During the financial year 2015-2016 the global economy had an uneven growth with a fewdeveloped economies demonstrating resilience. The world economy encountered challenges atmany levels last year these includes significant volatility Eurozone instabilitydepression in crude oil and commodity prices currency depreciation in emerging marketsand a lingering slowdown in China. The medium to long term economic outlook in Indiacontinues to look promising and it is heartening to see the Government's drive to continueto liberalise the economy. The Indian economy too faced challenges from slow agriculturalgrowth with two consecutive poor monsoon leading to sharp contraction in exports. Winningover all odds proactive steps and economic growth oriented policies of Government ofIndia during the financial year 2015-2016 ensured India's gross domestic product (GDP)growth of 7.6% as compared to 7.2% in the previous year.
It is with great pleasure that I present Mahanagar Gas Ltd's Annual Report for thefinancial year 2015-2016. On the occasion of Twenty-first Annual General Meeting of yourCompany and on behalf of the Board of Directors it gives me immense pleasure andsatisfaction to share noteworthy performance of your Company for the fiscal Year 2015-16.The net operating revenue for the Financial Year 2015-16 was Rs. 2079 crores as comparedto Rs. 2095 Crores in the preceding Financial Year. Your Company also continued tomaintain its profit growth. The Profit after Tax has achieved the level of Rs. 309 Croresas compared to Rs. 301 Crores in the preceding Financial Year. Your Board has recommendeda dividend of 175% i.e. Rs. 17.50 per equity share of Rs. 10/ each for the financial year2015-2016. It is also pertinent to mention that the peak gas sales in a day increased to2.76 MMSCM from 2.65 MMSCM which is 4% in excess over the previous financial year. YourCompany has been constantly improving and performing excellently.
One major development which I would like to share that your Company has successfullylisted its equity shares with both the stock exchanges (BSE / NSE) on July 01 2016 by wayof diluting 25% stake by its promoters (GAIL & BGAPH) by way of offer for sale (OFS)of shares. I am glad to inform you that the issue was over-subscribed by around 64 timesand as on date i.e. on August 26 2016 the equity share of the Company is quoted at Rs.596.30 (NSE) which is showing the market capitalisation of the MGL is more than Rs. 5890Crores.
Your Company has established its operations in one of the largest metro city of India.The ever expanding customer base coupled with large unserved population provides a stronggrowth opportunity. Over the next five years your Company would focus on increasing thepenetration in the current authorized geographical area through higher number of domesticconnections and more CNG stations along with expeditious rollout of CGD infrastructure inthe newly authorized Raigarh district.
Your Company is in the process of expanding the CGD network in the Geographic Area ofRaigarh District (Maharashtra) authorized by the PNGRB with 300 months of infrastructureexclusivity and 60 months of marketing exclusivity commencing w.e.f. April 012015.
Your Company is continuously screening opportunity to enter into new markets byparticipating in the bids invited by PNGRB for implementation of the CGD network acrossthe country in upcoming CGD bid rounds of the PNGRB. Also your Company is exploringvarious opportunities for inorganic growth such as equity stakes in other existing CGDentities. Your Company is looking for acquiring stake in other existing CGD entitieshaving established markets. It is also pleasing to inform you that your Company is biddingfor new geographical areas to set up and operate CGDs. Your Company also plans for newinitiatives of Hybrid CNG / Diesel vehicles CNG in two wheelers etc.
The decision of the Government of India (GoI) allowing supply of domestic gas up to110% of domestic gas allocation for CNG (transport) and PNG (domestic) segments of yourCompany is immensely helpful in maintaining competitiveness of CNG and PNG againstcompeting alternate fuels. This dispensation of the GoI would enable your Company to meetfluctuation in demand and cater to most of the incremental demand in these segments fromdomestic gas supplies.
The ability to source market priced gas from all major sources through physicalconnectivity with GAIL's Dahej-Uran pipeline network and the large demand potential in theexisting authorized areas of your Company provides a tremendous scope for growth. Achallenge before your Company would be to roll out its CGD infrastructure in a time boundmanner to meet its regulatory targets in newly authorized Raigarh district covering over6800 Square Km area consisting of diverse topography of rocky terrain and forest land.
Ladies and Gentlemen it is seen that progress continues but there is much more to do.While the challenge we face is formidable and not to be underestimated bringing yourCompany to the aspired level of success is important not only for shareholders but alsofor our customers people the society in which we operate and to the industry as awhole where we play a leading role.
Your Company being a people oriented organization has always focused on the developmentof its human capital. To realise this vision our processes are implemented in astructured manner utilising time tested & globally accepted mechanisms. To highlight afew of the initiatives your Company has established a competency framework and hasconducted the Assessment and Development Centre for its middle and senior management. YourCompany is very keen in developing the leadership competencies of their managers. There isa partnership with the best of the management institutes of India such as IIM- AhmedabadBangalore Indore & Kozhikode which helps to develop the leadership in pipeline soas to meet the future talent needs.
Further the opportunities are being provided to employees to upgrade and enhance theirskills and knowledge through E-Learning initiatives wherein the employee can undergo amodule at his / her convenience and as per choice. Apart from the above more than 3man-days of training per employee is being provided during the year which includesbehavioural technical functional and skill workshops.
It is a matter of pride that your Company is providing an android based mobileapplication "MGLCONNECT" which enable the customers to leverage the latesttechnology available in the market to enhance their satisfaction through portability ofuse ease of operation and time saving. Objective of your Company is to connectcommunicate and care for all shareholders and customers on continuous basis. In comingdays your Company is focusing on enhancing automation of all processes with a view toachieve paperless office.
Your Company fosters the unwavering philosophy of taking care of the community forsustainable tomorrow. As of August 2016 50 students from extremely fragile economicbackground have been nurtured to face tough engineering entrance examination with successrate in excess of 90%. The Company has also created infrastructure supportive to educationlike science centres (5 schools) computer laboratory (2 schools) and otherinfrastructure (4 schools). Your Company is also contributing towards Rs. Skill Indiacampaign' targeting skills augmentation of nearly 300 youths and is also contributing tovarious causes in alignment to national and global developmental agendas.
Before I conclude I would like to take this opportunity to thank all of you for yourcontinuous support and encouragement that has helped your Company to face all thechallenges and achieve consistent growth in its business while providing safecompetitive efficient and reliable source of energy to our esteemed customers.
With warm regards
Dr. Ashutosh Karnatak