1 Company overview
Indraprastha Gas Limited (the ‘Company’) was incorporated on 23 December 1998 under the Companies Act, 1956. The Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The registered office is located at IGL Bhawan, Plot No.4, Community Centre, Sector 9, R.K. Puram, New Delhi -110022.
2 Application of new and revised Indian Accounting Standard (Ind AS)
All the Ind AS issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) till the standalone financial statements are authorized have been considered in preparing these standalone financial statements.
2.1 Standards issued but not yet effective
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ‘Statement of cash flows’ and Ind AS 102, ‘Share-based payments.’ The amendments are applicable to the Company from 1 April 2017.
Amendment to Ind AS 7: The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement. The Company is evaluating the requirements of the amendment and the effect on the standalone financial statements is being evaluated.
Amendment to Ind AS 102: The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.
The Company has not issued any share options plans, hence this amendment will have no effect on the Company’s standalone financial statements.
3.1 Gross block of leasehold land includes land amounting to Rs. 16.98 crores (previous year: Rs. 16.98 crores) obtained on lease from local authorities under licensing arrangement and pending execution of the related lease agreements.
3.2 Buildings include buildings which have been constructed on land acquired on lease from various Government Authorities, (refer note 37)
4.1 Terms and rights attached to equity shares:
The Company has one class of equity shares having a par value of Rs. 10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
4.2 Reconciliation of the number of equity shares outstanding at the beginning and at the end of the year:
4.3 Details of shares held by each shareholder holding more than 5% shares:
4.4 The Company has not issued any shares pursuant to contract without payment being received in cash, or allotted as fully paid up by way of bonus shares or bought back any shares during the period of five years immediately preceding the date of balance sheet.
4.5 During the current year the Company paid dividend of Rs. 6.00 per share per equity share for financial year 2015-16 amounting to Rs. 84 crores (excluding dividend distribution tax of Rs. 17.10 crores) [in financial year 2015-16 Rs. 6.00 per equity share for financial year 2014-15 amounting to Rs. 84 crores (excluding dividend distribution tax of Rs. 17.10 crores )].
Further the Board of Directors at its meeting held on 16 November, 2016 has approved an interim dividend of Rs. 3.50 per equity share amounting to Rs. 49 crores (excluding dividend distribution tax of Rs. 9.98 crores), which since has been paid till 31 March 2017.
5.1 Term loans from banks referred above were secured by charge on all the plant and machinery of the Company.
5.2 Loan amounting to Rs. 145.31 crores as at 1 April 2015 was payable in 32 quarterly installments (8 installments of Rs. 1.56 crores each, 11 installments of Rs. 4.69 crores each and 13 installments of Rs. 6.25 crores each). This loan carried an interest rate of 10.25% p.a.
6 Contingent liabilities
(a) Demand raised by Excise authorities
The Company had received a show cause notice dated 5 June 2012 from the Directorate General of Central Excise Intelligence for not paying excise duty on the facility discount paid to Delhi Transport Corporation from December 2008 to August 2010 and raised a demand of Rs. 2.42 crores (previous year Rs. 2.42 crores) which the Company duly deposited and, however, filed an appeal on 20 August 2013 with the Commissioner of Central Excise. The demand was confirmed by the Commissioner of Excise in its order dated 30 September 2013 and a penalty of Rs. 2.42 crores (excluding interest) was imposed on the Company. The Company filed an appeal on 10 January 2014 against the demand including penalty with Central Excise and Service Tax Appellate Tribunal and the stay has been granted by the tribunal against the demand. The case is pending with Central Excise and Service Tax Appellate Tribunal.
