The following discussion of our financial condition and results of operations should be read in conjunction with our Restated Consolidated Financial Statements on page 241.
This Draft Red Herring Prospectus may include forward-looking statements that involve risks and uncertainties, and our actual financial performance may materially vary from the conditions contemplated in such forward-looking statements as a result of various factors, including those described below and elsewhere in this Draft Herring Prospectus. For further information, see
"Forward-Looking Statements" on page 27. Also read "Risk Factors" and "Significant Factors Affecting our Results of Operations" on pages 29 and 281, respectively, for a discussion of certain factors that may affect our business, financial condition or results of operations.
Unless otherwise indicated or the context otherwise requires, the financial information for the six months ended September 30, 2022 and September 30, 2021, and Fiscals 2022, 2021 and 2020 included herein is derived from the Restated Consolidated Financial Information, included in this Draft Red Herring Prospectus, which have been derived from our audited financial statements and restated in accordance with the SEBI ICDR Regulations and the Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the ICAI, as amended from time to time, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries. For further information, see "Restated Consolidated Financial Statements" on page 241. Our Company recently incorporated a subsidiary, SKI-Clean Energy Private Limited. However, since the incorporation of our Subsidiary was done on September 21, 2022, subscription to its equity capital was affected post September 30, 2022 and accordingly the audited consolidated Ind AS financial statements do not take into account consolidation of Subsidiary financials; and are therefore not reflected in Restated Consolidated Financial Statements of our Company.
Unless the context otherwise requires, under this section, references made to "we", "us", "our", "the Company" or "our Company" refers to IRM Energy Limited. Unless otherwise indicated, industry and market data used in this section has been derived from the industry report titled "City Gas Distribution Market Assessment" dated December 14, 2022 (the "CRISIL Report") prepared and issued by CRISIL Limited, appointed by us on September 1, 2022, and paid for and commissioned by our Company for an agreed fee in connection with the Issue. A copy of the CRISIL Report is available on the website of our Company at https://www.irmenergy.com/investor/#material-contracts-and-documents. The data included herein includes excerpts from the CRISIL Report and may have been re-ordered by us for the purposes of presentation. There are no parts, data or information (which may be material for the proposed Issue), that has been left out or changed in any manner. Unless otherwise indicated, financial, operational, industry and other related information derived from the CRISIL Report and included herein with respect to any particular year refers to such information for the relevant calendar year. For more information, please see the section entitled "Risk Factors This Draft Red Herring Prospectus contains information from an industry report prepared by CRISIL exclusively commissioned and paid for by us for such purpose" on page 41. Also please see the section entitled "Certain Conventions, Use of Financial Information and Market Data and Currency of Presentation - Industry and Market Data" on page 24.
OVERVIEW
We are a city gas distribution ("CGD") company in India, with operations at Banaskantha (Gujarat), Fatehgarh Sahib (Punjab), Diu & Gir Somnath (Union Territory of Daman and Diu/Gujarat), and Namakkal & Tiruchirappalli (Tamil Nadu), engaged in the business of laying, building, operating and expanding the city or local natural gas distribution network. We are an integrated value driven energy enterprise, developing natural gas distribution projects in the geographical areas ("GAs") allotted to us for industrial, commercial, domestic and automobile customers, and we have built our competency as a CGD company by development of our existing GAs since 2017. (Source: CRISIL Report) We focus on meeting the energy needs of customers in our GAs through our pipelines and CNG station network at a competitive price, while maintaining high safety standards.
(Source: CRISIL Report)
We have positioned ourselves as the provider of one of the safest, cleanest and most cost-effective fuels for households, commercial establishments and industrial units as well as for fuel requirements in transport segment. (Source: CRISIL Report) We distribute CNG for use in motor vehicles and PNG for use by domestic households as well as for commercial and industrial units. We were recognized as the ‘City Gas Distribution - Growing Company of the Year 2020 by Federation of Indian
Petroleum Industries ("FIPI"). Due to our competitive gas price and optimized operational expenditure, we can offer gas to our PNG industrial customers at a viable price in the market and enable the PNG industrial customers to switch from other alternate fuels (coal and furnace oils) to natural gas. (Source: CRISIL Report) Compared with competitive fuels, we provide a more reliable and environment-friendly alternative fuel to all our customer segments, and hence have been able to tap potential customer segments in the respective GAs. (Source: CRISIL Report). Further, we are committed to health and safety and have established safety management systems which ensures safe, reliable and uninterrupted distribution of natural gas to our customers, with a focus on systemic minimization of health and safety risks.
We commenced our operations in July 2017, pursuant to the receipt of authorizations for the GAs awarded for Banaskantha and Fatehgarh Sahib, in the sixth round of bidding conducted by the Petroleum and Natural Gas Regulatory Board ("PNGRB") in July 2016.
In July 2016, in the sixth round of bidding, we received authorization to lay, build, operate and expand the city or local natural gas network with a minimum work permit ("MWP") to create an infrastructure of 1,800 inch kms gas pipeline (consisting of medium density polyethene ("MDPE") pipelines and steel pipelines) and 28,021 PNG domestic connections in Banaskantha; and 650 inch kms gas pipeline (consisting of MDPE pipelines and steel pipelines), and 5,905 PNG domestic connections in Fatehgarh Sahib. Thereafter, we received the authorization for the GA of Diu & Gir Somnath in the ninth round of bidding conducted in September 2018, for creating the infrastructure of 188 inch kms gas pipeline (consisting of steel pipelines), 91,000 PNG domestic connections and 35 CNG stations in Diu & Gir Somnath. We are strengthening our roots in our existing authorized GAs. (Source: CRISIL Report) More recently, we have received the authorization for the GA of Namakkal & Tiruchirappalli in the eleventh round of bidding conducted by PNGRB in January 2022 for creating the infrastructure of 1,450 inch kms gas pipeline (consisting of steel pipelines), 17,74,000 PNG domestic connections and 290 CNG stations in Namakkal & Tiruchirappalli.
The PNGRB grants us the authorization to operate in a GA, along with an exemption from being under the purview of a
‘common carrier or ‘contact carrier for the transmission of natural gas within our GAs. Exemption from the purview of a ‘common carrier or ‘contact carrier allows us exclusivity to operate in our GA and install our pipelines for supply of natural gas. This exemption provides us with a ‘marketing exclusivity for transmission of natural gas, for a limited period prescribed by the PNGRB, within each of our GAs. For further details in relation to the GAs awarded to us, please see "Our Business
Operations Our Geographical Locations" beginning on page 178.
Our supply network consisted of (i) 3,248 inch kms, including approximately 2,665 inch kms of pipelines of medium density polyethylene ("MDPE") pipelines and 583 inch kms of steel pipelines for the six months ended September 30, 2022; (ii) 2712 inch kms, including approximately 2158 inch kms of MDPE pipelines and 554 inch kms of steel pipelines for the six months ended September 30, 2021; (iii) 2954 inch kms, including approximately 2380 inch kms of MDPE pipelines and 574 inch kms of steel pipelines for Fiscal 2022; (iv) 2343 inch kms, including approximately 1851 inch kms of MDPE pipelines and 492 inch kms of steel pipelines for Fiscal 2021; and (v) 1936 inch kms, including approximately 1499 inch kms of MDPE pipelines and 437 inch kms of steel pipelines for Fiscal 2020.
We served 168 industrial customers, 88 industrial customers, 96 industrial customers, 59 industrial customers and 30 industrial customers as at September 30, 2022, September 30, 2021, March 31, 2022, March 31, 2021, and March 31, 2020, respectively. Further, we served 202 commercial customers, 145 commercial customers, 179 commercial customers, 125 commercial customers and 90 commercial customers as at September 30, 2022, September 30, 2021, March 31, 2022, March 31, 2021 and March 31, 2020, respectively; and 43,183 domestic customers, 29,237 domestic customers, 35,725 domestic customers, 25,626 domestic customers and 18,382 domestic customers as at September 30, 2022, September 30, 2021, March 31, 2022, March 31, 2021 and March 31, 2020, respectively.
We have established a network of 56 CNG filling stations, comprising 2 stations owned and operated by the Company ("COCO Stations"), 30 CNG stations owned and operated by dealers ("DODO Stations") and 24 CNG stations owned and operated by oil marketing companies ("OMC Stations") as at September 30, 2022. Further, our network consisted of (i) 2 COCO Stations,
25 DODO Stations and 22 OMC Stations as at September 30, 2021; (ii) 2 COCO Stations, 27 DODO Stations and 23 OMC Stations as at March 31, 2022; (iii) 2 COCO Stations, 22 DODO Stations and 21 OMC Stations as at March 31, 2021; and (iv) 2 COCO Stations, 15 DODO Stations and 16 OMC Stations as at March 31, 2020. In aggregate, we had (i) 216 CNG station dispensing points across all GAs as at September 30, 2022; (ii) 188 CNG station dispensing points across all GAs as at September 30, 2021; (iii) 205 CNG station dispensing points across all GAs as at March 31, 2022; (iv) 170 CNG station dispensing points across all GAs as at March 31, 2021; and (v) 139 CNG station dispensing points across all GAs as at March 31, 2020. The COCO Stations and DODO Stations include the ‘IRM Energy branding to position and strengthen our corporate identity.
Our natural gas sourcing strategy aims to reduce the impact of price volatility and follow a calibrated approach in pricing to ensure growth in sales volume as well as maintaining healthy margins. It includes index linkages, gas procurement from high pressure high temperature fields under mid to long term tenure and reliance on a diversified portfolio of gas contracts, helping us in efficient input gas cost management. (Source: CRISIL Report) Our mid to long-term gas sale and purchase agreements
("GSPAs") with gas suppliers such as GAIL and RIL enable us to source gas at a reasonable cost. Our Companys gas procurement helps us mitigate the effect of the volatility in gas availability and pricing. (Source: CRISIL Report) We have also entered into certain gas transportation agreements ("GTAs") for transportation of natural gas from our suppliers pursuant to our GSPAs. Further, we have subscribed to a proprietary membership from Indian Gas Exchange ("IGX") in August 2022, through which we source natural gas on a need basis for our short-term requirements. Pursuant to the IGX membership, we get access to the natural gas free market, where prices are discovered by a free exchange mechanism. We were the first CGD entity to undertake a transaction (through a trading partner) on the Indian Gas Exchange to source RLNG. (Source: CRISIL Report)
Natural gas demand from the CGD sector to log at 15-16% CAGR between Fiscal 2022 and Fiscal 2030, to 103-107 MMSCMD. (Source: CRISIL Report). Demand from each sub-segment, including compressed and piped natural gas, is likely to grow at a healthy pace with the expansion in the gas network to more cities. (Source: CRISIL Report) Increase in penetration is expected to be a key demand driver for the PNG and CNG segment. (Source: CRISIL Report) Further, rising demand in the CGD segment has led to greater dependence on both domestic and imported gas. (Source: CRISIL Report) With CGD (domestic and transport) given the topmost priority in governments allocation of domestic gas, dependence on RLNG in the CGD segment is largely driven by commercial and industrial demand. (Source: CRISIL Report) RLNG accounted for ~43% of the CGD demand in Fiscal 2022 and ~47% in Fiscal 2021. (Source: CRISIL Report).
Our revenues from distribution of CNG and PNG vary for each of our GAs. While distribution of CNG is predominant in the Banaskantha and Diu & Gir Somnath GAs, the Fatehgarh Sahib GA focuses on supply of PNG. The supply of industrial PNG in the Fatehgarh Sahib gained an impetus pursuant to the NGT Order dated July 10, 2019, which enlisted Mandi Gobindgarh in the Fatehgarh Sahib GA as a pollution causing industrial cluster, thereby facilitating a shift from non-renewable pollution causing energy sources, towards consumption of PNG in the industrial cluster. For details, see "Marketing of PNG - Industrial PNG" in this section below.
The table below sets out the breakdown of net revenues (including compression income and excluding excise duty) generated from CNG and PNG (domestic, commercial and industrial) distribution and pursuant to NG trading for the six months ended September 30, 2022 and September 30, 2021, and for Fiscal 2022, Fiscal 2021 and Fiscal 2020, for each of our GAs:
| Particulars | Banaskantha |
Fatehgarh Sahib |
Diu & Gir |
NG Trading |
Total |
||||||
Somnath |
|||||||||||
| CNG | PNG | CNG | PNG | CNG | PNG | CNG | PNG | CNG | PNG | ||
(in million) |
|||||||||||
| Six months | 1,669.90 | 173.79 | 241.89 | 2,427.09 | 177.63 | 1.13 | - - | 2,089.42 | 2,602.01 | ||
| ended September | |||||||||||
| 30, 2022 | |||||||||||
| Six months | 861.79 | 79.40 | 76.20 | 626.39 | 90.08 | 0.05 | - 164.96 | 1,028.07 | 870.80 | ||
| ended September | |||||||||||
| 30, 2021 | |||||||||||
| Fiscal 2022 | 2,125.98 | 196.71 | 237.23 | 1,757.96 | 214.17 | 0.27 | - 509.77 | 2,577.38 | 2,464.71 | ||
| Fiscal 2021 | 1,213.14 | 137.09 | 117.36 | 313.43 | 83.17 | 0.01 | - 10.39 | 1,413.67 | 460.92 | ||
| Fiscal 2020 | 1,139.03 | 86.40 | 150.91 | 84.23 | 2.86 | - | - | - | 1,292.80 | 170.63 | |
The table below sets out the percentage of revenue contribution from CNG and PNG (domestic, commercial and industrial) distribution and pursuant to NG trading, for the six months ended September 30, 2022 and September 30, 2021, and for Fiscal 2022, Fiscal 2021 and Fiscal 2020, for each of our GAs:
| Particulars | Banaskantha |
Fatehgarh Sahib |
Diu and Gir |
NG Trading |
Total |
|||||
Somnath |
||||||||||
| CNG% | PNG% | CNG% | PNG% | CNG% | PNG% | CNG% | PNG% | CNG% | PNG% | |
| Six months | 90.57% | 9.43% | 9.06% | 90.94% | 99.37% | 0.63% | 0.00% | 0.00% | 44.54% | 55.46% |
| ended | ||||||||||
| September 30, | ||||||||||
| 2022 | ||||||||||
| Six months | 91.56% | 8.44% | 10.85% | 89.15% | 99.94% | 0.06% | 0.00% | 100.00% | 54.14% | 45.86% |
| ended | ||||||||||
| September 30, | ||||||||||
| 2021 | ||||||||||
| Fiscal 2022 | 91.53% | 8.47% | 11.89% | 88.11% | 99.88% | 0.12% | 0.00% | 100.00% | 51.12% | 48.88% |
| Fiscal 2021 | 89.85% | 10.15% | 27.24% | 72.76% | 99.99% | 0.01% | 0.00% | 100.00% | 75.41% | 24.59% |
| Fiscal 2020 | 92.95% | 7.05% | 64.18% | 35.82% | 100.00% | 0.00% | 0.00% | 0.00% | 88.34% | 11.66% |
We believe that we have established credibility in terms of efficient operational management, stakeholders management and supply chain risk management in our existing GAs, as there are significant entry barriers such as marketing and infrastructure exclusivity granted pursuant to the PNGRB authorizations for the respective GAs and requirement of large investments to establish a natural gas distribution network for competitors to enter into our area of operations post the expiry of marketing and infrastructure exclusivity. Our Company sees growth potential in and around the GAs we operate in, due to the (i) anticipated growth in the number of CNG vehicles due to the cost effectiveness of CNG as a fuel over other fuels (Source: CRISIL Report); (ii) potential growth in the number of households in our areas of operation; and (iii) presence of industrial clusters in Mandi Gobindgarh (Fatehgarh Sahib) and in Namakkal & Tiruchirappalli (Tamil Nadu).
