SUMMER TRAINING PROJECT REPORT

ON

FINANCIAL ACCOUNTING,MIS/BUDGETING/COSTING

SYSTEM

GAIL (India) Ltd., VIJAIPUR

SUBMITTED BY:

RASHMI SHARMA

MBA (2011-12)

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Certificate

This is to certify that Ms. Rashmi Sharma has completed her training on the topic

“Financial Accounting, MIS, Budgeting, Costing in GAIL Vijaipur ” as per the

curriculum in the Finance department at GAIL India Limited, Vijaipur (MP)

Rajesh Agarwal S.Sampath

Sr.Manager (F&A) Chief Manager (F&A)

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Acknowledgement

With great pleasure and sense of obligation express my heartfelt gratitude to

Mr. Rajesh Agrawal, my mentor, Sr.Manager (F&A), GAIL India Limited, Vijaipur,

for his encouragement throughout the training. I am highly indebted to him for

his valuable guidance and ever ready support. His persistent encouragement,

perpetual motivation, everlasting patience and excellent expertise in discussion

have benefited me to an extent which is beyond the scope of

acknowledgement.

I would like to give warm expressions of thanks to Mr. S.Sampath, Chief

Manager(F&A), GAIL India Limited, Vijaipur, for providing all the facilities and for

his enlightening guidance throughout the training.

My sincere thanks to all the members of staff in Finance department of GAIL

India Limited, Vijaipur for direct or indirect help in the training.

I sincerely thank my family, all my friends and well wishers for directly or

indirectly helping me during the course of training.

Rashmi Sharma

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CONTENTS

1) GAIL India Ltd ( Introduction)

2) Milestone of GAIL India ltd

3) GAIL Management

4) Business segment wise performance

5) LPG & Other Liquid Hydrocarbon

6) GAIL Subsidiary& Joint ventures

7) GAIL in Corporate world

8) Implementation in technology

9) Enterprise resource planning

10) Financial performance of GAIL India Ltd for F.Y 2010-2011

11) About GAIL Vijaipur

12) Milestone of GAIL Vijaipur

13) LPG plant working

14) Company Accounting Policy for 2010-2011

15) Financial Accounting system at GAIL Vijaipur

16) E- banking

17) Core values

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18) Reward and recognition

Gas Authority of India Limited, better known as GAIL is

India's predominant natural gas concern. The company

was formed in August, 1984. GAIL is directly involved

with all the dimensions of natural gas integration in India and is responsible for processes such as

exploration, processing, production, transmission, marketing, and distribution.

GAIL is also responsible for ensuring that all products and services related to natural gas in India

are well regulated and distributed. Gas Authority of India Limited has an impressive portfolio - it

owns more than 6,500 km of high-pressure pipelines for that have a net capacity of carrying nearly

150 MMSCMD of natural gas spanning the length and breadth of India. Apart from this, GAIL also

has a vast LPG transmission network spanning 1,922 km that has the capacity of transporting 3.8

MMTPA of liquefied petroleum gas. Gas Authority of India Limited also has several coal-bed

methane blocks and as many as 30 gas and oil exploration blocks.

Gas Authority of India Limited also owns the only gas-based fully-integrated petrochemical

complex in north India at Pata (UP) which is capable of producing 410,000 TPA of Polymers.

Key Strengths Of GAIL(India) Limited-

The company owns 7 gas processing units that produce 1.3 MMTPA of LPG and other liquid

hydrocarbons.

GAIL owns 13,000 km of OFC network that provides high and reliable bandwidth for telecom

service providers.

GAIL has several joint venture companies in Delhi, Agra, Lucknow, Mumbai, Hyderabad, Pune,

Kanpur, Agartala, and Bhopal that ensure the regular supply of piped natural gas for domestic as

well as commercial purposes. These companies also supply compressed natural gas to the huge

Indian transportation sector.

GAIL has a significant stake in the Dahej LNG Terminal as well as the Kochi LNG Terminal in

Kerala that is under construction as of now.

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GAIL has also been given the responsibility of refurbishing the Dabhol LNG terminal.

GAIL has a strong presence in Egypt by means of equity-based partnerships with 3 Egyptian

companies - Fayum Gas Company SAE, National Gas Company SAE, and Shell CNG SAE.

Gas Authority of India Limited has a considerable stake in China Gas Holding by means of which

GAIL intends to delve into CNG-related opportunities in China.

GAIL also has a fully-owned subsidiary company in Singapore, known as GAIL Global (Singapore)

Pvt. Ltd.

Within a period of past 25 years, GAIL has emerged as a truly Integrated Company across the

natural gas value chain while maintaining its position as the No. 1 Gas company in India. It has won

the excellent MOU performance award for the past 10 years consecutively.

GAIL manages following infrastructure:

India's largest Gas Transmission Networks (7850km pipelines) having a transmission

capacity of 118 MMSCMD of Natural Gas across the Country.

World's largest LPG pipeline network (1900Km) having a transmission capacity of

3.8MMTPA of LPG.

Seven Gas Processing Facilities with an aggregate capacity of 1.3 MMTPA of LPG, Propane,

Pentane and SBPS / Naphtha

India's largest gas-based integrated Petrochemicals Complex with an installed capacity of

4,10,000 TPA of Ethylene and 3,10,000 TPA of Polymers (HDPE, LLDPE)

Optic Fibre Cable Network of 12,500 kms to offer bandwidth as a Carrier's Carrier in the

Telecom sector

An Equity Participant in 16 E&P blocks, including 13 blocks in India, 1 block in Oman and 2

block in Myanmar

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A JV Partner in CNG/ City Gas Distribution Projects in Delhi, Mumbai, Hyderabad, Tripura,

Kanpur, Lucknow, Agra, Indore and Pune, Kota, Dewas, Meerut and Sonipat.

An Equity Participant in two CNG/ City Gas Distribution Projects in Egypt

A JV partner in a gas-based 156 MW Power Plant of Gujarat State Energy Generation

(GSEG) Ltd.

A JV partner in Petronet LNG Limited to import LNG and deliver re-gasified LNG in the

Indian Market

Gas transmission continues to be the core business of GAIL. The Company’s strategy has

been to look out for diversified growth by leveraging on its core competency of gas

transmission.

Gas Marketing :-

Government awarded Marketing rights of PMT Gas to GAIL as Government of India nominee.

Gas Transmission :-

The 30” diameter, 576 km long Dahej-Panvel-Dabhol pipeline with a design capacity of 12

MMSCMD was commissioned.

GAIL-RLTIL signed transmission agreement for transmission of gas from Krishna-Godavari (KG)

Basin.

Exploration & Production :-

Commercial production of oil from Cambay basin block CB-ONN-2000/1 , having equal

participation by GAIL and GSPC commenced.

Petrochemicals :-

Expansion of Petrochemical Plant at Pata for increasing capacity from 310,000 TPA LLDPE/HDPE

to 410,000 TPA completed.

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Brahmaputra Cracker and Polymer Limited (BPCL), subsidiary of GAIL with partners as

Government of Assam, Oil India Limted and Numaligarh Refinery Limited for setting up 2,80,000

MT Gas Cracker Project at Lepetkata, District Dibrugarh, Assam at an investment of Rs. 5,640

Crores.

MOU with Reliance Industries Limited was signed for joint cooperation in petrochemicals.

MOU with HPCL, TOTAL, Mittal Energy and OIL for evaluating feasibility of a petrochemical

plant.

Overseas Presence :-

GAIL formed a Joint Venture Company (JVC) with China Gas Global Energy Holdings Limited.

GAIL and China Gas are equal partners in this JV which has been registered in Bermuda. This is the

first Joint Venture Company of GAIL abroad. The JVC will pursue opportunities in CNG, City Gas,

Pipeline, CBM, LNG, and E&P projects. GAIL signed MoU with ITERA Oil and Gas Company of

Russia.

City Gas :-GAIL and HPCL signed JV agreement for City Gas projects in Rajasthan. GAIL and

Indian Oil linked MoU for JV in City Gas Distribution in West Bengal. GAIL set up a subsidiary

(GAIL Gas Limited) for City Gas Distribution and City Corridor Business.

MILESTONES OF GAIL (I) Ltd

1984   GAIL (India) Ltd was formed

 1987   HVJ (Hazira – Vijaipur – Jagdishpur) Natural Gas pipeline commissioned

 1989   First Year of profit registered

 1990   LPG Plant Phase – I at Vijaipur commissioned

 1992   Gas Marketing functions transferred to GAIL

 1993   Maiden dividend of Rs. 20 Crores paid to its shareholders

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 1994   First JV Mahanagar Gas Limited formed with British Gas incorporated to implement Mumbai City Gas Distribution project

 1995   Propane recovery plants at Vijaipur commissioned

 1996   GAIL listed in NSE, BSE and DSE

 1997   Government of India granted Navratna status to GAIL

 1998   Indraprastha Gas Limited (IGL) incorporated for supply of gas to household sector, transport sector & commercial consumers in Delhi.

 1999   LPG plants at Usar and Lakwa commissioned

 1999   Uttar Pradesh Petrochemical Complex (UPPC) at Pata commissioned with a design capacity of 3 lacs TPA of Ethylene to produce 2. 60 lacs TPA of HDPE & LLDPE.

 2000   LPG plant at Pata with a design capacity of 2.58 lacs TPA of LPG commissioned

 2000   Participated in under NELP- I and 2 blocks awarded

 2001   Jamnagar-Loni LPG Pipeline Project, world’s longest and India's first Cross-Country LPG 1269 km long pipeline commissioned

 2001   LPG plant at Gandhar commissioned

 2002   GAIL picks up 12% equity stake in GSEGs 156MW power project in Gujarat

 2003   GAIL has an initial success in the form of significant gas find in the block A-1 in Myanmar and discovery of Oil and Gas in the Cambay Block.

 2003   Bhagyanagar Gas Limited, a joint venture of GAIL and HPCL, incorporated in August 2003, in the field of distribution and marketing of Auto LPG, CNG for vehicles and retailing of natural gas in cities of Andhra Pradesh.

 2003   Vizag- Secunderabad LPG pipeline, the 580 km pipeline with a maximum throughput of 1.16 MMPTPA completed

 2003   GAIL successfully secures participation in 2 retail gas companies in Egypt, Fayum Gas Company and Shell CNG.

 2004   Dahej - Vijaipur natural gas pipeline commissioned

 2004   A wholly-owned subsidiary company GAIL Global (Singapore) Pte Ltd formed in Singapore

 2004   Platts declares GAIL as the first among Global Gas Utilities based on Return on Invested Capital (ROIC) in its worldwide survey of Top 250 Energy Companies in 2004.

 2004   Tripura Natural Gas Co. Ltd., a Joint Venture for city gas project in Tripura and UP Central Gas Ltd., a Joint Venture for city gas project with BPCL in Kanpur, incorporated

 2004   GAIL acquired 15% equity stake in NatGas, Egypt

 2005   Inauguration of the National Gas Management Centre (NGMC) of GAIL at NOIDA

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 2006   GAIL brings India’s first spot LNG cargo at Dahej

 2006   GAIL consortium wins 3 CBM blocks in III round of bidding

 2007   MoP&NG authorization for 5 new major pipelines received

 2007   Brahmaputra Cracker and Polymer Limited, a Joint Venture Company led by GAIL, formed for implementing Assam Gas Cracker Project

 2007   GAIL forms a Joint Venture Company (JVC) with China Gas Global Energy Holdings Limited.

 2007   Expansion of Petrochemical Plant at Pata for increasing capacity from 310,000 TPA LLDPE/HDPE to 410,000 TPA completed

 2008   Dahej - Panvel- Dabhol pipeline commissioned

 2008   GAIL Gas Limited incorporated for CGD

 2008   GAIL Gas limited wins the rights for rolling out city gas distribution projects in Meerut, Sonepat, Dewas and Kota.

 2009   GAIL gets SCOPE Meritorious Award for Corporate Governance for the year 2007-08.

 2010   Representative Office in Egypt opened

 2010   GAIL ranked no.1 company among gas utilities in Asia in the Platts Global Ranking.

GAILMANAGEMENT

CHAIRMAN /MD

(Sh. BC TRIPATHI)

WHOLE TIME DIRECTOR

Sh. R.D GOYAL Sh. SL RAINA Sh. PRABHAT SINGH Sh. S. VENKATRAMAN SH. PK JAIN

DIRECTOR (PROJECT) DIRECTOR(HR) DIRECTOR(MARKETING) DIRECTOR(B/D) DIRECTOR(F&A)

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PART TIME DIRECTOR (Government nominees)

Sh.SUDHIR BHARGAVA Sh.APURVA CHANDRA

PART TIME NON OFFICAL DIRECTOR (INDEPENDENT DIRECTOR)

PROF.AQ CONTACTOR SH RM SETHI S RAMESH SHAH Dr VINAYSHILGAUTAM Sh. ARUN AGARWAL

CHIEF VIGILANCE OFFICER

(Sh. ARUN SINGAL)

COMPANY SECRETARY

(Sh. NK NAGPAL)

BUSINESS SEGMENT WISE PERFORMANCE :-

Company has been achieving an all round “Excellent” rating by Government of India since MOU

signing. During the year under reviews, the segment wise business performance of the company is as

under:-

Natural Gas -

Company owns & operates a network of over 7850 km of natural gas high pressure trunk pipelines.

It supplies over 81.43 million cubic meters of natural gas per days as fuel to power plants, feedstock

for gas based fertilizer plants & to over 500 small, medium, & large industrial units to meet their

energy & process requirements. Company’s shares of gas transmission business are 79% & it holds

70% market share in gas marketing in India.

Natural Gas continues to constitute the core business of GAIL. During the year 2010-11, natural gas

sales have increased by 14 percent to 79.06 MMSCMD from 69.10 MMSCMD in the previous year.

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The Gas transmission has increased to 83.29 MMSCMD from 82.10 MMSCMD in the previous

year.

LPG and other Liquid Hydrocarbons -

Company has 7 LPG plants in the country. In 2010-11, total Liquid Hydrocarbon production

including LPG was 1.401 million MT as compared to previous year’s production of 1.401 million

MT. Production of LPG was 1.088 million MT during the year against a production of 1.043 million

MT in the last fiscal. The Propane production was 1,52,671 MT against the previous year’s

production of 155,873 MT. The Pentane production was 58,932 MT during the year 2010-11 as

against 73,505 MT produced in the year 2009-2010.

The LPG and other Liquid Hydrocarbons sales during FY 2010-11 were 1.405 million MT as against

1.343 million MT in the previous year. The Propane sales were 1, 53,153 MT against 155,292 MT in

the previous year, whereas the Pentane sales were 58,528 MT against 73,749 MT in the previous

year.

LPG Pipeline -

LPG transmission through pipelines was 2.744 million MT in the year 2008-09 as against 2.754

million MT in 2010-11.

Petrochemicals -

Company owns & operates a gas based integrated petrochemical plant at Pata, Uttar Pradesh with a

capacity of producing 4,10,000 TPA of Polymers i.e. HDPE & LLDPE, which has been enhanced by

1,00,000 TPA, company is currently in the process of setting up a 2,80,000 TPA Assam

Petrochemical Complex at an investment of Rs5,460 Cores. During2010-11, the production of

polymers has increased by 9 percent to 4.20 lakh MT as against 3.86 lakh MT in the previous year.

The polymer sales increased by 8 percent to 4.23 lakh MT from 3.91 lakh MT in the last financial

year.

Exploration & Production :-

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In line with Company’s strategy & towards integration along the energy chain, E&P activities have

gathered momentum during the year. The gas discovery in blocks A-1 & A-2 in Myanmar is

maturing to development stage & various studies preliminary to finalization of the development plan

& its implementation are underway. Presently, Company is involved in oil & gas exploration

activities over acreage of 1.7 Lac sq.km. Company now holds a participating interest between 10 to

80 per cent in 27 oil & gas exploration blocks. Of these, 9 are on-land blocks 7 18 are off-shore

blocks.

