Dear Shareholders,
On behalf of the Board of Directors, I am delighted to present the 40th Board's Report of your Company, along with Audited Standalone and Consolidated Financial Statements for the Financial Year 2023-24:
Financial Performance
i. Financial highlights on standalone basis for FY 2023-24 are as under:
Note: The following exchange rates are used in calculations:
For FY 2023-24: Average rate 1 US$ = '83.18 & Closing rate 1 US$ = '83.78 (for book value per share only)
For FY 2022-23: Average rate 1 US$ = '79.37 & Closing rate 1 US$ = '82.57 (for book value per share only)
ii. Key Financial Highlights on a Consolidated basis for FY 2023-24
In accordance with the provisions of the Companies Act 2013 "the Act", SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 "SEBI LODR Regulations", and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for FY 2023-24, together with the Auditors' Report forms part of this Annual Report.
The key highlights of the Consolidated Financial Results are as follows:
For FY 2023-24: Average rate 1 US$ = '83.18
For FY 2022-23: Average rate 1 US$ = '79.37
Business Overview
i. Pipeline Transmission
• Natural Gas Transmission
Your Company has expanded the network of Natural Gas Pipeline to ~16,243 km across the length and breadth of our country. The average gas transmission through this network during FY 2023-24 has increased by 12% to reach an all-time high of 120.46 MMSCMD as against 107.28 MMSCMD in the previous financial year. Revenue from operations from Natural Gas Transmission segment in FY 2023-24 has increased by 54.5% to '10,292 crore compared to '6,661 crore in FY 2022-23 mainly due to increase in transmission volume and also due to upward revision in Natural Gas transmission tariff. Your Company's share in country's Natural Gas Transmission is ~65%.
• Liquified Petroleum Gas (LPG) Transmission
Your Company owns and operates 2040 km of LPG pipeline network for LPG transmission consisting mainly of 1,427 km Jamnagar-Loni Pipeline (JLPL) which connects the western and northern parts of India and 610 km Vizag-Secunderabad Pipeline (VSPL) which is in the southern part of the country connecting the Eastern Coast.
JLPL and VSPL networks together achieved highest ever throughput of 4.396 MMTPA during the FY 2023-24 compared to 4.335 MMTPA in FY 2022-23. Revenue from operations from LPG transmission in FY 2023-24 increased to '732 crore compared to '722 crore in FY 2022-23. GAIL has a share of about 10% of the Indian LPG market in LPG production and 7% in LPG sales.
ii. Natural Gas Marketing
Natural Gas (NG) trading continues to be one of your Company's core businesses. During FY 2023-24, your Company achieved highest ever sales figure of 98.45 MMSCMD compared to 94.91 MMSCMD during FY 2022-23. Revenue from operations from Natural Gas Marketing in FY 2023-24 was '1,14,590 crore compared to '1,35,290 crore in FY 202223. Your Company's share in country's Domestic Gas Market is ~48%.
Sector-wise details of Natural gas marketing are as below:
Fertilizer Sector: Your Company supplied around 67% of the gas consumed in the Fertilizer sector in the country during FY 2023-24. During this FY, your Company supplied Gas to various fertilizer plants viz. Matix Fertilizers & Chemicals Ltd, Panagarh, Hindustan Urvarak & Rasayan Limited (HURL), Gorakhpur, Sindri and Barauni for achieving commercial urea production.
Power Sector: Your Company supplied around 43% of the gas consumed by gas-based power plants in the country during FY 2023-24. Over the past few years, the Company has successfully collaborated with various power producers to operationalize their stranded units. GAIL has also been successful in ensuring sufficient supply of natural gas including the short notice requirement to Power sector customers to meet the demand during crunch period.
iii. Petrochemicals
Your Company has a nameplate polymer production capacity of 810 Kilo Tons per annum (KTA) at the Pata complex. GAIL's subsidiary, Brahmaputra Cracker & Polymer Limited (BCPL) having GAIL equity of 70% has a capacity of 280 KTA. The marketing right of the BCPL plant is with GAIL taking the total marketing portfolio to 1090 KTA.
During FY 2023-24, your Company's total production of Petrochemicals increased by 75% to 777 TMT compared to 442 TMT in the FY 2022-23 and sales of Petrochemicals increased by 97% to 787 TMT in FY 2023-24 compared to total sales of 399 TMT in the FY 2022-23. Revenue from Operations from this segment increased by 58% to '7,753 crore compared to '4,917 crore in FY 2022-23. Your Company's share in country's total Petrochemical production is ~15% and share in country's total Petrochemical sales is ~11.1 %.
Your Company has started production of new wire & cable grade suitable for extrusion coating/lamination for raffia sector, to tap the promising growth in wire & cable sector.
GAIL will be producing Polypropylene products at its upcoming PP Plants at USAR & PATA under the brand name "G-Pol". Your Company is constantly expanding its global presence and have joined hands with Bhutan, Ghana & Nigeria for export of Polymers in FY 2023-24.
iv. Liquified Petroleum Gas (LPG) and other Liquid Hydrocarbon (LHC)
Your Company has five Gas Processing Units (GPUs) at four locations in the country having a total LPG & LHC production capacity of 1425 KTA. During FY 2023-24, total LHC production from GPUs increased to 996 TMT compared to 934 TMT in FY 2022-23 and sales increased to 998 TMT in FY 2023-24 compared to total sales of 929 TMT in the FY 2022-23. Revenue from Operations from LHC in FY 2023-24 was '5,076 crore compared to '5,570 crore in FY 2022-23.
v. Exploration and Production (E&P)
Considering the prevailing scenarios within the oil and gas sector, your Company has demonstrated resilience in upstream activities by maintaining cautious investments. Additionally, your Company will continue to assess potential exploration opportunities and maintain active participation in forthcoming domestic bid rounds.
