GEEC.L Regulatory News (GEEC)

20 Nov 2007 07:01

Great Eastern Energy Corp Ltd20 November 2007 Press Release 20 November, 2007 Great Eastern Energy Corporation Ltd. Interim Results six months ended 30th September 2007 Great Eastern Energy Corporation Ltd. (Great Eastern), a Company involved in theexploration, development and production of coal bed methane (CBM) natural gas inIndia, is pleased to announce its results for the six months ended 30thSeptember 2007. Great Eastern is pleased to report it has completed its debt programme, puttingin place the key component needed to progress the next phase of drilling andachieve the production target outlined at the time of the IPO. Other keyelements needed to achieve this production target are also progressing ahead orin line with expectations. Highlights: • Gas Production increased to 2.4 MMSCFD: • 367% increase on June update • 60% increase on August trading update • Finance: • Completion of debt programme - secured US$ 88 million • Cash position as at Nov 16, 2007 - US$ 5 million • Sales progressing well: • First commercial sales of CBM gas commence • One CNG outlet established at well 10 • Two additional CNG outlets being commissioned • Franchise agreement signed with Indian Oil Company (IOC) - 5 additional CNG stations at IOC outlets. More will be established in due course • Infrastructure: • Gas Gathering Station on target to be completed Jan '08 • Rig on site and being commissioned Commenting, YK Modi, Chairman and CEO of Great Eastern, said: "We have made solid progress in the last six months. Production has increasedsignificantly and we have achieved our first commercial sales of CBM naturalgas. The debt facility is now in place which will enable us to commence the nextphase of our drilling programme and acts as a further validation of thecommercial potential of CBM production in India. " For further information: Great Eastern EnergyYK Modi Chairman & CEO + 44 (0) 20 7743 6363Prashant Modi President & COO + 44 (0) 20 7743 6363 Pelham Public RelationsPhilip Dennis +44 (0)20 7743 6363Hugh Barker +44 (0)20 3008 5509 Arden PartnersRichard Day +44 (0)20 7398 1632Tom Fyson Chairman's statement I am pleased to report Great Eastern has made solid progress in the six monthsto 30th September, 2007. The Company now has proven Gas production and thefinances in place to achieve its stated medium term objective of 35MMSCFD. The rate of current production is 2.4 MMSCFD, an increase of over 60% since thelast update in August. Average production per well is substantially ahead ofindependent forecasts and we are confident this rate will continue to furtherincrease significantly as the rate of dewatering increases and we fracadditional seams. Great Eastern is able to supply gas across the full spectrum of markets withinits immediate locality. These markets include compressed natural gas ('CNG') forvehicles as well as small and large industrial units. As previously stated, the Company has commenced initial industrial sales of CBMas well as sales of CNG for vehicles in and around Asansol, West Bengal, India.The delivered price obtained is currently between $13 to $15 / mcf. We haveestablished a CNG outlet at well 10 and have commissioned two further CNGoutlets at wells 16 and 20. In October we entered into a franchise agreement with the Indian Oil Corporation("IOC"), a Fortune 500 company and India's largest downstream operation, toestablish CNG dispensing stations at IOC retail outlets in the cities located inand around the licence area. We expect the first of these to be fullyoperational in December 2007, with four further outlets due for completion inthe coming months. We expect these five stations to dispense approx. 1.5 mmscfof CNG per day at an average delivered price of over $15 / mcf. IOC has asubstantial number of retail outlets and as such there is scope for the numberof stations supplied with CNG to increase in line with production. The supply ofCBM natural gas direct as CNG is a world first. With the Indian economy continuing to see strong growth, the correspondingmarket for natural gas has also remained buoyant. The market for CNG is alsobeing driven by a combination of cost and environmental concerns, encouragingvehicle owners to switch from traditional diesel to gas. As at 16th November, the Company had cash on its balance sheet of US$ 5 million.I am pleased to report that further to the announcement in August we have nowsecured US$88 million of debt facilities. This completes our debt programme,putting in place the key outstanding element needed to progress the next phaseof drilling and associated infrastructure and in turn achieve the productionstargets outlined at the time of the IPO. The debt facility is provided by a consortium of 8 banks, led by the State Bankof India. Prior to providing this facility, each bank conducted its ownindependent due diligence on the project, which further validates the potentialof the Company's asset. The facility has been offered over an