4.2 Buildings, inter-alia, include buildings which have been constructed on land acquired on lease from various Government Authorities. (refer note 37).

4.3 The expenditure incidental to setting up of project is included in capital work-in-progress (CWIP) which is apportioned to the property, plant and equipment on completion of project. The Company has capitalised salary, wages and bonus amounting to H 20.22 crores (previous year H 20.24 crores) to the cost of property, plant and equipment /capital work-inprogress.

4.4 Capital work-in-progress has been netted off by H 8.49 crores towards provision for obsolete and slow moving capital work-in-progress (previous year H8.37 crores)

4.5 Refer Note 48 (a) for Capital Commitments

4.6 During financial year 22-23, The estimated useful life of fire extinguisher has been changed from 15 years to 10 years on account of which there is financial implication of H H0.64 crores on depreciation.

4.7 During the current & previous year, there is no change in any item of Property, plant & equipment due to business combination & revaluation.

16.1 Terms and rights attached to equity shares:

The Company has one class of equity shares having a par value of H 2 each (previous year H2 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.

16.4 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. Further, there are no shares which are reserved for issue under options and contracts or commitments for the sale of shares or disinvestment.

16.5 During the current year, the Company has declared interim dividend of H 210 crores (H 3 per share) & H 700 crores (H 10 per share) in the month of January & March respectively.

16.6 During the current year, the Company paid dividend of H 5.50 per equity share for financial year 2021-22 amounting to H 385 crores [in the previous year, H 3.60 per equity share for financial year 2020-21 amounting to H 252 crores].

Nature of reserves General reserve

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with Companies (Transfer of profits to Reserve) Rules, 1975. Consequent to introduction of the Companies Act 2013, there is no such requirement to mandatorily transfer a specified percentage of the net profit to general reserve.

Retained earnings

Retained earnings are created from the profit / loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.

35 Contingent liabilities

1. Claims against the Company not acknowledged as debt:

(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 H 2.42 crores (previous year H 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 H 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 remanded back to the assessing authority by Central Excise and Service Tax Appellate Tribunal to submit additional documents along with other evidence.

(b) Demand raised by income-tax authorities

In respect of assessment year 2017-18, the assessing officer had disallowed additional depreciation claimed by the Company in respect of assessment year 2017-18, on addition of assets pertaining to the CNG business. The department has raised a demand of H 2.48 crores for the assessment year 2017-18 including interest. Company has filed an appeal with Commissioner of Income Tax (Appeals) against the assessment order passed by income-tax department for AY 2017-18. The Company is of the view that such disallowance is not tenable and accordingly no provision has been made for the said demand.

In respect of the assessment year 2018-19, the assessing officer has disallowed additional depreciation claimed by the company on addition of assets pertaining to CNG business and also increased the amount of expense inadmissible on earning of exempted income in terms of section 14A read with rule 8D of Income Tax Act. The department has raised a demand of H4.70 crores for the assessment year 2018-19 including interest. Company has filed an appeal with Commissioner of Income Tax (Appeals) against the assessment order passed by income-tax department for AY 201819. The Company is of the view that such disallowance is not tenable and accordingly no provision has been made for the said demand.

In respect of the assessment year 2021-22, deductions under chapter-VIA amounting to H 35.40 crores for Deductions claimed under Chapter-VIA only consist of deduction under section 80-M of the Act has been denied u/s 143(1) of the Income Tax Act'1961 and accordingly, demand of H 9.76 crores has been raised. Company has filed an appeal with Commissioner of Income Tax (Appeals) against the Intimation Order issued u/s 143(1) of the Act. The Company is of the view that such disallowance is not tenable and accordingly no provision has been made for the said demand.

(c) Demand raised by Delhi Development Authority (DDA)

Delhi Development Authority (DDA) has raised a total demand (excluding interest) of H155.64 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. Further, DDA vide communication dated 29 August 2016 has revised the total demand (excluding interest) to H330.73 crores for the period upto 31 March 2016. The same was also reported in the previous year(s) as a contingent liability.

The matter is pending in the Hon'ble High Court of Delhi and the Company, based on the legal opinion taken, is of the view that such demand is not tenable and accordingly no provision has been made for this aforementioned demand raised by DDA in the books of accounts.

(d) Demand raised by Greater Noida Authority

The company is engaged in development of CGD Network in the Geographical Areas of Greator Noida from the year 2005. For undertaking these activities, NOCs from the Authority were obtained after paying one time restoration charges and committing due compliance with all terms & conditions of the NOCs. Since 2005, the company has been actively engaged in laying pipelines for supllying Natural Gas in Greator Noida. In the Financial Year 2016-17, the company received a demand letter from Greater Noida Authority amounting to H 10.13 crore for payment of lease rent in respect of the pipelines already laid in Greator Noida. The demand from Greator Noida authority included annual lease rent with 10% escalation in every year and penal interest @18% thereon. The demand was further increased to H 22.29 crore by Greater Noida Authority in June 2019.

