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Petronet LNG

BSE: 532522|NSE: PETRONET|ISIN: INE347G01014|SECTOR: Oil Drilling And Exploration
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Notes to Accounts Year End : Mar '19

Notes to the standalone financial statements for the year ended 31 March 2019

(All amounts are in Rupees lac, unless otherwise stated)

(a) Financing arrangements

The group had access to the following undrawn borrowing facilities at the end of the reporting period:

As at 31 March 2019

As at 31 March 2018

Floating rate Expiring within one year (bank overdraft and other facilities)

- Fund/ Non fund based (secured)

1,96,305

2,56,480

- Fund/ Non fund based (unsecured)

1,49,770

2,80,816

Expiring beyond one year (bank loans)

-

-

Total

3,46,075

5,37,296

The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in INR and have an average maturity of 1 year (as at 31 March 2018 -1 year).

b) Maturities of financial liabilities

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and excluding contractual interest payments and exclude the impact of netting agreements.

The inflows/(outflows) disclosed in the above table represent the contractual undiscounted cash flows relating to derivative financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity. The interest payments on variable interest rate loans and bond issues in the table above reflect market forward interest rates at the reporting date and these amounts may change as market interest rates change.

iii. Market Risk

Market risk is the risk that changes in market prices-such as commodity prices (LNG), foreign exchange rates and interest rates - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

a) Price Risk

To protect the company from fluctuation of commodity prices, same are passed through to the off-takers in long term contract. In spot or short term contract, they are generally pass through to the customers except in few cases, up to 2 cargo load, where the company keeps the commodity price risk with themselves to take benefit from market fluctuation.

b) Currency Risk

PLL imports LNG mainly from Qatar and Australia through long term chartered vessels. The foreign exchange involved in making payment to LNG suppliers, loading port charges and shipper is recovered from off-taker / customer under sale contract, both long term and short term. For foreign currency loans taken by Company, the company has entered into derivative transaction at the time of draw down itself to protect from exchange losses. Company does not take any exposure on account of currency in Foreign Currency Loans. In respect of other payments on account of repair and capex of plant, operating expenses of plant and corporate offices etc. same are monitored on a regular basis to keep the open position at an acceptable level.

Exposure to Currency Risk

The summary quantitative data about the Group''s exposure to currency risk as reported to the management of the Group is as follows:

As at 31 March 2019

USD

EUR

SGD

GBP

Financial Assets Loan

2,492

Net exposure to foreign currency risk (assets)

2,492

-

-

-

Financial Liabilities

Trade payables

1,21,764

100

16

4

Other payables for Capital goods

-

-

-

-

Net exposure to foreign currency risk (liabilities)

1,21,764

100

16

4

Net statement of financial position exposure

1,19,272

100

16

4

As at 31 March 2018

USD

AUD

GBP

Financial asset

Loan

2,295

-

-

Cash and cash equivalents

4

-

-

Derivative asset

Cross current interest rate swaps

9,573

-

-

Net exposure to foreign currency risk (assets)

11,872

-

-

USD

AUD

GBP

Borrowings

39,224

_

_

Trade payables

1,48,979

1

8

Other payables for Capital goods

2,142

-

-

Net exposure to foreign currency risk (liabilities)

1,90,345

1

8

Net statement of financial position exposure

1,78,473

1

8

c) Interest Rate Risk

The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company cash flow to interest rate risk. Company policy is to maintain most of its borrowings at fixed rate using interest rate swaps to achieve this when necessary especially if the borrowing is made in foreign currency. Company has some amount of loan taken from International Finance Corporation, which is at variable rate. The Company ensures that such amount is kept at an acceptable level. The investment of surplus funds made by company in debt based of mutual funds is also subject to this risk. Company makes investment in a manner which minimises such risk and also takes regular feedback from the market experts on such investments. The Company has also given loans to, India LNG Transport Company (No. 3) Limited, Malta and India LNG Transport Company (No. 4) Private Limited, Singapore, which are at Bank Rate and any change in Bank Rate will impact the earnings.

Sensitivity Analysis

A reasonably possible strengthening (weakening) of the INR against all other currencies at 31 March would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

Profit or loss, net of tax

Equity, net of tax

Strengthening

Weakening

Strengthening

Weakening

31 March 2019

10% movement

USD

7,760

(7,760)

7,760

(7,760)

EUR

7

(7)

7

(7)

SGD

1

(1)

1

(1)

GBP

0.3

(0.3)

0.3

(0.3)

Profit or loss, net of tax

Equity, net of tax

Strengthening

Weakening

Strengthening

Weakening

31 March 2018

10% movement

USD

11,611

(11,611)

11,611

(11,611)

AUD

0.1

(0.1)

0.1

(0.1)

GBP

1

(1)

1

(1)

Exposure to Interest Rate Risk

The interest rate profile of the Group''s interest-bearing financial instruments as reported to the management of the Group is as follows.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss, and the Company does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

Nominal Amount

31 March 2019

31 March 2018

Fixed-rate instruments

Financial liabilities

- Fixed rate borrowing

60,000

1,29,204

60,000

1,29,204

Variable-rate instruments

Financial assets

- Loan

2,492

2,295

Financial liabilities

- Variable rate borrowing

13,340

16,100

15,832

18,395

31 March 2019

Average interest rate

Balance

% of total loans

Financial Asset : Loan

6.50%

2,492

100%

Financial Liability: IFC A loan

8.74%

13,340

18%

31 March 2018

Average interest rate

Balance

% of total loans

Financial Asset : Loan

6.50%

2,295

100%

Financial Liability: IFC A loan

8.00%

16,100

11%

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

Profit or loss, net of tax

Equity, net of tax

100 bp increase

100 bp decrease

100 bp increase

100 bp decrease

31 March 2019 Variable-rate instruments

(87)

87

(87)

87

Cash flow sensitivity (net)

(87)

87

(87)

87

31 March 2018 Variable-rate instruments

(105)

105

(105)

105

Cash flow sensitivity (net)

(105)

105

(105)

105

A change of 100 basis points in interest rates would have increased or decreased equity by Rs. 87 lac after tax (Previous year Rs. 105 lac). This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

45 Capital Management

The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital on a yearly basis as well as the level of dividends to ordinary shareholders which is given based on approved dividend policy

The board of directors seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.

Source : Dion Global Solutions Limited
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