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Directors Report Year End : Mar '13    « Mar 12
Dear Shareholders,
 
 The behalf of the Board of Directors of your Company, I am delighted to
 present the 29th Annual Report of your Maharatna Company, along with
 Audited Financial Statements for the financial year 2012-13.
 
 YEAR IN RETROSPECT
 
 The year gone by shall always be remembered as a golden year of your
 Company. This year, your Company received Maharatna Status - another
 recognition by the Government of India of your Company''s potential and
 efforts to be a global energy major. It also acknowledges the
 significant role that your Company is playing in the nation''s social
 and economic development. Your Company is the youngest public sector
 undertaking to be recognized with this honor.
 
 Your Company made a landmark achievement by commissioning 5 MMTPA LNG
 regasification facility at Dabhol. Further, 1,000 Km long
 Dabhol-Bengaluru pipeline project was also commissioned during the
 year.
 
 Subsidiary of your Company in the USA has signed a Terminal Service
 Agreement (TSA) with Dominion Cove Point LNG LP in USA for a commitment
 of 2.3 MMTPA liquefaction capacity in the Cove Point LNG liquefaction
 terminal project in the US. The LNG from this terminal will be
 available for bringing to India as well as trading it in the
 international markets. With this milestone, your Company will have
 access to 5.8 MMTPA of LNG linked to Henry Hub prices.
 
 Further, your Company has become the No 1 Indian Company in terms of
 long term LNG and natural gas import tie-ups.
 
 FINANCIAL HIGHLIGHTS
 
 Your Company has recorded sustained growth in all key financial
 parameters during the year 2012-13 and the important financial
 highlights are as under: 
 
                                                     (Rs. in Crores)
 
 Particulars                                      2012-13     2011-12
 
 Turnover (Net of ED)                              47,333      40,281
 
 Other income                                         954         808 
 
 Cost of sales (excluding interest and
 depreciation and including extraordinary items)   41,054      34,842
 
 Gross margin                                       7,233       6,247
 
 Interest                                             195         116
 
 Depreciation                                         981         791
 
 Profit before tax                                  6,058       5,340
 
 Provision for tax                                  2,036       1,686 
 
 Appropriations
 
 Interim dividend                                     507         381
 
 Proposed final dividend                              710         723
 
 Corporate dividend tax                               203         179
 
 Net transfer to/from bond redemption reserve       (0.43)        (24)
 
 Transfer to CSR reserve                            13.13           -
 
 Transfer to General Reserve                          402         365
 
 Net surplus after Appropriations                   2,187       2,030
 
 DIVIDEND
 
 Your Company has a consistent track-record of dividend payment. So far,
 your Company has disbursed dividend of over Rs. 10,500 Crores to the
 shareholders.
 
 The Board of Directors of your Company had earlier approved payment of
 an interim dividend @ 40% on equity share of 10 each (Rs.4 per equity
 share) amounting to Rs.507 Crores, which was paid in February, 2013.
 Further, the Board has recommended payment of final dividend @ 56% on
 equity share of 10 each (Rs. 5.60 per equity share) for 2012-13.
 
 With this, the total dividend payment for the fiscal year 2012-13 will
 be 96% on equity share of Rs. 10 each (Rs. 9.60/- per equity share)
 amounting to Rs. 1,217 Crores on its paid-up equity capital of Rs.
 1,268.48 Crores, which is highest ever dividend paid by the Company.
 The total dividend payout including dividend tax accounts for 30.28% of
 profit after tax.
 
 CONTRIBUTION TO EXCHEQUER
 
 Your Company has contributed over Rs. 5,780 Crores in 2012-13 to the
 exchequer through dividend, duties, taxes and others, as compared to
 Rs. 5,560 Crores in 2011-12.
 
 CREDIT RATING
 
 Your Company has been reaffirmed the highest domestic credit rating of
 AAA from ICRA, CARE and CRISIL, which indicate the highest credit
 quality and rated instruments carry the lowest credit risk. The
 international rating agency, Moody''s International, Hong Kong, has also
 reaffirmed the corporate issuer rating of Baa2, which is one notch
 higher than sovereign rating. Further, Fitch Ratings has also assigned
 a long-term foreign currency issuer default rating of BBB- with a
 negative outlook, which is equal to sovereign rating.
 
 BUSINESS STRATEGY
 
 To pursue a high growth trajectory, your Company has developed strategy
 for the period from 2011- 2020. This strategy is currently under
 execution and the Company is closely monitoring progress on various
 strategic initiatives as well as keeping track of changes in external
 environment that have potential impact on its business. The top
 management of your Company has been playing a key role in driving it
 towards becoming an integrated hydrocarbon major with significant
 upstream, midstream and downstream interests by 2020.
 
 In the upstream segment, your Company aspires to import substantial LNG
 through conventional route as well as through terminal capacity booking
 and also acquire equity in producing assets/liquefaction facilities to
 source equity-linked LNG. Having acquired the Maharatna status, your
 Company would be able to pursue M&A opportunities vigorously. Your
 Company has made remarkable progress in sourcing LNG by finalizing
 several short/ medium term and long-term deals with suppliers, like GDF
 (France), GNF (Spain), Sabine Pass Liquefaction LLC (US) and Gazprom
 (Russia). Further, a US subsidiary of your Company has booked LNG
 capacity in Dominion Cove Point''s LNG liquefaction terminal in US.
 Besides, the Company is in discussion with other potential suppliers to
 tie-up more volumes. In addition, your Company is pursuing multiple
 trading plays in LNG through its wholly owned subsidiary, GAIL Global
 Singapore Pte Limited .
 
 To support higher LNG volumes, your Company plans to set up LNG
 terminals/floating storage and regasification units and also tie-up
 additional regasification capacities in existing and new terminals
 being set up by other companies. Your Company has successfully
 commissioned LNG terminal at Dabhol, as owner''s engineer and also
 tied-up additional regasification capacities at this LNG terminal with
 RGPPL. Further, your Company also tied-up additional regasification
 capacities at Dahej LNG terminal with Petronet LNG Limited (PLL).
 
 Considering the growing natural gas demand and India''s energy security,
 your Company is actively participating in the transnational pipeline
 project, Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline
 project. GSPA has been signed to import 38 MMSCMD gas into the country
 through this pipeline.
 
 In the midstream segment, your Company aspires to retain in leadership
 position through continuous pan-India expansion of pipeline network.
 Your Company recently commissioned the Dhabol-Bengaluru pipeline to
 bring gas to Bengaluru, the IT hub of India, and other potential demand
 centres along this pipeline. With this, your Company now has a total
 network of over 10,700 km pipeline in the country. Various other
 pipeline projects at different phases of execution will take the
 network size to 15,000 km by 2015.
 
 On the retail side, your Company is targeting additional 40-50
 cities/Geographical Areas (GAs) through its subsidiary and JVs for City
 Gas Distribution (CGD) in the coming few years. Your Company''s wholly
 owned subsidiary, GAIL Gas Limited, is progressing on track with
 respect to the city gas projects in the cities of Kota, Dewas, Meerut
 and Sonepat.
 
 In the downstream segment, your Company aspires to be among the top
 petrochemical players in the country by expanding existing capacities,
 setting up new plants, acquiring equity stakes in upcoming projects,
 along with product off-take rights for marketing. Your Company is
 currently doubling existing capacity at Pata and the project is
 expected to be completed on schedule. A greenfield petrochemical plant
 is also being set up in Assam through your Company''s subsidiary,
 Brahmaputra Cracker & Polymer Limited (BCPL). Another plant at Dahej is
 being set up through a JV, ONGC Petro-additions Limited (OPaL). By
 2015, your Company is expected to market 1.7 MMTPA of polymers. For
 handling such a large product portfolio, your Company is strengthening
 its petrochemical trading capability as well as scaling up its
 distribution network.
 
 As a responsible corporate citizen, your Company aims to reduce carbon
 footprint in a phased manner and contribute towards low carbon economy.
 For this, your Company has set targets for renewable energy projects
 and significant progress has been made so far. On the wind energy
 front, your Company plans to set up 500 MW wind power capacity in the
 next 3-4 years and against this, about 118 MW capacity has already been
 set up.
 
