GAIL do not consider DoT's Rs 1.83 lakh cr demand notice as not material event

GAIL India has told Securities and Exchange Board of India (Sebi) that it did not consider the notice sent by telecom watchdog Department of Telecommunications (DoT) seeking Rs 1.83 lakh crore in past dues as material event warranting disclosure to stock exchanges as the amount in the provisional assessment was considered not payable. This was in reply to a notice sent by Sebi over non-disclosure of DoT assessment orders/demand notices, GAIL on May 6 said the demand was not legally tenable.

"The amount assessed in provisional assessment orders are not payable, being unrelated matter to the terms and conditions of the IP-II licence obtained by the company and hence are also legally not tenable," the company in a regulatory filing disclosing the communication with Sebi.

GAIL said it had refuted the provisional assessment orders of DoT and sought its withdrawal.

"Accordingly, the event(s) of receipt of provisional orders was not considered material to be disclosed," it said.

After February 14 hearing in the Supreme Court, DoT has sent a notice to GAIL on dues owned by telecom companies such as Bharti Airtel and Vodafone Idea.

The original ruling of Supreme Court in October last year was led by DoT to demand Rs 1.47 lakh crore in unpaid dues on licence fees and spectrum usage charges from telecom companies such as Bharti Airtel and Vodafone Idea.

Its demand related to a 14-year-old dispute regarding the definition of adjusted gross revenue (AGR), which the Supreme Court agreed should include all kinds of income generated by the telcos.

Alongside, the DoT also raised a demand of over Rs 3 lakh crore from non-telecom PSUs such as GAIL, Oil India and PowerGrid for telecom licences these firms had primarily acquired for internal communication purposes.

For GAIL, the DoT assessed an outstanding of Rs 1,83,076 crore towards annual licence fee in respect of IP-II Licence. This included interests and penalty.

As per the filing, GAIL management viewed the "assessment orders/ demand notices received from DoT are not found material as per the GAIL Policy for determination of materiality and disclosure and therefore same does not require disclosure to the stock exchanges within 24 hours from the receipt."

On May 5, Sebi has issued a "caution letter" to GAIL for non-disclosure of material events/information.

The regulator said listing regulations require companies to disclose material information as soon as reasonably possible.

"This caution letter is being issued after considering the company's explanation on the matter. The company is advised to place this letter before its board of directors and disclose the same to the stock exchanges. You are also advised to disclose the reason of non-disclosure of the assessment orders/demand notices within the stipulated timeframe," it wrote.