In India there are 24 blocks which are in Basins such as Mahanadi, Bengal, Gujarat-Saurashtra,

Mumbai, and Cambay, Assam-Arakan & Cauvery. Company has got stake in the A-1 & A-2 blocks

in Myanmar & Block No. 56 in Omen. A beginning has been made by Company in earning revenue

from E&P activities. One of the on-land block in Cambay basin started commercial production from

February 2010 & Rs. 6.90 Crores has been generated as revenue during Feb-Mar’10

Coal Bed Methane:-

Company has been participating interest in 3 Coal Bed Methane blocks with an area of 1561 sq.km,

2 of which are in Chattisgarh & 1 in Jharkand. These blocks were awarded to GAIL consortium in

CBM-3 bidding around.

Telecommunications :-

Leveraging on its pipeline network, Company has built up an OFC network for leasing of bandwidth

as a carriers carrier. Company’s telecom business unit- GAILTEL has approximately 13000 km

network. During the year under review, GAILTEL achieved profit before tax of Rs. 3 Crores.

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Gas Transmission :-

GAIL has a market share of 78% of the gas transmission business and 70% of the gas marketing

business in India. GAIL's vast operations and projects include:

7850 kms of Natural Gas high-pressure trunk pipelines, Trunk Pipelines with the capacity to carry

148 MMSCMD of Natural Gas across India.

Supplying nearly 70 million cubic meters of Natural Gas per day as fuel to power plants for

generation of about 5200 MW of power, as feedstock for gas-based fertilizer plants to produce about

11 MMTPA of urea and to over 500 other small, medium and large industrial units to meet their

energy and process requirements.

Our 2,800 km long Hazira-Vijaipur-Jagadishpur (HVJ) pipeline and 610 km Dahej-Vijaipur pipeline

(DVPL), between them, cater to all the gas based power plants, fertilizer plants, and industries along

the entire West-North corridor of India.

Pipeline Projects :-

GAIL has put in place ship or pay commitment for new pipeline projects and has a host of important

pipeline projects on hand. These include the Dahej-Uran Pipeline Project, Dabhol-Panvel pipeline

project and the Jagoti-Pithampur Pipeline Project having a total investment implication of Rs.3,250

crores. Implementation of these projects is an important step towards creation of a National Gas Grid

in India.

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HVJ PIPE LINE LAYOUT WITH PLANT LOCATIONS AND CUSTOMERS LOCATIONS.

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City Gas Distribution -

GAIL was the first company in India to pioneer city gas distribution project. In addition to marketing

Natural Gas through Trunk and Regional Transmission systems, GAIL has formed joint venture

companies to supply gas to households, commercial users and the transport sector. Within the short

span of 10 years, GAIL has expanded its CNG business from 1 company (Mahanagar Gas Ltd.) in

India to 8 in India and 4 abroad.

Gas supplied by GAIL to retail gas distributors serves more than 3,00,000 automobiles as

Compressed Natural Gas (CNG) and over 3,30,000 households as Piped Natural Gas (PNG) in the

cities of New Delhi, Mumbai, Vadodara, Vijaywada, Hyderabad, Kanpur, Agra, Lucknow. Our

Project Blue Sky is gearing up to execute city gas projects in others cities in India including Pune,

Kota, Indore, Gwalior, Ujjain and cities in Kerala and Karnataka through Joint Ventures. We have

signed a Memorandum of Understanding with Infosys Technologies to develop City Gas

Distribution Software, leveraging the IT Expertise of Infosys and the domain expertise of GAIL.

GAIL's City Gas Distribution initiatives are not confined to India. It has established its presence in

the CNG and City Gas arenas in Egypt through equity participation in Fayum Gas, Shell CNG and

Natgas; and has acquired a stake in China Gas Holding to pursue CNG opportunities in mainland

China. GAIL plans to develop City Gas markets worldwide in collaboration with global oil and gas

majors.

GAIL is a founder member of the India CNG Consortium, which provides comprehensive solutions

for CNG implementation across the globe

LNG & RLNG -Page | 16

Presently, Company’ share of Gas Transmission business is 72% of India, and dependence on

imported LNG is expected to increase from 22% to 38% of the total gas trade. India has plans to

import about 25-27 MMTPA of LNG in the next 5-6 years. As a dominant player in the gas market,

GAIL is poised to play a major role in LNG sourcing and creation of pipeline infrastructure to

complete the chain of energy security that the Indian Government intends to pursue. Countries like

Abu Dhabi, Oman, Yemen, Nigeria, Malaysia, Indonesia and Australia are important prospects that

GAIL is currently exploring actively for LNG sourcing.

GAIL has co-promoted Petronet LNG Ltd (PLL), along with oil majors Oil and Natural Gas

Corporation (ONGC), Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited

(BPCL) for the import of LNG into India. PLL imports Natural Gas in the liquefied form (LNG)

from Ras Laffan Liquefied Natural Gas Company Ltd, Qatar, re-gasifies the LNG at its terminals at

Dahej (Gujarat) and sells the Re-liquified Natural Gas (RLNG) to users. PLL has a capacity of 5

MMTPA (million tons per annum) RLNG. GAIL's exemplary credentials in gas transmission and

marketing have led to its appointment, by the Government of India, as the sole transporter and

principal marketer of RLNG produced by PLL. Currently, GAIL markets about 11 MMSCMD of

RLNG from the Dahej terminal and transports about 18 MMSCMD.

The Government of India has entrusted GAIL with the responsibility of reviving the LNG terminal

at Dabhol in Maharashtra, as well as sourcing LNG for the terminal. GAIL has already signed a

Sales Purchase Agreement for import of LNG from Iran for 2 MMTPA (40% of the LNG being

imported by India from Iran).

LPG Transmission -   Overview

GAIL is the first company in India to own and operate pipelines for LPG transmission. It has 1,900 km LPG pipeline network 1,300 km of which connects the western and northern parts of India and 600 km of networks is in the southern part of the country connecting Eastern Coast. The LPG transmission system

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has a capacity to transport 3.8 MMTPA of LPG.LPG transmission through pipelines was 3161 TMT in the year 2009-10.

LPG Transmission -   Characteristics

GAIL has a share of about 10% of the Indian LPG market in LPG production and 7% in LPG sales.GAIL produces LPG through fractionation in Gas Processing Units, known as Straight Run LPG. GAIL’s LPG is an eco-friendly fuel and provides a cheaper and effective means of reducing pollution and increasing productivity.

Natural   Gas Transmission

Adequate supply of affordable energy is a pre-requisite for sustained growth, especially in the developing and emerging economies. Natural gas has emerged as most benign fuel in this regard.

Natural Gas is a new age fuel. With only one carbon and four hydrogen atoms per molecule, Natural Gas has the lowest carbon to hydrogen ratio, hence it burns completely, making it the cleanest of fossil fuels. Natural Gas satisfies most of the requirements for fuel in a modern day industrial society, being efficient, non-polluting and relatively economical. The periodic uncertainties and volatility in

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Natural Gas comes in 4 basic forms:

Liquefied Natural Gas (LNG) - Natural Gas which has been liquefied at – ( Minus) 160 degree Centigrade. Natural Gas is liquefied to facilitate transportation in large volumes in cryogenic tankers across sea.Regasified Liquefied Natural Gas (RLNG) – LNG Re-gasified before transporting it to consumers through Pipelines. Compressed Natural gas (CNG)- Natural Gas compressed to a pressure of 200-250 kg/cm2 used as fuel for transportation. CNG decreases vehicular pollution on the virtue of being cleaner fuel than liquid fuels.Piped Natural gas, PNG - Natural Gas distributed through a pipeline network that has safety valves to maintain the pressure, assuring safe, uninterrupted supply to the domestic sector for cooking and heating / cooling applications. India’s natural gas scenario is undergoing rapid changes and gas is poised to occupy a significant share in the energy mix. In order to diversify energy

LPG & OTHER LIQUID HYDROCARBONS :-

LPG & Allied Products: LPG

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Sector   Natural Gas is used  

 Generation of electricity by utilities

  As fuel for base load power plants In combined cycle/co-generation power plants

 

 Fertilizer Industry   As feed stock in the production of ammonia and urea  

 Industrial   As an under boiler fuel for raising steam As fuel in furnaces and heating applications

 

 Domestic and commercial   For heating of spaces and water For cooking  

 Automotive   As a non-polluting fuel  

 Petrochemicals   As the raw material from which a variety of chemical products e.g. methanol, are derived

 

GAIL produces LPG through fractionation, known as Straight Run (SR). GAIL LPG is an eco-

friendly fuel and provides a cheaper and effective means of reducing pollution and increasing

productivity.

Characteristics of GAIL LPG:

Processed from Natural Gas.

Has a high vapor pressure Vis-a Vis Refinery LPG

Vaporizes at atmospheric temperature and pressure

Clean fuel with almost nil unsaturated compounds

Has a higher calorific value than Refinery's LPG and hence gives more value for money

Its homogeneous composition results in more efficient combustion

The air fuel ratio need not be changed with every batch

No Impurities like Sulphur, carbon dioxide, traces of oxides of nitrogen. Hence lower

corrosion.

Has nil moisture content

Customer-friendly fuel as it is easy to transport, store and use GAIL LPG

GAIL produces over a million tones LPG - equivalent to around seventy million domestic

LPG cylinders.

GAIL's LPG transmission business includes the 1927-km LPG pipeline networks that connect the

Western, Northern and Southern part of India. These include the world's longest exclusive LPG

pipeline from Jamnagar, Gujarat, to Loni, near Delhi (another 70 km has been added to this system

between Kandla and Samakhiali, in Gujarat, to facilitate the transportation of LPG imported at

Kandla port). GAIL's LPG pipelines can transport 3.8 MMTPA of LPG, and have the capacity to

supply more than 20% of the LPG consumed in the country.

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LPG & Allied Products   : Propane

GAIL is India's only producer of Propane, a member of liquid hydrocarbon group, popularly known

as GAIL Propane. It is produced at the company's fractionators at Vijaipur in Madhya Pradesh and at

Pata in Uttar Pradesh. GAIL Propane is an eco-friendly fuel and provides an effective way of

reducing pollution and increasing productivity. Our Patrons also call it a "Fuel of Great Value"

because of its customer-friendly features.

Propane is the most preferred fuel all over the world due to its diverse applications in industrial,

domestic, commercial and auto sector, as fuel, refrigerant and source of clean captive power.

However, in India, Propane finds its application as fuel mainly in the industrial sector.

LPG & Allied Products: Pentane

LPG extraction from natural gas is carried out by cryogenic turbo-expander process at all LPG plants

of GAIL. In this process Propane & Butane are extracted from natural gas by cooling it to -55 to -68

oC. As natural gas contains heavier components (Pentane, Hexane, Heptane etc.) than Propane &

Butane, whenever natural gas is cooled for the extraction of LPG, these heavier components also get

liquefied along with Propane & Butane. LPG is separated from this total liquid by distillation and the

balance liquid is called Natural Gasoline Liquid. This NGL is then further processed to manufacture

Pentane and Special Boiling Point Solvent.

SBPS

The extraction of LPG from natural gas is carried out by cryogenic turbo - expander process at all

LPG plants of GAIL. In this process, Propane & Butane are extracted from natural gas by cooling it

to -55 to -68 oC. As natural gas contains heavier components (Pentane, Hexane, Heptane etc.) than

Propane & Butane also, whenever natural gas is cooled for the extraction of LPG, these heavier

components also get liquefied along with Propane & Butane. LPG is separated from this total liquid

by distillation and the balance liquid is called Natural Gasoline Liquid. This NGL is then further

processed to manufacture Pentane and Special Boiling Point Solvent.

LPG & Allied : LPG Pipelines

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The demand for LPG (Liquefied Petroleum Gas) as domestic fuel in the Northern, Central and

Western regions is being met from indigenous LPG production from oil refineries and from gas

processing units. Besides domestic LPG production sources, the deficit in demand-Supply is being

met through import of LPG at Kandla on the West coast.

Increasing demand for LPG has also put tremendous pressure on the rail/road network. Accordingly,

requirement of LPG pipeline starting from Kandla port up to Loni was identified and world's longest

LPG pipeline was commissioned by GAIL to facilitate transportation of imported LPG and LPG

production from the indigenous units  at  Jamnagar to the northern region.

Naphtha:

The extraction of LPG from natural gas is carried out by cryogenic turbo - expander process at all

LPG plants of GAIL. In this process Propane & Butane are extracted from natural gas by cooling it

to -55 to -68 degrees C. As natural gas contains heavier components (Pentane, Hexane, Heptanes

etc.) than Propane & Butane also, whenever natural gas is cooled for the extraction of LPG, these

heavier components also get liquefied along with Propane & Butane.

LPG is separated from this total liquid by distillation and the balance liquid is called Natural

Gasoline Liquid. This NGL is then further processed to manufacture Pentane and Naphtha.

PETROCHEMICALS

GAIL's the country's premier Natural Gas Marketer & Transporter, diversified into the

manufacturing and marketing of downstream HDPE & LLDPE from natural gas cracking at its Pata

(Uttar Pradesh state, India) unit from 19th April 1999. The beginning was with a name plate capacity

2,60,000 MTPA of HDPE and LLDPE.

GAIL is the only HDPE/LLDPE plant operating in Northern India and has a dominant market share

in North India. The primary thrust markets for the polymers had been Western India, but, with the

entry of GAIL in the HDPE & LLDPE market segments, today north India has also witnessed a

rapid and significant growth in the polymer downstream processing segments. In a successful span

of about a decades of establishing and marketing its grades under the brand names G-Lex & G-Lene,

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GAIL has along side augmented its name plate capacity of HDPE & LLDPE to 4,10,000 MTPA by

adding another dedicated HDPE downstream polymerization unit of 1,00,000 MTPA.

GAIL has two trains of dedicated HDPE units of the Mitsui slurry technology license ( capacity 2 x

1,00,000 MT/A)and marketing the grades under the brand name of G-lex and one train of the

HDPE/LLDPE swing plant under the Novacor solution based technology license( capacity 2,10,000

MT/A).

GAIL’S SUBSIDIARIES & JOINT VENTURES :-

Company has been the pioneer for City Gas Projects in India. With natural gas emerging as the fuel

of choice in the country, company believes that the next decade will belong to the city gas. Company

was the first Company to introduce City Gas Projects in India for supplies to households,

commercial users & for the transport sector by forming Joint Venture Companies.

SUBSIDIARIES –

GAIL Gas Limited -

Company has formed a wholly owned subsidiary named GAIL Gas Limited for implementing City

Gas. Projects & CNG corridor in the country. The subsidiary company will act as a vehicle for

bidding for laying of pipeline infrastructure in the country.

GAIL Global (Singapore) Pte. Limited –

Company has a wholly owned subsidiary, namely, GAIL Global (Singapore) Pte. Limited to manage

investments abroad. Company is looking for further business opportunities through this susidiary

company.

Brahmaputra Cracker & Polymer Limited :-

Page | 23

Company has 70% equity share with Oil India Limted (OIL), Numaligarh Refinery Limited (NRL),

Govt. of Assam, each having 10% equity share. The authorized capital of the company is Rs 1,200

Crores. A Feedstock Supply Agreement has been signed between Brahmaputran Cracker & Polymer

Limited (BPCL), & all the three suppliers viz, Oil & Natural Gas Company Limited, Oil India

Limited & Numaligarh Refinery Limited.

GAILTEL -

GAILTEL, the GAILTEL service arm of GAIL, is engaged in providing GAILTEL services to

mission critical in-house SCADA and ERP services apart from commercially leasing services to

GAILTEL Operators and ISP’s across India. GAILTEL has been operating commercially in the

Indian GAILTEL sector since June 2001. It is also responsible for meeting the captive

communication requirements of GAIL’s pipeline installations. GAILTEL, today serves most of the

GAILTEL operators of the country, which include HUTCH, VSNL, Airtel, Idea Cellular, Reliance

Infocom, Tata Tele services, to name a few.

Its high speed optic-fibre network extends to well over 13,000 Km connecting around 200 cities

across various states like: Rajasthan, Gujarat, Madhya Pradesh, Maharastra, Uttar Pradesh, Andhra

Pradesh, Haryana, Chandigarh, Delhi, Karnataka, Tamil Nadu and Kerela.

With SDH & DWDM as the core layer, the network is built largely along the highly secured GAIL’s

cross country pipeline corridor and also configured in "self-healing" rings to ensure highly reliable

and error free service to its esteemed customers. The network is managed centrally on round the

clock basis from a state-of-art Network Management Centre.