We aim to capitalize on synergetic business opportunities. For instance, Shizuoka Gas Co. Ltd, Japan ("ShizGas") has undertaken equity infusion in our Company in March 2022 and in December 2022. For further details in relation to the equity infusion by ShizGas, please see "Capital Structure" and "History and Other Corporate Matters" beginning on pages 70 and 200, respectively. ShizGas is the fourth largest gas company in Japan by natural gas sales volume, with vast experience in the CGD sector. (Source: CRISIL Report). We believe that ShizGass technical expertise and good practices as an energy provider in Japan will add value to our business operations. Pursuant to our association with ShizGas, we intend to implement good practices related to natural gas distribution, system engineering, operation and maintenance, and energy saving and CO2 reduction, and share know-how in relation to LNG trailer and satellite tanks.
In order to achieve business integration, we have interests and ownerships in certain complementary businesses. For instance, we have invested in Farm Gas Private Limited on December 9, 2019, a biomass and waste to energy solution company with a vision to convert biomass as well as municipal solid waste to compressed biogas (CBG) and bio-fertilizer, which aims to provide cost-effective and economically viable renewable energy through waste and biomass management. We have also invested in Venuka Polymers Private Limited, a company engaged in the production of polyethylene (PE) pipelines, on December 19, 2019 with a vision to provide cost-effective and economically viable products for creating the infrastructure of gas and water pipelines; and in Ni Hon Cylinders Private Limited, a company engaged in the supply of imported type one cylinders for retro fitment of CNG cylinders on March 30, 2022, with an intention of manufacturing cylinder cascades for sale to other CGD companies. Additionally, we have signed a memorandum of understanding ("MoU") with Mindra EV Private Limited on August 24, 2022 for setting up an electric vehicle ("EV") charging infrastructure at DODO Stations and COCO Stations for a period of five years. We believe this will enable the creation of an efficient ecosystem for EV charging. We also intend to make a transition towards being an energy company and implement our proposed renewable (solar) energy projects envisaged for sale of renewable power to reputed industrial, commercial customers and green hydrogen generating/producing companies through long term power purchase agreements through our subsidiary, SKI-Clean Energy Private Limited with a stake of 70.00% as on the date of this Draft Red Herring Prospectus, incorporated on September 21, 2022. We believe that the above initiatives will help us achieve business synergies and grow as an integrated energy enterprise.
Certain key performance indicators of our financial performance are listed below.
| Particulars | For the six months ended September 30, 2022 | For the six months ended September 30, 2021 | For Fiscal 2022 | For Fiscal 2021 | For Fiscal 2020 |
| Volume | |||||
| CNG (MMSCM) | 42.40 | 31.55 | 72.54 | 43.13 | 38.80 |
| PNG (MMSCM) | 55.32 | 28.47 | 78.52 | 19.87 | 6.45 |
| Total (MMSCM) | 97.73 | 60.02 | 151.06 | 63.00 | 45.25 |
| Volume growth (in %) | 62.83% | 188.97% | 139.79% | 39.23% | 70.75% |
| Net Revenue from Operations (net of Excise Duty) | 4,708.68 | 1,910.53 | 5,071.45 | 1,895.65 | 1,475.57 |
| (in million) | |||||
| Gas Cost (in million) | 3,671.17 | 866.72 | 2,482.31 | 770.67 | 677.11 |
| Gross Margin (in million) | 1,037.50 | 1,043.81 | 2,589.14 | 1,124.98 | 798.46 |
| EBITDA (Consolidated) (in million) | 669.36 | 790.48 | 2,008.98 | 729.72 | 496.80 |
| EBITDA (as % to net revenue from operations) | 14.22%$ | 41.37%$ | 39.61% | 38.49% | 33.67% |
| PAT (Consolidated) (in million) | 392.45 | 478.12 | 1,280.28 | 348.89 | 210.65 |
| EPS (Consolidated) (in ) | 13.32$ | 16.49$ | 43.88 | 12.39 | 8.60 |
| ROE (Consolidated) (in %) | 12.76%$ | 28.63%$ | 52.53% | 29.67% | 28.19% |
| ROCE (Consolidated) (in %) | 9.23%$ | 18.40%$ | 39.01% | 19.98% | 16.94% |
* As certified by Mukesh M. Shah & Co., Chartered Accountants through their certificate dated December 14, 2022.
$
Not annualized.SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Set forth below is a discussion of certain factors that have had, and continue to have a significant impact on our financial performance:
Sourcing and transportation of natural gas
Domestic gas currently makes for ~94% of domestic PNG and CNG demand. The Government has provided the highest priority to it, as it is committed towards ensuring the reach of domestic gas across the length & breath of the country. Thus, it is envisaged that the CGD sector will continue to avail the highest priority to the domestic gas allocation. (Source: CRISIL Report)
We have entered into certain natural gas sale and purchase agreements ("GSPAs") with various third-party gas suppliers such as GAIL and RIL for supply of natural gas in the geographical areas allotted to us ("GAs"). Upon procuring the natural gas from the suppliers, we thereafter distribute compressed natural gas ("CNG") and piped natural gas ("PNG") through our own network of pipelines to our customers. Our supply of CNG and PNG may be affected in the event there is any disruption or breakdown in our suppliers network infrastructure. For further details, please see "Risk Factor - Any breakdown in the network infrastructure through which we source and supply natural gas could adversely affect our business, reputation, results of operations and cash flows." While we face no such challenges currently, we may, in the future, not be able to obtain natural gas supplies in sufficient quantities and acceptable qualities, and on commercially acceptable terms, or at all. We may also have to purchase natural gas at a significantly higher price from alternative sources for carrying out our operations. Further, the MoPNG allocates natural gas to CGD entities through the MoPNG Guidelines. If there is any reduction in the allocation of domestic natural gas by MoPNG to our Company, to an extent that we cannot meet demand in domestic PNG and CNG consumption, we will need to purchase gas from alternative sources at prices that may be significantly higher than the price of allocated gas. For details, see "Risk Factor - We are dependent on Government policies for allocation of natural gas and cost of gas supplied for our CNG and domestic PNG customers (the "Priority Sector"). Any reduction in allocation of natural gas or any increase in the cost of gas could adversely affect our business, reputation, operations and cash flows." Further, we have also entered into certain gas transportation agreements ("GTAs") for transportation of natural gas from our suppliers pursuant to our GSPAs. Any disruption in the transportation network under the GTAs could result in delays or defaults in timely transmission of natural gas to our CGD network, which could also impact our results of operations. Our mid to long-term GSPAs with gas suppliers such as GAIL and RIL enable us to source gas at reasonable pricing as well as seamless supply of gas to our downstream CGD networks. For details in relation to the GSPAs, please see "Our Business Operations Key Business Agreements". Due to our competitive gas price and optimised operational expenditure, we can offer the gas to our industrial PNG customers at a viable price in the market and enable the industrial PNG customers to switch from other alternate fuels (coal and furnace oils) to natural gas. (Source: CRISIL Report)
Sale price of natural gas
A key driver for the demand for natural gas is its cost advantage compared to alternate fuels. The price at which we sell natural gas is benchmarked to the price of alternate fuels such as petrol, diesel, other liquid fuel and LPG. Prices of alternate fuels are linked to the price of crude oil. Any decrease in the prices of alternate fuels may adversely impact the demand for natural gas and correspondingly affect our results of operations. Moreover, the price at which we sell gas to our customers is determined on the basis of certain factors such as the cost of procurement of natural gas, transmission cost and our business margin. Any increases in the price of procurement of natural gas would also have an adverse impact on the sale price of the gas to our customers, which could also impact our results of operations.
Conducting operations and rolling-out infrastructure in an efficient and timely manner
We are required to construct an infrastructure of gas distribution pipelines as a part of our operations. However, we rely upon third party engineering, procurement and construction ("EPC") contractors that undertake turnkey contracts for our gas distribution pipeline projects, except in instances where certain materials procured by the Company is provided to the contractors. Our reliance on EPC contractors to complete the expansion may subject us to construction delays, which are beyond our control. Any delay in completion of a construction project may also cause a delay in the receipt of projected operating revenues from our operations or cause us to lose customers.Further, construction of gas pipeline infrastructure constitutes a major part of our capital expenditure. If we do not have sufficient internal resources to fund our capital expenditure requirements in the future, we may be required to incur additional debt or equity financing which may not be available on commercially reasonable terms or at all. For further details, please see "Risk Factors -We may be subject to risks associated with delays in construction and commissioning of our existing and new gas distribution pipelines, including any delay in meeting our MWP targets" on page 32.Lack of capital resources may inhibit our ability to implement the expansion and limit our ability to expand our revenues in future periods. Any failure or inconvenience by a third party to perform their obligations on time or at all shall results in delay in expanding our network infrastructure which could adversely affect our business, results of operations and cash flows.
Credit worthiness of our commercial and industrial customers
Our customer base includes industrial and commercial customers. Due to our competitive gas price and optimised operational expenditure, we can offer the gas to our industrial PNG customers at a viable price in the market and enable the industrial PNG customers to switch from other alternate fuels (coal and furnace oils) to natural gas. (Source: CRISIL Report) We focus on meeting the energy needs of customers in our GAs through our pipelines and CNG station network at a competitive price, while maintaining high safety standards. (Source: CRISIL Report). We have successfully established a distribution network of CNG and PNG to customers. We served 168 industrial customers, 88 industrial customers, 96 industrial customers, 59 industrial customers and 30 industrial customers as at September 30, 2022, September 30, 2021, March 31, 2022, March 31, 2021, and March 31, 2020, respectively. Further, we served 202 commercial customers, 145 commercial customers, 179 commercial customers, 125 commercial customers and 90 commercial customers as at September 30, 2022, September 30, 2021, March 31, 2022, March 31, 2021 and March 31, 2020, respectively; and 43,183 domestic customers, 29,237 domestic customers, 35,725 domestic customers, 25,626 domestic customers and 18,382 domestic customers as at September 30, 2022, September 30, 2021, March 31, 2022, March 31, 2021 and March 31, 2020, respectively. Since commercial and industrial customers constitute a significant part of our revenue from operations, any downgrading in the credit worthiness of our commercial and industrial customers, could adversely affect our business, results of operations and cash flows.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PREPARATION & MEASUREMENT
The Restated Consolidated Financial Statements of the Company and its joint control entities comprises of the Restated Consolidated Statement of Assets and Liabilities as at 30 September, 2022, 30 September 2021, 31 March 2022, 31 March 2021 and 31 March 2020, the Restated Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Restated Consolidated Statement of Cash Flows and the Restated Consolidated Statement of Changes in Equity for periods / years ended 30 September, 2022, 30 September 2021, 31 March 2022, 31 March 2021 and 31 March 2020 and the Summary Statement of Significant Accounting Policies and explanatory notes and notes to Restated Consolidated Financial Statement (collectively, the ‘Restated Consolidated Financial Information).
These Restated Consolidated Financial Information have been prepared by the Management of the company for the purpose of inclusion in the Draft Red Herring Prospectus ("DRHP") the Red Herring Prospectus ("RHP") and the Prospectus ("Prospectus"), (DRHP, RHP and Prospectus, collectively the "Offer Documents") prepared by the Company in connection with its proposed Initial Public Offer ("IPO") in terms of the requirements of:
a) Section 26 of Part I of Chapter III of the Companies Act, 2013, as amended ("the Act");
b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended ("ICDR Regulations"); and
c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered
Accountants of India (ICAI), as amended (the "Guidance Note").
These Restated Consolidated Financial Statement have been compiled by the Management from the audited Consolidated Financial Statements of the Company and its joint venture as at and for the periods / years ended 30 September, 2022, 30 September 2021, 31 March 2022, 31 March 2021 and 31 March 2020 prepared in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013, read with Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other accounting principles generally accepted in India, which have been approved by the Board of Directors of the Company at their meetings held on 7th November 2022, 7th November 2022 , 19th May 2022, 22nd June, 2021 and 9th July, 2020 respectively.
