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					Sub: A general purpose Report on GAIL

Executive Summary

GAIL (India) Ltd a Navratna PSU and India's principal gas transmission & marketing company,
was set up in 1984, to accelerate and optimize to effective and economic use of Natural Gas and
its fractions to the benefit of national; economy. Over a period of last two decades GAIL has
transformed to an integrated. Gas Major with synergistic diversification into other areas and now
has a broad range of businesses in its portfolio from Natural Gas Transmission and Marketing .
LPG, LNG Petrochemicals to Telecom.

GAIL has maintained healthy physical and financial performance in the year 2004-05. The Natural
Gas Throughput by GAIL's Pipeline Infrastructure was 7/56 MMSCMD Actual Production of LPG,
Propane, Ethylene, Polymers in 2004-05 were 1094835 MT. 181863 MT. 319290 MT. 298787 MT
respectively. During the Years 2004-05, the Gross Sales of GAIL was Rs. 12927 Crores (Net of
Excise Duty) and Profit after Tax was Rs. 1954 Crores.

In line with its performance, GAIL has obtained Excellent rating in MOU with its Ministry for the
year 2004-05.

The Major Projects which are under implementation are Dehej- Uran Pipeline Project Thulendi-
Phjulpur pipeline project Jagoti- Dewas- Pithampur Pipeline Project, Blue Sky Projects (24 cities
under consideration for CNG/City Gas application, Petrochemical Expansion Project at Pata.

in pursuit of excellence. GAIL has always endeavored to be a market innovator and focus its
effort in Diversification of its project/ Product mix like-Compressed Natural Gas( CNG) for
transport sector. Modification of HDPE grade for niche market of pipeline coating material,
modification of HDPE grade for Injection Moulded crates etc.

In view of the changing market scenario GAIL is paying strong attention to developing its
competitiveness in all of its areas of business. A new electronic performance management
system (e-PMS) has been launched to bring efficiency and objectivity in Appraisal system. ERP
has been launched and successfully made live in all major locations .

To avail global opportunities. a special focus is being given to globalization., GAIL has already
entered the markets of three countries of Myanmar, Egypt and China and is targeting 6 more
countries to expand its operations further. To give additional attention to global opportunities
GAIL Global (Singapore) Pte Ltd, a wholly owned subsidiary of GAIL has been opened during
2004.

Aligned with its vision, GAIL has carefully chosen strategic alliances for its business, R&D
projects and technology development.

GAIL is committed to the society and has always come forward for the cause of upliftment of
under-privileged people. Expenditure on Corporate Social Responsibilities during the year 2004-
05 was 13.04 Crores. GAIL Board has approved a norm to spend 1% of PAT of Corporate Social
Responsibility Programmes every year, out of which 75% has to be spent in Rural Sector.

GAIL Board comprises 6 whole-time Directors including C&MD and equal number of part-time
Directors, of which 3 represent MoP&NG GAIL Board has exercised its Autonomy & Powers
adequately, as delegated for approving number of project/ ventures and administrative decisions,
after the grant of Navratna Status. However, it is still left that the Board be further empowered in
respect of Investments. Restructuring, Mergers & Acquisitions, Compensation Package/ ESOPs
for employees. Appointment of Navratna Directors etc. to enable GAIL to meet current business
challenges effectively.

xxxxxxx

PERFORMANCE OF GAIL (INDIA) LIMITED

Part A & B

A-1. Name of Public Sector Undertaking and the Administrative Ministry

GAIL (India) Limited under the Ministry of Petroleum & Natural Gas

B- 2. Vision, Mission & Objectives Vision

"Be the leading company in natural gas and beyond with global focus, committed to customer
care, value creation for all stake holders and environmental responsibility."

Mission

To accelerate and optimize the effective and economic use of Natural Gas and its fractions to the
benefit of national economy.

Objectives

       To focus on all aspects of the gas value chain including exploration, production,
        transmission, extraction, processing, distribution of natural gas and their related
        processes, products and leveraged services.
       To achieve all round excellence in endeavor towards services for the nature and the
        people - The Ultimate Customer.
       To relentlessly strive to exceed the expectations of the customers, both internal and
        external, and stakeholders by endeavoring to create superior value through the use of
        best-in-class standards of operations, technologies and practices related to safety, health
        and environment.
       To use technology stretched to its limit.
       To e-enable all aspects of business as far as possible.

B-3. Strategy and Business Plan adopted for realization of goals as stated in the vision
statement and objectives set

Over the last 20 years, since its inception in August 1984, GAIL has emerged as a lead player in
the natural gas industry. Starting predominantly as a Natural Gas Transmission & Marketing
Company, GAIL has synergistically diversified into other business areas across the Natural Gas
Value Chain, to achieve maximum value for its business operations. Today, its business portfolio
spans a broad range, covering Natural Gas Transmission and Marketing, LPG, LNG,
Petrochemicals, CNG & City Gas distribution and Telecom. In order to create significant value for
its shareholders through an optimum portfolio mix, the company has developed a Corporate
Strategic Plan that gives a well-balanced and focused direction for consolidation of its existing
business portfolio as well as growth initiatives for the future. The key objective of the Corporate
Strategic Plan is to develop a robust growth oriented corporate portfolio with superior value
creation potential for GAIL's shareholders. The "Value Creation Potential" of each business is
based on the difference of expected return on equity and cost.
To achieve the Corporate Objectives in the context of the changed business environment, the
recommended Strategy Framework is built on four key planks which are as follows:

Maintain market position in the core Natural Gas Transmission & Marketing businesses through
aggressive market development and infrastructure build up (National Gas Grid);

Grow the smaller new businesses which provide growth and value creation potential;

Explore new business opportunities including Global investment that can provide additional value
creation;

Review the LPG, LNG and Petrochemical business strategies for further value creation and
growth.

The above strategy requires GAIL to invest a significant amount during the remaining period of
Xth Five Year Plan viz.2005- 07 and during the XIth Five Year Plan viz.2008-12. Successful
implementation of the recommended strategy is intended to increase GAIL's turnover to Rs.
46320 crores and accordingly the net profits are expected to jump to Rs. 5611 crores by 2012.
The Corporate Strategic Plan document, which provides the contours of planning for the growth
and consolidation of the company over a 10 year period, also carries a provision for mid course
correction in alignment with the uncertainties over gas supplies, price, transmission tariff,
regulatory mechanism, end-user developments, industry restructuring and technology
advancements. The company is also taking up the task of aligning its IT, HR etc. strategies to
support the strategic objectives.

B-4. MOU rating for last 3 years

Year      Composite Score MoU Rating
2001-2002 1.06            Excellent
2002-2003 1.08            Excellent
2003-04 1.00              Excellent
2004-2005 @               @

@ Evaluation for 2004-05 under progress in DPE.

B-5. When was the Board restructured after grant of Navratna/Miniratna status?

GAIL was conferred the 'Navratna' status by the Government in 11.11.1997. Thereafter, the
Board of Directors of the Company was restructured on 28.04.1999 by inducting four non-official
part time Directors.

B-6. Present composition of the Board after it's restructuring

The present composition of the Board after it's restructuring is as follows:

 S1. No. Name of the Director(s)        Name of the Post(s) Held
1        Shri Proshanto Banerjee        Chairman & Managing
                                        Director
2          Shri J. K. Jain              Director (Finance) (upto
                                        31.10.05)
3          Shri S. P. Rao               Director( Projects)
4          Shri B. S. Negi              Director (Business
                                           Development)
5         Shri Mohan R. Hingnikar          Director (HR)
6         Dr. U. D. Chou bey               Director (Marketing)
7         Shri R.K.Goel                    Director (Finance) (w. e.
                                           f.01.11. 05)
8         Shri M. S. Srinivasan            Director
9         Shri P.K.Sinha                   Director
10        Shri Ajay Tyagi                  Director (w.eJ.20.04.2005)
11        Dr. Amit Mitra                   Director
12        Dr. A. K. Kundra                 Director
13        Shri B. C. Bora                  Director

B-7. The number of Board meetings held (year wise, for the last three years)

Year      No. of Board Meetings held
2002-2003 16
2003-2004 17
2004-2005 15

B-8. Give details (for last 3 years) on the extent of Operational Autonomy availed by the
PSU.

