21st ANNUAL REPORT GUJARAT GAS COMPANY LIMITED

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					                                                                                   NOTICE
GUJARAT GAS COMPANY LIMITED

                              NOTICE is hereby given that the Twenty First Annual              “RESOLVED THAT subject to the provisions of Section
                              General Meeting of the Members of Gujarat Gas Company           198, 269, 309, 310 read with Schedule XIII and other
                              Limited will be held on Monday, 25th June, 2001, at 10.00       applicable provisions, if any, of the Companies Act,
                              a.m. at Tagore Hall, Paldi, Ahmedabad-380007 to                 1956 and subject to such approvals as may be
                              transact the following business:                                necessary under various statutes, the Company hereby
                                                                                              approves appointment of Mr. Robert W. Thomas as
                              ORDINARY BUSINESS                                               Managing Director of the Company for a period of
                                                                                              two years with effect from 29th September, 2000 on
                              1. To consider and adopt the Directors’ Report, the             the terms and conditions of employment including
                                 Audited Profit and Loss Account for the year ending          remuneration as detailed in the explanatory statement
                                 on 31st December 2000, the Balance Sheet as at that          annexed to the Notice with the liberty to the Board of
                                 date and the Auditors’ Report thereon.                       Directors to alter and vary the terms and conditions
                                                                                              including remuneration so as not to exceed the limits
                              2. To declare dividend on Equity Shares.
                                                                                              specified in Schedule XIII to the Companies Act, 1956
                              3. To consider and if thought fit, to pass with or without      (including any statutory modification or re-enactment
                                 modification(s), the following resolution as an              thereof) as may be agreed to between the Board and
                                                                                              Mr. Robert W. Thomas.”
                                 Ordinary Resolution:
                                                                                              “RESOLVED FURTHER THAT Mr. Robert W. Thomas
                                  "RESOLVED THAT Mr. Pradip N. Khandwalla who
                                                                                              shall not be liable to retire by rotation in accordance
                                 was appointed as Director of the Company to fill in
                                                                                              with Section 255 read with Article 98 (i) and (ii) of the
                                 the casual vacancy caused by the resignation of Ms.
                                                                                              Articles of Association of the Company.”
                                 Claire Hawkings and who vacates office at this
                                 meeting under Section 262 of Companies Act, 1956             “RESOLVED FURTHER THAT the Company Secretary
                                 and who is eligible for re-appointment and in respect        be and is hereby authorised to make necessar y
                                 of whom the Company has received a notice from a             applications and to do all things and deeds to comply
                                 member proposing his candidature for the office of           with the provisions under various statutes regulating
                                 Director be and is hereby appointed as Director of           the appointment of Mr. Robert W. Thomas as
                                 the Company."                                                Managing Director.”
                                                                                           7. To consider and if thought fit, to pass with or without
                              4. To consider and if thought fit, to pass with or without      modification(s), the following resolution as a Special
                                 modification(s), the following resolution as an              Resolution:
                                 Ordinary Resolution:
                                                                                               “RESOLVED THAT in partial modification of the
                                  "RESOLVED THAT Mr. Jal Ratanshaw Patel who was              resolution passed at the earlier Annual General
                                 appointed as Director of the Company to fill in the          Meeting(s) and subject to the provisions of Section
                                 casual vacancy caused by the resignation of Mr.              372A and other applicable provisions, if any, of the
                                                                                              Companies Act, 1956 and subject to such approvals
                                 Gerard Rees and who vacates office at this meeting
                                                                                              as may be required, consent of the Company be and
                                 under Section 262 of Companies Act, 1956 and who
21st ANNUAL REPORT




                                                                                              is hereby accorded to the Board of Directors of
                                 is eligible for re-appointment and in respect of whom
                                                                                              Company to make investment in Money Market Mutual
                                 the Company has received a notice from a member              Funds, private mutual funds, public sector bonds,
                                 proposing his candidature for the office of Director         government securities and call/ inter-corporate
                                 be and is hereby appointed as Director of the                deposits, exceeding any or all the percentages
                                 Company."                                                    prescribed by the Central Government under sub-
                                                                                              section (1) of Section 372A of the Act and the provisos
                              5. To appoint Auditors to hold office from the conclusion       thereto, provided however that the maximum amount
                                 of this meeting until the conclusion of the next Annual      of investments and / or call/ inter-corporate deposits
                                 General Meeting and to fix their remuneration.               so made / given shall not exceed sum of Rs. 1500
                                                                                              million (Rupees One Thousand Five Hundred million).”
                              SPECIAL BUSINESS
                                                                                              “RESOLVED FURTHER THAT pursuant to the
                              6. To consider and if thought fit, to pass with or without      provisions of Section 372A and other applicable
                                 modification(s), the following resolution as an              provisions, if any, of the Companies Act, 1956 and
                                 Ordinary Resolution:


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GUJARAT GAS COMPANY LIMITED

                                 subject to such approvals as may be required, consent     NOTES:
                                 of the Company be and is hereby accorded to the
                                 Board of Directors of Company to acquire by way of        1. A MEMBER ENTITLED TO ATTEND AND VOTE IS
                                                                                              ENTITLED TO APPOINT A PROXY TO ATTEND AND
                                 subscription, purchase or other wise the equity shares
                                                                                              VOTE INSTEAD OF HIMSELF ON A POLL AND THAT
                                 of Gujarat State Petronet Limited, exceeding any or
                                                                                              A PROXY NEED NOT BE A MEMBER.
                                 all the percentages prescribed by the Central
                                 Government under sub-section (1) of Section 372A          2. The relevant Explanator y Statement pursuant to
                                 of the Act and the provisos thereto, provided however        Section 173 (2) of the Companies Act, 1956 is annexed
                                 that the maximum amount of investment so made                hereto and forms part of this Notice.
                                 shall not exceed sum of Rs. 235 million (Rupees Two
                                 Hundred Thirty Five million).”                            3. Members/proxies should bring the Attendance Slip
                                                                                              duly filled in for attending the meeting.
                                 “RESOLVED FURTHER THAT the total investments
                                 made or loan or guarantee given by the Company            4. Members desirous of getting any information about
                                 pursuant to Section 372A of the Companies Act, 1956          the accounts and operation of the Company are
                                 shall not exceed the sum of Rs. 1950 million (Rupees         requested to address their queries to the Company
                                 One Thousand Nine Hundred Fifty million).”                   Secretary at the registered office so as to reach him at
                                                                                              least seven days before the date of the meeting to
                                 “RESOLVED FURTHER THAT the Board of Directors                enable the management to keep the required
                                 of the Company be and is hereby authorised to take           information readily available at the meeting.
                                 all the steps as may be necessar y, expedient or
                                 desirable to give effect to the above resolutions.”
                                                                                                          ANNEXURE TO NOTICE
                              8. To consider and if thought fit, to pass with or without
                                 modification(s), the following resolution as a Special    EXPLANATORY STATEMENT PURSUANT TO SECTION
                                 Resolution:                                               173(2) OF THE COMPANIES ACT, 1956

                                 “RESOLVED THAT pursuant to the provisions of              ITEM NO. 3
                                 Section 163 and other applicable provisions, if any,      Mr. Pradip N. Khandwalla was appointed by the Board of
                                 of the Companies Act, 1956, the Register of Members,      Directors as Director in the casual vacancy caused by the
                                 Share Transfer Books and all other relevant records       resignation of Ms. Claire Hawkings, in its Meeting held on
                                 and registers required to be maintained at the            March 1, 2001. As per the provisions of Section 262, he
                                 registered office of the company be maintained at         holds office of Director till the conclusion of this Annual
                                 the office of the Share Transfer Agents viz. MCS          General Meeting. A notice under Section 257 of the
                                 Limited, 101, Shatdal Complex, Opp.- Bata Show            Companies Act, 1956 alongwith the requisite deposit has
                                 Room, Ashram Road, Ahmedabad – 380009, situated           been received from a shareholder signifying his intention
                                 within the local limits of Ahmedabad city.”               to propose the candidature of Mr. Khandwalla for
                                                                                           appointment as Director of the Company.

                                                                  By Order of the Board    Brief Resume and Nature of Expertise
21st ANNUAL REPORT




                                                                                           Mr. Pradip N. Khandwalla is an Associate Member of
                                                                     Jagdish A. Mehta      the Institute of Chartered Accountants of India. He has
                                                                   Company Secretary       done his MBA from Wharton, Pennsylvania and Ph.D.
                                                                                           from Carnegie-Mellon, USA.
                              Registered Office
                              2, Shantisadan Society,                                      Professor Khandwalla’s research and teaching
                              Near Parimal Garden, Ellisbridge,                            contributions have been in organizational theory and
                              Ahmedabad – 380 006.                                         design and restructuring of organizations, management
                                                                                           of excellence, innovative turnaround management,
                              Place: Ahmedabad
                                                                                           effective management of public enterprises and
                              Date : April 25, 2001
                                                                                           governmental organizations, and creativity and
                                                                                           innovation. He has been a consultant to many Indian
                                                                                           and international organizations in the areas of team
                                                                                           building, innovative excellence, restructuring and creativity
                                                                                           training.


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GUJARAT GAS COMPANY LIMITED

                              He has taught at McGill University, Canada for several      ITEM NO. 4
                              years. Since 1975, he has been a professor at the Indian    Mr. Jal Ratanshaw Patel was appointed by the Board of
                              Institute of Management, Ahmedabad. He was L&T Chair        Directors as Director in the casual vacancy caused by
                              Professor of Organizational Behaviour at IIMA from 1985     the resignation of Mr. Gerard Rees, in its Meeting held on
                              to 1991 and then the Director of IIMA up to 1996.           March 1, 2001. As per the provisions of Section 262, he
                              He has made excellent contribution in the areas of          holds office of Director till the conclusion of this Annual
                              management, organisational sciences, etc. by authoring      General Meeting. A notice under Section 257 of the
                              nearly a dozen books and over 80 papers and articles in     Companies Act, 1956 alongwith the requisite deposit has
                              Indian and foreign journals and learned anthologies. He     been received from a shareholder signifying his intention
                              is on the editorial/advisory boards of several Indian and   to propose the candidature of Mr. Patel for appointment
                              international journals.                                     as Director of the Company.
                              He is also on the governing councils of several             Brief Resume and Nature of Expertise
                              institutions. He is a member of Government of India’s
                              National Renewal Fund, and a trustee of India Brand         Mr. Jal Ratanshaw Patel is an Associate Member of the
                              Equity Fund Trust. He is also a member on Appointments      Institute of Chartered Accountants of India and an
                              Board for Banking and Financial Institutions of             Associate Member of the Institute of Company
                              Government of India.                                        Secretaries of India. He possesses professional experience
                                                                                          of 40 years.
                              He has won many international and Indian awards.
                              Several inter national Who’s Who car r y his                He has been with the German FAG Group of Companies
                              biographical entr y.                                        since 1962. His progress with the group has been
                                                                                          remarkable. He joined FAG India Pvt. Ltd. in 1962 as
                              Directorship                                                Chief Accountant and took over the reins of FAG Precision
                              Apart from Gujarat Gas Company Limited, Mr.                 Bearings Limited (now FAG Bearings India Limited) as
                              Khandwalla holds directorship and membership of the         Managing Director in 1997 and Vice Chairman and
                              following Companies / Committees:                           Managing Director in 1999. He has been elevated to the
                                                                                          position of the Chairman from January, 2001.
                              Directorship
                                                                                          His area of expertise includes Finance, Accounts and
                              Sr.   Name of the Company                  Designation
                                                                                          Administration.
                              No.
                              1.    Bharat Petroleum                                      Directorship
                                    Corporation Limited                  Director         Apart from Gujarat Gas Company Limited, Mr. Jal
                              2.    National Thermal Power                                Ratanshaw Patel holds directorship of FAG Bearings India
                                    Corporation Limited                  Director         Limited.
                              3.    Mudra Communications Pvt. Ltd.       Director
                                                                                          He is also actively involved with various Co-operative
                                                                                          Banks, Associations and Federations as well as various
                              Membership of Committees
21st ANNUAL REPORT




                                                                                          Trusts.
                              Sr.   Name of the Company                  Designation
                              No.
                                                                                          Membership of Committees
                              1.    Audit Committee -
                                    Bharat Petroleum Corporation                          Sr. Name of the Company                      Designation
                                    Limited                          Member               No.
                              2.    Audit Committee –                                     1. Audit Committee –
                                    Gujarat Gas Company Limited      Member                   Gujarat Gas Company Limited              Chairman
                              3.    Shareholders Grievance Committee                      2. Shareholders Grievance Committee
                                    - Gujarat Gas Company Limited    Chairman                 - Gujarat Gas Company Limited            Member

                              Your Directors recommend appointment of Mr. Pradip N.       Your Directors recommend appointment of Mr. Jal
                              Khandwalla as Director.                                     Ratanshaw Patel as Director.

                              No Director, other than Mr. Pradip N. Khandwalla, is in     No Director, other than Mr. Jal Ratanshaw Patel, is in any
                              any way interested or concerned in the said resolution.     way interested or concerned in the said resolution.



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GUJARAT GAS COMPANY LIMITED

                              ITEM NO. 6                                                      Directorship
                              Mr. Edwin Bowles has resigned as Managing Director of           Sr. Name of the Company                   Designation
                              the Company w.e.f. September 29, 2000. Consequently,            No.
                              Mr. Robert W. Thomas has been nominated as Managing             1.  Gujarat Gas Financial
                              Director by British Gas Asia Pacific Holdings Pte. Ltd.             Services Limited                      Chairman
                              with effect from September 29, 2000 in terms of Article         2.  UGI Gujaratgas India Limited          Chairman
                              98 (i) of the Articles of Association of the Company, subject
                                                                                              Membership of Committees
                              to the approval of shareholders and other statutory
                              approvals as may be necessary.                                  Sr. Name of the Company                   Designation
                                                                                              No.
                              Brief Resume and Nature of Expertise
                                                                                              1.  Shareholders Grievance
                              Mr. Robert W. Thomas holds a Bachelor’s degree in                   Committee – Gujarat Gas
                              Economics from University of Wales, UK and a Master's               Company Limited                       Member
                              Degree in Management from DE Montfort University, UK.
                              On completion of his study, he joined BG plc (BG), a            Tenure of Appointment:
                              reputed and pioneer company involved in exploration,            Two years with effect from 29th September, 2000.
                              production, transmission and distribution of gas and oil.
                                                                                              Remuneration:
                              Mr. Robert W. Thomas has been associated with BG group          Remuneration payable to Mr. Robert W. Thomas is as
                              of Companies since 1975 and has held various positions          follows:
                              associated with the core business of gas transmission
                                                                                              I Salary:
                              and distribution. He has worked in various functions
                                                                                              Rs. 2,62,500/- per month.
                              including Engineering, Management Services, Marketing
                              and Finance and has a broad experience of all aspects           I I Perquisites and Allowances :
                              of the business. Since 1995, he has worked both in UK           Perquisites and allowances of Rs.38,00,000/- per annum
                              and Overseas, within the International group, which has         to be allowed in addition to salary, classified into two
                              operations in over 20 countries.                                categories A and B as detailed below:

                                                                                              CATEGORY ‘A’
                              The present scenario of the gas industry in countr y
                              requires a person having considerable experience in the         Housing
                              gas and oil industry. Since the Indian Government has           (i) The Managing Director to be provided rent free
                              opened up the Gas Industry for private investors, it will be    furnished accommodation in company owned /
                              essential for any organisation to have a person who has         maintained accommodation. The Managing Director to
                              considerable experience of this industry and can grow           have free use of the house, furniture and other consumer
                              the organisation. With various projects related to              durables, when and if required.
                              increasing available gas supply coming up in the State of
                              Gujarat, the company will have a competitive advantage          (ii) Other perquisites/allowances
                              to have Mr. Robert W. Thomas as Managing Director to            (a) The expenditure incurred by the Managing Director
21st ANNUAL REPORT




                              lead the company.                                                   on gas, electricity, water and furnishing to be
                                                                                                  reimbursed by the Company.
                              The appointment of Mr. Robert W. Thomas as Managing
                                                                                              (b) Soft furnishing to be provided, if required.
                              Director, will help the company to achieve future growth
                              targets alongwith optimising the resources available and        (c) All medical expenses incurred by the Managing
                              taking the company to greater heights of performance.               Director for himself and his family to be reimbursed,
                              The leadership qualities of Mr. Robert W. Thomas will               upto a ceiling of one month’s salary.
                              drive the company forward and position it to meet all           (d) Fees for Clubs subject to a maximum of two clubs;
                              future challenges, to become established as the leading             excluding admission and life membership fees.
                              private sector gas company in India.                            (e) Leave Travel Concession to hometown in U.K. for self,
                                                                                                  once in a year.
                              Directorship of Mr. Robert W. Thomas:
                              Apart from Gujarat Gas Company Limited, Mr. Robert W.           (f) Rest and relaxation trip to U.K. for self, once in a
                              Thomas holds directorship and membership of the                     year.
                              following Companies / Committees:                               (g) Premium for Personal Accident Insurance. The


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GUJARAT GAS COMPANY LIMITED

                                    premium not to exceed Rs. 10,000/-.                        the Board of Directors.
                              (h) Children’s education and hostel allowance.                   The Managing Director is permitted to give personal
                              (i) Any other payment in the nature of perquisites and           consulting ser vices to BG International and its
                                  allowances.                                                  subsidiaries.
                                                                                               Your Directors recommend appointment of Mr.
                              CATEGORY ‘B’
                                                                                               Robert W. Thomas as Managing Director.
                              I.   Encashment of Earned / Privilege leave as per Rules
                                                                                               No Director, other than Mr. Robert W. Thomas, is in
                                    of the Company.
                                                                                               any way interested or concerned in the said
                              II. The Managing Director to be provided chauffeur               resolutions.
                                   driven Company car, for official use.
                              III. Telephone to be provided at the Managing Director’s      ITEM NO. 7
                                    residence for official use. Personal long distance         The Shareholders in the last Annual General
                                    calls to be reimbursed to the Company.                     Meeting had approved investments of surplus funds
                              IV No contribution to be made to Provident Fund and
                                .                                                              in money market mutual funds and call /
                                  pension/ superannuating fund.                                inter-corporate deposits with an upper cap of
                              V Gratuity as per the provisions of Payment of Gratuity
                               .                                                               Rs. 900 million. Considering the projected
                                 Act, 1972.                                                    generation of surplus funds, the sanctioned limit is
                              (iii) Per formance Bonus/Commission                              likely to get exhausted. It is, therefore, proposed to
                                                                                               increase the investment limit from Rs. 900 million
                                    A performance bonus up to Rs. 80,00,000/- p.a. to
                                                                                               to Rs. 1500 million.
                                    be paid based upon achievement of targets as
                                    defined by the Board, pertaining to the Company’s          Your Company is presently negotiating an equity
                                    business plan.                                             stake of approximately 6% at par / premium in
                                    Such amount of bonus in addition to Salary and             Gujarat State Petronet Limited (GSPL), at present a
                                    monetary value of perquisites stated herein above          wholly owned subsidiary of Gujarat State Petroleum
                                    for each financial year to be fixed by the Board of        Corporation Limited. GSPL is incorporated with the
                                    Directors or a Committee of Board, should not              objective of laying pipelines to transmit natural gas
                                    exceed the overall ceiling laid down in Section 198        / LNG throughout the State of Gujarat. Accordingly,
                                    of the Companies Act, 1956.                                an investment of Rs. 235 million is envisaged by
                                    Company’s contribution to gratuity as per rules of         your Company. Your Directors believe that the
                                    the company and encashment of earned leave shall           investment in equity of GSPL would be of strategic
                                    not be included in the computation of ceiling on           significance to your Company. The above
                                    perquisites.                                               investment would be made out of surplus funds
                                    No sitting fees shall be paid to the Managing              available with the Company.
                                    Director for attending the meetings of the Board of        Section 372A of the Companies Act, 1956 provides
                                    Directors or any Committee thereof.
21st ANNUAL REPORT




                                                                                               that no loan or investment shall be made or
                                    Duties and Responsibilities:                               guarantee given exceeding 60% of the paid up
                                    The Managing Director shall be responsible for the         capital and free reserves or 100% of the free reserves
                                    management of the entire affairs of the Company            of the Company, whichever is more, unless the same
                                    subject to the superintendance, control and                has been previously authorised by a Special
                                    direction of the Board of Directors and shall perform      Resolution passed by the shareholders in the
                                    such specific functions and duties as the Board of         general meeting.
                                    Directors may entrust from time to time. He shall
                                                                                               As the aggregate amount of investment made, loan
                                    exercise such powers, as the Board may delegate to
                                    him from time to time, provided that such powers           and guarantee given by the Company (duly approved
                                    shall be exercised subject to the provisions and           by the Shareholders under Section 372A of the
                                    restrictions, if any, contained in the Companies Act,      Companies Act, 1956) is higher than the limits
                                    1956, Memorandum and Articles of Association of            specified under Section 372A, the proposed
                                    the Company and / or any restrictions / conditions         investment can be made only under approval of
                                    laid down by the Company in General Meeting or by          Shareholders by way of Special Resolution.


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GUJARAT GAS COMPANY LIMITED

                              Further details of proposed investments are given below:

                              Avenues                                 Purpose             Source of Funding      Amount              Terms
                              Investment in Money Market              Optimization     Internal Accruals         In aggregate     At the prevailing
                              Mutual Funds, private mutual            of surplus funds                           not to exceed    market rates.
                              funds, public sector bonds,                                                        Rs. 1500 million
                              government securities and call/
                              inter-corporate deposits
                              Equity Shares in Gujarat State          Furtherance of      Internal               Rs. 235 million     6% equity stake in
                              Petronet Limited (GSPL)                 long term           Accruals                                   GSPL at par /
                                                                      strategic &                                                    premium.
                                                                      business
                                                                      objectives

                              Your Directors recommend the resolution for approval of         thereto under Section 160 and 161 of the Companies
                              shareholders.                                                   Act, 1956 are to be kept at the Registered office of the
                              No Director is in any way interested or concerned in the        Company.
                              said resolution.
                                                                                              For keeping the aforesaid registers, documents, etc. at
                              ITEM NO. 8                                                      the office of Share Transfer Agent, shareholders’ approval
                              The Company is presently carrying out its share transfer        is proposed to be obtained by passing a Special
                              work in-house. MCS Limited, Ahmedabad has been                  Resolution.
                              appointed as Depositor y Registrar for establishing             A copy of the Special Resolution has been given to the
                              connectivity with NSDL and CDSL for Demat segment.              Registrar of Companies, Gujarat.
                              It is proposed to assign the share transfer work for physical   No Director is, in any way, concerned or interested in the
                              as well as Demat segment to MCS Limited with effect             said resolution.
                              from July 1, 2001.
                                                                                                                                   By Order of the Board
                              Section 163 of the Companies Act, 1956 provides that
                              Register of Members, Register of Debentureholders, Index                                                 Jagdish A. Mehta
                              of Members and Debentureholders, copies of all Annual                                                 Company Secretary
                              Returns under Section 159 and 160 together with copies          Place: Ahmedabad.
                              of certificates and documents required to be annexed            Date : April 25, 2001
21st ANNUAL REPORT




      6
                                                                      DIRECTORS’ REPORT
GUJARAT GAS COMPANY LIMITED

                              DEAR SHAREHOLDERS,

                              Your Directors have pleasure in presenting the 21st Annual Report together with the audited accounts for the year
                              ended December 31, 2000.

