DIRECTORS’ REPORT

TO THE MEMBERS

Your Directors are pleased to present the Nineteenth Annual Report and the Company’s audited accounts for the financial year ended March 31, 2014.

Financial Performance:

Your Company surpassed the milestone of Rs.1,800 Crores turnover, registering an impressive growth of 24% over the previous year. The Profit after Tax is Rs. 297 Crores for the year 2013-14 as compared to Rs. 299 Crores for the year 2012-13.

The financial results for the year ended March 31, 2014 are summarized below:

Particulars	2013-2014	2012-2013
	Rs. in Crores	Rs. in Crores
Net Revenue (Operating)	1,885	1,514
Other Income	34	32
Profit before Interest and Depreciation	523	515
Interest	0.21	1
Depreciation	81	71
Profit before Tax (PBT)	442	442
Provision for Tax	145	144
Profit after Tax (PAT) Balance of profit for earlier years Balance available for appropriation	297 911 1208	299 825 1124
Appropriations :
- Transfer to General Reserve	30	30
- Proposed Dividend on Equity Shares	156	156
- Tax on Dividend	27	27
- Balance of profit carried to Balance Sheet	995	911
Total appropriations	1208	1124
Earning per Share (Rs. per Share)	33.27	33.41

Net worth per share is increased from Rs. 132.37 in 2012-13 to Rs. 145.17 in 2013-14 signifying sound return on investment coupled with sizeable amount of profit ploughing back into the business.

Dividend:

In the previous year, a dividend of Rs. 17.50 per share (which included special dividend of Rs. 7.50 per share) was paid. For the financial year ended March 31, 2014, your Directors are pleased to recommend a dividend of Rs. 17.50 per equity share (i.e. normal dividend of Rs. 10.00 per share and special dividend is Rs. 7.50 per share) on 8,93,41,600 equity shares of Rs. 10.00 each (175% on the paid up value of each share).

The payment of dividend, after your approval at the Annual General Meeting, will be made in accordance with the regulations applicable at that time.

Finance:

The Company continued to have a robust cash flow. The net worth of the Company as on March 31, 2014 is now Rs. 1297 Crores as compared to Rs. 1183 Crores as on March 31, 2013. Your Company is not having any interest bearing loans as on March 31, 2014. The Company has not accepted any fixed deposits from the public.

For the year 2013-14, long term rating of the Company has been reaffirmed at [ICRA] AAA by ICRA. This is a result of the financial soundness of your Company.

Low debt equity ratio will enable your Company to raise debt finance for its expansion plans.

Management Discussion & Analysis:

(a) Operations and Business performance:

Mumbai is a densely populated and a congested city. Building infrastructure in the city has always been a challenge for your Company. Furthermore, as compared to other utilities whose infrastructure is already laid in the limited corridors available, City Gas Distribution (CGD) has the “last mover” disadvantage in Mumbai.

The Company has successfully continued scaling up of the infrastructure during the year under review in its authorised areas of operation of Mumbai, Thane, Mira-Bhayander and Navi Mumbai. The Company is also rapidly spreading it’s distribution infrastructure and connecting consumers in the suburban areas of Kalyan-Dombivali, Ambernath-Badlapur, Ulhasnagar, Bhiwandi, Panvel, Kharghar and Taloja which are also within your Company’s authorized geographical area. Growth has been maintained despite encountering complexities due to development of infrastructure by various other entities / authorities, limited construction window period of six months due to monsoons and delay in availability of statutory permissions from local authorities to build CGD infrastructure.

The table below shows growth achieved by the Company:

Sr No	Particulars		Addition for the Year 2013-14	Cumulative Growth Upto March 31, 2014
A. B. C.	Piped Natural Gas -Household Consumers Connected Compressed Natural Gas - Outlets / Stations - Dispensing Points - Compression Capacity - Vehicles Converted to CNG Pipelines laid - Steel - Polyethylene	Nos Nos Nos Kgs/day Nos Kms Kms	64,744 13 85 1,43,000 68,452 27 196	7,06,226 169 920 23,87,700 3,59,068 378 3,829

Continuous additions to the number of domestic connections and vehicles converted to CNG have ensured that your Company is one of the largest CGDcompanies in India in terms of consumer base.

The average gas sales volume of your Company during the financial year 2013-14 increased to 2.26 MMSCM per day registering a growth of over 8.8% over the previous fiscal year. The highest daily gas volume has reached a peak of 2.539 MMSCM per day during the year.

