1. 1 GAIL (India) Limited Welcome To Presentation On Company Secretariat Functioning & Corporate Governance

2. 2 GAIL- Vision & MissionVISION Be the leading company in natural gas and beyond with global focus, committed to customer care, value creation for all stakeholders and environment responsibility MISSION To accelerate and optimise the effective and economic use of Natural Gas and its fractions to the benefit of the national economy

3. 3 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.

4. 4 Functional Structure SHAREHOLDERS BOARD CMD DIRECTOR (MARKETING) DIRECTOR (FINANCE) DIRECTOR (PROJECTS) DIRECTOR (HR) DIRECTOR (BD) SUB- COMMITTEES

5. 5 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

6. 6 Composition of Board Companies 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…

7. 7 Present strength  Functional Directors/Whole-time Directors (including CMD) - Six  Part–time Directors (Government Nominees) - Two  Part–time Non-official Directors (Independent) – Four

8. 8 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

9. 9 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

10. 10 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…

11. 11  Business Development & Marketing Committee  Project Appraisal Committee  Share Transfer Committee  Empowered C&P Committee  Compensation Committee

12. 12 Annual Report  Compilation of data/inputs for Annual Report-Directors’ Report, MDA, Financial statements etc.  Obtaining the approval of Board & also by shareholders

13. 13 Shareholders Meeting Provision  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.

14. 14 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

15. 15 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

16. 16 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 investorqueries@gail.co.in  ‘Investor Zone’ section on Company’s website

17. 17 Maintenance of Records  Agenda/Minutes of Board and Board sub-committee(s) meeting(s)  HBA agreements of employees  MoU & Agreements entered by Company  Share certificates of JVs etc. For fast retrieval, scanned and upload serially no.

18. 18 “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?

19. 19 Need For Corporate Governance  Divorce between ownership and management  Concentrated ownership  Trust building  Optimum utilization of corporate resources

20. 20 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.

21. 21 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

22. 22 Corporate Governance-Clause 49  Composition of Board  Independent Directors  Audit Committee  CEO/CFO Certification  Report on Corporate Governance

23. 23  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

24. 24  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

25. 25 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…

26. 26  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.

27. 27 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…

28. 28  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…

29. 29 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

30. 30 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.

31. 31 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.

32. 32 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.

33. 33 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

34. 34 THANK YOU GAIL (India) Limited