GAIL (India) Ltd Management Discussions.


A. Global Energy Sector

The year 2020 will be remembered as the year of the COVID-19 Pandemic which changed human lives across the world. Government imposed restrictions, as well as the fear induced restraint among people, has led to the largest recession seen in the last seven decades after World War II. The impact of the pandemic on economies around the globe will continue to persist for a long period. The disruptions and turmoils brought by the pandemic in global energy dynamics have also been historical.

According to BP Statistical Review of World Energy 2021, global energy consumption fell by 4.5% in 2020 against 2019 making it the largest decline since 1945. While coal and gas also fell significantly during this period, the largest decline was seen in oil demand which contributed to 75% of the total fall in energy consumption. The decline in energy consumption in U.S, India, and Russia was the major contributor to the decline in overall global energy demand. On the contrary, China posted an increase of 2.1% in the energy demand last year. Renewable energy witnessed a slower growth rate as compared to the last 10-year average, however, it still grew at a healthy rate of 9.7%. Due to the historical fall in primary energy consumption, the carbon emissions also declined by 6.3% which is the lowest decline since 2011.

B. Global Gas Sector

While natural gas consumption fell by 2.3% i.e., by 81 billion cubic meters (bcm), the share of gas in primary energy continued to rise reaching 24.7%. Natural gas prices declined to multiyear lows averaging $1.99/mmbtu in 2020 - the lowest decline since 1995 whereas the Japan Korea Marker went as low as $4.39/mmbtu. While overall gas sector consumption declined, the LNG supply grew by 4 bcm or 0.6%, though still below the 10 - year average rate of around 7%. Notably, the US LNG supply expanded by 14 bcm i.e., 29% during the period. New LNG projects took a hit as only 3 MT LNG production capacity was announced in 2020 against the projected 60 MT. A summary of key global energy statistics is represented in Table 1

Table 1: Summary of key global energy statistics for year 2020 (Source: BP Statistical Review of World Energy 2021)

Energy Aspect Unit 2019 2020 % Growth
Primary Energy Consumption MTOE 13,889 13,295 -4.3
Carbon Emissions Mn. Tons 34,040 31,984 -6.0
Gas Consumption MMSCMD 10,696 10,473 -2.1
LNG Imports MMSCMD 1,325 1,337 0.85
Renewable Power Generation Twh 2,789.2 3,147 12.8
Oil Consumption Mbd 97.60 88.48 -9.3
Coal Consumption Exajoules 158 151 -3.9

(Conversion factors: 1 ExaJoules= 23.885 MTOE, 1 BCM = 1000/365 MMSCMD)

Coming to outlook on natural gas, the Shell LNG outlook 2021 estimates gas to contribute ~41% followed by renewables at 33% in global energy growth up to 2040. In sector-wise gas growth projections up to 2040, power stands at the highest 35% while the Asia region is expected to contribute to approximately half of the Global gas demand growth during these 20 years.

China, Japan & South Korea have announced net zero emissions targets. With several countries announcing Net Zero Emission (NZE) targets, natural gas can be better placed in reducing the overall emissions, coupled with renewables to provide cleaner power or to power sectors that are hard to electrify. According to IHS Markit, a trend is recently seen worldwide regarding offsetting the Green House Gases (GHG) emissions across the LNG value chain. Apart from cost competitiveness, carbon competitiveness would come into the picture while selecting the LNG suppliers. Various LNG suppliers who are announcing to provide emissions data with each cargo in coming years are attracting more contractual opportunities. However, standards are yet to be set for monitoring, reporting, and verifying emissions to provide transparency in emissions in the LNG industry.

(Source for Section A and B: BP Statistical Review of World Energy 2021, Global Energy Review2021 Report by IEA, Shell LNG Outlook2021, IHS Markit)

C. India Energy Sector

Indias primary energy consumption witnessed a decline of 5.6% driven mainly because of the decline in oil and coal consumption which declined by 9% and 6% respectively. Natural Gas, Renewables and Hydro were the only sectors which showed a positive change in energy consumption. A summary of key statistics related to Indias energy consumption is shown in Table 2.

Table 2: Summary of key India energy statistics for year 2020 (Source: BP Statistical ReviewofWorld Energy 2021)



% Growth in 2020 over 2019

Energy Aspect Unit Actual % of World Actual % of World
Primary Energy Consumption MTOE 809 5.8% 764 5.7% -5.6%
Carbon Emissions Mn. Tons 2,468.4 7.3% 2,298.2 7.2% -6.9%
Gas Consumption MMSCMD 162.5 1.5% 163.3 1.6% 0.5%
LNG Imports MMSCMD 88.8 6.7% 98.1 7.3% 10.5%
Renewable Power Generation Twh 139.2 5.0% 151.2 4.8% 8.6%
Oil Consumption Mbd 5.1 5.3% 4.7 5.3% -9.3%
Coal Consumption Exajoules 19 11.8% 18 11.6% -5.7%

(Conversion factors: 1 ExaJoules= 23.885 MTOE, 1 BCM = 1000/365 MMSCMD)

D. India Gas Sector Developments

During the inaugural address of the recent IHS CERA Week, the Honble Prime Minister Shri Narendra Modi outlined Indias energy map with seven key drivers - 1. Accelerating our efforts to move towards a gas- based economy 2. Cleaner use of fossil fuels particularly petroleum and coal 3. Greater reliance on domestic sources to drive bio-fuels 4. Achieving the renewable target of 450 GW by 2030 5. Increasing the contribution of electricity to decarbonize mobility 6. Moving into the emerging fuels including hydrogen 7. Digital innovation across all energy systems, further, the five pillars to bring energy justice to India are affordability, accessibility, efficiency, sustainability, and energy security. The governments focus on giving a much needed thrust to Indias natural gas sector is clear.

The Government has announced various reforms in the Gas sector in a bid towards boosting Gas based economy during the year. In October, 2020, the implementation of Market-based price discovery of domestic natural gas through the mechanism of E-bidding was launched. However, this policy applies to the blocks which have marketing freedom and do not apply to the nomination fields of Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) which contributed ~85% of Indias natural gas supply in LY2020-21.

In June, 2020, Indias first gas trading platform Indian Gas Exchange (IGX) was launched and in December, 2020, PNRGB granted authorization to IGX to set up and operate the exchange as per PNGRB (Gas Exchange) Regulations notified in October, 2020. This will be the first nationwide online delivery-based gas trading platform as an effort in the right

direction to bring transparency in gas price discovery. However, to see a significant volume of gas being traded on an exchange, issues like bringing natural gas in GST, rationalization of transportation tariffs, etc. also need to be resolved.

In February, 2021, the Draft LNG policy was introduced to ensure equitable distribution and adequate availability of LNG for all technologically feasible sectors, promote increased usage of LNG in transportation & mining sectors, and to promote new technologies related to LNG.

According to PPAC, natural gas sector consumption increased marginally from 153 MMSCMD to 154 MMSCMD. On a sectorial consumption basis, a decline was observed in the CGD sector due to COVID-19 restrictions; however, this decline was made up by increased consumption in the fertilizer sector. Earlier, the natural gas sector was growing at a CAGR of above 3% majorly because of enhanced consumption in the CGD sector. It is expected that consumption of natural gas will resume similar growth as normal life comes back on track.


2.1 Operational Performance

The operational performance of GAIL for the year FY 2020-21 is as follows:



Particulars UoM Quantity Total Revenue* Rs. In crore Quantity Total Revenue* Rs. In crore
Natural Gas Throughput MMSCMD 104.20 5,953 108.37 6,044
Natural Gas Trading MMSCMD 89.20 43,846 96.26 59,955
Liquid Hydrocarbon Sales TMT 1,138 3,294 1,263 4,234
Polymers Sales TMT 871 7,061 737 5,432
LPG Transported TMT 4,163 667 3,909 636

*including intersegment sales * Natural Gas Marketing

Natural Gas (NG) trading continues to be one of your Companys core businesses. During the financial year 2020-21, your Company clocked a sales figure of 89.20 MMSCMD (which included sales within India of 80.28 MMSCMD and overseas sales of 8.92 MMSCMD) as against 96.26 MMSCMD (which included sales within India of 84.60 MMSCMD and overseas sales of 11.66 MMSCMD) during FY 2019-20. The gross revenue of your Company from Natural Gas Marketing in FY 2020-21 was Rs. 43,846 crore as against Rs. 59,955 crore in FY 2019-20.

Your Company marketed 42.62 MMSCMD domestic gas in FY 2020-21 as against 49.21 MMSCMD in the previous financial year. Domestic gas volume contributed around 53% of the overall natural gas volume marketed by GAIL in India. The rest 37.66 MMSCMD (47%) gas marketed in India was through imported long-term, mid-term, and spot LNG volumes. Sector-wise details are as below:

Fertilizer Sector: Your Company supplied the majority of the gas consumed in the Fertilizer sector. In recent years, your Company has tied up with various Fertilizer users to supply around 12 MMSCMD of gas. During this FY, your Company has commenced gas supply to Hindustan Urvarak & Rasayan Limited (HURL), Gorakhpur w.e.f. November, 2020, for pre-commissioning of the plant and Mangaluru Chemicals & Fertilizers Limited (MCFL), Mangalore for commissioning of the plant and production of Urea using natural gas as feedstock.

Power Sector: Your Company supplied around 55% of the gas consumed by gas-based power plants in the country. Over the past few years, GAIL has successfully collaborated with various power producers to operationalize their stranded units. GAIL continues to explore opportunities for the supply of natural gas to gas-based power generation units at affordable prices and is currently supplying around 2.40 MMSCMD of Regasified Liquefied Natural Gas (RLNG) to power plants apart from allocated domestic gas. During FY 2020-21, your Company has supplied gas to Karnataka Power Corporation Limited (KPCL) w.e.f. September, 2020, for commissioning of the plant.

? Natural Gas Transportation

Your Company owns and operates various Natural Gas Pipelines, including a few dedicated pipelines, of a total length of around 13,700 km across the length and breadth of the country. The average daily gas transportation volumes during the financial year 2020-21 stood at 104.20 MMSCMD as compared to 108.37 MMSCMD during FY 2019-20, with the decline attributable to the widespread Covid related disruptions.

? Liquefied PetroleumGas(LPG)Transportation

Your Company owns and operates 2,038 km LPG pipeline network for LPG transportation namely the Jamnagar-Loni Pipeline (JLPL) and the Vizag-Secunderabad Pipeline (VSPL). JLPL networks achieved a

throughput of 4.16 MMTPA during the year 2020-21 against 3.91 MMTPA in the previousyear 2019-20.

? Petrochemicals

Your Company has a nameplate polymer production capacity of 810 Kilo Tons per annum (KTA) at the Pata complex. Your Companys subsidiary (70% equity share) Brahmaputra Cracker & Polymer Limited (BCPL) has a capacity of 280 KTA. The marketing right of the BCPL plant is with your Company taking the total marketing portfolio to 1,090 KTA.

Overall production from the Pata Petrochemicals complex in 2020-21 was 813 KTA. Your Company marketed approx. 1,177 KTA of polymers (which includes 871 KTA of GAIL and 306 KTA of BCPL) during the year. Your Company also exported 9 KTA of polymers to various Asian markets. Your Company has successfully maintained its market share in the domestic polyethylene market and remains the second-largest player in the Indian petrochemical market with a portfolio of over 1,000 KTA of polyethylene. Your Company and BCPL together have a combined production share of 17.4% of the High Density and Linear Low-Density Polyethylene (HDPE & LLDPE) market in the country.

