9 Nov 2009 15:30
Great Eastern Energy Corporation Ltd
Interim Results
Six months to 30 September 2009
Great Eastern Energy Corporation Ltd. (Great Eastern), a Company involved in the exploration, development and production of coal bed methane (CBM) natural gas in India, is pleased to announce its Interim Results for the 6 months ended 30 September 2009. Also, see separate announcement for equity fund raising.
Highlights:
| • | Sales and Marketing: | ||
| - | Pipeline network gives access to major new markets | ||
| - | 11 additional industrial customers contracted or under MOUs | ||
| - | 65% increase in the total quantity of contracted gas to 9.48 mmscfd | ||
| - | One major industrial customer now connected to Asansol-Durgapur pipeline | ||
| • | Infrastructure: | ||
| - | Distribution network completed and commissioned, including: | ||
| • | Gas gathering station on site | ||
| • | Central gas gathering station in Asansol | ||
| • | 11.8 km of pipeline connecting the gas gathering station to the central gas gathering station | ||
| • | 12.36km of pipeline from the central gas gathering station to Kulti | ||
| • | 53.46 km of pipeline connecting the central gas gathering station to Durgapur | ||
| • | Drilling, completion and production: | ||
| - | 10 additional wells drilled - bringing the total to 58 | ||
| - | Fracturing programme underway with Halliburton | ||
| - | 26 wells currently dewatering and producing gas | ||
| - | Current production maintained at 4 mmscfd - while pipeline network being built | ||
| • | Financials: | ||
| - | Revenue increased by 73% to $0.65 million | ||
| - | Rs. 3052.98 million drawn down from Rs. 3,500 million loan facility | ||
| - | Indian IPO making good progress, with the aim of: | ||
| • | Raising additional funds | ||
| • | Provide shareholders with additional liquidity | ||
Prashant Modi, President and COO of Great Eastern, commented:
"A milestone for the Company in the first half of the year is the completion of the entire distribution pipeline network. This will enable us to supply greater quantities of gas for industrial use and widen our customer base. We are now well positioned to be able to grow and take advantage of value across the entire chain, from production to distribution and sales. Demand for CBM gas in our target markets remains strong and we look forward to the next half of the year with confidence".
Disclaimer: www.geecl.com/IPO-SEBI-Disclaimer.html For further information:
| Great Eastern Energy | ||
| YK Modi | Chairman & CEO | + 44 (0) 20 7743 6363 |
| Prashant Modi | President & COO | + 44 (0) 20 7743 6363 |
| Arden Partners | ||
| Richard Day | +44 (0) 20 7398 1632 | |
| Adrian Trimmings | ||
| RBC Capital Markets | ||
| Sarah Wharry | +44 (0) 20 7653 4667 | |
| Pelham Public Relations | ||
| Philip Dennis | +44 (0) 20 7337 1516 |
Chairman's Statement
A major milestone for the Company over the last six months was the completion and commissioning of the distribution pipeline network. Great Eastern is now well placed to benefit from the entire value chain, including upstream, midstream and downstream operations. We have proven production capacity, the infrastructure in place in which to deliver that to end users in industrial quantities and a growing number of contracted industrial customers. As demand grows, we also have a drilling, completion and production programme in place to meet that need.
Sales, Marketing and Distribution
During the period, we have contracted an additional 11 industrial customers bringing the total number to 29. The total quantity of gas under contract / MOU is currently 9.48 mmscfd. This represents a 65% increase over the quantity of gas under contract / MOU at the time of the preliminary results in June this year. The average price obtained is $14.64 per mmbtu.
With the main distribution pipeline network now complete, we are well positioned to be able to grow the number of industrial customers over the next twelve months. This network enables us to reach the substantial industrial markets of Asansol, Kulti and Durgapur.
The overall distribution network consists of a gas gathering station on site, the central gas gathering station in Asansol and the pipeline network itself. The pipeline system, which totals 77.62km, is capable of carrying 35 mmscfd at 15 bar. On site, 23 wells are currently interconnected and link to the gas gathering station. We are currently in the process of interlinking additional wells.
Our focus is currently on putting the MDPE and steel spur-lines in place. These lines interconnect the wells and connect individual customers to the main trunkline network respectively. One major industrial customer is currently connected to the recently completed Asansol to Durgapur pipeline system.
Industrial demand for gas in target markets remains strong and the price being achieved is holding up well. It had been anticipated that the import of LNG would create some pricing pressure but that has not been the experience to date. The price at which LNG is being sold has, in fact, helped to strengthen gas prices in the region. With low conversion costs to the use of CBM gas, the incentive for industrial users to switch to gas supplied by Great Eastern remains as strong today as it has ever been.
Alongside the main industrial market, the Company's focus also remains on the compressed natural gas (CNG) market. Gas is sold through canisters, in cascades, to a more localised market that is primarily centered around dispensing stations for vehicular use.
Drilling & Production:
As previously announced, during the period, production was maintained at 4 mmscfd while the pipeline network was being completed. The rate of production was kept down by lowering the rate of dewatering. The aim of keeping production at this level was to avoid the need for excessive flaring of gas produced.
The current number of wells fracced, dewatering and producing gas has increased by 3 since the preliminary results to 26. We have also drilled an additional ten wells, bringing the total number of wells drilled to 58.
