Annual Report - 2005-06 - GAIL (India)

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3. In case of imported technology (imported during the last five years reckoned from the beginning of the financial year), following information may be furnished: a. Technology imported : (i) HDPE technology, from Mitsui Chemical Inc., Japan for GAIL Petrochemical Complex expansion, 100 KTA capacity. b. Year of import : (i) 2005 (ii) Ethylene cracker technology, from SWEC, USA for GAIL Petrochemical Complex expansion for addition of 100 KTA ethylene capacity. (ii) 2005 c. Has technology been fully absorbed : (i) Plant under construction. “Planning a winning strategy” d. If not fully absorbed, areas where this has : NA not taken place, reasons therefor and future plans of action (ii) Yes. Management Discussion & Analysis 38 Winning Momentum 39
INDIAN GAS SECTOR - PERSPECTIVE OF THE INDIAN GAS INDUSTRY The natural gas industry has conventionally been regulated by the Government of India (GOI) in the form of state ownership of industry participants, control over consumer and producer prices and the allocation of resources to distributors and end-users. CONSUMPTION AND DEMAND The sum total of this is that the total demand for natural gas in the country is expected to grow at a CAGR of 16% to about 300 MMSCMD by 2009-2010. It is expected to go over 300 MMSCMD by 2010-2011 and to 391 MMSCMD by 2024-2025 as per the Hydrocarbon Vision 2025. Currently natural gas contributes to the extent of 8% to the primary energy basket in the Indian Scenario as against 24% the world over. Gas 24% Oil 37% Source : Petrofed Primary Energy Consumption (India vs. World) World (2004-05) India (2004-05) The share is expected to increase to 14% by 2011-12 and further to 20% in the year 2025 as per the Hydrocarbon Vision 2025 and BP Statistical Review. % Hydro 6% Nuclear 6% 8% 33% 52% Coal 27% Oil 33% Primary Energy Consumption by Fuel Source 7% 5% 20% 25% 50% Gas 8% Hydro 5% Nuclear 1% Coal 53% The main drivers of growth will be the emphasis on infrastructure and utility sectors such as power and fertilizers. Presently the demand structure is such that power sector dominates demand by accounting for ~40% of total natural gas consumption in the country followed by fertilizer industry accounting for another ~28%. Power sector is expected to drive natural gas demand on account of additional capacity being created in the sector. The demand from the sector is also likely to go up because of replacement demand of liquid fuel (Naphtha and fuel oil) due to their higher and volatile prices as well as substitution for solid fuels (Coal) on account of environmental issues. Furthermore, the demand of gas from the fertilizer sector, which is dependent on Government regulations, price of gas vis-à-vis price of the alternative liquid feed stock and financial strength of the players in the fertilizer sector, is also estimated to increase. Natural gas is also expected to command a significant share in the retail market in the form of Compressed Natural Gas (CNG) in the automotive sector and Piped Natural Gas (PNG) in domestic households in view of advantages over competing fuels. SUPPLY On the supply side, currently, the two major PSU producers of natural gas in India, account for about 79% of total natural gas production in India. This situation is likely to change because of large discoveries of gas under the New Exploration and Licensing Policy (NELP) in the eastern coast. Availability of gas from the KG IRAN TURKMENISTAN DAHEJ JAMNAGAR DABHOL HAZIRA MUMBAI PUNE Natural Gas - Supply Outlook VIJAIPUR basin in the near future is expected to provide great opportunities for growth of gas based industries. The domestic production of natural gas is expected to be insufficient to meet the entire demand and hence exploring alternative energy sources such as import of LNG from the international markets and import of gas through Transnational Pipelines like Iran-India; Myanmar-India and Turkmenistan-India would be imperative. KOLKATA BHUBANESHWAR A 1 BLOCK MYANMAR KAKINADA MYANMAR High LNG regasification capacities are being planned in the near term, which signals a trend of increasing demand for LNG in the country. Besides, the firm quantities of LNG contracted is far less than the capacities envisaged for creation. Your Company, therefore, strongly believes that sourcing of additional volume of gas from international sources will be a key driver for growth in the near term. Cross border gas trade through transnational pipelines are longer term projects and have unique issues inherently such as legal issues, financing issues and most importantly, geo-political issues, which require involvement of Governments. The proposed Myanmar-India pipeline and the Iran-Pakistan-India pipeline are being dealt at the commercial level by Companies and at the geo-political level by the Government of India. Natural Gas – Demand-Supply Balance NEW GAS DISCOVERIES 2004 2025 350 LNG TERM’s PROBABLE LNG TERM’s MATURE Coal Oil Gas Others Source : BP Statistical Review and Hydrocarbon Vision 2025 MMSCMD 300 250 200 150 247 270 283 297 Optimistic Supply Pessimistic Supply KOCHI CHENNAI TIRUCHCHRAPLLI MANAPPAD TRANS – NATIONAL P/L CBM * Map not to scale 100 50 0 2006-07 2007-08 2008-09 2009-10 Demand Source : Infraline & MDRA Report, 2003 40 Winning Momentum 41
Page 3 and 4: CONTENTS Chairman’s Message 4 Hig
Page 5 and 6: “ Winning takes talent but it tak
Page 7 and 8: “A Winning Combination” Shri S.
