Home  »  Company  »  Chennai Petro.  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of Chennai Petroleum Corporation Ltd.

Mar 31, 2015

Dear Members,

On behalf of the Board of Directors of your Company, it is my privilege to present the 49th Annual Report on the working of your Company, together with the Audited Statement of Accounts, Auditors' Report and the Report of the Comptroller & Auditor General of India on the Accounts for the year ended March 31, 2015.

PERFORMANCE REVIEW

Physical

CRUDE THRUPUT ( in TMT) 2014-15 2013-14

Imported 8451 8777

Indigenous 2331 1847

Total 10782 10624

PRODUCTION (in TMT) 2014-15 2013-14

Light Ends 2153 2269

Middle Distillates 5636 5317

Lube Base Stocks 201 141

Wax 25 23

Heavy Ends 1840 1948

Intermediates 12 11

Others (20) (18)

Fuel & Loss 935 933

Total 10782 10624

Financial (Rs. in Crore)

2014-15 2013-14

Gross Turnover 47877.82 53923.70

Profit before Interest,

Depreciation and Tax (112.54) 626.58

Interest 403.73 567.97

Depreciation and Amortization 226.12 389.58

Profit/(Loss) before Tax (742.39) (330.96)

Provision for Taxation

- Income Tax (Net) - (23.42) [Pertaining to earlier years)

- Deferred Tax - (3.69)

- Deferred Tax (Prior period item) (703.40) -

Profit / (Loss) after Tax (38.99) (303.85)

Value Added 466.40 1283.15

Highlights of Financial Performance during the year 2014-15 :

The Financial performance in the last quarter of the financial year was positive due to better operating performance coupled with stable crude and product prices resulting in higher operating profits. Despite achieving highest ever crude throughput in FY 2014-15, the decline in turnover was due to steep fall in crude and product prices from October 2014 mainly due to supply glut in the international market. As a result, the profitability was impacted significantly during the year due to inventory losses. The company posted a Profit/ (loss) before tax of Rs. (742.39) crore. However, the Profit/ (Loss) after tax was lower at Rs. (38.99) crore consequent to recognition of deferred tax asset in the current year in respect of carry forward business loss and unabsorbed depreciation to the extent of deferred tax liability of Rs. 703.40 crore accounted in previous years in line with the opinion received by the company from the Institute of Chartered Accountants of India.

Dividend

The Board of Directors of the Company has not recommended any dividend for the year 2014-15 due to loss.

Book Value

The book value per share of your Company was Rs. 111.15 as on 31.03.2015 as compared to Rs. 115.67 as on 31.03.2014.

Reserves and Surplus

The Reserves and Surplus as on March 31, 2015 was Rs. 1506.07crore as compared to Rs. 1573.44 crore as on March 31, 2014.

Value Addition

The value addition during the year was Rs. 466.40 crore as compared to Rs. 1283.15 crore in the previous year.

Contribution to Ex-Chequer

The details are as under:

( Rs. in Crore )

Particulars 2014-15 2013-14

Central Exchequer 6250.41 4827.87

State Exchequer 472.44 567.44

Total 6722.85 5395.31

Public Deposit Scheme

Your Company has not accepted any public deposits during the year 2014-15 and no public deposit was outstanding as on 31.03.2015.

Transfer of Unclaimed Dividend to IEPF

Your Company has transferred to the Investor Education and Protection Fund the required amount as per the Companies Act, within the stipulated time.

Operational Performance

The total thruput of the company during the year was 10782 TMT as compared to 10624 TMT in the previous year. The distillates yield was the highest at 72.1% as against the previous best of 71.4% in 2013-14. The Fuel and Loss for the year was the lowest at 8.65% as compared to 8.78% in the last year.

Manali Refinery achieved the highest ever crude thruput of 10,251 TMT as compared to the previous best of 10065 TMT in 2013-14. Fluidised Catalytic Cracking Unit (FCCU) achieved the highest throughput of 1075 TMT as against the previous best of 1065 TMT in FY 2013-14. The thruput of Continuous Catalytic Reforming Unit (CCRU) was the highest at 389 TMT as against the previous best of 359 TMT in 2013-14. Similarly, the thruput of Diesel Hydro treating Unit (DHDT) was the highest at 2186 TMT. The NMP Lube Extraction Unit also registered the highest thruput of 425 TMT as against the previous best of 390 TMT in 2003-04. The Energy Index for Manali Refinery was also the lowest at 62.3 MBTU/ BBL/NRGF as against the previous best of 62.5 MBTU/BBL/NRGF in 2013-14.Production of Propylene, MS and HSD in Manali Refinery also surpassed the highest levels at 37 TMT, 1050 TMT and 4474 TMT respectively.

Manali refinery processed two new crudes viz., DAS crude from Abu Dhabi and Brass River from Nigeria. By processing these new crudes, the Company realized the benefit of adding new crudes to the basket.

During the year, Cauvery Basin Refinery achieved a crude thruput of 531 TMT and received the award for achieving highest crude volume from Marg Karaikal Port. The Fuel & Loss was lower at 4.08 wt% as compared to 4.76 wt % in the previous year.

MoU PERFORMANCE

Your Company signed a MoU incorporating performance parameters with Indian Oil Corporation Limited, the holding Company, for the year 2014-15, as per the guidelines issued by the Department of Public Enterprises (DPE).

MARKETING

Majority of the fuel products produced by CPCL are being marketed by M/s.Indian Oil Corporation Limited.

The details of sales achieved by direct marketing during 2014-15 over previous year are tabled below:

(Figures. in TMT)

S. No. Product 2014-15 2013-14

1 PBFS 8.86 7.64

2 MEKFS 10.95 8.19

3 Propylene 37.10 35.64

Around 11 new customers were registered during the year for supply of Food Grade.Hexane, Sulphur and Paraffin wax. Four Customer Meets were conducted at various locations for Wax, Sulphur and other direct customers. Agreement was entered into with Cetex Petrochemicals Limited for a period of4 years for supply of 6000 MT per annum of MEKFS.

PROJECTS

Completed Projects

New MS, Naphtha and Slop Tanks

In order to accommodate increased production of MS and Naphtha, one Naphtha and one MS tank, each of 10,000 KL capacity was constructed and commissioned in October 2014. Further, in order to handle slops more effectively, a new storage tank of 10,000 KL capacity was completed and commissioned in November 2014.

Construction of 4 MG Reservoir

As part of the Resid Upgradation Project enabling job, a new reservoir of 4 MGR was constructed and commissioned.

Projects at Cauvery Basin Refinery

Installation of 2 Crude oil storage tanks of 10,500 KL each is being implemented at an estimated cost of Rs. 25 Crore. The project has been mechanically completed in July 2015.

ONGOING PROJECTS

As a part of growth strategy, the Company has undertaken following projects aimed at capacity expansion, value addition and quality Upgradation.

Mounded Bullets

Currently the LPG, Propylene and Propane are stored in Horton Spheres and Butylene is stored in above ground bullets. As a risk reduction measure & also to provide intrinsically passive and safe environment and to eliminate BLEVE (Boiling Liquid Expanding Vapor Explosion) of LPG and petro chemical products, mounded bullet storage facility is under implementation at an outlay of Rs. 279 crore.

The project is mechanically completed in March 2015.

Resid Upgradation Project

In order to maximize the distillates yield of the Manali Refinery and increase the percentage of High Sulphur Crude processing, the Company is implementing a Resid Upgradation Project at an estimated cost of Rs. 3110 Crore. This project involves installation of Delayed Coker Unit and Revamp of existing Hydro Cracker Unit along with other associated facilities. Construction of major units like Delayed Coker Unit (DCU) and Sulphur Recovery Unit (SRU) are in progress. Other Utilities and Offsite packages have also started. The scheduled mechanical completion date of the project has been revised from December 2015 to July 2016 on account of delay in obtaining clearance from Ministry of Environment & Forests, resulting in re-tendering for certain contracts and change in scope and configuration of certain OSBL systems.

New Crude Oil Pipeline

Activities are initiated to replace the existing 45 year old Crude oil pipeline running from Chennai Port to Manali Refinery with a New Crude oil Pipeline with state-of-the-art technology and safety features, to ensure reliable and faster crude transfer to refinery at a cost of Rs. 257.87 crore. The new pipeline is aligned along the berm of Ennore Manali Road Improvement Project. The Coastal Regulatory Zone (CRZ) clearance from Ministry of Environment & Forests was received in January 2014. Clearance from Ministry of Road Transport and Highways (MORTH) has been obtained on 4th Apr 2015, followed by Petroleum and Explosives Safety Organisation (PESO) approval on 11th May 2015 The project is scheduled for completion by end November 2016.

FUTURE PROJECTS

BS- IV compliance - DHDS Revamp:

As per the Auto Fuel Vision and Policy 2025 of Government of India, 100% BS-IV quality fuels have to be supplied by the refineries from April 2017 and 100% BS-V/VI quality fuels from April 2020. To comply with this directive, the existing Diesel Hydro-desulphurisation Unit (DHDS) is proposed to be revamped from 1.8 MMTPA to 2.34 MMTPA to ensure 100% BS-IV production from the Manali Refinery. After the revamp, the DHDS unit will be able to produce hydro treated diesel with less than 10 ppm sulphur.

The feasibility report of this project (BSIV) is under preparation with a target to commission by 31st March 2017.

INDIAN ADDITIVES LIMITED

Your Company has only one Joint Venture viz., Indian Additives Limited (IAL), with Chevron Chemical Company (now Chevron Oronite Company), which was formed in the year 1989 for the manufacturing of Lube Additives. IAL achieved a turnover of Rs. 587.62 crore during the year 2014-15, as against Rs. 589.52 Crore in the previous year. The Profit after Tax for 2014-15 was Rs. 23.52 Crore as against Rs. 24.95 Crore in the previous year. The Board of IAL has recommended a dividend of 50% for the financial year 2014-2015.

INFORMATION TECHNOLOGY

Your company has taken rapid strides towards Green IT by focusing on the concept of paperless office with the successful implementation and processing of various employee claim in Employee Enterprise Portal system . In order to strengthen the IT security the Load Balancer was implemented which enables balancing of two ISP providers and automatic routing of internet services (Mail and Internet Services) with security features.

During the year, web-based On-line suggestion scheme, Tender Grievances System, centralized timesheet process for refinery locations (CBR) were introduced.

The website of your company was made user friendly by enabling screen reader access for persons with disabilities and the website is being updated regularly with news and events including Swachh Bharath activities.

RESEARCH AND DEVELOPMENT (R&D)

Your company's R&D policy lays emphasis on supporting refinery operations by providing technological inputs to meet the corporate objective of technical excellence in all aspects of refinery operations, promoting indigenous technologies for refinery processes in association with National Laboratories/ Academic institutions and developing new products and upgrade the quality of the existing petroleum products.

Formulation of Aromatic, Naphthenic and Paraffinic type Rubber Process Oils from refinery streams were carried out. Further, studies were carried out using effluent water stream as medium for growth of algae and the algae grown in effluent water was further converted to Biocrudes and studied by Hydrothermal liquefaction process.

Studies were carried out for the feasibility of using DHDS unit for Hydrotreating of VGO using commercial catalysts to ascertain whether the Hydrotreated VGO could be used as additional feed for FCC unit meeting the Gasoline sulfur requirements. In addition, the feasibility of producing Microcrystalline wax from BN Slack wax was studied using Lab de-oiling set up and based on that, a trial run was successfully conducted in the Wax plant for the production of Micro Crystalline Wax.

Your company has filed a patent on "Processing and distillation techniques for algal biocrude to produce drop-in biofuels". A paper on " Biocrude Production from Microalgae and characterization of TBP distillates of Algal biocrude blended with Petrocrude" was presented in the International Refining and Petrochemicals Conference held in Verona Italy in June 2014.

SAFETY PERFORMANCE

Safety Management System at CPCL aims at enhancing safety performance by promoting safety awareness and maintaining excellent standards for safety of people, plant and environment. Safety systems and procedures have been made mandatory for all employees and contractors including visitors. Inherent Safe Design aspects are considered in the initial stage itself and utmost importance given for strict safety compliance.

During the year, one old foam Tender has been replaced and new one put into service. As per the OISD norms, provision of automatic rim seal fire detection and protection system for large size floating roof tanks job is in progress. Radiography awareness program was conducted for employees by inviting experts from Indira Gandhi Centre for Atomic Research (IGCAR) Kalpakkam.

Onsite Emergency Mock Drills were conducted twice at Manali Refinery. Joint Director & Dy Director, Industrial Safety & Health witnessed the drills. Job Safety Analysis was carried out for all critical jobs.

Off site emergency preparedness mock drill was conducted in CBR in December 2014. NSPC audit of Chidmbaranar Oil Jetty was completed by Tamilnadu Maritime Board in October 2014 and by National Hydrographic Office in November 2014.

In recognition of your company's efforts in adhering to the best safety practices, Manali Refinery received the prestigious State Safety Award (First Prize) under Chemical Industries Category during December 2012 from the Government of Tamilnadu in November 2014. Cauvery Basin Refinery was bestowed with the Safety Appreciation Award from National Safety Council- TN Chapter for 2012 and also the Prashansa Patra for the assessment period 2010-2012 from National Safety Council, Mumbai, in October 2014.

ENVIRONMENTAL PERFORMANCE

Your Company recognizes the impact of industrial operations on environment & believes that commitment to environment protection is fundamental to the company's values which ensure sustainable development. Therefore, your company's development plan encompasses a variety of schemes towards minimizing the impact of Refining operations on Environment.

Bench scale study for treated water quality improvement and Fire water quality improvement were completed at IIT, Madras and CLRI, Chennai respectively. As part of solid waste management, new sludge pit and two bio remediation pits were completed.

In Cauvery Basin Refinery, Green House Emission Survey was conducted.

Significant initiatives taken in the area of air pollution control include the following:

* Continuous operation of Volatile Organic Compounds (VOC) Adsorption system in ETP II to reduce VOC emission.

* Continuous efforts to reduce Greenhouse Gases (GHG) emissions by energy efficiency improvement, alternate energy generation & by Leak Detection and Repair Program(LDAR)

* Real time data transfer to State Pollution Control Board from Continuous Ambient Air Quality Monitoring Stations

* Use of Low NOx Burners to reduce NOx emission from major heaters

* Finalization of advanced wastewater treatment to maximize reclamation of Refinery waste water.

* Adoption of in-situ sludge treatment for Crude oil tank bottom sludge to reduce sludge generation in tank

In recognition of the unique measures undertaken for the preservation of environment, the Cauvery Basin Refinery was awarded the Green Award for industries by TamilNadu Pollution Control Board in June 2014, for the year 2013-14.

ENERGY CONSERVATION

Your Company continues its efforts to implement various measures aimed at reducing the energy consumption and achieving energy conservation, which are expected to yield a saving to the extent of 12500 SRFT/ annum. Your company has achieved the lowest ever energy index of 63.0 MBN.

The following Energy Conservation measures were taken up in 2014-15:

* FCCU oxygen enrichment Oxygen rich stream from N202 plant was routed to FCCU resulting in stopping of one auxiliary air compressor.

* High pressure hydrogen from Diesel Hydro-Treater (DHDT) was routed to Wax HiFi resulting in stopping of hydrogen make up compressor to wax plant.

* CCR off gas was routed to OHCU/DHDT as make up gas thereby reducing hydrogen generation through Naphtha steam reforming.

* Steam trap management of entire refinery to minimize steam loss.

The details of proposals implemented for energy conservation are given in Annexure IV.

In appreciation of its energy conservation measures, your Company was awarded the second prize by Centre for High Technology (CHT) for Furnaces / Boilers insulation efficiency in the Refinery Technology Meet held at Chennai in November 2014.

QUALITY MANAGEMENT - TPM / ISO

Your company by practicing TPM carried out various improvements in energy, equipment reliability and quality. During the year, first surveillance audit was carried out for Safety, Health, Environmental and Quality Integrated Management System (SHEQ IMS). The CISF of Manali Refinery was certified for QMS 9001:2008 and it is the first in Indian Refineries to get certification on Quality Management Standard.

HUMAN RESOURCES

Your Company regards its employees as one of the key drivers of growth by providing a congenial work environment.

The total manpower of your Company as on 31st March 2015 was 1628, comprising of 744 supervisors and 884 non-supervisors (1688 as on 31st March 2014, comprising of 778 supervisors and 910 non-supervisors).

During the year, to promote cordial industrial relations climate, the Functional Management conducted 9 meetings with the Office Bearers of Union and Officers Association on various occasions. Further, 11 structured communication meetings with Office bearers of Welfare Associations were conducted. Memorandum of Settlement under section 18(1) and 2(p) of the Industrial Disputes Act 1947 on work related Allowance/facilities, Cafeteria approach and on Career Progression Policy for workmen was signed between Management and recognized union.

Further, during the year, communication meetings with the Functional Management were conducted wherein physical and financial performances of the Company were discussed. Suggestion for productivity and profitability improvements were received from the employees.

Your Company has been taking continuous effort for developing its human resources by organizing training programs for employees at all levels. During the year, 2.5 Man-days per employee for training was achieved meeting the target and in total 4120 Man-days training were provided to employees in various training programs. In order to develop the technical knowledge, the Core course Program was conducted at Refinery Engineering School of Training (RESOT) for Supervisory employees.

Training Programs on Leadership Development including Risk Management were conducted. In addition to the formal training, programmes aimed at developing the technical and non-technical skills of the employees, innovative programs on physical and mental health of the employees like yoga, meditation, etc were also conducted.

Your Company has been meticulously following the Presidential Directives and various instructions of the Government relating to the welfare of the SC, ST, OBC, and differently abled persons. Out of the total manpower, there were 396 SC employees (previous year: 414) and 37 ST employees (previous year: 38) as on 31.03.2015 constituting 24.32% and 2.27% of the total manpower respectively.

The reports relating to representation of SCs / STs / OBCs in the prescribed proforma as on 01.01.2015 is given in the Annexure - I.

Your Company is implementing the provisions of the Disabilities Act 1995 by way of 3% reservation for differently abled persons. In addition, various concessions and relaxations are being extended to physically challenged persons in the recruitment process.

Your Company is committed towards prevention of sexual harassment of women at workplace and takes prompt action in the event of reporting of such incidents. In this regard, an Internal Complaints Committee has been constituted to deal with sexual harassment complaints and conduct enquiries, if any. There were no complaints of sexual harassment during the year.

WELFARE OF WOMEN

Your Company firmly believes that women employees play a pivotal role in the human capital profile of the Company. As on 31.03.2015, 88 women employees are on the rolls of the Company, of whom 42 are in the Supervisory Grade and 46 are in Non supervisory Grade, constituting 5.65% of the total Supervisory employees and 5.20% of the total Non-supervisory employees respectively. International Women's Day 2015 was celebrated by the women employees of CPCL on 9th of March 2015 with the theme "Make it happen"

CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY DEVELOPMENT

Corporate Social Responsibility is one of the pivotal functions of your Company .The Company sees itself as an integral part of society and is conscious of its responsibilities towards betterment of quality of life of the communities at large.

The CSR Policy of the Company can be accessed at the website of the Company under the link http://www.cpcLco.in/corporate_information-cor_governance.htm.

The CSR&SD activities mainly focus on Health, Education, Women Empowerment, Skill Development, and Environment Protection & Renewable Sources of Energy for ensuring sustainable development of the society to which it belongs. Even though the company has incurred an average net loss during the preceding three financial years, an amount of Rs. 116.58 lakhs was spent during the year 2014-15 for various CSR&SD Projects and initiatives.

A detailed report on CSR activities as per the provisions of the Companies Act, 2013 alongwith CSR Highlights during the year are attached at Annexure - II to the report.

OCCUPATIONAL HEALTH SERVICES (OHS) CENTRE

Your Company's Occupational Health Services (OHS) Centre is dedicated to prevention of illness and injuries amongst all the employees and is well equipped with the best of the infrastructures to handle any eventuality.

