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நிறுவன பெயரின் முதல் சில எழுத்துக்களை நிரப்பி 'கோ' பட்டனை கிளிக் செய்யவும்

GAIL (India) Ltd.-இன் இயக்குநர் அறிக்கை

Mar 31, 2023

On behalf of the Board of Directors, I am delighted to present the 39th Board''s Report of your Company, along with Audited Standalone and Consolidated Financial Statements for the Financial Year 2022-23:

a. Financial highlights on standalone basis for FY 2022-23 are as under:

	FY 2022-23		FY 2021-22
Particulars	US $ Million	('' in crore)	US $ Million	('' in crore)
Revenue from Operations	18,181	1,44,302	12,218	91,646
Other Income	338	2,685	273	2,047
Cost of Sales (excluding Finance Cost and Depreciation & and amortisation expenses)	17,337	1,37,603	10,374	77,817
Gross Margin	1,182	9,384	2,117	15,876
Finance Cost	39	312	23	174
Depreciation and amortisation expenses	313	2,488	281	2,111
Profit Before Tax (PBT)	830	6,584	1,813	13,590
Tax Expense	162	1,282	430	3,226
Profit After Tax (PAT)	668	5,302	1,383	10,364
Final Dividend for previous year	55	438	-	-
Interim Dividend for current year	331	2,630	533	3,996
Net transfer to (from) Bond Redemption Reserve	-	-	(14)	(105)
Transfer to General Reserve	-	-	138	1,036
Net Surplus after Appropriations	282	2,234	726	5,437
	(US $)	(in '')	(US $)	(in '')
Earnings per Share **	0.10	8.04	0.21	15.56
Book value per Share**	0.94	77.35	1.00	75.92

Note: The following exchange rates are used in calculations:

For FY 2022-23: Average rate 1 US$ = ''79.37 & Closing rate 1 US$ = ''82.57 (for book value per share only)

For FY 2021-22: Average rate 1 US$ = ''75.01 & Closing rate 1 US$ = ''76.17 (for book value per share only)

## Previous year''s figures are adjusted for bonus issue of 1:2 shares during FY 2022-23.

b. Key Financial Highlights on a Consolidated basis for FY 2022-23

In accordance with the provisions of the Companies Act 2013 "the Actâ, SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 "SEBI (LODR) Regulationsâ, and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for FY 2022-23, together with the Auditors'' Report form part of this Annual Report.

The key highlights of the Consolidated Financial Results are as follows:
	FY 2022-23		FY 2021-22
Particulars	US $ Million	('' in crore)	US $ Million	('' in crore)
Revenue from Operations	18,379	1,45,875	12,382	92,874
Profit Before Tax	914	7,256	2,062	15,464
Profit After Tax	705	5,596	1,640	12,304
Less: Share of Minority	(3)	(20)	6	48
Profit for the Group	708	5,616	1,634	12,256

Note: The following exchange rates are used in calculations:

For FY 2022-23: Average rate 1 US$ = ''79.37 For FY 2021-22: Average rate 1 US$ = ''75.01

Business Overview1. Pipeline Transmission Natural Gas Transmission

Your Company has expanded the network of Natural Gas pipeline to ~15,600 km across the length and breadth of our country. The average gas transmission through this network during FY 2022-23 was 107.28 MMSCMD vis-a-vis 110.98 MMSCMD in the previous financial year. Revenue from operations from Natural Gas Transmission segment in FY 202223 was '' 6,661 crore as against '' 6,392 crore in FY 2021-22. The share in country''s Natural Gas Transmission is 65%.

â¢ LPG Transmission

Your Company owns and operates 2,040 km LPG pipeline network majorly are Jamnagar-Loni Pipeline (JLPL) and the Vizag-Secunderabad Pipeline (VSPL). JLPL and VSPL networks together achieved a throughput of 4.335 MMTPA during the FY 2022-23 against 4.199 MMTPA in the previous FY 2021-22. Revenue from operations from LPG transmission in FY 2022-23 was '' 722 crore as against '' 669 crore in FY 2021-22.

2. Natural Gas Marketing

During FY 2022-23, your Company clocked a sales figure of 94.91 MMSCMD (which included sales within India of 83.03 MMSCMD and overseas sales of 11.88 MMSCMD) as against 96.24 MMSCMD (which included sales within India of 86.55 MMSCMD and overseas sales of 9.69 MMSCMD) during FY 2021-22. Revenue from operations from Natural Gas Marketing in FY 2022-23 was '' 1,35,290 crore as against '' 77,326 crore in FY 2021-22. The share in country''s Domestic Gas Market is 50%.

3. Petrochemicals

During FY 2022-23, your Company recorded a total production of 442 KTA against a total production of 777 KTA in the FY 2021-22 and sales of 399 KTA in FY 2022-23 as against total sales of 790 KTA in the FY 2021-22. Revenue from Operations from this segment was '' 4,917 crore as against '' 8,549 crore in FY 2021-22.

4. LPG and Other Liquid Hydrocarbon

Your Company has five Gas Processing Units (GPUs) at four locations in the country having a total LPG & LHC production capacity of 1.4 Million MT. During FY 2022-23, total liquid

hydrocarbon production from GPUs was about 0.93 Million MT as against 1.0 Million MT in FY 2021-22, of which almost 92% constitutes LPG and Propane. Revenue from Operations from Liquid Hydrocarbons in FY 2022-23 also improved to '' 5,570 crore as against '' 4,865 crore in FY 2021-22.

5. Exploration and Production (E&P)

Your Company has participating interest in 13 E&P blocks out of which 10 are in India, 2 blocks in Myanmar and 1 Shale Gas JV in Eagle Ford Basin, Texas, USA (through wholly-owned subsidiary - GGUI). Out of these, your Company is an 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) block RJ-ONHP-2021/1 in Rajasthan basin awarded during OALP-VII bid round. The twelve E&P blocks (excluding Shale Gas in Eagle Ford Basin) hold an acreage of 2,656 km² as per its Participation Interest (P.I.) in various consortiums.

Revenue from the sale of hydrocarbons is being generated from 5 producing blocks namely A-1 & A-3 in Myanmar and CB-ONN-2000/1 & CB-ONN-2003/2 (Cambay onshore blocks) in India and one (1) shale gas JV acreage in Eagle Ford Basin, Texas, USA.

Revenue from Operations of '' 1,134 crore has been generated from E&P activities during FY 2022-23 as against '' 834 crore in FY 2021-22. Your Company, as an operator, has recently started commercial crude oil production from Galiyana#1 field in Gujarat from March 18, 2023.

6. Renewable Energy

Your Company is committed to reducing its carbon emissions and therefore implementing several renewable projects. It has a total installed capacity of 132 MW of alternative energy; out of which 117.95 MW is wind energy projects and 14.05 MW are solar energy projects including small solar units. Revenue from Operations of '' 46 Crore has been generated from Power Generation activities during FY 2022-23 as against '' 51 crore in FY 2021-22. Further, in line with the Government

of India (GoI) Hydrogen Mission, your company is running a pilot project for hydrogen blending in city gas network at Indore, Madhya Pradesh and is setting up a 10MW Green Hydrogen plant at Vijaipur, Guna District, Madhya Pradesh.

7. Project Execution

FY 2022-23 has been fruitful particularly for Pipeline Project execution. During the year ~1074 km of natural gas pipeline has been commissioned. Your Company has achieved 1,330 km of pipeline lowering in FY 2022-23. Pipeline Projects continue to be major thrust area for your company to build natural gas infrastructure in the country and 4,200 km of pipeline project as a part of National Gas Grid & other small connectivities are under different stages of project execution.

Your Company has expanded the reach of Pradhan Mantri Urja Ganga Pipeline Project, also known as Jagdishpur Haldia and Bokaro Dhamra pipeline (JHBDPL) with the commissioning of 2,096 km out of 2,655 km total pipeline length. All the 4 major anchor Fertilizers plants, namely M/s Matix Fertilizers, Durgapur and 03 units of M/s Hindustan Urvarak & Rasayan Limited (HURL) at Gorakhpur, Sindri, and Barauni are drawing full volumes.

During FY 2022-23, the major addition to JHBDPL network was made through commissioning of Bokaro-Angul Mainline. On 12.07.2022 , Hon''ble Prime Minister of India Shri Narendra Modi dedicated the Bokaro-Angul Section (~533 km) of JHBDPL to the Nation. Dhamra-Angul Mainline with spur lines to Jamshedpur, Ranchi, Cuttack & Bhubaneshwar have been commissioned. This will fast track the expansion of CGD network to these important cities. Your company has also commissioned Sultanpur-Jhajjar-Hisar pipeline (135 km) on 31.03.2023 and completed Chainsa-Jhajjar-Hissar (CJHPL) network. With the commissioning of Dhamra-Angul Mainline, your Company has connected another gas source to JHBDPL network enabling RLNG supply from Dhamra LNG terminal on the east coast of India in the state of Orissa.

Your company is also extending JHBDPL project to the

North-eastern region of India up to Guwahati in Assam with construction of 729 km Barauni-Guwahati Pipeline. Bihar section of Barauni-Guwahati Pipeline have been commissioned on 31.03.2023.

Guwahati is the gateway to the North Eastern Gas Grid being implemented by M/s Indradhanush Gas Grid Limited (IGGL), a Joint Venture of GAIL, IOCL, ONGC, OIL and NRL which is executing around 1,656 km natural gas pipelines to connect the eight states of North-East India.

Further, your Company is committed to increase reach of Natural Gas in the country by way of providing Last Mile Connectivity to Industrial customers and to City Gas Distribution (CGD) entities for supply of natural gas as CNG and PNG to various cities. During the year, the Company has completed 30 nos. of hook-up connections to CGD Geographic Areas (GAs), 5 nos. Last Mile Connections to Industrial customers and 02 nos. of Tie-in connectivities from Natural Gas Sources during the year. Further, work is under progress to provide connectivity to another 6 Industrial customers & 40 CGD Geographic Areas (GAs).

In order to strengthen and increase your Company''s natural gas transmission network to ~20000 km, your company is also executing other important pipeline projects which include Mumbai-Nagpur-Jharsuguda Pipeline (1755 km), Srikakulam-Angul Pipeline (744 km), part of Kochi-Koottanad-Bangalore-Mangalore Pipeline (KKBMPL) (~294 km) remaining in the State of Tamil Nadu, Dhamra-Haldia Pipeline (253 km) & Haridwar-Rishikesh-Dehradun Pipeline (50 km). These projects are at various stages of project execution.

Hon''ble Prime Minister laid the foundation stone for Srikakulam- Angul Pipeline on 12.1 1.2022.

Under the Petrochemicals business vertical, work is under progress on 500 KTA Propane Dehydrogenation and Polypropylene (PDH-PP) Project at Usar, Maharashtra, and 60 KTA Polypropylene (PP) project at Pata, Uttar Pradesh. Through Corporate Insolvency Resolution process (CIRP), your Company

was declared successful Resolution Applicant to acquire Purified Terephthalic Acid (PTA) plant of JBF Petrochemicals, Mangalore and the process for its revival is underway.

Buyback of Shares

Your Company has made buyback of 5,69,85,463 (Five Crore Sixty Nine Lakh Eighty Five Thousand Four Hundred and Sixty Three) fully paid-up equity shares of face value of '' 10 each (representing 1.28 % of the total number of fully paid-up equity shares) at a price of '' 190 (Rupees One Hundred Ninety only) per equity share payable in cash for an aggregate consideration of '' 1082,72,37,970 (Rupees One Thousand Eighty Two Crore Seventy Two Lakh Thirty Seven Thousand Nine Hundred and Seventy only) excluding taxes. After buyback process, the paid-up equity share capital of the Company reduced from '' 4,440.39 crore to '' 4,383.40 crore w.e.f. June 21, 2022.

Disinvestment by President of india

Your Company is promoted by the Government of India (GOI). GOI tendered 2,62,03,384 equity shares of the Company under the buyback offer and the same was bought back by the Company. Post buyback of shares, the GOI''s shareholding was 2,25,83,86,698 equity shares representing 51.52% of paid-up share capital on 26.06.2022 as against 51.45% held prior to buyback.

increase in Authorised Share Capital

Pursuant to shareholders approval in 38^th AGM held on 26.08.2022, the Authorised Share Capital of the Company was increased from '' 5,000 crore ('' Five Thousand Crore) to '' 10,000 crore ('' Ten Thousand Crore).

issue of Shares

In September, 2022, your Company issued and allotted Bonus Shares to the shareholders in ratio of one equity share of '' 10 each for every two equity shares of '' 10 each held as on record date i.e. 07.09.2022. As a result, the Paid-up Equity Capital has increased from '' 4,383.40 crores to '' 6,575.10 crores by capitalizing the General Reserves of '' 2191.70 crore.

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 @ 40% on equity shares of '' 10 each ('' 4.00/- per equity share each) amounting to '' 2,630.04 crore. The Interim Dividend(s) was paid in March, 2023 in addition to Final Dividend @10% on equity shares of '' 10 each ('' 1.00/- per equity share each) for FY 2021-22 amounting to '' 438.34 crore paid in September, 2022.

The details of the Unclaimed Dividend are covered in the Corporate Governance Report section, which forms part of the Board''s Report.

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.

Contribution to Exchequer

Your Company has contributed '' 14,446 crore in FY 2022-23 to the Central & State exchequer through duties, taxes, and others as compared to '' 13,090 crore in FY 2021-22.

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.

â¢ 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. Both these international rating agencies have indicated that your Company''s rating is now capped to the Sovereign rating of India and it may be upgraded once the sovereign rating of India improves.

Debt portfolio 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 rationalise 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 results in reduction in effective long-term borrowing cost.

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.

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), LNG Regasification (Konkan LNG Limited, Petronet LNG Limited), Gas trading (GAIL Global (Singapore) Pte. Limited) and Shale Gas (GAIL Global (USA) Inc.), LNG sourcing (GAIL Global (USA) LNG LLC). Contracts or arrangements/transactions carried out with all the related parties were on arm''s length basis and in the ordinary course of business.

During the FY 2022-23, your Company has acquired 26% stake in M/s LNG Japonica Shipping Corporation Limited ("Japonica") from M/s Mitsui O.S.K. Lines, Ltd., Tokyo, Japan. "Japonica" operates LNG vessel "GAIL Bhuwan" and your Company has signed Time Charter Party Agreement (TCP) with Japonica for shipping LNG from USA.

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. One such opportunity was acquisition of a JBF Petrochemicals Limited (JBF), a Petrochemicals Company incorporated in 2008 for setting up of 1.25 MMTPA Purified Terephthalic Acid (PTA) Plant within Mangalore Special Economic Zone (MSEZ) in the State of Karnataka.

In the year 2022, Resolution Professional of JBF submitted GAIL''s Resolution Plan for approval of the Hon''ble NCLT, Ahmedabad Bench in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC). Resolution Plan of GAIL was approved by NCLT, Ahmedabad on 13.03.2023. As per implementation of the Resolution Plan, your Company infused '' 2,101 crores (Equity - '' 625.00 crore and Debt - '' 1,476.00 crore) towards total Resolution Plan amount in JBF on 01.06.2023. Consequently, JBF has become a wholly-owned subsidiary of your Company with effect from 01.06.2023.

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.

Investment in no subsidiary/joint venture company ceased to exist during the year.

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 have been taken that focused on

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) 2022 was observed at Corporate Office and site Offices from 31^st October to 6th November 2022, under the guidance of Central Vigilance Commission (CVC) on the theme "Corruption free India for a developed Nationâ; "Hevipij 5Â® h-TRTâ fOdflr hurt" A Summary of vigilance cases during the year 2022-23 is as under:

Complaint/

Detailed

investigations

Opening Balance (as on 01.04.2022)

Received during the year

Total

Disposed off during the year

Closing balance as on 31.03.2023 (under

investigation)

Complaints

118

Detailed

Investigation

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

As a leading company in the Natural Gas value chain in India, your Company recognizes the importance of leveraging information technology (IT) to drive business growth and innovation. Your Company has adopted start-of-the-art technology solutions with a vision to improve productivity, efficiency, customer experience and gain a competitive advantage while reducing costs. Your Company remains committed to leveraging IT to support business growth and drive value for its stakeholders.

Your Company has implemented robust cyber security measures to protect the IT systems and data from cyber threats and attacks. This includes operating round-the-clock Security Operations Centre (SOC) with advanced security software, implementing regular security audits, and providing ongoing training and education to our employees. The IT data centres are ISO27001:2013 certified.

Representation of Priority Section

Your Company has been complying with the Presidential Directives and other instructions/guidelines issued from time to time pertaining to Policies and Procedures of Government of India regarding reservation, relaxations, concessions etc. for Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs), Economically

Weaker Sections (EWSs) and Persons with Benchmark Disabilities (PwBDs) in Direct Recruitment.

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 31^st March, 2023 are given in the table below:

Group	Total No. of Employees on Roll	SC	ST	OBC	PwBD	EWS
A	3776	604	270	841	59	40
B	308	34	19	98	7	0
C	690	129	34	246	31	0
D	43	12	5	12	0	0
CMD, Wholetime Directors & CVO	6	0	0	0	0	0
Grand Total (31.03.2023)	4,823	779	328	1197	97	40
Total number of employees as on 31.03.2022
	4,754	780	322	1,130	96	26

A total of 264 new employees joined your Company during the FY 2022-23. Total Manpower of the Company as on 31^st March, 2023 stood at 4823 (including CMD, Whole-time Directors & CVO) with 16% of its employees belonging to the SC category, 7% to the ST category, 25% to the OBC category, 8% to the Minorities and 2% to the Persons with Benchmark Disabilities (PwBDs) category. Your Company''s workforce is comprised of 312 women employees (i.e. 6% of its employees) as on 31^st March, 2023. The Company''s attrition rate is 0.97%, which is a testament to its strong human capital management.

Official Language

The Official Language Implementation Committees at the Corporate and Work Centre level meets 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 152 Hindi workshops were conducted during FY 2022-23 in which 3,119 employees were imparted training. Hindi Fortnight was observed across your Company from 14^th to 29^th September,

2022 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 10^th January,2023.

The First Sub-Committee of Committee of Parliament on Official Language inspected GAIL Madanpur Khadar, Mumbai, Vadodara, Kochi, Hyderabad Zonal Office, Varanasi, Abu Road, Nasirabad, Lucknow Zonal & Dibiyapur to review the steps undertaken to promote the Official Language.

Your Company has been awarded the Second prize for the year 2019-20 and Third prize for the year 2021-22 under the Petroleum Rajbhasha Shield Scheme for Commendable performance in the field of Official Language. These awards were presented by Shri Hardeep Singh Puri, Hon''ble Minister of Petroleum and Natural Gas during the Hindi Advisory Committee Meeting of MoPNG held on 25^th November, 2022.

Disclosure in relation to Sexual Harassment of Women at Workplace

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 with respect to FY 2022-23 is as under:

a)	Number of complaint pending at the beginning of the financial year	NIL
b)	Number of complaint filed during the financial year	NIL
c)	Number of complaint disposed off during the financial year	NIL
d)	Number of complaint pending at the end of the financial year	NIL

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.

In terms of the said policy, during the FY 2022-23, your Company made total procurement of '' 1541 crore from MSEs which is approx. 46.09 % of the total eligible value of annual procurement of approx. '' 3415 crore. The procurement made from MSEs owned by SC/ST Entrepreneurs is '' 137 crore which is approx. 4.01 % of the total eligible value of annual procurement and that from MSEs owned by Women Entrepreneurs is '' 108 crore which is approx. 3.61 % 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 already 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) and is also making payment to MSEs vendors through TReDS.

Procurement through Government e-Marketplace (GeM):

The Government e-Marketplace (GeM) is a Government-run e-commerce portal. It is a one-stop 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 2022-23, the Company had made procurement of '' 2541 crore through GeM (which is more than 25% of total eligible procurement in the year).

MoU Performance

The Memorandum of Understanding (MoU) is signed every year between your Company and its administrative ministry i.e., MoP&NG, to assess and enhance performance of Company through the targets set therein. The MoU for FY 2022-23 was signed between Secretary (P&NG), Government of India and CMD of your Company.

The evaluation of MoU of your Company for FY 2022-23 is under process. Evaluation of MoU for FY 2021-22 has been completed by DPE and GAIL has achieved a score of ''94.45'', which corresponds to ''Excellent'' rating.

Right to information

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) & 01 Link-CPiO/Nodal Officer (Online RTi) at Corporate office, 58 Assistant CPiOs and 25 First Appellate Authorities across all its units/offices to provide information to citizens under the provisions of the RTI 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 latest RTI Audit Report 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 in the public domain is placed on a proactive basis. This is being done to make the functioning more transparent and 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 GAIL is providing information through Online mode also. Approximately, 85% of the RTI applications/1^st stage appeals are received through online mode. All RTI applications received (online/physically 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 2022-23, your Company''s Corporate RTI Cell has a 100% disposal rate in respect of RTI Applications and First stage RTI Appeals received. A total of 875 RTI applications and 110 RTI Appeals were disposed-off within the prescribed time schedule as per the provisions of the RTI Act. Further, there was no penalty/adverse remarks received from Hon''ble Central Information Commission during the FY 2022-23 in respect of the second appeal(s) filed by RTI Appellant(s).

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 7.5 of DPE Guidelines on Corporate Governance, the detailed Management Discussion and Analysis forms part of the Board''s Report as 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 is part of Board''s Report as 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, 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.

The Statutory Auditors of the Company have examined and certified your Company''s compliance with respect to conditions enumerated in SEBI (LODR) Regulations and DPE guidelines on Corporate Governance. The certificate is part of Board''s Report as Annexure- C.

Business Responsibility & Sustainability Report

As per SEBI (LODR) Regulations for FY 2022-23, your Company is required to submit a Business Responsibility and Sustainability Report in place of Business Responsibility 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 is part of the Annual Report.

Bankers'' Meet

Auditors and Audit Reports1. Statutory Auditors

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s A.R. & Co., Chartered Accountants, New Delhi and M/s Gandhi Minocha & Co., Chartered Accountants, New Delhi were appointed as Joint Statutory Auditors for the FY 2022-23.

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 2022-23.

Comptroller and Auditor General of india (C&AG) Audit

Supplementary Audit of Financial Statements: Review and Comments of C&AG, if any on the Company''s Financial Statements for the financial year ended 31^st March, 2023 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. As on 31^st March 2023, there are fourteen pending published Paras related to C&AG audit including Irregular payment of stagnation relief, Irregular payment of income tax on perquisites to employee, Benefit extended to Private power producers, Non recovery from RIL, Abandon 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 form of shift allowance, Delay in completion of Minimum Work Program related to E&P, Infructuous expenditure due to noncompliance with O&M guidelines, Benefit to the executives in the form of payment of running and maintenance expenses of vehicles. The replies to these paras have been submitted and the status reports are also being furnished from time to time.

2. Cost Auditors

Your Company appointed six Cost Auditors for FY 2022-23 as follows:

S.No.	Name of the Cost Auditor	Region
1	M/s R J Goel & Co., New Delhi	Northern Region-I
2	M/s Chandra Wadhwa & Co., New Delhi	Northern Region-II
3	M/s Shome & Banerjee, Kolkata	Central Region
4	M/s A B K & Associates, Mumbai	Western Region
5	M/s Dhananjay V Joshi & Associates, Pune	Southern Region
6	M/s Mani & Co., Kolkata	Eastern Region

M/s R J Goel & Co., New Delhi is the lead Cost Auditor.

Your Company is maintaining Cost Accounting Records as prescribed under the Companies (Cost Records and Audit) Rules, 2014, specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013.

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 records by the Cost Auditors for FY 2021-22.

The Cost Audit Report for the financial year ended March 31, 2023 shall be filed within the prescribed time period under the Companies (Cost Records & Audit) Rules, 2014.

3. internal Auditor

Your Company has an In-house Internal Audit Department, which is headed by Executive Director. Your Company had also outsourced the internal audit of selected sites and had appointed four Internal Audit Firm(s) during FY 2022-23 for each region The details of Internal Audit Firm(s) are as under-

S.No.	Name of the internal Auditor	Region
1	M/s G S Mathur & Co. Chartered Accountants	Northern
2	M/s Niranjan & Narayan, Chartered Accountants	Southern
3	M/s Bandopadhyaya Bhaumik & Co. Cost Accountants	Eastern
4	M/s K G Somani & Co. LLP, Chartered Accountants	Western

4. Secretarial Auditor

Your Company appointed M/s Agarwal S. & Associates as Secretarial Auditor for FY 2022-23. Secretarial Audit Report confirming compliance by Practicing Company Secretary to the applicable provisions of the Companies Act, 2013, SEBI (LODR)

Regulations, and other applicable laws is part of the Board''s Report as Annexure-D.

Secretarial Auditor has made an observation that GAIL has been furnishing shorter notice to Stock Exchanges in respect of prior intimation about the meeting of the Board of Directors held on 27.05.2022 for consideration of final dividend.

Your Company''s substantive response to the qualifications made in the Secretarial Audit Report was as under:

For the FY 2021-22, GAIL was already complying Guidelines on Capital Restructuring of Central Public Sector Enterprises issued by Department of Investment & Public Asset Management (DIPAM) as Company had already paid 1^st Interim Dividend (@ '' 4 per share) & 2^nd Interim Dividend (@ '' 5 per share) in December, 2021 & March, 2022 respectively. However, based on Q4 performance, it was considered appropriate by the Management on 26.05.2022 that matter for considering Final Dividend for the benefit of the shareholders may be put up in the proposed 441^st Board meeting scheduled for 27.05.2022. Accordingly, the intimation regarding consideration of Final Dividend in 441^st Board Meeting to be held on 27.05.2022 was sent to Stock Exchanges on 26^th May, 2022. The Company had requested to Stock Exchanges vide letter dated 16.06.2022 for waiver of fine imposed on account of such non-compliance. However, NSE did not acceded to GAIL request for waiver of fine which was intimated vide letter dated 01.06.2023 and accordingly, fine was deposited to NSE on 07.06.2023. Reply from BSE is awaited.

The Company was fully compliant with the mandatory requirements of SEBI (LODR) Regulations and the Companies Act, 2013 during the FY 2022-23 except as stated above.

Performance Evaluation of Directors

Your Company is a Central Public Sector Enterprise (CPSE) and appointment/nomination of all the Directors including Independent Directors are being done by the President of India, through the MoP&NG, Government of India. Therefore, performance evaluation of individual Directors including Independent Directors is carried out by the Government of India.

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 '' 99.1 crores. i.e. 2.18% of the avg. net profit of the preceding three years after setting off the excess expenditure of 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 httos://www. aailonline. com/CSRPolicv.html

Energy Conservation, Technology Absorption and Foreign Exchange Earnings & Outgo

As per 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 are 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 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 hosted on the website at https://www.gailonline.com/pdf/InvestorsZone/GAILRelatedParty TransactionPolicyMarch2022.pdf

Particulars of Employees

As per notification dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government of India, Government Companies are exempted from complying with the provisions of Section 197 of the Companies Act, 2013. As your Company is a Government Company, information as required under said provisions have not been included in the Board''s Report.

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, 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 httD://gailonline.com/Ddf/InvestorsZone/ GAIL%20Dividend%20Distribution%20Policv.pdf

Acceptance of Deposits

Your Company has not accepted any Deposit during the FY 2022-23.

Fund Raising

During FY 2022-23, your Company had issued 15,750 numbers of 7.34% Senior, Unsecured, Listed, Rated, Taxable, Non-Cumulative,

Redeemable, Non-Convertible Debentures (Series-I) of ''10,00,000/-(Rupees Ten Lakh) each aggregating to '' 1575,00,00,000 (Rupees One Thousand Five Hundred Seventy-Five Crore) on Private Placement basis on 20^th December, 2022 (ISIN- INE129A0801). The same are listed both on the National Stock Exchange of India Limited (NSE) as well as on BSE Limited (BSE).

Foreign Exchange Earnings and Outgo

During FY 2022-23, Foreign exchange inflows were '' 28,136.38 crore and Foreign Currency outflows were '' 69,228.61 crore.

Board of Directors and Key Managerial Personnel

The following changes took place in the Board of Directors/Key Managerial Personnel of your Company since 01^st April, 2022:

Appointments:

Shri Sandeep Kumar Gupta, Chairman and Managing Director w.e.f. 03.10.2022

â¢ Shri Ayush Gupta, Director (HR) w.e.f. 22.08.2022

â¢ Shri Mahesh Kumar Agarwal, Company Secretary w.e.f.

27.08.2022

â¢ Shri Praveen Mal Khanooja, Government Nominee Director w.e.f. 16.05.2023

â¢ Shri Kushagra Mittal, Government Nominee Director w.e.f.

16.05.2023

â¢ Shri Sanjay Kumar, Director (Marketing) w.e.f. 15.06.2023 Cessations:

â¢ Shri E. S. Ranganathan, Director upto 11.08.2022

â¢ Shri A. K. Jha, Company Secretary upto 26.08.2022

â¢ Shri Manoj Jain, Chairman and Managing Director upto 31.08.2022

â¢ Dr. Navneet Mohan Kothari, Government Nominee Director upto 18.04.2023

The Board placed on record its deep appreciation for the valuable services rendered by outgoing Directors during their association with the company.

independent Directors'' Declaration

The 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, 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.

â¢ 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.aailonline.com/pdf/InvestorsZone/GAILfamiliarizationDroaram 23032022.pdf

Code of Conduct

Pursuant to the requirements of SEBI (LODR) Regulations 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 31^st March, 2023.

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

Your 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 31,2023;

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, 2023 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 share owners, business partners, and members of the GAIL family for reposing their faith, trust and confidence in your Company.

All that we have 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.

Mar 31, 2022

On behalf of the Board of Directors, I am delighted to present the 38th Board''s Report of your Company, along with Audited Standalone and Consolidated Financial Statements for the Financial Year 2021-22:

a. Financial highlights on standalone basis for FY 2021-22 are as under:

	FY 2021-22		FY 2020-21
Particulars	US $ Million	('' in crore)	US $ Million	('' in crore)
Revenue from Operations	12,032	91,646	7,683	56,738
Other Income	269	2,047	271	2,004
Cost of Sales (excluding Finance Cost and Depreciation)	10,216	77,818	6,810	50,293
Gross Margin	2,085	15,875	1,144	8,450
Finance Cost	23	174	21	156
Depreciation	277	2,111	258	1,908
Profit Before Tax (PBT)	1,785	13,590	865	6,386
Provision for Tax	424	3,226	203	1,496
Profit After Tax (PAT)	1,361	10,364	662	4,890
Appropriations Final Dividend for previous year Interim Dividend for current year	525	3,996	303	2,238
Net transfer to (from) Bond Redemption Reserve	(14)	(105)	2	15
Transfer to General Reserve	136	1,036	66	489
Net Surplus after Appropriations	714	5,437	291	2,149
	(US $)	(in '')	US $	(in '')
Earnings per Share	0.31	23.34	0.15	10.85
Book value per Share	1.48	112.42	1.32	97.69

Note: The following exchange rates are used in calculations:

For FY 2021-22: 1 US$ = ''76.17 as on 31^st March, 2022

For FY 2020-21: 1 US$ = ''73.85 as on 31^st March, 2021

b. Key Financial Highlights on a Consolidated basis for FY 2021-22

In accordance with the provisions of the Companies Act 2013 "the Actâ, SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 "SEBI (LODR) Regulationsâ, and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for FY 2021-22, together with the Auditors'' Report form part of this Annual Report.

The key highlights of the Consolidated Financial Results are as follows:
Particulars	FY 2021-22		FY 2020-21
Particulars	US $ Million	('' in crore)	US $ Million	('' in crore)
Revenue from	12,193	92,874	7,776	57,428
Operations
Profit Before Tax	2,030	15,464	1,046	7,725
Profit After Tax	1,615	12,304	832	6,143
Less: Share of	6	48	1	6
Minority
Profit for the Group	1,609	12,256	831	6,137

Note: The following exchange rates are used in calculations:

For FY 2021-22: 1 US$ = ''76.17 as on 31^st March, 2022

For FY 2020-21: 1 US$ = ''73.85 as on 31^st March, 2021

Business Overview1. Pipeline Transmissionâ¢ Natural Gas Transmission

Your Company has expanded the network of Natural Gas pipeline to 14,500 km across the length and breadth of our country. The average gas transmission through this network during FY 2021-22 was 110.98 MMSCMD vis-a-vis 104.20 MMSCMD in the previous financial year. The share in country''s Natural Gas Transmission is 68%. Revenue from operations from Natural Gas Transmission in FY 2021-22 was '' 6,392 crore as against '' 5,952 crore in FY 2020-21.

â¢ LPG Transmission

Your Company owns and operates 2,023 km LPG pipeline network namely the Jamnagar-Loni Pipeline (JLPL) and the Vizag-Secunderabad Pipeline (VSPL). JLPL and VSPL networks together achieved a throughput of 4.199 MMTPA during the FY 2021-22 against 4.163 MMTPA in the previous FY 2020-21. Revenue from operations from LPG transmission in FY 2021-22 was '' 669 crore as against '' 667 crore in FY 2020-21.

2. Natural Gas Marketing

During FY 2021-22, your Company clocked a sales figure of 96.24 MMSCMD (which included sales within India of 86.55 MMSCMD and overseas sales of 9.69 MMSCMD) as against 89.20 MMSCMD (which included sales within India of 80.28 MMSCMD and overseas sales of 8.91 MMSCMD) during FY 2020-21. Revenue from operations from Natural Gas Marketing in FY 2021-22 was '' 77,326 crore as against '' 43,846 crore in FY 2020-21. The share in country''s Domestic Gas Marketing is 53%.

3. Petrochemicals

During FY 2021-22, your Company recorded a total production of 777 KTA against a total production of 813 KTA in the FY 2020-21 and sales of 790 KTA in FY 2021-22 as against total sales of 871 KTA in the FY 2020-21. There was a decline of 4.5% in total production and a decline of 9.2% in total sales as compared to previous FY 2020-21. However, your Company was able to earn highest ever Revenue from Operations of

'' 8,549 crore, from this segment due to higher Polymer Price realization in FY 2021-22 as against '' 7,061 crore in FY 2020-21.

4. LPG and Other Liquid Hydrocarbon

Your Company has five Gas Processing Units (GPUs) at four locations in the country having a total LPG & LHC production capacity of 1.4 Million MT. During FY 2021-22, total liquid hydrocarbon production from GPUs was about 1.0 Million MT as against 1.14 Million MT in FY 2020-21, of which almost 91% constitutes LPG and Propane. Revenue from Operations from Liquid Hydrocarbons in FY 2021-22 also improved to '' 4,865 crore as against '' 3,294 crore in FY 2020-21.

5. Exploration and Production (E&P)

Your Company has participating interest in 13 E&P blocks of which 10 are in India, 2 blocks in Myanmar and 1 Shale Gas JV in Eagle Ford Basin, Texas, USA (through wholly-owned subsidiary - GGUI). Out of these, GAIL is an 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) block RJ-ONHP-2021/1 in Rajasthan basin recently awarded during OALP-VII bid round. The twelve E&P blocks (excluding Shale Gas in Eagle Ford Basin) hold an acreage of 2,656 km² as per its Participation Interest (P.I.) in various consortiums.

Revenue from Operations of '' 833 crore has been generated from E&P activities during FY 2021-22 as against '' 838 crore in FY 2020-21.

6. Renewable Energy

Your Company is committed to reduce its carbon emissions and implement renewable projects. GAIL has a total installed capacity of 131.75 MW of alternative energy; out of which 117.95 MW is wind energy projects and 13.8 MW are solar energy projects including small solar units. In addition, GAIL is also implementing solar energy projects of 2.6 MW at Pata in Uttar Pradesh, 10 MW at Vijaipur in Madhya Pradesh and 3.2 MW of solar roof top projects at various other O&M Sites. The power generated from the plant will substitute power drawn from the grid, which will help in reducing its carbon footprint in addition to optimization of the power cost. In line with the Government of India (GoI) Hydrogen Mission, your company is running a pilot project for hydrogen blending in city gas network and is setting up a 10MW Green Hydrogen plant at Vijaipur, Guna District, Madhya Pradesh. Revenue from Operations of ''50.95 crore has been generated from Power Generation activities during FY 2021-22 as against '' 43.49 crore in FY 2020-21.

7. Project Execution

During the FY 2021-22, ~1,000 km of gas pipeline is operationally ready. Further, around 5,400 km of pipeline as a part of National Gas Grid & other small connectivities is under different stages of project execution. Your Company has also achieved 1,139 km of pipeline lowering in FY 2021-22.

Under the Pradhan Mantri Urja Ganga Pipeline Project, also known as Jagdishpur Haldia and Bokaro Dhamra pipeline (JHBDPL), a total of 1,521 km out of 2,655 km pipeline length has been commissioned while achieving natural gas supply to all 4 major anchor Fertilizers plants, namely M/s Matix Fertilizers, Durgapur and 03 units of M/s Hindustan Urvarak & Rasayan Limited (HURL) at Gorakhpur, Sindri, & Barauni.

During the FY 2021-22, capacity augmentation of Vijaipur to Auraiya section of integrated Hazira-Vijaipur-Jagdishpur

pipeline has been completed and is now ready to fully cater to additional demands of existing consumers and to feed JHBDPL network.

Your Company is also extending JHBDPL project to the North-eastern region of India up to Guwahati in Assam with construction of 729 km Barauni-Guwahati Pipeline. Further, GAIL, through its Joint Venture M/s Indradhanush Gas Grid Limited (JV of GAIL, IOCL, ONGC, OIL and NRL) is also implementing North Eastern Region Network from Guwahati onwards by executing around 1,656 km natural gas pipelines to connect the eight states.

Further, your Company is committed to increase reach of Natural Gas in the country by way of providing Last Mile Connectivity to Customers & to City Gas Distribution (CGD) entities for supply of natural gas as CNG and PNG to various cities. GAIL has completed 27 nos. hook-ups connections to CGD Geographic Areas (GAs) and 4 nos. Last Mile Connections to customers during the year. Further, work is under progress to provide connectivity to another 6 customers & 50 CGD Geographic Areas (GAs).

Adding to its natural gas transmission network, there are other ongoing pipeline projects at various stages of execution which include Mumbai-Nagpur-Jharsuguda Pipeline (1,755 km), Srikakulam-Angul Pipeline (744 km), Dhamra-Haldia Pipeline (253 km), Sultanpur-Jhajjar-Hisar Pipeline (135 km) & Haridwar-Rishikesh-Dehradun Pipeline (50 km).

During FY 2021-22, two new natural gas Tie-in Pipelines have been authorized by PNGRB to your Company for laying viz. (i) from Jaya Field at Jambusar Gujarat to South Gujarat Network (~18 km) and (ii) from LNG Terminal at Jafrabad to Integrated HVJ Network (~170 km).

On LPG transmission front, Capacity Augmentation of Jamnagar-Loni LPG Pipeline from 2.5 MMTPA to 3.25 MMTPA has also been completed during the year.

Under the Petrochemicals business vertical, 500 KTA Propane Dehydrogenation and Polypropylene (PDH-PP) Project at Usar, Maharashtra, and another 60 KTA Polypropylene (PP) project at Pata, Uttar Pradesh is being set up.

Your Company also implemented SAS based Advanced Analytics System to Optimize Margin and automate demand driven Production Planning.

Buyback of Shares

Your Company made Buyback of 5,69,85,463 (Five Crore Sixty Nine Lakh Eighty Five Thousand Four Hundred and Sixty Three) fully paid-up equity shares of face value of '' 10 each (representing 1.28 % of the total number of fully paid-up equity shares) at a price of '' 190 (Rupees One Hundred Ninety only) per equity share payable in cash for an aggregate consideration of '' 1082,72,37,970 (Rupees One Thousand Eighty Two Crore Seventy Two Lakh Thirty Seven Thousand Nine Hundred and Seventy only) excluding taxes. Buyback offer was successful. Total number of Shares tendered were 51.52 crore against 5.69 crore offered. The paid-up equity share capital of the Company thus reduced from '' 4,440.39 crore to '' 4,383.40 crore w.e.f June 21, 2022.

Disinvestment by President of India

Your Company is promoted by the Government of India (GOI). GOI tendered 2,62,03,384 equity shares of the Company under the buyback offer and the same was bought back by the Company. Post buyback of shares, the GOI''s shareholding is now 2,25,83,86,698 equity shares representing 51.52% of paid-up share capital as against 51.45% held earlier.

Dividend

Your Company takes pride in being a consistent dividend-paying Company. The Board of Directors had approved payment of two interim dividends during the financial year, 1^st and 2^nd Interim Dividend @ 40% and 50% respectively on equity share of '' 10 each ('' 4.00 and '' 5.00 per equity share each) amounting to '' 3,996.35 crore on the paid-up equity share capital of the Company. The 1^st & 2^nd Interim Dividend(s) were paid in January, 2022 and March, 2022 respectively.

The Board of Directors has also recommended the payment of Final Dividend @ 10% ('' 1/- per equity share) on the paid-up equity share capital of the Company for the FY 2021-22 subject to approval of shareholders.

The details of the Unclaimed Dividend are covered in the Corporate Governance Report section, which forms part of the Board''s Report.

Employee Stock Option

Contribution to Exchequer

Your Company has contributed '' 13,090 crore in FY 2021-22 to the exchequer through duties, taxes, and others, as compared to '' 7,967 crore in FY 2020-21.

Credit Ratingâ¢ Domestic rating

Your Company has been reaffirmed 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 lower credit risk of the Company.

â¢ International Rating

The International rating agency, Moody''s International, Singapore, has assigned 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 a Long-term Issuer Rating of ''BBB-'' with a stable outlook, which is also equivalent to the sovereign rating of India. The agencies have indicated that your Company''s rating is now capped to the Sovereign rating of India and it may be upgraded once the sovereign rating of India improves.

Debt portfolio 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 reduce its cost of capital without impacting planned Capex. To rationalise the Cost of Capital, the Company refinanced old loans at lower interest rates. The tie-up for long-term and short-term facilities with Banks and Financial Institutions for fresh borrowings at competitive rates resulted in bringing down overall cost of funds. These measures led to reduction in effective long-term borrowing cost.

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.

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), LNG / Regasification (Konkan LNG Limited, Petronet LNG Limited), Gas trading (GAIL Global (Singapore) Pte. Limited), and Shale Gas (GAIL Global (USA) Inc.), LNG sourcing (GAIL Global (USA) LNG LLC). Contracts or arrangements / transactions with related parties were on arm''s length basis and in the ordinary course of business.

During the FY 2021-22, 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.

GAIL also acquired 26% stake in ONGC Tripura Power Company Ltd. (OTPC). Opportunities to optimally utilize the gas available in Tripura and to supply power to the deficit areas of North Eastern States of India is the main objective of OTPC.

Investment in no subsidiary / joint venture company ceased to exist during the year.

The subsidiaries / associates / joint venture companies have contributed significantly to its 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.

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, efforts have been made to bring in continuous system improvement to ensure greater transparency, automation of processes for reducing manual intervention and suggestions on various systemic improvements. Further, to sensitize the stakeholders, awareness workshops were held at various Company locations. This year, your Company supported the special drive of CVC to create awareness about Public Interest Disclosure & Protection of Informers (PIDPI) complaints and sensitized public on various provisions under PIDPI Complaint Mechanism by showcasing a short video film and publishing a small booklet on PIDPI.

The Vigilance Awareness Week (VAW) 2021 was observed by GAIL (India) Limited, Corporate Office and its various site offices from 26^th October to 1^st November 2021, under the guidance of Central Vigilance Commission (CVC). Theme for this year''s Vigilance Awareness Week was "Independent India @ 75: Self Reliance with Integrity; hr @ 75: icylUwi l VChURtt" The observance of the Vigilance Awareness Week (VAW) commenced by taking the Integrity Pledge by GAIL Employees at the Corporate Office and all its work centers.

Central Vigilance Commissioner, Shri Suresh N. Patel addressed to all GAIL employees from GAIL, Corporate Offices. All major 40 nos. of GAIL locations were connected through Videoconferencing. A Video film on "Independent India @ 75: Self Reliance with Integrity; hr @ 75: icyllidi l viCHlURdl" and Annual Vigilance Magazine of GAIL "Jagrook" was released by CVC.

Other highlights of VAW-2021 were:

â¢ CVO, GAIL attended the Run-up programne for Vigilance Awareness Week-2021 organized during joint conference of CVC and CBI at Kevadia, Gujarat.

â¢ Business Partner Interactive Meet (Vendor Meet) in New Delhi and Customer Meet for Gas, Petrochemical and LHC customers of NCR, Jaipur and Lucknow zones were organized.

â¢ To sensitize the public at large, Gram Sabhas in 4 villages of Bangalore and Ranchi were organized.

â¢ During Vigilance Awareness Week-2021, GM (Vigilance), Noida was felicitated by CVC for his contribution in preventive vigilance.

Representation of Priority Section

Your Company has been complying with the Presidential Directives and other instructions/guidelines issued from time to time pertaining to Policies and Procedures of Government of India regarding reservation, relaxations, concessions, etc. for Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs), Economically Weaker Sections (EWSs) and Persons with Benchmark Disabilities (PWBDs) in Direct Recruitment.

Group wise details with regard to total number of employees and the representation of Scheduled Castes, Scheduled Tribes, Other Backward Classes, Economically Weaker Sections, PWBD amongst them as on 31^st March, 2022 are given in the Table below:

	Total					EWS
Group	No. of Employees on Roll	SC	ST	OBC	PWBD
A	3,634	587	258	759	57	26
B	341	44	25	98	6	0

C	727	136	33	261	33	0
D	46	13	6	12	0	0
CMD, Wholetime Directors & CVO	6	0	0	0	0	0
Grand Total	4,754	780	322	1,130	96	26

A total of 253 new employees joined during the FY 2021-22. Total Manpower of the Company as on 31^st March, 2022 stood at 4,754 (including CMD, Whole-time Directors & CVO) with 16% of its employees belonging to the SC category, 7% to the ST category, 24% to the OBC category, 8% to the Minorities and 2% to the Persons with Benchmark Disabilities (PWBDs) category. Your Company''s workforce is comprised of 309 women employees as on 31^st March, 2022.

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.

Hindi workshops/trainings are organized on regular basis at Corporate Office and all work centers including training centers at GTI, Noida and GTI, Jaipur. Hindi computer training sessions are also an integral part of these programs. As many as 144 Hindi workshops were conducted during FY 2021-22 in which 3,812 employees were imparted training.

Hindi Fortnight was observed across your Company from 14^th to 28^thSeptember, 2021 to propagate linguistic harmony and to motivate the employees for the progressive usage of Hindi in their day-to-day work. Several Competitions/Programs were organized to encourage the employees to work in Hindi and create a conducive atmosphere.

Your Company also publishes its Quarterly Hindi magazine "Rajbhasha Sahyog" to promote the Hindi language. During the

year "jifw

Official Language has been prepared and hosted on intranet for the benefit of the employees.

The First Sub-Committee of Committee of Parliament on Official Language inspected GAIL Jaipur, Ahmedabad Zonal office, Kolkata Zonal Office, GGL, Noida & GAIL Chhainsa to review the steps undertaken to promote the Official Language.

Vishwa Hindi Divas was celebrated across GAIL on 10^th January, 2022. To mark the occasion, a Memoir Competition was organized at Corporate Office to promote Official Language. Several other programs were organized to promote Hindi during Vishwa Hindi Divas.

GAIL''s Jaipur Office has been awarded Third Prize for the year 201920 by the Department of Official Language, Ministry of Home Affairs for effective implementation of Official Language.

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. The Internal Committee (IC) has been set up to redress complaints received regarding sexual harassment. It provides a safe haven to all women, including its regular, outsourced employees and visitors.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 with respect to FY 2021-22 is as under:

a)	Number of complaint pending at the beginning of the financial year	NIL
b)	Number of complaint filed during the financial year	NIL
c)	Number of complaint disposed of during the financial year	NIL
d)	Number of complaint pending at the end of the financial year	NIL

Procurement from Micro and Small Enterprises

While implementing its Public Procurement Policy (PPP) for MSEs, your Company focuses on the following 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 addition, its PPPs have allowed local vendors to confidently quote numbers and aided in reduction of transaction and tender costs.

In terms of the said policy, during the FY 2021-22, your Company made total procurement from MSEs of '' 1,478 crore which is approx. 40.06% of the total eligible value of annual procurement of approx. '' 3689 crore of goods produced and services rendered by MSEs (including MSEs owned by SC/ST & Women Entrepreneurs).

Further, 16 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 has already 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) and is also making payment to MSEs vendors through TReDS.

Procurement through GeM

Your Company''s all work centers are registered on GeM Portal and procuring the Goods & Services available on the portal through GeM only.

In FY 2021-22, GAIL had made procurement of '' 2,593 crore through GeM (which is more than 25% of total procurement in the year.

Customer Relationship

â¢ Customer Engagement and Satisfaction

Customer engagement is how you build trust and relationships with your customers and adopt a strategy to keep them content and satisfied. Your Company engages with its customers across the year via various platforms. It aims at providing a satisfactory customer experience and undertaking appropriate customer-centric initiatives as a part of its engagement programmes. Such initiatives enhance the credibility of GAIL''s brand in the long run and help it reach out to potential customers.

Your Company is dedicated to build personal rapport and a healthy relationship with its customers to ensure customer satisfaction. For GAIL, it is crucial to analyse how its offerings are meeting or exceeding customer expectations. Meeting these expectations is an essential part of business growth and aids in rapidly developing its customer base and improving its reputation.

Your Company conducts two types of surveys to capture the feedback from customers on product quality and services offered. One is the Customer Satisfaction Index (CSI), which is an in-house attempt to collect the feedback from customers. A link is provided to all active customers to their registered email-id. Customers share their feedback on various parameters on quality and services. Their feedback is collected through SAP and analyzed. The observation is mitigated promptly and appropriately and there after customers are informed to complete the loop.

Second type is Customer Value Management (CVM) wherein the feedback from Customers are collected by a third-party evaluating agency. Customers are requested to respond to a set of questions and their feedback is recorded. This feedback is further analyzed by the agency and presented to your Company''s Management. Customer concerns are discussed and deliberated and a corrective action plan is institutionalized.

Further, your Company is also a part of the Centralized Public Grievance Redressal and Monitoring System (CPGRAMS). This system is aimed at providing the citizens and the public at large with a platform for redressal of their grievances, where complaints are directly received by the Ministry of Petroleum and Natural Gas (MoP&NG). During FY 2021-22, a total of 201 public grievances were received and all were resolved.

â¢ Customer Privacy and Grievance Redressal

Customer privacy is a more important issue today than ever before, as people are spending more time online. Matters such as protecting data, using information/data for the actual planned purpose, maintaining confidentiality and avoiding information theft or misuse are all part of customer privacy.

In addition to effectively protecting customer data, your Company focuses on delivering customer service while realising the significance of reachable and helpful grievance mechanisms. It has a reliable grievance redressal process and any concern or dissatisfaction that its customers may have can be resolved effectively. After getting the feedback from its business units, GAIL aims at addressing the issue and resolving it as soon as possible.

MoU Performance

A Memorandum of Understanding (MoU) is signed every year between your Company and its administrative ministry i.e., MoP&NG,

to assess and enhance performance of Company through the targets set therein. The MoU for FY 2021-22 was signed between Secretary (P&NG), Government of India, and CMD of your Company.

MoUs of CPSEs are finalized to assess CPSEs'' organizational efficacy, economic performance, competitiveness, and usefulness in the commercial place. MoU 2021-22 was signed in line with Government''s priorities in developing the natural gas sector in the country. Apart from financial parameters, MoU parameters also include parameters of strategic national importance like capital expenditure in Research & Development sphere. For the MoU 2021-22, a new parameter-improvement in Market Capitalization was included.

The evaluation of MoU of your Company for FY 2021-22 is under process. Evaluation of MoU for FY 2020-21 has been completed by DPE and GAIL has achieved a score of ''80.87'', which corresponds to ''Very Good'' rating.

Right to Information

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) & 01 Link-CPIO at Corporate office, 56 Asstt. CPIOs and 21 First Appellate Authorities across all its units/offices to provide information to citizens under the provisions of the RTI Act, 2005.

Section 4(1)(b) of the RTI Act, 2005 stipulates about the obligation of Public Authorities about the information which should be disclosed by every Public Authority on a suo-motu or proactive basis. Section 4(2) and Section 4(3) of the RTI Act, 2005 prescribes the method of dissemination of this information. Accordingly, keeping in view the purpose of suo-motu disclosures under Section 4, your Company''s Corporate RTI Cell has hosted a dedicated page on GAIL''s website, through which a large amount of information in the public domain on a proactive basis is placed. This is being done to make the functioning more transparent and 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 GAIL is providing information through Online mode. Besides, RTI applications received physically are being processed as per the provisions of the RTI Act, 2005 and the information is provided accordingly.

For FY 2021-22, GAIL''s Corporate RTI Cell has a 100% disposal rate in respect of RTI Applications and First stage RTI Appeals received and disposed-off. A total of 1313 RTI applications were disposed-off within the prescribed time schedule as per the provisions of the RTI Act. Further, There was no penalty/adverse remarks from Central Information Commission during the FY 2021-22 in respect of the second appeal(s) filed by RTI Appellant(s).

Risk Management

Management Discussion and Analysis

Corporate Governance

Your Company believes that good corporate governance plays a critical role in establishing a positive organizational culture. It is displayed through responsibility, accountability, consistency, fairness, and transparency towards our stakeholders. 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 as 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 Dividend(s) declared, IEPF Details and other matters, etc. forms 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.

Business Responsibility & Sustainability Report

As per SEBI (LODR) Regulations, for FY 2021-22, your Company may voluntarily submit a Business Responsibility and Sustainability Report in place of Business Responsibility Report. GAIL 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.

Auditors and Audit Reports

1. Statutory Auditors

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s A.R. & Co., Chartered Accountants, New Delhi and Gandhi Minocha & Co., Chartered Accountants, New Delhi were appointed as Joint Statutory Auditors for the FY 2021-22.

Review and Comments of C&AG, if any, on the Company''s Financial Statements for the financial year ended 31^st March, 2022 forms part of the Financial Statements. Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory. There are no qualifications on the financial statements by the Statutory Auditors for FY 2021-22.

2. Cost Auditors

Your Company appointed six Cost Auditors for FY 2021-22 as follows:

S. No.	Name of the Cost Auditor	Region
1	M/s R J Goel & Co., New Delhi	Northern Region-I
2	M/s Chandra Wadhwa & Co., New Delhi	Northern Region-II
3	M/s Shome & Banerjee, Kolkata	Central Region
4	M/s A B K & Associates, Mumbai	Western Region
5	M/s Dhananjay V Joshi & Associates, Pune	Southern Region
6	M/s Mani & Co., Kolkata	Eastern Region

M/s R J Goel & Co., New Delhi is the lead Cost Auditor.

3. Internal Auditor

GAIL has an In-house Internal Audit Department, which is headed by Chief General Manager. In addition to this, your Company has outsourced the internal audit of selected sites for the first time and has appointed four Internal Audit Firm(s) for each region for FY 2021-22 and FY 2022-23. The details are as under:-

S. No.	Name of the Internal Auditor	Region
1	M/s G S Mathur & Co. Chartered Accountants , New Delhi	Northern
2	M/s Niranjan & Narayan, Chartered Accountants, Hyderabad	Southern
3	M/s Bandopadhyaya Bhaumik & Co. Cost Accountants, Kolkata	Eastern
4	M/s K G Somani & Co. LLP, Chartered Accountants, New Delhi	Western

4. Secretarial Auditor

Your Company appointed M/s Agarwal S. & Associates as Secretarial Auditor for FY 2021-22. Secretarial Audit Report confirming compliance by Practicing Company Secretary to the applicable provisions of the Companies Act, 2013, SEBI (LODR) Regulations, and other applicable laws, forms part of Board''s Report as Annexure-D.

Secretarial Auditor has made an observation that your Company is not complying with the provisions of Regulation 17, 18, 19 & 20 of SEBI (LODR) Regulations, Clause 3.1.2, Clause 3.1.4, Chapter 4 & 5 of DPE Guidelines on Corporate Governance, Section 149(4), 177 & 178 of the Companies Act, 2013 w.r.t. Composition of Board and other Statutory Committees (Audit Committee, Stakeholders Relationship Committee, Nomination & Remuneration Committee and Risk Management Committee) and Performance Evaluation of Board. Further, due to non-compliance w.r.t. Composition of Board and Statutory Committees, NSE and BSE have imposed penalty(ies) for different quarters during FY 2021-22.

Your Company''s response to the qualifications made in the Secretarial Audit Report was as under:

GAIL is a Government Company and appointment/nomination of all Directors on the Board of the Company is done by Government of India (GOI). In absence of appointment of adequate number of Non-Executive Directors/Independent Directors by GOI, the provisions related to Composition of Board, Independent Directors in Audit Committee & Nomination & Remuneration Committee (from 01.04.2021 to 02.12.2021), Stakeholders Relationship Committee and Risk Management Committee (from 06.08.2021 to 02.12.2021) could not be complied with. However, Government (GOI) nominated six Non-Official Independent Directors on GAIL''s Board in November , 2021 and GAIL is therefore fully compliant with the requirements of SEBI (LODR) Regulations, 2015 related to the Constitution of Board, Audit Committee, Nomination and Remuneration Committee, Stakeholders

Relationship Committee and Risk Management Committee. Further, the terms & conditions of appointment as well as tenure of all Directors is also decided by GOI and there is a well laid down procedure for Performance evaluation of Directors by GOI.

Performance Evaluation of Directors

Corporate Social Responsibility

Your Company firmly believes that the commitment towards playing a defining role in the development of its stakeholders extends to uplifting lives of the marginalised 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, GAIL has incurred an expenditure of ''204.97 crore (3% of the average net profit of the preceding three years) on CSR activities during FY 2021-22 which is more than the statutory mandated expenditure of 2% (''136.46 crore) of average net profit of the preceding three years.

Annual Report on CSR activities as required under Rule 8 of the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 notified on 22^nd January, 2021 read with section 134(3) and 135(2) of the Companies Act, 2013 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 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 this report is placed 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 in section 188(1) of the Companies Act, 2013 in the prescribed form AOC-2 is placed at Annexure-G.

Particulars of Employees

Annual Return

Annual Return is hosted on your Company''s website at https:// gailonline.com/IZAnnualReports.html

Dividend Distribution Policy

As per Regulation 43A of the SEBI (LODR) Regulations, 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

Issue of Shares and Acceptance of Deposits

In FY 2021-22, no new shares were issued by the Company.

Your Company has not accepted any Deposits during the FY 2021-22. Fund Raising

During FY 2021-22, your Company has not raised funds through preferential allotment or through qualified institutional placement.

Foreign Exchange Earnings and Outgo

During FY 2021-22, Foreign exchange inflows were '' 20,326 crore and Foreign Currency outflows were ''46,843 crore.

Board of Directors and Key Managerial Personnel

The following changes occurred in the Board of Directors / Key Managerial Personnel of your Company during the FY 2021-22:

Appointments:

â¢ Dr. Navneet Mohan Kothari, Government Nominee Director w.e.f. 16.06.2021

â¢ Shri Akhilesh Jain, Independent Director w.e.f. 08.11.2021

â¢ Shri Sanjay Kashyap, Independent Director w.e.f. 17.11.2021

â¢ Dr. Nandhagopal Narayanasamy, Independent Director w.e.f.

17.11.2021

â¢ Smt. Kangabam Inaocha Devi, Independent Director w.e.f.

18.11.2021

â¢ Prof. Dr. Ravikant Kolhe, Independent Director w.e.f. 22.1 1.2021

â¢ Shri Sher Singh, Independent Director w.e.f. 22.1 1.2021

â¢ Shri Rakesh Kumar Jain, Director (Finance) and CFO w.e.f.

01.12.2021

â¢ Shri Deepak Gupta, Director (Projects) w.e.f. 12.02.2022 Cessations:

â¢ Shri Ashish Chatterjee, Government Nominee Director upto 31.05.2021.

â¢ Smt. Banto Devi Kataria, Independent Director upto

05.08.2021

â¢ Shri Anjani Kumar Tiwari, Director (Finance) and CFO upto

30.11.2021

â¢ Smt. Usha Suresh, Government Nominee Director upto

31.01.2022

The Board placed on record its deep appreciation for the valuable services rendered by outgoing Directors during their association with your Company.

Shri E S Ranganathan was holding the post of Director (Marketing)-GAIL w.e.f. 01.07.2020 and is presently placed under suspension by President of India vide letter no. C-31022/1/2022-VIG-PNG dated 18^th January, 2022.

Independent Directors'' Declaration

â¢ 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.

â¢ 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/GAILfamiliarization program23032022.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, 2022.

Insolvency and Bankruptcy Code, 2016

Information Systems and Technology

Your Company has always been at the forefront in the adoption of new technology solutions for the continual improvement in its business processes. With a vision to be a digitally empowered organization for operational excellence and stakeholder value creation, it has adopted several path-breaking technologies in its technology stack. State-of-the-Art Energy Trading and Risk Management (ETRM) system has been implemented in energy trading which has given complete visibility of the business segment under one platform. HyperConvergence Infrastructure-based Private Cloud setup with the latest software and highest level of reliability, availability and efficiency has been established to cater to the business workload.

During the unprecedented COVID-19 pandemic, employees were given the facility to work from home and advised to strictly follow Government guidelines w.r.t COVID-19. Your Company could function well with the help of several technological solutions like collaboration and virtual meeting platform, e-Note-sheet, Secure access of systems for remote working, Online transactions, Mobile Apps, etc.

Your Company has seamlessly integrated its ERP system with several external applications such as (i) Bharat Bill Pay System (BBPS) for receipt of payment from PNG customers, (ii) Government e-Marketplace (GeM) portal for exchange of PO, Bill and Payment details, (iii) GSTIN portal for submission of monthly GSTIN returns, (iv) TCS, e-Invoicing and e-Way bill portal for online and end-to-end integration with Statutory System (v) Gas trading platform of IGX for invoicing and payment (vi) Banks for auto-reconciliation, etc. for faster and reliable exchange of information. Your Company adopted digital way to conduct board and committee meetings "G-Board Portalâ (Paperless platform for GAIL''s Board/Committee Meetings).

Your Company has adopted Robotic Process Automation (RPA) technology for easing out repetitive tasks in very large volumes. Similarly, GAIL has developed several Mobile Apps for employee claims processing, payment gateway for receipt from employees. other Business Transactions as well as Reporting functionalities to facilitate ease of use and access through handheld devices. Your Company has introduced centralised processing of Invoicing for NG trading & NG transmission and centralised employee claim processing. These implementations have resulted in enhanced productivity, efficiency and accuracy in the workplace.

Your Company has implemented several web-based applications like (i) Risk Management System to monitor key risks and their mitigation plans, (ii) Online verification of documents of candidates, (iii) Jahajrani Web application for tracking various post-award activities of contracts, etc. for enhancing the transparency and completeness of business processes.

In the CGD segment, your Company has implemented CGD DPR Mobile App for monitoring penetration of PNG and CNG facilities by

its JVs/ subsidiaries. App-based CGD Meter Reading functionality, as well as BBPS based payment system, has provided a lot of convenience to the CGD customers.

Your Company has enhanced its Cyber Security portfolio with the addition of several modern Cyber Security solutions to protect its Information assets.

Your Company is in the process of upgrading the Centralized SCADA system with the latest technology for monitoring and controlling of the cross-country NG & LPG pipelines.

GAIL in service of the Nation amidst the Second and Third-wave of the Pandemic

During FY 2021-22, your Company braved the odds and managed to overcome the adversities caused by subsequent covid waves by maintaining uninterrupted and safe operations of its pipeline systems and ensured 100 % uninterrupted availability of Natural Gas and LPG to all the essential sectors in the country. Your Company believes in producing a positive, sustainable impact for both society and for the business itself and has achieved an overall HSE score of 97.18 for the FY 2021-22.

Your Company''s gas transmission and gas marketing volumes exceeded the previous financial year''s figure. While the sales in major anchor sectors largely remained unaffected, gas sales in the CGD sector had shown some weakness in the first quarter due to a lack of demand from CNG, commercial and industrial consumers. But with constant efforts, your Company was able to better the previous financial year''s performance in the CGD sector. It is worth mentioning that, despite pandemic-induced fear and people''s reluctance to allow technicians inside their homes for PNG connections, your Company along with its JVs and subsidiaries have achieved record PNG connections of more than 11.50 Lakh households during the FY 2021-22.

In Petrochemicals, your Company has produced 777 TMT of polymers and made sales of 790 TMT during the financial year, in the face of supply chain disruptions. With the easing of COVID restrictions, the progress of the projects was accelerated and your Company could achieve completion of various sections of pipelines contributing to and expanding the reach of Natural Gas Grid to newer geographies.

Being a responsible business entity, your Company worked diligently for hiring ISO containers for importing liquid oxygen during the peak period of the second wave of COVID-19. Additionally, your Company also supported towards setting up of 12 Pressure Swing Absorption (PSA) medical oxygen generation plants at different hospitals in India including Uttar Pradesh, Madhya Pradesh, Rajasthan & Karnataka.

Directors'' Responsibility Statement

Your 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, 2022;

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;

iv) prepared the annual accounts for the financial year ended March 31, 2022 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 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 shareowners, business partners, and members of the GAIL family for reposing their faith, trust and confidence in your Company.

All that we have 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 and employees look forward to the future with confidence and stand committed towards creating a mutually rewarding future for all stakeholders.

For and on behalf of the Board Manoj Jain

Place: New Delhi Chairman & Managing Director

Dated: 27.07.2022 (DIN: 07556033)

Mar 31, 2021

Dear Shareholders,

On behalf of the Board of Directors of your Company, I am delighted to present the 37^th Board''s Report of your Company along with Audited Standalone and Consolidated Financial Statements for the Financial Year 2020-21:

Financial Performance Review

a.Financial highlights on standalone basis for FY 2020-21 areas under:
Particulars	FY 2020-21		FY 2019-20
	US $ Million	(? in crore)	US $ Million	(? in crore)
Revenue from Operations	7,683	56,738	9,451	71,886
Other Income	271	2,004	185	1,408
Cost of Sales (excluding Finance Cost and Depreciation)	6,810	50,293	8,337	63,405
Gross Margin	1,144	8,450	1,300	9,888
Finance Cost	21	156	14	109
Depreciation	258	1,908	241	1,836
Profit Before Tax (PBT)	865	6,386	1,044	7,943
Provision for Tax	203	1,496	174	1,323
Profit After Tax (PAT)	662	4,890	870	6,621
Appropriations
Final Dividend for previous year	-	-	52	399
Interim Dividend for current year	303	2,238	379	2,886
Corporate Dividend Tax	-	-	86	657
Net transfer to (from) Bond Redemption Reserve	2	15	2	15
Transfer to General Reserve	66	489	87	662
Net Surplus after Appropriations	291	2,149	263	2,001

Note: The following exchange rate are used in calculations.

For FY2020-21: 1 US$ = ?73.85ason 31 March 2021 For FY2019-20: 1 US$ = X76.06 as on 31 March 2020

b. Key Financial Performance Indicators on aStandalone basis

â¢ Revenue from Operations decreased by 21% from ? 71,886 crore in FY 2019-20 to X 56,738 crore in FY 2020-21.

â¢ Profit Before Tax registered a reduction of 20% from X 7,943 crore during FY2019-20to?6,386croreduring FY2020-21.

â¢ ProfitAfterTax(PAT)decreasedby26%from?6,621 crorein FY2019-20

to?4,890crorein FY2020-21. ''

â¢ In view of the decrease in PAT, Earnings Per Share (EPS) for FY 2020-21 has reduced to? 10.85 from X 14.68 in FY 2019-20.

c. Key Financial Highlights on a Consolidated basis for FY 2020-21

In accordance with the provisions of the Companies Act 2013 "the Act", SEBI (Listing Obligationsand Disclosure Requirement) Regulations, 2015 "SEBI (LODR)" and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for FY 2020-21, together with the Auditorsâ Report form part of this Annual Report. The key highlights of the Consolidated Financial Results are as follows:

1. PipelineTransportation

â¢ Natural Gas Transportation

Your Company owns and operates a network of around 13,700 km of Natural Gas pipeline across the length and breadth of our country. The average gas transportation during FY 2020-21 was 104.20 MMSCMD vis-a-vis 108.37 MMSCMD in the previous financial year. Gross revenue of your Company from Natural Gas Transportation in FY 2020-21 was X 5,953 crore as against? 6,044 crore in FY2019-20.

(< in crore)
Particulars	FY 2020-21	FY 2019-20
Revenue from Operations	57,428	72,577
Profit Before Tax	7,725	10,429
Profit After Tax	6,143	9,515

DU3IIIC33 WVCI VICVV

â¢ LPG Transportation

Your Company owns and operates 2,038 km LPG pipeline network for LPG transportation namely the Jamnagar-Loni Pipeline (JLPL) and the Vizag-Secunderabad Pipeline (VSPL). JLPL networks achieved a throughput of 4.16 MMTPAduring the year 2020-21 against3.91 MMTPA in the previous year 2019-20. Gross revenue of your Company from LPG transportation in FY 2020-21 was? 667 crore as against ? 636 crore in FY 2019-20.

2. Natural Gas Marketing

During FY 2020-21, your Company clocked a sales figure of 89.20 MMSCMD (which included sales within India of 80.28 MMSCMD and overseas sales of 8.92 MMSCMD) as against 96.26 MMSCMD (which included sales within India of 84.60 MMSCMD and overseas sales of 11.66 MMSCMD) during FY 2019-20. Gross revenue of your Company from Natural Gas Marketing in FY 2020-21 was? 43,846 crore as against ? 59,955 crore in FY 2019-20.

3. Petrochemicals

During FY 2020-21, your Company''s production increased by 3% to 813 KTA of polymers as against 788 KTA in FY 2019-20 and sales increased to 871 KTA of polymers as against 737 KTA in FY 2019-20. Gross revenue of your Company from Petrochemicals in FY 2020-21 was ? 7,061 crore as against? 5,432 crore in FY 2019-20.

4. LPG and Other Liquid Hydrocarbon (LHC)

Your Company has five Gas Processing Plants (GPUs) at four locations in the country having total LHC production capacity of 1.4 Million MT. During FY2020-21, total Liquid Hydrocarbon production was about 1.14 Million MT as against 1.26 Million MT in FY 2019-20 of which almost 90% constitutes LPG and Propane. Gross revenue of your Company from Liquid Hydrocarbons in FY 2020-21 was ? 3,294 crore as against ? 4,234 crore in FY 2019-20.

5. Exploration and Production (E&P)

Your Company has participating interest in 12 E&P blocks of which 9 are in India, 2 blocks in Myanmar and 1 Shale Gas JV in Eagle Ford basin, Texas, USA (through wholly owned subsidiary GGUI). Out of these, your Company is an Operator in two onland blocks CB-ONN-2010/11 and CB-ONHP-2017/12 in Cambay basin awarded during NELP-IX and OALP-I bidding rounds respectively. The eleven E&P blocks (excluding Shale Gas in Eagle Ford Basin) hold an acreage of 2,170 km² as per its Participation Interest (P.l.) in various consortiums.

Revenue from sale of hydrocarbons is being generated from 5 producing blocks namely A-1 & A-3 in Myanmar and CB-ONN-2000/1 & CB-ONN-2003/2 (Cambay onshore blocks) in India and one (1) shale gas JV acreage in Eagle Ford basin, Texas, USA . Revenue from operations of ? 838 crore has been generated from E&P activities during FY 2020-21 as against ? 968 crore in FY 2019-20. Lower revenue from Myanmar is

mainly due to lower gas production (8 % lower i.e. 486 MMSCM vs 528 MMSCM in previous year) and lower gas price (11% lower i.e. US$6.53/ MMbtu vs US$7.35/MMbtu in previous year).

6. Renewable Energy

Your Company is committed to reduce carbon emission and implement renewable energy projects. Your Company has a total installed capacity of 130.21 MW of alternative energy; out of which 117.95 MW are wind energy projects and 12.26 MW are solar energy projects. Your Company is implementing a 1.8 MW captive Solar PV project at Vijaipur unit in Madhya Pradesh, 2.6 MW at Pata in Uttar Pradesh and 3.2 MW at various other O&M Sites.

7. Project Execution

Currently, your Company is executing around 6,000 km of pipeline projects as part of National Gas Grid & other small connectivities. Despite the immensely challenging times of COVID-19 pandemic, your Company has made significant progress & was able to commission over 1,000 km pipeline in FY 2020-21. The Kochi to Mangaluru Pipeline section of KKBMPL (450 km) & Dobhi to Durgapur Pipeline section (350 Km) of JHBDPL were commissioned & dedicated to the nation by Hon''ble Prime Minister on 5^th January, 2021 & 7^th February, 2021 respectively. Also, a 174 km section of 352 km long Vijaipur Auraiya Pipeline capacity expansion project hasalso been commissioned.

Now, out of 2,655 km of Pradhan Mantri Urja Ganga Pipeline Project, also known as Jagdishpur Haldia and Bokaro Dhamra pipeline (JHBDPL), total 1,100 km has been commissioned. Dobhi-Durgapur section will supply gas to M/s Matix Fertilizers & M/s Hindustan Urvarak & Rasayan Ltd. (HURL), Sindri. Your Company is also extending this pipeline project to the North-eastern region of India upto Guwahati in Assam with construction of 729 km Barauni-Guwahati Pipeline as an integrated part of JHBDPL. In addition, GAIL as JV partner of Indradhanush Gas Grid Limited (JV of GAIL, IOCL, ONGC, OIL, and NRL) is implementing North Eastern Region Network from Guwahati onwards by executing around 1656 km natural gas pipelines to connect eight north eastern states.

With the commissioning of long-awaited Kochi-Mangaluru Pipeline (450 km), gas supply to 3 major customers in Mangaluru viz. Mangalore Chemicals and Fertilizers Limited (MCFL), ONGC Mangalore Petrochemicals Limited (OMPL) & Mangalore Refinery and Petrochemicals Limited (MRPL) have now started.

Further, your Company is also taking up hook-up connections from the GAIL pipeline network to City Gas Distribution (CGD) entities for the supply of natural gas as CNG and PNG to various cities. Your Company has completed 16 CGD hook ups with CGD entities authorised by PNGRB.

Other ongoing pipeline projects under execution at various stages include Mumbai-Nagpur-Jharsuguda Pipeline (1,755 km), Srikakulam-Angul Pipeline (744 km), Dhamra- Haldia Pipeline (253 km), Sultanpur-Jhajjar-Hisar Pipeline (135 km) & Haridwar-Rishikesh-DehradunPipeline(50 km).

Under the Petrochemicals business vertical, your Company is setting up two projects, one 500 KTA Propane Dehydrogenation and Polypropylene (PDH-PP) Project at Usar, Maharashtra and another 60 KTA Polypropylene (PP) project at Pata, Uttar Pradesh. For both these projects, M/s EIL has been appointed as EPCM and Environment clearance has been granted by the Ministry of Environment, Forest & Climate Change. For PDH-PP Project-Usar, M/s LummusTechnology LLC, USA has been selected as Technology Licensor for PDH unit & M/s Grace Technologies Inc. has been selected as Technology Licensor for PP Unit. For Polypropylene (PP) project at Pata, M/s Grace Technologies Inc, USA has been selected as the Technology Licensor. Both these projects are in various stages of execution.

Integrated Annual Report(IAR)

Your Company has transitioned from compliance-based reporting to governance-based reporting by adopting the framework developed by the International Integrated Reporting Council (IIRC). We are presenting to you our 1^st Integrated Annual Report which highlights the performance of GAIL across the six capital that contribute to Energizing Growth and the measures taken by the Company towards a long-term sustainable value creation.

Buyback of Shares

Your Company made a maiden Buyback of 6,97,56,641 (Sixcrore Ninety Seven lakh Fifty Six Thousand Six Hundred Forty one) fully paid-up equity shares of face value of X 10 each (representing 1.55 % of the total number of fully paid-up equity shares) at a price of ? 150 (Rupees One Hundred Fifty Only) per equity share payable in cash for an aggregate consideration of X 1,046.35 crore (Rupees One Thousand Forty Sixcrore Thirty Five lakh only) excluding taxes. The paid-up equity share capital of the Company thus reduced from ?4,510.14 crore to X 4,440.39 crore.

Disinvestment by President of India

Your Company is promoted by the Government of India (GOI) and as per its decision, GOI tendered and sold 4,98,59,905 equity shares of the Company under the buyback offer. After tendering equity shares under buyback offer, the GOI''s shareholding is now reduced to 228,45,90,082 equity shares as on 31^st March, 2021 representing 51.45% of paid-up share capital of your Company as against 51.76% held earlier.

