PETRONET Petronet LNG Limited

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Board of Directors

Sh. S.C.Tripathi Chairman Sh. Suresh Chand Mathur CEO & Managing Director Sh. Sham Sunder Director (Technical) Sh. Prosad Dasgupta Director (Finance) Sh. Ashok Sinha Director Sh. B.S. Negi Director Sh. N.K. Nayyar Director Sh. N.K. Mitra Director Sh. Jacques Gautier Director Sh. Arun Duggal Director Sh. DP. Roy Director Sh. Harbans Lai Director Sh. P.K. Chadha Director Sh. J.L Zutshi Director

Company Secretary & V.P. (Finance) Registered Office:

R.K. Garg World Trade Centre, 1st Floor, Babar Road, Barakhamba Lane, New Delhi 110 001 Statutory Auditors: Tel.: 91-11-23411411, 91-11-23413616 Fax: 91-11-23414271 M/s V. Sankar Aiyar & Conpany Website:www.petronetlng.com

Bankers: LNG Terminal: Allahabad Bank GIDC Industrial Estate, Plot No. 7/A, Dahej, Talukavagra, Distt. Bharuch () ICICI Bank Limited Tel.: 02641-253182/257004 IDFC Ltd Fax: 02641-253180 Jammu & Kashmir Bank Oriental Bank of,Commerce State Bank of Indore State Bank of Patiala State Bank of Hyderabad CONTENTS State Bank of Syndicate Bank Notice of AGM 1 Directors' Report 6 Registrar & Share Transfer Agent: Management Discussion and Analysis Report 9 Corporate Governance Report 11 M/s KARVY Computershare Pvt. Ltd. Balance Sheet 22 KARVY House, Profit & Loss Account 23 46, Avenue 4, Street No. 1, Banjara Hills, Schedules 24 Hyderabad Cash Flow Statement 33 Tel.: 040-23312454/23320751/52 Auditor's Report 34 Fax: 040-23311968/23323049

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7TH ANNUAL REPORT 2004-2005

PETRONET LNG LIMITED

NOTICE 6. "RESOLVED THAT pursuant to Article 111 of the Articles of Association of the Company and the NOTICE is hereby given that the Seventh Annual provisions of Section 269, 309 and the provisions General Meeting of the Members of Petronet LNG of Schedule XIII and all other applicable provisions Limited (PLL) will be held on Tuesday, the 26th day of of the Companies Act, 1956, if any, approval of July, 2005 at 10:00 A.M. at Siri Fort Auditorium the Members be and is hereby accorded for Complex, August Kranti Marg, New Delhi-110049 to extending the term of appointment of Shri Sham transact the following business: Sunder, Director (Technical) of the Company from 1st April, 2005 to 31st March, 2006 on the existing ORDINARY BUSINESS: terms and conditions as approved by the Members st 1. To receive, consider and adopt the Audited in the third Annual General Meeting held on 21 Balance Sheet as on 31st March 2005, Profit & September, 2001." st Loss Accounts for the period ended 31 March, 7. "RESOLVED THAT Shri Prem Kumar Chadha who 2005 together with Reports of Directors' and was appointed as an Additional Director of the Statutory Auditors thereon. Company by the Board of Directors under Section 2. To appoint a Director in place of Shri N.K. Nayyar, 260 of the Companies Act, 1956 and who holds who retires by rotation and being eligible, offers office up to the date of this Annual General himself for reappointment. Meeting and in respect of whom the Company 3. To appoint a Director in place of Shri B.S. Negi, : has received a notice in writing proposing his who retires by rotation and being eligible, offers candidature for the office of Director under Section himself for reappointment. 257 of the Companies Act, 1956 be and is hereby 4. To appoint Statutory Auditors, fix their appointed as Director of the Company liable to remuneration and in connection therewith, to pass retire by rotation." with or without modification(s) the following 8. "RESOLVED THAT Shri N.K.Mitra who was resolution as Special Resolution: appointed as an Additional Director of the "RESOLVED THAT pursuant to the provisions of Company by the Board of Directors under Section Section 224A and other applicable provisions, if 260 of the Companies Act, 1956 and who holds any, of the Companies Act, 1956, M/s V. Sankar office up to the date of this Annual General Aiyar & Company, Chartered Accountants, New Meeting and in respect of whom the Company Delhi, the retiring Auditors of the Company, be has received a notice in writing proposing his and are hereby re-appointed as Statutory Auditors candidature for the office of Director under Section of the Company to hold office from the conclusion 257 of the Companies Act, 1956 be and is hereby of the Seventh Annual General Meeting till the appointed as Director of the Company liable to conclusion of the next Annual General Meeting at retire by rotation." a remuneration of Rs. 2.50 lacs plus out of pocket 9. "RESOLVED THAT Shri J.L. Zutshi who was expenses and applicable service tax." appointed as an Additional Director of the Company by the Board of Directors under Section SPECIAL BUSINESS: 260 of the Companies Act, 1956 and who holds office up to the date of this Annual General To consider and if thought fit, to pass with or without Meeting and in respect of whom the Company modification(s) the following resolution(s) as Ordinary has received a notice in writing proposing his Resolutions: candidature for the office of Director under Section 5. "RESOLVED THAT pursuant to Article 109 of the 257 of the Companies Act, 1956 be and is hereby Articles of Association of the Company and the appointed as Director of the Company liable to provisions of Section 269, 309 and the provisions retire by rotation." of Schedule XIII and all other applicable Provisions By Order1 of the Board ' of the Companies Act, 1956, if any, approval of For Petronet LNG Limited the Members be and is hereby accorded for extending the term of appointment of Shri Suresh Chand Mathur, CEO & Managing Director of the Company from 1st April, 2005 to 31st July, 2005 on the existing terms and conditions as approved by (R.K. Garg) the Members in the third Annual General Meeting Place: New Delhi Company Secretary & held on 21st September, 2001." Date: 14th June, 2005 V. P. (Finance)

