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Chairman’s Speech on the 16th Annual General Meeting

Dear Shareholders,

It gives me great pleasure to extend a warm welcome to all of you on the 16th Annual General Meeting of Petronet LNG Limited. On behalf of the Board of Directors, it is my privilege to thank each one of you for making it convenient to attend this meeting. The Annual Report for the year ended 31st March, 2014, along with audited financial statements has already been circulated to you. If you all agree, I will take them as read.

It is matter of considerable satisfaction that in a short span of ten years since it started LNG imports, your Company has established its presence as one of the major importers of LNG in the world.

India is currently the world’s fifth largest consumer of energy, accounting for nearly 4.7% (BP Stats 2013 Data from 2014 Report) of world’s total energy consumption. With sustained economic growth, the demand for energy is rapidly increasing. Energy is imperative for the economic development of the country and Petronet LNG is striving to make its mark as an important energy provider.  

Currently, the share of Natural Gas in our nation’s primary energy basket is significantly below the world average. We are making efforts to augment our Natural Gas supplies. Several international examples have shown that through an extensive development of pipeline infrastructure and LNG re-gasification terminals, a Country can encourage a gas-based development model, with positive impact on the environment. This is however dependent on the price of Natural Gas, particularly imported LNG.

In India’s current gas demand-supply scenario, there is a gap between demand and supply. The country has been a net importer of Natural Gas since 2004. To ease the supply pressure, in addition to long-term import, PLL is importing Spot/Short-Term LNG cargoes sourced from different suppliers worldwide. The demand for Natural Gas has been increasing. Even as the country is trying to augment domestic supplies of Natural Gas, the Government, on its part, is encouraging investments in LNG terminals so that sufficient quantity of Natural Gas can be imported.

The rapid growth of LNG business in the world is being hailed as the next big development in the Oil and Gas Industry. In view of demand-supply gap for Natural Gas, there is a potential to import LNG into the country. Your Company, which is at the forefront of importing LNG in India, will definitely have a bigger role to play in times to come.

Your Company has executed long-term LNG supply contracts with Qatar and Australia. To alleviate the gas shortage in the Country, the Company is negotiating with a number of international suppliers all around the world for bringing more volumes in India. This will help broad-base LNG supply sources. However, sourcing of LNG at attractive prices remains a challenge.

Your Company started its operations in 2004 and has become a leader in the LNG industry. Today, it is ranked 37th in the  elite list of Fortune India 500 Companies, on the basis of 2012-13 results based on revenue and market capitalization of the companies. Adding another feather to its cap, your Company has been ranked as the top Indian company under the sector Gas – Processing, Transmission and Marketing for the Dun & Bradstreet Corporate Awards 2012. Your Company has also received KMA Corporation Excellence Award-2013 for its CSR activities.

Your company has commissioned the 5 MMTPA greenfield LNG import and re-gasification plant in Kochi in Kerala. This was set up to enable PLL to expand reach and supply natural gas in the south. To achieve this objective, the Government of India had given permission to GAIL to lay pipelines to connect Kochi LNG terminal to the consumers in Mangalore and Bengaluru. Certain constraints are being faced by GAIL in laying these pipelines. The pipeline to Bengaluru passes through the State of Tamil Nadu and this has become a subject matter of litigation. The Mangalore section of the pipeline is awaiting ROU (Right of Use) acquisition from State Government in certain districts of Kerala. Your Company is hopeful for resolution of these issues and completion of pipelines in the near future.

The Terminals of the Company are strategically located to cater to the large demand of the entire Country. A robust pipeline network needed to carry the gas to the consumers and connecting regional markets. Government’s announcement to build additional 15000 km. of natural gas pipelines will certainly help in the direction.

During the year, while your company achieved the highest ever turnover of Rs. 37,748 Crore as against Rs. 31,467 Crore in 2012-13, the net profit during the year declined to Rs.712 Crore as against Rs. 1,149 Crore in the previous year. Lower capacity utilization, coupled with the commissioning and consequent capitalization of the Kochi terminal, resulted in lower profits for PLL for FY14. The capacity utilization at the Dahej Terminal was at 96%, while the Kochi terminal operated at minimal capacity.

Keeping in view the performance and dividend policy of your Company, the Directors are pleased to recommend a dividend of 20% on the paid-up share capital of the company for the year ending March 31, 2014. The market capitalization of your Company as on date is Rs. 14,475 Crore (approx.) and the Company has given more than 12 times return to its investors at the IPO price of Rs. 15/- per share issued in March, 2004.

I wish to take this opportunity to assure you that your Company would continue to contribute to the sustainable economic growth of the Country and, in the next few years, would reinforce its position as a key player in the energy sector. I, on behalf of the Board of Directors place on record its deep appreciation and acknowledgment of the valuable services and dedicated efforts provided by the all stakeholders, employees, customers and associates in achieving the high-performance objectives.  

I congratulate Petronet LNG Ltd. and its promoters for their significant achievement. I would like to assure all stakeholders that the Government of India will provide all necessary assistance in the growth of Company.

Thank you, Ladies and Gentlemen!

Saurabh Chandra
....September, 2014

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