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GAIL (India) Ltd.

BSE: 532155 Sector: Others
NSE: GAIL ISIN Code: INE129A01019
BSE 00:00 | 18 Jun 155.10 -5.45
(-3.39%)
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162.45

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152.60

NSE 00:00 | 18 Jun 155.05 -5.45
(-3.40%)
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161.95

LOW

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OPEN 162.00
PREVIOUS CLOSE 160.55
VOLUME 1212927
52-Week high 170.00
52-Week low 81.25
P/E 14.09
Mkt Cap.(Rs cr) 68,870
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 162.00
CLOSE 160.55
VOLUME 1212927
52-Week high 170.00
52-Week low 81.25
P/E 14.09
Mkt Cap.(Rs cr) 68,870
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

GAIL (India) Ltd. (GAIL) - Director Report

Company director report

Dear Shareholders

On behalf of the Board of Directors of your Company I am delighted to present the 36Directors' Report of your young and vibrant Maharatna Company along with AuditedStandalone and Consolidated Financial Statements for the financial year 2019-20:

Performance Review

The important financial highlights on standalone basis for the year 2019-20 are asunder:

Particulars FY 2019-20 FY 2018-19
US $ Million (Rs in Crore) US $ Million (Rs in Crore)
Gross Sales 9558 71730 10722 74808
Other income (including other operating income) 208 1564 267 1864
Cost of Sales (excluding Finance cost and depreciation) 8462 63507 9398 65572
Net Exceptional Items i.e. Impairment/ (Reversal) of Investments (14) (102) 47 326
Gross Margin 1318 9887 1544 10774
Finance Cost 15 108 20 139
Depreciation 245 1836 222 1550
Profit Before Tax (PBT) 1058 7943 1302 9085
Provision for Tax 176 1323 438 3059
Profit After Tax (PAT) 882 6621 864 6026
Appropriations
Final Dividend for previous year 53 399 47 325
Interim Dividend for current year 385 2886 202 1409
Corporate Dividend Tax 88 657 51 356
Net transfer to (from) Bond Redemption Reserve 2 15 2 15
Transfer to General Reserve 88 662 86 603
Net surplus after Appropriations 267 2001 476 3318

Note: The following exchange rates are used in calculations :

For 2019-20 :1 US$ = 75.05 as on 31 March 2020.

For 2018-19: 1 US$ = 69.77 as on 31 March 2019.

Consolidated Financial Statements

Your Company has prepared the Consolidated Financial Statements in accordance with theIND-AS by consolidating the financials of its subsidiaries associates and joint ventureentities. The key highlights of the Consolidated Financial Results are as follows:

(Rs in Crore)

Particulars FY 2019-20 FY 2018-19
Gross Sales 72414 75912
Profit Before Tax 10429 9831
Profit After Tax 9422 6546

Performance Indicators (Standalone)

Gross Sales

Gross sales decreased by 4% from 74808 crore in FY 2018-19 to 71730 crore in FY2019-20.

Profit Before Tax (PBT)

PBT registered a fall of 13% from 9085 crore during FY 2018-19 to 7943 crore during FY2019-20.

Profit After Tax (PAT)

Profit after Tax increased by 10% from 6026 crore in FY 2018-19 to 6621 crorein FY 2019-20.

Earnings Per Share (EPS)

In view of the increase in PAT EPS has gone up from 13.36 per share as on March 312019 (after adjustment to bonus in 1:1 ratio) to 14.68 per share as on March 31 2020.

Business Overview

Pipeline Transmission

Natural Gas Transmission

Your Company owns and operates a network of around 12426 km of natural gas pipelineacross the length and breadth of country. The average gas transmission during thefinancial year 2019-20 increased to 108.37 MMSCMD as compared to 107.43 MMSCMD in theprevious financial year. Gross revenue of your Company from Natural Gas Transmission in FY2019-20 was 6034 crore as against 5779 crore in FY 2018-19.

LPG Transmission

Your Company owns and operates 2038 km LPG pipeline network for LPG transmissionnamely Jamnagar-Loni (JLPL) & Vizag-Secunderabad (VSPL). Jamnagar-Loni (JLPL) and theVizag-Secunderabad (VSPL) pipeline networks achieved a throughput of 3.91 MMTPA during theyear against 3.97 MMTPA in the previous year. Gross revenue of your Company from LPGTransmission in FY 2019-20 was 637crore as against 624 crore in FY 2018-19.

Natural Gas Marketing

During the financial year 2019-20 your Company clocked a sales figure of 96.26 MMSCMD(which included sales within India of 84.60 MMSCMD and overseas sales of 11.66 MMSCMD) asagainst 96.93 MMSCMD during FY 2018-19. Gross revenue of your Company from Natural GasMarketing in FY 2019-20 was 59955 crore as against 61338 crore in FY 2018-19.