Your Company has Participating Interest (P.I.) in 13 E&P blocks of which 10 are in India, 2 blocks in Myanmar and 1 Shale Gas acreages in Eagle Ford Basin, Texas, USA (through wholly- owned subsidiary - GAIL Global (USA) Inc.). These blocks hold an acreage of 2,668 KM2 as per (P.I.) in various consortiums. Out of these, your Company is Operator in three onland blocks viz. (i) CB-ONN-2010/11 and CB-ONHP-2017/12 in Cambay Basin awarded during NELP-IX and OALP-I bidding rounds respectively and (ii) RJ-ONHP-2021/1 in Barmer-Sanchor Basin of Rajasthan awarded during OALP-VII bid round.
Revenue from the sale of hydrocarbons is being generated from 5 producing blocks namely A-1 & A-3 in Myanmar (Operator-Posco International), CB-ONN-2000/1 (Operator-
GSPC), CB-ONN-2003/2 (Operator-GSPC) & CB-ONN-2010/11 (Operator-GAIL) in India in addition to production from shale gas acreage in Eagle Ford, USA. Revenue from Operations of '1,033 crore has been generated from E&P activities during FY 2023-24 compared to '1,134 crore in FY 2022-23.
vi. Renewable Energy (RE)
Renewable energy remains a central focus for your company, and it is intensifying its efforts to bolster it further. This includes developing captive RE Power projects and enhancing in-house competencies to meet its internal consumption targets. These endeavors underscore its commitment to sustainable energy practices and advancing towards a greener future.
Your Company has a total installed capacity of 135 MW of Renewable Energy, out of which ~118 MW is wind energy and ~17 MW is from solar energy. The power generated from these projects is partially used to substitute power drawn from the grid. This helps in reducing carbon footprint in addition to optimization of the power cost. Your Company is committed to reduce its carbon emissions by implementing new renewable projects.
Revenue of '53.33 crore has been generated from Power Generation activities during FY 2023-24 compared to '64.26 crore in FY 2022-23. Further, in line with the Government of India (GoI) Hydrogen Mission, your Company is operating a pilot project for Hydrogen blending in city gas network at Indore, Madhya Pradesh.
Marking a major step towards foraying into new & alternate energy and in line with the National Green Hydrogen Mission, GAIL has installed its first Green Hydrogen Plant at GAIL Vijaipur in Madhya Pradesh, which was inaugurated by Shri Pankaj Jain, Secretary, Ministry of Petroleum & Natural Gas on 24th May, 2024. This Green Hydrogen plant has a capacity for producing 4.3 TPD of Hydrogen of 99.999% (by vol.) purity, through 10MW PEM (Proton Exchange Membrane) Electrolyzer unit, by electrolysis of water using renewable power. Initially the hydrogen produced from this unit shall be used as a fuel along with Natural Gas for captive purpose in the
various processes and equipment running in the existing plant at Vijaipur. Further, this hydrogen is planned to be dispensed to retail customers in the nearby geographies, transported through high pressure cascades.
Besides sourcing renewable power through open access, GAIL is also setting up around 20 MW Solar power plants at Vijaipur (both Ground Mounted and Floating) to meet the requirement of green power for the 10 MW PEM Electrolyzer.
vii. Sustainable Development and Net Zero
Your Company firmly believes in integrating Environmental, Social and Governance (ESG) across its value chain and aims at contributing to create a better world for the next generation. Your Company, being India's top gas transmission and distribution entity, is dedicated towards advancing the country's energy sector in a sustainable way, by incorporating sustainability in its operations and decision making. The Company's sustainability roadmap has been carefully crafted based on India's Nationally Determined Contribution (INDC) strategy for clean and accessible energy and the rising demand for Natural Gas in the country. Your Company has been upgraded from "C" to "B" level in CDP Global ESG Rating 2023 under Climate Change category.
Being a responsible energy Company and to further accelerate its decarbonization goals, your Company has developed a Net Zero strategy and clear organization-wide carbon roadmap to achieve a 100% reduction in Scope-1 and Scope-2 emissions by 2035 and a 35% reduction in Scope-3 emissions by 2040. The roadmap has been developed after conducting a detailed study on "Science-based Net-Zero Ambition and Action Plan".
viii. Research & Development (R&D) and Start-ups
Your Company's Board has recently given in-principle approval for setting up of R&D center in GAIL. The establishment of an in-house Research & Development (R&D) center will be equipped with state-of-the art laboratories, pilot plants, and facilities to carry out cutting-edge research in the entire natural gas value chain and next generation fuels.
Your Company's Start-Up Initiative 'Pankh' sees investment in innovative or high growth potential Start-Ups as an opportunity to derive long term benefits in terms of gaining technical know-how/competitive advancement on new technology and/or access to relevant technology and/or benefit to the society upon success of such entities. Under this initiative, an initial Corpus of '100 crore has been created for funding in new & promising Start-ups working in specific areas. GAIL has adopted a portfolio approach for its investment for reducing the risks involved. Investment in Start-Ups is spread across diverse areas like AI, Logistics, Electric Mobility, Nutrition, Rural Development, Health, Pipe Inspection, Energy, Renewable Energy, Environment, Bio Products, IOT, Industry 4.0 (process improvement), Fintech sector with credit line product of social cause etc. During the FY 2023-24, your Company has signed investment agreement with 01 Start-Up with a financial commitment of '1.0 crore.