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7TH ANNUAL REPORT 2004-2005

PETRONET LNG LIMITED

NOTES: slip available at the counters at the venue and 1. The Explanatory Statement pursuant to Section against exchange of Attendance Slip. 173 of the Companies Act, 1956 in respect of the Special Business and also for Item No 4 set out 11. No Brief case/Bags/Eatables will be allowed to above is annexed hereto. be taken inside the Auditorium. 2. A MEMBER ENTITLED TO ATTEND AND VOTE EXPLANATORY STATEMENT PURSUANT AT THE MEETING IS ENTITLED TO APPOINT TO SECTION 173(2) OF THE COMPANIES ACT, A PROXY TO ATTEND THE MEETING AND THE 1956. PROXY NEED NOT BE A MEMBER OF THE COMPANY. A PROXY SHALL NOT HAVE ANY ITEM NO: 4 RIGHT TO SPEAK AT THE MEETING AND SHALL NOT VOTE EXCEPT ON A POLL. M/s V. Sankar Aiyar & Company, Chartered Accountants, were appointed as the Statutory Auditors 3. The instrument appointing the proxy must be of the Company in the Sixth Annual General Meeting deposited at the Registered Office of the Company held on 2nd September, 2004 in terms of Section 224 not less than 48 hours before the commencement of the Companies Act, 1956, the Auditors shall hold of the Annual General Meeting (Proxy Form is office till the conclusion of the ensuing Annual General enclosed with the Annual Report). Meeting. Further, in terms of provisions of Section 224A of the Companies Act, 1956, the appointment/ 4. All documents referred to the accompanying reappointment of Auditors will be made in the Annual notice and the Explanatory Statement are open General Meeting by passing a Special Resolution, if for inspection at the Registered Office of the 25% or more of the paid up share capital of the Company during office hours on all working days Company is being held by Public Financial Institution(s) except Saturday and Sunday between 11.00 a.m. or a Government Company or Companies or Central to 1.00 p.m. up to the date of Annual General or State Government. Meeting. As more than 25% of the paid up share capital of the 5. Members/Proxies should bring the Attendance Company is being held by the Government Companies, Slip duly filled in for attending the Meeting. therefore, the Directors of the Company recommend 6. Members are requested to bring their copies of the appointment of M/s V. Sankar Aiyar & Company, the Annual Report to the Meeting. Chartered Accountants as Auditors of the Company by passing a Special Resolution at remuneration of 7. Members holding Shares in physical mode are Rs. 2.50 lacs plus out of pocket expenses and requested to notify the change in their address/ applicable service tax. bank account to the Company/ M/s Karvy Computershare Private Limited, KARVY Plaza, 46 No Director of the Company is in any way concerned Avenue 4, Street No 2, Banjara Hills, Hyderabad, or interested in the proposed resolution. the Registrar & Share Transfer Agent (R & T Agent) ITEM NO: 5 of the Company. Shri Suresh Chand Mathur was appointed as CEO Members must quote their Folio No. in all & Managing Director by the Board in its first Meeting correspondence with the Company/ R&T Agent. held on 7th April, 1998 for a period of five1 years. The Members holding shares in De-mat/ Electronic age of retirement for Whole-time Directors was fixed Form are requested to get the change in address/ by the Board up to 65 years in its meeting held on 18th bank details in the records of their Depository March, 2003. However, the re-appointment of Participant(s). Shri Suresh Chand Mathur as CEO & Managing Director was made by the Shareholders of the 8. No gifts will be distributed at the Annual General st Meeting Company up to 31 March, 2005 in their meeting held on 12th June, 2003. 9. The Share Transfer Books of the Company th will remain closed from 1st July, 2005 to 26th July, The Board in its Meeting held on 15 March, 2005 further extended the tenure of Shri Suresh Chand 2005 (both days inclusive) for the purpose of st Annual General Meeting. Mathur, CEO & Managing Director up to 31 July, 2005 on the existing terms & conditions i.e. in the pay scale 10. Entry to the Auditorium will be strictly against entry of Rs. 80,000-5000-1,00,000 per month (present basic

