We have audited the accompanying Standalone Financial Statements of Petronet LNG Limited ("the Company"), which
comprise the Balance Sheet as at 31st March, 2026, the Statement of Profit and Loss (including Other Comprehensive
Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year on that date and notes to
the Standalone Financial Statements, including a summary of the material accounting policies and other explanatory
information (hereinafter referred to as the "Standalone Financial Statements")
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone
Financial Statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and
give a true and fair view in conformity with Indian Accounting Standards prescribed under section 133 of the Act ("Ind AS")
and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2026, its
profit, total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing ("SA"s)
specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's
Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the
Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together
with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions
of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the ICAI's Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate
to provide a basis for our audit opinion on the Standalone Financial Statements.
Emphasis of Matter
We draw your attention to Note 14 to the Standalone Financial Statements regarding recoverability of trade receivables as
at 31st March 2026 include 'Use or Pay' (UoP) dues amounting to Rs. 719.84 Crore (gross) (Rs. 413.02 Crore (net) after making
a provision of Rs. 306.82 Crore). These dues have arisen due to lower capacity utilisation by customers under long-term
regasification agreements entered into by the Company. These UoP dues pertain to FY 2022-23 (CY 2022): Rs. 13.11 Crore,
FY 2023-24 (CY 2023): Rs.540.50 Crore, FY 2024-25 (CY 2024): Rs.117.27 Crore and FY 2025-26 (CY 2025): Rs. 48.96 Crore.
The Board had approved a recovery mechanism for UoP dues relating to CY 2022 and CY 2023, in accordance with
agreements reached with customers. As part of this arrangement, the Company received Rs. 630.04 Crore, as against CY
2022 UoP dues of Rs. 643.15 Crore, during the year. The Company continues to engage with the customer for balance
outstanding. The Company is in the process of implementing the Board approved recovery mechanism with all customers
for CY 2023. Bank guarantees pertaining to CY 2023 have been received from majority of the customers.
As per the terms of the Settlement Agreement under the recovery mechanism for Use or Pay (UoP) dues of CY 2022 and CY
2023, some of the customers have brought LNG quantities upto 31st March 2026, for which revenue has been recognised at
the prevailing Regasification Rate. Correspondingly, the Company has waived off UoP dues amounting to Rs.120.64 Crore
during the year ended 31st March 2026 by charging it to the Statement of Profit and Loss.
The Board at its meeting held on 9th April 2026, approved a recovery mechanism for UoP dues pertaining to CY 2024. The
Company is in the process of implementing this mechanism.
While some customers have not provided balance confirmations for the UoP dues, management remains confident of
recovery, as the amounts are contractually obligated. As a measure of prudence, the Company has made a time-based
provision of Rs. 306.82 Crore as at 31st March 2026 (Rs. 469.15 Crore as at 31st March 2025).
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the
Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters. We have determined the matters described below to be the key audit matters to be communicated in
our report:
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S. No.
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Key Audit Matter
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Auditor's Response
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1.
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Impairment assessment of Kochi Plant
The recoverable value of the Property Plant and
Equipment's capitalized under Kochi Plant of the
Company are dependent on future demand from
Kochi Plant.
The determination of recoverable amount of Kochi
Plant is based on the value-in use derived from future
free net cash flow based on management assumptions
of operations for the coming years and from the
terminal period. Significant judgement is required
by the Management in determining value-in-use,
including discount rate to be applied and cash flow
projections based on availability of pipeline, demand
of gas etc.
Accordingly, the impairment evaluation of Kochi Plant
is considered to be a key audit matter.
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We assessed the Company's process of assessing
the impairment requirement for Kochi Plant by
reviewing the Impairment Study Report, carried out
by an outside consultant appointed by the Company,
and for verification of the same, following tests were
performed:
• Considered if the discounted cash flow models
used to estimate the recoverable amount of
Kochi Plant, based on "Value in Use" (VIU) were in
consistent with Indian Accounting Standard;
• Considered whether the forecasted cash flows in
the impairment model were reasonable and based
upon supportable assumptions;
• Mathematical accuracy of the impairment model
calculations:
We found management's assessment that there is no
immediate case of impairment of Kochi Plant based on
VIU is reasonable.
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2.
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Revenue from Contracts with Customers
Accuracy of recognition, measurement, presentation
and disclosures of revenues and other related balances
in view of requirement of Ind AS 115 "Revenue from
Contracts with Customers"
The application of Ind AS 115 requires certain key
judgements including identification of distinct
performance obligations and transaction price.
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We assessed the Company's process of identification
of distinct performance obligations and transaction
price and for the same we selected sample contracts,
covering all type of revenue recognized by the
Company and performed the following procedures:
• Considered the terms of the contracts to determine
the transaction price specially to ascertain if there
is any financing component in the arrangement
where advances have been received from the
customers.
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S. No.
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Key Audit Matter
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Auditor's Response
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• Read, analysed and identified the distinct
performance obligations in these contracts.
• Compared these performance obligations with
that identified and recorded by the Company.
• Performed analytical procedures for
reasonableness of revenues disclosed by type and
service offerings.
Based on the work performed, we found the
management's assessment of determination of
transaction price and identification of distinct
performance obligation is reasonable.
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3.
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Determination of credit impairment on
trade receivables
Trade Receivables are significant to the Company's
Standalone Financial Statements. The Collectability of
trade receivables is a key element of the company's
working capital management. Due to complexity of
contractual terms, as well as ongoing negotiations
with customers, significant judgements are required
to estimate whether any impairment provision is
required against such receivable and accordingly, it
was determined to be a key audit matter in our audit.
