FORMING PART OF DIRECTORS' REPORT
A Brief Statement on Company's Philosophy on Code of Corporate Governance
The Philosophy of the Company in relation to Corporate Governance is to ensuretransparent disclosures and reporting that conforms fully to laws, regulations andguidelines, and to promote ethical conduct throughout the organization with the primaryobjective of enhancing shareholders' value while being a responsible corporate citizen.The Company firmly believes that any meaningful policy on Corporate Governance mustprovide empowerment to the executive management of the Company, and simultaneously createa mechanism of checks and balances which ensures that the decision-making power vested inthe executive management is used with care and responsibility to meet shareholders' andstakeholders' aspirations. The Company is committed to attain the highest standards ofCorporate Governance.
Board of Directors
The total strength of the Board as on 31st March, 2013, was thirteen Directors asdetailed herein below:
|S No ||Name ||Designation ||Category (Whole-time / Non-executive / Independent) |
|1 ||Shri Vivek Rae ||Chairman, Secretary, Govt. of India, (MOP&NG) ||Independent |
|2 ||Dr. A. K. Balyan ||Managing Director & CEO ||Whole-time |
|3 ||Shri R. K. Garg ||Director (Finance) ||Whole-time |
|4 ||Shri Rajender Singh ||Director (Technical) ||Whole-time |
|5 ||Shri B. C. Tripathi ||Director, Nominee of GAIL ||Non-executive |
|6 ||Shri R. K. Singh ||Director, Nominee of BPCL ||Non-executive |
|7 ||Shri Sudhir Vasudeva ||Director, Nominee of ONGC ||Non-executive |
|8 ||Shri A. M. K. Sinha ||Director, Nominee of IOCL ||Non-executive |
|9 ||Mr. Dominique PELLOUX-PRAYER ||Director, Nominee of GDF International ||Non-executive |
|10 ||Shri Tapan Ray ||Director, Nominee of GMB/GOG ||Independent |
|11 ||Shri B. C. Bora ||Director ||Independent |
|12 ||Shri Ashok Sinha ||Director ||Independent |
|13 ||Shri R. Ram Mohan ||Director, Lender's Nominee ||Independent |
During the year 2012-13, four Board Meetings were held on 24th April, 31st July, 19thOctober, 2012, and 13th January, 2013. The attendance of each Director in the BoardMeetings and the last Annual General Meeting is detailed herein below:
|Name of Directors ||Designation ||Number of Board Meetings held during the year 2012-13 ||Number of Board Meetings attended during the year 2012-13 ||Attendance at last Annual General Meeting held on 4th July, 2012 |
|Executive Directors || || || || |
|Dr. A. K. Balyan ||Managing Director & CEO ||4 ||4 ||yes |
|Shri R. K. Garg ||Director (Finance) ||4 ||4 ||yes |
|Shri C. S. Mani (upto 19th October, 2012) ||Director (Technical) ||4 ||3 ||yes |
|Shri Rajender Singh ( w.e.f. 14th November, 2012) || || ||1 ||NA |
|Non-executive Directors || || || || |
|Shri B. C. Tripathi ||Nominee Director of GAIL ||4 ||2 ||No |
|Shri R. K. Singh ||Nominee Director of BPCL ||4 ||2 ||No |
|Shri Sudhir Vasudeva ||Nominee Director of ONGC ||4 ||3 ||No |
|Shri A. M. K. Sinha ||Nominee Director of IOCL ||4 ||3 ||No |
|Mr. Dominique PELLOux-PRAYER *(Two Board meetings attended by Mr. Eric Ebelin as an Alternate Director) ||Nominee Director of GDF International ||4 ||4 ||No |
|Non-executive Independent Directors || || || || |
|Shri G. C. Chaturvedi (upto 31st January, 2013) ||Chairman ||4 ||3 ||yes |
|Shri Vivek Rae (w.e.f. 21st February, 2013) || || ||NIL ||NA |
|Shri Tapan Ray ||Independent Director ||4 ||2 ||No |
|Shri B. C. Bora ||Independent Director ||4 ||4 ||yes |
|Shri Ashok Sinha ||Independent Director ||4 ||4 ||yes |
|Shri R. Ram Mohan (w.e.f. 19th October, 2012) ||Independent Director ||4 ||1 ||NA |
Detail of Directorship / Membership / Chairmanship on the Board / Committees of theother Companies and Shareholding in the Company as on 31.03.2013
|Name || |
No. of other Companies in which Directorship / Chairmanship is held
No. of Membership / Chairmanship held in Committees of Board of other Companies
|No. of Shares held in the Company |
| ||Directorship ||Chairmanship ||Membership ||Chairmanship || |
|Shri Vivek Rae ||NIL ||1 ||NIL ||NIL ||NIL |
|Dr. A. K. Balyan ||2 ||NIL ||NIL ||NIL ||400 |
|Shri R. K. Garg ||2 ||NIL ||NIL ||NIL ||5300 |
|Shri Rajender Singh ||NIL ||NIL ||NIL ||NIL ||NIL |
|Shri B. C. Tripathi ||NIL ||4 ||1 ||NIL ||NIL |
|Shri R. K. Singh ||1 ||5 ||NIL ||1 ||400 |
|Shri Sudhir Vasudeva ||NIL ||7 ||NIL ||NIL ||800 |
|Shri A. M. K. Sinha ||1 ||1 ||NIL ||NIL ||600 |
|Mr. Dominique PELLOlix-PRAYER ||1 ||NIL ||NIL ||NIL ||NIL |
|Shri Tapan Ray ||11 ||1 ||3 ||2 ||NIL |
|Shri B. C. Bora ||1 ||NIL ||NIL ||NIL ||NIL |
|Shri Ashok Sinha ||2 ||NIL ||2 ||Nil ||NIL |
|Shri R. Ram Mohan ||NIL ||NIL ||NIL ||NIL ||NIL |
As per Clause 49, the above details are required to be disclosed only for the followingthree committees:
1 Audit Committee
2 Shareholders/Investors Grievance Committee
3 Remuneration Committee
Remuneration paid to Whole-time Directors and to Non-executive Directors during theyear ended 31st March, 2013
The remuneration to Whole-time Directors is being paid as per terms of theirappointment. The Company pays remuneration by way of salary, perquisites, allowances andcommission to Whole-time Directors. The commission is calculated with reference to profitsof the Company in a particular year and is determined by the Board and Shareholders,subject to overall ceiling as prescribed in the Companies Act, 1956.
