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Directors Report of Mangalore Refinery And Petrochemicals Ltd.

Mar 31, 2022

The Board of Directors of your Company are pleased to share the highlights of developments and progress of your Company since its last report along with audited financial statements, Auditors’ Report thereon and comments on the financial statements by the Comptroller and Auditor General (C&AG) of India.

STATE OF COMPANY’S AFFAIRS

Your Board is reporting the affairs of the Company for the FY 2021-22 as under:

Financial Performance

The standalone / consolidated financial highlights for the year ended 31/03/2022 are summarized below:

('' in crores)

Particulars

Standalone

Consolidated

Year ended 31st March, 2022

Year ended 31st March, 20211

Year ended 31st March, 2022

Year ended 31st March, 20211

PROFIT BEFORE TAX

2,708.33

(915.13)

2,711.31

(918.93)

Less: Current Tax (Current Year & Earlier Years)

477.29

(1.09)

477.29

(1.09)

Deferred Tax

(724.23)

(152.87)

(724.23)

(152.87)

PROFIT FOR THE YEAR

2,955.27

(761.17)

2,958.25

(764.97)

Add: Other Comprehensive Income

3.15

2.09

3.19

2.09

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

2,958.42

(759.08)

2,961.44

(762.88)

Less: Total Comprehensive Income Attributable to Non-Controlling Interest

-

-

-

-

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY

2,958.42

(759.08)

2,961.44

(762.88)

Add: Opening Balance in Profit and Loss Account

3,355.10

4,114.18

3,365.09

4,127.97

SUB-TOTAL

6,313.52

3,355.10

6,326.53

3,365.09

LESS: APPROPRIATION

Payment of Dividend on Equity Shares

-

-

-

-

CLOSING BALANCE (INCLUDING OTHER COMPREHENSIVE INCOME)

6,313.52

3,335.10

6,326.53

3,365.09

Term Debt (STD) programme. ICRA has also reaffirmed rating of [ICRA] AAA (pronounced as ICRA “Triple A rating with stable outlook) for the ''2,560 Crore Non-Convertible Debenture (NCD) Program of Mangalore Refinery and Petrochemicals Limited. CRISIL has reaffirmed “CRISIL AAA/Stable” (pronounced “CRISIL triple A rating with stable outlook”) for the ''2,560 Crore Non-Convertible Debenture, reaffirmed its Corporate Credit Rating (CCR) “CCR AAA/Stable”, reaffirmed short-term rating of ''1,000 Crore “CRISIL A1 ” and also reaffirmed the rating of “CRISIL A1 ” ''3,500 Crore Commercial Paper (CP) / Short Term Debt (STD) programme of Mangalore Refinery and Petrochemicals Limited.

CARE Ratings has reaffirmed “CARE AAA/Stable (pronounced “Triple A rating with stable outlook”) for the ''5,000 Crore Non-Convertible Debenture and the short-term rating of A1 for ''3,000 Crore Commercial Paper (CP) / Short Term Debt (STD) program of Mangalore Refinery and Petrochemicals Limited.

India Ratings (Fitch Group) has reaffirmed “IND AAA/Stable (pronounced “Triple A rating with stable outlook”) for the ''5,000 Crore Non-Convertible Debenture program, long-term Rating of ''1,000 Crore “IND AAA/Stable” and also reaffirmed foreign currency loan ratings of “IND AAA/Stable” for $524.66 Mn programme of Mangalore Refinery and Petrochemicals Limited.

MERGER OF OMPL WITH MRPL

The amalgamation of ONGC Mangalore Petrochemicals Limited (OMPL) with Mangalore Refinery and Petrochemicals Limited (MRPL) was approved by the Ministry of Corporate Affairs, New Delhi vide its Final Order dated 14/04/2022 with 01/04/2021 as Appointed Date and the Effective Date for Scheme of Amalgamation of OMPL and MRPL is 01/05/2022.

OPERATIONAL PERFORMANCE FOR FY 2021-22 Some of the major highlights for the FY 2021-22 are as under:

> Gross Crude Throughput of 14.871 MMT achieved during FY 2021-22 and Refinery Net Throughput of 15.040 MMT was achieved which includes Intermediates & Other Inputs.

> MRPL successfully commissioned FCC Gasoline Treating Unit (FGTU) of 800 KTPA Feed capacity as part of its BS-VI Project, on 11/07/2021.

> MRPL successfully commissioned Desalination Plant based on Reverse Osmosis Technology using Seawater with design capacity of 30 MLD process grade water, on 17/12/2021.

> MRPL successfully commissioned Sulfur Recovery Unit (SRU-7) with design capacity of 185 TPD Sulfur production as part of its BS-VI Project, on 28/03/2022.

> 4 New HSD tanks @ Beta Land with the capacity of 30200 KL each of gross storage capacity along with the New HSD coastal line to Jetty were commissioned during FY 2021-22.

> Five (5) new Crudes were processed for the first time during the FY 2021-22:

Tupi Crude (API-30.2) from Brazil, Amna Crude (API-37.2) from Libya, Egina Crude (API-27.6) from Nigeria, Basrah Medium Crude (API- 28.57) from Iraq, Baobab Crude (API- 22.6, High TAN) from Ivory Coast.

> For the first time, Vacuum Gas Oil (VGO) was imported coastally from M/s. HPCL, Vizag, in the month of September, 2021.

> Naphtha to M/s. ONGC Petro additions Limited (OPaL) was supplied for the first time in the month of September, 2021.

> ATF Defense grade was supplied to M/s. IOCL, for the first time in the month of September, 2021.

> Marine Fuel oil (MFO) - 0.35% SUL was exported for the first time in the month July, 2021.

> Ever Highest Capacity Utilization ofDHDT (108.8%) was achieved in the month ofNovember, 2021.

> Ever Highest Capacity Utilization ofDCU (105.6%) was achieved in the month of January, 2022.

> Highest PP production of 43.267 TMT achieved for the month of October, 2021 against Previous highest 43.111 TMT during July, 2021 . Ever Highest Polypropylene production of 460 TMT achieved for FY 2021-22 against nameplate Capacity of440 TMT.

> Ever Highest LPG production of 1049 TMT achieved for FY 2021-22, against Previous Highest was 970 TMT for FY 2018-19.

> Ever highest MS production of203.86 TMT in the month of March, 2022 against Previous highest was 198.2 TMT in the month of December, 2021. Ever Highest MS Production of 1727 TMT achieved for FY 2021-22, against Previous Highest was 1279 TMT for FY 2018-19.

> Ever highest LPG Dispatch of 105.2 TMT done for the month of December, 2021.

> ATF Export of 60 KT Cargo size was supplied for the first time in the month of October, 2021.

> Ever highest HSD Dispatch of664.6 TMT for the month of March, 2022 against Previous highest was 662.6 TMT in the month of December, 2021.

> Produced 389.976KT Para-Xylene, 148.240KT Benzene, 124.281 KT Paraffinic Raffinate and 293.903 KT Reformate.

MARKETING AND BUSINESS DEVELOPMENT

> Your company continues to maintain major share of the direct sales segment of petroleum products market in Karnataka and adjoining states. Your Company maintained leadership position in its marketing zone for all direct sales products such as Bitumen, Diesel, Sulphur, Petcoke, ATF, Polypropylene, Xylol (Xylenes) etc. The total domestic sales volume of all products during FY 2021-22 has been 1988 TMT with a sales value of ^11033 Crores against turnover of 1691 TMT and sales value of '' 7207 Crores in FY 2020-21.

> Retail marketing plan: MRPL is continuously focusing on its retail expansion in the States of Karnataka & Kerala and so far has successfully commissioned 32 retail outlets with another 20 retail outlets under various stages of construction. MRPL had given advertisement in FY 2021-22 for more than 400 locations in Karnataka & 100 locations in Kerala. Plans are in place for adding 50 new retail outlets every year for the next 5-10 years and will be entering new geographical areas of Tamil Nadu, Andhra Pradesh and Telangana in near to medium term.

> Your company’s Polypropylene Production has achieved a milestone by crossing the 440 KTPA Name plate capacity, as on 15th March, 2022 and annual PP Sales achieved the pinnacle feat of 450 KTPA for the 1st time since inception, during FY 2021-22. MRPL is increasing focus in core PP markets of Southern and Western parts of the country and also targeting Northern and Eastern locations for garnering more volume.

> Your Company’s Joint Venture, Shell MRPL Aviation Fuel and Services Limited has steadily acquired business for sale of Aviation Turbine Fuel (ATF) at Indian airports. The company achieved a turnover of ''673.19 Crores during FY 2021-22 against turnover of ''260.50 Crores in the previous FY 2020-21.

> The COVID-19 pandemic impacted adversely in FY 2021-22 and resulted in squeezed Aromatic spreads/margins. In order to mitigate the impact of reduced spreads/margins, mode of operation was changed to Reformate from Paraxylene/Benzene in Q3.

> Aromatics complex posted sales of approx. 400 KT of PX during the year. Exports constituted majority of the sales. North East Asia (NEA) constituted bulk of the Exports (77 %) with other regions viz., America and Europe comprising the rest.

> A significant milestone during the year was commencement of supplies to a major domestic Purified Terephthalic Acid (PTA) producer via coastal vessels.

> Benzene sales were at 147 KT an increase of 14% compared to FY 2020-21. New customers were added in the domestic market during the year expanding its reach and catering to Western India.

> Term contracts were entered into with major downstream producers in South India. For FY 2022, Export contract was entered into with one of the largest consumers of BZ in Middle East.

> Aromatics complex (SEZ Unit) switched over to Reformate mode in Q3. Sale of Reformate during the year was at 273 KT with Middle East (90 %) being the major Export destination.

> Paraffinic Raffinate and Heavy Aromatic sales were at 148 KT and 4 KT respectively.

> Exported Para-Xylene worth ''1,967 Crore, Benzene worth ''790 Crore, Paraffinic Raffinate worth ''711 Crore and Reformate worth '' 1758 Crore.

RECOGNITION

1. Indian Green Manufacturing Challenge (IGCM) 2020-21 - Gold Medal

2. Won two state level Safety Awards for best co-generation boiler.

3. Won best safety practices in Oil & Gas Industry award.

PROCUREMENT OF GOODS AND SERVICES FROM MSMEs

In line with the Public Procurement Policy, 2012 issued by Ministry of Micro, Small and Medium Enterprises, for the year 2021-22, your Company has achieved 28.79% procurement of goods and services from Micro and Small Enterprises against the target of 25%

PROJECTS BS VI upgradation

As per Auto Fuel Policy and directives from Ministry of Petroleum and Natural Gas (MoP&NG), the entire country has moved towards BS VI quality specifications for MS and HSD. The project involved setting up of new units and additional facilities. M/s. Engineers India Limited (EIL) was the Engineering, Procurement and Construction Management Consultant for the job. The main unit - FGTU was commissioned on 11/07/2021 resulting in additional 25 TMT/month BS VI MS. The balance two units - Nitrogen plant and SRU-7 were commissioned on 16/03/2022 and 28/03/2022 respectively.

Desalination Plant

Desalination Plant of 30 MLD capacity (scalable to 70 MLD) is set up to ensure continuous operation of Refinery during summer / weak monsoons and to eliminate risk of Nethravathi river being the only source of fresh water. The plant is set up on the shore of the Arabian Sea at Thannirbhavi in Mangalore on land leased from New Mangalore Port Trust. M/s. Fichtner India was the Project Management Consultant and M/s VA Tech Wabag Limited was the LSTK contractor. The plant was commissioned on 30/12/2021 and is operating at designed load consistently while the permeate (Desalinated water) is as per the required specifications.

Marketing Terminal at Devongonthi, Bengaluru

Marketing Terminal at Devangonthi, Bengaluru is being constructed to cater to business primarily in the state of Karnataka. The terminal would receive finished petroleum products (MS, HSD and ATF) through the existing PMHB pipeline from MRPL. The supplies of petroleum products to the retail outlets / customer / aviation stations would be met through road tankers. M/s. Nauvata Engineering Private Limited is the Consultant for the project. LSTK tender for Tankages and associated civil, mechanical, piping, electrical, instrumentation and fire-fighting is placed on M/s. Vishal Structurals Private Limited and for Civil and Structural works on M/s. SRR Projects Private Limited. Construction activities have commenced and the Terminal is scheduled to be completed by third quarter of FY 2023-24.

2G Ethanol

MRPL has been informed by MoP&NG to set up a 2G Ethanol Project in the state of Karnataka. Land for the same has been allotted by the Karnataka Industrial Areas Development Board (KIADB) at Harihara, Davanagere. Technology for the project has been selected and Detailed Feasibility Report has been prepared. MRPL has applied for the Viability Gap funding from GoI and Environmental clearance for the Project is awaited.

Modification of Gas Turbines for Natural Gas firing

MRPL has two Gas Turbines. Presently, GT-1 is fired using Light Cycle Oil and GT-2 by Refinery Fuel Gas. Both the Gas Turbines are designed to operate with Natural Gas. The project involved modifications to the Gas Turbines for Natural Gas firing. M/s. L&T-SL was the Project Management Consultant and M/s. BGGTS was awarded the contract for execution of the project. The project was commissioned on 24/12/2021.

CCR-1 Revamp

CCR-1 converts heavy naphtha feedstock into high octane reformate for gasoline blending and produces hydrogen for hydro-treating / hydrocracking. Revamp of Regenerator section of CCR-1 is being carried out to increase Regenerator Coke burn capacity thereby resulting in overall capacity increase to 80 m3/hr (from current 75 m3/hr). M/s. Triune Energy Services Private Limited is the Engineering, Procurement and Construction Management Consultant for the project. Major ordering is completed and equipment deliveries to site have commenced. Mechanical Completion of the project is scheduled in first quarter of FY 2023-24.

PFCC Stack Wet Gas Scrubber System

Petrochemical Fluidized Catalytic Cracking (PFCC) unit processes unconverted oil from Hydrocracker units, straight run low sulphur vacuum gas oil and hydro treated heavy coker gas oil and converts into value added products such as propylene, LPG and gasoline. During this process, carbon is deposited on the catalyst which reduces the ability of the catalyst to aid the cracking process. The carbon is then burnt off and the catalyst is regenerated. The regeneration process produces flue gas which passes through a system of cyclones and separators to remove catalyst fines. The project is conceived to reduce SPM limit in flue gas of PFCC as pollution control measure. M/s. Thyssenkrupp Industrial Solutions (India) Private Limited is the Project Management Consultant and M/s. Kalpataru Power Transmission Limited is the LSTK contractor for the project. Mechanical Completion of the project is scheduled in second quarter of FY 2023-24.

PFCC LPG Propylene Amine Scrubber

While processing feed with high Sulphur content in Petrochemical Fluidized Catalytic Cracking (PFCC), higher Hydrogen Sulfide (H2S) is expected in LPG and Propylene stream. Current system to meet H2S in LPG and Propylene product is caustic wash. Amine Scrubber System reduces dependency on caustic wash to a large extent. The system removes H2S in the LPG and Propylene streams and minimizes the spent caustic generation in existing Caustic Treatment System. M/s. Triune Energy Services Private Limited is the Engineering, Procurement and Construction Management Consultant for the project. Mechanical Completion of the project is scheduled in second quarter of FY 2023-24.

New Bitumen Blowing Train as a part of extension of existing Bitumen Blowing Unit

The project envisages setting up of additional Bitumen Blowing Train with a capacity of 144 KTPA as a part of extension of existing Bitumen Blowing Unit to cater to the simultaneous demand of VG-30 and VG-40 grades of bitumen to leverage market demand. M/s. Engineers India Limited is the Engineering, Procurement and Construction Management Consultant for the project. Mechanical Completion of the project is scheduled in third quarter of FY 2023-24.

DIGITAL TRANSFORMATION AND IT SECURITY

information technology (IT) has become a vital and integral part of every business plan. With the view to support organizational demands and for effectively utilizing Information technology, MRPL has been undertaking several digital transformation initiatives.

MRPL has a state of art Data Center (DC) and Disaster Recovery (DR) Site. The Data Center hosts a set of hardware infrastructures which caters to the day to day business needs of the organization. Presently MRPL ERP is running on SAP Suite on HANA (SoH) which is catering to day to day business transactions through it various modules. SAP HANA is an in-memory database technology that runs the SAP Landscape serving as a backend database. This has helped business achieve better performance and also future ready for upcoming versions.

On the IT security front, MRPL has been awarded the ISO-27001:2013 certification for MRPL Data Center and Disaster Recovery Center. ISO 27001:2013 is an international standard that provides a framework for Information Security Management Systems (ISMS). The standard describes best practices for an information security management system (ISMS) and helps organizations improve their IT security, comply with cyber security regulations, protect its information assets and enhance reputation.

As part of Digital India initiatives, MRPL has taken several initiatives with the emphasis on increased use of information technology to go digital and to promote transparency and efficiency in the system. In order to achieve the said objective, MRPL has successfully implemented the E-Office system. It is a digital workplace solution that replaces the existing manual handling of files and documents with efficient electronic system. The solution seeks to achieve a set of objectives like increasing efficiency & effectiveness of the processes, employee productivity, and efficient management of data, documents, files, information & knowledge, project tracking & monitoring etc within MRPL for better communication & co-ordination among departments.

SECRETARIAL STANDARDS

The Secretarial Auditor has certified that your Company has complied with the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ‘Meetings of the Board of Directors’ and ‘General Meetings’, respectively, during the financial year 2021-22.

HEALTH, SAFETY & ENVIRONMENT PERFORMANCE Occupational Health

• Two Occupational Health Centres (OHC) in Refinery and one Hospital in the township area are functional. It is equipped with emergency medical aids, ambulance facility, doctors, paramedic, shower facility for Chemical contact, emergency medicines and antidotes.

• During the outbreak of Covid-19, Occupational Health Centre was aptly and adequately supported by making all possible arrangements to combat and contain the spread of Covid-19. MRPL Hospital was made to stand as equipped enough as per the approved protocol & was declared the designated location for the benefit of all stakeholders for the purpose of initial screening & treatment before being referred for further medical management, if required to combat Covid-19.

• Dedicated Covid 19 vaccination centre established inside MRPL premises for vaccine coverage to employees, secondary workforce, dependants and CISF staff. Total number of beneficiaries of vaccination are 15,217 as on 31/3/2022.

• Oral Polio Vaccination program conducted at MRPL Hospital in association with Katipalla primary health centre. Total 145 children were benefited.

Safety

• MRPL successfully achieved ZERO RLTI in the FY 2021-22.

• MRPL achieved 2120 & 638 days without Reportable Lost time injuries (RLTI) as on 31/03/2022, in case of employee & contract workers respectively.

• MRPL bagged 2 state level awards by Department of Factories, Boilers, Industrial Safety & Health, GoK, for the year 2021:

? Best Safe Industry award under Oil Industry Category.

? Safe Operation, Maintenance & reliable boiler under Cogen Boiler category.

• As on 31/03/2022, MRPL employees achieved 29.4 safe million man hours.

• Carried out OISD Pre-commissioning safety audit for SRU 7, offsite facility & HSD line to jetty.

Environment Management

• Consent for Operation (CFO) granted by KSPCB for BS-VI Project namely FGTU, SRU-7 and Offsite facilities & commissioned.

• Consent for Operation (CFO) granted by KSPCB for 30MLD Desalination unit at Thannirbavi village & commissioned.

• Consent for Establishment (CFE) obtained for setting up Marketing Terminal at Devangonthi, Bangalore.

• Environmental Clearance was recommended by State Environment Impact Assessment Authority (SEIAA), GoK for proposed 2G-Ethanol project at Davangere. Wildlife Conservation plan authentication from PCCF-WL, Bangalore in progress.

• Baseline monitoring for Environment Impact Assessment study of proposed Petro Addition & Capacity Enhancement Project (PACE) completed.

• 81.43 MT of Oily Sludge, 208.99 MT of PFCC Spent catalyst and 183.8 MT of Spent clay have been Co-processed in SPCB authorized cement industries.

• 846.5 MT of Spent catalysts has been disposed through SPCB authorized Recyclers/ Reprocessors.

• 7.31 MT of Waste White Oil have been disposed to SPCB authorized Incineration Facility.

• 304.19 MT ofNon-Recyclable/ Non-Reusable Hazardous waste handed over to secured landfill (TSDF).

• 65,87,079 M3 of Tertiary Treated Municipal Sewage water from Mangalore city was utilized in MRPL during FY 2021-22.

• MRPL hosted Activity Committee Meet (ACM) on Environment and Water Management in association with Centre for High Technology (CHT), MoP&NG. The objective of the ACM is to share best operational practices, case studies, modifications and troubleshooting by Refineries.

• MRPL awarded Gold Medal by International Research Institute for Manufacturing (IRIM), for India Green Manufacturing Challenge 2020-21.

Sustainability Initiatives

Sustainable development is a key consideration for MRPL. Climate change is a major issue that the world is facing today

and MRPL is taking actions to reduce the environmental impact. MRPL is taking relevant initiatives to reduce carbon

footprint and conserve resources. In this process MRPL is pursuing several sustainable projects.

• MRPL is adopting projects to reduce overall emissions through energy conservation, improving the energy efficiency in its processes and use of renewable energy.

• In FY 2021-22 total solar energy generated in MRPL’s own solar plant is 28,405 KWh and total solar energy consumed by the company is 29,097 KWh (including the solar energy imported).

• MRPL has taken up different energy efficiency improvement measures and has achieved a fuel savings of 19,213 metric ton of oil equivalent (MTOE).

• To mitigate the risk of river water as a single source of water, a 30 MLD Desalination plant has been installed at sea coast of Arabic ocean.

• In addition to the de-salination plant, MRPL is utilizing Mangalore city treated sewage water to reduce our fresh river water conservation. In FY 2021-22 total Mangalore city treated sewage water utilized in the refinery is 65,87,079 M3

• Recycling and reusing is a key component of waste management and MRPL is adopting sustainable methods to recycle and re-use the waste generated.

• In FY 2021-22, 89% of ETP feed flow was recycled and re-used in the refinery.

• Oily sludge generated in ETP is re-used in the DCU unit.

• Hazardous wastes are co-processed through SPCB authorized cement industries, where hazardous waste materials are used in the cement kiln for the alternate source of energy.

• Recycling of hazardous wastes is done through SPCB authorized recyclers where spent catalysts are recycled and precious metals are recovered.

• In FY 2021-22, 63.7% oftotal hazardous and non-hazardous waste was recycled and re-used.

• To ensure the sustainable utilization of life support systems on earth, MRPL is taking major initiatives towards bio diversity conservation. MRPL is establishing a bio-diversity park in 41 acres of marshy land where the marshy land is being converted to a full-fledged bio diversity park. The bio-diversity park will have native tree species of Western Ghats which will act as a habitat for different varieties of Birds and insects.

• MRPL has taken several greenbelt development and compensatory afforestation initiatives to increase its green cover.

• MRPL has developed 50 acres of Greenbelt in Pilikula Biodiversity Park with approximately 4000 numbers of different western ghat plant species

• MRPL has developed green belt in 25 acres at Bengre near Thannirbhavi sea shore and raised approximately 4000 numbers ofplants saplings in co-ordination with Karnataka Forest Department.

• In addition, 969 numbers of saplings were planted during the FY 2021-22 in Refinery.

• MRPL has commissioned a Vermi compost facility for efficient management of cut grass, tree branches & leaves. 12,076 Kg of Vermi-compost was harvested in FY 2021-22. Two more Vermi compost facility construction is under progress.

• MRPL is committed towards the conservation of ecological system and Bio-diversity, in this regard MRPL has adopted wild animals in Pilikula Biological Park, Mangalore.

HEALTH, SAFETY & ENVIRONMENT PERFORMANCE OF AROMATIC COMPLEXHealth

Annual Medical Checkup of employees was carried out in compliance with the Rules under Factories Act and Karnataka

Factories Rules. 100% health check-up of employees completed as per schedule during the year 2021-22.

Occupational Health Centre (OHC) with 24X7 availability of Medical Staff is functional.

Safety Performance

The major achievements in the Safety are summarized as under:

• Aromatic Complex has achieved Zero Loss Time Incident (LTI) for FY 2021-22 it is an exemplary achievement to achieve 2346 Safe working days without LTI as on 31 March, 2022 which is equal to 15.20 Million man hours.

• Aromatic Complex has also received Prashansha Patra Award (4th position) from National Safety Council -Mumbai in Refinery and Petrochemical Sector (Manufacturing).

• Aromatic Complex has also been audited by British Safety Council- Mumbai for five star health and safety audit and Scored 87.31% (4 Star) on Health and safety Management system.

• Internal Safety Audits as well as External Safety Audits were conducted successfully in FY 2021-22 as per statutory requirement.

• Aromatic Complex observed Chemical Disaster prevention day on 04/12/2021.

• Public Awareness Programme on Safety and Environment was also conducted at SNDT College Kateel, Mangaluru.

• Various safety awareness program also conducted for District disaster Management Authorities of Kerala and Karnataka state on Tanker handling Emergency.

Environment Management

Inline with your Company’s commitment towards water conservation various steps have been taken for increasing treated effluent recycle in absolute terms. The technical/ Engineering solutions include: Adoption of Improved Chemical Treatment Program by introduction of ClO2 dosing with Hypochlorite, a better oxidizing agent to maintain better oxidation reduction potential (ORP) in recirculation cooling water thereby to have increased load of Treated effluent .

• At ETP, Impeller size of treated effluent Recycle transfer Pump to Cooling tower was increased resulting in increase in treated effluent flow capacity to Cooling Tower. By this, the effluent recycle has increased by approx. 50% in 2021-22 over 2020-21. Your Company is encouraging various initiatives in line with GOI Sustainable Development Goals, as chartered in UN summit such as usage of Gaseous fuel from Process Blocks instead of flaring, in Dual Mode Fired Heaters and usage of Hydrogen Peroxide reagent as substitute to Fenton’s reagent while treating effluent from Aromatic Complex in the Effluent Treatment Plant by which sludge generation is almost NIL.

• Your company is extensively promoting usage of Environment friendly Electric Vehicles as mode of transportation, to bring down carbon foot print. Usage of cleaner fuels, efficient usage of heat recovery systems have resulted in the decrease of SOX load by approx. 16% in 2021-22 over 2020-21. Your companys fruitful measures have resulted in CO2 reduction by 5% in 2020-21 over previous financial year. Your company has undertaken extensive forestation program and is maintaining the Greenery around the plant in more than Regulatory Body stipulated 33% area manifesting your companys commitment to achieve Environment safeguards.

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY DEVELOPMENT Corporate Social Responsibility:

MRPL’s social welfare and community development initiatives focus on the key areas of education, health care & sanitation and overall development of basic infrastructure in and around its operational area/ Dakshina Kannada & Udupi District/Karnataka State. These projects are largely in accordance with Schedule VII of the Companies Act, 2013. The key objectives of the MRPL’s CSR Policy is to ensure an increased commitment at all levels in the organization, to operate its business in an economically, socially and environmentally sustainable manner, while recognizing the interests of all its stakeholders.

The Company has identified following focus areas for CSR engagement:

1. Shiksha Samrakshan

2. Arogya Samrakshan

3. Bahujan Samrakshan

4. Prakruti Samrakshan

5. Sanskrithi Samrakshan

The CSR & SD Policy may be accessed on the Company’s website at http://www.mrpl.co.in/csr. The Annual Report on CSR activities for FY 2021-22 is annexed herewith as “Annexure-A”

PERFORMANCE AND FINANCIAL POSITION OF JOINT VENTURES/ ASSOCIATE

As per the Material Subsidiary Policy, there is no material subsidiary to the Company, applying the test of materiality for the FY 2021-22. A scheme of amalgamation of OMPL with MRPL has been filed with the Ministry of Corporate Affairs, pursuant to the provisions of Section 230 to 232 of the Companies Act, 2013 and other applicable statues, Regulations and Guidelines. Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule (5) of the Companies (Accounts) Rules, 2014, and has been approved on 14/04/2022 with 01/04/2021 as Appointed Date. The Effective Date for Scheme of Amalgamation of ONGC Mangalore Petrochemicals Limited and Mangalore Refinery and Petrochemicals Limited is 01/05/2022. A statement on the performance and financial position of the Joint Venture Companies is provided as an Annexure to the Consolidated Financial Statements. The details on the performance and financial position of Associate and Joint Venture Companies are given in Management Discussion and Analysis (MDA) Report.

In accordance with the provisions of the SEBI guidelines, the Company has framed a policy for determining material subsidiaries that can be accessed on the Company’s website.

ANNUAL REPORT OF CONSOLIDATED FINANCIAL STATEMENT

The Audited Consolidated Financial Statements for the year ended 31st March, 2022 of the Company and its subsidiaries form part of the Annual Report in accordance with Section 129 of the Companies Act, 2013 and Ind AS 110 on “Consolidated Financial Statements” read with Ind AS 28 on “Investments in Associates and Joint Ventures”. In accordance with section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company are available on the Company’s website. These documents will also be available for inspection during business hours at the registered office of the Company at Mangalore.

INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS

The Ministry of Corporate Affairs (MCA) on February 16, 2015, notified that Indian Accounting Standards (Ind AS) are applicable to certain classes of companies from April 1, 2016 with a transition date of April 1,2015. Ind AS has replaced the previous Indian GAAP prescribed under Section 133 of the Companies Act, 2013 (“the Act”) read with Rule 7 of the Companies (Accounts) Rules, 2014 and are applicable to the Company from April 1,2016.

TRANSFER TO RESERVES

No amount has been transferred to General Reserves for the financial year 2021-22.

DIVIDEND

The Board has not recommended any dividend for the FY 2021-22. The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”), is available on the Company’s website www.mrpl.co.in.

DEPOSITS

Your company has not accepted any deposits during the year pursuant to Section 74 of the Companies Act, 2013 and Rules there under.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

There have been no loans / guarantees given or securities provided during FY 2021-22 under the provisions of Section 185 / 186 of the Companies Act, 2013. The details of investments covered under the provisions of Section 186 of the Act are given in notes to financial statements provided in this Annual Report.

SHARE CAPITAL

The company has not issued any shares during FY 2021-22. The Issued, Subscribed and Paid up Equity Share Capital of your Company as on 31/03/2022 was ''1,753 Crore. The Company has not issued any equity shares with differential rights as to dividend, voting or otherwise and also sweat equity shares to employees of the Company under any scheme during the FY 2021-22.

DISCLOSURE OF ACCOUNTING TREATMENT:

In the preparation of Annual Financial Statements for the year ended March 31, 2022, the applicable Ind AS have been followed. So there is no treatment different from that prescribed in an Indian Accounting Standards.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 OF COMPANIES ACT, 2013 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT.

As far as Section 143 (12) of Companies Act 2013 is concern, there have been no instances of fraud as mentioned above.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF FINANCIAL YEAR AND DATE OF REPORT

No material changes or commitments have occurred after close of the year till date of review of financial by Audit Committee and subsequent approval of same by Board of Directors of the Company which affects the financial position of the Company except Government of India vide Excise Notifications No. 02/2022 to 11/2022- CE dated 30.06.2022 has levied Special Additional Excise Duty (SAED) and Road and Infrastructure Cess (RIC) on export of MS, HSD and ATF at the rate of ?6, ?13 and ?6 per litre respectively (approx. $ 26.5/bbl for HSD, $12.5/bbl each for MS and ATF ). Such levy is effective from 01/07/2022 which and is payable in addition to the existing levies. It is understood from the media reports that the levy has been imposed due to extra-ordinary situation prevailing in the global energy markets and to ensure domestic availability of Refined Products. Further, there is corresponding decrease in domestic Refinery Transfer Price (RTP). As the levy and reduction in RTP will have substantial financial impact on the company. The company has suitably represented to the Govt. of India for review of such levy and removal of deduction in RTP.

HUMAN RESOURCES

Your company values its human resources the most. To keep their morale high, your company extends several welfare benefits to the employees and their families by way of compensative medical care, education, housing and social security. During the financial year 2021-22, various welfare related policies have been implemented by the Company for its employees.

The Company maintains a MRPL Employees Recreation Centre. The Centre offers a wide range of pastime activities for the employees and their dependents.

Your Company continues to enjoy cordial and harmonious relations and not a single man-hour was lost on account of any industrial disturbance during the year 2021-22.

The welfare policies of the company are being revised consistent with the industry policies so as to enable employees to get enhanced benefits.

Reporting on SC / ST / PWD

Presidential Directives and other guidelines issued by Department of Public Enterprises, Ministry of Petroleum & Natural Gas, Ministry of Social Justice and empowerment from time to time with regard to reservation in services for Scheduled Castes, Scheduled Tribes, other backward castes and Persons with disabilities have been complied with. An adequate monitoring mechanism has been put in place for sustained and effective compliance. Liaison officers are appointed to ensure implementation of the Government Directives. Reservation Rosters are maintained as per the directives and are regularly inspected by the Liaison officer of the company as well as the officials from MoP&NG to ensure proper compliance of the Directives. MRPL also complies with provisions under “The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 relating to providing employment opportunities for Persons with Disabilities (PWDs). As on 31/03/2022, there are 37 permanent employees with disabilities on the roll of MRPL.

During the financial year 2021-22, company has recruited 213 employees comprising of 34 Scheduled Caste (SC) employees and 17 Scheduled Tribe (ST) employee and 12 women employees.

During the Year 2021-22, the Company devoted 4229 Mandays for training, development and learning, which amounts to 1.82 average Mandays per employee for Management staff and 2.57 Mandays per employee for Non-Management staff.

In accordance with para-29 of the Presidential Directive, statistics relating to representation of SCs / STs in the prescribed performa, SC / ST/ OBC Report - I and SC / ST / OBC Report -II are attached as ‘Annexure - B’ to the report.

EMPLOYEE WELFARE POLICIES:

The company, over a period of time, has introduced several welfare policies for its employees and their dependent family members in order to improve their quality of life, besides improving the morale and motivation of its employees. The welfare policies of the company are being revised from time to time with the industry practise so as to enable employees to get enhanced benefits.

SKILL DEVELOPMENT CENTER:

As part of National Skill Development Mission, Govt. of India, MRPL has undertaken skill development initiatives. MRPL has partnered with NTTF, Bengaluru & CIPET, Mysuru for imparting skill development training for unemployed youths.

In FY 2021-22, training could not be given to any of the candidates due to two waves of Covid-19.

WOMEN EMPOWERMENT

Women employees constituted 6.95 percent ofthe Company’s workforce.

Your Company has an Internal Complaints Committee (ICC) required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There have been no cases reported to the committee for the FY 2021-22. Annual Report pertaining to sexual Harassment of Women at workplace is attached at ‘Annexure -C’

HUMAN RESOURCES / PERSONNEL OF AROMATIC COMPLEX

Total employee strength in Aromatic Complex as on 31/03/2022 was 472. Out of which, 179 employees belonged to Management cadre and 293 employees belonged to Non-Management cadre. It included 297 Project Displaced Family (PDFs) Candidates. 83 Women employees constituted over 18 percent of Aromatic Complex’s workforce. During the year 2021-22, Aromatic Complex devoted 669.83 Man-days for Training, Development and Learning which amounted to an average of 1.43 Man-days per employee. This included functional, developmental and special training programmes covering the entire spectrum of employees.

OFFICIAL LANGUAGE

Annual Hindi Implementation Report for the year 2021-22

Your company is implementing Official Language Policy in letter and spirit as per the Annual Programme prescribed by the Department of Official Language, Ministry of Home Affairs, Govt. of India. In order to propagate and promote Hindi among the employees, Hindi Workshops are organized on a regular basis at Mangalore, Mumbai, Delhi & Bangalore Offices. At regular intervals inspection of internal departments and subordinate offices were carried out. Besides, Hindi Fortnight was celebrated and many online Hindi competitions such as Hindi Knowledge competition, Admin. Glossary, Letter writing etc., were conducted for the employees in the month of September, 2021. Hindi usage is promoted by conducting special quiz competitions at all levels including senior officials during Hindi month celebrations.

In addition to the above, online Hindi competition (Admin. Glossary) during World Hindi Diwas was conducted in January, 2022 for employees. Competitions were held in Hindi language for employees and their family members during National Safety Day, Environment Day, Security awareness week and Vigilance awareness week.

Your Company participated at Town Official Language Implementation Committee (TOLIC) Mangaluru level Hindi competitions and won Seven prizes and stood First at the TOLIC-Mangaluru level competitions. Online Hindi Essay competition was conducted for employees of TOLIC member organizations in October, 2021. In addition to this, your company participated in one more competition on the occasion of Vishwa Hindi Diwas and won First prize. To promote Hindi usage in neighboring Schools, Hindi Books were distributed to Eight Govt. Higher Primary and High Schools. Hindi classes were conducted regularly to employees to qualify in Prabodh, Praveen & Pragya examinations. Employees are motivated to pass final Hindi examinations through Incentive schemes such as Cash award & Personal Pay etc. To increase the correspondence in Hindi in the organization, Unicode facilities were activated on all computers used for daily office work.

Special awards were given to 04 students of DPS (Delhi Public School) in MRPL Township, who have scored highest marks in Class-X Hindi examination.

To implement Hindi in organization, sign boards have been made in bilingual/trilingual.

In order to propagate and to promote usage of Hindi in the company, in house Hindi Journal "MRPL PRATIBIMB" is being annually published. MRPL follow the guidelines of OL (Official Language), and conducted OLIC (Official Language Implementation Committee) meeting during four quarters of the year under the chairmanship of MD. Your company is making Continuous efforts for promoting Hindi usage in the organization by encouraging employees through trainings, workshops, seminars and incentives.

In view of the above activities and initiatives taken in Official Language Implementation, MRPL has been awarded II place by TOLIC- Mangalore.

RIGHT TO INFORMATION ACT, 2005

Your company has put in place an elaborate mechanism to deal with matters related to the Right to Information Act, 2005. The company has designated one Nodal Officer based at Registered Office at Mangalore and one First Appellate Authority (FAA), one Central Public Information Officers (CPIO) and Two Assistant Public Information Officers (APIOs). RTI manual is hosted on the website of the Company as per Section 4(2) of the RTI Act. Your company has aligned with the online RTI portal launched by DoPT and all the applications/appeals received through the portal have been disposed off through the portal.

The Quarterly Reports / Annual Reports have been submitted through the online portal of Central Information Commission www.cic.gov.in within the prescribed time limit. The data on RTI applications received and disposed off by your company is available online at www.mrpl.co.in/Content/RTI.

SECURITY MEASURES

Security of MRPL Refinery is designed to comply with Oil Sector Infrastructure Protection Plan (OSIPP) and the Security Audit recommendations given by MHA from time to time.

Physical Protection of the Refinery is handled by Central Industrial Security Force (CISF). They are fully equipped with adequate gadgets and weapons to handle all kinds of security threats to the Refinery. The Refinery has a state-of-the-art electronic surveillance system with an integrated CCTV cum Electronic Intrusion Detection system which is monitored from a Central Command & Control Centre.

Security is on top of the agenda of your Company and to ensure preparedness, periodic mock drills are conducted. To promote awareness of security issues among all stakeholders, Security Awareness Weeks are organised periodically.

VIGILANCE FUNCTION

Your company has developed a structured mechanism of vigilance functions. Its practices are focused towards creation of value to stakeholders. The practices involve multi-layer checks and balances to improve transparency. Vigilance awareness and preventive vigilance activities were continuously carried out during the year.

Your company has adopted a complaint handling procedure in accordance with CVC regulations, in which all complaints received from various sources are documented and investigated by vigilance. The details on the best vigilance practices and links to various useful websites is also provided in the MRPL Corporate website. Your company has achieved high compliance level with regard to e-procurement, e-tender and e-payment. Vigilance function focus on regular study of systems and procedures for continuous improvement and enhanced efficiency. Company is always looking forward to implement Technology based Innovation to ensure greater transparency and accountability.

In line with instructions of CVC, your company had conducted Vigilance Awareness programs for spreading awareness on Integrity. Sensitization programme conducted on the importance of ethics and moral values in public life for employees at entry level. Many awareness activities were designed to touch all walks of life. Sixth edition of in-house Vigilance Souvenir “Pardarshak” was released. Vigilance Awareness Online Quiz Competition was organized for Colleges by Mangalore Refinery (MRPL) on Vigilance related topics for creating awareness among college students and citizens. More than 3000 students participated in this quiz from almost all states and 16 different countries. PIDPI (Public Interest Disclosure and Protection of Informers) Resolution awareness posters and booklet was prepared and distributed by MRPL for creating awareness among employees and citizens about PIDPI. MRPL Vigilance Manual was released as a reference book covering all the relevant sections of CVC Vigilance Manual and MRPL Conduct, Discipline and Appeal rules. MRPL Vigilance Manual on Disciplinary Proceedings was prepared and released. It’s a compilation of all the instructions, guidelines and process of disciplinary proceedings. Various other activities such as Kiosk for Integrity Pledge, Vendors meet, various awareness program were conducted for stakeholders. Sensitization programme on the importance of ethics and moral values in public life.

Online essay competition for school and college students with the theme "Independent India @ 75: Self Reliance with Integrity” was conducted. Online poster competition was conducted for College students. The students of several schools and colleges participated in large number in the programme. Promotional videos and number of competitions like poster making, slogan writing, online quiz, essay writing etc. were conducted for employees and dependents. Short films, posters etc. were put in MRPL social media handle for creating awareness. Using technology to improve transparency has been a major focus area in which vigilance has played a key role.

During the FY 2021-22, 7 vigilance cases were received from PIDPI and all 7 complaints were disposed-off. Further 5 complaints were received from other Sources (Non-PDPI) and all 5 complaints were disposed-off. There were no pending vigilance complaints as on 31/03/2022.

WHISTLE BLOWER POLICY

The Whistle Blower Policy is formulated to provide a vigil mechanism for Directors and Employees to raise genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy. The Policy provides necessary safeguards for protection of Directors and Employees who avail the vigil mechanism from reprisals or victimization, for whistle blowing in good faith and to provide opportunity to Directors and Employees for Direct access to the Chairperson of the Audit Committee in exceptional cases. The policy is available on the Company’s website. During the year, no complaints were received under Whistle Blower Policy.

The Central Vigilance Commission (CVC) has advised Government organisations to adopt Integrity Pact voluntarily in their major procurement activities.

The Integrity Pact essentially envisages an agreement between the prospective vendors / bidders and the buyer, committing the persons / officials of both sides not to resort to any corrupt practices in any aspect / stage of the contract.

Only those vendors / bidders, who commit themselves to such a pact with the buyer, would be considered competent to participate in the bidding process.

The CVC guidelines further advises CPSUs to appoint Independent External Monitors as approved by the CVC to oversee the compliance of obligations under the Integrity Pact.

MRPL has implemented Integrity Pact in compliance with CVC guidelines and as per its recommendation, appointed Ms Alka Sirohi, IAS (Retd) and Mr. Sunil Kumar Chhourasia, IOFD (Retd) Former CVC as Independent External Monitor.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS &OUTGO:

Information required to be disclosed pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo are furnished in ‘Annexure- D’ which forms part of this Report.

MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES:

MRPL, being a Government Company, is exempted from the provisions of Section 197(12) of the Companies Act, 2013 and relevant Rules in view of the Notification dated 05/06/2015 issued by Ministry of Corporate Affairs (MCA).

The functional Directors of the Company are appointed by the administrative Ministry i.e., MoP&NG within the framework of DPE guidelines.

ANNUAL RETURN :

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013 the Annual Return as on 31/03/2022 is available on the Company’s website on www.mrpl.co.in/content/shareholders

RELATED PARTY TRANSACTIONS & PARTICULARS OF CONTRACTS/ARRANGEMENTS WITH RELATED PARTY :

All transactions entered with related parties during the FY 2021-22 were on arm’s length basis and in ordinary course of business. Further, there were no material related party transactions during the year with the Promoters, Directors or Key Managerial Personnel and no related party transactions were made which could have had a potential conflict with interests of the Company at large. The Company’s major related party transactions are generally with its holding Company, subsidiary, joint Venture Company and associates. All the contracts/arrangements/transactions entered into with related parties were on arm’s length basis, intended to further the Company’s interest. The Company has adopted a Related Party policy and procedure, which is available at company’s website.

The particulars of every contract or arrangements entered into by the Company with Related Parties referred in Section 188(1) of the Companies Act, 2013, is attached in the prescribed Form No. AOC - 2 as ‘Annexure-E’. MCA vide Notification dated 05/06/2015, has exempted the applicability of proviso 1 and 2 of Section 188(1) of the Companies Act, 2013 for transactions entered into between two Government Companies.

DIRECTORS & KEY MANAGERIAL PERSONNEL :

Changes in the Board of Directors and Key Managerial Personnel during the financial year 2021-22 MRPL being a Central Public Sector Enterprise (CPSE), Directors on the Board of the company are appointed by the Administrative Ministry i.e., Ministry of Petroleum and Natural Gas (MoP&NG), Government of India and therefore the provisions of Section 134(3) of the Companies Act, 2013 regarding policy on Directors appointment and remuneration shall not apply in view of the MCA notification dated 05/06/2015.

• Shri Shashi Shanker, Chairman/Director - MRPL has resigned from the Board of MRPL w.e.f 01/04/2021 consequent to his superannuation from the services of Oil and Natural Gas Corporation Limited as Chairman & Managing Director on 31/03/2021.

• Shri Subhash Kumar has been nominated as the Chairman on the Board of MRPL by ONGC with effect from 05/04/2021.

• Shri K B Shyam Kumar was appointed as Company Secretary and Compliance Officer with effect from 17/05/2021 in place of Shri Dinesh Ranjan Mishra who ceased to be Company Secretary and Compliance Officer due to sad demise on 02/05/2021.

• Shri Om Prakash Singh has been appointed as Additional Director of MRPL by ONGC with effect from 07/06/2021.

• Shri Rajkumar Sharma, Smt Nivedida Subramanian, Shri Manohar Singh Verma, and Shri Pankaj Gupta were appointed as Independent Directors on the Board of MRPL with effect from 15/11/2021

• Shri Subhash Kumar, Chairman/ Director - MRPL has resigned from the Board of MRPL w.e.f 01/01/2022 on the attaining the age of Superannuation from the services of Oil and Natural Gas Corporation Limited as Chairman & Managing Director on 31/12/2021.

• Dr. Alka Mittal was nominated as the Chairperson on the Board of MRPL by ONGC with effect from 11/01/2022. The Board placed on record its appreciation for the valuable services rendered by the outgoing Directors during their respective tenures.

All Independent Directors have given a declaration that they meet the criteria of independence as laid down under Section 149(6) of Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015.

Changes in the Board of Directors after 31/03/2022

• Smt Pomila Jaspal, Director (Finance) has resigned from the Board of MRPL w.e.f 18/04/2022 consequent upon her appointment as Director (Finance), Oil and Natural Gas Corporation Limited.

• Shri Asheesh Joshi, Director, has been appointed on the Board of MRPL vice Smt. Esha Srivastava, as Government Nominee Director w.e.f. 14/06/2022.

• Shri Om Prakash Singh ceased to be director w.e.f. 23/06/2022 on withdrawal of nomination by ONGC.