During the year 2013-14, your Company has made substantial investments in network expansion in its existing areas of operations of laying, building and developing CGD infrastructure in the authorized areas.

During the year, apart from domestic connections, your Company has also made progress in adding new Commercial and Industrial consumers.

The average CNG sale during the financial year 2013-14 increased to 11.51 Lakh Kg per day registering growth of about 8.9 % over the previous fiscal year. The peak daily sale of CNG reached 13.32 Lakhs Kg per day during the year. The growth in demand for CNG is expected to continue and your Company is preparing to seize this opportunity by significantly investing further in the CNG infrastructure in the city of Mumbai and adjoining authorised areas during the next fiscal year.

Some of the highlights of performance and initiatives taken up during the year are as follows:

(i) Day to day efficiency in gas sourcing, supply management, fund management and operations undertaken by your Company led to an overall control on costs.

(ii) Your Company was re-affirmed with AAA rating by ICRA in March 2014, the highest possible rating for Debt instrument by ICRA.

(iii) Your Company has completed successful assessment of OHSAS 18001:2007, ISO 9001:2008 and ISO 14001:2004.

(iv) Your Company received Greentech Safety Award 2013 in Gold Category for outstanding safety management standards in its entire operations and for excellence in developing system and technologies for preserving the environment.

(v) Your Company signed term regasified Liquified Natural Gas (RLNG) contract (0.15 Firm + 0.15 Fall back) for gas supplies commencing effectively from April 01, 2014 and the term is valid till December 2015. Firm RLNG supplies would help your Company to reduce its dependence on spot RLNG having high volatility of prices.

(vi) Your Company has successfully commissioned its first DRS at Ambernath to cater to the demands of domestic load, and thereby completing its first domestic conversion at Ambernath.

(vii) Your Company has also, safely and successfully, commissioned M/s. Fine Organics Industrial Pvt. Limited and M/s. Godrej Industries Limited in MIDC Ambernath area with a daily authorized quantity of 13,000 SCMD and 30,000 SCMD respectively.

(viii) The first ‘VIRTUAL PIPELINE-CASCADE SUPPLY’ was commenced for M/s. Asian Colour Coated Ispat Limited, Khopoli which was beyond the reach of our pipeline.

(b)Development in Gas Sourcing and Pricing:

Untiring efforts and advocacy by your Company resulted in your Company being allocated domestic gas for full requirement of CNG (transport) and PNG (domestic) segment at a level of the average consumption in the first half of 2013-14 vide Ministry of Petroleum and Natural Gas (MOP&NG) guidelines dated February 03, 2014. The allocation of domestic gas will be reviewed periodically and revised based on actual consumption in the previous period, by MOP&NG.

However, additional demand of natural gas arising between two reviews shall be met by market determined priced gas. The recently signed term RLNG contract would help your Company to reduce its dependence on spot RLNG having high volatility of prices.

Also, your Company has entered into framework agreements for Spot RLNG with various suppliers available in market to source Spot RLNG in a competitive manner to cater to daily and seasonal fluctuations in gas demand and quantities required over and above total of domestic gas allocations and firm RLNG supplies. Spot RLNG prices increased substantially during the year from low of about US$ 14.99 / MMBTU to a high of US$ 19.54 / MMBTU.

(c)Opportunities and Challenges:

The decision dated February 03, 2014 of Government of India to provide domestic gas to cater to full requirement of CNG (transport) and domestic PNG segments increase security of gas supply .

The ability to source market priced gas from all major sources through physical connectivity with GAIL’s Dahej-Uran pipeline network and the large demand potential in the existing authorized areas of your Company, provides a tremendous scope for growth.

A challenge before your Company would be to roll out its CGD infrastructure in a time bound manner to meet its regulatory targets, develop competitive skills to prepare for likely competition post exclusivity scenario in terms of skilled manpower, materials, contractors etc. and also to source long term gas at competitive terms. To address this challenge, your Company is focusing on upgrading its robust processes, strengthening manpower, developing more number of vendors, contractors and strengthening its regulatory functions with the support of its promoters - GAIL and BG.

In addition an unfavorable outcome in the ongoing legal case in the Hon ble Supreme Court between the PNGRB and Indraprastha Gas Limited, the Delhi based CGD entity, and other CGD entities on Network Tariff and Compression Charge related issues may have an impact on your Company.

