On behalf of the Board of Directors it is our privilege and honour topresent the Twenty-Second Annual Report along with Audited Standalone and ConsolidatedFinancial Statements and Auditors' Report thereon for the financial year ended 31stMarch 2020.
During the year 2019-20 the world at large suffered with NovelCoronavirus (COVID-19). The Novel Coronavirus (COVID-19) has infected more than a millionpeople in more than 150 countries a scourge confronting all of humanity impactinglifestyles businesses economies and the assumption of common well-being that all of ushave largely taken for granted. Despite adverse circumstances the Company continued todeliver its best in its operations and also effectively contributed towards the society atlarge by undertaking various activities under corporate social responsibility.
The financial year 2019-20 saw the Company operating its Dahej Terminalat 17.25 million tonnes throughput as compared to 15.97 Million tonnes in the previousyear 2018-19. The demand for LNG was consistent throughout the year. During the financialyear 2019-20 the Dahej Terminal handled 263 LNG Cargoes and supplied 885.06 Trillion BTU(TBtu) of RLNG as compared to 241 cargoes during financial year 2018-19 wherein supplieswere 820.15 TBtu. During the financial year 2019-20 2598 LNG Road Tankers were alsoloaded and dispatched from Dahej Terminal and 290 Trucks from Kochi Terminal. Theutilization of Kochi Terminal remained low in the absence of pipeline network for gasevacuation. 12 Cargoes were handled at the Kochi Terminal during the financial year2019-20 as compared to 9 Cargoes (including loading) during the year 2018-19. During theyear 2019-20 Kochi terminal supplied 42.78 TBtus of RLNG as compared to 24.07 TBtusfinancial year 2018-19.
Three LNG ships namely Disha' Raahi' andAseem' carry the entire LNG volumes from RasGas under a long-term contract toDahej. Besides Japanese companies Shipping Corporation of India (SCI) is also an equitypartner in the ship-owning companies. All these ships are manned managed maintained andoperated by SCI. The ships operate on a long-term time charter basis with Petronet as thecharterer. The fourth LNG vessel Prachi' was delivered on 30th November 2016.The duration of the charter is 19 years. Besides Japanese Companies NYK MOL and K-LineShipping Corporation of India (SCI) is an equity partner in the ship-owning company. PLLhas taken 26% equity in this LNG ship. As is the case with the above mentioned first threeships the fourth ship is also being manned managed maintained and operated by SCI.Supply of LNG from Gorgon is now on delivered basis and "Prachi" has beennovated to Exxon Mobil.
PLL imports 7.5 MMTPA of LNG from Ras Laffan Qatar on FOB basisthrough its long term chartered LNG vessels Disha
Raahi and Aseem. The duration of the charter is 25 years for eachvessel. These vessels are owned by a consortium of M/s NYK Line M/s K-Line M/s MOL andM/s SCI Ltd. The technical management manning and operations are carried out by M/s SCILtd. Supply of LNG from Gorgon Australia is now on DES basis and under this agreement ourfourth long term chartered LNG vessel "Prachi" has been novated to Exxon Mobil.Prachi is owned by a consortium of M/s NYK Line M/s K-Line M/s MOL and M/s SCI Ltdincluding PLL with 26% equity. The technical management manning and operations of Prachiis also carried out by M/s SCI Ltd. During FY 2019-20 the overall shipping operationshave run smoothly and the jetty utilization has been optimized without any downtime. LNGvessel Aseem had a contact damage in the month of March 2019 and was not in service for aperiod of about two & half months. LNG vessel Disha was not in service for a period ofabout two months due to a breakdown. Cargoes of these vessels were transported by hiringsubstitute LNG vessels from market without incurring any downtime or commercial loss toPLL.
DAHEJ LNG TERMINAL
Dahej Terminal which now has name plate capacity 17.5 MMTPA operated atabout 17.25 MMTPA capacity utilization during the FY 2019-20. Your Company has addedRegasification Capacity of 2.5 MMTPA at Dahej Terminal in the month of June 2019 and totalRegasification Capacity of Dahej Terminal has now been enhanced to 17.5 MMTPA.Accordingly Dahej Terminal is now catering higher gas demand and its share of gassupplies has consequently increased in the energy mix of India. The additionalRegasification unit for enhancing the Regasification Capacity has been added at anapproximate cost of Rs. 415 crore without raising any external debt. Your Company is alsoplanning seventh and eighth LNG Tanks. Also feasibility study for a standby third jettyhas started which will enhance reliability of LNG ship receiving.
KOCHI LNG TERMINAL
During the year the Kochi Terminal of name plate capacity 5 MMTPAoperated at average capacity utilization of about 17%. BPCL-Kochi Refinery and FACT plantwere the only major consumers throughout the FY 2019-20. Off-take of RLNG from KochiTerminal is expected to increase in FY 2020-21 in view of RLNG evacuation pipelineconnectivity to Mangalore likely to get completed. RLNG evacuation pipeline to Mangaloreis almost completed and expected to commission soon. Taral' LNG suppliescontinued with trucks to various consumers not connected on pipeline. LNG Dispensingfacility was also commissioned and LNG filling in bus started for trial running.
