Home  »  Company  »  PetronetLNG  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Petronet LNG Ltd.

Mar 31, 2016

1. Custom Duty on import of Project material / equipment has been assessed provisionally (current and previous years) and additional liability/refund, if any, on this account will be accounted for in the books on final assessment.

2. The Company has not received information from suppliers or service providers, that they are covered under the Micro, Small and Medium Enterprises (Development) Act, 2006. The information required to be disclosed under the Micro, Small and Medium Enterprises (Development) Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

3. Segment Reporting (Accounting Standard - 17)

Since the Company primarily operates in one segment - Natural Gas Business, segment reporting as required under Accounting Standard - 17 is not applicable. There is no reportable geographical segment either.

4. Corporate Social Responsibility

a) Amount required to be spent by the Company on Corporate Social Responsibility (CSR) activities during the year was Rs. 2,506 lac.

b) Corporate Social Responsibility (CSR) activities undertaken during the year is Rs. 597 lac [Rs. 565 lac has been paid in cash and Rs. 32 lac is yet to be paid in cash].

5. Previous year figures have been regrouped/rearranged wherever necessary, to correspond to current year figures.


Mar 31, 2015

1.Company Overview

Petronet LNG Limited referred to as "PLL" or "the Company" was formed by Bharat Petroleum Corporation Limited (BPCL), GAIL (India) Limited (GAIL), Indian Oil Corporation Limited (IOC) and Oil and Natural Gas Corporation Limited (ONGC) primarily to develop, design, construct, own and operate Liquefied Natural Gas (LNG) import and regasification terminals in India. PLL was incorporated on April 2, 1998 under the Companies Act, 1956 and received certificate of commencement of business on June 1, 1998. The Company is involved in the business of import and regasification of LNG and supply to BPCL, GAIL, IOCL and others. Presently the Company owns and operates LNG Regasification Terminal with the name plate capacity of 10 MMTPA at Dahej, in the State of Gujarat. The Company has also commissioned another LNG terminal with a name plate capacity of 5 MMTPA at Kochi, in the State of Kerala.

In respect of external commercial borrowings from International Finance Corporation Washington D.C.,USA and Proparco, France, the Company has entered into derivative contracts to hedge the loan amount including interest. This has the effect of freezing the Rupee equivalent of this liability as reflected under the Borrowings. Consequently, there is no restatement of the loan taken in foreign currency and there is no impact in the Statement of Profit & loss, arising out of exchange flunctuation for the duration of the loan.The interest payable in Indian Rupees on the derivative contracts is accounted for in the Statement of Profit & Loss.

2. Contingent Liabilities and commitments (to the extent not provided for)

A. Commitments

(a) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs. 1,08,476 lac (previous year 1,83,213 lac).

(b) The Company has long term LNG purchase commitments against which back to back sale agreements have been made, for which there are no foreseeable losses as on the Balance Sheet date.

(c) Outstanding Bank guarantees as on 31st March 2015 Rs.5,12,667 lac (previous year 4,30,046 lac) issued to LNG suppliers against long term purchase agreement.

B. Contingent Liability

(a) The Collector of Electricity Duty, Gandhinagar (Gujarat) had issued notices classifying the business activities of the Company as "Storage(HTP-NA)" instead of "Industrial Undertaking(HTP I)" and hence levied Electricity Duty @ 45% instead of 20% of the consumption charges and charging 70 paisa per unit on the power generated by the Company for its own consumption. The Company has challenged the legality and validity of the notices by way of writ petitions before the High Court of Gujarat. Meanwhile Company continues to make payment of Electricity Duty @15%(Revised rate of HTP-I) on the basis of the stay order granted by the High Court. The High Court vide order dated 1.7.2014 has set aside the notice and quashed the supplementary bill/demand notice and remanded the case back to the Collector of Electricity Duty, Gandhinagar to decide the nature of undertaking of the Company. The Company has made it's oral and written submissions before the Collector of Electricity Duty, Gandhinagar and the order is awaited. The total contingent liability till March, 2015 calculated on the differential payable (25% Revised rates for "HTP-II A") as classified by GEB and what is actually paid by the Company on "HTP-I" rate (i.e. 15%) is Rs. 2,251 lac (Previous year Rs. 1,745 lac).