GAILs Petrochemical complex has achieved more than 100% capacity utilization in FY 2020-21. For the second consecutive year, BCPL has achieved more than 100% capacity utilization in FY 2020-21.

? LPG and Other Liquid Hydrocarbons (LHC)

Your Company has five Gas Processing Plants (GPUs) at four locations in the country having a total LHC production capacity of 1.4 Million MT. During FY 2020-21, total liquid hydrocarbon production was about 1.14 Million MT as against 1.26 Million MT in FY 2019-20 of which almost 90% constitutes LPG and Propane.

? Exploration & Production (E&P)

Your Company is having an interest in both domestic and overseas upstream blocks. The participating interest is in 9 domestic E&P blocks, another 2 blocks in Myanmar (A-1 &A-3), and one (1) shale gas JVacreage in Eagle Ford Basin, Texas, USA. Your Company is Operator in twoonland domestic E&P blocks. There is additional gas discovery in Block A-3 in Myanmar. Appraisal of this gas discovery and further exploratory drilling is planned to extend the production period of ongoing gas production from these fields.

? Renewable Energy

Your Company is committed to reduce carbon emissions and implement renewable projects. Your Company has a total installed capacity of

130.21 MW of alternative energy; out of which 117.95 MW are wind energy projects and 12.26 MW are solar energy projects. Your Company is implementing 1.8 MW captive Solar PV project at Vijaipur unit in Madhya Pradesh, 2.6 MW at Pata in Uttar Pradesh, and 3.2 MW atvarious other O&M Sites. The power generated from the plant will substitute power drawn from the grid, which will help your Company in reducing its carbon footprint in addition to optimization of the power cost.

In line with Strategy 2030, your Company is exploring various opportunities for increasing its renewable portfolio through organic as well as inorganic routes.

Your Company is exploring various business opportunities in the Production and Marketing of Compressed Bio Gas (CBG) from organic waste. Your Company is an integral part of the MoP&NGs initiative - SATAT (Sustainable Alternative Towards Affordable Transportation) and accordingly has invited Expression of Interest (EOI) from various CBG Producers for providing Marketing tie-up of CBG at the Retail Outlets of your Company and its JVs. This has led to the issuance of 136 Letter of Intent (Lol) to potential CBG producers by the end of FY2020-21.

Your Company has also taken the decision of venturing into CBG business by setting up CBG production plants. Your Company is setting up its first CBG plant of 5 Tons per Day (TPD) CBG production capacity at Ranchi. Your Company has signed a concession agreement for 22 years with Ranchi Municipal Corporation for the supply of Municipal Solid Waste (MSW)and associated infrastructure for setting up the plant.

? City Gas Distribution

• Your Company (including group companies) is currently authorized to operate in 61 Geographical Areas (GAs) throughout India including metro cities of Delhi, Mumbai, Hyderabad, Bengaluru, Kolkata, etc. These CGD networks together cater to around 65% of the total 78.20 lakh Domestic PNG (DPNG) connections in the country. Out of the total 3,101 CNG stations in the country, your Company’s group operates 1,689 CNG stations representing 55% share. This year, your Company registered a record addition of 10.10 lakh household PNG connections and 341 CNG stations.

• Your Company was authorized to take up CGD projects in six cities as part of the PM URJA Ganga project namely, Varanasi, Bhubaneswar, Cuttack, Patna, Ranchi, and Jamshedpur. Supply of gas has already commenced to CNG, PNG customers in these cities. Your Company is executing the CGD project in Kolkata through its JV - Bengal Gas Company Limited.

• GAIL Gas Limited (a wholly-owned subsidiary of your Company) is executing and operating CGD (City Gas Distribution) projects in 14 GAs, including Bengaluru. Currently, GAIL Gas has 07 nos. of Joint Venture Companies (JVCs) and they are implementing CGD project in 09 GAs. GAIL Gas along with its JVCs is providing DPNG to 6.51 lakh households and catering to clean fuel requirements for vehicles through its 250 CNG stations spread across various GAs.

• During FY 2020-21, GAIL Gas along with its Joint Venture Companies has achieved around 1.87 lakh domestic PNG connections, the highest figure ever achieved by GAIL Gas since its formation. During the same period, GAIL Gas along with its JV companies have also set up 84 CNG stations.

• Bengaluru remained a major focus for your Company for CGD expansion. 11 CNG stations were set up and 44,382 domestic PNG connections were provided in the Bengaluru CGD area during FY 2020-21.

2.2 Financial Performance

? Capex

Your Company incurred a capex of Rs. 6,982 crore (including equity contribution to subsidiary and JV) during the FY 2020-21 as against a capex of Rs. 6,114crore in the FY 2019-20.

? Profitability

Revenue from Operations in FY 2020-21 decreased by 21% to X 56,738 crore against X 71,886 crore in the previous year. The PAT decreased to X 4,890 crore in 2020-21 against X 6,621 crore in the previous year showing a decrease of 26%.

? Shareholders Funds

The Reserves and Surplus (excluding Transition Reserve, Other Comprehensive Income & Bond Redemption Reserve) i.e. Free Reserves at the end of the FY 2020-21 stood at X 38,938 crore as compared to X 37,440 crore in the corresponding previous year. As on 31st March, 2021, the net worth of the Company stood at X 43,379 crore, as compared toRs. 41,950croreason 31st March, 2020.

? Debt and Interest

Total Debts outstanding as on 31st March, 2021 isRs. 5,991 crore as against X 5,257 crore as on 31st March, 2020. As against the total Foreign Currency Loans of X 252 crore outstanding as on 31st March, 2021, over 97% is hedged with financial derivatives.

Debt-Equity ratio as on 31st March, 2021 increased to 0.14 as compared to 0.09 as on 31st March, 2020. The Debt Service Coverage Ratio was 14 times as on 31st March, 2021 as against 30 times on 31st March, 2020. Further, the Interest Coverage Ratio was 20 times as on 31st March, 2021 as against 59 times on 31st March, 2020.

? Ratio Analysis

Return to Net Worth (PAT/Net Worth) for the Company as on 31st March, 2021 decreased to 11.27% as compared to 15.78% as on 31st March, 2020.

Return on Capital Employed (PBIT/ Capital Employed) decreased to 11.48% in FY 2020-21 as compared to 15.36% in FY 2019-20.

Debtors Turnover (Net Credit Sales (i.e. Gross Turnover)/Average Trade Receivables) for the Company as on 31st March, 2021 stood at 11.24 as compared to 13.47 as on 31st March, 2020.

Inventory Turnover (Cost of Goods Sold/Average Inventory) was 31.06 as on 31st March, 2021 as compared to 40.20 as on 31st March, 2020.

Current Ratio (Current Assets/ Current Liabilities) for the Company as on 31st March, 2021 stood at 0.86 as compared to 0.94 as on 31st March, 2020.

Operating Profit Margin (%) (Operating Income (Operating EBIT)/ Revenue from Operations (Net)) for the Company as on 31st March, 2021 stood at 11.53% as compared to 11.20% as on 31st March, 2020.

Net Profit Margin (%) (Profit after Tax (PAT) / Revenue from Operations (Net)) for the Company as on 31st March, 2021 stood at 8.62% as compared to9.21%ason 31st March, 2020.

? Market Capitalization

Market capitalization (BSE) of the Company increased substantially from X 34,480 crore on 31st March, 2020 toRs. 60,189 crore on 31st March, 2021, due to an increase in share price from Rs. 76.45/ Share toRs. 135.55/Share.

2.3 Companys Global Presence

Your Company is constantly expanding its global presence through its participation in projects/ventures along the natural gas value chain. With the LNG portfolio of around 14 MMTPA from the USA, Qatar, Australia, etc. your Company has emerged as one of the leading global LNG players and is actively involved in the LNG trading business in the international market.

Your Company is part of a consortium in two offshore E&P blocks (A-1 & A-3) in Myanmar. Around 14 MMSCMD of gas is being produced from these blocks and supplied to China and Myanmar through South East Asia Gas Pipeline Company Limited (SEAGP), in which your Company is also an equity partner. SEAGP is paying dividends to your Company regularly. Your Companys Branch Office in Myanmar is scouting for business opportunities in Myanmar and other South East Asian countries, in the areas of the gas value chain and beyond.

Your Company is the Government of Indias nominee in theTurkmenistan- Afghanistan-Pakistan-India (TAPI) natural gas project for import of gas to India from Turkmenistan. TAPI Pipeline Company Limited (TPCL) has been incorporated in Isle of Man to build, own, and operate the TAPI Pipeline. The pipeline, when constructed, is expected to carry 90 MMSCMD (33 bcm/a) of natural gas, of which India will receive 38 MMSCMD. The project is currently under the pre-FID stage, wherein various activities are being undertaken by TPCL. Considering the changes in the global energy market, your Company is discussing with Turkmengas for arriving at mutually acceptable terms and conditions to enhance the marketability of the pipeline gas to be received from Turkmenistan.

Your Company holds equity interest in two CGD companies in Egypt, namely Fayum Gas Company (FGC) and National Gas Company (Natgas), involved in the supply of natural gas to residential, commercial, and small industrial customers in Egypt.

Your Company is also an equity partner in China Gas Holdings Limited (China Gas), a retail gas company involved in city gas and CNG business in China and listed in Hong Kong Stock Exchange. China Gas is performing well and paying dividends to your Company regularly.

Your Company has formed GAIL Global (USA) Inc. ("GGUI") during 2011 in Houston, Texas as its wholly-owned subsidiary. GGUI has 20% interest in Carrizos (Carrizo Oil & Gas, Inc.) Eagle Ford Shale acreage position in the state of Texas, USA wherein the Company is actively involved in the production of shale gas.

Your Company has also formed GAIL Global Singapore Pte. Ltd (GGSPL) in 2004 as its wholly-owned subsidiary in Singapore. GGSPL is engaged in LNG trading, shipping, chartering of LNG vessels, and risk management services including transacting in financial markets for hedging short-term and mid-term exposures and structuring and purchasing futures, options, and other derivative contracts and swaps in various energy markets.

Your Company is in the process of establishing an office in Moscow, Russia, jointly with ONGCVidesh Limited, Indian Oil Corporation Limited, Oil India Limited, and Engineers India Limited. A Summary of Understanding (SOU)was signed among all partners on 25th March, 2021 to define the modalities of the establishment of the India Energy Office. Activities pertaining to the incorporation of the Company are in progress.


3.1 Strategy

In the year 2019, your Company framed Strategy 2030 to define the journey through the next decade. The strategy has been developed with the objective of building a strong business portfolio and organizational structure which is not only robust enough to respond to the fast-changing business scenario but also unlocks growth opportunities for the long-term growth of the Company and in turn, delivers long term value to stakeholders.

Your Company is planning to bid consistently for new pipelines put on offer through PNGRB. Your Company shall continue to grow its gas transmission business by laying important sections of National Gas Grid

(NGG) i.e., Jagdishpur-Haldia-Bokaro-Dhamra Pipeline, Kochi-Koottanad- Bangalore-Mangalore Pipeline Phase-ll, Vijaipur-Auraiya Pipeline, Barauni- Guwahati Pipeline, North East Gas Grid (through Joint Venture company Indradhanush Gas Grid Limited with IOCL, ONGC, OIL, NRL) aligning with Govt, priorities and by providing last-mile connectivity.