 Further, your Company has also established a 5 MW solar project in
 Rajasthan and plans to set up additional capacities in the coming
 years.
 
 In order to achieve all the strategic goals efficiently and in a time
 bound manner, your Company is giving significant thrust on
 strengthening and developing its human resource. Your Company''s
 training and development policies are being suitably aligned with
 strategic objectives to enable the organization to implement strategic
 plans by 2020.
 
 BUSINESS SEGMENT PERFORMANCE
 
 During the year under review, the segment wise business performance of
 your Company is as under:
 
 - Natural Gas Marketing
 
 Natural gas continues to constitute your Company''s core business.
 During 2012-13, gas sales clocked 81.44 MMSCMD, compared to 84.17
 MMSCMD in the previous financial year. Major supplies of natural gas
 include fuel to power plants, feedstock for gas-based fertilizer plants
 and LPG extraction. Your Company holds around 60% market share in
 India''s gas marketing.
 
 - Natural Gas Transmission
 
 Your Company owns and operates a network of about 10,700 kms of natural
 gas high pressure trunk pipeline with a pan-India capacity of around
 210 MMSCMD of natural gas. Average gas transmission during the year was
 104.9 MMSCMD, compared to 117.62 MMSCMD in the previous financial year.
 
 - LPG Transmission
 
 Your Company is the only one in India, which owns and operates
 exclusive pipelines for LPG transmission for third-party usage. Your
 Company owns and operates two LPG Pipeline transmission systems with a
 total length of 2,038 kms. Out of this, 1,415 km of pipeline network
 transports LPG from western to northern parts of India (Jamnagar - Loni
 pipeline) and the balance 623 kms of pipeline network transports LPG in
 the country''s southern part (Vizag-Secunderabad pipeline). The LPG
 transmission system has a capacity to transport up to 3.8 MMTPA of LPG.
 In 2012-13, the LPG transmission throughput achieved was about 3.136
 Million MT.
 
 - Petrochemicals
 
 During 2012-13, your Company has produced 437 Thousand MT of polymers
 and sold 427 Thousand MT of polymers.
 
 - LPG and Other Liquid Hydrocarbon Production
 
 Your Company has seven LPG plants in the country. In 2012-13, total
 liquid hydrocarbon production was about 1.376 Million MT, which mainly
 included 1.078 Million MT of LPG, 0.130 Million MT of Propane, 0.02
 Million MT of Pentane and 0.148 Million MT of Naphtha.
 
 - Exploration and Production (E&P)
 
 The E&P portfolio of your Company is as follows:
 
                              India    Overseas   Total
 
 Onshore blocks                10          -        10
 
 Shallow water blocks           3          2         5
 
 Deep water blocks             15          -        15
 
 Total                         28          2        30
 
 Hydrocarbon discoveries are in place in seven E&P blocks (five domestic
 blocks and two overseas blocks). Crude oil production is in progress
 from one of the onland blocks in Cambay basin and during 2012-13,
 revenue of Rs. 78 Crore have been generated.
 
 Development activities are in progress in blocks A-1 and A-3 at Myanmar
 offshore since November, 2009. Four development wells have been drilled
 in Myanmar''s Mya field. Drilling of additional development well in
 Myanmar''s Shwe field is in progress. Further, Engineering, Procurement,
 Construction, Installation and Commissioning (EPCIC) work is in
 progress for drilling and production platforms. Gas production is
 expected to start during 2013-14.
 
 Field Development Plan for one oil discovery in the block CB-ONN-
 2003/2 (Ankleshwar onland) has been approved. Declaration of
 commerciality has been submitted to the Government for approval in
 theTripura onland block (AA-ONN-2002/1).
 
 Your Company is operating three onland blocks (in Rajasthan, Cambay and
 Cauvery onland block) and is the joint operator in one Cambay onland
 block. During 2012-13, two exploratory wells were drilled in the
 Rajasthan onland block (RJ-ONN-2004/1). Seismic data acquisition has
 been completed in the Cauvery onland block (CY-ONN-2005/1) and
 interpretation of the data is in progress. The Government has granted
 the petroleum exploration license for Cambay onland block (CB-ONN-
 2010/11). Seismic data acquisition in this block is planned during
 2013-14.
 
 In addition to four E&P blocks that were awarded during 2011-12, your
 Company was awarded one more E&P block CB-ONN-2010/8 in Cambay onland
 basin (where BPRL is the operator) during 2012-13 under NELP-IX bidding
 round.
 
 BUSINESS DEVELOPMENT 
 
 - Global Initiatives
 
 During 2012-13, your Company executed a long-term LNG supply contract
 for 2.5 MMTPA from Russia with Gazprom Marketing and Trading Singapore
 Limited. Under the terms of the agreement, your Company is expected to
 receive 2.5 Million MT of LNG / year over 20 years, starting from
 2018-19. Under the contract, LNG will be sustainably priced with an
 oil-indexed formula and delivered to India''s Dahej, Dabhol and Kochi
 terminals.
 
 Further, your Company had also contracted 0.72 MMTPA (12 cargoes/year)
 LNG supply with Gas Natural Fenosa, Spain, for a three- year term
 starting 2013 and 0.36 MMTPA (6 cargoes per year) LNG supply with Gaz
 De France, France, for a two-year term starting 2013.  These contracts
 were executed during this financial year to encounter the immediate
 concerns of domestic supply shortage. In addition, during this
 financial year, your Company imported spot cargoes equivalent to 0.30
 MMTPA from time-to-time.
 
 In April, 2013, a US subsidiary of your Company signed Terminal Service
 Agreement (TSA) with Dominion Cove Point LNG LP for booking 2.3 MMTPA
 liquefaction capacity over 20 years in the Cove Point LNG liquefaction
 terminal project in US. Your Company is exploring various options for
 sourcing and transportationofgasfor supplying gas to this LNG terminal.
 
 Further, Your Company has signed a Memorandum of Understanding (MOU)
 with EDF Trading North America, LLC (EDFT) for cooperation in the areas
 of North American upstream equity gas investments, gas supply to export
 facilities and LNG supply optimization.
 
 Your Company is pursuing Turkmenistan-Afghanistan-Pakistan-India (TAPI)
 natural gas pipeline project for import of gas to India.  Agreements
 with respect to Transit fee and Transportation tariff are likely to be
 concluded soon. Your Company is playing a lead role in discussions on
 the project
 
 - Domestic initiatives
 
 The domestic business initiatives of your Company are as follows:
 
 - Naturalgas pipeline projects
 
 During the financial year, your Company completed commissioning of
 various pipeline networks and auxiliary systems, having a length of
 about1,300 km, which include the following:
 
 - 1,000 Km Dabhol -Bengaluru Pipeline Project
 
 - 164 Km Ludhiana to Jalandhar and Saharanpur to Haridwar sections of
 Bawana Nangal Pipeline Spur Line Project
 
 - Last mile consumer connectivity (74 km) extended to 34 numbers of
 consumers for supplying around 7.96 MMSCMD gas
 
 - RLNG terminal at Dabhol commissioned as Owner''s Engineer
 
 Apart from these, 41 Km Kochi-Koottanad-Bengaluru/Mangalore Phase-I
 Pipeline Project has been mechanically completed. However the
 commissioning of the same line would be done synchronizing with the PLL
 Kochi LNG Terminal and also the readiness of end consumers.
 
 - LNG Regasification Terminals and Shipping
 
 Your Company has successfully commissioned LNG terminal at Dhabol as
 owners engineers and also tied up additional re gasification capacity
 at this terminal with RGPPL. Your Company has underwritten the terminal
 capacity and will be the commercial operator of Dabhol terminal for 25
 years. Dabhol Terminal will act as a gateway to meet the gas demand of
 consumers in Maharashtra, Goa and Karnataka.
 
 Your Company also entered into an understanding with Petronet LNG
 Limited for reserving exclusive 2.5 MMTPA in the planned Dahej
 expansion LNG terminal in Gujarat to meet ever increasing demand along
 its existing pipeline networks.
 