(d)Risk Management & Internal Control System:

MGL has well placed robust internal control systems commensurate to the nature and size of its business and designed to ensure protection of value, adherence to operating standards and to eliminate the risk of fraud. Various policies and operating procedures have also been laid down to ensure internal control and compliance to statutory requirements.

Your Company has the following systems / procedures to ensure effective risk management and mitigation measures:

i.Robust integrated Enterprise Resource Planning (ERP) system across the Company which encompass through all major business operations.

ii.A Geographical Information System (GIS) to effectively manage its network.

iii.A well defined financial authority matrix in the form of Book of Delegation of Power (BODOP) to ensure stringent financial control.

iv.A Strategic Management Group (SMG) consisting of Senior Executives to undertake joint discussion and deliberation and to take joint decision on major issues.

v.A formal Risk Committee of Senior Executives to identify and discuss the critical business risks as well as to discuss the mitigation plans and responsibilities for identified risks. The Reports on the risks and mitigation plans are periodically placed before the SMG, Audit Committee and MGL Board.

vi.An internal audit by reputed external professional firm covering major business operations, ensures the effectiveness of existing processes, controls and compliances. The key findings and vital recommendations are reported to the senior management and Audit Committee of the Board at regular intervals.

Apart from the above, the organization structure and the well defined financial authorities’ matrix at different levels optimises decision making and ensures transparency. A combination of processes like approved policies / procedures and system of internal checks and balances involving inter-dependencies of job responsibilities also ensures that there are discussions and approvals before any commitment is made.

(e) Health, Safety, Security & Environment (HSS&E):

Safety

Your Company is in the business of supplying Piped and Compressed Natural Gas that is environment friendly and safe. To facilitate this, your Company constructs and operates pipelines in the city of Mumbai and its adjoining towns. Whilst doing this, your Company adheres to high standard of Health, Safety, Security and Environment as the Company believes that ‘Outstanding Business Performance requires Outstanding HSS&E Performance’. Your Company complies with all legal and statutory requirements applicable to its operations as a minimum standard and aspires to attain recognised world class performance.

Your Company is accredited to OHSAS 18001:2007, ISO 14001 for Environment and ISO 9001:2008 for Quality Management Systems which are being audited regularly at par with international requirements.

Your Company is committed to the health and safety of all its employees, the employees of our contractors and other stakeholders who may be affected by the Company’s operations. Your Company considers its contractors as business partners and expects them to adhere to the Company’s HSSE standards. Coaching and assistance is provided to the business partners as and when required.

Your Company has received the prestigious “Greentech Safety Award 2013-Gold Category” in the CGD sector in recognition of its outstanding safety management standards observed in its entire operations in Mumbai. This reflects our efforts towards the sustainable safety management systems and practices followed.

Your Company has also received “Greentech Environment Excellence Award 2013-Gold Category” for your significant contribution for a pollution free environment in Mumbai and its suburbs.

In your Company’s drive for continuous improvement in safety, the Company has undertaken various steps such as celebrating “Work at Height” campaign; “Driving Safety” campaign with a series of workshops and seminars across the Company. Your Company also expects all of its employees and contractors to report near miss and hazards which are then investigated and lessons learnt are shared with all the concerned. Your Company also takes cognisance of the lessons learnt from other oil and gas companies across the world. To further inculcate safe driving behaviours, in addition to VTS, your Company conducts Defensive Driving Training (DDT) to all drivers and helpers of LCV, pool, MCC / EMG vehicles. Your Company has imparted DDT training to more than 450 contractor drivers who worked for MGL.

Your Company has a well-built fire management system in place in compliance with all national standards. A competent firefighting workforce is being deployed to all the Company’s critical installations 24x7 to combat any fire emergency. The fire management system is being scrutinized by an external third party agency of international repute to check and validate the effectiveness of the system.

A series of mock drills were conducted in the presence and association with the MARG group members to demonstrate the MGL ERDMP (Emergency Response and Disaster Management Plan) and learn from the inputs of the MARG members for continual improvement.

Your Company is a customer centric company and therefore customer satisfaction and safety is of utmost importance to us. To facilitate this, a series of PNG safety awareness programs for domestic housing societies, commercial and industrial customers have been initiated. This helps in building brand value and raise customer awareness.

Security

The security management system is being audited periodically by a highly reputed third party agency to identify further areas of improvement in security and vigilance measures. Towards this direction, a central security control room is developed and phase wise implementation of increased security system through CCTV monitoring of all critical installations and offices are undertaken.