Petrochemicals

During FY 2019-20 your Company's production increased by 4.9% to 788 KTA of polymersas against 751 KTA in FY 2018-19 and sales increased to 737 KTA of polymers as against 735KTA in FY 2018-19. Gross revenue of your Company from Petrochemicals in FY 2019-20 was5432 crore as against 6704 crore in FY 2018-19.

LPG and Other Liquid Hydrocarbon

Your Company has five Gas Processing Plants (GPUs) at four locations in the countryhaving LHC production capacity of 1.4 Million MT. During FY 2019-20 total LiquidHydrocarbon production was about 1.26 Million MT as against 1.32 Million MT in FY 2018-19of which almost 90% constitutes LPG and Propane. Gross revenue of your Company from LiquidHydrocarbons in FY 2019-20 was 4234 crore as against 5083 crore in FY 2018-19.

Exploration and Production (E&P)

Your Company is having participating interest in 11 E&P blocks out of which 9blocks are in India and 2 blocks are in Myanmar. Your Company is Operator in two onlandblocks CB-ONN-2010/11 and CB-ONHP-2017/12 in Cambay basin awarded during NELP-IX andOALP-I bidding rounds respectively. These eleven E&P blocks hold an acreage of 2 2170km as per its Participation Interest (P.I.) in various consortiums.

Revenue from sale of hydrocarbons is being generated from 4 producing blocks namely A-1& A-3 in Myanmar and CB-ONN-2000/1 & CB-ONN-2003/2 (Cambay onshore blocks) inIndia. Revenue of 968 crore has been generated from E&P activities during FY 2019-20as against 639 crore in FY 2018-19.

Appraisal activities are in progress in one NELP-IX block i.e. GK-OSN-2010/1 whereONGC is the operator. Development activities are in progress in three blocks (i) twoNELP-IX blocks CB-ONN-2010/8 (Lead Operator: Bharat Petro Resources Limited) &CB-ONN-2010/11 (Lead Operator: GAIL) and (ii) one NELP-IV block AA-ONN-2000/1 (Operator:Jubilant Oil & Gas Pvt. Ltd.). As a part of Revised Field Development Plan (RFDP) inMyanmar offshore blocks A1 & A3 development activities have commenced.Simultaneously drilling of 3 exploratory wells in Block A-3 Myanmar was also initiatedduring FY 2019-20 and one gas discovery has been made in this block. Exploratoryactivities continued in two blocks (i) one NELP-IX block AA-ONN-2010/2 (Operator: OIL) and(ii) one OALP block CB-ONHP-2017/12 (Operator: GAIL).

Projects Execution

Currently your Company is executing around 7500 km of pipeline projects wherein yourCompany has made significant progress in the ongoing 2655 km of Jagdishpur Haldia andBokaro Dhamra Pipeline (JHBDPL) Project popularly known as Pradhan Mantri Urja GangaPipeline Project. Phase-1 (750 km) of this prestigious project from Phulpur to VaranasiGaya Patna and Barauni has already been commissioned. Your Company is also extending thispipeline project to the eastern region of India upto Guwahati in Assam with constructionof 729 km Barauni-Guwahati Pipeline as integrated part of JHBDPL. GAIL commissioned 594 kmof Natural Gas Pipeline in FY 2019-20 with consist of 165 km Gorakhpur spurline section ofJHPDPL Phase-I alongwith 350 km section of Kochi-Koottanad-Bangalore-Mangalore PipelinePhase-II and 07 customer connectivity projects. Your Company has made significant progressin pipeline laying activities in the 6 states of Bihar Uttar Pradesh Jharkhand OdishaWest Bengal and Assam. Natural gas supply for CNG & PNG has also commenced in Ranchi& Jamshedpur City in the august presence of the Hon'ble Chief Minister JharkhandShri Raghubar Das & Hon'ble Minister of Petroleum & Natural Gas and Steel ShriDharmendra Pradhan. With this your Company has completed gas supply in all six citiesentrusted to your Company by the Government of India i.e. Varanasi Bhubaneswar CuttackPatna Ranchi & Jamshedpur.

Your Company also completed construction of 30 CNG stations in FY 2019-20 out of which14 are already commissioned & 16 CNG stations are mechanically completed. Furtheryour Company is also taking up hook up connections from pipeline network with CGD entitiesto supply gas for CNG and PNG. Your Company has completed 7 CGD hook ups with these CGDentities authorised by PNGRB.

Other ongoing pipeline projects under execution at various stages includeDobhi-Durgapur Pipeline Project (Section-2B) (500 km) Bokaro- Angul Pipeline Project(Section-3A) (667 km) Baruani Guwahati Pipeline (729 km) and Vijaipur to Auraiya (357km).

