It gives me immense pleasure to share with you that your Company is continuing topursue a strategy of investment and growth along the natural gas value chain at a pace andscale unlike in the earlier years. Our charted path has led to delivery of highest everprots grossing over USD 1.07 billion in the scal year 2017-18 accompanied by strong cashows on secular contributions of all business segments. During the year we rea;rmed ourcourse of action towards consolidating leadership position in natural gas business bycommiing to expand transmission and distribution infrastructure as also the gas tradingportfolio of the Company. We set out at the beginning of the last scal year with apositive resolve on five major areas - de-risking of long term LNG portfolio charterhiring of LNG vessels acceleration of transmission pipeline and city gas distributionprojects intermixing of renewables into operations and stronger delivery of downstreamsegments. I am happy to share with you that the scal year 2017-18 has ended on a highlysatisfying note for our accomplishments have surpassed growth metrics on all fronts asenvisaged.
Your Company as an industry pioneer undertook innovative measures of destination andtime swap of term contracts with global players to optimize value under long-term LNGcontracted from USA. In addition the Company also ventured into commodity hedging formitigating price volatilities in LNG trade. You would be glad to know that these stepsalthough a first for your Company are paying o in multiple ways. In addition to this theLNG carrier Meridian Spirit which has been charter hired at extremely competitive rates ispressed into service for voyaging scheduled cargoes from US east coast. As a signicantdevelopment long term LNG contract with Gazprom has been re-worked to suittransformations in the consuming markets. In all with commencement of all the three longterm contracts your Company now has a LNG/RLNG portfolio of over 15 MMTPA and isrecognised as a signicant player by all major global operators in the industry. GAIL hasalso tied up new volumes of gas to the tune of 2.8 mmscmd from domestic sources both frompublic and private entities apart from being nominated by GoI for marketing additionalvolumes from western on-shore $elds from a private operator. Modalities under the same arebeing worked-out. You would be upbeat to learn that from the diversied portfoliostructure your Company has commenced marketing of LNG cargoes in the international marketto established and reputed counter parties. On the eorts of your Company in tying-up withdomestic consumers GAIL has been preferred as a partner for supplying RLNG to upcomingcapacities under the fertilizer sector and supply contracts aggregating to about 2.5 MMTPAhave been successfully concluded. Your Company is working concurrently on multiplepipeline projects aggregating over 5400 kms and the scale of action on this front farsurpasses any of the other transmission projects in the history of GAIL. Your Company hasbeen additionally entrusted to lay a 750 kms trunk pipeline network from Barauni toGuwahati as an integral limb of Jagadishpur-Haldia-Bokaro-Dhamra pipeline project.Execution of the natural gas transmission pipeline project in Eastern India is progressingas per schedule and the city of Varanasi is now connected to the main grid networkleading to the commissioning of City Gas Distribution at the Holy City in record time.Honble Prime Minister of India Shri Narendra Modi dedicated the CGD project at Varanasi tothe nation on 16th July 2018. Your Company has also commissioned the City Gas Distributionservices at Bhubaneswar and the daily sales are an enviable record for any new entity toemulate in such a short span. For the first time in the CGD history of India LNG basedfeedstock for supporting CGD application shall soon be tested at Bhubaneswar.
In our journey towards low carbon footprints GAIL has commissioned Indias 2nd largestrooop solar PV installation of 5.76 MW at Pata Petrochemicals Complex which osets over9000 tonnes per annum of
Green House Gases (GHGs). GAIL is now a part of FTSE4 Good Emerging Market Index whichreects its eminent position in Environmental Social and Governance (ESG) performance inOil & Gas sector. Your Company will continue to evaluate and pursue forwardintegration opportunities under Reasonable Endeavour (RE) chain in the evolving future.Aided by steady production and a gentle help from price recovery the downstream segmentsof our business witnessed high growth in sales and margins during the year. In additionon the downstream diversication end your Company has nalized technology selection for thecoal gasication at Talcher through JV mode to support a coal to urea /fertilizer producingunit. Work on major tenders have been initiated and are under nalization. Project site isgeared up for ground breaking anytime soon.
Your Company is working very hard to serve the green energy needs of the society inIndia and has delivered on strategic plans and commitments envisioned in the last scalyear.
