GAIL (India) Ltd

Memorandum of Understanding

between

Ministry of Petroleum & Natural Gas and

GAIL (India) Ltd. Year 2017-18

PART – A: Criteria For Performance Evaluation – MoU: 2017-18

SL Financial Performance Criteria Unit Marks

MoU Target for the 2017-18

Ex

100%

VG

80%

Good

60%

Fair

40%

Poor

20%

1 Turnover - Revenue from

Operations Rs. Cr. 10 52,389 51,023 49,772 48,451 47,813

2 Operating profit as a percentage

of Revenue from operation (Net) % 20 9.0% 8.5% 8.0% 7.7 7.5%

3 Return on Investment - PAT /

Average Net Worth % 20 9.0% 8.5% 8.3% 8.1% 8.0%

4 Capacity Utilization (10%)

4.a Gas Marketing MMSCMD 5 80 79 78 77 76

4.b Gas Transmission MMSCMD 5 100 98 96 94 92

5 CAPEX (Rs. Cr.) Rs. Cr. 10 3311 3190 3080 2970 2860

6

Percentages of value of CAPEX

contracts/ projects running/

completed during the year

without time/ cost overrun to total

value of CAPEX contracts

running/ completed during the

year (%)

% 5 100 90 80 70 60

PART – A: Criteria For Performance Evaluation – MoU: 2017-18

SL Financial Performance Criteria Unit Marks

MoU Target for the 2017-18

Ex

100%

VG

80%

Good

60%

Fair

40%

Poor

20%

7

Trade Receivables (Net) as

number of days of Revenue from

Operations (Gross)

Days 5 27 29 32 35 38

8

Reduction in claims against the

Company not acknowledged as

debt raised - CPSE and Others

% 5 10 9 8 7 6

9 Parameters relating to Joint Ventures (10%)

9.1

No. of PNG connections during

the year by the JVs/ Subsidiaries/

Associates

Lacs 6 10 9 8 7 6

9.2 New CNG stations

Nos.

4

120 110 100 90 80

9.3 Implementation of Green

Corridor Kms 1200 1000 800 600 400

10 HRM related Parameters (5%)

10.1

Online Submission of ACR /

APAR in respect of all executives

(E0 & above) along with

compliance of prescribed

timelines w.r.t writing of ACR /

APAR

% of no of

executives 1 100 95 90 85 80

PART – A: Criteria For Performance Evaluation – MoU: 2017-18

SL Financial Performance Criteria Unit Marks

MoU Target for the 2017-18

Ex

100%

VG

80%

Good

60%

Fair

40%

Poor

20%

10.2

Online Quarterly Vigilance

Clearance updation for Senior

Executives (AGM & above)

% of no of

Senior

Executives

1 100 95 90 85 80

10.3

Preparation of Succession Plans

and its approval by Board of

Directors

Date 1 30.09.2017 10.10.2017 20.10.2017 31.10.2017 10.11.2017

10.4 Holding of DPC without delay for

Executives (E0 & above level) % 1 100 95 90 85 80

10.5

Board decision on

recommendation of HR taskforce

constituted by MoP&NG

Date 1 31.10.2017 30.11.2017 31.12.2017 31.01.2018 28.02.2018

Total 100

Notes:

1. Breakup of Revenue estimated for the 2017-18 and revenue adjustment formula are annexed as Annexure A

2. CAPEX target of Rs. 3311 crore is excluding investment in JVs for Rs. 540 crore. It was also agreed that if the investment in

JVs is lower than Rs. 540 crore, the difference shall be added to the above targets.

3. The details of CAPEX Projects for Monitoring are annexed at Annexure B.

4. Targets recommended by the IMC are based on estimates submitted by the CPSE for the year 2016-17. In case of better

performance of CPSE as per final results as compared to estimates, the difference shall be added to the targets for the year

2017-18

5. Targets decided in the MoU are unconditional and no offset will be allowed except referred to in para 5.A.i(c) of Minutes of

IMC Meeting relating to Revenue from Operations. Further evaluation would be subject to compliance of additional eligibility

criteria as contained in 14.2 of MoU guidelines 2017-18.