Disinvestment by the President of India

The Government of India disinvested 19610227 shares in October 2019 through CPSEBharat 22 ETF. After disinvestment the President of India's shareholding is 2334449987equity shares representing 51.76% of paid-up share capital of your Company.

Dividend

Your Company has a consistent track-record of dividend payment. The Board of Directorsof your Company had earlier approved payment of an interim dividend @ 64% on equity shareof 10 each ( 6.40 per equity share) amounting to 2886.49 crore on the paid-up equityshare capital of the Company ( 4510.14 crore) and it was paid in February 2020.

Changes in the Share Capital/ Bonus Issue

Your Company fixed 10 July 2019 as the record date for the purpose of ascertaining theeligibility of shareholders for Issuance of bonus shares in the ratio of 1:1 i.e. one newbonus equity share of 10/- each for every one existing equity share of 10/- each heldsubject to the approval of shareholders which was obtained through postal ballot process.The results of Postal Ballot/E-voting were announced on 2 July 2019. During the FY2019-20 the Company had issued a total of 2255070933 equity bonus shares.

Contribution to Exchequer

Your Company has contributed 9460 crore in FY 2019-20 to the exchequer throughdividend duties taxes and others as compared to 8070 crore in FY 2018-19.

Credit Rating

Domestic rating

Your Company has been reaffirmed the highest domestic credit rating of AAA from ICRACARE and India Rating. This signifies the highest credit rating in India hence carrieslower credit risk of the Company.

International Rating

The International rating agency Moody's International Singapore has assigned thecorporate issuer rating of Baa3 with negative outlook which is equal to the sovereignrating of India. Further Fitch Ratings has also assigned a long-term foreign currencyissuer rating of BBB- with a negative outlook which is also equivalent to the sovereignrating of India. The agencies have indicated that your Company's rating may be upgradedonce the sovereign rating of India improves.

Particulars of Loans Investments and Corporate Guarantees

Details of investments loans and guarantees covered under Section 186 of the CompaniesAct 2013 forms part of the financial statement as a separate section in the AnnualReport for FY 2019-20.

Related Parties - Subsidiaries/ Associates/ Joint Ventures

Your Company has formed various subsidiaries / associates / joint venture companies fordifferent business areas such as City Gas Distribution (GAIL Gas Limited Indraprastha GasLimited Mahanagar Gas Limited etc.) Petrochemical production (Brahmaputra Cracker andPolymer Limited ONGC Petro-additions Limited) LNG/ Re-gasification (Petronet LNGLimited Konkan LNG Limited (KLL) etc.) Gas trading (GGSPL) Power generation (RGPPL)and Shale gas (GGUI). Contracts or arrangements / transactions with the related partieswere on an arm's length basis and in the ordinary course of business.

Your Company has acquired shares in KLL by providing financial support to KLL for debtresolution with its lenders. As part of debt resolution exercise lenders of KLL havetransferred their entire equity shareholding in KLL to your company. th MarchSubsequently KLL became subsidiary of your company w.e.f. 27 2020 with GAIL's equityshareholding of 69.06% along with NTPC and others.

No other Subsidiary / Joint Venture Company except GAIL China Gas Global EnergyHoldings Limited ceased to exist during the year. The Subsidiaries / Associates / JointVenture companies of your Company have contributed significantly to its business expansionactivities. A statement containing the salient features of the financial statements ofyour Company's Subsidiaries Associate Companies and Joint Ventures as per first provisoof section 129(3) of the Companies Act 2013 including individual contribution of thesecompanies towards the overall performance of the Company during the period is given underConsolidated Financial Statements.

Vigilance

Corporate Vigilance department of your Company is ISO-9001:2015 certified for havingadopted Quality Management System in compliance with the requirements of ISO.

During the year many system improvements were undertaken to ensure greatertransparency as well as automation of processes for reducing manual intervention. Reviewof policies and procedures were carried out which helped in reduction of corruption andensure all round good governance. Some of these systematic improvements were:

• Review of Whistle Blower Policy has been carried out and revised policy has beenimplemented.

• To ensure greater transparency additional information viz. Health and SafetyPolicy Information Security Policy Quality Policy and Risk Management Policy have beendisplayed on your Company website. In addition to the above list of parties/ vendorsbanned/ put on holiday by your Company have also been displayed on your Company'swebsite.

In order to have uniformity in the tender conditions for submission of EMD & CPBGin the form of DD / Bank Guarantee being submitted by the bidder/ Vendor provisions hasbeen made that EMD and CPBG will not be accepted in case the same has reference ofremitter / financer other than bidder on the aforementioned financial instrument of EMD/CPBG as a part of Government's initiative for ease of doing business.

To avoid the time gap between the date of complaint uploaded by the complainant and thedate when Complaint system is accessed by Vigilance Executive provision for generatingauto e-mail alerts has been developed.

