Gujarat Gas Ltd

Dear Members, Gujarat Gas Limited

Your Directors have pleasure in presenting the 12th Annual Report and the Audited Financial Statements for the Financial Year ended on 31st March, 2024.

Financial Highlights

PERFORMANCE HIGHLIGHTS

Highest average annual CNG sales of 2.72 mmscmd in FY 2023 - 24 (increase of 12% over FY 2022 - 23) on the back of investments in CNG station infrastructure coupled with favourable government policies.

During FY 2023 - 24, Company has connected further 1.87 lakhs homes through piped natural gas; crossed 21 Lakh Domestic connections.

GGL participated in Nationwide PNG campaign run by PNGRB to promote PNG awareness from 26th January, 2024 to 31st March, 2024 and Registered 41,000+ customers, Connected 47,000+ customers during the campaign.

New signings of industrial customers in FY 2023-24 1.11 mmscmd.

Gujarat Gas has launched Full Dealer Owned Dealer Operated (FDODO) scheme for fast track development of CNG stations infrastructure. Company plans to add more than 200 CNG stations in next 2-3 years under the scheme.

During the year FY 2023 - 24, India Ratings and Care Ratings have upgraded rating on long term bank facilities of Company to AAA/Stable from AA+/Positive. (CRISIL ratings had made similar rating upgrade in previous year)

Company has won the “Supply Chain Champion” Award in Oil & Gas industry category by the Institute of ISCM (India Supply Chain Management) in its 9th edition of annual rankings.

Company recognized as the ‘World?s Most Trustworthy Companies 2023? by Newsweek and Statista amongst the listed firms in Energy and Utilities category.

Company has been listed in Dun & Bradstreet?s flagship publication ‘India?s Top 500 Value Creators 2023? at 20th Rank in Gas Processing, Transmission and Marketing Category.

Company won IEI Industrial Excellence Award 2023 for the commendable performance in the category of Engineering, Manufacturing and Processing.

Company has been ranked amongst the “TOP 150 Wealth Creators by Dalal Street Investment Journal”.

Company has been conferred the prestigious “SKOCH ESG Award 2024 in City Gas Distribution (CGD) Project”

Company has entered into non binding MoU with Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCL) and Indian Oil Corporation Limited (IOCL) which includes setting up of CNG facility at their filling stations. Further, these Oil Marketing Companies (OMCs) to provide Liquid Fuels, automotive lubricants, greases etc. at GGL outlets.

DIVIDEND

Your Directors recommend for consideration of the Shareholders at the 12th Annual General Meeting, the Dividend of 5.66/- per fully paid up Equity Share of 2/- each (283%) on 68,83,90,125 Equity Shares for the Financial Year 2023 - 24. The weblink for Dividend Distribution Policy is available at https://www.gujaratgas.com/resources/downloads/dividend-distribution-policy-w-e-f-10th-may-2023.pdf

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES

Your Company does not have any subsidiary and joint venture. Guj Info Petro Limited is the Associate of your Company and the statement containing salient features of financial statements of Guj Info Petro Limited under Section 129(3) of the Companies Act, 2013 in prescribed Form AOC - 1 is enclosed herewith as Annexure - 5.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company represents consolidation of Financial Statements of Guj Info Petro Limited (GIPL), the associate company and controlled trust, in accordance with IND AS. The Audited Consolidated Financial Statements are provided in the Annual Report.

DEPOSITS

During the year under review, your Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The details of Loans, Guarantees, Securities and Investments, if any covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All Related Party Transactions that were entered into during the financial year were on an arm?s length basis and were in the ordinary course of business. A statement giving details of all Related Party Transactions is placed before the Audit Committee for approval/ ratification on a quarterly basis, as the case may be. The policy on Materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board is uploaded on the Company?s Website. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. The particulars of contracts or arrangements with Related Parties referred to in Section 188 (1) of the Companies Act, 2013, as prescribed in Form AOC - 2 of the Companies (Accounts) Rules, 2014 is enclosed herewith as Annexure - 4 to this Report.

Disclosures of transactions of the Company with person or entity belonging to the Promoter/Promoter Group which hold(s) 10% or more shareholding in the Company

All transactions amount disclosed above are inclusive of tax.

STATEMENT ON COMPLIANCES OF APPLICABLE SECRETARIAL STANDARDS

Your Directors hereby confirm that during the year, the Company has been compliant with the applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended. Pursuant to provisions of Section 135 of the Companies Act, 2013, the Company has also formulated a Corporate Social Responsibility Policy which is available on the website of the Company at https://www.gujaratgas.com/resources/downloads/corporate-social-responsibility-policy-wef-1st-june-2021.pdf. The details of the initiatives taken during the Financial Year 2023 24 in various areas in accordance with the Corporate Social Responsibility Policy of GGL is provided in the Annual Report on CSR. The Annual Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, as amended is enclosed herewith as Annexure - 2 to this Report. Further as required by Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014, Executive Summary of Impact Assessment Report for eligible CSR Project issued by Independent Agency had been placed before the Board of Directors at its meeting held on 6th May, 2024 and is being also attached to the Annual Report at Annexure - 2-A.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointment and Resignation of Directors

Since last Board?s Report, Shri J. P. Gupta, IAS ceased to be the Director of GGL consequent to resignation from the Board due to transfer and appointment as Additional Chief Secretary, Tribal Development Department, Govt. of Gujarat. Smt. Mamta Verma, IAS ceased to be the Director of GGL consequent to resignation from the Board on account of her transfer and appointment as Principal Secretary, Industries and Mines Department, Govt. of Gujarat.