B.C. Tripathi K. D. Tripathi

Chairman & Managing Director Secretary

GAIL (India) Limited Ministry of Petroleum & Natural Gas

New Delhi, 3rd

July 2017

PART B

TREND ANALYSIS

S. N. Financial performance Criteria Unit Financial year

2011-12 2012-13 2013-14 2014-15 2015-16

1

Revenue from operation - Gross

Rs. Crore

40,982 48,195 58,275 57,465 52,389

Revenue from operation – Net of Excise duty 40,441 47,523 57,508 56,742 51,914

2

a. Profit before tax

Rs. Crore

5,340 6,058 6,402 4,284 3,173

b. Other income 648 765 899 861 858

c. Extraordinary and Exceptional items 0 0 345 63 0

d. Prior period items 3.07 256.7 -6.55 107.37 -0.15

e. Operating profit/Loss (a-b+/-c+/-d) 4,695 5,550 5,151 3,468 2,315

3 Operating profit/surplus as percentage of revenue from

operations (net) % 11.61% 11.68% 8.96% 6.11% 4.46%

4

a. PAT

Rs. Crore

3,654 4,022 4,375 3,039 2,299

b. Net worth at year end 26,407 29,887 32,857 34,627 34,812

c. Average Net worth 25433 28147 31372 33742 34719

d. PAT/Net Worth % 14.37% 14.29% 13.95% 9.01% 6.62%

e. Paid-up share capital Rs. Crore 1,268 1,268 1,268 1,268 1,268

f. GoI Share % 57.34% 57.34% 56.11% 56.11% 56.11%

S. N. Financial performance Criteria Unit Financial year

2011-12 2012-13 2013-14 2014-15 2015-16

g. Reserves and surplus Rs. Crore 25,314 28,808 31,803 33,590 33,814

5 Total Expenses

Rs. Crore

35,749 42,229 52,349 53381 49599

6 Total Income 41089 48287 58406 57603 52772

7 Total expenses/ Total Income % 87% 87% 90% 93% 94%

8

Detail of other income

Rs. Crore

a. Interest 154 194 291 325 310

b. Dividend 252 383 336 325 320

c. Other Income 242 188 271 211 228

d. Total 648 765 899 861 858

9

a. Cash and bank balance and equivalent Rs. Crore 66 1,697 1,522 229 760

b. Investment in mutual funds Rs. Crore 0 0 0 0 0

c. Investment in shares other than subsidiary/ JVs Rs. Crore 5,679 6,533 6,788 6,528 4,652

d. Total (a + b + c) Rs. Crore 5,745 8,230 8,310 6,757 5,412

e. Cash credit/ Over-draft loan/ Short term loan Rs. Crore 0 224 0 234 0

f. Balance in current account Rs. Crore 32 10 22 4 34

10 Dividend paid/declared for the year. Excluding Dividend tax Rs. Crore 1104 1218 1319 761 698

S. N. Financial performance Criteria Unit

Financial year

2011-12 2012-13 2013-14 2014-15 2015-16

11

Installed Capacity in respect of each product

a. Gas Transmission throughput MMSCMD 176 206 206 206 206

b. LPG Transmission MMTPA 3.8 3.8 3.8 3.8 3.8

c. LHC Production MMT 1.4 1.4 1.3 1.3 1.3

d. Polymer Production TMT 410 410 410 810 810

12

Capacity utilization in respect of each product

a. Gas Marketing MMSCMD 84.17 81.44 79.18 72.07 73.67

b. Gas Transmission throughput MMSCMD 117.62 104.9 96.22 92.1 92.09

c. LPG Transmission TMT 3362 3136 3145 3093 2819

d. LHC Production TMT 1441 1376 1307 1276 1086

e. Petrochemical Production TMT 441 437 436 447 344

13

Contribution of each product in sales

a. Gas Trading % 73.66% 75.20% 74.46% 75.46% 78.15%

b. Gas transmission % 8.85% 6.48% 6.69% 5.39% 7.17%

c. LPG transmission % 1.13% 0.62% 0.73% 0.78% 0.94%

d. Petrochemicals % 8.39% 7.91% 7.93% 8.12% 5.89%

S. N. Financial performance Criteria Unit Financial year

2011-12 2012-13 2013-14 2014-15 2015-16

e. LHC Sales % 7.67% 9.37% 9.54% 8.93% 6.29%

14 CAPEX Rs. Cr. 7,136 6,301 4,364 1,924 1,881

15 Trade receivables (net) Rs. Cr. 2,177 3,217 3,530 5,504 3,843

16 Trade receivables (net) as percentage of RO (gross) % 5.31% 6.67% 6.06% 9.58% 7.34%

17

Claims against the company not acknowledge raised by

a. Central government depts.

