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1 We Stand for Pe||ab|||ty

21
st
Annual Report
Board of D|reotors 4
D|reotors' Peport 6
F|ve Year Prof||e 47
Annua| Aooounts 51
Aooount|ng Po||o|es 88
Cash F|ow Statement 91
Ba|anoe Sheet Abstraot and Company's
Genera| Bus|ness Prof||e 93
Aud|tors' Peport to the Shareho|ders 95
Sohedu|e of F|xed Assets - Townsh|p 99
lnoome and Expend|ture - Townsh|p eto. 100
Comments and Pev|ew of Aooounts
by C&AG 101
Annua| Aooount of Subs|d|ary
GAl| G|oba| S|ngapore) Pte. ||m|ted 109
Conso||dated F|nano|a| Statement 125
3 We Stand for Pe||ab|||ty
21
st
Annual Report
Board of Directors
Shri Proshanto Banerjee
Chairman & Managing Director
Shri J.K. Jain
Director (Finance)
Shri S.P. Rao
Director (Projects)
Shri B.S. Negi
Director
(Business Development)
Shri M.R. Hingnikar
Director (HR)
Dr. U.D. Choubey
Director (Marketing)
Shri M.S. Srinivasan, IAS
Director
(From 28.01.2005)
Dr. Amit Mitra
Director
Dr. A. K. Kundra
Director
Shri B.C. Bora
Director
Shri P.K. Sinha, IAS
Director
(From 20.12.2004)
Shri Ajay Tyagi, IAS
Director
(From 20.04.2005)
5 We Stand for Pe||ab|||ty
21
st
Annual Report
Statutory Auditors
M/s. S. Mann & Co.
Branch Auditors
M/s. Nripendra & Co.
M/s. Chhajer & Co.
Company Secretary
Shri N. K. Nagpal
Stock Exchanges where Shares/ GDRs of
the Company are listed
DSE House, 3/1, Asaf A|| Poad
New De|h| - 110 002
Ph|roze Jeejeebhoy Towers
Da|a| Street, Mumba| - 400 001
'Exohange P|aza'
Bandra Kur|a Comp|ex
Bandra E), Mumba| - 400 051
10, Paternoster Square
|ondon - EC4M 7|S U.K.)
The Delhi Stock Exchange
Association Limited
The Stock Exchange, Mumbai
National Stock Exchange of
India Limited
London Stock Exchange
GDPs)
Chartered Aooountants
New De|h|
Chartered Aooountants
Kanpur
Chartered Aooountants
Bhopa|
Registrars and Share
Transfer Agent
MCS Limited
Bankers
State Bank of India
Bank of India
Bank of Baroda
Indian Overseas Bank
ICICI Bank Ltd.
HDFC Bank Ltd.
Registered Office
16, Bh|ka|j| Cama P|aoe, P. K. Puram, New De|h| - 110 066
Corporate Aooounts Group Branoh
Jawahar vyapar Bhavan,
11
th
& 12
th
F|oors,
To|stoy Marg,
New De|h| - 110 001
Overseas Branoh
v|jaya Bu||d|ng,
Barakhamba Poad,
New De|h| - 110 001
Bh|ka|j| Cama P|aoe,
P. K. Puram,
New De|h| - 110 066
Prakash Deep Bu||d|ng,
To|stoy Marg,
New De|h| - 110 001
9A, Phe|ps Bu||d|ng,
Connaught P|aoe,
New De|h| - 110 001
G-3/4, Surya K|ran Bu||d|ng
19, Kasturba Gandh| Marg,
New De|h| - 110 001
Sr| venkatesh Bhawan,
W - 40, Okh|a lndustr|a| Area
Phase-ll,
New De|h| - 110 020
Directors Report
To,
The Members
The D|reotors have p|easure |n present|ng the 21
st
Annua| Peport
of your "Navratna" Company together w|th Aud|ted Aooounts for
the year ended 31
st
Maroh, 2005.
Your Company has oomp|eted yet another suooessfu| year and
we are happy to present the performanoe of GAl| |n the past
year, wh|oh brought an overa|| growth |n f|nano|a| and phys|oa|
performanoes.
PHYSICAL PERFORMANCE
The phys|oa| performanoe of GAl| showed growth |n a|| |ts
bus|nesses as oompared w|th |ast year. The sa|e of Gas has
|noreased by 8.7% over the prev|ous year to 22.835 BCM from
21.013 BCM. S|m||ar|y, our ||qu|d Hydrooarbon Produot|on, wh|oh
oompr|ses of produots ||ke Pentane, Propane and SBP So|vents,
|noreased by the same marg|n of 8.7% to 298264 MT as oompared
to the |ast year's produot|on of 274473 MT. A|though our |PG
produot|on reg|stered a marg|na| 1% |norease over the prev|ous
year to 1094835 MT, Po|ymer produot|on reg|stered an |mpress|ve
13.3% growth from 263720 MT to 298787 MT and our |PG
Transm|ss|on bus|ness has so|d 16% more oapao|ty over the
prev|ous year.
2004-05 2003-04
Sa|e of Gas BCM) 22.835 21.013
|PG Produot|on MTs) 10,94,835 10,88,686
Pentane/Propane/SBP 2,98,264 2,74,473
So|vents Produot|on MTs)
Po|ymer Produot|on MTs) 2,98,787 2,63,720
|PG Transm|ss|on MTs) 21,37,504 18,40,538
BCM : Billion Cubic Meters; MT: Metric Tonnes
FINANCIAL PERFORMANCE
Dur|ng the year under rev|ew, the Turnover of your Company, wh|oh
|no|udes revenue generated from sa|e of produots and serv|oes,
has |noreased to Ps.12,412 Crores from Ps.10,826 Crores Net
of ED and exo|ud|ng |nterna| oonsumpt|on) thereby reg|ster|ng a
growth of 14.6% over the prev|ous year.
(Rs. in Crores)
Particulars 2004-05 2003-04
Turnover Net of ED and lnterna| oonsumpt|on) 12,412 10,826
Other lnoome 349 244
Cost of Sa|es Exo|ud|ng lnterest & Depreo|at|on) 8,811 7,456
Gross Marg|n EBlDTA) 3,950 3,614
lnterest 134 138
Depreo|at|on/Wr|te Off 945 662
Prof|t Before Tax 2,871 2,814
Prov|s|on for Tax |no|ud|ng Deferred Tax) 917 945
Prof|t After Tax 1,954 1,869
However, the Prof|t After Tax |s Ps.1,954 Crores as aga|nst
Ps.1,869 Crores of prev|ous year, a growth of 4.6%. Th|s growth
|n the prof|tab|||ty of your Company has been aoh|eved |n sp|te of
a s|gn|f|oant |norease |n the subs|dy burden of 166% from
Ps. 428 Crores |n 2003-04 to Ps. 1,137 Crores |n 2004-05, wh|oh
GAl| shared towards under reoover|es on Domest|o |PG and
PDS Kerosene as per Government of lnd|a d|reot|ves.
HIGHLIGHTS 2004-05
Numbers speak
Turnover up by 14.6%
4.6% |norease |n PAT desp|te 166% |norease |n subs|dy burden
Net Worth up by 15.5%
Book va|ue/share up by 15% to Ps. 101.22
Peserves up by 17.8% to Ps. 7780.46 Crores
Truly Gas & beyond
Gas d|soovery |n Mynamar
O|| d|soovery |n Cambay b|ook
GAIL Global
100 % subs|d|ary |n S|ngapore
15 % equ|ty stake |n Natgas, Egypt
8.5 % part|opat|ng |nterest |n Ch|na Gas Ho|d|ng Company
Anything for a blue sky
C|ty gas d|str|but|on |mp|emented |n 5 o|t|es
Jv's |n p|aoe for 4 more o|t|es
Energizing Maharashtra
GAl| to souroe |NG for Patnag|r| Gas and Power Pvt |td
Spreading Wings
Ethy|ene produot|on oapao|ty at Pata |noreased from 2,60,000 TPA
to 3,10,000 TPA
GAl|TE| oomp|etes Meerut-Hapur and Greater No|da f|ber |oop
South - Gujarat & Nar|manam - Kutha|am P|pe||ne Projeot oomp|eted
GAl| perm|tted to market |PG w.e.f. Apr|| '06
Kudos to HR & Project teams
'Best Emp|oyers |n lnd|a 2004' by Hew|tt Assoo|ates-CNBC
NPMP award for exoe||enoe |n Projeot Management
Healthy, Wealthy & Wise
Pated Best PSU by Department of Pub||o Enterpr|ses DPE)
12
th
amongst 30 lnd|an oompan|es |n the ||st of Forbes 2000 - the
wor|d's wea|th|est oompan|es '05
Techno-savvy GAIL
F|na| stage of |mp|ementat|on of Enterpr|se Pesouroe P|ann|ng
Suooessfu||y oomm|ss|oned the Gas Management System
7 We Stand for Pe||ab|||ty
21
st
Annual Report
Furthermore, the book va|ue of your Company has |noreased from
Ps. 88 per share to Ps. 101 per share and the EPS of your
Company |s Ps. 23.11 |n FY-05 as oompared to Ps. 22.11 |n the
prev|ous year. The Peturn on lnvested Cap|ta| POlC), a parameter
on wh|oh GAl| was rated as the No. 1 Company among g|oba|
gas ut|||ty oompan|es as per P|atts |n FY-03, has |noreased from
19.17% |n FY-04 to 19.75% |n FY-05 and |s h|gher than the oost
of oap|ta|, thereby ref|eot|ng the va|ue oreat|ng oapab|||t|es of the
Company.
Consolidation of Accounts
Dur| ng the year, your Company has | noorporated a 100%
subs|d|ary, GAl| G|oba| S|ngapore) Pte. |td. Therefore, due to
regu|atory requ|rement of ||st|ng Agreement w|th Stook Exohanges,
Company has to oonso||date the aooounts |noorporat|ng the
aooounts of Subs|d|ary, Jo|nt venture and Assoo|ate oompan|es.
Henoe, your Company has prepared the oonso||dated aooounts
dur|ng the year.
Tot a| l noome | s Ps. 14, 207 Crores and Net Prof | t | s
Ps. 2,039 Crores. Tota| Gross Assets |s Ps. 14,786 Crores and
Tota| Peserves and Surp|us |s Ps. 7,964 Crores.
Returns
On the overa|| va|uat|ons of your Company, the Net Worth has
gone up by 15.5% to Ps. 8,560 Crores |n FY -05, generat|ng a
Peturn on Net Worth PONW) of 22.83% and the Peturn on Cap|ta|
Emp|oyed POCE) of 27.87%, both of wh|oh |nd|oate hea|thy
returns |n the bus|ness.
The Company has tota| reserves worth Ps. 7,780 Crores as on
FY-05, wh|oh |s an add|t|on of Ps. 1,180 Crores, from the prev|ous
year. Wh| | e t he gross b| ook on asset s has gone up by
Ps. 637 Crores to Ps.14,222 Crores |n FY-05, wh||e the net b|ook
has oome down by Ps. 297 Crores due to h|gher depreo|at|on.
Dividend
ln add|t|on to an lnter|m D|v|dend @ Ps. 4 per share for the year
2004-05, the D|reotors now fee| pr|v||eged to reoommend for
approva| of the members, payment of f|na| d|v|dend @ Ps. 4 per
share at a d|v|dend payout rat|o of 39%. The tota| payout to
shareho|ders |n 2004-05 |s Ps. 676 Crores.
W|th th|s, the tota| d|v|dend payment for the year 2004-05 stands
at 80% of the pa| d up equ| ty oap| ta| , | .e. Ps. 8 per share,
ma|nta|n|ng the rate dur|ng the prev|ous year.
Policy and Regulatory Framework
Po||oy doouments re|evant to lnd|a's natura| gas seotor name|y
Natura| Gas P|pe||ne Po||oy and Petro|eum and Natura| Gas
Pegu|atory Board B|||, both of wh|oh a|m to stream||ne the growth
of the gas eoonomy |n lnd|a, are yet to be re|eased by Government
of lnd|a. Both the doouments are reported to be under f|na||zat|on
and expeoted to be o|eared for |mp|ementat|on soon. Need|ess
to ment|on that the new po||o|es w||| have s|gn|f|oant |mpaot on
bus|ness of your Company |n terms of grow|ng oompet|t|on,
emergenoe of new markets and more |mportant|y, to fo||ow
d|fferent bus|ness praot|oes. Your Company has a|ready taken
severa| pro-aot|ve aot|ons towards oomp||anoe of the poss|b|e
measures env|saged |n the po||o|es. The bus|ness deve|opment
aot| v| t| es, d| soussed be| ow wou| d ref| eot the Company' s
preparedness and growth fooused areas.
CORPORATE STRATEGY
The strateg|o d|reot|on of your Company foouses on |ntegrat|on
aoross the gas va|ue oha|n, wh|oh |no|udes, exp|orat|on and
produot|on and gas souro|ng |n the upstream segment, gas
trad| ng, gas transm| ss| on p| pe| | nes, gas prooess| ng and
petroohem| oa| s | n the m| d stream segment and reta| | gas
d|str|but|on |n the downstream segment.
Your Company |ntends to |ay s|gn|f|oant thrust |n natura| gas
p|pe||ne expans|on, exp|orat|on and produot|on, gas souro|ng and
gas market|ng. C|ty gas bus|ness |s a|so an |mportant area of
|nterest. Bes|des g|oba||zat|on |n var|ous bus|ness vert|oa|s wou|d
a|so |norease |everage and m|n|m|ze r|sks assoo|ated w|th va|ue
oha|n |ntegrat|on. Your Company a|so oons|ders petroohem|oa|s
bus|ness as a growth dr|ver and p|ans to |everage unoonvent|ona|
teohno|og|es to aoh|eve oompet|t|veness.
BUSINESS DEVELOPMENT INITIATIVES
Natural Gas
lnd|an gas market has a|ready entered the growth phase, pr|mar||y
dr|ven by oommenoement of |NG |mports |n the western part of
the oountry. The soenar| o | ooks br| ghter w| th the new and
enoourag|ng gas f|nds |n eastern offshore. As a market |eader |n
gas bus|ness, your Company has taken severa| |n|t|at|ves to steer
through the oompet|t|ve s|tuat|on |n future to reta|n |ts |eadersh|p
pos|t|on |n the bus|ness.
Exploration and Production (E&P)
E&P |s a key growth dr|ver for your Company. At present, your
Company has 11 b|ooks through un|noorporated Jo|nt ventures,
|n partnersh|ps w|th var|ous exp|orat|on operators w|th a tota|
aoreage of over 67,000 km
2
. Your Company has seven b|ooks |n
the east ooast of lnd|a, three b|ooks |n the west ooast of lnd|a
and one |n Myanmar. These b|ooks have been aoqu|red through
b|dd|ng and through the farm-|n route.
The E&P |n|t|at|ve of the Company has a|ready had |n|t|a| suooess
|n form of gas d|soovery |n Myanmar A-1 b|ook and O|| |n Cambay
b|ook. Exp|orat|on work programme |n E&P b|ooks dur|ng 2004-
05 oons|sted of 2D se|sm|o data reprooess|ng of 340 |km,
aoqu|s|t|on of 2,355 km
2
3D se|sm|o data, dr||||ng of two on|and
we||s and 4 offshore we||s and geo|og|oa| and geophys|oa|
|nterpretat|on of the ava||ab|e data.
Exp|orat|on, deve|opment and operat|ons of a|| the b|ooks wou|d
enta|| s|gn|f|oant oap|ta| expend|ture |n the future. Furthermore,
your Company a| so p| ans to g| oba| | ze | ts E&P ventures by
part|o|pat|ng |n opportun|t|es |n fore|gn oountr|es and growth |n
the E&P bus| ness wou| d be pursued both organ| oa| | y and
|norgan|oa||y.
Globalisation
The |norgan|o growth mode| of your Company has resu|ted |n a
number of aoqu|s|t|on aot|v|t|es. Dur|ng the year under rev|ew,
your Company, through |ts subs|d|ary GAl| G|oba| S|ngapore)
Pte. ||m|ted, aoqu|red 15% equ|ty stake |n Nat|ona| Gas Company
Natgas), one of the |argest |ooa| d|str|but|on oompan|es |n Egypt.
Go|ng forward, your Company's foot pr|nts made |ts way to Ch|na
by way of aoqu|s|t|on of about 8.5% part|o|pat|ng |nterest |n Ch|na
Gas Ho|d|ng Company, a fast grow|ng reta|| gas oompany |n Ch|na
hav|ng exo|us|ve oonoess|ons |n more than 40 o|t|es for P|ped
Natura| Gas supp|y to res|dent|a|, |ndustr|a| and oommero|a|
seotors. Your Company has agreed to form separate Jo|nt
ventures for undertak|ng CNG projeots |n oerta|n o|t|es/towns |n
Ch|na. Your Company v|sua||zes th|s as a s|gn|f|oant opportun|ty
to bu||d |ts CNG re|ated expert|se. The g|oba||zat|on of bus|ness
has beoome a d|st|not bus|ness strategy for your Company.
Retail Gas Business (City Gas and CNG)
The suooess stor|es of two Jo|nt venture oompan|es of GAl|,
v|z., Mahanagar Gas ||m|ted MG|) and lndraprastha Gas ||m|ted
lG|) |n Mumba| and De|h| respeot|ve|y, for o|ty gas d|str|but|on |n
domest|o and automot|ve seotors are we|| known to a|| of you. GAl|,
therefore, |s form|ng more Jo|nt ventures w|th O|| Market|ng Compan|es
OMCs) for supp|y of natura| gas to domest|o and oommero|a|
oonsumers and CNG to the transport seotor |n var|ous o|t|es ||ke
Kanpur, |uoknow, Bare|||y, Agra, Pune, Gwa||or, lndore eto.
Peta|| Gas bus|ness has un|que oomp|ex|t|es, d|fferent from those
of bu|k natura| gas bus|ness. W|th the reta|| gas segment expeoted
to grow at a very h|gh paoe |n the near future, severa| reta|| Gas
Compan|es, wh|oh w||| be promoted by GAl|, w||| be faoed w|th
the oha||enge of oreat|ng and operat|ng the o|ty gas bus|ness. To
address these needs, GAl| has promoted jo|nt venture oompan|es
and other reta| | gas oompan| es | n lnd| a and abroad. Your
Company has taken the |n|t|at|ve for deve|op|ng a reta|| gas
software so|ut|on w|th lnfosys Teohno|og|es |td., Banga|ore.
Power
ln add|t|on, the Government of lnd|a |s now |n the prooess of
rev|va| of Dabho| Power Company. You w||| be p|eased to note
that GAl| has been se|eoted as a partner w|th Nat|ona| Therma|
Power Corporat|on ||m|ted NTPC) and lnd|an F|nano|a| lnst|tut|ons
to form a projeot Speo|a| Purpose veh|o|e SPv) w|th equ|ty
part|o|pat|on. The SPv has been reg|stered as Patnag|r| Gas and
Power Pr|vate ||m|ted. The pr|mary respons|b|||ty of GAl| w||| be
to souroe |NG and to undertake the operat|on of the regas|f|oat|on
term|na|. Your Company v|sua||zes th|s |n|t|at|ve as an attraot|ve
opportun|ty w|th oons|derab|e growth potent|a| |n both natura|
gas trad|ng and transportat|on |n oom|ng years.
Petrochemicals
ln the Petroohem|oa|s bus|ness seotor, your Company has
performed remarkab|y we|| dur|ng the year under rev|ew by
|noreas|ng sa|es vo|ume by 20% over |ast year. De-bott|eneok|ng
of the downstream p|ants has resu|ted |n the produot|on oapao|ty
|norease of 19% from 2,60,000 TPA to 3,10,000 TPA. Your
Company now |s a|so |ook|ng to the opportun|t|es for further
expans|on |n the Petroohem|oa| seotor through organ|o and
|norgan|o routes. Wh||e the ethy|ene produot|on oapao|ty at Pata
P|ant |s further be|ng |noreased to a |eve| of 4,40,000 TPA,
poss|b|||t|es of sett|ng up petroohem|oa| p|ants |n Kooh| Kera|a),
Assam and lran are a|so be|ng exp|ored.
Signing of Agreement between GAIL and China Gas Holding Company
Joint Venture Agreement between GAIL and IOCL
9 We Stand for Pe||ab|||ty
21
st
Annual Report
LNG
|NG |s a rea||ty |n lnd|a today. Your Company oons|ders |NG as
an | mportant gas souro| ng opt| on and | s aot| ve| y pursu| ng
opportun|t|es abroad for souroe t|e-ups to oater to the demand
of the grow|ng lnd|an markets.
GAILTEL
GAl|TE| prov|des nat|ona| oommun|oat|on baokbone us|ng OFC
based t e| eoom syst em | nst a| | ed a| ong GAl |' s p| pe| | ne
|nfrastruoture and estab||shes redundant OFC based DWDM
oommun|oat|on network. Add|ng to prev|ous 8,500 Km of f|ber
oonneot|ng 83 o|t|es, GAl|TE| had oomp|eted the Meerut-Hapur
|oop |n order to br|ng h|gh|y popu|ated or|t|oa| De|h|-Meerut route
|n redundanoy. Further |n order to |norease the oatohment area
and |mprove serv|oe ava||ab|||ty, Greater No|da f|ber |oop had been
oomp|eted.
GAl|TE| prov|des both |nterna| te|eoommun|oat|on serv|oes and
oommero|a| bandw|dth serv|oes to oustomers. Th|s year, GAl|TE|
has p|ayed major ro|e |n ||nk|ng d|fferent GAl| off|oes for EPP
purpose.
LPG Marketing
Your Company had taken up the matter w|th MoP&NG regard|ng
grant of perm|ss|on to market |PG be|ng produoed by GAl|.
MoP&NG |n February 2005, has perm|tted GAl| to market |PG
w.e.f. Apr||, 2006. Aot|on has been |n|t|ated for deve|opment of
requ|red |nfrastruoture and d|str|but|on network to market |PG
to a|| oategor|es of oustomers suoh as domest|o, oommero|a| -
paoked and |n bu|k to |ndustr|a| oustomers.
SUBSIDIARY COMPANY
Dur|ng the year under rev|ew, your Company formed a who||y
owned overseas subs| d| ary oompany name| y, GAl| G| oba|
S|ngapore) Pte. ||m|ted w|th the objeot|ve of aot|ve|y souro|ng
overseas bus|ness. Th|s oompany, |n future, |s ||ke|y to funot|on
as a veh| o| e f or a| | g| oba| | zat | on | n| t | at | ves. A prof | t of
Ps. 2.27 Crores has been made by th|s oompany.
PERFORMANCE OF JOINT VENTURES
Mahanagar Gas Limited (MGL)
The Company, a Jo| nt venture w| th Br| t| sh Gas and the
Government of Maharashtra, was |noorporated |n May, 1995, to
supp| y gas to domest| o, oommero| a| and sma| | | ndustr| a|
oonsumers and CNG to the transport seotor |n Mumba|. Current|y,
MG| | s supp| y| ng p| ped gas to about 2,30,000 domest| o
oonsumers, 658 oommero|a| oonsumers, 45 |ndustr|a| oonsumers
and CNG to over 1.5 |akhs veh|o|es |n Mumba| and Thane through
108 CNG out|ets spread over the o|ty.
Indraprastha Gas Limited (IGL)
lG|, a Jo|nt venture w|th BPC| and Government of De|h|, was
formed |n Deoember, 1998 to supp|y gas to domest| o and
oommero|a| oonsumers and CNG to the transport seotor |n NCT
of De|h|. lG| supp||es p|ped gas to more than 25,000 domest|o
oonsumers, 177 oommero|a| oonsumers and CNG to over 93,000
veh|o|es |no|ud|ng DTC Buses through 134 CNG out|ets spread
over the o|ty. lG| |s ||sted at the Nat|ona| Stook Exohange of lnd|a
||m|ted and The Stook Exohange, Mumba| and the Company's
o|os|ng share pr|oe was Ps. 97.20 as on 31
st
Maroh, 2005.
Petronet LNG Limited (PLL)
The Company, a Jo|nt venture of lOC|, ONGC, BPC| and GAl|,
was formed for sett|ng up of |NG |mport and regas|f|oat|on fao|||t|es.
P|| has a |ong term |NG supp|y oontraot w|th Pas Gas, Qatar for
|mport of 7.5 MMTPA. The Dahej term|na| started operat|ons |n
Maroh, 2004. Your Company, as the pr|no|pa| marketer has
transported the ent|re quant|ty of P-|NG |mported at Dahej term|na|.
P|| |s ||sted at the Nat|ona| Stook Exohange of lnd|a ||m|ted and
The Stook Exohange, Mumba| and the Company's o|os|ng share
pr|oe was Ps. 42.30 as on 31
st
Maroh, 2005.
Bhagyanagar Gas Limited (BGL)
The Company, a Jo|nt venture w|th HPC| was |noorporated |n
August, 2003 for d|str|but|on and market|ng of Auto |PG and CNG
for veh|o|es, and natura| gas for domest|o, oommero|a| and sma||
| ndust r| a| oonsumers | n o| t | es of Andhra Pradesh. BG|
oomm|ss|oned |ts f|rst Auto-|PG stat|on at T|rupath| |n June, 2004
fo||owed by two more stat|ons. BG| has a|so put up a CNG Mother
Stat|on at v|jaywada.
Central UP Gas Limited (CUGL)
CUG| |s a Jo|nt venture w|th BPC| |noorporated |n February, 2005
for o|ty gas d|str|but|on |n Kanpur o|ty. Your Company has
oomp|eted the projeot of |uoknow-Kanpur Feeder p|pe||ne, wh|oh
w||| be the souroe of supp|y of gas to CUG|.
BGLs first Auto LPG station at Tirupathi
Tripura Natural Gas Company Limited (TNGCL)
TNGC| | s a Jo| nt venture Company of Tr| pura l ndustr| a|
Deve|opment Corporat|on TlDC), Assam Gas Company ||m|ted
AGC|) and GAl| for d|str|but|on of P|ped Natura| Gas |n the state
of Tr|pura. Your Company has a part|o|pat|ng equ|ty of 29%.
PROJECTS
Projects Commissioned
Two p|pe||ne projeots have been oomm|ss|oned dur|ng the year.
The South - Gujarat P|pe||ne Projeot, oomm|ss|oned |n May, 2004
for supp|y|ng re-gas|f|ed |NG to the oonsumers |n South - Gujarat
and the |uoknow & Kanpur Feeder P|pe||ne, oomm|ss|oned |n
Maroh, 2005 w||| oarry gas to the o|t|es of |uoknow and Kanpur
for o|ty gas d|str|but|on.
The Nar|manam - Kutha|am P|pe||ne Projeot was oomp|eted |n
June, 2005 for the supp|y of the gas from Cauvery bas|n to the
oonsumers |n Kutha|am reg|on |n Tam||nadu. ln add|t|on to above,
there were number of spur p|pe||nes oomp|eted dur|ng the year |n
KG/Cauvery reg|ons, Gujarat reg|on and NCP.
Projects Under Execution
Your Company |s ourrent|y engaged |n the exeout|on of severa|
proj eot s, wh| oh a| m t o expand t he nat ura| gas p| pe| | ne
|nfrastruoture and oapao|ty expans|on of the Petroohem|oa| p|ant
at Pata. Some of the major projeots |no|ude the Dahej Uran
Pipeline Project, oonneot|ng Gujarat and Maharashtra, the Thulendi
Phulpur Pipeline Project, the Vijaipur Kota Pipeline Project,
oonneot|ng MP and Pajasthan, the Jagoti Dewas Pithampur
Pipeline Project wou|d oater to the gas demand of lndore, Dewas,
Ujja|n and P|thampur, the Kelaras - Malanpur Pipeline Project and
the Petrochemical Expansion Project at Pata to br|ng up the p|ant
to a po|ymer oapao|ty of 4,40,000 TPA.
Bes|des, for supp|y of gas to lPPs lndependent Power Produoers)
|n KG reg|on, your Company has taken up |ay|ng of P|pe||nes for
supp|y of gas |n Kr|shna Godavar| bas|n |n Andhra Pradesh to
the power p|ants.
Presidential Directive
M|n|stry of Petro|eum & Natura| Gas v|de |ts |etter no. |-11011/
2/03-GP Part-lll) dated 28
th
Ootober, 2004 |ssued Pres|dent|a|
D|reot|ve |n terms of Art|o|e 127 of Art|o|es of Assoo|at|on to oanoe|
the tender for Dahej-Uran P|pe||ne DUP|) Projeot and |ssue a
fresh tender |noorporat|ng speo|f|oat|ons under |nternat|ona||y
aooepted oodes suoh as APl-5| and not to put restr|ot|ons |n
the tender on any speo|f|o type of ||ne p|pe. ln the meanwh||e,
GAl| may a|so f|rm up souroe of supp|y and oonsumer t|e up for
DUP| Projeot. Aooord|ng|y, the tender was re-f|oated and no
| mpaot on the f| nano| a| pos| t| on of the Company oan be
asoerta|ned.
QUALITY MANAGEMENT
To bu||d GAl| as an organ|zat|on wh|oh stands for Qua||ty and to
|nfuse a "Tota| Qua||ty" ou|ture |n the organ|zat|on, Qua||ty C|ro|e
movement has been |aunohed |n GAl|. ln order to fao|||tate the
|mp|ementat|on of Qua||ty C|ro|es QCs) at a|| work oentres of
GAl|, M/s. FAAAl Federat|on of AOTS A|umn| Assoo|at|on of
lnd|a), who propagate Japanese Qua||ty oonoepts |n lnd|a has
been appo|nted as the oonsu|tant.
158 QCs have been reg|stered, spread over 15 work oentres of
GAl| aoross the oountry. The Qua||ty C|ro|e movement brought
out outstand|ng aoh|evements by the emp|oyees at grass root
|eve|. The management aooorded h|gh pr|or|ty to the Qua||ty C|ro|e
movement and |no|uded |t as a part of MOU targets.
Dur|ng the f|nano|a| year 2004-05, out of a MOU target of 64
| mprovement proj eots, QCs a| one have oontr| buted to 42
|mprovement projeots t||| now. These have resu|ted |n tang|b|e
sav|ngs to the tune of Ps. 2 Crores apart from |nnumerab|e
|ntang|b|e benef|ts.
Your Company has ass| gned h| ghest pr| or| ty on Qua| | ty
Management through TQM approaoh, suoh as-S|x S|gma, Qua||ty
C|ro|e, Standard|zat|on and Benohmark|ng.
TECHNOLOGY ABSORPTION
Your Company be| | eves that a strong foous | n teohno| ogy
absorpt|on wou|d prov|de the oompet|t|ve edge and henoe fue| for
a susta|ned growth eng|ne. W|th a strateg|o |ntent towards
d|vers|f|oat|on aoross the energy va|ue oha|n, GAl| has been not
on|y exp|or|ng but a|so support|ng teohno|ogy deve|opments |n
the areas of gas p|pe||ne transportat|on, gas based petroohem|oa|
teohno|og|es, underground ooa| gas|f|oat|on, above ground ooa|
gas|f|oat|on, stranded gas transportat|on teohno|og|es suoh as
soa|ed down ||quefaot|on p|ants, |NG by truoks, CNG by truoks
Shri Mani Shankar Aiyar, Honble Minister of Petroleum & Natural Gas
during the inauguration of Narimanam-Kuthalam pipeline project
11 We Stand for Pe||ab|||ty
21
st
Annual Report
and bu|k gas transportat|on teohno|og|es suoh as CNG by sh|ps.
Bes|des, GAl| |s a|so promot|ng severa| researoh projeots |n the
areas of hydrogen fue| oe||s, fue|s from waste p|ast|os eto.
On the bus|ness prooess s|de, your Company |s a|so a|m|ng to
oonvert bu|k of |ts paper based transaot|ons |n |ts bus|ness
prooesses t o e| eot ron| o mode of operat | ons. The SAP
|mp|ementat|on aoross the Company |s |n the f|na| stage and your
Company p|ans to d|g|t|ze and transaot paper based doouments
|n e|eotron|o form |n oomp||anoe w|th the lnformat|on Teohno|ogy
Aot of lnd|a.
AWARDS & ACCOLADES
Dur|ng the year under rev|ew, your Company was oonferred upon
the fo||ow|ng honours.
The Glow of a Navratna
Pated Best PSU by Department of Public Enterprises
(DPE) for top soore of 1.00 |n MOU for the year 2003-04. A
soore of 1.00 |s the h|ghest poss|b|e soore and |nd|oates
exoe||ent rat|ng |n a|| parameters of eva|uat|on.
Others
Golden Peacock Award for Corporate Governanoe 2003-04).
ln a survey oonduoted by M/s. Hew|tt Assoo|ates-CNBC,
featured amongst the prest|g|ous Best Employers in India
2004.
National Merit Award (Public Sector) for Excellence in
Cost Management from the lnst|tute of Cost and Works
Aooountants of lnd|a.
HT Power Jobs Award for Organization with Innovative
HR Practices.
Best Overall Performance in Upstream Sector by PCPA
for energy eff|o|enoy/sav|ng measures.
NPMP Award for Exoe||enoe |n Projeot Management 2003-04).
Global Recognition
12
th
amongst 30 lnd|an oompan|es appear|ng |n the ||st of
Forbes 2000 - the wor|d's wea|th|est oompan|es 2005). The
g|oba| rank |s 1250.
INFORMATION TECHNOLOGY INITIATIVES
Your Company |s deep|y oomm|tted to "squeeze teohno|ogy to
|ts ||m|t". Dur|ng the year under rev|ew, var|ous lT |n|t|at|ves have
been taken up to ensure faster and eff|o|ent on-||ne serv|oes suoh
as e-bank| ng, e-tender| ng, e-| nvestments, e-performanoe
management system, eto. by way of estab||sh|ng oonneot|v|ty
amongst a|| stake ho|ders.
A oentra||zed state of the art data oentre has been set up for a||
lT serv|oes |no|ud|ng EPP to extend oompany w|de 24 X 7 support
for var| ous on| | ne bus| ness prooesses. l n order to further
strengthen the system, measures for data seour|ty and network
proteot|on, gateway of your Company's lT network have been
taken, us|ng mu|t|p|e f|rewa||s and oentra||zed ant|-v|rus so|ut|on.
v|deo-Confereno|ng fao|||ty |s |n p|aoe aoross a|| off|oes to fao|||tate
|nteraot|ve sess|ons between work oentres as a|so for oost-
eff|o|ent oonfereno|ng w|th fore|gn vendors and supp||ers to
d|souss key oommero|a| |ssues.
Implementation of ERP
Your Company |s at the f|na| stage of |mp|ementat|on of Enterpr|se
Pesouroe P|ann|ng EPP) |n a|| bus|ness segments of the Company
at a|| work oentres.
Implementation of Gas Management System
Your Company has suooessf u| | y oomm| ss| oned the Gas
Management System, wh|oh enab|es your Company to fao|||tate
Shri Proshanto Banerjee, CMD, GAIL, receiving the Best Employers Award
Shri Proshanto Banerjee, CMD and Shri S.P. Rao, Director (Projects) receiving
the NPMP Award
Natura| Gas bus|ness operat|ons more eff|o|ent|y and speed||y by
|ntegrat|ng a|| souroes of gas to the offtakers/oustomers under
d|fferent|a| gas pr|o|ng reg|me.
MANAGEMENT DISCUSSION AND ANALYSIS
The deta||ed Management D|souss|on and Ana|ys|s of the f|nano|a|
oond|t|on and resu|ts of operat|ons separate|y form part of th|s
report.
IMPLEMENTATION OF OFFICIAL LANGUAGE
Your Company makes v|gorous efforts for propagat|on and
|mp|ementat|on of the Off|o|a| |anguage Po||oy of the Un|on of
lnd|a.
W|th a v|ew to promote use of H|nd| for off|o|a| purposes, H|nd|
workshops were organ|zed at a|| the Company's work oentres.
M|orosoft Off|oe XP b|||ngua| software was prov|ded to a|| the
Company's off|oes and oomprehens|ve tra|n|ng programmes were
oonduoted for the users, to |mpart work|ng know|edge to them |n
the b|||ngua| software.
Go|ng forward, to en||st greater part|o|pat|on of the emp|oyees |n
aooept|ng and |mp|ement|ng the Off|o|a| |anguage |n |etter and |n
sp|r|t, |noent|ve sohemes were made more attraot|ve.
Dur|ng the year under rev|ew, |n add|t|on to H|nd| D|was program
and Annua| Paj bhasha Conf erenoe, new and | nt erest | ng
oompet|t|ons, ou|tura| aot|v|t|es, sem|nars, Kav| Samme|an, H|nd|
sk|ts and exh|b|t|on on H|nd| aot|v|t|es were organ|zed at d|fferent
projeots/reg|ona| off|oes wh|oh found w|de part|o|pat|on.
HRD INITIATIVES
Dur|ng the year under rev|ew, the Company's lndustr|a| Pe|at|ons
o||mate |n genera| rema|ned harmon|ous. No 'man days' or 'man
hours' were |ost on aooount of any |ndustr|a| oonf||ot.
Your Company oont|nues to str|ve for exoe||enoe |n the f|e|d of
Emp|oyee We|fare. Go|ng forward, fo||ow|ng |n|t|at|ves |n re|at|on
to Human Pesouroes Deve|opment were taken.
lntroduot| on of an E| eotron| o Performanoe Management
System e-PMS) wh|oh fao|||tates on||ne generat|on and f|ow
of se|f appra|sa| forms
E|eotron|o oaptur|ng of the Key Performanoe Areas KPAs) and
Key Performanoe lnd|oators KPls) for the exeout|ves
Training Initiatives
The Company's Tra|n|ng Po||oy target of prov|d|ng m|n|mum one
tra|n|ng to eaoh emp|oyee, every year was fu||y oomp||ed. Aga|nst
MOU target of 3500 under exoe||ent oategory, 4640 personne|
were tra|ned by GAl| Tra|n|ng lnst|tute GTl). lt |no|udes fore|gn
tra|n|ngs/programmes to 45 sen|or exeout|ves |n prem|er bus|ness
sohoo|s suoh as Ke||ogg, Harvard, Stanford Bus|ness Sohoo|s,
eto. and 33 teohn|oa| exeout|ves at Advant|oa, UK for Energy
Management Serv|oes and at Tokyo Gas for |NG Operat|on &
Ma|ntenanoe. Dur|ng the year under rev|ew, number of tra|n|ng
days |noreased by a|most 200% oompared to |ast year.
ln order to prov|de more oomprehens|ve v|ew on tra|n|ngs,
Steer|ng Comm|ttee has been reoonst|tuted w|th |no|us|on of a||
Exeout|ve D|reotors. Course types have been ohosen to make
tra|n|ng oa|endar a||gned w|th GAl|'s Corporate Strategy.
The tra|n|ng programs have been d|v|ded |n four broad oategor|es.
A. Strategy, |eadersh|p and Bus|ness Know|edge Programs
B. Management, Funot|ona| and Prooess Programs
C. Operat|ona|, Teohn|oa|, lT & Safety Programs
D. Behav|oura| Deve|opment Programs
Wh||e top management programs have been fooused on type A,
m| dd| e management most| y rema| ned on type B. |ower
management tra|n|ng programs fooused on sk||| and speo|a||zat|on
programs as ment|oned |n type C. Type D programs have been
speo|a||y des|gned for a|| GAl| emp|oyees.
Your Company |s oonso|ous of the need to prepare the young
exeout| ves to faoe the oha| | enges of the future. Under a
oomprehens|ve and ta||ored program t|t|ed 'Young GAl| Un||m|ted'
wh|oh has been des|gned |n partnersh|p w|th the lnd|an lnst|tute
of Management llM), Ko|kata, the young GAl| exeout|ves |n the
age group of 22-35 years, are g|ven an opportun|ty for 'boundary-
|ess th|nk|ng' and exposure to |atest bus|ness praot|oes.
ln order to |norease the sk||| |eve|s of a|| non-exeout|ves, a
ded|oated tra|n|ng |nst|tute, named 'Teohn|oa| Tra|n|ng Centre',
has been set up at Ja|pur w|th modern |nfrastruoture and fao|||t|es.
REPRESENTATION OF SC/ST/OBC AND MINORITIES
The manpower of the Company as on 31
st
Maroh, 2005 stood at
3349, of wh|oh, 15.7% be|ong to SC, 6.1% to ST, 14.9% to OBC,
7.64% to M|nor|t|es and 1.3 % to Phys|oa||y Hand|oapped. Your
Company |s oont|nu|ng w|th |ts efforts to further reduoe the
shortfa|| of SC/ST/OBC representat|on.
The representat|on of women emp|oyees |s 4.6%.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES &
INDUSTRIAL RELATIONS FRONT
The | ndustr| a| soenar| o dur| ng the year 2004-05 rema| ned
harmon|ous and oord|a|. There was no str|ke or |ook out dur|ng the
year and as suoh no man-days were |ost. As on 31
st
Maroh, 2005
there were 3,349 emp|oyees on the ro||s of the Company.
13 We Stand for Pe||ab|||ty
21
st
Annual Report
ENVIRONMENT, HEALTH AND SAFETY FOR CORPORATE
SUSTAINABILITY
Your Company's oomm|tment and respons|b|||ty towards the
env|ronment stems from |ts v|s|on, wh|oh enjo|ns upon your
Company to susta|n bus|ness growth w|th deep oomm|tment to
the env|ronment.
Corporate HSE Policy
As reported ear| | er, your Company has a we| | estab| | shed
Env|ronment, Hea|th and Safety EHS) Po||oy. The safety and hea|th
of |ts emp|oyees are embedded |n the oore organ|zat|ona| va|ues
of the Company. The po||oy, |nter a||a, a|ms to ensure safety of
pub||o, emp|oyees, p|ant and equ|pment, ensure oomp||anoe w|th
a|| statutory ru|es and regu|at|ons, |mpart tra|n|ng to |ts emp|oyees,
oarry out safety aud|ts of |ts fao|||t|es, oonduot regu|ar med|oa|
oheok up of |ts emp|oyees and promote eoo-fr|end|y aot|v|t|es.
New Certifications
As reported ear||er, |PG P|ants, petroohem|oa| p|ant and major
p|pe||ne systems have been oert|f|ed for Env|ronment Management
System lSO 14001).
Dur|ng the year 2004-05, major |nsta||at|ons of GAl| have a|so
been oert|f|ed for the Oooupat|ona| Hea|th and Safety Management
System OHSAS 18001). The OHSAS system a|ms to e||m|nate or
m|n|m|ze r|sk to emp|oyees and other |nterested part|es who may
be exposed to OH&S r|sks assoo|ated w|th |ts aot|v|t|es.
Ensuring Compliance
Your Company oont|nues to reoogn|ze the |mportanoe of a|| the
nat| ona| and | nternat| ona| regu| at| ons and ensures 100%
oomp| | anoe at a| | t| mes. GAl| fu| f| | s the requ| red statutory
requ|rements of Centra| and State Po||ut|on Contro| Boards. Major
env| ronmenta| parameters as requ| red are be| ng regu| ar| y
mon|tored and reported to the oonoerned/regu|atory bod|es, v|z.,
Centra| Po||ut|on Contro| Board, State Po||ut|on Contro| Board,
M| n| stry of Env| ronment and Forests. GAl|'s env| ronmenta|
performanoe | s we| | w| th| n the em| ss| on | | m| ts | n statutory
gu|de||nes for a|| operat|ons.
Environmental Initiatives
Greenbelt Development
Your Company oonstant|y endeavours to m|n|m|ze the d|reot and
|nd|reot env|ronmenta| |mpaot of |ts bus|ness operat|ons and
str|ves to enr|oh the env|ronment wherever poss|b|e.
The green oover of a|| the GAl| fao|||t|es |s about 600 Heotares
out of a tota| area of about 1,592 Heotares. Dur|ng the year
2004-05, more than 25,000 trees have been p|anted. Th|s green
oover together w|th |arge water bod|es |n the oomp|ex has oreated
an |deo|og|oa| hab|tat for b|rds and an|ma|s.
Water and Waste Water Management
To oonserve natura| resouroes, your Company oont|nues to make
efforts |n max|m|z|ng reoyo|e of treated wastewater and through
ra|n water harvest|ng. Treated wastewater |s used for hort|ou|ture
and f| rewater use and the soheme has been suooessfu| | y
|mp|emented |n Petroohem|oa| p|ant at Pata and |PG P|ant at
Gandhar resu|t|ng |n 'zero d|soharge' and |s under |mp|ementat|on
at other |ooat|ons.
Further, ra|nwater harvest|ng measures have been |mp|emented
at Pat a, Gandhar and Mansarampura, Ja| pur. At l PS
Mansarampura, Ja|pur ra|nwater harvest|ng |s |mp|emented to
prevent the dep|et|on of ground water and |norease the ground
water |eve| to a great extent as the average ra|nfa|| |n Ja|pur d|str|ot
|s |ess than nat|ona| |eve|.
Solid Waste Management
A|| un|ts of GAl| are oont|nua||y and d|||gent|y str|v|ng to m|n|m|ze
and reoyo|e a|| so||d wastes to reduoe and e||m|nate any res|dua|
|mpaot on the env|ronment.
Air Pollution Management
F|are Gas reoovery projeot |s oonoeptua||zed for reoovery of f|are
gas above des|gn f|ow to use as fue| gas |n the oomp|ex and the
same |s be|ng |mp|emented at GAl|, Pata to reduoe F|are |osses,
therma| po||ut|on and oonserve natura| resouroes.