Your Directors wish to place on record appreciation for the services rendered by Shri J. P. Gupta, IAS and Smt. Mamta Verma, IAS as Directors of GGL. Further, based on the recommendation of Nomination and Remuneration Committee, the Board had appointed Shri S. J. Haider, IAS, Additional Chief Secretary, Energy & Petrochemicals Department (EPD), Government of Gujarat as Additional Director w.e.f. 13th August, 2024. It is proposed to regularize his appointment at the ensuing 12th Annual General Meeting. Shri Raj Kumar, IAS, Chairman will retire by rotation and it is proposed to reappoint him as the Director and Chairman of the Company in the ensuing 12th Annual General Meeting.

A brief resume of the Directors to be appointed at the ensuing Annual General Meeting, nature of expertise in specific functional areas and details regarding the Companies in which the Directorship is held together with the Membership / Chairmanship of Committees of the Board along with other statutory details are provided in the Explanatory Statement forming part of the Notice of the 12th Annual General Meeting.

DIRECTORS INDEPENDENCE

Pursuant to the applicable provisions of Section 149 (6) of the Companies Act, 2013, the Independent Directors of the Company have given confirmation/declaration to the Board that they meet with the criteria of Independence and are Independent in terms of applicable provisions of Section 149 (6) of the Companies Act, 2013. Further, they have also given the confirmations on independence as per provisions of Regulation 16(1)(b) and 25 (8) of the Listing Regulations.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013, the performance evaluation of the Board, Committees and individual Directors for Financial Year 2023 - 24 was carried out as per the terms and conditions of their appointment based on various parameters.

MEETINGS OF THE BOARD OF DIRECTORS

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business. The Board / Committee Meetings are pre-scheduled to enable the Directors to plan their schedule and to ensure meaningful participation in the Meetings. However, in case of a special and urgent business need, approval is taken by passing resolutions through circulation to the Directors, as permitted by law, which are noted in the subsequent Board/Committee Meetings.

During the period from 1st April, 2023 to 31st March, 2024, 4 (Four) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

AUDITORS

As your Company is a Government Company, the Statutory Auditors are appointed by the Comptroller & Auditor General of India (C&AG). Accordingly, the C&AG had appointed M/s. Ashok Chhajed & Associates, Chartered Accountants as the Statutory Auditors of the Company for the Financial Year 2023 - 24. Auditors? Report for Financial Year 2023 - 24 of M/s. Ashok Chhajed & Associates, Chartered Accountants are self-explanatory in nature and forms part of financial statements of the Company.

C&AG has carried out supplementary audit of the Financial Statements of your Company for the Financial Year 2023-24 pursuant to provisions of Section 143 (6) (a) of the Companies Act, 2013. The C&AG has issued Nil Comment Report on Financial Statements of the Company for the Financial Year 2023-24 which forms part of financial statements of the Company.

ANNUAL ACCOUNTS

The Audit Committee at its Meeting held on 6th May, 2024, approved the Financial Statements for the Financial Year ended on 31st March, 2024 and recommended the same for approval of the Board. The same have been subsequently approved by the Board of Directors at its meeting held on 6th May, 2024.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed M/s. Manoj Hurkat & Associates, Practicing Company Secretaries to conduct the Secretarial Audit of the Company for the Financial Year 2023 - 24. The Report of Secretarial Auditor on Company's Secretarial Audit for the Financial Year 2023 - 24 is enclosed herewith as Annexure - 3 to this Report. The Secretarial Audit Report is self- explanatory in nature.

COST AUDITOR

Your Company is required to carry out Cost Audit pursuant to Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014.

Your Company had appointed M/s Kailash Sankhlecha & Associates, Cost Accountants as Cost Auditors for the Financial Year 2023 - 24. Accordingly, Cost Audit has been carried out for the Financial Year 2023 - 24. The Cost Audit Report for Financial Year 2023 - 24 will be submitted to the Central Government in the prescribed format within stipulated time period.

As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in General Meeting for their ratification. Accordingly, resolution seeking Member's ratification for the remuneration payable to the Cost Auditors for Financial Year 2024 - 25 is included in the Notice convening the 12th Annual General Meeting.

RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM Risk Management

The Company has a well-defined Risk Management Framework for reviewing the major Risks and has adopted a Business Risk Management Policy. Further, pursuant to the requirement of Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has constituted a Risk Management Committee inter-alia to monitor the Risk Management Plan of the Company.

Internal Control System

The Company has a proper and adequate system of Internal Controls commensurate with its size of operations and nature of business. These are regularly tested and certified by Auditors. Significant audit observations of audit team and follow up actions thereon are reported to the Audit Committee. The details about the identification of elements of Risk and Internal Control Systems are provided in detail in the Management Discussion & Analysis Report forming part of this Board?s Report.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls, with reference to financial statement. The internal financial controls have been documented in the business processes. Such controls have been assessed during the year under review and were operating effectively.

VIGIL MECHANISM

The Company has established a Vigil Mechanism to report genuine concerns, details of which have been given in the Corporate Governance Report forming part of this Board?s Report. There were no complain received under Vigil Mechanism during Financial Year 2023 - 24.

HEALTH, SAFETY AND ENVIRONMENT (HSE)

GGL recognizes that the health and safety of all those involved in its operation and public along with protection of the environment is the prime responsibility of company and it?s management at every level.

Health, Safety and Environment (HSE) is a core value in GGL. GGL believes that outstanding business performance requires outstanding HSE performance. We aim to assure the integrity and safe operation of our assets, protect the health and safety of our employees, contractors & their staff, customers and general public in our operation area and to minimize the environmental impact associated with our business processes.

GGL operations are driven by the goal of zero injuries and seek to encourage a culture of excellence and drive forward for continual improvement in HSE performance.

