Dear Shareholders,
A very warm welcome to you to the 32nd Annual General Meeting of your Company.
Before we commence the proceedings, may I introduce my colleagues on the Board and other senior officials of your Company.
We have with us here today, Mr. Walter Simpson, Prof. Pradip Khandwalla, Mr. Sudhir Mankad, Mr. Ajit Kapadia, Mr. Jal Patel and Mr. Shaleen Sharma.
Mr. Walter Simpson is the President & Managing Director, BG India and has been working with the BG Group for the last 13 years. He has been in the Oil and Gas industry for over 26 years and has extensive international experience.
Prof. Pradip Khandwalla is an Independent Director and the Chairman of the Shareholders’ Grievances Committee. He has, besides other assignments, served as the Director of IIM, Ahmedabad.
Mr. Jal Patel is an Independent Director and is the Chairman of the Audit Committee. His professional experience at senior levels spans over four decades.
Mr. Sudhir Mankad is an Independent Director and has served in senior positions, both in Government of India and in the Government of Gujarat. Presently, he is the Chairman of Bhavnagar Energy Company Limited, Gujarat International Finance Tec-City limited (GIFT) and Gujarat Institute of Desert Ecology (GUIDE).
Mr. Ajit Kapadia, an Independent Director, has more than four decades of experience in the hydrocarbon industry.
Mr. Shaleen Sharma, Managing Director of your Company, has more than 31 years of experience in Industrial Marketing, the last 27 of which have been in natural gas marketing with major oil and gas companies of India.
We also have with us Mr. Sugata Sircar, Director – Finance of your Company and Ms. Rajeshwari Sharma, the Company Secretary.
The audited financial statements of your Company for the year ended 31st December, 2011 along with the Directors’ Report, have already been circulated to you. With your permission, we may take them as read.
I would like to begin the proceedings by giving you a report on the overall performance of your Company and the environment in which it operates.
The Oil and Gas sector in India has been instrumental in fuelling the growth of the Indian economy and hence presents a significant opportunity for investors in the years to come. The New Exploration Licensing Policy (NELP), conceived to address the increasing gap in demand and supply of energy in India, has attracted the interest of both domestic private sector players and some foreign players during the nine rounds of bidding thus far. Significant investments are also planned in Refining, LNG regasification capacity expansion and City Gas Distribution (CGD).
India’s consumption of natural gas has risen faster than any other fuel in recent years. Natural gas contribution towards India’s primary energy basket is forecast to grow from 11% currently to ~20% of the primary energy basket by the year 2025. On the supply side, for a brief period during 2009-10, it seemed like the gas supply matched the demand mainly due to significant increase in production from the prolific eastern offshore fields in the Krishna-Godavari basins. However, the supplies from these fields have not increased to the planned levels and, therefore, gas demand in the medium to long term is expected to be significantly higher than supplies. Given that supply from indigenous fields would not be adequate to meet demand over the medium to long term, the country will have to rely significantly on import of Liquefied Natural Gas (LNG). The consumption of regasified LNG (RLNG) in Indian markets increased through the year, primarily due to the availability of spot cargoes in addition to supplies under the longer term contracts.
The projected gas demand is likely to increase from 196 mmscmd in 2010 to 297 mmscmd in 2015 (CRISIL estimates) confirming a clear market preference for this environmentally friendly source of energy. Demand for natural gas in the CGD segment is expected grow at a compounded annual growth rate of 26% over the same period.
The Petroleum and Natural Gas Regulatory Board (PNGRB) was constituted in 2007, which has, among other mandates in the downstream hydrocarbon sector, the mandate of regulating the CGD business. The PNGRB has outlined its vision of expanding the CGD network to over 300 cities in India, a part of which, bidding has been initiated through four rounds for 28 cities. The demand for natural gas remains strong even with the changing economies of gas cost as the product retains an overall benefit to alternate fuels on several aspects.