To date a majority of the wells drilled have been in the north of the block. When the first phase of 100 wells is complete, the focus will shift to the south of the block for the remaining 200 planned wells. As a result, out of the nine wells drilled in the last six months, 6 were in the south of the block in order to obtain additional drilling and other data.
Post the period end we have embarked on a fraccing programme with Halliburton (from end of Oct 09). This programme will frac all 10 seams in each well. The number of wells to be fracced under the programme is yet to be determined as depends on the number of fracs needed per seam. The programme is, however, expected to take between 6 and 10 months. There is an option to extend the programme if need be.
With sales contracts, now in place, coming into effect over the next twelve months, this fraccing programme will help increase production to meet this demand.
As expected, drilling efficiency has improved with the deployment of our own rig, the Atlas Copco RD20. The time it takes to drill each well has remained much the same but the flexibility afforded by owning this rig has helped reduce the cost of drilling and completing each well.
Financials:
In the first six months of the year, revenue increased by 73% (from the last six months) to $0.65 million from CNG and industrial sales.
Great Eastern continues to seek a listing for the Company's shares on the Indian Stock Exchanges alongside its existing listing on AIM. The IPO is continuing to make progress. The Indian IPO will be a combination of a fresh issue of new shares and an offer for sale by existing shareholders.
As on 30 September 2009, the Company had Rs. 447.02 million undrawn funds available to it from its Rs. 3,500 million debt facility, having drawn down an additional Rs. 880.20 million during the period.
Outlook:
With the distribution infrastructure now in place, the focus over the next six months will be to put additional sales contracts in place and to build production capacity to meet demand. We look forward to the next six months with increased confidence.
Great Eastern Energy Corporation Limited
Interim condensed unaudited balance sheet as at 30 September 2009
(All amounts in US Dollars unless otherwise stated)
|
| Notes |
| As at 30 September 2009 | As at 31 March 2009 |
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | 8 | 41,538,931 | 34,227,389 | |
| Capital work-in-progress | 10 | 52,402,990 | 41,464,058 | |
| Intangible assets | 9 | 354,463 | 343,582 | |
| Prepayments | 5 | 207827 | 179,122 | |
| Restricted deposits with banks | - | 18,646 | ||
| Deferred income tax assets | 1,178,945 | 1,133,691 | ||
| Trade and Other receivables | 79,656 | 78,744 | ||
| 95,762,812 | 77,445,232 | |||
| Current assets | ||||
| Prepayments | 5 | 1,101,726 | 943,064 | |
| Trade and other receivables | 1,225,680 | 1,158,441 | ||
| Advance income tax | 140,126 | 343,847 | ||
| Restricted deposits with banks | 88,011 | 545,584 | ||
| Cash and cash equivalents | 3 | 172,812 | 502,714 | |
| 2,728,355 | 3,493,650 | |||
| Total Assets |
| 98,491,167 | 80,938,882 | |
| Capital and reserve attributable to Equity holders of the Company | ||||
| Ordinary Shares | 12,246,781 | 12,246,781 | ||
| Share premium | 33,301,944 | 33,301,944 | ||
| Currency translation reserve | (2,489,452) | (4,270,102) | ||
| Share-based payment reserve | 109,364 | 73,429 | ||
| Retained earnings | (15,151,630) | (11,357,955) | ||
| Total equity | 28,017,007 | 29,994,097 | ||
| LIABILITIES Non current liabilities | ||||
| Borrowings | 63,082,437 | 42,417,694 | ||
| Deferred income tax liability | 1,178,945 | 1,133,691 | ||
| Retirement benefit obligations | 135,853 | 105,911 | ||
| Provisions | 93,733 | 71,545 | ||
| 64,490,968 | 43,728,841 | |||
| Current liabilities | ||||
| Borrowings | 14,185 | 23,763 | ||
| Trade and other payables | 5,782,765 | 6,990,591 | ||
| Provisions | 186,245 | 201,590 | ||
| 5,983,195 | 7,215,944 | |||
| Total liabilities | 70,474,163 | 50,944,785 | ||
| Total equity and liabilities |
| 98,491,167 | 80,938,882 |
The notes on pages [5] to [18] form an integral part of this condensed interim financial information.
On behalf of the Board of Directors
| Place: New Delhi | Yogendra Kr. Modi | Kashi Nath Memani |
| Date: November 6, 2009 | Chairman & Chief Executive Officer | Director |
Great Eastern Energy Corporation Limited
Interim condensed unaudited income statement for six months ended 30 September 2009
(All amounts in US Dollars unless otherwise stated)
| For six months period ended 30 September | ||||
|
| Notes |
| 2009 | 2008 |
| Revenue | 526,234 | 391,378 | ||
| Other income | 126,656 | 65,810 | ||
| Repairs and Stores and Consumables | (98,855) | (155,106) | ||
| Employee benefit expenses | (729,908) | (510,053) | ||
| Depreciation and amortization | 8&9 | (1,050,541) | (229,685) | |
| Other operating expenses | (1,103,640) | (1,496,651) | ||
| Foreign exchange gain/(loss) | 63,528 | (76,484) | ||
| Operating loss | (2,266,526) | (2,010,791) | ||
| Finance income | 35,067 | 59 | ||
| Finance expense |
| (1,562,216) | (13,786) | |
| Finance income/ costs net | (1,527,149) | (13,727) | ||
| Loss before income tax | (3,793,675) | (2,024,518) | ||
| Income tax benefit | - | - | ||
| Loss for the period | (3,793,675) | (2,024,518) | ||
| Loss per share | ||||
| - basic and dilutive loss per share | (0.0696) | (0.0372) | ||
|
| ||||
The accompanying notes form an integral part of these financial statements.