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7TU AJVJSUAL REPORT 2004-2005

PETRONET LNG LIMITED PETRONET

pay Rs. 1 ;00,000/- per month) and other perquisites appointed as Additional Director w.e.f. 27.1.2005 on and benefits as per rule of the Company as approved the Board of the Company. by the Shareholders in the third Annual General st Pursuant to provisions of Section 260 of the Companies Meeting held on 21 September, 2003. Act, 1956, he holds office as Director up to the date of As per the requirement of the Companies Act, 1956 ensuing Annual General Meeting. The Company has the appointment of Managing Director is required to received a notice under Section 257 of the Companies be approved by the Shareholders in the General Act, 1956 from a Shareholder proposing the name of Meeting. Shri Prem Kumar Chadha as Director of the Company. A brief resume of Shri Prem Kumar Chadha as required Your Directors recommend the resolution for approval in terms of Clause 49 of the Listing Agreement is of the Shareholders. enclosed with the notice. The Board recommends that Shri Suresh Chand Mathur is interested in the he may be appointed as Director liable to retire by resolution to the extent of extension of his term as CEO rotation. & Managing Director. No other Director of the Company Your Directors recommend the resolution for approval is in any way concerned or interested in the proposed of the Shareholders. resolution. Shri Prem Kumar Chadha is interested in the resolution ITEM NO: 6 to the extent of his appointment as Director. No other Director of the Company is in any way concerned or Shri Sham Sunder was appointed as Director interested in the proposed resolution. (Technical) by the Board in its first Meeting held on 7th April, 1998 for a period of five years. The age of ITEM NO: 8 retirement for Whole-time Directors was fixed by the Board up to 65 years in its Meeting held on 18th March, Pursuant to Article 113 A of Articles of Association of 2003. However, the re-appointment of Shri Sham the Company and in terms of section 260 of the Sunder, Director (Technical) was^made by the Companies Act, 1956, Shri N.K. Mitra was appointed Shareholders of the Company up to 31st March, 2005 as Additional Director w.e.f. 5.5.2005 on the Board of in their meeting held on 12th June, 2003. the Company as Nominee of ONGC, one of the Promoters of the Company. Pursuant to provisions of The Board in its Meeting held on 27th January, 2005 Section 260 of the Companies Act, 1956, he holds further extended the tenure of Shri Sham Sunder, office as Director up to the date of ensuing Annual Director (Technical) up to 31st March, 2006 on the General Meeting. The Company has received a notice existing terms and conditions i.e. in the pay scale of under Section 257 of the Companies Act, 1956 from a Rs. 70,000-4000-90,000 per month (present basic pay Shareholder proposing the name of Shri N.K. Mitra as is Rs. 86,0007- per month) and other perquisites and Director of the Company. A brief resume of Shri Mitra benefits as per rule of the Company as approved by as required in terms of Clause 49 of the Listing the Shareholders in the third Annual General Meeting Agreement is enclosed with the notice. The Board held on 21st September, 2003. recommends that he may be appointed as Director As per the requirement of the Companies Act, 1956 liable to retire by rotation. the appointment of Whole-time Director is required to Your Directors recommend the resolution for approval be approved by the Shareholders in.the General of the Shareholders. Meeting. Shri N.K. Mitra is interested in the resolution to the Your Directors recommend the resolution for approval extent of his appointment as Director. No other Director of the Shareholders. of the Company is in any way concerned or interested Shri Sham Sunder is interested in the resolution to the in the proposed resolution extent of extension of his term as Director (Technical). No other Director of the Company is in any way ITEM NO: 9 concerned or interested in the proposed resolution. Pursuant to Article 113 A of Articles of Association of the Company and in terms of Section 260 of the ITEM NO: 7 Companies Act, 1956 Shri J.L. Zutshi was appointed Pursuant to Article 113 A of Articles of Association of as Additional Director w.e.f. 24.5.2005 on the Board of the Company and in terms of Section 260 of the the Company. Pursuant to provisions of Section 260 Companies Act, 1956, Shri Prem Kumar Chadha was of the Companies Act, 1956, he holds office as Director