Dividend

Your Company takes pride in being a consistent dividend paying Company. The Board of Directors of your Company had approved payment of two interim dividends during the financial year, 1^st and 2^ndInterim Dividend both @ 25% each on equity share of X 10 each (X 2.50 per equity share) amounting to X 2,237.63 crore on the paid-up equity share capital of the Company. The 1^a & 2^nd Interim Dividend was paid in February, 2021 and March, 2021 respectively.

The details of the Unclaimed Dividend are covered in the Corporate Governance Report section, which forms part of the Boardâs Report.

Employee Stock Option

The 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.

Contribution to Exchequer

Your Company has contributed X 1,961 crore in FY 2020-21 to the exchequer through duties, taxes and others, as compared to X 9,460 crore in FY 2019-20. "

Credit Rating

â¢ Domestic Rating

Your Company has been reaffirmed the highest domestic credit rating of AAA by ICRA, CARE and India Rating. This signifies the highest credit rating in India, and hence, signifies a lower credit risk of the Company.

â¢ International Rating

The International rating agency, Moodyâs International, Singapore, has assigned the corporate issuer rating of Baa3 with a negative outlook which is equal to the sovereign rating of India. Further, Fitch Ratings has also assigned a long-term foreign currency issuer rating of BBB-with a negative outlook, which is also equivalent to the sovereign

rating of India. The agencies have indicated that your Companyâs rating maybe upgraded once the sovereign rating of India improves.

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 Reportfor FY 2020-21.

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), LNG/ Re-gasification (Petronet LNG Limited, Konkan LNG Limited), Gas trading (GAIL Global (Singapore) Pte. Limited), and Shale gas (GAIL Global (USA) Inc.), LNG sourcing (GAIL Global (USA) LNG LLC). Contracts or arrangements/ transactions with related parties were on an armâs length basis and in the ordinary course of business.

During the Financial Year, your Company acquired an equity stake of 5% in Indian Gas Exchange Ltd. (IGX), Indiaâs first Gas Exchange to trade natural gas at designated physical hubs in India.

During the year, your Company swapped its shares in Ratnagiri Gas & Power Private Limited (RGPPL) with NTPC Limitedâs shares in Konkan LNG Limited (KLL). With this share swapping, GAILâs shareholding in KLL increased to 92.15% and it became a Subsidiary Company of GAIL. Further, your Company ceased to be a shareholder of RGPPL.

Investment in no other subsidiary / joint venture company except RGPPL ceased to exist during the year. No new subsidiary/ joint venture company wasformed during theyear.

The subsidiaries/ associates / joint venture companies of your Company have contributed significantly to its business expansion activities. A statement containing the salient features of the financial statements of your Companyâs Subsidiaries, Associate Companies and Joint Ventures as per the first provision 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.

Vigilance

The 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, effective systemic improvements have been suggested to ensure transparency, efficiency, automation of processes. Review of policies and procedures were carried out which can help in reduction in corruption and ensure all-round good governance. Some of these systemic improvements are:

i. Review of C&P procedure adopted by all JVs under jurisdiction to ensure compliance of CVC guidelines and Public procurement guidelines. Communication sent to JVs for compliance of CVC guidelines.

ii. As a preventive measure, a Ready Reckoner on common irregularities in procurement has been published and widely circulated.

iii. Preventive Vigilance Training Module for executives at induction level and mid-career level has been institutionalized.

All the above suggestions are under implementation/ under consideration by management.

The Vigilance Awareness Week (VAW) 2020 was observed by GAIL (India) Limited, Corporate Office and its various site Offices from 27^thOctober to 2^nd November, 2020, under the guidance of the Central Vigilance Commission (CVC). The theme for this yearâs Vigilance Awareness Week was "fldA HRS'' HR? (Vigilant India,

Prosperous India)". The observance of the Vigilance Awareness Week commenced by taking the Integrity Pledge by GAIL Employees at the Corporate Office and all its work centers.

As per the guidelines of CVC, dedicated efforts have been made in internal housekeeping activities. Several areas, systems and procedures were reviewed and re-visited to identify the gaps. Issues related to Land

management, low representation of women workforce, holding regular meetings of the internal committee on harassment of women employees etc. have been taken up and continuous efforts to streamline the internal processes are being taken.

During the Week, various knowledge-sharing sessions by eminent speaker, Shri Vinit Goenka, Member CRIS and Member IT Task Force, Ministry of Road Transport and Highway, Director (HR) and CVO, GAIL were organized in virtual mode.

Business Partner Interactive Meet on virtual platform was organized at New Delhi. The meet was attended by Shri Manoj Jain, CMD, GAIL, Ms Shubha N. Bhambani, CVO, GAIL, lEMsof GAIL- Shri Ajit Mohan Sharan, IAS (Retd.), Shri Sanjeev Behari, IRS (C&CE) (Retd.), Dr.Meeran Chadha Borwankar, IPS, DG Police (Retd) and other senior executives. Integrity Pledge was taken by all the Vendors present at the meet.

A compendium of systemic improvement suggested by GAIL Vigilance during 2013-2020 was released during VAW-2020.

GAIL also organized three Customer Interactive Meets for its customers of NCR, Mumbai and Lucknow zones. In all the meets, customers from Gas, Polymer and Retail businesses along with consignment stockiest participated. The meet was attended by Director (Marketing), GAIL and senior executives of Vigilance Department. Integrity Pledge was administered to all the participants present in the Customer meets.

Representation of Priority Section

Group wise details with regard to total number of employees and the representation of Scheduled Castes, Scheduled Tribes, Other Backward Classes, PWBD amongst them in your Company as on 31^st March, 2021 are given in the Table below:


Group	Total no. of Employees on Roll	SC	ST	OBC	PWBD
A	3,499	559	238	694	56
B	391	57	33	106	8
C	760	140	34	267	34
D	49	13	6	14	-
CMD, DIRECTORS &CVO	6	''	''	''	''
Total	4,705	769	311	1,081	98

A total of 156 new employees (including CVO) joined your Company during the FY 2020-21. Total Manpower of the Company as on 31 âMarch, 2021 stood at 4,705 (including Whole-time Directors & CVO) with 16% of its employees belonging to the SC category, 7% to the ST category, 23% to the OBC category, 8 % to the Minorities and 2.1% to the Persons with Benchmark Disabilities (PWBDs) category. Your Company''s workforce is comprised of 304 women employees as on 31 âMarch, 2021.

Official Language

Hindi workshops / trainings are organized on regular basis at Corporate Office and all work centres including training centres at GTI Noida and GTI Jaipur. Hindi computer training sessions are also an integral part of these programs. As many as 98 Hindi workshops were conducted during FY 2020-21 in which 1,972 employees were provided training.

Hindi Fortnight was observed across your Company from 14^th to 28^thSeptember, 2020 to propagate linguistic harmony and to motivate the employees for the progressive usage of Hindi in their day-to-day work. Several Competitions/Programmes were organized to encourage the employees to work in Hindi and create a conducive atmosphere.

Your Company also publishes its Quarterly Hindi magazine "Rajbhasha Sahyog" to promote the Hindi language. During the year "15^1 3 f2^RuT/4l^i?rf for Official Language has been prepared

and hosted on your Company intranet for the benefit of the employees.

''GAIL Rajbhasha Sammelan'' was organized on 15^th December, 2020 at GTI, Noida, and chaired by Director (HR). The purpose was to spread and propagate the essence of Hindi and simultaneously review the progress made on the implementation of the Official Language in the Company.

The First Sub-Committee of Committee of Parliament on Official Language inspected your Company, GAIL Jubilee Tower, Noida and GTI-Noida offices to review the steps undertaken to promote the Official Language and the efforts were appreciated by the Parliamentary Committee. The Draft and Evidence Sub-Committee of Committee of Parliament on Official Language also inspected GAIL Corporate Office to review the steps undertaken to promote the Official Language and the efforts were appreciated by the Committee.

Your Company has been recognised by The Ministry of Petroleum and Natural Gas for effective implementation of Official Language in Oil and Gas Sector Public Undertakings.

Vishwa Hindi Divas was celebrated across your Company on 11^,hJanuary, 2021. To mark the occasion, a Literary Seminar was organized at Corporate Office to promote Official Language. Several other programmes were organized across your Company to promote Hindi during Vishwa Hindi Divas.

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 the Workplace (Prevention, Prohibition & Redressal) Act, 2013.The Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 with respect to FY 2020-21:

a)	Number of complaints pending at the beginning of the financial year	NIL
b)	Number of complaints filed during the financial year	01
c)	Number of complaints disposed-off during the financial year	01
d)	Number of complaints pending at the end of the financial year	NIL

Procurement from Micro and Small Enterprises

The Government of India has already notified a Public Procurement Policy for Micro and Small Enterprises (MSEs), Order 2012 including the amendments.

In terms of the said policy, out of the total eligible value of annual procurement of approx. X 4,068 crore towards goods produced and services rendered by MSEs (including MSEs owned by SC/ST & Women Entrepreneurs) during the FY 2020-21, the value of total procurement made from MSEs was? 1,390 crore, which is approx. 34.17%.

Further, 15 Vendor Development Program for MSEs (including 3 Special Vendor Development Program/ Hand Holding Session specially for MSEs owned bySC/ST&Women Entrepreneurs) were conducted.

GAIL is already registered on the Trade Receivable e-Discounting System (TReDS) portal of all the three service providers (i.e. M/s Mynd Soultions, M/s ATReDS and M/s RXIL) and is also making payment to MSE vendors through TReDS.

Procurement through GeM

GAIL''s all work centers are registered on GeM Portal and procuring the Goods & Services available on the portal through GeM only.

In FY 2020-21, GAIL had made procurement of ?1,033 crore through GeM (which is more than 25% of total procurement of Goods & Services as compared to FY 2019-20) and became a topper amongst PSUs. Further, GAIL has got the First Rank and Platinum Certificate in the Category of "Order Value" in "First Bi-Annual Award for the Buyers and Sellers" announced by Government E-Marketplace (GeM).

MoU Performance

A Memorandum of Understanding (MoU) is signed every year between your Company and its administrative ministry i.e., MoP&NG, to enhance the performance level of company through the targets set therein. MoU for FY 2020-21 was signed between Secretary (P&NG), Government of India and Chairman & Managing Director, GAIL on 19^th October 2020. The thrust while fixing MoU targets was more towards aligning GAIL''s performance with Government''s priorities in developing the natural gas sector in the country. Apart from the financial and physical performance parameters, MoU parameters also include parameters of strategic national importance like capital expenditure, setting up new D-PNG connections and CNG stations, supporting compressed Bio-Gas initiative "SATAT" and procurement through GeM portal. GAIL made all out efforts to meet the targets set in MoU FY 2020-21 despite the stretched targets and COVID-19 scenario. Self-Evaluation of MoU FY 2020-21 will be carried out and submitted to DPE in due time, the result of which is expected to be announced by December 2021.

Performance of MoU FY 2019-20 is under evaluation by DPE. Your Company is expected to achieve a ''Very Good'' MoU rating for FY 2019-20. GAIL has achieved Excellent rating in most of the parameters, despite the restrictions posed in the last month of the financial year due to COVID-19.

Right to Information

To promote transparency and accountability, an appropriate mechanism has been set up across the Company in line with the Right to Information Act, 2005. Your Company has nominated 01 CPIO, 54 Asstt. CPIOs and 21 First Appellate Authorities at its units/offices to provide information to citizens under the provisions of the RTI Act, 2005.

Your Company has hosted RTI Guidelines and related information on its website and the same may be accessed at http://www.gailonline.com/ final_site/RTI.html .Besides, MIS Report on RTI Applications, Record Retention Schedule, and latest RTI Audit Report has also been web-hosted under the same link.

Section 4(1)(b) of the RTI Act, 2005 lays down the information which should be disclosed by any Public Authority on a suo moto or proactive basis. Section 4(2) and Section 4(3) prescribes the method of dissemination of this information. Accordingly, keeping in view the purpose of suo moto disclosures under Section-4, GAIL''s Corporate RTI Cell has hosted a dedicated page on GAIL''s website, through which large amount of information in the public domain on the proactive basis is placed. This is being done to make the functioning of your Company more transparent and 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, we are providing

information through Online mode. Besides, RTI applications received physically are being provided information accordingly.

For FY 2020-21, GAIL''s Corporate RTI Cell has a 100% disposal rate in respect of RTI Applications received & disposed-off. A total of 795 applications were disposed-off within prescribed time schedule as per the provisions of the RTI Statute. Further, your Company has received NIL penalty/adverse remarks from Central Information Commission for the year 2020-21 in respect of the second Appeal(s) filed byAppellant(s).

Risk Management

Management''s Discussion and Analysis

In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and clause 7.5 of DPE Guidelines on Corporate Governance, the detailed Management''s Discussion and Analysis forms part of this report as Annexure-A.

Corporate Governance

Your Company believes that good corporate governance plays a critical role in establishing a positive organizational culture. It is displayed through responsibility, accountability, consistency, fairness and transparency towards our stakeholders. 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 this Report as 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 establishment of whistle blower mechanism, details related to Annual General Meeting, information pertaining to Dividend declared, I EPF Details and other matters, etc. forms part of this report in 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.

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 a part of this Report as Annexure-C.

Business Responsibility Report

As stipulated under the SEBI (LODR) Regulations, 2015, the Business Responsibility Report (BRR) describing the initiatives taken by the Company from an environmental, social and governance perspective forms part of the Annual Report.

Auditors and Audit reports

1. Statutory Auditors

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s ASA & Associates LLP, Chartered Accountants, New Delhi and M/s A.R. & Co., Chartered Accountants, New Delhi were appointed as Joint Statutory Auditors of your Company for the FY2020-21.

Review and Comments of C&AG, if any, on the Company''s Financial Statements for the financial year ending 31^st March, 2021 form part of Financial Statements. Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory. There are no qualifications on the financial statements by the Statutory Auditors for FY 2020-21.

2. Cost Auditors

Your Company appointed six Cost Auditors for FY2020-21as follow:

S.No.	Name of the Cost Auditor	Region
1	R J Goel & Co., New Delhi	Northern Region-I
2	Chandra Wadhwa & Co., New Delhi	Northern Region-ll
3	Shome & Banerjee, Kolkata	Central Region
4	AB K& Associates, Mumbai	Western Region
5	Dhananjay V Joshi & Associates, Pune	Southern Region
6	Mani &Co., Kolkata	Eastern Region

M/s R J Goel &Co., New Delhi is the lead Cost Auditor.

The Cost Audit Report for the financial year ended 31^st March, 2020 was filed with Ministry of Corporate Affairs, Government of India on 4^th September, 2020.

3. Internal Auditor

Your Company has an in-house Internal Audit Department, which is headed by Chief General Manager.

4. Secretarial Auditor

Your Company appointed M/s Agarwal S. & Associates as Secretarial Auditor for FY 2020-21. 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 this Report as Annexure-D.

Secretarial Auditor has made an observation that your Company is not complying with the provisions of Regulation 17,18,19 & 20 of SEBI (LODR) Regulations 2015 w.r.t. Composition of Board and other Statutory Committees (Audit Committee, Stakeholders Relationship Committee and Nomination & Remuneration Committee) and Performance Evaluation of Board. Further, due to non-compliance w.r.t. Composition of Board and Statutory Committees, NSE and BSE have imposed penalty(ies) for different quarters during FY 2020-21.

Reply of the Management to the qualifications made in the Secretarial Audit Report is as under:

GAIL is a Government Company and appointment/nomination of all Directors on the Board of the Company is done by Government of India (GOI). GAIL has taken up with MoP&NG, GOI from time to time for appointment of requisite number of Independent Directors. In absence of appointment of adequate number of Independent Directors by GOI, the provision related to composition of Independent Directors in Audit Committee, Nomination & Remuneration Committee and Stakeholders Relationship Committee could not be complied from 08.09.2020 onwards. Further, the terms & conditions of appointment as well as tenure and remuneration/fees payable to all Directors are also

decided by GOI and there is a well laid down procedure for performance evaluation of the Directors by the Administrative Ministry.

Company has also requested to NSE and BSE to waive-off the penalties as per the Standard Operating Procedure issued by SEBI in this regard. BSE has already waived-off the penalty for the quarter ended September and December, 2020. For the remaining quarter(s) similar waiver is expected from NSE/BSE.

Performance Evaluation

GAIL is a Central Public Sector Enterprise (CPSE) and appointment/nomination of all the Directors including Independent Directors are being done by the President of India, through the MoP&NG, Government of India. Therefore, performance evaluation of individual Directors including Independent Directors is to be undertaken by the Government of India being the appointing authority.

Corporate Social Responsibility

Your Company firmly believes that the commitment towards playing a defining role in the development of its stakeholders extends to uplifting lives of the marginalised 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, your Company has incurred an expenditure of X 147.67 crore (2.08% of the average net profit of the preceding three years) on CSR activities during FY 2020-21 which is more than the statutorily mandated expenditure of 2% (X 141.91 crore) of average net profit of the preceding three years.

Ministry of Corporate Affairs vide its Notification(s) dated 22^nd January, 2021, notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, which, inter alia, provides for the revised format of annual report for publishing the CSR activities undertaken during the financial year ended 31^st March, 2021. The Company''s CSR Policy Statement and Annual Report on the CSR activities undertaken during the Financial Year ended 31^st March, 2021, are in accordance with Section 135 of the Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out in Annexure-E to this report.

Your Company''s CSR Policy is also available on Company website at https://www.gailonline.com/CSRPIoicy.html

For more information on CSR, you may also refer to the Social and Relationship and Natural Capital section of Integrated Annual Report which forms part of this report.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings & Outgo

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 in section 188(1) of the Companies Act, 2013 in the prescribed form AOC-2 is placed at Annexure-G

Your Company has formulated the policy on dealing with Related Party Transactions and the same is hosted on your Company''s website at http://gailonline.com/pdf/lnvestorsZone/GAIL_Related_Party_Transaction_ Policy.pdf

Particulars of Employees

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 197 of the Companies Act, 2013. As your Company is a Government Company, such particulars have not been included as part of the Board''s Report.

Annual Return

Annual Return is hosted on your Company''s website at https://gailonline.com/ IZAnnualReports.html.

Dividend Distribution Policy

As per Regulation 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/lnvestorsZone/GAIL%20Dividend %20Distribution%20Policy.pdf

Issue of Shares and Fixed Deposits

In FY 2020-21, there was no issue of shares.

Your Company has not accepted any fixed deposits including the Financial Year 2020-21.

Fund Raising

During FY 2020-21, your Company has not raised funds through preferential allotment or qualified institutions placement.

Foreign Exchange Earnings and Outgo

During FY 2020-21, Foreign exchange inflows were X 14,407 crore and Foreign Currency outflows were? 27,238 crore.

Key Managerial Personnel and Directors

The following changes occurred in the Board / Key Managerial Personnel of the Company:

Appointments

â¢ Shri Manoj Jain, Chairman and Managing Director was also given the additional charge of Director (Projects) w.e.f. 22.05.2020. He has also been given the additional charge of Director (HR) w.e.f. 01.04.2021.

â¢ Shri E S Ranganathan joined as Director (Marketing) w.e.f. 01.07.2020.

â¢ Shri M V Iyer joined as Director (Business Development) w.e.f. 25.1 1.2020.

â¢ Smt. Usha Suresh was appointed as Government Nominee Director w.e.f. 10.12.2020.

â¢ Dr. Navneet Mohan Kothari was appointed as Government Nominee Directorw.e.f. 16.06.2021.

Cessations:

â¢ Dr. Ashutosh Karnatak, Director (Projects) upto21.05.2020

â¢ Shri Gajendra Singh, Director (Marketing) upto 30.06.2020

â¢ Shri Jayanto Narayan Choudhury, Independent Director upto 07.09.2020

â¢ Dr. Rahul Mukherjee, Independent Director upto 07.09.2020

â¢ Smt. Esha Srivastava, Government Nominee Director upto 10.12.2020

â¢ Shri P K Gupta, Director (HR) upto 31.03.2021

â¢ Shri Ashish Chatterjee, Government Nominee Director upto 01.06.2021

â¢ Smt. Banto Devi Kataria, Independent Director upto 05.08.2021

The Board placed on record its deep appreciation for the valuable services rendered by outgoing Directors during their association with your Company.

Independent Directors'' Declaration

The Company has received the necessary declaration from Independent Director in accordance with Section 149(7) of the Companies Act, 2013 and Regulations 16(1)(b) and 25(8) of the SEBI (LODR) Regulations, 2015, confirming that:

â¢ She meets the criteria of independence as laid out in Section 149(6) of the Act and Regulations 16(1)(b)of the SEBI (LODR) Regulations, 2015.

â¢ It was confirmed that she has registered with the data base 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://gailonline.com/pdf/ InvestorsZone/GAILfamiliarizationprogram.pdf

Code of Conduct

Insolvency and Bankruptcy Code, 2016

No application has been made under the Insolvency and Bankruptcy Code; hence the requirement to disclose the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year is not applicable.

Information Systems and Technology

Your Company has always been at the forefront in adoption of new technology solutions for continual enhancement of its business processes. With a vision to be a digitally empowered organization for operational excellence and stakeholder value creation, your Company has adopted several path-breaking technologies in its technology stack. State-of-the-Art Energy Trading and Risk Management (ETRM) system has been implemented in energy trading which has given complete visibility of the business segment under one platform. Hyper Convergence Infrastructure based Private Cloud setup with latest software and highest level of reliability, availability and efficiency has been established to cater to the business workload.

Your Company has seamlessly integrated its ERP system with several external applications such as (i) Bharat Bill Pay System (BBPS) for receipt of payment from PNG customers, (ii) Government e-Marketplace (GeM) portal for exchange of PO, Bill and Payment details, (iii) GSTIN portal for submission of monthly GSTIN returns, (iv) TCS, e-lnvoicing and e-Way bill portal for online and end-to-end integration with Statutory System (v) Gas trading platform of IGX for invoicing and payment (vi) Banks for auto-reconciliation etc. for faster and reliable exchange of information. Your Company adopted digital way to conduct Board and Committee meetings "G-Board Portal" (Paperless platform for GAILs¹ Board/Committee Meetings.)

Your Company has adopted Robotic Process Automation (RPA) technology for easing out the repetitive tasks in very large volumes. Similarly, your Company has developed several Mobile Apps for employee claims processing, other Business Transactions as well as Reporting functionalities to facilitate ease of use and access through handheld devices. These implementations have resulted in enhanced productivity, efficiency and accuracy in the workplace.

Your Company has implemented several web based applications like (i) Risk Management System to monitor key risks and their mitigation plans, (ii) Online verification of documents of candidates, (iii) Jahajrani Web application for tracking various post-award activities of contracts etc. for enhancing the transparency and completeness of business processes.

In the CGD segment, your Company has implemented CGD DPR Mobile App for monitoring penetration of PNG and CNG facilities by its JVs/ subsidiaries. App based CGD Meter Reading functionality as well as BBPS based payment system has provided a lot of convenience to the CGD customers.

Your Company has enhanced its Cyber Security portfolio with the addition of several modern Cyber Security solutions to protect its Information assets.

Your Company has successfully resolved the AGR issue with Department of Telecom (DoT) and subsequently, all the demand notices amounting to about ?1.83 lakh crore have been withdrawn by DoT.

Your Company is in the process of upgrading the Centralized SCADA system with the latest technology for monitoring and controlling of the cross country NG & LPG pipelines.

GAIL''s Services during Lockdown and Impact of COVID-19 on GAIL''s business

Your Company maintained uninterrupted and safe operations of pipeline systems and plants to ensure the availability of Natural Gas and LPG to the essential sectors in the country.

GAIL''s gas transportation and gas marketing volumes saw a steep decline during the Lockdown period in 2020 and started returning to normal during the various phases of the unlock. The most prominent impact was seen in CGD sales which reduced by almost 5 times from February, 2020 to April, 2020. This was due to almost negligible consumption of gas in the CNG and industrial/commercial segment. However, by the month of Sept-Oct 2020, your Company''s gas sales and transportation volumes resumed back to normal as all restrictions were lifted in the country.

In Petrochemicals, Pata produced 813 TMT of polymers (more than the rated design capacity) and made sales of 871 TMT during the year despite the restrictions imposed on account of COVID-19 outbreak. With the easing of restrictions, the progress of the Projects which came to a halt on account of COVID-19 outbreak and nationwide lockdown were ramped up and GAIL could achieve completion of Kochi Mangaluru Pipeline in South & Dobhi Durgapur Pipeline in East which is a part of JHBDPL Pipeline and crucial link towards expanding Natural Gas network towards eastern India. It is worth mentioning that despite COVID-19 induced fear & people''s reluctance to allow technicians inside their homes for PNG connections, GAIL was able to provide PNG connections to more than 10 Lakh households through GAIL Gas Limited and our CGD JV companies.

Directors Responsibility Statement

Your 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 ending March 31,2021;

iv) prepared the annual accounts for the financial year ending March 31, 2021 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.

Mar 31, 2019

Dear Shareholders,

On behalf of the Board of Directors of your Company, I am delighted to present the 35th Directorsâ Report of your Maharatna Company, along with Audited Financial Statements for the financial year 2018-19.

Performance Review

The important financial highlights on standalone basis for the year 2018-19 are as under:

Particulars	2018-19		2017-18
	US $ Million	(Rs. in Crore)	US $ Million	(Rs. in Crore)
Gross sales	10,722	74,808	8,181	53,690
Other income (including other operating income)	267	1864	171	1,122
Cost of sales (excluding Finance cost and depreciation)	9,398	65,572	7,038	46,192
Net Exceptional Items (Impairment of Investments)	47	326	(4)	(28)
Gross margin	1,544	10,774	1,318	8,649
Finance Cost	20	139	42	275
Depreciation	222	1,550	216	1,415
Profit Before Tax (PBT)	1,302	9,085	1,060	6,958
Provision for tax	438	3,059	357	2,340
Profit After Tax (PAT)	864	6,026	704	4,618
Appropriations
Final Dividend for previous year	47	325	70	457
Interim Dividend for current year	202	1,409	197	1,294
Corporate Dividend Tax	51	356	54	353
Net transfer to/from Bond Redemption Reserve	2	15	(42)	(277)
Transfer to CSR Reserve	-	-	-	-
Transfer to General Reserve	86	603	70	462
Net surplus after Appropriations	476	3,318	355	2,329
1 US $ in INR converted at the exchange rate as on 31st March of the respective financial year	69.77		65.63

Key Ratios

- Gross Sales

Gross sales increased by 39 % from Rs. 53,690 crore during 2017-18 to Rs. 74,808 crore in 2018-19.

- Profit Before Tax (PBT)

PBT registered a jump of 31% from Rs. 6,958 crore in 2017-18 to Rs. 9,085 crore during 2018-19.

- Profit After Tax (PAT)

Profit after Tax increased by 30% from Rs. 4,618 crore during 2017-18 to a record high of Rs. 6,026crore in 2018-19.

- Earnings Per Share (EPS)

In view of the increase in PAT, EPS has gone up from Rs. 20.48 per share as or March 31^st, 2018 to Rs. 26.72 per share as on March 31^st, 2019.

- Consolidated Financial Statements

Your Company has prepared the Consolidated Financial Statements in accordance with the IND- AS consolidating its subsidiaries, associates and joint venture entities. The highlights of the Consolidated Financial Results are as follows:

(Rs. in Crore)

Particulars	2018-19	2017-18
Gross Sales	75,912	54,556
Profit Before Tax	9,831	6,936
Profit After Tax	6,546	4,799
Other comprehensive income	(123)	(321)

Business Overview

During the year under review, the segment wise business performance of your Company is as under:

- Natural Gas Marketing

Natural gas trading continues to be the focus area of your Company. During FY 2018-19 Natural Gas sales totalled 96.93 MMSCMD with sales within India being 86.39 MMSCMD and overseas sales being 10.54 MMSCMD. Gross revenue of your Company from Natural Gas Marketing in FY 2018-19 was Rs. 57,024 crore as against Rs. 38,021 crore in FY 2017-18.

- Transmission

- Natural gas transmission

Your Company owns and operates a network of around 12,200 km of natural gas high pressure trunk pipeline. The average gas transmission during the year 2018-19 increased to 107.43 MMSCMD as compared to 105.23 MMSCMD in the previous financial year. Gross sales of your Company from Natural Gas Transmission in FY 2018-19 was Rs. 5,194 crore as against Rs. 4,446 crore in FY2017-18.

- LPG transmission

Your company operates 2,038 km of pipeline for LPG transmission. Jamnagar-Loni and the Vizag-Secunderabad pipeline networks achieved a throughput of 3.97 MMTPA during the year against 3.72 MMTPA in the previous fiscal year, thereby registering a growth of more than 6%.Gross sales of your Company from LPG Transmission in FY 2018-19 was Rs. 614 crore as against Rs. 558 crore in FY 2017-18.

- Petrochemicals

During 2018-19, your Companyâs production increased by 13% to 751KTA of polymers and sales increased by 9% to 735 KTA of polymers from the Pata plant. Additionally, more than 289 KTA of polymer produced by BCPL was sold by GAIL. Gross sales of your Company from Petrochemicals in FY 201819 was Rs. 6,631 crore as against Rs. 5,788 crore in FY 2017-18.

- LPG and Other Liquid Hydrocarbon

Your Company has five LPG plants at four locations in the country having a production capacity of 1.4 Million MT. In 2018-19, total liquid hydrocarbon production was about 1.32 Million MT as against 1.28 Million MT in FY 2017-18, of which almost 90% constitutes LPG and Propane. Gross sales of your Company from Liquid Hydrocarbons in FY 2018-19 was Rs. 4,633 crore as against Rs. 4,179 crore in FY2017-18.

GAIL Board approved revival of existing LPG plant at Usar, Maharashtra and converting it into 500 KTA Polypropylene complex. This is first of its kind project in India which would be using Propane Dehydrogenation technology for production of Propylene integrated with the downstream Polypropylene unit.

- Exploration and Production (E&P)

Your Company has participating interest in II E&P blocks of which 9 blocks are in India and 2 blocks in Myanmar. Out of these, your Company is Operator in two on-land blocks viz. CB-ONN-2010/II and CB-OnHp-2017/12 in Cambay basin awarded during NELP-IX and OALP-I bidding rounds respectively.

Appraisal activities were continued in two NELP-IX blocks namely GK-OSN-2010/I (Operator: ONGC) and CB-ONN-2010/II (Lead Operator: GAIL). Development activities were initiated in one NELP-IX blocks namely CB-ONN-2010/8 (Lead Operator: Bharat Petro Resources Limited).

Phase-II Development activities in blocks AI and A3 were initiated during FY 2018-19.

Exploratory activities are in progress in two blocks namely (i)AA-ONN-2010/2 of NELP-IX(Operator OIL), and (ii) CB-ONHP-2017/12 (Operator GAIL) of OALP-I

Revenue of Rs. 639 Crores has been generated from sale of hydrocarbons from 4 producing blocks namely A-I & A-3, Myanmar and CB-ONN-2000/I and CB-ONN-2003/2 (Cambay onland) during the year 2018-19 as against Rs. 631 crore during the FY 2017-18.

- Projects Execution

At present your Company is expanding the Natural Gas pipeline network by executing more than 5700 Kms. of Major Pipeline projects, out of which around 1050 Km of pipeline projects has been completed during the FY 2018-19. The completed pipeline project consists of 475 Km section from Varanasi-Dobhi-Patna/Barauni of prestigious Jagdishpur Haldia & Bokaro Dhamra Pipeline project popularly known as âPradhan Mantri Urja Gangaâ, 315 Km of Auraiya-Phulpur pipeline and other last mile consumer connectivities.

Supply of Natural Gas also commenced in Patna City by commissioning of 2 CNG station and PNG which was inaugurated by Honâble Prime Minister of India. Further, supply of gas to CGD Cuttack & Bhubaneswar were started from new LCNG (Liquefied CNG) satellite terminal (First of its kind in India) commissioned in Bhubaneswar City. Supply of gas to these CGDs were earlier started last year through cascade mode.

Disinvestment by President of India

The government of India disinvested 1,16,75,668 shares in July 2018 & I,98,43,410 shares in February 2019 through CPSE Bharat 22 ETF. After disinvestment, the President of Indiaâs shareholding is 1,17,70,29,046 equity shares, representing 52.19% of paid-up share capital of GAIL.

Dividend

Your Company has a consistent track-record of dividend payment. The Board of Directors of your Company had earlier approved payment of an interim dividend @ 62.50% on equity share of Rs. 10 each C 6.25 per equity share) amounting to Rs.1,409.42 crore on the paid-up equity share capital of the Company C 2,255.07 crores), which was paid in February, 2019. Further, the Board has recommended payment of final dividend @17.70% on an equity share of Rs.10 each (Rs.1.77 per equity share) amounting to Rs. 399.16 crore. With this the total dividend for the FY 2018-19 will be 80.2% on equity share of Rs.10 each amounting to Rs. 1,808.57 crore on paid-up equity capital of Rs. 2,255.07 crore (pre-bonus) which is 30% of PAT or 5.15% of Opening net-worth of Rs. 35,142 crore as per Companies Act, 2013 and in compliance of DIPAM guidelines. Further, during the year, your company also paid Dividend Distribution tax of Rs. 356.46 crore.

Contribution to Exchequer

Your Company has contributed Rs. 8,070 crore in 2018-19 to the exchequer through dividend, duties, taxes and others, as compared to Rs. 6,782 crore in 2017-18.

Credit Rating

- Domestic rating

Your Company has been reaffirmed the highest domestic credit rating of AAA from ICRA, CARE and India Rating. This signifies the highest credit rating in India, hence, carries lower credit risk of the Company.

- International Rating

The International rating agency, Moodyâs International, Singapore, has assigned the corporate issuer rating of Baa2 with stable outlook which is equal to the sovereign rating of India. Further, Fitch Ratings has also assigned a long-term foreign currency issuer default rating of BBB- with a stable outlook, which is also equivalent to the sovereign rating of India. The agencies have indicated that your Companyâs rating may be upgraded once the sovereign rating of India improves.

Particulars of Loans, Investments and Corporate Guarantees Details of investments, loan and guarantee covered under Section 186 of the Companies Act, 2013 forms part of the financial statement, as a separate section in the Annual Report FY 2018-19.

Related Parties - Subsidiaries/ Associates/ Joint Ventures

Your Company has formed subsidiaries/ associates/ joint venture companies for City Gas Distribution, such as GAIL Gas Limited, Indraprastha Gas Limited, Mahanagar Gas Limited etc.; petrochemicals such as Brahmaputra Cracker and Polymer Limited, ONGC Petro-addition Limited; LNG/ Re-gasification, such as GAIL Global (USA) LNG LLC, Petronet LNG Limited etc.; gas trading, power generation and shale gas. All the Contracts or arrangements/ transactions with related parties were carried on an armâs length basis and in ordinary course of business.

In order to facilitate City Gas Distribution Projects in Kolkata, your Company has formed a Joint Venture Company named âBengal Gas Company Limited on 04.0I.2019 â and in order to lay down natural gas pipelines in North East India, your Company has formed a Joint Venture named âIndradhanush Gas Grid Limited on 10.08.2018 â.

No subsidiary / joint venture company ceased to exist during the year. However, GAIL China Gas Global Energy Holdings Limited ceased to exist w.e.f. 3 I st May, 2019. The subsidiaries/ associates/ joint venture companies of your Company have contributed significantly to its business expansion activities. A statement containing the salient features of the financial statements of your Companyâs Subsidiaries, Associate Companies and Joint Ventures as per first proviso of section 129(3) of the Companies Act, 2013 including details of Individual contribution of all subsidiaries, associates and joint venture companies towards the overall performance of Company during the period is given under Consolidated Financial Statements.

Vigilance

Corporate Vigilance department of your Company is ISO-900I:2015 certified for having adopted Quality Management System in compliance with the requirements of ISO. A number of system improvements were affected in your company during the year for effective utilization of its resources, which in turn would help to prevent corruption and ensure all round good governance. Some of these improvements are:

- Award of contract through Board Purchase has been limited to for a period of 6 months quantity only.

- In order to eliminate high and low rate items in routine/Maintenance contract, percentage rate bidding by contractors in the tenders has been adopted.

- To avoid delay in bill processing, provision has been made in Bill Watch System to generate email alerts after regular intervals to EIC as well as to the OIC and in case of extraordinary delay alerts will be sent to the concerned Director.

- For the benefit of vendors and suppliers, status of e-tendering, e-payments & receipts is monitored and reported to MoP&NG.

The Vigilance Awareness Week-2018 was observed on the theme âEradicate Corruption - Build a New Indiaâ at the corporate office and at all the work centers from 29th October, 2018 to 3rd November, 2018. The inauguration of VAW-2018 commenced by taking the Integrity Pledge by GAIL Employees followed by release of GAIL âJAGROOKâ Magazine by C&MD for spreading awareness on vigilance. Customer Interactive Meets were organized at Delhi- NCR and Guwahati Marketing office for Natural Gas, Petrochemicals & Liquid Hydrocarbon customers. Vendor Interactive Meet was also organized at New Delhi where booklet containing compendium of the initiatives taken by GAIL to enhance efficiency and transparency in Tendering/ Contracts was released.

During Vigilance Awareness Week various competitions such as debate/ elocution/ quiz/ essay writing/ slogan/ cartoon/ poster competitions on moral values ethics, good governance practices etc. were conducted in 12 schools and II colleges in various Work centers of GAIL, wherein 1753 students participated. Gram Sabhas were organized in 2 villages to sensitized villagers against corruption related practices wherein 180 villagers participated.

Representation of Priority Section

Your Company has been complying with the Presidential Directives and other instructions/guidelines issued from time to time pertaining to Policies and Procedures of Government of India in regard to reservation, relaxations, concessions etc. for Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs) and Persons with Disabilities (PWDs) in Direct Recruitment.

Details with regard to group-wise total number of employees and the representation of Scheduled Castes, Scheduled Tribes, and Other Backward Classes and PWDs amongst them, in your Company as on March 31, 2019 are given in table below:

Group	Employees on Roll	SC	ST	OBC	PWD
A	3280	521	212	622	50
B	459	79	50	104	8
C	730	I 30	24	246	36
D	54	I 3	6	17	0
C&MD DIRECTORS	6	0	I	0	0
Total	4529	743	293	989	94

A total of 154 new employees joined your Company during the FY 2018-19. Total Manpower of the Company as on March 31, 2019 stood at 4529 (including Whole-time Directors) with 16.40 % of its employees belonging to the SC category, 6.47 % to the ST category, 21.83 % to the OBC category, 8.04 % to the Minorities and 2.08 % to the Persons with Disabilities (PWDs) category. Your Companyâs workforce includes 284 women employees as on March 31, 2019. Official Language

The Official Language Implementation Committees at the Corporate and Work Centre level meet on a quarterly basis 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, Govt. of India.

Hindi workshops/trainings are organized on regular basis at Corporate Office and all work centres including training centres at GTI Noida and GTI Jaipur. Hindi computer training sessions are also integral part of these programs. As many as 126 Hindi workshops were conducted during 2018-19 in which 2,613 employees were provided training.

Hindi Fortnight was observed across GAIL from September 14^th to 28, 2018 to propagate linguistic harmony and to motivate the employees for the progressive usage of Hindi in their day-to-day work. Several Competitions were organized to encourage the employees to work in Hindi and create a conducive atmosphere. Your Company also publishes its Quarterly Hindi magazine âRajbhasha Sahyogâ to promote Hindi language. During the year âCompilation of Bilingual Forms and standard draftsâ has been prepared and hosted on GAIL intranet for the benefit of the employees.

The 19th GAIL Rajbhasha Sammelan* was organized on 04^th January, 2019 at Mysuru (Karnataka), chaired by Director (HR). The purpose was to spread and propagate the essence of Hindi and simultaneously review the progress made on the implementation of the official language in the Company.

Your Company was awarded third Prize for the year 2018-19 by the Ministry of Petroleum & Natural Gas for Promoting & Implementing Official Language successfully.

The First Sub-Committee of Committee of Parliament on Official Language inspected GAIL, Khera Compressor Station and GAIL Corporate office to review the steps undertaken to promote the official language and the efforts were appreciated by the Parliamentary Committee.

Vishwa Hindi Divas was celebrated across GAIL on 10^th January, 2019. To mark the occasion, a special workshop was organised indicating the importance of Official Language. Hindi books were also distributed to employees.

Sexual Harassment of Women at Workplace

Your Company has in place a 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 the Workplace (Prevention, Prohibition & Redressal) Act, 2013.The Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

a. number of complaints pending at the beginning of the financial year : Nil

b. number of complaints filed during the financial year : Nil

c. number of complaints disposed of during the financial year : NA

d. number of complaints pending as on end of the financial year : Nil

Procurement from Micro and Small Enterprises (MSEs)

The Government of India has notified a Public Procurement Policy for Micro and Small Enterprises (MSEs), Order 2012 and its amendments thereof.

In terms of the said policy, out of the total eligible value of annual procurement of approx. Rs. 5,677 crore for GAIL towards goods produced and services rendered by MSEs (including MSEs owned by SC/ST Entrepreneur) during the FY 2018-19 the value of total procurement made from MSEs by GAIL was Rs. 1,662 crore, which is approx. 29.27%.

Further, more than 16 Vendor Development Program for MSEs and 6 Special Vendor Development Program/ Hand Holding Session especially for MSEs owned by SC/ST Entrepreneurs were conducted.

GAIL is already registered on 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) and also making payment to MSEs vendors through TReDS).

A. Initiatives taken for minimizing disputes

In order to develop Good stakeholder management practices w.r.t. vendors/contractors and establish a lasting buyer-seller relationship, GAIL (India) Limited has implemented a series of industry first measures:-

1.0 Samadhan mechanism:-

a) Health Monitoring of contracts (HMC): Measuring health of contract against certain parameters. The issues (including AHR items, Extra Items, Time Extension, Hindrance, disputes etc.) identified during monthly health monitoring of contracts are reported and resolved by the Engineer-In-Charge (EIC).

b) SAMADHAN Committee- The issues that are unresolved by the EIC are referred to a high power committee to resolve. The committee hears the view point of both contractor and EIC before giving a recommendation.

c) Monitoring the closure of issues raised in exceptional reporting on a quarterly basis via Quarterly Closure of Contracts

The Samadhan Mechanism has potential to prevent disputes escalate into Arbitration/Litigation and delayed execution.

2.0 Engineer-in-charge coaching programme

In order reduce the disputes it is important to make the Engineer-in-Charges (EICs) aware on various aspects of contract and its management so as to make them better equipped to deal with different situations that may arise during the execution of the contracts. This internal capability enhancement programme is conducted in GAIL on a regular basis.

3.0 Vendor coaching programme

Vendor Coaching Program are being organized for vendors to make EICs aware about this mechanism along with other objective such as eliminate the gaps in understanding, inform the consequences of Corrupt/ Fraudulent/ Collusive /Coercive Practices and reduce the disputes, disagreements, arbitrations, etc.

4.0 Pre-tender conference (PTC)

In PTC, all issues pertaining to scope, specifications, design details/data, specific requirements, if any, etc. shall be open for discussion, except for commercial terms and conditions of tendering process, which may of course be opened for discussions to some extent with prior approval. A dedicated portal showing details of Pre-Tender Conference has been hosted on GAIL tenders website

B. Initiatives for ease of doing business

GAIL endeavors to procure material or services following transparent procedure and guidelines & policies of the company and Govt. of India. In order to provide equal opportunities and generate competition and ease of doing business, GAIL has taken following steps:

1 Review of CPBG in Work Contracts & time period for submission of CPBG

2 Review of Procedure for Vendor Performance Evaluation (Yellow/ Red Card)

3 Introduction of Percentage tendering in other Services/ Works

4 Revised Dispute Resolution Mechanism clause

5 Provision for submission of security deposit/ contract performance guarantee & EMD through additional mode- online bank transaction

6 Relaxation of Prior Experience-Prior Turnover Criteria Norms for Startups

7 Policy guidelines to encourage development of indigenous sources on continuous basis

8 General Conditions of Contract for Services

9 Verification and certification of documents pertaining to bid evaluation criteria (BEC)

10 Rationalization of Mobilization Advance

11 Provision for Pradhan Mantri Suraksha BimaYojna (PMSBY) And Pradhan MantriJeewan Jyoti BimaYojana

12 DOâS & DONâTâS: Do and Donât for Contractor published and circulated all sites.

13 Introduced a comprehensive policy to promote procurement from Government e Marketplace (GeM), which is an online procurement portal providing access to a host of products and services.

14 Registration on the TReDS platform of all the three service providers i.e. M/s RXIL, M/s Mynd Solution and M/s Invoicemart.

MoU Performance

A Memorandum of Understanding (MoU) is signed every year between your Company and its administrative ministry i.e. MoP&NG, through which performance targets for the year are set.

Your Company achieved âExcellentâ MoU rating for the financial year 2017-18 with a score of92.76.

MoU for the year 2018-19 was signed between Chairman & Managing Director, GAIL and Secretary (P&NG), Government of India on 5th June, 2018.

In 2018-19 GAILâs MoU was majorly aligned towards achieving GOIâs vision of making India a gas-based economy. The thrust while fixing MoU targets was on increasing the number of PNG connections and CNG stations while other critical aspects of the MoU included key financial parameters, gas marketing, gas transmission, project implementation, capital expenditure etc.

The evaluation of MoU 2018-19 is under progress and the final evaluated MoU score and rating is expected to be announced by December 2019.

Right to Information(RTI)

In order to promote transparency and accountability, an appropriate mechanism has been set up across the Company in line with the provisions of the Right to Information Act, 2005. Your Company has nominated CPIO/ACPIOs/ Appellate Authorities at its units/offices across the Company to provide information to citizens under the provisions of the RTI Act.

Your Company has hosted RTI Guidelines and related information on its site and these may be accessed at http://www.gailonline.com/final site/RTI.html Besides, MIS Report on RTI Applications, Record Retention Schedule and latest RTI Audit Report have also been hosted under the same link.

Section 4(I) (b) of the RTI Act, 2005 lays down the information which should be disclosed by any Public Authorities on a suo-motu or proactive basis. Section 4(2) and Section 4(3) of the Act, prescribes the method of dissemination of this information. Accordingly, keeping in view the purpose of suo-motu disclosures under Section-4 of the Act, GAILâs Corporate RTI Cell has hosted a dedicated page on GAILâs website, through which large amount of information in the public domain on proactive basis is placed. This is being done to make the functioning of your Company more transparent and reduce the need for filing individual RTI applications.

Further, your Company has been made âLIVEâ on the Govt. of Indiaâs-DoPT Online RTI Portal from July, 2016 and ever since, we are providing information Online, apart from providing the requested information offline.

For the Financial Year 2018-19, GAILâs Corporate RTI Cell has 100% disposal rate in respect of RTI Applications received. As on 31st March, 2019, we had a pendency of 23 RTI Applications, which were disposed-off subsequently within time schedule/as per the provisions of the RTI Statute. Further, your Company has received âNILâ penalty/adverse remarks from Central Information Commission for the year 2018-19 in respect of second Appeals filed by Appellants. Managementâs Discussion and Analysis

In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and clause 7.5 of DPE Guidelines on Corporate Governance, the detailed Managementâs Discussion and Analysis forms part of this report at Annexure- A.

Corporate Governance

Your Company believes that good corporate governance plays a critical role in establishing a positive organizational culture. It is evident by responsibility, accountability, consistency, fairness and transparency towards our stakeholders. Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015and DPE guidelines on Corporate Governance, a report on Corporate Governance forms part of this Report at Annexure- B.

The details of the meetings of the Board, Companyâs policy on Directorsâ appointment and their remuneration, details of establishment of whistle blower mechanism and other matters, etc. forms 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 the Companyâs operations in future.

The statutory auditors of the Company have examined and certified your Companyâs compliance with respect to conditions enumerated in SEBI (LODR) Regulations, 2015 and DPE guidelines on Corporate Governance. The certificate forms a part of this Report at Annexure- C.

Auditors

- Statutory Auditors

The statutory auditor of your Company is appointed by Comptroller & Auditor General of India (CAG). M/s O P Bagla & Co. LLP, Chartered Accountants, New Delhi and M/s ASA Associates LLP, Chartered Accountants, New Delhi were appointed as Joint Statutory Auditors of your Company for the FY 2018-19.

Review and Comments of CAG, if any, on the Companyâs Financial Statements for the financial year ending March 31^st, 2019, form part of Financial Statement. Notes on Financial Statement referred to in the Auditorsâ Report are self-explanatory.

There are no qualifications on the financial statements by the statutory auditors for FY 2018-19.

- Cost Auditors

Your Company has appointed M/s Ramanath Iyer & Co., New Delhi for Northern Region , M/s Bandyopadhyaya Bhaumik & Co., Kolkata for Northern and Eastern Region , M/s A C Dutta & Co., Kolkata for Southern Region, M/s Musib& Company, Mumbai for Western Region Part-I, M/s N.D Birla & Co., Ahmedabad for Western Region Part-II and M/s Sanjay Gupta & Associates, New Delhi for Central Region as cost auditors for FY 2018-19. M/s Ramanath Iyer & Co. is the lead cost auditor.

Your Company is maintaining cost records as specified by the Central Government under sub-section (I) of section 148 of the Companies Act, 2013 and Rule 8(5)(ix) of the Companies (Accounts) Amendment Rules, 2018.

Cost audit reports for the financial year ended March 31^st, 2018 were filed with Registrar of Companies on August 24^th, 2018.

- Internal Auditor

Your Company has an in-house Internal Audit Department, which is headed by Executive Director.

- Secretarial Auditor

Your Company has appointed M/s Agarwal S. & Associates as secretarial auditors for 2018-19. 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 this Report at Annexure-D. Pursuant to SEBI Circular Number CIR/CFD/CMD I /27/20 I 9 dated 08.02.2019, Annual Secretarial Compliance Report is also attached as Annexure-E The observation made by Secretarial Auditor and Companyâs response to the observations is as under:-

Observation No. I : Non-compliance of Regulation 17 (10) & 25 (4) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has not carried out the performance evaluation of the directors. Companyâs Response: GAIL is a Government Company, appointment/ nomination of all the Directors including Independent Directors are being done by the President of India, through the MoP&NG, Government of India. Therefore, performance evaluation of individual Directors including Independent Directors is to be undertaken by Government of India being the appointing authority.

In this regard, MCA vide notification dated 5th June, 2015 & 5th July, 2017 has exempted Government Companies from applicability of the following provisions:

- Section 134 (3)(p) and 178 (2) of the Companies Act, 2013 & - Sub-Para (2) and (7) of Para II, Para IV, Para V, clauses (a) and (b) of sub- Para (3) of Para VII and Para VIII of Schedule IV (Code for Independent Directors) respectively.

In this regard, SEBI has been approached for similar exemption is awaited from the provisions of SEBI LODR Regulations 2015 relating to Performance Evaluation of Board and its directors in line with exemptions granted to Government Companies in the Companies Act, 2013.

Observation No. 2: In terms of Regulation 17(I) of SEBI (LODR) 2015 the Company should have the requisite number of Independent Directors on the Board of Company during the period from 05.06.2018 to 05.08.2018.

Companyâs Response: During the year, GAILâs Board had an optimum combination of executive and non-executive directors on the Board from 01.04.2018 to 04.06.2018 & 06.08.2018 to till date. However the position of an independent Director on the Board of the Company was vacant from 05.06.2018 to 05.08.2018.

GAIL is a Government Company and falls under the administrative control of the Ministry of Petroleum and Natural Gas, Government of India. The Directors are nominated/appointed by the Government of India. The Company has continuously pursued with the Government of India for the appointment of requisite number of Independent Directors on its Board during the vacant period in order to comply with the provisions of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 & the Companies Act, 2013. The vacant position was filled up on 06.08.2018 consequent upon the appointment of Smt. Banto Devi Kataria as Independent Director.

Performance Evaluation

As per notification dated 5^th June, 2015 issued by the Ministry of Corporate Affairs, Government of India, Government Companies are exempted from complying with the provisions of section 134(3)(p) of the Companies Act, 2013 with respect to performance evaluation of Board and its Committees.

Corporate Social Responsibility

Your Company firmly believes that the commitment towards playing a defining role in the development of its stakeholders extends to uplifting lives of the marginalised segments of the society, living in and around its areas of operation. The principles of Corporate Social Responsibility (CSR) are deeply imbibed in your companyâs corporate culture. To amplify outreach efforts, your Company has incurred an expenditure of 2.74% of the average net profit of the preceding three years on CSR projects/activities during FY 2018-19 Rs. 119.29 Crore) exceeding the government mandated 2% Rs.87.21 crores).

Annual Report on CSR activities as required under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 read with section 134(3) and 135(2) of the Companies Act, 2013 is placed at Annexure-F.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings & Outgo

As per requirement of 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 this report at Annexure-G

Particulars of contracts or arrangements with related parties

Your Company has formulated the policy on dealing with Related Party Transactions and the same is hosted on your Companyâs website at http://gailonline.com/pdf/InvestorsZone/GAIL Related Party Transaction Policy.pdf,

Particulars of Employees

As per provisions of section 197(12) of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed Company is required to disclose the ratio of the remuneration of each director to the median employeeâs remuneration etc., in the Directorsâ Report. In terms of the provisions of section 197(12) of the Companies Act, 2013, read with the Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every Company is required to give a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules in the Annual Report.

However, 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 197 of the Companies Act, 2013. As your Company is a Government Company, such particulars have not been included as part of the Directorsâ Report.

Extract of Annual Return

Extract of Annual Return forms part of this Report at Annexure-I. The Extract of Annual Return for the Financial Year ended 31st March 2019 is also available on the Companyâs website www.gailonline.com Dividend Distribution Policy

As per Regulation 43A of the SEBI LODR Regulation, 2015, your Company has formulated a Dividend Distribution Policy. The dividend pay-out is in accordance with the Companyâs Dividend Distribution Policy.

The Dividend Distribution Policy of the Company is available on the Companyâs website, at http://gailonline.com/pdf/InvestorsZone/GAI L%20Dividend% 20Distribution%20Policy.pdf.

Issue of Shares and Fixed Deposits

In Financial Year 2018-19, there was no issue or buyback of shares.

However, your company has issued bonus share in the ratio of one equity share for every one equity share held in the month of July 2019. Consequent upon issue of bonus shares, share capital has increased to Rs. 4510.14 crore.

Your Company has not accepted any fixed deposits during the financial year 2018-19 and, as such, no amount of principal or interest was outstanding as on the balance sheet date.

Fund Raising

During FY 2018-19, your Company has not raised funds through preferential allotment or qualified institutions placement.

Foreign Exchange Earnings and Outgo

During FY 2018-19, Foreign exchange inflow was Rs. 14,805 crore and foreign currency outgo was Rs. 29,869 crore.

Key Managerial Personnel and Directors

The following Key Managerial Personnel (KMP) were appointed/re-appointed on the Board of your Company:

- Shri Manoj Jain, Director (Business Development) was appointed w.e.f June 05^th, 2018.

- Shri Anjani Kumar Tiwari, Director (Finance) was appointed w.e.f December 015¹, 2018 (from the date of obtaining DIN).

- The tenure of Dr. Ashutosh Karnatak as Director (Projects) was extended for a period beyond 0I.03.2019 till 30.06.2020 i.e the date of his superannuation by Ministry of Petroleum & Natural Gas.

The following were appointed/re-appointed on the Board of your Company as Director(s):

- Smt. Banto Devi Kataria, Independent Director was appointed w.e.f August 06^th, 2018 (from the date of obtaining DIN).

- Shri Anupam Kulshreshta, Shri Sanjay Tandon and Shri S.K. Srivastava, Independent Directors were re-appointed w.e.f November 19, 2018 for a period of one year from the date of completion of their exiting tenure i.e., 19.11.2018or until further orders, whichever is earlier.

- Shri Ashutosh Jindal, Government Nominee Director was appointed w.e.f May 27^th, 2019.

The Board placed on record its deep appreciation for the valuable services rendered by Shri Subir Purkayastha and Smt. Indrani Kaushal during their association with your Company.

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 ending 31^st March, 2019.

Directors Responsibility Statement

Yours Directors confirm that they have:

i) followed applicable accounting standards, alongwith proper explanation relating to material departures, in the preparation of the annual accounts for the financial year ending March 31^st, 2019;

iv) prepared the annual accounts for the financial year ended March 31^st, 2019 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 help, guidance and support received from the Government of India, especially the Ministry of Petroleum and Natural Gas, various state governments, regulatory and statutory authorities.

Your Directors acknowledge wise counsel received from Statutory Auditors and CAG and are grateful for their consistent support and co-operation.

Your Directors also wish to thank all the shareowners, business partners and members of the GAIL family for reposing their faith, trust and confidence in your Company.

On behalf of your Directors, I would like to place on record our deep appreciation for the hard work, dedication, commitment and solidarity of your Companyâs employees.

Your Directors and employees look forward to the future with confidence and stand committed towards creating a mutually rewarding future for all stakeholders.

For and on behalf of the Board

B.C. Tripathi

Place: New Delhi Chairman & Managing Director

Dated: 08^th July, 20 9 (DIN: 01657366)

Mar 31, 2018

DIRECTORS'' REPORT

Dear Shareholders,

On behalf of the Board of Directors of your Company, I am delighted to present the 34th Directors'' Report of your Maharatna Company, along with Audited Financial Statements for the financial year 2017-18.

Financial Highlights

The important financial highlights on standalone basis for the year 2017-18 are as under:

Particulars	2017-18		2016-17
	US $ Million	(Rs, in Crore)	US $ Million	(? in Crore)
Gross sales	8,181	53,690	7,457	48,789
Other income (including other operating income)	171	1,122	194	1,271
Cost of sales (excluding interest and depreciation including extraordinary items)	7,038	46,192	6,491	42,474
Net Exceptional Items (Profit on Sale of Investments & Impairment of Assets)	4	28	(46)	(299)
Gross margin	1,318	8,649	1,114	7,287
Finance Cost	42	275	73	479
Depreciation	216	1,415	213	1,397
Profit Before Tax (PBT)	1,060	6,958	827	5,411
Provision for tax	357	2,340	292	1,908
Profit After Tax (PAT)	704	4,618	535	3,503
Appropriations
Final Dividend for previous year	70	457	58	381
Interim Dividend for current year	197	1,294	165	1,078
Corporate Dividend Tax	54	353	45	295
Net transfer to/from Bond Redemption Reserve	(42)	(277)	15	98
Transfer to CSR Reserve	-	-	-	-
Transfer to General Reserve	70	462	54	350
Net surplus after Appropriations	355	2,329	199	1,301
1 US $ in INR converted at the exchange rate as on 31st March of the respective financial year	65.63		6543

Financial Performance

- Gross Sales

Gross sales increased by 10 % from Rs,48,789 crore during 2016-17 to Rs,53,690 crore in 2017-18.

- Profit Before Tax (PBT)

PBT registered a jump of 29% to Rs,6,958 crore during 2017-18 from Rs, 5,411 crore in 2016-17.

- Profit After Tax (PAT)

Profit after Tax increased by 32% from Rs,3,503 crore during 2016-17 to a record high of Rs,4,618 crore in 2017-18.

- Earnings Per Share (EPS)

? â¦ â¦ &

In view of the increase in PAT, EPS (adjusted after Bonus issue in FY 17-18)

has gone up from I5.53 per share as on March 31, 2017 to Rs,20.48 per share as on March 31, 2018.

- Consolidated Financial Statements

Your Company has prepared the Consolidated Financial Statements in accordance with the Ind AS consolidating its subsidiaries, associates and joint venture entities. The highlights of the Consolidated Financial

^{Results are as follows:} ₍Rs, in Crore)

Particulars	2017-18	2016-17
Turnover	54,694	49,334
Profit Before Tax	6,936	5,183
Profit After Tax	4,799	3,368
Other comprehensive income	(321)	1,300

Business Performance

During the year under review, the segment wise business performance of your Company is as under:

- Natural Gas Marketing

Natural gas trading continues to constitute your Company''s core business. During FY 2017-18, gas sales volume increased 5% to 85.0 MMSCMD from 81.21 MMSCMD in the previous financial year. Gross revenue of your Company due to gas marketing in FY 17-18 was Rs,38,021 Crore registering a jump of 10% mainly on account of the increase in sale price and volume contributing 71% to the topline of the Company.

- Transmission

* Natural gastransmission

Your Company owns and operates a network of around 11,400 km of natural gas high pressure trunk pipeline with a pan-India capacity to handle volumes of around 206.03 MMSCMD. The average gas transmission during the year 2017-18 was 105.23 MMSCMD, compared to 100.4 MMSCMD in the previous financial year. The EBIDTA of Natural Gas transmission increased by 15% to Rs,3,633 crore from Rs,3,170 crore in the previous year.

* LPG transmission

Your Company operates 2,038 kms of pipeline for LPG transmission. Jamnager-Loni and the Vizag-Secunderabad pipeline networks achieved a throughput of 3.72 MMTPA during the year against 3.36 MMTPA in the previous fiscal year. Gross revenue of your Company from LPG transmission in FY 17-18 was Rs,558 crore as against Rs,514 crore in FY 2016-17.

- Petrochemicals

During 2017-18, your Company''s production increased by 11% to 671 TMTs of polymers and sales increased by 15% to 674 TMTs of polymers from the Pata plant. Additionally, more than 205.56 TMTs of polymer produced by BCPL was sold by GAIL. Gross revenue of your Company from Petrochemicals in FY 17-18 was Rs,5,788 crore as against Rs,5,626 crore in FY 2016-17.

- LPG and Other Liquid Hydrocarbon Production

Your Company has six LPG plants at five locations in the country having a production capacity of 1.5 million MT. In 2017-18, total liquid hydrocarbon production was about 1.28 Million MT, of which over 80% constitutes LPG and Propane. This segment showed a significant jump of 83% at the EBIDTA level, which increased to Rs,2,372 crore from 1,293 crore in the previous year. The improvement was largely due to buoyant prices and 15% increase in sale volumes.

- Exploration and Production (E&P)

Your Company now has participating interest in 10 E&P blocks of which 8 blocks are in India and 2 blocks in Myanmar. Out of these, your Company is Operator in one onland block viz. CB-ONN-2010/11 in the Cambay basin, awarded during the NELP-IX bidding round. Revenue of approx. Rs,631 crore has been generated from sale of hydrocarbons from these blocks during the year 2017-18.

GAIL Global (USA) Inc. (GGUI), a wholly owned subsidiary of GAIL (India) Limited, executed a Purchase and Participation Agreement with Carrizo Oil & Gas Inc. in September 2011, in order to enter into an unincorporated Joint Venture for acquiring 20% working interest in Carrizo''s certain Eagle Ford Shale acreage position in Texas, USA. Carrizo is the Operator of the JV. The JV''s lease holding is primarily located in the wet gas / condensate window in Eagle Ford shale in South Texas having significant liquids content.

Disinvestment by President of India

The Government of India disinvested 1,30,26,898 shares in June 2018 through CPSE Bharat 22 ETF. After disinvestment, the President of India''s shareholding is 1,19,55,21,226 equity shares, representing 53.01% of paid-up share capital of GAIL.

Dividend

Your Company has a consistent track-record of dividend payment. The Board of Directors of your Company had earlier approved payment of an interim dividend @ 76.50% on equity share of 10 each ('' 7.65 per equity share) amounting to 1,293.85 crore on then paid-up equity share capital of the Company (Rs, 1,691.30 crores), which was paid in January, 2018. Further, the Board has recommended payment of final dividend @14.40% on an equity share of 10 each (1.44 per equity share) on expanded equity post issue of Bonus shares, i.e., Rs,2,255.07 crores for FY 2017-18 amounting to Rs,324.72 crore.

With this, the total dividend payment for the fiscal year 2017-18 will be 71.80% on an equity share of 10 each (Rs, 7.18 /- per equity share) amounting to I618.57 crore on its paid-up equity capital of Rs,2,255.07 crore, which is 3505% of PAT and equals 5% of opening net worth of Rs,32,349.69 crore as per the Companies Act, 2013 and in compliance of Department of Investment & Public Asset Management (DIPAM) guidelines. In addition to the payment of dividend to the shareholders, your Company paid dividend distribution tax of Rs,352.53 crore.

Contribution to Exchequer

Your Company has contributed Rs,6,782 crore in 2017-18 to the exchequer through dividend, duties, taxes and others, as compared to Rs,5,909 crore in 2016-17.

Credit Rating

* Domestic rating

Your Company has been reaffirmed the highest domestic credit rating of AAA from ICRA, CARE CRISIL and India Rating. This signifies the highest credit rating in India, hence, carries lower credit risk of the Company.

* International Rating

The International rating agency, Moody''s International, Singapore, has upgraded the corporate issuer rating from Baa3 with a positive outlook to Baa2 with stable outlook which is equal to the sovereign rating of India. Further, Fitch Ratings has also assigned a long-term foreign currency issuer default rating of BBB- with a stable outlook, which is also equal to the sovereign rating of India. The international rating agencies, Moody''s and Fitch have rated your Company at par with India''s international rating. The agencies have indicated that your Company''s rating may be upgraded once the sovereign rating of India improves.

Particulars of Loans, Investments and Corporate Guarantees

Details of investments, loan and guarantee covered under Section 186 of The Companies Act, 2013 forms part of the financial statement, as a separate section in the Annual Report FY 2017-18.

Related Parties - Subsidiaries/ Associates/ Joint Ventures

Your Company has formed subsidiaries/ associates/ joint venture companies for City Gas Distribution, such as GAIL Gas Limited, Indraprastha Limited, Mahanagar Gas Limited etc.; petrochemicals such as Brahmaputra Cracker and Polymer Limited, ONGC Petro-addition Limited; LNG/ Regasification, such as GAIL Global (USA) LNG LLC, Petronet LNG Limited etc.; gas trading, power generation and shale gas. Contracts or arrangements/ transactions with related parties were on an arm''s length basis and in the ordinary course of business.

In order to facilitate the transfer of LNG undertaking pursuant to the Demerger Scheme of RGPPL, RGPPL incorporated Konkan LNG Private Limited (KLPL) as its wholly-owned subsidiary in December, 2015. The Demerger Scheme of RGPPL was approved by National Company Law Appellate Tribunal (NCLAT) vide order dated February 28, 2018 with appointed date as January 01, 2016 thereby transferring LNG business and all its associated assets and liabilities to KLPL, with mirror shareholding to RGPPL.

No subsidiary / joint venture company ceased to exist during the year. The subsidiaries/ associates/ joint venture companies of your Company have contributed significantly to its 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 first proviso of section 129(3) of The Companies Act, 2013 including details of Individual contribution of all subsidiaries, associates and joint venture companies towards the overall performance of Company during the period is given under Consolidated Financial Statements.

Vigilance

Corporate Vigilance department of your Company is ISO-9001:2008 certified for having adopted Quality Management System (QMS) in compliance with the requirements of ISO. Further, efforts are being made for the transition of existing QMS of Corporate Vigilance Department to ISO 9001:2015. To bring transparency in its systems and processes for the benefit of vendors and suppliers, status of e-tendering, e-payments & receipts is monitored and reported to MoP&NG. In addition to this, a number of system improvements were affected in your Company during the year for effective utilization of its resources, which in turn would help to prevent corruption and ensure all round good governance. Some of these improvements are:

- Online vigilance clearance status of senior executives is in place.

- List of vendors put on Holiday / Banned is available on GAIL Intranet.

- To regulate the release of man-days based payment to contract employees, Bio-metric card based Access Control system for entry/exit of contract employees is under implementation.

The Vigilance Awareness Week-2017 was observed on the theme "My Vision -Corruption Free India" at the corporate office and at all the work centers from 30th October to 4th November, 2017. An interactive session was organized at the GAIL Corporate Office on October 30, 2017 where in Sh. K V Chowdary, Central Vigilance Commissioner of India interacted with all the work centers of GAIL through Video Conferencing. GAIL Vigilance Magazine "JAGROOK" was also released on the occasion.

Essay writing, slogan writing and poster making competition for employees including contract employees were organized wherein a total number of 2,657 employees & their wards participated across 31 GAIL work centers. To create awareness among the youth towards the ill-effects of corruption, debate/allocution competitions were organized wherein a total number of 2106 students participated from over 27 schools/colleges. Further, Online Vigilance Quiz was conducted covering all work centers of GAIL on November 01, 2017.

Customer/Vendor Interaction Meets were organized at 4 locations. The concluding function was held on November 04, 2017 at Corporate Office in which Sh. Pratyush Sinha, Ex-CVC, was the the Chief Guest. A Knowledge Sharing Session was also organized during the event.

Representation of Priority Section

Your Company has been complying with the Presidential Directives and other instructions/guidelines issued from time to time pertaining to Policies and Procedures of Government of India in regard to reservation, relaxations, concessions etc. for Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs) and Persons with Disabilities (PWDs) in Direct Recruitment.

Details with regard to group-wise total number of employees and the representation of Scheduled Castes, Scheduled Tribes, and Other Backward Classes amongst them in your Company as on March 31, 2018 are given in the table below:

Group	Employees on Roll	SC	ST	C B O	PWD
A	3247	514	207	606	48
B	507	90	55	110	10
C	669	123	22	222	37
D	57	14	06	16	-
C&MD DIRECTORS & CVO	6	-	1	-	-
Total	4486	741	291	954	95

A total of 222 new employees (including CVO) joined your Company during the FY 2017-18. Total manpower of the Company as on March 31, 2018 stood at 4486 (including Whole-time Directors & CVO) with 16.5 % of its employees belonging to the SC category, 6.5% to the ST category, 21.3% to the OBC category, 7.9% to the Minorities and 2.1% to the Persons with Disabilities (PWDs) category. Your Company''s workforce comprised of 273 women employees as on March 31, 2018.

Official Language

The Official Language Implementation Committees at the Corporate and Work Centre level meets on a quarterly basis to monitor and review the progress made for achieving the targets fixed in the Annual Program issued by the Government. of India.

Hindi workshops/trainings are organized on regular basis at Corporate Office and all work centres. Hindi computer training sessions are also integral part of these programs. 127 Hindi workshops were conducted during 2017-18 in which 2260 employees were provided training.

Hindi Fortnight was observed across GAIL from September 14 to 28, 2017 to propagate linguistic harmony and to motivate the employees for the progressive usage of Hindi in their day-to-day work.

Your Company also publishes its half-yearly Hindi magazine "Rajbhasha Sahyog" to promote Hindi language and to provide a platform for creative writing in Hindi. During the year, ''Suvicharon ka Sankalan, a compendium of

365 select inspirational and motivational quotes was published and distributed among the employees.

The 18th ''GAIL Rajbhasha Sammelan'' was organized on March 10, 2018 at Amritsar (Punjab) to spread and propagate the essence of Hindi and simultaneously review the progress made on the implementation of the official language in the Company

The First Sub-Committee of Committee of Parliament on Official Language inspected the Ahmadabad Zonal and GAIL Corporate offices to review the steps undertaken to promote the official language and it was appreciative of the efforts we had undertaken.

Sexual Harassment of Women at Workplace

During the year 2017-18, no complaints of sexual harassment were received.

Procurement from Micro and Small Enterprises (MSEs)

The Government of India has notified a Public Procurement Policy for Micro and Small Enterprises (MSEs), Order 2012.

In terms of the said policy, out of the total eligible value of annual procurement of approx. Rs, 4,901 crore towards goods produced and services rendered by MSEs (including MSEs owned by SC/ST Entrepreneur) during the FY 2017-18, the value of total procurement made from MSEs is Rs, 1,362 crore, which is approx. 27.79%.

MoU Performance

A Memorandum of Understanding (MoU) is signed every year between your Company and its administrative ministry i.e. MoP&NG, through which performance targets for the year are set.

Your Company achieved ''Excellent'' MoU rating for the financial year 2016-17.

MoU for the year 2017-18 was signed between Chairman & Managing Director, GAIL and Secretary (P&NG), Government of India on July 03, 2017.

MoU 2017-18 was majorly aligned towards achieving GoI''s vision of India being a gas-based economy. The thrust while fixing MoU targets was on increasing the number of PNG connections, CNG stations, implementation of green corridor, and other critical aspects of the Company including key financial parameters, gas marketing, gas transmission, project implementation, capital expenditure etc.

The evaluation of MoU 2017-18 is under progress and the final evaluated MoU score and rating is expected to be announced during December, 2018.

Right to Information (RTI)

In order to promote transparency and accountability, an appropriate mechanism has been set up across the Company in line with the Right to Information Act, 2005. Your Company has nominated CPIO/ACPIOs/ Appellate Authorities at its units/offices across the Company to provide information to citizens under the provisions of the RTI Act.

Your Company has hosted RTI Guidelines and related information on its site and these may be accessed at http://www.eailonline.com/final site/RTI.html. Besides, MIS Report on RTI Applications, Record Retention Schedule and ^Â¦latest RTI Audit Report had also been hosted under the same link.

Section 4(1)(b) of the RTI Act, 2005 lays down the information which should be disclosed by any Public Authorities on a suo-motu or proactive basis. Section 4(2) and Section 4(3) prescribe the method of dissemination of this information. Accordingly, keeping in view the purpose of suo-motu disclosures under Section-4, GAIL''s Corporate RTI Cell has hosted a dedicated page on GAIL''s website, through which large amount of information in the public domain on proactive basis is placed. This is being done to make the functioning of your Company more transparent and reduce the need for filing individual RTI applications.

Further, your Company has been made ''LIVE'' on the GoI''s-DoPT Online RTI Portal from July, 2016 and ever since, we are providing information Online, apart from providing the requested information offline.

For the Financial Year 2017-18, GAIL''s Corporate RTI Cell has 100% disposal rate in respect of RTI Applications received & disposed off. As on 31st March, 2018, we had a pendency of 17 RTI Applications, which were disposed-off subsequently within time schedule/as per the provisions of the RTI Statute. Further, your Company has received ''NIL'' penalty/adverse remarks from Central Information Commission for the year 2017-18 in respect of second Appeal filed by Appellants.

Management Discussion and Analysis

In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and clause 7.5 of DPE Guidelines on Corporate Governance, the detailed Management''s Discussion and Analysis forms part of this report at Annexure- A.

Corporate Governance

Your Company believes that good corporate governance plays a critical role in establishing a positive organizational culture. It is evident by responsibility accountability consistency, fairness and transparency towards our stakeholders. 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 this Report at Annexure- B.

The details of the meetings of the Board, Company''s policy on Directors'' appointment and their remuneration, details of establishment of whistle blower mechanism and other matters, etc. forms part of report on Corporate Governance.

There is no significant and material order passed by the regulators or Courts or tribunals impacting the going concern status and the Company''s operations in future.

Hon ble Minister for Petroleum & Natural Gas and Skill Development & Entrepreneurship, Shri Dharmendra Pradhan inaugurated two Compressed Natural Gas (CNG) stations in CuHack in the presence of Shri B C Tripathi, CMD and other dignitaries

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 a part of this Report at Annexure- C.

Auditors

* Statutory Auditors

The statutory auditor of your Company is appointed by Comptroller & Auditor General of India (CAG). M/s O P Bagla & Co. LLP (Formerly O P Bagla & Co), Chartered Accountants, New Delhi and M/s ASA Associates LLP, Chartered Accountants, New Delhi were appointed as Joint Statutory Auditors of your Company for the FY 2017-18.

Review and Comments of CAG, if any, on the Company''s Financial Statements for the financial year ending March 31,2018, form part of Financial Statement. Notes on Financial Statement referred to in the Auditors'' Report are self-explanatory and, therefore, do not call for any further comment.

There are no qualifications by the statutory auditors on the financial statements for FY 2017-18.

* Cost Auditors

Your Company has appointed M/s Ramanath Iyer & Co., New Delhi for Northern Region , M/s Bandyopadhyaya Bhaumik & Co., Kolkata for Northern and Eastern Region , M/s A C Dutta & Co., Kolkata for Southern Region, M/s Musib & Company, Mumbai for Western Region Part-I, M/s N.D Birla & Co., Ahmedabad for Western Region Part-II and M/s Sanjay Gupta & Associates, New Delhi for Central Region as cost auditors for FY 2017-18. M/s Ramanath Iyer & Co. is the lead cost auditor.

Your Company is maintaining cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013.

Cost audit reports for the financial year ended March 31, 2017 were filed to Registrar of Companies on September 07, 2017.

* Internal Auditor

Your Company has an in-house Internal Audit Department, which is headed by Executive Director.

* Secretarial Auditor

Your Company has appointed M/s Agarwal S. & Associates as secretarial auditors for FY 2017-18. 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 this Report at Annexure- D.

The observation made by Secretarial Auditor in his Audit report is as under:

Non-compliance of Regulation 17 (10) & 25 (4) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has not carried out the performance evaluation of the directors.