All possible hazards in the work place were monitored as per the established hygiene monitoring schedule, to ensure a congenial work environment and the hazards were within the acceptable levels. The health surveillance was carried out and about 90% of the employees working in the hazardous area underwent the annual health check up. In addition, the contract workers who were to work at heights and confined spaces were screened for physical fitness before they were posted to the jobs.

Various programs were organized to promote wellness and create awareness of illness for the employees.

PUBLIC GRIEVANCES

Your Company is committed to provide prompt response to public grievances and a Grievance redressal system is in place. Details and contact number of Public Grievance Officer are displayed in the website of the Company, viz. www.cpcl.co.in. As on 31.03.2015, there were no complaints pending.

CORPORATE GOVERNANCE

In line with the provisions of Clause 49 of the Listing Agreement and DPE Guidelines on Corporate Governance, a separate section on Corporate Governance forms part of this Annual Report.

AUDIT COMMITTEE

The Composition of the Committee as on 31.3.2015 is as under:

* Mr. G.Ramaswamy Independent Director - Chairman.

* Mr. S.Krishna Prasad, Director (Finance) -Member

* Ms. Perin Devi, Government Director- Member

* Mr. Yasin Rezazadeh, Director -NICO - Member

The recommendations of the Audit Committee during the year were accepted by the Board.

Being a Government Company, the company has requested Ministry of Petroleum and Natural Gas, Government of India, to consider appointment of minimum one additional independent director immediately to comply with the quorum requirement of minimum two independent directors.

SECRETARIAL AUDIT

The Secretarial Audit Report for the year 2014-15 confirms that the company has complied with all the applicable provisions of the Companies Act 2013 and the rules made there under and other applicable acts, rules, guidelines, standards etc. except the clause relating to appointment of Independent Directors. The appointment of additional independent directors is under the consideration of Government of India.

The report, duly certified by a practising Company Secretary, is attached as Annexure - III to the Report.

Your Company being a Government Company, the selection and appointment of Directors, terms of appointment and the remuneration payable to Directors is decided by the Government of India as per the Government guidelines and not by the Board of Directors. In view thereof, the Company has not reconstituted its Remuneration Committee to include the terms provided under the Companies Act, 2013. The performance evaluation of the directors other than directors representing Naftiran Inter trade Company, one of the promoters of the company, is carried out by the Administrative Ministry (MoP&NG), Government of India as per applicable Government guidelines.

CODE OF CONDUCT

The Board of Directors of your Company has enunciated a code of conduct for the Directors and Senior Management Personnel, which has been circulated to all concerned and has also been hosted on the company's website. The code can be accessed at http://www.cpcl.co.in/code_conduct.htm. The Directors and Senior Management Personnel have affirmed compliance with the code of conduct.

RISK MANAGEMENT POLICY

To ensure alignment of Risk Management system with the corporate and operational objective and to improve upon the existing procedure, the Executive Committee of the company at its 246th Meeting held on 26.04.2011 constituted a Committee comprising of officials from various functional areas to identify the risks in the present context, prioritise them and formulate proper action plan for implementation. The Committee has formulated the Risk Management Policy.

The Action Taken Report on the Risk Management Policy for the year 2014-15 was reviewed by the Audit Committee and Board at the Meeting held on 23.05.2015.

INTERNAL FINANCIAL CONTROLS

Your Company has adequate Internal Financial Controls for ensuring the smooth conduct of its business with focus on checks and controls on systems and procedures, safeguarding the assets, prevention and detection of frauds and errors, accuracy of the accounting records and the timely preparation of reliable financial information. The Company has a separate Internal Audit department headed by a Senior Manager who directly reports to the Managing Director. The Internal Audit department comprises of officials from finance, who carry out extensive audit throughout the year.

STATUTORY AUDITORS

M/s. Chandran & Raman, Chennai and M/s S.Venkatram & Co., Chennai were appointed as Joint Statutory Auditors of the Company for the financial year 2014-2015 by the Comptroller and Auditor General of India. The Board of Directors of the Company fixed a remuneration of Rs. 10 lakh (Rs. 5 lakh to each of the Joint Statutory Auditors) in addition to the out-of-pocket expenses, if any, and applicable service tax.

There are no qualifications in the Statutory Auditors report dated 23.05.2015 on the annual accounts for the financial year 2014-15.

M/s. K. Suryanarayanan, Cost and Management Accountant, Chennai was appointed as the Cost Auditor of Manali Refinery and Cauvery Basin Refinery of the Company for the financial year 2014-15 in respect of Petroleum and Petrochemical sector at a total remuneration of Rs. 1,70,000/- plus applicable taxes and out of pocket expenses, if any, to conduct the audit of Cost Accounts maintained by the Company and Rs. 30000/- plus applicable taxes towards certification fee for compliance report in respect of activity of power generation, subject to the ratification by the shareholders in the Annual General meeting.

The cost audit for the year 2013-14 was carried out and the cost audit report was filed with the Ministry of Corporate Affairs in the prescribed form within the stipulated time period.

PUBLIC PROCUREMENT POLICY FOR MSMEs

Your company has complied with the Public Procurement Policy for MSMEs as per the directives of the Government of India. Necessary provision has been made in the tenders indicating the eligibility of MSMEs to participate in the tender. As against the target of 20% for procurement from MSMEs, the actual procurement of your Company from MSMEs during the year was 37%.

RELATED PARTY TRANSACTIONS (RPTs)

In line with the provisions of the Companies Act, 2013 and the Listing Agreement, a policy on material RPTs has been framed, which can be accessed on the website of the company under the link https://www.cpcl.co.in/InvestorCenter Grievances. Your Company has undertaken transactions with related parties during the year. These transactions are in the ordinary course of business and on arms length basis. As per the RPT Policy, approval of Audit Committee has been obtained for all RPTs. During the year, there was no material RPTs. The disclosures related to Related Party Transactions in accordance with applicable accounting standards are provided at Note-28 of the Annual Accounts.

RIGHT TO INFORMATION

The Right to Information Act, 2005 is applicable to your company. In accordance with the provisions of the RTI Act, necessary disclosures have been made in the website of the company.

During the year, 37 applications under the RTI Act were received and responded in time.

VIGILANCE

The Vigilance Department of your company continues to improve and strengthen Vigilance Mechanism by conducting periodic/surprise inspections, major inspections and systems studies focusing on areas of improvement. Training programs, and lectures on vigilance functions, procedures to be followed in procurement, contracts and execution of works were conducted to create awareness as part of capacity building and to bridge knowledge gap, if any.

Focus is maintained on leveraging of technologies as a result of which the payment of bills to vendors/ contractors is effected through ECS/EFT.

All open tenders are published also in CPCL website in order to ensure competition and transparency. In line with CVC's guidelines Notice Inviting Tenders, tender documents and details of Purchase Orders/ Contracts awarded were hosted in the CPCL website. Procurement and contracts are being initiated through "e-tendering" mode and the value of the Tenders finalized through E-tender portal is being monitored and steps for improving the performance is taken continuously.

Vigilance Awareness Week Programme was observed from 27th October to 1st November, 2014 with the theme - "Combating Corruption - Technology as Enabler". Various programmes including Interaction Meet with Contractors, Customer Meet, Lecture sessions, Essay competitions and Slogan competitions were conducted both in Manali and Nagapattinam Refinery Units.

As part of Integrity Pact implementation, major contracts above value of Rs. 5.0 crore are covered under the Pact.

OFFICIAL LANGUAGE POLICY

In compliance of Official Language Act, 1963, Official Language Rules, 1976 and orders issued by Government of India from time to time, efforts were continued during the year for increasing the progressive use of Hindi in Official work.

The Managing Director of the Company is the Chairman of the Official Language Implementation Committee, which meets every quarter to review the progress of implementation of Official Language Policy.

During the year Prabodh, Praveen and Pragya classes were conducted for the benefit of employees. 11 employees passed Hindi Examination conducted under Hindi Teaching Scheme. Employees were encouraged by paying incentives every quarter for doing work in Hindi. Four Hindi Workshops were organized for the benefit of employees.

As part of the Hindi day celebrations, Hindi Competitions were conducted and winners of the competitions were awarded prizes during the celebrations.

STATUTORY INFORMATION

* Particulars of employees drawing a remuneration of Rs. 60 lakhs or more per annum, if employed throughout the financial year or Rs.5 lakhs per month, if employed for part of the financial year, during 2014-15 as required under Section 197 of the Companies Act, 2013 and rules made there under - Nil.

* Statutory details of Energy Conservation and Technology Absorption, R&D activities and Foreign Exchange Earnings and Outgo, as required under the Companies Act, 2013 and the rules prescribed thereunder are given in the Annexure and form part of this Report (Annexure - IV).

* Certificate received from the Auditors of the Company regarding compliance of conditions of Corporate Governance, as required under Clause 49 of the Listing Agreement and also the compliance with the guidelines on Corporate Governance issued by Department of Public Enterprises, Government of India is Annexed and forms part of this Report (Annexure - V)

* Management Discussion and Analysis Report as required under Clause 49 IV F of the Listing Agreement is annexed and forms part of the Report (Annexure - VI).

REPORTING UNDER SECTION 23(1)(B) OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985

In line with the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 CPCL has reported to the BIFR in October 2014, due to erosion of more than 50% of peak networth over the last four financial years as on 31.03.2014.

CPCL has reported a loss of Rs. 38.99 crore for the year ended 31.03.2015. The company initiated various measures to improve the physical and financial performance during the year. The Company has achieved excellent physical performance during the year 2014-15 by registering the highest distillate yield of 72.1% and the lowest Fuel & Loss of 8.65%, as a result of various energy conservation and margin improvement measures implemented by the company. The company is also in the process of implementing a Resid Upgradation project at an approved cost of Rs. 3110 Crores, which is expected to help in boosting the bottom line of the company.

Despite excellent operational performance, the fall in networth from to Rs. 1722 Cr as on 31.03.2014 to Rs. 1655 Cr as on 31.03.2015 was mainly attributed to extraneous factors beyond the control of the company. Factors like the steep fall in Crude and Product prices from July 2014 in the international market and the consequent inventory losses significantly impacted the profitability of the Oil industry and CPCL in particular, being a standalone refining company. Considering further reduction in networth as on 31.03.2015, the company is required to report to BIFR within 60 days from the date of adoption of accounts by the shareholders of the company.

Due to the implementation of various measures to improve physical and financial performance and with the stabilisation of crude and product prices from Quarter IV of FY 2014-15, the company is expected to show positive results in FY 2015-16.

In addition to various measures taken by the company to improve the physical performance, the proposal for capital infusion by issue of preference shares to IOCL on private placement basis upto Rs. 1000 crore, approved by the Board will augment the networth of the company significantly.

DIRECTORS

Mr.L.Sabaretnam and Mr.Venkatraman Srinivasan, Independent Directors ceased to be directors on the Board of CPCL effective 16.09.2014.

Mr.T.S.Ramachandran, Director (Technical) superannuated from the services of the company effective 30.11.2014.

Mr. Gautam Roy has been appointed as Managing Director effective 14.10.2014.

Mr.U.Venkata Ramana has been appointed as Director (Technical) effective 01.12.2014.

Mr.S.Krishna Prasad has been appointed as Director (Finance) effective 09.01.2015.

Ms.Perin Devi, Director (R&V), Ministry of Petroleum and Natural Gas, Government of India has been appointed as a Director effective 12.03.2015 in place of Shri.Mohan Lal.

Mr.Alireza Zamani and Mr.Yasin Rezazadeh have been appointed as Directors representing Naftiran Intertrade Company Limited, one of the promoters of the Company effective 23.03.2015 in place of Mr.M.H.Ghodsi and Mr.A.Azmoodeh respectively.

The Company has received a Certificate of Independence from Mr.G.Ramaswamy, Independent Director confirming that he meets the criteria prescribed for Independent Directors under the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Since the company has only one independent director, a separate meeting of Independent Directors could not be held as per provisions of the Companies Act, 2013 and Listing Agreement.

During the year, 9 meetings of the Board of Directors were held. The details of the meetings attended by each Director are provided in the Corporate Governance Report.

No significant and material orders were passed by the Regulators or Courts or tribunals, which impact the going concern status and companies operation in future.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has framed a whistle blower policy wherein the employees are free to report any improper activity resulting in violations of laws, rules, regulations or code of conduct by any of the employees, to the Competent Authority or Chairman of the Audit Committee, as the case may be. Any such complaint is reviewed by the Competent Authority or Chairman of the Audit Committee. The confidentiality of those reporting violations are maintained and they are not subjected to any discriminatory practice. No employee has been denied access to the Audit Committee. The policy on Vigil Mechanism / Whistle Blower can be accessed on the Company's website at the link https://www.cpcl.co.in/investor centre grievances/.

During the year, no complaint has been received under the Whistle-Blower Policy.

DETAILS OF LOANS / INVESTMENTS / GUARANTEES

Your Company has not provided Loans / Guarantees /Security to any person, body corporate and joint ventures during the year.

EXTRACT OF ANNUAL RETURN

As required under the provisions of the Companies Act, 2013, the extract of Annual Return for the financial year ended 31st March, 2015 in prescribed form MGT-9 is attached at Annexure - VII to this report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134(5) the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed, that,

i) in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed and that there are no material departures from the same;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors have prepared the annual accounts for the financial year ended March 31, 2015, on a going concern basis;

v) the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and operating effectively.

vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

ACKNOWLEDGEMENT

Your Board of Directors would like to express its sincere appreciation for the dedicated efforts made and valuable services rendered by the members of CPCL family.

The Board would also like to thank the Government of India, particularly the Ministry of Petroleum & Natural Gas, Other Ministries, Indian Oil Corporation Ltd, Naftiran Intertrade Company Ltd, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Oil Industry Safety Directorate and the various State Governments, regulatory and statutory authorities for their valuable guidance and support.

The Board is grateful to all its stakeholders for their continued support and confidence reposed in the Company.

Your Directors place on record their appreciation of the valuable contributions made by Mr.L.Sabaretnam, Mr.Venkatraman Srinivasan, Mr.T.S.Ramachandran, Mr.Mohan Lal, Mr.M.H.Ghodsi and Mr.Ahmad Azmoodeh, Directors, during their tenure.

For and on behalf of the Board

Date : 03.08.2015 (B.Ashok) Place : New Delhi Chairman


Mar 31, 2014

To the Shareholders of Chennai Petroleum,

On behalf of the Board of Directors of your Company, I present the 48th Annual Report on the working of your Company, together with the Audited Statement of Accounts for the year ended March 31, 2014.

PERFORMANCE REVIEW Physical

CRUDE THRUPUT ( in TMT) 2013-14 2012-13

Imported 8777 8335

Indigenous 1847 1407

Total 10624 9742

PRODUCTION (in TMT) 2013-14 2012-13

Light Ends 2269 2034

Middle Distillates 5317 4567

Lube Base Stocks 141 134

Paraffin Wax 23 21

Heavy Ends 1967 2036

Intermediates 11 49

Other Inputs (37) (24)

Fuel & Loss 933 925

Total 10624 9742

Financial

( Rs.in Crore )

2013-14 2012-13

Gross Turnover 53923.70 46842.47

Profit before Interest,

Depreciation and Tax 626.58 (845.26)

Interest 567.97 477.90

Depreciation and Amortization 389.58 374.53

Profit/(Loss) before Tax (330.96) (1697.69)

Provision for Taxation

- Income Tax (Net) (23.42) - [Incl. pertaining to earlier years)

- Deferred Tax (3.69) 69.15

Profit/(Loss) after Tax (303.85) (1766.84)

Value Added 1283.15 (160.27)

Major Reasons for incurring Loss during the year 2013-14:

The following major factors adversely impacted the financial performance of the company in spite of better physical performance during the year 2013-14.

- Lower product cracks.

- Unprecedented depreciation of the Indian Rupee against the US Dollar and volatility in foreign exchange market resulting in exchange fluctuation loss

- Higher interest expenditure due to increased working capital requirements, inadequate internal accruals and servicing of loans on completed projects.

- Higher CST under recovery due to out of zone movement of products.

The borrowings as on 31.03.2014 was Rs.5,599.62 crore as compared to ` 5905.45 crore in the previous year.

In order to meet long term fund requirements, the Company, during January 2014 on a direct placement basis, issued 10000 numbers of 9.65% Secured Redeemable Non-Convertible Debentures (Series – II) of Rs.10 lakh each redeemable at par for Rs.1000 crore.

Dividend

The Board of Directors of the Company has not recommended any dividend for the year 2013-14 due to loss.

Book Value

The book value per share of your Company was Rs.115.67 as on 31.03.2014 as compared to `136.07 as on 31.03.2013.

Reserves and Surplus

The Reserves and Surplus as on March 31, 2014 was Rs.1573.44 crore as compared to Rs.1877.29 crore at the end of 2012-13.

Value Addition

The value addition during the year was Rs.1283.15 crore as compared to ` (160.27) crore in the previous year.

Contribution to Ex-Chequer The details are as under:

( Rs.in Crore )

Particulars 2013-14 2012-13

Central Exchequer 4827.87 4113.74

State Exchequer 567.44 603.11

Total 5395.31 4716.85

Public Deposit Scheme

Your Company has not accepted any fresh public deposits during the year 2013-14.

Transfer of Unclaimed Dividend to IEPF

Your Company has transferred to the Investor Education and Protection Fund the required amount as per Section 205(C) (2) of the Companies Act, 1956, within the stipulated time.

Operational Performance

The total thruput of the Company during the year 2013-14 was 10624 TMT. The Fuel and Loss for the year was 8.78% as compared to 9.49% in the previous year.

Manali Refinery achieved the highest ever thruput of 10065 TMT as compared to the previous best of 10045 in 2010-11. Refinery III at Manali surpassed, for the first time, the expanded design capacity of 4.0 MMTPA during the year. Once Thru Hydro Cracker Unit (OHCU) achieved the highest ever thruput of 2007 TMT, as against the previous best of 1996 TMT in 2010-11. Fluidised Catalytic Cracking Unit (FCCU) achieved the highest ever thruput of 1065 TMT, as against the previous best of 1006 TMT in 2010-11. The energy index of Manali Refinery was lowest at 62.5 MBN as against the previous best of 65.8 MBN in 2012-13. HSD and propylene production in Manali Refinery achieved the highest ever crossing 4 MMTPA and 35.8 TMT respectively.

Manali Refinery increased the Spot Crude Oil Basket from 37 to 50 numbers, thereby increasing the chances of selection of crudes with higher intrinsic value. Further Manali refinery processed three new crudes viz., Kikeh from Malaysia and Agbami and Okwuibome from Nigeria. By processing these new crudes, the Company realizes the benefit of adding new crudes to the basket.

During the year, Cauvery Basin Refinery, processed a new Crude Oil, Agbami for the first time. CBR achieved the highest ever Crude coastal receipt parcel size of 44.4 TMT in March 2014 through Marg Karaikkal Port, as compared to the previous highest shipment of 42 TMT.CBR is being operated at maximum power import mode in order to reduce cost of power and utilities.

MoU PERFORMANCE

Your Company signed an MoU incorporating performance parameters with Indian Oil Corporation Limited, the holding Company, for the year 2013-14, as per the guidelines issued by the Department of Public Enterprises (DPE).

MARKETING

Indian Oil Corporation Limited, the holding Company, continues to market major portion of the fuel products of your Company.

Some of the specialty products are being directly marketed by your Company. The direct sales achieved during 2013-14 as compared to previous year are given below:

(Qty. in TMT)

S. No. Product 2013-14 2012-13

1 Naphtha 208.97 207.5

2 Sulphur 50.38 45.9

3 PBFS 7.64 7.04

4 MEKFS 8.19 7.53

5 Paraffin wax 23.01 20.90

6 Propylene 35.64 27.89

About 10 new customers were registered during the year for supply of Sulphur, Hexane and Propane.

PROJECTS

Your Company lays emphasis on timely completion of all projects.

Completed Projects

Fire water storage tanks:

Your company constructed and commissioned two tanks with a capacity of 13,000m3 each in June ''13, for storing fire water along with associated fire water pumps.

VOC Project:

Your company constructed and commissioned the Volatile Organic Compound (VOC) absorption facility with 3 nos. of activated carbon filters at Effluent Treatment Plant -II.