(b) The Company has filed a writ petition before the Gujarat High Court challenging the legality and correctness of the notice dated April 1, 2006 from the Collector of Stamps, Bharuch stating that pursuant to the amendment to Section 24 of the Bombay Stamp Act, 1958, the Company is required to pay stamp duty @ Re.1 per Rs. 1000/ or part thereof of the value mentioned in the Delivery Order of the goods imported through ports in Gujarat. The Hon'ble High Court of Gujarat vide its order dated February 24, 2010 has quashed the notice issued by the Stamp Authorities. Stamp authorities have filed Special Leave Petition (SLP) in Supreme Court against the same and the case is pending as on 31st March 2015. The contingent liability from the effective date of amendment i.e. April 1, 2006 till March 31, 2015 on the CIF value is estimated to be Rs. 15,258 lac. (Previous year till March, 2014 Rs.11,806 lac).

(c) The Company has received refund of Rs. 112 lac, Rs. 284 lac and Rs. 346 lac from Customs Department vide CESTAT order dated November 7, 2013, September 9, 2011 and May 31, 2010 respectively mainly pertaining to custom duty on short landing of LNG. The Custom Authorities have filed appeal against the order of the CESTAT with the Hon'ble High court of Gujarat which is pending as on March 31, 2015. Further, differential custom duty amounting Rs. 2,455 lac is lying as recoverable in books as on 31st March 2015. (Rs.2,177 lac as on 31st March 2014) against the same.

(d) Taxes and duties recoverable (Note 14) includes service tax of Rs. 4,005 lac on vessel hire charges (including interest of Rs. 297 lac) paid under protest for the period from May 16, 2008 to September 30, 2009 under section 65(105)(zzzzj) of the Finance Act, 1994 (as amended) - "Supply of Tangible Goods for Use". The Commissioner of the Service Tax, vide Order dated March 6, 2012 has confirmed the demand. Against the Order of the Commissioner, Service Tax, the Company has filed an appeal before CESTAT, Delhi on June 6, 2012. CESTAT Delhi has passed an order in favour of the Company on October 24, 2013, vide order no. ST/A/58706/2013-CU(DB), upholding Company's contention that Vessel Hire Charges are not subject to Service Tax. The department has initiated the process to file an appeal against the CESTAT order before the Supreme Court. Refund application has been pending with the department since December 13, 2013 and no refund has been received by the Company till date.

(e) Few cases are pending with Service Tax Department at various levels, pertaining to applicability of service tax on charges paid for External Commercial Borrowings taken from IFC, ADB & Proparco. Amount involved in such cases including penalty is Rs. 479 lac (approx).

(f) The DGCEI (Ahmedabad) has issued show cause notice dated 10th October 2014 claiming service tax of Rs. 1,416 lac on the boil off quantity of LNG during regasification process. The Company has adequately replied against the notice and no further query/demand has been raised by the department.

(g) During the year, the Company has received the assessment order for AY 2008-09, which was referred back to AO by ITAT for recalculation of 14A disallowance. The assessing officer has raised a demand of Rs. 1,244 lac vide it's order dated 20.03.2015. The Company is in the process of filing the appeal to CIT(A).

(h) The Company has filed Service Tax Refund Application for services availed in the Special Economic Zone for it's LNG Terminal at Kochi, amounting to Rs. 1,919 lac, out of which Rs. 774 lac is before the CESTAT level and Rs. 1,145 lac is at Assistant Commissioner level.

(i) Demand Order amounting to Rs. 882 lac raised by Dy. Commissioner of Customs, for inclusion of additional charges towards transportation in the Assessable value for Free on Board (FOB) cargoes and appeal for the same has been filled at Commissioner of Customs (Appeals).

(j) There are certain claims of Rs. 18,362 lac made by a Contractor against capital works for which the Company has also made certain counter claims. As per the terms of the contract, Independent expert's opinion is being sought and pending the settlement of liability, claims are not determinable and therefore no provision has been made in the books.

(k) Dahej Second Jetty Topside contract awarded to a consortium of two parties was terminated by the Company in July, 2012 because of the failure of the contractor to carry out the work as per schedule. Contractor invoked arbitration and claimed Rs. 15,156 lac. PLL has also filed counter claim of Rs. 11,671 lac as per the contract. Pending the outcome of arbitration proceedings, liability against the claims, if any, is not determinable and therefore no provision has been made in the books.