During the financial year 2019-20 your Company achieved a turnover ofRs. 35452 Crore as against Rs. 38395 Crore in 2018-19. The net profit during the yearstood at Rs. 2698 Crore as against Rs. 2155 Crore in the previous year. A summary of thecomparative financial performance in the fiscal 2019-20 and 2018-19 is presented below:
| || ||(Rs. in crore) |
|Particulars ||2019-20 ||2018-19 |
|Revenue from operations ||35452 ||38395 |
|Other Income ||373 ||450 |
|Total Revenue (A) ||35825 ||38845 |
|Salary & Other operating expenses ||31463 ||35102 |
|Finance Charges ||403 ||99 |
|Depreciation ||776 ||411 |
|Total Expenses (B) ||32642 ||35612 |
|Profit before exceptional item and tax ||3183 ||3233 |
|Exceptional Items ||72 ||- |
|Profit before tax ||3111 ||3233 |
|Tax expenses including deferred tax ||413 ||1078 |
|Profit after tax ||2698 ||2155 |
|Earnings (Rs.) per Share* ||17.98 ||14.37 |
The Board of Directors of your Company has recommended a final dividendof Rs. 7 per equity share of Rs. 10/- each i.e. 70% of the paid-up Share Capital of theCompany as on 31st March 2020. This is in addition to Special Interim Dividend of Rs.5.50 per equity share of Rs. 10/- each paid by the Company in November 2019. This is the14th consecutive year for which your Company has recommended payment of dividend. Thefinal dividend shall be paid to the members whose names appear in the Register of Membersas well as the Beneficial Ownership Position provided by NSDL/CDSL as at the close ofbusiness hours on 16th July 2020 (Record date).
The Board of your Company has formulated a Dividend Distribution Policy("The Policy"). The Policy is annexed to this Report and is also available onour website www.petronetlng.com.
CHANGES IN SHARE CAPITAL
There was no change in the Share Capital of the Company during theyear. The Company has Authorised Share Capital of the Company of Rs. 30000000000/-(Rupees Three Thousand Crore) divided into 3000000000 (Three Hundred Crore) EquityShares of face value of Rs. 10/- (Rupees Ten) each and Paid-up Share Capital of Rs.15000000880/- (Rupees One Thousand Five Hundred Crore Eight Hundred Eighty) dividedinto 1500000088 (One Hundred Fifty Crore Eighty Eight) Equity Shares of face value ofRs. 10/- (Rupees Ten) each.
FINANCING OF PROJECTS
Given the strong cash flows of the Company the expansion of the Dahejproject and other capital expenditure was funded entirely with the internal accrualswithout the need to draw any debt. The relationship with the existing lenders continues tobe good.
NEW BUSINESS INITIATIVES
LNG TERMINAL AT BANGLADESH PROJECT
Your company has submitted an Expression of Interest to the REOI(request for expression of interest) floated by Rupantarita Prakritik Gas Company Limited(RPGCL) a subsidiary of Petrobangla for construction of Land-based LNG Re-gasificationTerminal at Matarbari Cox's Bazar Bangladesh on build own operate and transferbasis. RPGCL is currently in the process of shortlisting the Expression of Interest (s)received from international companies.
LNG TERMINAL & RLNG SUPPLY IN SOUTH ANDAMAN
Your company has completed pre-project studies for a floating storage& regasification (FSRU) terminal in South Andaman. Based on the studies a DetailedFeasibility Report (DFR) was prepared & submitted to Andaman & NicobarAdministration. As Ministry of Power has awarded the 50MW RLNG based power plant to NTPCon nomination your company is planning to bid for their Gas supply tender (issued inSept' 2019) bid submission is expected in the next financial year.
LNG TERMINAL IN SRI LANKA
Your Company has completed the Pre-Feed studies along with JapaneseConsortium and Sri Lanka Gas Terminal Company Limited for setting up a Floating Storage& Regasification Terminal at Colombo Sri Lanka. The Company is now conducting theFEED studies. The Environmental Clearance for the project is also progressing and publiccomments are responded. Discussion on definitive agreement such as terminal use agreementLNG sale and purchase agreement implementation agreement etc. regarding the project havestarted.
LNG AS AN AUTOMOTIVE FUEL
As a responsible corporate citizen and in a step towards meetingIndia's COP-21 commitment your Company is taking up initiatives to develop the smallscale LNG market in the Country and has been promoting the environment friendly LNG as afuel in Road transportation. Your Company had done discussions and deliberation withMinistry of Road Transportation and Highways (MORTH) and Ministry of Commerce andIndustries (MOCI) for inclusion of LNG as an automotive fuel in Central Motor VehicleRules (CMVR) and for inclusion of LNG dispensing stations development regulation in Staticand Mobile Pressure vessel rules (SMPV). With the efforts of your Company both theseregulations are in place now and a new doorway is opened in Indian market for LNG as acleaner transportation fuel.