Your Company has so far supported 35 Start-Ups with a total investment commitment of '70.69 crore and a total disbursement of '65.39 crore. The valuations of some of these start-ups have appreciated many folds. In FY 2023-24, 04 GAIL supported Start-Ups have raised funds at higher valuation than the valuation at which GAIL made initial investment.
ix. City Gas Distribution (CGD)
CGD entities within the GAIL group are operating across pan India Geographical Areas (GAs). In the latest CGD round conducted by PNGRB, GAIL group Company-Tripura Natural Gas Company Limited (TNGCL) has secured 2 GAs - Mizoram and Manipur, marking a significant milestone in extending our reach to the northeastern part of the nation. Also, during last year, GAIL's Joint Venture Mahanagar Gas Limited (MGL) has acquired entire equity of Unison Enviro Private Limited (UEPL). UEPL has been authorised 2 GAs in Maharashtra and 1 GA in Karnataka by PNGRB. With this GAIL and GAIL group companies are operating 72 GAs across the nation out of the total 307 GAs. Major GAs where GAIL and GAIL group companies are operating includes Varanasi, Cuttack, Bhubaneshwar, Patna, Ranchi, Jamshedpur, Delhi, Mumbai, Pune, Bangalore, Hyderabad, Lucknow, Kanpur, Agra, Dehradun, Vadodara, Indore, Kota, Gwalior, Mangalore etc. This year, your Company along with its group Companies have added 11.06 lakh PNG connections and 422 CNG stations summing up to ~83.4 lakh PNG customers and ~2770 CNG stations across the country. Revenue from CGD business has increased to '595.44 crore on standalone basis and '11,851.69 crore on consolidated basis during FY 202324 compared to '488.05 crore on standalone basis and '11,286.69 crore on consolidated basis in FY 2022-23.
GAIL Gas Limited (a wholly-owned subsidiary of your Company) is executing and operating CGD projects in 16 GAs, including Bengaluru. Currently, GAIL Gas Limited has 6 Joint Venture Companies (JVCs) and these JVs are implementing CGD project in 9 GAs. GAIL Gas Limited along with its JVCs has connected 9.77 lakh households and catering to clean fuel requirements for vehicles through 570 CNG stations.
During FY 2023-24, GAIL Gas along with its JVCs has achieved 1.1 lakh domestic PNG connections and set up 122 CNG stations.
Bengaluru remained a major focus for your Company for CGD expansion. 44 CNG stations were set up and around 37,008 domestic PNG connections were provided in the Bengaluru GA area during FY 2023-24.
x. Project Execution
Hon'ble Prime Minister laid the foundation stone for the Krishnagiri to Coimbatore section of Kochi-Koottanad- Bangalore-Mangalore Pipeline (KKBMPL II) and Nagpur- Jabalpur section & Nagpur-Jharsuguda section of Mumbai- Nagpur-Jharsuguda Pipeline (MNJPL), alongside dedicating the Vijaypur -Auraiya pipeline, Dhamra-Angul Pipeline, Sultanpur-Jhajjar Pipeline and Barauni - Guwahati Pipeline under PM Urja Ganga Yojna to the nation. Additionally, GAIL is steadfastly working towards laying around 3400 km of Natural Gas Pipelines across the nation. The major ones include the Durgapur-Haldia Pipeline, Dhamra- Haldia Pipeline, Srikakulam-Angul Pipeline, Mumbai-Nagpur-Jharsuguda, Krishnagiri-Coimbatore Section of KKBMPL and Gurdaspur- Jammu Pipeline. Furthermore, GAIL has proudly established India's first small-scale LNG unit at Vijaipur, showcasing the potential of SSLNG technology in connecting isolated sources and consumers to the Natural Gas Pipeline Network.
Under the Petrochemical business vertical, your Company is in the process of setting up a 500 KTA Propane dehydrogenation and Polypropylene (PDH-PP) Plant at Usar, Maharashtra, which is expected to be commissioned in 2025. This would be the first plant in India using Propane Dehydrogenation technology for the production of Propylene. Various project-related activities are in full swing and commissioning is expected in 2025. Further, your Company is also in process of undertaking assessment of carbon intensity for hydrogen produced at PDH- PP plant at Usar. Your Company is also setting up a 60 KTA Polypropylene (PP) plant at Pata and 50 KTA Isopropanol (IPA) unit at Usar.
Your Company is the commercial operator of the 5 MMTPA Dabhol terminal in Maharashtra under Konkan LNG Limited (KLL), a Subsidiary Company of GAIL. Commissioning activities related to breakwater facilities are in full swing. GAIL Mangalore Petrochemicals Limited (GMPL), a 100% subsidiary of your Company is taking up revival of the 1.25 KTA Purified Terephthalic Acid (PTA) plant's assets and machinery and it aims to commission and start production in 2025.
xi. Compressed Bio-Gas
Aligned with Net Zero aspirations and import reduction objectives, GAIL has recently signed a term sheet with M/s TruAlt Bioenergy Limited (TBL), involving the acquisition of equity in Leafiniti Bioenergy Private Limited (LBPL). This strategic move entails an investment of approx. '600 crore for the establishment of 10 Compressed Bio Gas (CBG) plants, with a collective production target exceeding 33 Million kgs, and will be an important constituent of GAIL's commitment to setting several CBG plants aiming towards Atma Nirbhar Bharat. The Company is in the process of setting up its first CBG plant of 5 Tons per Day (TPD) CBG production capacity at Ranchi.
xii. Overseas business
Your Company is constantly expanding its global presence through its participation in projects/ventures along the Natural Gas value chain. With the LNG portfolio of around 14 MMTPA from the USA, Qatar, Australia etc., the Company has emerged as one of the leading global LNG players and is actively involved in the LNG trading business in the international market. GAIL has signed two 10-year LNG supply agreements, commencing from 2026; 1 MMTPA from VITOL, Singapore and 0.5 MMTPA from ADNOC Gas, UAE.
Your Company is part of a consortium in two offshore E&P blocks (A-1 & A-3) in Myanmar. Around 15.33 MMSCMD of gas is being produced from these blocks and supplied to China and Myanmar through South East Asia Gas Pipeline Company Limited (SEAGP), in which GAIL is also an equity partner.