On behalf of the Board of Directors
| Place: New Delhi | Yogendra Kr. Modi | Kashi Nath Memani |
| Date: November 6, 2009 | Chairman & Chief Executive Officer | Director |
Great Eastern Energy Corporation Limited
Consolidated statement of changes in equity for the six months ended 30 September 2009
(All Amounts In US Dollars unless otherwise stated)
|
| Issued capital | Share premium | Retained earnings | Translation reserve | Share based premium reserve | Total equity |
| At April 1, 2009 | 12,246,781 | 33,301,944 | (11,357,955) | (4,270,102) | 73,429 | 29,994,097 |
| Currency translation adjustments | - | - | - | 1,780,650 | - | 1,780,650 |
| Loss for the period | - | - | (3,793,675) | (3,793,675) | ||
| Employees share-based payment scheme | 35,935 | (2209132) | ||||
| At September 30, 2009 | 12,246,781 | 33,301,944 | (15151,630) | (2,489,452) | 109,364 | 28,017,007 |
|
| Issued capital | Share premium | Retained earnings | Translation reserve | Total equity |
| At April 1, 2008 | 12,246,781 | 33,301,944 | (4,815,414) | 4,930,843 | 45,664,154 |
| Currency translation adjustments | - | - | - | (6,600,701) | - |
| Loss for the period | - | - | (2,024,518) | - | (8,739,146) |
| At September 30, 2008 | 12,246,781 | 33,301,944 | (6,839,932) | (1,669,858) | 36,925,008 |
a) Share premium represents the premium paid by Shareholders on issue of shares and is net of equity translation costs, under the Indian Companies Act, 1956 such a reserve has got a restricted usage.
b) Translation reserve represents exchange difference arising on translation from functional currency to presentation currency in accordance with IAS 21 "The effects of changes in foreign exchange rate"
The accompanying notes form are an integral part of these financial statements.
On behalf of the Board of Directors
| Place: New Delhi | Yogendra Kr. Modi | Kashi Nath Memani |
| Date: November 6, 2009 | Chairman & Chief Executive Officer | Director |
Great Eastern Energy Corporation Limited
Interim Condensed Statement of Cash Flows for the six months ended 30 September 2009
(All amounts In US Dollars unless otherwise stated)
|
| ||
| For the six month ended Sep 30 2009 | For the year ended March 31, 2009 | |
| Cash flows from operating activities | ||
| Net loss after tax | (3,793,675) | (6,542,541) |
| Adjustments for: | ||
| Loss(Profit) on disposal of PPE | (3,629) | 92 |
| Liabilities written back | - | (78,793) |
| Finance cost | 1,562,216 | 1,852,227 |
| Finace income | (35,068) | (39,164) |
| Interest on income tax refund | - | (34,037) |
| Depreciation and amortization | 1,050,541 | 824,780 |
| Share -based payments charge | 38,787 | 73,429 |
| Foreign exchange loss/(gain) | (28,302) | 158,041 |
| Provisions for gratuity and superannuation | 28,757 | 16,722 |
| Provisions for compensated absences | - | 3,556 |
| Provisions for advances | - | 81,362 |
| Provisions for wealth tax | - | 1199 |
| Operating profit /(loss) before working capital changes | (1,180,373) | (3,604,334) |
| (Increase)/decrease in Trade receivables | 2,902 | 400,145 |
| (Increase)/decrease in other receivables | 550,785 | 196,454 |
| (Increase)/decrease in prepayments | (120,006) | (938,770) |
| Increase / (decrease) in payables and accruals | (1,977,582) | 5,107,451 |
| Cash flows from operating activities | (2,724,274) | 1,160,946 |
| (Current tax paid)/ refunded | 223586 | - |
| Net cash used in operating activities | (2,500,688) | 1,160,946 |
| B. Cash flows from investing activities | ||
| Purchase of property, plant and equipment (PPE) | (6,301,931) | (13,195,169) |
| Addition to capital work in progress (development of wells) | (6,461,534) | (16,220,541) |
| Purchase of intangible asset | (19,283) | (17,185) |
| Increase/(decrease) in restricted deposits(net) | (67,533) | 181,708 |
| Proceeds from sale of PPE | 75,247 | 990 |
| Interest received | 63,784 | 116,578 |
| Net cash flows used in investing activities | (12,711,250) | (29,133,619) |
| C. Cash flows from financing activities | ||
| Proceeds from share issue | 1 | - |
| Proceeds from Borrowings | 17,898,012 | 30,626,079 |
| Interest expense | (3,042,717) | (3,925,710) |
| Net Cash provided by financing activities | 14,855,296 | 26,700,369 |
| Net (decrease)/ increase in cash and cash equivalents (A+B+C) | (356,642) | (1,272,304) |
| Cash and Cash equivalents as at beginning of the year | 502,714 | 2,102,196 |
| Exchange gain/losses on cash and cash equivalents | 26740 | (327,178) |
| Cash and Cash equivalents as on 30 September | 172,812 | 502,714 |
a) Cash and cash equivalents are same as that disclosed under note 3.