Operational Autonomy               Available by PE
Granted
B-8.1 Monitoring of the            GAIL has established various systems of internal monitoring,
performance by the Board           which are both effective and transparent in nature. These
                                   include:
a) Transparent and effective
system of internal monitoring as            Internal MOU signed with the Work Centers, Zonal
established in the PSU.                      Offices I and Functional Departments to assign
                                             physical, financial and qualitative targets. The
                                             performance against the targets is periodically
                                             reviewed for realignment of action plan.
                                            Periodic review of Projects Performance and Plan
                                             Capital Expenditure by C&MD / full-time Directors.
                                            Well documented Systems & Procedures in the form
                                             of Manuals & Hand Books for critical functions
                                            Independent and integrated Internal Audit
                                             Department, headed by Executive Director, with direct
                                             reporting to C&MD. The IA department reviews
                                             compliance of Management guidelines and
                                             adherence to Systems. Deviations, wherever noticed,
                                             are highlighted for corrective actions.
                                            Quarterly review of physical and financial
                                             performance of the Company by the Board.
                                            Review and monitoring of the progress of all major
                                             projects, is also undertaken by the Board on a
                                             monthly basis and wherever required, corrective
                                             action suggested to avoid time and cost overrun.
b) Audit Committees set up.         The company has an Audit Committee in terms of the
Specify terms of reference, field   requirements of Section 292 A of the Companies Act, 1956
of operation, number of             and Listing Agreement of Stock Exchanges. The Audit
meetings held so far and import     Committee comprises of Non-Executive Directors as its
findings.                           Members. The terms of reference of the Audit Committee are
                                    as under:

                                          Oversight of the Company's financial reporting
                                           process and disclosure of its financial information to
                                           ensure that the financial statement is correct.
                                          Review of the annual financial statements before
                                           submission to the Board.
                                          Review of the adequacy of internal control systems,
                                           with the management and external & internal
                                           auditors.
                                          Reviewing the adequacy of internal audit functions.
                                          Discussion with internal auditors, and any significant
                                           findings and follow up thereon.
                                          Reviewing the findings of any internal investigations
                                           by the internal auditors in matters of suspected fraud
                                           or irregularity or a failure of internal control system of
                                           material nature and reporting the same to the Board.
                                          Review of the Company's financial and risk
                                           management policies.
                                          Recommending the fixation of! audit fee and also
                                           approval for payment for any other services.

                                The number of audit committee meetings held during the
                                years 2002- 03, 2003-04 and 2004-05 were 4,3 and 10
                                respectively.
C) Other measures adopted for In addition to the measures included in B-8.1.a) above,
effective monitoring within the following are in adoption:
PSU, if any.
                                Monthly review of performance vis-a-vis all targets envisaged
                                in the MoU signed with the Govt.

                                    Issuance of Monthly Performance Report, which
                                    comprehensively covers Progress, Performance and status of
                                    GAIL.
B-8.2 Steps taken for
Technology upgradation:
                              The company has a Technology Transfer and Application Cell
                              (TTAC) to undertake R&D activities in line with company's
a) R & D Stage                business objectives. The TTAC has taken up various projects
                              in association with other organizations:

                                  1. Development of technology for separation of Paraffins
                                       and Olefins by Adsorption, with IIT Kanpur
                                  2.   Development of Leak Detection Method for Natural
                                       Gas Pipelines with IIT, Chennai
                                  3.   Development of Technology to produce Liquid Fuel
                                       from Plastic waste, with IIP Dehradun



b) Acquiring new technology   Technology Transfer and adoption in GAIL's business are
through JVs or otherwise      being taken up in following areas:

                                  1. Natural Gas Hydrate for transportation of Natural Gas
                                       from isolated fields Technology from NGH AS Norway
                                  2.   Lignite/Coal in-situ Gasification with Ergo Energy -
                                       Canada
                                  3.   Coal gasification with Shell Technology.
                                  4.   Methanol to Propylene with Lurgi's Technology
                                  5.   Methanol to Olefins with UOP's Technology
                                  6.   Modular LNG using Technology from LNGI Australia
                                  7.   CNG by ship using VOTRANS Technology of
                                       EnerSea, USA
                                  8.   Onboard LNG Regasification using technology from
                                       Exmar, Belgium
                                  9.   CNG by road using Technology from TransCanada.

                              Apart from these, E&P department of the company has
                              undertaken two Gas Hydrate Research Projects for exploring
                              alternate potential sources; of gas as a part of National Gas
                              Hydrate Programme (NGHP) under OIDB funding (i) Geo-
                              Scientific investigations of gas hydrate in Goa Offshore and
                              (ii) Mallik Gas Hydrate Production Well Research Project
                              under collaboration with Japan National Oil Company (JNOC)
                              and Geoloaical Survey of Canada (GSC).
B-8.3 Steps taken towards     GAIL has always endeavored to be a market innovator and
diversification of            focus its effort in diversification of its product/product mix in
products/Product Mix          petrochemical field in a true business and consumer oriented
                              marketing approach. Some of the efforts taken in this direction
                              are:

                                      Modification of HDPE grade for niche market - Low
                                       Denier Stretched Tape for HDPE Fabric manufacture.
                                      Modification of HDPE grade for Injection Moulded
                                       Crates for ensuring high degree of dimensional
                                       stability.

                              Manufacturing of Octene based LLDPE Film Grade in
                              October, 2005 for the Milk Packaging applications.
B-9 Give details of Delegation of Decision Making Authority

Offered                            Availed by PE
B-9.1 To incur capital expenditure To meet the operational requirements, to empower
on new projects modernization, functionaries at various levels and expedite the
purchase of equipment etc:         decision making process, GAIL has a document
                                   titled "Delegation of Powers". The document
Year wise investment on new        stipulates the administrative and financial powers
projects, modernization,           delegated at various hierarchical levels. Delegation
contribution of new products in    of Powers at the level of C&MD / Functional
turnover                           .Directors is given at Annexure - I. The details of
                                   investments in new projects incurred are given at
                                   Annexure-II.
B-9.2. To enter into technology
JVs or strategic alliance
    a. No. of JVs formed           2000-01
    b. No. of Stragetic Alliances
        made                       2 E&P blocks under NELP- I
    c. the share of the PSU in
        the JV/Strategic Alliances Mahanadi Offshore (15%)
        (SAs)
    d. expected gains from         North-East Coast Offshore (50%)
        JV/SAs
                                   2001-02

                                  6 E&P Blocks under NELP-II

                                  Gujarat-Surashtra Offshore (15%)

                                  Mumbai Offshore (15%)

                                  Mahanadi Offshore (20%)

                                  Cambay Onland (50%)

                                  Mahanadi Onland (20%)

                                  Kerala-Konkan (15%) - Relinquish

                                  Cauvery Offshore (25%)

                                  Gains - Equity Gas / Oil

                                  2002-03

                                  Myanmar Offshore (10%)

                                  Gains - Gas Import for the country. GAIL
                                  considered Preferred Buyer of Gas
                                  2003-04

                                  2 E&P Blocks under NELP- IV

                                  Tripura Onland (80%)

                                  Cauvery Onland (50%)

                                  Gains - Equity Gas / Oil

                                  Bhagyanagar Gas Ltd. (25%)

                                  Gains - Development of CNG & LPG in AP

                                  Fayum Gas Co, Egypt (19%)

                                  SHELL CNG, Egypt (22%)

                                  Gains - Strategic investments for long-term
                                  business development / expansion in Egypt and
                                  annual dividends

                                  2004-05

                                  Tripura Natural Gas Co. Ltd. (29%)

                                  Central UP Gas Ltd. (22.5%)

                                  Gains - Development of CNG &PNG Market

                                  NATGAS, Egypt (15%)

                                  China Gas Holdings Co. Ltd. (9%)

                                  Gains - Strategic investments for long-term
                                  business development / expansion in Egypt and
                                  China / annual dividends
B-9.3. Steps Taken towards
a) Organizational restructuring   The dynamic business environment demanded
including establishment of cost & exclusive focus on Marketing function, thereby, the
profit centres.                   post of Director (Marketing) was created with the
                                  approval of MoP&NG. This led to restructuring /
                                  segregation of Planning and Marketing functions in
                                  GAIL, which used to be handled by Director
                                  (Planning) earlier. Also, the post of Director
                                  (Planning) has been renamed as Director
                                  (Business Development) with the approval of
                                  MoP&NG.
b) New Offices opened in India    To give focus to global opportunities GAIL Global
and abroad.                       (Singapore) Pte. Ltd, a wholly owned subsidiary of
                                  GAIL has been opened in 2004.
c) New activity centres           To reach nearer to the. customer, marketing
established , if any              activities have been given focus by creating new
                                  groups like Retail Marketing, International &
                                  Domestic Gas. Sourcing and Pricing, Total Quality
                                  Management, Energy Management Services.

                                  The functions of the new Business Development
                                  Group have been realigned with emphasis on
                                  strategic organic and inorganic growth.

                                  Corporate and Strategic Planning i Group has been
                                  created to make the Company's short and long
                                  term strategies under project "Disha", aligned with
                                  company's vision and mission.
B-9.4. Creation and winding up of The Chairman & Managing Director/ Board is the
posts including and upto those of competent authority for creation of below board
non-Board level Directors,        level posts.
Functional Directors. Posts
created and abolished with their As a part of the restructuring, exercise, a post of
level may kindly be specified.    Director (Marketing) at Schedule B was created.

