Gujarat State Petronet

The Directors have pleasure in presenting 10th Annual Report and
 audited accounts of the company for the year ended 31st March, 2008.
 
 FINANCIAL HIGHLIGHTS
 
                                          (Rs. in crore)
 Particulars                          2006-07    2007-08
 
 Total Income                          335.01     447.28
 
 Manpower Expenses                       3.97       7.63
 
 Gas Transmission Charges                7.20       1.45
 
 Connectivity Charges                   13.06      11.22
 
 Admin, O&M & other Expenses            25.61      33.12
 
 Total Operating Expenses               49.84      53.42
 
 Gross Margin                          285.17     393.86
 
 Interest (after capitalization)        45.65      81.51
 
 Depreciation                          102.61     163.22
 
 Prior Period Expenses                   0.34       0.02
 
 Profit Before Tax                     137.25     149.15
 
 Tax including Deferred Tax             47.88      49.23
 
 Profit After Tax                       89.37      99.92
 
 MAJOR ACHIEVEMENTS
 
 The year was marked by several accomplishments, both in terms of
 physical and financial performance. Your company has maintained an
 upward trend in all performance parameters as follows,
 
 * Turnover increased from Rs.335.01 crores to Rs.447.28 crores in
 previous year, recording increase of 34%.
 
 * EBIDTA increased from Rs.285.17 crores to Rs.393.86 crores in
 previous year, recording increase of 38%.
 
 * PAT increased from Rs.89.37 crores to Rs.99.92 crores in previous
 year, recording increase of 12%.
 
 * 100% pipeline grid availability and accident free year of
 operations.
 
 * Finalized Equity and Term Loan tie-up with International Finance
 Corporation (IFC) for approx. Rs.445 crore.
 
 * Enhanced strategic equity stake in City Gas Distribution Network
 being developed in the State of Gujarat.
 
 CAPITAL
 
 During the year, paid up share capital of the Company has increased
 from Rs.542.80 crore to Rs.562.01 crore on account of allotment of
 shares on preferential basis to IFC and also to eligible employees
 under the ESOP Scheme.
 
 DIVIDEND
 
 Keeping in view the fund requirements for expansion projects, the Board
 of Directors of the Company is pleased to recommend dividend @ 5% for
 the Financial Year 2007-08.
 
 Gas Transmission Services
 
 The Company has signed firm GTAs for transporting 30.33 MMSCMD
 (Previous year 32.13 MMSCMD) of gas to various customers and
 interruptible GTAs for 6.69 MMSMCD.
 
 GAS GRID PROJECT
 
 The Government of Gujarat has always played a proactive role in die
 development of energy value chain. Gujarat is the first state to plan
 and execute a state wide Gas Grid on open access principle.
 
 The pipeline grid has been designed as per the highest international
 standards with inbuilt flexibility to cater to varying loads.
 
 The pipeline grid map is enclosed herewith as Annexure - IV
 
 Projects commissioned:
 
 Since last Directors Report the Company has successfully commissioned
 various pipeline projects like Atul Spur, Palej Spur, NTPC Jhanore
 Pipeline, etc.
 
 The current span of the Grid under operation is approx. 1130 kms and
 gas is flowing from Hazira / Dahej to various industries and City Gas
 Distribution Networks located in Surat, Bharuch, Baroda, Anand,
 Ahmedabad, Gandhinagar, Sabarkantha, Kalol, Mehsana, Morbi,
 Surendranagar, Rajkot, Navsari, Vapi and Valsad districts.
 