Your Company is the Government of India's nominee in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Natural Gas project for import of gas to India from Turkmenistan.
Your Company holds equity interest in two CGD companies in Egypt, namely Fayum Gas Company (FGC) and National Gas Company (Natgas). Your Company is also an equity partner in China Gas Holdings Limited (China Gas), a leading CGD player.
Your Company formed GAIL Global (USA) Inc. ("GGUI") during 2011 in Houston, Texas as its wholly-owned subsidiary and acquired Shale gas assets; and GAIL Global (USA) LNG LLC ("GGULL"), a wholly-owned stepdown subsidiary in March, 2013 for sourcing of Natural Gas, pipeline transportation and liquification arrangements at Dominion Cove Point. Your Company also formed GAIL Global Singapore Pte. Ltd (GGSPL) in 2004 as its wholly-owned subsidiary in Singapore for LNG trading.
Your Company jointly with ONGC Videsh Singapore Pte Ltd, IOCL Singapore Pte Ltd, Oil India International Pte Ltd, and Engineers India Ltd has formed Bharat Energy Office LLC (BEO), Moscow, Russia for exploring business opportunities in Russia.
Your Company also holds equity interest in M/s LNG Japonica Shipping Corporation Limited ("Japonica").
Subsidiaries / Associates / Joint Ventures
Your Company has formed various subsidiaries / associates / joint venture companies for different business areas such as City Gas Distribution (GAIL Gas Limited, Indraprastha Gas Limited, Mahanagar Gas Limited etc.), Petrochemical production (Brahmaputra Cracker and Polymer Limited, ONGC Petro-additions Limited, GAIL Mangalore Petrochemicals Limited), LNG Re-gasification (Konkan LNG Limited, Petronet LNG Limited), LNG Shipping (LNG Japonica Shipping Corporation Limited), Gas trading (GAIL Global (Singapore) Pte. Limited) ,Shale Gas (GAIL Global (USA) Inc.) and LNG sourcing (GAIL Global (USA) LNG LLC).
Your Company is constantly in search for acquisition of Companies in synergy with GAIL or in diverse fields. Equity investments opportunities are scrutinized on regular basis.
The subsidiaries / associates / joint venture companies have contributed significantly to your Company's business expansion activities. A statement containing the salient features of the Financial Statements of your Company's Subsidiaries, Associate Companies and Joint Ventures as per the first proviso of Section 129(3) of the Companies Act, 2013 including the individual contribution of these companies towards the overall performance of Company during the period is given under Consolidated Financial Statements forming part of this Annual Report.
Contracts or arrangements / transactions carried out with all the related parties were on arm's length basis and in the ordinary course of business Investment in no subsidiary / joint venture Company ceased to exist during the year.
Dividend
Your Company takes pride in being a consistent dividend-paying Company. The Board of Directors had approved payment of Interim Dividend during the financial year 2023-24 @ 55% of the paid-up Equity Share Capital of '6,575.10 crore i.e. '5.50 per Equity Share out of the profits of the Company for the Financial Year 2023-24 to the Equity Shareholders amounting to '3,616.30 crore. The Interim Dividend(s) was paid in February, 2024.
The details of the Unclaimed Dividend are covered in the Corporate Governance Report section, which forms part of the Board's Report.
Contribution to Exchequer
Your Company has contributed '16,536.35 crore in FY 2023-24 to the Central & State exchequer through duties, taxes, and others as compared to '14,446 crore in FY 2022-23.
Memorandum of Understanding (MoU) Performance
The Memorandum of Understanding (MoU) is signed every year between your Company and its administrative ministry i.e. Ministry of Petroleum & Natural Gas (MoP&NG) to assess and enhance performance of the Company through the targets set therein. The MoU for FY 2023-24 was signed between Secretary (P&NG), Government of India and Chairman & Managing Director of your Company.
The evaluation of MoU of your Company for FY 2023-24 is under process. Evaluation of MoU for FY 2022-23 has been completed by DPE and GAIL has achieved a score of 91.00, which corresponds to 'Excellent' rating.
Employee Stock Option (ESOP)
Your Company has not provided any Employee Stock Option, therefore, disclosure requirement in relation to ESOP under Rule 12(9) and Rule 16(4) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable.
Disinvestment by President of India
Your Company is promoted by the Government of India (GOI). Shareholding of GOI as on 31st March, 2024 is 51.52 %. During FY 2023-24, no disinvestment of GAIL's shares was done by GOI.
Credit Rating of the Company
• Domestic rating
Your Company has been reaffirmed with the highest domestic credit rating of 'AAA' with stable outlook by ICRA, CARE and India Ratings. This signifies the highest domestic long-term credit rating in India, and hence, signifies a very low credit risk of the Company.
• International Rating
The International Rating Agency, Moody's International, Singapore, has assigned to your Company the Long-Term Corporate Issuer Rating of 'Baa3' with Stable Outlook which is equal to the Sovereign Rating of India. Further, Fitch Ratings has assigned to your Company, a Long-term Issuer Rating of 'BBB-' with a Stable Outlook, which is also equivalent to the Sovereign Rating of India. They have mentioned that GAIL's rating could be upgraded if India's sovereign rating is upgraded.
Tax Planning and management
• Your Company's demand for '695.73 crore for FY 2018-19 was dropped by Maharashtra VAT Dept. by issuing rectification order.
• GAIL received refund order of '78.52 crore under section of income tax Act 239A for withholding taxes on LNG ship chartering charges.
• Your Company was accredited with Authorized Economic Operator (AEO) T3 Status, which is a highest level of facilitation for Importers & Exporters by Central Board of Indirect Taxes and Customs. AEO is a programme under the aegis of the World Customs Organization (WCO) SAFE Framework of Standards to enhance international supply chain security and facilitate movement of legitimate goods and promote ease of doing business.
