Gujarat Gas Company Limited ("Company")is engaged in Natural Gas Business in Gujarat. Natural gas business involves distribution of gas from sources of supply to centers of demand and to the end customers. The Company is listed on the Ahmedabad Stock Exchange, Bombay Stock Exchange, National Stock Exchange and Vadodara Stock Exchange.

(2) Share Capital

c) Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares. Each equity shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors, is subject to shareholders' approval in the ensuing Annual General Meeting. In the event of liquidation of the Company, the equity shareholders are entitled to receive the residual assets of the Company in proportion to their shareholding.

GSPC Distribution Networks Limited (GDNL) is the holding company of Gujarat Gas Company Limited w.e.f. 12 June 2013. The ultimate holding company being Gujarat State Petroleum Corporation Limited w.e.f. 12 June 2013.

f) Shareholder holding more than 5% preference shares

The preference shares were fully held by BG Asia Pacific Holdings Pte. Limited (holding company till 11 June 2013). These preference shares were redeemed on 30 March 2012.

h) The Company had issued bonus equity shares in the ratio of 1:1 in 2009, resulting in an increase in the issued equity share capital from 6,41,25,000 shares of face value Rs 2 each to 12,82,50,000 shares of face value Rs 2 each. The Company has not bought back any equity shares during the past 5 years. The Company has not allotted any shares as fully paid pursuant to contracts without payment being received in cash, during the past 5 years.

(3) Contingent Liabilities:

(a) Claims against the Company not acknowledged as debts Rs. 5.08 Crores (Previous year Rs. 2.60 Crores).

(b) Claims of Rs. 2.17 Crores (Previous year Rs. 2.17 Crores) against the Company have been disputed by the Company. The Company is, however, indemnified by an insurance policy.

(c) Income tax related exposures Rs. 10.68 Crores (Previous year Rs. 7.95 Crores)

(d) Service tax related exposures Rs 36.36 Crores (Previous year Rs. 30.67 Crores)

(e) Excise related exposures Rs 0.12 Crores (Previous year Rs 0.18 Crores)

(4) Estimated amount of contracts net of advances remaining to be executed on capital account and not provided for Rs. 28.59 Crores (Previous year Rs. 33.26 Crores).

(5) Employee Stock Option Plan 2008:

The Company implemented an Employee Stock Option Plan 2008 ('ESOP 2008') which provides for the allotment of equity shares of Rs. 2 /- each to eligible employees of the Company and its subsidiaries. The Scheme is administered by an ESOP Trust (Gujarat Gas Company Limited Employee Stock Option Welfare Trust) which purchases, out of the funds advanced by the Company, the shares equivalent to the number of options granted, for allotment to the grantees. IDBI Trusteeship Services Limited are the trustees of the said trust. The trustees can purchase or sell the shares from the market as per the approved scheme. For the 15 months period ended on 31st March 2014, there are no purchases from the market.

Pursuant to the above scheme, the Company has granted options, as mentioned here below, convertible into equity shares of Rs. 2/- each to employees of the Company and its subsidiaries. The exercise price is calculated at 10% discount to the closing price of the shares on record date, being the date on which the grant of options were approved. The Scheme provides for graded vesting of options granted, over a period of 4 years from the date of grant.

The options are to be exercised within a maximum period of 2 years from the date of vesting. Within the exercise period, the employee would have the option to either purchase the shares from the trust at the exercise price or to give a mandate of sale to the trust at the best available market price, in which event the difference between the net price realized on sale after taxes and charges and the Exercise Price will accrue as gains to the employee.

In accordance with the approval granted by the members of the Company, to the issue of Bonus Shares in the ratio of one equity share of the Company of Rs. 2/- each for every one equity share of the Company held by the Shareholders of the Company as on September 19 , 2009, being the Record Date, the Compensation Committee of the Board of Directors of the Company, on September 22, 2009, had approved adjustments to the Options granted and unvested as on September 19 , 2009, under the Gujarat Gas Company Ltd - Employee Stock Option Plan 2008, whereby each option had been doubled and the Exercise Price thereof been halved with effect from September 22, 2009.

The employee share based payment plans have been accounted based on the Fair value method of accounting using the Black-Scholes Option Pricing Formula. The weighted average remaining contractual life of options outstanding as on 31 March 2014 is 1.67 years. (Previous year 2.67 years)

In accordance with Guidance Note on Accounting for Employee Share-based Payments issued by Institute of Chartered Accountants of India and SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 issued by Securities Exchange Board of India, an amount of Rs. 0.48 Crores (Previous year Rs. 1.20 Crores) has been recognised as an expense in Employee Benefits Expenses (Note 23) and corresponding liability has been disclosed as Stock Options Outstanding Account (Note 4). The balance of Rs. 2.69 Crores (Previous year Rs. 2.99 Crores) in Stock Options Outstanding Account (Note 4) represents the amortised cost of stock options outstanding. As on 31 March 2014, the amount recoverable from ESOP trust is Rs. 8.63 Crores (Previous year Rs. 12.75 Crores).

The Company has adjusted loss of Rs.1.00 Crores (Previous year loss of Rs. 3.36 Crores) to General Reserve as the difference between the cost incurred by the ESOP Trust for the purchase of shares and the exercise price of those options which have been exercised by the employees during the current year, in accordance with Guidance Note on accounting for Employee share based payment, issued by the ICAI.

The Company has taken premises for business and residential use for its employees under cancelable operating lease agreements. The total lease rentals recognized as an expense during the year under the above lease agreements aggregates to Rs. 1.03 Crores (Previous year Rs. 1.10 Crores). The lease agreement typically ranges from 1 to 9 years.

(6) Value of Imported and Indigenous Raw Material and Stores and spares and percentage thereof to the total consumption

(7) The provision for income tax has been calculated based on income earned during the 15 months period ended 31 March 2014. However the tax year end of the Company being 31 March 2014 the ultimate liability for the Assessment Year 2014-15 will be determined based on the total income of the Company for the 12 months period ending 31 March 2014.

(8) The Board of Directors in its meeting held on 21 April 2014 has considered and approved the scheme of amalgamation and arrangement between the Company, GSPC Gas Company Limited, Gujaratgas Trading Company Limited , Gujarat Gas Financial Services Limited and GSPC Distribution Networks Limited. The scheme is subject to relevant statutory approvals.

(9) The current Financial Year that began on 1 January 2013 has been extended by a period of three months, to close on 31 March 2014, such that the Financial Statements giving effect to such extension are compiled for a period of fifteen months from 1 January 2013 to 31 March 2014. Hence, the current year's Statement of Profit and Loss, Cash Flow Statement and related Notes are not comparable with those of previous period.

(10) Previous year figures have also been regrouped/reclassified wherever considered necessary to conform to current year's classification.