                              1. FINANCIAL RESULTS
                                                                                                                              (Rs. in thousands)
                              PARTICULARS                                                                 Current Year           Previous Period
                                                                                                           ending on                   ending on
                                                                                                          31.12.2000                 31.12.1999

                              Total Income                                                                  3,083,998                 1,913,527
                              Gross Profit before Interest and Depreciation                                   927,824                   526,850
                              Less: Interest                                                                  109,037                    84,091
                                     Depreciation                                                             110,517                    82,417
                              Profit before Tax                                                               708,270                   360,342
                              Provision for Taxes                                                             233,200                    70,200
                              Net Profit after Tax                                                            475,070                   290,142
                              Less: Prior period expenses and provisions (net)                                 12,394                     3,674
                              Amount Available for appropriation                                              462,676                   286,468
                              Add: Brought forward from previous year                                          73,338                    22,285
                              Add: Transfer from Investment Allowance (Utilised)
                                    Reserve                                                                      7,300                          --

                              Appropriations:
                              Transfer to Debenture Redemption Reserve                                         70,000                   100,000
                              Transfer to General Reserve                                                      50,000                    50,000
                              Payment of Interim Dividend (including tax)                                      56,943                          -
                              Proposed Dividend (including tax)                                                84,799                    85,415
                              Surplus                                                                         281,572                    73,338


                              The performance between the two periods, as stated           3.  MANAGEMENT            DISCUSSION                AND
                              above, is strictly not comparable due to different               ANALYSIS REPORT
                              accounting periods.                                          3.1 Industr y Str ucture & Developments:
                              During the year under review, total income increased by           Gujarat Gas Company Limited (GGCL) is a natural
                              20.88%, gross profit increased by 32.08%, profit after            gas distribution company that forms part of India’s
                              tax increased by 21.13% and earnings per share                    fast growing oil & gas sector. Natural gas replaces
21st ANNUAL REPORT




                              increased to Rs. 36.08 per share.                                 alternative fuels like coal, fuel oil, LDO, naphtha,
                                                                                                diesel and electricity. Consumers include industries,
                              2.   DIVIDEND                                                     commercial establishments, households and
                                   Considering the healthy cash flow, the Directors             vehicles.
                                   declared and paid an interim dividend of Rs. 4 per           In the oil & gas business, the upstream sector has
                                   share in May, 2000. Your Directors are pleased to            exploration and production (E&P) companies, which
                                   recommend a further dividend of Rs. 6 per share for          extract oil and natural gas. Oil and Natural Gas
                                   the year ending on 31st December 2000. (Aggregate            Corporation (ONGC) is one such company.
                                   dividend of Rs.10 per share for CY 2000). The further        Transmission companies receive gas from E&P
                                   dividend, if approved by the shareholders at the             companies and supply to downstream distribution
                                   Annual General Meeting, will be paid to those                companies or large consumers through their
                                   shareholders whose names appear on the                       transmission pipeline network. Gas Authority of India
                                   Register of Beneficial Owners as kept under section          Ltd. (GAIL) is a transmission company. Transmission
                                   11 of the Depositories Act, 1996 as on the end of            pipelines operate on high pressure and have a large
                                   15th April, 2001 and Register of Members of the              capacity. Distribution companies have an extensive
                                   Company on 1st May, 2001.                                    low pressure pipeline network that feeds relatively


     7
GUJARAT GAS COMPANY LIMITED

                                  smaller consumers. GGCL in Gujarat, Mahanagar                  of the Company is closely associated with its ability
                                  Gas in Mumbai and Indraprashtha Gas in Delhi fall              to market gas in this segment. Industrial users have
                                  into this category.                                            increasingly started considering natural gas as an
                                                                                                 alternative fuel because of its comparative price
                                  Recent Development
                                                                                                 stability and benefit to the environment. Chemical
                                  In December 2000, the State of Gujarat promulgated             and pharmaceutical industries in GGCL’s area of
                                  the ‘Gujarat Gas Ordinance, 2000’ which seeks to               operations have continued to perform well. The
                                  usher in a regime of operating discipline in the State,        outlook for the textile industry is very positive. The
                                  through specifically appointed authorities, primarily          average daily gas sales to this segment has increased
                                  by                                                             from 0.892 million cubic meters of gas in 1999 (9
                                                                                                 months) to 0.956 million cubic meters in 2000, a
                                  n   regulating investment in capacity creation and
                                                                                                 growth of 7.17%.
                                      utilisation of transmission and distribution
                                      network.                                                   Commercial: This segment consists of restaurants,
                                  n   assigning distribution licenses for different              hotels and other commercial establishments. It
                                      geographical areas through a Gas Commissioner.             accounts for about 1.45% of the gas sales volume.
                                  n   regulating transmission tariffs and other matters
                                                                                                 Domestic: This segment accounts for 7.76% of GGCL
                                      through a Gas Regulatory Authority.
                                                                                                 sales volume. A significant shift has been achieved
                              3.2 Opportunities & Threats:                                       from LPG to natural gas.
                                  The Gujarat Gas Ordinance, 2000 provides an                    CNG: 0.14% of total gas volumes was sold to natural
                                  opportunity for GGCL to get licenses for new areas             gas vehicles. Although the turnover from this
                                  such as Ahmedabad and Baroda and thus, expand                  segment is small, it offers good profitability and
                                  its network. GGCL is a strong candidate to get these           significant potential for growth. The Company
                                  licenses because of its operating experience and               launched a drive in Surat to convert three wheelers
                                  proven track record.                                           to CNG during the year. Financial assistance to meet
                                  There is a provision in the Ordinance to grant licenses        the cost of vehicle conversions was also arranged. A
                                  to operating distribution companies. GGCL is in the            good response has encouraged similar initiatives to
                                  process of making the necessary application to                 be taken up in Ankleshwar and Bharuch during 2001.
                                  obtain a license for its existing operations in Surat,    3.4 Future Outlook:
                                  Ankleshwar and Bharuch. Hence, there is no threat             The prospects for GGCL for 2001 are very positive in
                                  to the current operations of GGCL.                            view of the following developments.

                              3.3 Operations and Market Performance:                        n    GGCL has signed an agreement with Gujarat State
                                                                                                 Petronet Ltd. (GSPL) for the transmission of 500,000
                                  Although GGCL is primarily a distribution company,             cubic meters of gas per day, which can go up to
                                  it is also involved in gas transmission. It buys gas           800,000 cubic meters of gas per day, at the option
                                  from Gujarat State Petroleum Co. Ltd. (GSPCL), an              of GSPL. Transmission is expected to begin in the
                                  E&P company and GAIL. At the end of 2000, GGCL                 second half of 2001. Since the existing transmission
                                  had 116.72 kms. of transmission and 1240.39 kms.               pipeline will be used, the deal entails no capital
                                  of distribution pipelines.                                     expenditure.
21st ANNUAL REPORT




                                  During the year under review, GGCL received 250,000       n    GGCL has also signed a gas sales agreement with
                                  cubic meters per day of additional gas in September            Search Chem, a subsidiary of United Phosphorus
                                  2000. In December 2000, GGCL distributed an                    Ltd. for supply of 225,000 cubic meters of gas per
                                  average of 1.12 million cubic meters of gas per day            day, subject to receipt of required consents and
                                  as against 0.98 million cubic meters on 31.12.1999,            availability of gas. Commencement of supply is
                                  registering an increase of 14.29%. On 31st December            targeted in November 2001.
                                  2000, your Company had a customer base of                 n    The full impact of the additional gas received in
                                  121,577 - 408 industrial, 1,619 commercial,                    September 2000 would be felt during 2001 since it
                                  118,642 domestic and was supplying Compressed                  takes almost 2-3 months for industries to build up
                                  Natural Gas (CNG) to 908 vehicles.                             to take higher volumes.

                                  An overview of the performance in each of the above       3.5 Risk Management:
                                  segments follows.                                             GGCL has implemented a robust system of risk
                                                                                                management. Periodically, it identifies and records
                                  Industrial: This segment consists of primarily textile,
                                                                                                risks. For every risk, a definite responsibility is assigned
                                  chemical and pharmaceutical industries. GGCL sells
                                                                                                to a manager for preparation of plan(s) to manage
                                  90.65% of its volume to industries. The future success


      8
GUJARAT GAS COMPANY LIMITED

                                  that risk. The Management Committee and the Audit             Group’s worldwide policy. Your company was awarded
                                  Committee review the Risk Register on a regular               the BG Group Chairman’s award from amongst 19
                                  basis.                                                        group companies worldwide for HS&E performance.
                                                                                                A BG audit conducted during the year indicated
                              3.6 Internal Control Systems :
                                                                                                GGCL’s performance as amongst the top quartile
                                   The Directors would like to assure you that there are
                                                                                                across the world.
                                   adequate internal systems, controls and checks in
                                   place commensurate with the size of the Company          4. SUBSIDIARY / JOINT VENTURE COMPANIES
                                   and the nature of its business. Financial controls       4.1 Gujarat Gas Financial Services Limited (GFSL):
                                   are monitored through the process of budgeting and
                                                                                                GFSL broadened its product portfolio during the
                                   a detailed authorisation matrix. There is an internal
                                                                                                year. In addition to providing finance for gas related
                                   audit department headed by an experienced
                                                                                                equipment, it repositioned itself as a ser vice
                                   chartered accountant. The Audit Committee reviews
                                                                                                intermediary to provide a wider range of financial
                                   the internal audit program and analyses non-
                                                                                                products such as home loans, appliance and vehicle
                                   conformity reports generated by internal auditors
                                                                                                loans, credit cards, etc. through a strategic alliance
                                   for continuous improvement in systems and
                                                                                                with ICICI Ltd. in January 2000.
                                   processes.
                                                                                                As a result of restructuring the business, total income
                              3.7 Investments:                                                  reduced by 8.60%, Profit before Depreciation, Interest
                                   In a continuous drive to reduce exposure in the equity       and Taxes (PBDIT) reduced by 19.37% and Profit
                                   market, current investments in equity and equity             after Taxes (PAT) reduced by 13.67%, on an
                                   based mutual funds were reduced from Rs. 18.05               annualised basis.
                                   million to Rs. 0.179 million. All fresh investments
                                   were made in money market mutual funds as a              4.2 UGI Gujaratgas India Limited (UGIL):
                                   prudent measure.                                             There was significant improvement in UGIL’s plant
                                                                                                capacity utilisation and quality control. In 2000, UGIL
                                  As communicated previously, GGCL divested its LPG
                                                                                                recorded sales of Rs. 144.91 million with a PBDIT of
                                  business at a profit of Rs. 2.85 million. The transfer
                                                                                                Rs. 13.00 million against Rs. 120.59 million of sales
                                  of its Lodhika plant would be completed in 2001 on
                                                                                                and Rs. 8.82 million of PBDIT last year.
                                  receipt of necessary approvals.
                                                                                                During the year, the Hanson Group divested its stake
                              3.8 Activities for Stakeholders:                                  in UGIL along with related intellectual property rights
                                  Shareholders: In addition to regular dividends, GGCL          to the Invensys Group. This change is expected to
                                  endeavoured to provide efficient secretarial services         improve marketing and facilitate exports. The year
                                  to its shareholders, like prompt registration, quick          2001 promises to be a growth year with further
                                  response to queries, timely despatch of dividend              improvement in profitability.
                                  warrants, etc. Disclosure of Company information is
                                  done as required.                                         4.3 Petroleum Infrastructure Limited (PIL):
                                                                                                As communicated earlier, PIL has been put under
                                  Customers: GGCL continued to provide installation
                                                                                                creditors’ voluntary winding up. During the year,
                                  assistance for equipment. Regular safety checks were
                                                                                                GGCL pursued an opportunity to sell the company
                                  carried out at installations to ensure safe operations,
                                                                                                as a going concern. However, the offer fell through
                                  in addition to providing on call operational support.
21st ANNUAL REPORT




                                                                                                due to extraneous reasons. There being no other
                                  Users were also educated on best practices of fuel
                                                                                                alternative, an additional amount of Rs. 31 million
                                  usage. Moreover, the Company remained committed
                                                                                                is provided in the accounts for the year under review.
                                  to its social obligations through various development
                                                                                                GGCL made a provision of Rs. 75 million equivalent
                                  activities.
                                                                                                to investment in equity of PIL in view of the
                                  Human Resources: GGCL had 541 employees as on                 accumulated losses in 1999. The winding up exercise
                                  31st December, 2000. The Company has a well                   is expected to be completed in 2001.
                                  documented and implemented Per for mance
                                  Planning, Review and Development Strategy to take         5. FINANCE
                                  care of the aspirations of its employees. It also has a   GGCL continued to have a healthy cash flow. GGCL has
                                  variety of welfare policies like medical insurance and    also made adequate provisions for all contingencies, bad
                                  vehicle finance. Industrial relations have always         debts and diminution in value of investments, etc.
                                  remained cordial.                                         Pursuant to Section F of SEBI Guidelines for Disclosure
                                                                                            and Investor Protection, the Company has transferred a
                              3.9 Health, Safety and Environment:                           sum of Rs. 70 million to the Debenture Redemption
                                  GGCL continued with its rigorous health, safety and       Reserve. During the year under review, GGCL has not
                                  environment (HS&E) program, in line with the BG           invited any fixed deposits within the meaning of Section


     9
GUJARAT GAS COMPANY LIMITED

                              58A of the Companies Act, 1956.                               7.4 Report on Corporate Governance:
                              6. CREDIT RATING                                                As stipulated by Clause 49 of the Listing Agreement,
                              During the surveillance review completed in March 2000,         the Report on Corporate Governance is given
                              CRISIL upgraded the rating for the Non-convertible              separately in this Annual Report and forms part of
                              Debentures with an aggregate value of Rs. 800 million           this Report.
                              from “AA” to “AA+”. This rating indicates high safety
                              with regard to timely payment of interest and principal.      8. AUDITORS AND AUDITORS’ REPORT
                                                                                              Price Waterhouse, Statutory Auditors of the Company,
                              7. STATUTORY INFORMATION
                                                                                              retire at the ensuing Annual General Meeting and
                              As required under Section 212 of the Companies Act,
                                                                                              have offered themselves for re-appointment.
                              1956, the audited financial accounts for the year ending
                              on 31st December 2000 and Auditors’ Report thereon              The notes to the accounts referred to in the Auditors’
                              along with Directors’ Report of Gujarat Gas Financial           Report are self-explanatory and therefore, do not call
                              Services Ltd., a subsidiary of GGCL, are attached to            for any further comments.
                              GGCL’s Balance Sheet.
                                                                                            9. DIRECTORS
                              7.1 Energy, Technology and Foreign Exchange:
                                                                                              Mr. Pradip N. Khandwalla and Mr. Jal Ratanshaw Patel,
                              Since the Company is not a scheduled industry, the details      the Directors retire by rotation at the ensuing Annual
                              in respect of Form A pursuant to Rule 2 of the Companies        General Meeting. Being eligible, they have offered
                              (Disclosure of Particulars in the Report of Board of            themselves for reappointment.
                              Directors) Rules, 1988 are not required to be furnished.
                                                                                              For the kind perusal of the shareholders, a brief
                              However, the details in respect of Form B pursuant to
                                                                                              resume of each of them, nature of their expertise and
                              Rule 2 are submitted as Annexure-1 hereto and forms
                                                                                              the names of the companies in which they hold the
                              part of this report.
                                                                                              directorship and the details of membership of the
                              7.2 Particulars of Employees:                                   committees of the Board, are enclosed. Your Directors
                              In compliance with the provisions of section 217 (2A) of        recommend their appointment.
                              the Companies Act, 1956 read with the Companies                 Your Directors also place on record their appreciation
                              (Particulars of Employees) Rules, 1975 as amended, the          for the valuable guidance given by Mr. Edwin Bowles,
                              requisite details are submitted as Annexure-2 hereto and        Managing Director and Ms. Claire Hawkings, Director,
                              forms part of this report.                                      who resigned during the year.
                              7.3 Directors’ Responsibility Statement:
                                                                                            10.APPRECIATION
                              Your Directors hereby state                                     Your Directors place on record their appreciation to
                                                                                              employees for their dedicated performance. Your
                              i. that in the preparation of the annual accounts, the          Directors wish to acknowledge the support and
                                 applicable accounting standards have been followed           assistance received from GAIL, GSPCL, NIKO, ONGC,
                                 along with proper explanation relating to material           the Central and the State Government and the
                                 departures;                                                  financial institutions, viz., IDBI, State Bank of India,
                              ii. that the directors have selected such accounting            HDFC Bank and Standard Chartered Bank.
21st ANNUAL REPORT




                                  policies and applied them consistently and made             Your Directors express their gratitude to its promoters
                                  judgements and estimates that are reasonable and            viz., BG International for their valuable contribution
                                  prudent so as to give a true and fair view of the state     throughout the year. Directors also thank all the
                                  of the affairs of the company as at 31st December,          shareholders and debentureholders for their
                                  2000 and of the profit of the company for the year          continuing support to the Company.
                                  ending on that date;
                              iii. that the directors have taken proper and sufficient                              For and on behalf of the Board
                                   care for the maintenance of adequate accounting
                                   records in accordance with the provisions of the                                               HASMUKH SHAH
                                   Companies Act, 1956 for safeguarding the assets of                                                 CHAIRMAN
                                   the company and for preventing and detecting fraud
                                   and other irregularities;                                Place: Ahmedabad
                              iv. that the directors have prepared the annual accounts      Date: March 1, 2001.
                                  on a going concern basis.




10
                                                                                ANNEXURE – 1
                                 Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988


                                                                                          FORM – B
GUJARAT GAS COMPANY LIMITED

                              1. Research and Development (R&D)
                              A. Specific areas in which R&D carried out by the                Development of techniques, equipments and standards
                                 Company                                                       for Natural Gas distribution and utilization
                              B. Benefits derived as a result of the above R&D                 Safety & Environment Improvements
                                                                                               n   Reduction in accidents
                                                                                                   (Improvement in safety performance in terms of LTIF
                                                                                                   (Lost Time Incident Frequency) indicator; LTIF of 1.9
                                                                                                   during 1999 improved upto 1.27 during 2000)
                                                                                               n   Converted auto rickshaws to run on Compressed
                                                                                                   Natural Gas. Reduction in vehicular emission due
                                                                                                   to conversion of 200 nos. of 3-wheeler auto-rickshaws
                                                                                                   from Petrol to CNG.
                                                                                               Process and reliability improvement
                                                                                               n   Determined requirement for earthing of pipeline and
                                                                                                   associated equipments.
                                                                                               n   Derived per formance parameters by car r ying out
                                                                                                   deficiency analysis of systems and individual
                                                                                                   components.
                                                                                               n   Evaluated performance of gas fired turbo generator.
                                                                                               n   Improvement achieved through raising Asset Integrity
                                                                                                   Profile Score from 48% during 1999 upto 72% during 2000.
                              C. Future Plan of action                                         n   Upgradation of odourant injection system.
                                                                                               n   Upgradation of metering system.
                                                                                               n   Improvement of Pressure Reducing Station (PRS) to
                                                                                                   fully comply with IGE/TD/10.
                                                                                               n   Development of technology per for mance reporting
                                                                                                   and monitoring system.
                              D. Expenditure on R&D
                                 a Capital                                                     Nil
                                 b Recurring                                                   Nil
                                 c Total                                                       Nil
                                 d Total R&D expenditure as a percentage of                    Nil
                                    total turnover
                              2. Technology Absorption, Adaptation and Innovation
                              A. Efforts in brief, made towards technology                     n     Implementation of recommendations in HAZOP
                                 absorption, adaptation and innovation                               study related to safety in network, installations and
                                                                                                     safety system related issues.
                                                                                               n     Implementation of system for on-line calibration of
                                                                                                     Safety Valves installed in Domestic distribution network.
                                                                                               n     From the data collected for gas load, optimized the
                                                                                                     operating pressure.
                              B. Benefits derived as a result of the above efforts e.g.        n     Increased life of PE distribution network and
                                 product improvement, development, import                            reduction in Gas Loss resulting from leakage
21st ANNUAL REPORT




                                 substitution, etc.                                                  through PE Pipes.
                                                                                               n     Reduction in maintenance expenses.
                                                                                               n     Increased safety of our network and installation.
                              C. In case of imported technology (imported during the
                                 last 5 years reckoned from the beginning of the
                                 financial year), following information may be furnished.
                                 A Technology imported                                               Not applicable
                                 B Year of Import                                                    Not applicable
                                 C Has technology been fully absorbed?                               Not applicable
                                 D If not fully absorbed, areas where this has not
                                      taken place, reasons thereof and
                                      future plans of actions.                                       Not applicable
                              3. Foreign Exchange Earning and Outgo:                                         Current Year                  Previous Period
                                                                                                      (Rs. in thousands)                (Rs. in thousands)
                                 Total Foreign Exchange earned                                                        Nil                               Nil
                                 Total Foreign Exchange used                                                       6,443                             5,372
                                                                                                                                For and on behalf of the Board
                              Place :   Ahmedabad                                                                                           HASMUKH SHAH
                              Date :    March 01, 2001.                                                                                         CHAIRMAN


11
                                                                          ANNEXURE - 2
GUJARAT GAS COMPANY LIMITED

                              Statement of Particulars of Employees pursuant to the provisions of Section 217 (2A) of the
                              Companies Act, 1956 and forming part of the Directors' Report for the year ended 31st
                              December, 2000

                              Names of the Employees employed throughout the year and were in receipt of remuneration of not
                              less than Rs. 12,00,000/- per annum.

                              Name         Designation /    Remuneration    Qualification &   Date of           Last Employment held
                                           Nature of        Rupees          Experience        Commencement
                                           duties                           (Years)           of Employment
                              Mr.          Vice President   12,73,012/-     B.Sc.(Hons.)      01/06/1989        Practicing
                                  .
                              K. P Sinha   (Gas Division)                   L.L.B.(Spl)                         Management
                              (50)                                          M.L.W. (25)                         Consultant

                                                                                                           For and on behalf of the Board

                                                                                                                       HASMUKH SHAH
                                                                                                                           CHAIRMAN
                              Place : Ahmedabad
                              Date : March 01, 2001.
21st ANNUAL REPORT




12
                                                  A REPORT ON CORPORATE GOVERNANCE
GUJARAT GAS COMPANY LIMITED

                              Good Corporate Governance refers to a system that entails transparency, fairness, accountability and integrity. This
                              is achieved through a system of disclosures, supervision and monitoring that protects and enhances the trust of
                              various interest groups like shareholders, employees, suppliers, creditors, customers and society at large.
                              With a view to promote and raise standards of Corporate Governance of listed companies, SEBI has prescribed a set
                              of disclosures and compliances to be made by listed companies, by incorporating them in the Listing Agreement.
                              Good Corporate Governance is not merely a matter of ethics. The essence of good Corporate Governance is to
                              ensure superior corporate performance. It makes excellent business sense. It strengthens the investors’ trust and
                              confidence and ensures long term partnership that helps in fulfilling a company’s quest for higher growth and
                              profits.

                              1.      Company ’s philosophy on Corporate Governance:
                              GGCL Board believes in and supports the principles of Corporate Governance. The Board represents the
                              shareholders’ interest in perpetuating successful business, including optimising long-term financial returns. In
                              addition to the obligation of maximising shareholder’s long-term value, GGCL Board is responsible to all the
                              constituents of its business i.e. customers, employees, suppliers and to the communities where it operates.

