Annual Report - HPCL - 2008-2009

HINDUSTAN PETROLEUM CORPORATION LIMITED
ANNUAL REPORT 2008-2009
DIRECTOR'S REPORT
TO
THE MEMBERS
On behalf of the Board of Directors, I have great pleasure in presenting to
you the fifty seventh Annual Report on the working of the Company, together
with the Audited Accounts for the year ended 31st March 2009.
HIGHLIGHTS:
(Rs./Crores)
FINANCIAL 2008-09 2007-08
Sales/Income from Operations 1,31,802.65 1,12,098.27
Profit before Depreciation, Interest and Tax 5,776.36 2,725.59
Depreciation (981.29) (850.82)
Interest (2,082.84) (766.10)
Profit before Tax 712.23 1,108.67
Provision for Tax
Current Tax (227.60) (166.74)
Deferred Tax (34.29) (202.53)
Taxation of earlier years written back 111.77 408.61
Deferred Tax written back 26.90 -
Fringe Benefit Tax (14.03) (13.13)
Profit after Tax 574.98 1,134.88
Balance brought forward from previous year 7,794.67 6,892.13
Appropriations
General Reserve (57.50) (113.49)
Proposed Dividend (177.78) (101.59)
Tax on distributed profits (30.21) (17.26)
Balance carried forward 8,104.16 7,794.67
PHYSICAL PERFORMANCE (MMT)
Market Sales (including Exports) 25.59 24.47
Crude Thruput:
Mumbai Refinery 6.65 7.36
Visakh Refinery 9.16 9.41
SHAREHOLDERS' VALUE (Rupees)
Earnings Per Share 16.98 33.48
Cash Earnings Per Share 46.97 64.55
Book Value Per Share 316.88 311.59
DIVIDEND:
Your Directors, after taking into account the financial results of the
Company during the year, have recommended dividend of Rs. 5.25 per share
for the year 2008-09 as against Rs. 3.00 pet share paid for the year 2007-
08. The dividend for 2008-09, including dividend tax provision will absorb
Rs. 207.99 crores (2007- 08.- Rs. 118.85 crores).
SALES/INCOME FROM OPERATIONS:
Your Company has achieved sales/income from operations of Rs. 1,31,802.65
crores as compared to Rs. 1,12,098.27 crores in 2007-08.
PROFIT:
Your Company has earned gross profit of Rs. 3,776.36 crores as against
Rs.2,725.59 crores in 2007-08 and profit after tax of Rs. 574.98 crores as
compared to Rs. 1,134.88 crores in 2007-08.

INTERNAL RESOURCES GENERATION:
The Internal Resources generated were Rs. 1,590.55 crores as compared to
Rs. 2,069.38 crores in 2007-08.
CONTRIBUTION TO EXCHEQUER:
Your Company has contributed a sum of Rs. 20,990.33 crores to the exchequer
by way of duties and taxes, as compared to Rs. 21,753.33 crores in 2007-
08.
DIRECTORS' RESPONSIBILITY STATEMENT:
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors
state that:
(i) In the preparation of the Annual Accounts, all the applicable
Accounting Standards have been followed along with proper explanation
relating to material departures.
(ii) The Company has selected such Accounting Policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
company as on 31 st March, 2009 and of the Profit & Loss Account of the
Company for the year ended on that date.
(iii) The Company has taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
(iv) These Accounts have been prepared on a going concern basis.
MEMORANDUM OF UNDERSTANDING WITH GOVERNMENT OF INDIA:
Your Corporation has been signing a Memorandum of Understanding (MOU) with
the Ministry of Petroleum & Natural Gas. The performance of the Corporation
of the year 2008-09 qualifies for 'Excellent' rating basis self evaluation.
REFINERY PERFORMANCE:
HPCL refineries processed a combined crude thruput of 15.81 million tonnes
as against 16.77 million tonnes achieved during 2007-08.
During the year, Mumbai Refinery achieved crude thruput of 6.65 million
tonnes as against 7.36 million tonnes for the year 2007-08. This was mainly
due to planned shutdown of Units. The Fuel and Loss at Mumbai Refinery was
6.64% during the year which is better than MOU excellent target of 8.20%.
During the year, Visakh Refinery achieved crude thruput of 9.16 million
tonnes as against 9.41 million tonnes for the year 2007-08, which
corresponds to capacity utilization of 122%. This was mainly due to planned
shutdown of one of the three Crude Distillation Units. The Fuel and Loss at
Visakh Refinery was 5.69% during the year which is better than MOU
excellent target of 6.80%. Visakh Refinery achieved the highest ever
production of Bitumen at 340 thousand tonnes (as against previous best of
310 thousand tonnes in 2007-08).
Gross refining margins of Mumbai Refinery averaged at US$ 6.11 per barrel
as against US$ 5.98 per barrel for the year 2007-08. Gross refining margins
of Visakh Refinery averaged at US$ 2.42 per barrel as against US$ 6.98 per
barrel for the year 2007-08.
The installation of facilities for production of Euro III / IV Petrol
(Motor Spirit) at both the Refineries have been completed and commissioning
activities have commenced.
The particulars with respect to Conservation of Energy, Technology
Absorption, Foreign Exchange Earning & Outgo are detailed in Annexure I.
Similarly, particulars relating to control of pollution and other
initiatives by Refineries are listed in Annexure II of the Directors'
Report.
MARKETING PERFORMANCE:
The market sales (including exports) was 25.39 million tonnes as against
24.47 million tonnes recorded in 2007-08. The Company achieved highest ever
turnover of Rs. 1,16,427.83 crores during the year as against
Rs.1,03,837.43 crores during 2007-08.
VIGILANCE:
Vigilance Department in the current year has strived to emphasise in its
activities, an environment of proactive vigilance, the importance of
transparency, adherence to professionalism and high standards in customer
service and project execution. The stress has been on preventive vigilance
rather than fault finding.
INDUSTRIAL RELATIONS:
Industrial Relations climate during the year 2008-09 continued to be
harmonious across all locations. The Government of India conveyed its
appreciation for the dedication and maturity demonstrated by employees of
the Corporation for not endorsing the strike call of the Oil Industry
Officers Association during January 6* to 8th, 2009 and being the sole
suppliers of petroleum products to the nation.
The Competency Mapping and Development process adopted by the Corporation
to retain and develop talent and the On-line Alert Management System to
ensure compliance of statutory requirements with respect to labour
legislation received awards for Talent Management and Best Development of
IT in HR at the Employer Branding Awards 2008.
In support of the Retail business, the HR department reached out to meet
the development needs of extended stakeholders by launching the Sada Aap Ke
Liye training programme for dealermen at Retail Outlets. Internal faculty
covered approximately 7700 dealermen under this programme in a most cost
effective manner.
OFFICIAL LANGUAGE IMPLEMENTATION:
Official Language Implementation continued to receive utmost importance in
the Corporation.
SC / ST LIAISON:
The overall representation of SC / ST employees in the Corporation is
27.28%. During the year, your Corporation has carried out a number of
Welfare / Development activities such as primary education, scholarships,
drinking water facilities, health care, income generating schemes /
vocational training, rehabilitation of persons with disabilities and other
welfare activities.
CORPORATE GOVERNANCE:
The Corporation has complied with the requirements of Corporate Governance
with the exception of appointment of Independent Directors to the level of
50% of the total strength of the Board. This matter is being pursued with
the administrative Ministry and is under their active consideration. The
details in this regard form part of this Annual Report.
MANAGEMENT DISCUSSION & ANALYSIS REPORT:
This report has been given separately.
PARTICULARS OF EMPLOYEES:
A statement providing the information as required under Section 217 (2A) of
the Companies Act, 1956 is annexed herewith (Annexure III). The details
regarding the number of women employee's vis-a-vis the total number of
employees in each group is also annexed (Annexure IV).
DIRECTORS:
HPCL Board presently comprises of 9 Directors. The whole time Directors are
S/Shri Arun Balakrishnan, Chairman & Managing Director, S. Roy Choudhury,
Director-Marketing, V. Viziasaradhi, Director-Human Resources, B.
Mukherjee, Director-Finance and K. Murali, Director-Refineries.
The Part-time Directors are S/Shri P.K. Sinha, L.N. Gupta, P.V. Rajaraman
and Prakash G. Apte. The following are the changes in Directorships that
occurred during the year.
Shri L.N. Gupta Joint Secretary-Refineries, MOP&NG joined HPCL Board as
Part-time Director on 25th June, 2008.
Shri P.K. Sinha, Additional Secretary and Financial Adviser, MOP&NG who
joined the HPCL Board on 1st March, 2006 continues to be the Ex-Officio
Part-time Director of the Corporation.
S/Shri T.L. Sankar and I.M. Pandey who joined the HPCL Board on 21st
January, 1999 & 8th December, 2005 respectively ceased to be Directors with
effect from 1st December 2008 & 8th December, 2008 respectively.
S/Shri Arun Balakrishnan, Chairman & Managing Director, S. Roy Choudhury,
Director-Marketing, V. Viziasaradhi, Director-HR and B. Mukherjee,
Director-Finance, continued as whole time Directors of the Corporation.