Page | 24

JOINT VENTURES –

Aavantika Gas Limited (AGL) -

AGL is a Joint Venture of your Company & Hindustan Petroleum Corporation Limited (HPCL) for

implementation of City Gas Projects in the cities of Madhya Pradesh. AGL has started project

implementation activities in the city of Indore. Company has 22.5 % stake in the Company along

with HPCL as equal partner.

Bhagyanagar Gas Limited (BGL) –

BGL is currently operating three Autos LPG stations in Hyderabad & one Auto LPG station in

Tirupathi. It is currently operating six CNG stations in Vijayawada & three CNG Stations in

Hyderabad. Company has 22.5% stake in the company along with HPCL as equal partner

Central U.P. Gas Limted (CUGL) –

CUGL is currently operating five stations in Kanpur, one CNG station in Kanpur is under

commissioning. CUGL is building MDPE network for supply of PNG to domestic, commercial &

industrial sectors in the city of Kanpur. Company has 22.5% stake in the Company along with BPCL

as equal partner.

Green Gas Limited (GGL) –

GGL is currently operating four CNG stations in Lucknow & three CNG stations in Agra. GGL will

also take up project implementation in other cities of Western UP on the basis of gas availability &

project viability. Company has 22.5% stake in the company along with IOC as equal partner.

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Indraprastha Gas Limited (IGL) –

IGL is supplying piped gas to around 1 Lac domestic, 276 commercial, 16 small industries

consumers & CNG to over 1.35 Lacs vehicles through 153 CNG stations. IGL is catering to world’s

largest CNG bus fleet of over 11,000 buses in Delhi. Company has 22.5 % stake in the company

along with BPCL as equal partner.

Mahangar Gas Limted (MGL) –

MGL has set up 128 CNG stations catering to over 1.85 Lacs vehicles spread over Mumbai, Thane,

Mira-Bhayandar & Navi-Mumbai areas besides supplying PNG to over 3.40 Lacs domestic, 907

commercial & 36 small industrial consumers. Company has 49.75% stake in the company along with

British Gas as equal partner.

Maharashtra Natural Gas Limted (MGNL):

MNGL is a Joint Venture of your Company & Bharat Petroleum Corporation Limited (BPCL) for

implementation of City Gas Projects in Pune city. MNGL is developing necessary infrastructure for

supply of CNG & PNG in the city. Company has 22.5 % stake in the company along with BPCL as

equal partner.

Petronet LNG Limited (PLL):

PLL was formed for setting up of LNG import & regasification facilities. PLL has a long term LNG

supply contract with Ras Gas, Qatar for impmort of 7.5 MMTPA. PLL Dahej terminal is being

expanded to 10 MMTPA capacity. Company has 12.50% stake in the company along with BPCL,

IOC & ONGC as equal partners.

Ratnagiri Gas & Power Private Limited (RGPPL):

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RGPPL is a Joint Venture Company between Company, NTPC, Financial Institutions & MSEB.

Company has 28.33% stake in the company along with NTPC as equal partner. The capacity of the

Ratnagiri Gas & Power Station is 2,150 MW. Company has made an investment of Rs.500 Crores &

has approved additional equity of Rs. 475 Crores to RGPPL, out of the Rs.475 Crores, an amount of

Rs. 92.90 Crores has been paid during the month of May, 2008.

Tripura Natural Gas Company Limited –

TNGCL is presently supplying gas to 6600 domestic, 104 commercial, 21 industrial consumers &

has set up one CNG station in Agartala city. Company has 29% stake in the company.

Ratnagiri Gas And Power Private Limited (RGPPL) -

RGPPL is a Joint Venture Company between GAIL (India) Ltd, NTPC Limited, Indian Financial

Institutions (IFIs) and MSEB Holding Company Limited. The Promoters have incorporated and

registered the Company as a private limited company on 8th July 2005. The authorized share capital

of the company is 2000 Crore and the shareholdings of GAIL, NTPC and IFI’s are 28 1/3% each and

MSEB 15%. The Project is located at Ratnagiri district of Maharashtra state about 340 Km south of

Mumbai.  The project has power generation capacity of 2150 MW along with an integrated 5

MMTPA LNG terminal. Primary fuel for the power plant is natural gas. Presently LNG terminal

revival work is under progress and is expected to be completed in year 2008. The Company is not

listed to any Stock Exchange of India/abroad.

Gujarat State Energy Generation Ltd -

Gujarat State Energy Generation Ltd was incorporated on December 13, 1998, with Gujarat State

Petroleum Corporation Ltd (GSPCL) as the main promoter, to set up a Natural Gas-based power

project at Hazira. The project was planned with a generation capacity of 156 MW by utilising natural

gas from Hazira gas fields jointly owned by GSPCL and NIKO Resources, Canada, at an estimated

cost of Rs. 576 crore with a 70:30 Debt to Equity ratio within 21 months from June 1, 2000.

Fuel Supply Agreement with GSPCL / NIKO and Fuel Transportation Agreement with Gujarat State

Petronet Ltd were entered into to securitize fuel supply. An arrangement is in place to sell power to

Page | 27

the Gujarat Electricity Board through a Power Purchase Agreement signed on February 28, 2000, for

20 years

The Combined Cycle Power Plant comprises of two Gas Turbines (52 MW

each), one Steam Turbine (52 MW) and 2 Heat Recovery Steam

Generators.

GAIL accepted an equity offer of 12 % in March2001 following due

diligence exercise.

Commercial production was declared with the commissioning of the Gas Turbines in open cycle

mode in December 2001. Subsequent to successful completion of performance tests, Combined

Cycle operation commenced from June 2002

GAIL in Corporate World :-

GAIL to supply gas to Barauni fertiliser, Bettiah power plant -

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Gas Authority of India (GAIL), natural gas major, would supply gas to Barauni fertiliser factory and

its 250-300 MW power plant at Bettiah through its 1,400 km Jagdishpur-Haldia pipeline by 2012.

GAIL will supply Gas to both Barauni fertilizer factory and Bettiah power plant through two spur

lines, the two spur lines would be laid down from Bakhtiarpur to Barauni and the other from

Bakhtiarpur to Champaran via Chhapra.

GAIL would supply 2.11 MMSCMD gas from its first spur line to the fertilizer factory, which would

be revived by June 2012 through special purpose vehicle (a joint venture company promoted by

NFL, RCF and KRIBHCO) under the name of Urvarak Videsh, for a period of 15 years from the

date of commencement of supplies.

GAIL signs gas co-operation pact with Karnataka -

GAIL (India) and Infrastructure Development Department (IDD) Karnataka signed a Gas Co-

operation Agreement in Bangalore.

Gas cooperation agreement between GAIL and IDD, Karnataka aims to develop the natural gas

distribution and city gas infrastructure, to develop the use of eco-friendly fuels, especially Natural

Gas/CNG/PNG/R-LNG and to promote a Joint Venture (JV) for domestic, industrial and transport

sectors in the state of Karnataka.

Government of Karnataka said that natural gas is a preferred fuel today for environmental and other

reasons and with the recent discoveries of new natural gas find as well as the proposed GAIL

pipeline to Bangalore, the state will now be able to obtain gas for its energy as well as other

requirements. All success to GAIL in laying its pipelines to Bangalore

The two organizations would initiate a joint exercise for immediate assessment of the demand

potential of natural gas and allied products in the State. Besides, the cooperation is based on the

strategy of API i.e. Awareness, Prevention and Implementation to work towards the goal of clean

and green environment.

Under the Cooperation Agreement, GAIL will use its technical and commercial expertise to study

various options and to evaluate Energy Demand in the state. GAIL and IDD will conduct necessary

Page | 29

techno-economic studies based on demand potential, including pipelines and City Gas Distribution

Networks (CGD) prepare the preliminary Techno Economic Feasibility Report (TEFR) for

infrastructure development. The Cooperation Agreement also provides for GAIL and IDC, to

identify industrial clusters for distribution of Natural Gas as fuel and to determine modus operandi

for setting up of joint ventures by GAIL in Karnataka.

It may be recalled that GAIL Board had accorded in-principle approval for laying of the Dabhol-

Bangalore gas pipeline during its meeting held in January 2008. Depending on the source and

customer tie up, the 30`, 730 km Dabhol-Bangalore gas pipeline shall be designed to carry 16

MMSCD of gas and will need an investment of approximately Rs 44 billion (including 650 km of

spur lines).

The route of the proposed pipeline is from R-LNG Terminal of Ratnagiri Gas and Power (RGPPL) at

Dabhol in Maharashtra up to Bangalore. The pipeline will pass through Ratnagiri and Kolhapur

districts of Maharashtra; and Belgaum, Dharwad, Haveri, Davangere, Chitradurga, Tumkur and

Bangalore districts of Karnataka. With this pipeline, natural gas from RGPPL`s R-LNG Terminal

can be supplied to industrial clusters in the state of Maharashtra and Karnataka. GAIL will also be

laying 840 km Kochi – Kanjirkkod – Bangalore / Mangalore pipeline which will pass through

Kerala, Tamil Nadu and Karnataka at an estimated investment on this pipeline will be Rs 22 billion.

GAIL signs deal with fertilizer cos to pipe KG gas -

Reliance Industries` (RIL) Krishna-Godavari (KG) basin gas is all set to fuel fertilizer plants with

GAIL (India) signing transportation agreements with fertilizer firms, reports Economic Times.

Nagarjuna Fertilizers, Iffco and Chambal Fertilizers have alos signed the deal and nine other

fertilizer companies are expected to sign transportation agreements with GAIL.

The two parties also agreed on a commissioning period of three months. Despite inking gas sale-

purchase agreements with fertilizer companies, RIL was unable to transport KG gas to them due to

differences over terms of agreement between GAIL and consumers.

Shares of GAIL (India) gained Rs 5.8, or 2.47%, to trade at Rs 240.65. The total volume of shares

traded was 338,758 at the BSE (3.28 p.m., Friday).

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GAIL mulls investment of Rs 10 bn in CNG stations -

Government run, GAIL India is mulling to invest Rs 10 billion in setting up 2,000 compressed

natural gas (CNG) dispensing stations on major national highways to create a CNG Quadrilateral,

reports Economic Times. Chairman and managing director of the company said that the company

was in a position to achieve its target in the next three years. He further said that GAIL Gas, a

wholly owned subsidiary of the company has agreed to provide a support of Rs 1 billion in setting up

CNG stations in cities along its parent company`s pipeline network.

In first part of the CNG Quadrilateral, five CNG stations would be set up on the Delhi-Mathura-Agra

highway at Rs 490 million.  The quadrilateral would need 14 million standard cubic metres of

natural gas a day, he said. Currently, 400 CNG stations in the country sell 3.7 mmscmd of gas to

automobiles.

The company seeks to procure all of the 5 mmscmd gas from the initial output from Reliance

Industries` eastern offshore KG-D6 fields for selling CNG to automobiles and piped natural gas to

households for cooking purpose.

GAIL takes 9% stake in ONGC Petro-additions -

Gas Authority of India has acquired 9% equity stake in a petrochemical plant project of ONGC Petro

additions (OPAL), coming up at Dahej in Gujarat. ONGC Petro-additions is a special purpose

vehicle created for executing the Rs 135 billion petrochemicals complex at Dahej, in Gujarat.

GAIL, which already has a presence in the petrochemicals business, is reported to have sought 19%

equity in OPAL. With 50% of the project already tied up and 25% reserved for public issue, ONGC

said OPAL has had to turn down a lot of overseas offers. The public offer, which will be at a

premium, is expected to come later after the project gets off the ground.

OPAL will use C2-C3 (ethane and propane) compounds extracted from imported liquefied natural

gas (LNG) to make polymers. Commissioning of the project has been tied to the setting up of a

cracker unit. GAIL in discussions with Shell to import LNG cargo for Dabhol

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GAIL India is in discussions with Shell to import one LNG cargo for commissioning the Dabhol

LNG terminal, meant to feed the adjoining power plant. The company said Shell has committed

supplying them one cargo. GAIL has expanded into gas processing, petrochemicals, liquefied

petroleum gas transmission and telecommunications. GAIL signs gas supply contract with National

Fertlilizers

GAIL (India) today signed term sheets for supply of natural gas to Barauni plant of Urvarak Videsh

and Bhatinda, Panipat and Nangal plants of National Fertilizers (NFL).

The terms sheets were signed by Director (Marketing), GAIL, CMD and Director (Technical), NFL,

Chairperson, Urvarak Videsh and Director (Finance), NFL in presence of Union minister of

Chemicals and Fertilizers and Steel.

NFL is operating its three fertilizer plants at Panipat, Bathinda and Nangal Plants with fuel oil as

feedstock. The changeover of feedstock from fuel-oil to natural gas is estimated at a cost of Rs.11.50

billion for each plant. The changeover of feedstock will reduce the energy consumption in these

plants, which in turn will, reduce the fertilizer subsidy outgo of government of India to the tune of

Rs. 6.62 billion per annum during initial five years. This saving is expected to go up to Rs. 7.41

billion per annum from 6th year onwards after completion of these projects.

According to the term sheets, GAIL will supply 2.11 MMSCMD gas to Barauni plant, 0.88

MMSCMD, 0.87 MMSCMD and 1.03 MMSCMD for NFL Panipat, Bhatinda and Nangal plants

respectively.

The initial supply date in case of Barauni is Oct 2012-June 2013 and June 2012 - December 2012 in

case of NFL fuel oil conversion plants. The contract period is 15 years from the date of

commencement of supplies. Gas for the supply will be sourced from sources like KG Basin block /

other NELP blocks / RLNG etc.

GAIL commissions Ambewadi-Usar pipeline -

GAIL (India) commissioned the 30`` dia, 50 km Ambewadi – Usar pipeline. GAIL commissioned

the pipeline connecting tap-off point at Ambewadi on the Panvel – Dabhol pipeline of GAIL (which

provides gas to Dabhol power plant) to the existing pipeline of GAIL in the Usar region.

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The new pipeline will enable supply of RLNG to various customers in Usar region such as RCF,

Thal, Ispat Industries Limited, Vikram Ispat, HR Johnson, Supreme and NITCO. Out of these,

Supreme and NITCO are new customers, whereas other companies are presently taking APM gas

available from Thal. However, these companies will now benefit from additional availability of

natural gas in the form of RLNG.

GAIL has already commissioned 30``, 590 km Dahej - Uran and Dabhol Panvel Pipeline Phase I,

DUPL spur lines in Kalyan, Turbhe and Taloja area and 30``, 70 km Korgaon – Pune pipelines to

supply natural gas to various customers in the region. Presently, pipeline projects to provide

connectivity to TATA Power and HPCL are under progress.

GAIL owns and operates a network of around 7850 km of Natural Gas high pressure trunk pipeline

with a capacity to carry 148 MMSCMD of natural gas across the country.

GAIL is implementing projects to lay additional 5,500 km of natural gas pipelines at an estimated

investment of Rs 200 billion. These would include large trunk pipelines along with smaller pipelines

which would provide connectivity among trunk lines so that the Company is able to have a grid.

When these pipelines are commissioned, the capacity is expected to increase from 148 MMSCMD at

present to around 300 MMSCMD.

New natural gas trunk pipelines being laid are 610 km Dadri – Bawana – Nangal pipeline passing

through UP, Delhi, Haryana and Punjab, 310 km Chainsa – Gurgaon – Jhajjhar – Hissar pipeline

passing through Haryana and Rajasthan, 876 km Jagdishpur – Haldia pipeline passing through West

Bengal, Jharkhand, Bihar and U.P., 730 km Dabhol – Bangalore pipeline passing through

Maharashtra and Karnataka , 840 km Kochi – Kanjirkkod – Bangalore / Mangalore pipeline passing

through Kerala, Tamil Nadu and Karnataka. In addition to these, GAIL is augmenting the capacities

of 3 existing pipelines, viz. Dahej (Gujarat) – Vijaipur (Madhya Pradesh) pipeline, Vijaipur (Madhya

Pradesh) – Dadri (Uttar Pradesh) pipeline, Vijaipur (Madhya Pradesh) – Auraiya (Uttar Pradesh) –

Jagdishpur (Uttar Pradesh) pipeline.

GAIL, IFFCO sign MOU for gas sector projects -

Page | 33

GAIL and Indian Farmers Fertiliser Cooperative (IFFCO) signed a memorandum of understanding

(MoU) for cooperation in natural gas sector related opportunities in India.