Additional slop Tank

Your company constructed a new Storage Tank of capacity 10,000 KL, to handle slop more effectively.

MS-Naphtha Tanks:

Your company constructed one Naphtha and one MS tank, each of capacity 10,000 KL to accommodate increased production of MS/Naphtha.

Projects Under Implementation Manali Refinery

Mounded Bullet Storage

As a risk mitigation measure and in line with the norms prescribed by the Oil Industry Safety Directorate (OISD), your Company is implementing a Mounded Bullet Storage facility for LPG and Petrochemical products at an estimated cost of Rs.279 Crore. The project was taken up in April 2013 and mechanical completion is expected by end of 2014.

Resid Up gradation Project

A Resid Up gradation project aimed at increasing the distillate yield by about 7 % by processing increased percentage of High Sulphur Crude is being implemented at Manali Refinery at an estimated cost of Rs.3110.36 crore. The project comprises installation of Delayed Coker Unit (2.2 MMTPA), revamp of existing Hydro Cracker Unit from 1.85 MMTPA to 2.25 MMTPA and other associated facilities. The construction work has commenced at site. This project is scheduled for completion by December 2015.

New Crude Oil Pipeline

A new 42" Crude Oil Pipeline with enhanced safety features is planned from Chennai Port to Manali Refinery at an estimated cost of Rs.257 Crore as a replacement for existing old pipeline. The new pipeline is aligned along the berm of Ennore Manali Road Improvement Project of NHAI. Coastal Regulatory Zone (CRZ) clearance was accorded for the pipeline in January 2014. The pipeline alignment clearance with NHAI is taken up. The project is scheduled for completion by July 2015.

Cauvery Basin Refinery

- Two Crude oil storage tanks of 10500 KL each at an estimated cost of Rs.25crore is under construction to enhance the crude storage capacity.

- A product line from CBR to Trichy is under implementation to improve evacuation of products from CBR.

INITIATIVES TAKEN TO ACHIEVE OPERATIONAL EXCELLENCE

Your Company has taken following initiatives to achieve improvement in both Physical and Financial

Performances.:

- Implementation of various energy conservation measures resulting in a saving of Rs.36.5 crore.

- Implementation of various value addition measures like maximization of CCR feed and butene, resulting in a saving of about Rs.16.90 crore.

- Increased import of power from grid to 5 MW to reduce energy consumption and overall cost of power.

- Implementation of measures to reduce the repairs and maintenance cost, overtime cost, manpower cost and interest cost

- Improving the reliability of the Plant.

- Reducing the crude inventory level to an average of 23 days.

- Increasing Distillate yield.

INDIAN ADDITIVES LIMITED

Indian Additives Limited (IAL), the joint venture between your Company and Chevron Chemical Company (now Chevron Oronite Company) , formed in the year 1989 for manufacturing Lube Additives, achieved a turnover of Rs.589.52 Crore during the year 2013-14, as against Rs.537.72 Crore in the previous year. The Profit after Tax for 2013-14 is Rs.24.95 Crore as against Rs.36.68 Crore in the previous year.

INFORMATION TECHNOLOGY

Your Company is marching ahead with the innovative use of Information Technology for enabling speedy decision making, improving operational efficiency and effective knowledge management. The SAP Payroll Module and Employee Enterprise Portal system were implemented during the year.

In line with the Information Security Policy and to strengthen the IT security, USB blocking software that enables blocking of USB drive in all PCs was successfully implemented.

Your Company introduced Web-based attendance program and On-line Kaizen registration system.

The SAP based Weighbridge software for the newly commissioned Weighbridge, was internally developed and implemented.

Based on the directives from the Government of India, your company has taken steps for migrating from Internet Protocol Version 4 (IPV4) to Internet Protocol Version 6 (IPV6), in a phased manner with a target date of completion by end December 2017.

RESEARCH AND DEVELOPMENT (R&D)

Your company''s R&D is committed to provide support to refinery operations by providing technological inputs to achieve technical excellence in all aspects of refinery operations, promote indigenous technology for refinery processes and develop new products and upgrade the quality of the existing products.

Your company has constituted a Research Advisory Committee to formulate, evaluate and monitor the R&D projects.

During the year, a new Micro-reactor for evaluation of catalyst and feedstock for Once through Hydro

Cracker Unit was successfully commissioned.

Your company''s R&D successfully carried out feasibility study for production of Food / Polymer Grade Hexane, using Hydro-processing route in the existing Pre-de-sulphuriser Unit and Pilot Plant studies on the use of co-solvents for NMP extraction of Lube distillates.

Your company''s R&D also initiated a collaborative research program on "Algae to Biofuels" with M/s.Aban Infrastructure Pvt. Ltd. Initial studies were carried out with Microalgae from Saline and Fresh water sources and the study was presented at International Refining and Petrochemicals Conference 2014. An application for patenting of biocrude production from Microalgae was also submitted.

A demonstration unit with large raceway pond and Pilot plant for Hydrothermal Liquefaction has been planned and a proposal is submitted to CHT for evaluation by Research Advisory Committee (RAC) and funding.

Your company''s R&D has a collaborative project with Indian Institute of Petroleum for developing strategies for the production of Low Sulfur Furnace oil, funded by Centre for High Technology (CHT) and monitored by Scientific Advisory Committee(SAC). The objective of the project is to reduce the sulfur in Furnace Oil to 0.5% level in line with MARPOL Specification on Marine Fuels.

SAFETY PERFORMANCE

Your Company keeps a constant vigil on its safety management practices and sets very high safety standards to ensure accident free man days in its work place. Initiatives were taken to augment safety training and safety briefings for further bolstering the safety culture.

Your company has installed and commissioned new High Volume Long Range (HVLR) monitors for fighting fire, if any, on tall structures and storage tanks both in Manali and Cauvery Basin Refinery.

Further, Hydrocarbon Gas Detectors were installed and commissioned in storage tank farm in Manali and CBR for early detection of hydro carbon leaks. Off-site Mock Drill exercise was conducted at Manali Industrial area in coordination with M/s Tamilnadu Petroproducts Limited (TPL) in November 2013 under the guidance of National Disaster Management Authority (NDMA). Similarly, Offsite mock drill was conducted in CBR in coordination with IOCL- Chennai, Bangalore, Madurai & Trichy (CBMT) in January 2014.

External Safety Audit at Manali refinery was conducted by OISD team in August 2013 and the implementation of the recommendations is taken up on priority. In CBR, Seventh Surprise Safety Check by OISD was carried out in February 2014.

Your company has achieved the longest spell of 138 incident free days and the Man - hour lost due to accidents as a percentage of total man-hours was lower at 0.018 %.

In recognition of the Company''s efforts in the areas of safety management, Greentech Foundation, along with Indian Institute of Corporate Affairs, Ministry of Corporate Affairs, Government of India awarded the company, the Greentech Occupational Health Safety Award 2013 in Silver category for Petroleum Refining Sector.

ENVIRONMENTAL PERFORMANCE

Your Company is constantly implementing various environmental protection measures to ensure that there are no adverse impact on the neighbourhood and the society as a result of its operations.

Significant environmental protection measures undertaken in Manali refinery include:

- Preparation of Emergency Response and Disaster Management plan in consultation with District Authorities and certified by Disaster Management Institute, Bhopal and submission of the document to Petroleum & Natural Gas Regulatory Board (PNGRB).

- Installation of Volatile Organic Compounds (VOC) Adsorption System in Effluent Treatment Plant-II (ETP) to reduce VOC emission.

- Manual analysis of all 12 parameters of ambient air quality as per revised National Ambient Air Quality Standards 2009.

- Installation of Rain Water Harvesting facility in 15 buildings.

Significant environmental protection measures undertaken in Cauvery Basin Refinery include:

- Provision of LED lights at housing complex and Refinery

- Completion of Green house gas emissions and removal survey for the year 2011-12 as per ISO 14064-1:2006 and certification from M/s BVC.

- Completion of Rainwater harvesting in 3 buildings.

In recognition of the efforts undertaken by the company in the areas of environmental protection, your company has been awarded the Greentech Environment Award - Silver category in Petroleum refining sector. The Cauvery Basin Refinery of your company has been awarded the Green Award for Industries by Tamilnadu Pollution Control Board for undertaking unique measures for preservation of environment.

ENERGY CONSERVATION

Your Company continues its efforts to implement various measures aimed at reducing the energy consumption and achieving energy conservation. The company has achieved the lowest ever energy index of 63.84 MBN.

Your company implemented the following encon measures resulting in a saving of Rs.36.50 crore and a saving in Fuel and Loss to the extent of 9840 MT of fuel oil equivalent for the year 2013-14.

- Recovery of Diesel Hydrotreater (DHDT) off-gas Hydrogen

- Operation of low pressure DHDT

- Implementation of recommendations of National Thermal Power Corporation (NTPC) in Cogen Boiler-3.

- OHCU Hydrocom Step-less capacity control of Make-up gas compressor.

- Steam trap management of Refinery III

The details of proposals being implemented for energy conservation are given in Annexure I. In appreciation of its energy conservation measures, your company was awarded the following prizes by Centre for High Technology (CHT) at the Refinery Technology Meet held at Kochi:-

- Special prize for best reduction in Steam leaks for the year 2013.

- Second prize for Furnace/Boiler efficiency for the year 2012.

- Special prize to CBR for Insulation effectiveness of Furnace for year 2012.

PROCESS IMPROVEMENTS

Your Company has successfully implemented the oxygen enrichment technology in the Sulphur Recovery Unit (Plant 78) which will enhance the capacity of SRU.

In view of the above achievement, your company, along with M/s.Engineers India Ltd., was jointly awarded a Special Commendation Award for "Innovator of the Year Team" in recognition of outstanding achievement in conceptualization, development and successful commercialization of Oxy Enrich process technology for capacity enhancement for Sulphur Recovery units, by PETROFED .

In addition, feed rate of Continuous Catalytic Reforming Unit (CCR) was increased by about 10% from 55 to 60 m3/hr during the year resulting in highest ever Feed processing of 358.8 TMT in CCR Unit.

QUALITY MANAGEMENT – TPM / ISO

Your company has taken several efforts to internalize the TPM culture across various functions and departments to ensure sustainable improvement in the functioning of the nine pillars of TPM. During the year, recertification audit was carried out for Safety, Health, Environmental and Quality, Integrated Management System (SHEQ IMS). During the year, Bureau Veritas Certification India Pvt. Ltd carried out ISO 14064 Green House Gas (GHG) emission verification for 2012-13 for Manali and CBR.

HUMAN RESOURCES

Your Company regards its employees as one of the key drivers of growth by providing a congenial work environment.

The total manpower of your Company as on 31st March 2014 was 1688, comprising of 778 supervisors and 910 non-supervisors (1705 as on 31st March 2013, comprising of 805 supervisors and 900 non-supervisors).

During the year, two Communication meetings with Officers and Four Shop level communication meetings were conducted by Managing Director and Functional Directors wherein current business scenario was discussed. In addition, three communication meetings with the collectives and eight structured meetings with the Office Bearers of Welfare Associations were conducted.

Your company takes concerted efforts in Training and Development of the employees. During the year 4695 man days of training was imparted to all its employees. Skill Development Programmes covering 250 manhours have also been conducted for the benefit of the employees. During the year, training programme on business risk management covering 224 man hours was organized. In addition, innovative programs aimed towards developing the physical as well as the mental health of the employees like yoga and meditation were organized. A two days course on "Refinery Economics" was conducted for the Office Bearers and Committee members of the collectives, to explain the nuances of economics of Refinery operations.

Your Company has been scrupulously following the Presidential Directives and various instructions of the Government relating to the welfare of the SC, ST, OBC, and differently abled persons. Out of the total manpower, there were 414 SC employees (previous year: 420) and 38 ST employees (previous year: 38) as on 31.03.2014 constituting 24.53% and 2.25% of the total manpower respectively. The reports relating to representation of SCs / STs / OBCs in the prescribed proforma as on 01.01.2014 is given in the Annexure-II.

Your Company is implementing the provisions of the Disabilities Act 1995 by way of 3% reservation for differently abled persons. In addition, various concessions and relaxations are being extended to physically challenged persons in the recruitment process.

WELFARE OF WOMEN

Your Company endeavors to provide equal opportunity for women in employment. As on 31.03.2014, 88 women employees were on the rolls of the Company, of whom 42 are in the Supervisory Grade and 46 are in Non supervisory Grade, constituting 5.39% of the total Supervisory employees and 5.05% of the total Non-supervisory employees. International Women''s Day was celebrated in March 2014 on the theme "Inspiring change".

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company firmly believes in the process of inclusive development and accordingly aligns its organizational objectives and business goals with the social objectives.

Being a responsible corporate citizen, your company implemented a number of Corporate Social Responsibility (CSR) activities, benefitting many stakeholders. The focus of CSR activities is aimed at skill development, education, health and hygiene facilities and women empowerment. During the year an amount of `101 lakhs was spent on various CSR activities for the benefit of community around your Refineries at Manali and CBR, Nagapattinam.

Major CSR activities carried out during the year include the following:

- Running four Community Health Centers serving 50,000 people.

- Conducted two General Medical Camps in association with various Hospitals.

- Conducted one Comprehensive Eye Care Camp including treatment for cataract.

- Provision of assistance for implementation of Government sponsored National Pulse Polio Programme.

- Distribution of Merit Scholarships to the students of Rural Educational Institutions.

- Sponsorship of "Home Management for Visually Challenged Students" program.

- Management of a Creche through Women''s India Association for the benefit of working women.

- Installation of One 10KW grid connected Solar Photo Voltaic system at Polytechnic College, Manali.

- Sponsorship of sports meet for promoting sports among the school students

- Provision of toilet and drinking water facilities for school students and for public

- Provision of placement linked computer training program for 100 beneficiaries, in association with M/s ITCOT, Chennai at Computer Sciences Corporation (CSC) Nagapattinam at a cost of Rs.10 Lakh. Of the 100 youths trained, around 72 nos of youths have been gainfully employed.

- Mobile Science Lab Education Program for the schools in Nagapattinam District conducted in association with M/s. Agastya International Foundation, Bangalore at a cost of Rs.4.00 lakhs benefitting around 15,000 school students.

PUBLIC PROCUREMENT POLICY FOR MSMEs

Your company is making all efforts to comply with the Public Procurement Policy for MSMEs as per the directives of the Government of India and necessary steps have been initiated in this regard.

OCCUPATIONAL HEALTH SERVICES (OHS) CENTRE

Your Company gives extra impetus for achieving high standards of excellence in health care and has an Occupational Health Services (OHS) Centre equipped with latest equipments and the centre is manned by highly qualified professionals. During the year, a lecture session was arranged on the topic "Pain and Posture" for the benefit of the employees and also to educate the employees on the ill effects of bad postures.

In order to help the employees to overcome their stress levels, a program on "Ultimate in Stress Management" was organized. A study on the effect of exposure to organic solvents in the refinery work environment was carried out. Screening for Osteoporosis and general well being was conducted at CBR, for employees and their spouses.

In consideration of the pioneering efforts in the areas of health and safety, your company was bestowed with Golden Peacock Award for Occupational Health and Safety for the year 2013 by Institute of Directors (IOD), New Delhi.

PUBLIC GRIEVANCES

Your Company accords top priority to the timely redressal of public grievances and a Grievance redressal system is in place. Details and contact number of Public Grievance Officer are displayed in the website of the Company, viz. www.cpcl.co.in. As on 31.03.2014, there were no complaints pending.

RISK MANAGEMENT

A detailed and comprehensive Risk Management Policy addressing the various perceived risks in the sustained operations of the company is in place. The policy and the action taken report for the year 2013-14 was reviewed by the Board of Directors of the Company.

CORPORATE GOVERNANCE

Your Company firmly believes in doing the right things and all things right and adheres to the best practices in matters of transparency, accountability and disclosures.

Your Company complied with all the mandatory requirements of Corporate Governance Guidelines issued by Securities & Exchange Board of India and Department of Public Enterprises (DPE), Government of India for the year 2013-14, except the clause relating to the appointment of Independent Directors. A separate section on Corporate Governance forms part of this Annual Report.

Your Company also complies with the Voluntary Guidelines on Corporate Governance issued by Ministry of Corporate Affairs, Government of India in December 2009, as far as practicable.

SECRETARIAL AUDIT

In line with the provisions of the Voluntary Guidelines on Corporate Governance issued by the Ministry of Corporate Affairs, your Company carried out Secretarial Audit for the year 2013-14 from M/s. S.Sandeep & Associates, Company Secretaries and their report forms part of the Annual Report. The Secretarial Audit Report confirms that the company has complied with all the applicable provisions of the Companies Act, SEBI Guidelines, rules etc except with the clause relating to appointment of Independent Directors. The appointment of additional Independent Directors is under the consideration of Government of India.

RIGHT TO INFORMATION

The Right to Information Act, 2005 is applicable to your company. In accordance with the provisions of the RTI Act, necessary disclosures have been made in the website of the company. During the year, 28 applications under the RTI Act were received and responded in time.

VIGILANCE

The vigilance department of your Company plays a proactive role in establishing a culture of integrity, probity, transparency, fairness and accountability in the organisation by conducting periodic/surprise inspections, major inspections and systems studies focusing on areas of improvement.

In order to create awareness as part of capacity building and to bridge knowledge gap, if any, training programs, and lectures on vigilance functions, procedures to be followed in procurement, contracts and execution of works were conducted.

The Vigilance Department firmly believes in leveraging of technologies as a result of which the payment of bills to vendors/ contractors effected through ECS/EFT touched a phenomenal 99%.

As a step towards e-governance, all open tenders are published in CPCL website in order to ensure competition and transparency. In line with CVC''s guidelines, Notice Inviting Tenders, tender documents and details of Purchase Orders/Contracts awarded are hosted in the CPCL website. Procurement and contracts are being initiated through "e-tendering" mode.

During the year, the Vigilance Awareness Week program was conducted from 28th October to 2nd November, 2013. As part of the program, Interaction meetings with Vendors, Contractors, Customers and other Stakeholders, Lecture sessions for employees, Essay and Slogan Competitions for employees and school students were held

INTEGRITY PACT

In order to improve transparency in business dealings, your Company implemented the Integrity Pact. 24 major contracts were covered under the Integrity Pact and the threshold limit for entering into Integrity Pact was revised from Rs.10 Crore to Rs. 5.00 Crore.

OFFICIAL LANGUAGE POLICY

Your Company is sincerely implementing the Official Language Policy of the Government of India and steps were taken for the progressive use of Hindi in official communication.

Your Company received the prestigious Rajbhasha Shield (Third prize) 2013 instituted by Town Official Language Implementation Committee, Chennai under the category of Public Sector Undertaking (Big) in Chennai.

STATUTORY INFORMATION

- Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 - Nil.

- Statutory details of Energy Conservation and Technology Absorption, R&D activities and Foreign Exchange Earnings and Outgo, as required under Section 217(1) (e) of the Companies Act, 1956 and the rules prescribed there under, i.e., the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure and form part of this Report (Please refer Annexure-I).

- Certificate received from the Auditors of the Company regarding compliance of conditions of Corporate Governance, as required under Clause 49 of the Listing Agreement and also the compliance with the guidelines on Corporate Governance issued by Department of Public Enterprises, Government of India is Annexed and forms part of this Report (Please see Annexure-III).

- Management Discussion and Analysis Report as required under Clause 49 IV F of the Listing Agreement is annexed and forms part of the Report (Annexure IV).

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 2000 with respect to Directors'' Responsibility Statement, it is hereby confirmed, that,

i) in the preparation of the annual accounts for the financial year ended March 31, 2014, the applicable accounting standards have been followed and that there are no material departures from the same;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors have prepared the annual accounts for the financial year ended March 31, 2014, on a going concern basis; and

v) Proper systems are in place to ensure compliance of all laws applicable to the Company.

STATUTORY AUDITORS

M/s. Chandran & Raman, Chennai and M/s S.Venkatram & Co., Chennai have been appointed as Joint Statutory Auditors of the Company for the financial year 2013-2014 by the Comptroller and Auditor General of India. The Board of Directors of the Company fixed a remuneration of ` 10 lakh ( Rs.5 lakh to each of the Joint Statutory Auditors) in addition to the out-of-pocket expenses, if any, and applicable service tax.