 Projects on Hand
 
 Your Directors are pleased to inform that the Company continues to
 develop pipeline infrastructure in the State of Gujarat. The following
 pipeline sections are being developed on priority basis,
 
 * Rajkot-Vadinar Pipeline Project (30x 110 km)
 
 * Bhadbut-Gana Pipeline Project (30x 109 km)
 
 * Gana-Hadala Pipeline Project (30 x 85 km)
 
 * Petronet LNG Connectivity (24x .035 km)
 
 * Morbi - Mundra Pipeline Project (18 x 130 km)
 
 * Baroda - Halol Pipeline Project (12 x 37 km)
 
 * Suzlon Spurline (8 x 28 km)
 
 * IPCL Connectivity (12 x 3.5 km)
 
 * ONGC - Olpad (12 x 5 km)
 
 * IOCL Connectivity (12 x 5 km)
 
 * Olpad - GSEC Utran Pipeline Project (12 x 15 km) Further, the
 Company also continues to develop several Spur lines to connect
 Industrial clusters and medium size customers along the pipeline
 network, which include regions like Vapi, Morbi, Mehsana and Baroda.
 
 Future Plans
 
 The Company is working on future expansion plans. The pipelines, which
 may be taken up for implementation in future include:
 
 * Darod - Jafrabad Pipeline Project (30 x 205 km)
 
 * Spurline to EOL, Refinery (24 x 8 km)
 
 * Dahej Network Pipeline Project (12 x 45 km)
 
 * Spurline to Vilayat GIDC (12 x 15 km)
 
 * Tarapur - Isharvada (8 x 15 km)
 
 * Mehsana - Palanpur (18 x 75 km)
 
 Further the Company has also initiated activities for expanding the
 pipeline network beyond the State of Gujarat.
 
 Operation & Maintenance activities
 
 The Company has transported 6144.92 MMSCM (Previous year: 5246.46
 MMSCM) of gas during the Financial Year under review.
 
 To safeguard Pipeline assets and optimize efficiency of the pipeline
 system, the Company is giving utmost importance to efficient operations
 and preventive maintenance.
 
 HEALTH, SAFETY AND ENVIRONMENT
 
 The Company attaches great importance to Health, Safety and
 Environmental aspects. The Company is expanding and managing its
 business operations in a safe and environmentally sustainable manner.
 The environment and safety features have been integrated into design,
 construction and O&M operations to have utmost safety for the
 facilities, local community and the environment. Further, Disaster
 Management plans are reviewed and updated regularly.
 
 The Company is ensuring effectiveness of HSE Management systems through
 training, regular audits and review mechanism.  HSE is everyones
 responsibility and each employee is encouraged to act in accordance
 with HSE policy. All contractors are required to adhere to our HSE
 policies while executing the Company work.
 
 The Company has obtained ISO 9001:2000 certification for its O&M
 activities. The Company has also initiated process for ISO-14001 and
 OHSAS-18001 certification.
 
 FIXED DEPOSITS
 
 During the year, the company has not accepted any Fixed Deposits from
 the public.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 During the year, the Company focused on CSR initiatives.  This mainly
 involved organizing blood donation camps, promoting use of
 environmentally friendly fuel, creating awareness for conservation of
 energy, promotion of educational activities, etc.
 
 DIRECTORS
 
 Since last Directors Report, Smt. V L Joshi, IAS, Shri H K Dash, IAS
 and Shri Luis Miranda ceased to be the Directors of the Company. Your
 Directors wish to place on record appreciation of the services rendered
 by them as Directors of the Company.
 
 Shri M M Srivastava, IAS was appointed as Additional Director to hold
 office till the ensuing Annual General Meeting. It is proposed to
 regularize1 his appointment in the 10th Annual General Meeting.
 
 Pursuant to the provisions of section 256 of the Companies Act, 1956
 Shri U Sundararajan, Shri Suresh Mathur and Shri Hasmukh Adhia, IAS
 shall retire by rotation at the ensuing Annual General Meeting and
 being eligible, offer themselves for re-appointment.
 
 A brief resume of the Directors retiring by rotation/seeking
 appointment at the ensuing Annual General Meeting, nature of their
 expertise in specific functional areas and names of companies in which
 they hold Directorship and Membership/Chairmanship of committees of the
 Board, are given in the Corporate Governance Report forming part of the
 Directors Report.
 
