1. Contingent Liabilities:
 
 (a) Claims against the group not acknowledged as debts Rs. 13.57
 million (Previous year Rs. 11.15 million).
 
 (b) Claims of Rs. 27.92 million (Previous year Rs. 25.86 million)
 against the Group have been disputed by the Group. The Group is,
 however, indemnified by an insurance policy.
 
 (c) Income tax exposures of Rs. 376.92 million (Previous year Rs.
 320.04 million) In respect of holding company, Gujarat Gas Company
 Limited:
 
 (i) Includes income tax demand of Rs. 53.46 million (Previous year Rs.
 53.46 million) relating to Assessment Years 1998-99,1999-00 and 2000-01
 due to disallowance of interest on debentures issued for the Hazira
 Ankleshwar pipeline and incurred during its construction, claimed as
 revenue expenditure. The amount of Rs. 53.46 million (Previous year Rs.
 53.46 million) has been paid under protest.
 
 CIT (Appeals) has ruled in favour of the company and deleted the demand
 of Rs. 6.87 million pertaining to A.Y. 2000- 01. The Income-tax
 department has preferred an appeal in ITAT against the said order of
 CIT (Appeals) but ITAT allowed the claim for A.Y.2000-2001. The appeal
 for the other two years is pending with the ITAT.
 
 (ii) Includes income tax demand of Rs.123.41 million (Previous year Rs.
 122.38 million) including interest on tax, relating to Assessment Years
 1995-96 to 2007-08 due to disallowance of depreciation claimed on
 leased assets. The total amount paid by company / adjusted by tax
 authorities on account of above demand aggregates to Rs.122.41 million
 (Previous year Rs.121.67 million). The total tax exposure (though
 actually paid), net of interest on tax, on account of the above for all
 the years aggregates to Rs. 115.32 million (Previous year Rs. 115.04
 million). The companys appeals against the above demands are pending
 with ITAT for Assessment years 1996-97,1997-98,1998-99 and 1999-
 00,2001 -02 and 2002-03. The companys appeal for A.Y. 2005-06,2006-07
 and 2007-08 is pending with CIT (A). For AY. 2000-01, 2003-04 and
 2004-05 the matter has been decided in the companys favour by the
 ITAT.  The High Court of Gujarat has allowed the companys claim on the
 same issue for AY. 1995-96 and this is likely to have a positive
 consequential effect on all the subsequent years.
 
 (iii) Includes income tax demand for Rs.11.68 million (Previous year
 Rs.7.99 million) for disallowances under Section 14A on account of
 expenditure incurred for earning exempt income for AY.
 2004-05,2005-06,2006-07 and 2007- 08. The total amount paid by company
 / adjusted by tax authorities on account of above demand aggregates to
 Rs. 7.99 million (Previous Year Rs.1.39 million). The Appeal for AY.
 2005-06,2006-07 and 2007-08 is pending with CIT (A) and for A.Y 2004-05
 with ITAT.
 
 For A.Y. 2000-01 the Tribunal has disallowed the similar expenses under
 Section 14A and has asked the Assessing Officer to re-examine the tax
 levy as per Rule 8D of the Income Tax Rules, 1962 and hence the amount
 can not be quantified at this stage. The Company has preferred an
 appeal with the High Court against the above order of the Tribunal.
 
 (iv) Includes income tax demand for Rs.12.42 million (Previous year
 Rs.12.42 million) for certain disallowances for A.Y.  2003-04 to
 2006-07. The demand is towards disallowances on account of bad debts
 written off, inventory written off, deposits written off and treatment
 of Cenvat credit balance as income. The total amount paid by company /
 adjusted by tax authorities on account of above demand aggregates to
 Rs. 8.67 million (Previous year Rs. 8.67 million). The appeal for A.Y.
 2005-06 and 2006-07 is pending with CIT (A) and for AY. 2003-04 and
 2004-05 with ITAT.
 
 In respect of subsidiary company, Gujarat Gas Financial Services
 Limited:
 
 i. Includes income tax demand of Rs. 12.56 million (Previous year Rs.
 12.56 million) including interest on tax, relating to AY. 1996-97 due
 to disallowance of depreciation claimed on leased assets. The total
 amount paid by company / adjusted by tax authorities towards above
 demand aggregates to Rs. 12.56 million (Previous year Rs. 12.56
 million).  Income tax demand for the years A.Y. 1997-98 to A.Y.
 2000-01, on the same issue, amounts to Rs. 4.93 million.
 