The development of the Indian gas market is a major focus area of your Company. To grow the gas market share, your Company shall be pushing for higher gas usage in the industrial segment, transport segment using CNG & LNG, trigeneration, etc., ensuring off-take of envisaged additional domestic gas production and the increasing pace of activities in the fastgrowing CGD sector through GAIL Gas and JVs. Lurther, your Company is looking for avenues to supply gas in the new segments like LNG trucking i.e., LNG for long haul transportation. Discussions are underway with EESL for cooperation for use of natural gas in the trigeneration system.

Your Company is the largest LNG portfolio holder in India having diverse price linkages and shall be looking to offer value and reliable supply to consumers by selling the right mix in domestic and international geographies. Your Company is consistently looking for new international geographies to sell LNG volumes.

Your Company shall be exploring opportunities in the petrochemicals segment to leverage upon your Companys extensive presence and high future demand for polyethylene and polypropylene.

Your Company will be selectively making investment in the Renewable Energy domain given the future growth potential and also to partner with Govt, in meeting Indias INDC (Intended Nationally Determined Contributions) commitments on climate change. Your Company is exploring the opportunity of acquiring stakes in renewable energy assets of existing players and also looking towards participating in solar park tenders as a Solar Power Producer.

Your Company shall also be focussing on preparing the next line of leadership and developing capabilities to realize the strategic direction that has been envisioned.

Your Company is continuously exploring new business opportunities which have the potential to offer a future growth engine and substantially add to the portfolio. To promote new technologies, your Company has invested in startups that focus on new technologies like Electric Vehicles, digitization, etc.

In the LY 2020-21 key initiatives were taken mainly in the core business of gas marketing and gas transmission business. Your Company continues to be a preferred supplier of end-users and has tied-up a substantial volume of new/renewal contracts with key consumers during the LY and continues to be in discussions with existing and new consumers for incremental gas sale opportunities. Your Company is prioritizing the CGD sector (Industrial & Commercial Segment), Refineries, Steel and Sponge Iron units which consume other liquid fuels to supply them with natural gas as an alternative . Group companies are installing over 23 LNG stations along Golden Quadrilateral and other major highways of which construction activities have commenced for 6 LNG stations.

In LY 2020-21, your Company made strategic moves in the direction set under Strategy 2030 by expanding natural gas infrastructure, supplying gas to key sectors, and exploring opportunities in petrochemical. Kochi - Mangalore and Dobhi Durgapur gas pipelines were commissioned and were dedicated to the Nation by the Honble Prime Minister. Recently, your Company obtained authorization for laying of Srikakulam - Angul, Dhamra Haldia Paradip Pipeline (as an extension of JHBDPL), and Mumbai-Nagpur-Jharsuguda pipelines.

In petrochemicals, your Company is setting up a 500 KTA Polypropylene plant, a first of its kind project in India which would be using Propane Dehydrogenation technology for the production of Propylene integrated with the downstream Polypropylene unit. Your Company has selected Licensors for the PDH and PP units during the year, further, in the Renewables sector, your Company has been looking for opportunities to scale up the RE portfolio from 130 MW through bidding routes and also through inorganic routes like mergersand acquisitions.

Your Company is continuously exploring new business opportunities which have the potential to offer a future growth engine and substantially add value to the portfolio.

Digital Strategy

Your Company has always been at the forefront of implementing and adopting new technologies and has made significant investments in digital technologies in the past. Given the dynamic market environment, your Company has assumed a Digital Strategy exercise to leverage the recent advances in digital technologies and advanced analytics to support effective decision-making and build a scalable and agile enterprise with improved business performance and competitive advantage. This Digital Strategy exercise aims at addressing the future needs of your Company in terms of mission-critical services, supporting operations, maintenance, planning, sustainability, and overall vision. Your Company has also defined its digital vision to bring alignment among the various stakeholders and the potential digital themes. The new Digital Vision of your Company is:

"Be a digitally empowered organization for operational excellence and stakeholder value creation"

The new Digital Vision of your Company addresses the needs and aspirations of all key stakeholders including employees, customers, vendors, shareholders, and society. Under the Digital Strategy exercise, key digital themes were identified, which focus on various business value drivers such as Brand strength, Customer Satisfaction, Health Safety & Environment, People Effectiveness, Sourcing Effectiveness, and Trustworthiness. A roadmap has been established with potential digital initiatives to bridge the gaps between the current state and leading practices/emerging digital trends and implementations of various digital initiatives are in process.

Adoption of the latest digital technologies by your Company is expected to make a huge contribution to promote sustainability through enhanced monitoring and data capturing. A broad multi-stakeholder alliance and platforms for sharing digital solutions and services are essential to attain the Sustainability Development Goals. New digital methods are facilitating timely and precise monitoring of data relevant for promoting sustainability in your organization and helping to do the operations in the right manner. Digital co-operation on platforms is helping in creating a database, which could be used for big data analytics-based solutions to support better planning and optimization.

3.2 New Initiatives

? Natural Gas Marketing

Your Company is strengthening its existing customer base while simultaneously working on expanding gas consumption in existing/emerging sectors. With the commissioning of the long-awaited KKMBPL, gas supply was commenced to MCLL, MRPL, and OMPL, which are the major customers in the Mangalore region. Similarly, your Company has also completed connectivity with major anchor load customers along JHBDPL. In the LNG business, your Company has reached a new milestone of importing 83 LNG cargoes to India amounting to approx. 5.27 MMT of LNG volumes during FY 2020-21, to cater to the growing need.

Your Company is also working closely with other industry players and stakeholders to kick-start commercial off-take of Compressed Bio-Gas from CBG producers initially on a pilot basis, which is scalable across the nation. Your Company and its JVs and subsidiaries are also working towards constructing LNG stations along major highways so that LNG can be utilized as an automotive fuel for the heavy vehicle segment. Efforts are also on going to commence use of LNG as automotive fuel for heavy equipment in the mining sector, which can commercially replace HighSpeed Diesel (HSD).

? Sourcing & Trading

Your Company has established itself as a major global LNG player and is now trading a substantial amount of LNG in international markets. Past several years, your Company undertook various innovative deals including time swap transactions and third-party sales on a FOB basis to de-risk the LNG portfolio. Further, several destination swap transactions have been carried out to ensure the delivery of competitively priced LNG in the Indian market. Your Company has successfully handled the impacts of the COVID-19 pandemic through cancellation/re-scheduling of cargoes under various long-term LNG contracts, ensuring uninterrupted LNG/RLNG supply to customers.

Your Company has implemented the Energy Trading and Risk Management (ETRM) system to plan, manage and optimize the entire LNG value chain operations starting from sourcing of gas, liquefaction, shipping, and regasification. All the LNG contracts, RLNG contracts, Hedging transactions, shipping voyages, etc. are being effectively captured in the ETRM system augmenting GAILs risk management strategies. Further, your Company is actively undertaking hedging to manage commodity price risk.

? LNG Shipping

To transport the LNG sourced from the USA, your Company hired a newly built LNG Vessel GAIL Bhuwan from a subsidiary of Mitsui OSK Lines (MOL), Japan. The vessel was delivered to GAIL in March, 2021 and is of state-of-the-art technology and design. Your Company may charter additional LNG ship(s) on a spot/term basis based on trading strategy in the year 2021-22.

Your Company has developed LNG ship chartering and operational capabilities in a very short period and is now fully equipped to independently charter and manage its LNG Vessels. This has resulted in substantial financial savings to your Company. Your Company is constantly on the lookout to optimize the Shipping cost through optimal voyage planning and other freight trading opportunities.

? LNG Regasification Terminals

Konkan LNG Limited (KLL) is a subsidiary company of GAIL. During the year, your Company swapped its shares in Ratnagiri Gas & Power Private Limited (RGPPL) with NTPC Limiteds shares in KLL. With this share swapping, GAILs shareholding in KLL increased to 92.15%. Accordingly, management and operational control over the Dabhol LNG terminal has been further enhanced. It shall provide greater operational flexibility to your Company in LNG business in terms of sourcing, regasification, and trading of LNG.

The number of LNG cargoes regasified by KLL is increasing steadily leading to an increase in KLLs operating profit. KLL is also able to service the loan taken from GAIL for debt resolution settlement with its lenders during the last financial year.

Your Company is the commercial operator of the 5 MMTPA Dabhol terminal in Maharashtra under KLL. The terminal is currently operating only during non-monsoon months due to the non-availability of breakwater facilities. The construction work for breakwater has started and is likely to be commissioned by 2022, after which the terminal shall be able to operate throughout the year, utilizing its full capacity. Further, your Company is making all efforts for full utilization of regasification capacity of Dabhol terminal by selling surplus regasification slots to third parties.

? Natural Gas Transportation

Your Company is committed to increase the length of its natural gas pipeline infrastructure by developing new natural gas pipelines as well as by expansion/extension of its existing natural gas pipelines. Your Company has taken steps to provide Tie-in connections with its natural gas pipelines to the upcoming new gas sources, including in Krishna Godavari (KG) Basin, Cauvery Basin, and Coal Bed Methane (CBM) discoveries to enable more and new gas injections into its pipelines. Furthermore, Inter-Connections (ICs) are also being provided with the natural gas pipelines of other pipeline entities in the country.

In addition to providing Last Mile Connectivity (LMC) to various industrial consumers to enable them to consume natural gas and shift from other alternative fuels, your Company is also providing Hooking-up connectivity (i.e. connectivity from the trunk natural gas pipeline to CGD network) to more than 100 new CGD Networks in various parts of the country. 8 new LMC and 16 Hook-ups were completed to supply/transport gas during FY 2020-21.

Your Company has also firmed up modality with the newly established Gas Exchange for smooth transportation of gas traded in the Gas Exchange. In addition, your Company is the only gas pipeline company in the country that is successfully operating an online pipeline open-access portal for easier and transparent booking of Common Carrier Capacity in its natural gas pipeline. More than 3000 Capacity Tranche (CT) requests have been processed through the portal during FY 2020-21 while total CT requisitions processed till 31s‘March, 2021 since the launch of the online portal in 2018 is over 5,900.

? Developing the National Gas Grid (NGG)

To develop National Gas Grid, your Company is executing projects to lay around 5,977 km of gas pipelines across India and another 2,047 km pipelines through its JVs (which includes 1656 km by Indradhanush Gas Grid Ltd. and 391 km by Andhra Pradesh Gas Distribution Company Ltd.). Despite the highly challenging times of the Covid-19 pandemic, over 1,000 km of pipelines have been commissioned in FY 2020-21. The status of ongoing projects are as follows:

1. Jagdishpur- Haldia & Bokaro-Dhamra Pipeline (JHBDPL) (2,655 km) and Barauni-Guwahati Pipeline(BGPL) (729 km) section as an integral part of JHBDPL: This pipeline network shall pass through the Eastern part of U.P., Bihar, Jharkhand, Odisha, West Bengal, and Assam. The pipeline network shall have two gas sources, one at Phulpur (Allahabad, U.P.) and the other at Dhamra RLNG Terminal (Odisha). The pipeline from Barauni to Guwahati will connect the North eastern gas grid to National Gas Grid. Recently, PNGRB has granted authorization of Dhamra-Haldia Pipeline (DHPL) (253 km) for capacity expansion of JHBDPL network and increasing size of Dhamra-Paradip spur line. With this, the expansion capacity of the integrated JHBDPL network is now 23 MMSCMD from earlier 16 MMSCMD. All sections of 3,637 km integrated JHBDPL (including BGPL & DHPL) are under various stages of execution.