The Vigilance Awareness Week 2019 was observed by your Company and its various th nd under the guidance of Central site Offices from 28 October to 2 November 2019 VigilanceCommission (CVC). Theme for this year's Vigilance Awareness Week was “Integrity AWay of Life”-bZekunkjh&d thou 'kSyh”. The observance ofthe Vigilance Awareness Week commenced by taking the Integrity Pledge by GAIL Employees atthe Corporate Office and all its work centers.

During the week a lecture by Shri Subhash Chandra Agarwal a right to informationactivist was organized at GAIL Corporate Office. Your Company also organized two CustomerInteractive Meets at New Delhi and Jaipur wherein customers from Gas Polymer and Retailbusiness along with Consignment Stockiest participated. Your Company organized two vendormeets at New Delhi and Vijaipur Guna. At New Delhi the meet was attended by IndependentExternal Monitor (IEM) of GAIL Chief Vigilance Officer Director (Finance) and othersenior executives. An e-pledge booth was organized in the office of Goods & ServiceTax Central Goods & Services Tax Commissionerate South Delhi at Bhikaiji Cama PlaceNew Delhi for facilitating the employees of GST to administer e-pledge.

To spread awareness amongst students various competitions like poster debateelocution panel discussion were organized in Colleges/ Schools. Some work centers alsoorganized “Walkathon” as a part of the Vigilance Awareness campaign. Two GramSabhas were organized at Khano and Munshipur Tarai in District Auraiya of Uttar Pradeshwith co-operation of the Village Head.

Representation of Priority Section

Your Company has been complying with the Presidential Directives andInstructions/Guidelines issued from time to time pertaining to Policies and Procedures ofthe Government of India in regards to reservations relaxations concessions etc. forScheduled Castes (SCs) Scheduled Tribes (STs) Other Backward Classes (OBCs) and Personswith Disabilities (PWDs) in Direct Recruitment. Group wise details with regard to totalnumber of employees and the representation of Scheduled Castes Scheduled Tribes andOther Backward Classes amongst them in your Company as on st

31 March 2020 are given in the Table below:

Group Total no. of Employees on Roll SC ST OBC PWD
A 3393 538 225 660 56
B 441 71 43 111 7
C 790 150 35 271 35
D 52 13 6 16 -
CMD DIRECTORS & CVO 6 - 1 - -
Total 4682 (*) 772 310 1058 98

(*Including Advisor (Security))

A total of 271 new employees (including CVO) joined your Company during the FY 2019-20.Total Manpower of the Company as on 31 March 2020 stood at 4682 (including Whole-timeDirectors & CVO) with 16% of its employees belonging to the SC category 7% to the STcategory 23% to the OBC category 8% to the Minorities and 2.1% to the Persons withDisabilities (PWDs) category. Your Company's workforce comprised of 304 women employees ason 31 March 2020.

Official Language

The Official Language Implementation Committees at the Corporate and Work Centre levelmeet on a quarterly basis to monitor and review the progress made for achieving thetargets fixed in the Annual Program issued by the Official Language Department Ministryof Home Affairs Government of India.

Hindi workshops / trainings are organized on regular basis at Corporate Office and allwork centers including training centers at GTI Noida and GTI Jaipur. Hindi computertraining sessions are also integral part of these programs. As many as 120 Hindi workshopswere conducted during FY 2019-20 in which 2402 employees were provided training.

Hindi Fortnight fgUnh i[kokM+k was observed across your Company from16 to thSeptember 30 2019 to propagate linguistic harmony and to motivate the employees for theprogressive usage of Hindi in their day-to-day work. Several Competitions /programmes wereorganized to encourage the employees to work in Hindi and create a conducive atmosphere.

Your Company also publishes its Quarterly Hindi magazine “RajbhashaSahyog” to promote Hindi language. During the year “StandardImplementation Procedure (SIP)” for Official Language has been prepared andhosted on your Company's intranet for the benefit of the employees.

"GAIL Rajbhasha Sammelan" was organized from 31 January to 1 February2020 at Puri (Odisha) chaired by Director (HR). The purpose was to spread and propagatethe essence of Hindi and simultaneously review the progress made on the implementation ofthe Official Language in the Company. The First Sub-Committee of Committee of Parliamenton Official Language inspected your Company's Lucknow Zonal Office GGL Bengaluru andHyderabad Zonal Office to review the steps undertaken to promote the Official Language andthe efforts were appreciated by the Parliamentary Committee. Vishwa Hindi Divas wascelebrated across your Company on 10 January 2020. To mark the occasion a LiterarySeminar was organized at Corporate Office to promote Official Language. To inculcate thereading habit in Hindi ‘Kathgodam' Hindi Book was distributed to employees ofCorporate Office. Several other programmes were organized across your Company to promoteHindi during Vishwa Hindi Divas.