As per the agreement both the companies would jointly evaluate the potential of setting up of a gas

based power plant and other industries including Chemicals, Fertilisers, Compressed Natural Gas

(CNG) and Piped Natural Gas (PNG) in India and also explore the possibility of sourcing of Natural

Gas / LNG for the identified projects.

Gail Signed MOU with other Corporates for Gas Supply :-

GAIL signed Term Sheets for supply of natural gas to Barauni plant of Urvarak Videsh Limited and

Bhatinda, Panipat and Nangal plants of National Fertilizers Limited. NFL is operating its three

fertilizer plants at Panipat, Bathinda and Nangal Plants with fuel oil as feedstock. According to the

Term Sheets, GAIL will supply 2.11 MMSCMD gas to Barauni plant, 0.88 MMSCMD, 0.87

MMSCMD and 1.03 MMSCMD for NFL Panipat, Bhatinda and Nangal plants respectively. The

initial supply date in case of Barauni is Oct 2012-June 2013 and June 2012 - December 2012 in case

of NFL Fuel Oil conversion plants. The contract period is 15 years from the date of commencement

of supplies. The Barauni plant will be supplied gas through GAIL’s 1400 km (including spurlines)

Jagdishpur-Haldia pipeline (JHPL) to be laid at an investment of approx. Rs. 7000 crore, whereas

NFL plants at Bhatinda, Panipat and Nangal will be supplied gas through GAIL’s 610 km Dadri-

Bawana-Nangal pipeline to be laid at an investment of Rs. 2500 crore. The 32 MMSCMD

Jagdishpur – Haldia pipeline will open up energy corridor for major industrial use by other fertilizer

plants and steel plants along the pipeline route. The revival of Barauni unit by Urvarak Videsh

Limited co-promoted by RCF, Kribhco and NFL is scheduled to be complete by 2012-13. The

conversion of NFL plants is scheduled to be complete by 2011.

Gas Cooperation Agreement with Tamil Nadu -

GAIL signed a Gas Cooperation Agreement with Tamil Nadu Industrial Development Corporation

Limited (TIDCO). As a part of the Gas Cooperation Agreement, GAIL will conduct preliminary

techno-economic feasibility study for gas demand potential in industrial, commercial, transport,

residential sectors and evaluate medium and long term gas demand potential of the State. GAIL will

also assess pipeline infrastructure and associated facilities required for supply of natural gas

Page | 34

including optical fibre network. The Company will determine Natural Gas supply options to Tamil

Nadu on long term competitive basis.

Gas Cooperation Agreement with Himachal Pradesh -

GAIL signed a Co-operation Agreement with the Department of Industries, Himachal Pradesh for

extension of the proposed Dadri-Bawana-Nangal natural gas pipeline up-to this region, a joint

exercise for assessment of the demand potential of natural gas and allied products in the state of

Himachal Pradesh and for looking into feasibility of extending the proposed Dadri-Bawana-Nangal

natural gas pipeline upto Himachal Pradesh. The Gas pipeline will bring clean and environment

friendly fuel to various consumers in the region, which include Industrial, domestic and transport

sectors. The availability of gas in the region would herald the use of a more efficient energy

resource, which will increase the competitive edge of the industries using natural gas.

MOU with BPCL -

GAIL and Bharat Petroleum Corporation Limited signed a Memorandum of Understanding for

cooperation in the areas of Natural Gas –Transmission and distribution, LPG Pipeline, City Gas

Projects, Exploration & Production, use and marketing of Naphtha, Infrastructure Projects and

Technology & Knowledge Sharing.

GAIL IN ADVANCE STAGE OF IMPLEMENTATION

OF TECHNOLOGY :-

E-BUSINESS -

GAIL made significant investments in IT infrastructure and software over the last five years in view

of the current developments in the industry and GAIL's growth plans. In the last two years, GAIL

has taken significant steps to leverage its strength of existing robust IT infrastructure. An IT Policy

and an IT Strategy have been put in place.

GAIL’s IT strategy is an Integrated Approach. In today’s competitive

world, IT strategy can provide the real competitive edge to companies.

Page | 35

The company's IT initiatives are spread across all its functional areas and the objective is to use IT to

the best possible extent. IT contributes directly to work efficiency

and transactional efficiency, leading to cost reduction and increased

customer satisfaction. Thus, GAIL has undertaken a number of IT

initiatives which have significantly contributed to cost reduction and

operational efficiency. Rather than relying on reams of papers and

files and loads of unclassified information, one must develop a

system of electronic exchange of classified and appropriate information. GAIL’s IT strategy borders

on these principles in an effort to become a techno savvy and efficient company.

Personal E-Banking -

E-Banking at GAIL is an attempt to enable safe and easy handling of employee’s salary accounts

and miscellaneous claims. Personal e-Banking has been introduced in the corporate office and Noida

wherein the salary and other payments get credited to employee’s account by electronic transfer.

ATM facilities have been provided at corporate office and Noida office for facilitating transactions.

Organisational E-Banking (E-Receivables and E-Payments) -

GAIL has also introduced organizational E-Banking covering E-Receivables and E-Payments, for

all the customers and vendors. An integrated system has been developed to enable efficient and

speedy transactions involving GAIL, banks, customers and vendors. Besides better operational

efficiency, lesser paper work and better utilization of manpower, there has helped reduction in

transaction cycle time leading to financial advantages.

E-Investment of Surplus funds -

An online system for investing surplus funds has been developed,

wherein the banks are able to quote their rates online, the transactions

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are compared and processed electronically before the final investment is made. This E-investment

system has resulted in process cycle time reduction and cost effectiveness for both GAIL and the

banks, besides better returns.

Paperless FAX -

GAIL has made a shift from the traditional FAX rooms to Paperless FAX System based on Fax

servers, which is an e-mail-based system through which employees can conveniently send and/or

receive fax messages through their messaging system mailbox internally or by accessing the

messaging system from anywhere in India and abroad with the help of the Internet. The IT

department has estimates that by adopting this practice on a company-wide basis, a saving of around

Rs 25 lakh per annum can be achieved, excluding the STD charges, which register a higher amount

when a fax message is sent through an ordinary fax machine, the fax server.

Bill Watch System -

Processing of the suppliers’ bills has been a major area of concern for business organizations and

their suppliers. GAIL has made a sincere effort to overcome delay

in processing of bills by introducing an online Bill Watch System,

by which suppliers, vendors and contractors are enabled through

GAIL website to track the status of their pending bills. All they have

to do is enter the ‘receipt number’ given at the time of submission of

the bills and the system informs them instantly about the detailed

status of their bills and at which level the bills are pending, if applicable. This is an important step

towards strengthening our partnership with our suppliers, vendors and contractors, and creates the

needed supply chain efficiency.

There are significant results achieved at all the locations wherein more than 90% of bills are cleared

within 15 days after introduction of the Bill Watch System.

Video Conferencing -

GAIL has one of the best Video Conferencing facilities

connecting 23 major work centers and sites so far, which

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will be extended to other locations as well. This facility is being used for conference inaugurations,

key presentations and quick business reviews, internally. It also helps in cost-efficient conferencing

with foreign vendors and suppliers to discuss key commercial issues.

File Watch System -

One of the key factors of success of a progressive organization is fast

and transparent decision making. To enable this GAIL has introduced

‘File Watch System’ which is a web based centralized system, wherein

brief information, about all the files, including dates of entry and exit,

are necessarily being entered at initiation level as well at all the

transaction levels where the file moves.

File watch system helps users, track the movement and status of the files, as well as the time taken

by the individual officers to clear the files and the total time taken for approvals. The inbuilt aspect

of accountability in this system, cuts down the decision making time, which is a major cause of

concern, especially in PSUs. “Reshaping” our organization entails a fresh perspective of things

which is why we have the File Movement System and the Bill Watch System in place.Reaching

Employees (Corporate Intranet /100 % e-Mail Access / Internet Access to Executives)

In today’s era of knowledge workers, it is of paramount importance to be well informed about all the

happenings in the micro and macro business environment, on time. To facilitate this, GAIL has

achieved milestone of providing e-mail access to each and every employee of company and further

to enhance external orientation, all executives of the company have Internet access. Banking upon

this extensive reach of computers and e-mail facility to all the employees, company has developed a

Corporate Intranet, which is a dedicated and a powerful medium of information sharing between all

the employees and the different business functions of GAIL. The intranet is constantly updated and

this sharing of information is on a continuous basis.

Enterprise Resource Planning -

Page | 38

GAIL is in the process of implementing the Enterprise Resource

Planning (ERP) system. ERP implementation would improve the

operational efficiency, productivity and customer satisfaction levels,

besides optimization of cost, inventory and manpower utilization.

This will also lead to efficient Supply Chain Management. ERP

implementation would also lead to Integrated business & process

control systems, Standardized processes by adopting best industry practices across locations and

functions, Efficient and timely provision of Management Information for better decision support and

operational control, and Enabling internal performance measurement and Improved responsiveness

to changing market conditions,

The major benefits of GAIL's IT initiatives include cost reduction, operational efficiency, faster

decision making, better service to customers, better vendor management, seamless and faster

information sharing, quick response time with better and faster communication.

OBJECTIVES

Enable GAIL to leverage information for competitive advantage in a deregulated and highly competitive market scenario

Move up the value chain

Achieve higher customer service and satisfaction

Improve operational efficiency and productivity

Optimization of cost

ERP SOLUTION FOR GAIL GAIL decided to implement SAP - ERP solution after due diligence SAP commands over 70 % market share

SAP has been implemented in over 3,50,000 organizations worldwide including most oil & gas majors

SAP is built on Global Best Business Practices

Page | 39

FINANCIAL PERFORMANCE OF GAIL FOR THE

YEAR 2010-11

GAIL (India) Limited has recorded sustained performance in all key physical as well as financial

parameters in the Financial Year 2010-11.

Page | 40

GAIL (India) Limited has recorded sustained performance in key physical as well as financial

parameters in the Financial Year 2010-11. According to the audited figures, Turnover (net of excise

duty) in the year 2010-11 increased by 30 per cent to Rs. 32,459 crore from Rs. 24,996 crore in FY

2009-10. The Profit Before Tax during the year 2010-11 increased by 14 percent to Rs. 5,240 crore

from Rs. 4,578 crore in the previous year. The Profit After Tax during the year 2010-11 increased by

13% to Rs. 3,561 crore from Rs. 3,140 crore in the previous year. The Gross Margin during the year

2010-11 increased by 15 percent to Rs. 5,973 crore from Rs. 5,210 crore. The Board of Directors has

recommended payment of total dividend at the rate of 75 percent on the paid-up share capital of the

Company for FY 2010-11 inclusive of 20 percent interim dividend already paid. During the year

2010-11, as per consolidated financial statements, the total group sales (net of Excise Duty) were Rs.

35,107 crore. The consolidated Gross Margin was Rs. 7,065 crore, the Profit before Tax was Rs.

5,799 crore and Group Profit after Tax was Rs. 4,021 crore.The Earning Per Share (EPS) was Rs.

28.07 per share in the year 2010-11 as against Rs. 24.75 per share in the year 2009-10. The EPS as

per consolidated statement was Rs. 31.70 per share as against Rs. 26.23 per share in the previous

year. The decrease in net profit during the fourth quarter of the current financial year was mainly due

higher LPG Subsidy contribution by the Company.

Financial Performance of 2010-11

Segment-wise Revenue

During the Current financial year, revenues from Natural Gas Transmission business have increased by 20 percent to Rs. 3790 crore as against Rs.3168 crore in last year. The revenues from LPG transmission during the current financial year have increased by 6 percent to Rs. 475 crore as against Rs. 447 crore in last year. The sales from Natural Gas Trading during current financial year increased by 37 percent to Rs. 25,667 crore as against Rs.18,803 crore in last year. The net sales from Petrochemicals business have increased by 2 percent to Rs. 2,960 crore as against Rs.2,912 crore in last year. The net sales from LPG and Liquid Hydrocarbons business during the current financial was Rs. 2,786 crore as against Rs. 2833 crore in last year.The increase in net profit during the current financial year was mainly due to the increase in Natural gas Trading and Transmission and increase in petrochemicals sales. 

Page | 41

Physical Performance

During the current financial year, the Natural Gas transmission was 117.91 MMSCMD, increased by 10 percent from 106.74 MMSCMD in the last year. The LPG transmission during the current financial year was 3,337 TMT, up by 6 percent from 3,161 TMT in the last financial year. The Natural Gas sales during the current financial year were 83.23 MMSCMD, up 2 percent from 81.43 MMSCMD in the last year. The LPG and Other Liquid Hydrocarbon production during the current financial year was 1,369 TMT, as against 1440 TMT in the last year. The LPG and Other Liquid Hydrocarbon sales during the current financial year were 1373 TMT, as against 1443 TMT in the last year. During FY 2010-11, the petrochemical production was 416 TMT as against 417 TMT in the last year. The polymer sales during current financial year were 420 TMT as against 410 TMT in the last year.

Q4   Results of 2010-11

GAIL (India) Limited registered a turnover (net of Excise Duty) of Rs. 8,894 crore in the fourth quarter of FY 2010-11 as against Rs.6,522 Crore, a 36 percent increase over the turnover in the corresponding quarter during the last financial year. GAIL’s Net Profit for the fourth quarter of the FY 2010-11 decreased by 14 percent to Rs. 783 crore against Rs. 911 crore in the corresponding quarter of previous year due to higher LPG Subsidy. The Gross Margin decreased by 9 percent to Rs. 1,340 crore in the fourth quarter of the current financial year as against Rs.1,465 crore in the corresponding period last year. The Profit Before Tax decreased  by 13 percent to Rs. 1,139 crore in the fourth quarter of the current financial year against Rs.1,306 crore in the corresponding period of last year.

Physical Performance

During the fourth quarter of the current financial year, the Natural Gas sales were 85.73 MMSCMD, up 3 percent from 83.59 MMSCMD during the corresponding quarter of last year. During the fourth quarter of FY 2010-11, the petrochemical production was 122 TMT, up 9 percent from 112 TMT in the corresponding quarter last year. The polymer sales during the fourth quarter of the current financial year have increased by 32 percent to 144 TMT as against 109 TMT in the corresponding quarter in the previous year. The LPG transmission during the fourth quarter of the current financial year was 857 TMT as against 871 TMT during the corresponding quarter in the previous financial year. The LPG and Other Liquid Hydrocarbon production during the fourth quarter of the current financial year was 339 TMT as against 357 TMT in the corresponding quarter of last year. The LPG and Other Liquid Hydrocarbon sales during the fourth quarter of the current financial year were 339 TMT as against 356 TMT in the corresponding period last year. The Natural Gas transmission during the fourth quarter of the current financial year was 120.43 MMSCMD, increased by 5 percent from 114.76 MMSCMD in the corresponding period last year

Page | 42

ABOUT GAIL VIJAIPUR

Page | 43

GAIL VIJAIPUR HAVING

TWO PLANTS

LPG PLANT HVJ PLANT

GAIL (India) Limited is having its most valued installation at

Vijaipur Distt Guna of Madhya Pradesh Vijaipur. GAIL Vijaipur is the O&M Head Quarter of HVJ

Page | 44

Natural Gas Transmission Pipeline (includes 6 compressor stations at different Locations, MCR

station for monitoring pipeline health & hydraulics of natural gas), 2 gas processing units for Liquid

Hydrocarbon production. Journey of GAIL Vijaipur has observed various milestones, Gas

Processing Unit of Vijaipur complexs started operations in the early nineties.

GAIL (India) Limited is also having its first LPG Plant at Vijaipur. In this plant, LPG is extracted

from Natural Gas by following latest Turbo-expander process.

