AnnualReport2004-05 hpcl

HPCL_AR 2k5 Delux Cover 1-4.P65 10/4/05, 2:53 PM1

HPCL stall at the 6th International Petroleum Conference and Exhibition held in January 2005 at New Delhi (PETROTECH 2005)

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Our vision.....★ HPCL delights customers by superior understanding and fulfilling their

stated and latent needs with innovative product and services.

★ HPCL commands highest reputation and is known for its sensitivity

and responsiveness for concerns of its customers and other stakeholders.

★ HPCL always acts faster than the competitors in the most cost effective

way.

★ HPCL is the highest performer in Rate of Growth and Return on

Investment.

★ HPCL is a Learning and Innovative Organization.

★ HPCL provides an environment of trust, pride and camaraderie

Our Anthem.....


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Dear Shareholder

It gives me pleasure to present before you the following significant details of your Corporation :

HOW YOUR CORPORATION PERFORMED :

Area of Performance 2004-05 2003-04

Crude Thruput (MMT) 13.94 13.70

Market Sales (MMT) 20.09 19.53

Gross Sales (Rs. Crores) 64,690 56,333

Gross Profit (Rs. Crores) 2,382 3,643

Net Profit (Rs. Crores) 1,277 1,904

Dividend (%age) 150 220

Net Worth (Rs. Crores) 8,828 7,743

Earnings Per Share (Rs.) 37.69 56.18

YOUR CORPORATION’S INFRASTRUCTURE :

Refineries of Mumbai & Visakhapatnam Depots - 100

Product Pipelines – ASFs - 10

*Mumbai-Pune Retail Outlets - 6667

*Visakh-Vijayawada-Secunderabad SKO/LDO Dealers - 1648

Regional Offices – 85 LPG Distributors - 2153

Terminals/Installations/TOPs - 36 LPG Customers - 2.17 Crores

CURRENT MAJOR PROJECTS :

Upgradation of facilities of Mumbai & Visakh Refineries of an expenditure of Rs. 2800 Crores.

New Pipeline between Mundra & Delhi and Extension of Mumbai – Pune Pipeline to Solapur of anexpenditure of Rs. 1960 Crores.

Upgradation, Automation and New facilities for the Marketing Division to strengthen marketinginfrastructure at an expenditure of Rs. 1400 Crores.

Expansion and Diversification on own and through ventures and tie-ups.

Important current activities, future plans and detailed overview of HPCL as well as Petroleum Sector havebeen covered by me separately (Page No. 4)

Your Corporation would continue to perform strongly and thereby instill confidence in you to continue yourassociation for a long time.

M.B.Lal

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Signing of Deed of Assurance and relaunch of Sri Guru Gobind Singh Refineries. Seen in the picture are Hon'ble Ministerof Petroleum & Natural Gas and Panchayati Raj, Shri Mani Shankar Aiyar, Hon'ble Chief Minister of Punjab,Shri Amarinder Singh and Shri M.B. Lal, C&MD

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Distribution of Mobile PCOs by the Corporation to PhysicallyChallenged persons below poverty line - Seen in the pictureare Hon'ble Chief Minister, Smt. Sheila Dikshit, Governmentof Delhi and Shri M. B. Lal, C&MD

Hon'ble Minister of Petroleum & Natural Gas and PanchayatiRaj Shri Mani Shankar Aiyar presenting the NPMP Awardof Excellence for Project Management to Shri M. B. Lal,C&MD. Also, seen in the picture is Shri S.C. Tripathi,Secretary to Government of India, Ministry of Petroleum &Natural Gas (MOP&NG)

Hon'ble Minister of Home Affairs Shri Shivraj V. Patilpresenting the Excellence Award for outstandingcontribution to the Petroleum Industry to Shri M.B.Lal,C&MD at a function of Telugu Academy, New Delhi

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ContentsChairman's Message...................................................... 04

Our Directors .................................................................. 09

Functional Directors ........................................................ 10

Senior Corporate Officers............................................... 11

Offices, Auditors & Bankers............................................ 12

Notice of AGM ................................................................ 13

Performance Profile ........................................................ 20

Directors' Report ............................................................ 30

Annexure to Directors' Report ......................................... 34

Management Discussion & Analysis Report ................... 47

Special Focus Areas ...................................................... 90

Human Resources Accounting ...................................... 105

Auditors' Report ........................................................... 106

Balance Sheet .............................................................. 112

Profit & Loss Account ................................................... 113

Schedules to Accounts ................................................. 114

Cash Flow Statement ................................................... 132

Statement Pursuant to Section 212 .............................. 135

Social Welfare .............................................................. 136

C & AG's Comments .................................................... 137

Review of Accounts by C & AG..................................... 138

Joint Venture Companies ............................................. 142

Consolidated Financial Statements .............................. 143

Corporate Governance Report ..................................... 159

Annual Report of Guru Gobind SinghRefineries Limited (Subsidiary Company) .................... 178

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Dear Shareholder,The financial results of your Corporation for the 12 months period April 2004 – March 2005have already been published and I am sure you must have seen the same. I am also sure thatyou must have noticed that despite significant physical performance in terms of increasedrefinery thruputs, increased refinery margins and increased sales volume, the Corporationrecorded a lower net profit of Rs.1277 crores as compared to the net profit of Rs.1904 crores forthe financial year 2003-04. I am sure that the reason for the lower profit may also be known toyou considering the fact that the hydro carbon sector is constantly in the news. It may be relatingto the new oil and gas finds in our country or the surging crude oil prices and the constantspeculation whether the product prices especially that of LPG, Kerosene, Petrol and Diesel wouldbe raised or not. The one significant reason for HPCL’s lower profit for the year was due to thewide mismatch between the crude and product prices and the need for the Corporation to bearthe burden of subsidies on products like Kerosene and LPG. A portion of the subsidy was alsoshared by the upstream companies.Physical PerformanceThe physical performance of the Corporation however has been significant. The turnover during2004-05 is Rs.64690 crores as compared to Rs.56333 crores in 2003-04 showing 14.8 %increase. The marketing volumes achieved were the highest ever at 20.09 MMT as comparedto 19.53 MMT for the previous year. Our Mumbai Refinery and Visakh Refinery togetherrecorded the highest ever thruput of 13.94 MMT, as compared to 13.70 MMT for the previousyear. On the refining front the average margins for the year have gone up to $ 5.30 per barrelfrom the earlier years of $ 4.45 per barrel. The growth trend in MS/HSD, our main product linehave been successively increasing by registering highest growth rates in the industry. Similarlythe Aviation and Lubes business line have also made distinct impact in terms of value andgrowth in the market.

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Chairman's Message (Contd.)

Growth StrategyIn the context of continuing pressure on margins, HPCL aims not only to increase value from itscore business operations but also look for new avenues for growth, expansion and diversifications.In the Marketing segment, the endeavour is to achieve not only increase in sales volumes butalso increased contributions thereon and look for new avenues of growth. In the RefiningOperations, we are aiming for thruput maximization, capacity augmentation throughde-bottlenecking, improved yield of products, improved units reliability etc. which could contributeto higher GRM. Risk Management initiatives have been commenced to stabilise the impact ofmarket / price volatilities. Reduction in operating costs is aimed in all activities across theCorporation. I would like to highlight the steps taken in each of these areas.RefiningBoth Mumbai Refinery and Visakh Refinery have recorded not only higher thruput but alsoincreased GRMs during 2004-05, as compared to the previous year. With the refining segmentcontinuing to record positive contributions, steps are being taken to enhance the currentinfrastructure at both Mumbai Refinery and Visakh Refinery. Both the Refineries are currentlyimplementing the Green Fuel Projects at a total cost of Rs.2800 crores which when completedwould enable them to produce Motor Spirit and High Speed Diesel Oil to meet the new EuroSpecifications. Visakh Refinery and Mumbai Refinery are also de-bottlenecking the existingfacilities and adding certain new facilities whereby our crude processing capacities would beenhanced from existing 13 MMTs to 16.2 MMTs.MarketingDownstream oil marketing scenario is witnessing intense competition from not only the PSUs butalso private companies, some foreign companies who have entered the segment. Every companyis making aggressive marketing efforts to gain market share and in this process are offeringseveral value added services to the customers to gain their loyalty. ��

�� This isbeing achieved by our constant endeavour to provide quality products and services, vehiclecare, combating adulteration through a process of monitoring, control, automation of activitiesand striving for reaching global standards in operation. Customers visiting the retail outlets arealso being given added facilities like convenient stores, ATM centres, information kiosks, foodcentres and reward schemes.The other strategy has been to reach out and consolidate in the highway segment which isexpected to be the new growth area with the cross country road construction projects nearingcompletion in several areas. Concerted thrust by all the SBUs of the Marketing Division has nowresulted in the greater visibility of your Corporation in each of the segment. The State-of-art‘Club-HP’ Retail outlets stands out distinctly in the urban market.Rural FocusRural India presents untapped opportunities. Continuing with our thrust on the rural segment,we have set up number of low cost retail rural outlets during the year for supply of quality dieselwhich are called “Hamara Pumps”. This has also been improvised as a multipurpose “KisanVikas Kendras”, offering a ‘Single Window’ supply point, for the farmers to source their fuel,seeds, pesticide needs etc. Our “Rasoi Ghar”, the community kitchen has made a deep impact

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in the rural market by making LPG available at affordable price. During the year HPCL openedadditional Rasoi Ghars all over the country bringing the total to over 1350.Lubes & Aviation BusinessThe Lubes segment which is not price regulated, has potential to contribute considerably to theprofitability of the Corporation. The facilities at the Lubes Unit of the Mumbai Refinery aretherefore being enhanced to produce superior Grade II Lubricants which has good marketdemand, both in India and abroad. The Aviation business line has been registering impressivegrowth and profitability. This SBU is continuing with aggressive plans to enhance market sharein the aviation segment.Value Addition, Efficiency, ProductivityIn order to mitigate the impact of negative margins on the main product lines, the Corporationhas been taking many initiatives oriented towards value additions and operational improvementsin its core lines of refining and marketing. Improving unit service factors, improving the yield ofvalue added products through process improvements in the Refineries and stabilizing the impactof price fluctuations through oil price risk management have been the focus areas during theyear as detailed in the Management Discussions Analysis Report. In addition, we are alsoenhancing the supply side infrastructure through new Pipeline Projects. Further, setting up ofSingle Buoy Mooring for receipt of crude through very large crude carriers (VLCC) at a suitablelocation is also being explored. Our cost control and cost reduction measures include optimizingcrude procurement costs, enhancement of energy efficiencies, optimizing product distributionand transportation costs, savings in financing and operating costs etc. which receive focussedattention resulting in savings to the Corporation.DiversificationTo sustain growth and profitability in the coming period, it is essential that the Corporation notonly retains and consolidates its current position but also look for new areas of businessopportunities. It is in this context that the Corporation has started taking steps for entering thesegments of Exploration & Production, sourcing supply of LNG/CNG to meet increasing demandfor Gas. Both these segments being capital intensive , the Corporation is weighing the option ofentering these segments in association with reputed Indian and foreign companies, details ofwhich have been covered in the report.Prize petroleum, our joint venture has struck its first own crude oil in its on shore marginal fieldat Gujarat which is a small beginning for a big step ahead. This was achieved by Prizepetroleum in association with M/S Aban Llyod in the development of 3 marginal oil fields atGujarat. It has also acquired a 50% stake in a producing oil well at Sanganpur and has takenfurther developmental steps in the field. HPCL in consortium with Oil India Limited have alsoquoted for oil fields currently offered by Government of India under NELP V and is hopeful ofgetting some blocks.Crude Price and Impact on MarginsCrude oil prices witnessed the most dramatic rise in the past year, with the average price perbarrel of the Indian Basket crude rising from around $32 per barrel in March 2004 to about$49 per barrel in March 2005. The international crude oil markets have witnessed fundamentalchange in the demand supply scenario. The huge increase in demand across the globe and


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inability of reserve supply capacity to keep up to demand played a major role in the rise of thecrude oil prices. Price movements were amplified by the concerns about the insecurity of supplydue to natural calamities (like Hurricane Ivan in Gulf of Mexico) and geo-political tensionsincluding terrorism and strikes in oil producing countries.The inventory levels in the industrialized nations have also been a major concern which duringthe past one year have been close to the lowest in the past and thus impacting crude pricevolatility. There has been a rapid rise in the demand for oil from Asia, especially China andIndia. In the current scenario, ensuring uninterrupted supplies has assumed importance.

Product PricingNon-revision in the prices of the major finished product lines in tandem with increase in crudeoil prices have caused significant impact on the profitability of oil companies including HPCLoperating as an integrated refining and marketing company. Despite the growth in volume, thereduced margins on prime products like MS and HSD, as well as the need to bear the impact ofsubsidies on SKO and LPG has had a direct effect on the profitability. The Government is seizedof the issue and is trying to evolve a suitable scheme to minimize the impact on oil companies,including HPCL. The current gap between the cost of production and quantum of realisationwould continue to impact the future margins unless crude prices comes down considerably.The outlook for the short and medium term on the crude oil prices indicate continued high levelof crude prices due to changes in the supply/demand scenario, political uncertainities, stretchedproduction capacities of producing nations and the limited complexities of Asian refineries.HPCL is actively exploring use of various innovative tools to cushion the volatilities of such marketforces and introduce appropriate risk management practices. Initiatives like own sourcing ofcrude, crude transportation through VLCC, widening basket of crude purchased, efficient treasurymanagement have all started showing positive contributions.

HR InitiativesIn our organisation pyramid, the base is our employees who continue to serve with dedication.Our thrust has been to � �� !"� � ��!� �� !� capabilities of our employees tomeet the requirement of changing market dynamics and environments. It is also our endeavourto ensure that all the activities of different functions are aligned with the overall corporateobjectives. The ongoing HR initiatives such as “Competency Mapping” to enhance employeecapabilities and “Balanced Scorecard” approach to fix performance targets and evaluation areaddressing the core of the above requirements. The other initiative of “Six Sigma” approach toquality improvement has helped us to clearly identify the action areas on each segment of studyand as more and more employees are introduced to these concepts the efficiency level of theorganisation will improve further. Encompassing all these initiatives, the organisation transformationexercise for achieving continuous excellence is also progressing well and a large segment ofemployees have already gone through this change management process.An important aspect that is being highlighted in the change management process is the needfor SBUs to look constantly for other avenues of growth and profitability while endeavouring toimprove physical performance. The need to support line functions in their activities, improvingefficiency, achieving reduction in costs are being emphasized to all other functions across theOrganization.


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Way ForwardTo summarise, the initiatives to consolidate in the downstream segment and slowly but steadilyenter upstream segment would enable your Corporation to meet the emerging challenges ofincreased competition, changing energy mix and need for operational excellence and growth.In our current area of downstream activities which mainly form refining and marketing petroleumproducts, the Corporation is enhancing its capabilities in both the segments. The MarketingDivision is implementing two major product pipeline projects connecting Mundra and Delhi andLoni and Solapur at an estimated cost of Rs.1960 crores which when completed will enhancethe supply capabilities to meet the consumer demand in the northern sector. The Marketingdivision will spend further nearly Rs.1400 crores towards upgradation, automation andmodernization of retail outlets and other facilities. It is consolidating its market position in theurban segment through the process of various initiatives aimed at delighting the customers fortheir continued loyalty and look at HPCL as a preferred company to meet their fuel needs.All these activities, including the expenditure required for the initiatives under the explorationand production segments, entering the gas segments etc would entail a capital expenditure ofabout Rs.11000 crores to be incurred during the next 3-4 years.Corporate Social ResponsibilitiesWe recognise our obligations to the society, both in area of environmental protection and socialdevelopment. HPCL has taken several initiatives and is implementing schemes aimed towardsupliftment of weaker sections of the society. The Corporation spent about Rs.5 crores during 2004-05 on several welfare measures. We also made a special contribution of Rs.7.5 crores to thePrime Minister’s National Relief Fund to provide relief to the tsunami affected people.I would also draw your attention to our special focus area relating to the Corporate SocialResponsibilities.ConclusionLast year, #� �� $��!� ��

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�� +++�� I have repeated this because thisdefinition will hold good forever for every organization.Our customers include you the esteemed shareholders and the stakeholders like our dealers,vendors, contractors, business associates and others who have reposed faith on HPCL. We, onour part, would continue to endeavour to take HPCL further towards growth and profitability bymeeting the challenges that we face and grabbing the opportunities that arise. We look forwardto your continued support in this ongoing process.

Thank you,

M. B. LAL


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Shri M. B. LalChairman & Managing Director

Shri Arun BalakrishnanDirector - Human Resources

Shri C. RamuluDirector - Finance

Shri S. Roy ChoudhuryDirector - Marketing

Shri M. A. TankiwalaDirector - Refineries (From 01.06.2005)

Shri M. S. SrinivasanDirector (Till 20.06.2005)

Shri A. K. SrivastavaDirector (Till 07.03.2005)

Shri Prabh DasDirector (From 03.05.2005)

Shri C. B. SinghDirector (From 03.05.2005)

Dr. B. MohantyDirector (Till 29.10.2004)

Shri T. L. SankarDirector

Shri Raja G. KulkarniDirector

Shri Rajesh V. ShahDirector

Shri M. NandagopalDirector

Shri D. S. MathurDirector - Refineries (Till 31.05.2005)

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Shri M.B.Lal, C&MD with his team of Functional Directors - Shri Arun Balakrishnan, Director - HR, Shri C. Ramulu,Director - Finance, Shri S. Roy Choudhury, Director - Marketing & Shri M. A. Tankiwala, Director - Refineries

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Smt. Parminder H.Mathur,

Chief Vigilance Officer

Shri S.K. Mukherjee,Executive Director -

Safety, Health &Environment

Shri N.R. Narayanan,Company Secretary

Shri K. Murali,Executive Director -

Research &Development

Shri R.N. Sharma,Executive Director -

Internal Audit & JVCs

Shri A.K. Bhide,Executive Director -Corporate Finance

Shri K.S.R. Prasad,Financial Controller

Shri S.P. Gupta,General Manager -Payroll, Treasury &

Reimbursement

Shri V. Vizia Saradhi,Executive Director -Industrial Relations

Shri B. Mukherjee,General Manager -Human Resources

Shri Sandeep Joseph,General Manager -Human Resources,(Special Activities)

Shri C.N. Rao,Executive Director -

Information Technology& Planning

Shri S.M. Palav,General Manager -

InformationTechnology

Ms. Nishi Vasudeva,General Manager -

Enterprise ResourcePlanning

Shri O.P. Pradhan,General Manager -

Strategy

Shri A.S. Tulaskar,General Manager -

Upstream

Shri G. Hariharan,General Manager -

Legal

Shri Ajit Singh,Deputy General

Manager - I/C, DCO

Shri D.K. Hota,Head - Internal

Coaches

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Registered Office and Headquarters Office

Petroleum House,17, Jamshedji Tata Road,

Mumbai - 400 020.e-mail: [email protected]

website: www.hindustanpetroleum.com

Marketing Headquarters

Hindustan Bhavan,8, Shoorji Vallabhdas Marg,

Ballard Estate, Mumbai - 400 001.

Mumbai Refinery

B.D. Patil Marg, Chembur,Mumbai - 400 074.

Visakh Refinery

Post Box No. 15,Visakhapatnam - 530 001.

Statutory Auditors

G.P. Kapadia & Co.Chartered Accountants

Mumbai

N.M. Raiji & Co.Chartered Accountants

Mumbai

Branch Auditors

B.V. Rao & Co.Chartered Accountants

Visakhapatnam

Zonal Offices

East Zone

6, Church Lane,Post Box No. 146,Kolkata - 700 001.

West Zone

R&C Building,Sir J.J. Road, Byculla,Mumbai - 400 008.

North Zone

6th & 7th Floor,Core 1 & 2, North Tower,

Scope Minar, Laxmi Nagar,Delhi - 110 092.

South Zone

Thalamuthu Natarajan Building,4th Floor, 8, Gandhi Irwin Road,Post Box No. 3045, Egmore,

Chennai - 600 008.

Bankers

State Bank of IndiaUnion Bank of India

Punjab National BankStandard Chartered Bank

Bank of BarodaBank of IndiaCitibank N.A.

Corporation BankICICI BankHDFC Bank

Company Secretary

Shri N.R. Narayanan

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Notice of Annual General Meeting

HINDUSTAN PETROLEUM CORPORATION LIMITED(A Government of India Enterprise)

REGISTERED OFFICE : 17 JAMSHEDJI TATA ROAD, MUMBAI 400 020

NOTICE

NOTICE is hereby given that the 53rd ANNUAL GENERAL MEETING of the Members of Hindustan PetroleumCorporation Limited will be held on Wednesday, September 21, 2005 at 3.00 P.M. at Y. B. Chavan Auditorium,General Jagannath Bhosale Marg, Next to Sachivalaya Gymkhana, Mumbai - 400 021, to transact the followingbusiness :

ORDINARY BUSINESS :

1. To receive, consider and adopt the Balance Sheet as on March 31, 2005, Profit and Loss Account for theyear ended on that date and Reports of the Board of Directors and Auditors thereon.

2. To declare equity dividend for the financial year 2004-2005.

3. To appoint a Director in place of Shri T. L. Sankar, who retires by rotation and is eligible for reappointment.

4. To appoint a Director in place of Shri Rajesh V. Shah, who retires by rotation and is eligible for reappointment.

5. To appoint a Director in place of Shri C. Ramulu, who retires by rotation and is eligible for reappointment.

6. To approve payment of Rs.11 Lakhs as remuneration to the Statutory Auditors of the Company to beappointed by the Comptroller and Auditor General of India for auditing the Accounts of the Company forthe Financial Year 2005-06.

SPECIAL BUSINESS :

APPOINTMENT OF DIRECTORS :

7. To consider and, if thought fit, to pass, with or without modification(s), the following resolution as anOrdinary Resolution.

“RESOLVED that Shri Prabh Das who was appointed as an Additional Director of the Company by theBoard of Directors under Article 112 of the Articles of Association of the Company with effect fromMay 3, 2005 and who holds office under the said Article and pursuant to Section 260 of the CompaniesAct, 1956 only upto the date of this Annual General Meeting, and who is eligible for re-appointment underthe relevant provisions of the Companies Act, 1956, and in respect of whom the Company has receiveda notice in writing from a member signifying his intention to propose him as a candidate for the office ofthe Director, be and is hereby appointed as a Director of the Company liable to retire by rotation”.


“RESOLVED that Shri C. B. Singh who was appointed as an Additional Director of the Company by theBoard of Directors under Article 112 of the Articles of Association of the Company with effect fromMay 3, 2005 and who holds office under the said Article and pursuant to Section 260 of the CompaniesAct, 1956 only upto the date of this Annual General Meeting, and who is eligible for re-appointment underthe relevant provisions of the Companies Act, 1956, and in respect of whom the Company has receiveda notice in writing from a member signifying his intention to propose him as a candidate for the office ofthe Director, be and is hereby appointed as a Director of the Company liable to retire by rotation”.


“RESOLVED that Shri M. A. Tankiwala who was appointed as Additional Director holding charge of Officeof Director-Refineries of the Company by the Board of Directors under Article 112 of the Articles ofAssociation of the Company with effect from June 1, 2005 and who holds office under the said Article

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Notice of Annual General Meeting (Contd.)

and pursuant to Section 260 of the Companies Act, 1956 only upto the date of this Annual GeneralMeeting, and who is eligible for re-appointment under the relevant provisions of the Companies Act,1956, and in respect of whom the Company has received a notice in writing from a member signifying hisintention to propose him as a candidate for the office of the Director, be and is hereby appointed as aDirector of the Company liable to retire by rotation”.

INCREASE IN THE BORROWING POWERS OF THE COMPANY :

10. To consider and, if thought fit, to pass, with or without modification(s), the following resolution as aSpecial Resolution.

“RESOLVED THAT in supersession of the ordinary resolution passed by the shareholders in theExtraordinary General Meeting of the Company held on July 23, 1985, the consent of the Company beand is hereby accorded to the Board of Directors under Section 293(1)(d) and all other applicableprovisions, if any, of the Companies Act, 1956 including any statutory modification or reenactmentthereof for the time being in force read with Article 67 of the Articles of the Association of the Companyto borrow any sum or sums of money from time to time notwithstanding that the money or moneys to beborrowed together with the moneys already borrowed by the Company (apart from temporary loansobtained from the Company’s bankers in the ordinary course of business) may exceed, the aggregate ofthe paid up share capital of the Company and its free reserves that is to say, reserves not set apart forany specific purpose, provided however, the total amount so borrowed and outstanding at any one timeshall not exceed Rs.5,000 crores (Rupees Five Thousand Crores only) over and above the paid up sharecapital and free reserves of the Company notwithstanding that it may be beyond the limit of debt equityratio as provided in Article 67 of the Articles of Association of the Corporation”.

“RESOLVED THAT the consent of the Company be and is hereby accorded in terms of Section 293 (1)(a) and all other applicable provisions, if any, of the Companies Act 1956 (including any statutorymodification or re-enactment thereof, for the time being in force), to the Board of Directors of theCompany to create/provide Security for the sums borrowed on such terms and conditions and at suchform and manner and with such ranking as to priority as the Board in its absolute discretion thinks fit onthe assets of the Company, as may be agreed to between the Corporation and lenders so as to securethe borrowings by the Company, together with interest costs , charges, expenses and all other moniespayable by the Company to the concerned Lenders/Institutions, under the respective arrangement enteredinto / to be entered by the Company”.

“RESOLVED further that the Securities to be created by the Company for its borrowings as aforesaidmay rank with the security already created in the form of mortgage and / or charges already created orto be created in future by the Company as may be agreed to between the Company and concernedparties”.

“RESOLVED further that for the purpose of giving effect to this Resolution, the Board or any Committeeor person authorised by the Board, be and are hereby authorised to finalise, settle and execute suchdocuments/ deeds / writings/ papers / agreements as may be required and to do all acts, deeds,matters and things as it may in its absolute discretion deem necessary, proper or desirable and to settleany question, difficulty or doubt that may arise in regard to creating security as aforesaid or otherwiseconsidered to be in the best interests of the Company”.

INCREASE IN THE EQUITY HOLDING OF FIIS IN HPCL:

11. To consider and, if thought fit, to pass, with or without modification(s), the following resolution as aSpecial Resolution.

“RESOLVED THAT pursuant to applicable provisions, of the Foreign Exchange Management Act, 1999(FEMA), the Companies Act, 1956 and all other applicable rules, regulations, guidelines and laws (includingany statutory modification or re-enactment thereof for the time being in force) and subject to all applicable

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approvals, permissions and sanctions and subject to such conditions as may be prescribed by any of theconcerned authorities while granting such approvals, permissions, sanctions, which may be agreed to bythe Board of Directors of the Company and/or a duly authorized Committee thereof for the time beingexercising the powers conferred by the Board of Directors (hereinafter referred to as “the Board”), theconsent of the Company be and is hereby accorded for investments by Foreign Institutional Investorsincluding their sub-accounts (hereinafter referred to as the “FIIs"), in the shares of the Company, bypurchase or acquisition from the market under the Portfolio Investment Scheme under FEMA, subject tothe condition that the total holding of all FIIs put together shall not exceed 40% of the paid up equity sharecapital as may be applicable.

“RESOLVED FURTHER THAT the Board or any person/s authorized by the Board be and is herebyauthorized to do all such acts, deeds, matters and things and execute all documents or writings as maybe necessary, proper or expedient for the purpose of giving effect to this resolution and for mattersconnected therewith or incidental thereto”.

BY THE ORDER OF THE BOARD

N.R. NarayananCompany Secretary

Date : August 10, 2005Regd. Office : 17, Jamshedji Tata Road,

Churchgate,Mumbai - 400 020.

NOTES :

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TOATTEND AND VOTE INSTEAD OF HIMSELF AND SUCH PROXY NEED NOT BE A MEMBER OF THECOMPANY. Proxies in order to be effective, must be deposited at the Registered Office of the Companynot less than 48 hours before the time of the meeting.

2. The Explanatory Statement made pursuant to Section 173(2) of the Companies Act, 1956 in respect ofthe Item Nos. 6 to 11 of the Notice is annexed herewith.

3. Dividend on Equity Shares as recommended by the Directors for the year ended March 31, 2005, ifapproved at the meeting, will be payable to those eligible members whose names appear :

(1) As Beneficial owners, as on September 05, 2005 as per the list to be furnished by National SecuritiesDepository Ltd. and Central Depository Services (India) Ltd. in respect of shares held in electronicform, and

(2) As Members in the Register of Members of the Company after giving effect to all valid share transfersin physical form lodged with the Company on or before September 05, 2005.

4. Members are requested to bring their copies of the Annual Report to the Meeting. Members/Proxies attendingthe Meeting should bring the Attendance Slip, duly filled, for handing over at the venue of the meeting.

5. (a) Members holding shares in physical form are requested to advise immediately change in their address,if any, quoting their Folio number(s), to M/s. MCS Ltd., the Registrars at their address given below.

(b) Shareholders holding shares in dematerialised form are requested to advise immediately change inaddress, if any, quoting their respective Client ID/DP ID Nos., to their respective DepositoryParticipants and not to M/s. MCS Ltd. or to the Company.

6. (a) Members holding shares in physical form, who have not given the Bank Particulars/Mandate, ECSMandates earlier or if there is any change in the details, are requested to send the same quoting theFolio number(s), to our Registrars M/s. MCS Ltd. on or before September 05, 2005.


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(b) All Shareholders who are holding shares in Dematerialised form are requested to advise change, ifany, in details of their bank account/ECS mandates to their respective Depository Participantsimmediately to enable the Company to pay the dividend accordingly.

7. Members are hereby informed that Dividends which remain unclaimed/unencashed over a period of 7years have to be transferred by the Company to Investor Education and Protection Fund constituted bythe Central Government under Section 205A and 205C of the Companies Act, 1956.

We give below the details of Dividends paid by the Company and their respective due dates of transfer to theFund of the Central Government if they remain unencashed.

Date of declaration Dividend for the year Month and year ofof Dividend transfer to the Fund

21.09.1998 1997-98 Nov. 2005

09.09.1999 1998-99 Oct. 2006

30.03.2000 1999-2000 (Interim) May 2007

08.09.2000 1999-2000 (Final) Oct. 2007

28.09.2001 2000-2001 Oct. 2008

28.08.2002 2001-02 (Final) Sep. 2009

30.01.2003 2002-03 (Interim) Feb. 2010

24.09.2003 2002-03 (Final) Oct. 2010

22.12.2003 2003-04 (Interim) Jan. 2011

09.09.2004 2003-04 (Final) Oct. 2011

09.12.2004 2004-05 (Interim) Jan. 2012

It may please be noted that no claim can be made by the shareholders for the unclaimed Dividends whichhave been transferred to the credit of the Investor Education and Protection Fund of the Central Governmentunder the amended provision of Section 205B of the Companies (Amendment) Act, 1999.

In view of the above regulation, the shareholders who are yet to encash the dividend are advised to sendrequests for duplicate dividend warrants in case they have not received the Dividend Warrants for any ofthe above mentioned financial years and/or revalidation of unencashed Dividend Warrants still held bythem to the Registrars and Transfer Agents of the Company so that dividends can be encashed.

8. The address of Registrars and Transfer Agents of the Company is as follows :

M/s. MCS Ltd.

Unit : Hindustan Petroleum Corporation Ltd.,

Sri Venkatesh Bhavan, Plot No. 27, Road No.11,

MIDC Area, Andheri (East),

Mumbai - 400 093.


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9. Appointment/Re-appointment of Directors

At the ensuing Annual General Meeting, S/Shri T. L. Sankar, Rajesh V. Shah and C. Ramulu retire byrotation and being eligible, offer themselves for re-appointment.

Shri Prabh Das, Shri C. B. Singh and Shri M.A. Tankiwala who were appointed as Additional Directorsduring the year are being recommended for appointment as Directors liable to retire by rotation.

Details of the abovementioned Directors are given in Annexure to the Notice of the Annual GeneralMeeting.

EXPLANATORY STATEMENT IN PURSUANCE OF SECTION 173(2) OF THE COMPANIES ACT, 1956.

6. HPCL is a Government Company within the meaning of Section 617 of the Companies Act, 1956. Interms of the provisions of Section 619 of the Companies Act, 1956, Statutory Auditor/s for a GovernmentCompany is/are appointed by the Comptroller and Auditor General of India (C&AG). In terms of Section224 (8) (aa) of the Companies Act, 1956, the remuneration of the Auditors is required to be fixed by theCompany in a General Meeting or in such a manner as the Company in a General Meeting may determine.

The Board of Directors of the Company have recommended a remuneration of Rs.11 lakhs plus out ofpocket expenses to the Statutory Auditors (including Joint/Branch Auditors, if any) of the Company tobe appointed by the C&AG for auditing the Accounts of the Company for the Financial Year 2005-06 forthe approval of the shareholders. The Corporation will shortly submit an application to the Comptrollerand Auditor General of India, regarding appointment of Statutory Auditors.

7. Shri Prabh Das was appointed as an Additional Director on the Board effective 3.5.2005. In terms ofSection 260 of the Companies Act, 1956 and Article 112 of the Articles of Association of the Company,he holds office upto the date of next Annual General Meeting and is eligible for re-appointment. TheCompany has received a notice proposing the candidature of Shri Prabh Das for the office of Director interms of Sections 255 and 257 of the Companies Act, 1956.

Shri Prabh Das is Joint Secretary in the Ministry of Petroleum and Natural Gas, New Delhi. The Boardrecommends appointment of Shri Prabh Das.

None of the Directors other than Shri Prabh Das are interested in the resolution.

8. Shri C. B. Singh was appointed as an Additional Director on the Board effective 3.5.2005. In terms ofSection 260 of the Companies Act, 1956 and Article 112 of the Articles of Association of the Company,he holds office upto the date of next Annual General Meeting and is eligible for re-appointment. TheCompany has received a notice proposing the candidature of Shri C. B. Singh for the office of Director interms of Sections 255 and 257 of the Companies Act, 1956.

Shri C. B. Singh is Joint Advisor in the Ministry of Petroleum and Natural Gas, New Delhi. The Boardrecommends appointment of Shri C. B. Singh.

None of the Directors other than Shri C. B. Singh are interested in the resolution.

9. Shri M. A. Tankiwala was appointed as Director (Refineries) of the Corporation. He was appointed as anAdditional Director on the Board effective 1.6.2005 and in terms of Section 260 of the Companies Act,1956 and Article 112 of the Articles of Association of the Company, he holds office upto the date of thenext Annual General Meeting and is eligible for re-appointment. The Company has received a noticeproposing the candidature of Shri M. A. Tankiwala for the office of Director in terms of Sections 255 and257 of the Companies Act, 1956.

Shri M.A. Tankiwala’s association on the Board will be beneficial to the Company. The Board recommendsappointment of Shri M.A. Tankiwala.

None of the Directors other than Shri M.A. Tankiwala are interested in the resolution.


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10. In terms of Section 293(1)(d) of the Companies Act, 1956, the Board of Directors shall not borrowmoneys where the moneys to be borrowed together with moneys already borrowed (other than thetemporary loans obtained from the Company’s bankers in the ordinary course of business) exceed theaggregate of the paid up capital and free reserves of the Company except with the consent of theshareholders obtained in a General Meeting.

The shareholders of the Company at the Extraordinary General Meeting held on July 23, 1985 haveaccorded their consent to the board to borrow moneys in excess of the paid up capital and free reserves,provided, the aggregate of such borrowings together with moneys already borrowed and outstanding atany one time, shall not exceed Rs.500 crores over and above the paid up share capital and free reserves.

Taking into consideration, the investment that would be required in the next 2 to 3 years in ongoingprojects in the Refineries (GFEC) and at Marketing division (new Pipeline projects) as well as newprojects like grass root Refinery at Visakh, grass root Refinery at Punjab being set up by the SubsidiaryCompany GGSRL, Exploration and Production initiatives of the Joint Venture Company, Prize Petroleumetc., the Board of Directors of the Company have considered it desirable to enhance the borrowingpowers from Rs.500 crores over and above the paid up share capital and free reserves to Rs.5000crores over and above the paid up share capital and free reserves. The Corporation would be required toprovide security for the borrowings. Hence approval under Section 293(1)(a) of the Companies Act isbeing taken. Accordingly, the resolutions are placed before the shareholders for their approval.

None of the Directors are interested in the resolution except to the extent of their shareholdings in theCorporation.

The Directors recommend the resolution to be adopted as a Special Resolution by the shareholders.

11. The Reserve Bank of India, by amending the Foreign Exchange Management (Transfers or Issue ofSecurity by a Person Resident Outside India) Regulations, 2000, has raised the limit of investments byForeign Institutional Investors of the paid up equity capital of Indian Companies, subject to the approvalof the Board of Directors and approval of members of the Company by way of a special resolution.

The increase in the FIIs limit to 40% will result in increased weightage of the Company’s share inbenchmarking international stock market indices. Large number of FIIs direct their investment on thebasis of these benchmark indices. Increase the limit for FIIs investment would therefore enable to meetthe demand of FII to invest in HPCL shares and thereby resulting in a positive impact in the capitalmarket.

None of the Directors are interested in the resolution, except to the extent of their shareholding in theCorporation.

The Directors recommend the resolution to be adopted as a special resolution by the shareholders.

BY THE ORDER OF THE BOARD

N.R. NarayananCompany Secretary

Date : August 10, 2005Regd.Office : 17, Jamshedji Tata Road,

Churchgate,Mumbai - 400 020.


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ANNEXURE TO ITEMS 3 TO 5 AND 7 TO 9 OF THE NOTICE

Details of Directors seeking appointment/reappointment at the 53rd Annual General Meeting (in pursuanceof Clause 49 of the Listing Agreement)

Name of the T. L. Sankar Rajesh V. C. Ramulu Prabh Das C. B. Singh M. A.Director Shah Tankiwala

Date of Birth 21/03/1934 01/10/1951 10/01/1948 30/10/1957 03/01/1960 25/01/1949

Nationality Indian Indian Indian Indian Indian Indian

Date of 21/01/1999 21/01/1999 14/08/2003 03/05/2005 03/05/2005 01/06/2005Appointmenton the Board

Qualifications M.Sc. Degree in ACA., ACS, IAS, M.A. (Eco.) B.E. (Mech.)(Chemistry), Mathematics, MBA (Leeds, B.Tech. (Hons), MBAMA (Dev. MBA UK) MBAEco.), IAS

List of • Rain • Mukand Ltd. • Prize • IOC • Oil India GGSRLDirectorships Calcining • Mukand Petroleum • EIL Ltd.held in other Ltd. Engineers Co. Ltd. • CPCLCompanies • KSK Energy Ltd. • GGSRL

Ventures • Fusion • HINCOLLtd. Investments • SALPG

• GGSRL & Financial• Delhi Power Services

Co. Ltd. Ltd.• Small Scale • Catalyst

Sustainable Finance Ltd.Infra- • Conqueststructure InvestmentsDevelop- & Financement Ltd.Board • Kalyani

Mukand Ltd.• Bengal Port

Ltd.• Jeewan Ltd.• India

ThermalPower Ltd.

• ONGC


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Performance Profile

Market Sales (incl. Exports)

12

14

16

18

20

22

FY05FY04FY03FY02FY01FY00FY99FY98FY97FY96

mm

t

CAGR : 4.78%

Turnover

10000

20000

30000

40000

50000

60000

70000


Rs./

Cror

es

CAGR : 17.11%

CAGR : 10.66%

Gross Profit (PBDIT)

1000

1500

2000

2500

3000

3500

4000


Rs.

/Cro

res

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Performance Profile

2004-05 2004-05 2003-04 2002-03 2001-02 2000-01

FINANCIAL US$ Million Rs./ Crores

GROSS SALES 14,709 64,689.51 56,332.57 52,698.99 45,309.67 47,117.50Gross Profit 542 2,381.83 3,642.66 3,139.06 2,046.69 2,140.91Depreciation 150 659.59 606.58 574.25 529.47 433.38Interest 19 81.64 55.65 153.02 294.74 387.33Tax (Incl. Def. Tax) 83 363.27 1,076.49 874.43 434.50 232.19NET PROFIT 290 1,277.33 1,903.94 1,537.36 787.98 1,088.01Dividend 116 509.00 746.81 678.66 339.33 339.33Tax on Distributed Profits 16 71.15 95.65 78.26 – 34.61Retained Earnings 159 697.18 1,061.48 780.44 448.65 714.07

INTERNAL RESOURCES GENERATED 290 1,277.44 1,722.10 1,375.76 1,112.56 1,147.45

VALUE ADDED 1,184 5,208.06 6,061.19 5,115.14 4,101.87 3,912.06

WHAT CORPORATION OWNS

Gross Fixed Assets 2,818 12,393.17 11,387.43 10,754.32 10,244.85 9,166.67Depreciation 1,239 5,449.53 4,809.32 4,319.12 3,759.87 3,239.70Net Fixed Assets 1,579 6,943.64 6,578.11 6,435.20 6,484.98 5,926.97Capital Work in Progress 179 786.84 496.14 347.68 304.38 587.81Investments - JVCs & Subsidiary 188 825.76 817.34 784.14 652.34 502.84

- Others 212 931.08 1,231.08 1,231.08 1,481.08 0.08Net Current Assets 572 2,513.63 1,775.02 646.72 1,319.49 3,037.24Misc. Exps. (Public Issue exps. – – – – – 0.85to the extent not written off)Deferred Tax Liability (313) (1,374.75) (1,454.08) (1,400.04) (1,173.05) –

Total 2,416 10,626.20 9,443.61 8,044.78 9,069.22 10,055.79

WHAT CORPORATION OWES

Net Worth 1,919 8,440.85 7,742.81 6,678.85 5,897.68 6,486.27Share Capital 77 338.93 338.90 338.83 338.81 338.77Reserves 1,842 8,101.92 7,403.91 6,340.02 5,558.87 6,147.50Borrowings 497 2,185.35 1,700.80 1,365.93 3,171.54 3,569.52

Total 2,416 10,626.20 9,443.61 8,044.78 9,069.22 10,055.79

PHYSICAL Million Tonnes

CRUDE THRUPUT 13.94 13.70 12.93 12.33 11.98Mumbai Refinery 6.12 6.11 6.08 5.63 5.57Visakh Refinery 7.82 7.59 6.85 6.70 6.41PIPELINE THRUPUT 6.05 6.14 6.11 6.47 6.37MARKET SALES 20.09 19.53 18.84 18.02 18.39

1. Previous year figures regrouped/reclassified wherever necessary

2. 1 US$ = Rs. 43.98 (Exchange Rate as on 31.03.2005)

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Performance Profile

Contribution to Ex-chequer

0

1000

2000

3000

4000

5000

6000

7000

8000

FY05FY04FY03FY02FY01

Rs.

/Cro

res

Excise Duty Customs Duty Income Tax Sales Tax

Distribution of Earnings 2004-2005

51.4%

31.5%

1.1% 0.9% 0.6% 1.9% 1.1% 1.1% 2.1%8.4%

Raw & Packing Material

Purchase of Products For

Duties

Transhipping Expenses

Employees

Depreciation & Interest

Other Operating Expenses

Taxation

Dividend

Transfer to Reserves

Re-sale

EPS DPS

EPS-DPS Comparison

0

10

20

30

40

50

60


Rs.