Your Company has commissioned India's first LNG dispenser stationsinside Dahej and Kochi LNG terminals and has also commissioned the first commerciallyapproved and registered LNG powered buses of the Country for employee's movement atboth places. Your Company has prepared a business plan based on traffic study on IndianRoads and decided to develop LNG corridors covering major National Highways of India. YourCompany is developing western and southern highways expeditiously as a pilot project. YourCompany has partnered up with various CGD players and OMCs to jointly develop theseLNG/LCNG dispensing stations in their area. The recent clarification by PNGRB on settingup of LNG dispensing stations in various CGD Geographical Areas will pave the way forcreation of LNG corridors across the country.
HEALTH SAFETY & ENVIRONMENT (HSE)
Both Dahej and Kochi terminals continue to operate safely without anymajor incident. Your Company is committed to conduct business with a strong environmentconscience ensuring sustainable development safe workplaces and enrichment of thequality of life of its employees customers and the community at large. Compliance withsafety systems and procedures and environmental laws is monitored by the Company. TheCompany is having well defined policy for Health Safety & Environment. Your Companyis committed to fight against novel COVID-19. Your Company has taken numerous steps bothat Company and community levels including sanitization works quarantine cycles foremployees/ contract workers. Employee at Corporate Office are allowed to work from home inlock-down. Your team is taking various initiatives to interact with the employees in bothplants and employees under quarantine at hotel/home. Your Company is extending everysupport to its employees and their families in this difficult time. Motivational speechand addresses are being imparted by eminent personalities like Dr. C.B. Satpathy. A groupof female employees have been assigned the responsibility of interacting with femaleemployees or spouses of employees for inquiring their well-being and offering medicalsupport which your Company can complement.
DETAILS OF SUBSIDIARY/ JOINT VENTURES / ASSOCIATE COMPANIES
1) Adani Petronet (Dahej) Port Private Ltd.
A Solid Cargo Port through a Company named Adani Petronet (Dahej) PortPrivate Ltd. had commenced its operations in August 2010 at the Dahej Port. Solid CargoPort Terminal has facilities to import/export bulk products like coal steel andfertilizer. PLL has a 26% equity in this Solid Cargo Company and the balance equity isheld by the Adani group.
Performance and Financial Position of Solid Cargo Joint Venture (JV)Company
| || ||(Rs. In Lakhs) |
|Particulars ||For the year ended 31st March 2020 ||For the year ended 31st March 2019 |
|Revenue from operations ||32889 ||42102 |
|Profit/ (loss) from continuing operations ||7772 ||21190 |
|Other comprehensive income ||(177) ||(202) |
|Total comprehensive income ||7595 ||20988 |
|Company's share of total comprehensive income (26%) ||1974 ||5456 |
2) India LNG Transport Co. (No. 4) Pvt. Ltd. (ILT4')
India LNG Transport Co. (No. 4) Pvt. Ltd. (ILT4') is jointventure of your Company with 26% ownership interest. ILT4 is the owner of vessel MT Prachiand is primarily engaged in transportation of LNG. It is one of the Company'sstrategic investments and has the principal place of business in Singapore.
Performance and Financial Position of ILT4
| || ||(Rs. In Lakhs) |
|Particulars ||For the year ended 31st Dec 2019 ||For the year ended 31st Dec 2018 |
|Revenue from operations ||16671 ||18823 |
|Profit/ (loss) from continuing operations ||(2097) ||9437 |
|Other comprehensive income ||- ||- |
|Total comprehensive income ||(2097) ||9437 |
|Company's share of total comprehensive income (26%) ||(545) ||2454 |
3) Petronet LNG Foundation
Petronet LNG Foundation a Company Limited by Guarantee has beenpromoted by the Company under the provisions of Section 8 of the Companies Act 2013 andthe rules made thereunder as a wholly owned subsidiary of the Company. Petronet LNGLimited undertakes to contribute to the assets of the company in the event of its beingwound up while it is a member or within one year afterwards for payment of the debts orliabilities of the company contracted before it ceases to be a member and of the costscharges and expenses of winding up not exceeding a sum of Rs 10000000/- (Rupees OneCrore Only).
Petronet LNG Foundation is facilitating the Promoter to comply with itsrequirement of Corporate Social Responsibility (CSR) under provisions of Section 135 ofCompanies Act 2013 and rules made thereunder.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
All possible measures have been undertaken successfully by your Companyto achieve the desired objective of energy conservation and technology upgradation. Inorder to ensure optimum conservation of energy and absorption of technology yourCompany's engineers have been interacting with industry peers technology providersand EPC Contractors. They have also been nominated to important national and internationalseminars. A team has closely worked with Project Consultant and EPC Contractors in allphases of designing and construction of Dahej and Kochi LNG Terminals.
