ഹോം  »  Company  »  GAIL (India)  »  Quotes  »  Notes to Account
കമ്പനിയുടെ പേരിലെ ആദ്യത്തെ കുറച്ച് അക്ഷരങ്ങള്‍ എന്റര്‍ ചെയ്യൂ, അതിന് ശേഷം 'ഗോ' എന്നതില്‍ ക്ലിക്ക് ചെയ്യൂ

Notes to Accounts of GAIL (India) Ltd.

Mar 31, 2023

The Company has only one class of equity shares having par value of '' 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 shareholding at the shareholders meetings.

4.87,93,407 shares (Previous Year: 2,96,90,172) are held in the form of Global Depository Receipts

The Company has not issued any shares for a consideration other than cash in immediately preceding five years except 2,19,16,99,881 bonus shares issued during FY 2022-23, 2,25,50,70,933 bonus shares issued during FY 2019-20 and 56,37,67,733 bonus shares during FY 2017-18.

The Company bought back 5,69,85,463 fully paid up equity shares representing 1.28% of the paid-up share capital for an aggregate amount of '' 1,082.72 crore (excluding taxes) at '' 190 per equity share. The equity shares bought back were extinguished on 21st June 2022. The Company bought back 6,97,56,641 fully paid up equity shares representing 1.55% of the paid-up share capital for an aggregate amount of '' 1,046.35 crore (excluding taxes) at '' 150 per equity share. The equity shares bought back were extinguished on 22nd March 2021.

a Retained Earnings

The Retained Earnings represents accumulated earnings of the Company. Retained Earnings is a free reserve of the Company and is used for the purposes like issuing bonus shares, buy back of shares and other purposes (like declaring Dividend etc.) as per the approval of Board of Directors. It includes the re-measurement gain/(loss) on defined benefit plans which will not be re-classified to statement of profit and loss in subsequent periods.

B Bond Redemption Reserve

As per the Companies Act, 2013 a Bond Redemption Reserve is required to be created for all bonds/ debentures issued by the Company at a specified percentage. Further, MCA vide notification No. 574 (E) dated 16th August 2019, creation of Bond Redemption Reserve is not required for listed companies. However, there is no clarity in the notification whether noncreation of Bond Redemption Reserve is applicable for bonds issued before notification date. Therefore, the Company has decided to continue creation of Bond Redemption Reserve as per conservative approach. This reserve is created out of appropriation of profits over the tenure of bonds and during the previous year the Company has fully repaid bonds. Accordingly, the Company has transferred back Bond Redemption Reserve to Retained earnings.

C Capital Redemption Reserve

As per the Companies Act 2013, Capital Redemption Reserve is created when the Company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares purchased is transferred to Capital Redemption Reserve. Utilization of this reserve is governed by the provisions of the Companies Act 2013

D Fair Value Gain/ (Loss) of Equity instruments

This reserve represents the cumulative effect of fair value fluctuations of investments made by the company in equity instruments of other entities. The cumulative gain or loss arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. This will not be re-classified to the statement of profit and loss in subsequent periods.

E Cash Flow Hedge Reserve

The Cash Flow Hedge Reserve represents the cumulative effective portion of gains/ (losses) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain/ (loss) arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. Such gains/ (losses) will be reclassified to statement of profit and loss in the period in which the hedged item occurs/ affects the statement of profit and loss..

29 Contingent Liabilities and Commitments:

i. Contingent Liabilities:

a. Claims against the Company not acknowledged as debts:

(i) Legal cases for claim of '' 2,118.27 crore (Previous Year: '' 2,270.77 crore) by 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 Demands & Appeals of '' 0.40 crore (Previous Year '' 0.40 crore) is pending and disclosed as Contingent Liability as on 31st March 2023.

** The Company has reviewed its Contingent Liability in respect of Show Cause Notices (SCNs) pending adjudication and the same has not been treated as obligation accordingly the previous year figures have been restated as under:

(iii) Disputed Indirect Tax Demands are as under:

('' in crore)

Sl.

No.

Particulars

As at 31st March, 2023

As at 31st march, 2022**

1

Custom Duty#

1,560.81

596.03

2

Excise Duty*

3,731.94

3,594.31

3

Sales Tax/VAT"

868.77

71.32

4

Entry Tax

0.80

0.75

5

Service Tax

7.31

7.08

6

GST

0.85

0.85

Total

6,170.48

4,270.34

# It includes the demand confirmed by customs authorities '' 934.01 crore (up to 31st March 2023) (Previous Year: '' nil) including penalty and interest, on account of Special Additional Duty (SAD) and Custom Duty on differential quantity, while finalising provisionally assessed Bill of Entries in respect of import of LNG by Company during Sept''2017 to Mar''2022 at Dabhol Port, Ratnagiri. Considering the merits of the case, the Company is in process of filing an appeal before the Commissioner (Appeals) Pune. Further, based on the exemption notification no. 51/2017 dated 30.06.2017, clarification provided by Central Board of Indirect Taxes and Customs (CBIC) and practice being followed at other Custom Port i.e. Dahej & Hazira, the Company is confident of favorable outcome in the matter.

*It includes demand of differential Central Excise Duty confirmed by CESTAT, Delhi vide order dated 30th November 2018 of '' 2,889 crore (up to 31st March 2023 is '' 3,391 crore) (Previous Year: '' 3,265.51 crore) including interest and penalty in the matter pertaining to classification of ''Naphtha'' manufactured by the Company. The Company has filed an appeal before the Hon''ble Supreme Court against the order, which was admitted and a stay has been granted by the Hon''ble Supreme Court on compliance of the conditions of depositing a sum of '' 20 Crore and furnishing security to the extent of '' 132 Crore. The Company has obtained opinion from legal expert and according to them; the Company has a good case on merits as well as on limitation. The matter is pending before the Court.

"Maharashtra VAT Authority during the VAT Assessment for the FY 2018-19 in respect of GAIL, Mumbai, has confirmed the demand of '' 696 crore (Previous Year: '' nil) including penalty and interest by denying benefit of exemption notification issued by Govt. of Maharashtra on supply of NG to power generating company and VAT set-off against purchase of NG. Considering the merits of the case, GAIL has filed a rectification application before the Assessing Authority and based on favorable legal opinion obtained on the matter, the Company is confident of favorable outcome.

(iv) Miscellaneous claims of '' 14.01 crore (Previous Year: '' 47.02 crore) includes mainly arbitration cases filed by vendors for delayed payments and losses incurred by them etc.

(v) Some of the customers have submitted counter claims amounting to '' Nil (Previous Year: '' 12,184 crore) against Ship or Pay charges / Consequential Losses for not supplying Gas.

b. Corporate Guarantees for raising Loans:

The Company has issued Corporate Guarantees for '' 4,583.74 crore (Previous Year: '' 4,361.27 crore) on behalf of related parties for raising loan(s). The amount of loan(s) outstanding as on 31st March 2023 against these Corporate Guarantees are '' 1,523.30 crore (Previous Year: '' 1,166.27 crore).

ii. Commitments:

a. Capital Commitments:

Estimated amount of contracts (Inclusive of Taxes & Net of Advances) remaining to be executed on Capital account as on 31st March 2023 is '' 12,381.09 crore (Previous Year: '' 6,891.28 crore).

b. Lease Commitments:

The company has various lease contracts that have not yet

commenced as on 31st March 2023. The future lease payments

for these non-cancellable lease contracts are as follows:

c. other Commitments:

(i) The Company has commitment of '' 4,357.27 crore (Previous Year: '' 4,559.88 crore) towards further investment and disbursement of loans 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 under various Production Sharing Contracts / Revenue Sharing Contracts in respect of E&P Joint Ventures is '' 114.93 crore (Previous Year '' 63.59 crore)

31 Claims by the Company not acknowledged as income / Asset:

I. In respect of certain customers towards Ship or Pay charges, matter being sub-judice / under dispute, the Company has been issuing claim letters, aggregate amount of which as on 31st March 2023 is '' 1,747.05 crore (Previous Year: '' 1,758.25 crore). Income in respect of the same shall be recognized as and when the matter is finally decided.

II. Pending court cases in respect of certain customers for recovery towards 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 (MoPNG), the Company has issued claim letters amounting to '' 1,704.56 crore (Previous Year: '' 1,704.56 crore) on the basis of information provided by Fertilizer Industry Coordination Committee (FICC). The proceeds, if received, will be transferred to the Gas Pool.

III. During the current financial year one of the Company''s Long term LNG Supplier disrupted LNG supplies due to geopolitical situation. The Company has been making multiple efforts on various levels to mitigate the situation. The Company is also pursuing its contractually available legal recourse for Specific Performance of its contractual obligations. Accordingly, the impact on the Company shall be assessed only after final outcome of the said legal recourse.

32 Pricing and Tariff:

I. With effect from 1st April 2002, Liquefied Petroleum Gas (LPG) prices have been de-regulated and decided on the basis of import parity prices fixed by the Oil Marketing Companies. However, the pricing mechanism is provisional and is yet to be finalized by the Ministry of Petroleum and Natural Gas (MoPNG). Impact on pricing, if any, will be recognized as and when the matter is finalized.

II. Natural Gas Pipeline Tariff and Petroleum Products Pipeline Transportation Tariff are 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.

III. The Company has filed appeal(s) before Appellate Tribunal (APTEL), against various moderations done by PNGRB in respect of Final Tariff Order(s) issued by PNGRB for Dadri-Bawana-Nangal Natural Gas Pipeline (DBNPL), Chhainsa-Jhajjar-Hissar Natural Gas Pipeline (CJHPL), Cauvery Basin, Kochi -Koottanad -Mangaluru-Bengaluru Pipeline (KKMBPL), Krishna Godavari Basin (KG Basin) and Dabhol-Bangalore Pipeline (DBPL) Networks. The same are pending for final adjudication.

IV. During the financial year 2015-16, the Company has filed a Writ Petition before Hon''ble Delhi High Court challenging the jurisdiction of PNGRB to fix transmission tariff for natural gas marketed to consumers. Hon''ble High Court has dismissed the aforesaid Writ Petition vide its Order dated 11th April 2017. In this regard, the Company has filed a Review Petition before the Hon''ble Delhi High Court on 12th May 2017 which has been admitted by the Hon''ble Court and is pending for final adjudication.

V. PNGRB vide Gazette Notification No. F. No. PNGRB RB/ COM/3-PPPL Tariff (1)/2012 Vol-IV (P-1018) dated 14th December 2021, has extended the existing LPG Pipeline tariff determination regulations till 30th September 2023.

33 On 19th February 2014, PNGRB notified the Amended Affiliate Code of Conduct Regulations by insertion of Regulation 5A mandating that an entity engaged in both marketing and transportation of natural gas shall create a separate legal entity on or before 31st March 2017 so that the activity of transportation of natural gas is carried on by such separate legal entity and the right of first use shall, however, be available to the affiliate of such separate legal entity. The Company has challenged the said PNGRB Regulation before Hon''ble Delhi High Court by way of a Writ Petition and the same is pending for final adjudication.

Pursuant to the notification of PNGRB (Determination of Natural Gas Pipeline Tariff) Amendment Regulations, 2022 dated 17.11.2022, and the subsequent submission of GAIL, PNGRB, vide Tariff Orders dated 22.03.2023 and 24.03.2023,

has determined Integrated Tariff (levelized and zonal apportionment) for GAIL''s Integrated Natural Gas Pipeline (comprising Integrated HVJ, DUPL-DPPL, DBPL, DBNPL, CJHPL, JHBDPL, South Gujarat sub-network, Trombay and Uran-Thal-Usar sub-networks) with effect from 1st April, 2023.

34 Pursuant to the notification of PNGRB (Determination of Natural Gas Pipeline Tariff) Second Amendment Regulations, 2020 dated 23.11.2020 and the amendments in the PNGRB (Determination of Natural Gas Pipeline Tariff) Regulations, 2008, PNGRB, vide Tariff Order dated 29th March, 2023, has determined the ''Unified Tariff" for the National Gas Grid System (NGGS), which has come into force with effect from 1st April, 2023. The NGGS comprises of twelve (12) inter-connected natural gas pipelines of nine (09) entities. Under the same, customers/shippers across the country and located on the NGGS shall be paying the same applicable zonal unified tariff for movement of gas from the Unified Entry Point upto the Unified Exit Point on the NGGS. However, Revenue Entitlement of GAIL would be as per its Approved Zonal Integrated Tariff and KG-Basin Tariff which are part of the NGGS.

ii. In the year 1990, Gujarat Industrial Development Corporation (GIDC) allotted Leasehold Land measuring 70.87 Hectares to the Company for 99 years for setting up of LPG Recovery in Vaghodia, Gujarat. The Lease Deed executed is for approx. 66.30 Hectares of Land, whereas the Government of Gujarat has not yet transferred the balance to GIDC.

Company is pursuing the matter with GIDC and Government of Gujarat for regularization of the balance land. Company has maintained the stand that no further amount is payable in the absence of demand from GIDC. The Company is of the opinion that since the amount for allotted land has already been paid and there is no additional demand from GIDC, no liability / contingent liability exists on the Company.