Sexual Harassment of Women at Workplace

Your Company has in place a Policy on Prevention Prohibition and Redressal of SexualHarassment of Women at Workplace in line with the requirements of the Sexual Harassment ofWomen at the Workplace (Prevention Prohibition & Redressal) Act 2013.The InternalComplaints Committee (ICC) has been set up to redress complaints received regarding sexualharassment. Disclosures in relation to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013:

a) Number of complaints pending at the beginning of the Financial Year : NIL
b) Number of complaints filed during the Financial Year : 01
c) Number of complaints disposed of during the Financial Year: NIL
d) Number of complaints pending at the end of the Financial Year: 01

Procurement from Micro and Small Enterprises

The Government of India has notified a Public Procurement Policy for Micro and SmallEnterprises (MSEs) Order 2012 mandating 25% Procurement/Services from MSMEs. In terms ofthe said policy out of the total eligible value of annual procurement of approx. 3548crore towards goods procured and services rendered by MSEs (including MSEs owned by SC/STEntrepreneurs and Women Entrepreneurs) during the FY 2019-20 . The value of totalprocurement made from MSEs is 1367 crore which is approx. 38.53%. Further severalinitiatives have been taken towards ease of doing business in recent past for pre-awardand post-award activities including initiatives for coaching and development ofstakeholders. Initiatives for Pre-Award stage include Pre-Tender Meeting ModelInstructions to Bidders (ITB) For Domestic Bidding -Procurement of Services & Worksand Goods Provision for Submission of EMD/ Security Deposit/ Contract PerformanceGuarantee through additional mode of Online Bank Transaction Standardization of terms andconditions with OEMs etc. For better contract administration your Company has implementedinitiatives like Health Monitoring of Contracts Quarterly Closure of ContractsPre-Dispute Resolution (Samadhan) Mechanism Methodology for Transaction on TradeReceivable Discounting System (TReDS) uploading details on Company's Website ContractManagement Document (COMAND) Rationalization of Mobilization Advance Review of CPBG inWork Contracts & Time Period for Submission of CPBG Review of Arbitration Provisionand many others.

Your Company also believes that coaching and development of stakeholders (both internalas well external) forms an important part of sustainable growth and accordinglyinitiatives like Vendor Coaching Program EIC Coaching Program and Vendor InteractiveMeets are regularly organized in this direction.

MoU Performance

Your Company achieved ‘Excellent' MoU rating for the Financial Year 2018-19 with ascore of 93.27.

MoU for the FY 2019-20 was signed between Chairman & Managing Director GAIL andSecretary (P&NG) Government of India on 30 May 2019

In 2019-20 also GAIL's MoU was aligned with GOI's aspiring vision of transformingIndia into a Gas based economy. Key thrust area of MoU was mainly on continuing effort toincrease number of PNG connections and CNG stations. Other critical aspects were relatedto key financial parameters gas marketing gas transmission project implementationcapital expenditure and support to Start-ups to align with GoI's vision of ‘Start-upIndia'.

Your Company has made earnest efforts in fulfilling MoU obligations in spite of adverseeffects faced due to COVID-19 situation. Self-Evaluation of MoU FY 2019-20 will be carriedout and submitted to DPE in due time result of which is expected to be announced byDecember 2020.

Right to Information (RTI)

In order to promote transparency and accountability an appropriate mechanism has beenset up across the Company in line with the Right to Information Act 2005. Your Companyhas nominated CPIO/ACPIOs/First Appellate Authorities and Nodal Officer at itsunits/offices across the Company to provide information to citizens under the provisionsof the RTI Act.

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

Section 4(1)(b) of the RTI Act 2005 lays down the information which should bedisclosed by any Public Authority on a suo-motu or proactive basis. Section 4(2) andSection 4(3) of the RTI Act 2005 prescribes the method of dissemination of thisinformation. Accordingly keeping in view the purpose of suo-motu disclosures underSection-4 GAIL's Corporate RTI Cell has hosted a dedicated page on GAIL's websitethrough which large amount of information in the public domain on proactive basis isplaced. This is being done to make the functioning of your Company more transparent andreduce the need for filing individual RTI applications. Further your Company has beenmade LIVE on the Government of India's DoPT Online RTI Portal from July 2016 and eversince we are providing information through Online mode also apart from providing therequested information in offline manner.

For the FY 2019-20 GAIL's Corporate RTI Cell has disposed-off all applicationsreceived through online/offline mode. All RTI Applications were disposed-off within timeschedule/as per the provisions of the RTI Statute. Further your Company has received NILpenalty/adverse remarks from Central Information Commission for FY 2019-20 in respect ofsecond Appeal(s) filed by Appellants.