• Hon'ble Supreme Court dismissed the Special Leave Petition (SLP) filed by the Gujarat Sales Tax Department in case of Gujarat Sale Tax case, where the demand of ~'. 5,000 crore was made against GAIL for Stock Transfer of Natural Gas from Gujarat.
Debt and Liquidity Management
The Company managed its liquidity requirements through a judicious mix of long-term and short-term borrowings and internal accruals. This helped the Company to reduce its cost of capital without impacting the planned Capex. To rationalize the Cost of Capital, the Company makes effort to refinance old loans at lower interest rates and to tie-up for long-term and short-term facilities with Banks and Financial Institutions for fresh borrowings at competitive rates. These measures result in reduction in effective long-term borrowing cost.
Large Corporates are required to raise 25% of their incremental borrowing by issuance of debt securities. In the FY 2023, GAIL has raised the substantial part of necessitated funds through the debt securities. In FY 2024, due to available alternative cheaper source of raising funds and permitted timelines up to FY 2026, GAIL optimized the cost of funds by borrowing through competitive sources instead of debt securities.
For effective management of surplus funds, GAIL has embarked into new financial journey by starting investment of its Surplus Funds in Private Mutual Funds and in Tri-party Repo System (TREPS) and Clearcorp Repo Order Matching System (CROMS) ensuring high degree of Safety of investments and attractive returns based on prevailing market conditions.
Particulars of Loans, Investments and Corporate Guarantees
Details of investments, loans and guarantees covered under Section 186 of the Companies Act, 2013 forms part of the Financial Statements presented in this Annual Report.
Vigilance
Corporate Vigilance department of your Company is ISO-9001:2015 certified for having adopted Quality Management System in compliance with the requirements of ISO.
During the year, various steps were taken that focused on prevention of corruption and bringing in systemic improvement for ensuring greater transparency, fairness, efficiency and accountability. To sensitize the employees about various aspects of contract management, specialized trainings were organized at different GAIL locations and Vigilance Awareness Week (VAW) 2023 was observed at Corporate Office and site Offices from 30th October to 5th November 2023, under the guidance of Central Vigilance Commission (CVC) on the theme "Say no to corruption; commit to the Nation"; "•tk'craij dT lOjVi dj; d lelir jg".
A Summary of vigilance cases handled during the year 2023-24 is as under:
Customer Relationship
Customer loyalty and satisfaction are at the heart of your Company's business and is highly essential for its long-term growth. GAIL reviews its strategies, redefines its approaches and undertakes business initiatives focused on providing better services. It believes in keeping its customers informed about the business operations to build lasting relationships and ensure better customer satisfaction.
Information Systems and Technology
Your Company has consistently maintained a leading position by staying updated with the latest technology trends, aiming for continuous system enhancements to gain a competitive advantage. Currently, it is in the process of migrating the current SAP system to the latest SAP S/4 HANA platform. This transition will allow the Company to harness the capabilities of real-time analytics, intelligent automation and simplified & streamlined processes, all while providing enhanced performance & user experiences.
As part of digitization efforts, your Company has revamped its invoicing methodology in the NG Transmission business to centralize invoicing from the Central Nodal Business Area. Furthermore, it has undertaken the implementation of SAP for GAIL Managlore Petrochemical Limited and introduced a Financial Supply Chain Management (FSCM) solution for GAIL's Polymer, CGD, and LHC Business units. These measures aim to streamline credit management processes and enhance operational efficiency across various segments of business. GAIL became the first Indian Company to adopt e-BG/ SBLC through Swift Platform for digitizing Bank Guarantee/SBLC that will enable end-to-end secure , paperless, and seamless transactions.
Your Company has successfully incorporated the necessary requirements in SAP and Open Access Portal for implementation of PNGRB's Unified/ Integrated Tariff orders. GAIL has developed package for Small Scale LNG operations and introduced Trust accounting on SAP Treasury & Risk Management module.
Corporate Communication
GAIL has ignited enthusiasm nationwide for advancing access to clean energy, which is truly commendable. Over 100 million individuals have been reached through a variety of campaigns, including "Together for Clean Air", "Khushiyon ki Energy with Natural Gas" and "Reconnect to Roots" conducted on GAIL's digital platforms, during the past year. This widespread engagement demonstrates your Company's commitment to promoting cleaner and more sustainable energy solutions for all.
Representation of Priority Section
Your Company has been complying with the Presidential Directives on Reservation and other instructions/guidelines issued from time to time pertaining to Policies and Procedures of Government of India.
Group wise details with regard to total number of employees and the representation of Scheduled Castes, Scheduled Tribes, Other Backward Classes, Economically Weaker Sections, Persons with Benchmark Disabilities amongst them as on 31st March, 2024 are given in the table below:
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A total of 384 new employees joined your Company during the FY 2023-24. Total Manpower of the Company as on 31st March, 2024 stood at 5038 (including CMD, Whole-time Directors & CVO) with 16% of its employees belonging to the SC category, 7% to the ST category & 26% to the OBC category. Further, out of total employees-7.46% belong to the Minorities and 2.1% of the total workforce belong to the Persons with Benchmark Disabilities (PwBDs) category. Your Company's workforce is comprised of 344 women employees (i.e. 6.83% of its employees) as on 31st March, 2024. The Company's attrition rate is 0.85%, which is a testament to its strong human capital management.
Official Language
The Official Language Implementation Committees at the Corporate and Work Centre level meet every quarter to monitor and review the progress made for achieving the targets fixed in the Annual Program
issued by the Official Language Department, Ministry of Home Affairs, Government of India.
As many as 154 Hindi workshops were conducted during FY 202324 in which 3146 employees were imparted training. Hindi Fortnight was observed across your Company from 14th to 29th September, 2023 to propagate linguistic harmony and to motivate the employees for the progressive usage of Hindi in their day-to-day work. Vishwa Hindi Divas was celebrated across GAIL on 10th January,2024.