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Our audit procedures in this area included the
following:
• Assessed the design, implementation and
operating effectiveness of internal controls over
Management's evaluation of the Expected Credit
Loss on trade receivables including historical
credit loss.
• Reviewed contractual terms subject to which
revenue recognised and trade receivables
outstanding in the books.
• Reviewed documents related to ongoing
negotiation with the customers.
• Discussion with management over recoverability
of outstanding dues.
• Reviewing the adequacy and completeness of the
disclosures in Standalone Financial Statements.
We found management's assessment of credit
impairment is reasonable.
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4.
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Contingent liabilities
There are various pending cases against which demand
has been raised by different authority.
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For legal and regulatory matters, our procedures
included following:
• Assessing the processes and control over legal
matters;
• Reviewing the Group's significant legal matters
and other contractual claims;
• Performing substantive procedures on the
underlying calculations of potential liability;
• Where relevant, reading external legal opinions
obtained by management;
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S. No.
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Key Audit Matter
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Auditor's Response
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• Where relevant, obtaining written confirmation from
external legal counsels on the status of the cases
• Reviewing the adequacy and completeness of the
company's disclosures.
Based on the work performed, we found the disclosures
made by the management in Standalone Financial
Statements are sufficient.
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Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the information
included in the Management Discussion and Analysis, Board's Report including Annexures to Board's Report, Business
Responsibility and Sustainability Report, Corporate Governance and Shareholder's Information, but does not include the
Standalone Financial Statements and our auditor's report thereon. The other information in annual report is expected to be
made available to us after the date of this auditor's report.
Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or
our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditor's report, we
conclude that there is a material misstatement of this other information; we are required to report that fact. Reporting
under this section is not applicable as no other information is obtained at the date of this auditor's report.
Responsibilities of Management and Those Charged with Governance for the Standalone
Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the
preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial
performance, including other comprehensive income, changes in equity and cash flows of the Company in accordance
with the accounting principles generally accepted in India including Ind AS specified under section 133 of the Act. This
responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for
safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and
design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring
the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone
Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Standalone Financial Statements, the Board of Directors is responsible for assessing the Company's ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
The Company's Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these Standalone Financial Statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for
expressing our opinion on whether the company has adequate internal financial controls with reference to Standalone
Financial Statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor's report to the related disclosures in the Standalone Financial Statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the
disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a
manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the standalone financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143 (3) of the Act, based on our audit we report that:
i. We have sought and obtained all the information and explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit.
ii. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears
from our examination of those books.
iii. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of
Changes in Equity and the Statement of Cash Flow dealt with by this report are in agreement with the books
of account.
iv. In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section
133 of the Act.
v. On the basis of written representations received from the directors as on 31st March, 2026 and taken on
record by the Board of Directors, none of the directors is disqualified as on 31st March, 2026 from being
appointed as a director in terms of Section 164(2) of the Act.
vi. With respect to the adequacy of the internal financial controls with reference to Standalone Financial
Statements of the Company and the operating effectiveness of such controls, refer to our separate report in
"Annexure A".
vii. With respect to the other matters to be included in the Auditor's Report in accordance with the requirements
of section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to
the explanations given to us, the managerial remuneration paid / provided by the Company to its directors
during the year in accordance with the provisions of section 197 of the Act.
viii. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the
Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information
and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone
Financial Statements - Refer Note No. 37 to the Standalone Financial Statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were
any material foreseeable losses as at 31st March 2026.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education
and Protection Fund by the Company.
iv. (a) The management has represented to us that, to the best of its knowledge and belief, no funds
(which are material either individually or in the aggregate) have been advanced or loaned or
invested (either from borrowed funds or share premium or any other sources or kind of funds) by
the company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"),
with the understanding, whether recorded in writing or otherwise, that the Intermediary shall,
whether, directly or indirectly lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries;
(b) The management has also represented to us that, to the best of its knowledge and belief, no
funds (which are material either individually or in the aggregate) have been received by the
company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with
the understanding, whether recorded in writing or otherwise, that the company shall, whether,
directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever
by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security
or the like on behalf of the Ultimate Beneficiaries; and
(c) Based on audit procedures performed that have been considered reasonable and appropriate
in the circumstances, nothing has come to our notice that has caused us to believe that the
representations under sub-clause (i) and (ii) of Rule 11(e) of the Companies (Audit and Auditors)
Rules 2014, as provided under (a) and (b) above, contain any material misstatement.
v. The dividend declared or paid during the year by the Company is in compliance with section 123 of the
Companies Act, 2013.
vi. Based on our examination, which included test checks, the company has used accounting software for
maintaining its books of account for the financial year ended 31st March, 2026 which has a feature of
recording audit trail (edit log) facility and the same has operated throughout the year for all relevant
transactions recorded in the software. Further, during the course of our audit, we did not come across
any instance of audit trail feature being tampered with and the audit trail has been preserved by the
Company as per the statutory requirements for record retention.
2. As required by the Companies (Auditor's Report) Order, 2020 ("the Order") issued by the Central Government of
India in terms of Section 143(11) of the Act, we give in the "Annexure B" a statement on the matters specified in the
paragraphs 3 and 4 of the said Order to the extent applicable.
For V. Sankar Aiyar & Co.
Chartered Accountants
ICAI Firm Regn No. 109208W
Sd/-
(Ajay Gupta)
Partner
Place: New Delhi Membership No. 090104
Date: 4th May 2026 ICAI UDIN: 26090104KGRGJZ1312
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