Dear Members Gujarat Gas Limited
(Formerly known as GSPC Distribution Networks Limited)
Your Directors have pleasure in presenting the 4th Annual Report and the AuditedAccounts for the Financial Year ended on 31st March 2016.
The name of your Company was changed from GSPC Distribution Networks Limited (GDNL) toGujarat Gas Limited (GGL) vide the fresh certificate of incorporation granted by Registrarof Companies Ahmedabad dated 15th May 2015.
| ||Standalone Financials ||Consolidated Financials |
|Particulars ||12 Months ended 31/03/2016 ||12 Months ended 31/03/2015 ||12 Months ended 31/03/2016 ||12 Months ended 31/03/2015 |
| ||Rs. in Cr. ||Rs. in Cr. ||Rs. in Cr. ||Rs. in Cr. |
|Total income ||6150.53 ||9113.40 ||6150.53 ||9113.40 |
|Gross profit before interest depreciation and tax ||743.96 ||1210.40 ||743.96 ||1210.40 |
|Less: Interest ||246.02 ||331.28 ||246.02 ||331.28 |
|Depreciation ||245.69 ||237.68 ||245.69 ||237.68 |
|Profit before tax ||252.25 ||641.44 ||252.25 ||641.44 |
|Tax expenses ||99.30 ||197.86 ||99.30 ||197.86 |
|Net Profit ||152.95 ||443.58 ||152.95 ||443.58 |
|Minority Interest ||- ||- ||- ||- |
|Share of Profit from Associates ||- ||- ||2.92 ||2.96 |
|Profit attributable to Group ||- ||- ||- ||- |
|Add: Undistributed profit /(loss) of earlier years ||204.38 ||(26.06) ||223.48 ||(9.92) |
|Balance available for Appropriation ||357.33 ||417.52 ||379.35 ||436.62 |
|Less: Appropriations: || || || || |
|Transfer to general reserve ||- ||- ||- ||- |
|Preference dividend ||- ||- ||- ||- |
|Proposed Equity dividend ||34.42 ||68.84 ||34.42 ||68.84 |
|Corporate dividend tax on proposed dividend ||7.01 ||14.01 ||7.01 ||14.01 |
|Interim Dividend ||- ||- ||- ||- |
|Corporate dividend tax on interim dividend ||- ||- ||- ||- |
|Depreciation Adjustment ||- ||5.29 ||- ||5.29 |
|Transfer to Stock Options Outstanding Account ||- ||- ||- ||- |
|Transfer to Debenture Redemption Reserve ||- ||125.00 ||- ||125.00 |
|Surplus / (Deficit) retained ||315.90 ||204.38 ||337.92 ||223.48 |
|Earning per Share (Rs.) Rs. 10 each ||11.11 ||32.22 ||11.32 ||32.43 |
Your Company continues to hold the leadership position as the largest CGD Company inthe country catering to 1099122 residential customers 12077 commercial customersdispensing CNG from 233 operational CNG stations for automotive sector and providing cleanenergy solutions to 2886 industrial units across its operational area with a spread ofaround 17120 kilometers of pipeline network. While GGL has been resilient in sustainingthe industrial volumes successfully in the ever dynamic oil & gas industry it hascontinued to focus its efforts for developing and growing PNG (Domestic) and CNG business.GGL connected around 70769 household customers and commissioned 19 CNG stations duringyear. Sales volume has grown by 4% in the residential segment and 8% in transport (CNG)segment.
The stand-alone net profit after tax for the current year 2015-16 decreased to Rs.152.95 from Rs. 443.58 crores in the previous year. The Company had healthy net cashflowsfrom operations of Rs 655.42 crores during the year. Investments were made in extension ofpipeline network to reach new areas and in reinforcements and upgradation of existingnetwork as required. Investments were also made to connect residential customers andaugmenting the CNG infrastructure. Investments were also made to upgrade the ITinfrastructure of your Company and integrate SAP in the merged entity to unify systemsenhance reliability and enable scalability. Appropriate provisions have been made in theaccounts wherever necessary for contingencies bad debts and diminution in value ofinvestments. No amount has been transferred to the General Reserve during the year.