Page 9 and 10: Statutory Auditors M/s S. Mann & Co
Page 11 and 12: LPG MARKETING PIPELINE INTEGRITY MA
Page 13 and 14: GREEN GAS LIMITED (GGL): MAHANAGAR
Page 15 and 16: SAFE PERFORMANCE OF THE COMPANY Dur
Page 17 and 18: • GREENTECH Safety Gold Award for
Page 19 and 20: ANNEXURE TO THE DIRECTORS’ REPORT
Page 21: HDPE Production (MT) 111305 109158
Page 25 and 26: Polyethylene market in India is dom
Page 27 and 28: GAIL has borne a subsidy of Rs.428
Page 29 and 30: LPG TRANSMISSION Your Company owns
Page 31 and 32: The other income represents a very
Page 33 and 34: SUNDRY DEBTORS The debtors (net of
Page 35 and 36: ii. Attendance of each Director at
Page 37 and 38: The payment made to Whole-time Dire
Page 39 and 40: GAIL Stock place at BSE (Rs./Share)
Page 41 and 42: Economic Approach Model The Economi
Page 43 and 44: Five Year Profile (B) GAS THROUGHPU
Page 45 and 46: (b) As per the information given to
Page 47 and 48: Profit & Loss Account for the Year
Page 49 and 50: Schedule 3 - Loan Funds (Rs.in Cror
Page 51 and 52: Schedule 5 - Capital Work-in-Progre
Page 53 and 54: Schedule 7 - Current Assets, Loans
Page 55 and 56: Schedule 10 - Manufacturing, Transm
Page 57 and 58: Cash Flow Statement for the Financi
Page 59 and 60: 20. Contingent Liabilities and Capi
Page 61 and 62: and the Income and the expenditure
Page 63 and 64: Sl. Segments Natural LPG No. Gas 1.
Page 65 and 66: Disclosure as required by Clause 32
Page 67 and 68: Schedule of Fixed Assets (Township)
Page 69 and 70: Review of the Accounts of GAIL (Ind
Page 71 and 72: Annual Report for the year ended 31
Page 73 and 74:
Nexia Tan & Sitoh Certified Public
Page 75 and 76:
Cash Flow Statement for the year en
Page 77 and 78:
Quoted shares as at 31st March, 200
Page 79 and 80:
Holding Company GAIL (India) Limite
Page 81 and 82:
Auditor’s Report To The Board Of
Page 83 and 84:
Schedule 1 - Share Capital Schedule
Page 85 and 86:
Schedule 5 - Capital Work-in-Progre
Page 87 and 88:
Schedule 7 - Current Assets, Loans
Page 89 and 90:
(Rs.in Crores) Year Ended Year Ende
Page 91 and 92:
III. Investment other than in Subsi
Page 93 and 94:
) During the year, the Company has
Page 95 and 96:
Information About Business Segments
Page 97 and 98:
Share of GAIL in assets, liabilitie
Page 99:
Gas Industry specific terminologies
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Annual Report - 2005-06 - GAIL (India)

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