Explanation on observation made by Secretarial Auditor in his Audit report is as under:

GAIL is a Government Company, appointment/ nomination of all the Directors including Independent Directors are being done through by the President of India, through the MoP&NG, therefore, performance evaluation of individual Directors including Independent Directors is to be done by Government of India being the appointing authority. As per requirement of SEBI (LODR) Regulations, 2015, a policy on performance evaluation including an evaluation criterion for the Board and its directors has been formulated.

In this regard, MCA vide notification dated June 5, 2015 & July 5, 2017 has exempted Government Companies from applicability of the following provisions:

- Section 134 (3)(p) and 178 (2) of The Companies Act, 2013 &

- Sub-Para (2) and (7) of Para II, Para IV, Para V, clauses (a) and (b) of subPara (3) of Para VII and Para VIII of Schedule IV (Code for Independent Directors) respectively.

In this regard, SEBI has also been requested for grant of exemption from the provisions of SEBI (LODR) Regulations 2015 relating to Performance Evaluation of Board and its directors in line with exemptions granted to Government Companies in The Companies Act, 2013. The reply from SEBI is awaited. The matter was deliberated in Nomination and Remuneration Committee and it was decided that the draft policy will be considered for Board''s approval on receipt of any specific directives from SEBI in this regard. The same was informed to the Board also.

Performance Evaluation

As per provisions of section 134(3)(p) of The Companies Act, 2013 for every listed company, a statement indicating the manner in which formal annual evaluation of the performance of the Board, its Committees and of individual directors should form part of the Directors'' Report.

However, as per notification dated June 5, 2015 and July 5, 2017 issued by the Ministry of Corporate Affairs, Government of India, government companies are exempted from provisions pertaining to performance evaluation of the Board, its committees and individual directors under the Companies Act, 2013.

Your Company is a government company and the appointment, tenure, performance evaluation etc. of Directors is done by the Government of India, therefore, such particulars have not been included as part of the Directors'' Report.

Corporate Social Responsibility

Your Company firmly believes that Corporate Social Responsibility (CSR) plays a major role in the development of any country and therefore, it has made CSR an integral part of its ethos and culture. Your Company goes beyond the statutory compliances and makes efforts contribute to the economic development while improving the quality of life of the local community around the company''s work centers, and the society at large. To amplify its outreach efforts, your Company has incurred an expenditure of 2.63% of the average net profit of the preceding three years on CSR projects/activities in FY 201718 (Rs,91.65 Crore) against the stipulated 2% spend (Rs,69.67 crores).

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

As per requirement of 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 this report at Annexure- F

Particulars of contracts or arrangements with related parties

As per requirement of 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 in section 188(1) of The Companies Act, 2013 in the prescribed form AOC-2 is placed at Annexure-G.

Your Company has formulated the policy on dealing with Related Party Transactions and the same is hosted on your Company''s website at http://www.gailonline.com/final site/pdf/GAIL Related Party Transaction Policy.pdf.

Particulars of Employees

As per provisions of section 197(12) of The Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Per sonnel) Rules, 2014, every listed Company is required to disclose the ratio the remuneration of each director to the median employee''s remuneration etc., in the Directors'' Report. In terms of the provisions of section 197(12) of The Companies Act, 2013, read with the Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every Company is required to give a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules in the Annual Report.

However, 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 197 of The Companies Act, 2013. Your Company is a Government Company, therefore, such particulars have not been included as part of the Directors'' Report.

Extract of Annual Return

Extract of Annual Return forms part of this Report at Annexure-H.

Dividend Distribution Policy

As per Regulation 43A of the SEBI (LODR) Regulation 2015, your Company has formulated a Dividend Distribution Policy. The dividend pay-out is 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://www.gailonline.com/final site/ pdf/InvestorsZone/ GAIL%20Dividend%20Distribution%20Policy.pdf.

Issue of Shares and Fixed Deposits

In March, 2018, your Company issued and allotted Bonus Shares to the shareholders in ratio of one equity share of 10 each for every three equity shares of 10 each held as on 29.03.2018. As a result, the Paid-up Equity Capital has increased from 1,691.30 crores to Rs,2,255.07 crores by capitalizing the General Reserves for Rs,563.77 crores.

Your Company has not accepted any fixed deposits during the financial year 2017-18 and, as such, no amount of principal or interest was outstanding as of the balance sheet date.

Fund Raising

During FY 2017-18, your Company has not raised funds through preferential allotment or qualified institutions placement.

Foreign Exchange Earnings and Outgo

During FY 2017-18, Foreign exchange earnings were Rs, 1,797.92 crore and foreign currency outgo was Rs, 11,116.05 crore.

Key Managerial Personnel and Directors

The following Key Managerial Personnel (KMP) were appointed on the Board of your Company:

- Shri Gajendra Singh, Director (Marketing) w.e.f April 05, 2017.

- Shri Manoj Jain, Director (Business Development) w.e.f June 05, 2018.

The following were appointed on the Board of your Company as a Non-official Part-Time Director(s):

- Dr.Rahul Mukherjee, Independent Director w.e.f. September 15, 2017 (from the date of obtaining DIN)

- Shri Jayanto Narayan Chaudhury, Independent Director w.e.f. September 15, 2017 (from the date of obtaining DIN)

- Ms. Indrani Kaushal, Government Nominee w.e.f. September 22, 2017

- Ms. Banto Devi Kataria, Independent Director w.e.f. August 6, 2018 (from the date of obtaining DIN)

Shri Anant Kumar Singh ceased to be Director on the Board of your Company w.e.f. May 11, 2017.

The Board placed on record its deep appreciation for the valuable services rendered by outgoing Directors/KMPs during their association with your Company Code of Conduct

Directors Responsibility Statement

Yours Directors confirm that they have:

i) followed applicable accounting standards, alongwith proper explanation relating to material departures, in the preparation of the annual accounts for the financial year ending March 31, 2018;

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 ending March 31, 2018 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 appreciation for help, guidance and support received from the Government of India, especially the Ministry of Petroleum and Natural Gas, various state governments, regulatory and statutory authorities.

Your Directors acknowledge wise counsel received from Statutory Auditors and CAG and are grateful for their consistent support and cooperation.

Your Directors also wish to thank all the shareowners, business partners and members of the GAIL family for reposing their faith, trust and confidence in your Company.

On behalf of your Directors, I would like to place on record our deep appreciation for the hard work, dedication, commitment and solidarity of your Company''s employees.

Your Directors and employees look forward to the future with confidence and stand committed to creating a bright future for all stakeholders.

For and on behalf of the Board

B.C. Tripathi

Pl_ace: N_ew Delhi Chairman & Managing Director

Dated : 10.08.2018 (DIN: 01657366)

Mar 31, 2017

DEAR SHAREHOLDERS,

The behalf of the Board of Directors of your Company, we are delighted to present the 33^rd Annual Report of your Maharatna Company, along with Audited Financial Statements for the financial year 2016-17.

PARTNER IN INDIAâS GROWTH - NATURAL GAS LEADER

You will be glad to know that your Company, GAIL (India) Limited is today counted amongst the top Natural Gas (NG) companies in the world. It marks its presence in the entire gas value chain from exploration, processing of gas for value-added products such as LPG, Propane, Pentane, Naphtha, Marketing and Transmission as well as Petrochemicals.

Your Company has an extensive Pipeline network consisting of above 11,000 kms of NG pipeline and above 2000 kms of LPG pipeline. Besides, it has followed business opportunities beyond geographical frontiers to establish its presence globally. Your Company has an office in the USA for shale gas, LNG operations trading office in Singapore and City Gas Distribution (CGD) joint ventures (JVs) in Egypt and China to promote the use of natural gas. Further your Company is also sourcing gas through international Sale Purchase Agreement (SPAs).

Your Companyâs environmental friendly business plays a vital role in the social and economic development of the country and makes substantial contribution towards its energy security.

Urja Ganga: Government of India (GoI) has entrusted your Company the task to execute the 2600 km long Jagdishpur Haldia & Bokaro-Dhamra Pipeline project connecting the eastern states of the country to the National Gas Grid. Five states, namely Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal will benefit from gaining access to natural gas on affordable and equitable basis. Once completed, the project will help to revive fertilizer plants & CGD project activities in these states, thus giving momentum to their socioeconomic growth. Your Company has also been authorized with the task to develop the CGD infrastructure of seven cities namely Varanasi, Patna, Ranchi, Bhubaneswar, Cuttack, Jamshedpur and Kolkata to access to cleaner fuel i.e., natural gas as Piped Natural Gas (PNG) for household purposes and Compressed Natural Gas (CNG) for fuelling vehicles and transforming the quality of life.

FINANCIAL HIGHLIGHTS

Ministry of Corporate Affairs (MCA) vide notification dated 16 February 2015 notified the Companies (Indian Accounting Standards) Rules, 2015 laying down the roadmap for application of IFRS converged standards IND AS to Indian companies other than banking companies, insurance companies and nonbanking finance companies (NBFCs). As per the notification, all listed companies having net worth of Rs.500 crore or more shall mandatorily transit from 1^st April 2016.

Your Company is covered under IND AS w.e.f 1^st April 2016. In compliance to Companies (Indian Accounting Standards) Rules, 2015, your Company has prepared its financial statements for FY 2016-17 with comparative figures for FY 2015-16. The Company has adjusted the impact of transition from Indian General Acceptable Accounting Principal to IND AS in the opening reserve of 1^st April 2015 and in the Statement of Profit & Loss for FY 2015-16. Further as per the provision of IND AS, the holding, subsidiaries, joint ventures, or associate companies of your Company need to also transit towards IND AS w.e.f. 1^st April 2016.

The important financial highlights for the year 2016-17 are as under:

Particulars	2016-17		2015-16*
Particulars	US $ Million	(Rs. in Crores)	US $ Million	(Rs. in Crores)
Gross sales	7,457	48,789	7,773	52,003
Other income (including other operating income)	194	1,271	162	1,084
Cost of sales (excluding interest and depreciation including extraordinary items)	6,491	42,474	7,162	47,915
Net Exceptional Items (Profit on Sale of Investments & Impairment of Assets)	(46)	(299)	-	-
Gross margin	1,114	7,287	773	5,172
Finance Cost	73	479	120	800
Depreciation	213	1,397	196	1,310
Profit Before Tax (PBT)	827	5,411	457	3,062
Provision for tax	292	1,908	125	836
Profit After Tax (PAT)	535	3,503	333	2,226
Appropriations	-		-
Final Dividend	58	381	57	381
Interim Dividend	165	1,078	47	317
Corporate Dividend Tax	45	295	21	142
Net transfer to/from Bond Redemption Reserve	15	98	5	35
Transfer to CSR Reserve	-	-	(0)	(1)
Transfer to General Reserve	54	350	34	230
Net surplus after Appropriations	199	1,301	168	1,122
1 US $ in INR converted at the exchange rate as on 31^st March of the respective financial year	65.43		66.9

*IND-AS has been implemented in FY 2016-17, financial figures for FY 2015-16 reinstated as per IND-AS

DISINVESTMENT BY PRESIDENT OF INDIA

The government of India disinvested 1,53,15,380 shares on January 01, 2017 through CPSE ETF-II. After disinvestment, the President of India shareholding is 69,63,80,452 equity shares, representing 54.90% of paid-up share capital of GAIL.

Again GoI disinvested 78,55,657 shares during March, 2017 through CPSE ETF-III post-bonus allotment of shares. After disinvestment, the President of India shareholding as on date is 92,06,51,612 equity shares, representing 54.43% of paid-up share capital of GAIL.

DIVIDEND

Your Company has a consistent track-record of dividend payment. So far, it has disbursed dividend of over Rs.15,120 Crores to its shareholders including Rs.9,120 Crores as dividend to the GoI.

The Board of Directors of your Company had earlier approved payment of an interim dividend @ 85% on equity share of Rs.10 each (Rs.8.50 per equity share) amounting to Rs.1078 crores on then paid-up equity share capital of the Company (Rs.1268.48 Crores), which was paid in February, 2017. Further, the Board has recommended payment of final dividend @ 27% on equity share of Rs.10 each (Rs.2.70 per equity share on expanded equity post issue of Bonus shares i.e. Rs.1691.30 Crores) for the FY 2016-17 amounting to Rs.457 Crores.

With this, the total dividend payment for the fiscal year 2016-17 shall be Rs.1,535 Crores on a paid-up equity capital of Rs.1691.30 Crores which is 43.81% of PAT and equals to 5% of opening net worth of Rs.30,699 Crores as per the Companies Act, 2013 and in compliance of Department of Investment & Public Asset Management (DIPAM) guidelines. In addition to the payment of dividend to the shareholders, your Company paid dividend distribution tax of Rs.295 Crores.

Capital expenditure to the tune of Rs.17,000 crore (net of capital subsidy) is planned for spending by your Company in next 2-3 years mainly on Pipelines (Urja Ganga Pipeline and others), CGDs and other business expansions through JV route etc. Accordingly, the company requires to plough back from the profits / internal resources to partly fund capex.

CONTRIBUTION TO EXCHEQUER

Your Company has contributed over Rs.5,909 crores in 2016-17 to the exchequer through dividend, duties, taxes and others, as compared to Rs.4,929 crores in 2015-16.

CREDIT RATING

- Domestic Rating

Your Company has been reaffirmed the highest domestic credit rating of AAA from ICRA, CARE and CRISIL and India Rating. This signifies highest credit rating in India, hence, carries lower credit risk of the Company.

- International Rating

The International rating agency, Moodyâs International, Singapore, has also reaffirmed the corporate issuer rating of Baa3 with a positive outlook, which is equal to the sovereign rating of India. Further, Fitch Ratings has also assigned a long-term foreign currency issuer default rating of BBB- with a stable outlook, which is also equal to the sovereign rating of India. The international rating agencies, Moodyâs and FITCH have rated your Company at par with Indiaâs international rating. The agencies have indicated that your Companyâs rating may be upgraded once sovereign rating of India improves.

BUSINESS STRATEGY

Your Company is aligned to the path of growth levers as identified in the master strategy envisioned for the decade spanning upto 2020. Although the strategy undergoes periodic reviews with requisite course corrections, GAIL has been progressing in expanding its foot-prints along the natural gas value chain very scrupulously.

- National Gas Grid

Your Company has been actively engaged in developing the natural gas pipeline network and working towards development of a National Gas Grid structure as a backbone for expanding the infrastructure reach across the country. Government of India is focused to accelerate the grid development for ushering maturity in the domestic gas market. In this endeavor your Company is working on multiple pipeline to its network of over 11,000 kms. Over 60% of the network addition is expected to be achieved from the Jagadishpur-Haldia-Bokaro-Dhamra Pipeline (JHBDPL) at an estimated project cost of Rs.12,940 crores. Project work is under progress as per phase-wise schedule. GoI has already approved 40% capital grant for this project and the first installment of the grant of Rs.450 crore was disbursed during FY 2016-17. Your Company is also working to execute the Vijaipur-Auraiya-Phulpur pipeline (VAPPL) of 672 Km to ensure feed gas supply to JHBDPL. Further, Kochi-Koottanad-Mangalore-Bangalore pipeline (KKMBPL) project of 873 Km is also under execution. With these projects, your Company shall further strengthen its leadership position in natural gas transmission segment.

- LNG Marketing

Gas consumption of the country for the year 2016-17 was around 139 MMSCMD with contribution from domestic producers about 68 MMSCMD. For the first time in Indiaâs energy consumption, the last fiscal year holds significance as natural gas sales from domestic and imported sources was in equal proportion. Your Company, had a sales mix of domestic gas and RLNG in 60:40 ratio. GAIL as a leading player of the commodity holds a market share of about 60% in India.

Your Company tied-up significant LNG from international sources and 5.8 MMTPA of the volumes are expected to commence from Calender Year (CY) 2018 from Sabine Pass Liquefaction and Dominion Cove Point at USA. Over the last few quarters, your Company has concluded various deals towards de-risking the portfolio significantly and also executed swap structures to ensure competitive delivery based pricing at Indian terminals. Residual volumes too are expected to be tied-up based on the encouraging response received from the domestic and overseas market participants. Your Companyâs subsidiary, GAIL Global Singapore Pte. Limited, is also pursuing LNG trading activities in international markets.

Your Company executed a non-binding tolling Term Sheet with Dhamra LNG Terminal Private Limited (DLTPL) for booking of 1.5 MMTPA regas capacity at the proposed LNG Terminal at Dhamra, Odisha. Further, your Company is also exploring the possibility of taking equity in DLTPL.

Your Company is in the process of tying up charter hiring LNG ships and also working on logistics optimization models to ensure efficient haulage of LNG from various sources especially USA.

- City Gas Distribution

In order to provide clean fuel for domestic, vehicular and commercial use and to facilitate development of smart cities, your Company plans to expand its city gas distribution network. GAIL Gas Limited, your Companyâs wholly owned subsidiary, is implementing CGD projects in the cities of Kota, Dewas, Meerut, Sonepat, Bengaluru & Taj Trapezium and through its JVs in Haridwar, North Goa & Vadodara. Further, as a part of the Urja Ganga Project (Jagdishpur Haldia Bokaro Dhamra pipeline Project), your Company shall on its own or through its subsidiary also implement CGD in six new cities in eastern India. CGD in Kolkata shall be operated through our JV. Your company through its Subsidiary and JV companies over 63% of the CNG stations and 50% share of the domestic PNG connections.

- Petrochemicals

Your Company has a marketing portfolio of polyethylene and polypropylene products over 1 Million Tonnes per annum from the unit 810 KTA unit at Pata and 280 KTA plant operated by the subsidiary, Brahmaputra Cracker & Polymer Limited (BCPL). Your Company and its subsidiary have a combined production share of 25% of the High Density and Liner Low Density polyethylene market in the country.

Further, your companyâs petrochemical joint venture namely ONGC Petro-Additions at Dahej was also commissioned during the year.

- Human Resource Development

Your Company realizes the criticality of aligning human resource development initiatives with strategic objectives to achieve organizational goals. Significant steps towards skill development and capability build-up, talent acquisition, development and retention strategies are continuously undertaken for being an employer of choice.

BUSINESS PERFORMANCE

During the year under review, the segment wise business performance of your Company is as under:

- Natural Gas Marketing

Natural gas trading constitutes 70% of the business turnover and continues to be your Companyâs core business. During FY 2016-17, gas sales clocked 81.21 MMSCMD, compared to 73.67 MMSCMD in the previous financial year. Domestic gas availability remained stagnant at 48.5 MMSCMD while LongTerm imported volumes witnessed increased consumption vis-a-vis the previous financial year. Consumption of gas by CGD sector at 20 MMSCMD emerged to be the fastest growing segment.

- Transmission 0 Natural Gas

Your Company owns and operates a network of about 11000 kms of natural gas high pressure trunk pipeline with a pan-India capacity to handle volumes of around 206 MMSCMD. The average gas transmission during the year 2016-17 was 100.38 MMSCMD, compared to 92.09 MMSCMD in the previous financial year. The share of third party transmission was 22.18 MMSCMD.

- Fertilizer Sector

During FY 2016-17, your Company achieved total sales of Natural Gas (Domestic RLNG) in the Fertilizer Sector of 25.74 MMSCMD (including 12.09 MMSCMD of Domestic Gas). Your Company is in discussion with upcoming/ revived fertilizer units for supply of gas and it is expected that agreement for supplying gas shall be firmed up during CY 2017.

- Power Sector

During FY 2016-17, your Company achieved total sales of Natural Gas (Domestic RLNG) in the Power Sector of 23.81 MMSCMD (including 19 MMSCMD of Domestic gas). The PSDF Scheme of Ministry of Power for the gas based power sector continued during FY 16-17 and your Company as Pool Operator supplied around 4.0 MMSCMD of incremental RLNG to gas based power plants which is included in the total sales to the Power Sector. The Scheme discontinued on 31^st March 2017 and your Company continues to explore opportunities for supply of natural gas to gas based power generation units at affordable prices.

- LPG

Your Company is unique in India to own and operate 2038 Kms of exclusive pipelines for LPG transmission for third-party usage across two major networks. Jamnager-Loni and the Vizag-Secunderabad pipeline networks achieved a throughput of 3.36 MMTPA during the year against 2.82 MMTPA in the previous fiscal year.

- Petrochemicals

The overall production of polymers in 2016-17 was 6.04 lakh MT while your Company marketed 5.77 lakh MT during this period. The total polymers marketed including polymer produced by your Companyâs subsidiary, Brahmaputra Cracker & Polymer Limited (BCPL) stood at 6.65 lakh MT, which represents almost a 100% increase over FY 2015-16.

- LPG and Other Liquid Hydrocarbon Production

Your Company has LPG plants at five locations in the country having a production capacity of 1.3 million MT. In 2016-17, total liquid hydrocarbon production was about 1.11 Million MT, of which over 80% constitutes LPG and Propane.

- Exploration and Production (E&P)

As a result of continued portfolio optimization, your Company now has participating interest in 12 E&P blocks of which 10 blocks are in India and the remaining two blocks in Myanmar. Out of these, your Company is Operator in one onland block namely CB-ONN-2010/11 in Cambay basin awarded during the NELP-IX bidding round. Drilling activities continued in four (out of five) blocks. Hydrocarbon discoveries have been notified to the government in two blocks namely GK-OSN-2010/1 and CB-ONN-2010/8. Survey activities are in progress in the remaining NELP-IX block AA-ONN-2010/2.

The E&P business has continued to be revenue self-sustainable for the third consecutive year due to earnings from four blocks (two blocks each in Myanmar and Cambay basin). Your company earned revenues to the tune of Rs.615.28 crores from these blocks during the year.

INITIATIVES FOR FUTURE GROWTH 0 Petrochemicals

In order to establish your Company as a significant petrochemical player, especially in Asia, focus was given to develop export capability. GAIL exported 14,000 MT of polymers as a step in this direction. Your Company targets to continue exports based on opportunities in the region.

Your Company along with Hindustan Petroleum Corporation Limited (HPCL) is carrying out various studies for setting up a Greenfield Naphtha/ Ethane-based petrochemical complex in Andhra Pradesh.

- LNG Regasification Terminals

Your Company is evaluating various opportunities for setting-up/booking LNG Regasification capacity in the country. It has signed a non-binding Tolling Term Sheet with Dhamra LNG Terminal Private Limited (DLTPL) for booking of 1.5 MMTPA capacity in the proposed Dhamra LNG Terminal. This is over and above the capacity already booked at Dabhol and Dahej of 6.5 MMTPA.

- LNG Shipping

Currently, your Company is in the process of charter hiring of ocean carriers for evacuating FOB contracted LNG volumes from east coast of USA. Company has engaged the services of Shipping Corporation of India in this regard. Number of ships for hire shall be fixed based on the residual volume to be brought directly to India from USA after considering international sales and swap transactions.

- Natural Gas Pipeline Projects

During the financial year, your Company completed 14 pipeline projects including Last mile connectivity of approximately 437 kms, to harness the commercial utilization of various pipeline networks in the states of Karnataka, Gujarat, Goa, Haryana, Rajasthan, Maharashtra and Punjab. The pipeline revamp projects in KG and Cauvery Basin are completed over 90% and over 80% in Gujarat and are targeted for completion during the current year.

- Non-Conventional Energy

Your Company is committed to reduce the carbon emission and implement renewable energy projects. Your Company has a total installed capacity of 118 MW of Wind Energy Generation Projects (WEG) and has recorded 43% growth in the revenue from wind energy.

As part of its commitment towards sustainable development, your Company is also installing a 5.76 MW grid connected roof top solar power plant at its petrochemical complex at Pata, U.P. The power generated shall be consumed within the petrochemical complex and substitute the power drawn from the grid to generate significant cost reduction and also carbon footprint of GAIL.

- Coal Gasification

Your Company is also entering into coal gasification by setting up surface coal gasification based urea project at Talcher. The project, with an estimated cost of Rs.8000 crores is envisaged for the production of 2200 MTPD ammonia and 3850 MTPD urea. A joint venture company Talcher Fertilizers Limited was formed with consortium partners namely GAIL, Coal India Limited (CIL), Rashtriya Chemicals and Fertilizers (RCF) and Fertilizer Corporation of India Limited (FCIL). Pre-project activities are on full swing with M/s Shell being selected the Licensor. Approvals from CCEA /GoI are targeted to be completed to lay foundation for starting the project activities during the current fiscal year.

RELATED PARTIES - SUBSIDIARIES/ ASSOCIATES/ JOINT VENTURES

Your Company has formed subsidiaries/ associates/ joint venture companies for CGD, petrochemicals, LNG, gas trading, power generation and shale gas. It has played pioneering role in introducing city gas projects for natural gas supplies to households, commercial, industrial and transport sectors through its subsidiary and joint venture companies. Contracts or arrangements/ transactions with related parties were on armâs length basis and in ordinary course of business.

Your Companyâs subsidiaries/ associates/ joint venture companies contributed significantly to its business expansion activities. A statement containing the salient feature of the financial statements of your Companyâs Subsidiaries, Associate Companies and Joint Ventures as per first proviso of section 129(3) of the Companies Act, 2013 including details of individual contribution of all subsidiaries, associates and joint venture companies towards the overall performance of the Company during the period is given under Consolidated Financial Statements.

The details of subsidiaries/ associates/ joint venture companies operations are provided as:

NATURAL GAS, LNG AND POWER

- GAIL Global (Singapore) Pte. Limited (wholly owned subsidiary)

GAIL Global (Singapore) Pte. Ltd. (GGSPL), primarily started as an overseas investment arm of your Company and was operationalized for LNG trading in 2012. It commenced its business operations in May 2012. GGSPL is now actively involved in business activities in the area of LNG Trading. Until March 31, 2017, GGSPL has traded 54 LNG cargoes so far out of which 23 were traded during the financial year 2016-17.The turnover for 2016-17 was USD 494 million.

GGSPL has also been mandated by your Company to market part of the Henry Hub linked LNG volume sourced from the USA, in the international market. It is making its best efforts to market such volumes in the international market. The supplies against the said volumes are expected to start from the year 2018.

- GAIL Global (USA) Inc (wholly owned subsidiary)

GAIL Global (USA) Inc.(GGUI), was incorporated as a wholly owned subsidiary of GAIL to undertake investment in the Eagle Ford shale gas asset with the objective to enter into the US shale gas market and bring shale gas technology to India. GGUI executed a definitive agreement with M/s Carrizo Oil & Gas Inc., USA (Carrizo) on September, 2011, to enter into an unincorporated JV in the Eagle Ford Shale asset inTexas. The subsidiary acquired a 20% participating interest in this JV. Carrizo, with the remaining 80% participating interest, functions as the operator of the JV.

During the year, seven wells came online, taking the total number of online wells to 106 as on December 31, 2016. The gross production volume of GGUI during calendar year 2016 was 669 million barrel of oil equivalent (Mboe).

- GAIL Global (USA) LNG LLC (wholly owned subsidiary of GGUI)

GAIL Global (USA) LNG LLC (GGULL) signed a contract with Dominion Cove Point LNG, LP (DCP) to book LNG tolling capacity of 2.3 MMTPA in its Cove Point terminal. It also signed Gas Sales & Purchase Agreement (GSPA) with WGL Midstream, Inc. for sourcing gas for liquefaction at the terminal. The construction activities at the terminal are on track and it is expected to be in service by December 2017.

- GAIL China Gas Global Energy Holdings Limited

GAIL China Gas Global Energy Holdings Limited was formed with an objective to pursue gas sector opportunities, primarily in China. Your Company has a 50% equity stake with China Gas Holdings Limited as an equal partner.

- Petronet LNG Limited (PLL)

PLL was formed in 1998 to set up LNG import and re-gasification facilities in India. It currently owns and operates a 15 MMTPA capacity LNG re-gasification terminal at Dahej, Gujarat. The capacity is being expanded to 17.50 MMTPA. PLL has also setup an LNG regasification terminal at Kochi, Kerala with a name plate capacity of 5 MMTPA.

Your Company has 12.5% equity stake in PLL along with Bharat Petroleum Corporation Ltd. (BPCL), Oil and Natural Gas Corporation (ONGC) and Indian Oil Corporation Limited (IOCL) as equal partners.

- Ratnagiri Gas and Power Private Limited (RGPPL)

RGPPL was formed as a joint venture with NTPC for taking over and operating the erstwhile Dabhol Power Project assets consisting of 1967.08 MW gas based combined cycle Power Block and 5MMTPA LNG Block. The assets were transferred to RGPPL in October, 2005.

Your Company currently has 25.51% equity stake in RGPPL along with NTPC holding 25.51%, MSEB Holding Company Limited holding 13.51% and Indian Financial institutions holding 35.47%.

The power block was revived and has been under commercial operation since May 19, 2009. However, it could not be operated in FY 2014-15 due to the non-availability of domestic gas.

With support of the GoI for stressed power plant under the Power System Development Fund (PSDF) scheme, RGPPL commenced power generation on November 26, 2015 for supply to the railways in the states of Maharashtra, Gujarat, Jharkhand and Madhya Pradesh to the tune of 500 MW. The PSDF scheme was available till March 31, 2017 only. During the financial Year 2016-17, a total of 4426 BUs were supplied to the Indian Railways using 857.4 MMSCM of natural gas. Total revenue earned from sale of energy in FY 16-17 was Rs.2105.67 Crores.

RGPPL signed a 5-year Power Purchase Agreement with railways for 500 MW and Gas Sales Agreement with GAIL for 5 years w.e.f April 01, 2017. As a result, the power plant is presently running and generating approximately 470 MW of power, which is being supplied to the railways.

The LNG Terminal commercial operations commenced in May, 2013. RGPPL entered into a framework agreement with GAIL as Commercial Operator for 25 years on tolling basis. A total of sixty three cargos have been successfully unloaded since itâs commissioning with fifteen being unloaded during FY 2016-17. The total revenue earned from the plant by LNG Terminal during 2016-17 was Rs.266.69 Crores and from commissioning till 31^st March 2017 is about Rs.1007 crores. However, the terminal is still operating at partial capacity (about 1.5 MMTPA as against 5 MMTPA), due to the absence of breakwater facilities. The breakwater construction process has been initiated and the terminal is expected to become fully operational during2019-20.

The process of the demerger of the power and LNG blocks is also under progress under the revised RBI norms and to enable availability of funds for the construction of breakwater to achieve the full potential of the LNG terminal.

CITY GAS DISTRIBUTION (CGD)

- GAIL Gas Limited (wholly owned subsidiary)

GAIL Gas was incorporated in the year 2008 GAIL Gas has achieved a phenomenal growth of 82 % in volume on year on year basis. The Company achieved gas sales volume of 1356 MMSCM during FY 2016-17.

The Profit Before Tax (PBT) of the Company has increased by Rs.39 crores over the previous year while the sales revenue increased by Rs.1248 crores. The additional customer base of industrial, commercial and transport sectors have been expanded with rigorous marketing efforts. Company has entered into agreements with OMCs for setting up retail outlets of CNG to expand the reach and cater to the increasing demand and availability of CNG. GAIL Gas has set up additional 10 CNG stations at Sonepat, Meerut, Dewas & TTZ Geographical Areas in FY 2016-17 which will create enhanced availability of Green Fuel. The company has taken various marketing initiatives to reach out to prospective consumers for Domestic PNG Connections.

Company has also strengthened its various interfaces with Customers through development of digital platforms i.e (1) Online Registration for Domestic Customers (2) Online Payment Gateway (3) Mobile Application (4) Online Feedback submission (5) Online Industrial PNG Request System etc. The CNG sales of GAIL Gas has grown 30 % on year on year basis.

In Bengaluru GA, GAIL Gas has laid 42 KM of steel Pipeline and 245 KM of MDPE Pipeline network. 19,370 Domestic customers have been connected during the year. Company also commissioned 03 CNG station in Bengaluru and commercial operations has started at 01 CNG station. Further, 10 CNG stations are planned in FY 2017-18.

- Aavantika Gas Limited (AGL)

AGL was incorporated to implement CGD projects in Madhya Pradesh. As on March 31, 2017, AGL operated 22 CNG stations including 9 daughter stations, 9 online stations and 4 mother stations in Indore GA (including Ujjain) and Gwalior GA.

Further, as on March 31, 2017, AGL supplied PNG to around 12658 Domestic, 58 commercial & 75 industrial customers in its authorized geographical regions. AGL is also catering to the fuel requirement of around 22,190 CNG vehicles operating in the region. GAIL has 49.97% stake along with HPCL as an equal partner.

- Bhagyanagar Gas Limited (BGL)

BGL was incorporated to implement CGD projects in the united Andhra Pradesh. As on March 31, 2017, BGL operated 41 CNG stations including 33 daughter stations, 5 online stations and 3 mother stations.

Further, as on March 31, 2017, BGL supplied PNG to 6608 households, 59 commercial & 5 industrial customers in its authorized geographical regions. BGL is also catering to the fuel requirement of around 39246 CNG vehicles operating in the region. GAIL has 49.97% stake along with HPCL as an equal partner.

- Central UP Gas Limited(CUGL)

CUGL was incorporated to implement CGD projects in Uttar Pradesh. As on March 31, 2017, CUGL is operated 18 CNG stations including 3 daughter stations, 11 online stations and 4 mother stations.

Further, as on March 31, 2017, CUGL supplied PNG to 19333 domestic, 177 commercial & 51 industrial customers in its CUGL authorized geographical regions. CUGL is also catering to the fuel requirement of around 56599 CNG vehicles operating in the region. GAIL has 25% stake along with BPCL as an equal partner.

- Green Gas Limited(GGL)

GGL was incorporated to implement CGD projects in Uttar Pradesh. As on March 31, 2017, GGL operated 19 CNG stations including 7 âv daughter stations, 6 online stations & 6 mother stations.

Further, as on March 31, 2017, GGL supplied PNG to around 16200 domestic, 23 commercial & 8 industrial customers in its authorized geographical regions. GGL is also catering to the fuel requirement of around 41318 CNG vehicles operating in the region. GAIL has 49.97% stake along with IOCL as an equal partner.

- Indraprastha Gas Limited (IGL)

IGL was incorporated to implement CGD projects in Delhiâs the National Capital Territory (NCT) and cities in adjoining National Capital Region (NCR). As on March 31, 2017, IGL operated 421 CNG Stations including 45 daughter stations, 306 online stations & 70 mother stations.

Further, as on March 31, 2017, IGL supplied PNG to 742206 domestic, 1816 commercial & 932 industrial customers in its authorized geographical region. IGL is also catering to fuel requirement of 892319 CNG vehicles operating in the region. GAIL has 22.5% stake along with BPCL as an equal partner.

- Mahanagar Gas Limited (MGL)

MGL was incorporated to implement CGD projects in Mumbai & adjoining areas. As on March 31, 2017, MGL operated 203 CNG stations including 32 daughter stations, 151 online stations & 20 mother stations.

MAHANAGAR

Further, as on March 31, 2017, MGL supplied PNG to 9,48,892 domestic, 3220 commercial & 62 industrial customers in its authorized geographical region. MGL is also catering to the fuel requirement of 5,45,505 CNG vehicles operating in the region.

Your Company accorded approval to Mahanagar Gas Ltd.(MGL), to issue fully paid up unsecured Compulsory Convertible Debentures(CCDs) at par to the Government of Maharashtra (GoM) due to which equity holding of GoM increased to 10% of the total paid-up equity capital. Further, your Company also accorded approval to off-load the equity shares held by it and BG Asia Pacific Holdings Pte. Limited (BGAPH) each upto 12.5% of MGL equity through the Initial Public Offering (IPO). MGL equity shares were listed on NSE and BSE. Your Companyâs equity holding in MGL post-IPO is 32.5% along with BGAPH as an equal partner.

- Maharashtra Natural Gas Limited (MNGL)

MNGL was incorporated to implement CGD projects in and around Pune. As on March 31, 2017, MNGL operated 42 CNG Stations including 17 daughter stations, 20 online stations & 5 mother stations.

Further, as on March 31, 2017, MNGL supplied PNG to 5,08,51 mngl domestic, 169 commercial and 129 industrial consumers in its authorized geographical region. MNGL is also catering to the fuel requirement of 1,40,378 CNG vehicles operating in the region. GAIL has 22.5% stake along with BPCL as an equal partner.

- Tripura Natural Gas Company Limited (TNGCL)

TNGCL was incorporated to implement CGD projects in Agartala. As on March 31, 2017, TNGCL operated 6 CNG stations including 3 daughter stations and 3 mother stations.

Further, as on March 31, 2017, TNGCL supplied PNG to 28669 Domestic, 354 commercial & 50 industrial customers in its authorized geographical region. TNGCL is also catering to the fuel requirement of 9103 CNG vehicles operating in the region. GAIL has 48.98% stake in TNGCL.

- Vadodara Gas Limited (VGL)

Your Company holds 32.93% stake in VGL in lieu of transfer of CNG stations associated pipeline laid in the city for connecting CNG station at market value on Slump Sale basis against the issue of shares at par along with GAIL Gas Ltd. and VMSS holding â Rs.17.07% and 50% stake respectively. VGL operates 9 CNG stations in Vadodara with compression capacity more than 98,550 kg/day.

VGL also caters to the Piped Natural Gas (PNG) requirements of its consumers in domestic and commercial sectors. It supplies PNG to 84,432 houses and 2,456 commercial sectors in the city through a 940 km long PE pipeline distribution grid and 3 district pressure regulating system. It is also developing a new MDPE network in and around the city of Vadodara to cater to the PNG requirements of the domestic and commercial sectors.

PETROCHEMICALS

- Brahmaputra Cracker and Polymer Limited (BCPL)

BCPL was incorporated in the year 2007. Your Company has 70% equity stake ry-YâT- in Brahmaputra Cracker and Polymer Limited (BCPL), with Oil India Limited (OIL), Numaligarh Refinery Limited (NRL) and the | â ; Government of Assam each having 10% equity share. BCPL has set up 2, 80,000 TPA polymer plant in Assam.

During the FY-2016-17, 99540 MT polymer and 14129 MT liquid hydrocarbons have been produced. The polymers produced by BCPL are marketed by GAIL under Marketing Agreement.

- ONGC Petro-additions Limited (OPaL)

ONGC Petro-additions Limited (OPaL), a joint venture company promoted by GAIL, ONGC and GSPC has commissioned a green field petrochemical project at Dahej, Gujarat with a capacity to produce 1.4 MMTPA of polymers (Polyethylene-PE and Polypropylene-PP) as the final products. Honâble Prime Minister, Shri Narendra Modi dedicated the plant in service to the nation on March 07, 2017. Your Company has made an investment of Rs.994945 Crores in OPaL.

OTHERS

- TAPI Pipeline Company Limited (TPCL)

Your Company is pursuing the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline project to receive natural gas supply from the Galkynysh fields of Turkmenistan. Gas Sale Purchase Agreement (GSPA) to import 38 MMSCMD gas into the country has already been signed. TPCL was incorporated in âIsle of Manâ, to build, own and operate the proposed TAPI pipeline. It has engaged a consultant for providing Project Management and FEED Consultancy Services for the Afghanistan - Pakistan section of the pipeline. Your Company holds 5% equity in TPCL. The Shareholderâs Agreement and Investment Agreement have also been signed. The project execution is subject to certain condition precedents.

- South-East Asia Gas Pipeline Company Limited (SEAGP)

SEAGP was formed in the year 2010 to transport natural gas from A1/A3 blocks in Myanmar to the Myanmar-China border. During 2016-17, this pipeline transported an average of 14 MMSCMD of natural gas. Your Company has a 4.17% equity stake in SEAGP.

- Talcher Fertilizers Limited

A consortium comprising of your Company, CIL, RCF and FCIL was formed in 2015 to revive the FCIL Talcher fertilizer unit in the Angul district of Odisha. The MoU was signed by the consortium partners on September 05, 2013. Subsequently, the joint venture company, Rashtriya Coal Gas Fertilizers Limited, was incorporated on November 13, 2015. The company was renamed as âTalcher Fertilizers Limitedâ in May 31, 2016. Your Company holds 29.67% in this JVC. In principle approval of allocation of North Arkhapal Coal Mine (50%) has been received.

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 financial statements, as a separate section in the Annual Report FY 2016-17.

IT ADVANCEMENTS & FUNCTIONAL EXCELLENCE

Your Company has started âDigital GAILâ initiative with a vision to leverage the benefits of state-of-the-art Analytics, Mobility and Collaboration Platforms to support different business functions of GAIL including Plant Operations & Maintenance by integrating IT Systems with Plant & Pipeline Systems.

To align Your Companyâs ERP system for Regulatory and Statutory Compliance, successful migration to the latest tax procedure was done as a pre-requisite for Goods and Services Tax (GST) readiness.

Your company has successfully implemented GST at all locations from 1st July 2017. The other business segments of the company such as Gas Transmission, Petrochemical, and LPG/LHC etc. are covered under GST. Your company has organised GST awareness workshops at different work centres for vendors & customers with a view to spread awareness among the stakeholders for GST.

Your Company has implemented next generation unified communications & collaboration platform with audio-video capability for enhanced employee collaboration.

After successful implementation of latest ISO 27001 Information Security Management System framework, a Security Operations Centre (SOC) was established along with Advanced Persistent Threat mitigation system to alleviate new types of cyber-security risks. Your Company has also implemented state-of-the-art Private Cloud infrastructure and initiated several new projects for improving network connectivity and information security.

A Project Monitoring System has been developed in your Company to digitize monitoring and control of the pipeline projects. This system will help the management to have better insight into the projects on a real-time basis through charts and reports and will facilitate decision making and early resolution of issues.

Your Company is in the process of implementing the SAP Treasury and Risk management (TRM) module which will help in mapping various treasury functions that are being operated centrally from Corporate Office. Apart from the above, the TRM will also include the implementation and management of provident fund & pension related investments.

In line with the âDigi-Dhanâ campaign of the Government of India, Your Company has taken an initiative to bring awareness on digital payments and cashless transactions among the employees, contract workers etc. at various GAIL locations.

- Pipeline Intrusion Detection System (PIDS):

In order to ensure real time surveillance of pipelines, GAIL has installed Pipeline Intrusion Detection System (PIDS) on trial basis at Piyala to Loni, 72 km. section and about 175 kms along Vizag to Secunderabad LPG pipeline netwroks. The detection system works on Distributed Acoustic sensing Technology utilizing the optical fiber cable (OFC) along the pipeline. Various events like manual excavation using hand tools, machine excavation, vehicle movements, agricultural activities, valve operation detection, fiber break, scrapper pig location etc. are identified automatically and alarm generated accordingly on the operators HMI graphics screen.

- Integrated Security Command and Control Center:

To enhance the safety and security of GAS/LPG pipelines in the densely populated NCR and across other north Indian states, an Integrated Security Command and Control Center has been established at Infohub, Noida. Round-the-clock monitoring of functions such as Pipeline ROU surveillance, live CCTV footage of pipeline facilities, critical pipeline maintenance activities etc. are being undertaken along 2000 kms of gas & LPG pipeline operating in the northern region.

HEALTH, SAFETY AND ENVIRONMENT (HSE) MANAGEMENT

- Corporate HSE Policy:

The HSE Best Practices in your Company are primarily driven through a Corporate HSE Policy which is a statement of commitment of the management of your Company. Your Company is committed to giving highest priority to Occupational Health, Safety of Plants and Pipelines & Personnel in a serene environment. Uniform well-designed HSE Management System is in place to support our commitment. Your Company conducts its business in harmony with nature and promotes sustainable development. Employees and contract workers are encouraged to adopt safe working habits and behavior to ensure an effective implementation of the HSE Policy and empowered to notify and stop any unsafe work / act, as may so arise.

- Safety Performance

Safety performance is measured in your Company through the âHSE Scoreâ which is evaluated on the basis of important HSE Management System elements. Your Company achieved the HSE Score of 92.94% as against the MoU target of 90%.

- Safety Training

Training is a key to the safety of people and premises. Your Company imparts regular and structured HSE training including Behavior Based Safety training to its employees to upgrade their skills, knowledge and competence, in order to perform their HSE functions effectively and developing an effective safety culture. Regular training is also imparted to contract workers, tanker drivers and others to create awareness of the probable hazards in their work area so as to avoid and safeguard against unsafe actions.

- Safety Audits

Safety audits are regularly conducted to ensure the implementation of the HSE Management System Guidelines and Emergency Preparedness. These audits are performed by both external safety auditors and experienced in-house auditors.

- Occupational Health

Your Company has implemented occupational hygiene measures and medical surveillance programs to monitor and control the occupational health of its employees, based on defined guidelines. All employees at various work centers undertake periodic medical examination as per these guidelines. The Corporate Occupational Health Committee meets on a quarterly basis to monitor the occupational health program in your Company and the effectiveness is evaluated based on the outcome of the Health Audit undertaken through in-house multi-disciplinary teams.

SUSTAINABILITY INITIATIVES

This year your Company published its seventh Sustainability Report -âRejuvenate. Resonate. Redefineâ for FY 16-17 based on the Global Reporting Initiative (GRI) G4 Guidelines. Sustainability reporting has helped in measuring and monitoring your Companyâs performance and move beyond the mandatory requirements to ingrain sustainability culture within the organization. It has served as an important management tool, helping us to revisit our systems, policies and procedures. Your Companyâs Sustainable Development Committee, comprising of Functional Directors and an Independent Director as the Chairman, regularly monitors performance under sustainability initiatives.

Your Company believes that it is important to collaborate with industry leaders, associations and peers to address national and global sustainability challenges and work towards a common goal. Your Company has collaborated in the study on âClimate Change Risks: Preparedness for Oil and Gas Sectorâ undertaken by the Federation of Indian Petroleum Industry (FIPI) and The Energy and Resources Institute (TERI).

In line with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 requirements, Business Responsibility Report (BRR) 201617 is contained in a separate section of the Annual Report.

VIGILANCE

Corporate Vigilance department of your Company is ISO-9001:2008 certified for having adopted Quality Management System in compliance with the requirements of ISO. Various initiatives such as Bill Watch System, e-tendering, e-payments etc. have already been implemented in the past for the benefit of vendors and suppliers to bring transparency in its systems and processes. A number of system improvements were affected in your company during the year for effective utilization of its resources, which in turn would help to prevent corruption and ensure all round good governance. Some of these improvements are:

- Implementation of the system for pegging percentage fee payable to the Architect / Consultant on the original contract value.

- Timely appointment of Third Party Inspection Agency (TPIA) before award of the jobs / works as required.

- Implementation of several smart-phone enabled applications related to business transactions of the Company for increasing organizational efficiency.

The Vigilance Awareness Week-2016 was observed on the theme âPublic participation in promoting integrity and eradicating corruptionâ at the corporate office and at all the work centers from October 31 to November, 05, 2016. In order to create better awareness on corruption and its effects amongst the youth and college students, various competitions such as debates, elocution, panel discussion were organized in colleges/schools at Kolkata, Chennai, Guna, Bengaluru, Jhabua, Jaipur, Noida, Dibiyapur and Vadodara. Topics on corruption and its ill effects, importance of morals and values, honesty and integrity, ethics, transparency in governance, ways in which the youth can participate in the fight against corruption and such related issues were the subject of debate in these competitions. In order to create awareness among GAIL employees and the related work force, various competitions including essay writing, slogan writing, poster paintings, online quiz and debates were held during the week. Other events including banners/ posters/ painting display, and marches and rallies were also organized at various work centers.

A magazine âJAGROOKâ containing CVC circulars, vigilance related puzzles, cartoons, articles and case studies was also published. Customer interactive meet across business segments were organized at NCR Zonal office and Mangalore for their active engagement on related matters.

CAPABILITY BUILDING - Human Capital

Your Company invests dedicated resources in order to be the preferred employer to attract and retain requisite talent. The Companyâs Intellectual Capital is carefully nurtured and channelized to cater to its business plans for maximising value. Value Added per Employee reflects our emphasis to make the optimal & productive use of the available resources and business opportunities. For the year under review, Value Added per Employee was Rs.218.38 lacs.

- Leadership Development Program

Your Company gives priority to develop its Leadership capability. As part of the Leadership Development Program, we continued to undertake the Senior Management Development Centre (SMDC) exercise with great emphasis on the developmental aspects of individual executive. Your Company believes that capability building and enhancing competency of employees is the key to the successful execution of strategic plans. As on date, almost all the senior executives in E-6 Grade and above have been covered under the program.

To percolate the benefit of the SMDC Program, your Company has extended the same to executives in E-5 grades as well. In an initial spell during the year, over 300 executives were covered.

- Capability Development

The GAIL Training Institute (GTI) organizes systematic and structured programs for capability building across all levels within the organization on a continuous basis. In recognition of the initiatives taken, GTI was conferred with the prestigious Golden Peacock National Training Award - 2016.

Your Company is also playing a proactive role to support the National Skill

Development Mission through active participation in the creation of Hydrocarbon Sector Skill Council (HSSC) and providing skill based training to create a pool of skilled manpower for City Gas Distribution network and midstream hydrocarbon industry.

- Representation of Priority Section

Your Company has been complying with the Presidential Directives and other instructions/guidelines issued from time to time pertaining to Policies and Procedures of Government of India in regard to reservation, relaxations, concessions etc. for Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs) and Persons with Disabilities (PWDs) in Direct Recruitment.

Group	Employees on Roll	SC	ST	OBC	PWD
A	3149	497	202	579	46
B	537	102	61	108	11
C	603	102	22	188	35
D	61	17	06	16	01
C&MD DIRECTORS & CVO	05	-	-	-	-
Total	4355	718	291	891	93

A total of 121 new employees joined your Company during the FY 2016-17, taking the total manpower as on March 31, 2017 to 4355 (including Whole-time Directors & CVO) with 16.48 % of its employees belonging to SC category, 6.68 % to ST category, 20.45% to the OBC category, 7.99 % to minorities and 2.13% to the PWDs category. Your Companyâs workforce comprised of 257 women employees as on March 31, 2017.

- Official Language

The Official Language implementation Committees at the Corporate and Work Centre level meets on a quarterly basis to monitor and review the progress of achievement of targets fixed in the Annual Program issued by the Govt. of India.

Hindi workshops/trainings are organized on regular basis at GTI, Jaipur and Noida and at other work centres. Hindi computer training sessions are integral part of these programmes. During the year 2016-17, 1897 employees were provided formal training through 101 workshops.

Hindi Fortnight was celebrated from September 14 to 28, 2016 to promote the use of the official language. Your Company now uses special software to generate administrative orders in both Hindi and English. You will be glad to know that we are one of the few PSUs to implement this facility.

The 17th âRajbhasha Sammelanâ was organized on November, 26 and 27, 2016 to promote the use of Hindi and review the progress made on the implementation of the official language in the Company.

The First Sub-Committee of Committee of Parliament on Official Language inspected the Pata, Bengaluru, Haridwar, Kochi and Mumbai offices to review the steps undertaken to promote the official language and were appreciative of our efforts undertaken.

A meeting of Hindi Salahkar Samiti was organized on April 22, 2017 at Srinagar (J&K) by the MoP&NG under the chairmanship of Minister of State for Petroleum & Natural Gas (I/C). Your Company also participated in this meeting and received Petroleum Rajbhasha Award (Consolation) for the year 2015-16.

- Sexual Harassment of Women at Workplace

Your Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment ofWomen at workplace in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.The Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.

During the year 2016-17, 3 (three) sexual harassment complaints were received and the same were disposed of.

INNOVATION, RESEARCH AND DEVELOPMENT (R&D)

To inculcate and encourage innovation and creativity in the organization, your Company has established a Suggestion Scheme to elicit ideas and process modification proposals from employees. The suggestions are evaluated by a committee and implemented based upon their feasibility. The best suggestion is awarded with the CMD trophy. Incremental innovations are also pursued through Quality Circle initiatives.

Your Company is committed to spend over 1% of its PAT on Research and Development (R&D) efforts to address the important industry challenges of maintaining the safety and integrity of the gas processing & petrochemical plants, transmission and distribution systems, controlling costs and enhancing productivity, and maintaining environmental stewardship.

Currently your Company has engaged in greater R&D collaboration with various Engineering Institutes and CSIR laboratories to pursue a judicious portfolio of basic, applied and pilot R&D projects in the identified thrust areas. Various developmental projects are also undertaken at sites to improve safety and efficiency of existing installations.

The major research initiatives undertaken in FY 2016-17 include, the application of high resolution satellite imagery for pipeline monitoring, development of Robot for Health Monitoring of Pipeline, pilot testing of wireless sensor network for pipeline data transfer, setting-up of a Pilot plant for conversion of waste plastic to diesel, development of novel adsorbent materials for low pressure storage of natural gas, and testing of a 5 KW PEM fuel cell and projects on CO₂ conversion and utilization.

Your Company is also focused on augmenting the gas supply through new sources. Apart from carrying out bench-scale work on methane recovery from marine gas hydrates, your Company is also associated with the National Gas Hydrate Program. It has also become an industrial partner in the Indo-US strategic research initiative under the Solar Energy Research Institute for India and USA (SERIIUS) program.

Further, your Company is planning to invest in start-ups as they have the potential to improve existing businesses, create new business and increase manufacturing base. Given the government policies are also increasingly in favor of start-ups. Your Company has allocated a corpus of Rs.50 Crores for taking up investments in this sector to give a fillip to the governmentâs efforts and to reap benefits from the start-ups portfolios. The start-up initiatives are in the process of roll-out during the current calendar year.

TOTAL QUALITY MANAGEMENT

Your Company is committed to enhancing customer satisfaction and standarzing business processes through the implementation of a Quality Management System. We achieved a customer satisfaction level of 92% during FY 2016-17 and committed to further improve our rank. Your Company endeavors for continual and sustainable improvement through the implementation of effective quality practices, innovation and standardization. Management System and Energy Management System along various pipelines & process units and the Quality Management System at corporate and marketing offices has been implemented. Your Company undertakes Quality Circle projects with engagement of its employees resulting in high employee morale and increased productivity.

PROCUREMENT FROM MICRO AND SMALL ENTERPRISES (MSEs)

The Government of India has notified a Public Procurement Policy for Micro and Small Enterprises (MSEs), Order 2012.

In terms of said policy, out of the total eligible value of annual procurement of approximately, total procurement made from MSEs was Rs.811.63 crores constituting 25.85%.

MOU PERFORMANCE

A Memorandum of Understanding (MoU) is signed every year between your Company and its administrative ministry i.e. MoP&NG, through which performance targets for the year are set. The thrust while fixing MoU targets was on improving performance of the critical aspects of the Company including key financial parameters, gas marketing, gas transmission, project implementation, capital expenditure & polymer production etc. MoU for the year 2016-17 was signed between Chairman & Managing Director and Secretary (P&NG), Government of India on August 05, 2016.

Your Company achieved âVery Goodâ MoU rating for the financial year 2015-16. The evaluation of MoU 2016-17 is under progress and the final evaluated MoU score and rating is expected to be announced during December 2017.

LAURELS - Corporate

- Dun & Bradstreetâs âIndiaâs Top PSUs & PSU Awards 2016â in the category âManufacturing: Gas - Processing, Transmission and Marketingâ

- SCOPE Meritorious Awards 2014 - 15 in the category âRTI Act - 2005 Complianceâ

- ASSOCHAM 2^nd Corporate Governance Summit cum Excellence Award 2015-16 as a winner under Listed Public Sector Category

- GAIL conferred with the âEconomic Times 2 Good CSR Ratingâ- Only PSU to be feted in âAll Round Excellenceâ category

- Health, Safety & Environment (HSE)

With its continued focus on HSE across its installations, your Company has won the following awards during the year 2016-17

- Prestigious OISD awards for the Year 2014-15 from the Honorable Minister of State (IC),P&NG, Sh. Dharmendra Pradhan for the following categories:

- Pata under category âOther Processing Plantâ

- Vijapur under category âOther Processing Plantâ

- Hazira- Vijaipur- Jagdishpur Natural Gas Pipeline under category âCross Country Pipeline - LPG & Gas Pipelineâ

- Most Consistent Safety Performer - Gas Processing Unit, Gandhar Gas Processing Plantâ

- GAIL Vaghodia GPU and Compressor Station, Vaghodia- 4^th Level Award: PRASHANSA PATRA, from the National Safety Council of India

- HVJ Compressor Station, Vijaipur- 2^nd Level Award: SHRESHTHA SURAKSHA PURUSKAR (Silver Trophy), from the National Safety council of India

- GPU Gandhar Suraksha Puraskar (Bronze Trophy) from the National Safety council Mumbai for the year-2015 0 GPU Vijaypur received 14^th National Award for Excellence in Cost Management-2016

RIGHT TO INFORMATION

In order to promote transparency and accountability, an appropriate mechanism has been set up across the Company in line with the Right to Information Act, 2005. Your Company has nominated CPIO/ACPIOs/ Appellate Authorities at its units/offices across the country to provide information to citizens under the provisions of RTI Act.

Your Company has hosted RTI Guidelines and related information on its site and these may be accessed at http://www.gailonline.com/final_site/RTI.html. Besides, MIS Report on RTI Applications, Record Retention Schedule and latest RTI Audit Report had also been hosted under the same link.

Further, your Company has been made âLIVEâ on the GoIâs Online RTI Portal from July, 2016 and ever since we are providing information online, apart from providing the requested information offline, through physical RTI applications.

MANAGEMENTâS DISCUSSION AND ANALYSIS

In terms of the Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR Regulations, 2015) and clause 7.5 of DPE Guidelines on Corporate Governance, the detailed Managementâs Discussion and Analysis forms a part of this report at Annexure- A. CORPORATE GOVERNANCE

Your Company believes that good corporate governance is critical in establishing a positive organizational culture. A fact that is evident through the responsibility, accountability, consistency, fairness and transparency we show towards our stakeholders. Pursuant to the SEBI LODR Regulations, 2015 and DPE guidelines on Corporate Governance, a report on Corporate Governance forms part of this Report at Annexure- B.

The details of the meetings of the Board, Companyâs policy on Directorsâ appointment and their remuneration, details of the establishment of whistle blower mechanism and other matters, etc. forms 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 the Companyâs operations in future.

The statutory auditors of the your Company have examined and certified its compliance with respect to conditions enumerated in SEBI LODR Regulations, 2015 and DPE guidelines on Corporate Governance. The certificate forms a part of this Report at Annexure- C.

AUDITORS

- Statutory Auditors

The statutory auditor of your Company is appointed by Comptroller & Auditor General of India (CAG). M/s G.S. Mathur & Co., Chartered Accountants, New Delhi and M/s O P Bagla & Co., Chartered Accountants, New Delhi were appointed as Joint Statutory Auditors of your Company for the FY 2016-17.

Review and comments of CAG, if any, on the Companyâs Financial Statements for the financial year ending March 31, 2017, forms part of Financial Statement. Notes on Financial Statement referred to in the Auditorsâ Report are self-explanatory and does not require any further comments.

Your Company, along with other oil sector PSEs, has taken up the following matters with the Ministry of Petroleum & Natural Gas:

a) Employerâs Contribution to âEmployees Provident Fund Schemeâ on leave encashment by the employees

b) Encashment of Half Pay Leave and Earned Leave to employees over and above 300 days on superannuation

- Cost Auditors

Your Company has appointed M/s Ramanath Iyer & Co., New Delhi for the Northern Region, M/s Bandyopadhyaya Bhaumik & Co., Kolkata for the Northern and Eastern Region, M/s A C Dutta & Co., Kolkata for the Southern Region, M/s Musib & Company, Mumbai for the Western Region Part-I, M/s N. D Birla & Co., Ahmedabad for theWestern Region Part-II, and M/s Sanjay Gupta & Associates, New Delhi for the Central Region as cost auditors for FY 2016-17. M/s Ramanath Iyer & Co. is the lead cost auditor.

Cost audit reports for the financial year ended March 31, 2016 was filed at the Registrar of Companies on September 20, 2016.

- Internal Auditor

Your Company has an in-house Internal Audit Department, which is headed by an Executive Director.

- Secretarial Auditor

Your Company has appointed M/s Agarwal S. & Associates as secretarial auditors for 2016-17. 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 this Report at Annexure- D.

The observations made by the Secretarial Auditor in his Audit report are as under:

a. Non-compliance of Proviso to Section 149 (1) of the Companies Act 2013 read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 17 (1) (a) of Securities Exchange Board of India (Listing Obligation & Disclosure Requirements) Regulations, 2015 w.r.t. appointment of at least one woman Director on the Board of the Company.

b. Non-compliance of Regulation 17 (1) (b) of Securities Exchange Board of India (Listing Obligation & Disclosure Requirements) Regulations, 2015 and Clause 3.1.4 of the DPE Guidelines on Corporate Governance for Central Public Sector Enterprises w.r.t. Composition of the Board of Directors of the Company.

c. Non-compliance of Section 149(8) of the Companies Act 2013 read with Schedule IV (clause VIII) of Companies Act, 2013 and Regulation 17 (10) & 25 (4) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has not carried out the performance evaluation of the Directors.

Explanations on observations made by Secretarial Auditor in seriatim are as under:

a. As on March 31, 2017, there was no woman Director on the Board of the Company. However, during the year, there was a Woman Director on the Board of the Company from January 31, 2017 to March 18, 2017.

b. As on march 31,2017, GAILâs Board comprised of four whole-time Directors including CMD, two Government nominee Directors and five Independent Directors. GAIL is a Government Company under the administrative control of the Ministry of Petroleum and Natural Gas, Government of India; the Directors are nominated/appointed by the Government of India. The Company is continuously pursuing with the Government of India for the appointment of requisite number of Independent Directors on the Board in order to comply with the provisions of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, DPE Guidelines & the Companies Act, 2013.

However, during period January 31, 2017 to March 18, 2017, the composition of GAILâs Board was as per provisions of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, DPE Guidelines & the Companies Act, 2013.

c. GAIL is a Government Company, appointment/ nomination of all the Directors is being done by the President of India, through the MoP & NG and performance evaluation of individual Directors including Independent Directors is to be done by the Government of India being the appointing authority.

Further, as per notification dated 5^th July, 2017 issued by the Ministry of Corporate Affairs, Government of India, provisions of clauses (a) and (b) of sub-paragraph (3) of paragraph VII and paragraph VIII of Schedule IV of the Companies Act 2013 shall not apply in the case of a Government Company, if the requirements in respect of matters specified in these paragraphs are specified by the concerned Ministries or Departments of the Central Government or as the case may be, the State Governments and such requirements are complied with by the Government companies. CORPORATE SOCIAL RESPONSIBILITY

Your Company believes that Corporate Social Responsibility (CSR) plays a major role in the development of any country. Therefore, it has made CSR an integral part of its ethos and culture. To amplify its outreach efforts, GAIL has incurred an expenditure of 2.26% of the average net profit of the preceding three years on CSR projects/activities of 2016-17 (Rs.92.16 crores) against the stipulated 2% spend as per the statute (Rs.81.47 crores). The overall spends (Rs.123.58 crores) amount to 3.03% of the average net of profit of the preceding three financial years.

The Annual Report on CSR activities as required under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 read with section 134(3) and 135(2) of the Companies Act, 2013 is placed at Annexure E.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION

As per requirement of 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 forms part of this report at Annexure- F. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

As per requirement of 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 in section 188(1) of the Companies Act, 2013 in the prescribed form AOC-2 is placed at Annexure-G. Your Company has formulated the policy on dealing with Related Party Transactions and the same is hosted on your Companyâs website at http://www.gailonline.com/final_site/pdf/InvestorsZone/GAIL_Related_Part y_Transaction_Policy.pdf.

PARTICULARS OF EMPLOYEES

As per provisions of section 197(12) of the Companies Act, 2013 read with the Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed Company is required to disclose the ratio of the remuneration of each director to the median employeeâs remuneration etc. in the Directorsâ Report. Also, in terms of the provisions of section 197(12) of the Companies Act, 2013 read with the Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every Company is required to give a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules in the Annual Report.

However, as per notification dated June 05, 2015 issued by the Ministry of Corporate Affairs, Government of India, government companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. Your Company is a government company, therefore, such particulars have not been included as part of the Directorsâ Report.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return forms part of this Report at Annexure-H.

DIVIDEND DISTRIBUTION POLICY

As per Regulation 43A of the SEBI LODR Regulation 2015, your Company has formulated a Dividend Distribution Policy. The dividend pay-out is in accordance with the Companyâs Dividend Distribution Policy.

The Dividend Distribution Policy of the Company is annexed herewith as Annexure-I to this report and is also available on the Companyâs website, at http://www.gailonline.com/final_site/pdf/InvestorsZone/GAIL%20Dividend %20Distribution%20Policy.pdf.

ISSUE OF SHARES AND FIXED DEPOSITS

In March, 2017 your Company issued Bonus Share in ratio of one equity share of Rs.10 each for every three equity shares of Rs.10 each held. As a result the Paid-up Equity Capital has increased from Rs.1,268.48 Crores to Rs.1,691.30 Crores by capitalizing the General Reserves for Rs.422.82 Crores.

Your Company has not accepted any fixed deposits during the financial year 2016-17 and, as such, no amount of principal or interest was outstanding as of the balance sheet date.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, foreign exchange earnings were Rs.785.07 Crores and foreign currency outgo was Rs.8711.71 Crores.

KEY MANAGERIAL PERSONNEL AND DIRECTORS

The following Key Managerial Personnel (KMP) was appointed on the Board of your Company:

- Shri P K Gupta, Director (HR) w.e.f. February 01, 2017.

- Shri Gajendra Singh, Director (Marketing) w.e.f. April 05, 2017.

During the period, the following were appointed on the Board of your Company as Directors:

- Shri Ashish Chatterjee, Government Nominee Director w.e.f. December 23, 2016.

- Shri Dinkar Prakash Srivastava, Independent Director w.e.f. January 31, 2017.

- Dr. Anup K Pujari, Independent Director w.e.f. January 31, 2017.

- Smt. Anupama Jaiswal, Independent Director w.e.f. January 31, 2017.

During the period, the following ceased to be Key Managerial Personnel (KMP) on the Board of your Company:

- Shri M Ravindran, Director (HR) w.e.f. January 31, 2017 upon attaining the age of superannuation.

During the period, the following ceased to be Directors on the Board of your Company:

- Shri Ashutosh Jindal, Government Nominee Director, w.e.f December 23, 2016.

- Smt. Anupama Jaiswal, Independent Director w.e.f. March 18, 2017.

- Shri Anant Kumar Singh, Government Nominee Director, w.e.f May 11, 2017.

The Board placed on record its deep appreciation for the valuable services rendered by outgoing Directors/KMP during their association with your Company.

CODE OF CONDUCT

Pursuant to the requirements of SEBI LODR Regulations, 2015 the Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year ending 31^st March, 2017.

PERFORMANCE EVALUATION

As per provisions of section 134(3)(p) of the Companies Act, 2013 for every listed company, a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors should form part of the Directorsâ Report. However, 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 government company and the appointment, tenure, performance evaluation etc. of Directors is done by the Government of India, therefore, such particulars have not been included as part of the Directorsâ Report. Remuneration of CMD, Whole-time Directors and its employees is determined by the Government of India. As per requirement of the SEBI LODR Regulations, 2015, an evaluation criterion for the Board is being formulated.

DIRECTORS RESPONSIBILITY STATEMENT

Yours Directors confirm that:

i) in the preparation of the annual accounts for the financial year ending March 31, 2017, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

iv) prepared the annual accounts for the financial year ending March 31, 2017 on a going concern basis;

v) had 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 control are adequate and were operating effectively.

ACKNOWLEDGMENT

Your Directors express their gratitude for guidance and support received from the Government of India, especially the Ministry of Petroleum and Natural Gas, various state governments, regulatory and statutory authorities.

Your Directors acknowledge wise counsel received from Statutory Auditors and CAG and are grateful for their consistent support and cooperation.

Your Directors also wish to thank all the shareowners, business partners and members of the GAIL family for reposing their faith, trust and confidence in your Company.

On behalf of your Directors, I would like to place on record our deep appreciation for the hard work, dedication, commitment and solidarity of your Companyâs employees.

Your Directors and employees look forward with confidence and stand committed to creating a bright future for all stakeholders.

For and on behalf of the Board

(B. C. Tripathi)

Chairman & Managing Director

Place: New Delhi

Dated: 08.08.2017

Mar 31, 2016

DEAR SHAREHOLDERS,

On behalf of the Board of Directors of your Company, I am delighted to present the 32nd Annual Report of your Maharatna Company, along with Audited Financial Statements for the financial year 2015-16.

PARTNER INDIA''S GROWTH - NATURAL GAS LEADER

With a turnover of Rs.51,614 crores, your Company is India''s largest natural gas Company and is ranked amongst the top gas utilities in Asia. Your Company has presence across the entire gas value chain with activities ranging from Gas Transmission and Marketing to Processing (for fractionating LPG, Propane, SBP Solvent and Pentane), transmission of LPG, and production and marketing of Petrochemicals like HDPE and LLDPE.

Your Company has extended its presence in LNG re-gasification, City Gas

Distribution, Exploration & Production through subsidiaries and joint venture companies and also diversified into solar and wind power generation.

Gas transmission is one of the core competencies of your Company and draws its strength from about 11,000 km of natural gas pipeline network and 2,038 km of LPG pipeline transmission network.

With a lean work force of 4321 employees, your Company plays a vital role in the social and economic development of the country and makes a substantial contribution towards its energy security.

FINANCIAL HIGHLIGHTS

The important financial highlights for the year 2015-16 are as under:

PARTICULARS 2015-16 2014-15

US $ Million (Rs. in crores) US $ Million (Rs. in crores)

Turnover (Net of ED) 7,715 51,614 8,952 56,569

Other income 173 1,158 173 1,096

Cost of sales (excluding interest and depreciation and including 7,122 47,646 8,236 52,046 extraordinary items)

Gross margin 766 5,126 879 5,557

Interest 96 640 57 361

Depreciation 196 1,313 154 974

Profit before tax 474 3,173 678 4,284

Provision for tax 131 874 197 1,245

Profit After Tax 344 2,299 481 3,039

Appropriations - - - -

Interim dividend 47 317 60 381

Proposed final dividend 57 381 60 381

Corporate dividend tax 21 142 24 154

Net transfer to/from bond redemption reserve 5 35 6 37

Transfer to CSR reserve (0) (1) (5) (30)

Transfer to general reserve 34 230 48 304

Net surplus after Appropriations 179 1,196 287 1,814

1 US $ in INR converted at the exchange rate as on 31st March of 66.90 - 63.19 - the respective financial year

DIVIDEND

Your Company has a consistent track-record of dividend payment. So far, it has disbursed dividend of over Rs.13,741 Crores to its shareholders including Rs.8,316 Crores disbursed as dividend to the Government of India (GOI).

The Board of Directors of your Company had earlier approved payment of an interim dividend @ 25% on equity share of Rs.10 each (Rs.2.5 per equity share) amounting to Rs.317.12 Crores, which was paid in February, 2016. Further, the Board has recommended payment of final dividend @ 30% on equity share of Rs.10 each (Rs.3.00 per equity share) for FY 2015-16 amounting to Rs.380.54 crores.

With this, the total dividend payment for the fiscal year 2015-16 will be 55 % on equity share of Rs.10 each (Rs.5.50/- per equity share) amounting to Rs.697.66 Crores on its paid-up equity capital of Rs.1,268.48 Crores and dividend distribution tax of I42.03 crores. The total dividend pay-out including corporate dividend tax accounts for 35% of profit after tax.

CONTRIBUTION TO EXCHEQUER

Your Company has contributed over Rs.4,929 Crore in 2015-16 to the exchequer through dividend, duties, taxes and others, as compared to Rs.5,788 Crore in 2014-15.

CREDIT RATING

- Domestic rating

Your Company has been reaffirmed the highest domestic credit rating of AAA from ICRA, CARE and CRISIL, which is highest credit rating in India and carries lower credit risk of the Company.

- International Rating

The International rating agency, Moody''s International, Hong Kong, has also reaffirmed the corporate issuer rating of Baa2 with a negative outlook, which is one notch higher than sovereign rating of India. The Baa2 rating affirmation reflects GAILs dominant position in gas transmission business. Further, Fitch Ratings has also assigned a long-term foreign currency issuer default rating of BBB- with a negative outlook, which is equal to sovereign rating of India.

BUSINESS STRATEGY

In the last year and a half, the oil and gas sector witnessed game-changing disruptions with oil prices crashing from 114 $/bbl to a low of around 30 $/bbl and having profound implications on companies across the sector.

The volatility in oil prices has caused downward shift in prices of LNG, oil products, petrochemical products, etc. Further, domestic production of natural gas has been on the decline over the past 5 years, from peak of 140 MMSCMD in 2010-11 to 86 MMSCMD in 2015-16. Notwithstanding these challenges which have had physical and financial implications on your Company, the management has taken it as an opportunity and has initiated strategic steps to reinvent itself and emerge out stronger than before.

In order to evolve, grow and excel, your Company continuously reviews its strategy developed for the period 2011-2020 to make the necessary course correction, in line with changes in the external business environment and internal organizational requirements. Management of your Company is taking steps to realize strategic objectives and ensure that your Company is on course to become an integrated hydrocarbon major with presence across the entire gas value chain.

- National Gas Grid

Your Company is the largest natural gas pipeline Company in India and going forward, the focus will be on the development of National Gas Grid which is one of the key priorities of the Government of India (GoI). Your Company now has a total network of approximately 11,000 km pipeline in the country. Additionally, it has commenced execution of the Phulphur

- Haldia pipeline project (Phase-1) which was inaugurated by the Hon''ble Prime Minister of India in July, 2015. This project is also referred to as "Energy Highway of Eastern India" and once completed, it would help to revive closed fertilizer plants. This pipeline will connect states of Eastern India to the rest of the gas network in the country and pave the way for developing the "National Gas Grid" The Board has also approved the 670 km Vijaipur-Auraiya-Phulpur pipeline. With these projects and through continuous pan-India expansion of the pipeline network, your Company will further strengthen its leadership position in the natural gas transmission segment.

Your Company is also pursuing the transnational pipeline project, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project. Gas Sales & Purchase Agreement (GSPA) has already been signed to import 38 MMSCMD gas into the country through this pipeline. Further, TAPI Pipeline Company has been incorporated as a Special Purpose Vehicle in the Isle of Man with your Company holding 5% equity. Shareholder''s Agreement and Investment Agreement of TAPI Pipeline Company have been signed.

- LNG Marketing

One of the key strategic priorities of your Company today is the marketing of LNG in domestic and international markets. Over the last few years, your Company tied-up significant LNG volumes by concluding several deals with suppliers, such as Sabine Pass Liquefaction LLC (USA), Gazprom (Russia) etc. Further, your Company''s US subsidiary has booked LNG capacity in Dominion Cove Point''s LNG liquefaction terminal in the USA for which 20 year gas sourcing agreement has been entered with WGL Midstream Inc. (USA). In line with its LNG import portfolio, your Company is focusing it efforts on gas market development to attract and retain more customers. The marketing tie-ups are being explored for selling LNG in India and in the global markets. Your Company''s subsidiary, GAIL Global (Singapore) Pte Limited is actively pursuing LNG trading activities from Singapore.

To develop the gas sector in India and advance the country on the road to a gas based economy, your Company has advocated the implementation of the pooling mechanism. As a result, for the first time in the country, large scale gas pooling was introduced where your Company is acting as a pool operator to manage procurement and supply of R-LNG to stranded gas based power plants in India. Your Company is also supplying RLNG to fertilizer companies at competitive rate through bidding process.

Your Company has tied-up additional regasification capacities at Dahej LNG terminal and Dabhol LNG terminal to facilitate regasification of additional LNG tied-up in recent years. Further tie -ups in upcoming LNG regasification terminals shall also be pursued. Your Company plans to own long term charter hire LNG ships to transport LNG volumes from the USA to India and other global markets.

- City Gas Distribution (CGD)

In order to provide clean fuel for domestic, vehicular and commercial use and to facilitate development of smart cities, your Company is expanding its CGD network. Your Company''s wholly owned subsidiary, GAIL Gas Limited, is implementing CGD projects in the cities of Kota, Dewas, Meerut, Sonepat, Bengaluru and Taj Trapezium in addition to pursuing the same in the state of Kerela, Karnataka, Andra Pradesh, Rajasthan, Kota and Vadodara city etc. through its joint ventures. In line with the GoI''s mission to accelerate the use of gas, your Company through its CGD JVs has set an unprecedented record by providing 2.5 lakhs new PNG connections during the year.

- Petrochemicals

Your Company aspires to be one of the leading players in India in this segment by strengthening its petrochemical portfolio through expansion of existing capacities, setting up new plants and acquiring equity stakes in upcoming projects. Petrochemical plant was commissioned in Assam through Brahmaputra Cracker & Polymer Limited (BCPL) a subsidiary of your Company. This plant was dedicated to the nation by Hon''ble Prime Minister of India in February, 2016. Further, a petrochemical plant at Dahej is being set up by ONGC Petro-additions Limited (OPaL) which is a joint venture (JV) of your Company,

- Renewables

As a responsible corporate citizen and in line with the GoI''s commitment to reduce carbon emissions, your Company aims to decrease its carbon footprint in a phased manner. It has installed 118 MW wind energy capacity and has also set up a 5 MW solar project. Further, your Company is a stakeholder in a Special Purpose Vehicle (SPV) created under the aegis of Ministry of Petroleum & Natural Gas (MoP&NG) and Ministry of New & Renewable Energy (MNRE) for pursuing the setting up of Grid Connected Renewable Energy Power Projects.