V. For laying Natural Gas pipelines, Company acquires Right of Use (ROU) of Land for which advance is generally paid to Special Land Acquisition Officer (SLAO). The said Advance is being operated by the SLAO through a separate Bank account. However, in some cases, for KYC purposes, PAN number of the Company has been used. These Bank Accounts are solely under the control of the SLAO. Accordingly, these accounts are shown under deposits.

iV. The Company has entered into a perpetual land lease agreement with Delhi Development Authority (DDA) for its Corporate Office. The lease rent is payable half-yearly, which is under revision w.e.f. 1st January 2018. DDA has not informed revised Lease Rent. Accordingly, the Company has deposited rent till 14th July 2023 as per pre-revised lease agreement. The Company has also applied for conversion of title deed of the said land from Leasehold to Freehold for which confirmation from DDA is awaited.

ii. Gas Pool Money (Provisional) shown under "Other Financial Liabilities - Non-Current" amounting to '' 581.87 crore (Previous Year: '' 581.87 crore) with a corresponding debit thereof under Trade Receivable will be invested / paid as and when the said amount is received from the customers.

37 i. The Company is acting as a 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. As on reporting date, the dues payable to Urea plants is '' 0 crore (Previous Year: '' 82.79 crore).

ii. The Company is acting as Pool Operator in terms of the decision of the Government of India for capacity utilization 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 '' 87.63 crore (Previous Year: '' 87.63 crore) on this account, as on 31st March 2023 which is payable to the above said power plants and / or to the Government of India.

38 Ind AS 115 - Revenue from Contracts with customers:

Ind AS 115 establishes a five-step model to account for

revenue arising from contracts with customers and requires that revenue be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

Ind AS 115 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

41 Disclosure under ind AS 19 onEmployee Benefits is given as below:

I. defined contribution Plans

a. employees'' Superannuation Benefit Fund

During the year, the Company has contributed '' 107.34 crore (Previous Year: '' 108.10 crore) to Superannuation Benefit Fund (including National Pension System) and charged to Statement of Profit and Loss/ CWIP.

b. employee Pension Scheme (EPS-95)

During the year, the Company has contributed '' 5.03 crore (Previous Year: '' 5.23 crore) to EPS-95 and charged to Statement of Profit and Loss/ CWIP.

ii. defined Benefit Plans:

a. Provident Fund

During the year, the Company has contributed '' 89.75 crore (Previous Year: '' 76.66 crore) to Provident Fund Trust at predetermined fixed percentage of eligible employees'' salary and charged to statement of profit

and loss/ CWIP. Further, the obligation of the Company is to make good shortfall, if any, in the fund assets based on the statutory rate of interest.

b. Gratuity

Each employee rendering continuous service of 5 years or more is entitled to receive gratuity amount based on completed tenure of service subject to maximum of '' 0.20 crore at the time of separation from the Company.

c. Post-Retirement Medical Scheme (PRMS)

PRMS provides medical coverage to retired employees and their eligible dependant family members. During the year, the Company contributed '' 38.52 crore (Previous Year: '' 16.87) to PRMS using projected unit credit method of actuarial valuation.

d. Terminal Benefits (TB)

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

e. Relief Measures for Dependent Family Members of Deceased Employees

The Company provides various assistance to the dependent family members of the deceased employees for Education of Childrens, Medical Benefits and Residential Quarter Facilities in the event of death of an employee during the service.

iii. Other Long Term Benefit Plans:

a. earned leave Benefit (El)

Earned Leave is accrued 30 days per year. Earned Leave is encashable in the multiple of 5 any no of times in a year while in service, subject to keeping a minimum balance of 15 days in the respective employee''s account. Encashment on retirement or superannuation is limited to 300 days.

b. Half Pay Leave (HPL)

HPL is accrued 20 days per year. The encashment of unavailed HPL is allowed as per approved Company rules at the time of Superannuation.

c Long Service Award (LSA)

As per approved policy of the Company, 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.

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

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

(iii) E&P blocks are assessed individually for impairment.

iii The Company''s share of balance cost recovery is '' 426.19 crore (Previous Year '' 352.36 crore) to be recovered from future revenues from

E&P blocks having proved reserves as per production sharing contracts

46 Accounting Standards - Impairment of Assets - Ind AS-36:

In compliance of Ind AS-36, Impairment of Assets, the Company carried out assessments of impairment in respect of assets of GAIL Tel,

and Right of Use (RoU) for Pipelines as on 31st March 2023:

i. The Company reversed impairment loss of '' 4.26 crore against earlier provisions (Previous Year reversal of impairment loss '' 0.83 crore) in respect of assets of GAIL Tel.

ii. The Company accounted impairment loss of '' 0.72 crore (Previous Year reversal of impairment loss '' 0.87 crore) in respect of Plant and Machinery

iii. The Company conducted impairment study of RoUs for Pipelines in compliance to the provisions of Ind AS 36. There is no impairment loss found in respect of RoUs.

47 In compliance of Ind AS 109 on Impairment of Financial Assets/ Expected Credit Loss (ECL) on Financial Guarantees, the Company has

carried out an assessment in respect of its following investments/ Financial Guarantees as on 31st March 2023:

i. During the year, based on fair valuation of investment in Tapi Pipeline Company Limited, the Company has made a provision for impairment of '' 55.38 crore (Previous Year: '' Nil). The Carrying Value of Company''s investment in Tapi Pipeline Company Limited as on 31st March 2023 is '' nil (Previous Year: '' 55.38 crore).

ii. During the year, based on the fair valuation of GAIL Global USA Inc. (GGUI), the Company has provided for Expected Credit Loss of ''46.62 crore (Previous Year: '' 169.58 crore) against Corporate Guarantee provided by the company on behalf of GGUI.

51 Interest free advance has been given to M/s. Petronet LNG Ltd. (PLL) for booking of regasification capacity to the tune of '' 561.80 crore during FY 2014-15 & FY 2015-16 in two equal tranches. The said advance is to be adjusted within 15 years against regasification invoices of PLL. Out of above advance, PLL has adjusted '' 38.2 crore during the year (Previous Year: '' 38.2 crore). Balance amount of '' 324.63 crore during the year (Previous Year: '' 362.83 crore) has been accounted as advance in Note No 12 and 12A.

52 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 of receipt of valid invoice.

53 Cabinet Committee on Economic Affairs (CCEA), Government of India in its meeting held on 21st September 2016 approved 40% capital grant of estimated capital cost of '' 12,940 crore i.e. '' 5,176 crore to the Company for execution of Jagdishpur Haldia Bokaro Dhamra Pipeline Project (JHBDPL).

The Company has received '' 4,926.29 crore (Previous year '' 4,926.29 crore) towards Capital Grant till 31st March 2023. During the year, the Company has amortised the capital grant amounting '' 100.67 crore (Previous Year: '' 68.8 crore) based on the useful life of the asset capitalized.

54 Financial Risk Management:

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

i. Market Risk

Market risk is a risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate risk, foreign currency risk, equity price risk and commodity price risk. Financial instruments affected by market risk includes Loans, Borrowings, Deposits and Derivative Instruments.

(a) interest Rate Risk

Interest rate risk is a 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 longterm domestic rupee term 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 outstanding as on 31st March 2023, after considering the impact of swap contracts. .

b) Foreign Currency Risk

Foreign currency risk is a risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and foreign currency, primarily US 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 and forward contracts for 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 the 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

The Company imports LNG for marketing and 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 and overseas on back to back basis. However, the Company is exposed to the price risk on the volume which is not contracted on back to back basis. As most of the LNG purchase and sales contracts are based on natural gas or crude based index, such price risk arises out of the volatility in these indices. In order to mitigate this index linked price risk, the Company has been taking appropriate derivative products in line with the Board approved ''Natural Gas Price Risk Management Policy''.

d) Equity Price Risk

The Company''s investment in listed and unlisted equity instruments are subject to market price risk arising from uncertainties about future values of these investments. The Company manages the equity price risk through review of investments 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 '' 280.78 crore (Previous Year: '' 233.42 crore).

At the reporting date, the exposure to listed equity investments at fair value was '' 4662.74 crore (Previous Year: '' 5058.89 crore). A variation of ( /-) 10% in share price of equity investments listed on the stock exchange could have an impact of approximately ( /-) '' 466.27 crore (Previous Year '' 505.89 crore) on the OCI and equity investments of the Company. These changes would not have an effect on profit or loss.

ii. Liquidity Risk

Liquidity risk is a 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 requirements such as overdraft facility and long term borrowing through domestic and international market.

iii. Credit Risk

Credit risk is a risk that a customer or ship party to a financial instrument may fail to perform or pay the due amounts causing financial loss to the Company. It is considered as a part of the risk-reward balance of doing business and is considered on entering into any business contract to the extent to which the arrangement exposes the Company to credit risk. It may arises from Cash and Cash Equivalents, Derivative Financial Instruments, deposits with financial institutions and mainly from credit exposures to customers relating to outstanding receivables. Credit exposure also exists in relation to guarantees issued by the Company. Each segment is responsible for its own credit risk management and reporting.

The Company has issued Corporate Guarantees on behalf of its group companies, refer note no. 50 (II) for details.

Trade Receivables

Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and controls relating to customer credit risk management. Outstanding receivables from customers 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 banks, for the purpose of investment of surplus funds and foreign exchange transactions. Foreign exchange transaction and investments of surplus funds are made only with empanelled Banks and Liquid & Overnight Mutual Funds. Credit limits of all Banks are reviewed by the Management on regular basis.

iV. 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 year.

55 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: technique 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, 2023, the Company held the following financial instruments carried at fair value on the statement of financial position:

i) The carrying cost of Interest bearing Loans & Borrowings is approximately equal to their Fair Market Value.

ii) The carrying amount of trade receivables, cash and cash equivalents, other bank balance, others receivables, trade payables, interest accrued and due, other payables and other financial liabilities are considered to be same as their fair value due to their short term nature.

iii) With respect to loans, the fair value was calculated based on cash flows discounted using the current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.

As at 31st March, 2022 the Company held the following financial instruments carried at fair value on the statement of financial position:

i) The carrying cost of Interest-bearing loans & borrowings is approximately equal to their Fair Market Value.

ii) The carrying amount of trade receivables, cash and cash equivalents, other bank balance, others receivables, trade payables, interest accrued and due, other payables and other financial liabilities are considered to be same as their fair value due to their short term nature.

iii) With respect to loans, the fair value was calculated based on cash flows discounted using the current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.

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.

56 Hedging Activities and Derivatives:

Derivatives not designated as Hedging instruments:

The Company uses forward currency contracts, interest rate swaps, cross currency interest rate swaps, commodity swap contracts to hedge its foreign currency risks, interest rate risks and commodity price risks. Derivative contracts not designated by management as hedging instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value on each reporting date. Such contracts are entered into for periods consistent with exposure of the underlying transactions.

Derivatives designated as Hedging instruments:

Cash Flow Hedges

The Company enters into hedging instruments in accordance with policies as approved by the Board of Directors with written principles which is consistent with the risk management strategy of the Company. Company has decided to apply hedge accounting for certain derivative contracts that meets the qualifying criteria of hedging relationship entered into post October 01, 2017.

Foreign currency Risk

Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of firm commitment of capital purchases in USD and existing borrowings e.g. USD / Japanese Yen etc. commodity Price Risk

The Company purchases and sells natural gas / liquefied petroleum gas on an ongoing basis as its operating activities. The significant volatility in natural gas / liquefied petroleum gas prices over the years has led to Company''s decision to enter into hedging instruments through swap transactions including basis swaps. These contracts are designated as hedging instruments in cash flow hedges of forecasted sales and purchases of natural gas / liquefied petroleum gas.

The table below shows the position of hedging instruments and hedged items (underlying) as at the balance sheet date.

58 Confirmation of Assets & Liabilities:

i. Some balances of trade and other receivables, trade and other payables are subject to confirmation / reconciliation. Adjustment, if any, will be accounted for on confirmation / reconciliation of the same, which will not have a material impact.

ii. 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.

63 Wilful Defaulter:

The Company has not been declared as a wilful defaulter by any bank or financial institution or any other lender as on 31st March 2023 and 31st March 2022.

64 Benami Property:

The Company is not holding any Benami Property as on 31st March 2023 and 31st March 2022. Further, no proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

65 Borrowings Secured against current Assets:

During the financial year ended 31st March 2023, the Company has not availed any borrowings from banks or financial institutions against security of current assets. Accordingly no quarterly return/statements of current assets filled by the Company with Banks or Financial Institutions.

66 Registration of charges or satisfaction with Registrar of companies (Roc):

During the financial year 2022-23, charge amounting to '' 3,400 crore was created in favour of Bank of India. The charges were created/ satisfied within statutory timelines and no charge creation or satisfaction is pending.

68 The Company is charging depreciation on Natural Gas/ LPG Transmission pipelines considering useful life 30 years and residual value 5%. During the year the Company has sought an opinion of the EAC of ICAI on the Residual value of Natural Gas/ LPG Transmission pipelines vide letter no. GAIL/ND/F&A/CO/EAC Opinion/2022-23/1 dated 25th November 2022 for which opinion is awaited.

69 Previous Year''s figures have been regrouped / reclassified, wherever necessary to correspond with the current year''s classification / disclosure. Major items regrouped / reclassified are as under:

('' in crore)

Particulars

Regrouped from

Regrouped to

Amount

Financial Guarantee Obligations-Non Current

Other Financial Liabilities Non Current

Other Financial Liabilities Current

182.45


Mar 31, 2022

The Company has only one class of equity shares having par value of 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 shareholding at the shareholders meetings.