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Performance Profile

2004-05 2004-05 2003-04 2002-03 2001-02 2000-01

FUND FLOW STATEMENT US$ Million Rs./Crores

Sources of Funds :Profit after Tax 290 1,277.33 1,903.94 1,537.36 787.98 1,088.01Depreciation 150 659.59 606.58 574.25 529.47 433.38LPG Deposits 40 175.92 172.12 177.87 272.72 380.60Borrowings (Net) 70 307.37 382.32 – – 1,095.78Share Capital – 0.03 0.07 0.02 – –Share Premium – 0.83 2.41 0.70 1.34 0.50Redemption of Oil bonds 68 300.00 – 250.00 – –Redemption/Sale of Investment – – 0.21 9.00 – 85.28Prov. for Deferred Tax (18) (79.33) 54.04 226.99 134.44 –Adj. on account of sale/ deletionof Assets & Prov. for diminutionin Investment 2 6.81 43.37 7.92 (11.68) 141.30

Total 602 2,648.55 3,165.06 2,784.11 1,714.27 3,224.85

Utilisation of Funds :Dividend 116 509.00 746.81 678.66 339.33 339.33Tax on Distributed Profits 16 71.15 95.65 78.26 – 34.61Capital Expenditure 301 1,322.63 941.32 577.58 790.43 993.76Working capital :Increase/(Decrease) 168 738.65 1,347.07 699.82 (1,580.42) 1,730.50Repayment of Loans (Net) – – – 640.91 574.20 –Investment - JVCs (Incl. Adv.towards Equity & Share app.Money pending allotment) 2 7.12 34.21 108.88 110.58 127.50Investment- Others – – – – 1,481.00 –Misc. Exps. (Public Issue exps.) – – – – (0.85) (0.85)

Total 602 2,648.55 3,165.06 2,784.11 1,714.27 3,224.85

CONTRIBUTION TO EXCHEQUERExcise Duty 1,407 6,189.05 6,128.99 5,661.39 4,667.00 4,172.67Customs Duty 318 1,397.73 1,139.70 872.57 768.11 1,136.30Sales Tax 1,814 7,977.27 6,986.11 6,168.46 5,318.10 5,144.74Service Tax 2 6.74 0.15 – – –Income Tax 143 629.82 617.70 433.91 493.40 279.76

Total 3,684 16,200.61 14,872.65 13,136.33 11,246.61 10,733.47

RATIOSGross Profit/Sales (%) 3.68 6.47 5.96 4.52 4.54Net Profit/Sales (%) 1.97 3.38 2.92 1.74 2.31Earnings Per Share (Rs.) 37.69 56.18 45.37 23.26 32.12Cash Earnings Per Share (Rs.) 54.81 75.67 62.94 42.85 44.91Avg. Sales/Employee (Rs. Crores) 6.13 5.08 4.70 3.99 4.08Avg. Net Profit/Employee (Rs. Crores) 0.12 0.17 0.14 0.07 0.09Debt Equity Ratio 0.02:1 0.05:1 0.09:1 0.19:1 0.23:1

MANPOWER (NOs.) 10,561 11,088 11,213 11,357 11,549

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Performance Profile

2004-05 2004-05 2003-04 2002-03 2001-02 2000-01

VALUE ADDITION US$ Million Rs./Crores

Income:

Gross Sales/Income from operations 14,829 65,218.33 57,511.13 54,259.48 44,456.98 48,504.42

Add : Increase/(Decrease)in Inventory 8 34.87 357.50 1,187.90 (258.47) (367.97)

14,837 65,253.20 57,868.63 55,447.38 44,198.51 48,136.45

Cost of Raw materials:

Raw Material Consumption 4,679 20,576.22 14,940.83 14,366.80 10,719.31 11,624.88

Purchase for resale 7,657 33,677.05 30,304.41 29,936.30 24,379.88 28,403.60

Packages 21 90.38 79.15 68.60 55.39 62.54

Stores & Spares 16 70.77 67.87 52.88 48.31 38.44

Utilities 26 114.34 104.10 107.40 93.36 117.39

12,399 54,528.76 45,496.36 44,531.98 35,296.25 40,246.85

Duties applicable to products: 1,254 5,516.38 6,311.08 5,800.26 4,800.39 3,977.54

Total Value added 1,184 5,208.06 6,061.19 5,115.14 4,101.87 3,912.06

Operations

Operating & Service Costs 481 2,113.82 1,848.97 1,429.95 1,502.56 1,242.76

Employees’ Benefits 162 712.41 569.56 546.13 552.62 528.39

Providers of Capital

Interest on borrowings 19 81.64 55.65 153.02 294.74 387.33

Dividend 132 580.15 842.46 756.92 339.33 373.94

Income Tax 83 363.27 1,076.49 874.43 434.50 232.19

Re-deployment in Business

Retained Profit 159 697.18 1,061.48 780.44 448.65 714.07

Depreciation 150 659.59 606.58 574.25 529.47 433.38

Total Value distributed 1,184 5,208.06 6,061.19 5,115.14 4,101.87 3,912.06

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Performance Profile

2004-05 2003-04 2002-03 2001-02 2000-01

SALES VOLUME * 000 Tonnes

Light Distillates

Liquified Petroleum Gas 2,510.97 2,282.47 2,025.44 1,817.93 1,617.63

Naphtha 2,160.90 2,245.74 1,966.02 1,727.74 1,565.35

Motor Spirit 2,035.96 1,948.79 1,873.63 1,765.62 1,653.30

Hexane 42.64 44.50 36.28 40.27 38.33

Propylene 32.61 31.58 30.00 21.26 24.51

Sub-total 6,783.08 6,553.08 5,931.37 5,372.82 4,899.12

Middle Distillates

Mineral Turpentine Oil 56.74 47.96 47.68 48.86 55.32

Aviation Turbine Fuel 409.34 277.95 224.55 224.01 215.67

Superior Kerosene Oil 1,766.41 1,792.98 1,840.18 1,920.26 2,046.97

High Speed Diesel 7,632.80 7,453.77 7,539.97 7,508.61 7,803.94

JBO/WO 6.91 8.50 8.24 7.85 15.81

Light Diesel Oil 289.98 309.69 342.78 299.60 342.46

Sub-total 10,162.18 9,890.85 10,003.40 10,009.19 10,480.17

Lubes & Greases 254.25 334.08 329.23 259.67 253.60

Heavy Ends

Furnace Oil 1,726.04 1,429.23 1,425.61 1,389.21 1,390.76

Low Sulphur Heavy Stock 457.25 554.14 570.86 531.25 773.60

Bitumen 574.31 656.79 506.42 404.30 518.41

Others 131.53 108.00 77.07 54.70 79.40

Sub-total 2,889.13 2,748.16 2,579.96 2,379.46 2,762.17

Total 20,088.64 19,526.17 18,843.96 18,021.14 18,395.06

* Including Exports

MARKETING NETWORK Numbers

Regional Offices 85 81 76 76 76

Terminals/Installatns./TOPs 36 36 35 35 32

Depots 100 89 92 90 87

LPG Bottling Plants 40 40 40 39 37

ASFs 10 10 10 10 10

Retail Outlets 6667 5502 4863 4729 4600

SKO/LDO Dealers 1648 1647 1644 1638 1631

LPG Distributors 2153 1993 1898 1822 1601

LPG Customers (in crores) 2.17 1.99 1.77 1.60 1.44

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Combined Gross Refining Margins

5.65

4.30

2.87

1.841.82

0

1

2

3

4

5

6


US

$ /

bbl

Performance Profile

Imported Indigenous

Crude Thruput - MR

0

1

2

3

4

5


mm

t

Light Distillate Middle Distillate Heavy Ends

Production Volume - MR

0

1

2

3

4

5


mm

t

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Performance Profile

2004-05 2003-04 2002-03 2001-02 2000-01

PRODUCTION VOLUME - MUMBAI REFINERY 000 Tonnes

Light Distillates

Liquified Petroleum Gas 172.20 161.50 154.50 164.20 141.10

Naphtha 744.30 695.40 659.80 585.50 603.10

Motor Spirit 308.40 259.00 253.40 263.20 220.90

Hexane 38.90 42.80 36.10 36.90 37.80

Propylene – – – – –

Solvent 1425 8.90 11.20 11.20 11.90 14.70

Sub-total 1,272.70 1,169.90 1,115.00 1,061.70 1,017.60

Middle Distillates

Mineral Turpentine Oil 54.00 50.80 44.80 44.10 50.30


Superior Kerosene Oil 335.90 392.10 491.80 453.20 438.10


JBO/WO – – – – –

Light Diesel Oil 241.50 287.70 282.70 269.20 280.60

Sub-total 2,732.60 2,725.00 2,682.00 2,571.40 2,465.70

LOBS/TOBS 214.00 277.60 305.50 274.40 272.80

Heavy Ends

Furnace Oil 933.50 976.20 1,046.70 904.70 946.00


Bitumen 324.80 338.30 273.40 246.40 298.10

Others (Incl.input of BH Gas) 49.50 47.10 39.00 42.10 40.80

Sub-total 1,500.40 1,536.20 1,561.80 1,318.50 1,422.20

Total 5,719.70 5,708.70 5,664.30 5,226.00 5,178.30

Intermediate Stock Differential (3.90) (0.60) (3.20) 21.80 13.70

Fuel & Loss 402.20 400.20 418.20 383.80 383.20

Total 6,118.00 6,108.30 6,079.30 5,631.60 5,575.20

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Light Distillate Middle Distillate Heavy Ends

Production Volume - VR

0

1

2

3

4

5


mm

t

Performance Profile

Imported Indigenous

Crude Thruput -VR

0

1

2

3

4

5

6

7


mm

t

Combined Crude Thruput

0

2

4

6

8

10

12


mm

t

Imported Indigenous

�

Performance Profile

2004-05 2003-04 2002-03 2001-02 2000-01

PRODUCTION VOLUME - VISAKH REFINERY 000 Tonnes

Light Distillates

Liquified Petroleum Gas 296.81 323.55 279.40 293.10 229.40

Naphtha 812.59 845.98 602.70 601.50 681.50

Motor Spirit 677.37 734.83 676.30 715.00 637.20

Hexane – – – – –

Propylene 32.15 31.66 29.70 22.20 24.50

Solvent 1425 – – – – –

Sub-total 1,818.92 1,936.02 1,588.10 1,631.80 1,572.60

Middle Distillates

Mineral Turpentine Oil – 1.71 1.10 7.60 6.30


Superior Kerosene Oil 715.32 731.81 637.30 676.00 603.30


JBO/WO 5.38 7.75 7.30 8.10 7.50

Light Diesel Oil 89.21 110.54 113.80 50.50 28.90

Sub-total 4,073.94 3,676.07 3,554.10 3,559.40 3,258.10

Heavy Ends

Furnace Oil 926.45 848.47 623.00 624.60 481.80


Bitumen 240.09 288.51 220.90 106.70 70.00

Others 11.68 11.32 11.10 7.00 3.30

Sub-total 1,444.72 1,532.93 1,243.40 1,142.40 1,155.40

Total 7,337.58 7,145.02 6,385.60 6,333.60 5,986.10

Intermediate Stock Differential 7.01 (18.86) 58.20 (36.20) 25.50

Fuel & Loss 477.59 465.32 407.50 408.90 393.70

Total 7,822.18 7,591.48 6,851.30 6,706.30 6,405.30

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Directors' Report

TO THE MEMBERS

On behalf of the Board of Directors, I present the Fifty third Annual Report on the working of the Company,together with the Audited Accounts for the year ended 31st March, 2005.

HIGHLIGHTSFINANCIAL (Rs./Crores) 2004-05 2003-04

Sales Turnover 64,689.51 56,332.57Profit before Depreciation, Interest and Tax 2,381.83 3,642.66Depreciation (659.59) (606.58)Interest (81.64) (55.65)Profit before Tax 1,640.60 2,980.43Provision for Current Tax (589.71) (1022.45)Provision for Deferred Tax 79.33 (54.04)Provision for taxation of earlier years written back 147.11 –Profit after Tax 1,277.33 1,903.94Transfer from Debenture Redemption Reserve 100.00 –

Appropriations:

General Reserve (127.73) (190.39)Debenture Redemption Reserve – (25.00)Proposed Dividend : Interim (169.67) (203.88)

Final (339.33) (542.93)Tax on distributed profits (71.15) (95.65)Balance carried forward 669.45 846.09

PHYSICAL (Million Tonnes)

Market Sales (incl. Exports) 20.09 19.53Crude Thruput :

Mumbai Refinery 6.12 6.11Visakh Refinery 7.82 7.59

SHAREHOLDER VALUE (Rupees)

Earnings per Share 37.69 56.18Cash Earnings per Share 54.81 75.67Book Value per Share 249.04 228.47

DIVIDEND

Your Directors, after taking into account the financial results of the Company during the year, have recommendeddividend of 150% for the year 2004-05 (including interim dividend of 50%)as against 220% dividend paid forthe year 2003-04. The dividend for 2004-05, including dividend tax provision will absorb Rs. 580.15 crores(2003-04 : Rs. 842.46 crores).

TURNOVER

Your Company has achieved a sales turnover of Rs. 64,689.51 crores as compared to Rs. 56,332.57 croresin 2003-04.

PROFIT

Your Company has earned gross profit of Rs. 2,381.83 crores as against Rs. 3,642.66 crores in 2003-04and profit after tax of Rs.1,277.33 crores as compared to Rs.1,903.94 crores in 2003-04.

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Directors' Report

INTERNAL RESOURCES GENERATION

The Internal Resources generated were Rs.1,277.44 crores as compared to Rs.1,722.10 crores in 2003-04.

CONTRIBUTION TO EXCHEQUER

Your Company has contributed a sum of Rs.16,200.61 crores to the exchequer by way of duties and taxes,as compared to Rs. 14,872.65 crores in 2003-04.

DIRECTORS’ RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, your Directors state that :

(i) In the preparation of the Annual Accounts, all the applicable Accounting Standards have been followedalong with proper explanation relating to material departures.

(ii) The Company has selected such Accounting Policies and applied them consistently and made judgementsand estimates that are reasonable and prudent so as to give a true and fair view of the State of Affairsof the Company as on 31st March, 2005 and of the Profit and Loss Account of the Company for the yearended on that date.

(iii) The Company has taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities.

(iv) These Accounts have been prepared on a going concern basis.

MEMORANDUM OF UNDERSTANDING WITH GOVERNMENT OF INDIA

The Corporation has been achieving an all round “Excellent” rating vis-à-vis MOU targets for thirteen consecutiveyears upto 2003-04 as a result of the concerted efforts of all the employees. The performance of theCorporation of the year 2004-05 also qualifies for “Excellent” rating basis self assessment. The details ofperformance vis-à-vis MOU 2004-05 targets are enclosed (Annexure I).

REFINERY PERFORMANCE

HPCL refineries achieved the highest ever combined crude thruput of 13.94 MMT as against previous best of13.70 MMT achieved during 2003-04.

Mumbai Refinery achieved a Crude thruput of 6.12 MMT against installed capacity of 5.5 MMT, whichrepresents a capacity utilization of 111.20%. The Fuel and loss at Mumbai refinery was 6.57%, which isbetter than the MOU target of 7.20%.

Visakh Refinery achieved the highest ever crude thruput of 7.82 MMT against previous best of 7.59 MMTachieved during 2003-04, which corresponds to 104.30% capacity utilization of installed capacity (7.5 MMTPA).The Fuel and loss at Visakh refinery was 6.12%, which is also better than the MOU target of 6.50%.

Gross refining margins of Mumbai Refinery averaged at $ 5.60 per barrel as against $ 4.26 per barrel for theyear 2003-04. Gross refining margins of Visakh Refinery averaged at $ 5.06 per barrel as against $ 4.61 perbarrel for the year 2003-04. Both the refineries have initiated steps to put up new facilities to produce fuelsto meet future specifications.

MARKETING PERFORMANCE

Your Company achieved the highest sales growth of 3.5% vis-à-vis 3.9% for the industry in the year. Themarket sales (including exports) registered 20.09 MMT corresponding to Rs. 64,689.51 crores during theyear as against 19.53 MMT corresponding to Rs. 56,332.57 crores during 2003-04.

VIGILANCE

“The raison d’être of Vigilance activity is not to reduce but to enhance the level of managerial efficiency andeffectiveness in the organisation”. (- CVC circular dated 13.04.04).

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Directors' Report

The above dictum of the Central Vigilance Commission isthe principal determinant as far as functioning of theVigilance department is concerned. Adherence to the samewas ensured in the various activities undertaken by thedepartment during the year. Vigilance wing has beenstriving to enhance transparency levels in the Organisation,through advocating extensive use of e-governance. Tendernotices and forms are made available on the website.Initiatives like e-payments, e-procurements, computerisedfile tracking system etc. are under various stages ofimplementation across the Organisation. In critical areaslike dealership selection, the results are being publishedon the website.

Preventive vigilance activity was stepped up through inspections, workshops and awareness programmes.Special Q & Q (Quality and Quantity) campaigns were organised during the Vigilance Awareness Week,wherein demonstrations for enhancing awareness with respect to the issues related to adulteration weregiven to the customers across the country.

Vigilance department will continue to bolster the efforts of the Management in striving towards making thisOrganisation a “World Class Energy Company”, and enhancing value for all stakeholders.

INDUSTRIAL RELATIONSThe Industrial Relations climate during the year 2004-05 continued to be generally harmonious in the Corporation.

OFFICIAL LANGUAGE IMPLEMENTATIONProgressive use of Hindi in the Corporation continues to receive due importance. More details are given in theManagement Discussion and Analysis Report.

SC/ST LIAISONThe overall representation of SC/ST employees in the Corporation is 27.85%. During the year, your Corporationhas carried out a number of Welfare/Development activities. More details are given in the ManagementDiscussion and Analysis Report.

CORPORATE GOVERNANCEThe Corporation has complied with the various requirements of Corporate Governance. The details in thisregard form part of this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORTThis report has been given separately.

PARTICULARS OF EMPLOYEESA statement providing the information as required under Section 217 (2A) of the Companies Act, 1956 isannexed herewith (Annexure IV). The details regarding the number of women employee’s vis-à-vis the totalnumber of employees in each group is also annexed (Annexure V).

DIRECTORSShri B. Mohanty, Joint Advisor, MOP&NG, ceased to be Director with effect from 29.10.04 consequent to hisreassignment in the Ministry of Petroleum and Natural Gas. Shri A.K. Srivastava, Jt. Secretary, MOP&NG,ceased to be Director with effect from 07.03.05 after his completion of tenure in MOP&NG.

Shri Prabh Das, Joint Secretary, MOP&NG and Shri C. B. Singh, Joint Advisor, MOP&NG, were appointed asDirectors with effect from 03.05.05 who have been co-opted as Additional Directors, liable to retire at thenext Annual General Meeting and are eligible for re-appointment.

Shri N. K. Puri, Director-Marketing of the Corporation retired on April 30, 2004 upon attaining the age ofsuperannuation and after serving the Corporation for a period of 40 years.

A Vigilance Conference in progress

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Directors' Report

Shri M.S. Srinivasan, Additional Secretary, MOP&NG, continues to be ex-officio part time Director of theCorporation.

S/Shri T.L. Sankar, Raja G. Kulkarni, Rajesh V. Shah and M. Nandagopal continue to be part time non-officialDirectors of the Corporation.

S/Shri M.B. Lal, C&MD, D.S. Mathur, Director (Refineries), A. Balakrishnan, Director (Human Resources), C.Ramulu, Director (Finance) and S. Roy Choudhury, Director (Marketing) continue to be the whole time Directorsof the Corporation. Shri D.S. Mathur will superannuate effective June 01, 2005.

As per the provisions of Section 256 of the Companies Act, 1956, S/Shri T.L. Sankar, Rajesh V. Shah andC. Ramulu will be the Directors, who will retire by rotation at the next AGM and are eligible for reappointment.

The Board of Directors place on record their sincere appreciation of the valuable services rendered byS/Shri A.K. Srivastava, B. Mohanty and N.K. Puri during their tenure on the Board.

ACKNOWLEDGEMENTSThe Directors gratefully acknowledge the valuable guidance and support extended by the Government ofIndia, Ministry of Petroleum and Natural Gas, other Ministries, Petroleum Planning & Analysis Cell and theState Governments.

The Directors also acknowledge the contribution made by the large number of dealers and distributors spreadall over the country towards improving the service to our valued customers as well as for the overall performanceof the Company.

The employees of the Corporation have continued to display their total commitment towards the pursuit ofexcellence. Your Directors take this opportunity to place on record their appreciation for the valuable contributionmade by the employees and look forward to their services with zeal and dedication in the years ahead toenable the Company to scale even greater heights.

Your Directors are thankful to the shareholders for their faith and continued support in the endeavours of the Corporation.

For and on behalf of the Board of Directors

M. B. LALMay 26, 2005 Chairman & Managing Director

Shri M.B.Lal, C&MD handing over the Dividend cheque to the Hon'ble Minister of Petroleum & Natural Gas and PanchayatiRaj, Shri Mani Shankar Aiyar. Also, seen in the picture are Shri S.C.Tripathi, Secretary to Government of India, Ministry of

Petroleum & Natural Gas & Shri M.S. Srinivasan, Special Secretary, MOP&NG and the Functional Directors.

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Annexure to Directors' Report

ANNEXURE - I

MOU TARGETS VERSUS ACTUAL PERFORMANCE : 2004-05

CRITERIA UNIT Target Actual“Excellent” Level Achieved

COMMON PARAMETERS (A)

I. STATIC FINANCIAL PARAMETERS :

a) Financial Performance Indicators :

i) Gross Margin/Gross Block % 13.87 19.22

ii) Net Profit/Net Worth % 8.65 15.13

iii) Gross Profit/Capital Employed % 11.66 18.21

b) Financial Indicators (size) :

i) Gross Margin Rs. Crores 1811.00 2382.00

ii) Gross Sales Rs. Crores 61525.00 64690.00

c) Financial Returns :

i) PBDIT/Total Employment Rs. Lakhs 16.09 22.55

ii) Added Value/Gross Sales % 1.45 2.37

II. DYNAMIC PARAMETERS

i) Quality : ISO Certification LPG Plants Wt. Mks. 4 4

ii) Customer Satisfaction % 98.00 98.00

iii) Employee Training & Motivation :Competency Profiling Wt. Mks. 1 1Finalisation of Strategy for SBUs thru’Shared Vision Exercise Wt. Mks. 1 1Implementation of Six Sigma (Mktg. & Refineries) Wt. Mks. 1 1

iv) R & D Efforts :No. of Products Launched Nos. 7 7

v) Project Implementation/ModernisationGreen Fuels & Emission Control Project – MR Wt. Mks. 2 2Clean Fuels & Emission Control Project – VR Wt. Mks. 2 6Terminal Automation : 35 Locations Wt. Mks. 3 15

vi) Capex/Greenfield Investments/JVsGreen Fuels & Emission Control Project – MR % of Outlay 80 19Clean Fuels & Emission Control Project – VR % of Outlay 80 50

vii) Extent of Globalisation (International,foreign JVs etc.)HINCOL - Commissioning of Blending PlantsVisakh Wt. Mks. 1 1Mangalore Wt. Mks. 1 1SALPG - Completion of Access Shaft Sinking Wt. Mks. 2 10

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CRITERIA UNIT Target Actual“Excellent” Level Achieved

SPECIFIC PARAMETERS (B)

I. Sector Specific :

Distillate Yields :

Mumbai Refinery Wt% 68.20 69.39

Visakh Refinery Wt% 75.50 76.37

Fuel and Loss :

Mumbai Refinery Wt% 7.20 6.57

Visakh Refinery Wt% 6.50 6.12

Market Share :

MS - Retail % 25.52 25.22

HSD - Retail % 23.45 23.19

II. Enterprise Specific and Efficiency Parameters :

No. of Reportable Accidents in Refineries Wt. Mks. 1 1.48

Cu. Mtrs. of Process Effluents Discharged Wt. Mks. 1 1

Control on Retail Outlets % 76.00 80.00

Addition of Retail Outlets % 70.00 72.00

Addition of LPG Distributorships % 70.00 79.00

Branding of Retail Outlets (Club HP) Nos. 2200 2247

OVERALL RATING (A) + (B) EXCELLENT

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ANNEXURE - II

Particulars with Respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earning/Outgo as per Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

ENERGY CONSERVATION AND TECHNOLOGY ABSORPTION

1) CONSERVATION OF ENERGY

a) Energy conservation measures undertaken and additional investment/proposals for implementationon conservation of energy

Mumbai and Visakh Refineries accord highest priority to energy conservation and have undertakenseveral Encon measures by operational improvements & implementing Encon projects. Various Enconmeasures undertaken during 2004-05 are as follows :

Mumbai Refinery

i. Optimized GTG load and reduced Specific energy consumption from 0.373 to 0.365 (Kg of fuelper unit power generation in CPP).

ii. Modified PDU steam condensate recovery system and reduced process steam consumption by 2tons/hr.

iii. Organized Oil Conservation Fortnight during January 15 to 31, 2005 to generate mass awarenessin public for conservation of petroleum products. During the fortnight, several activities like freePUC check up for vehicles, display of oil conservation posters and slogan/quiz drawing competitionsin various schools of Chembur area were conducted.

iv. Installation of Secondary seals in 18 nos. of floating roof storage tanks to reduce tank emissionlosses.

v. Replacement of FR-CDU/VDU/FRE-CDU rotary Air Pre-heater with stationery Air pre-heaters toimprove the furnace efficiency by about 4%.

vi. Conversion of FRE and LR -VDU natural draft furnaces to balance draft furnaces for efficiencyimprovement by 9 %.

vii. Recovery of LR units’ condensate (24 T/hr) for usage in Captive Power Plant as boiler feedwater.

viii. Optimization of the FR/FRE units crude preheat exchangers network to improve the preheattemperature by 20 Deg C.

ix. Firing of FR vacuum column off gas (low calorific value) in heaters.

x. Ceramic coating in SEU-II furnace and Hydrogen Reformer to improve the thermal efficiency by 2%.

Visakh Refinery

i. Carried out comprehensive refinery’s compressed air survey by engaging an external agency.Performance of all refinery compressors was studied in detail and survey identified 3000Nm3/h air leaks in the compressed air system. Identified air leaks arrested and spared onecompressor operation.

ii. Reduced specific steam consumption to 292 MT/TMT of crude processing during the year ascompared to 305 MT/TMT crude processing in 2003-04 by periodic surveying and arrestingsteam leaks.


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iii. Steam leaks Joint survey was carried out by CHT nominated team during the Oil Conservationfortnight in January 2005.

b) Impact of above measures on energy conservation and consequent impact on cost of production ofgoods.

Various measures undertaken during the year 2004-05 would result in estimated energy savings ofabout 32221 SRFT, which is equivalent to Rs. 34 crores.

c) Total energy consumption and energy consumption per unit of production :Please refer Form-A of the Annexure to the Directors’ Report.

2) TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

a) Efforts made towards technology absorption, adoption & innovation

Information with respect to above is given below in Form-B

b) Imported Technology (Imported during last 5 years) :

Technology Imported Year Whether fully If not absorbedof Import absorbed Reasons

Flexi cracking of Vacuum Gas Oils (FCCU) at MR 1999 Yes –

Flexi cracking of Vacuum Gas Oils (FCCU) at VR 2000 Yes –

Merox Treatment Facilities at VR 2000 Yes –

Bitumen Blowing at VR 2000 Yes –

Diesel Hydro De-sulfurisation at both MR and VR 2000 Yes –

Hydrogen Units at both MR and VR 2000 Yes –

Sulfur Recovery Units at both MR and VR 2000 Yes –

Diesel Hydro De-sulfurisation 2nd Reactor at MR 2004 Yes –

3) FOREIGN EXCHANGE EARNING AND OUTGO

a) Activities relating to exports :

Various initiatives has been taken to increase exports and for development of new Exports marketsfor products and services. Efforts are on to access international Markets and to tap export potentialfor free trade products and lubricants.

b) Total Foreign Exchange used and earned :

Please refer Notes to Accounts – Schedule 20 B, Note. 10 G, H, I & J.

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FORM - A

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

MUMBAI REFINERY

(A) Power and Fuel Consumption 2004-05 2003-04

1. (a) Electricity PurchasedUnits (Million KWH) 10.47 7.35Total Amount (Rs. Crores) 12.36 12.95Rate Per Unit for energy charges (Rs./KWH) 3.90 4.51Maximum Demand Charges (Rs. Crores) 8.28 9.63

(b) Own GenerationThrough Steam Turbine/GeneratorUnits (Million KWH) 279.89 293.16Units per tonne of fuel 2636.02 2624.61Cost per unit (Rs./KWH) 5.82 4.33

2. Furnace oil/LSHSQuantity (TMT) 152.37 168.73Total amount (Rs. Crores) 153.31 161.22Average rate (Rs./Ton) 10062.00 9555.00

3. NaphthaQuantity (TMT) 126.70 131.82Total amount (Rs. Crores) 217.87 180.69Average rate (Rs./Ton) 17196.00 13707.00

4. LPGQuantity (TMT) 5.08 10.29Total amount (Rs. Crores) 9.54 16.30Average rate (Rs./Ton) 18777.00 15848.00

5. Refinery GasQuantity (TMT) 41.81 27.09Total amount (Rs. Crores) 42.06 25.88Average rate (Rs./Ton) 10062.00 9555.00

6. BH GasQuantity (TMT) 9.99 6.58Total amount (Rs. Crores) 4.35 2.81Average rate (Rs./Ton) 4455.00 4275.00

7. CokeQuantity (TMT) 28.70 25.67Total amount (Rs. Crores) 28.88 24.53Average rate (Rs./Ton) 10062.00 9555.00

(B) Consumption per Unit of Production

Electricity (KWH/Ton of crude) 47.46 49.20Liquid Fuel (Tons/TMT of crude) 45.61 49.20Gas Fuel (Tons/TMT of crude) 9.30 7.20Coke Fuel (Tons/TMT of crude) 4.69 4.20

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VISAKH REFINERY

(A) Power and Fuel Consumption 2004-05 2003-04

1. (a) Electricity purchased

Units (Million KWH) 3.38 1.47Total amount (Rs. Crores) 4.87 4.66Rate Per Unit for Energy charges(Rs/KWH) 14.42 15.17Electricity Exported (Million KWH) 0.21 0.01Maximum Demand charges (Rs. Crores) 2.43 2.43

(b) Own Generation (CPP)

Units (Million KWH) 252.42 246.62Units Per Ton of Fuel 2460.15 2441.90Cost Per Unit (Rs./KWH) 5.26 3.25

2. Furnace Oil/LSHS

Quantity (TMT) 140.12 110.88Total amount (Rs. Crores) 146.26 107.02Average rate (Rs./Ton) 10438.17 9651.79

3. CPP Fuel


4. Naphtha (DHDS)


5. Refinery Gas


6. Coke


(B) Consumption per unit of production :

Electricity (KWH/Ton of Crude) 32.67 32.68Liquid fuel (Tons/TMT of Crude) 34.41 30.73Gas fuel (Tons/TMT of Crude) 10.95 9.04Coke Fuel (Tons/TMT of Crude) 9.11 11.40

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FORM B

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION

1. RESEARCH AND DEVELOPMENT (R & D)

A. COLLABORATIVE R&D PROJECTS

MoU have been finalized with Research collaborators for the following projects :

a. Up-gradation of FCCU recycle oil through solvent extraction using NMP as solvent (with IIP, EIL &CPCL)

The project aims at extraction of aromatics from the FCCU feed using NMP as solvent. Theraffinate so obtained would be superior quality FCCU feed stock and would result in better yieldsof Light and Middle distillates. The benefit expected from this project is approx. Rs. 3 crores/annum.

During the year 2002-03 and 2003-04, test runs were conducted for low Sulphur feed stock inMR-FCCU and high Sulphur feed stock at CPCL-FCCU. The samples of side streams and residuewere analysed by IIP. Subsequently, a successful plant run was undertaken in Solvent ExtractionUnit of Mumbai Refinery during February 2004, which resulted in raffinate yield of approx.75-80% and same was routed to FCC unit as feed stock.

During 2004-05, physico-chemical characterization and analysis of Test Run samples was doneby IIP and mass transfer studies on Glass Packed Extraction Column has been completed.

b. Energy efficient Deasphalting process using supercritical solvent recovery (with IIP, EIL & CHT)

In the energy efficient super-critical approach the solvent recovery in the unit is done undersupercritical process conditions, resulting in an over all energy savings of about 20 to 40 percent(mainly in utilities) and lower solvent losses. The project was initiated during 2002-03 and isscheduled to be completed by 2006. The benefit expected is approximately Rs. 2 Crores/annum.

During the year, test runs were conducted in MR-PDA unit and relevant samples were analyzed byIIP. Site selection, PFDs & P&IDs has been finalized in consultation with M/s EIL to implementthe facilities. The same is expected to be implemented by 2006.

c. Optimization studies of Hexane manufacturing unit and feasibility study for producingpolymer-grade hexane (with IIP)

Study has been initiated along with IIP during 2004-05 for optimizing the existing Hexane plantoperating conditions to explore the possibility to produce WHO and Polymer grade Hexane, whichhave more stringent quality specification with respect to sulfur and benzene content.

d. Optimization studies of NMP Lube Extraction Unit (with IIP)

Study has been initiated along with IIP during 2004-05 to optimize operating parameters toobtain specific product quality and thruput maximization. Improvement in colour, sulfur and saturatesin products is also expected by increasing severity of hydrofining and thru usage of suitablecatalyst.

e. Improvement of Propylene Purity (with IICT Hyderabad)

Proposal has been signed with IICT Hyderabad to improve the purity of Propylene through membraneseparation.

f. MOU has been signed between Chevron, IIT Kanpur and Advanced Refining Technologies forvarious R&D activities.


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B. EXPENDITURE ON R & D

Capital Expenditure : Rs.0.47 croresRevenue Expenditure : Rs.1.28 crores

2. UPGRADATION INITIATIVES

Mumbai Refinery

• Commissioned DHDS second reactor and commenced EURO-III grade HSD supply in line with AutoFuel policy during the year.

• Altered CDU-II process parameters suitably to maximize ATF pool by blending BH ATF to PG ATF. Ithas improved ATF production substantially. Refinery also has planned to further augment ATF treatingfacilities during 2005-06 through minor modifications in ATF network.

Visakh Refinery

• Carried out Gasoline Sulphur Reduction Additives evaluation and usage commenced to reduce CRNSulphur content to meet BS-II & Euro-III MS demand .

• Increased DHDS operation severity to meet BS-II & EURO-III HSD demand.

• Commissioned LPG merox caustic regeneration facility to reduce chemical consumption and to improveproduct quality.

• Commenced 380 cst Viscosity Furnace oil production for export.

• Carried out 48 crudes evaluation with assay TBP and refinery laboratory TBP Distillation.

ANNEXURE - III

Environmental Protection Measures

Mumbai and Visakh Refineries have been meeting the statutory regulations and standards set by StatePollution Control Boards and Ministry of Environment and Forest, Govt. of India. Both the Refineries havebeen certified as ISO 14001.

Visakh Refinery

1. Solid Waste Management :

• Bioremediation of low oily sludge : Refinery is remediating biologically ETP sludge generated.

• Insitu Chemical Cleaning of Crude Tank bottom sludge : Crude tank 01B insitu chemical cleaningcarried out and oil recovery from sludge is in progress.

• Processing of oily Sludge from Sludge Lagoons : Global Tender floated and order has been placed onM/S. Balmer Lawrie. The equipment installation is in progress.

• Integrated Hazardous Solid Waste Management Plan Project : Restructuring of the agreement is inprogress for continuing the Phase III, IV and V of the project.

• Vermicomposting of canteen waste : Aerobic Vermi Bacterial (AVB) system based composting activityfor treating canteen waste is under continuous operation.

• Treatment Storage and Disposal Facility (TSDF) : Proposal for Refinery Hazardous solid Waste disposalto TSDF at Hyderabad is under process of approval.

• Ground water monitoring network development study draft report received from EIL.


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2. AIR Pollution Control :

• Sulphur Dioxide emission guidelines are being followed for monitoring and achieving the sulphur dioxideemissions norm on day to day basis.

• T&I of SRU-1 was taken up and Hardware modifications were carried out in SRU-1 for furtherimprovement in the unit performance.

• 3 Nos. New Continuous Ambient Air Monitoring Stations ( CAAMS ) along with a Weather monitoringstation were installed and commissioned successfully. This has enhanced Refinery capability forcontinuous monitoring of Air Quality for SO2, NOX, HC, CO, SPM, RSPM and Noise level. WeatherMonitoring station indicates Humidity, Rainfall, Wind Velocity and Direction.

• Volatile organic compounds inventorisation study taken up with M/S. EIL assistance. Final report isawaited.

3. Liquid Effluent Management :

• Oil Ingress Study by M/S. EIL : Tender floated for carrying out hardware modifications for the inlets ofexisting ETPs as per recommendations of the study. Technical Bid evaluation is completed andproject implementation is planned as part of NPCB 2005-06.

• Feasibility study for Zero discharge study : Phase I/II of the study completed and Draft report receivedfrom EIL.

• Feasibility Study and process design of dedicated collection and reprocessing system for Sour waterstreams : Study initiated in December 2004. Data collection is in progress. Expected to be completedby June 2005. Equipment procurement proposed in NPCB 2005-06.

4. Environment Management System :

• Visakh Refinery has a comprehensive Environment Management System (EMS) and is a ISO 14001certified Refinery. Surveillance Audit was conducted and ISO 14001 certification received in 2002 isbeing maintained. Initiative has been taken for upgradation to 2004 edition of the ISO 14001 standard.

• VR is implementing Process Safety Management system conforming to Occupational Safety andHealth Administration’s Process Safety Management (OSHA PSM) and Environmental ProtectionAgency’s Risk Management Program (EPA RMP) guidelines of USA. Consultant has been appointed.

• A batch of 18 officers of VR were trained by EIL for conducting Risk Analysis studies and Hazard andoperability studies. ( HAZOP )

5. Other Activities :

Gasoline Sulphur Reduction Additives evaluation was carried out at IOC, Faridabad and usage of samecommenced from December 2004 to achieve reduction in CRN Sulphur to meet demand of BS - II and Euro -III MS.

• FCCU-IR E-Cat addition was carried out in FCCU-II. This has resulted in minimisation of Catalyst costand reduction in Hazardous Solid wastes generation.

• Necessary changes in DHDS operation severity made to achieve BS - II and Euro - III HSD productionex-existing DHDS.


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Mumbai Refinery

1. In a major thrust to the solid waste management, Mumbai Refinery has processed 11,450 M3 (approx.)of sludge during the year 2004-05 by M/s. Mid Content, Singapore using mechanical separation methodand recovered about 5670 M3 of oil in the sludge. As of now most of the land fills have been treated.

2. The left over sludge cake of 2000 M3 (having oil content less than 10%) is being treated byBio-Remediation method by M/s. Terra Consultant India Pvt. Ltd. and the same is expected to becompleted by July 2005.

3. Mumbai Refinery has taken initiative for treating the tank sludge in an environmental friendly mannerwithout removal of the sludge from tank and with reduced tank down time. In this direction, in-situcleaning by M/s. Balmer Lawrie & Co. Ltd. using BLABO technology has been started in Crude Tank-115during March 2005 for recovering the potential oil from the sludge. The complete cleaning of the tank isexpected to be completed by June 2005 for facilitating the maintenance repair jobs.

4. Refinery has a comprehensive Environment Management System (EMS) & ISO 14001 certification andhas been renewed by external Surveillance Auditor M/s. SGS during July 2004.

5. M/s. EIL has conducted a training program on Hazards and Operability (HAZOP) for Refinery Engineersand M/s. SGS has conducted a refresher training program on ISO-14001 as a part of EnvironmentalManagement System (EMS).

6. Inline with the Solid Hazardous Waste Management Rules, 2003 and Honorable Supreme Court directive,Mumbai Refinery has become a member of M/s. Mumbai Waste Management Ltd. and disposed offabout 226 Mts of various hazardous wastes such as spent catalyst from FCCU, DHDS, Lube Hydrifiners& SRU and other wastes have been disposed off and complied with the statutory requirement.

7. The present Ambient Air Analyzers (SO2, NOx, SPM & CO) which have become obsolete are beingreplaced with new ones. Order has been placed on M/s. Environmental S.A. France and the same areexpected to be received shortly.

8. Refinery has entered into an agreement with M/s. RCF for locating Ambient air Monitoring Station inRCF’s residential colony premises, Chembur. Procurement of Analyzers is being taken up.

9. A Feasibility study has been carried out by M/s EIL for replacing the existing ETP-I & ETP-II with newIntegrated ETP by adopting Cyclic Activated Sludge treatment followed by Membrane Bio-Reactor formeeting the proposed CPCB standards on MINAS. The project is being implemented at a cost ofRs. 50 crores.

10. Action initiated for improving the underground sewer system based on the recommendations of in-housesurvey carried out last year for better monitoring and control/operation of ETP-II/API Separators. Varioussewer streams of under ground sewer system were flushed to facilitate free flow of oily water, routing ofthe system was checked and drawings were updated accordingly. Presently, repairs/correction of thejunction boxes as per OISD standards are in progress.

11. As a part of Green Fuels and Emission Control Project, Flue Gas Desulfurisation Unit (Wet Gas Scrubber)is being put up in FCCU Unit for reducing the SO2 emission and Particulate Matter.


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ANNEXURE - IV

Information as per Section 217(2A), read with Companies (Particulars of Employment) Rules, 1975 andforming part of the Directors’ Report for the period 1st April, 2004 To 31st March, 2005.

1 ADVANI R I SR. MGR SALES-MIS PQS 3,214,795 BSC 35 1-Dec-69 56 KOMAL MANUFATURING CO. LTD.2 AHIRE RAMESH N SR. MOBILE OPT(SG) 2,049,837 NON SSC 33 4-Nov-71 543 ALPANA VIDYADHAR DESHPANDE DY. MGR FINANCE 1,874,224 BCOM, ACA 14 4-Jan-91 394 ANANDA PADMANABAN A DY. MGR FINANCE 2,004,699 BSC, ACA 15 5-Jul-89 41 BHARAT HEAVY ELECTRICALS LTD.5 APTE K V CH MGR LPG 1,286,516 BE (MECH) 35 26-Dec-69 56 KOSAN GAS CO. LTD.6 ARORA SURINDARPRAKASH J EX OPRNS OFFICER 1,121,851 BSC 35 24-Nov-69 607 B K SAWANT EXE OPS OFFICER 3,158,380 BA 31 17-Oct-73 55 G. B. M. S. WORLI DAIRY8 B R S NARAYANA RAO SR. MANAGER AUDIT 2,707,752 BCOM, ACA 15 5-Jul-89 41 BEST & CROMPTON ENG LTD.9 BABU RAO S MAINT. TECH. 1,815,175 MATRIC NTC 37 9-Feb-68 55 UNPAID BLACKSMITH APPRENTICE

(BLACKSMITH)10 BADLANI L N CHIEF ADMIN. ASST. 2,044,064 SSC 32 19-May-72 56 GREAVES COTTON & CO. LTD.11 BALAN T K CH MANAGER CS & P 3,016,939 BE (ELCT & ELC 30 1-Feb-75 56 BOMBAY FOOTWEAR PVT. LTD.

& TELE COMM)12 BALASUBRAMANIAN V SR MGR DEALER MGMT 2,418,716 MBSc DBM, MMS 34 13-Jul-70 57 BOMBAY TEXTILE RESARCH ASSN.13 BENWAL M C BOILER ATTENDANT (SG) 1,884,050 NON SSC 33 15-Nov-71 5314 BHATIA R G MANAGER ADMINISTRATION 3,106,425 DME DEE 30 1-Feb-75 56 V.D. STEEL ROLLING MILL15 BINAWADE M J SR RO MANAGER 2,811,290 BSC ENGG 24 24-Jun-80 SHRI DNYANESHWAR SAHAKARI

(CHEM), MBA KHANDSARI UTPADAK SANSTHA LTD.16 BISWAS JANAKI B MGR-LPG 2,954,658 LIC MECH ENGG 23 24-Aug-81 45 JANAKI BROTHERS17 CHANDRA SEKHAR K V DY MGR VIGILANCE 2,048,599 BE ELEC 15 21-Jan-90 3618 CHITNIS P V DY MGR 3,015,179 BCOM 29 1-Dec-75 50 INDUSTRIAL & AGRI. ENGINEERING CO.19 CHODANKAR H D SR PLANT OPERATOR(SG) 1,972,773 SSC 31 24-Dec-73 5220 DALAL V R JR ADMIN. ASST. 1,800,881 SSC 28 1-Apr-76 5321 DEORI MAHESWAR MANAGER INSTALLATION 2,533,567 BA 22 17-May-82 4322 DHAMODARAN J DY MGR ENGG & PROJECTS 2,092,202 BE CIVIL 16 9-Jan-89 40 M SUBRAMANYAM23 DSOUZA CHARLES L DY MGR FIN 2,856,370 BCOM 33 22-Jan-72 5624 DSOUZA H B S. MGR PIPELINE OPERAT 2,516,475 DME DIP IN IND/ 30 1-Feb-75 58 CHEMO PHARMA LABS LTD.

FAC MGT(C)25 DUBEY R R CHIEF ADMIN. ASST. 1,987,927 BSC 31 17-Sep-73 5426 DUTTA SUBHASH CH SR PLANT OPERATOR 750,229 NON SSC 40 23-Sep-64 6027 DVS RAVIKUMAR DY MANAGER-PROJECTS 2,037,839 B TECH MECH 15 20-Oct-89 3828 FERNANDES JOSEPH V SR PLANT OPERATOR 1,974,771 SSC 33 11-Oct-71 5429 GHODKE B S SR MANAGER-VREP OPNS. 3,177,012 BSC 27 1-Jul-77 5530 GOPALAN SAKULAN CHIEF RG-MGR 2,423,164 DIP IN ELCT & 23 10-Nov-81 49

TELE COMM31 GOYAL RAM KUMAR SR REGIONAL MANAGER 3,092,927 B.E (MET) 22 1-Sep-82 45 STERLING STEELS & WIRES LTD.32 GUNSEKARAN V MGR RETAIL 2,688,426 BE (MECH), MMM 20 8-Oct-84 4433 GUPTA ALOK SR ACCOUNTS OFFICER 290,488 B COM, ACA 6 17-Aug-98 29 THE MEHSANA DIST CO-OP MIL PRODN.34 GUPTA M L CHIEF ADMIN. ASST. 658,253 SSC 41 23-Jan-64 6035 HAROLD BORGES SR ADMIN ASST. 1,990,914 SSC 31 1-Oct-73 5436 HORO LUCY CHIEF ADMIN. ASST. 1,900,215 BA 24 24-Oct-80 4837 ISAAC JACOB V DY MANAGER OPERATIONS 2,467,872 BSC ENGG (MECH) 20 8-Oct-84 44 WATER & WASTE WATER AUTHORITY38 JOSEPH G SR OPNS OFFICER 2,566,486 BA 29 24-Mar-76 55 M/S. DISTILLERS TRADING CORPN LTD.39 JOSHI SUBHASH EKNATH DY MANAGER FIN 2,291,481 SSC/SSLC 33 1-May-71 5640 JOSHUA K V IT ASSISTANT 544,512 SSC 21 5-Oct-83 6041 JYALA MANOHARSINGH S SR MOBILE OPT(SG) 2,024,886 SSC 33 15-Dec-71 5442 KADOLKAR M D SR MGR SECURITY 3,078,702 M.SC, M PHIL 25 9-Oct-79 5343 KEDARE SHANTARAM C SR PLANT OPERATOR 513,601 SSC 36 26-Aug-68 6044 KELSHIKAR S H CH ADMINISTRATIVE ASST 2,039,002 SSC 30 1-Oct-74 5045 KOHLI RAKESH DY MANAGER 2,362,245 BE (MECH), 19 3-Oct-85 41

MASTER ININTL BUSS

46 KOLI R M EX OPNS OFFICER 2,813,321 BA 28 5-Jul-76 5547 KOTIAN HARISHCHANDRA C SR MOBILE ASST. 471,057 NON SSC 33 4-Nov-71 5248 KOTIAN P C SR MOBILE OPT(SG) 308,818 NON SSC 30 1-Oct-74 5649 KRISHANKUMAR DEPOT MANAGER 3,054,455 MSC 32 1-Nov-72 5650 KRISHNAMURTHY V DY MANAGER 2,398,026 BE (INSTRU) 20 5-Nov-84 4451 KRISHNAN R DGM LPG PROJECTS 3,377,948 DME 26 3-Aug-78 56 ASHOK LEYLAND LTD.52 KULKARNI R B SR TECH OPT(SG) 2,120,646 HSC/INTER/PUC 31 17-Sep-73 5553 KUMAR ALOK EX SALES OFFICER RETAIL 2,052,156 M SC 15 2-Jan-90 3854 M K HAYATKHAN SR PLANT OPERATOR(SG) 1,938,273 SSC 33 6-Sep-71 5255 MAHADEV GUMMA SR MGR ERP 2,966,433 BE (MECH) ME(IE) 21 16-Jan-84 48 HYDERABAD ALLWYN LTD.56 MALEKJEE N T DY MGR ACCOUNTS 3,252,751 BCOM 27 1-Mar-78 4957 MHATRE U N MGR QUALITY CONTROL 2,458,102 BSC 28 1-Jul-76 57 M/S. SAVITA CHEMICALS PVT. LTD.58 MICHAEL M CHIEF MANAGER HR 3,212,516 MA 23 9-Mar-82 51 DREDGING CORPORATION LTD.59 MOHINDER SINGH AULAKH MANAGER SH & E 1,891,537 BE (MECH) 20 8-Oct-84 43 GOETZE (INDIA) LIMITED60 S R WAGH DY MGR FIN 2,326,395 BA, LLB 23 7-Aug-81 45 M/S. ISHWARLAL & CO. LTD.61 N S BALA SR MOBILE ASST (SG) 494,137 NON SSC 31 1-Aug-73 6062 NARENDRANATH S DY MGR CORPORATE 1,820,212 BA 19 12-Jun-85 4363 NARESH KUMAR PATEL MGR INSPECTION 2,195,825 BE (MECH) 15 2-Jan-90 3864 NAVAROJI N DY MANAGER OM & S 2,083,955 HSC/INTER/ 26 20-Dec-78 58

PUC, BA65 NAYAK SHUBHADA K CHIEF ADMIN. ASST. 1,901,126 BA 24 12-Mar-81 50 CHIDAMBARAN MULRAJ & CO. LTD.66 NUNES P T SR PLANT OPERATOR(SG) 1,826,460 SSC/SSLC 30 1-Oct-74 5167 PADHI BALAKRISHNA PRINCIPAL MDI NIGDI 3,150,345 BSC, PG (PM & IR) 21 7-Feb-84 51 THE TATA IRON & STEEL CO. LTD.

