To the Members of Petronet LNG Limited
1. Report on the Standalone Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Petronet LNGLimited ("the Company") which comprise the Balance Sheet as at 31st March2018 the Statement of Profit and Loss (including Other Comprehensive income)the CashFlow Statement and the Statement of Change in Equity for the year then ended and a summaryof the significant accounting policies and other explanatory information (herein afterreferred as "standalone Ind AS financial statements").
2. Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standaloneInd AS financial statements that give a true and fair view of the state ofaffairs(financial position) profit or loss (financial performance including othercomprehensive income) cash flows and change in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards(Ind AS)prescribed under Section 133 of the Act read with relevant rules issuedthereunder. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controlsthat were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.
3. Auditor's Responsibility
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We have conducted our audit in accordance with the Standards on Auditing specifiedunder Section 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement. An audit involves performingprocedures to obtain audit evidence about the amounts and the disclosures in thestandalone Ind AS financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the standaloneInd AS financialstatements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone Ind AS financial statements that give a true and fair viewin order to design audit procedures that are appropriate in the circumstances. An auditalso includes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial statements. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the standaloneInd AS financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thestate of affairs (financial position) of the Company as at 31st March 2018 and itsprofit (financial performance including other comprehensive income) its cash flows andchange in equity for the year ended on that date.
5. Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of Section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order. As required by Section 143(3) of the Act we report that:a. We have sought and obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purposes of our audit; b. In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books;
c. The Balance Sheet Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and the Statement of Change in Equity dealt with by thisReport are in agreement with the books of account;
d. In our opinion the aforesaid standalone Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Actread with relevant rule issuedthereunder;
e. On the basis of written representations received from the directors as on 31stMarch2018 taken on record by the Board of Directors none of the directors is disqualified ason 31stMarch 2018 from being appointed as a director in terms of Section 164 (2) of theAct.
f. With respect to the adequacy of the internal financial controls with reference toInd AS financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate report in "Annexure B"; Our report expresses anunmodified opinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial reporting.
g. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 37B to the standalone IndASfinancial statements;
ii. The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses - Refer Note 37 A (b)to the financialstatements;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company and
"Annexure A" referred to in paragraph 5 of our report of even date
1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of two years. Inaccordance with this programme fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification. In our opinion the periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
2. The inventory has been physically verified by the management at reasonableintervals. No material discrepancies were noticed on such physical verification.
3. The Company has not granted any loans secured or unsecured to companies firmLimited Liability Partnerships or other parties in the register maintained under section189 of the Companies Act 2013. Therefore the provisions of clause 3(iii) (a) (b) and(c) of the Companies (Auditors Report) Order 2016 are not applicable.
4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
5. The Company has not accepted any deposits from the public within the provisions ofSections 73 to 76 or any other relevant provisions and the Rules framed thereunder.Accordingly the provisions of Clause 3 (v) of the Order are not applicable to theCompany.
6. We have broadly reviewed the books of accounts maintained by the Company pursuant toRules made by the Central Government for the maintenance of cost records under Section148(1) of the Companies Act 2013 and are of the opinion that prima facie the prescribedaccounts and records have been maintained.
7. (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including Provident Fund Income Tax Sales Tax Service TaxCustom Duty Value Added Tax Cess Goods and Service Tax and other material statutorydues applicable to it. There were no arrears of undisputed statutory dues as at 31st March2018 which were outstanding for a period of more than six months from the date theybecame payable. We are informed that there is no liability towards Employees StateInsurance and Excise Duty for the year under audit.
(b) According to the information and explanations given to us and as per the records ofthe Company the dues of service tax custom duty and income tax which have not beendeposited/deposited under protest with the appropriate authorities on account of anydispute are given below:
8. The Company has not defaulted in the repayment of dues to financial institutionsbanks Government or debenture holders.
9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year. Accordingly paragraph3 (ix) of the Order is not applicable. 10. Based upon the audit procedures performed andinformation and explanations given by the management we report that no fraud on or by theCompany has been noticed or reported during the course of our audit. 11. According to theinformation and explanations give to us and based on our examination of the records of theCompany the Company has paid/provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Companies Act 2013 where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable Accounting Standards.
14. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. 15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
16. In our opinion and according to the information and explanation given to us thecompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.
"Annexure B"as referred to in paragraph 5(f) of our report of even date
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference to Ind AS financialstatements of Petronet LNG Limited ("the Company") as of 31 March 2018 inconjunction with our audit of the Standalone Ind AS financial statements of the Companyfor the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls with reference to Ind AS financial statements based on the internalcontrols over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by The Institute of CharteredAccountants of India (ICAI). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to Ind AS financial statements based on our audit. We conductedour audit in accordance with the Guidance Note on Audit of Internal Financial Controlsover Financial Reporting (the "Guidance Note") and the Standards on Auditingissued by ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to financial statements was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial control system with reference to Ind AS financial statements andtheir operating effectiveness. Our audit of internal financial control with reference toInd AS financial statements included obtaining an understanding of internal financialcontrol with reference to Ind AS financial statements assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemwith reference to Ind AS financial statements.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control with reference to Ind AS financial statements isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to Ind AS financial statements includes those policies and procedures that:
a) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
b) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
c) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls with reference toInd AS financial statements to future periods are subject to the risk that the internalfinancial control with reference to Ind AS financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to Ind AS financial statements and such internalfinancial controls with respect to financial statements were operating effectively as at31 March 2018 based on the internal controls over financial reporting criteriaestablished by the Company considering the components of internal controls stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe ICAI.
For T R Chadha & Co LLP
Firm Regn No. 006711N / N500028
Date: 21st May 2018
Place: New Delhi