The design gas processing capacity of the plant (both trains combined) is 15 million standard cubic

meters of gas per day (MMSCMD) with annual production installed capacity of LPG as well as the

other allied products, Propane, Pentane and Naphtha being as following:

PRODUCT INSTALLED ACHEIVED

LPG 406000 MT 455562 MT

PROPANE 130000 MT 85599 MT

PENTANE 42000 MT 25360 MT

NAPHTHA 24000 MT 41052 MT

Plant is now operated at 120 % of design gas processing capacity on continuous

Basis. The present annual production of all the products achieved is as following:

Milestones of GAIL Vijaipur

Page | 45

LPG PLANT WORKING -

Page | 46

Sr. No. MILESTONES OF GAIL VIJAIPUR Year

1. Commissioning of Compressor Stn. 1987

2. Completion of HVJ Pipeline 1988

3. Commissioning of LPG Phase I (TR-11) 1991

4. Commissioning of LPG Phase II (TR-12) 1992

5. Comm. of Propane recovery unit-1 1995

6. Comm. of Propane recovery unit-2 1996

7. Introduction of SPBS 1998

8 Pentane Storage & SBPS 1998

9. GREP Pipe Line 1998

10. Comm. of LEF Overhead Compressor 2001

11. Completion of DVPL Project 2004

12. Introduction of Naphtha 2006

13. VKPL, KMPL,JIPPL 2007

14 GREP up gradation Project Ongoing

GAS Compressor Stations :-

The HVJ pipeline system consists of six compressor stations Hazira, Vaghodia, Jhabua, Kheda,

Vijaipur, and Auraiya. These compressor stations boost the pressure of natural gas for efficient

transmission and for meeting the contractual pressure requirements of different consumers. The

compressor stations are main consumers of Energy, their scheduling of operation is of utmost

importance from energy efficiency point of view. These compressors are Gas turbine driven

equipments. Due care has been taken at the time of selection of these machines from the energy

consumption point of view & suitable capitalization clause has been applied during evaluation of

technology. Details of Compressor Stations along the HVJ Pipeline are depicted in Exhibit BO.4.

Page | 47

Centralized Pipeline Maintenance Base :

Page | 48

Sr. No Station Name Compressor Details

Comp. Make

1 Hazira 7+3 RR-Allison KC5

2+0 RR-RB211 KB5

2 Vaghodia 2+1 RR-RB211

3 Jhabua 5+2 RR-Allison KC5

2+1 NP

4 Khera 2+1 RR-RB211

The Centralized pipeline group monitors the health of pipeline. This centralized group collates the

data collected by other maintenance bases, analyzes the data & directs corrective action to be taken

for mitigating the adverse impact of the issue. The pipeline integrity is ensured by analyzing the

various parameters e.g. PSP, healthiness of cathodic protection. Pipeline maintenance is very

technology driven & it is being planned without hampering the customer supply. The aerial surveys

are also planned to verify the site reports.

The pipeline integrity is ensured by analyzing the various parameters e.g. PSP, healthiness of

cathodic protection. Pipeline maintenance is very technology driven & it is being planned without

hampering the customer supply. The aerial surveys are also carried out to verify the site reports.

Gas Processing Unit :

The Capacity of Gas Processing complex at Vijaipur is 15MMSCMD (Million Metric Standard

Cubic Meter Per day) of natural gas with two trains of 7.5 MMSCMD each. The total plant capacity

is 6 Lakh MT of Liquid Hydro Carbons (LHC).

The entire process consists of:

1) Gas receiving, drying and regeneration,

2) Pre-cooling & Chill down in Expander,

3) Distillation

Gas receiving, drying & regeneration :

Natural gas is received from HVJ (Hazira-Vijaipur-Jagdishpur) pipeline at a pressure of around 54.2

Kg/cm2g and temperature of around 30 degree C. The gas flows to a Knock Out Drum (KOD) where

any liquid present in the gas is knocked off. After this the gas is dried in Molecular Sieve Dryers to

remove the moisture to below 1 ppm level. A two bed dryer system is used – one for drying &

another for regeneration.

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Pre-cooling & Chill-down Section :

The dried gas is cooled to approx (-) 69 degree C in two stages. In the first stage it is pre-cooled to

approx (-) 39 degree C in chiller by heat exchange with various cold streams generated later in the

process in the chill down system and external Propane refrigeration. Propane refrigeration system is

provided to supply additional refrigeration required in chiller and LEF condenser for Propane

recovery. The condensed liquid is separated out in Separator-I and vapor is expanded through a

single stage Turbo-expander. The vapor-liquid mixture from Turbo-expander is fed to Separator-II.

The hydrocarbon liquid from the two separators, after heat exchange, is fed to the fractionation

section to recover the products i.e. LPG, Propane, Pentane and SBP Solvent.

Vapors (Lean Natural Gas) from the second separator are taken through the chiller to recover

refrigeration. Then it is compressed to about 30 Kg/cm2g by the expander compressor. The quantity

of lean gas required for NFL Plant & branch line of HVJ pipeline is compressed in a GT driven two

stage Lean Gas Compressor to 45 Kg/cm2g (Medium Pressure Lean Gas) and the rest of gas is

compressed to 55.2 Kg/cm2g (High Pressure Lean Gas) and sent to Vijaipur compressor station of

HVJ pipeline for further transmission.

Distillation Section :

The distillation section consists of four columns namely LEF, Propane, LPG and Naphtha columns.

(a) LEF Column – Liquid from the two separators flows to chiller to supply cold & is then routed to

Light Ends Fractionation (LEF) column. This column removes all Methane, Ethane and most of

Carbon dioxide as overhead vapors. Bottom stream consists of part of Propane, Butane, Pentane &

heavier hydrocarbons. Condensing a part of overhead vapors generates reflux. The refrigerant duty is

supplied by vapors from second separator and external Propane refrigeration.

(b).Propane Column – Liquid from LEF column bottom is fed to Propane column where Propane is

produced as top product.

© LPG Column – Liquid from Propane column bottom is fed to LPG column for separation of LPG

& heavier hydrocarbons. This column separates LPG as top product.

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(d)NAPHTHA Column – Liquid from the LPG column bottom is fed to NAPHTHA column where

Pentane is produced as the top product and Naphtha as bottom product.

Storage facility :

Following facilities exist for storage of the products:

(a) LPG - Eight Spheres of 2575 M3 water capacity each

(b) Propane - Three Spheres of 2575 M3 water capacity each

(c) Pentane - Five Bullets of 198 M3 water capacity each

(d) Naphtha - Two Tanks of 1300 M3 water capacity each

Loading facility:

Following facilities exist for loading & dispatch of the products:

(a) LPG - (i) Rail Loading Gantry with Eighty loading points

(ii) Road Loading Gantry with Eight loading bays

(b) Propane - Road Loading Gantry with Four loading bays.

© Pentane - Road Loading Gantry with Two loading bays

(d) Naphtha - Road Loading Gantry with Three loading bays

Employee Profile: the core of the organization

Page | 51

GAIL, Vijaipur team consists of 327 employees, which includes both executives and non-

executives. The average age of employees is 36 years. Technically Vijaipur executive team is highly

capable with strong professional qualification base .Most of the core functions like O&M of Plant,

HR, Procurement, and Finance are carried out by dedicated and trained employees. Some of the non-

core activities like Housekeeping & Township Security have been out-sourced through agencies who

are expert in their own areas. CISF has been kept for plant security.

COMPANY ACCOUNTING POLICY FOR 2010-11

(A) BALANCE SHEET

1) Fixed Assets -

Fixed Assets are valued at historical cost on consistent basis. In the case of commissioned assets

where final payment to the supplier/contractors is pending, capitalization is made on provisional

basis, including provisional liability pending approval of Competent Authority, subject to necessary

adjustment in cost and depreciation in the year of settlement.

2) Intangible Assets -

Intangible assets like software, licenses and right-of-use of land including sharing

of ROU with other entities which are expected to provide future enduring

economic benefits are capitalized as Intangible Assets.

3) Capital Work in Progress -

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(a) Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual

payments/estimated liability, as and when work commences where ROU is acquired.

(b) The capital work in progress includes advance for capital goods/ material in Transit/ value of

materials / equipment etc. received at site for use in the projects

4) Borrowing Cost -

Borrowing cost of the funds specifically borrowed for the purpose of obtaining qualifying assets and eligible for capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for use after netting off any income earned on temporary investment of such funds. Expenses Incurred During Construction Period.

All revenue expenditure incurred during the year, which is exclusively attributable to acquisition /

construction of fixed assets, is capitalized at the time of commissioning of such assets.

6) Depreciation/Amortization -

Depreciation on Fixed Assets other than those mentioned below is provided in accordance with the

rates as specified in Schedule XIV of the Companies Act, 1956, on straight line method (SLM) on

pro-rata basis (monthly pro-rata for bought out assets).

Assets costing upto Rs.5,000/- are depreciated fully in the year of capitalization. Bunk Houses are

amortized on assumption of five years life. Oil and Gas Pipelines including other related facilities

are depreciated @ 3.17% per annum on SLM basis based on useful life of 30 years.

Computers at the residence of the employees are depreciated @ 23.75% per annum on SLM basis.

Furniture, Electric Equipments and Mobiles provided for the use of employees are depreciated @

15% per annum on SLM basis.

Cost of the leasehold land not exceeding 99 years is amortized over the lease period. Depreciation

due to price adjustment in the original cost of fixed assets is charged prospectively.

Capital expenditure on the assets (enabling facilities), the ownership of which is not with the

Company, is charged off to Revenue. Software / Licenses are amortized in 5 years on straight line

method. No depreciation is being charged on ROU being perpetual in nature.

Page | 53

After impairment of assets, if any, depreciation is provided on the revised carrying amount of the

assets over its remaining useful life.

Capital assets installed at the consumers premises on the land whose ownership is not with the

company, has been depreciated on SLM basis in accordance with the rates as specified in Schedule

XIV of the Company's Act, 1956

7) Foreign Currency Translation -

(a) Transactions in foreign currency are accounted at the exchange rate prevailing on the transaction

date.

(b) Monetary items (such as Cash, Receivables, Loans, Payables, etc.) denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.

(c) Non monetary items (such as Investments, Fixed Assets, etc), denominated in foreign currencies

are accounted at the exchange rate prevailing on the date of transaction(s).

(d) Any gains or loss arising on account of exchange difference either on settlement or on translation

is accounted for in the Profit & Loss account.

8) Investments -

Investments are classified into current and long term investments. Current investments are stated at lower of cost or market value. Long term investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

9) Inventories -

Raw materials and Finished products are valued at cost or net realizable value, whichever is lower.

Stock in process is valued at cost or net realizable value, whichever is lower. It is valued at cost

where the finished products in which these are to be incorporated are expected to be sold at or above

cost.

Stores and spares and other material for use in production of inventories are valued at weighted

average cost or net realizable value, whichever is lower. It is valued at weighted average cost where

Page | 54

the finished products in which they will be incorporated are expected to be sold at/or above cost.

Surplus / Obsolete Stores and Spares are valued at cost or net realizable value, which ever is lower.

(d) Surplus / Obsolete Capital Stores, other than held for use in construction of a capital asset,

are valued at lower of cost or net realizable value.

10) Machinery spares , which can be used only in connection with an item of fixed asset and their

use is expected to be irregular, are capitalized with the cost of that fixed asset and are depreciated

fully over the remaining useful life of that asset.

11) Grants -

In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken

to Capital Reserve which is recognized as income in the Profit and Loss Account over the useful life

period of the asset.

(B) PROFIT & LOSS ACCOUNT :-

12) Sale proceeds are accounted for based on the consumer price inclusive of Statutory Levies and

charges up to the place where ownership of goods is transferred.

13) Income from Consultancy/Contact Services, if any, is recognized based on Proportionate

Completion Method.

14) The interest allocable to operations in respect of assets commissioned during the year is worked

out by adopting the average of debt equity ratios at the beginning and closing of that year and

applying the average ratio of debt thus worked out to the capitalized cost.

15) Pre-project expenditure relating to Projects which are considered unviable / closed is charged off

to Revenue in the year of declaration/closure.

16) Employees Benefits -

All short term employee benefits are recognized at there undiscounted amount in the accounting

period in which they are incurred.

Page | 55

Employee Benefits under Defined Contribution Plan in respect of provident fund is recognized based

on the undiscounted obligation of the company towards contribution to the fund. The same is paid to

the provident fund which is administered through a separate trust.

Employee Benefits under Defined Benefit Plans in respect of leave encashment, compensated

absence, post retirement medical scheme, long service award and other terminal benefits are

recognized based on the present value of defined benefit obligation, which is computed on the basis

of actuarial valuation using the Projected Unit Credit method. Actuarial liability in excess of

respective plan assets is recognized during the year. Provision for gratuity as per actuarial valuation

is funded with a separate trust.

17) Taxes on Income -

Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Deferred Tax

Liability / Asset resulting from ‘timing difference’ between book and taxable profit is accounted for

considering the tax rate and laws that have been enacted or substantively enacted as on the Balance

Sheet date. Deferred Tax Asset, if any, is recognized and carried forward only to the extent that there

is virtual certainty that the asset will be realized in future.

18) R&D Expenditure -

All expenditure, other than on capital account, on research and development are charged to Profit

and Loss Account.

19) Exploration and Development Costs :-

i) The Company follows Successful Efforts Method for accounting of Oil & Gas exploration

and production activities, which includes:-

Survey Costs are expensed in the year in which these are incurred.

Page | 56

Cost of exploratory wells is carried as ‘Exploratory wells in progresses’. Such exploratory wells in

progress are capitalized in the year in which the Producing Property is created or is expensed in the

year when determined to be dry / abandoned.

All wells appearing as “exploratory wells in progress” which are more than two years old from the

date of completion of drilling are charged to Profits and Loss Account except those wells which have

proved reserves and the development of the fields in which the wells are located has been planned.

ii) Capitalization of Producing Properties -

Producing Properties are capitalized when the wells in the area / field are ready to commence

commercial production having proved developed oil and gas reserves.

Cost of Producing Properties includes cost of successful exploratory wells, development wells,

initial depreciation of support equipments & facilities and estimated future abandonment cost.

iii) Depletion of Producing Properties -

Producing Properties are depleted using the “Unit of Production Method (UOP)”. The depletion or

unit of production charged for all the capitalized cost is calculated in the ratio of production during

the year to the proved developed reserves at the year end.

Company’s share of production costs as indicated by Operator consists of pre well head and post

well head expenses including depreciation and applicable operating costs of support equipment and

facilities.

20. Contingent Liabilities and Capital Commitments:-

a. Contingent Liabilities are disclosed in each case above Rs5 lakhs.

b. . Estimated amount of contracts remaining to be executed on capital accounts are disclosed

in each case above Rs. 5 Lacs.

21. Impairment

Page | 57

The Carrying amounts of assets are reviewed at each Balance Sheet date. In case there is any

indication of impairment based on Internal / External factors, an Impairment loss is recognized

wherever the carrying amount of an asset exceeds its recoverable amount.

GENERAL

22. Prepaid expenses and prior period expenses/income upto Rs.1,00,000/- in each

case are charged to relevant heads of account of the current year.

23. Liquidated Damages, if any, are accounted for as and when recovery is effected and the matter is

considered settled by the Management. Liquidated damages, if settled, after capitalization of assets

are charged to revenue if below Rs. 50 lakhs in each case, otherwise adjusted in the cost of relevant

assets.

24. Insurance claims are accounted for on the basis of claims admitted by the insurers.

25 a) Custom duty & other claims (including interest on delayed payments) are accounted for when there is

significant certainity that the claims are realizable.

b) Liability in respect of MGO of Natural gas is not provided for where the same is secured by MGO

recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on

receipt basis.

Page | 58

FINANCIAL ACCOUNTING SYSTEM AT GAIL- VIJAIPUR

Finance Department at GAIL Vijaipur is handling all accounting matters of HVJ Pipe Line and LPG Plant at Vijaipur. The Finance Department is headed by DGM (F&A). For proper accounting, the Business Area code for HVJ Transactions is 3000 and 6000 for LPG.

The following activities are handled by Finance Department in GAIL Vijaipur:

Following activities related to Financial Accounting are being handled by the Finance

Department- Vijaipur:-

Purchase Accounting of Natural Gas.

Sales Invoicing and Debtors Accounting.

Contracts Payments.

HVJ Purchase Payments.

Page | 59

LPG Purchase Payments.

Misc Payments.

Pay Roll Accounting, Staff Payments.

Statutory Payments like Direct & Indirect Taxes.

Projects Payments.

E. Banking and Bank Reconciliation.

Depreciation Accounting.

Central Accounting

MIS, Budgeting, Costing & Cost Accounting Records.

