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GAIL (India) Limited

Welcome To

PresentationOn

Company Secretariat

Functioning & Corporate

Governance

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GAIL- Vision & MissionVISIONVISION

Be the leading company in natural Be the leading company in natural gas and beyond with global focus, gas and beyond with global focus, committed to customer care, value committed to customer care, value

creation for all stakeholders and creation for all stakeholders and environment responsibilityenvironment responsibility

MISSIONMISSION

To accelerate and optimise the To accelerate and optimise the effective and economic use of effective and economic use of

Natural Gas and its fractions to Natural Gas and its fractions to the benefit of the national the benefit of the national

economyeconomy

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GAIL-Overview

GAIL is a Government Company, Navratna PSU under the administrative control of Ministry of Petroleum & Natural Gas (MoP&NG).

FY 2008-09 - Turnover– Rs. 23,776 crores, Profit After Tax – Rs.1,400 crores & Net-worth- Rs. 14,575 crores (Paid Share Capital + Reserve & Surplus).

Equity Shares of the Company are listed at Bombay Stock Exchange Limited (BSE); National Stock Exchange of India Limited (NSE) & GDRs are listed at London Stock Exchange.

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Functional Structure

SHAREHOLDERS

BOARD SUB-COMMITTEES

CMD

DIRECTOR (MARKETING)

DIRECTOR (FINANCE)

DIRECTOR(PROJECTS)

DIRECTOR (HR)

DIRECTOR (BD)

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Company Secretariat - Activities

Convening and conducting Board of Directors meetings

Convening and conducting Board Sub-Committees of meetings

Convening and conducting Shareholders meetings Compliance of listing agreements with Stock

Exchanges Payment of dividend to shareholders Investor Services Maintenance Preservation of employee/company related records for

safe custody

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Composition of BoardCompanies Act, 1956

Minimum - three and maximum – No Limit.

Company’s Articles

Minimum - three and maximum – twenty

All the Directors appointed by the President of India through the Ministry of Petroleum and Natural Gas.

Clause 49 of the Listing Agreement

Not less than 50% Board comprising of non-executive directors.

If Chairman is executive, at least half of the Board to comprise of independent directors.

If Chairman is non-executive, at least one third of the Board to comprise of independent directors.

Contd…

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Present strength

Functional Directors/Whole-time Directors (including CMD) - Six

Part–time Directors (Government Nominees) - Two

Part–time Non-official Directors (Independent) – Four

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Board Meeting

Provisions

To meet 4 times in a year.

Not more than 4 months to elapse between two meetings.

During FY 2008-09, 9 Board Meetings were held.

Related work Advance intimation to Directors wrt to date, time and

venue of meeting Sending of Agenda to all Board members well in advance Necessary arrangement for Directors No remuneration except payment of sitting fees @ Rs.

10,000 to Part–time Non-official Directors (Independent) Preparation of minutes

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Passing of Resolution by Circulation

Matter of an urgent nature- approval through circulation Draft Resolution and the necessary documents to be

circulated among Directors for approval Approved by majority of the Directors Certain matter circulation not allowed

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Sub-Committees of Board

Statutory Sub-Committees Audit Committee Shareholders/ Investor Grievance Committee

Other Sub-Committees

HR Committee

Redressal of Vendors’ Grievance Committee

Corporate Social Responsibility Committee

Ethics Committee

Contd…

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Business Development & Marketing Committee

Project Appraisal Committee

Share Transfer Committee

Empowered C&P Committee

Compensation Committee

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Annual Report Compilation of data/inputs for Annual Report-Directors’

Report, MDA, Financial statements etc.

Obtaining the approval of Board & also by shareholders

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Shareholders MeetingProvision Required to be held in each year and within six months

of the close of FY Interval of not more than fifteen months between two

AGMs

Related Work Necessary arrangements for AGM viz. booking of venue,

appointment of Event Manager, Registration counter for facilitating shareholders

Printing and dispatching of Annual Report to Shareholders at least 25 days before the date of AGM.

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Compliance of Listing Agreement and other

Statutory Compliances Advance intimation of date of Board meeting to Stock

Exchange Filing of various compliances with stock exchanges In case of approval of financial results, intimation within

15 minutes from the conclusion of the Board Meeting. In case of appointment of Directors:

- Obtaining of Director Identification Number. - Filing of Form 32 to Registrar of Companies - Welcome kit, inter-alia, containing Code of Conduct,

Insider Trading Code, Annual Report, MoA and AoA etc. to Directors

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Payment of Dividend

After approval by Board/Shareholder, dividend amount transferred within 5 days

Mode of Dividend Payment: Electronic Clearing Service (ECS), Dividend Warrant and Demand Draft

GAIL regularly pays dividend. For FY 2008-09, Board approved dividend @ Rs.7/- per

equity share Till date, Company paid dividend of more than Rs. 6,500

crores which includes more than Rs. 4,500 crores to Government of India

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Investor Services

Handling of investor grievances viz. non-receipt of dividend, transfer of shares, non-receipt of annual report etc.