Based on the assessment of the fund requirements of the Company for the smoothsustenance of its operations and for its future capital expenditure programme yourDirectors recommend for consideration of the shareholders at the 4th Annual GeneralMeeting the payment of Dividend of Rs. 2.50 per fully paid up equity share of Rs. 10/-each on 137678025 equity shares for the Financial Year 2015-16.
COMPOSITE SCHEME OF AMALGAMATION
The Board of Directors at its meeting dated 24th February 2014 granted its"in-principle" approval to the consolidation by way of amalgamation to GujaratGas Limited ["the Company" (Formerly known as GSPC Distribution NetworksLimited)] of erstwhile GSPC Gas Company Limited ("GSPC Gas") erstwhile GujaratGas Company Limited ("GGCL") erstwhile Gujarat Gas Financial Services Limited("GFSL") and erstwhile Gujarat Gas Trading Company Limited ("GTCL")through a High Court approved Composite Scheme of Amalgamation and Arrangement (Scheme).The Board at its meeting held on 21st April 2014 approved the Scheme of Amalgamation andArrangement. In consideration of the amalgamation the Company has issued and allotted theshares as per the following swap ratio: a) 1 (one) equity share of Rs.10/- each creditedas fully-paid up of GGL for every 1 (one) equity share of Rs. 2/- each held by equityshareholders of the GGCL; b) 1 (one) equity share of Rs.10/- each credited as fully-paidup of GGL for every 1 (one) equity share of Rs. 10/- each held by equity shareholders ofGFSL; c) 81 (eighty one) equity shares of Rs.10/- each credited as fully-paid up of GGLfor every 76 (seventy six) equity shares of Rs.10/- each held by equity shareholders ofGSPC Gas; Your Company had initiated the process of Amalgamation as per the relevantprovisions of Companies Act 1956/ or Companies Act 2013 the SEBI requirements includingthe provisions under the listing agreements with the stock exchanges. As mentioned abovethe Honorable High Court of Gujarat at Ahmedabad had sanctioned the Scheme vide commonoral order dated 30th March 2015 (certified copy received by the Company on 18th April2015). A copy of the authenticated/certified Order had been filed with the office of theRegistrar of Companies Ahmedabad on 14th May 2015. Accordingly the Effective Date for theScheme is 14th May 2015 with an appointed date of 1st April 2013. Subsequently thecompany's name has been changed from GSPC Distribution Networks Limited to Gujarat GasLimited (GGL) with effect from 15th May 2015. As per the Scheme the CGD Business oferstwhile GSPC Gas erstwhile GGCL erstwhile GFSL and erstwhile GTCL was transferred andvested in Gujarat Gas Limited.
The erstwhile GGCL was listed on BSE NSE ASE and VSE and hence as per the requirementof SEBI Circular No. CIR/CFD/DIL/5/2013 dated 4th February 2013 erstwhile GGCL obtainedthe Observation from the NSE BSE ASE and VSE vide their letters dated 5th November 20147th November 2014 10th November 2014 and 11th November 2014 respectively. Further theScheme was approved by an overwhelming majority of its Shareholders and Creditors at theirmeetings held on 5th January 2015 & 6th January 2015 respectively. As per the Schemeall assets debts liabilities duties and obligations of every kind pertaining to CGD ofthe Transferor Companies have vested in Gujarat Gas Limited being the Transferee Companywith an appointed date of 1st April 2013. The following have been effected as per theScheme:
1. ALTERATION TO MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION
A. Transfer of the Consolidated Authorised Share Capital of Transferor Companies
As per the Scheme of Amalgamation and Arrangement the authorised share capital ofthe Transferor Companies aggregating to 235100000 shares of Rs 10 each stood transferredto and combined with the authorised share capital of the Company and was re-classifiedwithout any further act or deed. Hence Clause V of the Memorandum of Association of theCompany and clause 4 of Article of Association of the Company relating to authorised sharecapital of the Company stands replaced with the following clause:
I. Clause V of Memorandum of Association
The Authorised Share capital of the company is Rs. 17571000000/- (Rupees seventeenthousand five hundred and seventy one million only) divided into 1735100000 (Seventeenhundred thirty five million and one lac only) Equity shares of Rs. 10/- each 17000000(Seventeen million only) 7.5% Redeemable Preference shares of Rs. 10/- each and 5000000(Five million only) Preference shares of Rs. 10/- each.
