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GAIL (India) Ltd.

BSE: 532155 Sector: Others
NSE: GAIL ISIN Code: INE129A01019
BSE 15:55 | 27 Mar 2018 GAIL (India) Ltd
NSE 05:30 | 01 Jan 1970 GAIL (India) Ltd
OPEN 319.00
PREVIOUS CLOSE 424.75
VOLUME 220972
52-Week high 518.00
52-Week low 311.30
P/E 13.26
Mkt Cap.(Rs cr) 54,291
Buy Price 321.00
Buy Qty 710.00
Sell Price 0.00
Sell Qty 0.00
OPEN 319.00
CLOSE 424.75
VOLUME 220972
52-Week high 518.00
52-Week low 311.30
P/E 13.26
Mkt Cap.(Rs cr) 54,291
Buy Price 321.00
Buy Qty 710.00
Sell Price 0.00
Sell Qty 0.00

GAIL (India) Ltd. (GAIL) - Director Report

Company director report

DEAR SHAREOWNERS

On behalf of the Board of Directors of your Company it is my pleasure to present the31 Annual Report of your Maharatna Company along with Audited Financial Statements forthe financial year 2014-15.

PARTNER GROWTH WITH INDIA'S NATURAL GAS LEADER

With a turnover of Rs 56569 Crores GAIL (India) Limited is India's largest naturalgas Company and ranked among the top gas utilities in Asia. Your Company has a presenceacross the entire gas value chain with activities ranging from Gas Transmission andMarketing to Processing (for fractionating LPG Propane SBP Solvent and Pentane) transmission of LPG and production and marketing of Petrochemicals like HDPE and LLDPE.Your Company has extended its presence in Power LNG re-gasification City GasDistribution and Exploration & Production through equity and joint ventureparticipations and also diversified into solar and wind power generation.

Gas transmission is one of the core competencies of GAIL and it draws strength fromabout 11000 km of natural gas pipeline network and 2038 km of LPG pipeline transmissionnetwork.

With a lean work force of 4266 employees your Company plays a meaningful role insocial and economic development of the country and makes a substantial contributiontowards its energy security.

FINANCIAL HIGHLIGHTS

Your Company's key financial parameters during the year 2014-15 and important financialhighlights are as under:

2014-15 2013-14
Particulars US $ Million ( Rs in Crores) US $ Million ( Rs in Crores)
Turnover (Net of ED) 8952 56569 9445 57245
Other income (incl. Exceptional Items) 173 1096 249 1506
Cost of sales (excluding interest and depreciation) 8236 52045 8383 50806
Gross Margin (incl. Exceptional Items) 889 5620 1311 7945
Interest 57 361 60 366
Depreciation 154 975 195 1177
Profit before tax 678 4284 1056 6402
Provision for tax 197 1245 334 2027
Profit after tax 481 3039 722 4375
Appropriations
Interim dividend 60 381 94 571
Proposed final dividend 60 381 123 748
Corporate dividend tax 24 154 37 224
Net transfer to/from bond redemption reserve 6 37 (1) (6)
Transfer to CSR reserve (5) (30) 3 18
Transfer to general reserve 48 304 72 438
Net surplus after Appropriations 287 1814 393 2382
1 US $ in INR converted at the exchange rate as on 31 March of the respective financial year 63.19 60.61

DISINVESTMENT BY PRESIDENT OF INDIA

The Government of India (GoI) has disinvested 15672024 shares on 27th March 2014through CPSE ETF. Further GoI has disinvested 37819 shares on 8 April 2015 through CPSEETF as Bonus Units. After disinvestment the th President of India holds 711695832equity shares representing 56.11% of paid-up share capital of GAIL.

DIVIDEND

Your Company has a consistent track-record of dividend payment. So far your Companyhas disbursed dividend of over Rs 13043 Crores to the shareholders including Rs 7925crores disbursed as dividend to Government of India.

The Board of Directors of your Company had earlier approved payment of an interimdividend @ 30% ( Rs 3 per equity share) on equity share of Rs 10 each amounting to Rs380.54 Crores which was paid in March 2015. Further the Board has recommended paymentof final dividend @ 30% ( Rs 3 per equity share) on equity share of Rs 10 each for 2014-15amounting to Rs 380.54 Crores. With this the total dividend payment for the fiscal year2014-15 will be 60% ( Rs 6 per equity share) on equity share of Rs 10 each amounting to Rs761.09 Crores on its paid-up equity capital of Rs 1268.48 Crores and dividenddistribution tax of Rs 153.56 Crores. The total dividend pay-out including corporatedividend tax accounts for 30.10% of Profit After Tax.

CONTRIBUTION TO EXCHEQUER

Your Company has contributed over Rs 5788 Crores in 2014-15 to the exchequer throughdividend duties taxes and others as compared to Rs 6993 Crores in 2013-14.

CREDIT RATING

Your Company has been reaffirmed the highest domestic credit rating of AAA from ICRACARE CRISIL and India Ratings which carry the lowest credit risk. The internationalrating agency Moody's International Hong Kong has also reaffirmed the corporate issuerrating of Baa2 which is one notch higher than sovereign rating. Further Fitch Ratingshas also assigned a long-term foreign currency issuer default rating of BBB- with a Stableoutlook which is equal to sovereign rating.

CORPORATE STRATEGY

In order to make a quantum leap in its growth trajectory your Company has developedits corporate strategy for the period 2011-2020. This strategy is currently underexecution and the Company is closely monitoring progress on various strategic initiativesas well as continually assessing the macro environment to evaluate its impact on GAIL'sbusinesses. The management of your Company has been playing a crucial role to achieve thestrategic objectives and to ensure that it emerges as an integrated hydrocarbon major withsignificant upstream midstream and downstream interests by 2020.

In the upstream segment your Company plans to increase LNG imports throughconventional route as well as through terminal capacity booking. It also plans to acquireequity in producing assets/liquefaction facilities to source equity-linked LNG. It hasmade remarkable progress in sourcing LNG by finalising several long-term deals withsuppliers like Sabine Pass Liquefaction LLC (USA) Gazprom (Russia) and WGL MidstreamInc. (USA) . GAIL Global (USA) LNG LLC a subsidiary of your Company in the United Statesof America (USA) has booked LNG capacity in Dominion Cove Point's LNG liquefactionterminal in the state of Maryland. In addition your Company is pursuing LNG shippingbusiness by charter hiring LNG ships to transport LNG from the USA to India and otherglobal markets. Your Company has also ventured into LNG trading business through itswholly owned subsidiary GAIL Global Singapore Pte Limited.

To facilitate increase in LNG volumes your Company plans to set up land based LNGterminals and Floating Storage and Regasification Units (FSRUs) . It is also bookingadditional regasification capacities in existing and new terminals being set up by othercompanies. Your Company has tied-up additional regasification capacities at Dahej LNGterminal with Petronet LNG Limited (PLL) . Further in-line with the LNG sourcing effortsyour Company has intensified its domestic gas market development efforts in India toattract and retain more customers.

In order to bridge the demand-supply gap of natural gas as well as to address theenergy security needs of the country your Company is aggressively pursuing thetransnational Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project. BilateralGSPA with Turkmengas has already been signed to import 38 MMSCMD gas into the countrythrough this pipeline. Further the TAPI Pipeline Company Limited has been incorporated asa Special Purpose Vehicle in the Isle of Man by the four TAPI entities.

In the midstream segment your Company aspires to retain its leadership positionthrough a continuous pan-India expansion of pipeline networks in synchronisation withcustomer readiness along the pipeline networks. Your Company now has approximately 11000km network of natural gas pipeline in the country. To further cater to the growing demandand to increase its geographic reach various pipeline projects are at different phases ofexecution which will take the network size to around 15000 km. In the downstream segmentyour Company aspires to be amongst the top petrochemical players in the country byexpanding existing capacities setting up new plants acquiring equity stakes in upcomingprojects along with product off-take rights for marketing. It has doubled existingpetrochemical production capacity at Pata by commissioning the second petrochemical unitPata. A Greenfield Petrochemical plant is also being setup in Assam through your Company'ssubsidiary Brahmaputra Cracker & Polymer Limited (BCPL) . Another petrochemical plantat Dahej is being set up through a JV ONGC Petro-additions Limited (OPaL) . By 2016 yourCompany is expected to have 1.7 MMTPA polymer volume for marketing.

