Annual Report - 2005-06 - GAIL (India)

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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
ii. Attendance of each Director at the Board meetings and the last AGM The attendance of Directors at the Board meetings held during 2005-2006 and the Annual General Meeting held on 28.09.2005, is as below: S. No. Name of the Director Date of Date of No. of Board Attendance at (S/Shri) appointment cessation meetings 21st AGM held attended on 28.09.2005 (out of 15) (Yes / No) 1. Proshanto Banerjee 27.08.2001 --- 12 Yes 2. S.P. Rao 22.10.1999 --- 14 Yes 3. B.S. Negi 01.01.2003 --- 13 Yes 4. M.R. Hingnikar 28.07.2003 --- 14 Yes 5. Dr. U.D. Choubey 06.05.2004 --- 14 No 6. R.K. Goel 01.11.2005 --- 6 --- 7. J.K. Jain 22.01.1996 31.10.2005 9 Yes 8. M.S. Srinivasan 28.01.2005 02.01.2006 7 No 9. Anil Razdan 17.02.2006 --- 1 --- 10. P.K. Sinha 20.12.2004 17.02.2006 12 Yes 11. Ajay Tyagi 20.04.2005 --- 10 No 12. Dr. Amit Mitra 29.04.1999 --- 9 No 13. Dr. A.K. Kundra 18.08.2003 --- 15 Yes 14. B.C. Bora 18.08.2003 --- 13 No iii. Number of other Boards or Board Committees in which a Director is a Member or Chairman As on 31.03.2006, the Directors of the Company held the following directorships and committee positions in other Companies: S. No. Name of the Director No. of Directorship(s) No. of Membership(s) Chairmanship(s) (S/Shri) held in other Companies in Committees of Board of in Committees of Board and name of the Company other Companies of other Companies 1. Proshanto Banerjee Nil Nil Nil 2. S.P. Rao 1 Nil Nil Bhagyanagar Gas Limited 3. B.S. Negi 4 Nil Nil Petronet LNG Limited Ratnagiri Gas & Power Pvt. Limited Shell CNG, Egypt Fayum Gas Company, Egypt 4. M.R. Hingnikar 1 1 Mahanagar Gas Limited Audit Committee- Nil Mahanagar Gas Limited 5. Dr. U.D. Choubey 6 Nil Nil Central U.P. Gas Limited Green Gas Limited Mahanagar Gas Limited Tripura Natural Gas Company Limited Ratnagiri Gas & Power Pvt. Limited GAIL Global (Singapore) Pte. Limited 6. R.K. Goel 1 Nil Nil Ratnagiri Gas & Power Pvt. Limited 7. Anil Razdan 2 Nil Nil Oil & Natural Gas Corporation Limited Indian Oil Corporation Limited 8. Ajay Tyagi 1 Nil Nil Bharat Petroleum Corporation Limited 9. Dr. Amit Mitra 2 1 Steel Authority of Audit Committee- Nil India Limited Bata India Limited Bata India Limited 10. Dr. A.K. Kundra 1 Nil Nil Punjab Alkalies & Chemicals Limited 11. B.C. Bora Nil Nil Nil 64 Winning Momentum 65
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 and 22: HDPE Production (MT) 111305 109158
Page 23 and 24: INDIAN GAS SECTOR - PERSPECTIVE OF
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: SUNDRY DEBTORS The debtors (net of
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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