QHSE commitment & Certification:

GGL ensures that all its management decisions reflect its Quality, Health, Safety & Environment (QHSE) intentions. GGL is committed that its QHSE management system complies with all applicable legal requirements including Acts, Regulations, National & International Standards, Guidelines and code of practices for Health Safety & Environment (including directives issued by legal, statutory or regulatory bodies) and follows best industrial practices. GGL aims to continue as an industry leader in City Gas Distribution business through its QHSE performance. GGL has established its Quality, Occupational Health, Safety & Environment (QHSE) management system with reference to international standards ISO 9001:2015, ISO 14001:2015 & ISO 45001:2018 and successfully completed its periodic audits as per mentioned ISO standards. The certifications demonstrate sustenance and company?s continued commitment to quality, health, safety and environment management and customer satisfaction which is the key to sustainable business performance. GGL has more than 160 Standard Operating Procedures and Guidelines for seamless and safe functioning of various aspects of business. In Financial Year 2023 - 24 GGL has reviewed and revised its HSE Policy, Asset Integrity Policy and Quality Policy with an aim to capture and commit to Environmental Social & Governance aspects. In this Financial year GGL has also reviewed and revised more than Twenty (20 nos.) existing SOP & Guidelines to adapt to the changing business dynamics, operational requirements with respect to implementation at site and to increase the quality, safety & operational efficiency with an aim of continual improvement of the management systems at GGL.

Project execution with highest level of Safety & Risk levels at ALARP in new Charge Areas:

GGL has entered into new charge areas within its authorized Geographical areas. New areas are being supplied gas through either by traditional gas pipeline extension to these areas or using fairly new concepts of Virtual Pipeline network through line pack & decompression of CNG or regasification of LNG, in areas where pipeline laying project may take significant time. GGL takes extra HSE precautions for all such new areas of geography. Risk assessment by utilizing industry recognized tools of safety engineering studies has been at the fore-front of all such projects such as Hazard Operability (HAZOP), Quantitative Risk assessment (QRA), Escape Muster Evacuation & Rescue Analysis (EMERA) and Hazardous Area Classification (HAC) for all types of Gas installations at the planning stage itself and compliance to recommendations of these studies so that risks can be mitigated. GGL assets have been designed, constructed, commissioned, operated and maintained, such that the risks to personnel & public / society are reduced to as low as reasonably practicable (ALARP).

GGL had in past carried out Environmental Impact Assessment (EIA) for pipeline projects passing through environmental/ecological sensitive areas/zones in Palghar district & Thane Rural GA to determine the potential environmental, social effects of the proposed project. The results of these study along with mitigation plan were presented to authorities based on which GGL had received Environmental Clearance from Ministry of Environment, Forest & Climate Change. GGL is now in process of initiating similar studies for ecologically sensitive areas of Dadra & Nagar Haveli. GGL this year also continued special focus on safety aspects at projects in new Geographical areas & new charge areas with implementation of HSE management system in these areas relevant to project requirement, trainings, visits & meetings by management team members focusing on safety requirements.

First of its kind Projects with focused Risk assessment Green H2 blending & CBG injection in PNG/CNG:

GGL along with M/s NTPC had commissioned India?s first Green H2 blending (5%) in PNG distribution network at Kawas, Hazira. This pilot project supplies blended gas to domestic & commercial connections of NTPC township. The project is supporting to verify the feasibility assumptions and impact related to hydrogen blending such as safety, asset health/integrity, blending homogeneity, combustion and odorization etc. in PNG network. GGL took utmost care of Safety aspects since this being a first of its kind project in India through means of exhaustive risk assessment using both Qualitative and Quantitative methods involving experts and internal teams and conducting comprehensive testing methods at each step to mitigate risks to the lowest reasonably practicable. A third party assessment was carried out through M/s GERMI to establish network health and adequacy of the project results. Based on GGL presentation to the PNGRB & World Bank along with their consultants, PNGRB had granted permission to increase blending percentage of Green H2 from 5% to 8%. The increased blending was completed in December 2023 which is also being successfully run till date.

GGL had few years back implemented First Bio-gas blending in PNG network at Nadiad, further to that in Financial Year 2023 - 24, GGL has also started its first Bio-gas injection into CNG system. Bio-gas manufacturer (M/s Transtech Green Power Pvt. Ltd.) since November 2023 has started supplying Compressed Bio-gas at GGL CNG station which is being injected into our CNG station at Sanchor area of Rajasthan. GGL and Bio-gas manufacturer together took Safety & quality requirement as the highest priority. Remote Gas Quality monitoring, odorization and automatic shut-off systems are the key things focused during these projects to ensure highest level of quality, safety & customer satisfaction while using Bio-gas which helps in significant contributions to issues related to waste management, air pollution and countries? dependency on imported fuel.

GGL had also presented its case regarding Bio-gas compatibility with Natural Gas in terms of Quality composition (Methane percentage) of Bio-gas to be increased to minimum 95% methane for it to be feasible for injection into PNG/CNG network. PNGRB has also further taken up the matter with Bureau of Indian Standard (BIS) for modifying relevant Indian standards.

HSE Compliance Assurance & Audits:

GGL conducts its business in a safe and responsible manner and ensures compliance with the all legal and regulatory requirements. Compliance assurance is confirmed through audits / inspections with respect to all applicable PNGRB regulations and other standards covering all geographical areas of GGL every year including this financial year.

GGL has successfully conducted compliance audits & applicable recertification audits with respect to below listed PNGRB regulations through PNGRB empaneled Third Party Inspection Agency (TPIA) for Geographical Areas.

