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Chapter- VI

Policy Perspectives

GAIL (India) Limited is one of the most innovative and progressive

public sector companies of India. It was in 1984, that the Government of

India announced the commissioning of a Company called Gas Authority of

India Limited, to work for building and operating the natural gas

transportation set up on India. This Company was to work in the area of

natural gas only. After twenty six years of its commissioning, this

Company has become a major energy Company and is rated by 'Platts,' an

international survey company, as number one integrated energy Company

of Asia and number two at Global level. The Company has set up a number

of milestones, not only in India but at the world level too. Today, it is truly

a most diversified international energy company of India, which has

marked its presence. It has a number of energy areas. The Company and

the Government of India are investing a lot of money and time, to come up

with strong policy initiatives for its future growth.

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Some very important policies are mentioned as under:

(i) Green Energy-Green Company

Green Energy means an area in the field of energy creation by

reducing carbon emission levels or the type of energy which is produced by

deploying most environment friendly non conventional fuels and

infrastructure. GAIL (India) Limited is popularly known as 'Green

Company of India', because it is providing the manufacturing, marketing

and infrastructure facilities in the area of Green fuels and hydro carbons

like Natural Gas, CNG, PNG, LNG, LPG etc.

There is an immense scope for the Company to invest and work in 'Green'

areas. Green fuels are comparatively cheaper and cleaner then traditional

fossil fuels. The Government of India has made a commitment to reduce

its carbon emissions by a minimum 20 percent by 2020. India is also going

to be the third largest consumer of energy after USA and China, from its

fifth position at present, in the coming years. At present the per capita

energy consumption in India is one of the lowest in the world (0.3 tonnes

of oil equivalent against the world average of 1.8).1 globally, the natural

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1. Annual Report 2009-10, GAIL (India) Limited, New Delhi, p. 39

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gas constitutes about 24 percent of energy areas which in India, it accounts

for about 9 percent. This is a very poor index and the Government of India

has handed over this charge to GAIL (India) limited to enhance the level of

natural gas consumption in India. The Company may see its present

turnover of about Rs. 25000 crore to be four times in coming ten years. The

Company has already shown a compounded Annual Growth Rate over 13

percent in its performance in recent years.

The Government of India is reducing the subsidies on oil products

gradually. It is going to add huge amounts of profits to the Company. Till

now all the profit making Companies in oil and gas sector bear the brunt of

subsidies. GAIL (India) Limited has bore the additional burden of more

than Rs. 1326 crore during the financial year 2009-10. The Company has

designed and planned its expansion policies for future to take big strides in

Green Energy areas.

(ii) Expansion Policy

The Company has more than seventy percent market share in the

areas of gas transmission. It has planned to maintain its dominance in the

area. It has expansion plans for building more than 7500 km of gas

pipelines in the country. India has a vast potential for growth in this area

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because the percentage covered, at present, for example in the gas

pipelining is not even twenty percent of the total possible area. These

projects need huge investments in thousands of crores of Rupees and the

Company is very ambitious to go in a very big way for expending its

networks. The Company is going to invest more than Rs. 30000 crores in

next five years to install new pipelines in gas transmission. These would

include large trunk pipelines along with smaller pipelines which would

help the Company to complete its dream project of 'National Gas Grid.'

The company owns and operates the biggest gas based petrochemical

plant of India at Pata and has planned to double its production capacity in

coming five years. Presently this plant has a capacity of producing 420,000

TPA of Ethylene and 410,000 TPA of Polymers i.e. HDPE and LLDPE.

GAIL (India) Limited has some very ambitious plans which are

listed us under:

Developing a State-of-the-art National Gas Grid in India

To provide Green Energy in every part of the country, to every

industry in manufacturing and production sector, especially power,

fertilizers, steel, infrastructure etc.

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To provide clean fuel to every household in the country in form of

Green Kitchens and CNG to every vehicle.

To provide bulk qualities of polymers and petrochemicals in order to

replace the use of wood and other natural resources like coal and

other fossil fuels.

To enhance the number of social welfare activities though its

Corporate Social Responsibility projects.

To provide World class training to its employees and future trainees

of not only India, but the whole world in general and South-East

Asia in particular in the areas of hydrocarbons, gas transmission and

Human Resource Management.

To create a large pool of Knowledge Capital in energy areas.

To provide large employment opportunities in the specialized energy

areas.

To develop its capacities in exploration and production (E and P) of

natural gas.

To maintain its position of dominance in energy areas by signing

more joint ventures and opening subsidiary companies.

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The above listed parameters are very broad in nature with each of the areas

having very large internal dimensions. The Company needs a lot of

research, investments both capital and human, government support

mechanism, strategic management policies, focused business initiatives,

ultrra hi-tech IT enabled infrastructure and a lot more.

Some broad areas under 'Policy perspectives' with futuristic

approach to development and expansion of the Company are suggested

through this piece of research.