(l) The Company had entered into a lease agreement with Cochin port trust (CPT) for 33.4015 hectare of land for building and operating port and regasification facility at Kochi. CPT has raised demand for enhanced lease rent (almost 10 times), by quoting the order of Tariff Authority for Major Ports (TAMP) dated 10th June 2010. CPT has invoked arbitration and claimed Rs. 4,258 lac as on 31st March 2015. Further, an additional demand amounting Rs. 2,000 lac has been raised by CPT for usage of dredged sand by the Company. PLL has been contesting the increase in lease rent as well as dredging sand claims. As such, the matter has been referred to Arbitration. Pending the outcome of arbitration proceedings, liability against the claims, if any, is not determinable and therefore no provision has been made in the books.

3. Income Tax cases are pending at various appellate authorities/levels regarding addition of income at the time of Income Tax assessment. The Company has deposited Rs. 9,427 lac against the demand raised by the tax authorities. Pending the final outcome of the cases, demand raised by the tax authorities have been provided for in the books of account in the year of receipt of the demand.

4. Custom Duty on import of Project material / equipment has been assessed provisionally (current and previous years) and additional liability/refund, if any, on this account will be accounted for in books on final assessment.

5. The Company has not received any information from suppliers or service providers, whether they are covered under the "Micro, Small and Medium Enterprises (Development) Act, 2006. Disclosure relating to amount unpaid at the year-end together with interest payable, if any, as required under the said Act are not ascertainable.

6. Segment Reporting (Accounting Standard - 17)

Since the Company primarily operates in one segment - Natural Gas Business, segment reporting as required under Accounting Standard - 17 is not applicable. There is no reportable geographical segment either.

7. Transactions with Related Party: a) Related Party

Related parties and their relationships

i) Joint Venturer (Promoters)

Indian Oil Corporation Limited (IOCL)

Bharat Petroleum Corporation Limited (BPCL)

Oil and Natural Gas Corporation Limited (ONGC) GAIL (India) Limited (GAIL)

ii) Joint Venture

Adani Petronet (Dahej) Port Pvt. Ltd (APPPL).

iii) Key Managerial Personnel (KMP)

Dr A K Balyan Sh. Rajender Singh Sh. R K Garg

8. There is no impairment loss of any assets that has occurred in terms of Accounting Standard 28.

9. The Company is eligible for deduction under section 80IA of the Income Tax Act, 1961, with respect to power generation and port undertakings at Dahej. Till previous year, provision for Income Tax has been made in the books without considering deduction under section 80IA, as the deduction was disallowed by the Income Tax Department at the time of assessment. During the year, the Company has been allowed deduction under Section 80IA for AY 2012-13 and therefore, tax benefits amounting to Rs. 12,314 lac has been accounted for in the books w.r.t. AY 2012- 13 to AY 2014-15. Further, the Company has claimed Income tax deduction benefit of Rs. 2,048 lac under Section 32AC at the time of filing of Income Tax return for AY 2014-15 and the same has been accounted for in the books during the current year.

10. Previous year figures have been regrouped/rearranged wherever necessary, to correspond to current year figures.


Mar 31, 2014

1. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs. 18,32,13 lac (previous year 5,94,17 lac).

The Company has long term LNG purchase commitments against which back to back sale agreements have been made.

2. Contingent Liability

a) Letter of credit/Bank guarantees of Rs. 43,00,46 lac (previous year 30,24,10 lac)

b) The Collector of Electricity Duty, Gandhinagar (Gujarat) had issued notices classifying the business activities of the Company as "Storage(HTP-IIA)" instead of "Industrial Undertaking(HTP I)" and hence levied Electricity Duty @ 45% instead of 20% of the consumption charges and charging 70 paise per unit on the power generated by the Company for its own consumption. The Company has challenged the legality and validity of the notices by way of writ petitions, which is pending before the Gujarat High Court. Meanwhile Company continues to make payment of Electricity Duty @15%(Revised rate of HTP-I) on the basis of the stay order granted by the High Court. The High Court has clubbed similar matters pending before it and are being tried together. The Court has so far concluded the arguments of all the Petitioners and is now listed for the arguments of GEB. The matter came up for hearing before the High Court on five dates between February and March, 2014, but no proceedings took place. The total contingent liability till March,2014 calculated on the differential payable (25%(Revised rates for "HTP-II A") as classified by GEB and what is actually paid by Company on "HTP-I" rate i.e. 15%) is Rs. 17,45 lac (Previous year Rs. 14,93 lac ).

