GAIL India

Dear Shareholder,
 
 Today, as we progress towards GAIL's 23rd year, I am proud of the fact
 that building our corporate character remains the organization's prime
 focus. Winning, through tireless endeavours, has only strengthened this
 commitment.
 
 At GAIL, each one of us is inspired by a winning momentum that
 motivates us to work towards creating new intellectual capital within
 an enduring value system. I take this opportunity to give you a glimpse
 into the enriching corporate character that encourages us at GAIL to
 adopt the highest standards of corporate governance.
 
 Recognized for our Industrial Leadership by the PLATTS Global Energy
 Award, GAIL has also found a prominent position within the top 15
 largest listed gas utility firms in the Oil & Gas industry, in terms of
 Market Capitalization by the recent RFC Energy rankings.These accolades
 have further strengthened our efforts to carve a niche in the global
 energy market.
 
 Evolving a global outlook, in this era where geographical, linguistic
 and cultural boundaries are almost fading away, is an integral part of
 our vision for the future. We have already invested US $ 70 million by
 making significant forays in exploring growth ventures and entering new
 markets across the world, such as China, Myanmar, Egypt and recently by
 being awarded Block 56 in Oman for exploration and production of
 hydrocarbons. Coal Bed Methane (CBM) opportunities are being explored
 in association with expertise from Australia and Sweden. We are
 venturing into new forays such as bidding for gas fields in Ethiopia
 and setting up LPG plants in Uzbekistan.
 
 Today, the energy sector in India is booming and natural gas is living
 up to its epithet of being the 'fuel of the future'.This lays more
 emphasis on our efforts to effectively harness the immense potential of
 this valuable fuel. In this context, we are spurred by a strategy to
 expand our business profile by developing into an integrated company
 across the natural gas value chain and making our presence felt across
 the gamut from exploration and production (E&P) to gas transportation
 and processing.
 
 An emphasis on innovation has always been the cornerstone of all our
 efforts. We have notched up some interesting achievements that I want
 to share with you.This year, for the first time ever, we started
 production of crude oil in the Cambay Oil Basin. With this development,
 our foray into E&P activities started yielding revenues.The setting up
 the National Gas Management Centre (NGMC) is the first Infohub of its
 kind in India that allows for round- the-clock monitoring and control
 of all the company's transmission assets spread throughout the country
 from one single location.
 
 Another `first' of its kind, is our initiative to promote preventive
 health care through the Air Pollution Related Disease Diagnostic
 Centers (APRDCs) set up in association with premier Hospitals across
 the nation.The APRDCs are an integral part of our Corporate Social
 Responsibility (CSR) Programme called Hriday under the aegis of which
 we attempt to address myriad issues be it that of education,
 sanitation, pollution or infrastructure development.  As a caring
 corporate, we have consolidated our firm commitment to society by
 dedicating 1% of our PAT (Profit After Tax) for our CSR activities.
 
 A major development in the energy sector in India has been the passing
 of the Petroleum and Natural Gas Regulatory Board Act that envisages
 the institution of a Regulatory Board to oversee the activities of the
 downstream petroleum sector.This is a step towards liberalization of
 the petroleum and natural gas sector that offers newer vistas for us
 along with bringing in healthy competition.  Competition is something
 we look forward to as it motivates us to reflect within and constantly
 goads us to perform better.
 
 Another year has gone by, ushering in myriad opportunities, new
 partnerships, exciting ventures while also heralding in a brand new
 year- one with more promises to keep, higher goals to achieve and more
 and more smiles to bring, on the faces of all those associated with us.
 We reaffirm our commitment to excellence as we look forward to another
 year with a determination to sustain our momentum and success.
 
 Proshanto Banerjee
 Chairman & Managing Director