(d) Terms / Notes
(1) Transactions with related parties are made on terms equivalent to those that prevail in arm's length transactions and in ordinary course of business. Outstanding balances are unsecured.
(2) Apart from the above transactions, the Company has also entered into transactions including but not limited to transmission of natural gas, rendering & receiving of services, placement & maturity of term/liquid deposits, use of public utilities, receipt/payment of rent etc. with Government related entities (entities controlled, jointly controlled or significantly influenced by Government of Gujarat). ^ese transactions are entered in ordinary course of business & are at arm's length prices based on the agreed contractual terms. Further, GSPL has significant transactions with State Government related entity, being Gujarat State Financial Services Limited [GSFS] [w.e.f. 20th October, 2022]. ^e related party transactions with GSFS during the period are Placement/renewal of deposits ' 34,436.50 Lacs, Withdrawal/maturity of Deposits ' 47,027.19 Lacs and Interest Income ' 322.94 Lacs. Further, the balance of deposit as on 31“ March, 2023 is ' 4,306.10 Lacs.
C. Financial risk management
^e Company has a well-defined risk management framework. ^e Board of Directors of the Company has adopted a Risk Management Policy. 'tte Company has exposure to the following risks arising from financial instruments:
• Credit risk ;
• Liquidity risk ; and
• Market risk
(i) 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. ^e potential activities where credit risks may arise include from cash and cash equivalents and security deposits or other deposits and principally from credit exposures to customers relating to outstanding receivables and other receivables. ^e maximum credit exposure associated with financial assets is equal to the carrying amount. Details of the credit risk specific to the company along with relevant mitigation procedures adopted have been enumerated below:
Trade and other receivables
Company's exposure to credit Risk is the exposure that Company has on account of services rendered / prodcuts sold to a contractual counterparty or counterparties, whether with collateral or otherwise for which the contracted consideration is yet to be received. ^e Company's customer base are Industrial and Commercial.
Services are generally subject to security deposit and/or bank guarantee clauses to ensure that in the event of non-payment the Company's receivables are not affected. ^e Company provides for allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables.
^e Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix.
Refer note 11 for ageing of trade receivables
^e above receivables which are past due but not impaired are assessed on case-to-case basis. ^e instances pertain to third party customers which have a proven creditworthiness record. Management is of the view that these financial assets are not impaired as there has not been any adverse change in credit quality and are envisaged as recoverable based on the historical payment behaviour and extensive analysis of customer credit risk, including underlying customers’ credit ratings, if they are available. Consequently, no additional provision has been created on account of expected credit loss on the receivables. 'ttere are no other classes of financial assets that are past due but not impaired. ^e provision for impairment of trade receivables, movement of which has been provided below, is not significant / material. ^e concentration of credit risk is limited due to fact that the customer base is large and unrelated.
Other financial assets
Other financial assets includes loan to employees, security deposits, investments, cash and cash equivalents, other bank balance, advances to employees etc.
• Cash and cash equivalents and deposits are placed with banks / financial institution having good reputation and past track record with adequate credit rating.
• Investments are made in credit worthy companies / group companies.
• ^e Company has given security deposit to various government authorities (like Municipal corporation, Nagarpalika, Grampanchayat, Road & building division and Irrigation department of State Governments, credit worthy companies etc.) for the permission related to work of executing / laying pipeline network in their premises / jurisdiction. Being government authorities, the Company does not have exposure to any credit risk.
• Loan and advances to employees (for housing advances) are majorly secured in nature and hence the Company does not have exposure to any credit risk.
(ii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are proposed to be settled by delivering cash or other financial asset. ^e Company’s financial planning has ensured, as far as possible, that there is sufficient liquidity to meet the liabilities whenever due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. ^e Company has practiced financial diligence and syndicated adequate liquidity in all business scenarios.
(iii) Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments.
Currency risk
^e functional currency of the Company is Indian Rupees. ^e Company do not have derivative financial instruments. Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.
40. CAPITAL MANAGEMENT
Company defines capital as total equity including issued equity capital, share premium and all other equity reserves attributable to equity holders of the Company (which is the Company’s net asset value). ^e primary objective of the Company’s financial framework is to support the pursuit of value growth for shareholders, while ensuring a secure financial base.
^e Company monitors capital using a ratio of ‘adjusted net debt’ to ‘adjusted equity’. For this purpose, adjusted net debt is defined as total interest-bearing loans and borrowings less cash and bank balances. Total equity comprises all components of equity. 'ttere are no interest bearing loans and borrowings obtained by the Company which are outstanding as on 31st March 2023.
41. DISCLOSURES UNDER IND AS 116 LEASES
A. ^ie Company as lessee:
Nature of the lease transaction:
^e Company has taken various parcel of land with lease term ranging from 5 years to 99 years, office building with lease term ranging from 4 years to 10 years, LNG Trucks and regasification facilities for 5 years, and various guest houses / yards / office containers / vehicles on lease with the lease term of 6 to 11 months. Some lease contract can be renewed with mutual consent and some lease contract also contains the termination options. Such options are appropriately considered in determination of the lease term based on the management's judgement. In certain contracts, the Company is restricted from assigning and subletting the leased assets. For leases where the lease term is less than 12 months with no purchase option, the Company has elected to apply exemption for short term leases and accordingly, right of use assets and lease liabilities for these contracts are not recognised.