The first Sub-Committee of Committee of Parliament on Official Language inspected GAIL Haridwar, Vishakapatnam, Rajahmundry, Jhabua, Bhopal Zonal, Bengaluru, Gandhar, Hazira, Karaikal, Chennai Zonal and Chandigarh Zonal Office to review the steps undertaken to promote the Official Language at these locations.
Your Company was also awarded the First Prize for FY 2022-23 under the Rajbhasha Keerthi Puraskar Yojana of Department of Official language, Ministry of Home Affairs in the Public Sector Undertakings category 'A' Region for best implementation of Official Language Policy of Government of India on 14th September,2023 during the Hindi Diwas Celebrations at Pune, Maharashtra.
Disclosure in relation to Sexual Harassment of Women at Workplace
Your Company has in place a robust Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013.
Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 with respect to FY 2023-24 is as under:
Procurement from Micro and Small Enterprises (MSEs)
Your Company is a socially responsible business organization and offers ample opportunities via its Public Procurement Policy (PPP) for vendors and suppliers. This gives fair opportunities to MSEs, encouraging participation and cultivating sustainable growth.
While implementing its Public Procurement Policy (PPP) for MSEs, your Company focuses on the following minimum allocation: 25% of the procurement from MSEs, 4% from MSEs owned by the SC/ST entrepreneurs and 3% from MSEs owned by the women entrepreneurs.
In terms of the said policy, during the FY 2023-24, your Company made total procurement of '1,963 crore from MSEs which is 56% of the total eligible value of annual procurement of '3,474 crore. The procurement made from MSEs owned by SC/ST Entrepreneurs is '142 crore which is 4.08% of the total eligible value of annual procurement and that from MSEs owned by Women Entrepreneurs is '231 crore which is 6.65% of the total eligible value of annual procurement.
Further, 20 Vendor Development Programmes for MSEs (including 4 Special Vendor Development Programmes / Hand Holding Sessions especially for MSEs owned by SC/ST & Women Entrepreneurs) were conducted.
Your Company is registered on the Trade Receivable e-Discounting System (TReDS) portal of all the three service providers (i.e. M/s Mynd Solutions, M/s A TReDS, and M/s RXIL) for making payment to MSEs vendors through TReDS portal.
Procurement through Government e-Marketplace (GeM):
The Government e-Marketplace (GeM) is a Government-run e-commerce portal. It is a one-stop platform to facilitate and enable easy online procurement of Goods & Services that are needed by various Government Departments, Organizations and PSUs.
All work centers of your Company are registered on GeM Portal and are procuring the Goods & Services available on the portal through GeM only.
During the FY 2023-24, the Company had made procurement of '2,704 crore through GeM against the Procurement plan of '1,900 crore (which is more than 25% of total eligible procurement in the year).
Right to Information (RTI)
To promote transparency and accountability, an appropriate mechanism has been set up across the Company in line with the provisions of Right to Information Act, 2005. Your Company has nominated 01 Central Public Information Officer (CPIO) and 01 Link- CPIO /Nodal Officer (RTI) at Corporate office. Besides, 59 Assistant CPIOs and 26 first appellate authorities are also being nominated across all its units/offices to provide information to citizens under the provisions of the Right to Information Act, 2005.
Your Company has hosted RTI Guidelines and related information on its website and the same may be accessed at https://gailonline.com/ RTI.html. Besides, MIS Report on RTI applications, record retention schedule and contact details of CPIO/Link-CPIO and ACPIOs have also been web-hosted under the same link.
Keeping in view the purpose of suo-motu disclosures under Section 4 of the RTI Act, 2005, your Company has hosted a dedicated page on its website, through which a large amount of information is placed in the public domain on proactive basis. This is being done to increase the transparency and accountability in the working mechanism of your Company and to reduce the need for filing individual RTI applications.
Further, your Company has been made LIVE on the Government of India-DoPT Online RTI Portal from July, 2016 and ever since information is also being provided through Online mode also. Approximately, 80% of the RTI applications/1st stage appeals are received through online RTI portal. All RTI applications received (online/physical mode) are being processed as per the provisions of
the RTI Act, 2005 and the information is provided accordingly within prescribed time limit. For FY:2023-24, your Company has achieved 100% disposal rate in respect of RTI Applications and First stage RTI Appeals. A total of 907 RTI applications and 94 RTI first stage Appeals were received and disposed of under the provisions of the RTI Act, 2005. Besides, a total of 24 Hearings regarding second stage RTI appeals were attended at Central Information Commission (CIC). All the 24 second stage appeals were disposed of by CIC in favour of GAIL during the FY 2023-24.
Risk Management
The details on the Risk Management activities including the implementation of risk management policy, key risks identified, and their mitigations are covered in the Management Discussion and Analysis section, which forms part of the Board's Report.
Management Discussion and Analysis
In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and clause 4.5 of DPE Guidelines on Corporate Governance, the detailed Management Discussion and Analysis forms part of the Board's Report at Annexure-A.
Corporate Governance
Your Company believes that good corporate governance plays a critical role in establishing a positive organizational culture. Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPE guidelines on Corporate Governance, a report on Corporate Governance forms part of Board's Report at Annexure-B.
The details of the meetings & composition of the Board, Statutory Committees of the Board including the terms of reference, Company's policy on Directors' appointment and their remuneration, their shareholding in the Company, details of the establishment of whistleblower mechanism, details related to Annual General Meeting, information pertaining to Dividends declared, Investor education & protection fund (IEPF) details and other matters, etc. are part of report on Corporate Governance.
There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and operations of your Company in the future.
No agreement referred to in Regulation 30A of the SEBI LODR Regulations, 2015 has been entered or executed by the shareholders, promoters, promoter group entities, related parties, directors, key managerial personnel and employees of the Company.