(i) Strategic Human Resource Management Policies

The Company has very ambitious plans of growth and expansion in

the coming times. Presently the Company has less than four thousand

employees who are managing its affairs. With the growth plans in mind,

the Company has to develop very strategic HRM plans. The number of its

employees is expected to grow at a very fast rate. The Company already

has very innovative HRM initiatives in practice, which have been studied

in previous chapters. The growing future demands of more human

resources will add new dimensions and challenges. So the Company should

develop a futuristic, plan like 'Strategic HRM plan 2020', which should

address to all future challenges.

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(ii) Heavy Investment Generation Policies

The Company has future plans of development and expansion in its

mind. The laying of additional 5000 km network of pipelines for gas

transmission alone, needs an amount of Rs. 30,000 crore in coming times.

The Company has plans to raise its turnover from Rs. 25000 crore to Rs.

100000 crore in coming five years. It needs to plan some concrete plans to

raise these huge amounts. Expanding its sales and industrial base is a must

for the Company. A well planned 'Financial Plan Document-Meeting the

Next Decade Requirements' kind of plan must start taking its place. It

needs to plan an 'Economic Advisory Cell' which should assist the Board

of Directors in finance raising plans which may include offering public

issue globally, making tie-ups with World Bank, UNO an other

international agencies for grants etc. It can lead the world in the areas of

Green Energy and can ask for international assistance for meeting its future

requirements through some ambitious plans like 'Green Earth', 'Save

Earth' 'Save Environment' etc.

(iv) Strategic Infrastructure Development Policies

The Company has the world class infrastructure with all

international standard certification. The future expansions will call for

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more plants and industrial units. The Company needs to have more

infrastructures in future. A new plan like 'Strategic Infrastructure

Development Plan 2020' must be drafted and planned. There is a need for

'Comprehensive IT Initiatives Plan' which should provide all kind of IT

solutions to its future infrastructures. The Company must develop some

strategic plans to have international tie-ups with leading infrastructure

building companies as well IT companies like IBM, Microsoft, Apple, Dell

etc.

GAIL (India) Limited should open up minimum two big subsidiaries

in form of GAIL IT Limited and GAIL Infrastructure Development

Company etc. to meet its requirements and also raising equity through

public funds for the Company.

(v) Creating and Developing New Training Institutes

The Company, at present, has two major training institutes at Jaipur

and Noida. In order to provide a boost to its HRD activities, the Company

must have at least two more training institutes, one each in South West and

North East part of the country. There is a greater need of training to its

employees and with expected increase in number of its employees in

coming times.

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(vi) Creation of Knowledge Capital

The Company will be in a great demand of managers, technical

experts and working force in coming years in executive and non executive

categories of employees. The demand for experts and specialists in various

energy, technical and management areas is expected to be doubled very

soon.

The Company must develop some E-school (Energy-School)

concept in the country to develop 'GAIL Institutes for Specialized

Learning' or It should start some University or colleges in both

management and energy areas, where special courses, should be available

as academic degrees, which are linked to the needs of the Company. There

is already a University known as University of Petroleum Energy Studies

(UPES) at Dehradun, Uttranchal, which is running some special energy

related courses. GAIL (India) Limited can have some strategic tie ups with

this University or other universities and institutes of the world. The

Company can guide the present Universities and colleges to start new job

oriented courses for its requirements. Creation of 'Knowledge Captial'

should be atop priority agenda for the Company.

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(vii) Creation of GAIL Townships

Coming times in the Company will demand more townships with the

increase in number of employees and expansion of plants. The townships

of GAIL (India) Limited should be world class townships where there is an

extensive use of Green energy and use of non conventional sources of

energy like Solar Energy and Wind Energy. All the transportation should

run on CNG's small capacity power plants for townships running on Gas,

buildings, schools, residences etc. provided with Green energy concept

must be the feature of Company townships.

It should set a new trend for reality sector also, to build and operate

Green Townships.

(viii) Strategic Policies for Bio fuel Plants

Agriculture sector is still the oldest and easiest professions found in

India. The rural areas of the villages are not properly equipped with

management of agricultural and bio wastes. Brazil has set new standards in

the world in the areas of bio fuels as cheaper sources of energy and a

replacement for petroleum products.

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GAIL (India) Limited should come forward and take initiatives to

help the rural folk with solutions in the areas of biomass waste

management. Gas based or other non conventional based energy inputs can

provide some help to agriculture sector to go professional in its approach.

(ix) Policy for Public Relations and Awareness

The Company has done a lot in the areas of Green energy creation,

yet it has not been able to create awareness in this area at the desired level.

There are still lot of people in India, who have not heard anything about

Green energy areas.