Environment

The environment is both a brand image and a core area of concern to your Company. In addition to the process and procedures your Company has in place to meet the requirements of ISO 14001 accreditation, every year your Company celebrates World Environment Day wherein your employees rededicate themselves to protect the environment and promote the benefits of natural gas to the environment through public awareness campaigns.

(f)Project Monitoring:

Aligned with the vision imparted by your Company’s management, Centralized Monitoring System (Web based application) has been devised for capturing and display of milestones / achievements pertaining to all ongoing projects for effective monitoring of cost and progress.

This web based application eliminated the former system of maintaining and compiling day to day progress at decentralized location for all key parameters (connection, conversion, CNG outlet status, PE and Steel laying etc) in excel sheet and need of sending information by emails for preparation of MIS report.

Web application facilitates the centralized pool for storage and display of MIS report in digital form. This has helped your Company in Go Green initiatives.

Continuous monitoring improved timely booking of consumption and fast processing of contractors bill for executed work. This has helped in prompt closing of financial accounts. It also helped in controlling other parameters of MIS like inventory level, number of MP damages, dry out of CNG outlets and CNG outlet related complaints.

Corporate Project Monitoring department is continuously working to improve process of project monitoring.

(g) Asset Integrity:

While working on the gas network, a number of activities of critical nature are being undertaken at site, which requires right competency and ability of the personnel performing it. In order to enable every user to understand these activities and enhance his / her knowledge, your Company has developed suitable E-learning modules in the form of short films comprising of animated slides using Code of Practice (COP) as the basis for the contents.

Apart from above, your Company has also undertaken various tasks including the following:-

• Developing online solution for reporting and effective tracking, monitoring of actions arising from various internal audits; updating the status of open actions online and keeping track of all open actions until they get closed.

• Developing anti rodent HDPE sleeve bends to prevent PE damages to minimize gas leakages within the residential society premises.

• In order to enable further improvements to achieve higher system integrity. the recommendations from an adequacy assessment on the MGL PE pipeline practices have been implemented.

Development and installation of plastic disk type pipe marker along the entire pipeline network enhancing its visibility and therefore better protection from third party activity.

(h) Future Outlook:

MGL has established its operations in one of the largest metro of India. The ever expanding customer base coupled with large unserved population provides a strong growth opportunity. Over the next 5 years, your Company would focus on increasing the penetration in the current authorized geographical area through higher number of domestic connections and more CNG stations.

MGL would also be participating in opportunities in the upcoming CGD bid rounds of PNGRB to grow outside its current area of operations.

Automation , Information Technology, Metering and CRM improvements:

(a) Automation and Information Technology:

Your Company has witnessed smooth operation of 3 ERP systems as well as IT systems during the year. Maximum uptime of IT infrastructure, systems and services could be achieved without any loss-time of operation or information security incidents.

Your Company enhanced the ERP systems by implementing add-on modules in Human Resources and also implementing complex meter control process. The mobility implementation has not only stabilized but also was strengthened with the implementation of collection which has helped significantly in debt management. Interfaces were developed for business associates, which has resulted in better control and effective time management.

Your Company has also developed an independent application to bring in effective management, control and enhanced decision making process. One such application is the “Audit - database”, where in-house audits conducted by Safety and Asset Integrity department have been made on-line and is part of a relational database with the aid of client-server technology. A comprehensive training module has been developed by integrating with the e-Performance Management System. The system has proved to be a handy tool for measuring the effectiveness of both external and internal trainings. In its endeavour to have greater transparency in its processes, your Company has developed a centralized system of receipt and processing of invoices of its business associates adhering to the first-in-first-out principle and making the associates aware through the internet the status of their invoices.

Your Company has made significant continued progress in the implementation of SCADA covering all the four City Gate Stations, 109 CNG stations and 3 Sectionalising Valves (SV). Further work is in progress to cover an additional 34 CNG stations and 6 SVs.

The implementation of Data logger monitoring system for monitoring of District Regulating Stations (DRS) has been completed for thirty DRSs; the process is drawn for covering an additional number of fifteen DRSs enabling your Company to further strengthen the safety of operations and provide improved services to your consumers in a more efficient manner.

Further to the successful implementation of pilot projects in the premises of 1,425 domestic customers, your Company is now in the process of evaluating the feasibility of implementing Automated Meter Reading (AMR) system in the premises of additional 50,000 domestic customers.

Your Company is also in the process of reviewing a cost-effective solution for an AMR system for the Commercial consumers. The AMR project is primarily aimed to remotely acquire the actual meter readings instead of personal visit to the property. In addition, AMR has a functionality of detecting meter tampering instances.