ERDMP Periodic Certification Audits: Successfully completed for Four (4) new Geographical Areas Palghar District & Thane Rural GA, Dadra & Nagar Haveli GA, Amreli GA and Kutch (W) GA in line with PNGRB Codes of Practices for Emergency Response and Disaster Management Plan, Regulations in Financial Year 2023 - 24.

T4S & IMS Certification Audits: Successfully completed First T4S & IMS audit for Sirsa Fatehabad Mansa GA and also completed periodic audits for Three (3) Geographical Areas Bathinda GA, Amreli GA and Kutch (W) GA as per the defined periodicity of TPIA audits, in line with PNGRB Technical Standards and Specifications including Safety Standards (T4S), Regulations and PNGRB Integrity Management System (IMS), Regulations, in Financial Year 2023-24.

No major non-compliances were observed during above mentioned audits, most of the observations arising out of these audits are being addressed on priority basis. Compliance report of all these audits have been submitted to regulatory board as well.

Key Safety Index

The safe delivery of projects and safe operations of assets is a critical success factor for the company?s business. GGL sets HSE targets and closely monitors it to achieve continual improvement in QHSE performance.

GGL recognizes that leadership commitment is fundamental for continual improvement in HSE performance. GGL management team members review HSE performance on regular basis.

GGL is committed to protect Safety, Health and Well-being of people working for the organization. Lost Time Injury Frequency (LTIF) is the industry standard key indicator which is used to measure GGL?s occupational safety performance.

GGL has achieved Lost Time Injury Frequency of 0.209 for the Financial Year 2023-24.

Total man-hours of GGL in Financial Year 2023-24 is 33.54 Million.

Asset Integrity Index:

Asset Integrity (AI) in CGD (City Gas Distribution) is the management of the physical condition of gas assets to ensure that they are fit for purpose over their life cycle and do not pose a risk to personnel, public, property and environment. Asset Integrity management is thus critical for safe operation of our facilities and to ensure suitable and sufficient measures are in place to prevent a major accident.

At GGL, Asset Integrity is paramount to ensure the safety and reliability of operations and its key performance is measured through AI Scorecard. The AI scorecards include various Key Performance Indicator (KPIs), both leading as well as lagging indicators defined based on industry standard to emphasize attention upon matters related to AI Management system. AI KPIs include Process measures, Operational measures & direct integrity measures and are essential tools for managing asset integrity risks.

The regular monitoring of these KPIs against pre-defined targets helps to assess the effectiveness of asset performance. In Financial Year 2023-24, GGL has achieved an average of around 90% compliance to its AI scorecard.

Mock-drills:

GGL has a well-developed and certified Emergency Response and Disaster Management Plan through PNGRB approved Third Party Inspection agency (TPIA) for each of its operational Geographical Areas. GGL conducts mock-drills at defined intervals to check adequacy of preparedness against various anticipated emergency scenarios across all locations.

In Financial Year 2023-24, GGL carried out

Level-1 Mock-drills 106 numbers

Level-2 Mock-drills involving local emergency services/mutual aid partners - 38 numbers

Level-3 Mock-drills including participation in the offsite mock drills organized by District authorities 25 numbers

GGL Lifesaver Rules & Compliances:

GGL has well-defined 10 Lifesavers Rules for work related to safety critical areas such as Safe Systems of Work, Excavation-HDD-Boring, Working at Height, Lifting, Confined Space Entry, Driving, Gas Escape Handling, Electrical, CNG Handling & LNG Handling. All critical activities are covered under these defined 10 lifesaver areas which are monitored throughout the year using Lifesaver compliance / Work place inspection checklists defined based on lifesaver rules. In Financial Year 2023-24, GGL has achieved ~ 94% compliance to lifesavers rules.

HSE Initiatives:

To improve HSE performance, various HSE initiatives and programs are implemented as part of HSE improvement plan such as Safety tours by Management, awareness sessions with frontline workers and supervisors on various aspects of Safety, Utility coordination, Safety awareness workshops at local schools across operational areas, campaign activities related to lifesaver areas, Hazard hunt activities, special drives to check compliance in defined focus areas etc. In Financial Year 2023-24, GGL has achieved more than 95% compliance to its HSE improvement plan.

GGL encourages participation and involvement of its employees and contractor staff in HSE related activities through monthly HSE committee meetings, Hazard and Near miss reporting, monthly quiz, risk assessment, work place inspections, various campaigns and celebration of HSE events and numerous safety awareness programs.

GGL has also established a system for evaluating contractor performance on monthly basis. Quality & HSE performance has been made an essential part of this performance evaluation with pre-defined key indicators.

HSE Awareness & Trainings:

GGL always ensures that safety training programs are conducted periodically for employees and contractor staff. GGL also organizes various safety awareness programs including awareness regarding Natural Gas related safety for its customers, general public, employees, contractors and other stakeholders such as third-party utility. In Financial Year 2023-24:

579 numbers of Natural Gas safety awareness program have been conducted for general public, customers.

1948 numbers of Safety & Technical Competency Training programs have been conducted which includes Basic Safety, Practical Fire-fighting, First Aid Treatment, Defensive Driving, Working at height and other Technical Competency trainings in various areas such as GI Plumbing, CNG filling, Welding, CGD O&M, LCNG O&M etc.

985 numbers of Safety Awareness Programs have been conducted for employees and contractors.