PERFORMANCE REVIEW
Your Company maintained its status as the largest private sector CGD Company in India by volumes.
Your Company met the challenges of gas sourcing through the year by successfully procuring RLNG at competitive prices through medium and short term contracts with various suppliers to meet the gas requirements of its customers, and will continue to make concerted efforts to secure such supplies in an optimum and competitive manner. This will ensure supply security for your Company’s customers and generate flexibility in managing the variations in gas requirements of our various market segments. Higher proportion of RLNG at market benchmarked prices in your Company’s portfolio, have made it necessary for the Company to revise its pricing more frequently than in the past.
Sales Volumes of your Company grew in certain segments. About 30,000 new household customers were connected on natural gas during the year, taking the total number of domestic customers of your Company to over 325,000. More than 165,000 vehicles now ply in your Company’s operating areas on CNG. Your Company has c. 330,000 customers, including industrial and commercial units. Sales volumes grew by 12% in the residential segment and 14% in the CNG segment.
FINANCIAL PERFORMANCE OF THE COMPANY
Your Company’s performance for the year under review has already been circulated to you. I shall take the same as read.
As you would have seen, the Profit After Tax increased from Rs. 2590 million last year to Rs. 2748 million in 2011. Investments were made in extension of pipeline network and in reinforcements and upgradation of existing network as required. Investments were also made to upgrade the IT solutions and hardware of your Company to enhance reliability and enable scalability. A portion of the cash profits generated during the year has been paid out as interim dividend.
Let me add that the Board has recommended a special dividend for the year after careful consideration of the cash reserves and its potential to generate profits. It has been ensured that the Company has adequate funds to enable its planned growth.
The Company is expected to receive its authorization from the PNGRB shortly for its current areas of operations. The application for network tariff will be prepared and filed after the authorization is received. The Company has a specialized team to ensure that the tariff applied for reflect deliverable capex and volume projections and is hence on robust ground. The Company sells gas at a bundled price, in which network tariff, to be determined by the PNGRB, would be an embedded element.
HSSE AND CORPORATE GOVERNANCE
Your Company remains committed to the highest standards of Health, Safety, Security and Environment (or HSSE) and Corporate Governance. We continue our efforts in imbibing and strengthening a strong safety culture in the Company. We also engage our contractors, franchisees and other stakeholders in this endeavour.
As a Socially Responsible Corporate citizen, we have contributed in environment, education and skill development. We have supported many sustainable development projects to benefit communities in which our Company operates.
As you are aware, the BG Group has expressed its intention to divest its shareholding in the Company. We are advised that this process is currently in progress and significant developments in this regard will be disclosed appropriately.
ACKNOWLEDGEMENTS
All these achievements would not have been possible without the support of all the stakeholders including the Central and State Governments and various Government agencies, our suppliers and contractors, customers and above all the shareholders . I would like to take this opportunity to thank all those who have supported and guided us during the year.
I also thank all my colleagues on the Board for their continued support and guidance.
Last, but not the least, I would like to thank all employees of Gujarat Gas for their high level of motivation, commitment and hard work.
On this very encouraging note and with your permission, may I, on behalf of the Directors, take up the agenda?
I now call upon the Company Secretary to take up the agenda.
Hasmukh Shah
Chairman
Date: 26th April 2012
Place: Ahmedabad
Note: This does not purport to be a record of the proceedings of the 32nd Annual General Meeting of the Company.
Chairman's Speech at the 31st Annual General Meeting
Dear Shareholders,
A very warm welcome to you to the 31st Annual General Meeting of your Company.
Before we commence the proceedings, may I introduce my colleagues on the Board and other senior officials of your Company.
We have with us here today, Mr. Derek Fisher , Prof. Pradip Khandwalla, Mr. Bikash Bora, Mr. Ajit Kapadia, Mr. Walter Simpson, Mr. Jal Patel and Mr. Shaleen Sharma.