Mr. K. Suryanarayanan, Cost and Management Accountant, Chennai was appointed as the Cost Auditor of Manali Refinery and Cauvery Basin Refinery of the Company in respect of Petroleum and Petrochemical sector at a total remuneration of `1,70,000/- p.a. plus applicable taxes and out of pocket expenses, if any, to conduct the audit of Cost Accounts maintained by the Company and Rs.30000/ p.a plus applicable taxes towards certification fee for compliance report in respect of activity of power generation.

REPORTING UNDER SECTION 23(1)(b) OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985

In terms of the requirements under Section 23(1) (b) of the Sick Industrial Companies (Special Provisions) Act 1985, ("SICA"), a report of the Board of Directors with regard to accumulated loss being in excess of 50% of the Company''s peak net worth during the immediately preceding four financial years along with its causes and measures being taken is submitted.

The peak net worth of CPCL during the last four years was Rs. 3793 crores. If the net worth is reduced to less than 50% of such peak net worth, i.e. Rs. 1897 Crore, a report to Board for Industrial and Financial Reconstruction (BIFR) on the fact of such erosion is required to be made. The loss of CPCL for the Financial Year ending 31st March, 2014 was Rs.304 crore and consequently the net worth reduced to Rs. 1722 crore, which has resulted in erosion of more than 50% of its peak net worth over the last four Financial Years. Considering the net worth of Rs.1722 crore as on 31.03.2014, the fact of such erosi in is to be reported to the BIFR within a period of 60 days from the date of adoption of accounts by the shareholders of the company.

REASONS FOR LOSSES

The following major factors adversely impacted the financial performance of the company during the years 2012-13 and 2013-14

- High Volatility in crude and product prices resulting in lower effective cracks.

- Unprecedented depreciation of the Indian Rupee against the US Dollar and volatility in foreign exchange market resulting in exchange fluctuation loss.

- Higher interest expenditure due to increased working capital requirements, inadequate internal accruals and servicing of loans on completed projects.

- Lower crude thruput during the year 2012-13 due to revamp shutdown of Refinery II, unplanned shutdown of Refinery III for packing replacement and reduced distillate yields.

- Higher CST under recovery.

MEASURES BEING TAKEN TO IMPROVE THE OPERATIONAL AND FINANCIAL PERFORMANCE

The Company has initiated following measures to achieve improvement in both Physical and Financial Performance:

Operational improvements and efficiencies:

Various margin improvement measures initiated by the company in the areas of energy conservation and consequent reduction in fuel & loss, value addition measures and optimization of crude mix are expected to improve the profitability.

Implementation of Resid Up gradation project:

The Residue Up gradation Project being implemented at a capital outlay of Rs. 3110 Crore is expected to significantly improve the Gross Refining Margins due to the conversion of bottoms into middle distillates. Keeping in view the huge requirement of funds for the project, the company has approached Oil Industry Development Board (OIDB) to sanction 50% of the outlay as loan for the project which is expected to bring down the overall financing cost of the project.

Focus on Cost containment:

The company has identified specific cost containment measures in the areas of repairs & maintenance, staff cost and also optimization of utilities cost. These initiatives would yield results in the coming years. The company has requested Indian Oil Corporation Limited to reduce the credit period for payment towards supply of products so as to facilitate the reduction in working capital requirement and savings in interest cost.

Capital Infusion:

The company is exploring various options of infusion of capital which will augment the net worth of the company and reduce the interest cost.

DIRECTORS

Ms.D.Lilly, Director (Finance) ceased to be a Director on the Board of CPCL effective 31.07.2013 on attaining the age of superannuation. Mr.A.S.Basu, Managing Director was holding the additional charge of the post of Director (Finance) till 31.05.2014.

Mr. Mohan Lal, Director (R&A), Ministry of Petroleum and Natural Gas has been appointed as a Director on the Board of CPCL effective 21.08.2013 in place of Mr.P.K.Singh, who ceased to be a Director effective 11.09.2012.

Prof.M.S.Ananth, Independent Director, ceased to be a Director on the Board of CPCL effective 07.11.2013.

Mr.G.Ramaswamy, Practicing Chartered Accountant, has been appointed as an Independent Director on the Board of CPCL effective 07.11.2013 in place of Mr.M.S.Ananth.

Mr.A.S.Basu, Managing Director ceased to be a Director on the Board of CPCL effective 31.05.2014 on attaining the age of superannuation. Mr.S.Venkataramana, Director (Operations) has been holding the additional charge of the post of Managing Director.

Mr.R.S.Butola, Chairman, ceased to be a director on the Board of CPCL effective 31.05.2014.

Mr.Sanjiv Singh, Director (Refineries), Indian Oil Corporation Limited has been appointed as a Director on the Board of CPCL effective 03.07.2014 in place of Mr.Rajkumar Ghosh, who ceased to be director effective 30.06.2014.

Your Directors place on record their appreciation of the valuable contributions made by Ms.D.Lilly, Prof.M.S.Ananth, Mr.A.S.Basu, Mr.R.S.Butola and Mr.Rajkumar Ghosh during their tenure.

ACKNOWLEDGEMENT

Your Directors place on record their gratitude for the valuable guidance and cooperation and support received from the Ministry of Petroleum & Natural Gas, Indian Oil Corporation Limited, Naftiran Intertrade Company Limited, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Oil Industry Safety Directorate, Centre for High Technology, the other Ministries of Government of India, Government of Tamil Nadu, Central Vigilance Commission, Financial Institutions and commercial banks.

Your Directors are also thankful to the suggestions received from the Statutory Auditors and the Comptroller & Auditor General of India.

Your Directors specially thank all the shareholders for their support.

Your Directors sincerely acknowledge the commitment and perseverance of all the employees



For and on behalf of the Board of Directors

Date : 16.07.2014 S. VENKATARAMANA

Place : Chennai Managing Director (i/c)


Mar 31, 2013

To the Shareholders of Chennai Petroleum,

The behalf of the Board of Directors of your Company, it is indeed my privilege to present the 46th Annual Report on the performance of your Company, together with the Audited Statement of Accounts for the year ended March 31, 2012

PERFORMANCE REVIEW

Significant Highlights

- Highest ever turnover of Rs. 45365 Crore achieved.

- Total Thruput of 10557 TMT achieved.

- Carbon Foot Printing exercise was completed for Manali and CBR refineries as part of Sustainable development activities.

- Achieved the lowest ever energy index of 67.2 MBTU/BBL/NRGF for Manali Refinery and 108.67 MBN for Cauvery Basin Refinery.

- Manali Refinery successfully changed the solvent from Sulfolane to NMP for production of hexane to meet the stringent product quality.

- Received Income Tax refund of Rs. 276 Crore based on the favourable order given by CIT (Appeals)for Sec.80 IB claim on Refinery III profits for Assessment Year 2008-09.

- DHDT Unit commissioned successfully in Manali.

- Installation of Oxygen enrichment facility jointly developed with EIL in SRU, Train B resulting in enhanced OHCU thruput.

- 20" Crude oil interlink pipeline between Chidambaranar Oil Jetty (COJ) and Marg Karaikkal Port successfully commissioned in February 2012.

- Cauvery Basin Refinery has received the "Excellence in Consistent TPM Commitment Award" for the year 2011 from Japan Institute of Plant Maintenance (JIPM).

- Cauvery Basin Refinery has received the prestigious National Safety Award for 2009 instituted by the Director General, Factory Advice Services and Labour Institutes, Ministry of Labour & Employment, Government of India.

- Won the PSE Excellence Awards instituted by the Department of Public Enterprises and Indian Chamber of Commerce for the year 2011 for "Environmental Excellence and Sustainability Development" and Good Corporate Governance.

- Won the CII Excellence in Water Management Award for the year 2011.

Physical

CRUDE THRUPUT (in TMT) 2011-12 2010-11

Imported 9050.8 9105.0

Indigenous 1505.8 1643.0

Total 10556.6 10748.0

PRODUCTION (in TMT) 2011-12 2010-11

Light Ends 2270.5 2279.0

Middle Distillates 5148.9 5141.0

Heavy Ends 2008.9 2177.0

Lube Base Stocks 178.3 186.0

Paraffin Wax 24.0 27.0

Others (Intermediaries) (87.6) 25.0

Other Inputs (87.0)

Fuel & Loss 1013.6 996.0

Total 10556.6 10748.0

Financial (Rs. in Crore)

2011-12 2010-11

Gross Turnover 45384.91 38128.26

Profit before Interest, Depreciation & Tax 456.58 1332.44

Interest 249.38 254.45

Depreciation and Amortization 365.42 314.47

Profit before Tax (158.22) 763.52

Provision for Taxation

- Income Tax (Net) [Incl. Pertaining to earlier years) (253.51) 223.48

- Deferred Tax 33.47 28.52

Profit after Tax 61.83 511.52

Value Added 969.03 1748.65

Dividend

The Board of Directors of the Company is pleased to recommend a dividend of 20% of the Paid-up Share Capital of the Company representing Rs.2/- per equity share for the year 2011-12.

Book Value

The book value per share of your Company has increased from Rs. 252.90 in the year 2010-2011 to Rs. 254.72 in the year 2011-2012.

Reserves and Suplus

The Reserves and Surplus increased from Rs. 3616.92 crore as on 31.03.2011 to Rs. 3644.13 crore as on March 31, 2012.

Value Addition

The value addition during the year is Rs.969.03 crore as compared to Rs. 1748.65 crore in the previous year.

The Profit before Tax during the year 2011-12 was mainly due to:

- Lower refining margins on account of high volatility in the crude and product prices leading to depressed cracks in the wake of the economic crisis in the European Union & economic slowdown in the US.

- Unprecedented depreciation of the Indian Rupee against the US Dollar and extreme volatility in Foreign Exchange Market resulting in exchange fluctuation losses.

- Additional freight incurred during the year due to transportation of crude in smaller Afra max vessels instead of Suez Max vessels on account of infrastructural constraints at Chennai Port Trust and production disturbances during cyclone Thane.

Contribution to Ex-Chequer

During the year, your Company has paid a sum of Rs. 5784.82 crore to the ex-chequer as compared to Rs. 6837.32 crore in the previous year.

Public Deposit Scheme

Your Company has not accepted any fresh public deposits during the year 2011-12.

Transfer of Unclaimed Dividend to IEPF

Your Company has transferred to the Investor Education and Protection Fund the required amount as per Section 205(C) (2) of the Companies Act, 1956, within the stipulated time.

Manali Refinery - Salient features of Operations

- Manali Refinery achieved a total Crude thruput of 9.945 MMT as compared to 10.045 MMT in the previous year.

- Achieved the highest distillate yield of 70.3 wt%.

- Achieved the lowest ever energy index of 67.2 MBTU/BBL/NRGF by maximising thruput in secondary units.

- Maximized the production of food grade hexane by additional 40% through process improvements.

- Completed health checkup for "Excellence in Consistent TPM Commitment Award" for 2011.

- Highest ever production of the following products :

(Figures in TMT)

Product 2011-12 Previous Best

High Speed Diesel 3911 3863 (2010-11)

Motor Spirit 1020 860.0 (2010-11)

- Procured three new low sulfur crudes viz., Espoir from Ivory Coast, Palanca Blend from Angola and Essider from Libya.

- One new Crude was added to the basket: viz., Okwori, new Low Sulfur Trial crude from Nigeria.

Cauvery Basin Refinery (CBR) - Salient features of Operations

- Processed 611 TMT of Crude as compared to 703.3 TMT in the previous year.

- Achieved the highest ever distillate yield of 86.64 wt % on crude in 2011-12 (Previous best :

83.2 wt % in 2010-11).

- Two nos. of Continuous Ambient Air Quality Monitoring stations and one online Stack Monitoring station commissioned for better monitoring and control of various environmental parameters.

- Introduced new product namely High Flash High Speed Diesel.

- Successfully conducted Green House Gas Emission Survey.

MoU PERFORMANCE

Your Company signed an MoU with Indian Oil Corporation Limited, the holding Company for the year 2011-12, as per the guidelines issued by the Department of Public Enterprises (DPE). The provisional rating for the year 2011-12 is "1.43".

MARKETING

Majority of the products of your Company like MS, HSD, LPG, SKO, etc. are marketed by Indian Oil Corporation Limited, the holding Company.

CPCL directly markets some of the Speciality products and highest direct sales achieved during 2011-12 as compared to previous year are given below :

(Quantity in TMT)

S. No. Product 2010-11 2011-12

1 Naphtha 211.66 218.51

2 Sulphur 52.02 56.97

3 Propane 2.06 2.14

4 PBFS 7.14 7.53

During the year, seven Customer Meets were conducted at various locations for Wax, Sulphur and other direct customers and 19 new customers were registered for the supply of Sulphur, Hexane, Propane and Propylene.

PROJECTS

Your Company made an investment of Rs. 490.18 crore on various projects during 2011-12 (cumulative expenditure of Rs.2640.23 crore upto 2011-12), out of the approved outlay of Rs. 3575 Crore for the XI Plan (2007-2012).

Completed Projects

Euro-IVProject - DHDT Units:

To produce MS/HSD meeting Euro-IV specifications for Chennai and Bangalore and Euro-III equivalent specifications for the rest of the locations, your company has undertaken Auto fuel Quality Upgradation Project at an estimated cost of Rs. 2615.69 crore in Manali Refinery as per the Auto Fuel Policy of the Government of India.

The Diesel Hydro treater unit (DHDT) with a capacity of 1.8 MMTPA was commissioned in May 2011.

CBR 20" Crude line

Cauvery Basin Refinery of your Company has successfully commissioned a 20" interlink crude oil pipeline between Karaikkal Port and CPCL-CBR''s Chidambaranar Oil Jetty at a cost of Rs.10.86 Crore. This project will enable CBR to receive crude oil in higher parcel sizes resulting in reduction in the transportation and handling cost of crude and the flexibility to utilize other crude oil tankers of larger sizes.

Projects Under Implementation :

Euro-IV Project:

The utilities and off-site facilities of Euro-IV auto fuel quality upgradation project are in various stages of execution. A new Hydrogen Generation Unit to enhance the existing Hydrogen Generation capacity is under commissioning stage. The revamp of the Effluent Treatment Plant-II is in the final stage of mechanical completion and is expected to be commissioned in October 2012.

Revamp of existing CDU/VDU-II from 3.7to4.3MMTPA

A project to enhance the unit capacity from existing 3.7 MMTPA to 4.3 MMTPA is under implementation at a cost of Rs. 333.99 Crore. This project is expected to be completed during the second quarter of the financial year 2012-13.

Resid Upgradation Project

For improving the distillate yield of the Manali refinery and to process increased level of high Sulphur bearing Crudes, approval was accorded for implementation of a Resid Upgradation Project at an estimated cost of Rs. 3110.36 Crores. This project is scheduled to be completed within 33 months from the date of Environmental Clearance, which is delayed mainly due to non lifting of ban imposed by MoE&F on new investments in the Manali Industrial Region.

New Crude Oil Pipeline

To overcome the risks associated with the transportation of Crude Oil through the existing 30" Crude Oil Pipeline from Chennai Port to Manali Refinery your Company is implementing a new 42" Crude Oil Pipeline Project at a cost of Rs. 126 Crore. All engineering activities have been completed along the route of the proposed port connectivity road project, Coastal Regulatory Zone clearance is awaited for this project 2 X 10.5 TKL Crude Oil Storage tanks at CBR

A project for construction of two Crude oil storage tanks of 10500 KL each is being implemented to have better operational flexibility in Crude receipt and storage.

New Projects

Refinery Expansion Project:

An expansion project to increase the capacity of Manali Refinery to 17.5 MMTPA by installing a 6.0 MMTPA unit with matching secondary processing facilities is under conceptualization. The process configuration is under finalisation.

Construction of Mounded Bullet:

With the objective to promote safety and reduce the environmental impact, your Company proposes to install a mounded gas storage facility in replacement of the existing bullets for LPG, Propane and Propylene.

Diesel Hydro Treating facilities:

It is proposed to provide diesel hydro treating facilities at Cauvery Basin Refinery by shifting the idle equipments at Manali Refinery and also by providing other associated facilities for removal of Sulfur from diesel is envisaged. The project is expected to increase the capacity utilization of CBR and improve refinery margins by enabling processing of medium sulfur crudes. Detailed Feasibility Report was completed by M/s. Projects and Development (India) Ltd

Naphtha Reforming Facilities:

A proposal is also envisaged for shifting of idle assets at Manali Refinery to Cauvery Basin Refinery and provision of other associated facilities for reforming of Naphtha. The project is expected to improve the refinery margins and enable production and supply of MS from CBR.

STRATEGIC INITIATIVES

Your company is conscious of the fact that growth is central to its core purpose and the quest for growth has to be through activities undertaken within the framework of HSE policy, corporate governance and sustainable development. The In-house Strategy Meet was held in October 2011 to discuss various growth strategies like Petcoke based Power Project, New Propylene Recovery Unit, Propylene Derivatives Unit, 15 MMTPA refinery at PCPIR and GRM improvement strategies such as additional Hexane from ISOM Unit.

INITIATIVES TAKEN IN EXCELLING

- Carbon foot printing exercise was completed for Manali and CBR refineries as part of sustainable development activities.

- CPCL''s CBR unit has produced a new product (High flash High Speed Diesel) and supplied to the market for the first time in support of Navy operations.

- CPCL has implemented the on-line blending automation for its MS, HSD and FO streams and the on-line analyser models used for this have been recently updated to meet the new streams and product specifications.

- CPCL has adopted business improvement technologies like off-line Multi Blend optimizer and scheduling tools for better value addition to the products.

- CPCL has conducted a Workshop on "Safety Culture Improvement" with the help of the Dupont Sustainability Solutions to strengthen the safety measures in the refinery.

- Reach-in programmes were conducted to improve the communication among the employees at sectional level and facilitate a platform to discuss the targets, performance, safety and work related issues for improving the working conditions in the refinery.

- Mr. C. Ramadoss, employee of CPCL received the India Shram Award in October 2011 in recognition of the outstanding contribution made by workmen.

- CPCL has commissioned two additional continuous Ambient Air Quality Monitoring Stations and one online Stack Monitoring Station for strengthening the monitoring mechanism of various environmental parameters.

- CPCL along with IOC R&D have initiated a project to co-process Jatropha based bio-diesel (about 3-5 wt%) along with fossil diesel in the hydro-treating unit mentioned above.

AREAS OF LEADERSHIP OF CPCL

- Oxygen Enrichment facility was extended to SRU train thereby enabling increased OHCU thruput which will improve the Distillates production and profitability.

- Successfully completed trial processing of Light Neutral LOBS in NMP Extraction Plant to maximize capacity utilization of NMP Extraction unit and reduce energy consumption.

- The CBR Unit of CPCL has passed the final assessment and has been awarded "Excellence in consistent TPM commitment award for 2011" by JIPM, Japan. CPCL is the first refinery in the Indian Oil Industry to achieve this award

INDIAN ADDITIVES LIMITED

Indian Additives Limited, was formed in the year 1989 as a joint venture between your Company and Chevron Chemical Company (now Chevron Oronite Company) in the year 1989 for manufacturing Lube Additives.

IAL achieved a turnover of Rs. 454.33 Crore (provisional) during the year 2011-12, as against Rs. 375.28 Crore in the previous year. The Profit after Tax for 2011-12 is Rs. 35.76 Crore as against Rs. 37.45 Crore in the previous year.

INFORMATION TECHNOLOGY

Your Company has taken rapid strides towards Green IT by focusing on the concept of paperless office with the introduction of Online Vigilance Clearance system for getting No Objection Certificate for passport applications and foreign tours and Online booking for Train and Air Travel system.

Your company has leveraged the usage of new technologically advanced concept of Virtualisation and Consolidation at Manali Refinery whereby, the multiple servers and services will be run on a single server, resulting in lower administrative cost and higher energy savings.

Realising the need to provide safer and secure IT system against cyber attacks, your company has upgraded its Firewall applications.