                              2.     Board of Directors:
                              GGCL Board recognises the right of shareholders to know about the Directors and their interest in the Company.
                              GGCL Board represents an optimum combination of executive and non-executive Directors. Composition and
                              category of the present Directors as well as details of their directorship / membership in other companies /
                              committees including those of GGCL, private and foreign companies are given below:
                              Names of the Directors                                 Category              Number of                Number of
                                                                                                       Directorship in          Chairmanship /
                                                                                                          Companies             membership in
                                                                                                                             Board Committees
                              Mr.   Hasmukh Shah, Chairman                      Promoter and                   9                        2
                              Mr.   Ross Stobie                                 non-executive                  3                        1
                              Mr.   Angus McCallum                                  Directors                  5                        1
                              Mr.   Douglas Reid                                                               5                        2

                              Mr. P Laheri
                                   .K.                                         Non-executive                   4                         -
                              Mr. Pradip N. Khandwalla                       and independent                   4                        3
                              Mr. Jal Ratanshaw Patel                               directors                  2                        2

                              Mr. Robert W. Thomas,                             Promoter and
                              Managing Director                             Executive Director                 3                        1

                              Details of attendance of the directors at the Board meetings held during the year 2000 and at the last Annual
21st ANNUAL REPORT




                              General Meeting are give below:

                              Names of the Directors                          Number of Board            Number of Board              Attendance
                                                                             Meetings held while        meetings attended             at last AGM
                                                                              holding the office         while holding the
                                                                                                    office (% attendance)
                              Mr. Hasmukh Shah, Chairman                                   7                   6 (85.71%)                         Yes
                              Mr. Ross Stobie                                              7                   6 (85.71%)                        Yes
                              Mr. Angus McCallum                                           7                   4 (57.14%)                         Yes
                              Mr. Douglas Reid                                             7                   6 (85.71%)                        Yes
                                   .
                              Mr. P K. Laheri                                              7                   1 (14.28%)                        No
                              Mr. Pradip N. Khandwalla                Not holding the office                             -      Not holding the office
                              Mr. Jal Ratanshaw Patel                 Not holding the office                             -      Not holding the office
                              Ms. Claire Hawkings                                          2                      1 (50%)                        No
                              Mr. Edwin Bowles (Ex-MD)                                     4                     4 (100%)                        Yes
                              Mr. Robert W. Thomas, Managing Director                      3                     3 (100%)       Not holding the office


13
GUJARAT GAS COMPANY LIMITED

                              Brief resume of the Directors being appointed at the Annual General Meeting are given in the Explanatory Statement
                              annexed to the Notice and forming part of the Annual Report.

                              Details of Board Meetings held during the year

                              Sr.No.   Date of Board Meetings during CY 2000               Number of Directors                     Attendance
                              1.       1 March 2000                                        7                                       5
                              2.       18 April 2000                                       7                                       5
                              3.       27 July 2000                                        6                                       6
                              4.       6 September 2000                                    6                                       3
                              5.       19 October 2000                                     6                                       4
                              6.       14 December 2000                                    6                                       5
                              7.       15 December 2000                                    6                                       3

                              The Board meetings are generally held at the registered office of the Company in Ahmedabad. Calendar of the Board
                              Meetings is fixed in advance for each year. The Board meets at least once a quarter with gap between two meetings
                              not exceeding four months. It has remained the practice of the Company to place before the Board, all the matters
                              listed in Annexure – 1 to Clause 49 of the Listing Agreement including revenue budget, capital budget, health, safety
                              and environment issues. The Directors also have access to all the information about the Company and are free to
                              recommend inclusion of any matter in the agenda for discussion. Senior executives are invited to attend the Board
                              Meeting and provide clarifications as and when required.

                              3.   Audit Committee

                              GGCL constituted its Audit Committee on 1st March, 2000. The Committee was broad-based by induction of Mr. Ross
                              Stobie and Mr. Robert W. Thomas on 15th December, 2000 followed by its reconstitution on 1st March, 2001, to align
                              its composition and strength with the Corporate Governance code. Members of the Audit Committee are Mr. Jal
                              Ratanshaw Patel, Chairman (w.e.f. April 25, 2001), Mr. Pradip N. Khandwalla and Mr. Douglas Reid. The Audit
                              Committee consists entirely of qualified professionals. Quorum of the Committee is two members, including both the
                              independent directors.

                              The terms of reference of the Audit Committee include approving and implementing the audit procedures and
                              techniques, reviewing the financial reporting systems, internal control systems and control procedures and ensuring
                              compliance with the regulatory guidelines. Calendar of the Meetings is fixed in advance for each year. The Committee
                              met five times during the year under review. The Committee also met prior to finalisation of accounts for the year
                              ended on December 31, 2000.

                              The role and powers of the Committee are in compliance of the provisions of the Listing Agreement and the Companies
                              Act, 1956 as amended. The Committee reviews reports of the internal auditor and statutory auditors along with the
                              Register recording the potential risks and their mitigation plans. The Committee invites senior executives of GGCL as
21st ANNUAL REPORT




                              it considers appropriate, for attending the meetings of the Committee. The internal auditor, head of finance and
                              representative of the statutory auditors are permanent invitees at the meetings. The Company Secretary acts as
                              Secretary to the Committee.

                              Single-member Committee consisting of Mr. Douglas Reid met five times during the year under review on March 1,
                              2000, April 17, 2000, July 27, 2000, October 18, 2000 and December 14, 2000.

                              4.   Remuneration of Directors:

                              Mr. Robert W. Thomas, Managing Director is the only executive director on the Board. The Board determines his
                              remuneration on the basis of achievement of key performance indicators.

                              The Company is paying managerial remuneration to the Managing Director only. The details of such remuneration
                              are given below. Non-executive Directors are not paid any remuneration except sitting fees for attending the meetings
                              of the Board or Committee(s) thereof. In view of this, the Board has not felt the need for a separate Remuneration
                              Committee at this juncture. The Board will review this decision based on future developments in the current year.


14
GUJARAT GAS COMPANY LIMITED

                              Elements of remuneration package               Fixed                    Mr. Edwin Bowles            Mr. Robert W.
                                                                             Component /              (from 01.01.2000            Thomas (from
                                                                             Performance               to 28.09.2000)           29.9.2000 onwards)
                                                                             linked Incentive            Amount (Rs.)              Amount (Rs.)

                              Salary                                         Fixed                         2,345,000                     805,000

                              Benefits                                       Fixed
                              - Furnished Accommodation                                                    1,049,263                     198,629
                              - Medical Reimbursement                                                          5,950                           -
                              - Leave Travel Concession                                                       82,750                           -
                              - Electricity                                                                   89,437                           -
                              - Value of perquisite for use of
                                Chauffeur driven car                                                         122,593                          -
                              - Leave Encashment                                                                   -                     65,625
                              Bonus                                          Performance                   6,000,000                  2,000,000
                                                                             linked incentive
                              Total                                                                        9,694,993                  3,069,254




                              Other Details:

                              Particulars                              Mr. Edwin Bowles                      Mr. Robert W. Thomas

                                                                       (from 1.1.2000 to 28.9.2000)          (from 29.9.2000 onwards)

                              Performance criteria for Bonus           n   Health, Safety &                  n   Health, Safety &

                                                                           Environment Criteria.                 Environment Criteria.

                                                                       n   Profit before Interest & Tax.     n   Profit before Interest & Tax.

                                                                       n   Return on average                 n   Return on average

                                                                       capital employed.                     capital employed.

                              Service contracts                        For a period of two years             For a period of two years

                                                                       commencing from 23rd                  commencing from

                                                                       January 1999.                         29th September 2000.
21st ANNUAL REPORT




                              Notice Period                            Nil                                   Nil

                              Severance Fees                           Nil                                   Nil

                              Stock Option & Pension                   Nil                                   Nil

                              5.   Shareholders Grievance Committee:

                              GGCL has a Committee to approve share transfers and related matters and redressal of all types of complaints /
                              requests from the shareholders since April, 1992. Present members of the Committee are Mr. Pradip N. Khandwalla,
                              Chairman (w.e.f. April 25, 2001), Mr. Robert W. Thomas and Mr. Jal Ratanshaw Patel. Mr. Jagdish Mehta, Company
                              Secretary is the compliance officer. The Company received approximately 150 complaints during the year. All the
                              complaints were solved to the satisfaction of shareholders.

                              The Committee has sub-delegated powers to the Managing Director to approve share transfers upto 10,000 shares
                              per folio. As the shares of the Company are under compulsory Demat trading for all investors, this delegation is
                              considered adequate. The Managing Director, as delegated authority, approves share transfers at least once in a
                              fortnight.


15
GUJARAT GAS COMPANY LIMITED

                              Number of pending share transfers as on December 31, 2000                  3200 Equity Shares (32 Certificates)
                              Share Transfer cases pending from                                          December 13, 2000
                              Cases where confirmation from the seller                                   400 Equity Shares pending from
                              was awaited, pending from                                                  December 13, 2000

                              6. General Body Meetings
                              Location and time of last three AGMs

                              Date                         Time                 Ve n u e
                              18 April 2000                10.00 a.m.           Bhaikaka Hall, Near Law Garden, Ellis Bridge,
                                                                                Ahmedabad 380 006
                              6 September 1999             10.00 a.m.           Bhaikaka Hall, Near Law Garden, Ellis Bridge,
                                                                                Ahmedabad 380 006
                              20 August 1998               10.00 a.m.           Bhaikaka Hall, Near Law Garden, Ellis Bridge,
                                                                                Ahmedabad 380 006
                              No special resolutions were passed through postal ballots at the last Annual General Meeting (AGM). No special
                              resolutions are proposed through postal ballots at the forthcoming AGM. The Company is awaiting guidelines on
                              postal ballots from the Central Government and would implement the same.

                              7. Disclosures:

                              There are no materially significant related party transactions having potential conflict with the interest of the company
                              at large. Similarly, there are no pecuniary relationships or transactions with the non-executive directors.

                              There are no non-compliances by the company on any matter related to capital markets, during the last three years.
                              Similarly, there are no penalties, strictures imposed by Stock Exchange, SEBI or any statutory authority on any matter
                              related to capital markets except late creation of security on assets of the company in favour of the debenture
                              trustees.

                              8. Means of communication:

                              The Company shall be publishing the quarterly results in the Economic Times in Ahmedabad and Mumbai editions as
                              well as the Financial Express, Mumbai edition in English language and Ahmedabad edition in Gujarati language.

                              The Company has its own web site – http://www.gujaratgas.com, on which the quarterly results, all the official releases
                              to the stock exchanges and presentations made to institutional investors and analysts are displayed.

                              The Board Report deals with all the matters stipulated under the Management Discussion and Analysis Report.

                              9. General Shareholder Information:

                              All the required information has been furnished under the head “Information for Investors”.
21st ANNUAL REPORT




                              10. Compliance

                              GGCL has complied with all the mandatory requirements of Corporate Governance. The Board would review
                              implementation of non-mandatory requirements of Corporate Governance code in due course. As the provisions of
                              the Corporate Governance code could be implemented fully only in the month of March 2001 as stipulated in Clause
                              49 of the Listing Agreement, the Auditors' Certificate for the year 2000 was not obtained. GGCL shall, however, obtain
                              Auditors's Certificate from the next year.

                                                                                                                      For and on behalf of the Board



                                                                                                                                   HASMUKH SHAH
                                                                                                                                          CHAIRMAN
                              Place: Ahmedabad
                              Date: March 1, 2001



16
                                                                     INFORMATION FOR INVESTORS
GUJARAT GAS COMPANY LIMITED

                              1.   Annual General Meeting details:                           At 10.00 a.m. on 25th June, 2001 at
                                                                                             Tagore Hall, Paldi, Ahmedabad – 380 007.
                              2.   Financial Calendar
                                   The Company follows financial year of January to December. Meetings of the Board of Directors of the Company
                                   are scheduled to be held on the following dates during the year 2001:

                                   March 1, 2001 (already held)                              July 26, 2001
                                   April 25, 2001                                            October 25, 2001
                                   June 25, 2001                                             December 6, 2001

                              3.   Book Closure Date:
                                   For Physical segment                                      16th April, 2001 to 30th April, 2001
                                                                                             (both days inclusive)
                                   For Demat Segment                                         At the close of working hours on 15th April, 2001

                              4.   Dividend payment:                                        On or after 25th June, 2001, but within the
                                                                                             statutory time limit.
                              5. Listing on Stock Exchanges:                                 n Shares listed on Ahmedabad, Mumbai

                                                                                                and Vadodara Stock Exchanges.
                                                                                             n NCDs listed on Wholesale Debt Market

                                                                                                segment - National Stock Exchange.
                              Listing fees have been paid for the year 2000-2001 as per the Listing Agreements with the respective Stock Exchanges.
                              6. Stock Code
                                    The Stock Exchange, Ahmedabad                            20860
                                    The Stock Exchange, Mumbai                               523477
                                    Vadodara Stock Exchange                                  23477

                              7.   Market Price Data
                                   Market price data at the Stock Exchange, Mumbai for the year 2000 is given below:

                                   Month                                               Highest (Rs.)                  Lowest (Rs.)
                                   January                                                692.00                        502.50
                                   February                                               527.00                        350.00
                                   March                                                  435.00                        325.00
                                   April                                                  390.00                        282.00
                                   May                                                    415.30                        315.00
                                   June                                                   430.00                        339.00
                                   July                                                   448.50                        347.05
                                   August                                                 543.00                        425.00
21st ANNUAL REPORT




                                   September                                              660.00                        537.00
                                   October                                                690.00                        510.00
                                   November                                               663.00                        582.00
                                   December                                               739.80                        655.00

                              8.   Performance in comparison to BSE Sensex
                                   Performance in comparison to BSE Sensex for the year under review is given on the inside cover page.

                              9.   Registrar and Transfer Agent and Share Transfer System
                                   The Company is presently carrying out share transfer in-house, whereas MCS Limited has been appointed as
                                   Depository Registrar for establishing connectivity with NSDL and CDSL for Demat segment.

                                   The Company is in the process of appointing MCS Limited, Ahmedabad as Share Transfer Agent with effect form
                                   July 1, 2001 for physical as well as Demat Segment. Accordingly, a proposal is placed before the Shareholders for
                                   approval by way of Special Resolution at the ensuing Annual General Meeting, to maintain the statutory
                                   registers and records at the office of the Share Transfer Agents. If the proposal is approved, the Shareholders may


17
GUJARAT GAS COMPANY LIMITED

                                    send their share transfer and other requests to MCS Limited at the following address from July 1, 2001:

                                    MCS Limited,
                                    101, Shatdal Complex, 1st Floor,
                                    Opp. Bata Show Room, Ashram Road,
                                    Ahmedabad – 380 009
                                    Phone Nos. (079) 6582878, 6581296 –
                                    Fax No. (079) 6584027
                                    E-mail address: mcsamd@jindalonline.com

                              10. Distribution of Shareholding
                                  Distribution of shareholding as on April 13, 2001 is given below:

                              SHAREHOLDING PATTERN

                              Category                             No of       Shares held       Shares held in       Total no. of          % to
                                                             shareholders       in physical      dematerialised             shares        capital
                                                                                      form                form                held
                              Resident Individuals                     11764        764902                848968           1613870            12.58
                              Foreign Institutional Investors (FIIs)       9           1400               190600            192000              1.5
                              Non-Resident Indian
                              (NRI’s) and (OCB’s)                         44           3400                 6265               9665            0.08
                              Indian Companies and
                              Foreign Companies                          209           4900               837757            842657             6.57
                              Mutual Funds                                13            300               533273            533573             4.16
                              Public Financial Institutions,
                              Government Companies and Banks              17        486500                791539           1278039             9.96
                              Foreign Promoters                            1       8352075                      0          8352075            65.13
                              Shares in Transit (in the Depository)        0               0                3121               3121            0.02

                              To t a l                                 12057     9613477               3211523          12825000          100.00

                              11.Dematerialization of Shares and Liquidity:
                                  As you are aware, Securities and Exchange Board of India (SEBI) had decided that with effect from January 17,
                                  2000, GGCL shares can be traded in electronic form only by all the investors. Your Company has signed agreements
                                  with both the depositories viz. NSDL and CDSL. Should you still have any quer y regarding
                                  depository working, please feel free to write to us at the registered office. We shall be glad to respond to your
                                  queries.
21st ANNUAL REPORT




                                    Shares of your Company are highly liquid and are included in Group “A” category of shares of the Stock
                                    Exchange, Mumbai. 34.877% shares of the Company are held by Non-promoter shareholders.

                              12. Company does not have any GDRs/ADRs/Warrants or any other Convertible instruments.

                              13. Gas Receiving Locations

                                    Surat
                                                                           .O.
                                    Mayavanshi Mohalla, Post Box No. 915, P Navyug College, Adajan Gam, Surat – 395 009

                                    Ankleshwar
                                    Surti Bhagol, Umarwada Road, Via Piraman Naka, Ankleshwar – 393 001

                                    Bharuch
                                    Bharuch – Palej –Tankaria Road, Near Nandevar Cross Roads, At & Post – Rhadpor, Dist. Bharuch



18
GUJARAT GAS COMPANY LIMITED

                              14. Nomination facility
                                  The Companies Act, 1956 provides for nomination facility to investors. As a shareholder, you have an option to
                                  nominate any person as your nominee to whom your shares shall vest in the unfortunate event of your death. It
                                  is advisable to avail of this facility especially by shareholders who currently hold shares in their single name.

                                    Nomination can avoid the process of acquiring right in shares through transmission by law. In the case of joint
                                    holders nominating their nominee, such nomination will be effective only on death of all the holders. Shareholders
                                    may write to the Company at the Registered Office for obtaining the nomination form. The nomination form is
                                    also available at the Company's Web-site viz. www.gujaratgas.com

                              15. Bank Mandate:
                                  With a view to overcome transit risks like fraudulent encashment, theft, etc. shareholders are recommended to
                                  give their bank mandate. Shareholders may write to the Company at the Registered Office for obtaining the bank
                                  mandate form. The bank mandate form is also available at the Company's Web-site viz. www.gujaratgas.com

                                    While opening a depository account with participants of NSDL and CDSL, you may have given your bank
                                    account details, which will be used by your Company for printing on dividend warrants. This ensures that the
                                    dividend warrants, even if lost or stolen, cannot be used for any purpose other than for depositing the money in
                                    the account specified on the dividend warrant. This ensures safety for investors. However, you may want to receive
                                    dividend in an account other than the one specified while opening the depository account. If so, you may
                                    change/correct the bank account details with your depository participant.

                              16.    Unclaimed Dividend:
                                    The Company has transferred the unclaimed dividend to the General Revenue Account of the Central
                                    Government for the financial years 1991-92 to 1994-95. Shareholders, who have not encashed their
                                    dividend warrants for the above years, are requested to lodge their claim with the Registrar of Companies,
                                    Gujarat, Ahmedabad.

                              17. Folio Merging:
                                  Members who hold shares in same order of names in more than one folio are requested to send their request for
                                  merging all their shareholdings into one folio, along with the share certificates, in case of physical shares.

                              18. Correspondence with the Company
                                  Address for correspondence with the Company is:
                                  Gujarat Gas Company Limited, 2, Shantisadan Society, Nr. Parimal Garden, Ellis Bridge, Ahmedabad –
                                  380 006, India. Telephone Numbers : (079) 6462980, 6460095, Fax (079) 6466249.
                                  E-mail: jamehta@gujaratgas.com
21st ANNUAL REPORT




19
                                                         Auditors’ Report to the members of
GUJARAT GAS COMPANY LIMITED                                Gujarat Gas Company Limited


                              1.   We report that we have audited the Balance Sheet of Gujarat Gas Company Limited as at December 31, 2000
                                   and the relative Profit and Loss Account for the year ended on that date both of which we have signed under
                                   reference to this report and the above mentioned accounts are in agreement with the books of account.

                              2.   In our opinion and to the best of our information and according to the explanations given to us, the Balance
                                   Sheet and Profit and Loss Account together with the notes thereon / attached thereto and the Statement on
                                   Significant Accounting Policies give, in the prescribed manner the information required by ‘The Companies Act,
                                   1956’, of India (the ‘Act’), read with Note 10(a) on Schedule 17 regarding prices of Natural Gas being reviewed
                                   by the Ministry of Petroleum and Natural Gas, Government of India and subject to Note 15 on Schedule 17
                                   regarding shareholder’s and Central Government approval yet to be obtained for the appointment of the
                                   Managing Director and his remuneration, to the extent indicated therein with corresponding effect on the profit
                                   for the year and year-end net assets also give respectively, a true and fair view of the state of the Company’s
                                   affairs as at December 31, 2000 and its profit for the year ended on that date.

                              3.   We have obtained all the information and explanations which to the best of our knowledge and belief were
                                   necessary for our audit. In our opinion, proper books of account have been kept as required by law so far as
                                   appears from our examination of the books.

                              4.   In our opinion these accounts have been prepared in compliance with the applicable accounting standards
                                   referred to in Section 211 (3C) of the Act.

                              5.   Based on representations made by all the Directors of the Company and the information and explanations made
                                   available, the directors of the company do not prima facie have any disqualification as referred to in clause (g)
                                   of sub-section (1) to Section 274 of the Act.

                              6.   As required by the Manufacturing and Other Companies (Auditor’s Report) Order 1988 dated 7th September
                                   1988 issued by the Central Government of India and on the basis of such checks as we considered appropriate
                                   and according to the information and explanations given to us, we further report that :

                                   (i)      (a) The Company has maintained proper records to show full particulars including quantitative details
                                            and situation of its fixed assets.

                                            (b) The fixed assets of the Company including those leased out are physically verified by the manage-
                                            ment according to a phased programme designed to cover all the items over a period of three years.
                                            Pursuant to the programme, a physical verification was carried out during the year and this revealed no
                                            material discrepancies.

                                   (ii)     The fixed assets of the Company have not been revalued during the year.

                                   (iii)    The stocks of stores, spare parts and pipe fittings of the Company at all its locations have been
                                            physically verified by the management at the year-end.

                                   (iv)     In our opinion, the procedures of physical verification of stocks followed by the management are
21st ANNUAL REPORT




                                            reasonable and adequate in relation to the size of the company and nature of its business.

                                   (v)      The discrepancies between the physical stocks and the book stocks which have been properly dealt with
                                            in the books of account were not material.

                                   (vi)     In our opinion the valuation of stocks of stores, spare parts and pipe fittings has been fair and proper
                                            in accordance with the normally accepted accounting principles in India and is on the same basis as in
                                            the preceding year.

                                   (vii)    The Company has not taken/granted any loans, secured or unsecured, from/to Companies, firms or
                                            other parties listed in the register maintained under Section 301 of The Act. In terms of sub-section (6)
                                            of Section 370 of The Act, provisions of the section are not applicable on or after the commencement
                                            of the Indian Companies (Amendment) Act, 1999.

                                   (viii)   The employees and other parties to whom loans or advances in the nature of loans have been given are
                                            generally repaying the principal amounts as stipulated, and are also, where applicable, regular in the



20
GUJARAT GAS COMPANY LIMITED

                                            payment of interest.

                                  (ix)      In our opinion, there is an adequate internal control procedure commensurate with the size of the
                                            Company and the nature of its business, for purchase of stores, spares and pipe fittings including
                                            components, plant and machinery, equipment and similar assets and for the sale of goods.

                                  (x)       The Company has not purchased goods and materials and sold goods, materials and services
                                            aggregating Rs. 50,000/- or more in value from/to any of the parties listed in the register maintained
                                            under Section 301 of the Act.

                                  (xi)      The Company has a system of determining unserviceable or damaged stores, spares and pipe fittings
                                            on the basis of technical evaluation and on such basis, in our opinion, adequate amounts have been
                                            written off such stocks in the accounts.

                                  (xii)     The Company has not accepted any deposits from the public.

                                  (xiii)    In our opinion, reasonable records have been maintained by the Company for the sale and disposal of
                                            scrap, where applicable and significant. The Company does not have any by-product.

                                  (xiv)     In our opinion the Company’s present internal audit system is generally commensurate with its size and
                                            nature of business.

                                  (xv)      The Central Government of India has not prescribed the maintenance of cost records by the Company
                                            under Section 209(1)(d) of the Act for any of its products.