The details of remuneration paid to the Whole-time Directors during the year are statedherein below:
|S. No. ||Name ||Designation ||Salaries & Allowances ||Contribution to PF & Gratuity Fund ||Other Benefits & Perks ||Commission payable on Profit for the year 2012-13 ||Total |
|1 ||Dr. A. K. Balyan ||Managing Director & CEO ||50,82,552 ||2,89,548 ||6,22,429 ||20,00,000 ||79,94,529 |
|2 ||Shri C. S. Mani ||Director (Technical) (upto 19th October, 2012) ||30,18,243 ||7,04,091 ||15,34,806 ||11,06,849 ||63,63,989 |
|3 ||Shri R. K. Garg ||Director (Finance) ||38,51,363 ||2,01,701 ||7,03,904 ||20,00,000 ||67,56,968 |
|4 ||Shri Rajender Singh ||Director (Technical) (w.e.f. 14th November, 2012) ||12,58,444 ||69,048 ||2,18,992 ||7,56,164 ||23,02,648 |
The details of the sitting fees paid to Non-executive Directors or their nominatedOrganization / Company during the year ended 31st March, 2013, is as detailed below:
|S. No. ||Name ||Sitting Fees paid during 2012-13 (Rs.) |
|1 ||Mr. Dominique Pelloux - Prayer/ Mr. Eric Ebelin ||1,00,000 |
|2 ||Government of India ||80,000 |
|3 ||Bharat Petroleum Corporation Ltd. ||80,000 |
|4 ||Oil & Natural Gas Corporation Ltd. ||1,20,000 |
|5 ||Indian Oil Corporation Ltd. ||1,80,000 |
|6 ||GAIL (India) Ltd. ||60,000 |
|7 ||Gujarat Maritime Board ||40,000 |
|8 ||Shri B. C. Bora ||2,00,000 |
|9 ||Shri Ashok Sinha ||2,20,000 |
|10 ||Shri R. Ram Mohan (w.e.f. 19th October, 2012) ||20,000 |
*Alternate Director to Mr. Dominique Pelloux-Prayer
In addition to the above, Commission on Profits is also payable to the followingIndependent Directors:
|S. No. ||Name ||Commission payable on Profit for the year 2012-13 (Rs.) |
|1 ||Shri B. C. Bora ||7,50,000 |
|2 ||Shri Ashok Sinha ||7,50,000 |
Terms of appointment of Whole-time Directors
The Company has the following Whole-time Directors as on 31st March, 2013:
1. Dr. A. K. Balyan, Managing Director & CEO
2. Shri R. K. Garg, Director (Finance)
3. Shri Rajender Singh, Director (Technical)
The initial tenure of Whole-time Director(s) is for a period of five years w.e.f. theirrespective date of appointment. However, the tenure of Whole-time Directors may further beextended by re-appointing them, subject to approval by Members in the Annual GeneralMeeting.
The appointment of Whole-time Directors is subject to termination by a three-monthnotice in writing by either party.
The Audit Committee comprises the following Directors as on 31st March, 2013:
1 Shri Ashok Sinha, Chairman
2 Shri B. C. Bora, Member
3 Shri A. M. K. Sinha, Member
4 Shri R. Ram Mohan, Member
All the Members of Audit Committee are Non-executive Directors and three out of fourMembers are Independent Directors, namely Shri Ashok Sinha, Shri B. C. Bora and Shri R.Ram Mohan. The quorum of the Audit Committee is two Members.
The Chairman of the Audit Committee also attended the last Annual General Meeting ofthe Company held on 4th July, 2012.
The Company Secretary is the Secretary of the Audit Committee.