W| th a v| ew to ensure that the operat| on of th| rd part| es
oontraotors, supp||ers eto.) |s not affeot|ng the env|ronment, PUC
oert|f|oat|on has been made mandatory for |oad|ng of tankers |n
|akwa P|ant.
Health & Safety
Safety Performance
GAl| oont|nues to str|ve for 'zero aoo|dents' |n a|| |ts un|ts. Dur|ng
the year 2004-05, the HSE lndex has |mproved from 95.4% to
96.31% |ead|ng to a deo||n|ng trend |n |no|dents and resu|t|ng |n
enhanoed produot|v|ty. The report|ng of 'near-m|ss' |no|dents has
a|so |mproved |n the |ast year wh|oh |nd|oates a strong safety
ou|ture throughout a|| |eve|s of the organ|zat|on.
Declining trend of incidents in GAIL
Safety Training
Dur|ng the year 2004-05, 100% of the emp|oyees were exposed
to safety tra|n|ng |n the form of regu|ar HSE br|ef|ngs, 2 SMS
workshops for personne| from a|| s|tes. Bes|des, de-stress|ng
workshop for sen|or exeout|ves and |eotures by renowned externa|
faou|ty were oarr|ed out.
External Safety Audits
Dur|ng the year 2004-05, your Company's safety praot|oes and
systems were aud|ted by g|oba||y renowned aud|tors, Br|t|sh
Safety Couno||-UK, German|soher ||oyd-Germany, Tebod|n-
Nether|ands and DNv-Norway.
Occupational Health Examination
GAl| oont|nued |ts oomm|tment to |mprove the we|| be|ng of |ts
emp| oyees. Dur| ng the year 2004-05, a| | emp| oyees of the
Company were med|oa||y exam|ned. Bes|des, oontraot workers,
ClSF personne|, v|||agers from nearby areas were a|so oovered |n
the program.
Environmental Awards
Greenteoh Env|ronment Exoe||enoe Award for 2003-04 deo|ared
|n 2004-05) was g|ven to |PG P|ants at Gandhar & vaghod|a,
Pata and Jamnagar-|on| |PG P|pe||ne by Greenteoh Foundat|on,
New De|h|. Th|s foundat|on |s supported by M|n|stry of Env|ronment
and Forests, Government of lnd|a and Centre for lnternat|ona|
Transfer of Env|ronmenta| Teohno|og|es, Germany. The award |s
| n reoogn| t| on of the oare for env| ronment adopted by the
Company.
|PG P|ant at Usar has reoe|ved the 'lnd|ra Gandh| Memor|a|
Nat|ona| Award' under the oategory 'Exoe||ent Po||ut|on Contro|
lmp|ementat|on Go|d Award'.
Safety Awards
F| ve star Hea| th & Safety Management System Aud| t was
oonduoted by Br|t|sh Safety Couno||, U.K. |PG Peoovery P|ants
at v|ja|pur & Gandhar and Jamnagar-|on| |PG P|pe||ne were
awarded w|th F|ve Star rat|ng. |PG Peoovery P|ant, Gandhar has
reoe|ved the prest|g|ous Sword of Honour from Br|t|sh Safety
Couno|| for |ts outstand|ng performanoe on HSE f|e|ds.
|PG P|ant at |akwa and Pata P|ant have reoe|ved the 'Prashansha
Patra' Award from Nat|ona| Safety Couno|| of lnd|a.
|PG P|ant at Usar reoe|ved 1
st
O|| lndustry Safety Awards |n the
oategory 'Other Prooess|ng P|ants' and HvJ P|pe||ne reoe|ved
1
st
Pr|ze under the oategory 'Cross oountry p|pe||ne' for the year
2004-05.
|PG P|ant Aura|ya has reoe|ved the 1
st
pr|ze for the year 2003-
04 under the oategory 'Other Prooess|ng P|ants'. Speo|a| Award
'W|thout |oss of ||fe' was reoe|ved from OlSD for 2002-03.
Greenteoh Go|d Awards for Env|ronment Safety reoe|ved from
Greenteoh Foundat|on to our Prooess P|ants at v|ja|pur, Gandhar,
Usar, Pata, |akwa and J|P| & vSP| p|pe||nes and Haz|ra
Compressor stat|on.
ENERGY MANAGEMENT SERVICES FOR CUSTOMER
CARE
Energy Management Serv|oes EMS) group, formed |n the year
2002, w|th an objeot|ve to promote measures for aooe|erat|ng
oonservat|on of Natura| Gas, to oreate awareness amongst the
|ndustr|es/users about the |mportanoe, benef|ts and methods of
enhano|ng energy eff|o|enoy, to promote teohn|oa| serv|oes to
aoh|eve eoonomy and eff|o|enoy of gas use by ex|st|ng and
potent|a| oustomers.
21 energy eff|o|enoy enhanoement stud|es have been undertaken
|n the past year for |mprov|ng the eff|o|enoy of p|ants and
prooesses. Many of the suggest|ons have been |mp|emented by
the oustomers y|e|d|ng energy sav|ng and |n turn monetary
benef|ts to the user |ndustr|es and revenue to GAl| for |ts serv|oes.
National Gas Conservation Programme
ln oont|nuat|on to the oonservat|on programme that was started
| n the year 2003, EMS group organ| zed the Nat| ona| Gas
Conservat| on Programme on 14
th
Deoember, 2004. The
programme a| med at enoourag| ng d| fferent | ndustr| es to
undertake energy sav|ngs measures.
The awards for Exoe||enoe |n Energy Conservat|on were g|ven to
d|fferent energy eff|o|ent |ndustr|es from d|fferent seotors ||ke
fert|||zer, power, petroohem|oa|s, sponge-|ron, g|ass, fraot|onat|on
un|ts and gas oompressor stat|ons. Tata Chem|oa|s |td., Babra|a,
NTPC, Far| dabad, l PC|, Gandhar, v| kram l spat, Pa| garh,
Shri Proshanto Banerjee, CMD, GAIL, speaking during the launch of
National Gas Conversation Programme
15 We Stand for Pe||ab|||ty
21
st
Annual Report
v|deooon Narmada G|ass, Bharuoh, GAl| P|ants at v|ja|pur &
Gandhar, Compressor Stat|on at GAl|, v|ja|pur were the w|nners
|n the|r respeot|ve seotors.
Technology Meets
GAl| organ|zed 17 teohno|ogy meets at Ch|ttorgarh, Hyderabad,
Mumba| and other |ooat|ons for oustomers. The meets ma|n|y
fooused upon |ssues perta|n|ng to methods for eff|o|ent ut|||zat|on
of natura| gas, the teohno|og|oa| ohanges and a|so the |ndustry-
w|de best praot|oes for |mprov|ng produot qua||ty and reduo|ng
natura| gas wastages.
Climate Change Initiatives
GAl| |s exp|or|ng opt|ons that |ead to reduot|on of green-house
gases as a part of C|ean Deve|opment Meohan|sm CDM) projeot
under Kyoto Protooo|. Th|s wou|d he|p your Company to earn
Carbon ored|ts apart from reduot|on of oarbond|ox|de. A projeot
for supp|y of CO
2,
from the Petroohem|oa| p|ant to fert|||zer and
other prospeot|ve |ndustr|es |s under aot|ve oons|derat|on.
CORPORATE SOCIAL RESPONSIBILITY
Helping people help themselves!
Your Company |s oomm|tted to the be||ef that |t ex|sts not just to
run bus|nesses and generate prof|ts, but a|so to fu|f||| |ts dut|es
as a respons|b|e oorporate o|t|zen. At GAl|, we def|ne Corporate
Soo|a| Pespons|b|||ty as continuing commitment for operating
the core business in a socially responsible way, complemented
by investment in communities to produce an overall positive
impact on society. As a oar|ng o|t|zen, we pa|nt var|ous v|brant
hues on the oanvas of ||fe, eaoh oo|our |n the pa|ette oom|ng a||ve
w|th the bo|d brush strokes of hope, harmony and happ|ness. ln
order to trans|ate th|s va|ue |nto aot|on we have made a oonso|ous
deo|s|on to spend one peroent of our Prof|t After Tax PAT) of the
prev|ous f|nano|a| year on CSP programmes.
The f oous areas of your Company' s CSP aot | v| t | es are.
Environment Protection & Horticulture, Infrastructure,
Drinking Water/Sanitation, Healthcare/Medical facilities,
Communi ty Devel opment and Li teracy enhancement/
Empowerment programmes.
A snapshot of your Company's attempt to extend a he|p|ng hand
to the soo|ety, |s as fo||ows -
Air Pollution Related Disease Diagnostic Centre
A projeot has been undertaken to set up Air Pollution Related
Disease Diagnostic Centres APPDC) |n 22 cities of the oountry
hav|ng a|arm|ng |eve|s of a|r po||ut|on and where|n your Company
has p|ans to set up CNG/PNG |nsta||at|on. These oenters are be|ng
equ|pped w|th modern d|agnost|o amen|t|es re|ated to resp|ratory
and oard|o-vasou|ar d|seases. More |mportant|y, these APPDC's
wou|d deve|op the base||ne data on ooourrenoe and preva|enoe of
a|r po||ut|on re|ated d|seases, before and after |nsta||at|on of CNG/
PNG fao|||t|es |n the |dent|f|ed o|t|es. Dur|ng the year under rev|ew,
out of the tota| 22 d|agnost|o oenters projeoted to oome up, 18
d|agnost|o oenters have a|ready been set up.
Mobile Health Clinics
To prov|de hea|th oare fao|||t|es to v|||agers, ambu|anoes were
prov|ded to operate Mobile Health Clinics |n the rura| areas around
the o| t| es of Agra, Ja| pur, Ko| kata and v| j a| pur. l n a nove|
partnersh|p w|th an NGO name|y GlDF, an extens|ve med|oa|
oommun|ty outreaoh program was undertaken at v|ja|pur.
Mother and Child Care Hospital
A 30-bed Mother and Child Care Hospital was set up for the
tr|ba| popu|at|on |n Jhabua, Madhya Pradesh.
Adoption of Senior Citizens
ln assoo|at|on w|th He|p Age lnd|a, about 100 dest|tute senior
citizens were adopted. Out of these, 72 persons were aff||oted
w|th |eprosy.
Merit Scholarships
Merit scholarships were awarded to more than 2,500 sohoo|
oh||dren drawn from over 40 sohoo|s. These oh||dren represent
the soo|o-eoonom|oa||y under pr|v||eged oategory of the soo|ety.
Computer literacy for school children
ln order to promote computer literacy amongst the sohoo| oh||dren,
PCs |oaded w|th oompat|b|e software paokages were prov|ded
to the v|||age sohoo|s |n Samakh|a||, Hyderabad & Pond|oherry,
sohoo| for deaf oh||dren |n v|shakhapatnam, Udavam Karanga|
Sohoo| |n Chenna| and the B||nd We|fare sohoo|s |n De|h| and
Gurgaon.
Ms. Alka Kumar, DGM, CSR, handing over a cheque of Rs. 20 lakhs
for APRDC, Rajahmundry
Women Empowerment
W| th the obj eot| ve to empower women to atta| n f| nano| a|
|ndependenoe, |n|t|at|ves were taken to promote ||teraoy, spread
|ega| awareness, |mpart adu|t eduoat|on and vooat|ona| tra|n|ng
|n ta||or|ng, food preservat|on, beaut|o|an oourses eto. The women
fo|k |n the surround|ng areas of Ja|pur, |akwa, Usar and Gurgaon
were benef|o|ar|es of these |n|t|at|ves.
Girls Hostel
A g|r|s' hoste| 'Matri Karuna Girls Chhatralaya' was oonstruoted
for the g|r| students and dest|tute women |n Pat|am, Madhya
Pradesh. Another girls hostel was oonstruoted at |eva Pate| Seva
Samaj |n Jamnagar, Gujarat.
Aanganwadi
Aaganwadi bu||d|ngs were oonstruoted |n v|ja|pur.
Village Adoption
Village adoption programs were oarr|ed out as an on-go|ng aot|v|ty
|n and around v|japur, Haz|ra and Gurgaon.
Plastic Waste Bins
Plastic waste bins were |nsta||ed at prom|nent pub||o p|aoes |n
the state of Uttaranoha| to promote o|ean||ness |n the h||| state.
Rainwater Harvesting
ln a measure to fao|||tate ra|n/storm water harvest|ng and he|p
the farmers to aooess better |rr|gat|on fao|||t|es, check dams were
oonstruoted |n v|||ages around Khera, v|ja|pur and vaghod|a.
Tsunami Relief
A sum of Ps. 4 Crores was spent for the tsunami affeoted persons
|n Tam|| Nadu and Pond|oherry.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION
Deta||s of oonservat|on of energy, teohno|ogy absorpt|on |n
aooordanoe w|th Compan|es D|so|osure of Part|ou|ars |n the
Peport of Board of D|reotors) Pu|es, 1988 are annexed.
FOREIGN EXCHANGE EARNINGS AND OUTGO
Dur|ng the year, Fore|gn Exohange Earn|ngs were Ps. 79 Crores
wh|oh was ma|n|y on aooount of export of Po|ymers.
Expend|ture |n Fore|gn Currenoy was Ps. 859 Crores wh|oh was
ma|n|y on projeot re|ated |mports.
PARTICULARS OF EMPLOYEES UNDER SECTION 217(2A)
OF THE COMPANIES ACT, 1956
The part|ou|ars of emp|oyees u/s 2172A) of the Compan|es Aot,
1956, read w|th Compan|es Part|ou|ars of Emp|oyees) Pu|es,
1975 |s 'n||'.
EXPENDITURE ON ENTERTAINMENT, FOREIGN TOURS
AND PUBLICITY
Dur| ng the year the Company has | nourred expend| ture of
Ps. 462 |akhs on fore|gn tours, fore|gn tra|n|ng, sem|nars &
oonferenoes, Ps. 22 |akhs on enterta|nment and Ps. 2,362 |akhs
on advert|s|ng & pub||o|ty.
CORPORATE GOVERNANCE
Pursuant to C|ause 49 of the ||st|ng Agreement w|th the Stook
Exohanges, Corporate Governanoe Peport and Aud| tor' s
Cert|f|oate regard|ng oomp||anoe of oond|t|ons of Corporate
Governanoe forms part of the Annua| Peport.
Children getting computer education
Special education programme and vocational training for women
17 We Stand for Pe||ab|||ty
21
st
Annual Report
DIRECTORS
Dur|ng the year under rev|ew, Shr| M.S. Sr|n|vasan, Speo|a|
Seoretary, MoP&NG, Shr| P.K. S|nha, Jo|nt Seoretary & F|nano|a|
Adv|sor, MoP&NG and Shr| Ajay Tyag|, Jo|nt Seoretary, MoP&NG
were appo|nted as D|reotors on the Board of D|reotors of your
Company w. e. f . 28. 01. 2005, 20. 12. 2004 and 20. 04. 2005
respeot|ve|y.
Shr| M.S. Sr|n|vasan, an a|umn| of the lnd|an lnst|tute of Teohno|ogy
llT), Madras and Harvard Un|vers|ty, USA |s a member of the lnd|an
Adm|n|strat|ve Serv|oe lAS). ln a oareer spann|ng over 32 years,
he has r|oh and var|ed exper|enoe of ho|d|ng |mportant pos|t|ons
|n the State and Centra| Governments.
Shr| P.K. S|nha, a graduate |n Eoonom|os and M. Ph|| |n Soo|a|
So|enoes, |s a member of the lnd|an Adm|n|strat|ve Serv|oe lAS).
ln h|s serv|oe oareer of over 27 years, he has served w|th d|st|not|on
both |n the Centra| and State Governments.
Shr| Ajay Tyag|, a Post Graduate |n Computer So|enoe and ho|d|ng
Masters |n Pub||o Adm|n|strat|on from Harvard Un|vers|ty, |s a
member of the lnd|an Adm|n|strat|ve Serv|oe lAS). Dur|ng h|s oareer
spann|ng over two deoades, he has hand|ed major ass|gnments
both |n the State and Centra| Governments.
Dur|ng the year under rev|ew, Dr. P.K. Paohaur| and Shr| A.K.
Sr| vastava oeased to be D| reotors of the Company w.e.f.
26.10.2004 and 07.03.2005 respeot|ve|y.
BOARD MEETINGS AND GENERAL MEETING
Dur|ng the year under rev|ew, 15 meet|ngs of the Board of D|reotors
of the Company were he|d. The 20
th
Annua| Genera| Meet|ng of
the Members of the Company was he|d on 30
th
September, 2004.
DIRECTORS RESPONSIBILITY STATEMENT IN TERMS OF
SECTION 217(2AA) OF THE COMPANIES ACT, 1956
Pursuant to the requ|rement of Seot|on 2172AA) of the Compan|es
Aot, 1956, w|th respeot to D|reotors' Pespons|b|||ty Statement, |t
|s hereby oonf|rmed that .
1. |n the preparat|on of the annua| aooounts for the f|nano|a| year
ended 31
st
Maroh, 2005, the app||oab|e aooount|ng standards
had been fo||owed a|ong w|th proper exp|anat|on re|at|ng to
mater|a| departures,
2. the D|reotors had se|eoted suoh aooount|ng po||o|es and
app||ed them oons|stent|y and made judgments and est|mates
that are reasonab|e and prudent so as to g|ve a true and fa|r
v|ew of the state of affa|rs of the Company at the end of the
f|nano|a| year and of the prof|t of the Company for the year
under rev|ew,
3. the D|reotors had taken proper and suff|o|ent oare for the
ma|ntenanoe of adequate aooount|ng reoords |n aooordanoe
w| t h t he prov| s| ons of t he Compan| es Aot , 1956 f or
safeguard|ng the assets of the Company and for prevent|ng
and deteot|ng fraud and other |rregu|ar|t|es,
4. the D|reotors had prepared the annua| aooounts for the
f|nano|a| year ended 31
st
Maroh, 2005 on a go|ng oonoern
bas|s.
AUDITORS
Off|oe of The Comptro||er & Aud|tor Genera| of lnd|a v|de |ts |etter
no. CA. v/COY/CENTPA| GOvT. , GAl | 3) /370 dat ed 6
th
September, 2004, has appo|nted M/s S. Mann & Co., Chartered
Aooountants, New De|h| as Statutory Aud|tors of the Company,
M/s. Nr|pendra & Co., Chartered Aooountants, Kanpur as Branoh
Aud|tors for U.P. Petroohem|oa| Comp|ex at Pata and M/s. Chhajer
& Co., Chartered Aooountants, Bhopa| as Branoh Aud|tors for
|PG P|ant at v|ja|pur for the year 2004-05.
ACKNOWLEDGEMENT
The Board of D|reotors w|sh to p|aoe on reoord the|r s|noere
appreo|at|on for the va|uab|e serv|oes and ded|oated efforts of
t he emp| oyees of t he Company, who have ensured t he
aooomp||shment of exoe||ent resu|t and aoh|evement of the
Company. The Board a|so w|shes to thank the Government of
lnd|a, espeo|a||y the M|n|stry of Petro|eum and Natura| Gas and
var|ous State Governments for the|r va|uab|e gu|danoe and
support.
The Board of D|reotors w|shes to p|aoe on reoord |ts h|ghest
appreo|at|on of the s|gn|f|oant oontr|but|ons made by Dr. P.K.
Paohaur| and Shr| A.K. Sr|vastava dur|ng the|r tenure as D|reotor
on the Board of D|reotors of the Company.
For and on beha|f of the Board
Proshanto Banerjee
Cha|rman & Manag|ng D|reotor
P|aoe. New De|h|
Dated. 14
th
August, 2005
Annexure to the Directors Report on Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings & Outgo as per Section 217(1)(e) of the
Companies Act, 1956 read with Companies (Disclosure of Particulars in the report
of Board of Directors) Rules, 1988
A. CONSERVATION OF ENERGY:-
(a) Energy conservation measures taken:
1. Energy Audit has been oarr|ed out at Pata by M/s. PCPA, New De|h| and at J|P|, Nas|rabad by M/s. EPDA and oerta|n
reoommendat|ons have a|ready been |mp|emented wh|oh has started y|e|d|ng sav|ngs amount|ng to Ps. 62 |akhs p.a. at
Pata and Ps. 6.43 |akhs p.a. at J|P|, Nas|rabad.
2. Benchmarking exercise for var|ous prooess un|ts of the Company have been oarr|ed out and be|ng o|ose|y mon|tored
to oontro| and reduoe speo|f|o energy oonsumpt|ons.
3. Variable Frequency Drive (VFD) system |mp|emented for jookey pump at Gandhar |PG P|ant has resu|ted |n energy
sav|ngs month|y/year|y @ 10800 KWH/129600 KWH and oost sav|ngs month|y/year|y @ Ps. 0.58 |akhs/ Ps. 7 |akhs. The
tota| sav|ngs dur|ng 2004-05 aoh|eved- Ps. 5.25 |akhs.
4. Modification done in lighting systems by |nsta||at|on of energy eff|o|ent ||ght|ng dev|oes at many of the work oenters
of HvJ,J|P| and Gandhar have resu|ted |n energy sav|ngs month|y/year|y @ 46297 KWH/555564 KWH and oost sav|ngs
month|y/year|y @ Ps. 2.3 |akhs/ Ps. 27.5 |akhs.
5. Installation of P.F. improvement equipments and maintaining P.F. in the range between 0.95 to 0.99 at var|ous
|ooat|ons of J|P| and HvJ- Jhabua and Gandhar have resu|ted |nto prevent|on of |osses of e|eotr|oa| energy. A substant|a|
month|y/year|y sav|ngs of Ps. 4.6 |akhs/Ps. 55.5 |akhs have a|so been made towards rebate from E|eotr|o|ty Board.
6. The awareness campaign to save energy and effort for optimal utilization of running of static and rotating
equipments at var|ous work oenters of HvJ, J|P|, Pata, Gandhar eto. have resu|ted |nto substant|a| energy sav|ngs
month|y/year|y @ 646808 KWH/7761696 KWH and oost sav|ngs month|y/year|y @ Ps. 34.4 |akhs/ Ps. 412.7 |akhs.
(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy:
1. Dur|ng 2005-06, Energy Aud|t has been p|anned to be oarr|ed out at HvJ-D|byapur and J|P| Mansarampura at an
est|mated oost of Ps. 4.5 |akhs and Ps. 0.75 |akhs respeot|ve|y and |ntroduot|on of EMS at Gandhar has been p|anned
at an est|mated oost of Ps. 8.7 |akhs.
2. Variable Speed Drive (VSD) system at var|ous |ooat|ons of Pata, Gandhar, Usar and HvJ-Jhabua have been taken up
for |mp|ementat|on dur|ng 2005-06 at an est|mated oost of Ps. 1.41 Crores. W|th the |mp|ementat|on of the projeots as
above, the month|y/year|y reduot|on |n oonsumpt|on of energy as est|mated wou|d be 89406 KWH/1072872 KWH and
oost reduot|on wou|d be Ps. 3.9 |akhs/Ps. 46.6 |akhs.
3. Lighting system modifications by |nsta||at|on of energy eff|o|ent ||ght|ng dev|oes are be|ng taken up at many of the
work oenters of J|P| and HvJ-Jhabua dur|ng 2005-06 at an |nvestment of Ps. 1 |akh wh|oh wou|d resu|t |n energy
sav|ngs of month|y/year|y @ 2500 KWH/ 30000 KWH and oost sav|ngs month|y/year|y @ Ps. 0.1 |akh/Ps. 1.2 |akhs.
4. Installation of P.F. improvement equipments for the E|eotr|oa| systems at var|ous |ooat|ons of J|P| has been p|anned
at an |nvestment of Ps. 11.6 |aos wh|oh wou|d resu|t |n oost sav|ngs of month|y/year|y @ Ps. 1.64 |akhs/Ps. 19.71 |akhs.
5. Solar power system has been p|anned for |mp|ementat|on at Gandhar at an approx|mate oost of Ps. 9.3 |akhs wh|oh
wou|d resu|t |n energy sav|ngs of month|y/year|y @ 3780 KWH/45360 KWH and oost sav|ngs month|y/year|y @
Ps. 0.202 |akhs/Ps. 2.43 |akhs.
19 We Stand for Pe||ab|||ty
21
st
Annual Report
Bes|des above, var|ous energy sav|ng measures have been p|anned and are be|ng |mp|emented to enhanoe operat|ona|
eff|o|enoy and thereby save oost as deta||ed be|ow.
|) Flare Gas Recovery Project: Th|s projeot at Pata env|sages reoover|ng the f|are gases go|ng through the f|are
system for u|t|mate use as fue| gas |n the ut|||ty bo||ers. The projeot oons|st|ng of gas oompress|on system and
assoo|ated p|p|ng eto. w||| be |mp|emented through an EPCM oonsu|tant, M/s. |urg| lnd|a. The est|mated expend|ture
of the projeot |s Ps. 10.72 Crores. lmp|ementat|on of the projeot wou|d resu|t |nto fue| sav|ngs to the tune of Ps. 6.5
Crores per year.
||) Installation of additional STG: lnsta||at|on of a 9 MW extraot|on type STG un|t has been approved for Pata. The
|nvestment wou|d be Ps. 18 Crores. The sett|ng up of extraot|on type STG wou|d enab|e eff|o|ent use of the vHP
steam to produoe HP steam and a|so |n power generat|on wh|oh w||| reduoe dependenoe on State Gr|d and make
sav|ngs of around Ps. 7 Crores p.a.
|||) Advance Process Control (APC): Th|s projeot |s under |mp|ementat|on for upstream un|ts GPU/ |PG/ GCU un|ts)
of Petroohem|oa| projeot. After |mp|ementat|on of the projeot, |t |s expeoted to reduoe the speo|f|o energy oonsumpt|on
to the tune of 3% |n these un|ts.
(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on
the cost of production of goods:
Energy oonservat|on measures taken so far have resu|ted |n an |mprovement |n energy eff|o|enoy as deta||ed at a) and
b) above.
(d) Total energy consumption and energy consumption per unit of production:
Neoessary |nformat|on |n Form - A annexed.
B. TECHNOLOGY ABSORPTION:-
(e) Efforts made in technology absorption
Neoessary |nformat|on |n Form - B annexed.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:-
(f) Activities relating to exports; initiatives taken to increase exports; development of new export markets for
products and services; and export plans:
Dur| ng the year, the Company's exports, | no| ud| ng deemed exports, | noreased to Ps. 89.89 Crores from
Ps. 22.81 Crores |n the prev|ous year, reoord|ng an annua| growth of 294%. The tota| exports and deemed exports
dur|ng 2004-05 had been 18752 MTs and 2920 MTs respeot|ve|y. Th|s s|gn|f|oant |norease |n exports has estab||shed
the wor|d o|ass qua||ty of po|ymers be|ng produoed by the Company.
(g) Total foreign exchange used and earned:
Dur|ng the year, Fore|gn Exohange earn|ngs were Ps. 79 Crores wh|oh was ma|n|y on aooount of export of Po|ymers.
Expend|ture |n Fore|gn Currenoy was Ps. 859 Crores wh|oh was ma|n|y on projeot re|ated |mports.
Form - A
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
A. POWER & FUEL CONSUMPTION 2004-2005 2003-2004
1. Electricity
a. Purohased from State Gr|d)
Un|t KWH) 134081400 131206836
Tota| Amount Ps. |n |akhs) 6476.58 6321.11
Pate/Un|t Ps./KWH) 4.83 4.82
b. Own Generat|on
|) Through D|ese| Generator
Un|t KWH) 664809.6 567643
Un|ts per ||tre of D|ese| O|| KWH/||tres) 2.75 2.70
Cost/Un|t Ps./KWH) 9.6 8.55
||) Through Steam Turb|ne/Generator GTG/GEG/STG)
Un|ts KWH) 292848219 279434522
Un|ts per 1000 SCM of gas 2490.78 3157.52
Cost/Un|t Ps./KWH) 1.74 1.79
2. Coal NIL Nl|
3. Furnace Oil NIL Nl|
4. Others/Internal Generation NIL Nl|
B. CONSUMPTION PER UNIT OF PRODUCTION
ETHYLENE
Produot|on MT) 319290 275610
E|eotr|o|ty KWH/MT) 57.13 66.27
Furnaoe O|| NIL Nl|
Coa| NIL Nl|
Others - Fue| Gas MT/MT) 0.25 0.26
- Steam MT/MT) 1.19 1.37
HDPE
Produot|on MT) 109158 96670
E|eotr|o|ty KWH/MT) 290.04 327.48
Furnaoe O|| NIL Nl|
Coa| NIL Nl|
Others - Steam MT/MT) 0.83 0.92
LLDPE
Produot|on MT) 189586 167050
E|eotr|o|ty KWH/MT) 267.13 295.14
Furnaoe O|| NIL Nl|
Coa| NIL Nl|
Others - Fue| Gas MT/MT) 0.05 0.07
- Steam MT/MT) 0.59 0.66
21 We Stand for Pe||ab|||ty
21
st
Annual Report
Form - B
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION
RESEARCH & DEVELOPMENT (R&D)
1. Specific areas in which R&D carried out by the Company
Deve|opment of teohno|ogy for separat|on of Paraff|ns and O|ef|ns by adsorpt|on w|th llT, Kanpur.
Study of effeot of ag|ng, eros|on and abras|on on |nterna| ooat|ngs used |n Natura| Gas p|pe||nes w|th lFP, Franoe.
Deve|opment of |eak deteot|on methods for Natura| Gas p|pe||nes w|th llT, Chenna|.
CNG mar|ne transportat|on teohno|ogy va||dat|on and feas|b|||ty study.
Part|o|pat|on |n TSA Agreement of CHT w|th UOP.
Up-Soa||ng of F|e|d App||ed Coat|ng Teohno|ogy.
Deve|opment of on||ne property pred|ot|on software paokage for ||DPE p|ant GAl|, Pata w|th llT-Kharagpur.
Deve|opment of teohno|ogy for |nh|b|t|on of ooke format|on |n gas oraoker furnaoes w|th llT, Kanpur.
Deve|opment of Prooess Eng|neered Fue|s from p|ast|o waste w|th SPl.
2. Benefits derived as a result of the above R&D
The teohno|ogy oan reduoe energy oosts for separat|on of ||ght hydrooarbon gas m|xture |n oompar|son to the
oonvent|ona| d|st|||at|on prooess. Projeot under progress.
lnterna||y ooated p|pes have smoother surfaoes. Th|s resu|ts |n |esser operat|on oosts and |noreased throughput.
Projeot under progress.
The |nd|genous |eak deteot|on software has been tested |n |ANCO p|pe||ne. lmprovement |s |n progress.
The teohno|ogy oan be |ow oost a|ternat|ve to transport of |NG, P|pe||nes.
UOP |s major teohno|ogy supp||er to Petro|eum ref|ner|es. Consu|tanoy w||| he|p |mprovement of prooesses.
|ow oost ooat|ngs teohno|ogy for app||oat|on |n f|e|d for we|d jo|nts, f|tt|ngs eto.
The Property pred|ot|on software paokage wou|d he|p |n deorease off-grade produot|on |n ||DPE p|ant. P|gorous
test|ng of software under progress.
The run |engths of gas oraoker furnaoes oan be |mproved three - fo|d resu|t|ng |n h|gher produot|on. Exper|ments are
|n progress at GAl|, Pata.
So||d fue|s from p|ast|o waste |n oomb|nat|on w|th paper waste, |eaf waste, ooa| eto. have been produoed and tested
|n two |ndustr|es. va||dat|on |s |n progress.
3. Future plan of action
To transfer teohno|ogy for Underground Coa| Gas|f|oat|on.
Sett|ng up P||ot/Demo un|t for oonvers|on of Methano| to Propy|ene.
To work on oonvers|on of Methane to O|ef|ns Teohno|og|es.
To work on sma|| soa|e |NG.
To work on Coa| gas|f|oat|on.
To work on CNG Transportat|on by Poad/Barge.
To work on |NG Transportat|on by Poad/Barge.
Part|o|pat|on |n Hydrogen Corpus Fund for deve|opment of Hydrogen based teohno|og|es.
To transfer teohno|ogy for p||ot soa|e manufaoture of b|o-degradab|e p|ast|os.
To transfer teohno|ogy for manufaoture of |ong |ast|ng |nseot|o|de net.
To work on deve|opment of storage and transportat|on of Natura| Gas |n |ts Hydrate form.
To work on generat|on of Methane from MSW as a new souroe of gas.
4. Expenditure on R&D:
(a) Capital . Nl|
(b) Recurring . Ps. 1.11 Crores
(c) Total . Ps. 1.11 Crores
(d) Total R&D expenditure as a percentage of total turnover . 0.009%
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1. Efforts, in brief, made towards technology absorption, adaptation and innovation
NTGG Prooess teohno|ogy. A demonstrat|on p|ant was set up |n vaghod|a. The p|ant |s oont|nuous|y operat|ng
|n batoh mode from Ootober'04.
F|aker for |ow Po|ymer wax. The un|t has been set up |n GAl|, Pata and |s |n oont|nuous operat|on from
Apr||'04.
2. Benefits derived as a result of the above efforts, e.g., product improvement, cost reduction, product
development, import substitution, etc.
NG| otherw|se sp|ked oonverted to va|ue added produots |PG, MFO.
|PW f|akes are so|d at h|gher pr|oe than |umps.
3. In case of imported technology (imported during the last five years reckoned from the beginning of the financial
year), following information may be furnished:
(a) Technology imported . Nl|
(b) Year of import . Not app||oab|e
(c) Has technology been fully absorbed? . Not app||oab|e
(d) If not fully absorbed, areas where this has not taken . Not app||oab|e
place, reasons therefor and future plans of action
23 We Stand for Pe||ab|||ty
21
st
Annual Report
Report on Corporate Governance
I. CORPORATE GOVERNANCE AT GAIL
Corporate Governanoe has beoome forma||y app||oab|e |n lnd|a, from the year 1999-2000. The foundat|on of good
Corporate Governanoe |s based upon the pr|no|p|es of transparenoy, fa|rness, d|so|osure and aooountab|||ty.
Your oompany be||eves that effeot|ve Corporate Governanoe |s oharaoter|zed by the praot|oe of eaoh of the above. The
Board pursues |ts Corporate Governanoe objeot|ve by demonstrat|ng s|noer|ty |n dea||ng w|th management, fa|rness |n
dea||ng w|th emp|oyees, meet|ng the oomp||anoe requ|rements of the Government and praot|oe of eth|oa| oorporate
o|t|zensh|p |n the soo|ety.
Keep|ng the trad|t|on of be||ev|ng |n the h|ghest standard of Corporate Governanoe, your oompany has reoe|ved the
"Go|den Peaoook Award" for exoe||enoe |n Corporate Governanoe for the Year 2003-04.
II. BOARD OF DIRECTORS
Composition of Directors
GAl| lnd|a) ||m|ted be|ng a Government Company, a|| the D|reotors of the Company are appo|nted/nom|nated by the
Government. As per Art|o|es of Assoo|at|on, the number of D|reotors sha|| not be |ess than three and more than twenty.
As on 31
st
Maroh, 2005, there were e|even D|reotors on Board oompr|s|ng of s|x Who|e T|me D|reotors |no|ud|ng Cha|rman
& Manag|ng D|reotor and f|ve Non-off|o|a| Part-t|me D|reotors |no|ud|ng two off|o|a|s of Government of lnd|a.
Dur|ng the year 2004-05, none of the Non-off|o|a| Part-t|me D|reotors of GAl| had any peoun|ary or mater|a| re|at|onsh|p
or transaot|on w|th the Company.
None of the D|reotors were members |n more than ten Board Comm|ttees or Cha|rman of more than f|ve Comm|ttees as
speo|f|ed |n C|ause 49 of the ||st|ng Agreement) aoross a|| the oompan|es |n wh|oh they were D|reotors.
Board Meetings
Dur|ng the f|nano|a| year 2004-05, the Board met f|fteen t|mes on the fo||ow|ng dates.-
Sl. No. Date of Board Meeting
1 30.04.2004
2 31.05.2004
3 30.06.2004
4 30.07.2004
5 02.09.2004
6 04.09.2004
7 07.09.2004
8 27.10.2004
9 05.11.2004
10 20.12.2004
11 10.01.2005
12 17.01.2005
13 28.01.2005
14 11.02.2005
15 19.02.2005
Proper not|oes were g|ven |n respeot of these meet|ngs and the prooeed|ngs were proper|y reoorded and s|gned |no|ud|ng
o|rou|ar reso|ut|ons passed, |n the M|nutes Book ma|nta|ned for the purpose.
The part | ou| ars of D| reot ors | no| ud| ng t he| r at t endanoe at Board Meet | ng s) and Annua| Genera| Meet | ng
dur|ng the F|nano|a| Year 2004-05 |s deta||ed be|ow.
WHOLE-TIME FUNCTIONAL DIRECTORS:
Shri Proshanto Banerjee, 27.08.2001 15 Yes 2 - -
Chairman & Managing Director
Shri J.K. Jain, Director (Finance) 22.01.1996 13 Yes 1 1 -
Shri S.P. Rao, Director (Projects) 22.10.1999 15 Yes 1 - -
Shri B.S. Negi, Director (BD) 01.01.2003 15 Yes 3 2 -
Shri M.R. Hingnikar, Director (HR) 28.07.2003 14 Yes 1 1 -
Dr. U.D. Choubey, Director (Marketing) 06.05.2004 14 Yes 1 - -
NON OFFICIAL PARTTIME DIRECTORS (EX- OFFICIO) :
Shri M.S. Srinivasan 28.01.2005 1 NA 3 - 2
Shri Badal K. Das 30.06.2004) 1 NA 3 - -
Shri A.K. Srivastava 07.03.2005) 10 Yes 3 - -
Shri P.K. Sinha 20.12.2004 6 NA 3 3 -
NON OFFICIAL PARTTIME DIRECTORS (INDEPENDENT DIRECTORS) :
Dr. Amit Mitra 29.04.1999 8 No 3 1 -
Dr. R.K. Pachauri 26.10.2004) Nl| No 1 1 -
Dr. A. K. Kundra 18.08.2003 14 Yes 1 - -
Shri B.C. Bora 18.08.2003 13 No - - -
Names of Director(s) Date of
Appointment/
(Cessation)
No. of
Board
Meetings
attended
AGM held on
30.09.04
attended
(Yes/No)
Directorship(s)
in other
companies
Membership(s)
of Committees of
Boards of other
companies
Chairmanship(s)
of Committees of
Boards of other
companies
25 We Stand for Pe||ab|||ty
21
st
Annual Report
III. AUDIT COMMITTEE
Brief terms of reference of Audit Committee
The terms of referenoe of Aud|t Comm|ttee |no|ude, |nter-a||a, the fo||ow|ng.
a) Overs|ght of the Company's f|nano|a| report|ng prooess and d|so|osure of |ts f|nano|a| |nformat|on to ensure that the
f|nano|a| statement |s oorreot.
b) Pev|ew|ng w|th the management, the annua| f|nano|a| statements before subm|ss|on to the Board.
o) Pev|ew|ng w|th the management, the externa| and |nterna| aud|tor, the adequaoy of |nterna| oontro| systems.
d) Pev|ew|ng the adequaoy of |nterna| aud|t funot|ons.
e) D|souss|on w|th |nterna| aud|tors and any s|gn|f|oant f|nd|ngs and fo||ow up thereon.
f) Pev|ew|ng the f|nd|ngs of any |nterna| |nvest|gat|ons by the |nterna| aud|tors |nto the matter where there |s suspeoted
fraud or |rregu|ar|ty or a fa||ure of |nterna| oontro| system of mater|a| nature and report|ng the same to the Board.
g) Pev|ew|ng the Company's f|nano|a| and r|sk management po||o|es.
h) Peoommend|ng the f|xat|on of aud|t fee and approva| for payment for any other serv|oes.
Composition & Qualifications
The Aud|t Comm|ttee of the Company |s oonst|tuted |n aooordanoe w|th the prov|s|ons of the ||st|ng Agreement and the
Compan|es Aot, 1956. lt oompr|ses of four non-off|o|a| part-t|me D|reotors, v|z., Dr. A.K. Kundra Cha|rman), Shr|. P.K.
S|nha Member), Dr. Am|t M|tra Member) and Shr|. B.C. Bora Member).The quorum of the Aud|t Comm|ttee |s two
members or one-th|rd of the strength of the oomm|ttee, wh|ohever |s h|gher. The Cha|rman has adequate f|nano|a| and
aooount|ng know|edge.
D|reotor F|nanoe), Head of lnterna| Aud|t Department and the Statutory Aud|tors are permanent |nv|tees to the meet|ngs)
of the Comm|ttee. The Company Seoretary aots as Seoretary to the Aud|t Comm|ttee.
Audit Committee Meetings and attendance thereat
Dur|ng the f|nano|a| year 2004-05, ten Aud|t Comm|ttee Meet|ngs were he|d and attendanoe thereat of the members
was as fo||ows.
Date of Dr. A.K Kundra Shri A.K. Srivastava Shri P.K. Sinha Shri B.K Das Dr. Amit Mitra Shri B.C. Bora
Meeting (w.e.f. (w.e.f. (upto
27.10.2004 20.12.2004) 30.06.2004)
& upto
20.12.2004)
15.04.2004 Yes - - Yes No No
30.04.2004 Yes - - No Yes Yes
25.06.2004 Yes - - Yes No Yes
16.07.2004 Yes - - - No Yes
29.07.2004 Yes - - - No Yes
29.09.2004 Yes - - - Yes Yes
27.10.2004 Yes Yes - - No No
08.12.2004 Yes No - - No Yes
28.01.2005 Yes - Yes - Yes Yes
14.03.2005 Yes - No - Yes Yes
No. of 10 1 1 2 4 8
meet|ngs
attended
IV. REMUNERATION TO DIRECTORS
GAl |l nd| a) || m| ted, be| ng a Government Company, the remunerat| on of | ts Who| e-t| me D| reotors | s f| xed
by t he Government of l nd| a t hrough M| n| st ry of Pet ro| eum & Nat ura| Gas. The non-of f | o| a| part t | me
D| reot ors Ex-of f | o| o) do not reoe| ve any remunerat | on f rom t he Company. The non-of f | o| a| part -t | me
D|reotors lndependent) are not ent|t|ed to any remunerat|on exoept s|tt|ng fee of Ps.10,000/- for attend|ng
eaoh meet|ng of the Board of D|reotors and Comm|ttees) thereof and expenses |no|denta| thereto.
Details of remuneration paid to Whole Time Directors for the financial year 2004- 05:
(Rs. in Lakhs)
Names of Director(s) Salary & Contribution Other benefits Total
Allowances to Provident, and perquisites
Gratuity &
other Funds
Shr| Proshanto Banerjee 7.82 4.91 1.15 13.89
Chairman & Managing Director
Shr| J.K. Ja|n 7.14 1.61 0.66 9.41
Director (Finance)
Shr| S.P. Pao 7.28 1.96 0.77 10.01
Director (Projects)
Shr| B.S. Neg| 9.04 2.09 2.27 13.40
Director (Business Development)
Shr| M.P. H|ngn|kar 7.32 3.60 1.49 12.41
Director (HR)
Dr. U.D. Choubey 7.39 1.87 4.13 13.39
Director (Marketing)
The serv|oe oontraot |s for f|ve years wh|oh |s renewab|e for further s|m||ar per|ods. The not|oe per|od |s for three months.
The Company has not |ntroduoed any stook opt|ons soheme.
Details of sitting fees paid to the Non-Official Part-Time (Independent) Directors for attending the meetings
of the Board/Committees:
Names of Director(s) Amount (in Rs.)
Dr. Am|t M|tra 1, 30,000
Dr. P. K. Paohaur| -
upto 26.10.2004)
Dr. A. K. Kundra 2, 70,000
Shr| B.C. Bora 2,90,000
V. SHAREHOLDERS/ INVESTORS GRIEVANCE COMMITTEE
The Shareho| ders' /l nvest ors' Gr| evanoe Comm| t t ee oompr| ses of Shr| B. C. Bora, Cha| rman
w.e.f. 27.10.2004), Shr| S.P. Pao, D|reotor Projeots) and Shr| M.P. H|ngn|kar, D|reotor HP). The Comm|tee,
at | t s meet | ng he| d on 28. 01. 2005, rev| ewed t he serv| oes t o t he shareho| ders/| nvest ors | no| ud| ng
response to the|r oomp|a|nts/oommun|oat|ons. The Company Seoretary aots as the Comp||anoe Off|oer of the Company.
Dur| ng the year under rev| ew, 2081 oomp| a| nts were reoe| ved from the shareho| ders through SEBl /Stook
Exohanges perta| n| ng to non-reoe| pt of d| v| dend, Annua| Peport, non-a| | otment of shares, non-reoe| pt of
refund order, eto., out of wh|oh 1963 oomp|a|nts have been reso|ved. The Company has been tak|ng a|| steps to ensure
27 We Stand for Pe||ab|||ty
21
st
Annual Report
that shareho| ders re| ated aot| v| t| es are g| ven due pr| or| ty and the matters/| ssues ra| sed are reso| ved at
t he ear| | est . A| | t he va| | d share-t ransf er request s reoe| ved dur| ng t he year were du| y prooessed and
approved w|th|n st|pu|ated per|od of 30 days. There were no pend|ng oases of transfer of shares |n phys|oa|
form as on 31
st
Maroh, 2005.