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7TH ANNUAL REPORT 2004-2005

PETRONET LNG LIMITED up to the date of ensuing Annual General Meeting. Name of The Company Position Held The Company has received a notice under Section of India Ltd Director 257 of the Companies Act, 1956 from a Shareholder ONGC Director proposing the name of Shri J.L. Zutshi as Director of IBP Co. Ltd Director the Company. Indian Oil Panipat Power Consortium Ltd Chairman A brief resume of Shri Zutshi as required in terms of Lanka IOC Pvt Ltd Chairman Clause 49 of the Listing Agreement is enclosed with the notice. The Board recommends that he may be 2. Shri B.S. Negi appointed as Director liable to retire by rotation. Shri B.S. Negi is Director (Planning) of GAIL Your Directors recommend the resolution for approval (India) Ltd, responsible for formulating and of the Shareholders. implementing strategies for GAIL in planning and Shri J.L. Zutshi is interested in the resolution to the marketing activities related to Natural Gas extent of his appointment as Director. No other Director Pipeline, LPG, Polymers etc. He is with GAIL for of the Company is in any way concerned or interested more that 19 years and has to his credit the in the proposed resolution construction and the commencing of the Worlds largest LPG Pipeline i.e. Jamnagarto Loni pipeline By Order of the Board of GAIL. For Petronet LNG Limited Shri Negi graduated in Mechanical Engineering from university of Allahabad. He also completed post graduation in Project Management from Punjab University Patial-a and Master of Engineering (Turbo Machinery) from South (R.K. Garg) Gujarat University, Surat. He has 34 years of rich Place : New Delhi Company Secretary & th professional experience in the field of Oil Refinery, Date : 14 June, 2005 V. P. (Finance) Fertiliser Paints, Gas Transmission, Gas Processing and LPG Transmission. He is the nominee of GAIL on the Board of Petronet LNG Limited. BRIEF BIOGRAPHY OF DIRECTORS PROPOSED TO BE APPOINTED/REAPPOINTED AS REQUIRED Shri Negi holds Directorship in'the following other IN TERMS OF LISTING AGREEMENT Companies:

1. Shri N.K. Nayyar Name of the Company Position Held Shri N.K. Nayyar is Director (Planning & Business GAIL (India) Limited Director Development), Indian Oil Corporation Ltd (IOCL) Shell CNG Egypt Director and responsible for diversification of IOCL in to Fayum Gas Co. Ltd Director Gas Sector, integration along hydrocarbon chain through Petrochemical, Exploration and Production. Shri Nayyar besides being a 3. Shri Suresh Chand Mathur Chartered Accountant is also an alumnus of Indian Shri Suresh Chand Mathur is a Chartered Institute of Management, Ahmedabad and has Accountant by qualification. He is CEO & completed Advanced Financial Management Managing Director of the Company since April, Programme in Oil & Gas from University of Texas, 1998. He has varied experience of over 30 years Dallas. in the Oil Industry. During his tenure with the Indian Shri Nayyar was actively involved in IOCL Oil Corporation Ltd, he has held important successful acquisition of IBP Co Ltd, Chennai assignments in the filed of finance, strategic Petroleum Corporation Ltd and Bongaigaon planning, import of crude oil, marketing and Refineries & Petrochemicals Ltd. He is the operation and acquisition of the projects, nominee of the IOCL on the Board of Petronet Prior to taking over the charge of Petronet, he LNG Limited. was the Director (Finance) of Indian Oil Shri Nayyar holds Directorship in the following Corporation Ltd. Shri Mathur had been consultants other Companies: to ITC Geneva and World Bank and has authored