c) The Company has filed a writ petition before the Gujarat High Court challenging the legality and correctness of the notice dated April 1, 2006 from the Collector of Stamps, Bharuch stating that pursuant to the amendment to Section 24 of the Bombay Stamp Act, 1958, the Company is required to pay stamp duty @ Re.1 per Rs.1000/ or part thereof of the value mentioned in the Delivery Order of the goods imported through ports in Gujarat. The Hon''ble High Court of Gujarat vide its order dated February 24, 2010 has quashed the notice issued by the Stamp Authorities. Stamp authorities have filed Special Leave Petition (SLP) in Supreme Court against the same and the case is pending as on 31st March 2014. The contingent liability from the effective date of amendment i.e. April 1, 2006 till March 31, 2014 on the CIF value is estimated to be Rs. 11,806 lac. (Previous year till March, 2013 Rs. 84,81 lac).

d) The company has received refund for Rs 2,84 lac pertaining to Bills of Entries related to short landing of LNG received vide Order from CESTAT dated 29/09/2011 and refund of Rs 3,46 lac vide order dated 31st May 2010 of CESTAT. The custom authorities have filled appeal against the order of the CESTAT with the Hon''ble High court of Gujarat which is pending as on March 31, 2014.

e) Taxes and duties recoverable (Note 17) includes service tax of Rs. 40,05 lac on vessel hire charges (including interest of Rs. 2,97 lac) paid under protest for the period from May 16, 2008 to September 30, 2009 under section 65(105)(zzzzj) of the Finance Act, 1994 (as amended) – "Supply of Tangible Goods for Use". The Commissioner of the Service Tax, vide Order dated March 6, 2012 has confirmed the demand. Against the Order of the Commissioner, Service Tax, The Company has filed an appeal before CESTAT, Delhi on June 6, 2012. CESTAT Delhi has passed an order in favour of the company on October 24, 2013, vide order no. ST/A/58706/2013- CU(DB) , upholding company''s contention that Vessel Hire Charges are not subject to Service Tax Refund application has been filed with the department on December 13, 2013, the department has not yet filed an appeal against the said order. Company has filed CAVEAT with the High Court of Delhi and Supreme Court to avoid ex-parte assessment of appeal.

f) The Company has cases pending with Service Tax Department at various levels, pertaining to applicability of service tax on charges paid for External Commercial Borrowings taken from IFC, ADB & Proparco. Amount involved in such cases is Rs. 475 lac (approx) including penalty.

3. Custom Duty on import of Project material / equipment has been assessed provisionally (current and previous years) and additional liability, if any, on this account will be provided on final assessment.

4. The Company has not received any information from suppliers or service providers, whether they are covered under the "Micro, Small and Medium Enterprises (Development) Act, 2006. Disclosure relating to amount unpaid at the year-end together with interest payable, if any, as required under the said Act are not ascertainable.

5. Segment Reporting (AS – 17)

Since the Company primarily operates in one segment – Natural Gas Business, segment reporting as required under Accounting Standard - 17 is not applicable. There is no reportable geographical segment either.

6. Transactions with Related Party:

a) Related parties and their relationships i) Joint Venturer (Promoters)

Indian Oil Corporation Limited (IOCL) Bharat Petroleum Corporation Limited (BPCL) Oil and Natural Gas Corporation Limited (ONGC) GAIL (India) Limited (GAIL)

ii) Joint Venture

Adani Petronet (Dahej) Port Pvt. Ltd.

iii) Subsidiary of Promoter (ONGC)

Mangalore Refinery and Petrochemicals Limited

iv) Key Managerial Personnel (KMP)

Dr. A. K. Balyan

Sh. Rajender Singh

Sh. R. K. Garg

7. There is no impairment loss of any assets that has occurred in terms of AS-28

8. The company has claimed deduction under section 80IA of the income tax act 1961 in respect of Power generation and Port Undertaking in its tax returns. However, provision for income tax has been made without considering the aforesaid deduction pending final assessment with Income tax authorities.