VI. GENERAL BODY MEETINGS
Annual General Meeting:
The |ooat|on and t|me of |ast three Annua| Genera| Meet|ngs) are as fo||ows.
For the Year 2001-02 2002-03 2003-04
AGM 18
th
19
th
20
th
Date & T|me 24.9.2002 30.09.2003 30.09.2004
10.30 a.m. 4.00 p.m. 10.30 a.m.
venue FlCCl Go|den FlCCl Go|den S|r| Fort Cu|tura| Comp|ex,
Jub||ee Aud|tor|um Jub||ee Aud|tor|um Khe| Gaon Marg
Tansen Marg Tansen Marg S|r| Fort Poad
New De|h| New De|h| New De|h|
Dur|ng the year, no |tem warranted the posta| ba||ot and one |tem was passed through speo|a| reso|ut|on |n the Annua|
Genera| Meet|ng.
VII. DISCLOSURES
Disclosure on materially significant related party transactions
Dur| ng the year, there have been no s| gn| f| oant/mater| a| re| ated party transaot| ons w| th the Promoters,
D|reotors or the Management, the|r subs|d|ar|es or re|at|ves, eto., that may have potent|a| oonf||ot w|th the
| nterest of the Company at | arge. The deta| | s of 'Pe| ated Party D| so| osures' are be| ng d| so| osed | n Note
No.10 of Sohedu|e 14 to the Aooounts |n the Annua| Peport.
Details of non-compliance relating to Capital Market
The Company has oomp||ed w|th the requ|rements of the SEBl, Stook Exohanges and the regu|atory author|t|es on
oap|ta| market re|ated aot|v|t|es as app||oab|e from t|me to t|me. Dur|ng the |ast three years, there has been no
non-oomp||anoe of the prov|s|ons/requ|rements of SEBl, Stook Exohanges or any regu|atory author|ty re|ated to oap|ta|
market. The Company has a|so opted for vo|untary Seoretar|a| Aud|t from a praot|s|ng Company Seoretary.
VIII. MEANS OF COMMUNICATION
To prov|de |arge pub||o|ty and to reaoh the shareho|ders, ana|ysts, |nvest|ng pub||o, eto., the quarter|y and ha|f-year|y
f|nano|a| resu|ts were pub||shed |n |ead|ng newspapers hav|ng w|de o|rou|at|on, v|z., The Eoonom|os T|mes, The H|ndustan
T|mes Eng||sh & H|nd|). The "||m|ted Pev|ew" reports of the f|nano|a| resu|ts for the quarters ended on 30
th
June 2004,
30
th
September 2004 and 31
st
Deoember 2004 were obta|ned from the Statutory Aud|tors of the Company and f||ed w|th
the Stook Exohanges.
The Company's f|nano|a| resu|ts are d|sp|ayed on the Company's webs|te at www.gailonline.com and the same |s a|so
hosted on the EDlFAP SEBl webs|te).The press re|eases and ana|yst presentat|ons are a|so d|sp|ayed on the Company's
webs|te.
A deta||ed Management D|souss|on and Ana|ys|s Peport |s eno|osed w|th the D|reotors' Peport.
IX. GENERAL SHAREHOLDERS INFORMATION
Forthcoming AGM Date, Time and Venue
The 21
st
Annua| Genera| Meet|ng |s sohedu|ed for Wednesday, the 28
th
September, 2005 at 10.30 a.m., at S|r| Fort
Cu|tura| Comp|ex, Khe| Gaon Marg, S|r| Fort Poad, New De|h| - 110 016.
Financial Calendar
The Company's f|nano|a| year |s Apr|| 1
st
, 2004 to Maroh 31
st
, 2005.
Dividend Payment Date
An Interim Dividend @ 40% for the f|nano|a| year 2004-05 was approved by the Board and the same has been pa|d. The
Board has reoommended the payment of F|na| D|v|dend @ 40% for the f|nano|a| year 2004-05 for the oons|derat|on of
the shareho|ders at the ensu|ng Annua| Genera| Meet|ng. lf approved by the shareho|ders, the same w||| be transferred
w|th|n f|ve days from the date of deo|arat|on, as per the prov|s|ons of the Compan|es Aot 1956, and sha|| be pa|d w|th|n
30 days from the date of approva| |.e. 28
th
September, 2005.
Date of Book Closure
The Company had f|xed the Peoord Date of 28.12.2004 for the purpose of determ|n|ng the e||g|b|||ty of the members/
benef|o|a| owners of the Company for payment of Interim Dividend @ 40% for the f|nano|a| year 2004-05 a|ready pa|d).
The Peg|ster of Members sha|| rema|n o|osed from 16
th
September, 2005 to 28
th
September, 2005 both days |no|us|ve),
for the purpose of determ|n|ng the e||g|b|||ty of the members/benef|o|a| owners of the Company for payment of F|na|
D|v|dend @ 40% on equ|ty shares for the year ended 31
st
Maroh, 2005, |f approved by the shareho|ders.
Payment of Dividend through Electronic Clearing Service (ECS)
The oompany |s prov|d|ng E|eotron|o C|ear|ng Serv|oe ECS) fao|||ty for payment of d|v|dend |n se|eot o|t|es and for th|s
purpose the 9-d|g|t MlCP Code of the Banker as noted |n the reoords of the Depos|tory sha|| be used for the purpose of
rem|ttanoe of d|v|dend through ECS. lt |s therefore neoessary that the shareho|ders shou|d have oorreot bank deta||s,
9-d|g|t MlCP Code noted |n the reoords of the|r Depos|tory.
Members ho|d|ng shares |n e|eotron|o form are requested to get the ohange |n address/bank deta||s/ECS Mandate
|noorporated |n the reoords of the|r Depos|tory Part|o|pant DP). The P&TA/Company w||| not enterta|n any request for
ohange |n address/bank deta||s/ECS Mandate.
Transfer of Unclaimed Dividend Amount to Investor Education and Protection Fund (IEPF)
Members are requested to app|y for renewa|/|ssue of demand drafts for the D|v|dend for the f|nano|a| year 1997-98
before 27
th
September, 2005, after wh|oh any unpa|d d|v|dend amount for the year 1997-98 w||| be transferred by the
Company to lnvestor Eduoat|on and Proteot|on Fund lEPF) and no o|a|m sha|| ||e aga|nst the Company or lEPF after the
sa|d transfer.
Particulars of Directors appointed/re-appointed
The Not|oes) of the Annua| Genera| Meet|ngs) he|d on 30
th
September, 2004 for the year 2003-04 and sohedu|ed to be
he|d on 28
th
September, 2005 for the year 2004-05 oomp||es w|th th|s requ|rement.
29 We Stand for Pe||ab|||ty
21
st
Annual Report
Listing Details & Security Codes
Stock Exchanges Security Code
The Stock Exchange, Mumbai 532155
Ph|roze Jeejeebhoy Towers, Da|a| Street,
Mumba|-400001
The National Stock Exchange of India Limited* GAILEQ
Exohange P|aza,
Bandra-Kur|a Comp|ex, Bandra East),
Mumba|- 400051
The Delhi Stock Exchange Association Limited -
DSE House, 3/1 Asaf A|| Poad
New De|h|-110002
London Stock Exchange** GAID LI
10, Paternoster Square, |ondon EC4M 7|S U.K.) GAILY US
* The Bonds are ||sted at the WDM segment
** G|oba| Depos|tary Peoe|pts GDPs)
Listing Fees
The annua| ||st|ng fees for the year 2004-05, |n re|at|on to the ||sted Equ|ty Shares/Bonds of the Company has been pa|d
to the oonoerned Stook Exohanges on demand. The Company has a|so made the payment of Annua| Custody Fee for
the f|nano|a| year 2005-06 to the Nat|ona| Seour|t|es Depos|tory ||m|ted NSD|) and Centra| Depos|tory Serv|oes lnd|a)
||m|ted CDS|) based on the fo||o/lSlN pos|t|ons as on 31.03.2005.
MARKET PRICE DATA: HIGH, LOW AND VOLUME DURING EACH MONTH IN LAST FINANCIAL YEAR
MONTH(S) BSE NSE MARKET INDEX
2004-05 High Low Volume High Low Volume BSE Sensex Nifty
(in Rs.) (in Rs.) (in Rs.) (in Rs.)
APRIL 245.75 213.65 4,62,79,599 245.60 213.55 11,82,39,834 5979 1912.35
MAY 232.40 105.55 4,47,65,136 236.00 101.25 12,03,92,524 5773 1837.95
JUNE 181.25 155.00 2,23,20,323 181.35 153.00 7,10,75,905 5013 1566.50
JULY 201.25 165.10 2,15,10,659 201.30 164.80 6,29,40,491 5201 1638.70
AUGUST 195.50 170.30 1,06,05,718 195.10 170.15 3,40,49,580 5269 1658.90
SEPTEMBER 199.85 177.50 1,52,63,320 199.90 177.60 4,36,03,031 5639 1760.80
OCTOBER 206.80 189.05 1,13,26,209 215.00 189.00 3,24,60,654 5804 1829.45
NOVEMBER 218.80 195.90 76,33,368 239.00 198.00 2,55,65,734 6248 1963.80
DECEMBER 244.00 216.50 65,67,786 245.80 216.55 2,49,90,798 6617 2088.45
JANUARY 256.50 202.35 76,18,850 265.80 202.20 2,99,77,201 6696 2120.15
FEBRUARY 259.00 230.05 1,47,30,488 270.00 225.60 4,67,35,343 6721 2110.15
MARCH 256.00 203.10 92,04,196 256.00 200.00 3,79,39,131 6955 2183.45
REGISTRARS AND SHARE TRANSFER AGENT:
MCS ||m|ted
Sr| venkatesh Bhawan
W-40, Okh|a lndustr|a| Area, Phase-ll,
New De|h|-110020
Te| No- 91-11-26384909-11
Fax No-91-11-26384907
SHARE TRANSFER SYSTEM :
The shares of the Company are be|ng oompu|sor||y traded |n demater|a||zed form w.e.f. 15.02.1999. Shares reoe|ved |n
phys|oa| form are transferred w|th|n a per|od of 30 days from the date of |odgment of va||d share transfer deed a|ong
w|th share oert|f|oate. These requests are prooessed through the Peg|strar & Transfer Agent, |.e., MCS ||m|ted, a SEBl
approved Peg|strar & Transfer Agent, wh|oh has been appo|nted to effeot the transfer of shares and other re|ated jobs.
A Share Transfer Comm|ttee oompr|s|ng of a|| the Who|e-T|me D|reotors |no|ud|ng Cha|rman & Manag|ng D|reotor,
oons|ders the requests for transfer/transm|ss|on of shares, |ssue of dup||oate share oert|f|oates, re-mater|a||zat|on, eto.
Dur|ng the year, n|ne meet|ngs of the Share Transfer Comm|ttee were he|d. The deta||s of transfers are reported to the
Board of D|reotors at |ts ensu|ng meet|ng.
Dur|ng the year, a oert|f|oate on ha|f-year|y bas|s oonf|rm|ng due oomp||anoe of the share transfer forma||t|es by the
Company under C|ause 47o) of the ||st|ng Agreement), and a Seoretar|a| Aud|t Peport |under SEBl Depos|tor|es and
Part|o|pants) Pegu|at|ons, 1996| for reoono|||at|on of tota| adm|tted oap|ta| w|th both the depos|tor|es and the tota|
|ssued and ||sted oap|ta| were obta|ned from a Praot|o|ng Company Seoretary and have a|so been subm|tted to Stook
Exohanges w|th|n st|pu|ated t|me.
PERFORMANCE OF GAIL SHARE PRICE IN COMPARISON TO
BROAD BASED INDICES-BSE SENSEX AND NIFTY
31 We Stand for Pe||ab|||ty
21
st
Annual Report
SHAREHOLDING PATTERN AS ON 31.03.2005
Sl. Category No. of Shares % of
No. held holding
A Promoters holding :
1 Promoters
- lnd|an Promoter 48,49,36,417 57.345
- Fore|gn Promoter - -
2 Persons aot|ng |n oonoert 700 -
Sub-Total 48,49,37,117 57.345
B Non Promoters holding :
3 lnst|tut|ona| lnvestors
a) Mutua| Funds and UTl 89,82,866 1.062
b) Banks, F|nano|a| lnst|tut|ons, lnsuranoe Compan|es 4,92,35,327 5.822
Centra|/State Government lnst|tut|ons/Non-Government lnst|tut|ons)
o) Fore|gn lnst|tut|ona| lnvestors Flls) 12,50,67,908 14.790
Sub-Total 18,32,86,101 21.674
4 Others
a) Pr|vate Corporate Bod|es 77,00,786 0.911
b) lnd|an Pub||o 3,15,96,855 3.736
o) NPls/OCBs 6,80,821 0.081
d) Any Other - Government Company ONGC & lOC) 8,16,79,098 9.658
- GDPs 5,57,70,822 6.595
Sub-Total 17,74,28,382 20.981
GRAND TOTAL 84,56,51,600 100.00
DISTRIBUTION OF SHAREHOLDING
The d|str|but|on of shareho|d|ng of the oompany as on 31.03.2005 |s deta||ed be|ow.
No. of Share- % to Total Shareholding of No. of Shares Amount % to Total
holders nominal value of Rs. 10/- (in Rs.)
2,48,352 96.68 Upto 5000 2,09,96,040 20,99,60,400 2.48
4,820 1.88 5001 to 10000 37,33,461 3,73,34,610 0.44
2,035 0.79 10001 to 20000 29,97,744 2,99,77,440 0.35
572 0.22 20001 to 30000 14,69,658 1,46,96,580 0.17
256 0.10 30001 to 40000 9,24,933 92,49,330 0.11
196 0.08 40001 to 50000 9,24,035 92,40,350 0.11
273 0.11 50001 to 100000 20,09,027 2,00,90,270 0.24
381 0.15 100001 and above 81,25,96,702 8,12,59,67,020 96.09
2,56,885 100.00 TOTAL 84,56,51,600 8,45,65,16,000 100.00
DEMATERIALIZATION OF SHARES & LIQUIDITY
Shares of the Company are oompu|sor||y traded |n demater|a||zed form w.e.f. 15.2.99. As on 31
st
Maroh, 2005, out of the
shares he|d by the shareho|ders other than the Government), 99.33 % are he|d |n demater|a||zed form.
OUTSTANDING GDRs/ADRs/ WARRANTS OR ANY CONVERTIBLE INSTRUMENTS, CONVERSION DATES
AND LIKELY IMPACT ON EQUITY
The Government of lnd|a d|s|nvested 135 m||||on Equ|ty Shares out of |ts ho|d|ng |n the |nternat|ona| market through
GDP meohan|sm |n 1999-2000. A tota| number of 22.5 m||||on GDPs were |ssued, one GDP oompr|s|ng s|x Equ|ty
Shares. As on 31.03.2005, tota| number 92,95,137 GDPs were outstand|ng. The oonvers|on of GDPs |nto Equ|ty Shares
has no |mpaot on tota| equ|ty oap|ta|.
AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE
The Aud|tors' Cert|f|oate regard|ng oomp||anoe of oond|t|ons of Corporate Governanoe, as st|pu|ated |n C|ause 49 of the
||st|ng Agreement |s annexed herew|th.
MAJOR PLANT LOCATIONS
U P Petroohem|oa| Comp|ex, Pata
P.O. Pata-206241
D|stt. Aura|ya U.P)
|PG Peoovery P|ant, Usar
P.O. Ma|yan-402203
Ta|. A||bagh
D|stt. Pa|gad Maharashtra)
|PG Peoovery P|ant, v|ja|pur
GAl| Comp|ex
v|ja|pur-473112
D|stt. Guna M.P.)
|PG Peoovery P|ant, vaghod|a
GlDC lndustr|a| Estate
vaghod|a-391760
D|stt. Baroda Gujarat)
|PG Peoovery P|ant, |akwa,
S|vasagar-785688 Assam)
|PG Peoovery Projeot, Gandhar
v|||. Pozantankar|a,Ta|. Amod
D|stt. Bharuoh- 392140 Gujarat)
OUR ADDRESS FOR CORRESPONDENCE
GAl| lnd|a) ||m|ted
16, Bh|ka|j| Cama P|aoe, P.K. Puram
New De|h| - 110066
Te|. No. 91- 11-26172580, 26182955
Fax No. 91- 11-26185941
33 We Stand for Pe||ab|||ty
21
st
Annual Report
Auditors Certificate on Corporate Governance
To
The Shareho|ders of GAl| lnd|a) ||m|ted
We have read the report of the Board of D|reotors on Corporate Governanoe and have exam|ned the re|evant reoords re|at|ng
to the oomp||anoe of the oond|t|ons of Corporate Governanoe by GAl| lnd|a) ||m|ted for the year ended Maroh 31, 2005 as
st|pu|ated |n o|ause 49 of the ||st|ng Agreement of the sa|d Company w|th the Stook Exohanges.
The oomp||anoe of the oond|t|ons of the Corporate Governanoe |s the respons|b|||ty of the management. Our exam|nat|on
was ||m|ted to the prooedure and |mp|ementat|on thereof adopted by the Company for ensur|ng oomp||anoe w|th the oond|t|ons
of Corporate Governanoe. lt |s ne|ther an aud|t nor an express|on of op|n|on of the f|nano|a| statements of the Company.
ln our op|n|on and to the best of our |nformat|on and aooord|ng to the exp|anat|ons g|ven to us, the Company has oomp||ed
w|th the oond|t|ons of Corporate Governanoe as st|pu|ated |n o|ause 49 of the above ment|oned ||st|ng Agreement.
We state that no |nvestor gr|evanoes) |s/are pend|ng for a per|od exoeed|ng for one month exoept the gr|evanoe re|at|ng to
offer for sa|e of equ|ty shares upto 10% and/or oonstra|ned by |noomp|ete dooumentat|on and/or |ega| |mped|ments aga|nst
the Company as per the oert|f|oate of the Peg|strar & Transfer Agent of the Company.
We further state that suoh oomp||anoe |s ne|ther an assuranoe as to the future v|ab|||ty of the Company nor eff|o|enoy or the
effeot|veness w|th wh|oh the management has oonduoted the affa|rs of the Company.
For S Mann & Co.
Chartered Aooountants
Subhash Mann
New De|h|. Partner
June 21, 2005 Membersh|p No. 80500
INDUSTRIES STRUCTURE & DEVELOPMENTS
The O|| and Natura| Gas |ndustry had trad|t|ona||y been regu|ated
by the Government of lnd|a Gol). The M|n|stry of Petro|eum and
Natura| Gas MoP&NG) oversees the ent|re oha|n of aot|v|t|es from
exp|orat|on and produot|on of orude o|| and Natura| Gas, ref|n|ng,
d|str|but|on and market|ng of petro|eum produots and export and
|mport of orude o|| and petro|eum produots.
The natura| gas seotor, wh|oh |s a|ready open for part|o|pat|on |n
the areas of E&P, |NG | mports, Transm| ss| on P| pe| | nes,
D|str|but|on P|pe||nes, Market|ng and Prooess|ng, |s further mov|ng
to a oomp|ete|y market dr|ven one, as pr|oes and a||ooat|on of
domest|o gas by the state enterpr|ses |s a|so progress|ve|y
de-oontro||ed. The paoe of the dynam|oa| trans|t|on |s dr|ven by
var|ous faotors, |no|ud|ng steep growth |n the domest|o natura|
gas demand and |norease |n |ndustr|a| and eoonom|o growth of
lnd|a. The potent|a| of a grow|ng gas eoonomy has attraoted fore|gn
p|ayers that has not on|y resu|ted |n more oompet|t|on but a|so
a||gned the |ndustry to oo||aborate w|th one another.
At the nat|ona| perspeot|ve, major thrust has been g|ven towards
Energy Seour|ty of the nat|on by the Government of lnd|a. O||
d|p|omaoy, trans-oountry gas p|pe||nes, |mport of gas |n the form
of |NG and sett|ng up strateg|o petro|eum reserves are some of
the steps the Government has taken to ensure energy seour|ty of
the oountry.
The share of natura| gas |n tota| energy oonsumpt|on has been
|ow pr|mar||y due to ||m|ted ava||ab|||ty of domest|o gas. The
s|tuat|on |s ||ke|y to ohange beoause of |arge d|soover|es of gas
under the New Exp|orat|on and ||oens|ng Po||oy NE|P) |n the
eastern ooast, upoom|ng trans-oountry p|pe||nes ||ke lran-lnd|a,
Myanmar- lnd|a p|pe||nes and thrust be|ng |a|d on |NG souro|ng
from M|dd|e East, South East As|a and Austra||a.
PERSPECTIVE OF THE INDIAN GAS SECTOR
Demand and Supply
The lnd|an gas market has entered |n a new era w|th Natura| Gas
gradua||y beoom|ng the most |mportant oomponent of Pr|mary
Energy M|x |n the oountry. The tota| demand of Natura| Gas |n the
oountry |s expeoted to grow at a CAGP of 16% to over 300
MMSCMD by 2010-11 as aga|nst the ourrent demand of about
150 MMSCMD. Current|y natura| gas oontr|butes to the extent of
8% to the pr|mary energy basket and the share |s expeoted to
|norease to 14% by 2011-12.
The |ong |ast|ng supp|y oonstra|ned market |s now |ook|ng towards
the prospeots of oommenoement of oommero|a| produot|on from
the new d|soover|es of domest|o gas under the New Exp|orat|on
and ||oens|ng Po||oy NE|P). Ava||ab|||ty of gas from the East
Coast, |no|ud|ng the KG bas|n |n near future |s expeoted to prov|de
great opportun|t|es for growth of gas based |ndustr|es. Suooessfu|
sh|pment of gas through p|pe||nes from the Eastern offshore to
var|ous gas markets of the oountry w||| be a b|g boost to the
lnd|an energy seotor.
LNG
Ava||ab|||ty of substant|a| vo|ume of P|NG Pegas|f|ed ||quef|ed
Natura| Gas) |n the lnd|an Market dur|ng 2004-05 has resu|ted |n
an add|t|ona| vo|ume of more than 10% of Natura| Gas. The
oapao|ty of the |NG |mport and regas|f|oat|on term|na| at Dahej
|s be|ng fu||y ut|||zed for regas|f|oat|on of 5 m||||on tonnes per
annum mmtpa) from the beg|nn|ng of the FY-06. Your Company
has made a|| neoessary arrangements for transm|ss|on of tota|
vo|ume of P|NG ava||ab|e from the Dahej term|na| to var|ous
oustomers |ooated |n the states of Gujarat, MP, Pajasthan, De|h|,
Haryana and UP. The seoond |mport term|na| at Haz|ra has a|so
oome under operat|on dur|ng th|s FY-06. Aooeptanoe of the pr|oe
of |NG |s an |mportant deve|opment |n the lnd|an gas seotor.
Go|ng forward, |NG regas|f|oat|on oapao|t|es of 25 mmtpa are
be|ng p|anned |n the near term, wh|oh s|gna|s a trend of |noreas|ng
demand for |NG |n the oountry. Bes|des, the f|rm quant|t|es of
|NG oontraoted |s far |ess than the oapao|t|es env|saged for
oreat|on. Your Company, therefore, strong|y be||eves that souro|ng
of add|t|ona| vo|ume of |NG from |nternat|ona| souroes w||| be a
key dr|ver for growth |n the near term. |NG |s expeoted to beoome
a maj or gas souro| ng a| ternat| ve and th| s w| | | enta| | lnd| an
oompan|es part|o|pat|ng |n a|| parts of the |NG va|ue oha|n |.e.
|NG ||quefaot|on, |NG transportat|on and |NG regas|f|oat|on.
Natural Gas from other Sources
Hav|ng rea||zed the |mportanoe of Natura| Gas |n oountry's energy
soenar|o, Government of lnd|a |s aot|ve|y pursu|ng the var|ous
other poss|b|||t|es of souro|ng Natura| Gas through oross-border
p|pe||nes from oountr|es ||ke lran, Kazakhstan, Myanmar eto.
Deve|opmenta| projeots to obta|n gas from non-oonvent|ona|
souroes as Coa| Bed Methane CBM) and underground Coa|
Gas|f|oat|on are a|so be|ng pursued ser|ous|y. Your Company has
a|so put strong foous |n the area of teohno|ogy soann|ng and
absorpt|on through partnersh|ps w|th teohno|ogy prov|ders for
|mp|ementat|on of Coa| Gas|f|oat|on projeots |n lnd|a.
Transportation Technologies
Bes|des exp|or|ng non-oonvent|ona| souroes of energy, your
Company |s a|so aot|ve|y foous|ng on |nnovat|ve gas transportat|on
teohno|og|es to have |n |ts k|tty a basket of transportat|on opt|ons
for transport|ng gas from areas that do not a||ow eoonom|oa|
transportat|on through the oonvent|ona| route of p|pe||nes. Some
Management Discussion and Analysis
35 We Stand for Pe||ab|||ty
21
st
Annual Report
of the areas that we are |ook|ng at are CNG by sh|ps for bu|k
transportat| on and modu| ar |NG and CNG transportat| on
teohno|og|es by truoks from stranded souroes to gas oonsumers.
Natural Gas Markets
The maoro-eoonom|o po||o|es of Government of lnd|a, no doubt,
wou|d dr|ve the growth of Natura| Gas |n oom|ng years part|ou|ar|y
aga|nst the demand from power seotor as we|| as from other
|ndustr|a| seotors. |arger appet|te of gas w||| be there from ex|st|ng
|ndustr|es, wh|oh wou|d be w||||ng to sh|ft from ||qu|d fue| souroes
for the reason of h|gher and vo|at||e pr|oe and from so||d fue|s on
the ground of env|ronmenta| oost.
Natura| gas |s a|so expeoted to oommand a s|gn|f|oant share |n
the reta|| market suoh as Compressed Natura| Gas CNG) |n the
automot|ve seotor and P|ped Natura| Gas PNG) |n domest|o
househo| ds | n v| ew of advantages over oompet| ng fue| s.
Consequent|y, CNG and PNG d|str|but|on |nfrastruoture wou|d be
oreated more o|t|es w||| be keen to use CNG) as auto fue| and
P|ped Natura| Gas PNG) |n domest|o seotor to oontro| |eve| of
po||ut|on.
Reaching out through the Gas Grid
Wh||e the efforts are taken to souroe more natura| gas to add |n
the energy basket, s|mu|taneous efforts are be|ng made to oreate
add|t|ona| p|pe||ne |nfrastruoture oapao|t|es to de||ver gas to
oonsumers. Your Company, be|ng the market |eader |n gas
transm|ss|on bus|ness, has a|ready oonoeptua||zed the b|ue pr|nt
of a Nat|ona| Gas Gr|d to prov|de oonneot|v|ty to var|ous gas
souroes and geograph|oa||y d|spersed markets. The Gr|d has been
oonoeptua||zed to enab|e gas sh|ppers to pump gas at any po|nt
|n the ma|n Gr|d and take de||very from any po|nt |n the Gr|d,
thereby prov|d|ng an opt|ma| and eoonom|oa| so|ut|on for oross
oountry transportat|on |n lnd|a. ln th|s regard, your Company has
made progress by oover|ng POU aoqu|s|t|on, prepar|ng feas|b|||ty
reports, estab||sh|ng Gas Management Systems for var|ous
segments of gas gr|d and |dent|fy|ng the potent|a| markets |n
d|fferent states.
OPPORTUNITIES, THREATS, RISKS & CONCERNS
Natura| gas w||| p|ay an |noreas|ng|y |mportant ro|e |n the grow|ng
lnd|an Energy market. Supp|y oonstra|nts and |noreas|ng pr|oes
of oonvent|ona| fue|s w||| enoourage a sh|ft to natura| gas. Grow|ng
env|ronmenta| oonoern w||| further enhanoe the natura| gas
propos|t|on. Power seotor |s expeoted to be the key growth dr|ver
for natura| gas demand. The demand w||| a|so be sens|t|ve to the
ohanges |n pr|oe of gas and the re|at|ve pr|oe of gas and oompet|ng
fue|s.
Demand for LNG
Ava||ab|||ty of |NG |n the oountry has oommenoed dur|ng the |ast
f|nano|a| year at Dahej and Haz|ra |NG regas|f|oat|on term|na|s.
Dabho| |NG fao|||t|es, wh|oh w||| now be operated by the new|y
formed oompany Patnag|r| Gas and Power Pr|vate ||m|ted, are
||ke|y to beoome operat|ona| dur|ng the FY-07. The feas|b|||ty of
transnat|ona| p|pe||nes from the west as we|| as the east |s
prov|d|ng add|t|ona| opportun|ty for gas seotor |n lnd|a. ln order
to evaouate add|t|ona| ava||ab|||ty of gas, deve|opment of p|pe||ne
|nfrastruoture |s ||ke|y to be a major thrust area |n the near future.
Your Company has p|ans to |ay |nter-state p|pe||ne |nfrastruoture
to oonneot var|ous souroes of gas to the markets.
Government Policy
Keep|ng |n v|ew the |ong term demand and supp|y requ|rements,
the Government of lnd|a has been work|ng on two |mportant po||oy
doouments name|y, Gas P|pe||ne Po||oy and Petro|eum and
Natura| Gas Pegu|atory Board B|||. These po||oy doouments are
under f|na||zat|on and wou|d profound|y |nf|uenoe the bus|ness
strategy of your Company |n oom|ng years. The Petro|eum
Pegu|atory B||| seeks to regu|ate the bus|ness of natura| gas
transm| ss| on, ref| n| ng, prooess| ng, storage, transportat| on,
d|str|but|on and market|ng. The po||oy for deve|opment of natura|
gas p|pe||nes network seeks to appo|nt a regu|ator to oversee
and promote deve| opment of natura| gas seotor and a| so
env|sages an arms |ength re|at|onsh|p between transm|ss|on ent|ty
and market|ng/exp|orat|on aot|v|ty.
Price of Gas and Petrochemicals
The Government of lnd|a |s the major shareho|der and ho|ds
57.35% of share oap|ta| of the Company. The major deo|s|ons
||ke f|xat|on of pr|oe of natura| gas and f|xat|on of tar|ff for HvJ
p|pe||ne are taken by Government of lnd|a. The Government of
lnd|a has reoent|y announoed upward rev|s|on of natura| gas pr|oes
|n |ts rev|sed Gas Pr|o|ng Order, |mpaot|ng the oost of produot|on
of ||qu|d hydrooarbon ||ke |PG, petroohem|oa| and transm|ss|on
bus|ness. Furthermore, the petroohem|oa| and |PG pr|oes are
|nf|uenoed by g|oba| demand supp|y pos|t|ons and vary w|th t|me.
Domestic Gas Sourcing
Your Company souroes most of the gas |t se||s from O|| and
Natura| Gas Corporat|on ||m|ted ONGC) under a Memorandum
of Understand|ng between the two oompan|es. The Gas Sa|e
Agreement between ONGC and GAl| |s under f|na||zat|on.
Sharing of Under-Recoveries on LPG and Kerosene
The meohan|sm for shar|ng |PG under reoovery of the O||
Market|ng Compan|es |n the year 2004-05 affeoted Prof|t Before
Tax to the extent of Ps.1,137 Crores |n 2004-05 as oompared to
Ps. 428 Crores |n the prev|ous year. ln th|s meohan|sm, your
Company has been shar|ng under reoover|es on aooount of
domest|o |PG and PDS Kerosene, whereas your Company ne|ther
produoes nor se||s Kerosene. Your Company has taken up the
matter w|th the M|n|stry of Petro|eum and Natura| Gas for rev|ew|ng
the meohan|sm for shar|ng under reoover|es on these produots.
Contingent Liabilities
The oont|ngent ||ab|||t|es ma|n|y ar|se from revenue author|t|es.
These o|a|ms have been d|sputed and |ega| prooeed|ngs are
pend|ng at d|fferent |eve|s of adjud|oat|on. However, |n May 2005,
the Sa|es Tax Tr|buna| has uphe|d your Company's pos|t|on on a
o|a|m by the Sa|es Tax author|t|es, resu|t|ng |n a reduot|on of
oont|ngent ||ab|||ty of Ps. 4,962 Crores, wh|oh |s 51% of the
oont|ngent ||ab|||ty as on 31
st
Maroh, 2005.
Transmission Tariffs
The Government of lnd|a has reoent|y announoed a rev|sed Gas
Pr|o|ng Order and aooord|ng|y, the transm|ss|on tar|ffs for the HvJ
and DvP| p|pe||ne systems |s due for rev|ew. The Government
has referred the rev|ew of HvJ and DvP| transm|ss|on tar|ffs to
the Tar|ff oomm|ss|on.
Risk Minimization
Your Company has taken severa| |n|t|at|ves to m|n|m|ze the r|sks,
wh|oh |no|ude.
R-LNG Your Company |s seour|ng ava||ab|||ty of natura| gas
through |mport. A Gas Sa|e Purohase Agreement has been s|gned
for |mport of |NG from lran to the extent of 5 MMTPA. The supp|y
from Dahej term|na| has |noreased to 5 MMTPA from 2.5 MMTPA
and the oapao|ty of the term|na| wou|d be further doub|ed to
10 MMTPA. ln order to m|n|m|ze the r|sk of supp|y of r|oh gas for
|ts |PG and petroohem|oa| p|ants, GAl| wou|d souroe r|oh |NG
for regas|f|oat|on at Dahej. GAl| |s a|so part|o|pat|ng |n the efforts
for growth |n |NG |mports through Dabho|, Kooh| and Ennore
term|na|s.
Expl orati on & Producti on Your Company has been
part|o|pat|ng |n exp|orat|on b|ooks |n oonsort|um w|th other E&P
Compan|es for seour|ng gas supp|y. Dur|ng the exp|orat|on
aot|v|t|es, two hydrooarbon d|soover|es have been made, one gas
d|soovery |n b|ook A1 |n Myanmar and another o|| d|soovery |n
Cambay bas|n.
City Gas Distribution Your Company has formed Jo|nt
ventures w| th other o| | market| ng oompan| es for o| ty gas
d|str|but|on. Centra| UP Gas ||m|ted CUG|) has been formed for
o|ty gas d|str|but|on |n Kanpur a|ongw|th BPC|. A Jo|nt venture
oompany w|th lOC| |s be|ng formed for o|ty gas d|str|but|on |n
|uoknow and Agra. The Company has p|an to go ahead w|th the
C|ty Gas D|str|but|on System |n 10 other o|t|es. Beyond the lnd|an
sub-oont| nent, GAl | | s p| ann| ng to set up Jo| nt venture
partnersh|ps w|th Ch|nese oompan|es for CNG and o|ty gas
d|str|but|on projeots |n ma|n|and Ch|na.
Gas Pipeline System ln order to prov|de natura| gas to a||
parts of the oountry, |nfrastruoture needs to be oreated for ||nk|ng
souroes of supp|y and demand oentres. Your Company has taken
severa| steps |n th|s d|reot|on and has oonoeptua||zed a p|an,
wh|oh w||| requ|re s|gn|f|oant |nvestment. The var|ous p|pe||ne
projeots wh|oh are under var|ous stages of exeout|on are Dahej -
Uran P|pe||ne, Thu|end| - Phu|pur P|pe||ne, v|jaypur - Kota P|pe||ne,
Jagot| - Dewas - P|thampur P|pe||ne, Ke|aras - Ma|anpur P|pe||ne.
Pr|or|t|zed |n|t|at|ve for other |nterstate p|pe||nes are Jagd|shpur-
Ha| d| a P| pe| | ne, v| j a| pur - Aura| ya - Jagd| shpur P| pe| | ne
augmentat|on), Dadr| - Nanga| P|pe||ne, DvP| augmentat|on,
v|ja|pur - Dadr| p|pe||ne augmentat|on), Kooh| - Manga|ore
p|pe||ne, Dabho| - Banga|ore - Chenna| P|pe||ne, Kak|nada -
Panve| P|pe||ne.
Petrochemical Complex The ethy|ene produot|on oapao|ty of
UP Petroohem|oa| Comp|ex at Pata |s be|ng |noreased from
3,10,000 TPA to 4,40,000 TPA by |noreas|ng the number of oraoker
furnaoe. Th|s w||| he|p |n aoh|ev|ng eoonom|es of soa|e. GAl| has
a|so taken |n|t|at|ve for estab||sh|ng Petroohem|oa| p|ants at Assam
GAIL gas pipeline system
Petrochemical plant at Pata
37 We Stand for Pe||ab|||ty
21
st
Annual Report
depreo| at| on and a 19% | norease | n mater| a| oonsumed.
H|stor|oa||y the oost of sa|es has been grow|ng at a CAGP of 8%
|n the |ast 5 years, both of wh|oh are |ower than the oorrespond|ng
growth rates of |noome.
The |norease |n depreo|at|on |s pr|mar||y due to oap|ta||zat|on of
v|zag - Seounderabad |PG p|pe||ne, wh|oh aooounted for 67%
of the tota| oap|ta||zed assets and the fu|| year depreo|at|on on
the Dahej-v|ja|pur P|pe||ne wh|oh aooounted for the 19% |norease
|n mater|a| oonsumed, wh|oh oontr|butes, 77% of the tota| oost
of sa|es, |s due to |norease |n feedstook oonsumpt|on and a|so
due to h|gher purohase oost towards P|NG.
Profitability and Returns
S|noe |noome has been grow|ng at a rate, h|gher than that of
oost of sa| es, the prof| ts generated from your Company's
bus|ness have been grow|ng at a faster CAGP of 18% |n the |ast
5 years than the |noome.
Consequent|y, the Peturn on lnvested Cap|ta| POlC) from GAl|'s
bus|ness has been susta|ned at 19.63% |n 2000-01 to 19.75%
|n 2004-05.
The Earn|ngs Before lnterest Depreo|at|on and Taxes EBlDTA)
has |noreased by 9% to Ps. 3,950 Crores |n 2004-05 and a Prof|t
After Tax PAT) of Ps. 1,954 Crores. 24% of the EBlDTA has
oontr|buted towards depreo|at|on th|s year as aga|nst 18% |ast
year, wh||e the oontr|but|on of EBlDTA towards f|nano|a| oharges
has been 3% |n 2004-05 as oompared to 4% |n the |ast year.
Contr|but|on towards taxat|on has reduoed from 26% of EBlDTA
|n 2003-04 to 23% |n 2004-05.
Shareholders Fund
The reserves and surp| us of your Company st and at
Ps. 7,780 Crores. There are two d|st|not growth phases |n the
|ast ten years. ln the f|rst phase, |.e., 1995-96 to 2000-01, the
bus|ness has added to the reserves at an average rate of Ps.
636 Crores per annum, wh||e |n the seoond phase, |.e., 2001-02
to 2004-05, the rate of |nf|ow to the reserves poo| has been at
an average rate of Ps. 786 Crores, an |norease of 24% over the
f|rst phase. Th|s has trans|ated |n a 5 year CAGP of 15%.
Moreover, wh||e the reserves have grown oons|stent|y, the
d| v| dend payout to the shareho| ders has a| so | noreased
oons|stent|y. Your Company has reduoed the retent|on rat|o from
84% |n 1995-96 to 61% |n 2004-05 through an |norease |n
d|v|dend payment from 10% |n 1995-96 to 80% |n 2004-05. The
reta|ned money pumped baok to the reserves |s |nvested |n the
bus|ness, wh|oh has been generat|ng returns of over 20% |n the
|ast f|ve years.
and Kera|a. ln|t|at|ves have a|so been taken to br|ng Ethy|ene -
Propy|ene C2-C3) from v|ja|pur. Furthermore, GAl| |s a|so exp|or|ng
sett|ng up a gas based Petroohem|oa| oomp|ex |n lran.
COMMENTARY ON FINANCIAL PERFORMANCE WITH
RESPECT TO OPERATIONAL PERFORMANCE
Operational Performance
Dur|ng the year under rev|ew, gas sa|es were up 9% to 22.835
BCM as aga|nst 21.013 BCM |n the |ast f|nano|a| year. The natura|
gas bus|ness generated 71% revenue for the Company.
|PG produot|on dur|ng the year was 10.95 |akh MTs oompared
to 10.89 |akh MTs |n |ast year, a marg|na| |norease of 1% YoY.
The oapao|ty ut|||zat|on of the |PG p|ants stands at 94%, pr|mar||y
oaused due to non-ava||ab|||ty of feedstook gas of adequate
quant|ty and r|ohness at the Usar P|ant as a|so non ava||ab|||ty of
adequate feed gas at |akwa P|ant.
Other | | qu| d hydrooarbon produot| on, oompr| s| ng Propane,
Pentane, SBP So|vent and other produots was 2.98 |akh MTs as
aga|nst 2.74 |akh MTs |n |ast year, an |norease of 9% YoY.
Po|ymer produot|on, wh|oh |no|udes ||DPE and HDPE, dur|ng the
year under rev|ew was 2.99 |akh MTs as aga|nst 2.64 |akh MTs
|ast year, an |norease of 13% YoY. The |norease |s pr|mar||y
attr|buted to the |norease |n po|ymer produot|on oapao|ty due to
de-bott|eneok|ng of the p|ant from 2.6 |akh MT to 3.1 |akh MT.
|PG transm|ss|on was 21.38 |akh MTs oompared to 18.41 |akh MTs
|n |ast year, an |norease of 16% over the prev|ous year. Th|s |s due to
the |noreased oapao|ty ut|||zat|on of the Jamnager-|on| |PG p|pe||ne
and due to the oomm|ss|on|ng of the v|zag-Seounderabad |PG
p|pe||ne.
Overall Financials
Income
The t urnover net of ED and | nt erna| oonsumpt | on) was
Ps. 12,412 Crores as oompared to Ps. 10,826 Crores |n the
prev|ous year. The other |noome was Ps. 349 Crores as aga|nst
Ps. 244 Cores |n the |ast year thereby |noreas|ng the tota| |noome
by 15% to Ps. 12,761 Crores.
The tota| |noome of your Company has been grow|ng at a CAGP
of 11% |n the |ast 5 years.
Cost of Sales
The oost of sa|es, |no|ud|ng depreo|at|on and |nterest, |noreased
by 20% YoY, oontr|buted ma|n|y by a sharp |norease of 43% |n
Impact of Subsidy Sharing on Overall Financials
Your Company has shared under reoover| es on sens| t| ve
pet ro| eum produot s of Ps. 428 Crores | n 2003-04 and
Ps. 1,137 Crores |n 2004-05. GAl| shared the subs|dy burden on
domest|o |PG and PDS Kerosene as per the d|reot|ves of the
Government of lnd|a.
The shar|ng of subs|dy has d|reot|y reduoed the operat|ng |noome
and the ensu|ng prof|tab|||ty. W|thout the subs|dy |mpaot, your
Company wou|d have reoorded h|gher returns and |noome.
Debt and Equity
Your Company as on 31.03.2005 has net borrow|ngs of Ps. 1,997
Crores wh|oh |s 0.23 t|mes the tota| equ|ty Net worth) of the
Company of Ps. 8,560 Crores. Consequent|y, your Company has
a h|gh ab|||ty to ra|se debt to fund for |ts future oap|ta| expend|ture
p|ans.
Sources of Funds vs. Application of Funds
The souroe of funds oompr|s|ng Equ|ty, |oan funds and Deferred
Tax ||ab|||ty |s Ps. 11,878 Crores as oompared to Ps. 10,806 Crores
|n the prev|ous year. The Equ|ty Share oap|ta| has not undergone
any ohange | n the | ast seven years and stands at
Ps. 845.65 Crores, oontr|but|ng 7% of the tota| souroe poo|. On the
other hand, the reserves and surp|us aooount for 65% of the poo|.
As on 31.03.2005, the net va|ue of F|xed Assets, oreated w|th a
tota| gross b|ook of Ps. 14,222 Crores, stands at Ps. 7,846 Crores
and aooounts for 2/3rd of the tota| funds. Bes|des 25% of the
funds |s ava||ab|e towards ||qu|d assets, wh|oh |s ava||ab|e to meet
future oap|ta| expend|ture requ|rements. The ba|anoe funds have
been parked |n lnvestments and Cap|ta| Work-|n-Progress.
Stock Market Performance
Your Company's stook has performed exoeed|ng|y we|| |n the |ast
two years. The market oap|ta||zat|on of GAl| stands at Ps. 17,945
Crores as on 31
st
Maroh, 2005 at a Pr|oe to Earn|ngs rat|o of 9.18.
The average da||y turnover at the Nat|ona| Stook Exohange NSE)
|n the |ast two years, |.e., 2003-05 has |noreased by 5096% to
Ps. 62.14 Crores per day from Ps. 1.19 Crores |n the prev|ous
two years, |.e., 2001-03. Correspond|ng|y, the average da||y traded
quant|ty at NSE has |noreased by 1866% from 1,58,326 shares
per day to 31,12,954 shares per day.
Shareholder Value Creation
Your Company be||eves |n bus|ness as a foroe for good. Over the
years, your Company has oons|stent|y oreated va|ue for the
shareho|ders. Our be||ef |s that shareho|der va|ue from bus|ness
|s oreated when the returns generated from the bus|ness, |.e., net
operat|ng prof|t after taxes |s h|gher that the oost of oap|ta|.
Furthermore, our foous on va|ue oreat|on a|ms to generate a h|gher
rate of |norease of Prof|t After Tax PAT) than the rate of |nvestment
|n f|xed asset oreat|on. ln the year 2004-05, the net operat|ng
Prof|t After Tax exo|ud|ng other |noome, net of tax) |s h|gher than
the oost of oap|ta| by Ps. 651 Crores.