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7TH ANNUAL REPORT 2004-2005

PETRONET LNG LIMITED

a Book on " Handbook of Import of Crude Oil and Name of the Companies Position Held Petroleum Products for Developing Countries". Sona Koyo Steering System Ltd Director Shri Suresh Chand Mathur is not Director of any Sona Okegawa Precision Forging Ltd Director other Company. SOWIL Ltd Director

4. Shri Sham Sunder 6. Shri N.K. Mitra Shri Sham Sunder is Director (Technical) of the Shri N.K. Mitra is Director (Offshore) with Oil & Company since April, 1998.He is B.E in Chemical Natural Gas Corporation Ltd (ONGC). He holds Engineering from Punjab University, Chandigarh degree in B.Sc. (Hons.) and also degree in and also holds MS (Chemical Engineering) Petroleum Engineering from Indian School of from OKLAHOMA State University, Still Water, Mines, Dhanbad. Shri Mitra Joined ONGC in 1973 USA. He is responsible for execution of projects and since than he has held various senior and other related technical matters of the positions like Chief Engineer (Production), Company. General Manager (Production), Executive Director (Offshore). Shri Sham Sunder is not Director of any other Company. Shri Mitra is the nominee of ONGC on the Board of Petronet LNG Limited. 5. Shri Prem Kumar Chadha Shri Mitra holds Directorship in the following other Shri Prem Kumar Chadha is graduate in Companies: Mechanical Engineering. He joined Hindustan Lever Ltd. as a Management Trainee in 1962 and Name of the Companies Position Held worked in various capacities in manufacturing Oil & Natural Gas Corporation Limited Director and general management functions. In 1980, he ONGC Videsh Ltd Director was appointed to the Board of Hindustan Lever Manglore Refineries & Petrochemicals Ltd. Director Ltd. Pawan Hans Ltd Director In 1985, he was transferred to Unilever's subsidiary in Japan where he worked as Technical 7. Shri J.L. Zutshi Director, Nippon Lever before moving to Europe Shri J.L. Zutshi, Ex-chairman of Indian Oil in 1991. He functioned as the Head of Technology Corporation Ltd is Bachelor of Engineering (BE) for Unilever worldwide from 1991 to 1996 based (from Houston). He has over 36 years rich in the Netherlands. He retired in 1998 as Senior experience in the down stream Oil and Gas Vice President, Manufacturing and Supply Chain, Industry. Besides, he is expert in Strategic Human Unilever NV, Rotterdam after 36 years service with Resources Management and also has extensive the Unilever group. experience in Marketing operations and Logistics. Shri Chadha is presently serving as a Non- During his carrier with Indian Oil Corporation Ltd executive Director on the Boards of few he had held very senior positions like Executive Companies in India. He is also a Management Director (Marketing Operations), Executive Consultant to some Companies in India and Director (Personnel), Director (Personnel) etc. Indonesia. Shri J.L. Zutshi holds Chairmanship in Lubrizol Shri Prem Kumar Chadha holds Directorship in India (Pvt) Limited. the following other Companies:

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7TH ANNUAL REPORT 2004-2005

PETRONET LNG LIMITED

DIRECTORS' REPORT IBP Co. Ltd. to take up feasibility of LNG supply to consumers in cryogenic vehicles, the LNG for such pilot To The Members, project being allocated from IOC's share of RLNG. The Directors have pleasure in presenting the Seventh Annual d) Shipping Arrangement Report and the Audited Accounts of your Company for the Your Company had executed two Shipping Time Charter year ended 31st March, 2005. Agreements with "India LNG Transport Company (No1) The year 2004-05 was marked by several achievements and Ltd" and "India LNG Transport Company (No 2) Ltd. accomplishments by your Company. The detailed owned by the consortium led by Mitsui OSK Lines, performance during the year is provided herein below: Japan. M/s Daewoo Ship Building and Marine Engineering Company, Korea completed the LNG TERMINAL AT DAHEJ construction of second vessel named "RAAHI", which was delivered on 16th December 2004. Your Company commenced commercial operations from India's first LNG Receiving and Regasification Terminal at "RAAHI" made its maiden voyage to Lake Charles, USA th Dahej from 9 April 2004. The Company implemented the after loading LNG at RasLaffan, Qatar. LNG Shipment Dahej LNG project within budget and schedule. to Dahej on "RAAHI" commenced from 18th March, and is now regularly bringing LNG to Dahej. First ship a) Operations of Dahej Terminal "DISHA" is continuing to bring LNG to Dahej from LNG cargoes are being regularly received at Dahej, forty RasLaffan regularly. two LNG cargoes were unloaded in the year 2004-05 and 3236 MMSCM regasified LNG has been supplied e) Port Operator to the Off-takers viz GAIL (India) Limited (GAIL), Indian M/s Sealion Sparkle Port and Terminal Services (Dahej) Oil Corporation Ltd (IOCL) and Limited, a JV Company of PSA Marine Pte Ltd., Corporation Ltd (BPCL). Singapore and Ocean Sparkle Ltd., India is providing The Dahej LNG terminal has received ISO 9001 Port Operation Services at Dahej. The Port Operator is certification in its very first year of operation. The terminal providing tugs, marine crafts and crew at our port, and has also received Occupational Health & Safety is responsible for safe berthing of LNG tankers at the Management System (OHSAS). 18001 certification and jetty and other related marine services. ISO 14001 for Environment Management System from DNV after successful completion of the certification audit EXPANSION OF DAHEJ LNG TERMINAL th on 29 December, 2004. Your Company has embarked upon the expansion of Dahej The terminal achieved 1.54 million accident LNG terminal to 10.0 MMTPA capacity. This shall involve free man-hours of operation in the financial year 2004- construction of additional LNG storage tank, pumps, 05. vaporizers, send out and metering systems etc. The process of selection of lump-sum turnkey contractor.for Dahej b) EPC Contract expansion project has been initiated. A common Request The LNG terminal at Dahej has been executed through for Qualification (RFQ) for Dahej expansion project and a lump sum turnkey EPC Contract by setting-up of LNG terminal at , Kerala has been sought a Consortium of companies led by from interested parties, based on which, four parties have M/s Ishikawajima Harima-Heavy Industries Co. Limited been short-listed who may be participating in Bidding for EPC (IHI), Japan. The performance test of the facilities at work. Dahej LNG Terminal was carried out from 8th June to th Engineers India Limited has been entrusted with the job of 13 June 2004. The entire plant was run at 100% design preparation of bid package for Dahej Expansion project. Bid capacity to demonstrate the achievement of performance package shall be reviewed by M/s Foster Wheeler Energy guarantees for various equipment and systems. Limited, U.K. The Request for Proposals (RFP) shall be invited Based on the recommendation of several consultants, from the bidders pre-qualified at the RFQ stage. the Company has decided not to construct breakwater Approval of Gujarat Pollution Control Board (GPCB) for the at Dahej and instead construct an additional LNG expanded capacity at Dahej LNG terminal has been obtained. storage tank, which shall provide necessary flexibilities Updated Marine and Terrestrial Risk Analysis has been in operations during monsoon. In addition, the Company carried out and submitted to Department of Forests and has implemented additional counter measures e.g Environment, Government of Gujarat, for obtaining Four-60 Ton shore to ship mooring lines. environment clearance. c) Pilot Project for Supply of LNG in Cryogenic Vehicles LNG TERMINAL AT KOCHI A Memorandum of Understanding has been entered with Your Company has also commenced activities for setting up