(b)Metering:

Accuracy and efficiency improvement in domestic meter reading was achieved by adopting various practices such as rectification in large number of master data related to consumer address, meter serial number etc; introduction of system for cross-checking the authenticity of at least 10% door lock images, meter reading punching accuracy etc; checking meters of domestic consumers having consistently nil gas consumption; carrying on survey on gas geyser location in individual premises; providing list of non-functioning meters to O&M department for replacement; carrying out measurement of actual length of copper tubing in few domestic PNG installations, performance of Industrial and Commercial (I & C) meter reading activities, etc.

In addition to the above, to enable better monitoring and control over meter tampering, commercial meter reading software was modified to capture also the meter seal photo and enabled keying-in of meter seal number along with provision of Undertaking Form to ensure meter reader accountability with respect to ‘no tampering’ status at each location.

As way forward, following improvements are under implementation which would further enhance meter reading efficiency and authenticity:

- Meter reading software modification to include key features like display of detailed address at a glance, specific instruction to meter reader for individual consumer, etc.

- Replacement of joint ticketing from hard form to soft form.

- Change in ERP mapping for the address visible to meter readers, from Premise Master Data to Business Partner Master Data.

(c)CRM:

The Overall Customer Satisfaction Index (CSI) survey carried out through a third party for CRM department increased to 78 from 70 for previous year.

This was a result of the efforts undertaken by the Company to enhance the service to customers, such as opening of 3 new Walk-in Centres (Sanpada, Andheri and Mira Road); issuing of bilingual (English and Marathi) leaflet with PNG bill explaining the details of billing methodology and various ways to provide meter reading; improvement of Call Management System in terms of resolution of chronic problem of notification not visible to responsible person’; modification of few report modules to facilitate easy and better monitoring by responsible persons; and reduction in call abandonment through deployment of Call Centre Customer Service Executives

Going forward, following improvements are under implementation for enhancing system efficiency:

- Replacement of call centre proprietary hardware, software of Interactive Voice Response System (IVRS) with non-proprietary system (capital cost being 1/6th of the existing system). Major benefits to accrue are: availability of higher number of user licenses at no extra cost, availability of outbound call management, provision of restricted period dialing facility on the contact numbers of Complaint Officer / Nodal Officer / Appellate Authority, customized 12 x 12 IVRS matrix to accommodate any future expansion requirements in the IVR tree, reduction in annual maintenance expenses.

- CRM mobile application which will be used by customers for providing meter reading with meter image, viewing/ paying bills, logging service requests etc, downloading standard forms, calculating savings through CNG usage, etc which would be more elaborate and at the same time help MGL reduce SMS expenses.

Quality Initiative:

Your Company has successfully completed the recertification audit for ISO 9001:2008 Quality Management System by M/s. DNV in April 2014. As a part of continual improvement, intelligent electro fusion machine has been introduced for fusion joints in PE network. This facilitates traceability of fusion joints records with data down loading facility. This machine also has a special feature like auto lock-out upon expiry of calibration date.

Human Resources Development and Employee Relations:

Your Company believes that Human Resource is its most valuable asset and has made all efforts to attract, train and retain talent during the year. Organization restructuring for growth, revisiting HR policies, facilitating conducive work environment, outbound training programs and engagement of employees were some of the initiatives undertaken by MGL.

A salary correction exercise was done after market benchmarking survey. Employees were also given appropriate annual salary increment linked to performance ratings in order to inculcate a performance driven work culture. Your Company has focused on implementing IT enabled HR systems and processes. Multi channel communication with employees on business related issues seeking their feedback facilitated strong employee connect and engagement. Employee welfare measures like post-retirement medical insurance, was also introduced.

On the diversity front, various initiatives were taken by your Company which contributed in strengthening bonding of employees and the extended family like participation of women employees in various initiatives including Women’s Half-Marathon, out bound programs; encouraging employee participation in national level seminars, conferences; celebration of MGL’s Foundation Day, Women’s Day, with the involvement of the employees across all levels; and a common staff picnic for MGL parivaar.

At the year end, your Company had 478 employees on its rolls; 41 employees were recruited during the year 2013-14. The attrition rate was around 6%.