- Human Resource Development

Your Company is committed to align its human resource development initiatives with strategic business objectives to achieve its organizational goals. The key areas under focus are skill development and capability build-up, talent acquisition, development and retention.

BUSINESS PERFORMANCE

During the year under review, the segment wise business performance of your Company is as under:

- Natural Gas Marketing

Natural gas marketing continues to constitute your Company''s core business. During 2015-16, gas sales clocked 73.67 MMSCMD, compared to 72.07 MMSCMD in the previous financial year. Major supplies of natural gas include fuel to power plants, feedstock for gas-based fertilizer plants, LPG extraction and City Gas Distribution. Your Company holds around 71.24 % market share in India''s gas marketing.

Your Company has been designated by Ministry of Petroleum & Natural Gas (MOP&NG) to raise invoices for non- submission of utilization certificate, duly certified by Fertilizer Industries Coordination Committee (FICC), by concerned fertilizer companies for use of APM gas for production of urea. The Company is revenue neutral for such transaction.

Most of the customers disputed the debit notes raised by the Company and matter was pending at Hon''ble High Court. Further, MoP&NG vide letter dated 16th December, 2015 revised the earlier modalities for deriving the quantity and price for issue of debit notes. The company has taken the matter with Ministry of Fertilizer and FICC to provide information / details.

Considering the pending court case, uncertainty in recovery of debit notes, matter being under consideration of Government- MOP&NG, Ministry of Fertilizer and FICC, The Company issued claim letter amounting to Rs. 1651.18 crore for such type of cases, till the matter gets settled.

- Transmission

- Natural Gas

Your Company owns and operates a network of about 11000 kms of natural gas high pressure trunk pipeline with a pan-India capacity of around 206 MMSCMD of natural gas. The average gas transmission during the year was 92.72 MMSCMD, compared to 92.10 MMSCMD in the previous financial year.

- LPG

Your Company is the only Company in India, which owns and operates exclusive pipelines for LPG transmission for third-party usage. It owns and operates two LPG pipeline transmission systems with a total length of 2,038 kms. Out of this, 1,415 kms of pipeline network transports LPG from western to northern parts of India (Jamnagar - Loni pipeline) and the balance 623 kms of pipeline network transports LPG in the country''s southern part (Vizag-Secunderabad pipeline). The LPG transmission system has a capacity to transport up to 3.8 MMTPA of LPG. In 2015-16, the LPG transmission throughout achieved was about 2.82 Million MT.

- Petrochemicals

During 2015-16, your Company produced 344.168 Thousand MT of polymers and sold 333.5 Thousand MT of polymers.

- LPG and Other Liquid Hydrocarbon Production

Your Company has LPG plants at five locations in the country. In 2015- 16, total liquid hydrocarbon production was about 1.09 Million MT, which mainly included 0.85 Million MT of LPG, 0.13 Million MT of Propane, 0.02 Million MT of Pentane and 0.08 Million MT of Naphtha.

- Exploration and Production (E&P)

Your Company''s E&P business has continued self-sustainable production of oil and gas for the second consecutive year from four blocks (two overseas blocks in A-1 & A-3 block, Myanmar and 2 domestic blocks in Cambay basin).

Revenue of approx. Rs. 751.51 Crores has been generated from sale of hydrocarbon from 4 producing blocks namely A-1 & A-3, Myanmar and CB-ONN-2000/1 and CB-ONN-2003/2 (Cambay onland) during the year 2015-16.

Further, Field Development Plan (FDP) has been approved by Directorate General of Hydrocarbons (DGH) for the gas resource of 65 BCF in Tripura block (AA-ONN-2002/1).

As a result of continued portfolio optimisation, your Company now has participating interest in 13 E&P blocks (excluding one GAIL Operated Block CY-ONN-2005/1 in Cauvery basin which was relinquished in June 2016) of which 11 blocks are in India and 2 in Myanmar. Out of these, your Company is Operator in one onland blocks viz. CB-ONN-2010/11 in Cambay basin awarded during NELP-IX bidding round.

Drilling activities were initiated in 4 (out of 5) blocks obtained during NELP-IX bidding round viz (i) CB-ONN-2010/11 (Lead Operator: GAIL),

(ii) CB-ONN-2010/8 (Lead Operator: Bharat Petro Resources Limited)

(iii) GK-OSN-2010/1 (Operator: ONGC) (iv) GK-OSN-2010/2 (Operator: ONGC). Gas discovery has been notified to Government in the block GK- OSN-2010/1. Survey activities are planned in the remaining NELP-IX block AA-ONN-2010/2 (Operator: OIL)

INITIATIVES FOR FUTURE GROWTH

* Global Initiatives

Your Company is constantly pursuing a leading role in the TAPI Pipeline project to receive Natural Gas from the Galkynysh fields in Turkmenistan. After incorporation of TAPI Pipeline Company Limited (TPCL), Turkmengas has been endorsed as the consortium leader. TPCL has a mandate to build, own and operate the proposed TAPI Pipeline. The Shareholders Agreement (SHA) of TPCL was signed in December 2015 during the ground breaking ceremony for laying of the Turkmen leg of the TAPI pipeline. Investment Agreement (IA) relating to initial equity infusion by the TAPI entities into TPCL was also signed in April, 2016. Galkynysh Pipeline Company, the consortium leader group led by Turkmengas, shall be taking 85% equity in TPCL, while your Company, ISGS (Pakistan) and Afghan Gas Enterprise (AGE) shall be taking 5% equity each.

* Domestic Initiatives

The domestic business initiatives of your Company were as follows:

* Petrochemicals

GAIL and Hindustan Petroleum Corporation Limited (''HPCL!) are exploring the possibility of setting up a Greenfield petrochemical complex in the east coast of India primarily based on imported ethane.

* LNG REGASIFICATION TERMINALS

Your Company is evaluating various opportunities for setting up/ booking LNG regasification capacity in the country

* LNG SHIPPING

In 2011, your Company contracted 3.5 MMTPA of LNG from Cheniere Energy, USA on FOB basis for an initial period of 20 years. Further, in 2013 your Company subsidiary GAIL Global (USA) LNG LLC also signed a Terminal Service Agreement (TSA) for booking 2.3 MMTPA of liquefaction capacity in the Dominion Cove Point terminal for 20 years. The initial supplies from both these contracts are expected to commence from early 2018. Currently, your Company is in the process of long term charter hiring of LNG ships through the international competitive bidding route.

* NATURAL GAS PIPELINE PROJECTS

During the financial year, your Company has completed 27 number of ''Last Mile Connectivity'' to harness the commercial utilization of various pipeline networks in the seven states of Karnataka , Gujarat, Goa , Haryana, Rajasthan, Maharashtra & Punjab.

* NON-CONVENTIONAL ENERGY

Your Company has total installed capacity of 118 MW of Wind Energy Generation Projects (WEG). Your Company began operations with a modest capacity of 4.5 MW wind energy for captive use in Gujarat in 2009-10 and graduated to commercial production after commissioning 100 MW of WEG projects in Tamil Nadu and Karnataka in 2011-12. It also made its entry in the solar power sector by setting up 5 MW Solar Power Plant in Rajasthan through bidding under the Jawaharlal Nehru National Solar Mission.

Your Company is setting up 5.76 MW grid connected roof top captive solar power plant at Pata Petrochemical Complex, Uttar Pradesh.

* COAL GASIFICATION

Your Company is also entering into coal gasification by setting up surface coal gasification based urea project at Talcher. The project is envisaged for production of 2200 MTPD Ammonia and 3850 MTPD Urea and the project cost is estimated to be around Rs.8,000 Crore. Joint Venture Company Talcher Fertilizers Limited (formerly known as Rashtriya Coal Gas Fertilizers Limited) was formed on 13th November, 2015 with consortium partners i.e. GAIL, CIL, RCF & FCIL.

The success of this project would pave the way for the production of fertilizers from abundantly available domestic coal, thus resulting in lesser dependency on their imports.

RELATED PARTIES - SUBSIDIARIES/ ASSOCIATES/ JOINT VENTURES

Your Company has formed subsidiaries/associates/joint venture companies for CGD, petrochemicals, LNG, gas trading, power generation and shale gas. It has played pioneering role in introducing city gas projects for natural gas supplies to households, commercial, industrial and transport sectors through its subsidiary and joint venture companies. Contracts or arrangements/ transactions with related parties were on arm''s length basis and in ordinary course of business.

Your Company''s subsidiaries/ associates/joint venture companies contributed significantly in the business expansion activities of your Company. A statement containing the salient feature of the financial statements of your Company''s Subsidiaries, Associate Companies and Joint Ventures as per first proviso of section 129(3) of the Companies Act, 2013 including details of individual contribution of all subsidiaries, associates and joint venture companies towards the overall performance of Company during the period is also given under Consolidated Financial Statements.

The details of subsidiaries/associates/joint venture companies are mentioned below:

NATURAL GAS, LNG AND POWER

- GAIL Global (Singapore) Pte. Limited (wholly owned subsidiary)

GAIL Global (Singapore) Pte. Ltd. (GGSPL), primarily started as an overseas investment arm of your Company and was operationalized for LNG trading in 2012. It commenced its business operations in May 2012. GGSPL is now actively involved in business activities in the area of LNG Trading. Until March 31, 2016, GGSPL has traded twenty one (21) LNG cargoes out of which 13 were traded during the financial year 2015-16. The turnover for 2015-16 was USD 307 million.

GGSPL has also been mandated by your Company to market part of the Henry Hub linked LNG volume sourced from the USA, in the international market. The supplies against the said volumes are expected to start from the year 2018.

GGSPL is also in process of third-party trades and endeavouring ship chartering and risk management activities along with supplying LNG cargoes to GAIL.

- GAIL Global (USA) Inc (wholly owned subsidiary)

GAIL Global (USA) Inc.(GGUI), was incorporated as a wholly subsidiary of GAIL to undertake investment in the Eagle Ford shale gas asset. The primary objective behind this investment was to enter into the US shale gas market and to bring shale gas technology to India. GGUI executed a definitive agreement with M/s Carrizo Oil & Gas Inc., USA (Carrizo) on September 28, 2011, to enter into an unincorporated JV in the Eagle Ford Shale asset in Texas. GGUI acquired a 20% participating interest in this JV. Carrizo, with the remaining 80% participating interest, functions as the operator of the JV.

During the year, 20 wells came online, taking the total online wells to 99 as on December 31, 2015. The gross production volume of GGUI during 2015 was 853.1 Mboe.

- GAIL Global (USA) LNG LLC (wholly owned subsidiary of GGUI)

GAIL Global (USA) LNG LLC (GGULL) signed a contract with Dominion Cove Point LNG, LP (DCP) to book LNG tolling capacity of 2.3 MMTPA in its Cove Point terminal. It also signed Gas Sales & Purchase Agreement (GSPA) with WGL Midstream, Inc. for sourcing of gas for liquefaction at the Terminal. The construction activities at the terminal are on-track and the terminal is expected to be in service by January 2018. GGULL would be selling all LNG volumes from Cove Point to GAIL.

- GAIL China Gas Global Energy Holdings Limited

GAIL China Gas Global Energy Holdings Limited, was formed with an objective to pursue gas sector opportunities, primarily in China. Your Company has a 50% equity stake with China Gas Holdings Limited as an equal partner.

- Petronet LNG Limited (PLL)

PLL was formed in 1998 to set up LNG import and re- gasification facilities in India. It currently owns and operates a 10 MMTPA capacity LNG re-gasification terminal at Dahej, Gujarat. The capacity is being expanded to 15 MMTPA (expected to be completed by end of 2016). PLL has also setup an LNG re-gasification terminal at Kochi, Kerala with a name plate capacity of 5 MMTPA.

Your Company has 12.5% equity stake in PLL along with Bharat Petroleum Corporation Ltd. (BPCL), Oil and Natural Gas Corporation (ONGC) and Indian Oil Corporation Limited (IOCL) as equal partners.

- Ratnagiri Gas and Power Private Limited (RGPPL)

RGPPL was formed as a joint venture with NTPC for acquiring and operating the erstwhile Dabhol Power Project assets consisting of 1967.08 MW gas- based combined cycle power block and 5 MMTPA LNG Block. The assets were transferred to RGPPL in October, 2005. Your Company has 25.51% equity stake in RGPPL along with NTPC 25.51%, MSEB Holding Company Limited 13.51% and Indian Financial institutions 35.47%.

The power block, was non-operational due to paucity of funds and non- availability of domestic gas in FY 2014-15. Government of India has floated a scheme for restart of the gas based Power Plant on Regasified LNG, vide its OM dated 27.03.2015 support from Power System Development Vund (PSDF Support Scheme of GoI), which provided for reverse auction. RGPPL has participated in the GoI scheme with Indian Railways as the buyer for the generation under PSDF Scheme. Ministry of Power has allocated temporary 620 MW power out of allocation to Maharashtra to Indian Railways under PSDF Support of GoI for the financial year 2015-16 & 2016-17.

Power Plant commenced operation under PSDF Support Scheme on November 26, 2015 & supplying around 500 MW Power to the Indian Railways in the states of Maharashtra, Gujarat, Madhya Pradesh & Jharkhand. During the Financial Year 2015-16, a total of 1197.08 BUs have been supplied to Indian Railways.

RGPPL has already entered into a long-term frame work agreement with GAIL for commercial utilization of LNG terminal and commenced tolling operations for 25 years w.e.f February 2012. 45 cargos have been successfully unloaded since commissioning. 22 cargos were unloaded during FY 2015-16. The total revenue earned by LNG Terminal from commissioning till 31st March 2016 is about Rs.700 Crores. The plant now operates only in non monsoon period as there is no breakwater. Demerger process of power plant & LNG terminal is going on. It is envisaged that by 2020, the breakwater construction will be completed and it will be able to operate round the year at full capacity.

The proposal for the demerger of the Power and LNG business is under consideration of RGPPL and its shareholders. The purpose of the demerger is (a) to enable restructuring of the loan in order to make the two demerged entities independently viable and (b) to make available the funds to complete the breakwater in order to achieve the full potential of the LNG terminal.

CITY GAS DISTRIBUTION (CGD)

- GAIL Gas Limited (wholly owned subsidiary)

GAIL Gas was incorporated with the objective to implement City Gas Distribution (CGD) projects in the country, GAIL Gas has been authorized by Petroleum and Natural Gas Regulatory Board (PNGRB) to implement CGD Projects in Dewas, Kota, Sonipat, Meerut, Taj Trapezium Zone and Bengaluru. In addition, GAIL Gas is pursuing City Gas Business in the state of Kerala, Andhra Pradesh, Karnataka, Rajasthan, Kota and Vadodara City etc. through its joint ventures. It has also won the authorization of Haridwar district and North Goa through a consortium with Bharat Petroleum Corporation Limited by PNGRB.

Rajasthan State Gas Limited (RSGL) was incorporated by GAIL Gas Limited and Rajasthan State Petroleum Corporation Limited (RSPCL) with the objective to promote the CGD projects and take up activities of gas distribution in the state of Rajasthan. GAIL Gas has transferred its Kota CGD Assets to RSGL and matching contribution will be made by other JV partner i.e. RSPCL

* Compressed Natural Gas (CNG)

During the year, GAIL Gas augmented its CNG distribution infrastructure by enhancing the capacity of existing stations and adding two CNG Station in Sonipat and one in Firozabad. CNG sales increased to 38 MMSCM in 2015-16.

* Piped Natural Gas (PNG)

In PNG business, GAIL Gas is progressively supplying PNG to domestic customers in its authorized cities. Presently, the company is catering to 11404 households.

GAIL Gas continue to maintain its focus on the PNG industrial and commercial segment as one of the potential growth areas. With its concentrated efforts in the year 2015-16, the total number of commercial and industrial customers increased to 513 in 2015-16.

GAIL Gas has commissioned the steel networks in the geographical area (GA) of Sonepat, Dewas, Kota, Meerut, Taj Trapezium Zone and Bengaluru. For reaching more charge areas for domestic connections, the steel grid network and MDPE pipeline network has been extended to 388.93 kms and 806.41 kms respectively in 2015-16 in the cities of Sonepat, Meerut, Dewas, Kota, Taj Trapezium zone and Bengaluru.

During the year, the sales volume from industrial, commercial and domestic customers grew to 702.80 MMSCM from 526 MMSCM during previous year.

- Aavantika Gas Limited (AGL)

AGL was incorporated to implement CGD Projects in Madhya Pradesh. As on 31st March, 2016, AGL operates 20 CNG stations including 9 daughter stations, 7 online stations & 4 mother stations in Indore GA (including Ujjain) and Gwalo GA.

Further, as on 31st March 2016, AGL supplied PNG to around 6430 Domestic, 37 commercial & 59 industrial consumers in its authorized geographical regions. AGL is also catering to fuel requirement of around 21,300 CNG vehicles operating in the region. Your Company along with HPCL holds 22.50% stake as an equal partner.

- Bhagyanagar Gas Limited (BGL)

BGL was incorporated to implement CGD projects in the United Andhra Pradesh. As on 31st March, 2016, BGL operated 33 CNG Stations including 25 daughter booster stations, 5 online stations & 3 mother stations. Further, as on 31st March 2016, BGL supplied PNG to over 4270 households, 46 commercial & 3 industrial consumers in its authorized geographical regions. BGL also fulfills the fuel requirement of around 37000 CNG vehicles operating in the region. Your Company has 22.50 % stake along with HPCL as an equal partner.

- Central UP Gas Limited (CUGL)

CUGL was incorporated to implement CGD projects in Uttar Pradesh. As on 31st March, 2016, CUGL operated 17 CNG Stations including 4 mother stations, 10 online stations & 03 daughter booster stations.

Further, as on 31st March 2016, CUGL supplied PNG to over 13283 domestic, 148 commercial & 44 Industrial customers in its authorized geographical regions. CUGL is also catering to fuel requirement of around 51865 CNG vehicles operating in the region. Your Company has 25% stake along with BPCL as an equal partner.

- Green Gas Limited (GGL)

GGL was incorporated to implement CGD projects in Uttar Pradesh. As on 31st March, 2016, GGL operated 15 CNG Stations including 5 daughter stations, 6 online stations & 4 mother stations.

Further, as on 31st March 2016, GGL supplied PNG to over 12100 domestic, 15 commercial & 5 industrial customers in its authorized geographical regions. GGL is also catering to fuel requirement of around 36966 CNG vehicles operating in the region. Your Company has 22.5% stake along with IOCL as an equal partner.

- Indraprastha Gas Limited (IGL)

IGL was incorporated to implement CGD projects in Delhi''s National Capital Territory (NCT) and cities in adjoining National Capital Region (NCR). As on 31st March, 2016, IGL operated 340 CNG Stations including 68 mother stations, 243 online stations & 29 daughter stations.

Further, as on 31st March 2016, IGL supplied PNG to over 6.36 Lac Domestic, 1751 commercial & 821 industrial consumers in its authorized geographical region, which includes the entire public transport of the national capital and also the world''s largest bus fleet on CNG. IGL is also catering to fuel requirement of around 8.4 Lac CNG vehicles in the Delhi/NCR. Your Company has 22.5% stake along with BPCL as an equal partner.

- Mahanagar Gas Limited (MGL)

MGL was incorporated to implement CGD projects in Mumbai & adjoining areas. As on 31st March, 2016, MGL operated 188 CNG Stations, 19 mother stations, 142 online stations & 27 daughter booster stations.

Further, as on 31st March 2016, MGL supplied PNG to over 8.62 Lac Domestic, 2866 commercial & 60 industrial consumers in its authorized geographical region. MGL is also catering to fuel requirement of around 4.7 Lac CNG vehicles operating in the region.

Your Company accorded approval to Mahanagar Gas Ltd.(MGL), to issue fully paid up unsecured Compulsory Convertible Debentures(CCDs) at par to Government of Maharashtra (GOM) due to which equity holding of GoM increased to 10% of total paid-up equity capital. Further, your Company also accorded approval to off-load the equity shares held by GAIL and BGL each up to 12.5% of MGL equity through the Initial Public Offering(IPO). MGL Issue was opened on 21st June, 2016 and closed on 23rd June, 2016. Shares were allotted to investors at Rs.421/- per share. MGL equity shares were listed on NSE and BSE on 1st July, 2016 . Your Company equity holding in MGL post-IPO is 32.5% along with BG Asia Pacific Holdings Pte. Limited as an equal partner.

- Maharashtra Natural Gas Limited (MNGL)

MNGL was incorporated to implement CGD projects in and around Pune. As on 31st March, 2016, MNGL operated 36 CNG Stations including 5 mother stations, 14 online stations & 17 daughter stations.

Further, as on 31st March 2016, MNGL supplied PNG to over 30598 Domestic, 132 Commercial and 115 Industrial Consumers in its authorized geographical region. MNGL is also catering to fuel requirement of around 97307 CNG vehicles operating in the region. Your Company has 22.5% stake along with BPCL as an equal partner.

- Tripura Natural Gas Company Limited (TNGCL)

TNGCL was incorporated to implement CGD projects in Agartala. As on March 31st, 2016, TNGCL operated 5 CNG stations including 3 mother stations and 2 daughter stations in these areas.

Further, as on March 31st, 2016, TNGCL supplied PNG to over 22,615 domestic, 322 commercial and 47 Industrial customers in its authorized geographical region. TNGCL also fulfils the fuel requirement of around 8,063 CNG vehicles operating in the region. Your Company has 29% stake in this joint venture.

- Vadodara Gas Limited (VGL)

Shareholders approved transfer of your Company''s CNG stations and associated pipeline laid in city for connecting CNG Station in Vadodara to proposed Joint Venture Company of GAIL Gas Limited with Vadodara Mahanagar Seva Sadan (VMSS) in year 2011.

Accordingly, VGL was incorporated as Joint Venture Company (JVC) of GAIL Gas Limited and VMSS for supply of Compressed Natural Gas ("CNG") and Piped Natural Gas ("PNG") in the city of Vadodara. Your Company has signed the Business Transfer Agreement (BTA) with VGL and transferred its assets to VGL. VGL is operating the CGD business we.f. 01.10.2014 in Vadodara. Consequent upon transfer of assets, your Company has 32.93% stake along with GAIL Gas Ltd. 17.07% stake and VMSS has 50% stake in VGL.

VGL operates 9 CNG stations in Vadodara and dispensing more than 65,000 kg/day CNG, The CNG network in the City of Vadodara includes 3- Mother Stations, 1- On-line Station and 5- Daughter Booster Stations and 13 Km Steel Pipelines.

VGL also caters to the Piped Natural Gas (PNG) requirements of its consumers in domestic and Commercial Sectors. VGL supplies PNG to 76,000 houses and 2,200 commercial in the city through a 750 km long PE Pipeline Distribution Grid and 07 District Pressure Regulating System. This network was originally built, owned and operated by VMSS. VGL developed new MDPE network of 204 Km in outskirt area which catered about 50000 houses and out of that @2400 connections regularised and others ongoing.

PETROCHEMICALS

- Brahmaputra Cracker and Polymer Limited (BCPL) (Subsidiary)

Your Company has 70% equity stake in Brahmaputra Cracker and Polymer Limited (BCPL), with Oil India Limited (OIL), Numaligarh Refinery Limited (NRL) and the Government of Assam each having 10% equity share. BCPL has set up 2,80,000 TPA polymer plants in Assam.

The petrochemical complex at Lepetkata was commissioned on January 02, 2016 and dedicated to the nation by Hon''ble Prime Minister, Narendra Modi on February 05, 2016.

As on 31st March, 2016, BCPL has produced around 3200 MT of polymers and 1000 MT of liquid hydrocarbons. Marketing Agreement was executed with BCPL during the year.

- ONGC Petro-additions Limited (OPaL)

OPaL is implementing a Greenfield petrochemical complex of 1.4 MMTPA Polymer capacity at Dahej, Gujarat. Your Company, with a 15.5% equity stake and an investment of Rs.994.95 crores, is a co-promoter of OPaL. Oil and Natural Gas Corporation Limited (ONGC) and Gujarat State Petroleum Corporation Limited (GSPC) are co-promotors of OPaL. The plant is likely to commence operations during FY 2016-17.

OTHERS

- TAPI Pipeline Company Limited (TPCL)

Your Company is pursuing the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline project to receive natural gas supply from the Galkynysh fields of Turkmenistan. TPCL was incorporated in November 2014 in ''Isle of Man, to build, own and operate the proposed TAPI pipeline. In August 2015, Turkmengaz was endorsed as the Consortium Leader of the project by the TAPI entities. The Shareholders Agreement of TPCL was signed among the shareholders on December 13, 2015 while the Investment Agreement was signed on April 07, 2016. Your Company holds 5% equity in TPCL.

- South-East Asia Gas Pipeline Company Limited (SEAGP)

SEAGP was formed to transport natural gas from A1/A3 blocks in Myanmar to Myanmar-China border. As of January 2016, this pipeline is transporting nearly 16 MMSCMD of natural gas. Your Company has a 4.17% equity stake in SEAGP

- Talcher Fertilizers Limited (Earlier known as Rashtriya Coal Gas Fertilizers Limited)

A consortium comprising of your Company, CIL, RCF and FCIL was formed to revive FCIL, Talcher fertilizer unit in the Angul district of Orissa. The MoU was signed by the consortium partners on September 05, 2013. Subsequently, the joint venture company, Rashtriya Coal Gas Fertilizers Limited, was formed on November 13, 2015. Your Company holds 29.67% in this JVC.

PARTICULARS OF LOANS, INVESTMENTS AND CORPORATE GUARANTEES

Details of investments, loan and guarantee covered under Section 186 of the Companies Act, 2013 forms part of financial statement, as a separate section in the Annual Report FY 2015-16.

IT ADVANCEMENTS AND FUNCTIONAL EXCELLENCE

Digital technology is now a new disruptive force to reckon with in all realms of businesses. Your Company has aligned with the GoI''s "Digital India" initiative to launch Digital GAIL to integrate all processes and stakeholders with digital services. Digital GAIL aims to ensure that the Company''s services are made available electronically, efficiently, in shorter delivery time, while reducing paperwork.

All SAP systems in your Company have been upgraded and so the Company is all set for the implementation of asset depreciation as per the IT Act, linear asset management, risk management, incident management, worker safety management, change management, and mobile apps for HR & Sales.

Your Company has implemented Analytics Dashboards for the top management, using the latest SAP HANA-based Business Information Warehouse. These user-friendly dashboards provide drill-down facilities for analysing data and facilitate faster decision making. Your Company has also introduced mobile apps to provide anytime and anywhere access to employees.

GAIL has also implemented the enhanced EHSM Module for incident and risk management. This ensures that any deviation in operational process is recorded and automated for proper monitoring. Accordingly, preventive actions for mitigation of risks are taken.

Your company has also implemented a system for bilingual (Hindi and English) conversion of selective SAP output.

To provide recognition to your Company data centres as secured data centres in the industry, these have been certified by international certification agency based on ISO 27001:2013 Information Security Management System (ISMS) Framework. Your company has successfully conducted Surveillance Audit in November 2015 through M/s BSI and retained the ISO 27001 certification for ensuring security of information and physical assets.

Continuing journey towards functional excellence, your Company has taken various new initiatives during FY 2015-16 in the fields of Competence building, Asset Integrity Management, Standardization, Digital Applications / Processes, Employee Engagement, Knowledge Leverage, Archiving of Documents, Stakeholder Management etc. Further, moving ahead in the endeavor to nurture symbiotic relationship with Vendors / Contractors / Suppliers, Vendor Coaching, Pre-Dispute Resolution Mechanism & health monitoring of Contracts have been implemented with an objective to minimize disputes during contract execution as well as to minimize post contract closure legal disputes / arbitrations.

HEALTH, SAFETY AND ENVIRONMENT (HSE) MANAGEMENT

- Corporate HSE Policy

The HSE practices are primarily driven through a Corporate HSE policy, which is a statement of commitment of the management of your Company. The Company is committed to conduct business with a robust and integrated HSE management system with a focus on improving harmony with the environment through sustainable development. The safety and health of all our employees is of paramount importance to the management, and find mention in the core organisational values of GAIL. Employees and contract workers are strongly encouraged to adopt a safe working culture and behaviour to ensure effective implementation of the HSE policy. Complying with applicable HSE rules and regulations and going beyond in setting internal targets are important elements of the HSE management policy of your Company.

- Safety Performance

Safety performance is measured through "HSE Score" which is evaluated on the basis of performance of sites against important HSE Management System elements. Your Company achieved the HSE Score of 93% as against the MoU target of 90%.

- Safety Training

Your Company imparts regular and structured HSE training to its employees to upgrade their skills, knowledge and competence. It also conducts regular training sessions for contract workers, hydrocarbon tanker drivers and other workers to create awareness of the probable hazards in their work area and suggest safe work practices. Your Company also understands the importance of good health, and as a step in this direction, it organized the HSE workshop on "Occupational Health" for business heads and heads of fire and safety & medical services. Faculties from prestigious institutions are also invited regularly to share their insights on health-related issues. Your Company also holds technical seminars regularly, as a case point, it organized a seminar on "Safe Operation of Cross-Country Pipeline" for Oil and Gas Industry in Mumbai, in association with National Safety Council, Mumbai.

- Safety Culture Transformation Through Behaviour Based Safety (BBS) Concept

Your Company introduced and implemented the Behaviour-Based Safety (BBS) Concept to enhance safety of people and its installations. The implementation of this concept has helped to minimize at-risk behaviour at all work sites. In order to educate the employees on this concept, behaviour- based safety cum safety leadership workshops were organized at various sites of your Company during the year.

- Safety Audits

Your Company undertakes various safety audits to ensure implementation of the HSE Management System Guidelines and Emergency Preparedness. These audits are conducted by in-house teams and external safety auditors.

- Occupational Health

Your Company has implemented occupational hygiene measures and medical surveillance programmes to monitor and control the occupational health of its employees. It has also prepared guidelines on occupational health management. The Corporate Occupational Health Committee met four times during the year to monitor the occupational health programmes in your Company. To evaluate effectiveness of these programmes, a multi-disciplinary internal team conducted occupational health audit of process plants on all its work sites. The Company also conducts periodic medical examination of its employees at its various work centres, based on defined guidelines.

SUSTAINABILITY INITIATIVES

Your Company is in the process of publishing its sixth Sustainability Report for 2015-16 based on the Global Reporting Initiative (GRI) G4 Guidelines. Sustainability reporting has helped in measuring and monitoring your Company''s performance and moving beyond the mandatory requirements to ingrain sustainability within the organization in letter and spirit. It has served as an important management tool helping us to re-look at your Company''s systems, policies and procedures.

Since inception, your Company has been guided by the principles of accountability and transparency. In 2011, your Company formally began its sustainability journey, taking small yet steady steps at a time. The Company''s Sustainable Development Committee, comprising the Functional Directors as its members and an independent director as the Chairman, regularly monitors these sustainability initiatives and their performance.

The management of your Company understands that taking concrete actions in the right direction is equally important. GAIL is among the very few companies to have set voluntary targets through Sustainability Aspirations 2020 and transparently disclosed them in the public domain. Your Company has disclosed additional targets through the revised Sustainability Aspirations 2020 in the Sustainability Report. The targets are in the area of Specific Energy Reduction, Specific GHG Emission Reduction, Specific Fresh Water Consumption Reduction and Zero Waste Water Discharge.

Your Company has strengthened its data management systems to capture credible and authentic data and information from its various sites. For the second time in a row, your Company has been acknowledged among CDP''s India Leaders 2015 and featured in the Climate Disclosure Leadership Index (CDLI). Your Company has emerged the highest ranking Company among the country''s Public Sector Undertakings, and third overall, in the CDLI 2016.

Your Company believes that it is important to collaborate with industry leaders, associations and peers to address national and global sustainability challenges and work towards a common goal. Its focus has remained on collaborating with various external stakeholders such as TERI, CII, GRI, UNGC, FICCI and CDP among others, to gain from their knowledge and experience in the area of sustainability. Your Company conducted workshops in collaboration with organizations such GRI Focal Point India and CDP during the year.

In line with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 requirements, Business Responsibility Report (BRR) 2015-16 is contained in a separate section in the Annual Report.

VIGILANCE

Corporate Vigilance department of your Company is ISO-9001:2008 certified for having adopted Quality Management System in compliance with the requirements of ISO. Various initiatives such as Bill Watch System, e-tendering, e-payments etc. have already been implemented in the past for the benefit of vendors and suppliers to bring transparency in your Company''s systems and processes. A number of system improvements were effected in your Company during the year for effective utilization of its resources, which in turn would also help in preventing corruption and ensure all round good governance like:

- Test check measurement by senior officers during bill payment Â» Constitution of Estimate Review Committee for tenders to improve estimation process.

- Roll out of On-line Price bidding for service requisitions in Supplier Relationship

- Management (SRM) e-tendering system.

The Vigilance Awareness Week-2015 was observed on the theme "Preventive Vigilance as a tool of Good Governance" at the Corporate Office and at all the work centres of your Company from 26th to 31st October, 2015. In order to create better awareness about corruption and its effects amongst the youth and college students, various competitions were organized. In order to spread awareness among your Company employees and related work force, various competitions involving Essay Writing, Slogan Writing, Poster Paintings, Online Quiz and debates were held during the week. Other events including banners/posters/painting display, March and rallies with NGOs were also organized at various work centres. A magazine "JAGROOK" containing CVC circulars, articles and case studies related to vigilance was also published.

CAPABILITY BUILDING

- Human Capital

Your Company invests considerable time, efforts and resources to be the employer of choice and attract and retain the best available talent. GAIL carefully nurtures its intellectual capital and channelizes its resources to generate value. The Company''s Value Added per Employee initiative reflects its commitment to make optimal and productive use of the available resources and business opportunities. For the year under review, Value Added per Employee was Rs.167.74 lacs.

- Leadership Development Program

Building organizational and leadership capabilities is one of the top priorities of your Company. Under the Company''s Leadership Development Programme, the Senior Management Development Centre (SMDC) exercise was initiated for capability building of the senior level employees. As on date, the following employees were trained under this programme: Almost all the senior executives in the Chief Manager (E-6 Grade) and above; more than 95% executives who were promoted to the level of chief managers in APE 2015; and 316 senior managers (E-5 Grade). Plans are underway to train more senior managers (E-5 Grade) in the near future.

Development gaps of the participants were identified and a comprehensive Individual Development Plan (IDP) was drawn to fill this gap. Under this programme, customized training would be provided to the employees at premier business schools, and through e-learning courses and books.

- Representation of Priority Section

Your Company has been complying with the Presidential Directives and other instructions/guidelines issued from time to time pertaining to Policies and Procedures of Government of India in regard to reservation, relaxations, concessions etc. for Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs) and Persons with Disabilities (PWDs) in Direct Recruitment.

Details with regard to Group-wise total number of employees and the representation of Scheduled Castes, Scheduled Tribes, and Other Backward Classes amongst them in your Company as on 31st March, 2016 have been given in Table below:

Group Employees on Roll SC ST OBC PWD

A 3102 485 197 563 41

B 558 110 63 104 11

C 598 103 23 185 35

D 58 17 6 14 1

C&MD DIRECTORS & W 05 - - - - CVO

Total 4321 715 289 866 88

A total of 136 new employees joined your Company during the 2015-16. Total Manpower of the Company as on 31st March, 2016 stood at 4321 (including Whole-time Directors & CVO) with 16.54% of its employees belonging to SC category, 6.68% to ST category, 20.04% to OBC category, 7.96% to Minorities and 2.03% to PWDs category Your Company''s workforce comprised of 251 women employees as on 31st March, 2016.

- Capability Development

Your Company believes that its human resource is one of the most vital assets for achieving its vision, mission and objectives. Therefore, capability building and talent development of its human resources have been its key focus areas.

GAIL Training Institute (GTI) organizes systematic and structured programmes for capability building across all levels within the organization. In recognition of its initiatives, GTI has been conferred with the prestigious Golden Peacock National Training Award for the year 2016.

GTI organised the following programmes and initiatives during the period under review:

- More than four man-days of training on average per employee.

- Certification Training Programmes from NACE, ASME, OEMs and technology licensors for technical human resources to empower them with state-of-the-art expertise in the core areas of their function.

- Specialised training programmes on new business areas, in-line with the Company''s Strategy 2020, including Business Modelling, Energy Trading, Hedging and Risk Management.

- Individual Development Plan (IDP) for chief managers and above, based on the developement areas identified during the SMDC exercise.

- The participants of this IDP plan were provided competency-based books and e-learning modules prepared by Harvard Manage Mentor (HMM). They also undertook customised management development programmes through IIM Bengaluru and Kolkata.

- Leading external management experts were invited to provide customised functional development programmes for senior employees.

- Mentorship programme for all new executives Â» Healing with nutrition programme to provide health tips and reduce stress levels.

- Awareness programmes on Sustainable Development on all sites.

More than 60% of employees have already participated in these programmes.

- Knowledge sharing seminar to motivate employees to share their experiences/ expertize with other employees.

- In-house business quizzes and business simulations to update employees with the latest developments in their core business areas. Â» One year access to executives of E&P Department to International Petroleum Industry Multimedia System (IPIMS) e-learning module developed by International Human Resource Development Corporation (IHRDC).

As part of its commitment to develop skills and capabilities across the hydrocarbon industry, GTI also successfully organised training programmes for employees of several other organisations including RGPPL, HPCL, BCPL, IGL, MGL, MNGL, GSPL, and HMEL.

Your Company also plays a proactive role to support the National Skill Development Mission. It is the founder member of Hydrocarbon Sector Skill Council (HSSC) and provides skill-based training to create a pool of skilled manpower for CGD network and mid-stream hydrocarbon industry.

- Official Language

Your Company goes the extra mile to propagate and implement the Official Language Policy of the Union of India.

The Official Language Implementation Committees at the corporate and work centre level held quarterly meetings to monitor and review the progress of achieving the targets fixed in the Annual Programme issued by the Govt. of India.

Hindi workshops/trainings are organized on regular basis at GTI, Jaipur and Noida and at other work centres. Hindi computer training sessions are integral part of these programmes. During the year 2015-16, 1,335 employees were provided formal training through 67 workshops. All computers in the Company have Unicode Hindi fonts with transliteration key-board typing facility

Hindi Fortnight was celebrated from September 14 to 28, 2015 to promote the official language.

Every Monday/first working day of the month is observed as Hindi Diwas wherein all employees are encouraged to express themselves in the language.

Your Company now uses a special software to generate all formal communication including pay slips, CPF card, pension card, promotion order, transfer order, reliving order in both Hindi and English. GAIL is one of the few PSUs to implement this facility

Names of all employees in official e-mail IDs are both in English and Hindi. The Company terminology has been standardized and the list has been circulated amongst all employees. GAILs web site and Intranet also follow the bilingual format.

Your Company also publishes the Hindi magazine "Rajbhasha Sahyog" to promote the language. Motivational and inspirational books in Hindi were distributed on the occasion of World Hindi Day,

The 16th Rajbhasha Sammelan was organised on January 21 and 22, 2016 to promote the use of Hindi and review the progress made in the implementation of the official language in the Company.

The First Sub-Committee of Committee of Parliament on Official Language inspected the Jamnagar, Agartala and Ramgarh offices to review the steps undertaken to promote the official language and were appreciative of our efforts.

A meeting of Hindi Salahkar Samiti was organised on February 8, 2016 in Puri by the MoP&NG under the Chairmanship of Minister of State for Petroleum & Natural Gas (I/C). GAIL too participated and highlighted its efforts to promote the language.

- Sexual Harassment of Women at Workplace

Your Company has in place ''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 the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment

During the year 2015-16, two sexual harassment complaints received and the same were disposed off.

INNOVATION, RESEARCH AND DEVELOPMENT (R&D)

Your Company is committed to address the challenges of ever changing business scenario through Innovation. In this regard efforts are made to encourage Innovation and creativity of employees through a Suggestion Scheme. This Scheme helps to promote organization-wide idea generation for incremental innovation. The employees are motivated to suggest improvements in their respective areas of work. The suggestions so received are evaluated in a time bound manner for implementation and CMD trophy is awarded to the best Suggestion.

Your Company is aggressively pursuing many R&D projects in its identified thrust areas with a focus on developing high-impact innovative technologies to help pursue the existing business in a more optimum and sustainable manner. To improve the pipeline maintenance practices a R&D project to utilize Satellite imagery for monitoring Pipeline RoU was conceptualized. This project involved geo-mapping of the Pipeline route and finalizing the sequencing of taking Satellite images to meet the requirement of monthly monitoring. A change detection software was also developed to identify encroachments through analysis of sequential images. A "Bhuvan-GAIL Portal" was launched for monitoring the RoU of 610 Km stretch of Dahej-Vijaipur pipeline through this technology. Success of this pilot Project shall enable scaling-up of this technology to cover the entire Pipeline network besides developing additional functionalities to monitor activities like Project execution of new Pipeline projects.

Your Company had successfully demonstrated the capture of Land Fill Gas (LFG) site in an open and active landfill site at Ghazipur in Delhi. A part of this low-quality LFG is now being partially upgraded and utilized to generate Power through a 30 KW Micro Turbine. This Project demonstrates our commitment towards sustainable utilization of waste energy and climate risk mitigation through reduction of carbon footprint.

The Wireless Sensor Network (WSN) technology is known for its resilience and is more reliable than conventional wired networks. Wireless Sensors were developed for continuous monitoring of Pipeline parametres and are presently being pilot tested for transmitting and logging data of few customers at Bhiwadi terminal. Various new applications of polymer grades such as anti-microbial sutures for healthcare applications; Nano- clay based additives to enhance polymer properties etc. are also being developed.

The other important area for Research is hydrogen which is an ultra- clean fuel. A Novel carbon nano-composite material was developed that could store up to 6.7 wt% of hydrogen exceeding the 6% target set by Department of Energy (DoE), USA. Further evaluation is underway to utilize this material in a compact storage device to provide Hydrogen to a Polymer Electrolyte Membrane (PEM) Fuel Cell.

Your Company has a judicious mix of various Basic/Applied/Pilot projects encompassing the Natural Gas value chain in its R&D portfolio. In addition, few projects are also being pursued in upcoming areas like Solar, Fuel Cells, Gas Hydrates etc. These R&D projects are being pursued in association with reputed research organizations / institutes. Few Developmental Projects to improve efficiency and safety of existing operations and to conserve the resources by utilizing better technologies are also being implemented at process plants.

TOTAL QUALITY MANAGEMENT

Your Company endeavors for continual and sustainable improvement through implementation of quality practices, innovation and standardization. Your Company continues to implement various Quality Circle projects through engagement of Company employees, resulting into innovation in work places and leading to enhancement in productivity. Your Company has achieved a Customer Satisfaction level of 90% and committed to improve it. Your Company works for the satisfaction of customers and stakeholders. Your Company has implemented Integrated Management System and Energy Management System in various pipeline system and process units. Your Company is committed to sustainable development.

PROCUREMENT FROM MICRO AND SMALL ENTERPRISES (MSEs)

The Government of India has notified a Public Procurement Policy for MSEs, Order 2012. In terms of said policy, out of the total eligible value of annual procurement of approx. Rs.2,016 Crores towards goods produced and services rendered by MSEs (including MSEs owned by SC/ST Entrepreneur) during the FY 2015-16, the value of total procurement made from MSEs is Rs.435.34 Crores which is approx. 21.59%. of 2,016 Crores

MOU PERFORMANCE

A Memorandum of Understanding (MoU) is signed every year between your Company and its administrative ministry i.e. MoP&NG, through which performance targets for the year are set. MoU for the year 2015-16 was signed between Chairman & Managing Director and Secretary (P&NG), Government of India on 31st March, 2015.

The thrust while fixing MoU targets was more towards improving performance on critical aspects of the Company which include Key Financial parameters, Gas Marketing, Gas Transmission, Project Implementation, Capital Expenditure, Liquid Hydrocarbon & Polymer Production etc. Significant thrust has also been given on Research & Development Projects and Operating Efficiency parameters.

Your Company has been consistently achieving ''Excellent'' MoU rating since the inception of MoU system i.e. from 1989-90 to 2013-14. However, because of unprecedented fall in crude oil prices from $ 140 / barrel to ~ $ 30 - 40 in 2014-15 leading to fall in LHC & Polymer prices, negative price differentials between Spot and long term contracted R-LNG prices etc., there were gaps between MoU targets and actual performance of your Company in FY 2014-15. As a result, your Company achieved ''Very Good'' MoU rating for the year 2014-15.

Evaluation of MoU 2015-16 is under progress and the final evaluated MoU score and rating is expected to be announced in December 2016.

LAURELS

- Corporate

- Emerged as the highest ranking PSU in Carbon Disclosure Leadership Index securing 98 out of maximum 100, an increase of 12 points in one year.

- Released its fifth Sustainability Report becoming the first PSU to avail Content Index certification by GRI, Amsterdam.

- Dun & Bradstreet Award 2015 in the category Gas - Processing, Transmission and Marketing.

- Achieved the 5th rank in the Platts Top 250 Companies in the Asia- Pacific in the Gas Utilities category Â» "Environmental Sustainability - Company of the year" for 2015. The special commendation award has been conferred to GAIL for special efforts towards Environmental Sustainability and Climate Change.

- Health, Safety & Environment (HSE)

With its contu iued focus on HSE across its installations, your Company has won following awards during the year 2015-16:

- OISD awards for Cross Country Pipeline-LPG & Gas Pipeline: GAIL- HVJ Pipeline and Most Consistent Safety Performer-gas processing Plant: GAIL GPU, Gandhar Â» Maharashtra region Pipeline system, Mumbai received "Safety Innovation Award 2015" from the institution of Engineers India, New Delhi.

- NCR received British Safety Council International Safety award, U.K -2016.

- GPU Gandhar plant won Gujarat State Safety award 2014 from the Gujarat Safety Council of India Â» GPU Gandhar plant won "Suraksha Puraskar" (Bronze Trophy)-2015 from National Safety Council of India.

- GPU Usar received "Certificate of Appreciation" for National Safety Awards

- GAIL Vaghodia received "Golden Peacock Occupational Health & Safety Award, 2015, by the Institute of Directors, New Delhi.

- GPU Gandhar received British Safety Council International Safety award, U.K .

- HVJ Compressor Station, Vijaipur (M.P) awarded prestigious "SURAKSHA PURASKAR" by National Safety Council, under Group A in manufacturing sector.

RIGHT TO INFORMATION (RTI)

In order to promote transparency and accountability, an appropriate mechanism has been set up across the Company in line with the Right to Information Act, 2005. Your Company has nominated ACPIOs/CPIO/ Appellate Authorities at its units/offices across the country to provide information to citizens under the provisions of RTI Act.

MANAGEMENT DISCUSSION AND ANALYSIS

In terms of the Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the detailed Management''s Discussion and Analysis forms a part of this report at Annexure- A.

CORPORATE GOVERNANCE

Your Company believes that good corporate governance is critical in establishing a positive organizational culture. It is evident by responsibility, accountability, consistency, fairness and transparency towards our stakeholders. 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 this Report at Annexure- B.

The details of the meetings of the Board, Company''s policy on Directors'' appointment and their remuneration, details of establishment of whistle blower mechanism and other matters, etc. forms 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 Company''s operations in future.

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 a part of this Report at Annexure- C.

AUDITORS

- Statutory Auditors

The statutory auditor of your Company is appointed by Comptroller & Auditor General of India (CAG). M/s G.S. Mathur & Co., Chartered Accountants, New Delhi and M/s O P Bagla & Co., Chartered Accountants, New Delhi were appointed as Joint Statutory Auditors of your Company for the FY 2015-16.

Review and Comments of CAG, if any, on the Company''s Financial Statements for the financial year ending 31st March 2016, forms part of Financial Statement. Notes on Financial Statement referred to in the Auditors'' Report are self-explanatory and, therefore, do not call for any further comment.

- Cost Auditors

Your Company has appointed M/s Ramanath Iyer & Co., New Delhi for Northern Region , M/s Bandyopadhyaya Bhaumik & Co., Kolkata for Northern and Eastern Region , M/s A C Dutta & Co., Kolkata for Southern Region, M/s Musib & Company, Mumbai for Western Region Part-I, M/s N.D Birla & Co., Ahmedabad for Western Region Part-II, M/s Sanjay Gupta & Associates, New Delhi for Central Region as cost auditors for FY 2015-16. M/s Ramanath Iyer & Co. is the lead cost auditor.

Cost audit reports for the financial year ended 31st March, 2015 was filed to Registrar of Companies on 14th October, 2015.

- Internal Auditor

Your Company has an in-house Internal Audit Department, which is headed by Executive Director.

- Secretarial Auditor

Your Company has appointed M/s Agarwal S. & Associates as secretarial auditors for 2015-16. 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 this Report at Annexure- D.

The observations made by Secretarial Auditor in his Audit report are as under:

(a) Proviso to Section 149(1) read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014 w.r.t. appointment of at least one woman Director on the Board of the Company.

(b) Regulation 17 (1) of Securities Exchange Board of India (Listing Obligation & Disclosure Requirements) Regulations, 2015 (erstwhile Clause 49 (II) (A) & (B) of the Listing Agreement) and Clause 3.1.4 of the DPE Guidelines on Corporate Governance for Central Public Sector Enterprises w.r.t. composition of the Board of Directors of the Company.

(c) Non-compliance of Section 149(8) read with Schedule IV (VIII) of Companies Act, 2013 and Regulation 17 (10) & 25 (4) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has not been carried out the performance evaluation of the directors.

Explanations on observations made by Secretarial Auditor in seriatim are as under:

(a) As on 31st March 2016, there was no woman Director on the Board of the Company However, during the year, there was a Woman Director on the Board of the Company from 21st May, 2015 to 2nd January, 2016.

(b) As on 31st March 2016, your Company''s Board comprised of four whole-time Directors including CMD, two Government nominee Directors and three Independent Directors.

Your Company is a Government Company under the administrative control of the Ministry of Petroleum and Natural Gas, Government of India, the Directors are nominated/appointed by the Government of India. The Company is continuously pursuing with the Government of India for the appointment of requisite number of Independent Directors on their Board in order to comply with the provisions of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, DPE Guidelines & the Companies Act, 2013.

(c) Your Company is a Government Company, appointment/ nomination of all the Directors is being done by the President of India, through the MoP&NG and performance evaluation of individual Directors including Independent Directors is to be done by Government of India being appointing authority

CORPORATE SOCIAL RESPONSIBILITY

Your Company believes that Corporate Social Responsibility (CSR) plays a major role in the development of any country. Therefore, it has made CSR an integral part of its ethos and culture. To amplify our outreach efforts, GAIL has incurred an expenditure of 2.3% of the average net profit of the preceding three years on CSR projects/activities of 2015-16 (I18.64 crores) against the stipulated 2% spend (Rs.102.34 crores). The overall spends (Rs.160.56 crores) amount to 3.14% of the average net profit of the preceding three financial years.

Annual Report on CSR activities as required under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 read with section 134(3) and 135(2) of the Companies Act, 2013 is placed at Annexure E.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION

As per requirement of 134 (3)(m) of the Companies Act, 2013 read with Ru le 8(2) of the Companies (Accounts) Rules, 2014, details of conservation of energy and technology absorption forms part of this report at Annexure- F.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

As per requirement of 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 in section 188(1) of the Companies Act, 2013 in the prescribed form AOC-2 is placed at Annexure-G.

Your Company has formulated the policy on dealing with Related Party Transactions and the same is hosted on your Company''s website at http:// www.gailonline.com/final_site/pdf/GAIL_Related_Party_Transaction_ Policy pdf.

PARTICULARS OF EMPLOYEES

As per the provisions of section 197(12) of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed Company is required to disclose the ratio of the remuneration of each director to the median employee''s remuneration etc. in the Directors'' Report.

However, as per notification dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government of India, Government Companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. Your Company is a Government Company, therefore, such particulars have not been included as part of Directors'' Report.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return forms part of this Report at Annexure-H.

ISSUE OF SHARES AND FIXED DEPOSITS

Your Company has neither issued any shares nor accepted any fixed deposits during the financial year 2015-16 and, as such, no amount of principal or interest was outstanding as of the balance sheet date.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, foreign exchange earnings were Rs.866.54 crores and foreign currency outgo was Rs.2,558.71 crores.

KEY MANAGERIAL PERSONNEL AND DIRECTORS

During the period, the following ceased to be Key Managerial Personnel (KMP) on the Board of your Company:

- Shri Prabhat Singh, Director (Marketing) resigned w.e.f. 14th September, 2015 Â» Shri N.K. Nagpal, Company Secretary w.e.f. 26th May, 2016

Shri A.K. Jha has been appointed as Company Secretary of the Company w.e.f. 26th May, 2016.

During the period, the following ceased to be Directors on the Board of your Company:

- Smt. Anuradha Sharma Chagti, Government Nominee Director w.e.f. 2nd January, 2016

The following were appointed on the Board of your Company as Director:

- Shri S.K. Srivastava, Independent Director w.e.f. 20th November, 2015 Â» Shri D.J. Pandian, Independent Director w.e.f. 20th November, 2015 and resigned from the Company w.e.f. 31st March, 2016 Â» Shri Anupam Kulshreshtha , Independent Director w.e.f. 28th November, 2015 (from the date of obtaining DIN)

- Shri Sanjay Tandon , Independent Director w.e.f. 20th November, 2015

- Shri Anant Kumar Singh, Government Nominee Director w.e.f. 2nd January, 2016

The Board placed on record its deep appreciation for the valuable services rendered by outgoing Directors/KMP during their association with your Company,

CODE OF CONDUCT

Pursuant to the requirements of SEBI (LODR) Regulations, 2015 the Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year ending 31st March, 2016.

PERFORMANCE EVALUATION

As per the provisions of section 134(3)(p) of the Companies Act, 2013 for every listed Company, a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors should form part of the Directors'' Report.

However, as per notification dated 5th June, 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 Government Company and the appointment, tenure, performance evaluation etc. of Directors is done by Government of India, therefore, such particulars have not been included as part of Directors'' Report. Remuneration of CMD, Whole-time Directors and its employees is determined by Government of India. As per requirement of SEBI (LODR) Regulations, 2015, an evaluation criterion for the Board is being formulated.

DIRECTORS RESPONSIBILITY STATEMENT

Yours Directors confirm that:

i) In the preparation of the annual accounts for the financial year ending 31st March, 2016, the applicable accounting standards have been followed, alongwith proper explanation relating to material departures;

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 ending 31st March, 2016 on a going concern basis;

v) had 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 were operating effectively.

ACKNOWLEDGMENT

Your Directors express their gratitude for help, guidance and support received from the Government of India, especially the Ministry of Petroleum and Natural Gas, various state governments, regulatory and statutory authorities.

Your Directors acknowledge wise counsel received from Statutory Auditors and CAG and are grateful for their consistent support and cooperation.

Your Directors also wish to thank all the shareowners, business partners and members of GAIL family for reposing their faith, trust and confidence in your Company,

On behalf of your Directors, I would like to place on record our deep appreciation for the hard work, dedication, commitment and solidarity of your Company''s employees.

Your Directors and employees look forward to the future with confidence and stand committed to creating a bright future for all stakeholders.

For and on behalf of the Board

(B.C. Tripathi)

Chairman & Managing Director

Place: New Delhi

Dated: August 19, 2016

Mar 31, 2015

DEAR SHAREOWNERS,

The behalf of the Board of Directors of your Company, it is my pleasure to present the 31st Annual Report of your Maharatna Company, along with Audited Financial Statements for the financial year 2014-15.

PARTNER GROWTH WITH INDIA'S NATURAL GAS LEADER

With a turnover of Rs.56,569 Crores, GAIL (India) Limited, is India's largest natural gas Company and ranked among the top gas utilities in Asia. Your Company has a presence across the entire gas value chain with activities ranging from Gas Transmission and Marketing to Processing (for fractionating LPG, Propane, 5BP Solvent and Pentane), transmission of LPG, and production and marketing of Petrochemicals like HDPE and LLDPE. Your Company has extended its presence in Power, LNG re-gasification. City Gas Distribution and Exploration & Production through equity and joint venture Participations and also diversified into solar and wind power generation.

Gas transmission is one of the core competencies of GAIL and it draws strength from about 11,000 km of natural gas pipeline network and 2,038 km of LPG pipeline transmission network.

With a lean workforce of 4,266 employees, your Company plays a meaningful role in social and economic development of the country and makes a substantial contribution towards its energy security.

FINANCIAL HIGHLIGHTS

Your Company's key financial parameters during the year 2014-15 and Important financial highlights are as under:

2014-15 2013-14

Particulars US $ [Rs. in US $ [Rs. in Million Crores] Million Crores]

Turnover (Net of ED) 8,952 56,569 9,445 57,245

Other income (incl. Exceptional Items) 173 1,096 249 1,506

Cost of sales (excluding interest and depreciation) 8,236 52,045 8,383 50,806

Gross Margin (incl. Exceptional Items) 889 5,620 1,311 7,945

Interest 57 361 60 366

Depreciation 154 975 195 1,177

Profit before tax 678 4,284 1,056 6,402

Provision for tax 197 1,245 334 2,027

Profit after tax 481 3,039 722 4,375

Appropriations

Interim dividend 60 381 94 571

Proposed final dividend 60 381 123 748

Corporate dividend tax 24 154 37 224

Net transfer to/from bond redemption reserve 6 37 (1) (6)

Transfer to CSR reserve (5) (30) 3 18

Transfer to general reserve 48 304 72 438

Net surplus after Appropriations 287 1814 393 2,382

1 US $ in INR converted at the exchange rate as on 31st March 63.19 60.61 of the respective financial year

DISINVESTMENT BY PRESIDENT OF INDIA

The Government of India (Gol) has disinvested 15,672,024 shares on 27th March,2014 through CP5EETF. Further, Gol has disinvested 37,819 shares on 8th April, 2015 through CP5E ETF as Bonus Units. After disinvestment, the President of India holds 711,695,832 equity shares, representing 56.11% of paid-up share capital of GAIL.

DIVIDEND

Your Company has a consistent track-record of dividend payment. So far, your Company has disbursed dividend of over fl3,043 Crores to the shareholders includingRs.7,925 crores disbursed as dividend to Government of India.

The Board of Directors of your Company had earlier approved payment of an interim dividend @ 30% (Rs.3 per equity share) on equity share of Rs.10 each amounting to Rs.380.54 Crores, which was paid in March, 2015. Further, the Board has recommended payment of final dividend @ 30% (Rs.3 per equity share) on equity share of Rs.10 each for2014-15 amounting to Rs.380.54Crores. With this, the total dividend payment for the fiscal year 2014-15 will be 60% (Rs.6 per equity share) on equity share of Rs.10 each amountingtoRs.76l.09 Crores on its paid-up equity capital of Rs.1,268.48 Crores and dividend distribution tax of Rs.153.56 Crores. The total dividend pay-out including corporate dividend taxaccountsfor30.10%of Profit After Tax.

CONTRIBUTION TO EXCHEQUER

Your Company has contributed over Rs.5,788 Crores in 2014-15 to the exchequer through dividend, duties, taxes and others, as compared to Rs.6,993 Croresin2013-14.

CREDIT RATING

Your Company has been reaffirmed the highest domestic credit rating of AAA from ICRA, CARE, CRISIL and India Ratings, which carry the lowest credit risk. The international rating agency, Moody's International, Hong Kong, has also reaffirmed the corporate issuer rating of Baa2, which is one notch higher than sovereign rating. Further, Fitch Ratings has also assigned a long-term foreign currency issuer default rating of BBB- with a Stable outlook, which is equal to sovereign rating.

CORPORATE STRATEGY

In order to make a quantum leap in its growth trajectory, your Company has developed its corporate strategy for the period 2011-2020. This strategy is currently under execution and the Company is closely monitoring progress on various strategic initiatives as well as continually assessing the macro environment to evaluate its impact on GAIL's businesses. The management of your Company has been playing a crucial role to achieve the strategic objectives and to ensure that it emerges as an integrated hydrocarbon major with significant upstream. midstream and down stream interests by 2020.

In the upstream segment, your Company plans to increase LNG imports through conventional route as well as through terminal capacity booking. It also plans to acquire equity in producing assets/liquefaction facilities to source equity-linked LNG. It has made remarkable progress in sourcing LNG by finalising several long-term deals with suppliers, like Sabine Pass Liquefaction LLC (USA), Gazprom (Russia) and WGL Midstream Inc. (USA). GAIL Global (USA) LNG LLC, a subsidiary of your Company in the United States of America (USA), has booked LNG capacity in Dominion Cove Point's LNG liquefaction terminal in the state of Maryland. In addition, your Company is pursuing LNG shipping business by charter hiring LNG ships to transport LNG from the USA to India and other global markets. Your Company has also ventured into LNG trading business through its wholly owned subsidiary, GAIL Global Singapore Pte Limited.

To facilitate increase in LNG volumes, your Company plans to set up land based LNG terminals and Floating Storage and Regasification Units (FSRUs). It is also booking additional regasification capacities in existing and new terminals being set up by other companies. Your Company has tied-up additional regasification capacities at Dahej LNG terminal with Petronet LNG Limited (PLL). Further, in-line with the LNG sourcing efforts, your Company has intensified its domestic gas market development efforts in India to attract and retain more customers.

In order to bridge the demand-supply gap of natural gas as well as to address the energy security needs of the country, your Company is aggressively pursuing the transnational Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project. Bilateral GSPA with Turkmeng as has already been signed to import 38 MMSCMD gas into the country through this pipeline. Further, the TAPI Pipeline Company Limited has been incorporated as a Special Purpose Vehicle in the Isle of Man by the four TAPI entities.

In the midstream segment, your Company aspires to retain its leadership position through a continuous pan-India expansion of pipeline networks in synchronisation with customer readiness along the pipeline networks. Your Company now has approximately 11,000 km network of natural gas pipeline in the country. To further cater to the growing demand and to increase its geographic reach, various pipeline projects are at different phases of execution which will take the network size to aroundl5,000 km. In the downstream segment, your Company aspires to be amongst the top petrochemical players in the country by expanding existing capacities, setting up new plants, acquiring equity stakes in upcoming projects along with product off-take rights for marketing. It has doubled existing petrochemical production capacity at Pata by commissioning the second petrochemical unit Pata. A Greenfield Petrochemical plant is also being setup in Assam through your Company's subsidiary, Brahmaputra Cracker & Polymer Limited (BC PL). Another petrochemical plant at Dahej is being setup through a JV.ONGC Petro-additions Limited (OPaL). By 2016, your Company is expected to have MMTPA polymer volume for marketing. On the retail side, your Company is targeting additional 40-50 Geographical Areas (GAs) through its subsidiaries and J Vs for city gas distribution (CGD) in the coming years. Your Company's wholly owned subsidiary, GAIL Gas Limited, is progressing on track with respect to CGD projects in the cities of Kota, Dewas, Meerut and Sonepat. Further, GAIL Gas Limited has won the authorization from Petroleum & Natural Gas Regulatory Board (PNGRB) in 4th round of CGD bidding to develop CGD network for the city of Bengaluru. Your Company aims to reduce its carbon footprint in a phased manner and contribute positively towards a low carbon economy. Accordingly your Company has set targets for renewable energy projects and significant progress has been made so far. Your Company has 118 MW installed capacity of wind energy. It has also established a 5 MW solar power project. Further, your Company is a stakeholder in an SPV created under the aegis of Ministry of Petroleum & Natural Gas (MoP&NG) & Ministry of New and Renewable Energy (MNRE) for setting up of grid connected Renewable Energy Power Projects.

In order to achieve the strategic goals efficiently and in a time bound manner, a major thrust is being given to strengthen and enhance the capabilities of human resource of your Company. Accordingly, recruitment, training and development policies are being suitably aligned with strategic objectives to enable your Company to implement and achieve its strategic goals by 2020.

BUSINESS PERFORMANCE

During the year under review, the segment wise business performance of your Company is as under:

- Natural Gas Marketing

Natural gas continues to constitute your Company's core business. During 2014-15, gas sales clocked 72 MM5CMD, compared to 79 MMSCMD in the previous financial year. Major supplies of natural gas are made as fuel to power plants, as feed stock for gas-based fertilizer plants and for LPG extraction. Your Company holds around 60% market share in India.

- Transmission

- Natural Gas

Your Company owns and operates a network of about 11,000 kms of high pressure trunk pipelines with a pan-India capacity to transport around 206 MMSCMD of natural gas. Average gas transmission during the year was 92 MMSCMD compared to 96 MMSCMD in the previous financial year.

- LPG

Your Company has the distinction of being the only company in India, to own and operate exclusive pipelines for LPG transmission for third-party usage. It owns and operates two LPG Pipeline transmission systems with a total length of 2038 kms. Of this, 1415 km of pipeline network transports LPG from western to northern parts of India (Jamnagar - Loni LPG Pipeline) and the remaining 623 kms of pipeline network transports LPG in the country's southern part (Vizag-Secunderabad LPG Pipeline). The LPG transmission system has a capacity to transport up to 3.8 MMTPA of LPG. In2014- 15, the LPG transmission throughput achieved was about 3.09 Million MT

- Petrochemicals

During 2014-15, your Company has produced 447 Thousand MT of polymers and sold 441 Thousand MT of polymers.

- LPG and Other Liquid Hydrocarbon Production

Your Company has seven LPG plants in the country. USAR LPG Plant is in complete shutdown condition and is being kept under preservation mode. In 2014-15, the total liquid hydrocarbon production was aboutl,276 Thousand MT, which mainly comprised of 1,039 Thousand MT of LPG, 115.8lThousand MT of Propane, 22.76Thousand MT of Pentane and 98.75 Thousand MT of Naphtha.

- Exploration and Production (E&P)

The E&P portfolio of your Company is as follows:

India Overseas Total

Onshore blocks 8 - 8

Shallow water blocks 3 2 5

Deep water blocks 2 - 2

Total 13 2 15

During the year 2014-15, E&P business has generated sufficient revenue to be self-sustainable. Production of gas from its A-l &A-3 block in Myanmar has reached peak production of 14 MMSCMD. In 2014-15, revenue of approximately Rs.663.10 Crore has been generated from sale of hydrocarbon from its 4 producing blocks namely A-l & A-3, Myanmar and Cambay Onland blocks CB-ONN-2000/l (Ahmedabad) & CB-ONN-2003/2 (Ankleshwar) in Gujarat. The Field Development Plan (FDP) has been submitted for gas resource of 71BCF in Tripura block.

Your Company is an Operator in three onland blocks viz. (I) RJ-ONN-2004/l in Rajasthan basin (Ganganagar) awarded during NELP-VI bidding round, ii) CY- ONN-2005/l in Cauvery basin, Tamil Nadu (Thanjavur and Thiruvarur) awarded during NELP-VII bidding round and (iii) CB-ONN-2010/n in Cambay basin, Gujarat (Anand and Ahmedabad) awarded during NELP-IX bidding round. Your Company is non-operating partner in remainingl2 blocks.

During the year 2014-15, preparation for drilling of exploratory wells in block CY-ONN-2005/l was in progress. Actual drilling shall start after land acquisition. In block CB-ONN-2010/11, during the year 2014-15, acquisition, processing and interpretation (API) of 131 KM2 3D Seismic Data has been completed. Drilling of exploratory wells is planned during2015-l6.

INITIATIVES FOR FUTURE GROWTH

- Global Initiatives

In November 2014, GAIL Global (USA) LNG LLC (GGULL), wholly-owned subsidiary of your Company in the US, signed a 20 year gas sourcing agreement with WGL Midstream Inc. (USA) for procuring natural gas required to feed the 2.3 MMTPA Dominion Cove Point LNG Terminal. Earlier in 2013, GGULL has signed Terminal Service Agreement (TSA) with Dominion Cove Point LNG LP for booking 2.3 MMTPA liquefaction capacity in the Cove Point LNG liquefaction project located at Lusby in the state of Maryland in the US.

Your Company is constantly pursuing a leading role in the TAPI Pipeline project to receive Natural Gas from the Galkynysh fields in Turkmenistan. The Pipeline Consortium Company TAPI Pipeline Company Limited (TPCL) was incorporated on 11th November 2014 in 'Isle of Man', a British Crown dependency located in the Irish Sea. TAPI has a mandate to build, own and operate the proposed TAPI Pipeline.

- Domestic initiatives

The domestic business initiatives of your Company were as follows: - LNG Regasification Terminals

Your Company is planning to set up a Floating Storage & Re- gasification Unit (FSRU)/ Re-gasification terminal on the East coast of India. In this regard, discussions are on with Adani Ports and Special Economic Zone Ltd. (AP5EZ) for equity participation and booking of capacity in the proposed regasification terminal at Dhamra port in Odisha.

- LNG Shipping

In 2011, your Company contracted 3.5 MMTPA of LNG from Cheniere Energy, USA on FOB basis for an initial period of 20 years. Further, in 2013 your Company has also signed a Terminal Service Agreement (TSA) for booking of 2.3 MMTPA of liquefaction capacity in Dominion Cove Point terminal for 20 years. The initial supplies from both these contracts are expected to commence from December 2017. Currently, your Company is in the process of long term Charter hiring of LNG ships through international bidding route.

- Natural Gas Pipeline Projects

During the year, your Company has completed 36 number of 'Last Mile Connectivities' coveringl29 km approx. of pipeline to increase the commercial utilization of various pipeline networks in 11 states- Uttar Pradesh, Uttarakhand, Punjab, Haryana, Rajasthan, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Andhra Pradesh and Kerala.

- Non-Conventional Energy

Your Company has a total installed capacity of 118 MW of Wind Energy Generation Projects (WEG). Your Company had started with a modest capacity of 4.5 MW wind energy in the state of Gujarat in March 2010 for captive use. After the success of the first WEG project, an additional capacity of 14.7 MW of WEG was installed in January 2012 in the state of Gujarat for captive use. Your Company graduated to commercial production after commissioningg8.75 MW of WEG projects in the states of Tamil Nadu and Karnataka in March 2012.

During the year, your Company also entered into generation of solar power by setting up a 5 MW Solar Power Plant in the state of Rajasthan under the Jawaharlal Nehru National Solar Mission, through bidding.

- Coal Gasification

Your Company is entering into a joint venture for Coal Gasification cum Fertiliser production at Talcher, Odisha, with Rashtriya Chemicals and Fertilizers Limited (RCF), Fertilizer Corporation of India Limited (FCIL) and Coal India Limited (CIL). It is proposed to setup Coal Gasification unit based on Coal supplied from a coal block allocated for the plant.

The project envisages production of 3,850 MT urea per day. The success of this project shall pave the way forward for production of fertilizer from the abundantly available domestic coal, resulting in lesser dependency on import of fertilizers.

RELATED PARTIES-SUBSIDIARIES/ASSOCIATES/JOINT VENTURES

Your Company has formed subsidiaries and joint venture companies for CGD, petrochemicals, LNG, gas trading, power generation and shale gas. Your Company is one of the pioneers introducing city gas projects in India for natural gas supplies to households, commercial and transport sectors through its subsidiary and joint venture companies. The details of these subsidiary and joint venture companies are mentioned hereunder:

NATURAL GAS, LNG AND POWER

- GAIL Global (Singapore) Pte. Limited (wholly owned subsidiary)

GAIL Global (Singapore) Pte. Ltd. (GGSPL), primarily started as an overseas investment arm of your Company and was operationalized for LNG trading in 2012. It commenced its business operations in May 2012. GGSPL is now actively involved in business activities in the area of LNG Trading. Till 31st March, 2015, GGSPL has traded eight LNG cargoes out of which three have been traded duringthefinancialyear2014-15.

GGSPL has also been mandated by your Company to market upto 3 MMTPA of its USA sourced LNG in the international market. GGSPL is already marketing such volumes in the international markets. The supplies against the said volumes are expected to start from the year 2018.

GGSPL is also targeting LNG third-party trades, ship chartering and risk management activities along with supplying LNG cargoes to GAIL.

- GAIL Global(USA)Inc(wholly owned subsidiary)

GAIL Global (USA) Inc. (GGUI), was incorporated as a wholly owned subsidiary of your Company to undertake investment in the Eagle Ford shale gas asset. The primary objective behind this investment was to enter into the US Shale Gas market and to bring the Shale Gas technology to India. GGUI executed a definitive agreement with M/s Carrizo Oil & Gas Inc., USA (Carrizo) on September 28, 2011, to enter into an unincorporated Joint Venture (JV) in the Eagle Ford Shale asset in Texas. GGUI acquired a 20% participating interest in this joint venture. Carrizo, with the remaining 80% participating interest, is functioning as the Operator for the J V.

During the year, 12 wells came online, taking total online wells to 79 as on December 31, 2014. In addition, 16 wells were under different stages of Drilling & Completion as on that date. The gross production volume of GGUI during 2014 was 978.5Mboe.

- GAIL Global (USA) LNG LLC (wholly owned subsidiary of GGUI)

GAIL Global (USA) LNG LLC (GGULL) was formed during March 2013 for entering into contractual agreements with Dominion Cove Point LNG, LP (DCP) for booking of LNG Tolling capacity of 2.3 MMTPA in its DCP LNG terminal. GGULL has signed Gas Sales & Purchase Agreement (GSPA) on November 30, 2014 with WGL Midstream, Inc. for sourcing of gas on delivered basis at the inlet of Cove Point pipeline/terminal for a term of 20 years to produce about 2.3 MMTPA of LNG at the Cove Point Terminal. GGULL and DCP have satisfied all the Condition Precedents in the Terminal Service Agreement (TSA) making the TSA effective with effect from December!9,2014.

- GAIL China Gas Global Energy Holdings Limited

The joint venture company, GAIL China Gas Global Energy Holdings Limited, was formed with an objective to pursue gas sector opportunities, mainly in China. Potential gas sector projects are being identified for implementation by the company. Your Company has a 50% equity stake with China Gas Holdings Limited as an equal partner.

- Petronet LNG Limited (PLL)

PLL, which was formed for setting up of LNG import and re-gasification facilities, currently owns and operates an LNG re-gasification terminal of 10 MMTPA capacity located at Dahej, Gujarat. PLL has a long term LNG supply contract with RasGas, Qatar for import of 7.5 MMTPA of LNG. PLL is undertaking capacity expansion of LNG re- gasification terminal to 15 MMTPA at Dahej which is expected to be completed by end of 2016. PLL has also setup up an LNG re-gasification terminal at Kochi, Kerala with a capacity of 5 MMTPA. PLL also has a long term LNG supply contract with Exxon Mobil's Gorgon Project for supply of 1.44 MMTPA of LNG for its Kochi terminal.

Your Company has 12.5% equity stake with Bharat Petroleum Corporation Ltd. (BPCL), Oil and Natural Gas Corporation (ONGC) and Indian Oil Corporation Limited (IOCL)as equal partners.

- Ratnagiri Gas and Power Private Limited (RGPPL)

RGPPL was formed as a joint venture with NTPC for taking over and operating the erstwhile Dabhol Power Project assets consisting of 1967.08 MW gas-based combined cycle Power Block and 5 MMTPA LNG Block. The assets were transferred to RGPPL in October2005.

The power block has been revived and is under commercial operation since 19th May 2009. The power block was not operated due to non- availability of domestic gas in 2014-15 and paucity of funds.

The gas delivery to LNG Terminal through high pressure delivery system was started in January 2013 and commissioned with effect from 22nd May 2013. Since the power generation is envisaged to entirely use available domestic gas, the integrated LNG terminal is also utilized for tolling purposes. RGPPL has already entered into a long-term framework agreement with GAIL for commercial utilization of LNG terminal and commenced tolling operations. 25 cargos have been successfully unloaded since commissioning.10 cargos were unloaded during2014-15.

RGPPL is in a difficult financial position due to non-liquidation of high receivables from its beneficiaries and non-availability of domestic gas for power generation leading to inability in meeting its debt servicing obligations for the year2014-15.

To avoid being a Non Performing Asset, RGPPL has converted lenders' outstanding dues into equity. As a result, your Company has 25.51% equity stake in RGPPL with NTPC holding 25.51%, MSEB Holding Company Limited holdingl3.51% and Indian Financial institutions holding 3547%.