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7TH ANNUAL REPORT 2004-2005

PETRONET LNG LIMITED

LNG Receiving and Regasification Terminal at Kochi of 2.5 Apr 9, JuM Oct1, Jam, Apr 9, 2004 to 2004 to 200410 2005 to 2004 to MMTPA nominal capacity, with provision for expansion to 5 Jun 30, Sep30, Dec 31, Mar 31, Mar 31, MMTPA. The terminal mainly consists of two Storage Tanks 2004 2004 2004 2005 2005 each of 155,000 cubic meters capacity, vaporization system Quantity (TBTUs) 25.33 31.52 33.92 34.26 125.03 and utilities and off site facilities. LNG port facilities include Rs. in Crores construction of jetty, breakwater, dredging etc. Sales 388.4 502.1 531.5 523.2 1,945.2 Other Income 2.8 1.9 5.0 3.6 13.3 Cochin Port Trust (CPT) at Puthuvypean Island in outer Cochin Raw Material 346.3 Harbour had allocated land for the LNG terminal. The physical Consumed 440.9 460.9 447.9 1,696.0 Staff & Other Expenses 20.5 25.7 22.6 29.9 98.7 marking of the boundary points has been carried out by CPT, Profit before Interest, and allotment letter has been issued. Dep. & Tax 24.4 37.4 53.0 49.0 163.8 Finance Charges 21.8 28.5 28.6 30.5 109.4 The capacity of LNG tanks proposed for Kochi LNG terminal Profit before Dep. &tax 2.6 8.9 24.4 18.5 54.4 has been upgraded to.155,000 cubic meters so that additional Depreciation 22.1 24,9 24.9 24.9 96.8 LNG storage capacity is not needed when PLL expands Kochi Tax (Deffered tax Assets) - - - (14.0) (14.0) Net Profit/ (Loss) (19.5) (16.0) (0.5) 7.6 (28.4) terminal to 5 MMTPA. M/s Fluor, an International Engineering Consulfants who had prepared the original DFR, has further During the year Company capitalized fixed assets at its Dahej updated the DFR including cost estimates. LNG terminal amounting to approx. Rs. 1900 Crores. During 2004-05, Company paid custom duty amounting to Rs. 82.64 The environment clearance for Kochi terminal was obtained Crores. The Company achieved financial closure of Dahej earlier for 110,000 cubic meters LNG tank capacity. Ministry Project on June 30, 2004, undet Project Finance Scheme, of Environment and Forest (MOE&F) have advised that PLL consequent to which the short term promoters' guaranteed should carry out fresh risk analysis etc. for proposed storage loans were repaid and guarantees vacated. The Company tanks. Action has accordingly been taken. did not raise any fresh loans during the year.

TRANSPORTATION OF LNG FOR PROJECTS The Quarterly performance of the Company can be summed DAHEJ EXPANSION AND KOCHI up as under: Rs in crores For meeting the transportation requirement of proposed expanded capacity of Dahej LNG terminal and regasification and storage LNG terminal at Kochi, your company has initiated the process for selecting the Ship Owner / Operator. A global press notice for pre-qualification of Ship Owners / Operators for transportation of LNG under Time Charter Agreement (TCA) for Dahej expansion and Kochi was issued in November, 2004. Six parties have been pre-qualified for further submission of their proposal for Time Charter hire.

SOLID CARGO PORT AT DAHEJ QEI QEII QEIII QEIV Your Company has decided to set up the Solid Cargo Port I Sales 0 Consumption D Profit before Interest, Dep. & Tax at Dahej through a Special Purpose Vehicle (SPV) as INFORMATION TECHNOLOGY mandatory required under the Concession Agreement with Gujarat Maritime Board. The Joint Venture Agreement shall The Company has implemented SAP R3, an ERP solution be entered into with the selected Joint Venture partner after covering the entire operations of the organization commencing execution of the Concession Agreement with Gujarat Maritime from loading of LNG to evacuation into pipeline. With implementation of SAP R3, front-end & IS of critical data key Board. data like weather conditions, tidal movement, send outs etc. FINANCIAL PERFORMANCE are available real-time on line to the relevant Management. The Company has automated its entire business processes As mentioned earlier, the Company Commenced commercial in line with the Best Industry Practices. operations w.e.f April 9, 2004 and has sold 125.03 Trillion British Thermal Units (TBTU) of Re-gasified LNG (RLNG) till Your Company had also been nominated by Economic Times March 31, 2005, representing sales revenue of Rs.1945 for "Emerging Company of the Year Award 2004". Crores. DIVIDEND The quarter wise financial performance of the Company are The Directors do not recommend any dividend for the year as under: ending 31st March 2005.