ii. Clause 4 of Articles of Association The Authorised Share capital of the companyis Rs. 17571000000/- (Rupees seventeen thousand five hundred and seventy one milliononly) divided into 1735100000 (Seventeen hundred thirty five million and one lac only)Equity shares of Rs. 10/- each 17000000 (Seventeen million only) 7.5% RedeemablePreference shares of Rs. 10/- each and 5000000 (Five million only) Preference shares ofRs. 10/- each.
B. Amendment to Object Clause of the Company
Upon the Scheme becoming effective the following clauses stand inserted in theMain Objects clause after clause 5 of the Memorandum of Association:
6. To carry on business of dealing with all aspects of negotiations procurementimports storage handling processing distribution and transportation of Natural GasLiquefied Natural Gas ("LNG") Coal Bed Methane ("CBM") Naphtha FuelOils Crude Oil & other Petroleum Products coal and any other fuels and utilizationthereof.
7. To administer fuel supply and purchase contracts on behalf of State Government andpromoter Companies.
8. To develop expertise provide consultation and render advisory services for varioustechnical legal and commercial aspects of Fuel Supply Management business andfacilitating implementation of Natural Gas LNG CBM Naphtha Fuel Oils Crude Oil &Petroleum Products Coal and any other fuel projects.
9. To act as an advisory body to the Government / any other agency appointed by StateGovernment for all aspects related to Policy and regulation of Natural Gas LNG CBMNaphtha Fuel Oils Crude Oil & Petroleum Products Coal and any other fuels import /utilization.
10. To promote and make strategic investment in infrastructure projects and facilitiesmeant for augmenting fuel supply.
C. Alteration to the Name Clause
Upon the Scheme becoming effective the name of GSPC Distribution Networks Limitedwas changed to Gujarat Gas Limited vide the fresh certificate of incorporation dated 15thMay 2015 granted by Registrar of Companies Ahmedabad to the Company pursuant to changeof name as per the Scheme of Amalgamation and Arrangement.
2. ISSUE OF EQUITY SHARES AND REORGANIZATION OF SHARE CAPITAL
As per the Scheme with effect from 14th May 2015 (the Effective Date) the Companyhas reduced its Equity Share Capital from Rs. 9000500000 to Rs. 131578950 aftercancellation of investment of Rs 4000500000 divided into 400050000 shares of Rs. 10each held by erstwhile GSPC Gas Company Limited (one of the transferor company) and hasreduced its remaining fully paid up equity share capital from Rs. 5000000000 dividedinto 500000000 shares of Rs. 10 each to Rs. 131578950 divided into 13157895 sharesof Rs. 10 each.
Further the Committee of the Board of Directors at its meeting held on 2nd June 2015allotted 124520130 fully paid up Equity Shares of Rs. 10/- each aggregating to Rs.1245201300 to shareholders holding shares of erstwhile Transferor Companies as onRecord Date being 28th May 2015 pursuant to the said Scheme. Equity shares of Rs. 10 eachallotted on 2nd June 2015 were credited by the Depositories into the shareholdersaccount on 25th June 2015 and the physical share certificates were dispatched on 26thJune 2015 by Karvy Computershare Pvt. Ltd. the Registrar and Transfer (RTA) Agent of theCompany.
3. ACCOUNTING TREATMENT
Upon the Scheme becoming effective the Company has accounted for the Amalgamationin its books of accounts with effect from the Appointed Date as per the "PurchaseMethod" as described in Accounting Standard - 14 "Accounting forAmalgamations" issued by the Institute of Chartered Accountants of India such that:A. The assets liabilities and debts of the Transferor Companies are transferred to andvested in the Company pursuant to the Scheme and recorded at their respective fairvalues as determined by the Board as on the Appointed Date.