296,90,172 shares (Previous Year: 3,15,26,148) are held in the form of Global Depository Receipts.

The Company has not issued any shares for a consideration other than cash in immediately preceding five years except 2,25,50,70,933 bonus shares issued during FY 2019-20, 56,37,67,733 bonus shares during FY 2017-18 and 42,28,25,800 bonus shares during

During FY 2020-21 the Company has bought back 6,97,56,641 fully paid up equity shares of face value of '' 10 each (representing 1.55% the total number of fully paid up equity shares in the paid-up share capital of the Company) for an aggregate amount of '' 1,046.35 crore (excluding taxes) at '' 150 per equity share. The settlement of all valid bids were completed on 19th March 2021 and the equity shares bought back were extinguished on 22nd March 2021.

i) During the year, the Company has paid interim dividend of '' 9.00 per share (Previous year '' 5.00 per share)

ii) The Board of Directors proposed the final dividend of ''1.00 per equity share having face value of '' 10 each for FY 202122, subject to approval by the members of the Company

Nature and Purpose of reserves

A Retained Earnings

The Retained Earnings represents accumulated earnings of the Company. Retained Earnings is a free reserve of the Company and is used for the purposes like issuing bonus shares, buy back of shares and other purposes (like declaring Dividend etc.) as per the approval of Board of Directors. It includes the re-measurement gain/(loss) on defined benefit plans which will not be re-classified to statement of profit and loss in subsequent periods.

B General Reserve

The Company transfers 10% of Profits every year to General Reserve and it is a free reserve.

C Bond Redemption Reserve

As per the Companies Act, 2013 a Bond Redemption Reserve is required to be created for all bonds/ debentures issued by the Company at a specified percentage. Further, MCA vide notification No. 574 (E) dated 16th August 2019, creation of Bond Redemption Reserve is not required for listed companies. However, there is no clarity in the notification whether noncreation of Bond Redemption Resreve is applicable for bonds issued before notification date. Therefore, the Company has decided to continue creation of Bond Redemption Reserve as per conservative approach. This reserve is created out of appropriation of profits over the tenure of bonds and during the current year the Company has fully repaid bonds. Accordingly, the Company has transferred back Bond Redemption Reserve to Retained earnings.

D Securities Premium

As per the Companies Act, 2013 when a Company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of premium received on those shares shall be transferred to ''securities premium account''. The securities premium can be used for issue of bonus shares, buy back of shares and payment of premium for redemption of debentures or preference shares.

E Capital Redemption Reserve

As per the Companies Act 2013, Capital Redemption Reserve is created when the Company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares purchased is transferred to Capital Redemption Reserve. Utilization of this reserve is governed by the provisions of the Companies Act 2013.

F Fair Value Gain/ (Loss) of Equity Instruments

This reserve represents the cumulative effect of fair value fluctuations of investments made by the Company in equity instruments of other entities. The cumulative gain or loss arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. This will not be re-classified to the statement of profit and loss in subsequent periods.

G Cash Flow Hedge Reserve

The Cash Flow Hedge Reserve represents the cumulative effective portion of gains/ (losses) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain/ (loss) arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. Such gains/ (losses) will be reclassified to statement of profit and loss in the period in which the hedged item occurs/ affects the statement of profit and loss.

Categories

Opening

Balance

Additions

Deletions

Closing

Balance

Others

1,731.75

668.68

281.24

2,119.19

Total

6,969.44

1,006.43

316.53

7,659.34

b. Lease Commitments:

The Company has various lease contracts that have not yet commenced as at 31st March, 2022. The future lease payments for these non-cancellable lease contracts are as follows:

I. Contingent Liabilities:

a. Claims against the Company not acknowledged as debts:

(i) Legal cases for claim of '' 2,270.77 crore (Previous Year: '' 1,773.91 crore) by 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 Demands & Appeals of '' 0.40 crore (Previous year '' 0.40 crore) is pending and disclosed as Contingent Liability as on 31st March, 2022. Further, settlement applications for all the Direct Tax cases, which were filed under Tax Amnesty Scheme has been settled during the FY 2021-22.

(iii) Disputed Indirect Tax Demands are as under:

('' in crore)

Sl.

No.

Particulars

As at 31st March, 2022

As at 31st March, 2021

1

Custom Duty

596.03

573.52

2

Excise Duty*

3,625.41

3,471.97

3

Sales Tax / VAT

71.32

62.47

4

Entry Tax

0.75

0.60

5

Service Tax

165.82

159.94

6

GST

881.82

864.41

Total

5,341.15

5,132.90

*It includes '' 3,265.51 crore (Previous Year: '' 3,139.92 crore) towards demand (including interest and penalty) of Central Excise Duty confirmed by CESTAT, Delhi in the matter pertaining to classification of ''Naphtha'' manufactured by the Company. The Company has filed an appeal before the Hon''ble Supreme Court against the order, which was admitted and a stay has been granted by the Hon''ble Supreme Court on compliance of the conditions of depositing a sum of '' 20 crore and furnishing security to the extent of '' 132 crore.

Further, the Company has obtained opinion from legal experts and according to them; the Company has a good case on merits as well as on limitation. The matter is pending before the Court.

(iv) Miscellaneous claims of '' 47.02 crore (Previous Year: '' 62.23 crore) includes mainly arbitration cases filed by vendors for delayed payments and losses incurred by them etc.

The category-wise movement of Contingent Liabilities from (i) to (iv) above is as under:

('' in crore)

Categories

Opening

Balance

Additions Deletions

Closing

Balance

Central

4,671.41

214.66 25.09

4,860.98

Govt.

State Govt.

564.13

123.09 10.20

677.02

CPSEs

2.15

- -

2.15

(v) Some of the customers have submitted counter claims amounting to '' 12,184 crore (Previous Year: '' 10,014 crore) against Ship or Pay charges / Consequential Losses for not supplying Gas. The matter is sub judice since 2016.

b. Corporate Guarantees for raising Loans:

The Company has issued Corporate Guarantees for '' 4,361.27 crore (Previous Year: '' 3,759.00 crore) on behalf of related parties for raising loan(s). The amount of loan(s) outstanding as on 31st March, 2022 against these Corporate Guarantees are '' 1,166.27 crore (Previous Year: '' 1,140.72 crore).

II. Commitments:

a. Capital Commitments:

Estimated amount of contracts (Inclusive of Tax & Net of Advances) remaining to be executed on Capital account as on 31st March, 2022 is '' 6,891.28 crore (Previous Year: '' 7,094.70 crore) (amount is inclusive of tax).

('' in crore)

Particulars

Year ended 31st March, 2022

Year ended 31st March, 2021

Within one year

0.00

0.77

After one year but not more than five years

0.00

0.83

Total

0.00

1.60

c. Other Commitments:

(i) The Company has commitment of '' 4,559.88 crore (Previous Year: '' 3,535.19 crore) towards further investment and disbursement of loan in the Subsidiaries, Joint Ventures, Associates and Other Companies and Buyback of Shares. The above includes '' 1,321.71 crore (including Buyback Tax) towards Buyback of 5,69,85,463 fully paid-up Equity Shares of face value '' 10/- each of the Company at a price of '' 190 per equity share, as approved by Board in its meeting held on 31st March, 2022.

(ii) Commitments made by the Company towards the Minimum Work Programme in respect of Jointly Controlled Assets have been disclosed in Note 47 (B) (iv).

(iii) The Company has been authorized by the Ministry of Petroleum & Natural Gas (MoPNG), Government of India for implementation of City Gas Distribution (CGD) Projects in six

30 Impact of COVID 19:

The continuance of COVID-19 pandemic is causing economic impact globally. The Company is engaged in processing, trading & transmission of natural gas and with phase wise unlocking of restrictions, its operations were not materially impacted during the year 2021-22 and no significant impact on the continuity of operations of business of the Company is envisaged due to COVID-19 in foreseeable future."

31 Disclosure relating to Corporate Social Responsibility (CSR):

As per Section 135 of the Companies Act, 2013 read with guidelines issued by Department of Public Enterprises, GOI, the Company is required to spend, in every financial year, at least two per cent of the average net profits of the Company made during the three immediately preceding financial years in accordance with its CSR Policy.

. Claims by the Company not acknowledged as Income / Liability:

In respect of certain customers towards Ship or Pay charges, matter being sub judice / under dispute, the Company has been issuing claim letters, aggregate amount of which as on 31st March, 2022 is '' 1,758.25 crore (Previous Year: '' 1,750.51 crore). Income in respect of the same shall be recognized as and when the matter is finally decided.

Pending court cases in respect of certain customers for recovery towards 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 (MoPNG), the Company has issued claim letters amounting to '' 1,704.56 crore (Previous Year: '' 3,143.57 crore) on the basis of information provided by Fertilizer Industry Coordination Committee (FICC). The proceeds, if received, will be transferred to the Gas Pool.

Pricing and Tariff:

With effect from 1st April, 2002, Liquefied Petroleum Gas (LPG) prices have been de-regulated and decided on the basis of import parity prices fixed by the Oil Marketing Companies. However, the pricing mechanism is provisional and is yet to be finalized by the Ministry of Petroleum and Natural Gas (MoPNG). Impact on pricing, if any, will be recognized as and when the matter is finalized.

b. Natural Gas Pipeline Tariff and Petroleum Products Pipeline Transportation Tariff are 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.

c. (i) The Company has filed appeal(s) before Appellate

Tribunal (APTEL), against various moderations done by PNGRB in respect of Final Tariff Order(s) issued by PNGRB for Dadri-Bawana-Nangal Natural Gas Pipeline (DBNPL), Chhainsa-Jhajjar-Hissar Natural Gas Pipeline (CJHPL), Cauvery Basin, Kochi-Koottanad-Bengaluru -Mangaluru-Pipeline (KKBMPL), Krishna Godavari Basin (KG Basin) and Dabhol-Bangalore Pipeline (DBPL) Networks. The same are pending for final adjudication.

(ii) PNGRB, vide its Tariff Order no. TO/07/2018 dated 27th September 2018, has approved Final Pipeline Tariffs for South Gujarat Regional Pipeline Networks, which was challenged by certain customers in Court of Law. Hon''ble High Court of Gujarat, vide its Order dated 17th June 2019 has allowed the Company to charge new tariff rates w.e.f. 17th June 2019. The Company has filed an appeal before Hon''ble High Court of Gujarat for differential amount for the period from 1st April,2018 to 16th June, 2019 which is pending for disposal.

d. During the FY 2015-16, the Company has filed a Writ Petition before Hon''ble Delhi High Court challenging the jurisdiction of PNGRB to fix transmission tariff for natural gas marketed

to consumers. Hon''ble High Court has dismissed the aforesaid Writ Petition vide its Order dated 11th April, 2017. In this regard, the Company has filed a Review Petition before the Hon''ble Delhi High Court on 12th May, 2017 which has been admitted by the Hon''ble Court and is pending for final adjudication.

PNGRB vide Gazette Notification No. F. No. PNGRB/COM/3-PPPL Tariff (1)/2012 Vol-IV (P-1018) dated 14th December, 2021 has extended the existing LPG Pipeline tariff determination regulations till 30th September, 2023.

On 19th February, 2014, PNGRB notified the Amended Affiliate Code of Conduct Regulations by insertion of Regulation 5A mandating that an entity engaged in both marketing and transportation of natural gas shall create a separate legal entity on or before 31st March, 2017, so that the activity of transportation of natural gas is carried on by such separate legal entity and the right of first use shall, however, be available to the affiliate of such separate legal entity. The Company has challenged the said PNGRB Regulation before Hon''ble Delhi High Court by way of a Writ Petition and the same is pending for final adjudication.

On 23rd November, 2020 PNGRB notified the Determination of Natural Gas Pipeline Tariff Second Amendment Regulations 2020, for determination of a single Weighted Average Tariff for fourteen inter-connected pipelines of various entities. However, the same are yet to come into legal effect.

Land & Building:

Title deeds pending for execution in the name of the Company as on 31st March, 2022 is '' 26.93 crore (Details attached as Annexure-A).

In the year 1990, Gujarat Industrial Development Corporation (GIDC) allotted Leasehold Land measuring 70.8734 Hectares to the Company for 99 years for setting up of LPG Recovery Plant in Vaghodia, Gujarat. The Lease Deed executed is for approx. 66.3038 Hectares of Land, whereas the Government of Gujarat has not yet transferred the balance to GIDC.

Company is pursuing the matter with GIDC and Government of Gujarat for regularization of the balance land. Company has maintained that no further amount is payable in the absence of demand from GIDC. The Company is of the opinion that since the amount for allotted land has already been paid and there is no additional demand from GIDC, no liability / contingent liability exists on the Company.

*The earmarked balances, which includes interest accrued on short-term deposit in banks, does not belong to the Company and has not been accounted for as income.

b. Gas Pool Money (Provisional) shown under "Other Financial Liabilities - Non-Current" amounting to '' 581.87 crore (Previous Year: '' 581.86 crore) with a corresponding debit thereof under Trade Receivable will be invested / paid as and when the said amount is received from the customers.

39 a. The Company is acting as a 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. As on reporting date, the dues payable to Urea plants is '' 82.79 crore (Previous Year: '' NIL).

b. The Company is acting as Pool Operator in terms of the decision of the Government of India for capacity utilization 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 '' 87.63 crore (Previous Year '' 87.63 crore) on this account, as on 31st March, 2022 which is payable to the above said power plants and / or to the Government of India.

