Indraprastha Gas

1.  Background
 
 Indraprastha Gas Limited (The Company) was incorporated on December
 23, 1998 under the Companies Act, 1956. It is listed on the Bombay
 Stock Exchange (BSE) and the National Stock Exchange (NSE).
 
 The Company is a joint venture between GAIL India Limited and Bharat
 Petroleum Corporation Limited. The Companys business consists of sale
 of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG).
 
 2.  Contingent liabilities
 
 2.1 Income Tax cases
 
 In respect of Assessment Year 2001 -02 to Assessment Year 2006-07, the
 department disallowed certain claims made or set offs availed by the
 Company. This resulted into adjustments to past carried forward losses
 aggregating Rs 29,448,913 (previous year Rs. 29,448,913) and demands
 raised aggregating Rs.  63,289,287 (Previous year Rs.  56,968,002)
 against which Company has deposited Rs. 32,858,902 (Previous Year Rs.
 22,118,716) under protest.  The Company has filed appeals against the
 above which are pending at various stages.
 
 2.2 UP Trade Tax Cases
 
 The Commercial Tax department of Uttar Pradesh has raised the demand
 towards UP Trade Tax for the Assessment year 2007-08 amounting to Rs.
 1,776,435 (Previous year Rs. 1,776,435) against which Rs. 863,019
 (Previous Year Rs.  863,019) has been deposited and a Bank Guarantee of
 Rs. 914,000 is issued in favour of the department. The Company has
 filed appeals against the above demand with Tribunal, Commercial Taxes,
 Noida.
 
 2.3 Bank Guarantees
 
 The Companys total liability towards un-expired Bank Guarantees is
 Rs.494,809,876 (Previous year Rs. 219,175,559).
 
 2.4 Service charges
 
 During the year the Company has received a demand of Rs.  43,745,684
 towards service charges on purchase of natural gas for the period I
 July, 2008 to 31 March, 2009 The Company is of the view that the amount
 is not payable and is disputing the demand made by the supplier and
 hence no provision has been made in the books of accounts for this
 amount.
 
 3.  Estimated amount of contracts remaining to be executed on capital
 account and not provided for (net of advances) Rs 701,143,333 (previous
 year Rs 639,812,199).
 
 4.  The Company has installed CNG Stations on land leased from various
 Government Authorities under leases for periods ranging from one to
 five years. However, assets constructed/installed on such land are
 depreciated generally at the rates specified in Schedule XIV to the
 Companies Act, 1956, as the management does not foresee non-renewal of
 the above lease arrangements by the Authorities.
 
 5.  Segment reporting
 
 The Company operates in a single segment of Natural Gas Business mainly
 in the National Capital Region and therefore the disclosure
 requirements as per Accounting Standard 17 Segment Reporting are not
 applicable to the Company.
 
 6.  Management has carried out a review of the carrying value of assets
 as at 31 March 2009 in accordance with the provisions of Accounting
 Standard - 28, Impairment of Assets. Based on the review, the
 management is of the opinion that there are no impairment indicators
 that necessitate any adjustments to the carrying value of assets.
 
 Note: Managerial Remuneration does not include:
 
 1.  Rs. 559,062 paid to Whole Time Director towards commission on
 profit for the financial year 2007-08, since the amount was refunded by
 him and the same was subsequently paid to his parent organization
 Bharat Petroleum Corporation Limited as per his advice.
 
 2.  Rs. 1,500,000 payable to Managing Director and Whole Time Director
 as commission on profit based on the period of directorship held during
 the financial year ended on 31.03.2009, since the amount will be paid
 to their parent organization as per their advice.
 
 Notes:
 
 1.  Difference in reconciliation of opening stock, purchases, sales and
 closing stock of gas quantities is on account of measurement tolerance
 and normal loss of 15,061,670 SCM (previous year 15,626,463 SCM).
 
 2.  Natural gas is purchased in SCM and Compressed Natural Gas is sold
 in Kgs.
 
 3.  Sale of CNG is net of discounts and gross of excise duty.