Detail of Meetings of Audit Committee held during the year
|Member ||No. of Meetings Held ||No. of Meeting Attended |
|Shri Ashok Sinha ||4 ||4 |
|Shri B. C. Bora ||4 ||4 |
|Shri A. M. K. Sinha ||4 ||3 |
|Shri R. Ram Mohan, Independent Director (Appointed as member w.e.f. 13th January, 2013) ||4 ||Nil |
Terms of Reference of Audit Committee
The primary function of the Audit Committee is to assist the Board of Directors infulfilling its oversight responsibilities by reviewing the financial reports and otherfinancial information provided by the Company to any Government Body or to the investorsor the public; the company's system of internal controls regarding finance, accounting andlegal compliances that the Management and the Board have established.
The terms of reference of Audit Committee include inter-alia the following:
Oversee the Company's financial reporting process and disclosure of itsfinancial information to ensure that the financial statement is correct, sufficient andcredible.
Recommending the appointment and removal of statutory and internal auditors(wherever required), fixation of audit fee and also approval for payment for any otherservices.
Reviewing with the Management the quarterly, half-yearly and the annualfinancial statements before submission to the Board, focusing primarily on:
- Any changes in accounting policies and practices.
- Major accounting entries based on exercise of judgment by the Management.
- The going-concern assumption.
- Compliance with accounting standards.
- Compliance with Stock Exchange(s) and Legal requirements concerning financialstatements.
- Any related party transactions, i.e. transactions of the Company of material nature,with Promoters or the Management, or relatives etc. that may have potential conflict withthe interest of the Company at large.
Reviewing with the Management, statutory and internal auditors, the adequacy andcompliance of internal control systems.
Reviewing the adequacy of internal audit function, reporting structure coverageand frequency of internal audit.
Discussion with internal auditors about any significant findings and follow-upthereon.
Reviewing the findings of any internal investigations by the internal auditorsinto matters where they are suspected of any fraud or irregularity or a failure ofinternal control systems of a material nature and reporting the matter to the Board.
Discussion with statutory auditors about the scope of audit as well as havepost-audit discussion to ascertain any area of concern.
Reviewing the company's financial and risk-management policies.
Shareholders' / Investors' Grievance Committee
As on 31st March, 2013, the Shareholders'/Investors' Grievance Committee comprises thefollowing Directors:
1 Shri Ashok Sinha, Chairman
2 Shri A. M. K. Sinha, Member
3 Shri R. K. Garg, Member
4 Shri Rajender Singh*, Member
The Company Secretary is the Compliance Officer of the Company.
One Meeting of the Shareholders'/Investors' Grievance Committee was held on 13thJanuary, 2013 which was attended by all the memebers of the committee.
* (Appointed as member w.e.f. 13th January,2013)
Details of Complaints received and redressed during the year ended 31st March, 2013
2 complaints were pending as on 1st April, 2012. 1,206 complaints were received and1,203 complaints were resolved during the year. Only 5 complaints were pending as on 31stMarch, 2013.
Share Transfer Committee
The Share Transfer Committee was constituted to deal with the cases likere-materialization of shares, transfer, transposition and splitting of shares in physicalmode. The Share Transfer Committee comprises Whole-time Directors, namely,
1 Dr. A. K. Balyan, Managing Director & CEO
2 Shri R. K. Garg, Director (Finance)
3 Shri Rajender Singh, Director (Technical)
Dr. A. K. Balyan, Managing Director & CEO, is the Chairman of the Committee.
The Remuneration Committee was constituted by the Board to determine the RemunerationPackage for Executive Directors. The following Directors are the Members of theRemuneration Committee as on 31st March, 2013:
1. Shri Ashok Sinha, Chairman
2. Shri B. C. Bora, Member
3. Shri Sudhir Vasudeva, Member
One meeting of the Remuneration Committee was held on 24th April, 2012.
Risk Assessment & Minimisation Procedure
The Company has laid down procedures to inform the Members of the Board about the riskassessment and minimization procedure. A Risk Management Committee consisting ofWhole-time Directors periodically reviews the procedures to ensure that ExecutiveManagement controls risk through properly defined framework. The risk assessment frameworkencompassed, inter-alia, methodology for assessing risks on ongoing basis, riskprioritization, risk mitigation, monitoring plan and comprehensive reporting system.
Legal Compliance Reporting
As required under Clause 49 of the Listing Agreement, the Board periodically reviewscompliances of various laws applicable to the Company.
Annual General Meetings (AGMs)
The details of last three Annual General Meetings are as mentioned below:
|Year ||2009-10 ||2010-11 ||2011-12 |
|Date & Time ||24th June, 2010 at 10:00 AM. ||30th June, 2011 at 10:00 AM. ||4th July, 2012 at 10:00 AM |
|Venue ||Air Force Auditorium, Subroto Park, Dhaula Kuan, New Delhi-110010 ||Air Force Auditorium, Subroto Park, Dhaula Kuan, New Delhi-110010 ||Air Force Auditorium, Subroto Park, Dhaula Kuan, New Delhi-110010 |
|Details of Special Resolutions ||1) Appointment of Statutory Auditors ||1) Appointment of Statutory Auditors ||1) Appointment of Statutory Auditors |
| ||2) Amendment of Articles of Association ||2) Approval for payment of Commission on profit to Directors ||2) Approval for Employee Stock Option Scheme |
|Resolutions passed through Postal Ballot ||Nil ||Nil ||Nil |
Extraordinary General Meeting(s) (EGMs)
During the year 2012-13, no Extraordinary General Meeting of the Members of the Companywas held.