 Your Company is formulating a ''Shipping Strategy'' for shipping LNG from
 Sabine Pass and Dominion Cove Point LNG terminals in the US.
 
 - Renewable Energy
 
 Your Company had installed till date wind energy projects of 117.95 MW
 capacity. GAIL had started with a modest capacity of 4.5 MW wind energy
 in State of Gujarat in year 2009-10 for captive use.  After the success
 of wind project, additional Wind Energy Generation of 14.7 MW was
 installed in the State of Gujarat for captive use in year 2011-12. Your
 Company graduated to commercial production after commissioning 98.75 MW
 of wind energy projects in the states of Tamil Nadu and Karnataka in
 year 2011-12.
 
 In 2011-12, your Company entered into solar power generation by winning
 the bid to set up a 5 MW solar plant under Jawaharlal Nehru National
 Solar Mission. The Project was commissioned in February 2013 and is
 generating 30,000-35,000 KWh per day.
 
 SUBSIDIARIES AND JOINT VENTURES
 
 Your Company has formed subsidiaries and joint venture companies for
 CGD, petrochemicals, LNG, gas trading, power generation and shale gas.
 Your Company is one of the pioneers to introduce city gas projects in
 India for natural gas supplies to households, commercial and transport
 sectors through its subsidiary andjoint venture companies.
 
 The details of subsidiary and joint venture companies are mentioned
 hereunder:
 
 - Natural Gas, LNG and Power
 
 - GAIL Global (Singapore) Pte Limited (wholly owned subsidiary)
 
 GAIL Global (Singapore) Pte Limited, primarily started as an overseas
 investment arm of your Company and was operationalized for LNG trading
 in 2012. It has commenced its business operations and successfully
 delivered its first cargo at Dahej in November, 2012.The Company is
 also targeting third-party sales, ship chartering and risk management
 activities along with supplying LNG cargoes to India.
 
 Total revenue of the Company for 2012-13 was USD 33 Million and Profit
 AfterTax was USD 0.92 Million.
 
 - GAILGlobal (USA) Inc (wholly owned subsidiary)
 
 GAIL Global (USA) Inc., a wholly owned subsidiary of your Company, was
 formed during 2011-12. The main aim behind forming this subsidiary was
 to acquire 20% working interest in an unincorporated joint venture with
 Carrizo Oil & Gas Inc. in the Eagle Ford shale acreage in the state of
 Texas. The subsidiary is operational at Houston and going forward,
 would explore other business opportunities in North America.
 
 Total revenues of the Company for the year ended 31st December, 2012
 were USD 21 Million and Profit AfterTax was USD 3.97 Million.
 
 - GAILGlobal (USA) LNG LLC (wholly owned subsidiary)
 
 GAIL Global (USA) LNG LLC, a wholly owned subsidiary of GAIL Global
 (USA) Inc., was formed in the state of Delware, USA on 28th March, 2013
 for entering into contractual agreements with Dominion Cove Point LNG,
 LP for booking of LNG Tolling capacity of 2.3 MMTPA in its Dominion
 Cove Point LNG terminal located at Lusby in the state of Maryland and
 for booking capacity in associated Dominion Cove Point Pipeline.
 
 GAIL Global (USA) LNG LLC has adopted calendar year as its fiscal year,
 as such the first accounts of the Company will be prepared for the year
 ended 31st December, 2013.
 
 - GAILChina Gas Global Energy Holdings Limited
 
 The joint venture company, GAIL China Gas Global Energy Holdings
 Limited, was formed with an objective to pursue gas sector
 opportunities, mainly in China. Potential gas sector projects are being
 identified for implementation by the company. Your Company has 50%
 equity interest in it, along with China Gas Holdings Limited as equal
 partner.
 
 - Petronet LNG Limited (PLL)
 
 PLL was formed to set up LNG import and re- gasification facilities. It
 currently owns and operates LNG re-gasification terminal of 10 MMTPA
 capacity located at Dahej, Gujarat. PLL has a long-term LNG supply
 contract with Ras Gas, Qatar, to import 7.5 MMTPA of LNG. This Joint
 Venture of your Company is planning to expand capacity to 15 MMTPA at
 Dahej, for which pre-project activities are in progress.  Further, PLL
 is also setting up an LNG re-gasification terminal at Kochi, Kerala,
 with a capacity of 5 MMTPA. This facility is scheduled to be
 commissioned in 2013. PLL has entered into long-term LNG supply
 contract with Exxon Mobil''s Gorgon Project to supply 1.44 MMTPA of LNG
 for its Kochi terminal.
 
 Your Company has 12.5% equity stake in PLL, along with BPCL, Oil and
 Natural Gas Corporation Limited (ONGC) and Indian Oil Corporation
 Limited (IOCL) as equal partners.
 
 Total revenue of the Company for 2012-13 was Rs. 31,554 Crore and
 Profit AfterTax was Rs. 1,149 Crore.
 
 - Ratnagiri Gas and Power Pvt. Limited (RGPPL)
 
 RGPPL was formed in July, 2005 as joint venture for taking over and
 operating erstwhile Dabhol Power Project assets consisting of 1967.08
 MW gas based combined cycle Power Block and 5 MMTPA LNG Block. The
 assets were transferred to RGPPL in October, 2005.
 
 The Power Block has been revived and under commercial operation since
 19th May, 2009. The Power Block operated at a Power Load Factor (PLF)
 of 31.21% during 2012-13.
 
 The Gas delivery to your Company''s pipeline network through High
 Pressure delivery system was started in January, 2013. Subsequent to
 which necessary systems required for commercial operation has been
 commissioned with effect from 22nd May 2013. Since the power generation
 is envisaged using the domestic gas entirely, integrated LNG terminal
 shall be utilized for tolling purposes. RGPPL has already entered into
 a long term agreement with your Company for commercial utilization of
 LNG terminal and commenced tolling operations.
 
 As on 31st March, 2013, the paid up capital of the Company was Rs. 2916
 Crore and out of this, your Company''s share of contribution was Rs. 974
 Crore. RGPPL has met its full debt servicing obligations upto 2012-13
 and paid maiden dividend @5% in 2011-12.
 
 Your Company has 32.86% equity stake in RGPPL alongwith NTPC holding
 32.86%, MSEB Holding Company Limited 17.41% and Indian Financial
 institutions 16.87%.
 
 The Company''s total revenue for 2012-13 was Rs. 2,290 Crore and
 suffered a loss of Rs.375 Crore.
 
 - City Gas Distribution (CGD)
 
 - GAIL Gas Limited (wholly owned subsidiary)
 
 GAIL Gas was incorporated with an implementation of the country''s CGD
 projects. GAIL Gas today operates over 300 Km of steel pipeline network
 and approximately 500 Km of MDPE Pipeline in the cities of Sonipat,
 Meerut, Dewas, Kota, Agra & Ferozabad.
 
 GAIL Gas has put up a total CNG Compression Capacity of around 2.50 Lac
 Kg/day through 10 Mother/Online CNG Stations & 7 Daughter Booster
 Stations at Sonipat, Meerut, Dewas, Kota, Vijaipur, Panvel, Firozabad
 and Vadodara.
 
 Your Company''s subsidiary has taken up investment for setting up the
 infrastructure along the national highways for building green
 corridors. To encourage the conversion of vehicles on CNG and make CNG
 refuelling available at highways, GAIL Gas has commissioned two CNG
 stations at Panvel & Vijaipur; two more stations at Dibiyapur & Kovvur
 are scheduled to be commissioned in 2013-14.
 
 GAIL Gas is supplying natural gas to 422 industrial units and 11
 commercial customers. GAI L Ga s ha s a lso commenced gas supplies to
 around 4,400 domestic customers progressively in the cities of Sonipat,
 Meerut, Dewas and Kota.
 
 GAIL Gas is implementing the CGD Project in Taj Trapezium Zone (TTZ)
 including Ferozabad, Fatehpur-Sikri, Bharatpur, Govardhan & Vrindavan,
 with a total project cost of Rs. 146 Crores.
 