On the retail side your Company is targeting additional 40-50 Geographical Areas (GAs)through its subsidiaries and JVs for city gas distribution (CGD) in the coming years. YourCompany's wholly owned subsidiary GAIL Gas Limited is progressing on track with respectto CGD projects in the cities of Kota Dewas Meerut and Sonepat. Further GAIL GasLimited has won the authorization from Petroleum & Natural Gas Regulatory Board(PNGRB) in 4th round of CGD bidding to develop CGD network for the city of Bengaluru. YourCompany aims to reduce its carbon footprint in a phased manner and contribute positivelytowards a low carbon economy. Accordingly your Company has set targets for renewableenergy projects and significant progress has been made so far. Your Company has 118 MWinstalled capacity of wind energy. It has also established a 5 MW solar power project.Further your Company is a stakeholder in an SPV created under the aegis of Ministry ofPetroleum & Natural Gas (MoP&NG) & Ministry of New and Renewable

Energy (MNRE) for setting up of grid connected Renewable Energy Power Projects. Inorder to achieve the strategic goals efficiently and in a time bound manner a majorthrust is being given to strengthen and enhance the capabilities of human resource of yourCompany. Accordingly recruitment training and development policies are being suitablyaligned with strategic objectives to enable your Company to implement and achieve itsstrategic goals by 2020.

BUSINESS PERFORMANCE

During the year under review the segment wise business performance of your Company isas under:

• Natural Gas Marketing

Natural gas continues to constitute your Company's core business. During 2014-15 gassales clocked 72 MMSCMD compared to 79 MMSCMD in the previous financial year. Majorsupplies of natural gas are made as fuel to power plants as feedstock for gas-basedfertilizer plants and for LPG extraction. Your Company holds around 60% market share inIndia.

• Transmission w Natural Gas

Your Company owns and operates a network of about 11000 kms of high pressure trunkpipelines with a pan-India capacity to transport around 206 MMSCMD of natural gas. Averagegas transmission during the year was 92 MMSCMD compared to 96 MMSCMD in the previousfinancial year. w LPG

Your Company has the distinction of being the only company in India to own and operateexclusive pipelines for LPG transmission for third-party usage. It owns and operates twoLPG Pipeline transmission systems with a total length of 2038 kms. Of this 1415 km ofpipeline network transports LPG from western to northern parts of India (Jamnagar Loni LPGPipeline) and the remaining 623 kms of pipeline network transports LPG in the country'ssouthern part (Vizag-Secunderabad LPG Pipeline) . The LPG transmission system has acapacity to transport up to 3.8 MMTPA of LPG. In 2014-15 the LPG transmission throughputachieved was about 3.09 Million MT.

• Petrochemicals

During 2014-15 your Company has produced 447 Thousand MT of polymers and sold 441Thousand MT of polymers.

• LPG and Other Liquid Hydrocarbon Production

Your Company has seven LPG plants in the country. USAR LPG Plant is in completeshutdown condition and is being kept under preservation mode. In 2014-15 the total liquidhydrocarbon production was about 1276 Thousand MT which mainly comprised of 1039Thousand MT of LPG 115.81Thousand MT of Propane 22.76 Thousand MT of Pentane and 98.75Thousand MT of Naphtha.

• Exploration and Production (E&P)

The E&P portfolio of your Company is as follows:

India Overseas Total
Onshore blocks 8 - 8
Shallow water blocks 3 2 5
Deep water blocks 2 - 2
Total 13 2 15

During the year 2014-15 E&P business has generated sufficient revenue to beself-sustainable. Production of gas from its A-1 & A-3 block in Myanmar has reachedpeak production of 14 MMSCMD. In 2014-15 revenue of approximately Rs 663.10 Crore hasbeen generated from sale of hydrocarbon from its 4 producing blocks namely A-1 & A-3Myanmar and Cambay Onland blocks CB-ONN-2000/1 (Ahmedabad) & CB-ONN-2003/2(Ankleshwar) in Gujarat. The Field Development Plan (FDP) has been submitted for gasresource of 71 BCF in Tripura block.

Your Company is an Operator in three onland blocks viz. (I) RJ-ONN-2004/1 in Rajasthanbasin (Ganganagar) awarded during NELP-VI bidding round ii) CY-ONN-2005/1 in Cauverybasin Tamil Nadu (Thanjavur and Thiruvarur) awarded during NELP-VII bidding round and(iii) CB-ONN-2010/11 in Cambay basin Gujarat (Anand and Ahmedabad) awarded during NELP-IXbidding round. Your Company is non-operating partner in remaining 12 blocks.

During the year 2014-15 preparation for drilling of exploratory wells in blockCY-ONN-2005/1 was in progress. Actual drilling shall start after land acquisition. Inblock CB-ONN-2010/11 during the year 2014-15 acquisition processing and interpretation(API) of 131 KM 3D Seismic Data has been 2 completed. Drilling of exploratory wells isplanned during 2015-16.

INITIATIVES FOR FUTURE GROWTH

• Global Initiatives

In November 2014 GAIL Global (USA) LNG LLC (GGULL) wholly-owned subsidiary of yourCompany in the US signed a 20 year gas sourcing agreement with WGL Midstream Inc. (USA)for procuring natural gas required to feed the 2.3 MMTPA Dominion Cove Point LNG Terminal.Earlier in 2013 GGULL has signed Terminal Service Agreement (TSA) with Dominion CovePoint LNG LP for booking 2.3 MMTPA liquefaction capacity in the Cove Point LNGliquefaction project located at Lusby in the state of Maryland in the US.

Your Company is constantly pursuing a leading role in the TAPI Pipeline project toreceive Natural Gas from the Galkynysh fields in Turkmenistan. The Pipeline ConsortiumCompany TAPI Pipeline Company Limited (TPCL) was incorporated on 11th November 2014 in'Isle of Man' a British Crown dependency located in the Irish Sea. TAPI has a mandate tobuild own and operate the proposed TAPI Pipeline.

• Domestic initiatives

The domestic business initiatives of your Company were as follows:

• LNG Regasification Terminals

Your Company is planning to set up a Floating Storage & Re- gasification Unit(FSRU) / Re-gasification terminal on the East coast of India. In this regard discussionsare on with Adani Ports and Special Economic Zone Ltd. (APSEZ) for equity participationand booking of capacity in the proposed regasification terminal at Dhamra port in Odisha.

• LNG Shipping

In 2011 your Company contracted 3.5 MMTPA of LNG from Cheniere Energy USA on FOBbasis for an initial period of 20 years. Further in 2013 your Company has also signed aTerminal Service Agreement (TSA) for booking of 2.3 MMTPA of liquefaction capacity inDominion Cove Point terminal for 20 years. The initial supplies from both these contractsare expected to commence from December 2017. Currently your Company is in the process oflong term Charter hiring of LNG ships through international bidding route.

• Natural Gas Pipeline Projects

During the year your Company has completed 36 number of 'Last Mile Connectivities'covering 129 km approx. of pipeline to increase the commercial utilization of variouspipeline networks in 11 states- Uttar Pradesh Uttarakhand Punjab Haryana RajasthanMadhya Pradesh Gujarat Maharashtra Karnataka Andhra Pradesh and Kerala.

• Non-Conventional Energy

Your Company has a total installed capacity of 118 MW of Wind Energy GenerationProjects (WEG) . Your Company had started with a modest capacity of 4.5 MW wind energy inthe state of Gujarat in March 2010 for captive use. After the success of the first WEGproject an additional capacity of 14.7 MW of WEG was installed in January 2012 in thestate of Gujarat for captive use. Your Company graduated to commercial production aftercommissioning 98.75 MW of WEG projects in the states of Tamil Nadu and Karnataka in March2012.

During the year your Company also entered into generation of solar power by setting upa 5 MW Solar Power Plant in the state of Rajasthan under the Jawaharlal Nehru NationalSolar Mission through bidding.

• Coal Gasification

Your Company is entering into a joint venture for Coal Gasification cum Fertiliserproduction at Talcher Odisha with Rashtriya Chemicals and Fertilizers Limited (RCF) Fertilizer Corporation of India Limited (FCIL) and Coal India Limited (CIL) . It isproposed to setup Coal Gasification unit based on Coal supplied from a coal blockallocated for the plant.

The project envisages production of 3850 MT urea per day. The success of this projectshall pave the way forward for production of fertilizer from the abundantly availabledomestic coal resulting in lesser dependency on import of fertilizers.

RELATED PARTIES - SUBSIDIARIES/ ASSOCIATES/ JOINT VENTURES

Your Company has formed subsidiaries and joint venture companies for CGDpetrochemicals LNG gas trading power generation and shale gas. Your Company is one ofthe pioneers introducing city gas projects in India for natural gas supplies tohouseholds commercial and transport sectors through its subsidiary and joint venturecompanies. The details of these subsidiary and joint venture companies are mentionedhereunder:

NATURAL GAS LNG AND POWER

• GAIL Global (Singapore) Pte. Limited (wholly owned subsidiary)

GAIL Global (Singapore) Pte. Ltd. (GGSPL) primarily started as an overseas investmentarm of your Company and was operationalized for LNG trading in 2012. It commenced itsbusiness operations in May 2012. GGSPL is now actively involved in business activities inthe area of LNG Trading. Till 31 March 2015 GGSPL has traded eight LNG cargoes out ofwhich three have been traded during the financial year 2014-15.