During the year 2012-13, no material transactions with the Directors or the Management,their subsidiaries or relatives etc. have taken place, which have potential conflict withthe interest of the Company.
There has been no non-compliance of the provisions/requirements of StockExchanges/SEBI. No penalties/strictures have been imposed on the Company by the StockExchanges or SEBI or any other statutory authority on any matter relating to the CapitalMarket.
Means of Communication
The Company's website (www.petronetlng.com) has updated details about the Company, itsproject status, Shareholding pattern on quarterly basis, etc. The financial results arebeing posted on the Company's website. The Company also has an exclusive e-mail ID(email@example.com) for investors to contact the Company in case of anyinformation and grievances. The financial results were also published in National DailyNewspapers in terms of Listing Agreement.
General Shareholders Information Annual General Meeting (AGM)
|Day & Date ||4th July, 2013 |
|Time ||10:00 AM |
|Venue ||Air Force Auditorium, Subroto Park, Dhaula Kuan, New Delhi-110010 |
|Date of Book Closure ||24th June, 2013, to 4th July, 2013 (Both days inclusive) |
Dividend Payment Date
The dividend, if approved by the Members of the Company, will be paid on or after 16thJuly, 2013.
Petronet LNG Ltd. follows the financial year from April to March. The Un-auditedFinancial Results for the first three quarters and the Audited Financial Results for theyear ended 31st March, 2013, were taken on record and approved by the Board in itsmeeting(s) held on the following dates:
|Quarter Ended ||Date of Board Meeting |
|April - June, 2012 ||31st July, 2012 |
|July - September, 2012 ||19th October, 2012 |
|October-December, 2012 ||13th January, 2013 |
|Year Ended || |
|31st March, 2013 ||30th April, 2013 |
Listing on Stock Exchange(s)
|Name of Stock Exchanges ||Stock Code |
|The Stock Exchange, Mumbai (BSE) ||532522 |
|The National Stock Exchange of India Limited (NSE) ||PETRONET |
Market Price Data: High and Low during each month in the last financial year
|Month ||BSE (in Rs.) ||NSE (in Rs.) |
| ||High ||Low ||High ||Low |
|April, 2012 ||175.00 ||135.20 ||174.90 ||135.00 |
|May, 2012 ||145.25 ||122.25 ||145.35 ||122.00 |
|June, 2012 ||149.50 ||125.40 ||149.80 ||125.30 |
|July, 2012 ||150.65 ||139.55 ||150.80 ||139.25 |
|August, 2012 ||155.45 ||144.60 ||155.40 ||144.55 |
|September, 2012 ||172.95 ||152.20 ||172.65 ||150.65 |
|October, 2012 ||171.20 ||157.50 ||180.00 ||157.25 |
|November, 2012 ||175.15 ||153.90 ||175.35 ||153.65 |
|December, 2012 ||165.70 ||153.55 ||165.70 ||157.00 |
|January, 2013 ||168.80 ||150.90 ||168.70 ||150.55 |
|February, 2013 ||156.20 ||140.00 ||156.30 ||139.60 |
|March, 2013 ||150.80 ||127.15 ||150.75 ||126.75 |
Distribution Schedule as on 31st March, 2013
|Category (Amount) ||No. of Cases ||% of Cases ||Total Shares ||Amount in Rs. ||% of Amount |
|Up to - 5000 ||3,26,964 ||89.51 ||5,06,24,071 ||50,62,40,710 ||6.75 |
|5001 - 10,000 ||24,974 ||6.84 ||1,95,93,154 ||19,59,31,540 ||2.61 |
|10,001 - 20,000 ||8,381 ||2.29 ||1,23,04,032 ||12,30,40,320 ||1.64 |
|20,001 - 30,000 ||1,923 ||0.53 ||49,29,379 ||4,92,93,790 ||0.66 |
|30,001 - 40,000 ||821 ||0.22 ||29,30,880 ||2,93,08,800 ||0.39 |
|40,001 - 50,000 ||602 ||0.16 ||28,47,433 ||2,84,74,330 ||0.38 |
|50,001 - 1,00,000 ||813 ||0.22 ||58,97,181 ||5,89,71,810 ||0.79 |
|1,00,001 & Above ||838 ||0.23 ||65,08,73,914 ||6,50,87,39,140 ||86.78 |
|TOTAL ||3,65,316 ||100.00 ||75,00,00,044 ||7,50,00,00,440 ||100.00 |
Shareholding Pattern of the Company as on 31st March, 2013
|Category ||No. of Shares Held ||% of Shareholding |
|A Promoter's holding || || |
|1 Promoters || || |
| Indian Promoters ||37,50,00,000 ||50.00 |
| Foreign Promoters ||Nil ||Nil |
|Sub- Total (A) ||37,50,00,000 ||50.00 |
|B Non- Promoters holding || || |
|1 Institutional Investors || || |
|a Mutual Funds and IITI ||6,72,80,381 ||8.97 |
|b Banks, Financial Institutions ||1,50,953 ||0.02 |
|c Insurance Companies / Central / State Govt. Institutions / Non-government Institutions / Venture Capital Funds ||1,40,000 ||0.02 |
|d FII's (Including ADB holding) ||10,26,46,886 ||13.69 |
|Sub-Total (B1) ||17,02,18,220 ||22.70 |
|2 Others || || |
|a Private Corporate Bodies ||1,78,19,673 ||2.38 |
