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Updated:22 May, 2019, 14:39 PM IST

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Updated:22 May, 2019, 14:50 PM IST

DIRECTORS REPORT

TO,

THE MEMBERS

Your Directors have pleasure in presenting the Sixteenth Annual Report and the Company's audited financial statements for the financial year ended March 31, 2015.

FINANCIAL REVIEW

During the year, gross turnover of the Company has decreased by 6% from Rs. 4319.37 crores in year 2013–14 to Rs. 4048.58 crores in the year 2014–15 mainly on account of substantial reduction in the selling price of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG)–domestic due to allocation of additional domestic gas to City Gas Distribution (CGD) sector resulting in lower input cost of gas which was passed on to the customers by reducing selling price of CNG and PNG–domestic in February 2014. However, Profit after tax has increased by 22% from Rs. 360.26 crores in 2013–14 to Rs. 437.73 crores in 2014–15.

DIVIDEND

Your Directors are pleased to recommend higher dividend of 60% (Rs. 6.00 per share) as against 55% (Rs. 5.50 per share) paid in the last year. The proposed dividend including corporate dividend tax would absorb Rs. 101.10 crores.

PERFORMANCE HIGHLIGHTS COMPRESSED NATURAL GAS BUSINESS

During the year, your Company has augmented its CNG distribution infrastructure by enhancing the installed compression capacity from 66.81 Lakhs Kg/day in March 2014 to 68.50 Lakhs Kg/day in March 2015. The total number of CNG stations were 326 as on March 31, 2015 which included 280 stations in Delhi and 46 stations in National Capital Region (NCR).

In its ongoing endeavor to keep customer satisfaction as the top most priority, your Company has taken various initiatives as under:

1. An alternate cashless mode of payment for CNG customers by using Credit / Debit card at all IGL owned CNG stations has been made available through Electronic Data Terminals (EDC).

2. In its endeavor to make genuine lubricants easily available to its CNG customers, your Company has commenced sale of MAK GE Lubes at selected IGL owned CNG stations.

The estimated number of vehicles running on CNG in Delhi and NCR as on March 31, 2015 was over 800,000 including 540,000 private vehicles

PIPED NATURAL GAS BUSINESS PNG –

Domestic Connections

A major thrust has been given to the expansion of PNG network in Delhi and NCR i.e. Gautam Budh Nagar (Noida, Greater Noida) and Ghaziabad.

Your Company has increased its steel pipeline network from 658 kms in FY 2013–14 to 680 kms in FY 2014–15 and MDPE network from 8437 kms in FY 2013–14 to 8967 kms in FY 2014–15.

During the year, your Company provided 59,029 PNG connections in Delhi & 42,256 PNG connections in NCR and the total number of connections went up from 4,59,467 in March 2014 to 5,60,752 in March 2015. It is noteworthy that your Company broke its own record of highest number of connections in a year by providing 1,01,285 domestic PNG connections in Financial Year 2014–15. Highest number of PNG connections provided by your Company in 2014–15 is also a record in our country's CGD business.

Company has taken major initiative to upgrade its business process and introduce technologically advanced platform for customer interface. Customer app on mobile phone has been successfully rolled out. PNG customer will be able to obtain important services pertaining to their PNG connection through this mobile app. This customer app shall bring qualitative improvements in our service levels.

Your Company has also undertaken a pilot project of customer self help kiosk. First two such kiosks have been commissioned in prominent public places in Delhi & Noida. Depending on customer response such installations will be further increased.

PNG – Commercial & Industrial

Your Company has maintained its focus on the Industrial and Commercial segment as one of the potential growth areas in the forthcoming years. There was some decline in sales in commercial & industrial segment in financial year 2014–15, primarily due to stiff competition from alternate fuels prices like Furnace oil (FO)/Diesel which have come down drastically due to lower crude prices. However, with its concentrated efforts, the total number of commercial customers increased from 1291 in March 2014 to 1566 in March 2015 and the industrial customers from 584 in March 2014 to 726 in March 2015.

Your Company has already expanded its pipeline network to most of the major industrial areas of Delhi and NCR i.e. Gautam Budh Nagar (Noida, Greater Noida) and Ghaziabad. Pipeline laying activities are underway in the remaining major industrial areas in NCR.

REGULATORY DEVELOPMENTS

Petroleum and Natural Gas Regulatory Board (PNGRB) vide its order no. TO/03/2012 dated April 9, 2012 determined the per unit network tariff and compression charge for the CGD Network of the Company for Delhi, based on submission of data by the Company in May 2009 and certain assumptions taken by PNGRB in this regard. The tariffs determined by PNGRB are much lower than the rates submitted by the Company.