Shri M. A. Tankiwala, Director-Refineries, retired from the services of the
Corporation effective 31st January, 2009 on attaining the age of
superannuation.
Shri K. Murali has been appointed as Director-Refineries with effect from
2'a February, 2009 who has been co-opted as an Additional Director liable
to retire at the next Annual General Meeting and is eligible for re-
appointment.
As per the provisions of Section 256 of the Companies Act, 1956, S/Shri
P.V. Rajaraman, Prakash G. Apte and V. Viziasaradhi are the Directors who
will retire by rotation at the next Annual General Meeting and are eligible
for re-appointment.
The Board of Directors place on record their sincere appreciation to the
valuable services rendered by S/Shri T.L. Sankar, I.M. Pandey and M.A.
Tankiwala during their tenure on the Board.
ACKNOWLEDGEMENTS:
The Directors gratefully acknowledge the valuable guidance and support
extended by the Government of India, Ministry of Petroleum & Natural Gas,
other Ministries, Petroleum Planning & Analysis Cell and the State
Governments.
The Directors also acknowledge the contribution made by the large number of
dealers and distributors spread all over the country towards improving the
service to our valued customers as well as for the overall performance of
the Company.
The employees of the Company have continued to display their total
commitment towards the pursuit of excellence. Your Directors take this
opportunity to place on record their appreciation for the valuable
contribution made by the employees and look forward to their services with
zeal and dedication in the years ahead to enable the Company to scale even
greater heights.
Your Directors are thankful to the shareholders for their faith and
continued support in the endeavors of the Company.
For and on behalf of the Board of Directors
ARUN BALAKRISHNAN
Date : June 02, 2009 Chairman & Managing Director
Annexure -1
Particulars with respect to Conservation of Energy, Technology Absorption
and Foreign Exchange Earning/ Outgo as per Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988.
ENERGY CONSERVATION & TECHNOLOGY ABSORPTION:
I. CONSERVATION OF ENERGY:
a) Energy Conservation measures undertaken and Additional Investment /
proposals for implementation on conservation of energy:
Mumbai and Visakh Refineries accorded highest priority to energy
conservation and have undertaken several Encon measures by operational
improvements and implementing Encon projects. Various Encon measures
undertaken during 2008-09 are as follows:
Mumbai Refinery:
Extended Ceramic coating to FR / FRE & LR -VDU furnaces, which has improved
overall furnace's efficiency by approximately 2%.
Reduced specific energy consumption from 0.42 MT / MWH to 0.40 MT / MWH in
GTG's by generating more power from CPP.
Reduced tank emission by installing secondary seals on one floating roof
Naphtha tank.
Developed 6k commissioned in-house Light Ends Unit condensate recovery
system for generation of low pressure (LP) steam.
Carried out compressed air leak survey and reduced the air leak by 34%.
Reduced average steam leak from 5 T/hr to 3.27 T/hr by attending to the
steam leaks in a planned manner.
Signed Gas Transmission Agreement (GTA) with M/s GAIL to use the gas
network for using the Gas in the process units.
Observed Oil & Gas Conservation Fortnight from January 15-31, 2009 to
generate mass awareness amongst the public for conservation of petroleum
products. During the fortnight, several activities like lecture,
slogan/quiz, competition etc. were organized inside and outside the
Refinery.
Visakh Refinery:
Refinery achieved best ever Specific Energy Consumption of 85.78
MBTU/BBL/NRGF as compared to the previous best of 87 MBTU/BBL/NRGF during
the year 2007-2008.
Routed CDU-1 hot well off gas to Atmospheric Furnace in February 2009,
which has an estimated savings of approximately 643 SRFT.
Continued online chemical cleaning of CDU / VDU Furnaces to sustain optimum
crude thruput as well as fuel saving.
Maximized hot feed to FCCU-Il since October 2008, which enabled to save the
energy considerably.
Carried out Hydrokinetic decoking of CDU-I furnaces instead of steam-air
de-coking, which saved steam / fuel considerably.
Observed Oil and Gas Conservation Fortnight from January 15-31, 2009 to
generate mass awareness amongst the public for conservation of petroleum
products. During the fortnight, several activities like lecture,
slogan/quiz, competition etc. were organized inside and outside the
Refinery.
b) Impact of above on energy conservation measures and consequent impact on
cost of production of goods:
Refineries estimated energy saving from various Encon measures undertaken
during the year 2008-09 is as follows:
Mumbai Refinery : Approximately 11698 SRFT, which is equivalent to Rs. 27
crores.
Visakh Refinery : Approximately 14839 SRFT, which is equivalent to Rs. 34
crores.
c) Total energy consumption and energy consumption per unit of production:
Please refer Form-A of the Annexure-I to the Directors' Report.
II. TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION:
Efforts made towards technology absorption, adaptation & innovation
information is given in Form-B of the Annexure-I.
Imported Technology (imported during last 5 years):
Technology Imported Year of Whether fully If not absorbed,
Import absorbed or not Reasons
Mumbai Refinery:
Diesel Hydro De-sulfurisation 2004 Yes
Unit 2nd Reactor at MR
Continuous Catalytic 2004 No Project is under
Reformer (CCR) commissioning
Isomerisation Unit 2004 No Project is under
commissioning
Fluidized Catalytic 2004 No Project is under
Cracking Unit (New) commissioning
Prime G + Unit 2004 No Project is under
commissioning
Flue Gas Desulphurization 2005 No Project is under
commissioning
Online cleaning of
Heaters 6k Furnaces 2006 Yes
Visakh Refinery :
Diesel Hydro De-sulfurisation
Unit 2nd Reactor 2005 Yes
Online Cleaning of Heaters 2006 Yes
Use of Gasoline Sulfur
Reduction Additives 2005 Yes
Use of Regen Flue Gas
Sulfur Reduction Additive 2006 Yes
Continuous Catalytic Reactor 2004 No Project is under
commissioning
Isomerisation Unit 2004 No Project is under
commissioning
Fluidized Catalytic 2004 No Project is under
Cracking Unit (Revamp) commissioning
Sulfur Recovery Unit 2005 No Project is under
commissioning
Flue Gas Desulphurization 2005 No Project is under
commissioning
III. FOREIGN EXCHANGE EARNINGS AND OUTGO:
a) Activities relating to exports:
Various initiatives have been taken to increase exports and for development
of new export markets for products and services. Efforts are on to access
international markets and to tap export potential for free trade products
and lubricants.
b) Total Foreign Exchange used and earned:
Please refer Notes to Accounts - Schedule 20B, Note 16 F, G, H & I.
Annexure to Directors' Report
FORM-A
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
MUMBAI REFINERY:
(A) Power and Fuel Consumption 2008-09 2007-08
1. (a) Electricity Purchased
Units (Million KWH) 86.19 127.14
Total Amount (Rs./Crores) 50.54 63.00
Rate Per Unit (Excluding demand charges) (Rs./KWH) 5.12 4.03
Maximum Demand Charges (Rs./Crores) 6.42 11.69
(b) Own Generation (CPP)
Through Steam Turbine / Generator
Units (Million KWH) 259.51 237.29
Units per tonne of fuel 2499.57 2409.00
Cost pet unit (Rs./KWH) 8.04 9.13
2. Furnace Oil / Liquid fuel (LSHS/HSD)
Quantify (Thousand tonnes) 138.56 274.63
Total amount (Rs./Crores) 317.89 510.95
Average rate (Rs./tonne) 22943.00 18605.00
3. Other /Internal Generation
i. Naphtha
Quantity (Thousand tonnes) 108.76 125.10
Total amount (Rs./Crores) 349.17 373.07
Average rate (Rs./tonne) 32104.00 29822.00
ii. LPG
Quantity (Thousand tonnes) 8.07 10.46
Total amount (Rs./Crores) 26.54 29.70
Average rate (Rs./tonne) 32881.00 28401.00
iii. Refinery Gas
Quantity (Thousand tonnes) 70.24 76.07
Total amount (Rs./Crores) 161.15 141.53
Average rate (Rs./tonne) 22943.00 18605.00
iv. BH Gas
Quantity (Thousand tonnes) 10.88 8.04
Total amount (Rs./Crores) 9.54 4.47
Average rate (Rs./tonne) 8771.00 5562.00
v. Coke
Quantity (Thousand tonnes) 32.37 34.58
Total amount (Rs./Crores) 74.27 64.33
Average rate (Rs./tonne) 22943.00 18605.00
(B) Consumption per Unit of Production
Electricity (KWH/ Tonne of Crude) 51.97 49.55
Fuel Oil (Tonne/ Thousand tonnes of Crude) 37.18 54.35
Gas (Tonne/ Thousand tonnes of Crude) 13.41 12.86
Coke (Tonne/ Thousand tonnes of Crude) 4.87 4.70
VISAKH REFINERY
(A) Power and Fuel Consumption
1. (a) Electricity Purchased
Units (Million KWH) 11.80 10.46
Total amount (Rs./Crores) 6.75 6.37
Rate Per Unit (Excluding demand charges) (Rs. /KWH) 3.05 3.10
Electricity Exported (Million KWH) 0.26 0.00
Maximum Demand Charges (Rs./Crores) 3.15 3.12
(b) Own Generation (CPP)
Units (Million KWH) 291.90 289.84
Units Per Tonne of Fuel 2674.20 2726.11
Cost Per Unit (Rs./KWH) 6.50 6.73
2. Furnace Oil /LSHS
Quantity (Thousand tonnes) 129.43 133.86
Total amount (Rs./Crores) 308.81 259.10
Average Rate per unit (Rs./Tonne) 23858.19 19356.25
3. Other/Internal Generation
i. CPP Fuel
Quantity (Thousand tonnes) 109.15 106.32
Total amount (Rs./Crores) 367.93 338.42
Average Rate per unit (Rs./Tonne) 33708.19 31831.03
ii. Naphtha (DHDS)
Quantity (Thousand tonnes) 45.23 40.52
Total amount (Rs./Crores) 152.00 129.64
Average Rate per unit (Rs./Tonne) 33603.25 31998.16
iii. Refinery Gas
Quantity (Thousand tonnes) 102.14 107.69
Total amount (Rs./Crores) 235.67 207.54
Average Rate per unit (Rs./Tonne) 23073.12 19271.92
iv. Coke
Quantity (Thousand tonnes) 81.09 88.08
Total amount (Rs./Crores) 188.15 170.35
Average Rate per unit (Rs./Tonne) 23202.47 19340.69
(B). Consumption per unit of production:
Electricity (KWH/Tonne of Crude) 33.14 31.91
Liquid fuel (Tonne/Thousand tonnes of crude) 31.00 29.83
Gas fuel (Tonne/Thousand tonnes of crude) 11.16 11.44
Coke Fuel (Tonne/Thousand tonnes of etude) 8.86 9.36
FORM-B
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ADAPTATION & INNOVATION:
1. RESEARCH & DEVELOPMENT (R&D)
* COLLABORATIVE R&D PROJECTS:
MOUs have been finalized with Research Collaborators for the following
projects:
a. Optimization studies of food grade Hexane manufacturing unit and
feasibility study for producing polymer grade Hexane (With IIP):
Study was initiated along with IIP during 2004-05 for optimizing the
existing Mumbai Refinery Hexane Plant's operating conditions to explore the
possibility of producing WHO and Polymer grade Hexane, which have more
stringent quality specifications w.r.t. sulfur 6k benzene content and has
got market demand.