Rs. Cr

2,157 4,090 5,273 5,819 6,201

b. State governments/Local authorities 538 1,038 1,313 1,191 1,158

c. CPSEs 13 31 50 29 45

d. Others 3,333 810 961 1,163 1,267

Total 6,041 5,969 7,597 8,202 8,671

18 Return (share of profit/loss) on investment in Joint Ventures % 115% 124% 107% 122% 126%

19 No. of PNG connections during the year by the

JVs/Subsidiaries Lacs - - 1.52 2.15 1.72

20 No. of CNG stations Nos. - - - 25 36

Annexure A

S No. Particulars

1 Revised Revenue from Operations (RO) 52,389 51,023 49,772 48,451 47,813

2 FR = Fixed Revenue in Rs Cr 21,878 20,545 19,876 19,179 18,364

3 ER = Exchange Rate in Rs/US $ 68 68 68 68 68

4Gas Source: Domestic

Volume

(QD)

Price

(PD)Rs.CR.

Volume

(QD)

Price

(PD)Rs.CR.

Volume

(QD)

Price

(PD)Rs.CR.

Volume

(QD)

Price

(PD)Rs.CR.

Volume

(QD)

Price

(PD)Rs.CR.

Domestic Gas at APM Price 41.61 2.74 10,992 41.57 2.74 10,981 41.39 2.74 10,934 41.29 2.74 10,906 41.30 2.74 10,910

Domestic Gas at Non APM Price 3.68 5.18 1,839 3.71 5.18 1,855 3.48 5.18 1,738 3.38 5.18 1,690 3.32 5.18 1,661

Deap Sea Gas 1.03 5.23 519 1.03 5.23 518 1.03 5.23 519 0.99 5.23 500 0.95 5.23 480

5 Subtotal/ Wt Avg. - Domestic 46.32 2.99 13,350 46.31 2.99 13,355 45.90 2.98 13,192 45.66 2.97 13,096 45.57 2.97 13,051

6 CFD = Conversion Factor for Domestic Gas 1.4194 1.4194 1.4194 1.4194 1.4194

7 Gas Source: Imported

Volume

(QLTR)

Price

(PLTR) Rs.CR.

Volume

(QLTR)

Price

(PLTR) Rs.CR.

Volume

(QLTR)

Price

(PLTR) Rs.CR.

Volume

(QLTR)

Price

(PLTR) Rs.CR.

Volume

(QLTR)

Price

(PLTR) Rs.CR.

RLNG LT -Ras Gas Inside Gujarat 2.90 9.15 2,589 2.95 9.15 2,633 2.95 9.15 2,633 5.88 9.15 5,253 3.90 9.15 3,491

RLNG LT -Ras Gas outside Gujarat 10.93 10.50 11,213 11.02 10.50 11,296 10.61 10.50 10,881 7.54 10.50 7,733 9.47 10.50 9,715

RLNG LT -Ras Gas New Contract 0.32 8.62 267 0.30 8.62 257 0.30 8.62 253 0.30 8.62 254 0.30 8.62 254

RLNG LT -Gorgon 1.56 10.46 1,597 1.49 10.46 1,518 1.49 10.46 1,518 1.49 10.46 1,518 1.49 10.46 1,518

RLNG LT -DCP 1.42 10.80 1,495 1.35 10.80 1,419 1.35 10.80 1,420 1.35 10.80 1,419 1.35 10.80 1,421

8 Subtotal/ Wt Avg. - LT RLNG 17.13 10.26 17,161 17.10 10.25 17,124 16.69 10.25 16,704 16.55 10.01 16,176 16.51 10.17 16,398

9 CFLTR = Conversion Factor for Long Term RLNG 1.4366 1.4366 1.4366 1.4366 1.4366

Details of Fixed Revenue

10 Particulars Excellent VG Good Fair Poor

Spot RLNG 7,207 6,501 6,370 6,282 5,887

Gas transmission 4,433 4,219 4,095 3,885 3,967

LHC 2,295 2,167 2,044 1,922 1,800

Petchem 6,693 6,430 6,161 5,903 5,552

LPG Transmission 523 501 480 458 430

E&P 555 555 555 555 555

Other 73 73 73 73 73

Other Operating Income 100 100 100 100 100

11 Total Fixed Revenue (FR) 21,878 20,545 19,876 19,179 18,364

12 Revised Revenue from Operations (RO) (S No. 5+8+11) 52,389 51,024 49,772 48,451 47,813

Note : PD and PLTR components of the formula includes Basic Price, Customs duty (if any), Regasification (if any), Gujarat VAT (if any), Marketing Margin and North East

Discounts (if any).