GGL has collaborated with M/s. Aspire Disruptive Skill (ADS) Foundation for executing one of its CSR activity of conducting skill development programs. The objective of the training is empowering the needy and unemployed youth through industry responsive skill development and enhance their livelihood. More than 150 youth have been trained in these Skill development trainings. GGL also educates and influences various third-party utility companies and their contractors workforce, machine operators etc. who undertake digging/excavation/drilling activities on or near the underground GGL gas pipeline network through coordination meetings, site sessions, including giving away of utilizable gifts such as water bottles, key chains etc. with GGL contact numbers for Dial before Dig/Emergency. These sessions are done to focus on the safety risks and environmental impact of the release of Natural gas which can occur as a result of damaging natural gas pipelines while digging/excavation/drilling operations. GGL has conducted more than 1268 numbers of Utility coordination & Natural Gas safety awareness programs for various utility companies, their contractors & its workforce.

GGL has extensively implemented usage of ‘Call before you Dig? application which has been developed by Department of Telecom, Government of India with an intention to increase coordination between digging agencies/contractors/individuals with the Utility agencies so as to reduce damages to underground utilities including gas pipelines during excavation activities. GGL contractors have registered on this application and have started raising requests in CBUD app before starting digging activities and we are urging third parties to use this app / dial in/ inform directly to GGL prior to starting any digging/excavation/drilling activities so that damage to Natural gas pipeline network can be prevented.

Celebrating HSE Events at GGL

GGL, being a prudent organization, celebrates various HSE related events like National Safety Week, Road Safety Week and World Environment Day. GGL celebrated 53rd National Safety Week in March 2024, focusing on this year?s theme “Focus on Safety Leadership for ESG Excellence”. Below mentioned activities were accomplished across all locations of GGL

Health & Safety Pledge ceremony at all offices & various sites involving employees and contractor staff.

Photography competition called “Capture Safety First” to showcase best safety practices at GGL work sites. GGL Employees and Out Sourced employees participated in this competition in large numbers and best ones at each GA were rewarded.

Awareness session on “Focus on Safety Leadership for ESG Excellence”.

Contractor Engagement session at Site NSW Awareness, Basics of Safety Leadership for ESG Excellence etc.

Natural Gas Safety Awareness program for public awareness (Societies, Schools etc.).

Spot Quiz on Safety for GGL Employees and Contractor Staff.

GGL observed National Road Safety Month in between 18th January to 17th February 2024, playing our part in making our roads safer for everyone. Below mentioned activities were planned and completed across all locations of GGL as part of celebrating this event:

Group gathering at GGL Offices & Road Safety message to employees by Management

Spot quiz on Road Safety for GGL Employees, Outsourced Employees and Contractor Staff

Poster competition on 'Road safety' for Children of GGL & Outsourced Employees

Special Eye check-up camp for CNG Mobile Cascade vehicle drivers / LNG Drivers / Hired vehicle drivers

Defensive driving training for GGL Employees, Outsourced employees, MCV/LNG tanker/Emergency O&M vehicle /Hired office vehicle drivers & Two wheeler Patrolmen etc.

Vehicle safety inspection drive covering all office vehicles, O&M Emergency vehicle, CNG MCVs and LNG Tankers

Awareness Session on Driving Safety for MCV drivers/LNG tanker driver, Hired vehicle drivers, Patrolmen, Meter readers, O&M team etc.

GGL celebrated 50th World Environment Week to encourage awareness and implement actions for the protection of our environment. As part of World Environment Week celebration ‘Plantation? activity was carried out across all GGL locations. GGL carried out more than 2100 sapling/tree plantation during observance of World Environment Week. Along with that following activities were also carried out as part of celebration plan.

Display of custom Environment Day/ Week banners & Group gathering at GGL Offices

Poster competition World Environment Day 2023 theme "solutions to plastic pollution under the campaign #BeatPlasticPollution" for Children of GGL and Out Source Employees

Ideas competition "Environment protection - At GGL work places / Business Activities" - for GGL Employees and Out Sourced employees

Engagement with Contractors supervisors for waste management including plastic waste (collection, handling and recycle / reuse) generated during various business activities

Spot Quiz GGL Employees and Contractor Staff

All of these activities were done with an aim to involve employees, contractors, society at large and enhance their awareness regarding importance of Health Safety & Environment and related best practices.

HSE Rewards & Recognition at GGL:

With an intention to motivate and foster a positive HSE culture and step-up HSE-AI compliance and performance, GGL has put in place HSE reward and recognition scheme to acknowledge significant HSE contribution of employees and contractor staff and to boost their confidence. Under this scheme:

HSE contributor of the month among employees and contractor staff are identified on monthly basis at each geographical area and are rewarded during monthly HSE committee meeting.

Monthly Best Hazard & Best Near miss carefully selected based on quality and safety criticality and rewarded

Best HSE Performer amongst all employees in every quarter for each operations area

Best HSE Performer amongst all employees for Financial year for each operations area

GGL also conducted monthly online HSE-AI Quiz based on HSE and Asset Integrity focus areas to raise awareness amongst employees across GGL & winners of this quiz identified through draw system are awarded each month.

Step up with Environmental, Social and Governance - ESG system:

ESG is a system to measure the sustainability of a company or investment in three specific categories: Environmental, Social and Governance. With intentions to grow & reduce costs in the long run and forge a sense of trust amongst consumers & stakeholders. GGL has decided to step up its HSE scorecard to align with ESG requirements. In that line, GGL Board of Directors have constituted Business Responsibility and Sustainability Report (BRSR) Committee to oversee all activities pertaining to GGL ESG-BRSR reporting. The Committee has responsibility to review & approve business policies, process, practices and adoption of other necessary matters including decision-making, risk management, target setting for material issues & opportunities relevant to the organization.