• Smt. Pomila Jaspal, Director (Finance), ONGC has been appointed as Nominee Director on the Board of MRPL w.e.f. 15/07/2022.

Changes in the Key Managerial Personnel after 31/03/2022

• Smt Pomila Jaspal, Director Finance & CFO, has resigned from the office of MRPL w.e.f. 18/04/2022 consequent upon her appointment as Director ( Finance), Oil and Natural Gas Corporation Limited.

• Shri Yogish Nayak S. was appointed as Chief Financial Officer w.e.f. 27/04/2022.

FORMAL ANNUAL EVALUATION:

MRPL, being a Government Company, the provisions of Section 134(3) (p) of the Companies Act, 2013 in respect of annual evaluation of the Board Committees and individual Directors shall not apply in view of the MCA notification dated 05/06/2015. However, as per Regulation 17 of SEBI (LODR) Regulations, 2015 formal annual evaluation of Independent Director for the FY 2021-22 had been carried out by the Board.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to provisions of Section 134 of the Companies Act, 2013, the Board of Directors ofyour Company has made the following statement for FY 2021-22:

a) In the preparation of the Annual Financial Statements for the year ended March 31,2022, the applicable Ind AS have been followed along with proper explanation relating to material departures;

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

c) The Directors have taken proper profit and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the Annual Financial Statements on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

NUMBER OF BOARD MEETINGS

The Board of Directors of your Company had seven (7) Meetings during the FY 2021-22. The maximum interval between any two meetings did not exceed 120 days as prescribed in the Companies Act, 2013. Details of the Board Meetings held, have been furnished in the Corporate Governance Report which forms part of this Report.

AUDIT COMMITTEE

The Audit Committee has been constituted as per the terms of reference prescribed under Section 177 of the Companies Act, 2013 read with Rule 6 of the Companies (Meetings of the Board and its Powers) Rules, 2014,Listing Regulation, 2015 and Guidelines on Corporate Governance for Central Public Sector Enterprise issued by Department of Public Enterprise, Government of India. There have been no instances where the recommendations of the Audit Committee were not accepted by the Board of Directors. The details of Audit Committee are disclosed in the Corporate Governance Report which forms part of this Report.

NOMINATION & REMUNERATION COMMITTEE (NRC) :

MRPL being a Central Public Sector Enterprise (CPSE), Directors on the Board of the company are appointed by the Administrative Ministry i.e., Ministry of Petroleum and Natural Gas (MoP&NG), Government of India. Accordingly, the Company has not adopted any Nomination & Remuneration policy.

Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI (LODR) Regulations, 2015 and DPE guidelines on Corporate Governance for CPSE, your Company has constituted a Nomination & Remuneration Committee.

The details on the Nomination & Remuneration are disclosed in Corporate Governance Report which forms part of this report.

MRPL is a ‘Schedule-A’ Category-1 Miniratna Central Public Sector Enterprise (CPSE). The appointment, terms, conditions and remuneration of Managing Director and Functional Directors (Whole-time Directors) are fixed by the Department of Public Enterprises (DPE), Govt. of India.

RISK MANAGEMENT POLICY:

In line with the requirements of SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015, your Company has developed and rolled out a comprehensive Enterprise -wide Risk Management (ERM) Policy throughout the organization. The Audit Committee periodically reviews the risk assessment and mitigation actions in MRPL.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS:

There are no significant and material orders passed by the Regulators/ Courts/ Tribunals that would impact the going concern status of the Company and its future operations.

CORPORATE GOVERNANCE:

The Companies Act, 2013 and SEBI (LODR) Regulations, 2015 have strengthened the governance regime in the country. Your Company is in compliance with the governance requirements provided under the Companies Act, 2013, SEBI Listing Regulations, 2015 and has complied with all the mandatory provisions of Companies Act, 2013 and Rules made there under, SEBI Listing Regulation, 2015 relating to the Corporate Governance requirements and mandatory guidelines on Corporate Governance for CPSEs issued by DPE, Government of India. The Corporate Governance Report for the FY 2021-22 forms part of this Report.

Pursuant to Schedule V of the SEBI Listing Regulations, 2015, the compliance certificate from Practicing Company Secretaries regarding compliance of conditions of Corporate Governance also forms part of the Annual Report. The Secretarial Auditors have made observations on non-availability of requisite number of Independent Directors on the Board of the Company from 01/04/2021 to 15/11/2021, constitution of Audit Committee from 01/04/2021 to 16/01/2022 and Nomination and Remuneration Committee from 01/04/2021 to 31/03/2022. The matter for appointment of requisite number of independent Directors is being pursued with MoP&NG and the same is under active consideration of MoP&NG.

Pursuant to requirements of the Companies Act, 2013 and SEBI Listing Regulations, 2015, following policies/codes have been formulated and uploaded on the Company’s website at www.mrpl.co.in

a) Code of Conduct for Board Members and Senior Management Personnel;

b) Whistle Blower Policy;

c) Related Party Transactions - Policy and Procedures;

d) CSR & SD Policy;

e) Material Subsidiary Policy;

f) The Code of Internal Procedures and Conduct for prohibition of Insider Trading in Dealing with the securities of MRPL;

g) Policy on Materiality for disclosure of events to the Stock Exchanges;

h) Policy on preservation of Documents;

i) Training Policy for Board of Directors;

j) Dividend Distribution Policy.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

Pursuant to the applicable provisions of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (“the IEPF rules”), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF, established by the Government of India, after the completion of seven years. Further, according to the Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. During the financial year no amounts of unclaimed dividend and corresponding shares were due for transfer to Investor Education & Protection Fund (IEPF). The details are provided in the Shareholder Information Section of this Annual Report and are also available on website ofthe company www.mrpl.co.in.

ANNUAL BUSINESS RESPONSIBILITY REPORT :

SEBI Listing Regulations, 2015 mandated inclusion of Annual Business Responsibility Report (ABRR) as part of the Annual Report for top 1,000 Listed Entities based on market capitalization. In compliance with the Regulation, ABRR for the FY 2021-22 forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS :

In terms of Regulation 34 of the SEBI Listing Regulations, 2015 the Management’s Discussion and Analysis (MDA) Report for the FY 2021-22 forms part of this Report.

INTERNAL FINANCIAL CONTROL :

Your Company has a well-established and efficient internal financial control system to ensure an adequate and effective internal control environment that provides assurance on efficiency of conducting business, including adherence to Company’s policies, safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information.

The Company has in-house Internal Audit Department commensurate with its size of operations. Audit observations are periodically reviewed by the Audit Committee of the Board and necessary directions are issued whenever required. The highlights on Internal Control system are disclosed in the Management Discussion Analysis Report which forms part of this report.

As regards Financial Reporting controls, the internal auditor verifies the adequacy and effectiveness of controls. Your Company has also obtained a certificate from the Joint statutory auditors under Sec 143(3)(I) of the Companies Act, 2013 towards the existence of adequate Internal Financial control system over Financial reporting and its operating effectiveness, as at 31st March 2022.

AUDITORS:

Joint Statutory Auditors

M/s Sankar & Moorthy, Chartered Accountants, Kannur and M/s Ram Raj & Co, Chartered Accountants, Bengaluru were the Joint Statutory Auditors of the Company for the FY 2021-22. They have audited the Financial Statements for FY 2021-22 and submitted their report which forms part of this report. There is no qualification in the Auditors Report on the financial statements of the Company. Notes to the Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any comments. Total fees paid to the Joint Statutory Auditors for the financial year 2021-22 was '' 28 lakh consolidated basis.

Secretarial Auditors

Your Company engaged M/s Ullas Kumar Melinamogaru & Associates, Practising Company Secretaries, Mangaluru for conducting Annual Secretarial Audit for FY 2021-22 pursuant to Section 204 of the Companies Act, 2013. M/s Ullas Kumar Melinamogaru & Associates, Practising Company Secretaries, Mangaluru has issued Secretarial Audit Report for the FY 2021-22 which forms part of this report as ‘Annexure-F’. The Auditors have made observations on the composition of the Board with regard to requisite number of Independent Directors on the Board of the Company. The matter for appointment of requisite number of independent Directors is being pursued with MoP&NG and the same is under active consideration of MoP&NG.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Cost Accounts maintained by the company for the FY 2021-22 are being audited by Cost Auditors M/s. Musib & Co. Cost Accountant, Mumbai.

COMMENTS OF C&AG ON THE JOINT STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED AND STANDALONE FINANCIAL STATEMENTS FOR THE FY 2021-22

The Comments of Comptroller & Auditor General of India (C&AG) forms part of this report and are attached as ‘Annexure-G’. You would be pleased to know that there are no comments from C&AG on the Auditor’s Report or on the Financial Statements for the year 2021-22. There were no pending audit para as far as financials concerned.

ACKNOWLEDGEMENT

Your Board of Directors wish to thank the shareholders for the continued confidence reposed on their Company. Your Directors sincerely thank the Government of India (Gol), Ministry of Petroleum and Natural Gas (MoP&NG), Ministry of Finance (MoF), Ministry of Corporate Affairs (MCA), Department of Public Enterprises (DPE), Ministry of Environment and Forest (MoEF), Ministry of External Affairs (MEA), Ministry of Shipping (MoS), Ministry of Home Affairs (MHA), other Ministries and Departments of the Central Government for their valuable support, guidance and continued co-operation. Your Directors also place on record their appreciation for the support from Government of Karnataka.

Your Directors gratefully acknowledge support and direction provided by the parent company, Oil and Natural Gas Corporation Limited (ONGC) and the support of Hindustan Petroleum Corporation Limited (HPCL) as Promoters of the company. Your Directors acknowledge the continuous cooperation and support received from New Mangalore Port Trust, Financial Institutions, Banks and all other stakeholders. Your Directors recognize the patronage extended by the valued customers for the products of the Company and promise to provide them the best satisfaction. The Board would like to express its sincere appreciation for the dedicated efforts made and valuable services rendered by all the employees collectively and concertedly as a team known as “Team MRPL” towards the Company’s achievements during the year 2021-22.

1

Restated (refer Note - 50 to the Financial Statements)

Your company achieved a turnover of ''86,037 crore during the financial year 2021-22 as against ''50,739 crore during the financial year 2020-21. The company earned profit of ''2,955.27 crore (profit after tax) during the financial year 2021-22 against loss of ''761.17 crore incurred during the financial year 2020-21.

Impacts of COVID on Financial performance

The Company has assessed the possible effect that may result from COVID-19 pandemic / Russia-Ukraine War, which is not significant on the carrying amounts of Property, Plant and Equipment, Inventories, Receivables and Other Current Assets. The demand for Company’s products is expected to be lower in the short term which is not likely to have a continuing impact on the business operations ofthe Company. In the opinion ofthe management, the carrying amount of these assets will be recovered.

During the FY 2021-22, the Company has issued Non-Convertible Debentures (NCDs) aggregating ''1,200 Crore. The NCDs are listed on BSE Limited and National Stock Exchange of India Limited (NSE). The company has also taken Capex loans from Federal Bank and State Bank of India - FCTL amounting to ''234.30 crores and ''111.67 crores respectively.

ICRA has reaffirmed the long-term rating of [ICRA] AAA (pronounced ICRA “Triple A rating with stable outlook) and the short-term rating of [ICRA] A1 (pronounced ICRA A one plus) on the ''19,200 Crore bank facilities and also reaffirmed the rating of “[ICRA]A1 ” (pronounced ICRA A one plus) for ''4000 Crore Commercial Paper (CP) / Short


Mar 31, 2019

Dear Members,

On behalf of the Board of Directors of your Company, it gives me immense pleasure to share with you the highlights, developments and the progress that your Company has made during the financial year ended March 31, 2019 and to present the 31st Annual Report on the business and operations of Mangalore Refinery and Petrochemicals Limited (MRPL) and its audited financial statements together with the Auditors'' Report and comments on the financial statements by the Comptroller and Auditor General (C&AG) of India. You will be delighted to know that financial year 2018-19 has been yet another year of achievements for your Company.

STATE OF COMPANY''S AFFAIRS

Your Board is reporting the affairs of the Company for the FY 2018-19 as under:

Financial Performance

The standalone / consolidated financial highlights for the year ended 31/03/2019 are summarized below:

(Rs. In Crore)

Standalone

Consolidated

Year ended 31st March, 2019

Year ended 31st March, 2018

Year ended 31st March, 2019

Year ended 31st March, 2018

Profit Before Tax

580.77

3,350.70

651.37

2,871.40

Less: Current Tax

135.54

698.86

135.54

698.86

Deferred Tax

113.28

427.72

164.57

398.98

Profit For The Year

331.95

2,224.12

351.26

1,773.56

Add: Other

Comprehensive

Income

(4.52)

3.32

(5.95)

3.51

Total

Comprehensive Income For The Year

327.43

2,227.44

345.31

1,777.07

Less: Total

Comprehensive Income Attributable to Non Controlling Interest

-

-

10.53

(218.95)

Total Comprehensive Income Attributable to Owners Of the Company

327.43

2,227.44

334.78

1,996.02

Add: Opening Balance in Profit and Loss Account

8,799.13

7,837.32

8,001.72

7,271.33

Sub-Total

9,126.56

10,064.76

8,336.50

9,267.35

(Rs. In Crore)

Standalone

Consolidated

Year ended 31st March, 2019

Year ended 31st March, 2018

Year ended 31st March, 2019

Year ended 31st March, 2018

Less: Appropriation

Transferred to Debenture Redemption Reserve

-

-

11.69

-

Payment of Dividend on Equity Shares

525.78

1,051.56

525.78

1,051.56

Tax on Dividend

108.07

214.07

108.07

214.07

Closing Balance (Including Other Comprehensive Income)

8,492.71

8,799.13

7,690.96

8,001.72

Your company achieved turnover of Rs. 72,283 crore during the financial year 2018-19 against Rs. 63,067 crore during the financial year 2017-18. The Company earned a profit after tax (PAT) of Rs. 332 crore during the financial year 2018-19 against profit of Rs. 2,224 crore earned during the financial year 2017-18. The Gross Refining Margin (GRM) for financial year 2018-19 was 4.06 $/bbl as against 7.54 $/bbl during the financial year 2017-18.

ICRA has reaffirmed the long-term rating of AAA (pronounced ICRA triple A) and the short-term rating of A1 (pronounced ICRA A one plus) on the Rs. 7,000 crore bank facilities of Mangalore Refinery and Petrochemicals Limited (MRPL). CRISIL has reaffirmed its Corporate Credit Rating (CCR) ''CCR AAA/Stable'' on Mangalore Refinery and Petrochemicals Limited (MRPL).

OPERATIONAL PERFORMANCE

The financial year 2018-19 has been a successful year for your Company. Some of the major highlights for the year 2018-19 are as under:

- Your company processed 16.23 Million Tons of Crude during Financial year 2018-19, against the previous highest crude processing of 16.13 Million Tons in Financial Year 2017-18. Total input to the refinery was 16.43 Million Tons against previous highest of 16.31 Million Tons during financial year 2017-18.

- The Company registered the highest ever throughput of 16.43 MT and lowest ever energy consumption of 74.27 MBN for FY 2018-19.

- Company''s Polypropylene production was 388.17 Thousand MT (TMT) in the financial year 2018-19 as against 294.5 TMT in the financial year 2017-18. Company''s Polypropylene dispatch was 405.718 TMT in the financial year 2018-19 as against 278.16 TMT in the financial year 2017-18.

- Company''s LPG production and dispatch during the financial year 2018-19 was 969.82 TMT and 974.66 TMT respectively as against 876.8 TMT and 873.08 TMT during the financial year 2017-18.

- Your Company continued to include newer crude grades in the processing basket with an aim to diversify crude sourcing. Urals from Russia, Basra Heavy from Iraq and Nagayalanka crude from domestic sources, were processed in the refinery for the first time.

- Similarly, efforts to establish newer markets were fruitful when MRPL exported approximately 18,567 MT of Polypropylene during financial year 2018-19 compared with 7520 MT of Polypropylene during financial year 2017-18.

MARKETING AND BUSINESS DEVELOPMENT

Your company continues to maintain major share of the Direct sales segment of petroleum products market in Karnataka and adjoining states. Your Company maintained leadership position in its marketing zone for Direct sales products such as Bitumen, Fuel Oil, Sulphur, Pet Coke, Xylol (Xylenes) etc. The total domestic sales volume of all products during the FY 2018-19 has been 2050 TMT against 1786 TMT in FY 17-18 with a sales value of Rs. 8034 Crore during the year 2018-19 against Rs. 5,940 Crore, which is about 35 % higher than previous year sales value.

Your Company continues to enhance its market share for Polypropylene with introduction of new and niche grades. The company has enhanced its sales value in FY 2018-19 to Rs. 4,180 Crore compared to the previous year sales value of Rs. 2,639 Crore. The company has maintained its leadership position in the Polypropylene market of South India for its MANGPOL brand. Your Company has achived highest value of PP production of 388 KT for 2018-19.

Your Company has also successfully marketed its entire production of Petcoke on a consistent basis with sales volumes of 993 TMT in FY 2018-19 against 809 TMT in FY 17-18. The Company also sold about 123 TMT Sulphur (against 103 TMT in FY 17-18) in its marketing zone and the surplus Sulphur is being exported in larger parcel sizes.

Your company has also maintained timely supplies to State Trading Corporation, Mauritius which has a long term supply contract with MRPL. The company supplied 1021 TMT of petroleum products to STC Mauritius with a sales value of Rs. 4192 Crore in FY 2018-19.

Your Company Shell MRPL Aviation Fuel Services Limited has steadily acquired business for sale of Aviation Turbine Fuel (ATF) at Indian airports. The company achieved a turnover of Rs. 719 Crore during FY 2018-19 against turnover of Rs. 543 Crore in the previous FY 2017-18.

New retail outlet at Gubbi in Tumakuru District, Karnataka was commissioned in the FY 2018-19. Your company continues the process of retail expansion plan to set up new retail outlets in the state of Karnataka & Kerala. Letter of Intents have been issued to several shortlisted applicants for commissioning of new retail outlets.

RECOGNITIONS

- Received Srishti-Good Green Governance (G-Cube) winner''s award under Manufacturing Sector on the occasion of Earth Day 22nd April, 2018 organized by Srishti Publications, New Delhi.

- Conferred with Platinum Award by Greentech foundation on 31st May, 2018 at New Delhi, in Petroleum Refining Sector for outstanding achievement in Environment Management.

- Bagged Parisara Pratishti Award during Environment Conservation Day celebration by KSPCB at Town hall, Mangalore on 1st August, 2018.

- SECONA (Security Consultants Association) has conferred on MRPL, Security Project (Integrated) of the Year award for the Integrated Security Management System (ISMS) project. This is one of the highest awards in India in the field of Security

- Won the prestigious Plant of the Year award for 2018 conferred by Field Comm Group. MRPL is the first Indian company to receive such an esteemed international award.

PROCUREMENT OF GOODS AND SERVICES FROM MSMEs

In line with the Public Procurement Policy, 2012 issued by Ministry of Micro, Small and Medium Enterprises for the year 2018-19, your Company has achieved 25.29% procurement of goods and services from Micro and small Enterprises.

PROJECTS

Existing Projects

BS VI Upgradation

As per Auto Fuel Policy and Directives from Ministry of Petroleum and Natural Gas, the entire country has to move towards BS VI quality specifications for MS and HSD by 1st April 2020. The project involves setting of new units and additional facilities. M/s Engineers India Ltd has been appointed as Engineering, Procurement and Construction Management Consultant for the job. Environment Clearance for the project has been obtained.

Critical ordering activities have been completed and deliveries have commenced. Site activities are in full swing. Mechanical completion and commissioning of the new facilities will be achieved progressively to meet ministry guidelines.

CCR#2 unit revamp

The existing CCR-2 unit was revamped to increase the Capacity of NHT/Platformer/CCR from 79 m3/hr. to 90m3/hr& RSU from 122 m3/hr to 145 m3/hr thereby yielding higher quantity of MS. The feedstock to the unit is heavy naphtha from Crude distillation units and Hydrocracker units.

The unit after revamp was successfully commissioned on 19th October 2018 and is currently operating with 100% capacity.

UOP is the Licensor and M/s L&T Chiyoda was appointed as EPCM consultant for the project.

Railway Siding for Pet Coke evacuation

Dispatches by Railway Wagons will make MRPL products conveniently available in competitive markets and improve commercial realization to MRPL.

Construction of Railway siding for smooth evacuation of Petcoke is being carried out. The Railway siding is being executed by M/s Konkan Railway Corporation Ltd and M/s Mecon have been appointed as the EPCM consultant to execute the balance of the Project consisting of Closed conveyor system, Loading silos with Rapid Loading Systems, Measuring devices, facilities to control environmental pollution etc.,

The project is mechanically complete and pre-commissioning activities are under progress.

Desalination Plant

To mitigate the risk of river water as a single source of water, a desalination plant is being set up near the sea. This plant of current capacity 30MLD (expandable to 70MLD) will cater to the future water requirement of the company. Project is approved by MoEF & CC for Environmental Clearance and formal grant of EC obtained on 18.04.2019.

M/s Fichtner India is the PMC for the project and M/s VA Tech Wabag is the LSTK contractor. The plant is scheduled to be completed by 2020.

2G Ethanol

MRPL is in a process of setting up 2G Ethanol project in the State of Karnataka in line with the national vision for reducing import dependency of crude oil. 2G Ethanol is produced from Agro residues viz Corn cobs, Rice straw, Wheat stalk, Corn Stalk etc. Land for the same is allotted by KIADB at Harihara, Davangere. Licensor has been selected and Basic Engineering Design Package preparation is in progress by the licensor.

USING INFORMATION AND COMMUNICATION TECHNOLOGY FOR PRODUCTIVITY ENHANCEMENT

MRPL has taken many initiatives to leverage on Information Technology for improving its business productivity. As part of this initiative, an Enterprise Resource Planning product SAP was implemented in the year 2010 covering all major business processes. To run SAP applications, a state of the art Data Centre has been functioning at Mangalore site for supporting 24 x 7 business operations.

As part of an upgradation & migration phase, SAP system at MRPL is being migrated to HANA (High-Performance Analytic Appliance) platform using Suite-On-HANA (SoH) approach with refreshed hardware setup. This would enable SAP system to process massive amounts data in main memory resulting in performance improvement and user experience.

In addition, MRPL recently undertook and completed a SAP system audit across various SAP modules by appointing M/s PwC for addressing any control gaps in the business processes.

On the Cyber Security front, all the necessary audits pertaining to Information Security Management System (ISMS) have been completed and MRPL has been recommended for ISO-27001:2013 certification.

Future projects on IT front for MRPL include implementation of CRM (Customer Relationship Management) on SAP system during FY 2019-20 for enhancing customer relationship.

SECRETARIAL STANDARDS

The Secretarial Auditor has certified that your Company has complied with the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ''Meetings of the Board of Directors'' and ''General Meetings'', respectively, during the financial year 2018-19.

HEALTH, SAFETY & ENVIRONMENT PERFORMANCE

The company''s Philosophy on the HSE is to perform better than minimum required by statutes. The major Achievements on the Environment Management front include:

Environment Management

- The Expert Appraisal Committee (EAC) for CRZ Projects, MoEF & CC, New Delhi has recommended CRZ clearance for the proposed 70 MLD Desalination Plant at Tanneerbavi village in Mangaluru in its meeting held on 25th Jan 2019. EC certificate for Desalination Plant has been received in the current financial year.

- Environmental Impact Assessment (EIA) report for the proposed 2G Ethanol project has been submitted to KSPCB Regional Office, Davanagere on 15th Nov, 2018.

- Memorandum of Understanding (MoU) has been signed with M/s. Dr. Shivarama Karantha Pilikula Nisarga Dhama on 14th December, 2018 for the development of Bio-Diversity Park in 41 acres of Marshy land area in MRPL premises.

- New Hazardous Waste Storage Shed has been constructed and commissioned in the month of Dec-18 with a view of better management of Hazardous Waste.

- New Digital Display Board has been installed outside the Cargo Gate for displaying Environmental data in accordance with the Supreme Court Monitoring Committee (SCMC) Directive.

- As a part of Corporate Environment Responsibility (CER), approximately 32,000 nos. of LED bulbs were distributed in 10 neighboring villages.

- Under Stage-2 Compensatory afforestation in 30 acres at Dr. Shivarama Karantha Pilikula Nisarga Dhama, plantation of 2000 saplings was carried out in the month of July, 2018.

- 1643 MT of Oily sludge, 2369 MT of PFCC Spent catalyst, 842 MT of Spent Clay, 140 MT of Spent Adsorbent and 406 MT of Waste Insulation was sent for co-processing in SPCB Authorized Cement Industries.

- 565 MT of Spent Catalyst and 174 MT of Spent Carbon was disposed through SPCB Authorized Recyclers/ Reprocessors.

- 7.1 MT of E-Waste (Fused Lamps - Category CEEW 5) was disposed through SPCB Authorized Recyclers.

- 15 MT of PPU Treated Waste White Oil was disposed to SPCB Authorized Incineration Facility.

- 50,89,921 m3 Tertiary Municipal Sewage Water received in MRPL during FY 18-19 and after proper disinfection treatment was utilized in cooling towers as make-up water.

- Awareness programme was organized on 05th November, 2018 for MRPL DPS school children sensitizing about ill effects of noise & air pollution by fire crackers during Diwali festival. Another sensitization programme on Phasing out use of single-use plastic item in coordination with KSPCB and NITK was also carried out.

Safety

- Pre-Commissioning Safety Audit of RTLF (Relocation of Tankages and Loading Facility) was carried out by Oil Industry Safety Directorate (OISD).

- Safety Awareness Survey was carried out in the Refinery by M/s National Safety Council, Mumbai during 27th - 29th, November 2018.

- 1024 days without Reportable Lost Time Injuries (RLTI) achieved as on 31-03-2019.

- 13.67 Million Man Hrs worked as on 31-03-2019.

- Fire & Safety training imparted to all the employees including contract work force

Occupational Health

- Annual Medical Checkup of employees was carried out in three categories in compliance with the Rules under Factories Act and Karnataka Factories Rules, one below 40 years of age, second for age group between 40 to 45 years and third for age group for 45 and above. Different groups have to undergo different medical tests. The employees were also subject to Hearing Loss test for those employees who are working in high noise areas. Lung Function Test, Colour Blindness Test, Blood Test, etc were some of the general tests which were undergone by the employees.

- Two Occupational Health Centres (OHC) with 24x7 availability of Medical Staff are functional.

- The services of MRPL Hospital are available not only for the employees and their dependents but also for neighboring villages

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY DEVELOPMENT

Corporate Social Responsibility

MRPL''s social welfare and community development initiatives focus on the key areas of education, health care & sanitation and overall development of basic infrastructure in and around its operational area/ Dakshina Kannada & Udupi District/Karnataka State. These projects are largely in accordance with Schedule VII of the Companies Act, 2013.

The key objectives of the MRPL CSR Policy is to ensure an increased commitment at all levels in the organization, to operate its business in an economically, socially and environmentally sustainable manner, while recognizing the interests of all its stakeholders.

The Company has identified following focus areas for CSR engagement:

1. Shiksha Samrakshan

2. Arogya Samrakshan

3. Bahujan Samrakshan

4. Prakrithi Samrakshan

5. Sanskrithi Samrakshan

The CSR and SD policy of the Company was amended during the financial year 2018-19. The salient features of the amendment were inclusion of Swachh Bharat activities, allocation of funds, implementation methodology and revision in delegation of powers.

The CSR & SD Policy may be accessed on the Company''s website at http://www.mrpl.co.in/csr. The Annual Report on CSR activities for FY 2018-19 is annexed as ''Annexure-A''.

Sustainability Development

Sustainability efforts of the Company have reached the mainstream with opportunities on long term viable approaches in all segments of the organization. Embracing environmentally sustainable business practices and sustainable business processes are prioritized in all endeavors of the organization with focus on ensuring sustainability to build a culture of accountability across the organization.

The company had conceptualized a novel concept to establish a biodiversity park at MRPL premises which will be an ex-situ development process wherein native species of plants from different localities of Western Ghats and those from the coastal Karnataka will be established in the park. Since increased density and species of plants habitually attract different forms of animals, birds and other species to this region, it will be helpful in maintaining Bio-Diversity in the region. The company is partnering with Dr. Shivarama Karantha Pilikula Nisarga Dhama (Dr. SKPND) for the purpose who brings in domain expertise.

In another novel endeavor, MRPL along with Karnataka State Pollution Control Board (KSPCB) has embarked on building an Urban eco-park wherein measures are taken to protect the environment and will enable create awareness to public and educating students. MRPL intends to emphasize the environmental responsibility undertaken and sensitize the role of technology in sustainable refinery operations.

MRPL has also initiated one more novel drive which is to replace the use of inorganic fertilizer with in-house generated organic fertilizer within the refinery premises by Vermicomposte of MRPL horticulture debris.

MRPL is committed to the responsibility of carrying out refinery operations by maintaining high standards towards Sustainable Development.

PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARY/ JOINT VENTURES/ ASSOCIATE

The details on the performance and financial position of Subsidiary, Associate and Joint Venture Companies are given in Management Discussion and Analysis (MDA) Report. Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule (5) of the Companies (Accounts) Rules, 2014, a statement on the performance and financial position of the subsidiary and Joint Venture Companies is provided as an Annexure to the Consolidated Financial Statements.

In accordance with the provisions of the SEBI guidelines, the Company has framed a policy for determining material subsidiaries that can be accessed on the Company''s website.

Your company has one subsidiary i.e. ONGC Mangalore Petrochemicals Limited (OMPL). As per the Material Subsidiary Policy, OMPL is not a material subsidiary of the Company, applying the test of materiality for the FY 2018-19.

ANNUAL REPORT OF SUBSIDIARY AND CONSOLIDATED FINANCIAL STATEMENT

The Audited Consolidated financial statements for the year ended 31st March, 2019 of the Company and its subsidiaries form part of the Annual Report in accordance with Section 129 of the Companies Act, 2013 and the Ind AS 110 on "Consolidated Financial Statements" read with Ind AS 28 on "Investments in Associates and Joint Ventures". In accordance with section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of the subsidiary Company are available on the Company''s website. These documents will also be available for inspection during business hours at the registered office of the Company at Mangalore.

INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS

The Ministry of Corporate Affairs (MCA) on February 16, 2015, notified that Indian Accounting Standards (Ind AS) are applicable to certain classes of companies from April 1, 2016 with a transition date of April 1, 2015. Ind AS has replaced the previous Indian GAAP prescribed under Section 133 of the Companies Act, 2013 ("the Act") read with Rule 7 of the Companies (Accounts) Rules, 2014 and are applicable to the Company from April 1, 2016.

TRANSFER TO RESERVES

No amount has been transferred to General Reserves for the financial year 2018-19.

DIVIDEND

The Board of Directors has recommended a dividend of Rs. 1/- per equity share for the FY 2018-19. The dividend shall be paid after the approval of members at the Annual General Meeting. The dividend has been recommended in accordance with Company''s Policy on Dividend Distribution. The Dividend Distribution Policy of the Company is hosted on the website of the Company at www.mrpl.co.in.

DEPOSITS

Your company has not accepted any deposits during the year pursuant to Section 74 of the Companies Act, 2013 and Rules there under.

PARTICULARSOF LOANS,GUARANTEES ANDINVESTMENTS

There have been no loans / guarantees given or securities provided during the FY 2018-19 under the provisions of Section 185 / 186 of the Companies Act, 2013. The details of investments covered under the provisions of Section 186 of the Act are given in notes to financial statements provided in this Annual Report.

SHARE CAPITAL

The company has not issued any shares during the FY 2018-19. The Issued, Subscribed and Paid up Equity Share Capital of your Company as on 31/03/2019 was Rs. 1,753 Crore.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF FINANCIAL YEAR AND DATE OF REPORT

There has been no change in the nature of business during the year. No material changes or commitments have occurred after close of the year till the date of this report which affects the financial position of the Company.

HUMAN RESOURCES

Your company values its human resources the most. To keep their morale high, your company extends several welfare benefits to the employees and their families by way of compensative medical care, education, housing and social security. During the financial year 2018-19, various welfare related policies have been implemented by the Company for its employees. The welfare policies of the company are being revised as and when revisions take place in welfare policies of downstream companies to enable the employees to get enhanced benefits.

The Company maintains an MRPL Employees Recreation Centre. The Centre offers a wide range of pastime activities for the employees and their dependents. An Internal Departmental Cricket Tournament was also organised during the year.

Your Company continues to enjoy cordial and harmonious relations and not a single man-hour was lost on account of any industrial disturbance during the year 2018-19.

The welfare policies of the company are being revised as and when revisions take place in welfare policies of downstream companies to enable the employees to get enhanced benefits. Your company organized 30th PSPB Chess tournament from 18th March, 2019 to 22nd March, 2019.

Reporting on SC / ST / PWD

Presidential Directives and other guidelines issued by Department of Public Enterprises, Ministry of Petroleum & Natural Gas, Ministry of Social Justice and empowerment from time to time with regard to reservation in services for Scheduled Castes, Scheduled Tribes, other backward castes and Persons with disabilities have been complied with. An adequate monitoring mechanism has been put in place for sustained and effective compliance. Liaison officers are appointed to ensure implementation of the Government Directives. Reservation Rosters are maintained as per the directives and are regularly inspected by the Liaison officer of the company as well as the officials from MoP&NG to ensure proper compliance of the Directives. MRPL also complies with provisions under "The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 relating to providing employment opportunities for Persons with Disabilities (PWDs). As on 31/03/2019, there are 29 permanent employees with disabilities on the roll of MRPL.

During the financial year 2018-19, company has recruited 66 employees including 11 Scheduled Caste (SC) and 4 Scheduled Tribe (ST) employees and 2 employees belonging to Persons with Disability category. No women employee was recruited during the said period.

During the year 2018-19, the Company devoted 4446 Mandays for training, development and learning, which amounts to 2.9 Mandays per employee for Management staff and 1.8 Mandays per employee for Non-Management staff.

In accordance with para-29 of the Presidential Directive, statistics relating to representation of SCs / STs in the prescribed performa, SC / ST/ OBC Report - I and SC / ST / OBC Report -II are attached as ''Annexure - B'' to the report.

Skill Development Centre

As a part ofNational Skill Development Mission of the Government of India, MRPL has set up "MRPL Kaushal Vikas Kendra" (MRPL KVK) on 12/02/2017. A total of 58 candidates of MRPL KVK have undergone skill development training in various courses like "CNC Operator - Vertical Machining Centre and "Through Hole Assembly Operator" at Nettur Technical Training Foundation (NTTF), Bangalore during the financial year. Assessment of the course by respective Trade Council was undertaken by the candidates for Certification and Placement assistance were offered to all the candidates willing for relocation.

WOMEN EMPOWERMENT

Women employees constituted 6.73 percent of the Company''s workforce.

Your Company has an Internal Complaints Committee (ICC) required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There have been no cases reported to the committee for the FY 2018-19.

OFFICIAL LANGUAGE

Your company is implementing Official Language Policy in letter and spirit as per the Annual Programme prescribed by the Department of Official Language, Ministry of Home Affairs, Govt. of India. In order to propagate and promote Hindi among the employees, Hindi Workshops were organized on a regular basis at Mangalore, Mumbai, Delhi & Bangalore Offices. At regular intervals inspection of internal departments and subordinate offices were carried out.

Also, Hindi Fortnight was celebrated and many Hindi competitions such as Hindi Knowledge competition, Handwriting, Admin. Glossary, Hindi solo song, Hindi dictation etc. were conducted for the employees and their family members in the month of September 2018. In addition one more Hindi competition (Admin. Glossary) was conducted in January 2019 for employees. Competitions were held in Hindi language for employees and their family members during National Safety Day, Environment Day, Security awareness week and Vigilance awareness week. Hindi usage is promoted by conducting special quiz competition for senior officers such as CGMs & GGMs during Hindi month celebrations.

Hindi classes were conducted regularly for employees to qualify in Prabodh, Praveen & Pragya examinations. Employees are motivated to pass final Hindi examinations through Incentive schemes such as Cash award & Personal Pay etc. To increase the correspondence in Hindi in the organization Unicode facilities was activated on all computers used for daily office work.

Special awards were given to 15 students of DPS (Delhi Public School) in MRPL Township, who have scored highest marks in Class-X Hindi examination.

Your Company participated at TOLIC level Hindi competitions and won Eight prizes and stood Second at the TOLIC level competitions. Hindi debate competition was conducted for employees of TOLIC member organizations at MRPL. Hindi Essay competition was also organized for Degree College students of Mangalore University as a part of Hindi month celebrations under the auspices of TOLIC Mangalore. In addition to the above a Hindi seminar was organized on 07/03/2019 wherein all the TOLIC member organizations along with Official Language Liaison Officers (OLLO) took part in the seminar.

In order to propagate and to promote usage of Hindi in the company, in house Hindi Journal namely "MRPL PRATIBIMB" is being annually published. MRPL follows the guidelines on OL (Official Language), and conducted OLIC (Official Language Implementation Committee) meeting during four quarters of the year under chairmanship of MD to review and for action plan for improving usage of Hindi in MRPL. Your company is making Continuous efforts for promoting Hindi usage in the organization by encouraging employees through trainings, workshops, seminars and incentives.

RIGHT TO INFORMATION ACT, 2005

NUMBER OF RTI APPLICATION RECEIVED, DISPOSED AND PENDING.

Company''s RTI Manual is available on Company''s website. During the year, 253 applications were received, out of which 18 applications were transferred to other Public Authorities and balance 235 were disposed off as per provisions of the Act.

SECURITY MEASURES

Security of MRPL Refinery is designed to comply with Oil Sector Infrastructure Protection Plan (OSIPP) and the Security Audit recommendations given by MHA from time to time.

Physical Protection of the Refinery is handled by Central Industrial Security Force (CISF). The CISF strength at MRPL has been recently augmented following an approval in this regard by MHA, Govt of India.

Security is on top of the agenda of MRPL and to ensure preparedness, periodic mock drills on work-place security preparedness are conducted. To promote awareness on security issues among all stake holders, Security Awareness Weeks are organised periodically.

A major revamp of electronic surveillance of the Refinery through an integrated CCTV cum Electronic Intrusion Detection system has been completed with the commissioning of the system on December 31, 2018. Further up-gradation of Security Infrastructure of MRPL with building two separate Gate Complexes are under progress.

VIGILANCE FUNCTION

Your company has developed a structured mechanism of vigilance functions. Its practices are focused towards creation of value to stakeholders. The practices involve multi-layer checks and balances to improve transparency. Vigilance awareness and preventive vigilance activities were continuously carried out during the year. Your company has a full time Chief Vigilance Officer, assisted by a dedicated team.

In compliance with CVC instructions, your company has implemented a complaint handling policy in which all complaints received from various sources are recorded and examined by vigilance. The details on the best vigilance practices and links to various useful websites are also provided in the MRPL Corporate website. Your company has achieved highest compliance level with regard to e-procurement, e-tender and e-payment. In line with instructions of CVC, your company had conducted Vigilance Awareness programs for spreading awareness on ill effects of corruption. Being nominated as the nodal agency for conducting the Vigilance awareness programs in the city of Mangalore, various awareness activities were designed to touch all walks of life. Vendors meet was conducted as a part of Vigilance Awareness Program in which more than 500 vendors participated. Vigilance awareness mobile van with Anti-corruption audio message covered different areas around the Refinery and Mangalore city to educate the citizens about the ill-effect of corruption. Vigilance awareness walkathon was conducted in which more than 400 people participated to create an ethical awareness among the citizens on the menace of corruption and emphasized to use latest technology to curb the evil practices. Awareness program was conducted for Contract workman and CISF security Personnel. For popularizing the "Integrity Pledge" developed by central vigilance Commission, MRPL installed 3 integrity pledge kiosk in Mangalore City during Vigilance Awareness Week. MRPL along with All India Radio, Mangalore jointly produced various vigilance awareness programs which were aired during Vigilance Awareness Week-2018 including interview of CVO and MD, MRPL, online phone in program conducted by head AntiCorruption Bureau, Mangalore. Vigilance sensitization program for top management was conducted by Shri. J. Vinod Kumar, Director, Central Vigilance Commission. A one-day seminar on integrity for children "Chilume Bhavya Barathadatta" was conducted. To incite the development of ethics and honesty among school children, a leadership program was conducted for 18 integrity clubs launched during 2017 in different schools along with various other awareness programs and competitions in 22 schools and 16 colleges. Observance of Vigilance awareness week was accomplished with effective utilization of social media. Schools and colleges, government offices, general public and employees of MRPL, OMPL and Shell-MRPL were covered in the vigilance awareness drive. E-office has been implemented in the company and is aimed at improving efficiency in the working of MRPL. Leveraging the technology to enhance transparency has been a thrust area of action in which vigilance has a catalytic role. The website of company displays downloadable tender document, publication of information of work awarded on nomination basis, publication of post award information of contracts etc.

Whistle Blower Policy

The Whistle Blower Policy is formulated to provide a vigil mechanism for Directors and Employees to raise genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy. It also provides for adequate safeguard against victimisation of persons who use such mechanism. The Policy provides necessary safeguards for protection of Directors and Employees who avail the vigil mechanism from reprisals or victimization, for whistle blowing in good faith and to provide opportunity to Directors and Employees for Direct access to the Chairperson of the Audit Committee in exceptional cases. The policy is available on the Company''s website. During the year, no complaints were received under Whistle Blower Policy.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

Information required to be disclosed pursuant to Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo are furnished in ''Annexure- C'' which forms part of this Report.

MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES

MRPL, being a Government Company, is exempted from the provisions of Section 197(12) of the Companies Act, 2013 and relevant Rules in view of the Notification dated 05/06/2015 issued by Ministry of Corporate Affairs (MCA).

The functional Directors of the Company are appointed by the administrative Ministry i.e. MoP&NG within the terms & conditions as per DPE guidelines.

EXTRACT OF ANNUAL RETURN

Information required to be disclosed pursuant to Section 134(3)

(a) of the Companies Act, 2013 with respect to the details forming part of the extract of the Annual Return in form MGT-9 are furnished in ''Annexure- D'' which forms part of this Report. The same is also available on the website of the Company.

RELATED PARTY TRANSACTIONS & PARTICULARS OF CONTRACTS / ARRANGEMENTS WITH RELATED PARTY

All transactions entered with related parties during the FY 2018-19 were on arm''s length basis and in ordinary course of business. Further, there were no material related party transactions during the year with the Promoters, Directors or Key Managerial Personnel and no related party transaction were made which could have potential conflict with interest of the Company at large. The Company has adopted a Related Party policy and procedure, which is available at company''s website.

The particulars of every contract or arrangements entered into by the Company with Related Parties referred in Section 188(1) of the Companies Act, 2013, in the prescribed Form No. AOC - 2 attached as ''Annexure-E''. MCA vide Notification dated 05/06/2015, has exempted the applicability of Section 188(1) of the Companies Act, 2013 for a transaction entered into between two Government Companies.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Changes in the Board of Directors and Key Managerial Personnel during the financial year 2018-19

MRPL being a Central Public Sector Enterprise (CPSE), Directors on the Board of the company are appointed by the Administrative Ministry i.e. Ministry of Petroleum and Natural Gas (MoP&NG), Government of India and therefore the provisions of Section 134(3)(e) of the Companies Act, 2013 regarding policy on Directors appointment and remuneration shall not apply in view of the MCA notification dated 05/06/2015.

Shri Subhash Kumar, Director (Finance) ONGC was appointed as an Additional Director on the Board of MRPL on 15/05/2018. Shri M Venkatesh was appointed as Managing Director & CEO w.e.f 01/06/2018 by MoP&NG on superannuation of Shri H. Kumar on 31/05/2018 from the services of the Company. Shri M. Venkatesh, Managing Director was entrusted the additional charge of Director (Refinery) by MoP&NG upto 31/05/2019 due to vacancy in the position of Director (Refinery). Shri M. Venkatesh, Managing Director was also entrusted with the additional charge of Director (Finance) consequent upon the sad demise of Shri A. K. Sahoo, Director (Finance) on 11/12/2018. Shri Vivek Mallya, nominated as Non official Independent Director by MoP&NG for a period concurrent with his tenure as Non - Official Director (NoD) on the Board of ONGC i.e. till 30/01/2020, or until further orders by MoP&NG, whichever is earlier was appointed as an Additional Director, designated as Non Official Independent Director by the Board with effect from 07/01/2019 to hold office until the date of Annual General Meeting. Shri S. Raviprasad, GGM (Finance) was appointed as Chief Financial Officer (CFO) of the Company w.e.f. 07/02/2019.

The Board places on record its appreciation for the valuable services rendered by the outgoing Directors during their respective tenure.

All Independent Directors have given a declaration that they meet the criteria of independence as laid down under Section 149(6) of Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015.

Changes in the Board of Directors after 31/03/2019

There were no changes in the Board of Directors after 31/03/2019. FORMAL ANNUAL EVALUATION

MRPL, being a Government Company, the provisions of Section 134(3) (p) of the Companies Act, 2013 in respect of annual evaluation of the Board Committees and individual Directors shall not apply in view of the MCA notification dated 05/06/2015. However, as per Regulation 17 of SEBI Listing Regulations, 2015 formal annual evaluation of Independent Directors for the FY 2018-19 had been carried out by the Board. A meeting of Independent Directors was held on 04/02/2019. Independent

Directors also reviewed the performance of non - independent Directors and the Board of Directors as a whole along with the Chairperson of the Company as per SEBI (LODR) Regulations, 2015.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to provisions of Section 134 of the Companies Act, 2013, the Board of Directors of your Company has made the following statement for FY 2018-19:

a) In the preparation of the Annual Financial Statements for the year ended March 31, 2019, the applicable Ind AS have been followed along with proper explanation relating to material departures;

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

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the Annual Financial Statements on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

NUMBER OF BOARD MEETINGS

The Board of Directors of your Company had seven (7) Meetings during the FY 2018-19. The maximum interval between any two meetings did not exceed 120 days as prescribed in the Companies Act, 2013. Details of the Board Meetings held, have been furnished in the Corporate Governance Report which forms part of this Report.

AUDIT COMMITTEE

The Audit Committee has been constituted as per the terms of reference prescribed under Section 177 of the Companies Act, 2013 read with Rule 6 of the Companies (Meetings of the Board and its Powers) Rules, 2014, Regulation 18 of SEBI Listing Regulation, 2015 and Guidelines on Corporate Governance for Central Public Sector Enterprise issued by Department of Public Enterprise, Government of India. There have been no instances where the recommendations of the Audit Committee were not accepted by the Board of Directors. The details of Audit Committee are disclosed in the Corporate Governance Report which forms part of this Report.

NOMINATION, REMUNERATION (NR) AND HUMAN RESOURCE MANGAGEMNT (HRM) COMMITTEE

MRPL being a Central Public Sector Enterprise (CPSE), Directors on the Board of the company are appointed by the Administrative Ministry i.e. Ministry of Petroleum and Natural Gas (MoP&NG), Government of India. Accordingly, the Company has not adopted any Nomination/Remuneration policy.

Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI Listing Regulations, 2015 and DPE guidelines on Corporate Governance for CPSE, your Company has constituted a Nomination/ Remuneration Committee. During the year HRM Committee of the Company was merged with Nomination/Remuneration Committee as Nomination, Remuneration and Human Resource Management Committee.

The details on the Nomination, Remuneration and HRM Committee are disclosed in Corporate Governance Report which forms part of this report.

MRPL is a ''Schedule-A'' category-1 Miniratna Central Public Sector Enterprise (CPSE). The appointment, terms, conditions and remuneration of Managing Director and Functional Directors (Whole-time Directors) are fixed by the Department of Public Enterprises (DPE), Govt. of India.

RISK MANAGEMENT POLICY

In line with the requirements of SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015, your Company has developed and rolled out a comprehensive Enterprise-wide Risk Management (ERM) Policy throughout the organization. ERM policy is also being reviewed by an independent professional firm. The Audit Committee periodically reviews the risk assessment and mitigation actions in MRPL.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS

There are no significant and material orders passed by the Regulators/ Courts/ Tribunals that would impact the going concern status of the Company and its future operations.

CORPORATE GOVERNANCE

The Companies Act, 2013 and SEBI Listing Regulations, 2015 have strengthened the governance regime in the country. Your Company is in compliance with the governance requirements provided under the Companies Act, 2013, SEBI Listing Regulations, 2015 and has complied with all the mandatory provisions of Companies Act, 2013 and Rules made thereunder, SEBI Listing Regulation, 2015 relating to the Corporate Governance requirements and mandatory guidelines on Corporate Governance for CPSEs issued by DPE, Government of India. The Corporate Governance Report for the FY 2018-19 forms part of this Report.

Pursuant to Schedule V of the SEBI Listing Regulations, 2015, the Auditors'' certificate on compliance of conditions of Corporate Governance also forms part of the Annual report. The Auditors have made observations on the appointment of Independent Directors on the Board of the Company for the part of FY 2018-19. Presently, there are 6 Independent Directors on the Board of your Company.

Pursuant to requirements of the Companies Act, 2013 and SEBI Listing Regulations, 2015, following policies/codes have been formulated and uploaded on the Company''s website at www. mrpl.co.in:

a) Code of Conduct for Board Members and Senior Management Personnel;

b) Whistle Blower Policy;

c) Related Party Transactions - Policy and Procedures;

d) CSR & SD Policy;

e) Material Subsidiary Policy;

f) The Code of Internal Procedures and Conduct for prohibition of Insider Trading in Dealing with the securities of MRPL;

g) Policy on Materiality for disclosure of events to the Stock Exchanges;

h) Policy on preservation of Documents;

i) Training Policy for Board of Directors; j) Dividend Distribution Policy.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the applicable provisions of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IEPF rules"), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF, established by the Government of India, after the completion of seven years. Further, according to the Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. During the year, the Company has transferred the unclaimed and unpaid dividends of Rs. 2,90,47,291/-. Further, 1,45,62,735 corresponding shares on which dividends were unclaimed for seven consecutive years stood transferred to IEPF, as per the requirements of the IEPF rules. The details are provided in the Shareholder information section of this Annual Report and are also available on www.mrpl.co.in.

ANNUAL BUSINESS RESPONSIBILITY REPORT

SEBI Listing Regulations, 2015 mandated inclusion of Annual Business Responsibility Report (BRR) as part of the Annual Report for top 500 listed entities based on market capitalization. In compliance with the Regulation, BRR for the FY 2018-19 forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

In terms of Regulation 34 of the SEBI Listing Regulations, 2015 the Management''s Discussion and Analysis (MDA) Report for the FY 2018-19 forms part of this Report.

INTERNAL FINANCIAL CONTROL

Your Company has a well-established and efficient internal financial control system to ensure an adequate and effective internal control environment that provides assurance on efficiency of conducting business, including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information. An independent audit of Information Systems of the Company was also undertaken and appropriate actions are taken on suggestions given during audit.

The Company has in-house internal Audit Department commensurate with its size of operations. Audit observations are periodically reviewed by the Audit Committee of the Board and necessary Directions are issued whenever required. Details on the Internal Control system are disclosed in the Management Discussion Analysis Report which forms part of this report.

AUDITORS

Joint Statutory Auditors

M/s Shreedhar, Suresh & Rajagopalan, Chennai and M/s Manohar Chowdhry and Associates, Mangalore were the Joint Statutory Auditors of the Company for the FY 2018-19. They have audited the Financial Statements for the FY 2018-19 and submitted their report which forms part of this report. There is no qualification in the Auditors Report on the financial statements of the Company. Notes to the Accounts referred to in the Auditors Report are self-explanatory and thereof do not call for any comments.

Secretarial Auditors

Your Company engaged M/s Kumar Naresh Sinha & Associates, Practicing Company Secretary, Noida for conducting Annual Secretarial Audit for the FY 2018-19 pursuant to Section 204 of the Companies Act, 2013. M/s Kumar Naresh Sinha & Associates, Practicing Company Secretary, Noida has issued Secretarial Audit Report for the FY 2018-19 which forms part of this report as ''Annexure-F''. The Auditors have made observations on the non - availability of requisite number of Independent Directors on the Board of the Company till 06/01/2019.There were requisite number of Independent Directors on the Board of the Company as on 31/03/2019.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Cost Accounts maintained by the company for the FY 2018 -19 are being audited by Cost Auditors M/s. Chandra Wadhwa & Co., New Delhi. M/s Chandra Wadhwa & Co, Cost Accountant have been re-appointed as Cost Auditors for FY 2019-20.

COMMENTS OF C&AG ON THE JOINT STATUTORY AUDITORS'' REPORT ON THE CONSOLIDATED AND STANDALONE FINANCIAL STATEMENTS FOR THE FY 2018-19

The Comments of Comptroller & Auditor General of India (C&AG) forms part of this report and are attached as ''Annexure-G''. You would be pleased to know that there is no comments from C&AG on the Auditor''s Report or on the Financial Statements for the year 2018-19.

ACKNOWLEDGEMENT

Your Board of Directors wish to thank the shareholders for the continued confidence reposed on their Company. Your Directors sincerely thank the Government of India (GoI), Ministry of Petroleum and Natural Gas (MoP&NG), Ministry of Finance (MoF), Ministry of Corporate Affairs (MCA), Department of Public Enterprises (DPE), Ministry of Environment and Forest (MoEF), Ministry of External Affairs (MEA), Ministry of Shipping (MoS), Ministry of Home Affairs (MHA), other Ministries and Departments of the Central Government for their valuable support, guidance and continued co-operation. Your Directors also place on record its appreciation for the support from Govt. of Karnataka.

Your Directors gratefully acknowledge support and Direction provided by the parent company, Oil and Natural Gas Corporation Limited (ONGC) and the support of Hindustan Petroleum Corporation Limited (HPCL), as Promoters of the company. Your Directors acknowledge the continuing cooperation and support received from New Mangalore Port Trust, Financial Institutions, Banks and all other stakeholders. Your Directors recognize the patronage extended by the valued customers for the products of the Company and promise to provide them the best satisfaction. The Board would like to express its sincere appreciation for the dedicated efforts made and valuable services rendered by all the employees collectively and concertedly as a Team known as "Team MRPL" in the Company''s excellent achievements during the year 2018-19.

For and on behalf of the Board

(Shashi Shanker)

Chairman

(DIN: 06447938)

Place : New Delhi

Date : 03/07/2019


Mar 31, 2018

Dear Members,

On behalf of the Board of Directors of your Company, it gives me immense pleasure to share with you the highlights, developments and the progress that your Company has made during the financial year ended March 31, 2018 and to present the 30th Annual Report on the business and operations of Mangalore Refinery and Petrochemicals Limited (MRPL) and its audited financial statements together with the Auditors’ Report and comments on the financial statements by the Comptroller and Auditor General (CAG) of India. You will be delighted to know that financial year 2017-18 has been yet another year of achievements for your Company. The Company registered the highest ever throughput of 16.31 MMT.

STATE OF COMPANY’S AFFAIRS

Your Board is reporting the affairs of the Company for the FY 2017-18 as under:

Financial Performance

The standalone / consolidated financial highlights for the year ended 31/03/2018 are summarized below:

(Rs. In Crore)

Standalone

Consolidated

Year ended 31st March, 2018

Year ended 31st March, 2017

Year ended 31st March, 2018

Year ended 31st March, 2017

Profit Before Tax

3,350.70

5,531.41

2,871.40

5,053.85

Less: Current Tax

698.86

1,185.38

698.86

1,185.38

Deferred Tax

427.72

702.35

398.98

575.26

Profit For The Year

2,224.12

3,643.68

1,773.56

3,293.21

Add: Other Comprehensive Income

3.32

(5.03)

3.51

(4.90)

Total Comprehensive Income For The Year

2,227.44

3,638.65

1,777.07

3,288.31

Less: Total Comprehensive Income Attributable to Non Controlling Interest

(218.95)

(179.55)

Total Comprehensive Income Attributable To Owners Of The Company

2,227.44

3,638.65

1,996.02

3,467.86

Add: Balance in Profit and Loss Account (Adjusted)

6,571.69

4,198.67

6,005.70

3,803.47

Sub-Total

8,799.13

7,837.32

8,001.72

7,271.33

Appropriation

Transferred to General Reserve

-

-

-

-

Closing Balance (Including Other Comprehensive Income)

8,799.13

7,837.32

8,001.72

7,271.33

Your company achieved turnover of Rs.63,067 crore during the financial year 2017-18 against Rs.59,415 crore during the financial year 2016-17. The Company earned a profit after tax (PAT) of Rs.2,224 crore during the financial year 2017-18 against profit of Rs.3,644 crore earned during the financial year 2016-17. The Gross Refining Margin (GRM) for financial year 2017-18 was 7.54 $/bbl as against 7.75 $/bbl during the financial year 2016-17.

OPERATIONAL PERFORMANCE

The financial year 2017-18 has been a remarkable year for your Company. Some of the major highlights for the year 2017-18 are as under:

- Highest ever Gross crude processed for FY 2017-18 was 16.31 MMT against the previous highest of 16.27 MMT during FY 2016-17 registering an increase of 0.25% in throughput.

- Company’s Polypropylene production was 294.5 Thousand MT (TMT) in the financial year 2017-18 as against 264 TMT in the financial year 2016-17. Company’s Polypropylene dispatch was 278.16 TMT in the financial year 2017-18 as against 263.6 TMT in the financial year 2016-17.

- Company’s LPG production and dispatch in the financial year 2017-18 was 876.8 TMT and 873.08 TMT respectively as against 857.9 TMT and 855.9 TMT in the financial year 2016-17.

- Company has achieved MS Production of 1374.9 TMT in the financial year 2017-18 as against 1219 TMT in the previous financial year 2016-17.

Your Company continued to include newer crude grades in the processing basket with an aim to diversify crude sourcing. Qarun Blend from Egypt and Southern Green Canyon from United States were processed in the refinery for the first time. Similarly, efforts to establish newer markets were fruitful when MRPL exported approximately 7500 Tonne Polypropylene.

On the energy front, the efforts for increasing efficiency of energy usage reduced the Energy Index MBN from 79.61 in 2016-17 to 77.06 in 2017-18, representing an improvement of 2.5%. Newer initiatives like India’s largest refinery site based solar power project commissioned in March 2018, is expected to improve the energy efficiency further.

MARKETING AND BUSINESS DEVELOPMENT

Your company continues to maintain major share of the direct sales segment of petroleum products market in Karnataka and adjoining states. Your Company maintained leadership position in its marketing zone for direct sales products such as Bitumen, Fuel Oil, Diesel, Sulphur, Petcoke, Xylol (Xylenes) etc. The company has commenced Diesel supplies directly to new Railway Consumer Depots during the period and has also expanded its retail network. The total domestic sales volume of all products during the FY 2017-18 has been 1786 TMT with a sales value of Rs.5940 Crores which is about 15.7% higher than previous year sales value of Rs.5132 Crores.

Your Company continues to enhance its market share for Polypropylene with introduction of new and niche grades. The company has made in-roads in new geographical areas and has enhanced its sales value in FY 2017-18 to Rs.2639 Crores compared to the previous year sales value of Rs.2273Crores. The company has maintained its leadership position in the Polypropylene market of South India for its MANGPOL brand.

Your Company has also successfully marketed its entire production of Petcoke on consistent basis with a sales volumes of 809 TMT. Company also sold about 103 TMT Sulphur in its marketing zone and the surplus Sulphur is being exported in larger parcel sizes.

Your company has also maintained timely supplies to State Trading Corporation, Mauritius which has a long term supply contract with MRPL. The company supplied 1065 TMT of petroleum products to STC Mauritius with a sales value of Rs.3347 Crores in FY 2017-18.

Your Company Shell MRPL Aviation Fuel & Services Limited has steadily acquired business for sale of Aviation Turbine Fuel (ATF) at Indian airports. The company achieved a turnover of Rs.543.29 Crores during FY 2017-18 against turnover of Rs.554.29 Crores in the previous FY 2016-17.

Your company has commenced its retail expansion plan by releasing the advertisement for appointment of dealers for retail outlets in the state of Karnataka & Kerala and process to set up new retail outlets is going on. Letter of Intents have been issued to several shortlisted applicants for time bound commissioning of new retail outlets. Two new outlets were commissioned in the FY 2017-18.

RECOGNITIONS

- Won the prestigious BML Munjal Award for Business Excellence through Learning and Development. It won the Runner Up trophy in the PSU-Manufacturing category.

- Recognized with Silver Medal by International Research Institute for Manufacturing (IRIM) as part of India Green Manufacturing Challenge (IGMC) for the year 2017.

- Conferred an award under Employee Productivity Category at 5th PSU Awards ceremony organized by ‘Governance Now’ magazine of SAB group.

- In recognition of the excellent services provided by MRPL in the supplier category, Rashtriya Chemicals and Fertilizers Ltd. (RCFL) felicitated MRPL by awarding Performance Award 2017 & excellent support and timely supplies by MRPL helped RCFL Trombay Unit in achieving operational excellence during the year 2017.

- Bagged Srishti - Good Green Governance (G-Cube), Winners trophy under Manufacturing Sector on auspicious occasion of Earth Day- April 22nd 2018 at New Delhi.

- Recognized with Platinum Trophy at the 18th Annual Greentech Environment Award 2018.

PROCUREMENT OF GOODS AND SERVICES FROM MSES

In line with the Public Procurement Policy, 2012 issued by Ministry of Micro, Small and Medium Enterprises for the year 2017-18, against the set target of 20%, your Company has achieved 27% procurement of goods and services from Micro and small Enterprises.

PROJECTS

Existing Projects

BS VI Upgradation

As per Auto Fuel Policy and directives for MoP&NG, the entire country is moving towards BS VI quality specifications for MS and HSD by 1st April, 2020. Products from the Refineries have to meet BS VI quality specifications from 1st January, 2020. Further MoP&NG has directed the refineries to complete necessary modifications and construction activities and attain mechanical completion by July, 2019 and roll out the products to Oil marketing companies from 1st January, 2020. MRPL requires additional units for MS and Revamp/Catalyst changes for HSD. As part of this project, new FCC Gasoline Treatment Facility, Sulphur Recovery Unit, Nitrogen and Utilities and Revamps of CHTU and DHDT is being carried out.

Axens, EIL, UOP are the licensors for the various units and EIL has been appointed as EPCM Consultant for the job. Environment Clearance for the project has been obtained. All long lead items ordering completed. Balance items ordering and Site grading job under progress. The project has a scheduled completion of Q3 of FY 2019-20.

CCR2 Unit Revamp

MRPL currently has two numbers of NHT/ Plat former Unit. Both the units are of identical capacity and licensed by M/s UOP. The feedstock to the unit is heavy naphtha from crude distillation units and Hydrocracker units. The objective of the unit is to upgrade the low octane heavy naphtha to High octane reformate. The existing CCR-2 unit is being revamped to produce higher quantity of Reformate, yielding higher quantity of MS.

UOP is the Licensor and M/s L&T, Chiyoda was appointed as EPCM consultant for the project.

The Project execution time is 26 months from the date of all necessary approvals in place including environment clearance (23 months for Mechanical completion and 3 months for precommissioning /commissioning activities).

Engineering and procurement completed. Ordering of all Equipments and Tenders completed. Project is under execution and is expected to get completed by September, 2018.

Railway Siding for Pet Coke

Dispatches by Railway Wagons will improve safety in transportation, reduced environmental pollution, make MRPL products conveniently available in competitive markets and improve commercial realisation to MRPL. Construction of state of the art Railway siding for smooth evacuation of Petcoke with M/s Konkan Railway, is being carried out. The Railway siding will be executed by M/s Konkan Railway Corporation Ltd and M/s Mecon have been appointed as the EPCM consultant to execute the balance of plant of the Project consisting of Closed conveyor system, Loading silos with Rapid Loading Systems, Measuring devices, Pollution control facilities etc.

For Railway Siding, agreement with Konkan Railway (KRCL) on deposit mode has been signed. All orders and contracts have been placed and execution is under full swing. The Project is expected to get completed by December, 2018.

2G Ethanol

Company is also setting up a 2G Ethanol project. Land for the same has been identified and is being acquired through KIADB. Licensor selection for the technology is in progress. Project is expected to get commissioned by 2021.

Desalination Plant

To mitigate the risk of river water as a single source of water, an alternate source of water is being planned through the installation of desalination plant. This plant of current capacity of 30MLD expandable to 70MLD will cater to the immediate and future water requirement of the company. The Project has obtained permission from the Government of Karnataka. PMC has been placed and LSTK is being awarded. Project is expected to be completed by 2020.

USING INFORMATION AND COMMUNICATION TECHNOLOGY FOR PRODUCTIVITY ENHANCEMENT

MRPL has taken many initiatives to leverage on Information Technology for improving business productivity. SAP (Systems and Application Products for Data processing) was implemented in the year 2010 for all major business processes. To run these SAP applications, a state of the art Data Centre has been functioning at Mangalore site for supporting 24 x 7 business operations.

GST, an indirect tax on the sale of goods and services, was successfully implemented in MRPL on 1st July, 2017. The migration from SAP ECC to SAP HANA (High-performance Analytic Appliance), an application that uses in-memory database technology that allows the processing of massive amounts of real-time data in a short time, is planned during the year 2018.

With a strong focus on moving towards digitization, MRPL successfully implemented paperless E-Office system, a digital workplace solution that replaces the existing manual handling of files and documents with efficient electronic system to achieve objectives like transparency, efficiency and paperless office.

Digital Signature issued by an accredited Certificate Authority (CA), the advanced and secure type of electronic signature, is implemented for the Sales Invoices generated through SAP System.

MRPL is continuously upgrading its IT security to meet the new challenges of information threat thereby protecting all important information from any type of cyber threat. As a part of this, MRPL is under the process of obtaining IS0-27001:2013 certification for its SAP Data Center and Disaster Recovery Center.

SECRETARIAL STANDARDS

The Secretarial Auditor has certified that your Company has complied with the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ‘Meetings of the Board of Directors’ and ‘General Meetings’, respectively, during the FY 2017-18.

HEALTH, SAFETY & ENVIRONMENT PERFORMANCE

The company’s Philosophy on the HSE is to perform better than minimum required by statutes. The major Achievements on the Environment Management front include:

A) Environment

- Environmental Clearance obtained from Ministry of Environment, Forest & Climate Change (MoEF&CC), New Delhi for proposed BS-VI (Stage-1) Auto Fuel Quality Compliance & Associated Projects Facilities at MRPL, Mangalore.

- As a part of MRPL’s commitment to Sustainable Development with a focus on reduction in carbon emissions and renewable energy generation, largest solar power project in a Refinery site with a total capacity of 6.06MWp spread across 34 roof tops within the Refinery premises Installed.

- Carbon Foot Printing (CFP) Study is undertaken in the Refinery by M/s. Emergent Ventures for GHG accounting and deriving roadmap for carbon neutrality.

- Feasibility Study for Zero Liquid Discharge (ZLD) concept is carried out by M/s. Engineers India Limited (EIL).

- A Memorandum of Understanding (MoU) is made with M/s. Pilikula Nisarga Dhama for development of Greenbelt in another 30 acres land at Pilikula Biological Park as a part of compensatory afforestation. Total project is covered across 50 acres in two stages. First stage i.e. plantation in 20 acres completed and second stage in 30 acres is in progress.

- Efforts are taken to maximize the utilization of Hazardous and Non-hazardous Solid Waste via Coprocessing, Recycling & Reprocessing.

- 1500 MT of Oily sludge, 110 MT of Spent Adsorbent and 43 MT of Waste Insulation is Co-processed in SPCB Authorized Cement Industry.

- 764 MT of Spent Catalyst was disposed through SPCB Authorized Recyclers/Reprocessors.

- 35,33,006 m3 Tertiary Municipal Sewage Water received in MRPL during FY 17-18 and after proper disinfection treatment, it has been taken to cooling towers as make-up water.

- Work Environment Monitoring carried out in the Refinery by M/s. Shiva Analyticals, Bengaluru to assess the impact of air borne chemicals in the work zone area.

B) Safety

- External Safety Audit (ESA) of Single Mooring Point(SPM) and associated facilities was carried out by OISD during October, 2017.

- Safety Training KIOSK (STK) installed and commissioned at seven locations in Refinery.

- MRPL was certified for OHSAS Management System by certifying agency M/s. Bureau Veritas.

- 659 days without Reportable Lost Time Injuries (RLTI) achieved as on 31/03/2018.

- 8.51 Million Man Hours worked as on 31/03/2018.

- Fire & Safety training imparted to all employees including contract work force.

C) Health

- Annual Medical Checkup of employees was carried out in three categories in compliance with the Rules under Factories Act and Karnataka Factories Rules. One below 40 years of age, second for age group between 40 to 45 years and third for age above 45 years. Different groups have to undergo different medical tests such as Tread Mill Test etc. The employees were also subject to Hearing Loss test for those employees who are working in high noise areas. Lung Function Test, Colour Blindness Test, Blood Test etc. are some of the general medical tests which the employees have undergone.

- Two Occupational Health Centres (OHC) with 24x7 availability of Medical Staff are functional.

- The services of MRPL Hospital is available not only for the employees and their dependents but also for the people from neighboring villages.

- Occupation Health Hazard Profiling Study was carried out in the Refinery by M/s National Safety Council, Mumbai from 15/11/2017 to 18/11/2017

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY DEVELOPMENT

Corporate Social Responsibility

MRPL’s social welfare and community development initiatives focus on the key areas of education, health care & sanitation and overall development of basic infrastructure in and around its operational area/ Dakshina Kannada & Udupi District/Karnataka State. These projects are largely in accordance with Schedule VII of the Companies Act, 2013.

MRPL has spent Rs.10.30 Crore (previous year Rs.1.45 Crore) for various CSR activities during the year 2017-18. Pursuant to Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 the Annual Report on CSR activities for FY 2017-18 is annexed herewith as ‘Annexure A’.

There have been no changes in the CSR/SD policy of the Company during the financial year 2017-18.

The key objectives of the MRPL CSR Policy is to ensure an increased commitment at all levels in the organization, to operate its business in an economically, socially and environmentally sustainable manner, while recognizing the interests of all its stakeholders.

The Company has identified following focus areas for CSR engagement:

Shiksha Samrakshan

Activities that promote education, especially in Anganwadis, government and government aided schools.

Arogya Samrakshan

Health Care, by way of running Primary Health Centres in rural areas.

Bahujana Samrakshan

Infrastructure support to community halls near our operational areas, women empowerment, girl child development, gender sensitive projects, initiatives for physically and mentally challenged, initiatives for SC/ST communities, “Preparedness

Prakriti Samrakshan

Providing infrastructural support for Drinking water supply to neighbouring villages.

Sanskriti Samrakshan

Protection of local historical and cultural artifacts and historical monuments, heritage sites etc. Promotion of local artisans, craftsman, musicians, artists and their art forms etc. for preservation of local heritage, art and culture.

The CSR Policy may be accessed on the Company’s website at http://www.mrpl.co.in/csr.

Sustainability Development and Performance

Sustainability approach of your company in the bygone year was envisioned for permanence of the business and to attain a composed score of eco-friendly frontage and performance parameters. Your company has beheld a commanding performance in the core business by achieving highest capacity utilization among all Indian Public sector refineries in FY 2017-18. Also, the improvement obtained in sustainable approach in attaining core business excellence is the quintessence of preceding FY 2017-18.

Your company had derived Carbon Foot Print of the refining operations and has derived action plan to improve the carbon intensity of the refinery and thus mitigating Global Warming Menace to possible extent. Your company had commissioned largest solar project of 6.063 MWp in a refinery site in India. The solar power project with a total capacity of 6.063 MWp is spread across 34 roof-tops within the refinery premises comprising both RCC and sloping sheet steel roofs. Built at a cost of Rs.27 Crores by M/s Tata Power Solar Systems Limited, these solar plants generate more than 24,000 units per day amounting to more than 8.8 million units per annum.

Your company has fortified the commitment towards environment by reducing the fresh water intake, Maximizing recycle of Treated effluent and decrease Sulphur oxides emissions.

Your company has implemented Reduce, Reuse and Recycle (3R) hierarchy for its Solid and Liquid Waste Management. It has derived an enduring strategy to reduce our dependence on fresh water from water bodies through the minimization of effluent generation, utilization of Mangalore City Municipal Sewage and maximization of treated effluent recycle. When it comes to the management of Hazardous and Other Wastes, your Company has been striving continuously towards our goal of achieving Zero Waste Disposal to Land fill. As a matter of fact, we are proud that during FY 2018 we did achieve zero disposals to land fill facility. A combination of processes such as In-situ and Ex-situ regeneration, in-house utilization (reprocessing), Cement Kiln Co-processing for resource recovery and Recycling has helped us in our endeavour.

Your company had improved its energy intensity and registered a Mean Barrel Number of 77.06 in FY 2017-18 Vs 79.61 in FY 2016-17.Your company had commissioned Flare Gas Recovery System (FGRS) for recovering valuable Hydrocarbons from flaring and FGRS reduces flaring noise; thermal radiation; operating and maintenance costs; air pollution and emissions; and fuel gas and steam consumption while increasing process stability and flare tip life without any impact on the existing safety relief system.

Your company had celebrated various awareness programmes among citizens of Mangalore like Cyclathon to endorse sustainable life style at Mangalore Corporation.

MRPL has installed an additional RO of 3.4 MGD capacity with a financial implication of Rs.10.30 Crores for processing the Municipal Sewage. This has opened up a new avenue to extract additional DM plant feed (2.72 MGD i.e. 80 % of 3.4 MGD) out of the Municipal Sewage which otherwise is being utilized only as cooling tower and firewater makeup. This in turn will enable MRPL to replace equivalent fresh river water with recycled water. Commissioned in April 2018, this RO plant has so far processed 3, 74,125 m3 of Municipal Sewage and produced 2, 79,130 m3 Permeate.

Further, with a vision of achieving Zero Effluent Discharge to Sea (except for monsoon) MRPL is undertaking an ambitious ZLD project of 400 m3/h capacity with a Capital Expenditure requirement of Rs.339 Crores). The feasibility study for the project has already been completed by M/s. Engineers India Limited. Post implementation of ZLD plant, the specific fresh water requirement of MRPL is expected to reduce by 15 %.

In order to reduce reliance on Fresh water further and to enable MRPL with the flexibility for future expansions, it is proposed that a Reverse Osmosis (RO) based Desalination Plant of 13 MGD capacity be set up by MRPL at a cost of Rs.595 Crores (Rs.550.4 Crores with an IDC of Rs.44.5 Crores) on 15 Acre land provided by New Mangalore Port Trust (NMPT). Out of this around 2 MGD water will be supplied to our neighbour Mangalore Chemicals & Fertilizers (MCF) and thus anchoring the sustainable efforts in and around the Mangalore Zone.

Your company had demonstrated resilient management system of Quality and Environment and thus certified for ISO 2015 Standards and has become one of the pioneers in Indian Oil & Gas fraternity to comply with revised ISO standards.

Your company had reiterated its incessant support to Greenery in around premises and went on sponsoring 2nd Phase of Tree plantation at Pilikula Nisarga Dhama in additional 30 acres in addition to previous 20 acres and thus making 50 acres of area to flourish with Western Ghats Endemic species. Your company had spread awareness of Novel Reforestation technique of “Seed Ball” among Schools and colleges in the geographical presence of company.

Your company efforts to embark on longstanding sustainable efforts were bedecked with receipt of Greentech Award as

PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARY/ JOINT VENTURES/ ASSOCIATE

The details on the performance and financial position of Subsidiary, Associate and Joint Venture Companies are given in Management Discussion and Analysis (MDA) Report. Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule (5) of the Companies (Accounts) Rules, 2014, a statement on the performance and financial position of the subsidiary and Joint Venture Companies is provided as an Annexure to the Consolidated Financial Statements.

In accordance with the provisions of the SEBI guidelines, the Company has framed a policy for determining material subsidiaries that can be accessed on the Company’s website.

Your company has one subsidiary i.e. ONGC Mangalore Petrochemicals Limited (OMPL). As per the Material Subsidiary Policy, OMPL is not a material subsidiary of the Company.

ANNUAL REPORT OF SUBSIDIARY AND CONSOLIDATED FINANCIAL STATEMENT

The Audited Consolidated financial statements for the year ended 31st March, 2018 of the Company and its subsidiaries form part of the Annual Report in accordance with Section 129 of the Companies Act, 2013 and the Ind AS 110 on “Consolidated Financial Statements” read with Ind AS 28 on “Investments in Associates and Joint Ventures”. In accordance with section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of the subsidiary Company are available on the Company’s website. These documents will also be available for inspection during business hours at the registered office of the Company at Mangalore.

INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS

The Ministry of Corporate Affairs (MCA) on February 16, 2015, notified that Indian Accounting Standards (Ind AS) are applicable to certain classes of companies from April 1, 2016 with a transition date of April 1, 2015. Ind AS has replaced the previous Indian GAAP prescribed under Section 133 of the Companies Act, 2013 (“the Act”) read with Rule 7 of the Companies (Accounts) Rules, 2014 and are applicable to the Company from April 1, 2016.

TRANSFER TO RESERVES

No amount has been transferred to General Reserves for the financial year 2017-18.

DIVIDEND

The Board of Directors has recommended a dividend of Rs.3 per equity share for the FY 2017-18. The dividend shall be paid after the approval of members at the Annual General Meeting. The dividend has been recognized in accordance with Company’s Policy on Dividend Distribution. The Dividend Distribution Policy of the Company is annexed herewith as ‘Annexure B’ to this report.

DEPOSITS

Your company has not accepted any deposits during the year pursuant to Section 74 of the Companies Act, 2013 and Rules thereunder.

PARTICULARS OF LOANS,GUARANTEES AND INVESTMENTS

There have been no loans / guarantees given or securities provided during the FY 2017-18 under the provisions of Section 185 / 186 of the Companies Act, 2013. The details of investments covered under the provisions of Section 186 of the Act are given in notes to financial statements provided in this Annual Report.

SHARE CAPITAL

The company has not issued any shares during the FY 2017-18. The Issued, Subscribed and Paid up Equity Share Capital of your Company as on 31/03/2018 was Rs.1,753 Crore.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF FINANCIAL YEAR AND DATE OF REPORT

There has been no change in the nature of business during the year. No material changes or commitments have occurred after close of the year till the date of this report which affects the financial position of the Company.

HUMAN RESOURCES

Your company values its human resources the most. To keep their morale high, your company extends several welfare benefits to the employees and their families by way of compensative medical care, education, housing and social security. During the financial year 2017-18, various welfare related policies have been implemented by the Company for its employees. The welfare policies of the company are being revised as and when revisions take place in welfare policies of downstream companies to enable the employees to get enhanced benefits.

The Company maintains an MRPL Employees Recreation Centre. The Centre offers a wide range of pastime activities for the employees and their dependents. An Internal Departmental Cricket Tournament was also organised during the year.

Your Company continues to enjoy cordial and harmonious relations and not a single man-hour was lost on account of any industrial disturbance during the year 2017-18.

MRPL has one trade union of non-management employees viz. MRPL Employees Union affiliated with Petroleum & Gas Workers Federation of India (PGWFI). Contract workers have union viz. MRPL ONGC Karamchari Sangha affiliated to MRPL Employees Union & PGWFI. MRPL also has MRPL Management Staff Association, MRPL-ONGC SC ST Employee’s Welfare Association and Forum of Women in Public Sector.

MRPL engages with its collectives in bilateral discussions before implementing any significant operational changes that could substantially affect them. MRPL also coordinates with Government Central & State Officials like Assistant Labour Commissioner (C) & Dy. Chief Labour Commissioner (C), Dy. Director of Factories etc. to its Industrial Relations related discussions which are always cordial.

MRPL also has statutory Works Committee (headed by GGM and having members from management employees and nominees of collective of non-management).

Reporting on SC / ST / PWD

Presidential Directives and other guidelines issued by Department of Public Enterprises, Ministry of Petroleum & Natural Gas, Ministry of Social Justice and empowerment from time to time with regard to reservation in services for Scheduled Castes, Scheduled Tribes, other backward castes and Persons with disabilities have been complied with. An adequate monitoring mechanism has been put in place for sustained and effective compliance. Liaison officers are appointed to ensure implementation of the Government Directives. Reservation Rosters are maintained as per the directives and are regularly inspected by the Liaison officer of the company as well as the officials from MoP&NG to ensure proper compliance of the Directives. MRPL also complies with provisions under “The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 relating to providing employment opportunities for Persons with Disabilities (PWDs). As on 31/03/2018, there are 28 permanent employees with disabilities on the roll of MRPL.

During the year, your Company has recruited 21 employees comprising of 7 Schedules Caste (SC) / Schedule Tribe (ST) employees. Total employee strength as on 31/03/2018 was 1916 including 129 women employees, 256 SC/ST employees and 28 employees belonging to persons with disability category (PWD). 823 employees belong to Management cadre whereas 1093 employees belong to Non-Management cadre. During the Year 2017-18, the Company devoted 3552.68 Mandays for training, development and learning, which amounts to 2.80 Mandays per employee for Management staff and 1.15 Mandays per employee for Non-Management staff.

In accordance with para-29 of the Presidential Directive, statistics relating to representation of SCs / STs in the prescribed performa, SC / ST/ OBC Report - I and SC / ST / OBC Report -II are attached as ‘Annexure - C’ to the report.

Skill Development Centre

As a part ofNational Skill Development Mission of the Government of India, MRPL has set up “MRPL Kaushal Vikas Kendra” (MRPL KVK) on 12/02/2017. The first batch of 57 candidates of MRPL KVK have undergone skill development training in “CNC Operator-Turning” and “Industrial Electrician” course at Nettur Technical Training Foundation (NTTF), Bangalore and second batch of 20 candidates of MRPL KVK have under gone skill development training in “CNC Vertical Machining centre” course at Nettur Technical Training Foundation (NTTF), Bangalore. Placement assistance was offered to all the candidates willing for relocation.

WOMEN EMPOWERMENT

Women employees constituted over 6.73 percent of the Company’s workforce.

Your Company has an Internal Complaints Committee (ICC) required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There have been no cases reported to the Committee, for the financial year 2017-18.

OFFICIAL LANGUAGE

Your company is implementing Official Language Policy in letter and spirit as per the Annual Programme prescribed by the Department of Official Language, Ministry of Home Affairs, Govt. of India. In order to propagate and promote Hindi among the employees, Hindi Workshops were organized on a regular basis at Mangalore, Mumbai, Delhi & Bangalore Offices. Inspection of internal departments and subordinate offices were carried out at regular intervals.

Hindi Fortnight was celebrated and many Hindi competitions such as Hindi letter writing, Handwriting, Admin. Glossary, Hindi solo song, News reading etc. were conducted for the employees and their family members in the month of September 2017. In addition, one more Hindi competition (Admin. Glossary) was conducted in January, 2018 for employees. Competitions were held in Hindi language for employees and their family members during National Safety Day, Environment Day, Security awareness week and Vigilance awareness week. Hindi usage is promoted by conducting special quiz competition for senior officers such as CGMs & GGMs during Hindi month celebrations.

Hindi classes were conducted regularly to employees to qualify in Prabodh, Praveen & Pragya examinations. Employees are motivated to pass final Hindi examinations through Incentive schemes such as Cash award & Personal Pay etc. To increase the correspondence in Hindi in the organization Unicode facilities was activated on all computers used for daily office work.

Special awards were given to 45 students of DPS (Delhi Public School) in MRPL Township, who have scored highest marks in Class-X Hindi examination.

Your Company participated at TOLIC level Hindi competitions and won Nine prizes and stood Second at the TOLIC level competitions. Official Language Knowledge competition was conducted for employees of TOLIC member organizations at MRPL. Hindi Essay competition was also organized for Degree College students of Mangalore University as a part of Hindi month celebrations under the auspices of TOLIC Mangalore. In addition to the above, a Hindi seminar was organized on 26/3/2018 wherein all the TOLIC member organizations along

In order to propagate and to promote usage of Hindi in the company, in house Hindi Journal namely “MRPL PRATIBIMB” is being published annually. MRPL follow the guidelines of OL (Official Language) and conducted OLIC (Official Language Implementation Committee) meeting during four quarters of the year under the chairmanship of MD to review and for action plan for improving usage of Hindi in MRPL. Your company is making continuous efforts for promoting Hindi usage in the organization by encouraging employees through trainings, workshops, seminars and incentives.

RIGHT TO INFORMATION ACT, 2005

The RTI manual of the Company is available on its website which discloses all required information. During the year, 181 applications were received, out of which 8 applications were transferred to other Public Authority and balance 173 were disposed off as per the provisions of RTI Act.

SECURITY MEASURES

Security of MRPL Refinery is designed to comply with Oil Sector Infrastructure Protection Plan (OSIPP) and the Security Audit recommendations given by MHA from time to time.

Physical Protection of the Refinery is handled by Central Industrial Security Force (CISF). MHA has recently sanctioned additional CISF manpower for strengthening the physical security of the Refinery.

Security is on top of the agenda of MRPL and to ensure preparedness, periodic mock drills on work-place security preparedness are conducted. To promote awareness on security issues among all stake holders, Security Awareness Weeks are organized periodically.

A major revamp of electronic surveillance of the Refinery through an integrated CCTV cum Electronic Intrusion Detection system project is under progress and it is likely to be completed by end of 2018.

VIGILANCE FUNCTION

Your company has developed a structured mechanism of vigilance functions. Its practices are focused towards creation of value to stakeholders. The practices involve multi-layer checks and balances to improve transparency. Vigilance awareness and preventive vigilance activities were continuously carried out during the year. Your company has a full time Chief Vigilance Officer and assisted by a dedicated team.

In compliance with CVC instructions, your company has implemented a complaint handling policy in which all complaints received from various sources are recorded and can be examined by vigilance. MRPL corporate website has been revamped by including the system for registering the online complaints. The details on the best vigilance practices and links to various useful websites is also provided in the MRPL Corporate website. Your company has achieved highest compliance level with regard to e-procurement, e-tender and e-payment.

In line with instructions of CVC, your company had conducted Vigilance Awareness programs for spreading awareness on evil effects of corruption. For popularizing the “Integrity Pledge” developed by central vigilance Commission, MRPL installed 4 integrity pledge kiosk in Mangalore City during Vigilance Awareness Week. More than 10,000 college students took the integrity pledge. To incite the development of ethics and honesty among school children, MRPL started Integrity clubs in 18 schools. E-office concept which is currently under implementation in the company is aimed at improving efficiency in the working of MRPL.

Leveraging the technology to enhance transparency has been a thrust area of action in which vigilance has a catalytic role. The website of company displays downloadable tender document, publication of information of work awarded on nomination basis, publication of post award information of contracts etc.

Whistle Blower Policy

The Whistle Blower Policy is formulated to provide a vigil mechanism for Directors and Employees to raise genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy. It also provides for adequate safeguard against victimisation of persons who use such mechanism. The Policy provides necessary safeguards for protection of Directors and Employees who avail the vigil mechanism from reprisals or victimization, for whistle blowing in good faith and to provide opportunity to Directors and Employees for direct access to the Chairperson of the Audit Committee in exceptional cases. The policy is available on the Company’s website. During the year, no complaints were received under Whistle Blower Policy.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

Information required to be disclosed pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo are furnished in ‘Annexure- D’ which forms part of this Report.

MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES

MRPL, being a Government Company, is exempted from the provisions of Section 197(12) of the Companies Act, 2013 and relevant Rules in view of the Notification dated 05/06/2015 issued by Ministry of Corporate Affairs (MCA).

The functional directors of the Company are appointed by the administrative Ministry i.e. MoP&NG within the terms & conditions as per DPE guidelines.

EXTRACT OF ANNUAL RETURN

Information required to be disclosed pursuant to Section 134(3)

(a) of the Companies Act, 2013 with respect to the details forming part of the extract of the Annual Return in form MGT-9 are furnished in ‘Annexure- E’ which forms part of this Report.

RELATED PARTY TRANSACTIONS & PARTICULARS OF CONTRACTS / ARRANGEMENTS WITH RELATED PARTY

All transactions entered with related parties during the FY 2017-18 were on arm’s length basis and in ordinary course of business. Further, there were no material related party transactions during the year with the Promoters, Directors or Key Managerial Personnel and no related party transaction were made which could have potential conflict with interest of the Company at large. The Company has adopted a Related Party policy and procedure, which is available at company’s website.

The particulars of every contract or arrangements entered into by the Company with Related Parties referred in Section 188(1) of the Companies Act, 2013, in the prescribed Form No. AOC - 2 attached as ‘Annexure-F’. MCA vide Notification dated 05/06/2015, has exempted the applicability of Section 188 (1) of the Companies Act, 2013 for a transaction entered into between two Government Companies.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Changes in the Board of Directors and Key Managerial Personnel during the financial year 2017-18

MRPL being a Central Public Sector Enterprise (CPSE), Directors on the Board of the company are appointed by the Administrative Ministry i.e. Ministry of Petroleum and Natural Gas (MoP&NG), Government of India and therefore the provisions of Section 134(3)(e) of the Companies Act, 2013 regarding policy on Directors appointment and remuneration shall not apply in view of the MCA notification dated 05/06/2015.

Shri V. P. Haran, Shri Sewa Ram, Shri Balbir Singh and Dr. G.K. Patel were nominated as Non official Independent Directors by MoP&NG with effect from 08/09/2017 and were appointed as Additional Directors by the Board with effect from 08/09/2017, vacate their office in this AGM and being eligible offer themselves for appointment as Directors in the 30th Annual General Meeting.

Shri Shashi Shanker assumed the charge of Director / Chairman of your Company on 01/10/2017 consequent to superannuation of Shri D. K. Sarraf from the services of ONGC on 30/09/2017.

Shri K.M. Mahesh and Shri Sanjay Kumar Jain, Directors, MoP&NG, appointed as Additional Directors with effect from 24/11/2017 vacate their office as Additional Directors and being eligible offer themselves for appointment as Director in the 30th Annual General Meeting.

Shri Diwakar Nath Misra and Smt. Perin Devi, ceased to be a Director w.e.f. 24/11/2017 consequent upon withdrawal of their nominations by MoP&NG.

Changes in the Board of Directors after 31/03/2018

Shri Subhash Kumar, Director (Finance) ONGC was appointed as an Additional Director on the Board of MRPL on 15/05/2018.

Shri M. Venkatesh assumed the office of Managing Director w.e.f. 01/06/2018. Shri H. Kumar, Managing Director demitted the office of Managing Director on attaining the age of superannuation w.e.f. 01/06/2018.

The Board places on record its appreciation for the valuable services rendered by the outgoing Directors during their respective tenure.

All Independent Directors have given a declaration that they meet the criteria of independence as laid down under Section 149(6) of Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015.

FORMAL ANNUAL EVALUATION

MRPL, being a Government Company, the provisions of Section 134(3)(p) of the Companies Act, 2013 in respect of annual evaluation of the Board Committees and individual Directors shall not apply in view of the MCA notification dated 05/06/2015. However, as per Regulation 17 of SEBI Listing Regulations, 2015 formal annual evaluation of Independent Directors for the FY 2017-18 had been carried out by the Board. A meeting of Independent Directors was held on 29/01/2018.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to provisions of Section 134 of the Companies Act, 2013, the Board of Directors of your Company has made the following statement for FY 2017-18:

a) In the preparation of the Annual Financial Statements for the year ended March 31, 2018, the applicable Ind AS have been followed along with proper explanation relating to material departures;

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

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the Annual Financial Statements on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

As per SEBI Listing Regulations, 2015, Audit Committee has reviewed the Directors’ Responsibility Statement.

NUMBER OF BOARD MEETINGS

The Board of Directors of your Company had seven (7) Meetings during the FY 2017-18. The maximum interval between any two meetings did not exceed 120 days as prescribed in the Companies Act, 2013. Details of the Board Meetings held, have been furnished in the Corporate Governance Report which forms part of this Report.

AUDIT COMMITTEE

The Audit Committee has been constituted as per the terms of reference prescribed under Section 177 of the Companies Act, 2013 read with Rule 6 of the Companies (Meetings of the Board and its Powers) Rules, 2014, Regulation 18 of SEBI Listing Regulation, 2015 and Guidelines on Corporate Governance for Central Public Sector Enterprise issued by Department of Public Enterprise, Government of India. There have been no instances where the recommendations of the Audit Committee were not accepted by the Board of Directors. The details of Audit Committee are disclosed in the Corporate Governance Report which forms part of this Report.

NOMINATION/ REMUNERATION COMMITTEE

MRPL being a Central Public Sector Enterprise (CPSE), Directors on the Board of the company are appointed by the Administrative Ministry i.e. Ministry of Petroleum and Natural Gas (MoP&NG), Government of India. Accordingly, the Company has not adopted any Nomination/Remuneration policy.

Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI Listing Regulations, 2015 and DPE guidelines on Corporate Governance for CPSE, your Company has constituted a Nomination/ Remuneration Committee. The details on the Nomination/ Remuneration Committee are disclosed in Corporate Governance Report which forms part of this report.

MRPL is a ‘Schedule-A’ category-1 Miniratna Central Public Sector Enterprise (CPSE). The appointment, terms, conditions and remuneration of Managing Director and Functional Directors (Whole-time Directors) are fixed by the Department of Public Enterprises (DPE), Govt. of India.

RISK MANAGEMENT POLICY

In line with the requirements of SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015, your Company has developed and rolled out a comprehensive Enterprise-wide Risk Management (ERM) Policy throughout the organization. The Audit Committee periodically reviews the risk assessment and minimization process in MRPL.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS

There are no significant and material orders passed by the Regulators/ Courts/ Tribunals that would impact the going concern status of the Company and its future operations.

CORPORATE GOVERNANCE

The Companies Act, 2013 and SEBI Listing Regulations, 2015 have strengthened the governance regime in the country. Your Company is in compliance with the governance requirements provided under the Companies Act, 2013, SEBI Listing Regulations, 2015 and has complied with all the mandatory provisions of Companies Act, 2013 and Rules made thereunder, SEBI Listing Regulation, 2015 relating to the Corporate Governance requirements and mandatory guidelines on Corporate Governance for CPSEs issued by DPE, Government of India, except for the presence of requisite number of Independent Directors on the Board. The Corporate Governance Report for the FY 2017-18 forms part of this Report.