In terms of the provisions of Section 217(2A) of the Companies act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in the Annexure I to the Directors’ Report. However, having regard to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Any Member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Corporate Social Responsibility (CSR):

Your Company continues to be a socially responsible corporate. During the year, your Company has engaged in various social causes focusing primarily in the areas of - Health, Education and Environment. Your Company has spent, ` 81 Lakhs during the financial year 2013-14 while ` 37.76 Lakhs during the financial year 2012-13 and ` 22 Lakhs during the financial year 2011-12 on the CSR initiatives. During the year following CSR activities were undertaken by your Company:

(i) Six free Health Check-up camps for auto / taxi drivers and for local authorities including Traffic Police and Fire Brigade personnel in Mumbai, benefiting about 600 persons.

(ii) Free residential coaching facilities provided for meritorious children of drivers of auto, taxi and public transport buses to train them for pre-engineering entrance exams of prestigious engineering institutions. Three of the ten students provided with this educational support, were selected for IIT and NIT.

(iii) Infrastructural support in the form of central air-conditioning system provided to Mumbai s Taraporevala Aquarium.

(iv) Provided porta cabins for the traffic police not only for the larger interest of road safety but also from the perspective of their health and well being.

(v) Supporting ten visually handicapped students at the Victoria Memorial School for the Blind at Tardeo by bearing their boarding & lodging expenses.

(vi) Partnering with Don Bosco Technical Institute, to impart technical training to the under privileged youth in the plumbing trade to make them self-reliant.

(vii) Extended support for setting up remedial centre for upgrading of psychiatric child services in Nair Hospital, a reputed Government Hospital in Mumbai.

(viii) Spreading awareness on the ill - effects of tobacco through release of a multilingual pocket story book with wide distribution to auto / taxi / bus drivers and general public.

(ix) The use of CNG in Mumbai and its surrounding areas is helping to reduce the vehicular pollutants by over 1100 metric tons per day, thereby contributing significantly in the improvement of the overall health and environment of the city.

Keeping in view the provisions of the Companies Act 2013, your Company has formed a Board level CSR Committee and formulated a new CSR policy.

Board of Directors:

After the adoption of previous year Annual Accounts on May 22, 2013, following developments have taken place in the composition of the Board of Directors of the Company:

Mr. B.C. Tripathi, GAIL Nominee, resigned as Chairman and Director from the Board with effect from May 27, 2013. Mr. Pankaj Kumar Pal, GAIL Nominee, has been appointed as Additional Director on the Board effective from May 28, 2013.

Mr. S.L. Raina, GAIL Nominee, has resigned as Director from the Board with effect from May 31, 2013. Mr. M. Ravindran, GAIL Nominee, has been appointed as Additional Director on the Board effective from June 01, 2013.

The appointments of Mr. Pankaj Kumar Pal and Mr. M. Ravindran as Directors of the Company have been confirmed by the shareholders of the Company during the 18th Annual General Meeting held on August 27, 2013.

Mr. William Allan Perrin, Technical Director, has resigned from the Board on February 14, 2014. Ms. Susmita Sengupta has been appointed as the new Technical Director on the Board effective from February 15, 2014.

Mr. Shaleen Sharma and Mr. Shahram Jahanbani who retire from the Office of Director by rotation and being eligible, have offered themselves for re-appointment. Mr Arun Balakrishnan and Mr Santosh Kumar Vajpayee, Independent Directors of the Company, have given declarations 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. Keeping in view the relevant provisions of the Companies Act, 2013, rules made thereunder and Schedule IV to the Act and clause 49 of the Listing agreement, these Directors are being appointed as Independent Directors for the tenure of appointment as mentioned in the Notice of the forthcoming Annual General Meeting (AGM) of the Company.

The Board of Directors wish to place on record their appreciation for the invaluable contribution rendered by Mr. B.C. Tripathi, Mr. S.L. Raina and Mr. William Allan Perrin during their tenure.

The Board of Directors welcome Mr. Pankaj Kumar Pal, Mr. M. Ravindran and Ms. Susmita Sengupta as the new Directors on the Board.

During the year under review, six meetings of the Board and five meetings of the Audit Committee were held.

Directors Responsibility Statement:

In accordance with Section 217 (2AA) of the Companies Act, 1956, the Directors of the Company hereby state:

(a) that in preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) that the Directors have selected such accounting policies and applied them consistently 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 ended on March 31, 2014 and of the profit of the Company for the year under review;

(c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(d) that the Directors have prepared the annual accounts for the Financial Year ended March 31, 2014 on a going concern basis.