Conservation of Energy
1. Plant is using best technology and optimization practices for energyconservation.
2. Plant cold energy is being used for air conditioning of buildingsand cooling in Nitrogen Generation Plant.
Steps are being taken by the company to use alternate source of energyas mentioned below:
1. Feasibility Study for 5 MW solar power plant is nearing completion.
2. Replacement of sodium and mercury lamps in plants with LED lightsare being done to conserve energy.
Research & Development:
1. A pilot plant based on inhouse studies is being built to producepotable water from Air Heater Condensate water (which is a by-product of Re-gasificationprocess) by its required treatment and mineralization.
FOREIGN EXCHANGE EARNINGS AND OUTGO
Your Company's foreign exchange earning was Rs. 13 crore (Rs. 57 croreduring the FY 2018-19) and foreign exchange outgo was Rs. 29254 crore (33126 crore duringthe FY 2018-19) during Financial Year 2019-20.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIALSTATEMENTS
There is a system deployed whereby each process owner access andcertify the compliance of the relevant processes and controls on periodical basis.Further audits and reviews are conducted by independent agencies including internal andstatutory auditors. Their reports are being reviewed by the management and Audit Committeeon the basis of same improvements are carried out in the existing system on regularbasis.
EXTRACT OF THE ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act 2013 theextract of the annual return in the prescribed format (Form MGT-9) is annexed to thisreport.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company fully understands its responsibility towards the societyand has been constantly striving and trying its level best for contributing its bittowards causes leading to Social Development. In its endeavor to be more focused towardsits social goals the Company is developing a more structured approach to enhance accessto quality healthcare enrich the lives of communities in need welfare of the war widowsenvironmental causes and enhance the educational facilities across geographies in theCountry.
The Company is implementing short-term medium-term and long- termstrategy to channelize the resources in an organized manner so as to derive maximumsocio-economic impact from the targeted approach. In line with its social goals asenumerated above the Company has already identified several projects in the areas ofHealthcare Education Welfare of the War Widows Skill Development Environment SportsAgriculture Swacch Bharat etc. where your Company will spend the annual CSR budget in aprogressive and sustainable manner.
In terms of provisions of Companies Act 2013 an amount of Rs. 57 Croreis required to be spent on CSR activities in Financial Year 2019-20. However consideringthe outbreak of the COVID-19 Pandemic the competent authority revised and approved theCSR budget to a total of Rs. 118 Crore (One hundred Eighteen Crore Only). A total ofRs.117.96 Crore (One hundred Seventeen Crore and Ninety-Six Lakh Only) was spent on CSRactivities viz. Rs. 100.00 Crore has been contributed to the PM Cares fund to combat COVID19 pandemic and Rs. 17.96 Crore for CSR projects including Rs. 21 Lakh as AdministrativeOverheads in the FY 2019-20.
Nevertheless your Company has been making constant efforts to reachoptimum level of CSR expenditure and has achieved the target above the earmarked CSRbudget of the FY 2019-20 resulting in tangible positive impact on society and has madecommendable improvements over the previous years in terms of both spending as well asnumber of CSR projects taken up. The disclosure as per Rule 9 of Companies (CorporateSocial Responsibility Policy) Rules 2014 is attached herewith as Annexure B and form partof the Board Report.
Further Petronet LNG Foundation (PLF) a Company Limited by Guaranteehas been incorporated on 31st March 2017 by Petronet LNG Limited (PLL) as a promoter ofthe Company under the provisions of Section 8 of the Companies Act 2013 and the rulesmade thereunder and acts as the CSR Arm of PLL. Petronet LNG Foundation is facilitatingthe promoter to comply with its CSR under provisions of Section 135 of Companies Act 2013and rules made thereunder. It has already taken up some high impact projects and is in theprocess of finalizing projects/ programmes with higher project cost and impact. While allCSR projects have been carefully chosen giving utmost importance to quality of spendinginstead of just spending some projects have been outstanding in their impact.
Petronet Kashmir Super-30' is one such outstanding CSRproject which prepares underprivileged students of Kashmir to overcome various social andother disadvantages and helps them to compete with the best for admission into the premierengineering institutions like IITs and NITs by providing quality coaching and guidance. Inthe Healthcare front in association with All India Institute of Medical Sciences (AIIMS)Bhubaneswar PLF aims in transforming the Trauma & Emergency Care landscape in Odishaby extending support to construct a state-of-the art Level-I Trauma Care center at AIIMSBhubaneswar and ensure best possible healthcare facility for the people of Odisha. Inaddition PLF in association with Artificial Limbs Manufacturing Corporation of India(ALIMCO) is extending the support with Aid and Assistive devices such as motorizedtricycles tricycles Smart phone smart cane BTE hearing aids etc. for the Persons withDisabilities with an objective to empowering them in Delhi/ NCR Bharuch (Gujarat) andKochi (Kerala). Under Education Petronet Samkalp Super 30' is a programmewhich prepares underprivileged students for Civil Services Examinations by providing freequality coaching and guidance in Delhi.