The Statutory Auditors of the Company have examined and certified your Company's compliance with respect to conditions enumerated in SEBI LODR Regulations, 2015 and DPE guidelines on Corporate Governance. The certificate forms part of Board's Report at Annexure-C.
Business Responsibility & Sustainability Report (BRSR)
SEBI vide notification dated May 10, 2021 amended Regulation 34 (2) (f) of SEBI LODR Regulations, 2015 and makes it mandatory for top 1,000 listed entities (by market capitalization) to present Business Responsibility and Sustainability Report (BRSR) as a part of the Annual Report. Your Company has adopted Business Responsibility & Sustainability Report (BRSR) describing the initiatives taken by the Company from an Environmental, Social and Governance perspective and the same forms part of the Annual Report.
Regulatory or Courts order
During the FY 2023-24, there was no order or direction of any court or tribunal or regulatory authority either affecting Company's status as a going concern or which significantly affected Company's business operations
Reporting of Frauds by Auditors
The Auditors in their report for the year have not reported any instance of fraud committed by the officers/employees of the Company.
Material Changes Affecting the Company
There have been no material changes and commitments affecting the financial position of the Company between the end of the Financial Year and date of this report. There has been no change in the nature of the business of the Company.
Compliance with Secretarial Standards
The Company has followed the applicable Secretarial Standards, with respect to Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India.
Auditors and Audit Reports
i. Statutory Auditors
The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s Gandhi Minocha & Co., Chartered Accountants, New Delhi and M/s Kirtane & Pandit LLP, Chartered Accountants, New Delhi were appointed as Joint Statutory Auditors for the FY 2023-24.
Notes on Financial Statements referred to in the Statutory Auditors' Report are self-explanatory. There are no qualifications on the financial statements by the Statutory Auditors for FY 2023-24.
ii. Comptroller and Auditor General of India (C&AG) Audit
Comptroller and Auditor General of India (C&AG) conducts Supplementary Audit of Financial Statements. Review and Comments of C&AG, if any on the Company's Financial Statements for the financial year ended 31st March, 2024 forms part of the Financial Statements.
C&AG paras from other audits: In addition to the supplementary audit of the financial statements mentioned above, the C&AG conducts audits of various nature. During the year 2023-24,
one C&AG published para was settled. As on 31st March 2024, there are thirteen (13) C&AG published paras pending for closure related to irregular payment of stagnation relief, irregular payment of income tax on perquisites to employee, benefit extended to private power producers, non-recovery from RIL, abandoned E&P blocks, irregular payment towards encashment of Half pay/Sick leave/Earned leave, irregular payment towards employer's share of EPF contribution on leave encashment, Petrochemical Production and Project Management, safety preparedness of Oil & Gas transmission pipelines, special monetary appreciation to its employees, benefit extended to the executives in the form of shift allowance, infructuous expenditure due to non-compliance with O&M guidelines, benefit extended to the executives in the form of payment of running and maintenance expenses of vehicles.
Replies to these audit Paras have been furnished from time to time and the same is under review of MoP&NG and C&AG.
iii. Cost Auditors
Your Company is maintaining Cost Accounting Records as prescribed under the Companies (Cost Records and Audit) Rules, 2014, specified by the Central Government under subsection (1) of section 148 of the Companies Act, 2013.
Your Company appointed six Cost Auditors for FY 2023-24 as follows:
M/s R J Goel & Co., New Delhi is the lead Cost Auditor.
The cost audit reports are filed by the Lead Cost Auditor with the Central Government in the prescribed form within the stipulated time. There are no qualifications in the Cost Audit Report by the Cost Auditors for FY 2022-23.
The Cost Audit Report for the financial year ended March 31, 2024 shall be filed within the prescribed time period under the Companies (Cost Records & Audit) Rules, 2014.
iv. Internal Auditor
Your Company has an In-house Internal Audit Department, which is headed by Executive Director. It had outsourced the internal audit of selected sites and appointed four Internal Audit Firm(s) during FY 2023-24 for each region. The details of Internal Audit Firm(s) are as under:-
The aforesaid Internal Audit Firms served as an extended arm of internal audit team and also provided new insights in auditing practices & methodologies, risk based audit and technology- based audit techniques, in addition to cost efficiency in place of traditional audit. Further, they have rendered support in physical verification of stocks and digitization. All these have resulted in strengthening of Internal Control systems.
v. Secretarial Auditor
Your Company appointed M/s Agarwal S. & Associates as Secretarial Auditor for FY 2023-24. Secretarial Audit Report confirming compliance by Practicing Company Secretary to the applicable provisions of the Companies Act, 2013, SEBI LODR Regulations, 2015 and other applicable laws forms part of the Board's Report as Annexure-D.
As per the provisions of the section 134(3) of the Companies Act, 2013, Board of Directors in their Board Report is required to provide explanations or comments on every qualification, reservation or adverse remark made by the Company Secretary in practice in his report.
The observations made by Secretarial Auditor in his Audit Report and Company's response thereon are included in Annexure-DI.
Performance Evaluation of Directors
As per notification dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government of India, Government Companies are exempted from complying with provisions of section 134(3)(p) of the Companies Act, 2013. Your Company is a Central Public Sector Enterprise (CPSE) and appointment/nomination of all the Directors including Independent Directors are being done by the Government of India. Therefore, such particulars are not included in the Board's Report.
Corporate Social Responsibility (CSR)
Your Company firmly believes that the commitment towards playing a defining role in the development of its stakeholders extends to uplifting lives of the marginalized segments of the society, living in and around its areas of operation. The principles of Corporate Social Responsibility (CSR) are deeply imbibed in your Company's corporate culture. To amplify outreach efforts, the Company has incurred an expenditure of '175.71 crore i.e. 2.47 % of the average net profits of the preceding three years after setting off the excess expenditure of the previous financial years.