                                  To sharpen the Sourcing & Marketing focus of the
                                  Company, one position each of GM (Domestic Gas
                                  Sourcing), GM (International Gas Sourcing) and
                                  GM (Retail Marketing) have also been created.
B-9.5. To structure and           For formulation and implementation of various HR
implement schemes relating to     related Schemes, Board of Directors is the
personnel and human resource      Competent Authority .
management training, voluntary
or compulsory retirement          Some of the important initiatives undertaken in the
schemes, etc.                     organization are:

                                         Web enabled Human Resource Information
                                          System (i..e. HRIS)
                                         Launch of Organizational Transformation
                                          Exercise known as 'Project Parivartan'
                                         New Training Policy for the employees
                                          specifying minimum one training per
                                          employee every year.
                                         Launch of Senior Management
                                          Development Center for the senior level
                                          Executives of the company
                                         A new electronic performance system (e-
                                          PMS) has been launched to bring
                                          efficiency and objectivity in Appraisal
                                          system
                                         Corporate Challenge Scheme

B-9.6 Wage negotiations effected Wage structure, perquisites and allowances in
                                 respect of unionized category of employees are
                                 determined through negotiations based on the
                                 Govt. guidelines issued in this regard. The
                                 Competent Authority. for approval of Wage
                                 Revision agreed upon through the process of wage
                                 negotiation, is the Board of Directors.
                                   Details of the long-term settlement for wage
                                   revision of unionized category are as follows:

                                             LTS effective from 01.04.87 to 31.03.91 - 4
                                              Years
                                             Mini settlement from 01.04.91 to 31.12.91 -
                                              9 months
                                             Settlement regarding PPS effective from
                                              01.04.91 to 31.12.91
                                             LTS effective from 01.01.92 to 31.12.96 - 5
                                              Years
                                             LTS effective from 01.01.97 to 31.12.2006
                                              - 10 Years


B-9.7. Debt raised from the                       (Rs. in crores)
domestic capital markets (year    2001-02 2002-03 2003-04
wise amount).                     Nil     Nil     1600
                                  2004-05
                                  Nil
8. Borrowings from international                  (Rs. in crores)
markets, ECBs raised (year wise 2001-02 2002-03 2003-04
amount).                          48.51 Nil       Nil
                                  2004-05
                                  Nil
9. Joint Ventures and wholly      Please see B-9.2 & B-9.3 (b)
owned subsidiaries established in
India or abroad. The expected
gains and objectives.

10. Financial Data / Indicators:

Sl.   Particulars                  1996-97 (base year 2000-01       2001-02     2002-03     2003-04   2004-05
No
1     Turnover                     4493                  9826       10309       11343       11943     13591
2     Operating expenses           4030                  8246       8470        8965        9273      10908
3     PBIT                         890                   1749       2029        2705        2952      3005
3A    PBD IT                       1123                  2350       2622        3348        3614      3950
4     Net profit (NP)              620                   1126       1186        1639        1869      1954
5     Capital Employed             834                   6898       7737        8130        9220      10786
      (CE)
6     Net Worth (NW)               2569                  5469       5333        6337        7411      8560
7     Internal resources     853                         1727       1779        2283        2531      2899
      generation
8     Foreign Exchange       0                           23         91          147         22        79
      Earning (FEE)
9     Mobilization of funds:
A     Domestic Sources             425                   1153       884         6261        2072      1963
B     International Sources        377                   1558       1541        1421        61        34
10    Ratios:
A     PBDIT to CE                 135%                 34%        34%         41%          39%         37%
A1    PBIT to Turnover            20%                  18%        20%         24%          25%         22%
B     NP to NW                    24%                  21%        22%         26%          25%         23%
C     Turnover to CE              539%                 142%       133%        140%         130%        126%
D     FEE to Turnover             0%                   0%         1%          1%           0%          0.6%
E     Debt to equity              0.32                 0.50       0.45        0.32         0.29        0.23
      Investment in JV to         1%                   2%         2%          2%           2%          2%
      NW

Note: turnover = Sales including Internal Consumption less ED Operating Expenses = All
expenses including depreciation but excluding interest.

B-11 (a). Details of new projects and investment decisions taken by the Board after its
restructuring.

After conferment of the 'Navratna' powers, the projects taken up by GAIL with an investment of
more than Rs.50 crores, are given below:

(i) Dahej Vijaipur Pipeline Project

The Project is a 42" X 610 Kms pipeline, for transporting R-LNG from Dahej to Vijaipur for
supplying it to consumers in Gujarat, Madhya Pradesh , Rajasthan & NCR of Delhi by utilizing the
existing Pipeline Network to the extent possible. Present capacity of Dahej - Vijaipur Pipeline is
23.14 MMSCMD The project got successfully commissioned, around 6 months ahead of
schedule. Board approval for the project was obtained in December, 2001 for Rs. 2936.38
Crores.

(ii) Vizag-Secunderabad LPG Pipeline

GAIL has laid a LPG pipeline to transport 1.164 MMTPA of LPG from Vizag to Secundrabad via
Vijaywada. LPG from the HPCL refinery at Vizag, imported LPG from Cavern storage & Eastern
India Pvt. Limited (EIPL) are the supply sources for this pipeline. The approved cost of the project
was around Rs.491 crores. The project was approved by the Board of Directors in February, 2001
and was completed in 2004.

(iii) Jamnagar-Loni LPG Pipeline: Phase-II

The Jamnagar-Loni LPG pipeline system has been upgraded from 1.7 MMTPA capacity to 2.5
MMTPA capacity. In addition to availability of 2.0 MMTPA at Jamnagar (Essar Oil Limited - 0.5
MMTPA and Reliance Petrochemical Limited - 1.5 MMTPA), 0.5 MMTPA of imported LPG from
Kandla has also been considered for transportation in phase - II.

The project was approved by the board 31.01.2001 with a capital cost of Rs. 99.51 crores and
was commissioned in September, 2003 well within stipulated time frame.

(iv) Debottlenecking of Existing LLDPE/HDPE Swing Plant

To de-bottleneck the existing LLDPE/HDPE Swing Plant at UPPC from the existing 160,000 TPA
to 210,000 TPA capacity. The project was approved by the Board of Directors in August, 2001 for
Rs. 76 crores. The project was commissioned in April 2004.
(v) UPPC Expansion Project

To set up one additional furnace in GCU and to set up a new Swing plant alongwith the additional
utilities to bring up the plant at global benchmark in capacity terms. The polymer capacity would
be increased to 440000 TPA. The project was approved by the Board of Directors on 27.11.2002
for Rs. 647 Crores. The project is expected to be completed by March, 2007.

(vi) Dahej - Hazira - Uran Pipeline

The Project comprises a trunk line of 30" X 386.5 Kms & spurline & loopline of 117.8 Kms various
sizes (12" to 24") for transporting R-LNG from PLL, Dahej & Shell, Hazira to Uran for supplying it
to consumers in Gujarat, Maharashtra and UT of Silvassa. Present capacity of Pipeline is 12
MMSCMD. The Board approved the project with a cost of Rs. 1830.77 Crores which is expected
to be commissioned by February, 2007.

(vii) Blue Sky Project

GAIL's Board accorded the approval for setting up of the City Gas Distribution Projects in the
cities of Agra, Lucknow, Kanpur, Faridabad and Pune on 25.10.2002 under Blue Sky Project with
an investment of RS.554.24 Crore, subject to establishing the commercial viability in individual
cities. Financial viability for Lucknow /Kanpur was established. Accordingly, feeder line for Kanpur
and Lucknow has been taken up and completed.

(viii) Chainsa Maruti Pipeline Project

The 16", 60 km pipeline has been taken up to meet additional demand of natural gas and to
secure uninterrupted gas supply to IGL. The pipeline starts from tap-off point at SV-11 at Chainsa
on GREP pipeline and terminates at GAIL's terminal at Maruti Udyog (Gurgaon). The Board
approved the total project cost of Rs.67.10 Crores on 27.02.2001. The project was completed on
31st March 2004.

(ix) South Gujarat Pipeline Project

The Project Comprises 47 Kms of 16"/8"/6"/4" Pipeline for supplying 9.5 MMSCMD of R-LNG to
existing consumers in South Gujarat region from Tap-off points on Dahej - Vijaipur Pipeline at
Ankot, Samni & Vaghodia utilizing the existing Pipeline Network to the extent possible. The Board
approved the total project cost of Rs.94.89 Crores on 25.02.2003.

(x) Telecom Business Project

GAIL entered into the telecom sector as infrastructure provider for leasing out bandwidth to
various telecom service providers.. Under phase-I, II A & II B of Telecom Business Project, Delhi,
Mumbai and other cities falling en-route are being inter-connected through a network of 8000
kms. The Board approved the projects at an estimated cost of Rs. 295.30 crores.

(xi) Equity Participation in Fayum Gas Company. (FGC), SHELL Compressed Natural Gas
EGYPT (SCNGE), National Gas Company (Natgas) in Egypt and China Gas.

The Board approved on 20.11.2003 the equity participation for the following:

a. GAIL's equity participation in Shell Compressed natural Gas Egypt (SCNGE) to the level of
22% at a total investment of US $0.153 million and providing a corporate guarantee to
Commercial International Bank (CIB), Egypt for an amount of US $0.377 million.
b. GAIL's equity participation in Fayum Gas Company (FGC) to the level of 19% at a total
investment of US $2.70 million.

c. Authorizing CMD, GAIL of his representative to execute the Shareholders Agreement and
Share Purchase Agreement in respect of Fayum Gas Company and Share Purchase Agreement
and Deed of Adherence in respect of Shell Compressed Natural Gas Egypt (SCNGE).

d. Natgas

Board approved on 30th July 2004 for GAIL's participation in Natgas

GAIL's equity participation of 15% in National Gas Company S.A.E., Egyp with a financial
implication of LE 118.5 million, equivalent to about USD 19.2 million, equivalent to about Rs.88.3
crore.