Numma Onnu' is another project in Ernakulam District toprovide free food to the needy and has been implemented with the Eranakulam DistrictAdministration. Further in collaboration with CIPET PLF is imparting skill developmentprogramme for local underprivileged youth in Gujarat Kerala Haryana & HimachalPradesh by helping them be confident enough to find gainful employment. The company stoodby the Nation to combat the COVID-19 pandemic by contributing Rs. 100 Crore to the PMCares Fund and supported Heath Care Workers treating COVID-19 patients with PPEs of Rs.1.53 Crore across Delhi Kerala & Gujarat.
The Corporate Social Responsibility Policy of the Company is availableat the website of the Company at the following weblink:https://www.petronetlng.com/PDF/CSR_Policy_27042015.pdf.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP) Inductions and Cessation
The following Directors were inducted on the Board/ceased to beDirectors on the Board of the Company:
1. Shri Arun Kumar was appointed by the Board of Directors asAdditional Director (Independent Director) w.e.f. 9th April 2019.
2. Shri Rajender Singh ceased to be Director (Technical) of theCompany w.e.f. 20th July 2019 due to his retirement on attaining the age ofsuperannuation.
3. Shri B.C. Tripathi (Nominee Director of GAIL) ceased to be Directorof the Company w.e.f. 1st August 2019 consequent upon change of nomination upon hissuperannuation from GAIL.
4. Dr. Ashutosh Karnatak (Nominee Director of GAIL) was appointed bythe Board of Directors as Additional Director w.e.f. 7th August 2019. Further Dr.Ashutosh Karnatak ceased to be Additional Director (Nominee Director of GAIL) w.e.f. 28thAugust 2019 pursuant to the provisions of Section 161 of the Companies Act 2013 as thenotice of 21st Annual General Meeting (AGM) dated 15th July 2019 was already circulatedto the members of the Company therefore agenda in this regard did not formed part of thenotice of 21st AGM.
Thereafter Dr. Ashutosh Karnatak was again appointed by the Board asAdditional Director (Nominee Director of GAIL) w.e.f 29th August 2019.
5. Dr. T. Natarajan (Nominee Director of GMB/GoG) ceased to be Directorof the Company w.e.f. 22nd August 2019 due to change in nomination by GMB/GoG.
6. Shri Sanjeev Kumar (Nominee Director of GMB/GoG) was appointed bythe Board of Directors as Additional Director w.e.f. 4th September 2019.
7. Dr. M.M. Kutty ceased to be the Director and Chairman of theCompany w.e.f. 1st May 2020 as he ceased to be Secretary Ministry of Petroleum &Natural Gas Government of India consequent upon attaining the age of superannuation.
8. Dr. Ashutosh Karnatak (Nominee Director of GAIL) ceased to be aDirector w.e.f. 6th May 2020 consequent upon change of nomination by GAIL.
9. Shri Manoj Jain (Nominee Director of GAIL) was appointed by theBoard of Directors as Additional Director w.e.f. 6th May 2020.
10. Shri Tarun Kapoor Secretary Ministry of Petroleum & NaturalGas Government of India was appointed as Additional Director and Chairman of the Companyw.e.f.11th May 2020.
11. Shri Sanjiv Singh (Nominee Director of IOCL) ceased to be Directorw.e.f. 1st July 2020 consequent upon change in nomination by Indian Oil CorporationLimited due to his superannuation from the services of IOCL on 30th June 2020
12. Shri Shrikant Madhav Vaidya (Nominee Director of IOCL) wasappointed by the Board of Directors as Additional Director w.e.f. 1st July 2020.
13. Shri D Rajkumar (Nominee Director of BPCL) ceased to be a Directorw.e.f. 20th July 2020 consequent upon change of nomination by BPCL.
14. Shri Arun Kumar Singh (Nominee Director of BPCL) was appointed bythe Board of Directors as Additonal Director w.e.f. 10th August 2020.
The Board placed on record its sincere appreciation for valuableservices rendered and contribution made by Shri Rajender Singh Shri B.C. Tripathi Dr.Ashutosh Karnatak Dr. T. Natarajan Dr. M.M. Kutty Shri Sanjiv Singh and Shri DRajkumar Members of the Board during their association with the Company.