GGSPL has also been mandated by your Company to market upto 3 MMTPA of its USA sourcedLNG in the international market. GGSPL is already marketing such volumes in theinternational markets. The supplies against the said volumes are expected to start fromthe year 2018.

GGSPL is also targeting LNG third-party trades ship chartering and risk managementactivities along with supplying LNG cargoes to GAIL.

• GAIL Global (USA) Inc (wholly owned subsidiary)

GAIL Global (USA) Inc. (GGUI) was incorporated as a wholly owned subsidiary of yourCompany to undertake investment in the Eagle Ford shale gas asset. The primary objectivebehind this investment was to enter into the US Shale Gas market and to bring the ShaleGas technology to India. GGUI executed a definitive agreement with M/s Carrizo Oil &Gas Inc. USA (Carrizo) on September 28 2011 to enter into an unincorporated JointVenture (JV) in the Eagle Ford Shale asset in Texas. GGUI acquired a 20% participatinginterest in this joint venture. Carrizo with the remaining 80% participating interest isfunctioning as the Operator for the JV.

During the year 12 wells came online taking total online wells to 79 as on December31 2014. In addition 16 wells were under different stages of Drilling & Completionas on that date. The gross production volume of GGUI during 2014 was 978.5 Mboe.

• GAIL Global (USA) LNG LLC (wholly owned subsidiary of GGUI)

GAIL Global (USA) LNG LLC (GGULL) was formed during March 2013 for entering intocontractual agreements with Dominion Cove Point LNG LP (DCP) for booking of LNG Tollingcapacity of 2.3 MMTPA in its DCP LNG terminal. GGULL has signed Gas Sales & PurchaseAgreement (GSPA) on

November 30 2014 with WGL Midstream Inc. for sourcing of gas on delivered basis atthe inlet of Cove Point pipeline / terminal for a term of 20 years to produce about 2.3MMTPA of LNG at the Cove Point Terminal. GGULL and DCP have satisfied all the ConditionPrecedents in the Terminal Service Agreement (TSA) making the TSA effective with effectfrom December 19 2014.

• GAIL China Gas Global Energy Holdings Limited

The joint venture company GAIL China Gas Global Energy Holdings Limited was formedwith an objective to pursue gas sector opportunities mainly in China. Potential gassector projects are being identified for implementation by the company. Your Company has a50% equity stake with China Gas Holdings Limited as an equal partner.

• Petronet LNG Limited (PLL)

PLL which was formed for setting up of LNG import and re-gasification facilitiescurrently owns and operates an LNG re-gasification terminal of 10 MMTPA capacity locatedat Dahej Gujarat. PLL has a long term LNG supply contract with RasGas Qatar for importof 7.5 MMTPA of LNG. PLL is undertaking capacity expansion of LNG re-gasification terminalto 15 MMTPA at Dahej which is expected to be completed by end of 2016. PLL has also setupup an LNG re-gasification terminal at Kochi Kerala with a capacity of 5 MMTPA. PLL alsohas a long term LNG supply contract with Exxon Mobil's Gorgon Project for supply of 1.44MMTPA of LNG for its Kochi terminal.

Your Company has 12.5% equity stake with Bharat Petroleum Corporation Ltd. (BPCL) Oiland Natural Gas Corporation (ONGC) and Indian Oil Corporation Limited (IOCL) as equalpartners.

• Ratnagiri Gas and Power Private Limited (RGPPL)

RGPPL was formed as a joint venture with NTPC for taking over and operating theerstwhile Dabhol Power Project assets consisting of 1967.08 MW gas-based combined cyclePower Block and 5 MMTPA LNG Block. The assets were transferred to RGPPL in October 2005.

The power block has been revived and is under commercial operation since 19 May 2009.The power block was not operated due to non- th availability of domestic gas in 2014-15and paucity of funds.

The gas delivery to LNG Terminal through high pressure delivery system was started inJanuary 2013 and commissioned with effect from 22nd May 2013. Since the power generationis envisaged to entirely use available domestic gas the integrated LNG terminal is alsoutilized for tolling purposes. RGPPL has already entered into a long-term frameworkagreement with GAIL for commercial utilization of LNG terminal and commenced tollingoperations. 25 cargos have been successfully unloaded since commissioning. 10 cargos wereunloaded during 2014-15.

RGPPL is in a difficult financial position due to non-liquidation of high receivablesfrom its beneficiaries and non-availability of domestic gas for power generation leadingto inability in meeting its debt servicing obligations for the year 2014-15.

To avoid being a Non Performing Asset RGPPL has converted lenders' outstanding duesinto equity. As a result your Company has 25.51% equity stake in RGPPL with NTPC holding25.51% MSEB Holding Company Limited holding 13.51% and Indian Financial institutionsholding 35.47%.

CITY GAS DISTRIBUTION (CGD)

• GAIL Gas Limited (wholly owned subsidiary)

GAIL Gas was incorporated with the objective of focused implementation of City GasDistribution (CGD) projects in the country. GAIL Gas has been authorized by Petroleum andNatural Gas Regulatory

Board (PNGRB) for implementing City Gas Distribution Projects in Dewas Kota SonipatMeerut Vadodara and Taj Trapezium Zone. In addition GAIL Gas is pursuing City GasBusiness in the state of Kerala Andhra Pradesh Karnataka Rajasthan and West Bengal etc.through its joint ventures. It has won authorization from PNGRB in 4 round of CGD thbidding to develop CGD network for the city of Bengaluru. It has signed MoU with BharatPetroleum Corporation Limited for joint participation under 5th round of CGD bidding andhave been authorized by PNGRB for the implementation of City Gas Distribution in HaridwarDistrict (GA) .

Compressed Natural Gas (CNG)

During the year GAIL Gas augmented its CNG distribution infrastructure by enhancingthe capacity of existing stations and adding new stations at Sonipat. CNG sales increasedto 31 MMSCM in 2014-15.

Piped Natural Gas (PNG)

In PNG business GAIL Gas is supplying PNG to domestic customers progressively in itsauthorized cities. Presently the company is catering to 8700 households.

GAIL Gas has maintained its focus on the PNG industrial and commercial segment as oneof the potential growth areas. With its concentrated efforts in the year 2014-15 thetotal number of commercial and industrial customers increased to 503 in 2014-15.

GAIL Gas has commissioned the steel networks in the geographical area (GA) of SonepatDewas Kota and Meerut. Further the steel network augmentation is under progress in theTaj Trapezium Zone (TTZ) . For reaching more charge areas for domestic connections thesteel grid network and MDPE pipeline network has been extended to 374.21 kms and 586.74kms respectively in 2014-15 in the cities of Sonepat Meerut Dewas Kota and TajTrapezium zone. During the year the sales volume from industrial and commercial customersgrew to 526 MMSCM.

• Aavantika Gas Limited (AGL)

AGL was incorporated to implement CGD Projects in Madhya Pradesh. As on 31 March 2015AGL operated 18 CNG stations including 7 daughter stations 8 online stations and 3 motherstations.

Further as on 31 March 2015 AGL supplied PNG to around 2500 Domestic 32 Commercialand 52 Industrial customers in its authorized geographical regions. AGL is also cateringto the fuel requirement of around 20000 CNG vehicles operating in the region. YourCompany has a 22.5% stake with HPCL as an equal partner.

• Bhagyanagar Gas Limited (BGL)

BGL was incorporated to implement CGD projects in Andhra Pradesh. As on 31 March 2015BGL operated 32 CNG stations including 3 daughter booster stations 8 online stations and7 mother stations Further as on 31 March 2015 BGL supplied PNG to over 3100 Households46 Commercial & 3 Industrial customers in its authorized geographical regions. BGL isalso catering to the fuel requirement of around 31600 CNG vehicles operating in theregion. Your Company has a 22.5% stake with HPCL as an equal partner.

• Central U.P. Gas Limited (CUGL)

CUGL was incorporated to implement CGD projects in Uttar Pradesh. As on 31 March 2015CUGL operated 16 CNG stations including 4 mother stations 9 online stations and 3daughter booster stations.

Further as on 31 March 2015 CUGL supplied PNG to over 8300 domestic 119 commercial& 39 Industrial customers in its authorized geographical regions. CUGL is alsocatering to the fuel requirement of around 46600 CNG vehicles operating in the region.Your Company has a 25% stake with BPCL as an equal partner.

• Green Gas Limited (GGL)

GGL was incorporated to implement CGD projects in Uttar Pradesh. As on 31 March 2015GGL operated 14 CNG stations including 5 daughter stations 5 online stations and 4 motherstations.

