Annual Report - 2005-06 - GAIL (India)

SHAREHOLDER VALUE CREATION
Over the years, your Company has
consistently created value for the
shareholders. Your Company believes in the
fact that shareholder value is created when
the returns generated from the business
are higher than the cost of capital. This can
be measured through
EVC (Economic Value Creation). During the
year 2005-06, your Company’s EVC was
Rs. 811 Crores.
INTERNAL CONTROL SYSTEMS
AND THEIR ADEQUACY
The Company has developed internal
control systems commensurate to its
size and business. The Company also has
an in-house Internal Audit Department,
which ensures adequacy of internal
control systems and reports to the Audit
Committee, which further reviews the
adequacy of internal control systems.
CONCLUSION
Your Company has clearly shown that it has
been successful in creating value not only
for the shareholders but for all the stakeholders
in general. The initiatives taken by
your Company focuses on competitiveness
both internally and externally.
Value Added Statement 2005-06
To Remunerate Employees To Reward to Providers of Capital To the Government
To Maintain Operations
To Expand the Group
Internal capability building to outperform
competitors in the near and long terms is being
gradually enhanced through several initiatives
such as the e-initiatives for increasing the business
process efficiency and training for increasing
employee competencies. On the external front your
Company is now poised to strengthen its base in
the international markets via its global businesses
in the coming years.
The challenges in the Oil & Gas industry are
many. Increase in crude oil prices threaten
competitiveness and pose marketing challenges.
Besides, the Indian Natural Gas market is maturing
and is expected to grow rapidly, bringing newer
opportunities. New regulations would govern
the new paradigm of the domestic gas industry.
Being the market leader, your Company is better
prepared financially and intellectually to drive on
the growing Indian gas economy.
CAUTIONARY STATEMENT
Statements in the Directors’ Report and
Management Discussion and Analysis
describing the Company’s objectives,
projections, estimates, expectations,
predictions etc. may be “Forward Looking
Statements” within the meaning of
applicable laws and regulations. Actual
results, performances or achievements
may vary materially from those expressed
or implied, depending upon economic
conditions, government policies and
other incidental factors.
1. BRIEF STATEMENT ON
COMPANY’S PHILOSOPHY ON
CODE OF GOVERNANCE
‘Corporate Governance’ is about
managing business in an ethical
and responsible manner, focusing
on sustainable value creation
for the stakeholders, within the
prevalent regulatory framework.
Codification of Corporate
Governance principles in any
business entity is not an end but
is in fact a tool, to demonstrate
commitment to the principles
of integrity and transparency in
business processes. It is beyond
doubt, ‘transparency’ and
‘accountability’ are two pillars on
which the Corporate Governance
edifice rests.
Corporate Governance in the
Company is not mere compliance
of the provisions of the laws or
the Listing Agreement of Stock
Exchanges. Going forward, it is
practiced in a manner, such that an
ethical tone underlines all business
processes.
2. BOARD OF DIRECTORS
i. Composition and category of
Directors
GAIL (India) Limited being a
Government Company, all the
Directors are appointed/nominated
by the President of India, through
the Ministry of Petroleum &
Natural Gas (MoP&NG). The Articles
of Association of the Company
stipulate that the number of
Directors shall be not less than
three and not more than twenty.
As on 31st March, 2006, there were eleven Directors on the Board, comprising of six Wholetime
Directors, including the Chairman & Managing Director and five Part-time Directors,
including two officials of the Government of India and three Independent Directors. During
the year 2005-2006, the composition of the Company’s Board of Directors was as follows:
S. No. Name of the Director Designation held
(S/Shri)
I. Whole-time Directors
1. Proshanto Banerjee Chairman & Managing Director
2. S.P. Rao Director (Projects)
3. B.S. Negi Director (Business Development)
4. M.R. Hingnikar Director (HR)
5. Dr. U.D. Choubey Director (Marketing)
6. R.K. Goel Director (Finance)
(w.e.f. 01.11.2005)
7. J.K. Jain Director (Finance)
(upto 31.10.2005)
II. Part-time Directors (Government Nominee)
8. M.S. Srinivasan Director
Secretary, MoP&NG
(upto 02.01.2006)
9. Anil Razdan Director
Additional Secretary, MoP&NG
(w.e.f. 17.02.2006)
10. P.K. Sinha Director
Joint Secretary & Financial Advisor, MoP&NG
(upto 17.02.2006)
11. Ajay Tyagi Director
Joint Secretary, MoP&NG
(w.e.f. 20.04.2005)
III. Part-time Non-official Directors (Independent)
12. Dr. Amit Mitra Director
13. Dr. A.K. Kundra Director
14. B.C. Bora Director
None of the Part-time Directors (Government Nominee) or Part-time Non-official Directors
(Independent) hold any equity shares in the Company.
CORPORATE
GOVERNANCE REPORT
62 Winning Momentum 63