In accordance with the Articles of Association of the Company and asper statutory requirements Shri Shashi Shanker Nominee Director ONGC would retire byrotation at the ensuing Annual General Meeting and being eligible offers himself forreappointment. In accordance of provisions of Companies Act 2013 Shri Sanjeev Kumar(Nominee Director of GMB/GoG) Shri Manoj Jain (Nominee Director of GAIL) Shri TarunKapoor (Chairman) Shri Shrikant Madhav Vaidya (Nominee Director of IOCL) and Shri ArunKumar Singh (Nominee Director of BPCL) who were appointed as Additional Directors of theCompany after the date of last Directors' Report shall vacate their offices at theensuing Annual General Meeting. Necessary notices have been received from them/Member(s)under Section 160 of Companies Act 2013 proposing their candidature for appointment. Thesame has also been given at website of the Company at www.petronetlng.com. The Boardrecommends their appointment. Brief resume of directors seeking appointment andreappointment together with the nature of their expertise in specific functional areasdisclosure of relationship between director inter-se name of companies in which they holdmembership/ chairmanship of committees of the Board alongwith their shareholding incompany etc. as stipulated under SEBI (LODR) Regulations 2015 and other statutoryprovisions are given in the annexure to the Notice of 22nd Annual General Meeting.
Key Managerial Personnel
Pursuant to Section 203 of Companies Act 2013 the Key ManagerialPersonnel of the Company as on 31st March 2020 were:
1. Shri Prabhat Singh MD&CEO
2. Shri V. K. Mishra Director (Finance) and CFO
3. Shri Rajan Kapur CGM & Vice President Company SecretaryThere were no changes in Key Managerial Personnel of the Company during the FY 2019-20.
ANNUAL EVALUATION OF THE BOARD
The Board adopted a formal mechanism for evaluating its performance andas well as that of its Committees and individual Directors including Chairman of theBoard. The evaluation of all the Directors Committees Chairman of the Board and theBoard as a Whole was conducted based on a structured evaluation process consideringvarious aspects of the Board's functioning such as composition of Board andCommittees experience and competencies performance of specific duties and obligationscontribution at the meetings and otherwise independent judgment governance issues etc.
COMPLIANCES WITH RESPECT TO INDEPENDENT DIRECTORS
Pursuant to Section 149(7) of Companies Act 2013 and Regulation 25 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 declaration(s)by all the Independent Director(s) have been obtained stating that they meet the criteriaof independence as provided in Section 149(6) of the Companies Act 2013 and Regulation16(1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
The Independent Directors as appointed by the Board possess variousskills / expertise which are required for the Directors in the context of theCompany's business for effective functioning such as such as Leadership Technology& Operational experience strategic planning Financial Regulatory Legal and RiskManagement Industry experience Research & Development and Global business. Furtherall the Independent Directors are complying with the provisions of Section 150 of theCompanies Act 2013 read with The Companies (Appointment and Qualifications of Directors)Rules 2014
FAMILIARIZATION PROGRAMME AND TRAINING OF INDEPENDENT DIRECTORS
All new Independent Directors inducted in to the Board attend anorientation programme. The Company has well-defined Training Program for training to BoardMembers which inter-alia include the various familiarization programs in respect of theirroles rights responsibilities in the Company nature of the industry in which Companyoperates business model of the Company etc. Further the same is also taken care duringthe various strategy meets of the Company and different presentations in the Board/Committee meetings. The details of such familiarization programs have also been posted onthe website of the Companyat https://www.petronetlng.com/Familiarisation_Programme.php.Further at the time of the appointment of Independent Director the Company issues aformal letter of appointment outlining his/her roles responsibilities. functions dutiesremuneration and other terms and conditions. The format of the letter of appointment isavailable on the website of the Company.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the year seven Board Meetings were held and the details ofwhich are given in the Corporate Governance Report annexed to this Report which forms partof the Annual Report. The intervening gap between the meetings was within the periodprescribed under the Companies Act 2013 and also as per SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. For further details regarding number ofmeetings of the Board and its committees please refer Corporate Governance Reportannexed to this Report.
The Company recognizes and embraces the importance of a diverse boardin its success. We believe that a truly diverse board will leverage differences inthought perspective knowledge skill regional and industry experience cultural andgeographic backgrounds age ethnicity race and genderthat will help us retain ourcompetitive advantage. The Board Diversity Policy adopted by the Board sets out approachto diversity. The policy is available at the website of the Company at https://www.petronetlng.com/PDF/PolicyDiversity.pdf.
The recommendations made by the Audit Committee during the year wereaccepted by the Board. The other details of Audit Committee like composition terms ofreference meetings held are provided in the Corporate Governance Report annexed to thisReport.
NOMINATION AND REMUNERATION COMMITTEE
The Company has a Nomination and Remuneration Committee and detaileddisclosure in this regard has been given in the Corporate Governance Report which isannexed to this Report.
SEPARATE MEETING OF INDEPENDENT DIRECTORS
As per statutory requirements the Company arranges for separatemeetings of Independent Directors every year and detailed disclosure in this regard hasbeen given in the Corporate Governance Report which is annexed to this Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OFTHE COMPANIES ACT 2013
In compliance with the provisions of the Companies Act 2013 thedetails of investments made and loans/guarantees provided as on 31st March 2020 are givenin the respective Notes to the financial statements.