 The total tax exposure, net of interest on tax, on account of the above
 for all the years aggregates to Rs. 17.49 million (Previous year Rs.
 17.49 million). The appeals for all the above years are pending with
 the ITAT.
 
 The Assessing Officer has also levied a penalty under section 271 (1)
 (c) for A.Y. 1996-97, amounting Rs. 6.77 million (Previous year Rs.
 6.77 million). The penalty demand has been reduced by Rs. 4.14 million
 after adjusting the refund of various years. The appeal against this is
 pending with the ITAT.
 
 ii. Includes income tax demand of Rs. 5.46 million (Previous year Rs.
 5.46 million) for the AY. 1996-97 on account of disallowance of loss on
 sale of securities as business loss. The Company preferred an appeal
 against the above demand and CIT (A) has quashed the demand. However,
 the Income Tax Department has filed an appeal against the above order.
 
 iii. Includes income tax demand of Rs. 14.42 million (Previous year Rs.
 14.42 million) for the A.Y. 2001 -02 on account of disallowance of
 claim for bad debts. The Company has paid an amount of Rs. 7.60 million
 (Previous year Rs. 7.60 million) out of the above demand. The ITAT had
 ruled partly in favour of the company by allowing bad debts towards
 bill discounting transactions. An appeal has been preferred with the
 High Court against the ITAT order. The High Court has restored back the
 matter to the ITAT and matter is pending with ITAT. Further the
 Assessing Officer has also levied a penalty under section 271 (1 )(c)
 of the Income Tax Act 1961, amounting Rs.10.01 million. The Companys
 appeal was decided by the ITAT in its favour.
 
 iv. Includes income tax demand of Rs. 14.81 million (Previous year Rs.
 14.81 million) for the A.Y. 2002-03 on account of disallowance of claim
 for bad debts (Rs. 14.00 million) and professional expenses (Rs. 0.81
 million). The total amount paid by company / adjusted by tax
 authorities towards above demand aggregates to Rs. 8.83 million
 (Previous year Rs. 8.83 million). Recently the ITAT has ruled partly in
 favour of the company by allowing bad debts towards bill discounting
 transactions. An appeal has been preferred with the High Court against
 the ITAT order.  Recently the High Court has restored back the matter
 to the ITAT and matter is pending with ITAT.
 
 Includes income tax demand of Rs. 2.86 million (Previous year Rs. 2.86
 million) for the A.Y. 2003-04 on account of disallowance of claim for
 bad debts. Recently the ITAT has ruled in favour of the Company and has
 allowed claim of bad debts. Department may prefer an appeal against the
 ITATs order.
 
 Includes income tax demand of Rs. 0.23 million (Previous year Rs. 0.23
 million) for A.Y. 2004-05 on account of disallowance of claim for bad
 debts. The appeal for A.Y. 2004-05 is pending with the ITAT.
 
 v. Includes income tax demand of Rs. 20.14 million (Previous year Rs.
 20.14 million) for A.Y. 2006-07 on account of disallowance of service
 charges paid to GGCL and inventory written off during the year. The
 total amount paid by company / adjusted by tax authorities towards
 above demand aggregates to Rs.18.28 million (Previous year Rs.18.28
 million). The CIT (A) has decided the appeal partly in our favour by
 allowing the service charges as deductible business expenditure. The
 appeal is pending with the ITAT.
 
 vi. Includes income tax demand of Rs. 25.35 million (Previous year Rs.
 25.35 million) for the A.Y. 2007-08 on account of disallowance of
 service charges paid to GGCL. The total amount paid by company /
 adjusted by tax authorities towards above demand aggregates to Rs.18.96
 million (Previous year Nil). The Company has preferred an appeal before
 the CIT (A) against the said order.
 
 vii. Includes income tax demand of Rs. 34.77 million (Previous year
 Nil) for the A.Y. 2008-09 on account of disallowance of service charges
 paid to GGCL. The Company has preferred an appeal before the CIT (A)
 against the said order.
 