Energy Economy and Geopolitics have continued over the past years to spring surprises.Even in the midst of diering policy priorities and trade actions across countriesmultilateral institutions have maintained the stance of global economic growth rate atabout 4% for 2018 and 2019. Economic activity of India is on an expansionary path andexpectation of growth range 7.3-7.5% on last years base of 6.7%. LNG markets tested newerfrontiers and positively surprised the energy industry with the additional increase of 35MTPA being completely absorbed largely in Asia and North East Asian markets. The 12-13%increase in LNG trade in 2017 also witnessed a steady climb in price from USD 5.5 to nearUSD 10 per mmbtu between August to December 2017 partly because of rise in crude oil baseprice as also a rise in consumption in new and existing markets. India too witnessed9-10% growth in LNG imports and continues to expand demand through 2018.
During the year 2017 global trend of primary energy consumption grew over 2%signifying a sharp uptick above the 10 year moving averages. Although renewables grew by17% over that in 2016 by adding an equivalent of 69 MTOE carbon emissions too witnessedan increase by over 1.5%. During the same period LNG trade growth was up by 13% followingrenewables as the next fastest growing segment.
India mirrored global trends with natural gas consumption registering nearly 7% growthled by renewable energy segmental growth at over 19% contributing to Indias primaryenergy consumption growth of 4.3% over the previous year 2016. India consumed over 52 BCMof natural gas whereas LNG imports recorded throughput at 72 million cubic metres a dayand contributed in equal measure to domestic consumption. Going forward expansion ofinfrastructure in the midstream along with rapid expansion in consumption acrossdownstream segments such as fertilizer and city gas retailing along with additional owsfrom LNG contracts and domestic sources is poised to boost gas markets signicantly in themedium term and beyond.
GAIL Performance A Reassuring Present and Rearming Future
Amidst the underpinning cyclicity in the energy commodity markets and other prevalentuncertainties your Company has shown strong performance across all segments. The Companysturnover was up by 10% at INR 53690 crore while Prot Aer Tax rose by 32% to INR 4618crore surpassing the peak gross prot of over USD 1 billion for the first time aer 2013.
Your Companys Board and Management have consistently followed a policy path of creatingwealth and value for the share owners investments. Keeping with the ethos your Companyissued Bonus shares in ratio of 1:3 for equity shares owned. The Board has alsorecommended Companys highest ever total dividend payout of INR 1619 crore leading to ahistoric dividend distribution at 35% of pro$t aIer tax. Your Companyfis EPS alsoincreased by 32% at INR 20.48 per share on enhanced paid-up equity.
The combined turnover of your Companys overseas subsidiaries has grown by over 67% toregister USD 851 million. The Singapore subsidiary traded 31 cargoes during the yearsignifying nearly 35% incremental growth over previous year and supporting underlyingdemand strength in LNG markets. The Transmission segment recorded a modest 5% physicalgrowth over previous scal year and your Company aims to expand throughput by another 0.7BCM in the current year. GAIL also witnessed over 12% growth under common and contractcarrier capacity bookings by having serviced 138 third party requests during the year.Your Company has been steadily servicing more and more consumer requests under open accessand has accomplished processing of 100% requests during the last scal year. The experienceyour Company has gathered over the years in the transmission segment shall equip it tobecome a signicant participant in the upcoming gas hub based trading system which is awidely anticipated policy shi in the making. Prudent nancial management of the pipelineprojects by your Company has been a constant strength for supporting Government of Indiasvision of expanding gas grid in the country. GAIL has added over 5000 kms in gaspipelines since 2008 and within a span of next three years your Company endeavours to addabout 5500 kms to the gas grid network. Today it has the reputation of being the leadingIndian company to work on gas infrastructure projects steadfastly and consistently. Inline with the Cabinet approval of September 2016 your Company has also initiated theprocess of engaging with the regulator PNGRB on tari unication modality in closecoordination with the nodal Ministry.