 GAIL Gas has implemented uniform price mechanism in Taj Trapezium Zone
 (TTZ) area w.e.f. 16.7.2012. The marketing activities of GAIL Gas are
 progressing well and GAIL Gas has tied-up over 580 industrial and 45
 commercial consumers.  GAIL Gas has also signed over 200 GSCs with the
 customers at Mandi Gobindgarh and Khanna.
 
 GAIL Gas Joint venture foray at the state level has already commenced
 with the incorporation of the JV with Kerala State Industrial
 Development Corporation (KSIDC) in Kerala as Kerala GAIL Gas Ltd.  a n
 d with And hra Pra d esh G a s Infrastructure Corporation Ltd. (APGIC)
 in Andhra Pradesh as Andhra Pradesh Gas Distribution Corporation Ltd.
 (APGDC) for pursuing Gas Distribution opportunities in respective
 States .Furthermore GAIL Gas has joined hands with Vadodara Mahanagar
 Sewa Sadan (VMSS) for expansion of ongoing City Gas Distribution in the
 city of Vadodara.  Similarly GAIL Gas is in advanced stage for formal
 tie-ups with Rajasthan State Petroleum Corporation Ltd. (RSPCL) and
 Karnataka State Industrial & Infrastructure Development Corporation
 Ltd. (KSIIDC) in the states of Rajasthan & Karnataka for distribution
 of natural gas to small/ medium industrial units in various clusters
 along the pipeline corridor and dispensing of CNG to vehicles.
 
 - Aavantika Gas Limited (AGL)
 
 MAGL was incorporated to implement CGD projects in Madhya Pradesh. As
 on 31st March, 2013 was operating 14 CNG stations including 7 Daughter
 stations, 5 Online stations and 2 Mother stations.
 
 Further, during 2012-13, AGL supplied PNG to over 1380 domestic, 24
 industrial and 6 commercial consumers in their authorized geographical
 region. AGL is also catering to fuel requirement of over 11,000 CNG
 vehicles operating in the region. Your Company has 22.5% stake in AGL,
 along with HPCL as equal partner.
 
 Total revenue of the Company for 2012-13 was Rs. 119 Crore and Profit
 After Tax was Rs. 0.21 Crore.
 
 - Bhagyanagar Gas Limited (BGL)
 
 BGL was incorporated to implement CGD projects in Andhra Pradesh. As on
 31st March, 2013, BGL was operating 29 CNG stations including 24
 Daughter stations, 2 Online stations and 3 Mother stations.  Further,
 project work in respect of three CGD projects, namely Hyderabad,
 Vijayawada and Kakinada, are in progress.
 
 During 2012-13, BGL supplied PNG to over 1700 domestic, 15 commercial
 and 1 industrial consumer in its authorized geographical region. BGL is
 also catering to fuel requirement of around 20,000 CNG vehicles
 operating in the region. Your Company has 22.5% stake in the Company,
 along with HPCL as equal partner.
 
 Total revenue of the Company for 2012-13 was Rs. 84 Crore and Profit
 After Tax was Rs. 3 Crore.
 
 - Central U.P. Gas Limited (CUGL)
 
 CUGL was incorporated to implement CGD projects in Uttar Pradesh. As on
 31st March, 2013, CUGL was CUGL operating 12 CNG stations including 2
 mother stations and 10 online stations.
 
 During 2012-13, CUGL supplied PNG to around 3000 domestic, 30
 industrial and 40 commercial customers in its authorized geographical
 regions. BGL is also catering to fuel requirement of around 35,000 CNG
 vehicles operating in the region. Your Company has 25% stake in the
 joint venture, along with BPCL as equal partner.
 
 Total revenues of the Company for 2012-13 was Rs. 148.02 Crore and
 Profit After Tax was Rs. 20.98 Crore.
 
 - GreenGas Limited (GGL)
 
 GGL was incorporated to implement CGD projects in U.P As on 31st March,
 2013, GGL was operating 11 CNG stations including 6 Daughter stations,
 2 Online stations and 3 Mother stations. The Ministry of Petroleum and
 Natural Gas (MoPNG) has authorized GGL for CGD in Lucknow and Agra.
 
 During 2012-13, GGL supplied PNG to around 1600 domestic, 3 industrial
 and 2 commercial customers in its authorized geographical regions. GGL
 is also catering to fuel requirement of around 25,000 CNG vehicles
 operating in the region. Your Company has 22.5% stake in the joint
 venture, along with IOCL as equal partner.
 
 Total revenue of the company for 2012-13 was Rs. 126 Crore and Profit
 After Tax was Rs. 21 Crore.
 
 - Indraprastha Gas Limited (IGL)
 
 IGL was incorporated to implement CGD projects in Delhi''s NCT and
 cities in adjoining National Capital Region (NCR). As on 31st March,
 2013, IGL was operating 324 CNG stations including 149 mother stations,
 124 online stations and 51 daughter stations.
 
 During 2012-13, IGL supplied PNG to around 3.8 Lac domestic, 400
 industrial and 950 commercial customers in its authorized geographical
 regions. IGL is also catering to fuel requirement of around 6.5 Lac CNG
 vehicles operating in the region, which includes the entire public
 transport of the national capital and also the world''s largest bus
 fleet on CNG. Your Company has 22.5% stake in the joint venture, along
 with BPCL as an equal partner.
 
 Total Revenue and Profit After Tax (PAT) of the Company for 2012-13 are
 Rs. 3,380 Crore and Rs. 354 Crore respectively.
 
 - Mahanagar Gas Limited (MGL)
 
 MGL was incorporated to implement CGD projects in Mumbai and adjoining
 MAHANAGAR areas. As on 31st March, GAS 2013, MGL was operating 17 CNG
 stations including 18 mother stations, 129 online stations and 13
 daughter stations.
 
 During 2012-13, MGL supplied PNG to around 6 Lac domestic, 40
 industrial and 1900 commercial customers in its authorized geographical
 regions. MGL is also catering to fuel requirement of around 3 Lac CNG
 vehicles operating in the region. Accepting the Central Government
 authorization, PNGRB has granted authorization and exclusivity for the
 existing areas of Mumbai, Thane, Navi Mumbai and Mira-Bhayander and
 expansion areas of Kalyan, Dombivali, Ambernath, Badlapur, Ulhasnagar,
 Bhiwandi, Taloja, Kharghar and Panvel.  Your Company has 49.75% stake
 in the joint venture, along with British Gas as equal partner.
 
 Total revenues of the Company for 2012-13 was Rs. 1514 Crores and
 Profit After Tax was Rs. 299 Crore.
 
 - Maharashtra Natural Gas Limited (MNGL)
 
 MNGL was formed for implementation of CGD projects in and around Pune.
 mngl MNGL has received authorization from MoPNG for CGD in Pune,
 including Pimpri, Chinchwad, Talegaon,Hinjewadi and Chakan areas. As on
 31st March, 2013, MNGL was operating 17 CNG stations including 3 mother
 stations, 3 online stations and 11 daughter stations.
 
 During 2012-13, MNGL supplied PNG to around 6000 domestic, 50
 industrial and 20 commercial customers in its authorized geographical
 regions. MNGL is also catering to fuel requirement of around 45,000 CNG
 vehicles operating in the region. Your Company has 22.5% stake in the
 joint venture, along with BPCL as equal partner.
 
 Total revenue of the Company for 2012-13 was Rs. 182 Crore and Profit
 After Tax was Rs. 35 Crore.
 
 - Tripura Natural Gas Company Limited (TNGCL)
 
 OTNGCL was incorporated to implement CGD projects in Agartala. As on
 31st March, 2013, TNGCL was -jsssKKiat. operating 3 CNG stations
 including 2 mother stations and 1 daughter station.
 
 During 2012-13, MNGL supplied PNG to around 11,000 domestic, 40
 industrial and 200 commercial customers in its authorized geographical
 regions. MNGL is also catering to fuel requirement of around 4500 CNG
 vehicles operating in the region.  Your Company has 29% stake in the
 joint venture.
 
 Total revenue of the Company for 2012-13 was Rs. 26 Crore and Profit
 After Tax was Rs. 5 Crore.
 