The Restated Consolidated Financial Information have been prepared so as to contain information / disclosures and incorporating adjustments set out below in accordance with the ICDR Regulations:
a) have been prepared after incorporating adjustments for the changes in accounting policies, material errors and regrouping/reclassifications retrospectively in the financial years ended March 31, 2022, March 31, 2021, March 31, 2020 and six month period ended September 30, 2021 to reflect the same accounting treatment as per the accounting policies and grouping/classifications followed as at and for the six month period ended September 30, 2022;
b) do not contain any qualifications requiring adjustments; and
c) have been prepared in accordance with the Companies Act 2013, ICDR Regulations and the Guidance Note
The Consolidated Financial Statements are presented in Indian Rupee (INR) which is also Functional Currency of the Company and all values are rounded to the nearest millions except when otherwise indicated.
1.1. Historical cost convention
The Consolidated Financial Statements have been prepared on a historical cost convention & on an accrual basis, except for certain items that are measured at fair value as required by relevant Ind AS:
Financial assets & financial liabilities measured initially at fair value (refer accounting policy on financial Instruments);
Defined benefit & other long-term employee benefits.
1.2. Current vs Non-Current Classification
The Company presents assets & liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
Expected to be realised or intended to be sold or consumed in normal operating cycle
Held primarily for the purpose of trading
Expected to be realised within twelve months after the reporting period, or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current
A liability is treated as current when:
It is expected to be settled in normal operating cycle
It is held primarily for the purpose of trading
It is due to be settled within twelve months after the reporting period, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
Deferred tax assets & liabilities are classified as non-current assets & liabilities.
The operating cycle is the time between the acquisition of assets for processing & their realisation in cash & cash equivalents.
1.3. Principles of equity accounting for Consolidation
The Restated Consolidated Financial Statement of IRM Energy Limited (‘the Company) includes financial statements of IRM Energy Limited, Farm Gas Private Limited (‘the Joint Control Entity"), Venuka Polymers Private Limited (‘the Joint Control Entity") Ni-Hon Cylinders Pvt Ltd (‘the Joint Control Entity") and SKI-clean Energy Private Limited ("the subsidiary Entity") in all of which Joint Control Entity, the Company owns 50% paid up share capital and in Subsidiary Entity, the company has subscribed to MOA for 70% of the Equity share capital collectively referred to as ‘the Group.
The Restated Consolidated Financial Statements have been prepared on the following basis:
Joint ventures
Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated balance sheet. Accordingly, the share of profit/ loss of each of the associate companies, joint venture (the loss being restricted to the cost of investment) has been added to / deducted from the cost of investments.
Equity accounting
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Companys share of the post-acquisition profits or losses and other comprehensive income.
The carrying amount of equity accounted investments are tested for impairment in accordance with the policy described in note 32 below.
Subsidiary Entity
No Financial transactions have occurred in the subsidiary Entity by 30th September, 2022. Therefore, there are no transactions in the subsidiary entity to give effect in the consolidated Financials of the company.
1.4. Use of estimates
The preparation of Consolidated Financial Statements in conformity with Ind AS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Companys accounting policies. The areas involving a higher degree of judgement or complexity, or area where assumptions & estimates are significant to these Consolidated Financial Statements are disclosed below.
The preparation of Consolidated Financial Statements in conformity with the Accounting Standards generally accepted in India requires, the management to make estimates & assumptions that affect the reported amounts of assets & liabilities & disclosure of contingent liabilities as the date of the Consolidated Financial Statements & reported amounts of revenues & expenses for the year. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in current & future periods.
When preparing the Consolidated Financial Statements, management undertakes a number of judgments, estimates
& assumptions about the recognition & measurement of assets, liabilities, income & expenses. In the process of applying the Companys accounting policies, the following judgments have been made apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial information. Judgements are based on the information available at the date of balance sheet.
(i) Income Taxes: Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
(ii) Property, plant & equipment: Property, plant & equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assets expected useful life & the expected residual value at the end of its life. Management reviews the residual values, useful lives & methods of depreciation of property, plant & equipment at each reporting period end & any revision to these is recognised prospectively in current & future periods. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
(iii) Employee Benefits: Significant judgments are involved in making judgments about the life expectancy, discounting rate, salary increase, etc. Which significantly affect the working of the present value of future liabilities on account of employee benefits by way of defined benefit plans.
(iv) Impairment of assets & investments: Significant judgment is involved in determining the estimated future cash flows from the investments, Property, Plant & Equipment & Goodwill to determine its value in use to assess whether there is any impairment in its carrying amount as reflected in the financials.
(v) Deferred Tax: Deferred tax asset is recognised for all the deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. The management assumes that taxable profits will be available while recognising deferred tax assets.
(vi) Recognition & measurement of unbilled gas sales revenues: In case of customers where meter reading dates for billing is not matching with reporting date, the gas sales between last meter reading date & reporting date has been accrued by the company based on past average sales. The actual sales revenue may vary compared to accrued unbilled revenue so included in Sale of natural gas & classified under current financial assets.
(vii) Recognition & measurement of other provisions: The recognition & measurement of other provisions are based on the assessment of the probability of an outflow of resources & on past experience & circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore vary from the figure so provided & included as liability.
(viii) Leases: The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.
In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease.
The Company revises the lease term if there is a change in the non-cancellable period of a lease. The discount rate is generally based on the incremental borrowing rate.
1.5. Property, Plant & Equipment
(i) Property, Plant and Equipment are stated at cost of acquisition / construction less accumulated depreciation.
The Company capitalises to project assets all the cost directly attributable & ascertainable, to completing the project (including pre-operative expenses). These costs include expenditure of pipelines, plant & machinery, cost of laying of pipeline, cost of survey, commissioning & testing charge, detailed engineering & interest on borrowings attributable to acquisition of such assets. The gas distribution networks are treated as commissioned when supply of gas commences to the customer(s).
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Subsequent expenditure related to an item of property, plant and Equipment is added to its book value only if it increases the future economic benefits from the existing asset beyond its previously assessed standard of performance. All other expenses incurred towards normal repairs and maintenance of the existing property, plant and Equipment (including cost of replacing parts) are charged to profit and loss for the period during which such expenses are incurred.
Interest on borrowings attributable to the acquisition / construction of Property, Plant and Equipment for the period of construction is added to the cost of Property, Plant and Equipment.
Assets installed at customer premises, including meters & regulators where applicable, are recognised as property plant & equipment if they meet the definition provided under Ind AS 16 subject to materiality as determined by the management & followed consistently.
(ii) Capital Work in Progress includes expenditure incurred on assets, which are yet to be commissioned & capital inventory, which comprises stock of capital gitems/construction materials at respective city gas network.
All the directly identifiable & ascertainable expenditure, incidental & related to construction incurred during the period of construction on a project, till it is commissioned, is kept as Capital work in progress (CWIP) & after commissioning the same is transferred / allocated to the respective "Property, Plant and Equipment".
Further, advances paid towards the acquisition of property, plant & equipment outstanding at each balance sheet date are classified as capital advances under other non- current assets.
(iii) Depreciation is provided as follow:
Property, Plant and Equipment is depreciated over the permissible useful life specified in Schedule II pursuant to section 123(2) of the Companies Act, 2013 as per Straight line method".
The estimated Useful life of Asset is below
| Name of Asset | Useful life |
| Building | 25 Years |
| Computer and Laptops | 3 Years |
| Plant and Machinery- Pipelines and Last Mile Connectivity | 25 Years |
| Plant and Machinery- CNG Stations Equipments and Installations | 15 Years |
| Furniture and Fixtures | 10 Years |
| Office Equipment | 5 Years |
| Vehicles | 5 Years |
| Software | 5 Years |
Useful life of the Right of Way (ROW) charges is considered as the period for which such charges are paid. In cases where the tenor of payment is not specified by the authorities, the useful life of such ROW charges is considered as 10 years.
o The management believes that these useful lives are realistic & reflect fair approximation of the period over which the assets are likely to be used. The useful lives are reviewed by the management at each financial year end & revised, if appropriate. In case of a revision, the unamortised depreciable amount (remaining net value of assets) is charged over the revised remaining useful life.
o For the purpose of calculating the depreciation, residual value for Tangible assets has been considered as 5% of the value of asset concerned.
Depreciation on items of property, plant & equipment acquired / disposed-off during the year is provided on pro-rata basis with reference to the date of addition / disposal.
Depreciation on additions to Property, Plant and Equipment made during the period having cost of Rs. 5000 or less is provided @ 100% on pro rata basis with reference to the date of addition.
Gains & losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of profit & loss under Other Expenses/Income.
(iv) Intangible Assets:
Intangible Assets includes amount paid towards obtaining Right of Way (ROW) permissions for laying the gas pipeline network & cost of developing software for internal use. The Company capitalises software as
Intangible Asset where it is expected to provide future enduring economic benefits. Cost associated with maintaining software programmes are recognised as expenses as & when incurred.
Any item of intangible assets is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the intangible asset (calculated as the difference between the net disposal proceeds & the carrying amount of the intangible asset) is charged to revenue in the income statement when the intangible asset is derecognised.
1.6. Foreign currency transactions
Foreign currency transactions are recorded at the exchange rates prevailing at the date of such transactions. Monetary assets & liabilities as at the Balance Sheet date are translated at the rates of exchange prevailing at the date of the Balance Sheet. Gain/Loss arising on account of differences in foreign exchange rates on settlement/translation of monetary assets & liabilities are recognised in the Statement of Profit & Loss, unless they are considered as an adjustment to borrowing costs, in which case they are capitalised along with the borrowing cost.
1.7. Revenue recognition
(i) Revenue is measured at fair value of the consideration received or receivable. The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company & no significant uncertainty exists regarding the amount of consideration that will be derived from the sale of goods /services & regarding its collection. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction & the specifics of each arrangement.
Sale of Natural Gas is recognized on supply of gas to customers by metered/assessed measurements as no significant uncertainty exists regarding the measurability or collectability of the sale consideration. Sales are billed bi-monthly for domestic customers, monthly/fortnightly for commercial & non-commercial customers & fortnightly for industrial customers as the timing of the transfer of risks & rewards varies depending on the individual terms of the sales agreement. Revenue on sale of Compressed Natural Gas (CNG) is recognized on sale of gas to consumers from retail outlets.
The amount recognised as revenue is stated inclusive of excise duty & exclusive of Sales Tax /Value Added Tax (VAT) & Goods & Service Tax & is net of trade discounts or quantity discounts.
Unbilled revenue is recognised from the end of the last billing cycle to the Balance Sheet date since the related supply of natural gas are performed
The amounts collected towards connection charges from certain domestic customers are "Non-Refundable Charges". Accordingly, the same are recognized as revenue as an when the Company receives the amount from such customers.
The amounts collected from certain domestic customers which includes amount "refundable" in nature. Accordingly, the same are recognized as a liability under the head "Deposit from Customers" in the balance sheet.
(ii) Interest income is recognised on time proportionate method (on accrual basis).
(iii) Revenue in respect of other income is recognised when no significant uncertainty as to its determination or realisation exists.
1.8. Borrowing Costs
(i) The Company is capitalising borrowing costs that are directly attributable to the acquisition or construction of qualifying asset up to the date of commissioning. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
(ii) Other borrowing costs are recognised as an expense in the year in which they are incurred, if any.
1.9. Impairment of Property, Plant & Equipment & Intangible Assets
The Company, at each balance sheet date, assesses whether there is any indication of impairment of any asset &/ or cash generating unit. If such indication exists, assets are impaired by comparing carrying amount of each asset &/ or cash generating unit to the recoverable amount being higher of the net selling price or value in use. Value in use is determined from the present value of the estimated future cash flows from the continuing use of the assets.
1.10. Inventories
Inventory of Gas (including gas inventory in pipeline & CNG cascades) is valued at lower of cost & net realizable value. Cost is determined on weighted average cost method.
Stores, spares & consumables and other inventory items (viz. CNG Kits, etc) are valued at lower of cost & net realizable value. Cost is determined on moving weighted average basis.
1.11. Accounting for Income Taxes
Income tax expenses comprises current tax (i.e. amount of tax for the period determined in accordance with the Income Tax Law) & deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income & taxable income for the period). Income tax expenses are recognised in statement of profit or loss except tax expenses related to items recognised directly in reserves (including statement of other comprehensive income) which are recognised with the underlying items.
(i) The Income Tax expense or credit for the period is the tax payable on the current periods taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets & liabilities attributable to temporary differences & to unused tax losses.
The Current Income Tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period i.e. as per the provisions of the Income Tax Act, 1961, as amended from time to time. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Advance Taxes & provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid & income tax provision arising in the same tax jurisdiction for relevant tax paying units & where the Company is able to & intends to settle the asset & liability on a net basis.
(ii) Deferred Tax is provided in full on temporary difference arising between the tax bases of the assets & liabilities & their carrying amounts in Consolidated Financial Statements at the reporting date. Deferred tax are recognised in respect of deductible temporary differences being the difference between taxable income & accounting income that originate in one period & are capable of reversal in one or more subsequent periods., the carry forward of unused tax losses & the carry forward of unused tax credits.
Deferred Income Tax is determined using tax rates (& laws) that have been enacted or substantially enacted by the end of the reporting period & are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred Tax Assets are recognised for all deductible temporary differences & unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences & losses.
Deferred Tax Assets & Liabilities are offset when there is a legally enforceable right to offset current tax assets & liabilities & when the deferred tax balances relate to the same taxation authority. Current tax assets & tax liabilities are offset where the Company has a legally enforceable right to offset & intends either to settle on a net basis, or to realise the asset & settle the liability simultaneously.
Current & Deferred Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Any tax credit available including Minimum Alternative Tax (MAT) under the provision of the Income Tax Act, 1961 is recognised as deferred tax to the extent that it is probable that future taxable profit will be available against which the unused tax credits can be utilised. The said asset is created by way of credit to the statement of profit & loss & shown under the head deferred tax asset.