eight year tenureand represents the first project financing of its kind in India. The rig was delivered to the site at the beginning of November and is currentlyin the process of being commissioned. It will be ready for use by January atwhich point the next phase of drilling will commence. The rig will bring addedflexibility to this campaign and also result in a reduction in drilling costs.The Gas Gathering Station is also on target for completion in January and thepipeline construction is progressing well. Outlook We are confident that with the Gas Gathering Station and pipeline completed wecan achieve further meaningful sales of gas in the next six months. Furthermore,we look forward to starting the next phase of our drilling programme on time inJanuary 2008. With all the key elements now in place, combined with continuing strong gasdemand fundamentals, we remain confident of the Company's prospects for thecoming six months and beyond. -ENDS- Interim condensed balance sheet as at 30 September 2007 (In US Dollars unless otherwise stated) Notes As at As at 30 September 31 March 2007 2007 AssetsNon-current assetsProperty, plant and equipment 8 3,804,803 1,181,024Capital work-in-progress 10 38,285,971 31,913,627Intangible assets 9 385,328 368,571Prepayments 5 132,674 66,122Other financial assets 99,965 57,689 42,708,741 33,587,033Current assetsPrepayments 5 3,241,562 459,929Advance income tax 759,698 629,129Other financial assets 1,148,273 968,431Cash and cash equivalents 3 1,910,468 11,032,180Restricted deposit with bank 4 647,531 - 7,707,532 13,089,669Total Assets 50,416,273 46,676,702Equity and liabilitiesIssued capital 12,246,781 12,246,781Share premium 33,301,944 33,301,944Retained earnings (2,939,555) (2,305,483)Translation reserves 5,208,839 945,822Total equity 47,818,009 44,189,064 Non current liabilitiesProvisions 50,327 45,882Employee benefit liability 42,362 40,122Deferred income tax liability 6 - - 92,689 86,004Current liabilitiesTrade and other payables 2,492,993 2,387,869Provisions 12,582 13,765 2,505,575 2,401,634Total liabilities 2,598,264 2,487,638Total equity and liabilities 50,416,273 46,676,702 Interim condensed income statement for six months ended 30 September 2007 (In US Dollars unless otherwise stated) For six months period ended 30 September Notes 2007 2006 Revenue 7272 -Other income 2460 -Personnel expenses (232,511) (213,262)Depreciation and amortization 8&9 (52,534) (20,254)Other operating expenses (670,031) (735,709)Foreign exchange gain/(loss) 3145 (1402)Operating profit/(loss) (942,199) (970,627)Finance income 323,210 780,011Finance expense (15,083) (6,672)Finance income/(expense), net 308,127 773,339Profit/(loss) before income tax (634,072) (197,288)Income tax expense - -Profit/(loss) for the period (634,072) (197,288) Loss per share- basic and dilutive (in cents) (0.1164) (0.0362) Consolidated statement of changes in equity for the six months ended 30 September 2007 (In US Dollars unless otherwise stated) Issued capital Share premium Retained Translation Total equity earnings reserve At April 1, 2007 12,246,781 33,301,944 (2,305,483) 945,822 44,189,064Currency transaction differences - - - 4,263,017 4,263,017Loss for the period - - (634,072) - (634,072)At September 30, 2007 12,246,781 33,301,944 (2,939,555) 5,208,839 47,818,009 Consolidated statement of changes in equity for the six months ended 30 September 2006 (In US Dollars unless otherwise stated) Issued capital Share premium Retained Translation Total equity earnings reserve At April 1, 2006 12,246,781 33,301,944 (1,980,192) (103,291) 43,465,242Loss for the period - - (197,288) - (197,288)Input credit for VAT and service tax - - 16,437 - 16,437recognizedCurrency transaction differences - - - (1,248,519) (1,248,519)At September 30, 2006 12,246,781 33,301,944 (2,161,043) (1,351,810) 42,035,872 Interim Condensed Statement of Cash Flows for the six months ended 30 September 2007 (In US Dollars unless otherwise stated) Six months ended September 30, 2007 2006A. Cash flows from operating activitiesProfit/(loss) after tax (634,072) (197,288)Adjustments for:Interest expense 15,083 -Interest income (323,210) (780,011)Depreciation and amortization 52,534 40,210Foreign exchange loss/(gain) (5,716) 1,402Provisions (4,181) 8,650Operating profit /(loss) before working capital changes (899,562) (927,037)(Increase)/decrease in debtors (1,023) -(Increase)/decrease in other receivables/prepayments (2,848,082) (1,038,017)Increase / (decrease) in payables and accruals (117,037) 3,095,366Net cash flows from operating activities (3,865,704) 1,130,312 B. Cash flows from investing activitiesCash paid for purchase of property, plant and equipment (486,918) (56,120)Cash paid for capital work in progress (including well (5,175,092) (11,943,408)development cost)Cash paid for purchase of intangible asset (3,010) (131,308)Cash paid for purchase of leasehold land (58,799) (30,258)Proceeds/(payment) on encashment/(acquisitions) of short term (629,782) 15,186,840bank