GGL has devised new policies and revised existing policies related to HSE, Human Resources, Information Security, Customer & Community grievance redressal, Sustainable Development, CSR etc. in line with ESG requirements. Also additionally performance indicators have been identified to comply with ESG requirements and data has been recorded against the same. GGL has worked towards improvising systems and process with the aim to resolve and implement all essential & identified leadership indicators relevant to GGL business & operations. GGL has published its first Business Responsibility & Sustainability Report for Financial Year 2022-23 in line with SEBI defined requirements for ESG disclosures as a part of company?s Annual Report.

Gujarat Gas Limited won the “SKOCH AWARD 2024” in ESG Category for its project ‘City Gas Distribution?. The SKOCH ESG Award and Assessment serves as a significant yardstick to evaluate the commitment to India 2047. It focuses on the interplay between sustainable investments and processes to shape a sustainable and growing business future. GGL submitted its nomination for SKOCH ESG Awards with respect to wide positive Environmental, Social & Governance impact created by Gujarat Gas Limited through its PNG & CNG infrastructure expansion, Product enhancement activities (Green H2 blending/ CBG blending), New technology absorption (LNG/EV/DCS), CSR & Governance initiatives etc. bringing in a positive holistic impact. After extensive scrutiny for completion, veracity of the nomination and rounds of evaluation presentations scored by expert jury & peers and popular voting, GGL?s project was adjudged the winner for the coveted honor of SKOCH Award ‘India?s honest Independent honor?.

MANAGEMENT DISCUSSION & ANALYSIS

The Management Discussion & Analysis is as under:

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

Natural Gas is the cleanest and most efficient of the fossil fuels and is a smart energy choice. Not only does it supplement renewable energy, such as wind and solar, but it also has a smaller carbon footprint than other fossil fuels.

Natural Gas is used as a feedstock in several industries like fertilizers, plastics and other commercially important organic chemicals and used as a fuel for electricity generation, heating purpose in industrial and commercial units. Natural gas is also used for cooking in domestic households and as a transportation fuel for vehicles.

The global energy crisis triggered by the Russian invasion of Ukraine had put gas supply security and market stability at the center of policy interventions in 2022. Following the gas supply shock of 2022, natural gas markets moved towards a gradual rebalancing in 2023 due to timely policy action, market forces and favourable weather conditions. Gas prices decreased significantly compared with their 2022 highs but remain well above their historical averages in Asia and Europe. Despite this gradual rebalancing, the market remained tight on the supply side and prices continued to display high volatility. Natural gas markets are expected to return to growth in 2024, although the expansion of gas use will be capped in import markets by the limited increase in global LNG supply1.

Presently, in India the share of natural gas in energy basket is 6.7%. The Government has set a target to raise the share of natural gas in energy mix to 15% in 2030. Various steps have been taken by the Government in this direction. These, inter-alia, include expansion of National Gas Grid (24,623 kms operational and 10,860 km under construction), expansion of City Gas Distribution (CGD) network (300 Geographical Areas (GAs) with Minimum Work Plan of approx. 12.50 crore PNG connections, 17,751 CNG Stations and 5.42 lakh inch-km pipeline by 2023) and setting up of Liquefied Natural Gas (LNG) Terminals (current 47.7 MMTPA capacity to 66.7 MMTPA),etc.2.

Natural gas is considered as a transitional fuel as India strives to achieve net-zero carbon emissions by 2070, being viewed as a cleaner alternative to traditional fossil fuels. India's robust economic growth, surpassing 7.5% in the first six months of the financial year, is driving an exponential rise in energy needs. India is the third-largest consumer of energy, oil and LPG globally, the fourth-largest LNG importer and refiner and the fourth-largest automobile market. Anticipating a doubling of energy demand by 2045, India is heading towards becoming the world's fastest-growing energy market.

Consumption of Natural Gas (including internal consumption) with a volume of 66.634 BCM (billion cubic meters) during the Financial Year 2023-24 registered 11.1% growth year-on year basis over the volume of 59.969 BCM during Financial Year 2022-23.

During ‘April-March-Financial Year 2023-24?, total Natural Gas monthly domestic consumption with a volume of 60.578 BCM, registered a growth of 11.1% over the volume of 54.53 BCM during the same period in the preceding year.

During ‘April-February-Financial Year 2023-24?, consumption of Natural gas (NG) was driven by fertilizer (32%) followed by CGD (19%), Power (12%) Refinery (8%), Petrochemicals (4%). Misc sectors occupied a share of 25%. Fertilizer sector occupied the highest share for the Consumption of Natural Gas which has reduced from 34% to 32% as compared to the previous year. CGD sector has also seen its share go down from 20% to 19%, power sector reducing from 13% to 12%. Refinery has increased from 6% to 8%3.

2. OPPORTUNITIES AND THREATS

The Government is promoting the usages of clean and green fuel, i.e. Piped Natural Gas (“PNG”) and Compressed Natural Gas (“CNG”) by expanding the coverage of CGD network in the Country. Union minister for petroleum and natural gas announced the government's ambitious plan to significantly boost India's natural gas consumption to 500 million metric standard cubic meters per day (MMSCMD) by 2030, up from the current 185 MMSCMD. This three-fold increase is part of a comprehensive strategy aimed at enhancing the country's energy security and fostering the growth of ancillary industries reliant on natural gas.

The Union Minister also highlighted the government's commitment to investing $67 billion in the natural gas sector over the next six years. This investment aims to provide natural gas to end consumers at stable prices and is supported by policy and regulatory frameworks that promote the use of natural gas across the Country. Natural gas demand in India is expected to increase by 6 per cent in 2024, mainly supported by higher gas use in industry (including in the fertilizer sector) and stronger gas burn in the power sector amid the development of national pipeline grid and city gas infrastructure. In November 2023 the Government approved mandatory blending of Compressed BioGas into the domestic gas supply. The mandate will be set at 1 per cent of total Compressed Natural Gas and domestic Piped Natural Gas consumption from 2025, and raised gradually to 5 per cent from 2028-29.