Refer Note 3 for details relating to Right of Use Assets.
43. DISCONTINUED OPERATIONS AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE:
Petroleum and Natural Gas Regulatory Board (“PNGRB”) granted authorization in favour of the Company for laying, building, operating or expanding City Gas Distribution network in geographical areas of Amritsar (May 2015) and Bhatinda (May 2016) District in the state of Punjab. In furtherance of overall strategic business objective and synergies, the Company and Gujarat Gas Limited (“GGL”, subsidiary of the Company) requested to PNGRB for transfer of these authorizations to GGL in line with applicable PNGRB Regulations. After due examination, PNGRB provided approval dated 29th June 2020 for transfer of these authorization for Amritsar Bhatinda GAs from GSPL to GGL subject to fulfilment of below three conditions:
1) Revised Performance Bank Guarantee
2) Revised Gas Sale Agreement in name of GGL
3) Financial Closure
During the year ended 31” March 2021, on fulfilment of the above conditions, the Company had classified the CGD business as a discontinued operation. ^e associated assets and liabilities were consequently presented as held for sale in financial statements for the year ended 31” March 2021. ^e date of such classification is 18th December 2020. No impairment loss was recognised on reclassification as the management expected that the fair value less cost to sell is higher than the carrying amount.
Pursuant to the approval by the Board of Directors on 3rd June 2021, the Company had executed Business Transfer Agreement (BTA) on 26th October 2021 to transfer City Gas Distribution (CGD) Business of Amritsar and Bhatinda Geographical Areas to Gujarat Gas Limited (GGL, a subsidiary company) by way of slump sale for cash consideration of ' 153.86 Crores (' 164.58 Crore Business valuation determined based on an independent valuation less ' 10.72 Crore working capital adjustment as on closing date). ^e Company has consummated the above transfer of business with effect date 1” November 2021 to reflect the same in the previous financial year.
44. DISCLOSURES FOR EMPLOYEE BENEFITS AS PER INDIAN ACCOUNTING STANDARD - 19
Defined contribution plan:
Provident fund and superannuation fund benefits charged to Statement of Profit and Loss during the period are ' 404.80 Lacs and ' 204.57 lacs respectively (PY: ' 363.52 Lacs and ' 171.46 Lacs respectively).
Defined benefit plans:
^e Company has participated in Group Gratuity scheme of HDFC Standard Life Insurance Company Limited. ^e liability in respect of gratuity benefits, post retirement medical benefit scheme (PRMBS) & leave salary being defined benefit schemes, payable in future, are determined by actuarial valuation as on balance sheet date. In arriving at the valuation for gratuity, medical benefits & leave salaries, following assumptions were used:
A description of methods used for sensitivity analysis and its Limitations:
Sensitivity analysis is performed by varying a single parameter while keeping all the other parameters unchanged. Sensitivity analysis fails to focus on the interrelationships between underlying parameters. Hence, the results may vary if two or more variables are changed simultaneously. ^e method used does not indicate anything about the likelihood of change in any parameter and the extent of the change, if any.
Other notes:
^e Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. ^e Code has been published in the Gazette of India. However, the date on which the Code will come in to effect has not been notified. ^e Company will assess the impact of the Code when it comes into effect and will record any related impact in the period when the Code becomes effective.
45. DETAILS OF BENAMI PROPERTIES
^e Company does not hold any Benami properties. No proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibitions) Act, 1988 and the rules made thereunder.
46. UTILISATION OF BORROWED FUNDS AND SHARE PREMIUM
^e Company has not advanced or loaned or invested funds - either borrowed funds or share premium or any other sources or kind of funds to any other person or entity, including foreign entities (Intermediaries) with an understanding that the Intermediary shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company or
(ii) provide any guarantee, security or the like to or on behalf of the Company.
^e Company has not received any fund from any person or entity, including foreign entities (Funding Party) with the understanding that the Company shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
48. RELATIONSHIP WITH STRUCK OFF COMPANIES
^e Company has not entered into any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.
49. REGISTRATION OF CHARGES OR SATISFACTION WITH REGISTRAR OF COMPANIES (ROC)
As at the reporting dates, none of the charges or satisfaction of charges are yet to registered with ROC beyond the statutory time limit.
50. COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES
As the Company is a Government Company, in terms of section 2(45) of the Companies Act, compliance with number of layers of the companies as per section 2(87) of the Companies Act read with Companies (Restriction on number of Layers) Rules 2017, is not applicable.
51. DISCLOSURE IN RELATION TO UNDISCLOSED INCOME
'ttere are no transactions that has been not recorded in the books of accounts and has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
52. DETAILS OF CRYPTO CURRENCY OR VIRTUAL CURRENCY
^e Company has not traded or invested in Crypto currency or Virtual Currency during the financial year and comparative period.
53 As at the balance sheet date, the Company has reviewed the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss has been provided.
54 Amount due for credit to Investor Education and Protection Fund is NIL (Previous year NIL).
55 In the opinion of management, any of the assets other than property, plant and equipment and non-current investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.
56 Previous year figures have been reclassified or regrouped wherever necessary to enhance comparability and ensure consistency with the current year’s financial statements.
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