Further, PNGRB made the determined tariffs applicable with retrospective effect from April 1, 2008. In its order PNGRB stated that the modalities and time frame for refund of differential Network Tariff and Compression Charge would be decided subsequently.

The Company filed a writ petition on April 10, 2012 against the order of PNGRB dated April 9, 2012 before the Hon'ble Delhi High Court. The Hon'ble High Court of Delhi has passed the judgment in this case on June 1, 2012 and has quashed the PNGRB order dated April 9, 2012. PNGRB filed special leave petition before the Hon'ble Supreme Court of India against the order dated June 1, 2012 of Hon'ble Delhi High Court.  On July 1, 2015, Hon'ble Supreme Court of India has dismissed the special leave petition of PNGRB.

ASSOCIATE COMPANIES

CENTRAL U.P. GAS LIMITED (CUGL)

CUGL is engaged in City Gas Distribution in the cities of Kanpur and Bareilly in Uttar Pradesh. Your Company holds 50% of paid–up equity share capital of CUGL.

MAHARASHTRA NATURAL GAS LIMITED (MNGL)

During Financial Year 2014–15 MNGL became an Associate Company after acquisition of 4.75 crore shares of MNGL in the first tranche at a price of Rs. 38/– per equity share from certain financial investor shareholders of MNGL. MNGL is in City Gas Distribution business in Pune in the State of Maharashtra.

During the Financial Year 2015–16, the Company has acquired 25 lac shares in the second and final tranche at a price of Rs. 38/– per equity share, making its total holding to 5 crores shares which constitutes 50% of the paid–up share capital of  MNGL.

The statement containing the salient features of the financial statement of Company's Associates pursuant to first proviso to sub–section (3) of Section 129, is appended as Annexure 1 to this Report.

FUTURE OUTLOOK

Your Company has drawn out plans to further consolidate its presence in Delhi and NCR by investing Rs. 250 Crores during the financial year 2015–16.

In an effort to curb air pollution and to improve ambient air quality in Delhi & NCR, the National Green Tribunal (NGT) in a landmark ruling on April 7, 2015 banned diesel vehicles over ten years old from plying on Delhi roads and all petrol vehicles which are more than 15 years old shall not be registered in NCR & Delhi. It is expected that more numbers of CNG private cars would be added as customers would prefer CNG over Diesel for their new purchases also.

It is also expected that with an increase in allocation of domestic gas to City Gas Distribution (CGD) entities, the price differential of CNG versus alternate liquid fuel will continue to drive the conversion of petrol driven private vehicles to CNG mode. Introduction of more CNG variant models by car manufacturers would further add to CNG volumes.

Your Company has aggressive plans to expand its PNG customer base in alignment with mission of expanding PNG launched by Government of India. The Company shall endeavour to reach 3 lakh new kitchens in FY 2015–16. Expanding PNG connectivity into newly constructed housing units in Gautam Budh Nagar by builders / government will be given priority to register ambitious growth. The sustained marketing campaign by the Company in Gautam Budh Nagar & Ghaziabad has encouraged builders & developers to integrate PNG at drawing board stage. This approach will enable your Company to utilize assets better in coming years. New high volume industrial & commercial customers will continue to be target for achieving higher growth by your Company.

The Company is looking forward to expand its footprints in new cities through participation in bidding process of PNGRB and by way of strategic investment in other CGD Companies.

INFORMATION TECHNOLOGY

Your Company has embarked on attaining new heights in the field of IT enablement through performing upgrade of their existing ERP system on latest hardware platform. As part of upgrading the ERP software landscape, your Company has performed technical and functional upgrade of the existing ERP landscape to the latest technology platform of SAP ECC6.0 EHP –7. Better monitoring and controlling of critical business processes alongwith automation and optimization have been achieved through implementation of new functionalities and modules.

Your Company has developed new & advanced customer centric applications to provide the customers user friendly experience over portal which can be accessed anywhere even on handheld devices making it convenient to process self–help related services at ease. These applications including Customer Relationship Management (CRM), Business Communication Management (BCM), Multichannel Foundation For Utilities (MCFU) would be released shortly enabling the customers to leverage the latest technology available in the market to enhance their satisfaction through portability of use, convenience, ease of operation and time saving. Apart from the above, your Company has implemented an android based mobile application "IGLCONNECT" for providing self–help related services viz. bill related information, payment options, complaints, online connection requests etc.