B. With effect from the Appointed Date and upon the Scheme becoming effective theinvestment of erstwhile GSPC Gas in the Company the investment of the Company inerstwhile GGCL and the investment of erstwhile GGCL into erstwhile GFSL and erstwhile GTCLstands cancelled.
C. Inter-company transactions and balances including loans advances amount receivableor payable inter-se between the Transferor Companies and the Company as appearing in theirbooks of accounts if any stand cancelled.
D. The Company has credited to the Share Capital Account in its books of account theaggregate face value of equity shares issued to the shareholders of Transferor Companiespursuant to the Scheme of Amalgamation.
E. The difference in the value of net assets of Transferor Companies vested in theCompany and issue of shares as above after adjustment of the cancellation of investmentof erstwhile GSPC Gas into the Company investment of the Company into erstwhile GGCL andinvestment of erstwhile GGCL into erstwhile GFSL and erstwhile GTCL reduction of sharecapital of the Company and adjustment of differential amount arising has been credited bythe Company to "Reserves" or debited to "Goodwill Account" as thecase may be.
F. In case of any difference in accounting policy between the Transferee Company andthe Transferor Companies or between Transferor Companies the impact of the same till theAppointed Date would be adjusted in accordance with Accounting Standard - 5 "NetProfit or Loss for the Period Prior Period Items and Changes in Accounting Policies"to ensure that the financial statements of the Transferee Company reflect the financialposition on the basis of consistent accounting policy. Consequent to order dated 6th July2015 of the Honorable High Court of Gujarat sanctioning permission of re-opening andrevision of books of accounts for the year 2013-14 the audited financial statements oftransferee company i.e. Gujarat Gas Limited (formerly known as GSPC Distribution NetworksLimited-GDNL) for year 2013-14 has been re- opened and revised by the Company to giveeffect of the said amalgamation and arrangement in books of accounts for the year 2013-14.The business of the transferor companies have been transferred to the Company on a goingconcern basis. As per the Scheme the appointed date for the transfer of assets andliabilities at their respective fair value as determined by the Board is 1st April 2013.Accordingly operations of all the Transferors Companies from 1st April 2013 have beenaccounted for in the financial statements for financial year 2013-14.
4. DISSOLUTION OF THE TRANSFEROR COMPANIES
As per the Scheme of Amalgamation with effect from 14th May 2015 the TransferorCompanies i.e. erstwhile GSPC Gas Company Limited ("GSPC Gas") erstwhileGujarat Gas Company Limited ("GGCL") erstwhile Gujarat Gas Financial ServicesLimited ("GFSL") and erstwhile Gujarat Gas Trading Company Limited("GTCL") stand dissolved without winding up pursuant to the provisions ofSection 394 of the Act.
LISTING OF SHARES
Your Company's equity shares have been listed and trading on BSE Limited (BSE)National Stock Exchange of India Limited (NSE) Ahmedabad Stock Exchange Limited (ASE) andVadodara Stock Exchange (VSE) with effect from 15th September 2015. The ISIN of EquityShares is INE844O01022. Further it is brought to the notice of Shareholders that SEBI hasvide its Order No. WTM/RKA /MRD/144/2015 dated November 09 2015 has provided the exit toVadodara Stock Exchange Limited and in view thereof the Company is no longer listed onVSE.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATES
Pursuant to the Scheme your Company does not have any subsidiary and joint venture andGuj Info Petro Limited is the Associate of your Company a statement containing salientfeatures of financial statements of Guj Info Petro Limited under first proviso to subsection (3) of section 129 in form AOC-1 is attached at Annexure-8.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard - 23 on Accounting for Investments inAssociates the Audited Consolidated Financial Statements are provided in the AnnualReport.