The carrying amount of deferred tax assets is reviewed at each reporting date & reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date & are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
1.12. Leases
The Company as a lessee
The Companys lease asset classes primarily consist of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a initial application date i.e. 1 April 2019. 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 an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of initial application of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short-term and low-value leases, the Company recognizes the lease payments as an operating expense on actual payment basis as and when incurred.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The ROU assets are initially recognized that is equal to lease liabilities on the initial application date, that is arrived based on incremental borrowing rate on the initial application date. They are subsequently measured at cost less accumulated depreciation and impairment losses.
ROU assets are depreciated from the initial application date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments on the date of initial application. The lease payments are discounted using the incremental borrowing rate. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or a termination option. Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Company as a lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever 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. When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease Consolidatedly. The sublease is classified as a finance or operating lease by reference to the ROU asset arising from the head lease. For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
1.13. Employee Benefits
Liabilities for wages & salaries, including leave encashment that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees services up to the end of the reporting & are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
(i) Defined Contribution Plan:
Contribution towards provident fund for eligible employees are accrued in accordance with applicable statutes & deposited with the regulatory provident fund authorities (Government administered provident fund scheme). The Company does not carry any other obligation apart from the monthly contribution.
The Companys contribution is recognised as an expense in the Statement of Profit & Loss during the period in which the employee renders the related service.
(ii) Defined Benefit Plan:
Gratuity liability is a defined benefit obligation and is computed at the end of each financial year on the basis of an actuarial valuation by an actuary appointed for the purpose as per projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on the government bonds.
The Liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of the defined benefit plan obligation at the end of the reporting period less the fair value of the plan assets. The Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method. The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to the market yields at the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost in calculated by applying the discounting rate to the net balance of the defined benefit obligation & the fair value of plan assets. Such costs are included in employee benefit expenses in the statement of Profit & Loss. Re-measurements gains or losses arising from experience adjustments & changes in actuarial assumptions are recognised immediately in the period in which they occur directly in "other comprehensive income" & are included in retained earnings in the statement of changes in equity & in the balance sheet. Re-measurements are not reclassified to profit or loss in subsequent periods.
The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit & loss:
Service costs comprising current service costs, past-service costs, gains & losses on curtailments & non-routine settlements;
Net interest expense or income. (iii) Long Term Employee Benefits:
The liability in respect of accrued leave benefits which are expected to be availed or encashed beyond 12 months from the end of the year, is treated as long term employee benefits.
The Companys liability is actuarially determined by qualified actuary at balance sheet date by using the Projected Unit Credit method.
Actuarial losses/ gains are recognized in the Statement of Other Comprehensive Income in the year in which they arise.
1.14. Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company operates in a single segment of natural gas business and relevant disclosure requirements as per Ind AS 108 "Operating Segments" have been disclosed by the Company under note no 38.
1.15. Provisions, Contingent Liabilities & Contingent Assets
Provision is recognised when the Company has a present obligation as a result of past events & it is probable that the outflow of resources will be required to settle the obligation & in respect of which reliable estimates can be made. A disclosure for contingent liability is made when there is a possible obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision/ disclosure is made. Contingent assets are not recognised in the financial statement.
Provisions & contingencies are reviewed at each balance sheet date & adjusted to reflect the correct management estimates.
1.16. Statement of Cash Flows
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or accruals of past or future operating cash receipts or payments & item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing & financing activities of the Company are segregated.
1.17. Events occurring after the Reporting Date
Adjusting events (that provides evidence of condition that existed at the balance sheet date) occurring after the balance sheet date are recognized in the Consolidated Financial Statements. Material non adjusting events (that are inductive of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that represents material change & commitment affecting the financial position are disclosed in the Directors Report.
1.18. Exceptional Items
Certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company is such that its disclosure improves the understanding of the performance of the Company, such income or expense is classified as an exceptional item & accordingly, disclosed in the notes accompanying to the Consolidated Financial Statements.
1.19. Dividends
Final Dividend on shares is recorded as liability on the date of approval of the same by Shareholders & interim dividend are recorded as liability on the date on declaration by Companys board of Directors.
1.20. Earnings per Share
Basic earnings per share are calculated by dividing the net profit or loss [excluding other comprehensive income] for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a right issue, shares split & reserve share splits [consolidation of shares] that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss [excluding other comprehensive income] for the year attributable to equity shareholders & the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
1.21. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments also include derivative contracts such as foreign exchange forward contracts, cross currency interest rate swaps, interest rate swaps, currency options and embedded derivatives in the host contract.
a. Financial Assets
Initial recognition and measurement
All financial assets are recognized initially at fair value (plus transaction costs attributable to the acquisition of the financial assets, in the case of financial assets are not recorded at fair value through profit or loss).
i. Classifications
The company classifies its financial assets as subsequently measured at either amortized cost or fair value depending on the companys business model for managing the financial assets and the contractual cash flow characteristics of the financial assets.
ii. Business model assessment
The company assesses the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed, and information is provided to management.
Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ‘principal is defined as the fair value of the financial asset on initial recognition. ‘Interest is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a period, for other basic lending risks, costs (e.g. liquidity risk and administrative costs), and profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.
Financial Assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met:
It is held within a business model whose objective is to hold assets to collect contractual cash flows.
the contractual terms of the financial asset represents contractual cash flows that are solely payments of principal and interest.
After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method. Amortised cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
Financial Assets at Fair Value through Other Comprehensive Income (FVOCI)
A financial asset is measured at amortized cost only if both of the following conditions are met:
it is held within a business model whose objective is to hold assets in order to collect contractual cash flows.
the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest.
On initial recognition, the Company makes an irrevocable election on an instrument-by-instrument basis to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments, other than equity investment which are held for trading. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the Reserve for equity instruments through other comprehensive income. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
Financial Assets at Fair Value through Profit and Loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading.
Other financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in statement of the profit and loss.
Investment in Subsidiaries, Jointly Controlled Entities and Associates
Investment in subsidiaries, jointly controlled entities and associates are measured at cost less impairment as per the Ind AS 27 -Separate Financial Statements.
Impairment of investments
The Company reviews its carrying value of investments carried at cost or amortised cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.
iii. Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the companys balance sheet) when:
The rights to receive cash flows from the asset have expired, or
The company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through arrangement; and either (a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the company continues to recognize the transferred asset to the extent of the companys continuing involvement. In that case, the company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the company could be required to repay.
On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in the OCI is recognised in profit or loss.
Impairment of financial assets
The Company assesses the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments on a forward-looking basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
With regard to trade receivable, the Company applies the simplified approach as permitted by the Ind AS 109, Financial Instruments, which requires expected lifetime losses to be recognised from the initial recognition of the trade receivables.
For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial assets has increased significantly since initial recognition.
b. Financial Liabilities
i. Initial recognition and measurement
Financial liabilities are classified at initial recognition as financial liabilities at fair value through profit or loss or amortised cost, as appropriate.
All financial liabilities are recognised initially at fair value and in the case of amortised cost, net of directly attributable transaction costs.
ii. Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial Liabilities measured at amortised cost
After the initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in the Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ losses are not subsequently transferred to the P&L.
However, the Company may transfer the cumulative gain or loss within equity. All the other changes in fair value of such liability are recognised in the statement of profit or loss.
iii. Derecognition of financial liabilities
The company derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
c. Modifications of financial assets and financial liabilities
Financial assets
If the terms of a financial asset are modified, the company evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed to have expired. In this case, the original financial asset is derecognised and a new financial asset is recognised at fair value.
If the cash flows of the modified asset carried at amortised cost are not substantially different, then the modification does not result in derecognition of the financial asset. In this case, the company recalculates the gross carrying amount of the financial asset and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in profit or loss. If such a modification is carried out because of financial difficulties of the borrower, then the gain or loss is presented together with impairment losses. In other cases, it is presented as interest income. The gain / loss is recognised in other equity in case of transaction with shareholders.
Financial liabilities
Borrowings and other financial liabilities are initially recognised at fair value (net of transaction costs incurred). Difference between the fair value and the transaction proceeds on initial is recognised as an asset / liability based on the underlying reason for the difference.
Subsequently all financial liabilities are measured at amortised cost using the effective interest rate method. The company derecognises a financial liability when its terms are modified, and the cash flows of the modified liability are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss. The gain / loss is recognised in other equity in case of transaction with shareholders.
The Company has computed the Equity component of the Preference Shares considering the terms of the RPS to be non-cumulative and further modified the estimates of future cash flows.
1.22. Fair Value Measurements
These Consolidated Financial Statements are prepared under the historical cost convention, except certain financial assets & liabilities measured at fair value (refer accounting policy on financial instruments) as per relevant applicable Ind AS.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest & best use or by selling it to another market participant that would use the asset in its highest & best use.
The Company uses valuation techniques that are appropriate in the circumstances & for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs & minimising the use of unobservable inputs. All assets & liabilities for which fair value is measured or disclosed in the Consolidated Financial Statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets & liabilities that are recognised in the Consolidated Financial Statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
(All amounts are in Million Indian Rupees) |
||||||||
| As at 30 September 2022 | Financial instruments by category |
Fair value hierarchy (fair value) |
||||||
(carrying amount) |
||||||||
| FVPL | FVOCI | Amortise | Total | Level 1 | Level 2 | Level 3 | Total | |
| d cost | ||||||||
| Financial assets | ||||||||
| Investment* | 140.60 | - | - | 140.60 | 140.60 | - | - | 140.60 |
| Loans | - | - | 76.46 | 76.46 | - | - | 76.46 | 76.46 |
| Trade receivables | - | - | 503.06 | 503.06 | - | - | 503.06 | 503.06 |
| Cash & cash equivalents | - | - | 728.75 | 728.75 | - | - | 591.49 | 728.75 |
| Other Bank Balances | - | - | 567.60 | 567.60 | - | - | 405.57 | 567.60 |
| Other financial assets | - | - | 278.80 | 278.80 | - | - | 208.25 | 278.80 |
| Total financial assets | 140.60 | - | 2,154.67 | 2,295.27 | 140.60 | - | 2,154.67 | 2,295.27 |
| Financial liabilities | ||||||||
| Borrowings | - | - | 2,878.44 | 2,878.44 | - | - | 2,878.44 | 2,878.44 |
| Lease Liabilities | - | - | 139.94 | 139.94 | - | - | 139.94 | 139.94 |
| Trade payables | - | - | 347.64 | 347.64 | - | - | 347.64 | 347.64 |
| Other financial liabilities | - | - | 595.81 | 595.81 | - | - | 595.81 | 595.81 |
| Total financial liabilities | - | - | 3,961.83 | 3,961.83 | - | - | 3,961.83 | 3,961.83 |
| * Investment excludes investment in Joint Control Entities | ||||||||
(All amounts are in Million Indian Rupees) |
||||||||
| As at 30 September 2021 | Financial instruments by category |
Fair value hierarchy (fair value) |
||||||
(carrying amount) |
||||||||
| FVPL | FVOCI | Amortise | Total | Level 1 | Level 2 | Level 3 | Total | |
| d cost | ||||||||
| Financial assets | ||||||||
| Investment* | 45.33 | - | - | 45.33 | 45.33 | - | 45.33 | |
| Loans | - | - | - | - | - | - | - | - |
| Trade receivables | - | - | 169.06 | 169.06 | - | - | 169.06 | 169.06 |
| Cash & cash equivalents | - | - | 663.84 | 663.84 | - | - | 663.84 | 663.84 |
| Other Bank Balances | - | - | 169.06 | 169.06 | - | - | 169.06 | 169.06 |
| Other financial assets | - | - | 171.37 | 171.37 | - | - | 171.37 | 171.37 |
| Total financial assets | 45.33 | - | 1,173.33 | 1,218.66 | 45.33 | - | 2273.33 | 1,218.66 |
| Financial liabilities | ||||||||
| Borrowings | - | - | 2,036.79 | 2,036.79 | - | - | 2,036.79 | 2,036.79 |
| Lease Liabilities | - | - | 54.62 | 54.62 | - | - | 54.62 | 54.62 |
| Trade payables | - | - | 127.03 | 127.03 | - | - | 127.03 | 127.03 |
| Other financial liabilities | - | - | 292.64 | 292.64 | - | - | 292.64 | 292.64 |
| Total financial liabilities | - | - | 2,511.08 | 2,511.08 | - | - | 2,511.08 | 2,511.08 |
| * Investment excludes investment in Joint Control Entities | ||||||||
(All amounts are in Million Indian Rupees) |
||||||||
| As at 31 March 2022 | Financial instruments by category |
Fair value hierarchy (fair value) |
||||||
(carrying amount) |
||||||||
| FVPL | FVOCI | Amortise | Total | Level 1 | Level 2 | Level 3 | Total | |
| d cost | ||||||||
| Financial assets | ||||||||
| Investment* | 102.78 | - | - | 102.78 | 102.78 | - | - | 102.78 |
| Loans | - | - | 77.42 | 77.42 | - | - | 77.42 | 77.42 |
| Trade receivables | - | - | 227.13 | 227.13 | - | - | 227.13 | 227.13 |
| Cash & cash equivalents | - | - | 591.49 | 591.49 | - | - | 591.49 | 591.49 |
| Other Bank Balances | - | - | 405.57 | 405.57 | - | - | 405.57 | 405.57 |
| As at 31 March 2022 | Financial instruments by category | Fair value hierarchy (fair value) |
||||||
(carrying amount) |
||||||||
| FVPL | FVOCI | Amortise | Total | Level 1 | Level 2 | Level 3 | Total | |
| d cost | ||||||||
| Other financial assets | - | - | 208.25 | 208.25 | - | - | 208.25 | 208.25 |
| Total financial assets | 102.78 | - | 1,509.86 | 1,612.64 | 102.78 | - | 1509.86 | 1,612.64 |
| Financial liabilities | ||||||||
| Borrowings | - | - | 2025.91 | 2025.91 | - | - | 2025.91 | 2,025.91 |
| Lease Liabilities | - | - | 117.06 | 117.06 | - | - | 117.06 | 117.06 |
| Trade payables | - | - | 250.93 | 250.93 | - | - | 250.93 | 250.93 |
| Other financial liabilities | - | - | 414.39 | 414.39 | - | - | 414.39 | 414.39 |
| Total financial liabilities | - | - | 2808.29 | 2808.29 | - | - | 2808.29 | 2808.29 |
| * Investment excludes investment in Joint Control Entities | ||||||||
(All amounts are in Million Indian Rupees) |
||||||||
| As at 31 March 2021 | Financial instruments by category | Fair value hierarchy (fair value) |
||||||
(carrying amount) |
||||||||
| FVPL | FVOCI | Amortise | Total | Level 1 | Level 2 | Level 3 | Total | |
| d cost | ||||||||
| Financial assets | ||||||||
| Investment* | 13.76 | - | - | 13.76 | 13.76 | - | 13.76 | |
| Loans | - | - | - | - | - | - | - | - |
| Trade receivables | - | - | 111.85 | 111.85 | - | - | 111.85 | 111.85 |
| Cash & cash equivalents | - | - | 257.50 | 257.50 | - | - | 257.50 | 257.50 |
| Other Bank Balances | - | - | 156.74 | 156.74 | - | - | 156.74 | 156.74 |
| Other financial assets | - | - | 48.33 | 48.33 | - | - | 48.33 | 48.33 |
| Total financial assets | 13.76 | - | 574.42 | 588.18 | 13.76 | - | 574.42 | 588.18 |
| Financial liabilities | ||||||||
| Borrowings | - | - | 1633.51 | 1633.51 | - | - | 1633.51 | 1633.51 |
| Lease Liabilities | - | - | 56.23 | 56.23 | - | - | 56.23 | 56.23 |
| Trade payables | - | - | 100.59 | 100.59 | - | - | 100.59 | 100.59 |
| Other financial liabilities | - | - | 284.31 | 284.31 | - | - | 284.31 | 284.31 |
| Total financial liabilities | - | - | 2074.64 | 2074.64 | - | - | 2074.64 | 2074.64 |
| * Investment excludes investment in Joint Control Entities | ||||||||
(All amounts are in Million Indian Rupees) |
||||||||
| As at 31 March 2020 | Financial instruments by category | Fair value hierarchy (fair value) |
||||||
(carrying amount) |
||||||||
| FVPL | FVOCI | Amortise | Total | Level 1 | Level 2 | Level 3 | Total | |
| d cost | ||||||||
| Financial assets | ||||||||
| Investment* | - | - | - | - | - | - | - | - |
| Loans | - | - | - | - | - | - | - | - |
| Trade receivables | - | - | 46.96 | 46.96 | - | - | 46.96 | 46.96 |
| Cash & cash equivalents | - | - | 120.87 | 120.87 | - | - | 120.87 | 120.87 |
| Other Bank Balances | - | - | 60.13 | 60.13 | - | - | 60.13 | 60.13 |
| Other financial assets | - | - | 49.31 | 49.31 | - | - | 49.31 | 49.31 |
| Total financial assets | - | - | 277.28 | 277.28 | - | - | 277.28 | 277.28 |
| Financial liabilities | ||||||||
| Borrowings | - | - | 1467.40 | 1467.40 | - | - | 1467.40 | 1467.40 |
| Lease Liabilities | - | - | 43.57 | 43.57 | - | - | 43.57 | 43.57 |
| Trade payables | - | - | 72.10 | 72.10 | - | - | 72.10 | 72.10 |
| Other financial liabilities | - | - | 246.90 | 246.90 | - | - | 246.90 | 246.90 |
| Total financial liabilities | - | - | 1829.97 | 1829.97 | - | - | 1829.97 | 1829.97 |
* Investment excludes investment in Joint Control Entities
1.23. The previous year numbers have been reclassified wherever necessary. Unless otherwise stated, all amounts are in
Million Indian Rupees. Items reflecting as 0.00 denotes value less than Rs. 50,000.