The notes on pages [5] to [18] are an integral part of these financial information
On behalf of the Board of Directors
| Place: New Delhi | Yogendra Kr. Modi | Kashi Nath Memani |
| Date: November 6, 2009 | Chairman & Chief Executive Officer | Director |
Notes to Interim Condensed Financial Information
1. CORPORATE INFORMATION
Great Eastern Energy Corporation Limited ('GEECL' or 'the Company') is a public limited company incorporated in India with its registered office at Fathepur, G. T. Road, Asansol, West Bengal, India.
The Company was incorporated in 1992 to explore, develop, distribute and market Coal Bed Methane or CBM in India. GEECL originally entered into a license agreement in December 1993 with Coal India Limited (CIL) for exploration and development of CBM over an area of approximately 210 Sq. km (approximately 52,000 acres) in the Raniganj coalfields of West Bengal (the Block). Following the transfer of CBM administration in India from the Ministry of Coal to the Ministry of Petroleum and Natural Gas (MoPNG), the Company entered into the existing CBM production sharing contract (PSC) on 31 May 2001 for the Block.
The PSC is effective from 9 November 2001 as a result of the granting by Government of West Bengal of the Petroleum Exploration License on the same date and provides for a five year initial assessment and market development phase, followed by a five year development phase and then a twenty-five year production phase, extendable with the approval of the Government of India (GOI). The PSC also provides that the Company can produce gas during any phase with the prior approval of the GOI. Although GEECL currently is in the development phase, but dewatering is already underway in 30 producing wells and commercial production has already started in 19 of these wells. Further, another 26 wells are in various stages of development.
The Company has its primary listing on Alternative Investment Market.
This condensed interim financial information was approved for issue on 6th November 2009. Condensed interim financial statements for the period ended 30 September 2009 has not been audited.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
a. Basis of preparation
The interim condensed financial information for the six months period ended 30 September 2009 have been prepared in accordance with IAS-34 Interim Financial Reporting.
The interim condensed financial information do not include all the information and disclosures required in the annual financial information, and should be read in conjunction with the Company's annual audited financial information as at 31 March , 2009.
The financial information are presented in US Dollar ('$') and all values are rounded to the nearest US dollar except when otherwise indicated.
Significant Accounting Policies and estimates
The accounting polices adopted in preparation of the interim condensed financial information are consistent with those followed in the preparation of the Company's annual audited financial information for the year ended 31 March 2009.
Standards, amendment and interpretations effective as at 30 September 2009
There are no standards, amendments and interpretations to published standards that are mandatory for accounting periods beginning on or after 1 April 2008 and are also relevant for Company's operations.
Standards, amendments and interpretations effective in the period ended 30th September 2009 but not relevant
The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1 April 2008 but they are not relevant to the Company's operations:
| a. | IFRIC 12, 'Service concession arrangements'; and |
| b. | IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction' |
b. Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The functional currency of the Company is Indian Rupees ("Rs." or "INR"). The financial statements are presented in US Dollar (US $), which is the Company's presentation currency.
For the purpose of conversion from the functional currency to the presentation currency the assets and liabilities except for equity for each balance sheet presented is translated at the closing rate at the date of that balance sheet. Income and expense for each income statement presented are converted using an average rate and all resulting exchange difference is recognized as a separate component of equity.
(ii) Transactions and balances
Transactions in foreign currencies are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currency are translated into functional currency at the exchange rates ruling at the balance sheet date. Exchange differences arising on the settlement of monetary items or translation at rates that are different from those at which they were initially recorded, are recognized as income or expense in the period in which they arise. Non monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.
c. Property, plant and equipment
Property, plant and equipment is stated at historical cost including initial estimate of dismantling and site restoration cost, less accumulated depreciation and any impairment in value. Land is measured at cost. Historical cost includes expenditure that is directly attributable to the acquisition or self-construction of property, plant and equipment. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with them will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance expenditures are charged to the income statement during the financial period in which they are incurred. When any major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.
Depreciation (other than Gas producing wells) is calculated on a straight-line basis over the estimated useful life of the assets as follows -
| Buildings | : | 30 |
| Plant and Machinery | : | 5-10 |
| Furniture, Fixture and Office Equipment | : | 5-15 |
| Vehicles | : | 10 |
| Pipeline | : | 10 |
The property, plant and equipment acquired under finance lease are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term.
The asset's residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each balance sheet date. Depreciation on Gas producing wells is calculated based on unit of production method.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of property, plant and equipment is the greater of the net selling price and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of inflows. The recoverable amount is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognised in the income statement.
d. Capital work in progress
Expenses incurred for development and construction of wells are capitalized and included under the head capital work-in-progress until the wells are ready for their intended use using the Full Costing method. The cost of drilling, wire line logging and perforation services, cementing and fracturing services, which have been outsourced, has been included in well development costs. All other expenses directly attributable in respect to developing and constructing wells are capitalized and included under capital work in progress. Once the wells are ready for their intended use depreciation is charged on the unit of production method.
Inventories consumed as well as inventories lying in stock for the purpose of well development are grouped as part of capital work in progress. These items are not meant for sale in the ordinary course of business or for use as supplies in the production process of saleable gas, but are to be used towards well development and hence, are treated as Capital Work in Progress. Advances paid for supply of capital goods and services are also grouped as part of capital work in progress.