Your Company is committed to provide all its customers and stakeholders with latest technology related services and would continue to enhance the same through continued support and appreciation of its customers.

HUMAN RESOURCES

The Company realizes that the challenges of the future can be best met with competent and motivated human resources. The Company is taking various HR initiatives to add value to its pool of human talent and integration of individual goals with that of the Company. Company is reviewing compensation packages and other facilities of its employees to make them more competitive and aligned with industry practices.

Training & Development of the employees forms an integral part of Company's policy towards achieving its objective. Assessment Center & 360 degree appraisal system have been introduced for DGM and above level employees.

During the year, Company also inducted various young professionals at entry level to infuse talent in the professional arena. The Company has also maintained a harmonious and cordial relation among its employees. The Company recognizes and appreciates the contribution of all its employees in its growth path.

HEALTH SAFETY AND ENVIRONMENT (HSE)

Your Company has always accorded top most priority to Fire and Safety related issues and has focused its continual efforts to maintain a good safety culture and to improve Fire and Safety standards.

It is a matter of pride that your Company has crossed 67 Million Man Hours accident free till March 31, 2015. This is a milestone achievement resulted from continuous efforts of all the individuals working directly and indirectly for the Company. During FY 2014–15, your Company has been conferred various prestigious safety awards/ appreciation certificates viz. Green Tech Safety Award (platinum category), Safety Innovation Award by Institute of Engineers, Special Commendation by Golden Peacock Occupational Health & Safety Award and Certificate of Appreciation from National Safety Council to recognize the excellence in the field of Fire & Safety management.

For ensuring safety and business sustainability, an initiative was taken to enhance CNG cylinder validation infrastructure and has successfully resulted in increasing the cylinder testing centres more than the requirement. Also, safety drives to educate the CNG consumers were taken up regularly to get their CNG cylinders validated.

Safety inspections of CNG vehicles are also done periodically on random basis to check compliances of safety standards and to prevent unsafe condition arising out of gas leakage from the CNG kits. For Safety of CNG vehicles, free safety clinics are periodically organized where inspection of CNG kits and fittings is undertaken.

Training is regularly imparted to the employees, contract staff at CNG stations, DTC drivers and consumers of CNG and PNG. To create safety awareness and to impart training to all category of consumers, a dedicated group of trainers with fully equipped training van is deployed which conducts safety clinics along with practical demonstration.

In line with Company's HSE policy, Safety Audits and other statutory compliances are done to ensure safety in all facets of IGL's operations.

Advanced High Pressure Water Mist cum Foam based protection systems have been installed at various Mega CNG stations and are being installed at rest of the CNG stations to deal any fire emergency in its initial stage.

Emergency Control Centres (ECC) established at strategic locations across Delhi & NCR are manned round the clock to respond fast to any gas leak or emergency situation. Two Emergency Response Vehicles (ERVs) are stationed at two distantly located ECC across Delhi. Three more ERVs planned to strengthen emergency response shall be deployed in coming months.

IMPLEMENTATION OF INTEGRATED MANAGEMENT SYSTEM

Your Company has successfully implemented and certified for Total Integrated Management System in 2014–15 for:

1. Quality Management System ISO 9001:2008

2. Environmental Management System ISO 14001:2004

3. Occupational Health and Safety Management System OHSAS 18001:2007

CORPORATE SOCIAL RESPONSIBILITY

During the financial year 2014–15, the Board of Directors of your Company approved the new CSR policy keeping in view the requirements under Companies Act, 2013. Various CSR projects have been initiated and are being taken forward under  the IGL CSR Policy.

The Company has been supporting meritorious students from under–privileged strata of society for specialised coaching for engineering entrance examination (JEE) through a scheme run by an NGO. It is a matter of satisfaction that in 2014–15, eight out of twelve students sponsored by your Company have qualified for admission in IIT and other leading engineering colleges.

Your Company realizes the need that good health is paramount to ensure safety on the roads. Therefore, your Company has started the 'IGL Swasth Saarthi' – a comprehensive health management programme for auto and taxi drivers in Delhi & NCR wherein a series of comprehensive Health check­up camps are being organised at CNG stations through a leading hospital. Your Company is also funding the daily training programme for taxi drivers on Gender Sensitisation & Skill Management being organised by Transport Department, Govt. of NCT of Delhi, for all taxi drivers going for annual fitness test. With the objective of covering the risk in case

A First aid training for drivers of CNG based public transport in progress at IGL CNG Station, as a part of our CSR programme, IGL Swasth Saarthi.  of accidents while driving for 3.25 lakh drivers of CNG run public transport, your Company has bought a Group Accident insurance cover under 'IGL Suraksha Yojna'.