The average |norementa| PAT generated from the bus|ness |n the
|ast f|ve years has been Ps. 218 Crores aga|nst an average rate
of f|xed asset oreat|on gross b|ook) of Ps. 1,140 Crores |n the
same per|od, |nd|oat|ng a 19% returns.
INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY
The Company has deve| oped | nt erna| oont ro| syst ems
oommensurate to |ts s|ze and bus|ness. The Company a|so has
an |n-house lnterna| Aud|t Department, wh|oh ensures adequaoy
of |nterna| oontro| systems and reports to the Aud|t Comm|ttee,
wh|oh further rev|ews the adequaoy of |nterna| oontro| systems.
CONCLUSION
ln ||ght of the deve|opments that have happened |n the past year
your Company has shown that not on|y |t has been oreat|ng va|ue
for |ts shareho|ders but a|so oreat|ng va|ue for other stakeho|ders
as we||. The |n|t|at|ves taken by your Company foouses on
oompet|t|veness both |nterna||y and externa||y.
lnterna| oapab|||ty bu||d|ng to outperform oompet|tors |n the near
and |ong terms |s be|ng gradua||y enhanoed through severa|
|n|t|at|ves suoh as the e-|n|t|at|ves for |noreas|ng the bus|ness
prooess ef f | o| enoy and tra| n| ng f or | noreas| ng emp| oyee
oompeteno|es. On the externa| front your Company |s now po|sed
to strengthen |ts base |n the |nternat|ona| markets v|a |ts g|oba|
bus|nesses |n the oom|ng years.
The oha||enges |n the O|| & Gas |ndustry are many. lnorease |n
orude o|| pr|oes threaten oompet|t|veness and pose market|ng
oha||enges. Bes|des, the lnd|an Natura| Gas market |s matur|ng
and |s expeoted to grow rap|d|y, br|ng|ng newer opportun|t|es.
New regu|at|ons wou|d govern the new parad|gm of the domest|o
gas |ndustry. Be|ng the market |eader, your Company |s better
prepared f|nano|a||y and |nte||eotua||y to dr|ve on the grow|ng
lnd|an gas eoonomy.
CAUTIONARY STATEMENT
St at ement s i n t he Di rect ors Report and Management
Discussion & Analysis, describing the Companys objectives,
projections, estimates, expectations, predictions etc. may be
forward looking statements within the meaning of applicable
l aws and regul at i ons. Act ual resul t s, perf ormances or
achievements may vary materially from those expressed or
implied, depending upon economic conditions, Government
policies and other incidental factors.
39 We Stand for Pe||ab|||ty
21
st
Annual Report
Five Year Trends
41 We Stand for Pe||ab|||ty
21
st
Annual Report
Financial Performance
43 We Stand for Pe||ab|||ty
21
st
Annual Report
45 We Stand for Pe||ab|||ty
21
st
Annual Report
47
21
st
Annual Report
We Stand for Pe||ab|||ty
Sources and Application of Funds
as at 31
ST
March 2005
SOURCES
11878
APPLICATIONS
11878
|OAN FUNDS
1997
SHAPEHO|DEP'S
FUNDS
8626
DEFEPPED TAX
|lABl|lTY
1255
EQUlTY SHAPE
CAPlTA|
846
PESEPvES
7780
GPOSS B|OCK
14222
DEPPEClATlON
6377
NET B|OCK
7845
CAPlTA| WOPK lN
PPOGPESS
309
lNvESTMENTS
784
CUPPENT ASSETS,
|OAN ADvANCES
6414
CUPPENT |lABl|lTlES
AND PPOvlSlONS
3474
WOPKlNG
2940
Ps. |n Crores)
49
21
st
Annual Report
We Stand for Pe||ab|||ty
Five Year Profile
(A) FINANCIAL
Ps. |n Crores)
2000 - 2001 2001-02 2002-03 2003-04 2004-05
PAlD-UP CAPlTA| 845.65 845.65 845.65 845.65 845.65
PESEPvES & SUPP|US 4,634.40 4,489.79 5,493.48 6,599.50 7,780.46
SECUPED |OANS 661.17 397.63 163.95 1,655.52 1,600.00
UNSECUPED |OANS 2,049.72 2,027.18 1,883.17 477.96 397.40
DEFEPPED TAX |lABl|lTY NET) - 1,090.74 1,119.75 1,227.58 1,255.23
8,190.94 8,850.99 9,506.00 10,806.21 11,878.74
REPRESENTED BY :
GPOSS B|OCK 10,037.91 10,701.94 11,048.71 13,584.73 14,222.35
|ESS . DEPPEClATlON 3,568.87 4,167.06 4,786.61 5,441.85 6,376.47
NET FlXED ASSETS 6,469.04 6,534.88 6,262.10 8,142.88 7,845.88
CAPlTA| WOPK-lN-PPOGPESS 632.23 425.70 688.14 814.47 309.08
lNvESTMENTS 661.45 688.21 687.94 771.99 783.95
NET CUPPENT ASSETS 427.88 1,201.98 1,867.71 1,076.87 2,939.83
MlSCE||ANEOUS EXPENDlTUPE 0.34 0.22 0.11 - -
8,190.94 8,850.99 9,506.00 10,806.21 11,878.74
GPOSS SA|ES 9,197.44 9,567.50 10,641.99 11,295.67 12,927.07
GPOSS MAPGlN 2,349.98 2,622.05 3,348.31 3,614.10 3,950.37
DEPPEClATlON 600.52 593.16 643.54 661.60 944.89
PPE|lMlNAPY/DEFEPPED PEvENUE
EXPENSES WPlTTEN-OFF 0.11 0.11 0.11 0.11 -
lNTEPEST 197.14 226.88 186.37 137.97 134.09
PPOFlT/|OSS) BEFOPE TAX 1,552.21 1,801.90 2,518.29 2,814.42 2,871.39
PPOFlT/|OSS) AFTEP TAX 1,126.17 1,185.84 1,639.11 1,869.34 1,953.91
DlvlDEND lNC|. lNTEPlM DlvlDEND 338.26 380.54 591.96 676.52 676.52
COPPOPATE DlvlDEND TAX 34.50 - 43.34 86.68 92.51
lNTEPNA| GENEPATlON 1,726.80 1,779.11 2,282.76 2,531.05 2,898.80
NET WOPTH 5,468.61 5,332.65 6,336.57 7,410.70 8,559.65
CAPlTA| EMP|OYED 6,896.92 7,736.86 8,129.81 9,219.75 10,785.71
(B) GAS THROUGHPUT/PRODUCTION
2000 - 2001 2001-02 2002-03 2003-04 2004-05
NATURAL GAS ( MMSCMD ) 61.75 61.60 63.40 62.84 71.56
LPG ( M / T ) 7,84,591.28 9,98,235.65 11,14,423.41 10,88,686.04 10,94,835.00
SBP SOLVENT ( M / T ) 31,269.83 23,453.94 34,507.83 65,298.28 58,875.59
PENTANE ( M / T ) 10,494.90 24,253.44 33,466.30 51,872.15 57,524.74
PROPANE ( M / T ) 79,415.82 87,434.69 1,20,187.81 1,57,303.26 1,81,863.47
ETHYLENE ( M / T) 2,13,716.00 2,72,048.30 3,11,995.00 2,75,610.00 3,19,289.86
HDPE/LLDPE ( M/T) 1,94,587.16 2,50,287.94 2,91,828.51 2,63,719.91 2,98,787.35
(C) FINANCIAL RATIOS
2000 - 2001 2001 - 2002 2002-03 2003-04 2004-05
NET WORTH PER RUPEE OF 6.47 6.31 7.49 8.76 10.12
PAID-UP CAPITAL (RS.)
BORROWINGS TO NET WORTH (RS.) 0.50 0.45 0.32 0.29 0.23
PROFIT BEFORE TAX TO CAPITAL 22.51 23.29 30.98 30.53 26.62
EMPLOYED ( % )
PROFIT BEFORE TAX TO NET WORTH ( % ) 28.38 33.79 39.74 37.98 33.55
PROFIT BEFORE TAX TO GROSS SALES ( %) 16.88 18.83 23.66 24.92 24.92
PROFIT BEFORE TAX TO GROSS 15.46 16.84 22.79 20.72 20.19
FIXED ASSETS ( % )
GROSS SALES TO CAPITAL EMPLOYED (%) 133.36 123.66 130.90 122.52 122.52
EARNING PER SHARE (RS.) 13.32 14.02 19.38 22.11 23.11
DIVIDEND PER SHARE (RS.) 4.00 4.50 7.00 8.00 8.00
DIVIDEND PAYOUT RATIO (%) 33.10 32.09 38.76 40.83 39.36
51
21
st
Annual Report
We Stand for Pe||ab|||ty
Balance Sheet as at 31
st
March, 2005
Ps. |n Crores)
SCHEDULE AS AT AS AT
NO. 31
ST
MARCH, 2005 31
ST
MAPCH, 2004
SOURCES OF FUNDS
Shareholders Funds
Cap|ta| 1 845.65 845.65
Peserves and Surp|us 2 7,780.46 8,626.11 6,599.50 7,445.15
Loan Funds 3
Seoured |oans 1,600.00 1,655.52
Unseoured |oans 397.40 1,997.40 477.96 2,133.48
Deferred Tax Liability (Net) 1,255.23 1,227.58
11,878.74 10,806.21
APPLICATIONS OF FUNDS
Fixed Assets 4
Gross B|ook 14,222.35 13,584.73
|ess . Depreo|at|on 6,376.47 5,441.85
Net B|ook 7,845.88 8,142.88
Cap|ta| Work |n Progress 5 309.08 8,154.96 814.47 8,957.35
Investments 6 783.95 771.99
Carried Forward 8,938.91 9,729.34
53
21
st
Annual Report
We Stand for Pe||ab|||ty
Balance Sheet as at 31
st
March, 2005
Ps. |n Crores)
SCHEDULE AS AT AS AT
NO. 31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Brought Forward 8,938.91 9,729.34
Current Assets, Loans and Advances 7
lnventor|es 481.44 474.91
Sundry Debtors 822.86 720.69
Cash and Bank Ba|anoes 3,446.84 1,567.95
Other Current Assets 26.98 3.28
|oans and Advanoes 1,635.86 1,340.25
6,413.98 4,107.08
Less : Current Liabilities and Provisions 8
Current ||ab|||t|es 2,716.13 2,296.25
Prov|s|ons 758.02 733.96
3,474.15 3,030.21
Net Current Assets 2,939.83 1,076.87
TOTAL 11,878.74 10,806.21
Contingent Liabilities not provided for (Refer Schedule 14)
Notes on Accounts 14
Sohedu|es 1 to 14 and Aooount|ng Po||o|es form part of Aooounts
N. K. Nagpa| J. K. Ja|n B. S. Neg| Proshanto Banerjee As per our separate Peport of even date
Seoretary D|reotorF|nanoe) D|reotorBD) Cha|rman & Manag|ng D|reotor For M/S S. MANN & COMPANY
Chartered Aooountants
Subhash Mann
Partner)
P|aoe . New De|h| Membersh|p No. 80500
Dated. June 21, 2005
Profit & Loss Account for the Year Ended 31
st
March, 2005
Ps. |n Crores)
SCHEDULE YEAR ENDED YEAP ENDED
NO. 31
ST
MARCH, 2005 31
ST
MAPCH, 2004
INCOME
Sa|es 12,552.16 11,011.01
|ess . Exo|se Duty 514.87 469.18
12,037.29 10,541.83
|PG Transm|ss|on /
P|NG Sh|ppers Charges 356.49 264.38
lnoome from Te|eoom 18.42 20.24
12,412.20` 10,826.45
Add . Aooret|on to Stook
C|os|ng Stook 104.59 131.45
|ess . Open|ng Stook 131.45 (26.86) 92.84 38.61
12,385.34 10,865.06
lnterna| oonsumpt|on 1,179.18 1,118.73
Other lnoome 9 349.05 244.03
TOTAL 13,913.57 12,227.82
EXPENDITURE
Purohases 7,853.23 6,703.58
Manufaotur|ng, Transm|ss|on,
Adm|n|strat|on
Se|||ng & D|str|but|on and
Other Expenses 10 2,108.26 1,926.45
Depreo|at|on 4 946.65 663.97
3,054.91 2,590.42
|ess . lno|denta| Expend|ture
dur|ng oonstruot|on
transferred to Cap|ta|
Work-|n-Progress 11 0.93 3,053.98 16.09 2,574.33
Deferred Pevenue
Expend|ture wr|tten off - 0.11
TOTAL 10,907.21 9,278.02
Prof|t before lnterest and
F|nanoe Charges 3,006.36 2,949.80
lnterest and F|nanoe Charges 12 134.09 157.32
|ess . lnterest and F|nanoe
Charges transferred
to Cap|ta| Work-|n-Progress 11 - 134.09 19.35 137.97
Profit for the year Carried Forward 2,872.27 2,811.83
55
21
st
Annual Report
We Stand for Pe||ab|||ty
Ps. |n Crores)
SCHEDULE YEAR ENDED YEAP ENDED
NO. 31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Brought Forward 2,872.27 2,811.83
|ess . Pr|or Per|od Adjustments Net) 13 0.88 2.59)
Profit before Tax 2,871.39 2,814.42
Prov|s|on for Taxat|on - Current 889.83 837.25
- Deferred 27.65 917.48 107.83 945.08
Profit after Tax 1,953.91 1,869.34
Amount available for appropriation 1,953.91 1,869.34
APPROPRIATIONS
lnter|m D|v|dend 338.26 338.26
Proposed F|na| D|v|dend 338.26 338.26
Corporate D|v|dend Tax 92.51 86.68
Bond Pedempt|on Peserve 32.13 32.12
Genera| Peserve 195.39 186.93
Balance Carried to Balance Sheet 957.36 887.09
TOTAL 1,953.91 1,869.34
Details of Earning Per Share
A. Prof|t after tax 1,953.91 1,869.34
B. We|ghted Average No. of Equ|ty Shares 845,651,600 845,651,600
C. Nom|na| va|ue per Equ|ty Share Ps.) 10/- 10/-
D. Bas|o and D||uted Earn|ng Per Share Ps.) 23.11 22.11
Notes on Accounts 14
Sohedu|es 1 to 14 and Aooount|ng Po||o|es form part of Aooounts
N.K.Nagpa| J.K.Ja|n B. S. Neg| Proshanto Banerjee As per our separate Peport of even date
Seoretary D|reotor F|nanoe) D|reotor BD) Cha|rman & Manag|ng D|reotor For M/S S. MANN & COMPANY
Chartered Aooountants
P|aoe . New De|h| Subhash Mann
Dated . June 21, 2005 Partner)
Membersh|p No. 80500
Schedule 1 - Share Capital
Ps. |n Crores)
AS AT AS AT
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
AUTHORISED
100,00,00,000 Equ|ty Shares of Ps. 10/- eaoh 1,000.00 1,000.00
ISSUED, SUBSCRIBED AND PAID-UP
84,56,51,600 Prev|ous Year . 84,56,51,600) 845.65 845.65
Equ|ty Shares of Ps.10/- eaoh fu||y pa|d up
TOTAL 845.65 845.65
57
21
st
Annual Report
We Stand for Pe||ab|||ty
Schedule 2 - Reserves and Surplus
Ps. |n Crores)
AS AT AS AT
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Capital Reserve
Grant Peoe|ved from Dan|sh Govt. for oonstruot|on of
Gas Teohno|ogy lnst|tute at No|da)
As per |ast Aooount 2.33 2.45
|ess . Transferred to Prof|t & |oss Aooount 0.12 2.21 0.12 2.33
Share Premium Account 0.26 0.26
Investment Allowance (Utilised) Reserve 266.61 266.61
Bonds Redemption Reserves
As per |ast Aooount 32.12 -
Add . Transferred from Prof|t & |oss Aooount 32.13 32.12
64.25 32.12
Foreign Currency Translation Reserves (3.80) -
General Reserve
As per |ast Aooount 967.79 780.86
Add . Transferred from Prof|t & |oss Aooount 195.39 186.93
1163.18 967.79
Profit and Loss Account
As per |ast Aooount 5,330.39 4,443.30
Add . Transferred from Prof|t & |oss Aooount 957.36 887.09
6287.75 5330.39
TOTAL 7,780.46 6,599.50
Schedule 3 - Loan Funds
Ps. |n Crores)
AS AT AS AT
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
SECURED LOANS
Loan from ICICI Bank Ltd. - 43.33
Seoured by a par| passu oharge w|th ADB |oan drawn for
|PG P|pe||ne projeot by way of hypotheoat|on of
movab|es |no|ud|ng movab|e Maoh|nery, Maoh|nery spares,
too|s & aooessor|es present & future of
Jamnagar - Kand|a - |on| |PG P/| projeot
|no|ud|ng Ps..Nl| Prev|ous Year . Ps. 40.00)
due for payment w|th|n one year)
Loan from Bank of India,Tokyo - 12.19
Seoured by hypotheoat|on of
Steam Turb|ne Craoked Gas, Ethy|ene and
Propy|ene oompressors prooured from
M/s EBAPA, Tokyo and |nsta||ed at Pata.
|no|ud|ng Ps.Nl| Prev|ous Year . Ps.12.19)
due for payment w|th|n one year)
Loan from Bank of India 500.00 500.00
Seoured by hypotheoat|on by way of
f|rst oharge on par| passu bas|s of
movab|e p|ant & maoh|nery, maoh|nery spares,
equ|pment, too|s & aooessor|es &
other moveab|es, both present & future,
whether |nsta||ed or not & |y|ng |oose or
|n stores of Dahej v|ja|pur P|pe||ne projeot)
|no|ud|ng Ps.Nl| Prev|ous Year . Ps.Nl|)
due for payment w|th|n one year)
Bonds Series - I 500.00 500.00
6.10% Seoured Non-oonvert|b|e redeemab|e
Bonds -Ser|es - l are redeemab|e
|n 5 equa| |nsta||ment oommeno|ng from
the end of the 8th year upto the end of
the 12
th
year from the deemed date of
a||otment August 22, 2003. Bonds
are seoured by oharge on |mmovab|e
res|dent|a| bu||d|ng and movab|e p|ant
& maoh|nery s|tuated at Haz|ra, vaghod|a,
Gandhar and vadodara |n Gujarat.)
Carried Forward 1000.00 1055.52
59
21
st
Annual Report
We Stand for Pe||ab|||ty
Brought Forward 1000.00 1055.52
Bonds Series - II 600.00 600.00
5.85% Seoured Non-oonvert|b|e redeemab|e
Bonds -Ser|es - ll are redeemab|e
|n 5 equa| |nsta||ment oommeno|ng from
the end of the 6
th
year upto the end
of the 10th year from the deemed date of
a||otment Maroh 25, 2004. Bonds are
seoured by oharge on |mmovab|e
res|dent|a| bu||d|ng & movab|e p|ant & maoh|nery
s|tuated at Haz|ra,vaghod|a,Gandhar,
vadodara & DvP| Projeot |n Gujarat.)
UNSECURED LOANS
Other Loans and Advances
From Banks :
- State Bank of India, London 34.28 49.09
|no|ud|ng Ps. 13.71 Prev|ous Year . Ps. 14.13)
due for payment w|th|n one year)
From others
- Oil Industry Development Board
|no|ud|ng Ps. 65.75 Prev|ous Year . Ps. 65.75)
due for payment w|th|n one year) 363.12 428.87
TOTAL 1,997.40 2,133.48
Ps. |n Crores)
AS AT AS AT
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Schedule 4 - Fixed Assets (Tangible/Intangible Assets)
DESCRIPTION GROSS BLOCK (AT COST)
As at Additions/ Sales/ As at
1.4.2004 Adjustments Adjustments 31.03.2005
during the year during the year
Tangible Assets (A)
Land: Freeho|d 59.13 0.20 - 59.33
|easeho|d 69.63 1.88 - 71.51
Building:
Off|oe/Others 363.99 4.82 - 368.81
Pes|dent|a| 253.12 0.30 - 253.42
Bunk Houses 1.62 - - 1.62
P|ant and Maoh|nery 12,489.07 575.45 0.08 13,064.44
Pa||way ||nes & S|d|ngs 5.47 - - 5.47
E|eotr|oa| Equ|pments 120.39 3.81 0.19 124.01
Furn|ture, F|xtures and 201.88 34.26 8.43 227.71
Other Equ|pments
Transport Equ|pments 2.41 0.14 0.33 2.22
TOTA| A) 13,566.71 620.86 9.03 14,178.54
Intangible Assets (B)
P|ght of Use 17.42 0.04) - 17.38
Softwares/||oenoes 0.60 25.83 - 26.43
TOTA| B) 18.02 25.79 - 43.81
TOTAL (A+B) 13,584.73 646.65 9.03 14,222.35
Prev|ous Year 11.048.71 2,543.80 7.78 13,584.73
61
21
st
Annual Report
We Stand for Pe||ab|||ty
Ps. |n Crores)
DEPRECIATION NET BLOCK
Upto For the Year Adjustments As at As at As at
31.03.2004 during the year 31.03.2005 31.03.2005 31.03.2004
- - - - 59.33 59.13
4.60 0.61 0.03) 5.18 66.33 65.03
61.51 9.77 - 71.28 297.53 302.48
32.40 4.91 - 37.31 216.11 220.72
1.58 0.04 - 1.62 - 0.04
5,227.50 904.86 4.16) 6,128.20 6,936.24 7,261.57
3.44 0.27 - 3.71 1.76 2.03
29.00 5.89 0.05) 34.84 89.17 91.39
80.32 18.42 7.61) 91.13 136.58 121.56
1.41 0.15 0.18) 1.38 0.84 1.00
5,441.76 944.92 12.03) 6,374.65 7,803.89 8,124.95
- - - - 17.38 17.42
0.09 1.73 - 1.82 24.61 0.51
0.09 1.73 - 1.82 41.99 17.93
5,441.85 946.65 (12.03) 6,376.47 7,845.88 8,142.88
4,786.61 663.97 8.73) 5,441.85 8,142.88 6,262.10
Schedule 5 - Capital Work-in-Progress
Ps. |n Crores)
AS AT AS AT
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
||nep|pe Construot|on and re|ated fao|||t|es |no|ud|ng Cathod|o Proteot|on 81.08 57.98
Compressor Stat|ons - 156.82
Te|eoom/Te|esuperv|sory System 5.71 33.02
|PG P|pe||ne Projeot 2.02 362.72
|PG Projeots 0.89 1.17
Petroohem|oa|s 46.55 56.23
Te|eoom Projeots 1.07 13.36
Others 29.30 32.59
Exp|oratory We|| |n Progress 42.99 19.51
Bu||d|ngs 7.83 4.16
|ess . Prov|s|on for abandonment of Work |n Progress 2.64 5.19 1.77 2.39
||nep|pes, Cap|ta| ltems |n Stook/Trans|t
|no|ud|ng mater|a|s w|th Contraotors. Ps. 0.27 Prev|ous Year. Ps. 0.44) 93.13 76.00
|ess . Prov|s|on for |osses/obso|esoenoe 1.24 91.89 1.47 74.53
Advanoe for Cap|ta| Expend|ture
Unseoured - Cons|dered Good) 2.39 4.15
Unseoured - Cons|dered Doubtfu|) 1.39 1.39
3.78 5.54
|ess . Prov|s|on for Doubtfu| Advanoes 1.39 2.39 1.39 4.15
TOTAL 309.08 814.47
63
21
st
Annual Report
We Stand for Pe||ab|||ty
Schedule 6 - Investments
Ps. |n Crores)
AS AT AS AT
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
LONG-TERM INVESTMENTS
A. Trade Investments
Quoted * -
570,600 Prev|ous Year . 570,600) Equ|ty Shares of Ps.10/-eaoh fu||y 0.86 0.86
Pa|d-up |n Gujarat lndustr|es Power Co. |td.|no|udes 1,90,200 Equ|ty
Shares aoqu|red dur|ng the year 1996-97 at a prem|um of Ps.15/- per share)
3,42,66,845 Prev|ous Year . 3,42,66,845) Equ|ty Shares of 556.29 556.29
Ps.10/- eaoh fu||y pa|d up |n ONGC |td. Aoqu|red dur|ng
1999-2000 at a pr|oe of Ps.162.34 per Share)
6.96 % O|| Compan|es GOl Speo|a| Bonds 2009 6.00 6.00
A||oted |n ||eu of o|a|ms pend|ng w|th O|| Co-ord|nat|on Comm|ttee)
3,15,00,000 Prev|ous Year . 3,15,00,000) Equ|ty Shares of Ps. 10/- 31.50 31.50
eaoh fu||y pa|d-up |n lndraprastha Gas |td. a Jo|nt venture Company)
9,37,50,000 Prev|ous Year . 9,37,50,000) Equ|ty Shares of Ps.10/- 98.75 98.75
eaoh fu||y pa|d up |n Petronet |NG |td. a Jo|nt venture Company)
|no|udes 1,00,00,000 equ|ty shares a||oted at a prem|um of Ps. 5/- per share
* Aggregat|ng market va|ue of the above ment|oned quoted
seour|t|es Ps. 3736.27 Prev|ous Year . Ps. 3151.24)
Unquoted - At cost
4,44,49,960 Prev|ous Year . 4,44,49,960) Equ|ty shares of Ps. 10/- 44.45 44.45
eaoh fu||y pa|d up |n Mahanagar Gas |td. a Jo|nt venture Company)
12,497 Prev|ous Year . 12,497) Equ|ty shares of Ps. 10/- eaoh fu||y 0.01 0.01
pa|d up |n Bhagyanagar Gas |td. a Jo|nt venture Company)
Advanoe aga|nst a||otment of Equ|ty Shares of Bhagyanagar Gas |td. 4.98 4.99 4.98 4.99
Advanoe aga|nst a||otment of Equ|ty shares of Tr|pura Natura| Gas |td. 0.83 -
a Jo|nt venture Company)
Carried Forward 743.67 742.84
Ps. |n Crores)
AS AT AS AT
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Brought Forward 743.67 742.84
Advanoe aga|nst a||otment of Equ|ty shares of Centra| UP Gas |td. 0.03 -
a Jo|nt venture Company)
2,07,60,000 Prev|ous Year . 2,07,60,000) Equ|ty Shares of 20.76 20.76
Ps.10/- eaoh fu||y pa|d-up |n Gujrat State E|eotr|o|ty Generat|on |td.
19,000 Prev|ous Year . 15,200) Equ|ty shares of |E 100/- eaoh 8.09 8.09
fu||y pa|d up |n Fayum Gas Company reg|stered |n Egypt.
Dur|ng the year 2004-05, Fayum Gas Company
has restruotured the equ|ty oap|ta|)
2,20,000 Prev|ous Year . Nl|) Equ|ty Shares of |E 10/- eaoh 1.61 -
fu||y pa|d up |n She|| Compressed Natura| Gas Company,
Egypt reg|stered |n Egypt.
21,00,000 Prev|ous Year . Nl|) Equ|ty Shares of USD 1 eaoh fu||y 9.64 -
pa|d up |n GAl| G|oba| S|ngapore Pte.) |td., |noorporated |n
S|ngapore 100% subs|d|ary oompany)
3 Prev|ous Year . 3) 12% 2006, GEB Bonds of 0.15 0.30
Ps. 10,00,000/- eaoh. Transferred by GlPCO |n ||eu of
redempt|on of 1/3rd 18% redeemab|e
Non - Convert|b|e Debenture. 50% |s pa|d dur|ng the FY 2004-05.)
B. Non Trade Investments - Others
Unquoted - At cost
a) |). 30 Shares of Ps.50 eaoh fu||y pa|d up |n Darpan
Co-operat|ve Hous|ng Soo|ety |td., vadodara - -
||). 50 Shares of Ps.50 eaoh fu||y pa|d up |n Ashoka
Apartments Co-operat|ve Hous|ng Soo|ety |td., vadodara - -
|||). 30 Shares of Ps.50 eaoh fu||y pa|d up |n Panohvat|
Apartments Co-operat|ve Hous|ng Soo|ety |td., Surat - -
|v). 400 Shares of Ps.10 eaoh fu||y pa|d up |n Sanand
Members Assoo|at|on,Ahmedabad. - -
v). 35 Shares of Ps.50/-eaoh fu||y pa|d up |n Green
F|e|dsB) Cooperat|ve Hous|ng Soo|ety |td, Mumba| - -
TOTAL 783.95 771.99
65
21
st
Annual Report
We Stand for Pe||ab|||ty
Schedule 7 - Current Assets, Loans and Advances
Ps. |n Crores)
AS AT AS AT
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
A. CURRENT ASSETS
INVENTORIES
As Cert|f|ed by the Management)
Stores and Spares |no|. Construot|on Surp|us* 416.30 377.93
|ess . Prov|s|on for |osses/Obso|esoenoe 39.45 34.47
376.85 343.46
Stook of Gas**/Po|ymers/|PG and Other Produots 104.59 481.44 131.45 474.91
SUNDRY DEBTORS
Debts outstand|ng for a per|od exoeed|ng s|x months
- Unseoured, Cons|dered Good 221.69 101.15
- Unseoured, Cons|dered Doubtfu| 120.25 341.94 124.44 225.59
Other Debts
- Unseoured, Cons|dered Good 601.17 619.54
- Unseoured, Cons|dered Doubtfu| - 601.17 0.81 620.35
943.11 845.94
|ess . Prov|s|on for Doubtfu| debts 120.25 822.86 125.25 720.69
CASH AND BANK BALANCES
Cash |n hand 0.09 0.11
Cheques/Stamps |n hand 0.02 8.92
Pem|ttanoe |n trans|t 11.49 11.60 0.42 9.45
BANK BALANCES(SCHEDULED BANKS)
On Current Aooount |no|udes Corporate ||qu|d Term 82.50 364.25
Depos|t Ps. 17.79 Prev|ous Year . Ps. 180.91) )
On Current Aooount -Gas Poo| Money 0.01 -
On Current Aooount -Jv Consort|um 0.01 -
On Short Term Depos|t 2,426.21 534.09
On Short Term Depos|t -Gas Poo| Money |no|udes |nterest 566.89 377.71
aoorued but not due Ps.1.77Prev|ous Year . Ps. 1.23)
On Short Term Depos|t -Jv Consort|um |no|udes |nterest 359.62 3,435.24 3,446.84 282.45 1,558.50 1,567.95
aoorued but not due Ps. 3.52 Prev|ous Year . Ps. 3.56)
OTHER CURRENT ASSETS
lnterest aoorued but not due on Depos|ts 26.98 3.28
Carried Forward 4,778.12 2,766.83
Ps. |n Crores)
AS AT AS AT
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Brought Forward 4,778.12 2,766.83
B. LOANS AND ADVANCES
Loans/Advances to Subsidiaries 76.94 -
GAl| G|oba| S|ngapore Pte.) |td.,
100% subs|d|ary oompany |noorporated |n S|ngapore)
Loans to Employees
- Seoured, Cons|dered Good 136.83 101.15
- Unseoured, Cons|dered Good 16.18 23.73
|no|ud|ng dues from D|reotors Ps.0.14 Prev|ous Year .
Ps.0.07) Max|mum amount due at any t|me dur|ng the year
. Ps. 0.20) Prev|ous Year . Ps. 0.11)
Others 4.29 157.30 4.18 129.06
Unseoured, Cons|dered Good)
Advances recoverable in cash or in
kind or for value to be received
- Unseoured, Cons|dered Good 1,334.03 1,167.55
|no|udes Ps. 1024.52 Prev|ous Year . 915.13) pa|d/adjusted
aga|nst lnoome tax demand under protest. |no|udes Ps. 3.11
Prev|ous Year .Ps.3.36) on aooount of d|s|nvestment of Govt.
Equ|ty by way of GDP/Domest|o Tranohe/ offer for sa|e)
- Unseoured, Cons|dered Doubtfu| 1.08 1.15
1,335.11 1,168.70
|ess . Prov|s|on for Doubtfu| Advanoes 1.08 1,334.03 1.15 1,167.55
Claims Recoverable
- Unseoured, Cons|dered Good 36.92 8.92
- Unseoured, Cons|dered Doubtfu| 0.42 0.12
37.34 9.04
|ess . Prov|s|on for doubtfu| o|a|ms 0.42 36.92 0.12 8.92
Deposits with Customs, Port Trust and Others
- Unseoured, Cons|dered Good 30.67 34.72
- Unseoured, Cons|dered Doubtfu| 0.31 0.31
30.98 35.03
|ess . Prov|s|on for doubtfu| o|a|ms 0.31 30.67 1,635.86 0.31 34.72 1,340.25
TOTAL 6,413.98 4,107.08
* includes Rs. 60.78 (Previous Year : Rs. 20.51) in transit.
**after adjustment of calorific value
67
21
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We Stand for Pe||ab|||ty
Schedule 8 - Current Liabilities and Provisions
Ps. |n Crores)
AS AT AS AT
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
A. CURRENT LIABILITIES
Sundry Cred|tors 1,360.26 1,268.76
lno|udes due to Sma|| Soa|e
Undertak|ngs . Ps. N||
Prev|ous Year . Ps. N||))
Depos|ts/Petent|on Money from 136.40 184.36
Contraotors and others
Other ||ab|||t|es 463.83 276.11
Other ||ab|||t|es -
Gas Poo| Money 723.18 534.51
- Uno|a|med D|v|dend 1.28 0.86
Amount due for ored|t to
lnvestor Eduoat|on Fund |s
Ps. N|| Prev|ous Year . N||))
lnterest aoorued but not
due on |oans 31.18 2,716.13 31.65 2,296.25
B. PROVISIONS
Prov|s|on for taxat|on 4,394.08 3,504.26
|ess. Advanoe Tax 4,487.32 3,585.02
|ess. Adjustment of Pefunds 433.16 4,054.16 339.92 390.41 3,194.61 309.65
Prov|s|on for Proposed
D|v|dend 338.26 338.26
Prov|s|on for Corporate
D|v|dend Tax 47.44 43.34
Prov|s|on for Gratu|ty - 22.39
Prov|s|on for |eave
Enoashment and 32.40 20.32
Post Pet|rement Med|oa| Benef|ts 758.02 733.96
TOTAL 3,474.15 3,030.21
Schedule 9 - Other Income
Ps. |n Crores)
YEAR ENDED YEAP ENDED
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Dividend 119.34 104.32
lnterest on .
- Bonds/Debentures 0.45 0.50
- Depos|ts w|th Banks 100.50 56.66
- Others 45.05 9.53
146.00 66.69
Tax deduoted at souroe. Ps. 16.16 Prev|ous Year. Ps.10.93)
|ess . Transferred to lno|denta| Expend|ture
dur|ng oonstruot|on Sohedu|e 11) - 146.00 2.39 64.30
Export Incentives 3.92 8.02
M|soe||aneous lnoome 79.79 67.64
Tax deduoted at souroe . Ps. 0.01 Prev|ous Year . Ps. 0.10)
|ess . Transferred to lno|denta| Expend|ture
dur|ng oonstruot|on Sohedu|e 11) - 79.79 0.25 67.39
TOTAL 349.05 244.03
69
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Annual Report
We Stand for Pe||ab|||ty
Schedule 10 - Manufacturing, Transmission, Administration, Selling &
Distribution and other Expenses
Ps. |n Crores)
YEAR ENDED YEAP ENDED
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Paw Mater|a| oonsumed 899.15 819.60
Employees Remuneration and Benefits*
Sa|ar|es, Wages and A||owanoes 140.85 130.08
Contr|but|on to Prov|dent and Other Funds 20.64 16.33
We|fare Expenses 44.29 205.78 27.77 174.18
Power, Fue| and Water Charges 399.25 381.90
Stores and Spares oonsumed 145.31 174.96
Pent 14.10 13.12
Pates and Taxes 3.28 5.17
||oenoe Fees - Te|eoom 1.56 3.04
Bandw|dth Consumpt|on 1.03 2.76
Repairs and Maintenance
P|ant and Maoh|nery 117.61 98.84
Bu||d|ngs 12.10 11.43
Others 12.17 141.88 12.15 122.42
lnsuranoe 22.59 21.32
Commun|oat|on Expenses 8.06 7.39
Pr|nt|ng and Stat|onery 3.64 2.84
Trave|||ng Expenses 29.16 30.87
Books and Per|od|oa|s 0.60 0.72
Advert|sement and Pub||o|ty 23.62 26.65
Carried Forward 1,899.01 1,786.94
Ps. |n Crores)
YEAR ENDED YEAP ENDED
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Brought Forward 1,899.01 1,786.94
Payment to Auditors
Aud|t Fees 0.16 0.08
Management Serv|oes 0.04 0.08
Out of Pooket Expenses 0.04 0.24 0.07 0.23
Enterta|nment Expenses 0.22 0.18
Peoru|tment and Tra|n|ng Expenses 10.28 8.24
veh|o|e H|re and Punn|ng Expenses 14.49 13.00
Survey Expenses 26.88 14.06
Consu|tanoy Charges 15.53 12.54
Data Prooess|ng Expenses 2.86 1.17
Donat|on 5.25 0.57
Pesearoh and Deve|opment Expenses 0.40 0.34
|oss on sa|e / wr|tten off of assetsnet) 2.10 1.62
Bad Debts/C|a|ms/Advanoes/Stores wr|tten off 1.26 1.02
Dry We|| Expenses wr|tten off 11.98 -
Prov|s|on for Doubtfu| Debts, Advanoes, C|a|ms, Depos|ts and 3.00 2.40
obso|esoenoe of Stores and Cap|ta| ltems
Exo|se Duty on Stook net) (10.21) 2.65
Expenses on Enab||ng Fao|||t|es 3.04 4.81
Se|||ng & D|str|but|on Expenses 9.28 7.13
D|soount on Sa|es 9.46 7.59
Comm|ss|on on Sa|es 11.59 10.07
Seour|ty Expenses 25.14 22.61
Other Expenses 66.46 29.28
TOTAL 2,108.26 1,926.45
*lno|udes .
1) Ps. 12.08 Prev|ous Year . Ps. 5.32) on aooount of ret|rement benef|ts v|z. |eave enoashment and Med|oa|.
71
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We Stand for Pe||ab|||ty
Schedule 11 - Incidental Expenditure During Construction
Ps. |n Crores)
YEAR ENDED YEAP ENDED
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Employees Remuneration and Benefits
Sa|ar|es, Wages and A||owanoes 0.49 4.11
Contr|but|on to Prov|dent and Other Funds - 0.28
We|fare Expenses 0.08 0.57 0.53 4.92
Power, Fue| and Water Charges 0.02 1.34
Stores and Spares oonsumed - 0.58
Pent 0.04 0.80
Pates and Taxes - 0.18
Repairs and Maintenance
P|ant and Maoh|nery 0.02 0.20
Bu||d|ngs - 0.18
Others - 0.02 0.29 0.67
lnsuranoe 0.02 0.28
Commun|oat|on Expenses 0.04 0.20
Pr|nt|ng and Stat|onery - 0.08
Trave|||ng Expenses - 1.38
Advert|sement and Pub||o|ty - 0.08
Peoru|tment and Tra|n|ng Expenses - 0.01
veh|o|e H|re and Punn|ng Expenses 0.02 0.96
lnterest and F|nanoe Charges - 19.35
Survey Expenses - 0.12
Consu|tanoy Charges - 0.03
Other Expenses 0.09 1.54
Depreo|at|on 0.11 2.92
0.93 35.44
|ess .
- lnterest lnoome - 2.39
- M|so. lnoome - - 0.25 2.64
Net Expend|ture 0.93 32.80
|ess .Transferred to Cap|ta| Work-|n-progress
a) Mfg., Transm|ss|on, Admn., Se|||ng & D|str|but|on and Other Expenses 0.93 16.09
b) lnterest & f|nanoe Charges - 19.35
o) Other lnoome - 0.93 2.64) 32.80
Balance Carried over to Balance Sheet NIL Nl|
Schedule 13 - Prior Period Adjustments
Ps. |n Crores)
YEAR ENDED YEAP ENDED
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Purohase of Gas - 24.77)
Sa|ar|es, Wages and A||owanoes (0.12) 0.14
Power, Fue| and Water Charges 0.66 0.96)
Stores and Spares oonsumed 0.03 1.98)
Pent (0.69) 2.22
Depreo|at|onNet) (1.65) 0.55
Pepa|rs and Ma|ntenanoe 0.21 1.15
veh|o|e h|re and Punn|ng Expenses - 0.04
lnterest - 0.17
Consu|tanoy Charges 0.71 -
Data Prooess|ng - 0.03)
Other Expenses 0.92 0.68
TOTAL 0.07 22.79)
|ess .
- Sa|es (0.03) 20.11)
- lnterest lnoome (0.14) 0.06)
- M|soe||aneous lnoome (0.64) (0.81) 0.03) 20.20)
TOTAL (NET) 0.88 2.59)
Schedule 12 - Interest and Finance Charges
Ps. |n Crores)
YEAR ENDED YEAP ENDED
31
ST
MARCH, 2005 31
ST
MAPCH, 2004
Interest on Term Loans
Fore|gn Currenoy |oans 0.73 61.30
Other |oans 133.14 133.87 80.28 141.58
Comm|tment and other F|nanoe Charges 0.22 15.74
TOTAL 134.09 157.32
73
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Schedule 14 - Notes on Accounts
1. Est|mated amount of Contraots rema|n|ng to be exeouted on Cap|ta| Aooount and not prov|ded for .
|) For Jo|nt ventures. N|| Prev|ous Year. N||).
||) Share |n Cap|ta| Comm|tment of Jo|nt ventures based on the|r aud|ted/unaud|ted statement of aooounts. Ps. 92.08
Crores Prev|ous Year. Ps. 106.93 Crores).
|||) Company's own unexeouted oap|ta| oomm|tment. Ps. 265.60 Crores Prev|ous Year. Ps. 167.54 Crores).
2. Cont|ngent ||ab|||t|es .
l. C|a|ms aga|nst the Company not aoknow|edged as debts. Ps. 9225.29 Crores Prev|ous Year. Ps. 8058.93 Crores),
wh|oh ma|n|y |no|ude.
a) C|a|ms of ONGC| for Ps. 248.46 Crores Prev|ous Year. Ps. 375.84 Crores) on aooount of |nterest for de|ayed
payment and MGO eto. Out of these MGO o|a|ms of Ps. 49.23 Crores Prev|ous Year. Ps. 56.08 Crores) are
reooverab|e on baok-to-baok bas|s.
b) lnoome Tax demand of Ps.1,026.81 Crores Prev|ous year. Ps. 915.58 Crores re|at|ng to the assessment years
1996-97 to 2001-02) re|at|ng to assessment years 1996-97 to 2002-03. The lnoome tax assessment of the
oompany has been oomp|eted up to the assessment year 2002-03. Aga|nst the tota| demand, the oompany has
pa|d/adjusted Ps. 1024.52 orores Prev|ous Year. Ps. 915.13 Crores) under protest. Based upon the deo|s|on of
the appe||ate author|t|es and the |nterpretat|on of the prov|s|ons of the lnoome Tax Aot, the oompany has been
|ega||y adv|sed that the demand |s ||ke|y to be e|ther de|eted or |t may be substant|a||y reduoed. The oompany
has f||ed an appea| aga|nst the demand for the assessment years 1996-97 to 1999-2000 w|th lTAT. Aga|nst the
demands for assessment year 2000-01 to 2002-03 appea|s of the Company are pend|ng before Comm|ss|oner
of lnoome Tax Appea|s).
o) Sa|es Tax demand of Ps. 3,449.18 Crores Prev|ous Year. Ps. 2,349.60 Crores) and |nterest thereon Ps. 1,513.04
Crores Prev|ous Year. Ps. 995.24 Crores) for Haz|ra un|t |n Gujarat State. Sa|es Tax Author|t|es, Ahmedabad
have treated the transfer of Natura| Gas by the oompany from the state of Gujarat to other states dur|ng the
per|od Apr||, 1994 to Maroh, 2001 as |nter-state sa|es under Seot|on 3a) of the Centra| Sa|es Tax Aot. The
oompany has been pay|ng sa|es tax under seot|on 12 of the Gujarat Sa|es Tax Aot aga|nst Form 17 s|noe
|noept|on 1987) and aooord|ng|y the sa|es tax assessments have been oomp|eted. Based on the |nterpretat|on
of the prov|s|ons of the Sa|es Tax Aot and |ega| adv|oe from the experts, the oompany had f||ed wr|t pet|t|on and
speo|a| |eave pet|t|on |n the Supreme Court of lnd|a. ln February, 2005 the oase was transferred by Hon'b|e
Supreme Court to Gujarat Sa|es Tax Tr|buna| for deo|s|on. The Tr|buna| has g|ven |ts judgment on 16.05.2005
aooept|ng the oontent|on of the oompany for |nterstate transportat|on of Natura| Gas as branoh transfer and not
the |nterstate sa|e and set as|de the demand under seot|on 41-B of the Gujarat Sa|es Tax Aot. The Hon'b|e
Tr|buna| has g|ven further |nstruot|on to the Assess|ng Author|ty to assess Company and deo|de tax ||ab|||ty |n
aooordanoe w|th the |aw for the per|od 1998-99 to 2000-01 oons|der|ng |nterstate transfer of natura| gas as
branoh transfer.
d) Comm|ss|oner of Customs, Ahmedabad has |ssued show oause not|oes where |n a sum of Ps 581.22 Crores
Prev|ous year. Ps. 581.22 Crores) for the per|od 22.06.97 to 10.02.2002 has been demanded, by treat|ng GAl|
as |mporter under Seot|on 226) of the Customs Aot, 1962 on aooount of purohase of gas from Tapt| and Panna-
Mukta f|e|ds from Jo|nt venture of Br|t|sh Gas Exp|orat|on and Produot|on l) ||m|ted, Pl| and ONGC| JvCs).
