Dear Shareholder,
 
 It is my privilege to share with you the highlights of yet another year
 of successful performance of your Company. During the financial year
 2011-12, Turnover increased by 24% to Rs. 40,281 Crore and despite a
 higher petroleum subsidy, Profit after Tax increased to Rs. 3,654 Crore.
 Your Company had the distinction of being the only company from Asia to
 receive the World''s No. 1 company in Downstream Operation award for
 2011 by Platts. Your Company was also ranked the number 2 Gas Utility
 in Asia in the Platts Top 250 Energy Companies Rankings.  Your Company
 once again maintained its excellent performance rating for 2010-11
 under the MoU with Government of India.
 
 This performance of your Company was in the backdrop of a slowing
 economic environment. Although India''s economic growth has decelerated
 to below 7% during 2011-12, a sustained growth for Indian economy may
 not be difficult to attain in the coming years due to Government
 initiatives in the areas of policy, price stability and continuing
 reforms.
 
 Ensuring requisite supply of energy is crucial to attaining this
 growth. Currently, India is the 4th largest energy consumer in the
 world and is expected to be the 3rd largest by 2025. Demand for clean
 energy sources like natural gas is growing exponentially and meeting
 this demand effectively is essential to support growth. India''s
 consumption of natural gas has grown faster than all other fossil
 fuels, growing at a CAGR of over 11% in the last few years.
 
 Your Company is continuing to pursue greater energy security for India
 through ensuring sufficient availability and access to gas and other
 sources of clean energy. We are working towards achieving the goals as
 envisaged in Strategy 2020 of your Company to spur social, economic and
 environmental growth based on clean energy. To meet the short-fall in
 supply of domestic gas, your Company is in discussions with several
 global sellers. Efforts are also being made to secure additional
 supplies from domestic sources. The pipelines being laid by your
 Company would help in establishing an integrated National Gas Grid all
 over India within a few years'' time.
 
 In order to further strengthen your Company''s position as India''s
 premier integrated gas Company, it is setting up LNG import
 infrastructure and focussing on growing areas like city gas
 distribution, expanding petrochemicals business, diversifying into high
 margin downstream areas in gas value chain and creating a portfolio of
 renewable businesses. The expansion of existing petrochemical plant at
 Pata is ahead of schedule and physical progress of 48% has been
 achieved. Commissioning of the LNG re-gasification terminal at Dabhol
 is expected this year which will enable better utilization of your
 Company''s infrastructure.
 
 Your Company is expanding its global presence to acquire new expertise
 and resources through overseas tie-ups in emerging areas such as Shale
 gas. This will allow it to establish a foothold in resource rich
 countries while complementing your Company''s core business. Your
 Company successfully concluded acquisition of 20% interest in Carrizo
 Oil & Gas Inc.''s Eagle Ford Shale acreage in the USA through its
 recently incorporated subsidiary, GAIL Global (USA) Inc. Besides this,
 your Company has signed a 20-year Sales and Purchase Agreement with
 Sabine Pass Liquefaction LLC, a unit of Cheniere Energy Partners, for
 supply of 3.5 million tonnes per year of LNG. This has set a new trend
 in global gas trade as it is one of the first agreements signed by an
 Asian entity which has price linkage to gas rather than oil. With
 respect to the trans-national pipeline TAPI, your Company has executed
 the Gas Sales & Purchase Agreement with Turkmengaz for 38 MMSCMD for 30
 years.
 
 To capture the growth in renewable energy, your Company has moved from
 being a captive producer to a commercial producer after commissioning
 around 100 MW of wind energy projects last year. Your company intends
 to further expand its wind and solar energy portfolio. To achieve these
 and other goals, your Company continually strives to develop and
 enhance the capacity and capability of its existing talent pool.
 
 Your Company follows a growth path that is not only
 environment-friendly but also creates value for the society and other
 important stakeholders. I am happy to share with you that your Company
 released its first Sustainability Report for the year 2010-11. Moving
 another step forward, your Company became a signatory to the United
 Nations Global Compact (UNGC) last year to further align its operations
 and strategies with the ten universally accepted principles of UNGC.
 Your Company is also the first in India''s Oil and Gas Sector to be
 listed in BSE- GREENEX, the first environment friendly equity index
 launched by Bombay Stock Exchange. Your Company''s Corporate Social
 Responsibility programmes have been successful in making a long term
 impact on the lives of the disadvantaged segment of society and towards
 creation of sustainable livelihoods.
 
 Your Company continues to set benchmarks in the area of corporate
 governance. In yet another recognition of this, it was conferred with
 11th ICSI National Award, 2011 for Excellence in Corporate Governance.
 I would like to convey my sincere gratitude for your support and
 confidence which has enabled us to reach this and other milestones.
 Your Company remains committed to uphold the highest standards of
 governance and pursue higher value creation for all stakeholders.
 
 
                                                     B.C. Tripathi
 
                                      Chairman & Managing Director