deposits (Net)Interest received from investments 323,210 702,142Net cash flows from investing activities (6,030,391) 3,727,888 C. Cash flows from financing activitiesInterest expense (15,083) -Net Cash flows from financing activities (15,083) - Net changes in cash and cash equivalents (A+B+C) (9,911,178) 4,858,200 Cash and Cash equivalents as on 1 April 11,032,180 4,271,906Foreign currency translation difference on cash balances 789,466 (126,537)Cash and Cash equivalents as on 30 September 1,910,468 9,003,569 a) Cash and cash equivalents are same as that disclosed under note 3. b) Closing cash and cash equivalents include restricted deposits amounting to$1,019,762 (30 September 2006: 663,620). Notes to Interim Condensed Financial Information 1. CORPORATE INFORMATION Great Eastern Energy Corporation Limited ('GEECL' or 'the Company') is a publiclimited company incorporated in India with its registered office at 1D, 'BallyHigh', 1 Ballygunge Park Road, Kolkata, India. The Company was incorporated in 1992 to explore, develop, distribute and marketCoal Bed Methane or CBM in India. GEECL originally entered into a licenseagreement in December 1993 with Coal India Limited ('CIL') for exploration anddevelopment of CBM over an area of approximately 210 Sq. km (approximately52,000 acres) in the Raniganj coalfields of West Bengal (the Block). Followingthe transfer of CBM administration in India from the Ministry of Coal to theMinistry of Petroleum and Natural Gas ('MoPNG'), the Company entered into theexisting 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 byGovernment of West Bengal of the Petroleum Exploration License on the same dateand provides for a five year initial assessment and market development phase,followed by a five year development phase and then a twenty-five year productionphase, extendable with the approval of the Government of India (GOI). The PSCalso provides that the Company can produce gas during any phase with the priorapproval of the GOI. Out of 23 wells, 2 wells have started producing gas, since14 July 2007 and 28 August 2007 respectively. The Company has started sellingsuch gas produced to small industries in nearby areas. Other 21 wells are stillin the exploratory and market development phase with dewatering and productiontesting underway. The Company has its primary listing on Alternative Investment Market. This condensed consolidated interim financial information was approved for issueon 16 November 2007. 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The interim condensed financial information for the six months period ended 30September 2007 have been prepared in accordance with IAS-34 Interim FinancialReporting. The interim condensed financial information do not include all the informationand disclosures required in the annual financial information, and should be readin conjunction with the Company's annual audited financial information as at 31March , 2007. The financial information are presented in US Dollar ('$') and all values arerounded to the nearest US dollar except when otherwise indicated. Significant Accounting Policies and estimates The accounting polices adopted in preparation of the interim condensed financialinformation are consistent with those followed in the preparation of theCompany's annual audited financial information for the year ended 31 March 2007. The following new standards, amendments to standards and interpretations aremandatory for financial year beginning 1 April 2007. • IFRS 7, 'Financial instruments: Disclosures', and the complementaryamendment to to IAS 1, 'Presentation of financial information- Capitaldisclosures' effective for annual periods beginning on or after 1 January,2007, introduces new disclosures relating to financial instruments. The Companyis in the process of assessing the impact of IFRS 7 and the amendment to IAS 1.These disclosures are not required for the interim reporting period. • IFRIC 8, 'Scope of IFRS 2', effective for annual periods beginning onor after 1 May 2006. This Interpretation applies to transactions in which anentity or an entity's shareholders have granted equity instruments or incurred a liability to transfer cash or other assets for amounts that are basedon the price (or value) of the entity's shares or other equity instrumentsof the entity when the identifiable consideration received (or to be received)by the entity, including cash and the fair value of identifiable non-cashconsideration (if any), appears to be less than the fair value of the equityinstruments granted or liability incurred. This standard does not have anyimpact on the Company's financial information. • IFRIC 9, 'Reassessment of Embedded Derivatives', effective for annualperiods beginning on or after 1 June 2006. An interpretation requires an entityshall assess whether an embedded derivative is required to be separated from thehost contract and accounted for as a derivative when the entity first becomes aparty to the contract. This standard does not have