Ind AS 115 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

Ind AS 115 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

43 Disclosure under Ind AS 19 onEmployee Benefits is given as below:

a. Superannuation Benefit Fund (Defined Contribution Fund):

The Company has paid for an amount of '' 108.10 crore (Previous Year: '' 101.89 crore) towards contribution to Superannuation Benefit Fund Trust and National Pension System (NPS) and charged to Statement of Profit and Loss.

b. Provident Fund:

The Company has paid contribution of '' 81.89 crore (Previous Year: '' 76.77 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.

c. Other Benefit Plans

(i) Gratuity:

As per Payment of Gratuity Act 1972, Gratuity is payable @15 days salary for every completed year of service subject to minimum service period of 5 years. Total Gratuity payable to each employee is limited to

'' 20 lakh as per Central Government notification S.O. 1420 (E) dated 29th March, 2018.

(ii) 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 provided '' 16.87 crore (Previous Year: '' 19.13 crore) towards the PRMS.

(iii) Earned Leave Benefit (EL)

Earned Leave is accrued @30 days per year. Earned Leaves can be encashed while in service upto 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 is limited to 300 days.

(iv) 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 from their last place of posting.

(v) Half Pay Leave (HPL)

HPL is accrued @20 days per year. The encashment of unavailed HPL is allowed as per approved Company rule at the time of Superannuation.

(vi) Long Service Award (LSA)

As per approved policy of the Company, 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 components of net benefit expenses recognized in the Statement of Profit and Loss, based on actuarial valuation, is placed as Annexure-B.

(i) The actuarial valuation considers the estimates of future salary increases, inflation, seniority, promotion and other relevant factors.

(ii) The management has relied on the overall actuarial valuation conducted by the actuary.

44 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 '' 173.94 crore (Previous Year: '' 175.63 crore).

45 In compliance of Ind AS 108 on "Operating Segment", the Company has adopted following Business Segments as its reportable segments:

(a) Transmission services

(i) Natural Gas

(ii) LPG

(b) Natural Gas Marketing

(c) Petrochemicals

(d) LPG and other Liquid Hydrocarbons

(e) Other Segments (includes GAILTEL, E&P, Power Generation and City Gas Distribution)

There are no geographical segments in the Company.

The disclosure of segment wise information is given as per Annexure-C.

46 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-D.

47 Disclosure under Ind AS 112 on "Disclosure of Interests in Other Entities":

(i) The Company is a 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 operators 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) E&P blocks are assessed individually for impairment.

c. The Company''s share of balance cost recovery is '' 352.36 crore (Previous Year '' 208.15 crore) to be recovered from future revenues from E&P blocks having proved reserves as per production sharing contracts.

48 Accounting Standards - Impairment of Assets - Ind AS-36:

In compliance of ''Ind AS-36, Impairment of Assets'' and ''Ind AS 109, Financial Instruments'', the Company carried out assessments of impairment in respect of assets of E&P, GAIL Tel, and Right of Use (RoU) for Pipelines as on 31st March, 2022:

a. The Company accounted for impairment loss of '' 0.46 crore (Previous Year '' 1.41 crore) in respect of E&P assets.

b. The Company accounted for impairment gain of '' 0.83 crore (Previous Year: loss of '' 6.53 crore) in respect of assets of GAIL Tel.

c. The Company has reversed impairment loss of '' 0.86 crore (Previous Year: '' 0.31 crore) against earlier provision in respect of Plant and Machinery as assets written off.

d. The Company conducted impairment study of RoUs for Pipelines in compliance to the provisions of Ind AS 36. There is no impairment loss found in respect of RoUs.

49 In compliance of Ind AS 109 on Impairment of Financial Assets, the Company has carried out an impairment assessment in respect of its following investments as on 31st March, 2022:

During the year, based on fair valuation of Company''s investment in GAIL Global USA Inc. (GGUI), the Company has made a provision of impairment of '' Nil against impairment provision of '' 10.61 crore in Previous Year. The Carrying Value of Company''s investment in GGUI as on 31st March, 2022 is '' 6.97 crore (deemed investment) (Previous year: '' NIL).

During the year, based on the fair valuation of GAIL Global USA Inc. (GGUI), Company has also provided for Total Expected Credit Loss '' 169.58 crore against Corporate Guarantee provided by the Company on behalf of GGUI.

52 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. (i) Corporate Guarantees given by the Company to Banks for issuance of Performance Bank Guarantee to the below mentioned

subsidiary of the Company with regard to implementation of various City Gas Projects is as under:

against regasification invoices of PLL. Out of above advance, PLL has adjusted '' 38.20 crore during the year (Previous Year: '' 38.20 crore). Balance amount of '' 362.83 crore (Previous Year: '' 401.03 crore) has been accounted as advance in Note No 12 and 12A.

The Company has issued Corporate Guarantees on behalf of its US subsidiary and Step down subsidiary to the tune of USD 1,055.06 million ('' 8,036.41 crore). The Guarantee for USD 70.00 million ('' 533.19 crore) issued to US subsidiary is towards meeting its obligation and as per Company assessment; there is no possibility of default by US subsidiary. Further, Guarantees issued to step down subsidiary of USD 985.06 million ('' 7,503.22 crore), has been issued in-furtherance of business of the Company.

Based on the opinion of Expert Advisory Committee (EAC) of The Institute of Chartered Accountants of India (ICAI), provision for expected credit loss for '' 169.58 crore has been made in the books of accounts of the Company for the Guarantees issued to GAIL Global (USA) Inc. There is no security provided by the Company.

53 Interest free advance has been given to M/s. Petronet LNG Ltd. (PLL) for booking of regasification capacity to the tune of '' 561.80 crore during FY 2014-15 & FY 2015-16 in two equal tranches. The said advance is to be adjusted within 15 years

55 Cabinet Committee on Economic Affairs (CCEA), Government of India in its meeting held on 21st September 2016 approved 40% capital grant of estimated capital cost of '' 12,940 crore i.e. '' 5,176 crore to the Company for execution of Jagdishpur Haldia Bokaro Dhamra Pipeline Project (JHBDPL). The Company has received '' 4,926.29 crore (Previous Year '' 4,336.74 crore) towards Capital Grant till 31st March, 2022. During the year, the Company has amortised the capital grant amounting to '' 68.80 crore (Previous Year: '' 45.77 crore) based on the useful life of the asset capitalized.

56 Financial Risk Management:

The Company is exposed to a number of 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.

a. 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.

(i) 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 domestic rupee term loan and 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 outstanding as on 31st March, 2022, after considering the impact of swap contracts.

(ii) 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 US 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.

(iii) 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 and overseas on back to back basis. However, the Company is exposed to the price risk on the volume which is not contracted on back to back basis. As most of the LNG purchase and sales contracts are based on natural gas or crude based index, such price risk arises out of the volatility in these indices. In order to mitigate this index linked price risk, Company has been taking appropriate derivative products in line with the Board approved ''Natural Gas Price Risk Management Policy''.

(iv) 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 '' 233.42 crore (Previous Year '' 255.46 crore).

At the reporting date, the exposure to listed equity investments at fair value was '' 5,058.89 crore (Previous Year '' 3,154.64 crore). A variation of ( /-) 10% in share price of equity investments listed on the stock exchange could have an impact of approximately ( /-) '' 505.89 crore (Previous Year '' 315.46 crore) on the OCI and equity investments of the Company. These changes would not have an effect on profit or loss.

b. Liquidity Risk

Liquidity risk 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 requirements such as overdraft facility and long term borrowing through domestic and international market.

c Credit Risk

Credit risk is the risk that a customer or counterparty 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.

(i) The Company has issued Corporate Guarantee to banks for '' 5,951.99 crore (Previous Year: '' 6,084.99 crore) for issuance of Performance Bank Guarantee to one of its subsidiaries in regard to implementation of various City Gas Projects.

(ii) The Company has issued Corporate Guarantees for '' 7,541.31 crore (Previous Year: '' 7,311.66 crore) on behalf of its related parties towards Payment Security under TSA and PSA, Performance Guarantee for GSPA and availing SBLC Facility (excluding guarantees issued for availing working capital facility)

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 empaneled bank, for the purpose of investment of surplus funds and foreign exchange transactions. Foreign exchange transaction and investments of surplus funds are made only with empaneled Banks. Credit limits of all Banks are reviewed by the Management on regular basis.

d. 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 year.

57 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

(i) The carrying cost of Interest-bearing Loans & Borrowings is approximately equal to their Fair Market Value

(ii) The carrying amount of trade receivables, cash and cash equivalents, other bank balance, others receivables, trade payables, interest accrued and due, other payables and other financial liabilities are considered to be same as their fair value due to their short term nature.

(iii) With respect to loans, the fair value was calculated based on cash flows discounted using the current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.

(i) The carrying cost of Interest-bearing Loans & Borrowings is approximately equal to their Fair Market Value

(ii) The carrying amount of trade receivables, cash and cash equivalents, other bank balance, others receivables, trade payables,

interest accrued and due, other payables and other financial liabilities are considered to be same as their fair value due to their short term nature.

(iii) With respect to loans, the fair value was calculated based on cash flows discounted using the current lending rate. They are

classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.

58 Hedging Activities and Derivatives:

Derivatives not designated as Hedging Instruments:

The Company uses forward currency contracts, interest rate swaps, cross currency interest rate swaps, commodity swap contracts to hedge its foreign currency risks, interest rate risks and commodity price risks. Derivative contracts not designated by management as hedging instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value on each reporting date. Such contracts are entered into for periods consistent with exposure of the underlying transactions.

Derivatives designated as Hedging Instruments:

Cash Flow Hedges

The Company enters into hedging instruments in accordance with policies as approved by the Board of Directors with written principles which is consistent with the risk management strategy of the Company. Company has decided to apply

hedge accounting for certain derivative contracts that meets the qualifying criteria of hedging relationship entered into post 1st October, 2017.

Foreign Currency Risk

Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of firm commitment of capital purchases in USD and existing borrowings e.g. USD / Japanese Yen etc.

Commodity Price Risk

The Company purchases and sells natural gas / liquefied petroleum gas on an ongoing basis as its operating activities. The significant volatility in natural gas / liquefied petroleum gas prices over the years has led to Company''s decision to enter into hedging instruments through swap transactions including basis swaps. These contracts are designated as hedging instruments in cash flow hedges of forecasted sales and purchases of natural gas / liquefied petroleum gas.

The table below shows the position of hedging instruments and hedged items (underlying) as at the balance sheet date.

65 Wilful Defaulter:

The Company has not been declared as a wilful defaulter by any bank or financial institution or any other lender as on 31st March, 2022 and 31st March, 2021.

66 Benami Property:

The Company is not holding any Benami Property as on 31st March, 2022 and 31st March, 2021. Further, no proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

67 Borrowings Secured against Current Assets:

During the financial year ended 31st March, 2022, the Company has not availed any borrowings from banks or financial institutions against security of current assets. Accordingly, no quarterly return/statements of current assets filed by the Company with Banks or Financial Institutions.

68 Registration of Charges or satisfaction with Registrar of Companies (ROC):

During the financial year 2021-22, consequent to redemption of Bond Series in February 2022, charge created in favour of IDBI Trusteeship was satisfied and charge amounting to '' 2000 crore was created in favour of HDFC Bank Limited.

The charges were created / satisfied within statutory timelines and no charge creation or satisfaction is pending.


Mar 31, 2021

Provisions, Contingent Liabilities, Contingent Assets & Capital Commitments

(a) Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will bean outflow of resources. Contingent liabilities/assets exceeding ? 5 Lakhs in each case are disclosed by way of notes to accounts except when there is remote possibility of settlement/realization.

(b) Estimated amount of contracts remaining to be executed on capital accounts are disclosed in each case above? 5 lacs.

1.15 Taxes on Income

Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes considering the tax rate and tax laws that have been enacted or substantively enacted as on the reporting date.

Deferred tax relating to items recognized outside Statement of Profit and Loss is recognized outside Statement of Profit and Loss (either in Other Comprehensive Income or in Equity).

The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.

1.16 Research & Development Expenditure

Revenue expenditure on Research and Development is charged to Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on Research and Development is capitalized in case the same qualifies as asset.

1.17 Cash and Cash Equivalents

Cash and cash equivalents consist of cash at bank and in hand and shortterm deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

1.18 Segment Reporting

The Management of the Company monitors the operating results of its business Segments for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.

The Operating segments have been identified on the basis of the nature of products / services.

a) Segment revenue includes directly identifiable with/allocable to the segment including inter-segment revenue.

b) Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result.

c) Expenses which relate to the Company as a whole and not allocable to segments are included under unallocable expenditure.

d) Income which relates to the Company as a whole and not allocable to segments is included in unallocable income.

e) Segment assets including CWIP and liabilities include those directly identifiable with the respective segments. Unallocable assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.

1.19 Earning Per Share

Basic earnings per equity share is computed by dividing the net profit after tax attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed by dividing adjusted net profit after tax by the aggregate of weighted average number of equity shares and dilutive potential equity shares during the year.

1.20 Liquidated damages/ Price Reduction Schedule

Amount recovered towards Liquidated Damages/Price Reduction Schedule are adjusted/appropriated as and when the matter is settled.