1.24. Appropriate adjustments have been made in the Restated Consolidated Statement of Assets and Liabilities, Profit and
Loss and Cash Flows, wherever required, by a reclassification of the corresponding items of income, expenses, assets, liabilities and cash flows in order to bring them in line with the groupings/disclosures as per the Audited Consolidated Financial Statements of the Company for the period ended 30 September, 2022.
1.25. All the ratios for period ending September 30, 2022 and September 30, 2021 are not annualised unless specifically mentioned otherwise.
PRINCIPAL COMPONENTS OF REVENUE AND EXPENDITURE
Set forth below are the principal components of revenue and expenditure from our continuing operations:
Revenue
Our revenue comprises (i) revenue from operations; and (ii) other income.
Revenue from operations
Revenue from operations comprises (a) sale of goods, which comprises of compressed natural gas and piped natural gas; and (b) sale of services, which comprises of connection income and other operating revenues.
Other income
Other income comprises interest income and fair value measurement of financial assets
Expenses
Our expenses primarily comprise (i) purchases of stock-in-trade of natural gas; (ii) changes in inventories of finished goods, work-in-progress and stock-in-trade; (iii) excise duty on sale of compressed natural gas; (iv) employee benefit expense; (v) finance costs; (vi) depreciation and amortisation expenses; and (vii) other expenses.
Purchases of stock-in-trade of natural gas
Purchases of stock-in-trade of natural gas comprises cost towards purchase cost of natural gas including gas transmission charges.
Changes in inventory of finished goods, work-in-progress and stock-in-trade
Changes in inventories of finished goods, work-in-progress and stock-in-trade is based on calculating the difference between the inventory at the beginning of the year and the inventory at the end of the year.
Employee benefits expense
Employee benefit expense primarily comprises (i) salaries, wages and bonus; (ii) contribution to provident and other funds; (iii) leave encashment and gratuity; and (iv) staff welfare expenses.
Finance costs
Finance costs include: (i) interest expense on term loans, working capital, financial lease, preference shares and others; (ii) transaction cost of borrowings; and (iii) bank and other finance charges.
Depreciation and amortisation expenses
Depreciation and amortisation expenses primarily comprise (i) depreciation of tangible assets; and (ii) amortisation of intangible assets.
Other expenses
Other expenses comprise (i) advertisement, marketing and business development charges; (ii) hire charges; (iii) license fees; (iv) power and fuel; (v) repairs and maintenance; (vi) loss on remeasurement of financial assets; (vii) sitting fees and managerial remuneration; (viii) corporate social responsibility expenses; (ix) insurance charges; (x) legal and professional expenses; (xi) rates and taxes; (xii) travelling, lodging and boarding expenses; (xiii) stamp duty expense; (xiv) security expenses; (xv) consumption of spares and consumables; (xvi) rent; (xvii) foreign exchange fluctuation; and (xviii) miscellaneous expenses.
Tax expense
Tax expenses comprise the current and previous years corporate tax and the net deferred tax.
RESULTS OF OPERATIONS
The following table sets forth certain information with respect to our results of operations for the six months ended September 30, 2022 and September 30, 2021 and for Fiscals 2022, 2021 and 2020:
| Particulars | For the six months |
For the six |
For the year |
For the year |
For the year |
||||||
ended September 30, |
months ended |
ended March 31, |
ended March 31, |
ended March 31, |
|||||||
2022 |
September 30, 2021 |
2022 |
2021 |
2020 |
|||||||
( in |
(% of |
( in |
(% of |
( in |
(% of |
( in |
(% of |
( in |
(% of |
||
million) |
Total Income) |
million) |
Total Income) |
million) |
Total Income) |
million) |
Total Income) |
million ) |
Total Income) |
||
| REVENUE | |||||||||||
| Revenue from | 5,041.15 | 99.46% | 2,054.46 | 99.44% | 5,461.43 | 99.44% | 2,118.09 | 99.66% | 1,656.5 | 99.72% | |
| Operations | 6 | ||||||||||
| Other Income | 27.55 | 0.54% | 11.51 | 0.56% | 30.50 | 0.56% | 7.33 | 0.34% | 4.69 | 0.28% | |
| Total Income | 5,068.70 | 100% | 2,065.97 | 100% | 5,491.93 | 100% | 2,125.42 | 100% | 1,661.2 | 100% | |
| 5 | |||||||||||
| EXPENSES | |||||||||||
| Purchases of stock-in- | 3,667.28 | 72.35% | 873.81 | 42.30% | 2,492.27 | 45.38% | 770.86 | 36.27% | 677.60 | 40.79% | |
| trade of natural gas | |||||||||||
| Changes in Inventories | 3.90 | 0.08% | (7.09) | (0.34%) | (9.96) | (0.18%) | (0.19) | (0.01%) | (0.50) | (0.03%) | |
| of Finished goods, | |||||||||||
| work-in-progress and | |||||||||||
| Stock-in-Trade | |||||||||||
| Excise duty on sale of | 332.47 | 6.56% | 143.93 | 6.97% | 389.98 | 7.10% | 222.44 | 10.47% | 180.99 | 10.89% | |
| compressed natural | |||||||||||
| gas | |||||||||||
| Employee Benefits | 39.72 | 0.78% | 31.73 | 1.54% | 71.58 | 1.30% | 41.11 | 1.93% | 38.58 | 2.32% | |
| Expenses | |||||||||||
| Finance Costs | 113.95 | 2.25% | 101.63 | 4.92% | 220.75 | 4.02% | 158.55 | 7.46% | 96.67 | 5.82% | |
| Depreciation and | 98.17 | 1.94% | 72.25 | 3.50% | 150.41 | 2.74% | 120.00 | 5.65% | 91.81 | 5.53% | |
| Amortisation expense | |||||||||||
| Other Expenses | 389.67 | 7.69% | 243.03 | 11.76% | 653.27 | 11.90% | 351.78 | 16.55% | 262.82 | 15.82% | |
| Total Expenses | 4,645.16 | 91.64% | 1,459.28 | 70.63% | 3,968.30 | 72.26% | 1,664.55 | 78.32% | 1,347.9 | 81.14% | |
| 7 | |||||||||||
| Profit before Tax | 423.54 | 8.36% | 606.69 | 29.37% | 1,523.63 | 27.74% | 460.87 | 21.68% | 313.28 | 18.86% | |
| Tax Expense | |||||||||||
| - Corporate Tax | 83.13 | 1.64% | 138.08 | 6.68% | 334.50 | 6.09% | 89.89 | 4.23% | 42.76 | 2.57% | |
| - Deferred Tax | 9.20 | 0.18% | 11.93 | 0.58% | 53.54 | 0.97% | 19.72 | 0.93% | 59.61 | 3.59% | |
| Total Tax | 92.33 | 1.82% | 150.01 | 7.26% | 388.04 | 70.66% | 109.61 | 5.16% | 102.37 | 6.16% | |
| Profit for the year/ | 331.21 | 6.53% | 456.68 | 22.10% | 1,135.59 | 20.68% | 351.26 | 16.53% | 210.91 | 12.70% | |
| period before share | |||||||||||
| of profit/(loss) of | |||||||||||
| Joint Control Entities | |||||||||||
| Share of profit/(loss) | 61.24 | 1.21% | 21.44 | 1.04% | 144.69 | 2.63% | (2.37) | (0.11%) | (0.26) | (0.02%) | |
| of Joint Control | |||||||||||
| Entities | |||||||||||
| Profit for the year/ | 392.45 | 7.74% | 478.12 | 23.14% | 1,280.28 | 23.31% | 348.89 | 16.41% | 210.65 | 12.68% | |
| period | |||||||||||
SIX MONTHS ENDED SEPTEMBER 30, 2022 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30, 2021
Revenue
Our total income increased significantly by 145.34 % from 2,065.97 million in the six months ended September 30, 2021 to
5,068.70 million in the six months ended September 30, 2022, primarily due to increase in sales volume of compressed natural gas by 34.40 % and piped natural gas by 94.34 %. Our overall volume increased by 62.83 % in the six months ended September 30, 2022 compared to the corresponding six months ended September 30, 2021. Further, we have also increased the selling price to pass on the increase in input gas cost to customers.
Revenue from operations
Our revenue from operations increased significantly by 145.38% from 2,054.46 million in the six months ended September 30, 2021 to 5,041.15 million in the six months ended September 30, 2022, primarily due to:
Increase in revenue from sale of compressed natural gas by 106.65% from 1,172.00 million in the six months ended September 30, 2021 to 2,421.89 million in the six months ended September 30, 2022, on account of increase in overall sales volume of compressed natural gas by 34.40% from 31.55 MMSCM in the six months ended September 30, 2021 to 42.40 MMSCM in the six months ended September 30, 2022. Further, the Company has increased the selling price to pass on the increase in input gas cost of APM;
Increase in revenue from sale of piped natural gas by 198.81% from 870.80 million in the six months ended September 30, 2021 to 2,602.01 million in the six months ended September 30, 2022, on account of increase in overall sales volume of piped natural gas by 94.34% from 28.47 MMSCM in the six months ended September 30, 2021 to 55.32 MMSCM in the six months ended September 30, 2022. Further, the Company has increased the selling price to pass on the increase in input gas cost of R-LNG; and
Increase in connection income and other operating revenue by 47.94% from 11.66 million in the six months ended September 30, 2021 to 17.25 million in the six months ended September 2022 on account of connection income earned.
Other income
Other income increased significantly by 139.36% from 11.51 million in the six months ended September 30, 2021 to 27.55 million in the six months ended September 30, 2022, primarily due to an increase in the interest income.
Expenses
Total expenses increased significantly by 218.32% from 1,459.28 million in the six months ended September 30, 2021 to
4,645.16 million in the six months ended September 30, 2022, primarily due to increase in cost of purchases of stock-in-trade of natural gas, excise duty on sale of compressed natural gas, finance costs and other expenses.
Purchases of stock-in-trade of natural gas
Purchases of stock-in-trade of natural gas (including gas transmission charges) increased significantly by 319.69 % from 873.81 million in the six months ended September 30, 2021 to 3,667.28 million in the six months ended September 30, 2022, primarily due to increased cost of input gas and higher volume of gas purchased to meet the overall demand of natural gas.