any impact on the Company'sfinancial information. • IFRIC 10, 'Interim financial reporting and impairment', prohibits theimpairment losses recognized in an interim period on goodwill and investments inequity instruments and in financial assets carried at cost to be reversed at asubsequent balance sheet date. Interpretation is effective for annual periodsbeginning on or after 1 November 2006. This standard does not have any impact onthe Company's financial information. • IFRIC 11, 'IFRS 2 - Group and treasury share transactions' effectivefor annual period beginning on or after 1 March 2007, IFRIC 11 provides guidanceon whether share-based transactions involving treasury shares or involving groupentities (for example, options over a parent's shares) should be accounted foras equity-settled or cash-settled share-based payment transactions in thestand-alone accounts of the parent and group companies. The interpretation isnot relevant to the Company's operation as the Company do not share-basedpayments transactions The following new standards, amendments to standards and interpretations havebeen issued but are not effective for financial year beginning 1 April 2007 andhave not been early adopted: • IFRS 8, 'Operating segments' (effective from 1 January 2009). IFRS 8replaces IAS 14 and aligns segment reporting with the requirements of the USstandard SFAS 131, 'Disclosures about segments of an enterprise and relatedinformation'. The new standard requires a 'management approach', under whichsegment information is presented on the same basis as that used for internalreporting purposes. This standard does not have any impact on the Company'sfinancial information. • IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimumfunding requirements and their interaction' (effective from 1 January 2008).IFRIC 14 provides guidance on assessing the limit in IAS 19 on the amount of thesurplus that can be recognised as an asset. It also explains how the pensionasset or liability may be affected by a statutory or contractual minimum fundingrequirement. The Company will apply IFRIC 14 from 1 April 2008, but it is notexpected to have any impact on the Company's accounts. Interpretations to existing standards that are not yet effective and notrelevant for the Company's operations The following interpretations to existing standards have been published and aremandatory for the Company's accounting periods beginning on or after 1 April2008 or later periods but are not relevant for the Company's operations: • IFRIC 12, 'Service concession arrangements' (effective from 1 January2008). IFRIC 12 applies to contractual arrangements whereby a private sectoroperator participates in the development, financing, operation and maintenanceof infrastructure for public sector services. IFRIC 12 is not relevant to theCompany's operations because the Company do provide for public sector services. • IFRIC 13, 'Customer loyalty programmes' (effective from 1 July 2008).IFRIC 13 clarifies that where goods or services are sold together with acustomer loyalty incentive (for example, loyalty points or free products), thearrangement is a multiple-element arrangement and the consideration receivablefrom the customer is allocated between the components of the arrangement inusing fair values. IFRIC 13 is not relevant to the Company's operations becausethe Company do not operate any loyalty programmes. 3. Cash and Cash equivalents As at 30 September 2007 31 March 2007Cash in hand 988 348Cash at banks - on current account 273,848 105,400 - on fixed deposit 1,635,632 10,926,432 1,910,468 11,032,180 Fixed deposits with banks include $1,019,762 (31 March 2007: $29,239) kept asmargin money deposits against letter of credit issued by banks on behalf of theCompany. 4. Restricted deposits with bank Restricted deposits with bank represent margin money deposits against letters ofcredit issued by banks on behalf of the Company. Restrictions on such depositsincluding those considered as part of Cash and Cash equivalents (refer note 3above) are released on the expiry of the terms of the respective arrangements. 5. Prepayments Prepayments includes advances of $3,206,908(31 March 2007: $405,662) made tovarious vendors for purchase of equipment and construction of Gas GatheringStation('GGS') 6. Income tax There is no current tax liability in view of losses for the period. The Companyhas not carried forward the losses incurred till 31 March 2005, however from theyear ended 31 March 2006 the Company has carried forward losses for set-offagainst future taxable profits. Further as the Company will be enjoying a taxholiday period in accordance with the Income Tax Act in India, no deferred taxassets has been recognized during this period. 7. Segment reporting The Company operates in a single geographical segment, being India, and in asingle business segment, being the production and sale of gas. Hence, noseparate segment information has been furnished herewith. 