Annual Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is placed at Annexure-E.
Your Company's CSR Policy is also available on Company website at https://www.gailonline.com/CSRPolicy.html
Energy Conservation, Technology Absorption and Foreign Exchange Earnings & Outgo
As per the requirement of Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, details of conservation of energy and technology absorption and foreign exchange earnings and outgo forms part of the Board's report at Annexure- F.
Particulars of Contracts or Arrangements with Related Parties
As per requirement of Section 134 (3) (h) of the Companies Act,
2013 read with Rule 8(2) of the Companies (Accounts) Rules,
2014 particulars of contracts or arrangements with Related Parties as referred to in section 188(1) of the Companies Act, 2013 in the prescribed form AOC-2 forms part of the Board's report at Annexure-G.
Your Company has formulated the policy on dealing with Related Party Transactions and the same is also hosted on the Company's website at https://www.gailonline.com/pdf/InvestorsZone/ RPTPolicy24042024.pdf
Particulars of Employees
The provisions of Section 134(3)(e) of the Act are not applicable to a Government Company. Consequently, details on Company's policy on Directors' appointment and other matters as required under Section 178 (3) of the Act, are not provided. Similarly, Section 197 of the Act is also exempt for a Government Company. Consequently, there is no requirement of disclosure of the ratio of the remuneration of each Director to the median employee's remuneration and other such details, including the statement showing the names and other particulars of every employee of the Company, who if employed throughout/part of the Financial Year, was in receipt of remuneration in excess of the limits set out in the Rules are not provided in terms of Section 197 (12) of the Act read with Rule 5 (1)/(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Annual Return
Annual Return is hosted on your Company's website at https:// gailonline.com/IZAnnualReports.html
Dividend Distribution Policy
As per Regulations 43A of the SEBI LODR Regulations, 2015 your Company has formulated a Dividend Distribution Policy. The dividend pay-out is made in accordance with the Company's Dividend Distribution Policy.
The Dividend Distribution Policy of the Company is available on the Company's website, at http://gailonline.com/pdf/InvestorsZone/ GAIL%20Dividend%20Distribution%20Policy.pdf
Acceptance of Deposits
Your Company has not accepted any Deposit from Public during the FY 2023-24 and as such, no amount of principal or interest was outstanding as on 31st March, 2024.
Fund Raising
During FY 2023-24, your Company has not raised equity funds through preferential allotment or through qualified institutional placement.
Foreign Exchange Earnings and Outgo
During FY 2023-24, foreign exchange earnings were '14,017.39 crore and outgo was '49,466.03 crore as compared to foreign exchange earnings of '28,136.38 crore and outgo of '69,228.61 crore during FY 2022-23.
Board of Directors and Key Managerial Personnel
The following changes took place in the Board of Directors/ Key Managerial Personnel of your Company since 01st April, 2023: Appointments:
• Shri Praveen Mal Khanooja, Government Nominee Director
w.e.f. 16.05.2023
• Shri Kushagra Mittal, Government Nominee Director w.e.f.
16.05.2023
• Shri Sanjay Kumar, Director (Marketing) w.e.f. 15.06.2023
• Shri Asheesh Joshi, Government Nominee Director w.e.f.
18.10.2023
• Shri Rajeev Kumar Singhal, Director (Business Development) w.e.f. 28.11.2023
Cessations:
• Dr. Navneet Mohan Kothari, Government Nominee Director upto 18.04.2023
• Shri Praveen Mal Khanooja, Government Nominee Director upto 17.10.2023
• Shri Mahesh Vishwanathan Iyer, Director (Business Development) upto 31.10.2023
The Board placed on record its deep appreciation for the valuable guidance and significant contribution made by outgoing Directors during their association with the Company.
Independent Directors' Declaration
Your Company has received necessary declaration from Independent Directors in accordance with Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the SEBI LODR Regulations, 2015 confirming that:
• They meet the criteria of independence as laid out in Section 149(6) of the Act and Regulation 16(1) (b) of the SEBI LODR Regulations, 2015.
• They have registered themselves with the database of Independent Directors maintained by the Indian Institute of Corporate Affairs under the Ministry of Corporate Affairs.
Familiarization Program for Independent Directors
The details of Independent Directors' training/familiarization programmes are available on the Company's website at https://www.gailonline.com/pdf/InvestorsZone/ FamiliarizationProgramme01042024.pdf
Code of Conduct
Pursuant to the requirements of SEBI LODR Regulations, 2015 and DPE Guidelines on Corporate Governance, the Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year ended 31st March, 2024.
Insolvency and Bankruptcy Code, 2016
No application has been made under the Insolvency and Bankruptcy Code; hence the requirement to disclose the details of the application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year is not applicable.
Directors' Responsibility Statement
The Directors confirm that they have:
i) followed applicable accounting standards, along with proper explanation relating to material departures in the preparation of the annual accounts for the financial year ended March 31, 2024;
ii) selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review;
iii) taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv) prepared the annual accounts for the financial year ended March 31, 2024 on a going concern basis;
v) devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively; and
vi) laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively.
Acknowledgment
Your Directors express their gratitude for the help, guidance and support received from the Government of India, especially the Ministry of Petroleum and Natural Gas as well as the various State Governments, regulatory and statutory authorities.
Your Directors acknowledge the constructive suggestions received from Comptroller and Auditor General of India and Auditors, and are grateful for their continued support and cooperation.
Your Directors also thank all the shareholders, business partners, and members of the GAIL family for reposing their faith, trust and confidence in your Company.
All that have been achieved would not have been possible without the relentless and focused efforts of your Company's employees; we place our deep appreciation for their commitment.
Your Directors also express their gratitude for the help, guidance and support received from the outgoing Board Members.
Your Directors and employees look forward to the future with confidence and stand committed towards creating a mutually rewarding future for all stakeholders.