Further as on 31 March 2015 GGL supplied PNG to over 7800 Domestic 9 Commercial& 4 Industrial customers in its authorized geographical regions. GGL is also cateringto the fuel requirement of around 33400 CNG vehicles operating in the region. YourCompany has a 22.5% stake with IOCL as an equal partner.

• Indraprastha Gas Limited (IGL)

IGL was incorporated to implement CGD projects in Delhi's National Capital Territory(NCT) and cities in adjoining National Capital Region (NCR) . As on 31 March 2015 IGLoperated 326 CNG stations including 68 mother stations 228 online stations and 30daughter stations.

Further as on 31 March 2015 IGL supplied PNG to over 5.6 Lac Domestic 1560Commercial and 717 Industrial customers in its authorized geographical region whichincludes the entire public transport of the national capital and also the world's largestbus fleet on CNG. IGL is also catering to the fuel requirement of around 7.6 lac CNGvehicles in the Delhi/NCR. Your Company has a 22.5% stake with BPCL as an equal partner.

• Mahanagar Gas Limited (MGL)

MGL was incorporated to implement CGD projects in Mumbai and its adjoining areas. As on31 March 2015 MGL operated 180 CNG stations including 19 mother stations 137 onlinestations and 24 daughter stations.

Further as on 31 March 2015 MGL supplied PNG to over 8 Lac Domestic 2607 Commercialand 57 Industrial customers in its authorized geographical region. MGL is also catering tothe fuel requirement of around 4.2 lac CNG vehicles operating in the region. Your Companyhas a 35% stake with British Gas as an equal partner.

• Maharashtra Natural Gas Limited (MNGL)

MNGL was incorporated to implement CGD projects in and around Pune. As on 31 March2015 MNGL operated 30 CNG stations including 5 mother stations 11 online stations and 14daughter stations.

Further as on 31 March 2015 MNGL supplied PNG to over 16147 Domestic 47 Commercialand 97 Industrial customers in its authorized geographical region. MNGL is also cateringto the fuel requirement of around 79400 CNG vehicles operating in the region. YourCompany has a 22.5% stake with BPCL as an equal partner.

• Tripura Natural Gas Company Limited (TNGCL)

TNGCL was incorporated to implement CGD projects in Agartala. As on 31 March 2015TNGCL operated 5 CNG stations including 3 mother stations and 2 daughter stations.

Further as on 31 March 2015 TNGCL supplied PNG to over 18000 Domestic 294 Commercialand 47 Industrial customers in its authorized geographical region. TNGCL is also cateringto fuel requirement of around 6986 CNG vehicles operating in the region. Your Company has29% stake in the joint venture.

• Vadodara Gas Limited (VGL)

Shareholders approved the transfer of your Company's CNG stations and associatedpipeline in Vadodara to the proposed joint venture company of GAIL Gas Limited withVadodara Municipal Sewa Sadan in the year 2011.

Accordingly VGL was incorporated as joint venture company (JVC) of GAIL Gas Limitedand Vadodara Mahanagar Seva Sadan (VMSS) for the supply of Compressed Natural Gas(“CNG”) and Piped Natural Gas (“PNG”) in the city of Vadodara. YourCompany has signed the Business Transfer Agreement (BTA) with VGL and transferred itsassets to VGL. VGL is operating the CGD business we.f. 1st January 2014 in Vadodara.Consequent upon transfer of assets to VGL your Company has a 32.93% stake GAIL Gas Ltd.holding 17.07% stake and VMSS holding 50% stake.

VGL operates nine CNG stations in Vadodara and is dispensing more than 65000 kg/dayCNG. The CNG network in the city of Vadodara includes 2 mother stations 1 on-line stationand 6 daughter booster stations as well as 13 km steel pipelines.

VGL also caters to the Piped Natural Gas (PNG) requirements of its consumers inDomestic and Commercial sectors. VGL supplies PNG to 76000 houses and 2800 commercial inthe city through a 750 km long PE Pipeline Distribution Grid and 07 District PressureRegulating System.

PETROCHEMICALS

• Brahmaputra Cracker and Polymer Limited (BCPL) (Subsidiary)

BCPL is setting up a 280000 TPA polymer plants in Dibrugarh Assam. The Company isnow in the final phase of project execution and has achieved an overall physical progressof 99.6% and financial progress of 96 % till the end of the financial year. Thecommissioning of the project is expected in the near future.

Your Company has a 70% equity stake in Brahmaputra Cracker and Polymer Limited (BCPL)with Oil India Limited (OIL) Numaligarh Refinery Limited (NRL) and the Government ofAssam having 10% equity share each.

• ONGC Petro-additions Limited (OPaL)

OPaL is implementing a Greenfield petrochemical complex of 1.4 MMTPA Polymer capacityat Dahej Gujarat. Your Company is a co-promoter of OPaL having a 15.5% equity stakewith an investment of Rs 994.95 crore. Oil and Natural Gas Corporation Limited (ONGC) andGujarat State Petroleum Corporation Limited (GSPC) are the other promoters of OPaL.

OTHERS

• TAPI Pipeline Company Limited

Your Company is pursuing the Turkmenistan Afghanistan Pakistan India (TAPI) Pipelineproject to receive Natural Gas supply from the Galkynysh fields of Turkmenistan. ThePipeline Consortium Company (TPCL) was incorporated on 11th November 2014 in 'Isle ofMan' to build own and operate the proposed TAPI Pipeline. Presently it is formed withequal participation by the four nominated entities (GAIL ISGS AGE and Turkmengaz) ofIndia Pakistan Afghanistan and Turkmenistan respectively. A Consortium Leader shall beinducted in due course.

• South-East Asia Gas Pipeline Company Limited (SEAGP)

SEAGP was formed to transport natural gas from A1/A3 blocks in Myanmar to Myanmar-Chinaborder. This pipeline is currently transporting nearly 15 MMSCMD of natural gas. YourCompany has a 4.17% equity stake in SEAGP.

LOAN INVESTMENTS AND CORPORATE GUARANTEE

A statement containing the salient feature of the financial statement of your Company'sSubsidiaries Associate Companies and Joint Ventures as per first proviso of section129(3) of the Companies Act 2013 is included in the consolidated financial statement.Further details of Loans and Investments covered under the provisions of Section 186 ofthe Companies Act 2013 forms part of financial statement a separate section in theAnnual Report FY 2014-15.

Your Company has given corporate guarantees to its subsidiaries only for availingloan as per provisions of section 186 of the Companies Act 2013 the details of the sameare as under: l Rs 504.34 Crores given to Oil Industrial Development Board on behalf ofBrahmaputra Cracker and Polymer Limited.

• Rs 118 Crores given to Oil Industrial Development Board on behalf of GAIL GasLimited.

• USD 114.1 million given to State Bank of India New York Branch on behalf ofGAIL Global (USA) Inc.

• USD 100 million given to Mizuho Bank Ltd. on behalf of GAIL Global (Singapore)Pte. Ltd.

IT ADVANCEMENTS

Your Company has been very IT-savvy and has always been at the forefront in leveragingvarious technologies for transparent efficient and effective execution of businesses andunderlying operations. With a young workforce faster technology curve adoption is butnatural to your Company. Today your Company's transactional engagements with customersvendors employees business associates and partners remain on electronic platform throughvarious ERP modules.

Some of the initiatives such as e-tendering e-auction/reverse auction e-recruitmentBill Watch System e-payments were adopted by your Company quite some time back thusfacilitating transparent dealings with the stakeholders concerned. By adopting the latestand state-of-the-art IT solutions your Company is keeping pace with the fast changingindustry environment. It strives continually for efficiency enhancement of employees andhas enabled access of required information to the right person using the latest ITsecurity solutions.

All the three datacentres of your Company have been certified for ISO 27001:2013 forInformation Security Management Framework (ISMS) . This certification shall providerecognition to your Company datacentres as secured datacentres in the industry. The ISO27001 ISMS Framework ensures highest security levels for information assets available inthe datacentres of your Company. The implementation of ISO 27001 based ISMS framework hasalso helped in implementing Crisis Management Plan for countering Cyber Attacks and CyberTerrorism.

Your Company has implemented centralized Pipeline Integrity Management System for itscross-country pipeline network to ensure continuous updation of O&M data andelimination of aging effect on pipelines. Your Company has also implemented an automatedGPS based system for monitoring of pipeline patrolling.

Your Company has implemented Biometric based Access Control system to preventunauthorized access to plant premises and office buildings at Petrochemical and LPGPlants Compressor Stations and Pumping Stations.