                                  (xvi)     The Company has been regular during the year in depositing Provident Fund and Employees’ State
                                            Insurance dues with the appropriate authorities in India.

                                  (xvii)    At the last day of the financial year there was no amount outstanding in respect of undisputed income
                                            tax, wealth tax, sales tax and customs duty which were due for more than six months from the date they
                                            became payable. Excise duty is not applicable to the products of the Company.

                                  (xviii)   During the course of our examination of the books of account carried out in accordance with the
                                            generally accepted auditing practices in India, we have not come across any personal expenses which
                                            have been charged to Profit and Loss Account, nor have we been informed of such case by the manage-
                                            ment other than those payable under contractual obligations and / or accepted business practices.

                                  (xix)     The Company is not a sick industrial company within the meaning of clause (o) of Section 3(1) of the
                                            Sick Industrial Companies (Special Provisions) Act,1985 of India.

                                  (xx)      In respect of services rendered, in our opinion :

                                            (a) The Company has a reasonable system of recording receipts, issues and consumption of materials
                                                and stores and allocating materials and stores consumed to the relative jobs, commensurate with
21st ANNUAL REPORT




                                                its size and nature of its business.

                                            (b) The Company has a reasonable system of allocating man hours utilised to the relative jobs,
                                                commensurate with its size and nature of its business.

                                            (c) There is a reasonable system of authorisation at proper levels with necessary controls on the issue
                                                of stores and the related system of internal control of the Company is commensurate with the size
                                                of the Company and the nature of its business.


                                                                                                                                 S. Berera
                                                                                                                                    Partner
                                                                                                                       For and on behalf of
                              Place : New Delhi                                                                        Price Waterhouse
                              Date : March 01, 2001                                                              CHARTERED ACCOUNTANTS




21
                                              BALANCE SHEET AS AT 31ST DECEMBER, 2000
GUJARAT GAS COMPANY LIMITED

                                                                                   Schedule                                      As at                As at
                                                                                                                           31-12-2000           31-12-1999
                                                                                                             Rs. in             Rs. in                Rs. in
                                                                                                          thousand           thousand             thousand
                               SOURCES OF FUNDS
                               SHARE HOLDERS FUNDS:
                                  Capital                                                1                 128,250                                     128,250
                                  Reserves and Surplus                                   2               1,171,572                                     850,638
                                                                                                                             1,299,822                 978,888
                               LOAN FUNDS :
                                  Secured loans                                          3                 800,000                                     800,000
                                  Unsecured loans                                        4                       -                                      10,029
                                                                                                                               800,000                 810,029
                               DEPOSITS :
                                  From customers                                                           439,798                                  388,285
                                  From Gas Authority of India Limited                                       38,692                                   38,692
                                  From Others                                                               69,282                                   69,467
                                                                                                                               547,772              496,444
                                                                                     TOTA L                                  2,647,594            2,285,361
                               APPLIC ATION OF FUNDS
                               FIXED ASSETS :
                                   Gross Block                                           5               2,133,755                                2,084,284
                                   Less : Depreciation                                                     465,578                                  364,417
                                                                                                         1,668,177                                1,719,867
                                      Less : Lease Terminal Adjustment Account                             119,357                                   78,876
                                      Net Block                                                          1,548,820                                1,640,991
                                      Capital work in progress                                              63,002                                    1,529
                                      Capital Inventory                                                      9,801                                   24,935
                                                                                                                             1,621,623            1,667,455
                               INVESTMENTS                                   6                                                 629,961              327,226
                               CURRENT ASSETS, LOANS & ADVANCES:
                                  Inventories                                7                              29,488                                      22,201
                                  Sundry Debtors                             8                             344,084                                     296,920
                                  Cash and Bank Balances                     9                             117,617                                      77,488
                                  Interest receivable from Investments/Loans                                 8,035                                       1,391
                                  Loans and Advances                         10                            242,113                                     235,080
                                                                                                           741,337                                     633,080
                               Less : Current Liabilities & Provisions                  11
                                   Current Liabilities                                                     212,510                                  218,168
                                   Provisions                                                              132,817                                  124,232
21st ANNUAL REPORT




                                                                                                           345,327                                  342,400
                               Net Current Assets                                                                              396,010              290,680
                                                                                     TOTA L                                  2,647,594            2,285,361
                               Significant A ccounting Policies and
                               Notes to Accounts                                        17
                              This is the Balance Sheet referred to in our report of even date.   The Schedules referred to above form an integral part of the
                                                                                                  Balance Sheet.
                              S. BERERA                                                           For and on behalf of the Board
                              Partner                                                             HASMUKH SHAH                     Chairman
                              For and on behalf of
                                                                                                  ROBERT W. THOMAS                 Managing Director
                              PRICE WATERHOUSE
                                                                                                  DOUGLAS REID                     Director
                              CHARTERED ACCOUNTANTS
                                                                                                  R. SRIKANTH                      Finance Director
                                                                                                  J. A. MEHTA                      Company Secretary
                              Place    : New Delhi                                                Place : Ahmedabad
                              Date     : March 01, 2001                                           Date : March 01, 2001


22
                              PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST DECEMBER, 2000
GUJARAT GAS COMPANY LIMITED

                                                                             Schedule                                    For the               For the
                                                                                                                     Year ended          period ended
                                                                                                                    31-12-2000            31-12-1999
                                                                                                      Rs. in              Rs. in                 Rs. in
                                                                                                   thousand           thousand               thousand
                              INCOME :
                                 Sales                                            12              2,946,883                                 1,834,973
                                 Other Income                                     13                137,115                                    78,554
                                 (Decrease)/Increase in stock of                                          -                                     (831)
                                 trading goods
                                                                                                                     3,083,998              1,912,696
                              EXPENDITURE :
                                 Material consumed/processed
                                 (all indigenous)                                                 1,876,485                                 1,212,903
                                 Operating & Other Expenses                       14                279,689                                   172,943
                                 Depreciation                                                       110,517                                    82,417
                                 Interest                                         15                109,037                                    84,091
                                                                                                                     2,375,728              1,552,354
                              Profit before Taxes                                                                      708,270                  360,342
                              Provision for Taxation :
                              - Wealth Tax                                                               200                                        200
                              - Income Tax                                                          233,000                                      70,000
                              - Provision for Income Tax for earlier years/(writeback)              (11,367)                                      3,674
                                [Net of Rs. 17,557 thousand being
                                provision of earlier years no longer required
                                written back (Previous period Rs. Nil )]
                                                                                                                       221,833                   73,874
                              Profit af ter Taxes                                                                      486,437                  286,468
                              Prior Period Adjustments                            16                                    23,761                        -
                              Profit Af ter Prior Period Adjustments                                                   462,676                  286,468
                              Profit brought forward                                                                    73,338                   22,285
                              Transferred from Investment Allowance (Utilised)                                           7,300                        -
                              Profit available for Appropriations                                                      543,314                  308,753
                              APPROPRIATIONS :
                              Debenture Redemption Reserve                                                              70,000                  100,000
                              Interim Dividend                                                                          51,300                        -
                              Interim Corporate Dividend Tax                                                             5,643                        -
                              Proposed Dividend                                                                         76,950                   76,950
                              Proposed Corporate Dividend Tax                                                            7,849                    8,465
                              General Reserve                                                                           50,000                   50,000
                              Profit Carried Forward                                                                   281,572                   73,338
21st ANNUAL REPORT




                                                                                                                       543,314                  308,753
                              Significant A ccounting Policies and
                              Notes to Accounts                                   17

                              This is the Profit & Loss Account referred to in our report   The Schedules referred to above form an integral part
                              of even date.                                                 of the Profit & Loss Account.
                                                                                            For and on behalf of the Board

                              S. BERERA                                                     HASMUKH SHAH                     Chairman
                              Partner                                                       ROBERT W. THOMAS                 Managing Director
                              For and on behalf of                                          DOUGLAS REID                     Director
                              PRICE WATERHOUSE
                                                                                            R. SRIKANTH                      Finance Director
                              CHARTERED ACCOUNTANTS
                                                                                            J. A. MEHTA                      Company Secretary
                              Place   : New Delhi                                           Place : Ahmedabad
                              Date    : March 01, 2001                                      Date : March 01, 2001


23
                                         SCHEDULES FORMING PART OF BALANCE SHEET


                                                                                                                 As at               As at
GUJARAT GAS COMPANY LIMITED

                                                                                                           31-12-2000          31-12-1999
                                                                                                                Rs. in               Rs. in
                                                                                                             thousand            thousand
                              SCHEDULE 1
                              SHARE C APITAL
                              Authorised
                                   25,000,000 Equity Shares of Rs. 10/- each                                   250,000            250,000
                              Issued, Subscribed & Paid up
                                   12,825,000 (Previous period 12,825,000) Equity Shares
                                   of Rs. 10/- each fully paid-up
                              [Out of above 8,352,075 shares (Previous period 8,352,075) are
                              held by holding company British Gas Asia Pacific Holdings Pte. Limited]          128,250            128,250

                              SCHEDULE 2
                              RESERVES AND SURPLUS
                              GENERAL RESERVE
                              As per last Balance Sheet                                                        570,000            520,000
                              Add : Amount Transferred from Profit and Loss Account                             50,000             50,000
                                                                                                               620,000            570,000

                              INVESTMENT ALLOWANCE (Utilised)
                              RESERVE ACCOUNT
                              As per last Balance Sheet                                                            7,300             7,300
                              Less : Transferred to Profit & Loss Account                                        (7,300)                 -
                                                                                                                         -           7,300
                              DEBENTURE REDEMPTION RESERVE
                              As per last Balance Sheet                                                        200,000            100,000
                              Transferred from Profit and Loss Account                                          70,000            100,000
                                                                                                               270,000            200,000
                              PROFIT AND LOSS ACCOUNT                                                          281,572             73,338
                                   TOTA L                                                                    1,171,572            850,638

                              SCHEDULE 3
                              SECURED LOANS
                              Debentures                                                                        800,000            800,000
                              Notes :
                                   1. Debentures :
                                       360 13.50% Non-Convertible Debentures (NCDs) of Rs. 10 lacs each (Previous period 360) and 440
                                       13.25% NCDs of Rs. 10 lacs each (Previous period 440). 360 13.50% NCDs and 340 13.25% NCDs of
                                       Rs. 10 lacs each are redeemable at par on the expiry of 7 years from the date of allotment i.e.
                                       February 25, 2005 and 100 13.25% NCDs of Rs. 10 lacs each are redeemable at par on the expiry of
21st ANNUAL REPORT




                                       7 years from the date of allotment i.e. June 3, 2005. However, there is an option in both the cases to
                                       either parties for an early redemption on expiry of 5 years from the date of allotment. The Debentures
                                       are secured by a specific mortgage and charge on the Freehold & Leasehold land situated at
                                       Ankleshwar & Bharuch together with all buildings, structures and plant & machinery thereon and a
                                       floating charge on all the other assets, both present & future (other than specific properties for
                                       which specific mortgage has been created), and further subject to a prior charge on stock created /
                                       or to be created in favour of bank for working capital requirement.
                                   2 . Non Fund Based Limit from banks :
                                       Secured by way of hypothecation of stock of stores, pipe fitting and book debts of the Company
                                       aggregating to Rs. 145,000 thousand.

                              SCHEDULE 4
                              UNSECURED LOANS
                              Deferred Payment Credit
                              [Due within one year Rs. Nil (Previous period Rs. 10,029 thousand)]                        -          10,029



24
25
     21st ANNUAL REPORT                                                                                      GUJARAT GAS COMPANY LIMITED



     SCHEDULE 5
     FIXED ASSETS
     (Refer Note 2,3,6 & 12 on Schedule 17)                                                                                                                               (Rs. in thousand)

                  Pa r t i c u l a r s                        GROSS       BLOCK                                          D E P R E C I AT I O N                          NET BLOCK
                                                 AS AT        Additions    Deduction/          AS AT         AS AT    For the Year      Deduction/          AS AT         AS AT         AS AT
                                           01-01-2000      For the Year   Adjustments    31-12-2000     01-01-2000                     Adjustments    31-12-2000    31-12-2000    31-12-1999
                                                                          For the year                                                 For the year
     Land                                       8,611             259             424         8,446              -              -                 -            -         8,446         8,611
     Buildings                                128,730             555             736       128,549         12,937          2,097               66        14,968       113,581       115,793
     Plant & Machinery                      1,585,821          61,999           8,589     1,639,231        264,798         89,011            6,525       347,284     1,291,947     1,321,023
     Furniture, Fixtures & Fittings            58,824             497           5,276        54,045         18,121          3,145            1,777        19,489        34,556        40,703
     Vehicles                                  22,354           7,632           5,914        24,072          7,003          1,817            2,625         6,195        17,877        15,351
     Leased Assets
     Vehicles                                     532                 -           532             -            245             30              275             -             -           287
     Plant & Machinery                        279,412                 -             -       279,412         61,313         14,417          (1,912)        77,642       201,770       218,099
                                           2,084,284          70,942         21,471 2,133,755            364,417        110,517             9,356      465,578 1,668,177 1,719,867
     (Less) /Add :
     Lease Ter minal          Adjustment              -               -              -              -       78,876         40,481                 -      119,357     (119,357)      (78,876)
     T O TA L                              2,084,284          70,942         21,471 2,133,755            443,293        150,998             9,356      584,935 1,548,820 1,640,991
     Capital Work in Progress                                                                                                                                           63,002         1,529
     (including capital advances)
     Capital Inventory at cost                                                                                                                                           9,801        24,935
     T O TA L                              2,084,284          70,942         21,471 2,133,755            443,293        150,998             9,356      584,935 1,621,623 1,667,455
     Previous period                        1,210,686       1,022,315        148,717      2,084,284        423,042         91,988           71,737       443,293     1,640,991

     Notes :
     1. Land includes Leasehold Land Rs. 184 thousand (Previous period Rs. 184 thousand)
     2. Cost of Building includes cost of shares of the face value of Rs. 1,155/- (Previous period Rs. 1,205/-) received under the bye-laws of the society.
     3. Additions to Plant & machinery is net of capital contribution of Rs. 1,083 thousand. (Previous period Rs. Nil thousand)
     4. Land includes land pending registration in the name of the Company Rs. 696 thousand (Previous period Rs. 509 thousand)
GUJARAT GAS COMPANY LIMITED

                                                                                                       As at         As at
                                                                                                 31-12-2000    31-12-1999
                                                                                        Rs. in        Rs. in         Rs. in
                                                                                     thousand      thousand      thousand
                              SCHEDULE 6
                              INVESTMENTS
                              (Refer Note 4,13,14 & 17 on Schedule 17)

                              A      Long Term Investments :
                                     Trade - Unquoted                                              63,088        63,088
                                     Non Trade - Unquoted                                           6,375         6,750
                                     Long Term Investments (A)                                     69,463        69,838

                              B      Current Investments :
                                     Equity Shares :
                                     Non Trade - Quoted                                               113          2,032
                                     Debentures :
                                     Non Trade - Quoted                                                66           107
                                     Non Trade - Unquoted                                          30,000        15,000
                                     Other Investments :
                                     Non Trade - Quoted                                           530,319       240,249
                                     Current Investments (B)                                      560,498       257,388
                                     Total Investments (A+B)                                      629,961       327,226


                                     Aggregate cost of Unquoted Investments                        99,463        84,838
                                     Aggregate cost of Quoted Investments                         530,498       251,599
                                     Aggregate market value of Quoted Investments                 534,568       258,914

                                  SCHEDULE 7
                                  INVENTORIES
                                  (Refer Note 5 on Schedule 17)
                                       Stores and Pipe Fittings                                     29,488         22,201
                                      To t a l                                                      29,488         22,201

                              SCHEDULE 8

                              SUNDRY DEBTORS
21st ANNUAL REPORT




                              Unsecured - considered good, unless otherwise stated
                              Exceeding Six Months                                                  11,556        11,852
                              Others
                              -Considered Good                                                    332,528       285,068
                              -Considered Doubtful                                      2,480                         -
                              Less : Provision for Doubtful Debts                       2,480                         -
                                                                                                          -             -
                                     To t a l                                                     344,084       296,920




26
GUJARAT GAS COMPANY LIMITED

                                                                                                                As at              As at
                                                                                                          31-12-2000         31-12-1999
                                                                                              Rs. in           Rs. in              Rs. in
                                                                                           thousand         thousand           thousand

                              SCHEDULE 9
                              CASH & BANK BAL ANCES

                              Cash in hand                                                                     11,656             4,512
                              [Including cheques in hand Rs. 10,806 thousand
                              (Previous period Rs. Nil)]
                              Balances with Scheduled Banks :
                                    - In Current Accounts                                                      53,287            43,668
                                    - In Fixed Deposit Account                                                 52,674            29,308
                                   To t a l                                                                  117,617             77,488

                                   Out of the above :

                              1.   Fixed deposits aggregating Rs. 1,119 thousand (Previous period Rs. 2,933 thousand) lodged with Bank as
                                   margin money for the issue of Guarantees and Letters of Credit.

                              2.   Fixed deposits aggregating Rs. 1,555 thousand (Previous period Rs. 1,318 thousand) have been pledged
                                   with Government Authorities.

                              3.   Balance with Scheduled Banks in Current Accounts include Rs. 4,262 thousand (Previous period Rs.
                                   3,320 thousand) on account of Unpaid Dividend.


                              SCHEDULE 10
                              LOANS AND ADVANCES
                              Unsecured -considered good, unless
                              otherwise stated

                              Loan to a Subsidiary Company                                                   168,910           113,032
                              Advances recoverable in Cash or in kind
                              or for value to be received                                                     26,204            52,787
                              Loan to Others:
                              Petroleum Infrastructure Ltd.                                                          -          29,671
                              Advance payment of Tax & Tax
21st ANNUAL REPORT




                              deducted at source                                            875,990                            647,132
                              Taxation Provision                                          (828,991)                          (607,542)
                              [Including provision for wealth                                                 46,999            39,590
                              tax Rs. 600 thousand
                              (Previous period Rs. 984 thousand)]
                                   To t a l                                                                  242,113           235,080




27
GUJARAT GAS COMPANY LIMITED

                                                                                                         As at           As at
                                                                                                   31-12-2000      31-12-1999
                                                                                          Rs. in        Rs. in           Rs. in
                                                                                       thousand      thousand        thousand
                              SCHEDULE 11
                              CURRENT LIABILITIES AND PROVISIONS

                              ( A ) CURRENT LIABILITIES
                                    Sundry Creditors
                                    - Due to Small Scale Industries                        113                             219
                                    - Others                                           185,549                         202,881
                                                                                                      185,662          203,100
                                   Unpaid Dividend                                                      4,262            3,320
                                   Franchisee Deposits                                                    182            1,079
                                   Other Liabilities                                                   22,404           10,310
                                   Interest accrued but not due
                                   on Deferred payment credit                                                -              359
                                                                                                      212,510          218,168

                              (B) PROVISIONS
                                  Proposed Dividend                                                    84,799           85,415
                                  [Including proposed Corporate
                                  Dividend tax Rs. 7,849 thousand
                                  (Previous period Rs. 8,465 thousand)]
                                  Contingencies                                                        43,415           36,481
                                  For gratuity and leave encashment                                     4,603            2,336
                                                                                                      132,817          124,232


                                   TOTA L                                                             345,327          342,400


                              SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT
                                                                                                    Year ended    Period ended
                                                                                                   31-12-2000      31-12-1999
                                                                                                         Rs. in           Rs. in
                                                                                                     thousand         thousand
21st ANNUAL REPORT




                              SCHEDULE 12
                              SALES

                                   Natural Gas                                                      2,883,168        1,798,729
                                   [(Includes prior period sales amounting
                                   to Rs. Nil (Previous Period Rs. 10,276 thousand)]
                                   Service & Fitting Charges                                           63,715           35,439
                                   LPG Connection Fees                                                      -              789
                                   Hotplates & Accessories                                                  -               16
                                   TOTA L                                                           2,946,883        1,834,973




28
GUJARAT GAS COMPANY LIMITED

                                                                                                    Year ended    Period ended
                                                                                                   31-12-2000      31-12-1999
                                                                                          Rs. in         Rs. in           Rs. in
                                                                                       thousand      thousand         thousand
                              SCHEDULE 13
                              OTHER INCOME
                                 Income from Investments
                                 - Dividend from subsidiary company                                    13,975          11,180
                                 - Dividend from Trade Investment                                       1,200               -
                                 - Dividend from others                                                 8,819           2,708
                                 - Interest on Bonds & Debentures                                       1,785           1,416
                                   [Gross- Tax deducted at source Rs. 112 thousand
                                   (Previous period Rs. 407 thousand)]
                                 - Interest on loan to Subsidiary                                      17,354          10,149
                                   [Gross- Tax deducted at source Rs. 3,771 thousand
                                   (Previous period Rs. 1,922 thousand)]
                                 - Interest on Others (Customer & Staff advances)                      13,595            8,458
                                 Lease Income                                             36,560                        26,558
                                 (Less)/Add : Lease Equalisation                        (19,548)                       (9,571)
                                                                                                      17,012            16,987
                                  Profit on Sale of Investments                                       25,897            14,931
                                  Profit on Sale of Assets                                               128                74
                                  Profit on Sale of LPG business                                           -             2,853
                                  Excess Provision no longer required written Back                    28,609             1,271
                                  Miscellaneous Income                                                 8,741             8,527
                                  TOTA L                                                             137,115            78,554

                              SCHEDULE 14
                              OPERATING AND OTHER EXPENSES
                                 Stores and Chemicals consumed                                          8,093            5,363
                                 Payments to and Provisions for Employees
                                 - Salaries, Wages and Bonus                             86,331                        53,664
                                 - Contribution to Provident and Other Funds              6,278                         3,444
                                 - Welfare Expenses                                      17,666                         4,470
                                                                                                      110,275          61,578
                                   Power and Fuel                                                       7,461           5,940
                                   Rent                                                                14,774          10,979
                                   Rates & Taxes                                                        5,045           4,893
                                   Repairs :
                                   - To Building                                             530                        1,278
                                   - To Plant & Machinery                                  7,860                        7,293
                                   - To Others                                             4,720                        5,686
                                                                                                       13,110          14,257
                                   Research & Development Expenses                                          -             336
21st ANNUAL REPORT




                                   Insurance                                                            5,238           6,079
                                   Stationery & Printing                                                3,682           3,108
                                   Advertisement Expenses                                               3,537           1,206
                                   Communication Expenses                                               6,099           5,359
                                   Vehicle Hire Charges and Expenses                                    7,412           3,305
                                   Travelling Expenses                                                  6,096           4,684
                                   Donation                                                             3,406           1,049
                                   Selling & Distribution Expenses                                          -           3,669
                                   Directors’ Fees                                                         14               7
                                   Loss on Sale of Fixed assets                                         2,123           2,833
                                   Bad debts / Advances written off                                    31,583           4,112
                                   Provision for Contingencies                                          6,934           1,594
                                   Provision for Doubtful Debts                                         2,480               -
                                   Fixed Assets written off                                             5,402           3,903
                                   Investments written off                                                104               -
                                   Discount on Service charges                                          3,057               -
                                   Miscellaneous Expenses                                              33,764          28,689
                                   TOTA L                                                             279,689         172,943


29
GUJARAT GAS COMPANY LIMITED

                                                                                                               Year ended         Period ended
                                                                                                              31-12-2000           31-12-1999
                                                                                                                    Rs. in                Rs. in
                                                                                                                thousand              thousand
                              SCHEDULE 15
                              INTEREST
                              On Debentures / Loans                                                                107,878               71,827
                              Others                                                                                 1,159               12,264
                                   TOTA L                                                                          109,037               84,091