Mr. Derek Fisher is the President and Managing Director, BG Asia. He has been working with the BG Group for the last 12 years in various senior management positions and had worked with GE earlier.
Mr. Walter Simpson is the President & Managing Director, BG India and has been working with the BG Group for the last 12 years. He has been in the Oil and Gas industry for over 25 years and has extensive international experience.
Prof. Pradip Khandwalla is an Independent Director and the Chairman of the Shareholders’ Grievances Committee. He has, besides other assignments, served as the director of IIM, Ahmedabad.
Mr. Jal Patel is an Independent Director and is the Chairman of the Audit Committee. His professional experience at senior levels spans over four decades.
Mr Bikash Bora is an Independent Director and has more than four decades of experience in the oil and gas industry. He was the Chairman and Managing Director of ONGC till 2001.
Mr. Ajit Kapadia, an Independent Director, has more than four decades of experience in the hydrocarbon industry.
Mr. Shaleen Sharma, Managing Director of your Company has more than 30 years of experience in Industrial Marketing, the last 26 of which have been in natural gas marketing with major oil and gas companies of India.
We also have with us Mr. Sugata Sircar, Director – Finance of your Company and Ms. Rajeshwari Sharma, the Company Secretary.
The audited financial statements of your Company for the year ended 31st December, 2010 along with the Directors’ Report, have already been circulated to you. With your permission, we may take them as read.
I would like to begin the proceedings by giving you a report on the overall performance of your Company and the environment in which it operates.
INDUSTRY DEVELOPMENTS
Natural Gas is not only an environment-friendly fuel but is also economical, safe, efficient and easy to handle. It is rapidly commanding a larger share of the fast growing energy basket. While it currently accounts for 11% of India’s primary energy basket, greater availability (both from domestic fields and import routes) is expected to take this share to 23% by 2020. The strong industrial and urban growth in Gujarat, especially in our areas of operation, combined with a conducive business, social and political environment, is expected to generate an even stronger demand for natural gas in the State.
Indigenous gas supply in the country was impacted adversely in 2010 by the production constraints in the D6 fields in the Krishna Godavari Basin. This created a larger supply shortfall in a scenario of increasing demand for natural gas in the country, which was partly mitigated with imports of LNG.
It is now evident that indigenous supply may not be adequate to meet the strong demand in the medium to long term. Demand for natural gas is expected to increase by over 40% in the next three years. It is evident that reliance on LNG will have to increase in the coming period.
PERFORMANCE REVIEW
2010 has been another eventful year for Gujarat Gas. Your Company has over the last two decades created a formidable position for itself in the city gas distribution industry. It has developed a strong business model which is tested with every change in the economic and policy environment as also with changes in supply, pricing and demand dynamics. I am happy to report that your Company has successfully managed its challenges and completed one more year of excellent performance.
Gujarat Gas has entered into medium term contracts for purchase of regassified LNG and continues to contract short term rLNG to meet the full requirements of its customers. Your Company operates in several segments and supplies gas for use in several applications. Its insight into the dynamics of gas usage in various applications places it in a strong position to penetrate high value segments. This I believe will be critical in sustaining and growing value in an evolving environment.
As you know, the BG Group which is the largest shareholder of Gujarat Gas is one of the fastest growing companies in the world in the oil and gas sector. It is a significant player in the global LNG business. This places Gujarat Gas in a strong position to gain access to the LNG supply chain in the country. Gujarat Gas continues to benefit from the access it has to global best practices in the fields of asset integrity, operations, safety and management development through its parent.
Profitable growth has always been on the agenda of the Board and the management. Your Company has the right resources by way of human and financial capital to grow its business. The growth of the business is predicated on enhancements with existing customers, network extension into adjacent areas and geographical expansion into new areas. While your Company has been investing in growing its customer base and extending its network, opportunities are opening up to expand into new areas. Your Company has bid for a new geographical area in Gujarat under the third round of bidding invited by the PNGRB, the gas regulator. The bid is presently under technical evaluation by the regulator.