CITY GAS DISTRIBUTION (CGD)

- GAIL Gas Limited (wholly owned subsidiary)

GAIL Gas was incorporated with the objective of focused implementation of City Gas Distribution (CGD) projects in the country. GAIL Gas has been authorized by Petroleum and Natural Gas Regulatory Board (PNGRB) for implementing City Gas Distribution Projects in Dewas, Kota, Sonipat, Meerut, Vadodara and Taj Trapezium Zone. In addition, GAIL Gas is pursuing City Gas Business in the state of Kerala, Andhra Pradesh, Karnataka, Rajasthan and West Bengal etc. through its joint ventures. It has won authorization from PNGRB in 4th round of CGD bidding to develop CGD network for the city of Bengaluru. It has signed MoU with Bharat Petroleum Corporation Limited for joint participation under 5th round of CGD bidding and have been authorized by PNGRB for the implementation of City Gas Distribution in Haridwar District (GA).

Compressed Natural Gas (CNG)

During the year, GAIL Gas augmented its CNG distribution infrastructure by enhancing the capacity of existing stations and adding new stations at Sonipat.CNG sales increased to 31 MMSCM in2014-15.

Piped Natural Gas (PNG)

In PNG business, GAIL Gas is supplying PNG to domestic customers progressively in its authorized cities. Presently, the company is catering to 8,700 house holds.

GAIL Gas has maintained its focus on the PNG industrial and commercial segment as one of the potential growth areas. With its concentrated efforts in the year 2014-15, the total number of commercial and industrial customers increased to 503 in 2014-15.

GAIL Gas has commissioned the steel networks in the geographical area (GA) of Sonepat, Dewas, Kota and Meerut. Further, the steel network augmentation is under progress in the Taj Trapezium Zone (TTZ). For reaching more charge areas for domestic connections, the steel grid network and MDPE pipeline network has been extended to 374.21 kms and 586.74 kms respectively in 2014-15 in the cities of Sonepat, Meerut, Dewas, Kota and Taj Trapeziumzone.

During the year, the sales volume from industrial and commercial customers grewto526 MMSCM.

- Aavantika Gas Limited (AGL)

I AGL was incorporated to implement CGD Projects in Madhya Pradesh. As on 31st March 2015, AGL operated 18 CNG stations including 7 daughter stations, 8 online stations and 3 mother stations.

Further, as on 31st March 2015, AGL supplied PNG to around 2500 Domestic, 32 Commercial and 52 Industrial customers in its authorized geographical regions. AGL is also catering to the fuel requirement of around 20,000 CNG vehicles operating in the region. Your Company has a 22.5%stake with HPCL as an equal partner.

- Bhagyanagar Gas Limited (BGL)

BGL was incorporated to implement CGD projects in Andhra Pradesh. As on 31st March 2015, BGL operated 32 CNG stations including 3 daughter booster stations, 8 online stations and 7 mother stations

Further, as on 31st March 2015, BGL supplied PNG to over 3,100 Households, 46 Commercial & 3 Industrial customers in its authorized geographical regions. BGL is also catering to the fuel requirement of around 31,600 CNG vehicles operating in the region. Your Company has a 22.5% stake with HPCL as an equal partner.

- Central U.P. Gas Limited (CUGL)

CUGL was incorporated to implement CGD projects in Uttar Pradesh. As on 31st March 2015, CUGL operated 16 CNG stations including 4 mother stations, 9 online stations and 3 daughter booster stations.

Further, as on 31st March 2015, CUGL supplied PNG to over 8300 domestic, 119 commercial & 39 Industrial customers in its authorized geographical regions. CUGL is also catering to the fuel requirement of around 46,600 CNG vehicles operating in the region. Your Company has a 25% stake with BPCL as an equal partner.

- Green Gas Limited (GGL)

GGL was incorporated to implement CGD projects in Uttar Pradesh. As on 31st March 2015, GGL operated 14 CNG stations including 5 daughter stations, 5 online stations and 4 mother stations.

Further, as on 31st March 2015, GGL supplied PNG to over 7,800 Domestic, 9 Commercial &4 Industrial customers in its authorized geographical regions. GGL is also catering to the fuel requirement of around 33,400 CNG vehicles operating in the region. Your Company has a 22.5% stake with IOCL as an equal partner.

- Indraprastha Gas Limited (IGL)

IGL was incorporated to implement CGD projects in Delhi's National Capital Territory (NCT) and cities in adjoining National Capital Region (NCR). As on 31st March, 2015, IGL operated 326 CNG stations including68 mother stations,228 online stations and 30 daughter stations.

Further, as on 31st March 2015, IGL supplied PNG to over 5.6 Lac Domestic, 1,560 Commercial and 717 Industrial customers in its authorized geographical region, which includes the entire public transport of the national capital and also the world's largest bus fleet on CNG. IGL is also catering to the fuel requirement of around 7.6 lac CNG vehicles in the Delhi/NC R. Your Company has a 22.5% stake with BPC L as an equal partner.

- Mahanagar Gas Limited (MGL)

MGL was incorporated to implement CGD projects in Mumbai and its adjoining areas. As on 31st March 2015, MGL operated 180 CNG stations including 19 mother stations, 137 onlinestationsand24daughter stations.

Further, as on 31st March 2015, MGL supplied PNG to over 8 Lac Domestic, 2607 Commercial and 57 Industrial customers in its authorized geographical region. MGL is also catering to the fuel requirement of around 4.2 lac CNG vehicles operating in the region. Your Company has a 35% stake with British Gas as an equal partner.

- Maharashtra Natural Gas Limited (MNGL)

MNGL was incorporated to implement CGD projects in and around Pune. As on 31st March 2015, MNGL operated 30 CNG stations including 5 mother stations, 11 online stations and 14 daughter stations.

Further, as on 31st March 2015, MNGL supplied PNG to over 16147 Domestic, 47 Commercial and 97 Industrial customers in its authorized geographical region. MNGL is also catering to the fuel requirement of around79,400 CNG vehicles operating in the region. Your Company has a 22.5% stake with BPC L as an equal partner.

- Tripura Natural Gas Company Limited (TNGCL)

TNGCL was incorporated to implement CGD projects in Agartala. As on 31st March 2015, TNGCL operated 5 CNG stations including 3 mother stations and 2 daughter stations.

Further, as on 31st March 2015, TNGCL supplied PNG to over 18000 Domestic, 294Commercialand47lndustrial customers in its authorized geographical region. TNGCL is also catering to fuel requirement of around 6986 CNG vehicles operating in the region. Your Company has 29% stake in the joint venture.

- Vadodara Gas Limited (VGL)

Shareholders approved the transfer of your Company's CNG stations and associated pipeline in Vadodara to the proposed joint venture company of GAIL Gas Limited with Vadodara Municipal Sewa Sadan in the year 2011.

Accordingly, VGL was incorporated as joint venture company (JVC) of GAIL Gas Limited and Vadodara Mahanagar Seva Sadan (VMSS) for the supply of Compressed Natural Gas ("CNG") and Piped Natural Gas("PNG") in the city of Vadodara. Your Company has signed the Business Transfer Agreement (BTA) with VGL and transferred its assets to VGL. VGL is operating the CGD business we.f. 1st January 2014 in Vadodara. Consequent upon transfer of assets to VGL, your Company has a 32.93% stake, GAIL Gas Ltd. Holding 17.07% stake and VMSS holding 50% stake.

VGL operates nine CNG stations in Vadodara and is dispensing more than 65,000 kg/day CNG. The CNG network in the city of Vadodara includes 2 mother stations, 1 on-line station and 6 daughter booster stations as well asl3km steel pipelines.

VGL also caters to the Piped Natural Gas (PNG) requirements of its consumers in Domestic and Commercial sectors. VGL supplies PNG to 76,000 houses and 2,800 commercial in the city through a 750 km long PE Pipeline Distribution Grid and 07 District Pressure Regulating System.

PETROCHEMICALS

- Brahmaputra Cracker and Polymer Limited (BCPL) (Subsidiary)

BCPL is setting up a 2,80,000 TPA polymer plants in Dibrugarh, Assam. The Company is now in the final phase of project execution and has achieved an overall physical progress of 99.6% and financial progress of 96 % till the end of the financial year. The commissioning of the project is expected in the near future.

Your Company has a 70% equity stake in Brahmaputra Cracker and Polymer Limited (BCPL).with Oil India Limited (OIL), Numaligarh Refinery Limited (NRL) and the Government of Assam having 10% equity share each.

- ONGC Petro-additions Limited (OPaL)

OPaL is implementing a Greenfield petrochemical complex of 1.4 MMTPA Polymer capacity at Dahej, Gujarat. Your Company is a co-promoter of OPaL, having a 15.5% equity stake, with an investment of Rs.994.95 crore. Oil and Natural Gas Corporation Limited (ONGC) and Gujarat State Petroleum Corporation Limited (G5PC) are the other promoters of OPaL.

OTHERS

- TAPI Pipeline Company Limited

Your Company is pursuing the Turkmenistan- Afghanistan-Pakistan-India (TAPI) Pipeline project to receive Natural Gas supply from the Galkynysh fields of Turkmenistan. The Pipeline Consortium Company (TPCL) was incorporated on 11th November 2014 in 'Isle of Man', to build, own and operate the proposed TAPI Pipeline. Presently it is formed with equal participation by the four nominated entities (GAIL, I5G5, AGE, and Turkmengaz) of India, Pakistan, Afghanistan and Turkmenistan respectively. A Consortium Leader shall be inducted in due course.

- South-East Asia Gas Pipeline Company Limited (SEAGP)

5EAGP was formed to transport natural gas from A1/A3 blocks in Myanmar to Myanmar-China border. This pipeline is currently transporting nearly 15 MM5CMD of natural gas. Your Company has a 4.17%equity stake in SEAGP.

LOAN, INVESTMENTS AND CORPORATE GUARANTEE

A statement containing the salient feature of the financial statement of your Company's Subsidiaries, Associate Companies and Joint Ventures as per first proviso of section 129(3) of the Companies Act, 2013 is included in the consolidated financial statement. Further, details of Loans and Investments covered under the provisions of Section 186 of the Companies Act, 2013 forms part of financial statement, a separate section in the Annual Report FY 2014-15.

Your Company has given corporate guarantees to its subsidiaries only, for availing loan, as per provisions of sectionl86 of the Companies Act, 2013, the details of the same are asunder:

- Rs.50434 Crores given to Oil Industrial Development Board on behalf of Brahmaputra Cracker and Polymer Limited.

- Rs.118 Crores given to Oil Industrial Development Board on behalf of GAIL Gas Limited.

- USD 114.1 million given to State Bank of India, New York Branch on behalf of GAIL Global (USA) Inc.

- USD 100 million given to Mizuho Bank Ltd. on behalf of GAIL Global (Singapore) Pte. Ltd.

IT ADVANCEMENTS

Your Company has been very IT-savvy and has always been at the forefront in leveraging various technologies for transparent, efficient and effective execution of businesses and underlying operations. With a young workforce, faster technology curve adoption is but natural to your Company. Today, your Company's transactional engagements with customers, vendors, employees, business associates and partners remain on electronic platform through various ERP modules.

Some of the initiatives such as e-tendering, e-auction/reverse auction, e- recruitment. Bill Watch System, e-payments were adopted by your Company quite some time back thus facilitating transparent dealings with the stake- holders concerned. By adopting the latest and state-of-the-art IT solutions, yourCompanyiskeepingpacewiththefastchangingindustryenvironment.lt strives continually for efficiency enhancement of employees and has enabled access of required information to the right person, using the latest IT security solutions.

All the three data centres of your Company have been certified for ISO 27001:2013 for Information Security Management Framework (ISMS). This certification shall provide recognition to your Company data centres as secured data centres in the industry. The IS027001 ISMS Frame work ensures highest security levels for information assets available in the data centres of your Company. The implementation of ISO 27001 based ISMS framework has also helped in implementing Crisis Management Plan for countering Cyber Attacks and Cyber Terrorism.

Your Company has implemented centralized Pipeline Integrity Management System for its cross-country pipeline network to ensure continuous updation of O&M data and elimination of aging effect on pipelines. Your Company has also implemented an automated GPS based system for monitoring of pipe line patrolling.

Your Company has implemented Biometric based Access Control system to prevent unauthorized access to plant premises and office buildings at Petrochemical and LPG Plants, Compressor Stations and Pumping Stations.

Your Company is implementing Manufacturing Integration & Intelligence to integrate plant systems with enterprise application for generating alarms and root cause analysis along with the latest version of Environment Health & Safety Management for monitoring various processes. Your Company is also implementing a mobility solution for its field engineers to run plant maintenance application on mobile device.

Your Company is implementing Enterprise Analytics for the Top Management to provide the latest business metrics or key performance indicators accessible anytime, anywhere on any device. Your Company is also upgrading its SAP systems for mitigating any risk and maintaining readiness for innovation.

MOVING TOWARDS EXCELLENCE

Your Company as a continually improving organization, believes in raising the bars of performance levels in steps to achieve functional excellence. With this objective, your Company has taken various in litiatives during 2014-15.

Your Company has taken an initiative to integrate all departments and its employees with digital services with an objective to reduce paperwork. Your Company has been at the forefront of leveraging information technology for running its business process. With 2020 vision in sight, your Company needed robust processes, structure and most importantly prompt decision making to act as the key enablers and accelerators.

As part of e-enablement, your Company is planning to deploy cell phone application for its pipeline maintenance personnel, so that the information related to safety, procedures, spares etc. is readily available even when in the field. Globally, the worlds of IT and Operational Technology are converging and hence, your Company intends to improve the overall asset management and safety across the organization by leveraging these technologies and has initiated integration of IT with Plant systems, which will deliver enhanced information for better decisions, reduced costs, lower risks etc.

With the rapid urbanization throughout the country. Integrity Management of Cross Country Pipelines is not just a maintenance activity anymore and requires focus on various other elements as they have direct impact on the integrity Management and your company focus on multiple requirements of the present day Integrity Management i.e. Safety, Operations, Maintenance, Environment, Stakeholders, Technology and Education.

All the activities executed in your Company are being monitored and controlled for timely completion. Improvement Audits are being conducted by team members to identify the lapses / deviations, if any, for taking corrective actions.

Your Company views suppliers/contractors/consultants as critical partners in growth. A symbiotic relationship with these key Stakeholders not only ensures economic gains, higher quality, improved planning and timeliness of project but also ensures greater long term support and value. Your Company developed an effective Stakeholder Management Mechanism wherein regular meetings are held with key Suppliers/Contractors/Consultants to understand their issues / concerns and address them appropriately in time- bound manner. Further, your Company is currently in the process of developing a pre-dispute resolution mechanism, through which post closure legal disputes/arbitrations are targeted to be minimized to a large extent.

HEALTH, SAFETY AND ENVIRONMENT

Your Company's HSE policy is to conduct business with a robust and integrated Health, Safety and Environment (HSE) Management System focused on improving harmony with the environment through sustainable development. Safety and Health of its people is of paramount importance for your Company and these attributes are embedded in the core organizational values of your Company. Employees and Contract Workers in your Company are strongly encouraged to adopt safe working culture and behaviour to ensure effective implementation of the HSE Policy. Your Company identifies all the Health, Safety and Environment hazards, evaluates the associated risks and manages these through effective and appropriate control programs and deployment of latest technology

Your Company primarily operates in the hydrocarbon sector which is inherently very hazardous. Your Company regularly identifies the hazards and evaluates their risk potential in various areas of its operations. While on the one hand, your Company takes adequate preventive measures to minimise risks during design, construction, operations & maintenance activities, on the other hand, your Company takes measures to mitigate the consequences in case of any undesirable incident. Your Company employs best-in-class technologies and supplements safety through a robust HSE Management System. Stringent SOPs (Standard Operating Procedures), Work Permit Systems, Process Safety Management, Safety Audits are some key elements of HSE Management System which are monitored rigorously and regularly, and reviewed at the highest level in your Company. This year, your Company reviewed SOPs of all locations and standardised the SOPs through international experts in safety and process licensors. Your Company has adopted the practice of observing 10th of every month as Monthly Safety Day when the Officer-in-charge at all locations devote half-a-day to review safety issues. Exceptions noted are brought to the immediate notice of top management.

A massive exercise has been taken up to develop systems, procedures &S0P for each activity that is taken up on regular basis and which being vetted by internationally reputed consultants to align with global best practices. Parallelly, web/online portals have been developed for various new Application for ease in data access and data archiving.

Sustainable Development (SD) Committee of Board of Directors is the apex body in your Company to review HSE performance and emergency preparedness and met 3 times during the year.

Your Company has an Emergency Response and Disaster Management Plan (ERDMP) in place for all of its installations, which has been accredited by Petroleum and Natural Gas Regulatory Board (PNGRB) approved third party accreditation agencies and submitted to PNGRB after approval from your Company's Board. Your Company has also prepared a Disaster Management Plan (DMP)as per instruction of the Ministry to deal with disasters.

Your Company has implemented a Behaviour Based Safety (BBS) Program at all locations to foster the culture of safety amongst all the stakeholders. Lead trainers have been developed and various monitoring committees have been formed at all locations to ensure that the BBS culture is nurtured on sustainable basis.

Safety audits were carried out in your Company during the year by various authorities, reputed third parties and in-house safety audit teams to evaluate implementation of safety systems. Timely compliance of recommendations of the safety audits are monitored and reviewed at various levels including by the top management of your Company.

Safety Training and unit specific training through well-structured modules is imparted to all employees in your Company at the time of induction as well as transfer to a new location as per job profile. In addition, periodic refresher training and specialised training related to specific work area are also provided.

The Safety performance in your Company is measured through "HSE Index" which is evaluated on the basis of important HSE Management System elements. To make the safety performance evaluation more objective, HSE Index system was reviewed by a senior level committee and has been made more comprehensive and stringent by including additional elements of HSE Management System in the evaluation system. The revised parameter, named the HSE Score has been implemented since September 2014.

Corporate level Occupational Health Committee in your Company met on quarterly basis during the year to monitor the implementation of occupational health and hygiene program. Occupational Health Audit of two process plants at Usar and Gandhar were carried out this year by members of the corporate occupational health committee. Occupational Health check- ups of employees and contract workers were carried out in your Company to assess the occupational health parameters and take corrective measures.

SUSTAINABILITY INITIATIVES

Your Company published its fifth Sustainability Report - 'Fostering Responsible Growth' for 2014-15 based on the Global Reporting Initiative (GRI) Guidelines. Sustainability reporting has helped us in measuring and monitoring our Company's performance and moving beyond the mandatory requirements to ingrain sustainability within the organization in letter and spirit. It has served as an important management tool helping us re-look at our Company's systems. policies and procedures.

Taking a step ahead, from measuring to taking concrete actions in the right direction is also important. Your Company has been among the very few companies to have set voluntary targets through Sustainability Aspirations 2020 and transparently disclose it in the public domain. Your Company has disclosed additional targets through the revised Sustainability Aspirations 2020 in the Sustainability Report. The targets are in the area of Specific Energy Reduction, Specific GHG Emission Reduction, Specific Fresh Water Consumption Reduction and Zero Waste Water discharge.

Since inception, your Company has been guided by the principles of accountability and transparency. In 2011, your Company formally began its sustainability journey. Your Company believed that although it was a few steps behind, taking small yet strategic steps in right direction was more important. Your Company has a Sustainable Development Committee comprising the Functional Directors as members to regularly monitor it sustainability initiatives and performance. Your Company has strengthened its data management systems to capture credible and authentic data and information from its various sites.

For the first time, your Company has been acknowledged among CDP's India Leaders2014andfeatured in the Climate Disclosure Leadership Index (CDLI). Your Company is the only Company in Utilities category featuring in the top 22 India Leaders.

Your Company believes that it is important to collaborate with industry leaders, associations and peers to address national and global sustainability challenges and work towards a common goal. Its focus has remained on collaborating with various external stakeholders such asTERI.CII, GRI, UNGC, FICCI and CDP among others, to gain from their knowledge and experience in the area of sustainability. Your Company conducted workshops in collaboration with organizations such GRI Focal Point India and CDP during the year.

In line with the Listing Agreement requirements. Business Responsibility Report (BRR)2014-15 is contained in a separate section in the Annual Report. Your Company was placed at 2nd position in the Environmental Social and Governance (ESG) Score of India Inc. Study (2014) based on the BRR of 2013- 14 conducted by Sustainable Business Leadership Forum.

VIGILANCE

The Vigilance department of your Company is ISO-9001:2008 certified for having adopted Quality Management System in compliance with the requirements of ISO. Various e-initiatives and system improvements were implemented in your Company for effective utilization of systems, which helps in preventing corruption and ensures all round good governance. Some of these improvements are:

- Introduction of Percentage Mark-up Model for O&M, ARC and Civil contracts works tenders.

- Monitoring timely release of retention money of contractors by Implementing automatic MIS Alert to the respective OICs of all the units.

- Fraud Prevention Policy hosted on your Company's website.

- Standardization of procedure for the generation of Minimum Guaranteed Off take (MGO) invoice through SAP in GAIL Gas Ltd.

- All Vigilance and CVC Circulars uploaded on Intranet portal for Awareness of employees.

The Vigilance Awareness Week-2014 was observed on the theme "Combating Corruption - Technology as an enabler" at the Corporate Office and also at all work centers of your Company from 27th October to 1st November 2014. It encompassed various activities to spread anti-corruption drive, brainstorming sessions for interweaving enabling technologies and applications for creating a transactional backbone. This is a step towards increasing transparent and efficient decision making and improving process performance.

A magazine "JAGROOK", containing CVC circulars, articles and case studies on corruption was also published. To evaluate our systems and procedures, a Customer Interactive Meet was organized. Customers were also apprised about e - initiatives taken by your Company to make the system transparent with minimum human intervention. Customers have shared their experience with your Company, put forward their feedback, suggestions and grievances. Vendor Interactive meets were organized at your Company's petrochemical Plant at Pata.

CAPABILITY BUILDING

- Human Capital

Your Company lays strong emphasis on attracting and acquiring best talent and also on efficient deployment of manpower on right jobs as per business requirements of the Company. Value Added per Employee gives an account of efforts of your Company's emphasis to make the best and most productive use of the resources and business opportunities available. For the year under review, value added per employee was Rs.17373 Lacs.

- Leadership Development Program

Your Company realizes that it is critical to continually strive to develop and enhance the capability and competence of its senior level executives in order to prepare them for future leadership positions. As part of the Leadership Development Program, Senior Management Development Centre (SMDC) exercise has been undertaken. SMDC has been conducted for senior executives in Chief Manager and above grades and as of now around 670 senior executives have been covered under this exercise. During the year under review, more than 95% of the executives who got promoted to the level of Chief Manager were covered under the SMDC Exercise.

In order to fill in the developmental gaps of such executives identified through 5MDC exercise, a comprehensive Individual Development Plan (IDP) has been drawn up for all the participants of 5MDC exercise. The IDP consists of customized training programmes at premier business schools, e-learning courses and distribution of books.

- Representation of Priority Section

Your Company has been complying with the Presidential Directives and other instructions/guidelines issued from time to time pertaining to Policies and Procedures of Government of India in regard to reservation, relaxations, concessions etc. for Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs) and Persons with Disabilities (PWDs) in direct recruitment.

Details with regard to group wise total employees and the representation of SCs, STs, OBCs and PWDs amongst them in your Company as on 31st, March 2015 are given in the table below:

GROUP EMPLOYEES SC ST OBC PWD ON ROLL (NCL)

A 3081 478 191 557 40

B 576 117 68 100 12

C 551 97 22 165 35

D 52 17 5 14 2

CMD, Whole-Time Directors &CVO 6 - - - -

TOTAL 4266 709 286 836 89

During the year under review, total of 314 new employees joined your Company. The total manpower of your Company as on 31st March 2015 stood at 4266 (including CMD, Whole-time Directors and CVO) with 16.62% of Company's employees belonging to SC category, 6.70% to ST category, 19.60% to OBC (NCL) category, 8% to Minorities and 2.09% to PWDs category. Your Company's workforce comprised of 5.98% women employees as on 31st,March 2015.

- Capability Development

Your Company believes that its human resource is one of the most vital assets for achieving its Vision, Mission and Objectives. Therefore, Capability Building and Talent Development of its human resources has been the key focus area for your Company.

The GAIL Training Institute (GTI) is organizing systematic and structured programs for capability building across all levels within the organization. In recognition of the initiatives taken by it, GTI has received the prestigious Golden Peacock National Training Award - 2014. GTI has maintained the track record of excellent MOU performance in all the parameters in the MoU signed with the administrative ministry.

Some of the salient achievements/initiatives for talent development are asunder:

- Various certification Training Programme from NACE, ASME, OEMs and technology licensors for gaining state-of-the-art expertise for its technical human resources.

- Specialized Training Programme on new business areas in line with Company's strategy 2020 such as Shale Gas, Energy Trading Hedging And Risk Management etc. were organized.

- For executives of the level Chief Manager and above. Individual Development Plan(IDP) based on the SMDC exercise were executed. The IDP comprised distribution of competency based books, access to e-learning modules from Harvard Manage Mentor(HMM) and Customised Management Development Programmes through MM Bengaluru and Kolkata.

- Customised Management Development Courses from leading management institutes specifically for executives from HR discipline.

- Mentorship programme established for all new joining executives.

- Training mandays per employee more than 5 for the year under review.

- Healing with nutrition programme organised for employees for Staying fit &reducing stress.

- Awareness programs on sustainable development organised for Employees at sites.

- Knowledge sharing seminar for motivating employees to share best practices across shall sites.

- For creating knowledge based and competitive environment, in- house business quizzes and business simulations organized to keep the employees updated with latest developments in the business areas.

In its pursuit of offering training programs to external organizations and to convert itself into a revenue generating centre, GTI has successfully organized training programs for participants from several organizations like RGPPL, HPCL.BCPL, IGL, MGL, MNGL, GSPL, HMEL etc. Further, in collaboration with American Society of Mechanical Engineers (ASME), U.S.A., GTI is successfully running certificate courses in ASME B31.8 for Various external organizations.

Your Company is also playing an active role in formation of hydrocarbon skill council to carry forward of skill building in hydrocarbon sector to support the National Skill Development Mission.

- Official Language

Your Company is continuously endeavouring for the propagation and successful implementation of the Official Language Policy of the Union. The Official Language Implementation Committees at Corporate as well as work centre level held their quarterly meetings regularly to monitor and review the progress made in achieving the targets fixed in the Annual Programme issued by the Government of India.

Hindi Workshops/Trainings are being organized on regular basis at GTI, Jaipur and Noida as well as the other work-centres. Hindi Computer Training sessions are integral part of these programmes. During the year2014-15, a total of 65 workshops were organized where 865 employees were given training. All the computers of the Company are equipped with the Unicode Hindi fonts with transliteration key-board typing facility

With a view to create greater awareness and consciousness among employees, hindi Fortnight was celebrated from 15-29 September, 2014 across the Company. Every Monday/first working day of the month is being observed as Hindi Diwas across the Company.

A unique initiative has been taken to implement the special software to generate Pay Slip, CPF Card, Pension Card, Promotion Order, Transfer Order, Reliving Order etc. in bi-lingual version from SAP. Your Company is one of the few PSUs to implement this facility.

As a unique initiative, names of all employees of your Company in official e-mail IDs are being displayed in hindi also. The terminology being used across your Company has been standardized and circulated.

The bilingual website of your Company is regularly updated with latest news and press releases. Intranet of your Company is also available in bilingual format.

Your Company has published an issue of hindi magazine 'Rajbhasha Sahyog" for propagation of hindi among the employees. In order to cultivate the habit of reading in hindi, motivational and inspirational books were distributed to the employees of your Company and their family members.

During the year 2014-15, the 1st Sub-Committee of Parliament on Official Language inspected the Bengaluru and Noida off ices of your Company to review the progress of Official Language. The Sub-Committee appreciated the efforts and sincerity of your Company to implement the Official Language. MoP & NG has also recognized the efforts of your Company for effective and wide implementation, and propagation of hindi among Oil PSUs and awarded your Company under Rajbhasha Shield Yojana.

- Sexual Harassment of Women at Workplace

The Company has in place a 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 the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All concerned persons as per the Act are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed off during the year 2014-15:

- No of complaints received: Nil

- No of complaints disposed off: Nil

INNOVATION, RESEARCH AND DEVELOPMENT

Your Company is committed to address the challenges of ever changing business scenario through innovation. Your Company has made enduring efforts to encourage innovation and creativity of employees through its Suggestion Scheme. The Suggestion Scheme helps to promote organization- wide idea generation for incremental innovation. All employees of your Company are motivated to suggest improvements in their respective areas of work. The suggestions are evaluated in a timely manner for implementation and the best suggestion is awarded with the CMD trophy.

Your Company is also the co-ordinator for mid-stream sector of Oil & Gas industry for promoting industry-wide innovation in the sector. Innovation workshops were held as part of this initiative where the Best and innovative practices adopted by various departments are shared for due recognition and further propagation.

Your Company has set-up a Pilot Land Fill Gas (LFG) Project at Ghazipur in Delhi to reduce the GHG emissions. A further initiative is being taken-up to utilize the low quality LFG to produce power. A 30 KW micro turbine based power plant is being installed to generate power with LFG after its partial upgradation. The successful fruition of this endeavour shall demonstrate the use of LFG as a source of renewable energy. This also demonstrates the commitment of your Company towards sustainable utilization of waste energy and reduction of its carbon foot print.

Your Company is aggressively pursuing many R&D projects in its identified thrust areas with a focus on developing high-impact innovative technologies to conduct the existing businesses in a more optimal and sustainable manner. Your Company has a judicious mix of various basic, applied and pilot projects Encompassing the natural gas value chain in its R&D portfolio. In addition, few projects are also being pursued in upcoming areas like Underground Coal Gasification, Fuel Cells, Hydrogen and Gas Hydrates. These R&D projects are being pursued in association with reputed research organizations / institutes. Your Company has also implemented many developmental projects to improve efficiency of existing operations and to conserve the Environment by utilizing better technologies.

TOTAL QUALITY MANAGEMENT

Your Company continues to focus on continual and sustainable improvement in the process, system and functional areas. Customer satisfaction is the top priority of your Company and is being continuously monitored through regular interactions. Major achievements of your Company in TQM are as under:-

- Customer Satisfaction Index achieved during 2014-15 is 8g.72%.

- 105 Nos. of quality circle projects were undertaken by your Company during FY 2014-15 at various work centres resulting in tangible benefits of Rs.278.65 lakhs in addition to the recurring intangible benefits.

- Gas Processing Unit, Vaghodia of your Company has been recommended for certification of Energy Management System (EMS) ISO:50001-2011.

PROCUREMENT FROM MSEs

The Government of India has notified a Public Procurement Policy for Micro and Small Enterprises (MSEs), Order 2012. In terms of the said policy, the total eligible value of annual procurement of goods produced and services rendered by MSEs (including MSEs owned by SC/ST entrepreneurs) during the year 2014-15 is about Rs.138 crore of which the total procurement made from MSEs (including SC/ST entrepreneurs) directly or indirectly isRs.26 crore which is approximately 9% of Rs.138crore.

MOU PERFORMANCE

A Memorandum of Understanding (MoU) is signed every year between your Company and its administrative ministry i.e. MoP&NG, to enhance the performance level of the Company through the targets set therein. The MoU for the year 2014-15 was signed between the Chairman & Managing Director and the Secretary (P&NG), Government of India on215t March,2014.

The thrust while fixing MoU targets was more towards improving Performance on critical aspects of the Company which include gas marketing, gas transmission, project implementation, capital expenditure, new business areas etc. Significant thrust has also been given on Corporate Social Responsibility, Research & Development Projects and Human Resource Management.

Your Company has been consistently achieving excellent MoLI rating since the inception of MoLI system i.e. from 1989-90 to 2013-14. In spite of the economic slowdown and relatively unfavourable business environment compared to preceding years, your Company achieved MoLI composite score of 1.288for theyear2013-14 which is considered as Excellent MoLI rating.

In the financial year 2014-15, there is a gap between MoLI targets and actual achievement primarily due to fall in domestic gas availability, decrease in Spot/ RLNG prices, decrease in petrochemical and LHC prices and sharp decline in crude oil prices. The final evaluated MoLI score and rating for FY 2014-15is expected to be announced in December2015.

The MoLI for the year 2015-16 was signed between the Chairman & Managing Director and the Secretary (P&NG), Government of India on 31st, March, 2015.

LAURELS

Corporate

- Your Company featured amongst "India's 100 Best Companies to Work For 2014 Study" conducted by Great Place to Work Institute for the third Consecutive year.

- Sustainability Report for FY 2013-14, received the coveted 'A Application Level' statement by international organization Global Reporting Initiative(GRI).

- Company of the Year' in the Project Management category for its Dabhol- Bengaluru natural gas pipeline project at the Petroleum Federation of India (PetroFed) Oil & Gas Industry Awards 2013

HSE

- International Safety Award - 2014 from the British Safety Council, UK to GAIL Pata and GAIL NCR.

- International Safety Award-2015 by the British Safety Council, UK to HVJ Compressor Station, Vijaipur.

- "Suraksha Puraskar (Bronze Trophy)-2013"by the National Safety Council of India, Mumbai to LPG Recovery Plant, Vijaipur.

- "Prashansa Patra (Certificate) Safety Award-2013"by the National Safety Council of India, Mumbai to HVJ Compressor Station, Vijaipur (M.P).

- Shreshtha Suraksha Puraskar (Second Level-Silver trophy) for year 2014 from the National Safety Council, Mumbai to GPU, Vijaipur.

- Suraksha Puraskar (Third level - Bronze trophy) for year 2014 from National Safety Council. Mumbai to HVJ Compressor Station, Vijaipur.

- Golden Peacock Environment Management Award 2014 by the Institute of Directors, New Delhi to GAIL, Vijaipur.

- Golden Peacock Occupational Health & Safety Award 2014 by the Institute of Directors, New Delhi to GAIL NCR.

- Safety Innovation Award-2014 by the Institution of Engineers (India), Delhi State Centre to Maharashtra region pipe line system.

- National Safety AwardfromDGFASLIforyear2012to GAIL Pata.

- NSC Safety Award-2013 as Sarvashreshta from NSC MP-Chapter to GAIL Vijaipur.

RIGHT TO INFORMATION

In order to promote transparency and accountability, an appropriate mechanism has been set up across the Company in line with the Right to Information Act, 2005. Your Company has nominated ACPIOs/CPIO/ Appellate Authorities at its units/offices across the country to provide information to citizens under the provisions of RTI Act.

MANAGEMENT DISCUSSION AND ANALYSIS

The detailed Management Discussion and Analysis forms a part of this report At Annexure-A.

CORPORATE GOVERNANCE

Your Company believes that good corporate governance is critical in establishing a positive organizational culture. It is evident by responsibility, accountability, consistency, fairness and transparency towards its stakeholders. Pursuant to the revised clause 49 of the Listing Agreement with the Stock Exchanges and DPE guidelines on Corporate Governance, a report on Corporate Governance forms part of this Report at Annexure- B.

The details of the meetings of the Board, Company's policy on Directors' appointment and remuneration etc. and other matters, details of establishment of whistle blower mechanism etc. forming part of report on Corporate Governance.

There is no significant and material orders passed by the regulators or Courts or tribunals impacting the going concern status and Company's operations in future.

The statutory auditors of the Company have examined and certified your Company's compliance with respect to conditions enumerated in revised clause 49 of the Listing Agreement and DPE guidelines on Corporate Governance. The certificate forms part of this Report at Annexure-C.

AUDITORS

- Statutory Auditors

The statutory auditor of your Company is appointed by Comptroller & Auditor General of India (CAG). M/s G.S. Mathur & Co., Chartered Accountants, New Delhi and M/s S.K. Mittal & Co, Chartered Accountants, New Delhi appointed as Joint Statutory Auditors of your Companyfor2014-15.

Review and Comments of CAG on the Company's Financial Statement for the financial year ending 31st March, 2015 by CAG, if any, forms part of Financial Statement. Notes on Financial Statement referred to in the Auditors' Report are self-explanatory and, therefore, does not call for any Further comment.

- Cost Auditors

Your Company has appointed M/s Rohit & Associates for Pondicherry Rajamundry & Bangalore unit(s); M/s R Nanabhoy & Co. for Hazira, Vaghodia, Vadodra, Jhabua, Khera, Vijaipur, Auraiya, Agra, Kailaras, Chiansa & Noida (NCR) unit(s); M/s M Goyal & Co. for Mumbai & Vadodra unit(s); M/s Dhananjay V Joshi& Associates for VSPL& J LPLunit(s) and M/s DGM & Associates for Agartala & Lakwa unit(s) as cost auditors for FY2014-15.M/s Chandra Wadhwa & Co. is the lead cost auditor.

The due date for filing Cost Audit Reports for the financial year ended 31st March, 2014 was 27th September, 2014 and the same were filed to Registrar of Companies on 26th September,2014.

- Internal Auditor

Your Company has an in-house Internal Audit Department, which is headed by Executive Director.

- Secretarial Auditor

Your Company has appointed M/s Agarwal 5. & Associates as secretarial auditors for 2014-15. Secretarial Audit Report confirming compliance by Practicing Company Secretary to the applicable provisions of the Companies Act, 2013, Listing Agreement and other applicable laws, forms Part of this Report at Annexure-D.

The observations made by secretarial auditor in his Audit report are as under:

i. Proviso to Sectionl49(l) read with Rule3 of the Companies (Appointment and Qualification of Directors) Rules,2014 i.e. Appointment of at least one woman Director.

ii. Section 149(4) of Companies Act, 2013, Clause 49(II)(A) of the Listing Agreement and Clause 3.1.4 of the Guidelines on Corporate Governance for Central Public Sector Enterprises i.e. Optimum Combination of Executive and non-Executive Directors.

iii. Sections 135(1), 177(2) and Section 178(1) of the Companies Act, 2013 and Rule 6 of the Companies (Meetings of Board and its Powers) Rules, 2014, regarding composition of CSR Committee, Audit Committee and Nomination and Remuneration Committee.

iv. Section 149(8) read with Schedule IV (VIII) and Section 178(2) of Companies Act, 2013, w.r.t. performance evaluation of Independent Directors.

Explanation on observations made by secretarial auditor in seriatim are asunder:

a) As on 31st March, 2015, your Company's Board comprised of five whole-time Directors including CMD and one Government Nominee Director. GAIL does not have any woman Director. The term of Independent Director(s) on your Company's Board including woman Director expired on 28th February, 2015. Subsequently with the appointment of a woman Director, Smt. Anuradha Sharma Chagti as Government Nominee Director by MoPNG on the Board w.e.f. 21st May, 2015the requirements of Sectionl49(l) has been fulfilled.

b) Your Company is a Government Company, appointment/nomination of all the Directors is being done by the President of India, through the Ministry of Petroleum & Natural Gas (MoP & NG). Your Company is continuously pursuing with MoP & NG for appointment of requisite number of Independent Directors on the Board of the Company.

c) Your Company was in compliance of composition of CSR Committee, Audit Committee and Nomination and Remuneration Committee till 28.02.2015. However, after cessation of Independent Directors w.e.f. 28.02.2015, the Company was not in compliance with the aforementioned provisions of the Companies Act, 2013, as stated at b) above.

d) Your Company is a Government Company, appointment/nomination of all the Directors is being done by the President of India, through the MoP&NG and performance evaluation of individual Directors including Independent Directors is to be done by Government of India being appointing authority

The Compliance to observations of the secretarial auditor ats. no. ii) and iii) as stated above shall be met once the requisite numbers of Independent Directors are appointed by Government of India on your Company's Board.

CORPORATE SOCIAL RESPONSIBILITY

Your Company believes that Corporate Social Responsibility (CSR) plays a major role in the development of any country. Therefore, it has made Corporate Social Responsibility (CSR) an integral part of its ethos and culture. Annual Report on CSR activities as required under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 read with sectionl34(3)andl35(2)of the Companies Act, 2013 is placed at Annexure-E.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION

Details of conservation of energy and technology absorption in accordance with section 134(3) of the Companies Act, 2013 read with Companies (Accounts) Rules,2014 forms a part of this report at Annexure-F.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

As per requirement of 134 (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 particulars of contracts or arrangements with related parties as referred in section 188(1) of the Companies Act,2013 is placed at Annexure-G. Your Company has formulated the policy on dealing with Related Party Transactions and the same is hosted on your Company's website at http://www.gailonline.com/final_site/pdf/ GAIL_Related_Party_Transaction_Policy.pdf.

PARTICULARS OF EMPLOYEES

As per provisions of section 197(12) of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to disclose the ratio of the remuneration of each Director to the median employee's remuneration etc. in the Directors' Report.

However, as per notification dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government of India, Government Companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. Your Company is a Government Company, therefore, such Particulars have not been included as part of Directors' Report.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return forms part of this Report at Annexure-H.

ISSUE OF SHARES AND FIXED DEPOSITS

Your Company has not issued equity shares with differential rights as to dividend, voting or other wise and issue of shares (including sweat equity shares) to employees of the Company under any scheme.

Your Company has not accepted any fixed deposits and, as such. no amount of principal or interest was outstanding as of the Balance Sheet date.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, foreign exchange earnings were Rs.64449 Crores and foreign currency outgo was Rs.8088.49 Crores.

During the year under review, there was an outgo of Rs.2.20 Crores on foreign Tours and training.

KEY MANAGERIAL PERSONNEL AND DIRECTORS

During the year, the following ceased to be Key Managerial Personnel on the Board of your Company:

- Shri S. Venkatraman, Director (BD) w.e.f. 30th September, 2014 upon at training the age of superannuation.

- Shri P.K.Jain, Director (Finance) w.e.f. 30th April, 2015 upon at training the age Of superannuation.

During the year, the following ceased to be Directors on the Board of your Company:

- Shri RK. Singh, Government Nominee Director w.e.f. 26th September, 2014 upon ceasing to official of MoPNG.

- Shri Rajive Kumar, Government Nominee Director w.e.f.15th December, 2014 upon ceasing to of facial of MoPNG.

- Smt. Shyamala Gopinath and Dr. A.K. Khandelwal, Independent Director(s) w.e.f.28th February,2015 consequent upon completion of tenure for 3years.

The Board placed on record its deep appreciation for the valuable services rendered by outgoing Directors during their association with your Company.

Shri Ashutosh Jindal was appointed as Part-time Director (Government Nominee) on the Board of your Company w.e.f. 24th February 2015. Shri Subir Purkayastha was appointed as Director (Finance) and Chief Financial Officer by the Board of your Company w.e.f. 1st May, 2015. Smt. Anuradha Sharma Chagti was appointed as Government Nominee Director by the Board of your Company w.e.f.215,May,2015.

The tenure of Shri Prabhat Singh as Director (Marketing) was extended for a period of beyond 24.02.2015 till 30.11.2016 i.e. the date of his superannuation, or until further orders, whichever is earlier by Government of India.

Further, Shri M. Ravindran, Director (HR) and Dr. Ashutosh Karnatak, Director (Projects) are retiring by rotation and being eligible have offered themselves for re-appointment.

None of the Director is in receipt of any commission from any subsidiary Company of your Company.

PERFORMANCE EVALUATION

As per provisions of sectionl34(3)(p) of the Companies Act,2013 every listed company, a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors should form part of the Directors' Report.

However, as per notification dated 5th June, 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 Government Company and the appointment, tenure, performance evaluation etc. of Directors is done by Government of India, therefore, such particulars have not been included as part of Directors' Report. Remuneration of CMD, Whole-time Directors and its employees is determined by Government of India. As per requirement of clause 49 of Listing Agreement, evaluation criteria for the Board is being formulated.

CODE OF CONDUCT

Pursuant to the requirements of clause 49 of Listing Agreement, the Board Members and Senior Management Personnel, have affirmed compliance with the Code of Conduct for the financial year ending315,March,2015.

DIRECTORS RESPONSIBILITY STATEMENT

Yours Directors confirmed that:

i) In the preparation of the annual accounts for the financial year ending 315t March, 2015, the applicable accounting standards have been followed, Along with proper explanation relating to material departures;

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 ending315t March, 2015 on a going concern basis;

v) had 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 were operating effectively.

ACKNOWLEDGMENT

Your Directors express their gratitude for continuance guidance and support by the Government of India, especially the Ministry of Petroleum and Natural Gas, various state governments, and regulatory and statutory authorities.

Your Directors acknowledge the wise counsel received from Statutory Auditors, Secretarial Auditor and CAG for their consistent support and cooperation.

Your Directors also wish to thank all the shareowners, business partners and members of GAIL family for reposing their faith, trust and confidence in your Company.

On behalf of your Directors, I would like to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and workers.

Your Directors and employees look forward to the future with confidence and stand committed to create a prosperous future for all stakeholders.

For and on behalf of the Board

B.C. Tripathi

Chairman & Managing Director

Place: New Delhi

Dated: 5th August, 2015

Mar 31, 2014

Dear Shareholders,

The On behalf of the Board of Directors of your Company, I am delighted to present the 30 Annual Report of your Maharatna Company, along with Audited Financial Statements for the financial year 2013-14.

YEAR UNDER RETROSPET

During the year under review, your Company''s 1000 kms long Dabhol-Bengaluru Pipeline Project was awarded the coveted Platts Global Energy Awards 2013 as Premier Project in Large Construction Category.

The year 2013-14 has been a year of venturing into new businesses and expanding the scale of operations in an effort to be a global energy player. Your Company entered into the elastomer business by approving the project for setting up 110 KTA capacity Poly Butadiene Rubber (PBR) Plant at a cost of Rs. 2,575 crore at Dahej in a joint venture with ONGC.

Further, your Company and Shipping Corporation of India have entered into a MoU for cooperation in the LNG shipping business.

Your Company has also signed an MoU with Paradip Port Trust Limited for setting up an LNG terminal at Paradip in Odisha.

On the Exploration and Production (E&P) front, gas production from A-1 and A-3 Blocks in Myanmar has started during the FY 2013-14. The total revenue from E&P business during FY 2013-14 was Rs. 244 crore.

FINANCIAL HIGHLIGHTS

Your Company has recorded sustained growth in all key financial parameters during the year 2013-14. The important financial highlights of the year are as under:

(Rs. in crore)

Particulars 2013-14 2012-13

US $ Million (Rs. in crore) US $ Million (Rs.in crore)

Turnover (Net of ED) 9,445 57,245 8,608 47,333

Other income 192 1,162 173 954

Cost of sales (excluding interest and 8,383 50,808 7,466 41,054 depreciation and including extraordinary items)

Gross margin 1,254 7,599 1,315 7,233

Interest 60 366 35 195

Depreciation 194 1,176 178 981

Profit before tax 1056 6,402 1,102 6,058

Provision for tax 334 2,027 370 2,036

Profit after tax 722 4,375 731 4,022

Appropriations

Interim dividend 94 571 92 507

Proposed final dividend 123 748 129 710

Corporate dividend tax 37 224 37 203

Net transfer to/from bond redemption reserve (1) (5.94) 0 (0.43)

Transfer to CSR reserve 3 17.87 2 13.13

Transfer to general reserve 72 438 73 402

Net surplus after Appropriations393 2,382 398 2,187

US $ in INR converted at the exchange rate 60.61 54.99 prevalent as on 31st March of the respective financial year

DISINVESTMENT BY PRESIDENT OF INDIA CONTRIBUTION TO EXCHEQUER CREDIT RATING STRATEGIC INITIATIVES

The Government of India (GoI) has disinvested th 15,672,024 shares on 27 March, 2014 through CPSE ETF. After disinvestment, the President of India is holds 711,733,651 equity shares representing 56.11% of paid-up share capital of GAIL.

DIVIDEND

Your Company has a consistent track record of dividend payment. So far, it has disbursed dividend of over Rs. 11,900 crore to the shareholders.

The Board of Directors of your Company had earlier approved payment of an interim dividend @ 45% on equity share of Rs. 10 each (Rs.4.5 per equity share) amounting to Rs. 571 crore, which was paid in February, 2014. Further, the Board has recommended the payment of final dividend @ 59% on the paid-up equity share capital of the Company of Rs. 10 each (Rs. 5.9 per equity share) for FY 2013.

With this, the total dividend payment for the fiscal year 2013-14 will be 104% on equity share of Rs. 10 each (Rs. 10.40/- per equity share) amounting to Rs. 1,319 crore on its paid-up equity capital of Rs. 1,268.48 crore, which is the highest ever dividend paid by your Company. The total dividend pay out including dividend tax accounts for 35.28% of Profit after Tax (PAT).

CONTRIBUTION TO EXCHEQUER

Your Company has contributed over Rs. 6,993 crore in 2013-14 to the exchequer through dividend, duties, taxes and others, as compared to Rs. 5,780 crore in 2012

CREDIT RATING

Your Company has been reaffirmed the highest domestic credit rating of AAA from ICRA, CARE and CRISIL. The international rating agency, Moody''s International, Hong Kong, has also reaffirmed the corporate issuer rating of Baa2, which is one notch higher than the sovereign rating. Further, Fitch Ratings has also assigned a long-term foreign currency issuer default rating of BBB with a negative outlook, which is equal to the sovereign rating.

STRATEGIC INITIATIVES

In order to grow sustainably, your Company has developed a strategy for the period 2011-2020. This strategy is currently under execution and your Company is closely monitoring the progress on various strategic initiatives as well as analysing the dynamic environment to assess its impact on GAIL''s businesses. The top management of your Company has been playing a crucial role in achieving the strategic objectives and to make GAIL an integrated hydrocarbon major with significant upstream, midstream and downstream interests by 2020.

In the upstream segment, your Company aspires to import substantial LNG through conventional route as well as through terminal capacity booking and also acquiring equity in producing assets/liquefaction facilities to source equity-linked LNG. Your Company has made remarkable progress in importing 25 LNG cargoes under various shortterm contracts with suppliers like GDF (France), GNF (Spain) and Excelerate Energy (USA) as well as on spot basis to meet the growing demand of the Indian market. Further, the US subsidiary of your Company has booked LNG capacity in Dominion Cove Point''s LNG liquefaction terminal in the US. In addition, your Company is pursuing LNG shipping business by charter hiring LNG ships to transport LNG from the US to India and other global markets. Your Company is also pursuing LNG trading business through its wholly owned subsidiary, GAIL Global Singapore Pte Limited.

To facilitate increase in LNG volumes, your Company plans to set up LNG terminals/floating storage and regasification units and is also booking additional regasification capacities in existing and new terminals being set up by other companies. Your Company has also executed regasification agreement with Petronet LNG Limited for regasifying 2.5 MMTPA LNG in the planned Dahej expansion LNG terminal in Gujarat to meet the ever increasing demand along its existing pipeline networks.

To bridge the demand-supply gap of natural gas and address the energy security needs of the country, your Company is actively participating in the transnational pipeline project, the Turkmenistan-Afghanistan- Pakistan-India (TAPI) pipeline project. GSPA has already been signed to import 38 MMSCMD gas into the country through this pipeline.

In the midstream segment, your Company aspires to retain its leadership position through continuous pan-India expansion of pipeline network. Your Company now has approximately 11,000 kms network of pipeline in the country. Various other pipeline projects are at different phases of execution which will take the network size to around 15,000 kms.

On the retail side, your Company is targeting additional 40-50 cities/Geographical Areas (GAs) through its subsidiary and joint ventures (JVs) for city gas distribution (CGD) in the coming few years.

In the downstream segment, your Company aspires to be amongst the top petrochemical players in the country by expanding existing capacities, setting up new plants, acquiring equity stakes in upcoming projects, along with product off-take rights for marketing. Your Company is currently doubling existing petrochemical capacity at Pata and the project is under implementation. A green field petrochemical plant is also being setup in Assam through your Company''s subsidiary, Brahmaputra Cracker & Polymer Limited (BCPL). Another petrochemical plant at Dahej is being set up through a JV, ONGC Petro-additions Limited (OPaL). By 2015, your Company is expected to have 1.7 MMTPA polymers for marketing.

In order to achieve all the strategic goals, significant thrust is being given to strengthen and develop the human resource of your Company. Accordingly, recruitment, training and development policies are being suitably aligned with strategic objectives to enable your Company implement and achieve its strategic goals by 2020.

SEGMENT PERFORMANCE

During the year under review, the segment wise business performance of your Company is as under:

Natural Gas Marketing

Natural gas continues to constitute your Company''s core business. During 2013-14, gas sales clocked 79.18 MMSCMD, compared to 81.44 MMSCMD in the previous financial year. Major supplies of natural gas include fuel to power plants, feedstock for gas-based fertilizer plants and LPG extraction. Your Company holds around 67% market share in India''s gas marketing.

Transmission

Natural Gas

Your Company owns and operates a network of about 11,000 kms of natural gas high pressure trunk pipeline with a pan-India capacity of around 206 MMSCMD of natural gas. Average gas transmission during the year was 96.22 MMSCMD, compared to 104.90 MMSCMD in the previous financial year mainly due to the decrease in gas from RIL''s KG D6 block.

LPG

Your Company is the only company in India, which owns and operates exclusive pipelines for LPG transmission for third-party usage. Your Company owns and operates two LPG pipeline transmission systems with a total length of 2038 kms. Out of this, 1415 km of pipeline network transports LPG from western to northern parts of India (Jamnagar Â Loni LPG Pipeline) and the balance 623 kms of pipeline network transports LPG in the country''s southern part (Vizag-Secunderabad LPG Pipeline). The LPG transmission system has a capacity to transport up to 3.8 MMTPA of LPG. In 2013-14, the LPG transmission through put achieved was about 3.15 MillionMT.

Petrochemicals

During 2013-14, your Company has produced 436 Thousand MT (TMT) of polymers and sold 445 TMT of polymers.

LPG and Other Liquid Hydrocarbon Production

Your Company has seven LPG plants in the country for production of LPG and other liquid hydrocarbons. In 2013-14, the total liquid hydrocarbon production was 1307 TMT, which included 1030 TMT of LPG, 135 TMT of Propane, 22 TMT of Pentane and 120 TMT of Naphta.

Exploration and Production (E&P)

The financial year 2013-14 has seen significant transformation of the E&P business of GAIL. The production of gas has started from overseas blocks A-1 and A-3, Myanmar.

Your company has earned a revenue of Rs. 244 crore from E&P activities through the sale of gas in A-1 and A-3 in Myanmar and crude oil in Cambay Onland block CB-ONN-2000/1 during the year 2013-14.

At present, GAIL has participating interest in 20 E&P blocks of which 18 blocks are in India and 2 in Myanmar.

GAIL is the Operator in three onland blocks viz. (i) RJ-ONN-2004/1 in Rajasthan basin awarded during NELP-VI bidding round, ii) CY-ONN- 2005/1 in Cauvery basin awarded during NELP-VII bidding round and (iii) CB-ONN-2010/11 in Cambay basin awarded during NELP-IX bidding round. GAIL is the non-operating partner in the remaining 17 blocks. In Rajasthan onland block, one well has been drilled during FY 2013-14 and future course of action is being charted. Drilling of wells is planned during the year 2014-15 in Cauvery onland block. In Cambay onland block, the acquisition of 131 KM2 3D seismic data has been initiated.

Declaration of Commerciality (DoC) for gas discovery has been submitted to the Government in Block MN-OSN-2000/2 (Mahanadi offshore Block, NELP-II) while DoC for gas discovery Kathalchari Â 1 in Block AA-ONN-2002/1 (Tripura Onland Block, NELP-IV) has recently approved by the Government.

BUSINESS ADVANCEMENT

Global Initiatives

In April 2013, GAIL Global (USA) LNG LLC, a US subsidiary of GAIL, signed a Terminal Service Agreement (TSA) with Dominion Cove Point LNG LP for booking 2.3 MMTPA liquefaction capacity in the Cove Point LNG liquefaction project located at Lusby in the State of Maryland in the US.

Under this agreement, your Company through its US subsidiary has to procure its share of natural gas and deliver it to the Cove Point pipeline for liquefaction at the terminal. Your Company has already short-listed potential gas suppliers / transporters for supply of gas to the Cove Point LNG liquefaction project. Discussions are underway with the short-listed party(s) for finalising the terms and conditions.

Your Company is pursuing Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline project for import of gas to India. Asian Development Bank has been appointed as the Transaction Advisor (TA) for the TAPI project. Incorporation of a company for implementing the project is underway. Your Company is playing a lead role in discussions on the project.

Domestic Initiatives

The domestic business initiatives of your Company are as follows:

Poly Butadiene Rubber (PBR) Plant

Your Company would be setting up a PBR plant of 110,000 tonnes per annum capacity at a cost of Rs. 2,575 crore at Dahej, Gujarat through a 50:50 joint venture with ONGC. The necessary approval for setting up the project has been obtained. The project is scheduled for commissioning during 2017 and your Company would be playing a lead role in executing the project.

Natural Gas Pipeline Projects

During the financial year, your Company commissioned various pipeline networks and auxiliary systems, which include the following:

Capacity Augmentation of Auraiya-Jagdishpur pipeline from Dibiyapur to SV-2 and from Sachendi to Kanpur Fertilizers & Cements Ltd.

Karanapur-Moradabad-Kashipur pipeline has been further extended upto Rudrapur by commissioning of the Kashipur- Rudrapur pipeline.

Â¡Commissioning of the Kochi-Koottanad-Bengaluru / Mangalore Phase-I pipeline done in August 2013 after receipt of LNG from PLL Kochi.

Â¡Last Mile consumer connectivity (approximately:- 112 kms) extended to 66 numbers of consumers for supplying of natural gas around 5.55 MMSCMD.

Non-Conventional Energy

Your Company has installed wind energy projects of 118 MW capacity. Your Company had started with a modest capacity of 4.5 MW wind energy in the state of Gujarat in year 2009-10 for captive use. After the success of the wind project, additional Wind Energy Generation of 14.7 MW was installed in the state of Gujarat for captive use in the year 2011-12. Your Company graduated to commercial production after commissioning 100 MW of wind energy projects in the states of Tamil Nadu and Karnataka in the year 2011-12.

In the year 2011Â12, your Company entered into solar power generation by winning the bid to setup a 5 MW Solar Plant under the Jawaharlal Nehru National Solar Mission in Rajasthan. The project was commissioned in February 2013 and is generating 25000 Â 28000 kWh per day.

SUBSIDIARIES & JOINTVENTURES

Your Company has formed subsidiaries and joint venture companies for City Gas Distribution (CGD), petrochemicals, LNG, gas trading, power generation and shale gas. Your Company is one of the pioneers in introducing city gas projects in India for natural gas supplies to households, commercial and transport sectors through its subsidiary and joint venture companies.

The details of subsidiary and joint venture companies are mentioned hereunder:

Natural Gas, LNG and Power

GAIL Global (Singapore) Pte Limited (wholly owned subsidiary)

GAIL Global (Singapore) Pte Limited, primarily started as an overseas i nvestment arm of your Company and wa s operationalized for LN trading in 2012. It comenced its busi nes operations by delivering its first cargo at Dahej in November, 2012. The Company is also targeting third-party sal e, shi p chartering and risk mnagement activities al ong with suplying LNG cargoes to India. In the year 2013-14, GSPL suplied cargoes to GAI L. The otal r venue of the Company for 2013-14 wa s US $ 1 89. 3 Milio and PAT wa s US$ .16 Milion.

- GAIL Global (USA) Inc (wholly owned subsidiary)

GAIL Global (USA) Inc., a wholly owned subsidiary of your Company, was formed during 2011-12 with the main aim to acquire 20% working interest in an unincorporated joint venture with Carrizo Oil & Gas Inc. in the Eagle Ford shale acreage in the state of Texas. The subsidiary is operational at Houston and going forward, it would explore other business opportunities in the US.

The total revenue of the Company for the year ended 31st December, 2013 was US $ 38.03 Million and PAT was US $ 4.52 Million.

- GAIL Global (USA) LNG LLC (wholly owned subsidiary of GGUI)

GAIL Global (USA) LNG LLC, a wholly owned subsidiary of GAIL Global (USA) Inc., was formed in the state of Delaware, USA on 28th March, 2013 for entering into contractual agreements with Dominion Cove Point LNG, LP for booking LNG tolling capacity of 2.3 MMTPA in its Dominion Cove Point LNG terminal located at Lusby in the state of Maryland and for booking capacity in associated Dominion Cove Point Pipeline.

GAIL Global (USA) LNG LLC has adopted calendar year as its fiscal year, as such the first accounts of the Company has been prepared for the year ended 31st December, 2013.

GAIL China Gas Global Energy Holdings Limited

The joint venture company, GAIL China Gas Global Energy Holdings Limited, was formed with an objective to pursue gas sector opportunities, mainly in China. Potential gas sector projects are being identified for implementation by the company. Your Company has 50% equity stake along with China Gas Holdings Limited as equal partner as per the agreement.

- Petronet LNG Limited (PLL)

PLL, which was formed for setting up of LNG import and re-gasification facilities, currently owns and operates an LNG re-gasification terminal of 10 MMTPA capacity located at Dahej, Gujarat. PLL has a long-term LNG supply contract with RasGas, Qatar for import of 7.5 MMTPA of LNG.

PLL is undertaking capacity expansion to 15 MMTPA at Dahej for which pre-project activities are in progress. Further, PLL has also setup up an LNG re-gasification terminal at Kochi, Kerala with a capacity of 5 MMTPA which was commissioned in August, 2013. PLL has a long term LNG supply contract with Exxon Mobil''s Gorgon Project for supply of 1.44 MMTPA of LNG for its Kochi terminal.

Your Company has 12.5% equity stake along with BPCL, Oil and Natural Gas Corporation (ONGC) and Indian Oil Corporation Limited (IOCL) as equal partners.

The total revenue of the Company for 2013-14 was Rs.37,747.58 crore and PAT was Rs.711.92 crore.

- Ratnagiri Gas and Power Pvt. Limited (RGPPL)

RGPPL was formed in July, 2005 as a joint venture with NTPC for taking over and operating the erstwhile Dabhol Power Project assets consisting of 1967.08 MW gas-based combined cycle Power Block and 5 MMTPA LNG Block. The assets were transferred to RGPPL in October, 2005.

The power block has been revived and is under commercial operation since 19th May, 2009. The power block was operated at a Power Load Factor (PLF) of 8.74% with a generation loss of 12760 Million Units due to non-availability of domestic gas in FY 2013-14.

The gas delivery to your Company''s pipeline network through high pressure delivery system was started in January, 2013 and commissioned with effect from 22nd May, 2013. Since the power generation is envisaged using the domestic gas entirely, the integrated LNG terminal shall be utilized for tolling purposes. RGPPL has already entered into a long term agreement with GAIL for commercial utilization of LNG terminal and commenced tolling operations.

As on 31st March, 2014, the paid up capital of the Company was 2,964.90 crore and out of this, your Company''s share of contribution was" 974.31 crore.

Your Company has 32.86% equity stake in RGPPL along with NTPC holding 32.86%, MSEB Holding Company Limited 17.41% and Indian Financial institutions 16.87%.

The Company''s total revenue for 2013-14 was " 2,216.34 crore and profit was ~ 112.05 crore. However, the company is in financial crisis due to non-liquidation of high receivables from its beneficiaries leading to inability in meeting its debt servicing obligations for the year 2013-14.

City Gas Distribution (CGD)

GAIL Gas Limited (wholly owned subsidiary)

GAIL Gas was incorporated with the objective of focused implementation of City Gas Distribution (CGD) projects in the country. During the year, GAIL Gas laid 550 kms MDPE pipeline in the cities of Sonipat, Meerut, Dewas, Kota, Agra,

Ferozabad & Bharatpur. New CNG stations were installed and are operational at Dibiyapur (Uttar Pradesh) & Kota (Rajasthan). Additional stations are planned at Firozabad, Bharatpur & Sonepat. During the year, GAIL Gas achieved conversion of 1,177 PNG Domestic customers progressively in the cities of Sonipat, Meerut, Dewas, Kota and Ferozabad and the total number of customers drawing gas went up from 4,427 in March 2013 to 5,604 in March 2014. The sales volume from industrial & commercial customers grew from 451.61 MMSCM in FY 2012-13 to 519.66 MMSCM in FY 2013-14.

The marketing activities of the Company are progressing well and it has tied-up over 844 industrial and 45 commercial consumers. To expand the business canvas, GAIL Gas formed a joint venture company with Vadodara Mahanagar Sewa Sadan (VMSS) to carry forward the ongoing City Gas Distribution business and augment the infrastructure for expanding CGD business in the city of Vadodara, and with Rajasthan State Petroleum Corporation Ltd. to form a joint venture company for implementation of CGD projects in the state of Rajasthan.

The total revenue of the Company for FY 2013-14 was Rs. 991.11 crore and PAT was Rs. 11.44 crore.

Aavantika Gas Limited (AGL)

AGL was incorporated to implement CGD projects in Madhya Pradesh. As on 31st March 2014, AGL operated 14 CNG stations including 7 daughter stations, 5 online stations and 2 mother stations.

Further, as on 31st March 2014, AGL supplied PNG to around 1900 domestic, 19 commercial and 31 industrial consumers in its authorized geographical regions. AGL is also catering to the fuel requirement of over 11,500 CNG vehicles operating in the region. Your Company has 22.5% stake, along with HPCL as an equal partner.

The total revenue of the Company for 2013-14 was Rs. 115.26 crore and PAT was Rs. 0.50 crore.

Bhagyanagar Gas Limited (BGL)

BGL was incorporated to implement CGD projects in Andhra Pradesh. As on 31st March, 2014, BGL operated 29 CNG stations including 24 daughter stations, 2 online stations and 3 mother stations.

Further, as on 31st March 2014, BGL supplied PNG to over 2100 domestic, 34 commercial and 2 industrial consumers in its authorized geographical regions. BGL is also catering to the fuel requirement of around 20,650 CNG vehicles operating in the region. Your Company has 22.5% stake, along with HPCL as an equal partner.

The total revenue of the Company for 2013-14 was Rs. 116.87 crore and PAT was Rs. 14.99 crore.

Central U.P. Gas Limited (CUGL)

CUGL was incorporated to implement CGD projects in Uttar Pradesh. As on 31st March, 2014, CUGL operated 14 CNG stations including 2 mother stations, 11 online stations and 1 daughter booster station.

Further, as on 31st March 2014, CUGL supplied PNG to around 4200 domestic, 36 industrial and 77 commercial customers in its authorized geographical regions. CUGL is also catering to the fuel requirement of around 40,900 CNG vehicles operating in the region. Your Company has 25% stake, along with BPCL as an equal partner.

The total revenue of the Company for 2013-14 was Rs. 196.73 crore and PAT was Rs. 25.03 crore.

Green Gas Limited (GGL)

GGL was incorporated to implement CGD projects in Uttar Pradesh. As on 31st March, 2014, GGL operated 14 CNG stations including 5 daughter stations, 5 online stations and 4 mother stations.

Further, as on 31st March 2014, GGL supplied PNG to over 3600 domestic, 3 industrial and 7 commercial customers in its authorized geographical regions. GGL is also catering to the fuel requirement of over 28600 CNG vehicles operating in the region. Your Company has 22.5% stake, along with IOCL as an equal partner.

The total revenue of the Company for 2013-14 was Rs. 162.01 crore and PAT was Rs. 22.62 crore.

Indraprastha Gas Limited (IGL)

IGL was incorporated to implement CGD projects in Delhi''s National Capital Territory (NCT) and cities in adjoining National Capital Region (NCR). As on 31st March, 2014, IGL operated 325 CNG stations including 75 mother stations, 212 online stations and 38 daughter stations.

Further, as on 31st March 2014, IGL supplied PNG to around 4.5 lacs domestic, 585 industrial and 1277 commercial customers in its authorized geographical regions. IGL is also catering to the fuel requirement of around 7.2 Lac CNG vehicles operating in the region, which includes the entire public transport of the national capital and also the world''s largest bus fleet on CNG. Your Company has 22.5% stake, along with BPCL as an equal partner.

The total revenue of the Company for 2013-14 was Rs. 3,922.16 crore and PAT was Rs. 360.26 crore.

Mahanagar Gas Limited (MGL)

MGL was incorporated to implement CGD projects in Mumbai and adjoining areas. As on 31st March, 2014, MGL operated 169 CNG stations including 19 mother stations, 130 online stations and 20 daughter stations.

Further, as on 31st March 2014, MGL supplied PNG to over 7 lacs domestic, 53 industrial and 2289 commercial customers in its authorized geographical regions. MGL is also catering to the fuel requirement of around 3.6 Lac CNG vehicles operating in the region. Your Company has 49.75% stake, along with British Gas as an equal partner.

The total revenue of the Company for 2013-14 was Rs. 1,885.15 crore and PAT was Rs. 297.25 crore.

Maharashtra Natural Gas Limited (MNGL)

MNGL was formed for implementation of CGD projects in and around Pune. As on 31st March, 2014, MNGL operated 28 CNG stations including 5 mother stations, 8 online stations and 15 daughter stations.

Further, as on 31st March 2014, MNGL supplied PNG to over 12,300 domestic, 83 industrial and 31 commercial customers in its authorized geographical regions. MNGL is also catering to the fuel requirement of around 60,200 CNG vehicles operating in the region. Your Company has 22.5% stake, along with BPCL as an equal partner.

The total revenue of the Company for 2013-14 was Rs. 344.08 crore and PAT was Rs. 56.66 crore.

Tripura Natural Gas Company Limited (TNGCL)

TNGCL was incorporated to implement CGD projects in Agartala. As on 31st March, 2014, TNGCL operated CNG stations including 2 mother stations and daughter stations.

Further, as on 31st March 2014, TNGCL supplied PNG to around 14,650 domestic, 45 industrial and 254 commercial customers in its authorized geographical regions. TNGCL is also catering to the fuel requirement of around 6150 CNG vehicles operating in the region. Your Company has 29% stake, in the joint venture.

The total revenue of the Company for 2013-14 was Rs. 42.19 crore and PAT was Rs. 6.57 crore.

Petrochemicals

Brahmaputra Cracker and Polymer Limited (BCPL) (Subsidiary)

BCPL is setting up a 2,80,000 TPA polymer plant and project execution is in progress. The total revised project cost, as approved by the Cabinet Committee for Economic Affairs (CCEA) in November 2011 is Rs. 8,920 crore. The Company is now in the final phase of project execution and has achieved an overall physical progress of 93.6% and financial progress of 81.03 % till the end of the financial year.

Your Company has 70% equity stake, with Oil India Limited (OIL), Numaligarh Refinery Limited (NRL) and the Government of Assam each having 10% equity share.

ONGC Petro-additions Limited (OPAL)

OPaL is implementing a green field petrochemical complex of 1.4 MMTPA Polymer capacity at Dahej, Gujarat. Your Company is a co-promoter of the project, with 15.50% equity stake while Oil and Natural Gas Corporation Limited (ONGC) and Gujarat State Petroleum Corporation Limited

(GSPC) are the other promoters.

Apart from above, your Company holds equity interest in China Gas Holdings Limited, Fayum Gas Company, South-East Asia Gas Pipeline Company Limited and Gujarat State Energy Generation Ltd. It also has the right to appoint a Director on the Board of these companies.

During the year 2013-14, your Company disinvested 60 million shares of China Gas Holdings Limited and presently holds 150 million shares. The Company has a right to nominate a Director on the Board of the company.

IT ADVANCEMENTS

Your Company is an IT-savvy organization and is continually striving to provide the best of technology applications to its valued users. With newer interventions in the IT domain, we have not only endeavoured to attain seamless integration with GAIL''s business transactions, processes and systems, but also proactively sensitized the users with emerging paradigms in system usage and technology transformations.

By adopting the latest and state-of-the-art IT solutions, which are keeping in pace with the fast changing industry and its way of working, we continually strive for efficiency enhancement of employees and have enabled access of required information to the right person, by the use of the latest IT security solutions.

Your Company is in the forefront of leveraging IT to bring in systemic improvements. In the last few years, your Company has introduced many new functionalities and features in SAP platform, which has been a part of the functional upgrade for bringing improvement and transparency in business operations. Your Company has also adopted latest and state- of-the-art IT solutions like Document Management System, and Private Cloud platform with Disaster Recovery (DR) setup of IT infrastructure, in line with the industry''s latest technological advancements. Going further, System''s manageability and availability have been enhanced substantially with this future-ready and DR-enabled cloud infrastructure.

Your Company is in the process of rolling out Business Intelligence - Analytics and Dashboard for easy and dynamic analysis of business critical information and its easy visualization.

Your Company is in the process of implementation of centralized enterprise-wide Geographic Information Systems (GIS)-based Pipeline Integrity Management System for its cross-country pipeline network, using industry standard assessment models in line with the national/international statutory codes. This will ensure seamless and consistent data flow from engineering to operations and also result in continuous updation of O&M data and aging of our pipelines.

For strengthening information security and identifying the potential internal and external threats, your Company has carried out Information Systems Audit through an expert external audit agency. The IT operations of your company have been certified with ISO 9001:2008. Your company is also preparing for ISO 27001 certification for Information Security Management Framework (ISMS) and Crisis Management Plan (CMP) in line with CERT-In Guideline.

HEALTH, SAFETY AND ENVIRONMENT MANAGEMENT

Health, Safety and Environment (HSE) management is a key driver of operational excellence in your Company. GAIL has an elaborate HSE Management System in place to ensure the health and safety of its employees and protect environment for a sustainable development. Your Company believes in prevention of all health, safety and environment hazards. HSE performance of various installations of your Company is monitored on a regular basis through monthly HSE reports, audits and Surprise Safety Checks by senior officials. HSE sub-committee of Board of Directors, which is the apex body for matters related to HSE, met three times during the year to review your Company''s performance and emergency preparedness in this regard.

On 27th June, 2014, an unfortunate mishap occurred on the Tatipaka- Kondapalli gas pipeline segment of your Company leading to the loss of civilian lives and causing damage to the property in the vicinity. As a responsible Company, all efforts were undertaken for rescue. Your Company has also initiated steps towards relief and rehabilitation of the affected people. Further, your Company has decided to adopt the Nagaram Village and will endeavour to transform it into a model village.

Your Company has taken a number of measures to reassess and address safety related issues. M/s Engineers India Limited has been engaged to reassess the health, safety and integrity of various natural gas pipeline systems including KG Basin and the LPG pipeline networks. In addition, a reputed international consultant is being engaged to review and compare the Standard Operating Procedures (SOPs) and safety measures across GAIL''s hydrocarbon assets with that of the international majors and reset benchmarks. Further, your Company''s Internal Audit group has initiated fresh technical audits of the various pipeline systems. Further, the Company''s Crisis Management Plan of 2012 is being overhauled including the measures taken to ensure swift reporting of incidents across the Company and external bodies. The framework of the HSE department is being further strengthened to ensure ZERO Tolerance to deviation from SOPs, increase safety awareness and enhance emergency response systems.

Your Company has taken a new initiative to implement Behavioural Based Safety (BBS) programme in its installations in a phased manner from this year as a part of continuous improvement of safety culture in the organization. This year, the BBS program was rolled out in the Company''s process plants at Vijaipur, Vaghodia, Gandhar and Usar. Your Company identified common life threating causes of accidents and launched a "Life Saver Scheme" for employees and workers. Your Company has prepared a Corporate Film on Health, Safety and Environment in GAIL to inform and educate our business partners and other stake holders.

Corporate HSE Policy

Your Company is committed to conduct business with a robust and integrated HSE Management System with a focus on improving harmony with the environment through sustainable development. The safety and health of everyone who works for your Company is of paramount importance and these attributes are embedded within the core organizational values of GAIL. Our employees and contract workers are strongly encouraged to adopt a safe working culture and behaviour to ensure effective implementation of the HSE policy. Complying with applicable HSE rules and regulations and going beyond in setting internal targets is one the important elements of the HSE Management in your Company.

8Safety Performance

Safety performance is measured in your Company through "HSE index" which is evaluated on the basis of important HSE Management System elements. Your Company achieved the HSE index of 99.06% as against the MoU target of 98%.

Safety Training

Your Company imparts regular and structured HSE training to its employees to upgrade their skills, knowledge and competence to carry out HSE-critical functions effectively. Regular training is also imparted to contract workers, tanker drivers and others to make them aware of the probable hazards in their work area and avoid unsafe acts.

Keeping in view the challenge posed by one of fastest growing waste stream i.e. e-wastes, your Company organized a two-day HSE workshop on the theme "EÂWaste Management" for its business heads, fire and safety heads and environment engineers. Faculty from the Ministry of Environment & Forests and prestigious institutions imparted valuable insights about the e-waste management and the applicable rules and regulations.

Safety Audits

Safety Audits are carried out in your Company to ensure implementation of the HSE Management system guidelines and emergency preparedness. Safety audits are carried out by external safety auditors and experienced in-house auditors.

Occupational Health

Your Company has implemented occupational hygiene measures and medical surveillance programmes to monitor and control the occupational health of its employees. Your Company has prepared guidelines on occupational health management in the organization to manage the occupational health of its employees and workers.

The Corporate Occupational Health Committee met four times during the year to monitor the occupational health programme in your Company. As a measure of a broader coverage of occupational health programme, your Company formed eleven new local level occupational health committees at its compressors and pumping stations in addition to the existing six local level occupational health committees at its process plants. All employees of your Company at various work centres undertake periodic medical examination as per guidelines.