Corporate Governance:

The Company believes that good Corporate Governance practices shall enable the Management to direct and control the affairs of the Company in an efficient manner to achieve the Company’s goals of maximizing value for all stakeholders. The Company has been voluntarily following, on a reasonable endeavor, the requirements of clause 49 of Corporate Governance code as applicable to the listed companies. A separate report on Corporate Governance has been annexed to the Annual Report.

Auditors:

Statutory Auditors:

M/s. Deloitte Haskins & Sells, the Statutory Auditor of the Company, will retire at the ensuing Annual General Meeting of your Company and, being eligible, offer themselves for re-appointment. The re-appointment, if made, for the Financial Year 2014-15, will have to be by a Ordinary Resolution as required under Section 139 of the Companies Act, 2013.

Cost Auditors:

M/s Dhananjay V. Joshi & Associates, Cost Auditors were appointed as Cost Auditor for the audit of cost records maintained by the company for the financial year ended 31st March 2013. The Audit Report was filed by the Cost Auditors on 26th September 2013 within the due date. In respect of the financial year ended 31st March 2014, M/s Dhananjay V. Joshi & Associates, Cost Auditors were re-appointed. The due date for filing the Cost Audit report is 27th September 2014.”

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

The information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed hereto as Annexure I.

Appreciation and Acknowledgement:

Your Directors take this opportunity to place on record their appreciation and sincere thanks to the Ministry of Petroleum & Natural Gas, Petroleum & Natural Gas Regulatory Board, Government of Maharashtra (GOM), Municipal Corporation of Greater Mumbai, Navi Mumbai, Thane, Mira-Bhayander, Kalyan-Dombivali, other State and Central Government Authorities, Mumbai Metropolitan Regional Development Authority (MMRDA), Maharashtra Industrial Development Corporation (MIDC), Police and Fire Brigade Authorities, Bankers, Contractors, Consultants, Consumers and Local Citizens for their whole hearted support and co-operation. The Board also record their appreciation to its Shareholders - GAIL (India) Limited, BG Group and GOM for their support and to the employees of the Company for their devotion, dedication and hard work for efficient operations and implementation of projects whilst maintaining momentum on your Company’s growth.

For and on behalf of the Board of Director

(Shaleen Sharma)

Chairman

Place : Mumbai

Dated: 04.09.2014

ANNEXURE - I

Conservation of Energy, Technology Absorption:

Your Company has implemented a number of energy conservation measures at various operating installations. This has resulted in cosiderable savings and contributions to environmental improvements.

In addition, your Company has implemented energy conservation schemes at various CNG stations. It includes successful implementation of cascades of water capacity of 3000 litres, to reduce the frequency of start-stop of the compressor, thereby improving efficiency and also implementation of cascades of water capacity of 4500 litres, for transportation from mother station to daughter booster station through LCV, to reduce the frequency of movements of LCVs.

Solar Power Plant of 30kw is installed at CGS, Wadala which caters to the electrical lighting load of the office building.

Solar Power Plant of 20kw each is scheduled for installation at MGL Offices at Mahape and CGS, Taloja and CGS,Ambernath.

Energy Conservation unit is installed at MGL House, Bandra Kurla Complex. This results into 14-15% reduction in energy consumption towards lighting load.

The requisite information with regard to Conservation, Technology Absorption in terms of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, is set out in a separate statement attached hereto (Form ‘A’ and ‘B’) and forms part hereof.

Foreign Exchange Earnings and Outgo:

During the year under review, the Company has not earned any foreign exchange and the expenditure in foreign exchange was Rs. 88.53 Crores. The details of foreign exchange outgo during the period ended March 31, 2014 are as under:

(Rs. in Crores)

i) Payment to foreign suppliers	10.6
ii) Dividend	77.79
iii) Travelling	0.0044
iv) Others	0.14