Your company has successfully introduced the e-fax server, a comprehensive network fax solution for creating, sending, receiving, and managing faxes directly from a user''s desktop computer. The fax is integrated with email to enable high volume delivery & paperless communication. Your company has also upgraded the routers in the organization.

RESEARCH AND DEVELOPMENT (R&D)

Your company focuses its attention to fundamental R & D for sustainability of its business, advanced technical services, building capabilities and enhance profitable growth and continues to be an efficient user of technology.

Your Company''s R&D is aimed at increasing the efficiency and reliability of the refinery processes and continues to extend support to various Refinery units like FCC, Hydrocracker, DHDS and Lube units with process and feed optimization studies.

Your R&D center has carried out extensive isomerisation pilot plant studies to successfully develop a model for supporting the commercial ISOM unit. Studies were initiated on Bio fuels also by conducting several high-pressure pilot plant trials on thermo chemical conversion of Algae.

Your R&D centre also entered into Research cooperation with Indian Institute of Petroleum (IIP), Dehradun for the development of process for low sulfur fuel oil through Extraction route as an alternate to hydro treating which is expensive and complex.

SAFETY PERFORMANCE

Your Company with its deep conviction as a responsible corporate citizen pursued whole heartedly the principle of maximising production without compromising on Safety in its pursuit towards excellence.

Your Company has prepared the Process Safety Manual in line with the guidelines of Oil Industry Safety Directorate.

A workshop on Safety Culture Improvement was conducted for the benefit of cross section of employees. Your company has also revised the incentive scheme for reporting Near Miss Incidents (NMI) in order to encourage the employees in generating more number of Near Misses and giving importance for process safety NMIs and High potential NMIs.

One Four Day programme on "Risk Based Process Safety" and three One -Day Programmes on " Process Safety Management " were conducted through Centre for Chemical Process Safety (CCPS).

An off-site emergency mock drill was conducted under the guidance of Brig (Dr) B.K.Khanna (Retd.), Senior Specialist (Training and Capacity Development) NMDA, New Delhi with active participation of District Collector, Tiruvallur and all the Stakeholders.

ENVIRONMENTAL PERFORMANCE

Your Company, recognizes the impact of industrial operations on environment and believes that commitment to environment is fundamental to the company''s values which ensure sustainable development. Therefore, your company''s development plan encompasses a variety of schemes towards minimizing the impact of refining operations on environment.

Significant initiatives taken in the areas of environmental protection include the following:

- Completion of Fugitive Emission Inventorisation in Refinery I & III.

- Adoption of alternative methodology for oil recovery, i.e. in-situ technique by treating the oily Sludge in the tank farm itself, for oil recovery.

- Three numbers of fixed roof tanks of capacity 10000 KL each have been constructed and being commissioned for oily water feed to Effluent Treatment Plant (ETP) for minimisation of emission of Volatile Organic Compounds.

- Mobile Ambient Air Quality unit launched. Real time ambient air quality monitoring station analyzer data and stack emission monitoring data configured in PIN under the continuous Emission Monitoring System.

The sustained and concentrated efforts taken by the company in the area of water management has earned the company Environment Excellence Award in Water Management by Confederation of Indian Industry.

RENEWABLE ENERGY DEVELOPMENT

Sustainability Development is recognized as one of the important focus areas in CPCL and as part of these efforts, CPCL generate 28.9 Million Units of Power from the 17.6 MW Windmill in Tamil Nadu. CPCL is exploring various options of utilizing Solar energy, as a part of its commitment to Sustainability Development

As part of CSR activity, CPCL has implemented a unique concept of providing 45 Nos. of Solar based Street Lights at Jawadhu Hills for the benefit of Tribal people.

ENERGY CONSERVATION

Your Company continues its efforts to undertake several measures aimed towards achieving Energy Conservation.

During the year, Condensate Recovery System was commissioned in Visbreaker and Sulfur Recovery Units as part of Energy Conservation initiative.

The Manali Refinery of your company achieved the lowest ever energy index of 67.2 MBTU/BBL/NRGF. The Cauvery Basin Refinery achieved the lowest ever energy index of 108.67 MBN.

The Energy Conservations Measures undertaken during the year are detailed in Annexure-I.

REFINERY BUSINESS OPTIMISATION

Under the Integrated Refinery Business Improvement Programme being implemented in association with Centre for High Technology and M/s. Shell Global Solutions International, 11 proposals for implementation were completed with a net benefit of 7.243 Million US Dollars (10.1Cents per bbl).

PROCESS OPTIMISATION

Your Company has been a fore runner among the Indian Refineries with regard to implementation of best practices in Refinery Business Optimisation in order to achieve better operating margins.

Your company has successfully completed the trial processing of LN in NMP Extraction Plant to maximize the capacity utilisation of NMP Extraction Unit and reduction of energy consumption.

Several initiatives taken in the area of optimisation include the following :

- Installation of Duplex Stainless Steel tubes for coolers for run length enhancement in propylene unit

- Changeover of hexane plant solvent from sulfolane to NMP

TOTAL PRODUCTIVE MAINTENANCE (TPM)

The Manali Refinery of your company successfully completed the health check up for "Excellence in Consistent TPM Commitment Award" conducted by the Japan Institute of Plant Maintenance (JIPM).

The Cauvery Basin Refinery of your Company received the "Excellence in Consistent TPM Commitment Award" for 2011 from the Japan Institute of Plant Maintenance (JIPM), in March 2012.

HUMAN RESOURCES

Your Company has a manpower dedicated to meet the vision of the company and is always endeavoring to take the company to challenging heights. Your company''s HR policy caters to the demand of maintaining a steady flow of talent, in a business which is characterized by risks and uncertainties, fluctuating crude and product prices and growing competition.

The total manpower of the Company as on 31st March 2012 was 1745 (1773 as on 31st March 2011) comprising 787 supervisors and 958 non-supervisors (808 supervisors and 965 non-supervisors as on 31st March 2011).

In order to develop the skill set of the employees, your company recently started "Employees Learning Forum" and 11 programmes were successfully conducted during the year.

The Industrial Relations climate continued to be harmonious, cordial and peaceful through out the year with periodical sharing of the information with the collectives. Structured communication meetings were held with the collectives to communicate the quarterly / annual performance and growth prospects of the Company.

The backlog vacancies of Persons with Disabilities, which was 4 in the beginning of the year has been filled up through special Recruitment drive.

Your Company firmly believes in continuously upgrading the skills and competencies of the employees with the objective of creating a leadership pipeline. Training programmes aimed at enhancing both the functional competencies and behavioural competencies of the employees at all levels were organised with the best of faculties. During the year, your Company utilized 5364 man days covering employees at all levels. Your company achieved average training man days of 2.7 per employee during the year. Competency Mapping was carried out for 142 deputy managers/ managers by the Company during this year.

Your Company has been scrupulously following the Presidential Directives and various instructions of the Government relating to the welfare of the SC, ST, OBC, and Persons with Disabilities. Out of the total manpower, there were 433 SC employees (previous year: 439) and 38 ST employees (previous year: 36) as on 31.03.2012 constituting 24.81% and 2.18% of the total manpower respectively.

The statistics relating to representation of SCs / STs / OBCs in the prescribed proforma as on 01.01.2012 is given in Annexure-II.

WELFARE OF WOMEN

Your Company provides equal opportunities for women in employment and ensures that requisite work ambience exists for women employees. As on 31.03.2012, 90 women employees are on the rolls of the Company, of whom 40 are in the Supervisory Cadre and 50 are in Non supervisory Cadre, constituting 5 % of the total Supervisory employees and 5.2 % of the total Non-supervisory employees.

International Women''s Day 2012 was celebrated with the theme "Promote Gender Equality and Empower Women" which was chaired by Kalaimamani Dr. Smt. Sarada Nambi Arooran, State Information Commissioner (Retd.).

Your Company received the Best Enterprise Award in the Miniratna category instituted by the Forum of Women In Public Sector (WIPS) under the aegis of Standing Conference on Public Enterprises (SCOPE), for the second consecutive time.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company is committed to follow the guidelines on Corporate Social Responsibility (CSR) issued by the Department of Public Enterprises (DPE) and the CSR Committee constituted by the Board of Directors of the Company monitors the overall functioning as well as guide and suggest improvements in the CSR activities in line with the company''s vision and mission statement and CSR policy.

During the year, an amount of Rs. 372.65 lakhs was spent on various Corporate Social Responsibility activities as compared to Rs. 368.51 lakhs spent in the last year. Out of Rs. 372.65 lakhs, Rs. 90 lakhs was spent on various health care initiatives and Rs. 106 lakhs was spent towards education.

Significant CSR Activities carried out during the year include:

- Organised a Mega Science Fair at Manali in association with Agastya International Foundation, Bangalore for the benefit of Manali Neighbourhood School Students, which has benefited about 10800 Students from 14 Schools.

- Distribution of Merit Scholarships totaling Rs. 18.16 lakhs to the meritorious students of the nearby Government/ Panchayat/Municipality / Government Nursing Institutions.

- Conducted 12 Comprehensive Eye Care Camps benefitting 1700 people living in and around Manali, in association with M/s. Sankara Nethralaya, Medical Research Foundation. 120 cataract surgeries were performed.

- Donated one Ambulance at a cost of Rs. 8.01 lakhs to the Blood Bank of Rajiv Gandhi Government General Hospital, Chennai for segregating and transporting the Blood collected at various Blood Donation Camps to their main Hospital in the City.

- Donated one Fully Automated Bio-Chemistry Analyser at a cost of Rs. 13.26 lakhs to Government Hospital of Thorasic Medicine, Tambaram Sanatorium to enable the hospital to carry out a large number of analyses with accuracy in a shorter time.

- Donated Rs. 14.50 lakhs to M/s.Sankara Nethralaya Medical Research Foundation for purchase of one Operating Microscope used to perform surgery under high magnification with special illumination in the Operation Theater and is specially used for ocular surgeries like Cataract, Vitreo-retinal and Squint

A sum of Rs. 51 lakhs was spent by Cauvery Basin Refinery of your Company on various CSR activities for the benefit of the nearby community. Significant activities include the following:

- Distribution of Merit Scholarships worth Rs. 4.94 lakhs to the meritorious students of the Schools/ Polytechnic/ITI educational institutions, which has benefited 213 students.

- Conducted Eye Care Camps for the benefit of people living in and around Panangudi, in association with M/s. Aravind Eye Hospital, Puducherry. 500 people were screened and 100 cataract surgeries were performed.

- Construction of kitchen buildings for Panchayat Union Elementary School, Periyanariyangudi and Narimanam villages at cost of Rs. 4.5 lakhs and at Municipal Middle School, Nagapattinam at a cost of Rs. 3.14 lakhs.

OCCUPATIONAL HEALTH

Your Company gives utmost thrust on achieving excellence in occupational and personal health of its employees and has state-of-the art Occupational Health Services (OHS) Centre equipped with latest diagnostic and therapeutic equipments and manned by qualified health professionals.

OHS Centre continued its endeavor to preserve the health of the employees and 81 percent of the employees underwent the annual health check up.

''Healthy heart and body composition analysis'' was organised for all employees and counselling was done higlighting good eating habits for maintaining a healthy heart

A programme on "Holistic Development of Adolescence" was conducted for the benefit of the children of the employees in the age group of 13 years to 19 years and for the parents.

OHS biochemistry laboratory continues to hold the quality certificate of National Accreditation Board for Laboratories as per ISO 15189:2007.

PUBLIC GRIEVANCES

Your Company accords top priority to the public grievances and a Grievance Redressal System is in place.

Your company continues to implement the Centralized Public Grievances Redress and Monitoring System (CPGRAMS) as advised by the Department of Administrative Reforms & Public Grievances, Ministry of Personnel Public Grievances and Pension, Government of India. Details and contact number of Public Grievance Officer are displayed in the website of the Company, viz. www.cpcLco.in.

RISK MANAGEMENT

The reports pertaining to the year 2011-12 under the Risk Assessment & Minimization Procedures were reviewed by the Executive Committee and also by the Audit Committee and Board of Directors of the Company.

A Risk Management Policy for the year 2012-13 has been prepared by the Committee constituted for this purpose and the report submitted by the Committee was also reviewed by the Audit Committee and the Board

CORPORATE GOVERNANCE

Your Company has taken structured initatitive towards Corporate Governance and its practices are valued by various stakeholders. The Corporate Governance practices are based on multi layered checks and balances to ensure transparency and accountability.

Your Company complied with all the mandatory requirements of Corporate Governance Guidelines issued by Securities & Exchange Board of India and Department of Public Enterprises (DPE), Government of India for the year 2011-12, except the clause relating to the appointment of Independent Directors. A separate section on Corporate Governance forms part of this Annual Report

Your Company also complies with the Voluntary Guidelines on Corporate Governance issued by Ministry of Corporate Affairs, Government of India in December 2009, as far as practicable.

SECRETARIAL AUDIT

In line with the provisions of the Voluntary Guidelines on Corporate Governance issued by the Ministry of Corporate Affairs, your Company carried out Secretarial Audit for the year 2011-12 from M/s. S.Sandeep & Associates, Company Secretaries and their report forms part of the Annual Report The Secretarial Audit Report confirms that the company has complied with all the applicable provisions of the Companies Act, SEBI Guidelines, rules etc except with the clause relating to appointment of Independent Directors.

RIGHT TO INFORMATION

The Right to Information Act, 2005 is applicable to your company. In accordance with the provisions of the RTI Act, necessary disclosures have been made in the website of the company.

During the year, 54 applications under the RTI Act were received and disposed off in time.

VIGILANCE

Your Company is committed to ethical conduct of business and the main focus of the vigilance department is to create a culture of integrity and probity in the company.

System studies were undertaken to improve compliance with the procedures and also to enhance operational efficiencies. Payments of bills to vendors/ contractors effected through ECS/EFT achieved 98 %, demonstrating the increased focus maintained by the vigilance on the use of technology.

Vigilance Awareness week was observed in a befitting manner with the theme "Participative Vigilance" which was actively participated by employees, customers, vendors , contractors, service providers etc.

INTEGRITY PACT

Your Company has a Memorandum of Understanding (MoU) with Transparency International India (TII) for implementing an Integrity Pact Program focused on improving transparency in business dealings.

19 major contracts/ works were covered under the Integrity pact during the year. Periodical review meetings were held with Independent External Monitors. An interactive meet was also organised with Independent External Monitors for major contractors.

HINDI IMPLEMENTATION

During the year, a serious of initiatives were undertaken for promotion and propagation of Hindi in official communication and to ensure implementation of the Official Language Policy of the Government of India. The Official Language Implementation Committee monitors the implementation of Official Language Policy on a quarterly basis.

Various activities like workshops, meetings, competitions, etc., were organised during the year and the World Hindi Day was celebrated on 10.01.2012.

Your company won the prestigious Rajbhasha shield (IInd prize) instituted by the Town Official Language Implementation Committee, Chennai under the Public Sector Unit - Big category

STATUTORY INFORMATION

- Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 - Nil.

- Statutory details of Energy Conservation and Technology Absorption, R&D activities and Foreign Exchange Earnings and Outgo, as required under Section 217(1) (e) of the Companies Act, 1956 and the rules prescribed thereunder, i.e., the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure and form part of this Report (Please refer Annexure-I).

- Certificate received from the Auditors of the Company regarding compliance of conditions of Corporate Governance, as required under Clause 49 of the Listing Agreement and also the compliance with the guidelines on Corporate Governance issued by Department of Public Enterprises, Government of India is Annexed and forms part of this Report (Please see Annexure-III).

- Management Discussion and Analysis Report as required under Clause 49 IV F of the Listing Agreement is annexed and forms part of the Report (Annexure IV).

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 2000 with respect to Directors'' Responsibility Statement, it is hereby confirmed, that,

i) In the preparation of the annual accounts for the financial year ended March 31, 2012, the applicable accounting standards have been followed and that there are no material departures from the same;

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review;

iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) The Directors have prepared the annual accounts for the financial year ended March 31, 2012, on a going concern basis; and

v) Proper systems are in place to ensure compliance of all laws applicable to the Company.

AUDITORS

M/s. Chandran & Raman, Chennai and M/s S.Venkatram & Co., Chennai have been appointed as Joint Statutory Auditors of the Company for the financial year 2011-2012 by the Comptroller and Auditor General of India. The Board of Directors of the Company fixed a remuneration of Rs. 7.5 lakh ( Rs. 3.75 lakh to each of the Joint Statutory Auditors) in addition to the out-of-pocket expenses, if any, and applicable service tax.

DIRECTORS

Mr.Rajkumar Ghosh, Director (Refineries) Indian Oil Corporation Limited has been appointed as a Director on the Board of CPCL effective 02.09.2011 in place of Mr.B.N.Bankapur.

Mr.K.Balachandran, Managing Director was relieved from the services of the company effective 17.11.2011 as he has tendered his resignation and Mr.S.Venkataramana, Director (Operations) has been holding the additional charge of the post of the Managing Director, till 05.07.2012. Mr. A.S. Basu, Executive Director (Operations), Indian Oil Corporation Limited has been appointed as a Director on the Board of CPCL and also as the Managing Director effective 06.07.2012.

Your Directors place on record their appreciation of the valuable contributions made by Mr.K.Balachandran and Mr.B.N.Bankapur during their tenure.

ACKNOWLEDGEMENT

Your Directors place on record their gratitude for the valuable guidance and co-operation received from the Ministry of Petroleum & Natural Gas, Indian Oil Corporation Limited, Naftiran Intertrade Company Limited, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Oil Industry Safety Directorate, Centre for High Technology, the other Ministries of Government of India, Government of Tamil Nadu, Central Vigilance Commission, Financial Institutions and commercial banks.

Your Directors are also thankful to the valuable suggestions and guidance received from the Statutory Auditors and the Comptroller & Auditor General of India.

Your Directors place on record their special appreciation to the valued shareholders for their support.

Your Directors sincerely acknowledge the contribution, dedication, commitment and perseverance displayed by all the employees.

For and on behalf of the Board of Directors

Date : 03.08.2012 R.S. BUTOLA

Place : New Delhi Chairman


Mar 31, 2012

The behalf of the Board of Directors of your Company, it is indeed my privilege to present the 46th Annual Report on the performance of your Company, together with the Audited Statement of Accounts for the year ended March 31, 2012

PERFORMANCE REVIEW

Significant Highlights

- Highest ever turnover of Rs. 45365 Crore achieved.

- Total Thruput of 10557 TMT achieved.

- Carbon Foot Printing exercise was completed for Manali and CBR refineries as part of Sustainable development activities.

- Achieved the lowest ever energy index of 67.2 MBTU/BBL/NRGF for Manali Refinery and 108.67 MBN for Cauvery Basin Refinery.

- Manali Refinery successfully changed the solvent from Sulfolane to NMP for production of hexane to meet the stringent product quality.

- Received Income Tax refund of Rs. 276 Crore based on the favourable order given by CIT (Appeals)for Sec.80 IB claim on Refinery III profits for Assessment Year 2008-09.

- DHDT Unit commissioned successfully in Manali.

- Installation of Oxygen enrichment facility jointly developed with EIL in SRU, Train B resulting in enhanced OHCU thruput.

- 20" Crude oil interlink pipeline between Chidambaranar Oil Jetty (COJ) and Marg Karaikkal Port successfully commissioned in February 2012.

- Cauvery Basin Refinery has received the "Excellence in Consistent TPM Commitment Award" for the year 2011 from Japan Institute of Plant Maintenance (JIPM).

- Cauvery Basin Refinery has received the prestigious National Safety Award for 2009 instituted by the Director General, Factory Advice Services and Labour Institutes, Ministry of Labour & Employment, Government of India.

- Won the PSE Excellence Awards instituted by the Department of Public Enterprises and Indian Chamber of Commerce for the year 2011 for "Environmental Excellence and Sustainability Development" and Good Corporate Governance.

- Won the CII Excellence in Water Management Award for the year 2011.