Changes in the measurement of an existing decommissioning, restoration and similar liability that result from changes in the estimated timing or amount of the outflow of resources embodying economic benefits required to settle the obligation, are deducted from the cost of the related asset in the current period provided that the amount deducted shall not exceed the carrying amount of the asset.
e. Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the company makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used.
f. Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.
The useful lives of intangible assets are assessed to be finite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the income statement in the expense category consistent with the function of the intangible asset.
A summary of the policies applied to the Company's intangible assets is as follows:
| • | Gas exploration rights and Right of way are capitalized at historical costs. |
| • | Computer Software-Costs associated with identifiable and unique software products controlled by the Company having probable economic benefits exceeding the costs beyond one year are recognized as intangible assets. Costs incurred during the development stage of computer software are shown as intangible assets under development and are not amortized till the software is ready for its intended use. These costs are amortized using the straight line method over their useful lives not exceeding 5 years. |
| Gas exploration rights | Computer software | Right of way | |
| Useful lives | Finite | Finite | Finite |
| Amortization method used | Amortized on a straight line basis over the period of 25 years | Amortized on a straight line basis over the period of 5 years | Amortized on a straight line basis over the period of 5 years |
| Internally generated or acquired | Acquired | Acquired | Acquired |
| Impairment testing/ recoverable amount testing | Where an indicator of impairment exists | Where an indicator of impairment exists | Where an indicator of impairment exists |
| Remaining unamortized period | Twenty three years and three months | Three and half years | Four years and nine months |
g. Financial assets
Financial assets within the scope of IAS 39 are classified as either financial assets at fair value through profit or loss, loans and receivables, held to maturity investments, and available for sale financial assets, as appropriate. The classification of financial assets depends on the purpose for which the financial assets were acquired. The management determines the classification of its financial assets at initial recognition and, where allowed and appropriate, re-evaluates this classification at each financial year end.
The financial assets held by the company consist of loans and receivables only. These financial assets are recognized initially at fair value plus transaction costs that are directly attributable to the acquisition or issue of these financial assets. Subsequent to initial recognition, these are carried at amortised cost using the effective interest method.
• Loans and receivables
Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets except for maturities greater than 12 months after the balance sheet date in which case, these are classified as non-current assets. The Company's loans and receivables comprise of 'trade and other receivables', 'restricted deposits with banks' and 'cash and cash equivalents' on the balance sheet date. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired and any impairment loss is required to be recognised in the income statement. Impairment testing of receivables is discussed in note 2(h) below.
The Company considers whether a contract contains an embedded derivative when the entity first becomes a party to it. The embedded derivatives are separated from the host contract which is not measured at fair value through profit or loss when the analysis shows that the economic characteristics and risks of embedded derivatives are not closely related to those of the host contract.
All regular way purchases and sales of financial assets are recognized on the trade date, which is the date that the Company commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.
h. Trade and other receivables
Trade and other receivables are initially recognized at fair value. Subsequent to initial recognition, trade and other receivables are subsequently carried at amortized cost using the effective interest method less any allowance for impairment. Amortized cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction costs. A provision for impairment of trade and other receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
The allowance for impairment of receivables reflects management's best estimate of probable losses inherent in the accounts receivable balance. Management primarily determines the allowance based on the ageing of accounts receivable balances, historical write-off experience and customer credit worthiness. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement. When the receivable is uncollectible, it is written off against the allowance account.
i. Cash and cash equivalents
Cash and cash equivalents includes cash in hand, balances with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
j. Inventories
Inventories of stores and spares are valued at the lower of cost and net realisable value. Costs include expenses incurred in bringing each product to its present location and condition and is determined using the weighted average cost method. Net realizable value is the replacement cost of the stores, spares and consumables.
k. Trade and other payables
Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
l. Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
Borrowing costs incurred for the construction of any qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are expensed.
m. Provisions
Provisions are recognized when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as other finance expense.
These provisions are capitalized where they are expected to increase the economic benefits flowing from the use or eventual disposal of the asset, or when they represent an obligation to remediate at the end of the asset's life and are recoverable from future economic benefits of using the asset. In all other cases, they are charged to the income statement.
n. Employee costs, Pensions and other post-employment benefits
Employee retirement benefits
The company has both defined benefit and defined contribution plans. The defined benefit plans are the gratuity plan and superannuation plan and the defined contribution plan is the state administered provident fund.
A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate fund. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
i. The Gratuity Plan
The gratuity plan is a defined benefit plan that provides a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment based on the respective employee's last drawn salary and length of employment.