 STATUTORY & C&AG AUDIT
 
 Your Company being a Government Company, the Statutory Auditors are
 appointed by the Comptroller & Auditor General of India (C&AG).
 Accordingly, C&AG has appointed M/s T.  N. Shah & Co, Chartered
 Accountants, Gandhinagar as Statutory Auditors of the Company for the
 Financial Year 2007-08.  C&AG office has given NIL Comment Report for
 the Financial Year 2007-08. The NIL Comment Report is annexed herewith.
 
 AUDIT COMMITTEE
 
 Audit Committee of Directors of the Company at its meeting held on 27th
 June, 2008 approved the Annual Accounts for the financial year ended on
 31st March, 2008 and recommended the same for approval of the Board.
 
 DIRECTORS RESPONSIBILITY
 
 STATEMENT
 
 Pursuant to the provisions of section 217 (2AA) of the Companies Act,
 1956, the Directors hereby confirm that, (i) in the preparation of the
 annual accounts, the applicable accounting standards had been followed
 along with proper explanation relating to material departutes.
 
 (ii) accounting policies are selected and applied consistently and
 judgments and estimates are reasonable and prudent so as to give a true
 and fair view of the state of affairs of the company at the end of the
 financial year and of profit of the company for that period.
 
 (iii) 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 is taken.
 
 (iv) the annual accounts are prepared on a going concern basis.
 
 MANAGEMENT DISCUSSION & ANALYSIS
 
 This Annual Report contains a separate section (Annexure-I) on the
 Management Discussion and Analysis, which forms part of the Directors
 Report.
 
 CORPORATE GOVERNANCE
 
 Corporate Governance denotes the framework for companies to conduct
 their business in an ethical and responsible manner.  It is determined
 primarily by the approach that a company has towards its stakeholders
 as well as to the environment in which it operates. It stems from the
 belief and realization that corporate citizenship has a set of
 responsibilities, which must be fulfilled for a company to progress and
 succeed over the long term.
 
 A Report on Corporate Governance as required under clause 49 of the
 listing agreement is incorporated as a part of this Directors Report
 (Annexure - II). A compliance certificate by the practicing company
 secretary is also attached to the Directors Report.
 
 GSPL EMPLOYEES STOCK OPTION PLAN (ESOP)
 
 The company instituted ESOP Scheme in October 2005 to provide an
 incentive to attract, retain and reward the employees and to enable
 them to participate in future growth and financial success of the
 Company. Each such option has conferred a right upon the Employee to
 apply for one Equity Share of the Company.
 
 Statutory disclosures regarding ESOP scheme are enclosed as
 Annexure-III to this Directors Report.
 
 PARTICULARS OF EMPLOYEES
 
 During rhe year under review, none of the employees were drawing
 remuneration, which require disclosure under Section 217 (2A) of the
 Companies Act, 1956, read with the Companies (Particulars of Employees)
 Rules, 1975.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 Conservation of Energy
 
 During the period under review, there is no consumption of energy
 requiring disclosure.
 
 Technology Absorption
 
 The Company has not imported any technology. However, the Company has
 engaged consultants/advisors of international repute to make available
 latest technology for Project implementation.
 
 Foreign Exchange Earnings & Outgo
 
 Foreign Exchange Earnings - Rs. NIL Foreign Exchange Outgo - Rs.0.92
 crore
 
 ACKNOWLEDGEMENTS
 
 The Directors appreciate the continued support received from the valued
 customers and look forward to this mutually supportive relationship in
 future.
 
 The Directors place on record their appreciation of the valuable
 services rendered by employees at all levels, without whose
 contribution die excellent performance of the Company would not have
 been possible.
 
 The Directors are extremely grateful for all the support given by the
 Government of Gujarat at all levels. Their guidance, encouragement and
 moral support enabled the Company to expand the Pipeline Network in a
 professional manner.
 
 The Directors place on record their sincere thanks to the Shareholders
 and Lenders for their valuable support, trust and confidence in the
 Company.
 
                             For and on behalf of Board of Directors
 
 Date  : 29th August, 2008            D Rajagopalan, IAS
 Place : Gandhinagar                    Chairman