Authorizing Chairman & Managing Director and / or Director (Planning) or their authorized
representative (s) to execute transaction documents of investment in Natgas, subject to mutually
accepted terms.

e. China Gas

GAIL's Board in its 221st meeting held on 19th February, 2005 had discussed about GAIL's
participation in China Gas Holding Limited and passed the following resolution :

Quote

"Approving acquisition of 210 million shares @ HK $ 1.158 per share of the face value of HK $
0.01 per share as fresh issue of China Gas Holdings limited by GAIL or through its wholly owned
subsidiary company - GAIL Global (Singapore) Pte. Ltd., with a financial implication of HK$
243.18 million equivalent to about Rs 137 crores.

Signing of Share Subscription Agreement (SSA) between GAIL an China Gas Holdings Limited.

Authorizing C&MD or his authorized representative to finalize and sign the Share Subscription
Agreement or any other documents as may be required on behalf of GAIL."

Unquote

Accordingly, the Share Subscription Agreement between GAIL and China Gas Holdings Limited
was executed on 19th February, 2005. After meeting the Conditions Precedent as per SSA, the
payments for subscribing 210 million shares of China Gas were made on 3rd May, 2005.

(xii) Dadri - Panipat - IOCL Panipat Pipeline in Punjab Sector

The Board approved laying of 28" X 114 Kms. "Dadri - Panipat" Pipeline with 16" X 8 Kms, on
26.09.2003, at an estimated cost of Rs. 346.995 Crores. Market is there for gas.

(xiii) Thulendi - IFFCO, Phulpur Pipeline Project

The Board approved laying of 18" X 139 Kms. pipeline' project for transportation of RLNG in UP
Sector. It has an estimated cost of Rs. 220 Crores subject to signing of TSA/Gas Supply Contract
with IFFCO, Phulpur 1 receipt of Environment Clearance, The project was approved on
26.09.2003. The Project is targeted for completion by May, 2006.
(xiv) Kailaras Malanpur Pipeline Project

The Board approved Kailaras - Malanpur pipeline project with an estimated cost of Rs 104.73
Crore on 28th January 2005 to transport RLNG from Dahej. The proposed pipeline is designed
for 2 MMSCMD in order to cater various consumers in Malanpur. The pipeline is of 12"/6" and 4"
diameter with a total length of 95 kms.

(xv) Jagoti - Indore - Pithampur Pipeline

The Board approved this project on 28th January 2005 with an estimated cost of Rs 194.82 crore.
The pipeline proposed will connect Ujjain, Indore and Dewas Towns for supply of RLNG to
industrial consumers and will have city gas distribution for Indore city. The proposed pipeline is
designed for 3 MMSCMD, the pipeline is of 16"/6" and 4" diameter with a total length of 170 km.

(xvi) ERP Project - Interconnect

The Board approved ERP Project with an estimated cost of Rs. 55 crore on 05.06.2002, The
tentative schedule of completion is 25 months from the zero date viz., 04.11.2003. The Objectives
that GAIL desires to achieve from the implementation of ERP are to move up the value chain,
achieve higher customer service and satisfaction, Improve productivity, Optimize cost, improve
efficiency and achieve lower inventories.

However numerous benefits are envisaged after implementation of ERP Project like Inter-
connected business and process control systems, Standardize processes adopting best industry
practices across locations and functions, Provide Management Information to support new
organizational structures, Better decision support and operation control, Enable internal
performance measurement, Improved responsiveness to changing market global conditions,
Leverage new opportunities and technologies for collaborative business, Enable transformation
etc.

(xvii) GAIL's Exploration and Production Projects

The Board has accorded approval to enter into Hydrocarbon Exploration & Production (Upstream
E&P). Accordingly, GAIL has participated in the various NELP rounds of bidding and has been
awarded the following blocks:

Exploration and Production Projects

S. No.     Block No.                        Date of PSC         Participating Interest &
                                            Signing             Partner
           NELP-I
1          MN-OSN-97/3 Mahanadi 12.04.2000                      GAIL - 15%
           Offshore                                             ONGC (Operator) - 85%
2          NEC-OSN-97/1 Bay of              03.10.2000          GAIL - 50%
           Bengal Offshore                                      Gazprom (Operator) - 50%
           NELP - II
3          GS-DWN-2000/2 Gujarat 17.07.2001                     GAIL - 15%
           Saurashtra Offshore                                  ONGC (Operator) - 85%
4          MB-DWN-2000/2 Mumbai             17.07.2001          GAIL - 15%
           Offshore                                             ONGC (Operator) - 50%
                                                  IOC -. 15%
                                                  OIL - 10%
                                                  GSPC - 10%
5    MN-OSN-2000/2 Mahanadi   17.07.2001          GAIL -20%
     Offshore                                     ONGC (Operator) - 40%
                                                  IOC - 20%
                                                  OIL - 20%
6    CB-ONN-2000/2 Cambay On 17.07.2001           GAIL - 50%
     land
                                                  GSPC (Operator) - 50%
7    MN-ONN-2000/1 Mahanadi   17.07.2001          GAIL - 20%
     Onland
                                                  OIL (Operator) - 40%
                                                  IOC - 20%
                                                  ONGC - 20%
     NELP-IV
8    AA-ONN-2000/1 Tripura    06.02.2004          GAIL - 80%
     Onland
                                                  JOGPL (Operator) – 20%

9    CY-ONN-2000/1 Cauvery    06.02.2004          GAIL - 50%
     Onland
                                                  JOGPL (Operator) – 30%
                                                  GSPC - 20%
     NELP-V
10   AA-ONN-2003/2 Assam      PSC to be signed.   GAIL – 35%
     Onland
                                                  JOGPL (Operator) - 45%
                                                  GSPC - 20%
11   AN-DWN-2003/2            25.09.2005          GAIL-15%
     Andaman Offshore                             Eni SpA (Operator) – 40%
                                                  ONGC – 45%
12   CB-ONN-2003/2   Cambay   25.09.2005          GAIL - 20 %
     Onland                                       GSPC (Operator) 50%
                                                  Jubilant - 20%
                                                  Geo Global Resources - 10%


     "Farm - in"
13   A-I, Myanmar Offshore    01.10.2000          GAIL - 10%
                                                  Daewoo (Operator) - 60%

                                                  OVL - 20%

                                                  KOGAS - 10%
14   A-3, Myanmar Offshore    01.10.2000          GAIL - 10%
                                                  Daewoo (Operator) - 60%
                                                                    OVL - 20%
                                                                    KOGAS - 10%
15          CY-OS/2 Cauvery                 19.11.1996 w.e.f        GAIL – 25%
            Offshore                        22.2.2002)              HARDY (Operator) – 75%

xix) National Gas Grid

National Gas Grid has been conceptualized for transportation of gas available from various
sources viz. PLI-Dahej, PLL - Kochi, Dabhol, Ennore, Myanmar gas, Iran gas and Reliance gas of
Kakinada. The source of gas will be connected to the various limbs of NGG to cater to the needs
of the customers in different parts of India.

Out of 15 gas limbs, Dahej-Vijaipur pipeline project has already been commissioned and work in
respect of Dahej - Uran and Vijaipur - Kota pipeline project are under progress. Preparations of
Detailed Feasibility Reports (DFR) for the remaining pipelines are in progress.

B-l1. (b). Number of major projects under implementation along with their cost/time
overrun, if any.

The salient features of projects, which are under implementation, are given in the following table :

S.N   Name of Project      Approved      Date of           Expected date of    Cost / Time
                           cost (in      Approval          commissioning       overrun.
                           Crore)
1.    Dahej – Uran         1830.77       (Revised Board Feb, 2007 as per       No delay envisaged
      Pipeline Project     (Revised cost approval) Initial Board Approval on    from the revised
                           approved by Approval: Nov, 21.06.2005               completion date of
                            Board on      2002                                 Feb, 2007
                           02.09.04)
                                          Revised Cost
                                         Approval:
                                         02.09.2004

                                         Project Go-
                                         ahead:
                                         21.06.2005




2.    Thulendi – Phulpur   220.00        26.09.2003       Mary'2006            -----
      pipeline project.
3.    Dadri – Panipat      346.99        26.09.2003       Project under hold for want of Gas
      Pipeline Project                                    Supply Agreement with IOCL.
4.    Vijaypur - Kota      299.84        30.06.2004       December'06          ----
       Pipeline Project
5.    Kailaras –           104.73        28.01.2005       July'06              ----
      Malanpur Pipeline
      project
6.    Jagoti - Dewas -     194.82        28.01.2005       July'06              -----
      PithampurP/L
7.    Blue sky Projects    554.24        25.10.02         The project was approved by GAIL
                                                          Board for 5 cities viz Lucknow, Kanpur,
                                                            Faridabad, Pune & Agra subject to the
                                                            condition that GAIL has to establish
                                                            financial viability before making financial
                                                            commitment in the project.
                                                            Subsequently it was also decided that
                                                            GAIL shall lay the feeder line up to the
                                                            city gate station (CGS) and downstream
                                                            activities shall be taken by Joint venture
                                                            which was to be formed for this purpose.