Your Company met the challenges of gas sourcing through the year. Whilst 0.60 mmscmd of D6 gas was allocated on a “fall-back” basis by the MoPNG to your Company, no contract could be signed with the suppliers due to inadequate gas production from the D6 fields during the year. However, the Company was successful in procuring RLNG at competitive prices through medium and short term contracts with various suppliers to meet the gas requirements of its customers, and will continue to make concerted efforts to secure such supplies so as to maintain an efficient balance of medium and short term RLNG in its gas sourcing portfolio. This will ensure supply security for your Company’s customers and generate flexibility in managing the variations in gas requirements of our various market segments.
Your Company was able to grow gas sales volumes by 17% over the previous year. About 30,000 new household customers were connected on natural gas during the year, taking the total number of domestic customers of your Company to over 295,000. More than 130,000 CNG vehicles now ply in your Company’s operating areas. Your Company has around 300,000 customers, including industrial units. Sales volumes grew by 20% in the Industrial segment and 16% in the CNG segment.
The average cost of gas for your Company’s portfolio increased over the previous year, primarily due to higher proportion of RLNG in the portfolio which made it necessary to align the gas sales prices in the latter part of the year.
Hasmukh Shah
Chairmain
Date : 28th April 2011
Place : Ahmedabad
Chairman’s Speech at the 30th Annual General Meeting
Dear Shareholders,
A very warm welcome to you to the 30th Annual General Meeting of your Company.
Before we commence the proceedings, may I introduce my colleagues on the Board and other senior officials of your Company.
We have with us here today, Mr Derek Fisher, Prof. Pradip Khandwalla, Mr. Jal Patel, Mr Bikash Bora, Mr. Ajit Kapadia, Mr. Rajeev Khanna and Mr. Shaleen Sharma.
Mr Derek Fisher is the President and Managing Director, BG Asia. He has worked with the BG Group for the last 11 years in various senior management positions and had worked with GE earlier. Prof. Pradip Khandwalla is an Independent Director and the Chairman of the Shareholders’ Grievances Committee. He has, besides other assignments, served as the director of IIM, Ahmedabad. Mr. Jal Patel is an Independent Director and is the Chairman of the Audit Committee. His professional experience at senior levels spans over four decades. Mr Bikash Bora is an Independent Director and has more than four decades of experience in the oil and gas industry. He was the Chairman and Managing Director of ONGC till 2001. Mr. Ajit Kapadia, an Independent Director, has more than four decades of experience in the hydrocarbon industry. Mr. Rajeev Khanna has a total experience of more than 35 years in the Indian Petroleum industry and the Government of India. He heads BG India’s Policy and Corporate Affairs department.
Mr. Shaleen Sharma, Managing Director of your Company is a well-qualified professional with more than 29 years of experience of Industrial Marketing, the last 25 of which have been in natural gas marketing with major oil and gas companies of India.
We also have with us Mr. Sugata Sircar, Director – Finance of your Company and Ms. Rajeshwari Sharma, the Company Secretary.
The audited financial statements of your Company for the year ended 31st December, 2009 along with the Directors’ Report, have already been circulated to you. With your permission, we may take them as read.
I would like to begin the proceedings by giving you a report on the overall performance of your Company and the environment in which it operates.
INDUSTRY DEVELOPMENTS
India is emerging strong and resilient from an economic slowdown which affected most of the world. Our economy is on a strong growth path. Industrial output increases with every passing month. Large commitments are being made to build infrastructure in the fields of energy and transportation.
The oil and gas industry has been dynamic as well. The advent of KG D6 gas, the allocation policy of the Government for the same, the import of LNG into India and the role of the Regulatory Board have been some of the significant developments over the past one year.