Pursuant to Schedule V of the SEBI Listing Regulations, 2015, the Auditors’ certificate on compliance of conditions of Corporate Governance also forms part of the Annual Report. The Auditors have made observations on the appointment of Independent Directors on the Board of the Company for the part of FY 201718. Presently, there are 5 Independent Directors on the Board of your Company. The Company has been continuously pursuing with the Ministry of Petroleum & Natural Gas (MoP&NG) for the appointment of requisite number of Independent Directors.

Pursuant to requirements of the Companies Act, 2013 and SEBI Listing Regulations, 2015, following policies/codes have been formulated and uploaded on the Company’s website at www. mrpl.co.in :

a) Code of Conduct for Board Members and Senior Management Personnel;

b) Whistle Blower Policy;

c) Related Party Transactions - Policy and Procedures;

d) CSR & SD Policy;

e) Material Subsidiary Policy;

f) The Code of Internal Procedures and Conduct for prohibition of Insider Trading in Dealing with the securities of MRPL;

g) Policy on Materiality for disclosure of events to the Stock Exchanges;

h) Policy on preservation of Documents;

i) Training Policy for Board of Directors; j) Dividend Distribution Policy.

BUSINESS RESPONSIBILITY REPORT

SEBI Listing Regulations, 2015 mandated inclusion of Business Responsibility Report (BRR) as part of the Annual Report for top 500 listed entities based on market capitalization. In compliance with the Regulation, BRR for the FY 2017-18 forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

In terms of Regulation 34 of the SEBI Listing Regulations, 2015 the Management’s Discussion and Analysis (MDA) Report for the FY 2017-18 forms part of this Report.

INTERNAL FINANCIAL CONTROL

Your Company has a well-established and efficient internal financial control system to ensure an adequate and effective internal control environment that provides assurance on efficiency of conducting business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information.

The Company has in-house internal Audit Department commensurate with its size of operations. An independent audit of Information Systems of the Company is also being undertaken. Audit observations are periodically reviewed by the Audit Committee of the Board and necessary directions are issued whenever required. Details on the Internal Control system is disclosed in the Management Discussion Analysis Report which form part of this report.

AUDITOR

Joint Statutory Auditors

M/s Shreedhar, Suresh & Rajagopalan, Chennai and M/s Manohar Chowdhry and Associates, Mangalore were the Joint Statutory Auditors of the Company for the FY 2017-18. They have audited the Financial Statements for the FY 2017-18 and submitted their report which forms part of this report. There is no qualification in the Auditors Report on the Financial Statements of the company. Notes to the Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments.

Secretarial Auditors

Your Company engaged M/s Kumar Naresh Sinha & Associates, Practicing Company Secretary, Noida for conducting Annual Secretarial Audit for the FY 2017-18 pursuant to Section 204 of the Companies Act, 2013. M/s Kumar Naresh Sinha & Associates, Practicing Company Secretary, Noida has issued Secretarial Audit Report for the FY 2017-18 which forms part of this report as ‘Annexure-G’. The Auditors have made observations on the non availability of sufficient number of Independent Directors on the Board of the Company during the year and in the composition of Audit Committee and Nomination and Remuneration Committee during the period from 01/04/2017 to 25/10/2017. The Company is pursuing with the Ministry of Petroleum & Natural Gas (MoP&NG), Govt. of India, for the appointment of requisite number of Independent Directors.

Cost Auditor

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Cost Accounts maintained by the company for the FY 2017-18 are being audited by Cost Auditors M/s. Bandyopadhyaya Bhaumik & Co., Kolkata.

COMMENTS OF C&AG ON THE JOINT STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED AND STANDALONE FINANCIAL STATEMENTS FOR THE FY 2017-18

The Comments of Comptroller & Auditor General of India (C&AG) forms part of this report and are attached as ‘Annexure-H’. You would be pleased to know that your company has received NIL comments from C&AG for the year 2017-18.

ACKNOWLEDGEMENT

Your Board of Directors wish to thank the shareholders for the continued confidence reposed on their Company. Your Directors sincerely thank the Government of India (GoI), Ministry of Petroleum and Natural Gas (MoP&NG), Ministry of Finance (MoF), Ministry of Corporate Affairs (MCA), Department of Public Enterprises (DPE), Department of Investment and Public Asset Management (DIPAM) Ministry of Environment and Forest (MoEF), Ministry of External Affairs (MEA), Ministry of Shipping (MoS), Ministry of Home Affairs (MHA), other Ministries and Departments of the Central Government for their valuable support, guidance and continued co-operation. Your Directors also place on record its appreciation for the support from Govt. of Karnataka.

Your Directors gratefully acknowledge support and direction provided by the parent company, Oil and Natural Gas Corporation Limited (ONGC) and the support of Hindustan Petroleum Corporation Limited (HPCL), as Promoters of the company. Your Directors acknowledge the continuing co-operation and support received from New Mangalore Port Trust, Financial Institutions, Banks and all other stakeholder. Your Directors recognize the patronage extended by the valued customers for the products of the Company and promise to provide them the best satisfaction. The Board would like to express its sincere appreciation for the dedicated efforts made and valuable services rendered by all the employees collectively and concertedly as a Team known as “Team MRPL” in the Company’s excellent achievements during the year 2017-18.

For and on behalf of the Board

(Shashi Shanker)

Chairman

(DIN: 06447938)

Place: New Delhi

Date: 12/07/2018


Mar 31, 2017

Dear Members,

The behalf of the Board of Directors of your Company, it gives me immense pleasure to share with you the highlights, developments and the progress that your Company has made during the financial year ended March 31, 2017 and to present the 29th Annual Report on the business and operations of Mangalore Refinery and Petrochemicals Limited (MRPL) and its audited financial statements together with the Auditors’ Report and comments on the financial statements by the Comptroller and Auditor General (C&AG) of India. You will be delighted to know that financial year 2016-17 has been yet another year of achievements for your Company. The Company registered the highest ever throughput of 16.27 MMT.

STATE OF COMPANY’S AFFAIRS

Your Board is reporting the affairs of the Company for the FY 2016-17 as under:

Financial Performance

The standalone / consolidated financial highlights for the year ended 31/03/2017 are summarized below:

(Rs. In Crore)

Standalone

Consolidated

Year ended 31st March, 2017

Year ended 31st March, 2016

Year ended 31st March, 2017

Year ended 31st March, 2016

Profit Before Tax

5,531.41

1,158.30

5,053.85

286.51

Less: Current Tax

1,185.37

234.56

1,185.38

234.56

Deferred Tax

702.36

(223.20)

575.26

(453.82)

Profit For The Year

3,643.68

1,146.94

3,293.21

505.77

Add: Other

Comprehensive

Income

(5.03)

0.32

(4.90)

(0.12)

Total

Comprehensive Income for the Year

3,638.65

1,147.26

3,288.31

505.65

Less: Total Comprehensive Income Attributable to Non Controlling Interest

(179.55)

(318.13)

Total

Comprehensive Income Attributable to owners of the Company

3,638.65

1,147.26

3,467.86

823.78

Add: Balance in Profit and Loss Account (Adjusted)

4,198.67

3,051.41

3,803.47

2,979.69

Sub-Total

7,837.32

4,198.67

7,271.33

3,803.47

Appropriation

Transferred to General Reserve

-

-

-

-

Dividend on Equity Shares

1051.56

-

1051.56

-

Tax on Dividend

214.07

-

214.07

-

Closing Balance (Including other Comprehensive Income)

7,837.32

4,198.67

7,271.33

3,803.47

Your company achieved turnover of Rs.59415 crore during the financial year 2016-17 against Rs.50864 crore during the financial year 2015-16. The Company earned a profit after tax (PAT) of Rs.3644 crore during the financial year 2016-17 against profit of Rs.1147 crore earned during the financial year 2015-16. The Gross Refining Margin (GRM) for financial year 2016-17 was 7.75 $/bbl as against 5.20 $/bbl during the financial year 2015-16. Your Company has retained its highest corporate rating “[CCR AAA]” affirmed by CRISIL and IrAAA by ICRA during the FY 2016-17.

OPERATIONAL PERFORMANCE

The financial year 2016-17 has been a remarkable year for your Company. Some of the major highlights for the year 2016-17 are as under:

- Highest ever Gross crude processed for FY 2016-17 was 16.27 MMT against the previous highest of 15.69 MMT during FY 2015-16 registering an increase of 3.69 % in throughput. This high performance could be achieved by optimal crude mix, better equipment reliability, timely shutdown adherence and commendable operational discipline.

- New Crudes processed during FY 2016-17 were Pazflor (High TAN), Yombo & Soorosh.

- Yombo Crude from Congo processed was with the lowest ever API of 16.4.

- Received first parcel of crude oil for delivery into Mangalore cavern of Indian Strategic Petroleum Reserves Ltd (ISPRL). The first parcel of 260 TMT of Iran Mix was received in VLCC MT DINO.

- Highest ever production and dispatch of Poly - propylene, LPG, MS, HSD and throughput in MBPL pipeline.

- MRPL dispatched first parcel of HSD- Euro VI to HPCL during the month of October, 2016.

- MRPL has been awarded ‘BEST MANUFACTURER EXPORT AWARD - MEDIUM / LARGE’ (Petroleum & Petroleum products) for the year 2014-15, acknowledging the performance as the foremost exporter in the state of Karnataka.

MARKETING AND BUSINESS DEVELOPMENT

Your company continues to expand its market spread in the direct sales segment of petroleum products in the state of Karnataka and its adjoining states. Your Company has maintained significant market share and direct customer relations for products such as Bitumen, Fuel Oil, Sulphur, Diesel, Naphtha, Petcoke and Mixed Xylene in its refinery zone. The total sales volume of direct marketing products including Polypropylene during the FY 2016-17 has been 1858 TMT with a sales value of Rs.5132 Crores compared to sales volume of 1610 TMT with a sales value of Rs.3308 Crores in the previous FY 2015-16. MRPL has already achieved dominant market share for its MANGPOL branded Polypropylene in its marketing zone in a very short time. MRPL also continues to maintain leadership position for sales of Bitumen, Sulphur, Pet Coke and Xylol in its marketing zone.

Your Company continues to expand its Polymer product range with new grades and has also expanded its market reach. Your company achieved sales of 264 TMT Polypropylene in FY 2016-17 as against sales of 139 TMT in FY 2015-16. Your Company has also succeeded in marketing the entire production of Pet Coke on consistent basis with a sales volume of 838 TMT in 2016-17. Company also evacuated higher quantity of Sulphur in domestic market targeting major customer in adjoining states. The surplus Sulphur is being exported in larger parcel sizes.

Your company has also maintained timely supplies to State Trading Corporation, Mauritius which has a long term supply contract with MRPL. The company supplied 1049 TMT of petroleum products to STC Mauritius with a sales value of Rs.2860 Crores in FY 2016-17 against sales volume of 1057 TMT at a sales value of Rs.2757 Crores during FY 2015-16.

Your company has commenced the retail expansion plan by releasing the advertisement for appointment of dealers for retail outlets in the state of Karnataka & Kerala and is in the process of expanding its retail network in the its refinery zone. Letter of Intents have been issued to several shortlisted applicants for time bound commissioning of new retail outlets. Feasibility study for additional retail outlet locations is under progress and the company is expecting to commission a sizeable number of retail outlets during next few years.

Your Company Shell MRPL Aviation Fuel Services Limited has steadily acquired business for sale of Aviation Turbine Fuel (ATF) at Indian airports. The company achieved a turnover of Rs.554.29 Crores during FY 2016-17 against Rs.317.97 Crores in the previous FY 2015-16.

RECOGNITIONS

Your Company has been assigned Excellent Rating for the FY 2015-16 by Department of Public Enterprises, Government of India.

At a glittering Earth Day function organised by Srishti Publications at the India International Centre, New Delhi, on 22/04/2017, MRPL bagged Runner up in the manufacturing category after an intense scrutiny and verification by an expert panel.

Shri H Kumar, Managing Director has been conferred with the ‘FORE - Top Rankers Excellence Award’ for Organisational Excellence at the 18th National Management Summit on ‘Leading Transformation of Organisations in the Digital Age’, at New Delhi.

PROCUREMENT OF GOODS AND SERVICES FROM MSEs

In line with the public procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012, for the year 2016-17, against the set target of 20%, your Company has achieved 21.7% procurement of goods and services from Micro and small Enterprises (MSEs) and 40.3% (excluding proprietary items and catalysts & chemicals).

PROJECTS

Existing Projects: BS VI Upgradation

As per Auto Fuel Policy and directives from MoP&NG, the entire country has to move towards BS VI quality specifications for MS and HSD by 01/04/2020. Products from the Refineries have to meet BSVI quality specifications from 01/01/2020. Further MoP&NG has directed the refineries to complete necessary modifications and construction activities and attain mechanical completion by July, 2019 and roll out the products to Oil marketing companies from 01/01/2020. MRPL requires additional units for MS and Revamp/Catalyst changes for HSD. As part of this project, new FCC Gasoline Treatment Facility, Sulphur Recovery Unit, Nitrogen and Utilities and Revamps of CHTU and DHDT is being carried out.

Axens, EIL, UOP are the licensors for the various units and EIL have been appointed as EPCM Consultant for the job. The Environment Clearance for the project was recommended by the EAC on 18/04/2017.

Engineering of these units are in advanced stages and tendering for material and works have commenced.

CCR2 Unit Revamp

MRPL currently has two numbers of NHT/ Plat former Unit. Both the units are of identical capacity and licensed by M/s UOP. The feedstock to the unit is heavy naphtha from crude distillation units and Hydrocracker units. The objective of the unit is to upgrade the low octane heavy naphtha to High octane reformate. The existing CCR-2 unit is being revamped to produce higher quantity of Reformate, yielding higher quantity of MS.

UOP are the Licensor and M/s L&T, Chiyoda are appointed as EPCM consultant for the project. The ordering works are in progress and the revamped unit is expected to get commissioned in 2018-19.

Railway Siding for Pet Coke

Dispatches by Railway Wagons will improve safety in transportation, reduced environmental pollution, Make MRPL products conveniently available in competitive markets and improve commercial realisation to MRPL. Construction of state of the art Railway siding for smooth evacuation of Petcoke with M/s Konkan Railway is being carried out. The Railway siding will be executed by M/s Konkan Railway Corporation Ltd and M/s Mecon have been appointed as the EPCM consultant to execute the balance of plant of the Project consisting of Closed conveyor system, Loading silos with Rapid Loading Systems, Measuring devices, Pollution control facilities etc.

The project is under execution and Engineering has been completed. Tendering is in progress and the project is expected to complete in December 2018.

Future Projects: 2G Ethanol

Your company has been mandated by the Ministry of Petroleum and Natural Gas (MoP&NG), to set up a 2G ethanol plant in Karnataka State. 2nd generation bio-fuels or “Advance Biofuels” are produced from sustainable feedstock which are not in competent for fodder (viz. Surplus Rice straw, Wheat straw, Maize cobs, Maize stalk, Bagasse, Cotton stalk, etc) .

Based on the Biomass feedstock assessment study, your company is planning to set-up a 2G ethanol plant with a capacity of 60 KLPD. The Prefeasibility study of the project has been completed. As the next course of action, MRPL is planning to take up the detailed feasibility study.

The benefits from the advance bio-fuels will be,

- Ethanol is blended with petrol as a part of ethanol blending program from the Government, this will help in reducing the oil import bill of the country.

- Reduction in CO2 and CO emissions, thereby reducing the greenhouse gas emissions.

- Additional source of income to the farmers.

Power from open source:

MRPL is planning to meet all its future requirements through purchase of power through open access. A feasibility study was conducted by M/s PTC India Ltd. Basis this feasibility, a route survey and cost estimation for new facility to access power at 220kv level is under progress. This project is expected to complete in FY 2019-20.

Desalination Plant:

To mitigate the risk of river water as a single source of water, an alternate source of water is being planned through the installation of desalination plant. The Project has obtained permission from the Government of Karnataka. Feasibility studies along with studies for Environment Impact Assessment etc is being done. The project is expected to be commissioned in FY 2019-20.

USING INFORMATION AND COMMUNICATION TECHNOLOGY FOR PRODUCTIVITY ENHANCEMENT

MRPL has taken initiatives to leverage on Information Technology for improving business processes by implementing SAP (Systems and Application Products for Data processing) across all business functions. To run these applications, a state of the art Data Centre has been functioning at Mangalore site for supporting 24 x 7 business operations. Recently MRPL has completed technical upgrade of SAP from EHP 3 to EHP 7 to enhance functionalities of SAP system. MRPL has migrated its SAP system to GST Regime by incorporating all necessary changes in the system and it has gone live on 01/07/2017. With a strong focus on moving towards digitization, MRPL has initiated systems for digitization of documents and is in the process of implementing paperless E-Office system. All employees related self services has been digitized with the implementation of online systems like Leave Management System, Medical System, Travel Management, Time management, Monthly claims etc. These systems are being migrated to app based solution (SAP Fiori). MRPL is continuously upgrading its IT security to meet the new challenges of information threat thereby protecting all important information from any type of misuse. All IT infrastructures are provided to employees to carry out their regular business activities.

HEALTH, SAFETY & ENVIRONMENT PERFORMANCE

The company’s Philosophy on the HSE is to perform better than minimum required by statutes. The major Achievements on the Environment Management front include:

A) Environment

- Environmental Impact Assessment (EIA) study carried out by M/s National Environmental Engineering Research Institute (NEERI), Nagpur for proposed BS-VI (Stage-1) Auto Fuel Quality Compliance & Associated Projects Facilities in line with the approved Terms of Reference (ToR) obtained from Ministry of Environment, Forest & Climate Change (MoEF&CC), New Delhi.

- Hydrogeological Investigation & Modelling study is being carried out by M/s. National Institute of Hydrology (NIH) in the Refinery.

- Grid Analysis study carried out by M/s. National Environmental Engineering Research Institute (NEERI), Nagpur to assess Environmental Impacts of MRPL Phase-III units operation on Air, Ground Water & Noise quality in surrounding villages. Draft report received and a presentation was given to Technical Advisory Committee of Karnataka State Pollution Control Board (KSPCB).

- As a part of Oil & Gas Conservation Month 2017, a campaign was conducted to make neighbouring Villages, Chelairu, Soorinje, Jokatte & Permude as ‘Smoke Free Village’ by facilitating LPG connections free of cost to those households using only biomass/ wood as cooking fuel.

- As per agreement between MRPL and M/s. Ramky Engineers (State Pollution Control Board approved TSDF Operator), total 1120 MT of Solid Hazardous Waste was disposed during 2016-17.

- Total 287 MT of Spent Catalyst generated from Petro Fluidized Catalytic Cracking Unit (PFCCU) was disposed during 2016-17 for co-processing in Cement Plant.

- Replacement of street light fixtures by LED undertaken.

- In Air conditioning package units of phase-3, R22 (Ozone depleting agents) replaced by R407C refrigerant.

- As part of greenbelt development, 20 acres of plantation developed in Pilikula Biological Park, Mangalore.

- Following activities were conducted to spread awareness on tree plantation:

- Distribution of saplings in schools of neighbouring villages to spread awareness amongst students.

- Mass tree plantation as a part of Koti Vriksha Andolan was carried out with active involvement of neighbouring villagers.

- Contribution made to Karnataka State Forest Department towards the tree plantation program.

- 33,25,012 m3 of Treated Municipal Sewage Water was utilized for Cooling Tower makeup (April, 2016 to March, 2017) to reduce fresh water intake.

- Two Fog Generators procured and installed in the refinery to mitigate the dust pollution, if any, from Coke Laydown and Sulphur Recovery Unit area.

- Work Environment Monitoring carried out in the Refinery by M/s. Shiva Analyticals, Bengaluru to access the impact of air borne chemicals in the work zone area.

- ONGC Group Sustainability Report generated incorporating MRPL’s Sustainability Performance for the year 2015-16.

- Following proposals are initiated/completed to control pollution issues:

1. Covering of Sulphur Open Storage Yard & Coke pit;

2. Installation of closed blow out diverters at the top of the DCU Coke drums-completed;

3. Shifting of existing Pet Coke loading silos to a distance ~700m from the neighbouring residential area;

4. Noise reduction from SRU Incinerator blower by providing acoustic insulation on the discharge line up to Thermal incinerator-completed;

5. Shifting of existing Phase-3 slop tanks away from the existing location;

6. Construction of Railway Siding for reducing road transport.

B) Safety

- Surprise safety audit by OISD, External Safety Audit and audit by PESO were carried out.

- 294 days without Reportable Lost Time Injuries (RLTI) as on 31/03/2017.

- 3.41 Million Man Hours worked as on 31/03/2017.

C) Health

- Annual Medical Checkup of employees was carried out in three categories in compliance with the Rules under Factories Act and Karnataka Factories Rules.

- Two Occupational Health Centre (OHC) with 24x7 availability of Medical Staff are functional.

- Services of MRPL Hospital are available not only for the employees and their dependants but for Out Patients as well.

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY DEVELOPMENT

Corporate Social Responsibility (CSR)

MRPL’s social welfare and community development initiatives focus on the key areas of education, health care & sanitation and overall development of basic infrastructure in and around its operational area/ Dakshina Kannada & Udupi District/Karnataka State. These projects are largely in accordance with Schedule VII of the Companies Act, 2013.

MRPL has spent Rs.1.45 Crore (previous year Rs.4.11 Crore) for various CSR activities during the year 2016-17. Pursuant to Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 the Annual Report on CSR activities for 2016-17 is annexed herewith as ‘Annexure A’.

Sustainability Development and Performance

Sustainability efforts of your Company in foregoing year were intensified with footsteps towards the longevity of the company success in an era of continuous challenges. We as a company have emphasized on long term viable approaches in all segments of the organization. Embracing environmentally sustainable business practices were prioritized in all endeavors of the organization. Sustainable business processes to find novel solutions considering better and greener alternatives were initiated. Educating employees on eco-conscious business, sustainable business culture in all segments of company were given utmost importance. The focus on ensuring sustainability to build a culture of accountability throughout the organization was charted.

Your company improved its water foot print by enhancing intake of sewage treated water from City Corporation. Fresh water was eco-consciously replaced by treated sewage water from Mangalore by a quantity equivalent to 2 Million imperial gallons per day. This dual benefit of reducing fresh water intake and consuming urban effluent from city was seconded by using additional 1.5 Million imperial gallons per day treated effluent recycle to the cooling towers. Your company furthering its commitment to reduce its fresh water footprint is setting up a Reverse Osmosis system at a cost of Rs.15 Crore to further process treated sewage water received from the City, to make the water usable directly in the refinery processes. Your company had initiated actions for Zero Liquid Discharge (ZLD) considering availability of fresh water for refinery processes. The water foot print of the refinery complex is envisaged to be improved with novel practices and engineering techniques.

Your company ventured into renewable sources to supply its energy demands. Your company initiated processes for harnessing solar energy that is available in abundance. A roadmap has been drawn to setup 5.6 MWe of solar power plant from all available rooftops. Your company aims to invest around Rs.40 Crore in this project.

Your company had an innovative approach for improving the surrounding topography. The green cover of surrounding area was envisaged to be made denser by signing a Memorandum of Understanding (MOU) with Pilikula Nisarga Dhama, Vamanjoor, Mangaluru to take up the greenbelt development) at Pilikula Nisarga Dhama, Mangalore. In the novel cause termed “Let us plant a forest - Creation of Green Belt” MRPL sponsored plantation and subsequent maintenance for a period of three years in 20 acres of land by planting 2000 plants in Pilikula Nisarga Dhama with native species of Western Ghat.

Your company is endeavoring towards cleaner technologies by reducing vehicular emissions in refinery premises by switching to battery operated vehicles to its supervisory staff.

Naturally available sun light is used to alleviate the warehouse radiance using a novel technique of “SkyPipe “by harvesting day light.

Your company has envisaged an action plan to replace all existing street lights and office lighting to low power consuming LED’s in its premises. Substantial progress has been made on this and we anticipate being 100% LED illuminated by 2018. Total saving of 163500 W and future saving of 80000 W in next one year is envisaged by the scheme

Your company had practiced and will endure to take the footpath of sustainability in all the upcoming endeavors.

PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARY/ JOINT VENTURES/ ASSOCIATE

The details on the performance and financial position of Subsidiary, Associate and Joint Venture Companies are given in Management Discussion and Analysis (MDA) Report. Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule (5) of the Companies (Accounts) Rules, 2014, a statement on the performance and financial position of the subsidiary and Joint Venture Companies is provided as an Annexure to the Consolidated Financial Statements.

In accordance with the provisions of the SEBI guidelines, the Company has framed a policy for determining material subsidiaries that can be accessed on the Company’s website.

Your company has one subsidiary i.e ONGC Mangalore Petrochemicals Limited (OMPL). As per the Material Subsidiary Policy, OMPL is not a material subsidiary of the Company applying the test of materiality.

ANNUAL REPORT OF SUBSIDIARY AND CONSOLIDATED FINANCIAL STATEMENT

The Audited Consolidated financial statements for the year ended 31st March, 2017 of the Company and its subsidiaries form part of the Annual Report in accordance with Section 129 of the Companies Act, 2013 and the Ind AS 110 on “Consolidated Financial Statements” read with Ind AS 28 on “Investments in Associates and Joint Ventures”. In accordance with section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of the subsidiary Company are available on the Company’s website. These documents will also be available for inspection during business hours at the registered office of the Company at Mangalore.

INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS

The Ministry of Corporate Affairs (MCA) on February 16, 2015, notified that Indian Accounting Standards (Ind AS) are applicable to certain classes of companies from April 1, 2016 with a transition date of 01/04/2015. Ind AS has replaced the previous Indian GAAP prescribed under Section 133 of the Companies Act, 2013 (“the Act”) read with Rule 7 of the Companies (Accounts) Rules, 2014 and are applicable to the Company from 01/04/2016. The reconciliations due to transition from previous GAAP to Ind AS have been set out in Note 51 in the notes to accounts in the standalone and consolidated financial statements.

TRANSFER TO RESERVES

No amount has been transferred to General Reserves for the financial year 2016-17.

DIVIDEND

The Board of Directors has recommended a dividend of Rs.6 per equity share for the FY 2016-17. The dividend shall be paid after the approval of members at the Annual General Meeting. The dividend has been recognized in accordance with Company’s Policy on Dividend Distribution. The Dividend Distribution Policy of the Company is annexed herewith as ‘Annexure B’ to this report.

DEPOSITS

Your company has not accepted any deposits during the year pursuant to Section 74 of the Companies Act, 2013 and Rules thereunder.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

There have been no loans / guarantees given or securities provided during the financial year 2016-17 under the provisions of Section 185 / 186 of the Companies Act, 2013. The details of investments covered under the provisions of Section 186 of the Act are given in notes to financial statements provided in this Annual Report.

SHARE CAPITAL

The company has not issued any shares during the FY 2016-17. The Issued, Subscribed and Paid up Equity Share Capital of your Company as on 31/03/2017 was Rs.1,753 Crore.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF FINANCIAL YEAR AND DATE OF REPORT

There has been no change in the nature of business during the year. No material changes or commitments have occurred after close of the year till the date of this report which affects the financial position of the Company.

HUMAN RESOURCES

Your company values its human resources the most. To keep their morale high, your company extends several welfare benefits to the employees and their families by way of compensative medical care, education, housing and social security. During the financial year 2016-17, various welfare related policies have been implemented by the Company for its employees.

The Company maintains an Employee Club known as MRPL Employees Club (MEC). The Club offers a wide range of pastime activities for the employees and their dependents. An Internal Departmental Cricket Tournament was also organised by MRPL Employees Club (MEC).

37th PSPB Inter Unit Carrom Tournament was held in MRPL Employees Club from 20/02/2017 to 04/03/2017. Players of International repute representing various Oil PSU companies participated in the prestigious tournament. IOCL won both Men’s & Women’s team events and ONGC was the Runner-up in both the team categories.

Your Company continues to enjoy cordial and harmonious relations and not a single man-hour was lost on account of any industrial disturbance during the year 2016-17.

Reporting on SC / ST / PWD

Presidential Directives and other guidelines issued by Department of Public Enterprises, Ministry of Petroleum & Natural Gas, Ministry of Social Justice and empowerment from time to time with regard to reservation in services for Scheduled Castes, Scheduled Tribes, other backward castes and Persons with disabilities. An adequate monitoring mechanism has been put in place for sustained and effective compliance. Liaison officers are appointed to ensure implementation of the Government Directives. Reservation Rosters are maintained as per the directives and are regularly inspected by the Liaison officer of the company as well as the officials from MoP&NG to ensure proper compliance of the Directives. MRPL also complies with provisions under “The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 relating to providing employment opportunities for Persons with Disabilities (PWDs). As on 31/03/2017, there are 28 permanent employees with disabilities on the roll of MRPL.

During the year, your Company has recruited 120 employees comprising of 3 women employees and 46 Schedules Caste (SC) / Schedule Tribe (ST) employees. Total employee strength as on 31/03/2017 was 1,917 including 132 women employees, 252 SC/ST employees and 28 employees belonging to persons with disability category (PWD). 821 employees belong to Management cadre whereas 1,096 employees belong to Non-Management cadre. During the Year 2016-17, the Company devoted 5142 Mandays for training, development and learning, which amounts to 3.71 Mandays per employee for Management staff and 2.42 Mandays per employee for Non-Management staff.

In accordance with para-29 of the Presidential Directive, statistics relating to representation of SCs / STs in the prescribed performa, SC / ST/ OBC Report - I and SC / ST / OBC Report -II is attached as ‘Annexure - C’ to the report.

Skill Development Centre

As a part of National Skill Development Mission of the Government of India, MRPL has set up “MRPL Kaushal Vikas Kendra” (MRPL KVK) on 12/02/2017. The first batch of 60 candidates of MRPL KVK is undergoing skill development training in “CNC Operator-Turning” and “Industrial Electrician” course at Nettur Technical Training Foundation (NTTF), Bangalore.

WOMEN EMPOWERMENT

Women employees constituted over 6.88 percent of the Company’s workforce. During the year, programmes on women empowerment and development, including programmes on gender sensitization were orgainsed. Your Company has an Internal Complaints Committee (ICC) required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There have been no cases reported to the Committee, for the financial year 2016-17.

OFFICIAL LANGUAGE

Your Company is implementing Official Language Policy as per the Annual Programme prescribed by the Department of Official Language, Ministry of Home Affairs, Govt. of India. In order to propagate and promote Hindi among the employees, Hindi Workshops were organized on a regular basis at Mangalore, Mumbai, Delhi & Bangalore Offices. At regular intervals inspection of internal departments and subordinate offices records/documents for usage and promotion of Hindi were carried out.

Also, Hindi Fortnight was celebrated and many Hindi competitions such as Hindi Dictation, Handwriting, Admin Glossary, Hindi Padho, Samajho & Tick karo, News reading etc were conducted for the employees and their family members in the month of September 2016. In addition one more Hindi competition (Admin Glossary) was conducted in January 2017 for employees. Competitions were held in Hindi language for employees and their family members during National Safety Day, Environment Day, Security awareness week and Vigilance awareness week. Hindi usage is promoted by conducting special quiz competition for senior officers such as GMs & GGMs during Hindi month celebrations.

Hindi classes were arranged regularly to employees to qualify in Prabodh, Praveen & Pragya examinations and Hindi Steno examination. Employees are motivated to pass final Hindi examinations through Incentive schemes such as Cash award & Personal Pay etc. To increase the correspondence in Hindi in the organization, Unicode facilities were activated on all computers used for daily office work.

Special awards were given to 30 students of Delhi Public School (DPS) in MRPL Township, who have scored highest marks in Class-X Hindi examination.

Your Company participated at TOLIC level Hindi competitions and won Eight prizes and stood Second at the TOLIC level competitions. Hindi solo song competition was conducted for employees of TOLIC member organizations at MRPL. In addition Hindi debate competition was also organized for Degree College students of Mangalore University as a part of Hindi month celebrations under the auspices of TOLIC Mangalore. MRPL has been awarded first prize for outstanding performance in hindi implementation for the year 2016-17 at TOLIC level.

In order to propagate and to promote usage of Hindi in the company, in house Hindi Journal namely “MRPL PRATIBIMB” is being published. MRPL follow the guidelines of Official Language (OL), and conducted Official Language Implementation Committee (OLIC) meeting during four quarters of the year under chairmanship of MD to review and for action plan for improving usage of Hindi in MRPL. Your company is making continuous efforts for promoting Hindi usage in the organization by encouraging employees through trainings, workshops, seminars and incentives.

RIGHT TO INFORMATION ACT, 2005

Company’s RTI manual is available on Company’s website which discloses all required information. During the year, 174 applications were received, out of which 150 were disposed off before 31/03/2017, 01 application was transferred to other Public Authority and balance 23 applications were disposed off after 31/03/2017.

SECURITY MEASURES

Security of MRPL Refinery is designed to comply with Oil Sector Infrastructure Protection Plan (OSIPP) and the Security Audit recommendations given by MHA from time to time.

Physical Protection of the Refinery is handled by Central Industrial Security Force (CISF). The Company has recently inducted an additional contingent of 62 CISF personnel to further augment security arrangements in Phase-3 area of the Refinery. Proposal to further augment the CISF strength is under consideration of the MHA.

Security is on top of the agenda of MRPL and to ensure preparedness, periodic mock drills on work-place security preparedness are conducted. To promote awareness on security issues among all stake holders, Security Awareness Weeks are organised periodically. An integrated CCTV cum Electronic Intrusion Detection system is under implementation to further strengthen electronic surveillance of the Refinery.

VIGILANCE FUNCTION

Your company has developed a structured mechanism of vigilance functions and its practices are focused towards creation of value to stakeholders. The practices involve multilayer checks and balances to improve transparency. Vigilance awareness and preventive vigilance activities were continuously carried out during the year. New Chief Vigilance Officer Shri Rajeev Kushwah, ITS has taken charge on 15/04/2017.

In compliance with CVC instructions, your company has implemented a complaint handling policy in which all complaints received from various sources are recorded and can be examined by vigilance. MRPL corporate website has been revamped by including the system for registering the online complaints. The details on the best vigilance practices and links to various useful websites is also provided in the MRPL Corporate website. Your company has achieved highest compliance level with regard to e-procurement, e-tender and e-payment.

In line with instructions of CVC, your company had conducted Vigilance Awareness programs for spreading awareness on evil effects of corruption. A public kiosk was set up at Mangalore City Corporation facilitating the citizens of Mangalore to take E-Integrity Pledge. A walkathon was conducted in Surathkal to spread the awareness on transparency in public life. Debate competition was also conducted for the school children. MRPL and All India Radio, Mangalore conducted several vigilance awareness programs during the year.

DoPT has developed a web enabled online system for vigilance status of employees working in Government sector. Your company is in process of updating the vigilance status of Board level and below board level employees in the web system.

Leveraging the technology to enhance transparency has been a thrust area of action in which vigilance has placed a catalytic role. The website of company displays downloadable tender document, publication of information of work awarded on nomination basis, publication of post award information of contracts.

Whistle Blower Policy

The Whistle Blower Policy is formulated to provide a vigil mechanism for Directors and Employees to raise genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy. It also provides for adequate safeguard against victimisation of persons who use such mechanism. The Policy provides necessary safeguards for protection of Directors and Employees who avail the vigil mechanism from reprisals or victimization, for whistle blowing in good faith and to provide opportunity to Directors and Employees for direct access to the Chairperson of the Audit Committee in exceptional cases. The policy is available on the Company’s website. During the year, no complaints were received under Whistle Blower Policy.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

Information required to be disclosed pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo are furnished in ‘Annexure- D’ which forms part of this Report.

MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES

MRPL, being a Government Company, is exempted from the provisions of Section 197(12) of the Companies Act, 2013 and relevant Rules in view of the Notification dated 05/06/2015 issued by Ministry of Corporate Affairs (MCA).

The functional directors of the Company are appointed by the administrative Ministry i.e. MoP&NG within the terms & conditions as per DPE guidelines.

EXTRACT OF ANNUAL RETURN

Information required to be disclosed pursuant to Section 134(3)(a) of the Companies Act, 2013 with respect to the details forming part of the extract of the Annual Return in form MGT-9 are furnished in ‘Annexure- E’ which forms part of this Report.

RELATED PARTY TRANSACTIONS & PARTICULARS OF CONTRACTS / ARRANGEMENTS WITH RELATED PARTY

All transactions entered with related parties during the financial year 2016-17 were on arm’s length basis and in ordinary course of business. Further, there were no material related party transactions during the year with the Promoters, Directors or Key Managerial Personnel. The Company has adopted a Related Party policy and procedure, which is available at company’s website.

The particulars of every contract or arrangements entered into by the Company with Related Parties referred in Section 188(1) of the Companies Act, 2013, in the prescribed Form No. AOC - 2 attached as ‘Annexure-F’. MCA vide Notification dated 05/06/2015, has exempted the applicability of Section 188 (1) of the Companies Act, 2013 for a transaction entered into between two Government Companies.

DIRECTORS & DIRECTORS’ RESPONSIBILITY STATEMENT

Changes in the Board of Directors and Key Managerial Personnel during the financial year 2016-17

MRPL being a Central Public Sector Enterprise (CPSE), Directors on the Board of the company are appointed by the Administrative Ministry i.e. Ministry of Petroleum and Natural Gas (MoP&NG), Government of India and therefore the provisions of Section 134(3) (e) of the Companies Act, 2013 regarding policy on Directors appointment and remuneration shall not apply in view of the MCA notification dated 05/06/2015.

Shri A.K. Sahoo assumed the office of Director (Finance) on 01/02/2016 and was appointed as a Director in the 28th Annual General Meeting held on 03/09/2016, in place of Shri Vishnu Agarwal, who superannuated from the services of the Company. Shri Diwakar Nath Misra, Director (GP), MoP&NG was appointed as Additional Director with effect from 09/03/2016 and was also appointed as a Director in the 28th Annual General Meeting held on 03/09/2016. Shri B.K. Namdeo, Nominee Director, HPCL ceased to be a Director consequent upon his superannuation from the services of HPCL on 31/10/2016 and Shri Vinod S. Shenoy, Director (Refinery) HPCL was appointed as Director in casual vacancy with effect from 08/11/2016. The Board places on record its appreciation for the valuable services rendered by the outgoing Directors during their respective tenure.

Ms. Manjula C. nominated as Non official Independent Director by MoP&NG with effect from 31/01/2017 was appointed as an Additional Director by the Board with effect from 31/01/2017, vacates her office in this AGM and being eligible offers herself for appointment as Director in the 29th Annual General Meeting.

FORMAL ANNUAL EVALUATION

MRPL, being a Government Company, the provisions of Section 134(3)(p) of the Companies Act, 2013 in respect of annual evaluation of the Board Committees and individual Directors shall not apply in view of the MCA notification dated 05/06/2015. However, as per Regulation 17 of SEBI Listing Regulations, 2015 formal annual evaluation of independent Director had been carried out by the Board. No meeting was held by the Independent Directors during the year as the company had only one Independent Director.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to provisions of Section 134 of the Companies Act, 2013, the Board of Directors of your Company has made the following statement for FY 2016-17:

a) In the preparation of the Annual Financial Statements for the year ended March 31, 2017, the applicable Ind AS have been followed along with proper explanation relating to material departures;

b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are 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 that period;

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the Annual Financial Statements on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

As per SEBI Listing Regulations, 2015, Audit Committee has reviewed the Directors’ Responsibility Statement.

NUMBER OF BOARD MEETINGS

The Board of Directors of your Company had six (6) Meetings during the FY 2016-17. The maximum interval between any two meetings did not exceed 120 days as prescribed in the Companies Act, 2013. Details of the Board Meetings held, have been furnished in the Corporate Governance Report which forms part of this Report.

AUDIT COMMITTEE

The Audit Committee has been constituted as per the terms of reference, prescribed under Section 177 of the Companies Act, 2013 read with Rule 6 of the Companies (Meetings of the Board and its Powers) Rules, 2014, Regulation 18 of SEBI Listing Regulation, 2015 and Guidelines on Corporate Governance for Central Public Sector Enterprise issued by Department of Public Enterprise, Government of India. There have been no instances where the recommendations of the Audit Committee were not accepted by the Board of Directors. The details of Audit Committee are disclosed in the Corporate Governance Report which forms part of this Report.

Due to non-availability of sufficient number of Independent Directors, the Audit Committee is not constituted as per the provisions of the Companies Act, 2013 & SEBI Listing Regulation, 2015.

NOMINATION AND REMUNERATION COMMITTEE

Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI Listing Regulations, 2015 and DPE guidelines on Corporate Governance for CPSE, your Company has constituted a Nomination and Remuneration Committee. The details on the Nomination and Remuneration Committee are disclosed in Corporate Governance Report which forms part of this report.

MRPL is a ‘Schedule-A’ category-1 Miniratna Central Public Sector Enterprise (CPSE). The appointment, terms, conditions and remuneration of Managing Director and Functional Directors (Whole-time Directors) are fixed by the Department of Public Enterprises (DPE), Govt. of India. MRPL being a Central Public Sector Enterprise (CPSE), Directors on the Board of the company are appointed by the Administrative Ministry i.e. Ministry of Petroleum and Natural Gas (MoP&NG), Government of India.

Due to non-availability of sufficient number of Independent Directors, the Nomination and Remuneration Committee is not constituted as per the provisions of the Companies Act, 2013 & SEBI Listing Regulation, 2015.

RISK MANAGEMENT POLICY

In line with the requirements of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, your Company has developed and rolled out a comprehensive Enterprise-wide Risk Management (ERM) Policy throughout the organization. The Audit Committee periodically reviews the risk assessment and minimization process in MRPL.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS

There are no significant and material orders passed by the Regulators/ Courts/ Tribunals that would impact the going concern status of the Company and its future operations.

CORPORATE GOVERNANCE

The Companies Act, 2013 and SEBI Listing Regulations, 2015 have strengthened the governance regime in the country. Your Company is in compliance with the governance requirements provided under the Companies Act, 2013, SEBI Listing Regulations, 2015 and has complied with all the mandatory provisions of Companies Act, 2013 and Rules made thereunder and SEBI Listing Regulation, 2015 relating to the Corporate Governance requirements and mandatory guidelines on Corporate Governance for CPSEs issued by DPE, Government of India, except for the presence of requisite number of Independent Directors on the Board and Board Committees. The Corporate Governance Report for the FY 2016-17 forms part of this Report.

Pursuant to Schedule V of the SEBI Listing Regulations, 2015, the Auditors’ certificate on compliance of conditions of Corporate Governance also forms part of the Annual report. The Auditors have made observations on the appointment of Independent Directors on the Board of the Company. The Company is pursuing with the Ministry of Petroleum & Natural Gas (MOPNG) for the appointment of requisite number of Independent Directors.

Pursuant to requirements of the Companies Act, 2013 and SEBI Listing Regulations, 2015, following policies/codes have been formulated and uploaded on the Company’s website at www.mrpl.co.in :

a) Code of Conduct for Board Members and Senior Management Personnel;

b) Whistle Blower Policy;

c) Related Party Transactions - Policy and Procedures;

d) CSR & SD Policy;

e) Material Subsidiary Policy;

f) The Code of Internal Procedures and Conduct for prohibition of Insider Trading in Dealing with the securities of MRPL;

g) Policy on Materiality for disclosure of events to the Stock Exchanges;

h) Policy on preservation of Documents;

i) Training Policy for Board of Directors; j) Dividend Distribution Policy.

BUSINESS RESPONSIBILITY REPORT

SEBI Listing Regulations, 2015 mandated inclusion of Business Responsibility Report (BRR) as part of the Annual Report for top 500 listed entities based on market capitalization. In compliance with the Regulation, BRR forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

In terms of Regulation 34 of the SEBI Listing Regulations, 2015 the Management’s Discussion and Analysis (MDA) Report for the FY 2016-17 forms part of this Report.

INTERNAL FINANCIAL CONTROL

Your Company has a well-established and efficient internal control system and procedure. The Company has a well-defined delegation of financial powers to its various executives through the manual of Delegation of Powers (DOP). The Company has in-house Internal Audit Department commensurate with its size of operations. Audit observations are periodically reviewed by the Audit Committee of the Board and necessary directions are issued whenever required.

AUDITORS

Joint Statutory Auditors

M/s Shreedhar, Suresh & Rajagopalan, Chennai and M/s A. Raghavendra Rao and Associates, Mangalore were the Joint Statutory Auditors of the Company for the FY 2016-17. They have audited the Financial Statements for the Financial Year 2016-17 and submitted their report which forms part of this report. There is no qualification in the Auditors Report on the Financial Statements of the company. Notes to the Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments.

Secretarial Auditor

Your Company engaged M/s Kumar Naresh Sinha & Associates, Practicing Company Secretary, Noida for conducting Annual Secretarial Audit for the year 2016-17 pursuant to Section 204 of the Companies Act, 2013. M/s Kumar Naresh Sinha & Associates, Practicing Company Secretary, Noida has issued Secretarial Audit Report for the year 2016-17 which forms part of this report as ‘Annexure-G’. The Auditors have made observations on the appointment of Independent Directors on the Board of the Company and overtime working hours as per the provisions of the Factories Act, 1948. The Company is pursuing with the Ministry of Petroleum & Natural Gas (MoP&NG), Govt. of India, for the appointment of requisite number of Independent Directors. As regards the observations on working hours, the same has been taken up with the Department of Public Enterprises by the Industry Group.

Cost Auditor

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost accounts maintained by the company for the FY 2016 -17 are being audited by Cost Auditors M/s. Bandyopadhyaya Bhaumik & Co., Kolkata.

M/s. Bandyopadhyaya Bhaumik & Co., Kolkata have been reappointed as Cost Auditor for FY 2017-18.

COMMENTS OF C&AG ON THE JOINT STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED AND STANDALONE FINANCIAL STATEMENTS FOR THE FY 2016-17

The Comments of Comptroller & Auditor General of India (C&AG) forms part of this report and are attached as ‘Annexure-H’. You would be pleased to know that your company has received NIL comments from C&AG for the year 2016-17.

ACKNOWLEDGEMENT

Your Board of Directors wish to thank the shareholders for the continued confidence reposed on their Company. Your Directors sincerely thank the Government of India (GoI), Ministry of Petroleum and Natural Gas (MoP&NG), Ministry of Finance (MoF), Ministry of Corporate Affairs (MCA), Department of Public Enterprises (DPE), Ministry of Environment and Forest (MoEF), Ministry of External Affairs (MEA), Ministry of Shipping (MoS), Ministry of Home Affairs (MHA), other Ministries and Departments of the Central Government and the Government of Karnataka, for their valuable support, guidance and continued co-operation.