Management Discussion and Analysis

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

Corporate Governance

Your Company believes that good corporate governance plays a critical role inestablishing a positive organizational culture. It is displayed through responsibilityaccountability consistency fairness and transparency towards our stakeholders. Pursuantto the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and DPEguidelines on Corporate Governance a report on Corporate Governance forms part of thisReport at Annexure- B.

The details of the meetings & composition of the Board details of meetings &composition of statutory committees of the Board including the terms of referenceCompany's policy on Directors' appointment and remuneration and also their shareholding inthe Company details of establishment of whistle blower mechanism details related toAnnual General Meeting information pertaining to Dividend declared IEPF Details andother matters etc. forms part of report on Corporate Governance.

There are no significant and material orders passed by the regulators or Courts ortribunals impacting the going concern status and operations of your Company in future. TheStatutory Auditors of the Company have examined and certified your Company's compliancewith respect to conditions enumerated in SEBI (LODR) Regulations 2015 and DPE guidelineson Corporate Governance. The certificate forms a part of this Report at Annexure- C.

Auditors

Statutory Auditors

The Statutory Auditors of your Company are appointed by Comptroller & AuditorGeneral of India (C&AG). M/s ASA & Associates LLP Chartered Accountants NewDelhi and M/s A R & Co. Chartered Accountants New Delhi were appointed as JointStatutory Auditors of your Company for the FY 2019-20. Review and Comments of C&AG ifany on the Company's Financial Statements for the Financial Year ending March 31 2020forms part of Financial Statements. Notes on the Financial Statement referred to in theAuditors' Report are self-explanatory. There is no qualification on the FinancialStatements by the Statutory Auditors for FY 2019-20.

Cost Auditors

Your Company has appointed six Cost Auditors for FY 2019-20 i.e. M/s Ramanath Iyer& Co. New Delhi for Northern Region M/s Bandyopadhyaya Bhaumik & Co. Kolkatafor Northern and Eastern Region M/s A C Dutta & Co. Kolkata for Southern RegionM/s Musib & Company Mumbai for Western Region Part-I M/s N.D Birla & Co.Ahmedabad for Western Region Part-II and M/s Sanjay Gupta & Associates New Delhi forCentral Region as Cost Auditors for FY 2019-20. M/s Ramanath Iyer & Co. is the leadCost Auditor. Your Company is maintaining Cost Accounting Records as prescribed under theCompanies (Cost Records and Audit) Rules 2014 specified by the Central Government undersub-section (1) of section 148 of the Companies Act 2013.

The Cost Audit Report for the Financial Year ended March 31 2019 was filed with theCentral Government on August 7 2019.

Internal Auditor

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

Your Company has independent and integral Internal Audit Department having diligentprofessionals covering aspects relating to commercial and technical domains. The InternalAudit Department functionally reports to the Audit Committee and administratively reportsto the Chairman & Managing Director as per the best global practice. The auditassignments are conducted as per the annual audit program approved by the Audit Committee.Internal Audit examines the effectiveness of internal controls through risk-based audit ofbusiness processes. In congruence with the mission of Internal Audit “Assurance andadvice that adds value to the organization” the root cause and impact of thesignificant audit observations are reported to the management. The Audit Committee of theBoard reviews the significant findings of internal audit and C&AG audit regularly.

Secretarial Auditor

Your Company has appointed M/s Agarwal S. & Associates as Secretarial Auditor forFY 2019-20. Secretarial Audit Report confirming compliance by Practicing Company Secretaryto the applicable provisions of the Companies Act 2013 SEBI (LODR) Regulations 2015 andother applicable laws forms part of this Report at Annexure- D.

Pursuant to SEBI Circular Number CIR/CFD/CMD1/27/2019 dated 08.02.2019 AnnualSecretarial Compliance Report is also attached as

Annexure E.

The observations made in the Secretarial Audit Report and Company's response to theobservations as under: -

Observation No. 1: Non-Compliance of Regulation 17(1)(b) of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 and Clause 3.1.4 of the DPE Guidelines on Corporate Governance for Central PublicSector Enterprises the Company did not have requisite no. of Independent Directors on theBoard of the Company w.e.f. 19.11.2019 to 31.03.2020.

Company's Response: GAIL is a Government Company and appointment/nomination of allDirectors on the Board of the Company is done by Government of India (GOI). Further theterms & conditions of appointment as well as tenure of all Directors are also decidedby GOI. GAIL has been regularly following up with its Administrative Ministry(MoP&NG) Government of India for filling up the vacant positions of IndependentDirectors on its Board of Directors.

Observation No. 2 : Non-compliance of Regulation 17 (10) & 25 (4) ofSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 the Companyhas not carried out the performance evaluation of the directors.

Company's Response: GAIL is a Government Company appointment/nomination of all theDirectors including Independent Directors are being done by the President of Indiathrough the MoP&NG Government of India. Therefore performance evaluation ofindividual Directors including Independent Directors are undertaken by Government ofIndia being the appointing authority. Further there is a well laid down procedure forevaluation of Directors by the Administrative Ministry Government of India.