Changes in inventories of finished goods, work in progress and stock-in-trade
Changes in inventories of finished goods, work-in-progress and stock-in-trade increased significantly by 155.01 % from (7.09) million in the six months ended September 30, 2021 to 3.90 million in the six months ended September 30, 2022, due to a significant increase in the opening inventory of the period from 2.06 million in the six months ended September 30, 2021 to 12.02 million in the six months ended September 30, 2022 and decrease in closing inventory from 9.15 million in the six months ended September 30, 2021 to 8.12 million in the six months ended September 30, 2022.
Excise duty on sale of compressed natural gas
Excise duty on sale of compressed natural gas increased significantly by 131.00 % from 143.93 million in the six months ended September 30, 2021 to 332.47 million in the six months ended September 30, 2022, due to increase in sale of compressed natural gas.
Employee benefits expense
Employee benefits expenses increased by 25.22 % from 31.72 million in the six months ended September 30, 2021 to 39.72 million in the six months ended September 30, 2022, primarily due to increase in salaries, wages, bonus cost from 27.53 million in the six months ended September30, 2021 to 33.32 million in the six months ended September 30, 2022 on account of net addition of 46 employees during the six months ended September 30, 2022.
Finance costs
Finance costs increased by 12.13 % from 101.63 million in the six months ended September 30, 2021 to 113.95 million in the six months ended September 30, 2022, primarily due to increase in bank and other finance charges from 16.88 million in the six months ended September 30, 2021 to 27.39 million in the six months ended September 30, 2022.
Depreciation and amortisation expenses
Depreciation and amortisation expenses increased by 35.87 % from 72.25 million in the six months ended September 30, 2021 to 98.17 million in the six months ended September 30, 2022, primarily due to increase in depreciation of tangible assets from 65.47 million in the six months ended September 30, 2021 to 88.51 million in the six months ended September 30, 2022 resultant due to increase in gross block of property, plant and equipment from 2,811.34 million in the six months ended September 30, 2021 to 3,725.83 million in the six months ended September 30, 2022.
Other expenses
Other expenses increased by 60.34 % from 243.03 million in the six months ended September 30, 2021 to 389.67 million in the six months ended September 30, 2022, primarily due to (i) incorporation of license fee of 35.10 million in the six months ended September 30, 2022; (ii) incorporation of loss on remeasurement of financial assets of 2.18 million in the six months ended September 30, 2022; (iii) incorporation of foreign exchange fluctuation of 0.34 million in the six months ended September 30, 2022; (iv) increase in hire charges of vehicles from 98.77 million in the six months ended September 30, 2021 to 143.25 million in the six months ended September 30, 2022; (v) increase in expense on power and fuel from 33.12 million in the six months ended September 30, 2021 to 54.02 million in the six months ended September 30, 2022; (vi) increase in repairs and maintenance expense from 64.56 million in the six months ended September 30, 2021 to 77.78 million in the six months ended September 30, 2022 and; (vii) increase in corporate social responsibility expense from 3.02 million in the six months ended September 30, 2021 to 8.10 million in the six months ended September 30, 2022; (viii) increase in advertisement, marketing and business promotion expense from 3.94 million in the six months ended September 30, 2021 to 7.96 million in the six months ended September 30, 2022; (ix) increase in legal and professional charges from 6.80 million in the six months ended September 30, 2021 to 10.37 million in the six months ended September 30, 2022; (x) increase in rent expense from 2.96 million in the six months ended September 30, 2021 to 4.76 million in the six months ended September 30, 2022; (xi) increase in director sitting fees expense from 1.12 million in the six months ended September 30, 2021 to 1.98 million in the six months ended September 30, 2022; (xii) increase in travelling, lodging and boarding expense from 2.70 million in the six months ended September 30, 2021 to 6.99 million in the six months ended September 30, 2022; (xiii) increase in rates and taxes expense from 0.18 million in the six months ended September 30, 2021 to 2.92 million in the six months ended September 30, 2022; (xiv) increase in security expense from 2.47 million in the six months ended September 30, 2021 to 3.08 million in the six months ended September 30, 2022; (xv) increase in stamp duty expense from 1.23 million in the six months ended September 30, 2021 to 5.03 million in the six months ended September 30, 2022; and (xvi) increase in miscellaneous expense from 7.32 million in the six months ended September 30, 2021 to 14.33 million in the six months ended September 30, 2022.
Profit before tax
Our profit before tax decreased by 30.18 % from 606.68 million in the six months ended September 30, 2021 to 423.54 million the six months ended September, 2022, primarily on account of an increase in input cost of natural gas owing to geopolitical tensions between Russia and Ukraine.
Tax Expense
Corporate tax expense decreased by 39.80 % from 138.08 million in the six months ended September 30, 2021 to
83.13 million in the six months ended September 30, 2022, primarily on account of decrease in profit before tax; and
Deferred tax expense decreased by 22.87 % from 11.93 million in six months ended September 30, 2021 to 9.20 million in the six months ended September 30, 2022, primarily due to impact of timing difference of depreciation, retirement benefit expense and lease expense.
Profit for the year/ period before share of profit/(loss) of Joint Control Entities
Profit for the year before share of profit/(loss) of Joint Control Entities decreased by 27.47 % from 456.68 million in the six months ended September 30, 2021 to 331.21 million in the six months ended September 30, 2022 due to lower profits on account of higher input gas cost.
Share of profit/(loss) of Joint Control Entities
Share of profit/(loss) of Joint Control Entities increased by 185.63 % from 21.44 million in the six months ended September 30, 2021 to 61.24 million in the six months ended September 30, 2022 due to higher profits earned by joint control entities.
Profit for the period
Profit for the period decreased by 17.91 % from 478.12 million in the six months ended September 30, 2021 to 392.45 million in the six months ended September 30, 2022 due to higher input gas cost.
FISCAL 2022 COMPARED TO FISCAL 2021
Revenue
Total revenue increased by 158.39 % from 2,125.42 million in Fiscal 2021 to 5,491.93 million in Fiscal 2022 primarily due to increase in sales volume of compressed natural gas by 68.19 % and piped natural gas by 295.22%. Overall volume increased by 139.79% compared to corresponding Fiscal 2021. Further, we traded surplus volume of natural gas and achieved gross revenues of 509.77 million in Fiscal 2022 compared to 10.39 million in Fiscal 2021.
Revenue from operations
Revenues from operations increased by 157.85 % from 2,118.09 million in Fiscal 2021 to 5,461.43 million in Fiscal 2022, primarily due to:
Increase in revenue from sale of compressed natural gas by 81.37 % from 1,636.11 million in Fiscal 2021 to
2,967.36 million in Fiscal 2022, on account of increase in overall sales volume of compressed natural gas by 68.19 % from 43.13 MMSCM in Fiscal 2021 to 72.54 MMSCM in Fiscal 2022. Further, the Company has increased the selling price to pass on the increase in input gas cost of APM;
Increase in revenue from sale of piped natural gas by 434.74% from 460.92 million in Fiscal 2021 to 2,464.71 million in Fiscal 2022, on account of increase in overall sales volume of piped natural gas by 295.22 % from 19.87 MMSCM in Fiscal 2021 to 78.52 MMSCM in Fiscal 2022. Further, the Company has increased the selling price to pass on the increase in input gas cost of R-LNG; and
Increase in connection income and other operating revenue by 39.41 % from 21.06 million in Fiscal 2021 to 29.36 million in Fiscal 2022 on account of increase in connection income.
Other income
Other income increased by 316.10 % from 7.33 million in Fiscal 2021 to 30.50 million in Fiscal 2022, primarily due to a significant increase in interest income from 7.02 million in Fiscal 2021 to 29.42 million in Fiscal 2022.
Expenses
Total expenses increased by 138.40 % from 1,664.55 million in Fiscal 2021 to 3,968.30 million in Fiscal 2022, primarily due to changes in inventories of finished goods, work in progress and stock-in-trade and higher cost of purchases of stock-in-trade of natural gas, excise duty expense on account of higher compressed natural gas sales, higher employee benefit cost and other expenses.
Purchases of stock-in-trade of natural gas
Purchases of stock-in-trade of natural gas (including gas transmission charges) increased significantly by 223.31 % from 770.86 million in Fiscal 2021 to 2,492.27 million in Fiscal 2022, primarily due to increased cost of input gas and higher volume of gas purchased to meet the overall demand of natural gas.
Changes in inventories of finished goods, work in progress and stock-in-trade
Changes in inventories of finished goods, work-in-progress and stock-in-trade decreased significantly from (0.19) million Fiscal 2021 to (9.96) million in Fiscal 2022 due to an increase in the inventory at the end of the year from 2.06 million in Fiscal 2021 to 12.02 million in Fiscal 2022.
Excise duty on sale of compressed natural gas
Excise duty on sale of compressed natural gas increased significantly by 75.32 % from 222.44 million in Fiscal 2021 to
389.98 million in Fiscal 2022 due to higher sales of compressed natural gas.
Employee benefits expense
Employee benefits expenses increased by 74.12 % from 41.11 million in Fiscal 2021 to 71.58 million in Fiscal 2022, primarily due to increase in salaries, wages, bonus cost from 35.53 million in Fiscal 2021 to 62.15 million in Fiscal 2022 on account of net addition of 22 employees during the Fiscal 2022 and increase in staff welfare cost from 0.67 million in Fiscal 2021 to 4.03 million in Fiscal 2022.
Finance costs
Finance costs increased by 39.23 % from 158.55 million in Fiscal 2021 to 220.75 million in Fiscal 2022; primarily due to (i) increase in interest cost on term loans from 105.98 million in Fiscal 2021 to 129.47 million in Fiscal 2022; (ii) increase in interest cost from 1.87 million in Fiscal 2021 to 4.96 million in Fiscal 2022; and (iii) increase in bank and other finance charges from 27.78 million in Fiscal 2021 to 60.56 million in Fiscal 2022.
Depreciation and amortisation expenses
Depreciation and amortisation expenses increased by 25.34 % from 120.00 million in Fiscal 2021 to 150.41 million in Fiscal 2022, primarily due to an increase in depreciation of tangible assets from 107.30 million Fiscal 2021 to 137.99 million in Fiscal 2022, resultant due to an increase in gross block of property, plant and equipment from 2,534.87 million in Fiscal 2021 to 3,213.06 million in Fiscal 2022.
Other expenses
Other expenses increased by 85.70 % from 351.78 million in Fiscal 2021 to 653.27 million in Fiscal 2022, primarily due to (i) incorporation of license fees of 63.00 million in Fiscal 2022; (ii) increase in hire charges of vehicles from 139.97 million in Fiscal 2021 to 237.20 million in Fiscal 2022; (iii) increase in expense on power and fuel from 53.69 million in Fiscal 2021 to 82.82 million in Fiscal 2022; (iv) increase in repairs and maintenance expense from 79.26 million in Fiscal 2021 to 142.32 million in Fiscal 2022 and; (v) increase in corporate social responsibility expense from 3.40 million in Fiscal 2021 to 6.03 million in Fiscal 2022; (vi) increase in advertisement, marketing and business promotion expense from 6.47 million in Fiscal 2021 to 12.05 million in Fiscal 2022; (vii) increase in legal and professional charges from 10.56 million in Fiscal 2021 to 16.77 million in Fiscal 2022; (viii) decrease in stamp duty expense from 9.41 million in Fiscal 2021 to 1.24 million in Fiscal 2022; (ix) increase in director sitting fees and managerial remuneration expense from 9.27 million in Fiscal 2021 to 23.57 million in Fiscal 2022; (x) increase in travelling, lodging and boarding expense from 2.88 million in Fiscal 2021 to 9.15 million in Fiscal 2022; (xi) decrease in rates and taxes expense from 0.91 million in Fiscal 2021 to 0.18 million in Fiscal 2022; (xii) increase in security expense from 4.43 million in Fiscal 2021 to 4.90 million in Fiscal 2022; (xiii) increase in rent expense from 1.79 million in Fiscal 2021 to 4.58 million in Fiscal 2022; (xiv) incorporation of tender fees of 13.54 million in Fiscal 2022; and (xv) increase in miscellaneous expense from 18.19 million in Fiscal 2021 to
21.28 million in Fiscal 2022.
Profit before tax
Our profit before tax increased by 230.60 % from 460.87 million in Fiscal 2021 to 1,523.63 million in Fiscal 2022, primarily due to significant increase in revenues led by higher volumes and lower input gas cost.
Tax Expense
Corporate tax expense increased by 272.12 % from 89.89 million in Fiscal 2021 to 334.50 million in Fiscal 2022 primarily on account of significant increase in profit before tax from 460.87 million in Fiscal 2021 to 1,523.63 million in Fiscal 2022; and
Deferred tax expense increased by 171.50 % from 19.72 million in Fiscal 2021 to 53.54 million in Fiscal 2022 primarily due to primarily due to impact of timing difference of depreciation, retirement benefit expense and lease expense.
Profit for the year before share of profit/(loss) of Joint Control Entities
Profit for the year before share of profit/(loss) of Joint Control Entities increased by 223.30 % from 351.26 million in Fiscal 2021 to 1,135.59 million in Fiscal 2022 due to significant increase in revenues led by higher volumes and lower input gas cost.
Share of profit/(loss) of Joint Control Entities
Share of profit/(loss) of Joint Control Entities increased by 6,205.06 % from (2.37) million in Fiscal 2021 to 144.69 million in Fiscal 2022 due to higher profits earned by joint control entities.
Profit for the year
Profit for the year increased by 266.96 % from 348.89 million in Fiscal 2021 to 1,280.28 million in Fiscal 2022 due to significant increase in revenues led by higher volumes and lower input gas cost as well as due to higher profits earned by joint control entities.
FISCAL 2021 COMPARED TO FISCAL 2020
Revenue
Total revenue increased by 27.94 % from 1,661.25 million in Fiscal 2020 to 2,125.42 million in Fiscal 2021, primarily due to an increase in the sales volume of piped natural gas by 208.01 %. Overall volume increased by 39.23 % compared to corresponding Fiscal 2020. Further, we traded surplus volume of natural gas and achieved gross revenues of 10.39 million in Fiscal 2021, compared to Nil in Fiscal 2020.