Your Directors gratefully acknowledge support and direction provided by the parent company, Oil and Natural Gas Corporation Limited (ONGC) and the support of Hindustan Petroleum Corporation Limited (HPCL), as Promoters of the company. Your Directors acknowledge the continuing co-operation and support received from New Mangalore Port Trust, Financial Institutions, Banks and all other stakeholder. Your Directors recognize the patronage extended by the valued customers for the products of the Company and promise to provide them the best satisfaction. The Board would like to express its sincere appreciation for the dedicated efforts made and valuable services rendered by all the employees collectively and concertedly as a Team known as “Team MRPL” in the Company’s excellent achievements during the year 2016-17.

For and on behalf of the Board

(Dinesh K. Sarraf)

Chairman

(DIN: 00147870)

Place: New Delhi

Date: 19/07/2017


Mar 31, 2015

Dear Members,

On behalf of the Board of Directors, I take pleasure in presenting the Board''s Report on the performance of your Company, together with the Audited Financial Statements and Auditors'' Report and the Report of the C&AG of India for the financial year ended 31/03/2015.

1.0 THE STATEMENT OF COMPANY''S AFFAIRS:

1.1 PERFORMANCE AT A GLANCE

- Crude processed at 14.65 MMT during the year 2014-15 against 14.55 MMT during the previous year 2013-14.

- Turnover at Rs 62,412 Crores during the year 2014-15 against Rs 75,226 Crores for the previous year 2013-14.

- Export Turnover at Rs 22,790 Crores during the year 2014-15 against Rs 35,392 Crores for the previous year 2013-14.

- After Tax Loss Rs 1,712 Crores during the year 2014- 15 against Profit of Rs 601 Crores for the previous year 2013-14

1.2 FINANCIAL PERFORMANCE

The Audited Standalone / consolidated financial performance for the year ended 31/03/2015 is summarized below:

(Rs In Crores)

Standalone Year ended Year ended 31st March 2015 31st March,2014

Turnover 62412 75226

Profit before (1250) 1437

Depreciation Interest and Tax Interest

Interest and Finance Charges 407 321

Gross Profit after interest but before (1657) 1116 Depreciation and Tax

Depreciation and Amortizations 499 706

Profit/(Loss) Before Tax (2156) 410

Provision for Taxation (444) (191) (deferred tax liability)

Profit/(Loss) after Tax (1712) 601

Balance of Profit/(Loss) 4839 4238 brought forward from previous year

Surplus available for appropriation 3075 4839

Consolidated Year ended Year ended 31st March 2015 31st March,2014

Turnover 62051 74952

Profit before Depreciation Interest and Tax (1325) 1448

Interest and Finance Charges 448 323

Gross Profit after interest but before (1773) 1125 Depreciation and Tax

Depreciation and Amortizations 522 707

Profit/(Loss) Before Tax (2295) 418

Provision for Taxation (deferred tax liability) (442) (188)

Profit/(Loss) after Tax (1853) 606

Balance of Profit/(Loss) brought forward 4858 4252 from previous year

Surplus available for appropriation 3003 4858

1.3 OPERATIONAL PERFORMANCE:

- Your Company had processed highest ever crude of 14.65 MMT during the financial year 2014-15 compared to 14.55 MMT during the previous year.

- The operating margin was 3.44 $/bbl during 2014-15 as against 1.69 $/bbl during 2013-14.

- Your Company has achieved export turnover of Rs 22,790 Crores during the financial year 2014-15 by exporting products viz., Motor Spirit, Naphtha, Mixed Xylene, High Speed Diesel, Jet fuel and Fuel Oil.

1.4 DIVIDEND AND TRANSFER TO RESERVES:

During 2014-15, your Company has incurred loss of Rs 1,712 Crores. Hence, your Directors have not recommended any dividend for FY 2014-15 and no amount has been transferred to General Reserve during the FY 2014-15.

1 .5 DEPOSIT:

Your Company has not accepted any fixed deposit during the year from the public. As on 01/04/2014, certain customer advances remained unpaid which were classified as deemed deposits under the provisions of the Companies Act, 2013 and were refunded to customers during the year.

1.6 PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements. Full particulars of Loans given, Investments made and Guarantees given, and Securities provided are furnished in the notes to Financial Statements forms part of the Annual Report.

1.7 SHARE CAPITAL:

The Authorised Share Capital of the company has been increased from Rs 2,000 Crores to Rs 3,000 Crores. The Issued, Subscribed and Paid up Equity Share Capital of your Company as on 31/03/2015 stood at Rs 1,753 Crores. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options or sweat equity as any kind of securities.

1.8 MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF FINANCIAL YEAR AND DATE OF REPORT.

There is no occurrence of material change and commitment made between the end of financial year and date of this report which has affected financial position of the company.

1.9 CREDIT PROFILE

- After Annual surveillance, the highest Corporate Credit Rating has been reaffirmed by both ICRA and CRISIL in March 2015.

- ICRA has reaffirmed "Ir AAA" to MRPL.

- "[ICRA] AAA" for Rs 3,000 Cr. Fund- Based limits of MRPL.

- "[ICRA] A1 " to Rs 4,000 Cr. Non-Fund based limits of MRPL.

- "[ICRA] A1 " to Rs 900 Cr. Commercial Paper Programme to MRPL.

- CRISIL has reaffirmed the highest Corporate Credit Rating "[CCR AAA]" to MRPL.

2.0 MARKETING & BUSINESS DEVELOPMENT:

Your Company has retained its strong market presence in its Refinery zone for various petroleum products and also been able to get a good market reach for Petcoke. Company could evacuate Petcoke and Sulphur on a consistent basis in domestic as well as export market.

With entry of natural gas pipeline in North Karnataka & Goa, customers earlier using Fuel Oils are shifting to Gas, leading to shrinkage of liquid fuels market. However, due to commissioning of the Petcoke unit in MRPL, Company has carried good market development and has already attained market leadership for Petcoke sales in South India.

Your Company continues to expand its market spread in the direct sales segment of petroleum products in the state of Karnataka and its adjoining states. Your Company has significant market share and direct customer relations for products such as Bitumen, Fuel Oil, Sulphur, Diesel, Petcoke and Mixed Xylene in its refinery zone. The total sales volume of direct marketing products during the FY 2014-15 was 0.81 MMT with a sales value of Rs 1,926 Crores compared to volume of 0.46 MMT and sales value of '' 2,291 Crores in the previous FY 2013-14.

The deregulation of HSD pricing has opened up opportunities for recommencing the retail business. Your company has significantly increased HSD sales in its refinery zone. Domestic sale of Sulphur has also increased considerably against previous year. Your Company has commissioned its first dealer operated Retail Outlet at Mangalore in December, 2014 and is in the process of setting up large number of retail outlets in its refinery zone.

Your Company has set up a Polypropylene plant of 440 KTPA capacity and company has already appointed required channel partners in initial primary target markets for marketing of Polypropylene. Detailed Market study has been completed and Sales are expected to commence soon. In addition, Your Company is also developing its own storage infrastructure for Polypropylene in Karnataka.

3.0 HEALTH, SAFETY AND ENVIRONMENT PERFORMANCE

Your Company have achieved 1212 accident free days as on 18/05/2015 with 12.10 million man hours worked. The various units of Phase - III Refinery Upgradation and Expansion Project and storage tanks were commissioned safely during the year.

Your Company is committed towards imparting continuous training in fire and safety practices. Regular Mock exercises were conducted considering the various emergency scenarios in plant and non plant areas.

Your Company believes in "Perform beyond Compliance" - that is to perform better than minimum required by statutes. The Refinery of your Company is a certified ISO

14001: 2004 for Environment Management Systems by TUV Rheinland. The major achievements on the Environment Management and performance are summarized as under:

In Environment Management, the company''s Philosophy is to perform beyond Compliance - that is to perform better than minimum required by statutes. The major Achievements on the Environment Management front include:

- Water Audit Study conducted in the Refinery by M/s. National Productivity Council, Hyderabad.

- Marine Quality Monitoring at Single Point Mooring (SPM) conducted by M/s. College of Fisheries, Mangalore.

- Utilization of Sewage Treatment Plant (STP) water as make-up to cooling towers carried out. This measure is directly resulted in reduction of fresh water consumption.

- A Sulphur Pastillation Unit is commissioned as a part of Phase - III Project to reduce the dust emissions.

- Inspection of Tier - I facility of SPM was carried out by OISD & Indian Coast Guard in the month of March, 2015.

- CTBD (Cooling Tower Blow Down) system of WWTP - III commissioned in the month of March, 2015.

- VOC Recovery system is commissioned in WWTP - III.

- SOx & NOx Stack Online Analyzer data of Phase - I & II units connected to CPCB server in the month of March, 2015.

- Hydrocarbon detectors at strategic locations in the refinery are provided.

- VOC Emission monitoring carried out in the refinery through reputed agency at 74000 points and corrective measures are taken to effectively minimize the same, wherever needed.

- Periodic Manual Stack Monitoring is being carried out by MoEF/KSPCB approved external agency.

- Ambient Air Quality Monitoring is carried out by MoEF/ KSPCB approved external agency in and around the refinery at 9 location including 4 locations in Phase - III area as per revised National Ambient Air Quality Monitoring Standards published by Ministry of Environment & Forests.

- An advanced technology has been employed for cleaning Crude Tanks in the refinery which results in lower oil content in the Tank sludge.

- Environment Awareness Programmes was organized periodically in the neighboring villages in association with Karnataka State Pollution Control Board.

- 70-75% of the total treated Effluent is recycled back to the cooling towers.

- Continuous online monitoring of Analyzers installed to monitor Treated Effluents for parameters like pH, Sulphide, Dissolved Oxygen, Phenols, before discharged to sea.

- Treated effluents are monitored on a daily basis at both Refinery end & at APMC yard.

- A Fortnightly Marine Environment Impact Assessment study is being carried out through College of Fisheries, Mangalore from 7 monitoring stations set-up in the vicinity of Treated effluent Disposal point (at sea) & 3 Stations in the Seashore. The results indicate no adverse effect on the marine environment.

- The Company is meeting the stipulations of KSPCB with regard to the quality of treated effluent, which is well below the standards in every aspect, on a continuous basis.

- Ten Nos. of Ground Water monitoring stations in and around the Refinery have been set up and regular monitoring of ground water quality is being carried out along with Karnataka State Pollution Control Board (KSPCB).

- Low sulphur Fuel oil was being used in all the Refinery furnaces and boilers, simultaneously maximizing the usage of ultra low Sulphur fuel gas generated in the refinery process units.

- Sulphur Recovery Units (SRUs) are operated at efficiency greater than 99%.

- Annual Submarine pipeline inspection carried out by National Institute of Oceanography (NIO).

4.0 PROJECTS

4.1 Phase - III Refinery Upgradation and Expansion Project:

The commissioning of all the Secondary Process Units of Phase -III Refinery Upgradation and Expansion project were completed in September 2014, these units will increase the distillate yield and produce high value products viz Propylene, Gasoline from low value black oils. Crude Distillation Unit (CDU), Hydrogen Generation Unit (HGU) and Diesel Hydrotreater Unit (DHDT) were commissioned in the previous financial years. The delay in commissioning of the process units was mainly on account of non-availability of reliable steam and Power from CPP. The total expenditure incurred by your Company on Phase -III Refinery Upgradation and Expansion project is around Rs 12,485 Crores as on 31/03/2015.

Your refinery is now capable of processing most difficult crudes from 18 API (blended) to 46 API gravity and light to heavy / sour to sweet crudes and also capable to handle High TAN Crudes also.

4.2 Single Point Mooring (SPM):

Your Company has setup SPM along with coastal booster pumping station within the port limits at a location of 16 Km from the shore having the draft availability of 32 M for handling Very Large Crude Carrier (VLCC), at a cost of Rs 1,044 Crores (Actual cost as on 31/03/2015 is Rs 807 Crores). The SPM is constantly unloading Suez Max (about 135,000 of cargo) ships since commissioning in August, 2013. As on 31/03/2015, 108 ships has been unloaded at SPM, handling total crude cargo of approximately 14.5 Million Tonnes. This facility has also decongested existing berth at New Mangalore Port, during non-monsoon periods.

4.3 Polypropylene Unit:

The Polypropylene (PP) unit has been set up with the licensor M/s Novolen Technology, Germany in integration with the Phase - III Project at an estimated Capex of Rs 1,804 Crores. The total expenditure incurred on this project is Rs 1,227 Crores as on 31/03/2015. The feed-in has been achieved during March, 2015. The unit was inaugurated on 05/04/2015 by the Hon''ble Minister of Petroleum and Natural Gas (Independent Charge) and commercial production has been started since 18/06/2015.

5.0 AWARDS AND RECOGNITION:

- Won the "Export Excellence Award, 2014" in Best Exporter Award (Medium/large category) from the Federation of Karnataka Chamber of Commerce and Industry (FKCCI) for FY 2013-14 in recognition of its Rs 35,392 Crores worth of export.

- Won the Silver at "Niryat Shree Award -2014" in the residual sector of the MSME at FIEO (Federation of Indian Export Organisation).

- MRPL has conferred the prestigious "Skoch Foundation Order -of-Merit Award" for the best project in the country.

- Shri Vishnu Agrawal, Director Finance of MRPL was adjudged winner of the ''BT-STAR Excellence Award in the category PSU- small,- DIRECTOR-FINANCE OF THE YEAR'' post a rigorous evaluation process by the Jury of the BT- Star Excellence Awards, 2015.

- MRPL won the first prize for outstanding performance in the area of Hindi Implementation for the year 2014-15 for fourth consecutive year by TOLIC, Mangalore.

6.0 PERFORMANCE OF SUBSIDIARY/ JOINT VENTURES:

Pursuant to Section 129 (3) of the Companies Act, 2013 read with Rule (5) of the Companies (Accounts) Rules, 2014, the salient features of Financial statement of Subsidiary and Joint Ventures in Form AOC-1 is attached as Annexure ''A'' which forms part of this report.

6.1 SUBSIDIARY COMPANY:

Your Company has adopted a Policy on determining Material Subsidiary, which is available at www.mrpl.co.in.

6.1.1 ONGC Mangalore Petrochemicals Limited (OMPL)

ONGC Mangalore Petrochemicals Limited (OMPL) is the only subsidiary company. Your company holds 51% of equity shares in OMPL since 28/02/2015 and the balance 49% held by parent company ONGC. OMPL has set up an Aromatic Complex with an annual capacity 914 KTPA of Para-xylene and 283 KPTA of Benzene in Mangalore Special Economic Zone as value chain integration project of ONGC & MRPL. The total project cost is about Rs 6,875 Crore and it has commenced commercial operation from 1st October, 2014. 0.26 MMT of Para-xylene and 0.06MMT of Benzene, have since been exported in the financial year, as the production is being ramped up.

The revenue for FY 2014-15 is Rs 1,728.25 Crores (Previous Year Rs 0.026 Crores) with Pre-tax loss of Rs 914.30 Crores (Previous Year loss of Rs 1.18 Crores) and post-tax loss of Rs 914.30 Crores (Previous Year loss of Rs 0.47 Crores).

6.2 JOINT VENTURE(S)

6.2.1 Shell MRPL Aviation Fuel Services Limited (SMAFSL)

MRPL Joint Venture (JV) with Shell B.V. Netherland known as Shell MRPL Aviation Fuel Services Limited (SMAFSL) supplies Aviation Turbine Fuel (ATF) to both domestic and international airlines at several Indian airports. The revenue for FY 2014-15 is Rs 636 Crores (Previous Year Rs 662 Crores) with Pre-tax profit of Rs 10.69 Crores (Previous Year Rs 18.40 Crores) and post-tax profit of Rs 7.74 Crores (Previous Year Rs 12.30 Crores).

6.2.2 Mangalam Retail Services Limited (MRSL)

Mangalam Retail Services Limited (MRSL) the Joint Venture (JV) Company with Ashok Leyland Project Services Limited (ALPSL) was incorporated on 03/05/2006 to set up commercial complexes for promoting retail plan of MRPL. In absence of any viable business plan, the continuance of the JV is being examined. The JV has not commenced any business activities. Hence there is no business transaction during the FY 2014-15. The Account of the JV was audited for the purpose of consolidation.

7.0 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO :

Information required to be disclosed pursuant to Section 134(3)(m) of The Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 with respect to conservation of energy, technology absorption and foreign exchange earnings & outgo are furnished in Annexure ''B'' which forms part of this Report.

8.0 EXTRACT OF ANNUAL RETURN :

Information required to be disclosed pursuant to Section 134(3)(a) of The Companies Act, 2013 with respect to the details forming part of the extract of the Annual Return in form MGT-9 are furnished in Annexure ''C'' which forms part of this Report.

9.0 MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES:

Your Company being a Govt. company is exempted to furnish information under Section 197 of the Companies Act, 2013 vide Ministry of Corporate Affairs (MCA) Notification dated 05/06/2015.

10.0 CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY DEVELOPMENT :

10.1 Corporate Social Responsibility (CSR):

Your Company''s social welfare and community development initiatives focus on the key areas of education, health care and overall development of basic infrastructure in and around its operational areas. These projects are largely in accordance with Schedule VII of the Companies Act, 2013.

The CSR objective of your Company in line with DPE guidelines is promoted under the name of "SAMRAKSHAN". This captures the spirit and commitment to protect, preserve and promote the social, cultural and environmental heritage and wealth in and around the area of our business and to usher in sustainable development. Facilitating Midday Meal to support continuing Education, setting up of computer room, Anganwadi building, skill development training for youths, infrastructural development etc. is a part of the Samrakshan activities. In addition, your Company is committed to mission of "Swachh Vidhyalaya Abhiyan" and has undertaken construction of 50 toilets in Govt. schools.

Your Company has taken up the construction of One wing of Government Lady Goschen Hospital, Mangalore under its "CSR - SAMRAKSHAN" Programme, at a cost of Rs 21.70 Crores.

Lady Goschen Hospital is a 162 year old hospital for Women, established in the year 1849 and is located at the heart of Mangalore City. It has 260 beds, mainly catering to the health care needs of patients from poorer section of society. About 75% of the patients who come for treatment to this hospital belong to Below Poverty Line (BPL) category.

Your company has spent Rs 4.81 Crores (Previous Year Rs 3.47 Crores) for various CSR activities during the year 2014-15. Pursuant to Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 the Annual Report on CSR activities is annexed herewith as Annexure ''D''.

10.2 Sustainability Development Performance:

- Sustainability efforts of your Company is centering on drawing action plans towards minimizing our carbon footprint through managing complex projects and operations, addressing risk and opportunity, and engaging externally. We also continue our focus on defining supplier expectations for business conduct, and on addressing related risks in our supply chain.

- We continue to work to reduce greenhouse gas emissions in our operations and to integrate climate change-related activities and goals into our business planning.

- The Plan further provides guidance regarding integrating sustainable development with our business operations. Your Company has laid down priority areas as well as short and long term actions to be undertaken for meeting the objectives of the plan. Key identified areas include:

- Hydrocarbon value chain optimization

- Energy consumption optimization

- Water and Waste Management

- Customer development and growth partnership

Specific enablers have also been identified to facilitate the

implementation of action plans developed for above four

areas.

Your Company is consolidating its position in potential hydrocarbon value chain optimization avenues for sustainable development. The pivotal emphasis is on recovering value from low value hydrocarbons such as petcoke, refinery offgas and internal fuel oil.

After successful commissioning of the Phase-III major units such as Delayed Coker Unit, Petrochemical grade Fluidised Catalytic Cracking Unit (PFCCU), Diesel Hydrotreating Unit and the latest Polypropylene Unit, MRPL''s product base has expanded to include Pet coke, Ultra Low sulfur Diesel and Polypropylene. Your Company is establishing value partners to expand market base and partner sustainable growth.

Your Company is also considering other sustainable options to utilize the pet coke for firing in utility boilers to produce steam for power generation along with capture of the associated pollutant - sulfur molecule. This is expected to not only help in production of cheaper power, but also ensure timely evacuation of this product from the refinery complex. Another advantage envisaged is the reduction in internal fuel oil consumption which is currently being fired in the boilers, for upgradation into various lighter molecules like Polypropylene, diesel etc. via the delayed coking route. In-house feasibility study of the project with support from potential technology suppliers is being taken-up.

Water and waste management is given top priority by Your Company to reduce refinery''s impact on the environment. The refinery recycles more than 70% of its treated effluents and has also been maximizing intake of treated municipal sewage to reduce fresh water intake. The refinery has also commissioned its sludge processing facility to effectively address disposal concerns.

Your Company is also looking into the option of recovering valuable ethylene from low value PFCC off gas and supplying into downstream petrochemical complexes. Also, the recovered ethylene can be used as a co-monomer along with propylene to produce hetero-polymers of polypropylene for enhancing market value. The in-house viability study along with the potential increase in profitability estimations are being carried out with inputs from downstream petrochemical complexes and ethylene recovery technology suppliers.

The Phase-III Refinery Complex Captive power plant facilities and some of the process heaters are designed to burn Natural Gas as fuel. The Phase-III Hydrogen generation unit is also designed to consume Natural Gas as an alternate feedstock. The infrastructure to bring natural gas to Mangalore is being assessed by various gas suppliers. Subject to economics, utilization of natural gas will not only reduce SO emissions but also open up the avenue of converting the low value internal fuel oil into high value hydrocarbons.

11.0 RELATED PARTY TRANSACTIONS :

All transactions entered with Related Parties for the year were on arm''s length basis and in ordinary course of business. Further, there are no material related party transactions during the year with the Promoters, Directors or Key Managerial Personnel. The Company has adopted a Related Party policy and procedure, which is available at www.mrpl.co.in.

All Related Party Transactions are placed before the Audit Committee as also to the Board for approval. Omnibus approval was obtained on a quarterly basis for transactions which are of repetitive nature.

11.1 Particulars of contracts or arrangements with related parties:

The particulars of every contract or arrangements entered into by the Company with Related Parties referred in Section 188(1) of the Companies Act, 2013 disclosed in Form No. AOC - 2 attached as Annexure ''E''. MCA vide Notification dated 05/06/2015, has exempted the applicability of Section 188 (1) of the Companies Act, 2013 for a transaction entered into between two Government Companies.. In view of the same shareholders approval has not been solicited for the transactions with Govt. Companies.

12.0 HUMAN RESOURCES:

- Your Company continued to enjoy cordial and harmonious relations with the collectives and as evidence to the same not a single man-hour was lost on account of any industrial disturbance during the year 2014-15.

- During the year, your Company has recruited 33 employees comprising of 2 women employees and 15 Scheduled Caste (SC) / Scheduled Tribe (ST) employees

- Total employee strength as on 31/03/2015 was 1720 including 125 women employees, 202 SC/ST employees and 7 Physically Challenged employees. 742 employees belong to Management cadre whereas, 978 employees belong to Non-Management cadre.

- During the year 2014-15, Your Company devoted 4078 Mandays for Training, Development and Learning which amounted to an average of 2.39 Mandays per employee. This includes functional, developmental and special training programs covering the entire spectrum of employees.

13.0 OFFICIAL LANGUAGE:

Your Company is implementing Official Language Policy in

letter and spirit as per the Annual Programme prescribed by the Department of Official Language, Ministry of Home Affairs, Government of India. In order to propagate Hindi among the employees, Hindi Workshops are organised on a regular basis at Mangalore, Mumbai, Delhi & Bangalore Offices. Regular Hindi classes such as Prabodh, Praveen & Pragya in addition to Hindi Stenography are being conducted for employees. In order to increase the correspondence in Hindi, by the employees, special efforts are made to activate Unicode facilities on all the computers used in your Company. To motivate employees for Hindi usage, various incentive schemes are introduced such as Cash award & Personal Pay.

14.0 RIGHT TO INFORMATION ACT, 2005:

Your Company''s RTI manual is available on its website www.mrpl.co.in which discloses all required information. During the year, 112 applications were received, out of which 96 were disposed off before 31/03/2015 and balance 16 applications were disposed off after 01/04/2015.

15.0 SECURITY MEASURES:

The Refinery security is designed and operated in compliance with guidelines given by Oil Sector Infrastructure Protection Plan (OSIPP) and the Security Audit recommendations given by the IB (MHA) from time to time.

The Refinery is completely secured and protected inside including newly expanded refinery operations area under Phase-III and the Refinery surrounding premises all the times through deployment of Central Industrial Security Force (CISF) personnel.

Refinery Security is on priority due to increased threats and it is ensured through emergency preparedness, conducting periodic mock drills by security personnel. In order to promote awareness on security issues among all stake holders, Security Awareness programmes along with government authorities are organized periodically.

16.0 VIGILANCE FUNCTION :

Your Company has developed a structured mechanism of vigilance functions and its practices are focused towards creation of value for all the stakeholders. The practices involve multi-layer checks and balances to improve transparency. Vigilance Awareness and Preventive vigilance activities were continuously carried out during the year. Guidelines of Central Vigilance Commission (CVC) are being followed. Officers in sensitive posts are rotated regularly.

Whistle Blower Policy for employees is in place which ensures that a genuine whistle blower is granted due protection from any victimization. In compliance with CVC instruction, your Company has implemented a complaint handling policy in which all complaints received from various sources can get recorded and can be examined by Vigilance. Further, in line with CVC instructions, your

Company has achieved high compliance level with regard to e-payment and e-tender.

Leveraging of technology to enhance transparency has been a thrust area of action in which vigilance has played a catalytic role. The website of the Company displays downloadable tender document, publication of information of works awarded on nomination basis, publication of post award information of contracts.

Full time Chief Vigilance Officer (CVO) is posted and he can be contacted at [email protected] for any complaint having vigilance angle.

16.1 Whistle Blower Policy for Directors & Employees:

The Whistle Blower Policy is formulated to provide a vigil mechanism for Directors and Employees to raise genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy. It also provides for adequate safeguard against victimisation of persons who use such mechanism.

The Policy provides necessary safeguards for protection of Directors and Employees who avail the vigil mechanism from reprisals or victimization, for whistle blowing in good faith and to provide opportunity to Directors and Employees for direct access to the Chairperson of the Audit Committee in exceptional cases. The policy is available on the Company''s website www.mrpl.co.in.

17.0 DIRECTORS & DIRECTORS'' RESPONSIBILITY STATEMENT

17.1 Following changes took place in Board of Directors and Key Managerial Personnel of your Company.

- Shri H. Kumar assumed the office of Managing Director w.e.f 14/08/2014 and elected as a Director in the 26th Annual General Meeting held on 13/09/2014.

- Shri M. Venkatesh has assumed the office of Director (Refinery) with effect from 1st April, 2015. He was appointed as Additional Director who vacates his office as Additional Director and being eligible offers himself for appointment as Director (Refinery) in the 27th Annual General Meeting.

- Shri Nalin Kumar Srivastava, Deputy Secretary, MoP&NG was appointed as Additional Director with effect from 5th March, 2015, who vacates his office as Additional Director and being eligible offers himself for appointment as Director in the 27th Annual General Meeting.

- Smt. Perin Devi, Director of MoP&NG was appointed as Additional Director with effect from 14th May, 2015, who vacates her office as Additional Director and being eligible offers herself for appointment as Director in the 27th Annual General Meeting..

- Shri Vishnu Agrawal who retires by rotation and being eligible offers himself for re-appointment as a Director.

- Shri V G Joshi, ceased to be a Director consequent upon his superannuation from the services of MRPL on 31st March, 2015.

- Shri P. Kalyanasundaram, ceased to be a Director w.e.f 4th March, 2015 consequent upon his superannuation from the services of Government of India.

- Shri C. L. Shah, Smt. Neela Gangadharan, Prof. Jayant M. Modak, Prof. Usha Kiran Rai and Capt. John Prasad Menezes ceased to be Additional Director w.e.f. 14/09/2014.

The Board places on record appreciation for the valuable contributions made by them during their tenure as Directors of the Company.

17.2 Directors'' Responsibility Statement:

To the best of knowledge and belief and according to the information and explanations received, Directors make the following statement in terms of Section 134(3)(c) of the Companies Act, 2013.

The Board of Directors confirm as under for the Financial Year 2014-15:

a) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 and 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the Annual Accounts on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

17.3 Formal Annual Evaluation & Board Diversity:

Your company is Schedule "A" category -1 Miniratna Central Public Sector Enterprise (CPSE) governed by Department of Public Enterprise (DPE), Government of India and its Administrative Ministry i.e. Ministry of Petroleum & Natural

Gas (MoP&NG) Government of India. The Board Diversity is maintained as the Administrative Ministry i.e., MoP&NG appoints various categories of Directors on the Board. The evaluation of the Company is made by MoU signed with ONGC, the holding Company pursuant to DPE guidelines. The formal evaluation process is based on evaluation of MoU parameters for various operational and physical Parameters. MCA vide notification dated 05/06/2015, has exempted the Govt. Company from the formal annual evaluation by the Board on its own performance pursuant to Section 134(3) (p) of the Companies Act, 2013, as the Directors are evaluated by the Administrative Ministry i.e., MoP&NG, Govt. of India.

The Directors are appointed by the Govt. of India and terms and conditions of their service is also determined by Govt. of India. The detailed terms and conditions are furnished in the Corporate Governance Report.

18.0 NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:

The Board of Directors of your Company had Nine (9) Meetings during the FY 2014-15. Details of the Board Meetings held for the year 2014-15 have been furnished in the Corporate Governance Report and forms part of this Report.

19.0 AUDIT COMMITTEE:

The Audit Committee was constituted on the terms of reference as prescribed under Section 177 of the Companies Act, 2013 read with Rule 6 of the Companies (Meetings of the Board and its Powers) Rules, 2014, Clause 49 of the Listing Agreement with the Stock Exchanges and Guidelines on Corporate Governance for Central Public Sector Enterprise issued by Department of Public Enterprise, Government of India. The detail of Audit Committee is disclosed in the Corporate Governance Report which forms part of this Report.

20.0 NOMINATION AND REMUNERATION POLICY:

MRPL is a ''Schedule A'' category-1 Miniratna Central Public Sector Enterprise (CPSE). The appointment, terms, conditions and remuneration of Managing Director and Functional Directors (Whole-time Directors) are fixed by the Department of Public Enterprises (DPE), Govt. of India.

Pursuant to Clause 49 of the Listing Agreement and DPE guidelines on Corporate Governance for CPSE, your Company has constituted a Nomination and Remuneration Committee. The details on the Nomination and Remuneration committee is disclosed in Corporate Governance Report which forms part of this report.

21.0 RISK MANAGEMENT POLICY:

Your Company has a well-defined policy framework for Enterprise Risk Management formulated by M/s. Deloitte, Risk Managers are continuously monitoring the Risks pertaining to their area. Risk Management Committee was reconstituted consisting of majority of Directors pursuant to Clause 49 (VI) of Listing Agreement which monitors and evaluates the risk overview document once in quarter and recommends the same to the Audit Committee for evaluation. The Risk Management Committee''s overview document is duly reviewed by the Audit Committee and placed before the Board on quarterly basis.

22.0 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operations.

23.0 CORPORATE GOVERNANCE:

- Your company has complied with all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance requirements and mandatory guidelines on Corporate Governance for CPSEs issued by DPE, Government of India, except the Composition of Board of Directors, in relation to requisite number of Independent Directors.

- The Annual Report contains a separate section on Corporate Governance, which forms part of this Report.

- Pursuant to Clause 55 of Listing Agreement, Annual Business Responsibility Report (ABRR) has been prepared for the financial year and the same has been uploaded on the website of the company www.mrpl.co.in

- Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, your Company has obtained the Certificate from the Joint Statutory Auditors of the Company, towards Compliance of Corporate Governance which forms part of this report.

24.0 MANAGEMENT DISCUSSION AND ANALYSIS:

In terms of Clause 49 (VIII) (D) of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report for the FY 2014-15 duly reviewed by Audit Committee and approved by Board and forms part of this Report.

25.0 INTERNAL FINANCIAL CONTROL:

Your Company has a well established Internal Control system to ensure an effective internal control environment that provides assurance on the efficiency of conducting business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. The Internal Auditor certifies on the assurance of adequacy of Internal Control System on quarterly basis which are regularly reviewed by the Audit Committee. Details on the Internal Control System is disclosed in the MDA which forms part of this report.

26.0 AUDITORS:

26.1 Joint Statutory Auditors:

M/s Gopalaiyer and Subramanian, Coimbatore and M/s A Raghavendra Rao and Associates, Mangalore have been appointed as Joint Statutory Auditors of the Company for the FY 2014-15 by Comptroller & Auditor General of India (C&AG). They have audited the Financial Statements and along with Balance Sheet for the Financial Year ended 31/03/2015 and submitted their report which forms part of this report.

26.2 Comptroller and Auditor General (C&AG) Report:

The Comptroller and Auditor General (C&AG) have submitted their report which forms part of this report.

26.3 Secretarial Auditors:

Your Company has engaged M/s Ullas Kumar Melinamogaru & Associates, Practicing Company Secretaries, Mangalore for conducting Annual Secretarial Audit for the year 2014-15 pursuant to Section 204 of the Companies Act, 2013. M/s Ullas Kumar Melinamogaru & Associates, Practicing Company Secretaries, Mangalore have issued Annual Secretarial Audit Report (Form MR-3) for the year 2014-15 which forms part of this report and is furnished as Annexure ''F''.

26.4 Cost Auditors:

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost accounts maintained by the company for the FY 2014 -15 are being audited by Cost Auditors M/s. Bandyopadhyaya Bhaumik & Co., Kolkata with approval of Ministry of Corporate Affairs, Government of India.

27.0 ACKNOWLEDGEMENT:

27.1 Your Directors sincerely thank the Government of India (GoI), Ministry of Petroleum and Natural Gas (MoP&NG), Ministry of Finance (MoF), Ministry of Corporate Affairs (MCA), Department of Public Enterprise (DPE), Ministry of Environment and Forest (MoEF), Ministry of External Affairs (MEA), Ministry of Shipping (MoS), Ministry of Home Affairs (MHA), other Ministries and Departments of the Central Government and the Government of Karnataka, for their valuable support, guidance and continued co- operation.

27.2 Your Directors gratefully acknowledge support and direction provided by the parent company, Oil and Natural Gas Corporation Limited (ONGC) and the support of Hindustan Petroleum Corporation Limited (HPCL), the Promoters of the company.

27.3 Your Directors wish to thank the shareholders for the continued confidence reposed on their Company.

27.4 Your Directors acknowledge the continuing co-operation and support received from New Mangalore Port Trust, Financial Institutions, Banks and all other stakeholder such as suppliers of crude oil, vendors, contractors, transporters.

27.5 Your Directors recognize the patronage extended by the valued customers for the products of the Company and promise to provide them the best satisfaction.

27.6 Your Directors wish to place on record their sincere appreciation of the sustained and dedicated efforts put in by all the employees collectively and concertedly as a Team known as "Team MRPL".

For and on behalf of the Board

(Dinesh Kumar Sarraf) Chairman

Place: New Delhi Date: 09/07/2015


Mar 31, 2014

Dear Members,

On behalf of the Board of Directors of MRPL and on my behalf, it is my privilege to present the 26th Annual Report and the Audited Accounts for the financial year ended March 31, 2014.

It is a matter of pride that your Company is now Schedule ''A'' Central Public Sector Enterprise (CPSE) upgraded from Schedule ''B'' status. Your Company is marching ahead with a renewed vision and commitments for greater growth. We focused at fortitude in advertises, embracing opportunities and over coming setbacks to gain in strength with continued support of all shareholders.

1.0 PERFORMANCE AT A GLANCE

- Highest ever crude processed at 14.59 MMT during the year 2013-14 against 14.41 MMT during the previous year 2012-13.

- Highest ever Turnover at Rs. 75,226 Crore during year 2013-14 against Rs. 68,834 Crore for the previous year 2012-13.

- Highest ever Export Turnover at Rs. 35,392 Crore during the year 2013-14 against Rs. 33,340 Crore for the previous year 2012-13.

- profit After Tax (PAT) at Rs. 601 Crore during the year 2013-14 against the loss of Rs. 757 Crore incurred for the previous year 2012-13

1.1 SUMMARY OF FINANCIAL PERFORMANCE

The summarized financial performance of your company for the year ended 31st March, 2014 is furnished below:

(Rs. In Crore)

Year ended Year ended 31st March, 31st March, 2014 2013

Turnover 75226 68834

Profit before Depreciation Interest and Tax 1437 456

Interest and Finance Charges 321 329

Gross Profit after interest but before Depreciation 1116 127 and Tax

Depreciation and Amortizations 706 604

Profit/(Loss) Before Tax 410 (477)

Provision for Taxation (deferred tax liability) (191) 280

Profit/(Loss) after Tax 601 (757)

Balance of profit/(Loss) brought forward from 4238 4999 previous year

Surplus available for appropriation 4839 4242

Transfer to Capital Redemption Reseve - 4

Balance carried to Balance Sheet 4839 4238

1.2 DIVIDEND

In view of the carry forward losses of previous financial year and funds requirement for meeting huge capital expansion plans of the Company, your Board of Directors has not recommended any dividend for the financial year 2013-14. However, we are quite confdent to deliver growth and enhance shareholder value once all the units of Phase-III Refnery Project are made fully operational which will contribute significant improvement in operating profit margins of the Company.

1.3 OPERATIONAL PERFORMANCE

Your Company had processed the highest ever crude of 14.59 MMT during the financial year 2013-14 compared to 14.41 MMT during the previous financial year 2012-13. The Fuel and Loss net of commissioning usage was 7.15%, higher by 1% as the fuel consumption during stabilisation of units.

The Refnery achieved the Highest Crude processed with Energy index (MBTU/BBL/NRGF) of 60.88 during the year 2013-14 against 61.01 during the year 2012-13.

1.4 EXPORTS

Your Company has achieved highest ever export turnover of Rs.35,392 Crore during the financial year 2013-14 by exporting products viz., Motor Spirit (MS), Naphtha, Mixed Xylene (MX), High Speed Diesel (HSD), Air Turbine Fuel (ATF) and Fuel Oil (FO).

Your Company continues to supply petroleum products viz. Mogas, ATF, Gas Oil and Fuel Oil to State Trading Corporation (STC), Mauritius.

In the global competitive market, Your Company has secured its place by exporting petroleum products to 21 countries viz. Bahamas , China , Egypt, Hongkong, Japan, Jordan, Kenya ,Korea, Malaysia ,Mauritius, Netherlands, Oman ,Saudi Arabia ,Singapore, Slovenia, South Africa, Taiwan, Turkey ,UAE, UK and Yemen and continues to explore more opportunities for its growth.

1.5 SAFETY PERFORMANCE

Your Company have achieved 912 accident free days as on 22/07/2014 with 8.59 million man hours worked. The various units of Phase -III Refnery Upgradation and Expansion Project and storage tanks were commissioned safely during the year.

Your Company is committed towards imparting continuous training in fre and safety practices. During the year, 1085 employees and 5788 contract workmen were trained in fre and industrial safety. Regular Mock exercises were conducted considering the various emergency scenarios in plant and non plant areas.

1.6 ENVIRONMENT MANAGEMENT & PERFORMANCE

Your Company believes in "Perform beyond Compliance" - that is to perform better than minimum required by statutes. The Refnery of your Company is a certified ISO 14001: 2004 for Environment Management Systems. The major achievements on the Environment Management and performance are summarized as under:

- The Phase -III has an advanced Waste Water Treatment Plant (WWTP) which includes oil effuent Treatment unit, Sequential Batch Reactor (SBR) unit and Membrane Bio Reactor (MBR). This unit was commissioned during the year.

- Sulphur Pastillation Unit was commissioned in the Refnery to reduce dust emissions in the Sulphur Recovery Unit (SRU).

- An advanced Reverse Osmosis (RO) Plant was commissioned on 30/10/2013 for maximizing the quantity of treated water recycle back to the Refnery.

- Wet Air Oxidation (WAO) Unit is set-up in the Refnery to treat Spent Caustic to improve the WWTP performance.

- Volatile Organic Compound (VOC) Recovery system in WWTP- III was commissioned during the year. VOC Emission is being monitored at 74,000 points in the Refnery through reputed agency and corrective measures are taken to effectively minimize the same.

- A Condensate Recovery Unit was commissioned in process unit resulting reduction in fresh water consumption.

- A Closed Bioremediation Unit was commissioned in the Refnery as a part of WWTP.

- Environment Awareness programs are organized periodically in the neighbouring villages & schools in association with Karnataka State Pollution Control Board (KSPCB).

- Karnataka Forest Department, Government of Karnataka has been requested to develop greenbelt in 120 acres area of the Refnery. They have developed saplings and Plantation has been commenced in the Refnery area of your Company.

- Advanced technology has been deployed for cleaning Crude oil Tanks in the Refnery.

- Regular Seawater quality monitoring is being carried out by M/s. College of Fisheries on fortnight basis indicating no adverse effect on the marine environment.

- Ten Ground Water monitoring stations in and around Refnery have been setup and regular monitoring of ground water quality is being carried out along with KSPCB. Average treated effuent recycled to cooling towers during the year was 70-75%.

- Ambient air quality monitoring is being done inside and outside the Refnery at 9 locations (including 2 locations at Phase-III Project site) as per revised National Ambient Air Quality Monitoring Standard.

Your Company has also undertaken the following projects which are in various stages of installation:

Your Company has also undertaken the following projects which are in various stages of commissioning.

- Vapour Recovering System for light hydrocarbon storage tanks in Phase – III Refnery Project,

- Automatic Rim seal protection Installation in storage tanks.

- Connection of LPG spheres and Mounded Bullets PSV discharge to fare header.

1.7 MARKETING

1.7.1 Marketing and Business Development

Your Company continued its direct marketing activities in the State of Karnataka and in the adjoining states. The total direct marketing turnover during the financial year 2013-14 was Rs. 2589 Crore.

With the availability of natural gas pipeline in North Karnataka and Goa, some major customers have shifted from liquid fuels to gas, leading to shrinkage of liquid fuels market. However, your Company could establish a good market reach for sale of Petcoke produced from the Delayed Coker Unit (DCU) commissioned in Phase-III project during April, 2014.

Your Company continues to develop its direct marketing network for various value added products like Petcoke, Polypropylene (PP) etc by various units commissioned in Phase-III Refnery project.

1.7.2 Retail Operations

Your Company embarked into bulk sales of HSD after the introduction of dual pricing for HSD which has improved sales considerably in the bulk consumer segment. Domestic sale of Mixed Xylene has increased considerably against previous year. Keeping in view the gradual decontrol of HSD in retail segment; Your company is evaluating the opportunity to set up few retail outlets in select markets.

1.7.3 New Products Marketing Plan

Your Company is setting up a Polypropylene (PP) plant of 440 KTPA capacity for bulk supplies to downstream processing industry. The channel partners have been identified for sale of Polypropylene (PP) in key areas in the domestic market. In addition to this your Company is also developing storage infrastructure for Polypropylene (PP) in Karnataka for managing its supply chain for marketing networks.

1.7.4 Joint Ventures

Your Company''s Joint Venture (JV) with Shell B.V. Netherland known as Shell MRPL Aviation Fuel Services Limited (SMAFSL) supplies Aviation Turbine Fuel (ATF) to both domestic and international airlines at Indian airports has performed well.

The Turnover of the SMAFSL was Rs. 651 Crore during the financial year 2013-14 against Rs. 486 Crore during the previous financial year 2012-13 and the Pre-tax profit of Rs. 18.40 Crore during the financial year 2013-14 against Rs.13.14 Crore during the previous financial year 2012-13. The company has declared dividend of 10% for the financial year 2013-14 as compared to 8% in the previous financial year 2012-13.

2. AWARDS AND RECOGNITION:.

- Upgraded to Schedule ''A'' CPSEs from Schedule "B" with effect from 04/07/2013 by the Department of Public Enterprises, thereby making it eligible for achieving the "NAVARATNA" status.

- Won the coveted Petrofed Award "Refnery of the Year-2012" for its commendable performance in production and operational efficiencies while adhering to the norms of health, safety and environment protection.

- Won the "Refnery of the Year" from Petrofed for the year 2011-12 for leading performance in production and operational efficiencies while meeting the norms of Health, Safety and Environment protection.

- Won the "Export Excellence Award, 2013" in Best Manufacturer / Exporter (large category) – Gold from the Federation of Karnataka Chamber of Commerce and Industry (FKCCI) on 22/06/2013.

- Secured the frst prize for outstanding performance in the area of Hindi Implementation for the year 2012-13 by Town Offcial Language Committee(TOLIC), Mangalore on 28/05/2013.

- Secured the frst prize in the Jawaharlal Nehru Centenary Awards for energy performance for the year 2011-12 & 2012-13 under the Refneries category having complexity of 6.0.

- Secured the frst prize in the OGCF-2012 awards for Furnace/Boiler effciency having heat duty more than 1000MM Kcal/hr.

- Won the "State Export Excellence Award" for 2012-13 & 2011-12 Medium/ Large category – Gold & Platinum respectively by Government of Karnataka.

- Won the award for "Best Fuel efficient Boiler operation" by the Department of Factories and Boilers on the occasion of 43rd National Safety Day celebration.

3. CREDIT PROFILE

3.1 ICRA has reaffirmed Issuer Rating "Ir AAA" (pronounced IR Triple A) to your company. This rating indicates the highest credit quality rating assigned by ICRA and the rated entity carries the lowest credit risk.

3.2 ICRA has reaffirmed "[ICRA] AAA" (pronounced as ICRA Triple A) to Rs. 3,000 Crore Fund- Based limits of your company. The outlook on the rating is "Stable".

1.3 ICRA has reaffirmed "[ICRA] A1 " (pronounced as ICRA A one plus) to Rs. 4,000 Crore Non- Fund based limits of Your company.

1.4 ICRA has reaffirmed "[ICRA] A1 " (pronounced as ICRA A one plus) to Rs. 1,500 Crore Commercial Paper issued by your company. This rating indicates the very strong degree of safety regarding timely payment of financial obligations i.e., which carries the lowest credit risk.

1.5 CRISIL has reaffirmed "[CCR AAA]" (pronounced as CCR Triple A). This rating indicates highest degree of strength with regard to honouring debt obligations by Your company.

4. FINANCIAL ACCOUNTING:

The financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP), all accounting standards guidance note on accounting for activities of your company issued by The Institute of Chartered Accountants of India (ICAI) and Schedule VI format and other relevant provisions of the Companies Act, 1956. The MCA General Circular No. 1/19/2013-CL-V dated 04/04/2014 clarifes that the Annual Accounts/Financial Statements along with documents required to be attached thereto, Auditors'' Report and Boards'' Report in respect of financial years that commenced earlier than 1st April, 2014 shall be governed by the relevant provisions/ Schedules/rules of the Companies Act, 1956.

5. INTERNAL CONTROL SYSTEM

Your Company has a well-established internal control system, which is commensurate with its size and nature of operations. The internal control systems are designed to provide a reasonable assurance over reliability in financial reporting, ensure appropriate authorisation of transactions, safe guarding the assets of the Company and prevent misuse/losses and legal compliances.

The internal control system includes a well-Defined delegation of authority and a comprehensive Management Information System coupled with monthly reviews of operational and financial performance, a well-structured budgeting process with regular monitoring of expenses, a state of art ERP systems and Internal audit.