                                                            Financial viability for Lucknow / Kanpur
                                                            was established.
8.     Petrochemical     647.38            27.11.2002       Anticipated            SIA approval got
       Expansion Project Crores                             Completion March delayed by about
                                                            2007                   Four and half
                                                                                   months. Basic
                                                                                    Engineering
                                                                                   Package from
                                                                                   Licensor got
                                                                                   delayed due to late
                                                                                   payment to Licensor
                                                                                   because of delay in
                                                                                   SIA approval. No
                                                                                   cost overrun
                                                                                   expected.

B-12.Capacity utilization as a % of total capacity during the three years (year wise). In case of
service sector PSUs the indicator may be suitable modified as Occupancy rate in the case of
Hotel Sector, disinvestment / recovery rate of loans in case of financial sector, availability of lines
in case of Power sector etc.

                                    Unit          2001- 2002 2002- 2003 2003- 2004 2004-
                                                                                   2005

Natural Gas                         MMSCMO        33.042         33.034        32.231        31.8
Transportation (HVJ) (Capacity – MMSCMD           98.93%         98.90%        96.50%        95.2%
33.4 MMSCMD)

LPG (Production Capacity      %                   89.9           100.3         98.0          98.6
 1110844 MT
Total liquid Hydrocarbon      %                   75.4           86.6          90.6          92.6
  Production including LPG
 Capacity 1505126 MT
Ethylene (Capacity 300000 MT) %                   90.7           104.0         91.87         106.43

HOPE / LLOPE (Capacity              %             100.6          113.9         104.41        118.52
160000 MT Swing Plant
HDPE (Capacity 100000 MT)           %             89.3           109.5         96.661        109.16

B-13. Foreign Exchange Earning (FEE) as a ratio of Turnover during the previous three
year (year wise);

Or
In respect of the PSUs where there is no scope for FEE, an indicator reflecting the 'Social Burden'
giving following information, during last three years (year wise):

   i.   Projects / Services rendered on social rather than economic considerations.
  ii.   SC/ ST/ other special categories recruitment as a % of total recruitment.
 iii.   Total expenditure on development of peripheral / adopted villages and that spent on
        National calamities / disasters / other social service activities.

B-13.(ii) The information is given in the following table:

Recruitment Made in 2004

Group of    Total no. of      No. of Candidates Appointed
Posts       Vacancies
            Filled            SCs        %age to      STs     %age to       OBC       %age I to
                                         Total                Total                   Total
A           9                 0          0            1       11            1         11
B           12                2          17           1       8             2         17
C           0                 0          0            0       0             0         0
D           0                 0          0            0       0             0         0
Total       21                2          10           2       10            3         14


Recruitment Made in 2003

Group of Total no. of         No. of Candidates Appointed
Posts    Vacancies


            Filled            SCs        %age to      STs     %age to      OBC        %age to
                                         Total                Total                   Total
A           14                2          14           0       0            1          7
B           14                2          14           2       14           1          7
C           0                 0          0            0       0            0          0
D           1                 0          0            0       0            0          0
Total       29                4          14           2       7            2          7

Recruitment Made in 2002

Group of Total no. of         No. of Candidates Appointed
Posts    Vacancies
         Filled               SCs         %age to     STs      %age to     OBC       %age to
                                          Total                Total                 Total
A           9                 2           22          0        0           0         0
B           109               26          24          9        8           15        14
C           0                 0           0           0        0           0         0
D           0                 0           0           0        0           0         0
Total       118               28          24          9        8           15        13
B-13.(i) & (iii)

GAIL is committed to the society and has always come forward for the cause of upliftment of
under-privileged people. GAIL Board approved in its 183rd meeting on 25.10.2002, a norm to
spend 1% of PAT on Corporate Social Responsibility Programmes every year, out of which 75%
has to be spent in Rural Sector.

As a responsible corporate citizen, GAIL has undertaken several programmes aimed at the
upliftment and welfare of the socially and economically weaker sections of the society. The focus
areas of its Corporate Social Responsibility programmes has been - Health & Sanitation,
Community development, Education, Infrastructure development, Medical etc. Expenditure
incurred on these programmes over the last few years is as below:

Sl. No.      Year              Expenditure incurred
1.           2002-03           Rs. 670 lac
2.           2003-04           Rs.919 lac
3.           2004-05           Rs. 1304 lac

Major social welfare activities undertaken in the past years :

         Provisioning tube-wells, bore-wells and hand pumps to the villages having scarcity of
          natural water reservoirs.
         Extension of Merit scholarship to 2500 meritorious children. Also distributed merit
          scholarships through Rotary Education Foundation and Him Jyoti Foundation.
         Empowering physically challenged persons by providing motorized tricycles, tricycle-
          rickshaws, personal computers to the schools for visually impaired children.
         Construction of internal village roads and infrastructure for community development.
         Provision of sewing machines and vocational training to widows and women belonging to
          socially and economically under-privileged categories for their empowerment.
         Provision of state-of-the-art Mobile Medicare Units (Ambulance) to Ramakrishna Mission
          Sevashrama, Missionaries of Charity and local hospitals.
         Sponsoring 1100 cases of cataract surgeries with Intra Ocular Lens implant for senior
          citizens in association with HelpAge.
         Adoption of 100 leprosy-affected senior citizens in association with HelpAge.
         Extensive health/family welfare/nutritional/family planning camps in the surrounding
          villages of our work centres.
         Contribution towards setting up of Air Pollution Related Disease Diagnostic Centre at 18
          highly polluted cities, under the Project-'Blue Sky'
         Construction of a girls hostel at Ratlam, MP and a Maternity and Child Care Hospital at
          Jhabua, MP

PART C

RESPONSE ON QUALITATIVE FACTORS AS PERCEIVED BY THE PSU

C-l. Do you think that Board is professionalized, if no, which areas need to be represented
on the Board.

Presently Board of GAIL comprises of six whole time Directors, including the C&MD and an equal
number of part time Directors, of which three represent the MoP&NG. While the constitution of
the Board is balanced with the whole time Directors covering the important functional areas of the
organization, the part time Directors are individuals of repute who carry industry/sectoral
expertise.
However, further restructuring of the Board, by way of induction of 'Independent Directors' is
required in terms of the revised Clause 49 of Listing Agreement on Corporate Governance to
further enhance the degree of professionalism and technical/managerial expertise of the Board.
SEBI guidelines applicable to listed companies provide for at least equal number of non-executive
/ independent Directors.

C-2.Please specify

(a) To what extent the Govt. has given financial autonomy

Great Extent Significant Moderate Extent Less Extent Least Extent
             √

b) To what extent the Govt has given operational autonomy

Great Extent Significant Moderate Extent Less Extent Least Extent
                         √

C-3.How the Board is accountable for their decision making. To what extent the
accountability is commensurate with the enhanced autonomy

All issues of significance, including financial & strategic/policy matters such as- Budget,
Corporate Plan, Accounts, Policies, Investments, Expansions, Diversification, Acquisitions etc.
are brought before the Board for its approval/information, as per requirement. The Board is fully
accountable for the decisions taken by it in respect of the issues placed before it. Periodic review
of the status in the Board approved issues/decisions is undertaken at successive Board
meetings. These decisions, reflect in terms of company performance against financial and
physical parameters, is in turn subject to periodic monitoring/review by the
Government/Administrative Ministry.

C-4.Please list the impediments or constraints, if any, in the efforts to become global
competitive.

In terms of the DPE circular dated 22.07.97, the Board of Navratna PSUs are empowered to
establish financial JVs and wholly owned subsidiaries in India and abroad, with the stipulation that
the equity investment of the PSU should be limited to the following:

i. Rs.200 Crore in anyone project
ii. 5% of the Net Worth of the PSU in anyone project
iii. 15% of the Net Worth of the PSU in all JVs and subsidiaries put together

The above conditions are restrictive and place limitations on the autonomy of the company to
operate in a globally competitive and dynamic business environment.

The PSU Board should be vested with functional autonomy in respect of decisions concerning not
only day-to-day operations but also matters relating to implementation of new projects,
operations, diversification, mergers & acquisitions. The existing regulations governing the
management of the PSUs are comprehensive in terms of checks & controls. It is suggested that
the role of the Govt. / Administrative Ministry in respect of above said, should be confined only to
macro level issues of national importance.

C-5 .To make the PSU globally competitive, what suggestions would you like to make.
     To enable PSUs to be globally competitive, the Management and the Board should be
        vested with autonomy in managing the affairs of the Company. The extent of such
        autonomy in any case being governed by regulations placed under the Companies Act,
        SEBI guidelines etc., it would facilitate the PSU's if the financial ceilings defined by DPE
        for equity investments of PSUs in JVs / Subsidiaries are removed providing level playing
        field.
     The Board may be granted autonomy to approve Mergers & Acquisitions, Formation of
        Subsidiaries and Restructuring of the Organization to make the PSU globally competitive
     The Board of Directors should have autonomy to nominate professionals on the Board as
        per the specified requirements of PSUs
     The Board of Directors should be empowered to determine the compensation package of
        its employees and the Functional Directors, the compensation for Functional Director
        may be subject to the ceilings prescribed by the Companies Act. This would help PSUs in
        attracting, motivating and retaining its 'people resources' and ensure closer alignment of
        compensation packages with the prevailing market conditions.
     In order to enable GAIL to play a complementary role in overseas E&P ventures, the
        existing mechanism of Empowered Committee of Secretaries (ECS) may be extended to
        GAIL, which is currently extended to OVL and OIL/IOCL consortium. This would facilitate
        in fast track clearance in overseas ventures.
     The Navratna PSUs should be granted flexibility to introduce employee related schemes
        such as ESOP, VRS etc., which would lend to more effective management of its work-
        force.
C-6.Do you think that current level of autonomy and delegation should be continued, if so,
please give the justification for relating Navratna status and benefits that had accrued with
this status?