9. Previous year figures have been regrouped/rearranged wherever necessary, to correspond to current year figures.


Mar 31, 2013

Company Overview

Petronet LNG Limited referred to as "PLL" or "the Company" was formed by Bharat Petroleum Corporation Limited (BPCL), GAIL (India) Limited (GAIL), Indian Oil Corporation Limited (IOC) and Oil and Natural Gas Corporation Limited (ONGC) primarily to develop, design, construct, own and operate a Liquefied Natural Gas (LNG) import and regasification terminals in India. PLL was incorporated on April 2, 1998 under the Companies Act, 1956 and received certificate of commencement of business on June 1, 1998. The Company is involved in the business of import and regasification of LNG and supply to BPCL, GAIL, IOCL and others. Presently the Company owns and operates LNG Regasification Terminal with the name plate capacity of 10 MMTPA at Dahej, in the State of Gujarat. The Company is also setting up another Greenfield LNG Regasification Terminal with the name plate capacity of 5 MMTPA at Kochi, in the State of Kerala.

The Company has only one class of shares referred to as equity shares each having a par value of Rs. 10. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2013, the amount of dividend per share recognized as distribution to equity shareholders is Rs. 2.50/- (previous year Rs. 2.50/-). The total dividend appropriation for the year ended March 31, 2013 amounted to Rs.18,750 lacs (previous year Rs. 18,750 lacs) and corporate dividend tax of Rs. 3,187 lacs (previous year Rs. 3,042 lacs).

The external commercial borrowings from International Finance Corporation (Washington), Asian Development Bank & Proparco, France are borrowed at an average cost of 8.61% p.a (inclusive of hedge cost) and the loans from Indian lenders carry an average interest rate of 10.41% p.a as applicable on 31st March 2013.

1. In respect of external commercial borrowings from International Finance Corporation Washington D.C.,USA and Proparco, France, the Company has entered into derivative contracts to hedge the loan amount including interest. This has the effect of freezing the Rupee equivalent of this liability as reflected under the Borrowings. Thus there is no impact in the statement of Profit & Loss, arising out of exchange fluctuations for the duration of the loan. Consequently, there is no restatement of the loan taken in foreign currency.The interest payable in Indian Rupees on the derivative contracts is accounted for in the Statement of Profit & Loss.

2 Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs. 5,94,17 lacs (previous year 12,88,97 Lacs).

The Company has long term LNG purchase commitments against which back to back sale agreements have been made.

3 Contingent Liability

a) Letter of credit/Bank guarantees of Rs. 30,24,10 Lacs (previous year 28,82,53 Lacs)

b) The Collector of Electricity Duty, Gandhinagar (Gujarat) had issued notices classifying the business activities of the Company as "Storage(HTP-NA)" instead of "Industrial Undertaking(HTP I)" and hence levied Electricity Duty @ 45% instead of 20% of the consumption charges and charging 70 paise per unit on the power generated by the Company for its own consumption. The Company has challenged the legality and validity of the notices by way of writ petitions, which is pending before the Gujarat High Court. Meanwhile Company continues to make payment of Electricity Duty @15%(Revised rate of HTP-I) on the basis of the stay order granted by the High Court. The High Court has clubbed similar matters pending before it and areis being tried together. The Court has so far concluded the arguments of all the Petitioners and is now listed for the arguments of GEB. No further hearing took place in 2012. The total contingent liability till March,2013 calculated on the differential payable (25%(Revised rates for "HTP-II A") as classified by GEB and what is actually paid by Company on "HTP-I" rate i.e. 15%) is Rs. 14,93 lacs (Previous year Rs.14,34 lacs ).

c) The Company has filed a writ petition before the Gujarat High Court challenging the legality and correctness of the notice dated April 1, 2006 from the Collector of Stamps, Bharuch stating that pursuant to the amendment to Section 24 of the Bombay Stamp Act, 1958, the Company is required to pay stamp duty @ Re.1 per Rs.1000/ or part thereof of the value mentioned in the Delivery Order of the goods imported through ports in Gujarat. The Hon''ble High Court of Gujarat vide its order dated February 24, 2010 has quashed the notice issued by the Stamp Authorities. Stamp authorities have filed Special Leave Petition (SLP) in Supreme Court against the same and the case is pending as on 31st March 2013. The contingent liability from the effective date of amendment i.e. April 1, 2006 till March,2013 on the CIF value is estimated to be Rs. 84,81 lacs. (Previous year till March, 2012 Rs. 57,01 lacs).