Similar to any other business, the Company faces challenges in the form of stiff competition from other fuels due to accessibility and availability. The fuel also faces risk in the form of disparity in the tax structure compared to alternate fuels as PNG and CNG are still out of GST ambit. Notwithstanding these, your Company shall continue to focus placing environmentally clean Natural Gas to affordable markets for sustainable growth. Apart from this the PNGRB has recently issued a Public Notice stating the expiry of infrastructure exclusivity period for the laying, building or expansion of the CGD network for the Geographical Areas (GAs) of Mumbai & Greater Mumbai authorized to Mahanagar Gas Limited (MGL) and for Vadodara GA authorized to Vadodara Gas Limited (VGL). MGL has legally challenged this regulatory notice however, MGL and the PNGRB are aiming to settle the matter amicably.

The Company has completed the Minimum Work Program (MWP) targets as applicable viz. PNG (Domestic) connections, Pipeline Inch- km laid, Compression Capacity and CNG Stations in the Geographical Areas of Surat-Bharuch-Ankleshwar, Valsad, Union Territory of Dadra and Nagar Haveli, Dahej, Anand District (excluding areas already authorized), Panchmahal District, Amritsar, Navsari and Narmada GAs.

Subsequent to the Honourable Supreme Court order dated September 28, 2021 in the matter of Adani Gas Limited vs Union of India & Ors. (Civil Appeal No. 6008-6009/2021) wherein the authorization awarded to your Company for the Geographical Area of Ahmedabad District (Excluding Areas Already Authorized) was upheld, PNGRB vide its letter dated June 28, 2023 has amended the timelines of the exclusivity period in respect of laying, building, or expanding the CGD network till September 2046 and also the exclusivity period for exemption from the purview of common carrier or contract carrier till March 2027.

Further, as per the Honourable APTEL order dated December 13, 2023 in the matter of Gujarat Gas Limited vs PNGRB & Anr. (Appeal No. 816 of 2023), Adani Total Gas Limited (ATGL) was directed to desist from operating their two (2) online CNG stations and two (2) Daughter Booster CNG stations located within the authorised area of Gujarat Gas Limited on or before January 01, 2024 which have been duly closed down as on date.

3. SALES AND MARKET PERFORMANCE

Your Company as on date has total 27 CGD licenses and operates in 44 districts across six states and one Union territory and also has one transportation pipeline license.

Your Company has an expanse of around 1,75,700 square kilometres of licensed area under its umbrella and continues to hold the position among the largest CGD Company in Country. Your Company supplies natural gas to more than 21 lakh residential consumers, over 15,220 commercial customer and has erected/commissioned 808 CNG stations for vehicular consumers and provides clean energy solutions to over 4,390 industrial units through its wide spread operations with more than 39,370 kilometres of Natural Gas pipeline network.

Your Company has achieved a growth of 12% and 4% in CNG and commercial sales respectively compared to previous year. Your Company has continued its focused efforts for developing and growing PNG and CNG business. Your Company has connected more than 1,87,000 residential customers and commissioned 33 new CNG stations during the year.

4. OUTLOOK

The future outlook for natural gas in India depends on the growth in demand, the evolution of the pricing regime and the pace of gas infrastructure expansion. The demand will steadily rise with adoption of natural gas in new emerging Geographical Areas.

Your Company has already adopted digitization of its critical processes and going forward also, your Company shall leverage its endeavors for more digitization and aims to set benchmark in the CGD industry for complete E-Office, benefiting all the stakeholders viz. consumers, vendors, suppliers and employees. India?s Natural Gas supply and demand outlook is changing. The Government of India (GoI) wants to make India a gas-based economy by boosting domestic production. India has set a target to raise the share of gas in its primary energy mix to 15% by 2030 from about current level of 6.7%. To improve the share of Natural Gas and promote a gas-based and clean fuel economy, the GoI has adopted a systematic approach to focus on all aspects of the gas sector viz upstream, midstream and downstream including CGD network development.

Your Company has been continuously growing and expanding its horizon by venturing into new geographic areas and is committed to reach every possible Natural Gas user across its licensed expanse of around 1,75,700 square kilometres through its ever growing pipeline network spread across 44 districts in six states and one UT. Your Company shall continue to focus on growing the penetration in the current operating areas by increasing the PNG connections and additional CNG stations while tapping the untapped potential by expeditious rollout of distribution network in its operating Areas. With this focused endeavor, your Company shall continue its efforts in providing clean fuel solutions across all operational area to augment an energetic top-line and bottom-line in coming years.

5. RISKS AND CONCERNS

As per EIA Short-Term Energy Outlook (STEO) March 2024 report, The Brent crude oil spot price averaged $83 per barrel (b) in February, an increase of $3/b from January. Prices rose in February in part due to continuing uncertainty and increased risk around the attacks targeting commercial ships transiting the Red Sea shipping channel, as well as an anticipated extension to voluntary OPEC+ production cuts, which were officially announced on March 4, 2024. The OPEC+ voluntary production cuts are an extension of the existing production cuts that were announced on November 30, 2023 and are now extended through the second quarter of 2024 (2Q24). The announcement also included an additional voluntary production cut from Russia.

It is expected that the tighter oil market shall balance during 2024 and will keep the Brent price above current levels, averaging $88/b in 2Q24, $4/b higher than in last month?s STEO. It is expected to remain relatively flat for the rest of the year before increasing inventories (when OPEC+ supply cuts are set to expire) start putting slight downward pressure on the price in 2025. It is anticipated that the Brent crude oil price will decrease from an average of $88/b in January 2025 to an average of $82/b in December 2025, averaging $87/b in 2024 and $85/b in 2025.