Test run was conducted jointly with IIP Dehradun, which has confirmed the
feasibility to produce WHO grade Hexane of less than 500 ppm aromatics on
sustained basis with certain improvement in the scheme.
However, meeting of other specifications like PAH (Polycyclic Aromatic
Hydrocarbon) & NVM (Non Volatile Matter) of WHO grade Hexane are still
being studied by IIP.
b. Optimization studies of NMP Lube Extraction Unit (With IIP):
Study was initiated along with IIP during 2004-05 to optimize Mumbai
Refinery NMP Lube Extraction Unit operating parameters to obtain specific
product quality and thruput maximization. Improvement in colour, sulfur and
saturates is also expected by increasing the severity of hydrofining and
selection of suitable catalyst. A substantial energy saving is also
expected by Pinch Analysis of heat exchangers in the unit.
Determination of lube potential of 150 N & 500 N is completed. Critical
Solution Temperature, LLE single stage studies and Preliminary Glass Packed
Column (GPC) runs are also completed. Pinch and Simulation studies were
also done. Final report was prepared and submitted. Modifications suggested
in heat recovery by Pinch Analysis will accordingly be implemented through
NPCB projects.
Controlled test run was conducted jointly by IIP-HPCL personnel. The test
run samples were analyzed by HP for Physico Chemical Characterization.
Determination of Lube potential, Critical Solution Temperature, LLE single
stage studies, Preliminary Glass Packed Columns &_ Pinch Simulation studies
have been completed and final report has been prepared. The modification
suggested will be implemented accordingly.
c. Membrane Separation Study to recover Propylene from Visakh Refinery Gas
Mixture & LPG (With IICT Hyderabad):
Collaborative R&D is in progress with 11CT Hyderabad for membrane
separation of propylene from LPG. Validation of Membrane and test run with
pure gas was done. Test run with gas mixture is being carried out for
different membranes. 11CT is in process of writing simulation program for
determining the number of stages for achieving desired propylene purity and
membrane area requirement based on feed capacity and composition of G3
fraction
* Expenditure on R&D through Revenue budget was Rs. 28.4 Lakhs during the
year.
2. UPGRADATION INITIATIVES:
Mumbai Refinery signed agreement with US Trade Development Agency (USTDA)
for Technical assistance grant related to bottom upgradation project and
for Asset Integration Management Program.
Mumbai Refinery routed heavier streams like HVGO and III SS of High 'S'
crude to FCCU as feed by using Gasoline Sulfur Reduction additive in
admixture with regular catalyst, which increased production of LPG and
gasoline.
Mumbai Refinery routed FCCU residue to solvent extraction unit to generate
superior grade (High BMCI) CBFS and FCCU feed. This increases LPG,
Gasoline, Diesel production and has reduced LSHS generation.
Mumbai Refinery carried out successful trial run in Solvent Extract Unit in
order to upgrade the Bright Stock extract to superior quality Treated
Aromatic Extract (TRAE) and has signed an agreement with M/s Idemitsu-Japan
to supply 30 Thousand Tonnes /Annum TRAE.
Visakh Refinery initiated 'Integrated Refinery Business Improvement
Program' in association with Shell Global Solutions for identification and
implementation in the areas like Refinery Margin, Energy Loss Performance
and Plant availability / Reliability. Out of total 23 identified areas for
improvement, seven have been implemented. This has resulted in accruing
benefits to the tune of approximately 9.35 million USD per annum.
Visakh Refinery enhanced its capability to process wide range of crude and
also further widened its crude basket. Refinery-processed new crudes like
RIL-KGB in November 2008 and opportunity crude like Kikeh (Malaysian) in
January 2009, which has resulted in benefits with respect to both operating
flexibility and margins.
Annexure - II:
Control of Pollution & other Environment initiatives undertaken by
Refineries during 2008-09 : MUMBAI REFINERY:
A. HAZARDOUS WASTE MANAGEMENT:
* Hazardous Waste Disposal
In order to comply with the 'Hazardous Wastes Management & Handling Rules -
2004' spent catalysts, old chemicals and discarded chemicals continue to be
disposed of at registered 'Common Hazardous Wastes Treatment Storage
Disposal Facility' (CHWTSDF), operated by Mumbai Waste Management Limited
(MWML) for Landfill /Incineration. Refinery disposed approximately 112
tonnes ot absolute/ expired chemicals and spent catalyst during 2008-09.
* Solid Waste Disposal:
Refinery processed approximately 1950 M' crude sludge and recovered 1275 M'
potential oil from the sludge, worth Rs. 1 Crore during the year. This
activity was carried out by M/s. Mid Continent Environment Pvt. Ltd.
through 'Mechanical Oil Recovery Technology'.
B. AIR EMISSION CONTROL & MONITORING:
* Commenced online Ambient Air Quality & updated Treated Effluent Data on
'Electronic Display Board' at refinery main gate since July 2008 for public
awareness.
* Relocated and commissioned successfully Ambient Air Monitoring Station
no. 3 at Administrative building of Lube Refinery and Ambient Air
Moniroring Station no. 1 at north of DCS Building after due approval from
MPCB to facilitate execution of new project during the year.
C. EFFLUENT WATER TREATMENT & CONTROL:
* New Integrated Effluent Plant (NIEP) : Replacing existing Effluent Plants
I & II with new Integrated ETP by adopting Cyclic Activated Sludge
treatment followed by Membrane Bio-Reactor and Tertiary Treatment Plant.
The project is expected to be completed by June, 2009.
* Biological Oxygen Demand (BOD) Reduction : Improved ETP-1 performance by
reducing Biological Oxygen Demand (BOD) level by regular repairs and
cleaning jobs.
D. ISO-14001:2004: CERTIFICATE RENEWAL:
* Mumbai Refinery conducted successfully 'Fourth & Fifth Surveillance
Verification / Certification Audit' during die year by the appointed
Certification Agency M/s. SOS India Pvt. Ltd. The agency has verified the
implementation and operation of the 'Environmental Management System' (EMS)
with revised standards along with its continual improvement and recommended
the continuation of the 1SO-1400L2004 Standard Certification for MP.
* Refinery organized successfully '5-Day Lead Auditor Training Program' on
ISO-14001:2004 and trained 23 nos. of employees to strengthen the Internal
Auditor's team.
* Refinery conducted 50 nos. of Environmental Awareness Programs for
various departments regarding ISO-14001:2004 implementation and Operations
in the Refinery.
* Refinery organized training program on 'Environmental Legislation Latest
Amendments' & 'Environmental Aspects Impacts Methodology LJp-gradation'
through external agency M/s. SGS India Private Ltd. to comply Audit report
findings.