Revenue from operations
Revenues from operations increased by 27.86 % from 1,656.56 million in Fiscal 2020 to 2,118.09 million in Fiscal 2021, primarily due to:
Increase in revenue from sale of compressed natural gas by 11.01% from 1,473.79 million in Fiscal 2020 to
1,636.11 million in Fiscal 2021, on account of increase in overall sales volume of compressed natural gas by 11.16 % from 38.80 MMSCM in Fiscal 2020 to 43.13 MMSCM in Fiscal 2021;
Increase in revenue from sale of piped natural gas by 170.13% from 170.63 million in Fiscal 2020 to 460.92 million in Fiscal 2021, on account of increase in overall sales volume of piped natural gas by 208.01 % from 6.45 MMSCM in Fiscal 2020 to 19.87 MMSCM in Fiscal 2021; and
Increase in connection income and other operating revenue by 73.48 % from 12.14 million in Fiscal 2020 to 21.06 million in Fiscal 2021 on account of increase in connection income.
Other income
Other income increased by 56.29 % from 4.69 million in Fiscal 2020 to 7.33 million in Fiscal 2021, primarily due to significant increase in interest income from 4.69 million in Fiscal 2020 to 7.02 million in Fiscal 2021.
Expenses
Total expenses increased by 23.49 % from 1,347.97 million in Fiscal 2020 to 1,664.55 million in Fiscal 2021 primarily due to increase in cost of natural gas, excise duty on sale of compressed natural gas, finance cost and other expenses.
Purchases of stock-in-trade of natural gas
Purchases of stock-in-trade of natural gas (including gas transmission charges) increased by 13.76 % from 677.60 million in Fiscal 2020 to 770.86 million in Fiscal 2021, primarily due to increased cost of input ga and higher volume of gas purchased to meet the overall demand of natural gas.
Changes in inventories of finished goods, work in progress and stock-in-trade
Changes in inventories of finished goods, work-in-progress and stock-in-trade increased significantly by 163.15 % from (0.50) million in Fiscal 2020 to (0.19) million in Fiscal 2021 on account of increase in inventory in Fiscal 2021 as compared to Fiscal 2020.
Excise duty on sale of compressed natural gas
Excise duty on sale of compressed natural gas increased significantly by 22.90 % from 180.99 million in Fiscal 2020 to
222.44 million in Fiscal 2021, due to higher sale of compressed natural gas.
Employee benefits expense
Employee benefits expenses increased by 6.56 % from 38.58 million in Fiscal 2020 to 41.11 million in Fiscal 2021, primarily due to an increase in leave encashment and gratuity expense from 1.66 million in Fiscal 2020 to 3.02 million in Fiscal 2021 due to an increase in salaries, wages and bonus and company contribution to provident and other funds from 35.31 million in Fiscal 2020 to 37.42 million in Fiscal 2021 on account of net addition of 25 employees during the Fiscal 2021.
Finance costs
Finance costs increased by 64.02 % from 96.67 million in Fiscal 2020 to 158.55 million in Fiscal 2021, primarily due to significant increase in interest cost on term loans from 62.70 million in Fiscal 2020 to 105.98 million in Fiscal 2021; (ii) increase in interest on working capital, preference shares, finance lease liability and other interest from 17.95 million in Fiscal 2020 to 23.10 million in Fiscal 2021; and (iii) and due to increase in bank and other finance charges from 14.92 million in Fiscal 2020 to 27.78 million in Fiscal 2021.
Depreciation and amortisation expenses
Depreciation and amortisation expenses increased by 30.71 % from 91.81 million in Fiscal 2020 to 120.00 million in Fiscal 2021, primarily due to increase in depreciation of tangible assets from 80.74 million in Fiscal 2020 to 107.30 million in Fiscal 2021 resultant due to increase in gross block of property, plant and equipment from 2,009.77 million in Fiscal 2020 to 2,534.87 million.
Other expenses
Other expenses increased by 33.85 % from 262.82 million in Fiscal 2020 to 351.78 million in Fiscal 2021, primarily due (i) increase in hire charges of vehicles from 87.20 million in Fiscal 2020 to 139.97 million in Fiscal 2021; (ii) increase in expense on power and fuel from 44.62 million in Fiscal 2020 to 53.69 million in Fiscal 2021; (iii) increase in repairs and maintenance expense from 52.87 million in Fiscal 2020 to 79.25 million in Fiscal 2021 and; (iv) increase in corporate social responsibility expense from 2.17 million in Fiscal 2020 to 3.40 million in Fiscal 2021; (v) decrease in advertisement, marketing and business promotion expense from 6.90 million in Fiscal 2020 to 6.47 million in Fiscal 2021; (vi) decrease in legal and professional charges from 24.73 million in Fiscal 2020 to 10.56 million in Fiscal 2021; (vii) increase in stamp duty expense from 4.22 million in Fiscal 2020 to 9.41 million in Fiscal 2021; (viii) increase in director sitting fees and managerial remuneration expense from 6.84 million in Fiscal 2020 to 9.27 million in Fiscal 2021; (ix) decrease in travelling, lodging and boarding expense from 4.81 million in Fiscal 2020 to 2.88 million in Fiscal 2021; (x) incorporation of rates and taxes expense of 0.91 million in Fiscal 2021; (xi) increase in security expense from 4.15 million in Fiscal 2020 to 4.43 million in Fiscal 2021; (xii) increase in rent expense from 1.11 million in Fiscal 2020 to 1.79 million in Fiscal 2021; (xiii) decrease in tender fees from 0.56 million in Fiscal 2020 to 0.00 in Fiscal 2021; and (xiv) decrease in miscellaneous expense from 18.34 million in Fiscal 2020 to 18.19 million in Fiscal 2021.
Profit before tax
Our profit before tax increased by 47.11 % from 313.28 million in Fiscal 2020 to 460.87 million in Fiscal 2021 primarily due to increase in revenues led by higher volumes and lower input gas cost.
Tax Expense
Corporate tax expense increased by 110.21 % from 42.76 million in Fiscal 2020 to 89.89 million in Fiscal 2021 primarily on account of increase in profit before tax from 313.28 million in Fiscal 2020 to 460.87 million in Fiscal
2021; and
Deferred tax expense decreased by 66.91 % from 59.61 million in Fiscal 2020 to 19.72 million in Fiscal 2021 primarily due to impact of timing difference of depreciation, retirement benefit expense, unabsorbed loss and depreciation, MAT credit and lease expense.
Profit for the year before share of profit/(loss) of Joint Control Entities
Profit for the year before share of profit/(loss) of Joint Control Entities increased by 66.54 % from 210.91 million in Fiscal 2020 to 351.26 million in Fiscal 2021 due to increase in revenues led by higher volumes and lower input gas cost.
Share of profit/(loss) of Joint Control Entities
Share of profit/(loss) of Joint Control Entities decreased by 811.54 % from (0.26) million in Fiscal 2020 to (2.37) million in Fiscal 2021 due to loss suffered by joint control entities.
Profit for the year
Profit for the year increased by 65.62 % from 210.65 million in Fiscal 2020 to 348.89 million in Fiscal 2021 due to increase in revenues led by higher volumes and lower input gas cost.
LIQUIDITY AND CAPITAL RESOURCES
We have historically financed the expansion of our business through judicious mix of internal accruals, equity infusion and bank finances. From time to time, we may obtain loan facilities to finance our short-term working capital requirements.
CASH FLOWS
The following table sets forth certain information relating to our cash flows in the periods indicated:
| Particulars | For the six months ended September 30, 2022 | For the six months ended September 30, 2021 | For the year ended March 31, 2022 | For the year ended March 31, 2021 | For the year ended March 31, 2020 |
(in million) |
|||||
| Net cash from/ (used in) operating | 65.69 | 518.13 | 1,286.39 | 454.24 | 308.00 |
| activities | |||||
| Net cash from/ (used in) investing | (904.11) | (423.20) | (1,103.39) | (420.26) | (618.85) |
| activities |
| Particulars | For the six months ended September 30, 2022 | For the six months ended September 30, 2021 | For the year ended March 31, 2022 | For the year ended March 31, 2021 | For the year ended March 31, 2020 |
(in million) |
|||||
| Net cash from/ (used in) financing | 975.69 | 311.42 | 150.99 | 102.66 | 353.31 |
| activities | |||||
| Net increase/ (decrease) in cash and | 137.26 | 406.35 | 333.99 | 136.64 | 42.46 |
| cash Equivalents | |||||
| Cash and cash equivalents at the end of | 728.75 | 663.84 | 591.49 | 257.50 | 120.86 |
| the period/ year |
Operating Activities
Six months ended September 30, 2022
In the six months ended September 30, 2022, net cash from operating activities was 65.69 million. Profit before tax for the period was 423.54 million in the six months ended September 30, 2022 and adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of net provision for expense of 161.87 million; interest and finance charges of 113.95 million; depreciation and amortisation expense of 98.17 million; and fair value measurement of financial assets 2.18 million. This was partially offset by adjustments for interest income of 27.55 million.
The main adjustments for changes in working capital in the six months ended September 30, 2022 included increase in financial liabilities of 188.68 million and a decrease in inventories of 1.89 million. This was offset by adjustments for increase in other assets of 272.29 million, increase in trade receivables of 275.92 million, decrease in trade payables of 3.25 million and decrease in other liabilities of 132.42 million.
Cash generated from operations in the six months ended September 30, 2022 amounted to 278.85 million. This was offset by
Direct Tax Paid (including TDS) of 213.16 million.
Six months ended September 30, 2021
In the six months ended September 30, 2021, net cash from operating activities was 518.13 million. Profit before tax for the period was 606.69 million in the six months ended September 30, 2021 and adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of interest and finance charges of 101.63 million; depreciation and amortisation expense of 72.25 million; and net provision for expenses 25.81 million. This was partially offset by adjustments for fair value measurement of 2.59 million; and interest income of 8.92 million.
The main adjustments for changes in working capital in the six months ended September 30, 2021 included increase in financial liabilities of 14.46 million and decrease in other liabilities of 7.29 million. This was offset by adjustments for decrease in trade payables of 50.56 million, increase in other assets of 95.25 million, increase in trade receivables of 57.22 million, and increase in inventories of 7.08 million.
Cash generated from operations in the six months ended September 30, 2021 amounted to 591.93 million. This was offset by Direct Tax Paid (including TDS) of 73.80 million.
Fiscal 2022
In Fiscal 2022, net cash from operating activities was 1,286.39 million. Profit before tax for the year was 1,523.63 million in Fiscal 2022 and adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of interest and finance charges of 220.77 million; depreciation and amortisation expense of 150.38 million; and provision for expense of 48.28 million. This was partially offset by adjustments for interest income of 29.42 million and fair value measurement of 1.08 million.
The main adjustments for changes in working capital in Fiscal 2022 included an increase in trade payables of 14.11 million and an increase in financial liabilities of 130.08 million. This was offset by adjustments for increase in other assets of 370.12 million, increase in trade receivable of 115.26 million and a decrease in other liabilities of 57.50 million and increase in inventories of 9.11 million.
Cash generated from operations in Fiscal 2022 amounted to 1,504.76 million. This was offset by Direct Tax Paid (including TDS) of 218.37 million.
Fiscal 2021
In Fiscal 2021, net cash from operating activities was 454.24 million. Profit before tax for the year was 460.87 million in Fiscal 2021 and adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of interest and finance charges of 158.54 million; depreciation and amortisation expense of 120.00 million; and net provision for expense of 3.10 million. This was partially offset by adjustments for interest income of 7.02 million and fair value measurement of 0.31 million.
The main adjustments for changes in working capital in Fiscal 2021 included an increase in financial liabilities of 63.28 million and increase in other liabilities of 188.71 million. This was offset by adjustments for increase in other assets of
288.57 million, increase in inventories of 1.10 million, increase in trade receivables of 63.06 million, and a decrease in trade payables of 88.74 million.
Cash generated from operations in Fiscal 2021 amounted to 545.71 million. This was offset by Direct Tax Paid (including TDS) of 91.47 million.
Fiscal 2020
In Fiscal 2020, net cash from operating activities was 308.00 million. Profit before tax for the year was 313.28 million in Fiscal 2020 and adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of interest and finance charges of 96.65 million; net provision for expense of 26.64 million; and depreciation and amortisation expense of 91.80 million. This was partially offset by adjustments for interest income of 4.69 million.
The main adjustments for changes in working capital in Fiscal 2020 included increase in financial liabilities of 28.08 million. This was offset by adjustments for increase in other assets of 40.59 million, increase in inventories of 4.28 million, increase in trade receivables of 12.49 million, decrease in trade payables of 111.82 million and decrease in other liabilities of 16.20 million.
Cash generated from operations in Fiscal 2020 amounted to 366.38 million. This was offset by Direct Tax Paid (including
TDS) of 58.38 million.
Investing Activities
Six months ended September 30, 2022
Net cash used in investing activities was 904.11 million in the six months ended September 30, 2022, primarily on account of investment of 40.00 million and the purchase of fixed assets including capital work in progress of 887.28 million. This was partially offset by interest income received of 22.21 million and income from loans of 0.96 million.
Six months ended September 30, 2021
Net cash generated from investing activities was 423.20 million in the six months ended September 30, 2021, primarily on account of investment of 79.30 million and the purchase of fixed assets including capital work in progress of 344.16 million.
This was partially offset by interest income received of 0.26 million.
Fiscal 2022
Net cash used in investing activities was 1,103.39 million in Fiscal 2022, primarily on account of purchase of fixed assets including capital work in progress of 904.53 million, investment of 138.75 million and loans given of 77.42 million. This was partially offset by interest income received of 17.31 million.