Sr. Name Designation/ Remuneration Qualifications Exper- Date of Age Last EmploymentNo. Nature of Duties (Rupees) ience Joining

(Years)

1 2 3 4 5 6 7 8 9

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(Years)

1 2 3 4 5 6 7 8 9

68 PADMANABHA S CHIEF INSTALATION MGR 3,411,513 BSC, M.TECH (MECH) 26 30-Aug-78 5669 PANDHARE S L SR ACCOUNTS OFFICER 1,935,019 BCOM, L L B 20 18-Mar-85 4370 PANDIT AMAL K SR MAINT TECH 345,040 NON SSC 21 3-Oct-83 6071 PANIKAR V P EXEC CUSTOMER CELL OFF 2,405,308 BSC 30 9-Dec-74 57 EASTERN PETROLEUM PVT. LTD.72 PAWAR W S MANAGER 2,868,372 BA 27 1-Feb-78 5173 P K DAMODARAN MANAGER HR 3,441,089 MA, BL, DPM 26 6-Dec-78 5474 PRADHAN MANOJKUMAR SADA SR ACCOUNTS OFFICER 237,647 BCOM, ACA 6 7-Dec-98 30 K S AIYER & CO.75 PUNEGAR J Y DGM - SAFETY&INSP 3,079,170 LEE 30 1-Feb-75 57 RALLIES INDIA LTD.76 PURI N K DIRECTOR MARKETING 1,415,175 DME 41 3-Feb-64 6077 RAMNATH K DGM - DS LUBES 2,963,979 BTECH (CHEM) 29 31-Oct-75 55 PLASTIPEEL CHEM & PLASTICS PVT. LTD.78 RAMNATH R PHARM./COMPOUNDER 2,131,846 SSC, DIP IN PHARM 31 11-Jun-73 55 WOCK HARDT PHARMACEUTICAL79 RANI DASARI USHA EX SALES OFFICER 2,227,296 B COM, MBA (FIN) 16 9-Jan-89 3880 RANJIT KUMAR DASH DY MGR FIRE & SAFETY 2,108,926 BSC, BE (FIRE) 16 13-Feb-89 3981 RATHOD J T CHIEF ADMIN ASST 1,880,657 BSC 24 7-Apr-80 5082 S CHANDEKAR MANAGER FINANCE 3,559,334 BSC 29 11-Dec-75 54 FOOD CORPOATION OF INDIA83 SAHA SUSAN PAUL EXECUTIVE SALES OFFICR 2,035,384 BTECH (CHEM) 19 10-Oct-85 4384 SAILESH COUSIK CHIEF MANAGER 3,043,082 BCOM, ACA 18 24-Mar-87 41 LOVELOCK & LEVIS85 SAWILANI B V CHIEF PROJECTCOORD MGR 3,576,280 BE (MECH) 29 12-Nov-75 55 HINDUSTAN STEEL CORPN.86 SEBASTIAN ARUN EX SALES OFFICER 2,242,958 MA 29 25-Aug-75 52 UNICORN INDUSTRIES87 SHAH V M CH MANAGER - ADMIN 2,395,454 DME 36 18-Nov-68 58 M/S. NATIONAL ORGANIC CHEMICAL

INDUSTRIES LTD.88 SHIRISKAR A S MGR INSTLLN 2,970,112 BSC 24 16-Oct-80 52 ESSO CAR CARE CENTRE89 SHRIVASTAVA A K EX SALES OFFICER 2,093,751 MA 25 1-May-79 57 INDUSTRIAL ENTERPRISES90 SINGH B P MANAGER-TECH 748,891 B TECH (CHEM) 17 13-Mar-89 39 ASIAN PAINTS91 SINGH PRABHAT KR EXEC OPRNS OFFICER 2,220,200 BSC ENGG (MECH 20 5-Nov-84 4592 SINGH RAM DY MANAGER 1,911,527 MA 21 21-Apr-83 56 DIRECTOR C.H.D. (M/EDUCATION)93 SINGH SUMER EXEC OPRNS OFFICER 2,471,167 BA 26 19-Oct-78 5594 SISAUDIA SANJEEV SR REG MGR 764,708 BSC, DBM 22 12-Nov-82 4595 SRINIVASARAO K DY MANAGER-TECH 2,006,675 B TECH CHEM 15 20-Oct-89 3796 SRIRAM S DY MGR 2,352,981 BE (CHEM) 19 17-Jul-85 42 WESTERN RAILWAY97 SUHAS KATE MGR-F&S 2,534,312 BSC 19 19-Nov-85 4998 SULE DILIP VINAYAK MGR INSTALLATION 2,651,783 B.SC, M.SC 35 10-May-69 5799 TOMY VARGHESE SR REG MGR 3,228,296 BSC 22 1-Sep-82 45100 TULASIRAO I S SR SUPDT QC 2,034,263 BSC 24 17-Jul-80 52 UDC OF CENTRAL EXCISE101 VASUDEVAN V MGR SHARES 2,279,335 B.COM 35 14-Jul-69 58 INDIAN COTTON MILLS FEDERATION102 VIDYA SAGAR Y EXEC OPRNS OFFICER 2,238,770 B TECH (CHEM) 19 20-Jan-86 44103 VIJAYAKUMAR P EX OPRNS OFFICER 2,350,198 BSC 22 1-Sep-82 45104 VIJAYAN T V DY MGR INSTALLATION 2,733,604 BCOM 32 23-Apr-72 55 CHETTINAD CEMENT CORPN., MADRAS105 VIJAYARAM K MGR LPG SALES 3,004,599 MA 22 29-Jun-82 48 M/S SHRI VENKAT RAGHAVA RICE CO.106 VINAYAKARAO P MANAGER-SHIFT CO-ORD 890,076 SSC/SSLC 41 1-Jun-63 60107 VINOD B S DY MGR I&G 949,074 B TECH (ELECT) 21 16-Jan-84 45 M/S STANDARD BATTERIES LTD.108 WAGLE M H MGR FINANCE AND ACOUNT 3,216,824 B.COM 28 20-Sep-76 50 TATA VIDYUT KARAYALAYA109 WORLIKAR BHARATI S CHIEF ADMIN ASST 1,927,086 BA 23 20-Nov-81 50 NEW EVEREST ENGG WORKS110 MAINKAR PURNIMA PRASHANT MANAGER ADMN 2,234,510 BA,DIP IN HOTEL 26 5-Jan-79 51 HOTEL CENTAUR

MGMT & CATERIN111 PATIL BHASKAR SOMAJI MANAGER - MINOR PROJECTS 2,951,985 BE (MEHANICAL) 22 11-Aug-82 51 M.S.E.B., KARADI112 PATHROSE A G DGM-HR (MR) 2,313,109 BSC, LLB,PG (PM&IR) 19 28-Feb-86 59 SKOL BREVERIES LTD.113 M SHANMUGAM MGR - G’AGE/SCRAP DIS 2,228,079 BE (MECHANICAL) 17 28-Dec-87 40114 DIVEKAR B V DGM-OPNS (LR) 2,251,802 BSC,DIP IN ORM 36 14-Oct-68 60 M/S. POLYOLEFINS INDUSTRIES LTD.115 REGE SATISH VINAYAK SENIOR MANAGER - 2,032,412 BSC 34 6-Jan-71 59 NATIONAL PEROXIDE LTD.

T&D & PLANNING116 SHENOY U U CH MGR-PRODN 2,945,049 BSC 34 6-Jan-71 58 M/S. POLYOLEFINS INDUSTRIES LTD.117 WAGLE SUBHASH DY MGR-PRODN 2,095,022 BSC 34 6-Jan-71 59 POLY OLEPHINS INDUSTRIS LTD.

BHALCHANDRA118 MHATRE DINESH DHARMAJI MANAGER - PROJECTS 2,869,117 SSC/SSLC,ITI/ 33 3-Jun-72 57 CARBIDE CHEMICALS CO. ANIK

NCTVT MACHINIST119 BUDDHISAGAR A D SENIOR ENGINEER - 3,018,477 SSC/SSLC,ITI 33 3-Jun-72 55 AIR INDIA LTD

MAINTENANCE120 BHIDE VILAS BALKRISHNA MGR-ROTARY 3,902,034 SSC/SSLC 33 3-Jun-72 54 KAMLAKAR ELECTRIC WORKS121 KHEDKAR VIJAYKUMAR SR ENGR-MNTC 2,930,919 SSC/SSLC,ITI/ 33 3-Jun-72 53 STANDARD REFINING COMPANY

VISHVANATH NCTVT MACHINIST122 KANEKAR VIKAS SHRIKANT DEPUTY MANAGER - 3,249,291 SSC/SSLC,ITI 33 3-Jun-72 56 F.C.I. LTD., TROMBAY UNIT, MARVLI

MAINTENANCE123 MANKAR D M DY MGR-MNTC (ONSITE) 3,259,471 SSC/SSLC 33 3-Jun-72 56 SAURSHTRA ENGG. PVT. LTD.124 AMRE MADHUSUDAN DY MGR-PRODN 2,054,020 SSC/SSLC,ITI/ 33 3-Jun-72 59 NATIONAL ORGANIC CHEMICAL LTD.

DOULATRAO NCTVT-ELECTRICAL125 CHAUGULE GAJANAN DY MGR-PURCHASE 1,833,433 BSC,DMM 33 16-Aug-72 59 BELL PHARMA

KASHINATH126 KARDILE SHIVAJI DHARMAJI MANAGER - MATERIALS 1,914,243 DME 32 18-Dec-72 59127 WADEKAR DIVYAKANT SR MGR-W/SHOP 3,929,805 DME 32 15-Dec-72 55 NATIONAL RAYON CORP. LTD.

DATTATRYA128 PATANKAR V D CHIEF MAINT TECHNICIAN 2,025,895 HSC/INTER/PUC 31 9-Nov-74 54 LUBE INDIA LTD.129 SUNDARAM R SR MGR-LR UNITS 3,248,440 BSC 29 11-May-75 57 CALICO CHEMICALS130 PAI V G DY MANAGER - CANTEEN 3,015,561 BSC 29 11-May-75 54 LUBRI CHEMICAL INDUSTRIES RAI.

BHAYANDER (W. RLY)131 MATHURE M P SENIOR ENGINEER - 2,360,068 ITI/NCTVT 29 17-Nov-75 57 BHARAT BIJLEE

MAINTENANCE MACHINIST132 MINOCHER BEJAN MGR-PRODN 2,929,351 BSC 29 17-Nov-75 53 FRAMROZE, CAMA & CO.133 KUBAL Y S CHIEF ACCOUNTS ASST 2,066,898 B.COM 29 27-Jan-76 53 M/S. KONKAN MINERALS134 PANCHAL JITENDRA DY MGR-OM&S 3,184,468 BSC,CERT 28 7-Jan-77 53 RADIO INDUSTRIES

HARKISHAN PROGRAMME(COMP APPLN)

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(Years)

1 2 3 4 5 6 7 8 9

135 GANESAN R CHIEF ACCOUNTS ASST 1,928,876 BSC 27 7-Mar-78 52 ECONOMIC CONSTRUCTION COMPANY136 KARGUTKAR RAVINDRANATH DY MANAGER - PROD 2,566,802 SSC/SSLC, 23 4-May-82 51 TUBE WELD ENGG, WORKS (P) LTD.

MANOHAR BOILER PROFICIENCY137 SHETTY D V DY.MGR.- MNTC 2,516,436 SSC/SSLC,DME 23 7-Jan-82 53 M.H.SABOO SIDDIK POLYTECH138 DABADGHAV S V MANAGER - FINANCE 2,264,242 B.COM 33 17-Jul-72 58 KIRLOSKAR OIL ENGINES LTD.139 VAIDYA PRAKASH UDHAV MANAGER - UTILITIES 1,966,863 BSC 37 7-Jan-68 58140 PATTEKAR VILAS V SENIOR MANAGER - 2,351,644 BSC 37 7-Aug-68 59

SHIFT CO-ORDINATOR141 BABAR S B FORKLIFT OPTR/DRIVER 1,990,305 NON SSC 32 9-Mar-73 53142 GAIKAR B V DEPUTY MANAGER - 3,262,209 SSC/SSLC,ITI/ 31 1-Jan-74 55 ESSO STANDARD REFINARY CO.

MAINTENANCE NCTVT MACHINIST OF INDIA LTD143 SANGARE D D CHIEF MAINT TECHNICIAN 2,063,453 NON SSC 31 3-Jan-74 56 ESSO COOP. STORES, ESSO NAGAR (WEST)144 MENEZES W CAR DRIVER 1,841,166 NON SSC 31 3-Jan-74 56 ESRC CANTEEN145 GORE P M CHIEF DRAFTSMAN 2,265,214 SSC/SSLC 30 2-Mar-75 55 HUMPHREYS & GLASGOW CONSULTANTS

PVT. LTD.146 RANE D S CHIEF MAINT TECHNICIAN 2,215,588 30 4-Jul-75 55 HINDUSTAN PETROLEUM PUMP147 PATEL B C ENGINEER - MAINT 2,446,314 SSC/SSLC 30 5-Feb-75 57 M/S. ECONOMIC CONSTRUCTION

COMPANY148 RANADIVE KIRANCHANDRA MANAGER MAINTENANCE 3,253,480 SSC/SSLC, 30 7-Jan-75 53 PLA - ELECTRO APPLIANCES

DATTATRAY LICENSIATE IN ELEC.149 MAZGAONKER J N CHIEF DRAFTSMAN 2,391,221 DME 30 15-Sep-75 56 INDUSTRIAL CONSULTING BUREAU150 KHADTARE S M CHIEF PROCESS TECHNICIAN 2,088,056 SSC/SSLC 30 21-Sep-75 51 S.O.M.C. LUBE REFINERY151 D'SOUZA H CHIEF ACCOUNTS ASST. 1,837,974 BA 29 10-Jan-75 57 MR. WILLIAM SERRAO, WILLIAM’S

CLASSES152 CHAUHAN S R S CHIEF PROCESS TECHNICIAN 2,172,083 SSC/SSLC 29 12-Jan-75 54 H.P.C. LUBE REFINERY153 SHAH SHIRISHKUMAR CH MGR-PROJS MTLS 3,545,785 BE (MECHANICAL) 28 28-Feb-77 56 SWASTIK H & J P LTD.

BHOGILAL154 BANDEKAR SUBHASH SENIOR MANAGER - 3,508,951 BSC 29 7-Jan-76 55

SAKHARAM NEW PROJECTS155 SUVARNA SANJEEVA KADYA DEPUTY MANAGER - 2,203,004 SSC/SSLC 28 3-Nov-77 57 S. DIAS & COMPANY

MAINTENANCE156 VARTAK S D CHIEF DRAFTSMAN 1,852,083 ITI/NCTVT - 28 6-Jan-77 58 I.C.B. LTD.

DRAFTSMAN157 SAWANT D S DEPUTY MANAGER - P&A 2,582,449 BSC 27 7-Mar-78 53158 PRADHAN SANJAY SURYAKANT DY MGR-QUALITY CONT 2,553,902 BSC 25 12-Mar-79 50 P2 & ASSOCIATES159 KASHID D M DY MGR - QC 2,687,641 BSC,LLB,Dip in 24 2-Feb-81 51 CADICO CHEMICALS PLASTIC DIVISION,

PRODUCTION ENGG ANIK160 DESHMUKH ANIL MADHUKAR MANAGER - SECURITY 2,599,764 BA,DME 24 6-May-81 58 INDIAN AIR FORCE161 RAJARATHINAM T SENIOR MANAGER - 3,039,143 BE (MECHANICAL) 24 24-Aug-81 47 M/S. HINDUSTAN ORGANIC CHEMICALS LTD.

CES CONSTRUCTION162 PANCHBHAI RAJENDRA B DEPUTY MANAGER - 2,049,666 BSc Engg (MECH.) 16 1-Sep-89 39

MAINTENANCE163 ALMEIDA LYDIA A CHIEF SECRET. ASST. 1,964,258 SSC 38 8-Feb-67 56164 BHAT P S MANAGER MATERIALS 1,265,382 DME 36 18-Nov-68 60 THE INDIAN SMELTING & REFINING CO. LTD.165 CHAUDHARY V R DY MANAGER FINANCE 1,056,777 BA, LLB 36 8-Jun-68 60 CENTURY SPINNING & MFG. CO. LTD.166 CHOUDHARI H R DY MANAGER PRODUCTION 727,027 SSC 30 11-Sep-74 52167 CHOUGULE P A LPG OPERATOR(SG) 1,908,171 BSC CHEMISTRY 33 27-Mar-72 54168 DSA DINA CHIEF ACCOUNTS ASST. 2,122,058 BSC 26 20-Dec-78 49169 MANIKPURI RUKDEO DAS MAIN TECH 251,840 SSC,EME 19 16-Sep-85 60 INDIAN ARMY170 PATIL B V CHIEF ADMIN. ASST. 343,570 BA 23 12-Nov-81 48171 PATIL SURGONDA MALGOND SR. ADMIN ASST. 2,089,272 BA 30 10-Oct-74 53172 SANDHI MOHAMMED HUSSAIN SR ACCOUNTS ASSISTANT 2,106,143 SSC 33 11-Oct-71 52 KURLA RUBBER FACTORY173 SHANBHAG D R CHIEF ADMIN. ASST. 2,005,447 SSC 36 11-Nov-68 56174 TATKARE L P SR ENGG MAINT 1,094,642 SSC, ITI/ 32 2-Oct-72 60 INDIAN AIR FORCE

NCTVT MACHINIST

1. Employees listed in the statement were employed for part of the year and were in receipt of remuneration at the rate of not less than Rs. 2,00,000/- per month.2. Employment in the corporation is non-contractual.3. Employment provides for termination of services by either party giving one month’s notice.4. None of the employees are related to any of the Directors.

ANNEXURE - V

Statement showing Women Employees as on March 31, 2005

Group Total No. of No. of Women % of WomenEmployees Employees Employees

A 3562 219 6.15

B* – – –

C 6348 419 6.60

D 651 27 4.15

Total 10561 665 6.30

*HPCL has no posts classified under group ‘B’ as the entry in non-management grades has been re-classified in group ‘C’effective 1.1.1994.

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Management Discussion & Analysis Report

ECONOMIC SCENARIO

The Indian economy recorded a growth of 6.9% in 2004-05, a commendable per formancegiven that it registered the decade’s highest growth rate of 8.5% in 2003-04. The Economyhad to contend with a deficient South-West monsoon, hardening commodity prices as well asdamage caused by the tsunami on the east coast of the country. Crude oil prices witnessedthe most dramatic rise in the past year, with the average price per barrel of the Indian Basketcrude rising from $32.2 per barrel in March, 2004 to $49.3 per barrel in March, 2005. Theinternational crude oil markets have witnessed fundamental change in the demand-supplyscenario. The demand of the Asia Pacific Region continued to surge ahead of the demand ofwestern nations. The huge increase in demand across the globe and inability of supply tokeep up to the demand played a major role in the rise of the crude oil prices. Price movementswere impacted further by the concerns about the insecurity of supply due to natural calamities(like Hurricane Ivan in Gulf of Mexico) and geo-political tensions including terrorism andstrikes in producing countries. The Stock Market Sensex moved from 5655 points in April2004 to a peak of 6493 points in March, 2005. This reflected the confidence of the investingpublic on the corporate sector and the buoyancy of capital markets boosted the avenues formobilisation of resources from investing public.

Agriculture sector growth is expected to be at 1.1% in 2004-05 against almost 10% growthin 2003-04. Deficient rainfall to the tune of 12% below long period average was the mainreason for this poor performance. Advance estimates indicate that Industry grew at 7.8% in2004-05, the highest growth recorded in the last eight years. In the industr y sector,manufacturing GDP is estimated to have expanded by almost 9% in 2004-05 against 6.9%growth in 2003-04. The Services sector is projected to have maintained its growth momentumat 8.9% compared to 9.1% growth in 2003-04.

Petroleum product consumption increased by 3.7% in 2004-05 maintaining almost the samegrowth rate as last year. Diesel consumption grew by 7% against a marginal growth of only1% in 2003-04. Petrol demand continued to grow at about 4% as in 2003-04. Naphtha andATF were two of the fastest growing products in 2004-05. Naphtha consumption increasedby 18% on the back of new petrochemicals capacity. Naphtha consumption had actuallydeclined in 2003-04. ATF consumption had grown at 9.4% in 2003-04, in the backdrop ofairline industry growth and continued to grow in 2004-05, registering a growth of 14.2%.Bitumen consumption declined substantially dropping from 13% growth in 2003-04 to 1%decline in 2004-05. SKO and LDO consumption too continued to decline in 2004-05.

On the external front, exports recorded a growth of 24.1% in 2004-05 on top of 21% growthseen in 2003-04. Iron ore, manufactures of metals, primary and semi-finished iron and steel,transport equipment, plastic and linoleum products and petroleum and crude products werethe key drivers of exports growth. Exports of petroleum products increased by 20% in 2004-05, rising from 14.6 MMT in 2003-04 to 17.5 MMT in 2004-05. In value terms, petroleumproduct exports went up by 75% in 2004-05. Realisation was $6.3 billion in 2004-05 against

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Management Discussion & Analysis Report (Contd.)

$3.6 billion in 2003-04. Imports went up by 37% in 2004-05 with POL imports increasing by45%. Foreign exchange reserves stood at $135.14 billion at the end of the financial year, anaccrual of $27.4 billion over reserves in 2003-04.

The inflation rate was higher at 6.7% in 2004-05 compared to 5.4% in 2003-04. Fuel groupexhibited an inflation rate of 10% due to increase in prices of coal and petroleum products.

Projections indicate that the economy is likely to grow at around 6% in 2005-06. The continuedupward trend in the capital market would support further growth in economic activity. Theindustrial sector is expected to lead the growth followed by services. The Agricultural sectormay not do so well due to delay in onset of monsoon. The Oil sector is, therefore, expectedto fare well next year also.

SECTOR OVERVIEW

Downstream oil sector in the country faces a positive demand environment basis a goodeconomic growth. Petroleum products consumption in the country was around 111 MMT in2004-05, a growth of 3.7% over 2003-04. On the supply side, however, refining capacity, ataround 132 MMT, continues to outstrip demand. As a result, nearly 18 MMT petroleumproducts were exported. Despite this surplus, refining margins have been good due to tightdemand-supply balance in Asian region. China has been the growth story in the region with oildemand growing at 8% and accounting for almost 80% of incremental demand in the Asianregion in 2004. Oil consumption in Asia in 2004 was around 23.4 million barrels per day(mb/d) vis-à-vis refining capacity of 22 mb/d.

A corollary of high demand has been high oil prices. In 2004, the global demand for oil roseby 2.46m barrels a day – an increase of 3.4 per cent. This is both the fastest rate of growthand the largest absolute increase since 1978. High demand coupled with tight supply chain,alongwith factors such as speculative funds, stretched production capacities, limitedcomplexities of Indian Refineries etc. caused prices to rise above $50/bbl. Oil MarketingPSUs recorded lower profits due to wide gap between the crude and product prices, lowermargins on Diesel and Petrol and had to bear the burden of subsidies on products like LPGand Kerosene. It must be noted that these four products constitute 70% of the Indianpetroleum product basket. This has af fected the revenue realisations of the marketingcompanies.

The private oil companies have gained a market share of around 2.6% in retail sales of dieseland petrol. The gain has been larger in the diesel segment as private companies haveconcentrated largely on highway sales. Private oil companies accounted for 1 MMT of the2.5 MMT incremental retail sales of MS and HSD in 2004-05.

The country’s second LNG terminal was commissioned by Shell in Hazira, Gujarat. This hasaugmented the availability of gas in the western region of the country. Naphtha consumptionin the western region has gone down in 2004-05 due to greater gas availability.

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The new auto-fuel policy announced by the Government of India mandated Euro-III emissionnorms for eleven major cities with effect from April, 2005. These emission norms requirechanges in petrol and diesel quality including reduction in sulphur limits. Indian refiners areinvesting heavily in projects to produce products that conform to new standards.

All these developments point to an increasingly competitive industry that has to attain a finebalance between high raw material costs, increasing costs relating to environmentalcompliance, greater expenditure to meet new competition and lower realisation from finishedgoods. HPCL has been following a differentiation strategy to retain and expand its sales.Branded fuels like Power and Turbojet have been introduced. Customer experience at theretail outlet is sought to be improved under the aegis of “Club HP”. Attention is beingfocused on hitherto relatively neglected rural markets. New opportunities opened throughexpansion in sectors such as aviation are being pursued vigorously. Projects are underway toimprove efficiency of the supply chain so as to optimise costs.

MOU PERFORMANCE :

The Corporation each year signs a ‘Memorandum of Understanding (MoU) with Government ofIndia through its Administrative Ministry. MOP&NG regarding performance targets that areto be achieved by various functions in the Corporation for each financial year. The Corporationhas been achieving an all round “Excellent” rating on its performance vis-à-vis MOU targetsfor thirteen consecutive years upto 2003-04 as a result of the concerted efforts of all theemployees. The performance of the Corporation in the year 2004-05 also received “Excellent”rating.

PHYSICAL AND FINANCIAL PERFORMANCE

The turnover during 2004-05 is Rs. 64690 crores as compared to Rs. 56333 crores in2003-04 showing 14.8% increase. The marketing volumes achieved were the highest ever at19.27 MMT as compared to 18.62 MMT for the previous year and our Mumbai Refinery andVisakh Refinery together recorded the highest ever throughput of 13.94 MMT as compared to13.70 MMT for the previous year. On the refining front the average margins for the year havegone up to $5.30 per barrel from the earlier years of $4.45 per barrel. The growth trend inMS/HSD our main product line have been successively increasing by registering highestgrowth rates in the industry. Similarly the Aviation and Lubes business line have also madedistinct impact in terms of value and growth in the market.

Despite significant physical performance in terms of increased Refinery thruputs, increasedRefinery margins, increased Refinery Sales Volume, the Corporation recorded a lower netprofit of Rs. 1277 crores as compared to the net profit of Rs. 1904 crores for the financialyear 2003-04. The main reason for HPCL’s lower profit for the year was due to the widemismatch between the crude and product prices and the need for the Corporation to bear theburden of subsidies on products like Kerosene and LPG. A portion of the subsidy impact wasalso shared by the upstream companies.

The various initiatives of our different SBUs as highlighted herein are aimed towards sustainingprofitability and future growth.


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Crude thruput and Capacity utilisation

HPCL refineries achieved the highest ever combined crude thruput of 13.94 MMT as againstprevious best thruput of 13.7 MMT achieved during 2003-04.


REFINERIES

Shri A.S. Rao,General Manager -

(I/C), Visakh Refinery

Shri V.D. Mahajan,Executive Director -

Refinery Coordination

Shri P.A.B. Raju,General Manager -

Operations,Visakh Refinery

Shri G.A. Shirwaikar,Executive Director -

International Trade &Supplies

Shri B.K. Namdeo,General Manager -

Projects,Mumbai Refinery

Shri D.K. Deshpande,Executive Director -

Mumbai Refinery

Shri K.V. Rao,General Manager -Finance, Visakh

Refinery

Shri A.B. Sathe,General Manager -International Trade

Shri S.C. Mehta,General Manager -

Operations,Mumbai Refinery

Refineries Team

Sulphur Recovery Unit at Mumbai Refinery

Mumbai Refinery (MR)

Mumbai Refinery achieved a Crude thruput of 6.12 MMT asagainst its installed capacity of 5.5 MMT, which representsa capacity utilisation of 111.2%. It achieved highest everFCCU thruput and production of LPG, MS, ATF and MTOduring the year. The distillate yield was 68.96% as comparedto 68.30% during 2003-04.

It also achieved highest ever GRM of $5.29/bbl againstprevious best of $4.26 per barrel in 2003-04. Fuel & lossrecorded was 6.57%, which was better than the MOU targetof 7.2%.

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Mumbai Refinery undertook debottleneckingof FCCU to improve thruput as well asdistillate yields. It has also initiated varioussteps like change in crude mix, optimisationof GTG firing/Boiler operations to improverefinery’s profitability.

Visakh Refinery (VR)

VR achieved highest ever crude thruput of 7.82 MMT as against the previous best thruput of7.59 MMT during 2003-04, which corresponds to 104.3 % capacity utilization of installedcapacity (7.5 MMTPA). It achieved highest ever DHDS thruput and production of Propyleneand HSD. The distillate yield was 75.3 % as compared to 73.9% for the year 2003-04. It alsoachieved lowest “Specific Energy Consumption” of 100.8 MBTU/BBL/NRGF during the yearas compared to previous best of 101.5 MBTU/BBL/NRGF during 2003-04. Specific EnergyConsumption has improved consistently during the last 5 years.

VR also achieved highest ever GRM of $5.09/bbl against previous best of $4.61 per barrelin 2003-04. Fuel and loss recorded was 6.12%, which was better than the MOU target of6.5%.

Visakh Refinery has also initiated steps to improve GRM like change in crude mix, optimisationof VBU operations, De-bottlenecking of LPG Merox Unit treating facility and crude receiptthrough VLCC to improve profitability.

Mumbai Refinery Green Fuels & Emission Control Project (MR-GFECP)

MR has undertaken this mega project at a cost of Rs. 1152 Crores (October ’02 price) toproduce the MS/HSD of EURO-III grade forsupplies in Metro/Mega cities and Bharatstage – II grade for supplies in the rest ofthe country.

The project when completed will also enhancethe refining capacity from current level of5.5 to 7.9 MMTPA. The major facilitiesproposed under this project are NHT/CCR,Isomerization unit, FCC GasolineHydrotreater unit with associated auxiliariesand revamp of existing CDU-I/VDUs and FCCUnits.


Shri S.C. Tripathi, Secretary to Government of India, MOP&NGinaugurating the Refinery Technology Meet. Also seen in thepicture is Shri M.B. Lal, C&MD

Golden Jubilee celebrations at Mumbai Refinery

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MR has already commenced production of BIS-II MS/HSD and EURO III HSD from January,2005 and May, 2005 respectively. EURO-III MS production/supply is expected to commencefrom the last Quarter of 2006, after implementation of on-going GFEC project. In the meanwhile,the Corporation is procuring EURO-III MS from industry sources for meeting the Mumbairegion’s demand till completion of GFEC project.

Visakh Refinery Clean Fuels Project (VRCFP)

Visakh Refinery is currently implementing this project at an approved cost of Rs. 1635crores (April '03 price) to produce the MS/HSD of EURO-III grade for supplying to Metro/Mega cities and Bharat stage – II grade for the rest of the country. Major facilities proposedunder this project are NHT/CCR/NIU/FCC NHT in MS block, Flue gas Desulphurization projectand revamp of existing FCCU-II & DHDS Units.

VR has commenced production of BIS-II MS/HSD & EURO III HSD from 1st January, 2005onwards. EURO-III MS production is expected to commence from the last Quarter of 2006,after implementation of this project. In the meanwhile Euro-III MS demand of Hyderabadregion is being met from the refinery by utilizing appropriate crude mix and blending ofstreams.


CDU MeroxTreating Unit at Visakh Refinery

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Major Maintenance initiativesby the Refineries :

Both the Refineries accordhighest priority to preventivemaintenance to avoid unplannedand emergency shutdowns. Thefollowing major initiatives weretaken by both the Refineries inthis area :

� Improved reliability ofequipment through strictadherence to PreventiveMaintenance (PM)schedules.

� Root Cause Failure analysisfor the critical equipmentand taken correctivemeasures to improve service factor of equipment.

� In-house Training Programs for Operation and Maintenance Crew on Pumps and MechanicalSeals to enhance pumps reliability.

� Detailed study of the rotary equipment sealing system and measures were taken toimprove the reliability.

Safety Awards

Mumbai Refinery

� Prestigious Oil Industry Safety Award (OISD) for the year 2002-03 for ‘Best OverallSafety Performance’ amongst Refineries for the 2nd year in a row.

� National Safety award 2003 for the lowest average weighted accident frequency rate forthe 3rd consecutive year (2001/2002/2003).

� National Safety award 2003 for achieving the largest number of Manhours without aFatal/Non-Fatal Accident/Total Permanent Disability.

Achievements

� MR commissioned the DHDS second reactor in service & commenced HSD productionconfirming to EURO-III norms.

� VR received ISRS Level-8 (International Safety Rating System) from M/s. DNV France.


Erection of a column at Visakh Refinery

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� Starting from June 2004 received four parcels of crude through VLCC with Lighterageoperations during 2004-05 and realised freight savings of approximately $0.7/bbl.

� VR improved crude basket by processing new Crudes viz. EA, Belayam, Seria Light andBenchmas.

� Commenced production of Euro-III, MS-HSD.

CRUDE OIL PROCUREMENT

HPCL’s two refineriesat Mumbai andV i s a k h a p a t n a mprocessed 13.94 MMTof crude oil during2004-05. Of this 3.75MMT was fromindigenous source,while the balancequantity of 10.19 MMTwas of imported crude.During the year, HPCLimported 6.67 MMT ofcrude on term contractbasis from M/s. SaudiAramco (Saudi Arabia),M/s. Somo (Iraq), M/s. Adnoc (U.A.E.), Petronas (Malaysia) and NOC (Libya), while thebalance quantity was purchased on spot basis.

For maximising margins at our Refineries, emphasis was laid on widening the crude basketso as to have an optimum choice from a variety of crude oils. Continuous attempts are beingmade to widen the crude basket and diversify the sources of supply. During 2004-05, 18 newcrude from Malaysia, Yemen, Libya, West Africa, Brazil and Equador were included in theacceptable crude basket and 5 new crude from Egypt, Nigeria, Thailand and Brunei wereprocessed in Visakhapatnam refinery.

MR/VR achieved higher GRMs in 2004-05 (MR-$5.29/bbl, VR-$5.09/bbl) vis-a-vis 2003-04(MR-$4.26/bbl, VR-$4.61/bbl) due to general buoyancy in international market caused bysurging demand led by China.

The change over of 1.0 MMT of AL/AM to Basrah improved refinery margins by Rs. 15crores per annum based on differential margins of about $0.3/bbl between Arab Light andBasrah.

During the year, 10.23 MMT of imported crude oil worth CIF value Rs. 13,787.98 crores was


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purchased. Towards minimising crude freight cost, four VLCC cargoes were finalised forVisakh refinery and the same were received after lighterage at Kakinada. This resulted infreight savings of Rs. 6 crores approximaely per cargo vis-a-vis direct discharge thru Suezmaxtanker. Efforts are being made with major Public/Private ports for installation of SPM facilitiesat Visakh for reducing the freight cost further by direct discharge of VLCCs.

On the exports front, a growth of around 20% in volume and 47% in rupee value terms wasachieved in 2004-05 as compared to the previous year. This year, over 730.16 TMT of bulkpetroleum products worth Rs. 1,425 crores were exported. Export incentives in the form ofadvance license were obtained against the exports made, which would enable duty freeimport of crude oil with CIF value of approximately Rs. 134 crores.

Oil Price Risk Management :

Steps have been initiated to build capabilities and develop skill to face the new challenges ofa deregulated market and the various new risks to which the corporation is now exposed. OilPrice Management project is one of the tools to cover such risk. This will help in protectingmargins for both refinery and marketing divisions and will also proactively address some ofthe corporate governance issues. The first phase of framing the policy is under way. Theproject will result in setting up of a trading desk and risk management activities are likely tocommence by the end of 2005-06.

8th Annual INDUSTRY PERCEPTION SURVEY of Asia/Pacific Petroleum Trading Companiesfor 2004

Annual industry perception survey of Asia/Pacific Petroleum Trading Companies is conductedby Applied Trading Systems, Inc., Houston. Applied trading system specialises in analysis ofthe developments in the petroleum industry and has been releasing daily reports on thepetroleum industry since 1988. Upon requests from clients, ATS has sponsored an annualIndustry Perception Survey which focuses on identifying the most effective Petroleum TradingCompany within Asia/Pacific. The first annual Industry Perception Survey for Asia/PacificRegion was conducted in 1997 and the 8th annual survey was conducted for 2004. The 8thannual survey included seventy nine (79) petroleum companies that have been nominated forconsideration and focused on 7 basic categories. This survey has been transmitted to over90 dif ferent organisations within Asia and the U.S. West Coast that are either directparticipants in, or service providers to, the Petroleum Trading Industry.

In the very 3rd year from commencement of trading activities, HPCL has been ranked as the4th best NOC Company (after IOC, Petronas & Sinopec) as per the Industry PerceptionSurvey of Asia/Pacific Petroleum Trading Companies for 2004. This is the first time HPCLhas figured in the first 5 companies nominated under any category.


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MARKETINGRETAIL BUSINESS

The Oil sector is undergoing a rapid change. Progressive deregulation of the sector hasprovided opportunities to large private players to enter into the fray and seriously worktowards grabbing their share of the market in the shortest possible time. The industry is,therefore, witnessing a scenario of increased competition and companies competingaggressively for the share of market.

The emerging challenges in Retail segments are; aggressive network development by newand existing players, price as a tool for competition, pressure on margins and volumes,increasingly demanding customers looking for greater choice, use of technology for providingdifferentiated services, dealer relationship, aggressive marketing and value for money offerings,all directed towards delighting the ultimate consumer.


Shri S.K. Biswas,Executive Director -Projects & Pipelines

Marketing Team

Shri S.P. Chaudhry,Executive Director -

Retail

Shri S.V. Sahni,Executive Director -

LPG

Shri K.R. Shankaran,Executive Director -

Direct Sales

Shri A.B. Thosar,General Manager -

Pipelines

Shri S.S. Mundle,General Manager -

Operation & Distribution

Shri R. Sudhakara Rao,General Manager -

North Zone

Shri B. Gururajan,General Manager -

South Zone

Shri A.B. Pai,General Manager -

East Zone

Shri M.S. Damle,General Manager -

West Zone

Shri S.K. Savla,General Manager -

Engineering & Projects

Shri Y.K. Gawali,General Manager -

LPG

Shri S.P. Singh,Deputy General

Manager - Aviation

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RETAIL SBU

Retail constitutes nearly 60% of HPCL’s business and, therefore, attracts special focus inthe organization. HPCL has a market share of nearly 24% amongst PSU Oil companies incombined petrol and diesel volumes.


Shri S.C.Tripathi, Secretary to Government of India,MOP&NG, inaugurating the first ever online DensityDisplay Unit at HPCL's e-fuel station in Bandra-KurlaComplex

A view of the "Hamara Pump" at Mananjeri, Tamilnadu

Retail SBU vision

HPCL has been gearing itself well in advance in the face of impending deregulation of Retailsector from April, 2002. An Organisational Transformation Exercise was undertaken in thecorporation for achieving continued excellence. The entire focus was to develop the Visionand Strategy to meet the stated and latent needs of the customers. The employees atdifferent levels participated and shared their aspirations. As a result, Retail SBU vision wascocreated which reads as under :

� Retail is the highest performer in sales growth over industry.

� Retail has sustained profitability through increased sales, ARB earnings, cost optimization,focus on branded fuels and branded lubricants and has the best return on investment.

� Retail delights customers by fulfilling their stated and latent needs with innovativequality products and services, competitive prices through its loyal and committed dealers.

� Retail has competent, committed and empowered people making the workforce challengingvibrant and happening.

� Retail team has sense of pride, mutual trust and camaraderie conducting business in afair, transparent and ethical manner.

To achieve the Retail Vision strategies were to be formulated. This was followed by formationof sub groups who spread across various market segments such as Highways, Car segment,

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2/3 Wheeler segment and Rural segment. They interacted with the customers and variousfocus groups to find out specific needs of the customers. Thereafter a Customer CentricGrowth Strategy was developed with focus on Absolute Customer Delight as unique valueproposition for each customer segment.

Retail Initiatives

Retail SBU has taken several pioneering initiatives in the Oil Industry and has many “Firsts”to its credit in the last 2-3 years.

� First to introduce branded diesel “Turbojet” in India.

� First to set up “e-fuel stations” in India through large scale implementation of RetailAutomation in line with international practices of quality thru quantity control.

� First to introduce “Exclusive Mobile Labs” to enhance the capabilities on quality checks.

� First to introduce the concept of “Mobile Dispensers” as a Rural initiative.

� First to set up low cost Rural outlets under the brand name “Hamara Pump”.

� First to launch “Drive Smart” a co branded fleet card focused on meeting the specificneeds of fleet operators/transport companies.

Retail Branding

HPCL has branded its Retail outlets under the name “Club HP” positioned on the platform ofproviding outstanding customer and vehicle care. More than 2250 outlets have been brandedand an aggressive expansion programme is in progress.


Retail Outlets

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Branded Fuels

The need of branded fuels has been greatly felt by customers with the rapid growth of newgeneration vehicles in the past few years. HPC has successfully introduced “Power” in thepetrol segment which is now available at more than 1200 outlets in the country. “Power”sales constitute more than 11% of total MS sales and growing rapidly. This is testimony tothe acceptance of this premium product by the customers. Similarly “Turbojet” was launchedin diesel segment and is available in more than 1400 outlets. Turbojet sales similarly constituteabout 7% of total diesel sales and are growing.

Loyalty Based Card Programme

In the continued efforts to build consumer loyalty, Retail SBU launched successfully a cardbased loyalty programme comprising of Credit cards/Debit cards/Smart 1 cards/Fleet cardsetc. The HPCL-ICICI co branded credit card has been recognised by VISA as the largest baseand fastest growing co branded card in South East Asia. In a short period of three yearsRetail SBU has acquired a customer base of over 2.5 million customers under the loyaltyprogramme. The total sales through these cards was Rs. 1336 crores during 2004-05.

Non Fuel Business

Retail has built a profitable non fuel business through wide range of value added facilities tocustomers. These include ATMs, take away food counters, vehicle accessories, courier servicesetc. through tie ups with reputed brands. 26 ATMs added during 2004-05, taking the totalnumber to 208 as of March 31, 2005.

NETWORK EXPANSION :

With the commissioning of 1163 retail outlets during 2004-05, which is highest among allthe Oil companies, HPCL has total network of 6667 Retail outlets as of 31.3.05.

As a part of Rural initiative, 385 “Hamara Pumps” were commissioned during 2004-05 takingthe total number to 392. Seeds, Pesticides and fertilizers are also being sold through selectRetail outlets, to the farmers, upgrading them as Kisan Vikas Kendras.

New Visual Retail Identity – “Project Aakarshan”

HPCL Retail SBU is the first to introduce the concept of New Visual Retail Identity to givefresh and attractive look to the Retail outlets. This has given world class look and appearanceto its Retail outlets which stand out in the Oil Industry.

Quality Assurance :

Retail SBU has taken several initiatives, many of them, first in the Industry towards qualityassurance under the banner of “Good Fuel Promise” at the Retail outlets.


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� 20 exclusive Mobile Labs were added during 2004-05. These labs have strengthened ourcapabilities of carrying out surprise checks at the outlets.

� Third party Surveillance Audit by M/s. Bureau Veritas was completed at 1303 Club HPoutlets during 2004-05 which has resulted in remarkable improvement in the quality andservice standards at the outlets.

� 363 Retail outlets received ISO certification during 2004-05, taking total number to 416as of March 31, 2005.

� Customer Satisfaction Index (CSI) was undertaken by the Regional Offices covering1633 Retail outlets across the country during 2004-05, as a mechanism to receivecustomer feedback and further enhance the service provided to the customers.

� Retail SBU has taken unique initiative in launching Quality/Quantity awareness campaignsunder the Club HP promise of Good Fuel Promise. More than 100 such campaigns havebeen conducted across the country.

Retail Automation :

HPCL has pioneered the concept of e-fuel stations in India having fully automated over 40Retail outlets in Mumbai/Vashi. Large scale expansion is being carried out covering morethan 400 additional sites with focus on Highways. Retail Automation is an internationalpractice for Quality Assurance through Quality control. It focuses on monitoring the stocks,sales and inventory controls at Retail outlets by capturing, collating and analysing all thetransactions electronically.

Vehicle Management System :

As a step towards ensuring quality of products during transportation to the Retail outlets,HPCL has taken the initiative to monitor tank truck movements on real time basis. Thesystem comprises of Global Positioning System (GPS), Global System for Mobile Communication(GSM) and a software which links GPS and GSM with the Geographical Information System(GIS). The System has been successfully piloted on 20 tank trucks and is being expanded toall the company owned tank trucks across the country in phase I.

Club HP helpline :

HPCL has introduced Club HP Helpline in 11 major cities in India through toll free number5500-5050 which facilitates the customers in receiving various information on HPCL Retailproducts, services and promotional campaigns etc.

Training/Motivation of Dealers and Dealermen :

Dealers and dealermen are the initial point of contact for our Retail customers. It is essentialthat they remain alert and sensitive to the customers need when they come to the Retail


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Outlets and spare no efforts to provide the required services to the customers. To enhancetheir capabilities the Corporation has initiated the following training programme :

Gurukul :

Training Centres for “in-house” training programms are being developed at prominently locatedcompany-owned model retail outlets in each Region for training Dealers/Dealermen on aregular basis. 45 locations have been identified for such training centres and 29 Gurukulshave been set up.

Dealermen Training :

Dealermen training “customer first” conducted covering 9684 dealermen on all India basis in482 training programmes held by professional agencies during 2004-05. In addition to above,“In-sit-U” training programme was conducted covering 6803 dealermen through 827 trainingprogrammes across the Regions.

Highway Dealermen Training :

The training module “Highway Stars” aims to sharpen customer oriented skills of Dealermenin highway retailing. 98 programmes have been conducted covering 2351 participants during2004-05.

Dealermen motivation :

1949 dealermen awarded under the scheme “Spot & Reward”, which aims at giving immediaterecognitions for the good work by the dealermen. Similarly, 41 Dealermen children were givenscholarships during 2004-05 across Regions.

Retail SBU Performance

As result of various marketing initiatives Retail SBU has achieved land mark performance inthe year 2004-05. Following are some of the performance highlights :

HPCL has achieved 4.8% growth in petrol sales which is higher than Industry growth of4.1%, thereby increasing market share by 0.17%. Similarly growth of 4.8 % has beenachieved in diesel sales which is higher than Industry growth of 3.9%. Market share indiesel has been increased by 0.19%. As such in the Retail business HPCL has shownsuperior performance to Industry in the year 2004-05.

AWARDS :

� Received Excellence Award “Forecourt Retailer of the Year-2005” instituted by KSATechnopak – ICICI Bank on February 24, 2005.

� Received “Excellence Award 2005” for outstanding contribution in Petro Retailing Businessby DEW Journal on March 20, 2005.


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Opportunities and Future Challenges

Petroleum Retail Marketing provides immense growth opportunities. The competition is gettingintense with private players working hard to grab market share. They have already commissionedmore than 1000 Retail outlets with aggressive expansion plans. Multinational companiesand other new players are also trying to set up their network. Each one is striving to increaseshare of market as quickly as possible.

Successful Petroleum retailing companies would need to address all the challenges in acomprehensive and integrated manner. They would need to deliver value propositions that arerelevant to the customer in a consistent manner across the retail network. The key tosuccess is a dif ferentiated service at the forecourt and the winner will be the one whoultimately delivers the promises of his Brand.

In order to succeed, it is, therefore, essential that we anticipate the future, initiate revolutionaryinnovations and change the historical pattern of management by aligning strategy, structure,people, culture, processes and ultimately working in teams to meet the contemporary businessimperatives. Retail SBU in HPCL understands the challenges ahead and the entire Retailteam stands committed to achieve the cocreated vision.

LPG SBU

The co-created vision of the SBU is as under :

� HP Gas is the market leader in growth and profitability in the industry.

� HP Gas is the world class and most preferred brand by the customers for the quality,appearance, innovations, services and offering total energy solutions for all gaseous fuelapplications.

� HP Gas is global in entire gamut of LPG marketing and trading with massive presence inrural sector.


Unloading of the first LPG Vessel at the newly commis-sioned "Visakh Outer Harbour"

Pampore LPG Plant maintaining supply line in the Kashmirvalley even in adverse weather conditions

� HP Gas is a caring organization with a strong bond with its customers, dealers and allother stakeholders.

� HP Gas is a team of highly motivated, competent and disciplined employees and conductsits business in ethical and transparent manner.

� HP Gas is totally committed to safety, health and environment.

The LPG Business line accounts for approximately 13% of the total volume base of HPCL.LPG Marketing has undergone tremendous change in the last few years with our countrygetting distinction of being one of the fastest growing market with regard to LPG consumptionand one of the countries with largest number of domestic consumers serviced through LPGCylinders. During the year 2004-05, LPG SBU has marketed 2.50 million Metric Tonnesachieving an all time record bulk sales of 83 TMT and Non-Domestic Packed sale of 47 TMTnotching a growth of 33% in this sector. 160 new LPG distributorships were commissionedduring the year taking the total distributorships to 2153. 19 lakhs new connections weregiven during the year taking the customer base to nearly 2.2 crores.

Marketing initiatives :

HPCL was the first Company to brand LPG Marketing under the platform of “Ji Haan” focusingon instant service to LPG customers. Consolidation of the ‘Ji Haan’ Services was givenemphasis and services such as delivery of refills within 24 hours, extended delivery timingsbetween 8 am and 8 pm on all days of a week, installation of a new connection within 24hours etc. were further consolidated across the country. The single contact point help lineno. 1716 has now been extended to a total of 10 cities and Internet booking facility isavailable at 7 cities.

Our ‘Ji Haan’ services has not only set a benchmark in the Indian LPG marketing scenario butalso has become synonymous with reliability and punctuality, emphasizing the importance ofmeeting the customer expectations which the industry followed. ‘HP GAS’ has been awardedthe “Golden Peacock Innovative Product/Service Award for the year 2004” for its variousinitiatives on customer service by the jury headed by Justice A. M. Ahmadi, Former ChiefJustice, Supreme Court of India. Justice M. N. Venkatchaliah, Former Chief Justice of Indiaand Chairman Centre for Corporate Governance, presented the Award.

HP Gas was once again the first to anticipate the customer needs and visualise their futureaspirations. We introduced the ‘weight campaign’, offering the customer the choice of verifyingthe correct weight of the cylinder at the doorstep which was not only followed by theindustry but also very well appreciated by the public at large. This initiative of HP Gas hasbagged the ‘Dainik Bhaskar Indian Marketing awards 2004’ for innovative marketing initiativefor customer services. HP Gas won the award under the category of services against stiffcompetition from strong brands such as Wipro and Hutch.


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Thrust Area :

LPG has made all the difference between the urban and the rural woman, bringing about adrastic difference in their lifestyles. HPCL has taken steps to bridge this gap by focusing inrural areas.

The ‘HP Gas Rasoi Ghar’ concept has gained popularity not only at the village level but alsoin corporate world. In line with our commitment to provide a clean eco-friendly fuel to ourrural population, we have taken several initiatives such as tie-ups with village levelorganisations for speedier implementation of the Rasoi Ghars. This concept is also pickingup pace in the forest areas with state forest departments joining hands with HPCL for takingforward this innovative concept. HPCL has been awarded the “National Excellence for Innovativetechnologies” for its ‘Rasoi Ghar’ concept besides being extensively covered through TV andpress media. The award instituted by Wisitex Foundation in association with Indian MerchantsChamber was awarded to HPCL in recognition of our selfless and untiring efforts and farreaching vision towards rural development and upliftment. Today there are over 1350 RasoiGhars operating across the country benefiting over 15,000 families.

To strengthen our hold in the industrial and commercial sector and also become morecompetitive, number of steps were taken such as reducing costs through independent productsourcing, aggressive credit and discount policy etc. It has also successfully piloted severalnew alternate application of LPG and converted 50 industries from alternative fuels to LPG,generating ND packed and Bulk volumes of 1500 MTs per month.