1.21 Statement of Cash Flow

Statement of cash flow is prepared in accordance with the indirect method prescribed in Ind AS 7, ''Statement of Cash Flows''

1.22 Fair value measurement

The Company measures financial instruments including derivatives and specific investments (other than subsidiary, joint venture and associates), at fair value at each balance sheet date.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

(i) Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

(ii) Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

(iii) Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the balance sheet on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above

1.23 Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(A) Financial assets

a) Classification

The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through Statement of Profit and Loss on the basis of its business model for managing the financial assets and the contractual cash flows characteristics of the financial asset.

b) Initial recognition and measurement

All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through Statement of Profit and Loss, transaction costs that are attributable to the acquisition of the financial asset.

c) Subsequent measurement

For purposes of subsequent measurement financial assets are classified in below categories:

i. Financial assets carried at amortised cost

A financial asset other than derivatives and specific investments, is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

ii. Financial assets at fair value through other comprehensive income

A financial asset other than derivatives comprising specific investment is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.

iii. Financial assets at fair value through Statement of Profit and Loss

A financial asset comprising derivatives which is not classified in any of the above categories are subsequently fair valued through profit or loss.

d) Derecognition

A financial asset is primarily derecognized when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.

e) Investment in subsidiaries, joint ventures and associates

i. The Company has accounted for its investment in subsidiaries, joint ventures and associates at cost. The Company assesses whether there is any indication that these investments may be impaired. If any such indication exists, the investment is considered for impairment based on the fair value thereof.

ii. When the Company issues financial guarantees on behalf of subsidiaries, joint ventures and associates initially it measures the financial guarantee at their fair values and subsequently measures athigherof:

• The amount of loss allowance determined in accordance with impairment requirements of I nd AS 109 and

• The amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 115 ''Revenue from Contracts with Customers''

iii. The Company recognize the initial fair value of financial guarantee as deemed investment with a corresponding liability recorded as financial guarantee obligation. Such deemed investment is added to the carrying value amount of the investment in subsidiaries, joint venture and associates. Financial guarantee obligation is recognized as other income in Statement of Profit and Loss over the remaining period of financial guarantee.

f) Impairment of other financial assets

The Company assesses impairment based on expected credit losses (ECL) model for measurement and recognition of impairment loss on the financial assets that are trade receivables or contract revenue receivables and all lease receivables etc.

(B) Financial liabilities

a) Classification

The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through Statement of Profit and Loss. Such liabilities, including derivatives shall be subsequently measured at fair value.

b) Initial recognition and measurement

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.

c) Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

i. Financial liabilities at amortised cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.

ii. Financial liabilities at fair value through Statement of Profit and Loss

Financial liabilities at fair value through Statement of Profit and Loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through Statement of Profit and Loss. Financial liabilities are classified as held for trading if theyare incurred for the purpose of repurchasing in the near term. This category comprises derivative financial instruments entered into by the

Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.

D) Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

(C) Embedded Derivatives

a) If the hybrid contract contains a host that is an asset within the scope of Ind AS 109, the Company does not separate embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109 to the entire hybrid contract.

b) If the hybrid contract contains a host that is not an asset within the scope of Ind AS 109, the Company separate embedded derivatives from the host and measures at fair value with changes in fair value recognized in statement of profit or loss if, and only if:

(i) The economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host.

(ii) A separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and

(iii) The hybrid contract is not measured at fair value with changes in fair value recognized in profit or loss

(D) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously

(E) Derivative financial instruments and Hedge Accounting

The Company uses derivative financial instruments, in form of forward currency contracts, interest rate swaps, cross currency interest rate swaps, commodity swap contracts to hedge its foreign currency risks, interest rate risks and commodity price risks.

a) Derivatives Contracts not designated ashedging instruments

i. The derivatives that are not designated as hedging instrument under Ind AS 109, are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

ii. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss.

b) Derivatives Contracts designated as hedging instruments

i. The derivatives that are designated as hedging instrument under Ind AS 109 to mitigate its risk arising out of foreign currency and commodity hedge transactions are accounted for as cash flow hedges.

ii. The Company enters into hedging instruments in accordance with policies as approved by the Board of Directors, provide written principles which is consistent with the risk management strategy of the Company.

iii. The hedge instruments are designated and documented as hedges at the inception of the contract. The effectiveness of hedge instruments is assessed and measured at inception and on an ongoing basis. The effective portion of change in the fair value of the designated hedging instrument is recognized in the "Other Comprehensive Income" as "Cash Flow Hedge Reserve". The ineffective portion is recognized immediately in the Statement of Profit and Loss as and when occurs. The amount accumulated in Cash Flow Hedge Reserve is reclassified to profit or loss in the same period(s) during which the hedged item affects the Statement of Profit or Loss Account. In case the hedged item is the cost of non-

financial assets / liabilities, the amount recognized as Cash Flow Hedge Reserve are transferred to the initial carrying amount of the non-financial assets/ liabilities.

iv. If the hedging relationship no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in Cash Flow Hedging Reserve remains in Cash Flow Hedging Reserve till the period the hedge was effective. The cumulative gain or loss previously recognized in the Cash Flow Hedging Reserve is transferred to the Statement of Profit and Loss upon the occurrence of the underlying transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified in the Statement of Profit and Loss.

1.24 Leases

The Company adopted Ind AS 116 "Leases" and applied the standard to all lease contracts existing on April 1, 2019 using the modified retrospective method. The Company assesses at the inception of contract whether a contract is, or contains, a lease i.e. if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

As a Lessee

a) Identifying a lease

At the inception of the contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company assesses whether:

i. The contract involves the use of an identified asset, specified explicitly or implicitly.

ii. The Company has the right to obtain substantially all the economic benefits from use of the asset throughout the period of use, and

iii. The Company has right to direct the use of the asset.

Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

b) Initial recognition of Right of use asset (ROU)

The Company recognizes a ROU asset at the lease commencement date (i.e., the date the underlying asset is available for use). ROU assets are initially measured at cost less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, adjusted for any lease payments made on or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or site on which it is located, less any lease incentives received.

c) Subsequent measurement of Right of use asset (ROU)

ROU assets are subsequently amortized using the straight-line method from the commencement date to the earlier of the end of the useful life of ROU asset or the end of the lease term. If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. In addition, the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurement of the lease liability. Refer to the accounting policies in section 1.12 Impairment of non-financial assets.

d) Initial recognition of lease liability

Lease liabilities are initially measured at the present value of the lease payments to be paid over the lease term. Lease payments included in the measurement of the lease liabilities comprise of the following:

i. Fixed payments, including in-substance fixed payments

ii. Variable lease payments that depend on an index or a rate

iii. Amounts expected to be payable under a residual value guarantee; and

iv. The exercise price under a purchase option, extension option and penalties for early termination only if the Company is reasonably certain to exercise those options.

e) Subsequent measurement of lease liability

Lease liabilities are subsequently increased to reflect the accretion of interest and reduced for the lease payments made. . In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

f) Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption. Lease payments on short-term leases and leases of low-value assets are recognized as expense in Statement of Profit and Loss.

As a Lessor

Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the lease term.

Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables and finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.

Estimates and assumptions

Determination of discount rate as a lessee

Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. Company estimates its incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment using observable available inputs (such as market interest rates).

1.25 Recent accounting pronouncements - Standards issued but not yet effective:

The Ministry of Corporate Affairs (MCA) notifies new Indian Accounting Standards or amendments to the existing Indian Accounting Standards. There is no such notification by MCA in this regard which would have been applicable from April 01,2021.


Mar 31, 2019

1. 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 52.19% in the paid-up equity capital of the company as on 31st March 2019. The registered office of the Company is located at 16, Bhikaiji Cama Place, R K Puram, New Delhi- I10066. 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 2019 were authorized for issue in accordance with a resolution of the Board of Directors on 27th May 2019.

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.

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 (INR) and the values are rounded to the nearest crore (INR 0,000,000), except when otherwise indicated.

a) Out of aforesaid investments in Subsidiary/ JV/ Associate, few shares are held in the name of GAIL officials jointly with GAIL

b) Investment are valued in accordance with Accounting Policy No. I.22 given in Note No. I

c) Aggregate amount of impairment in value of investments is Rs. 1,086.68 Crore upto end of the year (Previous Year Rs. 760.35 Crore)

d) Investment in other than subsidiary, associate and joint ventures are valued at fair value through OCI at each Balance Sheet date.

e) Investment made in Start-up companies and its fair value is considered to be equal to book value for initial 5 years.

a) The Company has only one class of equity shares having par value of 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 shareholding at the shareholders meetings.

b) I,92,66,283 shares (Previous Year : 1,52,83, 549) are held in the form of Global Depository Receipts.

c) The Company has not issued any shares for a consideration other than cash in immediately preceding five years except 56,37,67,733 Bonus Shares during the previous FY 2017-18 and 42,28,25,800 Bonus Shares during the FY 2016-17 in the ratio of one equity share for every three equity shares held.

2. Contingent Liabilities and Commitments:

I. Contingent Liabilities:

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

(i) Legal cases for claim of Rs.1,812.88 crore (Previous Year: Rs.1,805.11 crore) by 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 demands of Rs.1,171.09 crore (net of provision of Rs. 265.59 crore) (Previous Year Rs.1,138.04 crore net of provision of Rs. 254.33 crore) against which the Company has filed appeals before appellate authorities & courts. Further, the Income Tax Department has also filed appeals before ITAT against the relief granted by CIT (Appeals) to the Company. The aggregate amount involved in appeals filed by Department is Rs. 721.68 crore (including interest) (Previous Year: Rs. 674.89 crore).

*It includes Rs. 2,888.72 crore towards demand (including interest and penalty) of Central Excise duty in the matter pertaining to classification of ‘Naphtha’ manufactured by the Company. CESTAT, Delhi vide order dated 30.11.2018 has allowed the appeal filed by the Central Excise Department in this matter. Considering the merits of the case, the Company has filed an appeal before the Hon’ble Supreme Court.

The appeal filed by Company has been admitted and stay has been granted by the Hon’ble Court on compliance of the conditions of depositing a sum of Rs. 20 Crore with the court and furnishing security to the extent of Rs. 132 Crore by the Company.

Further, expert opinion from legal experts have been obtained by the Company and according to them, the Company has a good case on merits as well as on limitation.

(iv) Miscellaneous claims of Rs. 268.47 crore (Previous Year: Rs. 160.80 crore) includes mainly arbitration cases filed by vendors for delayed payments and losses incurred by them etc.

The movement of above contingent liabilities from (i) to (iv) under various categories is tabulated below:

(v) Some of the customers have submitted counter claims amounting to Rs. 17,733 crore (PY: Rs. 15,028 crore ) against Ship or Pay charges / consequential losses for not supplying gas.

(b) Corporate Guarantees

(i) The company has issued Corporate Guarantee to banks for Rs. 6,084.99 crore (PY: Rs. 5,951.99 crore) for issuance of Performance Bank Guarantee to one of its subsidiaries in regard to implementation of various City Gas Projects.

In respect of accounting of these guarantees in line with the requirements of Ind AS 109 - “Financial Instruments” and in response to the opinion provided by the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India, the company has sought further clarification from EAC. Pending clarification from EAC, no accounting entry has been passed in respect of these corporate guarantees. Management is of the view that the impact, if any, will not be material to the financial statements.

(ii) The Company has issued Corporate Guarantees for Rs. 2,449 crore (Previous Year: Rs. 2,207 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. 1,201 crore (Previous Year: Rs. 1,559 crore).

II. Capital Commitments:

(a) Estimated amount of contracts (Net of advances) remaining to be executed on capital account as at 31st March 2019 is Rs. 7,300.66 crore (Previous Year: Rs. 7,472.82 crore).

(b) Other Commitments:

(i) The Company has commitment of Rs.1,394.42 crore (Previous Year: Rs. 771.56crore) 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 45 (B) (iv).

3. In respect of certain customers towards Ship or Pay charges, matter being sub-judice/under dispute, the Company has been issuing claim letters, aggregate amount of which is Rs.1,561.97 crore (Previous Year Rs.1,268.77 crore) as at the end of the year. Income in respect of the same shall be recognized on final disposal of the matter.

4. 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. 3,091.94 crore (PY: Rs. 2,990.39 crore) on the basis of information provided by Fertilizer Industry Coordination Committee (FICC).

5. Pricing and Tariff

(a) 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.

(b) Natural Gas Pipeline Tariff and Petroleum Products Pipeline Transportation Tariff are 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.

(c) (i) As per directions of Appellate Tribunal (APTEL), till date, PNGRB has issued 06(Six) final tariff orders applicable from 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.

(ii) PNGRB, vide its Tariff Order no. T0/07/2018 dated 27th September 2018, has approved Final Pipeline Tariffs for South Gujarat Regional Pipeline Networks. Hon’ble High Court of Gujarat, vide its Order dated 20thNovember 2018, has granted interim stay over retrospective implementation of this Final Tariff Order in respect of some of these customers.

Nonetheless, impact on profits, if any, is being recognized consistently as and when the pipeline tariff is revised by orders of PNGRB. As regards rest of the Tariff Orders, PNGRB is yet to issue its final orders.

(d) The Company has filed a Writ Petition, during the financial year 2015-l6, before the Hon’ble Delhi High Court challenging the jurisdiction of PNGRB on fixation of transmission tariff for own requirement capacity in natural gas pipelines. The Hon’ble Delhi High Court has dismissed the aforesaid Writ Petition vide its Order dated llth April 2017. In this regard, the Company has filed a Review Petition before the Hon’ble Delhi High Court on 12thMay 2017 against the said Order which has been admitted by the Hon’ble Court for review and is pending adjudication.