FORM A

Form for disclosure of particulars with respect to Conservation of Energy

			Current Year	Previous Year
			2013-14	2012-13
	Power and Fuel Consumption
1.	Electricity
a)	Purchased
	Unit		89345860	85761457
	Total Amount (Rs.)		858311253	746753054
	Rate / Unit (Rs.)		9.61	8.55
b)		Own Generation
	(i)	Through Diesel Generator (CGS, Sion - MGL owned)
		Unit (kwh)	192	640
		Unit per Ltr of Diesel Oil	0.914	1.340
		Cost / Unit (Rs.)	69.84	40.90
	(ii)	Through Natural Gas Generator (CGS, Mahape - MGL owned)
		Unit (kwh)	1080	192
		Unit per SCM of Natural Gas	1.279	1.13
		Cost / Unit (Rs.)	33.83	33.65
	(iii)	Through Diesel Generator (hired at CGS, Taloja)
		Unit (kwh)	--	4818
		Unit per Ltr of Diesel Oil	--	1.20
		Cost / Unit (Rs.)	--	44.41
	(iv)	Through Natural Gas Generator (CGS, Taloja - MGL owned)
		Unit (kwh)	27520	154
		Unit per SCM of Natural Gas	0.90	1.375
		Cost / Unit (Rs.)	48.05	27.64
	(v)	Through Natural Gas Generator (CGS, Ambernath - MGL owned)
		Unit (kwh)	13098	--
		Unit per SCM of Natural Gas	0.90	--
		Cost / Unit (Rs.)	48.11	--
	(vi)	Through Natural Gas Generator (MSRTC, Khopat, Thane - MGL owned)
		Unit (kwh)	380	--
		Unit per SCM of Natural Gas	0.62	--
		Cost / Unit (Rs.)	69.50	--
	(vii)	Through Solar Power Plant (CGS, Sion)
		Unit (kwh)	30291	15927
		Unit per Ltr of Fuel Oil / Gas	--	--
		Cost / Unit (Rs.)	--	--
	(viii)	Through Steam
		Unit (kwh)	--	--
		Unit per Ltr of Fuel Oil / Gas	--	--
		Cost / Unit (Rs.)	--	--
2.	Coal (specify quality and where used)
	Quantity (tonnes)		--	--
	Total Cost (Rs.)		--	--
	Average Rate		--	--
3.	Furnance Oil
	Quantity (K. Ltrs)		--	--
	Total Amount (Rs.)		--	--
	Average Rate (Rs.)		--	--
4.	Others / Internal Generation (please give details)
	Quantity		--	--
	Total Cost (Rs.)		--	--
	Rate / Unit (Rs.)		--	--

FORM B

Form for disclosure of particulars with respect to absorption

			Current Year
Sr No	Particulars		2013-14
1	Research and Development (R&D)
A	Specific areas in which R&D carried out by the Company	(a)	Continuity with development of :
		-	Automatic Meter Reading (AMR) System
		-	PE Risers
		-	Supervisory Control and Data Acquisition (SCADA) System
		-	GIS Mobility
		-	Anti-rodent initiatives
		-	Improvement in plastic clamps for copper pipes
B	Benefits derived as a result of the above R&D	-	Improvement in the existing business processes and working standards of a City Gas Distribution Project.
		-	Development of Natural Gas Market
		-	Safe and effective operation of Gas Supply Network
		-	Cost saving and Energy saving
C	Future plan of action	-	Continuing Vendor Development (Regulators, Meters, PE pipes, etc)
		-	Further development of SCADA system
		-	PE Risers
		-	Automater Meter Reading (AMR) technology
		-	Solar Roof Top
D	Expenditure on R&D :
(a)	Capital	(a)	No Direct Expenditure
(b)	Recurring	(b)
(c)	Total	(c)
(d)	Total R&D expenditure as a percentage of total turnover	(d)
2	Technology absorption, adaptation and innovation
A	Efforts, in brief, made towards technology adaptation and innovation	-	Further development of Standards, Specifications and Operating Procedures (from BG Group), adapted for local implementation
B	Benefits derived as a result of the above efforts e.g. Product Improvement, Cost Reduction, Product Development, Import Substitution, etc.	-	Safe operation of Gas Supply Network
		-	Import substitution by development of indigenous vendor for supply of Diaphragm Gas Meter
		-	Growth strategy
C	In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year), following information may be furnished :
(a)	Technology imported	(a)	The main import has been technical advice on SynerGEE Gas Software
(b)	Year of import	(b)	2006-07
(c)	Has technology been fully absorbed	(c)	Yes
(d)	If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of action	(d)	--

3 Foreign Exchange Earning and Outgo		Current Year	Previous Year
		(Rs. in thousands)	(Rs. in thousands)
Total Foreign Exchange earned		Nil	Nil
Total Foreign Exchange outgo		885296	760140

In accordance with Section 217 (2AA) of the Companies Act, 1956, the Directors of the Company hereby state:
(a)that in preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b)that the Directors have selected such accounting policies and applied them consistently 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 ended on March 31, 2014 and of the profit of the Company for the year under review;
(c)that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
(d)that the Directors have prepared the annual accounts for the Financial Year ended March 31, 2014 on a going concern basis.