During the year under review your Company has not accepted deposits from the publicfalling within the ambit of Section 73 of the Companies Act 2013 read with Companies(Acceptance of Deposits) Rules 2014.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The details of Loans Guarantees Securities and Investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the Notes to theFinancial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All Related Party Transactions that were entered into during the financial year were onan arms length basis and were in the ordinary course of business. A statement givingdetails of all Related Party Transactions is placed before the Audit Committee forapproval/ ratification on a quarterly basis as the case may be. The Policy on Materialityof Related Party Transactions and Dealing with Related Party Transactions as approved bythe Board is uploaded on the Companys Website. None of the Directors has anypecuniary relationships or transactions vis-a-vis the Company. The particulars ofcontracts or arrangements with Related Parties referred to in Section 188 (1) of theCompanies Act 2013 as prescribed in Form AOC - 2 of the Companies (Accounts) Rules 2014is enclosed herewith as Annexure -5 to this Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted a Corporate Social Responsibility (CSR) Committee inaccordance with Section 135 of the Companies Act 2013 read with Companies (CorporateSocial Responsibility Policy) Rules 2014. Pursuant to provisions of Section 135 of theCompanies Act 2013 the Company has also formulated a Corporate Social ResponsibilityPolicy which is available on the website of the Company athttp://www.gujaratgas.com/resources/downloads/csr-policy.pdf The Annual Report on CSRactivities as required under the Companies (Corporate Social Responsibility Policy) Rules2014 is enclosed herewith as Annexure - 2 to this Report.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Appointment and Resignation of Directors
Shri Ravindra Agrawal Shri PPG Sarma and Shri N Bose Babu ceased to be Director witheffect from 21/04/2015. Shri D.J. Pandian IAS Chief Secretary Government of Gujarat wasappointed as Additional Director and Chairman on the Board of the Company with effect from21/04/2015. Shri D.J. Pandian IAS upon his superannuation ceased to be Director of theCompany with effect from 30/05/2015. Shri M.K. Das IAS Joint Managing Director GujaratState Petroleum Corporation Limited was appointed as Additional Director on the Board ofCompany with effect from 21/04/2015. He ceased to be the Director of the Company witheffect from 27/04/2015. Shri Atanu Chakraborty IAS was appointed as Additional Directorof the Company on 16/04/2015 and his appointment was regularized in the 3rd AGM of theCompany. He ceased to be director of the Company with effect from 11/04/2016. Shri LChuaungo IAS was appointed as Additional Director of the Company on 21/04/2015 and hisappointment was regularized in the 3rd AGM of the Company. He ceased to be director of theCompany with effect from 27/06/2016. Shri G.R. Aloria IAS Chief Secretary Government ofGujarat was appointed as an Additional Director and Chairman on the Board of Directors ofthe Company with effect from 13/08/2015. His appointment was approved by the Shareholdersin the 3rd AGM of the Company and on account of his retirement from the office of ChiefSecretary to Government of Gujarat he ceased to be director with effect from 31st July2016. Shri Mukesh Kumar IAS was appointed as an Additional Director with effect from21/04/2015 and his appointment was regularized in the 3rd AGM of the Company and he ceasedto be director of the Company with effect from 8th August 2016. Your Directors wish toplace on record their appreciation for the services rendered by them as the Directors ofthe Company.
Dr. JN Singh IAS has been appointed as Additional Director with effect from 25/04/2016.Upon his appointment as the Chief Secretary Government of Gujarat he was appointedw.e.f. 11th August 2016 as the Chairman on the Board of Directors in place of Shri G. R.Aloria IAS who retired from the office of Chief Secretary to Government of Gujaratw.e.f. 31st July 2016. It is proposed to regularize the appointment of Dr. JN Singh IASin the ensuing 4th Annual General Meeting. Shri Sanjeev Kumar IAS had been appointed asAdditional Director with effect from 21/04/2015 and his appointment was regularized in the3rd AGM of the Company. He will retire by rotation and it is proposed to reappoint him asthe Director of the Company in the ensuing 4th Annual General Meeting.