8. Property, plant and equipment During the six months ended 30 September 2007, the Company has capitalised 2wells and acquired cascades, generator sets and other machinery. There were nodisposals during the period. As at September 30, 2007 2006Opening net book balance as on 1 April 1,181,024 1,039,640Additions (including capitalisation of 2 wells (refer note 11)) 2,508,499 65,729 Depreciation (67,921) (40,136)Foreign exchange fluctuation on translation 183,201 (1,828)Closing net book balance as on 30 September 3,804,803 1,063,405 9. Intangible assets Intangible assets comprises of cost of SAP implementation and cost ofacquisition of rights for gas exploration. The amortization during six monthsended 30 September 2007 charged to statement of income amounts to $21,440 ( 30September 2006: $14,668). The Company has acquired computer software during sixmonths ended 30 September 2007 capitalized as intangible of $3,010 (31 March2007: $128,681) Cost of SAP implementation is being amortised over a period of 5 years which isthe useful life of such software as assessed by the management. Gas Explorationrights are being amortised over a period of 25 years commencing from the currentyear when commercial production has started. 10. Capital work-in-progress During the six months period ended 30 September 2007, the Company has notdrilled any new wells. However, the cost of workover expenses like sandcleaning, remedial cementing, pump setting and related services, which have beenoutsourced, has been taken to capital work-in-progress for existing 23 wellsincluding 2 producing wells till commencement of commercial production. Allother expenses incurred with respect to developing and maintaining wells, tillthey become producing properties are capitalised and included under capitalwork-in-progress. During the period, the Company has incurred $ 8,390,295 (30September 2006: $11,013,021 ) as additions to capital work-in-progress. As at 30 September 2007 2006Opening net book balance as on 1 April 31,913,627 15,418,158Additions 8,392,602 11,013,021Capitalisation (2,020,258) -Closing net book balance as on 30 September 38,285,971 26,431,179 During the six months ended 30 September 2007, the Company has written downdamaged and unusable materials amounting to $nil (30 September 2006: $6,672) 11. Well capitalisation a) During the period the Company has capitalized two wells amounting to$20,20,258 (March 2007: $nil). All exploration cost involved in drilling,cementing, fracturing and drilling of exploratory core holes are initiallycapitalized as Capital work-in-progress till the time these are ready forcommercial use. Cost of exploratory wells including apportionment of preoperative expenses and allocated depreciation of support equipment. b) Depletion : Commercially producing wells are depleted using unit ofproduction method based on related proved reserves. Proved reserves of gas perwell are technically re-assessed in house every year at the end of period/yearbased on technical data available. 12. Retirement benefits The Company has two post employment unfunded benefit plans, namely gratuity andsuperannuation and one state administered provident fund, which is a fundeddefined contribution plan. Gratuity and superannuation are defined benefitschemes. The Company has made provision for gratuity and superannuation benefitson the basis of actuarial valuation. 13. Leases and arrangements containing lease The Company has entered into Equipment lease and other arrangements with variouscontractors for development of its wells, whereby the specific assets leased bythe contractors are used only at the Company's well development site and sucharrangements convey the right to use the assets. Some of these arrangementscontain lease as per IFRIC 4. The significant terms and arrangements aredescribed below. a) Drilling rig has been taken on Lease from John Energy Limited, till 31December 2007. The arrangements have terms describing the operating rate perhour, the standby rate per hour and the repair rate per hour. The Leasearrangement is not cancelable and terminates only on happening of a 'forcemajeure' event. The total lease payments made under this contract during theperiod are $284,361 (30 September 2006: $115,981) The future minimum rentals payable under such type of lease are 30 September 2007 2006Within one year 111,122 39,164After one year but not more than five years Nil Nil b) For cementing services during workover operation, equipment andpersonnel from Schlumberger Asia Services Limited have been hired. Thearrangement is cancelable at the option of either party to the contract. c) Wire-line logging of core holes has been contracted to ScintrexGeophyscial Services (India) Private Limited, which includes hiring of drillingequipments along with the services of its crew. The lease terms include rate ofequipments hiring along with the payments towards non-lease elements. The leasearrangement is not cancelable and terminates only on happening of a 'forcemajeure' event. The work was completed