The internal audit team is led by a professional audit manager and supported by financial and technical personnel drawn from across the organisation. The internal audit is conducted as per a plan drawn at the beginning of the year in consultation with the management and statutory auditors of the Company which is finally approved by the Audit Committee. The audit plan attempts to cover all significant risk areas, review and evaluation of the effectiveness of existing processes, controls and compliances and ensure adherence to policies and procedures. All the significant audit observations made by the internal auditors of the Company are regularly reviewed by the management. However, all significant audit observations along with the management responses/ replies and follow up actions are periodically placed for review before the Audit Committee.

6. PROJECTS

A) Ongoing projects:

i. Phase -III Refnery Upgradation and Expansion Project.

The commissioning of Secondary Process Units of Phase -III Refnery Upgradation and Expansion project are under near completion, which will increase the distillate yield and produce high value products viz Propylene, Gasoline from low value black oils.

Crude Distillation Unit (CDU), Hydrogen Generation Unit (HGU) and Diesel Hydrotreater Unit (DHDT) were commissioned in the last financial year. The Refnery achieved major milestones with the commissioning of the Delayed Coker Unit (DCU), one train of Sulphur Recovery Unit (SRU) and Coker Gasoil Hydro Treating Unit (CHTU) in the months of April and May 2014. The last process unit in Phase -III, Petro (PFCCU) unit is under advance stage of commissioning and expected to go on stream shortly.

The delay in commissioning was mainly on account of the delay in the completion of the Captive Power Plant (CPP) being executed by M/S BHEL. Most of the major equipments are commissioned and it is expected that the CPP can supply the required quantity of steam and power for running all the Phase -III units.

The total expenditure incurred by your Company on Phase –III Refnery Upgradation and Expansion project is around Rs. 11500 Crore as on 15/07/2014.

ii. Polypropylene Project (PP):

The Polypropylene (PP) unit being set up with the licensor M/s Novolen Technology, Germany in integration with the Phase -III Project at an estimated Capex of Rs. 1804 Crore by your Company has achieved an overall progress of 95.6% as on 15/07/2014.

The non-vacating of the site by PDF had resulted in shifting the location of the unit causing delay in the site work and environmental clearance. The project is expected to get mechanically completed and will go on stream shortly. The total expenditure incurred on this project was Rs. 960 Crore as on 15/07/2014.

iii. Single Point Mooring (SPM) Project:

Your Company has setup SPM project along with coastal booster pumping station within the port limits at a location of 16 Km from the shore having the draft availability of 30 M for handling Very Large Crude Carrier (VLCC) at an estimated cost of Rs. 1044 Crore . The SPM was successfully commissioned on 29/08/2013 by unloading the frst crude vessel Ratna Puja with the cargo of 87 TMT(''000MT).

This facility will enable the company to receive crude in Suez max / VLCC vessels, which in turn will give freight economics and also allow access to West African and Latin American countries for sourcing crudes. This facility will also de-congest existing berth facility at New Mangalore Port Trust (NMPT) port and reduce the incidence of demurrage.

iv. Refnery Performance Improvement Programme

Your Company has taken up Refnery Performance Improvement Programme (RPIP) through M/s Shell Global Solutions International B.V. under the auspices of Centre for High Technology, Ministry of Petroleum and Natural Gas (MoP&NG), Government of India.

The RPIP is aimed at identifying opportunities for improvement by adopting best operating practices in the areas having a bearing on profit margin including optimizing operation , energy and utilities consumption , minimizing hydrocarbon loss and improving maintenance and inspection practices.

The PFI''s (Proposals for Implementation) developed after the evaluations are under various stages of implementation.

B) Future Projects:

Your Company has signed an Memorandum of Understanding (MOU) with Government of Karnataka for setting up a Linear Alkyl Benzene (LAB) Plant (for producing raw materials to manufacture detergent) and to expand its Refning capacity to 18/21 MMTPA in a time horizon of 3 to 6 years subject to techno economic viability and availability of required infrastructure at Mangalore with an approximate investment of Rs. 8500 Crore.

7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO :

The additional information required to be disclosed pursuant to section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings & outgo are furnished in ''Annexure- I'' which forms part of this Report.

8. PARTICULARS OF EMPLOYEES

Your Company being a Government Company is exempted from disclosure of particulars of employees under section 217(2A) of the Companies Act, 1956, and the Particulars of Employees (Amendment) Rules, 2011.

9. RIGHT TO INFORMATION ACT, 2005

Your Company''s RTI manual is available on its website www.mrpl.co.in, which discloses all required information.

During the year, 114 applications were received, out of which 111 were disposed off before 31/03/2014 and balance 3 applications were disposed off subsequently.

10. HUMAN RESOURCES

- Your Company continued to enjoy cordial and harmonious relations with the collectives and as evidence to the same not a single man-hour was lost on account of any industrial disturbance during the year 2013-14.

- During the year, your Company has recruited 114 employees comprising of 8 women employees and 44 Schedules Caste (SC) / Schedule Tribe (ST) employees.

- Total employee strength as on 31/03/2014 was 1715 including 127 women employees,191 SC/ST employees and 7 Physically Challenged employees. 704 employes belong to Management cadre whereas 1011 employees belong to Non-Management cadre.

- During the year 2013-14, Your Company devoted 4809 Mandays for Training, Development and Learning which amounted to an average of 3 Mandays per employee. This includes functional, developmental and special training programs covering the entire spectrum of employees.

11. OFFICIAL LANGUAGE:

Your Company is implementing Offcial Language Policy in letter and spirit as per the Annual Programme prescribed by the Department of Offcial Language, Ministry of Home Affairs, Government of India. In order to propagate Hindi among the employees, Hindi Workshops are organised on a regular basis at Mangalore, Mumbai, Delhi & Bangalore offices. Regular Hindi classes such as Prabodh, Praveen & Pragya in addition to Hindi Stenography are being conducted for employees. In order to increase the correspondence in Hindi, by the employees, special efforts are made to activate Unicode facilities on all the computers used in your Company. To motivate employees for Hindi usage, various incentive schemes are introduced such as Cash award & Personal Pay.

12. VIGILANCE FUNCTION:

Your Company has developed a structured mechanism of vigilance functions and its practices are focused towards creation of value for all the stakeholders. The practices involve multi-layer checks and balances to improve transparency. Vigilance Awareness and Preventive vigilance activities were continuously carried out during the year. Guidelines of Central Vigilance Commission (CVC) are being followed. officers in sensitive posts are rotated regularly.

Whistle Blower Policy for employees is in place which ensures that a genuine whistle blower is granted due protection from any victimization. In compliance with CVC instruction, your Company has implemented a complaint handling policy in which all complaints received from various sources can get recorded and can be examined by vigilance. Further, in line with CVC instruction, your Company has achieved high compliance level with regard to e-payment and e-tender.

Leveraging of technology to enhance transparency has been a thrust area of action in which vigilance has played a catalytic role. The website of the company displays downloadable tender document, publication of information of works awarded on nomination basis, publication of post award information of contracts.

Full time Chief Vigilance officer (CVO) is posted and he can be contacted at [email protected] for any complaint having vigilance angle.

13. SECURITY MEASURES

Security of Refnery of your Company is designed to comply with Oil Sector Infrastructure Protection Plan (OSIPP) and the Security Audit recommendations given by the Intelligence Bureau (IB), Ministry of Home Affairs, Government of India from time to time are duly implemented.

The Security of the Refnery of your Company is handled by Central Industrial Security Force (CISF) and survey to extend CISF coverage to newly commissioned Phase -III Project is underway. A project to install an integrated Security Surveillance System for the entire Refnery is on the anvil.

Security is on top of the agenda of your Company and to ensure preparedness, periodic mock drills on work-place security preparedness are conducted. To promote awareness on security issues amongst all stake holders, Security Awareness Weeks are organized.

14. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

Your Company''s social welfare and community development initiatives focus on the key areas of education, health care and overall development of basic infrastructure in and around its operational areas. The CSR objective of your Company in line with DPE guidelines is promoted under the name of "SAMRAKSHAN". This captures the spirit and commitment to" protect, preserve and promote the social, cultural and environmental heritage and wealth in and around the area of our business and to usher in sustainable development". Facilitating Midday Meal to support continuing Education, setting up of computer room, Anganwadi building, skill development training for youths, infrastructural development etc. is a part of the Samrakshan activities.

Your company has spent Rs. 3.47 Crore for various CSR activities during the year 2013-14.

15. DIRECTORS

During the year following changes took place in Board of Directors of Your Company:

15.1 Shri D.K. Sarraf has assumed the position of CMD, ONGC and Chairman/ Director of your Company w.e.f. 01/03/2014 consequent to superannuation of Shri Sudhir Vasudeva from the services of ONGC.

15.2 Consequent upon attaining the age of superannuation Shri P P Upadhya, Managing Director, retired from the services of MRPL on July 31, 2014. Shri Vishnu Agrawal, Director (Finance) has assumed the additional charge of the post of Managing Director w.e.f. 01/08/2014.

15.3 Shri V G Joshi was appointed Director (Refnery) w.e.f. 04/04/2013.

15.4 Shri P Kalyanasundaram, Joint Secretary, MoP&NG was appointed Government Director w.e.f. 15/04/2013 in place of Shri P. K. Singh. Shri P. Kalyanasundaram who retires by rotation and being eligible offers himself for re-appointment as a Director.

15.5 Shri B. K. Namdeo, Director Refnery (HPCL) was appointed as Director w.e.f. 01/07/2013 in place of Shri K. Murali consequent upon superannuation from the services of HPCL. Shri B. K. Namdeo who retires by rotation and being eligible offers himself for re-appointment as a Director.

15.6 Shri B Ravindranath ceased to be an Independent Director / Nominee Director of IDBI Bank Limited., w.e.f. 06/01/2014.

15.7 Dr. D. Chandrasekharam ceased to be an Independent Director w.e.f. 10/03/2014 consequent upon the expiry of his 3 years term as an Independent Director on the Board of ONGC.

15.8 Shri K. S. Jamestin, Special Invitee on the Board, was superannuated from the services of ONGC as Director (HR) on 31/07/2014 and ceased to be a Special Invitee on the Board. Shri A. K. Banerjee, Director (Finance), ONGC, has been nominated as Special Invitee on the Board of MRPL w.e.f. 05/08/2014.

15.9 The Board wishes to place on record its deep appreciation for the services rendered and contribution made by Shri Sudhir Vasudeva, Shri P P Upadhya, Shri P. K. Singh, Shri K. Murali, Shri B Ravindranath, Dr. D. Chandrasekharam and Shri K. S. Jamestin as directors / special Invitee during their tenure on the Board of the company.

16. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956, with respect to Directors'' responsibility statement, it is hereby confirmed that:

a. In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year 2013-14 and of the profit and loss of the company for that period;

c. The Directors have taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 and 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d. The Directors have prepared the Annual Accounts for the financial year 2013- 14 on going concern basis.

17. FIXED DEPOSIT

Your company has not accepted any fixed deposit during the year from the public.

18. CORPORATE GOVERNANCE

18.1 Your company has complied with all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance requirements and mandatory guidelines on Corporate Governance for CPSEs issued by DPE, Government of India, except the composition of Board of Directors.

18.2 The Annual Report contains a separate section on Corporate Governance, which forms part of this Report.

18.3 Pursuant to Clause 55 of Listing Agreement, Annual Business Responsibility Report (ABRR) has been prepared for the financial year and the same has been uploaded on the website of the company www.mrpl.co.in

18.4 Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, Your company has obtained the Certifcate from the Joint Statutory Auditors of the Company, towards Compliance of Corporate Governance which is annexed to and forms part of this report.

18.5 As a measure of good corporate governance, Your company has engaged M/s Ullas Kumar Melinamogaru & Associates, Practicing Company Secretaries, Mangalore for conducting Annual Secretarial Compliance Audit for the year 2013-2014. M/s Ullas Kumar Melinamogaru & Associates Practicing Company Secretaries, Mangalore have issued Annual Secretarial Compliance Audit Report for the year 2013-14 which forms part of this report.

19. MANAGEMENT DISCUSSION AND ANALYSIS

In terms of Clause 49 (IV)(F) of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report for the year have been attached and forms part of this report.

20. AUDITORS:

20.1 M/s Gopalaiyer and Subramanian, Coimbatore and M/s A Raghavendra Rao and Associates, Mangalore have been appointed as Joint Statutory Auditors of the Company for the Financial Year 2013-14 by Comptroller & Auditor General of India (C&AG).

20.2 The report of the C&AG at Annexure III forms part of this Report.

20.3 Pursuant to the provisions of the Companies Act, 1956, the cost accounts maintained by the company for the financial year 2013 -14 are being audited by Cost Auditors M/s. Musib and Associates with approval of Ministry of Corporate Affairs, Government of India.

21. ACKNOWLEDGEMENT

- Your Company always conducts business with a strong commitment for environment preservation, sustainable development, safe workplaces and enrichment of the quality of life of its stakeholders and the community at large.

- Your Directors are highly grateful for all the help, guidance and support received from the Ministry of Petroleum and Natural Gas (MoP&NG), Ministry of Finance (MoF), Ministry of Corporate Affairs (MCA), Department of Public Enterprises (DPE), Ministry of Environment and Forest (MoEF), Ministry of External Affairs (MEA), Ministry of Shipping (MoS), Ministry of Home Affairs (MHA) Ministry of Heavy Industries and Public Enterprises (MoHI&PE) and other inistries and Departments of Central and State Governments especially the Government of Karnataka.

- Your Directors gratefully acknowledge the continued support and guidance extended by Oil and Natural Gas Corporation (ONGC) Limited, the parent company.

- Your Directors thank all shareholders and members of the Company for their faith, trust and confdence reposed on the Management of the Company.

- Your Directors wish to place on record their sincere appreciation for the sustained efforts and dedicated contributions put in by all the employees collectively and concertedly as a Team, to ensure that the Company continues to grow and excel.

For and on behalf of the Board

(D.K. Sarraf) Chairman

Place: New Delhi

Date : 05/08/2014


Mar 31, 2013

Dear Members,

The behalf of the Board of Directors of Mangalore Refi nery and Petrochemicals Limited (MRPL) and on my own behalf, it is my privilege to present the 25th Annual Report of the performance of your Company, the Audited Accounts and Auditors’ Report thereon for the year ended 31/03/2013.

2012-13 : Silver Jubilee Year of your Company

Your Company which was set up in 1988 with a processing capacity of 3.69 MMTPA was later expanded to 9.69 MMTPA before reaching the present capacity of 15 MMTPA.

25 years later, your Company MRPL, is an ONGC group company, a trail blazer with cutting edge technology and a jewel in the crown of our great Nation.

With ONGC powering MRPL : A Decade of Exponential Growth and Prosperity

The Board of Directors acknowledge the wonderful success story scripted by your Company under ONGC Group. In just 10 years, your company turned around from a ''BIFR’ case to a ''Mini Ratna, Category 1’ in July 2007 and a Schedule "A” Public Sector Enterprise in July, 2013. Your Company moved the needle of capacity utilization from a sluggish 70%, a decade back to a remarkable above 100% capacity utilization, year on year, for the last decade. The capacity itself has been increased from 9.69 MMTPA to 15 MMTPA. Your Company’s ability to deliver results is recognized by the Indian hydrocarbon industry and your Company have been awarded "Refi nery of the Year” for 2009 and for 2012 by Petrofed.

2012-13 : New milestones; Tough challenges.

2012-13 was a year of new milestones. Your Company have processed highest ever crude of 14.4 MMT during the year and posted the highest ever gross turnover of Rs. 68,834 Cr despite the shutdown of the refi nery due to water shortage during 19/04/2012 to 27/04/2012. Inspite of the good physical performance during the year, the Company has incurred a net loss after tax of Rs. 757 Cr against after tax profi t of Rs. 909 Cr in the previous year. The loss was mainly contributed by shutdown of the refi nery due to water shortage at a time when the price of Crude and Product was falling resulting in inventory losses, lower operating margin, higher depreciation and interest cost arising out of Phase III capitalization. It must be admitted that your Company has put in a very creditable performance during the year 2012-13 in the background of the industry scenario and as compared with the performance results of the peers. On completion of Phase-III project in its entirety, the company anticipates the benefi ts of the project will start accruing and is expected to be in the path of profi tability again.

Major highlights of CompanyÊs performance during the year 2012-13

1. Processed the highest ever crude of 14.4 MMT during the year 2012-13, against 12.82 MMT in 2011-12 and recorded the highest ever gross turnover of Rs. 68,834 Cr for the year 2012-13 against Rs. 57,207 Cr for the year 2011-12.

2. Higher distillate yield in 2012-13 at 76.55% as against 73.27% in 2011-12.

3. Set a new record in export during the year at 7.10 MMT vis-a-vis last year’s 5.59 MMT

4. Procured the highest Crude of 14.15 MMT during the year 2012-13 as against 13.02 MMT in 2011-12 at a time of sanction against Iran.

5. The product despatch for the year 2012-13 at 13.17 MMT was highest against 11.95 MMT in 2011-12.

1.1 SUMMARY OF FINANCIAL PERFORMANCE

(Rs.In Cr.)

Year ended Year ended 31st March, 2013 31st March, 2012

Turnover 68,834 57,207

Profi t before Depreciation Interest and 456 1,961 Tax

Interest and Finance Charges 329 207

Gross Profi t after interest but before 127 1,754

Depreciation and Tax

Depreciation and Amortizations 604 434

Profit/(Loss) Before Tax (477) 1,320

Provision for Taxation (deferred tax 280 411 liability)

Profit/(Loss) after Tax (757) 909

Balance of Profi t/(Loss) brought forward 4,999 4,298 from previous year

Surplus available for appropriation 4,242 5,207

Appropriations:

Dividend on Equity Shares 175

Tax on Dividend 28

Transfer to Capital Redemption 5 5

Reserve

Balance carried to Balance Sheet 4,237 4,999

1.2 DIVIDEND

In view of the losses during the year 2012-2013, declaration of dividend could not be considered by the Board of Directors for the year.

1.3 OPERATIONAL PERFORMANCE

Your Company with increased capacity addition had processed the highest ever crude of 14.4 MMT during 2012-13 against 12.82 MMT in 2011-12 despite shutdown of the refi nery from 19th April to 27th April, 2012 due to water shortage. Fuel & Loss for the year 2012-13 was 7% against 6.75% in 2011-12. Higher fuel & loss was mainly on account of commissioning activities of Phase-III units and force majeure shutdown of the refi nery during the fi rst quarter of the year due to water crisis. The energy index for the year 2012-13 was 61.01 (MBTU / BBL / NRGF) against 57.92 in 2011-12 and MBN was higher during the year due to higher fuel & loss and lower complexity operations. The Company processed some new crudes namely Zafi ro, Rabi, Aseng and Hungo for the fi rst time during the year 2012-13.

1.4 EXPORTS

Your Company have achieved highest ever export turnover of Rs. 33,340 Cr during the year 2012-13 by exporting petroleum products viz., Motor Spirit, Naphtha, Mixed Xylene, High Speed Diesel, Jet fuel and Fuel Oil.

The three year term export contract for the supply of petroleum products to State Trading Corporation, Mauritius to meet the demands of Republic of Mauritius continued during the year. Your Company has successfully fi nalised a new 3 year contract with STC, Mauritius for supply of petroleum products which will be valid till 31/07/2016.

In the global competitive market, your Company have secured its place by exporting the petroleum products and is continuing to explore opportunities for its growth.

1.5 SAFETY PERFORMANCE

Your Company have recorded accident free period of 435 days during the year. No major outbreak of fi re during the year resulting in property loss or environmental damage. Hydrogen and DHDT Plants of Phase-III were commissioned safely during the year in addition to a few new tanks. Your Company is committed towards imparting continuous training in fi re & safety practices. During the year, 873 employees and 4,722 contract workmen were trained in fi re and industrial safety. OISD external safety audit was conducted in December-2012.

A total of 7 Mock exercises were conducted during the year considering the various emergency scenarios like toxic gas leak, fi res, in Plant and Non-Plant area like Materials Department. This includes one full scale "off site” Mock exercise carried out in the presence of District Crisis Group Members on 04/12/2012 which was followed by Review Meeting and timely implementation of all the recommendations.

1.6 ENVIRONMENT MANAGEMENT & PERFORMANCE

In Environment Management, the Company’s Philosophy is to perform beyond Compliance - that is to perform better than minimum required by statutes. The refi nery is certifi ed with ISO 14001: 2004 for Environment Management Systems.

The major achievements on the Environment Management and performance front include:

- Phase III advanced Waste Water Treatment Plant which includes oil effl uent treatment unit & Sequential Batch Reactor (SBR) unit was commissioned in the month of March, 2013. Membrane Bio Reactor (MBR) unit pre- commissioning jobs are in progress.

- Sulphur Pastillation Unit is being commissioned in the Refi nery as a part of Phase - III to reduce dust emissions in the Sulphur Recovery Unit (SRU).

- An advanced Reverse Osmosis (RO)Plant is set up for maximizing the quantity of treated effl uent back to the Refi nery. RO will be commissioned shortly.

- Wet Air Oxidation (WAO) Unit is set-up in the refi nery to treat Spent Caustic and to improve the WWTP performance.

- A Condensate Recovery Unit has been commissioned in process unit resulting reduction in fresh water consumption.

- A Closed Bioremediation Unit is being commissioned in the refi nery as a part of WWTP-III

- VOC Emission is being monitored at 74,000 points in the refi nery through reputed agency and corrective measures are taken to effectively minimize the same.

- Environment Awareness programs are organized periodically in the neighbouring villages & schools in association with Karnataka State Pollution Control Board (KSPCB).

- Order was placed on State Forest Department for developing greenbelt in 120 acres area. Plants are being developed in their nursery. Tree Plantation is already commenced in the Refi nery.

- An advanced technology has been employed for cleaning Crude Tanks in the refi nery.

- Seawater quality monitoring was carried out by M/s. College of Fisheries on fortnight basis indicating no adverse effect on the marine environment.

- Ten Ground Water monitoring stations in and around Refi nery have been set up and regular monitoring of ground water quality is being carried out along with KSPCB.

- Average treated effl uent recycled to cooling towers during the year was 70-75%.

- Ambient air quality monitoring is being done inside and outside the Refi nery at 9 locations (including two locations at Phase-III Project site) as per revised National Ambient Air Quality Monitoring Standard.

The following ongoing projects are in various stages of installation:

- Vapour Recovering System for light hydrocarbon storage tanks in Phase - III Refi nery Project,

- VOC Recovery system in WWTP- III,

- Installation of additional Hydrocarbon detector at strategic locations in the Refi nery,

- Installation of automatic rim seal protection for storage tanks at procurement stage and

- Connection of LPG spheres and Moulded Bullets PSV discharge to fl are header.

1.7 MARKETING

1.7.1 Domestic Marketing of Products

Your Company continued its direct marketing activity in the segment of petroleum products in the State of Karnataka and the adjoining States. The direct sales turnover during the year 2012-13 was ? 3,750 Cr compared to ? 2,755 Cr in the previous year.

1.7.2 Retail Operations

Government of India has announced complete decontrol of HSD prices for direct bulk consumers. Your Company has already made inroads in the bulk HSD market. Pending fi nalization of the Govt. policy towards eventual complete decontrol of HSD prices for retail segment, your Company have taken cautious steps to set up only few retail outlets in select markets.

However, your company is in preparedness to enter the retail market in short notice. MS prices remain decontrolled and sales from existing retail outlets continue.

1.7.3 New Products Marketing Plan

Your Company is setting up a polypropylene (PP) plant of 440 KTPA capacity for bulk supplies to downstream processing industry. Detailed Business Plan for sale of PP has been fi nalized and selection of channel partners for sale in domestic market is in progress. In addition, your Company is also developing storage infrastructure for PP in Karnataka.

Your Company is also putting up a Delayed Coker Unit, which will produce pet coke, a new product in the product basket of MRPL. Your Company shall undertake sale of pet coke to major industrial consumers in South India.

1.7.4 Joint Ventures

Your Company’s Joint Venture (JV) with Shell B.V. Netherland in the name and style of Shell MRPL Aviation Fuel Services Private Limited (SMAFSPL) supplies Aviation Turbine Fuel to both domestic and international airlines at Indian airports. During the year, this JV Company has been converted into a public company (SMAFSL).

SMAFSL is aggressively acquiring market share in both domestic and international airlines at Indian airports. The company commenced its operations at Goa and New Delhi. Aviation fuelling station facility has been set-up at Mangalore. The turnover for the year 2012-13 is Rs. 486.10 Cr (2011-12 Rs. 517.35 Cr) and recorded a Pre-tax profi t of Rs. 13.14 Cr for the year (Previous Year Rs. 18.16 Cr). The company has proposed to pay a dividend of 8% for the year 2012-13 (10% in 2011-12).

2. AWARDS AND RECOGNITION:

- MRPL has been upgraded from Schedule ''B’ to Schedule ''A’ company with effect from 4/7/2013.

- MRPL has bagged the coveted Petrofed Award, 2012 "Refi nery of the Year” for the commendable performance in production and operational effi ciencies while meeting the norms of health, safety and environment protection.

- MRPL has won "Export Excellence Award, 2013” in Best Manufacturer – Exporter - large category- Gold by Federation of Karnataka Chamber of Commerce and Industry.

- MRPL was conferred "State Export Excellence Award” for 2010-11 & 2009- 10 Medium/Large category – Gold by Government of Karnataka.

- MRPL has been rated "Excellent” in performance as per the MoU signed with ONGC for the year 2011-12 and 2012-13 (provisional).

- Managing Director, MRPL has won the "CEO with HR Orientation Award” in the Global HR Excellence Awards presented by Institute of Public Enterprise, Hyderabad.

- MRPL was conferred with "BT-Star PSU Excellence Award, 2013” in Human Resource Management category (Mini ratna /others).

- MRPL was awarded First Prize for outstanding performance in the area on Hindi Implementation for two consecutive years 2011-12 and 2012-13 by the Town Offi cial Language Implementation Committee, Mangalore.

3. CREDIT PROFILE

3.1 ICRA has reaffi rmed Issuer Rating "Ir AAA” (pronounced IR Triple A) to MRPL. This rating indicates the highest credit quality rating assigned by ICRA and the rated entity carries the lowest credit risk.

3.2 ICRA has assigned "[ICRA] AAA” (pronounced as ICRA Triple A) to Rs. 3,000 Cr Fund- Based limits of MRPL. The outlook on the rating is "Stable”.

3.3 ICRA has assigned "[ICRA] A1 ” (pronounced as ICRA A one plus) to Rs. 4,000 Cr Non-Fund based limits of MRPL.

3.4 ICRA has reaffi rmed "[ICRA] A1 ” (pronounced as ICRA A one plus) to Rs. 900 Cr Commercial Paper Programme of MRPL. This rating indicates the very strong degree of safety regarding timely payment of fi nancial obligations i.e., which carries the lowest credit risk.

3.5 CRISIL has reaffi rmed the highest Corporate Credit Rating "[CCR AAA]’’ (pronounced as CCR Triple A) to MRPL. This rating indicates highest degree of strength with regard to honouring debt obligations by MRPL.

External Commercial Borrowings

Towards partial Debt Funding for Phase III Refi nery Project, Polypropylene Project and SPM Project, your Company had tied up External Commercial Borrowings (ECB) of US $ 250 Million in 2011-12, out of which US $ 50 Million was availed in the year 2011-12 and remaining US $ 200 Million was drawn in the year 2012- 13. In order to keep the interest cost lower, your Company tied up further ECB of US $ 400 Million in the year 2012-13 and have drawn out of it US $ 50 Million during the year.

4. INTERNAL CONTROL SYSTEM

Your Company remains committed to ensure an effective internal control environment that provides assurance on the effi ciency of operations and security of assets. Internal Audit department functions under the supervision of the Audit Committee chaired by an Independent Director. Your Company have a well established internal control review mechanism which assures an effective internal control environment to the Audit Committee and Board of Directors.

5. PROJECTS

A) Ongoing Projects

i. Phase III Refinery Upgradation and Expansion Project.

The implementation of ongoing Company’s Phase III Refi nery Project to increase complexity and profi tability by increasing the refi ning capacity to 15 MMTPA, to process high TAN and heavy crude, increasing the distillate yield by upgrading low value naphtha and black oils and to produce value added products like Propylene and upgrade its total diesel pool to superior (Euro III/IV) grade HSD is nearing completion. The estimated cost of the project continues to be Rs. 12,160 Crore despite some delay in completion.

The implementation of the project though delayed is now progressing satisfactorily. As of 15/07/2013, the overall physical progress is 99 % against scheduled target of 100%. Due to the delay in completion of the CPP, your Company had taken up alternate measures to commission some of the units in Phase III with the utilities (power and steam) sourced from existing Refi nery CPP. All the process units and the downstream units have achieved Mechanical Completion which includes major units like Petro Fluidized Catalytic Cracking Unit (PFCCU), Delayed Coker Unit (DCU), Sulphur Recovery Unit (SRU). The Units are awaiting the availability of uninterrupted Steam and Power for carrying out the pre-commissioning and commissioning activities from CPP which is being executed by M/s BHEL. CPP is anticipated to be completed progressively by September / October, 2013. However, GTG 1 / HRSG 1 / GTG 2 have been commissioned.

HGU and DHDT units have been successfully commissioned. The other associated Utilities and offsite facilities like Cooling Water System, DM Water System, Air & Nitrogen System, Waste Water Treatment System & Fire Water System have also been commissioned.

The cost commitment for Phase III project was Rs. 10,935 Cr while the cumulative expenditure incurred was Rs. 10,458 Cr as on 31/07/2013. The project having reached the completion stage of 99% and cost commitment nearing completion, it is anticipated that there will not be any cost overrun despite the delay in project completion.

ii. Polypropylene Project

The setting up a Polypropylene unit integrated with the Phase III Project at an estimated capex of Rs. 1,804 Cr by your company with M/s. Novolen Technology, Germany is moderately delayed due to PDF problems. The non vacating of site by PDF has resulted in shifting the location of the unit and delayed commencement of site work and delayed receipt of environmental clearance. Site grading work has now been carried out in the new location and civil and structural works and equipment erection are in progress.

This Project has achieved a progress of 90 % as against target of 93 % as of 15/07/2013. The Cost Commitment made for Polypropylene Project was Rs. 1,298 Cr while the cumulative expenditure incurred was Rs. 725 Cr as of 31/07/2013.

iii. Single Point Mooring (SPM) Project

Your Company have set up SPM project along with coastal booster pumping station within the port limits at a location of 16 kilometers from the shore (High-Seas) having draft availability of 30 meters for handling upto Very Large Crude Carrier (VLCC) at an estimated cost of Rs. 1044 Cr. This facility will enable the company to receive crude in suez max / VLCC vessels, which in turn will give freight economics and also allow access to West African and Latin American countries crudes. This facility will also de-congest existing berth facility at NMPT port and reduce the incidence of demurrage. The facility can also be deployed for crude receipt by the Indian Strategic Petroleum Reserve Limited (ISPRL) underground cavern for storage of Crude oil at Mangalore.

The project activity has achieved an overall progress of 98.64% against the revised scheduled target of 99.12 % as of 15/07/2013. The testing of the facility was started on 03/01/2013. However, due to technical issues, it was taken up for repairs. This repair activity has since been completed. Cost Commitment made for SPM project was Rs. 688 Cr while the cumulative expenditure incurred was Rs. 651 Cr as of 31/07/2013.

iv. Refinery Performance Improvement Programme

Your Company have taken up Refi nery Performance Improvement Programme (RPIP) through M/s Shell Global Solutions International B.V. (SGSI) under the auspices of Center for High Technology, Ministry of Petroleum & Natural Gas.

The RPIP is aimed at identifying opportunities for improvement by adopting best operating practices in the areas having a bearing on profi t margin including optimizing operation, energy and utilities consumption, minimizing hydrocarbon loss and improving maintenance and inspection practices.

The fi rst part of Assessment phase has been completed and is presently under development for implementation.

B) Future Projects

Your Company have signed an MoU with Government of Karnataka for setting up a Linear Alkyl Benzene (LAB) Plant (for producing raw materials to manufacture detergent) and to expand its refi ning capacity to 21 MMTPA subject to techno- economic viability and availability of required infrastructure at Mangalore with an approximate investment of Rs. 8500 Cr. Besides these, Company has been planning to put up a Pet Coke gasifi cation plant and an Olefi n Complex (Naphtha Dual Feed Cracker) at an estimated cost of Rs. 2300 Cr. The preliminary feasibility report is under fi nalization for this project.

6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO :

The additional information required to be disclosed pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings & outgo are furnished in ÂAnnexure - IÊ which forms part of this Report.

7. PARTICULARS OF EMPLOYEES

Your Company being a Government Company is exempted from disclosure of particulars of employees under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Amendment Rules, 2011.

8. RIGHT TO INFORMATION ACT, 2005

Your Company have a RTI manual posted in the website www.mrpl.co.in.

During the year, 96 applications were received, out of which 80 were disposed off before 31/03/2013 and balance 16 applications disposed off after 1/04/2013.

9. HUMAN RESOURCES

- During the year 2012-13, your Company continued to enjoy cordial and harmonious relations with the collectives and as evidence to the same, not a single man-hour was lost on account of industrial disturbance.

- Your Company have recruited 160 employees including 24 women employees, 21 Schedule Caste (SC) & Schedule Tribe (ST) during the year 2012-13.

- Total employee strength as on 31/03/2013 was 1625 including 119 women employees. The strength of Management cadre employees were 629 and 996 were from Non-Management cadre. The total number of employees belonging to SC/ST categories was 150 and Physically Challenged 5.

- During the year 2012-13, your Company devoted 7191 man-days for Training, Development and Learning which amounts to an average 4.50 man-days per employee. This includes functional, developmental and special training programs covering the entire spectrum of employees.

10. OFFICIAL LANGUAGE:

Your Company implements Offi cial Language Policy in letter and spirit, as per the Annual Programme prescribed by the Department of Offi cial Language, Ministry of Home Affairs, Govt. of India. In order to propagate Hindi among the employees, Hindi Workshops were organised on a regular basis. In order to increase the correspondence in Hindi, by the employees, special efforts were made to activate Unicode facilities on all the computers of the Refi nery. Your Company promotes use of Hindi by conducting various programmes and competitions for the employees, their children and family members. Special awards were given to the eight topper students of MRPL DPS School, Mangalore who earned the highest marks in the public examination of class Xth in Hindi Language. In order to propagate Hindi in the Refi nery a House Journal (Half yearly) namely "MRPL PRATIBIMB” is being published from January, 2013. Your Company have been awarded fi rst prize for outstanding performance in Hindi implementation for the year 2011-12 and 2012-13 by the Town Offi cial Language Implementation Committee, Mangalore and also won nine prizes in the competition.

11. VIGILANCE FUNCTION:

Your Company have developed a structured mechanism of vigilance functions and its practices are focused towards creation of value for all the stakeholders. The practices involve multi-layer checks and balances to improve transparency. Vigilance Awareness and Preventive vigilance activities were continuously carried out during the year. Guidelines of Central Vigilance Commission (CVC) are being followed. Offi cers in sensitive posts are rotated regularly. Whistle Blower Policy for employees is in place which ensures that a genuine whistle blower is granted due protection from any victimization. In compliance with CVC instruction, your Company has implemented a complaint handling policy in which all complaints received from various sources can get recorded and can be examined by vigilance. Further, in line with CVC instruction, your Company have achieved very high compliance level with regard to e-payment and e-tender. Leveraging of technology to enhance transparency has been a thrust area of action in which vigilance has played a catalytic role. The website of the company displays downloadable tender document, publication of information of works awarded on nomination basis, publication of post award information of contracts. Full time Chief Vigilance Offi cer is in place and he can be contacted at cvo@ mrplindia.com for any complaints having vigilance angle.

12. SECURITY MEASURES

Security of MRPL Refi nery is designed to comply with Oil Sector Infrastructure Protection Plan (OSIPP) formulated by Ministry of Petroleum and Natural Gas (MoP&NG). Security of MRPL Refi nery is constantly being upgraded to meet with the requirements of OSIPP. Various security measures taken up at MRPL are as follows:

12.1 CISF Induction:

The Ministry of Home Affairs (MHA), Govt of India had sanctioned a total of 200 Central Industrial Security Force (CISF) personnel for the protection of MRPL Refi nery. The CISF had initially deployed a Quick Reaction Team for protection of the Refi nery. The CISF has recently taken over security of MRPL Refi nery with the induction of 110 CISF personnel. The remaining sanctioned strength of 90 personnel will be inducted by December, 2013. The CISF Township being constructed at a total cost of Rs. 32 crore is expected to be ready by December, 2013.

12.2 CCTV Surveillance & Access Control:

The Refi nery is covered by state-of–the art CCTV Network designed to cover all the access control gates and other strategic locations. Plan to extend CCTV coverage along with an integrated CCTV cum Communication control room is on the anvil. The security to Refi nery facility is strictly controlled by appropriate access control.

12.3 Mock Drills:

Your Company regularly conducts mock drills to assess the preparedness of the security forces to safeguard the Refi nery and its operation in the event of strike, law and order problems and other security related events independently and also along with the District Authorities besides State Police and Coast Guard. MRPL and industries in the neighbourhood are actively involved in the Coastal Security Exercises conducted along the coastal area under the auspices of Coast Guard.

12.4 The security system in place is routinely inspected and reviewed by the Industrial Security Branch of Intelligence Bureau (IB) to identify grey area and recommend / suggest improvements. Your Company deligently implements the majority of IB’s recommendations. The IB team had appreciated the Physical Security, IT Security and Fire Fighting systems at MRPL. Your Company is also guided by security expertise of the parent company.

13. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

The CSR objective of your Company promoted under the name of ''SAMRAKSHAN’ is to promote in a holistic and sustainable manner, development of under-privileged communities, affl icted by poverty, illiteracy, illness and physical disabilities. Besides these, your Company has taken CSR initiative to protect, preserve and promote the social, cultural and environmental, heritage and wealth in and around the area of company’s business and to usher in sustainable development. Your Company with these objectives has implemented a number of CSR programmes. The major programmes are sponsoring Midday Meal to support continuing education, setting up of computer lab, add on facility to Government schools, promotion of livelihood for economically weaker section of people by organising computerised stitch craft, JCB and crane operating training programme, construction of Community hall for local Panchayat, participation in development of appropriate access road to and from remote villages to main arterial roads, providing scholarship and fi nancial assistance to girl and SC/ST students for the Academic year 2012-13 , construction of class rooms, anganwadi, toilets and bath rooms for students’ hostel and running a free primary health centre. The Company along with ONGC has extended its commitment by putting up a separate block to the 162 year old Lady Goschen Hospital at an estimated cost of Rs. 21 Crores. The foundation stone for this facility was laid on March 18, 2013 by the Honourable Union Minister for Petroleum & Natural Gas Dr. M Veerappa Moily and Chief Minister of Karnataka Shri Jagadish Shettar. This activity will make a lasting impact in health services provided to women and infants in the city of Mangalore and surrounding areas.

Your Company has spent Rs. 4.65 Cr. for various CSR activities during the year 2012-13.

14. DIRECTORS

During the year, following changes took place in Board of Directors of your Company:

14.1 Shri P. K. Singh, Joint Secretary, MoP&NG was appointed on 17/08/2012 in place of Shri Vivek Kumar, Joint Secretary, MoP&NG.

14.2 Dr. A. K. Rath, Independent Director completed his three year tenure on 15/02/2013.

14.3 Shri V. G. Joshi has been appointed as Director (Refi nery), MRPL and he had assumed charge on 04/04/2013.

14.4 Shri P. Kalyanasundaram, Joint Secretary, MoP&NG has been appointed w.e.f. 15/04/2013 in place of Shri P. K. Singh, Joint Secretary, MoP&NG.

14.5 Shri B. K Namdeo, Director (Refi nery), HPCL has been appointed w.e.f. 01/07/2013 in place of Shri K. Murali, who superannuated from HPCL.

14.6 The Board wishes to place on records its appreciation for the services rendered by Shri Vivek Kumar, Dr. A. K. Rath, Shri P. K. Singh and Shri K. Murali as Directors during their tenure on the Board of the Company.

14.7 In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Shri P. Kalyanasundaram and Shri Sudhir Vasudeva will retire by rotation at the 25th Annual General Meeting of the Company. Shri P. Kalyanasundaram and Shri Sudhir Vasudeva being eligible, offer themselves for re-appointment as Directors of the Company.

14.8 Brief resume of the Directors seeking appointment / re-appointment, together with the nature of their expertise in specifi c functional areas, the names of the companies in which they hold the directorship and the membership / chairmanship of committees of the Board, and their shareholding in the Company are furnished in the Annexure to the AGM notice.

15. DIRECTORSÊ RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217 (2AA) of the Companies Act, 1956, with respect to Directors’ responsibility statement, it is hereby confi rmed that: i) In the preparation of the Annual Accounts, the applicable accounting standards have been followed and that there are no departures from the same.

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and the Profi t & Loss of the Company for the year ended on that date.

iii) The Directors have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, and

iv) The Directors have prepared the Annual Accounts of the Company on a "going concern” basis.

16. FIXED DEPOSIT

Your Company have not accepted any fi xed deposit during the year from the public.

17. CORPORATE GOVERNANCE

17.1 Your Company have complied with all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance requirements and mandatory guidelines on Corporate Governance for CPSEs issued by DPE, Government of India except having requisite number of Independent Directors on the Board of the Company. There are two Independent Directors on the Board of your Company. The Company is pursuing with Ministry of Petroleum and Natural Gas (MoP&NG), Government of India for appointment of requisite number of Independent Directors.

17.2 The Annual Report contains a separate section on Corporate Governance, which forms part of this report.

17.3 Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, your Company have obtained the Certifi cate from the Joint Statutory Auditors of the Company towards compliance of Corporate Governance which is annexed and forms part of this report.

17.4 In terms of Clause 49 (IV) (F) of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report (Annexure - II) have been attached and forms part of this report.

17.5 As a measure of good corporate governance, your Company has engaged Practicing Company Secretaries for conducting Annual Secretarial Compliance Audit for the year 2012-13. The Practicing Company Secretaries have issued Annual Secretarial Compliance Audit Report for the year 2012-13 which forms part of this report.

18. AUDITORS

18.1 M/s. Maharaj N. R. Suresh & Co., Chennai and M/s. Gopalaiyer and Subramanian, Coimbatore have been appointed as Joint Statutory Auditors of the Company for the Financial Year 2012-13 by Comptroller & Auditor General of India (C&AG).

18.2 The report of the C&AG at Annexure - III forms part of this Report. You will be pleased to note that your Company has got ''NIL’ comments certifi cate from C&AG for the 11th year in a row.

18.3 Pursuant to the provisions of Section 233B of the Companies Act, 1956, the cost accounts maintained by the Company are being audited by Cost Auditors M/s. Musib and Associates who are appointed with approval of Ministry of Corporate Affairs, Government of India.

19. ACKNOWLEDGEMENT

19.1 Your Directors sincerely thank the Government of India, Ministry of Petroleum and Natural Gas, Ministry of Finance, Ministry of Corporate Affairs, Department of Public Enterprises, Ministry of Environment and Forest, Ministry of External Affairs, Ministry of Shipping, Ministry of Heavy Industries, Ministry of Home Affairs other Ministries, Public Enterprise Selection Board and Departments of the Central Government and the Government of Karnataka for their valuable support and continued co-operation.

19.2 Your Directors gratefully acknowledge support and cooperation extended by Hindustan Petroleum Corporation Limited, as co-promoter of the company.

19.3 Your Directors wish to thank the shareholders for their continued confi dence reposed on the management and the Company.

19.4 Your Directors acknowledge the continuing co-operation and support received from New Mangalore Port Trust, Financial Institutions, Banks and all other stakeholders such as suppliers of crude oil and other inputs, contractors, transporters and others.

19.5 Your Directors recognize the patronage extended by the valued customers for the products of the company and promise to provide them the best satisfaction.

19.6 Your Directors wish to place on record their sincere appreciation of the sustained and dedicated efforts put in by all the employees collectively and concertedly as a Team.

19.7 Your Company salutes ONGC with deep gratitude for the courage and conviction displayed by ONGC in acquiring and transforming your Company. Today, with all round achievements and spectacular growth and having been crowned with Schedule ''A’ status, your Company shines as an incredible example in the industry under the aegis of ONGC.

For and on behalf of the Board

(Sudhir Vasudeva)

Chairman

Place: New Delhi

Date: 8th August, 2013


Mar 31, 2012

The behalf of the Board of Directors, I take pleasure in presenting the 24th Annual report on the performance of your company, together with the Audit report and Audited account for the year ended 31/03/2012.

It is a matter of immense satisfaction that the performance of your company both on the Physical as well as Fiscal parameters created certain new benchmarks of excellence during the year 2011-12.

Major highlights of your Company's performance during the year are enumerated below:

1. Highest ever Refinery crude thruput at 12.82 MMTPA.

2. Highest ever Turnover at Rs. 572,068 Million.

3. Highest ever Export Turnover at Rs. 234,183 Million.

4. Lowest ever Energy consumption index of 57.92 MBN.

5. Nameplate capacity of the refinery has been enhanced to 15 MMTPA with successful commissioning of 3 MMTPA Crude and Vaccum Distillation Unit III (CDU&VDU III) of Phase-III project on 29/03/2012.

6. With Commissioning of CDU and VDU-III before 31/03/2012 your Company is eligible for benefits under Section 80(IB) of the Income Tax Act, 1962 for Phase- III project.

7. Government of Karnataka has sanctioned an attractive Tax Incentive package for the Phase-III project.

8. Diesel Hydro Treater/ Hydrogen Generation/ Coker Gas Oil Hydro Treater Units were mechanically completed before 31/03/2012.

9. DPE Adjudged performance of your company as "Excellent" for the year 2010- 11 against the MoU target.

1.1 FINANCIAL PERFORMANCE

(Rs. In Million)

Year ended Year ended

31st March, 2012 31st March, 2011 Turnover 572,068 437,236

Profit be fore Depreciation 19 08 22,332

Interest and Tax

Interest and Finance Charges 2,067 1,047

Gross Profit after interest but before 17,541 21,285

Depreciation and Tax

Depreciation and Amortizations 4,339 3,914

Profit Before Tax 13,202 17,371

Provision for Taxation 4,116 5,605

Profit after Tax 9,086 11,766

Balance of Profit/(Loss) brought forward 42 998 33 959 from previous year

Surplus available for appropriation 52,074 45,727 Appropriations:

Proposed dividend on Preference 0,000 0,00 Shares (Rs. 9,186)

Proposed Dividend on Equity Shares 1,753 2,103

Tax on Dividend 284 341

Transfer to Capital Redemption Reserve 46 -

Transfer to General reserve - 295

Balance carried to Balance Sheet 49,991 42,988

1.2 DIVIDEND

The Board of Directors of your company is pleased to recommend dividend payout of 10% (Rs. 1/- per equity share) ofRs. 10/- each fully paid-up in view of the ongoing project investment and the reduced profitability. This will absorb Rs. 2,036 Million including Rs. 284 Million as dividend distribution tax.