 - Petrochemicals
 
 - Brahmaputra Cracker and Polymer Limited (BCPL) (Subsidiary)
 
 BCPL is setting up a 2,80,000 TPA polymer plant and project execution
 is in progress.  The total revised project cost, as approved by the
 Cabinet Committee for Economic Affairs (CCEA) in November 2011, is
 8,920 Crores. The Company is now in final phase of project execution
 and has achieved an overall physical progress of 91% and financial
 progress of 73% till the end of the financial year. The commissioning
 of the project is set to take place in December, 2013.
 
 Your Company has 70% equity share in BCPL with Oil India Limited (OIL),
 Numaligarh Refinery Limited (NRL) and Government of Assam each having
 10% equity share.
 
 - ONGC Petro-additions Limited (OPaL)
 
 OPaL is implementing a Gujarat. Your Company is a co-promoter of the
 project, with 15.50% equity stake in OPaL, while Oil and Natural Gas
 Corporation Limited (ONGC) and Gujarat State Petroleum Corporation
 Limited (GSPC) are the other promoters.
 
 IT DEVELOPMENTS
 
 Your Company is an IT-savvy organization and is continuously adopting
 the latest and state-of- the-art IT solutions, keeping pace with the
 fast changing industry. This helps in continuous efficiency and
 productivity improvement of employees and also enables right
 information to the right person by the use of latest IT security
 solutions.
 
 Your Company has migrated business-critical applications to a
 centralized private cloud platform, along with Disaster Recovery (DR)
 IT infrastructure, in line with the industry''s latest technological
 advancements. System''s manageability and availability have been
 enhanced substantially with this future-ready and DR-enabled cloud
 infrastructure.
 
 Your Company has completed implementing an electronic Document
 Management System (DMS), in line with the industry best practices.
 This enabled your Company to digitize important documents and records
 across locations and also provided electronic workflow and secure
 authorization-based access to information.
 
 Your Company is in the forefront of leveraging IT to bring in systemic
 improvements. This effort of your Company has been duly recognized at
 various forums. Your Company has been recently awarded with SAP ACE
 Award for Best Run Award for innovative use of SAP. During the year,
 your Company has also been certified as Customer Centre for Expertise
 (CCOE) by SAP.
 
 Your Company has implemented Joint Venture Accounting (JVA) system for
 Exploration & Production (E&P) business on SAP platform.  This has
 facilitated in capturing end-to-end JVA business processes and also
 enables partner accounting from a single system. With the
 implementation of JVA, your Company has enhanced efficiency,
 transparency and regulatory compliance in E&P activities.
 
 Your Company has also initiated implementation of centralized
 enterprise-wide Geographic Information Systems (GIS)-based Pipeline
 Integrity Management System for its cross-country pipeline network,
 using industry standard assessment models to fulfil the
 national/international statutory codes. This will ensure seamless and
 consistent data flow from engineering to operations and will also
 result in continuous updation of O&M data and aging of the pipelines.
 
 HEALTH, SAFETY AND ENVIRONMENT MANAGEMENT
 
 Your Company is a responsible corporate citizen and Health, Safety and
 Environment (HSE) excellence has been extensively promoted as a
 corporate culture within the organization. The safety and health of
 employees and external stakeholders are embedded in your Company''s core
 organizational values.  Your Company''s HSE policy, inter-alia, aims to
 ensure safety of public, employees, plant and equipment. It also
 ensures compliance with all statutory rules and regulations, imparting
 training to its employees, carrying out safety audits of its facilities
 and promoting eco-friendly activities.
 
 HSE sub-committee of Board of Directors, which is the apex body in your
 Company for all matters related to HSE, met three times during the year
 to review your Company''s performance and emergency preparedness in this
 regard.
 
 - Corporate HSE Policy
 
 Your Company is committed to promote globally comparable levels of HSE
 management system in the areas of its business of exploration and
 production of hydrocarbons, transmission and distribution of natural
 gas, production of LHC, transmission of LPG, petrochemicals, power
 generation etc., with focus on improving environmental harmony through
 sustainable development.
 
 - Safety Performance
 
 Your Company has always strived to maintain highest standards of
 safety. This is reflected in the HSE index, which evaluates the
 organization''s safety performance on various elements of HSE covering
 all business activities. During the year, your Company achieved the HSE
 index of 98.89% as against the Excellent MOU target of 98.5% signed
 with the Ministry.
 
 - Safety Training
 
 Your Company, in its constant efforts to keep employees fully aware of
 the HSE aspects, provides regular training to employees, contract
 workers, tanker drivers and others through internal as well as external
 resources.
 
 Your Company organized a two-day HSE workshop for all business heads,
 fire and safety heads and HR representatives from sites. Theme of this
 year''s workshop was taken as Disaster Management, in view of the ever
 rising risks to people and installations.  The theme also helped to
 create awareness amongst the employees regarding methods and measures
 to tackle any disaster. Leading experts in the country from National
 Disaster Management Authority (NDMA) and Oil Industry Safety
 Directorate (OISD) closely interacted with employees during the
 workshop.
 
 Your Company laid specific emphasis on construction safety related
 trainings during the current year, as mega expansion projects are
 underway at various locations.
 
 - Safety Audits
 
 To ensure compliance to statutory rules and regulations, implementation
 of safe work practices and continual improvement in the Safety
 Management System, your Company installations are being regularly
 audited through External Safety Auditors and experienced in-house
 auditors. During 2012- 13, twenty three External Safety Audits and
 seven safety audits by experienced in-house auditors were undertaken.
 
 Your Company also complied with the recent Emergency Response and
 Disaster Management Plan (ERDMP) guidelines of PNGRB and submitted
 ERDMP documents to PNGRB in September, 2012.
 
 - Occupational Health
 
 Your Company has a Corporate Occupational Health Committee supported by
 six local level occupational health committees, which meet every
 quarter for continuous monitoring and improvement of occupational
 health of employees. During 2012-13, all employees at the work centres
 were medically examined.
 
 SUSTAINABLE DEVELOPMENT INITIATIVES
 
 Your Company released its second sustainability report - Shaping the
 Future - for 2011-12. This stakeholder-centric report is a
 communication of your Company''s efforts to make a positive impact upon
 economic growth, ecological balance and social progress and help shape
 the future of millions of people towards achieving shared objectives.
 It is in line with the latest global standards of GRI, which is the de-
 facto international benchmark and externally assured with application
 level A .
 
 To create a mechanism towards governing sustainability, your Company
 has defined a structure that spans across various critical functions to
 effectively manage organizational complexities. A Sustainable
 Development Committee (SDC) chaired by an Independent Director has been
 broad-based with inclusion of all functional Directors except Chairman
 & Managing Director as its members. Further, your Company has
 constituted a Sustainable Development Steering Committee (SDSC), headed
 by the Director (Business Development) to provide impetus and direction
 to achieve sustainability goals, meet targets and monitor on-ground
 implementation of SD projects. In addition, your Company has also
 formed multi-disciplinary sustainability committees at all sites.
 
 In 2012, your Company drafted Sustainability Development Aspirations
 2020 through intensive consultations with internal and external
 stakeholders concerned with on- ground implementation of projects to
 identify priority areas of sustainability development.  Through
 Sustainability Development Aspirations 2020, your Company has set clear
 targets with respect to management of Green House Gas (GHG) emissions,
 water consumption, energy efficiency and training / awareness on
 sustainability. Apart from identifying priority areas, your Company has
 identified specific SD projects and the crucial ones among them have
 been included as a part of MoU with the MoPNG, which further signifies
 your Company''s commitment towards a sustainable future.
 
 Your Company organized its first UN-ESCAP Training in partnership with
 Global Compact Network India, after becoming a signatory to the United
 Nations Global Compact (UNGC) last year.
 
 Further, SEBI vide circular dated 13.08.2012 mandated the inclusion of
 Business Responsibility Reports (BRR) as part of the Annual Reports for
 top 100 listed companies based on Market Capitalization of the BSE and
 the NSE. The BRR provides a disclosure framework based on NVGs which
 maps the Company''s performance on the 9 Principles and Core Elements.
 In compliance to the said circular, the BRR is contained in a separate
 section in the Annual Report.
 