Performance Evaluation

GAIL is a CPSE and appointment/nomination of all the Directors including IndependentDirectors is being done by the President of India through the MoP&NG Government ofIndia. Therefore performance evaluation of individual Directors including IndependentDirectors is to be undertaken by the Government of India being the appointing authority.

Corporate Social Responsibility

Your Company firmly believes that the commitment towards playing a defining role in thedevelopment of its stakeholders extends to uplifting the lives of the marginalisedsegments of the society living in and around its areas of operation. The principles ofCorporate Social Responsibility (CSR) are deeply imbibed in your Company's corporateculture. To amplify outreach efforts your Company has incurred an expenditure of 125.30crore (2.01% of the average net profit of the preceding three years) on CSR activitiesduring FY 2019-20 which is more than the statutory mandated expenditure of 2% ( 124.79crore) of average net profits of the preceding three years.

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

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

Energy Conservation Technology Absorption and Foreign Exchange Earnings & Outgo

As per the requirement of section 134 (3)(m) of the Companies Act 2013 read with Rule8(2) of the Companies (Accounts) Rules 2014 details of conservation of energy andtechnology absorption and foreign exchange earnings and outgo forms part of this report atAnnexure- G.

Particulars of Contracts or Arrangements with Related parties

As per the requirement of section 134 (3) (h) of the Companies Act 2013 read with Rule8(2) of the Companies (Accounts) Rules 2014 particulars of contracts or arrangementswith the related parties as referred in the section 188(1) of the Companies Act 2013 inthe prescribed form AOC-2 is placed at Annexure - H. Your Company has formulatedthe policy on dealing with the Related Party Transactions and the same is hosted on yourCompany's website at http://gailonline.com/pdf/InvestorsZone/GAIL_Related_Party_Transaction_Policy.pdf

Particulars of Employees

As per notification dated June 5 2015 issued by the Ministry of Corporate AffairsGovernment of India Government Companies are exempted from complying with provisions ofsection 197 of the Companies Act 2013. As your Company is a Government Company suchparticulars have not been included as part of the Directors' Report.

Extract of Annual Return

Extract of Annual Return forms part of this Report at Annexure-I. The Extract ofAnnual Return for the Financial Year ended 31 March 2020 is also available on theCompany's website at https://gailonline.com/IZ-AnnualReports.html

Dividend Distribution Policy

As per Regulation 43A of the SEBI (LODR) Regulations 2015 your Company has formulateda Dividend Distribution Policy. The dividend pay-out is made in accordance with theCompany's Dividend Distribution Policy.

The Dividend Distribution Policy of the Company is available on the Company's websiteat http://gailonline.com/pdf/InvestorsZone/GAIL%20 Dividend%20Distribution%20Policy.pdf

Issue of Shares and Fixed Deposits

In Financial Year 2019-20 there was no buyback of shares. Your Company had issued atotal of 2255070933 equity bonus shares.

Your Company has not accepted any fixed deposits during the Financial Year 2019-20 andas such no amount of principal or interest was outstanding as on the balance sheet date.

Fund Raising

During FY 2019-20 your Company has not raised funds through preferential allotment orqualified institutions placement.

Foreign Exchange Earnings and Outgo

During FY 2019-20 Foreign exchange earnings was 13078 crore and foreign currencyoutgo was 26485 crore.

Key Managerial Personnel and Directors

The following Key Managerial Personnel (KMP) / Directors wereappointed/ceased/extension of tenure on the Board of your Company:

KMP

• Shri Manoj Jain Director (Business Development) was appointed as Chairman &Managing Director w.e.f. 14.02.2020 in place of Dr. Ashutosh Karnatak Director (Projects)who was holding additional charge of the post of Chairman & Managing Director duringthe period w.e.f. 01.08.2019 upto 13.02.2020.

• Shri E.S. Ranganathan was appointed as Director (Marketing) on the Board of theCompany w.e.f. 01.07.2020.

• Shri B.C. Tripathi was Chairman and Managing Director upto 31.07.2019. •Dr. Ashutosh Karnatak was Director (Projects) upto 21.05.2020.

• Shri Gajendra Singh was Director (Marketing) upto 30.06.2020 .

Government Nominee Director

• The tenure of Shri Ashish Chatterjee Government Nominee Director was extendedfor a period of 3 years w.e.f. 19.12.2019 or until further orders whichever is earlier.

• Smt. Esha Srivastava was appointed as Government Nominee Director w.e.f.24.03.2020 for a period of three years or until further orders whichever is earlier.

• Smt. Indrani Kaushal was Government Nominee Director upto 27.05.2019.