Dobhi to Durgapur section (DDPL- 450 km) of JHBDPL has been commissioned & dedicated to the Nation by the Honble Prime Minister on 7th February, 2021. This Pipeline section will supply gas to M/s Matix Fertilizer Plant at Durgapur (W.B.) & will revive M/s HURL Sindri, Jharkhand Fertilizer plant.

Pipeline from Phulpur to Dobhi with spurlines to Gorakhpur, Varanasi Patna (750 km) were already commissioned & with the addition of DDPL, cumulative 1100 km of JHBDPL is now commissioned & operational.

2. Kochi-Koottanad-Bangalore-Mangalore Pipeline (KKBMPL) Project Phase-ll (889 km): Kochi to Mangaluru pipeline (KMPL-450 km) passing through Kerala & Karnataka has been commissioned on 23rd November, 2020 & dedicated to the nation by the Honble Prime Minister on 05th January, 2021. Anchor customers of KMPL are Mangalore Chemicals and Fertilizers Limited, ONGC Mangalore Petrochemicals Limited & Mangalore Refinery, and Petrochemicals Limited. All three connectivity has been completed. Work is in progress for Koottanad to Bengalore section (439 km).

3. Vijaipur-Auraiya-Phulpur Pipeline: To de-bottleneck,the supply of the JHBDPL project, a parallel pipeline from Vijaipur to Phulpur via Auraiya

(667 km) is under execution in phases. Phase-1 from Auraiya to Phulpur (315 km) is already commissioned. Further, 174 km section from RT Dibiyapur (Auraiya) to IP2 (Jhansi), of Phase-2 (Vijaipur to Auraiya -352 km) has been commissioned in FY2020-21.

4. For the development of a regional gas pipeline grid in North East India, a Joint Venture Company (JVC) - Indradhanush Gas Grid Ltd. has been formed among 5 Oil &Gas PSUsviz. Indian Oil, ONGC, GAIL, OIL, and NRL as equal equity partners. This 1656 Km Gas grid is connecting eight North-Eastern States - Assam, Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Tripura, and Sikkim. Viability Gap Lunding (VGL)of X 5559 crore (60%) for this project was approved by the cabinet on 8th January, 2020. Board approval was obtained for the Equity contribution of X 222.36 crore in IGGL (including the earlier approved amount of X 100 crore) for implementation of the North East Gas Grid (NEGG) Project.

5. Construction work is in progress for Haridwar Rishikesh Dehradun Pipeline (50 km) & Sultanpur Jhajjar Hisar Pipeline (135 km) to provide natural gas connectivity to cities en-route the pipeline.

6. Srikakulam (AP)-Angul (Odisha) Pipeline (744 km), Dhamra-Haldia Pipeline (253 km), and Mumbai-Nagpur-Jharsuguda Pipeline (MNJPL) (1744 km) are under various stages of execution.

? Petrochemicals

After creating history in 2019, by becoming the first-ever producer of Metallocene grade polymer in India, your Company has successfully produced around 12,800 MT of Metallocene grade polymers during the year, without any assistance of the process licensor (M/s Univation, USA), thereby successful in absorbing the technology. Apart from that, the Pata petrochemical complex has also established sustained production of Hexene-1 based polymer grades in its New LLDPE Swing Unit being the first plant of Univation technology, in India, to produce the slated Polymer grades using different catalysts in a single reactor.

Process of appointment of new consignment stockiest (CS) at 8 Locations has been initiated by your Company to increase the network & sales of petrochemical marketing.

Your Company has adapted SAS Data Analytics Tool to enhance their ability to work faster -stay agile and give the organization a competitive edge over competitors. GAIL Petrochemicals business has developed Three Business Analytics Modules i.e. Margin Optimization, Price Forecasting, and Production Planning for Advanced Data Analytics.

Your Company envisages to enhance the production of Polypropylene grade petrochemicals and is in the process of setting up a 500 KTA Propane dehydrogenation and Polypropylene (PDH-PP) Plant at Usar, Maharashtra. This would be the first plant in India using Propane Dehydrogenation technology for the production of Propylene. For this project, M/s Lummus Technology LLC, USA has been selected as Technology Licensor for the PDH unit & M/s Grace Technologies Inc. has been selected as Technology Licensor for PP Unit. Environment clearance for the PDH-PP Project has been granted by the Ministry of Environment, Forest & Climate Change. Various project-related activities are in full swing.

Your Company is also setting up a 60 KTA Polypropylene (PP) plant at Pata. Environment Clearance for the Project has been granted by the Ministry of Environment, Forest & Climate Change. M/s Grace Technologies Inc, USA has been selected as the technology Licensor for the PP unit & various project activities are in progress at the site.

? Coal Gasification

Your Company is in the process of setting up a coal gasification-based Urea project through a JV- Talcher Fertilizers Limited (TFL), formed with Coal India Limited (CIL), Rashtriya Chemicals and Fertilizers (RCF), each having 31.85% stake, and Fertilizer Corporation of India Limited (FCIL) having 4.45% equity. The project, with an estimated cost of around X 13,277 crore is envisaged for the production of 2,200 MTPD Ammonia and 3,850 MTPD Urea. The coal for the project shall be sourced from the captive mine of North Arkhapal in the Talcher region which has been allotted to TFL by the Ministry of Coal. TFL has already signed the mine allotment agreement with Coal Ministry.Petcoke, which is the second feedstock, shall be sourced from the IOCL Paradip refinery for which TFL has already executed an MoUwith IOCL.

The project has received investment approval from all the JV partners in

August, 2019 and project activities have already commenced with the award of 02 major LSTK tenders of coal gasification and ammonia/urea at a cumulative cost of approx. X 8,000 crore to M/s Wuhuan Engineering Co. Ltd., China. The selection of other vendors is in progress along with other pre-project construction activities at the site. Cabinet Committee on Economic Affairs (CCEA) has approved the exclusive subsidy policy for urea to be produced by TFL on 20th April, 2021.

? Fertilizer

Your Company had taken 14.3% equity stake in Ramagundam Fertilizers and Chemicals Limited (RFCL) incorporated by NFL, EIL, and FCIL for producing 2,200 MTPD Ammonia and 3,850 MTPD Urea. Commercial operation of the unit was achieved on 22nd March, 2021. The supply of gas to RFCL has started.

? Procurement of Powerthrough Open Access

Open Access enables users to buy cheap power from the open market either from power exchange or through bilateral transactions. It offers the consumers competitive tariffs from third-party generators/ trading licensees, rather than being dependent only on Incumbent Discom, and provides opportunities for sustainable cost reduction. Pata has started purchasing power from the exchange and has planned to enter Round The Clock(RTC) Power for 20 MU.

Your Company has finalized a bilateral power purchase arrangement of 20 MW for Pata Petrochemical Complex with a leading power trading company. The power supply has commenced on Round the Clock (RTC) basis from 1st May, 2021, leading to substantial savings over the cost of procurement from the present Discom.

? Start-up Initiative

Your Company has an ongoing Start-up Initiative to make investments in Startups. To give a boost to this initiative, a corpus of X 100 crore was allocated.

Focused investments have been made in the Start-Ups operating in Renewable and Alternate Energy sources mainly consist of Compressed Bio Gas (CBG) and bio products. Your Company has signed Investment Agreements with 05 Start-Ups during the year with a commitment of X 15.30 crore. Till March, 2021, 29 Start-Ups are supported with a total commitment of X 61.20 crore, and X 51.08 crore has been already disbursed.

? Advocacy Initiatives

GAIL has strengthened its core businesses across the natural gas value chain. Natural gas is the cleanest fossil fuel which, when burned, releases 50% less C02 than coal and 20-30% less than oil. By virtue of the inherent characteristics of natural gas being a cleaner alternative to other polluting fuels, GAIL has been consistently working on accelerating and optimizing the effective and economic use of natural gas and its fractions for the benefit of the national economy.

GAIL recognizes that natural gas can play the role of bridge fuel substituting the dirty fuels ensuring sustainable energy security without impacting the economic growth of India. Natural gas can further contribute to reduce the rising urban pollution including vehicular pollution in Indian cities and help the end-users to reduce carbon emissionsin their daily lives.

GAIL had undertaken a number of studies on areas of gas advocacy. More recently, GAIL has been writing to the Power sector to include natural gas as a preferred option for blending with Renewable power to meet grid flexibility requirements. GAIL has provided elaborate inputs to the Ministry of Power on the Proposed Amendments in the Electricity Act, 2003 and Draft National Electricity Policy to consider due merits of natural gas to enhance gas off-take in the power sector.

Over the years, GAIL has been a part of industry events organized to propagate gas as better environmental fuel and endorse the market opportunities available for gas in India, support from international bodies for domestic gas market development. GAIL is interacting with various Indian industry associations including FIPI, Cll, FICCI, etc. on economicand sectorial reforms required by the Indian gas sector post COVID-19 and the need for policy support for clean and sustainable energy. GAIL has been consistently engaged with global associations like International Gas Union on Sustainable energy policy and reforms required in the gas sector.

GAIL is part of various prestigious industry bodies and associations which provide a platform to discuss industry issues and convey the industry voices to the government in a collective way to make better inclusive policies and bring reforms. This forms a significant basis for the advancement of the public good. GAIL also regularly interacts with PNGRB, the regulatory body to update them on the current status and industry viewpoint. In FY 2020-21, GAIL was part of the following associations-

• International Group of Liquefied Natural Gas Importers (GIIGNL)

• Federation of Indian Petroleum Industry (FIPI)

• Standing Conference of Public Enterprises (SCOPE)

• Federation of Indian Chambers of Commerce & Industry (FICCI)

• Global Reporting Initiative (GRI)

• Chemicals & Petrochemicals ManufacturersAssociation, CPMA

• TERI- Business Council for Sustainable Development (TERI-BCSD)

In coordination with the vision of the Government of India to promote the natural gas-based economy, your Company is playing an important role in transitioning from polluting fossil fuel to cleaner natural gas, which is undertaken through the #HawaBadlo (change the air) campaign. It is an independent peoples movement with the aim to galvanize people into action and to adopt natural gas as the fuel of choice.

? COVID-19 Response

To maintain employee wellbeing without disrupting customers operations became the top priority for business continuity. The unforeseen occurrence of the Covid-19 pandemic led to the swift and innovative adaptation of various HR practices according to the need of the hour such that the employees and organization both acclimatize to the new norms of workspace and deliverables with ease. Below are some of the measures your Company rolled out:

• To support GAIL Covid patients, GAIL tiedup with Apollo Group of Hospitals for the Stay I @ Home services under Project Kavach.

• A dedicated Task Force has been formed at Corporate Office to coordinate all the matters relating to the management of the COVID- 19 pandemic, across GAIL.

• A weekly roster for executives as well as non-executives was formulated by the HOD to call employees to attend office on a rotation basis depending on their nature of work & business exigency.

• Advisories were issued to employees for (i) Educating them about the Coronavirus outbreak; (ii) Sharing the foreign travel history of family members/relatives with concerned OICs/HR-Incharges; and (iii) Restricting their movement to other work centers in view of conditions w.r.t. coronavirus (COVID-19).

• Employees were advised to minimize their domestic as well as Foreign Travel. Also, employees traveling abroad were asked to observe a quarantine for 14 days and obtain medical clearance before joining back the office.

• Also, Official tours were restricted to the bare minimum unless absolutely essential for the business operations.

• Change in Working hours to create staggered timing for employees to minimize interaction and crowding in office space.