(b) Demand raised by income-tax authorities
In respect of assessment year 2013-14 and 2014-15, the assessing officer had disallowed additional depreciation claimed by the Company on assets pertaining to the CNG segment. The department has raised a demand of Rs. 2.51 crores and Rs. 2.01 crores for the assessment year 2013-14 and 2014-15 respectively including interest. Out of the said demand, Rs. 4.01 crores has been adjusted against the refund for the assessment year 2014-15 and demand order for the balance amount of Rs. 0.51 crores has been issued by the Department. The Company has filed an appeal with Commissioner of Income Tax (Appeals) against the decision of the Income - tax Department. The Company is of the view that such disallowance is not tenable and accordingly no provision has been made for the said demand. There was no such demand during previous year.
(c) Bank guarantees
The Company’s total liability towards un-expired bank guarantees is Rs. 0.25 crores (Previous year Rs. 0.25 crores).
(d) Demand raised by Delhi Development Authority (DDA)
Delhi Development Authority (DDA) has raised a total demand of Rs. 155.64 crores during 2013-14 on account of increase in license fees in respect of sites taken by the Company on lease from DDA for setting up compressed natural gas (CNG) stations in Delhi. The increase in license fees was related to the period 1 April 2007 to 31 March 2014. The Company has filed a writ petition on 11 October 2013 before the Hon’ble Delhi High Court against the demand raised by DDA as the revised license fees has been increased manifold and made applicable retrospectively from financial year 2007-08. The same was also reported in the previous year as a contingent liability. Further, DDA vide communication dated 29 August 2016 has revised the total demand to Rs. 330.73 crores for the period upto 31 March 2016.
The matter is pending in the Hon’ble High Court of Delhi and the Company is of the view that such demand is not tenable and accordingly no provision has been made for this demand raised by DDA till 31 March 2016 in the books of accounts.
(e) Apart from those disclosed above, the Company has certain litigations involving customers and based on legal advice of in house legal team, the management believes that no material liability will devolve on the Company in respect of these litigations.
7 (a) As per the terms of the gas supply agreement between the Company and GAIL (India) Limited ‘GAIL’, the Company had a minimum take or pay commitment to purchase natural gas quantities for the 12 months period ended on 31 December 2014. The Company had not purchased the minimum committed natural gas quantities. The Company had the right to purchase the short drawn quantities of natural gas in future periods. During the financial year 2015-16, the Company entered into a one-time settlement with GAIL under which the Company paid an amount of Rs. 14.03 crores to GAIL , as net settlement of its purchase obligation and surrender of its right to purchase the short drawn quantities of natural gas in future periods.
(b) The Company is in the process of re-negotiation of trade margin and facility charges payable to the Oil Marketing Companies (OMC) with effect from 1 April 2015 for sale of CNG from their respective outlets. Based on the current negotiations with the OMC, the management has estimated an amount of Rs. 31.51 crores pertaining to the said liability and has recorded the same in the books of accounts during the year.
(c) Bank guarantees
(i) During the year, the Company has been granted authorization for laying, building, operating and expanding CGD network in the geographical area of Rewari (Haryana) under the Petroleum and Natural Gas Regulatory Board (Authorizing entities to lay, build, operate or expand city or local Natural Gas Distribution Networks) Regulation 2008. The Company has submitted a performance bank guarantee of Rs. 1,052.36 crores to Petroleum and Natural Gas Regulatory Board to cover the construction obligation for creation of infrastructure in the first 5 years.
(ii) The Company’s commitment towards unexpired bank guarantees other than above mentioned in point (i) is Rs. 310.91 crores (previous year Rs. 390.17 crores) given in the ordinary course of business.
8 The Company has installed various CNG Stations on land leased from various government authorities for periods ranging from one to five years. However, assets constructed/installed on such land are depreciated generally at the rates specified in Schedule II to the Companies Act, 2013, as the management does not foresee non-renewal of the above lease arrangements by the authorities.
The net block of such assets amounts to Rs. 241.45 crores (previous year Rs. 221.64 crores).
9 Security deposits from customers of natural gas, refundable on termination/alteration of the gas sales agreements, are considered as current liabilities as every customer has a right to request for termination of supply and the Company does not have a contractual right to delay payment for more than 12 months.