PERFORMANCE REVIEW
As you are aware, the supply of gas to GGCL from the Panna-Mukta, Tapti fields was reduced by 30% from April 2008 following a directive issued by the Ministry of Petroleum and Natural Gas (MoPNG) nominating GAIL as the sole marketer of the entire gas produced from the PMT fields. The supply was further hampered in 2009 due to lower availability of gas from these fields. This resulted in continued shortage of gas to our industrial customers. The Company rose to the challenge of managing the gas requirements of its markets by procuring short term RLNG in the latter part of 2009. This enabled a certain increase in volumes in the third and fourth quarters.
The Company remains the leader and a respected player in its space. It sees rapid growth in demand in its markets and remains committed to investments in growth. Options for sourcing additional gas are also opening up which is vital for the Company to meet the growing demands in its markets.
Despite constrained availability of gas and a flat economic scenario through most of the year, the Company showed an annual top line and earnings growth. This was made possible by some prudent resource and cost management.
During the year, the Company added 28,000 domestic and over 22,000 CNG customers in its operating areas. The CNG segment continues to grow strongly with sales touching an all time high.
The year 2009 was significant on the regulatory front. The public consultation process of the Company’s application for authorization to operate city gas distribution networks in Surat, Bharuch and adjoining areas and to operate the 73 km Hazira-Ankleshwar transmission line was concluded by the Petroleum and Natural Gas Regulatory Board (PNGRB). The Company now awaits the completion of the remaining process by the PNGRB for the grant of authorization.
The year was also significant from the shareholders’ perspective. The Company’s market capitalisation rose from close to Rs.1500 crore to over Rs. 3000 crore in one year. I must thank you for your continual faith in the Company and its management. Bonus equity shares were issued in the ratio of 1:1. The Board has also recommended a special dividend of Rs. 5 per share in addition to the annual dividend of Rs. 3 per share. This being on the expanded capital base after the issue of bonus shares, would increase the payout to shareholders by over 5 times over the previous year. This has been recommended after careful assessment of the fund requirements of the Company for its capital program to enable its planned growth in the coming years and the projected earnings from operations.
Gujarat Gas remains India’s largest private sector city gas distribution entity in terms of volumes. The Company retains a multiple gas sourcing portfolio – with more than 95% of the gas sold by the Company being purchased at market prices. The Company’s business model remains robust. The parentage of the BG Group has been useful in procuring gas supplies in the past and we can look forward to their support in tying up supplies in the future.
FINANCIAL PERFORMANCE OF THE COMPANY
Your Company’s performance for the year under review has already been circulated to you. I shall take the same as read.
The Profit Before Tax increased from Rs 2345 million to Rs 2586 million mainly due to market optimization. The profit after tax increased from Rs. 1615 million to Rs. 1750 million.Your Company continues to invest in pipeline network, CNG stations and other infrastructure. 35 km of steel pipelines and 392 km of PE pipelines were laid during the year. Total capital investments were Rs 1553 million.
Your Company invested its surplus funds under an investment strategy designed to ensure complete safety of the funds and to ensure the best possible returns within the given safety parameters.
HSSE AND CORPORATE GOVERNANCE
Your Company remains committed to the highest standards of Health, Safety, Security and Environment or HSSE and Corporate Governance.
The rich inputs received from the BG Group in the areas of Health, Safety, Security and Environment has helped Gujarat Gas in establishing a strong safety culture among its employees as well as its contractors. While the road ahead is challenging in this respect, I am happy to report that the Company achieved 10 million man hours without any loss time injury this January. This was a major feat for the Company.
During the year, your Company developed a comprehensive strategy for carrying out activities for Corporate Social Responsibility (CSR), focusing on education and skill development. The strategy also addresses the need for supporting various sustainable development projects to benefit the communities in which your Company operates.
ACKNOWLEDGEMENTS
All these achievements would not have been possible without the support of all the stakeholders including the suppliers who ensured continuous supply of gas to us, the Central and State Governments, various Government agencies, customers and above all the shareholders . I would like to take this opportunity to thank all those who have supported and guided us during the year.
I also thank all my colleagues on the Board for their continued support and guidance.