Physical

CRUDE THRUPUT (in TMT) 2011-12 2010-11

Imported 9050.8 9105.0

Indigenous 1505.8 1643.0

Total 10556.6 10748.0

PRODUCTION (in TMT) 2011-12 2010-11

Light Ends 2270.5 2279.0

Middle Distillates 5148.9 5141.0

Heavy Ends 2008.9 2177.0

Lube Base Stocks 178.3 186.0

Paraffin Wax 24.0 27.0

Others (Intermediaries) (87.6) 25.0

Other Inputs (87.0)

Fuel & Loss 1013.6 996.0

Total 10556.6 10748.0

Financial (Rs. in Crore)

2011-12 2010-11

Gross Turnover 45384.91 38128.26

Profit before Interest, Depreciation & Tax 456.58 1332.44

Interest 249.38 254.45

Depreciation and Amortization 365.42 314.47

Profit before Tax (158.22) 763.52

Provision for Taxation

- Income Tax (Net)

[Incl Pertaining to earlier years) (253.51) 223.48

- Deferred Tax 33.47 28.52

Profit after Tax 61.83 511.52

Value Added 969.03 1748.65

Dividend

The Board of Directors of the Company is pleased to recommend a dividend of 20% of the Paid-up Share Capital of the Company representing Rs.2/- per equity share for the year 2011-12.

Book Value

The book value per share of your Company has increased from Rs. 252.90 in the year 2010-2011 to Rs. 254.72 in the year 2011-2012.

Reserves and Suplus

The Reserves and Surplus increased from Rs. 3616.92 crore as on 31.03.2011 to Rs. 3644.13 crore as on March 31, 2012.

Value Addition

The value addition during the year is Rs.969.03 crore as compared to Rs. 1748.65 crore in the previous year.

The Profit before Tax during the year 2011-12 was mainly due to:

- Lower refining margins on account of high volatility in the crude and product prices leading to depressed cracks in the wake of the economic crisis in the European Union & economic slowdown in the US.

- Unprecedented depreciation of the Indian Rupee against the US Dollar and extreme volatility in Foreign Exchange Market resulting in exchange fluctuation losses.

- Additional freight incurred during the year due to transportation of crude in smaller Afra max vessels instead of Suez Max vessels on account of infrastructural constraints at Chennai Port Trust and production disturbances during cyclone Thane.

Contribution to Ex-Chequer

During the year, your Company has paid a sum of Rs. 5784.82 crore to the ex-chequer as compared to Rs. 6837.32 crore in the previous year.

Public Deposit Scheme

Your Company has not accepted any fresh public deposits during the year 2011-12.

Transfer of Unclaimed Dividend to IEPF

Your Company has transferred to the Investor Education and Protection Fund the required amount as per Section 205(C) (2) of the Companies Act, 1956, within the stipulated time.

Manali Refinery - Salient features of Operations

- Manali Refinery achieved a total Crude thruput of 9.945 MMT as compared to 10.045 MMT in the previous year.

- Achieved the highest distillate yield of 70.3 wt%.

- Achieved the lowest ever energy index of 67.2 MBTU/BBL/NRGF by maximising thruput in secondary units.

- Maximized the production of food grade hexane by additional 40% through process improvements.

- Completed health checkup for "Excellence in Consistent TPM Commitment Award" for 2011.

- Highest ever production of the following products :

(Figures in TMT)

Product 2011-12 Previous Best

High Speed Diesel 3911 3863 (2010-11)

Motor Spirit 1020 860.0 (2010-11)

- Procured three new low sulfur crudes viz., Espoir from Ivory Coast, Palanca Blend from Angola and Essider from Libya.

- One new Crude was added to the basket: viz., Okwori, new Low Sulfur Trial crude from Nigeria.

Cauvery Basin Refinery (CBR) - Salient features of Operations

- Processed 611 TMT of Crude as compared to 703.3 TMT in the previous year.

- Achieved the highest ever distillate yield of 86.64 wt % on crude in 2011-12 (Previous best :

83.2 wt % in 2010-11).

- Two nos. of Continuous Ambient Air Quality Monitoring stations and one online Stack Monitoring station commissioned for better monitoring and control of various environmental parameters.

- Introduced new product namely High Flash High Speed Diesel.

- Successfully conducted Green House Gas Emission Survey.

MoU PERFORMANCE

Your Company signed an MoU with Indian Oil Corporation Limited, the holding Company for the year 2011-12, as per the guidelines issued by the Department of Public Enterprises (DPE). The provisional rating for the year 2011-12 is "1.43".

MARKETING

Majority of the products of your Company like MS, HSD, LPG, SKO, etc. are marketed by Indian Oil Corporation Limited, the holding Company.

CPCL directly markets some of the Speciality products and highest direct sales achieved during 2011-12 as compared to previous year are given below :

(Quantity in TMT)

S. No. Product 2010-11 2011-12

1 Naphtha 211.66 218.51

2 Sulphur 52.02 56.97

3 Propane 2.06 2.14

4 PBFS 7.14 7.53

During the year, seven Customer Meets were conducted at various locations for Wax, Sulphur and other direct customers and 19 new customers were registered for the supply of Sulphur, Hexane, Propane and Propylene.

PROJECTS

Your Company made an investment of Rs. 490.18 crore on various projects during 2011-12 (cumulative expenditure of Rs.2640.23 crore upto 2011-12), out of the approved outlay of Rs. 3575 Crore for the XI Plan (2007-2012).

Completed Projects

Euro-IVProject - DHDT Units:

To produce MS/HSD meeting Euro-IV specifications for Chennai and Bangalore and Euro-III equivalent specifications for the rest of the locations, your company has undertaken Auto fuel Quality Upgradation Project at an estimated cost of Rs. 2615.69 crore in Manali Refinery as per the Auto Fuel Policy of the Government of India.

The Diesel Hydro treater unit (DHDT) with a capacity of 1.8 MMTPA was commissioned in May 2011. CBR 20" Crude line Cauvery Basin Refinery of your Company has successfully commissioned a 20" interlink crude oil pipeline between Karaikkal Port and CPCL-CBR's Chidambaranar Oil Jetty at a cost of Rs.10.86 Crore. This project will enable CBR to receive crude oil in higher parcel sizes resulting in reduction in the transportation and handling cost of crude and the flexibility to utilize other crude oil tankers of larger sizes.

Projects Under Implementation :

Euro-IV Project:

The utilities and off-site facilities of Euro-IV auto fuel quality upgradation project are in various stages of execution. A new Hydrogen Generation Unit to enhance the existing Hydrogen Generation capacity is under commissioning stage. The revamp of the Effluent Treatment Plant-II is in the final stage of mechanical completion and is expected to be commissioned in October 2012.

Revamp of existing CDU/VDU-II from 3.7to4.3MMTPA

A project to enhance the unit capacity from existing 3.7 MMTPA to 4.3 MMTPA is under implementation at a cost of Rs. 333.99 Crore. This project is expected to be completed during the second quarter of the financial year 2012-13.

Resid Upgradation Project

For improving the distillate yield of the Manali refinery and to process increased level of high Sulphur bearing Crudes, approval was accorded for implementation of a Resid Upgradation Project at an estimated cost of Rs. 3110.36 Crores. This project is scheduled to be completed within 33 months from the date of Environmental Clearance, which is delayed mainly due to non lifting of ban imposed by MoE&F on new investments in the Manali Industrial Region.

New Crude Oil Pipeline

To overcome the risks associated with the transportation of Crude Oil through the existing 30" Crude Oil Pipeline from Chennai Port to Manali Refinery your Company is implementing a new 42" Crude Oil Pipeline Project at a cost of Rs. 126 Crore. All engineering activities have been completed along the route of the proposed port connectivity road project, Coastal Regulatory Zone clearance is awaited for this project 2 X 10.5 TKL Crude Oil Storage tanks at CBR

A project for construction of two Crude oil storage tanks of 10500 KL each is being implemented to have better operational flexibility in Crude receipt and storage.

New Projects

Refinery Expansion Project:

An expansion project to increase the capacity of Manali Refinery to 17.5 MMTPA by installing a 6.0 MMTPA unit with matching secondary processing facilities is under conceptualization. The process configuration is under finalisation.

Construction of Mounded Bullet:

With the objective to promote safety and reduce the environmental impact, your Company proposes to install a mounded gas storage facility in replacement of the existing bullets for LPG, Propane and Propylene.

Diesel Hydro Treating facilities:

It is proposed to provide diesel hydro treating facilities at Cauvery Basin Refinery by shifting the idle equipments at Manali Refinery and also by providing other associated facilities for removal of Sulfur from diesel is envisaged. The project is expected to increase the capacity utilization of CBR and improve refinery margins by enabling processing of medium sulfur crudes. Detailed Feasibility Report was completed by M/s. Projects and Development (India) Ltd

Naphtha Reforming Facilities:

A proposal is also envisaged for shifting of idle assets at Manali Refinery to Cauvery Basin Refinery and provision of other associated facilities for reforming of Naphtha. The project is expected to improve the refinery margins and enable production and supply of MS from CBR.

STRATEGIC INITIATIVES

Your company is conscious of the fact that growth is central to its core purpose and the quest for growth has to be through activities undertaken within the framework of HSE policy, corporate governance and sustainable development. The In-house Strategy Meet was held in October 2011 to discuss various growth strategies like Petcoke based Power Project, New Propylene Recovery Unit, Propylene Derivatives Unit, 15 MMTPA refinery at PCPIR and GRM improvement strategies such as additional Hexane from ISOM Unit.

INITIATIVES TAKEN IN EXCELLING

- Carbon foot printing exercise was completed for Manali and CBR refineries as part of sustainable development activities.

- CPCL's CBR unit has produced a new product (High flash High Speed Diesel) and supplied to the market for the first time in support of Navy operations.

- CPCL has implemented the on-line blending automation for its MS, HSD and FO streams and the on-line analyser models used for this have been recently updated to meet the new streams and product specifications.

- CPCL has adopted business improvement technologies like off-line Multi Blend optimizer and scheduling tools for better value addition to the products.

- CPCL has conducted a Workshop on "Safety Culture Improvement" with the help of the Dupont Sustainability Solutions to strengthen the safety measures in the refinery.

- Reach-in programmes were conducted to improve the communication among the employees at sectional level and facilitate a platform to discuss the targets, performance, safety and work related issues for improving the working conditions in the refinery.

- Mr. C. Ramadoss, employee of CPCL received the India Shram Award in October 2011 in recognition of the outstanding contribution made by workmen.

- CPCL has commissioned two additional continuous Ambient Air Quality Monitoring Stations and one online Stack Monitoring Station for strengthening the monitoring mechanism of various environmental parameters.

- CPCL along with IOC R&D have initiated a project to co-process Jatropha based bio-diesel (about 3-5 wt%) along with fossil diesel in the hydro-treating unit mentioned above.

AREAS OF LEADERSHIP OF CPCL

- Oxygen Enrichment facility was extended to SRU train thereby enabling increased OHCU thruput which will improve the Distillates production and profitability.

- Successfully completed trial processing of Light Neutral LOBS in NMP Extraction Plant to maximize capacity utilization of NMP Extraction unit and reduce energy consumption.

- The CBR Unit of CPCL has passed the final assessment and has been awarded "Excellence in consistent TPM commitment award for 2011" by JIPM, Japan. CPCL is the first refinery in the Indian Oil Industry to achieve this award

INDIAN ADDITIVES LIMITED

Indian Additives Limited, was formed in the year 1989 as a joint venture between your Company and Chevron Chemical Company (now Chevron Oronite Company) in the year 1989 for manufacturing Lube Additives.

IAL achieved a turnover of Rs. 454.33 Crore (provisional) during the year 2011-12, as against Rs. 375.28 Crore in the previous year. The Profit after Tax for 2011-12 is Rs. 35.76 Crore as against Rs. 37.45 Crore in the previous year.

INFORMATION TECHNOLOGY

Your Company has taken rapid strides towards Green IT by focusing on the concept of paperless office with the introduction of Online Vigilance Clearance system for getting No Objection Certificate for passport applications and foreign tours and Online booking for Train and Air Travel system.

Your company has leveraged the usage of new technologically advanced concept of Virtualisation and Consolidation at Manali Refinery whereby, the multiple servers and services will be run on a single server, resulting in lower administrative cost and higher energy savings.

Realising the need to provide safer and secure IT system against cyber attacks, your company has upgraded its Firewall applications.

Your company has successfully introduced the e-fax server, a comprehensive network fax solution for creating, sending, receiving, and managing faxes directly from a user's desktop computer. The fax is integrated with email to enable high volume delivery & paperless communication. Your company has also upgraded the routers in the organization.

RESEARCH AND DEVELOPMENT (R&D)

Your company focuses its attention to fundamental R & D for sustainability of its business, advanced technical services, building capabilities and enhance profitable growth and continues to be an efficient user of technology.

Your Company's R&D is aimed at increasing the efficiency and reliability of the refinery processes and continues to extend support to various Refinery units like FCC, Hydrocracker, DHDS and Lube units with process and feed optimization studies.

Your R&D center has carried out extensive isomerisation pilot plant studies to successfully develop a model for supporting the commercial ISOM unit. Studies were initiated on Bio fuels also by conducting several high-pressure pilot plant trials on thermo chemical conversion of Algae.

Your R&D centre also entered into Research cooperation with Indian Institute of Petroleum (IIP), Dehradun for the development of process for low sulfur fuel oil through Extraction route as an alternate to hydro treating which is expensive and complex.

SAFETY PERFORMANCE

Your Company with its deep conviction as a responsible corporate citizen pursued whole heartedly the principle of maximising production without compromising on Safety in its pursuit towards excellence.

Your Company has prepared the Process Safety Manual in line with the guidelines of Oil Industry Safety Directorate.

A workshop on Safety Culture Improvement was conducted for the benefit of cross section of employees. Your company has also revised the incentive scheme for reporting Near Miss Incidents (NMI) in order to encourage the employees in generating more number of Near Misses and giving importance for process safety NMIs and High potential NMIs.

One Four Day programme on "Risk Based Process Safety" and three One -Day Programmes on " Process Safety Management " were conducted through Centre for Chemical Process Safety (CCPS).

An off-site emergency mock drill was conducted under the guidance of Brig (Dr) B.K.Khanna (Retd.), Senior Specialist (Training and Capacity Development) NMDA, New Delhi with active participation of District Collector, Tiruvallur and all the Stakeholders.

ENVIRONMENTAL PERFORMANCE

Your Company, recognizes the impact of industrial operations on environment and believes that commitment to environment is fundamental to the company's values which ensure sustainable development. Therefore, your company's development plan encompasses a variety of schemes towards minimizing the impact of refining operations on environment.

Significant initiatives taken in the areas of environmental protection include the following:

- Completion of Fugitive Emission Inventorisation in Refinery I & III.

- Adoption of alternative methodology for oil recovery, i.e. in-situ technique by treating the oily Sludge in the tank farm itself, for oil recovery.

- Three numbers of fixed roof tanks of capacity 10000 KL each have been constructed and being commissioned for oily water feed to Effluent Treatment Plant (ETP) for minimisation of emission of Volatile Organic Compounds.

- Mobile Ambient Air Quality unit launched. Real time ambient air quality monitoring station analyzer data and stack emission monitoring data configured in PIN under the continuous Emission Monitoring System.

The sustained and concentrated efforts taken by the company in the area of water management has earned the company Environment Excellence Award in Water Management by Confederation of Indian Industry.

RENEWABLE ENERGY DEVELOPMENT

Sustainability Development is recognized as one of the important focus areas in CPCL and as part of these efforts, CPCL generate 28.9 Million Units of Power from the 17.6 MW Windmill in Tamil Nadu. CPCL is exploring various options of utilizing Solar energy, as a part of its commitment to Sustainability Development

As part of CSR activity, CPCL has implemented a unique concept of providing 45 Nos. of Solar based Street Lights at Jawadhu Hills for the benefit of Tribal people.

ENERGY CONSERVATION

Your Company continues its efforts to undertake several measures aimed towards achieving Energy Conservation.

During the year, Condensate Recovery System was commissioned in Visbreaker and Sulfur Recovery Units as part of Energy Conservation initiative.

The Manali Refinery of your company achieved the lowest ever energy index of 67.2 MBTU/BBL/NRGF. The Cauvery Basin Refinery achieved the lowest ever energy index of 108.67 MBN.

The Energy Conservations Measures undertaken during the year are detailed in Annexure-I.

REFINERY BUSINESS OPTIMISATION

Under the Integrated Refinery Business Improvement Programme being implemented in association with Centre for High Technology and M/s. Shell Global Solutions International, 11 proposals for implementation were completed with a net benefit of 7.243 Million US Dollars (10.1Cents per bbl).

PROCESS OPTIMISATION

Your Company has been a fore runner among the Indian Refineries with regard to implementation of best practices in Refinery Business Optimisation in order to achieve better operating margins.

Your company has successfully completed the trial processing of LN in NMP Extraction Plant to maximize the capacity utilisation of NMP Extraction Unit and reduction of energy consumption.

Several initiatives taken in the area of optimisation include the following :

- Installation of Duplex Stainless Steel tubes for coolers for run length enhancement in propylene unit

- Changeover of hexane plant solvent from sulfolane to NMP

TOTAL PRODUCTIVE MAINTENANCE (TPM)

The Manali Refinery of your company successfully completed the health check up for "Excellence in Consistent TPM Commitment Award" conducted by the Japan Institute of Plant Maintenance (JIPM).

The Cauvery Basin Refinery of your Company received the "Excellence in Consistent TPM Commitment Award" for 2011 from the Japan Institute of Plant Maintenance (JIPM), in March 2012.

HUMAN RESOURCES

Your Company has a manpower dedicated to meet the vision of the company and is always endeavoring to take the company to challenging heights. Your company's HR policy caters to the demand of maintaining a steady flow of talent, in a business which is characterized by risks and uncertainties, fluctuating crude and product prices and growing competition.

The total manpower of the Company as on 31st March 2012 was 1745 (1773 as on 31st March 2011) comprising 787 supervisors and 958 non-supervisors (808 supervisors and 965 non-supervisors as on 31st March 2011).

In order to develop the skill set of the employees, your company recently started "Employees Learning Forum" and 11 programmes were successfully conducted during the year.

The Industrial Relations climate continued to be harmonious, cordial and peaceful through out the year with periodical sharing of the information with the collectives. Structured communication meetings were held with the collectives to communicate the quarterly / annual performance and growth prospects of the Company.

The backlog vacancies of Persons with Disabilities, which was 4 in the beginning of the year has been filled up through special Recruitment drive.

Your Company firmly believes in continuously upgrading the skills and competencies of the employees with the objective of creating a leadership pipeline. Training programmes aimed at enhancing both the functional competencies and behavioural competencies of the employees at all levels were organised with the best of faculties. During the year, your Company utilized 5364 man days covering employees at all levels. Your company achieved average training man days of 2.7 per employee during the year. Competency Mapping was carried out for 142 deputy managers/ managers by the Company during this year.

Your Company has been scrupulously following the Presidential Directives and various instructions of the Government relating to the welfare of the SC, ST, OBC, and Persons with Disabilities. Out of the total manpower, there were 433 SC employees (previous year: 439) and 38 ST employees (previous year: 36) as on 31.03.2012 constituting 24.81% and 2.18% of the total manpower respectively.

The statistics relating to representation of SCs / STs / OBCs in the prescribed proforma as on 01.01.2012 is given in Annexure-II.

WELFARE OF WOMEN

Your Company provides equal opportunities for women in employment and ensures that requisite work ambience exists for women employees. As on 31.03.2012, 90 women employees are on the rolls of the Company, of whom 40 are in the Supervisory Cadre and 50 are in Non supervisory Cadre, constituting 5 % of the total Supervisory employees and 5.2 % of the total Non-supervisory employees.

International Women's Day 2012 was celebrated with the theme "Promote Gender Equality and Empower Women" which was chaired by Kalaimamani Dr. Smt. Sarada Nambi Arooran, State Information Commissioner (Retd.).