The liability recognized in the balance sheet in respect of the gratuity plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past- service costs. The defined benefit obligation is, each year, determined by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds denominated in Indian Rupees, being the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to income statement in the period in which they arise.
ii. Superannuation
The Superannuation (pension) plan for the company is a defined benefit scheme where monthly contribution at the rate of 15% of salary is payable. These contributions will accumulate at the prevailing rate of interest. At the time of retirement, termination or separation of employee, accumulated contribution will be utilized to buy pension annuity from an insurance company. The company makes provision of such pension liability in the books of accounts on the basis of actuarial valuation.
iii. State administered provident fund
Under Indian law, employees are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both the employee and the employer make monthly contributions to the plan at a pre-determined rate (currently 12.0%) of the employee's basic salary to a government recognized provident fund. The Company has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they accrue. Upon retirement or separation, an employee becomes entitled for this lump sum benefit, which is paid directly to the concerned employee by the fund.
iv. Compensated absences
Compensated absences comprises of leave balances accrued by employees. The leave balance is en-cashable for a maximum of 30 days. These balances can be accumulated up to a maximum of 60 days and carried forward for a period of 3 years. The leave lapses after 3 years if unutilized, or on the employee leaving the Company or on retirement. Compensated absences are being provided on the basis of actuarial valuation.
v. Share-based compensation
The Company operates an equity-settled, share-based compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the Company. The fair value of the employee services received in exchange for the grant of the options is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total amount expensed is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest based on the non-marketing vesting conditions. It recognizes the impact of the revision to original estimates, if any, in the income statement with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.
o. Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies:
| (a) | There is a change in contractual terms, other than a renewal or extension of the arrangement. |
| (b) | A renewal option is exercised or extension granted, unless the term of the renewal or extension was initially been included in the lease term. |
| (c) | There is a change in the determination of whether fulfillment is dependent on a specified asset. |
| (d) | There is a substantial change to the asset. |
Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios a), c) or d) and at the date of renewal or extension period for scenario b).
• Company as a lessee
Finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term.
Lease where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term.
p. Revenue Income
Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Company's activities. Revenue is shown net of value-added tax, excise duty, sales tax, returns, rebates and discounts.
Sales revenue is recognised on individual sales when persuasive evidence exist that the significant risks and rewards of ownership of the product have been transferred to the buyer.
These conditions are generally satisfied when the product is delivered, at a fixed or determinable price, and when inflow of economic benefits is reasonably assured. Delivery is defined based on the terms of the sale contract.
Revenue on sale of Coal Bed Methane ('CBM') is recognized on sale of gas to customers at delivery point. Revenue on sale of Compressed Natural Gas ('CNG') is recognized on sale of gas to customers at retail outlet.
q. Interest income
Income is recognized as interest accrues (using the effective interest method that is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset).
r. Government grants
Government grants are recognized at their fair value where there is reasonable assurance that the grant will be received and all the conditions attached to it will be complied with. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Government grants relating to the purchase of property, plant and equipment are adjusted against the carrying amount of the related asset.
s. Taxes
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilized except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Income tax relating to items recognized directly in equity is recognized in equity and not in the income statement.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
t. Equity instruments
Equity instruments, convertible into fixed number of equity shares at a fixed predetermined price, and which are exercisable after a specific period, are accounted for as and when such instruments are exercised. The transaction costs pertaining to such instruments are adjusted against equity.
u. Segment Reporting
A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and return that are different from those of components operating in other economic environments. A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. The Company considers that it operates in a single geography being India and in a single business segment being the production and sale of CBM gas.
3. Cash and Cash equivalents
| As at | ||
| 30 September 2009 | 31 March 2009 | |
| Cash in hand | 1309 | 4,106 |
| Cash at banks | 171,503 | 498,608 |
| 172,812 | 502,714 | |
4. Restricted deposits with bank
| As at | ||
| 30 September 2009 | 31 March 2009 | |
| Fixed deposits maturing within 12 months | 88,011 | 545,584 |
| Fixed deposits maturing beyond 12 months | - | 18,646 |
| 88,011 | 564,230 | |
All the restricted deposits are denominated in INR
These fixed deposits earn fixed interest at the respective bank deposit rates. These are margin money deposits against bank guarantee issued by banks on behalf of the company. Restrictions on such deposits are released on the expiry of terms of respective arrangements.
5. Prepayments
Prepayments include an amount of $ 30,256 (31 March 2009:$ 19,289) on account of advance rent to related party YKM Holdings Pvt. Ltd.
6. Income tax
There is no current tax liability in view of losses for the period. The Company has not carried forward the losses incurred till 31 March 2005, however from the year ended 31 March 2006 the Company has carried forward losses for set-off against future taxable profits. Further as the Company will be enjoying a tax holiday period in accordance with the Income Tax Act in India, no deferred tax assets has been recognized during this period.
7. Segment reporting
The Company operates in a single geographical segment, being India, and in a single business segment, being the production and sale of gas. Hence, no separate segment information has been furnished herewith.
8. Property, plant and equipment
During the six months ended 30 September 2009, the Company has capitalized pipelines, buildings, land, and other machinery.
| As at September 30, | ||
| 2009 | 2008 | |
| Opening net book balance as on 1 April | 34,227,389 | 16,818,701 |
| Additions | 6302127 | 8,461,876 |
| Disposal | (71618) | |
| Depreciation | (1,046,234) | (330,129) |
| Foreign exchange fluctuation on translation | 2,127,267 | (3,219,764) |
| Closing net book balance as on 30 September | 41,538,931 | 21,730,684 |
9. Intangible assets
Intangible assets comprises of cost of SAP implementation ,cost of acquisition of rights for gas exploration, Right of way. The amortization during six months ended 30 September 2009 charged to statement of income amounts to $29112 ( 30 September 2008: $17,276). The Company has acquired SAP license during six months ended 30 September 2009 capitalized as intangible of $19,283(30 September 2008: $18,447)
Cost of SAP implementation is being amortized over a period of five years which is the useful life of such software as assessed by the management. Gas Exploration rights are being amortized over a period of 25 years commencing from the year when commercial production has started.