Recognising the need to promote environment friendly alternate fuel, HPCL has been thefront-runner in the field of Auto LPG. HPCL, which was the first company to introduce AutoLPG in India, commissioned 6 more ALDs during the year taking the total numbers to 31,which has resulted in sales of more than 8000 MTs.

Safety & Environment :

Safety has always been accorded the highest priority in HPCL and to reaffirm the same thecurrent year was observed as ‘Customer Safety Awareness Year’ all over India. Multiplechannels such as TV, Press, and Posters were adopted for increasing awareness besidesconducting sensitisation programmes for deliverymen and customers with door-to-doorcampaigns and inspections of Domestic, Non-Domestic and Bulk LPG installations acrossthe country through trained distributor staff and 3rd party agencies to ensure that the LPGinstallation is safe. Special drive was also undertaken to make the rodent proof LPG hosecalled ‘Suraksha LPG Hose’ the most preferred rubber hose for our customers.

HPCL has also received approval from Ministry of Energy and Petrochemicals, Government ofGujarat for setting up CNG infrastructure in Ahmedabad, with permission to set up 10 CNGretail outlets in the City of Ahmedabad.


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Opportunities :

The Reticulated system (Piped LPG for domestic use) is a value addition to customers, withfeatures of safety, loyalty and uninterrupted supply of gas to households. HPCL has successfullyinstalled 10 new projects during the year covering more than 1000 flats.

HPCL’s strength had always been its infrastructure and to further consolidate the same 3grass root bottling plants are being set up at Mumbai, Loni and Rajahmundry with a totalcapacity of 176 TMTPA. Capacity Augmentation program are also being undertaken andcurrently projects at 8 plants are under various stages of completion. This will boost ourexisting bottling capacity from 1978 TMTPA to 2180 TMTPA.

The commissioning of the prestigious Visakh LPG Import Facility has enabled HPCL to havethe largest import capacity in the country. The 45.5 crores project would give a major boostin meeting the country’s ever growing LPG requirement. With commissioning of the facility, itwould be able to handle upto 0.6 million tones of imports per annum and would be meeting thedemand of Andhra Pradesh and Orissa. Further the commissioning of the GAIL Visakh – Vijayawada– Secunderabad Pipeline has enabled LPG from the Visakh LPG Import Facility/Refinery to bepumped directly through the pipeline thereby supplying the larger inland markets at a low costoption. Additionally with the jetty having a capacity to handle 40 TMT parcels, it would alsoreduce cost on imported LPG on commissioning of the SALPG cavern storage project.

Keeping in mind customer requirement of correct quality and quantity product, the focusduring the year was on quality. To re-emphasis our commitment of providing quality product toour customers, all plants have been provided with fully automatic, state of the art LPG fillingand quality control equipments requiring minimum human intervention.

ERP & IT Initiatives :

During the year, 20 Plants and 16 LPG ROs have been linked to ERP. With this, ERP rollout iscomplete at 32 out of 40 Plants and 22 out of 26 LPG ROs as of 31.3.05.

Distributor computerisation programme completed across the country. This would enable usto provide efficient service to consumers and also help us to roll out IT enabled value addedservices such as single number refill booking service, internet services, net based transactionswith Corporation and build up centralised consumer database.

Country’s first multi-application smart card for the HP Gas consumers was launched alongwithtransit application of BEST on 19th November, 2004. ZERO-Mass Consortium is implementingthe smart card based multi-application pilot project in line with the RBI and IDRBT guidelinesand approvals. The ZERO-Mass industry Consortium includes Indian and global IT companieswith a common commitment to the deployment of vendor independent open inter-operablestandards and global best practices to bring benefits of the best technology solutions formass deployment.


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Around 500 cards were issued as a pilot for study of applications for one month. This smartcard is given to HP GAS consumers free of cost as a value added service and will be havingthe SV/TV data in secured digitized manner.

The period ahead :

The road ahead is challenging. The future demand of LPG is likely to grow at a CAGR of 8%.Volumes are expected to increase from 9.7 million tonnes to 12 million tonnes. Out of thisdomestic sector demand would be around 11 million tonnes. Though the demand of the urbandomestic sector is expected to grow only at 6.5%, the rural segment is expected to witnessa phenomenal growth of 17.5% increasing from 1.5 million tonnes to 3.5 million tonnes.

Keeping in mind the opportunities available to HPCL, LPG SBU has chalked out elaboratefuture plans for the LPG business.

Understanding customer needs and preferences, identifying new areas for use of LPG andsetting and achieving high standards in customer service with a view to make it a differentiatingfactor in marketing of HP Gas would be the key to success in the days to come.

DIRECT SALES SBU

LUBES BUSINESS-LINE

The co-created vision of the SBU is as under :

� HP DS (LUBES) is market leader in growth and profitability.

� HP DS (LUBES) is most preferred supplier of quality products at right price and time.

� HP DS is a learning organisation withcommitted, competent and professionalteam.

� HP DS (LUBES) is delighting the customersby value added services.

� HP DS (I&G) is the market leader in growthwith focus on profitability.

� HP DS (LUBES) is a professional andempowered team for quick response tocustomers.

� HP DS ensures consumer loyalty through differentiated services.

Consequent to the deregulation of the lubricant trade in the year 1992-93, today, it is one ofthe most clustered markets in the country. The total Indian lube market is 1.2 MMTPA out ofwhich 65% of the volume comes from the Automotive sector and the balance constitutes theIndustrial sector.

HPCL has the largest lube refinery in the country with a capacity of 3,35,000 MT per annumand, hence has the advantage of manufacturing various types of base oils. It has strategically


Shri M.B. Lal, C&MD seen alongwith Shri K.R. Shankaran,ED-Direct Sales at the launch of HP Champion

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located blending plants (all accredited with ISO 9001) at Mumbai, Kolkata, Chennai andstate-of-the-art Plant at Silvassa.

The Lubes Division at HPCL met the challenges posed by a volatile lubricant market andregistered an impressive bottomline sales of 2,52,000 MT during the year covering entirerange of lubricants and greases.

The Division has the vision to be a market leader in growth and profitability. To meet thischallenge the focus is on value proposition to customers which includes product quality,service levels and relationship management through a professional and empowered team.

To achieve the above vision, HPCL has undertaken various initiatives :

Servicing Small & Medium Scale Customers

HPCL has recognised the requirements of small industrial customers who are not otherwiseserviced by the oil companies. HPCL has opened a network of 50 CFAs to cater to suchcustomers.

Focus on Core Sector Business

HPCL has put in special efforts in servicing the core sector industries like the Railways,Army, Coal, Steel and Transport segments. HPCL has registered a significant growth in thesesegments.

Rural Marketing

Having identified the need to cater to requirements of the rural sector, HPCL has developedspecial products like agricultural spray oils for crops of Apple, Rubber, Grapes, etc. It alsomarkets Tractor Oils and Pumpset Oils specifically for this sector.

HPCL has tied up with M/s. Rashtriya Chemicals & Fertilizers Ltd. (RCFL) for marketing ofHP Lubricants and Finit (household insecticide) through their dealer network across thecountry.

Marketing through Retail Outlets

With the recently expanded network of more than 6600 retail outlets in its fray, HPCLcontinues to sell most of its automotive lubricants through the retail network. They haveundertaken a micro marketing programme to bring into focus the lube business through theretail network for providing the customers with value added services at the outlets. This isbeing done through soft skilled training programmes, incentives and service monitoringprogrammes.

Network Expansion

Considering the shift in buying habits of vehicle owners/mechanics from petrol pumps tobazaar lube shops, HPCL has gone in for a network of exclusive lube distributors. Thenetwork of 168 lube distributors located across the country in turn cater to a vast network of15000 lube shops, authorised service centres and auto spare parts shops.


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Tie-ups with OEMs for Genuine Oils

HPCL has tied up with major OEMs like TATA Motors and Kinetic Engineering for marketing ofGenuine Oils. The tie up with TATA Motors includes a full range of lubricants for theirpassenger vehicles and in case of Kinetic 2 & 4 stroke engine oils.

Product Promotion

To enhance brand equity, HPCL is consistently engaged in product promotion and mediacampaigns.

Research & Development

The R&D Centre recently built at Vashi, Navi Mumbai has state-of-art equipment to cater tothe needs of Lube Marketing Division. The Centre is constantly engaged in development ofnew customised products and improving the current formulations and blending process.

Development of New Products

Keeping in view the various needs of the different segments in lubes, HPCL is innovating andconsistently developing new products to meet the market demands. The latest in the list areHP Champion, a diesel engine oil; HP Gasenol for CNG/LPG driven engines; HP Milcy Eurol15W40 and Dieselino for Euro II compliant engines.

Exports

Export of finished lubes to countries like Bangladesh, Nepal and Kenya continues. TheCorporation is making efforts to expand its reach to other neighbouring countries also. About930 TMT of Naptha and Fuel Oil of the value of approximately Rs. 1425 crores were exportedduring the year.

Awards

HPCL won the “Golden Peacock Innovation Award 2004” for in-house solubalising of ViscosityIndex Improver additive at Mazagaon plant, for manufacture of multigrade engine oils. OurSilvassa blending plant has won a Silver Safety Award by M/s. Greentech Safety for maintaininghigh standards of safety and a TERI Corporate Award for Environment, for 2003-04.

I&C BUSINESS LINE

HPCL’S I&C business line caters to the petroleum product requirement of wide range ofcustomers in sectors like power, fertilizer plants, industrial units, cement, steel, coal, glassetc. In transpor tation sector, we meet fuel requirements of railways, state transpor tundertakings, defence and shipping.

During the year 2004-05 we have recorded a sales volume of 5200TMT. HPCL holds marketshare of about 15.53%. HPCL has a market share of (Major products) 22.4% in Naphtha,23.5% in LDO, 19.2% in FO, 17.3% in Bitumen and 8.3% in HSD. The business is transacted


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through 18 regional offices spread all over the country, with the complement of competentand technically strong staff catering to the varied needs of our customers.

The business line has set itself a co created vision to be a market leader in growth withfocus on profitability, a learning business unit with committed and competent professionalsand ensure consumer loyalties through differentiation. In line with the said vision, variousinitiatives and thrust areas has been identified and are working to achieve to be the mostpreferred supplier. To ensure customer loyalties through dif ferentiation, we are offeringinnovative products/service like fuel management, fixed pricing, energy audit resulting incommercial benefits and savings thereby delighting the customers.

Considering the thrust given on road infrastructure development, marketing of bitumen continuesto occupy special focus. Similarly, special products (Hexane, Solvent and MTO) continue tomeet requirements of Solvent extraction units, Tyre industries and Paint industries respectively.

With the thrust on expanding business spread, HPCL is focussing bunkering as one of theemerging opportunity area and in this direction has entered into an MOU with renowned multinational company M/s. Chevron’s Fuel and Marine Marketing LLC. With this arrangement,we plan to launch internationally recognised bunkering fuel on competitive pricing and totallyupgraded delivery arrangements for both domestic and international customers. HPCL hasthe distinction of being the first to introduce a self propelled floating barge to take care ofthe fuel requirements of barges and vessels at sea.

AVIATION

The Aviation SBU provides Aircraft Refuelling services at the major airports in the country. TheSBU continued to perform in line with the vision it had set for itself in 2002-03 as under :

� HP Aviation is the market leader in profitability and growth through a wider networkamong the industry.

� HP Aviation has the second largest marketshare in both domestic and internationalbusiness in the country.

� HP Aviation has a highly motivated, inspiredand dynamic team, which takes pride inbeing part of the SBU.

� HP Aviation inspires confidence in customersby providing the best quality in product andservice.

� HP Aviation practices the highest standardsof health, safety and environment in theindustry.

The SBU achieved a remarkable growth of 47%in 2004-05. This was the second successivehigh growth year for the SBU following its 23.8%growth in 2003-04.


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In the process, the SBU added 11 new customer accounts, raising its market share from10.5% in 2003-04 to 14.3% in 2004-05. Over the last two years, market share has increasedfrom 9.8% to 14.3%. Market Share in the Foreign Airlines segment has increased from 3.8%to 21% in the same period.

The SBU implemented several customer focused initiatives in its endeavour to delight customerswith the best quality in product and service. HPCL's Aviation Service Facilities in Mumbai,Delhi, Chennai, Kolkata, Cochin and Calicut are today the only such facilities to be certifiedto the ISO 14001 environmental standards, underlining the Corporation’s emphasis on safetyand environment.

Adding state-of-the-ar t refueling equipment, providing customer orientation training toemployees, learning of foreign languages by supervisors to better interact with foreign airlinecustomers etc. are some of the other initiatives that the SBU has taken to ensure a betterservice offering to its valued customers.

The SBU continues its techno-commercial agreement with Chevron Texaco Global Aviation forinputs on current international operating practices and technology in this field. HPCL hasbegun expansion of its Aviation Service Network by adding its facilities at Bangalore and Goaairports. Consolidating its customer base, expansion of network and improvement in servicestandards will be the focus for the SBU in the current year.

The Aviation SBU has achieved the following unique distinction during the year.

� Only Indian company nominated on the IATA Fuel Suppliers Advisory Committee.

� Only Indian Company having ISO-14001 certified Aviation facilities.

� Only Indian Company to win the Golden Peacock Award for Environment Management2004-05.

� Only Indian Company providing Refueling Panel Operations service to its clients.

� Only Indian Company providing e-ticketing for air travel through select retail outlets.

� Only Indian Company ranked 17th among top 30 companies globally adjudged as “World’sbest jet fuel marketers” in survey conducted by the Armbrust Aviation group, USA.

Awards/Recognition

1. Received Greentech Gold Safety Award for Santacruz, Greentech Gold Environment awardsfor Santacruz/Palam and Greentech Silver Environment awards for Chennai/Calicut ASFsfor 2003-04.

2. HP Aviation was ranked 17 globally in the 7th Annual World’s Best International Jet FuelMarketer held in 2004-05 by Armbrust Aviation Group. 71 airlines participated in thissurvey and rated fuel suppliers on 22 service parameters. This is the highest rankingamong Indian suppliers and a considerable improvement on our ranking of 45 in theprevious year.


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OPERATIONS & DISTRIBUTION

HPCL’s current infrastructure includes 2 product pipelines between Mumbai and Pune (beingextended up to Solapur) and Visakh – Vijayawada – Secunderabad. Presently, there are 36Terminals/Installations/TOPs and 100 depots spread across the country. These infrastructurefacilitate continuous supply of products to the Retails Outlets. During the year, the followingnew facilities were added :

1. A NEW GRASS ROOT DEPOT AT AONLA, BAREILLY, U.P.

The depot construction was completed in record 14 months. It is a Rail-fed depot completedat a total cost of Rs. 10.25 crores including land cost and common industry sidingsharing cost. It has 9080 KL product tankages for storage of HSD, MS, SKO and Ethanol.The depot will cater to the market demand of Bareilly, Pilibhit, Badaun, Rampur(Uttarpradesh) and bridging to Haldwani (Uttranchal).

2. A NEW GRASS ROOT DEPOT AT RAMAGUNDAM, A.P.

A new Grass root Depot with total Tankage of 7974 KL for MS, HSD and SKO together,with product receipt through Railway Tank Wagons from Vijayawada Terminal has beencompleted at a cost of Rs. 11.47 crores and is ready for commissioning. The Depot willmeet the requirement of Nizamabad, Adilabad and Karimnagar. The facilities wereconstructed under the extremely dif ficult terrain and weather conditions involvingextensive Rock cutting. The siding facilities were completed by re-routing 2 nos. 132 KVHT Towers in the shortest possible time.

3. 25 KL CAPACITY TANK TRUCKS

The Corporation plans to roll out progressively ‘state-of-Art’ 25 KLs Tank trucks (TTs) forsupply of products. 2TTs at Vashi Terminal in April 2004, 1 TT in Wadala Terminal and 2TTs in ASF service at Shakurbasti have been so far introduced. Remaining 15 TTs will beput on road by September, 2005.

4. 40 KL CAPACITY NEW GENERATION TANK TRUCK

CCOE approval for 6 months trial operation of Aluminium Alloyed tank truck of 40 KLcapacity on Volvo FM 9 X 340, 6 X 4 Trailer Chassis has been obtained for operatingbetween Vashi Terminal and Retail Outlet at Sajgaon on Mumbai Pune Express Highway.

These state-of-art tank trucks made of Special Aluminium Grade are to be launchedduring 2005-06 have several safety, security and other technical features which will aidin enhancing distribution of products ensuring inter-alia Q & Q aspects.

5. ADDITIONAL TANKAGE COMMISSIONED

A total of 13100 KL additional tankage was commissioned at various locations during2004-05.


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6. VEHICLE MANAGEMENT SYSTEM FOR TANK TRUCKS

HPCL is first in the oil industry to introduce the Vehicle Management System for monitoringof tank truck movement from depots to retail outlets and back on real time basis toensure delivery of correct quantity and quality of products to consumers and to improveoverall operational efficiency. The system comprises of base station at loading location,Vehicle Mounting Unit in each tank truck with GPS (Global Positioning System), GSM(Global System for Mobile) for data transfer and GIS (Geographical Information System)software for mapping of the supply locations.

The system was successfully implemented in 15 company tank trucks during 2004 andis under implementation in 172 Company Owned tank trucks all over India which isexpected to be completed by September, 2005. The System is designed to generatePerformance of Trucks (POT) Reports on monthly basis apart from generating Distance,Route Travelled and Speed Reports on daily basis. Contractor/Dealer supplied trucks arealso proposed to be covered with the System.

7. ENERGY SAVING INITIATIVES :

� Lighting load : The system was commissioned at 71 locations and upto 20% savingsin the energy consumption is reported.

� T/T Loading pumps : HPCL is first in oil industry in installing energy saving systemsfor product pumps and the systems are operative at 16 locations as of now with anexpected energy saving of upto 30%. The system is being implemented at 51 morelocations and is expected to be completed by March, 2006 in phases.

� Visakhapatnam - Vijayawada - Secunderabad Pipeline Pumps : Installation of EnergySaving systems for pipeline pumps at VVSPL locations, viz., Vishakhapatnam,Rajamundr y, Vijayawada and Sur yapet have been completed and are undercommissioning. The system is first of its kind in South Asia and being implementedfor the first time, not only in the oil industry but in whole of Indian industry. Thesystem envisages energy savings to the tune of 30%.

� Other Energy Saving Initiatives : The following additional energy saving measures areunder various stages of implementation :

A) Micro processor based Intelligent lighting controllers for street lights and floodlights : Trial runs have been taken of the system at Vashi terminal and energysavings to the tune of 30% have been reported. The system is under implementationin 69 Depots/Terminals all over India.

B) Micro processor based Soft Starters for Lube Oil Pipeline : The system whichenvisages energy savings based on reduction in the motor starting current andvoltage control during part loads based on Torque requirements thereby reducingthe Stator core losses, is under implementation for Lube Oil Pipe Line OperatingPumps at Mumbai.


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C) Wind/Solar Hybrid Package at Loni Terminal : 15 KW Wind/Solar Hybrid PowerPlant to support a connected Lighting load of 6 KW for a working period of 6 to 8hours per day is being implemented at Loni terminal as a part of RenewableEnergy using. Subsidy to the tune of 50% has been obtained from MoNES (Ministryof Non Conventional Energy Sources) through MEDA (Maharashtra EnergyDevelopment Agency).

D) Solar Photo Voltaic System at Vashi Terminal : 100 Kwp Solar Power Plant (3 x25Kwp at Vashi W/Oil and 1 x 25 Kwp at Vashi B/Oil terminals) is underimplementation to support the lighting load which include street Lights and floodLight Towers. Subsidy application made to MoNES is under active considerationby them.

E) Vapour Recovery System, Loni Terminal : System consists of collecting vapourgenerated while filling the tank trucks and converting the Vapour to MS usingeither condensation or vapour absorption process. Recovery of MS from vapoursis estimated at 1.7 litres per 1 KL of MS Loading.

The above mentioned initiatives are expected to result in savings of approximatelyRs. 6 crores per annum commencing from financial year 2005-06.

8. MARKER SYSTEM

Marker Doping system to combat adulteration has been effectively implemented for MS/HSD at Vashi and Shakurbasti Installations. It has also been successfully introduced atHPCL-Wadala.

9. SECURITY LOCKING SYSTEM

Security locking system has been implemented at all locations covering entire existingnetwork.

10. ETHANOL DOPING SYSTEM

5% Ethanol Doped MS was introduced in 10 States in line with Government directives.The advantages of ethanol blended fuel are that it is a renewable and Biodegradable fueland environment friendly alternative to fossil fuel. Being oxygenated fuel, ethanol enhancesthe combustion of petrol resulting in reduction in emission of all major pollutants. Ethanolbeing a byproduct of sugar industries, use of Ethanol will help the sugarcane growers.

11. ISO CERTIFICATION FOR DEPOTS & TERMINALS

ISO Certification was obtained by 41 locations (NZ-20; EZ-6; WZ-9; SZ-6) : Two locationsin WZ and three in SZ are expecting certification during this year.


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ONGOING MAJOR PIPELINE PROJECTS

1. PUNE SOLAPUR PIPELINE PROJECT

HPCL’s 161 Kms long Mumbai Pune Pipeline is being extended from Pune (Loni) toSolapur (Pakni) via Hazarwadi with a view to optimise the freight economics and tomaximize utilization of Mumbai Pune Pipeline. This 343 Kms long, 14”/12.75” dia crosscountry pipeline project from Loni to Pakni envisages new pumping stations at Vashi andLoni, tapoff facilities at HPCL’s existing IRDs at Hazarwadi and Pakni and constructionof additional tankages. The project also envisages derating of Trombay-Vashi section ofMumbai Pune pipeline.

The design capacity of Mumbai Pune Solapur pipeline will be 4.295 MMTPA. The approvedcost of the project is Rs. 335.17 crores and is scheduled to be completed inSeptember, 2006. On commissioning of the project, industry requirements in the districtsof Kolhapur, Solapur and Gulbarga will be catered.

2. MUNDRA DELHI PIPELINE PROJECT

Mundra Delhi Pipeline project will be the longest multiproduct pipelines ever constructedin our country. It will be 1048 kms long, 18”/16” dia cross country multi-product petroleumpipeline traversing through four states of the country starting from Mundra Port in Gujaratto Bahadurgarh in Haryana.The pipeline has the capacity to carry multiple Grades of MS/HSD and SKO from west coast to northen part of India. The pipeline envisages 6 onlinepumping stations situated at Mundra, Santhalpur, Palanpur (in Gujarat), Awa, Ajmer andJaipur (in Rajasthan). Enroute, this pipeline will feed four grassroot Marketing Terminalsbeing constructed at Palanpur, Ajmer and Jaipur with road loading facilities and atBahadurgarh with road/rail loading facilities. The existing Rewari Terminal will also behooked up with the pipeline. Further, three 12 kms spur lines, one each for HSD, SKO andMS, are envisaged from Bahadurgarh Terminal to HPCL’s proposed Marketing Terminal atTikrikalan in Delhi. This will ensure uninterrupted supplies to the capital in abundance.

The design capacity of the pipeline is 5.0 MMTPA in Phase-I (2012-13) and 5.8 MMTPAin Phase-II (2016-17). The approved cost of the project is Rs. 1623.84 crores and isscheduled to be completed in May, 2007.

Mundra Delhi Pipeline will form the critical link in meeting HPCL’s demands in north zoneby transporting the surplus product available in West in the most reliable manner. Thispipeline will meet HPCL’s market demand in the states of Gujarat, Rajasthan, Haryana,Delhi, Uttar Pradesh, Uttranchal, and Madhya Pradesh. In the years to come MundraDelhi Pipeline will play the role of most important supply source to north India both forHPCL as well as other industry members.


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RESEARCH & DEVELOPMENT (R&D)

The Corporation has entered into MOU, with reputed institutions like IIP, EIL, CPCL, CHT,IICT etc for undertaking collaborative R & D projects. These include the following :

a. Up-gradation of FCCU recycle oil through solvent extraction using NMP as solvent (withIIP, EIL & CPCL)

The project aims at extraction of aromatics from the FCCU feed using NMP as solvent.The raffinate so obtained would be superior quality FCCU feed stock and would result inbetter yields of Light and Middle distillates. The benefit expected from this project isapproximately Rs. 3 crores/annum.

During the year 2002-03 and 2003-04, test runs were conducted for lowSulphur feed stock in MR-FCCU andhigh Sulphur feed stock at CPCL-FCCU. The samples of side streamsand residue were analysed by IIP.Subsequently, a successful plant runwas undertaken in Solvent ExtractionUnit of Mumbai Refiner y duringFebruary, 2004, which resulted inraffinate yield of approximately 75-80% and same was routed to FCC unitas feed stock.

During 2004-05, physico-chemicalcharacterisation and analysis of Test Run samples was done by IIP and mass transferstudies on Glass Packed Extraction Column has been completed.

b. Energy efficient Deasphalting process using supercritical solvent recovery (with IIP, EIL& CHT)

In the energy efficient super-critical approach the solvent recovery in the unit is doneunder supercritical process conditions, resulting in an over all energy savings of about 20to 40 per cent (mainly in utilities) and lower solvent losses. The project was initiatedduring 2002-03 and is scheduled to be completed by 2006. The benefit expected isapproximately Rs. 2 crores/annum.

During the year, test runs were conducted in MR-PDA unit and relevant samples wereanalyzed by IIP. Site selection, PFDs and P&IDs has been finalised in consultation withM/s. EIL to implement the facilities. The same is expected to be implemented by 2006.


Shri S.C. Tripathi, Secretary to Government of India, MOP&NG,inaugurating the R&D Centre at Vashi. Also, seen in the picture isShri M.B.Lal, C&MD

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c. Optimisation studies of Hexane manufacturing unit & feasibility study for producingpolymer-grade hexane (with IIP)

Study has been initiated along with IIP during 2004-05 for optimizing the existing Hexaneplant operating conditions to explore the possibility to produce WHO and Polymer gradeHexane, which have more stringent quality specification in respect of sulphur and benzenecontent.

d. Optimisation studies of NMP Lube Extraction Unit (with IIP)

Study has been initiated along with IIP during 2004-05 to optimise operating parametersto obtain specific product quality and thruput maximization. Improvement in colour, sulphurand saturates in products is also expected by increasing severity of hydrofining andthrough usage of suitable catalyst.

e. Improvement of Propylene Purity (With IICT Hyderabad)

Proposal has been signed with IICT Hyderabad to improve the purity of Propylene throughmembrane separation.

f. MOU has been signed between Chevron, IIT Kanpur and Advanced Refining Technologiesfor various R&D activities.

JOINT VENTURES

Mangalore Refinery & Petrochemicals Ltd. (MRPL)

MRPL with a capacity of 3 MMTPA was commissioned in March, 1996. The capacity wasenhanced to 9 MMTPA during 1999 - 2000. ONGC acquired the entire equity stake of IRIL inMRPL on 03.03.2003 and also infused Rs. 600 crores into MRPL as additional equity on30.03.2003. The FIs/Lenders of MRPL converted Rs. 365 crores of debt into equity andRs.160 crores of debt into ZCBs. Consequent to the above, HPCL’s equity stands at 16.95%after which a fresh Shareholder Agreement dated 03.03.2003 has been signed by HPCL withONGC to take care of the interests of HPCL. MRPL declared a maiden dividend of 10% for thefinancial year 2004-05. HPCL and MRPL have been exchanging intermediate process streamsbetween their refineries to supplement efforts to meet new environmental norms in respectof products like MS and HSD on mutually agreed terms.

Hindustan Colas Ltd. (HINCOL)

The per formance of HINCOL, a Joint Venture Company formed with Colas SA of France forproducing and marketing Bitumen Emulsions continues to be encouraging. In addition toBitumen Emulsions, HINCOL has been successfully marketing a wide range of value addedBitumen products like Modified Bitumen, Cut Back Bitumen etc. meeting the requirements ofroad builders.


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South Asia LPG Co. Pvt. Ltd. (SALPG)

This 50:50 Joint Venture Company between HPCL and Total Gas and Power India (a whollyowned subsidiary of Total of France) formed in 1999 is currently setting up UndergroundCavern storage of 60,000 MT capacity and associated receiving and despatch facilities atVisakhapatnam. This project is the first of its kind in South Asia and would facilitate importof LPG in large vessels resulting in savings in freight costs. The project will meet therequirement of a large storage for imported LPG in order to meet the increasing demand inAndhra Pradesh and neighbouring states.

Underground Cavern storages are the safest means of storing hydrocarbons and are beingused by several developed countries. There are over 80 mined underground caverns in theworld for LPG alone.

The cost of the project is estimated to be Rs. 333 crores and it is being financed throughDebt-Equity of 2.33:1. The project is expected to be completed by December, 2006.

Petronet India Ltd. (PIL)

Petronet India Ltd. (PIL) was formed in May, 1997 as a joint venture company with 50%equity by oil PSUs and balance 50% being taken by private companies/financial institutions.Special Purpose Vehicles (SPVs) were floated by PIL with oil companies for implementingindividual pipe line projects, viz., Petronet MHB, Petronet CCK and Petronet VK which areoperating companies.

Since oil companies are now laying pipelines independently, PIL has initiated action to disinvestits equity holding in individual JVCs.


Hincol, Vashi Plant - Bitumen Emulsion loading

During the year, HINCOL commissioned 2 new plants at Visakhapatnam and Mangalore.HINCOL now operates 6 plants geographically well positioned to meet the requirement ofcustomers across India. This JV has been declaring dividend for the last 6 financial years. Forthe year 2004-05 a dividend of 15% has been paid.

Hincol, Baroda - A section of emulsion plant

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Petronet MHB Ltd. (PMHBL)

HPCL, along with Petronet India Ltd. (PIL) haspromoted Petronet MHB Ltd., for theconstruction and operation of Mangalore-Hassan-Bangalore pipeline. PIL and HPCL wouldeach have 26% equity participation. ONGC hasjoined as a strategic partner in the Companyby taking 23% equity. The product pipeline from

Mangalore to Bangalore, with a tap off pointat Hassan, has been executed at a cost ofRs. 639 crores. The pipeline is meeting thetranspor tation needs between Mangalore,Hassan and Bangalore. Due to lower thruputand pipeline tariff, the operational and financialviability of PMHBL have been affected. Therestructuring of PMHBL is under progress.

Prize Petroleum Co. Ltd.

HPCL, in partnership with ICICI and HDFC, had formed this Joint Venture E&P Company viz.,Prize Petroleum Co. Ltd. for participating in exploration and production of hydrocarbons. PrizePetroleum in consortium with M/s. GSPC Ltd., Jubilant Enpro and Geoglobal Resources Ltd.has been awarded the Block CB-ONN-2002/3 in the Cambay Area under NELP-IV biddingprocess. The Production Sharing Contract for the same has been signed with the Governmentof India on February 6, 2004.

Prize Petroleum Co. Ltd. along with Aban Lloyd Chiles Offshore Ltd. has also been awardedservice contract for development of 3 marginal onshore fields of ONGC in Gujarat viz.,Hirapur, Khambel and West Bechrarji. Prize is currently carrying out further operations andexpects to produce oil by the second quarter of the current financial year.

The Company has also farmed in 50% participating interest in the producing Sanganpur fieldfrom M/s. Hydrocarbon Resources Development Co. Pvt. Ltd. Prize would sign the necessaryProduct Sharing Contract shortly.

The Company has also set-up the latest state-of-ar t geological data processing andinterpretation system.


Interphase tanks at Devangonthi Terminal

A view of Devangonthi Terminal

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Bhagyanagar Gas Ltd.

Bhagyanagar Gas Ltd. (BGL) has been formedas a Joint Venture Company by GAIL and HPCLfor distribution and marketing of environmentalfriendly fuels (green fuels) viz., CNG and AutoLPG for use in the transportation, domestic,commercial and industrial sectors, in the stateof Andhra Pradesh. BGL was incorporated on

August 22, 2003. HPCL and GAIL will hold22.5% each of the equity while 5% would beheld by Government of Andhra Pradesh and 50%by Strategic/Financial Investors.

BGL has set up one Auto LPG Outlet at Tirupatiand two Auto LPG Outlets at Hyderabad whichare operational. It proposes to commence CNGmarketing in Vijaywada during 2005-06. The

construction of CNG Mother station/dispensing stations was completed on July 15, 2005.

INTERNAL CONTROL SYSTEMS :

HPCL believes that a strong internal control is necessary for good Corporate Governance andfreedom of management should be exercised within a framework of appropriate checks andbalances. The Corporation remains committed to ensuring an ef fective internal controlenvironment that provides assurance on the efficiency of operations and security of assets.It has adequate internal control system commensurate with its size and nature of businessand has well laid down documented manuals, policies and guidelines covering various aspectsof business, processes and operations. It has an independent Internal Audit Departmentcomprising of financial, technical and IT professionals having varied experience in theirrespective functional areas.

The focus of Internal Audit is to review the adequacy of internal controls, compliance withCorporation’s policies and guidelines highlighting areas which would result in optimum utilisationof assets and financial resources, increase in profitability and operational excellence. TheInternal Audit activity encompasses carrying out test check of all major locations, Refineries,controlling offices and major operating functions on annual basis.


Bhagyanagar Gas Limited - LPG Dispensing facilities atHyderabad

Another Outlet of Bhagyanagar Gas Limited alongsideTirupati Hills

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The Annual Audit Programme is reviewed and approved by Chairman & Managing Director andthe Audit Committee of the Board. The significant audit findings are reviewed by the topManagement and Audit Committee and directions where necessary, are given for follow upactions in line with the audit findings.

BUSINESS DEVELOPMENT INITIATIVES

MOU with Shell :

An MOU was signed between HPCL and Shell to provide for products, infrastructure andfacility sharing between the two companies in India. It also envisages HPCL participation inLNG facilities being put up by Shell at Hazira.

MOUs with GSPCL :

An MOU was signed with GSPCL aimed at mutual co-operation in the exploration anddevelopment of Oil and Gas fields and setting up a network of CNG stations in Gujarat. AnMOU was also signed with GSPCL for marketing of CNG through the existing network ofHPCL retail outlets in the state of Gujarat.

Natural Gas :

HPCL took the initial step for acquiring a stake in Shell’s Hazira LNG Project by carrying outa due diligence of the business. A decision on the project is expected to be taken during thecurrent financial year. In addition to this, the other initiatives on the gas business are :

� A DFR is in preparation for setting up of LNG import/regassification terminal of 5 MMTPAat Mangalore/Mundra.

� An MOU is proposed with GAIL for setting up JVCs for distribution of city gas and CNGdistribution facilities in Gujarat, Rajasthan and Madhya Pradesh.

� Negotiations are in progress with M/s. Niko Resources/GSPCL for sourcing Natural Gasat Mora.

Wind Power :

HPCL has initiated steps to set up a Wind Power Generating Facility. Detailed feasibilityreport has been prepared for a 500 MW project. A pilot project of 25 MW is proposed to beset up either in Maharashtra or Karnataka during 2005-06.

Exploration & Production :

� An MOU has been signed between Sun Petroleum and HPCL JV Prize Petroleum for co-partnering in NELP-V. Sun Petroleum has also expressed its interest to acquire equitystake in Prize Petroleum.

� Prize Petroleum along with Aban Lloyd has won the bid for development of three marginalfields in Gujarat owned by ONGC.

� Prize Petroleum has also acquired a 50% stake in Sanganpur Oil fields in Gujarat.


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Global Diversification :

� To identify global business opportunities, study of prospects in other countries is beingcarried out with the help of M/s. Ernst & Young in phases. Phase I reports have beenreceived and are being reviewed.

� Equity participation in Paraxylene Plant proposed to be put up by Oman Oil Co. in theSultanate of Oman is being explored.

EXPLORATION & PRODUCTION

In its efforts to ensure security of supply and to improve the corporate profitability, HPCL hasinitiated steps to venture into Exploration & Production sector through acquisition of equity oilby securing interest in E&P projects in India or abroad. HPCL targets to acquire at least 1/3 ofits crude oil requirements as equity oil and has initiated various steps in this regard.

HPCL made an initial foray in E&P activities by setting up a Joint Venture called PrizePetroleum Company Limited, in association with financial institutions. This JV has beenreviewing various “farming–in” opportunities in the oil and gas sector both in India andabroad. It also extends technical assistance to HPCL in its E&P initiatives. Its consortiumwas recently awarded service contracts to develop three marginal onshore fields of ONGC inGujarat viz., Hirapur, Khambel and West Bechrarji. It has also secured a 50% participatinginterest in the producing Sanganpur oil fields in Gujarat and has undertaken further developmentin the fields.

The ONGC–HPCL consortium has secured two deepwater exploration blocks in the Kerala -Konkan coast under NELP IV offering in 2003-04. Activities such as reprocessing the availableseismic data, gathering of fresh 2D and 3D seismic data, geochemical sampling, geomagneticsurveys, analysis and interpretation of data to identify oil and gas prospects in these blocksetc., are currently in progress. Prize Petroleum also has won an onshore block in the CambayBasin of Gujarat, under the NELP-IV offering, in consortium with GSPCL and others.

HPCL is also exploring the feasibility of acquiring participating interest in proven fieldsabroad, directly or jointly in association with other players. Various such opportunities arecurrently being reviewed. The Corporation has participated in the bidding process of theongoing NELP-V, in association with suitable partners including Oil India Ltd., to secureinterest in the exploration blocks currently on offer.

HPCL would earmark required funds for expanding its E&P activities. The Corporation is alsoexploring the feasibility of associating with other major players in the E&P sector to furtherits efforts to enter the oil and gas segment.

FINANCE

The working capital requirements of the Corporation has gone up mainly on account of highcrude and product prices and pressure on market margins during the year. Requirement offunds have been met mainly by short term borrowings.


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While average borrowings during the year have increased by 120%, interest cost has increasedonly 46%. The weighted average cost of borrowings during the year was 4.98%.

During the year 2004-05, Foreign Exchange Market has been volatile. However, the Corporationtook suitable steps to ensure that adverse impact is minimised by timely hedging/forwardcover products.

During the year 2004-05, Corporation has commenced Commodity Risk Managementtransactions. The Corporation is of fering fixed price contracts to customers by taxingappropriate hedge in international commodity market. Initial experience has been veryencouraging. Steps are being taken to set up a full fledged commodity risk management deskto manage various kinds of commodity exposure.

With progressive implementation of Enterprise Resource Planning and increased implementationof core banking by major banks, it has now become possible to implement e-banking. A majorinitiative to leverage ERP has been taken up by the Corporation.

ENTERPRISE RESOURCE PLANNING (ERP)

The Corporation had initiated a “Business Process Reengineering” exercise which was followedby the commencement of implementation of Enterprise Resource Planning system to supportthe core processes which is the JD Edwards OneWORLDTmXe, a leading world class ERPsolution. As of June 30, 2005, 335 locations have gone live in the new system. Theseinclude both the refineries at Mumbai and Visakh and almost the entire West Zone ofMarketing Division. A total of 261 locations have been covered as of March, 2005 andapproximately 85% of the Corporation’s sales by volume are being recorded in the system by3300 users. The system has facilitated data integrity and availability of accurate informationto enable timely decision making and has also ushered in significant level of transparency inthe processes. Benefits in terms of better control over costs and standardization of processesare expected to be achieved on completion of the project.

HUMAN RESOURCE DEVELOPMENT

HR Department is ensuring focus in enhancing the capabilities of the employees of theCorporation to rise up to the emerging challenges in the Oil Sector. Towards this end,Training and Development received continuous attention in our endeavour to be a LearningOrganisation.


Training sessions in progress A scenic view of the Training Centre atNigdi

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An Organisational Transformation Exercise is currently in progress, details of which areprovided separately.

In order to take training closer to employees, a training portal has been launched whichserves as an interface between the Training Department and employees. We have tried tomake this portal very informative and user friendly. Some important features of this portalare – Training Calendar, Training History, Self Nominations, Notices, E-Learning, LearningCentre, Discussion Forum etc.

Executive MBA : In order to enhance general management capabilities, officers are nominatedfor Executive MBA (EMBA) programme of the duration of 18 months which consists of on-campus learning of 9 days per quarter and off-campus learning.

Other training programmes developed andconducted during the year were :

� “MDP on Marketing” for Retail RegionalManagers and Sales Officers

� “Retail Engineering” for Retail Engineers

� “Reach for the Skies” for Aviation Officers


All India Annual Sports Meet held at Mumbai. Seen in thepicture are Shri M.B.Lal, C&MD, Shri A. Balakrishnan,Director - HR and others

A section of employees participating in the sports event Children at the Sports Meet

� “Marketing Operations” for OperationsStream

� “Modern Safety Management” for Officersin locations

� “Step towards meeting future Refiner yChallenges” for Refinery Officers

� “Foreign Trade” for of ficers in Financestream and SBUs

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� “Risk Management and Derivatives” for officers in Finance and Direct Sales

� “Linux” for officers in IT stream

� “Networking Basic” for officers in IT Stream

All the above programmes have been customised to meet the Corporation’s needs. Servicesof reputed institutions like IIM-Ahmedabad, NCCB, Indian School of Petroleum etc., havealso been availed for conduct of such programmes. Officers have also been sent for variousexternal and foreign training programmes like Advanced Management Program, AcceleratedManagement Programme etc. conducted by reputed institutions.

A series of Change Management Programmes were conducted for the internal Union Leadersand approximately 150 Union Leaders have been exposed to the changing businessenvironment, customer needs etc. This has helped in implementation of ERP and otherOrganisational Transformation process in a streamlined manner.

Other Significant Initiatives :

Balanced Scorecard :

To enable translation of strategy into operational objectives and to align the activities in linewith core vision of the Organisation, HPCL has embarked on the Balanced Scorecard initiative.As a part of this initiative, Corporate Scorecards have been designed and formulated. FourteenLevel-1 scorecards have been designed and design of Level-2 scorecards is underway.

Competency Mapping :

To strengthen the competencies of our employees to meet the challenges of continuouschange, HPCL has initiated the process of Competency Mapping for aligning employeecompetencies to the business strategies and build framework for both Behavioural and Technicalcompetencies. During the year the Behavioural and Technical competency frameworks havebeen developed along with 100% position profiling. 207 officers have undergone competencyassessments and their individual development plans are being implemented.

Six Sigma :

To bring about quality improvement in business process, Six Sigma approach is beinginstitutionalised in the Corporation. As a part of this exercise, 14 projects have been identifiedand work on the projects are concurrently underway.

Achieving Continuous Excellence :

Thrust on upgrading skill of employees to deliver superior performance continued during theyear through project “ACE” (Achieving Continuous Excellence) and Leadership developmentprogrammes. A total 93 ACE Workshops and 53 LO Workshops have so far been conductedon cumulative basis.

Employees Relations Committee :

A new Management Employees Relations Committee has been set up to provide the officersan easily accessible machinery for settlement of grievances. This new facility is expected to


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enable expeditious settlement of grievances leading to increased levels of satisfaction,productivity and efficiency in the Organisation.

INDUSTRIAL RELATIONS :

The Industrial Relations climate for the financial year April 2004 to March 2005, continuedto be generally harmonious in all units of Marketing Division, Mumbai Refinery and VisakhRefinery and there was no loss of production. Due to our endeavour and the positive approachof the Unions, the overall Industrial Relations scenario witnessed active cooperation fromthe employees which in turn enhanced the productivity and strengthened industrial peace.Several Memorandum of Understanding (MOUs) were signed during the year with Unions atdifferent locations concerning different segment of activities of the Corporation. This hasresulted in streamlined functioning of activities in these locations in a cordial work atmosphereand inter-personal relations.

PROACTIVE IR

Learning Organisation (LO) workshop covers individual development as well as team learningskills. During the year 2004-05, 6 LO workshops for HR Officers, 1 LO workshop for MSACEC Members, 9 LO workshops for Union Leaders and 36 LO workshops covering the clerical/secretarial staff were conducted across the Corporation.

MANPOWER DATA

The manpower statistics of our Corporation for the past 5 years is as under :

Year-wise No. of No. of Non- TotalManpower as on Management Management Strength

Employees Employees

31.03.2001 3614 7935 11549

31.03.2002 3571 7786 11357

31.03.2003 3583 7630 11213

31.03.2004 3594 7494 11088

31.03.2005 3562 6999 10561

RECRUITMENT OF LAST 5 YEARS :

Year-wise Recruitment of Recruitment of TotalRecruitment Officers Non-Management Recruitment

2000-2001 27 66 93

2001-2002 38 41 79

2002-2003 27 11 38

2003-2004 63 1 64

2004-2005 80 6 86


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Break-up of Employees (As of 31.03.2005)

Total Strength 10561

SC/ST 2941

Physically Handicapped 127

Ex-Servicemen 639

Women Employees 665

Sportsmen 2

WELFARE

The overall representation of SC/ST employees in the Corporation is 27.85%. During the year2004-2005, our Corporation has carried out a number of Welfare/Developmental activities atvarious locations inhabited by SC/ST/Weaker Sections in the vicinity of operating businesslocations and Refineries at Mumbai and Visakhapatnam at a total cost of over Rs. 5.30Crores. The said activities include Primary/Secondary/Graduation and Post-Graduationeducation, health care, augmentation of drinking water facilities, family welfare, vocationaltraining, income generating schemes, rehabilitation of Persons With Disabilities (PWD),Scholarships to students of SC/ST/Weaker Sections including students with disabilities andprovision of computer training to the poor and needy students from the SC/ST/WeakerSections of Society. Out of a total of 1325 New Retail Outlets and LPG distributorshipscommissioned during the year, 105 were allotted to SC/ST category and 53 were allotted toPersons With Disabilities (PWD) category.

Visits of Parliamentary Committees & Member of National Commission for SC/ST :

During October 16-18, 2004, Study Tour of the Standing Committee on Petroleum & NaturalGas visited to Visakhapatnam to review the CSR activities of ONGC, GAIL and HPCL. HPCLwas nominated as the Coordinator. The Hon’ble Member of National Commission for STvisited at Chennai to review the implementation of reservation policy.

OFFICIAL LANGUAGE IMPLEMENTATION :

Progressive use of Hindi in the Corporation continues to receive due importance. Details aregiven separately.

THE FUTURE - OPPORTUNITIES & THREATS :

The Oil and Gas Sector is continuing to witness a turbulent phase. The downstream companieslike HPCL which are primarily engaged in refining crude and marketing of petroleum productsare experiencing continued pressure on margins which was reflected by a fall in net profit forthe year 2004-05. This was primarily due to the fact that there was substantial increase inthe crude oil prices which were not matched by corresponding increase in product prices,particularly LPG, Kerosene, MS and Diesel.


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The crude oil prices which moved from approx $32/bbl in March 2004 to $49.3/bbl in March2005 is likely to remain at higher levels. It is in this context that your Corporation is givingutmost thrust to integrate refining and supply operations, optimize value chain, develop riskmanagement capabilities, improve refinery GRMs etc. The Corporation is also pursuing optionsfor entry in upstream segments like Exploration and Production, Gas , Non conventionalEnergy areas, etc.

Securing equity oil by foraying into exploration and production, marketing of eco friendlygaseous fuels, retail automation and dynamic pricing, leveraging ‘state-of-the-art’ IT andcommunication technology, using risk management tools, strengthening of downstreaminfrastructure, etc. are some other initiatives that the Corporation is considering in pursuitof its future growth.

The Marketing segmentcontinues to witness intensecompetition not only betweendown stream companies butalso from private and foreigncompanies which havealready initiated their entryand also from upstreamcompanies who want to enterthe retail segment. Theobjective therefore is not onlyto protect the existing volumebut also identify new areasof growth. The initiatives ofthe Corporation in the area

of allied retail business, penetration of rural market, focus on the highway segment etc, areall aimed towards this purpose.

WAY FORWARD :

In order to mitigate the impact of negative margins on the main product lines, the Corporationhas been taking many initiatives oriented towards value additions and operational improvementsin its core lines of refining and marketing. Improving unit service factors, improving the yieldof value added products through process improvements in the Refineries and stabilising theimpact of price fluctuations through oil price risk management have been the main focusareas during the year. In addition, we are also trying to enhance the supply side infrastructurethrough projects such as Mundra-Delhi Pipelines and Loni-Solapur Pipelines. Further settingup of SBM for receipt of crude through VLCC at a suitable location is also being explored.Cost control and cost reduction measures are continuous areas of our focused attention.