SUSTAINABILITY INITIATIVES

Your Company published its fourth Sustainability Report Â ''Care Share and Grow'' for FY 2013-14. The stakeholder centric report focuses on a growth that creates value for all our stakeholders. The report highlights the various initiatives taken in the economic, environmental and social dimensions to secure the long term interests of our stakeholders. ''Care Share and Grow'' is in line with the global sustainability reporting standards of GRI (Global Reporting Initiative) G3.1 guidelines on Sustainability Reporting and the Oil & Gas Sector Supplement (OGSS). The report is externally assured in line with Assurance Standard AA1000AS with application level A . It is a Type 2 Moderate level assured report including data verification at different sites of GAIL. The report is available on the GAIL website (www.gailonline.com).

Your Company has a defined Sustainability Governance Structure following a top-down approach that spans across various critical functions to effectively manage organizational complexities. The Sustainable Development Committee, sub-committee of the Board is headed by an Independent Director with all the Functional Directors as members except Chairman & Managing Director, supported by the Sustainable Development Steering Committee, headed by the Director (Business Development) to provide impetus and direction to achieve sustainability goals, meet targets and monitor on-ground implementation of the various initiatives. At sites, we have the multi- disciplinary Sustainability Committee and Sustainability Team at the corporate level.

One of the Gas Processing Units at Gandhar was certified for Energy Management System ISO 50001:2011, which enable a systematic approach in achieving continual improvement of energy performance,

including energy efficiency, energy use and consumption. Your Company has also taken up the implementation of SA 8000 across its operation with pilot site as Hazira Compressor Station. With this, it is aimed to ensure meeting the voluntary requirements in the workplace that will protect and empower personnel within a company''s scope of control and influence.

This year, your Company participated in the Carbon Disclosure Project (CDP) for the first time. CDP is an international, not-for-profit organization providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information. Your Company is the highest scoring public sector company among the Indian CDP responders in 2013.

Your Company is the only PSU in Oil and Gas sector to become the founding member of the GRI Focal Point India Sustainability and Transparency Consortium. The Consortium provides a platform to share and engage with various organizations to discuss issues related to sustainability reporting. Your Company also hosted the launch of the GRI G4 Guidelines in India at GAIL Corporate Office in Delhi. In addition, senior official''s of your Company had a fruitful interaction with senior executives from GRI, sharing industry perspective in the field of sustainability.

Your Company also became the founding member of the India Green House Gas (GHG) Program along with various other major companies. The programme is a voluntary initiative launched by World Resources Institute (WRI) India, the Confederation of Indian Industry and The Energy and Resources Institute on GHG accounting, standardize measurement and management of GHG emissions in India. The programme promotes a more competitive, profitable and sustainable business environment, broadening engagement between policymakers and the business sector in supporting the overall advancement of national goals.

Going beyond the mandatory requirements, your Company has set clear targets through Sustainability Aspirations 2020, with respect to the management of Green House Gas (GHG) emissions, water consumption, energy efficiency and training / awareness on sustainability. This initiative has been highly appreciated at various national and international forums. The details of the progress are presented in our Sustainability Report FY 2013-14. All these initiatives are aimed at building the social and environmental capital of your Company to make it a truly sustainable company.

In line with the SEBI requirements, your Company provides a complete disclosure on the Company''s performance on the 9 Principles of National Voluntary Guideline and Core Elements. The BRR FY 2013-14 is contained in a separate section in the Annual Report FY 2013-14.

INCLUSIVE GROWTH- INITIATIVES FOR SOCIAL GROWTH

Your Company believes that CSR plays a major role in developing a nation. Therefore, your Company has made Corporate Social Responsibility (CSR) an integral part of its ethos and culture. Your Company has a dedicated team operating within the framework of a well- structured CSR policy, which mandates 2% contribution of the Company''s PAT to CSR activities. Further, your Company has constituted a CSR Committee of the Board to deliberate and decide on the CSR proposals. The details of the same are contained in the report on Corporate Governance.

Following the project-based approach as put-forth by the DPE and as detailed in your Company''s CSR policy, your Company has implemented

CSR programmes primarily in and around the rural areas adjoining major work centres/installations of your Company. These programmes are taken up under the seven thrust areas identified by your Company - education /literacy enhancement, skill development/ empowerment, community development, drinking water/ sanitation, environment protection/ horticulture, infrastructure and healthcare/ medical facility. Major initiatives undertaken by your Company under these thrust areas are detailed in Management Discussion & Analysis.

VIGILANCE

Various improvements were introduced in systems and processes by your company for achieving better e-governance. Some of these significant improvements are:

- Complaint Monitoring System (CMS) to process all complaints which are received in various work centres and departments centrally.

- E-Tendering threshold limit has been reduced from Rs. 50 lacs to Rs. 25 lacs.

- Renewal of ISO Certification of Corporate Vigilance Department.

- Quarterly automatic alerts to respective Officer In-charge for taking suitable action to resolve instances of outstanding retention money of the vendors.

- Improvements have been made in Tender Monitoring System to generate more customized reports.

Vigilance Awareness Week-2013 was observed from 28th October, 2013 to 2nd November, 2013 under the aegis of the Central Vigilance Commission (CVC), at the Corporate Office, New Delhi and at all your Company work centres. Shri Pratyush Sinha, former Central Vigilance Commissioner graced the inaugural ceremony as the Chief Guest and administered Vigilance Pledge to the employees. On this occasion, a magazine "JAGROOK" published by the Corporate Vigilance Department, containing CVC circulars and articles on the subject of Good Governance including case studies was released. The theme of the Vigilance Awareness Week this year was "Promoting Good Governance Positive Contribution of Vigilance". In order to spread awareness of the theme, various competitions such as online quiz, essay writing (Hindi & English), slogan writing (Hindi & English) and poster painting were organized across different centers of your Company. A customer interactive meet and a vendor interactive meet were organized at Jaipur and Noida respectively. Customers from various segments such as Natural Gas, Liquid Hydrocarbon and Petrochemical as well as vendors providing project related services/supplies to your Company actively participated in the two meets.

CAPABILITY BUILDING

Your Company lays a strong emphasis on attracting, acquiring and deploying the best talent across all its business functions. A highly engaged and dynamic workforce has led to a continuous rise in the value added per employee in the last 5 years. Value added per employee gives an account of efforts of the Company''s employees to make the best and most productive use of the resources available to them.

Training

Your Company lays great emphasis on the development of human resources in the existing and new areas of its business. GAIL Training Institute (GTI) organizes systematic and structured programmes for capability building across all levels within the organization. In recognition of its initiatives, GTI has received the prestigious national award for Innovative Training Practices from the Indian Society for Training and Development (ISTD) and the Golden Peacock National Training Award - 2014.

GTI, Noida and Jaipur have maintained the track record of excellent MoU performance in all the parameters in the MoU signed with the administrative ministry. The key achievement are as under:

Percentage actualization of training plan has been more than 100% for the financial year ending 31st March, 2014. A total 224 training programmes were organized during the period under review. 17910 man-days of training were organized by GTI, Noida & Jaipur in the above period. Training days per employee is 4.51.

The development plan of the executives is directly linked with the Performance Management System.

Training budget as percentage of employee cost for FY 2013-14 is 4.71%.

A mentorship programme has been established for the new joining executives and all mentees have been assigned their respective mentors.

Yoga classes are organized at GTI and at various sites to reduce stress. Eleven programmes/sessions were organized during FY 2013-14.

6 man-days of training on awareness of sucession planning have been organized.

6 man-days of training have been imparted on Risk Management to GAIL employees.

216 man-days of training have been imparted on Project Management to GAIL employees.

With the objective to share and manage knowledge within the organization, Technical Knowledge Sharing Seminar and sessions are organized every year.

5 company wide business quizzes were organized to keep the GAIL employees updated with the latest developments in the business areas of GAIL.

In its pursuit of offering training programmes to external organizations and to convert itself into a revenue generating centre, GTI has successfully organized training programmes for participants from other organizations like RGPPL, HPCL, BCPL, IGL, MGL, MNGL, GSPL, HMEL etc. Further, in collaboration with the American Society of Mechanical Engineers (ASME), USA, GTI is successfully running certificate courses in ASME B31.8, B 31.8S and B 31Q for various external organizations.

Development Programme for Senior Management

Your Company realizes that it is critical to continually strive to develop and enhance the capability and competence of its senior level executives in order to prepare them for future leadership positions. As an effort towards the same, the Senior Management Development Centre (SMDC) exercise has been undertaken as part of the Leadership Development Program. SMDC has been conducted for senior executives in the Chief Manager and above grades and as of now around 600 senior executives have been covered under this exercise.

In order to fill in the developmental gaps of such executives identified through the SMDC exercise, a comprehensive Individual Development Plan (IDP) has been drawn up for all the participants of SMDC exercise. The IDP consists of customized training programmes at premier business schools, e-learning courses and distribution of books.

Representation of Priority Section

Your Company has been complying with the Presidential Directives and other instructions/guidelines issued from time to time pertaining to Policies and Procedures of Government of India in regard to reservation, relaxations, concessions etc. for Scheduled Castes ( SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs) and Persons with Disabilities (PWDs) in direct recruitment.

Details with regard to group wise total number of employees and the representation of SCs, STs and OBCs amongst them in your Company as on 31st March, 2014 are given in the table below:

GROUP EMPLOYEES SC ST OBC PWD ON ROLL (NCL)

A 2947 454 180 513 38

B 592 123 72 99 12

C 424 77 14 126 33

D 52 17 5 14 2

TOTAL 4015 671 271 752 85

A total of 132 new employees joined the Company during the FY 2013-14. The total manpower of the Company as on 31st March, 2014 stood at 4022 (including Whole-Time Directors & CVO) with 16.71% the Company''s employees belonging to the SC category; 6.75 % to the ST category; 18.73 % to the OBC (NCL) category; 8.02 % to minorities and 2.12 % to PWDs category. Your Company''s workforce comprised of 244 women employees as on 31st March, 2014.

Official Language

Your Company is continuously making vigorous efforts for the propagation and successful implementation of the Official Language Policy of the Union. The Official Language Implementation Committees at Corporate as well as work centre level held their quarterly meetings regularly to monitor and review the progress made in achieving the targets fixed in the Annual Programme.

In an endeavour to familiarize the new entrants in the company with the Official Language Act and various OL rules, training to ETs and GETs is being imparted at the induction level. To inculcate the knowledge of the Official Language among the newly promoted employees from S7 to E1 and E2 grades, special 2-days'' training programmes have been designed and implemented at the corporate level besides other regular workshops at all the work centres.

With a view to create greater awareness and consciousness among employees, Hindi Fortnight was celebrated from 14th to 28th September, 2013 across the Company. During the fortnight innovative and interesting competitions, cultural activities, Kavi Sammelan, seminars on Hindi activities etc. were conducted. Every Monday/first working day of the month is being observed as Hindi Diwas across the Company.

Bilingual software with Unicode fonts were made available across the Company. To impart working knowledge of Hindi as well as computer training to employees in bilingual software, a comprehensive and time bound programme was prepared and implemented during the year.

As an innovative initiative, names of all employees of your Company in official e-mail IDs are being displayed in Hindi also. The terminology being used across GAIL has been standardized and circulated.

Training in translation is being provided to all nodal officers on quarterly basis through the Central Translation Bureau, Ministry of Home Affairs.

In order to provide a larger platform to discuss the problems and difficulties in implementation of the Official Language, an annual conference was organized on 22nd February, 2014 wherein senior officials from corporate office and work centres participated and shared their valuable thoughts.

The bilingual website of GAIL was launched on 22nd February, 2014 by Director (HR).

In order to cultivate the habit of reading Hindi books among employees of GAIL and their family members, two books "Anger Management" and "Time Life Management" in Hindi were distributed to all employees on the occasion of "Vishwa Hindi Diwas" .

Women Empowerment

To encourage and recognize the role of women employees in your Company''s success story, GAIL Women Employees Award Scheme has been instituted since 2009. Since then, every year awards to Women employee(s) based on their performance in their functional area are conferred on the International Women''s Day.

INNOVATION, RESEARCH & DEVELOPMENT

Your Company firmly believes that innovation can lead to multiple benefits for the organization. Accordingly, the Company makes constant efforts to create a culture that supports innovation in all its business verticals. Your Company has a Suggestion Scheme for the employees to promote organization-wide idea generation for incremental innovation. The suggestions are evaluated in a time bound manner for implementation and the best suggestion is awarded with the CMD trophy.

As part of the activities of Sectoral Innovation Council by MOPNG, your Company has been nominated as the coordinator for mid-stream sector of Oil & Gas industries and aims to promote industry-wide innovation in the sector.

Your Company has further intensified its thrust on Research & Development (R&D) activities and put in place a R&D Policy and Manual that streamlines the Selection, Award and Monitoring of R&D projects. Your Company is pursuing various R&D projects in identified thrust areas with a focus on developing high-impact innovative technologies that unlock new energy sources, improve efficiency of existing operations, and add value to the products. In addition, few projects are also being pursued on CO2 utilization to reduce carbon footprint.

Your Company has successfully completed a pilot project for Land Fill Gas (LFG) recovery at Ghazipur Landfill site, Delhi. This is the first project of its kind in India to be implemented on an active landfill site. It is also the first project of your Company to have been successfully validated and registered with UNFCCC for availing carbon credits. This project show cases your Company''s efforts towards sustainable utilization of resources.

Your Company has a judicious mix of R&D portfolio comprising of various Basic/Applied/Pilot & Technology development projects encompassing the natural gas value chain. In addition, few projects are also being pursued in upcoming areas like Underground Coal Gasification, Fuel Cells, Hydrogen, and Gas Hydrates in line with the Company''s aspiration to emerge as an integrated hydrocarbon major by 2020. These projects are being pursued in association with reputed research organizations / institutes.

TOTAL QUALITY MANAGEMENT (TQM)

Your Company continues to focus on continual and sustainable improvement in the process, system and functional areas. Customer satisfaction is the top agenda of your Company and is being continuously monitored through regular interactions. Preliminary steps have been under taken by the department to initiate Deming Prize related works for one of its units. Major achievements of your Company in TQM are as under:

- Customer Satisfaction Index achieved during FY 2013-14 is 92%.

- Your Company has undertaken 137 number of QC Projects at various work centres of GAIL which have resulted in financial savings of Rs. 826.49 lacs (tangible gains) from these projects for the FY 2013-14, which has led towards continual improvement (intangible gains) as well as tangible gains.

- LPG Gandhar plant received Energy Management system certificate of ISO : 50001-2011

PROCUREMENT FROM MSES

The Government of India has notified a Public Procurement Policy for Micro and Small Enterprises (MSEs), Order 2012. In terms of this policy, the total procurement made from MSEs (including MSEs owned by SC/ST Entrepreneurs) during the year 2013-2014 for goods & services is about Rs.18,000 lacs which is approximately 8.64% of the total procurement of goods & services of about Rs. 2,08,000 lacs.

MOU PERFORMANCE

A Memorandum of Understanding (MoU) is signed every year between your Company and its administrative ministry i.e. MoPNG, with the aim to enhance the performance level of the Company through the targets set therein. The MoU for the year 2013-14 was signed between the Chairman & Managing Director and the Secretary (P&NG), Government of India on 25th March, 2013.

The thrust while fixing MoU targets was more towards improving performance on critical aspects of the Company which include gas marketing, gas transmission, project implementation, Capital expenditure, New Business Areas, Quality Management and Safety among others. Significant thrust has been given on Corporate Social Responsibility, R&D, Sustainability, Human Resources and Corporate Governance.

Your Company has been consistently achieving an excellent MoU rating from the inception of MoU system i.e. from 1989-90 to 2012-13. For the year 2013-14, inspite of the economic slowdown and relatively unfavourable conditions compared to preceding years, GAIL is hopeful in achieving an excellent performance. The final ratings of your Company on MoU 2013-14 shall be declared in August 2014.

LAURELS

- CorCoorpore

- Greentech Gold Award for outstanding achievement in Corporate Social Responsibility (CSR) in Gold Category.

- Global HR Excellence Award for Talent Management 2014 and Best Employer 2013-14 award for Best HR Strategy in Line with Business, by World HRD Congress.

- Sustainability Performance Award by Indian Chamber of Commerce at 4th Corporate Governance and Sustainability Vision Summit & Awards 2014.

- HSE

- International Safety Award-2014 with merit from British Safety Council, UK to GPU, Vijaipur/GAIL Khera.

- International Safety Award-2014 from British Safety Council, UK to GAIL Vaghodia (4th time in a row)/Gandhar/NCR/Rajamundry

- Golden Peacock Environment Excellence Award-2013 to GAIL Gandhar from Institute of Directors, New Delhi.

- Golden Peacock Occupational Health and Safety Award-2013 to GAIL Lakwa from Institute of Directors, New Delhi.

- National Safety Council of India (NSCI) Suraksha Puraskar (Bronze Trophy)- 2012 to LPG Plant, Vijaipur.

- National Safety Council of India (NSCI) Suraksha Puraskar (Bronze Trophy)- 2012 to HVJ Compressor Station, Vijaipur.

- National Safety Council of India (NSCI) Prashansa Patra-2012 to GAIL, Vaghodia.

- Safety Innovation Award-2013 from Institution of Engineers (India) to GAIL Usar/Vaghodia/ Mumbai/Mansarampura/Abu Road.

- Gujarat State Safety Award-2012 (Shield) to GAIL, Vaghodia.

- Gujarat Safety Council "Appreciation Certificate" for Safety to RPNHQ, Vadodara region for the year of 2012.

RIGHT TO INFORMATION

In order to promote transparency and accountability, an appropriate mechanism has been set up across the Company in line with the Right to Information Act, 2005. Your Company has nominated ACPIOs/ CPIO/ Appellate Authorities at its units/offices across the country to provide information to citizens under the provisions of RTI Act.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

As per Section 212 of the Companies Act, 1956, documents in respect of subsidiary companies viz. Directors'' Report, Auditor''s Report, Balance Sheet and Profit & Loss Account are required to be attached to the Balance Sheet of the holding Company. The Ministry of Corporate Affairs vide circular dated 8th February, 2011, has granted exemption under section 212 of the Companies Act, 1956 to companies from attaching the aforesaid documents of subsidiary companies with the Annual Report, subject to compliance of the conditions mentioned in the said circular.

Your Company has five subsidiary companies as on 31st March, 2014. Your Board has accorded the necessary approval for not attaching Directors'' Report, Balance Sheet, Profit & Loss Account, Auditor''s Report and other statutory data/ documents of subsidiary companies viz. GAIL Gas Limited, Brahmaputra Cracker & Polymer Limited, GAIL Global (Singapore) Pte Limited, GAIL Global (USA) Inc. and GAIL Global (USA) LNG LLC with the Balance Sheet of your Company. All the conditions mentioned in the circular are being complied to by your Company. The Annual Report of the said subsidiary companies is available on your Company''s website www.gailonline.com. Besides, a physical copy will be made available to the shareholders on request in writing.

Consolidated Financial Statements, as per applicable Accounting Standards and statement containing brief financial details of your Company''s subsidiaries for the financial year ended 31st March, 2014 form part of the Annual Report. Annual accounts of subsidiaries and the related detailed information are open for inspection by any member at the registered office of the Company and of the respective subsidiary companies during working days.

MANAGEMENT DISCUSSION AND ANALYSIS

The detailed Management Discussion and Analysis forms a part of this report at Annexure- A.

CORPORATE GOVERNANCE

Your Company believes that good corporate governance is critical in establishing a positive organizational culture and it is evident by responsibility, accountability, consistency, fairness and transparency towards its stakeholders. Pursuant to clause 49 of the Listing Agreement and DPE guidelines on Corporate Governance, a report on Corporate Governance forms part of this Report at Annexure- B.

The statutory auditors of the Company have examined and certified your Company''s compliance with respect to conditions enumerated in clause 49 of the Listing Agreement and DPE guidelines on Corporate Governance. The certificate forms part of this Report at Annexure- C.

Secretarial Compliance Report confirming compliance by Practicing Company Secretary to the applicable provisions of the Companies Act, 1956, Listing Agreement, DPE guidelines on Corporate Governance, SEBI Guidelines, forms part of this Report at Annexure- D.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION The details of conservation of energy and technology absorption in accordance with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 forms a part of this report at Anexure-E.

PARTICULARS OF EMPLOYEES

As per provisions of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, every company is required to provide particular of employees in the Directors'' Report exceeding the stipulated remuneration limit(s).

However, as per notification dated 31st March, 2011 issued by the Ministry of Corporate Affairs, amending provisions of said rules, has exempted Government companies for not including such particular in the Directors'' Report. As your Company is a Government Company, such particulars have not been included as part of Directors'' Report. Any member desirous of obtaining such particulars may write to the Company and the same will be provided.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the balance sheet date.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, foreign exchange earnings were Rs. 210.01 crore and foreign currency outgo was Rs. 9,229.22 crore.

During the year under review, there was an outgo of Rs. 3.97 crore on foreign tours and training and Rs. 1.35 crore on advertising and publicity.

DIRECTORS

During the year, the following ceased to be Directors on the Board of your Company:

?Shri Arun Agarwal, Independent Director w.e.f. 23rd February, 2014 consequent upon completion of tenure for 3 years. ?Shri R.D. Goyal, Director (Projects) w.e.f. 28th February, 2014 upon attaining the age of superannuation.

Dr. Ashutosh Karnatak, Director (Projects) was appointed on the Board of your Company as Additional Director w.e.f. 1st March, 2014.

The tenure of Shri B.C. Tripathi as Chairman & Managing Director was extended for a period of five years beyond 31.07.2014 by Government of India

Further, Shri Prabhat Singh, Director (Marketing) and Shri P. K. Singh, part-time (Govt. Nominee) Director are retiring by rotation and being eligible have offered themselves for re-appointment.

The Board placed on record its deep appreciation for the valuable services rendered by outgoing Directors during their association with your Company.

CODE OF CONDUCT

Pursuant to the requirements of clause 49 of the Listing Agreement 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 ending 31st March, 2014.

DIRECTORS'' RESPONSIBILITY STATEMENT

Yours Directors confirmed that:

i) in the preparation of the annual accounts for the financial year ending 31st March, 2014, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

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, 1956, 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 ending 31st March, 2014 on a going concern basis;

v) have 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 were operating effectively.

AUDITORS

- StaSutouty ory Audito

The statutory auditor of your Company is appointed by Comptroller & Auditor General of India (CAG). M/s M. L Puri, Chartered Accountants, New Delhi and M/s G.S. Mathur & Co., were appointed as Joint Statutory Auditors of your Company for 2013-14.

The review of your Company''s Annual Accounts for the financial year ending 31st March, 2014 by CAG forms part of this report. Notes on accounts referred in the Auditors'' Report are self-explanatory and therefore, does not call for any further comment.

- CosCost udAudito

Your Company has appointed M/s Rohit & Associates, Vadodara; M/s R Nanabhoy & Co., Mumbai; M/s Chandra Wadhwa & Co., New Delhi; M/s M Goyal & Co., Jaipur; M/s Dhananjay V. Joshi & Associates, Pune; M/s DGM & Associates, Guwahati; M/s Mani & Co., Kolkata and M/s K.L. Jaisingh & Co., Noida as cost auditors for 2013-14.

The due date for filing cost audit reports for the financial year ended 31st March, 2013 was 27th September, 2013 and the same were filed to Registrar of Companies on 24th September, 2013.

ACKNOWLEDGMENT

Your Directors express their gratitude for help, guidance and support received by the Government of India, especially the Ministry of Petroleum and Natural Gas, various state governments, and regulatory and statutory authorities.

Your Directors acknowledge wise counsel received from Statutory Auditors and CAG and are grateful for their consistent support and cooperation.

Your Directors also wish to thank all the shareowners, business partners and members of GAIL family for reposing their faith, trust and confidence in your Company.

On behalf of your Directors, I would like to place on record our deep appreciation for the hard work, dedication, commitment and solidarity of your Company''s employees.

Your Directors and employees look forward to the future with confidence and stand committed to creating a bright future for all stakeholders.

For and on behalf of the Board

B.C. Tripathi Chairman & Managing Director

Place : New Delhi Dated : 04.08.2014

Mar 31, 2013

Dear Shareholders,

The behalf of the Board of Directors of your Company, I am delighted to present the 29th Annual Report of your Maharatna Company, along with Audited Financial Statements for the financial year 2012-13.

YEAR IN RETROSPECT

The year gone by shall always be remembered as a golden year of your Company. This year, your Company received Maharatna Status - another recognition by the Government of India of your Company''s potential and efforts to be a global energy major. It also acknowledges the significant role that your Company is playing in the nation''s social and economic development. Your Company is the youngest public sector undertaking to be recognized with this honor.

Your Company made a landmark achievement by commissioning 5 MMTPA LNG regasification facility at Dabhol. Further, 1,000 Km long Dabhol-Bengaluru pipeline project was also commissioned during the year.

Subsidiary of your Company in the USA has signed a Terminal Service Agreement (TSA) with Dominion Cove Point LNG LP in USA for a commitment of 2.3 MMTPA liquefaction capacity in the Cove Point LNG liquefaction terminal project in the US. The LNG from this terminal will be available for bringing to India as well as trading it in the international markets. With this milestone, your Company will have access to 5.8 MMTPA of LNG linked to Henry Hub prices.

Further, your Company has become the No 1 Indian Company in terms of long term LNG and natural gas import tie-ups.

FINANCIAL HIGHLIGHTS

Your Company has recorded sustained growth in all key financial parameters during the year 2012-13 and the important financial highlights are as under:

(Rs. in Crores)

Particulars 2012-13 2011-12

Turnover (Net of ED) 47,333 40,281

Other income 954 808

Cost of sales (excluding interest and depreciation and including extraordinary items) 41,054 34,842

Gross margin 7,233 6,247

Interest 195 116

Depreciation 981 791

Profit before tax 6,058 5,340

Provision for tax 2,036 1,686

Appropriations

Interim dividend 507 381

Proposed final dividend 710 723

Corporate dividend tax 203 179

Net transfer to/from bond redemption reserve (0.43) (24)

Transfer to CSR reserve 13.13 -

Transfer to General Reserve 402 365

Net surplus after Appropriations 2,187 2,030

DIVIDEND

Your Company has a consistent track-record of dividend payment. So far, your Company has disbursed dividend of over Rs. 10,500 Crores to the shareholders.

The Board of Directors of your Company had earlier approved payment of an interim dividend @ 40% on equity share of 10 each (Rs.4 per equity share) amounting to Rs.507 Crores, which was paid in February, 2013. Further, the Board has recommended payment of final dividend @ 56% on equity share of 10 each (Rs. 5.60 per equity share) for 2012-13.

With this, the total dividend payment for the fiscal year 2012-13 will be 96% on equity share of Rs. 10 each (Rs. 9.60/- per equity share) amounting to Rs. 1,217 Crores on its paid-up equity capital of Rs. 1,268.48 Crores, which is highest ever dividend paid by the Company. The total dividend payout including dividend tax accounts for 30.28% of profit after tax.

CONTRIBUTION TO EXCHEQUER

Your Company has contributed over Rs. 5,780 Crores in 2012-13 to the exchequer through dividend, duties, taxes and others, as compared to Rs. 5,560 Crores in 2011-12.

CREDIT RATING

Your Company has been reaffirmed the highest domestic credit rating of AAA from ICRA, CARE and CRISIL, which indicate the highest credit quality and rated instruments carry the lowest credit risk. The international rating agency, Moody''s International, Hong Kong, has also reaffirmed the corporate issuer rating of Baa2, which is one notch higher than sovereign rating. Further, Fitch Ratings has also assigned a long-term foreign currency issuer default rating of BBB- with a negative outlook, which is equal to sovereign rating.

BUSINESS STRATEGY

To pursue a high growth trajectory, your Company has developed strategy for the period from 2011- 2020. This strategy is currently under execution and the Company is closely monitoring progress on various strategic initiatives as well as keeping track of changes in external environment that have potential impact on its business. The top management of your Company has been playing a key role in driving it towards becoming an integrated hydrocarbon major with significant upstream, midstream and downstream interests by 2020.

In the upstream segment, your Company aspires to import substantial LNG through conventional route as well as through terminal capacity booking and also acquire equity in producing assets/liquefaction facilities to source equity-linked LNG. Having acquired the Maharatna status, your Company would be able to pursue M&A opportunities vigorously. Your Company has made remarkable progress in sourcing LNG by finalizing several short/ medium term and long-term deals with suppliers, like GDF (France), GNF (Spain), Sabine Pass Liquefaction LLC (US) and Gazprom (Russia). Further, a US subsidiary of your Company has booked LNG capacity in Dominion Cove Point''s LNG liquefaction terminal in US. Besides, the Company is in discussion with other potential suppliers to tie-up more volumes. In addition, your Company is pursuing multiple trading plays in LNG through its wholly owned subsidiary, GAIL Global Singapore Pte Limited .

To support higher LNG volumes, your Company plans to set up LNG terminals/floating storage and regasification units and also tie-up additional regasification capacities in existing and new terminals being set up by other companies. Your Company has successfully commissioned LNG terminal at Dabhol, as owner''s engineer and also tied-up additional regasification capacities at this LNG terminal with RGPPL. Further, your Company also tied-up additional regasification capacities at Dahej LNG terminal with Petronet LNG Limited (PLL).

Considering the growing natural gas demand and India''s energy security, your Company is actively participating in the transnational pipeline project, Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project. GSPA has been signed to import 38 MMSCMD gas into the country through this pipeline.

In the midstream segment, your Company aspires to retain in leadership position through continuous pan-India expansion of pipeline network. Your Company recently commissioned the Dhabol-Bengaluru pipeline to bring gas to Bengaluru, the IT hub of India, and other potential demand centres along this pipeline. With this, your Company now has a total network of over 10,700 km pipeline in the country. Various other pipeline projects at different phases of execution will take the network size to 15,000 km by 2015.

On the retail side, your Company is targeting additional 40-50 cities/Geographical Areas (GAs) through its subsidiary and JVs for City Gas Distribution (CGD) in the coming few years. Your Company''s wholly owned subsidiary, GAIL Gas Limited, is progressing on track with respect to the city gas projects in the cities of Kota, Dewas, Meerut and Sonepat.

In the downstream segment, your Company aspires to be among the top petrochemical players in the country by expanding existing capacities, setting up new plants, acquiring equity stakes in upcoming projects, along with product off-take rights for marketing. Your Company is currently doubling existing capacity at Pata and the project is expected to be completed on schedule. A greenfield petrochemical plant is also being set up in Assam through your Company''s subsidiary, Brahmaputra Cracker & Polymer Limited (BCPL). Another plant at Dahej is being set up through a JV, ONGC Petro-additions Limited (OPaL). By 2015, your Company is expected to market 1.7 MMTPA of polymers. For handling such a large product portfolio, your Company is strengthening its petrochemical trading capability as well as scaling up its distribution network.

As a responsible corporate citizen, your Company aims to reduce carbon footprint in a phased manner and contribute towards low carbon economy. For this, your Company has set targets for renewable energy projects and significant progress has been made so far. On the wind energy front, your Company plans to set up 500 MW wind power capacity in the next 3-4 years and against this, about 118 MW capacity has already been set up.

Further, your Company has also established a 5 MW solar project in Rajasthan and plans to set up additional capacities in the coming years.

In order to achieve all the strategic goals efficiently and in a time bound manner, your Company is giving significant thrust on strengthening and developing its human resource. Your Company''s training and development policies are being suitably aligned with strategic objectives to enable the organization to implement strategic plans by 2020.

BUSINESS SEGMENT PERFORMANCE

During the year under review, the segment wise business performance of your Company is as under:

- Natural Gas Marketing

Natural gas continues to constitute your Company''s core business. During 2012-13, gas sales clocked 81.44 MMSCMD, compared to 84.17 MMSCMD in the previous financial year. Major supplies of natural gas include fuel to power plants, feedstock for gas-based fertilizer plants and LPG extraction. Your Company holds around 60% market share in India''s gas marketing.

- Natural Gas Transmission

Your Company owns and operates a network of about 10,700 kms of natural gas high pressure trunk pipeline with a pan-India capacity of around 210 MMSCMD of natural gas. Average gas transmission during the year was 104.9 MMSCMD, compared to 117.62 MMSCMD in the previous financial year.

- LPG Transmission

Your Company is the only one in India, which owns and operates exclusive pipelines for LPG transmission for third-party usage. Your Company owns and operates two LPG Pipeline transmission systems with a total length of 2,038 kms. Out of this, 1,415 km of pipeline network transports LPG from western to northern parts of India (Jamnagar - Loni pipeline) and the balance 623 kms of pipeline network transports LPG in the country''s southern part (Vizag-Secunderabad pipeline). The LPG transmission system has a capacity to transport up to 3.8 MMTPA of LPG. In 2012-13, the LPG transmission throughput achieved was about 3.136 Million MT.

- Petrochemicals

During 2012-13, your Company has produced 437 Thousand MT of polymers and sold 427 Thousand MT of polymers.

- LPG and Other Liquid Hydrocarbon Production

Your Company has seven LPG plants in the country. In 2012-13, total liquid hydrocarbon production was about 1.376 Million MT, which mainly included 1.078 Million MT of LPG, 0.130 Million MT of Propane, 0.02 Million MT of Pentane and 0.148 Million MT of Naphtha.

- Exploration and Production (E&P)

The E&P portfolio of your Company is as follows:

India Overseas Total

Onshore blocks 10 - 10

Shallow water blocks 3 2 5

Deep water blocks 15 - 15

Total 28 2 30

Hydrocarbon discoveries are in place in seven E&P blocks (five domestic blocks and two overseas blocks). Crude oil production is in progress from one of the onland blocks in Cambay basin and during 2012-13, revenue of Rs. 78 Crore have been generated.

Development activities are in progress in blocks A-1 and A-3 at Myanmar offshore since November, 2009. Four development wells have been drilled in Myanmar''s Mya field. Drilling of additional development well in Myanmar''s Shwe field is in progress. Further, Engineering, Procurement, Construction, Installation and Commissioning (EPCIC) work is in progress for drilling and production platforms. Gas production is expected to start during 2013-14.

Field Development Plan for one oil discovery in the block CB-ONN- 2003/2 (Ankleshwar onland) has been approved. Declaration of commerciality has been submitted to the Government for approval in theTripura onland block (AA-ONN-2002/1).

Your Company is operating three onland blocks (in Rajasthan, Cambay and Cauvery onland block) and is the joint operator in one Cambay onland block. During 2012-13, two exploratory wells were drilled in the Rajasthan onland block (RJ-ONN-2004/1). Seismic data acquisition has been completed in the Cauvery onland block (CY-ONN-2005/1) and interpretation of the data is in progress. The Government has granted the petroleum exploration license for Cambay onland block (CB-ONN- 2010/11). Seismic data acquisition in this block is planned during 2013-14.

In addition to four E&P blocks that were awarded during 2011-12, your Company was awarded one more E&P block CB-ONN-2010/8 in Cambay onland basin (where BPRL is the operator) during 2012-13 under NELP-IX bidding round.

BUSINESS DEVELOPMENT

- Global Initiatives

During 2012-13, your Company executed a long-term LNG supply contract for 2.5 MMTPA from Russia with Gazprom Marketing and Trading Singapore Limited. Under the terms of the agreement, your Company is expected to receive 2.5 Million MT of LNG / year over 20 years, starting from 2018-19. Under the contract, LNG will be sustainably priced with an oil-indexed formula and delivered to India''s Dahej, Dabhol and Kochi terminals.

Further, your Company had also contracted 0.72 MMTPA (12 cargoes/year) LNG supply with Gas Natural Fenosa, Spain, for a three- year term starting 2013 and 0.36 MMTPA (6 cargoes per year) LNG supply with Gaz De France, France, for a two-year term starting 2013. These contracts were executed during this financial year to encounter the immediate concerns of domestic supply shortage. In addition, during this financial year, your Company imported spot cargoes equivalent to 0.30 MMTPA from time-to-time.

In April, 2013, a US subsidiary of your Company signed Terminal Service Agreement (TSA) with Dominion Cove Point LNG LP for booking 2.3 MMTPA liquefaction capacity over 20 years in the Cove Point LNG liquefaction terminal project in US. Your Company is exploring various options for sourcing and transportationofgasfor supplying gas to this LNG terminal.

Further, Your Company has signed a Memorandum of Understanding (MOU) with EDF Trading North America, LLC (EDFT) for cooperation in the areas of North American upstream equity gas investments, gas supply to export facilities and LNG supply optimization.

Your Company is pursuing Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline project for import of gas to India. Agreements with respect to Transit fee and Transportation tariff are likely to be concluded soon. Your Company is playing a lead role in discussions on the project

- Domestic initiatives

The domestic business initiatives of your Company are as follows:

- Naturalgas pipeline projects

During the financial year, your Company completed commissioning of various pipeline networks and auxiliary systems, having a length of about1,300 km, which include the following:

- 1,000 Km Dabhol -Bengaluru Pipeline Project

- 164 Km Ludhiana to Jalandhar and Saharanpur to Haridwar sections of Bawana Nangal Pipeline Spur Line Project

- Last mile consumer connectivity (74 km) extended to 34 numbers of consumers for supplying around 7.96 MMSCMD gas

- RLNG terminal at Dabhol commissioned as Owner''s Engineer

Apart from these, 41 Km Kochi-Koottanad-Bengaluru/Mangalore Phase-I Pipeline Project has been mechanically completed. However the commissioning of the same line would be done synchronizing with the PLL Kochi LNG Terminal and also the readiness of end consumers.

- LNG Regasification Terminals and Shipping

Your Company has successfully commissioned LNG terminal at Dhabol as owners engineers and also tied up additional re gasification capacity at this terminal with RGPPL. Your Company has underwritten the terminal capacity and will be the commercial operator of Dabhol terminal for 25 years. Dabhol Terminal will act as a gateway to meet the gas demand of consumers in Maharashtra, Goa and Karnataka.

Your Company also entered into an understanding with Petronet LNG Limited for reserving exclusive 2.5 MMTPA in the planned Dahej expansion LNG terminal in Gujarat to meet ever increasing demand along its existing pipeline networks.

Your Company is formulating a ''Shipping Strategy'' for shipping LNG from Sabine Pass and Dominion Cove Point LNG terminals in the US.

- Renewable Energy

Your Company had installed till date wind energy projects of 117.95 MW capacity. GAIL had started with a modest capacity of 4.5 MW wind energy in State of Gujarat in year 2009-10 for captive use. After the success of wind project, additional Wind Energy Generation of 14.7 MW was installed in the State of Gujarat for captive use in year 2011-12. Your Company graduated to commercial production after commissioning 98.75 MW of wind energy projects in the states of Tamil Nadu and Karnataka in year 2011-12.

In 2011-12, your Company entered into solar power generation by winning the bid to set up a 5 MW solar plant under Jawaharlal Nehru National Solar Mission. The Project was commissioned in February 2013 and is generating 30,000-35,000 KWh per day.

SUBSIDIARIES AND JOINT VENTURES

Your Company has formed subsidiaries and joint venture companies for CGD, petrochemicals, LNG, gas trading, power generation and shale gas. Your Company is one of the pioneers to introduce city gas projects in India for natural gas supplies to households, commercial and transport sectors through its subsidiary andjoint venture companies.

The details of subsidiary and joint venture companies are mentioned hereunder:

- Natural Gas, LNG and Power

- GAIL Global (Singapore) Pte Limited (wholly owned subsidiary)

GAIL Global (Singapore) Pte Limited, primarily started as an overseas investment arm of your Company and was operationalized for LNG trading in 2012. It has commenced its business operations and successfully delivered its first cargo at Dahej in November, 2012.The Company is also targeting third-party sales, ship chartering and risk management activities along with supplying LNG cargoes to India.

Total revenue of the Company for 2012-13 was USD 33 Million and Profit AfterTax was USD 0.92 Million.

- GAILGlobal (USA) Inc (wholly owned subsidiary)

GAIL Global (USA) Inc., a wholly owned subsidiary of your Company, was formed during 2011-12. The main aim behind forming this subsidiary was to acquire 20% working interest in an unincorporated joint venture with Carrizo Oil & Gas Inc. in the Eagle Ford shale acreage in the state of Texas. The subsidiary is operational at Houston and going forward, would explore other business opportunities in North America.

Total revenues of the Company for the year ended 31st December, 2012 were USD 21 Million and Profit AfterTax was USD 3.97 Million.

- GAILGlobal (USA) LNG LLC (wholly owned subsidiary)

GAIL Global (USA) LNG LLC, a wholly owned subsidiary of GAIL Global (USA) Inc., was formed in the state of Delware, USA on 28th March, 2013 for entering into contractual agreements with Dominion Cove Point LNG, LP for booking of LNG Tolling capacity of 2.3 MMTPA in its Dominion Cove Point LNG terminal located at Lusby in the state of Maryland and for booking capacity in associated Dominion Cove Point Pipeline.

GAIL Global (USA) LNG LLC has adopted calendar year as its fiscal year, as such the first accounts of the Company will be prepared for the year ended 31st December, 2013.

- GAILChina Gas Global Energy Holdings Limited

The joint venture company, GAIL China Gas Global Energy Holdings Limited, was formed with an objective to pursue gas sector opportunities, mainly in China. Potential gas sector projects are being identified for implementation by the company. Your Company has 50% equity interest in it, along with China Gas Holdings Limited as equal partner.

- Petronet LNG Limited (PLL)

PLL was formed to set up LNG import and re- gasification facilities. It currently owns and operates LNG re-gasification terminal of 10 MMTPA capacity located at Dahej, Gujarat. PLL has a long-term LNG supply contract with Ras Gas, Qatar, to import 7.5 MMTPA of LNG. This Joint Venture of your Company is planning to expand capacity to 15 MMTPA at Dahej, for which pre-project activities are in progress. Further, PLL is also setting up an LNG re-gasification terminal at Kochi, Kerala, with a capacity of 5 MMTPA. This facility is scheduled to be commissioned in 2013. PLL has entered into long-term LNG supply contract with Exxon Mobil''s Gorgon Project to supply 1.44 MMTPA of LNG for its Kochi terminal.

Your Company has 12.5% equity stake in PLL, along with BPCL, Oil and Natural Gas Corporation Limited (ONGC) and Indian Oil Corporation Limited (IOCL) as equal partners.

Total revenue of the Company for 2012-13 was Rs. 31,554 Crore and Profit AfterTax was Rs. 1,149 Crore.

- Ratnagiri Gas and Power Pvt. Limited (RGPPL)

RGPPL was formed in July, 2005 as joint venture for taking over and operating erstwhile Dabhol Power Project assets consisting of 1967.08 MW gas based combined cycle Power Block and 5 MMTPA LNG Block. The assets were transferred to RGPPL in October, 2005.

The Power Block has been revived and under commercial operation since 19th May, 2009. The Power Block operated at a Power Load Factor (PLF) of 31.21% during 2012-13.

The Gas delivery to your Company''s pipeline network through High Pressure delivery system was started in January, 2013. Subsequent to which necessary systems required for commercial operation has been commissioned with effect from 22nd May 2013. Since the power generation is envisaged using the domestic gas entirely, integrated LNG terminal shall be utilized for tolling purposes. RGPPL has already entered into a long term agreement with your Company for commercial utilization of LNG terminal and commenced tolling operations.

As on 31st March, 2013, the paid up capital of the Company was Rs. 2916 Crore and out of this, your Company''s share of contribution was Rs. 974 Crore. RGPPL has met its full debt servicing obligations upto 2012-13 and paid maiden dividend @5% in 2011-12.

Your Company has 32.86% equity stake in RGPPL alongwith NTPC holding 32.86%, MSEB Holding Company Limited 17.41% and Indian Financial institutions 16.87%.

The Company''s total revenue for 2012-13 was Rs. 2,290 Crore and suffered a loss of Rs.375 Crore.

- City Gas Distribution (CGD)

- GAIL Gas Limited (wholly owned subsidiary)

GAIL Gas was incorporated with an implementation of the country''s CGD projects. GAIL Gas today operates over 300 Km of steel pipeline network and approximately 500 Km of MDPE Pipeline in the cities of Sonipat, Meerut, Dewas, Kota, Agra & Ferozabad.

GAIL Gas has put up a total CNG Compression Capacity of around 2.50 Lac Kg/day through 10 Mother/Online CNG Stations & 7 Daughter Booster Stations at Sonipat, Meerut, Dewas, Kota, Vijaipur, Panvel, Firozabad and Vadodara.

Your Company''s subsidiary has taken up investment for setting up the infrastructure along the national highways for building green corridors. To encourage the conversion of vehicles on CNG and make CNG refuelling available at highways, GAIL Gas has commissioned two CNG stations at Panvel & Vijaipur; two more stations at Dibiyapur & Kovvur are scheduled to be commissioned in 2013-14.

GAIL Gas is supplying natural gas to 422 industrial units and 11 commercial customers. GAI L Ga s ha s a lso commenced gas supplies to around 4,400 domestic customers progressively in the cities of Sonipat, Meerut, Dewas and Kota.

GAIL Gas is implementing the CGD Project in Taj Trapezium Zone (TTZ) including Ferozabad, Fatehpur-Sikri, Bharatpur, Govardhan & Vrindavan, with a total project cost of Rs. 146 Crores.

GAIL Gas has implemented uniform price mechanism in Taj Trapezium Zone (TTZ) area w.e.f. 16.7.2012. The marketing activities of GAIL Gas are progressing well and GAIL Gas has tied-up over 580 industrial and 45 commercial consumers. GAIL Gas has also signed over 200 GSCs with the customers at Mandi Gobindgarh and Khanna.

GAIL Gas Joint venture foray at the state level has already commenced with the incorporation of the JV with Kerala State Industrial Development Corporation (KSIDC) in Kerala as Kerala GAIL Gas Ltd. a n d with And hra Pra d esh G a s Infrastructure Corporation Ltd. (APGIC) in Andhra Pradesh as Andhra Pradesh Gas Distribution Corporation Ltd. (APGDC) for pursuing Gas Distribution opportunities in respective States .Furthermore GAIL Gas has joined hands with Vadodara Mahanagar Sewa Sadan (VMSS) for expansion of ongoing City Gas Distribution in the city of Vadodara. Similarly GAIL Gas is in advanced stage for formal tie-ups with Rajasthan State Petroleum Corporation Ltd. (RSPCL) and Karnataka State Industrial & Infrastructure Development Corporation Ltd. (KSIIDC) in the states of Rajasthan & Karnataka for distribution of natural gas to small/ medium industrial units in various clusters along the pipeline corridor and dispensing of CNG to vehicles.

- Aavantika Gas Limited (AGL)

MAGL was incorporated to implement CGD projects in Madhya Pradesh. As on 31st March, 2013 was operating 14 CNG stations including 7 Daughter stations, 5 Online stations and 2 Mother stations.

Further, during 2012-13, AGL supplied PNG to over 1380 domestic, 24 industrial and 6 commercial consumers in their authorized geographical region. AGL is also catering to fuel requirement of over 11,000 CNG vehicles operating in the region. Your Company has 22.5% stake in AGL, along with HPCL as equal partner.

Total revenue of the Company for 2012-13 was Rs. 119 Crore and Profit After Tax was Rs. 0.21 Crore.

- Bhagyanagar Gas Limited (BGL)

BGL was incorporated to implement CGD projects in Andhra Pradesh. As on 31st March, 2013, BGL was operating 29 CNG stations including 24 Daughter stations, 2 Online stations and 3 Mother stations. Further, project work in respect of three CGD projects, namely Hyderabad, Vijayawada and Kakinada, are in progress.

During 2012-13, BGL supplied PNG to over 1700 domestic, 15 commercial and 1 industrial consumer in its authorized geographical region. BGL is also catering to fuel requirement of around 20,000 CNG vehicles operating in the region. Your Company has 22.5% stake in the Company, along with HPCL as equal partner.

Total revenue of the Company for 2012-13 was Rs. 84 Crore and Profit After Tax was Rs. 3 Crore.

- Central U.P. Gas Limited (CUGL)

CUGL was incorporated to implement CGD projects in Uttar Pradesh. As on 31st March, 2013, CUGL was CUGL operating 12 CNG stations including 2 mother stations and 10 online stations.

During 2012-13, CUGL supplied PNG to around 3000 domestic, 30 industrial and 40 commercial customers in its authorized geographical regions. BGL is also catering to fuel requirement of around 35,000 CNG vehicles operating in the region. Your Company has 25% stake in the joint venture, along with BPCL as equal partner.

Total revenues of the Company for 2012-13 was Rs. 148.02 Crore and Profit After Tax was Rs. 20.98 Crore.

- GreenGas Limited (GGL)

GGL was incorporated to implement CGD projects in U.P As on 31st March, 2013, GGL was operating 11 CNG stations including 6 Daughter stations, 2 Online stations and 3 Mother stations. The Ministry of Petroleum and Natural Gas (MoPNG) has authorized GGL for CGD in Lucknow and Agra.

During 2012-13, GGL supplied PNG to around 1600 domestic, 3 industrial and 2 commercial customers in its authorized geographical regions. GGL is also catering to fuel requirement of around 25,000 CNG vehicles operating in the region. Your Company has 22.5% stake in the joint venture, along with IOCL as equal partner.

Total revenue of the company for 2012-13 was Rs. 126 Crore and Profit After Tax was Rs. 21 Crore.

- Indraprastha Gas Limited (IGL)

IGL was incorporated to implement CGD projects in Delhi''s NCT and cities in adjoining National Capital Region (NCR). As on 31st March, 2013, IGL was operating 324 CNG stations including 149 mother stations, 124 online stations and 51 daughter stations.

During 2012-13, IGL supplied PNG to around 3.8 Lac domestic, 400 industrial and 950 commercial customers in its authorized geographical regions. IGL is also catering to fuel requirement of around 6.5 Lac CNG vehicles operating in the region, which includes the entire public transport of the national capital and also the world''s largest bus fleet on CNG. Your Company has 22.5% stake in the joint venture, along with BPCL as an equal partner.

Total Revenue and Profit After Tax (PAT) of the Company for 2012-13 are Rs. 3,380 Crore and Rs. 354 Crore respectively.

- Mahanagar Gas Limited (MGL)

MGL was incorporated to implement CGD projects in Mumbai and adjoining MAHANAGAR areas. As on 31st March, GAS 2013, MGL was operating 17 CNG stations including 18 mother stations, 129 online stations and 13 daughter stations.

During 2012-13, MGL supplied PNG to around 6 Lac domestic, 40 industrial and 1900 commercial customers in its authorized geographical regions. MGL is also catering to fuel requirement of around 3 Lac CNG vehicles operating in the region. Accepting the Central Government authorization, PNGRB has granted authorization and exclusivity for the existing areas of Mumbai, Thane, Navi Mumbai and Mira-Bhayander and expansion areas of Kalyan, Dombivali, Ambernath, Badlapur, Ulhasnagar, Bhiwandi, Taloja, Kharghar and Panvel. Your Company has 49.75% stake in the joint venture, along with British Gas as equal partner.

Total revenues of the Company for 2012-13 was Rs. 1514 Crores and Profit After Tax was Rs. 299 Crore.

- Maharashtra Natural Gas Limited (MNGL)

MNGL was formed for implementation of CGD projects in and around Pune. mngl MNGL has received authorization from MoPNG for CGD in Pune, including Pimpri, Chinchwad, Talegaon,Hinjewadi and Chakan areas. As on 31st March, 2013, MNGL was operating 17 CNG stations including 3 mother stations, 3 online stations and 11 daughter stations.

During 2012-13, MNGL supplied PNG to around 6000 domestic, 50 industrial and 20 commercial customers in its authorized geographical regions. MNGL is also catering to fuel requirement of around 45,000 CNG vehicles operating in the region. Your Company has 22.5% stake in the joint venture, along with BPCL as equal partner.

Total revenue of the Company for 2012-13 was Rs. 182 Crore and Profit After Tax was Rs. 35 Crore.

- Tripura Natural Gas Company Limited (TNGCL)

OTNGCL was incorporated to implement CGD projects in Agartala. As on 31st March, 2013, TNGCL was -jsssKKiat. operating 3 CNG stations including 2 mother stations and 1 daughter station.

During 2012-13, MNGL supplied PNG to around 11,000 domestic, 40 industrial and 200 commercial customers in its authorized geographical regions. MNGL is also catering to fuel requirement of around 4500 CNG vehicles operating in the region. Your Company has 29% stake in the joint venture.

Total revenue of the Company for 2012-13 was Rs. 26 Crore and Profit After Tax was Rs. 5 Crore.

- Petrochemicals

- Brahmaputra Cracker and Polymer Limited (BCPL) (Subsidiary)

BCPL is setting up a 2,80,000 TPA polymer plant and project execution is in progress. The total revised project cost, as approved by the Cabinet Committee for Economic Affairs (CCEA) in November 2011, is 8,920 Crores. The Company is now in final phase of project execution and has achieved an overall physical progress of 91% and financial progress of 73% till the end of the financial year. The commissioning of the project is set to take place in December, 2013.

Your Company has 70% equity share in BCPL with Oil India Limited (OIL), Numaligarh Refinery Limited (NRL) and Government of Assam each having 10% equity share.

- ONGC Petro-additions Limited (OPaL)

OPaL is implementing a Gujarat. Your Company is a co-promoter of the project, with 15.50% equity stake in OPaL, while Oil and Natural Gas Corporation Limited (ONGC) and Gujarat State Petroleum Corporation Limited (GSPC) are the other promoters.

IT DEVELOPMENTS

Your Company is an IT-savvy organization and is continuously adopting the latest and state-of- the-art IT solutions, keeping pace with the fast changing industry. This helps in continuous efficiency and productivity improvement of employees and also enables right information to the right person by the use of latest IT security solutions.

Your Company has migrated business-critical applications to a centralized private cloud platform, along with Disaster Recovery (DR) IT infrastructure, in line with the industry''s latest technological advancements. System''s manageability and availability have been enhanced substantially with this future-ready and DR-enabled cloud infrastructure.

Your Company has completed implementing an electronic Document Management System (DMS), in line with the industry best practices. This enabled your Company to digitize important documents and records across locations and also provided electronic workflow and secure authorization-based access to information.

Your Company is in the forefront of leveraging IT to bring in systemic improvements. This effort of your Company has been duly recognized at various forums. Your Company has been recently awarded with SAP ACE Award for Best Run Award for innovative use of SAP. During the year, your Company has also been certified as Customer Centre for Expertise (CCOE) by SAP.

Your Company has implemented Joint Venture Accounting (JVA) system for Exploration & Production (E&P) business on SAP platform. This has facilitated in capturing end-to-end JVA business processes and also enables partner accounting from a single system. With the implementation of JVA, your Company has enhanced efficiency, transparency and regulatory compliance in E&P activities.

Your Company has also initiated implementation of centralized enterprise-wide Geographic Information Systems (GIS)-based Pipeline Integrity Management System for its cross-country pipeline network, using industry standard assessment models to fulfil the national/international statutory codes. This will ensure seamless and consistent data flow from engineering to operations and will also result in continuous updation of O&M data and aging of the pipelines.

HEALTH, SAFETY AND ENVIRONMENT MANAGEMENT

Your Company is a responsible corporate citizen and Health, Safety and Environment (HSE) excellence has been extensively promoted as a corporate culture within the organization. The safety and health of employees and external stakeholders are embedded in your Company''s core organizational values. Your Company''s HSE policy, inter-alia, aims to ensure safety of public, employees, plant and equipment. It also ensures compliance with all statutory rules and regulations, imparting training to its employees, carrying out safety audits of its facilities and promoting eco-friendly activities.

HSE sub-committee of Board of Directors, which is the apex body in your Company for all matters related to HSE, met three times during the year to review your Company''s performance and emergency preparedness in this regard.

- Corporate HSE Policy

Your Company is committed to promote globally comparable levels of HSE management system in the areas of its business of exploration and production of hydrocarbons, transmission and distribution of natural gas, production of LHC, transmission of LPG, petrochemicals, power generation etc., with focus on improving environmental harmony through sustainable development.

- Safety Performance

Your Company has always strived to maintain highest standards of safety. This is reflected in the HSE index, which evaluates the organization''s safety performance on various elements of HSE covering all business activities. During the year, your Company achieved the HSE index of 98.89% as against the Excellent MOU target of 98.5% signed with the Ministry.

- Safety Training

Your Company, in its constant efforts to keep employees fully aware of the HSE aspects, provides regular training to employees, contract workers, tanker drivers and others through internal as well as external resources.

Your Company organized a two-day HSE workshop for all business heads, fire and safety heads and HR representatives from sites. Theme of this year''s workshop was taken as Disaster Management, in view of the ever rising risks to people and installations. The theme also helped to create awareness amongst the employees regarding methods and measures to tackle any disaster. Leading experts in the country from National Disaster Management Authority (NDMA) and Oil Industry Safety Directorate (OISD) closely interacted with employees during the workshop.

Your Company laid specific emphasis on construction safety related trainings during the current year, as mega expansion projects are underway at various locations.

- Safety Audits

To ensure compliance to statutory rules and regulations, implementation of safe work practices and continual improvement in the Safety Management System, your Company installations are being regularly audited through External Safety Auditors and experienced in-house auditors. During 2012- 13, twenty three External Safety Audits and seven safety audits by experienced in-house auditors were undertaken.

Your Company also complied with the recent Emergency Response and Disaster Management Plan (ERDMP) guidelines of PNGRB and submitted ERDMP documents to PNGRB in September, 2012.

- Occupational Health

Your Company has a Corporate Occupational Health Committee supported by six local level occupational health committees, which meet every quarter for continuous monitoring and improvement of occupational health of employees. During 2012-13, all employees at the work centres were medically examined.

SUSTAINABLE DEVELOPMENT INITIATIVES

Your Company released its second sustainability report - "Shaping the Future" - for 2011-12. This stakeholder-centric report is a communication of your Company''s efforts to make a positive impact upon economic growth, ecological balance and social progress and help shape the future of millions of people towards achieving shared objectives. It is in line with the latest global standards of GRI, which is the de- facto international benchmark and externally assured with application level A .

To create a mechanism towards governing sustainability, your Company has defined a structure that spans across various critical functions to effectively manage organizational complexities. A Sustainable Development Committee (SDC) chaired by an Independent Director has been broad-based with inclusion of all functional Directors except Chairman & Managing Director as its members. Further, your Company has constituted a Sustainable Development Steering Committee (SDSC), headed by the Director (Business Development) to provide impetus and direction to achieve sustainability goals, meet targets and monitor on-ground implementation of SD projects. In addition, your Company has also formed multi-disciplinary sustainability committees at all sites.

In 2012, your Company drafted Sustainability Development Aspirations 2020 through intensive consultations with internal and external stakeholders concerned with on- ground implementation of projects to identify priority areas of sustainability development. Through Sustainability Development Aspirations 2020, your Company has set clear targets with respect to management of Green House Gas (GHG) emissions, water consumption, energy efficiency and training / awareness on sustainability. Apart from identifying priority areas, your Company has identified specific SD projects and the crucial ones among them have been included as a part of MoU with the MoPNG, which further signifies your Company''s commitment towards a sustainable future.

Your Company organized its first UN-ESCAP Training in partnership with Global Compact Network India, after becoming a signatory to the United Nations Global Compact (UNGC) last year.

Further, SEBI vide circular dated 13.08.2012 mandated the inclusion of Business Responsibility Reports (BRR) as part of the Annual Reports for top 100 listed companies based on Market Capitalization of the BSE and the NSE. The BRR provides a disclosure framework based on NVGs which maps the Company''s performance on the 9 Principles and Core Elements. In compliance to the said circular, the BRR is contained in a separate section in the Annual Report.

TOWARDS RESPONSIBLE BUSINESS CONDUCT

Your Company believes that CSR plays a major role in developing a country. Therefore, it has made Corporate Social Responsibility (CSR) as an integral part of its ethos and culture. Your Company has a dedicated team operating within the framework of a well-structured CSR policy, which mandates 2% contribution of the Company''s Profit after Tax to CSR activities.

Following the Project-based Approach as put- forth by the DPE and as detailed in your Company''s CSR policy, your Company has implemented CSR programmes primarily in and around the rural areas adjoining major work centres/installations of your Company. These programmes are taken up under the seven thrust areas identified by your Company - education /literacy enhancement, skill development/ empowerment, community development, drinking water/ sanitation, environment protection/ horticulture, infrastructure and healthcare/ medical facility. Major initiatives undertaken by your Company under these thrust areas are detailed in Management Discussion & Analysis.

HUMAN RESOURCE MANAGEMENT

Your Company has been laying strong emphasis on attracting and acquiring best talent and also on efficient deployment of manpower on right jobs as per business requirements of the Company. Highly engaged and dynamic workforce has led to continuous rise in value added per employee in last 5 years. Value added per employee gives an account of efforts of Company''s employees to make the best and most productive use of the resources available to them.

- Training

Your Company has been witnessing rapid growth vertically & horizontally. Your company is expanding its operations in domestic market as well as its presence abroad. Your Company is also implementing various new projects to strengthen its presence across the entire gas value chain. With new technological developments and phenomenal expansion taking place in the hydrocarbon sector, need of the industry is changing from merely acquiring the latest state of the art technologies and equipment to engaging qualified personnel suitably equipped with knowledge, skills, attitude and a practical exposure to the highly specialized jobs. Further, in line with Strategy 2020, capability building will be required in the existing thrust areas & new strategic business areas. Therefore, it is the need of the hour to invest in the training & development of human resource in more systematic & structured manner. ISO 9001:2008 certified GAIL Training Institutes (GTIs) at Noida & Jaipur have been consistently working towards development of Human Capital of the Organization.

GTI, Noida & Jaipur have maintained the track record of excellent MOU performance in all the parameters in the MoU signed with Mo PNG . The Key achievements in training are as under:

- Percentage actualization of training plan has been more than 100% for the financial year ending 31st March, 2013. Total 208 training programs were organized during the period under review. Total 17,701 mandays of training has been organized by GTI, Noida & Jaipur in the above period. On an average 4.46 days of training has been organized per employee.

- As per plan, Senior Leadership & Business Knowledge programs have been organized for developing critical mass of leaders through a system of career planning & development.

- Multi-skilling / Skill Upgradation programs have been organized of non- executives.

- Mentorship program has been e s t ab li she d fo r the n ew j o ini n g Executives & all such executive trainees have been assigned the respective mentors.

- Yoga classes are being organized at GTI & at various sites to reduce stress. Total 13 programs/sessions were organized during 2012-13.

- Training sessions on Health Safety & Environment are being organized at sites. Total 59 sessions were organized as against the target of 40 sessions.

- 4 training programs on Awareness of succession planning have been organized.

- Total 2000 man hours of training have been imparted on Sustainable development to create awareness on sustainable development.

- With the objective of Knowledge Management within the organization, Technical Knowledge Sharing Seminar and sessions are organized every year

- Various companywide business quizzes were organized to keep the employees updated with the latest developments in the business areas of your company.

GAIL Training Institute (GTI) has been awarded as Emerging HRD thinkers Award by Indian Society for Training & Development (ISTD).

In its pursuit of offering training programs to external organizations and to convert itself into a revenue generating centre, GTI has successfully organized training programs for participants from other organizations like RIL, BPCL, RGPPL, IOCL, BCPL, IGL, MNGL, Adani Gas Limited, Siti energy, Sabarmati Gas Limited etc. Further, in collaboration with American Society of Mechanical Engineers (ASME), U.S.A., GTI is successfully running certificate courses in ASME B31.8, B 31.8S and B 31Q for various external organizations.

- Leadership Development Programme

Your Company realizes that it is critical to continually to develop and enhance the capability and competence of its senior level executives in order to prepare them for leadership positions. As an effort towards the same, Senior Management Development Centre (SMDC) exercise has been undertaken as part of the Leadership Development Program. SMDC has been conducted for senior executives in Chief Manager and above grades and as of now 525 senior executives have been covered under this exercise.

In order to fill in the developmental gaps of such executives identified through SMDC exercise, a comprehensive Individual Development Plan (IDP) has been drawn up for all the participants of SMDC exercise. The IDP consists of customized training programmes at premier business schools, e-learning courses and distribution of books.

- Vigilance

The Vigilance Department of your Company is now certified under ISO-9001:2008 in recognition of its contribution and continuous focus on improving the Company''s systems and procedures. Your Company has introduced a range of measures to bring clarity and transparency in procurement and work contracts which includes webhosting of tenders on GAIL as well as across Government websites, e-tendering and reverse auction for specified threshold values.

In compliance of the guidelines issued by the Central Vigilance Commission, the Vigilance Awareness Week 2012 was observed by your Company at the Corporate Headquarters and at all other regional installations. The Vigilance Commissioner graced the occasion as the Chief Guest on the inaugural day and administered the Vigilance Pledge to employees of major GAIL establishments connected through video conferencing. On this occasion, a magazine Jagrook, containing CVC circulars, articles on anti-corruption and case studies was also released by the Corporate Vigilance Department. During the Vigilance Awareness Week, Customer Interactive Meet and Vendor Interaction Meet were organized at Indore and GTI, Noida, respectively. Customers from various segments, such as natural gas, liquid hydrocarbon and petrochemicals, as well as vendors providing project- related services/supplies to your Company participated in these meets.

- Representation of Priority Section

Your Company has been complying with the Presidential Directives and other instructions/guidelines issued from time to time pertaining to Policies and Procedures of Government of India in regard to reservation, relaxations, concessions etc. for Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs) and Persons with Disabilities (PWDs) in Direct Recruitment.

Details with regard to Group-wise total number of employees and the representation of Scheduled Castes, Scheduled Tribes, and Other Backward Classes amongst them in your Company as on 31stMarch, 2013 have been given in table below:

EMPLOYEES ON Group ROLL SC ST OBC

A 2,853 437 171 485

B 568 125 74 86

C 477 82 15 144

D 56 17 5 14

TOTAL 3,954 661 265 729

A total of 99 new employees joined your Company during the 2012-13. Total Manpower of the Company as on 31st March, 2013 stood at 3961 (including Whole-time Directors & CVO) with 16.68% of its employees belonging to SC category, 6.7% to ST category, 18.40% to OBC category, 7.24% to Minorities and 2.09% to PWDs category. Your Company''s workforce comprised of 234 women employees as on 31st March, 2013 .

- Official Language

Your Company is continuously making vigorous efforts for the propagation and successful implementation of the Official Language Policy of the Union.The Official Language Implementation Committees at corporate as well as work centre level, held their quarterly meetings regularly to monitor and review the progress made in achieving the targets fixed in the Annual Programme.

In an endeavour to familiarize the Company''s new entrants with Official Language Act and various Official Language rules, training to ETs and GETs is being imparted at induction level. To inculcate the knowledge of Official Language among the newly promoted employees from S7 grade and new joinees at E0, E1 and E2 grades, a special two-days training programme have been designed and implemented at corporate level, apart from other regular workshops at all the work centres.

Your Company observed 2012-13 as Sahitya Varsh. Competitions viz. short story, poem and article in Hindi were conducted during this period. With a view to create greater awareness and consciousness among employees, Hindi Fortnight was celebrated from 14th to 28th September, 2012, across the Company. During the fortnight innovative and interesting competitions, cultural activities, Kavi Sammelan, Mushaira, seminars on Hindi activities etc. were conducted. Employees participated with great enthusiasm. To involve families of GAIL employees, various competitions and other cultural activities were also conducted for them. First working day of every month is being observed as Hindi Diwas across your Company.

In order to cultivate the habit of reading Hindi books among employees, a book in Hindi was distributed to all employees.

An innovative inter-PSU competition was also conducted by your Company for all Delhi-based member PSUs of Town Official Language Implementation Committee (TOLIC).

Your Company was awarded for best implementation of OL policy among TOLIC member PSUs during 2012-13 by Secretary, Official Language, Ministry of Home Affairs, Government of India.

Bilingual software with Unicode fonts were made pan-organizationally available. To impart working knowledge of Hindi as well as computer training to employees in bilingual software, a comprehensive and time-bound programme was prepared and implemented during the year.

Training in translation is being provided to all Nodal Officers on a quarterly basis through Central Translation Bureau, Ministry of

Home Affairs, Government of India.

To provide a larger platform to discuss the problems and difficulties to implement Official Language, annual conference was organized on 22nd March, 2013, wherein senior officials from corporate office and work centres participated and shared their valuable thoughts.

- Women Empowerment

To encourage and recognize the role of women employees in your Company''s success story, GAIL Women Employees Award Scheme has been instituted in your Company since 2009. Since then, awards to Women employees based on their performance in their functional area are conferred every year on International Women''s Day.

INNOVATION, RESEARCH AND DEVELOPMENT

Your Company recognizes that individual innovation, creativity and initiative are crucial determining factors and are required to be channelized to achieve organizational excellence. Your Company has an Innovation Council that solicits screens and implements the suggestions from employees. An appropriate reward is given to all ingenious suggestions and the best suggestion is awarded the CMD trophy.

At times, the ideas need to be developed into useful process/ product through R&D efforts. Your Company has an R&D portal on its intranet where detailed information on its R&D projects is disseminated. The employees can provide suggestions and feedback on the R&D projects to carry out any improvement or mid- course correction. Your Company is also soliciting innovative ideas from its stakeholders at large through its R&D portal. Recognizing the need importance to channelize the R&D efforts, your Company has developed and put in place the R&D Policy and Manual. It is expected that this policy document would pave the way for integration of the R&D efforts.

Your Company recognizes the importance of R&D to remain at the forefront of technology, your Company has set a goal to spend at least 1% of previous year''s PAT on R&D every year. It has identified the thrust areas of R&D in line with its business areas and follows a focused R&D strategy to take up projects in such areas. Many basic / fundamental / applied research projects have been taken up through various reputed engineering institutes / laboratories this year in the major thrust areas (viz. Natural Gas transportation & Storage, Fuel Cell & Nano- composites, CO2 and unconventional energy utilization and so on). It is expected that the successful outcome of these projects would provide goodvalue to your Companyin duecourse.

Your Company is setting up a unique, first-of-its kind pilot project for extraction of LandFill Gas (LFG) and its conversion to CNG after purification. The project is being implemented at the Ghazipur landfill site in Delhi. The Phase-1 of the project (landfill closure, capture & flaring of landfill gas) is already completed in the designated area. This innovative project will demonstrate the possibility of LFG extraction from an un-scientifically managed landfill site and help generate a clean fuel. It will also help to combat global warming by capturing methane gas that was getting released into the atmosphere. The success of this pilot project would open up the possibility of replicating its success country-wide.

Your Company has also taken up various technology development projects towards improvement in energy efficiency, process optimization and others at various sites. Further, your Company is actively exploring technologies that can be used to exploit various non- conventional energy sources, like shale gas, gas hydrates, Underground Coal Gasification (UCG) and others to develop alternate sources for augmenting the country''s energy supplies.

TOTAL QUALITY MANAGEMENT

Your Company continues to focus on continual and sustainable improvement in the process, systems and functional areas. Customer satisfaction is the top agenda of your Company and is being continuously monitored through regular interactions. Major achievements of your Company in TQM are as under:-

- Customer satisfaction index achieved during 2012-13 by your Company is 90%.

- 112 quality circle projects have been undertaken in process and system areas in your Company, which lead towards continual improvements as well as tangible gains.

ACCOLADES AND RECOGNITIONS

Your Company has consistently been ranked excellent by the Department of Public Enterprise (DPE), Government of India, ever since the introduction of the Memorandum of Understanding (MoU) based performance review system by the DPE. Your Company conferred with Maharatna Status by DPE- youngest Maharatna PSU among total 7 Maharatnas. Your Company has be en recognised for its performance in various areas. Some of them are mentioned below:

- Corporate Awards

- SCOPE Excellence Award(Institutional Category) for 2010-11

- Ranked 1st among Gas utilities in Asia in the Platts Global Ranking of Energy Companies in 2012

- Petrofed Award 2012 (for performance during 2011-12) for:

- Oil and Gas Pipeline Transportation Company of the Year

- Project Management (Rs. 500 to Rs.2000 Crore)- Company of the Year

- Environment Sustainability- Company of the Year

- HSE Awards

- International Safety Award for outstanding achievement in safety from British Safety Council, the United kingdom, for Gas Processing Unit and natural gas compressor station, Vaghodia; Gas Processing Unit, Gandhar; regional natural gas pipeline network, National Capital Region, Delhi.

- Sarvashrestha Suraksha Puraskar for Gas Processing Unit and for natural gas compressor station, Vijaipur from National Safety Council, MP chapter and National Safety Council, Mumbai, respectively, for 2010.

- GAIL Vaghodia bagged Gujarat State Safety Award from Gujarat Safety Council Vadodara

- Golden Peacock Occupational Health & Safety Award - 2012 for GAIL, Khera, from Institute of Directors, New Delhi

- Golden Peacock Environment Management Award-2012 from Institute of Directors, New Delhi for GAIL,Vaghodia

- Safety Innovation Award from Institution of Engineers, New Delhi for Khera Compressor station and Regional Natural Gas Pipeline Network, National Capital Region, Delhi

RIGHT TO INFORMATION

In order to promote transparency and accountability, an appropriate mechanism has been set up across your Company in line with the Right to Information Act, 2005. Your Company has nominated ACPIOs/ CPIO/ Appellate Authorities at its units/offices across the country to provide information to citizens under the provisions of RTI Act.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

As per Section 212 of the Companies Act, 1956, documents in respect of subsidiary companies viz. Directors'' Report, Auditor''s Report, Balance Sheet and Profit & Loss account are required to be attached to the Balance sheet of the holding Company. Ministry of Corporate Affairs vide circular dated 8th February, 2011 has granted exemption under section 212 of the Companies Act, 1956 to companies from attaching the aforesaid documents of subsidiary companies with the Annual Report, subject to compliance of the conditions mentioned in said circular.

Your Company has 5 (five) subsidiary companies as on 31st March, 2013. Your Board has accorded necessary approval for not attaching Directors'' Report, Balance sheet, Profit & Loss Account, Auditors'' Report and other statutory data/ documents of subsidiary companies viz. GAIL Gas Limited, Brahmaputra Cracker & Polymer Limited, GAIL Global (Singapore) Pte Limited, GAIL Global (USA) Inc. and GAIL Global (USA) LNG LLC (incorporated on 28th March, 2013) with the Balance Sheet of your Company. All the conditions mentioned in the circular are being complied by your Company. Annual Report of said subsidiary companies are available on your Company''s website i.e. www.gailonline.com and physical copy will be made available to shareholder on request in writing.

Consolidated Financial Statements as per applicable Accounting Standards and statement containing brief financial details of your Company''s subsidiaries for the financial year ended 31st March, 2013 is forming part of the Annual Report. Annual accounts of subsidiaries and the related detailed information are open for inspection by any member at the registered office of the Company and of the respective subsidiary companies during working days.

MANAGEMENT DISCUSSION AND ANALYSIS

The detailed Management Discussion and Analysis forms a part of this report at Annexure- A.

CORPORATE GOVERNANCE

Your Company believes that good corporate governance is critical in establishing a positive organizational culture and it is evident by responsibility, accountability, consistency, fairness and transparency towards its stakeholders. Pursuant to clause 49 of the Listing Agreement with the Stock Exchanges and DPE guidelines on Corporate Governance, a report on Corporate Governance forms part of this Report at Annexure- B.

The statutory auditors of the Company have examined and certified your Company''s compliance with respect to conditions enumerated in clause 49 of the Listing Agreement and DPE guidelines on Corporate Governance. The certificate forms part of this Report at Annexure- C.

Secretarial Compliance Report confirming compliance by Practicing Company Secretary to the applicable provisions of Companies Act 1956, Listing Agreement, Guidelines on Corporate Governance for Central Public Sector Enterprises, 2010, forms part of this Report at Annexure- D.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION

Details of conservation of energy and technology absorption in accordance with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 forms a part of this report at Annexure- E.

PARTICULARS OF PERSONNEL UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956

As per provisions of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, every company is required to provide particular of employees in the Directors'' Report exceeding the stipulated remuneration limit(s).

However, as per notification dated 31.03.2011 issued by Ministry of Corporate Affairs, amending provisions of said Rules, has exempted Government companies for not including such particular in the Directors'' Report. As your Company is a Government Company, such particulars have not been included as part of Directors'' Report. Any member desirous of obtaining such particulars may write to the Company and same will be provided.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the balance sheet date.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, foreign exchange earnings were Rs. 32.02 Crores. Expenditure in foreign currency was Rs. 1,708.92 Crores

During the year under review, your Company has incurred an expenditure of Rs. 8.55 Crores on foreign tours and training, Rs. 0.37 Crores on entertainment and Rs. 33.76 Crores on advertising and publicity.

DIRECTORS

Shri P.K. Singh was appointed as Part- time (Government Nominee) Director, Shri M. Ravindran was appointed as Director (HR) and Shri Rajive Kumar was appointed as Part-time (Government Nominee) Director w.e.f. 10th April, 2013, 1st June, 2013 and 26th June, 2013 respectively.