Considering the ever growing demand for skilled manpower across sectors as a result of 'Make in India' programme, your Company also contributed towards a Skill Development programme for unemployed youth in the fields of Gas plumbing,

Welding, Fitting and Fashion designing, by providing technical oriented quality training.

As a part of Swach Bharat programme, your Company is in the process of working with local authorities towards development of new public toilet complexes and upgradation of toilet facilities in government run schools.

The Annual Report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014, is appended as Annexure 2 to this report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013, your Directors hereby confirm that:

i) in the preparation of Annual Accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed;

ii) they have selected such accounting policies and applied them consistently except where otherwise stated in the Notes to Accounts and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; they have prepared the Annual Accounts for the Financial Year ended March 31, 2015 on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DIRECTORS

Shri M. Ravindran, nominee of Gail (India) Limited (GAIL), was appointed as Chairman of the Board in place of Shri K.K. Gupta w.e.f. January 14, 2015.

Shri V. Nagarajan, nominee of Bharat Petroleum Corporation Limited (BPCL), was appointed as Director (Commercial) w.e.f. September 4, 2014.

Shri R.K. Sharma, nominee of GAIL, was appointed as Additional Director of the Company in place of Shri Rajeev Kumar Mathur w.e.f. October 15, 2014.

Shri I.S. Rao, nominee of BPCL, was appointed as Additional Director of the Company w.e.f. January 14, 2015. Shri R.K. Sharma ceased to be director w.e.f. January 14, 2015

Dr. Sudha Sharma and Shri. Raghu Nayyar were appointed as Additional and Independent Directors w.e.f. March 20, 2015.

The proposal for appointment of Dr. Sudha Sharma and Shri Raghu Nayyar, as Independent Directors of the Company is being placed before the shareholders for approval in the ensuing Annual General Meeting (AGM) of the Company.

Smt. Gitanjali Gupta Kundra, nominee of Government of NCT of Delhi, was appointed as Additional Director of the Company in place of Shri Gyanesh Bharti w.e.f. April 20, 2015.

The shareholders of the Company at 15th Annual General Meeting had appointed Shri S.S. Rao, Shri Santosh Kumar Bajpai and Shri V. Ranganathan as Independent Directors of the Company w.e.f. September 12, 2014 to September 11, 2017.

Shri Rajesh Chaturvedi ceased as a Director of the Company w.e.f. August 31, 2014.

The Board takes this opportunity to place on record its appreciation for valuable contribution made by Shri K.K. Gupta, Shri Rajesh Chaturvedi, Shri Rajeev Kumar Mathur, Shri R.K. Sharma and Shri. Gyanesh Bharti during their tenure as Board Members.

In terms of Section 152 of the Companies Act, 2013, no Director is liable to retire by rotation at the ensuing Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that they  meet the criteria of independence as provided under section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement.

The details of programmes for familiarization of Independent Directors with the Company are put up on the website of the Company (<http://iglonline.net/Documents/Familiarization> Programmes–for–Independent–Directors.pdf).

The Nomination & Remuneration committee considers various criteria such as age, qualification, expertise, diversity in composition of Board and likely contribution to the Company while recommending the name of Independent Director.

During the financial year 2014–15, Nomination & Remuneration committee recommended to the Board, the Performance Linked Incentive Scheme for the employees of the Company. The Company has engaged a reputed HR consultant for study and revision of remuneration of employees of the Company.

The Nomination & Remuneration Committee has laid down criteria such as attendance and participation in the meetings, adherence to ethical standards, integrity, code of conduct, interpersonal relations with other Directors, safeguard of confidential information of the Company, observing corporate governance standards etc. to carry out evaluation of every Director's performance.

The Board of Directors carried out the evaluation of every Director, committees of Board and the Board as a whole based on the laid down criteria of performance evaluation.

CORPORATE GOVERNANCE

As per the requirements of the Clause 49 of the Listing Agreement with the Stock Exchanges a detailed Report on Corporate Governance and a certificate regarding compliance of conditions of Corporate Governance are annexed as part of the Annual Report.

DEPOSITS

During the financial year 2014–15, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year 2014–15, IGL has made investment of Rs. 180.50 crores in M/s Maharashtra Natural Gas Ltd. on March 26, 2015.