E. PUBLIC AWARENESS ACTIVITIES:
As a part of public awareness campaign, following environmental awareness
activities wete carried out:
* Observed 'INTERNATIONAL EARTH DAY' on 22'J April, 2008. Banners with
'Environment Protection Messages' were displayed at all prominent locations
within the Refinery premises for employee's awareness.
* Refinery organized various activities on 'World Environment Day' like
Tree Plantation Program, film show to 350 school children, two nos. of
street plays on environmental related subject namely, 'Say No to Plastics
use' at Refinery cafeteria & LR canteen.
* Refinery sponsored an 'Environmental Educational Awareness Program' on I
5th December, 2008 at G. N. Khalsa College for demonstrating its commitment
to Environmental Protection & Development.
VISAKH REFINERY:
A. HAZARDOUS WASTE MANAGEMENT:
Refinery disposed approximately 5000 empty drums and accumulated coke to
authorized parties / recyclers.
B. EMISSIONS MANAGEMENT
* Created awareness by saplings distribution on the occasion of 'World
Environment Day' on 5th June, 2008.
* Completed Lr phase of Leak Detection & Repair for fugitive emissions
management to control emissions well within the stipulated limits. Second
phase of the Program has been started.
* Launched online stack emission display portal in February, 2009.
C. LIQUID EFFLUENT MANAGEMENT:
* Commissioned excess Oil ingress project in ETP-I in August, 08 to reduce
the oil ingress into Bio system of the Effluent Treatment Plant.
* Installed Magnetic Flow meters on Influent streams for accurate
measurement of influent flow.
* Replaced plate packs in Tilted Plate Interceptor (TPI) on '13' stream in
ETP-II for effective oil removal.
* Conducted internal training on Effluent Treatment Plant principles, safe
operating procedures and hazards involved.
* Developed standard operating procedures for operation of Dual Media
Filters for effective removal of Total Suspended Solids.
Annexure - IV
STATEMENT SHOWING WOMEN EMPLOYEES AS ON MARCH 31, 2009
Group Total No.of No. of Women % of Women
Employees Employees Employees
A 4611 350 7.59
B* - - -
C 6473 414 6.39
D 162 8 4.93
TOTAL 11246 772 6.86
*HPCL has no posts classified under group 'B' as the entry in non-
management grades has been re-classified in group 'C' effective 1.1.1994.
Management Discussion & Analysis Report:
The Financial Year 2008-09 was marked by volatile events across the globe
impacting the economy and financial markets world over including India.
Despite such scenario, HPCL posted an impressive physical performance
exceeding the targets set for the year. Before proceeding with the details
on the same, a look at the global economy and energy sector.
ECONOMY AND THE OIL SECTOR:
India's GDP growth slowed down to 6.7% in 2008-09 after three years of 9%
growth. Industrial sector growth was around 4% in 2008-09 compared to 8%
registered in 2007-08. Growth decelerated sharply in the third quarter in
response to uncertain economic climate. The services and the agriculture
sector grew by about 10% and 2% respectively in 2008-09.
Inflation surged in the first half of the financial year in response to
revision of domestic fuel prices following steep rise in oil prices to
almost $147 per barrel by July 2008. Fears about inflation also led to
monetary tightening by the Reserve Bank of India (RBI). However, severity
of financial crisis precipitated a sharp fall in oil prices to around
$34/bbl by December 2008. Weak economic activity coupled with falling
commodity prices caused inflation to ease considerably. Domestic fuel
prices were revised downwards to pass on the benefit of low prices to
consumers.
Trade plummeted as turmoil engulfed the global economy. Exports continued
to contract from October 2008 onwards. Exports grew by mere 5.4% during
2008-09 compared to 29% growth in 2007-08. Imports also slowed, showing a
growth of 14% for 2008-09 compared to 35% growth in 2007-08.
The oil consumption in the country reflected the impact of high prices as
well as slowdown in the economy with growth rate halving to 3.5% compared
to 7% in 2007-08. Consumption of all products declined except diesel,
petrol, LPG, Naphtha and Bitumen. Petrol and diesel grew by around 9% and
8% respectively in 2008-09. Growth especially in diesel may have been
boosted by controlled prices vis-a-vis substitutes. Fall in prices due to
collapsing demand worldwide boosted Naphtha sales. Though Bitumen
consumption increased by 4% in 2008-09, growth rate was much lower than 18%
registered in 2007-08.
PERFORMANCE PROFILE:
The Company achieved highest ever turnover of Rs.1,16,428 crores during
2008-09 against Rs.1,03,837 crores in 2007-08. The profit after tax for the
year is Rs.575 crores compared to Rs.1135 crores in the previous year. The
profit for the year before prior period adjustments and taxes amounting to
Rs.712.22 crores may be viewed in the light of items J and K of Schedule 5
on Fixed Assets.
The 2008-09 performance of the Corporation has qualified for 'Excellent'
rating in terms of the Memorandum of Understanding (MOU) signed with the
Government of India.
The sales and production performance exceeded targets. The Refineries at
Mumbai and Visakh achieved a combined thruput of 15.81 Million Metric
Tonnes (MMT). Mumbai Refinery (MR) recorded a thruput of 6.65 MMT with
120.9% capacity utilization. Visakh Refinery (VR) recorded a thruput of
9.16 MMT with a capacity utilization of 122%. Gross refining margins of
Mumbai Refinery averaged $ 6.11 per barrel against $ 5.98 per barrel in
2007-08 while average Gross Refining Margin (GRM) for Visakh Refinery was $
2.42 per barrel as against $ 6.98 per barrel for 2007-08.
Market sales (including exports) were 25.39 MMT compared with 24.47 MMT in
2007-08. The product pipelines achieved the highest ever thruput of 10.58
MMT vis-a-vis the target thruput of 9.20 MMT.
The financial performance of the Corporation was affected by the higher
interest cost of Rs.2083 crores, an increase of Rs.1317 crores over the
previous year. The increase in the interest cost was mainly on account of
higher borrowings, arising due to increase in gross under-recoveries in the
current year and the delay in receipt of oil bonds, to finance the working
capital requirements. Borrowings at the end of the year were Rs.22,755
crores. The funds requirement was managed through a combination of short
and long term loans and thru judicious treasury management.
REFINERIES:
Table below provides information on performance of two refineries on
various parameters.
Parameter Mumbai Refinery Visakh Refinery
Crude Processed -MMT 6.65 9.16
Capacity Utilization - % 120.9 122.0
Fuel 6k Loss -Wt % 6.64 5.69
Distillate Yields-Wt % 69.9 73.6
Specific Energy Consuraption-
MBTU / BBL /NRGF 89.0 85.8
Major Projects at Mumbai Refinery:
Green Fuels & Emission Control Project: This project will enable the
Corporation to meet the EURO-HI/IV specifications of Motor Spirit (MS). The
main unit of the Project has been commissioned and Euro-III/IV MS
production has started. The project will be fully commissioned during the
second quarter of 2009-2010, well before the Government mandated date of
April 2010.
New Fluid Catalytic Cracker Unit (FCCU) unit of 1.5 Million Metric Tonne
Per Annum (MMTPA): This project will increase production of value added
products like Liquefied Petroleum Gas (LPG), petrol and diesel. The Project
is expected to be completed by May 2010. The approved cost of the Project
is Rs. 900 crores.
Lube Oil Up-gradation Project: This project is to be implemented at an
estimated cost of Rs. 1030 crores to produce Lube Oil Base Stock (LOBS) of
Group-II/IlI quality. The Project is expected to be completed by May 2010.
Effluent Treatment Plants: This project is to replace existing Effluent
Plants I & II with new Integrated Effluent Plants (IETP) by adopting Cyclic
Activated Sludge treatment followed by Membrane Bio-Reactor and Tertiary
Treatment Plant. The Project is expected to be completed by early August
this year.
Major Projects at Visakh Refinery:
Clean Fuel Project to meet the EURO-III / IV specifications of MS: The
Project is planned for commissioning during the second quarter of 2009-2010
well before the Government mandated date of April 2010. As part of the
project, the refining capacity is also envisaged to be increased to 8.33
MMTPA from current level of 7.5 MMTPA.
Mounded Storage Project at VR: Existing LPG/Propylene spheres are being
converted to Mounded storage system. The Project is being setup at a cost
of Rs. 124 Crores and is expected to be commissioned in July 2009. This
project aims at improving safety while freeing up space.
Single Point Mooring (SPM) facilities at Visakh for importing crude oil in
very large crude carriers: SPM is a crude receipt facility proposed to be
put up offshore (in the deep sea) to facilitate unloading of large crude
parcels of the size or around 300,000 Metric Tonnes from Very Large Crude
Carriers (VLCCs). The VLCCs cannot be berthed in the regular crude
receiving jetties due to draught restrictions. The installation of SPM will
give us an advantage in freight cost and reduce wharfage charges thereby
improving the refinery economics. The estimated cost of the Project is Rs.
643.46 crores. The Project is expected to be completed by May 2010.