10 As per Section 135 of the Companies Act, 2013, a company, meeting the eligibility criteria, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. Company’s CSR programs/projects focuses on sectors and issues as mentioned in Schedule VII read with Section 135 of Companies Act, 2013. A CSR committee has been formed by the company as per the Act.
a) Gross amount required to be spent by the Company during the year is Rs. 12.17 crores (Previous year Rs. 11.45 crores)
b) Amount spent during the year on CSR (excluding 5% administrative expenses)
11 The Company has certain dues to suppliers registered under Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act’). The disclosures pursuant to the said MSMED Act are as follows:
12 Employee benefits:
The following tables summarizes the components of net benefit expense recognized in the statement of profit and loss and the amount recognized in the balance sheet for the respective plans.
The significant actuarial assumptions for the determination of the defined benefit obligation are the discount rate, the salary growth rate and the average life expectancy. The calculation of the net defined benefit liability is sensitive to these assumptions. The following table summarises the effects of changes in these actuarial assumptions on the defined benefit liability at 31 March 2017.
The present value of the defined benefit obligation calculated with the same method (project unit credit) as the defined benefit obligation recognised in the balance sheet. The sensitivity analyses are based on a change in one assumption while not changing all other assumptions. This analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in the assumptions would occur in isolation of one another as some of the assumptions may be correlated.
13 Related party disclosures:
List of related parties:
(a) Entities having significant influence over the Company (promoter venturers)
i. GAIL (India) Limited
ii. Bharat Petroleum Corporation Limited
(b) Entities over which the Company exercises significant influence
i. Central UP Gas Limited
ii. Maharashtra Natural Gas Limited
(c) Entities controlled by a major shareholder
i. GAIL Gas Limited (controlled by GAIL (India) Limited
(d) Key managerial personnel (KMPs):
i. Mr. Narendra Kumar Managing Director (till 31 May 2016)
ii. Mr. E.S. Ranganathan Managing Director (with effect from 1 June 2016)
iii. Mr. V. Nagarajan Director Commercial
14 Financial instruments measured at fair value
The following tables present financial assets and liabilities measured at fair value in the statement of financial position in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.
There are no financial liabilities measured at Fair Value as at 31 March 2017, 31 March 2016 and 1 April 2015.
The financial assets measured at fair value in the statement of financial position are grouped into the fair value hierarchy as on 1 April 2015, 31 March 2016 and 31 March 2017 as follows:
The investments in mutual funds have been fair valued per net asset value (NAV) as at reporting date.
The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature
Security deposits received have not been fair valued as the same are repayable on demand, so there is no fixed term available for the purpose of discounting. Further, security deposits given have not been fair valued as the impact of the fair valuation is not material.
15 Financial risk management
This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of the same in the financial statements.
(i) Foreign currency risk
The Company is exposed to foreign exchange risk mainly through its purchases of capital items from overseas suppliers in various foreign currencies.
The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies to manage its risks.
The Company’s foreign currency exposure on accounts payable that have not been hedged by a derivative instrument or otherwise are given below:
Foreign currency sensitivity
There shall be no material impact on profit before tax due to 1% increase/decrease in foreign exchange rates.
(ii) Credit risk
Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or pay amounts due to the Company causing financial loss. It arises from cash and cash equivalents, derivative financial instruments, deposits from financial institutions and principally from credit exposures to customers relating to outstanding receivables. The Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognized at reporting date :
Balances with banks is subject to low credit risks due to good credit ratings assigned to these banks. Further, security deposits paid includes payment made to government agencies which are considered to low credit risk
(iii) Liquidity risk
Liquidity risk is the risk that suitable sources of funding for the Company’s business activities may not be available. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. Short term liquidity requirements comprises mainly of trade payables and employee dues arising during normal course of business as on each statement of financial position date. Long term liquidity requirement is assessed by the management on periodical basis and is managed through internal accruals. As at each statement of financial position date, the Company’s liabilities having contractual maturities (including interest payments where applicable) are summarized as follows:
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments:
(iv) Price risk
The Company is not exposed to sensitivity to price risk in regards to its financial assets and liabilities.