No, it is not adequate. The existing level of delegation of financial and operational autonomy to
PSU's may be considered to be enhanced in terms of the issues highlighted in the reply given at
point 5 above.

C-7. Do you think that further delegation of powers and autonomy is required? If yes,
specify the areas and the justifications.

As stated above, the current level of autonomy and delegation should be further enhanced to
enable greater flexibility and authority in matters related to investments, managing global
operations, restructuring, appointment of professional Directors on the Board, employee issues
such as pay revision, benefits, employee schemes etc. The specific areas and the justification
given against each have also been mentioned above.

Evaluation Sheet - 2003-04

                     Scores
Sr.No. A             25*    20         15      10      5       -5     -10     -15  20            25
       Net profit to                   >10                                         >-20
                            >=15               >=5 >=0 >=5 >=10 >=15
1      Net worth (%) >-20              and                                         and           >20
                            and <20            and <5 and <5 and <0 and <5 and <10
       25                              <15                                         <15




Sr.   B                   15    12       9      6          3    -3       -6   -9    -12    -15
No.
II    Total Manpower <=5 >5 and          >8   >11 and >14 >17 and >20 >23 >25 >25
      cost to Total cost    <=8          and <=14 and      <=20   and and and    and
      of- 15 Production                  <=11         <=17        <=23 <=25 <=28 <=28
      (%)**
III   PBDIT to Capital >=20 >=15         >=10 >=5 and >=0       >=5 and >=10 <=15 >=20 >-20
      Employed (%) - 15          and <20 and <10        and    <0       and and and
                                          <15           <5              <5 <-10 <15
IV      PBIT to Turnover >=25 >=20        >=10 >=5 and >=5 >=5 and >=10 >=20 >=25 >-25
        (%) - 15                 and <25 and <10        and    <0       and and and <-
                                          <20           <10             <5 <-10 20
>= Greater than or equal to
> Greater than
< Less than
<=Less than or equal to
* The limit to be adjusted (and replaced) in the cases where regulatory authority has fixed an
upper limit
** Cost of services in case of service organization.

Sr.   C                                 Scores
No.
                                        10    8 6     4 2 0               -2
VI    Earning per Share (ERs.10)
      D                               20      16 12 8 4 0                 -4
VII   Inter Sectoral Performance Rank I       II III IV V VI and          If the
      NP to NW based on 1999-00                           onwards but     value
      data 2003-04 - 12                                   value is +ve    is -ve
>= Greater than or equal to
> Greater than
<Less than
<= Less than or equal to

Annexure-III
Evaluation Sheet

                     Scores
Sr.No. A             25*    20      15       10      5      -5     -10     -15        -20        -25
       Net profit to                >10      >=5     >=0    >=5            >=15       >=20
                            >=15                                   >=10                          >-
1      Net worth (%) >-20           and      and     and    and            and <-     and <-
                            and <20                                and <-5                       20
       25                           <15      <10     <5     <0             10         15




Sr.   B                   15   12       9     6        3      -3         -6    -9   -12   -15
No.
II    Total Manpower <=5 >5 and         >8   >11 and >14 >17 and >20 >23 >25 >25
      cost to Total cost    <=8         and <=14 and      <=20   and and and    and
      of- 15 Production                 <=11         <=17        <=23 <=25 <=28 <=28
      (%)**
III   PBDIT to Capital >=20 >=15    >=10      >=5 and >=0     >=5 and >=10 <=15     >=20 >-20
      Employed (%) - 15     and <20 and       <10     and     <0      and and       and
                                    <15               <5              <5 <-10       <15
IV    PBIT to Turnover >=25 >=20    >=10      >=5 and >=0     >=5 and >=10 >=20     >=25 >-25
      (%) 12                and <25 and       <10     and     <0      and and       and <-
                                    <20               <5              <5 <-10       20
>= Greater than or equal to
> Greater than
<Less than
<= Less than or equal to
* The limit to be adjusted (and replaced) in the cases where regulatory authority has fixed an
upper limit
** Cost of services in case of service organization.

Sr. C                                Scores
No.
                                     10     8    6     4   2   0            -2
VI    Earning per Share (Rs.)        >=30 >=20 >=10 >=5 >=0 >=5 and <0      >=10
                                          and and and and                   and <-
                                          <30 <20 <10 <5                    5
      D                              20   16 12 8 4 0                       -4
VII   Inter Sectoral Performance     I    II   III  IV V VI and             If the
      Rank NP to NW based on                                onwards         value
      1999-00 data                                          but value is    is -ve
                                                            +ve
>= Greater than or equal to
> Greater than
<Less than
<= Less than or equal to
* Can't be performed due to non-availability of data for other companies for 2004-05
xxxxxx

Chapter 4 - Power of Chairman and Managing Director

The C&MD as Chief Executive Officer of the organization shall exercise full powers of the Board
in all matters other than item 4.1 to 4.10 below, which require approval of the Board or any sub
committee of the board as the case may be

4.1 Strategic Issues

4.1.1 Strategic Planning, strategic alliances, joint ventures, acquisitions/mergers (including
MOU's) and engagement of foreigners as employees of the organization.

4.1.2 Globalization through business participation in a foreign country including MOU's and
opening of officers abroad
4.1.3. Diversification in view business areas/activities
4.1.4 Organizational re-structuring
4.1.5 To obtain by purchase or through other arrangements, technology and /or technical know-
how

4.2 Plans/Budget

4.2.1 Long term/annual plans and capital and revenue budget estimates
4.2.2 Expenditure exceeding 10% of the approved plan outlay/Non-Plan outlay
4.2.3 Expenditure exceeding 10% of the approved project/scheme

4.3 Capital Investments in Projects

43.1 Policy Guidelines for capital Investments in Projects and approval of new projects,
expansion schemes, modifications exceeding Rs.50 crores.
4.3.2 Administrative approval exceeding sRs.5 crores on a capital/revenue item or a scheme., not
included in the approved budget of the year with a cumulative of Rs.20 crores in a year (including
such schemes approved by functional directors within their powers).

4.3.3 Purchase of land/buildings (including residential) in each case exceeding Rs.3 crore.

4.3.4 Pre-feasibility expenses over Rs.5 crore in each case.

4.4 Works and Purchase including Stores and Spares ( The powers of the Board relating to
works and purchase given below should be read in conjunction with the powers of EPC detailed
in chapter 7 of this manual.

4.4.1 Works - Acceptance of tenders for approved projects/scheme through open advertised
tender/limited tenders.

                                                      Above
a) When more than one valid tenders are received and Rs.1500
lowest techno commercially acceptable tender is       lacs
considered for award
b) When only single tender is received                Rs.750
                                                      lacs
c) Extension of scope of existing works contract with
no change in terms and conditions and/or approval of
extra (new)/submitted item for
d) Contracts awarded within own powers                Rs.300
                                                      lacs
f) Contracts awarded beyond own powers                20% of
                                                      original
                                                      contract
                                                      value
                                                      subject
                                                      to a
                                                      ceiling
                                                      of
                                                      Rs.750
                                                      lacs.
d) Award of contracts without calling for tenders     Rs.75
(reasons to be recorded in writing)/ or on single     lacs
tender/nomination basis
e) Powers to waive liquidated damages in case of      Rs. 75
delays in execution of contracts where the liquidated lacs
damages are recoverable as per contract (reasons to
be recorded in writing)

4.4.2 Purchase - Acceptance of tenders/quotation for approved project/scheme through open
advertised tenders/limited tenders.