d) The Company has received refund of Rs. 3,46 Lacs from the custom authorities by vide order dated 31st May 2010 of CESTAT. The custom authorities have filed an appeal against the order of CESTAT with the Hon''ble High Court of Gujarat which is pending as on 31st March 2013.

e) Taxes and duties recoverable (Note 17) includes service tax of Rs. 40,05 lacs on vessel hire charges (including interest of Rs. 2,97 lacs) paid under protest for the period from 16th May 2008 to 30th September 2009 under section 65(105)(zzzzj) of the Finance Act, 1994 (as amended) - "Supply of Tangible Goods for Use". Based on the opinion of the tax consultants, the Company is of the view that the demand is not tenable and the Company has filed a refund claim for the same with the Service tax Department. The Commissioner of the Service Tax, vide Order dated 6th March 2012 has confirmed the demand. Against the Order of the Commissioner, Service Tax, The Company has filed an appeal before CESTAT, Delhi on June 6, 2012. Final hearing in the matter was held on January 3, 2013. No formal Order received till date. Further, in the event of non refund of claim, the Company has counter claim of the amount from the off takers with interest. Thus, no provision is considered necessary by the management.

f) The Company has received a demand order dated 29th November 2011 for Rs. 65 lacs (including penalty of Rs. 33 lacs) towards service tax liability from the Commissioner (Adjudication) Service Tax, Delhi for the years 2003-04 to 2007-08. The Company has filed an appeal before the CESTAT on 7th March 2012 on the grounds that legal services were not taxable prior to 1st September 2009 and payment to International Finance Corporation, USA and others are not subject to service tax levy.

g) The Company has received a demand order dated 6th March 2012 for Rs. 3,77 lacs towards service tax liability, on commercial / commitment / administration charges paid on ECB''s availed, from the Director General of Central Excise Intelligence, Delhi for the years 2006-07 to 2010-11. The Company has filed an appeal against the same before CESTAT, Delhi and order is awaited as on 31st March 2013.

The future cash flow of items (b), (c), (d), (f) and (g) are determinable only on receipt of the decision judgment from the respective authorities.

4 Custom Duty on import of Project material / equipment has been assessed provisionally (current and previous years) and additional liability, if any, on this account will be provided on final assessment.

5 The Company has not received any information from suppliers or service providers, whether they are covered under the "Micro, Small and Medium Enterprises (Development) Act, 2006. Disclosure relating to amount unpaid at the year-end together with interest payable, if any, as required under the said Act are not ascertainable.

6 In term of para 10 of Accounting standard 16 "Borrowing Cost" Rs. 9,27 Lacs (Previous year 17,98 Lacs) has been reduced from the interest and finance charges (Note 11 - Capital work in progress) being income on temporary investment of surplus funds out of borrowing related to capital expenditure.

7 Segment Reporting (AS - 17)

Since the Company primarily operates in one segment - Natural Gas Business, segment reporting as required under Accounting Standard - 17 is not applicable. There is no reportable geographical segment either.

8 Disclosure in respect of Joint Venture (AS - 27)

In terms of the provisions contained in the Dahej LNG Port Terminal Concession Agreement, the Company is to develop a Solid Cargo Port along with LNG Terminal. A joint venture company "Adani Petronet (Dahej) Port Pvt Ltd (APPPL) has been formed for development of Solid Cargo Port. The Company has acquired 26% Equity in APPPL. The disclosure as per AS-27 is as follows:

9. Related Party

a) Related parties and their relationships

i. Joint Venturer (Promoters)

Indian Oil Corporation Limited (IOCL)

Bharat Petroleum Corporation Limited (BPCL)

Oil and Natural Gas Corporation Limited (ONGC)

GAIL (India) Limited (GAIL)

ii. Joint Venture

Adani Petronet (Dahej) Port Pvt. Ltd.

iii. Key Managerial Personnel (KMP)

Dr A K Balyan

Sh. Rajender Singh

Sh. R K Garg

Sh. C.S. Mani

10. There is no impairment loss of any assets that has occurred in terms of AS-28

11. The company has claimed deduction under section 80IA of the income tax act 1961 in respect of Power generation and Port Undertaking in its tax returns. However, provision for income tax has been made without considering the aforesaid deduction pending final assessment with Income tax authorities.

