(p) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. ^e expense relating to a provision is presented in the Statement of Profit and Loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of the particular asset. ^e cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. ^e unwinding of the discount is expensed as incurred and recognised in the Statement of Profit and Loss as a finance cost. ^e estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.
Contingent liabilities are not recognized in the financial statements but are disclosed by way of notes to accounts unless the possibility of an outflow of economic resources is considered remote.
Contingent assets are not recognized in financial statements. However, the same is disclosed, where an inflow of economic benefit is probable.
(q) Leases
^e Company assess whether a contract contains a lease, at the inception of the contract. 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. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether (i) the contract involves the use of identified asset; (ii) the Company has substantially all of the economic benefits from the use of the asset through the period of lease and (iii) the Company has right to direct the use of the asset.
^e Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. ^e Company uses judgement in assessing the lease term (including anticipated renewals/termination options).
As a lessee:
^e Company recognises a right-of-use asset and a lease liability at the lease commencement date. ^e right-of-use asset is initially measured at cost, which comprises the lease liability recognized adjusted for any lease payments made at 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 the site on which it is located, less any lease incentives received.
^e right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the underlying asset or the end of the lease term. ^e estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
^e lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease or, if that rate cannot be readily determined. After the commencement date, lease liability is increased to reflect the accretion of interest and reduced for the lease payment made.
Lease payments included in the measurement of the lease liability comprises of fixed payments, including in-substance fixed payments, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option.
^e lease liability is measured at amortised cost using the effective interest method. Modifications to a lease agreement beyond the original terms and conditions are generally accounted for as a re-measurement of the lease liability with a corresponding adjustment to the ROU asset. Any gain or loss on modification is recognized in the Statement of Profit and Loss. However, the modifications that increase the scope of the lease by adding the right to use one or more underlying assets at a price commensurate with the stand-alone selling price are accounted for as a separate new lease. In case of lease modifications, discounting rates used for measurement of lease liability and ROU assets is also suitably adjusted.
Short-term leases and leases of low-value assets
^e Company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of less than or equal to 12 months with no purchase option and assets with low value leases. ^e Company recognises the lease payments associated with these leases as an expense in Statement of Profit and Loss over the lease term.
As a lessor:
Leases for which the Company is a lessor is classified as finance or operating leases. When the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
Finance lease
All assets given on finance lease are shown as receivables at an amount equal to net investment in the lease. Principal component of the lease receipts is adjusted against outstanding receivables and interest income is accounted by applying the interest rate implicit in the lease to the net investment.
^e Company has a scheme of providing certain assets viz. mobiles, laptops, vehicles to their employees. Under the said scheme, the Company initially purchases the asset which is transferred to an employee after a specified period at book value on that date. As this arrangement has element of finance lease, the Company has derecognised the items of PPE given to employees & reclassified it as finance lease. ^e difference between the cost of the asset and present value (or absolute value if the present value is not material) of the consideration to be received from the employee over the lease term and at the time of transfer of ownership in the future is recognised as an employee cost over the period.
Operating lease
Lease income from operating leases where the Company is a lessor is recognised as income on a straight-line basis over the lease term. In case of modification of contractual terms, the same is accounted as a new lease, considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease.
(r) New and revised Indian Accounting Standards in issue but not yet effective
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31st March, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
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. ^e borrowing is Nil as at 31st March, 2024 and as at 31st March, 2023.
39. 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 does not have any secured / unsecured borrowings as on the reporting date.
40. 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.
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.
43. 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.
44. 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:
(1) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company or
(2) 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:
(3) 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
(4) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
47. 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.
48. 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.
49. 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.
50. 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.
51. 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.
52. Amount due for credit to Investor Education and Protection Fund is NIL (Previous year NIL).
53. 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.
For and on behalf of the Board of Directors,
For B P BANG & Co. Raj Kumar, IAS Milind Torawane, IAS
Chartered Accountants Chairman & Managing Director Joint Managing Director
Firm Registration No. 010621C DIN: 00294527 DIN: 03632394
Anurag Bang Ajith Kumar T R Rajeshwari Sharma
Partner Chief Financial Officer Company Secretary
Membership No. 434060
Place: Ahmedabad Place: Gandhinagar
Date: 8th May, 2024 Date: 8th May, 2024
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