Diesel Hydrotreater (DHT) Projects at MR and VR: Both refineries have
undertaken the project to upgrade the HSD quality to Euro-III/IV grade at a
combined cost of Rs.6881 crores by setting up of new Diesel Hydrotreater
Unit (DHT) to comply with Auto Fuel policy. The Project, being implemented
on Lumpsum Turn Key (LSTK) basis, is expected to be complete by 2011.
Wind Farm Project: The renewable energy projects are meant not only to meet
the demand of energy starved state but also to create environmentally clean
and affordable power. The Wind farm project is one such project which will
tap into the vast potential of wind energy in India and commits to generate
100 Mega Watts (MW) in different phases. The project cost for Phase-l is
Rs.265 crores. Under the first phase total of 25 MW Wind Farms have been
commissioned in Maharashtra and Pvajasthan. Efforts are being made to avail
carbon credits from this first phase of 25 MW. Another 25 MW is proposed to
be implemented and action has been initiated.
MARKETING:
* RETAIL:
The Retail Strategic Business Unit (SBU) recorded a growth of 13.8% in MS
for the year 2008-09 as against Industry (PSU) growth of 13.2%. HSD sales
grew by 13.6% against Industry (PSU) growth of 12.1%. HPCL has gained
Market share in MS 6k HSD (Combined) by 0.28%, the highest in the PSU oil
companies. With 47 Auto LPG Dispensing Stations (ALDS) commissioned during
2008-09, Auto LPG witnessed a growth in market share of 1.04% during the
year. The number of outlets for dispensing Auto LPG will be increased in
the coming period. Compressed Natural Gas (CNG) sales increased by 6%,
achieving a volume of 124 TMT Sales volume through CNG network at Ahmedabad
was 9949 MT, an increase of 19%. During the year, 22 new CNG stations have
been added across the country by the Corporation.
Leveraging technology for improving quantity/quality assurance to customers
continued to be a major activity of the Retail SBU. Continuous efforts were
undertaken towards cost optimization, increasing income from allied
business activities in the retail outlet premises, providing extensive
training for dealer/ dealermen.
It is also proposed to aggressively tap the rural market by setting up
special format retail outlets aimed at meeting the needs of rural customers
and set up infrastructure in locations where HPCL has either nil or
marginal presence . Concerted efforts are in progress to closely monitor
the performance of over 8000 retail outlets of the Company across the
country to ensure that the sales volume per outlet not only meets the
threshold levels but also registers continuous growth.
* AVIATION:
Despite global recession and adverse market conditions, the SBU focused on
improving its contribution to the Corporation's bottom-line through net-
work expansion for growth and internal cost optimization. Approval was
obtained from Directorate General of Civil Aviation (DGCA) for setting on
wheel facility at 15 airports. Various infrastructure projects for cost
effective logistic support were continued and the older equipment were
replaced with new ones. Safety, training and operational excellence were
given due emphasis. Five new Aviation Service Facilities were commissioned
thereby increasing the total network to 21 airports and 2 Defence bases. It
is also proposed to set up Low-cost mobile refueling facility at few more
airports in Tier II cities.
* LPG:
LPG SBU in Non-Domestic (ND) segment has achieved a growth of 12.8% with
353 TMT sales, an all time high. LPG SBU has maintained market leadership
position with 37% market share in ND segment. The competitive advantage was
sustained through commissioning of exclusive distributorship for ND segment
at high potential locations apart from investment in infrastructure for
long term contracts. LPG SBU has focused on conversions to eco friendly
fuel by introducing Liquid Offtake Valve for Non Domestic cylinders (NDC).
LPG SBU also enrolled 12.8 lakhs new consumers increasing total customer
strength to 2.7 crores. During the year HPCL has provided 3.6 lacs
customers with DBG.
LPG Plants bottled 2881 Thousand Metric Tonnes (TMT), a growth of 5.2%.
Mangalore LPG Import facility recorded a throughput of 1.7 MMT, achieving a
growth of 6.25%. LPG SBU has been focusing on improving customer services
through various IT initiatives and has started a unique service named 'HP
GAS ANYTIME', an SMS based real time booking and allied service to LPG
customers in the state of Kerala. This automated HP GAS Refill Booking &
Complaint Handling service is available 24x7 through single number to our
valued customers.
* INDUSTRY & COMMERCIAL (I&C) SALES:
Despite constraints and an overall downward trend in Industry during the
year, Direct Sales (I&C) SBU maintained its volume by sales to new and high
volume customers. The year ended on a positive note with the SBU recording
highest growth in the Industry. Major contributors to growth were sales of
Naphtha, Low Sulphur & Heavy Stock (LSHS), Light Diesel Oil (LDO) & HSD.
Higher demand in power sector due to shortage of gas supplies boosted
Naphtha sales. Downward trend in industry affected Specialty products, with
all products recording a decline in sales. Furnace Oil (FO) sales suffered
due to high price vis-a-vis substitutes. During second half of the
financial year, sales were impacted by recession/slowdown of economy.
* LUBES SALES:
Indian Lubricant market comprises about 0.90 MMTPA of the automotive
segment and 0.60 MMTPA of the industrial/direct segment. The core/large
sector industries account for around 50% of the industrial/direct market,
and the balance is distributed across diverse sectors such as sugar,
marine, fisheries, fertilizers, etc. Despite the slow down and recessionary
trend in the Indian Industry, Direct Sales (Lubes) SBU achieved total Lubes
sales of 351.5 TMT, with 193 TMT of Value Added lubes and 159 TMT of Base
Oils during the year.
* PROJECTS & PIPELINES:
New terminals, depots and related marketing infrastructure were constructed
during 2008-09 at a cost of approximately Rs. 34 crores. These facilities
would ensure that products are made available to consumers in the vast
retail network without interruption.
HPCL is laying a pipeline from Bathinda, Punjab to Bahadurgarh near Delhi
at a cost of Rs.605 crores for evacuating products from the Refinery being
set up by the JV Company HPCL Mittal Energy Ltd. The Refinery is scheduled
for completion by December 2010/March 2011.
* TERMINAL AUTOMATION SYSTEM:
The project for providing Terminal Automation System at 27 locations has
been completed at a cost of Rs. 94 crores. This initiative will ensure
speed and accuracy in measurements to consumers. The
Project includes facilities like Tank Truck Loading Automation, Tank farm
Management System, Online Density metering, Pump Sequencing and Automation,
Access Control for Tank Trucks etc.
* OPERATIONS & DISTRIBUTION:
During the year 2008-09, our product storage & distribution facilities
(viz. depots & terminals) handled a record volume of products supporting
the highest ever sales of 10.4 MMT of diesel, 2.84 MMT of petrol and 5.957
MMT of other products including Kerosene, Aviation Turbine Fuel (ATF), FO,
Naphtha etc. These facilities also played a crucial role in achieving a
record combined Pipeline thruput of 10.64 MMT. Optimizing inventory and
lowering logistics cost were the key success factors during the year.
SAFETY, HEALTH & ENVIRONMENT (SHE):
The Corporation is committed to conducting business with a focus on
protecting and preserving the environment, sustainable development, safe
work practices and enrichment of the quality of life of employees,
customers and the community. Systems and procedures have been put in place
and are constantly reviewed for improvement to achieve the higher
benchmarking of safety, occupational health and environment. Well equipped
health care facilities at all major locations are in place. Occupational
Health is another focus area and all efforts are being made to make the
work place the best possible.
INFORMATION TECHNOLOGY (IT):
The Enterprise Resource Planning (ERP) system has provided essential
support to main business processes of the Corporation. Various add-on
applications based on the ERP system have been put in place to exploit the
full potential of the ERP system.
The benefits of implementing the ERP system have now started accruing to
your Corporation. The system has substantially reduced the time taken for
closing the quarterly, half yearly and annual accounts. Standardization of
business processes in the system has resulted in better management control.
Cost of operations can be easily tracked in the system which helps the
managers in controlling them.
Several IT enabled solutions could be developed on the foundation of the
ERP system. The availability of on-line and real time information in these
systems enables speedy decision making, improved responsiveness, reduced
cycle times and improve customer service. ERP platform also enables
development of real time interfaces to the IT enabled systems of our
various business partners. Various such new initiatives have been
implemented and sustained efforts continue to bring in more of these to
reality.
In the area of procurement, the platform provided by the ERP system is
being used for bringing in transparency. System for on-line registration of
vendors through the Internet has been implemented. Similarly the system of
hosting tenders on the internet has also been implemented. The Corporation
has implemented e-tendering process for crude procurement wherein suppliers
of crude are able to submit their quotations on-line in a secure way.
RESEARCH & DEVELOPMENT (R&D):
Activities have been initiated for the development of infrastructural
facilities such as land survey, construction of compound wall, soil testing
at the Corporate R&D Centre at Bangalore.
Parallel to these activities, R&D has taken up collaborative projects with
IIT Kanpur, IISc, RTI-USA, TERI and GITAM University. The projects are in
the areas of process intensification, nanolubricants, biohydrogen
production and gasification. Also, new initiatives were taken up on slop-
cut elimination in pipelines, hydrogen production from natural gas and
Biofuels (ethanol/butanol) in collaboration with national & international
institutions/organizations.