12. Previous year figures have been regrouped/rearranged wherever necessary, to correspond to current year figures.


Mar 31, 2012

Company Overview

Petronet LNG Limited referred to as "PLL" or "the Company" was formed by Bharat Petroleum Corporation Limited (BPCL), GAIL (India) Limited (GAIL), Indian Oil Corporation Limited (IOC) and Oil and Natural Gas Corporation Limited (ONGC) primarily to develop, design, construct, own and operate a Liquefied Natural Gas (LNG) import and regasification terminals in India. PLL was incorporated on April 2, 1998 under the Companies Act, 1956 and received certificate of commencement of business on June 1, 1998. The Company is involved in the business of import and regasification of LNG and supply to BPCL, GAIL, IOCL and others. Presently the Company owns and operates LNG Regasification Terminal with the name plate capacity of 10 MMTPA at Dahej, in the State of Gujarat. The Company is also setting up another Greenfield LNG Regasification Terminal with the name plate capacity of 5 MMTPA at Kochi, in the State of Kerala.

Note :

1. Secured by first ranking mortgage and first charge on pari passu basis on all movable and immovable properties, both present and future including current assets except on trade receivables on which second charge is created on pari passu basis.

2. In respect of external commercial borrowings of USD 150 Million from International Finance Corporation Washington D.C., USA and USD 100 million from Proparco, France, outstanding as on 31st March, 2012, the Company has entered into derivative contracts to hedge the loan including interest. This has the effect of freezing the rupee equivalent of this liability as reflected under the Borrowings. Thus there is no impact of in the Profit & Loss, arising out of exchange fluctuations for the duration of the loan. Consequently, there is no restatement of the loan taken in foreign currency. The interest payable in Indian Rupees on the derivative contracts is accounted for in the Statement of Profit & Loss.

* Under lock in for a period of 5 years from the date of commercial operation (i.e. 01.09.2010) of the investee company as per the Dahej LNG Port Terminal Concession Agreement dated 20th December 2005 with Gujarat Maritime Board.

** Pledged with Sumitomo Mitsui Banking Corporation.

Other Notes on Accounts

1 Estimated amount of Contracts remaining to be executed on Capital Account (net of advances) and not provided for - Rs. 12,88,97 lacs (Previous year - Rs. 22,09,96 lacs).

2 Contingent Liabilities

a. Letter of Credit/ Bank Guarantees Rs. 28,82,53 lacs. (Previous year - Rs. 20,91,80 lacs)

b. The Collector of Electricity Duty, Gandhinagar (Gujarat) had issued notices classifying the business activities of the Company as "Storage" instead of "industrial Undertaking" and hence levied Electricity Duty @ 45% instead of 20% of the consumption charges and charging 70 paise per unit on the power generated by the Company for its own consumption. The Company has challenged the legality and validity of the notices by way of two writ petitions, which are pending before the Hon'ble High Court of Gujarat. Meanwhile Company continues to make payment of Electricity Duty @ 15% on the basis of the stay order granted by the High Court.

The total contingent liability till 31st March, 2012 calculated on the differential payable (25% for "HTP-II A" as classified by GEB and what is actually paid by Company on "HTP-I" rate is 15%) is Rs. 14,34 lacs (Previous year - Rs. 13,87 lacs).

c. The Company had filed a writ petition before the Gujarat High Court challenging the legality and correctness of the notice dated 1st April, 2006 from the Collector of Stamps; Bharuch stating that pursuant to the amendment to Section 24 of the Bombay Stamp Act, 1958, the Company is required to pay stamp duty @ Re. 1 per Rs. 1000 or part thereof the value mentioned in the delivery order of the goods imported through ports in Gujarat. The Hon'ble High Court of Gujarat has upheld the plea of the Company and quashed the notice issued by the Stamp Authorities. The Stamp Authorities have filed a Special Leave Petition (SLP) in the Hon'ble Supreme Court of India, which has been admitted for hearing. The contingent liability from the effective date of amendment i.e. 1st April, 206 till 31st March, 2012 on the CIF value is estimated at Rs. 57,01 lacs. (Previous year - Rs. 37,09 lacs).