The rationality of the demand for annual lease rents, escalations and penal interest was looked into by the Company by obtaining expert legal opinion in this regard and demand for lease rent was not found legally tenable. Hence, the matter in respect of the aforementioned demands was taken up by the Company with Greater Noida Authority for waiver and a letter in this regard was submitted with the Greater Noida Authority in November 2019. Subsequent to this, the Greater Noida Authority has not further pursued the matter with IGL till date.

(e) During the financial year 18-19, the Company received a demand amounting to H0.04 crores from the Commercial Tax department, Uttar Pradesh which has been deposited by the Company under protest.

(f) Apart from those disclosed above, the Company has certain ongoing litigations involving customers, vendors and employees. 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.

2 Demand raised by Goods and Service tax (GST) authorities

During the financial year 19-20, the Company had received a demand cum show cause notice from the GST authorities for an amount of H19.55 crores (previous year H 19.55 crores) in respect of financial year 2014-15, 2015-16, 2016-17 and from April 2017 to June 2017 wherein it has been alleged by the aforementioned authorities that the Company has incorrectly availed cenvat credit on the purchases made by the Company and has not paid service tax on certain other services.

The Company has filed the responses to the demand cum show cause notice and is of the view that such demand is not tenable. Accordingly, no provision has been made for the demand so raised.

3 There are numerous interpretive issues relating to the Hon'ble Supreme Court (SC) judgment dated 28 February 2019 on provident fund on which the Company is seeking legal advice specially on the retrospective applicability of the same. However, the Company for the current year is complying with the statutory requirements of the same and does not believes that any material liability would devolve on it.

4 During the financial year 18-19 and financial year 22-23, GAIL (India) Limited has raised the following claims against the Company in relation to the allocation and actual utilisation of domestic gas amounting to :

- H0.01 crores (previous year H0.01 crores) post reconciliation of the computation performed by the Company and GAIL (India) Limited; and

- H30.78 crores(previous year H 23.92 crores) and H1.37 crores(previous year H 1.37 crores) for the gas supplied by the Company to Adani Gas Limited (AGL) and Haryana City Gas Distribution Limited (HCGDL) respectively. The Company has raised claims of the corresponding amount to AGL and HCGDL respectively. Both the aforementioned companies are in the process of reconciling the data with GAIL (India) Limited. Further, based on the agreements entered into by the Company with AGL and HCGDL respectively, and subsequent legal advice obtained on this matter, the management believes that the Company has the right to recover the said amount if charged by GAIL (India) Limited,

from these companies. Accordingly, the management does not believes that any material liability would devolve on the Company.

36 Bank guarantees

(i) The Company was in earlier years granted authorization for laying, building, operating and expanding CGD network in the geographical area of Karnal, Rewari, Meerut (except area already authorised) Shamli, Muzaffarnagar, Kaithal, Ajmer, Pali, Rajsamand, Kanpur (except area already authorised), Fatehpur , Hamirpur and Hapur and during the current year authorization was granted for Banda, Chitrakoot & Mahoba 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 against which the Company had submitted performance bank guarantees amounting to H2,512.36 crores (previous year H2,512.36 crores) to the Petroleum and Natural Gas Regulatory Board to cover the construction obligation for creation of infrastructure.

(ii) The Company's commitment towards unexpired bank guarantees other than above mentioned in point (i) is H 1515.16

crores (previous year H 644.11 crores) given in the ordinary course of business.

37 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 H 206.69 crores (previous year H 281.85 crores).

38 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.

39 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. The 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.

1. The discount rate is based upon the market yields available on Government bonds at the accounting date relevant to currency of benefit payments for a term that matches the liability.

2. The estimates for future salary increase rate takes account of inflation, seniority, promotion, business plan, human resource policy and other relevant factors on long term basis.

Effect of plan on Company's future cash flows (a) Funding arrangements and funding Policy

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

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 analysis 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.

Defined contribution plan

The Company makes Provident Fund contributions which are defined contribution plans, for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised H 4.91 crores for provident fund contributions (previous year H4.67 crores) in the statement of profit and loss. The contributions payable to these plans by the Company are at rates specified in the rules of the scheme."

45 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.

During the previous year, 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.

46 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 ('FC) transactions and follows established risk management policies to manage its risks.

(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 :

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:

There are no interest bearing borrowings and hence company is not exposed to interest rate risk presently.