Shri S.L. Raina, Director (HR), Shri Sudhir Bhargava, Part-time (Govt. Nominee) Director, Dr. Neeraj Mittal, Part-time (Govt. Nominee) Director and Shri R.P. Singh, Part-time non- official (Independent) Director were Director(s) upto 31st May, 2013, 8th May, 2013, 10th April, 2013, and 9th August, 2012 respectively. Shri Mahesh Shah, Shri R.M. Sethi and Dr. Vinayshil Gautam were Part-time non-official (Independent) Directors upto 10.08.2012. The Board placed on record its deep appreciation for the valuable services rendered by outgoing Directors during their association with your Company.

CODE OF CONDUCT

Pursuant to the requirements of clause 49 of Listing Agreement, the Board Members and Senior Management Personnel, have affirmed compliance with the Code of Conduct for the financial year ending 31st March, 2013.

DIRECTORS'' RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT, 1956

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, in relation to Directors'' Responsibility Statement, it is confirmed that:

i) In the preparation of the annual accounts for the financial year ending 31st March, 2013, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

ii) The Directors have 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) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) The Directors have prepared the annual accounts for the financial year ending 31st March, 2013 on a going concern basis.

AUDITORS

- Statutory Auditors

The statutory auditor of your Company is appointed by Comptroller & Auditor General of India (CAG). M/s Rasool Singhal & Co., Chartered Accountants, Aligarh and M/s M.L. Puri, Chartered Accountants, New Delhi, were appointed as Joint Statutory Auditors of your Company for 2012-13.

The review of your Company''s Annual Accounts for the financial year ending 31st March, 2013 by CAG forms part of this report. Notes on accounts referred in the Auditors'' Report are self-explanatory and, therefore, do not call for any further comment.

- Cost Auditors

Your Company has appointed M/s Rohit & Associates, Vadodara; M/s R Nanabhoy & Co., Mumbai; M/s Chandra Wadhwa & Co., New Delhi; M/s M Goyal & Co., Jaipur; M/s Dhananjay V. Joshi & Associates, Pune; M/s DGM & Associates, Guwahati; M/s Mani & Co., Kolkata and M/s K. L. Jaisingh & Co., Noida as cost auditors for 2012-13 for the purpose of cost audit on 30th May, 2012.

The due date for filing cost audit reports for the financial year ended 31st March, 2012 was 31st January, 2013 and the same were filed to Registrar of Companies on 20th December, 2012.

ACKNOWLEDGMENT

Your Directors express their gratitude for constant support and cooperation showed by the Government of India, especially the Ministry of Petroleum and Natural Gas, various state governments, and regulatory and statutory authorities.

Your Directors acknowledge wise counsel received from Statutory Auditors and CAG and are grateful for their consistent support and assistance.

Your Directors also wish to thank all the stakeholders for reposing their faith, trust and confidence in your Company.

On behalf of your Directors, I would like to place on record our deep and sincere appreciation for the hard work, dedication and unstinted efforts of your Company''s employees for driving GAIL towards a glorious future.

For and on behalf of the Board

B.C. Tripathi

Chairman & Managing Director

Place: New Delhi

Dated: 14.08.2013

Mar 31, 2012

The behalf of the Board of Directors of your Company, I am delighted to present the 28th Annual Report of your "Navratna" Company along with Audited Financial Statements for the Financial Year 2011-12.

FINANCIAL HIGHLIGHTS

Your Company has recorded sustained growth in all key financial parameters during the year 2011-12 and the important financial high lights are as under:-

(Rs. in crore)

Particulars 2011-12 2010-11

Income from operations (Net of ED) 40,281 32,459

Other Income 549 519

Cost of Sales (excluding Interest and 34,583 27,005 Depreciation and including extra ordinary items)

Gross Margin 6,247 5,973 Interest 116 83

Depreciation 791 650

Profit Before Tax 5,340 5,240

Provision for Tax 1,686 1,679

Profit after Tax 3,654 3,561

Appropriations

Interim Dividend 381 254

Proposed Final Dividend 723 698

Corporate Dividend Tax 179 155

Net Transfer to/(From) Bond (24) 8

Redemption Reserve

Transfer to General Reserve 365 356

Net surplus after Appropriations 2,030 2,090

DIVIDEND

Your Company has a consistent track-record of dividend payment. So far, your Company has disbursed dividend of Rs. 9,403 crore to the shareholders.

The Board of Directors of your Company had earlier approved the payment of an interim dividend @30% on equity share of Rs. 10 each (Rs. 3/-per equity share) amounting to Rs. 381 crore which was paid in the month of January, 2012. Further, the Board has recommended the payment of Final dividend @57% on equity share of Rs. 10 each (Rs. 5.70/- per equity share) for the year 2011-12.

With this, the total dividend payment for the fiscal 2011-12 will be at 87% on equity share of Rs. 10 each (Rs. 8.70/- per equity share) amounting to Rs. 1,104 crore on its paid-up equity capital of Rs. 1,268.48 crore. The total dividend payout including tax accounts for 35% of profit after tax.

CONTRIBUTION TO EXCHEQUER

Your Company has contributed over Rs. 5,560 crores to the exchequer by way of duties, taxes, etc as compared to Rs.4,440crores in 2010-11.

CREDIT RATING

Your Company has been reaffirmed the highest domestic credit rating of AAA1 from ICRA, CARE and CRISIL which indicate the highest credit quality and rated instruments carry the lowest credit risk. The international rating agency, Moody's International, Hong Kong, has also reaffirmed the Corporate issuer rating of 'Baa2', which is one notch higher than sovereign rating and revised the local currency issuer rating to'Baa2,from 'A31 to your Company in line with the publication of Moody's Rating Implementation Guidelines titled 'How Sovereign Credit Quality May Affect Other Ratings" Further, Fitch Ratings has also assigned a long term Foreign Currency Issuer default rating of 'BBB-1 with negative outlook which is equal to sovereign rating.

BUSINESS STRATEGY

Natural gas industry is poised to grow in future, which calls for an effective strategy to reap maximum out of such potential. To pave the way for future, your Company has developed strategy for the period 2011-2020 and the same has been approved by the Board of Directors. Your Company aspires to become an integrated hydrocarbon major with significant upstream, midstream and downstream interests by 2020. To realize this ambition, your Company has identified several key growth areas and initiatives, in all segments of hydrocarbon value chain.

In the Upstream segment, your Company plans for Merger & Acquisition (M&A) to acquire equity stakes in gas producing assets/ liquefaction facilities to source equity linked LNG at favorable terms for Indian market. In addition, convention along-term LNG sourcing will continue to remain the focus area for your Company, particularly in wake of constrained domestic supplies. In order to support increased LNG imports, your Company plans to set up new LNG terminal(s) and tie-up additional re-gasification capacities in existing and upcoming LNG terminals.

Moving on to the Midstream segment, which has been the core area of your Company, several gas pipelines are being laid to maintain leadership in gas transmission. While ongoing pipeline projects such as Dhabol-Bengaluru, Kochi-Mangalore/ Bengaluru pipeline, etc. which are at different phases of execution, new projects like Jagdhishpur-Haldia pipeline and Surat-Pradip pipeline will further add to the strength of your Company's core business of transmission. Your Company plans to give additional focus on strong market development efforts and strengthen marketing capability to remain the leading marketer of gas. Further, considering growing demand of natural gas and India's energy security, your Company will continue to actively participate in transnational pipeline projects like TAPI. Your Company has also started international trading desk at Singapore and plans to establish it fully in the coming years. The trading desk shall explore multiple trading plays in LNG and petrochemicals in India and abroad to accelerate marketing revenues.

Moving further on towards the natural gas retail segment, large Indian cities will be the focus for city gas business expansion. Your Company is strengthening its retail presence by setting up new city gas projects in Kota, Dewas, Meerut and Sonepat through its wholly-owned subsidiary, GAIL Gas Limited, which is also participating in PNGRB's upcoming bidding rounds for other city gas projects. GAIL Gas is targeting additional40-50 cities/Geographical Areas (GAs) in the coming few years.

In the Downstream segment, your Company aims to be amongst the top two petrochemicals marketers in the country and for this, your Company plans to set up new capacities and further increase marketing volumes through trading. Your Company is currently doubling existing capacity at Pata besides setting up two green field crackers, one in Assam through its subsidiary, Brahmaputra Cracker and Polymer Limited (BCPL) and another at Dahej through its Joint Venture Company, ONGC Petro-additions Limited (OPaL). By the year 2014-15, your Company Will have 1.7 MMTPA marketing volumes of polymers. For handling such a large product portfolio, your Company plans to strengthen its petrochemical trading capability as well as scale up its distribution network.

Your Company plans to give significant thrust on Diversification in areas like gas based power and renewable energy. Gas based power projects at various locations are being explored and various business models are under consideration for setting up such projects. On renewable energy front, your Company plans to set up 500 MW wind power capacity in the next 3-4 years. Further, your Company is targeting to set up over 300 MW of solar based power generation capacity in a phased manner.

The above initiatives call for strengthening of human capital in tune with the Vision and Goals set-out. Therefore, your Company plans to grow capabilities in priority areas Ã global sourcing and acquisitions, market development and trading, joint venture/subsidiary management, capital productivity, E&P/shale, power generation, risk management, regulatory management, international operations and soon.

BUSINESS SEGMENT ANALYSIS SEGMENTAL REVIEW

During the year under review, the segment wise business performance of your Company is as under:

- Natural Gas Marketing

Natural gas continues to constitute the core business of your Company. During the year 2011-12, Gas sales clocked 84.17 MMSCMD compared to 83.23 MMSCMD in the previous financial year. Major supplies of Natural gas include fuel to power plants, feedstock for gas based fertilizer plants and LPG extraction. Your Company holds around 50% market share in gas marketing in India.

- Natural Gas Transmission

Your Company owns and operates a network of about 9,500 km of natural gas high pressure trunk pipeline with a capacity of approx. 172 MMSCMD of natural gas across the country. Gas transmission during the year was 117.62 MMSCMD compared to 117.91 MMSCMD in the previous financial year. Your Company's share of gas transmission business is around 74% in the country.

- LPG Transmission

Your Company is the only Company in India which owns and operates exclusive pipelines for LPG transmission for third party usage. Your Company owns and operates two LPG Pipeline transmission systems with a total length of2,038 km. Out of this, 1,415 km of pipeline network transports LPG from Western to Northern part of India (Jamnagar-Loni Pipeline) and the balance 623 km of pipeline network transports LPG in the Southern part of the country (Vizag-Secunderabad Pipeline). The LPG transmission system has a capacity to transport upto 3.8 MMTPA of LPG. In the year 2011-12, the LPG transmission throughput achieved was about 3.36 million MT.

- Petrochemicals

During FY2011-12, your Company has produced 441 TMT of polymers and sold 448TMTof polymers.

- LPG & Other Liquid Hydrocarbon Production

Your Company has 7 LPG plants in the country. In the year 2011-12, total Liquid Hydrocarbon production was about 1.44 million MT which mainly included 1.124 million MT of LPG, 0.146 million MT of Propane and 0.146 million MT of SBP solvent and Naphtha.

- Exploration and Production (E&P)

The E&P portfolio of your Company is as follows:

India Overseas Total

Onshore Blocks 9 - 9

Shallow Water Blocks 7 - 7

Deep Water Blocks 13 2 15

Total 29 2 31

Hydrocarbon discoveries are in place in 7 E&P blocks (5 domestic blocks and 2 overseas blocks).

Crude oil production is in progress from one of the on land blocks in Cambay basin and during the year 2011-12, revenue of Rs. 81.19 Crore was generated.

Development activities are in progress in the blocks A-1 and A-3, Myanmar Offshore and production of gas is expected to start from 2013.

Declaration of commerciality has been approved in the Mahanadi Offshore block (MN-OSN-2000/2). In other blocks with hydrocarbon discovery (Cambay Onland-Ankleshwar, Cauvery Offshore and Tripura On land),appraisal activities are under progress.

During the year, one CBM block (TR-CBM-2005/III- Tatapani Ramkola, Chattisgarh) was relinquished as the gas content within the coalseams Was found to be non-commercial.

Your Company has operatorship in 3 domestic E&P blocks. During the year 2011-12, 3 exploratory wells were drilled in Rajasthan onland block (RJ- ONN-2004/1) where your Company is the Operator. Seismic data acquisition is in progress in Cauvery onland block (CY-ONN-2005/1), which is the second block where your Company is the Operator. One Cambay onland block (CB-ONN-2010/11) has been awarded, where your Company is the Operator, during NELP-IXbidding round.

BUSINESS DEVELOPMENT

- Overseas Business Initiatives

Your Company is actively pursuing overseas business opportunities in the natural gas sector with an objective to contribute to the energy security of the country. The rationale for going overseas is to secure opportunities for from overseas tie-ups in newer areas such as shale gas in addition to establish foothold in resource rich countries and to strengthen and complement your Company's core business.

Your Company is scouting for upstream acquisition opportunities overseas in order to supplement gas sourcing initiatives on spot and long term basis. Upstream assets acquisition would provide sourcing opportunities besides additional revenue stream and potential upsides through new discoveries. The geographies under focus are North America, Africa, South-East Asia and Australia.

Overseas Presence

Egypt Singapore

-Equity stake in two gas retail - 100% subsidiary, GAIL Global Companies (Singapore) Pte Ltd. (GGSPL) opened office in Singapore for

-GAIL Representative Office in - trading LNG, petrochemicals etc. Cairo

China USA

-Strategic partner in China Gas - Equity in Eagle Ford Shale Acreage through wholly-owned

-50:50JV with China Gas Subsidiary- GAIL Global (USA) Inc.

Myanmar

-Partner in A1, A3 E&P Blocks

-Participation in Myanmar China Pipeline through South-East Asia Gas Pipeline Company Limited

Your Company has established a wholly-owned subsidiary, GAIL Global (USA) Inc. in USA during 2011. This subsidiary acquired 20% stake in Eagle Ford Shale acreage of Carrizo Oil & Gas Inc., which has significant liquid content and is currently one of the attractive unconventional resource plays in North America. The subsidiary is operational with placement of manpower from your Company. Going forward this subsidiary would explore other business opportunities in North America.

Further, your Company has signed a 20-year Sales and Purchase Agreement (SPA) with Sabine Pass Liquefaction LLC, a unit of Cheniere Energy Partners, for supply of 3.5 million tonnes/year of LNG. Your Company is the first Asian company to execute the dealindexed to Henry Hub gas price instead of the crude oilindices. Supplies are expected to commence from 2016-17.

During FY 2011-12, your Company's wholly-owned subsidiary, GAIL Global(Singapore) Pte. Ltd. (GGSPL) opened its office in Singapore with an objective to undertake trading activities in LNG and petrochemical commodities.

Under the aegis of Government of India, your Company is actively pursuing import of gas through the proposed trans-national pipeline originating in Turkmenistan and passing through Afghanistan and Pakistan to India (TAPI pipeline). Your Company has executed the Gas Sales Purchase Agreement (GSPA) with Turkmengaz for 38 MMSCMD for 30 year supply in May, 2012 at Ashgabat. Consequently, other agreements and arrangements are likely to be concluded soon. Your Company is playing lead role in the discussions on the project.

During FY 2011-12, your Company divested its entire stake in Shell CNG Egypt (SCNGE) as it did not meet the strategic objectives.

- Domestic Business initiatives

The domestic business initiatives of your Company are as follows:

- Natural Gas Pipeline Projects

During the financial year, your Company completed commissioning of various pipeline networks and auxiliary systems having a length of about 1,337 km which include the following:

1. Commissioning of Compressors at Jhabua & Vijaipur

2. Dahej-Vijaipur Pipeline

3. Karanpur-Moradabad-Kashipur Pipeline and Connectivity to Siti Energy & Sarvanthi Energy

4. Agra-Ferozabad Expansion

5. Connectivity to Meerut

Further, Bawana - NangalPipeline was charged with gas and the pipeline network Dahej - Vijaipur - Dadri- Bawana - Nangal/ Bhatinda was dedicated to the nation by Hon'ble Prime Minister of India during in auguralceremony of Asia Gas Partnership Summit held on 23rd March,2012.

Due to increase in gas availability and commissioning of trunk lines, last mile consumer connectivity has been provided to 32 number of consumers in FY2011-12 for supplying approx 6.35 MMSCMD gas.

During 2011-12, your Company was awarded authorization by PNGRB through a competitive bidding process to lay 1,500 km natural gas pipeline from Surat in Gujarat to Paradip in Orissa, connecting west to east coast.

- Petrochemicals

In order to have a robust presence in the Petrochemical sector, your Company is doubling the capacity of its existing Petrochemical manufacturing facilities at Pata to produce 9,00,000TPAof polymers.

Your Company is setting upa green-field 2,80,000TPA Petrochemical Complex at Lepetkata in District Dibrugarh, Assam, through its Subsidiary ,Brahmaputra Cracker and Polymer Limited (BCPL).

Further, your Company is also a co-promoter in ONGC Petro- additions Limited (OPaL) which is implementing a green field petrochemical complex of 1.4 MMTPA polymer capacity (dual feed cracker) in the Special Economic Zone(SEZ) at Dahej, Gujarat.

- Power Sector

Recognizing the potential reforms undertaken in the power sector and increased emphasis laid on capacity expansion in the power sector in the XIIth 5year plan, your Company is exploring opportunities in gas based power plants.

- LNG Rega sification Terminals

The increasing pace of demand for natural gas far outstrips its availability from indigenous sources. LNG imports will have to keep pace to meet the growing demand and bridge the gap in supply. Currently LNG import terminals are located on the Western coast of the country. Keeping in view the demand potential for natural gas applications in the Eastern belt of the country and for feeding proposed pipelines in the region, your Company is exploring setting- up of a LNG import facility along the East Coast of India.

- Renewable Energy

At the beginning of the year, your Company had an installed capacity of 4.5 MW wind energy at Sinoi, District Bhuj, Gujarat. The power generated was being wheeled for captive use by its installation in Samakhiali, Kandla and Gandhar in the state of Gujarat. During this year, it has set up another 14.7 MW wind energy projects in Gujarat for captive usage and 98.75 MW wind energy projects in the states of TamilNadu and Karnataka for commercial sale of power.

Further, in the year 2011-12, your Company entered into solar power generation by winning the bid to setup a 5 MW Solar plant in Rajasthan under Jawaharlal Nehru National Solar Mission (JNNSM).

IT ADVANCEMENTS

For better serving the customer requirements and to bring about Operational efficiency, your Company has always been at the forefront Of adopting newer IT solutions.

Your Company has taken several new IT initiatives to enhance productivity. SAP based Gas Management System (GMS), Governance, Risk & Compliance (GRC) and Reverse Auction modules have been implemented to enhance transparency, efficiency and customer satisfaction. Reverse Auction facilitates your Company to generate greater competition and reduce procurement cost.

Your Company has implemented an online bidding portal through which existing customers can bid for supply of Spot RLNG gas. The system dynamically captures the market spot prices against the bids and has also reduced the overall cycle time of selling the spot gas. Further, your Company has implemented Tender Monitoring System to enhance & bring better transparency in the procurement process.

Your Company has also consolidated its IT infrastructure to a central virtualized environment along with its Disaster Recovery (DR) setup in line with the latest technological advancements in the industry. This will provide better manageability of the infrastructure.

Your Company has implemented electronic Document Management System and is rolling out the same all across company. All the important information and records of your Company shall be digitized.

IT Security is a major thrust area of IT strategy and planning in the organization. Post SAP upgrade, an external expert agency is auditing entire IT systems and processes to strengthen Information Security, identify the risk areas and mitigate them with latest Industry standard security solutions.

The Business Information Systems department of your Company is certified with ISO 9001:2008 standard.

SUBSIDIARIES &JOINT VENTURES

Your Company has formed Subsidiaries and Joint Venture companies for Power Generation, Gas Trading, Shale Gas, LNG, City Gas Distribution and Petrochemicals. Your Company is one of the pioneers to introduce City Gas Projects in India for natural gas supplies to households, commercial and transport sector through its subsidiaries and joint venture companies.

The details of Subsidiary and Joint Venture Companies are mentioned hereunder:

NATURAL GAS, LNG & POWER

- GAIL Global (Singapore) Pte Limited (Wholly owned Subsidiary)

GAIL Global(Singapore) Pte Ltd. is as an overseas investment arm of the Company. Your Company is looking for LNG trading and Petrochemical trading through this wholly owned subsidiary company in Singapore.

Total revenue of the Company for FY 2011-12 was USD 2,290,763 and Profit After Tax was USD 2,033,075.

- GAIL Global (USA) Inc (Wholly owned Subsidiary)

GAIL Global(USA) Inc., a wholly owned subsidiary of your Company was formed during the year 2011-12 to acquire 20% working interest in an unincorporated joint venture with Carrizo Oil & Gas Inc. in the Eagle Ford shale acreage in the state of Tex as. The subsidiary is operational At Houston and going forward, would explore other business opportunities in North America.

Total revenue of the Company for the year ended 31st December, 2011 was USD 2.36 Mn and ProfitAfterTaxwasUSD0.26Mn.

- GAIL China Gas Global Energy Holdings Limited

The joint venture company was formed with an objective to pursue gas sector opportunities, mainly in China. Potential gas sector projects are being identified for implementation by the company. Your Company has 50% equity interest in the company along with China Gas Holdings Limited as equal partner.

- Petronet LNG Limited (PLL)

PLL, formed for setting up of LNG import and re-gasification facilities, currently owns and operates LNG re-gasification terminal of 10 MMTPA capacity located at Dahej, Gujarat. PLL has a long term LNG supply contract with Ras Gas, Qatar for import of 7.5 MMTPA of LNG. Further, PLL is constructing a LNG re- gasification terminal at Kochi, Kerala with a capacity of 5 MMTPA and is scheduled for commissioning in fourth quarter of 2012. PLL has entered into long term LNG supply contract with Exxon Mobil for the supply of 1.5 MMTPA of LNG for the Kochi terminal, PLL. Your Company has 12.5% equity stake in PLL along with BPCL,ONGC and lOCL as equal partners.

Total revenue of the Company for FY 2011-12 was Rs. 22,780.74 Cr. and Profit After Tax was Rs. 1057.54 Cr.

- Ratnagiri Gas and Power Private Limited (RGPPL)

The capacity of the Ratnagiri Gas & Power Station is 1,967.08 MW which is the largest gas based power generation facility in the country and during the year 2011-12, the Company produced 11619 MUs (Gross) of power. RGPPL is in the process of commissioning LNG Terminal of 5 MMTPA capacity. Your Company has 31.52% stake in the Company along with NTPC as equal partner. RGPPL is a joint venture company between your Company, NTPC and other shareholders are MSEB Holding Co. Ltd. and Indian Financial Institutions.

Total revenue of the Company for FY 2011-12 was Rs. 5223.83 Cr and Profit After Tax was Rs. 1089.24 Cr.

CITYGAS DISTRIBUTION

- GAIL Gas Limited (Wholly owned subsidiary)

GAIL Gas was incorporated with an objective of focused implementation of City Gas Distribution (CGD) projects in the Country. GAIL Gas has already laid 215.15 Km steel pipeline and 370.05 Km MDPE pipeline in these cities. GAIL Gas is operating 1 CNG station each at Dewas, Kota, Meerut and Sonepat. It has also established CNG stations at Panvel, Vijaipur and three stations at Vadodara. It is supplying natural gas to 67 industrial units in Kota, Dewas, Sonepat and Meerut. It has also commenced gas supplies to 1,891 domestic customers progressively. To encourage the conversion of vehicles on CNG and make CNG refueling available at highways, GAIL Gas has commissioned 2 CNG stations and 3 stations are scheduled to be commissioned in 2012-13. Effective from 16.11.2011, your Company transferred the entire distribution network and business in the Agra-Firozabad area to GAIL Gas Ltd. Accordingly, GAIL Gas is now handling 347 customers in the region for daily sales amounting to more than 1.3 MMSCMD.

Total revenue of the Company for FY 2011-12 was Rs. 289.01 Cr. and Profit After Tax was Rs. 8.34 Cr.

- Aavantika Gas Limited (AGL)

AGL was incorporated with an objective of implementation of City Gas Distribution (CGD) projects in the state of Madhya Pradesh. As on date, AGL is present in three cities viz. Indore, Ujjain and Gwalior. AGL now operates 11 CNG stations-7 daughter stations (5 at Indore and 2 at Ujjain), 3 online stations (2 at Indore and 1 at Gwalior) and I Mother station at Indore.

AGL also started supplying PNG to Domestic customers from December 2011. With this, AGL is now present in all the 4 business segments viz. CNG for Transportation sector and PNG for industrial, Commercial and Domestic sectors. Your Company has 22.5% stake in the Company along with HPCL as equal partner.

Total revenue of the Company for FY 2011-12 was Rs. 50.47 Cr and loss was Rs. 0.19 Cr.

- Bhagyanagar Gas Limited (BGL)

BGL was incorporated with an objective of implementation of City Gas Distribution (CGD) Prpkect of the state of Andhra Pradesh. BGL is currently operating 13 CNG stations in Hyderabad, 8 in Vijayawada, 2 at Kakinada and 1 at Rajahmundry. Further, Project work in respect of three CGD Projects, namely Hyderabad, Vijayawada and Kakinada are in progress. During FY 2011-12, it completed 2,872 PNG registrations in Hyderabad, 150 registrations in Vijayawada and 1,014 registrations in Kakinada. Your Company has 22.5% stake in the Company along with HPCL as equal partner.

Total revenue of the Company for FY 2011-12 was Rs. 42.02 Cr and loss was Rs. 0.88Cr.

- Central U.P. Gas Limited (CUGL)

CUGL was incorporated with an objective of implementation of City Gas Distribution (CGD) projects in the state of Uttar Pradesh. CUGL is presently operating one Mother CNG station each at Kanpur & Bareilly and 10 more online stations in Kanpur. Presently, CUGL is supplying CNG to 20,000 CNG vehicles in Kanpur and 5,000 CNG vehicles in Bareilly. As on date, CUGL is supplying PNG to 24 industrial, 26 Commercial and 8 customers using PNG for power generation through gas generator. Presently, CUGL is supplying 0.175 MMSCMD of gas in form of CNG and PNG in both the cities. Your company has 25% stake in the Company along with BPCL as equal partner.

Total revenue of the Company for FY 2011-12 was Rs. 115.02 Cr. and Profit After Tax was Rs. 21.11 Cr.

- Green Gas Limited (GGL)

GGL was incorporated with an objective of implementation of City Gas Distribution (CGD) GGL projects in the state of U.P. GGL is currently operating 7 CNG stations in Lucknow and 4 CNG stations in Agra. GGL is supplying CNG to almost 18,000 vehicles. GGL has also commenced the domestic gas supply in both Lucknow and Agra city and industrial gas supply in Lucknow. MoPNG has authorized GGL for CGD in Lucknow & Agra. Your Company has 22.5% stake in the Company along with IOCL As equal partner.

Total revenue of the Company for FY 2011-12 was Rs. 101.48 Cr. and Profit After Tax was Rs. 23.17 Cr

- Indraprastha Gas Limited (IGL)

IGL was incorporated with an objective of implementation of City Gas Distribution (CGD) projects in Delhi and adjoining cities of Noida, Greater Noida, Ghaziabad, Gurgaon and Faridabad. IGL is supplying piped gas to over 3.32 lac domestic consumers, 223 industrial and 639 commercial consumers in Delhi, Noida, Greater Noida and Ghaziabad. A total of 308 CNG stations have been set up by IGL in the region out of which 245 CNG stations are currently in operation. IGL is catering to CNG requirements of over 5 lac vehicles operating in the region which also includes the entire public transport of national capital and also world's largest bus fleet on CNG. Your Company has 22.5% stake in the Company along with BPCL as equal partner.

Total revenue of the Company for FY 2011-12 was Rs. 2,525.34 Cr. and Profit After Tax was Rs. 306.43 Cr.

- Mahanagar Gas Limited (MGL)

MGL was incorporated with an objective of implementation of City Gas Distribution (CGD) projects in the city of Mumbai and adjoining areas. MGL has presently set up 151 CNG stations catering to about 2.4 lac vehicles spread over Mumbai, Thane, Mira- Bhayander and Navi-Mumbai area besides supplying PNG to about 5.6 lac domestic customers and about 1,540 small industrial & commercial consumers. Accepting the Central Government authorization, the PNGRB has granted authorization and exclusivity for the existing areas of Mumbai, Thane, Navi Mumbai and Mira-Bhayander and expansion areas of Kalyan, Dombivali, Ambernath, Badlapur, Ulhasnagar, Bhiwandi, Taloja, Kharghar and Panvel. Your Company has 49.75% stake in the Company along with British Gas as Equal partner.

Total revenue of the Company for FY 2011-12 was Rs.1,328 Cr. and Profit After Tax was Rs. 308.58 Cr.

- Maharashtra Natural Gas Limited (MNGL)

MNGL was formed for implementation of City Gas Projects in and around Pune MNGL city.

MNGL has received authorization from MoPNG for CGD in Pune including Pimpri, Chinchwad,Talegaon, Hinjewadi & Chakan areas. At the close of the FY 2011-12, MNGL is supplying CNG to more than 27.000 vehicles which is comprising of 21.000 autos, 370 buses, 4,800 private cars and 950 taxis which are plying in Pune and Pimpri - Chinchwad. CNG is being sold through 17 CNG stations spread across the city. MNGL is also supplying PNG (Piped Natural Gas) to around 2,400 domestic, 20 industrial and 5 Commercial customers. Your Company has 22.5% stake in the Company along with BPCL as equal partner. Government of Maharashtra (provisional), IDFC (PE), IL&FS and Axis Bank are other Equity partners in MNGL.

Total revenue of the Company for FY 2011-12 was Rs. 76.89 Cr. and Profit After Tax was Rs. 12.23 Cr.

Tripura Natural Gas Company Limited (TNGCL)

TNGCL was incorporated with an objective of implementation of City Gas Distribution (CGD) Projects in Agartala. Presently, there are about 10,000 Domestic, 205 Commercial and 8 Industrial Consumers and 2 CNG Stations (one Mother Station &one Daughter Booster Station). Your Company has 29% stake in the Company.

Total revenue of the Company for FY 2011-12 was Rs. 24.90 Cr. and Profit After Tax was Rs. 3.50 Cr.

PETROCHEMICALS

- Brahmaputra Cracker and Polymer Limited (BCPL) (Subsidiary)

BCPL is setting up a 2,80,000TPA polymer plant and project execution is in progress. Your Company has 70% equity share in BCPL with OIL, NRL and Government of Assam each having 10% equity share. The total revised project cost as approved by CCEA in November 2011 is Rs. 8,920 Crores. Gas Supply agreements with Oil India Limited and ONGC and the term sheet agreement for Naphtha with NRL is in place, thereby making the feedstock secured for the plant. Entire land for the project has been acquired by BCPL. Civil and structural works for all the process units is at the final stage of completion. Mechanical& Piping works is going on full swing. The mechanical completion of the project is scheduled on July 2013 and commissioning on December 2013.

ONGC Petro-additions Limited (OPaL)

OPal is implementing a green field petro chemical complex of Dahej in the State of Gujarat. Your Company is a co-promoter with 17% equity stake in ONGC Petro-additions Limited (OPaL). Oil and Natural Gas Corporation (ONGC) and Gujarat State Petroleum Corporation Limited (GSPC) are the other promoters of the company.

HEALTH, SAFETY & ENVIRONMENT

Your Company is a responsible Corporate Citizen and Health, Safety & Environment (HSE) excellence has been extensively promoted as a corporate culture within the organization. The safety and health of employees and external stakeholders are embedded in the core organizational values of the Company.

Corporate Health, Safety & Environment (HSE) Policy

Your Company is committed to promote globally comparable levels of Health, Safety, Environment Management System in the areas of its business of exploration and production of Hydrocarbons, transmission and distribution of Natural Gas, production of Petrochemicals and LHCs, transmission of LPG, and generation of Power etc. with a focus on improving harmony with environment through Sustainable Development.

Safety Performance

Your Company has always strived to maintain highest standards of safety and this is reflected in the HSE index which evaluates the safety performance of the organization on various elements of Health, Safety and Environment covering all business activities.

Year HSE Index

MoU Target (%) Achieved (%)

2010-11 97.5 98.92

2011-12 98.0 99.05

Safety Training

Your Company has always endeavored to keep its employees fully aware of the HSE aspects and to meet this objective, regular training to employees, contract workers, etc. is provided through internal as well as external resources.

Your Company organized a two day HSE workshop for all business heads, fire & safety heads and HR representatives from sites. Theme of this year's workshop was "Occupational Health" in view of the ever rising risks to health while on the job and to create awareness amongst the employees regarding methods & measures to mitigate these risks.

Safety Audits

To ensure compliance to statutory rules and regulations, implementation of safe work practices, and continual improvement in Safety Management System, your Company installations are being regularly audited through External Safety Auditors and experienced in-house auditors. During the year 2011-12, 27 External Safety Audits and 07 audits by experienced in- house auditors were undertaken.

Occupational Health

Your Company has a Corporate Occupational Health Committee supported by 06 local level Occupational Health Committees which meet every quarter for continuous monitoring and improvement of the occupational health of the employees. During the year 2011-12, all employees at the work centers were medically examined.

SUSTAINABILITY-CONTRIBUTION TO TRIPLE BOTTOM LINE

Creating value beyond business forms the ethos of work at your Company. Besides wealth and value creation in financial and economic terms, your Company has always strived for providing value beyond business by taking care of the environment and society.

Your Company has taken steps to improve the governance structure of Sustainability. The Board of Directors has formed a Sustainable Development Sub-Committee to formulate, monitor and approve the sustainable development plans and implementation. In addition to this, a senior level steering committee has been formed for planning and monitoring the project implementation.

Your Company is progressively creating a port folio of renewable businesses (solar, wind, etc.) in order to grow the share of cleaner energy in the overall energy mix. Besides, your Company is taking up several other initiatives to promote sustainable development such as Global Methane Initiative, Green House Gas Accounting Report to Measure, Manage & Mitigate GHG emissions, construction of future buildings as green buildings, and so on.

Your Company is taking measures for improving efficiency of Operational processes to make them more environment friendly. This not only ensures enhanced energy efficiency but also has a positive impact on climate change and stimulates innovation across operations to enable better and sustainable performance.

Bombay Stock Exchange has recently launched the first environment friendly equity index named GREENEX. Your Company is the only company from Oil and Gas Sector to be listed in BSE- GREENEX. This is a major milestone in its sustainability journey.

Your Company has also come up with its first Sustainability Report with the theme - 'Value Beyond Business" The report is based on the GRI G3 Guidelines for the financial year 2010-11 to efficiently disseminate information on various measures taken by the company on social, economic and environmental fronts.

The Report highlights your Company's business philosophy to grow in a way which is sustainable for the economy, the stakeholders, the community and the environment. Your Company has tried to address key issues which are of imperative concern for its business and stakeholders.

Your Company looks upon this effort as an essential aspect for enhancing its corporate governance structure and transparency, a way to analyze and improve its business processes and operations and an efficient communicative tool with its stakeholders

The complete details about the sustainability performance of your Company are available in the Sustainability Report available at website of your Company under the section on "Sustainable Development".

CONTRIBUTINGTO SOCIAL PROGRESS

Corporate Social Responsibility(CSR) is an integral part of your Company's ethos and culture. Your Company has a dedicated team, operating within the framework of a well-structured CSR Policy which mandates contribution of 2 % of your Company's Profit after Tax to CSR activities.

Following the 'Project Based Approach' as put- forth by the DPE and as detailed in your Company's CSR policy, your Company has implemented CSR Programmes primarily in and around the rural are as adjoining major GAIL work centres/installations. These programmes are taken up under the seven thrust areas identified by your Company - Education /Literacy Enhancement, SkillDevelopment/ Empowerment, Community Development, Drinking Water/Sanitation, Environment Protection/ Horticulture, Infrastructure and Healthcare/ Medical facility. Major initiatives undertaken by your Company under these thrust areas are detailed in Management Discussion & Analysis.

VALUING HUMAN RESOURCES

Your Company takes pride in its highly effecient and engaged workforce which falls in Best Employer/ High Performance Range according to the survey undertaken by M/s Aon Hewitt Pvt Ltd on Employee Engagement. A highly committed and motivated young work force at your Company, have also been the reason behind continuous rise in value added per employee during the lasts years. Value added per employee gives an account of efforts of company's employees to make the best and most productive use of the resources available to them.

- Training

To fulfill the objective of Capability Development of organization's human resource, your Company has been offering various training programs related to the gas value chain for professional development of executives working in the Oil & Gas sector from its training centers 'GAIL Training Institute'(GTI) at Noida and Jaipur. To achieve your Company's vision, GTI is designing programs to sharpen knowledge, improve skills, align attitude and promote efficient use of latest technology.

During the year, GTI organized 177 training programs through which it imparted 14,079 mandays training to your Company's employees. Apart from in-house training programs, the employees are also nominated for attending external training programmes on contemporary subjects. This year, GTI had launched "e-Gyan Prawah" an e-Learning initiative for senior executives through Harvard Management Mentor covering 44 e-learning modules to support the key developmental areas. Further, customized Executive Development programs are also being organized through IIM Calcutta & Bangalore.

With an aim to create a learning environment and total quality culture in terms of people, products, services, work life, safety, energy and environment several "Business quizzes" were organized in English as well as in Hindi language. In order to motivate women employees in the organization, GTI has been taking forward the unique initiative of conferring annually 'GAIL Women Employees Award".

Mentoring has been introduced for Executive Trainees (ETs) joining the organization to facilitate structured learning of Company's culture. In addition, GTI has also organized programs on creating awareness on sustainable development across all work centers. Several other initiatives such as O&M seminar, Case study workshop, HSE summit, etc. were organized during the year with an objective of knowledge dissemination & experience sharing.

GTI conducted courses in the field of City Gas/CNG, Natural Gas/LPG Pipeline Operation &Maintenance,Petrochemical,0&M,and Fire & Safety for the participants from external organizations like IOCL, BPCL, RGPPL, BCPL, IGL, MNGL, Adani Gas Ltd, Siti energy, Sabarmati Gas, UP Fire Service Departments, OPaL, Honda Scooters & Motorcycles, etc. As an Authorized Training Provider to American Society of Mechanical Engineers (ASME), GTI is regularly conducting specific ASME certified courses.

With consistent efforts of team members and valued contribution of faculty, GTI achieved a training efficacy score of 91.76% during the year 2011-12.

- Leadership Development Program

Your Company realizes that it is critical to continually strive to develop and enhance the capability and competence of its existing talent pool. With the objective of development of its senior level executives and preparing them for future leadership positions, Senior Management Development Centre (SMDC) exercise has been undertaken as part of the Leadership Development Program. SMDC has been conducted for senior executives at Chief Manager and above grades. 471 such senior executives have been covered through this exercise.

Taking the next step forward in the direction of Leadership Development, a detailed Individual Development Plan (IDP) has been drawn Up for all the participants of SMDC exercise which consists of customized training programmes, e-learning courses and suggested readings with emphasis on the development areas as identified.

- Vigilance

The main thrust of vigilance activities in your Company is on predictive and preventive actions rather than punitive vigilance. In accordance with this objective, several contract & procurement, operation & maintenance related system improvement measures were undertaken during FY 2011-12. Intensive inspections of various works were taken up and corrective measures suggested. Further, initiatives like Tender Monitoring System, e-QPR system, on-line written examination in e-recruitment module, etc were undertaken in furtherance of company's objective to ensure transparency in systems & procedures.

Further, under the aegis of the Central Vigilance Commission, your Company organized a day long Interactive Seminar for Independent External Monitors (lEMs). The seminar was organized to provide a platform for sharing and updating technical knowledge on procurement matters considering the vital role of LEMs in administration of the Integrity Pact adopted by your Company.

A Vigilance Awareness Week was organised during the year. On this occasion, CVC launched an On- line Tender Monitoring System (TMS) and also released an in-house magazine titled "JAGROOK".

During the Vigilance Awareness Week, your Company organized Customer and Vendor Interactive meet. In order to spread awareness and to sensitize employees against the harmful effects of corruption, various competitions were also organized across your Company during the said period.

- Representation of SCs, STs, OBCs, Minorities and Women Employees

Your Company is complying with Presidential Directives on reservations for employment of Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs), physically challenged categories, etc.

Details regarding total number of employees and the representation of Scheduled Castes, Scheduled Tribes, and Other Backward Classes in your Company as on 31.03.2012 have been provided in the table below:

GROUP EMPLOYEES SC ST OBC ON ROLL

A 2784 437 164 453

B 530 114 69 68

C 565 93 23 172

D 58 17 5 14

TOTAL 3937 661 261 707

131 new employees joined your Company during the year 2011-12. Total man power of the Company as on 31.03.2012 stood at 3,937 with 16.8 % of its employees belonging to SC category, 6.6% to ST category, 17.9% to OBC category, 7.22% to Minorities and 2.2% to Physically Challenged categories. Your Company's workforce comprised 222 women employees as on 31.03.2012. Efforts are continuing for filling up the back log of vacancies reserved for SCs,STs and OBCs.

- Official Language

Your Company is continuously making vigorous efforts for the propagation and successful implementation of the Official Language Policy of the Union Government. The Official Language Implementation Committees at Corporate as well as Regional/ Unit level held their quarterly meetings regularly to monitor and review the progress made in achieving the targets fixed in the Annual Programme.

In an endeavor to familiarize the new entrants in the company with Official Language Act and various rules, training to Executive Trainees is being imparted during their orientation programme. To inculcate the knowledge of Official Language among the newly promoted employees from S7 to El and E2 grades, a two days training programme has been designed and implemented at corporate level besides other regular workshops at all the work centers.

With a view to create greater awareness and consciousness amongst employees, Hindi Fortnight was celebrated from 14th to 28th September,2011 across your Company. During the fortnight, a Business Quiz competition was conducted at company level through video conferencing besides other interesting competitions, cultural activities, seminars on Hindi activities, etc. The employees participated with great enthusiasm.

Bilingual software is provided to all offices of your Company for using on their computing device. To impart working knowledge of Hindi as well as to train employees in bilingual Software, a comprehensive programme was designed and implemented during the year. Further, the OICs/HR heads of work centers and other senior officers were imparted training for preparing e-mail communication in Hindi.

In order to cultivate the habit of reading Hindi, a book titled "Ati Prabhavshali logon kisa at adaten' was distributed among all employees. Quarterly Hindi magazines are published from work centres and distributed amongst employees in order to create interest among employees and their family members towards reading and creative writing in Hindi.

RESEARCH AND DEVELOPMENT

Your Company has been pursuing a unique collaboration with Municipal Corporation of Delhi for extraction of Land Fill Gas (LFG) at Ghazipur landfill site for conversion to CNG after purification. A Project Management Consultant (PMC) has been retained to take up project implementation activities. A CNG station running on landfill gas will be a first-of-its-kind in the world. This innovative project will not only generate a dean fuel but also simultaneously help in combating global warming due to the capture of methane gas that would have otherwise got released into the atmosphere. The success of this pilot project would open up the possibility of replicating its success allover the country. This project has been appreciated by the Platts Global Energy Awards Committee for the commitment towards harnessing All sources of energy.

Another project that your Company has been pursuing is on conversion of waste plastics into fuel. The bench-scale tests have given encouraging results and it is planned to conduct the pilot-scale studies in the next phase. R&D efforts are also being undertaken to develop new polymer grades to better suit the customer requirements.

Increasing the acceptability and usage of natural gas as vehicle Fuel serves the twin task of reducing environmental pollution as well as expanding your Company's business. Your Company has started a collaborative project with CMERI Durgapur and I IT Kharagpur to develop composite cylinders for storage of CNG. These light-weight cylinders shall help increase the fuel efficiency of the vehicles and would also be more acceptable to the consumers. Continuing with its pragmatic approach, your Company has also started working with I IT Madras to develop nano- composite materials for storage of Hydrogen gas which is touted as the fuel of the future.

Further, your Company is actively exploring potential technologies that can be used to exploit various non-conventional natural gas sources like Shale Gas, Gas Hydrates, Underground Coal Gasification (UCG) etc. that have potential to substantially increase the availability of natural gas in the country.

With a view to give a boost to R&D spending in the country, the Department of Public Enterprises (DPE) has mandated all profitable PSUs to spend at least 1% of their Profit After Tax (PAT) on R&D from 2012-13 onwards. Realizing the importance of R&D to improve the Technological capabilities and the requirement of meeting the DPE's mandate, your Company has taken proactive strategic steps in this direction.

Your Company has constituted a Research Advisory Committee (RAC) comprising of experts from Industry and Research Institutes with domain knowledge in areas relevant to its business to guide our future R&D endeavors. Your Company has also decided to take a quantum jump in its R&D projects and has solicited research proposals from various research and engineering institutes of national repute which shall be pursued in the near future.

TOTAL QUALITY MANAGEMENT

Your Company is always vying for continual and sustainable improvement in the process, systems and functional areas. Customer satisfaction is on the top agenda of your Company and is being continuously monitored through regular interactions. TQM department has taken following strides towards improvement:

- The Customer satisfaction index achieved during 2011-12 by your Company is 89%;

- Your Company is targeting application for Deming award (An International recognition for overall improvements in the processes). Actions have been initiated and roadmap drawn;

- One hundred number of Quality Circle projects have been undertaken in all process & system areas in your Company, which lead towards continual improvements as well as tangible gains.

AWARDS & ACCREDITATIONS

Your Company has consistently been ranked "Excellent" by the Department of Public Enterprise (DPE), Government of India, ever since the introduction of the Memorandum of Understanding (MoU) based performance review system by the DPE. Your Company has been recognized for its performance in various areas, some of them are mentioned below:

- Corporate Awards

- 11th ICSI National Award for Excellence in Corporate Governance,2011

- Corporate Governance Award 2012 by Indian Chamber of Commerce

- Commendation Certificate from SCOPE for CorporateGovernancein2010-11

- Platts Global Energy Award, 2011 for 'World's No. 1 Company in Downstream Operations'

- GAIL's Jamnagar - Loni and Vizag Secunderabad LPG pipeline Unit won the first & second National Award for Excellence in Cost Management 2011 respectively under the category of Public Sector Service Unit.

- MoU Excellence Award for Best Performing CPSE in the Petroleum Sector consecutively for second year for the year 2009-10.

- HSE Awards

- International Safety Award from British Safety Council, United Kingdom for Gas Processing Unit and Natural Gas Compressor Station, Vaghodia; Gas Processing Unit, Gandhar; Jamnagar-Loni LPG Pipeline; Regional Natural Gas Pipeline Network, National Capital Region, Delhi and Agra.

- Shrestha Suraksha Puraskar for Gas Processing Unit and Suraksha Puraskar for Natural Gas Compressor Station, Vijaipur from National Safety Council, Mumbai.

- Certificate of Appreciation from Gujarat Safety Council, Vadodara for GAIL, Gandhar, Vadodara and Vaghodia.

- Golden Peacock Occupational Health & Safety Award- 2011 for GAIL, Khera from Institute of Directors, New Delhi.

- Safety Innovation Award from Institution of Engineers, New Delhi for Gas Processing Unit& Natural Gas Compressor Station at Vijaipur and Vaghodia; Gas Processing Unit, Lakwa; Natural Gas Compressor Station, Khera; Regional Natural Gas Pipeline Network, Mumbai; LPG Booster Station, Abu road and Man sarampura.

- GAIL, Usar bagged the Confederation of Indian Industry (CII) -Shohrab GodrejGreen Business Centre (GBC) Environmental Best Practices Awards for 2012 under 'Most Innovative

Project of the Year' Category.

- Others

- Your Company scrip was included by Bombay Stock Exchange in BSE-Sensex on the basis of average free float market capitalization for 3 months.

- GTI has received the prestigious Golden Peacock Quality Award For Training System and 'Green Tech Gold HR award for outstanding achievement in Training Excellence1 for the year2011.

RIGHT TO INFORMATION

In order to promote transparency and accountability, an appropriate mechanism has been set up across the Company in line with the Right to Information Act, 2005. APIOs/ PIOs/CPIO at units/ offices across the country have been nominated to provide information to citizens under the provisions of RTI Act. 1st legal Appellate Authority have also been nominated for considering appeals of Information seeker against the orders of APIOs/PIOs/CPIOs.

MANAGEMENT DISCUSSION AND ANALYSIS

The detailed Management Discussion and Analysis forms part of this Report at

Annexure-A.

CORPORATE GOVERNANCE

Your Company believes Corporate Governance is at the root of shareholder's value creation. Pursuant to clause 49 of the Listing Agreement with the Stock Exchanges & DPE guidelines on Corporate Governance, a report on Corporate

Governance forms part of this Report at Annexure-B.

The statutory auditors of the Company have examined and certified your Company's compliance with respect to conditions enumerated in clause 49 of the Listing Agreement and DPE guidelines on Corporate Governance. The certificate forms part of this Report at Annexure-C.

Secretarial Compliance Report confirming compliance by Practising Company Secretary to the applicable provisions of Companies Act 1956, Listing Agreement, Guidelines on Corporate Governance for Central Public Sector Enterprises, 2010forms part of this Report at Annexure- D.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION

Details of conservation of energy, technology absorption in accordance with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed at Annexure- E.

PARTICULARS OF PERSONNEL UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956

The particulars of employees u/s 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 is annexed to this report at Annexure-F.

FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits and, as such, no amount of principal or interest was outstanding as of the balance sheet date.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, foreign exchange earnings were Rs. 8.85 crore. Expenditure in foreign currency was Rs. 2,451.42 crore.

During the year under review, your Company has incurred an expenditure of Rs. 5.27 crore on foreign tours and training, Rs. 0.17 crore on entertainment and Rs. 24.21 crore on advertising & publicity.

DIRECTORS

Dr Neeraj Mittal was appointed as Part-time (Govt. Nominee) Director w.e.f. 28.02.2012 and Smt Shyamala Gopinath, Shri R.P. Singh, Dr. A.K. Khandelwal and Shri Vivek Mehrotra were appointed as Non-official Part-time (Independent) Directors w.e.f. 29.02.2012.

Prof A.Q. Contractor, Non-official Part-time (Independent) Director and Shri Apurva Chandra, Part-time (Govt. Nominee) Director ceased to be Director(s) w.e.f. 03.08.2011 and 08.08.2011 respectively. Further, Shri Vivek Mehrotra, Non- official Part-time (Independent) Director ceased to be Director w.e.f. 14.05.2012.

The Board placed on record its deep appreciation for the valuable services rendered by outgoing Directors during their association with your Company.

CODE OF CONDUCT

Pursuant to the requirements of clause 49 of Listing Agreement, the Board Members and Senior Management Personnel, have affirmed compliance with the Code of Conduct for the financial year ending 31st March, 2012.

DIRECTORS' RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT,1956

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 in relation to Directors' Responsibility Statement, it is confirmed that:

i) in the preparation of the annual accounts for the financial year ending 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as 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) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors have prepared the annual accounts for the financial year ending 31st March,2012onagoingconcern basis.

AUDITORS

- Statutory Auditors

The Statutory Auditor of your Company is appointed By Comptroller & Auditor General of India (CAG). M/s Rasool Singhal& Co., Chartered Accountants, Aligarh and M/s M.L. Puri, Chartered Accountants, New Delhi were appointed as Joint Statutory Auditors of your Company for The year 2011-12.

The review of Annual Accounts of your Company for the financial year ending 31st March, 2012 by CAG forms part of this report. Notes on accounts referred in the Auditors' Report are self-explanatory and therefore, do not call for any further comments.

- Cost Auditors

Your Company has appointed M/s Rohit & Associates, Vadodara, M/s R. Nanabhoy & Co., Mumbai, M/s Chandra Wadhwa & Co., New Delhi, M/s M Goyal& Co., Jaipur, M/s Dhanajay V. Joshi & Associates, Pune, M/s DGM & Associates, Guwahati, M/s Mani & Co., Kolkata, and M/s. K.L Jaisingh & Co., Noida as Cost Auditors for financial year 2011-12 for the purpose of cost audit of various LPG/CNG unit/Telecom unit on 10thJune,2011.

The due date for filing Cost Audit Reports for the financial year ended 31st March, 2011 was 27th September, 2011 and the same were filed to Registrar of Companies on 24th September, 2011.

ACKNOWLEDGMENT

Your Directors express their gratitude for continued co-operation and support provided by Government of India, in particular the Ministry of Petroleum and Natural Gas, various State Governments, regulatory and statutory authorities from time to time.

Your Directors acknowledge the constructive suggestions received from Statutory Auditors and Comptroller & Auditor General of India and are Grateful for their consistent support and help.

Your Directors also wish to thank all the stakeholders of your Company for reposing their faith, trust and confidence in the Company.

On behalf of your Directors, I would like to place on record our deep and sincere appreciation for the hard work, dedication and unstinted efforts of your Company's employees to ensure that your Company achieves greater milestones and scales the newer pinnacle of success.

For and on behalf of the Board

B C Tripathi

Chairman & Managing Director

Place: New Delhi

Date: July 19,2012

Mar 31, 2011

Dear Shareholders,

On behalf of the Board of Directors of your Company, I am delighted to present the T}"' Annual Report of your "Navratna" Company along with Audited Financial Statements for the Financial Year 2010-11.

PERFORMANCE OVERVIEW

Your Company has recorded sustained growth in all key physical and financial parameters in the Financial Year 2010-11. During the year 2010-11, the important financial and physical highlights are as under-

FINANCIAL

{Rs in crore)

Particulars 2010-11 2009-10

Turnover (Net of ED) 32,459 24,996

Other lncome 519 541

Cost of Sales (excluding Interest and Depreciation and including extraordinary items) 27,005 20,327

Grass Margin 5,973 5,210

Interest 83 70

Depreciation 650 562

Profit Before Tax 5,240 4,578

Provision for Tax 1,679 1,438

Profit after Tax 3,561 3,140

Appropriations

Interim Dividend 254 254

Proposed Final Dividend 698 698

Corporate Dividend Tax 155 159

Net Transfer to Bond Redemption Reserve 8 (3)

Transfer to General Reserve 356 314

Balance carried forward to Balance Sheet 2,090 1,718

PHYSICAL

Particulars 2010-11 2009-10

GasTransmission(MMSCMD) 117.91 106.74

LPG Production (TMTs) 1,068 1,100

Pentane / Propane / SBP Solvents /

Naptha Production (TMTs) 301 340

Polymer Production (HDPE/ LLDPE Pellets) (TMTs)*B 416 417

LPGTransmission(TMTs) 3,337 3,161

* The total polymer production for FY2010-11 is 420 TMT which includes HDPE/ LLDPE pellets, LP flakes, wax, PE shreds, etc.

CONVERGED ACCOUNTING STANDARDS (IFRS) IMPLEMENTATION

In accordance with the notification issued by the Ministry of Corporate Affairs, Government of India, accounts are to be prepared on the basis of converged Accounting Standards i.e. Indian Accounting Standards converged with International Financial Reporting Standards (IFRS) as and when dates will be notified. Accordingly, your Company is taking necessary steps for the implementation of Ind AS which are converged with IFRS. Basic IFRS training has also been imparted to all the Finance executives of your Company. Your Company is ready to implement the Converged Accounting Standards (Ind AS) as and when it would be notified by Central Government.

DIVIDEND

Your Company has a consistent track-record of divicerc payment. So far, your Company has disbursed dividend ofRs 8,325 crore to the shareholders.

The Board of Directors of the Company had earlier approved payment of an interim dividend @ 20% on equity share ofRs 10 each {Rs2/- per equity share) amounting to Rs 253.70 crore paid in the month of December, 2010. Further, the Board had recommended payment of final dividend @55%on equity share ofRs 10 each {Rs 5.5 per equity share) for the year 2010-11.

With this, the total dividend payment for the fiscal 2010-11 will be at 75% on equity share ofRs 10 each (Rs7.5 per equity share) amounting toRs 951 crore on its paid-up equity capital ofRs 1,268.48 crore. The total dividend payout including tax accounts for 31% of profit after tax.

CREDIT RATING

Your Company has been reaffirmed the highest domestic credit rating of AAA'from ICRA, CARE and CRISIL which indicates the highest credit quality and rated instruments carry the lowest credit risk. The international rating agency, Moody's International, Hong Kong, has also reaffirmed the Corporate issuer rating of'Baa2; which is one notch higher than sovereign rating and local currency issuer rating of A3'to your Company. Further, Fitch Ratings has also assigned a long term Foreign Currency Issuer default rating of'BBB-'with stable outlook which is equal to sovereign rating.

CORPORATE STRATEGY

Your company is successfully executing Strategic Plan 2007-12 and is well on its road to establish pan-India presence.The main thrust has been on expansion of gas transmission network (to over 14,500 km) and securing gas supplies for meeting demand of various consumer segments. Your Company has interest in 27 E&P Blocks including 2 outside ndia & 1 CBM block for securing long-term gas supplies besides stake in LNG Terminals through equity stake in Petronet LNG and RGPPL Your Company has been successful to increase gas supplies to about 118 MMSCMD for transmission in FY 2010-11 and is well poised to secure substantially higher volumes in the coming few years. Your Company is strengthening its petrochemical presence through expansion of existing capacities at Pata besides setting up a new plant in Assam through its subsidiary, Brahmaputra Cracker and Polymer Limited. In addition, your Company has also taken a 17% equity stake in the 1.1 MMTPA petrochemical project being implemented by ONGC Petro Additions Limited at Dahej, Gujarat.

Your Company is also strengthening its retail presence by setting up new city gas projects in Kota, Dewas, Meerut and Sonepat through its wholly owned subsidiary, GAIL Gas Limited which is also participating in upcoming PNGRB bidding rounds for other city gas projects. Further, the Board of your Company, in order to consolidate the city gas distribution business, has approved the transfer of existing and ongoing expansion of local distribution assets in Agra and Firozabad to GAIL Gas Limited, and transfer of CNG distribution project in Vadodara to proposed JVC of GAIL Gas Limited with Vadodara Mahanagar Sewa Sadan, subject to consent of shareholders through postal ballot.

On globalization front, your Company has acquired 4.17 % equity stake in South East Asia Gas Pipeline Company which is executing Myanmar to China gas pipeline project.This pipeline is being laid for transmission of natural gas from A-1 & A-3 blocks in Myanmar where GAIL has a 8.5% stake. Your Company is also in pursuit of diversifying in new business areas like wind and solar power and actively scouting opportunities in gas based power generation projects.

In order to meet the huge capital requirements for funding the projects, the Board of Directors of your Company has approved the Foreign Currency Loan Facility of USD 150 million from The Bank of Tokyo- Mitsubishi UFJ Ltd, Singapore and USD 74.33 million from US Exim, Societe Genarale, New York.

Further, your company has recently developed Strategy for the period 2011 -20 and the same has been approved by the Board of Directors. As per this Strategy, your Company aspires to become an integrated hydrocarbon major with significant upstream and downstream interests by 2020.To realize this ambition, your Company has identified several key growth areas and initiatives, in upstream, midstream and downstream segments of hydrocarbon value chain. In the upstream, the thrust will be on global sourcing and acquisitions, targeting equity linked LNG in addition to sourcing gas from domestic blocks.To support higher LNG imports, your Company will explore the possibility of setting up new LNG terminal(s) and tie-up additional re-gasification capacities in existing / upcoming terminals. In the midstream, expansion of pipeline infrastructure will continue with additional focus on strong market development efforts and strengthening marketing capability to remain the leading marketer of gas. On the retail side, large cities will be the focus for city gas business expansion. In the downstream, your Company aims to be among the top 2 petrochemical players in the country and for this, your Company has plans to set up new capacities and further increase marketing volume through trading.To realize the ambitious business goals, capability building will remain at the core of your Company's focus.

BUSINESS SEGMENT ANALYSIS

SEGMENTAL REVIEW

Your Company has been consistently achieving the top-most all round "Excellent" rating by the Government of India, since the signing of the Memorandum of Understanding (MoU) with the Government of India on performance review. During the year under review, the segment wise business performance of the Company is as under:

Natural Gas Marketing

Natural gas continues to constitute the core business of your Company. During the year 2010-11, Gas Sales was 83.23 MMSCMD compared to 8143 MMSCMD in the previous financial year. Major supplies of natural gas include fuel to power plants and feedstock for gas based fertilizer plants. Your Company holds around 50% market share in gas marketing in India.

Natural Gas Transmission

Your Company owns and operates a network of about 8,644 km of natural gas high pressure trunk pipeline with a capacity of approx. 170 MMSCMD of natural gas across the country.The gas transmission during the year was 11 7.91 MMSCMD compared to 106.74 MMSCMD in the previous financial year registering a growth of 10%. Your Company's share of gas transmission business is around 74% in ndia.

Natural Gas Pipeline Projects

During the financial year, your Company has completed commissioning of various pipelines having length of about 761 km which includes Vijaipur-Dadri Pipeline (498 km), Sultanpur-Neemrana Pipeline (175 km) and Focus Energy Pipeline (88 km).

LPG Transmission

Your Company is the only Company in India which owns and operates pipelines for exclusive LPG transmission for third party usage.There are two LPG Pipeline transmission systems with a total length of about 2038 km, 1415 km of which connects the Western and Northern parts of India (Jamnagar-Loni LPG Pipeline) and 623 km of network is in the Southern part of the country (Vizag-Secunderabad LPG Pipeline). The LPG transmission system has a capacity to transport upto 3.8 MMTPA of LPG. LPG transmission throughput was about 3.337 million MTin the year 2010-11.

LPG Transmission Projects

Kandla- Samakhiali section of JLPL system has been upgraded from 0.5 MMTPA to 1.5 MMTPA by laying of 10"X 60 km loopline, installing additional Pumps at Kandla and receiving facilities at Samakhiali.

Petrochemicals

During FY 2010-11, your Company has produced 420 TMT of polymer which includes 416 TMT of HDPE/ LLDPE pellets and remaining quantity of LP flakes, wax, PE shreds, etc. Further, during the period, it sold 420 TMT of polymer (HDPE/ LLDPE/ low polymers /polymer lumps & shreds).

LPG & Other Liquid Hydrocarbon Production

Your Company has 7 LPG plants in the country. In the year 2010-11, total Liquid Hydrocarbon production was about 1.369 million MT which mainly included 1.068 million MT of LPG, 0.155 million MT of Propane, 0.035 million MTof Pentaneand balance quantity included other products like SBP solvent and Naphtha.

Exploration and Production (E&P)

Your Company has Participating Interest (PI) in 27 Exploration and Production (E&P) blocks and one Coal Bed Methane (CBM) block. Out of the 27 E&P blocks, 25 blocks are in India and 2 blocks are overseas (A-1 and A-3 blocks in Myanmar). One of the onland blocks in Cambay basin is in regular production and Rs4141 crore has been generated as revenue during the year 2010-11.

Out of the 27 E&P blocks where GAIL is participating, GAIL is the Operator in 2 blocks (Rajasthan Onland RJ-ONN-2004/1 and Cauvery Onland CY-ONN-2005/1). 1 st well- Lohara 1 is being drilled currently in Rajasthan onland block and two more wells are also planned to be drilled subsequently, while seismic data acquisition is planned in Cauvery onland block during the year 2011-12.

The CBM Block (TR-CBM-2005/III) in Chhattisgarh is in first exploration stage where dewatering of test wells is in progress. Development activities in blocks

A-1 and A-3, Myanmar offshore is in progress and the production of gas is expected to start from May 2013.

During the year 2010-11, Declaration of Commerciality has been approved in the Mahanadi Offshore block (MN-OSN-2000/2). Further, GAIL consortium has been awarded two deep water blocks in Andaman basin under NELP-VIII bidding round with ONGC as the Operator. GAIL has bid for E&P blocks in NELP-IX biddling round along with other consortium partners. Results are expected in FY 2011-12 and Production Sharing Contracts are expected to be signed soon thereafter.

Telecommunications

Leveraging on its pipeline network, your Company has built up a strong Optic Fibre Cable (OFC) network for its own internal use and leasing of bandwidth as a carriers' carrier. Your Company's telecom business unit -'GAILTEL has approximately 1 3,000 km of OFC network.

SEGMENTAL OUTLOOK

Natural Gas

Major focus for your Company is to maintain its dominant position in the gas business, especially the transmission segment and continue the relationship with existing customers and also to add more customers. Therefore, your Company is expanding its transmission network by laying another 7,500 Km of pipelines at an investment of X 30,000 crores, out of which around 1,200 km have been completed, to transport and supply natural gas to various customers in Power, Fertilizer, Refinery, industries, CGD projects etc.These would include large trunk pipelines, along with smaller pipelines which would provide connectivity among trunk lines to form a grid. The pipelines being laid by your Company would help in achieving the objective of an Integrated National Gas Grid.

Natural Gas Pipeline Projects

The projects are concurrently being executed in 16 States, 2 Union Territories, 116 Districts and the construction activities are in full swing simultaneously for more than 10 projects.The following projects are in advanced stage of construction and completion is expected by the end of year 2011.

I. Dahej-Vijaipur Pipeline Phase-I (DVPL-II) 610 km

ii. Bawana-Nangal Pipeline (BNPL) 501km

iii. Karanpur-Moradabad Kashipur- Rudrapur Pipeline Phase-I 105 km

Further, installation of 2nd & 3rd compressors atJhabua&Vijaipurand installation of two Compressors at Kailaras SChainsa are also in advanced stage of construction and completion is expected by the end of year 2011.

The completion of DVPL-II project along with commissioning of balance mainline compressors at Jhabua and Vijaipur will lead to enhanced capacity to transport RLNG from Dahej and KG Basin gas to consumers in northern part of India. Last mile connectivity has been given importance and steps have been taken up to connect customers within the shortest possible time leading to revenue generation.

Construction has recently started for the following projects.

I. Dabhol Bangalore Pipeline Phase-I 997 km

ii. Kochi-Koottanad Bangalore/ Mangalore Pipeline Phase-I 44 km

iii. Spurlinesto Roorkee-Haridwar, Ludhiana Jalandhar(BNPLSpurlines) 270 km

iv. Spurlines to Chittorgarh (Vijaipur- Kota Pipeline -VKPL extension) 290 km

The Dabhol- Bangalore and Kochi - Koottanad- Bangalore - Mangalore pipelines would increase GAIL's presence in southern ndia as these pipelines pass through virgin market areas. The quantum of gas transported is likely to increase, with commissioning of these projects.

Due to increase in gas availability, last mile consumer connectivity has been provided to 46 number of consumers for a gas quantity of approx 6.8 MMSCMD.

Your Company is also expanding its pipeline network in the states of Rajasthan, Uttarakhand, Punjab, Andhra Pradesh & Tamil Nadu.

Petrochemicals

Your Company owns and operates a gas based integrated petrochemical plant at Pata, Uttar Pradesh, with a capacity of producing 4,10,000 TPA of Polymers i.e. HDPE and LLDPE. Your Company has commissioned in the month December, 2010 an additional gas cracking furnace and with debottlenecking of the Gas Cracker Unit, the Ethylene production capacity has been increased to 4,46,000TPA. Further your Company is doubling the capacity of Petrochemical plant at Pata by installing 4,50,000 TPA of Gas Cracker Unit and 4,00,000 TPA of Downstream Polymer Unit.

Your Company is currently in the process of setting up a 2,80,000TPA Petrochemical Complex in Assam through its subsidiary, Brahmaputra Cracker and Polymer Limited (BCPL).

Your Company is a co-promoter with 1 7% equity stake in ONGC Petro-additions Limited (OPaL) which is implementing a green field petrochemical complex of 1.1 MMTPA Ethylene capacity at Dahej in the State of Gujarat.

Gas Sourcing

Your Company continues to have focus on securing gas supplies from international markets. LNG and trans-national pipelines are the two prevalent modes of cross border gas trade and your Company has been making efforts to bring more natural gas into the country through both these modes. Your Company has entered into a short term agreement to buy 0.48 MMTPA LNG from Marubeni Corporation, Japan and the first shipment was received in February 2011 .Your Company has also imported about 0.20 MMTPA of LNG in this financial year from various international sellers on spot basis to supplement the shortfall in domestic production from time-to-time. Your Company also sourced around 80 MMSCM of spot RLNG in 2010-11 from its Joint Venture Petronet LNG Ltd. (PLL). Further, agreements for procurement of spot LNG have been signed with 19 international sellers. In addition, discussions are on with 8 prospective suppliers for long term tie up of LNG.

Wind Energy

Your company has successfully commissioned a wind energy power project of 4.5 MW capacity at Sinoi in Kutch District of Gujarat at a cost ofRs 27.7 crore.The generated power is fully utilized for captive consumption at your Company's installations in Gujarat namely Gandhar.Samakhialiand Kandla.

Based on the satisfactory performance of 4.5 MW wind evergy project, your Company is now executing another 15 MW wind energy power project in state of Gujarat at an estimated cost ofRs 93.76 crore for captive utilization. Further,yourCompany's Board has approved the project for setting up of a 100 MW Commercial Wind Energy Generation Project in the states of Tamil Nadu and/ or Karnataka. In line with the decision, the Board of your Company has approved the amendment in main object clause of Memorandum of Association to carry on the business of generation, distribution and marketing of wind, tidal, solar and any other form of renewable energy on commercial basis, subject to approval of shareholders through postal ballot. Your Company is also exploring the possibilities of commercial wind power project in different states.

BUSINESS INITIATIVES

GLOBAL

Considering the importance of enhancing energy security of the country for sustaining high level of economic growth, your Company has taken initiatives to look overseas for acquisition of energy assets. This is being done in addition to the initiatives being pursued on the domestic front.

There are good prospects of participating in oil and gas assets abroad which are either producing or planned to be on production in the near term. Your Company is now focused on diversification of its resource base through equity participation in overseas projects. A dedicated group has been formed to pursue overseas acquisition activities with the objective of sourcing gas for the domestic market. With this prime objective, your Company is continuously scouting for acquiring energy assets abroad and also to source natural gas in the form of Liquefied Natural Gas (LNG) and piped gas imports in order to meet the growing requirements of Indian market. Further, your Company is also exploring various business opportunities abroad along the natural gas value chain for long term growth and to emerge as an integrated international gas company.

In addition to sourcing of LNG from different sources, your Company with the support of Government of India is actively pursuing sourcing of gas from Turkmenistan through Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. Inter Governmentl Agreement (IGA) and Gas Pipeline Framework Agreement (GPFA) have already been signed among the countries participating in the project.These agreements are important milestones for the implementation of the project.

Besides, your Company is pursuing an opportunity for participation in shale gas assets in USA so as to be ready with the skill and technological know-how for participation in the domestic shale gas bidding rounds as and when they are announced in the country.

In recent years, Africa has emerged as a prospective destination for sourcing of resources. In order to participate in projects in the resource rich countries in Africa,your Company has opened a representative office in Cairo, Egypt which will also pursue business opportunities in the Middle East.

DOMESTIC

Your Company has identified petrochemicals as a strategic business segment for its growth. Your Company is strengthening its presence in petrochemicals business by expanding its capacity and also acquiring equity stake in petrochemical plants.

Your Company has 70% equity share in Brahmaputra Cracker and Polymer Limited (BCPL), a subsidiary, with Oil India Limited (OIL), Numaligarh Refinery Limited (NRL), Govt, of Assam, each having 10% equity share. BCPL is setting up a 2,80,000TPA polymer plant.The financial commitment to the extent ofRs 5,460 crore has been made and project execution is in progress.

Your Company is a co-promoter in ONGC Petro-additions Limited (OPaL) which is implementing a green field petrochemical complex of 1.1 MMTPA Ethylene capacity at Dahej in the state of Gujarat. Your Company is entitled to market one-third of the polymers produced from the plant in domestic and overseas market which shal enhance your Company's market share in polymers. Further, your Company is exploring the possibility of setting up a downstream unit based on the by-product available from the project.

In view of the natural convergence between gas and power and to foray in the fast growing power sector, your Company has undertaken a number of initiatives through which it, on its own and also in partnership with other companies, plans to set up power plants in various parts of the country.

Due to wide gap in natural gas demand - supply scenario in India, the existing / new domestic gas sources and current / proposed LNG imports are not sufficient enough to meet the natural gas requirements of all demand centers in the country.To fill this gap, your Company is planning to set up a Floating Storage Re- gasification Unit (FSRU) unit on the east coast of India.

IT INITIATIVES

Your Company is an IT savvy organization and is continuously adopting the latest and state-of- the-art IT solutions, keeping pace with the fast changing industry.This helps in continuous improvement in efficiency and productivity of employees and also enables'right information to right person' by use of latest IT security solutions.

Your Company has taken several new IT initiatives to enhance productivity.The process of upgradation of the existing SAP ERP hardware and technical upgrade of SAP R/3 to the latest SAP ECC6 software has been successfully completed.This has added several new features to the existing ERP setup. Many new components like Governance, Risk & Control (GRC), e-Recruitment and Gas Management System (GMS) have also been added to the SAP infrastructure.This will lead to greater operational efficiency and transparency thereby helping in faster and accurate decision making. Further, Reverse Auctioning, Bid- encryption and System Generation of Comparative Statement have been added as new features to the SRM/e-Procurement system.

Your Company has started the implementation of a state-of-the-art centralized SCADA system for efficient, safe & smooth operation of existing & upcoming cross-country Natural Gas & LPG pipeline networks under large & complex National Gas Grid environment. On implementation of the centralized SCADA system substituting the existing multiple- heterogeneous SCADA systems for individual gas pipelines, your Company shall be able to monitors control its entire cross-country pipeline infrastructure at national and individual pipeline levels, providing relevant online pipeline data to its esteemed customers. It shal also enable your Company better integration with other critical applications like Gas Management System (GMS), SAP ERP and other applications and will also facilitate in implementation of SCADA in a cost effective and faster manner for future pipelines.

Your Company has also initiated the process for consolidation of the IT infrastructure to a centra virtualized environment along with its Disaster Recovery (DR) setup in line with the latest technological advancements in the industry. This will provide greater uptime and better manageability of the IT infrastructure.

Your Company is also in the process for implementation of an electronic Document Management System (DMS) in line with the industry best practices.This will include digitization of all the important information and records of your Company across various locations, electronic workflow and secure authorizations-based access to information. In addition to the above, your Company has put in place the latest high-definition Video Conferencing (VC) systems with real-time streaming facility at all its major locations. Moreover, desktop-based VC facility has been provided to all senior-level executives.This will further improve the communication facilities and reduce travel time and expenses.

The Business Information Systems department of your Company has been certified with the new ISO 9001:2008 standard.

SUBSIDIARIES & JOINT VENTURES

Your Company has formed Subsidiaries and Joint Venture companies for City Gas Distribution and Petrochemicals. Your Company is one of the pioneers to introduce City Gas Projects in India for supplies to households, commercial users and for the transport sector by forming Subsidiaries/ Joint Venture Companies.

SUBSIDIARIES

Brahmaputra Cracker and Polymer Limited (BCPL)

BCPL is setting up a 2,80,000 TPA polymer plant and project execution is in progress. The proposal for enhanced project cost and revised commissioning date is under Government approval.

Feedstock Supply Agreements have been signed between BCPL and all the three suppliers, viz, Oil and Natural Gas Corporation Limited, Oil India Limited and Numaligarh Refinery Limited. Technology license agreements have been signed for cracker, polyethylene and polypropylene units.

Entire land for the project has been acquired by BCPL. Civil structural works for the main process units, namely Ethylene Cracker unit, Polyethylene unit (HDPE/ LLDPE), Polypropylene unit, C2 extraction unit, Gas De- hydration unit and Gas sweetening unit of BCPL has commenced.

Your Company has 70% equity share in BCPL with OIL, NRL&Government of Assam each having 10% equity share.

GAIL Gas Limited

GAIL Gas was incorporated with an objective of focused implementation of City Gas Distribution (CGD) projects in the Country. In first round of bidding process of Petroleum and Natural Gas Regulatory Board (PNGRB), GAIL Gas has been authorized to implement CGD projects in four cities, namely, Sonepat, Kota, Dewas and Meerut.

GAIL Gas has already commissioned CNG stations in Dewas and Sonepat. Gas supply to industrial units has commenced in Dewas, Sonepat and Kota. GAIL Gas has also commenced gas supplies to domestic consumers in Dewas and network construction is in progress for other cities.

GAIL Gas has already laid 168 Km steel pipeline and 229 Km MDPE pipeline in these cities. GAIL Gas is operating 1 CNG stations each at Dewas and Sonepat. The CNG stations at Kota and Meerut are under commissioning. GAIL Gas is supplying natural gas to 24 industrial units in Kota, Dewas, Sonepat and Meerut. GAIL Gas has also commenced gas supplies to domestic customers progressively. GAIL Gas has taken up investment for setting up the infrastructure along the national highways for building CNG corridors. Going ahead with the objective to establish CNG Corridor to facilitate the availability of CNG outside the cities, GAIL Gas has commissioned 2 CNG stations in Vadodara and 1 CNG station each at Panvel SVijaipur.The construction of CNG stations at Kovvur, Auriya, Ferozabad & Mathura is in full swing.