• As per the extant medical scheme of GAIL, employees may claim towards consultation, tests, medicine, and hospitalization as per actuals. The said medical benefits were utilized by employees for seeking diagnosis and treatment for COVID-19 infection.

• Reimbursement for testing charges or purchase of essential items relating to COVID-19.

4. Risks, Challenges and Mitigation.

Regulatory Framework

The Petroleum & Natural Gas Regulatory Board (PNGRB) was established by the Government of India on 1st October, 2007 for carrying out the various provisions of the PNGRB Act, 2006. The PNGRB Act provides a legal framework for regulating the refining, processing, storage, transportation, distribution, marketing, and sale of petroleum, petroleum products, and natural gas, but excluding the activities of production of crude oil and natural gas, to protect the interests of consumers and entities engaged in these activities. The main functions of PNGRB include inter-alia,

(a) granting authorizations for laying, building, operating, or expanding new pipelines as common carriers or contract carriers and for laying, building, operating, or expanding new city gas distribution networks (CGD networks),

(b) declaring existing natural gas pipelines, petroleum & petroleum product pipelines and CGD networks as common carriers or contract carriers,

(c) regulating access to common carriers or contract carriers

(d) regulating transportation rates of common carriers or contract carriers and

(e) to perform such other functions as may be entrusted to it by the Central Government to carry out the provisions of this Act.

During the financial year 2020-21, PNGRB has notified the Gas Exchange Regulations and various other Amendments to Regulations in respect of Natural Gas Pipelines, CGD networks, and Petroleum Product Pipelines. Your Company has also been granted authorization for developing the Mumbai-Nagpur-Jharsuguda Natural Gas Pipeline.

PNGRB has also issued various orders and decisions in relevant matters. The details of the said regulations, amendments, authorizations, orders, and decisions are available on the official website of PNGRB ( and have varying implications on business. These regulations, amendments, authorizations, orders, decisions of PNGRB are appealable before the PNGRB Bench, Appellate Tribunal, and Courts and accordingly, some of them pertaining to your Company are also under various stages of appeals. The timing and content of any final changes in regulations made by PNGRB is not in your Companys control. However, regular interactions with PNGRB on sectoral issues, participation in public consultation exercises conducted by the Regulatory Board, and making logical submissions to the Regulator in writing helps your Company to anticipate or to minimize risks associated with any sudden or unforeseen changes in regulations.

Natural Gas Prices

Your Company currently markets natural gas purchased from domestic and international sources.

The Government of India, vide its order dated 25th October, 2014, had notified the New Domestic Natural Gas Pricing Guidelines, 2014. As per the notification w.e.f. 1st November, 2014, the gas price is determined bi-annually as per a specific formula, which in essence, is a twelve-month average price (minus transportation and treatment charges) of natural gas traded in the major hubs worldwide. The New Domestic Natural Gas Pricing Guidelines, 2014 are applied uniformly to all nominated fields to ONGC & OIL, New Exploration Licensing Policy (NELP) blocks, and Pre- NELP blocks that require Government Approval as per PSC, whereas the same are not applicable in case of small and isolated fields of nominated blocks that are covered under the pricing guidelines of 2013.

Further, the Government of India, vide its order dated 21stMarch, 2016, has notified guidelines on marketing including pricing freedom for the gas produced from discoveries in deep water, ultra-deepwater, and high pressure-high temperature areas. As per the guidelines, the Government has decided to ensure freedom of pricing for gas produced in these fields up to a ceiling price level calculated by taking a lower of the twelve-month average of landed price of imported fuel oil, substitute fuels, and LNG.

Your Company earns the marketing margin on the sale of domestic natural gas. Further, the Government of India, in its notification dated 24th December, 2015, applicable from 18th November, 2015, has put a ceiling on the marketing margin for the supply of domestic gas to fertilizer (Urea) and LPG producers toRs. 200 per 1,000 SCM.

In addition to the above, your Company purchases imported natural gas mainly from PLL at Dahej, Gujarat. The purchase and selling prices of such Natural Gas (RLNG) are based on international crude price indices. Further, your Company also directly imports LNG through carriers from various suppliers worldwide and gets it re-gasified either at PLLs regasification terminal at Dahej, Gujarat and Kochi, Kerala or at KLL regasification terminal at Dabhol, Maharashtra or at Shell Energy India Pvt Ltd (Formerly Hazira LNG Private Limited). Such LNG import is either under a medium-term agreement ranging up to three years or under spot cargo purchases. Under medium-term import, the selling price is largely based on the purchase price. However, under spot cargo imports, the selling price is dependent upon the demand and supply scenario and customer affordability. Import of LNG spot cargo is based on a thorough assessment of the affordability & requirement of the end consumers and the availability of LNG in the international markets.

LNG Portfolio

Your Company and its subsidiaries / joint ventures/affiliates till date have executed two long-term LNG contracts in the USA and one long-term LNG contract from Singapore based company to meet the growing LNG demand and enhance capacity utilization of pipeline infrastructure:

• LNG Sale and Purchase Agreement with Sabine Pass Liquefaction LLC for sourcing of 3.50 MMTPA of LNG from Sabine Pass Liquefaction terminal, USA with supplies commenced from Lebruary 2018.

• Terminal service agreement for booking of 2.30 MMTPA liquefaction capacity in the Cove Point LNG liquefaction terminal, USA with supplies commenced from April 2018 and Gas Sale and Purchase Agreement with WGL Midstream for the commensurate gas quantities.

• LNG Sale and Purchase Agreement with GMTS Singapore (Gazprom) for sourcing up to 2.85 MMTPA, i.e. around 10.26 MMSCMD of LNG (primarily from Yamal Liquefaction terminal) with supplies commenced from 2018-19.

The aforesaid LNG contracts were entered by your Company with the primary objective of meeting the demand of a growing Indian economy and ensure the energy security of the nation. During the finalization of the Sale Purchase Agreement (SPA) of the above, the power sector was envisaged as the key buyer. However, power produced from LNG doesnt come under the Merit Order Dispatch due to the availability of cheaper alternative power including renewables.

To mitigate the above risks, your Company is exploring opportunities to market LNG volumes in the international markets either directly and/or through its Singapore-based subsidiary, GGSPL.

In parallel, your Company has also optimized LNG sourced from the US through destination swap transactions to optimize the cost of shipping LNG to the Indian ports resulting inefficient management of the portfolio.

Since LY 2016-17, your Company undertook hedging transactions for a part of LNG volume used for your Companys internal consumption and sale to domestic and international customers, to mitigate the price risk and fix the margins. Such mitigating measures of commodity hedging are underway based on the regular assessment of managing cash flows from trading transactions.

Weighted Average/Pooled Tariff for Natural Gas Pipelines

PNGRB has come out with regulations on a dual tariff methodology. Under these regulations, certain pipelines have been combined as a gas grid wherein a single Weighted Average Tariff shall be determined by combining tariffs of individual pipelines, including bid-out pipelines. While users shall pay the Weighted Average Tariff, pipelines shall be entitled to earn the individual pipeline tariff, with a revenue-sharing mechanism among the various pipeline entities.

These regulations have not yet come into legal force and your Company has highlighted certain commercial, legal, implementation, and taxation issues to the regulator and MoP&NG. Your Company is working with MoP&NG, PNGRB, and all concerned stakeholders to ensure that the final regulations with the necessary changes balance the interest of consumers and pipeline entities and facilitates equitable market growth.

Power including Renewables

India is increasing its renewable energy capacity at a brisk pace with an aim to reduce carbon emissions. With an increase in renewable energy portfolio, the stability of the grid is a major concern for the industry. Natural gas-based power plants can act as a balance to provide grid stability as gas plants can respond more quickly to load changes than coal- based plants and can further help in the reduction of emissions, being cleaner than coal. Plant Load Lactor (PLL) for conventional fuel plants is on a decline and natural gas-based power plants continue to run with structural issues requiring resolution through policy intervention. Your Company has been working on a case-to-case basis and in close coordination with MoP&NG and the Ministry of Power to increase/revive off-take of natural gas by the power sector.

Polymer, LPG, and other LHC

Your Company is also marketing petrochemicals, LPG, and other LHC products. The prices of these products are influenced and determined by global and domestic factors influencing demand and supply. Your Company has developed a range of market acceptable products to ensure steady consumption of the petrochemical products and has optimized its portfolio by having production facilities at Pata (UP) and Assam. LPG marketing is decided in close coordination with the PSU Oil Marketing Companies. Continuous measures are taken towards managing margins across your Companys range of products.

Foreign Exchange Fluctuation Risk

Your Company, largely imports capital goods and stores & spares for various new projects, and operation & maintenance. It has also taken loans in foreign currency for meeting the capex requirement and making overseas investments. The majority of the loan portfolio is hedged byway of derivative products (currency swap and interest rate swap) and through the natural hedge from the foreign currency inflows. Your Company has an approved Foreign Currency & Interest Rate Risk Management Policy to manage foreign exchange exposure which has been reviewed during the year. The short-term and long-term exposure of the foreign currency of your Company is being monitored as per the approved policy.

Commodity Price Risk

Your Company has a Natural Gas Price Risk Management Policy to manage the price risk of natural gas. The price risk of natural gas used for internal consumption and as well as for selling to various downstream customers is being monitored as per the approved Policy. As and when the opportunity arises in the market, your Company has undertaken various derivative transactions to hedge the price risk arising out of fluctuation in the prices of imported natural gas.

Natural or Man-made Calamity Risk

Various risks are associated with gas transportation and distribution like blowout of pipelines, earthquake, tsunami, terrorist activities, etc. These risks are being mitigated right from the designing stage of these projects. However, such natural or man-made risks are emergent events and cannot be totally eliminated. If such an event occurs, it will incur significant liabilities for the Company.

Risk Management Framework

Your Company has a Risk Management Policy available at the website https://www.gailonline.eom/pdf/others/RiskManagementPolicyRev4.0. pdf and procedure to protect & add value to the organization & its stakeholders, with the objective to establish a risk intelligence framework for objectively managing expected risk exposures by the decision-makers in compliance to prevailing statutory regulations so as to assure demonstrable achievement of objectives and improvement of financial stability of your Company.

In the changing business scenario and expansion of your Company into various other activities, business risks and their mitigation plans are assessed on regular basis. Top Corporate Level Key Risks are as under:

1. Market Risk of LNG, linked with HH, in case of adverse movement of crude oil price, continuously suppressed spot LNG prices and expected to increase in domesticgasvolumes.

2. Risk of reduction in the margin of Petrochemical due to lower industry demand, lower sale price & high input cost.

3. Risk of Underutilization of pipeline due to sluggish growth in gas energy consumption.

4. Risk in reduction in capacity utilization of VSPL and less revenue generation due to laying down a pipeline by HPCL {Hassan (Karnataka)to Cherlapally (Telangana) LPG Pipeline Project).

5. GAILs Restructuring Risk.

6. Risk of delay in Project Execution due to delay in obtaining Right of Use (RoU)/Land.

7. Inadequate controls to protect the systems against malicious attacks may result in loss of data and disruption of operations.

8. Major LPG Leakage in RT/ SV Stations/ LPG Pipeline.

9. Risk of third-party damage & encroachment in pipelines.

10. Riskofstatutory/regulatory non-compliance.

11. Risk of unfavorable regulatory changes.

12. (a) The impact on GAIL Operational & Business due to pandemic/ epidemic/disaster situation.

(b) Risk arising out of the spread of Covid-19 in project offices and construction sites.