 In respect of holding company, GujaratGas Trading Company Limited:
 
 i. Includes demand of Rs. 11.20 million (Previous year Rs. 11.20
 million) for the A.Y. 2007-08 on account of disallowance of commission
 on purchase paid to BG Energy Holdings Limited and disallowance of
 expenditure u/s 14A as per Rule 8D of the Income tax Rules 1962. The
 total amount paid or adjusted by tax authorities towards above demand
 aggregates to Rs. 5.25 million (Previous year Nil). The Company has
 preferred an appeal before the CIT (A) against the said order.
 
 ii. Includes demand of Rs.12.45 million (Previous year Nil) for the
 A.Y. 2008-09 on account of disallowance of commission paid to BG Energy
 Holdings Limited, disallowance of expenditure u/s 14A as per Rule 8D of
 the Income tax Rules 1962 and treatment of VAT refund as taxable
 income. The Company has preferred an appeal before the CIT (A) against
 the said order.
 
 (d) Interest tax exposures of Rs. 4.15 million (Previous year Rs. 4.15
 million). The interest tax authorities in the assessment contented that
 the activities of the Company are chargeable to interest tax and raised
 a total demand of Rs. 56.40 million (Previous year Rs. 56.40 million)
 for the Assessment Years 1995-96 to 2000-01. The Company had filed an
 appeal against the above demands and CIT (A) ruled in favour of the
 Company for the Assessment Years 1995-96,1996-97, 1997-98,1998-99 and
 2000-01 and quashed the demands for these years aggregating to Rs.
 50.27 million (Previous year Rs. 50.27 million). However for
 A.Y.1999-2000, CIT (A) ruled against the company and raised a demand of
 Rs. 4.15 million (Previous year Rs. 4.15 million). The Company has paid
 an amount of Rs.1.25 million (Previous year Rs.1.25 million) out of the
 above demand. ITAT had ruled partly against the Company and had asked
 the Assessing Officer to re-examine the levy. The Company had preferred
 an appeal before the High Court against the ITAT order. Recently the
 High Court has restored back the matter to the ITAT and matter is
 pending with ITAT.
 
 Further, the Assessing Officer has levied a penalty in A.Y.1999-2000
 under section 13 of the Interest Tax Act 1974, amounting Rs. 1.98
 million (Previous year Rs. 1.98 million). The Company preferred an
 appeal against the above demand and CIT (A) ruled in favour of the
 Company and quashed the penalty demand. The appeal is pending with the
 ITAT.
 
 (e) The Company had retrenched 8 employees in the year 2002 under the
 provisions of The Industrial Disputes Act, 1949.  The employees had
 filed an appeal against the above retrenchment in a labour court. The
 Company had reached a settlement with two of the above employees and
 had provided for Rs. 0.68 million (Previous year Rs. 0.68 million),
 being the compensation payable to the remaining employees under The
 Industrial Disputes Act, 1949. Any additional amount due to the
 employees will be determined based on decision by the labour court and
 hence amount payable ultimately cannot be ascertained at this stage.
 
 2. Estimated amount of contracts net of advances remaining to be
 executed on capital account and not provided for Rs.  285.86 million
 (Previous year Rs. 125.48 million).
 
 3. The Group had constructed a civil structure aggregating to Rs.19.04
 million (Previous year Rs. 19.04 million) on land which is not yet
 owned by the Group. The management is confident of obtaining the
 requisite approvals of the Government Authorities for transfer of
 ownership of land.
 
 4. Material consumed includes:
 
 (a) Rs. 30.25 million (Previous year Rs. 30.30 million) towards
 Internal consumption of Gas.
 
 (b) Gain of Rs. 19.47 million (Previous year Rs. 21.82 million) as
 foreign exchange fluctuations.
 
 5. Obligations on Operating Leases:
 
 The group has taken premises for office and residential use for its
 employees under cancellable operating lease agreements.  The total
 lease rentals recognized as an expense during the year under the above
 lease agreements aggregates to Rs. 12.39 million (Previous year Rs.
 7.69 million). The lease agreement typically ranges from 1 to 5 years.
 
 6. Deposits from customers have been considered as a source of long
 term funds since the same are refundable only on
 termination/modification of the gas sale agreement.
 
 7. Accounting for Joint Venture:
 
 The Companys joint ventures Petroleum Infrastructure
 Limited(incorporated in India with 50% stake being held by the
 Company) and Sensus Metering Systems India Limited (incorporated in
 India with 49% stake being held by the Company) are under liquidation.
 Therefore, the Companys interest in the joint ventures has been
 accounted for in accordance with Accounting Standard 13 Accounting for
 Investments and has not been disclosed as per Accounting Standard 27
 Financial Reporting of Interest in Joint Ventures.
 