                                                    Above
a) When more than one valid tenders are received    Rs.1500
and lowest techno commercially acceptable tender is lacs
considered for placement of order
b) When only single tender is received              Rs.750
                                                    lacs
c) Report orders when there is no change in rates,    50% of
terms and conditions & subject to procedure given in original
C&P manual and for the same project/ same job         order
                                                      quantity
                                                      and /or
                                                      total
                                                      order
                                                      value
                                                      (including
                                                      repeat
                                                      order)
                                                      more
                                                      than
                                                      1500 lacs
d) Placement of order without calling for tenders     Rs.75
(reasons to be recorded in writing)/ or on single     lacs
tender/nomination basis
e) Acceptance of quotations without calling for
tenders for
1) Proprietary item                                   Rs. 1500
                                                      lacs
2) Surplus material and equipment/material lying in Rs.750
stock from other public sector undertakings to meet lacs.
exigencies of projects/operations & maintenance
3) Placing trial orders for R&D including development Rs.100
of alternative sources                                lacs
f) Powers to waive liquidated damages in case of      Rs.75
delays in execution of contracts where the liquidated lacs
damages are recoverable as per contract (reasons to
be recorded in writing)


Chapter 5 - Powers of Functional Directors

Functional Directors while exercising delegated powers should keep in mind that:


i) The exercise of powers would be in respect of administrative and financial matters relating to
their spheres of responsibilities.

ii) These shall not exceed or infringe upon powers available to the Board sub committee of the
Board/C&MD /other Directors of the Board, who are specifically responsible for certain functions.

iii) The power relating to HR will be exercised in consultation with Director (HR)/Head of HR
Department in the regions and in accordance with the requirement and promotion rules and
within the framework of the organizations chart/HR budget as approved by the Board.

iv) All powers for award of works/purchase contracts etc shall be exercised after receipt of
recommendations of duly constituted committees (except wherever specified otherwise) and after
following duly approved works contract/purchase procedure.

v) While exercising these powers. Head of Finance Department at Corporate are Office / in the
regions/site offices shall be consulted in all cases except for items where concurrence of Finance
is not prescribed in the Schedule of delegated powers.
Directors will have full administrative powers for administration of contracts relating to sales/
purchase / works /consultancy and other services unless specifically restricted.

5.1 Capital Investments in Projects

5.1.1 Approval of new projects, expansion schemes, modifications upto Rs.10 crore

5.1.2 Administrative approval upto Rs. 1crores on a capital/revenue item or a scheme not
included in the approved budget of the year, subject to Rs. crores in a year and overall ceiling of
Rs. 20 crores as defined at 4.3.2 in C&MD,s powers.

5.1.3 Purchase of land/Building (excluding residential) as per approved scheme for approved
projects for permanent installations in each case upto Rs.240 lacs.

5.1.4 Pre-feasibility expenses up to Rs.1 crore in each case.

5.1.5 Administrative approval of capital/revenue expenditure on item/scheme which is a part of an
approved budget up to Rs. 15 crore

5.1.6 Approval for change in scope of work upto 10% of the project cost, which has originally
been approved by CMD. Approval for change in scope of work for an original scheme approved
by director up to 10% provided the revised cost does not exceed Rs. 10 crores.

5.16 Approval for change in scope of work 10% of the project cost, which has originally been
approved by CMD. Approval for change in scope of work for an originally scheme approved by
director upto 10% provided the revised cost does not exceed Rs. 10 crores.

5.1.7 Full powers to sanction detailed estimates for execution of work and/or incur expenditure of
approved project/scheme

5.1.8 Full powers to sanction reappropriation within the same project and the approved plan
outlay for that project. (for the Board/Govt. approved project, the reappropriation has to be
approved by the Board).

5.2 Works and Purchase including Stores and Spares

5.2.1 Works - Acceptance of tenders for approved project/scheme through open advertised
tenders/limited tenders.

                                                      Above
a) When more than one valid tenders are received and Rs.1000
lowest techno commercially acceptable tender is       lacs
considered for award
b) When more than one valid tenders are received      Rs.500
and lowest techno commercially acceptable tender is lacs
considered for warded
c) Extension of scope of existing works contract with
no change in terms and conditions and/or approval of
extra (new)/submitted items for:
(i) Contracts awarded within own powers               Rs.200
                                                      lacs
(ii) Contracts awarded beyond own powers              20% of
                                                      original
                                                       contract
                                                       value
                                                       subject
                                                       to a
                                                       ceiling
                                                       of
                                                       Rs.500
                                                       lacs
d) Awarded of contracts without calling for tenders    Rs. 50
(reasons to be recorded in writing)/ or on single      lacs
tender/nomination
e) Power to waive liquidated damages in case of       Rs. 50m
delays are recoverable as per contract (reasons to be lacs
recorded in writing)

5.2.2 Purchase - Acceptance of tenders/quotation for approved project/scheme through open
advertised tenders/limited tenders.

                                                     Above
a) When more than one valid tenders are received     Rs.1000
and lowest techno commercially acceptable tender is lacs
considered for placement of order
b) When only single tender is received               Rs.500
                                                     lacs
c) Repeat orders when there is no change in rates, 50% of
terms and conditions & subject to procedure given in original
C&P manual and for the same project /same job        order
                                                     quantity
                                                     and /or
                                                     total
                                                     order
                                                     value
                                                     (including
                                                     repeat
                                                     order) up
                                                     to Rs.
                                                     1000 lacs
d) Placement of order without calling for tenders    Rs.50
(reasons to be recorded in writing)/or on single     lacs.
tender/nomination basis

Powers for extension of scope of existing contracts are concurrent powers to be exercised as per
ceilings specified under DoP for various levels of Competent of Authority and not in a manner that
each level would exercise as limit e.g. if a case is put up to Functional Director, the values
indicated hereunder are to be read as overall ceiling inclusive of approvals already taken at below
board level executives.

Chapter 6- Delegation of powers below Board Level Executives

6.1 Works Purchase including stores

(All figures in Rs/Lacs unless otherwise statd.)
6.1.1 Administrative Approval

Sl. Nature of Powers                      DD/(GM GM    DGM    CM SM MGR DM Remarks
                                          as OIC)
No.
i. Administrative approval for a          800    500   250    -     -   -   -
     capital item or a scheme,
     which is part of an approved
                      2
     budget/scheme
ii. Power to sanction detailed            Full   500   250    100 50 20     -
     estimates for execution of           Powers
     work/purchase and to incur
     expenditure in project where
     cost estimates have been
     approved by the competent
               3
     authority
iii. To accord administrative             Full   Full   Full   10 50 20     -     FC
     approval and to incur                powers powers powers                    required
     expenditure on operation and                       if OIC                    in case is
     maintenance of                                     else                      beyond 2
     plants/pipelines/facilities within                 250                       lacs
     approved budget

1
 At location where the highest level of C&P executive is not above the level of Manager, In such
case highest level C&P executives may exercise the powers of Manager (C&P)

2
 This power does not relate to approval of a new project/scheme for which approvals are required
as per rules/regulations/policy etc. at corporate office only.

3
 No separate approval of estimate would be required in case of project works included in the
feasibility report/detailed feasibility report with estimates in different heads duly approved by the
competent authority.

In case revised estimate for any capital item or a scheme exceed the approved cost by more than
10%, fresh approval of the competent authority shall be to within their respective powers.

6.1.2 Works

Sl.No. Nature of Powers      ED /(GM as OIC GM                    DGM       CM            SM   MGR      DM   Remarks
i.     Acceptance of tenders
       for approved
       project/scheme/works
       through open adverted
       tenders/limited
       tenders.
a      When more than one 800               500                   250       100           50   20       -
       valid tenders are
       received and the
       lowest techno
       commercially
       acceptable tender is
       considered for award
b      When only single      400            250                   125       50            25   10       -
       tender is received
ii     Extension of scope of 160                   100         50        20          10     4        -
       existing works
       contracts with no
       change in terms and
       conditions and / or
       approval of extra
       (new)/substituted items
       for contracts awarded
       within own powers
iii    Extension of scope of Up to 20% of the contract value, subject to ceiling as under (i) (b above
       existing works
       contracts with no
       change in terms and
       conditions and/or
       approval of extra
       (new)/ substituted
       items for contracts
       awarded beyond their
       own powers
iv     Award of contract        Full powers        Full        Full      -           -      -        -
       without calling for                         powers      powers if
       tenders in case of                                      OIC
       emergency
v.     Award of contracts       40                 25          12.5      5           2.5    1        -
       without calling for
       tenders (for reasons to
       be recorded in writing)
       or on single
       tender/nomination
       basis
vi.    Powers to walve          Full powers in     FCNR
       submission of earnest respect of tenders
       money/security deposit expected to be
                                awarded within
                                their powers
vii    Payment of advance to Full Powers           Full        Full      Full                            FCNR
       supplies/contractor as                      Powers      Powers    Powers
       per contractual
       provisions
viii   Powers to extend         Full powers in respect of contracts awarded within their powers          Refer
       completion date of                                                                                note
       contracts awarded
ix.    Powers for forfeiture of Full powers in respect of contracts awarded within their powers
       earnest money/security
       deposit as per terms of
       tenders/contract
       already approved
x.     Powers for               Full powers up to MGR                                                    FCNR
       refund/adjustment of
       earnest money/security
       deposit as per rules
       and terms of
       tenders/contract
       already approved
xi.    Powers to terminate      Full powers in respect of contracts awarded within their powers
       contracts awarded`
xii.   To issue letters/fax of Full powers         Full          Full        Full                            FCNR
       intent, work orders,                        powers        powers      powers
       purchase orders and to
       execute agreements
       after tenders have
       been accepted by the
       competent authority
a      When more than one 800                      500           250         100         50     20
       valid tenders are
       received and the
       lowest techno
       commercially
       acceptable tender is
       considered for
       placement of order
b      When only single         400                250           125         50          25     10
       tender is received
ii.    Repeat order when        Upto 50% of the quantity given in original purchase order to be approved by
       there is no change in original approving authority subject to the total purchase order value
       rates, terms and         remaining within limit as a (i) (a) above. In case the total order value
       conditions and subject including the repeat order would cross limit as stated above approval by next
       to procedure as per      higher authority as per their defined limits would be required.
       given in C & P manual
       for same project/same
       job
iii    Placement of order       Full powers        Full          Full        -           -      -        -
       without calling for                         powers        powers in
       tenders in case of                                        case it is
       emergency                                                 an OIC
iv.    Placement of order       40                 25            12.5        5           2.5    1        -
       without calling for
       tenders (reasons to be
       recorded in writing) or
       on single
       tender/nomination
       basis
v      Acceptance of
       quotations without
       calling for tenders
a)     For proprietary items 800                   500           250         100         50     20       -
b      For surplus material     400                250           125         50          25     10       -
       and equipment from
       other PSU
c      For placing trial orders 60                 37.5          18.75       7.5         3.75 1.5        -
       for R&D including
       development of
       alternative sources
vi     Powers to waive          Full powers in respect of tenders expected to be awarded within their powers FCNR
       submission of earnest
       money/security deposit
vii    Powers to extend         Full powers in respect of contracts awarded within their powers              Refer
       completion date of                                                                                    Note 5
       contracts awarded
viii   Powers for forfeiture of Full powers in respect of contracts awarded within their powers        FCNR
       earnest money/security
       deposit as per terms of
       tenders/contract
       already approved
ix.    Powers for               Full powers up to MGR                                                  FCNR
       refund/adjustment of
       earnest money/security
       deposit as per rules
       and terms of
       tenders/contract
       already approved
x.     Powers to terminate      Full powers in respect of contracts awarded within their powers
       contracts awarded
xi.    Payment of advance to Full Powers           Full        Full      Full                          FCNR
       suppliers/contractor as                     Powers      Powers    Powers
       per contractual
       provisions
xiii   To issue letters/fax of Full Powers         Full        Full      Full                          FCNR
       intent, work orders,                        Powers      Powers    Powers
       purchase orders and to
       execute agreements
       after tenders have
       been accepted by the
       competent authority