The petrochemicals and LHC segments gained traction and showcased impressiveperformance. During the FY 2017-18 portfolio sales from Pata unit grew by 15% and fromBCPL Assam grew by 136% over the preceding scal year. Your Company now has a strong brandacceptance amongst the polymer processors across the country and GAIL has been asigni$cant facilitator for the Indian agriculture segment through applications of Ra;apackaging drip irrigation and pipe extrusion proles over the years and has established aname for itself in the sector. During the year high flow value added LLDPE grade wasintroduced and established in the processing market for master batch applicationscontributing 8-10% into the LLDPE portfolio. Your Company has been at the forefront towork in close coordination with the consumers to enhance their experience and delivery ofvalue through the long trusted brands G-Lex and G-Lene along with the emerging starsBhrama-Pol and Bhrama-Lene now part of GAILfis umbrella portfolio of petrochemicalmarketed products. The year witnessed signicant improvements for various grades especiallyunder the HDPE Blow-Moulding and PP Raa categories to suit consumer end processingrequirements in addition to extending value added services to the processors underProductivity Enhancement Program. Your Company holds a signicant experience of over twodecades and formidable market share in the city gas distribution landscape on its own aswell as through its subsidiary GAIL Gas and other Joint Ventures. The segment is expandingat over 15% year on year with GoIs thrust to accelerate and promote a gas based economyat retail consumption level. Your Company has recently concluded the JV agreement withGreater Calcua Gas Corporation Limited (GCGCL) for city gas distribution at Kolkata andproject related activities are targeted to commence during the current year. At themega-city Bengaluru GAIL Gas has been on track with the network expansion targets and forthe first time has joined hands with Uber to switch over its Uber cab eet to run on CNG.Your Company now has presence directly and through aliates in most of the majormetropolitan cities and state capital cities under CGD and is also participating in the9th round of bidding presently under progress. So far aliates of GAIL have cornered over adozen new geographic locations and are hopeful of bagging a few more as the round comes toa close. Having commissioned city gas networks at Varanasi Bhubaneswar and Cu<ack inrecord time your Company has started work on project activities for laying the CGDnetworks at Patna Ranchi and Jamshedpur. The demerger of RGPPL is now complete with NCLATapproving the scheme and GAIL is now operationally in control of the LNG terminal company-Konkan LNG (P) Limited. The terminal is working towards becoming an all-weather port byearly 2022 to facilitate Dabhol regas units performance at rated capacity levels at 5MMTPA and beyond. During FY 2017-18 17 cargoes were unloaded at Dabhol port including thedischarge of the first LNG vessel from USA under GAILfis contract. GAIL achieved anothermilestone by signing Tolling Agreement with Dhamra LNG Terminal Pvt. Ltd. for booking 1.5MMTPA regasication capacity at Odisha as an additional measure of securing RLNG/LNGsupplies in eastern region.
Shareholders shall be happy to know that the Comptroller & Auditor General of Indiahas conveyed NILreport for ninth successive year which is a reection of the accountingstandards devoutly complied by your Company.
I would like to place on record my indebtedness to the various communities that weengage with across the country for their overwhelming response to your Companys acclaimedand award winning digital media awareness campaign-CHawaBadlofi which has drawn aention ofmore than 50 million Indians. Recognising the impact SCOPE has awarded CGold Medal forthe sustained and popular themes under the campaign to combat air pollution followed by aprestigious SAMMIE Silver award by competing with top notch multinational brands oneectiveness and reach of digital campaigns. GAILfis outreach under Corporate SocialResponsibility initiatives has been a denitive source of sunshine cover for themarginalized lives of over 1.5 million citizens by equipping and supporting them throughvarious intervening steps towards a beer tomorrow. Your Companys grass root involvementthrough various programmes for empowering the underprivileged has been recognized andawarded recently for excellence in CSR practices under Hindustan PSU Award 2018.
In this exciting phase of journey of your Company I express my gratitude for yourunshaken support and the decision of continuing an enduring relationship with the CompanyManagement and Employees for growing your investments and trust. Your Company appreciatesthe unwavering faith of our consumers in continuing their relationship with GAIL and fortheir trusted conviction of subscribing to our diverse range of natural gaspetrochemicals liquid hydrocarbon products and transmission services towards co-creatingvalue to end consumers across multiple platforms of application. As the Boardconscientiously strives to create value for the enterprise and share owners on behalf ofthe entire Board I take the opportunity to acknowledge the support of the central andstate governments regulators vendors partners and other stakeholders for supporting ourdevout aspiration to expand clean and green energy solutions towards creating Nav Bharat.On behalf of the Board I also record my profound appreciation to all the employees fortheir untiring and exceptional contribution constantly in shaping together the future ofyour Company.
B. C. Tripathi
Chairman & Managing Director