                              SCHEDULE 16
                              PRIOR PERIOD ADJUSTMENTS
                              Depreciation                                                                           1,912                      -
                              Lease Equalisation                                                                    20,934                      -
                              Gas Purchase                                                                             915                      -
                                   TOTA L                                                                           23,761                      -


                              SCHEDULE 17                                                  determined on individual basis). Cost is determined
                              SIGNIFIC ANT ACCOUNTING             POLICIES     AND         as per weighted average cost formula.
                              NOTES TO ACCOUNTS                                         5 . Inventories : Stores and Pipes fittings are valued
                              Significant Accounting Policies :                             at cost on First In First Out method after providing
                                                                                            for obsolescence.
                              1 . Accounting Convention : The Financial state-
                                  ments have been prepared in accordance with           6 . Foreign currency transactions:
                                  applicable Accounting Standards in India and in          Foreign currency transaction are accounted for at
                                  accordance with the Historical Cost Convention.          the exchange rate prevailing on the transaction
                              2 . Fixed Assets :                                           date. Year-end monetary assets and liabilities in
                                                                                           foreign currency, other than those pertaining to
                                 (a) Fixed Assets are stated at their original cost        the acquisition of fixed assets, are translated at
                                 including freight, duties, customs and other              the applicable year-end exchange rates and the
                                 incidental expenses relating to acquisition or            resultant difference is recognised as gain/loss for
                                 construction.                                             the year. Year-end translation difference in respect
                                 (b) Expenditure incurred during the period of             of liabilities pertaining to acquisition of fixed assets
                                 construction including preoperative expenses, all         are added to the costs of the relevant assets.
                                 direct and indirect expenses, interest and finance     7 . Retirement Benefits : Contributions in respect
                                 cost incidental to construction is carried forward         of gratuity are made to the approved Gratuity
                                 and on completion, the costs are allocated to the          Fund of the Company. The liability in respect of
                                 respective fixed assets.                                   gratuity is determined by actuarial valuation made
21st ANNUAL REPORT




                                 (c) Capital inventory represents items of capital          at the year end.
                                 nature lying in the store valued at cost on First In      The liability in respect of Leave Encashment is
                                 First Out method.                                         provided for on the basis of actuarial valuation as
                              3 . Depreciation : Depreciation on          assets is        on the date of the Balance Sheet.
                                  provided on Straight Line Method (SLM) at the         8 . Research & Development :
                                  rates and in the manner prescribed in Schedule
                                  XIV to the Companies Act,1956. Assets costing less       Revenue expenditure on research and development
                                  than Rs.5,000/- are depreciated at the rate of 100       is charged in the period in which it is incurred.
                                  per cent over a period of one year.                      Equipment purchased for research and
                                                                                           development is capitalised when commissioned and
                              4 . Investments :                                            included in the gross block of fixed assets.
                                 Long term Investments are stated at cost. Provi-       9 . Revenue Recognition :
                                 sion, if any, is made for permanent diminution in
                                 the value of investments.                                 (a) Sale of natural gas is recognised on
                                                                                           consumption and is billed bi-monthly for domestic
                                 Current investments are stated at lower of cost or        customers and monthly for industrial, commercial
                                 market value determined categorywise (hitherto            and non-commercial customers. Sales of CNG is


30
GUJARAT GAS COMPANY LIMITED

                                recognised on despatch.                                    11. Estimated amount of contracts net of advances
                                (b) The Lease Rentals have been accounted on                   remaining to be executed on capital account and
                                accrual basis as per the Lease Agreements entered              not provided for Rs.14,518 Thousand (Previous
                                into with the Lessees. The Institute of Chartered              period Rs. 1,784 Thousand).
                                Accountants of India has recommended in the                12. The company has constructed a building and
                                “Guidance Note on Accounting for Leases” for                   facilities for processing and distribution of natural
                                accounting lease rentals as income adjusted by                 gas on plots allotted on lease by Surat Municipal
                                creating Lease Equalisation Account to ensure                  Corporation and have paid rent accordingly. The
                                recognition of income at a constant periodic rate              plots are within the Town Planning Scheme
                                of return on the net investment outstanding. The               approved by Government of Gujarat. However, in
                                said recommendations are being followed by the                 the year 1994, Surat Mamalatdar had issued a
                                Company in respect of all lease transactions.                  notice on the ground that the plots belong to
                                (c) Dividend income is recognised when the right               Government of Gujarat. The honorable court has
                                to receive dividend is established i.e. on declaration         issued an ad-interim injunction against such
                                of dividend in the Annual General Meeting of the               notice, in the year 1994. The Mamalatdar has
                                investee company.                                              preferred an appeal against injunction. The
                                                                                               management is confident of resolving the dispute
                              Notes to Accounts:                                               without any disruption to its facilities.
                              10.   Contingent Liabilities:                                13. Company has invested Rs.39,093 Thousand
                                (a) Prices of Natural Gas for the nine months                  (Previous period Rs. 39,093 Thousand) for a 49%
                                ended December 31, 2000 are under review by the                share in UGI Gujarat Gas India Limited (UGIL)
                                Ministry of Petroleum and Natural Gas (MoP),                   under a joint venture with UGI Meters Limited, UK
                                Government of India. Pending finalisation of such              (UGM). The accumulated losses of UGIL as per
                                prices, payments/accruals of purchases of gas are              the latest audited accounts for the year ended
                                being made based on the rates specified in the                 March 31, 2000 is Rs.26,534 Thousand (Previous
                                MoP intimation dated September 18, 1997.                       year Rs. 22,370 Thousand). During the year,
                                However the management does not expect the price               Invensys Limited has acquired the interest of UGM
                                increase to be with retrospective effect. Additional           in the joint venture and is in the process of drawing
                                liability, if any, arising out of the aforesaid revision       up business plans and financial projections for
                                will be recognised when the prices are finalised.              UGIL. In view of the aforesaid change in its
                                                                                               management, the Company expects an
                                (b) Claims      against    the  company not
                                                                                               improvement in its future per for mance and
                                acknowledged as debt Rs.23,799 Thousand
                                                                                               consequently no provision has been made in these
                                (Previous period Rs.27,541 Thousand)
                                                                                               accounts in respect of the temporary diminution
                                (c) Claim of Rs.1,340 Thousand (Previous period                in the value of the investments in the joint venture.
                                Rs.1,340 Thousand) against the Company which
                                                                                           14. The Company has changed its policy in respect of
                                have been disputed by the Company. The Company
                                                                                               provision for diminution in value of current
                                is indemnified by an insurance policy.
                                                                                               investments from individual to category basis. Had
                                (d) The Company has given guarantee for                        the previous policy been followed, the profit for
                                Rs.60,000 Thousand (Previous year Rs.60,000                    the year would have been lower by Rs. 10,030
21st ANNUAL REPORT




                                Thousand) to the banker of its subsidiary company,             Thousand with consequential diminution of
                                Gujarat Gas Financial Services Ltd. for Cash Credit            equivalent amount in the year-end current
                                facility granted to the said subsidiary. Amount due            investments.
                                by the subsidiar y to the Bank under the
                                                                                           15. Shareholders’ approval for appointment of the
                                arrangement is Rs 1,388 Thousand (Previous period
                                                                                               Managing Director and his remuneration
                                Rs. 1,957 Thousand).
                                                                                               aggregating Rs. 3,069 Thousand will be obtained
                                (e) The Company has given guarantee for                        in the ensuing Annual General Meeting. Central
                                Rs.2,000 Thousand (Previous period Rs.2,000                    Government approval is also being sought for
                                Thousand) to the banker of its associate company,              appointment of Managing Director and
                                UGI Gujarat Gas India Limited for import under                 managerial remuneration to the extent indicated
                                the EPCG scheme. In addition, Bank guarantee of                above.
                                Rs. 17,150 Thousand (Previous period Rs.17,150
                                                                                           16. The Company has paid an interim Dividend of
                                Thousand) has been given on behalf of UGI Gujarat
                                                                                               Rs.4/- per share for the year 2000 as per the
                                Gas India Limited to secure 49% of NCD
                                                                                               resolution passed in the Board meeting held on
                                amounting Rs. 35,000 Thousand issue, to
                                                                                               18 April, 2000.
                                Standard Chartered Bank.


31
GUJARAT GAS COMPANY LIMITED

                                                                                                 As at         As at
                                                                                           31-12-2000    31-12-1999
                                                                                                Rs. in         Rs. in
                                                                                             thousand      thousand
                              17 Details of investment in Schedule 6 are :

                                  INVESTMENTS

                              A   Long Term Investments
                                  Trade Investments

                                  1. In Shares of Subsidiary Company (Unquoted) :
                                            1,397,500 Equity Shares of Rs. 10/-
                                                        each fully paid in Gujarat
                                                        Gas Financial Services Ltd.            13,995        13,995

                                  2. In Equity Shares of Associate Companies (Unquoted):
                                            3,909,293 Equity Shares of Rs. 10/-
                                                        each fully paid in UGI
                                                        Gujarat Gas India Limited              39,093        39,093
                                            75,00,000 Equity Shares of Rs. 10/-
                                                        each fully paid in Petroleum
                                                        Infrastructure Limited                 75,000        75,000
                                                        Less : Provision                     (75,000)      (75,000)

                                  3. Other (Unquoted)
                                     Trade Investments :
                                            1,000,000 Equity Shares of Rs. 10/-
                                                        each fully paid of Gujarat
                                                        State Petroleum
                                                        Corporation Ltd.                       10,000        10,000

                                    Non Trade Investments :
                                          Contribution in Gujarat Venture Capital
                                          Fund 1995 (Unquoted)                                  6,375         6,750

                                    Long Term Investments (A)                                  69,463        69,838
21st ANNUAL REPORT




32
GUJARAT GAS COMPANY LIMITED

                              B    Current Investments :
                                   Non Trade Investments (Quoted)
                                   1. Equity Shares : (Face Value of Rs. 10 each)
                                                                                        No. of              As at     No. of              As at
                                                                                        Shares       31-12-2000       Shares        31-12-1999
                                                                                                  Cost or Market                 Cost or Market
                                     Name of the Company:                                           Value which-                   Value which-
                                                                                                    ever is lower                  ever is lower

                                     GIC Housing Finance Ltd.                            8,100               113       8,100                113
                                     Industrial Development Bank of India                    -                 -      64,600              1,919
                                     Primus Chemicals Ltd.                             142,300                 -     142,300                   -
                                     Rajinder Pipes Ltd.                                 6,100                 -       6,100                   -
                                     In Equity Shares Quoted B (1)                                           113                          2,032

                                   2. Preference Shares : (Unquoted)
                                      Non Trade Investments

                                     Name of the Company                    No. of   Face Value            Cost         No. of            Cost
                                                                            Shares                       Amount         Shares          Amount
                                     Prudential Mouli Sugars Ltd.            4,900          40                -          4,900               -
                                     Bhilai Wires Ltd.                       6,000          10                -          6,000               -

                                     Preference Shares (Unquoted) B (2)                                         -                              -
                                   3. In Debentures
                                      Name of the Company                   No. of   Face Value            Cost         No. of            Cost
                                                                        Debentures                       Amount     Debentures          Amount
                               a     Non Trade Investments (Quoted)
                                     Bharat Earth Movers Ltd.#               4,100          20                66         4,100              107
                                     Mukerian Papers Ltd.                    3,700          70                 -         3,700                 -
                                     In Debentures (Quoted) B (3a)                                            66                            107
                                     # Face Value Rs. 30/-
                                     Face value of Rs. 10/- per debenture
                                     redeemed during the year

                               b     Non Trade Investments (Unquoted)
                                     ICICI Bonds                             6,000       5,000            30,000             -                 -
                                     Kotak Mahindra Finance Ltd.                 -           -                 -          150            15,000
21st ANNUAL REPORT




                                     In Debentures (Unquoted) B (3b)                                      30,000                         15,000

                                   4. Other Investments : (Non Trade Investments)

                               a     Quoted :
                                     Units
                                     - Investment in Mutual Funds                                       530,319                        240,249
                                     Other Investments (Quoted) B (4)                                   530,319                        240,249
                                     Current Investment (B)                                             560,498                        257,388
                                     Total Investment (A+B)                                             629,961                        327,226

                              Notes :
                                  1. Aggregate cost of Unquoted Investments                              99,463                         84,838
                                  2. Aggregate cost of Quoted Investments                               530,498                        251,599
                                  3. Aggregate market value of Quoted Investments                       534,568                        258,914



33
GUJARAT GAS COMPANY LIMITED




                              4.   Quantitative Movement of Investments
                                   from 1st January 2000 to 31st December 2000.                                              (Quantity in Numbers)
                                   Equity Shares
                                   Name of the Company                              Face      Opening     Purchased         Sold     Closing
                                                                                   Va l u e   Balance                                Balance
                                   Industrial Development Bank of India                10       64,600             -      64,600              -
                                   Mutual Funds
                                   Name of the Scheme                               Face      Opening     Purchased         Sold     Closing
                                                                                   Va l u e   Balance                                Balance
                                   UTI Master Gain                                     10      166,300             -      162,800        3,500
                                   UTI Master Plus                                     10      805,800             -      802,200        3,600
                                   Zurich India Capital Builder Fund                           500,000        84,674            -      584,674
                                   Alliance ‘95, Dividend Option                                     -        56,127            -       56,127
                                   Alliance Liquid Income, Growth Option                       725,163       693,001      725,163      693,001
                                   Alliance Cash Manager, Dividend Option                            -        35,150       22,473       12,677
                                   ANZ Super Saver Income Fund, Growth Option                        -       800,000            -      800,000
                                   Birla Balanced Fund, Growth Option                          241,741             -            -      241,741
                                   Birla Income Fund, Growth Option                                  -     2,142,247    2,142,247            -
                                   Birla Income Fund, Dividend Option                                -     1,016,260            -    1,016,260
                                   Chola Freedom Income Fund, Growth Option                          -       808,937      808,937            -
                                   DSP Merrill Lynch Bond Fund, Growth Option                        -       787,402      787,402            -
                                   IDBI Money Market Mutual Fund,
                                   Dividend Option                                                   -     1,869,206    1,869,206             -
                                   JM High Liquidity Fund, Growth Option                             -     2,277,954    2,277,954
                                   Kotak Balanced Fund, Dividend Option                        350,000       317,999            -      667,999
                                   Kotak GILT Fund, Investment Plan,
                                   Growth Option                                              1,121,838    3,472,564    4,594,402             -
                                   Kotak Bond Fund, Wholesale Plan,
                                   Growth Option                                               250,000     2,778,314            -    3,028,314
                                   Kotak Bond Fund, Wholesale Plan,
                                   Dividend Option                                                   -     1,899,918            -    1,899,918
                                   Kotak Liquid Fund, Dividend Option                                -       504,092            -      504,092
                                   Kothari Pioneer Balanced Fund, Growth Option                300,000       250,627            -      550,627
                                   Kothari Pioneer Income Fund, Growth Option                        -     2,898,155    1,676,159    1,221,996
                                   Kothari Pioneer Treasury Management A/c
                                   Dividend Option                                                    -       35,274       19,948       15,326
                                   Prudential ICICI Balanced Fund, Growth Option                538,525            -            -      538,525
                                   Prudential ICICI Income Plan, Growth Option                1,270,110    7,114,754    6,126,173    2,258,691
                                   Prudential ICICI Income Plan, Dividend Option                      -    3,351,078            -    3,351,078
                                   Prudential ICICI Liquid Plan, Growth Option                        -    9,868,049    9,868,049            -
                                   Prudential ICICI Liquid Plan, Dividend Option                      -    8,444,897    6,903,351    1,541,546
                                   Sun F&C Balanced Fund, Growth Option                         650,000      140,713            -      790,713
21st ANNUAL REPORT




                                   Sun F&C Income Fund, Growth Option                         2,525,126    5,322,250    7,847,376            -
                                   Sun F&C Income Fund, Dividend Option                               -    1,071,937            -    1,071,937
                                   Sun F&C Liquid Fund, Growth Option                                 -    2,216,332    2,216,332            -
                                   Sun F&C Liquid Fund, Dividend Option                               -   10,508,709    3,700,000    6,808,709
                                   Tata GILT Fund, Growth Option                                      -    2,558,897    2,558,897            -
                                   Templeton Bond Fund, Growth Option                         1,067,616    5,328,890      979,752    5,416,754
                                   Templeton Liquid Fund, Growth Option                       2,684,115   32,433,509   35,117,624            -
                                   Templeton Liquid Fund, Dividend Option                             -    8,873,927    8,346,027      527,900
                                   Zurich Prudence Fund, Growth Option                          186,220      108,601            -      294,821
                                   Zurich High Interest Fund, Growth Option                   5,615,137    4,098,255    5,615,137    4,098,255
                                   Zurich Liquidity Fund, Investment Plan
                                   Dividend Option                                                    -      481,444            -      481,444
                                   Zurich Liquidity Fund, Saving Plan
                                   Growth Option                                                      -    6,665,695    6,665,695             -
                                   Zurich Liquidity Fund, Saving Plan
                                   Dividend Option                                                    -    3,332,287            -    3,332,287
34
GUJARAT GAS COMPANY LIMITED

                                                                                                                                           Year ended                 Period ended
                                                                                                                                          31-12-2000                   31-12-1999
                                                                                                                        Rs. in                  Rs. in                        Rs. in
                                                                                                                     thousand               thousand                      thousand
                               18. Managerial Remuneration under Section 198 of the
                                   Companies Act, 1956
                                   - Salary & Bonus                                                                    11,216                                                    3,700
                                   - Perquisites                                                                        1,548                                                      909
                                                                                                                                                  12,764                         4,609
                               19. Payments to Auditors
                                   - Audit Fees                                                                             1,200                                                 600
                                   - Other Services                                                                           451                                                  22
                                   - Reimbursement of Expenses                                                                186                                                  81
                                     (Including Service Tax)                                                                                        1,837                         703

                                                                       .
                               20. Value of Imports calculated on C.I.F Basis
                                   - Capital Goods                                                                                                    631                          32
                                   - Spares parts                                                                                                   3,700                         844

                              21. Additional information pursuant to the provisions of paragraphs 3 & 4 of Part II of Schedule VI of the
                                  Companies Act, 1956. (Figures in brackets are for previous period)
                              ( A ) Value of Imported & Indigenous Raw Material & Stores and spares and percentage thereof to
                                    the total consumption

                                                                       Year ended December 31 2000                                        Period ended December 31 1999
                                                                 Percentage                       Rs. in Thousand                         Percentage              Rs. in Thousand
                              a) Raw materials - LPG
                                  - Imported                                     -                               -                                  -                             -
                                  - Indigenous                                   -                               -                              100%                         20,485
                                  TOTA L                                         -                               -                              100%                         20,485
                              b) Stores and spares
                                  - Imported                                2%                                107                                 8%                               266
                                  - Indigenous                             98%                              6,628                                92%                             3,069
                                  TOTA L                                 100%                               6,735                               100%                             3,335
                              (B) Purchases, Production / Processed, Sales and Stock :
                                      Product                 Units                  Purchases                               Sales                                Stock
21st ANNUAL REPORT




                                                                                                                                                    Opening                 Closing
                                                                           Production/             Rs. In            Qty.              Rs. In       Qty.     Rs. In       Qty.      Rs. In
                                                                        Processed Qty.           thousand                            thousand              thousand               thousand
                              Production/Processed        :

                              1.Natural Gas                    LSCM        3,555.91        1,876,485          3,489.07**        2,883,168            —           —         —           —
                                                               LSCM      (2,486.69)       (1,192,886)         (2,451.65)       (1,776,350)          (—)         (—)       (—)         (—)
                              2.Liquefied Petroleum Gas         M.T.                 —                —                —                   —         —           —         —           —
                                                                M.T.    (1,464.81)*          (20,017)         (1,505.34)            (22,380)     (40.53)      (468)       (—)         (—)
                              Trading Items :
                              1. Hot Plates                     No.                  —                —                —                   —         —           —         —           —
                                                                No.              (—)                 (—)              (6)                (—)         (6)       (87)       (—)         (—)
                              2. Accessories & others           No.                  —                —                —                   —         —           —         —           —
                                                                No.              (—)                 (—)              (—)                (16)       (—)       (276)       (—)         (—)

                              * Includes NIL MT gain ( previous period 10.27 MT ) during the process of decantation of LPG tankers
                              ** Excluding Line Loss of 66.84 LSCM (previous period 35.04 LSCM)


35
GUJARAT GAS COMPANY LIMITED

                              (C) Licensed and Installed Capacity :
                               The Company is operating on the basis of commitment made for supply of Natural Gas by GAIL and GSPCL
                               under the agreements, hence it has no relevance for capacity in respect thereof.

                              (D) Materials Consumed / Processed : (Indigenous)
                                                            Units                                 Qty.                        Rs.in thousand
                              1. Liquefied Petroleum Gas      MT                                     -                                       -
                                                              MT                               (1,505)                                (20,485)
                              2. Natural Gas                LSCM                                3,556                              1,876,485
                                                            LSCM                               (2,487)                             (1,192,886)

                              (E) Expenditure in foreign currency                       Year ended                                Period ended
                                                                                       31-12-2000                                  31-12-1999
                                                                                    Rs in thousand                              Rs in thousand
                              (i) Travelling expenses                                        1,771                                         793
                              (ii) Subscription                                                 57                                           8
                              (iii) Technical Fees                                               -                                       3,366
                              (iv) Repairs & Spares                                          3,700                                         905
                              (v) Staff Training & Seminar                                     284                                         102

                              (F) Dividends remitted by company in foreign currency during the year

                                  Particulars                     Amount      No. of Non Resident        No. of shares held       Period/Year Ended
                                                       (Rs. in thousand)             Shareholders
                                 Final Dividend                   50,112                        1               8,352,075               31-Dec-99
                                                                (50,112)                      (1)             (8,352,075)             (31-Mar-99)
                                 Interim Dividend                 33,408                        1               8,352,075               31-Dec-00


                              22. The subsidiary Company Gujarat Gas Financial Services Limited has proposed a dividend @ 40% and the same
                                  will be accounted for in the Books on declaration by the Company.

                              23. The provision for income tax has been calculated based on income earned during the year ended December 31,
                                  2000. However the tax year end of the Company being March 31, 2001 the ultimate liability for the Assessment
                                  Year 2001-02 will be determined on the total income of the Company for the year ending March 31, 2001.
                                  The provision for wealth tax has been made based on the net wealth as on December 31, 2000. However the
                                  ultimate liability for the Assessment Year 2001-02 will be determined based on the net wealth as on March 31,
                                  2001.