Inauguration of the Petrotech stall 2005 by Shri Eduardo Lopez Robayo, Hon'bleMinister of Energy & Mines, Equador. Seen in the picture are Hon'ble Ministerof Petroleum & Natural Gas and Panchayati Raj, Shri Mani Shankar Aiyar &Shri M.B.Lal, C&MD

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Potential areas such as optimising the crude procurement costs, enhancement of the energyefficiencies, optimising the product distribution and transportation costs, steps for savingsin financing and operating costs etc., receive focused attention resulting in savings to theCorporation. The Corporation is also gearing up to meet the demand of the market for bothLNG and CNG by firming up arrangements for receipt of gas as well as for supply of gas toboth retail and industrial customers. The demand for gas is set to grow substantially over thenext ten years, not only to sustain economic growth, but also on account of the high price ofliquid fuels which is encouraging customers to switch to gas. The Corporation on its partwould be required not only to ensure supply sources of CNG/LNG but also the infrastructuresrequired for supply of the same to its existing customers. This is important as otherwise itscustomers base could move out to other supply points. This is also beneficial to theenvironment as seen after the introduction of CNG in both Delhi and Mumbai. A number ofnew gas finds have been announced and these will certainly enhance domestic supply in themedium term. However, this increase in domestic production will not be sufficient and therewill be need to source gas from outside to bridge the supply gap.

It is in this context that the Corporation is continuing to pursue tie-ups/Joint Venturearrangements with reputed companies both Indian and foreign, to pursue initiatives in segmentslike Gas, Exploration & Production, Power, setting up of infrastructure in Marketing/Refiningarea. The Corporation’s expansion and diversification plans would involve a capital expenditureof Rs. 11000 crores to be incurred in phases during the next 3 to 4 years. The major projectsunder implementation are Green Fuels and Emission Control Project in Mumbai Refinery -Rs. 1152 crores, Clean Fuels Project at Visakh Refinery – Rs. 1635 crores, Mundra – DelhiPipeline Project – Rs. 1624 crores, Extension of Mumbai – Pune Pipeline to Hazarwadi at acost of Rs. 335 crores. The proposed capital expenditure also includes outlays towardsinvestments in Joint Ventures and Subsidiary Company for E&P initiatives and for modernisationand upgradation of marketing infrastructure.

HR department is laying greater focus in enhancing the core competencies and capabilitiesof employees to rise up to the challenges and enable the Corporation to carve a niche foritself in the Oil Sector.

CAUTIONARY STATEMENT :

Matters covered in the Management Discussion and Analysis describing the Company’sobjectives, projections, estimates, expectations may be “forward looking statements” withinthe meaning of applicable securities, laws and regulations. The actual per formance couldvary from those projected or implied. Important or unforeseen factors that could make adif ference to the Company’s operations include economic conditions affecting demand/supply and price conditions in the domestic market in which the Company predominantlyoperates, changes in regulations, and other incidental factors.


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The road ahead is challenging. The Corporation could continue to face pressures on margins.The scenario calls for action plans not only to sustain in current position but also to look foravenues to sustain the growth and development. The various initiatives that have beenhighlighted would provide the platform to the Corporation to chart its activities aligned to itsCorporation Vision. The Corporation with its strong fundamentals and growth plans is confidentof meeting the challenges ahead and live up to the expectations of all segments of itsStakeholders.

Shri P. Shankar, Central VigilanceCommissioner addressing at theInteractive session with the FunctionalDirectors & Senior Officers of theCorporation. Also, seen in the pictureis Shri M.B.Lal, C&MD

Functional Directors & Senior Officers of the Corporation at the Interactivesession with Shri P. Shankar, Central Vigilance Commissioner

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Special Focus Areas

HPCL’S CONSTANT ENDEAVOUR

� Aim for sustained Growth and Productivity to reward consistently our shareholders and stakeholders.

� Ensure highest standards of Safety in all our operations.

� Function in harmony with Environment and the Society.

� Produce Quality products and services to meet the stated and latent needs of customers.

� Set up infrastructure with “state of the art” facilities, endeavour for global standards in operations.

� Ensure highest standards of maintenance to ensure reliability of plants/units and enhance MTBF (MeanTime Between Failures).

� Be a learning organization with constant measures to upgrade skills and competencies to respond to theever changing market scenario.

� Be known for highest standards of Ethics and Transparency in operations.

� Earn the trust of all sections with whom the Company operates for an enduring relationship aimed atmutual benefit.

� Creating an environment of Trust, Pride and Camraderie within the organisation.

Setting goals,

Raising the bar,

Looking beyond the obvious,

Courting the impossible,

Dreams that chart

The course of our future,

That’s the HP way

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Special Focus Areas (Contd.)

CORPORATE SOCIAL RESPONSIBILITYThe two biggest challenges confronting the humankind today is Poverty and Pollution. Corporate Social

Responsibility is an integral part of Corporate Governance and is assuming a significant role for the corporates

in their activities. The value of ‘growing green’ i.e. being environmentally friendly, is looked upon by many

companies as a balancing act between nature on the one hand and stakeholders on the other, arising more

out of compulsions than passion to protect environment. But research reports indicate that investments in

environment improvement measures lead to noticeable improvement in the Company’s stock trading and the

stakeholders confidence.

HPCL has always endeavoured to discharge its social responsibility by undertaking wide ranging activities

across the country. The focus of activities has been to improve the standard of living of weaker sections of

the society including women, children and physically challenged persons. HPCL developmental programmes

centre round critical areas like education, health, drinking water facilities, vocational training, sanitation, rural

development etc. that not only provide basic needs of living but also encourage people to become self reliant.

HPCL has progressively scaled up activities on the CSR front quite by allocating significant resources in this

regard. In the last four to five years (2000-2005) nearly Rs.23 crores have been spent on various welfare

activities.

We have given below details of some significant CSR initiatives of the Corporation :

� On the primary education front, HPCL has provided uniforms to more than 60000 students, distributed

note books, school furniture, constructed/renovated 34 school buildings, 4 hostel buildings and around

90 numbers of class rooms in various parts of the country and also provided 7 school buses in Arunachal

Pradesh and Mizoram. Scholarships have been awarded to about 4000 students of various colleges for

graduation and post-graduation studies.

� On the health care front besides organizing medical, eye and gyanec camps, HPCL has provided 21

ambulances/mobile vans to various service societies and associations. HPCL has also been facilitating

running of a burns/trauma care hospital at Chembur called ‘Sushrut Hospital’. Being located in a highly

industrialized zone of Mumbai (Chembur) with many industries handling volatile and hazardous products,

this hospital has been set up specially to take care of any emergencies arising out of industrial accidents.

HPCL has contributed around Rs.20 crores towards the corpus fund of this hospital.

� Bore-wells with hand pumps have been installed in about 265 locations in many parts of the country to

mitigate the problems on the drinking water front.

� To support the income generation avenues for the needy rural population, apart from organizing vocational

training in tailoring, driving, stenography, agro based training etc. HPCL has also provided supplementing

tools to earn a decent livelihood.

� HPCL was one of the first to adopt eco-friendly technologies such as changeover from Phenol to NMP

solvent in three lube extraction units and changeover from Oleum to NMP in the Hexane Treating Plant.

These initiatives have been widely appreciated and have won for HPCL some national and international

awards/citations.

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� Being in an industry handling highly inflammable products, refining, distribution and marketing, it isessential that environmental norms are fully complied. The Corporation has set up an independentDepartment to handle Safety, Health and Environment (SHE) related activities. Continuous efforts aremade for improving the SHE awareness among employees and contractors through training and fieldobservations and clearly defining the safety responsibilities/accountabilities. All the efforts are towardsHPCL being recognised as a “SHE” focused organization. A sum of Rs.149 crores have been spent on“SHE” related matters and Rs.10 crores have been earmarked for the current year.

� On the environmental front, HPCL is meeting all the gaseous emission norms at Mumbai refinery, onthe liquid effluents we have taken necessary steps for Effluent Treatment Plant (ETP) integration formeeting the MINAS (Minimum National Standards) norms. Similarly in our Visakh refinery the ongoingFlue Gas Degenerate (FGD) projects when completed will bring all the SO2 emissions within norms asalso MINAS to ETP modifications.

� To develop a sustainable and environmentally sound strategy for long term management of hazardoussolid wastes, HPCL has entered into a tripartite agreement with national and international companiesfor preparing an “Integrated Hazardous Solid Waste Management Plan”.

� For handling the crude oil sludge, a two pronged strategy has been planned – One to develop amethodology for treating the sludge ‘in-situ’ so that untreated sludge inventory does not build up. Theother parallel strategy is to employ a suitable technology that can process the already accumulatedsludge in a central facility. Thus over a period of time, HPCL should be able to find a permanent andviable solution to the sludge problem.

� We have also undertaken ground water analysis for an assessment of water sampling and steps forcovering all possible sources of contamination. Projects for potential rain water harvesting are underdevelopment.

� Our environment training modules are developed on core aspects such as statutory requirements,emissions measurement and control, solid waste management and environmental audits.

� Investments of over Rs.4600 crores have been made/being committed in various Projects that reducethe sulphur emissions from the refineries as well as in projects for producing transportation fuels formeeting the environmental norms and other emission standards.

� In the marketing operations the focus is towards “total customer and vehicle care” by providing qualityproduct and value added services. Towards this objective, the Corporation has rolled out a number ofinitiatives like quality control mobile laboratories, external audits through independent agencies ande-fuel stations by way of retail automation.

INITIATIVES FOR RURAL POOR

� Earlier people in the rural areas had to cover long distances to source their fuel requirements. HPCL has

pioneered the novel concept of “Mobile retail outlets”, to supply the products nearest to the point of

consumption thereby saving time, energy and cost of rural customers. HPCL introduced the first of its

kind in the industry in Maharashtra.

CORPORATE SOCIAL RESPONSIBILITY (Contd.)

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� HPCL has also put up Kisan Vikas Kendras, which cater not only to fuel requirements but also on

fertilizers, pesticides, quality seeds etc. required for the agriculturists.

� We touch more than 20 million households by providing cooking gas and our LPG Business Line saw a

role for us in CSR front. The introduction of ‘Suraksha’ tube, to connect the LPG cylinder with the stove,

safety awareness programmes, insurance coverage in the event of any accidents are all oriented towards

safety and welfare of customers.

� LPG as a cooking fuel is yet to reach many portions of rural India. Most of the rural population in India

meet their cooking fuel needs by other sources such as coal, firewood etc. Substantial time is spent on

collecting these basic fuel needs. Moreover, due to the smoke and other forms of emissions in the

conventional cooking, serious health hazards are also posed. So HPCL thought of providing cooking

facilities at an affordable cost and thus emerged the “Rasoi Ghar” concept (community kitchen initiative).

We provide cooking facilities such as stoves, utensils as also the LPG connections in a common place

provided by Village Panchayat and operated through self help groups, for a nominal sum. This facility has

been found extremely convenient by the rural women and we are extending the same to other places and

also to hospitals and Schools' midday meal schemes. This unique initiative of ours has won laurels and

has made a deep impact in the rural segment wherever it has been introduced.

� Our CSR activities are also reaching the remote areas of the country and regions like Jammu and Kashmir

which have extreme climatic conditions. Our uninterrupted supply of cooking gas in J&K, where HPCL

market share is about 70% during the recent heavy snowfall has been well appreciated.

HPCL will always strive to be a role model on the CSR front and would look CSR initiatives not from the point

of view of statutory compliance but rather as a process to meet the obligations to the Society.

CORPORATE SOCIAL RESPONSIBILITY (Contd.)

Shri M.B. Lal, C&MD addressing the delegates at theNational Seminar on Governance

Visakh Refinery

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SAFETY, HEALTH & ENVIRONMENT CARE

• As a socially responsible Corporate citizen, HPCL is committed to maintaining high standards of safety,

health and environmental care. We have ensured that increasing scales of operation do not conflict with

protecting safety and health and safeguarding environment. Without losing sight of our long term goal of

reducing occupational injuries, operational incidents and environmental releases, we have expanded the

manufacturing and marketing operations in tune with national needs.

• The safety management systems of MR, VR and MLIF have been audited by DNV, as per their ISRS

protocol, and have been rated at level 8 (for MR & VR) and level 7 (for MLIF). Six other marketing

locations are preparing for ISRS Safety Audit.

• SHE Department is in the process of undertaking the following initiatives :

• To enhance SHE management framework, a detailed SHE performance improvement/benchmarking

study is being undertaken by the globally reputed SHE consultant.

• Achieving ISO-14001 accreditation for our marketing terminals.

• Adjudge different operating locations as per a newly developed SHE Index criteria consisting of

various evaluation parameters.

• Create awareness and provide training to the officers for developing in-house “Environmental Auditing”

capabilities of operating locations.

• HPCL has well-equipped health care facilities/arrangements at all major locations. Occupational health

is a focus area for HPCL and all issues pertaining to occupational health are addressed comprehensively.

• Drastic reduction in SO2 emissions have been achieved in both the Refineries inspite of the significant

increase in crude thruput. As a part of Green fuels and Emission Control project, Flue Gas Desulfurisation

Unit (Wet Gas Scrubber) is being put up in FCCU unit for further reducing the SO2 emission and Particulate

Matter in both the Refineries at Mumbai and Visakh.

• HPCL has been adopting ECO-friendly technologies such as changeover from phenol to NMP solvent and

changeover from Oleum to NMP. These initiatives have been widely appreciated and have won for HPCL

various national, international awards/citations. Diesel Desulphurisation facilities are fully operational in

both the refineries.

• HPCL has undertaken projects worth about Rs.2800 crores for its “Green Fuels Projects” in both the

refineries to meet the MS/HSD of EURO-III grade in Metro/Mega cities and Bharat stage-II grade in the

rest of the country.

• Mumbai Refinery has already commenced production/supply of BIS-II MS/HSD and EURO-III HSD from

1st January 2005 and 1st week of May 2005 respectively. Project for EURO-III MS is under implementation.


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• The Refineries have also taken initiative for treating the tank sludge in an environmental friendly manner

without removal of the sludge from tank and with reduced tank down time. In this direction, in-situ

cleaning by M/s. Balmer Lawrie & Co. Ltd. using BLABO technology has been started in Crude Tank for

recovering maximum oil from the sludge.

• Over 75% of the petroleum products from the refineries are being evacuated through pipelines. Dependence

on road transport for evacuation of products has been reduced drastically, resulting in considerable

reduction in auto emissions to atmosphere.

• Extensive green coverage has been provided in and around the refineries and housing colonies, Housing

colony at Mumbai has received the awards from “The Friends of Trees association for Greenery”.

• The Environment Management System of the Refineries, the Silvasa Lube Plant, Ajmer LPG Plant, Kota

LPG Plant, Loni LPG Plant and Manglore LPG Import Facilities, have been audited and awarded accreditation

under ISO – 14001. Other three LPG plants at Gumdipundi, Madurai and Palghat have been audited for

ISO – 14001 and auditors have recommended for accreditation.

• The Corporation has won several awards on Safety that have been listed under the segment ‘Awards/

Recognition’.

SAFETY, HEALTH & ENVIRONMENT CARE (Contd.)


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ENTERPRISE RESOURCES PLANNING (ERP)

Background

With a view to leverage the Information Technology for the benefit of business, an Enterprise Resource

Planning system (ERP) is currently under implementation and called as Project Parivartan which is JD Edwards

OneWorldTMXe, a leading world class ERP solution. The implementation covers all the modules of the ERP

software viz. Sales & Distribution, Manufacturing, Finance and HR to support the core business processes.

The system when completed and rolled out at all locations would effectively manage the information needs of

your Corporation. The system would provide the decision makers on-line and accurate information that would

aid them in taking timely business decisions. Tracking of cost of operations would become easy with the

implementation of this system. Standardisation of various business processes would result in better

management control.

The first phase of the project was to implement the solution at 14 pilot sites so chosen as to represent all

types of HPCL locations. This has been followed by roll out across all other locations of the Corporation.

Status of Implementation

The ERP implementation which aims to cover more than 400 locations was started from the West Zone in

August 2003 and has since progressed to the South Zone in March 2004, and subsequently to North Zone

from October 2004. During the year, ERP has been implemented at a total of 170 locations covering more

than 50% of Corporation’s business. As of April 2005, ERP implementation has been completed at 261

locations which include both the refineries at Mumbai and Visakh and almost the entire West, South and

North Zones. Approximately 85% of HPCL sales are being recorded in the new system as of date.

The JD Edwards system has been interfaced with the Computerised Materials Management System (CMMS)

system (Maximo) at both Mumbai and Visakh refineries. This interface enables two-way flow of data related

to purchase activities, warehouse issues etc. between the two systems. The interface has been configured

to enable optimum utilisation of the functionalities available in both the systems to the maximum.

Customised modules have been developed internally for Employee Compensation and Benefits and Employee

Payroll. These modules have been integrated with the core HR and Finance modules of the JD Edwards

software. The modules have been implemented at Mumbai Refinery and West Zone and are being rolled out

at other locations. These modules would help achieve enhanced employee satisfaction in view of smooth and

standardised implementation of HR policies.

A Change Management Programme facilitates a smooth transition for the employees using appropriate

Communication and Training strategies. Communication to the user groups is maintained using all available

channels including an intranet website. Comprehensive training is imparted to the users during the

implementation at any site. This is followed by refresher courses of 2-3 months post implementation. Additional

training programmes are also arranged from time to time for focussed training to specific user groups such as


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Regional Managers, Finance functionaries, location in-charges, clerical staff, etc. To foster a culture of

maximising user contribution to the implementation, a competition was established among the pilot locations

for the best implementation. Similar competitions during the roll out phase are continuing.

A ‘state-of-the-art’ data centre in the Head Office at Mumbai hosts powerful IBM enterprise servers, which

manage the entire data and applications in a centralised architecture. The connectivity to the locations has

been established by using various available communication channels such as leased lines, VSATs, ISDN,

VPN, radio links and dial-ups. A separate Disaster Recovery Centre (DRC) is being set up in Hyderabad for

providing a back-up in the event of any physical contingency at the primary site. This DRC would mirror the

main server and would be in a position to take over in case of any disaster at the primary site as well as to

enable any maintenance shutdown to the server.

New initiatives in Parivartan

Various new initiatives have been implemented which build on the information available on a real-time basis

from the ERP system and sustained efforts continue to bring in more of these to reality. In keeping with the

Corporation‘s focus on enhancing Customer satisfaction, a dedicated portal has been designed to display

the information related to despatch details and statement of accounts of a customer. This portal also gives

details of sales for the last 3 years. A customer logs in through internet using a secure user -id and password.

The portal has been launched for Retail, LPG and Aviation business and would be made available shortly for

the Corporation’s major industrial customers as well.

HPCL’s dealers and distributors are getting the information by SMS and e-mail on the loads sent to them,

once ERP system has been implemented at the despatch location. This information is sent to them immediately

on printing the invoice and is a big help in enabling them to keep track of their indents.

MIS report delivery by e-mail to senior management, field officers, document archival system for critical

documents like invoices, purchase orders, cheques, etc., electronic data transmission to a foreign airline on

sales are some of the other initiatives that have already been implemented.

New areas where the on-line availability of information can be harnessed to provide improved customer

service, as also provide visibility to other stakeholders are being explored on an ongoing basis.

The project will be fully rolled out by March 2006 .

ENTERPRISE RESOURCES PLANNING (ERP) (Contd.)


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PROJECT ORGANISATIONAL TRANSFORMATION

The process of organizational transformation which commenced about two years back has sown the seeds

for making HPCL a "Learning Organization”. More than 25% of employees of the Company have so far

participated directly in the various workshops being conducted as a part of transformation process. They

have experienced the power and value of co-creating a shared vision for the corporation.

Employees who participate in the workshops have ‘learnt’ that learning is beyond acquiring information and

knowledge. They have understood that a Learning Organization is where people are continually enhancing

their capabilities to create the results they truly desire, where individual and collective aspirations are set

free, where new and expansive thoughts are nurtured, and where they are continually learning how to learn

together.

Like any growing body of knowledge, there is a ‘disciplined’ approach towards building a Learning Organization.

It is not possible to create an inspired organization capable of producing sustained high performance overnight.

It is the rigorous application of the principles and practices of five disciplines of the learning organization by all

its members that brings into being a learning organization.

With the visions leading the teams and a sense of ownership to the vision prevailing, people in HPCL sense

a feeling of empowerment and commitment like never before. Short term focus has today given way to

sustainable value creation process. Today, people at all levels in the organization are committed to customer

delight that not only allows them to be true to themselves but also to the organization. As people have more

and more control on their jobs, they feel higher and higher responsibility for the outcomes. Shared and

co-created visions in the teams has enabled emergence of higher accountability in teams for achieving

results leading to improved results in all our business units in terms of risk taking, innovations and commitment.

The trust imperative in an organization is the basis for outstanding business results. The process of building

trust starts when there is intense open and reflective discussions in teams and they create their own future.

The process has made the teams redefine their relationship with other stakeholders resulting in a higher

degree of trust with them.


Director-HR and Project Organisation Transformation teammembers with the Management Guru Mr. Peter Senge, authorof the book "Fifth Discipline"

Distributed and disaggregated leadership is a

prerequisite to teams achieving excellence.

Leadership skill building therefore at all critical levels

in the business has become an immediate priority

for the organization. The middle management

members who are involved in leading unit level

business teams at the Regional Offices were first

involved in the process of leadership skill building.

Leadership Development Workshops were conducted

for the Regional Managers where they discovered the

value of alignment, teamwork, customer focus. They

also learned the importance of continually challenging

existing mindsets in order to avoid being prisoners of

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their own thinking. The value of conversing meaningfully to understand the import of significant issues by

leveraging collective thinking was explored with the help of dialogue process.

The participants in the leadership workshop understood the advantage of collective thinking replacing individual

myopias. Leadership thus could become community phenomena instead of individual aggressiveness. Shared

understanding and decision making is also resulting in people finding meaning in their work and collective

achievement resulting in fulfilling individual aspirations also.

Leadership is the ability to see the big picture and think systemically and holistically. The connectivity between

happy and motivated workforce and delighted customers and higher profitability is often understood but not

frequently paid attention to. In HPCL, we have done just that by capacity building in leadership workshops. In

fact the effort does not end with the workshops. Enabling structures are being put up to see that what is

learnt at the workshops is implemented at the workplace.

A team of six internal coaches headed by Director HR attended the 7th Annual Meet of Society for Organizational

Learning at Boston. The interactions with leading practitioners from world over, academicians from institutes

like MIT Boston, etc. and leading consultants from all over the globe immensely benefited the development of

coaches. Many of the ideas of connectivity, interdependencies and the primacy of team working were

successfully implemented by the coaches in the workshops.

The path is difficult, but the future is certain, since we have decided the future we want to create for

ourselves. The more the challenges, the higher is the sense of achievement, that the people in HPCL will

have. There are boundless opportunities and endless possibilities with the Organizational Transformation.

PROJECT ORGANISATIONAL TRANSFORMATION (Contd.)


Participants at the Leadership Self Development Programme held at Nigdi with C&MD and Functional Directors

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OFFICIAL LANGUAGE IMPLEMENTATION 2004-2005

Progressive use of Hindi in the Corporation continues to receive due importance. During the year “Hindi

Pakhwada” (Fortnight) was celebrated from September 6 to September 20, 2004. Efforts in the direction of

associating Rajbhasha with productivity of the various Strategic Business Units of the Organisation have

been given a further momentum. To further enhance the vocabulary and knowledge of Rajbhasha amongst

the employees and encourage the hidden talents, various competitions like essay-writing, letter writing,

elocution, group discussions etc. were organised. Eminent personalities dedicated towards propagation of

Hindi were invited as judges. Kavi Sammelan, lectures on Hindi Implementation by renowned personalities in

the field have motivated employees in more usage of Hindi. Various activities were carried out during the year

such as :

1. Hindustan Petroleum Corporation Limited Rajbhasha

Vision 2006 was prepared at the ACE (Achieving

Continuous Excellence) programme.

2. Bilingual Computer training programmes.

3. Workshops and conferences for the officers/clerical

staff to encourage the employees for implementation

of Rajbhasha as also to update and rejuvenate their

capabilities in Rajbhasha.

4. An All India Competition in Hindi - ‘Interesting/

Inspiring Memorable incident’ was organised for all employees.

5. ‘Rajbhasha Gyan Prashnavali’ Competition was held for all Mumbai based employees to create awareness

about Rajbhasha Implementation.

6. All India Rajbhasha Sammelan was organised at Visakhapatnam.

7. Hindi Utsav at various places.

The Sub-Committee of the Parliament Committee on Official Language inspected various places. The Sub-

Committee appreciated the work done in Hindi by the Corporation. East Zone received an award from Official

Language Implementation Department while South Zone also received an award from TOLIC for Official

Language Implementation.

The Corporation continues to head TOLIC in Mumbai for Public Enterprises/Organisations. Half yearly meetings

were organised as per schedule. The progress of member Organisations is reviewed as also members share

views on effective implementation for each others benefit during these meetings. Besides, “CHAUPALS”

were conducted under the banner of TOLIC at the offices of various member Organisations. Various competitions

were organised by the member Organisation under the banner of TOLIC.


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RASOI GHAR� HP GAS pioneered the launch of the Rasoi Ghar concept for providing lower strata of the society with

cheap and alternate fuel for cooking at affordable price.

� It provides the villagers with a ready to cook facility that eliminates the cost of one time deposit as wellas the recurring refill cost as they are required to pay basis the usage time only.

� The innovative concept of Rasoi Ghar, orcommunity kitchen has been appreciatedby all sections of society includingvoluntary organizations and women groups.

� Today there are more than 1350 RasoiGhars operating in 22 states and benefitingmore than 15,000 people.

� These Rasoi Ghars also help in meetingthe aspirations of rural population whocould not af ford to have an LPGconnection on their own.

� The Rasoi Ghar concept has now been expanded to public utility areas such as hospitals etc. Some ofthe important locations covered are AIIMS, Delhi, King George Hospital, Visakh, Tata Memorial Hospital,Mumbai and Lal Ded, Srinagar to ensure cooking of hygienic food at affordable prices for the relatives ofpatients who normally accompany the patient.

� Restricting felling of trees and protecting environment thereon has been another key benefit from theseRasoi Ghars. In a pilot project undertaken in the Yavatmal district of Maharashtra, 100 Rasoi Gharswere set up in the forest area in co-ordination with the forest department. It resulted in savings of nearly36,000 trees per Rasoi Ghar.

� Further, temporary Rasoi Ghars were also set up at all major rural melas such as Pushkar, Sonpur, Ujjainetc. to benefit pilgrims and floating population and at the same time to popularize the concept as well toincrease awareness of the benefits of LPG.

� Appreciating this novel initiative, NDTV Profit Channel has done a special feature covering the completeconcept and operations. Further the concept has also been widely covered by several dailies, periodicalsand magazines.

� For this innovative concept, HPCL has been awarded the prestigious ‘Golden Peacock Award’ for ecoinnovation and has also been awarded the ‘National Excellence Award for Innovative Techniques’ forimproving access of a modern fuel to Rural Women.

� HPCL would endeavour to promote the scheme further for the benefit of wider spectrum of the societyand in particular the weaker section of the society.

The Scheme has made a deep impact on the quality of living of rural people who otherwise dependent oncharcoal, firewood etc., for heating with associated health and environmental hazards.


A Rasoi Ghar

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INDIA’s FIRST UNDERGROUND (CAVERN) LPG STORAGE FACILITY

� Being set up by JV between HPCL and M/s. TOTAL of FRANCE (50 : 50), called South Asia LPG Pvt. Ltd.

� Underground LPG Cavern facility at Visakh 60,000 MTs.

� First in South Asia.

� LPG imports in large size 40,000 MT tankers resulting in freight savings.

� Project cost : Rs. 333 crores.

� Completion : August 2006.

� Storage facility is located at a depth of 160 mtrs. below the earth’s surface and is fully isolated.

� Technologically proven methodology.

� By far the safest and environment friendly means of storing LPG.

� Principle of containment ensures no leakage or contamination.

� Safety hazards on account of sabotage, storms, earthquakes and explosions are minimised.

� External fires will not affect storage.

� Surface land requirement is low in view of reduced safety distances.

� Caverns by their very nature require very low maintenance and hence safety is in-built.

� Low capital cost per tonne of storage.


A section of the Cavern under construction

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1. Award from Government of India for Excellent

Overall Performance and being one of the top

Ten Public Sector which fall under Excellent

Category.

2. Golden Peacock Innovation Award for 2004 from

Institute of Directors for innovation in

manufacturing of Viscosity Index Improver.

3. Oil Industry Safety Award for Best Overall Safety

Performance amongst Refineries to Mumbai

Refinery from Oil Industry Safety Directorate.

4. First Performer in Lube Oil Blending Category to

Mazgaon – Haybunder Lube Plant from Oil

Industry Safety Directorate.

5. Award for “Best Workplace Practices” from Asian

Forum on Corporate Social Responsibility,

Philippines for Employees friendly Policy and

Practices.

6. National Safety Awards for Mumbai Refinery from

Directorate General - Factory Advice Service &

Labour Institute (Mumbai), Ministry of Labour,

Government of India for achieving the lowest

average weighted accident frequency rate over a

period of 3 consecutive years.

7. National Safety Awards to Mumbai Refinery from

Directorate General - Factory Advice Service &

Labour Institute (Mumbai), Ministry of Labour,

Government of India for working the longest

number of manhours without a fatal/non-fatal

accident/total Permanent Disability.

8. Excellence Award to Retail SBU “Forecourt

Retailer of the Year 2005” instituted by KSA

Technopak – ICICI Bank.

9. “Excellence Award 2005” to Retail SBU for

outstanding contribution in Petro Retailing

Business by DEW Journal.


AWARDS/RECOGNITIONS - 2004 - 05

Dr. Manmohan Singh Hon'ble Prime Minister of India presentingthe Prestigious MOU Award for Excellent overall performanceto Shri M.B.Lal, C&MD

Shri Pranab Mukherjee, Hon'ble Minister of Defencepresenting the prestigious Good Corporate Citizen Awardto Shri M.B.Lal, C&MD

C&MD and ED-LPG receiving "Golden Peacock Award" fromDr. Ola Ullsten, former Prime Minister of Sweden

Shri T.N.R. Rao, former Secretary, MOP&NG, presentingthe award for outstanding contribution in Petro Retailingbusiness to Shri S.P. Chaudhry, ED-Retail

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10. Award for Innovative Brand Strategies under

DAKS Awards for Brand Excellence from Indian

Brand Summit which recognises talent and

encourages Mentorship, Role Models and Brand

Leadership.

11. Recognition to LPG SBU - Rasoi Ghar - National

Excellence for Innovative Technologies from

Wisitex Foundation in association with Indian

Merchants Chamber for selfless and untiring

efforts and far reaching vision towards rural

development and upliftment.

12. India Marketing Award – 2004 to LPG SBU from Exchange 4 Media Group for Excellence in Marketing Services

Category for their initiative in promising the customers the right weight of LPG cylinder, at their doorsteps.

13. ‘Golden Peacock Award' to LPG SBU for Innovative Product/Services for its ‘Ji Haan’ initiatives.

14. India’s Most Respected Company Award from Business World in reaching out to customers as compared

to other Oil PSUs.

15. Mid-Day HR Excellence Award from Mid-Day – Big Break & DAKs for Innovative HR Practices and Best

Reinvention of HR functions.

16. Excellent Energy Conservation Implementation Gold Award from International Greenland Society for

Energy Conservation.

17. Environment Excellence Gold Award for 2003-04 from Greentech Society for Commitment to Environment,

Health & Safety.

18. Safety Gold Award from Greentech Society for Commitment to Environment, Health & Safety.

19. Gold Award for Environment Excellence in Petroleum Refinery Sector - 2003-04 from Greentech Foundation

for Commitment to Environment, Health & Safety.

20. Good Corporate Citizen Award from PHD Chamber of Commerce and Industry for Corporate social

responsibility, Productivity enhancement and upgradation of conservation facilities.

21. Best Employers Award from Hewitt Associates for progressive people practices and initiatives.

22. Best Layout Award for HPCL house journal ‘HP News’ from Maya Ram Surian Foundation.

23. Golden Peacock Innovation Award for 2004 from Institute of Directors for highest achievement in the

fields of quality innovation management and innovative products/services.

24. Best Customer focus Award from Petrotech 2005 for Best Customer focus at Petrotech Stall.

25. National Safety Council Safety Award (NSCI) from National Safety Council to Mumbai Refinery for

Occupational Safety and Health Management and meritorious performance over sustained period of 3

preceding years.

AWARDS/RECOGNITIONS - 2004 - 05 (Contd.)


Justice M.N. Venkatchaliah, Former Chief Justice ofIndia, presenting the "Golden Peacock Award" to

Shri S.V. Sahni, ED-LPG

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Human Resource Accounting

HPCL considers human dimension as the key to organisation's success. Several initiatives for developmentof human resources to meet new challenges in the competitive business environment have gained momentum.HPCL recognises the value of its human assets who are committed to achieve excellence in all spheres. TheHuman Resource Profile given below in table shows that HPCL has a mix of energetic youth and experiencedseniors who harmonise the efforts to achieve the Company's goals.

Age 21 - 30 31 - 40 41 - 50 Above 50 Total

No. of Employees 462 3,031 5,280 1,788 10,561Management 294 1,263 1,532 473 3,562Non Management 168 1,768 3,748 1,315 6,999Average Age 43

Accounting For Human Assets

The Lev & Schwartz model is being used by our Company to compute the value of Human Resources. Theevaluation as on 31st March 2005 is based on the present value of future earnings of the employees on thefollowing assumptions.

1. Employees’ compensation represented by direct & indirect benefits earned by them on cost to Companybasis.

2. Earnings upto the age of superannuation are considered on incremental basis taking the Company’spolicies into consideration.

3. Such future earnings are discounted @ 11% (2003-04 : 11%).

Rs./Crores

2004-05 2003-04

VALUE OF HUMAN RESOURCES

Management employees 4,540 4,206

Non Management employees 3,724 3,378

8,264 7,584

Human Assets vis-a-vis Total AssetsNo. of Employees 10,561 11,088

Value of Human Assets 8,264 7,584

Net Fixed Asset 7,730 7,074

Investments 1,757 2,048

Net Current Asset 2,514 1,775

20,266 18,481

Employee Cost (incl. VRS compensation for 2004-05) 714 570

Profit Before Tax 1,641 2,980

Ratios (in %) :

PBT to Human Resource 19.86 39.29

Employee Cost to Human Resource 8.64 7.52

Human Resource to Total Resource 40.78 41.03

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Auditors' Report

TO THE MEMBERS OF HINDUSTAN PETROLEUM CORPORATION LIMITED

1. We have audited the attached Balance Sheet of Hindustan Petroleum Corporation Limited, as atMarch 31, 2005 and also the Profit and Loss Account and Cash Flow Statement of the Company for theyear ended on that date annexed thereto. These financial statements are the responsibility of Company’smanagement. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatements. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order, 2003, (“Order”) issued by the CentralGovernment of India in terms of sub-section 4A of Section 227 of the Companies Act, 1956, weenclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in Paragraph 3 above, we report that :(a) We have obtained all information and explanations which, to the best of our knowledge and belief,

were necessary for the purpose of the audit;(b) In our opinion, proper books of accounts, as required by law, have been kept by the Company, so

far as it appears from our examination of these books and proper returns, adequate for thepurposes of our audit, have been received from the branches;

(c) The Branch Auditors’ report, made available to us, has been appropriately dealt with while preparingour report;

(d) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this reportare in agreement with the books of account;

(e) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt withby this report comply with the Accounting Standards referred to in sub-section (3C) of Section211 of the Companies Act, 1956;

(f) On the basis of the written representations received from directors of the Company and taken onrecord by the Board of Directors, we report that no director is disqualified as at March 31, 2005,from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of theCompanies Act, 1956;

(g) In our opinion, and to the best of our information and according to the explanations given to us, andread with note no. 8 to Schedule 20 B regarding treatment of Income tax benefits, the said accountsgive the information required by the Companies Act, 1956, in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India;(i) In the case of the Balance sheet, of the state of affairs of the Company as at March 31, 2005;(ii) In the case of the Profit and Loss account, of the profit of the Company for the year ended on

that date; and

(iii) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

For G.P. Kapadia & Co. For N.M. Raiji & Co.Chartered Accountants Chartered Accountants

Nimesh Bhimani Vinay D. BalsePartner PartnerMembership No. 30547 Membership No. 39434

Place : New DelhiDate : May 26, 2005

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(Referred to in paragraph 3 of our report of even date)

1. (a) The Company has maintained proper records showing full particulars including quantitative detailsand situation of fixed assets except for items like pipes, valves, meters, instruments and othersimilar items peculiar to a continuous process industry.

(b) As explained to us, the Company, having regard to the size and nature of its business, has adopted apractice of carrying out physical verification of its fixed assets, except LPG cylinders and fixedassets of the erstwhile Kosan Gas Company undertaking, not handed over, on a staggered basis,over a period of three years in the case of Plant and Machinery and other assets, and over a period offive years in the case of furniture, fixtures and office equipment. We were informed that discrepanciesnoticed on such verification as compared to the book records have been properly dealt with in thebooks of account. However, the existence of the fixed assets situated at the residence of theemployees is taken on self declaration basis.

(c) Fixed assets disposed off during the year were not substantial and, therefore, do not affect the goingconcern assumption.

2. (a) As explained to us, the inventories were physically verified during the year by the Management atreasonable intervals.

(b) The procedures of physical verification of stocks followed by the Management are reasonable andadequate in relation to the size of the Company and the nature of its business. In the case ofmaterials lying with third parties, certificates confirming stocks held have been received from them.

(c) The Company has maintained proper records of inventory. We were informed that discrepanciesnoticed on such verification as compared to the book records were not material and have beenproperly dealt with in the books of account.

3. Based on the audit procedures applied by us and according to information and explanations given tous, the Company has neither granted nor taken any loans, secured or unsecured to/from companies,firms or other parties covered in the register maintained under Section 301 of the Companies Act,1956. Sub-clause (b), (c), (d), (e), (f) and (g) of sub-para (iii) of para 4 of the Order are not applicable.

4. In our opinion, and according to the information and explanations given to us, and having regard to thefact that some of the items are of specialised nature in respect of which suitable alternative sourcesdo not exist for obtaining comparative quotations, there are adequate internal control procedurescommensurate with the size of the Company and nature of its business for the purchase of inventoryand fixed assets and for the sale of goods and services.

5. (a) To the best of our knowledge and according to the information and explanations given to us, therewere no transactions that needed to be entered in the register in pursuance of Section 301 of theCompanies Act, 1956.

(b) As there have been no transactions that needed to be entered in the register maintained underSection 301 of the Companies Act, 1956, during the year, no comments are required to be offered inrespect of reasonability of prices at which such transactions have been entered into at the relevanttime.

6. In our opinion, and according to the information and explanations given to us, the Company hascomplied with the directives issued by the Reserve Bank of India and the provisions of Section 58Aand Section 58AA of the Companies Act, 1956, and the rules framed thereunder with regard todeposits accepted from the public. We have been informed that no order has been passed by theCompany Law Board or National Company Law Tribunal or Reserve Bank of India.

7. In our opinion, the Company has an internal audit system commensurate with its size and the natureof its business.

Annexure to Auditors' Report

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8. We have broadly reviewed the books of account maintained by the Company in respect of productswhere, pursuant to the Rules made by the Central Government, the maintenance of cost records hasbeen prescribed under Section 209 (1) (d) of the Companies Act, 1956. We are of the opinion thatprima facie the prescribed accounts and records have been maintained and are being made. We havenot, however, made a detailed examination of the records with a view to determine whether they areaccurate or complete.

9.(a) According to the information and explanations given to us and on the basis of our examination of thebooks of account, the Company has been regular in depositing undisputed statutory dues, includingProvident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax,Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory duesduring the year with the appropriate authorities. There are no undisputed dues payable for a period ofmore than six months as at March 31, 2005, from the date they became payable.

(b) According to the information and explanations given to us, dues relating to sales tax/customs duty/wealth tax/excise duty/cess which have not been deposited on account of disputes with the relatedauthorities have been reflected in the table here below :

Statute Forum Amount (Rs./Lakhs) Year

Central Excise Commissioner 426.06 1985 - 2005(Appeals) 560.14 1993 - 2004 - 2005

76.86 1994 - 199632.49 1997 - 1998

7,608.38 2003 - 2004

8,703.93

CESTAT 43,503.96 1994 - 200573.54 1997 - 1998

2.64 1997 - 199826.76 1997 - 199810.32 1997 - 1998

533.06 1998 - 19991.04 1999 - 2000

270.36 2001 - 2002280.55 2002 - 2003

4,440.78 2003 - 2004

49,143.01

Appellate Tribunal 173.58 1998 - 1999

Grant Total – Central Excise (A) 58,020.52

Sales Tax Act Sales Tax AppellateTribunal

Maharashtra GST 3,047.79 1994 - 1995 to1999 - 2000

Gujarat GST/CST 4.68 1986 - 1994

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Bihar State CST/GST/Finance 854.39 1986 - 1996Act/Works Contract Act

Uttar Pradesh CST 31.13 1987 - 1998

Andhra Pradesh State GST/CST 2,576.02 1994 - 2001

Karnataka State KST/CST/Entry Tax 8,323.27 1994 - 2002

Haryana CST 1,498.43 1997 - 1999

Jammu and Kashmir 8.87 1989 - 1990 to2002 - 2003

Sub-Total (B)(i) 16,344.58

Commissioner/DCCT/ADC/JCCT

Gujarat State MST 102.76 1994 - 2000

Maharashtra State Sales Tax 3,409.00 1985 - 1997

West Bengal State Sales Tax/CST 1,674.90 1996 - 2002

Bihar State DFA and CST 138.37 1997 - 1998

Orissa State GST/Entry Tax 4.29 1998 - 1999

Assam State CST 100.10 1996 - 1998

Uttar Pradesh State CST 15.03 1994 - 1995

Delhi State CST 80.99 1976 - 2002

Rajasthan State 860.34 2002 - 2003

Andhra Pradesh State GST/CST 4,381.54 1997 - 1998

Kerala State GST/CST 368.68 1996 - 1999

Karnataka State CST/GST 261.16 1998 - 2003

Jammu and Kashmir 8.15 1989 - 1990 to

2002 - 2003

Sub-Total (B) (ii) 11,405.31

Sales Tax

Kerala State Kerala High Court 336.83 1987 - 1988 to1995 - 1996

Karnataka Entry Karnataka High 28,578.11 1986 - 1987 toCourt 2002 - 2004

UP CST/Works Contract 1,069.62 1994 - 2003

Sub-Total (B) (iii) 29,984.56


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Sales Tax

Assam GST Assam Board of 4,946.95 1993 - 1999Revenue

Madhya Pradesh Madhya Pradesh 18.61 1985 - 1987Board of Revenue

Sub-Total (B)(iv) 4,965.56

Grand Total – Sales Tax Act 62,700.01(B) (i + ii + iii + iv)

Customs Duty Commissioner(Appeals) 35,025.21 1994 - 2003

6.75 2000 - 2001

Grand Total – Customs Duty (C) 35,031.96

Grand Total (A + B + C) 1,55,752.49

10. The Company does not have any accumulated losses at the end of the financial year and has notincurred cash losses in the financial year and in the financial year immediately preceding such financialyear.

11. According to information and explanations given to us and based on the checks carried out by us, theCompany has not defaulted in repayment of dues to financial institutions or banks or debentureholders.

12. According to the information and explanations given to us, the Company has not granted loans andadvances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund/nidhi/mutual benefit fund/society. Therefore the provisions ofsub-para (xiii) of para 4 of the Order are not applicable to the Company.

14. According to the information and explanations given to us, the Company is not dealing or trading inshares, securities, debentures and other investments. Therefore the provisions of sub-para (xiv) ofpara 4 of the Order are not applicable to the Company.

15. In our opinion and according to information and explanations given to us, the Company has notprovided guarantees for loans taken by others from banks and financial institutions.

16. In our opinion, the term loans taken during the year have been applied for the purpose for which theywere raised.

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17. According to the information and explanations given to us, and overall examination of the balancesheet of the Company, fund raised for short term basis have, prima facie, not been used during theperiod for long term investment.

18. According to information and explanations given to us the Company has not made any preferentialallotment of shares to parties and companies covered in the Register maintained under Section 301of the Companies Act, 1956 during the year.

19. According to information and explanations given to us, securities have been created in respect ofdebentures issued which have been redeemed in full during the year.

20. The Company has not made any public issue of any securities during the year.

21. According to the information and explanations given to us and based on the audit procedures performedand representation obtained from the management, we report that no fraud on or by the Company,having material misstatement on the financial statements has been noticed or reported during theyear under audit.





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Balance Sheet as at 31st March, 2005

Rs./Crores

SCHEDULE 2004-05 2003-04SOURCES OF FUNDS

Shareholders’ Funds :a) Capital 1 338.93 338.90b) Reserves and Surplus 2 8,101.92 7,403.91

8,440.85 7,742.81Loan Funds :

a) Secured Loans 3 319.91 542.73b) Unsecured Loans 4 1,865.44 1,158.07

2,185.35 1,700.80Deferred Tax Liability 1,374.75 1,454.08

Total 12,000.95 10,897.69

APPLICATION OF FUNDS

Fixed Assets : 5a) Gross Block 12,393.17 11,387.43b) Less : Depreciation 5,449.53 4,809.32

c) Net Block 6,943.64 6,578.11d) Capital Work-in-Progress 6 786.84 496.14

7,730.48 7,074.25Investments 7 1,756.84 2,048.42

Current Assets, Loans and Advances :a) Inventories 8 5,682.21 5,402.53b) Sundry Debtors 9 1,048.61 1,000.29c) Cash and Bank Balances 10 201.63 199.21d) Other Current Assets 11 0.35 0.32e) Loans and Advances 12 2,569.50 2,827.82

9,502.30 9,430.17Less :Current Liabilities and Provisions : 13

a) Liabilities 6,177.82 6,448.14b) Provisions 810.85 1,207.01

6,988.67 7,655.15

Net Current Assets 2,513.63 1,775.02

Total 12,000.95 10,897.69

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIESAND NOTES FORMING PART OF ACCOUNTS 20

M.B. LAL FOR G.P. KAPADIA & CO. FOR N.M. RAIJI & CO.Chairman & Managing Director Chartered Accountants Chartered Accountants

C. RAMULU NIMESH BHIMANI VINAY D. BALSEDirector-Finance Partner Partner

N.R. NARAYANANCompany Secretary


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Profit and Loss Account for the year ended 31st March, 2005

SCHEDULE 2004-05 2003-04INCOME

Sale of Products 64,689.51 56,332.57(Net of Discount : Rs. 462.60 crores, 2003-04 : Rs.315.94 crores)Less : Excise Duty Paid 5,424.96 5,993.47

Net Sales 59,264.55 50,339.10Net Recovery from/(Payment to) Industry Pool Accounts (7.86) 160.30Recovery under Subsidy Schemes 536.68 1,018.26Other Income 14 329.53 379.39

60,122.90 51,897.05INCREASE/(DECREASE) IN INVENTORY 15 34.87 357.50EXPENDITURE AND CHARGES

Purchase of Products for resale 33,677.05 30,304.41Raw materials consumed 20,576.22 15,017.04Packages consumed 90.38 79.15Duties applicable to products 91.42 317.61Transhipping Expenses 1,384.00 1,228.97Payments to and provisions for Employees 16 713.62 570.79Other Operating Expenses 17 1,244.46 1,171.36Depreciation/Amortisation 658.38 605.35Interest 18 81.64 55.65

58,517.17 49,350.33

PROFIT FOR THE YEAR BEFORE PRIOR PERIOD ADJUSTMENTS AND TAXES 1,640.60 2,904.22PRIOR PERIOD ADJUSTMENTS DEBITS/(CREDITS) (NET) 19 – (76.21)PROFIT BEFORE TAXES 1,640.60 2,980.43PROVISION FOR CURRENT TAXATION 589.71 1,022.45PROVISION FOR DEFERRED TAXATION (NET) (79.33) 54.04PROVISION FOR TAXATION OF EARLIER YEARS WRITTEN BACK (147.11) –PROFIT AFTER TAXES 1,277.33 1,903.94BALANCE BROUGHT FORWARD 5,268.19 4,422.10

Transfer from Debenture Redemption Reserve 100.00 –PROFIT AVAILABLE FOR APPROPRIATION 6,645.52 6,326.04APPROPRIATED FOR :

General Reserve 127.73 190.39Transfer to Debenture Redemption Reserve – 25.00Interim Dividend 169.67 203.88Proposed Final Dividend 339.33 542.93Tax on Distributed Profits 71.15 95.65

BALANCE CARRIED FORWARD 5,937.64 5,268.19EARNINGS PER SHARE (in Rs.) - Basic and Diluted 37.69 56.18

(2004-05 : EPS = Net Profit - Rs.1,277.33 crores/Weighted avg. no. of shares - 33.893 crores;2003-04 : EPS = Net Profit - Rs.1,903.94 crores/Weighted avg. no. of shares - 33.887 crores)

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIESAND NOTES FORMING PART OF ACCOUNTS 20





Rs./Crores

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Schedules forming part of the Balance Sheet

2004-05 2003-04

Rs./Crores

1. CAPITALA. Authorised :

75,000 Cumulative Redeemable Preference Shares ofRs. 100/- each 0.75 0.7534,92,50,000 Equity Shares of Rs.10/- each 349.25 349.25

350.00 350.00B. Issued :

33,93,30,000 Equity Shares of Rs.10/- each 339.33 339.33C. Subscribed and Called up :

33,93,30,000 Equity Shares of Rs.10/- each fully paid up 339.33 339.33Less : Calls unpaid by Others 0.40 0.43

338.93 338.90(1) 77,50,000 fully paid up equity shares of Rs. 10/- each were allotted to the

shareholders of Lube India Limited on the amalgamation of that companyfor consideration other than cash.