GAIL Gas is a wholly owned subsidiary of your Company.

GAIL Global (Singapore) Pte Limited

GAIL Global (Singapore) Pte Ltd. is as an overseas investment arm of the Company. Your Company is looking for further business opportunities through this wholly owned subsidiary Company in Singapore.

JOINT VENTURES

Aavantika Gas Limited (AGL)

AGL is in operation in Indore and Ujjain and is supplying CNG to the II I transport sector in these cities. AGL is supplying CNG to almost 14,500 vehicles in both the cities & PNG to industrial sector. AGL has set up 1 Mother Station, 2 Online Stations & 5 Daughter Stations in Indore and 2 Daughter Stations in Ujjain for dispensing CNG. AGL has registered its first operational profit in FY 2010-11. MoPNG has authorised AGL for CGD in Indore, Gwalior and Ujjain. Your Company has 22.5% stake in the Company along with HPCL as equal partner.

Bhagyanagar Gas Limited (BGL)

BGL is currently operating 8 CNG (1 Mother station and 7 Daughter Stations) in Vijaywada, 5 CNG stations in Hyderabad and 1 CNG station in Kakinada. BGL is supplying CNG in these 3 cities to almost 8,000 vehicles. BGL is currently operating in Hyderabad, Vijaywada and Kakinada. Your Company has 22.5% stake in the Company along with HPCL as equal partner.

lentral U.P. Gas Limited (CUGL)

CUGL is currently operating 10 CNG stations in Kanpur and 1 CNG station in Bareilly. CUGL is supplying CNG to almost 15,000 vehicles in the two cities. CUGL is supplying PNG to over 800 households. CUGL has received authorization from MoPNG for CGD in Kanpur & Bareilly. Your Company has 25% stake in the Company along with BPCL as equal partner.

GAIL China Gas Global Energy Holdings Limited

The joint venture Company was formed with an objective to pursue gas sector opportunities, mainly in China. Potential gas sector projects are being identified for implementation by the company. Your Company has 50% equity interest in the Company along with China Gas Holdings Limited as equal partner.

Green Gas Limited (GGL)

GGL is currently operating 7 CNG stations in Lucknow and 3 CNG stations in Agra. GGL is supplying CNG to almost 15,000 vehicles. MoPNG has authorized GGL for CGD in Lucknow & Agra. Your Company has 22.5% stake in the Company along with IOCL as equal partner.

Indraprastha Gas Limited (IGL)

IGL is the largest CGD entity in terms ofCNG sales and the number of vehicles running on CNG in India. IGL has received authorization from MoPNG for CGD in Delhi and adjoining cities of Noida, Greater Noida, Ghaziabad, Gurgaon and Faridabad.

As on 1st April, 2011, IGL was supplying piped gas to around 2.45 lac domestic consumers, 68 industrial and 463 commercial consumers. IGL is supplying CNG to over 4.3 lac vehicles through 278 CNG stations.The average per day sale during FY 2010-11 was 2.73 MMSCMD.

Your Company has 22.5% stake in the Company along with BPCL as equal partner.

Mahanagar Gas Limited (MGL)

MGL has presently set up 149 CNG MAHANAGAR gas stations catering to about 2.2 lac vehicles spread over Mumbai,Thane, Mira- Bhayandar and Navi-Mumbai areas besides supplying PNG to about 5.2 lac domestic customers, about 1,240 small industrial & commercial consumers. Accepting the Central Government authorization, the PNGRB has granted authorization and exclusivity for the existing areas of Mumbai,Thane, Navi Mumbai and Mirabhayander and expansion areas of Kalyan, Dombivli, Ambernath, Badalapur, Ulhasnagar, Bhiwandi.Taloja, Kharghar and Panvel. Your Company has 49.75% stake in the Company along with British Gas as equal partner.

Maharashtra Natural Gas Limited (MNGL)

MNGL was formed for MNGL implementation of City Gas B Projects in and around Pune city. MNGL has received authorization from MoPNG for CGD in Pune including Pimpri, Chinchwad, Talegaon, Hinjewadi SChakan areas. It has started 13 stations supplying CNG to more than 16,000 vehicles. MNGL has also started supply of PNG to domestic, industrial and commercial units. Your Company has 22.5% stake in the Company along with BPCL as equal partner.

ONGC Petro-additions Limited

0PaL is implementing a green field etrochemical complex of 1.1 MMTPA Ethylene capacity at Dahej in the State of Gujarat. Your Company is a co- promoter with 17% equity stake in ONGC Petro- additions Limited (OPaL). Oil and Natural Gas Corporation Ltd. (ONGC) and Gujarat State Petroleum Corporation Limited (GSPC) are the other promoters of the company.

Petronet LNG Limited (PLL)

PLL, formed for setting up of LNG import and re-gasification facilities, pursuant currently owns and operates LNG re-gasification terminal of 10 MMTPA capacity located at Dahej, Gujarat. PLL has a long term LNG supply contract with RasGas, Qatar for import of 7.5 MMTPA of LNG. Further, PLL is constructing a LNG re- gasification terminal at Kochi, Kerala with an initial capacity of 2.5 MMTPA, expandable upto 5 MMTPA and is scheduled for commissioning in early 201 2. PLL has entered into long term LNG supply contract with ExxonMobil for the supply of 1.5 MMTPA of LNG for the Kochi terminal. Your Company has 1 2.5% equity stake in PLL along with BPCL, ONGC and IOCL as equal partners.

Ratnagiri Gas and Power Private Limited (RGPPL)

The capacity of the Ratnagiri Gas & Power Station is 2,150 MW which is the largest gas based power generation facility in the country and currently producing 1,850 MW of power. RGPPL is in the process of commissioning LNG import terminal of 5 MMTPA capacity. Your Company has 32.88% stake in the Company along with NTPC as equal partner. RGPPL is a joint venture company between your Company, NTPC, Financial Institutions and MSEB.

@Tripura Natural Gas Company Limited (TNGCL)

TNGCL is presently supplying gas to around 8,475 domestic, 194 commercial and industrial consumers and has set up one CNG station in Agartala catering to more than 1,900 vehicles.TNGCL has received authorization from MoPNG for CGD in Agartala. Your Company has 29% stake in the Company

OVERSEAS EXPOSURE

GAIL is an equity partner in three retail gas companies in Egypt, namely Fayum Gas Company (FGC), Shell CNG Egypt (SCNGE) and National Gas Company (Natgas). FGC and Natgas are city gas distribution companies involved in supply of gas to residential, commercial and small industrial customers, whereas SCNGE is involved in setting up of Compressed Natural Gas (CNG) stations and supply of CNG to transport sector. However, the Board of your Company has approved the divestment of its shares in SCNGE as the strategic objectives of investment in SCNGE could not be met and accordingly, the process of sale of its equity shares in SCNGE is in process.

GAIL is also an equity partner in China Gas Holdings Limited (China Gas), a retail gas company involved in city gas and CNG business in China. Further, GAIL and China Gas have formed an equally owned joint venture company, GAIL China Gas Global Energy Holdings Limited for pursuing gas sector opportunities primarily in China.

GAIL is a part of consortium in two offshore E&P blocks (A-1 &A-3) in Myanmar and also holds participating interest in the joint venture Company - South East Asia Gas Pipeline Company Limited incorporated for transportation of the gas to be produced from A-1 &A-3 blocks in Myanmar to China.

In addition to having a wholly owned subsidiary namely GAIL Global (Singapore) Pte Ltd for managing investments abroad, your Company has opened a office in Cairo, Egypt to pursue business opportunities in Africa and Middle East.

SUSTAINABLE DEVELOPMENT

Your Company operates in the energy sector which is a very vital component of the economy. Energy powers every other productive activity in the economy, whether it be agriculture, infrastructure, manufacturing or services sector.The demand for energy is growing at a rate that is much higher than the growth rate of the economy. While the demand for energy is growing, new resources are getting increasingly more difficult and challenging to find, produce and monetize. At the same time, ndia needs to provide energy to its people at affordable prices. Your Company continues to strive towards energy security of the country while maintaining equilibrium with the environment in order to achieve sustainable development.

The principal business of your Company revolves around transmission of natural gas which in itself is a cleaner fuel and helps user industries reduce their pollution levels as compared to coal or other liquid fuels. Use of CNG in transport sector helps in reducing the pollution level in the cities. Your Company is also at the forefront of employing technologies and processes that reduce the energy consumption in its own operations.

Your Company has installed a wind energy project of 4.5 MW capacity at Sinoi, District Bhuj, Gujarat. The power generated is being wheeled for captive use by your Company's plants in Gujarat. Your Company has started work on setting up a new 15 MW wind energy project in Gujarat which will augment power supply for captive use of your Company's plants at Samakhiali, Kandla and Gandhar. In addition, your company is also planning to set up Wind Energy Project for commercial sale of Power.

Your Company is keen to enter into solar power. Your Company participated in the 1st phase of bidding under Jawaharlal Nehru National Solar Mission (JNNSM). Your Company plans to participate in future bidding rounds as well to setup solar power projects. Another initiative which your Company has undertaken to promote sustainable development is rain water harvesting. Your Company has implemented rain water harvesting projects at many of its office buildings at sites. Your Company has also invested Rs 20 crores to set-up a comprehensive waste water treatment plant at Fata site to maintain the water quality before discharging into the river. The treated wastewater is recycled and used for horticulture and fire water make-up.

Your Company's pilot project for production of landfill gas from the municipal solid waste site at Ghazipur, Delhi is another effort in sustainable development. Its success will pave the way for conversion of solid waste sites in cities to produce fuel. Such projects have multiple benefits as these not only generate fuel from waste by capturing methane that would have got released into the atmosphere but also reduce global warming since methane has a global warming potential of 21 times of Co,.

Measuring the CO, emissions is the first step towards the efforts to reduce its emissions. Your Company is taking up Green House Gas Accounting for its installation at Vijaipur. As Vijaipur is a representative site of your Company with similar compressor stations and LPG plants at other locations, the methodology used for data collection at Vijaipur snail be useful ;n knowing the carbon footprint of your Company's operations. This shall help to Measure, Managed Mitigate the GHG emissions.

Your Company will be also coming up with its first Sustainability Report based on the GRI G3 Guidelines for the financial year 2010-11 to efficiently disseminate information on various measures taken by the Company on social, economic and environmental fronts. The Report shall also help your Company to align its sustainable development efforts such that these maximize value for various stakeholders.

HEALTH, SAFETY & ENVIRONMENT

Your Company is a responsible Corporate Citizen and Health, Safety and Environment (HSE) excellence has been extensively promoted as a corporate culture within the organization. The Safety & Health of employees and external stakeholders are embedded in the core organizational values of the Company. The HSE policy, inter-alia, aims to ensure safety of public, employees, plant & eguipment, ensure compliance with all statutory rules and regulations, imparting training to its employees, carrying out safety audits of its facilities, and promoting eco-friendly activities.

Your Company has constituted HSE, sub-committee of the Board of Directors to review its HSE performance and emergency preparedness in the Company.

CORPORATE HEALTH, SAFETY & ENVIRONMENT [HSE) POLICY

Your Company is committed to promote globally comparable levels of Health, Safety,

Environment and Loss Control in the areas of its business of Exploration and Production of Hydrocarbons, Natural Gas and LPG transmission, Production of LPG, Petrochemicals etc., with clear emphasis on improving the Environment for Sustainable Development. Projects, E&P etc. are brought under the monitoring purview of HSE. PNGRB regulations are being adopted at all sites.

The safety and occupational health of its employees and external stakeholders are of paramount importance and all these attributes are embedded within the core organizational values of your Company.

SAFETY PERFORMANCE

Your Company continues to demonstrate excellent HSE performance. HSE indices, as indicated below, across all its work centers are meticulously monitored with the aim for continual improvement.

Year(s) HSE Index

MoU Target (%) Achieved (%)

2008-09 97.0 98.95

2009-10 97.5 99.25

2010-11 97.5 98.92

Monthly safety index monitoring has been made stringent by including more elements for monitoring site's HSE performance.

SAFETY TRAINING

Your Company continues to give utmost importance to train the employees on HSE aspects. Apart from employees; spouses, children, contract workers, tanker drivers, nearby villagers etc. are also imparted safety training. Newly recruited trainees are given one week specific HSE training at site.

Your Company had organized a two day workshop for all business heads and fire & safety personnel. In the workshop, the participants were exposed to external faculties, PNGRB regulations etc. Another two day training program was organized for business heads on 'Industrial Safety Sensitization'including introduction to'Behavior Based Safety'aspects.

EXTERNAL SAFETY AUDITS (ESA)

Your Company's safety practices and systems are audited for continual improvement by external agencies and inter unit safety audit teams.

External Safety Audits: During the year 2010-11, safety audits were carried out by external agencies for 20 O&M units. Also building safety audit was carried out in your Company's corporate office building in Delhi, O&M and Training Institute building at Noida. Major work centers have been certified for Integrated Management Systems (IMS). IMS outlines the standards needed to align with, or conform to, internationally accredited certifications such as ISO 9001 (quality assurance), ISO 14001 (environment) and OHSAS 18001 (health and safety).

Inter Unit Safety Audits (IUSA): During the year 2010-11, inter unit safety audits have been carried out for 6 units of your Company.

OCCUPATIONAL HEALTH

Your Company continued from the previous year its commitment to improve the well being of its employees. During the year 2010-11,al employees at the work centers were medically examined. Besides, contract workers, CISF personnel, villagers from nearby areas were also covered under the program.

CORPORATE SOCIAL RESPONSIBILITY

Your Company has set high standards of discharging Corporate Social Responsibility (CSR).The quantum of CSR allocation is 2% of profit after tax of the previous financial year for CSR programmes. CSR allocations are used for economic, environmental and social upliftment of communities in and around the work centers in the major thrust areas such as Community Development, Infrastructure, Drinking water/Sanitation, Literacy Enhancement/ Empowerment, Educational Aids, and Healthcare/Medical. Besides specific socia welfare programmes, the CSR funds are also used to provide relief to victims of national calamities. Major initiatives undertaken by your Company under these thrust areas are detailed in Management Discussion & Analysis.

HUMAN CAPITAL

Your Company takes pride in its highly efficient and engaged work force which has been the driving force behind continuous rise in value added per employee in last 5 years. Value added per employee gives an account of efforts of company's employees to make the best and most productive use of the resources available to them.

TRAINING

Oil &Gas Industry has been witnessing rapid growth & development both at the domestic as well as global levels. Your Company is also implementing various new projects to strengthen its presence across the entire gas value chain. With new technological developments and phenomenal expansion taking place in the hydrocarbon sector, need of the industry is changing from merely acquiring the latest state of the art technologies and equipment to engaging qualified personnel suitably equipped with knowledge, skills, attitude and a practical exposure to the highly specialized jobs. Therefore, it is essential to have a focused approach on training and development of the company's human resources. ISO 9001 certified GAILTraining institutes (GTI) at Noida & Jaipur have been consistently working towards development of Human Capital of the Organization.

Maintaining the track record of excellent performance, 1 2,789 training mondays were imparted during the period under review. During FY 2010-11,14,298 mondays of training have been completed by GTI against the target of 14,000 mondays.

GTI received the prestigious National Award for Innovative Training Practices from Indian Society for Training and Development (ISTD) in January 2011. In its pursuit of offering training programs to external organisations and to convert itself into a revenue generating centre, GTI has successfully organized training programs for participants from other organizations like IOCL, BCPL, IGL, Siti energy, UP Fire Service Department, OPaL, Honda Scooters & Motorcycles etc.

Some of the key training initiatives taken by your Company during FY 2010-11 are:

1. Launch of ASME (American Society of Mechanical Engineers) Certified Courses at GTI Noida as an Authorised Training Provider to ASME. 4 faculty members from GAIL have been certified by ASME as Authorised Training Instructors for offering these courses.

2. The training institute of your Company organized new programs like Management Development Programs (MDPs) for newly promoted DGMs, GMsand EDs in April and May 2010, Workshop on Behaviour Based Safety for OICs in January 2011 and Effective Communication Skills for Non Executives through Video Conferencing during December, 2010 to March, 2011.

3. A new website was created for the training institute of your Company which was launched by CMD on 8th March, 2011. Additionally, publicity material like brochures and AV film on activities and services of the training institute have also been prepared.

4. The training institute of your Company also provided consultancy to EIL in terms of deputing GAIL Engineers from Pata Plant to Panipat Petrochemical plant for providing assistance commissioning and training to their employees.

5. The training institute of your Company had also successfully developed and delivered a course on Natural Gas Business Management for the MBA students of Rajiv Gandhi Institute of Petroleum Technology (RGIPT).

VIGILANCE

The main thrust of vigilance activities in your company is on predictive & preventive actions rather than punitive vigilance. In accordance with this objective, intensive inspections of various works were taken up and corrective measures suggested. Further, Shri Pratyush Sinha, the then Central Vigilance Commissioner of India visited your Company and interacted with senior officers of the company. He highlighted the importance of Corporate Governance, role of supervisory officers in eliminating corruption and stated that Vigilance is a management function which brings in more transparency and making objectivity in decision making.

During the Vigilance Awareness period, your Company organized vendor interaction programme wherein 138 vendor representatives representing 86 vendors providing services for various GAIL pipeline projects actively participated. The programme received active participation from vendors. Rallies were organized by certain units in association with local NGOs for generation of awareness and publicity against ill effects of corruption.

REPRESENTATION OF SCs, STs, OBCs, MINORITIES AND WOMEN EMPLOYEES

Your Company has been complying with Reservation Policy in terms of Presidential Directives and other guidelines received from time to time from Government of India in respect of providing reservation in matters of employment to candidates belonging to Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs) and Persons with Disabilities (PWDs) in Direct Recruitment.

Details with respect to total number of employees and the representation of Schedules Castes, Scheduled Tribes, Other Backward Classes amongst them as on 31.03.2011 have been given in Table below:

GROUP EMPLOYEES SC ST OBC ON ROLL

A 2,661 422 158 422

B 495 105 65 59

C 664 113 28 191

D 58 17 5 14

TOTAL 3,878 657 256 686

A total of 220 new employees joined the company during the year 2010-11. Total Manpower of the Company as on 31.03.2011 stood at 3,878 with 16.9 % of its employees belonging to SC category, 6.60 % to ST category, 1 7.7% to OBC category, 7.1 % to Minorities and 2.24% to PWDs category. Your Company's workforce comprised of 218 women employees as on 31.03.2011.

EMPLOYEE ENGAGEMENT SURVEY

Employee Engagement Survey was carried out by your Company during FY 2010-11 to gauge the engagement level of the employees as it believes that only engaged employee will go extra mile in delivering superior results. With the help of the survey, valuable feedback was obtained from the employees on People Practices and suggestions were also taken for improving overall employee experience at GAIL. Your Company was placed in the High Performance/ Hewitt's Best Employer Range.

SENIOR MANAGEMENT DEVELOPMENT CENTRE (SMDC)

Your Company realizes that it is imperative to continually strive to develop and enhance the quality of its talent pool. This would enable it to place competent persons at strategic roles. Senior Management Development Centre (SMDC) is being conducted in your Company as part of the Leadership Development Program to objectively assess the potential of its senior executives. The objective of this exercise is to identify the development needs of senior executives and design development programs so as to bridge the gaps.

SMDC is being conducted for senior executives at Chief Manager and above grades. This exercise will be a crucial input for the development of pipeline of leaders in your Company.

OFFICIAL LANGUAGE

Your Company is continuously making vigorous efforts for the propagation and successfu implementation of the Official Language Policy. The Official Language Implementation Committees at Corporate as well as Regional / Unit level held their quarterly meetings regularly to monitor and review the progress made in achieving the targets fixed in the Annual Programme.

With a view to create greater awareness and consciousness among employees, Hindi Fortnight was celebrated across the company. Further, in order to provide a larger platform to discuss the problems and difficulties in implementation of Official Language, annual conference was organized wherein senior officials from corporate office and work centers participated and shared their thoughts.

Bilingual software was provided to all GAIL offices. To impart working knowledge of Hindi as well as computer training to employees in bilingual software, a comprehensive and time bound programme was prepared and implemented during the year.

"RajbhashaSahyog"a quarterly Hindi magazine was published and distributed among employees in order to create interest among employees of GAIL and their family members towards reading and creative writing in Hindi.

RESEARCH AND DEVELOPMENT

Your Company recognizes the importance of Research and Development (R&D) to improve its technological capabilities to remain competitive. Your Company pursues a focused R&D strategy to further its competitive edge in its existing business by improving operationa efficiency besides exploring new resources of energy to meet the growing demand of India's populace for clean energy. Your Company has contributed X 16 crores to the Hydrogen Corpus Fund managed by Centre for High Technology (CHT) to take up research projects in various facets of Hydrogen Production and Storage which is touted as the fuel of the future.

Your Company is pursuing a unique collaboration with Municipal Corporation of Delhi for extraction of gas at Ghazipur Landfil site. A 10 acres of area has been earmarked initially for carrying out a pilot project for extraction of landfill gas. As per the preliminary analysis carried out, the project holds a potential to generate 600-800 m3/Hr of gas. It is also planned to put up a CNG station on this landfill gas to improve the economics. A CNG station running on landfill gas will be a first-of- its-kind in the world.This innovative project will not only generate a clean fuel but also simultaneously help in combating global warming due to the capture of methane gas that would have otherwise got released into the atmosphere. The success of this pilot project would open the possibility of replicating its success all over the country.

Another innovative project that your Company is working upon is conversion of waste plastics into fuel.The bench scale tests have given encouraging results.This project shall not only help in proper disposal of waste plastic but also generate fuel from the same. R&D efforts are also being undertaken to develop new polymer grades to better suit the customer requirements

Efforts are also being made to harness technologies that can be used to exploit various non-conventional natural gas sources like Shale Gas, Gas Hydrates, Underground Coa Gasification (UCG) etc. that have potential to substantially increase the availability of natural gas.

LAURELS

CORPORATE AWARDS

- GAIL was ranked no.1 company among gas utilities in Asia in the Platts Globa Ranking of Energy Companies for the year 2010.

- "MOD Excellence Award" by the Department f Public Enterprises for the year 2008-09 in the petroleum sector.

- "Managing India Award" for the Outstanding PSU of the Year by AIMA.

- Kaizen Warrior Award for Most Efficient Navratna PSU of the year.

- Dun & Bradstreet-Rolta Corporate Award for Gas-Processing,Transmission & Marketing.

- GAIL's KG Basin and Vizag Secuderabad LPG pipeline unit won the first and second National Award for Excellence in Cost Management 2010 respectively under the category of Public Sector Manufacturing Unit.

- Certificate of Recognition for Excellence in Corporate Governance in the 10th ICSI National Award for Excellence in Corporate Governance 2010 as one of theTop Companies adopting Excellent Practices in Corporate Governance.

- Asia's Best Employer by World HRD Congress in the category of'Best HR Strategy in line with Business".

HSE AWARDS

- International Safety Award from British Safety Council (UK) for KG Basin & NCR.

- HVJ pipeline bagged consecutively 14th time Oil Industry Safety award with 1st rank for best overall safety performance under'Cross Country Pipelines Category"(Natural Gas/LPG).

- Gas processing ComplexVijaipur bagged for 7th time Oil Industry Safety Award with 2nd rank for best overal safety performance under other processing plants category.

- GAIL, Pata Bagged National Safety Award 2008 of Ministry of Labour & Employment, Government of India as 1st Winner (Category: Manufacture of Chemical & Fertilizers).

- GAIL Lakwa wins 1st Rankin overal Safety performance in the'Other Processing Plants Category"from OISD for 2009-10.

- Safety Innovation award for Agra, Khera, Lakwa & Nasirabad from Institute of Engineers Delhi State Center.

- GPU Vijaipur has won Sarvashresta award from National safety Council M. P Chapter.

- GAIL Pata, Vijaipur, Vaghodia, Jhabua, Hazira, NCR, & Mumbai bagged "Greentech Environment Excellence (Gold) Award - 2010"from Greentech Foundation, New Delhi.

OTHERS

- Your Company was adjudged as Asia's Best Employer by World HRD Congress in the category of'Best HR Strategy in line with Business".

- GAIL won most coveted award OC customer responsiveness presented by Economic Times & Avaya Global Connect.

RIGHT TO INFORMATION

In order to promote transparency and accountability, an appropriate mechanism has been set up across the Company in line with the Right to Information Act, 2005. Your Company has nominated APIOs/ PIOs/ CPIO at its units/offices across the country to provide information to citizens under the provisions of RTI Act.

MANAGEMENT DISCUSSION AND ANALYSIS

The detailed Management Discussion and Analysis form part of this report at Annexure- A.

CORPORATE GOVERNANCE

Your Company believes Corporate Governance is at the root of shareholder's value creation. Pursuant to clause 49 of the Listing Agreement with the Stock Exchanges, a report on Corporate Governance forms part of this Report at Annexure- B.

The statutory auditors of the Company have examined and certified your Company's compliance with respect to conditions enumerated in clause 49 of the Listing Agreement and DPE guidelines on Corporate Governance. The certificate forms part of this Report at Annexure- C.

ENERGY CONSERVATION,TECHNOLOGY ABSORPTION

Details of conservation of energy, technology absorption in accordance with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1 988 are annexed at Annexure- D.

PARTICULARS OF EMPLOYEES UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956

The particulars of employees u/s 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 is annexed to this report at Annexure E.

FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits and, as such, no amount of principal or interest was outstanding as of the balance sheet date.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, foreign exchange earnings wereRs4.72 crores. Expenditure in foreign currency was X 2,382.58 crores.

During the year under review, your Company has incurred expenditure ofRs 2.79 crores on foreign tours, foreign training, seminars & conferences, X 0.15 crores on entertainment and X 20.92 crores on advertising & publicity.

DIRECTORS

Shri S. Venkatraman was appointed as Director (Business Development) w.e.f 25.09.2010, Shri P.K.Jain was appointed as Director (Finance) in place of Shri R.K. Goel w.e.f. 01.03.2011 and Shri Arun Agarwal was appointed as non-official part-time (Independent) Director w.e.f. 24.02.2011. Dr. U.K. Sen, non-official part-time (Independent) Director ceased to be Director w.e.f. 28.04.2011.

The Board placed on record its deep appreciation for the valuable services rendered by Shri R.K. Goel and Dr U.K. Sen during their association with your Company.

CODE OF CONDUCT

In line with the requirements of clause 49 of Listing Agreement, the Board Members and Senior Management Personnel, have affirmed compliance with the Code of Conduct for the financial year ending 31 "March, 2011.

DIRECTORS' RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT, 1956

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 in relation to Directors'Responsibility Statement, it is confirmed that:

i) in the preparation of the annual accounts for the financial year ended 31 "March, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as 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) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors have prepared the annual accounts for the financial year ended 31st March, 2011 on a going concern basis.

AUDITORS

STATUTORY AUDITORS

The Statutory Auditor of your Company is appointed by Comptroller & Auditor General of India (CAG). M/s Rasool Singhal & Co, Chartered Accountants, Aligarh and M/s Mi. Puri, Chartered Accountants, New Delhi were appointed as Joint Statutory Auditors of your Company for the year 2010-11.

The review of Annual Accounts of your Company for the year ended 31 "March, 2011 by CAG forms part of this report as an addendum. Notes on accounts referred in the Auditors'Report are self explanatory and therefore, do not call for any further comments.

COST AUDITORS

Pursuant to the directions of the Centra Government for audit of cost accounts, your Company has appointed M/s Rohit J Vora, Vadodara for Vijaipur-LPG, M/s R. Nanabhoy &Co, Mumbai for Pata-LPG, M/s M Goyal & Co, Jaipur for Gandhar-LPG, M/s Chandra Wadhwa&Co, New Delhi forVaghodia-LPG, M/s DhanajayV.Joshi & Associates, Punefor Usar-LPG, M/s DGM & Associates, Guwahati for Lakwa-LPG and M/s Mani &Co, Kolkata for Baroda-CNG station as Cost Auditor(s) for the financial years 2010-11 to 2013-14. Further, M/s K.L. Jaisingh & Co, Cost Accountants, Noida was appointed as cost auditor for GAILTEL Business for the financial years 2011-12 to 2013-14.

ACKNOWLEDGMENT

Your Directors express their gratitude for the valuable guidance and support provided by Government of India in particular the Ministry of Petroleum and Natural Gas and various State Governments, regulatory and statutory authorities from time to time

Your Directors acknowledge the constructive suggestions received from Statutory Auditors and Comptroller & Auditor General of India and are grateful for their consistent support and cooperation.

Your Directors also wish to thank all the stakeholders of GAIL for reposing their faith, trust and confidence in your Company.

Your Directors would, at the end, like to place on record their deep and sincere appreciation for the hard work, dedication and unstinting efforts of your Company's employees to ensure that your Company reaches the pinnacle of success.

For and on behalf of the Board

B.C.Tripathi

Chairman & Managing Director

Place: New Delhi

Dated: July 18,2011

Mar 31, 2010

Oh behalf of ihe Board of Directors of your Company, I am delighted to present the 26th Annual Report of your Navratna Company along with Audited Financial Statements for the Financial Year 2009-10.

NATURAL GAS - SUSTAINABLE ENERGY

Indian economy is poised for high growth as compared to other economies in the world thereby generating energy demand. As the most environment- friendly fossil fuel natural gas is a major contributor to the clean and green environment.The establishment of a sustainable energy road map is one of the most pressing needs facing the country. Your Company for the last 25 years is driving Indias gas sector and is all set to take up the challenge of providing this iuaetinable energy.

Today, your Company is an integrated energy company along the Natural Gas value chain with global footprints. Having started as a gas transmission Company during the late eighties, it grew organically over the years by building a large network of natural gas trunk Pipelines covering a length of around 7,850 km. Your Company has interests in the business of natural gas, LPG, Liquid Hydrocarbons and Petrochemicals, the latter being value-added products. Your Company has also diversified into Exploration & Production, City Gas Distribution and is steadily developing its overseas presence. Your

Company is spearheading the move to a new era of clean fuel industrialization.

Your Company is implementing projects for laying five new pipelines and augmentation of rwoexisting pipelines with a total length of about 7,500 km having an outlay of about Rs. 30,000 crores. This will lead to doubling of pipeline length and transmission capacity in the coming years.

Your Companys present business portfolio includes:

- 7.850 km of Natural Gas high pressure trunk pipeline with a capacity of approx. 150 MMSCMD of natural gas across the country

- 7 LPG Gas Processing Units to produce 1.4 MMTPA of LPG and Other Liquid Hydrocarbons

- North Indias only gas based integrated Petrochemical complex at Pata, Uttar Pradesh, with a capacity of producing 4,10,000 TPA of Polymers

- 1.900 km of LPG Transmission pipeline network with a capacity to transport 38 MMTPA of LPG

- 27 Oil and Gas Exploration blocks and i Coal Bed Methane Block

- 13,000 km of OFC network offering highly dependable bandwidth for telecom service providers

PERFORMANCE OVERVIEW

You Company has recorded sustained growth in all key physical and financial parameters in the Financial Year 2009-10. During the year 2009-10, the important financial and physical highlights are as under:-

Financial

(Rs. In crores)

Particulars 2009-10 2008-09

Turnover (Net erf ED) 24,996 23.898

Other income 541 797

Cost of Sales (excluding interest and Depreciation and including extraordinary items) 20,327 19.844

Gross Margin 5,210 4.851

interest 70 87

Depreciation 562 560

Profit Before Tax 4,578 4.204

Provision for Tax 1,438 1,400

Profit after Tax 3,140 2.804

Appropriations

interim Dividend 254 507

Proposed Final Dividend 698 381

Corporate Dividend Tax 159 151

Net Transfer to Bond Redemption Reserve (3) 32

Transfer to General Reserve 314 280

Balance carried forward to Balance Sheet 1,718 1,453

Physical

Particulars 2009-10 2008-09

Gas Transmission (MMSCMD) 106.74 83.29

LPG Production (TMTs) 1,100 1,088

Pentane / Propane / SBP Solvents /

Naptha Production (TMTs) 340 313

Polymer Production (TMTs) 417 420

LPG Transmission (TMTs) 3,161 2,744

Converged Accounting Standards (IFRS) Implementation

In accordance witn the road map given by the Ministry of Corporate Affairs, Government of India, Accounts are to be prepared on the basis erf converged Accounting Standards i.e. Indian Accounting Standards converged with International Financial Reporting Standards (IFRS) w.e.f. 1" April, 2011. Accordingly, your Company is taking necessary steps for the implementation of Accounting Standards which are converged with IFRS. Basic IFRS training has also been imparted to concerned senior officials of your Company. Your Company is gearing up to implement the Converged Accounting Standards (IFRS) w.e.f. l" April. 2011 as would be notified by Central Government.

DIVIDEND

Your Company has a consistent track-record of dividend payment. So far, your Company has disbursed dividend of Rs. 7,370 crores to the shareholders

The Board of Directors of the Company had earlier approved payment of an interim dividend & 20% per equity share (Rs.2/- per equity share) amounting to Rs. 253.70 crores paid in the month of December, 2009. Further, the Board had recommended payment erf final dividend @ 55% per equity share (Rs. S5 per equity share) for the year 2009-10.

With this, the total dividend payment for the fiscal 2009-10 will be at 75% (Rs. 7.5 per equity share) amounting to Rs. 951.36 crores on its paid-up equity capital of Rs. 1,268.48 crores.

CREDIT RATING

Your Company has been assigned ihe highest domestic credit ratings of MA from ICRA and CARE which indicates the highest credit quality and rated instruments carry the lowest credit risk. The international rating agency. Moodys international. Hong Kong, has reaffirmed the Corporate issuer rating of Baa2 and local currency issuer rating of A3 to your Company in January 2010. Your Companys international rating from Moodys is higher than the countrys sovereign rating. This rating reflects GAILs leadership position in natural gas transmission business, the low level of business risks, favorable outlook for natural gas trade, its robust profitability and financial position and strengths derived from the significant sovereign ownership.

CORPORATE STRATEGY

Your Company has developed Strategic Plan for the period 200M2.The goal set by your Company includes doubling of its bottom line by the year 2011-12. The strategy developed to realize the set goals is as under:

&- Gas Sourcing & Marketing: Tying- up with producers and suppliers for marketing and transmission ofnaturalgason long term and sustainable basis. This is being realized by securing more gas from various producers, thereby increasing transmission and marketing volumes.

&- Gas Transmission: f_xpanding of pipeline infrastructure from 7.850 km to about 12,000 km with the laying of new pipelines by 2011 -12. For achieving this, execution of various new pipelines at a cost of around Rs. 30,000 crores is in progresive City Gas: Pursuing of City Gas distribution opportunities in various parts of the country.This requires introduction of Compressed Natural Gas for the automotive sector and Piped Natural Gas for commercial and domestic use in more number of cities ina phased manner. The same is being realized by participating in PNGRBs bidding process for various cities and executing city gas projects m those cities.

*ÃÂ¦ Petrochemicals: in the area of Petrochemicals business, your Company is examining possible options for expansion of its Petrochemical Complex at Pata and is exploring green field participation in new ventures in India and abroad. For achieving this, expansion of Petrochemical Complex at Pata is being carried out m phases and participation in new field ventures is being undertaken through equity stake, while also exploring new ventures through JV route.

E&p: Your Company also plans to strengthen E&P capability and resources to participate as a major partner/ operator in Domestic E&P / CBM bidding. This would help m developing E&P as a self-sustainable business for augmenting additional supplies of natural gas. For this, investments are being made in both domestic on-land and off-shore fields, with a balanced portfolio of developmental and exploratory projects.

Globalization: On the globalization front, the plan is to focus on areas having synergy with the existing businesses by entering into new and emerging gas rich countries with focus on sourcing of gas and participation in downstream activities.

Your Company is also in the process of developing Strategy for the coming decade. Certain focus areas of diversification have been identified, besides keeping focus on the core business areas.The strategy for pursuing such areas is being developed.

SEGMENTAL REVIEW

Your Company has been consistently achieving the top-most all round "Excellent" rating by the Government of India, since the commencement of signing of the Memorandum of Understanding (MoU) with the Government of India on performance review. During the year under review, the segment wise business performance of the Company is as under:

Natural Gas Marketing

Natural gas continues 10 constitute the core business of your Company. Dunng the year 2009-10, Gas Sales was 81.43 MMSCMD compared to 79.06 MMSCMD in the previous financial year. Major supplies of natural gas includes fuel to power plants, feedstock for gas based fertilizer plants. Your Company holds around 55% market share in gas marketing in India.

Natural Gas Transmission

Your Company owns and operates a network of about 7.850 km of natural gas high pressure trunk pipeline with a capacity of approx 150 MMSCMD of natural gas across the country.The Gas Transmission during the year was 106.74 MMSCMD compared to 83.29 MMSCMD in the previous financial year registering a growth of 28%. Your Companys share of gas transmission business is 72% in India.

Natural Gas Pipeline Projects

During the financial year, your Company has completed commissioning of various pipelines having a total length of about 700 km, including Dadri-Bawana pipeline for supplying gas to Pragati Power Corporation Limited and Chainsa - Sultanpur Pipeline, which will facilitate supplying about 34 MMSCMD gas to around 65 customers.

LPG Transmission

Your Company is the only Company in India which owns and operates pipelines for exclusive LPG transmission for third party usage. There are two LPG Pipeline Transmission Systems with a total length of about 1,900 km. 1.300 km of which connects the Western and Northern parts of India and 600 km of network is in the Southern part of the country. The

LPG transmission system has a capacity to transport upto 3.8 MMTPA of LPG. LPG transmission throughput was about 3.16 million MT in the year 2009-10.

Petrochemicals

During 2009-10, your Company has produced 4,17,000 MT of polymer and sold 4.10X100 MT of polymer and has 21 % of overall domestic market share. Your Company also introduced a new pipe grade product PE-100 grade in the market.

> LPG & Other Liquid Hydrocarbon Production

Your Company has 7 LPG plants in the country. In the year 2009-10. total Liquid Hydrocarbon production was about 1.440 million MT which mainly included 1.1 million MT of LPG. 0.18 million MT of Propane, 0.06 million MT of Pentane and balance quantity included other products like S8P solvent and Naptha.

*- Exploration and Production (E&P)

During the year 2009-10, hydrocarbon discovery has been made in Tripura Onland E&P block. Approval of Cabinet Committee on Economic Affairs (CCEA) has been Obtained for investment in Field Development Plan for A-1 and A-3 E&P blocks in Myanmar and also for participation in the associated onshore midstream pipeline. Development of the blocks A-1 and A-3 is in progress and the Gas production is expected to start from May. 2013. The Petroleum Exploration License for Cauvery Onland E&P block has been granted by Government of Tamil Nadu, where your Company is an Operator and the said block has been awarded during NELP-Vli bidding round. The petroleum operation of the aforesaid block has already commenced.

Your Company has participating interest in 27 E&P blocks and l CBM block. Out of these, 24 E&P blocks are in India and 3 blocks ate overseas (A-l and A-3 blocks in Myanmar and Block 56 in Oman). The on land block in Cambay basin is generating revenue and the revenue generated during the year is Rs. 32 25 crores.

Your Company is operating uvoonland E&P blocks viz. Rajasthan Ontand and Cauvery Onland.

Coal Bed Methane

Your Company lias participating interest in I Coal Bed methane block (in Chattisgarh state).The block is in first exploration stage. Exploration activities like drilling of core holes have been completed and drilling of test wells is planned.

Telecommunications

Leveraging on its pipeline network, your Company has built up a strong Optic Fibre Cable (OFC) network for leasing of bandwidth as a carriers carrier. Your Companys telecom business unit - GAILTEL has approximately 13,000 km of OFC network.

SEGMENTAL OUTLOOK

Natural Gas

Major focus for your Company is to maintain its dominant position in the gas business, especially the transmission segment and continue the relationship with existing customers and also add more customers. Therefore, your Company is building about 7,500 km of pipelines to transport and supply natural gas to various customers in Power, Fertiliser, Refinery, Industries, CGD projects etc These would include large trunk pipelines, along with smaller pipelines which would provide connectivity among trunk lines to form a grid

> Natural Gas Pipeline Projects

Your Company >s executing various pipeline projects for about 7.500 km of pipeline passing through 16 states, at an approved project cost of around Rs. 30,000 crores. When these pipelines are commissioned, the gas transmission capacity is expected to increase from ISO MMSCMD at present to around 300 MMSCMD.

Your Company has received approval / authorization in the year 2007 for the following five new natural gas pipelines in the country from the Ministry of Petroleum and Natural Gas (MoPNG), covering a length of around 5,500 km:

> 610 km Dadri - Bawana - Nangal pipeline passing through UP. Delhi, Haryana and Punjab

> 350 km Chamsa - Gurgaon - Jhajjhar - Hissar pipeline passing through Haryana and Rajasthan

2050 km Jagdishpur - Haldia pipeline passing through West Bengal, Jharkhand. Bihar and U.P

1389 km Dabhol - Bangalore pipeline passing through Maharashtra and Karnataka

1114 km Kochi - Kanjirkkod - Bangalore / Mangalore pipeline passing through Kerala. Tamil Nadu and Karnataka

In addition to these, your Company will be augmenting the capacities or its fwoexistitvg pipelines, namely, Dahej (Gujarat) - Vijaipur (Madhya Pradesh) pipeline and Vijaipur (Madhya Pradesh) - Dadri (Uttar Pradesh) pipeline, having a length of around 2,000 km.

Your Company has taken initiatives to transparently execute the projects without any time & cost over-runs through meticulous Project Monitoring.

- Petrochemicals

Your Company owns and operates a gas based integrated petrochemical plant at Pata, Uttar Pradesh, with a capacity of producing 4,10,000 TPA of Polymers ie. HOPE and LLDPE. Your Company is in the process of installing an additional gas cracking furnace, after which, the capacity will further increase up to 430.000 TPA.

Your Company is currently in the process of setting up a 280.000 TPA Petrochemical Plant in Assam, at an investment of about Rs. 5.460 crores through its subsidiary. Brahmaputra Cracker and Polymer Limited (BCPL).

GasSourcing

Your Company continues to have focus on securing gas supplies from international markets. LNG and trans-national pipelines are the two prevalent modes of cross border gas trade and your Company has been making efforts to bring more natural gas into the country.

Wind Energy

Your Company has successfully commissioned a wind energy project of 4.5 MW capacity at Sinoi (Anjar). District Bhuj in Gujarat, at a cost of Rs. 277 crores, in March, 2010. The generated power is fully utilized for captive consumption at your Companys installations in Gujarat, namely. Gandhar, Kandla and Samakhali.

Based on the successful commissioning and satisfactory performance of this project, your Company is planning to go for commercial wind energy projects in different states.

BUSINESS INITIATIVES

- Global

Your Company is continuously scouting for overseas business opportunities in the natural gas sector. The purpose is to have long term growth in core business areas and also to source natural gas to meet the growing requirements of the Indian market.

Your Company aims to target the African market owing to its high gas reserves and nascent gas infrastructure. Your Company is a part of the consortium which includes Shell. Total. PTT & other companies for bidding in the Nigerian Gas Master Plan (NGMP) project in Nigeria. Your Company is also looking for opportunities in countries like Ghana, Egypt, Papua New Guinea (PNG). Qatar etc Your Company has signed in MOU with Egyptian Natural Gas Holdings Company (EGAS) for cooperation in gas sector projects in Egypt. Your Company is also shortly opening an office m Egypt to pursue gas sector opportunities in Africa and Middle East.

Your Company is having Participating Interest in two offshore E&P blocks A-1 & A- 3 m Myanmar. For monetization or gas, your Company will also be participating in a offshore and onshore pipeline project. Commercial production of gas from these blocks is likely to commence from mid of 2013.

Domestic

In order to further strengthen its presence in the petrochemicals business, your Company is in the process of acquiring equity stake in ONGC Petto- additions Limited (OPaL). along with co-promoter status and rights to market a portion of polymers produced by OPaL. OPaL is setting up a green Held petrochemical complex of l.l MMTPA Ethylene capacity (dual feed cracker) in Oahej, Gujarat.

To foray m the fast growing power sector, GAIL has undertaken a number of initiatives through which, GAIL on ltsown,and also in partnership with other companies, plans to set up power plants in various parts of the country, in order to reach customers not connected by pipeline, your Company has undertaken study for distribution of gas in the form of LNG through tankers.

IT INITIATIVES

Your Company is IT sawy organization and is continuously adopting the latest and state-of-the-art IT solutions to keep pace with the fast changing industry. This helps in continuous improvement in efficiency and productivity of employees and also enables right information to right person; by use of latest IT security solutions.

Your Company has taken several new IT initiatives to enhance productivity. The process of upgradation of the existing SAP ERP hardware and software has been initiated, which will add several new features to the existing ERP setup and provide enhanced reporting and information management facilities. New components like Governance, Risk and Control (GRCJ, e-Recruitment and Gas Management System (GMS) are also being added to the SAP infrastructure.

Your Company has also started the process for implementation of a robust. state-of-the-art Document Management System (DMS), in line with the best practices of the industry. This will include digitization of all the important information and records of the Company across various locations, electronic workflow and authorizations-based access to information, in addition to the above, your Company has put in place the latest High-Definition Video Conferencing (VC) systems at all its major locations to improve the communication facilities and reduce travel time and expenses.

Further, e-mail being a major and very important communication tool in todays world, e-mail infrastructure has been upgraded to the latest version. Also, functionality of e-mails has been centralized and a Disaster Recovery (DR) setup has been put in place to take care of any unforeseen eventualities.

IT security is also a major thrust area of IT strategy and planning in the organization. Entire IT systems and processes have been audited by expert external agency to strengthen information security, identify the risk areas and mitigate them with latest and industry standard security solutions. Keeping pace with the latest advancements, the IT policy of your Company has been revised to reflect those changes. Also, the Business information System department of your Company has been certified with the new ISO 9001-2008 standard.

SUBSIDIARIES & JOINT VENTURES

Your Company has formed Subsidiaries and Joint venture companies (or City Gas Distribution and Petrochemicals, four Company is one of the pioneers to introduce City Gas Projects in India for gas supplies to households, commercial users and for the transport sector by forming Subsidiaries/ Joint Venture Companies.

- Subsidiaries

Brahmaputra Cracker and Polymer Limited (BCPL)

Your Company has 70% equity share m BCPL a subsidiary, with Oil India Limited (OIL). Numaligarh Refinery Limited (NRU Govt, of Assam, each having 10% equity share. Feedstock Supply Agreements have been signed between BCPL and all the three suppliers, viz. Oil and Natural Gas Corporation Limited. Oil India Limited and Numaligarh Refinery Limited.Technology license agreements have been signed for cracker, polyethylene and polypropylene units. Entire land for the project has been acquired by BCPL. Civil & structural works for the main process units, namely. Ethylene cracker unit. Polyethylene unit (HDPE/LLDPE). Polypropylene unit, C2+ extraction unit. Gas de-hydration unit and Gas sweetening unit of BCPL have commenced. Contract has been awarded for captive power plant for Lepetkata & gas turbine driven compressor for Duliajan station.

BCPL is setting up a 2,80,000 TPA polymer plant at an investment of Rs. S.460 crores. Financial commitment to the extent of Rs. 3,000 crores has been made and project execution is in progress.

GAIL Gas Limited

GAIL Gas is a wholly owned subsidiary of your Company. GAIL Gas has been selected for implementation of City Gas Distribution (CGD) projects in four cities, namely.

Kota, Dewas. Sonepat & Meerut in the I round of bidding by Petroleum & Natural Gas Regulatory Board (PNGRB). GAIL Gas has already started supply of CNG & PNG (Industrial Customers) in the city of Dewas from December, 2009. Steel Pipeline laying work is in progress in the cities of Meerut, Sonepat & Kota. The gas supplies will commence shortly in these cities. The total approved investment in all these cities is approx. Rs. 435 crores in phase-i.

GAIL Global (Singapore) Pte Limited

Your Company has a wholly owned subsidiary, namely. GAIL Global (Singapore) Pte Ltd, to manage investments abroad. Your Company is looking for further business opportunities through this subsidiary company.

* Joint Ventures

Aavantika Gas Limited (AGL)

AGL is in operation m Indore and Ujjain and is supplying CNG to the transport sector in these cities. AGL is supplying CNG to almost 9,000 vehicles in both the cities. AGL has plans to set up 5 and 2 CNG stations in Gwalior and Ujjain respectively and domestic supplies to nousenoius. o oaugnter stations are mecnamcaiiy leaoy for CNG dispensing, awaiting for CCOE final approval. MoPWG has authorised AGL for CGD in Indore, Gwaltor and Ujjain. Your Company has 22.5% stake in the Company along with HPCL as equal partner.

8hagyanagar Gas Limited (BGL)

8GL is currently operating 6 CNG siations in Vijaywada and 4 CNG stations in Hyderabad and one CNG station in Rajahmundeiy. BGL is supplying CNG in these 3 cities to almost 6,000 vehicles. BGL is also operating two Auto LPG stations in Hyderabad and one Auto LPG station in Tirupati. BGL has received authorization from MoPNG for City Gas Distribution (CGD) in Hyderabad & Vijaywada. Your Company has 22.5% stake in the Company along with HPCL as equal partner.

Central UP Gas Limited (CUGL)

CUGL is currently operating 7 CNG stations m Kanpur and 2 CNG stations in Bareily. CUGL is supplying CNG to almost 12,000 vehicles in the two cities. CUGL commenced its domestic supply of PNG with connections to 35 households Kanpur. CUGL has received authorization from MoPNG for CGD in Kanpur & Bareilly. Your Company has 22 5% stake in the Company along with BPCL as

Green Gas Limited (GGL)

GGL is currently operating 6 CNG stations in Luc know and 3 CNG stations in Agra. GGL is supplying CNG in the two cities. GGL has tied up for commencement of domestic supply of PNG with connections to households, commercial and industrial establishments. MoPNG has authorized GGL for CGD in Lucknow & Agra. Your Company has 22.5% stake in the Company along with IOCL as equal partner.

Indraprastha Gas Limited (IGL)

IGL is the largest CGD entity in terms of CNG sales and the number of vehicles supplied by CNG in India. tGL has received authorization from MoPNG for CGD in Delhi & its suburbs viz. NO)DA [Gautam Budh Nagar), Greater NOIDA, Gurgaon, Faridabad and Ghaziabad.

IGL is supplying piped gas to around 2 lacs domestic. 340 commercial 20 small industrial consumers and CNG to over 3 lac vehicles through around 200 CNG stations in NCR.

Your Company has 22.5% stake in the Company along with BPCL as equal partner.

Mahanagar Gas Limited (MGL)

MGL is a Joint Venture of your Company and British Gas. MGL has set up 140 CNG stations catering to over 2 lac vehicles spread over Mumbai, Thane, Mira-Bhayandar and Navi-Mumbai areas besides supplying PNG to over 45 lac domestic customers, more than 1,000 small industrial & commercial consumers, it has received authorization from MoPNG for CGD in Mumbai, District Thane including Navi Mumbai & Mira Bhayander. Your Company has 4975% stake in the Company along with British Gas as equal partner.

Maharashtra Natural Gas Limited (MNGL)

MNGL is a Joint Venture of your Company and Bharat Petroleum Corporation Limited (BPCL) for implementation of City Gas Projects in and around Pune city. MNGL has received authorization from MoPNG for CGD in Pune including Pimpri, Chinchwad, Talegaon, Hinjewadi & Chakan areas. It has started

10 stations supplying CNG to nearly 5,000 vehicles. Your Company has 22.5% stake in the Company along with BPCL as equal partner.

ONGC Petro-additions Limited (OPaL)

Your Company is m the process of acquiring equity stake in ONGC Petro- additions Limited (OPaL), which is a Joint Venture of your Company with Oil and Natural Gas Corporation Ltd. and Gujarat State Petroleum Corporation Ltd. for setting up Petrochemical Project at Dahej in Gujarat. OPaL is setting up a green field petrochemical complex of 1.1 MMTPA ethylene capacity (dual feed cracker) m Dahej, Gujarat.

Petronet LNG Limited (PLL)

Pu. has been formed for setting up of LNG import and regasification facilities. PLL has a long term LNG supply contract with RasGas, Qatar, for import of 7.5 MMTPA of LNG. PLL Dahej terminal in Gujarat has been expanded to 10 MMTPA capacity. PLL has successfully implemented a pilot project for supplying LNG through cryogenic road tankers. PLL is also coming up with a LNG terminal at Kochi, Kerala, with an Initial capacity of 2.5 MMTPA, expandable up to 5 MMTPA and it is scheduled to be operational by end of 2011. Your Company has 12.5% equity stake in PLL. along with BPCL, ONGC and IOCL as equal partners.

Ratnagiri Gas and Power Private Limited IRGPPLI

RGPPL is a joint venture company between your Company, NTPC. financial institutions and MSEB. The capacity of the Ratnagiri Gas & Power Station is 2,150 MW, which is the largest gas based power generation facility in the country and is currently producing 1.850 MW of power. RGPPL is in the process of commissioning an LNG import terminal of 5 MMTPA capacity. Your Company has 3288% stake in the Company along with NTPC as equal partner.

Tripura Natural Gas Company Limited (TNGCL)

TNGCL is presently supplying gas to around 7,500 domestic, 170 commercial and industrial consumers and has set up one CNG station in Agartala. which is catering to more than 1,400 vehicles. TNGCL has received authorization from MoPNG for CGD In

Agartala. Your Company has 29% stake in the Company.

GAIL China Gas Global Energy Holdings Limited

The joint venture company has been formed with an objective to pursue gas sector opportunities, mainly in China. Your Company has 50% equity interest in the company along with China Gas as equal partner. The joint venture company is in the process of identifying projects in gas and other related areas in China.

OVERSEAS PRESENCE

Your Company has presence in 5 countries. Your Company has made strategic investment in City Gas Distribution (CGD) & CNG businesses through equity participation in three companies in Egypt and one in China. Your Company is looking for further collaboration with them to pursue more business opportunities. Your Company has already formed a 50:50 JV with China Gas Holdings Ltd., with an objective to pursue downstream gas sector opportunities in China. Further, your Company is opening an office in Egypt.

Your Company has participating interest in two offshore blocks (A-1 & A-3) m Myanmar and one onshore block (56) in Oman. Commercial production of gas from Myanmar will start from May, 2013. Apart from this, your Company is also participating in an onshore pipeline project for transportation of gas from Myanmar to China.

Asia Gas Partnership Summit (AGPS)

Your Company organized ihe 6" Asia Gas Partnership Summit [AGPS) 2010 at Delhi during March 2010 on the theme "Sourcing. Transmission, Distribution of Natural Gas: Challenges for Emerging Markets! in association with FICCI and IGU. AGPS is a flagship event of your Company which has brought together leaders from the global natural gas industry onto one platform to share their perspectives and examine the paradigm shifts taking place in the Asian and global gas markets.The latest edition was a grand success and had a overwhelming response, both from the sponsors and the delegates. It witnessed unprecedented participation with 60 speakers, over 500 participants and 40 partners. As many as 25 eminent speakers from 1A countries presented papers. Foreign delegates & exhibitors also participated in the Summit.

A high level Qatar delegation led by H.E. Mr. Abdullah Bin Hamad Al-Atiiyah, Dy. Premier and Minister for Energy and Industry, State of Qatar, participated in the conference, which added a new dimension to the event. The event bolstered the already existing relationship between India and Qatar in the domain of natural gas and enhanced GAiLs brand image as a global and integrated gas utility.

SUSTAINABLE DEVELOPMENT

Your company continues to focus on energy security, climate change and energy needed to support economic development of the country in a sustainable manner. GAIL believes that the mam ways to meet Indias future energy challenges are through diversity, by accessing wide range of clean energy sources - both conventional and non-conventional and by improving energy efficiency and therefore, thrust is given to all such areas to contribute to a sustainable environment.

Natural gas is strategically important because it releases the least carbon dioxide compared to other fossil fuels e.g. when used as fuel for power generation, it produces about half the emissions caused by conventional coal generation Therefore, ihe focus on natural gas continues and remains the mainstay of your Companys business.

Keeping in view the need for developing low carbon economy, your Company has also started investing m low carbon businesses, mainly the renewable energy sources like wind and solar power. While a wind power project of 45 MW capacity for captive generation is already operational, new wind projects for commercial generation are also being planned. Your Company is also foraying into solar power sector and is making necessary tie- ups for the same.

Your Company is also continuously focusing on improving energy efficiency in its operations through use of energy efficient technologies, processes and equipments and through close performance monitoring. The details of energy conservations measures taken in 2009-10 and further initiatives towards energy conservation have been taken up which are likely to yield results m 201011 and onwards are given mAnnexure-D

CLEAN DEVELOPMENT MECHANISM

Continuing with its philosophy ofSpreading the Green Energy, your Company has taken a conscious decision to incorporate various environment fnendly initiatives in its new Office Building being constructed at No-da. These initiatives will reduce the emissions of Green-House Gases (GHG) from this building compared to a building constructed m the business-as-usual scenario. Therefore, it should be possible to get these initiatives registered as Projects under Clean Development Mechanism (CDM) for getting Certified Emission Reduction (CER> Units. Necessary applications for registering the Projects are being submitted to the United Nations Framework Convention on Climate Change (UNFCCQ.

HEALTH, SAFETY & ENVIRONMENT- SUSTAINABLE DEVELOPMENT

During the year, enhanced efforts continued to address Health, Safety and Environment matters and attain sustainable performance at all workplaces and beyond. Your Company is a responsible Corporate Citizen and Health, Safety and Environment (HSE) excellence has been extensively promoted as a corporate culture within the organization. The Safety & Health of employees and external stakeholders are embedded in the core organizational values of the Company. The HSE policy, inter alia, aims to ensure safety of public employees, plant & equipment, ensure compliance with all statutory rules and regulations, imparting training to its employees, carrying out safety audits of its facilities, and promoting eco-friendly activities.

To give top most thrust on HSE issues, your Company has constituted a HSE subcommittee of Board of Directors to review our HSE performance and emergency preparedness.

- Corporate Health, Safety & Environment (HSE) Policy

Your Company is committed to promote globally comparable levels of Health, Safety, Environment and Loss Control in the areas of its business of Exploration and Production of Hydrocarbons, Natural Gas and LPG transmission, Production of LPG, Petrochemicals etc., with clear emphasis on improving the Environment for Sustainable Development. The safety and occupational health of its employees and external stakeholders are of paramount importance and all these attributes are embedded within the core organizational values of the organization.

- Safety Performance

In order to achieve excellence in Health. Safety & Environment (HSE) aspects, your Company has embraced the principles and codes of best HSE practices in its HSE Management System. HSE Management System comprises 18 elements, which includes Leadership & Commitment, Employees Participation, facility Design, Construction & Pre-startup Safety Review, Process Safety information. Risk Analysis and Management, Third Party Services, Personnel Safely, Control of Defeat and Reliability of Critical System and Devices, Work Permit System, Operation & Maintenance, Inspection & Maintenance, Management of Change, Training, incident investigation and Analysis, Occupational Health, Environment Management, Emergency Planning and Response, Compliance Audit.

Your Company continues to demonstrate excellent HSE performance. HSE indices across all its work centers are meticulously monitored with the aim of continual improvement.

Year
2007-08 97 99.21

2008-09 97 98.95

2009-10 97.5 99.25

- Safety Training

Vour Company continues to give utmost importance to train the employees on HSE aspects. Apart from employees, spouses, children, contract workers, tanker drivers, nearby villagers etc. are also imparted safety training. New recruited trainees are given one week specific HSE training at site

- External Safety Audits (ESA)

Your Companys safety practices and systems are audited for continual improvement by external agencies and inter-unit safety audit teams External Sofety Audits: During the year 200910. safety audits were carried out by external agencies for IS O&M base units. Also, building safety audit was carried out in your Companys corporate office building in Delhi. O&M and Training Institute building at Noida. Major work centers have been certified for integrated Management Systems (IMS). IMS outlines the standards needed to align with, or conform to. internationally accredited certifications such as ISO 9001 (quality assurance), ISO 14001 (environment) and OHSAS18001 (health and safety).

*ÃÂ¦ Inlet Unit Safety Audits: During the year 2009-10, inter-unit safety audits have been carried out for seven units of GAIL

- Occupational Health

Your Company continued its commitment to improve the well being of its employees. During the year 2009-10, all employees at the work centers were medically examined. Besides, contract workers, CISF personnel. villagers from nearby areas were also covered under the program.

CORPORATE SOCIAL RESPONSIBILITY

Your Company has set high standards of discharging Corporate Social Responsibilities (CSR). The CSR allocation has been enhanced from the current financial year from 1% to 2% of profit after tax of the previous financial year for CSR programmes. CSR allocations are used for economic, environmental and social uplift ment of communities in and around the work centers in the major thrust areas such as Community Development, Infrastructure, Drinking water/Sanitation, Literacy Enhancement/Empowerment, Educational Aids, and Healthcare/Medical. Besides specific social welfare programmes, the CSR funds are also used to provide relief to victims of national calamities. Major initiatives undertaken by your Company under these thrust areas are detailed in a separate part of this Annual Report.

HUMAN RESOURCE

Your Companys industrial relations climate remained congenial and constructive. There were no Man Days or Man Hours lost on account of any sort of Industrial conflict. There was no incident of Strike/ Gherao/ Assault etc

Following Major Human Resource (HR| Initiatives marked the companys progress on Employees compensation, welfare and development front:

1. Revision of Pay Scales for Board Level and below Board level Executives

2. Initiation of process of comprehensive review of HR/ HRD Policy Framework

3. Review of Performance Management System (PMS) for Executives A. Review of Induction level for Executive Trainees

5. Implementation of Performance Related Pay (PRP)

6. Completion of Annual Placement and Departmental Promotion Exercises by 31J March, 2010.

- Training Initiatives

Oil & Gas industry, has been witnessing a rapid growth & development, both at the domestic, as well as global frontiers. Your Company is also implementing various new projects to strengthen Companys presence across the entire gas value chain. With new technological developments and phenomenal expansion taking place in the hydrocarbon sector, need of the industry is changing from merely acquiring the latest state of the art technologies and equipment to engaging qualified personnel suitably equipped with knowledge, skills, attitude and a practical exposure to the highly specialized jobs. Your Company has ISO 9001 certified GAIL Training Institutes (GTls) at Noida & Jaipur and is consistently working towards development of Human Capital of the Organization.

Training programs are identified by systemizing organizational needs with individual needs through an e- Performance Management System (e-PMS). Further, required orientation are given to Executive Trainees and newty promoted employees at executive levels.

In its pursuit to offer training programs to Indian and oversees companies to convert itself into a revenue generating centre, GTl has successfully organized customized training programs for participants from other reputed organizations like lOCL. RGTiL, Siti Energy, U.R Fire Service Department etc. Besides, special workshops have also been conducted within and outside GTl. in line with the specific needs of clients.

You Company is committed 10 deliver lis best wiih a team of highly skilled acuity, who possess a blend of academic and practical experience to achieve the statute at pat with other international institutes of repute.

- Women Empowerment

Women employees have a value adding role in the human capital profile of GAIL Amongst the total 211 women employees, 152 are in the executive cadre and 20 out of these are in the middle/ senior management positions.

Your Company has instituted 3 Awards for GAIL Women employees for encouraging and recognizing their best services in the field of (i) Functional Management (ii) Corporate Social Responsibility and (iii) Corporate Cultural Initiatives. This scheme is known as GAIL Women Employees Award Scheme (GWEAS). The award consists of:

A Certificate

A Trophy

> Cash prize of Rs.l.00.000/-

Citation for each award

These awards are distributed every year on international Womens Day (8th March).

- Representation of SC/ST, OBC, Minorities and Differently Abled

Your Company has been implementing Reservation Polices for SCs/ STs / OBCs / Persons with Disability (PHI and accordingly, has been providing employment to the candidates belonging to these categories in all Direct Recruitments as per instructions / guidelines received from time to time from the Government, since its inception ie. 16 August, 1984.

The total manpower of the Company as on 31st March, 2010, stood at 3.703, out of which, 17.1% belong to SC. 6.72% belong to ST, 17.23% to OBC, 8.44% to Minorities and 2.27% to physically challenged.

During the year, 220 employees joined the Company and the attrition rate has gone down to 0.69% as against from 0.96% for FY 2008-09.

- Vigilance Function

Your Company has organized Vendor Interaction Programme/issues/ Apprehensions raised by the vendors were addressed, suggestions made by the vendors were given due consideration after deliberation by the Management

CVCs thrust on leveraging of technology for improving vigilance administration have been implemented and the steps taken by your Company includes application forms and complete information regarding registration of contractors / suppliers / consultants / vendors is available on your Companys website, vendors can apply online for registration; to ensure transparency and improve efficiency, e-tendering has been implemented since 2007. All tenders above Rs. SO lacs are being processed through e-tendering; status of bill payments to contractors/ suppliers etc. is available online through the Bill Watch System IBWS) of your Companys website. Vendors can monitor the progress of their bills by logging on to BWS with their unique bill receipt number; to tackle the problem of repeated queries m a piece-meal manner, a provision of sending alerts of a file, submitted more than five times to the same officer(s) has been incorporated in the File Monitoring System: all tenders are zero Deviation tenders in order to avoid repeated queries and only one time Technical / Commercial Query is being allowed.

All vendors / contractors are required to sign the integrity pact for tenders valuing Rs. 1 core and above. The status of the same is being sent to independent External Monitors OEMs), persons of repute who were appointed in consultation with CVC.

New initiatives adopted by your Company as per the recommendations of the Vigilance includes fixed deposit confirmation from the Banks; publishing your Company tenders on Govt, of India tender website: revised format for annual property returns of employees; online vigilance complaint system; reverse auction; energy balancing in SAP across LPG Plants; online energy reconciliation of LPG Plants across your Company; no bill pendency / file pendency before relieving officers; email alerts on LCs of your Company consumers.

- Official Language

Your Company is continuously making vigorous efforts for the propagation and successful implementation of the Official Language Policy of the Union of India.The Official Language Implementation Committees at Corporate as well as Regional / Unit level held their quarterly meetings regularly to monitor and review the progress made in achieving the targets fixed in the Annual Programme.

In an endeavour to familiarize the new entrants in the Company with Official Language Act and various rules, training to Executive Trainees and Graduate Engineer Trainees is being imparted at induction level and special 2-days training programmes for newly promoted employees from S7 to El and E2 grades, have been designed and implemented at corporate level, besides other regular workshops at all the work centers.

With a view to create greater awareness and consciousness among employees, Hindi Fortnight was celebrated from 14" to 28" September, 2009 across the Company, in order to involve families of Companys employees, various competitions were also conducted for them.

Bilingual softwares were provided across the Company. To impart working knowledge of Hindi as well as computer training to employees in bilingual software, a comprehensive and time bound programme was prepared and implemented during the year.

"Rajbhasha Sahyog", a quarterly Hindi magazine, was published and distributed among employees in order to create interest among employees of your Company and their family members towards reading and creative writing in Hindi.

RESEARCH AND DEVELOPMENT

Research in energy technologies is important for efficient exploitation of indigenous energy resources. It Is of utmost importance to have a strong set-up of R&D. In the light of expanding and growing importance of natural gas in the countrys energy mix, R&D and technology development efforts in the natural gas sector assumes an important dimension.

Your Company has reconstituted R&D with a vision and mission with improved focus and purpose on development and assimilation of technologies in the gas & alternate energy sector. As a long term strategy, to carry out R&D projects, your Company has envisaged a judicious and healthy mix of ln-house & Out- sourced strategy, which shall lead to short gestation period of research projects and retaining of intellectual Property Rights (IPR) for owning the technology developed. Your Company is envisaging R&D pilot project for Landfil Gas harnessing at Ghazipur, Delhi, for recovering energy from municipal solid waste, in association with Municipal Corporation of Delhi.

Your Company has identified the following thrust areas for R&D activities:

Short Term:

- Energy from waste;

- New polymer grades;

- Alternate fuels:

- Compact and energy efficient storage;

- Coal to Gas/Liquid. Long Term:

- Non Conventional Energy:

- Commercialization of Futuristic fuels;

- Value addition of natural gas.

LAURELS

During ihe year under review, continuing the past trend, your Company was proud recipient of several awards. Some of the significant awards conferred upon your Company are as under:

- Corporate Awards

f SCOPE Corporate Governance Award for 2007-08 for excellence in propagation and implementation of Corporate Governance practices. Her Excellency. Smt. Praiibha Devisingh Patil Honble President of India, gave away the award to CMD, GAIL in a glittering function held in Vigyan Bhawan in the month of April 2010.

> Dahe)-Panvel-Dabho! pipeline project awarded 3rd position in IPMA project excellence award 2009.

International Safety award from British Safety Council.

India Pride Awards - Silver Award in the Oil & Gas category

> Plans Top 250 - Ranked 148th during 2009 and 5th among utility companies.

Indias most customer responsive company in the manufacturing category by the Avaya Global Connect.

- HSE Awards

During the year 2009-10, your Company has been awarded several coveted awards/appreciation for its excellent performance in HSE. Some of the significant awards conferred upon your Company are as under:

*ÃÂ¦ Three top awards from Oil Industry Safety Directorate for Gas Processing Unit, Vijaipur {First), Aurarya (Second) and cross country pipeline for HVJ Pipeline (First).

> Safety innovation award for 9 units from Institution of Engineers to Vijaipur, vaghodia, Gandhar, Kheia, JLPL (Mansarampura and Nasirabad), Agra, Maharasthra Region pipeline, Usar unit.

> International Safety award from British Safety Council for our units at Pata. Vijaipur. Gandhar, vaghodia, Lakwa and Rajamundry.

> Golden Peacock Award for Occupational Health & Safety from Institute of Directors to Hazira Gas Compressor Station.

> Golden Peacock Environmental Management Award to Gandhar Plant.

> Shreshta Suraksha Puraskar for 2008 from National Safety Council to Vijaipur LPG Plant and HVJ Compressor Stations.

r Prashansa Patra from National Safety Council, Mumbai to GPU Gandhar and Mumbai Region pipeline.

*- Gujarat State Safety Award- 2008 from Gujarat Safety Council to Baroda unit.

Certificate of appreciation from Gujarat Safety Council to Vaghodia LPG Plant.

> Amity Corporate Excellence Award for Health & Safety Practices during International Business Summit (INBUSID) being organized on 24 Feb, 2010.

Greentech Silver Award for outstanding achievement in the safety management for the year 2010 to Agartala unit.

* Others

Best customer friendly company by Economic Times

> PSU wealth creation by Dalai Street Journal

RIGHT TO INFORMATION

In order to promote transparency and accountability, an appropriate mechanism has been set up across the Company in line with the Right to Information Act, 2005. Your Company has nominated APKDs/PIOs/CPlO at its units/offices across the country to provide information to citizens under the provisions of RTi Act.

MANAGEMENT DISCUSSION AND ANALYSIS

The detailed Management Discussion and Analysis form part of this report at Annexure- A.

CORPORATE GOVERNANCE

Your Company believes Corporate Governance is at the root of shareholders value creation. Pursuant to clause 49 of the Listing Agreement with the Stock Exchanges, a report on Corporate Governance forms part of this Report at Annexure- B.

The statutory auditors of the Company have examined and certified your Companys compliance with respect to conditions enumerated in clause 49 of the Listing Agreement and OPE guidelines on Corporate Governance. The certificate forms part of this Report at Annexure- C.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION

Details of conservation of energy, technology absorption in accordance with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed at Annexure- 0.

PARTICULARS OF EMPLOYEES UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956

in terms of the provisions of section 217(2A) of the Companies Act, 19S6. read with the Companies {Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are required to be set out in the annexure to the Directors Report However, having regard to the provisions of section 2190)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company- There were a total 144 employees, who were employed throughout the financial year 2009-10 and in receipt of remuneration which, in the aggregate, was not less than Rs. 24 lac p.a. Further, there were a total of SI employees, who were employed for part of the financial year 2009-10 and in receipt of remuneration which, in the aggregate, was not less than Rs. 2 lac p.m.

FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits and. as such, no amount of principal or interest was outstanding as of the balance sheet date.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, foreign exchange earnings were Rs. 5.67 crores. Expenditure in foreign currency was Rs. 1.9135S crores.

During the year under review, your Company has incurred expenditure of Rs. 1.79 crores on foreign tours, foreign training, seminars & conferences, Rs.0.11 crores on entertainment and Rs. 13.33 crores on advertising & publicity.

DIRECTORS

Shii B.C. Tnpathi. then Director (Marketing) was appointed as Chairman and Managing Director in place of Dr. U.D. Choubey w.e.f. 01.082009. Shri Mahesh Shah, Shri R.M. Sethi and Dr. Vmayshil Gautam were appointed as non-official part-time (independent) Director in place of Dr. Amit Mitra and Dr. A.K. Kundra w.e.f. 11.082009. Shri Si. Raina was appointed as Director (HR) w.e.f.

19.08.2009. Shri A.K. Purwaha, then Director (Business Development) ceased to be a Director w.e.f 30.09.2009. Shri S. Sundareshan, Special Secretary, MoPNG on his appointment as Secretary, MoPNG ceased to be Director w.e.f.

01.02.2010. Shri Prabhat Singh was appointed as Director (Marketing) w.e.f. 24.02.2010 and Shri Sudhir Bhargava, Additional Secretary, MoPNG was appointed as Director we.f. 15.03.2010.

The Board placed on record its deep appreciation for the valuable services rendered by Dr. U.D. Choubey, Shri A.K. Purwaha, Shri S. Sundareshan, Dr. Amit Mitra and Dr. A.K. Kundra during their association with your Company.

CODE OF CONDUCT

in line with the requirements of clause 49 of Listing Agreement, the Board Members and Senior Management Personnel, have affirmed compliance with the Code of Conduct for the financial year ending 31st March, 2010.

DIRECTORS RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT, 1956

Pursuant to the requirements of section 217I2AA) of the Companies Act, 1956 ÃÂ¦n relation to Directors Responsibility Statement, it is confirmed that:

i) in the preparation of the annual accounts for the financial year ended 31st March, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as 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) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors have prepared the annual accounts for the financial year ended 31st March, 2010 on a going concern basis.

AUDITORS

- Statutory Auditors

The Statutory Auditor of your Company is appointed by Comptroller & Auditor General of India (C&AG). M/s Mehra Goel & Co.. Chartered Accountants, New Delhi and M/s Rasool Singhal & Co., Chartered Accountants, Aligarh were appointed as joint statutory auditors of your Company for the FY 2009-10. The C&AG has appointed M/s Mi. Pun & Co. Chartered Accountants, New Delhi and M/s Rasool Singhal & Co, Chartered Accountants, Aligarh as joint statutory auditors for FY 2010-11.

M/s S.CJ. Associates, Branch Auditors of Pata and M/s Rupa Sekhar & Associates, Branch Auditors of LPG ceased to be the Branch Auditors of the Company.

The review of Annual Accounts of your Company for the year ended 31st March, 2010 by C&AG forms part of this report as an addendum. Notes on accounts referred in the Auditors Report are self explanatory and therefore, do not call for any further comments.

- Cost Auditors

Pursuant to the directions of the Central Government for audit of cost accounts, your Company has appointed M/s RlGoel & Co., Delhi for Vijaipur- LPG, M/s Ramnath Iyer & Co. New Delhi for Pata - LPG, M/s K.G.Goyal & Co., Jaipur for Vaghodia -LPG, M/s Shome & Banerjee, New Delhi for Gandhar - LPG, M/s KNarsimhma Murthy, Hyderabad for Usar - LPG, M/s Bandyopadhyaya & Bhaumik & Co., Kolkata for Lakwa - LPG and M/s RMBansal & Co.. Kanpur for CNG Station, Baroda as Cost Auditors) for the year ended 31st March, 2010. ACKNOWLEDGMENT

Your Directors acknowledge their gratitude for the valuable guidance and support received from Government of India in particular the Ministry of Petroleum and Natural Gas and various State Governments, regulatory and statutory authorities from time to time

Your Directors also acknowledge the constructive suggestions received from Statutory Auditors and Comptroller & Auditor General of India and are grateful for their continued support and cooperation.

Your Directors thank all share-owners, bankers, financial institutions, business partners and members of the GAIL family for their faith, trust and confidence reposed in your Company and appreciates the contribution of contractors, vendors and consultants in the implementation of various projects of the Company.

Your Directors would like to place on record as appreciation to the hard work, commitment and unstinting efforts put in by your Companys employees at all levels to ensure that your Company continues to grow and excel.

For and on behalf of the Board

Place: New Delhi B.C.Tripathi

Dated: 30.07.2010 Chairman & Managing Director

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