Your Company received the Best Enterprise Award in the Miniratna category instituted by the Forum of Women In Public Sector (WIPS) under the aegis of Standing Conference on Public Enterprises (SCOPE), for the second consecutive time.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company is committed to follow the guidelines on Corporate Social Responsibility (CSR) issued by the Department of Public Enterprises (DPE) and the CSR Committee constituted by the Board of Directors of the Company monitors the overall functioning as well as guide and suggest improvements in the CSR activities in line with the company's vision and mission statement and CSR policy.

During the year, an amount of Rs. 372.65 lakhs was spent on various Corporate Social Responsibility activities as compared to Rs. 368.51 lakhs spent in the last year. Out of Rs. 372.65 lakhs, Rs. 90 lakhs was spent on various health care initiatives and Rs. 106 lakhs was spent towards education.

Significant CSR Activities carried out during the year include:

- Organised a Mega Science Fair at Manali in association with Agastya International Foundation, Bangalore for the benefit of Manali Neighbourhood School Students, which has benefited about 10800 Students from 14 Schools.

- Distribution of Merit Scholarships totaling Rs. 18.16 lakhs to the meritorious students of the nearby Government/ Panchayat/Municipality / Government Nursing Institutions.

- Conducted 12 Comprehensive Eye Care Camps benefitting 1700 people living in and around Manali, in association with M/s. Sankara Nethralaya, Medical Research Foundation. 120 cataract surgeries were performed.

- Donated one Ambulance at a cost of Rs. 8.01 lakhs to the Blood Bank of Rajiv Gandhi Government General Hospital, Chennai for segregating and transporting the Blood collected at various Blood Donation Camps to their main Hospital in the City.

- Donated one Fully Automated Bio-Chemistry Analyser at a cost of Rs. 13.26 lakhs to Government Hospital of Thorasic Medicine, Tambaram Sanatorium to enable the hospital to carry out a large number of analyses with accuracy in a shorter time.

- Donated Rs. 14.50 lakhs to M/s.Sankara Nethralaya Medical Research Foundation for purchase of one Operating Microscope used to perform surgery under high magnification with special illumination in the Operation Theater and is specially used for ocular surgeries like Cataract, Vitreo-retinal and Squint

A sum of Rs. 51 lakhs was spent by Cauvery Basin Refinery of your Company on various CSR activities for the benefit of the nearby community. Significant activities include the following:

- Distribution of Merit Scholarships worth Rs. 4.94 lakhs to the meritorious students of the Schools/ Polytechnic/ITI educational institutions, which has benefited 213 students.

- Conducted Eye Care Camps for the benefit of people living in and around Panangudi, in association with M/s. Aravind Eye Hospital, Puducherry. 500 people were screened and 100 cataract surgeries were performed.

- Construction of kitchen buildings for Panchayat Union Elementary School, Periyanariyangudi and Narimanam villages at cost of Rs. 4.5 lakhs and at Municipal Middle School, Nagapattinam at a cost of Rs. 3.14 lakhs.

OCCUPATIONAL HEALTH

Your Company gives utmost thrust on achieving excellence in occupational and personal health of its employees and has state-of-the art Occupational Health Services (OHS) Centre equipped with latest diagnostic and therapeutic equipments and manned by qualified health professionals.

OHS Centre continued its endeavor to preserve the health of the employees and 81 percent of the employees underwent the annual health check up.

'Healthy heart and body composition analysis' was organised for all employees and counselling was done higlighting good eating habits for maintaining a healthy heart

A programme on "Holistic Development of Adolescence" was conducted for the benefit of the children of the employees in the age group of 13 years to 19 years and for the parents.

OHS biochemistry laboratory continues to hold the quality certificate of National Accreditation Board for Laboratories as per ISO 15189:2007.

PUBLIC GRIEVANCES

Your Company accords top priority to the public grievances and a Grievance Redressal System is in place.

Your company continues to implement the Centralized Public Grievances Redress and Monitoring System (CPGRAMS) as advised by the Department of Administrative Reforms & Public Grievances, Ministry of Personnel Public Grievances and Pension, Government of India. Details and contact number of Public Grievance Officer are displayed in the website of the Company, viz. www.cpcLco.in.

RISK MANAGEMENT

The reports pertaining to the year 2011-12 under the Risk Assessment & Minimization Procedures were reviewed by the Executive Committee and also by the Audit Committee and Board of Directors of the Company.

A Risk Management Policy for the year 2012-13 has been prepared by the Committee constituted for this purpose and the report submitted by the Committee was also reviewed by the Audit Committee and the Board

CORPORATE GOVERNANCE

Your Company has taken structured initatitive towards Corporate Governance and its practices are valued by various stakeholders. The Corporate Governance practices are based on multi layered checks and balances to ensure transparency and accountability.

Your Company complied with all the mandatory requirements of Corporate Governance Guidelines issued by Securities & Exchange Board of India and Department of Public Enterprises (DPE), Government of India for the year 2011-12, except the clause relating to the appointment of Independent Directors. A separate section on Corporate Governance forms part of this Annual Report

Your Company also complies with the Voluntary Guidelines on Corporate Governance issued by Ministry of Corporate Affairs, Government of India in December 2009, as far as practicable.

SECRETARIAL AUDIT

In line with the provisions of the Voluntary Guidelines on Corporate Governance issued by the Ministry of Corporate Affairs, your Company carried out Secretarial Audit for the year 2011-12 from M/s. S.Sandeep & Associates, Company Secretaries and their report forms part of the Annual Report The Secretarial Audit Report confirms that the company has complied with all the applicable provisions of the Companies Act, SEBI Guidelines, rules etc except with the clause relating to appointment of Independent Directors.

RIGHT TO INFORMATION

The Right to Information Act, 2005 is applicable to your company. In accordance with the provisions of the RTI Act, necessary disclosures have been made in the website of the company.

During the year, 54 applications under the RTI Act were received and disposed off in time.

VIGILANCE

Your Company is committed to ethical conduct of business and the main focus of the vigilance department is to create a culture of integrity and probity in the company.

System studies were undertaken to improve compliance with the procedures and also to enhance operational efficiencies. Payments of bills to vendors/ contractors effected through ECS/EFT achieved 98 %, demonstrating the increased focus maintained by the vigilance on the use of technology.

Vigilance Awareness week was observed in a befitting manner with the theme "Participative Vigilance" which was actively participated by employees, customers, vendors , contractors, service providers etc.

INTEGRITY PACT

Your Company has a Memorandum of Understanding (MoU) with Transparency International India (TII) for implementing an Integrity Pact Program focused on improving transparency in business dealings.

19 major contracts/ works were covered under the Integrity pact during the year. Periodical review meetings were held with Independent External Monitors. An interactive meet was also organised with Independent External Monitors for major contractors.

HINDI IMPLEMENTATION

During the year, a serious of initiatives were undertaken for promotion and propagation of Hindi in official communication and to ensure implementation of the Official Language Policy of the Government of India. The Official Language Implementation Committee monitors the implementation of Official Language Policy on a quarterly basis.

Various activities like workshops, meetings, competitions, etc., were organised during the year and the World Hindi Day was celebrated on 10.01.2012.

Your company won the prestigious Rajbhasha shield (IInd prize) instituted by the Town Official Language Implementation Committee, Chennai under the Public Sector Unit - Big category

STATUTORY INFORMATION

- Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 - Nil.

- Statutory details of Energy Conservation and Technology Absorption, R&D activities and Foreign Exchange Earnings and Outgo, as required under Section 217(1) (e) of the Companies Act, 1956 and the rules prescribed thereunder, i.e., the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure and form part of this Report (Please refer Annexure-I).

- Certificate received from the Auditors of the Company regarding compliance of conditions of Corporate Governance, as required under Clause 49 of the Listing Agreement and also the compliance with the guidelines on Corporate Governance issued by Department of Public Enterprises, Government of India is Annexed and forms part of this Report (Please see Annexure-III).

- Management Discussion and Analysis Report as required under Clause 49 IV F of the Listing Agreement is annexed and forms part of the Report (Annexure IV).

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 2000 with respect to Directors' Responsibility Statement, it is hereby confirmed, that,

i) In the preparation of the annual accounts for the financial year ended March 31, 2012, the applicable accounting standards have been followed and that there are no material departures from the same;

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review;

iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) The Directors have prepared the annual accounts for the financial year ended March 31, 2012, on a going concern basis; and

v) Proper systems are in place to ensure compliance of all laws applicable to the Company.

AUDITORS

M/s. Chandran & Raman, Chennai and M/s S.Venkatram & Co., Chennai have been appointed as Joint Statutory Auditors of the Company for the financial year 2011-2012 by the Comptroller and Auditor General of India. The Board of Directors of the Company fixed a remuneration of Rs. 7.5 lakh ( Rs. 3.75 lakh to each of the Joint Statutory Auditors) in addition to the out-of-pocket expenses, if any, and applicable service tax.

DIRECTORS

Mr.Rajkumar Ghosh, Director (Refineries) Indian Oil Corporation Limited has been appointed as a Director on the Board of CPCL effective 02.09.2011 in place of Mr.B.N.Bankapur.

Mr.K.Balachandran, Managing Director was relieved from the services of the company effective 17.11.2011 as he has tendered his resignation and Mr.S.Venkataramana, Director (Operations) has been holding the additional charge of the post of the Managing Director, till 05.07.2012. Mr. A.S. Basu, Executive Director (Operations), Indian Oil Corporation Limited has been appointed as a Director on the Board of CPCL and also as the Managing Director effective 06.07.2012.

Your Directors place on record their appreciation of the valuable contributions made by Mr.K.Balachandran and Mr.B.N.Bankapur during their tenure.

ACKNOWLEDGEMENT

Your Directors place on record their gratitude for the valuable guidance and co-operation received from the Ministry of Petroleum & Natural Gas, Indian Oil Corporation Limited, Naftiran Intertrade Company Limited, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Oil Industry Safety Directorate, Centre for High Technology, the other Ministries of Government of India, Government of Tamil Nadu, Central Vigilance Commission, Financial Institutions and commercial banks.

Your Directors are also thankful to the valuable suggestions and guidance received from the Statutory Auditors and the Comptroller & Auditor General of India.

Your Directors place on record their special appreciation to the valued shareholders for their support.

Your Directors sincerely acknowledge the contribution, dedication, commitment and perseverance displayed by all the employees.

For and on behalf of the Board of Directors

Date : 03.08.2012 R.S. BUTOLA

Place : New Delhi Chairman


Mar 31, 2010

On behalf of the Board of Directors of your Company, it is my privilege to present the 44th Annual Report on the workings of your Company, together with the Audited Statement of Accounts for the year ended March 31, 2010.

CORPORATE OVERVIEW

- Turnover of Rs.29,184 crore and Profit after Tax of Rs.603.22 crore was achieved.

- Successfully completed and commissioned the expansion of Crude Distillation Unit III (CDU-III) from 3 MMTPA to 4 MMTPA, thereby enhancing the installed capacity of CPCL from 10.5 MMTPA to 11.5 MMTPA.

- Achieved the highest ever distillate yield of 69.2% as against the previous best of 68.3% in 2006-07, at Manali.

- Achieved the highest ever throughput of 917 Thousand Metric Tonnes (TMT) in Fluidised Catalytic Cracking Unit (FCCU) against the previous best of 902 TMT in 2008-09.

- Achieved the highest ever production of High Speed Diesel (3565.5 TMT), Propylene (33.9 TMT) and Paraffin Wax (28.5 TMT).

- Achieved the lowest ever energy index at Manali Refinery at 70.4 MBTU / BBL /NRGF in 2009-10 as against the previous best of 71.4 in 2007-08.

- Enhanced the capacity of Sulphur Recovery Unit (SRU) by 22% through Oxygen Enrichment Technology developed jointly with M/s.Engineers India Limited.

- Achieved the lowest ever energy index at Cauvery Basin Refinery at 127.3 MBTU/BBL/NRGF in 2009-10 against the previous best of 131.2 MBTU/BBL/NRGF in 2006-07.

- Japan Institute of Plant Maintenance (JIPM), Japan has awarded the coveted "TPM Excellence Award, Category A" for Cauvery Basin Refinery.

- CPCL was selected as one of the recipients of the prestigious Corporate Social Responsibility (CSR) Award by Rural Development and Panchayat Raj Department, Government of Tamil Nadu.

Financial Performance (Rs. in crore)

2009-2010 2008-2009

Gross Turnover 29183.84 36489.67

Profit before Interest,

Depreciation and Tax 1088.26 (112.28)

Interest 137.36 223.66

Depreciation and Amortization 267.14 257.17

Profit before Tax 683.76 (593.11)

Provision for Taxation

- Current Tax (Net) (81.44) (4.96)

-Deferred Tax 161.95 (193.36)

- Fringe Benefit Tax 0.03 2.49

Profit after Tax 603.22 (397.28)

Value Added 1540.48 922.87



The Company has achieved a turnover of Rs. 29,184 crore during the year, as compared to Rs.36,489 Crore in the previous year. The profit after tax stood at Rs. 603.22 Crore as compared to a loss of Rs.397.28 crore in the previous year. The value addition during the year is Rs. 1540.49 crore as compared to Rs. 922.87 crore in the previous year.

The Reserves and Surplus also registered an increase from Rs.2918.23 crore as on 31.03.2009 to Rs. 3313.08 crore as on March 31, 2010. The book value per share of your Company has increased from Rs. 205.98 in the year 2008-2009 to Rs 232.49 in the year 2009-2010.

Your Company has not accepted any fresh public deposits during the year 2009-10.

Your Company has transferred to the Investor Education and Protection Fund the required amount as per Section 205(C) (2) of the Companies Act, 1956, within the stipulated time.

DIVIDEND

The Board of Directors of your Company is pleased to recommend a dividend of 120% on the paid-up equity share capital of the Company for the financial year 2009-10 in view of the excellent performance of the Company.

MoU PERFORMANCE

Your Company excelled in performance in the various parameters covered under the MoU with Indian Oil Corporation Limited for the year 2009-10. As per the provisional assessment, the overall rating is "Excellent", for the 14th year in succession.

MARKETING

Indian Oil Corporation Limited, the holding Company continues to market a majority of the fuel products produced by your Company. During the year, your Company has achieved the highest ever sales of Propylene which was directly marketed by the Company. During the year, seven Customer Meets were arranged at various locations.

PROJECTS

Your Companys XI Plan Outlay (2007-12) is Rs. 3575 Crore. During the first two years of the XI Plan (2007-09), an expenditure of Rs. 583 Crore has been incurred. During the year 2009-10, a sum of Rs. 893 crore was incurred against the budget estimate of Rs. 716 crore towards plan projects and a sum of Rs.80.21 crore was incurred against the budget estimate of Rs. 178.62 crore towards non-plan projects.

Completed Projects

Capacity Enhancement of CDU/ VDU of Refinery III

A Project for enhancing the capacity of CDU / VDU of Refinery III from 3.0 MMTPA to 4.0 MMTPA at a cost of Rs. 200.41 crore has been completed with the objective of producing value added products like LPG, Naphtha, SK, HSD, etc.

Revamp of Semi Regenerative Catalytic Reforming Unit to Continuous Catalytic Reforming Unit

A project for revamp of Semi Regenerative Catalytic Reforming unit to Continuous Catalytic Reforming mode was completed at a cost of Rs. 272.77 crore with a view to increase the Octane Number for producing high quality MS meeting Euro IV specifications, besides maximizing its capacity. This project alongwith the upcoming isomerisation unit will enable the Company to meet the increased demand of MS.

SRU Revamp with Oxygen Enrichment Technology

A project for revamp of Sulphur Recovery Unit (SRU) for enhancing the capacity through Oxygen Enrichment Technology developed jointly with M/s.Engineers India Limited, for the first time in Indian Refineries, was successfully implemented.

On-going Projects

Auto-Fuel Quality Upgradation Project

In order to meet the revised specifications of MS and HSD, your Company is implementing Auto-Fuel quality upgradation project at an estimated cost of Rs.2615.69 crore. This project includes a Diesel Hydro-treating Unit, NHT/ISOM Unit, Utilities and Offsites (U&O) and Hydrogen Generation Unit (HGU).

The construction of the above process units is in an advanced stage of completion.

New Crude oil Pipeline

As a replacement for the old 30" pipeline from Chennai Port to Manali Refinery along the route of the proposed Port connectivity project, your Company is laying a new 42" Crude oil pipeline at a cost of Rs. 65 Crore. This project is expected to be completed within a period of 12 months after the Right of Way is made available by Chennai Port Trust. Discussions are being held with Chennai Port Trust for expediting the clearances for Right of Way.

New Project Initiatives

Resid Upgradation Project

With a view to maximize the Distillate yield of the Refinery, your Company proposes to implement the Resid Upgradation project at an estimated cost of Rs.3350 Crore. The project involves installation of a Delayed Coker Unit and revamping of existing Hydrocracker Unit alongwith other associated facilities.

Process packages for all the Process Units have been completed. Preparation of the Detailed Feasibility Report is in progress. This project is expected to be completed in 2013.

Single Point Mooring (SPM) & Crude Oil Terminal (COT) Project

Your Company is installing a Single Point Mooring (SPM) for import of Crude Oil facilities in Ennore through Very Large Crude Carriers (VLCC) and Crude Oil Tankage Terminal (COT) near Land Fall Point (LFP) for VLCC discharge to avoid demurrage, at an estimated cost of Rs. 1400 Crore. Most of the pre-project activities have been completed including Marine geo-physical study, geo-technical study, pipeline route survey and soil investigation. The environment studies are in progress. This project is expected to be completed in March 2013.

Revamp of Refinery - II for Capacity Expansion

It is proposed to enhance the capacity of Crude and Vacuum Distillation Unit of Refinery-ll from 3.7 MMTPA to 4.3 MMTPA at a cost of about Rs. 333 crore.

New Project Initiatives at CBR

- 20" inter connecting crude oil pipeline is planned between Karaikkal Port and CPCLs Chidambaranar Oil Jetty. MoU has been signed with M/s.Karaikkal Port Pvt. Limited (KPPL) for utilizing their facility to receive crude of economic parcel size. IOC, Pipeline division has been engaged as EPCM contractor for executing the project. This project is expected to be completed by March 2011.

- Shifting of Hydro treating facility (Plant 13) from Manali Refinery for Diesel Hydro treating which will enhance the crude basket of CBR.

DEVELOPMENT STRATEGIES

The outlook of the Oil Industry has been fast changing prompting various players to constantly revisit their planned strategies and devise new business initiatives for achieving sustainable development and also to adapt successfully to the changing scenario. Your Company has also undertaken a review of its strategies. A Strategy Meet was organized in July 2009 to discuss and deliberate on several growth initiatives identified by the Company. The important points identified during this Meet were discussed by the Board of your Company in September 2009.

Several action plans have been identified and important among them include replacing the Refinery I with a new CDU/VDU of 9 MMTPA capacity and associated secondary processing facilities and the setting up a 350 MW Joint Venture Power Project based on Petcoke.

INDIAN ADDITIVES LIMITED

Your Company formed a joint venture with Chevron Chemicals Company (now Chevron Oronite Company) named Indian Additives Limited (IAL) for the manufacture of Lube Additives components and packages, in the year 1989.

IAL has achieved a turnover of Rs.349.90 Crore during the year 2009-10, as against Rs.270.69 crore in the previous year. The Profit after Tax for 2009-10 is Rs.41.29 Crore as against Rs.8.67 Crore in the previous year. The Board of Directors of IAL has recommended a Dividend of 36% on the paid-up capital of the Company.

INFORMATION TECHNOLOGY

Your company keeps itself abreast of the advancements in the area of Information Technology so as to apply them to the extent possible in its pursuit of achieving operational excellence.

The Cauvery Basin Refinery and Manali Refinery went live on SAP effective 1st July 2009 and 1st August 2009 respectively. The highlights of the implementation of SAP included the following:

- Generation of Production reports

- Inclusion of Inspection Management System in the P.M Module of SAP

- Direct Integration of Weigh Bridge with SAP

- Implementation of B2B concept in Cauvery Basin Refinery for Crude related transactions

- Establishment of Video Conferencing facility between Manali Refinery and CBR

- Establishment of Audio Conferencing Facilities for Executives

RESEARCH AND DEVELOPMENT (R&D)

Your Company recognizes the need to be more competitive in order to face the future challenges in the Oil Industry and provides greater thrust to the role of R&D in order to achieve continuous upgradation of technologies and acquire expertise in various areas of activities.