The Company has taken Directors and Officers liabilities insurance aswell as appropriate insurance for all assets against foreseeable perils.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS
There are no significant and material orders passed by the Regulatorscourts or Tribunals which would impact the going concern status and the Company'sfuture operations.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES (RPTs)
In line with the provisions of the Companies Act 2013 and the SEBI(LODR) Regulations 2015 the Company has formulated a Policy on materiality of RelatedParty Transactions and also on dealing with Related Party Transactions. The same has beenposted on the website of the Company. The Company gives the disclosure regarding materialtransactions with related parties on quarterly basis along with the compliance report onCorporate Governance. As per requirements of Section 134 (3) of Companies Act 2013 readwith rule 8 of Companies (Accounts) Rule 2014 particulars of contracts or arrangementswith related parties as referred in section 188 (1) of the Companies Act 2013 is annexedto this report. Further suitable disclosure as required by the Accounting Standards hasbeen given in the Notes to the Financial Statements.
PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 197 OF THE COMPANIES ACT2013
Pursuant to provisions of Section 197 of the Companies Act 2013 readwith the Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the names and other particulars of employees are annexed to this Report.
DISCLOSURES PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT 2013
The ratio of remuneration of each Director to the median employeesremuneration and such other details in terms of Section 197 (12) of Companies Act 2013read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 forms part of Directors' Report and is annexed herewith.
Your Company takes pride in its highly motivated and competent HumanResource that has contributed its best to bring the Company to its present heights.Employees are the driving force behind the sustained stellar performance of your companyover all these years of Company's ascendancy. As a commitment towards yourCompany's core values employees' participation in Management was made effectivebased on mutual respect trust and a feeling of being a progressive partner in growth andsuccess. Both employees and management complemented each others' efforts infurthering the interest of your Company as well as its stakeholders signifying andhighlighting overall harmony and cordial employee relations prevalent in your Company. Noman days were lost due to strike or lock-out. As on 31st March 2020 there were 506employees excluding 2 Whole-time Directors.
M/s A. N. Kukreja Practicing Company Secretary (M. No. FCS 1070 CPNo. 2318) was appointed by Board of Director to conduct the Secretarial Audit of theCompany for the financial year 2019-20 as required under Section 204 of Companies Act2013 and rules thereunder.
A Secretarial Audit Report for the Financial Year 2019-20 submitted byM/s A. N. Kukreja a Company Secretary in practice is annexed with this report along withManagement's Reply on the Secretarial Audit Report for the Financial Year 2019-20.
The Company is committed to good Corporate Governance and lays strongemphasis on transparency accountability and integrity. As required under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Report on CorporateGovernance together with Auditors' Certificate regarding Compliance of conditions ofcorporate governance for the Financial Year 2019-20 is annexed to this report along withManagement's Reply on the Auditors' Report on the Corporate Governance Report for theFinancial Year 2019-20.
MANAGEMENT DISCUSSION AND ANALYSIS
The Annual Report contains a separate section on Management Discussionand Analysis which is annexed with the Directors' Report.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report covering initiatives taken withenvironmental social and governance perspective has been prepared in accordance with thedirectives of SEBI and forms a part of the Annual Report .
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has devised proper systems to ensure compliance with theprovisions of all applicable Secretarial Standards issued by the Institute of CompanySecretaries of India and that such systems are adequate and operating effectively.
Your Company continued to enjoy cordial and smooth relations amongstall its employees at Dahej and Kochi terminals.
The Company has laid down policies and procedures to inform the Membersof the Board about the risk assessment and minimization procedure. A Risk ManagementCommittee periodically reviews the procedures to ensure that Executive Management controlsrisk through properly defined framework. The risk assessment framework encompassesinter-alia methodology for assessing risks on an ongoing basis risk prioritization riskmitigation monitoring plan and comprehensive reporting system.
This Risk Management Framework supports your Company's businessstrategy and operations. Risk Management Framework is constantly updated for new andemerging risks emanating from business expansion and interests. The risks are evaluatedquantified & prioritized and mitigation plans are reviewed & monitored at variousstages. Corporate Level Risk Management Committee oversees the implementation of the RiskManagement Policy and Procedures which are periodically reviewed andmonitored by the RiskManagement Committee and by the Audit Committee before presenting it to the Board. In thechanging business scenario and expansion of your Company into various other activitiesbusiness risk and their mitigation plans are assessed on regular basis.
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES
The Board of Directors of the Company has approved the Vigil Mechanismin terms of provisions of Section 177 of Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 for Directors and employees of the Companyto report to the management concerns about unethical behaviour actual or suspectedfraud or violation of the policy. The same has also been hosted on the website of theCompany. During the year ended 31st March 2020 no complaint was received under VigilMechanism and thus no complaint was pending as on 31st March 2020.
CODE OF CONDUCT
The Company has formulated a Code of Conduct for Board Members andSenior Management Personnel. The confirmation of compliance of the same is obtained fromall concerned on annual basis. All Board Members and Senior Management Personnel havegiven their confirmation of compliance for the year under review. A declaration dulysigned by MD & CEO is given in the Report on Corporate Governance annexed to thisReport. The Code of Conduct for Board Members and Senior Management Personnel is given onthe website of the Company.