GAIL (India) Limited must develop a strategic plan to popularize the

concept of Green Energy and its use in daily life. It should have an

'Advance Centre for Popularizing Green Energy' along with a

developed Public Relation Office/cell. Further it should plan for 'GAIL

FM Stations' to impart knowledge in the new energy areas.

(x) Strategic Environmental Plan

The Company has to develop some strategic environmental plans

with an alliance with Ministry of Environment. Coming times will demand

more strategic environmental plans, with the increase in industrialization

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procession in the country. Saving environment should be matter of prime

importance for the Company and it must develop macro level plans instead

of micro level plans concerned to its own plants only.

(xi) New Corporate Plans

The Company must plan in advance some very innovative corporate

plans to stay in tough competition, it faces today with other energy

companies of both national and international level. 'More use of

technology for creating a Simpler Life' type ideologies should form the

basis, for future corporate plans. The new 'Corporate Citizen' laws of

future will demand very planned corporate policies from the Company.

(xii) Creation of Green Energy Shopping Malls

The future will demand more energy which in turn will raise the

demand of green energy. Till now, the basic inputs required to restructure

an existing system based on conventional resources, are very costly. The

Company must devise some low cost and easy to handle systems which can

increase the use of gas or other sources. These systems must be affordable

to a common man also. GAIL can start manufacturing or marketing low

cost, subsidized and standardized energy products. These products should

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be available at GAIL Shopping Malls or GAIL Energy Shops in future. It

will help the Company to enter every house hold in the country.

(xiii) Expansion of City Gas Distribution Network

The Company will need a robust City Gas Distribution (CGD) policy

in the coming times. At present, the Company has a capacity to feed at least

five to six times the areas; it is feeding with its subsidiary GAIL Gas

Limited. The problem is the non availability of pipeline system for its

transmission to domestic units. India has a very big market for such

projects and the Company can play a dominant role in this area in coming

times and raise its sales and profit ratio.

(xiv) People Oriented Policies

The Company is helping the Government and people of India by

providing multifaceted facilities in energy areas. Still, it has not been

possible for the Company to do something miraculous in this regard. Its

policies like Corporate Social Responsibility, which has become a core

value to the present corporate companies, have not brought the desired

results. A lot needs to be done to lift the downtrodden and needy sections

of society. No doubt, the Company is a professional business Company, yet

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is has to take up some more social issues. It contributes 2 percent of its

Profit after Tax (PAT) on CSR issues.

Although here are thousands of people who get benefited by the

social measures being taken up by the Company's policies' yet, the

Company must plan some more People oriented policies by conducting

some survey of need based classes.

(xv) Cost Effectiveness Policies

The Company must plan and develop some cost effective policies for

its future savings. There must be a GAIL Cost Effectiveness Cell which

should operate from corporate office and having its branches in all major

plants of the Company. The central office should include the top level

officers of the Company who have some in-depth knowledge of various

issues. Following structure of the proposed cell is suggested:

Organizational Structure of GAIL Cost Effectiveness Cell

Core Corporate level Cost Effectiveness Cell: It should operate from

corporate office, New Delhi and have following organizational structure:

Chairman and Managing Director (CMD)

4-Directors (Finance, HR, IT, Plant Maintenance)

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8-10 Officers (up to the level of GM, DGM)

4 Co-opted Members (Subject experts) from Top level

Educational/Consultancy organizations.

Charted Accountant

Plant level Cost Effectiveness Cell: It should operate from plant level

with following organizational structure.

ED/GM

4 officers from Plant (GM's and DGM's)

2 officers from middle management (Manager, Deputy Manager)

4 Co-opted Members (Subject Experts from Top level

Educational/Consultancy organizations

1 Charted Accountant

This plant level cell should be linked to the corporate office on 24x7

format.

Three Module System for Cost Effectiveness Cell

The general strategy of this Cost Effectiveness Cell should be to work on

three modules namely, Annual module, Monthly Module and Daily

Module. The objectives and targets set for annual basis should be linked to

monthly basis which further should be linked to daily targets. There should

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be close monitoring of all policies and their implementation. Focus areas

for these cells can be:

Plant Maintenance

Office and Management

Allowances/Perks of Directors

IT areas

Township Maintenance

Staff Transportation (et. Staff Buses instead of individual

vehicles and then cutting the conveyance allowances)

Review of allowances/perks

T.A./D.A scrutiny

Raw Material Wastage

Power Consumption

Waste Management and optimum utilization of Resources

(xvi) Threat and Challenge Management

The Company is growing at a very fast rate (nearly 13 percent for

last decade) and its future growth plans are very ambitious. It is operating

into a number of business areas in energy, at both international and national

level.

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The international business environment of today is very promising as

well as challenging due to a tough competition in all areas and segments.