|b Indian Public including HUF and Foreign Nationals ||10,63,62,860 ||14.18 |
|c NRI's / OCB's (Including GDFI) ||7,89,29,492 ||10.52 |
|d Any other (Clearing Members & Trusts) ||16,69,799 ||0.22 |
|Sub-Total (B2) ||20,47,81,824 ||27.30 |
|GRAND TOTAL (A+B1+B2) ||75,00,00,044 ||100.00 |
List of Shareholders Holding More than 1% of Equity Capital as on 31st March, 2013
|Name ||No. of Shares Held ||% of Shareholding |
|Promoter's Holding || || |
|Bharat Petroleum Corporation Ltd. ||9,37,50,000 ||12.50 |
|GAIL (India) Ltd. ||9,37,50,000 ||12.50 |
|Indian Oil Corporation Ltd. ||9,37,50,000 ||12.50 |
|Oil & Natural Gas Corporation Ltd. ||9,37,50,000 ||12.50 |
|Non-promoters Holding || || |
|GDF International ||7,50,00,000 ||10.00 |
|Asian Development Bank ||3,90,00,000 ||5.20 |
Detail of Unclaimed Shares as on 31.03.2013 issued pursuant to Initial Public Offer(IPO)
|S. No. ||Particulars ||Cases ||No. of shares |
|1 ||Aggregate Number of shareholders and the outstanding shares in the suspense account (i.e. KCL ESCROW ACCOuNT PETRONET LNG IPO-OFFER) lying at the beginning of the year i.e. 1st April, 2012. ||649 ||1,32,700 |
|2 ||Number of shareholders who approached for transfer of shares from suspense account during the year. ||2 ||300 |
|3 ||Number of shareholders to whom shares were transferred from suspense account during the year. ||1 ||200 |
|4 ||Aggregate number of shareholders and outstanding shares in the suspense account at the end of year, i.e. 31st March, 2013. ||648 ||1,32,500 |
Code of Conduct for Board Members & Senior Management Personal
The Board of Directors of the Company approved Code of Conduct for Board Members &Senior Management Personnel and the same was made effective from 1st April, 2006. A copyof the same has also been hosted on the website of the Company. All the Board Members andSenior Management Personnel have affirmed compliance with the said Code for the year ended31st March, 2013.
A certificate from the Managing Director & CEO and Director (Finance) on thefinancial Statements of the Company in terms of Clause 49 of Listing Agreement was placedbefore the Board, who took the same on record.
Related Party Transactions
The details of all significant transactions with related parties are periodicallyplaced before Audit Committee.
Reconciliation of Share Capital Audit
A qualified practicing Company Secretary carried out a Reconciliation of Share CapitalAudit on quarterly basis to reconcile the total Share Capital with National SecuritiesDepository Limited (NSDL), Central Depository Services Limited (CDSL) and the total issuedand listed capital. The audit confirms that the total issued/paid-up capital is inagreement with total number of shares in physical forms and total number of dematerializedshares held with NSDL and CDSL.
Status of Corporate Governance Voluntary Guidelines 2009
The voluntary guidelines issued by Ministry of Corporate Affairs in December 2009,pertaining to Corporate Governance are complied with to the extent found feasible.
|Major Plant / Unit Location(s) || |
|Dahej LNG Terminal ||Kochi LNG Project Site |
|GIDC Industrial Estate, ||Survey No. 347, |
|Plot No 7/A, Dahej, ||Puthuvypu (Puthuypeeen SEZ), |
|Taluka: Vagra, Distt. Bharuch, ||P.O. 682508, Kochi, |
|Gujarat - 392130 ||Kerala |
|Tel : 02641-253182/257004-257007 ||Tel: 0484-2502259 |
|Fax: 02641-253179/300310 ||Fax : 0484-2502264 |
|Address for Correspondence || |
|Registered & Corporate Office ||Registrar & Share Transfer Agent |
|Petronet LNG Limited ||M/s Karvy Computershare Pvt. Limited |
|World Trade Centre, First Floor, ||Plot No. 17 to 24, |
|Babar Road, Barakhamba Lane, ||Vittal Rao Nagar, |
|New Delhi - 110 001 ||Madhapur, Hyderabad - 500081 |
|Tel: 011- 23472525, 23411411 ||Tele: 040-23312454,23320751/52 |
|Fax: 011- 23472550 ||Fax: 040-23311968,23323049 |
|Email: firstname.lastname@example.org || |
Auditors' Certificate on Compliance with the conditions of Corporate Governanceunder clause 49 of the Listing Agreements
To the Shareholders of Petronet LNG Limited
1. We have examined the compliance of conditions of Corporate Governance by PetronetLNG Limited ("the Company") for the year ended March 31st, 2013 as stipulated inclause 49 of the Listing Agreements of the said company with Stock Exchanges in India.