LISTING ON STOCK EXCHANGES
The Company's equity shares are listed on the BSE Ltd. andNational Stock Exchange of India Ltd. 9.05% Unsecured Redeemable Taxable Non-ConvertibleDebentures (NCD) (Series II) (Option II) were listed on National Stock Exchange of IndiaLtd. However the samewere redeemed on 25th October 2019 and extinguished.
TRANSFER OF AMOUNTS/SECURITIES TO INVESTOR EDUCATION AND PROTECTIONFUND
Pursuant to the provisions of Section 124 and 125 of the Companies Act2013 and Rules made thereunder the Company has deposited the amount lying inUnpaid/Unclaimed Dividend account for the financial year 2006-07 to 2011-12 to InvestorEducation and Protection Fund. Detail of the same is available at website of the Companyat the following link https://www.petronetlng.com/cg.php Further pursuant to theprovisions of Section 124(6) of Companies Act 2013 all the shares in respect of whichdividend has not been paid or claimed for seven consecutive years or more were alsotransferred to IEPF Suspense Account. Details of the same is available at website of theCompany at the following link https://www.petronetlng.com/cg.php
No disclosure or reporting is required in respect of the followingitems as either these were not applicable or there were no transactions on these itemsduring the financial year 2019-20:-
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividendvoting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of theCompany under any scheme.
4. Neither the Managing Director nor the Wholetime Directors ofthe Company receive any remuneration or commission from any of its subsidiaries.
During the financial year 2019-20 there was no cases filed pursuant tothe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 and thus no case was pending as on 31st March 2020. As a part of compliance to theabove said act Internal Complaints Committees (ICC) have been constituted to redress thecomplaints regarding sexual harassment.
There are no material changes and commitments affecting the financialposition of the Company which have occurred between the end of the financial year and thedate of this report.
M/s T. R. Chadha & Co. Chartered Accountants LLP have beenappointed by the Shareholders of the Company as Statutory Auditors for the financial year2019-20.
The Auditors have submitted an unqualified report for the financialyear 2019-20. No fraud has been reported by Auditors under sub-section (12) of section 143of the Companies Act 2013.
As prescribed under the Companies (Cost Records and Audit) Rules 2014the Cost Accounting records are being maintained by your Company.
The Board of Directors has appointed M/s Chandra Wadhwa & Co. CostAccountants (Regn. No. 000239) as the Cost Auditors of the Company for the Financial Year2019-20. The Cost Audit Report for the year 2018-19 has been filed under XBRL mode on 21stAugust 2019.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of clause (c) of sub-section (3) of Section134 of the Companies Act 2013 Directors hereby states that:
(a) In the preparation of the annual accounts the applicableaccounting standards have been followed along with proper explanation relating to materialdepartures;
(b) The directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period;
(c) The directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(d) The directors have prepared the annual accounts on a going concernbasis;
(e) The directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively; and
(f) The directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems are adequate and operatingeffectively.
Ministry of Corporate Affairs through its Circulars dated 8th April2020 13th April 2020 and 5th May 2020 has allowed companies to conduct the generalmeetings through video conferencing(VC) or other audio visual means (OAVM) andnon-printing of annual reports during the calendar year 2020. SEBI through Circular No.SEBI/HO/CFD/CMD1/CIR/P/2020/79 dated 12.05.2020 has also relaxed certain provisions ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 in the wake ofCovid-19 pandemic.
MCA circular dated 05.05.2020 requires that the Company shouldfacilitate the manner in which the persons who have not registered their email addresseswith the company can get the same registered with the company.
In light of the MCA Circulars and better Corporate Governance theCompany has provided facility to the shareholders through the depositories i.e. NSDL andCDSL and through its Registrar and Transfer Agent i.e. Kfin Technologies Private Limitedto register their email addresses with the depositories or the Company for receiving theAnnual Report for 2019-20 and other communications.
The link for registration of email address is https://ris.kfintech.com/email_registration/ and the same is also available at our website athttps://www.petronetlng.com/. Accordingly it is requested that members who have notregistered their email addresses may kindly register the same.
The Board of Directors sincerely thanks and wishes to place on recordits appreciation of the Ministry of Petroleum and Natural Gas Government of India StateGovernments of Gujarat and Kerala Promoters of the Company RasGas Exxon Mobil and otherLNG suppliers gas off-takers and consumers of re-gasified LNG Auditors and Lenders fortheir whole-hearted co-operation and unstinted support. The Directors of your company alsoconvey their gratitude to all the shareholders for the continued support and the trustthey have reposed in the Management. The Directors look forward to a better future andfurther growth of your Company.
The Board also appreciates the contribution of contractors vendors andconsultants in the implementation of various projects of the Company.
We wish to place on record our deep appreciation to employees at alllevels for their hard work dedication and commitment.