(2) 52,00,000 fully paid up equity shares of Rs. 10/- each were allotted to thePresident of India, for consideration other than cash, on the amalgamationof Caltex Oil Refining India Limited (CORIL) with the Company.

(3) 26,44,30,000 shares of Rs. 10/- each were allotted as fully paid bonusshares by capitalisation of Capital Reserve, Capital Redemption Reserveand accumulated profits.

2. RESERVES AND SURPLUSShare Premium AccountAs per last Balance Sheet 1,164.12 1,164.12Less : Calls Unpaid 13.27 14.10

1,150.85 1,150.02

Debenture Redemption ReserveAs per last Balance Sheet 100.00 75.00Add : Transfer from Profit and Loss Account – 25.00

100.00 100.00Less : Transfer to Profit and Loss Account 100.00 –

– 100.00General ReserveAs per last Balance Sheet 885.70 695.31Add : Transfer from Profit and Loss Account 127.73 190.39

1,013.43 885.70Profit and Loss AccountSurplus per Account annexed 5,937.64 5,268.19

8,101.92 7,403.913. SECURED LOANS

i. 8.50 % Secured Non-Convertible Debentures redeemable at paron February 4, 2007 with an option for early redemption ofdebentures, at par, on February 4, 2005 (Secured against certainimmovable properties of the Company.) – 400.00

ii. Overdrafts from Banks 319.91 142.73(secured by hypothecation of Stock-in-Trade)

319.91 542.73

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4. UNSECURED LOANS

Fixed Deposits 0.11 2.79

Short Term Loans from Banks 1,665.33 1,155.28(Due for repayment within one year Rs. 1665.33 crores,2003-04 : Rs. 1155.28 crores)

From Oil Industry Development Board 200.00 –(Due for repayment within one year Rs. 66.66 crores,2003-04 : Rs. Nil)

1,865.44 1,158.07

2004-05 2003-04

Rs./Crores

A. Includes Rs. 2.60 crores (2003-2004 : Rs. 2.60 crores) of assets of erstwhile Kosan Gas Company arising out ofvesting of that company with the Corporation. This amount includes Rs. 0.14 crores (2003-2004 : Rs. 0.14 crores)not handed over to the Corporation consisting of Freehold Land Rs. 0.01 crores (2003-2004 : Rs. 0.01 crores)Building Rs. 0.06 crores (2003-2004 : Rs. 0.06 crores) Plant & Equipment Rs. 0.07 crores (2003-2004 : Rs. 0.07crores). Consequently, cumulative depreciation on the Fixed Assets amounting to Rs. 0.12 crores (2003-2004 :Rs. 0.12 crores) has not been provided for.

B. Includes Rs. 62.05 crores (2003-2004 : Rs. 52.78 crores) being the Corporation’s share of cost of land and otherassets jointly owned with other Oil Companies.

C. Title Deeds to some of the lands acquired are still to be obtained.D. Includes Rs. 0.01 lakhs (2003-2004 : Rs. 0.01 lakhs) being share application money in Co-operative Housing Societies.

5. FIXED ASSETS (A & B) Rs./Crores

Gross Block Additions/ Deductions/ Gross Block Depreciation Total Net Netat cost Reclassifi- Reclassifi- at cost and Depreciation Block Block

as at cations cations as at Amortisation and as at as at01/04/2004 31/03/2005 for the year Amortisation 31/03/2005 31/03/2004

2004-2005 upto31/03/2005

A. OTHER THAN INTANGIBLE ASSETS

1. Land - Freehold (C) 176.15 9.88 0.34 185.69 – – 185.69 176.15

2. Roads and Culverts 461.05 91.17 – 552.22 8.10 47.83 504.39 421.31

3. Buildings (D) 923.58 145.09 0.20 1,068.47 20.05 134.23 934.24 809.29

4. Leasehold Property- Land 83.61 4.45 – 88.06 2.63 17.19 70.87 69.05

5. Railway Siding and 269.65 1.93 – 271.58 13.32 101.61 169.97 181.37Rolling Stock

6. Plant and Equipment 9,134.71 716.46 19.12 9,832.05 579.75 4,947.42 4,884.63 4,754.06

7. Furniture, Fixtures 241.37 45.18 8.22 278.33 24.22 137.09 141.24 123.72and Office/Lab. Equipment

8. Transport Equipment 64.46 14.53 1.64 77.35 5.12 41.69 35.66 26.53

9. Unallocated Capital Expenditure 0.20 – – 0.20 – 0.20 – –on Land Development

Total (A) 11,354.78 1,028.69 29.52 12,353.95 653.19 5,427.26 6,926.69 6,561.48

B. INTANGIBLE ASSETS

1. Right of Way – 1.72 – 1.72 – – 1.72 –

2. Technical/Process Licences 6.24 – – 6.24 0.35 1.78 4.46 4.81

3. Software 26.41 4.88 0.03 31.26 6.05 20.49 10.77 11.82

Total (B) 32.65 6.60 0.03 39.22 6.40 22.27 16.95 16.63

Grand Total [(A) + (B)] 11,387.43 1,035.29 29.55 12,393.17 659.59 5,449.53 6,943.64 6,578.11

Previous Year 10,754.32 795.77 162.66 11,387.43 606.58 4,809.32 6,578.11

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6. CAPITAL WORK-IN-PROGRESS (at Cost)

Unallocated Capital Expenditureand Materials at Site 648.16 423.38Advances for Capital Expenditure 57.91 9.03Capital Stores 47.88 38.87Capital Stores lying with Contractors 4.45 4.66Capital goods in transit 2.03 1.49

760.43 477.43Construction period expenses pending apportionment(Net of recovery) :Establishment charges 25.71 18.11Interest 0.70 0.59

26.41 18.71

786.84 496.14

7. INVESTMENTS (Long term, at Cost)

A. TRADE INVESTMENTSQuoted1. Mangalore Refinery and Petrochemicals Ltd.

29,71,53,518 Equity Shares of Rs. 10/- each fully paid up 471.68 471.682. 6.96% Oil Companies Government of India

Special Bonds 2009 931.00 1,231.00

Unquoted1. Guru Gobind Singh Refineries Ltd. (Wholly owned

subsidiary) 29,57,10,000 Equity Shares ofRs. 10/- each fully paid-up 295.71 292.29(34,20,000 Equity Shares of Rs. 10/- each purchased/allotted during the year)

2. Hindustan Colas Ltd.47,25,000 Equity Shares of Rs. 10/- each fully paid up 4.72 4.72

3. Petronet India Ltd.1,59,99,999 Equity Shares of Rs. 10/- each fully paid up 16.00 16.00

4. Petronet MHB Ltd.1,30,000 Equity Shares of Rs. 10/- each fully paid up 0.13 0.13

5. Prize Petroleum Co. Ltd.99,99,600 Equity Shares of Rs. 10/- each fully paid up 10.00 10.00

6. South Asia LPG Co. Pvt. Ltd.2,75,00,000 Equity Shares of Rs. 10/- each fully paid up 27.50 22.50(50,00,000 Equity Shares of Rs. 10/- each allottedduring the year)

7. Bhagyanagar Gas Ltd.12,497 Equity Shares of Rs. 10/- each fully paid up 0.02 0.02

Total (A) 1,756.76 2,048.34

2004-05 2003-04

Rs./Crores

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B. OTHER INVESTMENTS

Quoted1. Government Securities of the face value of Rs. 0.02 crore

(2003-04 : Rs. 0.02 crore)Deposited with Others 0.02 0.02On hand - Rs. 0.25 lakh (2003-04 : Rs. 0.25 lakh) – –

2. Scooters India Ltd.10,000 Equity Shares of Rs. 10 each fully paid up 0.01 0.01

Unquoted1. Government Securities of the face value of Rs. 0.24 lakh

(2003-04 : Rs. 0.24 lakh)Deposited with Others - Rs. 0.10 lakh(2003-04 : Rs. 0.10 lakh) – –On hand* - Rs. 0.14 lakh (2003-04 : Rs. 0.14 lakh) – –

2. East India Clinic Ltd.1, ½% Debenture of face value of Rs.0.15 lakh -Rs.0.15 lakh (2003-04 : Rs.0.15 lakh) – –1, 5% Debenture of face value of Rs.0.07 lakh -Rs.0.07 lakh (2003-04 : Rs.0.07 lakh) – –

3. Shushrusha Citizen Co-operative Hospital Limited100 Equity Shares of Rs. 100/- each fully paid up -Rs. 0.10 lakh (2003-04 : Rs. 0.10 lakh) – –

4. Petroleum India International (Association of Persons)**Contribution towards Seed Capital 0.05 0.05

Total (B) 0.08 0.08

Total Investments [(A) + (B)] 1,756.84 2,048.42

Less : Provision for loss on Investments - Rs. 0.14 lakh (2003-04 : Rs. 0.14 lakh) – –

1,756.84 2,048.42

Cost Market/Redemption Value

2004-05 2003-04 2004-05 2003-04Aggregate of quotedInvestments 1,402.71 1,702.70 2,354.23 2,957.50Aggregate of unquotedInvestments 354.13 345.72

1,756.84 2,048.42

* Includes Rs. 0.14 lakhs (2003-04 : Rs. 0.14 lakhs) not in the possessionof the Company

** Members in Petroleum India International (AOP) where HindustanPetroleum Corporation Ltd., Bharat Petroleum Corporation Ltd., BongaigaonRefineries & Petrochemicals Ltd., Kochi Refineries Ltd., Engineers IndiaLtd., IBP Co. Ltd., Indian Petrochemicals Corporation Ltd., ChennaiPetroleum Corporation Ltd. have a share of 12.50 % each


2004-05 2003-04

Rs./Crores

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2004-05 2003-048. INVENTORIES

(As per Inventory taken, valued and certified by the Management)

Raw Materials (Including in-transit Rs. 221.93 crores; 2003-04 :Rs. 244.15 crores) 1,166.24 931.53Finished Products(Including in-transit between locations Rs. 449.54 crores;2003-04 : Rs. 390.94 crores) 4,107.17 4,149.69Stock in Process 275.07 197.68Packages 7.96 13.42

5,556.44 5,292.32Stores and Spares * (Including in-transit Rs. 13.25 crores;2003-04 : Rs. 8.47 crores) 125.77 110.21

5,682.21 5,402.53

* Includes stock lying with contractors Rs. 1.39 crores(2003-04 : Rs. 2.59 crores)

9. SUNDRY DEBTORS (Unsecured)

Over six months :Considered good 303.39 38.26Considered doubtful 31.56 28.65

Others :Considered good 745.22 962.03

1,080.17 1,028.94Less : Provision for Doubtful Debts 31.56 28.65

1,048.61 1,000.29

10. CASH AND BANK BALANCES

Cash on hand 1.21 1.11Cheques Awaiting Deposit 0.59 0.25With Scheduled Banks :

On Current Accounts 196.74 194.85On Non-operative Current Accounts* 0.01 0.01On Fixed Deposit Accounts ** 3.02 2.94

With Others :In Current Account with Municipal Co-operative Bank Ltd.(maximum balance during the year Rs. 0.13 crores,2003-04 : Rs. 0.09 crores) 0.06 0.05

201.63 199.21

* Represents amount deposited as per Court Order pendingfinal disposal.

** Includes lodged as security depositwith Mumbai Port Trust - Rs. 0.54 crores (2003-04 : Rs.0.54 crores),with IAAI - Rs. 0.24 crores (2003-04 : Rs.0.24 crores) andwith Sales Tax (Silvassa) - Rs.0.20 lakhs (2003-04 : Rs.0.20 lakhs)

Rs./Crores

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11. OTHER CURRENT ASSETS

Interest accrued on Bank Deposits and Investments 0.35 0.32

12. LOANS AND ADVANCES

Secured, considered good :Advances recoverable in cash or in kind or forvalue to be received * 365.48 362.71Interest Accrued thereon 102.77 95.29

Unsecured, considered good :Advances recoverable in cash or in kind or for value to be received ** 9.77 15.71Balances with Excise, Customs, Port Trust etc. 338.64 160.13Other Deposits 106.42 79.73Prepaid Expenses 7.40 10.06Amounts recoverable from Pool Account 832.86 933.45Share application pending allotment 44.98 51.28Advance towards equity 8.00 3.00Other Accounts Receivable *** 753.18 1,116.46

Unsecured, considered doubtful :Accounts Receivable and Deposits 4.17 7.30

2,573.67 2,835.12Less : Provision for Doubtful Receivables 4.17 7.30

2,569.50 2,827.82

* Includes Rs. 0.33 crore, (2003-04 : Rs.0.12 crore) due from Directors;maximum balance - Rs. 0.35 crore, (2003-04 : Rs.0.13 crore) andRs. 0.02 crore (2003-04 : Rs. 0.02 crore) due from an Officer; maximumbalance - Rs. 0.01 crore, (2003-04 : Rs. 0.02 crore).

** Includes Rs. Nil (2003-04 : Rs. Nil) due from Directors; maximum balanceRs. Nil, (2003-04 : Rs. Nil) and Rs. Nil (2003-04 : Rs. Nil) due from anOfficer; maximum balance Rs. Nil, (2003-04 Rs.Nil).

*** Includes Rs. 10.28 crores (2003-04 : Rs.10.11 crores) being amount duetowards Company’s share of profit in Petroleum India International.

13. CURRENT LIABILITIES AND PROVISIONS

A. Current LiabilitiesSundry Creditorsi) Total outstanding dues of small scale industrial undertakings * 4.41 2.78ii) Total outstanding dues of creditors other than small scale

industrial undertakings 2,094.84 1,188.41Deposits from Dealers/Consumers for LPG Cylinders 2,549.33 2,373.41Other Deposits 90.28 60.18Accrued Charges/Credits 200.39 101.32Preference share capital redeemed remaining unclaimed/uncashed 0.01 0.01Unclaimed Dividend** 10.84 10.05Unpaid matured fixed deposits – 0.06Other Liabilities 1,227.72 2,711.92

6,177.82 6,448.14


2004-05 2003-04

Rs./Crores

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2004-05 2003-04B. Provisions

Provision for Tax (Net) 301.91 489.13Provision For Dividend 339.33 542.93Provision for Pension 37.04 38.95Provision for other retirement benefits 84.98 66.44Tax on Distributed Profits 47.59 69.56

810.85 1,207.01

6,988.67 7,655.15

* OUTSTANDINGS DUES OF SMALL SCALE UNDERTAKINGS FOR MORE THAN 30 DAYS

M/s. A.K. Dey & Company, M/s. A.N. Instruments Private Ltd., M/s. A.V. Valves Ltd.. M/s. Adradin, M/s. AESEnergy Works (P) Ltd., M/s. Ajay Industries, M/s. Anil Aluminium Works, M/s. Associated Suppliers, M/s. CartalTechnical Serivces, M/s. CDC Carboline India Pvt. Ltd., M/s. Chemtrols Engineering Ltd., M/s. Chhabi Electricals (P)Ltd., M/s. Coastal Ammonia (P) Ltd., M/s. Coromandel Paints & Chemicals, M/s. Dembla Valves (P) Ltd.,M/s. Durga Electricals, M/s. Eastern Polycraft, M/s. Econo Valves (P) Ltd., M/s. Eskay Engineers & Precision,M/s. Evans Electricals, M/s. Fix Fit Fasteners Mfg. (P) Ltd., M/s. Flash Forge (P) Ltd., M/s. Floway Valves (P) Ltd.,M/s. G. S. Engineering Co., M/s. Ganesh Engineering Works, M/s. Ganesh Enterprises, M/s. Gangotri Turbo Tech.Engg., M/s. Gaskets (India) Private Ltd.. M/s. Geetha Enterprises, M/s. Girish V. Kangane, M/s. Global Enterprises,M/s. Gobs Constructions, M/s. Goodrich Gasket (P) Ltd., M/s. Gopal Engineering Works, M/s. Gujarat Infrapipes (P)Ltd., M/s. H. Guru Industries, M/s. H.M. Technologies, M/s. Hemant Lahane, M/s. Hi-tec Valves, M/s. Hydro -Pneumatics, M/s. IGP Engineers (P) Ltd., M/s. Inmacro, M/s. J J Industries, M/s. J R U Control (P) Ltd.,M/s. Jayalakshmi Engineering Con., M/s. Joseph Leslie Drager Mfg. (P) Ltd., M/s. K.K.Vidyut, M/s. K.V. FireChemicals (India), M/s. Kailash Arts, M/s. Kevin Enterprises (P) Ltd., M/s. Leak Stop Experts, M/s. Levcon Instruments(P) Ltd., M/s. LPG Bulk Lloyds, M/s. M J Patel & Co. Ltd., M/s. M. Sagar, M/s. M.S. Fittings Manufacturing,M/s. Madras Industrial Products, M/s. Mahalakshmi Engineers, M/s. Mahendra & Singh Constructions, M/s. ManoharSingh Mehta, M/s. Marine Care N Associates, M/s. Mastan Engineering Works, M/s. Microcare Computers (P) Ltd.,M/s. Mikroflo Filters (P) Ltd., M/s. Modern Electrical Works, M/s. Modern Papers, M/s. Mukund Engineering Services,M/s. Multi Thread Fasteners, M/s. Ncon Turbo Tech (P) Ltd., M/s. Newage Industries, M/s. Newtech Engineers,M/s. Nireka Engineering & Co. (P) Ltd., M/s. Pace Engineering Indl., M/s. Packings & Jointings Gasket, M/s. ParthEnterprises, M/s. Pavani Enterprises, M/s. Pavankumar Blasting Works, M/s. Pearsons & Drums, M/s. PioneerCorporation, M/s. Pipefit Engineers, M/s. Prathyusha Safety Mfg. Co., M/s. Pravasi Enterprises, M/s. PrecisionManagement Council, M/s. Prem Enterprises, M/s. President Engineering Works, M/s. Prime Mover Governer Services,M/s. PTD Fasteners (P) Ltd., M/s. Punjab Boot House, M/s. Pylon Engineers, M/s. Pyro Electric Instruments G.,M/s. R R Engineering Company, M/s. Raj Petro, M/s. Rajendra More, M/s. Rank Controls & Instruments, M/s. RaoWelding Works, M/s. Remi Process Plant & Machin, M/s. Renuka Engineering Works, M/s. S P Constructions,M/s. S P M Mathew & Bros., M/s. S S R Electricals, M/s. S. Venkata Rao, M/s. S.K. Ahmed, M/s. S.K.M.L.Enterprises, M/s. Sabari Engineering Contract, M/s. Sanjay Sahai Sharma, M/s. Sebim Valves (India) (P) Ltd.,M/s. Shalimar Valves (P) Ltd., M/s. Shanmuka Engineering Works, M/s. Shantinath Constructions, M/s. ShilpiEngineering, M/s. Shiva Jyothi Enterprises, M/s. Shreeji Suppliers, M/s. Sohan Engineering Enterprise, M/s. SouthernGasket Products, M/s. Sri Balaji Associates, M/s. Sri Gajalakshmi Industries, M/s. Sri Ganesh Ele & Rewinding,M/s. Sri Malleswar Enterprises, M/s. Sri Manoj Electrical Works, M/s. Sri Sai Leela Electrical Works, M/s. Sri SanariElectrical & Eng., M/s. Sri Trinadha Electrical Works, M/s. Srinivasa Industries, M/s. Sriram & Co., M/s. SteelSamrat (India), M/s. Supreme Engineering Agencies, M/s. Suresh Engineering Works, M/s. Surya Sai EngineeringWorks, M/s. Swan Enterprises (P) Ltd., M/s. Swaran Singh & Co., M/s. TAS Engineering Co (P) Ltd.,M/s. Technika, M/s. Techno Process Equipments Ltd., M/s. Teekay Tubes (P) Ltd., M/s. United Electrical & Rewindi,M/s. Usha Engineering Works, M/s. V.S. Mani, M/s. Vinsun Enterprises, M/s. Virgo Engineers Ltd., M/s. VoltampTransformers (P) Ltd., M/s. Waaree Instruments Ltd., M/s. X Techs, M/s. Yash Packaging, M/s. Yazard.

The above information is given to the extent available with the Company.

** No amount is due as at the end of the year for credit to Investors’ Education and Protection Fund.

Rs./Crores

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14. OTHER INCOME

Interest (Gross) : *On Investments 74.77 86.02On Deposits 3.85 17.48On Staff Loans 14.76 18.53On Customers’ Accounts 4.11 3.78On Others 20.19 25.49

117.68 151.30Dividend Income 0.71 –Share of Profit from Petroleum India International (AOP) 0.67 1.47Rent Recoveries 33.31 27.80Profit on Sale of Investments 6.60 –Exchange rate variation (Net) 77.88 129.90Miscellaneous Income ** 92.68 68.92

211.85 228.09

329.53 379.39

Note : * Tax deducted at source amounts to Rs. 0.78 crores(2003-04 : Rs.5.56 crores)

** Miscellaneous Income includes :Profit on contract - Rs. Nil (2003-04 : Rs.2.05 crores), Grossbilling : Rs. Nil (2003-04 : Rs.3.15 crores), Cost : Rs. Nil(2003-04 : Rs. 1.10 crores)

15. INCREASE/(DECREASE) IN INVENTORY

Closing Stock :Stock in Process 275.07 197.68Finished Products 4,107.17 4,149.69

4,382.24 4,347.37Less : Opening Stock :

Stock in Process 197.68 212.67Finished Products 4,149.69 3,777.20

4,347.37 3,989.87

34.87 357.50

16. PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

Salaries, Wages, Bonus etc. * 453.45 373.86Contribution to Provident Fund 35.19 34.24Pension, Gratuity etc. 23.16 9.19Voluntary Retirement Compensation 41.98 –Employee Welfare Expenses ** 164.17 158.03Less : Recoveries 4.33 4.53

159.84 153.50

713.62 570.79

* Includes Rs. 16.79 crores (2003-04 : Rs. 12.59 crores) towards leaveencashment on the basis of actuarial valuation.

** Includes Rs. 1.75 crores (2003-04 : Rs. 3.18 crores) towards postretirement medical benefits on the basis of actuarial valuation.

Schedules forming part of the Profit and Loss Account

2004-05 2003-04

Rs./Crores

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Schedules forming part of the Profit and Loss Account

2004-05 2003-0417. OTHER OPERATING EXPENSES

Consumption of Stores, Spares and Chemicals 70.77 67.87Power and Fuel 969.53 866.34Less : Fuel of own production consumed 956.76 857.17

12.77 9.17Repairs and Maintenance to Buildings 10.23 11.70Repairs and Maintenance to Plant and Machinery 234.28 165.68Repairs and Maintenance to other assets 5.34 3.49Insurance 29.71 40.08Rates and Taxes 320.98 300.69Equipment Hire Charges 1.04 0.28Rent 55.82 57.32Travelling and Conveyance 59.39 55.97Printing and Stationery 9.63 7.69Electricity and Water 101.57 94.93Charities and Donations 21.13 7.33Loss on Sale/write off of Fixed Assets/CWIP 4.02 2.93Stores and spares written off 3.12 0.04Write off of Goodwill (refer note 2 of Schedule 20B) 1.22 –Provision for Doubtful Receivables – 5.84Provision for Doubtful Receivables written back (3.13) –Provision for Doubtful Debts 2.91 (0.07)(After adjusting provision no longer requiredwritten back Rs 0.11 crores, 2003-04 :Rs.0.07 crores)Provision for assets under reconciliation – 39.26Security Charges 27.43 25.60Advertisement and Publicity 94.60 82.91Sundry Expenses and Charges (Not otherwise classified) 157.50 153.68Consultancy and Technical Services 23.34 38.97Exploration Cost 0.79 –

1,244.46 1,171.36

18. INTEREST

On Long Term Loans – 0.02On Short Term Loans 78.37 44.88On Overdraft from Banks 3.13 8.72On Fixed Deposits 0.13 1.95Others 0.01 0.08

81.64 55.65

19. PRIOR PERIOD DEBITS/(CREDITS)

Raw Materials Consumed – (76.21)

– (76.21)

Rs./Crores

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Statement of Significant Accounting Policies and Notes Forming Part of Accounts

20A. SIGNIFICANT ACCOUNTING POLICIES

Accounts are prepared under the historical cost convention in accordance with Generally Accepted AccountingPrinciples (GAAP), Accounting Standards issued by The Institute of Chartered Accountants of India (I.C.A.I.)and the provisions of the Companies Act, 1956. All income and expenditure having material bearing arerecognised on the accrual basis, except where otherwise stated. Necessary estimates & assumptions ofincome & expenditure are made during the reporting period and difference between the actuals and theestimates are recognised in the period in which the results materialise.

1. FIXED ASSETS

Land acquired on lease for 99 years or more is treated as freehold land.

2. INTANGIBLE ASSETS

Cost of Right of Way for laying pipelines is capitalised as Intangible Asset and being perpetual in natureis not amortised.

Costs incurred on technical know-how/license fee relating to process design/plants/facilities arecapitalised as Intangible Assets.

Cost of Software directly identified with hardware is capitalised along with the cost of hardware. Applicationsoftware is capitalised as Intangible Asset.

3. CONSTRUCTION PERIOD EXPENSES ON PROJECTS

Related expenditure (including temporary facilities and crop compensation expenses) incurred duringconstruction period in respect of plan projects and major non-plan projects are capitalised.

Interest on project specific borrowings are capitalised.

4. DEPRECIATION

a) Depreciation on Fixed Assets is provided on straight line method, in the manner and at rates prescribedunder Schedule XIV to the Companies Act, 1956 and is charged pro rata on monthly basis onassets, from/upto and inclusive of the month of capitalisation/sale, disposal or deletion during theyear.

b) All assets costing upto Rs. 5000/-, other than LPG cylinders and pressure regulators, are fullydepreciated in the year of capitalisation.

c) Premium on leasehold land is amortised over the period of lease.

d) Machinery Spares which can be used only in connection with an item of fixed asset and the use ofwhich is expected to be irregular, are depreciated over a period not exceeding the useful life of theprincipal item of fixed asset. Replacement of such spares is charged to revenue.

e) Intangible Assets other than application software are amortised on a straight line basis over theuseful life of the parent asset.

f) Application software are normally amortised over a period of four years or over its useful life beforeit becomes obsolete, whichever is earlier.

5. IMPAIRMENT OF ASSETS

Assessment of impairment of fixed assets is carried out on each balance sheet date. Impairment loss isrecognised when carrying amount of any CGU exceeds its recoverable amount.

6. FOREIGN CURRENCY TRANSACTIONS

a) Foreign Currency transactions during the year are recorded at the rates of exchange prevailing onthe dates of transactions.

b) All foreign currency assets and liabilities are restated at the rates ruling at the year end.

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c) All exchange differences are dealt with in the profit and loss account except those relating toacquisition on fixed assets which are adjusted in the cost of assets and those covered by forwardcontract rates where the gains/losses arising from such restatement are recognised over the periodof such contracts.

7. INVESTMENTS

a) Long-term investments are valued at cost and provision for diminution in value thereof is made,wherever such diminution is other than temporary.

b) Current investments are valued at lower of cost or fair market value.

8. INVENTORIES

a) Crude oil is valued at cost on First In First Out (FIFO) basis or at net realisable value, whichever islower.

b) Stock-in process is valued at raw material cost plus cost of conversion or at net realisable value,whichever is lower.

c) Finished products are valued at cost (on FIFO basis) or at net realisable value, whichever is lower.

d) Empty packages are valued at cost.

e) Stores and spares are valued at weighted average cost.

Value of surplus, obsolete and slow moving stores and spares, if any, is reduced to net realisable value.Surplus items, when transferred from completed projects are valued at cost/estimated value, pendingperiodic assessment/ascertainment of condition.

9. DUTIES ON BONDED STOCKS

Excise/Customs duty is provided on stocks stored in Bonded Warehouses (excluding goods exemptedfrom duty/exports or where liability to pay duty is transferred to consignee).

10. DEPOSITS

Amounts deposited with Government/semi-Government agencies not exceeding Rs.1000/- each aredirectly charged as an expense in the year of payment.

11. PROVISIONS

A provision is recognised as present obligation of past event based on estimate as on the balance sheetdate and settled on virtual certainty.

12. EXPLORATION & PRODUCTION EXPENDITURE

“Successful Efforts Method” of accounting is followed for Oil & Gas exploration and production activitiesas stated below :

a) Cost of surveys, studies, carrying and retaining undeveloped properties are expensed out in the yearof incurrence.

b) Cost of acquisition, drilling and development are treated as capital work-in-progress when incurredand capitalised when the well is ready to commence commercial production.

c) Accumulated costs on exploratory wells in progress are expensed out in the year in which they aredetermined to be dry.

The proportionate share in the assets, liabilities, income and expenditure of joint operations are accountedas per the participating interest in such joint operations.

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13. RETIREMENT BENEFITS

Liability towards leave encashment, pension, post-retirement medical benefits and gratuity to employeesis determined on actuarial valuation done at the year end. Liability so determined is funded in the case ofgratuity and provided for in other cases.

14. SALE OF PRODUCTS

Sales are net of discount, include applicable excise duty, surcharges and other elements as allowed tobe recovered as part of the price but exclude sales tax.

15. RESEARCH & DEVELOPMENT

Expenditure incurred on research activities are charged off in the year they are incurred. Expensesdirectly related to development activities which are capable of generating future economic resources aretreated as intangible assets.

16. TAXES ON INCOME

a) Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.

b) Deferred tax on account of timing difference between taxable and accounting Income is providedusing the tax rates and tax laws enacted or substantively enacted by the Balance Sheet date.

17. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

Contingent Liabilities and Capital Commitments are considered only for items exceeding Rs.1 lakh ineach case. Contingent Liabilities in respect of show cause notices are considered only when convertedinto demands.

18. ACCOUNTING/CLASSIFICATION OF EXPENDITURE AND INCOME

a) Net Recovery from/Payment to Pool Account :

Claim on Industry Pool Account/Government are accounted on acceptance in principle on the basisof available instructions/clarifications subject to final adjustment after audit as stipulated.

b) Insurance claims are accounted on acceptance basis.

c) All other claims/entitlements are accounted on the merits of each case/realisation.

d) Raw materials consumed are net of discount towards sharing of under recoveries.

e) Prior Period items :

Income and expenditure over Rs.1 lakh in each case pertaining to prior period items arising in thecurrent period are considered as prior period items.

20B. NOTES FORMING PART OF ACCOUNTS

1. The assets and liabilities relating to LPG business of M/s. Kosan Gas Company were vested in theCorporation by an Act of Parliament which was challenged by the erstwhile owners in the Delhi HighCourt. A compromise agreement for out of court settlement, negotiated with erstwhile owners andapproved by the Government of India, has been filed in the Delhi High Court.

2. Pursuant to the deeds of assignment signed between the President of India and the Company in itscapacity as the custodian of Parel Investment and Trading Company Limited (PITCL) and Domestic GasLimited (DGL), the assets and liabilities relating to LPG businesses of PITCL and DGL were acquired bythe Company resulting in a Goodwill of Rs. 1.22 crores being excess of liabilities over assets, which hasbeen charged to Profit & Loss Account.

3. In compliance with Accounting Standard –17 on “Segment Reporting” issued by The Institute of CharteredAccountants of India, the required information is given in note 10S of Notes to Accounts.


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Rs./Crores

4. (a) Inter-Oil Company transactions are reconciled on continuous basis. However, year end balances aresubject to confirmation/reconciliation.

(b) Customers’ Accounts are reconciled on an ongoing basis and are not likely to have a materialimpact on the outstanding or classification of the accounts.

5. In respect of sale of subsidised LPG (Domestic) and SKO (PDS), as advised by the Ministry of Petroleum& Natural Gas, a part of the under-recovery suffered by the Oil Marketing Companies during the year wascompensated by ONGC and GAIL, by offering discount on price of crude, SKO and LPG purchased fromthem. Accordingly, the Company has accounted the discount received as follows:

(a) Rs. 490.66 crores (2003-04: Rs. 277.35 crores) discount received on crude oil purchased fromONGC has been adjusted against ‘Raw Material Cost’ and

(b) Rs. 787.68 crores (2003-04: Rs. 417.22 crores) discount received on SKO (PDS) and LPG (Domestic)purchased from ONGC and GAIL has been adjusted against ‘Purchase of Product for Resale’.

6. Deferred Tax Assets/(Liabilities) arising due to timing differences comprise of :

2004-05 2003-04

Deferred Tax AssetProvision for Pension 12.47 13.98Provision for Medical Benefits 2.72 2.27Provision for Leave Encashment 18.65 13.71Others 36.05 15.92

Total (A) 69.89 45.88

Deferred Tax LiabilityDepreciation (1,412.52) (1,474.39)Others (32.10) (25.57)

Total (B) (1,444.62) (1,499.96)

Deferred Tax Liability [(A) + (B)] (1,374.73) (1,454.08)

7. Related Party disclosure :

Subsidiary Company Joint Venture Companies Total

2004-05 2003-04 2004-05 2003-04 2004-05 2003-04

Sales – – 91.53 43.53 91.53 43.53Purchases 14.00 – 5,039.64 5,646.87 5,053.64 5,646.87Investment 2.12 19.89 – 13.51 2.12 33.40Advance towards Equity – – 5.00 – 5.00 –Share applicationpending allotment – 1.30 – 9.98 – 11.28Interest – – 0.34 0.80 0.34 0.80Services 2.07 2.80 2.83 4.82 4.90 7.62Others 0.18 5.78 4.44 2.30 4.62 8.08Closing balances (6.76) (2.95) (240.12) (300.35) (246.88) (303.30)

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The names of parties are as follows :

Subsidiary Company : Guru Gobind Singh Refineries Ltd.

Joint Venture Companies : Mangalore Refineries and Petrochemicals Ltd., Hindustan Colas Ltd., Prize PetroleumCo. Ltd., Petronet India Ltd., Petronet MHB Ltd., South Asia LPG Co. Pvt. Ltd. and Bhagyanagar Gas Ltd.

Key Management Personnel :

Shri M. B. Lal, Chairman & Managing DirectorShri D. S. Mathur, Director - RefineriesShri Arun Balakrishnan, Director - Human ResourcesShri C. Ramulu, Director - FinanceShri S. Roy Choudhury, Director- Marketing (from May 10, 2004)

Details of remuneration to directors are given in note 10F of Notes to Accounts.

8. The Company has been consistently following a policy of accounting for income tax benefits in the yearin which the benefit is allowed in view of the past experience of uncertainties surrounding the claim fortax benefits. During the year, Company upon completion of assessment for the financial year 2001-2002(assessment year 2002-2003) was granted deduction for claim under Section 80-IB, being the first yearfor which the claim was made. The Company while writing back the provision of Rs. 47.52 croresattributable to the said tax benefits, keeping in mind the past practice, has continued with the conservativeaccounting treatment for the subsequent years.

9. Previous year’s figures have been regrouped/reclassified wherever necessary.

2004-05 2003-04

10 A. Estimated amount of contracts remaining to beexecuted on Capital Account not provided for 1,071.21 341.62

B. No provision has been made in the accounts in respect of thefollowing disputed demands/claims since they are subject toappeals/representations and a substantial portion thereof isrecoverable from Pool Account

i. Income Tax – –

ii. Sales Tax/Octroi 632.05 551.19

iii. Excise/Customs 910.58 706.60

iv. Land Rentals & Licence Fees 39.73 32.81

v. Others 68.38 33.10

C. Contingent Liabilities not provided for in respect of

i. Income Tax 10.55 10.55

ii. Sales Tax/Octroi 83.72 83.72

iii. Excise/Customs 111.32 114.78

iv. Employee Benefits/Demands (to the extent quantifiable) 69.48 49.90

v. Guarantees on behalf of others 166.82 166.82

vi. Claims against the Company not acknowledged as debts 150.99 157.23


Rs./Crores

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D. Payment to Auditors:

- Audit fees 0.11 0.10

- Tax audit fees 0.02 0.01

- Other Services 0.05 0.07

- Reimbursement of expenses 0.03 –

E. Items included under Other Account Heads viz.

Employee Welfare Expenses

- Salaries, Wages, Bonus etc. 5.36 5.82- Contribution to Provident Funds 0.37 0.35- Stores & Provision 7.72 7.17- Electricity and Water (Net of recoveries) 2.86 4.62- Repairs and Maintenance to Buildings 4.50 4.38- Repairs and Maintenance to Plant & Machinery 1.95 3.49- Repairs and Maintenance to Other Assets 0.15 0.57- Pension/Gratuity/Medical expenses 2.95 3.03- Rates and Taxes 1.19 1.18- Rent (Net of Recoveries) 42.23 41.15- Depreciation 1.21 1.23- Medical Expenses 43.14 42.27- Uniform/work clothes 25.67 23.51- Insurance 2.59 2.93- Security 0.76 0.72- Others (Net) 17.41 10.39

F. Managerial Remuneration :

- Salary and Allowances 0.43 0.37- Contribution to Provident Fund and other funds 0.04 0.04- Other benefits 0.13 0.09

G. C.I.F. value of imports during the year (excludes canalised imports):

- Raw materials 13,867.05 9,258.04- Stores, Spares and Chemicals 38.36 29.56- Capital Goods, Components and Spares 42.75 24.82

H (i) Expenditure in foreign currency on account of :Engineering, Technical and other services, demurragecharges, royalties and other matters 64.01 5.33

(ii) Foreign Currency payments for crude 13,849.09 9,237.84

I. Earnings in foreign exchange : (On accrual basis)Export of goods calculated on FOB basis 1,943.51 1,123.59Includes Rs. 330.56 crores (2003-04 : Rs. 87.91 crores)received in Indian currency out of repatriable fundsof foreign airlines customers

2004-05 2003-04

Rs./Crores

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2004-05 2003-04

J. Value of Raw Materials, Spare Parts and Components consumed :

(i) Raw Materials- Imported (in %) 73.26 69.36- Imported (in Value) 15,073.62 10,363.52- Indigenous (in %) 26.74 30.64- Indigenous (in Value) 5,502.60 4,577.31

(ii) Spare Parts & Components- Imported (in %) 37.54 47.12- Imported (in Value) 30.50 42.85- Indigenous (in %) 62.46 52.88- Indigenous (in Value) 50.76 48.09

K. Licensed capacity at year end in Metric Tonnes p.a. :

(a) Petroleum fuel and lube products 13,000,000 13,000,000

(b) Lubricating Oils 122,173 122,173

(c) Textile Auxiliaries 3,391 3,391

(d) Hydraulic Brake Fluid 556 556

(e) Insecticides 782 782

(f) Greases 5,913 5,913

L. Installed capacity at year end in Metric Tonnes per annum ascertified by the Management on which the Auditors have reliedupon :

(a) Petroleum fuel and lube products 13,000,000 13,000,000

(b) Lubricating Oils, Greases and Textile Auxiliaries * 319,779 319,779

(c) Hydraulic Brake Fluid and Insecticides 4,062 4,062

* Product manufacturing facilities are interchangeable

M. Production in Metric Tonnes :

(a) Petroleum fuel and lube products

i. Bulk Petroleum Products 12,821,603 12,531,676

ii. Lubricating Oil Base Stocks(including Transformer Oil Base Stocks) 214,023 278,085

iii. Carbon Black Feed Stock 29,346 28,734

iv. Axle Oil 277 349

v. Rubber Processing Oil 20,811 14,317

(b) Lubricating Oils 176,863 261,921

(c) Textile Auxiliaries 106 111

(d) Insecticides 238 677

(e) Greases 3,273 3,122


Rs./Crores

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N. Information for each class of goods purchased, sold and stocks during the year :Rs./Crores

Opening Stock Purchases Sales Closing Stock

2004-05 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04

a. BulkPetroleum M.T. 2112103 1837153 14697636 16921277 28082980 29227690 1556197 2112103Products Value 3961.87 3623.70 33677.05 30583.90 63703.18 55130.82 3876.43 3961.87

b. Lubricating M.T. 25870 29607 – – 38340 66254 31033 25870Oil Base Stocks Value 51.50 57.84 – – 98.61 142.87 61.95 51.5(includingTransformer oilBase stock)

c. Carbon Black M.T. 2332 2320 – – 31283 28409 193 2332Feed Stock Value 2.47 2.42 – – 39.59 32.94 0.24 2.47

d. Axle Oil M.T. 48 38 – – 285 338 40 48Value 0.15 0.09 – – 0.73 0.79 0.13 0.15

e. Lubricating M.T. 27664 22373 – – 173194 256572 31308 27664Oils Value 123.56 86.97 – – 824.66 1005.52 155.88 123.56

f. Textile M.T. 46 37 – – 119 100 33 46Auxiliaries Value 0.17 0.14 – – 0.58 0.49 0.14 0.17

g. Insecticides M.T. 725 426 – – 379 372 584 725Value 2.34 1.07 – – 2.87 2.94 2.99 2.34

h. Greases M.T. 1848 1290 – – 3133 2560 1985 1848Value 7.52 4.75 – – 19.29 16.20 9.30 7.52

i. AutomotiveAccessories Value 0.12 0.21 – – – – 0.11 0.12

Total 4149.69 3777.20 33677.05 30583.90 64689.51 56332.57 4107.17 4149.69

No adjustments for transit/operational/temperature variations/consumption for own operation have been made in regard to quantitative information. Previous year’s figures are recastwherever necessary for comparison and adjustment.

2004-05 2003-04

O. Raw Materials consumed:(a) Crude Oil Processed:

- Tonnes 13,942,043 13,699,685- Value 20,316.50 14,709.60

(b) Other Petroleum Products :- Tonnes 43,049 49,585- Value 83.68 48.12

(c) Additives, Inhibitors and Chemicals:- Value 99.36 90.80

(d) Non-Petroleum Products:- Value 76.68 92.31

P. Expenditure incurred on Research and Development :- Capital 0.47 0.99- Revenue 1.28 1.47

Q. Interest on Project specific borrowings capitalised 0.10 –

R. Exchange Differences :i) Adjusted in the carrying amount of Fixed Assets during

the accounting period. 0.70 (0.17)ii) In respect of Forward Exchange Contracts to be recognised

in Profit or Loss for one or more subsequent accounting periods 1.08 0.61

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S. Information regarding Primary Segment Reporting as per AS-17 for the year ended March 31, 2005 is asunder :

Rs./Crores

2004-05 2003-04

Petroleum Other Total Petroleum Other TotalProducts Businesses Products Businesses

RevenueExternal Revenue 59,997.23 59,997.23 51,744.28 51,744.28Inter-segment Revenue – – – –

Total Revenue 59,997.23 – 59,997.23 51,744.28 – 51,744.28

ResultSegment Results 1,600.03 (3.45) 1,596.58 2,959.52 2,959.52

Operating Profit 1,600.03 (3.45) 1,596.58 2,959.52 – 2,959.52

Less:Interest Expenditure 81.64 81.64 55.65Prior Year Expenditure – 76.21Add:Interest/Dividend Income 119.06 152.77Profit on Sale of Investments 6.60 –

Profit before Tax 1,640.60 2,980.43Less: IT(including Deferred tax) 363.27 1,076.49

Profit after Tax 1,277.33 – 1,903.94

Other InformationSegment Assets 17,229.33 3.45 17,232.78 16,504.42 16,504.42Corporate Assets 1,756.84 2,048.42

Total Assets 18,989.62 – 18,552.84

Segment Liabilities 7,121.67 7,121.67 7,797.88 7,797.88Corporate Liabilities 3,040.18 3,012.15

Total Liabilities 10,161.85 – 10,810.03

Capital Expenditure 1,322.63 1,322.63 941.32 – 941.32Depreciation 659.59 659.59 606.58 – 606.58

1. The Company is engaged in the following business segments:a) Downstream Petroleum i.e. Refining and Marketing of petroleum products.b) Exploration and Production of hydrocarbons.Segments have been identified taking into account the nature of activities and the nature of risks and returns.

2. Segment Revenue comprises the following:a) Turnover (Net of Excise Duties)b) Subsidy from Government of Indiac) Net Claim/(surrender to) PPAC/GOId) Other income (excluding interest income, dividend income and investment income)

3. There are no geographical segments.

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Cash Flow Statement for the year ended 31st March, 2005

2004-05 2003-04

Cash Flow From Operating Activities

Net Profit before Tax & Extraordinary items 1,640.60 2,980.43Adjustments for :Depreciation/Amortisation 659.59 606.58Loss on Sale/write off of Fixed Assets/CWIP 4.02 2.93Provision for assets under reconciliation - 39.26Interest Expense 81.64 55.65Interest Income (78.62) (103.50)Income from Investment (0.67) (1.47)Increase/(Decrease) in Provision for Doubtful Debts/Receivables (0.22) 5.77Dividend Received (0.71) -Exchange rate difference on loans 10.14 (6.11)Profit on sale of Investments (6.60) -

Operating Profit before Working Capital Changes 2,309.17 3,579.54

Increase/(Decrease) in Working Capital :Trade Receivables (51.23) (137.85)Other Receivables 160.64 (483.33)Other Current Assets (0.03) 0.09Inventories (279.69) (279.98)Trade and Other Payables (291.64) (633.01)

1,847.23 2,045.46Amounts recoverable from Pool Account 100.59 195.19

Cash generated from operations 1,947.82 2,240.65Direct Taxes paid (Net) (629.82) (617.70)

Cash Flow before extraordinary items 1,318.00 1,622.95Extraordinary items

Net Cash from operating activities (A) 1,318.00 1,622.95

Cash Flow From Investing ActivitiesPurchase of Fixed Assets (incl. Capital Workin Progress/excluding interest capitalised) (1,284.86) (889.50)Sale of Fixed Assets 2.79 0.92Purchase of Investment (Including share application moneypending allotment/Adv. towards Equity) (7.13) (34.21)Sale Proceeds of Investments 306.60 0.21Interest Income 78.62 103.50Dividend Received 0.71 -Income from Investment 0.67 1.47

Net Cash used in investing activities (B) (902.60) (817.61)

Rs./Crores

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2004-05 2003-04

Cash Flow From Financing ActivitiesProceeds from Calls in Arrear (Net) 0.86 2.47Loans Repaid (8,454.84) (4,408.17)Loans Raised 8,750.38 4,796.61Interest Paid on Loans (81.64) (55.65)Dividend paid (including dividend distribution tax) (804.92) (912.51)

Net Cash used in financing activities (C) (590.17) (577.25)

Net Increase/(Decrease) in Cash andCash equivalents [(A) + (B) + (C)] (174.76) 228.10

Cash & Cash equivalents as on 1st April (Opening) :Cash/Cheques on Hand 1.36 5.46Balances with Scheduled Banks

- On Current Accounts 194.85 4.14- Others 2.95 8.89

Balances with other Banks 0.05 0.06

199.21 18.55Overdrafts from Banks (142.73) (190.17)

56.48 (171.62)Cash & Cash equivalents as on 31st March (Closing):

Cash/Cheques on Hand 1.80 1.36Balances with Scheduled Banks

- On Current Accounts 196.74 194.85- Others 3.03 2.95

Balances with other Banks 0.06 0.05


(118.28) 56.48

Net Increase/(Decrease) in Cash and Cash equivalents (174.76) 228.10

Previous year’s figures have been regrouped/reclassified wherever necessary.