                              24. Corresponding figures of the previous period have been regrouped and reclassified wherever considered necessary
                                  to conform to current year’s figures.However, current year figures are not comparable with the previous period
                                  figures which are of nine months i.e. April 1, 1999 to December 31, 1999.
21st ANNUAL REPORT




36
                                    BALANCE SHEET ABSTRACT AND COMPANY’S BUSINESS PROFILE
GUJARAT GAS COMPANY LIMITED         AS PER PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956


                              I     Registration        Details
                                    Registration No.                                   :             3623
                                    State Code                                         :               04
                                    Balance Sheet Date                                 :        31-12-2000
                              II    Capital Raised during the year
                                    (Amount in Rs. thousand)
                                    Public Issue                                       :               NIL
                                    Rights Issue                                       :               NIL
                                    Bonus Issue                                        :               NIL
                                    Private Placement                                  :               NIL
                              III   Position of Mobilisation and Deployment of Funds
                                    (Amount in Rs. thousand)
                                    Total Liabilities                                  :         2,992,921
                                    Total Assets                                       :         2,992,921
                                    Sources of Funds
                                    Paid-up Capital                                    :           128,250
                                    Reserves & Surplus                                 :         1,171,572
                                    Secured Loans                                      :           800,000
                                    Unsecured Loans                                    :               NIL
                                    Deposits                                           :           547,772
                                    Application of Funds
                                    Net Fixed Assets                                   :         1,621,623
                                    Investments                                        :           629,961
                                    Net Current Assets                                 :           396,010
                                    Miscellaneous Expenditure                          :               NIL
                                    Accumulated Losses                                 :               NIL
                              IV    Per formance of the Company
                                    (Amount in Rs. thousand)
                                    Total Turnover                                     :         2,946,883
                                    Total Expenditure                                  :         2,238,613
                                    Profit/(Loss) before Tax                           :           708,270
                                    Profit/(Loss) After Tax                            :           462,676
21st ANNUAL REPORT




                                    Earnings per Share (Rs.)                           :             36.08
                                    Dividend Rate (%)                                  :              60%
                              V     Generic Name of Principal Products / Services
                                    of the Company (as per monetary terms)             :
                                    Item Code No. (ITC Code)                           :                —
                                    Product Description                                :     PROCESSING &
                                                                                           DISTRIBUTION OF
                                                                                             NATURAL GAS




37
                                              GUJARAT GAS COMPANY LIMITED
GUJARAT GAS COMPANY LIMITED   C ASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2000


                                                                                                             Year ended     Period ended
                                                                                                            31-12-2000       31-12-1999
                                                                                                                   Rs. in           Rs. in
                                                                                                              thousand          thousand
                              A . C ASH FLOW FROM OPERATING ACTIVITIES
                                  Net Profit before Tax and Extraordinary Items                                 708,270         360,342
                                  LESS : Prior Period Adjustments                                                23,761               -
                                                                                                               684,509          360,342
                              Add :
                                Depreciation for the year                                                      110,517           82,417
                                Depreciation (Prior Period)                                                      1,912                -
                                Lease Equalisation (Prior Period)                                               20,934                -
                                Loss on sale of Fixed Assets                                                     2,123            2,833
                                Bad Debts written off                                                           31,583            4,112
                                Provision for doubtful debts                                                     2,480                -
                                Provision for contingencies                                                      6,934            1,594
                                Fixed assets written off                                                         5,402                -
                                Investments written off                                                            104                -
                                Interest charged                                                               109,037           84,091
                                                                                                               975,535          535,389
                              LESS :
                                 Lease income (Net)                                                             17,012           16,987
                                 Profit on sale of investment                                                   25,897           14,931
                                 Profit on sale of fixed assets                                                    128               74
                                 Excess provision no longer required                                            28,609            1,271
                                 Income from dividend and interest on Bonds                                     25,779           15,304
                                 Other Interest earned                                                          17,354           10,149
                                 Operating Profit Before Working Capital Changes                               860,756          476,673
                                 Add / (Less) : (Increase) / Decrease in Current Assets
                                 Debtors                                                                       (81,227)        (104,710)
                                 Loans and Advances                                                                 376           45,474
                                 Inventories                                                                    (7,287)            8,142

                                 Add / (Less) : Increase /( Decrease) in Current Liability and Provisions
                                 Deposits Accepted                                                                51,328          11,050
                                 Trade Payable                                                                    25,577          23,213
21st ANNUAL REPORT




                                 Cash generated from operations                                                  849,523        459,842
                                 Interest earned on short term lending                                            10,710         11,707
                                 Taxes paid                                                                    (229,131)        (73,777)
                                 Net Cash from Operating Activities                                              631,102        397,772
                              B . C ASH FLOW FROM INVESTING ACTIVITIES
                                  Purchase of Fixed Assets                                                      (117,281)      (141,434)
                                  Sale of Fixed Assets                                                              2,806         74,221
                                  Purchase of Investments                                                     (1,678,221)    (1,587,886)
                                  Sale of Investments                                                           1,401,279      1,435,124
                                  Interest received (net of taxes)                                                  1,673          1,009
                                  Dividends received                                                               23,994         13,888
                                  Lease rentals received                                                           36,560         26,558
                                 Net Cash from Investing Activities                                            (329,190)       (178,520)



38
GUJARAT GAS COMPANY LIMITED

                                                                                                            Year ended           Period ended
                                                                                                           31-12-2000             31-12-1999
                              C . C ASH FLOW FROM FINANCING ACTIVITIES                                            Rs. in                 Rs. in
                                                                                                             thousand                thousand
                                 Payment of Long-term borrowings                                                      -                (17,373)
                                 Payment of Short-term borrowings                                              (10,029)                (15,369)
                                 Interest on borrowings                                                       (109,396)                (95,694)
                                 Dividend Paid including Tax on Dividend                                      (142,358)                (85,414)
                                 Net Cash from Financing Activities                                           (261,783)               (213,850)


                                 NET INCREASE IN C ASH & C ASH EQUIVALENTS                                       40,129                  5,402
                                 Cash & Cash Equivalents at the beginning of the year                            77,488                 72,086
                                 Cash & Cash Equivalents at the end of the year                                 117,617                 77,488

                              Notes :
                              1 Cash and cash equivalents represent cash and bank balances only.

                              2 The above Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting
                                Standard-3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India.

                              3 Purchase of fixed asset are stated inclusive of movements of capital work in progress, capital inventory and
                                preoperative expenses and are treated as part of investing activities.

                              4 Previous Period figures have been reclassified/regrouped wherever considered necessary to conform to the
                                current year figures. However, current year figures are not comparable with the previous period figures which
                                are of nine months i.e. April 1, 1999 to December 31, 1999.

                                                                                       For and on behalf of the Board
                                                                                       HASMUKH SHAH                        Chairman
                                                                                       ROBERT W. THOMAS                    Managing Director
                                                                                       DOUGLAS REID                        Director

                              Place : Ahmedabad                                        R. SRIKANTH                         Finance Director
                              Date : March 01, 2001                                    J. A. MEHTA                         Company Secretary
21st ANNUAL REPORT




                                                                           AUDITOR’S CERTIFICATE

                              The above Cash Flow Statement has been compiled from and is based on the audited accounts of Gujarat Gas
                              Company Limited for the year ended December 31,2000 reported by us on March 01, 2001. According to the
                              information and explanations given, the aforesaid Cash Flow Statement has been prepared pursuant to Clause 32 of
                              the Listing Agreement and reallocations required for the purpose are as made by the Company.

                                                                                                       S. Berera
                                                                                                       Partner
                                                                                                       For and on behalf of
                              Place : New Delhi                                                        Price Waterhouse
                              Date : March 01, 2001                                                    Chartered Accountants


39
                                   STATEMENT PURSUANT TO SECTION 212 OF THE
GUJARAT GAS COMPANY LIMITED    COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANY

                              Name of the Subsidiary                                    :       Gujarat Gas Financial Services Ltd.

                              1.   The financial year of the Subsidiary Company         :       31st December, 2000.
                                   ended on

                              2.   (a) No. of Equity Shares held by                     :       13,97,500 Equity Shares of Rs. 10/- each fully
                                       Gujarat Gas Company Limited in the                       paid up.
                                       subsidiary as on 31st December, 2000.                    (Previous Year 13,97,500)
                                   (b) Extent of interest of Gujarat Gas Company        :       69.88 % (Previous Year 69.88 %)
                                       Limited in the capital of the subsidiary

                              3.   Net Aggregate amount of profits of the subsidiary
                                   so far as it concerns the members of Gujarat Gas
                                   Company Ltd. and is not dealt with in the
                                   Company’s accounts

                                   (a) Profit for the financial year ended on           :       Rs. 137.74 Lacs
                                       31st December, 2000 of the subsidiary                    (Previous Year Rs.169.31 Lacs)

                                   (b) Profit for the previous financial years of the   :       Rs. 1,291.13 Lacs
                                       subsidiary since it became subsidiary of                 (Previous Year Rs. 1,237.24 Lacs)
                                       Gujarat Gas Company Limited.

                              4.   Net Aggregate amount of Profit/Losses of the
                                   subsidiary so far as dealt with or provision
                                   is made for those losses in Gujarat Gas Company
                                   Limited’s accounts.

                                   (a) For the subsidiary’s Financial year              :       Rs. 55.90 Lacs
                                       ended on 31st December, 2000.                            (Previous Year Rs. NIL)

                                   (b) For its previous year since it became the        :       Rs. 438.66 Lacs.
                                       subsidiary of Gujarat Gas Company Ltd.                   (Previous Year Rs. 298.91 Lacs)



                                                                                        For and on behalf of the Board

                                                                                            HASMUKH SHAH                      Chairman
                                                                                            ROBERT W. THOMAS                  Managing Director
                                                                                            DOUGLAS REID                      Director
21st ANNUAL REPORT




                              Place : Ahmedabad                                             R. SRIKANTH                       Finance Director
                              Date : March 01, 2001                                         J. A. MEHTA                       Company Secretary




40
                                                                               DIRECTORS’                REPORT
        GAS FINANCIAL SERVICES LIMITED
GUJARAT GUJARAT GAS COMPANY LIMITED
                                         To: Shareowners of Gujarat Gas Financial Services Limited
                                         Your Directors’ take pleasure in presenting the seventh report together with the audited accounts for calendar
                                         year ending on December 31, 2000.
                                         FINANCIAL                RESULTS*                                                                     (Rs. in '000)
                                           Pa r t i c u l a r s                                        Calendar Year                         For nine
                                                                                                               2000                     months ended
                                                                                                                                         on 31/12/99
                                           Total Income                                                        187,526                          153,873
                                           Profits before tax, NPAs, Diminution
                                           in investment value                                                   79,003                           56,166
                                           LESS: Write- off/provisions
                                                   NPAs                                                        (28,445)                         (10,918)
                                                   Diminution in value of investments                             (480)                            (198)
                                           Profit Before Tax                                                     50,078                           45,050
                                           Provision for Tax                                                   (20,669)                         (19,500)
                                           Profit After Tax                                                      29,409                           25,550
                                           Amount available for appropriations                                 127,721                          121,742
                                           Appropriations:
                                           Transfer to General Reserve                                            3,000                            5,000
                                           Transfer to Reserve Fund
                                           (as stipulated by RBI)                                                 6,000                            5,110
                                           Proposed Dividend
                                           (incl. Corp. Dividend Tax)                                           17,696                            13,320
                                           Surplus                                                             101,025                            98,312
                                         * Please note that the current period figures are for twelve months and hence not comparable with the ones of
                                         last year.
                                         In the year under review, income from operations have risen from Rs. 151.50 m to Rs. 180.77 m registering an
                                         increase of 19% attributed to rise in lease income from gas connections. As a prudent accounting measure,
                                         provisions of Rs. 62.38 m are being made which includes Rs. 33.45 m towards Lease Equalization Reserve and
                                         balance towards non-performing assets and diminution in value of investments.

                                         DIVIDEND
                                         Your Board of Directors had declared and paid an interim dividend of 40% i.e. Rs. 4/- share of Rs. 10/- each based
                                         on the provisional results of year 2000 and subject to Shareholders' approval. Directors are pleased to recommend
                                         payment of final dividend for year 2000, at the rate of 80% (including 40% interim dividend). The proposed
                                         dividend (including interim dividend) will absorb a sum of Rs. 17.696 m (inclusive of corporate dividend tax of
 7th ANNUAL REPORT




                                         Rs. 1.696 m).

                                         A P P R O P R I AT I O N S
21stANNUAL REPORT




                                         As stipulated by Reserve Bank of India, 20% of the pre-dividend profits i.e. Rs. 6 m (last year Rs. 5.11 m) are being
                                         transferred to a separate Reserve Fund and the same shall be appropriated subject to directives of RBI. Also, a sum
                                         of Rs. 3 m (last year Rs. 5 m) is proposed to be transferred to General Reserve.

                                         BUSINESS            REVIEW
                                         Consumer Finance
                                         The company made disbursements to the tune of Rs. 266.12 m under its consumer finance segment to 13455
                                         customers. Out of this, Rs. 156.67 m was disbursed to 11029 customers for domestic gas connections, while
                                         Rs. 109.45 m was disbursed to 2426 customers under Home Appliances and Vehicle finance schemes.
                                         Corporate Finance
                                         The company disbursed Rs.25.38 m to 19 gas customers in long-term finance segment by undertaking lease and
                                         hire-purchase transactions.


41
GUJARAT GAS FINANCIAL SERVICES LIMITED
          GUJARAT GAS COMPANY LIMITED

                                         ICICI Franchisee
                                         As you are aware, company had entered into a marketing/franchisee arrangement with ICICI Ltd., country’s leading
                                         financial institution. This tie-up has allowed company to offer financial products like car loans, credit cards,
                                         appliance loans, mutual funds/bonds etc. to gas customers of Gujarat Gas and others. Based on the success of the
                                         launch at Surat, the franchisee has been extended to Ahmedabad. In this year, plans are afoot to expand this to
                                         Bharuch/Ankleshwar. Disbursement business was Rs. 126.18 m in Vehicle Loan segment and Rs. 2.12 m in Home
                                         Appliances aggregating to 444 customers. The franchisee business income for your company was
                                         Rs. 1.136 m (net).
                                         Business Improvement Plans (BIP)
                                         Since last year, your company has been focussing on business growth through various BIPs and stretch targets. It
                                         is heartening to note that pursuit of BIPs has helped company to sustain its profitability. This year too, aggressive
                                         BIPs have been drawn up with a view to contain cost and enable company launch new products.
                                         ISO Certification
                                         Your company remains an ISO certified company. Surveillance audit rounds are planned in this year.

                                         HEALTH, SAFETY & ENVIRONMENT (HS&E)
                                         Your company had taken up implementation of HS&E policies (as applicable to Gujarat Gas). During the year,
                                         there was no Lost Time Injury (LTI) case. With a view to enhance awareness, HS&E quiz was conducted. HS&E audits
                                         were under taken at offices of the company.

                                         RBI REGISTRATION
                                         Your company continues to enjoy registration from Reserve Bank of India as a 'Lease & Hire Purchase' company.
                                         Since company has stopped accepting public deposits, RBI has categorised your company as “Non-Deposit Taking
                                         Company”. And consequentially your company is not required for file various returns to RBI.

                                         RESOURCE MANAGEMENT
                                         • With a view to reduce interest burden, your company pre-paid the outstanding Banque Nationale de Paris term
                                           loan of Rs. 100 m.
                                         • Public fixed deposits of Rs. 43.02 m have been pre-paid during the year and outstanding deposits at the end of
                                           the year are Rs. 2.255 m, which (as per RBI directions) has been deposited in an escrow account.
                                         • Need-based funds were available on call/short term basis from the holding company namely Gujarat Gas
                                           Company Limited.
                                         • Company continues to enjoy a cash credit limit of Rs. 60 m from State Bank of India.
                                         • During the period under review, the company did not accept any public deposits.
                                           The unclaimed deposits as on December 31, 2000, were Rs. 0.739 m of 70 depositors. Company has repeatedly
                                           reminded the respective deposit holders about maturity of their deposits.
21st ANNUAL REPORT




                                         RECOVERY
                                         Legal cases for recovery in all cases of defaults, including those written off in earlier years are being pursued.
7th ANNUAL REPORT




                                         Company has been able to recover Rs. 1.95 m out of bad debts written off in earlier years.

                                         PRUDENTIAL NORMS
                                         Your company has during the year complied with the RBI prescribed prudential norms in respect of Statutory
                                         Liquidity Ratio, compliance with exposure norms and Capital Adequacy Ratio. However, since your company has
                                         become ‘Non-Deposit Taking Company’ it is no longer required to comply with the prescribed prudential norms.

                                         HUMAN RESOURCES
                                         The number of employees has been contained at 31.

                                         STATUTORY INFORMATION
                                         • Details of employee emoluments as stipulated under the Companies (Particulars of Employees) Rules, 1975 are
                                            enclosed in the Annexure to the Director’s Report.


 42
         GAS FINANCIAL SERVICES LIMITED
GUJARAT GAS FINANCIAL COMPANY LIMITED
                                          • During the period, the foreign exchange earnings were NIL and outgo was to the extent of Rs.1.29 m.
 GUJARAT GUJARAT GAS SERVICES LIMITED

                                            Information pursuant to Part II of Schedule VI of the Companies Act, 1956, has been given in the notes to the
                                            accounts.

                                          • Pursuant to the Non-Banking Financial Companies Auditor’s Report (Reserve Bank) Directions, 1998, a report
                                            from the statutory auditors to the Board of Directors, has been received by your company. This report has
                                            certified that the company has complied with all the Directions and Prudential Norms as prescribed under the
                                            Reserve Bank of India Act.

                                          • Pursuant to provisions of Companies Act, 1956 (as amended by Companies (Amendment) Act, 2000), a
                                            Directors’ Responsibility Statement is attached and forms part of this report.

                                          AUDITORS

                                          Price Waterhouse, the Statutory Auditors of the company retire at the annual general meeting and offer themselves
                                          for re-appointment. The notes to the accounts referred to in Auditors’ Report are self-explanatory and therefore, do
                                          not call for any further comments.

                                          D I R E C T O R AT E

                                          • Mr. Edwin Bowles and Mr. B.C. Gheewala have resigned as Directors of the company.
                                          • Mr. Robert Thomas, Mr. Douglas Reid and Mr. R. Srikanth have been appointed Directors of the company in
                                            casual vacancies caused due to resignation. Mr. N.M. Dave has been appointed as an Additional Director.
                                          • Consequent to resignation of Mr. Edwin Bowles, Mr. Robert Thomas has taken over as Chairman of the company.
                                          • Mr. Douglas Reid and Mr. R. Srikanth, Directors of the company, retire by rotation and being eligible offer
                                            themselves for re-appointment.

                                          A P P R E C I AT I O N

                                          Your Directors would like to express their appreciation of efforts put in by all employees. Your Directors acknowledge
                                          the co-operation and support received from Banque National de Paris, State Bank of India and government
                                          agencies like Reserve Bank of India.

                                          Directors would also like to record appreciation of continuing support received from the promoters viz: Gujarat Gas
                                          Company Ltd. and other shareholders of the company and look forward to their continuing co-operation. Your
                                          Directors acknowledge the support received from the employees of Gujarat Gas Company Limited.

                                                                                                                                 For & on behalf of the Board
                                                                                                                                         ROBERT THOMAS
 7th ANNUAL REPORT




                                                                                                                                               CHAIRMAN
                                          Place: Ahmedabad
                                          Date : February 22, 2001
7th ANNUAL REPORT
21stANNUALREPORT




43
                                                                 ANNEXURE TO DIRECTORS’ REPORT
GUJARAT GAS FINANCIAL SERVICES LIMITED

                                         Statement of Particulars of Employees pursuant to the provisions of Section 217 (2A) of the
                                         Companies Act, 1956 and forming part of the Directors’ Report for the year ended 31st
                                         December 2000.

                                         Name of Employee employed throughout the period and was in receipt of remuneration of not less than
                                         Rs.12,00,000/- per annum.
          GUJARAT GAS COMPANY




                                         Name          Designation/       Remuneration       Quali-             Date of             Last employment
                                         (Age)         Nature of duties   (Rupees)           fication &         commence-           held and name of
                                                                                             experience         ment of             the employer,
                                                                                             (Years)            employment          Post held and period
                                                                                                                                    (Years)

                                         Chandran      Vice President     12,86,790          B.Sc.,             1st August          Gujarat Gas
                                         M.P.          (Overall Mana-                        CAIIB,             1995                Company Limited,
                                         (46)          gement)                               MBA                                    Manager(Financial
                                                                                             (23)                                   Services)
                                                                                                                                    (1)


                                                                                                                             For and on behalf of the Board

                                                                                                                                         ROBERT THOMAS
                                                                                                                                              CHAIRMAN
                                         Place : Ahmedabad
                                         Date : February 22, 2001


                                                                          ANNEXURE TO DIRECTORS’ REPORT

                                         DIRECTORS’ RESPONSIBILITY STATEMENT PURSUANT TO PROVISIONS OF SECTION 217 (2A A)
                                         OF THE COMPANIES ACT,1956 (AS AMENDED BY COMPANIES [AMENDMENT] ACT, 2000) AND
                                         FORMING PART OF THE DIRECTOR’S REPORT FOR THE YEAR ENDED 31ST DECEMBER 2000.

                                         This is to confirm and state on behalf of all Directors on Board of Gujarat Gas Financial Services Ltd. that:

                                         1) In preparation of the annual accounts for year 2000, the applicable accounting standards have been followed
                                            along with proper explanation relating to material departures,

                                         2) Such accounting policies have been selected and were applied consistently and made judgements and esti-
                                            mates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company
21st ANNUAL REPORT




                                            at the end of the calendar year of the profit of the company for that period,
7th ANNUAL REPORT




                                         3) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance
                                            with the provisions of Companies Act, 1956 (as amended), for safeguarding the assets of the company and for
                                            preventing and detecting fraud and other irregularities,

                                         4) The annual accounts have been prepared on a going concern basis.

                                                                                                                               For & on behalf of the Board
                                                                                                                                       ROBERT THOMAS
                                                                                                                                             CHAIRMAN
                                         Place: Ahmedabad
                                         Date : February 22, 2001




     44
GUJARAT GAS FINANCIAL COMPANY LIMITED
         GUJARAT GAS SERVICES LIMITED                       DISCUSSION ON OPERATIONS - YEAR 2000


                                        1. Total Income
                                           While income from Domestic gas connection leasing has contributed 68% of total income, other consumer
                                           retail finance business has contributed 15%. Income from Vehicle and Home Appliances segment has gone
                                           down due to referral business through ICICI tie-up at Surat. The first year of franchisee business started from
                                           Surat and in later part of the year was extended to Ahmedabad. With expansion of products offered and foray
                                           into new cities, income from franchisee business is expected to grow in future.
                                        2. Operating    Expenses
                                           Total operating expenses amounted to Rs. 137.44 million of which Rs. 34.621 m were towards Service Charges
                                           being paid for laying domestic Gas connections, followed by Interest & Finance Charges. Depreciation increased
                                           from 14% to 17% of total expenses as compared to previous year. Employee cost remained at the same
                                           percentage level.
                                        3. Interest   Expenses
                                           During the year, Interest and Finance charges totaled to Rs. 29.03 million. This has shown a reduction as a
                                           percentage to total expenses over previous year (from 31% to 21%) mainly on account of prepayment of higher
                                           interest rate debt like Term Loan and Fixed Deposits.
                                        4 . Non-Per forming Assets (NPA)
                                           As a prudent measure company has made adequate provisions for all the NPA cases and written off debts that
                                           were identified as not recoverable. All the necessary actions are under way to effect recovery out of provided
                                           cases also.
                                        5. Investments
                                           There is no change in the composition of investment portfolio during the year. Company did not divest its
                                           Invesments' in secondary markets due to overall slack position in the share markets.



                                        Place : Ahmedabad
                                        Date : February 22, 2001
21st ANNUAL REPORT
7th ANNUAL REPORT




45
                                                                 CORPORATE GOVERNANCE REPORT
          GUJARAT GAS COMPANY LIMITED
                                         PRUDENTIAL NORMS
GUJARAT GAS FINANCIAL SERVICES LIMITED

                                         Company has complied with all the prudential norms as prescribed for Non-Banking Finance Companies (NBFC) by
                                         Reserve Bank of India. Subsequent to GFSL being categorized as “Non-Deposit Taking Company” w.e.f.15/12/
                                         2000, it is no longer required to comply with the below-mentioned norms. However, while these norms were in force
                                         your company had complied them as follows:

                                         1. Statutory Liquidity Ratio (SLR)
                                            As per section 45IB of the Reserve Bank of India (Amendment) Act, 1997, every NBFC has to invest in
                                            unencumbered securities, an amount equivalent to 15% of the deposits outstanding at the close of the business
                                            on the last working day of the second preceding quarter.
                                            In compliance with this norm, company had maintained the requisite investments in government securities.
                                         2. Public Deposit Mobilization
                                            Presently the company has stopped accepting public deposits and the maturing deposits continued to be
                                            repaid on due dates. During 2000, company has pre-paid an amount of Rs. 40.44 million. The remaining
                                            outstanding public deposits (as on September 2000) of Rs. 6.721 million at maturity value, had been
                                            transferred to a special escrow account (in compliance with RBI directions in this regard).
                                         3. Compliance with exposure norm
                                            As per the RBI Directions, company cannot lend more than 15% of its own funds to a single party and group
                                            exposure cannot exceed 25% of the own funds. The company had not taken any exposure in excess of the above
                                            norm on any single party or group.
                                         4. Capital Adequacy Ratio
                                            The Capital Adequacy Ratio (based on audited results) as at 31st March, 2000 was 28%, against the
                                            required 12%.