Shri Jal Patel Prof Pradip Khandwalla Shri Ajit Kapadia Smt. Manjula Shroff and ShriK.D. Chatterjee being qualified and eligible for appointment as Independent Directors inthe Company in accordance with provisions of Section 149 152 read with Schedule IV andall other applicable provisions of the Companies Act 2013 and the Companies (Appointmentand Qualification of Directors) Rules 2014 were appointed by the Board of Directors witheffect from 21st April 2015 and their appointments were approved by the shareholders atthe 3rd Annual General Meeting as Independent Directors for a term of 2 consecutive yearsw.e.f. 21st April 2015. Shri Sujit Gulati IAS Additional Chief Secretary Energy &Petrochemicals Department has been appointed as Additional Director with effect from 11thAugust 2016. Dr. T. Natarajan IAS Jt. Managing Director GSPC has been appointed asAdditional Director with effect from 11th August 2016. It is proposed to regularize theirappointments in the ensuing 4th Annual General Meeting. A brief resume of the Directors tobe appointed at the ensuing Annual General Meeting nature of their expertise in specificfunctional areas and details regarding the companies in which they hold directorshipmembership / chairmanship of committees of the Board are given in the ExplanatoryStatement forming part of Notice of the 4th Annual General Meeting.
APPOINTMENT AND RESIGNATION OF KEY MANAGERIAL PERSONNEL
Shri Rohan Sampat who was appointed as Company Secretary of the Company with effectfrom 2nd December 2013 ceased to be the Company Secretary with effect from 24th May2015. Smt. Rajeshwari Sharma was appointed as Company Secretary with effect from 25th May2015. Shri Rahul Devi who was appointed as Chief Financial Officer with effect from 25thMay 2015 ceased to be the CFO with effect from 10th September 2015. Shri NiteshBhandari was appointed as Chief Financial Officer with effect from 14th September 2015.Shri PPG Sarma who was appointed as Chief Executive Officer of the Company with effectfrom 25th May 2015 ceased to be the Chief Executive Officer of the Company with effectfrom 2nd March 2016. Mr. Nitin Patil was appointed as the In-charge CEO with effect from2nd March 2016. Further he was re-designated as the CEO of the Company w.e.f. 11thAugust 2016.
Pursuant to the provisions of Section 149 (6) of the Companies Act 2013 theIndependent Directors of the Company have given confirmation/declaration to the Board thatthey meet with the criteria of Independence and are Independent in terms of Section 149(6) of the Companies Act 2013.
Pursuant to the provisions of the Companies Act 2013 the performance evaluation ofindividual Directors for FY 2015-16 was carried out as per the terms and conditions oftheir appointment based on the various parameters.
NOMINATION AND REMUNERATION POLICY
The Company's Nomination and Remuneration Policy on Directors' appointment andremuneration including criteria for determining qualifications positive attributesindependence of a Director and other matters provided under the relevant provisions of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is enclosed herewith as Annexure - 3 to this Report.
MEETINGS OF THE BOARD OF DIRECTORS
The Board meets at regular intervals to discuss and decide on Company / business policyand strategy apart from other Board business. The Board / Committee Meetings arepre-scheduled to enable the Directors to plan their schedule and to ensure meaningfulparticipation in the Meetings. However in case of a special and urgent business need theapproval is taken by passing resolutions through circulation to the Directors aspermitted by law which are confirmed in the subsequent Board/Committee Meetings.
During the year Seven (7) Board Meetings were convened and held the details of whichare given in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013.
AUDITORS (STATUTORY & CAG AUDIT)
As your Company is a Government Company the Statutory Auditors are appointed by theComptroller & Auditor General of India (CAG). Accordingly the CAG had appointedManubhai & Shah Chartered Accountants as Statutory Auditors of the Company for theFinancial Year 2015 - 16. The CAG has carried out supplementary audit of your Companypursuant to Provisions of Section 143 (6) of the Companies Act 2013. The CAG has issuedthe NIL comment report on the accounts of the Company for FY 2015-16.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorsof the Company had appointed Manoj Hurkat & Associates Practising Company Secretariesto conduct the Secretarial Audit of the Company for the Financial Year 2015-16. The Reportof Secretarial Auditor on Company's Secretarial Audit for the Financial Year 2015-16 isenclosed herewith as Annexure - 4 to this Report. The Secretarial Audit Report is selfexplanatory in nature.