(v) Interest risk
The Company’s policy is to minimise interest rate cash flow risk exposures on long-term financing. The Company is exposed to the interest rate risk on fixed deposit and on the investment done by the Company in mutual funds. The exposure to the interest rate for the Company’s mutual fund and fixed deposit is considered immaterial.
The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of /- 0.5% (2015-16: /-0.5%). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.
16 Capital management
The Company’s capital management objectives are:
a) to ensure the Company’s ability to continue as going concern; and
b) to provide an adequate return to stakeholders
For the purpose of Company’s capital management, capital includes issued equity capital. The Company manages its capital structure and makes adjustments in light of changes in economic condition and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing borrowings, less cash and cash equivalents.
17 Capital and other commitments
(a) Capital commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for is as under:
(b) Other commitments
The Company has entered into long-term agreements for purchase of natural gas upto maximum quantity of 0.58 million SCM/ day till 2028 with different suppliers. These agreements have ‘take or pay’ clause which shall be applicable in case gas off take is less than the contractual quantity as defined in the agreement and the same can be adjusted against make up quantity to be taken in the subsequent years. As at the balance sheet date, the management does not foresee any liability on account of said obligation.
18 First-time adoption of Ind AS Transition to Ind AS
These standalone financial statements, for the year ended 31 March 2017, are the first financial statements prepared by the Company in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its standalone 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 standalone financial statements which comply with Ind AS applicable for periods ending on 31 March 2017, together with the comparative period data as at and for the year ended 31 March 2016, as described in the summary of significant accounting policies. In preparing these standalone financial statements, the Company’s opening balance sheet was prepared as at 1 April 2015, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its previous GAAP standalone financial statements, including the balance sheet as at 1 April 2015 and the standalone financial statements as at and for the year ended 31 March 2016.
The Company has applied Ind AS 101 in preparing these first standalone financial statements. The effect of transition to Ind AS on equity, total comprehensive income and reported cash flows are presented in this section and are further explained in the notes accompanying the tables.
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
A.1 Ind AS optional exemptions:
A1.1 Deemed Cost
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the standalone financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.
Appendix C to Ind AS 17, Leases, requires an entity to assess whether a contract or arrangement contains a lease. As per Ind AS 17, this assessment should be carried out at inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based on conditions in place as at the date of transition.
An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP except as explained in note 8 and 9 below.
A2.2 De-recognition of financial assets and liabilities
Ind AS 101 requires a first-time adopter to apply the derecognition provisions of Ind AS 109 prospectively, for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively, from a date of the entity’s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions. The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
A2.3 Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS. The Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.
B. Reconciliation between previous GAAP and Ind AS
Ind AS 101, First time adoption of Indian Accounting Standards, requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.
C. Notes to first time adoption:
Note 1: Proposed dividend
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 (along with dividend distribution tax) of Rs. 101.10 crores as at 31 March 2016 (1 April 2015 - Rs. 101.10 crores) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.
Note 2: Remeasurements of post-employment benefit obligations
Under Ind AS, remeasurements i.e. actuarial gains and losses, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of statement of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. This has resulted in decrease in employee benefit expenses by Rs. 0.54 crores and increase in deferred tax expense by Rs. 0.19 crores. As a result of this change, the profit for the year ended 31 March 2016 increased by Rs. 0.35 crores. There is no impact on the total equity as at 31 March 2016.