The Company |s of the v|ew that as |t |s purohas|ng gas from JvCs at Haz|ra at the downstream f|ange of
ONGC|'s gas prooess|ng fao|||t|es a|ong w|th other natura| gas oom|ng from South Bas|n, |t |s not ||ab|e to
Customs Duty. The rep||es to Show oause not|oe have a|ready been sent to the Comm|ss|oner of Customs |n
oonsu|tat|on w|th the Consu|tants on 14.06.2002. No further response has been reoe|ved.
e) Customs duty demand of Ps. 305.53 Crores Prev|ous year. Ps 305.53 Crores). Custom Author|t|es, Mumba|
have ra|sed d|fferent|a| duty demand aga|nst Projeot lmports for Pata P|ant on aooount of non-subm|ss|on of
reoono|||at|on statement as requ|red under Projeot lmport Pegu|at|ons, 1986. An appea| was f||ed before CESTAT
on the ground that demand |s premature as the |ast oons|gnment |s yet to be reoe|ved and as per the Projeot
lmport Pegu|at|ons, the reoono|||at|on statement has to be subm|tted w|th|n three months from the date of
o|earanoe of |ast oons|gnment of goods. CESTAT has remanded the matter to DC Customs) for readjud|oat|on.
75
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f) Exo|se duty demand of Ps. 123.63 Crores Prev|ous year. Ps. 1491.54 Crores). Exo|se Author|t|es have ra|sed
demands at v|ja|pur, Usar and vaghod|a by treat|ng |ean gas as gaseous hydrooarbon and deny|ng exempt|on
ava||ab|e to |ean gas, wh|oh has a|| a|ong been treated as an exempted produot. The Company has obta|ned
favourab|e orders aga|nst past demands. However, one oase |s pend|ng at CESTAT.
ll. Bonds exeouted, |etters of Cred|t and Guarantees/Counter Guarantees. Ps. 13.40 Crores Prev|ous Year.
Ps. 109.46 Crores).
lll. The Company a|ong w|th three other promoters has |ssued Corporate Guarantees |n favour of banks and f|nano|a|
|nst|tut|ons for short term |oan taken by Petronet |NG ||m|ted from suoh banks and f|nano|a| |nst|tut|ons. The
Company share |n the Guarantee |s Ps. 350 Crores Prev|ous year. Ps. 350 Crores), be|ng one fourth share of
tota| guarantees of Ps. 1,400 Crores Prev|ous year. Ps. 1,400 Crores) |ssued as on 31.03.2005. The short term
|oan outstand|ng |n the books of Petronet |NG ||m|ted as on 31
st
Maroh, 2005 |s Ps. 1,259.89 Crores Prev|ous
year. Ps. 1,024.04 Crores).
lv. Share |n Cont|ngent ||ab|||t|es of Jo|nt ventures based on the|r aud|ted / unaud|ted statement of aooounts.
Ps. 83.03 Crores Prev|ous Year. Ps. 57.19 Crores).
3. a) Freeho|d |and aoqu|red for Jhans| Ma|ntenanoe Base and Seot|ona||s|ng va|ves |n Jamnagar - |on| P|pe||ne
Ps. 0.93 Crores Prev|ous Year. Ps. 1.05 Crores) and |easeho|d |and aoqu|red for |akwa projeot Ps. 7.82
Crores Prev|ous Year. Ps. 7.84 Crores) are va|ued / oap|ta||zed on prov|s|ona| bas|s.
b) T|t|e deeds for freeho|d |and, va|u|ng Ps. 1.52 Crores Prev|ous Year. Ps. 2.16 Crores) and |easeho|d |and va|u|ng
Ps. 26.76 Crores Prev|ous year. Ps. 26.63 Crores) are pend|ng exeout|on.
o) T|t|e Deeds |n respeot of ten res|dent|a| f|ats at As|ad v|||age, New De|h|, va|u|ng Ps. 1.17 Crores Prev|ous Year.
Ps. 1.17 Crores) are st||| |n the name of ONGC|. Conoerned author|t|es are be|ng pursued for gett|ng the same
transferred |n the name of the Company.
d) The oost of r|ght of use POU) amount|ng to Ps. 17.38 Crores as on 31.03.2005 Prev|ous year Ps. 17.42 Crores)
has been oap|t|||sed as |ntang|b|e asset. The Company has perpetua| P|ght of Use but has no ownersh|p of |and.
4. a) ||ab|||ty under Gas Poo| Aooount |no|udes gas poo| money for January-Maroh 2005 quarter amount|ng to
Ps. 61.64 Crores Prev|ous Year. Ps. 62.16 Crores) wh|oh sha|| beoome due for depos|t |n suooeed|ng quarter.
b) Depos|t |n Gas Poo| Money Aooount |s exo|us|ve of o|a|m amount|ng to Ps. 94.63 Crores Prev|ous Year.
Ps. 94.63 Crores) for oompensat|on for h|gher oost of gas purohased from Jv Compan|es from Pavva and Tapt|
f|e|ds from Apr||,1997 to September, 1997. MOP&NG v|de |ts |etter No |-12015/1/94-GP vlll) dated 04.07.1997
stated that GAl| w||| not be put to any |oss on aooount of oompensat|on towards h|gher pr|oe of Jv gas.
Aooord|ng|y, Gas Poo| money was transferred to separate bank aooount after reta|n|ng Ps. 94.63 orores wh|oh
|s be|ng oommun|oated to MOP&NG regu|ar|y. Aooord|ng|y, no |nterest ||ab|||ty has been prov|ded.
o) Purohase of gas |no|udes Ps 250 Crores Prev|ous year. Ps. 250 Crores) on aooount of Gas Poo| Aooount.
d) ||ab|||t|es on aooount of Gas Poo| Money amount|ng to Ps. 723.18 Crores Prev|ous year. Ps. 534.51 Crores)
and 10% retent|on from Jv oonsort|um amount|ng to Ps. 359.63 Crores Prev|ous year. Ps. 282.45 Crores)
|no|udes |nterest net of TDS) amount|ng to Ps. 32.30 Crores Prev|ous year. Ps. 25.15 Crores) on Short term
depos|ts for the year. Th|s |nterest |noome does not be|ong to the oompany henoe not aooounted as |noome.
5. Cost of F|xed Assets |no|ud|ng oap|ta| work |n progress) has been deoreased by an amount of Ps. 0.74 Crores Prev|ous
Year. Ps. 38.97 Crores) due to exohange rate var|at|on. An amount of Ps. 0.07 Crores Prev|ous Year. Ps. 0.87 Crores)
has been ored|ted to Prof|t & |oss aooount due to exohange rate var|at|on.
6. MOP&NG had |ssued soheme for meohan|sm of shar|ng the under reoover|es of O|| market|ng Compan|es on aooount of
non-rev|s|on |n se|||ng pr|oe of PDS Kerosene and domest|o |PG. Dur|ng the year, the Company has g|ven d|soounts to
O|| market|ng Compan|es amount|ng to Ps. 1,137 Crores Prev|ous Year. Ps. 428 Crores) on d|spatohes to them for
shar|ng subs|d|es.
7. a) Pr|oes of Natura| gas for the per|od Apr|| 1, 2000 to Maroh 31, 2005 |s under rev|ew by MOP&NG. Pend|ng f|na||sat|on
of suoh pr|oes, payments/aoorua|s of purohase of gas are be|ng made based on the rate speo|f|ed |n the MOP&NG
|etter dated September 18, 1997. Add|t|ona| ||ab|||ty or |ts effeot on prof|ts |f any, ar|s|ng out of the aforesa|d rev|s|on
w||| be reoogn|zed when the pr|oes are f|na||zed. However, the management does not expeot the pr|oe |norease to be
retrospeot|ve.
b) The Company |s ra|s|ng prov|s|ona| |nvo|oes for sa|e of P-|NG as the supp||er P|| |s a|so ra|s|ng prov|s|ona| |nvo|oes
on the Company s|noe oustoms duty on |mport of |NG by P|| has been assessed on prov|s|ona| bas|s.
8. W|th effeot from Apr|| 1, 2002, ||quef|ed Petro|eum Gas pr|oes has been deregu|ated and |s now based on the |mport
par|ty pr|oes f|xed by the O|| Compan|es. However, the pr|o|ng meohan|sm |s prov|s|ona| and |s pend|ng f|na||sat|on.
Add|t|ona| asset/||ab|||ty or |mpaot on prof|ts, |f any, ar|s|ng due to suoh ohange, w||| be reoogn|zed on f|na||zat|on of
pr|o|ng meohan|sm.
9. ln oomp||anoe of Aooount|ng Standard 17 on "Segment Peport|ng" |ssued by lnst|tute of Chartered Aooountants of
lnd|a, the requ|red |nformat|on |s g|ven as per Annexure - A to th|s sohedu|e. The Company has adopted Bus|ness
segments as |ts reportab|e segment. Upto prev|ous year, the bus|ness segments has been |dent|f|ed as Gas Prooess|ng
& Sa|es, |PG Transm|ss|on and Te|eoom.
Dur|ng the year, the bus|ness segments have been reo|ass|f|ed as
|) Transm|ss|on Serv|oes
a) Natura| Gas
b) |PG
||) Natura| Gas Trad|ng
|||) Petroohem|oa|s
|v) |PG and other ||qu|d Hydrooarbons
v) GAl|TE|
v|) Una||ooated
Assets of GAl|TE| segment has been rat|ona||zed dur|ng the f|nano|a| year 2004-05. Th|s has resu|ted |n deorease of
depreo|at|on by Ps. 20.83 Crores under GAl|TE| segment. There are no geograph|oa| segments.
10. ln oomp||anoe of Aooount|ng Standard 18 on "Pe|ated party D|so|osures" |ssued by lnst|tute of Chartered Aooountants
of lnd|a, the name of re|ated part|es, nature of re|at|onsh|p and deta||s of transaot|on entered therew|th are g|ven |n
Annexure - B.
11. ln oomp||anoe of Aooount|ng Standard 22 on "Aooount|ng for taxes on lnoome" |ssued by lnst|tute of Chartered
Aooountants of lnd|a, the Company has prov|ded aooumu|ated net deferred tax ||ab|||ty |n respeot of t|m|ng d|fferenoe as
on 31
st
Maroh, 2005 amount|ng to Ps. 1,255.23 Crores Prev|ous year. Ps. 1,227.58 Crores). Net Deferred tax expense
for the year of Ps. 27.65 orores Prev|ous year. Ps. 107.83 Crores) has been oharged to Prof|t & |oss Aooount. The |tem-
w|se deta||s of deferred tax ||ab|||ty are as under.
Ps. |n Crores)
As on 31
st
March, 2005 As on 31
st
Maroh, 2004
Deferred tax ||ab|||ty.
a) Depreo|at|on 1,375.16 1,298.16
|ess. Deferred Tax Assets.
a) Prov|s|on for Gratu|ty and Pet|rement Benef|ts 15.93 13.93
b) Prov|s|on for Doubtfu| Debts/C|a|ms/Advanoes 60.65 56.65
o) Others 43.35 -
Deferred tax ||ab|||ty net) 1,255.23 1,227.58
77
21
st
Annual Report
We Stand for Pe||ab|||ty
12. ln Comp||anoe of Aooount|ng Standard 27 on "F|nano|a| Peport|ng of lnterests |n Jo|nt ventures" |ssued by lnst|tute of
Chartered Aooountants of lnd|a, br|ef desor|pt|on of Jo|nt ventures of the Company are.
(a). Mahanagar Gas Limited: A Jo|nt venture w|th Br|t|sh Gas P|o. to supp|y gas to domest|o, oommero|a| and sma||
|ndustr|a| oonsumers and CNG for transport seotor |n Mumba|. The Company has |nvested Ps. 44.45 Crores for
aoqu|r|ng 444,49,960 equ|ty shares of Ps. 10 eaoh of the Company, present|y be|ng 49.75% of the pa|d up oap|ta|.
(b). Indraprastha Gas Limited: A Jo|nt venture w|th BPC| and Government of Nat|ona| Cap|ta| terr|tory NCT) of De|h|
to supp|y gas to domest|o, oommero|a| un|ts and CNG for transport seotor |n De|h|. The Company has |nvested
Ps. 31.50 Crores for aoqu|r|ng 315,00, 000 equ|ty shares of Ps. 10 eaoh of the Company, present|y be|ng 22.50% of
the pa|d up oap|ta|.
(c). Petronet LNG Limited: A Jo|nt venture w|th BPC|, lOC| and ONGC| for sett|ng up |NG |mports fao||t|es. The
Company has |nvested Ps. 98.75 Crores for aoqu|r|ng 937,50,000 equ|ty shares of Ps. 10 eaoh of the Company,
present|y be|ng 12.50% of the pa|d up oap|ta|. The sa|e of 5 m||||on tonnes per annum of |NG wh|oh wou|d be
|mported by P|| over a per|od of 25 years under Sa|e and Purohase agreement w|th PasGas, has been fu||y t|ed up
through Gas Sa|es and Purohase Agreement w|th three off takers GAl| lnd|a) ||m|ted, lOC| and BPC|.
(d). Bhagyanagar Gas Limited: A Jo|nt venture Company w|th HPC| for d|str|but|on and market|ng of CNG, Auto |PG,
Natura| Gas and other gaseous fue|s |n Andhra Pradesh. The Company has been a||otted 12,497 equ|ty shares of
Ps. 10 eaoh eaoh of the Company, present|y be|ng 22.50% of the pa|d up oap|ta|. The Company has further pa|d
Ps. 4.98 Crores as advanoe aga|nst a||otment of equ|ty shares.
(e). Tripura Natural Gas Company Limited: A Jo|nt venture Company w|th Assam Gas Company ||m|ted and Tr|pura
lndustr|a| Deve|opment Corporat|on for transportat|on and d|str|but|on of natura| gas through p|pe||nes |n Tr|pura.
The Company has pa|d Ps. 0.83 Crores as advanoe aga|nst a||otment of equ|ty shares.
(f). Central UP Gas Limited: A Jo|nt venture Company w|th BPC| for C|ty gas d|str|but|on |n Kanpur, Uttar Pradesh.
The Company has pa|d Ps. 0.03 Crores as an advanoe aga|nst a||otment of equ|ty shares.
The Company share of assets and ||ab|||t|es as at 31
st
Maroh, 2005 and the lnoome and expend|ture for the year |n
respeot of above Jo|nt ventures based on aud|ted / unaud|ted statements of aooounts as furn|shed by them |s as
fo||ows.
Ps. |n Crores)
200405 2003-04
A. Assets
|ong Term Assets 563.80 276.28
Current Assets 179.81 153.48
B. Current ||ab|||t|es & Prov|s|ons 173.15 122.05
C. lnoome 539.09 242.98
D. Expend|ture 425.65 149.14
E. Cont|ngent ||ab|||ty 83.03 57.19
13. The Company has part|o|pated |n jo|nt b|dd|ng under the Government of lnd|a New Exp|orat|on ||oens|ng Po||oy and had
been a||otted 10 B|ooks for wh|oh the Company has entered |nto Produot|on Shar|ng Contraot w|th Government of lnd|a
a|ong w|th other partners for Exp|orat|on & Produot|on of O|| and Gas. As per the Produot|on Shar|ng Contraot, the
Company has a m|n|mum work program oomm|tment of Ps. 137.18 Crores Prev|ous Year. Ps. 138.63 Crores). The
Company |s aot|ng as non-operator and wou|d have to share |n Expense/lnoome/Assets/||ab|||t|es based upon |ts
peroentage |n produot|on shar|ng oontraot. Dur|ng the year, part|o|pat|ng |nterest of 15% |n B|ook KK-DWN-2000/2 has
been re||nqu|shed to Government of lnd|a. The part|o|pat|ng |nterest |n the fo||ow|ng n|ne NE|P - B|ooks as on 31
st
Maroh, 2005 |s as under.
Joint Venture under NELP Blocks Participating Interest
1) MN-OSN-97/3 15%
2) NEC-OSN-97/1 50%
3) MN-OSN-2000/2 20%
4) GS-DWN-2000/2 15%
5) MB-DWN-2000/2 15%
6) CB-ONN-2000/1 40%
7) MN-ONN-2000/1 20%
8) CY-ONN-2002/1 50%
9) AA-ONN-2002/1 80%
ln add|t|on, the Company has farm-|n as non - operator w|th m|n|mum work program oomm|tment of Ps. 11.24 Crores
Prev|ous Year. 11.30 Crores) |n the fo||ow|ng b|ooks.
Blocks Participating Interest
1) A-1, Myanmar 10%
2) CY-OS/2 25%
The Company's share of assets and ||ab|||t|es as at 31
st
Maroh 2005 and the lnoome and the expend|ture for the year |n
respeot of jo|nt operat|ons projeot b|ooks has been |noorporated |n the Company f|nano|a| statements based upon
unaud|ted statement of aooounts subm|tted by the operators as fo||ows.
Ps. |n Crore)
2004-05 2003-04
lnoome - -
Expenses 37.79 14.29
F|xed Assets 1.05 0.36
Other Assets 45.25 21.14
Current ||ab|||t|es 33.53 16.51
14. ln oomp||anoe w|th amended C|ause 32 of the ||st|ng Agreement w|th Stook Exohanges, the requ|red |nformat|on are
g|ven |n Annexure - C.
15. Due to ohange |n Aooount|ng po||oy.
a) Dur|ng the year, the oompany has ohanged |ts aooount|ng po||oy of d|so|osure of P|ght of Use POU) under tang|b|e
assets to |ntang|b|e assets |n oomp||anoe to Aooount|ng Standard 26 on lntang|b|e Assets. Due to th|s, |ntang|b|e
assets have |noreased by Ps. 17.38 Crores w|th oonsequent deorease |n tang|b|e assets. Th|s ohange has no |mpaot
on Prof|t & |oss Aooount for the year.
b) Dur|ng the year, the oompany has ohanged |ts aooount|ng po||oy of oharg|ng off we||s |n progress the status of wh|oh
rema|ns undeo|ded for more than f|ve years to Prof|t and |oss aooount to oharg|ng off we||s |n progress the status of
wh|oh rema|ns undeo|ded for more than two years to Prof|t and |oss Aooount. Th|s ohange has no |mpaot on Prof|t
& |oss Aooount for the year.
o) Dur|ng the year, the oompany has ohanged |ts aooount|ng po||oy for prov|s|on for gratu|ty on the bas|s of aotuar|a|
va|uat|on at the end of f|nano|a| year to prov|d|ng ||ab|||ty towards Gratu|ty by payment to a fund ma|nta|ned by the
oompany and adm|n|stered through a separate trust set up by the oompany. D|fferenoe between the fund ba|anoe
w|th the trust and the aoorued ||ab|||ty as at the end of the year as per aotuar|a| va|uat|on |s oharged to Prof|t and
|oss Aooount. Th|s ohange has no |mpaot on Prof|t & |oss Aooount for the year.
79
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16. An amount of Ps. 4.95 Crores Prev|ous Year. Ps. 9.22 Crores) has been o|a|med on aooount of the adjustment for
CENvAT |n respeot of GAl|TE|, Pata, |PG P|ants at Usar, v|ja|pur, vaghod|a, Gandhar and |akwa. Suoh o|a|ms are
adjustab|e out of exo|se duty/serv|oe tax payab|e on goods and serv|oes.
17. No amount Prev|ous Year. N||) |s outstand|ng for more than 30 days |n respeot of SSl un|ts as on 31.03.2005.
18. a) The pr|oe of Gas purohased from Jo|nt venture Consort|um JvC) lnd|an and Fore|gn Partners) from Pavva / Pavva
Sate|||te, Tapt| and Panna-Mukta f|e|ds are denom|nated |n USD per MMBTU. The ||ab|||ty |n USD has been oonverted
at B|||s Buy|ng rate, TT se|||ng rate and TT buy|ng rate, preva|||ng as on 31.03.2005 or on the date of payment, as the
oase may be.
b) lmports have been aooounted for at the exohange rate preva|ent as on the date of ret|rement of doouments be|ng
the date of transaot|on.
19. Fo||ow|ng Government of lnd|a's approva|, the shareho|ders of the Company |n the Annua| Genera| Meet|ng he|d on 15
th
September, 1997 approved the transfer of a|| the assets |no|ud|ng P|ant and Maoh|nery, aooessor|es and other re|ated
assets wh|oh are part of |akwa Projeot va|ued at Ps. 246.91 Crores as on 31.03.2005 Prev|ous Year. Ps. 246.92
Crores) to Assam Gas Craoker Comp|ex at a pr|oe to be determ|ned by an |ndependent Agenoy and on terms and
st|pu|at|ons as the Board may |n |ts d|soret|on deem f|t. However, Assam Gas Craoker Comp|ex has not oome up as per
p|an and |PG |akwa Projeot has not been transferred to |t. Therefore, a fresh proposa| has been put up to Govt of lnd|a
to estab||sh Assam Gas Craoker projeot by GAl| and |PG |akwa Projeot w||| be part of that Assam Gas Craoker projeot.
20. Pend|ng |ssue of su|tab|e not|f|oat|on by the Government of lnd|a speo|fy|ng the per|od and app||oab|e rate at wh|oh oess
on turnover |s payab|e under seot|on 441A of Compan|es Aot, 1956 the Company has not prov|ded for the same.
21. Depos|ts made w|th the oonoerned author|t|es for ra||way oross|ngs, forest oross|ngs, remova| and |ay|ng of e|eotr|o/
te|ephone po|es and ||nes have been aooounted for under Cap|ta| Work-|n-Progress on the bas|s of work done/
oonf|rmat|on from the oonoerned department.
22. Ba|anoes grouped under Mater|a| w|th Contraotors, Sundry Debtors, |oans and Advanoes, Depos|ts and Sundry Cred|tors,
eto. are subjeot to oonf|rmat|on.
23. a) The Company has |nourred an expend|ture of Ps.7.26 orores on aooount of C|ty gas projeots wh|oh |s aooounted
under oap|ta| Work |n progress. Th|s amount wou|d be reooverab|e from the proposed Jo|nt ventures to be formed
for o|ty gas d|str|but|on projeots |n lnd|a.
b) The va|ue of p|pe||nes and re|ated fao|||t|es taken over |n Southern and North-eastern reg|on |n February 1992 and
Western Peg|on |n May 1992 |s prov|s|ona|, based on |nt|mat|on from ONGC|. Adjustments, |f any, for taxes, dut|es,
POU and other o|a|ms wou|d be made as and when asoerta|ned. Depreo|at|on on the assets taken over from ONGC|
has been prov|ded for as per the aooount|ng po||oy of the Company on the transfer va|ue of suoh assets. Pend|ng
|nsta||at|on of oustody transfer meters, the purohase of Gas |s aooounted for on the bas|s of meter|ng done at the
oonsumer's end.
24. The Prof|t & |oss Aooount |no|udes.-
a) Expend|ture on Pub||o Pe|at|ons amount|ng to Ps. 23.62 Crores Prev|ous Year. Ps. 26.65 Crores). The rat|o of
annua| expend|ture on Pub||o Pe|at|ons and Pub||o|ty to the annua| turnover |s 0.002.1 Prev|ous Year. 0.002.1).
b) Pesearoh and Deve|opment Expenses Ps. 0.40 Crores Prev|ous Year. Ps. 0.34 Crores).
o) Enterta|nment Expenses Ps. 0.22 Crores Prev|ous Year. Ps. 0.18 Crores).
25. Prev|ous year's oomparat|ve f|gures have been regrouped and reoast to the extent praot|oab|e, wherever neoessary.
F|gures |n braokets |nd|oate deduot|ons.
26. Information required as per Schedule VI of the companies Act, 1956
I. Quantitative Information
Ps. |n Crores)
OPENING STOCK PURCHASES@ SALES@ INTERNAL CLOSING STOCK
CONSUMPTION
QTY VALUE QTY VALUE QTY VALUE QTY VALUE QTY VALUE
Natural Gas including
RLNG (MMSCM) *
Year Ended 31.03.2005 91.58 47.30 25,895.79 7,828.35 22,835.45 8,878.80 2,021.99 1,167.87 115.21 57.31
Year Ended 31.03.2004 67.54 17.88 23,030.49 6,626.40 21,012.55 7,450.63 1,988.67 1,118.25 91.58 47.30
LPG (M/T)
Year Ended 31.03.2005 8,167.58 7.04 - - 10,89,066.16 1,093.55 - - 14,007.67 8.65
Year Ended 31.03.2004 8,086.31 6.92 - - 10,88,675.54 1,774.49 - - 8,167.58 7.04
Pentane (M/T)
Year Ended 31.03.2005 317.60 0.44 - - 57,177.88 129.50 - - 676.26 0.88
Year Ended 31.03.2004 502.82 0.40 - - 52,038.03 87.01 - - 317.60 0.44
Propane (M/T)
Year Ended 31.03.2005 855.49 0.83 - - 1,80,159.12 453.86 - - 2,572.05 2.64
Year Ended 31.03.2004 4,582.25 4.49 - - 1,60,909.62 321.84 - - 855.49 0.83
SBP Solvent (M/T)
Year Ended 31.03.2005 453.41 0.70 - - 58,854.09 158.95 - - 493.20 0.86
Year Ended 31.03.2004 552.88 0.68 - - 65,478.12 126.34 - - 453.41 0.70
Polymers (M/T)
Year Ended 31.03.2005 24,671.32 65.05 4,362.90 24.88 3,18,613.91 1,774.17 459.73 0.31 8,747.93 22.73
Year Ended 31.03.2004 20,028.76 48.06 14,475.48 77.18 2,65,475.85 1,179.36 8,067.97 0.44 24,671.32 65.05
C2/C3 (M/T)
Year Ended 31.03.2005 1,648.00 1.09 - - - - - - 3,811.69 2.44
Year Ended 31.03.2004 3,955.00 2.55 - - - - - - 1,648.00 1.09
Ethylene (M/T)
Year Ended 31.03.2005 1,910.00 2.35 - - - - - - 991.01 1.09
Year Ended 31.03.2004 7,483.00 7.94 - - - - - - 1,910.00 2.35
Butene-1 (M/T)
Year Ended 31.03.2005 133.00 0.37 - - 205.87 1.19 - - 307.86 0.70
Year Ended 31.03.2004 475.00 0.92 - - 1,346.14 6.40 - - 133.00 0.37
Other Products (M/T)
Year Ended 31.03.2005 5,618.19 6.28 - - 28,444.45 62.14 7,379.00 10.66 6,463.11 7.29
Year Ended 31.03.2004 2,581.03 3.00 - - 20,168.58 64.94 - - 5,618.19 6.28
Note. |) D|fferenoe |n reoono|||at|on of open|ng stook,purohases,sa|es and o|os|ng stook of Gas Quant|ty |s on aooount of measurement to|eranoe.
||) Ps. 54.38 CroresPrev|ous Year. 52.40 Crores) has been deduoted at Souroe u/s 194C of the lnoome Tax Aot from the Gas sa|es
|nvo|oes ra|sed dur|ng the year.
|||) lnterna| oonsumpt|on of Po|ymes |no|uded 294.40 MT for manufaoture of Other Produots.
|v) @Exo|ud|ng Pr|or Per|od adjustments.
* lno|udes gas after prooess|ng.
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We Stand for Pe||ab|||ty
(Rs. in Crores)
2004-05 2003-04
II. CIF Value of Imports
l) Cap|ta| Goods 38.18 86.63
||) Spare Parts & Components 58.63 121.16
|||) Paw mater|a|s Po|ymers) 1.16 -
III. a) Expenditure in Foreign Currency
l) lnterest/Comm|tment Charges 0.81 60.94
||) Teohn|oa|/Consu|tanoy/||oense Fee/Eng|neer|ng 21.41 15.62
|||) Others 836.79 1641.53
b) Earnings in Foreign Currency
l) Sa|es 76.95 19.03
||) Others lno|ud|ng Tender fee) 1.92 2.68
IV. Remuneration paid/payable to whole time Directors including
Chairman & Managing Director:
Sa|ar|es & A||owanoes 0.49 0.54
Contr|but|on to Prov|dent, Gratu|ty and Other Funds 0.16 0.15
Other Benef|ts and Perqu|s|tes 0.08 0.03
0.73 0.72
ln add|t|on to above remunerat|on, Who|e t|me D|reotors are a||owed the use of Staff oars |no|ud|ng for pr|vate journeys upto a oe|||ng
of 1000 Kms. per month on payment |n aooordanoe w|th the Bureau of Pub||o Enterpr|ses C|rou|ar.
V. Licensed Capacity, Installed Capacity and Actual Production
CURRENT YEAR PPEvlOUS YEAP
2004-05 2003-04
Licensed Installed Gas Production ||oensed lnsta||ed Gas Produot|on
Capacity Capacity Throughput Capao|ty Capao|ty Throughput
l) Natura| Gas |no|ud|ng
P|NG MMSCMD)
a) HvJ 33.40 33.40 31.75 - 33.40 33.40 32.23 -
b) Others - - 36.35 - - - 30.61 -
o) P|NG Sh|pper - - 3.46 - - - - -
||) |PG M /T) 11,68,844 11,68,844 - 10,94,835.00 11,68,844 11,68,844 - 10,88,686.04
|||) Propane M/T) 2,01,085 2,01,085 - 1,81,863.47 2,01,085 2,01,085 - 1,57,303.26
|v) Ethy|ene M/T) 3,00,000 3,00,000 - 3,19,289.86 3,00,000 3,00,000 - 2,75,610.00
v) HDPE/||DPE M/T) 3,10,000 3,10,000 - 2,98,787.35 2,60,000 2,60,000 - 2,63,719.91
Notes. 1. Produot|on of Pentane 57,524.74 MTs Prev|ous year . 51,872.15 MTs). SBP So|vent 58,875.59 MTs Prev|ous Year. 65,298.28
MTs).
2. ||oensed and lnsta||ed Capao|ty of C2/C3 4,00,000 MTsPrev|ous Year. 4,00,000 MTs) and aotua| Produot|on 4,26,994.01
MTs Prev|ous Year. 3,66,418.50 MTs).
3. ||oensed and lnsta||ed Capao|ty of Butene-1 10,000 MTs Prev|ous Year . 10,000 MTs) and aotua| Produot|on 7,989.27 MTs
Prev|ous Year. 7,036.42 MTs).
VI. Value of Raw Materials, Stores/Spares and Components consumed during the year.
CURRENT YEAR PREVIOUS YEAR
2004-05 2003-04
Qty. Rs. in crores % Qty. Ps |n orores %
i) Raw Material Consumed:
a) Gas (MMSCM)
- lnd|geneous 1150.72 888.49 100.00 1091.45 819.60 100.00
- lmported - - - - - -
b) Propylene (MT)
- lnd|geneous 147.60 0.43 100.00 - - -
- lmported - - - - - -
c) C4 Mix (MT)
- lnd|geneous 5170.77 10.23 100.00 - - -
- lmported - - - - - -
Sub total 6469.09 899.15 1091.45 819.60
ii) Stores, Spares Components
Consumed
- lnd|geneous - 71.05 48.90 - 75.83 43.34
- lmported - 74.26 51.10 - 99.13 56.66
Sub total 145.31 100.00 - 174.96 100.00
Total 1044.46 994.56
N. K. Nagpa| J.K.Ja|n B.S. Neg| Proshanto Banerjee As per our separate
Seoretary D|reotor F|nanoe) D|reotor BD) Cha|rman & Manag|ng D|reotor Peport of even date
For S MANN & COMPANY
P|aoe. New De|h| Subhash Mann
Dated. June 21, 2005 Partner)
Membersh|p No. 80500
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Information About Business Segments for Financial Year 2004-05
(Annexure - A)
Ps. |n Crores)
Sl. Segments Transmission Services Natural Gas Petro LPG & Liquid Gailtel Unallocated Consolidated
No. Trading Chemicals Hydrocarbons Total
Natural LPG
Gas
1. Revenue
Externa| Sa|es 1923.80 301.84 7130.16 1842.05 1837.48 18.42 222.37 13276.12
lntersegment sa|es - - - - - - - -
Total revenue 1923.80 301.84 7130.16 1842.05 1837.48 18.42 222.37 13276.12
2. Results
Segment Pesu|t
Prof|t before lnterest &Tax) 1193.54 89.54 210.80 804.24 609.00 1.07) 2906.05
Una||ooated expenses - - - - - - 165.91 165.91
Operat|ng Prof|t 1193.54 89.54 210.80 804.24 609.00 1.07) 165.91) 2740.14
lnterest Expenses - - - - - - 134.09 134.09
lnterest/ D|v|dend lnoome - - - - - - 265.34 265.34
Prov|s|on for Taxat|on - - - - - - 917.48 917.48
Prof|t/|oss) from Ord|nary
Aot|v|t|es 1193.54 89.54 210.80 804.24 609.00 1.07) 952.14) 1953.91
Extraord|nary |tems - - - - - - - -
Net Profit/(Loss) 1193.54 89.54 210.80 804.24 609.00 (1.07) (952.14) 1953.91
3 Other Information
Segment Assets 4626.47 1209.44 57.31 2120.58 1466.32 57.98 - 9538.10
Una||ooated Assets - - - - - - 4721.76 4721.76
Total Assets 4626.47 1209.44 57.31 2120.58 1466.32 57.98 4721.76 14259.86
Segment ||ab|||t|es 1891.95 38.73 16.49 96.36 123.98 26.48 - 2193.99
Una||ooated ||ab|||t|es - - - - - - 1280.16 1280.16
Total Liabilities 1891.95 38.73 16.49 96.36 123.98 26.48 1280.16 3474.15
Cost to aoqu|re
f|xed assets** 303.00 436.52 - 57.59 0.50 197.33) 46.37 646.65
Depreo|at|on* 560.44 140.41 - 136.80 95.08 7.67 6.25 946.65
Non Cash expenses
other than Depreo|at|on* 4.76 0.20) - 0.06 1.74 - 11.98 18.34
* Exo|ud|ng Pr|or per|od adjustments
** Assets of GAl|TE| has been rat|ona||sed dur|ng the year
Information About Business Segments for Financial Year 2003-04
(Annexure - A Contd.)
(Rs. in Crores)
Sl. Segments Transmission Services Natural Gas Petro LPG & Liquid Gailtel Unallocated Consolidated
No. Trading Chemicals Hydrocarbons Total
Natural LPG
Gas
1. Revenue
Externa| Sa|es 1726.17 266.65 5783.66 1265.31 2313.65 20.47 163.75 11539.66
lntersegment sa|es - - - - - - - -
Total revenue 1726.17 266.65 5783.66 1265.31 2313.65 20.47 163.75 11539.66
2. Results
Segment Pesu|t Prof|t
before lnterest &Tax) 1339.39 119.76 43.72 362.29 1048.58 8.79) - 2904.95
Una||ooated expenses - - - - - - 123.57 123.57
Operat|ng Prof|t 1339.39 119.76 43.72 362.29 1048.58 8.79) 123.57) 2781.38
lnterest Expenses - - - - - - 137.97 137.97
lnterest/D|v|dend lnoome - - - - - - 171.01 171.01
Prov|s|on for Taxat|on - - - - - 945.08 945.08
Prof|t/|oss) from
Ord|nary Aot|v|t|es 1339.39 119.76 43.72 362.29 1048.58 8.79) 1035.61) 1869.34
Extraord|nary |tems - - - - - - - -
Net Profit/(Loss) 1339.39 119.76 43.72 362.29 1048.58 (8.79) (1035.61) 1869.34
3. Other Informations
Segment Assets 4877.57 898.25 47.30 2216.47 1458.32 256.76 - 9754.67
Una||ooated Assets - - - - - - 2495.29 2495.29
Total Assets 4877.57 898.25 47.30 2216.47 1458.32 256.76 2495.29 12249.96
Segment ||ab|||t|es 1403.07 41.97 16.49 74.76 58.80 32.25 - 1627.34
Una||ooated ||ab|||t|es - - - - - - 1402.87 1402.87
Total Liabilities 1403.07 41.97 16.49 74.76 58.80 32.25 1402.87 3030.21
Cost to aoqu|re
f|xed assets 2269.63 96.90 - 6.95 13.32 150.63 6.37 2543.80
Depreo|at|on* 320.56 97.74 - 156.51 72.04 10.61 3.60 661.06
Non Cash expenses
other than Depreo|at|on* 3.46 - - 0.76) 2.34 - - 5.04
* Exo|ud|ng Pr|or per|od adjustments
85
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We Stand for Pe||ab|||ty
Related Party Disclosures
(Annexure - B)
I) Relationship
A) Joint Venture Companies:
1) Mahanagar Gas ||m|ted
2) lndraprastha Gas ||m|ted
3) Petronet |NG ||m|ted
4) Bhagyanagar Gas ||m|ted
5) Tr|pura Natura| Gas Corporat|on ||m|ted
6) Centra| UP Gas ||m|ted
B) Whole time Directors:
1) Shr| Proshanto Banerjee, Cha|rman and Manag|ng D|reotor
2) Shr| J. K. Ja|n
3) Shr| S. P. Pao
4) Shr| B.S. Neg|
5) Shr| M. P. H|ngn|kar
6) Dr U. D. Choubey
C) Unincorporated Joint venture for Exploration & Production Activities:
1) NEC - OSN - 97/1 Non-operator w|th part|o|pat|ng |nterest. 50%)
2) CB - ONN - 2000/1 Non-operator w|th part|o|pat|ng |nterest. 40%)
3) A-1, Myanmar Non-operator w|th part|o|pat|ng |nterest. 10%)
4) CY-OS/2 Non-operator w|th part|o|pat|ng |nterest. 25%)
5) AA-ONN-2002/1 Non-operator w|th part|o|pat|ng |nterest. 80%)
6) CY-ONN-2002/1 Non-operator w|th part|o|pat|ng |nterest. 50%)
II) The following transactions were carried out with the related parties in the ordinary course of business:
(Rs. in Crores)
A) Details relating to parties referred to in item no. I (A) above:
2004-05 2003-04
1) Sa|es 293.14 270.95
2) Amount reoe|vab|e as at Ba|anoe Sheet Date for 1) above 14.60 16.63
3) Purohases 1187.71 23.15
4) Amount payab|e as at Ba|anoe Sheet Date for 3) above 66.65 15.32
5) Pe|mbursement for other expend|ture reoe|ved/reoe|vab|e 1.23 3.52
6) Amount reoe|vab|e as at Ba|anoe Sheet Date for 5) above 1.17 3.71
B) Details relating to parties referred to in item no. I (B) above:
2004-05 2003-04
1) Pemunerat|on* 0.73 0.72
2) lnterest bear|ng outstand|ng |oans reoe|vab|e 0.14 0.06
3) lnterest aoorued on |oans g|ven 0.09 0.07
*Pemunerat | on | no| udes Bas| o, A| | owanoes, re| mbursement s, oont r| but | on t o PF and perqu| s| t es.
ln add|t|on, Who|e t|me D|reotors are a||owed the use of Staff oars |no|ud|ng for pr|vate journeys upto a oe|||ng of
1000 Kms. per month on payment |n aooordanoe w|th the Bureau of Enterpr|ses C|rou|ar.
C) Details relating to parties referred to in item no. I (C) above:
2004-05 2003-04
1) M|n|mum work program oomm|tment 94.39 94.90
2) Survey and other expenses 22.07 7.55
3) Other assets 46.13 21.38
4) Amount outstand|ng on Ba|anoe Sheet date 17.32 9.38
5) Amount wr|tten Off- Dry we|| expend|ture 2.22 -
Disclosure as Required by Clause 32 of the Listing Agreement
(Annexure - C)
Ps. |n orores)
Amount as on Max|mum amount
31.03.2005 outstand|ng dur|ng the
year ended 31.03.2005
1 |oans and advanoes |n the nature of |oans.
a To subs|d|ary Company. GAl| G|oba|
S|ngapore Pte) ||m|ted 76.94 76.94
b To Compan|es |n wh|oh D|reotors are |nterested N|| N||
o Where there |s no repayment sohedu|e or Pepayment of |oan
repayment beyond seven years or no |nterest wou|d be f|ve years from
or |nterest be|ow Seot|on 372 A of Compan|es Aot the date of draw| |.e
24/9/2004. Pate of
|nterest on |oan |s 6
months |lBOP +
100 bas|s po|nts
2 lnvestment by the Subs|d|ary Company
|n the shares of GAl| lnd|a) ||m|ted and |ts subs|d|ar|es N|| N||
87
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Annual Report
We Stand for Pe||ab|||ty
Statement Pursuant to Section 212(1)(e) of the Companies Act,1956 Relating to
Companys Interest in the Subsidiary Company
Name of the Subsidiary Company GAIL Global (Singapore) Pte Limited
1 The f|nano|a| year of the subs|d|ary Company ended on 31.03.2005
2 Date from wh|oh |t beoame subs|d|ary Company 14.09.2004
3 a) Number of Shares he|d by GAl| lnd|a) ||m|ted a|ongw|th 2,100,000 equ|ty shares of USD 1 per share
|ts nom|nees |n the subs|d|ary at the end of f|nano|a| year
of the subs|d|ary oompany
b) Extent of Shareho|d|ng 100%
4 The net aggregate amount of Subs|d|ary Company prof|t so
far |t oonoerns the members of Ho|d|ng Company.
a) Not dea|t w|th|n the Ho|d|ng Company Aooounts.
|) for the f|nano|a| year ended 31.03.2005 Ps. |n Crores) 2.26
||) for prev|ous f|nano|a| years of the subs|d|ary oompany s|noe Not App||oab|e
|t beoame the ho|d|ng oompany subs|d|ary
b) Dea|t w|th|n the Ho|d|ng Company Aooounts.
|) for the f|nano|a| year ended 31.03.2005 N||
||) for prev|ous f|nano|a| years of the subs|d|ary oompany s|noe |t
beoame the ho|d|ng oompany subs|d|ary N||
N. K. Nagpa| J.K.Ja|n B.S.Neg| Proshanto Banerjee
Seoretary D|reotor F|nanoe) D|reotor BD) Cha|rman & Manag|ng D|reotor
P|aoe . New De|h|
Dated . June 21, 2005
Accounting Policies
A. BALANCE SHEET
1. Fixed Assets
F|xed Assets are va|ued at h|stor|oa| oost on oons|stent bas|s. ln the oase of oomm|ss|oned assets where f|na| payment
to the Contraotors |s pend|ng, oap|ta||zat|on |s made on prov|s|ona| bas|s, |no|ud|ng prov|s|ona| ||ab|||ty pend|ng approva|
of Competent Author|ty, subjeot to neoessary adjustment |n oost and depreo|at|on |n the year of sett|ement.
2. Intangible Assets
lntang|b|e assets ||ke software, ||oenses and r|ght-of-use of |and |no|ud|ng shar|ng of POU w|th other ent|t|es wh|oh are
expeoted to prov|de future endur|ng eoonom|o benef|ts are oap|ta||zed as lntang|b|e Assets.
3. Capital Work in Progress
a). Crop oompensat|on |s aooounted for under Cap|ta| Work-|n-Progress on the bas|s of aotua| payments/est|mated
||ab|||ty, as and when work oommenoes where POU |s aoqu|red.
b). The Cap|ta| Work-|n-Progress |no|udes va|ue of mater|a|s/equ|pments, eto. reoe|ved at s|te for use |n the Projeots.
4. Borrowing Cost
Borrow|ng oost of the funds speo|f|oa||y borrowed for the purpose of obta|n|ng qua||fy|ng assets and e||g|b|e for
oap|ta||zat|on a|ong w|th the oost of the assets, |s oap|ta||zed upto the date when the asset |s ready for use after nett|ng
off any |noome earned on temporary |nvestment of suoh funds.
5. Expenses Incurred During Construction Period
A|| revenue expend|ture |nourred dur|ng the year, wh|oh |s exo|us|ve|y attr|butab|e to aoqu|s|t|on / oonstruot|on of f|xed
assets, |s oap|ta||zed at the t|me of oomm|ss|on|ng of suoh assets.
6. Depreciation/Amortisation
l. Depreo|at|on on F|xed Assets other than those ment|oned be|ow |s prov|ded |n aooordanoe w|th the rates as speo|f|ed
|n Sohedu|e Xlv of the Compan|es Aot, 1956, on stra|ght ||ne method on pro-rata bas|s month|y pro-rata for bought
out assets).
a). Assets oost|ng upto Ps.5,000/- are depreo|ated fu||y |n the year of oap|ta||sat|on.
b). Bunk Houses are amort|sed on assumpt|on of f|ve years ||fe.
o). Computers at the res|denoe of the emp|oyees are depreo|ated at the rate of 23.75 peroent.
d). Cost of the |easeho|d |and not exoeed|ng 99 years |s amort|sed over the |ease per|od.
e). Depreo|at|on due to pr|oe adjustment on aooount of fore|gn exohange rate var|at|ons or otherw|se |n the or|g|na| oost
of f|xed assets |s oharged prospeot|ve|y.
f). Cap|ta| expend|ture on the assets enab||ng fao|||t|es), the ownersh|p of wh|oh |s not w|th the Company, |s oharged
off to Pevenue.
g). Software / ||oenoes are amort|sed |n 5 years on stra|ght ||ne method.
h). No depreo|at|on |s be|ng oharged on POU be|ng perpetua| |n nature.
|). After |mpa|rment of assets, |f any, depreo|at|on |s prov|ded on the rev|sed oarry|ng amount of the assets over |ts
rema|n|ng usefu| ||fe
ll. Cap|ta| assets |nsta||ed at the oonsumers prem|ses on the |and whose ownersh|p |s not w|th the oompany, has been
depreo|ated on S|M bas|s |n aooordanoe w|th the rates as speo|f|ed |n Sohedu|e Xlv of the Company's Aot, 1956.