as on 30 September 2006 under thisarrangement. The Company has not entered into a new arrangement with thecontractor during the current period under review. d) The Wire-line logging and perforation services for production wellshave been contracted to HLS Asia Limited. The terms of contract include separatepayment arrangements towards lease and non-lease payments. The lease arrangementis cancelable at the option of either party to the contract. The work wascompleted as on 20 December 2006 under this arrangement. The Company has notentered into a new arrangement with the contractor during the current periodunder review. e) The Company has entered into two different arrangements with MitchellDrilling Operations PTY Limited and Mitchell Drilling International PTY Limitedfor drilling of production wells and core holes respectively. The terms ofcontract include comprehensive payment rates to include both lease and non-leaseelements which are not separable. The arrangement is cancelable at the option ofeither party to the contract. The work was completed on 6 October 2006 underthese arrangements. The Company has not entered into a new arrangement with thecontractor during the current period under review. f) For cementing and fracturing of wells, equipment and personnel from BJServices Company Middle East Limited have been hired. The arrangement iscancelable at the option of either party to the contract. The terms of contractinclude separate payment arrangements towards lease and non-lease elements. Thework was completed as on 21 December 2006 under this arrangement. The Companyhas not entered into a new arrangement with the contractor during the currentperiod under review. The arrangements mentioned in (b) to (f) include non-lease elements also and arebeing treated as capital work-in-progress along with other costs. Thesegregation of lease and non-lease elements under some of these arrangements isnot possible. The details of total expenses during the six months period ended30 September 2007 are as follows. For six months period ended 30 September 2007 2006Towards Minimum Lease payments:-Cementing and fracturing charges 229,100 834,937Logging and wire-line charges NIL 502,400Towards Lease payments under arrangements where lease and non-leasepayments are combinedDrilling Charges (including core hole drilling) 20,093 2,881,239 g) The Company has taken a building on finance lease, the net carryingamount of which is $293,894 (30 September 2006: $273,524). The entireconsideration has been paid during the year 2005-06(and there are no futurelease rentals payable. h) The Company has acquired a property under an operating lease for aninitial period of three years renewable by mutual consent on mutually agreeableterms. The lease is also cancelable at the option of either party by serving ofappropriate notice. The lease rental of $ 50,511(30 September 2006: $42,768)incurred has been charged to the profit and loss account. i) The Company has entered into a contract with Indian CompressorLimited for hiring of compressors on operating lease basis, which is cancellablesubject to certain conditions. The lease period is for two years and furtherrenewable for same period of time. The lease rentals of $12,790 (30 September2006: Nil) has been paid during the year. j) The Company has taken land on lease on which wells are beingdeveloped. The lease period ranges from 30-99 years. The entire amount ofconsideration in the form of lease premium has been paid upon acquisition. Thepremium paid for the period amounts to $58,799 (30 September 2006:$20,593),which has been disclosed separately under the head current and non- currentassets. 14. Commitments and Contingencies a) The claim from Directorate General of Hydrocarbons (DGH), Government ofIndia, towards additional fee of $ 103,171 (31 March,2007 -$ 94,058) for GasExploration Licence, continues to be under arbitration with both the parties tothe dispute filing their additional comments on the matter with the Arbitrator.During the period, DGH has also raised claim towards interest on the amount ofshortfall, since the date of the contract. Such additional amount of interestamounts to $ 137,518 (31 March 2007: $209,271) which along with the originalclaim has been treated by the Company as a Contingent Liability. There has beenno other change to the Contingencies as were existing as at 31 March 2007. b) Prepayments (Current) include $54,439 (31 March 2007: $49,630) recoverableM/s Adkins Services Inc., (Adkins), a drilling contractor which has been fullyimpaired. The contract with Adkins was terminated by the Company on the groundof non-performance and continued breach of contract. The Company in addition tothe above amount has made a claim of $4.98million (31 March 2007 : $4.54 million) for damages on account of delay in providing the services by the said contractor. The Contractor has also filed a counter claim of $7.00 million (31 March 2007: $6.38 million) against the Company for loss of profit, damages