d. The Company has received refund of custom duty of Rs. 3,46 lacs from the customs authorities by an Order dated 31st May, 2010 of the CESTAT. The customs authorities have filed an appeal against the Order of the CESTAT with the Hon'ble High Court of Gujarat which is pending.

e. Taxes and duties recoverable (Note 18.) includes service tax of Rs. 40,05 lacs on vessel hire charges (Including interest of Rs. 2,97 lacs) paid under protest for the period from 16th May, 2008 to 30th September, 2009 under section 65 (105) (zzzzj) of the Finance Act, 1994 (as amended) - "Supply of Tangible Goods for Use". Based on the opinion of the tax consultants, the Company is of the view that the demand is not tenable and the Company has filed a refund claim for the same with the Service tax Department. The Commissioner of the Service Tax, vide Order dated 6th March, 2012 has confirmed the demand. The Company is in process of filling an appeal before CESTAT, Delhi. Further, in the event of non refund of claim, the Company has counter claim of the amount from the Off takers with interest. Thus, no provision is considered necessary by the management.

f. During the year, the Company has received a demand order dated 29th November, 2011 for Rs. 65 lacs (including penalty of Rs. 33 lacs) towards service tax liability from the Commissioner (Adjudication) Service Tax, Delhi for the years 2003-04 to 2007-08. The Company has filed an appeal before the CESTAT on 7th March, 2012 on the grounds that legal services were not taxable prior to 1st September, 2009 and payment to International Finance Corporation, USA and others are not subject to service tax levy.

g. During the year, the Company has received a demand order dated 6th March, 2012 for Rs. 3,77 lacs towards service tax liability, on commercial/commitment / administration charges paid on ECB's availed, from the Director General of Central Excise Intelligence, Delhi for the years 2006-07 to 2010-11. The Company is in process of filling an appeal before CESTAT, Delhi.

The future cash flow of items (b), (c), (d), (f) and (g) are determinable only on receipt of the decision / judgment from the respective authorities.

3 Custom Duty on import of Project material/ equipment has been assessed provisionally (current and previous years) and additional liability, if any, on this account will be provided on final assessment.

4 The Company has not received any information from suppliers or service providers, whether they are covered under the "Micro, Small and Medium Enterprises (Development) Act, 2006". Disclosure relating to amount unpaid at the year - end together with interest payable, if any, as required under the said Act are not ascertainable.

5 In terms of para 10 of Accounting Standard 16 "Borrowing Costs". Rs. 17,98 lacs (previous year - Rs. 21,73 lacs) has been reduced from the Interest and Finance Charges (Note 11 - Capital Work in Progress) being income on temporary investment of surplus funds out of borrowings related to Capital Expenditures.

6 Segment Reporting (AS - 17)

Since the Company primarily operates in one segment - Natural Gas Business, segment reporting as required under Accounting Standard - 17 is not applicable. There is no reportable geographical segment either.

7 Related Party Transactions (AS - 18)

a) Related parties and their relationships

i. Promoters

Indian Oil Corporation Limited Bharat Petroleum Corporation Limited

Oil & Natural Gas Corporation Limited GAIL (India) Limited

ii. Joint Venture

Adani Petronet (Dahej) Port Pvt. Ltd

iii. Key Managerial Personnel (KMP)

P. Dasgupta (Managing Director & CEO) (Till 30th June, 2010)

A. K. Balyan (Managing Director & CEO) (Since 16th July, 2010)

Amitava Sengupta (Director - Finance & Commercial) (Till 26th April, 2011) C. S. Mani (Director - Technical)

R. K. Garg (Director - Finance) (Since 20th July, 2011)

8 There is no impairment loss of any asset that has occurred in terms of AS - 28.

9 The Company has claimed deduction under section 801A of the Income Tax Act, 1961 in respect of Power Generation and Port Undertaking in its Tax Returns. However, provision for income tax has been made without considering the aforesaid deductions.

10 Previous year figures have been regrouped/rearranged wherever necessary, to correspond to current year figures.

 
Subscribe now to get personal finance updates in your inbox!