Last, but not the least, I would like to thank all employees of Gujarat Gas for their high level of motivation, commitment and hard work.
On this very encouraging note and with your permission, may I, on behalf of the Directors, take up the agenda?
I now call upon the Company Secretary to take up the agenda.
Chairman’s Speech at the 29th Annual General Meeting
Dear Shareholders,A very warm welcome to you to the 29th Annual General Meeting of your Company.
Before we commence the proceedings, may I introduce my colleagues on the Board and other senior officials of your Company.
We have with us here today, Mr Derek Fisher, Prof. Pradip Khandwalla, Mr. Jal Patel, Mr Bikash Bora, Mr. Ajit Kapadia, Mr. Rajeev Khanna and Mr. Shaleen Sharma.
Mr Derek Fisher is the President and Managing Director, BG India. He has worked with the BG Group for the last 11 years in various senior management positions and had worked with GE earlier to that. Prof. Pradip Khandwalla is an independent Director and the Chairman of the Shareholders’ Grievances Committee. He has, besides other assignments, served as the director of IIM, Ahmedabad. Mr. Jal Patel is an independent Director and is the Chairman of the Audit Committee. His professional experience at senior levels spans over four decades. Mr Bikash Bora has more than four decades of experience in the oil and gas industry and was the Chairman and Managing Director of ONGC till 2001. Mr. Ajit Kapadia, an independent Director, has more than four decades of experience in the hydrocarbon industry.
Mr. Rajeev Khanna has a total experience of more than 34 years in the Indian Petroleum industry and the Government of India. He heads BG India’s Policy and Corporate Affairs department.
Mr. Shaleen Sharma, Managing Director of your Company is a well-qualified professional with more than 28 years of experience of Industrial Marketing, the last 24 of which have been in natural gas marketing with major oil and gas companies of India.
We also have with us Mr. Sugata Sircar, Director – Finance of your Company and Ms. Rajeshwari Sharma, the Company Secretary.
The audited financial statements of your Company for the year ended 31st December, 2008 along with the Directors’ Report, have already been circulated to you. With your permission, we may take them as read.
I would like to begin the proceedings by giving you a report on the overall performance of your Company and the environment in which it operates.
INDUSTRY DEVELOPMENTS
As we all know, the year 2008 was one of the most volatile in recent memory, for the world economy in general and for the oil & gas sector in particular. The economic growth rate in India started slipping with the impact of the global slowdown. Fortunately, the demand for natural gas in India has remained robust, though the supply from indigenous sources continued to fall significantly short of demand.
PERFORMANCE REVIEW
As you are aware, Gujarat Gas had contracts with the Panna-Mukta, Tapti JV and BG Exploration and Production India Limited to purchase a total of 3.05 mmscmd of gas. This was in addition to other sources of gas that the Company had contracted. The supply of PMT gas was reduced to 2.13 mmscmd due to a directive issued by The Ministry of Petroleum and Natural Gas (MoPNG) nominating GAIL as the sole marketer of the entire gas produced from the PMT fields. This led to a sharp shortage of gas for the Company. As household customers and CNG stations were priortized for supply of gas, the impact of the shortage had to be borne by our industrial customers. We do feel unhappy over not meeting the demands of our industrial customers.
The Company has been in talks with the Government for allocation of gas from the east coast supplies.
The Company’s applications for license are being processed by the Petroleum and Natural Gas Regulatory Board. The MoPNG, Govt. of India has in the meantime acknowledged its earlier authorization granted to the Company to operate in the cities of Surat, Bharuch and Ankleswar. The Company has also expressed its interest to operate in two new areas.
The CNG segment grew at 30% during the year due to a high rate of conversion of vehicles. The dispensing capacity was enhanced by adding four new CNG stations and by upgrading two compressors. More than 90,000 vehicles currently run on CNG in the Company’s markets.