2. The compliance of conditions of Corporate Governance is the responsibility of theCompany's management. Our examination was limited to the review of procedures andimplementation thereof, adopted by the Company or ensuring the compliance of theconditions of Corporate Governance. It is neither an audit nor an expression of opinion onthe financial statements of the Company.
3. In our opinion and to the best of our information and according to the explanationsgiven to us, we certify that the Company has complied with the conditions of CorporateGovernance as stipulated in the above mentioned Listing Agreement.
4. We further state that such compliance is neither an assurance as to the futureviability of the Company nor the efficiency or effectiveness with which the management hasconducted the affairs of the Company.
| ||For T.R. Chadha & Co. |
| ||Chartered Accountants |
| ||(Firm Registration No. 006711N) |
| ||Sd/- |
| ||Neena Goel |
|Place : New Delhi ||Partner |
|Date : 29th May, 2013 ||M.N.057986 |
BUSINESS RESPONSIBILITY REPORT
|Section 1: About our Company || |
|1. Corporate Identity Number (CIN) of the Company ||: L74899DL1998PLC093073 |
|2. Name of the Company ||: Petronet LNG Ltd.(PLL) |
|3. Registered address ||: World Trade Centre, First Floor, Babar Road, Barakhamba Lane, New Delhi - 110 001 |
|4. Website ||: http://www.petronetlng.com |
|5. E-mail id ||: email@example.com |
|6. Financial Year reported ||: April 2012 - March 2013 |
|7. Sector that the Company is engaged in ||: Oil & Gas |
|8. Product provided by the Company ||: Regasified Liquefied Natural Gas (LNG) |
|9. Total number of locations where business activity is undertaken by the Company: || |
|a. International Locations ||: Qatar (primarily) and various other countries of the world (for sourcing of LNG) |
|b. National Locations ||: Dahej in Gujarat, Kochi in Kerala and New Delhi. |
|10. Markets served by the Company ||: Pan-India |
|Section 2: Our financial details || |
|1. Paid up capital (INR) ||: 750 crores |
|2. Total turnover (INR) ||: 31,649 crores |
|3. Total profit after taxes (INR) ||: 1,149 crores |
|4. Total spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%) ||: 0.32% |
|5. Activities in which CSR expenditure has been incurred || |
| Community Development || Healthcare |
| Education || Water Management |
| Disaster relief || Sports and Culture |
| Fostering Entrepreneurship || |
|Section 3: Other details || |
|Subsidiary companies ||: The Company does not have any subsidiary Company. |
Section 4: BR information
1. Details of Director/Directors responsible for Business Responsibility
a. Details of the Director/Directors responsible for implementation of the BRpolicy/policies
|i. DIN Number ||: 00793181 |
|ii. Name ||: Dr. A. K. Balyan |
|iii. Designation ||: MD & CEO |
b. Details of the BR head
|S.No. ||Particulars ||Details |
|1. ||DIN Number ||00793181 |
|2. ||Name ||Dr. A. K. Balyan |
|3. ||Designation ||MD & CEO |
|4. ||Telephone number ||011 - 23472503 / 04 |
|5. ||e-mail id ||firstname.lastname@example.org |
Governance related to Business Responsibility
In our Company, compliance is the Board's responsibility and the members take it veryseriously, thus ensuring regular evaluation of the Company's sustainability performance.We have a Risk Management Committee to identify and mitigate all types of risks pertainingto the business of the Company. The Committee meets regularly to discuss various risks andmitigating factors for the same. The Board reviews and approves the annual business plans.The decisions on all strategic matters related to capital expenditure, revenue, etc. aretaken with the approval of the Board. It also discusses and deliberates on issuespertaining to risk management, safety performance, and monitors compliance to applicablestatutes and norms.
Our detailed sustainability performance will be published in our first SustainabilityReport - Partners of Clean Energy. This report will be available on our website from July,2013, onwards.
Nine Business Responsibility Principles
Principle 1: Businesses should conduct and govern themselves with Ethics, Transparencyand Accountability
As part of our Company's endeavor to set high standards of conduct for its employees, aCode of Business Conduct and Ethics has been laid down for all Board Members and SeniorManagement personnel. The Code, which was approved by the Board in 2006, encompassesgeneral moral imperatives, specific professional responsibilities, and additional duties /imperatives for the Board Members and Senior Management personnel. From 1st April, 2006,strict adherence to the Code has been mandatory for all. The Code reflects our thoroughbelief in maintaining the highest standards of business ethics, which takes into accountour business performance and its impact on society. All members have affirmed complianceto the Code in the reporting period. Besides being available on our website, copies of theCode are circulated to all the individuals concerned.
Corruption is one of the world's greatest challenges. It is a major hindrance tosustainable development and corrodes the very fabric of the society. Petronet LNG Ltd.(PLL) strongly believes in maintaining integrity and work ethics to protect not just thereputation of the Company but also the interests of its shareholders.
We have identified that the major potential source of corruption could be contractsawarded for construction of various facilities in an LNG Terminal. In order to mitigatethe risk, the EPC Sub-Committee of the Board, which is responsible for evaluating andrecommending large EPC contracts for Board approval, has an Independent Director as aMember. In addition to this, we also have safeguards in place in the tender documentswhich discourage bidders from indulging in any corrupt practice. In case of any such actof misconduct, it is within our rights to reject the bid or contract, as the case may be.