 TOWARDS RESPONSIBLE BUSINESS CONDUCT
 
 Your Company believes that CSR plays a major role in developing a
 country. Therefore, it has made Corporate Social Responsibility (CSR)
 as an integral part of its ethos and culture. Your Company has a
 dedicated team operating within the framework of a well-structured CSR
 policy, which mandates 2% contribution of the Company''s Profit after
 Tax to CSR activities.
 
 Following the Project-based Approach as put- forth by the DPE and as
 detailed in your Company''s CSR policy, your Company has implemented CSR
 programmes primarily in and around the rural areas adjoining major work
 centres/installations of your Company. These programmes are taken up
 under the seven thrust areas identified by your Company - education
 /literacy enhancement, skill development/ empowerment, community
 development, drinking water/ sanitation, environment protection/
 horticulture, infrastructure and healthcare/ medical facility.  Major
 initiatives undertaken by your Company under these thrust areas are
 detailed in Management Discussion & Analysis.
 
 HUMAN RESOURCE MANAGEMENT
 
 Your Company has been laying strong emphasis on attracting and
 acquiring best talent and also on efficient deployment of manpower on
 right jobs as per business requirements of the Company. Highly engaged
 and dynamic workforce has led to continuous rise in value added per
 employee in last 5 years. Value added per employee gives an account of
 efforts of Company''s employees to make the best and most productive use
 of the resources available to them.
 
 - Training
 
 Your Company has been witnessing rapid growth vertically &
 horizontally. Your company is expanding its operations in domestic
 market as well as its presence abroad. Your Company is also
 implementing various new projects to strengthen its presence across the
 entire gas value chain.  With new technological developments and
 phenomenal expansion taking place in the hydrocarbon sector, need of
 the industry is changing from merely acquiring the latest state of the
 art technologies and equipment to engaging qualified personnel suitably
 equipped with knowledge, skills, attitude and a practical exposure to
 the highly specialized jobs. Further, in line with Strategy 2020,
 capability building will be required in the existing thrust areas & new
 strategic business areas. Therefore, it is the need of the hour to
 invest in the training & development of human resource in more
 systematic & structured manner. ISO 9001:2008 certified GAIL Training
 Institutes (GTIs) at Noida & Jaipur have been consistently working
 towards development of Human Capital of the Organization.
 
 GTI, Noida & Jaipur have maintained the track record of excellent MOU
 performance in all the parameters in the MoU signed with Mo PNG . The
 Key achievements in training are as under:
 
 - Percentage actualization of training plan has been more than 100% for
 the financial year ending 31st March, 2013.  Total 208 training
 programs were organized during the period under review. Total 17,701
 mandays of training has been organized by GTI, Noida & Jaipur in the
 above period. On an average 4.46 days of training has been organized
 per employee.
 
 - As per plan, Senior Leadership & Business Knowledge programs have
 been organized for developing critical mass of leaders through a system
 of career planning & development.
 
 - Multi-skilling / Skill Upgradation programs have been organized of
 non- executives.
 
 - Mentorship program has been e s t ab li she d fo r the n ew j o ini n
 g Executives & all such executive trainees have been assigned the
 respective mentors.
 
 - Yoga classes are being organized at GTI & at various sites to reduce
 stress.  Total 13 programs/sessions were organized during 2012-13.
 
 - Training sessions on Health Safety & Environment are being organized
 at sites. Total 59 sessions were organized as against the target of 40
 sessions.
 
 - 4 training programs on Awareness of succession planning have been
 organized.
 
 - Total 2000 man hours of training have been imparted on Sustainable
 development to create awareness on sustainable development.
 
 - With the objective of Knowledge Management within the organization,
 Technical Knowledge Sharing Seminar and sessions are organized every
 year
 
 - Various companywide business quizzes were organized to keep the
 employees updated with the latest developments in the business areas of
 your company.
 
 GAIL Training Institute (GTI) has been awarded as Emerging HRD thinkers
 Award by Indian Society for Training & Development (ISTD).
 
 In its pursuit of offering training programs to external organizations
 and to convert itself into a revenue generating centre, GTI has
 successfully organized training programs for participants from other
 organizations like RIL, BPCL, RGPPL, IOCL, BCPL, IGL, MNGL, Adani Gas
 Limited, Siti energy, Sabarmati Gas Limited etc. Further, in
 collaboration with American Society of Mechanical Engineers (ASME),
 U.S.A., GTI is successfully running certificate courses in ASME B31.8,
 B 31.8S and B 31Q for various external organizations.
 
 - Leadership Development Programme
 
 Your Company realizes that it is critical to continually to develop and
 enhance the capability and competence of its senior level executives in
 order to prepare them for leadership positions. As an effort towards
 the same, Senior Management Development Centre (SMDC) exercise has been
 undertaken as part of the Leadership Development Program. SMDC has been
 conducted for senior executives in Chief Manager and above grades and
 as of now 525 senior executives have been covered under this exercise.
 
 In order to fill in the developmental gaps of such executives
 identified through SMDC exercise, a comprehensive Individual
 Development Plan (IDP) has been drawn up for all the participants of
 SMDC exercise. The IDP consists of customized training programmes at
 premier business schools, e-learning courses and distribution of books.
 
 - Vigilance
 
 The Vigilance Department of your Company is now certified under
 ISO-9001:2008 in recognition of its contribution and continuous focus
 on improving the Company''s systems and procedures. Your Company has
 introduced a range of measures to bring clarity and transparency in
 procurement and work contracts which includes webhosting of tenders on
 GAIL as well as across Government websites, e-tendering and reverse
 auction for specified threshold values.
 
 In compliance of the guidelines issued by the Central Vigilance
 Commission, the Vigilance Awareness Week 2012 was observed by your
 Company at the Corporate Headquarters and at all other regional
 installations. The Vigilance Commissioner graced the occasion as the
 Chief Guest on the inaugural day and administered the Vigilance Pledge
 to employees of major GAIL establishments connected through video
 conferencing. On this occasion, a magazine Jagrook, containing CVC
 circulars, articles on anti-corruption and case studies was also
 released by the Corporate Vigilance Department. During the Vigilance
 Awareness Week, Customer Interactive Meet and Vendor Interaction Meet
 were organized at Indore and GTI, Noida, respectively.  Customers from
 various segments, such as natural gas, liquid hydrocarbon and
 petrochemicals, as well as vendors providing project- related
 services/supplies to your Company participated in these meets.
 
 - Representation of Priority Section
 
 Your Company has been complying with the Presidential Directives and
 other instructions/guidelines issued from time to time pertaining to
 Policies and Procedures of Government of India in regard to
 reservation, relaxations, concessions etc. for Scheduled Castes (SCs),
 Scheduled Tribes (STs), Other Backward Classes (OBCs) and Persons with
 Disabilities (PWDs) in Direct Recruitment.
 
 Details with regard to Group-wise total number of employees and the
 representation of Scheduled Castes, Scheduled Tribes, and Other
 Backward Classes amongst them in your Company as on 31stMarch, 2013
 have been given in table below:
 
                EMPLOYEES ON 
 Group          ROLL               SC     ST     OBC 
 
 A               2,853             437    171    485
 
 B                 568             125     74     86
 
 C                 477              82     15    144
 
 D                  56              17      5     14
 
 TOTAL           3,954             661    265    729
 
 A total of 99 new employees joined your Company during the 2012-13.
 Total Manpower of the Company as on 31st March, 2013 stood at 3961
 (including Whole-time Directors & CVO) with 16.68% of its employees
 belonging to SC category, 6.7% to ST category, 18.40% to OBC category,
 7.24% to Minorities and 2.09% to PWDs category. Your Company''s
 workforce comprised of 234 women employees as on 31st March, 2013 .
 
 - Official Language
 
 Your Company is continuously making vigorous efforts for the
 propagation and successful implementation of the Official Language
 Policy of the Union.The Official Language Implementation Committees at
 corporate as well as work centre level, held their quarterly meetings
 regularly to monitor and review the progress made in achieving the
 targets fixed in the Annual Programme.
 