As covered in the preceding paras, identified risks have been deeply examined and reasonable mitigating measures/safeguards have been initiated. Your Company endeavors to pro-actively initiate measures towards maintaining financially stable business operations.

5. Investor Relations and Engagement

To develop a long-term relationship of trust & confidence with stakeholders, GAIL has a dedicated Investors Relations cell. As a responsible organization, GAIL strives to meet the aspirations of stakeholders including investors and analysts, through fair and timely disclosure of information, and also to obtain their confidence and esteem through bilateral communication. To pursue these objectives at all times, GAIL regularly discloses necessary information and conducts various investor relations activities. Along with the dedication to create value for stakeholders, your Company is also committed to promote transparency & excellence in Corporate Governance standards. The link to access the information related to Investors is - lnvestorsZone.html and lnformation.html

During FY 2020-21, your Company organized "Analysts Meet-2020"

through Virtual mode from Corporate Office, New Delhi in wake of Covid-19, organized 3 conference calls to discuss quarterly financial results & participated in 9 investor conferences, and conducted multiple one on one meetings for maintaining engagement with the investor community. Top Management/Senior Executives of the Company participated in these meetings/calls/ conferences. The link of Analysts Presentation and their transcripts are provided at the Companys website-

All such initiatives by your Company towards disseminating information to investors & analysts at the right time and from the right people has been recognized & appreciated by the Investor and Analyst Community from time to time. In the recent past, your Company has also assumed an active role on the ground in sensitizing its employees about the handling of the Unpublished Price Sensitive Information (UPSI).

Your Company won Investor Relations Award 2020 under the ESG disclosures category organized by IR Society in collaboration with BSE & KPMG.

6. Capability Development ? Human Capital

As on 31 "March, 2021, your Company had 4705 (including Whole-time Directors and CVO) employees on its roll. Your Company understands that human capital is essential to strategic performance. Bringing human capital into the mainstream of business, decision-making means an efficient allocation of human resources. This, in turn, contributes towards higher skill levels, increased productivity, and greater innovation.

Your Company has dedicated resources to develop its human capital through training and mentoring. People are our most precious resource and the effective investment and management of them are critical to the continued success of GAIL.

Value Added per Employee reflects its emphasis to make the optimal & productive use of the available resources and business opportunities. For the year under review, Value Added per Employee wasRs. 215.07 lakh.

Your Company is also imparting One-year Apprentice training to ITI / Diploma/ Degree Graduates equivalent to 10 % of total manpower every year, as a part of the skill development initiatives, at various work centers.

Your Company is committed to ensure that families of deceased employees do not feel left behind in their endeavor to lead a life with dignity while fulfilling its aspirations for a better future with access to quality education for their wards. With this spirit, relief measures with respect to housing and medical facilities and support towards the education of the dependent children are being extended to the families of all the deceased employees.

? Leadership Development Program

Starting from HVJ Project, your Company has developed a diverse portfolio across the Natural Gas Value Chain and has become an integrated entity. Taking cognizance of the challenges of coming years, GAIL has defined its business strategy till 2030 to continue the unstinted growth pattern. These new projects will need to be spearheaded by leaders who have the fortitude to act entrepreneurially by actively looking and advocating for new opportunities for the Company. Your Company believes that capacity building and enhancing the competency of employees is the key to the successful execution of its strategic plans. Asa part of preparedness for coming challenges, your Company has put an Integrated Leadership Development Framework and Succession Planning Framework for facilitating leadership development and career planning.

The Development strategy comprises multi-pronged Talent Development Interventionswhich includes:

• 360 Degree Feedback Exercise

• Senior Management Development Centre (SMDC) Exercise

• Focused development programmes

360 Degree Feedback is aimed to provide an effective feedback to the concerned executive(s) via his/her peers, subordinates, and seniors. Senior Management Development Centre (SMDC) exercise has been undertaken for senior executives in E-5 Grade & above. SMDC is an aid to ensure better and inspiring leadership in the organization. Post SMDC, the executives are provided with books, e-learning modules, and competency- specific training in premier B-schools. Customized Management Development Programs on Leadership have also been conducted for E-5 and above Women executives. Additionally, a structured Management Development Program is also imparted to all newly promoted E7 and E8 Executives.

Your Company is grooming the senior-level executives of GAIL at the level of Executive Director and Chief General Manager for the Board Position through capability building programs like Master Class for Directors and Board Room Effectiveness, wherein Directors of GAIL Board also conducted sessions. In line with the global business environment and Indias future growth trajectory, Capability building programs on the emerging areas such as Renewable and Alternate energy (Solar and Wind Energy), Water Value Chain, Specialty Chemicals Segment and other upcoming areas such as Mobility Future, Industry 4.0 and Automation are being conducted regularly for meeting the objectives of GAILs Strategy- 2030.

? Capability Development

A dedicated training center, GAIL Training Institute (GTI) provides systematic and structured training programs for capability building across all levels within the organization on a continuous basis.A Customized Program on Master Class for Directors was organized through M/s Institute of Directors, New Delhi by GTI for Senior Management Executives (E8 and E9 grades). The program was conducted on virtual mode. The Programs objective was to develop senior management executives of GAIL for board-level positions. The program covered various modules on Corporate Governance, the Companies Act, Internal Audit, Sustainability, CSR, etc.

Your Company is also playing a proactive role to support the National Skill Development Mission through active participation in the activities of Hydrocarbon Sector Skill Council (HSSC), the establishment of Skill Development Institute (SDI) at Raebareli, and providing Training and Recognition of Prior Learning (RPL) under Pradhan Mantri Urja Ganga Pipeline and City Gas Distribution Projects. 173 students have already been trained in SDI Raebareli, and 669 candidates have been trained in RPL Skill Development Program. Additionally, 430 candidates in GAIL Institute of Skills, Guna, M.P and 88 candidates in GAIL Institute of Skills, Nagaram, A.P have been trained during FY2020-21.

? Industrial Relations

The Industrial/Employee relations climate remained congenial and constructive. There were no Man Days or Man Hours lost on account of any sort of industrial conflict during the past three years in your Company. Discussions with employee collectives are held through Monthly/ Bi-Monthly/Quarterly Meetings, both at Work Centre and Corporate levels.

With the objective to keep pace with the changing business requirements and employees aspirations, and to maintain a sustainable competitive advantage, review of HR strategy and policies is undertaken on a continuous basis to align with the Organizational Strategy.

7. Health, Safety, and Environment Management

? Corporate HSE Policy

The HSE Best Practices in your Company are primarily driven through a Corporate Health, Safety & Environment (HSE) Policy which is a statement of commitment of the management of your Company. Your Company endeavors to generate value through Sustainable Development by placing commitment to Occupational Health, Safety, and Environment of Plants, Pipelines including CGDs and Personnel. Uniform well-designed HSE Management System is in place to support its commitment. Being a leader in Safety, your Company focuses on Occupational Health and Environment protection by adopting the latest Technology and Digitization. Employees and contract workers are encouraged to adopt safe working habits and behavior to create positive HSE culture within the organization and are empowered to notify and stop any unsafe work/act, as may so arise.

? Safety Performance

Safety Performance is measured in your Company through the "HSE Score System", which is evaluated based on the key elements of HSE Management System. Your Company achieved an "HSE Score" of 96.98% in the FY 2020-21. Your Company has achieved NIL major reportable incidents, in accordance with incident categorization of OISD & PNGRB.

10th of every month is observed as "Safety Day" at each Operations & Maintenance (O&M) site in your Company. On this day, the Officer InCharge of all installations (OICs) reviews all the safety related aspects of their installations under their jurisdiction. The exceptions report on Monthly Safety Day Observations is reviewed at management level.

? Safety Training & Awareness

Training and awareness is one of the key element of HSE Management System of your Company to understand the hazards and risks associated with workplace and the appropriate mitigation measures to be taken which lead to loss control. Your Company, having excellent training institute at Noida and Jaipur, imparts regular Operational and Safety Training to employees. Internal Operational and Safety Training System is also in place at O&M Installationswhere structured HSE trainings including Behavior Based Safety etc. are being imparted to employees and contract workers to upgrade their skills, knowledge and competence, to perform their HSE functions effectively and develop an effective safety culture.

To further strengthen and reinforce positive behavior, your Company has launched Behaviour Based Safety (BBS) Advance focusing on Safety Leadership at all O&M Installations. Implementation of BBS at all sites has facilitated employees to understand behavioral factors contributing to the cause of incidents, near misses and correct them through the behavioral change of targeted group of employees. Your Company has organized Webinars on Emotional Intelligence, Decision Making in Challenging Times, Effective delegation in Difficult Times etc. in Safety Processes during the year as part of behavioral safety approaches. Handholding visits were organized at sites by engaged consultants to penetrate BBS awareness among the workforce.

Digital Initiative i.e Leveraging IT in Safety was initiated by your Company in the year 2016-17 through implementation of Environment, Health & Safety Management (EHSM) in SAP. Continuous efforts are being made by your Company to ensure its usage by all segments of operations for effective implementation of HSE Management System.

? Safety Audits

Safety Audits are regularly conducted to ensure the implementation of the HSE Management System Guidelines and Emergency Preparedness. These audits are performed by PNGRB accredited Third Party Inspection Agencies and Oil Industry Safety Directorate (OISD). Recommendations given during the various audits are being complied within a time bound manner.

In addition, your Company has conducted Proactive and Internal Audits for all O&M Installations to ensure conformity w.r.t. provisions as stipulated in PESO, OISD Standards, PNGRB Regulations etc. and to identify improvement areas to further enhance the safety at the site.

? Occupational Health

Your Company has implemented occupational hygiene measures and medical surveillance programs to monitor and control the occupational health of its employees, based on defined guidelines. All employees at various work centers undertake periodic medical examination as per these guidelines. The Corporate Occupational Health Committee meets every quarter to monitor the occupational health program in your Company and the effectiveness is evaluated based on the outcome of the Health Audits undertaken through in-house multi-disciplinary teams to ensure effective implementation of Occupational Health Management in accordance with Occupational Health Guidelines.

Taking a proactive approach towards reinforcing behavior based health at workplace, your Company has organized a number of E-Webinar for GAIL Employees on BBS and COVID -19 Related Behaviors for the members of Work-center COVIDTask Force/ Corporate COVIDTask Force teams, Middle Management, Managers and Supervisors.

? HSE Initiativeand Achievements

Your Company has taken various initiatives to further improve the HSE Management System. Some of the important HSE initiatives and achievements are:

• Post IOCL Jaipur Terminal fire in the year 2010, M. B. Lai Committee investigating the fire emergency at IOCL Jaipur Terminal had recommended for setting up of Emergency Response Centres (ERC). Your Company is contemplating to setup the Pilot ERC at Dibiyapur. Rigorous efforts have been put by OMCs for engagement of consultant for the development of ERCs. Accordingly, TATA Consulting Engineers Ltd (TCE) has been appointed as PMC Services for Design, Development and Setting up of Emergency Response Center (ERC) at GAIL, Dibiyapur (Dist.-Auraiya).

• GAILs O&M and HSE Executives participated in various Sub Committee Meetings of PNGRB Regulations on Emergency Response and Disaster Management Plan, Retail Outlet Dispensing, Integrity Management System for Natural Gas Pipelines & City Gas Distribution Networks, Gas Processing Plants and Refineries etc. as part of development/amendment of Technical Codes & Standards.