 In case of Sensus Metering Systems India Limited, the assets of the
 joint venture has been liquidated and all liabilities have been paid
 off. The resultant proceeds of joint venture has been distributed to
 Company which is higher than the carrying value of Investment (net of
 provision made in earlier years for diminution in the value of
 investments). Company does not expect to receive any further amount
 from joint venture and hence remaining carrying value of investments in
 joint venture and related provision has been adjusted in the books of
 accounts.
 
 In case of Petroleum Infrastructure Limited, the investments have been
 written down to the realizable value.
 
 8. The Company is procuring natural gas from one of the suppliers on
 the basis of a Term Sheet agreed with the supplier effective April 1,
 2008. Under the terms of the agreement with the supplier, the Term
 Sheet shall be superseded by a Gas Sales and Transmission Contract
 (GSTC) as and when the same is finalised. The GSTC would be effective
 from April 1,2008.  Pending the finalisation of the GSTC, the gas
 procurement cost is being recorded in the books of account on the basis
 of the terms provided in the Term Sheet
 
 9. Segmental Reporting:
 
 The group is primarily in the business of distribution of Naturalgas
 through pipelines from sources of supply to centers of demand and to
 the end customers. The group also builds pipelines required to make the
 gas available to the end customer.  The other activity of the group
 comprises leasing of natural gas fired Cogeneration units, the income
 from which is not material in financial terms.
 
 Further, the group is operating in a single geographical segment.
 Accordingly, disclosures relating to primary and secondary business
 segments under the Accounting Standard on Segment Reporting (AS - 17)
 are not relevant to the Company.
 
 10.  Employee Stock Option Plan 2008:
 
 The group implemented an Employee Stock Option Plan 2008 (ESOP 2008)
 which provides for the allotment of equity shares of Rs. 2/- each to
 eligible employees of the group. The Scheme is administered by an ESOP
 Trust (Gujarat Gas Company Limited Employee Stock Option Welfare Trust)
 which purchases, out of the funds advanced by the group, the shares
 equivalent to the number of options granted, for allotment to the
 grantees. The Finance Director and Human Resource Director are the
 trustees of the said trust. The trustees can purchase or sell the
 shares from the market as per the approved scheme.
 
 Pursuant to the above scheme the group has granted options as mentioned
 here below convertible into equity shares of Rs.  21- each to employees
 of the group. The exercise price is calculated at 10% discount to the
 closing price of the shares on record date, being the date on which the
 grant of options were approved by board of directors and shareholders.
 The Scheme provides for graded vesting of options granted over a period
 of 4 years from the date of grant
 
 11. The provision for income tax has been calculated based on income
 earned during the year ended December 31, 2010 in accordance with
 Guidance Note on measurement of Income Tax expense for Interim
 Financial Reporting. However, the tax year end of the Company being
 March 31, 2011 the ultimate liability for the Assessment Year 2011 -12
 will be determined based on the total income of the Company for the
 year ending March 31,2011. The provision for wealth tax has been made
 based on the net wealth as on December 31,2010. However the ultimate
 liability for the Assessment Year 2011 -12 will be determined based on
 the net wealth as on March 31, 2011.
 
 12. Capital Work in Progress includes investment of Rs. 254.90 million
 (Previous year Rs. 254.90 million) for setting up a City Gas
 Distribution (CGD) network in Valsad and Navsari district, Union
 Territories of Silvassa and Daman which has not yet commenced
 operations. The Company is exploring options of utilising this
 investment. However, considering the uncertainly involved in the
 utilisation of this network, the Company, based on engineering
 estimates, has made a provision of Rs. 105.04 million (Previous year
 Rs. 105.04 million) to bring the carrying value of the investment to
 its expected recoverable amount.
 
 13.  In view of the general clarification issued by the Institute of
 Chartered Accountants of India on Accounting Standard 21 Consolidated
 Financial Statements, the consolidated financial statements do not
 include notes such as quantitative information, forex earnings/expense
 etc. which are not necessary to present true and fair view of the
 financial statements.
 
 14. Previous year figures have been reclassified/regrouped wherever
 considered necessary to conform to the current year figures.