IMPORTS/EXPORTS:
The total crude oil purchases during the year were 15.7 Million Metric
Tonnes (MMT) of which 4.2 MMT was indigenous procurement and the balance
11.5 MMT was imports from countries such as Iran, Saudi Arabia etc..
The product imports during the year were 1921 Thousand Metric Tonnes (TMT)
with Diesel accounting for bulk of the imports. The product exports during
the year were 1543 TMT. Naphtha, FO and Diesel (1% S) formed bulk of the
exports.
HPCL commenced independent chartering of ocean tankers in June 2008. During
the year 2008-09, the shipping division successfully met all the chartering
requirements of crude oil and LPG imports as well as coastal movement of
LPG and Lube Oil Base Stocks. Coastal movement of products was met using
vessels under time charter.
EXPLORATION & PRODUCTION:
The Corporation has participating interests varying from 10% to 20% in 26
exploration blocks, of which 4 are overseas in Oman, Australia and Egypt.
The blocks awarded during previous bid rounds of NELP-IV, NELP-V, NELP-VI
are progressing well as per the approved work programs. The hydrocarbons
discoveries reported at onshore blocks at Cambay, Gujarat and Block-56 in
Oman are being appraised and tested further and are on the verge of
establishing commercial prospects. The decline in crude oil prices along
with the global recession has affected the E&P activities world wide. It is
proposed to take advantage of the downturn by acquiring assets in South
East Asia, Australia, Africa and Central Asia.
HUMAN RESOURCES:
HPCL workforce of nearly 11250 employees continues to play an involved role
in the various activities of the Company. The Corporation in turn has
initiated several measures aimed towards enhancing employee motivation,
morale and engagement.
The Balanced Scorecard system has been fully implemented. Strategies to
define work processes, employee capability development and their
connectivity to customer delight and shareholder wealth creation has been
enabled and is yielding results. Training programs have been designed and
developed to enhance the role based competencies of employees.
Industrial Relations climate during the year 2008-09 continued to be
harmonious across all locations. In January 2009, the Government of India
conveyed its appreciation for the dedication and maturity demonstrated by
employees of the Corporation in maintaining uninterrupted supplies of
petroleum products when the rest of the industry resorted to work stoppage.
OFFICIAL LANGUAGES IMPLEMENTATION:
Official Language implementation has been given utmost importance in the
Corporation. Use of Official Language in various Strategic Business Units
of the Organisation has been enhanced.
CORPORATE GOVERNANCE (CG):
A separate segment on corporate governance forms part of this report.
However, it would be relevant to point out here that the Corporation is
giving utmost importance to compliance with Corporate Governance
requirements including compliance of regulations, transparent management
process, adherence to both internal and external value norms and robust
grievance redressal mechanism.
The Corporation has been complying with the requirement of Right to
Information Act (RTI). The Corporation has also implemented the Integrity
Pact in liaison with the 'Transparency International' with effect from
September 01, 2007.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
As a socially responsible citizen, HPCL is committed to sustainable
development. HPCL has reached out to the Society in general and
underprivileged in particular thru its CSR initiatives by providing for
education, health, water, sanitation, Rural Developmental activities,
vocational training and income generating schemes to make them self-
reliant. The Company has been spending an increasing percentage of its
annual profits on the social sector and also monitored implementation of
distinct schemes like AIDS prevention, vocational training for unemployed
youth, education of rural children, computer training, health care
facilities etc. From the current fiscal year onwards, two percent of net
profits have been set aside for the CSR activities.
GLOBAL COMPACT:
HPCL is also a Member of the Global Compact Society of India which is the
India Unit of the United Nation Global Compact, the largest voluntary
corporate initiative in the World. It offers a unique platform to engage
companies in responsible business behavior through the principles of Human
Rights, Labour Standards, Environment norms and Ethical practices. In HPCL,
all these area receive constant attention of the management to ensure
continuous compliance.
OUTLOOK:
The Global economy is in the midst of severe recession. Governments across
the globe have followed extremely aggressive fiscal and monetary policies
to prevent a severe economic depression. As a result, confidence seems to
be returning and the global economy is showing some signs of revival.
However, the impact of the crisis is still unfolding and economic prospects
remain uncertain. International Monetary Fund (IMF) projects that world
output would contract by 1.4% in 2009 with gradual recovery to growth of
2.5% by 2010. As advanced economies deal with strained financial sector,
emerging economies including India are vulnerable to trade and financial
spillovers. IMF projects that India's economy will grow by 5.4% in 2009 and
6.5% in 2010.
CAUTIONARY STATEMENT:
Matters covered in the Management Discussion and Analysis Reports
describing the Company's objectives, projections, estimates, expectations
may be 'forward looking statements' within the meaning of applicable
securities laws and regulations. The actual performance could vary from
those projected or implied. Important or unforeseen factors that could make
a difference to the Company's operations include economic conditions
affecting demand / supply and price conditions in the domestic market in
which the Company predominantly operates, changes in regulations, and other
incidental factors.
Our other Focus Areas:
Your Corporation apart from being a major downstream company has also
several Joint Ventures focusing on allied areas in the energy segment.
These Companies have been performing well and expanding its activities. The
Corporation is also engaged in several CSR activities aimed towards
supporting the weaker sections of the society across the country. Several
awards and recognition have been bestowed on your Corporation by both
agencies from India and outside India. We feel that this is an
acknowledgment of the good work done by your Corporation. It would be our
endeavour to raise further performance standards at every level. Details of
the Joint Ventures, CSR activities, Awards and recognition are given
below:
JOINT VENTURES:
HPCL-Mittal Energy Ltd. (HMEL):
HPCL-Mittal Energy Ltd (HMEL) is a joint venture between Hindustan
Petroleum Corporation Limited and Mittal Energy Investments Pte Limited
(MEI), Singapore, an L.N Mittal group company, for implementation of Guru
Gobind Singh Refinery, a greenfield refinery project located at Bathinda,
Punjab. Both partners hold 49% equity stake in HMEL and balance 2% is held
by Indian financial institutions.
HMEL is constructing a 9 MMTPA capacity greenfield grassroot refinery at
Bathinda, Punjab. The refinery is designed to process wide variety of crude
oils including comparatively economic crudes such as heavy, sour and other
opportunity crudes. The refinery configuration has high distillate yields
with zero bottoms, producing clean fuels meeting EURO-I1I/IV specifications
with environment friendly operations. It is single largest investment in
Punjab. The configuration comprising of primary and secondary process units
viz. CDU/VDU, VGO-HDT, FCC, NCU/ISOM, HGU, DHDT, SRU, DCU and Polypropylene
manufacturing facilities translates into one of the highest Nelson
Complexity index amongst all present and proposed refineries in India.
During the year, HMEL and HPCL Mittal Pipelines Ltd. (HMPL) made maiden
debt drawdowns to fund ongoing construction activities. Process Licensors
have been selected and Project Management Consultant (PMC) also appointed.
Basic engineering activities have been completed and order placed on all
identified long lead items.
The project is progressing well and is slated for commissioning by March,
2011.
CREDA-HPCL Biofuel Ltd. (CHBL):
In pursuit of promoting alternate fuels, CREDA-HPCL Biofuel Ltd (CHBL) was
incorporated on October 14, 2008 as a subsidiary company with equity
shareholding of 74% by HPCL and 26% by Chhattisgarh State Renewable Energy
Development Agency (CREDA). CHBL would undertake cultivation of jatropha
plants on 15,000 hectares of land leased by the Government of Chhattisgarh.
This Company is in the process of acquiring land on lease from Government
of Chhattisgarh (thru CREDA) for cultivation of jatropha plants. HPCL will
have exclusive rights on the entire produce of jatropha seeds and for
producing and marketing biodiesel and bi-products from the produce.
Hindustan Colas Ltd. (HINCOL):
Hindustan Colas Ltd (HINCOL), a joint venture company promoted by HPCL and
Colas S.A. of France on July 17, 1995 has reported another year of
excellent growth in its physical as well as financial performance. The
total volumes in the year 2008-09 grew by 17% to 194,781 MT and net profit
(PAT) grew by over 43% to Rs 27.50 crores. The company achieved a turnover
of Rs. 352.66 crores in 2008-09. A ready to use innovative product for
pothole repairs 'ROADBOND' was launched in October 2008. The Company
declared dividend of 15% during 2008-09.
South Asia LPG Co. Pvt. Ltd. (SALPG):
SALPG, a Joint Venture Company with Total Gas and Power India (a wholly
owned subsidiary of Total of France) incorporated on November 16, 1999,
commissioned 60,000 MT Storage capacity underground Cavern and associated
receiving & despatch facilities at Visakhapatnam in December 2007. The
SALPG Cavern is the first of its kind in entire South and South East Asia
and ranks among the deepest Caverns in the World.
During first full year of operation in 2008-09, volume of 578,853 MT of LPG
were discharged into the Cavern. The turnover during the year 2008-09 was
Rs 83.75 crores and net profit (PAT) was 29.78 crores. The Cavern cum
Marine Terminal achieved 245,458 safe man-hours since commencement of
operations in January 2008.