Future of this business will pose more challenges like dominance of big

capitalist economies like G-7 group, the individual corporate giants of

these countries, new international laws which may favour the most

developed countries, creation of new international bodies which may frame

new restricting policies for developing nations and its companies, demand

and supply gaps, environmental challenges, population challenges,

depleting sources of energy, natural disasters, economic slowdowns, new

innovations and increasing expectancy levels of quality assurances.

The national business environment is full of risks and challenges as

well. There are risks of slow economic growth, large gap in demand and

supply population crises, instable governments, increase of loss making

units in public sector, subsidy and concession challenges, HRM challenges,

knowledge capital shortage, natural disasters, changing government

policies, increasing political interference, changing price fixing

mechanism, increasing crime and social unrest, increasing scams and

scandals, resource generation challenges, state government policy

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challenges, power and energy crises and increasing competition from big

private players like Reliance industries.

All such challenges are economic, social, technological and

environmental in nature. The Company must plan in advance for these

challenges with a 'Pro-active approach' rather than 'Active approach'.

There must be a kind of 'Threats and Challenges Management

System', deployed on permanent basis in the Company. It must plan and

evolve some strategic policy framework with futuristic approach in this

area. The Company must start contributing to a kind of 'Contingency

Fund' which should be available at times of risks and threats. The

recommendations of this core system should be mandatory for the

Company.

(xviii) Business Expansion and Planning Cell

The Company has a very vast business segmental area in the country

as well as at global level. It has expended in its business in manifolds

during its journey of twenty six years. The process of business expansion is

still on, and each year some new targets are set by the management.

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Till date, the Company has a mechanism of passing all resolutions

and new targets in its Board of Directors meetings. It must plan a new cell

known as GAIL Business Expansion and Planning Cell. This cell should

be like a statutory and permanent body in GAIL having both permanent

and ex-officio members.

The Company at present runs the affairs of business expansion and

planning through its non statutory committee known as Business

Development and Marketing Committee. Its composition is as under:

Mr. R. M. Sethi- Chairman

Director (Finance)

Director (BD)

Director (Marketing)

Mr. Apurva Chandra

Dr. U.K. Sen

Prof. A. Q. Contractor

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The observations from this research indicate that there were total

nine Board of Director's meetings held in n the year 2009-10. There was no

data available about the number of meetings of the above mentioned non

statutory committee in the same year. Many of its members are the members

of other committees (non statutory). It is therefore suggested that instead of

having a non statutory committee, the Company must make a full time Cell in

this core business area. That full time cell can interact on regular base with all

plant heads and external international consultancy agencies.

(xix) Business Diversification Policies

Although, the Company has a non statutory committee in the form of

Business Development and Marketing Committee, it is suggested that it

should plan separate business diversification policies. There is a growing need

in the business and corporate organizations in general and GAIL (India)

Limited in particular to make a clear cut distinction in business expansion and

business diversification strategies. Business expansion and development is

mostly related to expand the existing portfolios only.

GAIL (India) Limited has diversified into various business segments

like marketing and transmission of gas, exploration and production, City Gas

Distribution, LPG, LNG, CNG, areas and telecommunication areas.

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There is a lot of scope in manufacturing sector for the Company. It is

producing raw material as polymers and polyethylene. It can start

manufacturing the byproducts on its own. Products of daily use in the areas of

Green Kitchens and appliances, polymer furniture and building materials,

polymer products for daily utilities can be the possible options. It can open its

Company operated showrooms to sell its products by offering 'franchise'. It

can open its high-tech kiosks at all leading international airports of the country

and other parts of the world. It must enter into retail sector for selling its low

cost products like crates, furniture, toys, showcases, modular kitchens, doors

etc. It must have strong tie-ups with media and fashion agencies. These

sources can popularize the idea of using more 'Green' products in coming

times.

It must encourage some film and documentary makers to produce

programs based on GAIL products and create awareness about its business.

It must evolve a strong strategy to publish literature of its core

business areas in both hard and soft versions to popularize its strategies.

Regular advertisements in national and international newspapers, journals,

magazines and internet can help in many ways to the Company.

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(xx) Research and Development Policies

There is a strong need for encouraging new research and

development in the Company. It must build a very sophisticated research and

development cell involving top experts, scientists, consultants and researchers.

The Company must focus and invest in this area in coming times. Research

and development tasks in the Company should be oriented towards following

areas:

Research and Development for Company

Research and Development for Country

Research and Development for all stakeholders and customers

Research and Development for individuals.

It must invite individual researchers to come forward and go for

research in core areas for Company like HRM, Economics, Commerce, and

Technical subjects of various engineering disciplines, Environment, Public

Policy and many more. It should reward the individual researches on

various issues related to Company to encourage more research.

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So some suggestions in the form of 'Policy Perspectives' have been

incorporated in this research work, which may prove useful to the

Company in coming times. It is not claimed that all these suggestions are

complete in nature. It is an attempt to highlight some emerging demands

for the Company to formulate some future policies and strategies.