Fiscal 2021
Net cash used in investing activities was 420.26 million in Fiscal 2021, primarily on account of purchase of fixed assets including capital work in progress of 350.74 million and investment of 75.96 million. This was partially offset by interest income received of 6.44 million.
Fiscal 2020
Net cash used in investing activities was 618.85 million in Fiscal 2020, primarily on account of purchase of fixed assets including capital work in progress of 622.27 million and investment of 1.50 million. This was partially offset by interest income received of 4.92 million.
Financing Activities
Six months ended September 30, 2022
Net cash from financing activities was 975.69 million in the six months ended September 30, 2022, primarily on account of proceeds from bank borrowings (net of repayments) of 843.31 million and proceeds from equity shares issued (including securities premium) of 261.38 million. This was partially offset by interest and finance cost of 96.94 million, Dividend paid of 14.68 million and the lease cost of 17.38 million.
Six months ended September30, 2021
Net cash from financing activities was 311.42 million in the six months ended September 30, 2021, primarily on account of proceeds from bank borrowings (net of repayments) of 394.90 million and proceeds from equity shares issued of 15.73 million. This was partially offset by interest and finance cost of 89.09 million and the lease cost of 10.12 million.
Fiscal 2022
Net cash flow from financing activities was 150.99 million in Fiscal 2022, primarily on account of proceeds from equity shares issued (including securities premium) of 15.73 million and of proceeds from bank borrowings (net of repayments) of 375.69 million. This was partially offset by interest and finance cost of 193.53 million, Dividend Paid of 34.99 million and the lease cost of 11.89 million.
Fiscal 2021
Net cash flow from financing activities was 102.66 million in Fiscal 2021, primarily on account of proceeds from equity shares issued (including securities premium) of 43.55 million, proceeds from preference shares issued of 34.14 million and net repayment of proceeds from bank borrowings (net of repayments) of 172.10 million. This was partially offset by interest and finance cost of 136.67 million, stamp duty on issue of shares of 1.13 million and the lease cost of 9.33 million.
Fiscal 2020
Net cash flow from financing activities was 353.31 million in Fiscal 2020, primarily on account of proceeds from equity shares issued (including securities premium) of 75.00 million, proceeds from preference shares issued of 100.84 million and net repayment of proceeds from bank borrowings (net of repayments) of 317.38 million. This was partially offset by interest and finance cost of 90.03 million, Dividend Paid of 41.30 million, stamp duty on issue of shares of 0.17 million and the lease cost of 8.41 million.
FINANCIAL INDEBTEDNESS
As at September 30, 2022, we had total borrowings (consisting of current and non-current borrowings) of 2,878.44 million. Our gross debt to equity ratio was 0.94:1 as at September 30, 2022. For further information on our indebtedness, see "Financial Indebtedness" on page 313.
The following table sets forth certain information relating to our outstanding indebtedness as at September 30, 2022 and our repayment obligations in the periods indicated:
| Particulars | As at September 30, 2022 |
|||
Payment due by period |
||||
| Up to 1 year | 1-5 years | More than 5 years | ||
(in million) |
||||
| Borrowings (other than redeemable preference shares) | 312.34 |
1,788.11 | 584.99 | |
| Redeemable preference shares | - | 32.89 | 160.10 | |
| Trade payables | 347.64 |
- | - | |
| Lease Liabilities | 8.43 |
64.30 | 67.21 | |
| Other financial liabilities | 595.81 |
- | - | |
| Total | 1,264.22 |
1,885.30 | 812.30 | |
CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
As at September 30, 2022, our contingent liabilities as per Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets and Capital Commitments, that have not been provided for, were as follows:
Contingent Liabilities
| Sr. Particulars | For the six | For the six | For Fiscal | For Fiscal | For Fiscal |
| No. | months | months | 2022 | 2021 | 2020 |
| ended | ended | ||||
| September | September | ||||
| 30, 2022 | 30, 2021 | ||||
| (in million) | |||||
| 1 Income Tax Liability for | 0.05 | 0.05 | 0.05 | - | - |
| Assessment Year18-19 | |||||
| Rectification filed pending | |||||
| resolution |
| Sr. Particulars No. | For the six months ended September 30, 2022 | For the six months ended September 30, 2021 | For Fiscal 2022 | For Fiscal 2021 | For Fiscal 2020 |
| (in million) | |||||
| 2 Payment of GST under protest. Refund application appeal to be filed. | 3.99 | - | - | - | - |
| 3 In respect of Corporate Guarantee given by the Company In favour of Banks extending the credit facilities to Joint Control Entities | 507.00 | 507.00 | 507.00 | 507.00 | - |
| 4 In respect of Performance Bank Guarantee (PBG) issued in favour of PNGRB by Banks | 1,581.20 | 1,251.20 | 1,581.20 | 250.00 | 250.00 |
| Total | 2,092.24 | 1,758.25 | 2,088.25 | 757.00 | 250.00 |
| Capital Commitments | |||||
| Sr. Particulars | For the six | For the six | For Fiscal | For Fiscal | For Fiscal |
| No. | months | months | 2022 | 2021 | 2020 |
| ended | ended | ||||
| September | September | ||||
| 30, 2022 | 30, 2021 | ||||
| (in million) | |||||
| 1 Estimated amount of contracts | 2,415.38 | 532.46 | 1,084.05 | 499.19 | 492.25 |
| remaining to be executed on capital | |||||
| account & not provided for (Net of | |||||
| advance) | |||||
| 2 Capital Commitment for | 0.35 | - | - | - | - |
| Subscription to Equity shares of | |||||
| SKI-Clean Energy Private Limited | |||||
| Total | 2,415.73 | 532.46 | 1,084.05 | 499.19 | 492.25 |
For further information on our contingent liabilities, see "Restated Consolidated Financial Statements" on page 241.
Except as disclosed in the Restated Consolidated Financial Statements or elsewhere in this Draft Red Herring Prospectus, there are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
The following table sets forth certain information relating to future payments due under known contractual commitments as at September 30, 2022, aggregated by type of contractual obligation:
| Particulars | As at September 30, 2022 |
||||
Payment due by period |
|||||
| Total | Up to 1 year | 1-5 years | More than 5 years | ||
(in |
million) | ||||
| Long Term Borrowings | |||||
| Long term borrowings | 2,566.10 | - | 1,821.00 | 745.10 | |
| Lease liabilities | 131.51 | - | 64.30 | 67.21 | |
| Trade Payables | - | - | - | - | |
| Other financial liabilities | 244.79 | 244.79 | - | - | |
| Total | 2,942.40 | 244.79 | 1,885.30 | 812.30 | |
For further information on our capital and other commitments, see "Restated Consolidated Financial Statements" on page 241.
CAPITAL EXPENDITURES
In the six months September 30, 2022 and September 30, 2021, and Fiscals 2022, 2021 and 2020, our capital expenditure towards additions to fixed assets (property, plant and equipments and intangible assets) and capital work-in-progress (project under construction) were 665.86 million, 325.60 million, 1,008.69 million, 438.50 million and 766.26 million respectively.
The following table sets forth our gross block of fixed assets for the periods indicated:
| Particulars | For the six | For the six | For the year | For the year | For the year |
| months ended | months ended | ended March | ended March | ended March | |
| September | September | 31, 2022 | 31, 2021 | 31, 2020 | |
| 30, 2022 | 30, 2021 | ||||
(in million) |
|||||
| Property, plant and equipment | 3,725.83 | 2,811.34 | 3,213.06 | 2,534.87 | 2,009.77 |
| Capital work in progress (project under | 673.09 | 244.87 | 522.84 | 197.02 | 289.60 |
| construction) | |||||
| Intangible assets | 46.19 | 37.54 | 41.70 | 37.02 | 30.61 |
| Right to use assets | 181.14 | 88.09 | 153.84 | 88.09 | 70.70 |
| Intangibles under development | 0.28 | 2.69 | 1.93 | 1.93 | 2.36 |
| Total | 4,626.53 | 3,184.53 | 3,933.37 | 2,858.93 | 2,403.04 |
For further information, see "Restated Consolidated Financial Statements" on page 241.
RELATED PARTY TRANSACTIONS
We enter into various transactions with related parties in the ordinary course of business. These transactions principally include goods procured and services availed or provided, reimbursement of expenses, director sitting fees and managerial remuneration.
For further information relating to our related party transactions, see "Restated Consolidated Financial Statements Note 33: Related party transactions" on page 271.
In the six months September 30, 2022 and September 30, 2021, and Fiscals 2022, 2021 and 2020, the aggregate amount of such related party transactions was 551.67 million, 62.08 million, 169.89 million, 60.76 million and 71.20 million, respectively. The percentage of the aggregate value of such related party transactions to our revenue from operations in the six months ended September 30, 2022 and September 30, 2021, and Fiscals 2022, 2021 and 2020 was 10.94 %, 3.02 %, 3.11 %, 2.87 %, and 4.30% respectively.
AUDITORS OBSERVATIONS
There are no qualifications by the Statutory Auditors which have not been given effect to in the Restated Consolidated Financial Statements.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Credit Risk
Credit risk is the risk of financial loss to us, if a customer or the counterparty to a financial instrument fails to meet its contractual obligations and arises principally from our receivables from customers and from its investing activities, including deposits with banks. The carrying amounts of financial assets represent the maximum credit risk exposure.
Liquidity Risk
Liquidity risk is the risk that we will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Our Companys approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation. We believe that our working capital is sufficient to meet our current requirements.
Market Risk
We are exposed to various types of market risks during the normal course of business. Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises risks such as price risk, currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Interest Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Our exposure to the risk of changes in market interest rates relates primarily to our long-term debt obligations with floating interest rates.
Currency Risk
We are indirectly exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD as the purchase prices of gas are typically designated in USD. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the companys functional currency. The risk is measured through a forecast of highly probably foreign currency cash flows. The objective of the hedges is to minimise the volatility of the cash flows of highly probable forecast transactions by hedging the foreign exchange inflows on regular basis.
Inflation
In recent years, India has experienced relatively high rates of inflation. While we believe inflation has not had any material impact on our business and results of operations, inflation generally impacts the overall economy and business environment and hence could affect us.
UNUSUAL OR INFREQUENT EVENTS OR TRANSACTIONS
Except as described in this Draft Red Herring Prospectus, to our knowledge, there have been no unusual or infrequent events or transactions that have in the past or may in the future affect our business operations or future financial performance.
KNOWN TRENDS OR UNCERTAINTIES
Our business has been subject, and we expect it to continue to be subject, to significant economic changes arising from the trends identified above in "Managements Discussion and Analysis of Financial Condition and Results of Operations - Significant Factors Affecting our Results of Operations" and the uncertainties described in "Risk Factors" on pages 278 and 29, respectively. To our knowledge, except as discussed in this Draft Red Herring Prospectus, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.
FUTURE RELATIONSHIP BETWEEN COST AND INCOME
Other than as described in "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 29, 170 and 278 respectively, to our knowledge, there are no known factors that may adversely affect our business prospects, results of operations and financial condition.
NEW PRODUCTS OR BUSINESS SEGMENTS
Except as set out in this Draft Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new business segments. For details, see, "Our Subsidiary and Associates" on page209.
COMPETITIVE CONDITIONS
We operate in a competitive environment. See "Risk Factors", "Industry Overview" and "Our Business" on pages 29, 123 and 170, respectively, for further details on competitive conditions that we face across our various business segments.
SIGNIFICANT DEPENDENCE ON SINGLE OR FEW CUSTOMERS
Given the nature of our business operations, we do not believe our business is dependent on any single or a few customers.
SEASONALITY/ CYCLICALITY OF BUSINESS
Our business is not seasonal in nature.
MATERIAL DEVELOPMENTS AFTER SEPTEMBER 30, 2022 THAT MAY AFFECT OUR FUTURE RESULTS OF OPERATIONS
Except as disclosed below and elsewhere in this Draft Red Herring Prospectus, there have been no significant developments after September 30, 2022 that may affect our future results of operations.
| Sr. No. | Particulars | Nature of Material Development |
| 1 | Increase in domestic gas cost due to change | Petroleum Planning and Analysis Cell (Ministry of Petroleum and |
| in domestic natural gas pricing guidelines | Natural Gas, Govt. of India) has increased the ceiling price of domestic | |
| natural gas from US $ 6.10/MMBTU to US $ 8.57/MMBTU w.e.f. | ||
| October 1, 2022. Further, the prices for gas produced from discoveries | ||
| Deepwater, Ultra Deepwater and High Pressure- High Temperature | ||
| areas have been increased from US $9.92/MMBTU to US $ | ||
| 12.46/MMBTU. This increase in pricing may have an adverse effect on | ||
| the profitability should the company is not able to fully pass on the | ||
| increase cost to customers by way of an adjustment to selling price. | ||
| 2 | Setting up of expert committee to examine | The Government has constituted an expert committee under the |
| the existing natural gas pricing policy | chairmanship of Shri. Kirit S. Parikh with appropriate representation | |
| from oil marketing companies, GAIL, ONGC-OIL, Ministry of | ||
| Fertilizer, Ministry of Petroleum and Natural Gas, Association of CGD | ||
| entities and Association of Oil and Gas Operators. The Committee is | ||
| empowered to critically examined the existing domestic gas pricing | ||
| guidelines and suggest market oriented, transparent and reliable pricing | ||
| regime ensuring fair price to end customers. The outcome of the | ||
| recommendation may have a bearing effect on the profitability of the | ||
| Company. | ||
| 3 | Proposed investment in newly incorporated | Board of the Directors of the Company have approved the setting up of |
| Subsidiary company named "SKI-Clean | subsidiary company to implement solar energy generation. Though the | |
| Energy Private Limited" | project is at a very initial stage of conceptualization, it may envisage | |
| capital commitment from the company. | ||
| 4 | Issue of Equity Shares to Shizuoka Gas Co. | Company has issued 2.75 lakhs Equity Shares of 10 each at a premium |
| Limited | of 540 per share to Shizuoka Gas Co. Limited on December 02, 2022. |
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