Being largest LPG storage capacity in the country, SALPG Cavern has eased
storage constraints on east coast and ensured smooth availability of LPG in
the supply zone.
Mangalore Refinery and Petrochemicals Ltd. (MRPL):
MRPL with a capacity of 3 MMTPA was commissioned in March 1996. The
capacity of the refinery was enhanced to 9 MMTPA during 1999-2000. ONGC
acquired the entire equity stake of IRIL in MRPL on 03.03.2003 and also
infused Rs 600 crores into MRPL as additional equity on 30.03.2003. The
FIs/ Lenders of MRPL converted Rs 365 crores of debt into equity and Rs 160
crores debt into Zero Coupon Bonds. Consequent to the above, HPCL's equity
stands at 16.95%. MRPL has declared a dividend of 12% for the financial
year 2008-09. HPCL and MRPL have been exchanging intermediate process
streams between their refineries to supplement efforts to meet new
environmental norms in respect of products like MS and HSD on mutually
agreed terms.
Prize Petroleum Company Ltd. (PPCL):
HPCL, in partnership with ICICI and HDFC, had formed this Joint Venture E&P
Company for participating in exploration and production of hydrocarbons.
PPCL was incorporated on October 28, 1998. PPCL is also providing
consultancy services related to E&P.
PPCL had signed a Service Contract with ONGC Limited for development of
marginal fields in Cambay basin (Hirapur, Khambel and West Bechraji field)
with 50% holding in the consortium. PPCL is the Service Contractor for
these fields. During the year, Hirapur field produced 46,926 barrels of
oil. Cumulatively, PPCL has produced 163,578 barrels of oil from Hirapur
field.
PPCL has also entered into a Production Sharing Contract (PSC) with 50%
stake in an onland marginal field at Sanganpur. During the year, there was
a production of 1,167 barrels of oil from this field. Cumulatively, PPCL
has produced 9,128 barrels of oil from Sanganpur field.
During the year, PPCL issued 5,00,00,000 8% cumulative convertible
preference shares of face value of Rs 10/- each to HPCL.
Petronet India Ltd. (PIL):
Petronet India Ltd (PIL) was incorporated on May 26, 1997 as a joint
venture company with 50% equity by oil PSUs and balance 50% taken by
private companies/financial institutions. Special Purpose Vehicles (SPVs)
were floated by PIL with oil companies for implementing individual pipeline
projects, viz, Petronet MHB, Petronet CCK and Petronet VK which are
operating companies.
Since oil companies are now having pipelines independently, PIL has
initiated action to disinvest its equity holding in individual JVs.
Petronet MHB Ltd. (PMHBL):
HPCL, along with Petronet India Ltd (PIL) promoted Petronet MHB Ltd (PMHBL)
for construction of Mangalore-Hassan-Bangalore pipeline at a cost of Rs.667
crores with debt equity ratio of 3:1. The joint venture company was
incorporated on July 31, 1998. Initially PIL& HPCL each contributed 26%
towards equity. ONGC joined as a strategic partner in the company by taking
23% equity in April 2003. The pipeline is meeting the transportation needs
between Mangalore-Hassan-Bangalore.
PMHBL achieved 14.50% higher throughput of 2.452 MMT during 2008-09 as
compared to 2007-08.
Revenue generation was higher by 13.46% during year 2008-09 at Rs.65.00
crores as compared to previous year.
PMHBL obtained Integrated Management System Certification covering Quality
management System-ISO-9001, Environmental Management system-ISO-14001 and
OHSAS-18001. During the year 2008-09, OHSAS 18001-1999 was upgraded to
OHSAS- 18001-2007.
By usage of Surveillance Camera installed at SV-4 of PMHBL, monitoring of
the pipeline activity and product movement was optimized.
Bhagyanagar Gas Ltd. (BGL):
Bhagyanagar Gas Ltd (BGL) was incorporated on August 22, 2003 as a Joint
Venture Company by GAIL and HPCL for distribution and marketing of
environmental friendly fuels (green fuels) viz. CNG and Auto LPG for use in
the transportation, domestic, commercial and industrial sectors, in the
State of Andhra Pradesh.
BGL is operating 6 CNG dispensing stations in Vijayawada, 3 CNG dispensing
stations in Hyderabad and 1 CNG dispensing station in Rajahmundry. During
the year, BGL participated in the bidding process for Kakinada CGD project
and was successful in obtaining Authorisation from Petroleum & Natural Gas
Regulatory Board (PNGRB). Further, MOP&NG has also confirmed that BGL is
the authorized agency to carry on the CGD business in the cities of
Hyderabad and Vijayawada.
BGL is also operating 4 Auto LPG Outlets - 3 in Hyderabad and 1 in
Tirupati. BGL achieved 6.61% higher sales at Rs 35.31 crores and higher
profits (PAT of Rs. 3.04 crores) during 2008-09 as compared to previous
year.
Aavantika Gas Ltd. (AGL):
Aavantika Gas Ltd (AGL) was incorporated on June 07, 2006 as a Joint
Venture Company by GAIL and HPCL for distribution and marketing of
environmental friendly fuels (green fuels) viz CNG and Auto LPG for use in
the transportation, domestic, commercial and industrial sectors, in the
State of Madhya Pradesh.
During the year, AGL commenced commercial operations from its Mother
station (at Indore) and 5 Daughter stations (4 in Indore and 1 in Ujjain).
The Company has been authorized by MOP&NG for carrying City Gas
Distribution (CGD) operations at Indore, Gwalior and Ujjain. Authorisation
from PNGRB is awaited.
AGL has also initiated action for laying 40 km long Steel Pipeline grid and
for commencing 10 CNG stations in Indore. AGL is also pursuing with State
Authorities for allotment of land for establishing additional Mother
station as well as permission to lay pipelines in Indore. AGL has also
taken steps to establish Mother Station at Gwalior and Ujjain.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
As a socially responsible Corporate citizen, HPCL every year undertakes
various long term and short term measures for the marginalised section of
the society under the heading of Corporate Social Responsibility (CSR).
Since the company is committed for a sustainable development, the various
schemes are related to customers, employees, suppliers, society and
environment.
The objective is to reach out to the Society in general and underprivileged
in particular and to improve the standard of living of weaker sections of
society including women, children and persons with disabilities. The aim is
also to provide facilities to satisfy basic requirements such as education,
contribute to sustainable development and environment, health, water,
sanitation and Rural Developmental activities, Vocational training and
income generating schemes to make them self-reliant.
For implementation of the various CSR projects, MoUs between Operating
Partners (reputed NGOs) and Project Leaders (HPCL's Sr. Officials) were
signed every year and implement the project as per the terms & conditions
of the MOU.
The CSR purpose statement for the Company is:
Serving the community is the purpose of our business.
Ensuring sustainable business process - financially, environmentally and
socially, is our effort.
Using core competence, expertise and technology of our business to reach
the common people, especially the underprivileged, is our aim.
Developing capacity in the community is our strategy:
Enhancing human excellence and improving quality of life is our endeavor.
The Company has been spending increasingly out of its annual profits on the
social sector every year and also monitors implementation of distinct
schemes like AIDS prevention, vocational training for unemployed youth,
education of rural children, computer training, health care facilities etc.
Under the CSR, HPCL has already initiated since 2005-06 distinct schemes
like:
* Swavalamban : Vocational training for unemployed youths.
* Navjyot : Health care.
* Unnati : Computer training for rural schools.
* Nanhi Kali : Education for rural girl child.
* Muskan : Rehabilitation of underprivileged children.
* Suraksha : Aids Prevention
* Global Warming
Other projects in rural markets with core competence (Rasoi Ghar & Hamara
Pump).
which are explained below
SWAVALAMBAN :
Its objective is to provide free Vocational Training to 550 beneficiaries
from low income group households. HPCL and CII have joined hands along with
M/s City 6k Guilds to impart training to youths and change them into useful
professionals.
NAVJYOT :
This project is an initiative to increase health index for displaced
children from slums. The project is for 3100 slum children from Bawana
Resettlement Colony to improve health care services. The project operating
partner is Navjyot India Foundation.
UNNATI :
The objective of this initiative is to provide Computer training with
additional facilities like Internet, E-mail etc. for 3000 students of
class VII to X from Govt. School at Visakh through NUT Limited.
NANHI KALI:
The project is an initiative towards Supporting the Girl Child. Corporation
has provided Sponsorship of the quality school education of 498 renewal of
Nanhi Kalis and additional 1400 Nanhi Kalis from various Govt. Schools from
Mehboobnagar Dist. and Paderu region in Andhara Pradesh through operating
partner M/s. KC Mahindra Education Trust.
MUSKAN:
The objective of this project is to provide foster care for foundlings, to
transform the lives of 100 street / neglected / underprivileged children by
providing shelter at Tuglakabad and Jahangipuri from Delhi State, providing
education, meals, clothing, health care, vocational training etc. through
our operating partner M/s. Prayas Juvenile Aid Centre (JAC) Society.