Internal Audit, Statutory, Cost Audit, Tax Audit

Purchase Accounting of Natural Gas:-

GAIL purchase Natural Gas from ONGC, Panna Mukta Tapti Projects and Petronet LNG. The

Natural Gas is transmitted from Hazira and Dahej thru Pipe Lines called HVJ and DVPL. The

purchase accounting of Natural Gas drawn from ONGC is done by Hazira Unit. However, in respect

of Natural Gas drawn by Vijaipur Plant from HVJ line for supply to customers under Vijaipur

Control and for extraction of LPG and Hydrocarbons, the purchase adjustment entry is passed by

the Vijaipur Plant in books of Accounts.

Sales Invoicing and Debtors Accounting :-

Sales Invoicing :-

GAIL Vijaipur cater the requirement of various gases to following customer

PRODUCTS MAJOR CUSTOMER IN ORGANIZED

Page | 60

SECTOR

Natural Gas National fertilizers ltd, Chambal fertilizer ltd, NTPC Anta, Samatal India, Samcore glass ltd, DCM (Shriram)

RLNG(Regassified liquid Natural Gas) Godrej Malanpur, Cadbury India, Surya Roshni ltd, Jamna auto ltd, Malanpur captive power plant

LPG To OMC i.e. IOCL, HPCL and BPCL, BORL (Bharat Oman Refinary Ltd)

Naphtha To NTPC

Propane C.L Gupta, SAIL, TATA Steel. etc

Pentane Reliable industries, J.C Enterprises pvt. Ltd., AMKAP Marketing Pvt ltd. etc

Trading of Natural Gas –

1) An agreement is made with customer for annual quantity & price agreed upon.

2) Gas Joint Ticket is raised by the Terminal incharge which is certified by the customer &

confirmed by NGMC. (Natural Gas Management Centre).

3) Invoice is raised on Fortnightly basis as per the terms of Agreement by Finance department

Vijaipur after confirmation of quantity by NGMC.

4) The payment from Customers is received centrally at Delhi Corporate office.

5) The accounting entries of Sales are made by Vijaipur Plant.

Sale of LPG: LPG is sold to OMCs i.e IOCL, HPCL and BPCL. LPG to IOCL is supplied thru pipe

Line and to HPCL and BPCL, thru Tankers and Railway Wagons. The LPG supplied for domestic

purpose is Non-Excisable and LPG for Industrial purposeis Excisable. The Prices are charged as per

the Sales Agreement signed by GAIL with OMCs as per APM Rates. The Invoicing is made on

weekly basis.Page | 61

Sales of Hydrocarbons i.e Naptha, Propane and Pentane :- These products are supplied to NTPC,

Malanpur Captive, Surya Roshni, etc. as per the agreement signed by GAIL with these customers.

The supply is made after receipt of advance payment.

1) Despatch documents/Excise Invoice – Despatch Deptt in the loading section inside the plant

issues the requisite documents on daily basis. For the Excisable products, requisite Excise

Documents are also issued at loading point.

(2)Commercial Invoice – Commercial Invoice is prepared for LPG on weekly basis and for other

products on fortnightly basis as per the customer terms and conditions. This is prepared on the basis

of despatch report and joint ticket from the loading control room.

(3) Invoicing against Transmission Cost :-

Against the Gas Transmission thru HVJ Pipe Line to customers i.e NTPC Anta, Chambal Fertilizers,

Samcore, Samtal and thru IOCL Pipe Line to IOCL and pipe line to NFL, the Invoicing to these

customers is made for Transmission Cost as per the agreed rates and terms and conditions.

SAP Procedure for Sales Invoicing :-

Tcode : F-28

Enter the Document Date

Document type : default DZ

Enter the Company Code

Enter the Posting Date

Enter the Bank Account : bank Incoming g/I

Enter the amount

Enter the Cheque date and bank name

Enter the business area

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Enter the customer code

Click process open item

Choose your relevant amount those should be in blue

Go to document and simulate than save.

DEBTORS ACCOUNTING :-

Debtors Accounting of Sales related transactions is made by Vijaipur Finance.

(1) Natural Gas –

Natural Gas invoicing is done by finance department & it include the following accounting entries-

1) At the time of raising invoice to Customers :

Customer A/c Dr

To Sales A/c

To Service Tax payable A/c

To VAT payable A/c

To Entry tax payable A/c

Note- Here Sales include following:

Basic Price + Royalty 10% + Purchase tax 10% + Transmission charges = Selling Price

2) At the time of receipt of payment from customer :

Bank A/c Dr

Page | 63

To Customer A/c

3) At the time of regularization of payment in which income tax is deducted :

Bank A/c Dr ( Actual amount received )

TDS A/c Dr ( TDS amount )

To Customer A/c

Note- In case if the customer deducts the income tax from the payment.

(2) Liquified Petroleum Gas (LPG) :-

It includes Excise & Commercial invoicing.

Excise Invoicing :

The accounting entry is:

Excise Duty Expense A/c Dr

To Excise duty payable A/c

Commercial Invoicing :

The accounting entry is:

Customer A/c Dr

To Sales A/c

To VAT payable A/c

Liquid Hydro Carbons (LHC) :

In case of Liquid Hydro Carbons (LHC) the finance department passes the following entries in the

books of accounts-

1) At the time of recipt of advance from customer-

Page | 64

Bank A/c Dr

To Customer Advance A/c

2) At the time of raising invoice of LHC –

Customer A/c Dr

To Sales A/c

To Sales tax payable A/c

3) At the time of regularization of payments –

Customer Advance A/c Dr

To Customer A/c

(3) Transportation invoicing :

In this following entries are passed by finance department in the books of account

1) At the time of raising invoice-

Customer A/c Dr

To Transmission Charges A/c

To Service tax payable A/c

2) At the time of receipt of payment –

Bank A/c Dr

To Customer A/c

Page | 65

3) At the time of regularization of payment in case of TDS deducted –

Bank A/c Dr

TDS receivable A/c Dr

To Customer A/c

SAP Procedure for Natural Gas Invoicing :-

In Standard Accounting Package (SAP) each transaction is given a particular code & for Natural Gas

transactions there are 2 different codes available:

(1) YRVI 001- This code is applicable for single invoicing.

Firstly the duration is set i.e. start & end date.

Then the Customer date is mentioned.

Cal. Value of Natural Gas is inserted which is given in gas ticket.

Billing date is given for which date bill has to prepared.

Material number is selected from various types of gas.

Plant is selected among Madhya Pradesh & Rajasthan.

Volume is set according to 1000/SCM unit.

Quantity is mentioned by using MMBTU unit.

Then from the list of all type of gases & transmission, selection of natural gas is made. Then

we execute the transaction, then a number is generated & for getting the print out we use

VF02 code. Then click the issue option from the filing document option, printing command

is given & we have our invoice in our hand.

(2) YRVI 010 – This code is applicable for mass invoicing.

The SAP procedure is same as for the code YEVI 001, only the basic difference is of the code.Page | 66

SAP Procedure of LPG Invoicing :-

The Transaction code is VF04.

Duration of billing date i.e. to & from has to be mentioned

Shipping point has to be given.

Click to options & select the billing date.

Display the bill list.

Collective Billing is done in case of LPG Invoicing.

Print command VF02 for printing of invoice.

SAP Procedure of Transportation Invoicing :-

The transaction code is 3015.

Firstly the duration is set i.e. start & end date.

Then the Customer date is mentioned.

Cal. Value of Natural Gas is inserted which is given in gas ticket.

Billing date is given for which date bill has to prepare.

Material number is selected from various types of gas.

Plant is selected among Madhya Pradesh & Rajasthan.

Volume is set according to 1000/SCM unit.

Page | 67

Quantity is mentioned by using MMBTU unit.

CONTRACT PAYMENTS :-

Indigenous Contracts :-

GAIL Vijaipur is also responsible to process the payments against various contracts related to O&M

for LPG Plant and for HVJ. The Contracts are processed by C&P Department Vijaipur as per

Company guidelines laid under C&P procedures and DOP. For each contract, the concerned head of

the department, nominate one EIC, to ensure the monitoring and execution of contracts. The EIC

generate monthly Service Entry Sheet for the quantity of works executed, verify the bills as per the

terms of contracts and sent to concerned officer in F&A Department- Vijaipur through BWS (Bill

Watch System) followed with hard copy. The Concerned Officer receives the Bills from BWS as

soon as the Bills are received in hard copy. F&A Department process the bills verifying all the

documents and terms and conditions. Penalty as applicable as mentioned in the contract and other

deductions as advised by EIC are also deducted by F&A Department. TDS at applicable rates is

deducted as per the nature of contract and provision given under Income Tax Rules.

Foreign Contracts/Purchase Payments :-

GAIL Vijaipur Finance Department is also dealing with processing of payments against Foreign

Contracts, awarded for maintenance etc Plant & Machinery and also for the spares  purchased from

these parties, in most of the case from Original Equipment Manufacturer.  The Contracts/PO to these

are awarded by C&P Department as per the company policy and procedure. There are also two types

of forms submitted to Reserve Bank of India through applicant’s bank in case of foreign payments –

Form 1 – Form regarding Import of machinery & spare parts.

Form 2- Form regarding Repair & services.

These forms are to be submitted to the RBI by the Applicant bank regarding the clarification of the

transaction. The Foreign payments are regulated in following ways (the mode of payment is

specifically mentioned in PO/WO)

Page | 68

Through L.C

Through Wire Transfer.

A) Payment through LC :- For making any foreign payment through Letter of Credit (LC), GAIL

submit application to its concerned bank in the format prescribed for it along with following

important documents.

1) Application & Guarantee for LC Form no. 2

2) Copy of Purchase order/Letter of Acceptance as the case may be.

The Letter of Credit (LC) are of two types :-

Revocable Letter of Credit  - in this type of LC continous payment is made until the final date of

payment comes.

Irrevocable Letter of Credit – in this type of LC one time payment is made on the final date of

payment.

B) Payment through Wire Transfer :- This mode of payment is followed when the Letter of Credit

is not opened.  As per this mode Bank is authorized to debit GAIL Account by equivalent amount in

INR of Foreign Money of P.O.  This authorization is given accompanied with following documents:-

Bill/Invoice

Bill of Lading

Copy of Work Order/P.O

A1 / A2

SAP Procedure for Contract Payments :-

In SAP, for each payment liability is created by preparing JV. Following steps are followed from

preparation of JV to release of Payments.

Step 1 – MIGO is to be done in SAP, it include the following entry :Page | 69

GL A/c Dr

To GR/IR A/c

Step 2 – MIRO is to be done after the first step, & following entry is passed :

GR/IR A/c Dr

To Vendor A/c

Step 3 – In last step bank payment has to be made, entry is:

Vendor A/c Dr

To Bank A/c

Entry of Service tax Credit –

Accountable receivable Service tax credit A/c Dr

To GL A/c

SAP Procedure for Foreign Payments :-

Step 1 – MIGO is to be done in SAP, it include the following entry :

GL A/c Dr

To GR/IR A/c

Step 2 – MIRO is to be done after the first step, & following entry is passed :

Page | 70

GR/IR A/c Dr

To Vendor A/c

Step 3 – In last step bank payment has to be made, entry is:

Vendor A/c Dr

To Bank A/c

Entry of Service tax Credit –

Accountable receivable Service tax credit A/c Dr

To GL A/c

In Invoice verification, we compare Purchase order & Goods receipt and vendor invoices and

checked on 3 parameters i.e. Price, Quantity, and Content. For Invoice Verification we require

Purchase Order (Material) / Work Order (Services) and MIGO/Service Entry sheet. In SAP, we can

do MIRO before Goods Receipt (MIGO)

Enter the Currency Rate

Go to T.Code MIRO

Enter the Purchase Order number and press enter

Enter the Section code

Enter the Text field

Take the printout of the accounting document through T.Code YRFS001

Enter the payment baseline date which is calculated the due date

Enter the Business area

Enter the House bank from which the payment is to be made

Enter the payment method of the relevant House bank

Page | 71

PURCHASE PAYMENTS FOR HVJ PIPELINE:-

GAIL Vijaipur Finance also deal with the payments against various purchases made for maintenance

and others for HVJ pipelines. For HVJ purchases payments the company Code is 3000 and business

area code for Vijaipur Unit is 3010. There are separate Business Area codes for each unit from

where the Hazira-Vijaipur-Jagdishpur pipeline goes. The Departments responsible to ensure the

proper upkeep and maintenance of HVJ Pipe lines at Vijaipur, raises their Purchase Requisition to

Vijaipur C&P Department. The Receipt and Issues of HVJ stores items are maintained by HVJ

Stores at Vijaipur. The HVJ Stores prepare the GRV of the spares received, through SAP and then

run MIGO. This result to creat Debit Inventory and credit GR/IR. The GRV along with the bills are

entered in BWS and send to finance depts. for processing of payments.

Page | 72

Finance runs MIRO in the SAP, this result to creation of vendor liability. In this process the GR/IR

has been debited and vendor liability is credited. This liability voucher is send to E-Banking section

for release of payment to the vendor. E Banking Section prepares the ZP Voucher and debit the

liability and credit to bank.

ACCOUNTING ENTRIES :-

Inventory A/c Dr

To GR/IR

GR/IR Dr

To Vendor

Vendor Dr

To Bank A/c

Special GL reagarding HVJ Purchase payments –

Security Deposit – L

Earnest money deposit – N

Page | 73

Retention money – K

PURCHASE PAYMENTS FOR LPG PLANT-

VIJAIPUR :-

The payments against various spares procured for the Operation and Maintenance of the LPG Plant

Vijaipur are also released by local finance. These payments included procurement of various spares,

consumables both indigenous and imported in nature. The procurement of the same is made by local

C&P Department based on Purchase Requisition raised by the concerned department. The spares are

received and issued by LPG Stores. The procedure to release the payment is same as in the case of

HVJ Purchase payments.

PAYMENT AGAINST TRANSPORTATION :-

GAIL Vijaipur is also handling the Payment against Transportation as per the Contracts awarded for

Transportation of various products like Naptha, Propane, Pentane etc. The TDS is deducted at the

applicable rates under the Income Tax Provisions.

Page | 74

MISCELLANEOUS PAYMENTS :-

Vijapur is the head quarter of HVJ Pipe line and other satellites RR Stations at Anta, Malanpur,

Gwalior, NFL and Narsingarh. Following Miscellaneous payments against the Misc. contracts are

fall under this category:-

Payment against Pest Control

Contractual Doctors

Electricity Bills of MPEB

RR Station Telephone and mobile bills of establishment and officers posted at these stations.

CISF Security payment deployed at Plant and at these RR Stations

Payment against Guest House maintenance

Courier

AMC of Computers

Zerox Machine

Other Equipments

Other Social activities payments

Payments against Financial Aid to Schools run by GAIL

Crop Compensation Payments

Auditor Expenses etc.

The Bills are sent by the concerned officer/department through BWS.

PAY ROLL ACCOUNTING :-

Page | 75

Salary of the employees is prepared by Corporate HR Department based on the inputs provided by

HR Department. The Off Cycle Payments i.e Medical, which are part of the Salary are being

considered in SAP, while preparing salary. The Salary is credited directly to the employees account

and entry is passed in the books of accounts according to Business Area given to the employees

while giving them Number (i.e employee code).

STAFF PAYMENTS /OFF CYCLE PAYMENTS :-

Vijaipur Finance Department is responsible to release Off Cycle payments like Medical,

Telephone/Mobiles, Lease Maintenance, CPF Loans Refundable and Non Refundable, HBA,

Vehicle Advance, Furniture Advance, Computer advance and Special Advance. Finance Department

is also responsible to release the payments against various recoveries made from the salary i.e LIC,

Professional Tax to the concerned authority. The Finance Department is also responsible to pass

needful entries in the books of accounts in case of outgoing and incoming employees in respect of

their advances according to Business Area.

Payments against Business Trips, Leave Travel Assistance and Transfer Expenses are also handled

by Finance Department. The employees wish to take the advance against Business Trips and

Transfer Expenses have to apply in the SAP Programme and to submit through their concerned

HOD. The Claims against Business Trip and Transfer Expenses are also to be claimed in the SAP

and to be submitted to finance department duly recommended by their HOD.