7. Foreign Currency Translation
a). |oans/other ||ab|||t|es |nvo|v|ng fore|gn ourrenoy are trans|ated at the rate of exohange BC Se|||ng) preva|||ng at the
year end . A|| exohange d|fferenoe |n respeot of fore|gn ourrenoy transaot|on are dea|t w|th |n the Prof|t and |oss
Aooount exoept those re|at|ng to aoqu|s|t|on of f|xed assets, wh|oh are adjusted |n the oost of the assets.
b). Depos|ts |n Fore|gn Currenoy are va|ued at the rate of exohange ( TT Buying) preva|||ng at the year end.
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8. Investments
a). Quoted |nvestments are va|ued at oost or market va|ue, wh|ohever |s |ower.
b). Unquoted |nvestments are va|ued at oost.
o). |ong term |nvestments are va|ued at oost. Prov|s|on |s made to reoogn|se a deo||ne, other than temporary, |n the
va|ue of |nvestments.
9. Inventories
a). Paw mater|a|s are va|ued at oost or net rea||sab|e va|ue, wh|ohever |s |ower.
b). F|n|shed produots are va|ued at oost or net rea||sab|e va|ue, wh|ohever |s |ower.
o). Stook |n prooess |s va|ued at oost or net rea||sab|e va|ue, wh|ohever |s |ower. lt |s va|ued at oost where the f|n|shed
produots |n wh|oh these are to be |noorporated are expeoted to be so|d at or above oost.
d). Stores and spares and other mater|a| for use |n produot|on of |nventor|es are va|ued at we|ghted average oost or net
rea||sab|e va|ue, wh|ohever |s |ower. lt |s va|ued at we|ghted average oost where the f|n|shed produots |n wh|oh they
w||| be |noorporated are expeoted to be so|d at/or above oost.
e). Surp|us / Obso|ete Stores and Spares are va|ued at oost or net rea||sab|e va|ue, wh|oh ever |s |ower.
f). Surp|us / Obso|ete Cap|ta| Stores, other than he|d for use |n oonstruot|on of a oap|ta| assets, are va|ued at
|ower of oost or net rea||sab|e va|ue.
10. Maoh|nery spares, wh|oh oan be used on|y |n oonneot|on w|th an |tem of f|xed asset and the|r use |s expeoted to be
|rregu|ar, are oap|ta||sed w|th the oost of that f|xed asset and are depreo|ated dur|ng the rema|n|ng usefu| ||fe of that
asset.
11. Grants
ln oase of depreo|ab|e assets, the oost of the assets |s shown at gross va|ue and grant thereon |s taken to Cap|ta|
Peserve wh|oh |s reoogn|sed as |noome |n the Prof|t and |oss Aooount over the usefu| ||fe per|od of the asset.
B. PROFIT & LOSS ACCOUNT
12. Sa|e prooeeds are aooounted for based on the oonsumer pr|oe |no|us|ve of Statutory |ev|es and oharges upto the p|aoe
where ownersh|p of goods |s transferred.
13. The |nterest a||ooab|e to operat|ons |n respeot of assets oomm|ss|oned dur|ng the year |s worked out by adopt|ng the
average of debt equ|ty rat|os at the beg|nn|ng and o|os|ng of that year and app|y|ng the average rat|o of debt thus
worked out to the oap|ta||sed oost.
14. Pre-projeot expend|ture re|at|ng to Projeots wh|oh are oons|dered unv|ab|e / o|osed, |s oharged off to Pevenue over a
per|od of f|ve years.
15. Retirement Benefits
a). ||ab|||ty towards Gratu|ty |s pa|d to a fund ma|nta|ned by the oompany wh|oh |s adm|n|stered through a separate
trust set up by the oompany. D|fferenoe between the fund ba|anoe w|th the trust and the aoorued ||ab|||ty as at the
end of the year as per aotuar|a| va|uat|on |s oharged to Prof|t and |oss Aooount.
b). ||ab|||ty towards |eave enoashment and post ret|rement med|oa| benef|ts to emp|oyees as at the end of the year |s
assessed on the bas|s of aotuar|a| va|uat|on and prov|ded for.
o). Contr|but|on to Prov|dent Fund as per the ru|es of the Company |s aooounted for on aoorua| bas|s.
16. Taxes on Income
Current tax represents the amount of tax payab|e |n respeot of taxab|e |noome for the per|od. Deferred tax ||ab|||ty
represents the tax be|ng d|fferenoe between taxab|e and aooount|ng |noome wh|oh or|g|nate |n one per|od and are
oapab|e of reversa| |n one or more subsequent per|ods.
17. R&D Expenditure
A|| expend|ture, other than on oap|ta| aooount, on researoh and deve|opment are oharged to Prof|t and |oss Aooount.
18. Year|y reoono|||at|on of Natura| Gas |s made w|th|n a ||m|t of +1%. ln oase of var|at|on beyond +1% va|ue of exoess
quant|ty |s kept |n a separate Aooount "To|eranoe F|uotuat|on Adjustment Aooount" for adjustments |n future.
19. Exploration and Development Costs :-
Suooessfu| Efforts Method |s be|ng fo||owed for aooount|ng of O|| & Gas exp|orat|on and produot|on aot|v|t|es wh|oh
|no|udes -
a). Survey Costs are expensed |n the year |n wh|oh these are |nourred.
b). Cost of exp|oratory we||s |s oarr|ed as 'Exp|oratory we||s |n progresses. Suoh exp|oratory we||s |n progress are
oap|ta||zed |n the year |n wh|oh the produo|ng property |s oreated or |s expensed |n the year when determ|ned to be
dry / abandoned.
o). A|| we||s appear|ng as "exp|oratory we||s |n progress" wh|oh are more than two years o|d from the date of oomp|et|on
of dr||||ng are oharged to Prof|ts and |oss Aooount exoept those we||s wh|oh have proved reserves and the deve|opment
of the f|e|ds |n wh|oh the we||s are |ooated has been p|anned. Suoh we||s, |f any are wr|tten baok on oommenoement
of oommero|a| produot|on.
20. Contingent Liabilities and Capital Commitments
a). Cont|ngent ||ab|||t|es are d|so|osed |n eaoh oase above Ps. 5 |akhs.
b). Est|mated amount of oontraots rema|n|ng to be exeouted on oap|ta| aooounts are d|so|osed |n eaoh oase above
Ps. 5 |akhs.
21. Impairment
The oarry|ng amounts of assets are rev|ewed at eaoh Ba|anoe Sheet date |f there |s any |nd|oat|on of |mpa|rment based
on lnterna| / Externa| faotors, an lmpa|rment |oss |s reoogn|zed wherever the oarry|ng amount of an asset exoeeds |ts
reooverab|e amount.
GENERAL
22. Prepa|d expenses and pr|or per|od expenses/|noome upto Ps.1,00,000/- |n eaoh oase are oharged to re|evant heads of
aooount of the ourrent year.
23. ||qu|dated Damages, |f any, are aooounted for as and when reoovery |s effeoted and the matter |s oons|dered sett|ed by
the Management. ||qu|dated damages, |f sett|ed, after oap|ta||zat|on of assets are oharged to revenue, |f be|ow Ps.50
|akhs |n eaoh oase otherw|se adjusted |n the oost of re|evant assets.
24. lnsuranoe o|a|ms are aooounted for on the bas|s of o|a|ms adm|tted by the |nsurers.
25. a). Custom Duty and other o|a|ms |no|ud|ng |nterest on de|ayed payments) are aooounted for on aooeptanoe |n pr|no|p|e.
b). ||ab|||ty |n respeot of MGO of Natura| gas |s not prov|ded for where the same |s seoured by MGO reooverab|e from
oustomers. Payments/reoe|pts dur|ng the year on aooount of MGO are adjusted on reoe|pt bas|s.
o). M|n|mum oharges re|at|ng to transportat|on of |PG are aooounted for on reoe|pt bas|s.
As per our separate report of even date
N. K. Nagpa| J. K. Ja|n B. S. Neg| Proshanto Banerjee For M/s S. MANN & COMPANY
Seoretary D|reotor F|nanoe) D|reotor BD) Cha|rman & Manag|ng D|reotor Chartered Accountants
D|reotor
Subhash Mann
P|aoe . New De|h| Partner)
Dated . 21.06.2005 Membersh|p No. 80500
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Cash Flow Statement for the Financial Year Ended 31
ST
March, 2005
Ps. |n Crores)
2004-05 2003-04
A. CASH FLOW FROM OPERATING ACTIVITIES
1 NET PPOFlT BEFOPE TAX AND EXTPAOPDlNAPY lTEMS 2,871.39 2,814.42
2 ADD .
DEPPEClATlON 944.89 661.60
DEFEPPED PEvENUE EXPENDlTUPE - 0.11
CAPlTA| PESEPvE (0.12) 0.12)
EXCHANGE PATE vAPlATlON (0.07) 0.87)
lNTEPEST EXPENDlTUPE 134.09 137.97
DlvlDEND lNCOME ON lNvESTMENTS (119.34) 104.32)
lNTEPEST lNCOME (146.00) 64.30)
PPOFlT/|OSS ON SA|E OF ASSETS NET) 0.52 1.61
813.97 631.68
3 OPEPATlNG PPOFlT BEFOPE WOPKlNG CAPlTA|
CHANGES 1+2) 3,685.36 3446.10
4 CHANGES lN WOPKlNG CAPlTA| EXC|UDlNG
CASH & BANK BA|ANCES)
TPADE AND OTHEP PECElvAB|ES (397.78) 196.96)
lNvENTOPlES (6.53) 56.32)
TPADE AND OTHEP PAYAB|ES 409.24 311.26
4.93 57.98
5 CASH GENEPATED FPOM OPEPATlONS 3+4) 3,690.29 3,504.08
6 DlPECT TAXES PAlD 859.56) 896.21)
NET CASH FROM OPERATING ACTIVITIES (5+6) 2,830.73 2,607.87
BALANCE CARRIED FORWARD 2,830.73 2,607.87
Ps. |n Crores)
2004-05 2003-04
BALANCE BROUGHT FORWARD 2,830.73 2,607.87
B. CASH FLOW FROM INVESTING ACTIVITIES
PUPCHASE OF FlXED ASSETS 147.15) 2,692.35)
SA|E OF FlXED ASSETS 0.63 0.59
PEDEMPTlON OF BONDS/DEBENTUPES 0.15 0.28
lNvESTMENT lN OTHEP COMPANlES 12.11) 84.33)
lNTEPEST PECElvED 122.30 78.23
DlvlDEND PECElvED 119.34 104.32
NET CASH FROM INVESTING ACTIVITIES 83.16 2,593.26)
C CASH FLOW FROM FINANCING ACTIVITIES
PPOCEEDS FPOM |ONG TEPM BOPPOWlNGS - 1,600.00
PEPAYMENT OF |ONG TEPM BOPPOWlNGS 135.51) 1,475.24)
lNTEPEST PAlD 134.56) 154.49)
DlvlDEND PAlD 764.93) 763.20)
NET CASH FROM FINANCING ACTIVITIES (1,035.00) 792.93)
NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 1,878.89 (778.32)
1567.95 2,346.27
CASH AND CASH EQUIVALENTS AS AT 01.04.2004
(OPENING BALANCE)
CASH AND CASH EQUIVALENTS AS AT 31.03.2005 3,446.84 1,567.95
(CLOSING BALANCE)
N.K.Nagpa| J.K. Ja|n Proshanto Banerjee As per our separate Peport of even date
Seoretary D|reotor F|nanoe) Cha|rman & Manag|ng D|reotor For S MANN & COMPANY
Chartered Aooountants
P|aoe . New De|h| Subhash Mann
Dated . June 21, 2005 Partner)
Membersh|p No. 80500
Cash Flow Statement for the Financial Year Ended 31
ST
March, 2005
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Balance Sheet Abstract and Companys General Business Profile
I. Registration Details
Peg|strat|on No. 0 1 8 9 7 6 State Code 5 5
Ba|anoe Sheet 3 1 0 3 2 0 0 5
Date Date Month Year
II. Capital raised during the year (Rs. in Lakhs)
Public Issue Right Issue
Nl| Nl|
Bonus Issue Private Placement
Nl| Nl|
III. Position of Mobilisation and Deployment of Funds: (Rs. in Lakhs)
Total Liabilities Total Assets
1 1 8 7 8 7 4 - - 1 1 8 7 8 7 4
Sources of Funds :
Paid up Capital Reserves and Surplus
- - - - 8 4 5 6 5 - - - 7 7 8 0 4 6
Secured Loans Unsecured Loans
- - - 1 6 0 0 0 0 - - - - 3 9 7 4 0
Deferred Tax Liability
- - - 1 2 5 5 2 3
Application of Funds :
Net Fixed Assets Investments
- - - 8 1 5 4 9 6 - - - - 7 8 3 9 5
Net Current Assets Misc. Expenditure
- - - 2 9 3 9 8 3 N l |
Accumulated losses
N l |
IV. Performance of the Company (Rs. in Lakhs)
Turnover (Net of ED) Total Expenditure
- - 1 2 7 3 4 3 9 - - - 9 8 6 3 0 0
Profit/Loss before Tax Profit/Loss after Tax
+) -) +) -)
+) - - - 2 8 7 1 3 9 +) - - - 1 9 5 3 9 1
Earning per share in Rs. Dividend
Ps. P.
2 3 1 1 8 0 %
V. Generic Names of the Principal Products/Services of Company (as per monetary terms)
ltem Code No. 2 7 1 1 2 1 0 0
lTC Code)
Produot Desor|pt|on N A T U P A | G A S
ltem Code No.
lTC Code) 2 7 1 1 1 9 0 0
Produot Desor|pt|on | P G
ltem Code No..
lTC Code) 3 9 0 1 2 0
Produot Desor|pt|on P O | Y E T H E | E N E
ltem Code No..
lTC Code) 2 7 1 1 2 0 0
Produot Desor|pt|on P P O P A N E
N.K. Nagpa| J.K.Ja|n B.S.Neg| Proshanto Banerjee As per our separate Peport of
Seoretary D|reotor F|nanoe) D|reotor BD) Cha|rman & Manag|ng D|reotor even date
For S MANN & COMPANY
Chartered Aooountants
P|aoe. New De|h| Subhash Mann)
Dated . June 21, 2005 Partner
Membersh|p No. 80500
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Auditors Report to the Shareholders
We have aud|ted the attaohed Ba|anoe Sheet of GAl| lnd|a) ||m|ted as at 31
st
Maroh, 2005, the Prof|t and |oss Aooount and
Cash F|ow Statement of the oompany for the year ended on that date annexed thereto |n wh|oh are |noorporated the
aooounts of two un|ts aud|ted by branoh aud|tors. These f|nano|a| statements are the respons|b|||ty of the Company's
management. Our respons|b|||ty |s to express an op|n|on on these f|nano|a| statements based on our aud|t.
We have oonduoted our aud|t |n aooordanoe w|th aud|t|ng standards genera||y aooepted |n lnd|a. These Standards requ|re
that we p|an and perform the aud|t to obta|n reasonab|e assuranoe about whether the f|nano|a| statements are free of
mater|a| m|sstatement. An aud|t |no|udes exam|n|ng, on a test bas|s, ev|denoe support|ng the amounts and d|so|osures |n the
f|nano|a| statements. An aud|t a|so |no|udes assess|ng the aooount|ng pr|no|p|es used and s|gn|f|oant est|mates made by
management, as we|| as eva|uat|ng the overa|| f|nano|a| statement presentat|on. We be||eve that our aud|t prov|des a reasonab|e
bas|s for our op|n|on.
As requ|red by the statement on the Compan|es Aud|tor's Peport) order,2003 |ssued by the Centra| Government of lnd|a |n
terms of sub-seot|on 4A) of Seot|on 227 of the Compan|es Aot, 1956, we eno|ose |n the Annexure a statement on the
matters speo|f|ed |n paragraphs 4 and 5 of the sa|d Order.
Further to our oomments |n the Annexure referred to above, we report that .
a. We have obta|ned a|| the |nformat|on and exp|anat|ons, wh|oh to the best of our know|edge and be||ef were neoessary
for the purposes of our aud|t,
b. The a||ooat|on of work amongst the aud|tors has been fo||owed as per the d|reot|ons oonta|ned |n |etter addressed to
GAl| lnd|a) |td. by the off|oe of the Comptro||er & Aud|tor Genera| of lnd|a, New De|h|.
o. ln our op|n|on, proper books of aooount as requ|red by |aw have been kept by the Company so far as appears from our
exam|nat|on of those books. The Branoh Aud|tor's Peport have been forwarded to us and have been appropr|ate|y
dea|t w|th,
d. The Ba|anoe Sheet and Prof|t & |oss Aooount and the Cash F|ow Statement dea|t w|th by th|s report are |n agreement
w|th the books of aooount,
e. ln our op|n|on, the Ba|anoe Sheet, Prof|t and |oss Aooount and the Cash F|ow Statement dea|t w|th by th|s report
oomp|y w|th the Aooount|ng Standards referred to |n sub-seot|on 3C) of Seot|on 211 of the Compan|es Aot, 1956,
f. On the bas|s of wr|tten deo|arat|on reoe|ved from the D|reotors, as on 31
st
Maroh, 2005, and taken on reoord by the
Board of D|reotors, we report that none of the d|reotors |s d|squa||f|ed as on 31
st
Maroh, 2005 from be|ng appo|nted as
a d|reotor |n terms of o|ause g) of sub-seot|on 1) of seot|on 274 of the Compan|es Aot, 1956,
g. ln our op|n|on and to the best of our |nformat|on and aooord|ng to the exp|anat|ons g|ven to us, the sa|d f|nano|a|
statements read together w|th the s|gn|f|oant aooount|ng po||o|es and notes thereon g|ve the |nformat|on requ|red by
the Compan|es Aot, 1956, |n the manner so requ|red and g|ve a true and fa|r v|ew |n oonform|ty w|th the aooount|ng
pr|no|p|es genera||y aooepted |n lnd|a.
|) |n the oase of the Ba|anoe Sheet, of the state of affa|rs of the Company as at 31
st
Maroh, 2005,
||) |n the oase of the Prof|t & |oss Aooount, of the prof|t for the year ended on that date and
|||) |n the oase of the Cash F|ow Statement, of the oash f|ow of the oompany for the year ended on that date.
For S. Mann & Co.
Chartered Aooountants
Subhash Mann
P|aoe . New De|h| Partner
Dated . June 21, 2005 Membersh|p No. 80500
Annexure to the Auditors Report
The Annexure referred to |n the aud|tor's report to the shareho|ders of GAl| lnd|a) ||m|ted for the year ended Maroh 31,
2005. We report that .
l) a) The oompany has genera||y ma|nta|ned proper reoords show|ng fu|| part|ou|ars |no|ud|ng quant|tat|ve deta||s and
s|tuat|on of f|xed assets.
b) Aooord|ng to the |nformat|on and exp|anat|on g|ven to us, there |s a regu|ar programme of ver|f|oat|on of f|xed assets
wh|oh, |n our op|n|on, |s reasonab|e hav|ng regard to the s|ze of the oompany and the nature of |ts assets. F|xed
assets have been phys|oa||y ver|f|ed by the management dur|ng the year and no mater|a| d|sorepano|es were not|oed
on suoh ver|f|oat|on.
ln our op|n|on, there was no substant|a| d|sposa| of f|xed assets dur|ng the year.
ll) Aooord|ng to the |nformat|on and exp|anat|ons g|ven to us, the |nventory of stores and spares were phys|oa||y ver|f|ed by
the Management, exoept those |y|ng w|th Eng|neers lnd|a |td. and other oontraotors at the end of the year. We have
been exp|a|ned that the stook of gas at the end of the year has been taken w|th referenoe to read|ng of Turb|ne F|ow
Meter/Gas Chromatograph |nsta||ed at Term|na|s, Stook of |PG/Pentane/SBP So|vent are determ|ned w|th referenoe to
Tank |eve| Gauge measurement wh|oh are oonverted |nto tonnage by measurement of dens|ty and app|y|ng oorreot|on
faotor for temperature. |PG vapour vo|ume |s oonverted to tonnage by standard formu|ae.
ln our op|n|on and aooord|ng to the |nformat|on and exp|anat|ons g|ven to us, the prooedures of phys|oa| ver|f|oat|on of
|nventory fo||owed by the Management are reasonab|e and adequate |n re|at|on to the s|ze of the Company and nature
of |ts bus|ness.
Aooord|ng to the |nformat|on and exp|anat|ons g|ven to us, no mater|a| d|sorepano|es have been not|oed on phys|oa|
ver|f|oat|on of stook of stores and spares as oompared to the books and reoords.
lll) The Company has ne|ther granted nor taken any |oans seoured or unseoured, to or from oompan|es, f|rms or other
part|es oovered |n the reg|ster ma|nta|ned under Seot|on 301 of the Compan|es Aot, 1956.
lv) ln our op|n|on, and aooord|ng to |nformat|on and exp|anat|ons g|ven to us, there are adequate |ntera| oontro| prooedure
oommensurate w|th the s|ze of the oompany and the nature of |ts bus|ness for the purohase of |nventory and f|xed
assets and for the sa|e of goods. Dur|ng the oourse of our aud|t no major weakness has been not|oed |n the |nterna|
oontro|s.
v) On the bas|s of our exam|nat|on of the books of aooounts, the oompany has not made any transao|ons |n respeot of any
party dur|ng the f|nano|a| year that needs to be entered |n the reg|ster pursuant to the seot|on 301 of the oompan|es
Aot, 1956.
The oompany has not aooepted any depos|ts from the pub||o dur|ng the year and oonsequent|y, the d|reot|ve |ssued by
the Peserve Bank of lnd|a and the prov|s|ons of seot|on 58A and 58AA of the Compan|es Aot, 1956, and the ru|es
framed there under are not app||oab|e.
vl) ln our op|n|on, the oompany's |nterna| aud|t system |s oommensurate w|th |ts s|ze and nature of |ts aot|v|t|es. However,
|t requ|res further strengthen|ng due to |norease |n the aot|v|t|es of the oompany |n reoent past.
vll) As oert|f|ed by the management and |ndependent Cost Aooountants, |n our op|n|on, the oompany |s ma|nta|n|ng the
presor|bed oost aooounts and reoords pursuant to the ru|es made by the Centra| Government for the ma|ntenanoe of
oost reoords under o|ause d) of sub-seot|on 1) of seot|on 209 of the Compan|es Aot, 1956.
vlll) Aooord|ng to the reoords of the oompany, the oompany |s genera||y regu|ar |n depos|t|ng und|sputed statutory dues
|no|ud|ng Prov|dent fund, lnvestor Eduoat|on and Proteot|on Fund, lnoome tax, Sa|es tax, Wea|th tax, Custom duty,
Exo|se duty, oess and any other statutory dues w|th the appropr|ate author|t|es. Aooord|ng to the |nformat|on and
exp|anat|on g|ven to us, no und|sputed amounts payab|e |n respeot of lnoome tax, Sa|es tax, Custom duty, Exo|se duty
and other statutory dues were outstand|ng at the year end for a per|od of more than s|x months from the date they
beoome payab|e.
As per the |nformat|on g|ven to us, the dues of Exo|se Duty, Custom Duty, Entry Tax, Sa|es Tax and Other Taxes wh|oh
have not been depos|ted on aooount of d|sputes and the forum where the d|spute |s pend|ng , are g|ven be|ow, requ|s|te
97
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d|so|osure |s be|ng made under the head Cont|ngent ||ab|||ty.-
Ps. |n Crores)
Sl. No. Issue Subject matter of dispute Amt. Status - Forum
1. Entry Tax Entry Tax on market va|ue 82.77 A||ahabad H|gh Court
of natura| gas |nstead of |ts
purohase pr|oe
Entry tax - Pata 0.08 Jt. Comm|ss|oner A)
2. Sa|es Tax 1. Non aooeptanoe of 2.83 Dy. Comm|ss|oner
deo|arat|on form for Appea|s), Surat
oonoess|ona| sa|es tax
2. CST on transm|ss|on 7.06 Tr|buna|, Chenna|
oharges
3. Demand aga|nst adjust- 0.74 Dy. Comm|ss|oner
ment of past per|od tax Appea|s), Gwa||or
4. Demand aga|nst rev|sed 0.13 CTO, Pajahmundry
assessment order
5. Sa|es Tax Demand 4966.22 Pefer Note on 2 o)
of Sohedu|e 14.
3. Customs 1. Projeot |mport - Pata 305.52 Dy. Comm|ss|oner
of Customs, Mumba|
2. Demand of duty on Panna- 581.22 Comm|ss|oner of
Mukta Gas Customs, Ahmedabad
4. Exo|se 1. Duty on |ean Gas 123.63 CESTAT
2. Duty on |ean Gas - 57CC 333.77 Supreme Court
3. D|sputed Modvat of Pata 4.67 Dy.Comm|ss|oner, Agra
4. Duty on |ean Gas - 57CC 55.44 Comm|ss|oner of
Centra| Exo|se, Pa|gad
5. Pentane reo|ass|f|oat|on 2.43 Asstt. Comm. Gwa||or
6. Pentane reo|ass|f|oat|on 1.63 Comm|ss|oner, Kanpur
7. Modvat on Comp - Pata 10.83 Comm|ss|oner A)
5. Other taxes Not|f|ed area tax on rev|sed 1.59 Ahmedabad H|gh Court
va|ue
lX) The oompany has no aooumu| ated | osses at the end of the f| nano| a| year and | t has not | nourred any
oash |osses |n the ourrent and |mmed|ate|y preoed|ng f|nano|a| year.
X) Based on our aud| t prooedure and on the | nf ormat| on and exp| anat| ons g| ven by the management,
we are of t he op| n| on t hat t he oompany has not def au| t ed | n repayment of dues t o a f | nano| a|
lnst|tut|on, bank and debenture ho|ders.
Xl) l n our op| n| on, the oompany has not granted | oans and advanoes on the bas| s of seour| ty by way of
p| edge of shares, debentures and other seour| t| es other than to | ts emp| oyees. l n our op| n| on, the
oompany has ma|nta|ned adequate doouments and reoords |n respeot of suoh |oans.
Xll) The oompany | s not a oh| t fund, n| dh| , mutua| benef| t fund or a soo| ety. Aooord| ng| y, o| ause 4x| | | ) of
the order not app||oab|e.
Xlll) Aooord| ng to the | nformat| on and exp| anat| on g| ven to us, the oompany | s not dea| | ng or trad| ng | n
shares, seour| t| es, debentures and other | nvestments. Aooord| ng| y, o| ause 4 x| v) of the order | s not
app||oab|e.
Xlv) The oompany a| ong w| t h ot her promot ers has | ssued oorporat e guarant ee | n f avour of banks and
f| nano| a| | nst| tut| on for short term | oan taken by Petronet |NG || m| ted from suoh banks and f| nano| a|
|nst|tut|ons, the terms and oond|t|ons whereof are not prejud|o|a| to the |nterest of the oompany.
Xv) Aooord| ng t o t he | nf ormat | on & exp| anat | on g| ves t o us, t he t erm | oans have been app| | ed f or t he
purpose for wh|oh these were obta|ned.
Xvl) We have been | nformed by the management that the funds ra| sed on short term bas| s have not been
used for |ong term |nvestment and v|oe-versa.
Xvll) The oompany has not made any preferent| a| a| | otment of shares to part| es or oompan| es oovered | n
the reg|ster ma|nta|ned under seot|on 301 of the Compan|es Aot, 1956.
Xvlll) The oompany has not |ssued any debentures dur|ng the year.
XlX) Dur|ng the year no money has been ra|sed by pub||o |ssues.
XX) Aooord| ng to the | nformat| on and exp| anat| ons g| ven to us, no fraud on or by the Company has been
not|oed or reported dur|ng the year.
For S. Mann & Co.
Chartered Accountants
P|aoe . New De|h| Subhash Mann
Dated . June 21, 2005 Partner
Membersh|p No. 80500
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Schedule of Fixed Assets (Township)
Ps. |n |akhs)
DESCRIPTION GROSS BLOCK ( AT COST) DEPRECIATION NET BLOCK
As at Add|t|ons/ Sa|es/ As at Up to For the Adjustments As at As at As at
01.04.2004 Adjustments Adjustments 31.03.2005 31.03.2004 Year dur|ng the 31.03.2005 31.03.2005 31.03.2004
dur|ng the dur|ng the Year
Year Year
|AND. FPEEHO|D 2,960.20 1.60) 108.59) 2,850.01 84.88 10.55 4.59) 90.84 2,759.17 2,875.32
|AND. |EASEHO|D 345.84 1.60 - 347.44 25.02 3.77 0.00 28.79 318.65 320.82
BUl|DlNG, 24,714.07 52.32) 169.63) 24,492.12 3,189.78 475.92 10.70) 3,655.00 20,837.12 21,524.29
POADS ETC.
DPAlNAGE, 1,108.85 60.61 - 1,169.46 426.99 61.91 2.42 491.32 678.14 681.86
SEWAGE & WATEP
SUPP|Y SYS. ETC.
FUPNlTUPE, 1,304.13 121.69 80.67) 1,345.15 545.77 95.73 80.84) 560.66 784.49 758.36
FlXTUPES &
OTHEP EQP.
TPANSPOPT
EQUlPMENTS 3.64 - 3.06) 0.58 1.55 0.08 1.49) 0.14 0.44 2.09
TOTAL 30,436.73 129.98 361.95) 30,204.76 4,273.99 647.96 95.20) 4,826.75 25,378.01 26,162.74
Income and Expenditure Account
Income and Expenditure Account for the year ended 31
st
March, 2005 on Provisions of Township,
Education, Medical and Other Facilities
Ps. |n |akhs)
S. Particulars Year Ended Year Ended
No. 31
st
March, 31
st
March,
2005 2004
Income
1 Peoovery of House Pent 54.68 49.55
2 Peoovery of Ut|||t|es 34.09 59.34
3 Other Peoover|es 8.77 6.72
4 Exoess of Expend|ture over lnoome 2,548.62 2,326.87
TOTAL 2,646.16 2,442.47
Expenditure
1 Sa|ar|es, Wages & PF Contr|but|on 328.23 257.73
2 Consumab|es, Stores & Med|o|nes 32.66 34.21
3 Subs|d|es for Soo|a| & Cu|tura| Aot|v|t|es 157.25 98.81
4 Pepa|rs & Ma|ntenanoe 505.92 469.49
5 Depreo|at|on 655.60 626.42
6 Ut|||t|es. Power, Gas & Water 360.08 429.99
7 |and Pent 9.14 9.05
8 We|fare - Sohoo| 99.09 116.17
9 Bus H|re Charges 204.95 153.07
10 C|ub & Peoreat|on 7.05 2.86
11 M|so Expenses - Taxes, ||oense Fees, lns eto. 146.10 127.31
12 Hortou|ture Expenses 140.11 117.35
TOTAL 2,646.16 2,442.47
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Addendum to the Directors Report
Management Replies to the Comments of the Comptroller and Auditor General of India under Section 619(4) of the
Companies Act, 1956 on the Accounts of GAIL (India) Limited for the year ended March 31, 2005.
PARA NO. COMMENTS OF THE COMPTROLLER AND
AUDITOR GENERAL OF INDIA
BALANCE SHEET

1. Current Assets, Loans and Advances-


(Schedule 7)
a) Sundry Debtors Rs. 822.86 Crores
The above |no|udes Ps. 21.32 Crores reooverab|e from
var|ous oustomers towards the d|fferenoe between the
h|gher rate of Pegass|f|ed ||quef|ed Natura| Gas
oharged to them and the agreed rates Adm|n|stered
Pr|oe Meohan|sm rates). ln the absenoe of any rev|s|on
to th|s effeot |n the Gas Supp|y Agreements w|th the
oustomers, the reoogn|t|on of revenue was not |n
aooordanoe w|th para 9.2 of AS-9.
Th|s has resu|ted |n overstatement of Debtors and
sa|es as we|| as the prof|ts to the extent of Ps. 21.32
Crores.
b) Advances recoverable in cash or in kind or
for value to be received Rs. 1,334.03 Crores
The above |no|udes Ps. 3.01 Crores spent on GDP
|ssue |n 1999 wh|oh |s doubtfu| of reoovery. Non
prov|s|on of the same has resu|ted |n overstatement
of advanoes reooverab|e |n oash or |n k|nd by Ps. 3.01
Crores and prof|t to the same extent.
2. Current Liabilities and Provisions
(Schedule 8)
Current Liabilities Rs. 2,716.13 Crores
Other Liabilities Rs. 463.83 Crores
The above does not |no|ude an amount of Ps. 4.73
Crores approx|mate|y on aooount of oonoess|on |n
oustom duty/CvD payab|e on the oonstruot|on surp|us
proposed for sa|e. Th|s has resu|ted |n understatement
of ||ab|||ty on aooount of oustom duty & CvD and
overstatement of prof|t to the extent of Ps. 4.73 Crores
approx|mate|y.
MANAGEMENT REPLIES
APM rates are app||oab|e on|y for the quant|ty agreed to be
supp||ed under APM. ln oase, gas |s drawn more than the APM
quant|ty, P|NG rates are oharged based on the agreement/
subsequent |etters |ssued to the oustomers and the revenue has
been reoogn|zed as per the prov|s|ons of AS- 9.
Th|s |s a |eg|t|mate o|a|m and has a|ready been reoommended by
MOP&NG to M|n|stry of D|s|nvestment for re|mbursement to GAl|.
As the amount |s reooverab|e from Government, |t was not
oons|dered neoessary by the management to make a prov|s|on
thereof. However, Company |s pursu|ng the |ssue w|th M|n|stry of
D|s|nvestment for ear|y reoovery.
Wherever reoono|||at|on has been made, d|fferent|a| amount of
oustom duty amount|ng to Ps. 2.45 Crores has a|ready been pa|d.
D|fferent|a| amount of Custom duty, |f any, w||| be pa|d after
oomp|et|on of reoono|||at|on for ba|anoe mater|a|. Therefore, ||ab|||ty
has not been oons|dered to be prov|ded for dur|ng the year.
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3. Notes on accounts (Schedule 14)
Note No. 6 to the Aooounts about d| so| osure of
Ps. 1,137 Crores d| soount passed on to the O| |
Market|ng Compan|es |s def|o|ent to the extent that |t
does not d|so|ose that amount of d|soount |s |no|us|ve
of Ps. 20.18 Crores on reversed Centra| Sa|es Tax.
(A. K. Singh)
Principal Director of Commercial Audit
& Ex.-Officio Member Audit Board II
Place: New Delhi
Dated: August 16, 2005
Prov|s|ona| |PG pr|oes are |no|us|ve of CST and the d|soount has
been g|ven as per the adv|oe of Petro|eum P|ann|ng and Ana|ys|s
Ce|| PPAC)/MOP&NG and has been oorreot|y aooounted for based
on the aooepted aooount|ng pr|no|p|es.
Pequ|s|te d|so|osure has a|so been made |n the Notes to Aooounts
v|de Note No. 6 of the Sohedu|e 14 form|ng part of the Annua|
Aooounts for the year 2004-05.
For and on behalf of the Board of Directors
(Proshanto Banerjee)
Chairman & Managing Director
Place: New Delhi
Dated: August 19, 2005
Review of the Accounts of GAIL (India) Limited, New Delhi,
For the Year Ended March 31
st
, 2005 by the Comptroller & Auditor General of India
Th| s Pev| ew of Aooounts has been prepared w| thout tak| ng | nto aooount oomments under Seot| on 6194) of the
Compan|es Aot, 1956 and qua||f|oat|ons oonta|ned |n the Statutory Aud|tors' Peport )
1. FINANCIAL POSITION
The tab|e be|ow summar|ses the f|nano|a| pos|t|on of the Company under broad head|ngs for the |ast three years .
Ps.|n Crores)
2002-2003 2003-2004 2004-2005
Liabilities
a) Pa|d-up Cap|ta|
|) Government 569.50 484.94 484.94
| | ) Others 276.15 360.71 360.71
b) Peserves and Surp|us
|) Free Peserves & Surp|us 5,490.77 6,596.91 7,777.99
| | ) Share Prem|um Aooount 0.26 0.26 0.26
|||) Cap|ta| Peserve 2.45 2.33 2.21
o) Borrow|ngs
|) From Government of lnd|a - - -
| | ) From F|nano|a| lnst|tut|ons - - -
|||) Fore|gn Currenoy |oans 1,420.83 61.28 34.28
|v) Others 626.29 2,072.20 1,963.12
d) |) Current ||ab|||t|es & Prov|s|ons 2,758.35 3,007.82 3,474.15
||) Prov|s|on for Gratu|ty 17.60 22.39 -
e) Deferred Tax ||ab|||ty 1,119.75 1,227.58 1,255.23
TOTAL 12,281.95 13,836.42 15,352.89
Assets
f) Gross B|ook 11,048.71 13,584.73 14,222.35
g) |ess. Depreo|at|on 4,786.61 5,441.85 6,376.47
h) Net B|ook 6,262.10 8,142.88 7,845.88
|) Cap|ta| Work-ln-Progress 688.14 814.47 309.08
j) lnvestments 687.94 771.99 783.95
k) Current Assets,|oans and Advanoes 4,643.66 4,107.08 6,413.98
|) M|soe||aneous Expend|ture not wr|tten off 0.11 - -
TOTAL 12,281.95 13,836.42 15,352.89
m) Work|ng Cap|ta| k-d|) ) 1,885.31 1,099.26 2,939.83
n) Cap|ta| Emp|oyed h+m) 8,147.41 9,242.14 10,785.71
o) Net Worth a+b|)+b||)-| ) 6,336.57 7,442.82 8,623.90
p) Net Worth Per Pupee of Pa|d-up Cap|ta| |n Ps.) 7.49 8.80 10.20
The Work|ng Cap|ta| has been |noreased from Ps. 1,099.26 Crores |n 2003-04 to Ps. 2,939.83 Crores |n 2004-05
ma|n|y due to |norease |n Short term depos|t from Ps. 534.09 Crores |n 2003-04 to Ps. 2,426.21 Crores |n 2004-05.
The |norease |n short term depos|ts was due to non ut|||sat|on of |nterna||y generated funds on new sohemes.
The Cap|ta| Emp|oyed has |noreased from Ps. 9,242.14 Crores |n 2003-04 to Ps. 10,785.71 Crores |n 2004-05 due to
|norease |n Net Current Assets.
Net Worth |noreased from Ps. 7,442.82 Crores |n 2003-04 to Ps. 8,623.90 Crores |n 2004-05 ma|n|y beoause of
|norease |n Peserves and Surp|us due to h|gher prof|tab|||ty.
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2. WORKING RESULTS
Ps.|n Crores)
2002-2003 2003-2004 2004-2005
|) Sa|es |no|. |PG Transm|ss|on oharges) 1,0641.99 11,295.67 12,927.07
||) |ess.Exo|se Duty 424.46 471.83 514.87
|||) Net Sa|es 1,0217.53 10,823.84 12,412.20
|v) Other/M|soe||aneous lnoome 318.76 244.03 349.05
v) Prof|t/|oss) before Tax and Pr|or Per|od 2,510.03 2,811.83 2,872.27
Adjustments
v|) Pr|or Per|od Adjustments 8.26 2.59 (0.88)
v||) Prof|t/|oss) before Tax 2,518.29 2,814.42 2,871.39
v|||) Tax Prov|s|ons 879.18 945.08 917.48
|x) Prof|t after Tax 1,639.11 1,869.34 1,953.91
x) Proposed/lnter|m D|v|dend 591.96 676.52 676.52
The sa|es of the Company has |noreased from Ps. 11,295.67 Crores |n 2003-04 to Ps. 12,927.07 Crores |n 2004-05,
wh|oh |s |noreased by 14.44% wh|oh was ma|n|y due to oomm|ss|on|ng of Pegass|f|ed ||qu|d Natura| Gas P|p||ne.
However, Prof|t After Tax has |noreased from Ps. 1,869.34 Crores |n 2003-04 to Ps. 1,953.91 Crores |n 2004-05 |.e.
|noreased by 4.52%.
Other lnoome has |noreased from Ps. 244.03 Crores |n 2003-04 to Ps. 349.05 Crores |n 2004-05 due to |norease |n
|nterest |noome from short term depos|t w|th banks and other m|soe||aneous |noome.
3. RATIO ANALYSIS
Some |mportant f|nano|a| rat|os on the f|nano|a| hea|th and work|ng of the Company at the end of |ast three years are
as fo||ows.
ln Peroentages)
2002-2003 2003-2004 2004-2005
A. Liquidity Ratio 168.35 136.55 184.62
Current Pat|o Current Assets to Current ||ab|||t|es
& Prov|s|ons but exo|ud|ng Prov|s|on for Gratu|ty)
k / d|) )
B. Debt Equity Ratio 32.31 28.66 23.16
|ong term debt to Net Worth
o | to |v but exo|ud|ng short term |oans ) / o )
C. Profitability Ratios
a) Prof|t before Tax to
|) Cap|ta| Emp|oyed 30.91 30.45 26.62
||) Net worth 39.74 37.81 33.30
|||) Sa|es 23.66 24.92 22.21
b) Prof|t after Tax to Equ|ty 193.83 221.05 231.05
o) Earn|ng per Share |n Ps.) 19.38 22.11 23.11
The peroentage of ||qu|d|ty Pat|o |noreased from 136.55 |n 2003-04 to 184.62 |n 2004-05 due to |norease |n Work|ng
Cap|ta|.
The peroentage of Debt Equ|ty Pat|o |s show|ng deoreas|ng trend. lt has deo||ned from 28.66 |n 2003-04 to 23.16 |n
2004-05 beoause of repayment of borrowed funds.
The peroentage of Prof|t after Tax to Equ|ty has |noreased from 221.05 |n 2003-04 to 231.05 |n 2004-05 due to
|noreased turnover.
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4. SOURCES AND USES OF FUNDS
Funds amount|ng to Ps.2921.29 Crores were generated from |nterna| and externa| souroes and ut|||sed dur|ng the
year 2004-05 as fo||ows.
Ps. |n Crores)
2004-05
Sources of Funds
Funds from operat|ons
Prof|t after Tax 1,953.91
Add. |oss on Sa|e of F|xed Assets net) 0.52
1,954.43
Add. Depreo|at|on/wr|te off 942.49
Add. Deferred Tax ||ab|||ty prov|ded for 27.65
2,924.57
|ess. Cap|ta| Peserve transferred to P&| Aooount 0.12
|ess. Fore|gn Currenoy Trans|at|on Peserve 3.80
2,920.65
Sa|e of F|xed Assets 0.64
TOTAL 2,921.29
Utilisation of Funds
lnorease |n F|xed Assets 646.65
|ess. Deorease |n Cap|ta| Work-ln-Progress 505.39 141.26
Deorease |n Borrowed funds 136.08
lnorease |n lnvestments 11.96
lnorease |n Work|ng Cap|ta| 1,867.06
D|v|dend Pa|d |no|. D|v|dend Tax 764.93
TOTAL 2,921.29
5. INVENTORY LEVELS
The |nventory |eve|s at the end of the |ast three years are g|ven be|ow.
Ps. |n Crores)
2002-2003 2003-2004 2004-2005
Stores and Spares 325.75 343.46 376.85
Stook of Gas/|PG/Po|ymers & other Produots 92.84 131.45 104.59
The Stook of Stores & Spares was equ| ve| ent to 31.13 months oonsumpt| on for produot| on requ| rements | n
2004-05 as oompared to 23.91 months oonsumpt|on |n 2003-04 and 27.54 months oonsumpt|on |n 2002-03.
The Stook represented 0.10 months sa|es dur|ng 2004-05 as oompared to 0.14 months sa|es |n 2003-04 and 0.10
months sa|es |n 2002-03.
6. SUNDRY DEBTORS
|) The peroentage of Sundry Debtors to Sa|es dur|ng the |ast three years |s g|ven be|ow.
Ps. |n Crores)
As on Considered Considered Total Sales Percentage of Sundry
31
st
March Good Doubtful Debtors Debtors to Sales
2003 709.51 120.47 829.98 10,641.99 7.80
2004 720.69 125.25 845.94 11,295.67 7.49
2005 822.86 120.25 943.11 12,927.07 7.30
The Sundry Debtors represents 0.88 months sa|es |n 2004-05 as oompared to 0.90 months sa|es |n 2003-04 and 0.94
months sa|es |n 2002-03.
||) Per|od - w|se Sundry Debtors as on 31.3.2005 are g|ven be|ow.