For and on behalf of the Board

M. B. LAL C. RAMULUChairman & Managing Director Director - Finance


Rs./Crores

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Balance Sheet Abstract and Company's General Business ProfileI. REGISTRATION DETAILS

REGISTRATION NO. : STATE CODE :

BALANCE SHEET DATE :

0 8 8 5 8

3 1 0 3 2 0 0 5

1 1

II. CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousands)PUBLIC ISSUE

N I L

BONUS ISSUE

N I L

RIGHTS ISSUE

N I L

PRIVATE PLACEMENT

N I L

III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs. Thousands)TOTAL LIABILITIES

1 2 0 0 0 9 4 5 6TOTAL ASSETS

1 2 0 0 0 9 4 5 6

SOURCES OF FUNDSPAID-UP CAPITAL

3 3 8 9 2 7 7

SECURED LOANS3 1 9 9 1 1 7

DEFERRED TAX LIABILITY1 3 7 4 7 5 2 0

RESERVES AND SURPLUS8 1 0 1 9 1 6 8

UNSECURED LOANS1 8 6 5 4 3 7 4

APPLICATION OF FUNDSNET FIXED ASSETS7 7 3 0 4 8 2 5

NET CURRENT ASSETS2 5 1 3 6 2 4 4

ACCUMULATED LOSSESN I L

INVESTMENTS1 7 5 6 8 3 8 7

MISC. EXPENDITUREN I L

IV. PERFORMANCE OF COMPANY (Amount in Rs. Thousands)TURNOVER

6 4 6 8 9 5 0 8 2

PROFIT/LOSS BEFORE TAX1 6 4 0 6 0 4 0+

EARNING PER SHARE IN RS.3 7 . 6 9

TOTAL EXPENDITURE5 8 4 8 2 2 9 3 2

PROFIT/LOSS AFTER TAX1 2 7 7 3 3 1 4+

DIVIDED RATE %1 5 0

V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS OF COMPANY (As per monetary terms)ITEM CODE NO. (ITC CODE)PRODUCT DESCRIPTION :

2 7 1 0

B U L K P E T R O L E U M P R O D U C T S

ITEM CODE NO. (ITC CODE)PRODUCT DESCRIPTION :

L U B R I C A N T S

2 7 1 0 0 0 4 1 / 6 1

ITEM CODE NO. (ITC CODE)PRODUCT DESCRIPTION :

P R O P Y L E N E

2 9 0 1 2 2 0 0

M.B. LAL C. RAMULU N.R. NARAYANANChairman & Managing Director Director-Finance Company SecretaryPlace : New DelhiDate : May 26, 2005

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1. Name of the Subsidiary Company Guru Gobind Singh Refineries Ltd.

2. Financial period of the Subsidiary Company ended 31st March, 2005

3. Total issued Share Capital of the Subsidiary Company 29,57,10,000 Equity Shares of Rs. 10 each

4. Number of shares held in the Subsidiary Company 29,57,10,000 Equity Shares of Rs. 10 each

5. Percentage of shares held in the subscribed capital 100%of the Subsidiary

6. The net aggregate amount, so far as it concerns themembers of the Company and is not dealt with in theCompany’s accounts, of the Subsidiary’s

i) Profit/(Loss) for the year ended 31st March, 2005 NIL

ii) Profit/(Loss) of the previous financial years of theSubsidiar y since it became the Company’sSubsidiary NIL

7. The net aggregate amount, so far as it concerns themembers of the Company and is dealt with in theCompany’s accounts, of the Subsidiary’s

i) Profit/(Loss) for the year ended 31st March, 2005 NIL

ii) Profit/(Loss) of the previous financial years of theSubsidiar y since it became the Company’sSubsidiary NIL

Statement pursuant to Section 212 of the Companies Act,1956 relating to Subsidiary Companies


M.B. LAL C. RAMULU N.R. NARAYANANChairman & Managing Director Director - Finance Company Secretary


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Social Welfare

Income and Expenditure Account for the Township, Education, Medical and Other Social Welfare facilities forthe year ended 31st March, 2005.

INCOME : 2004-05 2003-04

Recovery of house rent 3.36 2.61Recovery of utilities 0.32 0.37Other recoveries 0.66 0.61Excess of expenditure over income 159.84 149.57

164.17 153.16

EXPENDITURE :Salaries, Wages, Bonus etc. 5.36 5.82Contribution to Provident Funds 0.37 0.35Consumption of Stores, Spares and Chemicals 7.86 7.16Electricity and Water 3.15 4.93Repairs and Maintenance to Buildings 4.49 4.38Repairs and Maintenance to Plant & Machinery 1.95 3.49Repairs and Maintenance to Other Assets 0.15 0.57Pension/Gratuity 2.95 3.03Rates & Taxes 1.19 1.18Rent 45.59 43.75Depreciation 1.21 1.22Medical Expenses 44.89 39.08Uniform/Work clothes 25.67 23.50Insurance 2.59 2.93Security 0.77 0.72Others 15.97 11.05

164.17 153.16

Rs./Crores

SCHEDULE OF FIXED ASSETS (TOWNSHIP)

Gross Block Additions/ Deductions/ Gross Block Depreciation Total Net Netat cost Reclassifi- Reclassifi- at cost and Depreciation Balance Balance

as at cations cations as at Amortisation and as at as at1.4.2004 31.3.2005 for the year Amortisation 31.3.2005 31.3.2004

2004-2005 upto 31.3.2004

1. Land - Freehold 0.10 – – 0.10 – – 0.10 0.10

2. Buildings, Roads etc. 25.04 0.39 – 25.43 0.42 6.39 19.04 19.07

3. Plant and Machinery 4.15 – – 4.15 0.16 2.55 1.60 1.77

4. Furniture, Fixturesand Office/LaboratoryEquipment 4.25 0.19 0.02 4.42 0.06 0.70 3.72 3.61

5. TransportEquipment 0.01 – – 0.01 – – 0.01 –

Total 33.55 0.58 0.02 34.11 0.64 9.64 24.47 24.55

Previous Year 25.69 7.99 0.13 33.55 1.89 9.00 24.55

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Comments of the Comptroller and Auditor General of India under Section 619 (4) of the Companies Act,

1956 on the accounts of Hindustan Petroleum Corporation Limited for the year ended 31st March, 2005.

(Addendum to the Directors' Report dated May 26, 2005)

I have to state that the Comptroller and Auditor General of India has no comments upon or supplement to the

Auditors’ Report under Section 619(4) of the Companies Act, 1956 on the accounts of Hindustan Petroleum

Corporation Limited for the year ended 31st March, 2005.

Revathy IyerPrincipal Director of Commercial Audit &Ex-officio Member, Audit Board-II, Mumbai

Place : MumbaiDate : June 24, 2005

C & AG's Comments

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Review of Accounts by C & AG

Review of Accounts of Hindustan Petroleum Corporation Limited for the year ended 31st March, 2005 by theComptroller and Auditor General of India.

(Addendum to the Directors' Report dated May 26, 2005)

Note : Review of Accounts has been prepared without taking into account comments under Section 619 (4)of the Companies Act, 1956 and qualifications contained in the Statutory Auditors’ Report.

1. FINANCIAL POSITIONThe table below summarises the financial position of the Company under broad headings for the lastthree years :LIABILITIES Rs./Crores

2002-03 2003-04 2004-05(a) Paid up Capital :

(i) Government 173.08 173.08 173.08(ii) Others 165.75 165.82 165.85

(b) Reserves & Surplus(i) Free Reserves & Surplus(other than Share Premium) 5,192.41 6,253.89 6,951.07(ii) Share Premium Account 1,147.61 1,150.02 1,150.85

(c) Share Application Money Pending Allotment – – –(d) Borrowings from

(i) Government of India # 0.32 – –(ii) Issue of Debentures 450.00 400.00 –(iii) Cash Credit/Overdrafts from Bank 190.18 142.73 319.91(iv) Others 725.43 1,158.07 1,865.44

(e) (i) Current Liabilities & Provision 7,901.87 7,655.15 6,988.67(ii) Deferred Tax Liability 1,400.04 1,454.08 1,374.75

Total 17,346.69 18,552.84 18,989.62

ASSETS(f) Gross Block 10,754.32 11,387.43 12,393.17(g) Less : Cumulative Depreciation 4,319.12 4,809.32 5,449.53(h) Net Block 6,435.20 6,578.11 6,943.64(i) Capital Work-in-progress 347.68 496.14 786.84(j) Investments 2,015.22 2,048.42 1,756.84(k) Current Assets, Loans & Advances

(i) Inventories 5,122.54 5,402.53 5,682.21(ii) Sundry Debtors 862.37 1,000.29 1,048.61(iii) Cash & Bank Balances 18.55 197.06 201.63(iv) Loans & Advances 2,544.72 2,829.97 2,569.50(v) Other Current Assets 0.41 0.32 0.35

(l) Miscellaneous Expenditures tothe extent not written off or adjusted – – –

Total 17,346.69 18,552.84 18,989.62

Note : # Relending of World Bank loan.

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Rs./Crores

2002-03 2003-04 2004-05

(m)Working Capital [k-e(i)] 646.72 1,775.02 2,513.63

(n) Capital employed (h+m) 7,081.92 8,353.13 9,457.27

(o) Net Worth (a+b(i)+b(ii)-l) 6,678.85 7,742.81 8,440.85

(p) Net worth per Rupee ofEquity capital (Rs.)(o/a) 19.71 22.85 24.90

2. RATIO ANALYSIS

Some important financial ratios on the financial health and working of the Company at the end of lastthree years are as under :

2002-03 2003-04 2004-05

A. Liquidity Ratio

Current Ratio (%) 108.18 123.19 135.97

B. Debt Equity Ratio 0.09:1 0.05:1 0.02:1

C. Profitability Ratios (%)

a) Profit before tax to

i) Capital employed 34.06 35.68 17.35

ii) Net worth 36.11 38.49 19.44

iii) Sales 5.36 5.79 2.74

b) Net Profit after tax to Net worth 23.02 24.59 15.13

3. RESERVES & SURPLUS

The free Reserves and Surplus of the Company were 23.90 times the paid-up capital as on 31st March,2005 as against 21.85 times as on 31st March, 2004 and 18.71 times as on 31st March, 2003.

4. INVESTMENTS

The Company has made the following investments :

(i) Rs.3.42 crores in the equity share capital of Guru Gobind Singh Refineries Ltd.

(ii) Rs.5.00 crores in the equity share capital of South Asia LPG Co. Pvt. Ltd.

5. DUES FROM PP&AC

As of March 2005, the Company has to receive an amount of Rs. 777.02 crores from Pool Accountstowards various pool claims pertaining to the APM period (i.e. up to March 31, 2002).


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6. SOURCES AND UTILISATION OF FUNDS

Funds amounting to Rs. 3154.56 crores from internal and external sources were realised and utilisedduring the year as follows :

Rs./Crores

2004-05

SOURCES OF FUNDS

Funds from operations :Profit after tax 1,277.33Add : Depreciation 659.59Add : Net Loss on sale/write off of Fixed Assets/CWIP 4.02 1,940.94

Adjustment on sale/deletion of Fixed Assets/CWIP 25.53Share Capital 0.03Share Premium 0.83Short Term Loans raised 510.05Increase in Bank Loan 177.18Redemption of Oil Bonds 300.00OIDB Term Loan raised 200.00

Total 3,154.56

UTILISATION OF FUNDSPublic Deposit Repaid 2.68Increase in Capital Expenditure 1,345.37Deferred Tax 79.33Dividend Paid 804.93Repayment of Debentures 400.00Increase in working capital 513.83Increase in Investments 8.42

Total 3,154.56

7. WORKING CAPITAL

i) The working capital of the Company as on 31st March for the year 2002-03, 2003-04 and 2004-05was Rs. 646.72 crores, Rs. 1775.02 crores and Rs. 2513.63 crores respectively.

ii) The percentage of working capital to capital employed during the three years 2002-03, 2003-04 and2004-05 was 9.13, 21.25 and 26.58 respectively.

8. WORKING RESULTS

The working results of the company during the last three years are given below :

Rs./Crores

2002-03 2003-04 2004-05

i) Net Sales (excl. excise duty & including payments topool accounts) 48,608.21 51,517.66 59,793.37

ii) Profit before tax 2,411.79 2,980.43 1,640.60iii) Profit after tax 1,537.36 1,903.94 1,277.33


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9. INVENTORY

The inventory position as at the end of last three years was as follows :

Rs./Crores

2002-03 2003-04 2004-05

i) Raw Materials 1,025.33 931.53 1,166.24

ii) Stores & Spares 93.19 110.21 125.77

iii) Stock in Process 212.67 197.68 275.07

iv) Finished Goods 3,777.20 4,149.69 4,107.17

v) Packages 14.15 13.42 7.96

The stock of raw materials at the close of each year was equivalent to about 21 days’ consumption in2004-05 as against 23 days’ consumption in 2003-04 and 26 days’ consumption in 2002-03.

The stores, spares and packages at the end of 2004-05 represented 303 days’ consumption as against301 days’ consumption in 2003-04 and 323 days’ in 2002-03.

Finished Goods at the end of the year was equivalent to 25 days’ sales during 2004-05 as against30 days’ sales during 2003-04 and 26 days’ during 2002-03.

10. SUNDRY DEBTORS

The position of sundry debtors for the last three years ending 31st March, 2005 stood as follows :

Year Sundry Considered PercentageDebtors Doubtful & of debtors

Provided for to sales

Rs./Crores Rs./Crores

2002-03 891.09 28.72 1.69

2003-04 1,028.94 28.65 1.83

2004-05 1,080.17 31.56 1.67

The following table indicates the debts outstanding for more than one year as on 31st March, 2005 :

Rs./Crores

GovernmentDepartments Others Total

Debts over one year but less than two years 0.13 9.32 9.44

Debts over two years but less than three years 0.65 11.43 12.09

Debts outstanding for more than three years 2.77 31.85 34.62

11. DIVIDEND

The proposed dividend for the year 2004-05 is 150% on equity as compared to 220% paid for 2003-04and 200% paid for 2002-03. The dividend payout ratio after considering the tax on distributed profits,calculated as a percentage of total dividend paid/proposed to profit after tax, during the last three years2002-03, 2003-04 and 2004-05 was 49.24%, 44.23% and 45.42% respectively.

Revathy IyerPrincipal Director of Commercial Audit &Ex-officio Member, Audit Board-II, Mumbai

Place : MumbaiDate : June 24, 2005


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Sl. Name of the Date of Major Shareholdings Nature of operationsNo. Joint Venture incorporation

1. Mangalore Refinery & 07.03.1988 ONGC – 71.62% Refining of petro productsPetrochemicals Ltd. HPCL – 16.95%

2. Hindustan Colas Ltd. 17.07.1995 HPCL – 50.00% Manufacture and Marketing ofCOLAS – 50.00% Bitumen Emulsions & Modified

Bitumen

3. Petronet India Ltd. 26.05.1997 HPCL – 16.00% To act as nodal agency forFinancial/ developing identified and prioritisedStrategic petroleum product pipelinesInvestors – 50.00% in the countryOther PSUs – 34.00%

4. Petronet MHB Ltd. 31.07.1998 HPCL – 26.00% Operation and maintenance ofPetronet petroleum product pipeline betweenIndia Ltd. – 26.00% Mangalore-Hassan-BangaloreONGC – 23.00%Financial/StrategicInvestors – 25.00%

5. Prize Petroleum 28.10.1998 HPCL – 50.00% Exploration and productionCo. Ltd. ICICI & activities in the oil and gas

Associates – 45.00% sectorHDFC – 5.00%

6. South Asia LPG Co. HPCL – 50.00% Construction of LPG undergroundPvt. Ltd. 16.11.1999 TOTAL – 50.00% cavern storage of 60000 MT

capacity and associated receivingand despatch facilities atVisakhapatnam

7. Bhagyanagar Gas Ltd. 22.08.2003 HPCL – 22.50% Distribution and marketing ofGAIL – 22.50% environmental friendly fuels (greenAP Govt. – 5.00% fuels) viz. CNG and Auto LPG inFinancial/ the state of Andhra Pradesh.StrategicInvestors – 50.00%

Joint Ventures

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Auditors’ Report to the Board of Directors of Hindustan Petroleum Corporation Limited on the Consolidated FinancialStatements of Hindustan Petroleum Corporation Limited, its Subsidiary and its interests in Joint Venture Companies.

1. We have audited the attached Consolidated Balance Sheet of Hindustan Petroleum Corporation Limited, itsSubsidiary and its interests in Joint Venture Companies as at March 31, 2005, the Consolidated Profit and LossAccount and Consolidated Cash Flow Statement for the year ended on that date annexed thereto, which we havesigned under reference to this report. These financial statements are the responsibility of Hindustan PetroleumCorporation Limited’s management. Our responsibility is to express an opinion on these financial statementsbased on our audit.

2. We conducted our audit in accordance with generally accepted auditing standards in India. These Standardsrequire that we plan and perform the audit to obtain reasonable assurance whether the financial statements areprepared, in all material respects, in accordance with an identified financial reporting framework and are free ofmaterial misstatements. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statements. We believethat our audit provides a reasonable basis for our opinion.

3. The audited financial statements of the Subsidiary reflecting total assets of Rs. 305.46 crores as at March 31,2005 and Nil revenue for the year ended on that date and of four of the Joint Venture Companies reflecting totalassets of Rs. 230.21 crores as at March 31, 2005 and revenue of Rs. 47.71 crores for the year ended on thatdate, have been audited by other auditors on which we have relied. We have also relied on unaudited provisionalfinancial statements of two other Joint Venture Companies, viz. Mangalore Refinery and Petrochemicals Limitedand Petronet India Limited, reflecting total assets of Rs. 1,414.42 crores as at March 31, 2005 and revenues ofRs. 3,168.85 crores for the year ended on that date, for the purpose of our examination of the consolidatedfinancial statements.

4. We report that the consolidated financial statements have been prepared by the Company in accordance with therequirements of Accounting Standard 21 “Consolidated Financial Statements” and Accounting Standard 27 “FinancialReporting of Interests in Joint Ventures”, issued by the Institute of Chartered Accountants of India, on the basisof separate audited financial statements of Hindustan Petroleum Corporation Limited, its Subsidiary and fourJoint Venture Companies and unaudited provisional financial statements of two Joint Venture Companies.

5. On the basis of the information and explanations given to us and read with note 6 of Schedule 20 relating to non-inclusion of cash flows of certain entities in the preparation of consolidated cash flow statements and note no. 8to Schedule 20 relating to accounting for income tax benefits, and in the consideration of separate audit reporton individual financial statements, of Hindustan Petroleum Corporation Limited, its Subsidiary and Joint VentureCompanies, in our opinion, the consolidated financial statements give a true and fair view in conformity with theaccounting principles generally accepted in India:

(a) in the case of the Consolidated Balance sheet, of the consolidated state of affairs of Hindustan PetroleumCorporation Limited, its Subsidiary and its Joint Venture Companies as at March 31, 2005;

(b) in the case of the Consolidated Profit and Loss Account, of the consolidated results of operations ofHindustan Petroleum Corporation Limited, its Subsidiary and its Joint Venture Companies for the year endedon that date; and

(c) in the case of the Consolidated Cash Flow Statements, of the consolidated cash flows of Hindustan PetroleumCorporation Limited, its Subsidiary and two Joint Venture Companies for the year ended on that date.




Auditors' Report

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Consolidated Balance Sheet as at 31st March, 2005





Rs./Crores

SCHEDULE 2004-05 2003-04SOURCES OF FUNDSShareholders’ Funds :

a) Capital 1 340.49 340.46b) Reserves and Surplus 2 8,011.38 7,175.81

8,351.87 7,516.27Shares Application Money Pending Allotment 22.40 37.84Loan Funds :

a) Secured Loans 3 616.16 977.13b) Unsecured Loans 4 2,308.40 1,688.94

2,924.56 2,666.07Deferred Tax Liability 1,350.12 1,349.43

Total 12,648.95 11,569.61

APPLICATION OF FUNDSFixed Assets : 5

a) Gross Block 13,884.19 12,865.87b) Less : Depreciation 5,874.13 5,153.60

c) Net Block 8,010.06 7,712.27d) Capital Work-in-Progress 6 974.09 661.35

8,984.15 8,373.62

Investments 7 939.15 1,239.15

Current Assets, Loans and Advances :a) Inventories 8 6,008.44 5,605.50b) Sundry Debtors 9 1,215.19 1,142.52c) Cash and Bank Balances 10 211.91 221.32d) Other Current Assets 11 0.50 0.38e) Loans and Advances 12 2,692.81 2,929.20

10,128.85 9,898.92

Less :Current Liabilities and Provisions : 13

a) Liabilities 6,601.66 6,747.52b) Provisions 810.28 1,208.67

7,411.94 7,956.19

Net Current Assets 2,716.91 1,942.73Miscellaneous Expenditure to the extent not written off or adjusted :

– Expenses including commission or brokerageon underwriting or subscription of shares 8.74 14.11

Total 12,648.95 11,569.61

NOTES FORMING PART OF CONSOLIDATED ACCOUNTS 20

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Consolidated Profit and Loss Account for the year ended31st March, 2005

SCHEDULE 2004-05 2003-04INCOME

Sale of Products 68,239.88 58,508.51Less : Excise duty Paid 5,800.64 6,205.51

Net Sales 62,439.24 52,303.00Net Recovery from/(Payment to) IndustryPool Accounts (7.86) 160.30Recovery under Subsidy Schemes 536.68 1,018.26Other Income 14 371.38 486.33

63,339.44 53,967.89INCREASE/(DECREASE) IN INVENTORY 15 68.43 390.89

EXPENDITURE AND CHARGESPurchase of Products for resale 33,677.68 30,583.90Raw materials consumed 23,359.55 16,811.96Packages consumed 94.23 82.53Duties applicable to products 94.55 319.78Transhipping Expenses 1,384.00 1,228.97Payments to and provisions for Employees 16 723.08 576.35Other Operating Expenses 17 1,328.19 954.89Depreciation/Amortisation 736.73 675.57Interest 18 133.28 128.19Miscellaneous Expenditure written off 5.38 5.47

61,536.67 51,367.61PROFIT FOR THE YEAR BEFORE PRIOR PERIODADJUSTMENTS AND TAXES 1,871.20 2,991.17PRIOR PERIOD DEBITS/(CREDITS) (NET) 19 (0.05) (76.21)PROFIT BEFORE TAXES 1,871.25 3,067.38PROVISION FOR CURRENT TAXATION 602.49 1,023.63PROVISION FOR DEFERRED TAXATION (NET) 0.69 67.88PROVISION FOR TAXATION IN EARLIER YEARS WRITTEN BACK (147.57) –PROFIT AFTER TAXES 1,415.64 1,975.87BALANCE BROUGHT FORWARD 5,153.51 4,220.19

Transfer from Debenture Redemption Reserve 100.00 16.60PROFIT AVAILABLE FOR APPROPRIATION 6,669.15 6,212.66APPROPRIATED FOR :

General Reserve 127.81 190.51Transfer to Debenture Redemption Reserve – 25.00Interim Dividend 169.67 203.88Proposed Final Dividend 340.04 543.64Tax on Distributed Profits 71.25 95.74Market Development Fund – 0.38

BALANCE CARRIED FORWARD 5,960.38 5,153.51EARNINGS PER SHARE (in Rs.) 41.77 58.30

(2004-05 : EPS = Net Profit - Rs. 1,415.64 crores/Weighted avg. no. of shares - 33.893 crores;2003-04 : EPS = Net Profit - Rs. 1,975.87 crores/Weighted avg. no. of shares - 33.887 crores)

NOTES FORMING PART OF CONSOLIDATED ACCOUNTS 20





Rs./Crores

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Schedules forming part of the Consolidated Balance Sheet

2004-05 2003-04

Rs./Crores

1. CAPITAL

A. Authorised :75,000 Cumulative Redeemable PreferenceShares of Rs. 100/- each 0.75 0.7534,92,50,000 Equity Shares of Rs.10/- each 349.25 349.25

350.00 350.00

B. Issued :33,93,30,000 Equity Shares of Rs.10/- each 339.33 339.33

C. Subscribed & Called up :33,93,30,000 Equity Shares of Rs.10/- each fully paid up 339.33 339.33Less : Calls unpaid by Others 0.40 0.43

338.93 338.90Non-Cumulative Redeemable Preference Shares 1.56 1.56

340.49 340.46

2. RESERVES AND SURPLUS

Share Premium AccountAs per the last Balance Sheet 1,048.72 1,048.72Less : Calls Unpaid 13.31 14.20

1,035.41 1,034.52Debenture Redemption ReserveAs per the last Balance Sheet 100.00 91.60Add :Transfer from Profit & Loss Account – 25.00

100.00 116.60Less :Transfer to Profit & Loss Account 100.00 16.60

– 100.00

Capital Reserve 0.08 0.08

Market Development Reserve 1.40 1.40

General ReserveAs per the last Balance Sheet 886.30 695.41Add :Transfer from Profit & Loss Account 127.81 190.89

1,014.11 886.30

Profit & Loss Account Surplus as per Accounts annexed 5,960.38 5,153.51

8,011.38 7,175.81

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2004-05 2003-043. SECURED LOANS

Debentures8.50% Secured Non-Convertible Debentures redeemable at par onFebruary 4, 2007 with an option for early redemption of debenturesat par on February 4, 2005 (Secured against certain immovableproperties of the Company) – 400.00

Overdrafts from Banks 320.13 142.73

Rupee Term Loan 48.17 25.06

Long Term Loans from Banks 123.45 130.00

Interest accrued and due 2.55 1.72

Foreign Currency Loan 79.91 237.63

Others 41.95 39.99

616.16 977.13

4. UNSECURED LOANS

Fixed Deposits 0.11 2.79

From Oil Industry Development Board 200.00 –(Due for Repayment within one year Rs. 66.66 crores2003-04 : Rs. Nil)

Foreign Currency Loans 166.98 583.97

Advance towards Equity 1.40 0.88

Interest Accrued & Due 1.05 1.52

Short Term Loans From Banks 1,667.83 32.97

Sales Tax Deferment Loan 16.78 10.01

Others 254.25 1,056.80

2,308.40 1,688.94

Rs./Crores

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5. FIXED ASSETS Rs./Crores

Gross Block Additions/ Deductions/ Gross Block Depreciation Total Net Netat cost Reclassifi- Reclassifi- at cost and Depreciation Block Block

as at cations cations as at Amortisation and as at as at01-04-2004 31-03-2005 for the year Amortisation 31-03-2005 31-03-2004

2004-2005 upto31-03-2005

A. OTHER THAN INTANGIBLE ASSETS

1. Land - Freehold 263.80 11.31 0.36 274.75 – – 274.75 263.80

2. Roads and Culverts 482.13 91.21 0.13 573.21 8.44 48.85 524.36 441.71

3. Buildings 979.93 146.75 0.20 1,126.48 21.33 141.84 984.64 859.31

4. Leasehold Property

- Land 122.00 5.32 – 127.32 3.90 20.71 106.61 105.19

5. Railway Siding and Rolling Stock 269.66 1.93 – 271.59 13.32 101.60 169.99 181.37

6. Plant and Machinery 10,389.46 775.11 71.59 11,092.98 656.80 5,357.91 5,735.07 5,675.31

7. Furniture, Fixtures and Office/

Laboratory Equipment 249.16 45.63 8.28 286.51 24.70 138.57 147.94 130.49

8. Transport Equipment 66.03 14.97 1.99 79.01 5.30 42.18 36.83 27.61

9. Unallocated capital expenditure

on Land Development 0.20 – – 0.20 – 0.20 – –

Total (A) 12,822.37 1,092.23 82.55 13,832.05 733.79 5,851.86 7,980.19 7,684.79

B. INTANGIBLE ASSETS

1. Right of Way 10.85 3.79 – 14.64 – – 14.64 10.85

2. Technical/Process Licences 6.24 – – 6.24 0.35 1.78 4.46 4.81

3. Software 26.41 4.88 0.03 31.26 6.05 20.49 10.77 11.82

Total (B) 43.50 8.67 0.03 52.14 6.40 22.27 29.87 27.48

Grand Total [(A) + (B)] 12,865.87 1,100.90 82.58 13,884.19 740.19 5,874.13 8,010.06 7,712.27

Previous Year 12,070.76 966.54 171.43 12,865.87 679.56 5,153.60 7,712.27

2004-05 2003-04

6. CAPITAL WORK-IN-PROGRESS (at Cost)

Unallocated Capital Expenditure and Materials at Site 765.82 532.12Advances for Capital Expenditure 60.67 15.51Capital Stores 50.72 41.91Capital Stores lying with Contractors 4.46 4.66Capital goods in transit 2.03 1.49

883.70 595.69Construction period expenses pending apportionment(Net of recovery) 0.65 0.25Establishment charges 89.04 64.82Interest 0.70 0.59

90.39 65.66

974.09 661.35

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2004-05 2003-04

7. INVESTMENTS (Long term, at Cost)

A. TRADE INVESTMENTSQuoted1. 6.96% Oil Companies Government of India

Special Bonds 2009 931.00 1,231.00Unquoted1. Petronet MHB Ltd. 0.05 0.052. Petronet VK Ltd. 4.16 4.163. Petronet CCK Ltd. 4.16 4.164. Petronet CI Ltd. 0.17 0.17

Total (A) 939.54 1,239.54

B. OTHER INVESTMENTSQuoted1. Government Securities of the face value of Rs. 0.02 crores

Deposited with Others 0.02 0.02On hand - Rs. 0.25 lakhs (2003-04 : Rs. 0.25 lakhs) – –

2. Scooters India Ltd.10,000 Equity Shares of Rs. 10/- each fully paid up 0.01 0.01

Unquoted1. Government Securities of the face value of Rs.0.24 lakhs

Deposited with Others - Rs. 0.10 lakhs(2003-04 : Rs. 0.10 lakhs) – –On hand - Rs. 0.14 lakhs (2003-04 : Rs. 0.14 lakhs) – –

2. East India Clinic Ltd.1, ½% Debentures of face value of Rs. 0.15 lakhs -Rs. 0.15 lakhs (2003-04 : Rs. 0.15 lakhs) – –1, 5% Debentures of face value of Rs. 0.07 lakhsRs. 0.07 lakhs (2003-04 : Rs. 0.07 lakhs) – –

3. Shushrusha Citizen Co-operative Hospital Limited100 Equity Shares of Rs. 100/- each fully paid up -Rs. 0.10 lakhs (2003-04 : Rs.0.10 lakhs) – –

4. Petroleum India International (AOP)Contribution towards Seed Capital 0.05 0.05

Total (B) 0.08 0.08

Total Investments [(A) + (B)] 939.62 1,239.62

Less : Provision for loss on Investments 0.47 0.47

939.15 1,239.15

Rs./Crores

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2004-05 2003-048. INVENTORIES

Raw Materials 1,329.90 1,006.07Finished Products 4,241.54 4,250.65Stock in Process 296.61 219.08Packages 8.08 13.48

5,876.13 5,489.28Stores and Spares 132.31 116.22

6,008.44 5,605.50

9. SUNDRY DEBTORS (Unsecured)

Over six months :Considered good 317.25 52.54Considered doubtful 31.97 29.04

Others :Considered good 897.94 1,089.98Considered doubtful 7.28 –

1,254.44 1,171.56Less : Provision for Doubtful Debts 39.25 29.04

1,215.19 1,142.52

10. CASH AND BANK BALANCES

Cash on hand 1.24 1.13Cash & Cheques Awaiting Deposit 0.85 1.10With Scheduled Banks :

On Current Accounts 199.62 203.75On Non-operative Current Accounts 0.03 0.04On Fixed Deposit Accounts 10.11 15.25

With Others :In Current Account with Municipal Co-operative Bank Ltd. 0.06 0.05(Maximum Balance during the year Rs. 0.13 crores,2003-04 : Rs. 0.09 crores)

211.91 221.32

11. OTHER CURRENT ASSETS

Interest accrued on Bank Deposits and Investments 0.50 0.38

Rs./Crores

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2004-05 2003-0412. LOANS AND ADVANCES

Secured, considered good :Advances recoverable in cash or in kind or for value to be received 367.31 363.04Interest Accrued thereon 102.77 95.30

Unsecured, considered good :Advances recoverable in cash or in kind or for value to be received 57.94 52.82Balances with Excise,Customs, Port Trust etc. 348.38 169.28Other Deposits 108.73 36.79Prepaid Expenses 7.48 10.15Amounts recoverable from Pool Account 832.86 933.45Advance towards Equity 5.92 3.00Share Application Money Pending Allotment 40.51 58.46Other Accounts Receivable 820.91 1,206.91

Unsecured, considered doubtful :Accounts Receivable & Deposits 4.36 21.82

2,697.17 2,951.02Less : Provision for Doubtful Receivables 4.36 21.82

2,692.81 2,929.20

13. CURRENT LIABILITIES AND PROVISIONS

A. Current LiabilitiesSundry Creditorsi) Total outstanding dues of small scale

industrial undertakings 4.45 2.79ii) Total outstanding dues of creditors other than

small scale industrial undertakings 2,484.23 914.80Deposits from Dealers/Consumers for LPG Cylinders 2,549.33 2,373.41Other Deposits 97.80 62.45Accrued Charges/Credits 200.39 101.38Interest accrued but not due on loans 1.59 4.19Interest accrued and due on Unpaid Debentures 1.18 1.56Preference share capital redeemed remainingunclaimed/uncashed 0.01 0.01Unclaimed dividend * 10.84 10.05Unpaid matured fixed deposits – 0.07Unpaid matured debentures 2.80 2.91Other Liabilities 1,249.04 3,273.90

6,601.66 6,747.52

B. ProvisionsProvision for Tax (Net) 299.14 489.16Proposed Dividend on Preference Shares(Rs. 1,695; 2003-04 : Rs. 1695) – –Proposed Dividend on equity shares 340.04 543.64Provision for Gratuity/Pension 37.08 39.00Provision for other retirement benefits 86.33 67.22Tax on Distributed Profits 47.69 69.65

810.28 1,208.67

7,411.94 7,956.19

* No amount is due as at the end of the year for credit to Investors’ Education & Protection Fund.

Rs./Crores

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Schedules forming part of the Consolidated Profit and Loss Account

2004-05 2003-0414. OTHER INCOME

Interest (Gross) :On Investments 74.77 86.02On Deposits 4.31 17.84On Staff Loans 14.76 18.53On Customers’ Accounts 4.11 3.78On Others 22.83 26.82

120.78 152.99Dividend income 0.71 –Share of Profit from Petroleum IndiaInternational (AOP) 0.67 1.47Rent Recoveries 33.31 27.80Export benefit under duty free entitlement scheme 23.17 40.88Difference on payment on sales tax deferral loan – 43.33Profit on sale of Investments 6.60 –Exchange rate variation (Net) 78.94 145.66Miscellaneous Income 107.20 74.20

250.60 333.34

371.38 486.33

15. INCREASE/(DECREASE) IN INVENTORY

Closing Stock :Stock in Process 296.61 219.07Finished Products 4,241.54 4,250.65

4,538.15 4,469.72Less : Opening Stock :

Stock in Process 219.07 227.98Finished Products 4,250.65 3,850.85

4,469.72 4,078.83

68.43 390.89

16. PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

Salaries, Wages, Bonus, etc. 461.82 379.36Contribution to Provident Fund 35.81 34.64Pension, Gratuity etc. 23.18 9.20Voluntary Retirement Compensation 41.98 –Employee Welfare Expenses 164.62 157.68Less : Recoveries 4.33 4.53

160.29 153.15

723.08 576.35

Rs./Crores

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Schedules forming part of the Consolidated Profit and Loss Account

2004-05 2003-0417. OTHER OPERATING EXPENSES

Consumption of Stores, Spares and Chemicals 74.14 74.00Power and Fuel 1,076.46 961.22Less : Fuel of own production consumed 1,060.76 949.26

15.70 11.96Repairs and Maintenance to Buildings 10.29 11.92Repairs and Maintenance to Plant & Machinery 238.80 169.05Repairs and Maintenance to other assets 6.31 4.18Insurance 32.28 43.05Rates and Taxes 369.81 60.13Equipment Hire Charges 1.04 0.30Rent 56.80 57.81Travelling and Conveyance 59.87 56.30Printing and Stationery 9.66 7.72Electricity and Water 101.76 95.13Charities and Donations 21.13 7.32Loss on Sale/write off of Fixed Assets/CWIP 4.17 3.16Stores & spares written off 3.15 0.10Write off of Goodwill on acquiring LPG Business of PITCL & DGL 1.22 –Diminution in Value of Investment – 0.47Provision for Doubtful Debts 10.23 (0.07)Provision for doubtful Receivables – 5.84Receivables written off – 0.07Provision for Doubtful Receivables written back (3.10) –Provision for assets under reconciliation – 39.26Security Expenses 27.52 16.72Advertisement & Publicity 94.69 81.51Consultancy and Technical Services 23.75 37.72Exploration Cost 0.79 –Sundry Expenses and Charges (Not otherwise classified) 168.18 171.24

1,328.19 954.89

18. INTEREST

On Long Term Loans 39.99 55.50On Short Term Loans 78.37 58.10On Overdraft from Banks 3.13 8.72On Fixed Deposits 0.13 1.95Others 11.66 3.92

133.28 128.19

19. PRIOR PERIOD DEBITS/(CREDITS)

Interest on Deposits (0.05) –Raw Materials consumed – (76.21)

(0.05) (76.21)

Rs./Crores

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Notes forming part of Consolidated Financial Statements

20. Notes forming part of the Consolidated Financial Statements for the year ended 31st March, 2005

1. Basis of preparation

The company has prepared the consolidated financial statements by consolidating its accounts with itswholly owned subsidiary Guru Gobind Singh Refineries Limited in accordance with Accounting Standard21 (Consolidated Financial Statements) and its Joint Ventures in accordance with Accounting Standard27 (Reporting for Financial Interest in Joint Ventures).

2. Principles of Consolidation

The financial Statements of all these companies are prepared according to uniform accounting policies,in accordance with Generally Accepted Accounting Principles in India.

3. Companies included in Consolidation % Holding

Subsidiary

Guru Gobind Singh Refineries Limited 100.00

Joint Ventures

Hindustan Colas Limited 50.00

South Asia LPG Company Pvt. Limited 50.00

Prize Petroleum Company Limited 50.00

Mangalore Refinery and Petrochemicals Limited 16.95

Bhagyanagar Gas Limited 25.00

Petronet India Limited 16.00

Petronet MHB Limited 26.00

4. Other Significant Accounting Policies and additional information

The other significant accounting policies have been set out in the notes to accounts of the parentcompany Hindustan Petroleum Corporation Limited as the same have been applied to the accounts ofthe parent, subsidiary and joint ventures. Additional information not impacted by consolidation is alsoset out in the notes to the accounts of the parent company.

5. Figures pertaining to the Subsidiary company and Joint Ventures have been reclassified wherever toconform to the Company’s Financial Statements.

6. Cash flow statements of Joint Ventures for which the provisions of preparation of cash flow statement isnot applicable have not been included in the Consolidated Cash Flow Statement.

7. Related Party disclosure:

Joint Venture Companies

2004-05 2003-04

Sales 91.53 43.53

Purchases 5,043.35 5,646.89

Sale of Assets – –

Dividend 0.71 0.40

Investment – 13.51

Advance towards equity 5.00 –

Rs./Crores

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Joint Venture Companies

2004-05 2003-04

Share application money pending allotment – 9.98

Interest 0.34 0.80Services 2.83 5.99Others 4.44 1.46Interest paid 0.01 –Services received 1.50 –Closing balances (240.98) –Managerial Remuneration 0.61 0.49The names of parties are as follows :

Joint Venture Companies: Mangalore Refineries and Petrochemicals Ltd., Hindustan Colas Ltd., PrizePetroleum Co. Ltd., Petronet India Ltd., Petronet MHB Ltd., South Asia LPG Co. Pvt. Ltd., BhagyanagarGas Ltd., M/s. Colasie, M/s Colas SA.

Key Management Personnel:

Shri M. B. Lal, Chairman & Managing DirectorShri D. S. Mathur, Director - RefineriesShri Arun Balakrishnan, Director- Human ResourcesShri C. Ramulu, Director - FinanceShri S. Roy Choudhury, Director- Marketing (from May 10, 2004)

8. The Parent Company (Hindustan Petroleum Corporation Limited) has been consistently following a policyof accounting for income tax benefits in the year in which the benefit is allowed in view of the pastexperience of uncertainties surrounding the claim for tax benefits. During the year, the Parent Companyupon completion of assessment for the Financial Year 2001-2002 (Assessment Year 2002-2003) wasgranted deduction for claim under Section 80 IB, being the First Year for which the claim was made. TheParent Company while writing back the provision of Rs. 47.52 crores attributable to the said Tax benefit,keeping in mind the past practice, has continued with the conservative accounting treatment for thesubsequent years.

9. Previous year’s figures have been regrouped/reclassified wherever necessary.

2004-05 2003-04

10. A. Estimated amount of contracts remaining to beexecuted on Capital Account not provided for 1,192.83 417.81

B. No provision has been made in the accounts inrespect of the following disputed demands/claimssince they are subject to appeals/representationsand a substantial portion thereof is recoverablefrom Pool Account

i. Sales Tax/Octroi 632.05 551.19ii. Excise/Customs 910.58 706.60iii. Land Rentals & Licence Fees 39.73 32.81iv. Others 68.38 33.10

Rs./Crores

Rs./Crores

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C. Contingent Liabilities not provided for in respect ofi. Income Tax 25.19 69.13ii. Sales Tax/Octroi 128.64 244.40iii. Excise/Customs 112.61 –iv. Employee Benefits/Demands 69.48 49.90

(to the extent quantifiable)v. Guarantees on behalf of others 184.41 190.54vi. Claims against the Corporation not

acknowledged as debts 190.92 192.75vii. Enhancement of Compensation against land acquired 173.26 173.26viii. Service Tax 0.08 –ix. Others 1.72 –

D. Payment to Auditors :– Audit fees 0.17 0.14– Tax audit fees 0.02 0.02– Other services 0.07 0.09– Reimbursement of expenses 0.03 0.01

E. Managerial Remuneration :– Salary and Allowances 0.65 0.55– Contribution to Provident Fund and other funds 0.05 0.06– Other benefits 0.18 0.13

F. Deferred Tax Assets/(Liabilities) arising due to timingdifferences comprises of :Deferred Tax AssetsProvision for Gratuity/Pension 12.48 13.99Provision for Medical Benefits 2.72 2.27Provision for Leave Encashment 18.65 13.71Expenditure under Section 35D of the I.T. Act, 1961 – 0.02Unabsorbed Losses and Allowances 193.66 267.35Others 40.10 25.68

Total 267.61 323.02

Deferred Tax LiabilitiesDepreciation 1,571.63 1,629.11Lease Finance 12.58 14.80Others 33.40 28.34

Total 1,617.61 1,672.25

Deferred Tax Asset/(Liability) (1,350.00) (1,349.23)


2004-05 2003-04

Rs./Crores

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2004-05 2003-04

Cash Flow From Operating ActivitiesNet Profit before Tax & Extraordinary items 1,890.98 3,081.57Adjustments for :

Depreciation/Amortisation 724.59 671.40Deletion of Fixed Assets/CWIP 4.15 42.45Interest Expense 120.56 118.94Interest Income (81.24) (104.80)Income from Investment (0.67) (1.47)Provision for Doubtful Debts 7.13 5.83Dividend Received (0.71) –Provision written back (2.27) (0.36)Foreign exchange gain 10.13 (6.13)Profit on sale of Investment (6.60) –Misc. Expenses to the extent written off (Public Issue Expenses) 5.17 5.27

Operating Profit before Working Capital changes 2,671.22 3,812.72

Increase/(Decrease) in Working Capital :Trade Receivables (151.16) (260.10)Other Receivables 162.19 (489.55)Other Current Assets (0.03) 0.09Inventories (402.98) (313.21)Trade and other Payables (143.15) (541.52)

2,136.09 2,208.42Amounts recoverable from Pool Account 100.59 195.19

Cash generated from operations 2,236.68 2,403.62Direct Taxes paid (Net) (642.38) (618.80)

Cash Flow before extraordinary items 1,594.30 1,784.82

Net Cash from operating activities (A) 1,594.30 1,784.82

Cash Flow From Investing ActivitiesPurchase of Fixed Assets (incl. Capital Work in Progress/excluding interest capitalised) (1,302.95) (907.54)Preliminary expense – –Sale of Fixed Assets 2.88 1.64Purchase of Investment(Including Share Application moneypending allotment/Adv. towards equity) (7.13) (34.21)Sale proceeds of Investment 306.60 0.21Interest Income 81.37 104.80Dividend Received 0.71 –Income from Investment 0.67 1.47

Net Cash used in investing activities (B) (917.85) (833.62)

Consolidated Cash Flow Statement for the year ended31st March, 2005

Rs./Crores

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Consolidated Cash Flow Statement for the year ended31st March, 2005

Rs./Crores

2004-05 2003-04

Cash Flow From Financing ActivitiesProceeds from calls in Arrears (net) 4.28 22.73Proposed Public issue expenses – (0.04)Loans Repaid (8,633.48) (4,504.18)Loans Raised 8,698.99 4,805.57Interest paid on loan (including interest capitalised) (123.20) (129.03)Dividend paid (805.72) (912.51)

Net Cash used in financing activities (C) (859.13) (717.46)


Cash & Cash equivalents as on 1st April (Opening) :Cash/Cheques on Hand 1.37 5.48Balances with Scheduled Banks- On Current Accounts 203.25 4.79- Others 3.00 8.89Balances with other Banks 0.05 0.06


64.94 (170.95)

Cash & Cash equivalents as on 31st March (Closing):Cash/Cheques on Hand 1.81 1.37Balances with Scheduled Banks- On Current Accounts 197.27 203.25- Others 3.03 3.00Balances with other Banks 0.06 0.05


(117.74) 64.94


1. Figures have been regrouped/reclassified wherever necessary.2. Consolidated Cash Flow Statement for the year is for HPCL,its wholly owned Subsidiary (Guru Gobind Singh

Refineries Ltd.) and its Joint Ventures ( Mangalore Refinery and Petrochemicals Ltd. and Hindustan Colas Ltd).


M. B. LAL C. RAMULUChairman & Managing Director Director - Finance


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Corporate Governance

Corporate Governance in a formal way was made applicable to Indian Corporates from the year 1999-2000 by

SEBI, through the Listing Agreement with the Stock Exchanges. However, HPCL started Corporate Governance

reporting from the year 1999-2000, even though for HPCL it was applicable from 2000-01. These practices

form an integral part of the Company’s Governance Culture.

HPCL, lays special emphasis in conducting its affairs within the framework policies, internal and external

regulations and in a transparent manner. Being a Government Company, its activities are monitored by several

external agencies like the Statutory Auditors, Comptroller and Auditor General of India (CAG), the Central

Vigilance Commission (CVC), and Parliamentary Committees, etc.

Decision making process :

Like any other corporate, at the apex level is the HPCL Board. The Board has constituted several

sub-committees, such as the Committee of Functional Directors (CFD), the Audit Committee, the Investment

Committee, the HR Committee, the Investor Grievance Committee, etc. The composition of these Committees

is given in this Report. The meetings of these committees are convened on need basis and minutes of these

meetings are placed for information of the Board. Majority of the members of the Committees except CFD are

Independent Non-Executive or Government nominated directors with the whole time directors playing a

facilitating role.

The Corporation has constituted recently an Executive Council comprising of C & MD, the Functional Directors

and the SBU Heads of the Corporation. This group discusses important issues concerning the organization,

analyse the same and recommend the ‘way forward’ in respect of matters discussed. The emphasis laid by

this group is on team approach, mutual support of functions and joint deliberations on issues which has

enhanced further the decision making processes. It has thus facilitated an integrated thinking process and

A cross section of the audience at the 52ndAGM of the Corporation

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Corporate Governance (Contd.)

an aligned approach across the Corporation for achieving the Corporate Vision and each one of the aspirational

aspects contained in the Vision Statement.

Exercise of Authority :

The Corporation has a well documented Limits of Authority Manual, Purchase Manual, Chart of Accounts,

etc., facilitating the decision making process at various levels within the organization.

Limits of Authority Manual :

This manual (LAM) lays down the authorities that can be exercised at various levels i.e. the Board, Committee

of Functional Directors, the Executive Committee, the Contracts Committee, the Bids Committee and the

senior individual positions etc. for different activities of the Corporation. The manual is divided into segments

representing different functions like Sales, Crude and Shipping, Capital Projects, Operations and Distribution,

Finance, HR etc. and provides for a decision making process through various committees as above, represented

by inter-functional groups including Finance. This ensures a transparent and streamlined decision making

process adhering to the laid down systems and procedures and thereby leaving no room for arbitrariness.

The Committee of Functional Directors has delegated further powers to various sub-committees within the

organization, viz., Contracts Committee, Bids Committee, Credit Committee, etc.