Transaction Codes for T.A./TransferAdvance :-

In SAP the following procedure is followed for preparation of T.A / Transfer Advance –

T Code – PR05 is entered

CPF number of the employee is to be entered

See for trip number & double click

Page | 76

Click R & save

Click the ( ) Button

Approve

( ) Click this Button

Settle

LPG : 70

HVJ : 30

Click the ( ) Button

After settling come out of the session.

T Code – PRF9 is entered

Enter

Payroll _ _ _ _ _ _

Other period _ _ _ _ _ _ [ Only the number of months m which you are working is taken

in this step]

Personnel number

Trip number

Execute

After executing get out of PRF9 code.

T Code – PRRW is entered

Click Execute

Double Click Document Create

Page | 77

Get Back Once

Post

Post Immediately

Get Back Once

Double Click Document Created

Click FI / CO document

Entries passed

Page | 78

Statutory Payments like Direct, Indirect Taxes :-

Finance Department is handling following Direct and Indirect Tax related matters.

In Direct Taxes, TDS on payment to Contractors and against foreign purchases is deducted as per

applicable rates under section given under Income Tax Act. Presently TDS is deducted on following

payments under the applicable sections.

HEADS SECTIONS TYPE OF PAYMENTS

Contractors 194 C Maintenance & civil work

Professionals 194 J Visiting doctors

Rent 194 I Rent payments

Commission 194 H Commission agent

Foreign payment 195 C Import payment to the exporter in their foreign currency

Tax collected at source

(TCS)

206 Sales of scrap

Page | 79

The TDS is deducted as per the Rates given in the SAP under various sections of TDS. While

releasing the payment, the TDS is deducted from the payments and liability is created in relevant GL

Code. The liability stands in the books at the end of month is deposited by 7th of following month

thru on line payment. The Quarterly Return of TDS is filed by 15th of following month ending the

quarter. TDS Certificates to the concerned parties against the TDS deducted are issued by 10th of

following month. These TDS Certificates are generated from SAP.

Following are the Steps in SAP for issuance of TDS Certificate against Contracts/Foreign

Payments:-

Step 1 - The subsequent steps required from remitting the TDS to certificate generation are as

follows :

1) T code J1INCHLN

2) Company code,

3) Section code

4) Vendor recipient type (i.e. corporate, on corporate of government) etc.

5) Document Date : Current Date

6) Bank A/c : put 2013299

7) Execute

8) The system will show the screen same as it shows while processing open items.

9) Assign the relevant amount and stimulate the transaction and save, the system will give an

internal challan number and the clearing document will get generated

Step 2 – The next step is to enter the bank challan in the system

1) Tcode – J1INBANK

2) Company Code

Page | 80

3) Fiscal year

4) internal challan clearing no. put the one generated in J1INCHLN

5) bank challan number

6) bank challan date

7) bank key : key bank from which payment made

8) Finally after updation screen will be like this

Step 3 – Now the final step is to print the certificate

1) T Code J1INCERT

2) Company code

3) fiscal year

4) Business place/section code

5) section

6) posting dates

7) bank challan dates

8) rest fill the details according to he relevance

Page | 81

MIS Report on TDS in SAP :-

Step 1 – Use T-code J1INMIS is or go through SAP Menu> Accounting> Financial Accounting>

Account Payable> Withholding Tax> India> Extended Withholding Tax> Information System>

Withholding Tax.

Step 2 – The above screen will come, enter the following:

1) Company code

2) Fiscal Year

3) Posting Date ( From – To)

4) for refined search use Document number, Vendor, customer, Section code and official

withholding tax code is available

5) Select Consolidated report to view complete report of TDS or If User wants to see Bank

Challan Status select bank challan status option or If User wants to see Certificate status

select Certificate status.

6) Execute after filling in the details through clock icon or pressing F8 key.

Step 3 –

1) After execution the above report will come which shows the status of the TDS.

2) To save this report on to the hard drive use the circled icon above. This will pop up a window

with the options to save the report in different file format as shown below, choose the desired

format and save the file.

3) Thus, the final report is generated with items of the vendors along with the TDS status and

the same can be saved. The report can be drilled down on the line items to look at the

document.

INDIRECT TAXES :-Page | 82

EXCISE DUTY PAYMENTS :-

Excise duty is levied on non domestic LPG, Naptha, Propane, Pentane. Excise duty is paid on the

clearance basis i.e. on sales basis at the following rates of excise duty for the products given under:-

Following Statutory Records for Excise are maintained at GAIL Vijaipur :-

RG 1 – This is maintained for day to day production and clearance of the Products. Following

information are recorded in RG-1.

Page | 83

PRODUCTS BASIC EXCISE RATES

LPG- Domestic 0%

LPG-Commercial 8%

Naphtha

14%

Propane 8%

Pentane

14%

Date

Description of Goods

Product Tariff Heading Number

Opening Qty

Quantity Manufactured

Total Quantity

Removal of Qty from the factory

Amount of duty payable

Qty Removed without payment of duty

Qty consumed for other purpose

Total amount of excise duty payable

Basic duty

Special duty

Cess payable

Secondary & Higher education Cess

Internal Consumption

Closing stock qty.

Physical stock qty.

Gain / Loss

Percentage of gain / loss (qty)

Page | 84

ER 6 (Excise Return) – In ER 6, Consumption & Production of Raw materials are recorded on

monthly basis. Consumption of LPG for Domestic use and Production of Naptha, Propane, Pentane,

LPG from natural gas regarding this all the transactions are recorded.

PLA (Personal Ledger Account) – In Personal Ledger Account, the record of Amount Deposited in

Government account for payment of Excise duty vis a vis amount utilized by debiting in PLA, for

discharge of Excise duty liability is recorded on monthly basis.

TR 6 (Treasury Receipt) – This is a document in the form of challan for deposition of amount in

PLA in Government Account for payment of Excise Duty.

ER 1 (Excise Return) – ER-1 is monthly Return to be submitted to the Excise Department, giving

the summarized status of all Excise documents i.e RG-1, PLA, RG-23A Part II (Cenvat Account).

SERVICE TAX PAYMENT :- Service tax is a tax levied on services providers in India,

except the State of Jammu and Kashmir. The tax is levied on service providers. The service receiver

also pays the service tax. Service tax paid on accrued basis, by 5th of next month the service tax is to

be deposited by the service providers to the deptt and then it is to be reimbursed by the service

receiver. The return is filed on half yearly basis.

(1) April – September

(2) October – March

Page | 85

Main Services of GAIL Vijaipur -

Transport of goods through pipeline.

Transport of goods through road (service receiver)

Business Auxiliary services.

Foreign Consultancy services (service receiver)

Renting of immovable property

GAIL reimburses the service tax to the parties/service providers and avail credit of this in Excise

Records. This Credit is utilized for payment of service tax liability on finished product. GAIL raises

Bills for Transmission Charges on various customers against supply of Natural Gas through HVJ

Pipeline. The Service Tax is charged on this Transmission Cost as per the Central Excise Rules . The

requisite records of Service Tax are maintained as per the provision of Service Tax Rules under

Central Excise Rules.

VAL UE ADDED TAX – Value Added Tax is a multi point tax with set off for tax paid on

purchases. The tax is collected in installments at each transaction in the production distribution

process. There is no cascading because of the system of deduction or credit mechanism for taxes

paid. The tax is levied on consumption. The final and total burden of the tax is fully and exclusively

borne by the domestic consumer. No VAT is charged on goods exported. This is the tax system of

the future. The Products being supplied by GAIL Vijaipur with in MP State are levied with VAT. In

GAIL Vijaipur unit M.P.VAT rate is 13%.

CENTRAL SALES TAX (CST) – Central Sales Tax is levied under this act by the Central

Government but, it is collected by that state government from where the goods are sold. The tax thus

collected is given to the same state government which collected the tax. The prevailing CST rates

are 2% against form C and 5% without Form C. Interstate procurement for HVJ are made on full rate

of CST without issuance of concessional declaration forms. In LPG, inter-state purchases are made

at concessional rate of tax with declaration forms.

Page | 86

WCT :- Works Contract Tax is being deducted at source on Civil and other Works Contracts, as

per the applicable rates in Madhya Pradesh. The same is deposited with the Authority and requisite

WCT Certificates are issued to the concerned parties.

Sales Tax/VAT/Entry Tax Returns :- Filing of Returns and finalization of Assessment:- The

activity involved timely filing of Sales Tax/VAT/Entry Tax Return to the Sales Tax Authority and

get finalized the Assessment.

PROJECT PAYMENTS & ACCOUNTING :-

GAIL- Finance Vijaipur is also handling the payments and accounting of various new pipeline

projects and expansion projects of HVJ Pipe Line, Dahej -Vijaipur pipe line, Vijaipur Dadri pipe line

etc and new Compressor Stations . The Project Consultant is appointed by Project Department New

Delhi through inviting Global Tenders. The Project Consultant designs the whole project and makes

the estimate of the project. Based on this estimate the project is put up for the Board of Directors

Approvals under the guidelines of Ministry of Petroleum. Vijaipur Finance & Accounts Department

plays a key role in various teams made for Crop Compensation, Land Acquisition for laying

proposed pipe line in MP State. For Crop Compensation and Land Acquisition, GAIL has appointed

various state level officials on deputation called Competent Authority.

Following Payments are handled by GAIL Vijaipur Finance.

Payment against enabling work for Compressor

Page | 87

Payment against Camp office facility

Payment against Vehicle hired for Projects/Sites.

Payment regarding Compensation for Land Acquisition , Crop Compensation

Payment for Support Services on Contract basis.

The major payments related to all the projects are released by the Project Finance Deparment at

Corporate Office in Delhi.

SAP Procedure for Project Accounting :-

Following is the summary of the SAP Procedure of the Project Accounting

Transaction Code – MIR6 is given

Bios number is entered

Basic data is mentioned

Payment method is selected

Assignment- whether work order or purchase order

Business area code is given

Withholding tax i.e. TDS is deducted

Service Entry sheet is prepared

Print out command is given for invoice generation

BWS – Misc. Bills :-

Page | 88

Steps to be followed for Transaction FBV0

1) Click on Document list TAB

2) Enter the Company code, Fiscal year and the 25 digit BWS number

3) Execute the transaction.

Double click on the line item

1) Enter the Section Code

2) Enter Narration in the text field

3) Enter the Business area

4) Enter the House Bank

5) Enter the baseline date

6) Check the Withholding Tax data if the vendor is applicable

7) Enter the Expense GL Account and the relevant cost center

8) Simulate the Document and if the document is correct

9) Post the document

Accounting Entries :-

Expenses A/c Dr

To Vendor

Page | 89

Vendor A/c Dr

To Bank Outgoing A/c

The above entries will update the Vendor balances in FBLN

E-BANKING AND BANK RECONILATION :-

NET BANKING

INTRA BANK INTER BANKING

GAIL deals with three banks

Reserve bank of India

SBI ICCI HDFC

Page | 90

All banks are there

E-BANKING:-

GAIL Vijaipur has Bank Accounts with State Bank of India- GAIL Township, ICICI and HDFC

Bank. As per the Company policy, all payments to the employees, vendors, contractors and statutory

bodies are released only through E-banking Company has the policy not to release any payment

through manual cheques or Demand Drafts, except statutory payments to Govt Authority. The

vendors dealing with the Company regularly are compulsorily to have their account in any of the

above three Banks. In case, any party do not have their account in any of these banks, can be

facilitated by Cheques to be issued by ICICI or HDFC, based on our advice through E-banking to

these Banks. In case of new party/contractors/employees, the moping of bank account is made with

these Banks to facilitate the E-banking Payments. In E-banking payment system, as mentioned

above, for all type of payments, a liability voucher is prepared by doing MIRO. Based on this

liability voucher a ZP voucher is prepared and uploaded in the system. Two authorized officers ,

authorize to release the payment through E-banking.

SAP Procedure for E-Banking :-

Transaction code : YRFR030

E-Banking text file generated in SAP.

One executive upload this text file on respective bank site portal.

Later on two executives authorize the transaction & send text file for release payment

through e-banking.

Page | 91

BANK RECONCILIATION:-

For Bank Reconciliation, Bank statements are download from the bank site for the month.

Transaction code: YRAR003 , bank settlement if for upload in SAP for automatic matching of

transaction for BRS purpose. Unmatched transactions are clear with Transaction code: FEBA

manually. After matching transaction BRS statement generated with Transaction code: YRFU 003

Efforts are made for clear outstanding payment on BRS statement.

Page | 92

DEPRECIATION ACCOUNTING :-

The Assets are procured after taking I.O. Number (i.e Capex No) for the assets required for Plant and

Establishment thru C&P Deptt. The Capitalisation of these Assets are made based on GRV issued by

the Stores. The Depreciation is calculated on single shift basis under SLM.

SAP Procedure for Depreciation Accounting :-

T Code is given

Company code is entered

Business Area is defined

Balance Sheet account is mentioned

Asset class is defined

Personnel number is given

Assert code is mentioned

Purchasing date is mentioned

Acquisition Value is inserted

Accumulated Depreciation is automatically calculated through SAP

Present Book Value is received

Page | 93

CENTRAL ACCOUNTING :-

Central Accounting Cell in GAIL Vijaipur Finance is responsible to ensure correct and accurate

accounting in all areas and correct provisioning in the books of accounts. This cell is also to ensure

that Company Accounting Policy and Accounting Standards laid as per the Institute of Chartered

Accountants are being strictly followed. The Central accounting cell is also responsible to prepare

the Books of Accounts so as to ensure the smooth consolidation with Corporate Office and to get

audited by the Internal, Statutory and CAG Auditors. This Cell ensure timely completion of

Quarterly, Half yearly, Nine month and Annual Closing of Books of Accounts.

GAIL Vijaipur Finance prepares complete accounts for LPG Recovery Plant and compute the

profitability at the unit level. The same is audited by the Branch Auditors. The Profit & Loss,

Balance Sheet and Schedule of Accounts and Note on Accounts are prepared as per the Company

Law. The Books of Accounts of HVJ activities are finalized at Corporate Office, after consolidation

all the entries of all Business Areas are audited by the Statutory Auditors at HO level. The

profitability of HVJ is derived as a whole for GAIL.

Balance Sheet of LPG Plant Vijaipur is prepared at Unit level and audited by the Branch Auditors.

Balance Sheet as per the Company Law format comprises of following information and comparison

with last year .

Sources of Funds :

1. Shareholders Funds

Page | 94

Capital (IUT/BA) (As per Schedule I)

Reserve & Surplus (As per Schedule II)

2. Loans Funds (As per Schedule III)

Secured Loans

Unsecured Loans

3. Deferred tax liability (Net )

Application of Funds : (As per Schdule IV)

1. Fixed Assets

Gross Block

Less-Depreciation

Net Block

Capital work in Progress (As per Schedule V)

2. Investments (As per Schedule VI)

Current assets, Loans and Advances (As per Schedule VII)

a) Inventories

b) Sundry Debtors

c) Cash & Bank Balances

d) Other Current Asset

Current liabilities provision (Schedule VIII)

Net Current Assets

Miscellaneous Expenditure

Page | 95

Deferred revenue expenditure

Profit & Loss (debit balance)

NOTES ON ACCOUNTS -

Following Schedules are the prepared as part of Notes on Accounts for LPG Accounts

comparing with last financial year on Annual Basis:-

Schedule 1A – IUT/BA Adjustment balances

Schedule 2 - Reserves & Surplus

Schedule 3 - Loan funds

Schedule 4A – Fixed Assets: Showing Gross Block, Depreciation and Net Block with Break up of

Tangible and Intangible Assets.

Tangible Assets: - are Land, Building, Bunk House, Plant & Machinery , Railway Lines & Siding,

Electrical Equipments, Furniture, Fixtures and other Equipments and Transport Equipment.

Intangible Assets:- are Software/Licences. The Depreciation is charged on single shift rate under

SLM.

Schedule 5 - Capital work-in-Progress (including Capital Goods in Stock/Transit)

Schedule 6 - Investments

Schedule 7 - Current Assets, Loans & Advances : Showing the Inventory, Construction Surplus

(net of Provision for losses/obsolescence), Debtors showing Secured and Unsecured (net of

provision for doubtful debts), Cash Bank Balance, Loans and Advances, Claim Receivables,

Deposits with Customs, Port Trust and Others.

Schedule 8 - Current Liabilities & Provisions Sundry Creditors, Provisions for Taxation etc.