Ps. |n Crores)
Govt. Govt. Private Total
Depts. Companies Parties
Debts Outstanding
l) Upto one year 60.28 434.97 254.97 750.22
||) More than 1 year but |ess than 2 years 0.49 13.07 0.77 14.33
|||) 2 Years or more but |ess than 3 years 13.95 9.34 1.10 24.39
|v) 3 years or more 34.63 0.47 119.07 154.17
Tota| Debts 109.35 457.85 375.91 943.11
a). The dues from Government, Government Compan|es and Pr|vate part|es oonst|tute 11.59%, 48.55% and 39.86% of
the tota| Sundry Debtors respeot|ve|y.
b). The dues outstand|ng for more than 3 years oonst|tute 16.35% of the tota| Sundry Debtors.
A. K. SlNGH)
Pr|no|pa| D|reotor of Commero|a| Aud|t
& Ex-Off|o|o Member, Aud|t Board-ll
P|aoe . New De|h|
Dated . 16.08.2005
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GAIL Global (Singapore) Pte. Ltd.
GAIL Global (Singapore) Pte. Ltd. Directors Report
Annual Report for the period ended 31
st
March 2005
We, the unders|gned d|reotors, on beha|f of a|| the d|reotors of the Company, subm|t the annua| report to the members
together w|th aud|ted aooounts of the Company for the per|od ended 31
st
Maroh 2005.
Directorate
The directors in office at the date of this report are as follows:
Upendra Dutta Choubey Appo|nted on 14 September 2004)
K|rpa Pam v|j Appo|nted on 14 September 2004)
Pajeev Khanna Appo|nted on 14 September 2004)
Arrangements for Directors to Acquire Shares or Debentures
At no t|me dur|ng the f|nano|a| per|od was the Company a party to any arrangements to enab|e the d|reotors to aoqu|re
benef|ts by means of the aoqu|s|t|on of shares |n or debentures of the Company or any other body oorporate.
Directors Interests in Shares or Debentures
Aooord|ng to the reg|ster kept by the Company for the purposes of Seot|on 164 of the Compan|es Aot, Cap. 50, part|ou|ars
of |nterests of d|reotors who he|d off|oe at the end of the f|nano|a| per|od |n shares or debentures |n the Company and |n
re|ated oorporat|ons are as fo||ows.-
Ho|d|ngs |n the name Other ho|d|ngs |n wh|oh the d|reotor
of the d|reotor or nom|nee |s deemed to have an |nterest
At date At end At date At end
of |noorporat|on of the per|od of |noorporat|on of the per|od
Ord|nary Shares of Ps. 10 eaoh fu||y pa|d
Holding Company
GAIL (India) Limited
Upendra Dutta Choubey 200 - - -
Pajeev Khanna 270 270 500 -
Exoept as d|so|osed |n th|s report, no d|reotor who he|d off|oe at the end of the f|nano|a| per|od had |nterests |n shares or
debentures of the Company or of re|ated oorporat|ons e|ther at the beg|nn|ng of the f|nano|a| per|od or at the end of the
f|nano|a| per|od.
Directors Contractual Benefits
S|noe the date of |noorporat|on, no d|reotor has reoe|ved or beoome ent|t|ed to reoe|ve a benef|t by reason of a oontraot made
by the Company or a re|ated oorporat|on w|th the d|reotor or w|th a f|rm of wh|oh he |s a member or w|th a oompany |n wh|oh
he has a substant|a| f|nano|a| |nterest.
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Share Options
Dur|ng the f|nano|a| per|od, there were.-
|) no opt|ons granted by the Company to any person to take up un|ssued shares |n the Company.
||) no shares |ssued by v|rtue of any exero|se of opt|on to take up un|ssued shares of the Company.
As at the end of the f|nano|a| per|od, there were no un|ssued shares of the Company under opt|on.
Auditors
The aud|tors, Nex|a Tan & S|toh, have |nd|oated the|r w||||ngness to aooept re-appo|ntment.
For and on beha|f of the Board
Dr.) U.D. Choubey
D|reotor
P|aoe . New De|h| Pajeev Khanna
Dated . June 10, 2005 D|reotor
We, (Dr.) U.D. Choubey and Rajeev Khanna, be|ng d|reotors of GAIL Global (Singapore) Pte. Ltd., do hereby state that
|n our op|n|on.
a) the aooounts set out on pages 5 to 16 are drawn up so as to g|ve a true and fa|r v|ew of the state of affa|rs of the
Company as at 31
st
Maroh 2005 and of the resu|ts of the bus|ness ohanges |n equ|ty and oash f|ows of the Company
for the per|od ended on that date,
b) at the date of th|s statement there are reasonab|e grounds to be||eve that the Company w||| be ab|e to pay |ts debts
as and when they fa|| due.
S|gned on beha|f of the Board of D|reotors
Dr.) U.D. Choubey
D|reotor
P|aoe . New De|h| Pajeev Khanna
Dated . June 10, 2005 D|reotor
GAIL Global (Singapore) Pte. Ltd.
Nexia Tan & Sitoh
Cert|f|ed Pub||o Aooountants
INTERNATIONAL
Report of the Auditors to the Members of GAIL Global (Singapore) Pte. Ltd.
We have aud|ted the aooompany|ng f|nano|a| statements of GAl| G|oba| S|ngapore) Pte. |td. as set out on pages 5 to 16 for
the f|nano|a| per|od ended 31
st
Maroh 2005. These f|nano|a| statements are the respons|b|||ty of the Company's d|reotors. Our
respons|b|||ty |s to express an op|n|on on these f|nano|a| statements based on our aud|t.
We oonduoted our aud|t |n aooordanoe w|th S|ngapore Standards on Aud|t|ng. Those Standards requ|re that we p|an and
perform the aud|t to obta|n reasonab|e assuranoe about whether the f|nano|a| statements are free of mater|a| m|sstatement.
An aud|t |no|udes exam|n|ng, on a test bas|s, ev|denoe support|ng the amounts and d|so|osures |n the f|nano|a| statements.
An aud|t a|so |no|udes assess|ng the aooount|ng pr|no|p|es used and s|gn|f|oant est|mates made by the d|reotors, as we|| as
eva|uat|ng the overa|| f|nano|a| statement presentat|on. We be||eve that our aud|t prov|des a reasonab|e bas|s for our op|n|on.
ln our op|n|on,
a) the f|nano|a| statements are proper|y drawn up |n aooordanoe w|th the prov|s|ons of the Compan|es Aot, Cap 50
"the Aot") and S|ngapore F|nano|a| Peport|ng Standards so as to g|ve a true and fa|r v|ew of the state of affa|rs of the
Company as at 31
st
Maroh 2005 and the resu|ts, ohanges |n equ|ty and oash f|ows of the Company for the per|od
then ended on that date, and
b) the aooount|ng and other reoords exo|ud|ng reg|sters) requ|red by the Aot to be kept by the Company have been
proper|y kept |n aooordanoe w|th the prov|s|ons of the Aot.
Cert|f|ed Pub||o Aooountants
P|aoe . S|ngapore
Dated . June 10, 2005
5 Shenton Way UlC Bu||d|ng =23-03 S|ngapore 068808
Te|ephone. 65) 6534 5700 Fax. 65) 6534 5766 Ema||. tans|toh@tans|toh.oom.sg Webs|te. www.tans|toh.oom.sg
Ch|na Off|oe. Un|t 1209 Centra| P|aza 227 Huang P| North Poad Shangha| 200 003 Ch|na
Te|ephone. 8621) 63758226 Te|efax. 8621) 63758326 Webs|te. www.tans|toh.oom.on
Nex|a Tan & S|toh |s a member f|rm of Nex|a lnternat|ona|, a wor|dw|de network of |ndependent aooount|ng and oonsu|t|ng f|rms
113
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Balance Sheet as at 31
st
March 2005
Notes 2005
US$
Other Investments 3 19,065,966
Current Assets
Trade reoe|vab|e 4 1,038,062
Cash at bank 194,342
1,232,404
Current Liabilities
Aoorued operat|ng expenses 54,946
Amounts due to ho|d|ng oompany non-trade) 5 434,940
Prov|s|on for taxat|on 537
490,423
Net Current Asset 741,981
Non-Current Liabilities
|oan from ho|d|ng oompany non-trade) 6 17,200,000
2,607,947
Representing:
Share oap|ta| 7 2,100,000
Unappropr|ated prof|t 507,947
2,607,947
The notes set out on pages 9 to 16 form part of these aooounts.
GAIL Global (Singapore) Pte. Ltd.
Profit and Loss Account for the Period Ended 31
st
March 2005
For the period from
14
th
September 2004
(date of incorporation)
to 31
st
March, 2005
Notes US$
Revenue 8 1,038,062
Other |noome 9 8,892
Adm|n|strat|ve expenses 249,127)
Profit from operations 10 797,827
F|nanoe oosts 11 289,343)
Profit from ordinary activities before taxation 508,484
Taxation 12 537
Profit from ordinary activities after taxation 507,947
The notes set out on pages 9 to 16 form part of these aooounts.
115
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GAIL Global (Singapore) Pte. Ltd.
Statement of Changes in Equity for the Period Ended 31
st
March 2005
Share Unappropriated
Capital Profit Total
US$ US$ US$
As at 14
th
September 2004 2,100,000 - 2,100,000
Prof|t for the per|od - 507,947 507,947
As at 31
st
Maroh 2005 2,100,000 507,947 2,607,947
The notes set out on pages 9 to 16 form part of these aooounts.
Notes on the Accounts for the Period Ended 31
st
March 2005
For the period from
14
th
September 2004
(date of incorporation)
to 31
st
March, 2005
Note US$
Cash Flow From Operating Activities
Prof|t before tax 508,484
Adjustment for non cash items:
Ca|| depos|t |nterest |noome 8,892)
|oan |nterest expense to a ho|d|ng oompany 289,343
Operating profits before working capital changes 788,935
(Increase)/Decrease In:
Other reoe|vab|e 1,038,062)
Increase/(Decrease) In
Aoorued operat|ng expenses 54,946
Amount due to ho|d|ng oompany non-trade) 434,940
Net Cash Inflows From Operating Activities 240,759
Cash Flows From Investing Activities
Purohase of |nvestment 19,065,966)
Ca|| depos|t |nterest |noome 8,892
Net Cash (Outflows) From Investing Activities 19,057,074)
Cash Flows From Financing Activities
Prooeeds from app||oat|ons of new shares 2,100,000
|oan from a ho|d|ng oompany seoured) 17,200,000
|oan |nterest expense to a ho|d|ng oompany 289,343)
Net Cash Inflows From Financing Activities 19,010,657
Net |norease |n oash and oash equ|va|ents 194,342
Cash and oash equ|va|ents at beg|nn|ng of the per|od -
Cash and oash equ|va|ents at end of the per|od 13 194,342
The notes set out on pages 9 to 16 form part of these aooounts.
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We Stand for Pe||ab|||ty
Notes on the Accounts for the Period Ended 31
st
March 2005
These notes form an |ntegra| part of and shou|d be read |n oonjunot|on w|th the aooompany|ng aooounts.
1 Corporate Information
The f|nano|a| statements of the Company for the per|od ended 31
st
Maroh 2005 were author|sed for |ssue |n aooordanoe
w|th reso|ut|on of the d|reotors on 10 June 2005.
Ga|| G|oba| S|ngapore) Pte |td. |s a Company |noorporated |n S|ngapore w|th |ts p|aoe of bus|ness at 10 Co||yer Quay
=19-08 Ooean Bu||d|ng S|ngapore 049315.
The pr|no|pa| aot|v|t|es of the Company, wh|oh |s |noorporated |n the Pepub||o of S|ngapore, have been those re|at|ng to
the bus|ness of |nvestment ho|d|ng oompan|es.
The ho|d|ng oompany |s GAl| lnd|a) ||m|ted, a ||sted oompany |noorporated |n lnd|a, New De|h|.
2 Summary of Significant Accounting Policies
(a) Basis of preparation
The f|nano|a| statements are prepared |n aooordanoe w|th the h|stor|oa| oost oonvent|on.
The f|nano|a| statements have been prepared |n aooordanoe w|th S|ngapore F|nano|a| Peport|ng Standards "FPS").
The preparat|on of f|nano|a| statements |s |n oonform|ty w|th FPS requ|res the use of est|mates and assumpt|ons that
affeot the reported amounts of assets and ||ab|||t|es and d|so|osure of oont|ngent assets and ||ab|||t|es at the date of
the f|nano|a| statements and the reported amounts of revenues and expenses dur|ng the f|nano|a| year. A|though
these est|mates are based on management's best know|edge of ourrent events and aot|ons, aotua| resu|ts may
u|t|mate|y d|ffer from these est|mates.
(b) Investments
Other |nvestments oompr|se |ong-term equ|ty and non-equ|ty seour|t|es. They are stated at oost |ess a||owanoe for
d|m|nut|on |n va|ue based on a rev|ew at the ba|anoe sheet date. An a||owanoe for d|m|nut|on |n made where, |n the
op|n|on of D|reotors, there |s a deo||ne other than temporary |n the va|ue of suoh |nvestments, suoh reduot|on be|ng
determ|ned and made for eaoh |nvestment |nd|v|dua||y. Where there has been a deo||ne other than temporary |n the
va|ue of an |nvestment, suoh a deo||ne |s reoogn|zed as expense |n the per|od |n wh|oh the deo||ne |s |dent|f|ed.
(c) Trade and Other Receivables
Trade and other reoe|vab|es are stated at the|r oost |ess a||owanoe for doubtfu| reoe|vab|es. Bad debts are wr|tten off
when |dent|f|ed.
(d) Cash and Cash Equivalents
Cash and oash equ|va|ents oompr|se oash ba|anoes and bank depos|ts. For the purpose of the statement of oash
f|ows, oash and oash equ|va|ents are presented net of bank overdrafts wh|oh are repayab|e on demand and wh|oh
form an |ntegra| part of the Company's oash management.
(e) Provisions
Prov|s|ons are reoogn|sed when the Company has a present |ega| or oonstruot|ve ob||gat|on as a resu|t of past
event, |t |s probab|e that an outf|ow of resouroes w||| be requ|red to sett|e the ob||gat|on and a re||ab|e est|mate of the
amount oan be made.
(f) Preliminary Expenses
Pre||m|nary expenses are wr|tten off |n the per|od they are |nourred.
GAIL Global (Singapore) Pte. Ltd.
(g) Deferred Taxation
Deferred tax |s prov|ded |n fu||, us|ng ||ab|||ty method, on temporary d|fferenoes ar|s|ng between the tax bases of
assets and ||ab|||t|es and the|r oarry|ng amounts |n the f|nano|a| statements. Temporary d|fferenoes are not reoogn|sed
for goodw||| not deduot|b|e for tax purposes and the |n|t|a| reoogn|t|on of assets or ||ab|||t|es that affeot ne|ther
aooount|ng nor taxab|e prof|t. The amount of deferred tax prov|ded |s based on the expeoted manner of rea||sat|on
or sett|ement of the oarry|ng amount of assets and ||ab|||t|es, us|ng tax rates enaoted or substant|ve|y enaoted at the
ba|anoe sheet date.
Deferred |noome tax assets are reoogn|sed to the extent that |t |s probab|e that future taxab|e prof|t w||| be ava||ab|e
aga|nst wh|oh the temporary d|fferenoes oan be ut|||sed.
(h) Income Recognition
Prov|ded |t |s probab|e that the eoonom|o benef|ts w||| f|ow to the Company and the revenue and oosts, |f app||oab|e,
oan be measured re||ab|y, revenue |s reoogn|sed |n the prof|t and |oss aooount as fo||ows.
(i) Dividend Income
D|v|dend |noome from quoted |nvestments |s reoogn|sed when d|v|dend has been deo|ared and r|ght to reoe|ve
d|v|dend has been estab||shed.
(ii) Interest income
lnterest |noome |s reoogn|sed on an aoorua| bas|s.
(i) Related Parties
Pe|ated part|es are ent|t|es w|th oommon d|reotor, |nd|reot shareho|ders and/or d|reotors. Part|es are oons|dered to
be re|ated |f one party has the ab|||ty, d|reot|y or |nd|reot|y, to oontro| the other party or exero|se s|gn|f|oant |nf|uenoe
over the other party |n mak|ng f|nano|a| and operat|ng deo|s|ons. Part|es are a|so oons|dered to be re|ated |f they are
subjeot to oommon oontro| or oommon s|gn|f|oant |nf|uenoe.
(j) Foreign Currencies Translations
(i) Measurement currency
ltems |no|uded |n the f|nano|a| statements of eaoh ent|ty |n the Company are measured us|ng ourrenoy that best
ref|eots the eoonom|o substanoe of the under|y|ng events and o|roumstanoes re|evant to that ent|ty. The f|nano|a|
statements of the Company are presented |n Un|ted States Do||ars, wh|oh |s the measurement ourrenoy of the
Company.
(ii) Foreign currency transaction
Monetary assets and ||ab|||t|es |n fore|gn ourreno|es are trans|ated |nto Un|ted States do||ars at rates of exohange
approx|mat|ng to those ru||ng at the ba|anoe sheet date. Trans|at|ons |n fore|gn ourreno|es are transaoted at
rates ru||ng on transaot|on dates. Transaot|on d|fferenoes are |no|uded |n the prof|t and |oss statement.
(k) Impairment
The oarry|ng amounts of the Company's assets, other than |nventor|es, are rev|ewed at eaoh ba|anoe sheet date to
determ|ne whether there |s any |nd|oat|on of |mpa|rment. lf suoh |nd|oat|on ex|sts, the asset's reooverab|e amount |s
est|mated. For |ntang|b|e assets that are not yet ava||ab|e for use, the reooverab|e amount |s est|mated at eaoh
ba|anoe sheet date.
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An |mpa|rment |oss |s reoogn|sed whenever the oarry|ng amount of an asset or |ts oashgenerat|ng un|t exoeeds |ts
reooverab|e amount. lmpa|rment |osses are reoogn|sed |n the prof|t and |oss aooount.
(i) Calculation of recoverable amount
The reooverab|e amount |s the greater of the asset's net se|||ng pr|oe and va|ue |n use. ln assess|ng va|ue |n use,
the est|mated future oash f|ows are d|soounted to the|r present va|ue us|ng a pre-tax d|soount rate that ref|eots
ourrent market assessments of the t|me va|ue of money and the r|sks speo|f|o to the asset. For an asset that
does not generate oash |nf|ows |arge|y |ndependent of those from other assets, the reooverab|e amount |s
determ|ned for the oash-generat|ng un|t to wh|oh the asset be|ong.
(ii) An |mpa|rment |oss |s reversed |f there has been a ohange |n the est|mates used to determ|ne the reooverab|e
amount. An |mpa|rment |oss |s reversed on|y to the extent that the asset's oarry|ng amount does not exoeed the
oarry|ng amount that wou|d have been determ|ned, net of depreo|at|on or amort|sat|on, |f no |mpa|rment |oss
had been reoogn|sed. A reversa| of an |mpa|rment |oss |n respeot of |and and bu||d|ngs or |nvestment property
oarr|ed at reva|ued amount |s reoogn|sed |n the same way as a reva|uat|on |norease. A|| other reversa|s of
|mpa|rment are reoogn|sed |n the prof|t and |oss aooount.
(l) Employee Benefits
Defined contribution plans
Contr|but|ons to post emp|oyment benef|ts under def|ned oontr|but|on p|ans are reoogn|sed as an expense |n the
prof|t and |oss aooount as |nourred.
3. Other Investments
2005
US$
Quoted equity:
Quoted shares at oost 19,065,966
|ess. A||owanoe for d|m|nut|on |n va|ue -
19,065,966
Fair values 19,347,680
The market va|ue of quoted equ|ty |s determ|ned by referenoe to stook exohange quoted b|d pr|oes.
The exposure of other |nvestments to |nterest rate r|sks |s d|so|osed |n note 15o).
4. Trade Receivable
2005
US$
D|v|dend reoe|vab|e 1,038,062
1,038,062
The oarry|ng amount of trade reoe|vab|e approx|mates |ts fa|r va|ue.
GAIL Global (Singapore) Pte. Ltd.
5. Amounts Due To A Holding Company (Non-Trade)
These amounts are unseoured, |nterest-free and have no f|xed term of repayments.
6. Loan From Holding Company (Secured)
2005
US$
|ong term |oan 17,200,000
The |nterest bear|ng bank |oan bears |nterest of 6-months |lBOP as per Te|erate page p|us one hundred bas|s po|nts
bps). Dur|ng the per|od, the |nterest |s oharged at 1.68%. The repayment per|od |s 5 years.
These |oan are seoured by 15% pa|d up oap|ta| |n Nat|ona| Gas Company S.A.E Egypt Natgas) w|th |nvestment oost of
$19,065,966 as at 31
st
Maroh 2005 Note 3).
Carrying amounts Fair values
2005 2005
US$ US$
|ong term |oan 17,200,000 15,825,267
The fa|r va|ues are determ|ned from the d|soounted oash f|ow ana|ys|s, us|ng a d|soounted rate based upon the
6-months |lBOP as per Te|erate page p|us one hundred bas|s po|nts bps) as at the ba|anoe sheet date. The |oan
amount |s denom|nated |n Un|ted States Do||ar.
7. Share Capital
2005
US$
Author|sed.
At beg|nn|ng and end of per|od 20,000,000 ord|nary shares 20,000,000
lssued and pa|d-up oap|ta|.
At beg|nn|ng and end of per|od - 2,100,000 ord|nary shares of $1 eaoh 2,100,000
The Company was |noorporated w|th an author|sed share oap|ta| of $20,000,000 d|v|ded |nto 20,000,000 ord|nary
shares of US$1 eaoh. 2,100,000 ord|nary shares of $1 eaoh fu||y pa|d were |ssued at par for oash as |n|t|a| work|ng
oap|ta|.
8. Revenue
2005
US$
D|v|dend |noome 1,038,062
9. Other Income
2005
US$
Ca|| depos|t |nterest |noome 8,892
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10. Profit From Operations
The prof|t from operat|ons |s determ|ned.
Note 2005
US$
After charging:
Non-Aud|t fees pa|d to aud|tors 908
Pre||m|nary expenses 2f) 2,245
After crediting:
Ca|| depos|t |nterest |noome 8,892
11. Finance Costs
2005
US$
|oan |nterest expense to ho|d|ng oompany 289,343
12. Taxation
lnoome tax expenses 2005
US$
Current taxat|on
- ourrent 537
537
The tax |noome) / expense on prof|t d|ffer from the amount that wou|d ar|se us|ng the S|ngapore standard rate of
|noome tax due to the fo||ow|ng.-
2005
US$
Prof|t before tax 508,484
Tax oa|ou|ated at a tax rate of 20% 101,697
lnoome not subjeot to |noome tax 100,017)
Tax exempt|on 1,143)
537
13. Cash and cash equivalents
2005
US$
Cash at bank and |n hand 194,342
The oarry|ng amounts of oash and oash equ|va|ents approx|mate the|r fa|r va|ue.
The effeot|ve |nterest rates per annum re|at|ng to oash and oash equ|va|ents at the ba|anoe sheet date for the Company
are 0.69%. lnterest rates re-pr|oe w|th|n a per|od of twe|ve months.
The exposure of oash and oash equ|va|ents to |nterest rate r|sks |s d|so|osed |n note 15o).
GAIL Global (Singapore) Pte. Ltd.
14. Related Party Transactions
|) Some of the d|reotors have |nterest |n the re|ated part|es. Part|es are oons|dered to be re|ated to the Company |f the
Company has the ab|||ty, d|reot|y or |nd|reot|y, to oontro| the party or exero|se s|gn|f|oant |nf|uenoe over the party |n
mak|ng f|nano|a| and operat|ng deo|s|ons, or v|oe versa, or where the Company and the party are subjeot to oommon
oontro| or oommon s|gn|f|oant |nf|uenoe. Pe|ated part|es may be |nd|v|dua|s or other ent|t|es.
||) ln add|t|on to the re|ated party |nformat|on d|so|osed e|sewhere |n the aooounts, there were the fo||ow|ng s|gn|f|oant
re|ated party transaot|ons took p|aoe dur|ng the year on terms agreed between the part|es.
2005
US$
Holding Company
GAIL (India) Limited
|oan note a) 17,200,000
|oan |nterest expense note a) 289,343
Pe|mbursement of |ega| expense 183,772
Note.
a) The |oan from a ho|d|ng oompany amount|ng to US$17,200,000 as set out |n note 6, |s seoured and repayab|e |n fu||
on 24 September 2009. lnterest |s payab|e based upon the 6-months |lBOP as per Te|erate page p|us one hundred
bas|s po|nts bps).
15. Financial Instruments and Risk Management
(a) Financial risk management objectives and policies
The Company's overa|| treasury and fund|ng po||o|es foous on m|n|m|s|ng fore|gn ourrenoy and |nterest rate exposures
|n a oost-eff|o|ent manner and max|m|s|ng the y|e|ds on surp|us oash based on a prudent assessment of the r|sks of
|nvestments. Treasury matters are governed by po||o|es approved by the Board of D|reotors and are |mp|emented by
the management on a day to day bas|s.
(b) Credit risk
Management has a ored|t po||oy |n p|aoe and the exposure to ored|t r|sk on reoe|vab|es |s mon|tored on an ongo|ng
bas|s. Cred|t eva|uat|on |s performed on a|| oustomers requ|r|ng ored|t over a oerta|n amount and ored|t terms.
At ba|anoe sheet date, there were no s|gn|f|oant oonoentrat|ons of ored|t r|sk. The max|mum exposure to ored|t r|sk
|s represented by the oarry|ng amount of eaoh f|nano|a| asset |n the ba|anoe sheet.
(c) Interest rate risk
The Company's exposure to market r|sk for ohanges |n |nterest rates re|ate pr|mar||y to debt ob||gat|ons.
The Company's debt ob||gat|ons are denom|nated ma|n|y |n Un|ted States do||ars at |nterest rate of 6-months |lBOP
as per Te|erate page p|us one hundred bas|s po|nts bps). Per|od|o rev|ews are oarr|ed out by the management on
the proport|on of market rates tak|ng |nto aooount the oash f|ows and the nature of debt ob||gat|ons of the Company
and the market out|ook.
(d) Foreign currency risk
The Company |nours fore|gn ourrenoy r|sk on |ts |nvestments and expenses that are denom|nated |n a ourrenoy
other than Un|ted States do||ars. The ourrenoy g|v|ng r|se to th|s r|sk |s pr|mar||y Egypt|an pounds and S|ngapore
do||ars.
123
21
st
Annual Report
We Stand for Pe||ab|||ty
GAIL Global (Singapore) Pte. Ltd.
(e) Liquidity risk
The Company mon|tors |ts ||qu|d|ty r|sk and ma|nta|ns a |eve| of oash and oash equ|va|ents deemed adequate by
management to f|nanoe the Company's operat|ons and to m|t|gate the effeots of f|uotuat|ons |n the oash f|ows.
(f) Effective interest rates and repricing analysis
ln respeot of |nterest-bear|ng f|nano|a| assets and ||ab|||t|es, the fo||ow|ng tab|e |nd|oates the|r effeot|ve |nterest rates
at ba|anoe sheet date and the years |n wh|oh they are repr|oed.
Effective Total Within 1 to 5
Interest Rate 1 year years
% $ $ $
Financial Assets
2004
Cash and oash equ|va|ents 0.69 194,342 194,342 -
Financial Liabilities
2004
|oan from a ho|d|ng oompany seoured) 1.68 17,200,000 - 17,200,000
(g) Fair value of financial assets and liabilities
The fa|r va|ue of f|nano|a| assets and f|nano|a| ||ab|||t|es of the Company at the ba|anoe sheet date oompr|se ma|n|y
monetary assets and ||ab|||t|es and the d|reotors are of the op|n|on that reported |n the ba|anoe sheet approx|mates
the|r oarry|ng amount exoept as d|so|osed e|sewhere.
21
st
Annual Report
125 We Stand for Reliability
Auditors Report to the Board of Directors of GAIL (India) Limited on
Consolidated Financial Statements of GAIL (India) Limited,
its Subsidiary, Joint Ventures and Associates
We have examined the attached Consolidated Balance Sheet of GAIL (India) Ltd. (the Company), its subsidiary, joint ventures
and associates as at 31
st
March 2005 and the Consolidated Profit and Loss Account and the Consolidated Cash Flow
Statement for the year ended on the date annexed thereto. These financial statements are the responsibility of the management
of the company. Our responsibility is to express an opinion on these financial statements based on our audit.
1. We conducted our audit in accordance with generally accepted auditing standards in India. These Standards require
that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all
material respects, in accordance with an identified financial reporting framework and are free of material misstatements.
An audit includes, examining on a test basis, evidence supporting the amounts and disclousures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by the management, as
well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our opinion.
2. We did not audit the financial statements of subsidiary namely Gail Global (Singapore) Pte. Ltd., whose financial statements
reflect total assets of Rs. 88.85 Crores as at March 31, 2005 and total revenue of Rs. 4.66 Crores and net cash flows of
Rs.0.86 crores for the year ended on that date. These financial statements have been audited by other auditors whose
reports have been furnished to us, and our opinion, in so far as it relates to the amount included in respect of the
subsidiary, is based solely on the report of the other auditors.
3. We did not audit the financial statements of associates namely Fayum Gas, Shell Compressed Natural Gas Egypt,
Gujrat State Electricity Generation and National Gas Company NATGAS. These financial statements have been audited
by other auditors whose reports or certificates have been furnished to us, and our opinion, in so far as it relates to the
amount included in respect of these associates, is based solely on the report of the other auditors.
4. We did not audit the financial statements of joint ventures, whose financial statement reflect total assets of Rs.3662.73
crores and total liabilities of Rs.1,523.81 Crores as at March 31, 2005 and total revenue of Rs. 2,801.44 Crores, total
expenditure of Rs. 2,527.73 Crores for the year ended on that date. These financial statements have been audited by
other auditors or are certified by management whose reports or certificates have been furnished to us, and our opinion,
in so far as it relates to the amount included in respect of these joint ventures, is based solely on the report of the other
auditors or certificates of management as the case may be.
5. We report that the consolidated financial statements have been prepared by the Companys management in accordance
with the requirements of Accounting Standard (AS) 21, viz, Consolidated Financial Statements Accounting Standard (AS)
23, viz Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard (AS)
27, viz Financial Reporting of Interests in Joint Ventures, issued by The Institute of Chartered Accountants of India.
6. We further report that subject to Note No. 15, 16, 18, 19, 20 & 25 of Notes to Accounts to Consolidated Financial
Statements of the company and on the basis of the information and explanations given to us and on the consideration
of seperate audit reports on individual audited financial statements of the Company, its subsidiary, joint ventures and
associate companies, we are of the opinion that the said consolidated financial statements give a true and fair view in
conformity with the accounting principles generally accepted in India:
(a) in the case of the Consolidated Balance Sheet, of the consolidated state of affairs of the Company as at 31
st
March 2005.
(b) in the case of Consolidated Profit and Loss Account, of the consolidated results of operations of the Company for
the year on that date and
(c) in the case of Consolidated Cash Flow Statement, of the consolidated cash flows of the Company for the year
ended on that date.
For S. Mann & Co.
Charted Accountants
Subhash Mann
Place : New Delhi Partner
Dated : June 21, 2005 Membership No. 80500
21
st
Annual Report
127 We Stand for Reliability
GAIL (India) Limited - New Delhi
Consolidated Balance Sheet as on 31
st
March 2005
(Rs. in Crores)
Schedule As at
No. 31st March 2005
SOURCES OF FUNDS
Shareholders Funds
Capital 1 845.65
Reserves and Surplus 2 7,964.42 8,810.07
Loan Funds 3
Secured Loans 1,787.91
Unsecured Loans 415.89 2,203.80
Deferred Tax Liability (Net) 1,285.45
12,299.32
APPLICATIONS OF FUNDS
Fixed Assets 4
Gross Block 14,786.22
Less : Depreciation 6,461.83
Net Block 8,324.39
Capital Work in Progress 5 371.86
8,696.25
Investments 6 709.97
Current Assets, Loans and Advances 7
Inventories 501.50
Sundry Debtors 848.71
Cash and Bank Balances 3,491.28
Other Current Assets 27.03
Loans and Advances 1,637.47
6,505.99
Less: Current Liabilities and Provisions 8
Current Liabilities 2,797.20
Provisions 819.36
3,616.56
Net Current Assets 2,889.43
Miscellaneous Expenditure
(To the extent not written off or adjusted)
Deferred Revenue Expenditure
Preliminary Expenditure 3.67
TOTAL 12,299.32
Contingent Liabilities not provided for (Refer Schedule 14)
N.K.Nagpal J.K.Jain B S. Negi Proshanto Banerjee As per our separate report of even date
Secretary Director (Finance) Director (BD) Chairman & Managing Director For M/s S. MANN & COMPANY
Chartered Accountants
Subhash Mann
Place : New Delhi (Partner)
Dated : June 21, 2005 Membership NO. 80500
GAIL (India) Limited - New Delhi
Consolidated Profit & Loss Account for the Year Ended 31
st
March, 2005
(Rs. in Crores)
Schedule Year Ended
No. 31st March
2005
INCOME
Sales 12,880.19
Less: Excise Duty 552.10 12,328.09
LPG Transmission Charges/RLNG Shipper Charges 356.49
Income from Telecom 18.42
Increase (decrease) in Inventories
Closing Stock 101.11
Less: Opening Stock 131.50 (30.39)
Internal consumption 1,179.18
Other Income 9 355.52
TOTAL 14,207.31
EXPENDITURE
Purchases 7,712.89
Manufacturing, Transmission,Administration
Selling & Distribution and other Expenses 10 2,379.73
Depreciation 4 982.52
3,362.25
Less: Incidental Expenditure during construction
transferred to Capital Work-in-Progress 11 0.93 3,361.32
Deferred Revenue Expenditure written off 0.38
TOTAL 11,074.59
Profit before Interest and Finance Charges 3,132.72
Interest and Finance Charges 12 150.92
Profit for the year before Tax 2,981.80
Provision for Taxation - Current 927.54
- Deferred 30.91 958.45
Net profit before prior period items 2,023.35
Less: Prior Period Adjustments (Net) 13 0.88
Net profit 2,022.47
Carried Forward 2,022.47
21
st
Annual Report
129 We Stand for Reliability
Schedule Year Ended
No. 31
st
March
2005
Brought Forward 2022.47
ADD:
Share of Profit/(Loss) in Associates for the year 16.41
Group Profit after Tax 2,038.88
Profit brought forward from previous year 5,407.55
Amount available for appropriation 7,446.43
APPROPRIATIONS
Interim Dividend 338.26
Proposed Dividend 338.26
Corporate Dividend Tax 91.74
Bond Redemption Reserve 32.13
General Reserve 197.78
Balance Carried to Balance Sheet 6,448.26
TOTAL 7,446.43
Details of Earning Per Share
A. Group Profit after tax 2,038.88
B. Weighted Average No. of Equity Shares 84,56,51,600
C. Nominal Value per Equity Share ( Rs.) 10/-
D. Basic and Diluted Earning Per Share ( Rs.) 24.11
Notes on Accounts 14
Schedules 1 to 14 and Accounting policies form part of Accounts
N. K. Nagpal J. K. Jain B. S. Negi Proshanto Banerjee As per our separate report of even date
Secretary Director (Finance) Director (BD) Chairman & Managing Director For M/s S. MANN & COMPANY
Chartered Accountants
Subhash Mann
Place : New Delhi (Partner)
Dated : June 21, 2005 Membership NO. 80500
Schedule 1 - Share Capital
(Rs. in Crores)
As at
31
st
March 2005
AUTHORISED
100,00,00,000 Equity Shares of Rs.10/- each 1,000.00
ISSUED, SUBSCRIBED AND PAID-UP
84,56,51,600 Equity Shares of Rs.10/- each fully paid up 845.65
TOTAL 845.65
Schedule 2 - Reserves and Surplus
(Rs. in Crores)
As at
31
st
March 2005
Capital Reserve
(Grant received from Danish Govt. for construction of
Gas Technology Institute at Noida)
As per Last Account 2.33
Less : Transferred to Profit & Loss Account 0.12 2.21
Share Premium Account 14.69
Investment Allowance (Utilised) Reserve 266.61
Bonds Redemption Reserves 64.25
General Reserve
As per Last Account 975.95
Add: Transferred from Profit & Loss Account 197.78
1,173.73
Foreign Currency Translation Reserve (5.95)
Profit and Loss Account
Profit & Loss Account 6,448.26
Add: Adjustment based on accounts of associate 0.62 6,448.88
TOTAL 7,964.42
21
st
Annual Report
131 We Stand for Reliability
Schedule 3 - Loan Funds
(Rs. in Crores)
As at
31
st
March
2005
SECURED LOANS
Loan from Bank of India 500.00
(Secured by hypothecation by way of first charge on pari passu basis of movable plant &
machinery, machinery spares, equipment, tools & accessories & other moveables, both present
& future, whether installed or not & lying loose or in stores of Dahej Vijaipur Pipeline project)
including Rs.NIL due for payment within one year)
Loan from HSBC 10.80
Bonds Series - I 500.00
(6.10% Secured Non-convertible redeemable Bonds - Series - I are redeemable in 5 equal
installment commencing from the end of the 8th year upto the end of the 12th year from the
deemed date of allotment August 22, 2003. Bonds are secured by charge on immovable
residential building and movable plant & machinery situated at Hazira Vaghodia, Gandhar and
Vadodara in Gujarat.)
Bonds Series - II 600.00
(5.85% Secured Non-convertible redeemable Bonds -Series - II are redeemable in 5 equal
installment commencing from the end of the 6th year upto the end of the 10th year from the
deemed date of allotment March 25, 2004. Bonds are secured by charge on immoveable
residential building and movable plant & machinery situated at Hazira Vaghodia,Gandhar,
Vadodara & DVPL Project in Gujarat.)
Term Loan
External Commercial Borrowing 12.44
(Repayable within one year Rs. 2.49)
From Financial Institution 7.18
(Repayable within one year Rs. 0.02)
From Banks 131.36
From Others 26.13
UNSECURED LOANS
From Banks:
- State Bank of India, London 34.28
(including Rs.13.71 due for payment within one year)
- Other Banks 7.46
(repayable within one year)
- Buyers' Credit 4.77
From others: 46.51
- Oil Industry Development Board
(including Rs. 65.75 due for payment within one year) 363.12
- Sales Tax Deferred 5.47
Deposit From Customers 0.79
(Deposits from commercial customers of natural gas 415.89
refundable on termination of the gas sales agreements)
TOTAL 2,203.80
Schedule 4 - Fixed Assets
DESCRIPTION GROSS BLOCK (AT COST)
As at Additions/ Sales/ As at
1.4.2004 Adjustments Adjustments 31.03.2005
during the year during the year
Tangible Assets
Freehold 59.13 0.21 - 59.34
Leasehold 74.89 1.93 - 76.82
Building:
Office/Others 381.76 16.22 0.04 397.94
Residential 253.12 0.30 - 253.42
Roads and Fences 0.63 0.08 - 0.71
Electrical Installations 0.46 - - 0.46
Bunk Houses 1.62 - - 1.62
Plant and Machinery 12,720.90 863.31 0.33 13,583.88
Railway Lines & Sidings 5.47 - - 5.47
Communication Systems 0.29 - - 0.29
Electrical Equipments 123.54 4.78 0.19 128.13
Furniture, Fixtures and 0.02 - - 0.02
Other Equipments 203.71 34.55 8.43 229.83
Office Equipments 0.95 0.44 - 1.39
Vehicles 0.38 0.08 0.02 0.44
Transport Equipments 2.41 0.14 0.33 2.22
Intangible Assets
Right of Use 17.42 (0.04) - 17.38
Softwares / Licences 0.60 26.26 - 26.86
Total 13,847.30 948.26 9.34 14,786.22
Share in Joint Venture
Assets included above 262.57 301.60 0.31 563.86
21
st
Annual Report
133 We Stand for Reliability
(Rs. in Crores)
DEPRECIATION NET BLOCK
As at For the Year Adjustments As at As at As at
01.04.2004 during the year 31.03.2005 31.03.2005 31.03.2004
- - - - 59.34 59.13
5.23 0.76 0.04 5.95 70.87 69.66
62.71 10.66 - 73.37 324.57 319.05
32.40 4.91 - 37.31 216.11 220.72
0.05 0.02 - 0.07 0.64 0.58
0.04 0.02 - 0.06 0.40 0.42
1.58 0.04 - 1.62 - 0.04
5,272.98 938.81 4.16 6,207.63 7,376.25 7,447.92
3.44 0.27 - 3.71 1.76 2.03
0.06 0.01 - 0.07 0.22 0.23
30.21 6.43 0.05 36.59 91.54 93.33
- - - - 0.02 0.02
80.80 18.53 7.61 91.72 138.11 122.91
0.15 0.07 - 0.22 1.17 0.80
0.21 0.04 0.01 0.24 0.20 0.17
1.41 0.15 0.18 1.38 0.84 1.00
- - - - 17.38 17.42
0.09 1.80 - 1.89 24.97 0.51
5,491.36 982.52 12.05 6,461.83 8,324.39 8,355.94
49.51 35.86 0.01 85.36 478.50 213.06
Schedule 5 - Capital Work-in-Progress
(Rs. in Crores)
As at
31
st
March
2005
Linepipe Construction and related facilities including Cathodic Protection 81.05
Despatch/Receiving Terminals 0.03
Telecom/Telesupervisory System 5.71
LPG Pipeline Project 2.02
LPG Projects 0.89
Petrochemicals 46.55
Telecom Projects 1.07
Others 63.77
Survey,Studies and other service-Cochin 0.94
Solid Cargo Port 0.09
Engineering/project construction 8.85
Building 0.04
Exploratory Well in Progress 42.99
Construction of CNG Station at Vijayawada 0.39
Preoperative expenditure, pending allocation in respect of Jointly controlled Entity 0.59
Buildings 7.83
Less : Provision for abandonment of Work in Progress 2.64 5.19
Linepipes, Capital Items in Stock/Transit 110.54
(including materials with Contractors : Rs. 0.27)
Less : Provision for losses/obsolescence 1.24 109.30
Advance for Capital Expenditure
(Unsecured - Considered Good) 2.39
(Unsecured - Considered Doubtful) 1.39
3.78
Less : Provision for Doubtful Advances 1.39 2.39
TOTAL 371.86
21
st
Annual Report
135 We Stand for Reliability
Schedule 6 - Investments
(Rs. in Crores)
As at
31
st
March
2005
LONG-TERM INVESTMENTS
A. Trade Investments
Quoted* -
570,600 Equity Shares of Rs.10/-each fully Paid-up in Gujarat Industries Power 0.86
Co. Ltd.(includes 1,90,200 Equity Shares acquired during the year 1996-97 at a
a premium of Rs.15/- per share)
3,42,66,845 Equity Shares of Rs.10/- each fully paid up in ONGC Limited 556.29
(Acquired during 1999-2000 at a price of Rs.162.34 per Share)
6.96 % Oil Companies GOI Special Bonds 2009 6.00
(Alloted in lieu of claims pending with Oil Co-ordination Committee)
Mutual Fund Scheme
Birla Quarterly FMP 1.00
Reliance Quarterly FMP 1.00
Unquoted-At cost
Investment in Associates
19,000 Equity shares of LE 100/- each fully paid in Fayum Gas Company 4.59
registered in Egypt.
(During the year 2004-05, Fayum Gas Company has restructured the equity capital)
Add: Goodwill 3.50
Add: Share of Profit in Associate 0.69
Less: Dividend received 3.09 5.69
2,20,000 Equity shares of LE 10/- each fully paid up in Shell Compressed 0.33
Natural Gas Company,registered in Egypt
Add: Goodwill 1.28
Add: Share of Profit in Associate 0.03 1.64
2,07,60,000 Equity Shares of Rs.10/- each fully paid-up in Gujrat State Electricity 20.76
Generation Ltd.
