Annual Report - 2005-06 - GAIL (India)

SUNDRY DEBTORS
The debtors (net of provision) of your
Company as on 31 st March, 2006 stood at
Rs.753.47 Crores.
Particulars 2005-2006 2004-2005 Change
Sundry Debtors (Rs in Crores) 753.47 822.86 (8%)
Debtors collection period 20 days 23 days 3 days
Debtors as a % of Turnover (net of ED) 5% 7% -
There has been a marginal decrease in
debtors outstanding as compared to the
previous year. The collection period from
debtors has also reduced by 3 days.
CASH AND BANK BALANCES
The growth of your Company has been
largely financed through cash generated
from operations and to a lesser extent
from external proceeds. Your Company’s
cash and bank balances as at the end
of 2005-2006 were Rs.4496 Crores as
against Rs.3447 Crores in 2004-2005 which
represents a 30% increase. Your Company
has maintained higher cash and bank balances
in order to meet the future CAPEX plans. Your
Company’s treasury policy calls for investing the
surplus funds with the highly rated banks for short
term maturities. Your Company has earned Interest
on Deposits with banks of Rs.221 Crores which has
increased by 100% as compared to the previous
year figure of Rs.100.5 Crores. Investments made by
your Company are through the e-investment mode
which is quick and transparent.
Particulars 2005-06 2004-05
Cash and cash equivalents as % of total assets 27% 22%
Cash and cash equivalents as % of revenue 31% 28%
DEBT AND EQUITY
The Debt-Equity ratio of your Company has been generally below 0.5 and in the current year it is
as low as 0.19. This clearly signifies the fund raising capacity of your Company.
Debt equity ratio
0.60
0.50
0.40
0.30
0.20
0.10
0.32
10.25
0.43
14.73
0.48
8.51
Debt Equity/Interest Coverage
0.50 0.49
6.25
7.25
FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006
Debt Equity
0.45
8.90
0.32
14.51
18.77
0.29
22.41
0.23
Interest Coverage Ratio
28.91
0.19
30
25
20
15
10
5
0
Interest coverage ratio in no. of times
The interest coverage ratio provides
a quick picture of a Company’s ability
to pay the interest charges on its debt
and the safety margin a Company
has towards its interest payments.
Your Company has maintained a high
coverage ratio of 29 due to its low
dependency on external borrowings
and higher profitability.
STOCK MARKET PERFORMANCE
Your Company’s stock has performed
exceedingly well in the last three years.
The market capitalization of GAIL
stands at Rs.26913 Crores (NSE) as on
31st March, 2006 at a Price to Earnings
ratio of 11.66.
The average daily quantity traded at
NSE in 2005-2006 has been 1148463
shares as compared to 2561147 shares
in the year 2004-2005. On the other
hand the average daily turnover at NSE
in the year 2005-2006 has been Rs.2933
Lakhs as compared to Rs.5196 Lakhs in
the year 2004-2005.
VALUE ADDED STATEMENT
The Value Added Statement summaries the total wealth created and shows how it was shared
between employees, government, providers of capital and retained by your Company. The value
added statement enables us to show the social components of sustainable enterprise in a more
transparent manner. It shows the social value that the Company creates through its activities. A value
added statement of your Company is summarized below: -
FY 2006
VALUE ADDED STATEMENT
(Rs. in Crores)
Particulars Amount % %
Turnover 14,413.11
LPG Transmission 444.13
Income from Telecom 18.25
Internal Consumption 1,891.88
Increase or decrease in Stock 24.93
Subtotal 16,792.30
Less: Suppliers of material and services 12,652.45
Add: Other income 455.54
Total value created 4,595.39
Applied as follows:
To remunerate employees
Salaries and other benefits 221.83 4.83% 4.83%
To reward to providers of capital
Interest on loans 117.30 2.55%
Dividend to ordinary shareholders 360.75 7.85%
10.40%
To the Government
Dividend 484.90 10.55%
}
Company taxation* 1,386.70 30.17% 43.30%
Dividend Tax 118.60 2.58%
To maintain operations
Depreciation and amortization 559.49 12.18% 12.18%
To expand the group
Net earnings retained 1,345.82 29.29% 29.29%
Total value applied/retained 4,595.39 100.00% 100.00%
* Amounts towards sales tax, service tax, customs duty have not been considered above.
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60 Winning Momentum 61