                                         BOARD MEETINGS

                                         During 2000, seven meetings of Board of Directors were held.

                                         On the date of this Report, there are seven Directors on Board of your company with one being in-charge of day-to-
                                         day affairs of the company. The rest six are non-executive Directors including the Chairman and have experience in
                                         fields of finance, treasury, marketing, company management, engineering and legal.

                                         Attendance record of Board of Directors is as follows :



                                            Sr.No   Name of Director                          Meetings Attended              Out of
21st ANNUAL REPORT




                                            1.      **Edwin Bowles                                   6                          6
                                            2.      Robert Thomas - Chairman                         1                          1
7th ANNUAL REPORT




                                            3.         .
                                                    M.P Chandran - Vice President                    7                          7
                                            4.      Douglas Reid                                     NONE                       3
                                            5.      R.Srikanth                                       1                          1
                                            6.         .
                                                    K.P Sinha                                        5                          7
                                            7.      *B.C.Gheewala                                    6                          6
                                            8.      N.M. Dave                                        3                          3
                                            9.      J.A. Mehta                                       7                          7

                                            **Ex-Chairman
                                            *Since resigned



46
GUJARAT GAS FINANCIAL COMPANY LIMITED
        GUJARAT GAS SERVICES LIMITED

                                        BOARD COMMITTEES

                                        With a view to enable effective working of the Board, three committees are in place as per following details:

                                        S r.   Committee            Present                         Purpose
                                        No.                         Membership

                                        1.     Sanctioning          1. Robert Thomas               Approve and sanction financial assistance proposals
                                                                    2. R. Srikanth                 in excess of Rs.1 million per proposal.
                                                                           .
                                                                    3. M. P Chandran
                                        2.     Audit                1. R. Srikanth             n   Review and recommend for Board approval financial
                                                                            .
                                                                    2. M. P Chandran               statements/accounts and write-offs cases.
                                                                    3. J. A. Mehta             n   Review internal controls and offer recommendations
                                                                                                   for improvement.
                                                                                               n   Meet and discuss with Statutory and Internal Auditors
                                                                                                   the audit findings.
                                                                                               n   Provide effective supervision of the financial reporting
                                                                                                   process.
                                        3.     Share Transfer               .
                                                                    1. M. P Chandran               Approve share transfers, splitting,transmission,
                                                                    2. J. A. Mehta                 deletion, issue of duplicate shares and other share
                                                                                                   holder services.


                                        The Audit Committee has met twice in the year and considered audited financial statements for 1999 and first half
                                        of year 2000. The other two Committees have met on a need-basis and discharged the business set out.



                                        Place : Ahmedabad
                                        Date : February 22, 2001
21st ANNUAL REPORT
7th ANNUAL REPORT




47
                                                                             AUDITORS' REPORT
           GUJARAT GAS COMPANY LIMITED                      TO THE MEMBERS OF GUJARAT GAS FINANCIAL SERVICES LIMITED



                                                                                                        between the book records and the physical
GUJARAT GAS FINANCIAL SERVICES LIMITED

                                          1.   We report that we have audited the Balance
 GUJARAT GAS FINANCIAL SERVICES LIMITED

                                               Sheet of Gujarat Gas Financial Services Limited          inventory have been noticed.
                                               as at December 31, 2000 and the relative Profit    ii)   The fixed assets of the company have not been
                                               and Loss Account for the year ended on that              revalued during the year.
                                               date, both of which we have signed under           iii) The stocks of stores of the Company at all its
                                               reference to this report and the above                  locations have been physically verified by the
                                               mentioned accounts are in agreement with the           management at the year-end.
                                               books of account.                                  iv) In our opinion, the procedures of physical
                                          2.   In our opinion and to the best of our                    verification of stocks followed by the
                                               information and according to the explanations            management are reasonable and adequate in
                                               given to us, the Balance sheet and profit and            relation to the size of the company and nature
                                               loss Account, together with the notes thereon /          of its business.
                                               attached thereto and the statement on              v)    The discrepancies between the physical stocks
                                               significant Accounting Polices, give in the              and the book stocks, which have been properly
                                               prescribed manner the information required by            dealt with in the books of account, were not
                                               ‘The Companies Act, 1956’ of India (the ‘Act’),          material.
                                               and also give respectively, a true and fair view   vi) In our opinion, the valuation of stocks of stores
                                               of the state of the company ’s affairs as at           has been fair and proper in accordance with
                                               December 31,2000 and its profit for the year             the normally accepted accounting principles in
                                               ended on that date.                                      India and is on the same basis as in the
                                          3.   We have obtained all the information and                preceding year.
                                               explanations which to the best of our knowledge    vii) The company has not taken/ granted any loans,
                                               and belief were necessary for our audit. In our          secured or unsecured from/ to companies, firms
                                               opinion, proper books of account have been               or other parties listed in the register maintained
                                               kept as required by law so far as appears from           under section 301of the Act.
                                               our examination of the books. In our opinion,      viii) The parties to whom loans or advances in the
                                               these accounts have been prepared in                     nature of loans have been given by the Company
                                               compliance with the applicable accounting                are repaying the principal amounts as stipulated
                                               standards referred to in section 211(3C) of the          and are also regular in payment of interest in
                                               Act. Based on representations made by all the            most cases. In those cases where principal
                                               Directors of the Company and the information             amounts and/or interest are not being paid as
                                               and explanations as made available, directors            stipulated, reasonable steps have been or are
                                               of the Company do not prima facie have any               being taken by the Company for recover y of the
                                               disqualification as referred to in clause (g) of         principal and/or interest. There are, however,
                                               sub-section (1) to section 274 of the Act.               certain cases of loans and advances where no
      21st ANNUAL REPORT




                                          4.   As required by the Manufacturing and Other               interest is chargeable according to the terms of
                                               Companies (Auditor ’s Report ) order 1988              the loans and advances concerned.
                                                                                                  ix) In our opinion there is, an adequate internal
      7th ANNUAL REPORT




                                               dated 7th September ,1988, issued by the Central
                                               Government of India and on the basis of such             control procedure commensurate with the size
                                               checks as we consider appropriate and                    of the Company and the nature of its business,
                                               according to the information and explanations            for purchase of stores, plant and machiner y,
                                               given to us ,we further report that:                     equipment and similar assets and for the sale of
                                          i)   a) The company has maintained proper records             goods.
                                               to show full particulars including quantitative    x)    The company has not purchased goods and
                                              details and situation of its fixed assets.                materials and sold goods, materials and services
                                          b) The fixed assets of the Company have been                  aggregating Rs. 50,000/- or more in value from/
                                               physically verified during the year by the               to any of the parties listed in the register
                                               management and no material discrepancies                 maintained under section 301 of the Act.



       48
GUJARAT GAS FINANCIAL COMPANY LIMITED
                                                                                                         nature of its business.
         GUJARAT GAS SERVICES LIMITED

                                        xi) The Company has a system of determining
                                            unserviceable or damaged stores on the basis            b)   Considering the nature of services rendered, it
                                            of technical evaluation and on such basis, in                is not necessary to have a system of allocation
                                            our opinion, adequate amounts have been                      of man-hours untilized to the relative jobs.
                                             written off such stocks in the accounts.               c)   In our opinion, there is a reasonable system of
                                        xii) The provisions of section 58A of the Act are                authorization at proper levels with necessar y
                                            not applicable to the Company. However, the                  controls on the issue of stores and allocation
                                            company has accepted deposits from the public                of stores to various jobs and the related system
                                            in earlier years, in respect of which, the directives        of internal control of the Company is
                                            issued by the Reserve Bank Of India in terms of              commensurate with the size of the company and
                                            the Non Banking Financial Companies                          the nature of the business.
                                            Acceptance of public Deposits (Reser ve Bank)           xx) In respect of finance activities, in our opinion:
                                              Directions, 1998 have been complied with.             a) Adequate records and documents have been
                                        xiii) In our opinion the company’s present internal              maintained in respect of secured loans and
                                            audit system is commensurate with its size and               advances granted by the company on the basis
                                            nature of business.                                          of security obtained by way of pledge of fixed
                                        xiv) The Central Government of India has not                     deposit receipts.
                                             prescribed the maintenance of cost records by          b)   The company has maintained proper records of
                                            the Company under section 209 (1) (d) of the                 transactions and contracts in respect of trading
                                            Act for any of its products.                                 in debentures and timely entries have been made
                                        xv) The company has regularly deposited, during                  therein. All shares, debentures and other
                                            the year, provident fund and Employees’ state                securities have been held by the company in its
                                            Insurance dues with the appropriate authorities              own name.
                                            in India.                                               c)   The company being a Hire purchase and Leasing
                                        xvi) At the last day of the financial year there was             Company, the provisions of statute applicable
                                             no amount outstanding in respect of undisputed              to chitfunds, nidhi or mutual benefit society, are
                                            income tax, wealth tax, sales tax, customs duty              not applicable.
                                            and excise duty which were due for more than
                                              six months from the date they became payable.                                        S.Berera
                                        xvii) During the course of our examination of the                                          Partner
                                            books of account carried out in accordance with                                        For and on behalf of
                                            the generally accepted auditing practices in            Place : New Delhi         Price Waterhouse
                                            India, we have not come across any personal             Dated : February 22, 2001 Chartered Accountants
                                            expenses which have been charged to Profit &
21st ANNUAL REPORT




                                            Loss Account, nor have we been informed of
                                            such case by the management other than those
                                            payable under contractual obligations and/or
7th ANNUAL REPORT




                                            accepted business practices.
                                        xviii) The company is not a sick industrial company
                                              within the meaning of clause (o) of section 3(1)
                                            of the Sick Industrial Companies (Special
                                            Provisions) Act, 1985 of India.
                                        xix) In respect of services rendered:
                                        a) In our opinion, the company has a reasonable
                                            system of recording receipts, issues and
                                            consumption of materials and stores and
                                            allocating materials and stores consumed to the
                                            relative jobs, commensurate with its size and


49
          GUJARAT GAS COMPANY LIMITED

                                          The Board of Directors,
GUJARAT GAS FINANCIAL SERVICES LIMITED

                                          Gujarat Gas Financial Services Limited
                                          Gujarat



                                          Dear Sirs,


                                          Non Banking Financial Companies Auditor's Report (Reserve Bank) Directions, 1998


                                         We have audited the annual accounts of Gujarat Gas Financial Services LImited for the year ended December
                                         31, 2000. As required by the Non Banking Financial Companies Auditor's Report (Reserve Bank) Directions,
                                         1998, on the basis of such checks as we considered appropriate and as per the information and explanations
                                         given to us we report that :


                                         A. In the case of all non-banking financial companies


                                         1. The Company has obtained a certificate of registration from Reserve Bank of India under Section 45IA
                                             of the Reserve Bank of India Act, 1934.


                                         B. In the case of a non-banking financial company not accepting public deposits


                                         1. The Board of Directors of the Company have passed a resolution dated January 12, 1998 for the non-
                                            acceptance of any public deposits.
                                         2. The company has not accepted any public deposits during the period under our report.
                                         3. The company has complied with the prudential norms on income recognition, accounting standards,
                                            assets classification and provision for bad and doubtful debts, as specified in the directions issued by
                                             the Reserve Bank of India in terms of the Non-Banking Financial Companies Prudential Norms (Reserve
                                             bank) Directions, 1998.



                                                                                                                    S.Berera
                                                                                                                    Partner
                                                                                                                    For and on behalf of
                                         Place : New Delhi                                                          Price Waterhouse
                                         Dated : February 22, 2001                                                  Chartered Accountants
21st ANNUAL REPORT
7th ANNUAL REPORT




50
                                                             GUJARAT GAS FINANCIAL SERVICES LIMITED
GUJARAT GAS FINANCIAL COMPANY LIMITED
         GUJARAT GAS SERVICES LIMITED                        BALANCE SHEET AS AT 31st DECEMBER, 2000


                                                                                                                            As at               As at
                                                                                                                      31/12/2000          31/12/1999
                                                                                       Schedule          Rupees           Rupees              Rupees

                                        SOURCES OF FUNDS
                                        Shareholders’ Funds
                                            Equity Capital                                1         20,000,000                            20,000,000
                                            Reserves and Surplus                          2        177,021,923                           165,308,429
                                                                                                                     197,021,923         185,308,429
                                        Loan Funds
                                            Secured Loans                                 3          1,387,594                          101,957,807
                                            Unsecured Loans                               4        171,730,475                          152,991,194
                                                                                                                     173,118,069        254,949,001
                                                                            Total                                    370,139,992       440,257,430

                                        APPLICATION OF FUNDS

                                        Fixed Assets                                      5
                                             Gross block                                           535,204,884                           447,306,826
                                             Less : Depreciation                                    72,306,533                            53,744,190
                                                                                                   462,898,351                           393,562,636
                                             Less : Lease Equalization                              80,219,671                            60,813,870
                                             Net block                                             382,678,680                           332,748,766
                                             Capital work in progress                                7,334,932                                     -
                                                                                                                     390,013,612       332,748,766
                                        Investments                                       6                           32,235,846          32,815,348
                                        Current Assets, Loans and Advances
                                             Inventories                                  7         19,775,665                           12,888,244
                                             Stock on Hire                                8        169,629,238                          263,607,242
                                             Sundry Debtors                               9         37,672,029                           34,214,712
                                             Cash and Bank Balances                       10        12,968,490                            7,328,132
                                             Other Current Assets                         11        12,355,665                            1,918,624
                                             Loans and Advances                           12         7,522,251                           58,170,677
                                                                                                   259,923,338                         378,127,631
                                        Less: Current liabilities and Provisions          13
                                             Current liabilities                                   305,844,419                           281,955,672
                                             Provisions                                              6,188,385                            21,478,643
                                        Net Current Assets                                                           (52,109,466)       74,693,316
21st ANNUAL REPORT




                                                                             Total                                   370,139,992       440,257,430

                                        Significant Accounting Policies and Notes        19
7th ANNUAL REPORT




                                        to Accounts

                                        This is the Balance Sheet referred to in our              The schedules referred to above form an integral
                                        report of even date                                       part of the Balance Sheet

                                        S. BERERA                                                 ROBERT THOMAS     CHAIRMAN
                                        PARTNER                                                   R. SRIKANTH       DIRECTOR
                                        For and on behalf of                                      JAGDISH MEHTA     DIRECTOR
                                        PRICE WATERHOUSE                                          CHANDRAN. M. P.   VICE PRESIDENT & DIRECTOR
                                        CHARTERED ACCOUNTANTS                                     HIREN VYAS        SECRETARY
                                        PLACE : NEW DELHI                                         PLACE : AHMEDABAD
                                        DATED : FEBRUARY 22, 2001.                                DATED : FEBRUARY 22, 2001.



51
                                                          GUJARAT GAS FINANCIAL SERVICES LIMITED
                                                       PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED
                                                                    31st DECEMBER, 2000
          GUJARAT GAS COMPANY LIMITED

                                                                                                                      For the Year For the Period
GUJARAT GAS FINANCIAL SERVICES LIMITED

                                                                                                                            ended          ended
                                                                                                                      31/12/2000     31/12/1999
                                                                                       Schedule          Rupees            Rupees         Rupees
                                         INCOME
                                         Income from operations                            14      180,770,568                           151,502,864
                                         Other Income                                      15        6,756,319                             2,370,329
                                                                               Total                                 187,526,887       153,873,193

                                         EXPENDITURE
                                         Lease Rent                                                  1,194,368                             7,860,675
                                         Service and Maintenance Charges                            34,621,744                            17,315,630
                                         Personnel Expenses                                16        7,231,946                             5,160,686
                                         Administration and Other Expenses                 17       42,490,602                            23,630,601
                                         Interest and other finance charges                18       29,026,559                            34,030,075
                                         Depreciation                                               22,679,096                            15,600,212
                                         Prior Period Adjustments
                                         - Lease Equalisation                                            49,572                            3,459,843
                                         - Others                                                             -                            1,765,398
                                         - Interest on security deposits                                154,319                                    -
                                                                               Total                                 137,448,206       108,823,120
                                         Profit before taxation                                                       50,078,681        45,050,073
                                         Provision for Income Tax - Current year                    18,300,000                          19,500,000
                                                                   - Prior year                      2,369,187                                   -
                                                                                                                      20,669,187
                                         Profit after taxation                                                        29,409,494        25,550,073
                                         Profit brought forward from previous year                                    98,312,337        96,192,279
                                         Profit available for appropriation                                          127,721,831       121,742,352

                                         A P P R O P R I AT I O N S
                                         Interim Dividend                                                             16,000,000        12,000,000
                                         Corporate Dividend Tax                                                        1,696,000         1,320,000
                                         Transferred to Special Reserve (As stipulated by RBI)                         6,000,000         5,110,015
                                         Transferred to General Reserve                                                3,000,000         5,000,000
                                         Balance transferred to Balance Sheet                                        101,025,831        98,312,337
21st ANNUAL REPORT




                                                                                                                     127,721,831       121,742,352

                                         Significant Accounting Policies and Notes          19
7th ANNUAL REPORT




                                         to Accounts

                                         This is the Profit and Loss Account referred to in our   The schedules referred to above form an integral
                                         report of even date                                      part of the Profit and Loss Account


                                         S. BERERA                                                ROBERT THOMAS     CHAIRMAN
                                         PARTNER                                                  R. SRIKANTH       DIRECTOR
                                         For and on behalf of                                     JAGDISH MEHTA     DIRECTOR
                                         PRICE WATERHOUSE                                         CHANDRAN. M. P.   VICE PRESIDENT & DIRECTOR
                                         CHARTERED ACCOUNTANTS                                    HIREN VYAS        SECRETARY
                                         PLACE : NEW DELHI                                        PLACE : AHMEDABAD
                                         DATED : FEBRUARY 22, 2001.                               DATED : FEBRUARY 22, 2001.


52
                                                         SCHEDULES FORMING PART OF ACCOUNTS
GUJARAT GAS FINANCIAL COMPANY LIMITED

                                                                                                                         As at        As at
         GUJARAT GAS SERVICES LIMITED

                                                                                                                    31/12/2000   31/12/1999
                                                                                                                        Rupees       Rupees
                                        SCHEDULE-1

                                        SHARE C APITAL
                                        A. Authorised
                                           7,000,000 Equity Shares of Rs.10/- each                    70,000,000                   70,000,000
                                           5,000,000 Preference Shares of Rs.10/- each                50,000,000                   50,000,000
                                                                                                                   120,000,000   120,000,000
                                        B.   Issued, Subscribed and paid up
                                             2,000,000 Equity Shares of Rs.10/- each
                                             fully paid ( Previous year 2,000,000
                                             Equity Shares of Rs.10/- each)                                         20,000,000     20,000,000
                                             [Out of the above 1,397,500 Shares of
                                             Rs.10/- ( Previous year 1,397,500 Shares)                                        
                                             each are held by holding Company -
                                             Gujarat Gas Company Limited ]
                                                                                           To t a l                 20,000,000    20,000,000

                                        SCHEDULE-2

                                        RESERVES AND SURPLUS
                                        General Reserve
                                           Opening Balance                                            35,000,000                   30,000,000
                                           Add : Transferred from Profit & Loss Account                3,000,000                    5,000,000
                                                                                                                    38,000,000    35,000,000
                                        Special Reserve (as required by RBI )
                                            Opening Balance                                           31,996,092                   26,886,077
                                            Add : Transferred from Profit & Loss Account               6,000,000                    5,110,015
                                                                                                                    37,996,092     31,996,092
                                        Profit & Loss Account                                                      101,025,831     98,312,337
                                                                                           To t a l                177,021,923   165,308,429

                                        SCHEDULE-3

                                        SECURED LOANS FROM BANKS
                                        Cash Credit Account                                                          1,387,594      1,957,807
                                        (Secured by Hypothecation of lease assets,
21st ANNUAL REPORT




                                        stock on hire, relative book debts and stores and spares.
                                        Further secured by Corporate guarantee given
                                        by Gujarat Gas Company Limited )
                                        Term Loan                                                                            -    100,000,000
7th ANNUAL REPORT




                                                                                           To t a l                  1,387,594   101,957,807

                                        SCHEDULE-4
                                        UNSECURED LOANS
                                        Fixed Deposits [ Rs. 10.11 Lacs, (Previous Year
                                        Rs. 177.60 Lacs) are repayable within next                                   2,255,269     45,278,006
                                        twelve months ]
                                        Inter Corporate Deposits from Holding Company                              168,909,482    107,169,624
                                        Interest accrued and due on Inter Corporate Deposits                           565,724        543,564
                                                                                           To t a l                171,730,475   152,991,194



53
     21st ANNUAL REPORT                                                                           GUJARAT GAS COMPANY LIMITED
                                                                                        GUJARAT GAS FINANCIAL SERVICES LIMITED
54
     7th ANNUAL REPORT




     SCHEDULE - 5
     Fixed Assets
     (Refer note 2A on Schedule 19)                                                                                                                                                       Rupees

      PA R T I C U L A R S                                    GROSS BLOCK                                                D E P R E C I AT I O N                               NET BLOCK

                                                As at       Additions      Sales/Adj        Balance          As at      Additions         Sales/Adj        Balance           As at          As at
                                             01.01.00      during the     during the           as at      01.01.00     during the       during the            as at      31.12.00       31.12.99
                                                                 year           year       31.12.00                          year             year        31.12.00
      A.     Assets on Lease

      Plant & Mechinery                   438,302,291    109,129,327     21,073,537     526,358,081     51,095,522    21,280,314        3,484,880       68,890,956    457,467,125    387,206,769

      Total - (A)                         438,302,291    109,129,327     21,073,537     526,358,081     51,095,522    21,280,314        3,484,880       68,890,956    457,467,125    387,206,769

      B. Owned Assets

      Computer                              4,614,571               -       610,860       4,003,711      1,984,140       736,282           482,708       2,237,714      1,765,997      2,630,431

      Office Equipment & Elect.Install      1,568,401         20,000        431,750       1,156,651        169,200       351,195           115,134         405,261        751,390      1,399,201

      Furniture & Fixture                   1,436,147               -        11,025       1,425,122        276,025       139,979            11,026         404,978      1,020,144      1,160,122

      Vehicle - Car/ scooter                1,385,416      1,014,333        138,430       2,261,319        219,303      171,326             23,005         367,624      1,893,695      1,166,113

      Total - (B)                           9,004,535      1,034,333      1,192,065       8,846,803      2,648,668     1,398,782           631,873       3,415,577      5,431,226      6,355,867

      Total -(A)+(B)                      447,306,826    110,163,660     22,265,602     535,204,884     53,744,190    22,679,096        4,116,753       72,306,533    462,898,351    393,562,636

      Lease Equalisation                                                                           -    60,813,870    33,454,901       14,049,100       80,219,671    (80,219,671)   (60,813,870)