The Company's investments in fixed deposits with banks/corporates and liquid debt mutual funds are for short durations, and therefore do not expose the Company to significant interest rates risk.

47 Capital management

The Company's capital management objectives are:

a) to ensure the Company's ability to continue as a 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, if any. 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.

(b) Other commitments

The Company has entered into long-term agreements for purchase of natural gas up to maximum quantity of 1.84 million standard cubic meters (MMSCM)/ day (H8.11 crores per day based on average rates prevailing on March 2023) 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 the said obligation.

50 Leases

a) All lease contracts are accounted for in accordance with Ind AS 116 "Leases".

b) The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 April 2019 was 9% p.a. with maturity between 2020 - 2042.

c) Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to another party, the right-of-use asset can only be used by the Company. Leases are either non-cancellable or may only be cancelled by incurring a substantive termination fee. The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over office buildings and factory premises the Company must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease.

51 Segment Information

a) Description of segments and principal activities

The Company has a single operating segment that is "Sale of Natural Gas". Accordingly, the segment revenue, segment results, segment assets and segment liabilities are reflected by the financial statements themselves as at and for the financial year ended 31 March 2023.

b) Entity wide disclosures

Information about products and services

The Company is in a single line of business of "Sale of Natural Gas."

Geographical Information

The company operates presently in the business of city gas distribution in India. Accordingly, revenue from customers earned and non-current asset are located, in India.

Information about major customers:

In the current year, revenue from one external customer amounting to H 2144.03 crores (previous year H 932.26 crores) individually accounted for more than ten percent of the revenue.

53 During the year ended 31 March 2021, the Company had entered into an agreement with Indian Oil Corporation Limited ('IOCL') for setting up of infrastructure for storage, compression and dispensing of Hydrogen blended Compressed Natural Gas ('H-CNG') at Rajghat bus depot, New Delhi. As per the terms of the agreement, the Company is eligible to receive a grant of H 12.29 crores out of which H 10.12 crores is received up to 31st March 2023 and balance amount of H 2.17 crores is still receivable from IOCL as at 31 March 2023.

In line with the accounting policy, the property, plant and equipment is recorded at gross value and corresponding grant amount as deferred income. The grant is recognised in the statement of profit and loss in proportion to the depreciation expense on the associated property, plant and equipment.

The unamortized balance of grant as at 31 March 2023 is H 10.39 crores (previous year H 11.16 crores). During the year, the Company has recognised H 0.77 crores (previous year H 0.77 crores) in the Statement of Profit and Loss as 'Other income'.

54 The negotiations with the Oil Marketing Companies (OMCs), to renew the commercial terms of the contracts, have concluded and the agreements with them have been renewed w.e.f. 01.12.2021. Accordingly the trade margins have been paid at the new rates during the current year. It was agreed that the arrears for the period 01.04.2019 up to 30.11.2021 shall be finalized as per mutual discussions. The matter of arrear is not yet concluded and total amount of provision in this regard as at 31 March 2023 is H114.08 crores (previous year H146.47 crores).

Reasons for Variance in Ratios:

#1 The increase in Debt Service Coverage ratio from 23.24 times to 30.38 times is mainly on account of increase in EBIT by 9% over previous year.

#2 The increase in Inventory Turnover ratio from 839.75 times to 1094.43 times is mainly on account of increase in average input gas cost by 138% over previous year.

#3 The increase in Trade Payables Turnover ratio from 9.39 times to 14.07 times is mainly on account of increase in average input gas cost by 138% over previous year.

#4 The increase in Net capital turnover ratio from 12.18 times to 47.87 times is mainly on account of increase in revenue from operations by 84% over previous year.

#5 The decrease in Net Profit ratio from 15.5% to 9.26% is mainly on account of increase in average input gas cost by 138% over previous year.

#6 The increase in Return on Investment from 4.24% to 5.98% is mainly on account of increase in Repo Rate by RBI.

B The company has not advanced or loaned or invested any funds (either from borrowed funds or share premium or any other sources or kind of funds) to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Company; or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

Further, the company has not received any funds from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Funding Party or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries"

56 Post reporting date events

No adjusting or significant non-adjusting events have occurred between 31 March 2023 and the date of authorisation of the Company's standalone financial statements. However, the Board of Directors have recommended a final NIL dividend (previous year H5.5) on equity shares of H2 (previous year H 2) each for the year ended 31 March 2023, subject to approval of shareholders at the ensuing annual general meeting.

57 Previous period figures have been regrouped/reclassified, wherever required.

58 The standalone financial statements for the year ended 31 March 2023 were approved by the Board of Directors on 12 May 2023.