10. Capital work-in-progress
During the six months period ended 30 September 2009, the Company has drilled fourteen new wells which are under various stages of completion. During the period, the Company has incurred $ 14,238,657 (30 September 2008: $ 14,592,025) as additions to capital work-in-progress.
| As at 30 September | ||
| 2009 | 2008 | |
| Opening net book balance as on 1 April | 41,464,058 | 44,477,852 |
| Additions | 14,073,038 | 14,592,025 |
| Disposal/ Retirement | (1,278) | - |
| Capitalization | (5,731,302) | (7,004,592) |
| Exchange Fluctuation | 2,598,474 | (7,278,445) |
| Closing net book balance as on 30 September | 52,402,990 | 44,786,840 |
11. Well Capitalisation
a) During the six months period ended 30 September 2009 the Company has capitalized NIL wells (2008-09: Nine wells $11,241,220). All exploration cost involved in drilling, cementing, fracturing and drilling of exploratory core holes are initially capitalized as Capital work-in-progress till the time these are ready for commercial use..
b) Depletion : Commercially producing wells are depleted using unit of production method based on related proved reserves. Proved reserves of gas per well are technically re-assessed in house every year at the end of period/year based on technical data available.
12. Retirement benefits
The Company has two post employment unfunded benefit plans, namely gratuity and superannuation and one state administered provident fund, which is a funded defined contribution plan. Gratuity and superannuation are defined benefit schemes. The Company has made provision for gratuity and superannuation benefits on the basis of actuarial valuation.
13. Leases and arrangements containing lease
The Company has entered into Equipment lease and other arrangements with various contractors for development of its wells, whereby the specific assets leased by the contractors are used only at the company's well development site and such arrangements convey the right to use the assets. Some of these arrangements contain lease as per IFRIC 4. The significant terms and arrangements are described below.
| a. | The company has entered into arrangements with Mitchell Drilling International PTY Limited for logging and wiring of production wells and core holes respectively. The terms of contract include comprehensive payment rates to include both lease and non – lease elements which are not separable. The arrangement is cancelable at the option of either party to the contract. |
| | |
| b. | Work Over Rig which was taken on lease from Aakash Exploration Services Pvt. Ltd, the contract for same has expired in the month of April’09. |
| | |
| c. | For Cementing and fracturing services, equipment and personnel from Schlumberger Asia Services limited have been hired. The contract has been cancelled in the month of July-09. |
| | |
| d. | The above mentioned arrangements include non-lease elements also and are being treated as well development costs along with other costs. The segregation of lease and non- lease elements under some of the arrangements is not possible. The details of total expenses during the six months period ended 30th September 2009 are as follows:- |
| Nature | As at 30 Sep 2009 | As at 30 Sep 2008 |
| Towards Minimum Lease Payments;- | ||
| Cementing and Fracturing Charges | 201,819 | 3,329,049 |
| Logging and Wire Line Charges | 171,514 | 359,462 |
| Towards lease payments under arrangements where lease and non - lease payments are combined | ||
| Drilling Charges | 254,585 | - |
| Work Over Expenses | 41,658 | 114,016 |
e. The Company has taken a building on finance lease, the net carrying amount of which is $235,950 (30 September 2008: $250,257). The entire consideration has been paid during the previous year 2005-06 and there are no future lease rentals payable.
f. The Company has acquired a property under an operating lease for an initial period of three years renewable by mutual consent on mutually agreeable terms. The lease is also cancelable at the option of either party by service of appropriate notice. The lease rental of $ 79,093 (30 September 2008:$ 56,931) incurred has been charged to profit and loss account.
g. The company has taken different pieces of land on lease on which the wells are being developed. The lease period for these pieces of land generally ranges from 30 to 99 years. The Company is required to pay the entire amount of consideration as lease premium upfront upon entering into agreement for acquisition of these pieces of land and no further periodic lease rentals are payable for use of these pieces of land. The premiums paid till 30 September 2009 amounts to $ 200,045 (30 September 2008:$ 174,261) and the same have been recognized as prepayments and are being amortized over their respective lease periods.
14. Commitments and Contingencies
| As at 30 September 2009 | As at 31 March 2009 | |
| M/s Adkins Services Inc. | 9,693,765 | 8,783,048 |
| M/s M.R Associates | 18,090 | 15,948 |
| M/s D.S Steels | 190,182 | 162,760 |
| Claims made by Government of India (Ministry of Petroleum and Natural Gas) | 234,708 | 212,831 |
| Claims made by Income Tax Authorities | 48,430 | 45,664 |
| 10,185,175 | 9,220,251 |
There are no new contingencies existing for the Company, other than those mentioned above arising out of activities and operations during the six months period ended 30 September 2009.
15. Capital Commitments
At 30 September 2009, the Company has following Capital Commitments.
| As at September 30 | ||
| 2009 | 2008 | |
| Capital Assets | 8,169,515 | 15,435,345 |
16. Key business developments
| a) | During the period the Company has awarded a contract to Halliburton Offshore Services Inc to provide a crew and equipment to carry out fracturing operations. |
| b) | During the period the Company has made substantial progress in laying of pipeline from Asansol to Durgapur. |
| c) | During the period Company has entered into contract/MOU with new 11 new industrial customers bringing total number to 29. The total quantity of gas under the contract is currently 9.48 mmscfd. |
17. Events occurring after Balance sheet date
12" steel pipeline of 54.46 Km from Asansol to Durgapur has been completed.