6. Land& Building

(a) Freehold and Leasehold Land amounting to Rs. 22.21 crore and Rs. 7.17 crore (Previous Year: Rs. 26.67crore and Rs. 15.84crore) respectively are capitalized on provisional basis.

(b) Title deeds for freehold (5.31 hectares) and leasehold (61.49 hectares) land amounting to Rs. 10.93 crore and Rs. 15.05 crore (Previous Year: Rs. 23.35 crore and Rs. 8.84 crore) respectively are pending execution for transfer in the name of the Company. This includes Rs. 4.59 crore (Previous year Rs. 4.59 crore ) amount of Lease hold Land shown under ‘Prepayments’ in Note no 12 (Other Non-Current Assets - Non financial)

(c) Net Block for “Building” includes an amount of Rs. 1.32crore (Previous Year Rs.l.90crore) earmarked for disposal but in use.

(d) Details of Land & Buildings booked under CSR activities and not part of Property, Plant & Equipment (PPE) Schedule are as under:

7. Earmarked Balances:

(a) Liabilities on account of the following are kept as Earmarked Balances in short term deposit in banks:

(b) Gas Pool Money (Provisional) shown under “Other Long Term Liabilities” amounting to Rs. 652.45 crore (Previous Year: Rs. 654.83 crore) 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.

8. (a) The Company 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. 266.83 crore (Previous Year Rs. 368.37 Crore) is payable to and correspondingly receivable from Urea Plants, as on 3lst March 2019. After netting of the payable and receivable amounts, there is no impact in the financial statements.

(b) The Company is acting as pool operator in terms of the decision of the Government of India for capacity utilization of the notified gas based power plants. The Scheme, which was applicable till 3lst 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. 87.63 Crore) on this account, as on 3lst March 2019 which is payable to the above said power plants and / or to the Government of India.

9. Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 has become effective from lst April 2018 and accordingly the Company has adopted this Ind AS for the first time.

Ind AS 115 supersedes Ind AS ll Construction Contracts and Ind AS 18

Revenue and it applies, with limited exceptions, to all revenue arising from contracts with customers. Ind AS 115 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer

Ind AS ll5 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The Standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the Standard requires extensive disclosures.

The Company adopted Ind AS ll5 using the modified retrospective method of adoption with the date of initial application of 1 April 2018. The Company elected to apply the Standard to all contracts as at l April 2018.

The cumulative effect of initially applying Ind AS ll5 is recognized at the date of initial application as an adjustment to the opening balance of retained earnings. Therefore, the comparative information was not restated and continues to be reported under Ind AS ll and Ind AS l8.

The impact of applying Ind AS ll5 on the Company’s retained earnings as at 1 April 2018 is Nil.

Set out below, are the amounts by which each financial statement line item is affected as at and for the year ended 3l March 2019 as a result of the adoption of Ind AS 115. The adoption of Ind AS ll5 did not have a material impact on OCI or the Company’s operating, investing and financing cash flows. The first column shows amounts prepared under Ind AS ll5 and the second column shows what the amounts would have been, had Ind AS ll5 not been adopted.

The nature of the adjustments and the reasons for the significant changes in the statement of financial position as at 3lst March 2019 and the statement of profit or loss for the year ended 3lst March 2019 are described below:

Repurchase arrangements- Destination swap

GAIL has entered into a contract with customer to purchase and sell the same quantity of liquefied natural gas (LNG) at different locations at fixed prices. Since the transaction is in the nature of repurchase arrangements under Ind AS ll5, no separate purchase and sale is recorded for the consideration transferred/received.

Revenue from Contracts with Customers:

Disaggregation of revenue

Set out below is the disaggregation of the Company’s revenue from contracts with customers:

Management expects that 83 % of the transaction price allocated to unsatisfied contract as on 3lst March 2019 for Rs. 62l.28 cr will be recognized as revenue during the next FY2019-20. 2% of the transaction price allocated to unsatisfied contract as on 3lst March 2019 amounting to Rs. 16.23 cr will be recognized during 2020-21 to 2021-22. The balance l5% amounting to Rs. 113.49 cr will be realized from 2022-23 onwards.

10. The company has given corporate guarantee to lenders on behalf of its related parties in respect of their borrowings.

11. PNGRB on l9.02.20l4 notified insertion of Regulation 5A in the Amended Affiliate Code of Conduct Regulations that an entity engaged in both marketing and transportation of natural gas shall create a separate legal entity on or before 3l.03.20l7 so that the activity of transportation of natural gas is carried on by such separate legal entity and the right of first use shall, however, remain with the affiliate of such separate legal entity. The Company has challenged the said PNGRB Regulations before Hon’ble Delhi High Court by way of writ and the same is pending adjudication.

12. (a) Pay revision of Non-Executives of the Company is due w.e.f. lst Jan 20l7. Pending finalization of pay revision, a provision of Rs. 42.72crore (PY: Rs. 36.00 crore) has been made based on estimated basis. Accordingly, cumulative balance towards pay revision, pending settlement is Rs. 88.93 crore (PY: Rs. 46.21 crore)

(b) Pursuant to implementation of Pay Revision Directions, the Company has evaluated impact of increase in gratuity ceiling from Rs.l0 Lakh to Rs. 20 Lakh and has considered the incremental amount of Rs. 150.51 crore as recoverable from the respective fund as on March 3l, 2018 by reversing the impact taken in Statement of Profit & Loss Account in FY 2016-17. During the year, vide directive of DPE dated l0th July 2018 clarified that gratuity under DPE guidelines dated 3rd August 2017, is subject to affordability of the CPSE concerned effective for the period from 01.01.2017 till 28.03.2018, where pay has been revised w.e.f., 01.01.2017. Accordingly, the Board of Directors in its 394th Meeting held on 22nd October 2018, approved to fund the contribution along with interest and accordingly, a sum of Rs.l82.58 crore has been charged to Statement of Profit and Loss.

13. 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.ll5.35 crore (Previous Year: Rs. 56.l6 crore) towards contribution to Superannuation Benefit Fund Trust and National Pension System (NPS) and charged to statement of profit and loss.

II. Provident Fund

The Company has paid contribution of Rs. 63.89 crore (Previous Year Rs. 63.09 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 Rs. Nil), 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 at the end of the current financial year is ‘ Nil (Previous Year ‘Nil).

III. Other Benefit Plans

a) Gratuity:

As per Payment of Gratuity Act, Gratuity is payable for l5 days salary for every completed year of service subject to minimum service period of 5 years. Total Gratuity payable is limited to Rs. 20 lakh as per Central Government notification S.O. 1420 (E) dated 29.03.2018.

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. 281.69 crore (Previous Year Rs. 263.86) towards the PRMS in a separate bank account.

c) Earned Leave Benefit (EL)

Earned Leave is accrued 30 days per year. Earned Leave can be encashed while in service upto 75% of accumulated Earned Leave balance subject to maximum of 90 days at a time; provided a minimum balance of l5 days is left over in the respective employee’s account. Encashment on retirement or superannuation is limited to 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 from place of their last posting.

e) Half Pay Leave (HPL)

HPL is accrued 20 days per year. The encashment of unavailed HPL is allowed as per approved Company rule at the time of Superannuation.

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 as per approved policy of the Company.

i. The actuarial valuation takes into account the estimates of future salary increases, inflation, seniority, promotion and other relevant factors.

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

14. 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.l .06 crore (Previous Year: Rs. 8.57 crore).

15. 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 GAIL TEL, E&P, Power Generation and City Gas)

There are no geographical segments in the Company.

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

16. 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.

B) Jointly Controlled Assets

i) The Company has participating interest in blocks offered under New Exploration Licensing Policy (NELP) / Open Acreage Licensing Policy (OALP) in 9 Blocks (Previous Year: 8 Blocks) for which the Company has entered into Production Sharing Contract(s) (PSCs) with Government of India along with other partners for exploration and production of oil and gas. The Company is operator in Blocks CB-ONN-20l0/ll and CB-ONHP-20l7/l2 and it is Non-Operating Partner in other 7 blocks. The expenses, incomes, assets and liabilities are shared by the company based upon its participating interest in PSC(s) of respective blocks.

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 Operators of E&P blocks. The year-end oil reserves are estimates 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 in FY 2018-19 is 91,075 barrels (PY l,15,057 barrels).

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

c) The Company’s share of balance cost recovery is Rs. 499.20 crore (Previous Year Rs. 738.l2 crore) to be recovered from future revenues from E&P blocks having proved reserves as per Production sharing contracts.

17. Advance against equity pending allotment with South East Asia Gas Pipeline (SEAGP)as on 3lst March 2019 is Rs.95.78 crore (Previous Year Rs.95.78 crore) equivalent to USD 20,288,217. The Board of Directors and shareholders of SEAGP decided that refund, if any, will be determined based on their future cash flows and shall be subject to the approval of Board and Shareholders of SEAGP. During the year, SEAGP has not approved any further refund.

18. 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 31.03.2019:

i) During the year the Company has made net impairment of Rs. 0.35 crore(Previous Year Rs. 0.27 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 impairment provision of Rs. 19.02 crore (Previous Year: Rs. Nil) in respect of unused assets of LPG plant at Usar and the same has been recognized as impairment loss in the statement of profit and loss.

iii) During the year based on Project Evaluation of E&P Blocks, the following impairment provision has been made:

19. In compliance of Ind AS 109 on Impairment of Financial Assets, the Company has carried out an assessment of impairment in respect of its following assets as on 3l.03.2019:

i) During the year, based on increase in fair value of Company’s investment in Fayum Gas Company S.A.E., Egypt, the Company has made a reversal of impairment of Rs. 3.03 crore (Previous Year: Rs.l.55 crore). The Carrying Value of Company’s investment in Fayum Gas Company S.A.E., Egypt after reversal of aforesaid impairment provision as on 3l.03.2019 stands at Rs. 7.64 crore. (Previous year: Rs. 4.62 crore).

ii) During the year, based on increase in fair value of Company’s investment in Konkan LNG Private Limited (KLPL), the Company has made a reversal of impairment of Rs. 2.l8 crore out of the impairment provision of Rs. 139.75 crore provided during the last financial year on account of accumulated losses and eroded net worth.

During the year Company has infused further capital of Rs. 143.0l crore ir Equity and Rs. 252 crore in Preference Share Capital of KLPL for construction of Breakwater and other business purpose. In order to assess impairment on further capital infusion as aforesaid, the Company has carried out fresh impairment study, which projects future positive cash flows after commencement of Operation of Breakwater and accordingly, the carrying value of Company’s investment in KLPL as on 31 .03.2019 stands at Rs. 397.20 crore (Previous year : Rs.NIL), after reversal of aforesaid impairment provision.

iii) During the year, based on fair value of Company’s investment in RGPPL, the Company has provided for loss on impairment of Rs. 157.92 crore (Against reversal of impairment provision of Rs. 26.l4 crore in Previous Year). The Carrying Value of Company’s investment in RGPPL after making the aforesaid impairment provision as on 3l.03.2019 stands at Rs. 59.53 crore (Previous year: Rs. 2l7.45 crore).

iv) During the year, based on fair value of Company’s investment in GAIL Global USA Inc. (GGUI), the Company has provided for loss on impairment of Rs. 173.62 crore. The Carrying Value of Company’s investment in GGUI after making the aforesaid impairment provision as on 3l.03.2019 stands at Rs. 5.55 crore (Previous year: Rs. 179.l7 crore).

20. Details of Loans, Investments, Guarantee and Security given by the Company covered u/s l86 (4) of the Companies Act 20l3.

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:

21. Interest free advance has been given to Petronet LNG Ltd.(PLL) for booking of regasification capacity to the tune of Rs. 561.80 crore (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. 38.20 crore during the year(Previous Year: Rs. 38.20 crore). Balance amount of Rs. 475.84 crore (Previous year Rs. 514.04 crore) has been accounted as advance in Note No l2 and 12A.

22. 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 of receipt of valid invoice.

23. Cabinet Committee on Economic Affairs (CCEA), Government of India in its meeting held on 21st September 20l6 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). The Company has received Rs. 2056.60 crore (Previous year Rs. 850 crore) towards Capital Grant on above ground till 3l.03.2019. Further, the Company has shown Rs. 54l.60 crore as receivable towards Capital Grant as on 3l.03.2019 for the amount to be received based on the letter received from the Ministry of Petroleum and Natural Gas. During the year, the Company has amortised the capital grant amounting Rs. 8.00 crore (Previous year Rs. 0.24 crore) based on the life of the asset capitalized.

24. Financial Risk management

The company is exposed to a number of 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.

a. 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.

(i) 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 derivative 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 outstanding as on 3l.03.2019, after considering the impact of swap contracts.

(ii) 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.

(iii) 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 and overseas on back to back basis. However, the company is exposed to the price risk on the volume which is not contracted on back to back basis. As most of the LNG purchase and sales contracts are based on natural gas or crude based index, such price risk arises out of the volatility in these indices. In order to mitigate this index linked price risk, Company has been taking appropriate derivative products in line with the Board approved ‘ Natural Gas Price Risk Management Policy’

(iv) 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.188.77 Crore (Previous Year Rs.172.90Crore).