Your Company is implementing Manufacturing Integration & Intelligence to integrateplant systems with enterprise application for generating alarms and root cause analysisalongwith the latest version of Environment Health & Safety Management for monitoringvarious processes. Your Company is also implementing a mobility solution for its fieldengineers to run plant maintenance application on mobile device.

Your Company is implementing Enterprise Analytics for the Top Management to provide thelatest business metrics or key performance indicators accessible anytime anywhere on anydevice. Your Company is also upgrading its SAP systems for mitigating any risk andmaintaining readiness for innovation.

MOVING TOWARDS EXCELLENCE

Your Company as a continually improving organization believes in raising the bars ofperformance levels in steps to achieve functional excellence. With this objective yourCompany has taken various initiatives during 2014-15.

Your Company has taken an initiative to integrate all departments and its employeeswith digital services with an objective to reduce paperwork. Your Company has been at theforefront of leveraging information technology for running its business process. With 2020vision in sight your Company needed robust processes structure and most importantlyprompt decision making to act as the key enablers and accelerators.

As part of e-enablement your Company is planning to deploy cell phone application forits pipeline maintenance personnel so that the information related to safety proceduresspares etc. is readily available even when in the field. Globally the worlds of IT andOperational Technology are converging and hence your Company intends to improve theoverall asset management and safety across the organization by leveraging thesetechnologies and has initiated integration of IT with Plant systems which will deliverenhanced information for better decisions reduced costs lower risks etc.

With the rapid urbanization throughout the country Integrity Management of CrossCountry Pipelines is not just a maintenance activity anymore and requires focus on variousother elements as they have direct impact on the integrity Management and your companyfocus on multiple requirements of the present day Integrity Management i.e. SafetyOperations Maintenance Environment Stakeholders Technology and Education.

All the activities executed in your Company are being monitored and controlled fortimely completion. Improvement Audits are being conducted by team members to identify thelapses / deviations if any for taking corrective actions.

Your Company views suppliers / contractors / consultants as critical partners ingrowth. A symbiotic relationship with these key Stakeholders not only ensures economicgains higher quality improved planning and timeliness of project but also ensuresgreater long term support and value. Your Company developed an effective StakeholderManagement Mechanism wherein regular meetings are held with key Suppliers / Contractors /Consultants to understand their issues / concerns and address them appropriately intime-bound manner. Further your Company is currently in the process of developing apre-dispute resolution mechanism through which post closure legal disputes / arbitrationsare targeted to be minimized to a large extent.

HEALTH SAFETY AND ENVIRONMENT

Your Company's HSE policy is to conduct business with a robust and integrated HealthSafety and Environment (HSE) Management System focused on improving harmony with theenvironment through sustainable development. Safety and Health of its people is ofparamount importance for your Company and these attributes are embedded in the coreorganizational values of your Company. Employees and Contract Workers in your Company arestrongly encouraged to adopt safe working culture and behaviour to ensure effectiveimplementation of the HSE Policy. Your Company identifies all the Health Safety andEnvironment hazards evaluates the associated risks and manages these through effectiveand appropriate control programs and deployment of latest technology.

Your Company primarily operates in the hydrocarbon sector which is inherently veryhazardous. Your Company regularly identifies the hazards and evaluates their riskpotential in various areas of its operations. While on the one hand your Company takesadequate preventive measures to minimise risks during design construction operations& maintenance activities on the other hand your Company takes measures to mitigatethe consequences in case of any undesirable incident. Your Company employs best-in-classtechnologies and supplements safety through a robust HSE

Management System. Stringent SOPs (Standard Operating Procedures) Work PermitSystems Process Safety Management Safety Audits are some key elements of HSE ManagementSystem which are monitored rigorously and regularly and reviewed at the highest level inyour Company. This year your Company reviewed SOPs of all locations and standardised theSOPs through international experts in safety and process licensors. Your Company hasadopted the practice of observing 10th of every month as Monthly Safety Day when theOfficer-in-charge at all locations devote half-a-day to review safety issues. Exceptionsnoted are brought to the immediate notice of top management.

A massive exercise has been taken up to develop systems procedures & SOP for eachactivity that is taken up on regular basis and which being vetted by internationallyreputed consultants to align with global best practices. Parallelly web/online portalshave been developed for various new application for ease in data access and dataarchiving.

Sustainable Development (SD) Committee of Board of Directors is the apex body in yourCompany to review HSE performance and emergency preparedness and met 3 times during theyear.

Your Company has an Emergency Response and Disaster Management Plan (ERDMP) in placefor all of its installations which has been accredited by Petroleum and Natural GasRegulatory Board (PNGRB) approved third party accreditation agencies and submitted toPNGRB after approval from your Company's Board. Your Company has also prepared a DisasterManagement Plan (DMP) as per instruction of the Ministry to deal with disasters.

Your Company has implemented a Behaviour Based Safety (BBS) Program at all locations tofoster the culture of safety amongst all the stakeholders. Lead trainers have beendeveloped and various monitoring committees have been formed at all locations to ensurethat the BBS culture is nurtured on sustainable basis.

Safety audits were carried out in your Company during the year by various authoritiesreputed third parties and in-house safety audit teams to evaluate implementation of safetysystems. Timely compliance of recommendations of the safety audits are monitored andreviewed at various levels including by the top management of your Company.

Safety Training and unit specific training through well-structured modules is impartedto all employees in your Company at the time of induction as well as transfer to a newlocation as per job profile. In addition periodic refresher training and specialisedtraining related to specific work area are also provided.

The Safety performance in your Company is measured through “HSE Index” whichis evaluated on the basis of important HSE Management System elements. To make the safetyperformance evaluation more objective HSE Index system was reviewed by a senior levelcommittee and has been made more comprehensive and stringent by including additionalelements of HSE Management System in the evaluation system. The revised parameter namedthe HSE Score has been implemented since September 2014.

Corporate level Occupational Health Committee in your Company met on quarterly basisduring the year to monitor the implementation of occupational health and hygiene program.Occupational Health Audit of two process plants at Usar and Gandhar were carried out thisyear by members of the corporate occupational health committee. Occupational Healthcheckups of employees and contract workers were carried out in your Company to assess theoccupational health parameters and take corrective measures.

SUSTAINABILITY INITIATIVES

Your Company published its fifth Sustainability Report 'Fostering Responsible Growth'for 2014-15 based on the Global Reporting Initiative (GRI) Guidelines. Sustainabilityreporting has helped us in measuring and monitoring our Company’s performance andmoving beyond the mandatory requirements to ingrain sustainability within the organizationin letter and spirit. It has served as an important management tool helping us re-look atour Company’s systems policies and procedures.

Taking a step ahead from measuring to taking concrete actions in the right directionis also important. Your Company has been among the very few companies to have setvoluntary targets through Sustainability Aspirations 2020 and transparently disclose it inthe public domain. Your Company has disclosed additional targets through the revisedSustainability Aspirations 2020 in the Sustainability Report. The targets are in the areaof Specific Energy Reduction Specific GHG Emission Reduction Specific Fresh WaterConsumption Reduction and Zero Waste Water discharge.

Since inception your Company has been guided by the principles of accountability andtransparency. In 2011 your Company formally began its sustainability journey. YourCompany believed that although it was a few steps behind taking small yet strategic stepsin right direction was more important. Your Company has a Sustainable DevelopmentCommittee comprising the Functional Directors as members to regularly monitor itsustainability initiatives and performance. Your Company has strengthened its datamanagement systems to capture credible and authentic data and information from its varioussites.

For the first time your Company has been acknowledged among CDP's India Leaders 2014and featured in the Climate Disclosure Leadership Index (CDLI) . Your Company is the onlyCompany in Utilities category featuring in the top 22 India Leaders.

Your Company believes that it is important to collaborate with industry leadersassociations and peers to address national and global sustainability challenges and worktowards a common goal. Its focus has remained on collaborating with various externalstakeholders such as TERI CII GRI UNGC FICCI and CDP among others to gain from theirknowledge and experience in the area of sustainability. Your Company conducted workshopsin collaboration with organizations such GRI Focal Point India and CDP during the year.

In line with the Listing Agreement requirements Business Responsibility Report (BRR)2014-15 is contained in a separate section in the Annual Report. Your Company was placedat 2nd position in the Environmental Social and Governance (ESG) Score of India Inc. Study(2014) based on the BRR of 2013-14 conducted by Sustainable Business Leadership Forum.

VIGILANCE

The Vigilance department of your Company is ISO-9001:2008 certified for having adoptedQuality Management System in compliance with the requirements of ISO. Variouse-initiatives and system improvements were implemented in your Company for effectiveutilization of systems which helps in preventing corruption and ensures all round goodgovernance. Some of these improvements are:

• Introduction of Percentage Mark-up Model for O&M ARC and Civil contractsworks tenders.