Further, to strengthen our commitment to anti-corruption practices and principles, wehave been a member of Global Compact Network (GCN) since the last three years. We havecommitted to the principles and practices of the Global Compact that includes the tenprinciples pertaining to human rights, labour standards, environment and anti-corruption.PLL has submitted its first Communication on Progress (CoP) for 2011-12 that details ourwillingness to actively support the efforts made by GCN.
As part of our mission statement, we believe in maintaining highest standard ofbusiness ethics and values.
Principle 2: Businesses should provide goods and services that are safe andcontribute to sustainability throughout their life cycle
At present, PLL deals primarily in one business segment: the import, storage andre-gasification of Liquefied Natural Gas (LNG). The product composition is dominated bymethane, with varying portions of ethane, propane and butane. Natural Gas is cooled tominus 160C to liquefy, which facilitates transportation. LNG is transported in cryogenictankers across seas to our terminal, where it is re-gasified and then distributed.
PLL has branded its product as" Taral3" -the new-age eco-friendlyfuel. It is proposed to be delivered to customers not connected with pipeline near ourTerminals.
Three LNG ships - 'Disha', 'Raahi' and 'Aseem', bring LNG from RasGas, Qatar, to Dahej,transporting the contracted quantity of 7.5 MMTPA of LNG. Further, 1.44 MMTPA will beimported from Australia.
Product responsibility forms the very basis of the existence of our Company. Ourproduct itself being clean energy, there are no sustainability challenges arising from theimpact of our product. Having said that, there have been no instances of complacency andPLL is committed to diligence when it comes to taking responsibility for our product,including its provision, transportation and use. We are entirely compliant with allexisting regulations and during the reporting period, have not paid any fine fornon-compliance.
While we ensure that there is minimal environmental impact from transporting LNG acrossIndia, sourcing from local suppliers is not a valid option, given the nature of theproduct. Further, the product doesn't produce any waste. Hence, recycling is also notapplicable.
Principle 3: Businesses should promote the wellbeing of all employees
We believe a Company is as good as its people. Given our constant drive for success,our employees form the most important part of our DNA. As on 31st March 2013, our totalemployee strength stands at 397. The detailed break-up of our workforce will be availablein our Sustainability Report.
We engage the services of contractors at our facilities. In FY 2012-13, 477 contractualworkers (annual average) were operating in our Dahej facility. Additionally, for theconstruction project of our second jetty at Dahej, we engaged the services of a contractorwho employed approximately 950 (annual average) personnel at the project site.
We look at collective bargaining as an employee's right and do not object to it in anyway. However, the culture of an organized employee union or association does not exist inour Company.
Child and forced labour
To eliminate any instance of child labour, we ensure strict adherence to the minimumage provisions of National Labour Laws and Regulations. Being a part of the hydrocarbonindustry, we have stringent rules for hiring. Forced labour too, holds similar stances onour part, culminating in a clearly defined exit policy and a zero-tolerance approach tothis violation of human rights.
Attracting, motivating, and retaining talented employees today, given the competitivemarket, is a major challenge we must give adequate importance to.
Through our training programs, we would like to benchmark and enhance competencieswhich will address workforce issues on which the Company could capture value and make atangible positive impact of a learning organization.
The number of hours spent on training for our employees in the reporting period (inman-hours) is as follows:
|Employee category ||FY 2012-13 |
| ||Male ||Female |
|Senior Management ||136 ||NA |
|Mid Management ||2483 ||82 |
|Junior Management ||5192 ||377 |
|GETs / PGETs ||592 ||131 |
|Staff ||4223 ||409 |
Further, PLL has a robust Quality, Health, Safety and Environment Policy which iscirculated and emphasized to all our employees to help inculcate a culture of safety onour premises.
Principle 4: Businesses should respect the interests of, and be responsive, towardsall stakeholders, especially those who are disadvantaged, vulnerable and marginalized.
We, at PLL, believe that stakeholder engagement plays a vital role in improvingsustainability performance. It enables a better understanding of the reasonableexpectations and interests of stakeholders, allowing the Company to better manage andrespond to their concerns. Interacting with stakeholders and responding to stakeholders'expectations and feedback on the organization's performance confer many benefits on thosethat undertake genuine stakeholder engagement. Engagement is not only a trust-buildingexercise, but can also give us a first-mover advantage in opportunities with relation tothe stakeholder groups consulted.
Stakeholder identification is about defining the different groups of individuals orinstitutions that affect, or are affected by PLL's business operations in some capacity.We have identified our stakeholders on the basis of the parameters of responsibility,influence, proximity, dependency and representation.
The Government, our shareholders, employees, suppliers, contractors, customers andcommunities are key stakeholders, amongst others.
Though not disadvantaged or vulnerable, communities operating in and around our DahejTerminal need some assistance for faster development and we, at PLL, have provided supportto facilitate the same.
In this context, we would like to mention an initiative in Luwara village situated nearour Dahej Terminal. We have contributed significantly to the overall development of thevillage, specifically focusing on primary healthcare. Our contribution in other schemes,like improving drinking water facilities, installing solar street lights, development ofschool infrastructure, etc., has also been significant.