      To t a l                           447,306,826    110,163,660     22,265,602     535,204,884     114,558,060   56,133,997     18,165,853        152,526,204 382,678,680 332,748,766

      Capital work in progress                                      -              -               -             -              -                 -               -     7,334,932               -

      Previous     Year                  405,732,224     55,584,874     14,010,272     447,306,826     85,008,073    41,090,705     11,540,718        114,558,060 332,748,766 320,724,151
GUJARAT GAS FINANCIAL COMPANY LIMITED
         GUJARAT GAS SERVICES LIMITED

                                                                                                                       As at         As at
                                                                                                                  31/12/2000    31/12/1999
                                                                                                                      Rupees        Rupees
                                        SCHEDULE-6

                                        LONG TERM INVESTMENTS - NON TRADE
                                        (Refer Note 3A and 3B on Schedule 19)


                                        GOVERNMENT          SECURITIES
                                        Quoted, Fully Paid-up                                                    30,723,750      30,723,750

                                        EQUITY SHARES
                                        Quoted, Fully Paid-up                                                     3,739,522       3,739,522


                                        DEBENTURES
                                        Quoted, Fully Paid-up                                                      104,000         203,380
                                        PREFERENCE        SHARES
                                        Unquoted, Fully Paid                                                       116,000         116,000
                                                                                         Total                   34,683,272     34,782,652
                                        Less: Provision for diminution in value                                   2,447,426       1,967,304
                                                                                         Total                   32,235,846     32,815,348
                                        Aggregate value of Quoted Investments                                    34,567,272      34,666,652
                                        Aggregate market value of Quoted Investments                             32,478,995      32,842,348
                                        Aggregate value of Unquoted Investments                                    116,000         116,000

                                        SCHEDULE-7

                                        INVENTORIES
                                        ( Refer Note 4A on Schedule 19 )
                                        Stores and pipe fittings (at cost)                                       19,775,665      12,888,244
                                                                                        To t a l                 19,775,665     12,888,244

                                        SCHEDULE-8

                                        STOCK ON HIRE
                                        ( Refer Notes 5A and 6A on Schedule 19)
                                        Stock on Hire ( Includes repossessed stock of
21st ANNUAL REPORT




                                        Rs.6.61 Lacs, Previous Year Rs. 0.64 Lacs)                              169,629,238     263,607,242
                                                                                        To t a l                169,629,238    263,607,242
7th ANNUAL REPORT




                                        SCHEDULE-9

                                        SUNDRY DEBTORS
                                        Unsecured
                                        Considered Good
                                        - Debts outstanding for a period exceeding six months       1,419,561                     8,618,552
                                        - Other Debts                                              13,970,995                    27,637,685
                                        Considered Doubtful                                                      15,390,556      36,256,237
                                        - Debts outstanding for a period exceeding six months      24,300,291
                                        - Other Debts                                              20,559,318
                                                                                                                 44,859,609



55
          GUJARAT GAS COMPANY LIMITED
GUJARAT GAS FINANCIAL SERVICES LIMITED

                                                                                                                               As at          As at
                                                                                                                        31/12/2000      31/12/1999
                                                                                                                            Rupees          Rupees
                                         Secured
                                           - Debts outstanding for a period exceeding six months            3,440,000                     3,777,771
                                           - Other Debts                                                            -                     2,114,000
                                                                                                                         3,440,000        5,891,771
                                                                                                                        63,690,165       42,148,008

                                         Less: Provision for Doubtful Debts                                             21,844,947        7,933,296
                                         Less Unrealised Income                                                          4,173,189                -
                                                                                             Total                      37,672,029      34,214,712

                                         SCHEDULE-10

                                         C ASH AND BANK BAL ANCES
                                         Cash and Cheques in hand                                                          282,654          569,718
                                         Bank balance with Scheduled Banks
                                           - On Current Accounts                                                         5,964,804        6,758,414
                                           - In Term Deposit                                                             6,721,032                -
                                                                                            To t a l                    12,968,490       7,328,132

                                         SCHEDULE-11

                                         OTHER CURRENT ASSETS
                                         (Unsecured, considered Good)
                                         Interest Receivable                                                             1,416,535        1,443,147
                                         Prepaid Expenses                                                               10,939,130          475,477
                                                                                            To t a l                    12,355,665       1,918,624

                                         SCHEDULE-12
                                         LOANS AND ADVANCES
                                         ( Unsecured, considered good, unless otherwise stated )
                                         - Advances recoverable in cash or in kind or for value to be                      5,452,251      5,884,290
                                            received (Includes Rs. Nil due from a Director. Previous Year
                                            Rs. 19.38 Lacs Maximum Amount Outstanding during the
                                            period Rs.19.38 Lacs)
                                         - Loans to Customers against pledge of fixed
                                            deposit receipts Rs.Nil - Previous Year Rs 0.93 Lacs.                                  -         93,750
                                         - Bills of Exchange (Secured against deposit of title deeds                               -     29,382,637
21st ANNUAL REPORT




                                            of Immovable Assets Rs. Nil - Previous Year Rs. 26.61 Lacs)
                                         - Inter Corporate deposit with Companies                           2,300,000                    24,960,000
                                            less : Provision for doubtful deposits                          (230,000)                    (2,150,000)
7th ANNUAL REPORT




                                                                                                                          2,070,000      22,810,000
                                                                                            To t a l                     7,522,251      58,170,677
                                         SCHEDULE-13
                                         CURRENT LIABILITIES & PROVISION
                                         A. Current Liabilities
                                            -Interest accrued but not due                                                 11,457,664     30,369,843
                                            -Sundry Creditors                                                             16,180,875     12,593,157
                                            -Advance Installments received                                               240,832,801    181,702,869
                                            -Security Deposits                                                            36,127,201     56,132,340
                                            -Other liabilities                                                             1,245,878      1,157,463
                                                                                            To t a l                    305,844,419    281,955,672


56
GUJARAT GAS FINANCIAL SERVICES LIMITED

                                                                                                                          As at             As at
         GUJARAT GAS COMPANY LIMITED


                                                                                                                    31/12/2000       31/12/1999
                                                                                                                        Rupees           Rupees
                                         B. Provisions
                                           ( Refer Notes 7A and 9A on Schedule 19 )
                                           - Income Tax                                               69,500,000                      58,700,000
                                             Less: Advance Tax and Tax Deducted at source            (72,615,619)                    (50,910,132)
                                                                                                                      (3,115,619)     7,789,868
                                            -   Provision for Gratuity                                                    228,035         192,742
                                            -   Provision for Leave Encashment                                            259,969         176,033
                                            -   Proposed Dividend                                                       8,000,000     12,000,000
                                            -   Corporate Dividend Tax                                                    816,000       1,320,000
                                                                                          To t a l                    6,188,385      21,478,643



                                                                                                                    For the year     For the period
                                         SCHEDULE-14                                                                      ended            ended
                                                                                                                    31.12.2000       31.12.1999
                                                                                                                         Rupees           Rupees
                                         INCOME FROM OPERATIONS
                                         ( Refer Note 1A & 2(c)A on Schedule 19 )
                                         - Income from Lease                                         162,155,126                     109,450,826
                                         Less : Lease Equalisation                                   (33,454,901)                    (22,030,650)
                                                                                                                    128,700,225      87,420,176
                                         - Income from Hire Purchase                                                  43,025,943       46,694,291
                                         - Income from Bill Discounting                                                2,364,207        6,365,816
                                         - Interest on : 
                                             - Government Securities (Tax Deducted at Source
                                               Rs.7.98 Lacs - Previous Year Rs. 6.23 Lacs)             3,916,444                        3,209,706
                                             - Intercorporate Deposits (Tax Deducted at Source
                                               Rs.4.69 Lacs - Previous Year Rs. 8.26 Lacs)             1,936,674                        3,717,011
                                             - Term Deposits                                             214,612                           10,548
                                             - Others (Tax Deducted at Source
                                                Rs.0.28 Lacs - Previous Year Rs.0.32 Lacs)               518,447                       1,615,024
                                                                                                                      6,586,177       8,552,289
21st ANNUAL REPORT




                                         - Dividend                                                                       94,016         253,543
                                         - Profit on sale of investments ( Net )                                               -       2,216,749

                                                                                          To t a l                  180,770,568     151,502,864
7th ANNUAL REPORT




                                         SCHEDULE-15  

                                         OTHER INCOME
                                         - Income from Franchisee Business                                             1,135,560                -
                                         - Excess Provision Written Back                                                  86,072          260,163
                                         - Miscellaneous Income                                                        5,534,687        2,110,166
                                                                                          To t a l                    6,756,319       2,370,329




57
GUJARAT GAS FINANCIAL SERVICES LIMITED
          GUJARAT GAS COMPANY LIMITED

                                                                                                       For the year For the period
                                                                                                             ended          ended
                                                                                                       31.12.2000      31.12.1999
                                                                                                            Rupees         Rupees
                                         SCHEDULE-16
                                         PERSONNEL EXPENSES
                                         - Salaries and Allowances                                       6,425,564       4,552,976
                                         - Contribution to Provident & Other Funds                         283,542         267,445
                                         - Staff Welfare and other expenses                                522,840         340,265
                                                                                            To t a l    7,231,946       5,160,686

                                         SCHEDULE-17
                                         ADMINISTRATION AND OTHER EXPENSES
                                         - Discount                                                      2,710,960              -
                                         - Insurance                                                       722,321      1,027,632
                                         - Repairs and Maintenance - Others                                179,054      1,898,130
                                         - Rates and Taxes                                               1,550,071      3,017,206
                                         - Shared Services ( Refer Note 2B on Schedule 19 )              1,200,180        876,066
                                         - Legal and Professional Charges                                1,161,839        815,903
                                         - Advertisement Charges                                           965,746        862,810
                                         - Brokerage & Commission                                          221,088        464,721
                                         - Miscellaneous Expenses                                        4,194,448      3,329,312
                                         - Loss on sale of assets                                          437,533        222,183
                                         - Bad Debts Written off                                         9,108,611              -
                                         - Provision for Diminution in value of Investments                480,122        198,478
                                         - Provision for Doubtful Debts                                 19,336,912     10,918,160
                                         - Assets Written off                                              221,717              -
                                                                                           To t a l    42,490,602     23,630,601

                                         SCHEDULE-18
                                         INTEREST AND OTHER FINANCE CHARGES
                                         Interest on :
                                         - Working Capital                                                 166,480        225,158
                                         - Fixed Deposits                                                1,437,684      7,268,421
                                         - Security Deposits                                             5,230,038      6,012,690
                                         - Inter Corporate Deposits                                     17,142,787     10,149,119
21st ANNUAL REPORT




                                         - Term Loan                                                     5,049,570     10,374,657
                                         - Others                                                                -             30
                                                                         To t a l                      29,026,559     34,030,075
7th ANNUAL REPORT




58
GUJARAT GAS FINANCIAL COMPANY LIMITED
         GUJARAT GAS SERVICES LIMITED

                                        SCHEDULE - 19

                                        SIGNIFIC ANT ACCOUNTING POLICIES AND NOTES TO A CCOUNTS

                                        A . SIGNIFIC ANT ACCOUNTING POLICIES

                                        1.   Revenue     Recognition

                                        (a) Income from lease rentals and lease management fees arising out of lease agreements and hire purchase
                                            charges and service charges arising out of hire purchase agreements, is recognised on an accrual basis as
                                            per the terms of agreements entered into with lessees / hirers from time to time. In respect of hire purchase,
                                            income is recognised on the declining balance, based on rates implicit in the transaction.
                                            Income from sale of Gas connections is recognised on installation of gas connections. The difference
                                            between the cost of leased gas connections capitalized and, actual consumption of materials is disclosed
                                            as ‘Income from lease’

                                        (b) Dividend income is accounted for when the company’s right to receive payment is established.

                                        (c) In respect of other heads of income, the company follows the practice of accounting for such income on an
                                            accrual basis. Delayed payment charges are recognised on the basis of certainty of collection.

                                        (d) The company follows the prudential norms for income recognition and provides for / writes off Non-
                                            performing Assets as per the prudential norms prescribed by the Reserve Bank of India or earlier as
                                            ascertained by the management.

                                        2.   Fixed Assets
                                        (a) Fixed assets both owned and leased are stated at cost of acquisition including incidental expenses. Gas
                                            connections are capitalised at average price of standard consumption of material per connection.

                                        (b) Depreciation on assets including leased assets is charged on straight-line method at the rates prescribed in
                                            Schedule XIV to the Companies Act, 1956 on a prorata basis from the month of capitalization except on
                                            assets with employees, which are depreciated at 33.33% prorata.

                                        (c) The company follows recommendation of The Institute of Chartered Accountants of India contained in the
                                            Guidance Note on Accounting for Leases. Accordingly, lease rentals received / receivable under lease
                                            agreement have been accounted as income which are adjusted by creating lease equalisation account so
                                            as to recover the capital cost of the leased asset within the tenure of lease agreements or earlier as
                                            ascertained by the management. Accordingly, the lease period of gas connections is considered to be three
                                            to five years on an average and that of other assets is considered as per the primary period of the lease
                                            agreement. The said lease equalisation is provided on all assets upto 31st December 2000 other than assets
21st ANNUAL REPORT




                                            in the nature of operating lease.

                                        3.   Investments
7th ANNUAL REPORT




                                             Securities classified as long term investments are valued at cost and permanent diminution thereof, if any,
                                             in value is appropriately adjusted.
                                        4.   Inventories
                                             Stores and Pipefittings are valued on cost arrived at FIFO basis.
                                        5.   Stock on Hire
                                             Stock on Hire is valued at installments receivable and net of unearned hire purchase income falling due
                                             after the Balance Sheet date.
                                        6.   Repossessed     Stock
                                             Stock repossessed because of defaults in payment of hire purchase installments is valued at the installments
                                             due including those becoming due after the Balance Sheet date or net realizable value which ever is lower.


59
GUJARAT GAS FINANCIAL SERVICES LIMITED
          GUJARAT GAS COMPANY LIMITED

                                         7.   Retirement Benefits

                                              The liability on account of gratuity and leave encashment is determined on the basis of actuarial valuation
                                              at year end.

                                         8    For eign Cur rency Transactions

                                              Transactions in foreign currency are recognized at the rate prevailing on the date of the transaction. Gain /
                                              Loss arising out of the fluctuation in rates between transaction date and settlement date in respect of
                                              revenue items is recognized in the Profit and Loss a/c. Foreign currency current assets and liabilities are
                                              restated at the exchange rate prevailing at the year end and the gain/loss is adjusted to the Profit and Loss
                                              a/c.

                                         9    Provision    for Taxation

                                              Provision for Taxation for the Company’s financial year ended December 31, 2000 has been determined
                                              based on the results for three months ended March 31, 2000 (Assessment Year 2000-2001) and for the nine
                                              months ended December 31, 2000 (Assessment Year 2001-2002). The ultimate liability for Assessment Year
                                              2001-2002, however, will be determined on the total income for the company for the year ended March 31,
                                              2001.

                                         B.   NOTES TO ACCOUNTS

                                              1.   Commitment on account of future lease rentals Rs. 1,33,835 (Previous Year Rs. 10,60,405)

                                              2.   Shared services represent amounts paid to Gujarat Gas Company Limited, the holding company, for
                                                   use of office premises, common facilities and employees.

                                              3.   Details of investments as listed in Schedule 6 are as follows :



                                                                                  Face Value  As at 31.12.2000                       As at 31.12.1999
                                                                                    Rupees Numbers        Rupees                  Numbers        Rupees
                                         GOVERNMENT SECURITIES
                                         Quoted, Fully Paid-up
                                         - 13.05% GOVT. STOCK 2004                     100         25,000         2,723,750        25,000     2,723,750
                                         - 13.75% APRDC BOND                       100,000            100        10,000,000           100    10,000,000
                                         - 11.50% MSRDC BOND                       100,000             88         8,800,000            88     8,800,000
                                         - 13.15% ITI BOND                         100,000             82         8,200,000            82     8,200,000
                                         - 12.30% GSFC BOND                        100,000             10         1,000,000            10     1,000,000
                                                                                                                 30,723,750                 30,723,750
21st ANNUAL REPORT




                                                                                  Face Value  As at 31.12.2000                       As at 31.12.1999
7th ANNUAL REPORT




                                                                                    Rupees Numbers         Rupees                 Numbers        Rupees
                                         EQUITY SHARES, QUOTED
                                         Fully Paid-up
                                         - GIC HOUSING FINANCE LTD                        10        4,600              230,000      4,600        230,000
                                         - RELIANCE INDUSTRIES LTD *                      10          650                     -       650              -
                                         - GUJART MINERAL DEVELOPMENT CORP.               10        7,850             1,020,500     7,850      1,020,500
                                         - BANK OF INDIA                                  10       58,000            2,456,620     58,000      2,456,620
                                         - FOSECO INDIA LTD.                              10          100               32,402        100         32,402
                                                                                                                     3,739,522                 3,739,522
                                         * Bonus Shares




60
GUJARAT GAS FINANCIAL COMPANY LIMITED
         GUJARAT GAS SERVICES LIMITED

                                        DEBENTURES
                                        Quoted & Fully Paid-up
                                        - BHARAT EARTH MOVERS LTD.                    20         5,200           104,000        5,200        156,000
                                        - RELIANCE PETRO (TOCD)                        -             -                 -        1,200         47,380
                                        (Redeemed during the year)                                              104,000                      203,380

                                        PREFERENCE       SHARES

                                        Unquoted & Fully Paid-up

                                        PRUDENTIAL MOULI SUGARS LTD.                   40       2,900           116,000         2,900        116,000
                                                                                                                116,000                      116,000

                                        TOTA L                                                              34,683,272                    34,782,652

                                        4. Managerial Remuneration:
                                                                                                Cur rent Year               Previous Period
                                                                                                           (Rs.)                       (Rs.)
                                           Salaries and Allowances                                  8,70,105                      4,31,694
                                           Contribution to Provident Fund                           1,05,168                        66,565
                                           Value of Perquisites and Ex-gratia                       3,11,517                      1,33,173
                                           Note: - The above figures do not include provision for gratuity and leave encashment payable to the director
                                           as the same is actuarially determined for the company as a whole.

                                        5. Auditors Remuneration:
                                                                                                Cur rent Year               Previous Period
                                                                                                        (Rs.)                         (Rs.)
                                           Audit Fees                                               5,50,000                      4,00,000
                                           Service Tax                                                47,500                           NIL
                                           Out of Pocket expenses                                   1,16,041                        59,721

                                        6. Expenditure in Foreign currency
                                                                                                Cur rent Year               Previous Period
                                                                                                        (Rs.)                         (Rs.)
                                           Purchase of stores                                     12,90,477                       8,74,997

                                        7. Previous period figures, being for a period of nine months, are not comparable with the current year and
21st ANNUAL REPORT




                                           these have been regrouped / recast wherever necessary to conform with current year’s classification.
7th ANNUAL REPORT




61
                                                       Information pursuant to part (IV) of Schedule VI of the Companies Act, 1956
                                                        BALANCE SHEET ABSTRACT AND COMPANY’S
                                                              GENERAL BUSINESS PROFILE
          GUJARAT GAS COMPANY LIMITED

                                         I.     REGISTRATION DETAILS                                                  :
GUJARAT GAS FINANCIAL SERVICES LIMITED

                                                Registration No.                                                      :   21778 of 1994
                                                State Code                                                            :   04
                                                Balance Sheet Date                                                    :   31-12-2000

                                         II.    C APITAL RAISED DURING THE YEAR                                       :
                                                (Amount Rs. in thousands)
                                                Public Issue                                                          :   Nil
                                                Rights Issue                                                          :   Nil
                                                Bonus Issue                                                           :   Nil
                                                Private Placement                                                     :   Nil

                                         III.   POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS                      :
                                                (Amount Rs. in thousands)
                                                Total Liabilities                                                     :   6,82,173
                                                Total Assets                                                          :   6,82,173
                                                Sources of Funds                                                      :
                                                Paid-up Capital                                                       :     20,000
                                                Reserves and Surplus                                                  :   1,77,022
                                                Secured Loans                                                         :      1,388
                                                Unsecured Loans                                                       :   1,71,730
                                                Applications of Funds                                                 :
                                                Net Fixed Assets                                                      :   3,90,014
                                                Investments                                                           :     32,236
                                                Net Current Assets                                                    :   (52,109)
                                                Miscellaneous Expenditure                                             :         Nil
                                                Accumulated Losses                                                    :         Nil

                                         I V.   PERFORMANCE OF THE COMPANY                                            :
                                                (Amount Rs. in thousands)                                             :
                                                Total Income                                                          :   1,87,526
                                                Total Expenditure                                                     :   1,37,448
                                                Profit Before Tax                                                     :     50,078
                                                Earnings Per Share (Rs.)                                              :      14.70
                                                Dividend Rate (%)                                                     :        80%

                                         V.     GENERIC NAME OF PRINCIPAL PRODUCTS/ SERVICES OF THE COMPANY
                                                (As per monetary terms)                             :
21st ANNUAL REPORT




                                                Product Description                                 : Item Code No.
                                         1.     Lease Financing & Hire Purchase                     : Not applicable
                                         2.     Bills Discounting                                   : Not applicable
7th ANNUAL REPORT




                                         3.     Investments                                         : Not applicable




62
                                                                                                                                               FORM OF PROXY
GUJARAT GAS COMPANY LIMITED



                                                                   GUJARAT GAS COMPANY LIMITED
                                                  Registered Office: 2, Shantisadan Society, Near Parimal Garden, Ellisbridge, Ahmedabd – 380 006


                              I/We …………..………………………………................ of …………………………………………………............................
                              being member(s) of the above-named Company, hereby appoint …………………………... …….. of ………………. or
                              failing him ………………………… of …………………………….. as my / our proxy to vote for me / us on my / our
                              behalf, at the TWENTY FIRST ANNUAL GENERAL MEETING of the Company to be held at 10.00 a.m. on Monday,
                              25th June, 2001 at Tagore Hall, Paldi, Ahmedabad – 380 007 and at any adjournment thereof.

                              Signed at ……… (place) this …………… day of ………………........., 2001

                              Membership Folio No. ……………

                              No. of Shares held…………………
                                                                                                                               One Rupee
                                                                                                                                Revenue
                                                                                                                                 Stamp
                              IMPORTANT
                              (a) Revenue Stamp of One Rupee is to be affixed on this form.
                              (b) The Form should be signed across the stamp as per specimen signature registered with the Company.
                              (c) The Companies Act, 1956 lays down that an instrument appointing a proxy shall be deposited at the Registered
                                  Office of the Company, not less than FORTY EIGHT HOURS before the time fixed for holding the Meeting i.e.
                                  before close of business hours on June 22, 2001.
                              (d) A Proxy need not be Member.
                              …………………………………………………….…………………………………………………...........................................

                                                                                                                                            AT TENDANCE SLIP



                                                                   GUJARAT GAS COMPANY LIMITED
                                                  Registered Office: 2, Shantisadan Society, Near Parimal Garden, Ellisbridge, Ahmedabd – 380 006


                                                         To be handed over at the entrance of the Meeting Hall
21st ANNUAL REPORT




                                           Name of the attending Member
                                                 (In Block Letters)                                                              Membership Folio No.


                                            Name of Proxy (In Block Letters)
                                (To be filled in if the Proxy attends instead of the Member)                                       No. of Shares held

                              I hereby record my presence at the TWENTY FIRST ANNUAL GENERAL MEETING of the Company at Tagore Hall,
                              Paldi, Ahmedabad – 380 007 on Monday, 25th June, 2001.



                                                                                                                              …………………………………..
                                                                                                                                Member’s / Proxy’s Signature
                                                                                                          (To be signed at the time of handing over this slip)


63

				
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