• External Safety Audit of GAIL Installations carried out by OISD are as follows:

i. Vijaipur - Dadri NG Pipeline

ii. Hazira-Vijaipur-Jagdishpur, Dahej-Vijaipur I & II NG Pipelines (Hazira-Vaghodia)

iii. Jhabua-Vijaipur-Auraiya Section of HVJ NG Pipeline and Jhabua - Vijaipur Section of DVPL(I/II) Natural Gas Pipeline

• A comprehensive review of safety preparedness and adherence to safety practices carried out prior to commencement of Operations after COVID lock down of Gas Processing Plants and Pipelines, in accordance with guideline issued by Statutory Authorities.

• GAIL Gas Processing Plant, Vaghodia received the approval from Director Industrial Safety & Health (DISH), Govt, of Gujarat for authorization to give training on Health & Safety in line with the Section 111 (A)of the Factories Act, 1948.

• GAIL Vaghodia received appreciation letter from District Administration for taking lead during handling of Major Disaster at M/s. JayAgro Pvt. Ltd. in GIDC Vaghodia on 20th June, 2020.

8. Innovation, Research and Development

As a bridging fuel, Natural gas is playing a vital role in achieving sustainable economic growth. Natural gas demand in India is growing at a steady phase owing to its larger availability at reasonable prices, its attribute of being a cleaner fuel, and due to enhanced supply and distribution infrastructure over the years. Considering its social, economic and environmental impact, the Government of India has already set a vision to make India a gas-based economy with the aim to increase the share of gas in the energy mix from the current 6 per cent to 1 5 per cent in 2030. Innovation driven by Research and development in the energy sector is an essential pathway that guarantee that these energy resources are employed in a safe, efficient and cost-effective manner to meet this ambitious target.

In this direction, your Company is carrying out various collaborative R&D projects in association with reputed research institutes in key focus areas of Pipeline Asset Monitoring and Integrity Management; Natural gas Utilization/Value addition, C02 and Waste Valorisation(s) etc. Your Company consistently earmarks adequate R&D budget for carrying out these collaborative research and developmental activities involving Technology up-gradation and Modernization works, at various GAILs facilities. Some of the Major collaborative research initiatives under taken during this year are captured below.

Research works under "Pipeline Asset Monitoring and Integrity Management" are emphasised on enhancing the reliability, safety, and operational efficiency of natural gas infrastructure. Under this initiative, your organisation in collaboration with IIT-Kanpur is developing a Prototype of "Adoptive Intelligent Pipe Health Monitoring Robot" for Gas pipeline networks. Currently, optimization and validation of three different sensors and its performance, long range communication development, integration of speed control system and development of Machine Learning based defect classification are being carried out with the prototype. Further, for aerial monitoring of pipeline ROU (Right of Use) for early identification and prevention of encroachments, your Company is also developing a "Low Altitude Long Endurance (LALE) Unmanned Aerial System (UAS) for Surveillance, Reconnaissance and Asset Monitoring (SRAM)" in association with IIT-Kanpur. The salient features of this UAS include vertical take-off and landing, autopilot, beyond visual range of flight, electrical propulsion, gas leak detection, low weight (11kg) etc. Short-range trial run has been successfully completed with the prototype mounted with HD camera(s) and presently long-range flight tests along with high-resolution gas sensing cameras and HD video cameras are in progress.

In corrosion mitigation research works, the Quantification of AC induced corrosion rate in buried Pipeline is being studied at IIT-Madras through physical measurement and process model. Moreover, your Company has also pursued a project with CSIR-CECRI, for Survey and characterization of Microbial Communities in Gas Pipelines, Heat Exchanger and Fire Protection System for mitigation of Microbial Induced Corrosion (MIC).

Under the thrust areas of "Natural Gas utilization/ Value addition", your Company is carrying out the collaborative research works involving development of a Membrane Reformer for the production of fuel cell grade ultra-pure hydrogen through natural gas reforming with IIT-BHU. In addition, a novel heterogeneous catalyst is being developed with CSIR-IIP, Dehradun for direct conversion of methane to olefin through oxidative coupling. GAIL is also pursuing research work in association with IIT - Bombay, to investigate the combustion and emission phenomenon of dual fuel (CNG & Diesel) Compression Ignition engine for improving the fuel efficiency and minimization of NOx, Particulate Matter (PM)and C02 emissions.

Besides, the above initiatives, research efforts are also directed towards "Waste valorisation" aspects with a focus on zero waste discharge. In this direction, your Company is pursuing research project on "Waste Water Purification and Recycle using as Hydrate Process" with IIT- Madras. It is expected that development of optimized hydrate-based process which is supposed to be more energy efficient as compared to RO-based waste water purification.

In addition, under the clean energy initiative, your Company is exploring various potential alternatives for energy generation. One option is the use of bio-organic waste feedstock for the production of biogas through anaerobic digestion. Food waste, for instance, due to its relatively high starch and protein contents and high biodegradable nature, is a suitable organic source for bio-methanation. In this direction, your Company, in collaboration with CSIR-IICT, Hyderabad, is developing a high rate bio - methanation process for the generation of methane enriched biogas (more than 90%) from food waste. The main emphasis of the project is on development of an anaerobic digester system for generation of enriched Methane.

Moreover, your Company has continued the highly successful Central Suggestion Scheme for identifying and nurturing home-grown innovative and novel business ideas for its implementation in our operational activities.

Your Company has joined hands with other Oil & Gas PSUs to create a Centre of Excellence in Oil, Gas and Energy (CoE-OGE) at IIT-Bombay to carry out Industry relevant R&D works in the area Gas Hydrates, Pipeline management, Wealth from Agricultural residue, Water and wastewater management, etc. in the seed and mission mode.

9. Total Quality Management

Your Company is committed to enhance customer satisfaction and standardizing business processes through the implementation of a Quality Management System. Your Company endeavours for continual and sustainable improvement through the implementation of effective quality practices, innovation and standardization. Quality Management System and Energy Management System have been implemented along various Pipelines & Process units also at Corporate and Marketing offices. Your Company undertakes Quality Circle Projects with engagement of its employees resulting in high employee morale and increased productivity.

Voice of customers is being captured through Customer Value Management and Customer Satisfaction Index surveys.

Your Company is proud to share that Customer Satisfaction Index for FY 2020-21 is 94%.

10. Sustainability Initiatives

This year marks the release of the 11,h Sustainability Report of GAIL, which provides all the information regarding the Sustainability initiatives and actions performed by your Company towards leading Sustainable development. The relevant actions taken to contribute to the Governments vision and targets under the INDC (Indias Nationally Determined Commitments) and the agendas of the Sustainable development goals (SDGs) of the UN are addressed in the Report. The report follows the Global Reporting Initiative (GRI) standard of Reporting and attempts to deliver transparent and accurate data about your Company. The report also undergoes rigorous GRI Content Index Check Service by GRI, Netherland. The report gets assured by External Assurance Provider and report conforms with Sustainability Assurance Standards AA1000AS. The report being a Type 2 Moderate level assured report, builds accountability for releasing credible data.

This year GAIL has embarked upon reaching a new benchmark in taking initiatives that fulfill the interest of the stakeholders as well as target key issues of the world in the area of Sustainability. Your Company has started on a path to work with the best knowledge and expertise holders, by signing an MoU (Memorandum of Understanding) with the Principal Scientific Adviser (PSA) to the Government of India. This collaboration will set stones to the journey ahead to establish relevant impactful projects on topics which will include setting up Afforestation projects following the Miyawaki technique to enhance the carbon sink, preserve biodiversity, mainstream nature-based solutions to deal with issues of pollution and ultimately address the fight of climate change. The importance of decarbonisation has been felt across the globe and your Company. Recognizing the urgency of tackling climate change problem and the need to work collaboratively in a scientific and practical manner, other sustainable development projects under the guidance of the PSA will also be implemented. The sharing of ideas and knowledge will be a continuousand fruitful collaboration, extending to exploring newwaysof Waste Management at GAIL, and mainstreaming more SDGs with the business actions and decisions.

The Cll GreenCo rating, identified as one of the top 50 best practices to make products, services and processes greener by the UNIDO (United Nations Industrial Development Organisation) awarded the Vaghodia Site of GAIL with the Silver rating for its green practices. Your Company is dedicated to extending these awards across several other sites by working together, identifying hurdles and sharing solutions to make most processes, products and services of GAIL green from source to sink. Your Company was also bestowed with the leaders award at the "Frost and Sullivan and TERIs Sustainability Awards" held in 2020.

The transition in the energy sector towards renewable sources of energy is one the main pathways recognised to achieve emission reduction. The Government of India has set targets to reach 175 GW of Renewable capacity for India and extend it to 450 GW further.

The interests of our stakeholders are the strength of our attempt to build a transparent and efficient framework for Sustainable actions, keeping this in view, the materiality assessment performed for FY 2021-22 will give us insight to prioritizing relevant topics for our stakeholders and fora resilient business. This gets reflected through GAILs continuous inclusion in the FTSE4Good Index series over the years as a part of London Stock Exchange sustainability index

11. Environment Protection and Conservation/ Renewable Energy Developments

With ISO 9001:2015, ISO 14001:2015 and OHSAS 18001:2007 certifications, your Company is committed towards producing quality products while creating, maintaining and ensuring a safe and clean environment. Being a flagship energy company, your Company is committed to play a key role in building sustainable energy future for the country. As Indias leading Maharatna public sector enterprise, we are consistently enhancing our investments to help meet the long-term energy requirements of the nation while ensuring sustainability on economic, environmental and social front.

Your Company by virtue of its business in Natural Gas plays an instrumental role in transitioning towards a low-carbon economy. Operations of your Company have significantly contributed in reducing the flaring of gas from exploration and production activities and the development of pipeline networks, which has led to the supply of gas as fuel and feedstock to power, fertilizer, CGD and other industries. Further, the Liquid hydrocarbon business, the City Gas Distribution in many important cities of the country have been instrumental in improving the air quality and consequent reduction in pollution. Considering the life cycle impact on environment and health, Natural Gas is much more benign fossil fuel when compared to coal and liquid fuel. Unlike coal, natural gas does not require huge amount of water for its purification and it does not contaminate the ground water. Further, it is either transported through the pipeline as gas or closed cryogenic vessel as liquid and therefore does not contaminate air during transportation. When used in power generation or as a transport fuel, Natural Gas results in negligible emissions of S02, NOx, Hg and particulates compared with other fuels. The increased use of natural gas offers a significant contribution to improved local air quality and public health.

Your Companys polymer products are environment-friendly and fully recyclable. Your Company provides a wide choice of grades with consistent and reliable quality to its customers. Its manufacturing processes and quality systems ensure that the products conform to the technical specifications, backed by high quality services to provide complete solution to the customers.

Your Company monitors environmental parameters to assess the environmental quality on regular basis through an in-house team and as well as by independent third-party agencies. Updated and sophisticated instruments are used for monitoring environmental quality. The monitoring is done regularly and reports are sent to the respective State Pollution Control Boards. An Audit is also conducted for the process plants and pipelines to ensure the proper functioning of the environment management systems.

Our plants consistently operate under the national stipulated norms. Since your Company uses natural gas for its feedstock as well as fuel requirements, the level of pollutants emitted Is consistently much below the national stipulated norms. Adequate stack height has been provided for effective dispersion of pollutants. Low NOx burners are used in all the furnaces. Loading facilities are provided with vapor-return circuits. Your Companys petrochemical complex at Pata and Vijaipur have the facility of monitoring stack air and ambient air on continuous basis. State-of-the-art permanent ambient air monitoring stations measure sulphur dioxide, oxides of nitrogen, hydrocarbons, carbon monoxide and noise levels on real time basis.