Company has designated an exclusive e-mail ID viz. investorqueries@gail.co.in

‘Investor Zone’ section on Company’s website

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Maintenance of Records

Agenda/Minutes of Board and Board sub-committee(s) meeting(s)

HBA agreements of employeesMoU & Agreements entered by CompanyShare certificates of JVs etc.

For fast retrieval, scanned and upload serially no.

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“Set of rules that are designed to govern the behaviour of corporate enterprises. ”

“Stepping into the shoes of the shareholders, stakeholders, vendors, suppliers & employees by the Top Managers and CEO of the company”

Corporate Governance?

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Need For Corporate Governance

Divorce between ownership and management

Concentrated ownership

Trust building

Optimum utilization of corporate resources

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Relevance Of Corporate Governance

Enhance stakeholders’ value on sustainable basis. Business becomes socially more responsible and

accountable. Creating wealth for organisation as well as nation at

large.

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Corporate Governance -Development

Historical Development - Abroad Under deliberation from last four decades. Cadbury Committee set up by London Stock Exchange Sarbanes-Oxley Act, 2002 International Financial Reporting Standards (IFRS) Financial Services Act , UK

In India Chamber of Indian Industry Kumar Mangalam Birla Committee N R Narayana Murthy Committee Naresh Chandra Committee

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Corporate Governance-Clause 49

Composition of Board Independent Directors Audit Committee CEO/CFO Certification Report on Corporate Governance

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Not less than 50% Board comprising of non-executive directors.

If Chairman is executive, at least half of the Board to comprise of independent directors.

If Chairman is non-executive, at least one third of the Board to comprise of independent directors.

Composition of Board

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Not having any material pecuniary relationship.

Not related to promoters.

Not an employee of the Company during three years.

Not a partner or executive during 3 years of statutory audit firm, internal audit firm, legal firms, consulting firms, having material association with the company.

Not a material supplier, service provider, customer, lessor, or lessee, affecting independence.

Not owning 2 % or more of voting shares.

Nominees Directors appointed by the institution deemed to be independent.

not less than 21 years of age.

Independent Director

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Board to periodically review the following information:

Legal compliance of all applicable laws.

Risk management policy on risk management and minimization procedures.

Formulation of code of conduct.

Certification by CEO/CFO about financial reporting.

Annual operating plans and budgets.

Roles and Responsibilities of Board

Contd…

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Financial/ quarterly results.

Minutes of sub-committees of the Board.

Details of any joint venture agreements.

Foreign exchange exposures to limit the risk of adverse exchange rate movement.

Shaw-cause, demand, penalty notices, significant labour problems.

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Audit Committee

Minimum 3 (three) Directors. Two-third to be an independent directors. All members to be financially literate to read and

understand basic financial statements. At least one member to have accounting or financial

expertise (professionally qualified or officer with financial oversight responsibilities).

Chairman to be an independent director.

Contd…

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Chairman to be present in AGM.

Finance Director, Head of Internal Audit and

representative of Statutory Auditor to be invited.

Company Secretary to act as Secretary. To meet 4 times in a year. Not more than 4 months to elapse between two

meetings. Quorum to be two members or one third, whichever is

greater, with two independent directors present. During FY 2008-09, 8 meetings held

Contd…

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Roles and Powers of Audit Committee

To investigate any activity within its terms of reference To seek information from any employee To obtain outside legal or other professional advice To secure attendance of outsiders with relevant expertise To review quarter/annual financial statements To review the adequacy of internal audit function To review the functioning of the whistle blower

mechanism To review significant related party transactions To review appointment, removal and terms of

remuneration of chief internal auditor

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Shareholders/ Investors Grievance Committee

Constituted as per clause 49.

Chaired by Independent Director and two functional Directors.

To specially look into the redressal of grievances of shareholders/investors.

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Subsidiary Companies

At least one Independent Director on the Board of holding Company shall be a Director on Board of material non listed Indian subsidiary Company.

Financial statements, in particular, investment made by the unlisted subsidiary Company shall reviewed by the Audit Committee of the listed holding Company.

Minutes of the Board Meetings shall be placed at the Board Meeting of the listed holding Company.

Management should periodically bring to the attention of the Board of listed holding Company, a statement of all significant transactions and arrangements entered into by subsidiary Company.

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CEO/CFO Certification

Reviewed financial statements and the cash flow statement

No transactions entered into by the company during the year which are fraudulent, illegal or violative of the company’s code of conduct.

Accept responsibility for establishing and maintaining internal controls for financial reporting

Disclosed to the auditors and the Audit Committee, changes in internal control, accounting policies, instances of significant fraud etc.

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Compliance Report On Corporate Governance

• Separate section on Corporate Governance in the Annual Report

• Compliance with mandatory and non-mandatory requirement

• Quarterly compliance report to the Stock Exchange • Certificate from the Statutory Auditors for the FY

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THANK YOU

GAIL (India) Limited