SURAKSHA :
The prevention of HIV/AIDS through training , lectures and distribution of
condoms to truckers at 130 retail outlets/petrol pumps of national
highways, adjoining areas across the country through project operating
partner M/s. Organisation for Socially Economic and Rural Development
(OSERD).
GLOBAL WARMING :
Under this project, approximately 20000 school children are being educated
on awareness of Global Warming at Delhi, Goa and Mumbai through operating
partner M/s. CSRL (Centre for Social Responsibility & Leadership).
WELFARE :
In addition to the above CSR projects, various Welfare Activities are
undertaken each year under Special Component Plan (SCP) for SC/ST & other
Weaker Sections.
Main Activities:
* Primary Education
* Scholarships for Graduation & Post-Graduate Studies
* Drinking Water Facilities
* Health Care
* Income Generating Schemes / Vocational Training
* Rehabilitation of Persons with Disabilities
* Other Welfare Activities.
The total expenditure incurred during 2008-09 by the Corporation for CSR
activities was Rs. 1.51 crores.
AWARDS & RECOGNITION CORPORATE:
* Listed in Fortune Global 500 and Forbes Global 2000 companies
* Listed in 'World's Most Reputable Companies' compiled by Reputation
Institute (RI) during Janurary-February 2009.
* Awarded the prestigious 'NDTV Profit' Business Leadership Award 2008 in
the category of Oil 6k Gas. The Award honours business excellence &
recognizes companies that have fuelled the Indian economy to currently
being among the fastest growing economies in the world.
* The 'World Council for Corporate Governance' (WCFCG), UK and Institute of
Directors, India has conferred on HPCL the prestigious 'Golden Peacock
Corporate Governance Award 2008' under the petroleum category. This annual
award is conferred to companies which demonstrate benchmark standards and
excellence in Corporate Governance
* National Award For Excellence in Cost Management from the Institute of
Cost Accountants of India (ICWAI) under the category of Public Sector -
Manufacturing Organization of Turnover more than Rs. 1000 Crores.
* 'Perrofed Project Management Company of the Year Award' for 2007-08 for
HPCL's Outstanding Performance in completing the Mundra - Delhi Pipeline
Project successfully and for managing the project schedule 6k quality,
while complying with the norms of occupational health &t safety.
* Mayaram Surjan Foundation Award for in-house journal 'HP News' in
recognition of the 'effective use of the media of house Journal as an
essential tool for image building for furtherance of Internal Communication
& for creating better Public Relations'
* Directorate of Commercial Taxes have conferred on HPCL with the Second
Best Tax Payer Award for the State of Madhya Pradesh
IT:
* HPCL received the prestigious CIO 100 Award 2008 for its 'Project
Parivartan' Integrated Indent Management System and also for providing
enhanced service to HPCL stakeholders extending the benefits of the ERP
system to its various stakeholders through deployment of information
portals for customers, vendors & transporters and also enabling e-payments.
In-house development of Quality Control monitoring module, C6kB & Payroll
modules, interfaces with Maximo, tank truck filling & weighbridge
automation also contributed to bagging this award.
* HPCL bagged the 'Silver EDGE' Award for e-collection initiative. Network
Computing, a monthly IT magazine declared EDGE (Enterprises Driving Growth
6k Excellence) Awards to recognize the best IT implementations across
multiple industry verticals 6k technologies.
HUMAN RESOURCES:
* Conferred with 'Leading HR Practice Award' by the Singapore HR Institute
(SHRI) for innovative HR Practices.
* HPCL bagged the 'SAIL HR Excellence Award' under the 'Large Scale
Organisation' category for contributions in the field of People Management
* Best HR Practices in 'People Management' for HPCL's comprehensive HR
practices. Awarded by Amity International Business School.
* 'Winner' of the prestigious NIPM (National Institute of Personnel
Management) National Award for Best HR Practices.
* 5 World HRD Congress' Awards - 'Best Organisation with Innovative HR
Practices' by the 'World HRD Congress' for its entry 'Samavesh 2008'. In
addition to above HPCL bagged 3 Awards at the 'Employer Branding Awards
2008-09' (Final Rounds) for its best practices in 'Competency Mapping
initiative', 'Best HR Strategy in line with Business' and 'Santushti - e-
enabled final settlement process'. HPCL has also bagged a special award as
'Employer Brand of the Year 2008-2009'.
* 'Human Resources Management - Company of the Year' from Petrofed Oil &
Gas Award 2007 for contemporary ck progressive People Development
Initiatives & Practices.
MARKETING:
* Reader's Digest 'Trusted Brand' Gold Award 2009 in Petrol Station
category. This is the fourth year in succession that HPCL has received the
trusted brand award. The Reader's Digest Trusted Brand awards are based on
survey carried out and hence reflect the consumers' choice of their most
trusted and favorite brands.
* Asia Star 2008 Award for excellence in Packaging in Asia Pacific region
in Consumer Pack Category for marketing Lubricant Oil in PET bottle. The
awards are given in recognition of excellence in packaging design in terms
of innovation, functionality, graphical appeal, efficiency and environment
performance.
* HPCL's Mangalore LPG Import Facility (MLIF) was awarded the 'Golden
Peacock National Quality Award 2008' in the Petroleum sector.
SAFETY & ENVIRONMENT:
* Mumbai Refinery & Chakan LPG Plant awarded the 'Golden Peacock
Environment Management Award 2009' while Loni LPG TOP was awarded the
'Golden Peacock Occupational Health & Safety Award 2009'. Besides, a
'Special Commendation' for the Golden Peacock Occupational Health 6k Safety
2009 conferred on Salawas Depot.
* HPCL has been awarded with 7 Greentech Safety Award 2009. While Mangalore
LPG Import Facilities Raipur LPG Plant & Hassan Terminal were awarded the
Greentech Gold Safety Award, Salawas Depot & 3 LPG Plants at Loni, Jatni &
Patna received the Greentech Silver Safety Award. These awards are in
recognition of the high standards of safety & measures being taken to
safeguard the units & prevent accidents.
* Greentech Environment Excellence Award 2008 : HPCL's has been awarded 15
'Greentech Environment Excellence Award' for the year 2008. While Mumbai &
Visakh Refineries, Hassan POL Terminal were awarded the Greentech 'Gold'
Award, Mangalore POL Terminal 6k Irumpanam POL Terminal were awarded the
Greentech 'Silver' Award. Besides, 10 of LPG Plants have won the Greentech
Environment Excellence Award 2008 (2 Gold, 4 Silver & 4 Bronze).
* Hissar Depot awarded the 'Mukhya Mantri Puraskar & Haryana State Safety &
Welfare Awrard 2008' among Small Scale Miscellaneous Factories for the
longest Accident Free Period.
* Certificate of Merit been awarded to 5 LPG Plant (Usar, Chakan, Nasik,
Khapri 6k Chandrapur) for 'Meritorious Performance in Industrial Safety
during the year 2007'. The award was presented by National Safety Council,
Maharashtra Chapter.
* LPG Bottling Plant at Palghat awarded prestigious Industrial Safety Award
in Chemical / Petroleum category in the state of Kerala by Government of
Kerala for excellence in operational and Industrial safety & health.
* 2 Safety Awards from Oil Industry Safety Directorate (OISD) as the 'Best
Performer' for the year 2007 - 08, one under the category of 'LPG Marketing
Organizations' and the other amongst 'Lube Oil Blending Organizations'.
* HP MDI (Management Development Institute), Pune awarded Best Maintained
Garden in Pune by Pune Municipal Corporation. Also won 2 prizes for eco-
friendly initiatives of vermiculture & rain water harvesting.
* Hassan Terminal awarded First Prize for Best Maintained Rose Garden in
the entire district of Hassan and First Prize for Overall Development &
Maintenance of gardens, lawns, greenery among all government offices in the
district,
* LIP Nagar Housing Complex awarded Best Maintained Garden for 2008-09 from
the National Society of the Friends of Trees.
OFFICIAL LANGUAGE IMPLEMENTATION:
Indira Gandhi Rajbhasha Puraskar by Government of India, Ministry of Home
Affairs - Rajbhasha Vibhag for the year 2006-07 under PSU category for
excellent performance in Official Language Implementation in 'B' region.
'Ashirwaad' for Excellent Performance in Official Language Implementation
from Ashirwaad, a literary & cultural renowned institution.
* INDIVIDUAL:
* C&MD, Shri. Arun Balakrishnan conferred with prestigious 'CEO with HR
Orientation' by the World HRD Congress for the contribution to the cause of
HR.
* Corporate Excellence awarded to C&MD, Shri Arun Balakrishnan by National
Institute of Personnel Management (N1PM) Palghat - Kerala Chapter for his
outstanding contribution to Oil and Gas in the country.
* Director - Human Resources, Shri V. Viziasaradhi conferred with 'Leading
HR Leader Award' by the Singapore HR Institute (SHRI).
* Former C&.MD (March 1986 to December 1989), Shri M. K. Bagai awarded the
Lifetime Achievement Award at Petrotech 2009 for his outstanding
contribution to the development of India's Petroleum Industry.