4
  Powers for extension of scope of existing contracts are concurrent powers to be exercised as
per ceilings specified under DoP for various levels of Competent Authority and not in a manner
that each level would exercise as limit e.g. if a case is put up to ED/GM (OIC) the valves indicated
hereunder are to be read as overall ceiling inclusive of approvals already taken at levels below
within their respective powers, and so on.

5
  If the extension is granted levying applicable LD as per the original contract schedule no
financial concurrence is required. If time extension is granted partially levying LD or without
levying LD, beyond original completion schedule then financial concurrence is required.

xxxxxx

Annexure -III

         Plan Capital Expenditure -Schemes                       Rs.
         wise                                                    Crore
                                                                                         Rs. Crore
S.No     Description                                 Actuals     Actuals      Actuals    Actual Upto
                                                     2002-       2003-04      2004-05    Mar`05
                                                     023
         Petroleum
         (i) Continuing Schemes.
1        LPG Pipeline (Jamnagar Kandla-Loni          86.98       20.37        2.39       109.74
         P/L)-Phase II
2        LPG Pipeline (Vizag-Second)                 210.90      123.25       44.03      378.18
3        Dahej Vijaipur Pipeline Project (DVPL)      17.67       1,986.78     140.01     2,144.46
4        Dahej Uran Pipeline Project (DUPL)          0.38        1.98         7.17       9.53
5    Bareilly City Gas feeder Pipeline                  -          1.34     1.34
6    Chainsa Maruti Pipeline                            42.09      4.61     46.70
7    South Gujarat Pipeline Project            2.39     20.97      13.47    36.83
8    Project Blue Sky –Feeder lines            0.34     4.88       23.70    28.92
     (Kanpur/Lucknow/Agra/Pune)
9    Upgradation of Telecom Links-Ph I II”A,   41.57    65.13      13.43    120.13
     II”B
10   CFCL-II, Gadepan                                   -          11.02    11.02
11   Science& Technology (R&TD) Projects)      0.80     0.20       0.41     1.41
12   Thulendi Phulpur Pipeline                          -          0.74     0.74
13   Vijaipur kota pipeline Project                     -          0.98     0.98
14   Dadri Panipat Pipeline Project                     -          1.12     1.12
15   Bhagyanagar Feeder Line                            -          0.13     0.13
16   Gas supply to GACL Dahej                           -          1.31     1.31
17   Gas Supply to GSPL Dahej                           -          1.31     1.31
18   Bhyushan Steel                                     -          0.80     0.80
19   Creation of Inventory- Marginal Field                         5.19     5.19
     consumers
20   Exploration & Production                  3.50     20.39      22.98    46.87
21   Lines In Krishna Godavari Basin
22   Supply of Gas of K Cheruvu to KKD                  -          -        -
     JUNC LOOP Line
23   Gas Supply to Konaseema                            -          -        -
24   Other Small consumers in KG Basin         0.04                         0.04
     Sub Total-KG Basin
     Lines in Cauvery Basin
25   Aban Power                                         -          5.29     5.29
26   OPG Energy & Kavery power                          -          0.44     0.44
27   Henkel SPIC top SRCM                               -          2.40     2.40
28   Narimanam zone to Kovilkallapal           0.01     -          -        0.01
29   Other small consumers in cauvery Basin    0.01     -                   0.01
     Sub Total-Cauvery Basin                   1.32     -          8.13     9.45
     Sub-Total-Continuing Scheme-(i)           365.89   2,286.04   304.27   2,956.20
     ii) Equity Participation/JV
30   Equity investments in project blue sky             -          0.02     0.02
     (Agra/Lucknow/Kanpur/Pune/Bereilly)
31   LNG Petronet                                       75.00               75.00
32   Bhagyanagar Gas Ltd.                               4.98                4.98
33   Tripura Natural Gas. co. Ltd                       -          0.83     0.8
34   New JV GCGSCL                                      0.19                0.1
     Sub Total-Equity contribution/JV-(ii)     -        80.17      0.85     81.0
     iii) Other/New schemes
     Business Development Projects
35   Mergers & Acquisitions                             3.80       89.12    92.92
36   Global Natural Gas P/L Project                     -          1.62     1.62
     Other Schemes
37   Other CNG/ANG Projects-                            -          0.87     0.87
     Domestic/LPG Retail MKTG
38   Project Development-GAIL TEL              16.98    -          0.38     17.36
39   National Gas Grid INCL, Spurlines         0.34     10.72      13.40    24.46
40   NTPC Kochi-Kayamkulam (Earlier Kochi               1.60       0.34     1.94
     LNG P/L Network)
41   Revamping of LPG Plants                0.07     -                   0.07
42   MISC New Pipeline-KG                            0.39       18.73    19.12
     Basin/Cauvery/Gujarat
43   Small Pipelines-NCR                             -          0.29     0.29
44   Small Pipelines-Devas, Pithampur ,              -          0.13     0.13
     Indore
45   C2 C3 Pipeline from Vijaipur to Pata            -          0.28     0.28
     Sub Total –Other/New Schemes-(iii)     17.39    28.77      125.16   171.32
     iv) Completed Schemes
46   LANCO Kondapalli P/L                   8.66     3.48       0.89     13.03
47   Agra Firozabad loop line project       9.31     10.93      0.01     20.25
48   GSECL Dhuvaran Project                          0.80                0.80
49   Kalol ramol pipeline project           19.02    9.95                28.97
50   Pipeline to Tripura Natural Gas                 0.01                0.01
     Company
51   Pragati Power Project                  2.01     0.13                2.14
52   LPG Pipeline (Jamnagar Kandla-Loni              5.22       2.01     7.23
     P/L)-Phase-I
53   Godavarams Yanam                                0.29                0.29
     Gujarat Region Lines
54   Kuttalam-TNEB & Madras Cement          0.64     1.59       0.12     2.35
55   Petumangalam-ARKAY energy& TNEB-       0.51     -          0.90     1.41
     India cement
56   Kuttalam-PPN                           15.06    1.04                16.10
     Gujarat Region Line
57   Other small consumers in Ahemedabad             0.05                0.05
     Region (Shyam Ind)
     Sub Total –Completed Schemes-(iv)      126.93   45.57      3.93     176.43
     Total Petroleum-A(i+ii+iii+iv+v)       510.80   2,441.30   434.21   3,386.31
     Petrochemicals
     i) ONGOING/Completed schemes
58   C4 Mix Hydrogenation                   0.53     0.66                1.19
59   Debottlenecking of LLDPE/HDPL swing    4.52     26.32      4.75     35.59
     Plant
60   PATA expansion Project                 0.35     4.35       46.45    51.15
     Sub Total- ONGOING/completed           7.80     32.93      51.20    91.93
     schemes-(i)
     ii) Other/ New Schemes
61   Petrochemical Project Development/     16.18    16.54      3.29     36.01
     Augmentation
62   Assam Gas Cracker                               -          1.83     1.83
63   CO2 Supply to Fertilizer Plant                  -          -        -
64   PDH/PP Unit at Vijaipur                         -          -        -
     Sub-Total- New schemes-(ii)            16.18    16.54      5.12     37.84
     Total Petrochemicals-B-(i+ii)          23.98    49.47      56.32    129.77
     Total Capital Expenditure-Plan         534.78   2,490.77   490.53   3,516.08

				
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