1.3 OPERATIONAL PERFORMANCE

The Highest ever Refinery thruput was 12.82 MMTPA for the year 2011-12 compared to 12.64 MMTPA during the previous year. During the last fiscal, your Company has completed the revamp of its CDU/ VDU -I unit as well as Hydro Cracker Unit-II. Your company, keeping in view the process requirement and to maintain high utilization of its assets, has planned these revamps along with the turnaround shutdowns during the year 2011-12. During the year 2011-12, your company has processed three new crudes i.e., Agbami, COCO, Mellitah and continues to expand its crude basket.

1.4 EXPORTS

Your company has achieved highest ever export turnover ofRs. 234,183 Million during the year 2011-12 by exporting products like Motor Spirit (MS), Naphtha, Mixed Xylene, High Speed Diesel (HSD), Jet fuel and Fuel Oil (FO).

Your Company continues to have the Term export contract for the supply of petroleum products to Mauritius with the State Trading Corporation (STC), Mauritius.

In the global competitive market, your company has secured its place by exporting the petroleum products and continues to explore opportunities for its growth.

1.5 SAFETY PERFORMANCE

The year 2011-12 witnessed successful and safe commissioning of CDU/VDU- III of Phase-III. Your company has also recorded longest accident free period of 1662 days during the year by surpassing previous best record of 1301 days during the year.

Your company is committed towards imparting continuous training in fire & safety practices. During the year under review, 885 Nos. of Plant employees and 7,184 Nos. of contract employees were trained in Fire and Industrial Safety. Employees of your company were also trained on safety aspects and practices during the year.

Your company has conducted Multidisciplinary Internal Safety Audit and OISD external surprise audit was also conducted during the year and its recommendations are being complied with.

1.6 ENVIRONMENT MANAGEMENT

Your company believes in "Perform beyond Compliance" for Protection of the Environment. Your Company is ISO 14001:2004 certified company, authenticated by TUV Rheinl and.

Your Company has undertaken following major initiatives for Greener Environment during the last fiscal:

- Wet Air Oxidation Unit is under trial to treat Spent Caustic and to improve the WWTP performance.

- An advanced Reverse Osmosis Plant is being commissioned for maximizing the quantity of treated effluent recycle.

- Condensate Recovery Unit commissioned in CDU-1 resulting reduction in fresh water consumption. Similar units are planned for other process units as well.

- Second continuous ambient air quality monitoring system was installed in the refinery to monitor the ambient air quality.

- An external agency monitors Ambient Air Quality at 7 locations in and around the refinery.

- A Closed Bioremediation Unit is being commissioned in the refinery to treat oily sludge generated in the refinery.

- VOC Emission monitoring is being done at 74,000 points in the refinery through reputed agency and corrective measures taken to effectively minimize the same.

- Community awareness programme was organized in the neighboring villages in association with Karnataka State Pollution Control Board.

- In a unique partnership with Karnataka Forest Department, your company is developing green belt in 120 acres of land. As a first stage, 40,000 saplings are being grown in an offsite nursery by the Forest Department, which will be later transplanted in the green belt.

1.6.1 Environmental Performance:

Your company continues to comply with the Environmental Regulations and also making its best efforts for protection of environment by taking various steps.

Following major actions were taken to prevent water and air pollution.

Water:

- Effluent treatment plant operation was normal throughout the year.

- Treated effluent quality was well within the prescribed limits.

- Seawater quality monitoring carried out by M/s. College of Fisheries indicates no adverse effect on the marine environment due to treated effluent discharge.

- Average treated effluent recycle to cooling towers during the year was about 74%

- Treated effluent after maximum recycle and within the stipulated standards are discharged into sea at a distance of 700 m and at a depth of 6.5m through diffusers for maximum dispersion & dilutions. Independent government agency monitors the marine ecology at the outfall point in the sea on a fortnight basis. Till date there has been no adverse effect on the marine eco-system.

- Cooling towers are operated at greater than 6 Cycles of concentration, this measure has brought down the cooling tower blow down. Refinery practices the cascade blow down system in the cooling towers to conserve water and chemicals.

Air:

- Various energy conservation schemes are implemented for reducing air emission.

- Utilization of low sulphur (less than 1% S) fuel oil in furnaces, with average sulphur content, less than 1% maintained into fuel oil.

- Maximum utilization of Ultra Low Sulphur Fuel Gas (less than 10 ppmS) in furnaces.

- SRU units are running with more than 99% efficiency.

- Ambient air quality monitoring being done inside and outside the Refinery by reputed external agency as per revised National Ambient Air Quality Monitoring Standard set by Ministry of Environment & Forests (MoEF).

- Regular monitoring has minimized flaring.

- Daily average Sulphur dioxide emissions from the refinery kept beneath the prescribed limits of 40.0 T/day.

1.6.2 Solid Waste Management and implementation of Supreme Court Monitoring Committee (SCMC) Recommendations:

- 125MT of spent activated carbon was disposed off.

- Bioremediation of 2000 Tonnes of oily sludge has been completed successfully.

1.6.3 Noise Pollution Control:

Acoustic enclosures are provided for DG sets at Sarapady and APMC pumping station.

1.6.4 Future Plans:

- Utilization of Liquified Natural Gas (LNG) as alternative fuel in the Refinery.

- Vapour recovery System for light hydrocarbon storage tanks in Phase - III Refinery Project.

- VOC Recovery system in Waste Water Treatment Plant (WWTP) of Phase- III.

1.7 MARKETING

Domestic Marketing of Products

Your Company continues to increase its market share in the direct sales segment of petroleum products in the state of Karnataka and its adjoining states. The direct sales turn over during the year was Rs. 27,552 Million compared to Rs. 22,912 Million in the previousfiscal.

During the year Bitumen sales was increased to 293 TMT from 248 TMT sold during the previous year, registering a growth of 18%, Furnace Oil sales was increased to 146 TMT during the year from 99 TMT sold during the previous year, registering a growth of 47% and Mixed Xylene sales was also increased by threefold during the year.

1.7.1 Retail Operations

Keeping in view the under recoveries in retail marketing of auto-fuels, your company continues to adopt a non aggressive approach with its miniscule presence in the retail marketing.

1.7.2 New Products Marketing Plan

Your company is setting up a Polypropylene (PP) plant with the capacity of 440 KTPA, integrated with Phase- III expansion of refinery complex with an investment of Rs. 18,037.8 Million for supplying to downstream processing industry. Detailed business plan for sale of Polypropylene in domestic market is being finalized. Storage infrastructure for Polypropylene is being developed at Hassan in the State of Karnataka.

Your company is also setting up a Delayed Coker Unit (DCU) in its Phase- III expansion project, which will produce Petcoke, a new product in the product basket. Detailed business plan is being finalized for sale of Petcoke to major Industrial consumers in Southern India.

1.7.3 Joint Ventures

Your Company is in Joint Venture (JV) with Shell B.V Netherland known as Shell MRPLA viation Fuel Services Private Limited (SMAFSPL) which supplies Aviation Turbine Fuel (ATF) to both domestic and international airlines at Indian airports.

SMAFSPL is aggressively acquiring market share in both domestic and international airlines at Indian airports. It has commenced its refuelling operations at Mangalore airport.

Your company continues to hold 50% equity in the Joint Ventures by holding 15 Million equity shares worth ofRs. 150 Million.

Turnover of this JV Company was Rs. 5,173.48 Million during the year against Rs. 2,867.03 Million during the previous year and the Pre-tax profit ofRs. 181.59 Million during the year againstRs. 136.28 Million during the previous year.

The JV Company declared its maiden dividend ofRs. 1 per equity share ofRs. 10 each fully paid during the year.

2. AWARDS AND RECOGNITION:

Your company has been recognized for its excellence in all of its operational areas and received following awards during the year:

- Won the "Unnatha Suraksha Puraskara" award - 2011 conferred by National Safety Council -Karnataka Chapter for Outstanding Performance in Safety Management Systems.

- "Excellent" MoU rating received from Department of Public Enterprise, Government of India for the year 2010-11.

- Secured second prize for outstanding performance in the area of Hindi implementation for the year 2010-2011 by the Town Official Language Committee (TOLIC), Mangalore.

- Won BT- STAR PSU Excellence award 2012 for Excellence in Market Capitalization.

- Won OISD "Most Consistant Performer (Refineries)" Award for 2009-10

3. CREDIT PROFILE

3.1 ICRA Limited has reaffirmed Issuer Rating "IrAAA" (pronounced IR Triple A) to your company. This rating indicates the highest credit quality rating assigned by ICRA and the rated entity i.e., which carries the lowest credit risk.

3.2 ICRA has reaffirmed the rating assigned to the Rs. 15,000 Million Fund- Based limits of your company at "[ICRA] AAA" (pronounced ICRA Triple A).The outlook on the rating is "Stable".

3.3 ICRA has also reaffirmed the rating reassigned to the Rs. 55,000 Million Non- Fund based limits of your company at "[ICRA] A1 " (pronounced as ICRA A one plus).

3.4 ICRA has reaffirmed "[ICRA] A1 " (pronounced as ICRA A one plus).This rating indicates the very strong degree of safety regarding timely payment of financial obligations i.e., which carries the lowest credit risk.

3.5 CRISIL has reaffirmed "[CCR AAA] (pronounced as CCR Triple A). This rating indicates highest degree of strength with regard to honoring debt obligations by your company.

4. FINANCIAL ACCOUNTING

The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable accounting standards and as per the guidance note on accounting for activities of the company issued by The Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act, 1956. The financial statements have been prepared under the Revised Schedule VI format of the Companies Act, 1956 pursuant to notification of Ministry of Corporate Affairs (MCA), Government of India.

5. INTERNAL CONTROL SYSTEM

Your company remains committed to ensure an effective internal control environment that provides assurance on the efficiency of operations and security of assets.

Internal audit department functions under the supervision of the Audit Committee chaired by an Independent Director. Your company has a well established internal control review mechanism which assures effective internal control environment to the Audit Committee and Board of Directors.

6. PROJECTS

6.1 Phase-III Refinery Expansion and Up gradation Project

As you are aware that your company is implementing Phase-III refinery expansion and up gradation project at an estimated cost of Rs. 121,600 Million, which will drive the future growth of the company.

Major highlights of Phase-III refinery expansion and up gradation project are as under:

- With the increased capacity of 15 MMTPA your company is well placed in the market vis-e-vis its peers in the Industry.

- Your company is the second refinery in the country, capable of processing high TAN crudes.

- The "Nelson Complexity Index" of the refinery of your company enhanced to approximately 9.0 from 6.0.

- The Distillate yield of the refinery will be increased by approximately 80%.

- Your company will produce value added products like Propylene from the low value black oil.

- The Diesel Hydro Treater (DHDT) of the refinery of your company will convert the High Speed Diesel (HSD) into Euro -III, IV and V grade for domestic and global market.

The Phase-III project is being executed in hybrid mode consisting of various modes of execution viz., Engineering, Procurement and Construction Management (EPCM), Open Book Execution (OBE) and Lump Sum Turn Key (LSTK). M/S Engineers India Limited (EIL) is the Project Management Consultant. M/S Jacob is the EPCM Contractor for the cDu/VDU and M/S EIL is the contractor for Petro Fluidized Catalytic Cracking Unit (PFCCU) and Sulphur Recovery Unit (SRU) which are executed under OBE and LSTK.

Your company has achieved an overall progress of 95.7% against scheduled target of 100% as of 15/07/2012 in Phase-III project and is in the process of progressive commissioning of the following major units:-

(i) Hydrogen Generation Unit (HGU)

(ii) Diesel Hydro Treater Unit (DHDT)

(iii) Sulphur Recovery Unit (SRU)

(iv) Captive Power Plant (CPP)

(v) Petro Fluidized Catalytic Cracking Unit (PFCCU)

(vi) Delayed Coker Unit (DCU)

(vii) Coker Gas Oil Hydro Treater Unit (CHTU)

The crude was cut into CDU and VDU of Phase-III on 25/03/2012 after mechanical completion of necessary fire water network, flare network, utilities control systems and various finished products were routed to respective storage tanks on 29/03/2012.

Hydrogen Generation Unit (HGU) was succusfully commissioned on 18/07/2012

Two crude storage tanks each having 60,000 m3 capacity were commissioned on 30/3/2012 to enhance the crude storage capacity of the refinery of your company.

Wet Air Oxidation unit, a part of the auxiliary units/facilities was commissioned on 13/12/2011.

The Phase-III project has Hydrocarbon streams interconnections with the existing Phase-1 & II of the refinery of your company. Revamp of the existing Hydro Cracker Units (HCU-1 and hCu-2) has been successfully completed and commissioned during May, 2012.

Your company is pleased to inform that the Government of Karnataka has given an attractive incentive package consisting of following fiscal benefits for Phase- III project:

- Exemption from payment of Entry Tax on plant and machinery and capital goods during the initial period of 4 years from the date of commencement of project implementation.

- Exemption from payment of Entry Tax on the crude oil thruput in Phase-III for15yearsfrom the start of commercial production of the Phase-III.

- Exemption from Central Sale Tax for 15 years from the date of commencement of commercial production for all the interstate sales.

- Interest free soft loan at the rate of 100% of eligible gross VAT for first

3 years and 60% of eligible gross VAT on the sale of Polypropylene, Petroleum Coke, LSHS, Naphtha, LPG (incremental production), Mixed Xylenes and reformate to non SEZ units for next 12 years to be repaid after 15 years by 15 equal annual installments limited to Rs. 5000 Million per annum.

The Phase-III project of your company is now eligible for Income Tax benefit under Section 80(IB) of the Income Tax Act, 1962 as it has successfully commissioned CDU and VDU of Phase-III project on 29/03/2012 before the sunset deadline of 31/03/2012 .This benefit will place your company in a better position for competing with its peers in the market.

Hydrogen Generation (HG), Diesel Hydro Treater (DHDT), and Coker Gas Oil Hydro Treater (CHT) units along with related utilities were also mechanically completed before March 2012. The pre-commissioning activities of these units are nearing completion by extending steam and power from the existing facilities of Phase-I and Phase-II due to delay in commissioning of Captive Power Plant (CPP) of Phase -III by its LSTK contractor ( M/s BHEL). It is expected that M/s BHEL will be able to commission CPP of Phase-III by the end of September 2012 as assured by it.

6.2 Polypropylene Project

As you are aware that your company is setting up a Polypropylene (PP) unit integrated with the Phase-III project at an estimated Capex of Rs. 18,037.8 Million. M/s. Engineers India Limited (EIL) has been engaged to implement this project under OBE convertable to LSTK methodology and M/s. Novolen Technology, Germany has been selected as the licensor for the same.

Project Displaced Families (PDF) problems had delayed the site work which resulted in shifting the location of this project. Fresh environmental clearance has been obtained from the Ministry of Environment and Forest (MoEF) due to shifting of the location.

Polypropylene Project has achieved an overall progress of 82.2% against scheduled target of 97.7% as of 15/07/2012. Cost commitment made for this project was Rs. 12,976.6 Million and the cumulative expenditure incurred was Rs. 5,492.1 Million as of 31/03/2012.

6.3 Single Point Mooring (SPM) Project

Your company is setting up Single Point Mooring (SPM) project along with coastal booster pumping station within the port limits at a location of 16 kilometers inside the sea (High-Seas) having draft availability of 30 meters for handling Very Large Crude Carrier (VLCC) at an estimated cost of Rs. 10,440 Million.

SPM facility will have following advantages:

a. Use of VLCC will reduce the average freight cost of crude.

b. Flexibility to receive opportunity crudes from West African and Latin American countries.

c. De-congestion of existing jetties at New Mangalore Port Trust (NMPT) will result in handling more petroleum products.

d. Crude will be pumped to the Indian Strategic Petroleum Reserve Limited (ISPRL) underground cavern for storage of Crude oil at Mangalore and Padur.

Single Point Mooring (SPM) project has achieved an overall progress of 95.6% against the scheduled target of 100% as of 15/07/2012 and is expected to commence trial operation by the end of September, 2012.

6.4 Future Projects for Growth

During Global Investors Meet on 7th & 8th June, 2012 at Bengaluru, your company has signed a Memorandum of Understanding with the Government of Karnataka for setting up a Linear Alkyl Benzene Plant (a raw material to manufacture Detergents) and to expand its refining capacity to 21 MMTPA subject to techno- economic viability and availability of required infrastructure at Mangalore with an approximate investment ofRs. 85,000 Million.

7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The additional information required to be disclosed pursuant to Section 217(1) (e) of the Companies Act,1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings & outgo are furnished in 'Annexure-1' which forms part of this Report.

8. PARTICULARS OF EMPLOYEES

Your company being a government company is exempted from disclosure of particulars of employees under Section 217(2A) of the Companies Act, 1956, and the Particulars of Employees Amendment Rules, 2011.

9. RIGHT TOINFORMATIONACT, 2005

Your company has a RTI manual posted in the website www.mrpl.co.in.

During the year 87 applications were received, out of which 82 were disposed off before 31/03/2012 and balance 5 applications disposed off after 01/04/2012.

10. HUMAN RESOURCES

- During the year 2011-12, your company continued to enjoy cordial and harmonious relations with the collectives and as evidence to the same not a single man-hour was lost on account of any industrial disturbance.

- Your company has recruited 168 employees including 13 women employees during the year 2011-12, out of these 20 employees are Schedule Caste (SC), 12 Schedule Tribe (ST) and 1 Physically Challenged (PC).

- Total employee strength as on 31/03/2012 was 1500 including 104 women employees, out of these employees, 597 are from Management cadre whereas 903 are from Non-Management cadre. The number of employees belonging to SC/ST categories are 129 and Physically Challenged are 5.

- During the year 2011-12, your company devoted 5095 man-days for Training, Development and Learning which amounts to an average 3.45 man-days per employee. This includes functional, developmental and special training programs covering the entire spectrum of employees.

11. OFFICIAL LANGUAGE (OL)

Your company continues to implement Official Language (OL) Policy as per the Annual Programme prescribed by the Department of Official Language, Ministry of Home Affairs, Government of India, in this regard following steps were undertaken during the year.

- Periodical reports are sent to all the Government agencies including Administrative Ministry, Ministry of Petroleum and Natural Gas (MoP & NG) highlighting the progress made in promotion of Hindi.

- Hindi workshops and Hindi classes namely Prabodh, Praveen and Pragya are organized on a regular basis.

- Special efforts were made to activate Unicode facilities on all the computers used in the office for increasing the correspondence in OL.

- To motivate employees, incentive schemes such as cash award and personal pay is introduced.

- An OL inspection of various departments and offices was carried out.

Hindi Fortnight was celebrated and many Hindi competitions such as Hindi dictation, Handwriting, Admin-Glossary, speech etc. were conducted for the employees and their family members during the year.

Competitions are also held in Hindi language for employees and their family members during National Safety Day, Environment Day, Security awareness week and Vigilance awareness week.

Hindi Hasya Kavi Sammelan was held on 30/03/2012, 5 National level eminent Hindi poets from different parts of the country participated in this programme organized by your company.

Official Language Implementation Committee (OLIC) meetings, were held on quarterly basis under the chairmanship of Managing Director. All out efforts are being made to promote OL in your company.

Your company has been awarded first prize for outstanding performance in Hindi implementation for the year 2011-12 by the Town Official Language Implementation Committee (TOLIC), Mangalore. Your company also won eight prizes and stood Second at the TOLiC level competitions.

12. VIGILANCE FUNCTION

Your company has developed a structured mechanism of vigilance functions and its practices are focused towards creation of value for all the stakeholders. The practices involve multi-layer checks and balances to improve transparency. Vigilance awareness and preventive vigilance activities were continuously carried out during the year. Guidelines of Central Vigilance Commission are being followed. Officers in sensitive posts are rotated regularly.

Whistle Blower Policy for employees is in place which ensures that a genuine whistle blower is granted due protection from any victimization. In compliance with CVC instruction, your company has implemented a complaint handling policy in which all complaints received from various sources can get recorded and can be examined by vigilance. Further, in line with CVC instruction, your company has achieved very high compliance level with regard to e-payment and e-tender.

Leveraging of technology to enhance transparency has been a thrust area of action in which vigilance has played a catalytic role. The website of the company displays downloadable tender document, publication of information of works awarded on nomination basis, publication of post award information of contracts.

13. SECURITY MEASURES

Your company continues to improve the security measures at the refinery. The following steps were taken to improve the security during the year:

13.1 CISF Induction

Ministry of Home Affairs (MHA) has approved induction of 200 CISF personnel for security of the refinery. A Quick Reaction Team (QRT) team consisting of 22 CISF personnel was inducted to guard the refinery. Construction of an exclusive Township for CISF personnel is underway at a cost of Rs. 320 Million and is scheduled for completion in April, 2013. The second phase of CISF induction with an additional 80 personnel is expected to take place by September, 2012. The remaining CISF manpower will be inducted after completion of CISF Township.

13.2 CCTV Surveillance

The refinery is under surveillance of state-of-the art CCTV Network designed to cover all the access control gates and other strategic locations.

13.3 Access Control

Access to refinery area is controlled by computerised Smart Card & Manual Pass system for contract labourers and RFID smart card for employees. Access control to the refinery area is being improved by completion of the proposed new refinery gate and security building. The security building will be equipped with multi-zone metal detectors and X-ray baggage scanners. This gate will also have turnstiles controlled through bio-metric card readers for strict access control to refinery area. Anti-vehicle intrusion systems like Tyre Rippers are also being planned to be installed at refinery gates. Marketing operation and security infrastructure is being built in the lower plateau of the Refinery.

13.4 IB Recommendations

A team from Industrial Security Branch of Intelligence Bureau (IB) visits the refinery of your company once in every two years to inspect security arrangements, identify grey area and recommend / suggest improvements. All the recommendations given by the IB in the year 2008 have been complied. The last IB inspection was carried out during December, 2010 and out of 30 Recommendations, majority have been complied. The remaining recommendations are under varying stages of compliance.

13.5 Security Audit by ONGC

Chief of Security, Oil and Natural Gas Corporation (ONGC), carries out periodical review of security of the refinery besides periodical security audits, and recommends for improvement which are implemented.

13.6 Mock Drills

A "Protection Scheme" to safeguard the refinery of your company from the events of strike, law & order situation have been finalized with the district Commissioner and Police Commissioner, Mangalore. Regular security mock drills and district level security exercises are conducted jointly with State Police and Coast Guards. Your company is actively involved in the coastal security exercises conducted at the coastal area jointly with Coast Guard.

14. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

Your company's CSR initiative continues to be influenced by the needs and concerns of the community residing in the close proximity of the refinery.

The CSR initiative of your company known as "Samrakshan" have 5 areas with a vision to protect, preserve and promote people, peace and progress in and around of the refinery as under.

- Shikshana Samrakshan,

- Arogya Samrakshan

- Bahujan Samrakshan

- Prakrithi Samrakshan

- Sanskrithi Samrakshan

With these objectives, your company has implemented number of CSR schemes during the year. The major schemes covered under the CSR activities during the year includes construction of community hall, Road asphalting, mid- day meal to school students, construction of school building, toilet blocks for schools, scholarship for meritorious students including SC/ST students, add on facilities to SC/ST community, self employment training for women, free distribution of sewing machines to women , construction of Anganwadi, artificial limb camp, mega medical camp and running a free primary health centre.

The main thrust areas where your company has taken various initiatives are in line with DPE guidelines and has spentRs. 240 Million in various CSR schemes during last 4 years.

15. DIRECTORS

During the year following changes took place in Board of Directors of your company:

15.1 I, Shri Sudhir Vasudeva took over as Chairman of your Company from 03/10/2011.

15.2 Shri Vishnu Agrawal has assumed the office of Director (Finance) with effect from 01/04/2011 pursuant to his appointment as Director (Finance) of MRPL by the Ministry of Petroleum & Natural Gas (MoP&NG), Government of India.

15.3 Shri D.K.Sarraf has resigned on 16/09/2011 from the Board consequent upon his appointment as Managing Director of ONGC Videsh Limited (OVL).

15.4 The nomination of Shri A.K.Hazarika, and Shri K.S.Jamestin, was withdrawn by ONGC the parent company with effect from 31/10/2011 for optimizing the strength of the Board in compliance with Clause 3.1.3 of the mandatory guidelines of corporate governance for Central Public Sector Enterprises (CPSE) issued by Department of Public Enterprises (DPE), Government of India. Shri A.K.Hazarika and Shri K.S.Jamestin are continuing as special invitees on the Board of the company.

15.5 Shri U.K. Basu, Former Managing Director superannuated from the services of MRPL on 30/06/2012 and resigned from the Board of the company with effect from 01/07/2012.

15.6 Shri P.P. Upadhya, has assumed the office of Managing Director with additional change of Director (Technical) MRPL w.e.f. 01/07/2012, pursuant to his appointment as Managing Director and addittional charge of Director (Technical) of MRPL by the Ministry of Petroleum & Natural Gas (MoP&NG), Government of India.

15.7 The Board wishes to place on records its appreciation for the services rendered by Shri U.K. Basu as Managing Director and Shri D.K.Sarraf as Director during their tenure on the Board of the Company.

15.8 In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Dr. A.K. Rath will retire by rotation at the 24th Annual General Meeting of the Company. Dr. A.K. Rath, being eligible, offers himself for re-appointment as Director of the company.

15.9 Dr. D.Chandrasekharam was nominated by ONGC pursuant to clause 6.1 of the guidelines on corporate governance for CPSEs and was appointed as an additional Director with effect from 10/01/2012 by the Board of Directors who vacates his office as Additional Director and being eligible offers himself for re- appointment as a Director in the 24th Annual General Meeting.

15.10 Brief resume of the Directors seeking appointment / re-appointment, together with the nature of their expertise in specific functional areas, the names of the companies in which they hold the directorship and the membership / chairmanship of committees of the Board, and their shareholding in the Company are furnished in the Annexure to the AGM notice.

15.11 Your Company has complied with all the mandatory provisions of clause 49 of the Listing Agreement relating to the corporate governance requirements and mandatory guidelines on corporate governance for CPSEs issued by Department of Public Enterprise (DPE), Government of India except having requisite number of Independent Directors on the Board of the Company. There are three Independent Directors on the Board of your company constituting 1/3rd of its strength. The company is pursuing with Ministry of Petroleum and Natural Gas (MoP&NG), Government of India for appointment of requisite number of Independent Directors. The Annual Report contains a separate section on corporate governance, which forms part of this report.

16. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217 (2AA) of the Companies Act, 1956, with respect to Directors' responsibility statement, it is hereby confirmed that:

i) In the preparation of the Annual Accounts, 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 are reasonable and prudent, so as to give a true and fair view of the state of affairs of the company as at 31st March,2012 and the Profit & Loss of the company for the year ended on that date.

iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities, and

iv) The Directors have prepared the Annual Accounts of the Company on a "going concern" basis.

17. FIXED DEPOSIT

Your Company has not accepted any fixed deposit during the year from the public.

18. CORPORATE GOVERNANCE

18.1 Your Company has complied with all the mandatory provisions of Clause 49 of the Listing Agreement relating to the corporate governance requirements and mandatory guidelines on corporate governance for CPSEs issued by DPE, Government of India except having requisite number of Independent Directors on the Board of the Company. There are three Independent Directors on the Board of your company constituting 1/3rd of its strength. The company is pursuing with Ministry of Petroleum and Natural Gas (MoP&NG), Government of India for appointment of requisite number of Independent Directors.

18.2 The Annual Report contains a separate section on Corporate Governance, which forms part of this report.

18.3 Your Company is listed with the Bombay Stock Exchange Limited and National Stock Exchange Limited.

18.4 Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, your Company has obtained the Certificate from the Joint Statutory Auditors of the Company, for Compliance of Corporate Governance which is annexed to and forms part of this report.

18.5 As a measure of good corporate governance, your Company has engaged M/s Ullas Kumar Melinamogaru & Associates Practicing Company Secretaries for conducting Annual Secretarial Compliance Audit for the year 2011-2012. M/s. Ullas Kumar Melinamogaru & Associates, Practicing Company Secretaries have issued Annual Secretarial Compliance Audit Report for the year 2011-12 which forms part of this report.

18.6 Chairman speech at the 24th Annual General Meeting (AGM) will be distributed to shareholders during the meeting and will be published in the leading news papers.

18.7 Your Company has despatched a copy of Annual Report consisting of Directors Report, Auditors Report, Balance Sheet and Profit & Loss Statement and other documents as required to be sent under the provisions of Companies Act 1956 to all, its members as on the records date i.e. 13.07.2012 pursuant to Section 219 and the Companies Act, 1956.

19. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of Clause 49 (IV) (F) of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report have been attached and forms part of this report.

20. AUDITORS

20.1 M/s. Maharaj N. R. Suresh & Co., Chennai and M/s. Gopalaiyer and Subramanian, Coimbatore have been appointed as joint Statutory Auditors of the Company for the Financial Year 2011-12 by Comptroller & Auditor General of India (C&AG).

20.2 The report of the C&AG at Annexure III forms part of this Report.

20.3 Particulars of the Cost Auditor for the financial year 2011-12

(a) M/s. Musib and Associates, Cost Accountants has been appointed as Cost Auditor for the year 2011-12.

(b) Cost Audit report for the year 2011-12 will be filed before the due date i.e. 27/09/2011.

21. ACKNOWLEDGEMENT

21.1 Your Directors sincerely thank the Government of India (GoI), Ministry of Petroleum and Natural Gas (MoP&NG), Ministry of Finance (MoF), Ministry of Corporate Affairs (MCA), Department of Public Enterprise (DPE), Ministry of Environment and Forest (MoEF), Ministry of External Affairs (MEA), Ministry of Shipping (MoS), Ministry of Home Affairs (MHA) other Ministries and Departments of the Central Government and the Government of Karnataka, for their valuable support, guidance and continued co-operation.

21.2 Your Directors gratefully acknowledge support and direction provided by the parent company, Oil and Natural Gas Corporation Limited (ONGC) and the support of Hindustan Petroleum Corporation Limited (HPCL), as Promoters of the company.

21.3 Your Directors wish to thank the shareholders for the continued confidence reposed on their Company.

21.4 Your Directors acknowledge the continuing co-operation and support received from New Mangalore Port Trust, Financial Institutions, Banks and all other stakeholders such as suppliers of crude oil, vendors, contractors, transporters.

21.5 Your Directors recognize the patronage extended by the valued customers for the products of the company and promise to provide them the best satisfaction.

21.6 Your Directors wish to place on record their sincere appreciation of the sustained and dedicated efforts put in by all the employees collectively and concertedly as a Team known as "Team MRP".

For and on behalf of the Board

Place: New Delhi (Sudhir Vasudeva)

Date: 3rd August,2012 Chairman


Mar 31, 2011

Dear Members,

On behalf of the Board of Directors, I take pleasure in presenting the 23rd Annual Report on the performance of your company, together with the audit report and audited account for the year ended 31st March, 2011.

It is a matter of immense satisfaction that the performance on Fiscal and Physical parameter of your company created certain new benchmarks of excellence during the year 2010-11. Some of the performance highlights are enumerated below:

1) Highest ever Refinery crude thruput at 12.64 MMT.

2) Highest ever Turnover at Rs. 43,800 Crores.

3) Highest ever continuous accident free days of 1367 days as on 31st March, 2011.

4) Highest ever products dispatched through Mangalore - Hassan - Bangalore pipeline of 2.576 MMT.

5) Hydro cracker the major secondary processing unit achieved processing of 2.88 MMT (Capacity 121%).

6) Energy index of 58.13 MBN the lowest ever achieved.

7) Your Company signed a MoU with STC Mauritius 3 year products sale agreement signed in July, 2010.

8) Overall Refinery performance for 2009-10 was found to be qualifed for "excellent" rating of MoU with Government of India.

9) Phase – III Refinery upgradation and expansion project has achieved a overall progress of 84.4% (Actual) as against schedule target of 92.7% as on 15th June, 2011.

1.1 FINANCIAL PERFORMANCE

(Rs. in Crore)

Year ended Year ended

31st March, 2011 31st March, 2010

Turnover 43,800 36,141

Profit before Depreciation 2,233 2,196

Interest and Tax

Interest and Finance Charges 104 115

Gross Profit after interest but before 2,129 2,081

Depreciation and Tax

Depreciation and Amortizations 391 389

Profit Before Tax 1,738 1,692

Provision for Taxation 561 580

Profit after Tax 1,177 1,112

Balance of Profit/(Loss) brought forward 3,396 2,557 from previous year

Surplus available for appropriation 4,573 3,669

Appropriations:

Proposed dividend on Preference 0.00 0.00 Shares (Rs. 9,186)

Proposed Dividend on Equity Shares 210 210

Tax on Dividend 34 35

Transfer to General Reserve 30 28

Balance carried to Balance Sheet 4,299 3,396

1.2 DIVIDEND

In view of the ensuing project investment and considering the performance, the Board of your company has decided to recommend a dividend payout of 12%. This will absorb Rs. 244 Crore including Rs. 34 Crore as tax on dividend.

1.3 OPERATIONAL PERFORMANCE

The Refinery throughput was 12.64 MMT crude oil achieving 107% capacity utilization. The Refinery produced 11.77 MMT of finished products.

1.4 EXPORTS

Even in these challenging times your company has exported, MS, Naphtha, Mixed Xylene, HSD, ATF and FO totaling to 4.9 MMT amounting to Rs. 14,604 Crore.

1.5 Domestic Marketing of Products

Your Company continued to make inroads in the direct sales segment in Karnataka and its adjoining states with sales turnover during the year at Rs. 2,291 Crores.

In view of deregulation of MS pricing, your company has reformulated its Retail Business plan to set up 122 retail outlets in next two years and has developed its policy on dealer selection for setting up retail outlets predominantly in southern India.

1.6 SAFETY PERFORMANCE

- The Refinery has achieved its best ever record of 1367 days without Reportable Lost Time Injury (RLTI) as on 31st March, 2011 i.e. 9.59 Million Man Hours without RLTI. On the Contractor's level a total of 757 days was completed from 5th March, 2009 to 31st March, 2011 i.e. 7.69 Million Man Hours without RLTI.

- In the year 2010, your company was adjudged as "Most consistent Safety Performer in Refinery" by Oil Industry Safety Directorate.

- Safety at MRPL is the commitment of the Top Management and incorporates the highest standards amongst its employees and contract workmen. Periodic audits (both internal and external), Mock Exercise (Onsite & Offsite), regular training updates and a positive attitude towards safe work practices have ensured a safe and healthy work environment. All process plant modifications are verified through Hazard and Operability Study (HAZOP) before implementation.

- HAZOP study of all Refinery facilities including Offsite and Utilities were carried out.

1.7 ENVIRONMENT MANAGEMENT

- In Environment Management, your company's Philosophy is to perform beyond Compliance - that is to perform better than minimum required by statutes. The Refinery is certified with ISO 14001: 2004 for Environment Management Systems. Your Company has undertaken following initiatives for greener environment:

- A Sulphur Pelletisation Unit was commissioned in the Refinery to reduce the dust emissions.

- Wet Air Oxidation Plant is being commissioned in the Refinery for treating Spent Caustic resulting in further improving the quality of the treated effluent. Plant is in advance stage of completion.

- Second Continuous Ambient Air Quality Monitoring System is being installed in the Refinery to monitor the air quality. Installation of instrument is in advance stage.

- 26th Activity Committee Meet on "Environment Management" was jointly organized first time in MRPL by Centre for High Technology (CHT) and MRPL in the month of December, 2010.

- Microbiology study completed on treated effluent by M/s. College of Fisheries.

- VOC Emission monitoring carried out in the Refinery through reputed agency and corrective measures are taken to effectively minimize the same, wherever needed.

- Order placed to State Forest Department, Govt. of Karnataka for developing Greenbelt & Mango Orchard in and around the Refinery, 5,000 mangoes trees and 33,320 others trees, covering this 120 Acre Area.

- Periodic Manual Stack Monitoring is being carried out by MOEF/ KSPCB approved external agency.

- Work Environment Monitoring was carried out by M/s. Regional Labour Institute, Chennai.

- Hydro geological Study is being carried out by M/s. National Geophysical Research Institute, Hyderabad in all water sheds of the Refinery.

- Work Order placed on MOEF/KSPCB approved external agency for monitoring Ambient Air Quality in and around the Refinery as per revised National Ambient Air Quality Monitoring Standards published by Ministry of Environment & Forests.

- An advance technology employed for cleaning Crude Tanks in the Refinery. Tank cleaning was carried out by M/s. Plant Tech – Mid- continent (India) Pvt. Ltd.

- Bioremediation of 1000 MT of Oily Sludge has been completed by M/s. TERI, New Delhi.

- Environment Awareness Programs conducted in the neighbouring villages for School Children and for the community members.

- 70-75% of the total treated effluent is recycled back to the cooling towers.

- Continuous online monitoring Analyzers installed to monitor Treated effluents for parameters like PH, Sulphide, Dissolved Oxygen, Phenols, and VOC (Volatile Organic Compound) before discharged to sea.

- Treated effluents are monitored on a daily basis at both Refinery end & at APMC (Agricultural Produce Market Committee) yard.

- SOx and NOx emissions in ambient air are well below the standard stipulated by pollution control board, the monitoring of which in and around the Refinery is being done by M/s. National Institute of Technology Karnataka.

- A Fortnightly Marine Environment Impact Assessment study is being carried out though the M/s. Central Marine Fisheries Research Institute, Mangalore from 7 monitoring stations set-up in the vicinity of Treated effluent Disposal point (at sea) & 3 Stations in the Seashore. The monitoring of Flora and Fauna, Studies on Phytoplankton, Zooplankton & Benthic Organisms in the Ocean is being conducted. Study on Bioaccumulation of Heavy metals in Marine Organisms are also conducted twice per year.

- Your Company is meeting the stipulations of KSPCB with regard to the quality and quantity of treated effluent, which is well below the standards in every aspect, on a continuous basis.

- Ten Nos. of Ground Water monitoring stations in and around Refinery have been set up and regular monitoring of ground water quality is being carried out along with KSPCB.

- Low sulphur Fuel oil with less than 1% sulphur is being used in all the Refinery furnaces and boilers, simultaneously maximizing the usage of ultra low Sulphur fuel gas generated in the Refinery process units.

- 3 Sulphur Recovery Units (SRUs), 2 working 1 Standby established. SRUs are operated at efficiency greater than 99%.

- Innovative methods of solid waste reduction have been carried out by using Bioremediation process.

- Special health checkup is being carried out for employees working in high noise & dusty area and in units where Benzene is present.

- On-line analyzers have been installed for continuous monitoring of stack emissions, apart from manual monitoring of all stacks for compliance to Environment norms.

- Annual Submarine pipeline inspection carried out by M/s. National Institute of Oceanography (NIO).

1.8 MARKETING

1.8.1 Sales & Operation

Your Company continued to make inroads in the direct sales segment in Karnataka and its adjoining states. Major inroads made in Mixed Xylene market. ATF sales increased by 23 % to 67 TMT as compared to last year sales of 54 TMT. Total sales turn over during the year was about Rs. 2,291 Crores.

VG 30 and VG 10 grade Bitumen supplies started during the year. Your Company also started HSD supplies ex-Hassan hospitality location. Your Company increased supplies to OMC locations in Tamilnadu & Kerala.

1.8.2 Business Development

Your Company entered into an agreement with State Trading Corporation, Mauritius on 1st July, 2010 for supply of 1.1 MMT per annum liquid petroleum products valued at about 800 million USD at current prices. The products comprising ATF, MS, HSD and Furnace Oil will be supplied for a period of 3 years and the total value of this deal at current prices is 2.4 billion USD.

1.8.3 Joint ventures

The Joint Venture of your company with Shell B.VNetherland viz., "Shell MRPL Aviation Fuels and Services Private Limited" for marketing of ATF achieved a operating Profit of Rs. 214.06 Million (Previous year Rs. 145.45 Million), Pre tax Profit of Rs. 136.28 Million (Previous year Rs. 82.08 Million) and Post tax Profit ofRs. 109.68 Million (Previous year Rs. 45.34 Million) during the year. During the year, the sales under Delivering Company (DELCO) model were 85,489 KL (Previous year 68,927 KL). The Company fuelled 12,674 fights (Previous year 11,106 fights). Sales under the Contracting Company (CONCO) Model were 4,16,487KL (Previous year 3,43,133 KL).

1.8.4 Retail

Your Company continued to follow a non aggressive and cautious approach in marketing of HSD and petrol in view of the Government regulation in pricing. As of 1st April, 2011 MRPL is operating two HiQ retail outlets one each at Maddur and Hubli in Karnataka. The third outlet at Kadri Hills, Mangalore is under construction. In view of expected complete deregulation of MS and HSD pricing, your company has worked out its Retail Business plan to set up 122 retail outlets within two years. Your Company plans to set up these retail outlets predominantly around Mangalore with minimum logistic cost.

2. AWARDS AND RECOGNITION:

The excellent standards maintained by the Refinery on the production, energy conservation, environment management and safety front, enabled us to bag several awards:

- MRPL has bagged the Petrofed 'Refinery of the Year' Award honoring performance in refining of petroleum in India during the year 2009-10. This recognizes leading Performance in production and operational efficiency in refining operations, while meeting the norms of health safety and environmental protection.

- Oil Industry Safety directorate ranks MRPL as 1st in "Most consistent safety performer in Refineries" for the year 2009-10

- Company has achieved the "Excellent" Target (Composite score 1.04) against the MOU Targets set with Government of India for the year 2009-10

- Best Exporter Award (Gold) – 2010 for exporting products through NMPT, by Federation of Karnataka Chamber of Commerce & Industries.

- The "Oil & Gas Conservation Award-2010" for Furnace/Boiler efficiency instituted by CHT

- Your Company bagged 1st Prize in Furnace/Boiler efficiency under the Category-2 of Group-1 in the Annual OGCF-2009-10.

- Your Company bagged the second Prize of Jawaharlal Nehru Centenary Awards 2009-10 for Energy Performance of Refinery with composite energy factor for more than 5, under Group-1.

3. IMPROVED CREDIT PROFILE

3.1 Your Directors are pleased to inform you that ICRA Limited has reaffirmed Issuer Rating "IR AAA" (pronounced IR Triple A) to your company. This rating indicates the highest credit quality rating assigned by ICRA and the rated entity i.e., MRPL carries the lowest credit risk.

ICRA has reaffirmed "LAAA" (pronounced L triple A) the highest credit quality rating under ICRAs Long Term Rating Scale for Rs. 900 Crore Fund Based Working Capital limit of MRPL.

ICRA has also reaffirmed the "A1 " (pronounced A one plus), the highest and relatively stronger credit quality rating (within the rating category of A1) under ICRAs Short Term Rating Scale for Rs. 5,500 Crore Non-fund Based working capital Limit of MRPL.

4. PROJECTS

4.1 Phase III Refinery Project:

As you are aware, your company is currently implementing Phase III Refinery Project with an objective of increasing Profitability by increasing the refining capacity to 15 MMTPA, to process more of low price high Sulphur/high acid, heavy crude oils, increasing the distillate yield by upgrading low value black oils, producing value added products like Propylene and upgradation of its total diesel pool to superior (Euro III/ IV) grade. The estimated cost of the project is Rs. 12,160.26 Crore. Orders have been placed for all the units like PFCC, SRU & PPU, Captive Power Plant (CPP), Hydrogen & DHDT Units, CHT, DCU etc., as well as all utility

packages like Nitrogen, Compressed Air, Raw Water, Cooling water DM water and Waste Water Treatment Plant. The total value of orders placed as on 31st May, 2011 is Rs. 10,193 Crore. The implementation is progressing satisfactorily.

The Project has achieved a overall progress of 84.4% (Actual) as against schedule target of 92.7% as on 15th June, 2011. The captive powerplant being executed by M/s BHEL has acheived overall progress of 81.3% (Actual) against schedule of 96.6% as on 15th June, 2011, M/s BHEL has indicated 6 months delay in completion. To achieve production schedule of January, 2012, your Company has initiated action to draw power and steam from existing powerplants. The project is expected to achieve start of production within financial year 2011-12.

4.2 Polypropylene Project:

As you are aware that your company has been setting up Polypropylene unit integrated with the Phase III Project at an estimated capex of Rs. 1803.78 Crore. M/s.Engineers India Limited (EIL) has been engaged to implement the project under Open Book Execution (OBE) methodology. M/s.Novelene Technology, Germany have been selected as licensor for the project. However, the site work has been delayed due to PDF problems in this area. This has resulted in shifting the location of the unit. Site grading work has been carried out in the new location and is now ready for start of civil works. Fresh clearance from MOEF as required due to shifting of PP unit from MSEZ to MRPL Phase III Area is expected Shortly.

Polypropylene Project has achieved a progress of 64.2% (Actual) as against target of 67.2% (Scheduled) as of 15th June, 2011. Proactive actions have been taken to minimise delay from approved mechanical completion target of April, 2012 and commissioning by July, 2012.

Cost Commitment made for Polypropylene Project is Rs. 1,290.56 Crore and the expenditure incurred is Rs. 301.6 Crore as of 15th June, 2011.

4.3 SPM Project:

As reported last year, your company is proposing to set up a Single Point Mooring (SPM) facility in the sea of Mangalore Port area with an objective to receive crude oil in Very Large Crude Carrier (VLCC) tankers. Your Company Board approved the SPM Project in June, 2010 and subsequently ONGC Board Approved the SPM Project in July, 2010.

M/s Engineers India Ltd (EIL) is appointed as OBE/LSTK Contractor for this Project. EIL have already completed ordering of major long lead equipments like Booster Pumps with Diesel Engine, SPM, Bare Pipe, Valves, Pipe Fittings etc and ordering for the balance items is in progress. The Civil and Structural Work Contract, Sub Sea Pipeline and SPM Installation Contract are placed. Civil and Structural Work for the Booster Pump Station is in progress in NMPT Limits. Tender Floated for Composite Works.

The Progress of the Project as on 15.05.2011 is 15.7%.

Your Company has already obtained Environmental Clearance from Ministry of Environment and Forests, Government of India for the Project.

5. INTERNAL PROJECTS

5.1 CDU / VDU1 revamp:

The CDU / VDU Phase 1 unit for improvements in yield with better energy efficiency. The Basic Engineering was done by M/s. EIL who is the suppliers of Basic Engineering & Detailed Engineering for the original unit. Project Management Consultant (PMC) for the project is M/s. Uhde

India Pvt. Ltd. (UIPL). The LSTK Contractor is M/s. Toyo Engineering India Ltd. The Pre-shutdown activities related to the Project are completed and the Shutdown works shall be taken up in the scheduled Turnaround during September/October 2011.

5.2 Revamp of naphtha splitter unit-2:

This project is for maximizing the capacity utilization of the existing Isomerisation Unit and the CCR Unit with better Naphtha management. The Naphtha Splitter Unit-2 is being revamped with minor changes. The Basic Engineering has been carried out by Process Design Engg. Cell of M/s IOCL. M/s Engineers India Limited (EIL) has been retained for the Engineering & Procurement services. The estimated Project cost is about Rs.9.5 Crores and targeted completion by April, 2012.

