Directors' Report DIRECTORS’ REPORT Dear Shareholders, On behalf of the Board of Directors of your Company, I am delighted to present the 36th Directors’ Report of your young and vibrant Maharatna Company, along with Audited Standalone and Consolidated Financial Statements for the financial year 2019-20: Performance Review The important financial highlights on standalone basis for the year 2019-20 are as under: Particulars FY 2019-20 FY 2018-19 US $ Million (` in Crore) US $ Million (` in Crore) Gross Sales 9,431 71,730 10,722 74,808 Other income (including other operating income) 206 1,564 267 1,864 Cost of Sales (excluding Finance cost and 8,350 63,507 9,398 65,572 depreciation) Net Exceptional Items i.e. Impairment/ (13) (102) 47 326 (Reversal) of Investments Gross Margin 1,300 9,888 1,544 10,774 Finance Cost 14 109 20 139 Depreciation 241 1,836 222 1,550 Profit Before Tax (PBT) 1,044 7,943 1,302 9,085 Provision for Tax 174 1,323 438 3,059 Profit After Tax (PAT) 870 6,621 864 6,026 Appropriations Final Dividend for previous year 52 399 47 325 Interim Dividend for current year 379 2,886 202 1,409 Corporate Dividend Tax 86 657 51 356 Net transfer to (from) Bond Redemption Reserve 2 15 2 15 Transfer to General Reserve 87 662 86 603 Net surplus after Appropriations 263 2,001 476 3,318 Note: The following exchange rates are used in calculations : ØProfit Before Tax (PBT) For FY 2019-20: 1 US$ = ₹ 76.06 as on 31st March, 2020. PBT registered a fall of 13% from ₹ 9,085 crore during FY 2018-19 to ₹ 7,943 crore during FY 2019-20. For FY 2018-19: 1 US$ = ₹ 69.77 as on 31st March, 2019. ØProfit After Tax (PAT) Ø Consolidated Financial Statements Profit after Tax increased by 10% from ₹ 6,026 crore in FY 2018-19 to Your Company has prepared the Consolidated Financial Statements in ₹ 6,621 crore in FY 2019-20. accordance with the IND-AS by consolidating the financials of its subsidiaries, ØEarnings Per Share (EPS) associates and joint venture entities. The key highlights of the Consolidated In view of the increase in PAT, EPS has gone up from ₹ 13.36 per share as on Financial Results are as follows: March 31, 2019 (after adjustment to bonus in 1:1 ratio) to ₹ 14.68 per (` in crore) share as on March 31, 2020. Particulars FY 2019-20 FY 2018-19 (` in Crore) (EPS in Gross Sales 72,414 75,912 `) 15000 14.68 15 10% Profit Before Tax 10,429 9,831 13.36 12 10000 9,085 Profit After Tax 9,422 6,546 7,943 6,026 6,621 9 5000 10% Performance Indicators (Standalone) 13% 6 ØGross Sales 0 3 Gross sales decreased by 4% from ₹ 74,808 crore in FY 2018-19 to FY 2018-19 FY 2019-20 ₹ 71,730 crore in FY 2019-20. Profit Before Tax (PBT) Profit After Tax (PAT) EPS 23 Shri Manoj Jain, CMD (Centre) announced the Annual Financial Results 2019-20 of the Company at a Press Conference in the presence of Shri P.K. Gupta, Director (HR), Shri A. K. Tiwari, Director (Finance), Shri E.S. Ranganathan, Director ( Marketing) Business Overview FY 2018-19. Gross revenue of your Company from Natural Gas Marketing ØPipeline Transmission in FY 2019-20 was ₹ 59,955 crore as against ₹ 61,338 crore in FY 2018-19. Ø • Natural Gas Transmission Petrochemicals Your Company owns and operates a network of around 12,426 km of During FY 2019-20, your Company’s production increased by 4.9% to natural gas pipeline across the length and breadth of country. The 788 KTA of polymers as against 751 KTA in FY 2018-19 and sales increased average gas transmission during the financial year 2019-20 increased to to 737 KTA of polymers as against 735 KTA in FY 2018-19. Gross revenue 108.37 MMSCMD as compared to 107.43 MMSCMD in the previous of your Company from Petrochemicals in FY 2019-20 was ₹ 5,432 crore as financial year. Gross revenue of your Company from Natural Gas against ₹ 6,704 crore in FY 2018-19. Transmission in FY 2019-20 was ₹ 6,034 crore as against ₹ 5,779 ØLPG and Other Liquid Hydrocarbon crore in FY 2018-19. Your Company has five Gas Processing Plants (GPUs) at four locations in the • LPG Transmission country having LHC production capacity of 1.4 Million MT. During FY 2019-20, total Liquid Hydrocarbon production was about 1.26 Million MT Your Company owns and operates 2,038 km LPG pipeline network for LPG transmission namely Jamnagar-Loni (JLPL) & Vizag- as against 1.32 Million MT in FY 2018-19, of which almost 90% constitutes LPG and Propane. Gross revenue of your Company from Liquid Hydrocarbons in FY Secunderabad (VSPL). Jamnagar-Loni (JLPL) and the Vizag- Secunderabad (VSPL) pipeline networks achieved a throughput of 2019-20 was ₹ 4,234 crore as against ₹ 5,083 crore in FY 2018-19. 