18. Foreign Currency Translation
The Company has converted Indian Rupees ('INR') balances to $ equivalent balances on the following basis:
| • | For conversion of all assets and liabilities, other than equity, as at the reporting dates, the exchange rates prevailing as at the reporting date have been used, which are as follows: | |
| - | as at 30 September 2008: $1 = INR 46.94 | |
| - | as at 30 September 2009: $1 = INR 48.04 | |
| - | as at 31 March 2009: $1 = INR 50.95 | |
| • | For conversion of all expenses and income on income statement and the cash flow statement, for the respective periods, periodic average exchange rates have been used, which are as follows: | |
| - | For the six months period ended 30 September 2009: $1 = INR 48.54 | |
| - | For the six months period ended 30 September 2008: $1 = INR 42.77 | |
| • | For conversion of issued Share Capital and Share Premium, historical exchange rates prevailing on the respective dates of issue of shares have been taken into consideration. | |
| • | For conversion of authorized share capital, historical exchange rates prevailing on the respective dates of authorization of such share capital have been taken into consideration. | |
19. Related Party Disclosures
The Company has transactions with following related parties during the periods ended 30 September 2009 and 2008.
| As at 30 September 2009 | As at 31 March 2009 | |||
| Receivable | Payable | Receivable | Payable | |
| YKM Holdings Private Limited * | 60,512 | 146,862 | 38,579 | 329 |
| Mr. Yogendra Kr. Modi | - | 10,833 | - | 13,072 |
| Mr. Prashant Modi | - | 8,033 | - | 7,189 |
| Khaitan & Co. | 4,155 | - | 6,378 | 14,165 |
| 64,667 | 165,728 | 44,957 | 34,755 | |
| | September 2009 | September 2008 |
| Shareholders having significant influence | ·; CBM Investments Limited | ·; CBM Investments Limited |
| | | |
| Key managerial personnel | ·; Mr. Yogendra Kr. Modi ·; Mr. Prashant Modi ·; Mr. P Murari ·; Mr. Kashi Nath Memani ·; Mr Haigreve Khaitan ·; Mr Paul Sebastian Zuckerman ·; Mr. G S Talwar | ·; Mr. Yogendra Kr. Modi ·; Mr. Prashant Modi ·; Mr. P Murari ·; Mr. Kashi Nath Memani ·; Mr. Haigreve Khaitan ·; Mr. Serajul Haq Khan(resigned w.e.f. 5 December 2008) ·; Mr. Paul Sebastian Zuckerman |
| | | |
| Entities that are controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual or close family member of such individual Referred to in (b) above | ·; YKM Holdings Private Limited ·; YKM Holding International Limited ·; Khaitan and Co. ·; KNM Advisory Private Limited. | ·; YKM Holdings Pvt. Limited ·; YKM Holding International limited ·; Bokel Investments Limited. ·; Indian Purchase.com Infoware Limited ** ·; Khaitan and Co. ·; Centurian Bank of Punjab Limited (Since merged with HDFC Bank Ltd.)** ·; KNM Advisory Private Limited. |
* Amounts recoverable from YKM Holdings Private Limited consists of $30,256 (2008: $19,290) on account of security deposits paid for property taken on lease recoverable on expiry of lease agreement and $30,256 (2008: $19,289) on account of advance paid in rent adjustable against future occupation of property taken on lease.
** These entities are not controlled by key management personnel as of 31 March 2009.
c) The following tables provide the total amount of transactions which have been entered into with related parties during the period ended 30 September 2009 and 2008.
| Related Party | Nature of transaction | For Six Month period ended | |
| 2009 | 2008 | ||
| YKM Holdings Private Limited | Lease rentals | 66,057 | 44,976 |
| Payment for services rendered | - | 2,421 | |
| Advance Rent paid | 9,697 | - | |
| Security Deposit given | 9,697 | - | |
| Unsecured loan taken | 144,211 | - | |
| Interest on unsecured loan | 1,138 | - | |
| Reimbursement of Expenses | 44,488 | 13,688 | |
| Khaitan & Co. | |||
| Payment for services rendered | 2,472 | 982 | |
| KNM Advisory Private Limited | Reimbursement of Expenses | 1475 | - |
| Centurion Bank of Punjab (Since merged with HDFC Bank Ltd.) | FD Matured during the year | - | - |
d) Compensation paid to Key Management Personnel
| As at 31 Sept. 2009 | As at 30 Sept. 2008 | |
| Short term Employee Benefits | 281,969 | 211,401 |
| Provision for gratuity and superannuation | 35,522 | 18,356 |
| Compensated absences | 11,020 | 7,979 |
| Defined Contribution Plan | 16,354 | 11,489 |
| 344,865 | 249,225 |
In addition to above payments, the Company has also paid $3708.00 (2008: $ 7481.80) as sitting fees to the independent directors for attending various meetings and the same are included in 'other operative expenses' in the income statement.
e) Terms and conditions of transactions with related parties
The transactions with the related parties are made at normal market prices. Outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2009, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (2008: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
On behalf of the Board of Directors
| Yogendra Kr. Modi | Kashi Nath Memani |
| Chairman & Managing Director | Director |
| Place: New Delhi | |
| Date: November 6, 2009 |