Note 3: Vehicle lease
As per the HR policy of the Company, vehicles have been taken on lease by the Company and provided to some of the officers in the General Manager and above category. The lease rent is paid by the Company and transportation allowance of the employees is reduced to that extent. As per previous GAAP, these vehicles taken on lease has been considered as Finance Lease and capitalized in books and depreciated as per Companies Act, 2013. However, as per Ind AS 16 it is treated as operating lease since to qualify as finance lease, there should be transfer of all risk and rewards incidental to ownership to the lessee and the control over the asset should be with the Company. This has resulted in decrease in property, plant and equipment by Rs. 0.20 crores, increase in other current assets by Rs. 0.18 crores and decrease in retained earnings by Rs. 0.02 crores as on the date of transition. Further, as at 31 March 2016, this has resulted in a cumulative decrease in property, plant and equipment by Rs. 0.60 crores, increase in other current assets by Rs. 0.44 crores with corresponding decrease of Rs. 0.16 crores in retained earnings. Also, during FY 2015-16, finance charges on these vehicles amounting to Rs. 0.05 which was earlier charged to finance cost now has been charged to employee benefit expenses. Further depreciation for the year 2015-16 is reduced by Rs. 0.05 crores and employee benefit expense increased by Rs. 0.19 crores.
Note 4: Overhauling costs
The expenses incurred on scheduled repairs are termed as overhauling expenses. As per previous GAAP, the overhauling cost was charged to revenue and accordingly till FY 2015-16, the amount incurred on overhauling cost was shown as part of stores and spares consumption. However, as per provision of Ind AS 16, the overhauling cost needs to capitalized separately from the main asset and amortized over the remaining useful life of main asset or next overhauling due whichever is earlier. This has resulted in increase in property, plant and equipment by Rs. 1.81 crores with corresponding equivalent positive retained earnings for the year ended 31 March 2016. For the year 2015-16, this has resulted in increase in depreciation by Rs. 0.26 crores and decrease in other expense by Rs. 2.07 crores.
Note 5: Capitalisation of spares
As per previous GAAP, the stores and spares held for the purpose of repairs of the machine was shown as the part of the inventory in the balance sheet under the heading “Inventory” as current assets and same is shown as expense at the time of the consumption. As per Ind AS 16, the stores and spares having useful life of more than one year are classified as property, plant and equipment and depreciated over the remaining useful life of the asset or life of spare whichever is earlier and the balance spares including consumables are treated as inventory and charged as expense in the statement of profit and loss at the time of consumption. This has resulted in increase in property, plant and equipment by Rs. 3.69 crores, decrease in capital work in progress by Rs. 19.19 crores and increase in inventory by Rs. 10.68 crores with a decrease of Rs. 4.82 crores in retained earnings as on the date of transition. Further, as at 31 March 2016, this has resulted in cumulative increase in property, plant and equipment by Rs. 4.54 crores, decrease in capital work in progress by Rs. 18.82 crores, increase in inventory by Rs. 10.41 crores with a decrease of Rs. 3.87 crores in retained earnings. For the year 2015-16, this has resulted in decrease in depreciation by Rs. 1.08 crores and increase in other expenses by Rs. 0.13 crores.
Note 6: Reclassification from finance lease to operating lease
As per previous GAAP, the leasehold lands taken by the Company from various government authorities for the lease period of 90 years were considered as finance lease and hence were capitalized and depreciated over the period of lease. As per Ind AS 17 since there is no substantial transfer of the risks and rewards incidental to ownership and the company not having the option to purchase/renew the agreement for further period after 90 years, hence as on the date of transition the lands which do not meet the above criteria for being classified as finance lease have been reclassified as operating lease and accordingly there have been shown as prepaid lease rent in books of accounts. This has resulted in decrease in property, plant and equipment by Rs. 2.55 crores, decrease in capital work in progress by Rs. 9.11 crores, increase in other non current assets by Rs. 11.52 crores, increase in other current assets by Rs. 0.14 crores as on the date of transition. Futher as at 31 March 2016, this has resulted in cumulative decrease in property, plant and equipment by Rs. 2.55 crores, decrease in capital work in progress by Rs. 9.11 crores, increase in other non current assets by Rs. 11.39 crores, increase in other current assets by Rs. 0.27 crores.