Add: Share of Profit in Associate 10.68 31.44
3,000,000 Equity shares of LE 5/- per share in Natgas 21.21
Equity share has acquired at a premium LE 34.5 per Equity Share
Add: Goodwill 62.24
Add: Share of Profit in Associate 5.63
89.08
Carried Forward 693.00
(Rs. in Crores)
As at
31
st
March
2005
Brought Forward 693.00
Advance against allotment of Equity Shares of Tripura Natural Gas Limited
(a Joint Venture Company) 0.83
3 Nos. 12% 2006, GEB Bonds of Rs.10 Lakhs each 0.15
(Transferred by GIPCO in lieu of redemption of 1/3rd 18% redeemable
Non-Convertible Debenture, 50% is paid during the FY 2004-05)
Advance against allotment of Equity Shares of Central UP Gas Limited
(a Joint Venture Company) 0.03
B. Non Trade Investments - Others
Unquoted - At cost
(a) i). 30 Shares of Rs. 50 each fully paid up in Darpan
Co-operative Housing Society Ltd., Vadodara -
ii). 50 Shares of Rs. 50 each fully paid up in Ashoka
Apartments Co-operative Housing Society Ltd., Vadodara -
iii). 30 Shares of Rs. 50 each fully paid up in Panchvati
Apartments Co-operative Housing Society Ltd., Surat -
iv). 400 Shares of Rs. 10 each fully paid up in Sanand
Members Association,Ahmedabad. -
v). 35 Shares of Rs. 50/-each fully paid up in Green
Fields(B) Cooperative Housing Society Ltd, Mumbai - -
C. INVESTMENTS (Current Investments-Non-Trade)
Investments in Mutual Fund Scheme 13.72
91 days Treasury bills 2.24
TOTAL 709.97
21
st
Annual Report
137 We Stand for Reliability
Schedule 7 - Current Assets, Loans and Advances
(Rs. in Crores)
As at
31
st
March
2005
A. CURRENT ASSETS
INVENTORIES
(As Certified by the Management)
Raw Material (LNG) 11.06
Raw Material in Transit 4.42
CNG and Natural Gas in Pipeline 0.05
Stores and Spares including Construction Surplus* 424.35
Less : Provision for Losses/Obsolescence 39.45
384.95
Stock of Traded items 0.01
Stock of Gas**/Polymers/LPG and Other Products 101.06
501.50
SUNDRY DEBTORS
Debts outstanding for a period exceeding six months
- Unsecured, Considered Good 223.34
- Unsecured, Considered Doubtful 135.23 358.57
Other Debts
- Secured, Considered Good 19.48
- Unsecured, Considered Good 590.97
- Unsecured, Considered Doubtful - 610.45
969.02
Less: Provision for Doubtful debts 120.31 848.71
CASH AND BANK BALANCES
Cash in hand 0.37
Cheques/Stamps in hand 0.02
Remittance in transit 11.49 11.88
BANK BALANCES WITH SCHEDULED BANKS
On Current Account ( includes Corporate Liquid Term
Deposit Rs.17.79) 87.38
On Current Account -Gas Pool Money 0.01
On Current Account -JV Consortium 0.01
On Fixed Deposit Account 1.15
On Short Term Deposit 2,463.49
On Short Term Deposit -Gas Pool Money 566.89
(includes interest accrued but not due Rs. 1.77)
On Short Term Deposit -JV Consortium 359.62 3,478.55
(includes interest accrued but not due Rs. 3.52)
BANK BALANCES WITH OTHER BANKS
On current accounts 0.85
3,491.28
OTHER CURRENT ASSETS
Interest accrued but not due on Deposits 26.98
Interest accrued on Fixed Deposits 0.05
Carried Forward 4,868.52
(Rs. in Crores)
As at
31
st
March
2005
Brought Forward 4,868.52
B. LOANS AND ADVANCES
Loans to Employees
- Secured, Considered Good 136.83
- Unsecured, Considered Good 16.18
Others 2.41 155.42
(Unsecured, Considered Good)
Advances recoverable in cash or in
kind or for value to be received
- Unsecured, Considered Good 1,401.79
(includes Rs. 1024.52 paid/adjusted against Income
tax demand under protest).
(includes Rs. 3.11 on account of disinvestment of Govt.
Equity by way of GDR/Domestic Tranche/ Offer for sale)
(Includes advance against allotment of Equity
Shares of Joint venture Bhagyanagar Gas Ltd. of Rs. 2.74)
Others 5.39
- Unsecured, Considered Doubtful 1.08
1,408.26
Less: Provision for Doubtful Advances 1.08 1,407.18
Claims Recoverable
- Unsecured, Considered Good 36.92
- Unsecured, Considered Doubtful 0.52
37.44
Less : Provision for doubtful claims 0.52 36.92
Deposits with Customs, Port Trust and Others
- Unsecured, Considered Good 33.89
- Unsecured, Considered Doubtful 0.31
34.20
Less: Provision for doubtful deposits 0.31 33.89 1,633.41
Trade and security Deposits
- Unsecured, Considered Good
4.06
TOTAL 6,505.99
*includes Rs. 60.78 in transit.
**after adjustment of calorific value
21
st
Annual Report
139 We Stand for Reliability
Schedule 8 - Current Liabilities and Provisions
(Rs. in Crores)
As at
31
st
March
2005
A. CURRENT LIABILITIES
Sundry Creditors 1,430.09
Deposits/Retention Money from Contractors and Others 136.40
Other Liabilities 464.88
Due to Promoter Companies 0.25
Other Liabilities - Gas Pool Money 723.18
Unclaimed Dividend 1.28
Interest accrued but not due on loans 31.18
Trade and Security Deposits 9.94 2,797.20
B. PROVISIONS
Provision for taxation 4,475.04
Less: Advance Tax 4,509.68
Add: Adjustment of Refunds 433.15
398.51
Provision for Proposed Dividend 338.26
Provision for Corporate Dividend Tax 49.88
Provision for Gratuity 0.19
Provision for Wealth Tax 0.01
Provision for Leave Encashment and
Post Retirement Medical Benefits 32.51 819.36
TOTAL 3,616.56
Schedule 9 - Other Income
(Rs. in Crores)
Year Ended
31
st
March
2005
Dividend 122.15
Interest on:
- Bonds/Debentures 0.45
- Deposits with Banks 102.23
- Others 43.80
146.48
Surplus on Disposal of Investments 0.33
Export Incentives 3.92
Liabilities/Provisions no longer required written back 1.12
Miscellaneous Income 81.52
Less: Transferred to Incidental Expenditure -
during construction (Schedule 11) 81.52
TOTAL 355.52
21
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141 We Stand for Reliability
Schedule 10 - Manufacturing, Transmission, Administration, Selling & Distribution and
other Expenses
(Rs. in Crores)
Year Ended
31
st
March
2005
Raw Material consumed 1,111.16
Employees Remuneration and Benefits
Salaries, Wages and Allowances 147.66
Contribution to Provident and Other Funds 21.10
Welfare Expenses 44.84
Secondment charges 0.67
214.27
Power, Fuel and Water Charges 414.81
Stores and Spares consumed 149.57
Rent 16.20
Rates and Taxes 4.00
Licence Fees - Telecom 1.56
Bandwidth Consumption 1.03
Repairs and Maintenance
Plant and Machinery 124.56
Buildings 12.46
Others 12.81 149.83
Insurance 25.08
Communication Expenses 8.06
Printing and Stationery 3.64
Travelling Expenses 31.32
Books and Periodicals 0.60
Advertisement and Publicity 24.42
Payment to Auditors
Audit Fees 0.17
Management Services 0.04
Out of Pocket Expenses 0.04 0.25
Entertainment Expenses 0.22
Recruitment and Training Expenses 10.28
Vehicle Hire and Running Expenses 15.42
Equipment Hire charges 1.09
CNG Transportation 0.89
CNG Dispensing Charges 1.00
Operating Expenses at CNG Stations 2.08
Lease Charges 2.37
Survey Expenses 26.88
Consultancy Charges 15.53
Legal and Professional charges 3.25
Data Processing Expenses 2.86
Donation 5.25
Research and Development Expenses 0.40
Loss on sale / written off of assets(net) 2.13
Bad Debts/Claims/Advances/Inventories written off 1.26
Carried Forward 2246.71
(Rs. in Crores)
Year Ended
31
st
March
2005
Brought Forward 2,246.71
Dry Well Expenses written off 11.98
Provision for Doubtful Debts, Advances, Claims and Deposits 3.15
Excise Duty on Stock (Net) (10.21)
Expenses on Enabling Facilities 3.04
Selling & Distribution Expenses 9.59
Discount on Sales 9.46
Commission on Sales 11.59
Dealers' Commission 0.58
Security Expenses 25.60
Expenses during construction period written off 0.14
Vessel hire charges 1.44
Other Miscellaneous Expenses 70.88
Less: Transfer to Capital Work in Progress
Employees Remuneration and Benefits 2.29
Operating and Other Expenses 1.93
TOTAL 2,379.73
21
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143 We Stand for Reliability
Schedule 11 - Incidental Expenditure During Construction
(Rs. in Crores)
Year Ended
31
st
March
2005
Employees Remuneration and Benefits
Salaries, Wages and Allowances 0.49
Contribution to Provident and Other Funds -
Welfare Expenses 0.08 0.57
Power, Fuel and Water Charges 0.02
Rent 0.04
Repairs and Maintenance
Plant and Machinery 0.02
Buildings -
Others - 0.02
Insurance 0.02
Communication Expenses 0.04
Vehicle Hire and Running Expenses 0.02
Consultancy Charges 0.09
Other Expenses 0.11
0.93
Less :Transferred to Capital Work-in-progress
Mfg., Transmission, Admn., Selling & Distribution and Other Expenses 0.93
Balance Carried over to Balance Sheet -
Schedule 12 - Interest and Finance Charges
(Rs. in Crores)
Year Ended
31
st
March
2005
Interest
Foreign Currency Loans 0.73
On term loans 15.13
Other Loans 134.21 150.07
Other Interest 0.13
Bank Charges 0.50
Commitment and other Finance Charges 0.22
TOTAL 150.92
21
st
Annual Report
145 We Stand for Reliability
Schedule 13 - Prior Period Adjustments
(Rs. in Crores)
Year Ended
31
st
March
2005
Salaries, Wages and Allowances (0.12)
Power, Fuel and Water Charges 0.66
Stores and Spares consumed 0.03
Rent (0.69)
Depreciation(Net) (1.65)
Repairs and Maintenance 0.21
Consultancy Charges 0.71
Other Expenses 0.92
TOTAL 0.07
Less :
- Sales (0.03)
- Interest Income (0.14)
- Miscellaneous Income (0.64) (0.81)
TOTAL (NET) 0.88
Schedule 14 - Consolidated Notes on Accounts for the Year Ended 31.03.2005
SIGNIFICANT ACCOUNTING POLICIES
I. BASIS OF PREPARATION
The Consolidated Financial Statements (CFS) relate to GAIL (India) Limited (hereinafter referred as the Company)
and its subsidiary, Joint Ventures and Associates. The accounts are prepared on historical cost basis and in
accordance with the applicable accounting standards and other applicable relevant statues.
II. PRINCIPLES OF CONSOLIDATION
The consolidated Financial Statements have been prepared in accordance with the applicable Accounting standards
on the following basis:
i. The Financial Statements of the Company and its subsidiary companies are combined on a line-by-line basis
by adding together the book values of like items of assets, liabilities, income and expenses after fully eliminating
intra-group balances and intra-group transactions resulting in unrealized profits or losses in accordance with
Accounti ng Standard (AS) 21-Consol i dated Fi nanci al Statements i ssued by The Insti tute of Chartered
Accountants of India.
ii. The financial statements of Joint Venture Company have been combined by applying proportionate consolidation
method on a line by line basis on items of assets, liabilities, income and expenses after eliminating proportionate
share of unrealized profits or losses in accordance with Accounting Standard (AS) 27 on Financial Reporting
of Interests in Joint Ventures issued by the Institute of Chartered Accountants of India.
iii. The consolidated Financial Statements are prepared using uniform accounting policies for like transactions
and other events in similar circumstances and are presented to the extent possible, in the same manner as the
Companys separate Financial Statements except as otherwise disclosed in the Notes to Accounts.
iv. The excess of the cost to the Company of its investment in Subsidiaries and Joint Ventures over its proportionate
share in the equity of the investee company as at the date of acquisition of stake is recognized in the financial
statements as Goodwill. In case the cost of investment in a subsidiary or Joint Venture is less than the
proportionate share in the equity of the investee as on the date of the investment, the difference is treated as
Capital reserve.
v. Investments in Associates have been accounted for using the equity method in accordance with Accounting
Standard AS-23-Accounting for investment in Associates in Consolidated Financial Statements issued by
The Institute of Chartered Accountants of India. The excess/deficit of cost of investment over the proportionate
share in equity of the Associate as at the date of the acquisition of stake has been identified as Goodwill/
Capital reserve and included in the carrying value of the investment in Associate and disclosed separately.
The carrying amount of the investment is adjusted thereafter for the post acquisition change in the share of
net assets of the Associate. The Companys share as on 1
st
April 2004 has been adjusted with the opening
balance of Profit and Loss Account.
vi. The accounts of all Group Companies are drawn upto the same reporting date as the parent entity (i.e. Financial
Year ended March 31, 2005) except for three overseas Associates, in which case the accounts drawn up as at
December 31, 2004 have been used. No adjustments have been done for the period subsequent to that date,
since there are no significant transactions.
vii. The financial statements of the Subsidiary-GAIL Global (Singapore) Pte. Limited are prepared in accordance
with Singapore Financial Reporting Standards.
viii. The financial statements of Fayum Gas, Shell Compressed Gas and NatGas have been prepared in accordance
with the Egyptian Accounting Standards and relevant Egyptian Laws and regulations and according to the
historical cost basis assuming the company is a going concern
III. Investment other than in Subsidiaries and Associates have been accounted for as per Accounting Standard (AS)
13 on Accounting for Investments issued by The Institute of Chartered Accountants of India.
21
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147 We Stand for Reliability
IV. OTHER SIGNIFICANT ACCOUNTING POLICIES:
These are set out under Significant Accounting Policies as given in the respective Financial Statements of the
Company and its Subsidiary.
NOTES TO THE ACCOUNTS
1. The Consolidated Financial Statements represent consolidation of accounts of the Company (GAIL India Limited),
its subsidiaries, Joint Venture companies and associates as detailed below:
Name of Company Country of Relation Proportion of
Incorporation ownership interest
GAIL Global (Singapore) Pte. Ltd. Singapore Subsidiary 100%
Mahanagar Gas Limited India Joint Venture 49.75%
Indraprastha Gas Limited India Joint Venture 22.50%
Petronet LNG Limited India Joint Venture 12.50%
Bhagyanagar Gas Limited India Joint Venture 22.50%
Fayum Gas Egypt Associate 19%
Shell Compressed Natural Gas Egypt Egypt Associate 22%
Gujarat State Electricity Generation (GSEG) India Associate 12%
Natural Gas Company Nat Gas Egypt Associate 15%
2. In view of different sets of environment in which the subsidiaries/Joint Ventures are operating, the accounting
policies followed by the subsidiaries/Joint Ventures are different from the accounting policies of the Company in
respect of the following. Such different accounting policies have been adopted in respect of the following:
(Rs. in Crores)
Particulars Name of Joint Accounting Policies Proportion of
Venture GAILs share
(Gross Amount)
GAIL (India) Ltd. Joint Venture
Inventories
Valuation of Mahanagar Gas Valued at cost or NRV, Valued at weighted 4.03
Stores and Limited/Petronet whichever is lower average cost.
spares LNG Limited
Valuation of Petronet LNG Raw materials are valued Valuation of Raw Materials 15.48
Raw materials Limited at cost or net realisable is done at weighted
value, whichever is lower. average cost..
Valuation of Indraprastha Gas Valued at weighted average Valued at lower of cost on 4.01
Stores and Limited cost or net realizable value, First In First Out(FIFO) basis
Spares whichever is lower or Net Realizable Value.
Depreciation rates
Software/ Mahanagar Gas Software/Licences are Software/Licences are 1.05
Licences Limited amortized in 5 years on amortized in 6 years on (Gross
straight line method straight line method Block)
Software/ Petronet LNG Software/Licences are Software/Licenses are 1.69
Licences Limited amortized in 5 years on amortised in 3 years on (Gross
straight line method Straight Line Method. Block)
Capital Work Bhagyanagar Gas Indirect expenditure Indirect expenditure 0.59
in Progress Limited incurred during construction incurred during construction
period has been charged period has been shown
off to revenue. under pre-operative
expenditure pending
allocation which will be
apportioned to Fixed
Assets as and when
they are completed.
Retirement Benefits
Liability Mahanagar Gas Liability towards Gratuity is Gratuity liability is 12.35
towards Limited paid to a fund maintained covered under
Gratuity by the company which is LIC Group
administered through Gratuity Scheme.
a separate trust set up by
the company. Difference
between the fund balance
with the trust and the
accrued liability as at the
end of the year as per
actuarial valuation is
charged to Profit and
Loss Account
Prepaid Mahanagar Gas Prepaid expenses and All prepaid expenses and 0.27
Expenses Limited/ prior period expenses/ prior period expenses/
Indraprastha Gas income upto Rs.1,00,000/- income in each case are
Limited in each case are charged to charged to relevant heads
relevant heads of account of account of the current
of the current year. year.
Tolerance Mahanagar Gas Yearly reconciliation of Technical variation in 0.55
Fluctuation Limited/Petronet Natural Gas is made within Gas quantity loss or gain
LNG Limited a limit of +1%. In case of is taken to respective years
variation beyond +1% revenue account.
value of excess quantity is
kept in a separate Account
Tolerance Fluctuation
Adjustment Account
for adjustments in future.
Investment Mahanagar Gas Quoted investments are Investments are carried at 1.99
Limited valued at cost or market lower of weighted average
value, whichever is lower cost or market value.
Preliminery Mahanagar Gas Preliminary expenditure Preliminary expenditure and 0.23
Expenses Limited and deferred revenue deferred revenue expenditure
expenditure is charged is amortized over a period
to revenue. of ten years.
3. Estimated amount of Contracts remaining to be executed on Capital Account and not provided for is amounting to
Rs. 357.68 Crores which includes an amount of Rs. 92.08 Crores related to Joint Ventures.
4. Contingent Liabilities:
i). Claims against the Company not acknowledged as debts: Rs. 9,225.29 Crores which mainly include:
21
st
Annual Report
149 We Stand for Reliability
(a) Claims of ONGCL for Rs. 248.46 Crores on account of interest for delayed payment and MGO etc. Out of
these MGO claims of Rs. 49.23 Crores are recoverable on back-to-back basis.
(b) Income Tax demand of Rs. 1026.81 Crores relating to assessment years from 1996-97 to 2002-03. The
Income tax assessment of the company has been completed up to the assessment year 2002-03. Against
the total demand, the company has paid/adjusted Rs. 1024.52 Crores under protest. Based upon the
decision of the appellate authorities and the interpretation of the provisions of the Income Tax Act, the
company has been legally advised that the demand is likely to be either deleted or it may be substantially
reduced. The company has filed an appeal against the demand for the assessment years from 1996-97 to
1999-2000 with ITAT. Against the demand for the assessment year 2000-01, 2001-02 and 2002-03 appeals
of the Company are pending before Commissioner of Income Tax (Appeals).
( c) Sal es Tax demand of Rs. 3449.18 Crores (Previ ous Year: Rs. 2349.60 Crores) and i nterest thereon
Rs. 1513.04 Crores (Previous Year: Rs. 995.24 Crores) for Hazira unit in Gujarat State: Sales Tax Authorities,
Ahmedabad have treated the transfer of Natural Gas by the company from the state of Gujarat to other
states during the period April, 1994 to March, 2001 as inter-state sales under Section 3(a) of the Central
Sales Tax Act. The company has been paying sales tax under section 12 of the Gujarat Sales Tax Act
against Form 17 since inception (1987) and accordingly the sales tax assessments have been completed.
Based on the interpretation of the provisions of the Sales Tax Act and legal advice from the experts, the
company had filed writ petition and special leave petition in the Supreme Court of India. In February, 2005
the case was transferred by Honble Supreme Court to Gujarat Sales Tax Tribunal for decision. The Tribunal
has given its judgment on 16.05.2005 accepting the contention of the company for interstate transportation
of Natural Gas as branch transfer and not the interstate sale and set aside the demand under section
41-B of the Gujarat Sales Tax Act. The Honble Tribunal has given further instruction to the Assessing
Authority to assess Company and decide tax liability in accordance with the law for the period 1998-99 to
2000-2001 considering interstate transfer of natural gas as branch transfer.
(d) Commissioner of Customs, Ahmedabad has issued show cause notices where in a sum of Rs. 581.22
Crores for the period 22.06.97 to 10.02.2002 has been demanded, by treating GAIL as importer under
Section 2(26) of the Customs Act, 1962 on account of purchase of gas from Tapti and Panna-Mukta fields
from Joint Venture of British Gas Exploration and Production (I) Limited (formerly Enron Oil & Gas India
Limited), RIL and ONGCL (JVCs). The Company is of the view that as it is purchasing gas from JVCs at
Hazira at the downstream flange of ONGCLs gas processing facilities along with other natural gas coming
from South Basin, it is not liable to Customs Duty. The replies to Show cause notice have already been
sent to the Commissioner of Customs in consultation with the Consultants on 14.06.2002. No further
response has been received.
(e) Customs duty demand of Rs. 305.53 Crores : Custom Authorities, Mumbai have raised differential duty
demand against Project Imports for Pata Plant on account of non-submission of reconciliation statement
as required under Project Import Regulations, 1986. An appeal was filed before CESTAT on the ground
that demand is premature as the last consignment is yet to be received and as per the Project Import
Regulations, the reconciliation statement has to be submitted within three months from the date of clearance
of last consignment of goods. CESTAT has remanded the matter to DC (Customs) for readjudication.
(f) Excise duty demand of Rs. 123.63 Crores : Excise Authorities have raised demands at Vijaipur by treating
lean gas as gaseous hydrocarbon and denying exemption available to lean gas, which has all along treated
as an exempted product. The Company has obtained favourable orders against past demands. However,
one case is pending at CESTAT.
ii). Bonds executed, Letters of Credit and Guarantees/Counter Guarantees: Rs. 13.40 Crores.
iii). The Company along with three other promoters has issued Corporate Guarantees in favour of banks and
financial institutions for short term loan taken by Petronet LNG Limited from such banks and financial institutions.
The Company share in the Guarantee is Rs. 350 Crores, being one fourth share of total guarantees of
Rs. 1400 Crores issued as on 31.03.2005.
iv). An amount of Rs. 83.03 Crores related to joint ventures and an amount of Rs. 2.44 Crores related to associates.
5. (a) Liability under Gas Pool Account includes gas pool money for January-March 2005 quarter amounting to
Rs. 61.64 Crores which shall become due for deposit in succeeding quarter.
(b). Deposit in Gas Pool Money Account is exclusive of claim amounting to Rs. 94.63 Crores for compensation for
higher cost of gas purchased from JV Companies from Ravva and Tapti fields from April,1997 to September, 1997.
MOP&NG vide its letter no. L-12015/1/94-GP (VIII) dated 04.07.1997 stated that GAIL will not be put to any loss on
account of compensation towards higher price of JV gas. Accordingly, Gas Pool money was transferred to separate
bank account after retaining Rs. 94.63 Crores which is being communicated to MOP&NG regularly. Accordingly, no
interest liability has been provided.
(c). Purchase of gas includes Rs. 250 Crores on account of Gas Pool Account.
(d) Liabilities on account of Gas Pool Money amounting to Rs. 723.18 Crores and 10% retention from JV consortium
amounting to Rs. 359.63 Crores includes interest (net of TDS) amounting to Rs. 32.30 Crores on Short term deposits
for the year. This interest income does not belong to the company hence not accounted as income.
6. MOP&NG had issued scheme for mechanism of sharing the under recoveries of Oil marketing Companies on account of
non-revision in selling price of PDS Kerosene and domestic LPG. The Company has given discounts to Oil marketing
Companies amounting to Rs. 1,137 Crores on dispatches to them for sharing subsidies.
7 a) Prices of Natural gas for the period April 1, 2000 to March 31, 2005 is under review by MOP&NG. Pending finalisation
of such prices, payments/accruals of purchase of gas are being made based on the rate specified in the MOP&NG
letter dated September 18, 1997. Additional liability or its effect on profits if any, arising out of the aforesaid revision
will be recognized when the prices are finalized. However, the management does not expect the price increase to be
retrospective.
b) The Company is raising provisional invoices for sale of R-LNG since custom duty on import of LNG has been
assessed on provisional basis.
c). With effect from April 1, 2002, Liquefied Petroleum Gas price has been deregulated and is now based on the import
parity price fixed by the Oil Companies. However, the pricing mechanism is provisional and is pending finalisation.
Additional asset/liability or impact on profits, if any, arising due to such change, will be recognized on finalization of
pricing mechanism.
8. Due to change in Accounting policy:
a) During the year, the company has changed its accounting policy of disclosure of Right of Use (ROU) under tangible
assets to intangible assets in compliance to Accounting Standard 26 on Intangible Assets. Due to this, intangible
assets have increased by Rs. 17.38 Crores with consequent decrease in tangible assets. This change has no impact
on Profit & Loss Account for the year.
b) During the year, the company has changed its accounting policy of charging off wells in progress the status of which
remains undecided for more than five years to Profit and Loss account to charging off wells in progress the status of
which remains undecided for more than two years to Profit and Loss Account. This change has no impact on Profit
& Loss Account for the year.
c) During the year, the company has changed its accounting policy for provision for gratuity on the basis of actuarial
valuation at the end of financial year to providing liability towards Gratuity by payment to a fund maintained by the
company and administered through a separate trust set up by the company. Difference between the fund balance
with the trust and the accrued liability as at the end of the year as per actuarial valuation is charged to Profit and
Loss Account. This change has no impact on Profit & Loss Account for the year.
9. a) The price of Gas purchased from Joint Venture Consortium (JVC) (Indian and Foreign Partners) from Ravva / Ravva
Satellite, Tapti and PannaMukta fields are denominated in USD per MMBTU. The liability in USD has been converted
at Bills Buying rate, TT selling rate and TT buying rate, prevailing as on 31.03.2005 or on the date of payment, as the
case may be.
b) Imports have been accounted for at the exchange rate prevalent as on the date of retirement of documents being
the date of transaction.
10. Following Government of Indias approval, the shareholders of the Company in the Annual General Meeting held on
21
st
Annual Report
151 We Stand for Reliability
15
th
September, 1997 approved the transfer of all the assets including Plant and Machinery, accessories and other
related assets which are part of Lakwa Project valued at Rs. 246.91 Crores as on 31.03.2005 to Assam Gas Cracker
Complex at a price to be determined by an independent Agency and on terms and stipulations as the Board may in its
discretion deem fit. However, Assam Gas Cracker Complex has not come up as per plan and LPG Lakwa Project has
not been transferred to it. Therefore, a fresh proposal has been put up to Govt of India to establish Assam Gas Cracker
project by GAIL and LPG Lakwa Project will be part of that Assam Gas Cracker project.
11. Pending issue of suitable notification by the Government of India specifying the period and applicable rate at which cess
on turnover is payable under section 441A of Companies Act, 1956 the Company has not provided for the same.
12. Balances grouped under Material with Contractors, Sundry Debtors, Loans and Advances, Deposits and Sundry Creditors,
etc. are subject to confirmation.
13 The value of pipelines and related facilities taken over in Southern and North-eastern region in February 1992 and
Western Region in May 1992 is provisional, based on intimation from ONGCL. Adjustments, if any, for taxes, duties,
ROU and other claims would be made as and when ascertained. Depreciation on the assets taken over from ONGCL
has been provided for as per the accounting policy of the Company on the transfer value of such assets. Pending
installation of custody transfer meters, the purchase of Gas is accounted for on the basis of metering done at the
consumers end.
14. In respect of Subsidiary and Joint Ventures, the following additional notes to accounts are disclosed.
I. Petronet LNG LTD.
i). The company is in the process of finalizing the LNG Port Terminal Concession Agreement with Gujarat Maritime
Board (GMB) and the Government of Gujarat. In accordance with the terms of the proposed lease agreement,
lease rental payable from 30th August 2001 to 31
st
March 2005 has been provided on estimated basis pending
receipt of demand from GMB. Provision for stamp duty on the transaction has not been made in the accounts,
as it is not ascertainable.
ii). In respect of LNG Vessels arrived at Petronet LNG port, Dahej, the Company has paid port dues and waterfront
royalty to Gujarat Maritime Board as per the existing schedule of port charges applicable to all vessels calling on
the port. The rates are, however, subject to finalization in accordance with the terms and conditions provided in
the proposed concession agreement to be executed by the company with Gujarat Maritime Board.
iii). In terms of the provisions contained in the letter of intent issued by Gujarat Maritime Board while allotting the
plot for LNG Regasification Plant, the Company has to develop a Solid Cargo Port along with LNG Terminal. The
Board has approved the maximum equity investment of Rs. 23.93 Crores (towards 26% equity) in the Joint
Venture Company to be formed for implementation of the Solid Cargo Project. Expenses to the extent of
Rs. 2.38 Crores have been incurred on this account which includes a deposit of Rs. 1.70 Crores with Gujarat
Industrial Development Corporation classified under Loans & Advances.
II. Bhagyanagar Gas Limited
i). During the year, the Company commenced commercial operations relating to Auto LPG business. As regards
CNG business, it has commenced construction activities for setting up of CNG stations and related infrastructure
at Vijayawada which are at different stages of progress.
ii). The entire manpower of the company comprises of deputationists from GAIL and HPCL on full time basis.
III. INDRAPRASTHA GAS LIMITED
i) Compresses Natural Gas has been added as an excisable commodity under the central Excise Tariff Act from
March 1, 2001. due to unique nature of its business, it is not possible for the Company to comply with certain
provisions/procedures as required under the Act. The Company has filed applications with the Deputy
Commissioner (Tech), commissioner Central Excise, Chief Commissioner Central Excise for modification/
simplification of the provisions/procedures.
IV. Mahanagar Gas Ltd.
i) Company has taken on lease few equipments / machines for some CNG Retail Outlets. Lease charges are
dependent on sale of CNG at these outlets and hence there are no minimum lease payments. The term of the
contract is three years, renewable for a further period of three years at the discretion of the company. The
company can exercise purchase option at the end of the contract. The contract does not impose any restrictions
concerning dividend, additional debt and further leasing.
15. Unaudited financial statements of a joint venture - Mahanagar Gas Limited have been included in consolidation in
absence of the audited financial statements. The figures included in the consolidated financial statements relating to the
unaudited joint venture company (Mahanagar Gas Limited) are as under:
i) Total assets are Rs. 633.65 Crores and total liabilities of Rs. 633.65 Crores and
ii) Total revenues of Rs. 383.92 Crores and total expenditure of Rs. 209.20 Crores
16. Unaudited financial statements of an associate-GSEG have been included in consolidation in absence of the audited
financial statements.
17. JV Company has entered into agreements for taking on lease and license basis certain residential/office premises,
certain equipments, vehicles and premises for office use under operating lease agreements. All the agreements contain
a provision for its renewal. Lease payments recognized in the profit and loss account for the year is Rs.14.52 Crores
Lease obligations under non-cancelable periods are as follows:
Future lease rental obligation under these leases:
i) Not later than one year Rs. 7.09 Crores
ii) Later than one year and not later than five years Rs. 3.19 Crores
iii) Later than five years Rs. 1.25 Crores
18. In the consolidated financial statement as on March 31, 2005, the financial statements of Al Nubaria National Gas Co, a
subsidiary of NatGas and Al Watania Electric Technology, an associate of NatGas have not been consolidated due to
non availability of financial statement of these companies.
19. The consolidated Financial Statements are prepared using uniform accounting policies for like transactions and other
events in similar circumstances and are presented to the extent possible, in the same manner as the Companys
separate Financial Statements. However, there are some differences in certain accounting policies followed by the
company, subsidiary, joint ventures and associates but the impact of the same is not material.
20. In case of two joint venture companies, Tripura Natural Gas Company Ltd. (TNGCL) and Central UP Gas Ltd. (CUPGL),
the shares have not been allotted till March 31, 2005. Hence, GAIL (India) Ltd. does not obtain any shareholding right
with respect to the advance given against share capital. Such right would accrue only on allotment of shares, hence,
TNGCL & CUPGL have not been considered in the Consolidated of Financial Statement.
21. In compliance of Accounting Standard 17 on Segment Reporting issued by Institute of Chartered Accountants of
India, the required information is given as per Annexure A to this schedule.
Business Segments:
The business segments have been identified as
i) Transmission services
a) Natural Gas
b) LPG
ii) Natural Gas Trading
iii) Petrochemicals
iv) LPG and other Liquid Hydrocarbons
v) GAILTEL
vi) City Gas Distribution
vii) Unallocated
21
st
Annual Report
153 We Stand for Reliability
22. In compliance of Accounting Standard 18 on Related party Disclosures issued by Institute of Chartered Accountants
of India, the name of related parties, nature of relationship and details of transaction entered therewith are given in
AnnexureB.
23. In compliance of Accounting Standard 22 on Accounting for taxes on Income issued by Institute of Chartered
Accountants of India, the Company has provided Accumulated net deferred tax liability in respect of timing difference as
on 31
st
March, 2005. The item- wise details of deferred tax liability as on 31.03.2005 are as under:
(Rs. in Crores)
Deferred Tax Liability
a). Depreciation 1,407.65
b). Differences between carrying assets in the 26.80
financial statements & Income tax
Less: Deferred Tax Assets
a). Provision for Gratuity & Retirement Benefits 15.96
b). Provision for Doubtful Debts/Claims/Advances 61.14
c). Preliminary Expenses & others 71.90
Deferred Tax Liability (net) 1,285.45*
*It includes an amount of Rs. 1.77 Crores (Deferred Tax Assets) which has been netted of with Deferred Tax Liability.
24. In Compliance of Accounting Standard 27 on Financial Reporting of Interests in Joint Ventures issued by Institute of
Chartered Accountants of India, the required information is as under:
Jointly controlled Operations :
The Company has participated in joint bidding under the Government of India New Exploration Licensing Policy and had
been allotted 10 Blocks for which the Company has entered into Production Sharing Contract with Government of India
along with other partners for Exploration & Production of Oil and Gas. As per the Production Sharing Contract, the
Company has a minimum work program commitment of Rs. 137.18 Crores. The Company is acting as non-operator and
would have to share in expense/Income/Assets/Liabilities based upon its percentage in production sharing contract.
During the year, participating interest of 15% in Block KK-DWN-2000/2 has been relinquished to Government of India.
The participating interest in the following nine NELP - Blocks as on 31
st
March, 2005 is as under.
S.No. Joint Venture under NELP Blocks Participating Interest
1) MN-OSN-97/3 15%
2) NEC-OSN-97/1 50%
3) MN-OSN-2000/2 20%
4) GS-DWN-2000/2 15%
5) MB-DWN-2000/2 15%
6) CB-ONN-2000/1 40%
7) MN-ONN-2000/1 20%
8) CY-ONN-2002/1 50%
9) AA-ONN-2002/1 80%
In addition, the Company has two farm-in as non operator with minimum work program commitment of Rs.11.24
crores in the following blocks:
S.No. Blocks Participating Interest
1) A-1,Myanmar 10%
2) CY-OS/2 25%
The Companys share of assets and liabilities as at 31
st
March 2005 and the Income and the expenditure for the year in
respect of joint operations project blocks has been incorporated in the Company financial statements based upon
unaudited statement of accounts submitted by the operators as follows:
(Rs. in Crores)
2004-05
Income -
Expenses 37.79
Fixed Assets 1.05
Other Assets 45.25
Current Liabilities 33.53
Jointly controlled Entity :
GAIL (India) Limited share in assets, liabilities, income, expenses contingent liabilities and capital commitments of jointly
controlled Entities is as below.
(Rs. in Crores)
S.No. Description Mahanagar Indraprastha Petronet Bhagyanagar
Gas Limited Gas Limited LNG Limited Gas Limited
1 Loan Funds
i). Secured Loans 19.62 10.80 157.49 -
ii). Unsecured Loans 17.70 - - -
2 Reserves and Surplus 102.65 38.81 19.43 0.05
3 Current Liabilities 32.88 10.91 44.66 0.69
4 Provisions 72.09 7.28 0.15 0.01
5 Fixed Assets
i). Gross Block 217.25 107.43 238.60 0.53
ii). Depreciation 42.88 30.11 12.37 0.01
Net Block 174.37 77.32 226.23 0.52
iii). CWIP 27.36 6.98 10.05 0.98
6 Investments 1.99 13.72 2.24 -
7 Current Assets
i). Inventories 3.71 4.06 15.83 -
ii). Sundry Debtors 21.04 2.66 6.63 -
iii). Cash and Bank balances 3.33 1.52 37.25 1.49
iv). Loans and Advances 5.91 4.41 3.58 0.02
v). Other current assets 59.98 - - -
8 Income
i). Sales 188.27 101.26 94.70 0.16
ii). Other Income 2.73 1.75 1.66 0.09
9 Expenses
i). Purchase 7.87 0.12 - 0.14
ii). Manufacturing, Transmission, 29.79 17.08 224.35 0.03
Administration, Selling &
Distribution and other Expenses.
iii). Interest and Finance 2.36 0.78 13.67 -
Charges
10 Contingent Liabilities 10.16 - 72.87 -
11 Capital Commitments 52.58 12.76 24.78 1.96
21
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Annual Report
155 We Stand for Reliability
25. Un-audited financial statements of a Subsidiary Company GAIL Global (Singapore) Pte. Ltd. have been included in the
consolidation in the absence of the audited financial statements. The figures included in the consolidated financial
statements relating to the un-audited accounts of subsidiary company are as under:
i). Total assets are Rs. 88.85 Crores and total liabilities of Rs. 88.85 Crores and
ii). Total revenues of Rs. 4.66 Crores and total expenditure of Rs. 2.39 Crores.
26. Being the first year of presentation of Consolidated Financial Statement, the comparative figures of previous year have
not been given being transition period as per provisions of AS-21.
N.K.Nagpal J.K.Jain B S. Negi Proshanto Banerjee As per our separate report of even date
Secretary Director (Finance) Director (BD) Chairman & Managing Director For M/s S. MANN & COMPANY
Chartered Accountants
Subhash Mann
Place : New Delhi (Partner)
Dated : June 21, 2005 Membership No. 80500
GAIL (India) Limited Consolidated Financial Statements
Information About Business Segments for the Financial Year 2004-05
(ANNEXURE - A)
(Rs. in Crores)
1. Revenue
External Sales 1,923.80 301.84 7,226.52 1,842.05 1,837.48 18.42 233.48 227.03 13,610.62
Intersegment sales - - - - - - - - -
Total revenue 1,923.80 301.84 7,226.52 1,842.05 1837.48 18.42 233.48 227.03 13,610.62
2. Results
Segment Result
(Profit before
Interest &Tax) 1,193.54 89.54 219.17 804.24 609.00 (1.07) 94.73 - 3,009.15
Unallocated
expenses - - - - - - - 145.94 145.94
Operating Profit 1,193.54 89.54 219.17 804.24 609.00 (1.07) 94.73 (145.94) 2,863.21
Interest Expenses - - - - - - - 150.92 150.92
Interest/Dividend
Income - - - - - - - 268.63 268.63
Provision for Taxation - - - - - - - 958.45 958.45
Profit/(Loss) from
Ordinary Activities 1,193.54 89.54 219.17 804.24 609.00 (1.07) 94.73 (986.68) 2,022.47
Extraordinary items - - - - - - - - -
Net Profit/(Loss) 1,193.54 89.54 219.17 804.24 609.00 (1.07) 94.73 (986.68) 2,022.47
3. Other Information
Segment Assets 4,528.40 1209.44 364.01 2,120.58 1,466.32 57.98 356.49 - 10,103.22
Unallocated Assets - - - - - - - 4,727.16 4,727.16
Total Assets 4,528.40 1,209.44 364.01 2,120.58 1,466.32 57.98 356.49 4,727.16 14,830.38
Segment Liabilities 1,887.47 38.73 61.30 96.36 123.98 26.48 117.61 - 2,351.93
Unallocated Liabilities - - - - - - - 1,264.63 1,264.63
Total Liabilities 1,887.47 38.73 61.30 96.36 123.98 26.48 117.61 1,264.63 3,616.56
Cost to acquire
fixed assets 303.00 436.52 237.09 57.59 0.50 (197.33) 64.52 46.37 948.26
Depreciation 560.44 140.41 12.10 136.80 95.08 7.67 23.77 6.25 982.52
Non Cash expenses
other than Depreciation 4.76 (0.20) 0.13 0.06 1.74 0.00 0.05 11.98 18.52
Notes: 1. Includes JV Petronet LNG Limited
2. Includes JVs IGL, BGL and MGL
3. Includes Subsidairy GAIL Global (Singapore) Pte. Ltd. and Associate Company share
Sl.
No.
Segments Transmission Services Natural
Gas
Trading
(Note 1)
Petro-
chemicals
LPG &
Liquid
Hydro-
carbons
GAIL Tel City Gas
Distribution
(Note 2)
Un-
allocated
(Note 3)
Con-
solidated
Total
Natural Gas
LPG
21
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Annual Report
157 We Stand for Reliability
Related Party Disclosures
(ANNEXURE-B)
I) Relationship
A) Joint Venture Companies / Associates / Subsidiary:
1) Mahanagar Gas Limited
2) Indraprastha Gas Limited
3) Petronet LNG Limited
4) Bhagyanagar Gas Limited
5) Tripura Natural Gas Corporation Limited
6) Central UP Gas Limited
7) GAIL Global (Singapore) Pte. Ltd.
8) Fayum Gas Company
9) Shell Compressed Natural Gas
10) Gujarat State Electricity Generation Ltd.
11) National Gas Company Nat Gas
B) Whole time Directors:
1) Shri Proshanto Banerjee, Chairman and Managing Director
2) Shri J.K. Jain
3) Shri S.P. Rao
4) Shri B.S. Negi
5) Shri M.R. Hingnikar
6) Dr U.D. Choubey
7) Shri A.K. De
8) Shri Rajeev Khanna
9) Shri C.N. Trivedi
10) Shri A.K. Purwaha
C) Unincorporated Joint venture for Exploration & Production Activities:
1) NEC - OSN - 97/1 (Non-operator with participating interest: 50%)
2) CB - ONN - 2000/1 (Non-operator with participating interest: 40%)
3) A-1, Myanmar (Non-operator with participating interest: 10%)
4) CY-OS/2 (Non-operator with participating interest: 25%)
5) AA-ONN-2002/1 (Non-operator with participating interest: 80%)
6) CY-ONN-2002/1 (Non-operator with participating interest: 50%)
II) The following transactions were carried out with the related parties in the ordinary course of business:
A) Details relating to parties referred to in item no. I (A) above:
(Rs. in Crores)
2004-05
1) Sales 293.14
2) Amount receivable as at Balance Sheet Date for (1) above 14.60
3) Purchases 1187.71
4) Amount payable as at Balance Sheet Date for (3) above 66.65
5) Reimbursement for other expenditure received/receivable 1.23
6) Amount receivable as at Balance Sheet Date for (5) above 1.17
B) Details relating to parties referred to in item no. I (B) above:
(Rs. in Crores)
2004-05
1) Remuneration* 1.36
2) Interest bearing outstanding loans receivable 0.33
3) Interest accrued on loans given 0.16
*Remuneration includes Basic, Allowances, reimbursements,contribution to PF and perquisites.
In addition, Whole time Directors are allowed the use of Staff cars including for private journeys upto a ceiling of 1000
Kms. per month on payment in accordance with the Bureau of Enterprises Circular.
C) Details relating to parties referred to in item no. I (C) above:
(Rs. in Crores)
2004-05
1) Minimum work program commitment 94.39
2) Survey and other expenses 22.07
3) Other assets 46.13
4) Amount outstanding on Balance Sheet date 17.32
5) Amount written Off-Dry well expenditure 2.22
21
st
Annual Report
159 We Stand for Reliability
GAIL (India) Limited
Consolidated Cash Flow Statement for the Financial
Year Ended 31
st
March, 2005
Amount (Rs. in Crores)
S.No. Particulars 2004-05
A. CASH FLOW FROM OPERATING ACTIVITIES
1. Net Profit Before Tax 2,980.92
2. Adjustments for:
Depreciation and Amortisation 980.77
Deferred Revenue Expenditure Written Off 0.27
Capital Reseve (0.12)
Preliminary Expenditure 0.10
Inventory Written Off 0.02
Exchange Rate Variation (0.07)
Liabilities/Provisions no longer requied written back (1.12)
Interest Expenditure 151.79
Dividend Income On Investments (120.32)
Interest Income (148.10)
Profit/Loss On Sale Of Fixed Assets 0.53
863.75
3. Operating Profit Before Working Capital Changes (1+2) 3,844.67
4. Changes In Working Capital (Excluding Cash & Bank Balances)
Trade And Other Receivables (506.60)
Inventories (5.27)
Trade And Other Payables 448.62
(63.25)
5. Cash Generated From Operations (3+4) 3,781.42
6. Direct Taxes (Paid)/Refunded (896.57)
Net Cash Flow From/(used in) Operating Activities (5+6) 2,884.85
Balance Carried Forward 2,884.85
GAIL (India) Limited
Consolidated Cash Flow Statement for the Financial
Year Ended 31
st
March, 2005
Amount (Rs. in Crores)
S.No. Particulars 2004-05
Balance Brought Forward 2884.85
B. Cash Flow From Investing Activities
Purchase of Fixed Assets (453.63)
Proceeds from Sale of Fixed Assets 0.64
Redemtion of Bonds/Debentures 0.15
Investment Made (Net) (94.25)
Adjustment to Capital Work in Progress 175.86
Adjustment to Precperative Expenditure 32.39
Movement in Loans Given 0.01
Interest Received 124.62
Dividend Received 120.32
Net Cash From/(used in) Investing Activities (93.89)
C. Cash Flow From Financing Activities
Proceeds From application of new shares 9.34
Proceeds From Long Term Borrowings 216.80
Repayment of Long Term Borrowings (224.75)
Interest Paid (152.26)
Dividend Paid (782.79)
Net Cash From/(used in) Financing Activities (933.66)
Net Increase In Cash And Cash Equivalents (A+B+C) 1,857.30
Cash And Cash Equivalents As at 01.04.2004 1,633.98
(Opening Balance)
Cash And Cash Equivalents As at 31.03.2005 3,491.28
(Closing Balance)
N.K.Nagpal J.K.Jain B S. Negi Proshanto Banerjee As per our separate report of even date
Secretary Director (Finance) Director (BD) Chairman & Managing Director For M/s S. MANN & COMPANY
Chartered Accountants
Subhash Mann
Place : New Delhi (Partner)
Dated : June 21, 2005 Membership No. 80500