Your Companys in-house R&D Centre successfully commissioned a new ROFATrue Boiling Point Distillation Unit to carry out Crude Assays with extended vacuum facilities. Your Companys Research and Development with Sud- Chemie India Pvt. Ltd. resulted in successful scaling up of Lube Hydrofinishing Catalyst (500 kg) with improved activity and stability Characteristics.

Your Companys R&D Centre successfully carried out extensive reformer pilot plant studies to develop a Continuous Catalytic Reformer (CCR) model for supporting the commercial CCR unit.

SAFETY MANAGEMENT

Your Company and its employees are conscious of their commitment to carry out all the activities with primary focus on safety by adhering to the best safety practices in handling equipment and material.

During the year, your company has imparted monthly refresher training program on Fire and Safety to 177 CISF Personnel. Safety training is provided every month to truck crew with special focus on road safety regulations, safe driving habits, importance of spark arresters and fire extinguishing operations and around 490 Truck Crew members were covered under this training program.

The importance of safety in achieving credible safety performance is highlighted to employees, contract workers and others through various training programmes, live fire drill and field demonstrations. Also specialized safety training programmes are conducted on Chlorine handling, Scaffolding erection and Shutdown safety. Distribution of Safety pamphlets to contract workers in Tamil & Hindi, Safety handbooks in Tamil and Safety instructions for visitors are also done. A handbook on the roles and responsibilities of onsite co-ordinators was released in February, 2010. Employees participation in safety management system is ensured by having their representations in various safety committees.

A safety perception survey was conducted by M/s. Cholamandalam Group and the results of the survey are encouraging as compared to the similar survey done three years earlier. A safety meet was also organised for the benefit of the neighbourhood Manali industries.

A Safety film on the topic of "Human safety is precious for Life saving" describing the safety practices in Manali refinery was telecast in Podhigai Channel, mainly to create an awareness among general public on efforts taken by the Company towards safe operation.

Two on-site mock drills were conducted in September, 2009 and March, 2010 respectively. An off-site mock drill was conducted in February, 2010 at M/s, Manali Petrochemical Limited which was presided over by District Collector, Tiruvallur.

Awards /Achievements

Commitment to the safety standards and safety initiatives undertaken by the company to improve the safety management system resulted in the following awards;

- Safety Appreciation Award by the Institute of Engineers of India.

- Continued Patronage Award (CPA) from National Safety Council, Tamil Nadu.

- Golden Peacock award received in June 2009.

- Cauvery Basin Refinery received the Star Award under the Safety Awards Category 2007 from National Safety Council, Tamil Nadu Chapter in February 2010.

ENVIRONMENT MANAGEMENT

Your Company takes constant and persistent efforts to preserve and protect the ecological balance by adoption of several environmental conservation measures aimed towards achieving substantial abatement in pollution from its operations.

Significant initiatives undertaken in the areas of Solid Waste Management include disposal of 200 MT of SRU Spent Catalyst to M/s Tamil Nadu Waste Management Limited.

Your company has always demonstrated its concern to mitigate the adverse effects of climate change by undertaking several green initiatives which include mass tree plantation at Manali Refinery, change over to Light Emitting Diode (LED) for Corridor Lighting and use of Solar Lights at Cauvery Basin Refinery (CBR).

The efforts undertaken by the Company towards sustainable development resulted in registration of its Windmill farm as the first Clean Development Mechanism Project with the United Nations Framework Conventions for Climate Change (UNFCCC) in May 2010. This project is estimated to fetch an annual accruable Certified Emission Reduction (CER) of 34,186 for a period of ten years.

The sustained and concerted efforts taken by the company in the areas of Environment has earned the Company the Greentech Foundation award for Environment Excellence in October 2009.

RENEWABLE ENERGY DEVELOPMENT

Your Company has taken initiatives in the areas of renewable energy development by commissioning the 17.6 MW Windmill Project at Pushpathur village, Dindugul District, Tamil Nadu at a cost of Rs.90 Crore, which is the first of its kind in the Oil Industry. The annual power generated during the year was 36 million KWHr and the revenue generated was Rs. 10.33 Crore.

ENERGY CONSERVATION

Your Company accords priority attention to the Energy Conservation efforts by adopting and implementing energy efficient processes, installing energy saving devices and by continuous monitoring using sophisticated instruments.

Several steps have been taken to optimize the energy consumption such as Step less Control on MUG Compressor and Preheat improvements, which enabled the Manali Refinery to achieve the lowest ever energy index at 70.4 MBTU / BBL /NRGF in 2009-10 as against the previous best of 71.4 in 2007-08.

Details of Energy Conservation measures undertaken during the year are detailed in Annexure-ll.

INTEGRATED REFINERY BUSINESS IMPROVEMENT PROGRAMME

As part of the Integrated Refinery Business Improvement Programme, being implemented in association with M/s. Shell Global Solutions International, 8 proposals with a net benefit value of 4.73 Million US Dollars (6.62 Cents per bbl) were completed and 3 Proposals For Improvement having a net benefit value of 4.944 Million US Dollars (6.92 Cents per bbl) are under implementation.

OPTIMISATION

Your Company continues to give focused attention to the Refinery Business Optimisation by keeping pace With the latest technological changes in order to achieve the best operating margins and implement the best process optimization techniques.

A centralized web based fuel gas monitoring application for Manali Refinery was deployed in the portal of Process Information Network (PIN). A neural Network based model for monitoring HSD Lubricity was developed and made available on the PIN portal, which has an embedded operational intelligence.

Your Company also presented a paper titled "Role of real time process information in Refinery Operations" at the Refinery Technology Meet held in Chennai, which was widely appreciated.

TOTAL PRODUCTIVE MAINTENANCE (TPM)

Your Company has made significant progress in the areas of process improvements, Energy Savings, Establishment of Systems & Procedures, One Point Lessons (OPL), Kaizens, etc. including imbibing of TPM culture amongst the employees, ever since the concept of TPM was introduced in May 2005 at Manali Refinery and CBR.

The Cauvery Basin Refinery benefited immensely in implementing the TPM through improved work environment, work culture and value addition through implementation of large number of Kaizens and has achieved a significant milestone by receiving the coveted "TPM - Excellence Award - Category A" instituted by Japan Institute of Plant Maintenance for implementing all the 8 Pillars of TPM in March 2010.

The Manali Refinery passed the TPM Health check-up conducted by Confederation of Indian Industry in November 2009 and will be contesting for the JIPM Award during 2010.

During the year, a TPM hand book and a TPM brochure for the use of employees, Pillar Chairman and Circle Leaders were released. The Third CPCL Kaizen Competition was conducted during the year and 19 Kaizens were presented from all TPM Circles in the areas of Operations and Maintenance.

ISO-SHEQ Policy

Your Company continues to demonstrate its strong commitment to carry out its business activities with focused attention on Safety, Health, Environment & Quality and has formulated a comprehensive SHEQ Policy. The accreditation to OHSAS 18001:2007 - Occupational, Health & Safety Management System, Quality Management System (QMS) 9001:2008 and Environment Management System (EMS) 14001:2004 were received from M/s. Bureau Veritas Certification India, Chennai after the conduct of the Surveillance Audit during the year.

HUMAN RESOURCES DEVELOPMENT

Your Company is firm in its belief that the human resources of CPCL bestows upon the company the required competitive advantage. With a view to sustain this position, your company consistently gravitates, retains and motivates the best talent and also enables the employees at all levels to deliver excellent performance.

With a view to give impetus to talent development, Competency Mapping Development Centers were carried out for Managers with the assistance of M/s.Emst & Young, one of the renowned experts in the field. These Development Centres will now form the basis for carrying out Development initiatives for the year 2010-11.

Your company has also taken up a new HR initiative viz., "Employees Learning Forum" to build a more dynamic employee learning environment and to bring out the best talent in them. The objectives of the Forum are to provide a platform to all employees, to develop ideas, to share their knowledge with others, acquire knowledge from others, and in the process to multiply their knowledge levels in a plethora of areas, which will ultimately enhance the knowledge level in the company and help employees develop new ideas in their work front.

Your Company implemented the Pay revision for the supervisory employees in line with the guidelines from Department of Public Enterprises, Government of India.

The total manpower strength of the Company as on 31st March 2010 was 1735 (1667 as on 31st March 2009) comprising of 810 supervisors and 925 non-supervisors (779 supervisors and 888 non-supervisors as on 31st March 2009).

During the year, your company recruited 31 Officers and 78 Workmen. As a part of the Apprenticeship training requirement, 59 Diploma holders and 36 ITI Trade Apprentices underwent one-year apprenticeship Programme in the Company.

The Industrial Relations climate continued to be harmonious, cordial and peaceful through continuous dialogues and information sharing with the Trade Unions and Officers Association. Your Company also initiated quarterly communication meeting with the Collectives to communicate the performance, growth and developmental aspects of the Company.

HR Initiatives of previous year like Department-wise Open House Meets and Field visits by HR officials to ascertain day-to-day working environment issues were continued during the year and issues were addressed.

Your Company has been adhering to the Presidential Directives and various instructions of the Government relating to the welfare of the SC, ST, OBC, and Differently abled persons. The statistics relating to representation of SCs / STs / OBCs in the prescribed proforma as on 01.01.2010 is placed as (Annexure-I).

WELFARE OF WOMEN

Women empowerment through conduct of Training Programs in functional /technical /developmental areas received primary attention of the Management.

An exclusive web page titled "SHE" was inaugurated on the occasion of International Womens Day. The web page was created for the Women employees of your company, wherein, the creative expertise of Women employees is ornamented.

International Womens Day was celebrated by organizing a programme on the theme "Women: From Survival to Success" in which eminent professionals from various fields delivered lectures on topics of varied interests on Women Development and empowerment.

Women employees were nominated to attend National/Regional Meets conducted by the Forum for Women in Public Sector (WIPS) under the patronage of Standing Conference on Public Enterprises (SCOPE).

As on 31.03.2010, 82 women employees are on the rolls of the Company (constituting 4.72% of the total number of employees). Of the above, 32 are in the Supervisory Grade and 50 are in Non-Supervisory Grade.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company considers Corporate Social Responsibility as one of the pivotal functions to accelerate the process of overall sustainable development and make significant contribution to Nation building.

During the year, an amount of Rs. 169.78 Lakhs was spent on CSR activities focusing on education, health and sanitation, water supply, sports development, women empowerment, social cultural activities and other infrastructural development.

Significant activities carried out under Corporate Social Responsibility during the year include the following :

- Constructed classrooms, toilets and compound wall for various schools located in and around our refineries at a total cost of around Rs.70 Lakhs.

- Conducted 10 free comprehensive eye care camps in association with Medical Research Foundation of Sankara Nethralaya, Chennai for the benefit of local people. 93 people were benefited by free cataract surgery.

- Skill Development Training programme on Plastic Processing Machine Operator course for unemployed youth conducted at CIPET, Chennai.

- Sponsored 50 Girls (25 SC/ST and 25 Other Community) for one year Nursing Assistant Course at a cost of Rs.5 lakhs under Empowerment of Women programme.

- Construction of Public Toilet (for women) at Vadaperumpakkam at a cost of Rs.5.45 Lakhs.

- Distributed 130 numbers of Sewing Machines & 63 numbers of Hand mover Tricycles for the poor people at a cost of Rs.6.70 Lakhs.

- Conducted 3 General Medical Camps for Public, 5 days Dental Camp and 5 days ENT camp for school students.

- Sponsored Free Tuition / Computer Training Classes for the benefit of Students in and around Manali at a cost of Rs.4.94 lakhs.

- Donated Ultrasound Scanner machine worth of Rs.5.00 lakhs to Municipality Primary Health Centre at Thiruvottiyur.

Your Company will be contributing a sum of Rs. 14 Crore to CPCL Educational Trust towards the cost of construction of new building for the Polytechnic College and ITI.

During the year, 235 students were admitted in the Polytechnic College and 24 students were admitted for the ITI course.

OCCUPATIONAL HEALTH SERVICES (OHS)

The occupational Health Services Center (OHS) of your company is constantly endeavoring promotion of health of not only the employees of the Company but also the contract workmen by periodical monitoring of the health hazards at work place in a systematic manner.

About 72 percent of the employees underwent comprehensive medical examination as part of Health Surveillance. Contract workers, doing critical jobs, were examined for general medical problems and fitness.

OHS Center continues to focus its attention on sustaining the high quality standards which has resulted in continuation of accreditation by the National Accreditation Board for laboratories as per the ISO 15189:2007 standards.

Persistent efforts were undertaken for .promoting the awareness amongst the employees on various health care issues by conducting several health awareness programs like "Stress Management", "Awareness on Cancer" and "Care of the back".

INVESTOR RELATIONS

Your Company continues to accord top priority to Investor grievances with a view to ensure zero complaints at any given point of time. All efforts are undertaken to keep the time of response to the shareholders request/grievances at the minimum.

As on 31.03.2010,14,67,65,931 shares have been dematerialized constituting 98.56% of the paid-up share capital of the Company. Out of 58,033 shareholders, 39935 shareholders have dematted their shares representing 68.81 % of the total shareholders. The status of Shareholders/ Investors Grievances are periodically monitored by the Shareholders/ Investors Grievances Committee of the Board.

CORPORATE GOVERNANCE

Your Company firmly believes that transparency, full disclosure, fairness to all stakeholders and effective monitoring of the Corporate Affairs are the four pillars of Corporate Governance. The Corporate Governance Philosophy of the Company is aimed towards achieving business excellence, enhancing shareholder wealth and protecting the interest of all stakeholders.

Your Company complied with all the mandatory requirements of Corporate Governance Guidelines issued by SEBI and also the Corporate Governance guidelines prescribed by Department of Public Enterprises (DPE), Government of India applicable to Central Public Sector Enterprises, except the requirement relating to minimum number of Independent Directors. As against the requirement of six under the Listing Agreement and DPE Guidelines, the Company has three Independent Directors. The appointment of additional Independent Directors is under the consideration of Government of India. A separate section on Corporate Governance forms part of this Annual Report.

In view of the best Corporate Governance practices adopted by the Company, your Company was shortlisted as one of the top 25 Companies, adopting good Corporate Governance practices in the year 2009 by the Institute of Company Secretaries of India, for the fourth time in a row.

The Ministry of Corporate Affairs, Government of India issued the Voluntary Guidelines on Corporate Governance in December 2009. Your Company would make every endeavour to comply with the voluntary guidelines to the utmost extent feasible and within the domain of a Government Company and a Subsidiary of Indian Oil Corporation Ltd.

VIGILANCE

The Vigilance Department of your Company assists the Management in promoting transparency and awareness amongst the employees on various vigilance matters, while discharging their duties and responsibilities.

An important aspect of the Vigilance function is providing greater thrust on leveraging the technologies, . which resulted in payment of 97.9% of bills to vendors / contractors and service providers through Electronic Clearance Service and Electronic Funds Transfers.

Vigilance Awareness Week was observed in the Company during November 2009, wherein Quarterly Vigilance News Letter was released in addition to carrying out Vigilance Awareness activities.

As a part of Vigilance Awareness Week, a meeting with major contractors was held wherein the Independent External Monitors participated.

INTEGRITY PACT

Your Company has implemented the Integrity Pact for enhancing the degree of transparency in procurement and contracts with an objective of eliminating corruption in public dealings.

Integrity Pact is applicable in respect of contracts with a threshold limit of Rs. 10 Crore. Status Report on the progress of activities under the Integrity Pact are being periodically reviewed by the Executive Committee of the Company. Meetings of the Independent External Monitors with the Management of the Company are being held on a quarterly basis.

OFFICIAL LANGUAGE IMPLEMENTATION

Your Company makes concerted efforts to spread and promote Official language in compliance with the Official Language Act, 1963, Official Language Rules, 1978 and orders issued by Government of India from time to time.

The First Sub-Committee of Committee of Parliament on Official Language visited CPCL in October 2009 and deliberated on matters relating to the Official Language implementation in the Company.

In recognition of its outstanding efforts for increasing the progressive use of Hindi in official work, your Company has received RAJBASHA SHIELD from Town Official Language Implementation Committee (TOLIC) which is second in the Public Sector Undertaking (Big) Category.

STATUTORY INFORMATION

- Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules,1975 - Annexure-ll.

- Statutory details of Energy Conservation and Technology Absorption, R&D activities and Foreign Exchange Earnings and Outgo, as required under Section 217(1 )(e) of the Companies Act, 1956 and the rules prescribed thereunder, i.e., the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure and form part of this Report (Please refer Annexure-lll).

- Certificates received from the Auditors of the Company regarding compliance of conditions of Corporate Governance, as required under Clause 49 of the Listing Agreement and also the compliance with the guidelines on Corporate Governance issued by Department of Public Enterprises, Government of India are Annexed and forms part of this Report (Please see Annexure-IV).

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 2000 with respect to Directors Responsibility Statement, it is hereby confirmed

i) that, in the preparation of the annual accounts for the financial year ended March 31, 2010, the applicable accounting standards have been followed and that there are no material departures from the same;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review;

iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) that the Directors have prepared the annual accounts for the financial year ended March 31, 2010, on a going concern basis.

As required by the voluntary guidelines on Corporate Governance issued by the Ministry of Corporate Affairs, with respect to Directors Responsibility Statement, it is hereby confirmed that proper systems are in place to ensure compliance of all laws applicable to the Company.

AUDITORS

M/s. M.Thomas & Co., Chennai and M/s Sreedhar, Suresh & Rajagopalan, Chennai have been appointed as Joint Statutory Auditors of the Company for the financial year 2009-2010 by the Comptroller and Auditor General of India. The Board of Directors of the Company fixed a remuneration of Rs.7.5 lakh (Rs.3.75 lakh to each of the Joint Statutory Auditors) in addition to the out-of-pocket expenses, if any, and applicable service tax.

COST AUDITOR

M/s. J.V. Associates, Cost Accountants, Chennai have been appointed as the Cost Auditor of Manali Refinery and Cauvery Basin Refinery of the Company for the financial year 2009-10 at a remuneration of Rs.1,40,000/- (Rupees One lakh Forty thousand only) per annum plus applicable taxes and out-of-pocket expenses, if any, to conduct the audit of cost accounts maintained by the Company.

DIRECTORS

Mr. K. Balachandran, Director (Operations) has been appointed as Managing Director effective 01.12.2009 in place of Mr. K.K. Acharya who retired from the services of the Company on attaining the age of superannuation.

Mr. B.M. Bansal, Director (Planning & Business Development) & Chairman i/c, Indian Oil Corporation Limited has been appointed as a Director in place of Mr.S.Behuria effective 01.03.2010. He has also been appointed as a non- executive Chairman of the Company by the Government of India.

Mr. Sanjay Gupta, Director (MC&IOC) representing Ministry of Petroleum & Natural Gas, Government of India ceased to be a Director on the Board of CPCL effective 06.04.2010 consequent to his reversion to his parent department.

Your Directors place on record their appreciation of the valuable contributions made by Mr.K.K. Acharya, Mr.S.Behuria and Mr.Sanjay Gupta during their tenure.

ACKNOWLEDGEMENT

Your Directors would like to convey their gratitude to Ministry of Petroleum & Natural Gas, Indian Oil Corporation Limited, Naftiran Intertrade Company Limited, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Oil Industry Safety Directorate, Centre for High Technology, the other Ministries of Government of India, Government of Tamil Nadu, Comptroller & Auditor General of India, Central Vigilance Commission, Financial Institutions and commercial banks for their valuable guidance and support.

Your Directors place on record their sincere appreciation for the commitment and dedication made by the members of the CPCL family, which enabled the Company to excel in performance during the year 2009-10.

Your Directors thank all the shareholders for the confidence they have reposed on the Companys Board and Management, which enabled the Company to make a positive turnaround in the year 2009-10.

For and on behalf of the Board of Directors

B.M. BANSAL Chairman

Date : 16.07.2010 Place: New Delhi

 
Subscribe now to get personal finance updates in your inbox!