Principle 5: Businesses should respect and promote human rights
Our policies related to human rights are all-encompassing and thorough. We expect allour contractors and suppliers to also follow them. Some of the policies are as follows:
It is the policy of the Company to provide employment opportunity, regardless ofrace, color, gender, religion, age, sexual orientation, national or ethnic origin,disability, marital status, veteran status, or any other occupationally irrelevantcondition.
The above policy applies to recruitment, hiring and job assignment, promotion,demotion and transfer, layoff or termination, rates of pay and benefits, selection fortraining and the provision of any other human resources service.
The continuing progress and vitality of the Company requires that we utilize allavailable human resources to the fullest. The continuing need for well-qualified personneldictates that individuals with talent must be recognized and encouraged to progress.
The Company treats its employees with fairness and is deeply interested in theirgrowth and development. The Company expects its employees to adhere to the establishedstandards of conduct and performance to enable all to work together to achieve theobjectives of the Company.
There have been no complaints regarding breach of human rights in the reporting year.
Principle 6: Business should respect, protect, and make efforts to restore theenvironment
Our Quality, Health, Safety, and Environment (QHSE) Policy is displayed at prominentlocations within our Dahej Terminal. We expect our employees, contractors and suppliers toadhere to the principles outlined in the policy.
At PLL, not only do we import cleaner fuel and propel India towards low carbon growth,we also ensure energy efficiency, water conservation and other environment friendlyactivities in our operations. We take our role in contributing to a better environmentseriously and assess all potential environmental risks of our operations.
Energy and emissions
Our primary energy sources are Natural Gas and Diesel. In 2012-13, 2.48 million GJ ofprimary energy was consumed in our operations. Natural Gas is the main fuel constitutingnearly 95% of the energy consumed. Captive power generation using Natural Gas contributes92.39 % of the total carbon dioxide emissions from our operations.
As our processes are already environmentally clean, we do not have any CleanDevelopment Mechanism (CDM) projects.
Our operations do not necessitate consumption of large quantities of water. Yet, wehave undertaken certain innovative measures to reduce water consumption in our operations.
We, at PLL, have robust waste management systems in place. All hazardous wastegenerated in our facility is responsibly disposed through authorized waste recyclers.
The Company has undertaken measures towards protecting the marine ecology in the areaof its operations.
All our emissions/waste, etc. are well within regulatory limits.
Details of our environmental performance will be available in our SustainabilityReport.
Principle 7: Businesses, when engaged in influencing public and regulatory policy,should do so in a responsible manner
For the past three years, we have been a part of the Global Compact Network. OurCompany is also a member of the Standing Conference of Public Enterprises (SCOPE) and theInternational Group of Liquefied Natural Gas Importers (GIIGNL). Our Senior Managementrepresents the Company in various industry forums. We understand our responsibility as aninfluential part of the economy and do not engage in influencing public policy with vestedinterests.
Principle 8: Businesses should support inclusive growth and equitable development
As a responsible corporate citizen of the country, PLL has dedicated itself wholly tothe betterment of India, through business, by providing clean energy, and through constantcommunity engagement. Socio-economic development programmes are undertaken by our Companyin order to meet the priority needs of the community we operate in, envisioningself-sustaining communities in the near future. We have designated CSR roles andresponsibilities to ensure thorough implementation of our plans. Spearheading it at theBoard level is our MD & CEO who is responsible for the overall CSR planning andimplementation.
At the Corporate level, the Head HR, in consultation with Executive Committee (EC), isresponsible for the formulation of plans and strategies, annual fund allocation, periodicmonitoring and evaluation of activities to be taken up by terminals, documentation, brandenhancement and active CSR involvement at the Corporate office.
Similarly at the Dahej Terminal, CSR is undertaken by the Plant Head, who isresponsible for identification of appropriate schemes, in consultation with concernedexecutives in the field, examination and consolidation of proposals, maintenance of datarecords, etc.
Further, we constantly motivate our employees to engage in the CSR schemes as avoluntary philanthropic contribution to the society we live in.
Our community initiatives
At the Corporate level, emphasis is laid on providing support for disaster reliefmanagement, water management, education, healthcare, promotion of sports, art and culture,entrepreneurship, environment, etc. Similarly, at the LNG terminals priority is given toeducation, healthcare including drinking water, environment and entrepreneurship schemes.
Each development project at PLL has a CSR component as a part of the project cost now.Since FY 2012-13, we have been allocating a certain part of our profit for CSR activities.We work closely with the local Gram Panchayat and District administration. A couple ofmajor schemes, such as sweet drinking water facilities for Bharuch and mangroveplantations for environmental development near Dahej, are under implementation incollaboration with the State Governments in which PLL has made substantial contribution.
Principle 9: Businesses should engage with and provide value to their customers andconsumers in a responsible manner
We, at PLL, follow the highest standards of business ethics while dealing with ourcustomers. Adherence to all laws pertaining to product labeling, branding and distributionis of utmost priority to us and we are fully compliant with each one of them. As of now,there are no instances of customer dissatisfaction.