• Shri Ashutosh Jindal was Government Nominee Director w.e.f. 27.05.2019 till04.11.2019.

• Shri Rajiv Bansal was Government Nominee Director w.e.f. 08.01.2020 till

17.02.2020.

Independent Director

• Shri Sanjay Tandon was Independent Director upto 18.11.2019.

• Shri Anupam Kulshrestha was Independent Director upto 18.11.2019.

• Shri S.K. Srivastava was Independent Director upto 18.11.2019 .

• Dr. Anup K. Pujari was Independent Director upto 30.01.2020.

• Shri Dinkar Prakash Srivastava was Independent Director upto 30.01.2020. TheBoard placed on record its deep appreciation for the valuable services rendered byoutgoing Directors during their association with your Company.

Code of Conduct

Pursuant to the requirements of SEBI (LODR) Regulations 2015 and DPE Guidelines onCorporate Governance the Board Members and Senior Management Personnel have affirmedcompliance with the Code of Conduct for March the Financial Year ending 31 2020.

Information Systems and Technology

Under the ‘Digital Yatra 2.0' initiative - an umbrella programme towardsthe next level of digitalization various developments in digital technologies wereadopted by your Company. One such initiative was Digital Conduct of Board and CommitteeMeetings- ‘G Board'. The Board of Directors adopted digital way to conductBoard and Committee meetings. It has been developed with the support of in-house BIS teamof GAIL. Employees can use e-Note sheet application for taking approvals online whereverrequired. E-measurement Portal 'Anjani' was rolled out to automate and digitalizecontractor payments. The E-Sales of Polymers was launched on 17 March 2020. Launch ofSUGAM Portal to facilitate paperless smooth & faster processing in submission ofmedical claims and travel claims. Digitalization of medical claims under Post-RetirementMedical Scheme (PRMS) for superannuated employees. Automation in capitalization andbuyback of employee assets under furnishing scheme and also started remote DD Printingfacility.

In addition to delivering superior financial & physical performance in thisFinancial Year your Company has also taken various initiatives to optimize processes andimprove effectiveness of internal controls. Your Company has implemented centralizedpayment and centralized compliance system of TDS thereby reducing man hours and is alsoamong the first PSU to successfully implement the first digital worker named 'GAILManu' in production system for review of Accounts under its Robotic process automationprogram.

GAIL's services during Lockdown and impact of COVID-19 on GAIL's business

Employees were given the facility to work from home and advised to strictly followGovernment guidelines w.r.t COVID-19. During FY 2019-20 your Company and its employeeshave contributed around 54 crore to PM-CARES Fund at this hour of the national crisis. Inaddition several CSR measures such as distribution of PPE kits mask food and rationetc. to the needy across districts were arranged as a relief measure worth 4.74 crore.

Despite restrictions imposed on account of COVID-19 outbreak and nationwide lockdownyour Company managed uninterrupted and safe operations of pipeline systems and plants toensure the availability of Natural Gas and LPG to the essential sectors in the country.The Petrochemical complex at Pata was under temporary to shutdown from 03 April 2020 18April 2020 due to reduction of demand as well as transport restrictions in the Country.Further during lockdown Vendors Contractors etc. bills were paid smoothly throughdigital mode. It is worth mentioning that more than 40 lakh households connected to GAILand GAIL`s CGD JV`s were supplied uninterrupted Piped Natural Gas.

Aarogya Setu App (Mobile application developed by the Government of India to connectessential health services with the people of India to fight against COVID-19) wasdownloaded by all employees of GAIL. Further details on COVID-19 impact on GAIL's businessand services of GAIL during lockdown are included in Management Discussion & AnalysisReport.

Directors Responsibility Statement

Your Directors confirm that they have:

i) followed applicable accounting standards along with proper explanation relating tomaterial departures in the preparation of the annual accounts for the Financial Yearending March 31 2020;

ii) selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent to give a true and fair view of the state ofaffairs of the Company at the end of the Financial Year and of the profit of the Companyfor the year under review;

iii) taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

iv) prepared the annual accounts for the Financial Year ending March 31 2020 on agoing concern basis;

v) devised proper systems to ensure compliance with the provisions of all applicablelaws and such systems were adequate and operating effectively; and

vi) laid down internal financial controls to be followed by the Company and that suchinternal financial controls are adequate and are operating effectively.

Acknowledgment

Your Directors express their gratitude for help guidance and support received from theGovernment of India especially the Ministry of Petroleum and Natural Gas various StateGovernments Regulatory and Statutory Authorities.

Your Directors acknowledge wise counsel received from Statutory Cost and SecretarialAuditors guidance received from C&AG and are grateful for their consistent supportand cooperation.

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

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

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

For and on behalf of the Board
Manoj Jain
Place: New Delhi Chairman & Managing Director
Dated: 14.08.2020 (DIN: 07556033)