Note 7: Provision based on expected credit loss method
Incremental provision for doubtful debts amounting to Rs. 0.32 crores has been created based on expected credit loss method as on the date of transition. This has resulted in decrease in trade receivables by Rs. 0.32 crores and corresponding equivalent decrease in retained earnings as on the date of transition. Further as at 31 March 2016, this has resulted in cumulative decrease in trade receivables by Rs. 0.32 crores and corresponding decrease of Rs. 0.32 crores in retained earnings.
Note 8: Rectification of depreciation charged in earlier years
Certain leasehold lands were depreciated considering a shorter lease period under previous GAAP. This has now been rectified on transition to Ind-AS. This has resulted in increase in property, plant and equipment by Rs. 3.12 crores with corresponding equivalent increase in retained earnings as on the date of transition. Further as at 31 March 2016, this has resulted in cumulative increase in property, plant and equipment by Rs. 3.47 crores and decrease in other current assets by Rs. 0.12 crores with corresponding increase of Rs. 3.35 crores in the retained earnings. For the year 2015-16, this has resulted in decrease in depreciation by Rs. 0.36 crores and increase in other expense by Rs. 0.13 crores.
Note 9: Rectification of useful life of the building
One building was depreciated considering a useful life of 30 years. On transition to Ind-AS, its useful life is correctly taken as 60 years. This has resulted in increase in property, plant and equipment by Rs. 1.43 crores with corresponding increase of Rs. 1.43 crores in retained earnings as on the date of transition. Further as at 31 March 2016, this has resulted in cumulative increase in property, plant and equipment by Rs. 1.61 crores with corresponding equivalent increase in retained earnings. For the year 2015-16, this has resulted in decrease in depreciation by Rs. 0.18 crores.
Note 10: Deferred tax
Deferred tax assets of Rs. 0.21 crores have been created for Ind-AS transition adjustment as on the date of transition with equivalent increase in retained earnings. Further, deferred tax liability Rs. 0.53 crores has been created on account of above adjustments as on 31 March 2016, net impact being increase in deferred tax liabilities by Rs. 0.32 crores with corresponding equivalent decrease in retained earnings as on 31 March 2016. For the year 2015-16, this has resulted increase in deferred tax expense by Rs. 0.53 crores.
Note 11: Perpetual lease
Stamp duty charges on the perpetual land lease were inadvertently not accrued in the previous GAAP. The same has been rectified and accounted for. This has resulted in increase in property, plant and equipment by Rs. 1.26 crores and corresponding increase in other current liabilities as on the date of transition and as at 31 March 2016. This has not resulted in any impact on retained earnings.
Note 12: Other comprehensive income
Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP.
19 Details of specified bank notes (SBN) held and transacted during the period 8 November 2016 to 30 December 2016 is as under:
a) Balance of SBNs as on 8 November 2016 includes cash in hand on account of cash sales at stations.
b) During the period 8 November 2016 to 15 December 2016, vide certain notifications issued by the Ministry of Finance, the Company was allowed to accept the demonetised Rs. 1000 and Rs. 500 notes as legal tender. The daily collections at the CNG stations are deposited in the bank. The Company has received details of Rs. 1,000 and Rs. 500 notes (Specified Bank Notes) deposited from the bank and has considered amount collected as equivalent to the amount deposited. The Company, however, does not maintain independent records of denomination of currency in its books of accounts.
20 The Company is primarily engaged in the business of providing natural gas. Hence, as per the chief operating decision maker the sale of natural gas has been considered as a single operating segment per Ind AS 108 ‘Operating Segment’ and accordingly disclosures have been limited to single operating segment.
21 Post reporting date events
No adjusting or significant non-adjusting events have occurred between 31 March 2017 and the date of authorisation of the Company’s standalone financial statements. However, the Board of Directors have recommended a final dividend of 50% i.e. Rs. 5.00 (previous year Rs. 6.00) on equity shares of Rs. 10 each for the year ended 31 March 2017, subject to approval of shareholders at the ensuing annual general meeting.
22 The standalone financial statements for the year ended 31 March 2017 (including comparatives) were approved by the Board of Directors on 27 May 2017.