• Monitoring timely release of retention money of contractors by implementingautomatic MIS Alert to the respective OICs of all the units.

• Fraud Prevention Policy hosted on your Company's website.

• Standardization of procedure for the generation of Minimum Guaranteed Offtake(MGO) invoice through SAP in GAIL Gas Ltd.

• All Vigilance and CVC Circulars uploaded on Intranet portal for awareness ofemployees.

The Vigilance Awareness Week-2014 was observed on the theme “Combating CorruptionTechnology as an enabler” at the Corporate Office and also at all work centers ofyour Company from 27 October to 1 th November 2014. It encompassed various activities tospread anti-corruption drive brainstorming sessions for interweaving enablingtechnologies and applications for creating a transactional backbone. This is a steptowards increasing transparent and efficient decision making and improving processperformance.

A magazine “JAGROOK” containing CVC circulars articles and case studies oncorruption was also published. To evaluate our systems and procedures a CustomerInteractive Meet was organized. Customers were also apprised about e initiatives taken byyour Company to make the system transparent with minimum human intervention. Customershave shared their experience with your Company put forward their feedback suggestionsand grievances. Vendor Interactive meets were organized at your Company's petrochemicalplant at Pata.

CAPABILITY BUILDING

• Human Capital

Your Company lays strong emphasis on attracting and acquiring best talent and also onefficient deployment of manpower on right jobs as per business requirements of theCompany. Value Added per Employee gives an account of efforts of your Company's emphasisto make the best and most productive use of the resources and business opportunitiesavailable. For the year under review value added per employee was Rs 173.73 Lacs.

• Leadership Development Program

Your Company realizes that it is critical to continually strive to develop and enhancethe capability and competence of its senior level executives in order to prepare them forfuture leadership positions. As part of the Leadership Development Program SeniorManagement Development Centre (SMDC) exercise has been undertaken. SMDC has been conductedfor senior executives in Chief Manager and above grades and as of now around 670 seniorexecutives have been covered under this exercise. During the year under review more than95% of the executives who got promoted to the level of Chief Manager were covered underthe SMDC Exercise.

In order to fill in the developmental gaps of such executives identified through SMDCexercise a comprehensive Individual Development Plan (IDP) has been drawn up for all theparticipants of SMDC exercise. The IDP consists of customized training programmes atpremier business schools e-learning courses and distribution of books.

• Representation of Priority Section

Your Company has been complying with the Presidential Directives and otherinstructions/guidelines issued from time to time pertaining to Policies and Procedures ofGovernment of India in regard to reservation relaxations concessions etc. for ScheduledCastes (SCs) Scheduled Tribes (STs) Other Backward Classes (OBCs) and Persons withDisabilities (PWDs) in direct recruitment.

Details with regard to group wise total employees and the representation of SCs STsOBCs and PWDs amongst them in your Company as on 31 March 2015 are given in the tablebelow: st

GROUP EMPLOYEES ON ROLL SC ST OBC (NCL) PWD
A 3081 478 191 557 40
B 576 117 68 100 12
C 551 97 22 165 35
D 52 17 5 14 2
CMD Whole -Time Directors & CVO 6 - - -
TOTAL 4266 709 286 836 89

During the year under review total of 314 new employees joined your Company. The totalmanpower of your Company as on 31 March 2015 stood at 4266 (including CMD Whole-timeDirectors and CVO) with 16.62% of Company's employees belonging to SC category 6.70% tocategory 19.60% to OBC (NCL) category 8% to Minorities and 2.09% to PWDs category. YourCompany's workforce comprised of 5.98% women employees as on 31 March 2015.

• Capability Development

Your Company believes that its human resource is one of the most vital assets forachieving its Vision Mission and Objectives. Therefore

Capability Building and Talent Development of its human resources has been the keyfocus area for your Company.

The GAIL Training Institute (GTI) is organizing systematic and structured programs forcapability building across all levels within the organization. In recognition of theinitiatives taken by it GTI has received the prestigious Golden Peacock National TrainingAward - 2014. GTI has maintained the track record of excellent MOU performance in all theparameters in the MoU signed with the administrative ministry.

Some of the salient achievements/initiatives for talent development are as under:

• Various certification Training Programme from NACE ASME OEMs and technologylicensors for gaining state-of-the-art expertise for its technical human resources.

• Specialized Training Programme on new business areas in line with Company’sstrategy 2020 such as Shale Gas Energy Trading Hedging and Risk Management etc. wereorganized.

• For executives of the level Chief Manager and above Individual DevelopmentPlan(IDP) based on the SMDC exercise were executed.

The IDP comprised distribution of competency based books access to e-learning modulesfrom Harvard Manage Mentor(HMM) and Customised Management Development Programmes throughIIM Bengaluru and Kolkata.

• Customised Management Development Courses from leading management institutesspecifically for executives from HR discipline.

• Mentorship programme established for all new joining executives.

• Training mandays per employee more than 5 for the year under review.

• Healing with nutrition programme organised for employees for staying fit &reducing stress.

• Awareness programs on sustainable development organised for employees at sites.

• Knowledge sharing seminar for motivating employees to share best practicesacross all sites.

• For creating knowledge based and competitive environment in- house businessquizzes and business simulations organized to keep the employees updated with latestdevelopments in the business areas.

In its pursuit of offering training programs to external organizations and to convertitself into a revenue generating centre GTI has successfully organized training programsfor participants from several organizations like RGPPL HPCLBCPL IGL MGL MNGL GSPLHMEL etc. Further in collaboration with American Society of Mechanical Engineers (ASME) U.S.A. GTI is successfully running certificate courses in ASME B31.8 for various externalorganizations.

Your Company is also playing an active role in formation of hydrocarbon skill councilto carry forward of skill building in hydrocarbon sector to support the National SkillDevelopment Mission.

• Official Language

Your Company is continuously endeavouring for the propagation and successfulimplementation of the Official Language Policy of the Union. The Official LanguageImplementation Committees at Corporate as well as work centre level held their quarterlymeetings regularly to monitor and review the progress made in achieving the targets fixedin the Annual Programme issued by the Government of India.

Hindi Workshops/Trainings are being organized on regular basis at GTI Jaipur and Noidaas well as the other work-centres. Hindi Computer Training sessions are integral part ofthese programmes. During the year2014-15 a total of 65 workshops were organized where 865employees were given training. All the computers of the Company are equipped with theUnicode Hindi fonts with transliteration key-board typing facility.

With a view to create greater awareness and consciousness among employees hindiFortnight was celebrated from 15-29 September 2014 across the Company. Every Monday/firstworking day of the month is being observed as Hindi Diwas across the Company.

A unique initiative has been taken to implement the special software to generate PaySlip CPF Card Pension Card Promotion Order Transfer Order Reliving Order etc. inbi-lingual version from SAP. Your Company is one of the few PSUs to implement thisfacility.

As a unique initiative names of all employees of your Company in official e-mail IDsare being displayed in hindi also. The terminology being used across your Company has beenstandardized and circulated.

The bilingual website of your Company is regularly updated with latest news and pressreleases. Intranet of your Company is also available in bilingual format.

Your Company has published an issue of hindi magazine 'Rajbhasha Sahyog” forpropagation of hindi among the employees. In order to cultivate the habit of reading inhindi motivational and inspirational books were distributed to the employees of yourCompany and their family members.

During the year 2014-15 the 1 Sub-Committee of Parliament on Official Languageinspected the Bengaluru and Noida offices of your Company to review the progress ofOfficial Language. The Sub-Committee appreciated the efforts and sincerity of your Companyto implement the Official Language. MoP&NG has also recognized the efforts of yourCompany for effective and wide implementation and propagation of hindi among Oil PSUs andawarded your Company under Rajbhasha Shield Yojana.

• Sexual Harassment of Women at Workplace

The Company has in place a Policy on Prevention Prohibition and Redressal of SexualHarassment of Women at Workplace in line with the requirements of the Sexual Harassment ofWomen at the Workplace (Prevention Prohibition & Redressal) Act 2013. InternalComplaints Committee (ICC) has been set up to redress complaints received regarding sexualharassment. All concerned persons as per the Act are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2014-15:

- No of complaints received: Nil
- No of complaints disposed off : Nil

INNOVATION RESEARCH AND DEVELOPMENT

Your Company is committed to address the challenges of ever changing business scenariothrough innovation. Your Company has made enduring efforts to encourage innovation andcreativity of employees through its Suggestion Scheme. The Suggestion Scheme helps topromote organization-wide idea generation for incremental innovation. All employees ofyour Company are motivated to suggest improvements in their respective areas of work. Thesuggestions are evaluated in a timely manner for implementation and the best suggestion isawarded with the CMD trophy.