About Rs 99 crores were invested in capital projects during the year. Apart from CNG infrastructure, the investments were mainly in pipeline network. Once we receive the Regulatory Board’s approval for new areas we will need to have a sizeable capital programme.
FINANCIAL PERFORMANCE OF THE COMPANY
Your Company’s performance for the year under review has already been circulated to you. I shall take the same as read.
The Indian Rupee depreciated sharply, from about Rs 40/USD to Rs 48/USD by the end of 2008. This affected the gas cost of the Company. Steps have been taken to mitigate this to the extent feasible.
The annual revenue and earnings grew modestly in 2008, despite all odds. Unfortunately, the sales volumes could not be increased due to the constraint in gas supply.
The Company remains committed to growth and has earmarked substantial funds for the same.
HSSE AND CORPORATE GOVERNANCE
Your Company remains committed to the highest standards of Health, Safety, Security and Environment or HSSE and Corporate Governance.
The HSSE performance of your Company has been recognized during the year by various bodies. Your Company was awarded the Gujarat Safety Council Safety Award, the Greentech Gold Safety Award 2007 and the National Safety Council Safety Award - Prashansa Patra.
Your Company focused on social initiatives during the year, mainly in the areas of education, health, civic amenities and disaster management. Your Company also supported the building and upgradation of the Regional Blood Transfusion Centre at Surat and worked with various organisations and the Government for flood relief in Bihar.
ACKNOWLEDGEMENTS
All these achievements would not have been possible without the support of all the stakeholders including the suppliers who ensured continuous supply of gas to us, the Central and State Governments, various Government agencies, customers and above all the shareholders. I would like to take this opportunity to thank all those who have supported and guided us during the year.
I also thank all my colleagues on the Board for their continued support and guidance.
Last, but not the least, I would like to thank all employees of Gujarat Gas for their high level of motivation, commitment and hard work.
On this very encouraging note and with your permission, may I, on behalf of the Directors, take up the agenda?
I now call upon the Company Secretary to take up the agenda.
Hasmukh Shah
Chairman
Date : 30th April 2009
Place : Ahmedabad
Chairman's Speech At 28th AGM
Dear Shareholders,
A very warm welcome to you to the 28th Annual General Meeting of your company.
Before we commence the proceedings, may I introduce my colleagues on the Board and other senior officials of your company.
We have with us here today, Prof. Pradip Khandwalla, Mr. Jal Patel, Mr. Ajit Kapadia, Mr. Rajeev Khanna and Mr. Shaleen Sharma . Mr. Kapil Garg , the Managing Director of BG India and a Director of your company, regrets his inability to be present here today due to other unavoidable engagements. Prof. Pradip Khandwalla is an independent Director and the Chairman of the Shareholders’ Grievances Committee. He has, besides other assignments, served as the director of IIM, Ahmedabad. Mr. Jal Patel is an independent Director and is the Chairman of the Audit Committee. His professional experience at senior levels spans over four decades. Mr. Ajit Kapadia , an independent Director, has more than four decades of experience in the hydrocarbon industry. Mr. Rajeev Khanna has a total experience of more than 33 years in the Indian Petroleum industry and the Government of India. He heads BG India’s Policy and Corporate Affairs department.
Mr. Shaleen Sharma , Managing Director of your company is a well-qualified professional with more than 27 years of experience of Industrial Marketing, the last 24 of which have been in natural gas marketing with major oil and gas companies of India .
We also have with us Mr. Sugata Sircar, Director – Finance of your company and Ms. Rajeshwari Sharma, the Company Secretary.
The audited financial statements of your company for the year ended 31st December, 2007 along with the Directors’ Report, have already been circulated to you. With your permission, we may take them as read. I would like to begin the proceedings by giving you a report on the overall performance of your company and the environment in which it operates.
INDUSTRY DEVELOPMENTS
One of the major developments in the natural gas industry is the formation of the Petroleum and Natural Gas Regulatory Board. The Board engaged with the natural gas industry during the year 2007 and released a set of draft guidelines for comments. The guidelines were finally notified with effect from 19th March, 2008.