Adjustments in the Revenue from Operations will be given based on variations on Exchange rate (ER), Domestci gas price (PD) and LTRLNG price (PLTR). However,

no variation would be allowed for quantity variation and quantities will remain fixed.

PD: Average price of Domestic Gas in US$/MMBTU QD: Quantity of Domestic Gas in MMBTU

PLTR: Average price of imported RLNG in US$/MMBTU QLTR: Quantity of imported RLNG in MMBTU

Calculation of Revenue from Operation at various levels and Revenue Adjustment Formula

Adjusted Revenue from Operations = FR + ER*(QD*PD*1.4194+QLTR*PLTR*1.4366) Excellent VG Good Fair Poor

Annexure B

Details of CAPEX Projects for Monitoring

Sl.

No Name of Project

Approved

Cost /

Estimated

cost

Exp.

Planned

During

2017-18

Cum.

Physical

Progress

(%)

Details of Milestone in (2017-18) Date of Milestones

1

Jagdishpur-Haldia-

Bokaro-Dhamra Pipeline

Section-1

3397 1200 78

Laying of P/L up to Varanasi (100 Kms), Mechanical

Completion of Bihar Spurlines, Completion of Delivery of

line pipes, Delivery of Mainline Ball valves , Construction

Progress - 50 %

31st Mar’18

2

Dhamra - Angul Pipeline

Section –2A

2253 300 22

Award of Line pipe, Award of Laying Contract, Delivery of

30% of line pipe, Ordering of Mainline Ball Valves,

Construction Progress - 10 %

31st Mar’18

3

Dobhi- Durgapur

Pipeline

Section – 2B

2250 300 22

Award of Line pipe, Award of Laying Contract, Delivery of

30% of line pipe, Ordering of Mainline Ball Valves,

Construction Progress - 10 %

31st Mar’18

4

Bokaro - Angul –

Pipeline

Section – 3A

3212 95 10

Identification of Permanent land for stations, Award of Line

pipe, Tendering of Laying works, Tendering of Mainline

Ball Valves

31st Mar’18

5

Durgapur – Haldia

Pipeline

Section – 3B

1828 5 8

Identification of Permanent land for stations, Tendering of

Line pipe, Tendering of Laying works , Tendering of

Mainline Ball Valves

31st Mar’18

Annexure B

Sl.

No Name of Project

Approved

Cost /

Estimated

cost

Exp.

Planned

During

2017-18

Cum.

Physical

Progress

(%)

Details of Milestone in (2017-18) Date of Milestones

6 Kochi – Koottanad-

Mangalore Ph-II 2915 106 75

Award of Laying works of all sections, Award of HDD

Works

28th Feb’ 18

7

Auraiya- Phulpur

Pipeline project (APPL)

1428 225 78

Tendering of pipeline terminal Works, Ordering of Pipeline

terminal Works, Construction Progress 75%, Completion of

Delivery of line pipes, Delivery of Mainline Ball valves

31st Mar’18

8 Vijaipur – Auraiya

Pipeline Project3

2881 300 18

Award of Line pipe, Award of Laying Contract, Ordering of

Mainline Ball Valves, Start of delivery of Linepipe,

Construction Progress 10%.

31st Mar’18

9

Jamnagar- Loni LPG

Pipeline Augmentation

(JLPL)

328 50 80

Delivery of Line pipes, Ordering of Pipeline Laying &

Construct Works, Ordering of Composite station works of

LPG Pump, Delivery of Pumps ,

Completion of Pipeline Const.: 75%

31st Mar’18

10 Ankleshwar – Vadodara

Pipeline Project 200 40 96

Completion of RoU Opening ,

Mechanical Completion of Pipeline 31

st Mar’18

Remarks:

1. The overall Lowering target for the above 10 projects and other small pipelines is 1250 Kms for diameter of 24” and above. For monitoring

lowering of pipeline working out without time/cost overrun, lowering target would also be considered.