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PETRONET PETRONET LNG LIMITED

DEPOSITS preventing and detecting fraud and other irregularities; During the year, your Company did not accept any deposits and from the public under section 58A of the Companies Act, 1956. d) that the accounts of your Company have been prepared on a going-concern basis. EMPLOYEE PARTICULARS None of the employees of your Company is drawing BOARD OF DIRECTORS remuneration exceeding limits laid down under the provisions Shri Arvind Varma, an Independent Director, resigned from of Section 217 (2A) of the Companies Act, 1956 read with the office of Director on 4th December, 2004. Shri Prem Kumar the Companies (particulars of employees) Rules, 1975. Chadha, an Independent Director and Shri Harbans Lai, Nominee Director of Lenders were appointed on 27th January, CORPORATE GOVERNANCE 2005. Shri Ravindra Gupta, who was also appointed as an As required under Clause 49 of the Listing Agreement with Independent Director on 27th January, 2005 resigned on 17th the Stock Exchanges, the Report on Corporate Governance March, 2005 and in his place, the Board has appointed Shri together with Auditors' Certificate regarding Compliance of J. L. Zutshi as an Independent Director w.e.f. 24th May, 2005. the SEBI Code of Corporate Governance is annexed herewith. Shri Y.B. Sinha, nominee Director of ONGC ceased to be Director w.e.f. 4th May, 2005 and Shri N.K. Mitra has been MANAGEMENT DISCUSSION AND ANALYSIS appointed in place of Shri Y.B. Sinha w.e.f. 5th May, 2005 as The Annual Report also contains a separate section on the nominee Director of ONGC. Management Discussion and Analysis' which is a part of the The Board placed on record its appreciation of the enormous Directors' Report. contribution made by all the retiring Directors during their HUMAN RELATIONS tenure as Directors of the Company. Your Company continued to enjoy cordial relations amongst FOREIGN EXCHANGE EARNING AND OUTGO all its employees. In its pursuit of creating its own Management Your Company incurred Rs. 1598.43 crores towards Import cadre, your company recruited executives and staff at various of LNG and its Transportation during the year under review in levels, including senior management positions during the year. foreign exchange. Foreign exchange earnings on account of INDUSTRIAL RELATIONS Vessel hire charges were Rs. 13.44 crore. During the year, your Company maintained harmonious and AUDITORS cordial industrial relations. No man-days were lost due to M/s V. Sankar Aiyar & Company, Auditors of the Company, strike, lock out etc. will retire at the ensuring Annual General Meeting of your CONSERVATION OF ENERGY & TECHNOLOGY Company and being eligible, offer themselves for re- ABSORPTION appointment. The re-appointment, if made, for the Financial All possible steps have been taken by your Company to year 2005-2006, will have to be by a Special Resolution as required under section 224A of the Companies Act, 1956. achieve the objective of energy conservation and technology absorption. Your Company's engineers have been completely ACKNOWLEDGEMENTS involved with Consultants in all the phases of the operations The Board of Directors thanks and wish to place on record of the terminal in order to ensure high degree of optimization its appreciation to the Ministry of Petroleum and Natural Gas, and conservation of energy and absorption of technology. Ministry of Surface Transport, Ministry of Power, Ministry of DIRECTORS' RESPONSIBILITY STATEMENT Chemicals and Fertilisers, Ministry of Forest and Environment, , Governments of Gujarat and Kerala, Pursuant to the provisions of section 217(2AA) of the Promoters of the Company, Gaz De France, a Strategic Companies Act, 1956, the Directors hereby confirm: Partner, Indian and Overseas Financial Institutions, Banks, a) that your Company had followed the applicable Asian Development Bank, Domestic and International Legal accounting standards along with proper explanations Consultants, EPC Contractors and the Employees of the relating to material departures in the preparation of the Company at all levels for the continued Co-operation and annual accounts; unstinted support extended to the Company. b) that your Company had selected such accounting The Directors also express their sincere thanks to all the policies and applied them consistently and made Shareholders for the continued support and trust they have judgement and estimates that are reasonable and reposed in the Management. prudent so as to give a true and fair view of the state of The Directors look forward to a bright future with confidence. affairs of the Company at the end of the financial year and of the profit or loss account of the Company for that On behalf of the Board of Directors period; c) that your Company had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act Place : New Delhi (S. C. Tripathi) for safeguarding the assets of your Company and for Dated : 14th June, 2005 Chairman

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