5.3 Relocation of tank truck loading for BS IV MS / HSD and argumentation of ATF loading facility:

The existing BS IV MS/HSD tank truck loading is being carried out at hired third party a premise which has inherent limitations. Loading facilities is being proposed at own premises at a cost of approximately Rs. 25 Crores (inclusive of security related infrastructure). M/s. Mecon have been retained as the Project Management Consultant and engineering is nearing completion. The schedule completion is March, 2013.

Highlights of activities

- GOHDS (Gas Oil Hydro De-sulphurisation ) unit major revamp was successfully completed 4.5 months ahead of schedule and Unit commissioned on 16th April, 2010 which facilitates MRPLto Produce higher quantity of Euro-3 & Euro-4 grade low sulphur Diesel Products.

- Sulphur Pellatisation unit was commissioned on 29th July, 2010 which facilitates MRPL to market Pellatised sulphur.

- Hydrocracker-1 and Hydrogen-1 Catalyst replacement activity was safely & Successfully completed during June, 2010.

- CDU-2 Annual turnaround was carried out during 22nd Aug to 13th Sep, 2010.

- Major activity like entire radiation heater coil replacement of VDU was successfully completed.

- CDU-1, VDU-1, VBU-1&2 heater coil online cleaning was carried out during Feb, 2011. This helped us to improve capacity utilization.

6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO AND PARTICULARS OF EMPLOYEES

The additional information required to be disclosed pursuant to section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings & outgo is furnished in 'Annexure - I' which forms part of this Report.

7. PARTICULARS OF EMPLOYEES

Pursuant to the Notification No. 2/29/1998-CL.V dated 31st March, 2011 issued by Ministry of Corporate Affairs, the Particulars of Employees Rules, 2011 has been amended. As per the amendment, a government company is not required to publish the Particulars of employees under section 217(2A) of the Companies Act, 1956, and the rules framed thereunder. Your company being a government company is exempted from disclosers under section 217(2A) of the Companies Act, 1956, and the rules framed thereunder.

8. HUMAN RESOURCES

- During the year 2010-11, your company continued to enjoy cordial and harmonious relations with the collectives and as an evidence to the same, not a single man-hour was lost on account of any industrial disturbance during the entire year.

- The Long Term Settlement (LTS) pertaining to Wage revision and other related benefits effective 1st April, 2007 with the Employees union was finalized and signed on 31st January, 2011.

- As regards the pay revision for Board level and below Board level executives which was due from 1st January, 2007 is implemented successfully as per the Guidelines of Department of Public Enterprises , Government of India, (DPE)

- Your Company has recruited 6 employees during the year 2010-11. Out of these 01 belonged to Scheduled Caste (SC), 01 belonged to Other Backward Class (OBC) and 01 women employee were recruited.

- The number of employees as on 31st March, 2011 was 1294, including 73 women employees. The number of employees belonging to SC, ST & OBC categories were 74, 24 and 317 respectively.

- During the year 2010-11, your company devoted 4141 man-days for Training, Development and Learning which amounts to an average of 3.2 man-days per employee. This included functional, developmental and special training programs covering the entire spectrum of employees.

9. OFFICIAL LANGUAGE

Your Company is implementing Official Language Policy in letter and spirit as per the Annual Programme prescribed by the Department of Official Language, Ministry of Home Affairs, and Govt. of India. In order to propagate Hindi among the employees, Hindi Workshops are organized on a regular basis at Mangalore, Mumbai, Delhi & Bangalore Offices. Regular Hindi classes such as Prabodh, Praveen & Pragya are being conducted for employees. To motivate employees who pass final Hindi examinations, Incentive schemes are introduced such as Cash award & Personal Pay.

For promoting the use of Hindi, Hindi Fortnight was celebrated and many Hindi competitions such as Hindi Essay, Dictation, Translation, Songs, Extempore speech etc. were conducted for the employees, their children and family members in the month of September, 2010. Competitions are also held in Hindi for employees and their family members during National Safety Day, Environment Day, Security awareness week and Vigilance awareness week. OL inspections of internal departments and subordinate Offices were carried out. Special awards were given to the three toppers of DPS-MRPL School children who stood first three in the public exam of class X in Hindi language.

Your Company participated at TOLIC level Hindi competitions and won nine prizes and stood First at TOLIC level competition. Quarterly, half yearly and yearly reports are sent to all the controlling Agencies/ Departments / MOP&NG on time by highlighting the progress made in promotion of Hindi in the company. To popularize usage of Hindi, Hasya Hindi Kavi sammelan was organized on 25th March, 2011. Five National level Hindi humor poets participated in the Programme.

10. VIGILANCE FUNCTION

Your Company has developed a structured mechanism of vigilance functions and its practices are towards creation of value for all the stakeholders. The practices involve multi-layer checks and balances to improve transparency. Vigilance awareness and preventive vigilance activities were continuously carried out during the year. Guidelines of Central Vigilance Commission are being followed. Officers in sensitive posts are rotated regularly. A 'Whistle Blower's Policy' for employees is in place which ensures that a genuine whistle blower is granted due protection from any victimization. In compliance with CVC instruction, your company has implemented a complaint handling policy in which all complaints received from various sources can get recorded and can be examined by vigilance. Further, in line with CVC instruction, your Company has achieved very high compliance level with regard to e-payment, e-tender.

Leveraging of technology to enhance transparency has been a thrust area of action in which vigilance has played a catalytic role. Prominent examples are publication of all tenders above Rs. 5.00 lakhs in Company website along-with provision for downloadable tender document, publication of information of works awarded on nomination in Company website, publication of post award information of all contracts above Rs. 1.00 Crore in Company website.

11. SECURITY MEASURES

11.1 CISF Induction:

Following approval of 200 CISF manpower by Ministry of Home Affairs (MHA), for protection of MRPL, a Quick Reaction Team (QRT) team consisting of 22 CISF personnel was inducted to guard the Refinery on 28th August, 2010. The remaining CISF manpower will be inducted once the CISF Township is constructed having target completion of 3rd quarter of 2013.

11.2 CCTV Surveillance:

Complete area of the Refinery is covered by state-of-the art CCTV Network. Few Cameras are working on OFC cables and rests of them are working on wireless technology. CCTV network is designed to cover all the access control gates and other strategic locations. Work for expanding the CCTV coverage to 10 more critical locations is going on.

11.3 Access Control:

Access to Plant area will be better controlled with completion of the proposed New Plant Gate & Security Building for which work will begin shortly. This Security Building will be equipped with Multi-Zone Metal Detectors and X-ray baggage scanners. This Gate will also have turnstiles controlled through bio-metric card readers for strict access control to Plant area. Anti-Vehicle Intrusion systems viz Tire Rippers/ Bollards are also being planned to be installed at Plant Gates. Similar Marketing cum Security Infrastructure is being built in the Lower Plateau of the Refinery.

11.4 IB Recommendations:

Intelligence Bureau (IB) visits once in every two years to inspect security arrangements, identify grey area and to recommend / suggest improvements. All the recommendations given by the IB in the year 2008 have been complied. The latest IB inspection was carried out on 28-29th December, 2010 and a fresh set of 30 Recommendations have been received. Action has been initiated to comply with all the recommendations in a time bound manner.

11.5 Internal Security Audit - ONGC:

Besides IB, ONGC carries out Security Audit of MRPL internally. ED Chief Security, ONGC also carries out periodical review of Security and gives his recommendations which are being implemented.

11.6 Mock Drills:

Regular mock drills are conducted exclusively on Security. Besides internal mock drills conducted within Security Department, district level security exercises are conducted along with State Police and Coast Guard. MRPL and industries in the neighborhood are actively involved in the Coastal Security Exercises conducted along the Coastal area under the leadership of Coast Guard.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

As a socially responsive organisation your company is committed to the well being of the communities around the Refinery area and with this objective, it has taken up a number of schemes/ developmental activities during 2010- 11.The expenditure incurred on CSR activities during the year was Rs. 4.34 Crore (Rs. 12.54 Crore in previous year) in the core areas viz., Education, Health & Sanitation, Infrastructure, SC/ST Development Scheme, MRPL Rehabilitation Colony, Women Empowerment Programme.

13. DIRECTORS

13.1 Shri A.K. Hazarika was appointed as Director w.e.f 1st February, 2011, in place of Shri R.S Sharma consequent upon his superannuation from the services of ONGC on 31st January, 2011.

13.2 Shri B.Ravindranath has been appointed as a Nominee Director on the Board of MRPL by IDBI Bank Limited w.e.f 1st November, 2010, in place of Shri G.M Ramamurthy

13.3 Shri P.P. Upadhya has been appointed as Director (Technical) of MRPL by President of India. He has assumed the Office of Director (Technical) w.e.f 30th September, 2010.

13.4 Shri Vishnu Agrawal has been appointed as Director (Finance) of MRPL by President of India. He has assumed the Office of Director (Finance) w.e.f 4th April, 2011.

13.5 In accordance with the provisions of the Companies Act, 1956 and Article of Association of the Company, Shri K. Murali and Shri Sudhir Vasudeva Directors will retire by rotation at the 23rd Annual General Meeting of the Company. Shri K. Murali and Shri Sudhir Vasudeva, being eligible, offer themselves for re-appointment as Directors of the Company.

13.6 Brief resume of the Directors seeking appointment / re-appointment, together with the nature of their expertise in specific functional areas, the names of the companies in which they hold the directorship and the membership / chairmanship of committees of the Board, and their shareholding in the Company as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange are given in the Annexure to the AGM notice.

13.7 Your Company continues to pursue with the Government of India (Ministry of Petroleum & Natural Gas) for appointment of requisite number of Independent Directors on the Board of the Company for comply with clause 49(1A)(ii) of the Listing Agreement.

14. DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956, your Directors state that:

i) In the preparation of the Annual Accounts, the applicable accounting standards have been followed and that there are no material departures from the same.

ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to, give a true and fair view of the state of affairs of the Company at the end of the financial year viz., 31st March, 2011 and of the Profit & Loss of the Company for the year ended on that date.

iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) They have prepared the Annual Accounts of the Company on a going concern basis.

15. FIXED DEPOSIT

Your Company has not accepted any fixed deposit during the year from the public.

16. CORPORATE GOVERNANCE

16.1 Your Company has complied with all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance requirements, except with the requirement of requisite number of Independent Directors on the Board of the Company. Your Company is pursuing with the Administrative Ministry, MoP&NG for appointment of requisite number of Independent Directors on the Board. The Annual Report contains a separate section on Corporate Governance, which forms part of this Report.

16.2 Your Company is listed with the Bombay Stock Exchange Limited and National Stock Exchange Limited.

16.3 As required under Clause 49 of the Listing Agreement with Stock Exchanges, your company has obtained the Certificate from the Auditors of the Company, for Compliance of Corporate Governance which is annexed to and forms part of this report.

16.4 As a measure of good corporate governance, your company has voluntarily taken up Secretarial Audit for the year 2010-2011 and a Report obtained from M/s. A.N. Kukreja & Co, Practicing Company Secretaries is annexed to the Annual Report, and forms part of this report.

16.5 Your Company has also complied with the guidelines of corporate governance for Central Public Sector Enterprises (CPSEs), issued by DPE dated 14th May, 2010 except with regard to appointment of requisite number of Independent Directors.

16.6 The Management Discussion and Analysis Report forms part of the Directors' Report annexed as Annexure-II.

17. AUDITORS

17.1 M/s. S.R.R.K. Sharma Associates, Bangalore and M/s. Maharaj N. R. Suresh & Co., Chennai have been appointed as joint Statutory Auditors of the Company for the Financial Year 2010-11 by Comptroller & Auditor General of India (C&AG).

17.2 The report of the C&AG at Annexure III forms part of this Report.

17.3 Cost Audit branch of Ministry of Corporate Affairs (MCA) vide its order no. 52/61/CAB 2007 dated 24th January, 2007 has directed the company to maintain the cost accounts under the provisions of the Companies Act, 1956 and directed to conduct cost audit under section 233(B)(1) of the Companies Act, 1956. M/s. Musib & Associates, Practicing Cost Accountant has conducted Cost Audit for the year ended 2010-11. The Cost Audit Branch of Ministry of Corporate Affairs (MCA) has issued circular dated 11th April, 2011 w.e.f. 1st April, 2011 in supersession of earlier circular, whereby it requires the disclosures of details of the Cost Auditor and Cost Audit report for the year 2011-12.

17.4 Particulars of the Cost Auditor.

(a) M/s. Musib and Associates, Cost Auditor for the year 2010-11.

(b) Cost Audit report for the year 2010-11 will be fled before September, 2011.

18. ACKNOWLEDGEMENT

18.1 Your Directors sincerely thank the Government of India (GOI), Ministry of Petroleum and Natural Gas (MOP&NG), Ministry of Finance (MOF), Ministry of Corporate Affairs (MCA), Department of Public Enterprise (DPE), Ministry of Environment and Forest (MOEF), Ministry of External Affairs, Ministry of Shipping, Ministry of Home Affairs other Ministries and Departments of the Central Government and the State Government of Karnataka, Andhra Pradesh, Tamilnadu, Kerala and District Authorities at Mangalore for their valuable support and continued co-operation.

18.2 Your Directors gratefully acknowledge support and direction provided by the parent company, ONGC and the support of Hindustan Petroleum Corporation Limited (HPCL), as Promoters of the Company.

18.3 Your Directors wish to thank the shareholders for the continued confidence reposed on the Management and the Company.

18.4 Your Directors acknowledge the continuing co-operation and support received from New Mangalore Port Trust, Financial Institutions, Banks and all other stakeholders such as suppliers of crude oil and other inputs, vendors, contractors, transporters and others.

18.5 Your Directors recognize the patronage extended by the valued customers for the products of the Company and promise to provide them the best satisfaction.

18.6 Your Directors wish to place on record their sincere appreciation of the sustained and dedicated efforts put in by all the employees collectively and concertedly as a Team.

For and on behalf of the Board



Place: New Delhi A.K. Hazarika

Date: 4th July, 2011 Chairman


Mar 31, 2010

The Directors are pleased to present the 22nd Annual Report of the Company, together with the audited accounts for the financial year ended 31st March, 2010.

It is gratifying to note that your company has put in a very creditable performance in the background of the industry scenario, and the performance results of other peers. The Company has also created certain new benchmarks of excellence during the year under review. Some of the performance highlights are enumerated below:

1) Overall refinery performance was found to be qualified for "excellent" rating of MoU with Government of India.

2) Highest ever distillate yield of 72.8% at 12.5 MMTPA operating level. Z) Lowest ever own fuel consumption with energy index of 58.27 MBN.

4) Highest ever product sales of 7.40 MMT in the domestic market.

5) Highest ever direct marketing sales of 800 TMT.

6) Highest ever products dispatched through Mangalore-Hassan- Bangalore pipeline of 2.485 MMT.

7) Achieved Gross Refining Margin of 5.46 $/bbl despite low crack margins from the products in the International market.

8) Accident free operation of the refinery during the year achieving the safety record of 1002 days without any Reportable Accident and moving towards previous record of 1301 days.

9) Based on previous years consistent track record, name plate capacity of the refinery increased from 9.69 MMTPA to 11.82 MMTPA.

10) Commenced supply of BS-IV Grade petrol and diesel w.e.f. January 2010 in line with industry implementation programme.

11) The Company successfully completed the revamp of Gas Oil Hydro Desulphurization unit ahead of schedule and within budgeted cost. The same was commissioned and dedicated it to the Nation on 30.04.2010.

12) MRPL signed an MOU with Government of Karnataka for an investment proposal of 15,798 Crore comprising the Phase III Refinery Project and associated projects on 3rd June, 2010 at the Global Investors Meet held at Bangalore.

13) Your Company is the first refinery to begin processing the newly discovered highly viscous Rajasthan Crude Mangala in October 2009.

1.1 FINANCIAL PERFORMANCE ( in Crore)

Year ended Year ended 31st March, 31st March,

2010 2009

Turnover 36,081 42,719

Profit before Depreciation Interest and Tax 2,196 2,337

Interest and Finance Charges 115 143

Gross Profit after interest but before Depreciation and Tax 2,081 2,194

Depreciation and Amortisations 389 382

Profit Before Tax 1,692 1,812

Provision for Taxation 580 619

Profit after Tax 1,112 1,193

Balance of Profit/(Loss) brought forward from previous year 2557 1640

Surplus available for

appropriation 3,669 2,833

Appropriations:

Proposed dividend on Preference Shares ( 9,186) 0.00 0.00

Proposed Dividend on

Equity Shares 210 210

Tax on Dividend 35 36

Transfer to General reserve 28 30

Balance carried to 3,396 2,557

Balance Sheet 3.669 2,833

1.2 DIVIDEND

Despite marginally lower Profit After Tax during the year (as compared to the previous year), the Board of the Company has decided to recommend a dividend payout of 12%. This will absorb ? 245 Crore including ? 35 Crore as tax on dividend.

1.3 OPERATIONAL PERFORMANCE

The Refinery throughput was 12.50 MMT crude oil (12.59 MMT) achieving 106 % capacity utilisation (107%). It may be noted here that Company has increased the nameplate capacity of the refinery from 9.69 MMTPA to 11.82 MMTPA based on a review of successful utilization of design margins available in the units over a period of 4 years, duly approved by the Board in their meeting held on 16.02.2010. The refinery produced 11.68 MMT (11.78 MMT) of finished products during the year.

Your Company has always focused on improving the domestic offtake and achieved highest domestic sales of 7.40 MMT (7.30 MMT). The focus has been to ensure uninterrupted product supply to the domestic segment which also gives better margin.

1.4 EXPORTS

The exports of Petroleum products (Motor Spirit, Naphtha, Mixed Xylene, ATF, HSD, VGO and FO) during the year amounted to ? 11041 Crore ( 11636 Crore) which represents about 37% (38%) of the total dispatches of 11.72 MMT (11.76 MMT ). As you are aware, your company had a long term contract upto July 2010 with State Trading Corporation (STC), Mauritius for supply of approx. one MMTPA of petroleum products (MS, HSD, ATF & FO) which is the total requirement of Mauritius. The terms for renewal of the contract for a further period of 3 years has been finalized and the new Supply Agreement has been signed on 1.07.2010 which is effective 01.08.2010 till 31.07.2013. The contract envisages supply of 1.10 MMT per annum of Petroleum products during 2010-13 with +/- 10% at STCs, Mauritius option and the total value of this deal at current prices is about 2 billion USD. The Company continues to be accredited with Premier Trading House Status (till March 2012) by Director General of Foreign Trade (DGFT), Government of India based on its export performance.

Figures given in the bracket at para 1.3 & 1.4 relate to the previous year.

1.5 SAFETY PERFORMANCE

- Safety at MRPL has the constant support and commitment of the Top Management and incorporates the highest standards of safety amongst its employees and contract workmen. Periodic Audits (both External and Internal), Mock exercises (both Onsite & Offsite), regular training updates and a positive attitude towards safe work practices have ensured a safe and healthy work environment. All process plant modifications are verified through a Hazard and Operability Study (HAZOP) before implementation.

- The Refinery completed 1002 days without Reportable Lost Time Injury (RLTI) as on 31-03-2010 i.e., 6.93 Million Man hours without RLTI.

- In the year 2009, MRPL was adjudged as the Best Safe Refinery for the three years (2006-07, 2007-08 and 2008- 09) among the Indian Refineries and also adjudged as the second best safe refinery for the year 2008-09 by Oil Industry Safety Directorate (OISD).

1.6 ENVIRONMENT MANAGEMENT

In Environment Management, the companys Philosophy is to perform beyond Compliance - that is to perform better than minimum required by statutes. The refinery is certified with ISO 14001: 2004 for Environment Management Systems.

The following are some of the major new initiatives taken up by the company in addition to various other environment management measures done on a continuous basis including checking of Volatile Organic Compounds Emission at 38,000 points in the refinery and taking corrective measures therefor:

- Environment Impact Assessment including Risk Assessment for Quality Improvement Project (GOHDS revamp) and at operating level of 13.6 MMTPA of the refinery (considering current ongoing CDU - I revamp) conducted by M/s. National Environmental Engineering Research Institute (NEERI), Nagpur.

- Environment Clearance obtained from Ministry of Environment & Forests for Quality Improvement Project and operation of refinery at expanded capacity of 13.6 MMTPA during pre Phase III expansion project.

- An "Awareness Cum Interaction Programme" on Hazardous Waste (Management, Handling & Transboundary Movement) Rules 2008 jointly organized with Karnataka State Pollution Control Board for neighbouring industries.

- A Sulphur Pelletisation Unit is being installed to avoid Dust emissions in the Sulphur Recovery Unit.

- Microbiological study commenced for treated effluent by College of Fisheries.

- Work Environment Study is being carried out by Regional Labour Institute, Chennai to monitor the entry of harmful materials into the human systems at work place.

- Continuous Ambient air quality management system installed in the refinery to monitor the various pollutants S02, NO, N02, NOx, H2S, CO, SPM, RSPM, HC Methane, HC non - methane and Total HC. All pollutants are always well within the stipulated limit.

- Manual Stack Monitoring is carried out in all process units by M/s. Environment Management System, Mangalore.

- Bioremediation of 1000 MT oily sludge has been completed by The Energy and Resources Institute, New Delhi.

1.7 MARKETING

1.7.1 Direct Marketing:

The Direct marketing sales of the Company continued its growth during the year 2009-10. The Direct Marketing Sales including ATF and LSHS were up at 808.04 TMT as compared to last year sales of 775.37 TMT.

Bitumen group sales for 2009-10 were 345.24 TMT as compared to 328.48 TMT in 2008-09, with a growth of 5%. MRPL was successful in penetrating adjoining States of Tamilnadu, Kerala, Andhra Pradesh and Maharashtra.

1.7.2 Retail Operations:

MRPL continued to follow a non aggressive and cautious approach in marketing of HSD and petrol in view of the Government regulation in pricing. As of 1st April, 2010, MRPL is operating HiQ retail outlets one each at Maddur and Hubli in Karnataka. However, plans are in place to enter into Retail Operation with deregulation in prices and clearance from MoP&NG.

1.7.3 Joint Ventures in Marketing:

1.7.3.1 The joint venture of your Company with Shell B.V. Netherland viz., Shell MRPL Aviation Fuels and Services Private Limited" for marketing of ATF to both Domestic and International airlines at Indian airports, achieved a operating profit of ? 145.45 Million (previous year operating loss ? 26.20 Million) and post-tax profit of ? 45.34 Million (previous year post tax loss of ? 44.75 Million) in its first full year of operation after wiping out the losses incurred in the previous year.

During the year, the sales under the Delivery Company (DELCO) model were 68,927 KL (previous year 35,517 KL). The company has fuelled 11,106 flights (previous year 4,598 flights). The market share during the year was 15.2% at Bangalore airport and 2.8% at Hyderabad airport.

Sales under the Contracting Company (CONCO) model were 3,43,133 KL (previous year 18,312 KL). The Airport Authority of India has accorded approval for Mobile Refueling operation at Mangalore, Goa, Calicut, Ahmedabad, Coimbatore and Trivandrum. The company is ready to commence its operation at Mangalore as soon as new terminal becomes operational.

1.7.3.2 As you are aware, your Company and Ashok Leyland Group had incorporated a joint venture company viz., "Mangalam Retail Services Limited" for creating one stop-shop commercial complexes in the highway segment, which were also to have Retail Outlets (RO) of your Company. As the entire business model is planned

based on RO set up, this JV has not been able to make any progress as your Company had put on hold setting up of ROs to avoid adverse impact on margins.

2. AWAROS AND RECOGNITIONS

Your Company has received the following awards/ recognitions during the year:

- MRPL has been adjudged as the Most Safe Refinery for the Three years (2006-07, 2007-08 and 2008-09) by Oil Industry Safety Directorate (OISD), MoP&NG after evaluation of all the 17 PSU refineries in India.

- MRPL has also been conferred with 2nd Prize by OISD in the safe refinery category for the year 2008-09.

- MRPL is the Joint Winner in the Jawaharlal Nehru Centenary Award for Energy Performance of Refineries for 2008-09 in Group-1 category by Centre for High Technology (CHT), MoP&NG.

- MRPL has been rated Excellent in MOU performance by ONGC for 2008-09.

- MRPL has been rated number one company in terms of turnover per employee on All India basis by Business Today magazine (BT 500 2009 edition).

- MRPL received "Certificate of Merit" on 18.02.2010 in the Best HR practices 2009 competition organised by National Institute of Personnel Management, Kolkata.

- MRPL has been conferred Export Excellence Award 2010 (Best Manufacturer Exporter Award) - Large Category - Gold by Federation of Karnataka Chambers of Commerce and Industry on 5.06.2010.

- MRPL secured the best export award in overall category "Silver" in the State Level Export Excellence Award for the year 2007-08 and 2008-09 from Government of Karnataka.

3. IMPROVED CREDIT PROFILE

3.1 Your Directors are pleased to inform you that ICRA Limited has reaffirmed Issuer Rating "IR AAA" (pronounced IR Triple A) to your company. This rating indicates the highest credit quality rating assigned by ICRA and the rated entity i.e., MRPL carries the lowest credit risk.

3.2 ICRA has reaffirmed "LAAA" (pronounced L Triple A) the highest credit quality rating under ICRAs long term rating scale for ? 900 crore Fund Based Working Capital Limit of MRPL.

3.3 ICRA has also reaffirmed the "A1+" (pronounced A one plus), the highest and relatively stronger credit quality rating under ICRAs short Term rating scale for Rs.5,500 crore Non-fund Based Limit of MRPL.

3.4 CRISIL has reaffirmed the "CCR AAA" (pronounced "CCR Triple A") rating indicating highest degree of strength with regard to honouring debt obligations.

4. PROJECTS

4.1 Phase III Refinery Project :

As you are aware, your company is currently implementing Phase III Refinery Project with an objective of increasing profitability by

increasing the refining capacity to 15MMTPA, to process more of low price high Sulphur/high acid heavy crude oils,, increasing the distillate yield by upgrading low value black oils, producing value added products like Polypropylene and upgradation of its total diesel pool to superior (Euro lll/IV) grade. The estimated cost of the project is X 12160.26 Crore.

Orders have been placed for all the units like PFCC, SRU & PPU, Captive Power Plant (CPP), Hydrogen & DHDT Units, CHT, DCU etc. as well as all utility packages like Nitrogen, Compressed Air, Raw Water, Cooling water DM water and Waste Water Treatment Plant. The total value of orders placed as on 15.07.2010 is ? 9703 Crore.

The implementation is progressing satisfactorily. The Project has achieved a progress of 51.2% as on 15.07.2010. The project is expected to achieve the mechanical completion by October 2011 as planned and commissioning in phases by end of financial year 2011-12.

4.2 Polypropylene Project

As you are aware that company has been setting up Polypropylene unit integrated with the Phase III project at an estimated capex of ? 1803.78 Crore. M/s. Engineers India Limited (EIL) has been engaged to implement the project under Open Book Execution (OBE) methodology. M/s. Novelene Technology, Germany have been selected as licensor for the project. The project is expected to achieve mechanical completion by April 2012 as planned.

4.3 SPM project

As reported last year, the Company is proposing to set up a Single Point Mooring (SPM) facility in the sea of Mangalore Port area with an objective to receive crude in (very large crude carrier) VLCC tankers. The same facility can also be used for receipt of crude for Indian Strategic Petroleum Reserves (ISPRL) being set up by Government of India at Mangalore very near to our refinery. The draft DFR has been received from M/s. Consulting Engineering Services (I) Pvt. Ltd. and M/s. SBI Capital Markets Ltd. have done an independent financial appraisal of the Project. The estimated project cost is ? 1170.59 Crore.

M/s. Indian Strategic Petroleum Reserves Ltd., (ISPRL) is setting up Crude Oil Storage Cavern of 1.5 MMT at Mangalore. The SPM project envisaged utilizing a part of the ISPRL Mangalore Cavern for receipt and intermediate storage of Crude oil on proportionate cost sharing basis. The environment clearance from Ministry of Environment and Forest (MoEF), Government of India and clearance from Ministry of Shipping is expected shortly. The SPM project proposal has been approved by MRPL Board and is being taken up for approval by the Board of ONGC. The project is targeted to be completed by May 2012.

4.4 Internal Projects :

GOHDS Revamp :

GOHDS Revamp was taken up to increase the capacity of GOHDS by 30% and for up-gradation of quality with respect to Sulphur content meeting Euro IV Standards.

This project was originally scheduled to be completed by August 2010. Subsequently, it was decided to complete it by end March 2010 advancing the completion by nearly 5 Months. This

advancement was planned to meet the requirement of Euro IV norms for fuels in the major cities from 01/04/2010 onwards as per the directives of the Supreme Court.

The revamped GOHDS unit was successfully completed on 10.04.2010 and was dedicated to Nation by the Secretary, Petroleum and Natural Gas, Gol on 30.04.2010.

CDU / VDU1 REVAMP :

This Project is for enhancing the CDU / VDU Phase 1 unit capacity by 30% on substantial basis with improvement in yield with better energy efficiency. The Basic Engineering was done by M/s.EIL who are the suppliers of Basic Engineering & Detailed Engineering for the original unit. Project Management Consultant (PMC) for the project is M/s. Uhde India Pvt. Ltd. (UIPL). The LSTK Contractor is M/s. Toyo Engineering India Ltd. The contractual completion schedule is March 2011. The implementation is ahead of schedule and the progress achieved as on 20/07/2010 is 57% as against the scheduled 49%.

TANKAGES :

With a view to improving the flexibility in operations, the construction of the following tanks have been completed during the year:

1) 2 Diesel Tanks - 12300 m3 Capacity

2) 1 Kerosene Tank - 1790 m3 Capacity

3) ATF tank - 3500 m3 Capacity

4) Mixed Xylene tank - 5000 m3 Capacity

SULPHUR PASTILLATION UNIT (SPU) :

SPU Project is mechanically completed. Instrumentation jobs with respect to panels have also been completed. Conveyor erection job by M/s. Cobit is at the completion stage. Plant is under commissioning which is expected to be completed by last week of July 2010.

4.5 Aromatics Complex

As you are aware that the ONGC Mangalore Petrochemicals Ltd (OMPL) has been jointly promoted by ONGC and MRPL with 46% and 3% equity holding for implementing the Aromatics Project to produce Paraxylene and Benezene, value added products, using Naptha feedstock from MRPL at Mangalore Special Economic Zone (MSEZL). MSEZL has already allotted requisite land and site grading activity are in advanced stages. M/s. UOP, USA are the Technology Licensors for the project and M/s. Toyo Engineering (India) Ltd are the Project Management Consultants. The project cost is estimated at ? 5,750 crore. The company has already achieved financial closure and tied up debts for ? 3,758 crore. The company has awarded major contracts for its Process units with M/s. L & T Ltd for ? 2,035 crore and for Power Plant (CPP) with M/s. Thermax Ltd for ? 588 crore on Lumpsum Turnkey (LSTK) basis. Further the company has awarded contracts on LSTK basis for DM Plant, Cooling water system, Storage tanks, Plant Communication System etc. Company is in the advanced stage of finalizing LSTK contracts for Raw Water System, Effluent water system etc. The mechanical completion of the project is expected in end November 2012 and commercial production is expected in February 2013. The company is also in the process of selection of offtakers for its product with reputed companies.

5. BARMER CRUDE

Your company was the first refinery to begin processing the newly discovered and highly viscous Barmer Crude in October 2009. During the financial year 2009-10, the company received 0.2 MMT of Rajasthan crude as per Government allocation.

6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO AND PARTICULARS OF EMPLOYEES

The additional information required to be disclosed pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings & outgo is given in Annexure -1 which forms part of this Report.

7. PARTICULARS OF EMPLOYEES

The particulars required to be shown in terms of the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended with respect to particulars of employees are furnished in Annexure. However in terms of proviso (b) (iv) of Section 219 (1) of the Companies Act, 1956, the above annexure which is not sent with the accounts will be available for inspection by the members at the Registered office of the Company during working hours for a period of 21 days before the date of AGM. Any member who is interested to obtain such particulars may write to Investor Relations Cell of the company at Delhi.

8. HUMAN RESOURCES

- During the year 2009-10, the Company continued to enjoy cordial and harmonious relations with the collectives and as an evidence of the same, not a single man-hour was lost on account of any industrial disturbance during the entire year.

- The Long Term Settlement (LTS) with the Employees Union came to an end on 31s1 March, 2007. Negotiations for the fresh LTS are in progress.

- As regards the pay revision for Board level and below Board level executives which was due from January 01, 2007, based on the approval of the Board for implementation of pay revision as per the Department of Public Enterprises, Government of India, (DPE) Guidelines and taking into consideration the Presidential Directives issued by the Ministry of Petroleum and Natural Gas for implementation of the pay revision, your Company has implemented the same.

- The Company recruited 75 employees during the year 2009-10. Out of these, 11 belonged to Scheduled Caste (SC), 2 belonged to Scheduled Tribes (ST), 15 from Other Backward Classes (OBC) and 15 women employees were recruited.

- The number of employees as on March 31, 2010 was 1312, including 72 women employees. The number of employees belonging to SC, ST & OBC categories were 75, 24 and 321 respectively.

- During the year 2009 - 2010, Company devoted 2887 man-

days for Training, Development and Learning which amounts to an average of 2.2 man-days per employee. This included functional, developmental and special training programs covering the entire spectrum of employees.

9. OFFICIAL LANGUAGE:

MRPL is implementing Official Language Policy in letter and spirit as per the Annual Programme prescribed by the Department of Official Language, Ministry of Home Affairs, Govt, of India. In order to propagate Hindi among the employees, Hindi Workshops are organised on a regular basis at Mangalore, Mumbai and Bangalore Offices. Regular Hindi classes for Prabodh, Praveen & Pragya are being conducted for employees. In order to increase the correspondence in Hindi, by the employees, special efforts were made to install Hindi software on the computers and nearly 88% computers are installed with Hindi software APS 2000++. To motivate employees who pass final Hindi examinations, Incentive schemes are introduced such as Cash award and Personal Pay.

For promoting the use of Hindi, Hindi Fortnight was celebrated and many Hindi competitions such as Hindi Essay, Dictation, Translation, Songs, Extempore speech etc. were conducted for the employees, their children and family members in the month of September 2009. Competitions are also held in Hindi for employees and their family members during National Safety Day, Environment Day and Vigilance awareness week. Official Language inspections of internal departments and subordinate offices were carried out. Special awards were given to the three toppers of MRPL School children who stood first three in the public exam of class X in Hindi language.

MRPL participated at Town Official Language Implementation Committee (TOLIC) level Hindi competitions and won thirteen prizes and stood First at TOLIC level competition. Quarterly, Half yearly and Yearly reports are sent to all the controlling Agencies/ Departments / MoP&NG on time by highlighting the progress made in promotion of Hindi in the company. Hindi Hasya Kavi Sammelan was organised on 10.2.2010. Six National level Hindi humour poets participated in the programme. As per Official Language Rule, Official Language Implementation Committee (OLIC) meeting was conducted in all the four quarters under the Chairmanship of Managing Director. All out efforts are being made to promote Hindi in the company.

10. VIGILANCE FUNCTION:

Vigilance awareness and preventive vigilance activities were continuously carried out during the year by surprise inspections, Intensive type detailed examination, study of major work orders / purchase orders. Deemed single tenders, tenders on nomination basis were selectively taken for scrutiny.

Transparency initiatives leveraging technology in MRPL had been one of the major achievements of Vigilance department. During the year Vigilance has played a major catalytic role in introducing technology leverages in the company on core areas.

Vigilance Awareness Week was observed to educate employees and to have preventive vigilance through awareness programme conducted from 03.11.2009 to 07.11.2009 in Mangalore and MRPL offices at Bangalore, New Delhi and Mumbai with a theme

"Preventive Vigilance". Evolution and role of vigilance was duly explained to the participants with special emphasis on Whistle Blower Policy. Programmes including quiz, elocution etc. for employees were also conducted. The Managing Director administered oath to all officers on 03.11.2009.

Various competitions viz., Essay competition, Quiz competition, Poster competition, Slogan competition on the Theme "Preventive Vigilance" were held for employees.

Various educative lecture programme conducted for newly appointed graduate engineer trainees on "Facets and role of Vigilance". With thrust on technology as an effective preventive role Vigilance department impressed upon various functions to automate towards transparent and smooth transaction which reduced human interface as per CVC guidelines. With constant follow up with management team the initiatives were taken in the areas of E-payment, E- procurement, Bio metric identification and technology based solution for personal facilities like canteen have been top objective towards improving Vigilance administration by leveraging technology. E- procurement through Reverse Auction was commenced and continued during the year.

Keeping in view the requirement of Clause 49, company has formulated and put in place a Whistle Blower Policy.

11. SECURITY MEASURES

11.1 CISF Induction:

As reported last year, the management has decided to induct Central Industrial Security Force (CISF) to guard the Refinery. Sanction has been obtained from Ministry of Home Affairs for 200 CISF personnel and the first batch of 122 is expected to join anytime from now. All gates and access control to the Refinery will be handed over to CISF. Security of township, NMPT oil jetties, Sarapady Pump House will be looked after by the in-house Security department with contract security personnel.

11.2 CCTV Surveillance:

Complete area of the Refinery is covered by state of the art CCTV Network. Few cameras are netted with OFC cables and rest of them are working on wireless technology. CCTV network is designed to cover all the access control gates and other strategic locations. The CCTV surveillance is going to be further more strengthened by installing 10 more cameras shortly.

11.3 Access Control:

Access to Plant area will be better controlled by New Plant Gate which is segregating Plant and Nonplant area. This gate will have additionally X-Ray baggage screening machines and Multizone door frame metal detectors for frisking and searching. This gate will also have turnstiles integrated with biometric punch card system for strict access control as well as to prevent un-authorised entry.

11.4 IB Recommendations:

Intelligence Bureau (IB) visits once in every two years to inspect Security arrangements, identify grey area, and to recommend/suggest improvements. IB last visited MRPL during Sep 2008 and is expected

to visit this year. Out of the 27 recommendations, 21 have already been complied and actions with regard to compliance of remaining 6 recommendations are in progress.

11.5 Internal Security Audit - ONGC:

Besides IB, ONGC carries out Security Audit of MRPL internally. Their recommendations are being implemented.

11.6 Mock Drills:

Regular mock drills are conducted exclusively on Security. District level security exercises are conducted alongwith State police and Coast guard. Recently, Coast guard and State police conducted a mock exercise SAGAR KAVACH, by involving various industries including MRPL in the coastal belt.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

As a socially responsive organisation, the Company is committed to the well being of the communities around the refinery area and with this objective, it has taken up a number of schemes/ developmental activities during 2009-10. The expenditure incurred on CSR activities during the year was ? 12.54 Crore (? 4.21 Crore in previous year) in the core areas viz., Education, Health & Sanitation, Infrastructure, SC / ST Development Scheme, MRPL Rehabilitation Colony, Women Empowerment Programme. The company had contributed ? 4.95 Crore to Chief Ministers Calamity Relief Fund towards construction of houses in flood affected Devadurga Taluka of Raichur Dist. This is in addition to ? 50 lakhs contributed to the Chief Ministers Calamity Relief Fund earlier.

13. DIRECTORS

13.1 HPCL has nominated its Director (Refineries), Shri K. Murali on the Board of MRPL on 19.01.2010 in place of Shri S. Roy Choudhury. Shri K. Murali is a Chemical Engineer by profession having 30 years of rich experience in HPCL in the various areas of refinery.

13.2 Shri V. K. Dewangan, Director MoP&NG on completion of his tenure with Gol had resigned on 31.03.2010.

13.3 Shri L. K. Gupta, Director (Finance), MRPL resigned from the Company and Shri U. K. Basu, Managing Director has assumed additional charge of Director (Finance) w.e.f. 31.05.2010.

13.4 Dr. A. K. Balyan, Director resigned on 15.07.2010 from the Board of MRPL /ONGC consequent to his selection and appointment as MD & CEO, Petronet LNG Ltd.

13.5 The Board wishes to place on record its appreciation for the services rendered by Shri S. Roy Choudhury, Shri V. K. Dewangan, Shri L. K. Gupta and Dr. A. K. Balyan during their tenure as Directors on the Board of the Company.

13.6 Government of India has appointed Dr. A. K. Rath, Independent Director on the Board of your company effective 16.02.2010. Dr. Rath, a doctorate in Business Administration and IAS Officer (1973 cadre), carries with him over 37 years of experience in various Ministries of Central /State Government. Dr. Rath is currently

Professor and Chair of the Public Policy and Management Programme at MDI, Gurgaon.

13.7 In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the company, Dr. A. K. Rath shall hold office upto the date of the Annual General Meeting. The company has received notice from a shareholder proposing his name to the office of the Director at the ensuing AGM.

13.8 ONGC has nominated its Director (Finance), Shri D. K. Sarraf on the Board of MRPL on 27.07.2010 in place of Dr. A, K. Balyan. Shri D. K. Sarraf is an Associate Member of Institute c? Cost & Works Accountants of India and the Institute of Company Secretaries of India having 30 years of experience in Oil Industry.

13.9 In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Shri D. K. Sarraf and Shri Vivek Kumar will retire by rotation at the 22nd Annual General Meeting of the Company. Shri D. K. Sarraf and Shri Vivek Kumar, being eligible, offer themselves for re-appointment.

13.10 Brief resume of the Directors seeking appointment / re-appointment, together with the nature of their expertise in specific functional areas, the names of the companies in which they hold the directorship and the membership /chairmanship of committees of the Board, and their shareholding in the Company as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges are given in the Annexure to the AGM notice.

13.11 You might be pleased to note that a Director (Technical) position

has been approved by the Government of India. Accordingly, Director (Technical) has been shortlisted by the PESB after selection process and his letter of appointment is awaited. As regards filling up of the position of Director (Finance), Company has taken up with MoP&NG for initiating the action on a fast track basis.

13.12 The Company continues to pursue with the Government of India (Ministry of Petroleum & Natural Gas) for appointment of requisite number of Independent Directors on the Board of the Company pursuant to the provisions of the Listing Agreement.

14. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956 your Directors state that:

i) In the preparation of the Annual Accounts, the applicable accounting standards have been followed and that there are no material departures from the same;

ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to, give a true and fair view of the state of affairs of the Company at the end of the financial year viz., 31st March, 2010 and of the Profit & Loss of the Company for the year ended on that date;

iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) They have prepared the Annual Accounts ot the Company on a going concern basis.

15. FORFEITURE OF SHARES

In the public issue of PCDs / NCDs made by your company in May 1992, some of the shareholders had not paid allotment / call money on the shares allotted to them inspite of several reminders from the company.

After following the due procedure, your Board of Directors at their meeting held on 19.01.2010 forfeited 3,03,550 Equity shares pertaining to 1638 shareholders for non-payment of allotment / call money arrears. The Stock Exchanges and the defaulted shareholders were advised on the forfeiture of the shares. The forfeited shares have been cancelled and accordingly the paid-up equity capital of the company as on 31.03.2010 stands revised at ? 1752,59,87,770.

16. FIXED DEPOSIT

The Company has not accepted any fixed deposit during the year from the public.

17. CORPORATE GOVERNANCE

17.1 The Company has complied with all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance requirements, except with the requirement of number of Independent Directors on the Board of the Company. Your Company is pursuing with the Administrative Ministry, MoP&NG for appointment of additional Independent Directors on the Board. The Annual Report contains a separate section on Corporate Governance.

17.2 Your Company is listed with the Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

17.3 As required under Clause 49 of the Listing Agreement with Stock Exchanges, your Company has obtained the Certificate from the Auditors of the Company, for Compliance of Corporate Governance which is annexed to and forms part of the Annual Report.

17.4 As a measure of good corporate governance, your Company has voluntarily taken up Secretarial Audit for the year 2009-10 and a Report obtained from M/s. Rathi & Associates, Practising Company Secretaries is annexed to this Annual Report.

17.5 The Company has also complied with the voluntary guidelines of DPE except with regard to appointment of required number of Independent Directors and pre-approval of related party contracts by the Audit Committee. DPE has since modified the guidelines and made it mandatory for the year 2010-11 onwards. The review of related party contracts is retained after deleting the requirement of pre-approval.

17.6 As you are aware that MRPL Secretarial Department has been accredited with ISO 9001 : 2008 certificate on 12.05.2009 by M/s. Bureau Veritas Certification India (P) Ltd (BV). The certificate is valid till May, 2012 and BV will conduct yearly surveillance audit for two years. Accordingly, the first surveillance audit was conducted by M/s. BV on 07.05.2010 and confirmed the continuation of ISO 9001 : 2008 accreditation to the Secretarial Department.

17.7 The Management Discussion and Analysis Report forms part of the Directors Report annexed as Annexure-ll.

18. AUDITORS

18.1 M/s. S.R.R.K. Sharma Associates, Bangalore and M/s. Maharaj N. R. Suresh & Co., Chennai have been appointed as joint Statutory Auditors of the Company for the Financial Year 2009 -10 by Comptroller & Auditor General of India (C&AG).

18.2 The report of the C&AG at Annexure III forms part of this Report. You will be pleased to note that your Company has got a "NIL" comments Certificate from C&AG for the 8* year in a row.

18.3 As per the requirement of Central Government and pursuant to Section 233B of the Companies Act, 1956, the cost accounts maintained by the Company are being audited by Cost Auditors. M/s. JV Associates have been appointed as Cost Auditors for the year 2009-10 with approval of Ministry of Corporate Affairs, Government of India.

19. ACKNOWLEDGEMENT

19.1 Your Directors sincerely thank the Government of India (Gol), Ministry of Petroleum and Natural Gas (MoP&NG), Ministry of Finance (MoF) and other Ministries and Departments of the Central Government and the State Government of Karnataka, Andhra Pradesh, Tamilnadu and Kerala and District Authorities at Mangalore for their valuable support and continued co-operation.

19.2 Your Directors gratefully acknowledge the support and direction provided by the parent company, ONGC.

19.3 Your Directors wish to thank the shareholders for the continued confidence reposed on the Management and the Company.

19.4 Your Directors acknowledge the continuing co-operation and support received from New Mangalore Port Trust, Financial Institutions, Banks and all other stakeholders such as suppliers of crude oil and other inputs, vendors, contractors, transporters and others.

19.5 Your Directors recognize the patronage extended by the valued customers for the products of the company and promise to provide them the best satisfaction.

19.6 Your Directors wish to place on record their sincere appreciation of the sustained and dedicated efforts put in by all the employees collectively and conceitedly as a Team.

19.7 The company salutes its visionary Shri Subir Raha, former Chairman and Managing Director of ONGC Group Company who passed away on 1st February, 2010. He was the person who visualized as early as in 2003 that MRPL will one day touch the sky with glory. True to his dream, MRPL has grown and created many records of excellence in all the spheres of its operations and the graphs of the performance has been only going upwards. It is he who made the miracle of a PSU company turning around a private sector company. MRPL was turned around in just one year by ONGC. After takeover by ONGC in the year 2003, MRPL has not looked back and continues to aim and achieve new heights.

For and on behalf of the Board

(R. S. SHARMA) Chairman

Place: New Delhi Date : 31st July, 2010

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