At the reporting date, the exposure to listed equity investments at fair value was Rs. 4924.61 Crore (Previous Year Rs. 5488.92 Crore). A variation of ( /-) 10% in share price of equity investments listed on the stock exchange could have an impact of approximately ( /-) Rs. 492 Crore (Previous Year Rs. 549 Crore) on the OCI and equity investments of the Company. These changes would not have an effect on profit or loss.

b. 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.

c. Credit risk

Credit risk is the risk that a customer or counterparty 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.

d. 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 year.

25. The Company is evaluating applicability of provisions of Ind AS 109 w.r.t certain contracts of the Company with vendors awarded through ICB (International competitive bidding) which are denominated in third currency (i.e. a currency which not the functional currency of any of the parties to the contract). In this regard, in line with other PSU, the Company has sought opinion from the Expert Advisory Committee (EAC) constituted by The Institute of Chartered Accountants of India on the above matter vide letter no GAI^ND/F&A/CO/EAC Opinion/2018-19 dated 2lstMay 2018. On receipt of opinion / clarification from EAC, the Company will take necessary action in the matter.

26. 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 l: 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: technique which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

1. The carrying cost of Interest-bearing loans & borrowings is approximately equal to their Fair Market Value

2. The carrying amount of trade receivables, cash and cash equivalents, other bank balance, others receivables, trade payables, interest accrued and due, other payables and other financial liabilities are considered to be same as their fair value due to their short term nature.

3. With respect to loans, the fair value were calculated based on cash flows discounted using the current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.

1. The carrying cost of Interest-bearing loans & borrowings is approximately equal to their Fair Market Value

2. The carrying amount of trade receivables, cash and cash equivalents, other bank balance, others receivables, trade payables, interest accrued and due, other payables and other financial liabilities are considered to be same as their fair value due to their short term nature.

3. With respect to loans, the fair value were calculated based on cash flows discounted using the current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.

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.

27. Hedging activities and derivatives

Derivatives not designated as hedging instruments

The Company uses forward currency contracts, interest rate swaps, cross currency interest rate swaps, commodity swap contracts to hedge its foreign currency risks, interest rate risks and commodity price risks. Derivative contracts not designated by management as hedging instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value on each reporting date. Such contracts are entered into for periods consistent with exposure of the underlying transactions.

Derivatives designated as hedging instruments:

Cash flow hedges

The Company enters into hedging instruments in accordance with policies as approved by the Board of Directors with written principles which is consistent with the risk management strategy of the Company. Company has decided to apply hedge accounting for certain derivative contracts that meets the qualifying criteria of hedging relationship entered into post October 0l, 20l7.

Foreign currency risk

Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of firm commitment of capital purchases in US dollar and existing borrowings e.g. US dollars/ Japanese Yen etc.

Commodity price risk

The Company purchases and sells natural gas on an ongoing basis as its operating activities. The significant volatility in natural gas prices over the years has led to Company’s decision to enter into hedging instruments through swaps transactions including basis swaps. These contracts are designated as hedging instruments in cash flow hedges of forecasted sales and purchases of natural gas.

28. a. Confirmation of balances has been received 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

29. Statement containing salient features of the financial statements of Subsidiaries/Joint Ventures of the Company pursuant to Section 129 (3) of Companies Act, 2013 in form AOC I is attached in Annexure-D.

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


Mar 31, 2018

Notes to Financial Statements for the year ended 31st March 2018

1. Significant accounting judgments, estimates and assumptions

The preparation of the Company''s standalone financial statements requires management to make judgments, 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 adjustment to the carrying amount of assets or liabilities affected in future periods.

In particular, the Company has identified the following areas where significant judgments, 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. Judgments

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.

3. 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 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 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 discounted cash flow/net asset value method, valuation report of external agencies, Investee Company''s past history etc.

4. Contingent Liabilities and Commitments:

I. Contingent Liabilities:

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

(i) Legal cases for claim of Rs, 1,805.11 crore (Previous Year: Rs,1,622.61 crore) by 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 demands of H38.04 crore (net of provision of Rs,254.33 crore) (Previous Year Rs, 1128.26 crore net of provision of Rs,209.33 crore) against which the Company has filed appeals before appellate authorities & courts. Further, the Income Tax Department has also filed appeals before ITAT against the relief granted by CIT (Appeals) to the Company. The aggregate amount involved in appeals filed by department is Rs,674.89 crore (including interest) (Previous Year: Rs, 628.09 crore).

(v) Some of the customers have submitted counter claims amounting to Rs, 15,028crore against Ship or Pay charges / consequential losses for not supplying gas. As per legal opinion such claims are not arbitrable / barred by limitation.

(b) Corporate Guarantees

The Company has issued Corporate Guarantees for Rs,2,207 crore (Previous Year: Rs,2,203 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 1,254 crore (Previous Year: 1,306 crore).

II. Capital Commitments:

(a) Estimated amount of contracts (Net of advances) remaining to be executed on capital account as at 31st March 2018 is 1,472.82 crore (Previous Year: Rs,3,128.92 crore).

(b) Other Commitments:

(i) The Company has commitment of Rs,771.56crore (Previous Year: Rs,740.15crore) towards further investment and disbursement of loan in the subsidiaries, JointVentures, 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 51 (B) (v).

31 Sales Tax Department has raised a demand of Rs,3,449.18 crore (Previous Year: Rs,3,449.18 crore) and interest thereon 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 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 HonRs,ble High Court of Gujarat. Final hearing in the matter has concluded in the month of November 2016 and the order of HonRs,ble high court is awaited. In the opinion of the management, there is a remote possibility of crystalizing this liability.

5.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.

6. 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 1268.77 crore (Previous Year I725.43 crore) as at the end of the year. Income in respect of the same shall be recognized on final disposal of the matter.

7 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,2990.39 crore on the basis of information provided to Company by ICC.

8 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.In view of the management, the differential amount will not be material.

(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 are 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), till date, PNGRB has issued 06(Six) final tariff orders applicable from 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, impact on profits, if any, is being recognized consistently as and when the pipeline tariff is revised by orders of PNGRB. 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 2015-16, 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 which has been admitted by the Hon''ble Court for review.

9 Land & Building

(a) Freehold and Leasehold Land amounting to Rs,26.67 crore and Rs,15.84 crore (Previous Year: Rs,26.14 crore and Rs,40.45 crore) respectively are capitalized on provisional basis.

(b) Title deeds for freehold (6.85 hectares) and leasehold (198.98 hectares) land amounting to Rs,23.35 crore and Rs,8.84 crore (Previous Year: Rs,19.43 crore and Rs,36.75 crore) respectively are pending execution for transfer in the name of the Company. This includes Rs,4.59crore (Previous year Rs,9.39 crore ) amount of Lease hold Land shown under ''Prepayments'' in Note no 12 (Other Non Current Assets - Non financial)

(c) Net Block for "Building" includes an amount of Rs,1.90 crore (Previous Year Rs,2.04 crore) earmarked for disposal but in use.

10 Earmarked Balances

(a) The balance retention from Panna Mukta Tapti (PMT) JV consortium amounting to Rs,22.80 crore (Previous Year: Rs,21.80 crore) (shown in Note No 11A) is kept as Earmarked Balance in short term deposit in banks. It includes interest accrued but not due amounting to Rs,0.20 crore (Previous Year: Rs,0.15 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,299.93 crore (Previous Year: Rs,268.56 crore) (shown in Note No. 11A) 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 ShortTerm Deposits in banks (shown in Note No 11A). It includes interest accrued but not due amounting to Rs,7.79 crore (Previous Year: Rs,4.55 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,654.83 crore (Previous Year: Rs,655.48 crore) (shown in Note No 16) 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, 112.30 crore (Previous Year: Rs,99.74 crore) (shown in Note No 11A) 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.11A). It includes interest accrued but not due amounting to Rs,3.21 crore (Previous Year: Rs,3.82 crore) on short term deposits. This interest does not belong to the Company and not accounted for as income.

11 The Company has an equity investment amounting to Rs, 974.31 crore, in a joint venture company, Ratnagiri Gas and Power Pvt. Ltd. (RGPPL), which is equivalent to -25.50% of the paid-up equity capital of RGPPL.

During the year the Demerger Scheme of RGPPL was approved by NCLAT vide its order dated 28.02.2018. Pursuant to the scheme, the assets and liabilities of LNG business stands transferred to the demerged entity Konkan LNG Pvt. Ltd. (KLPL) and paid up share capital of RGPPL was reduced with a corresponding issue of shares of KLPL to shareholders of RGPPL. Accordingly, a sum of Rs, 139.75 crore was transferred to investment in KLPL out of total investment of Rs, 974.31 crore in RGPPL by the Company

In order to comply with the provision of Ind AS 109 "Impairment of Assets" as on 31.03.2018 for aforesaid investments in RGPPL and KLPL, the company has undertaken impairment study for both the investments. Based upon the study, a provision of Rs, 139.75 crore is made during the year towards impairment loss in carrying value of investment in KLPL. As regards investment in RGPPL, a sum of I65.89 crore has been reversed from the impairment made in the previous financial year.

12 (a) 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,368.37 crore (Previous Year ?78.34 crore) is payable to and correspondingly receivable from Urea Plants, as on 3^^ March 2018. After netting of the payable and receivable amounts, there is no impact in the financial statements.

(b) GAIL is acting as pool operator in terms of the decision of the Government of India for capacity utilization 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,87.63 crore) on this account, as on 31st March 2018 which is payable to the above said power plants and / or to the Government of India.

13 During the year the Company has entered into settlement in respect of its disputed claim of ship or pay charges amounting to Rs, 255.36 crore with Indian Oil Corporation Ltd. According to the settlement the Company has received Rs, 175 crore against aforesaid amount and has issued credit notes for balance amount of Rs, 80.36 crore and adjusted the same in income for the year.

14 Pending agreement on terms of settlement and execution of Indenture agreement in respect of certain dues with one of the customers, an amount of Rs, 132.98 crore received in this regard has been kept as advance received from customers.

15 As per the provision of IND AS 109 (Financial instruments), the Company has adopted Hedge Accounting for derivative contracts entered on or after 1st October 2017 due to substantial increase in commodity hedging transactions. Derivative contracts prior to 1st October 2017 will continue to be accounted as Derivative. Pursuant to changes as referred above, Mark to Market losses of I50.90 crore net of deferred tax of Rs, 81.05 crore pertaining to derivative contracts entered from 1st Oct 2017 onwards are recognized in the Other Comprehensive Income as on 31st March 2018.

16 PNGRB on 19.02.2014 notified insertion of Regulation 5A in the Amended Affiliate Code of Conduct Regulations that an entity engaged in both marketing and transportation of natural gas shall create a separate legal entity on or before 31.03.2017 so that the activity of transportation of natural gas is carried on by such separate legal entity and the right of first use shall, however, remain with the affiliate of such separate legal entity. The Company has challenged the said PNGRB Regulations before Hon''ble Delhi High Court by way of writ and the same is pending adjudication.

17 The Presidential directives for the implementation of the revised pay scales and allowances (w.e.f. 01/01/2017 based on DPE Office Memorandum No. W-02 / 0028/ 2017 - DPE (WC) - GL - XIII / 17 dated 3rd August, 2017) were issued on 23rd November, 2017. Pursuant to the aforesaid directives, revised pay scales and allowances for the Executives were implemented during the year. Further, in accordance with the guidelines for pay revision as aforesaid, the impact of increase in Gratuity ceiling from 10 lakhs to Rs,20 lakhs amounting to Rs, 150.51 crore provided in the Statement of Profit & Loss during FY 2016-17, was reversed during the year and is shown as recoverable from Superannuation Benefit Fund along with accrued interest thereon.

Pay revision of Non-Executives of the Company is due w.e.f 1st Jan 2017. Pending finalization of pay revision, a provision of Rs, 36 crore has been made based on estimated basis.

18 During the year the Company has been entrusted with developing 6 CGD projects in cities of Varanasi, Bhubaneswar, Cuttack, Jamshedpur, Ranchi and Patna. Authorization letter has already been issued by PNGRB to the Company for these 6 CGDs and these CGDs are to be developed as per Minimum Work Program (MWP) set by PNGRB following a defined timeline.

Cvlv/Iv*

19. 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,56.16 crore (Previous Year: Rs,55.83 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,63.09 crore (Previous Year Rs,54 98 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 '' 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. Payment is limited to Rs,20 lakh(increased from Rs, 10 lakh as per Central Government notification S.O. 1420 (E) dated 29.03.2018).

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,263.86 crore (Previous Year Rs, 248.99) 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 at the time of Superannuation.

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.

Note:

i. The actuarial valuation takes into account the estimates of future salary increases, inflation, seniority, promotion and other relevant factors.

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

48. 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,8.57 crore (Previous Year: Rs,49.16 crore).

20. 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 GAIL TEL, E&P, Power Generation and City Gas)

There are no geographical segments in the Company.

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

21. 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.

22. Disclosure under Ind AS 112 on "Disclosure of Interests in Other Entities":

(2) To the extent of information available with the Company

B) Jointly Controlled Assets

I The Company has participating interest in blocks offered under New Exploration Licensing Policy (NELP), in 8 Blocks (Previous Year: 10 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 non-operator, 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.