All installations of your Company carry out extensive afforestation in their respective sites and maintain requisite area as Green belt. Your Company has been continuously taking initiatives to safeguard the environment and biodiversity along with its diverse business segment. Adequate measures are also taken for the management of water resources. Your Company considers water as a precious natural resource and hence its consumption is closely monitored and controlled. Further, state-of-the- art technologies have been adopted to reduce and treat the wastewater generated. Your Company maximizes the concept of reuse and recycle of water. Discharge at all locations is compliant to the norms of the respective State Pollution Control Boards. Your Companys operations at all locations are state-of-the-art and involve clean technologies. Adequate treatment and reuse of treated wastewaters is adopted across the Company. Treated effluent water is recycled and used in-house for horticulture purposes within plant and township premises. Further, adequate measures are taken for waste management. Your Company manages its waste by efficiently segregating, treating and

disposing based on the type of waste generated i.e. hazardous and non-hazardous. The water and wastewater samples are also analysed at the in-house laboratory as well as external laboratories regularly.

Significant initiatives that have been taken by your Company during the year 2020-21 are:

• Development of Scientific Solid Waste Management Storage Facility to facilitate smooth transfer of all the wastes from plant to the Common Hazardous Waste Treatment, Storage and Disposal Facility (CHWTSDF)and Recyclers.

• Utilization of C02 captured through Microbial route in pilot scale: In recent years, cultivation of microalgae has received renewed attention on account of its possibility as a feasible C02 sequestration technology. Algae-based C02 conversion offers a cost effective option towards reducing our carbon footprint. GAIL is working in collaboration with Central Institute of Mining and Fuel Research (CIMFR), Dhanbad on the project C02 capture through Microbial Route in Pilot-scale at Petrochemical Complex, Pata. Suitable species of algae have been identified and tested for the subject job. An artificial system of micro algal cultivation for C02 sequestration has also been designed. The job of construction of raceway reactors for pilot scale micro algal cultivation for C02 sequestration at GAIL Pata is under progress. The CPVC pipeline for the transport of C02 from GPU to the pilot plant site has been laid.

• Organic Waste Converter: Generation of biodegradable/ organic waste is inevitable at any residential or industrial complex. Therefore, it is required that as an environmentally sound practice of waste management, composting of biodegradable/ organic waste is practiced. Biodegradable/ organic waste generated at Plants/ Colonies is converted into compost by means of Organic Waste Converters.

• Gas flaring is a prominent source of VOCs, CO, C02, S02, PAH, NOx and soot (black carbon), all of which are important pollutants, which interact, directly and indirectly, in the Earths climatic processes. The components of flare gas can be derived from flare temperature. We have installed latest technology Infrared thermal imaging camera to detect flare temperature online, thus, the pollutants can be monitored at any point of time.

• Flare Gas Recovery Unit commissioned at GAIL, Vijaipur and taken in continuous service after successful PGTR by Operations with an estimated saving of around one crore per month by recovery of mandatory primary seal vents from dry gas seals of Process Compressors. Furthermore, the unit will also aid in reduction in GHG emissions by shrinking C02 emission. Total reduction of 1462 tCo2e (metric tonnes of Carbon Dioxide Equivalent) per month is anticipated.

12. Corporate Social Responsibility

Your Company as a socially responsible Corporate understands and acknowledges its responsibilities towards the communities, the environment, all other stakeholders involved in the process. CSR function at your Company aims to promote social good and integrate economic, environmental and social objectives with the Companys operations and growth. In alignment with the vision of your Company, the CSR initiatives strive to enhance value creation in the society and the communities in which it operates, through its services, conduct & initiatives, to trigger poverty alleviation, promote sustained growth for the society, the community and those at the bottom of the pyramid, with the long term goal of contributing towards the development of prosperous and inclusive India. In the year 2020-21, your Company has incurred an expenditure of 2.08% of the average net profit of the preceding three financial years on CSR activities.

Your Company has complied with DPE guidelines regarding spends on identified Thematic Areas, i.e. Healthcare & Nutrition. Basic Healthcare facilities have been extended to more than 10 lakh people across the country through operation of 59 Mobile Medical Units covering 42 districts across 13 States. Support has also been provided for provision of medical equipment, HIV/AIDS and STI awareness, drinking water facilities, hygienic facilities through construction of toilets etc. Further, support has been provided for provision of clean drinking water through Household Tap connection at Nagaram, East Godavari district in Andhra Pradesh. The project will cater to around 7,500 people in the village.

As a responsible organization, your Company contributed X 50.00 crore through its CSR funds and employees contributed X 3.80 crore towards PM-CARES fund . Your Company also extended financial and material support to various District Administrations through supply, procurement and support of relief, ration and other related/ arrangements. GAIL continued its support through various initiatives, viz. distribution of ration kits, PPE kits/sanitizers/masks etc. to district administration and hospitals, medical equipment(s) like ventilators to Govt. Hospitals and also support for conducting awareness spreading activities for the masses in the rural areas and for students in Government schools for protection against the global pandemic.

To promote the cause of education in the country your Company has extended support towards providing all-expense paid specialized residential coaching for engineering college entrance examinations at GAIL Utkarsh centers at Kanpur (UP), Haldwani & Srinagar (Uttarakhand). Your Company has also provided education facilities in the form of infrastructure, smart classes, school equipment, teaching-learning material etc. in various Govt, schools/colleges across the country. Support has also been extended to Atal Innovation Mission, Government of Indias flagship initiative, by partnering with 10 schools, 5 each in Assam (4 in Barpeta & 1 in Mangaldoi) and Madhya Pradesh (District Guna) on building and maintaining of Atal Tinkering Labs for inculcating skills such as design mindset, computational thinking, adaptive learning, physical computing etc. in young minds. Your Company is also providing support for construction of indoor stadium in Government school at Balangir, Odisha to promote sports culture and opportunities for children belonging to the economically weaker sections.

Your Company has also extended support towards Skill Development Institutes (SDIs) at Raebareli (UP), Vishakhapatnam (AP) & Bhubaneswar (Odisha). These SDIs have been set up through collaborative efforts of Oil PSEs under the aegis of Ministry of Petroleum & Natural Gas and are in line with "Skill India Mission" of Government of India.

13. Internal Control Systems & Their Adequacy

Your Company has distinct and efficient Internal Control Systems in place. It has a clearly defined organizational structure, manuals and standard operating procedures for its business units and service entities to ensure orderly, ethical and efficient conduct of its business. The Companys internal control system ensures efficiency, reliability, completeness of accounting records and timely preparation of reliable financial and management information. Internal financial controls framework and Risk Control Matrix (RCM) for various business processes is in place and reviewed continuously by the management. In addition, it also ensures compliance of all applicable laws and regulations, optimum utilization and safeguard of the Companys assets.

Your Company has independent and integral internal audit department having diligent professionals covering aspects relating to commercial and technical domains. The Internal Audit department functionally reports to

the Audit Committee and administratively reports to the Director (Finance) as per the best global practice. The audit assignments are conducted as per the annual audit program approved by the Audit Committee. The Internal audit examines the effectiveness of internal controls through a risk-based audit of business processes. In congruence with the mission of internal audit "Assurance and advice that adds value to the organization", the root cause and impact of the significant audit observations are reported to the management. The Audit Committee of the Board reviews the significant findings of internal audit and C&AG audit regularly.

In addition to delivering superior financial & physical performance in this financial year, your Company has also taken various initiatives to optimize processes and improve the effectiveness of internal controls. Your Company has implemented centralized payment and centralized compliance system of TDS thereby reducing man hours and is also among the first PSU to successfully implement the first digital worker named "GAIL Manu 1" review of Accounts under its

Robotic process automation program.

14. Accolades • Corporate

• Golden Peacock Award for Excellence in Corporate Governance 2020.

• 2nd Position under the category Manufacturing-Public - Mega in 17th National Awards for Excellence is Cost Management-2019 by the Institute of Cost Accountants of India (ICAI).

• 1st Position under the category Transportation & Logistics in the 17th National Awards for Excellence is Cost Management-2019 by the Institute of Cost Accountants of India (ICAI).

• GAIL (India) Ltd has emerged as a winner under the category of "ESG Disclosures."

• GAIL Leatures in Lorbes List of Worlds Best Employers 2020. It is ranked 5thamong Indian PSEs.

• GAIL won the Leaders Award in the Mega Large Business, Process Sector category in the 11*’ edition of frost & Sullivan - MEASA and TERI - The Energy and Resources Institutes Sustainability 4.0 Awards 2020. The award recognizes corporates in sustainable development practices that provide a measurable and verifiable framework for sustainability.

• GAIL (India) Limited has been included in the prestigious LTSE4Good Index Series for the fourth time in a row, affirming the Companys strong commitment towards Environmental, Social and Governance (ESG) practices in the Oil & Gas Sector.

• GAIL (India) Limiteds Pata unit bagged 1st position in 16,hNational Awards for Excellence in Cost Management.


• Shiksha Bharti Award 2020 (Nov 2020)-GAIL was presented with the award for supporting Delhi Police Public Library at RK Puram Police Station for outstanding professional achievement and inspiring social contribution.

• SHRM HR Excellence Awards (Dec 2020): GAIL CSR was recognized for Project Arogya for its Meaningful contribution in the category- Excellence in Community Impact

• World Best Brand and Business Award 2020 (Dec 2020): Award received for supporting Delhi Police Public Library at RK Puram Police Station as Top 100 impactful innovation (education).

• CSR Shining Star Award (Lebruary 2021): GAIL was conferred with the Award by Honble Governor of Maharashtra at an event held at Raj Bhawan, Mumbai.

• Innovative Educator Award (Lebruary 2021): GAIL received the award for supporting Delhi Police Public Library at RK Puram Police Station.


• "International Safety Award 2021" with Merit from British Safety Council, UK for Petrochemicals Pata, GPU Vaghodia and GPU Gandhar.

• "Safety Innovation Award 2020" by The Institution of Engineers (India) for GPU Vijaipur for implementing Innovative Safety Management systems.

• Safety Awards 2020 from National Safety Council, India for various installations for displaying exemplary Occupational Safety & Health (OSH) performance, commitment to reduce workplace injuries, implementations of the best OSH practices and encourage continual improvements: -

• SURAKSHA PURASKAR (BRONZE TROPHY) for GPU Gandhar under Category Group A (Petroleum Refineries, Gas Processing Units and Petrochemical Complexes).

• PRASHANSA PATRA for GPU Vijaipur under Category Group A (Petroleum Refineries, Gas Processing Units and Petrochemical Complexes).

• PRASHANSA PATRA for GPU Vaghodia under Category Group A (Petroleum Refineries, Gas Processing Units and Petrochemical Complexes).

Cautionary Statement

Statements in the Directors Report and Management Discussion S Analysis, describing the Companys objectives, strategies, projections and estimates, expectations, etc. may be "forward looking statements" and progressive within the meaning of the applicable laws and regulations. Forward looking statements contained herein are subject to certain risks and uncertainties and accordingly actual results may differ materially from the expectations. Critical factors that could influence the Companys operations include global and domestic demand and supply conditions, changes in Government regulations/tax laws, economic developments within the country and factors such as litigation and industrial relations. Readers are cautioned not to place undue conviction on the forwardlooking statements.