AMOUNT WHICH THE COMPANY PROPOSES TO CARRY TO ANY RESERVES, IF ANY

For the year 2014–15, your Company has proposed to transfer Rs. 43.77 crores to the general reserve of the Company.

NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE

The details of number of meetings of the Board and Audit Committee held during the financial year ended March 31, 2015 and composition of Audit Committee are given in Corporate Governance Report.

RELATED PARTY TRANSACTIONS

The Company has formulated a Policy on materiality of Related Party Transactions and on dealing with Related Party Transactions and the same has been disclosed on the website of the Company at weblink <http://iglonline.net/Related–Party–>Policy.pdf.

During the financial year 2014–15, your Company has not entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014.

However, your Company has entered into transaction with GAIL & BPCL (Promoter Companies) which falls in the definition of "Related Parties" defined under Clause 49 of the Listing Agreement. Details of transactions with related parties are being disclosed separately in the Annual Report and since transactions in a contract with GAIL qualify as material transactions, the same is being placed for shareholders' approval in the ensuing Annual General Meeting (AGM).

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made thereunder, your Company has constituted Internal Complaints Committee. During the year, no complaint with allegation of sexual harassment was received by the Company.

RISK MANAGEMENT AND INTERNAL FINANCIAL CONTROLADEQUACY

During the financial year 2014–15, the Company has developed a Risk Management System including The Risk Policy & identification of the Risks which are reviewed periodically.

Your Company has laid down set of standards, processes and structure which enables to implement internal financial control across the organization and ensure that the same are adequate and operating effectively.

VIGIL MECHANISM

Your Company has implemented a Whistle Blower Policy as part of the vigil mechanism to comply with the regulatory requirements laid down by the Companies Act, 2013 and Clause 49 of the  Listing Agreement. With the implementation of vigil mechanism, the Company provides a platform to the employees, directors, vendors and suppliers of the Company to come forward and raise their genuine concerns without any fear of retaliation and victimisation. The Company has engaged an independent third party service provider to manage the operations of whistle–blower hotline. The details of the Whistle Blower Policy are available on the website of the Company (www.iglonline.net).

STATUTORY AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company retire at the ensuing Annual General Meeting and being eligible, offers themselves for re–appointment.

The Notes on financial statements referred to in the Auditors' Report are self–explanatory and do not call for any further comments.

COST AUDITORS

Your Company had re–appointed M/s. Chandra Wadhwa & Co., New Delhi as Cost Auditors for the financial year 2014–15.

As per Section 148 read with Companies (Audit & Auditors) Rules, 2014 and other applicable provisions, if any, of the Companies Act, 2013, the Board of Directors of your Company has appointed M/s. Chandra Wadhwa & Co., New Delhi, Cost Accountants as the Cost Auditors of the Company for the financial year 2015–16. The remuneration proposed to be paid  to the Cost Auditors is subject to the ratification by the members at the ensuing Annual General Meeting of the Company.

SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT

Pursuant to Section 204 of the Companies Act, 2013, your Company had appointed M/s V.K. Sharma & Co., Practicing Company Secretaries, Noida as its Secretarial Auditors to conduct the Secretarial Audit of the Company for the financial year 2014–15. The Report of Secretarial Auditor for the financial year 2014–15 is appended as Annexure 3 to this report.

DISCLOSURES REGARDING REMUNERATION

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as Annexure 4 to this report. Further, none of the employees fall under the purview of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company is appended as Annexure 5 to this report.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 is appended as Annexure 6 to this report.

ACKNOWLEDGEMENTS

Your Directors express their gratitude to the Ministry of Petroleum & Natural Gas, State Governments of NCT of Delhi & Uttar Pradesh, Petroleum and Natural Gas Regulatory Board, and Promoter Companies (GAIL & BPCL) for their continuous patronage & support throughout the year.

The Directors also acknowledge the support of all Statutory & Local Authorities, Bankers, Media, Station Operators & their employees, contractors, vendors and suppliers.

The Directors place on record their deep appreciation towards IGL's valued customers for their continued co–operation & support and look forward to the continuance of this relationship in future also.

The Directors wish to express their gratitude to all the shareholders for their continued trust and support.

The Directors also sincerely acknowledge the contributions made by all the employees of IGL for their dedicated services to the Company.

For and on behalf of Board of Directors

sd/– V. Nagarajan

Director (Commercial)

sd/– Narendra Kumar

Managing Director

Place: New Delhi

Date: August 5, 2015

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