3.91 MMTPA during the year against 3.97 MMTPA in the previous ØExploration and Production (E&P) year. Gross revenue of your Company from LPG Transmission in Your Company is having participating interest in 11 E&P blocks out of which FY 2019-20 was ₹ 637crore as against ₹ 624 crore in FY 2018-19. 9 blocks are in India and 2 blocks are in Myanmar. Your Company is ØNatural Gas Marketing Operator in two onland blocks CB-ONN-2010/11 and CB-ONHP- 2017/12 in Cambay basin awarded during NELP-IX and OALP-I bidding During the financial year 2019-20, your Company clocked a sales figure of 2 96.26 MMSCMD (which included sales within India of 84.60 MMSCMD and rounds respectively. These eleven E&P blocks hold an acreage of 2,170 km as per its Participation Interest (P.I.) in various consortiums. overseas sales of 11.66 MMSCMD) as against 96.93 MMSCMD during Revenue from sale of hydrocarbons is being generated from 4 producing blocks namely A-1 & A-3 in Myanmar and CB-ONN-2000/1 & CB-ONN- Natural Gas Marketing 2003/2 (Cambay onshore blocks) in India. Revenue of ₹ 968 crore has been (Sales in MMSCMD) generated from E&P activities during FY 2019-20 as against ₹ 639 crore in FY 2018-19. 11.66 MMSCMD Appraisal activities are in progress in one NELP-IX block i.e. GK-OSN- 12% 2010/1, where ONGC is the operator. Development activities are in progress in three blocks (i) two NELP-IX blocks CB-ONN-2010/8 (Lead Operator: Bharat Petro Resources Limited) & CB-ONN-2010/11 (Lead Operator: GAIL) and (ii) one NELP-IV block AA-ONN-2000/1 (Operator: Jubilant Oil & Gas Pvt. Ltd.). As a part of Revised Field Development Plan (RFDP) in Myanmar offshore blocks A1 & A3, 84.60 MMSCMD development activities have commenced. Simultaneously, drilling of 3 88% exploratory wells in Block A-3, Myanmar was also initiated during India Sales Overseas Sales FY 2019-20 and one gas discovery has been made in this block. Exploratory activities continued in two blocks (i) one NELP-IX block AA-ONN-2010/2 (Operator: OIL) and (ii) one OALP block CB-ONHP-2017/12 (Operator: GAIL). 24 ascertaining the eligibility of shareholders for Issuance of bonus shares in the ratio of 1:1 i.e. one new bonus equity share of ₹10/- each for every one existing equity share of ₹10/- each held subject to the approval of shareholders which was obtained through postal ballot process. The results of Postal Ballot/E-voting were announced on 2nd July, 2019. During the FY 2019-20, the Company had issued a total of 2,25,50,70,933 equity bonus shares. Contribution to Exchequer Your Company has contributed ₹ 9,460 crore in FY 2019-20 to the exchequer through dividend, duties, taxes and others, as compared to ₹ 8,070 crore in FY 2018-19. Credit Rating ØDomestic rating Your Company has been reaffirmed the highest domestic credit rating of AAA from ICRA, CARE and India Rating. This signifies the highest credit Hon’ble Chief Minister of Jharkhand Shri Raghubar Das, Hon’ble Union rating in India, hence, carries lower credit risk of the Company. Minister of Tribal Affairs Shri Arjun Munda and Hon’ble Minister for ØInternational Rating Petroleum & Natural Gas and Steel Shri Dharmendra Pradhan along with other dignataries launching supply of Compressed Natural Gas (CNG), The International rating agency, Moody’s International, Singapore, has domestic Piped Natural Gas (PNG) and CNG-run vehicles in Ranchi assigned the corporate issuer rating of Baa3 with negative outlook which is equal to the sovereign rating of India. Further, Fitch Ratings has also assigned a ØProjects Execution long-term foreign currency issuer rating of BBB- with a negative outlook, Currently your Company is executing around 7,500 km of pipeline projects which is also equivalent to the sovereign rating of India. The agencies have wherein, your Company has made significant progress in the ongoing 2,655 km indicated that your Company’s rating may be upgraded once the sovereign of Jagdishpur Haldia and Bokaro Dhamra Pipeline (JHBDPL) Project popularly rating of India improves. known as Pradhan Mantri Urja Ganga Pipeline Project. Phase-1 (750 km) of this Particulars of Loans, Investments and Corporate Guarantees prestigious project from Phulpur to Varanasi, Gaya, Patna and Barauni has Details of investments, loans and guarantees covered under Section 186 of the already been commissioned. Your Company is also extending this pipeline Companies Act, 2013, forms part of the financial statement, as a separate section project to the eastern region of India upto Guwahati in Assam with in the Annual Report for FY 2019-20.