Schedule 9 - Other Income: i.e Income from Dividend, interest, Export Incentives, Misc Income

etc.

Page | 96

Schedule10- Manufacturing, Transmission, Administration, Selling & Distribution & Other

Expenses: This includes details of Raw Material Consumed, Personnel Expenses, Establishment

Expenses, R&M Expenses, Other Expenses.

Schedule 11 – Incidental expenditure during Construction

Schedule 12 – Interest & finance charges

Schedule 13 – Prior period adjustments.

Schedule 14-Notes to Accounts:- It comprises of details on Capital Commitment, Contingent

liabilities not provided for, Free hold/lease hold land capitalized on provisional basis,

Freehold/leasehold land/flats, title deed pending execution, impact of exchange rates variation, notes

on LPG subsidy burden, segment disclosures, related party disclosures, details of joint ventures as

per AS-27, total outstanding dues of micro & small enterprises, total outstanding dues other than

micro & small enterprises, disclosure of amount lying in CWIP, Quantitative information on

Products i.e LPG, Naptha, Pentane, Propane, showing details of Opening Stock, Purchases, Sales,

Internal Consumption and Closing Stocks. CIF Value of Imports, Expenditures in Foreign Currency,

Earning in Foreign Currency, Licensed, installed and actual capacity achieved in production

product wise, Details of Consumption in RM, Stores & Spares, Stock Adjustment and other

declarations

MANAGEMENT INFORMATION SYSTEM (MIS) :-

GAIL Vijaipur Finance has to provide various reports and informations to Head Office as part of

MIS. These reports include Monthly Profitability Reports for LPG and HVJ showing the Sales Value

and Expenditures segment vise, Cost Sheets etc.

Profitability Report –

Profitability Report is prepared on monthly basis, it includes the followings:-

Page | 97

1) Quantity Sold

2) Quantity Produced

3) Gas Consumption by Plants

4) Prices

5) Income

6) Expenditure

7) Gross Margin

8) Profit Before Tax

Common Expenses are apportioned in LPG and HVJ in the following ratio:-

HBJ – 196 employees 60%

LPG - 131 employees 40%

Energy Expenses – The energy expenses are divided in following categories –

Captive Power Generation: that includes

GTG-A

GTG-B

DEG

GTG Consumption: it includes

LPG

HVJ

Page | 98

DVPL

MPSEB Consumption: it includes

Plant

LPG

Township

DVPL

Common Expenses:-

Purchase of Medicine

Staff Welfare

Sport Expenses

Dispensary Expenses

Welfare School

Electricity Township

Property Tax

R & M General Building

Repairs & Maintenance Township

Communication Expenses- P & T

Telephone Expenses

Telephone Residence

Public Relation Expenses- Other

Vehicle Hiring Charges

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Bus Hiring Charges

Social – Other

All these expenses are divided among-

1) HVJ Expenses

2) LPG Expenses

GTG Power Transfer Expenses:-In GAIL Vijaipur Plant GTG are installed. As and when power

requires for performing operations, GTG is used & its calculation statement is prepared on monthly

basis segments.

GTG in LPG

GTG in HVJ

GTG in DVPL

DEG in HVJ

Cost Sheets and Maintenance of Costing Records:-

After the preparation of expenditure statements, the cost sheet is prepared .The Cost sheet is

prepared for the following products. GAIL is preparing the records as per the requirement of

Institute of Cost & Works Accountants of India, specified for LPG Industries. The same are being

audited by the Cost Accountant Firm.

Manufacturing LPG

Naphtha

Pentane

Propane

Blended LPG.

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The Cost Sheet comprises of followings:-

Variable Cost

Fixed Cost

Cost of Production

Total Cost of Sales

Closing Stock

Shrinkage

Value of Closing Stock (Including Excise Duty)

Value of Closing Stock (Excluding Excise Duty)

Difference in Closing Stock

BUDGETING: - As per company policy, all units are to submit to Corporate Finance,

their Revised Estimates for the financial year and Original Estimates for the next financial year in

the month of July & August. The Vijaipur Finance Department also prepares the RE and BE in

respect of Revenue and Capital Expenditures called non planned expenditure. In the exercise of

preparation of estimates, the head wise proposed expenditures are taken from each department for

HVJ and LPG segment with their justification in the breakup of month-wise. The same is

scrutinized, discussed on its justification and complied. The complied Budgets are submitted to

Corporate Office for approval by Board of Directors. The Approved Budget Estimates for Revenue

and Capital (Non Planned) expenditures can be spend with in the financial year and can not be carry

forwarded to next financial year. The Department concerned has made the provision in budget can

only utilize these approved budgets on the heads for the company business. In case, there is no

provision in the budget estimates against a specific head, the expropriation of budget can be made

with the approval of Competent Authority. Similarly, in case of Non Planned/Capital Expenditures

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Budget, the amount can be spending to procure the assets/equipment to be capitalized by raising I.O

Number (Capex Sanctioned Number).

Following Budget Estimates are prepared:-

Revenue Expenditure Budget for LPG and HVJ

Non-Plan Expenditure Budget (Capital Budget) for LPG and HVJ

Procurement Budget ( O&M )

Depreciation Budget

Employee Advances Budget

Repairs & Maintenance Budget

Stores & Spares Expenditure Budget

REVENUE EXPENDITURE BUDGET – It includes followings:-

Raw material consumption

Employees remuneration

Power, Fuel & Water charges

Consumption of stores & spares

Rent

Rates & Taxes

License fees

Bandwidth Consumption

Repair & Maintenance

Insurance

Communication Expenses

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Printing & Stationery

Travelling Expense

Books & Periodicals

Advertisement & Publicity

Entertainment Expense

Recruitment & Training Expense

Vehicle hire & Running Expense

Exploration & Production Expense

Consultancy charges

Donations

Loss on sale of assets

R & D Expenses

Bad debts, Claims, Advance , Written off

Obsolescence of stores

Expense on enabling facilities

Selling & Distribution Expense

Security Expense

Other Expenses

NON-PLAN EXPENDITURE BUDGET –

The Non-plan expenditure budget/Capital Budget consist of amount to be spent on equipments/assets

capital in nature The various departments of Vijaipur unit prepare this type of budget –

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Pipeline

Human Resource

Fire & Safety

Civil Department

Contracts & Procurement

GAILTEL

Information Technology

Mechanical

Electrical

Instrumentation

HBJ

PROCUREMENT BUDGET ( O&M )-

It includes expenses like:

Spares, consumable & chemicals

Fuel & Oil

Others

DEPRECIATION BUDGET –

Depreciation budget includes the following heads –

Depreciation for previous year

Less: a) Depreciation not provided for assets reaching 95 %

b) Depreciation for assets (if known)

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Net total

Depreciation on additions

Total expenditure

EMPLOYEE ADVANCES BUDGET -

There are several type of advances which the GAIL Company gives it to their employees & each

unit of GAIL prepares budget for their advances, same is the case with Vijaipur unit.

Car Advance

Scooter Advance

HBA Advance

Furniture Advance

PC Advance

Other Advance

REPAIRS & MAINTENANCE BUDGET –

There are several expenses which come under the heads of Repairs & Maintenance. Vijaipur unit is

having an LPG Plant therefore it has much more expenses in comparison with the other units of

GAIL. Following are the departments which give their financial requirement regarding the repairs &

maintenance –

Pipeline department

Human Resource department

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Civil department

Mechanical department

Contracts & Procurement department

GAILTEL

Information Technology department

HBJ-Operations & Terminal

Electrical department

Electrical –Township

Instrumentation department

Fire & Safety department

HVJ BUDGET –

HVJ budget is prepared department wise in GAIL Vijaipur unit. The departments preparing the HVJ

budget are as follows –

Human Resource Department

Pipeline & Terminal

Contracts & Procurement

Electrical – HBJ

Electrical – Township

Civil department

Finance department

GAILTEL

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Fire & Safety

HVJ Operations

STORES & SPARES EXPENDITURE BUDGET –

The stores & spares budget is prepared for the expenses incurred in the stores of various departments

& spares used in the operational activities. The areas for which stores & spares expenditure budget is

prepared are –

Electrical

Electrical Township

Instrumentation

Mechanical

Telecom

Pipeline

Contracts & Procurement

Information Technology

Fire & Safety

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AUDIT

There are five types of audit in the Organization, viz.

a) Internal Auditb) Statutory Auditc) Government Auditd) Technical Audite) Tax Audit

Internal Audit

Internal Audit is a statutory requirement for all the Companies having paid up capital of over Rs. 25.00 lakhs. Under the Manufacturing and other Companies (Auditor's Report) order, 1988 (MAOCARO), the Companies are required to have an organized Internal Audit Wing Commensurate with the size and nature of their business. The function of Internal Audit may be expressed as an independent appraisal activity within an organization for the review of operations as a service to Management. It is a managerial control which functions by re assuring and evaluating effectiveness of other internal controls.

The Internal Audit is functioning under the Director (Finance) through Head of Internal Audit. The functions, duties, responsibilities and powers of Internal Audit department have been detailed separately in the Internal Audit Manual. Internal Audit should also examine independently the final accounts and attached Schedules to the Balance Sheet and Profit & Loss Account. Any point or observation make by the Internal Audit, which the Head of Finance Department considers acceptable for modification of the accounts, may be accepted and changes made in the Accounts. However, comments by Internal Audit, if any, should be offered will before the Finalization of the accounts.

Statutory Audit

Under Section 619(2) of Companies Act, 1956, the statutory Auditors (Chartered Accountants) are appointed by the Central Govt. on the advice of the Comptroller and Auditor General of India for conducting the audit in accordance with the provisions of the said Act. The Comptroller and Auditor

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General also has the power to direct the manner in which the Company's accounts shall be audited by the auditor and to give such auditor instructions in regard to any matter relating to the performance of his functions as such. The Officer Incharge of the Central Accounts Section shall co ordinate the audit work and supply the relevant information / records / documents as required by the auditors. With a view to finalize the final accounts well within the prescribed time, it is necessary that all such information, documents are provided expeditiously by the concerned Section / Departments to the Auditors.

Government Audit

Powers of the Comptroller and Auditor General

As mentioned earlier, the accounts of the Company are audited by the Statutory Auditors appointed by the Central Government on the advice of the Comptroller & Auditor General of India. The Comptroller & Auditor General of India conducts only a supplementary or test audit of these accounts and gives his comments upon or supplements the reports submitted by the Statutory Auditors. In terms of Section 619 (3) of the Companies Act, the Comptroller & Auditor General is empowered:

The Government audit conducts audit of the following three types :

a) Phase Audit under Section 619 (3) (b) of the Companies Act;b) Periodical Comprehensive Reviews;c) Balance sheet audit under Section 619 (4) of the Companies Act.

Technical Audit

Technical Audit normally functions directly under the Head of Technical Services or the GM / Director (Projects). In the discharge of its functions and duties, any information required by Technical Audit, if available with the Finance Department should be furnished. Any expert advice sought by the Technical Audit from time to time on financial matters should also be provided by the Finance Department

Tax Audit U / S 44 of the Income Tax

Finance Act, 1984 inserted a new Section 44 AB in the Income Tax Act, 1961 w.e.f. 1.4.1985 which requires that all persons carrying on business of profession and having total sales, turnover or gross receipts exceeding the limits specified therein in any previous year should get their accounts audited by a chartered accountant before the date specified therein and obtain the report of such audit in the prescribed form duly signed and verified by such account and setting forth such particulars as may be prescribed. "Specified date" in relation to the accounts of the previous year relevant to an assessment year (as per Income Tax Act / Rules amended up to 1995-96) means.

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a) Where the assessed is a Company, the 30th day of November of the assessment year, and

b) in any other case, the 31st day of October of the assessment year.

A Core Organization Values :

GAIL takes pride in its core organizational values:

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Ethics

We are transparent, fair and consistent in dealing with all people. We insist on honest, integrity and trustworthiness in all our activities.

People

We believe that our success is driven by the commitment and excellence of our people. We attract and retain result – oriented people who are proud of their work and are satisfied with nothing less than the very best in everything that they do. We encourage individual initiative by creating opportunities for our people to learn and grow. We respect the individual rights and dignity of all people.

Safety, Health and Environment

We promote highest levels of safety in our operation, health of our employees and a clean environment. We strive for continuous development of the communities in which we operate.

Customer

We strive relentlessly to exceed the expectations of our customer, both internal and external. Our customers prefer us

Shareholders

We meet the objectives of our share holders by providing them superior returns and value through their investments in us.

Technology

We believe technology is a key to the future success of our organization. We advocate ‘best in-class’ technologies.

Rewards and Recognition :

GAIL has been selected as the top Indian company in the Gas Processing, Transmission and Marketing sector for the Dun & Bradstreet - American Express Corporate Awards 2006. GAIL’s Dahej - Vijaipur Pipeline Project has won the Silver Medal in Mega Projects Category at the

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International Project Management Association Awards, 2006 The company has received the Platts Global Industry Leadership Award 2005 in recognition of its commitment, continuous good work and collective efforts over a period of two decades for the hydrocarbon industry at a global level.. Other awards include Certification of Merit’ from Hon’ble President of India in recognition of systematic and serious attempts for efficient utilization and conservation of energy during the last three years, the Golden Icon Award for exemplary initiatives in e-Governance. The Company was rated as one of the Best Employers in India by Hewitt Associates in 2004 and was adjudged as an Organization with Innovative HR Practices by HT Power Jobs. GAIL has recently won the Quality Excellence Award by the Quality Council of India. The Award was presented by His Excellency Hon'ble President of India, Dr. A.P.J Abdul Kalam

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AWARDS

Sr. No.

Date Location Subject

131/05/2010 13:02:11

MUMBAIGAIL MAHARASHTRA RECEIVED GREENTECH SAFETY GOLD

AWARD 2010

231/01/2011 16:53:38

MUMBAIGAIL MUMBAI RECEIVED SAFETY INNOVATION AWARD-2010

331/01/2011 16:18:57

MUMBAIGAIL MUMBAI RECEIVED SAFETY INNOVATION AWARD-2010

FROM INSTITUTION OF ENGINEERS

427/12/2010 13:06:08

NOIDASAFETY INNOVATION AWARD-2010 FOR GAIL ABUROAD &

MANSARAMPURA

526/05/2010 16:44:49

JHABUAGREENTECH SAFETY AWARD 2010 FOR JHABUA

623/10/2010 14:38:33

NOIDASAFETY INNOVATION AWARD-2010 FOR GAIL AGRA (UP REGION)

721/08/2010 12:20:17

GANDHARGPU-Gandhar bagged ‘CMD’s Rolling Trophy for Best Performing Unit’ for

the year ‘09-10

819/04/2011 16:29:22

MUMBAIGAIL MAHARASHTRA REGION PIPELINE SYSTEM RECEIVED

CERTIFICATION FOR ISO-14001 & OHSAS-18001

915/07/2010 12:09:43

AGARTALA GREENTECH AWARD 2010 FOR AGARTALA

1011/05/2010 17:32:43

NOIDAINTERNATIONAL SAFETY AWARD FOR GPU GANDHAR

1106/04/2011 12:20:50

MUMBAIGAIL MUMBAI DECLARED WINNER OF GREENTECH SAFETY

GOLD AWARD-2011

1206/04/2011 12:14:37

MUMBAIGAIL MUMBAI DECLARED WINNER OF GREENTECH GOLD

AWARD-2011

1303/06/2010 10:23:15

LAKWAGREENTECH SAFETY AWARD 2010 GOLD AWARD FOR GAIL

LAKWA

1403/01/2011 15:26:38

JHABUAGAIL, JHABUA WON THE GOLD AWARD FROM GREENTECH

TOWARDS ENVIRONMENT EXCELLENCE

1502/07/2010 17:18:49

JAIPURJLPL selected for "Special Commendation" Certificate for GOLDEN

PEACOCK AWARD

1601/01/2011 13:23:59

LAKWAGREENTECH Environment Excellence Award 2010 GOLD Award for

GAIL Lakwa

BIBLIOGRAPHY:Page | 113

www.gailonline.com .

www.google.com

published annual report of GAIL India Ltd 2010-2011.

Project Interconnect- SAP and User Manual- GAIL India Ltd

Financial management by I.M. Pandey

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