Your Company is also the co-ordinator for mid-stream sector of Oil & Gas industryfor promoting industry-wide innovation in the sector. Innovation workshops were held aspart of this initiative where the Best and innovative practices adopted by variousdepartments are shared for due recognition and further propagation.

Your Company has set-up a Pilot Land Fill Gas (LFG) Project at Ghazipur in Delhi toreduce the GHG emissions. A further initiative is being taken-up to utilize the lowquality LFG to produce power. A 30 KW micro turbine based power plant is being installedto generate power with LFG after its partial upgradation. The successful fruition of thisendeavour shall demonstrate the use of LFG as a source of renewable energy. This alsodemonstrates the commitment of your Company towards sustainable utilization of wasteenergy and reduction of its carbon footprint.

Your Company is aggressively pursuing many R&D projects in its identified thrustareas with a focus on developing high-impact innovative technologies to conduct theexisting businesses in a more optimal and sustainable manner. Your Company has a judiciousmix of various basic applied and pilot projects encompassing the natural gas value chainin its R&D portfolio. In addition few projects are also being pursued in upcomingareas like Underground Coal Gasification Fuel Cells Hydrogen and Gas Hydrates. TheseR&D projects are being pursued in association with reputed research organizations /institutes. Your Company has also implemented many developmental projects to improveefficiency of existing operations and to conserve the Environment by utilizing bettertechnologies.

TOTAL QUALITY MANAGEMENT

Your Company continues to focus on continual and sustainable improvement in theprocess system and functional areas. Customer satisfaction is the top priority of yourCompany and is being continuously monitored through regular interactions. Majorachievements of your Company in TQM are as under:-

• Customer Satisfaction Index achieved during 2014-15 is 89.72%.

• 105 Nos. of quality circle projects were undertaken by your Company during FY2014-15 at various work centres resulting in tangible benefits of Rs 278.65 lakhs inaddition to the recurring intangible benefits.

• Gas Processing Unit Vaghodia of your Company has been recommended forcertification of Energy Management System (EMS) ISO: 50001-2011.

PROCUREMENT FROM MSES

The Government of India has notified a Public Procurement Policy for Micro and SmallEnterprises (MSEs) Order 2012. In terms of the said policy the total eligible value ofannual procurement of goods produced and services rendered by MSEs (including MSEs ownedby SC/ST entrepreneurs) during the year 2014-15 is about Rs 138 crore of which the totalprocurement made from MSEs (including SC/ST entrepreneurs) directly or indirectly is Rs 26crore which is approximately 19 % of Rs 138 crore.

MOU PERFORMANCE

A Memorandum of Understanding (MoU) is signed every year between your Company and itsadministrative ministry i.e. MoP&NG to enhance the performance level of the Companythrough the targets set therein. The MoU for the year 2014-15 was signed between theChairman & Managing Director and the Secretary (P&NG) Government of India on 21March 2014.

The thrust while fixing MoU targets was more towards improving Performance on criticalaspects of the Company which include gas marketing gas transmission projectimplementation capital expenditure new business areas etc. Significant thrust has alsobeen given on Corporate Social Responsibility Research & Development Projects andHuman Resource Management.

Your Company has been consistently achieving excellent MoU rating since the inceptionof MoU system i.e. from 1989-90 to 2013-14. In spite of the economic slowdown andrelatively unfavourable business environment compared to preceding years your Companyachieved MoU composite score of 1.288 for the year 2013-14 which is considered asExcellent MoU rating.

In the financial year 2014-15 there is a gap between MoU targets and actualachievement primarily due to fall in domestic gas availability decrease in Spot/ RLNGprices decrease in petrochemical and LHC prices and sharp decline in crude oil prices.The final evaluated MoU score and rating for FY 2014-15 is expected to be announced inDecember 2015.

The MoU for the year 2015-16 was signed between the Chairman & Managing Directorand the Secretary (P&NG) Government of India on 31 March 2015.

LAURELS

Corporate

• Your Company featured amongst “India's 100 Best Companies to Work For 2014Study” conducted by Great Place to Work Institute for the third consecutive year.

• Sustainability Report for FY 2013-14 received the coveted 'A+ ApplicationLevel' statement by international organization Global Reporting Initiative (GRI) .

• Company of the Year' in the Project Management category for its Dabhol Bengalurunatural gas pipeline project at the Petroleum Federation of India (PetroFed) Oil & GasIndustry Awards 2013

HSE

• International Safety Award - 2014 from the British Safety Council UK to GAILPata and GAIL NCR.

• International Safety Award - 2015 by the British Safety Council UK to HVJCompressor Station Vijaipur.

• “Suraksha Puraskar (Bronze Trophy) -2013” by the National SafetyCouncil of India Mumbai to LPG Recovery Plant Vijaipur.

• “Prashansa Patra (Certificate) Safety Award -2013” by the NationalSafety Council of India Mumbai to HVJ Compressor Station Vijaipur (M.P) .

• Shreshtha Suraksha Puraskar (Second Level - Silver trophy) for year 2014 fromthe National Safety Council Mumbai to GPU Vijaipur.

• Suraksha Puraskar (Third level - Bronze trophy) for year 2014 from NationalSafety Council Mumbai to HVJ Compressor Station Vijaipur.

• Golden Peacock Environment Management Award 2014 by the Institute of DirectorsNew Delhi to GAIL Vijaipur.

• Golden Peacock Occupational Health & Safety Award 2014 by the Institute ofDirectors New Delhi to GAIL NCR.

• Safety Innovation Award-2014 by the Institution of Engineers (India) DelhiState Centre to Maharashtra region pipeline system.

• National Safety Award from DGFASLI for year 2012 to GAIL Pata.

• NSC Safety Award-2013 as Sarvashreshta from NSC MP-Chapter to GAIL Vijaipur.

RIGHT TO INFORMATION

In order to promote transparency and accountability an appropriate mechanism has beenset up across the Company in line with the Right to Information Act 2005. Your Companyhas nominated ACPIOs/CPIO/ Appellate Authorities at its units/offices across the countryto provide information to citizens under the provisions of RTI Act.

MANAGEMENT DISCUSSION AND ANALYSIS

The detailed Management Discussion and Analysis forms a part of this report atAnnexure- A.

CORPORATE GOVERNANCE

Your Company believes that good corporate governance is critical in establishing apositive organizational culture. It is evident by responsibility accountabilityconsistency fairness and transparency towards its stakeholders. Pursuant to the revisedclause 49 of the Listing Agreement with the Stock Exchanges and DPE guidelines onCorporate Governance a report on Corporate Governance forms part of this Report atAnnexure- B.

The details of the meetings of the Board Company's policy on Directors' appointmentand remuneration etc. and other matters details of establishment of whistle blowermechanism etc. forming part of report on Corporate Governance.

There is no significant and material orders passed by the regulators or Courts ortribunals impacting the going concern status and Company's operations in future.

The statutory auditors of the Company have examined and certified your Company'scompliance with respect to conditions enumerated in revised clause 49 of the ListingAgreement and DPE guidelines on Corporate Governance. The certificate forms part of thisReport at Annexure- C.

AUDITORS

• Statutory Auditors

The statutory auditor of your Company is appointed by Comptroller & Auditor Generalof India (CAG) . M/s G.S. Mathur & Co. Chartered Accountants New Delhi and M/s S.K.Mittal & Co. Chartered Accountants New Delhi appointed as Joint Statutory Auditorsof your Company for 2014-15.

Review and Comments of CAG on the Company's Financial Statement for the financial yearending 31 March 2015 by CAG if any forms part of Financial Statement. Notes onFinancial Statement referred to in the Auditors' Report are self-explanatory andtherefore does not call for any further comment.

• Cost Auditors

Your Company has appointed M/s Rohit & Associates for Pondicherry Rajamundry &Bangalore unit(s) ; M/s R Nanabhoy & Co. for Hazira Vaghodia Vadodra Jhabua KheraVijaipur Auraiya Agra Kailaras Chiansa & Noida (NCR) unit(s) ; M/s M Goyal &Co. for Mumbai & Vadodra unit(s) ; M/s Dhananjay V. Joshi & Associates for VSPL& JLPL unit(s) and M/s DGM & Associates for Agartala & Lakwa unit(s) as costauditors for FY 2014-15. M/s Chandra Wadhwa & Co. is the lead cost auditor.

The due date for filing Cost Audit Reports for the financial year ended 31st March2014 was 27 September 2014 and the same were filed to th Registrar of Companies on 26September 2014.th l Internal Auditor Your Company has an in-house Internal AuditDepartment which is headed by Executive Director.

• Secretarial Auditor

Your Company has appointed M/s Agarwal S. & Associates as secretarial auditors for2014-15. Secretarial Audit Report confirming compliance by Practicing Company Secretary tothe applicable provisions of the Companies Act 2013 Listing Agreement and otherapplicable laws forms part of this Report at Annexure- D.