etc which the Company disputes. The contractor has also claimed, interest at therate of 15% per annum from August 2004 till the date of realization, interimaward and costs incurred on litigation. The Company had filed an applicationbefore Hon'ble High Court at Calcutta for the appointment of PresidingArbitrator for the arbitral proceedings to be started. The Hon'ble High Court atCalcutta vide its order dated 18 March 2004 has appointed the PresidingArbitrator. Necessary adjustments, if any, will be made in the financialinformation once the arbitration proceedings are complete. There are no new contingencies existing for the Company, other than thosementioned above arising out of activities and operations during the six monthsperiod ended 30 September 2007. 15. Capital Commitments At 30 September 2007, the Company has following Capital Commitments. As at September 30 2007 2006 Capital Assets 8,750,868 1,932,215 16. Key business developments a) During the period the Company has awarded the contract for lying ofMDPE pipe line, to Universal Energies Ltd . Laying of MDPE pipeline pursuant tothe contract has commenced during the period. This pipeline would facilitateinterconnection of wells to GGS. Pipeline laying activities are expected to becompleted by December 2007. b) The Company has also awarded contract to Sopan O & M (P) Ltd for supplyand commissioning of GGS packages. It is expected that installation of processequipment will be completed by December'07 end. After completion of processequipment installation, GGS will be able to compress CBM into CNG as well as beable to deliver the gas through pipeline. c) The Company has awarded contract to M/s. Universal Energy Ltd for lyingLPE coated steel pipe line. This pipe line will be used for the transportationof CNG from Gas Gathering Station ('GGS') to nearby City Gas Station (CGS) anddifferent small outlets from where gases will be distributed to the differentcustomers d) Pursuant to the Company's plan to drill addition wells in the nextphase and to meet the capital requirement thereof, the Company has appointedSBI Capital Markets Limited ('SBI Cap'), a consultant to facilitate raising offunds. The Company intends to borrow $ 88.07 million from a consortium of banksand financial institutions to fund the future project expenses. The Company hasobtained sanction letters for an amount of $74.23 million as at 12 November2007. Disbursement of entire loan amount would be dependent upon obtaining thesanctions for remaining balance of $ 13.84 million. 17. Events occurring after balance sheet date The Company has entered into an agreement with Indian Oil Corporation Limited(IOC) on 30 October 2007, for sale of Coal Bed Methane Gas and developing CityGas Distribution network including CNG retailing in the state of West Bengal inIndia 18. Foreign Currency Translation The Company has converted Indian Rupees ('INR') balances to $ equivalentbalances 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 reportingdate have been used, which are as follows: o as at 30 September 2007: $1 = INR 39.74o as at 30 September 2006: $1 = INR 45.96 • For conversion of all expenses and income on income statement andthe cash flow statement, for the respective periods, periodic average exchangerates have been used, which are as follows: o For the six months period ended 30 September 2007: $1 = INR 40.86o For the six months period ended 30 September 2006: $1 = INR 45.95 • For conversion of issued Share Capital and Share Premium,historical exchange rates prevailing on the respective dates of issue of shareshave been taken into consideration. • For conversion of authorized share capital, historical exchangerates prevailing on the respective dates of authorization of such share capitalhave been taken into consideration. 19. Related Party Disclosures The Company has transactions with following related parties during the periodsended 30 September 2007 and 2006. As at 30 September 2007 As at 30 September 2006 a) Shareholders having • YKM Holdings Pvt. Ltd. • YKM Holdings Pvt. Ltd. Significant influence b) Key Management • Mr. Y K Modi • Mr. Y K Modi Personnel • Mr. P Murari • Mr. P Modi (upto 31July,2006) • Mr. Kashi Nath Memani P K Roy (upto 17 August 2006) • Mr Haigreve Khaitan • Mr. Serajul Haq Khan • Mr. P Murari • Mr Paul Sebastian Zuckerman • Mr. Kashi Nath Memani • Mr Haigreve Khaitan • Mr. Serajul Haq Khan • Mr Paul Sebastian Zuckermanc) Relative of key management personnel • Mr Prashant Modi d) Entities that are controlled, jointly • Indian Purchase.com Infoware • Indian Purchase.com Infoware controlled or significantly Limited Limited influenced by, or for which significant voting power in such • Khaitan & Co. • Khaitan & Co. entity resides with, directly or indirectly, any individual or close • Centurian Bank of Punjab family member of such individual Limited Referred to in (b) above • KNM Advisory Private Ltd This information is provided by RNS The company news service from the London Stock Exchange