 In an endeavour to familiarize the Company''s new entrants with Official
 Language Act and various Official Language rules, training to ETs and
 GETs is being imparted at induction level. To inculcate the knowledge
 of Official Language among the newly promoted employees from S7 grade
 and new joinees at E0, E1 and E2 grades, a special two-days training
 programme have been designed and implemented at corporate level, apart
 from other regular workshops at all the work centres.
 
 Your Company observed 2012-13 as Sahitya Varsh. Competitions viz. short
 story, poem and article in Hindi were conducted during this period.
 With a view to create greater awareness and consciousness among
 employees, Hindi Fortnight was celebrated from 14th to 28th September,
 2012, across the Company. During the fortnight innovative and
 interesting competitions, cultural activities, Kavi Sammelan, Mushaira,
 seminars on Hindi activities etc. were conducted. Employees
 participated with great enthusiasm. To involve families of GAIL
 employees, various competitions and other cultural activities were also
 conducted for them. First working day of every month is being observed
 as Hindi Diwas across your Company.
 
 In order to cultivate the habit of reading Hindi books among employees,
 a book in Hindi was distributed to all employees.
 
 An innovative inter-PSU competition was also conducted by your Company
 for all Delhi-based member PSUs of Town Official Language
 Implementation Committee (TOLIC).
 
 Your Company was awarded for best implementation of OL policy among
 TOLIC member PSUs during 2012-13 by Secretary, Official Language,
 Ministry of Home Affairs, Government of India.
 
 Bilingual software with Unicode fonts were made pan-organizationally
 available. To impart working knowledge of Hindi as well as computer
 training to employees in bilingual software, a comprehensive and
 time-bound programme was prepared and implemented during the year.
 
 Training in translation is being provided to all Nodal Officers on a
 quarterly basis through Central Translation Bureau, Ministry of
 
 Home Affairs, Government of India.
 
 To provide a larger platform to discuss the problems and difficulties
 to implement Official Language, annual conference was organized on 22nd
 March, 2013, wherein senior officials from corporate office and work
 centres participated and shared their valuable thoughts.
 
 - Women Empowerment
 
 To encourage and recognize the role of women employees in your
 Company''s success story, GAIL Women Employees Award Scheme has been
 instituted in your Company since 2009. Since then, awards to Women
 employees based on their performance in their functional area are
 conferred every year on International Women''s Day.
 
 INNOVATION, RESEARCH AND DEVELOPMENT
 
 Your Company recognizes that individual innovation, creativity and
 initiative are crucial determining factors and are required to be
 channelized to achieve organizational excellence. Your Company has an
 Innovation Council that solicits screens and implements the suggestions
 from employees. An appropriate reward is given to all ingenious
 suggestions and the best suggestion is awarded the CMD trophy.
 
 At times, the ideas need to be developed into useful process/ product
 through R&D efforts.  Your Company has an R&D portal on its intranet
 where detailed information on its R&D projects is disseminated. The
 employees can provide suggestions and feedback on the R&D projects to
 carry out any improvement or mid- course correction. Your Company is
 also soliciting innovative ideas from its stakeholders at large through
 its R&D portal. Recognizing the need importance to channelize the R&D
 efforts, your Company has developed and put in place the R&D Policy and
 Manual.  It is expected that this policy document would pave the way
 for integration of the R&D efforts.
 
 Your Company recognizes the importance of R&D to remain at the
 forefront of technology, your Company has set a goal to spend at least
 1% of previous year''s PAT on R&D every year. It has identified the
 thrust areas of R&D in line with its business areas and follows a
 focused R&D strategy to take up projects in such areas.  Many basic /
 fundamental / applied research projects have been taken up through
 various reputed engineering institutes / laboratories this year in the
 major thrust areas (viz. Natural Gas transportation & Storage, Fuel
 Cell & Nano- composites, CO2 and unconventional energy utilization and
 so on). It is expected that the successful outcome of these projects
 would provide goodvalue to your Companyin duecourse.
 
 Your Company is setting up a unique, first-of-its kind pilot project
 for extraction of LandFill Gas (LFG) and its conversion to CNG after
 purification. The project is being implemented at the Ghazipur landfill
 site in Delhi. The Phase-1 of the project (landfill closure, capture &
 flaring of landfill gas) is already completed in the designated area.
 This innovative project will demonstrate the possibility of LFG
 extraction from an un-scientifically managed landfill site and help
 generate a clean fuel. It will also help to combat global warming by
 capturing methane gas that was getting released into the atmosphere.
 The success of this pilot project would open up the possibility of
 replicating its success country-wide.
 
 Your Company has also taken up various technology development projects
 towards improvement in energy efficiency, process optimization and
 others at various sites. Further, your Company is actively exploring
 technologies that can be used to exploit various non- conventional
 energy sources, like shale gas, gas hydrates, Underground Coal
 Gasification (UCG) and others to develop alternate sources for
 augmenting the country''s energy supplies.
 
 TOTAL QUALITY MANAGEMENT
 
 Your Company continues to focus on continual and sustainable
 improvement in the process, systems and functional areas. Customer
 satisfaction is the top agenda of your Company and is being
 continuously monitored through regular interactions. Major achievements
 of your Company in TQM are as under:-
 
 - Customer satisfaction index achieved during 2012-13 by your Company
 is 90%.
 
 - 112 quality circle projects have been undertaken in process and
 system areas in your Company, which lead towards continual improvements
 as well as tangible gains.
 
 ACCOLADES AND RECOGNITIONS
 
 Your Company has consistently been ranked excellent by the Department
 of Public Enterprise (DPE), Government of India, ever since the
 introduction of the Memorandum of Understanding (MoU) based performance
 review system by the DPE. Your Company conferred with Maharatna Status
 by DPE- youngest Maharatna PSU among total 7 Maharatnas. Your Company
 has be en recognised for its performance in various areas.  Some of
 them are mentioned below:
 
 - Corporate Awards
 
 - SCOPE Excellence Award(Institutional Category) for 2010-11
 
 - Ranked 1st among Gas utilities in Asia in the Platts Global Ranking
 of Energy Companies in 2012
 
 - Petrofed Award 2012 (for performance during 2011-12) for:
 
 - Oil and Gas Pipeline Transportation Company of the Year
 
 - Project Management (Rs. 500 to Rs.2000 Crore)- Company of the Year
 
 - Environment Sustainability- Company of the Year
 
 - HSE Awards
 
 - International Safety Award for outstanding achievement in safety from
 British Safety Council, the United kingdom, for Gas Processing Unit and
 natural gas compressor station, Vaghodia; Gas Processing Unit, Gandhar;
 regional natural gas pipeline network, National Capital Region, Delhi.
 
 - Sarvashrestha Suraksha Puraskar for Gas Processing Unit and for
 natural gas compressor station, Vijaipur from National Safety Council,
 MP chapter and National Safety Council, Mumbai, respectively, for 2010.
 
 - GAIL Vaghodia bagged Gujarat State Safety Award from Gujarat Safety
 Council Vadodara
 
 - Golden Peacock Occupational Health & Safety Award - 2012 for GAIL,
 Khera, from Institute of Directors, New Delhi
 
 - Golden Peacock Environment Management Award-2012 from Institute of
 Directors, New Delhi for GAIL,Vaghodia
 
 - Safety Innovation Award from Institution of Engineers, New Delhi for
 Khera Compressor station and Regional Natural Gas Pipeline Network,
 National Capital Region, Delhi
 
 RIGHT TO INFORMATION 
 
 In order to promote transparency and accountability, an appropriate
 mechanism has been set up across your Company in line with the Right to
 Information Act, 2005. Your Company has nominated ACPIOs/ CPIO/
 Appellate Authorities at its units/offices across the country to
 provide information to citizens under the provisions of RTI Act.
 
 SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS 
 
 As per Section 212 of the Companies Act, 1956, documents in respect of
 subsidiary companies viz. Directors'' Report, Auditor''s Report, Balance
 Sheet and Profit & Loss account are required to be attached to the
 Balance sheet of the holding Company. Ministry of Corporate Affairs
 vide circular dated 8th February, 2011 has granted exemption under
 section 212 of the Companies Act, 1956 to companies from attaching the
 aforesaid documents of subsidiary companies with the Annual Report,
 subject to compliance of the conditions mentioned in said circular.
 