Your Company is required to carry out Cost Audit pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014.Accordingly the Cost Auditor Dalwadi & Associates Cost Accountants have carried outthe Cost Audit for the Financial Year 2015 16. The Cost Audit Report 2015 16 will besubmitted to the Central Government in the prescribed format within stipulated timeperiod.
Further the Board of Directors has on the recommendation of the Audit Committeeappointed Dalwadi & Associates Cost Accountants as the cost auditor to audit thecost accounts of the Company for financial year 2016-17 on remuneration of Rs.200000/-(Rupees Two Lacs) plus Service Tax as applicable.
As required under the Companies Act 2013 the remuneration payable to the Cost Auditoris required to be placed before the Members in General Meeting for their ratification.Accordingly the necessary resolution seeking Member's ratification for the remunerationpayable to the Cost Auditors for FY 2016-17 is included in the Notice convening the 4thAnnual General Meeting.
The Audit Committee of Directors of the Company at its Meeting held on 17th May 2016approved the Financial Statements for the Financial Year ended on 31st March 2016 andrecommended the same for approval of the Board.
RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM
The Company has a well-defined Risk Management Framework for reviewing the major Risksand has adopted a Business Risk Management Policy. Further pursuant to the requirement ofRegulation 21 of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations 2015 the Company has constituted a Risk ManagementCommittee inter-alia to monitor the Risk Management Plan of the Company.
Internal Control System:
The Company has a proper and adequate system of Internal Controls commensurate with itssize of operations and nature of business. These are routinely tested and certified byAuditors. Significant audit observations of audit team and follow up actions thereon arereported to the Audit Committee. The details about the identification of elements of Riskand Internal Control Systems are provided in detail in the Management Discussion &Analysis Report forming part of this Boards Report.
Internal Financial Controls
The Company has in place adequate internal financial controls with reference tofinancial statement. The internal financial controls have been documented in the businessprocesses. Such controls have been assessed during the year under review and wereoperating effectively.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has established a Whistle Blower Policy/Vigil Mechanism for Directors andEmployees to report their genuine concerns details of which have been given in theCorporate Governance Report forming part of this Directors' Report.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 and Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is attached at Annexure 9 which formspart of this report. The information showing names and other particulars of employees asper Rule 5(2) and 5(3) of the aforesaid Rules forms part of this report. However as perfirst proviso to Section 136(1) of the Act the Annual Report excluding the aforesaidinformation is being sent to the members of the Company and others entitled thereto. Thesaid information is available for inspection by members at the registered office of theCompany during business hours on all working days upto the date of ensuing annual generalmeeting. Any member interested in obtaining a copy thereof may also write to the CompanySecretary at the registered office of the Company.
GUJARAT GAS LIMITED EMPLOYEE STOCK OPTION PLAN 2016 ("THE ESOP 2016")
The erstwhile Gujarat Gas Company Limited (e-GGCL) had established the Employees StockOption Plan of 2008 (ESOP 2008) as per the SEBI (Employee Stock Option Scheme and EmployeeStock Purchase Scheme) Guidelines 1999 and pursuant to merger as per the Scheme ofAmalgamation the said ESOP have been implemented in GGL in respect of the EligibleEmployees of e-GGCL (Eligible Employees) who were entitled to ESOPestablished by e-GGCL and to whom as on the Record Date under the Scheme of Amalgamationoptions of e-GGCL had been granted but not exercised irrespective of whether the same hadvested or not.
Thus the Addendum Gujarat Gas Limited Employee Stock Option Plan 2016 (ESOP2016) that is supplementary to the Gujarat Gas Company Limited Employee Stock OptionPlan 2008 (ESOP 2008) has been formulated pursuant to the Scheme ofAmalgamation to issue revised grant of Options - I of GGL in lieu of Options granted bye-GGCL under ESOP 2008 to the Eligible Employees.
ESOP 2016 has commenced with effect from the Effective Date under the Scheme ofAmalgamation and shall continue to be in force until the date on which all of the Options- I issued under ESOP 2016 have been exercised or shall have expired by reason of lapse oftime or otherwise.