The observations made by secretarial auditor in his Audit report are as under:

i. Proviso to Section 149(1) read with Rule 3 of the Companies (Appointment andQualification of Directors) Rules 2014 i.e. Appointment of at least one woman Director.

ii. Section 149(4) of Companies Act 2013 Clause 49(II) (A) of the Listing Agreementand Clause 3.1.4 of the Guidelines on Corporate Governance for Central Public SectorEnterprises i.e. Optimum Combination of Executive and non-Executive Directors.

iii. Sections 135(1) 177(2) and Section 178(1) of the Companies Act 2013 and Rule 6of the Companies (Meetings of Board and its Powers) Rules 2014 regarding composition ofCSR Committee Audit Committee and Nomination and Remuneration Committee.

iv. Section 149(8) read with Schedule IV (VIII) and Section 178(2) of Companies Act2013 w.r.t. performance evaluation of Independent Directors.

Explanation on observations made by secretarial auditor in seriatim are as under:

a) As on 31 March 2015 your Company's Board comprised of five whole-time Directorsincluding CMD and one Government Nominee Director. GAIL does not have any woman Director.The term of Independent Director(s) on your Company's Board including woman Directorexpired on 28 February 2015. Subsequently with the th appointment of a woman DirectorSmt. Anuradha Sharma Chagti as Government Nominee Director by MoPNG on the Board w.e.f. 21May 2015 the requirements of Section 149(1) has been fulfilled.

b) Your Company is a Government Company appointment/nomination of all the Directors isbeing done by the President of India through the Ministry of Petroleum & Natural Gas(MoP&NG) . Your Company is continuously pursuing with MoP&NG for appointment ofrequisite number of Independent Directors on the Board of the Company.

c) Your Company was in compliance of composition of CSR Committee Audit Committee andNomination and Remuneration Committee till 28.02.2015. However after cessation ofIndependent Directors w.e.f. 28.02.2015 the Company was not in compliance with theaforementioned provisions of the Companies Act 2013 as stated at b) above.

d) Your Company is a Government Company appointment/nomination of all the Directors isbeing done by the President of India through the MoP&NG and performance evaluation ofindividual Directors including Independent Directors is to be done by Government of Indiabeing appointing authority.

The Compliance to observations of the secretarial auditor at s. no. ii) and iii) asstated above shall be met once the requisite numbers of Independent Directors areappointed by Government of India on your Company's Board.

CORPORATE SOCIAL RESPONSIBILITY

Your Company believes that Corporate Social Responsibility (CSR) plays a major role inthe development of any country. Therefore it has made Corporate Social Responsibility(CSR) an integral part of its ethos and culture. Annual Report on CSR activities asrequired under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules2014 read with section 134(3) and 135(2) of the Companies Act 2013 is placed at Annexure-E.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION

Details of conservation of energy and technology absorption in accordance with section134(3) of the Companies Act 2013 read with Companies (Accounts) Rules 2014 forms a partof this report at Annexure- F.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

As per requirement of 134 (3) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 particulars of contracts or arrangements with relatedparties as referred in section 188(1) of the Companies Act 2013 is placed at Annexure-G.Your Company has formulated the policy on dealing with Related Party Transactions and thesame is hosted on your Company's website at http://www.gailonline.com/final_site/pdf/GAIL_Related_Party_Transaction_Policy.pdf.

PARTICULARS OF EMPLOYEES

As per provisions of section 197(12) of the Companies Act 2013 read with the Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 everylisted company is required to disclose the ratio of the remuneration of each Director tothe median employee's remuneration etc. in the Directors' Report.

However as per notification dated 5 June 2015 issued by the Ministry of th CorporateAffairs Government of India Government Companies are exempted from complying withprovisions of section 197 of the Companies Act 2013. Your Company is a GovernmentCompany therefore such particulars have not been included as part of Directors' Report.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return forms part of this Report at Annexure-H.

ISSUE OF SHARES AND FIXED DEPOSITS

Your Company has not issued equity shares with differential rights as to dividendvoting or other wise and issue of shares (including sweat equity shares) to employees ofthe Company under any scheme.

Your Company has not accepted any fixed deposits and as such no amount of principalor interest was outstanding as of the Balance Sheet date.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year foreign exchange earnings were Rs 644.49 Crores and foreign currencyoutgo was Rs 8088.49 Crores.

During the year under review there was an outgo of Rs 2.20 Crores on foreign tours andtraining.

KEY MANAGERIAL PERSONNEL AND DIRECTORS

During the year the following ceased to be Key Managerial Personnel on the Board ofyour Company:

• Shri S. Venkatraman Director (BD) w.e.f. 30 September 2014 upon attaining theage of superannuation.

• Shri P.K. Jain Director (Finance) w.e.f. 30 April 2015 upon attaining the ageof superannuation.

During the year the following ceased to be Directors on the Board of your Company:

• Shri P.K. Singh Government Nominee Director w.e.f. 26 September 2014 uponceasing to official of MoPNG.

• Shri Rajive Kumar Government Nominee Director w.e.f. 1 December 2014 uponceasing to official of MoPNG.

• Smt. Shyamala Gopinath and Dr. A.K. Khandelwal Independent Director(s) w.e.f.28 February 2015 consequent upon completion of tenure for 3 years. th The Board placed onrecord its deep appreciation for the valuable services rendered by outgoing Directorsduring their association with your Company.

Shri Ashutosh Jindal was appointed as Part-time Director (Government Nominee) on theBoard of your Company w.e.f. 24 February 2015. Shri Subir th Purkayastha was appointed asDirector (Finance) and Chief Financial Officer by the Board of your Company w.e.f. 1 May2015. Smt. Anuradha Sharma Chagti was appointed as Government Nominee Director by theBoard of your Company w.e.f. 21 May 2015.

The tenure of Shri Prabhat Singh as Director (Marketing) was extended for a period ofbeyond 24.02.2015 till 30.11.2016 i.e. the date of his superannuation or until furtherorders whichever is earlier by Government of India.

Further Shri M. Ravindran Director (HR) and Dr. Ashutosh Karnatak Director(Projects) are retiring by rotation and being eligible have offered themselves forre-appointment.

None of the Director is in receipt of any commission from any subsidiary Company ofyour Company.

PERFORMANCE EVALUATION

As per provisions of section 134(3) (p) of the Companies Act 2013 every listedcompany a statement indicating the manner in which formal annual evaluation has been madeby the Board of its own performance and that of its committees and individual directorsshould form part of the Directors' Report.

However as per notification dated 5 June 2015 issued by the Ministry of th CorporateAffairs Government of India Government Companies are exempted from complying withprovisions of section 134(3) (p) of the Companies Act 2013. Your Company is a GovernmentCompany and the appointment tenure performance evaluation etc. of Directors is done byGovernment of India therefore such particulars have not been included as part ofDirectors' Report. Remuneration of CMD Whole-time Directors and its employees isdetermined by Government of India. As per requirement of clause 49 of Listing Agreementevaluation criteria for the Board is being formulated.

CODE OF CONDUCT

Pursuant to the requirements of clause 49 of Listing Agreement the Board Members andSenior Management Personnel have affirmed compliance with the Code of Conduct for thefinancial year ending 31 March 2015.

DIRECTORS RESPONSIBILITY STATEMENT

Yours Directors confirmed that:

i) In the preparation of the annual accounts for the financial year ending 31st March2015 the applicable accounting standards have been followed alongwith proper explanationrelating to material departures;

ii) selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent to give a true and fair view of the state ofaffairs of the Company at the end of the financial year and of the profit of the Companyfor the year under review;

iii) taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

iv) prepared the annual accounts for the financial year ending 31 March 2015 st on agoing concern basis;

v) had devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems were adequate and operating effectively and

vi) laid down internal financial controls to be followed by the Company and that suchinternal financial controls are adequate and were operating effectively.

ACKNOWLEDGMENT

Your Directors express their gratitude for continuance guidance and support by theGovernment of India especially the Ministry of Petroleum and Natural Gas various stategovernments and regulatory and statutory authorities.

Your Directors acknowledge the wise counsel received from Statutory AuditorsSecretarial Auditor and CAG for their consistent support and cooperation.

Your Directors also wish to thank all the shareowners business partners and members ofGAIL family for reposing their faith trust and confidence in your Company.

On behalf of your Directors I would like to place on record their deep sense ofappreciation for the committed services by the Company's executives staff and workers.

Your Directors and employees look forward to the future with confidence and standcommitted to create a prosperous future for all stakeholders.

For and on behalf of the Board
Place: New Delhi B.C. Tripathi
Dated: 5 August 2015 th Chairman & Managing Director