 Your Company has 5 (five) subsidiary companies as on 31st March, 2013.
 Your Board has accorded necessary approval for not attaching Directors''
 Report, Balance sheet, Profit & Loss Account, Auditors'' Report and
 other statutory data/ documents of subsidiary companies viz. GAIL Gas
 Limited, Brahmaputra Cracker & Polymer Limited, GAIL Global (Singapore)
 Pte Limited, GAIL Global (USA) Inc.  and GAIL Global (USA) LNG LLC
 (incorporated on 28th March, 2013) with the Balance Sheet of your
 Company. All the conditions mentioned in the circular are being
 complied by your Company. Annual Report of said subsidiary companies
 are available on your Company''s website i.e. www.gailonline.com and
 physical copy will be made available to shareholder on request in
 writing.
 
 Consolidated Financial Statements as per applicable Accounting
 Standards and statement containing brief financial details of your
 Company''s subsidiaries for the financial year ended 31st March, 2013 is
 forming part of the Annual Report. Annual accounts of subsidiaries and
 the related detailed information are open for inspection by any member
 at the registered office of the Company and of the respective
 subsidiary companies during working days.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 The detailed Management Discussion and Analysis forms a part of this
 report at Annexure- A.
 
 CORPORATE GOVERNANCE
 
 Your Company believes that good corporate governance is critical in
 establishing a positive organizational culture and it is evident by
 responsibility, accountability, consistency, fairness and transparency
 towards its stakeholders. Pursuant to clause 49 of the Listing
 Agreement with the Stock Exchanges and DPE guidelines on Corporate
 Governance, a report on Corporate Governance forms part of this Report
 at Annexure- B.
 
 The statutory auditors of the Company have examined and certified your
 Company''s compliance with respect to conditions enumerated in clause 49
 of the Listing Agreement and DPE guidelines on Corporate Governance.
 The certificate forms part of this Report at Annexure- C.
 
 Secretarial Compliance Report confirming compliance by Practicing
 Company Secretary to the applicable provisions of Companies Act 1956,
 Listing Agreement, Guidelines on Corporate Governance for Central
 Public Sector Enterprises, 2010, forms part of this Report at Annexure-
 D.
 
 ENERGY CONSERVATION, TECHNOLOGY ABSORPTION
 
 Details of conservation of energy and technology absorption in
 accordance with Companies (Disclosure of Particulars in the Report of
 Board of Directors) Rules, 1988 forms a part of this report at
 Annexure- E.
 
 PARTICULARS OF PERSONNEL UNDER SECTION 217 (2A) OF THE COMPANIES ACT,
 1956
 
 As per provisions of section 217(2A) of the Companies Act, 1956 read
 with the Companies (Particulars of Employees) Rules, 1975, every
 company is required to provide particular of employees in the
 Directors'' Report exceeding the stipulated remuneration limit(s).
 
 However, as per notification dated 31.03.2011 issued by Ministry of
 Corporate Affairs, amending provisions of said Rules, has exempted
 Government companies for not including such particular in the
 Directors'' Report. As your Company is a Government Company, such
 particulars have not been included as part of Directors'' Report. Any
 member desirous of obtaining such particulars may write to the Company
 and same will be provided.
 
 FIXED DEPOSITS
 
 Your Company has not accepted any fixed deposits and, as such, no
 amount of principal or interest was outstanding as of the balance sheet
 date.
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 During the year, foreign exchange earnings were Rs. 32.02 Crores.
 Expenditure in foreign currency was Rs. 1,708.92 Crores
 
 During the year under review, your Company has incurred an expenditure
 of Rs. 8.55 Crores on foreign tours and training, Rs. 0.37 Crores on
 entertainment and Rs. 33.76 Crores on advertising and publicity.
 
 DIRECTORS
 
 Shri P.K. Singh was appointed as Part- time (Government Nominee)
 Director, Shri M. Ravindran was appointed as Director (HR) and Shri
 Rajive Kumar was appointed as Part-time (Government Nominee) Director
 w.e.f. 10th April, 2013, 1st June, 2013 and 26th June, 2013
 respectively.
 
 Shri S.L. Raina, Director (HR), Shri Sudhir Bhargava, Part-time (Govt.
 Nominee) Director, Dr. Neeraj Mittal, Part-time (Govt. Nominee)
 Director and Shri R.P. Singh, Part-time non- official (Independent)
 Director were Director(s) upto 31st May, 2013, 8th May, 2013, 10th
 April, 2013, and 9th August, 2012 respectively.  Shri Mahesh Shah, Shri
 R.M. Sethi and Dr. Vinayshil Gautam were Part-time non-official
 (Independent) Directors upto 10.08.2012. The Board placed on record its
 deep appreciation for the valuable services rendered by outgoing
 Directors during their association with your Company.
 
 CODE OF CONDUCT
 
 Pursuant to the requirements of clause 49 of Listing Agreement, the
 Board Members and Senior Management Personnel, have affirmed compliance
 with the Code of Conduct for the financial year ending 31st March,
 2013.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF
 THE COMPANIES ACT, 1956
 
 Pursuant to the requirement of Section 217(2AA) of the Companies Act,
 1956, in relation to Directors'' Responsibility Statement, it is
 confirmed that:
 
 i) In the preparation of the annual accounts for the financial year
 ending 31st March, 2013, the applicable accounting standards have been
 followed, along with proper explanation relating to material
 departures;
 
 ii) The Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent to give a true and fair view of the state of affairs of the
 Company at the end of the financial year and of the profit of the
 Company for the year under review;
 
 iii) The Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956, for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 iv) The Directors have prepared the annual accounts for the financial
 year ending 31st March, 2013 on a going concern basis.
 
 AUDITORS
 
 - Statutory Auditors
 
 The statutory auditor of your Company is appointed by Comptroller &
 Auditor General of India (CAG). M/s Rasool Singhal & Co., Chartered
 Accountants, Aligarh and M/s M.L. Puri, Chartered Accountants, New
 Delhi, were appointed as Joint Statutory Auditors of your Company for
 2012-13.
 
 The review of your Company''s Annual Accounts for the financial year
 ending 31st March, 2013 by CAG forms part of this report. Notes on
 accounts referred in the Auditors'' Report are self-explanatory and,
 therefore, do not call for any further comment.
 
 - Cost Auditors
 
 Your Company has appointed M/s Rohit & Associates, Vadodara; M/s R
 Nanabhoy & Co., Mumbai; M/s Chandra Wadhwa & Co., New Delhi; M/s M
 Goyal & Co., Jaipur; M/s Dhananjay V. Joshi & Associates, Pune; M/s DGM
 & Associates, Guwahati; M/s Mani & Co., Kolkata and M/s K. L. Jaisingh
 & Co., Noida as cost auditors for 2012-13 for the purpose of cost audit
 on 30th May, 2012.
 
 The due date for filing cost audit reports for the financial year ended
 31st March, 2012 was 31st January, 2013 and the same were filed to
 Registrar of Companies on 20th December, 2012.
 
 ACKNOWLEDGMENT
 
 Your Directors express their gratitude for constant support and
 cooperation showed by the Government of India, especially the Ministry
 of Petroleum and Natural Gas, various state governments, and regulatory
 and statutory authorities.
 
 Your Directors acknowledge wise counsel received from Statutory
 Auditors and CAG and are grateful for their consistent support and
 assistance.
 
 Your Directors also wish to thank all the stakeholders for reposing
 their faith, trust and confidence in your Company.
 
 On behalf of your Directors, I would like to place on record our deep
 and sincere appreciation for the hard work, dedication and unstinted
 efforts of your Company''s employees for driving GAIL towards a glorious
 future.
 
                                    For and on behalf of the Board
 
                                                     B.C. Tripathi
 
                                      Chairman & Managing Director
 
 Place: New Delhi
 
 Dated: 14.08.2013
Source : Dion Global Solutions Limited
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