""Exit from the block is pending for approval from the Directorate General of Hydrocarbons (DGH)

v) Share of Minimum work program committed under various production sharing contracts in respect of E&P joint ventures is Rs,37.72 crore (Previous Year Rs,174.64 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 2018:

Notes:

i. The Company is Non-operating partner in E&P blocks except for one block 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 2017-18 is 1,15,057 barrels (Previous year 1,28,836 barrels).

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

c) The Company''s share of balance cost recovery is Rs,738.12 crore (Previous Year Rs,970.92 crore) to be recovered from future revenues from E&P blocks having proved reserves as per Production sharing contracts.

23India (TAPI) Gas Pipeline. GAIL currently holds 265,000 equity shares of USD 10 value per share and 25 equity shares of USD Nil value inTPCL as shown in Note no.5 (a) 10.

As at 31s March 2018, the Company has made a total payment of Rs, 26.87 crore, equivalent to USD 4.15 million (Previous Year Rs,26.87 crore, equivalent to USD 4.15 million) towards Pre Project Expenditure of the aforesaid project, out of which shares of Rs, 17.70 crore equivalent to USD 2.65 million as aforesaid have been allotted during the year and the balance of Rs,9.17 crore equivalent to USD 1.5 million has been shown as Advance against Equity in Note no.8.

24. Advance against equity pending allotment paid to South East Asia Gas Pipeline (SEAGP) in earlier years was I05.70 crore equivalent to USD 22,528,552. The Board of Directors and Shareholders of SEAGP in meeting held on 11.4.2018, approved refund of partial amount of such advance against equity. Accordingly, the amount recoverable by the Company of I4.48 crore equivalent to USD 2,240,334.80 is shown as current financial assets as at the end of the year and balance amount of Rs,95.78 crore equivalent to USD 20,282,217.20, has been shown as advance against equity pending allotment in Note no.8. Further, the Board of Directors and Shareholders of SEAGP has decided that subsequent refund will be determined based on their future cash flows and shall be subject to approval of Board and Shareholders of SEAGP

25. In settlement for recovery of bridge loan of 120 crore (Principle Rs,75 crore along with accrued interest of Rs,45 crore) due from Joint Venture Company, Bhagya nagar Gas Limited (BGL), the Company has received 2,11,50,000 equity shares of 10 each at a premium of Rs,40 per share amounting to I05.75 crore of BGL during the year and balance amount of Rs, 14.24 crore was refunded by BGL.

26. 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 31.03.2018:

i) During the year the Company has made a reversal of impairment of Rs,0.37 crore against an earlier impairment provision of Rs,0.40 crore provided during the last financial year in respect of its GAIL Tel assets and the same has been recognized as impairment gain in the statement of profit and loss.

ii) During the year the Company has made net impairment of Rs,0.64 crore(Previous Year Rs,6.82 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 nonavailability 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.

27. In compliance of Ind AS 109 on Impairment of Assets, the Company has carried out an assessment of impairment in respect of its following assets as on 31.03.2018:

i) During the year the Company has made a reversal of impairment of Rs,1.55 crore against an earlier impairment provision of Rs,5.04 crore provided during the last financial year. The CarryingValue of Company''s investment in Fayum Gas Company S.A.E., Egypt after reversal of aforesaid impairment provisionason31.03.2018stands atRs,4.62 crore.

ii) During the year, based on increase in fair value of Company''s investment in RGPPL over and above its carrying value after adjustment on account of Demerger, the Company has made a reversal of impairment of Rs,165.89 crore against an earlier impairment provision of ^783 crore provided during the last financial year. The Carrying Value of Company''s investment in RGPPL after reversal of aforesaid impairment provision as on 31.03.2018 stands at Rs,217.45 crore (Previous year: I91.31 crore)as mentioned at Note no 5 (b) 1.

iii) During the year, based on fair value of Company''s investment in KLPL, the Company has provided for loss on impairment of I39.75 crore. The Carrying Value of Company''s investment in KLPL after aforesaid impairment provision as on 31.03.2018 stands at '' NIL as mentioned at Note no. 5(b) 2. "excludes amount which is naturally hedged against foreign currency inflows.

28. 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.

29. Interest free advance has been given to Petronet LNG Ltd. (PLL) for booking of degasification capacity to the tune of '' 561.80 crore up to 31.03.2018 (Previous year '' 561.80 crore). The said advance is to be adjusted within 15 years against degasification invoices of PLL. Out of above advance, PLL has adjusted Rs, 38.20 crore during the year (Previous year Rs,9.55 crore). Balance amount of Rs,514.04 crore (Previous year Rs,552.25 crore) has been carried over as advance in Note No 12 and 12A.

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 of receipt of valid invoice. The amount remaining unpaid to all suppliers as at the end of the financial year is Rs,68.11 crore (Previous Year Rs,33.28 crore). No interest for delay was paid or payable under the Act.

31. 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). The Company has received Rs, 850 crore (Previous year Rs,450 crore) towards Capital Grant on above ground till 31.03.2018. During the year, the Company has amortised the capital grant amounting Rs,0.24 crore (Previous year nil) based on the life of the asset capitalized.

32. 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.

33. 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.

With all other variables held constant, the following table demonstrates the sensitivity to a reasonably possible change in interest rates on Corporate Linked Deposit Scheme (CLTD) outstanding as on 31.03.2018 which are linked with MIBOR:-

a. 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.

i. 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 outstanding as on 31.03.2018, 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

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 and overseas on back to back basis. However, the company is exposed to the price risk on the volume which is not contracted on back to back basis. As most of the LNG purchase and sales contracts are based on natural gas or crude based index, such price risk arises out of the volatility in these indices. In order to mitigate this index linked price risk, Company has been taking appropriate derivative products in line with the Board approved '' Natural Gas Price Risk Management Policy''

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. 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.

At the reporting date, the exposure to unlisted equity investments at fair value was Rs,172.90 Crore (Previous Year 188.07Crore).

At the reporting date, the exposure to listed equity investments at fair value was Rs,5 488.92 Crore (Previous Year Rs,5 712.87 Crore). A variation of ( /-) 10% in share price of equity investments listed on the stock exchange could have an impact of approximately ( /-) Rs,549 Crore (Previous Year Rs,571 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.

# Borrowings include impact of derivative contracts.

## includes interest accrued but not due as on 31.03.2017 as well as interest to be paid till maturity.

34. Credit risk

Credit risk is the risk that a customer or counterparty 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.

35. 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.

36. The Company is evaluating applicability of provisions of Ind AS 109 w.r.t certain contracts of the Company with vendors awarded through ICB (International competitive bidding) which are denominated in third currency (i.e. a currency which not the functional currency of any of the parties to the contract). In this regard, in line with other PSU, the Company has sought opinion from the Expert Advisory Committee (EAC) constituted by The Institute of Chartered Accountants of India on the above matter vide letter no GAIL/ND/F&A/CO/EAC Opinion/201819 dated 21st May 2018. On receipt of opinion / clarification from EAC, the Company will take necessary action in the matter.

Further the Company has sought opinion of the EAC of ICAI on the following issues during the financial 2017-18 for which opinion is awaited:

a) Disclosure in Notes to Financial Statements / inclusion under contingent liabilities of Corporate Guarantees issued by parent company to a bank for issuance of Performance Bank Guarantee on behalf of its wholly owned subsidiary company.

b) Disclosure of impairment loss on long term investment as Exceptional Items in the statement of profit and loss.

Pending opinion, the Company has considered same accounting treatment in respect of these matters in consistent with the previous financial year.

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

As at 31 March 2018, the Company held the following financial instruments carried at fair value on the statement of financial position:

Note:

1. The carrying cost of Interest-bearing loans & borrowings is approximately equal to their Fair Market Value

2. The carrying amount of trade receivables, cash and cash equivalents, other bank balance, others receivables, trade payables, interest accrued and due, other payables and other financial liabilities are considered to be same as their fair value due to their short term nature.

3. With respect to loans, the fair value were calculated based on cash flows discounted using the current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.

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

Note:

1. The carrying cost of Interest-bearing loans & borrowings is approximately equal to their Fair Market Value

2. The carrying amount of trade receivables, cash and cash equivalents, other bank balance, others receivables, trade payables, interest accrued and due, other payables and other financial liabilities are considered to be same as their fair value due to their short term nature.

3. With respect to loans, the fair value were calculated based on cash flows discounted using the current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.

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.

38. Hedging activities and derivatives

Derivatives not designated as hedging instruments

The Company uses forward currency contracts, interest rate swaps, cross currency interest rate swaps, commodity swap contracts to hedge its foreign currency risks, interest rate risks and commodity price risks. Derivative contracts not designated by management as hedging instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value on each reporting date. Such contracts are entered into for periods consistent with exposure of the underlying transactions.

Derivatives designated as hedging instruments:

Cash flow hedges

The Company enters into hedging instruments in accordance with policies as approved by the Board of Directors with written principles which is consistent with the risk management strategy of the Company. Company has decided to apply hedge accounting for certain derivative contracts that meets the qualifying criteria of hedging relationship entered into post October 01, 2017.

Foreign currency risk

Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of firm commitment of capital purchases in US dollar and existing borrowings e.g. US dollars/ Japanese Yen etc.

Commodity price risk

The Company purchases and sells natural gas on an ongoing basis as its operating activities. The significant volatility in natural gas prices over the years has led to Company''s decision to enter into hedging instruments through swaps transactions including basis swaps. These contracts are designated as hedging instruments in cash flow hedges of forecasted sales and purchases of natural gas.

The table below shows the position of hedging instruments and hedged items (underlying) as of the balance sheet date.

39. a. Confirmation of balances has been received 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.

69. Value of Raw Materials, Stores / spares and Components consumed during the year.

40 Other Quantitative details are given in Annexure-E.

41. Statement containing salient features of the financial statements of Subsidiaries/Joint Ventures of the Company pursuant to Section 129 (3) of Companies Act, 2013 in form AOC I is attached in Annexure-F.

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

73. The comparative financial information of the Company for the year ended 31st March 2017 included in the Standalone Ind AS financial statements, are based on the previously issued statutory financial statements audited by G.S. Mathur & Co. and O.P. Bagla & Co. vide their unmodified audit report (Revised) dated July 20, 2017 whose audit report has been relied upon by the newly appointed auditors.

I) Relationship

A) Joint Venture Companies/Associates/ Employees trust Details of Subsidiary Companies

1) GAIL Global (Singapore) Pte. Ltd.*

2) GAIL Gas Ltd.*

3) GAIL Global (USA) Inc. *

4) Tripura Natural Gas Corporation Limited*

5) GAIL Global USA LNG LLC*

Details of Joint Venture Companies

6) Ratnagiri Gas & Power Pvt. Ltd.*

7) Konkan LNG Private Limited*

8) Central UP Gas Limited

9) Green Gas Limited

10) Maharashtra Natural Gas Limited

11) Aavantika Gas Ltd.

12) Bhagyanagar Gas Limited

13) Vadodara Gas Limited*

14) Talcher Fertilizers Limited*

15) Tapi Pipeline Company Ltd

16) GAIL China Gas Global Energy Holding Ltd.

17) Andhra Pradesh Gas Distribution Corporation Limited

18) Kerala GAIL GAS Limited

19) Rajasthan State Gas Limited

20) Haridwar Gas Private Limited

21) GOA Natural Gas Private Limited Details of Associate Companies

22) China Gas Holdings Ltd.

23) Petronet LNG Limited

24) Mahanagar Gas Limited

25) Indraprastha Gas Limited

26) Brahmaputra Cracker and Polymer Limited*

27) Fayum Gas Company Limited

28) ONGC Petro Additions Ltd (OPAL)*

Details of Trusts

29) GAIL Employees Superannuation Benefit Fund

30) GAIL (India) Ltd. Employees Provident Fund Trust

31) GAIL (India) Ltd. Employees Death-cum- Superannuation Gratuity Scheme

* Transactions with these companies excluded as Government-related entity defined in IndAS 24

B) Key Management Personnel

i) Whole time Directors:

1) Shri B C Tripathi , Chairman and Managing Director

2) Dr. Ashutosh Karnatak, Director (Projects)

3) Shri Subir Purkayastha, Director (Finance) and CFO

4) Shri P K Gupta, Director (HR)

5) Shri Gajendra Singh, Director (Marketing) w.ef. (05.04.2017)

ii) Independent Directors:

1) Shri S.K. Srivastava

2) Shri Anupam Kulshreshtha

3) Shri Sanjay Tandon

4) Shri Dinkar P Srivastava

5) Dr. Anup K Pujari

6) Shri Jayanto Narayan Choudhury

7) Dr. Rahul Mukherjee

iii) Company Secretary

1) Shri Anil Kumar Jha

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)

2) A-1, Myanmar (Non-operator with participating interest: 8.5%)

3) A-3, Myanmar (Non-operator with participating interest: 8.5%)

4) SHWE Offshore Pipeline (Non-operator with participating interest: 8.5%)

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

6) RM-CBM-2005/III (Non-operator with participating interest: 35%)

(GAIL has relinquished from the Block)

7) TR-CBM-2005/III (Non-operator with participating interest: 35%)

(GAIL has relinquished from the Block)

8) MR-CBM-2005/III (Non-operator with participating interest: 45%)

(GAIL has relinquished from the Block)

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

(GAIL has relinquished from the Block)

10) BLOCK-56, Oman (Non-operator with participating interest: 25%)

(GAIL has relinquished from the Block)


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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