GRANT VESTING AND EXERCISE OF OPTIONS - I
1. The Eligible Employees were entitled to Revised Grants (with effect from theRevised Grant Date) of equivalent number of Options - I under the ESOP 2016 against theequivalent number of Options Granted and Vested in them pursuant to the ESOP 2008 whichhad not been Exercised by them on the Effective Date under the Scheme of Amalgamation.
2. The Eligible Employee have been issued Revised Grant of 13000 number ofOptions - I under the ESOP 2016 against the equivalent number of Options Granted andVested pursuant to the ESOP 2008.
3. The above Revised Grants of Options - I are on the basis of the Share Exchange Ratioof 1 (one) equity share of Rs.10/- each of GGL for every 1 (one) equity share of Rs.2/-each of e-GGCL pursuant to the Scheme of Amalgamation.
4. These Options - I shall continue to bear the Exercise Price as per the ESOP 2008.The Exercise Price payable for Options - I under ESOP 2016 is based on the Exercise Pricepayable under the ESOP 2008 that has been adjusted after taking into account the effect ofthe Share Exchange Ratio of 1:1.
5. Upon the Revised Grant of Options - I the Options Granted under the ESOP 2008 standcancelled and the Eligible Employees shall not be entitled to any further eligibilitycriteria under the ESOP 2016 neither any further Grants will be made under the ESOP 2016.
6. The Eligible Employees continue to be bound by all the terms and conditions of theESOP 2008 in addition to this ESOP 2016.
The Gujarat Gas Limited Employee Welfare Stock Option Trust Deed (ESOP 2016 TrustDeed) that is supplementary to the Deed of Gujarat Gas Company Limited EmployeeWelfare Stock Option Trust together with the Variation Deeds thereto (the ESOP 2008Trust Deed) was formed to hold the shares under ESOP 2016 Trust Deed to meetobligation in respect of the ESOPs granted to the Eligible Employees. The ESOP 2016 Trustshall be an irrevocable Trust. During the year 13000 Options-I were granted to foureligible employees of the Company in terms of ESOP 2016. Manubhai & Shah LLPChartered Accountants the auditors of the Company have certified to the effect that theESOP 2016 has been implemented in accordance with SEBI (Share Based Employee Benefits)Regulations 2014. Further it is confirmed that the ESOP 2016 is in compliance with SEBI(Share Based Employee Benefits) Regulations 2014. The applicable disclosures asstipulated under Regulation 14 of SEBI (Share Based Employee Benefits) Regulations 2014with regard to Employees Stock Option Plan of the Company are available on the website ofthe Company at www.gujaratgas.com and weblink for the same ishttp://www.gujaratgas.com/investors/ investors-information/
HEALTH SAFETY AND ENVIRONMENT (HSE)
Health Safety and Environment (HSE) is a core value in Gujarat Gas Limited a GSPCGroup Company. The company believes that all injuries are preventable. We recognize thatHSE is everyones responsibility and we each have a duty to intervene to preventunsafe actions and to reinforce safe behaviors. We conduct our business in a safe andresponsible manner and ensure compliance with the legal & regulatory requirements. Thecompany practices high level of HSE standards with an aim to protect health and safety ofpeople to minimize the environmental impact of our business activities and to assure theintegrity and safe operation of our assets. We set targets and closely monitor to achievecontinual improvement in our performance.
We are committed to ensure that the assets are safe and fit for purpose throughouttheir life cycle. The safe delivery of our projects and safe operations of our assets is acritical success factor for our business.
Gujarat Gas Limited being a prudent organization has joined hands in initiative likeSwachh Bharat Abhiyaan and is actively participating in various events & celebrationslike National Safety Week and World Environment Day to make the society a cleaner greenerand safer place.
The Company was awarded the Golden Peacock Occupational Health and Safety Award2016 for its exemplary performance and excellence in maintaining high standards ofsafety in Gas Sector. The prestigious award was received by the Company from the hands ofPiyush Goyal Hon'ble Union Minister of State (I/C) for Power Coal & RenewableEnergy Govt. of India at the Golden Peacock Awards function held at New Delhi on the10th of July 2016.