Your company has interacted with the Regulator, to facilitate the formulation of guidelines for the determination of authorized areas, network tariff and pipeline standards. The company is currently in the process of filing the required information with the Regulator for authorization.
Your company has always endeavored to contract multiple and reliable sources of gas. This has helped the company to keep its supply commitments to more than 290,000 household, industrial, CNG and commercial customers. An additional 1.45 mmscmd of Panna-Mukta, Tapti (PMT) gas, contracted with BGEPIL, started flowing into GGCL system from September 2007. The Government of India, in November 2007, appointed GAIL as the sole nominee for marketing all gas from the Panna Mukta and Tapti fields. Your company was receiving about 2.90 mmscmd of gas from these fields, under three different contracts. With considerable help from BG, your company was able to enter into a long-term arrangement with GAIL for supply of 2.13 mmscmd of gas from April 2008.
While the gas supply contract with the JV of GSPC-Niko for purchase of gas from Hazira block ended during the year, your company is exploring other sources to augment its current portfolio of gas supply.
The company witnessed strong industrial growth in its areas of operations. The cities of Surat and Ankleshwar also witnessed significant growth, thus creating fresh demand in the household and commercial segments.
PERFORMANCE REVIEW
Your company has been investing in upgrading infrastructure, in network extensions and in CNG infrastructure, over the last few years. About Rs 400 crores have been invested over the last three years, enabling your company to continue growing sales to its key industrial retail segment. Connecting to industrial estates and clusters as well as increasing penetration to industrial units in the company’s areas of operation has helped to grow this business segment by over 20% on year on year basis.
The CNG segment also continues on its strong growth path. Investment in additional CNG infrastructure and focused marketing efforts by the company has increased the conversion of vehicles to this clean and economic fuel. Having achieved almost complete penetration in the three wheeler market, the company is now converting cars and buses to CNG.
Some of the milestones in gas sales include:
Total gas sales crossing 4 million cubic meters per day
Sales to retail customers crossing 2.5 million cubic meters per day
CNG sales crossing 2 lakh cubic meters per day. 6 new CNG stations were set up and one CNG station was upgraded during the year, taking the total number of CNG stations to 26.
FINANCIAL PERFORMANCE OF THE COMPANY
Your company’s performance for the year under review has already been circulated to you. I shall take the same as read.
In view of the strong performance of the company and the growth prospects, your company is proposing an increase in the dividend.
HSSE AND CORPORATE GOVERNANCE
Your company remains committed to the highest standards of Health, Safety, Security and Environment or HSSE and Corporate Governance.
During the year 2007, your company won the Gujarat State Safety Award, the G Cube Award and also received the Prashansapatra from the National Safety Council. The company also won the BG Chairman’s Award for its exemplary efforts during the floods in Surat in 2006.
Your company focused on social initiatives during the year, which included solar lighting, building civic amenities and supporting education. The company contributed to the Government of Gujarat’s initiative on promoting education of the girl child. The company also sponsored a mobile education van and programs like safety training for migrant workers, safety programs in schools and “Science is Fun” workshops.
ACKNOWLEDGEMENTS
All these achievements would not have been possible without the support of all the stakeholders including the suppliers who ensured continuous supply of gas to us, the Central and State Governments, various Government agencies, customers and shareholders . I would like to take this opportunity to thank all those who have supported and guided us during the year.
I also thank all my colleagues on the Board for their continued support and guidance.
Last, but not the least, I would like to thank all employees of Gujarat Gas for their high level of motivation, commitment and hard work.
On this very encouraging note and with your permission, may I, on behalf of the Directors, take up the agenda?
I now call upon the Company Secretary to take up the agenda.
Date : 2nd May 2008 Hasmukh Shah
Place : Ahmedabad Chairman
Note: This does not purport to be a record of the proceedings of the 28th Annual General Meeting of the Company.