The approximate break between historical and forecast values is shown with historical data printed in bold; estimates and forecasts in italics.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has a proper and adequate system of Internal Controls commensurate with its size of operations and nature of business. The Company?s Internal Control Systems are further supplemented by extensive programs of audits, i.e. Internal Audit, Proprietary Audit by the Comptroller & Auditor General of India (C&AG) and Statutory Audit by Statutory Auditors appointed by the C&AG. The Internal Control System is designed to ensure that all financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of assets and compliance with statutory requirements. The Company has mapped a number of business processes on to SAP system, thereby leading to significantly improved controls & transparency. Your Company also continues to invest in Information Technology to support various business processes and automating controls.

FINANCIAL AND OPERATIONAL PERFORMANCE

The stand-alone net profit after tax (Total comprehensive income) for the current financial year 2023-24 decreased to 1,151.43 Crores from 1,533.99 Crores in the previous year. The Company had a healthy net cash inflow from operations of 1,634.04 Crores during the financial year 2023-24. There is no outstanding loan as on 31st March, 2024.

Investments were made in extension of pipeline network to reach new areas and in reinforcements and upgradation of existing network as required. Investments were also made to connect residential customers and augmenting the CNG infrastructure. Investments were also made to upgrade the IT infrastructure and integrate SAP to enhance reliability and enable scalability. No amount has been transferred to the General Reserve during the year.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore, including:

Previous year's ratios have been reclassified wherever necessary to confirm to the current period's presentation.

HUMAN RELATIONS AND PARTICULARS OF EMPLOYEES

Your Company employed 972 employees as on 31st March, 2024. Your Company has a focus on building capabilities and developing competencies of its employees. The Company believes that training and development is of vital importance to create a climate where people maximize their technical skills and inner potential which can help the Company in capitalizing the emerging business opportunities through their involvement. During the year, employees were sent for various training programs and seminars to enhance their skills/knowledge. The Company is also focused on automatization of all its policies and processes. Your Company has in place an attractive policy of performance linked incentive to encourage and reward employee performance. There was no strike or lock-out during the year under review.

DISCLOSURES IN RELATION TO THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

This disclosure is given in the Corporate Governance Report which forms part of Board?s Report 2023 24.

CORPORATE GOVERNANCE

The Company believes that good governance can deliver continuous good business performance. The particulars on Corporate Governance as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is incorporated as a part of this Board's Report at Annexure -1.

ANNUAL RETURN

The Annual Return of the Company in the Form MGT 7 is available on the website of the Company at https://www.gujaratgas.com/GGL/annual-return/

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

The details about conservation of energy, technology absorption, foreign exchange earnings and outgo is attached at Annexure 6. Foreign Exchange Earnings and Outgo-

The Company has incurred expenditure in Foreign Exchange to the extent of Rs. 0.38 Crores during Financial Year 2023-24 (Previous year Financial Year 2022-23 Rs. Nil) and the Foreign Exchange Earnings during Financial Year 2023-24 were Rs. Nil (Previous year Financial Year 2022-23 Rs. Nil).

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators/Courts during the year, which would impact the going concern status of the Company.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF GGL

There have been no material changes and commitments, if any, affecting the financial position of GGL which have occurred between the end of the Financial Year of GGL to which the Financial Statements relate and the date of this Report.

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

Gujarat Gas Limited is dedicated towards fostering an atmosphere of transparency and accountability by working in partnership and empowering our stakeholders. To protect and for the benefit of all our stakeholders, we strive to promote sustainable development. GGL considers its responsibility towards sustainable development as an opportunity to succeed by taking actions which are beneficial for society as a whole.

We applaud SEBI?s introduction of the "Business Responsibility and Sustainability Reporting" ("BRSR") reporting structure, which includes comprehensive Environmental, Social and Governance ("ESG") disclosures.

The second edition of our Business Responsibility and Sustainability Report (BRSR) forms part of the Annual Report, in which we attempted to provide all non-financial disclosures in accordance with clause (f) of sub-regulation (2) of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The report provides all our stakeholders with a comprehensive view and insight into our Company's contribution to the economy, the environment and society, which can be utilized to showcase GGL?s dedication towards long-term growth. In order to meet the expectations of our investors and other stakeholders, we are improving the transparency of our report, as well as our strategic approaches to create value for our stakeholders while minimizing risk in the external environment. Statement on ESG is attached at Annexure-7 of the Board?s Report.

FUND RAISING BY ISSUANCE OF DEBT SECURITIES BY LARGE ENTITIES

In view of requirements of various SEBI Circulars on fund raising by issuance of debt securities by large entities, disclosures made in terms of the said circulars forms part of Audited Annual Financial Results of the Company. No funds have been raised by your Company during Financial Year 2023 - 24.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013: a. that in the preparation of the annual accounts, financial statements for the year ended 31st March, 2024, the applicable accounting standards have been followed and no material departures have been made from the same; b. that accounting policies have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2024 and of the profit of the Company for the year ended on that date; c. that proper and sufficient care has been taken 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; d. that the annual financial statements have been prepared on a going concern basis; e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively. f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

ACKNOWLEDGEMENTS

The Directors place on record their deep appreciation to employees of the Company at all levels for their hard work, dedication and commitment. The Directors are extremely grateful for all the support given by the Government of Gujarat at all levels. The Directors place on record their sincere thanks to the Promoters, Shareholders, PNGRB, MOPNG, Suppliers, Lenders and Customers for their valuable support, trust and confidence reposed in the Company.