Purchase Manual :

This Manual lays down elaborate procedures to be followed while undertaking purchases and in finalisation of

contracts. It lays down, inter alia, the purchasing authorities at various levels, norms and processes for

procurement.

The endeavour always is on building trust with Shareholders, Employees, Customers and other stakeholders

based on the basic principles of Corporate Governance i.e. transparency, fairness, disclosure and accountability.

Disclosures :

Given below are the various informations forming part of Corporate Governance disclosures :

1. BOARD OF DIRECTORS :

1.1 Composition of Board of Directors

Executive Directors including Chairman (Whole-time) 5

Non-Executive Government Directors (Ex-officio) 3

Non-Executive Independent Directors (Non-official) 4

Total 12

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1.2 Board Meetings :

Eight Board Meetings were held during the financial year on the following dates :

23rd April, 2004 31st May, 2004 28th July, 2004 8th September, 2004

29th October, 2004 9th December, 2004 27th January, 2005 3rd March, 2005

1.3 Particulars of Directors including their attendance at the Board/Shareholders’ Meetings

Names of Academic No. of No. of Attendance Details of Memberships

Directors Qualifications Board Meetings at the last Directorships in held in

Meetings attended AGM Companies Committee as

held specified in

Clause 49 of the

Listing Agreement

FUNCTIONAL DIRECTORS

Shri M.B. Lal B.E. (Chem), 8 8 Yes 1. GGSRL Nil

PGDBM 2. HINCOL

(IIM Ahmedabad) 3. SALPG

Shri D.S. B.Tech, M.Sc. 8 8 Yes 1. GGSRL

Mathur $ PGDPE 2. Prize Petroleum Member - Audit

Co. Ltd. Committee :

GGSRL

Shri N.K. Puri @ DME 1 1 – 1. Petronet MHB Ltd. Nil

2. MRPL

3. SALPG

4. GGSRL

5. Bhagyanagar

Gas Ltd.

Shri Arun B.E. (Chem), 8 8 Yes 1. PIL Nil

Balakrishnan PGDBM 2. MRPL

(IIM Bangalore)

Shri C. Ramulu ACA. ACS, MBA 8 8 Yes 1. Prize Petroleum Member - Audit

Co. Ltd. Committee

2. GGSRL a) GGSRL

3. HINCOL

4. SALPG Chairman - Audit

Committee

a) HINCOL

b) Prize

Petroleum

Co.Ltd

Shri S. Roy Mechanical 7 7 Yes 1. HINCOL Nil

Choudhury (*) Engineer 2. Petronet MHB Ltd.

3. Bhagyanagar

Gas Ltd.


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NON-EXECUTIVE DIRECTORS (a) PART-TIME (EX-OFFICIO)

Shri M.S. B.Tech. (Civil) 8 6 – 1. IOC Chairman -Srinivasan Master of Public 2. BPCL Remuneration

Administration, 3. GAIL Committee :IAS a) IOC

b) BPCL

Dr. B. Mohanty M.Sc. (Dev. 5 3 – 1. BPCL Member - Audit(**) Mgmt.) Ph.D. 2. GGSRL Committee :

(Eco.) 3. Balmer Lawrie a) HPCLInvestments Ltd. b) GGSRL

c) BLILMember -Shareholders'InvestorsGrievancesCommittee :a) HPCL

Shri A.K. IAS 8 5 – 1. GAIL Chairman -Srivastava 2. IBP Remuneration(***) 3. BPCL Committee :

4. Petronet LNG Ltd. a) IOCMember - AuditCommittee :a) IBP

(b) PART-TIME DIRECTORS (NON-OFFICIO)

Shri T.L. Sankar M.Sc. (Chemistry), 8 6 – 1. Rain Calcining Ltd. Member -MA (Dev. Eco.), 2. KSK Energy RemunerationIAS Ventures Ltd. Committee :

3. GGSRL a) Rain Calcining4. Delhi Power Co. Ltd. Ltd.5. Small Scale Chairman - Audit

Sustainable Committee :Infrastructure a) HPCLDevelopment b) Rain CalciningBoard Ltd.

c) GGSRL

Chairman -Shareholders’Investor GrievancesCommittee :a) Rain Calcining Ltd.

Names of Academic No. of No. of Attendance Details of Memberships

Directors Qualifications Board Meetings at the last Directorships in held in

Meetings attended AGM Companies Committee as

held specified in

Clause 49 of the

Listing Agreement


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Shri Raja G. M.A. (Eco.) 8 8 Yes None Member -Kulkarni Shareholders

InvestorsGrievancesCommittee :a) HPCL

Shri Rajesh V. Degree in 8 3 – 1. Mukand Ltd. Member -Shah Mathematics, 2. Mukand Audit Committee :

MBA Engineers Ltd. a) HPCL3. Fusion Investments b) ONGC

& Financial ServicesLtd. Member -

4. Catalyst Finance Ltd. Shareholders'5. Conquest Investors

Investments & GrievancesFinance Ltd. Committee :

6. Kalyani Mukand Ltd. a) Mukand7. Bengal Port Ltd. Engineers8. Jeewan Ltd. Ltd.9. India Thermal b) HPCL

Power Ltd.10. ONGC Chairman -

Shareholders'Investors GrievancesCommitteea) ONGC

Shri M. B.Sc. 8 1 – 1. Mohan Breweries Chairman -Nandagopal (Agriculture) & Distilleries Ltd. Shareholders'

2. Thirumugal Mills Ltd. Investors3. Artos Breweries Ltd. Grievances4. S V Sugar Mills Ltd. Committee :5. Vestas RRB India Ltd. a) HPCL6. Mira Textiles &

Industries Ltd.7. Global Housing

Finance Corpn.Ltd.8. Binny Engg. Ltd.9. Mysore Fruit

Products Ltd.10. Clean Power Ltd.11. Sagar Sugars &

Allied Products Ltd.12. Binny Ltd.

@ : Shri N.K. Puri retired on attaining the age of superannuation on 30.04.04(*) : Shri S. Roy Choudhury appointed as Director-Marketing effective 10.05.04(**) : Dr. B. Mohanty ceased to be Director effective 29.10.04(***) : Shri A. K. Srivastava ceased to be Director effective 07.03.05$ : Shri D.S. Mathur retired on attaining the age of superannuation on 31.05.05

Names of Academic No. of No. of Attendance Details of MembershipsDirectors Qualifications Board Meetings at the last Directorships in held in

Meetings attended AGM Companies Committee asheld specified in

Clause 49 of theListing Agreement


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1.4 Profile of Directors :

Shri Mahesh B. Lal

Shri Lal is the Chairman and Managing Director of Hindustan Petroleum Corporation Ltd. Shri Lal took over asthe Chairman and Managing Director of HPCL, on June 05, 2002. Prior to this, Shri Lal was Director (Refineries)of BPCL.

Shri Lal is a Chemical Engineer from Indian Institute of Technology, Kanpur and a Post Graduate in Managementfrom IIM, Ahmedabad. Shri Lal has a vast and extensive experience in the Petroleum Industry. He was earlierAdvisor - Refineries in the Ministry of Petroleum and Natural Gas, Government of India. In this capacity, hewas the Government Director on the Boards of Kochi Refineries Ltd., IBP Co. Ltd., and Numaligarh RefineriesLtd. Thereafter, he was Director (Operations) of Madras Refineries Ltd. (now Chennai Petroleum CorporationLimited) before moving back to Bharat Petroleum Corporation Limited as Director (Refineries). IIT Kanpur hasbestowed the distinguished Alumnus Award on Shri Lal in the year 2002.

Shri M.S. Srinivasan

Shri M.S. Srinivasan graduated from the Indian Institute of Technology, Madras in the year 1970 and receivedhis Master’s in Public Administration degree from Harvard University, USA in 1987. He has been a member ofthe Indian Administrative Service (IAS) since 1971.

In a career spanning 32 years, Shri Srinivasan has had varied experience in both Public and Private Sectors. Heworked as General Manager of Pallavan Transport Corporation, as Managing Director of Kattabomman TransportCorporation and Project Coordinator of the Tamil Nadu Integrated Nutrition Project. He also worked in theMinistry of Petroleum and Natural Gas as a Director during 1984-89. Some of the other assignments held byhim include Managing Director of Tamil Nadu Newsprint and Papers Limited; Managing Director of the ChennaiMetropolitan Water Supply and Sewerage Board, Chairman and Managing Director of the Tamil Nadu IndustrialDevelopment Corporation Limited and Secretary to the Government of Tamil Nadu, Industries Department.

IIT Madras bestowed the Distinguished Alumnus Award on Shri M.S. Srinivasan in the year 2001.

Since November 2002, he has been working as Additional Secretary in the Ministry of Petroleum and Natural Gas.

Shri A.K. Srivastava

Shri A.K. Srivastava, Joint Secretary in the Ministry of Petroleum and Natural Gas is a member of IndianAdministrative Service. He is an Electrical Engineer from IRIMEE, Jamalpur, India and also B.E. (Mechanical)from the Council of Engineering Institution, London. He has also completed Post Graduate Diploma inManagement from AIMA, New Delhi. He has held senior positions in various Ministries of the Government ofIndia. He is also a Director on the Boards of Bharat Petroleum Corporation Limited, Gas Authority of IndiaLimited, IBP Co. Limited and also a special invitee to the Board of Petronet LNG Ltd.

DR. B. Mohanty

Dr. B. Mohanty, Ph.D in Economics and M.Sc in Development Management, has held several positions duringhis 24 years of service in various Ministries of the Government of India, having rich and varied experience ofworking in the areas of capital market reforms in the Ministry of Food and Consumer Affairs.

Shri T. L. Sankar

Shri Sankar is a Retd. Indian Administrative Service Officer with M.Sc. (Chemistry), Madras and M.A.(Development Economics) (Williams College, USA).

Shri Sankar has held several assignments for the Government of Andhra Pradesh, the Government of India,and international organisations in his 35 years career with the Indian Administrative Service. He continues tobe associated with several Committees of the Government of India in the areas of Energy Economics, PublicPolicy Analysis, and restructuring of Public Enterprises. He has served as Principal, Administrative StaffCollege of India; Director General - National Institute of Rural Development; Director, Institute of PublicEnterprises, Hyderabad; Advisor to the Government of India, Bangladesh, Sri Lanka, Tanzania and NorthKorea on energy policy and as Leader of the United Nations Team to design Regional Energy Development


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Programme and the Asian Development Bank’s Regional Energy Survey. He was also the Chairman, GasPrice Revision Committee. He was a member of the Power Minister’s Committee of Eminent Persons and theIndependent Standing Group under Justice P.N. Bhagawati. Shri Sankar has jointly edited two books,co-authored one, wrote several book chapters, and articles in national and international journals.

Shri Raja G. Kulkarni

Shri Raja Kulkarni is an M.A. with Economics from Bombay University and also holding Certificate on InternationalTrade Unionism from Harvard University, USA. He entered the Trade Union Movement in 1944 and has beencontinuously in the Trade Union Movement for the last 58 years. He was the Member of Parliament (LokSabha) during the period from 1971 to 1976. He has participated in several International Conferences andhas undertaken International Study Tours.

Shri Rajesh V. Shah

Shri Rajesh V. Shah obtained his first degree in Mathematics from the University of Cambridge in 1973, laterobtained a Master’s Degree in Business Administration from the University of California, Berkeley. He hasalso attended the Programme for Management Development (PMD) from Harvard Business School in 1983.

Shri Shah is presently the Managing Director of Mukand Ltd. In this capacity, he is responsible for all thediverse activities of the Company, which is India’s leading speciality steel producer and executing projects forroad construction and power plants.

He has served on various business councils, is a past president and has been a member of the NationalCouncil of the apex Indian business body, the Confederation of Indian Industry (CII) since 1986. He has beena member of the International Young Presidents’ Organisation (YPO) and was also Chairman of the YPOInternational Conference held in Mumbai in February, 1996 and on the International Board of Directors in thesame year.

Shri Rajesh Shah has been a strong believer in bringing about change within his company through the applicationof ‘Total Quality Management’ and has been awarded the Qimpro Gold Standard in 1990 and Platinum Standardin 1994 by Qimpro (an affiliate of Juran International Inc., USA), for his contribution in building India Inc.

Shri M. Nandagopal

Shri M. Nandagopal is B.Sc (Agriculture) from Agricultural University, Coimbatore. He is an Industrialist holdingposition as Director in various Companies. He is the Managing Director of Mohan Breweries and Distilleries Ltd.He is a Trustee in Sri Ramachandra Medical College and Research Institute, Chennai, Sakthi Trust, Delhi andMother Service Society, Pondicherry. Shri M. Nandagopal is also a member of Cosmopolitan Club and MadrasCricket Club.

Shri D.S. Mathur

Shri Mathur is on the Board of Directors of HPCL, currently holding the portfolio of Director (Refineries) from1996. Prior to that, for the period 1991 to 1996, he was holding the portfolio of Director (Personnel andAdministration). Shri Mathur is a Chemical Engineer from the Indian Institute of Technology, Kanpur. Hegraduated in the second batch in 1966 and was thereafter awarded a Shell Scholarship for postgraduation inManagement from the prestigious Loughborough University in U.K. On his return, he joined the erstwhile LubeIndia Ltd., which was a Joint Venture between Esso and the Government of India. Starting his career in theLube Refinery as a Technical Engineer, Shri Mathur held various positions in Production Planning, Economicsand Budgeting and Technical Departments of the Refinery. In 1974, on the formation of Hindustan PetroleumCorporation Ltd., he handled senior assignments in the Corporate Planning Division at Headquarters Officelooking after the activities of both Refinery and Marketing functions.

During his career, Shri Mathur attended various senior management programmes, like Project Management inthe U.K and Senior Administration Programmes at Henley and also obtained a Diploma in Petroleum Economicsfrom CPS, Oxford in 1985.


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Shri N.K. Puri

Shri Puri was on the Board of Directors of HPCL, holding the portfolio of Director (Marketing) till his superannuationon April 30, 2004. He is a Mechanical Engineer by profession. Shri Puri joined the erstwhile ESSO StandardEastern in 1964 and held several important positions in the organisation such as Chief General Manager -Retail, Chief General Manager - LPG, General Manager - HRD and General Manager - Lubes among others.

Shri Puri has attended several international conferences and has also attended Advanced ManagementProgrammes in Singapore and Malaysia.

Shri Arun Balakrishnan

Shri Balakrishnan is currently holding the portfolio of Director - Human Resources. Shri Balakrishnan is aChemical Engineer and an alumni of the Indian Institute of Management, Bangalore. He joined HPCL in 1976as a Management Trainee. He has held various positions in Marketing and Corporate functions around thecountry. These include positions such as Regional Manager of Orissa, Director Planning - OCC, GeneralManager - International Operations, General Manager - Lubricants and Specialities and Chief General Manager- Direct Sales.

He is credited with launching a number of successful lubricant brands and for spreading the HP Lubesdistributors network in the ASEAN countries. Shri Balakrishnan attended a program on Management in theUnited Kingdom under the Colombo Plan Program. He has also attended various seminars and conferencesrelated to Petroleum and Energy.

Shri C. Ramulu

Shri C. Ramulu is currently holding the portfolio of Director- Finance. Shri C. Ramulu is a qualified CharteredAccountant and Company Secretary and is a rank holder at the All India level. Shri C. Ramulu secureddistinction in MBA from the University of Leeds, U.K. in 1986.

Shri C. Ramulu commenced his career in the Petroleum Industry with Caltex India Ltd., which was laternationalised. His wide experience of over 28 years encompasses Financial Management including CorporateFinance, Treasury Operations, Budgetary Control, Internal Audit, etc., and General Management includingStrategy Planning, Management of Joint Ventures, etc. Shri Ramulu successfully handled the initial publicissue of HPCL for raising equity capital of Rs. 1200 crores.

Shri S. Roy Choudhury

Shri S. Roy Choudhury took charge as Director - Marketing effective May 10, 2004.

Shri S. Roy Choudhury is a Mechanical Engineer from the University of Assam. He commenced his career inthe Petroleum Industry with Assam Oil Company, Digboi, a subsidiary of Burma Oil Company. Shri S. RoyChoudhury joined HPCL on June 21, 1982 as Construction Engineer.

He has held various positions in the Company in Refinery, Marketing (Operations), Projects and Sales Divisionof HPCL. He is well known in the Oil Industry for his knowledge and expertise in the cross Country PipelineProjects before his appointment as Director - Marketing.

Shri Prabh Das

Shri Prabh Das, Joint Secretary of Ministry of Petroleum & Natural Gas is a member of Indian AdministrativeService. He is a B.Tech (Hons). from IIT, Kharagpur. He has also completed his Master of BusinessAdministration from Southern Cross University, Australia. He has worked as a District Magistrate and Collectorin Midnapur and Jalpaiguri Districts for a period of 5 years. Shri Prabh Das has also worked as a DeputySecretary/Director in the Department of Ocean Development and Ministry of Commerce, Government ofIndia. He has also worked as a Special Secretary (Transport) Government of West Bengal and Chief ExecutiveOfficer of Calcutta Metropolitan Development Authority.


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Shri Prabh Das joined the Ministry of Petroleum and Natural Gas as Joint Secretary in March 2003. He is alsoa Director on the Boards of Indian Oil Corporation Ltd., Engineers India Ltd. and Chennai Petroleum CorporationLtd.

Shri C. B. Singh

Shri C.B. Singh, holds a Master Degree in Economics from Allahabad University and is also a Master ofBusiness Administration from Southern Cross University, Australia. In the last 19 years of service with theGovernment of India Shri C.B. Singh has held several positions.

Shri C.B. Singh held positions in the field of Economic Planning and Economic Administration including areassuch as Investment Designing, Development Strategies and long range forecasting. He worked as Officer onSpecial Duty to the Union Agriculture Minister from March 2003 till April 2004. Shri Singh also held theposition of Director/Joint Director, Department of Industrial Policy and Promotion from April 1999 to March2003 in the Ministry of Commerce and Industry. He also held the position of Deputy Economic Advisor, Officeof the Economic Advisor from March 1998 to April 1999. Shri Singh also held the position as Deputy Director,Department of Economic Affairs, Assistant Controller of Insurance, Assistant Advisor in the Ministry ofFinance.

Currently, Shri Singh is Joint Advisor (Finance) in the Ministry of Petroleum and Natural Gas.

Shri M. A. Tankiwala

Shri M.A. Tankiwala took charge as Director (Refineries) effective June 1, 2005 prior to which he was theManaging Director of Guru Gobind Singh Refineries Ltd. (GGSRL), a fully owned subsidiary of HPCL and wasinstrumental in developing the grass root project.

He also served on the Board of Mangalore Refineries and Petrochemicals Limited (MRPL) the first refinery inthe Joint Sector as Managing Director (Technical) and ensured that due share was given to MRPL in meetingthe country’s energy demand.

Shri M.A. Tankiwala, a Graduate in Mechanical Engineering, commenced his career in Mumbai Refinery ofHPCL. He has had a wide exposure to the Petroleum Industry spanning for more than three decades inRefining Sector.

He has worked in both Mumbai and Visakh Refineries of HPCL in various capacities and contributed to thegrowth and development of the refinery operations of the Corporation.

2. REMUNERATION OF DIRECTORS :

• HPCL being a Government Company, the remuneration payable to its whole-time directors is approvedby the Government and advices received through the Administrative Ministry, viz., Ministry of Petroleumand Natural Gas.

• The Non-official part-time Directors are paid sitting fees for Board Meetings attended by them.

• HPCL does not have a policy of paying commission on profits to any of the Directors of the Company.

• The remuneration payable to officers below Board level is also approved by the Government of Indiain line with other Oil Companies.


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Remuneration paid to Whole-time Directors during 2004-05 is as under :

NAME OF DIRECTORS REMUNERATION

Shri M. B. Lal Rs. 10,26,608/-

Shri D. S. Mathur Rs. 10,42,458/-

Shri N. K. Puri * Rs. 7,97,244/-

Shri A. Balakrishnan Rs. 11,93,286/-

Shri C. Ramulu Rs. 11,68,340/-

Shri S. Roy Choudhury ** Rs. 8,27,619/-

* Retired on attaining the age of superannuation on 30.04.04.

** Appointed Director - Marketing effective 10.05.04.

3. BOARD SUB-COMMITTEES :

A. Audit Committee :

The Audit Committee comprises of Non-Executive Directors as follows :

1. Shri T. L. Sankar Non-Executive Independent Director

2. Dr. B. Mohanty * Non-Executive Government Director

3. Shri Rajesh V. Shah Non-Executive Independent Director

4. Shri M. Nandagopal ** Non-Executive Independent Director

5. Shri C. B. Singh *** Non-Executive Government Director

* Shri B. Mohanty ceased to be Director effective 29.10.04.

** Shri M. Nandagopal was inducted in the Audit Committee as a member effectiveApril 07, 2005.

*** Shri C. B. Singh was inducted in the Audit Committee as a member effective 26.05.05.

Shri T. L. Sankar is the Chairman of the Committee.

The terms of reference of the Audit Committee are as provided under the Companies Act and otherapplicable regulations.

The scope of the Audit Committee includes the following :

• Reviewing with Management the annual financial statements before submission to the Board.

• Reviewing with the Management, Statutory Auditors and internal auditors, the adequacy ofinternal control systems.

• Reviewing the adequacy of internal audit function, including the structure of the internal auditdepartment, staffing and seniority of the official heading the department, reporting structure,coverage and frequency of internal audit.

• Discussion with internal auditors on any significant findings and follow up thereon.


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• Reviewing the findings of any internal investigations by the internal auditors into matters wherethere is suspected fraud or irregularity or a failure of internal control systems of a materialnature and reporting the matter to the Board.

• Reviewing the Company’s financial and risk management policies.

The Committee, at the meeting held on May 23, 2005, reviewed the Accounts for the year2004-05, before the Accounts were adopted by the Board.

Date of Audit Committee Meetings :

31st May, 2004 28th October, 2004 3rd March, 2005 23rd May, 2005

Attendance at Audit Committee Meetings :

Name of the Members No. of Meetings held No. of Meetings attended % of attendance

Shri T. L. Sankar 4 3 75%

Dr. B. Mohanty 2 1 50%

Shri Rajesh V. Shah 4 2 50%

B. Committee on HR Policies :

The Company has constituted the Board Sub-Committee on HR Policies to look into various aspectsincluding remuneration as well as Compensation and Benefits for the employees. The Committeecomprises of :

1. Shri Rajesh V. Shah

2. Shri T. L. Sankar

3. Shri Raja G. Kulkarni

4. Shri Arun Balakrishnan

Shri Arun Balakrishnan, Director - Human Resources, is the Convenor of the Committee.

C. Investment Committee :

The Company has constituted the Investment Committee with the following members :

1. Shri T. L. Sankar

2. Shri Rajesh V. Shah

3. Shri A.K. Srivastava (till 07/03/05 )

4. Shri C. Ramulu

5. Shri Prabh Das (from 26/05/05)

Shri T. L. Sankar is the Chairman of the Committee. This Committee reviews investment proposalsbefore they are placed before the Board for its consideration.

D. Investor Grievance Committee :

The Company has constituted Investor Grievance Committee comprising of Non-Executive Directorsas follows :


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1. Shri M. Nandagopal Non-Executive Independent Director

2. Shri Rajesh V. Shah Non-Executive Independent Director

3. Dr. B. Mohanty* Non-Executive Government Director

4. Shri Raja G. Kulkarni Non-Executive Independent Director

5. Shri C. B. Singh** Non-Executive Government Director

* Shri B. Mohanty ceased to be Director effective 29.10.04.

** Shri C.B. Singh was inducted in the Investor Grievances Committee as a member effective 26.05.05.

Shri M. Nandagopal is the Chairman of the Committee.

The Committee reviews the status of Investor Grievances and Services and other important mattersof investors’ interest.

Dates of Investor Grievance Committee Meetings :

31st May, 2004 29th October, 2004 3rd March, 2005 26th May, 2005

E. Remuneration Committee :HPCL has not felt the need for Remuneration Committee in view of the fact that the Company is aGovernment Company as per Section 617 of the Companies Act, 1956. The Remuneration of the whole-time Functional Directors are fixed by the Government of India.The details of Remuneration paid to all the Functional Directors are given below :� The remuneration of the whole-time Functional Directors include basic salary, allowances and

perquisites as determined by the Government of India. Also, they are entitled to provident fund andsuperannuation contributions as per the rules of the Company.

� The gross value of the fixed component of the remuneration, as explained above, paid to the whole-time Functional Directors, during the financial year 2004-05 is given below :

(Rs. in Lakhs)

Name of the Director Salaries & Contribution Contribution to Other TotalAllowances to Provident Superannuation Benefits

Fund Fund andGratuity

M.B. Lal 8.16 0.78 – 1.32 10.26(Chairman &Managing Director)

D.S. Mathur 8.23 0.78 0.03 1.38 10.42(Director - Refineries)Till – 30.05.2005

N.K. Puri 7.53 0.06 0.28 0.10 7.97(Director - Marketing)Till – 30.04.04

Arun Balakrishnan 9.73 0.80 – 1.40 11.93(Director - HR)

C. Ramulu 8.90 0.84 0.01 1.93 11.68(Director - Finance)

S. Roy Choudhury 6.18 0.53 – 1.56 8.27(Director – Marketing)(From 10.05.2004)


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Shares Department Activities :

HPCL has a Shares Department under the Company Secretary, which monitors the activities of R&T Agentsand looks into the issues relating to shareholders. Share transfers, transmissions, demat/remat and otherimportant matters are approved by the Share Transfer Committee.

Presently, HPCL has over 107800 shareholders. The Corporation regularly interacts with the shareholdersthrough letters, investors’ meets, at the AGM, wherein the activities of the Corporation, its performance andits future plans is provided to the shareholders.

The Company has been taking appropriate steps to ensure that shareholder related activities are given duepriority and matters are resolved at the earliest.

The Company Secretary is the Compliance Officer in terms of the requirements of The Stock Exchange,Mumbai.

The quarterly results are published in the newspapers . The Company also organises press meets and pressreleases. The Financial Per formance and other details are also posted on the Company’s websitehindustanpetroleum.com.

4. During the year 2004-05, there were no material transactions with Directors or their relatives havingpotential conflict with the interests of the Company at large.

There have been no instances of non-compliance by the Company or penalties, strictures imposed on theCompany by any Stock Exchange or SEBI or any Statutory Authority, on any matters related to capitalmarkets during the last 3 years.

5. DETAILS OF ANNUAL GENERAL MEETINGS :

5.1 Location and time, where last three AGMs held :

Year Location Date Time

2003-04 Y.B. Chavan Auditorium, Mumbai 09.09.04 3.00 p.m.

2002-03 Y.B. Chavan Auditorium, Mumbai 24.09.03 3.00 p.m.

2001-02 Nehru Centre, Worli, Mumbai 28.08.02 3.30 p.m.

5.2 Whether Special Resolutions were put through postal ballot last year ?

No.

5.3 Are votes proposed to be conducted through postal ballot this year?

No.

6. MEANS OF COMMUNICATION :

� Half yearly report Press Advertisements, advices to Stock Exchanges, etc.

� Quarterly results Mainly business/regional newspapers, like EconomicTimes, Times of India, Financial Express, Indian Express

✓ Which newspapers normally Loksatta etc.published in

� Websites where quarterly results hindustanpetroleum.comare displayed


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� Whether it also displays official news Yesreleases and presentations made toinstitutional investors/analysts

� Whether Management Discussion and YesAnalysis Report is a part ofAnnual Report

� Whether shareholder information Shareholder information has been incorporated in thesection forms part of Annual Report Annual Report. The Company also communicates with

the shareholders from time to time.

7. GENERAL SHAREHOLDER INFORMATION :

7.1 53rd Annual General Meeting

Date and Time : September 21, 2005 at 3.00 PM

Venue : Y.B. Chavan Auditorium,General Jagannath Bhosale MargNext to SachivalayaGymkhana, Mumbai - 400 021

7.2 Financial calendar

Financial reporting for Qtr. ending 30.06.05 End Jul, 2005

Financial reporting for Qtr. ending 30.09.05 End Oct, 2005

Financial reporting for Qtr. ending 31.12.05 End Jan, 2006

Financial reporting for Qtr. ending 31.03.06 End May, 2006

Annual General Meeting for year ending 31.03.2006 Aug-Sept, 2006

7.3 Date of Book Closure : September 6 - 21, 2005

7.4 Dividend payment date (tentative) : September 26, 2005

7.5 (a) Listing on Stock Exchanges :

The Stock Exchange, Mumbai The Delhi Stock ExchangePhiroze Jeejeebhoy Towers, DSE House, 3/1, Asaf Ali Road,Dalal Street, New Delhi – 110 002Mumbai – 400 001

The Calcutta Stock Exchange Madras Stock Exchange Ltd.7 Lyons Range , Kolkata – 700 001 Exchange Building,

11, Second Line Beach,Chennai – 600 001

The National Stock Exchange of India Ltd.Exchange Plaza, 5th Floor,Plot No. C/1, G-Block,Bandra-Kurla Complex,Bandra (East),Mumbai – 400 051


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7.5 (b) Listing fees : Listing fees for financial year 2005-06have been paid to the above 5 StockExchanges in April, 2005.

7.6 Stock Codes :

BSE : 500104NSE : HINDPETROISIN (for trading in Demat form) : INE094A01015

7.7 Stock Market Data :

HPCL Share Price – BSE

Year High Rs. Low Rs.

2004-05 538.50 225.55

2003-04 542.45 269.40

2002-03 329.60 166.50

2001-02 338.75 94.50

Performance in comparison to broad based indices

As on HPCL Share BSE 30 NSE 50price Rs. SENSEX NIFTY

31.3.2005 305.95 6492.82 2035.65

31.3.2004 507.60 5590.60 1771.90

31.3.2003 294.40 3048.72 978.20

31.3.2002 290.60 3469.35 1129.55

31.3.2001 160.60 3694.38 1148.20


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HPCL SHARE PRICE MONTHLY DATA

Month Mumbai Stock Exchange National Stock Exchange

High Low Close Volume High Low Close VolumeRs. Rs. Rs. Nos. Rs. Rs. Rs. Nos.

April 2004 538.50 448.20 460.45 12482665 539.00 448.20 460.20 31283965

May 2004 487.00 225.55 300.65 23969602 480.00 264.55 300.60 53034612

June 2004 359.60 299.50 336.35 16247254 360.00 300.20 336.15 39396678

July 2004 341.00 280.00 317.45 16330655 341.70 262.20 318.05 41021816

Aug 2004 336.00 296.50 315.00 9440345 337.00 295.35 315.15 26657223

Sept 2004 339.90 307.45 316.25 7697085 355.25 291.15 316.35 21035776

Oct 2004 338.00 303.60 307.80 7654518 338.00 291.15 307.90 23335803

Nov 2004 367.20 302.55 338.70 8858715 367.40 302.00 338.80 27114551

Dec 2004 414.90 341.00 400.50 7926388 407.50 341.05 401.55 27549285

Jan 2005 416.50 325.05 363.00 6434761 416.95 282.00 362.00 21336145

Feb 2005 380.00 337.10 351.25 4943708 380.00 336.25 351.35 20457345

Mar 2005 353.10 296.20 305.95 9216925 351.50 295.10 304.35 26255538

PER SHARE AND RELATED DATA :

2004-05 2003-04 2002-03 2001-02 2000-01Per Share Data UnitEPS Rs. 37.69 56.18 45.37 23.26 32.12CEPS Rs. 54.81 75.67 62.94 42.85 44.91Dividend Rs. 15.00 22.00 20.00 10.00 10.00Book Value Rs. 249.04 228.47 197.12 174.07 191.47Share Related Data UnitDividend Payout % 45.42 44.23 49.24 43.06 34.37Price to Earnings* Multiple 8.12 9.03 6.49 12.49 5.00Price to Cash Earnings* Multiple 5.58 6.71 4.68 7.47 3.60Price to Book Vaue* Multiple 1.23 2.22 1.49 1.67 0.80* Based on March 31 Rs. 305.95 507.60 294.40 290.60 160.60

closing prices

7.8 Registrars and Transfer Agents : M/s. MCS LimitedSri Venkatesh Bhavan, Plot No. 27,Road No. 11, MIDC Area,Andheri (East),Mumbai – 400 093

7.9 Share Transfer System

Activities relating to Share Transfers are carried out by MCS Limited who are the Registrars and TransferAgents of the Company who have arrangements with the Depositories viz., National Securities DepositoryLimited and Central Depository Services (India) Limited. The transfers are approved by the Share TransferCommittee. Share transfers are registered and Share Certificates are despatched within a period of 30days from the date of receipt if the documents are correct and valid in all respects.


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The number of shares transferred during last two years :

2004-05 889052003-04 222090

7.10 Status of Investor Services :

Investor correspondence replied during the year are as follows :

Nature of Correspondence Number

1. Share Transfers and related issues 269

2. Transmission of Shares/Nomination for shares 354

3. Issue of Duplicate share certificates 110

4. Dividend related issues 2401

5. ECS/Bank Mandates/Request for Change of Address 3642

6. Call Money Payment Correspondence/Reminders 2722

7. SEBI/Stock Exchange/Legal cases 51

8. Others 1185

Total 10734

All complaints received from SEBI, Stock Exchanges, Department of Company Affairs etc., have beendealt with.

7.11 Dematerialisation of shares and liquidity :

The total number of shares dematerialised as on 31.03.2005 is 161724223 representing 97.28% ofshare capital excluding shares held by the Government of India.

Trading in Equity shares of the Company is permitted only in dematerialised form, w.e.f., February 15,1999 as per notification issued by the Securities and Exchange Board of India (SEBI).

7.12 Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion date and likely impacton equity :

There are no outstanding Warrants to be converted into Equity shares.

Detachable Tradeable Warrants issued alongwith public issue shares in April 1995 were converted intoequity shares during the period February 1997- April 1997. The Warrant certificates were not calledback by the Company and bear no value.

7.13 Plant Locations :

The Corporation has 2 Refineries located at Mumbai and Visakh. It has 85 Regional offices, 36 Terminals/Tap off Points, 100 Depots, 40 LPG Bottling Plants and 6667 Retail outlets etc., located all over thecountry.

7.14 Address for correspondenceRegistrars and Transfer Agents : Company’s Shares Department :M/s. MCS Limited Shares DepartmentUnit : HINDUSTAN PETROLEUM HINDUSTAN PETROLEUMCORPORATION LTD. CORPORATION LIMITEDSri Venkatesh Bhavan, Plot No. 27, 2nd Floor, Petroleum House,Road No. 11, MIDC Area, 17, Jamshedji Tata Road,Andheri (East), Mumbai - 400 093 Churchgate, Mumbai - 400 020Telephone No.: 022 - 2821 5235 Telephone No.: 022 - 2202 6151Fax No.: 022 - 2835 0456 Ext. 3204/3201/3233/3239/3208

Fax No.: 022-2287 4552/2284 1573


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7.15 Distribution Schedule as on 31.03.2005

No. of Physical Holding Dematerialised Total Share holding %Shares Holding

No. of No. of No. of No. of No. of No. of Share- HoldingShare- Shares Share- Shares Share- Shares holders

holders holders holders

1-500 18308 3412159 80836 10239619 99144 13651778 91.89 4.02

501-1000 810 590930 4783 3588543 5593 4179473 5.19 1.23

1001-5000 94 154388 2508 4832764 2602 4987152 2.41 1.47

5001-10000 3 19050 191 1401565 194 1420615 0.18 0.42

10001 & above 3 173429250 354 141661732 357 315090982 0.33 92.86

Total 19218 177605777 88672 161724223 107890 339330000 100.00 100.00

7.16 Shareholding pattern as on :

31.03.2005 31.03.2004

Category No. of No. of % No. of No. of %Share- Shares Share- Shares

holders holders

President of India 1 173076750 51.01 1 173076750 51.01

Financial Institutions 36 52184490 15.38 48 55822735 16.45

FIIs/OCBs 147 73696932 21.72 228 66875476 19.71

Banks 30 1633802 0.48 26 2069128 0.61

Mutual Funds 86 8105835 2.39 121 11628698 3.43

NRIs 3547 1170352 0.34 3387 1102379 0.32

Employees 1162 522910 0.15 1450 654525 0.19

Others 102881 28938929 8.53 90740 28100309 8.28

Total 107890 339330000 100.00 96001 339330000 100.00


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The Board of Directors ofHindustan Petroleum Corporation Limited

We have examined the compliance of Corporate Governance by Hindustan Petroleum Corporation Limited, forthe year ended on March 31, 2005, as stipulated in Clause 49 of the Listing Agreement of the said Companywith stock exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examinationwas limited to procedures and implementation thereof, adopted by the Company for ensuring the complianceof the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on thefinancial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify thatthe Company has complied with the conditions of Corporate Governance as stipulated in the abovementionedListing Agreement.

We state that no investor grievances are pending for a period exceeding one month against the Company asper the records maintained by the Shareholders’/Investors’ Grievance Committee.

We further state that such compliance is neither an assurance as to the future viability of the Company northe efficiency or effectiveness with which the management has conducted the affairs of the Company.

For an on behalf of For and on behalf of

G.P. Kapadia & Co. N.M. Raiji & Co.Chartered Accountants Chartered Accountants

Nimesh Bhimani Vinay D. BalsePartner Partner

Place : MumbaiDated : July 18, 2005

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BOARD OF DIRECTORS

Shri M.B. Lal, Chairman

Shri M.A. Tankiwala, Managing Director

Shri D.S. Mathur, Director (till 31/05/2005)

Shri T.L. Sankar, Director

Shri C. Ramulu, Director

Shri S.P. Chaudhry, Director (from 14/05/2004)

Dr. B. Mohanty, Director (till 29/10/2004)

Shri N.K. Puri, Director (till 30/04/2004)

Guru Gobind Singh Refineries Limited

Registered Office

Village : Phulokhari

Taluka : Talwandi Saboo

District : Bathinda

State : Punjab

Statutory AuditorsM/s R.Vender Gupta and Associates

Company SecretaryShri Sidhartha Tyagi

Administrative Office

3rd Floor, UCO Bank Building,

Sansad Marg,

New Delhi : 110001

Bankers

Punjab National Bank

28-A, Kasturba Gandhi Marg

New Delhi : 110001

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Directors' Report

On behalf of the Board of Directors of your Company, I present the 4th Annual Report on the working of yourCompany together with the Audited Statements of Accounts, the Auditors Report and the Review of theAccounts by the Comptroller and Auditor General of India for the financial year ended on 31st March, 2005.

As you are aware your Company was incorporated on 13th December, 2000 with its Registered office atBathinda and has been formed with the objective of setting up a 9 MMTPA Grass root refinery along withassociated facilities in the State of Punjab. As on 31st March, 2005, your Company is a wholly ownedsubsidiary of Hindustan Petroleum Corporation Limited.

The fiscal incentives granted by the Government of Punjab (GOP) has a significant bearing on the viability of theProject. As such, your Company is continuing discussions with Government of Punjab for early conclusion of Deedof Assurance (DOA) and the matter is expected to be finalized shortly. The Company thereafter intends to take upthe project activities which were put on hold.

During the period your company also assisted HPCL in the various studies on Non-Conventional energyresources.

STATUTORY DISCLOSURES

(A) Particulars of Employees u/s 217(2A) of the Companies Act, 1956 :

There are no employees under the category covered by Section 217 (2A) of the Companies Act, 1956.

(B) Conservation of Energy :

As required under 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particularsin the Report of Board of Directors) Rules, 1988 regarding Energy Conservation and Technology Absorption,the Board hereby discloses as follows :

(i) That the Board, as part of its existing internal control measures, is striving for the Conservation ofEnergy under the supervision of Managing Director on a continuous basis and is satisfied that theutilisation of energy is optimum for the present working of the Company.

(C) Technology Absorption :

The Company has not made any absorption, adaptation and import of technology from the date of incorporation.

(D) Foreign exchange earnings and outgo :

The required information in respect of foreign exchange earnings and outgo is given in Note no. 8 (b) of theAccounts.

CORPORATE GOVERNANCE

The details in this regard is enclosed as Attachment and form part of this Annual Report.

DIRECTORS

S/Shri M.B. Lal, D.S. Mathur, T.L. Sankar, C. Ramulu and S.P. Chaudhry continue to be the part time Directorsof the Company and Shri M.A. Tankiwala the Managing Director of the Company.

As per the provisions of Section 256 of the Companies Act, 1956, S/Shri C. Ramulu and S.P. Chaudhry willbe the Directors who will retire by rotation at the forthcoming Annual General Meeting and being eligible, offerthemselves for reappointment under the provisions of Section 256 of the Companies Act, 1956.

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Directors' Report (Contd.)

DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 217 (2AA) of the Companies Act, 1956, your Directors state that :

(i) In the preparation of the annual accounts for the financial year 2004-05, the applicable accountingstandards have been followed along with proper explanation relating to material departures.

(ii) The Company has selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as on 31st March, 2005.

(iii) The Company has taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities.

(iv) These accounts have been prepared on a going concern basis.

ACCOUNTS

There being no commercial activities, the Company is only required to prepare the Balance Sheet for theperiod of 12 months from 01/04/2004 to 31/03/2005.

ACKNOWLEDGMENT

Your Directors acknowledge with thanks the continued help, support and guidance received from the Governmentof India, especially, the Ministry of Petroleum and Natural Gas, Department of Public Enterprises, Governmentof Punjab, Punjab State Industries Development Corporation, Government of Gujarat, Government of Rajasthan,Government of Haryana and the holding Company HPCL in guiding the Company in its activities. Your Directorsalso take this opportunity to place on record their appreciation on the valuable contribution made by theemployees.

For and on behalf of the Board of Directors

Shri M. B. LalChairman


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Auditor's Report

ToThe MembersGURU GOBIND SINGH REFINERIES LTD.

1) We have audited the attached Balance Sheet of Guru Gobind Singh Refineries Limited as at 31st March,2005 along with Statement of Incidental Expenses incurred for the year ended on that date annexedthereto. No Profit & Loss account has been prepared since the Company is under construction stageduring the year. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our Audit.

2) We conducted our audit in accordance with the auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supportingthe amount and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion.

3) As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of Indiain terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure astatement on the matters specified in paragraphs 4 & 5 of the said Order.

4) Further to our comments in the Annexure referred to above, we report that :

(i) We have obtained all the information and explanations, which to the best of our knowledge andbelief were necessary for the purposes of our audit.

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far asappears from our examination of those books.

(iii) The Balance Sheet and Statement of Incidental Expenses dealt with by this report are in agreementwith the books of account.

(iv) In our opinion, the Balance Sheet and Statement of Incidental Expenses incurred during ConstructionPeriod dealt with by this report comply with the Accounting Standards referred to in sub-section(3C) of Section 211 of the Companies Act, 1956.

(v) On the basis of written representations received from the Directors, as on 31st March, 2005 andtaken on record by the Board of Directors, we report that none of the Directors is disqualified as on31st March, 2005 from being appointed as a Director in terms of clause (g) of sub-section (1) ofSection 274 of the Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanation given to us, thesaid accounts read with notes thereon give the information required by the Companies Act, 1956, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India.

(a) In the case of the Balance Sheet, of the State of affairs of the Company as at 31st March, 2005.

(b) In the case of “Statement of Incidental Expenses” the expenses incurred for the year ended onthat date.

For R. Vender Gupta & AssociatesChartered Accountants

Lalit KumarPlace : New Delhi PartnerDate : May 09, 2005 Membership No. 92803

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Referred to in paragraph 3 of our report of even date

I. a) The Company has maintained a register showing full particulars including quantitative details and

situation of fixed assets.

b) All the assets have been physically verified by the management during the year and there is a

regular programme of verification which, in our opinion, is reasonable having regard to the size of

the Company and the nature of its assets. No material discrepancies were noticed on such

verification.

c) During the year, the Company has not disposed off any plant & machinery hence this clause is not

applicable.

II. As the Company in under construction stage therefore this clause (a, b & c) relating to inventory is not

applicable to the Company.

III. The Company had not taken any loan during the year from other companies covered in the register

maintained under Section 301 of the Companies Act, 1956. Hence clause (a, b, c & d) is not applicable

to the Company.

IV. In our opinion and according to the information and explanation given to us, there are adequate internal

control procedures commensurate with the size of the Company and the nature of its business with

regard to fixed assets. As the Company is under construction stage, therefore, this clause relating to

inventory and sale of goods is not applicable. During the course of audit we have not observed any

major weaknesses in internal control.

V. a) According to the information and explanation given to us, there are no such transactions which

needs to be entered into the register maintained under Section 301 of the Companies Act, 1956.

b) In our opinion and according to the information and explanation given to us , there are no transactions

made in pursuance of contracts or arrangements entered in the register maintained under

Section 301 of the Companies Act, 1956 hence this clause is not applicable.

VI. The Company has not accepted any deposit from the public during the year hence the provisions of

Section 58 A & 58 AA of the Companies Act, 1956 and Rules framed there under are not applicable.

VII. In our opinion, the Company has an Internal Audit System, commensurate with the size and nature of

its business.

VIII. The Company is in construction stage, therefore, this clause of cost records under Section 209 (1)(d)

of the Companies Act, 1956 is not applicable.

IX. a) The Company is regular in depositing with appropriate authorities undisputed statutory dues like Income

tax, Sales tax, Excise duty and Custom duty, which were applicable during the year to the Company.

Annexure to Auditor's Report

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b) According to Information and explanation given to us, no undisputed amount payable in respect of

Income tax, Sales tax, Excise duty and Custom duty were in arrears as on 31st March, 2005 for

the Period more than six months from the date they become payable.

c) According to Information and explanation given to us, there are no dues of Sales tax, Income tax,

Custom duty and Excise duty, which have not been deposited on account of any dispute.

X. The Company is in the construction stage hence this clause of accumulated losses is not applicable.

XI. The Company has not taken any loan from Bank & Financial Institution and not issued any debenture

during the year, hence this clause is not applicable.

XII. The Company has not granted any loans and advances against pledge of shares, debentures and other

securities hence this clause is not applicable.

XIII. In our opinion, the Company is not a chit fund or a Nidhi/Mutual benefit fund/Society. Therefore this

clause is not applicable.

XIV. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other

investments. Therefore this clause is not applicable.

XV. In our opinion, the Company has not given any guarantee for the loan taken by others from Bank and

Financial Institutions. Therefore this clause is not applicable.

XVI. In our opinion, the Company has not applied for any term loan. Therefore this clause is not applicable.

XVII. According to information and explanation given to us and on the basis of overall examination of the

Balance Sheet, we report that Company has not raised any Short Term/Long term funds, therefore,

this clause is not applicable.

XVIII. According to information and explanation given to us, the Company has not made any preferential

allotment of shares to any party and companies covered in the register maintained u/s 301 of the

Companies Act. Therefore this clause is not applicable to the Company.

XIX. According to the information and explanation given to us, the Company has not issued any Debentures

during the year under report. Therefore this clause is not applicable to the Company.

XX. The Company has not raised any money by Public issue hence this clause is not applicable to the

Company.

XXI. According to information and explanation given to us, no fraud on or by the Company has been noticed

or reported during the course of our audit.For R. Vender Gupta & Associates

Chartered Accountants

Lalit KumarPlace : New Delhi PartnerDate : May 09, 2005 Membership No. 92803


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Balance Sheet as at 31st March, 2005

Schedule As at 31st As at 31stMarch, 2005 March, 2004

I. SOURCES OF FUNDS

1. Shareholder’s funds :Share Capital 1 2,957,100,000 2,922,900,000

2. Share Application Pending Allotment – 13,000,000

Total 2,957,100,000 2,935,900,000

II. APPLICATION OF FUNDS

1. Fixed Assets :a) Gross Block 2 1,640,624,169 1,627,031,505b) Less : Depreciation 62,493,972 41,262,913

c) Net Block 1,578,130,197 1,585,768,592d) Capital Work in Progress 3 1,374,226,003 1,387,205,222

2,952,356,200 2,972,973,814

2. Current Assets, Loan and Advances :a) Sundry Debtors 4 67,641,473 29,486,334b) Cash and Bank Balance 5 103,508 553,069c) Other Current Assets 6 13,617 12,113d) Loan and Advances 7 34,444,681 49,962,095

102,203,279 80,013,611Less :3. Current Liabilities and Provisions

a) Liabilities 8 123,468,172 143,097,611b) Provisions 5,357 3,864

123,473,529 143,101,475

4. Net Current Assets (21,270,250) (63,087,864)

5. Miscellaneous Exp. (to the extent not 9 26,014,050 26,014,050written off or adjusted)

Statement of Significant AccountingPolicies and Notes forming part of Accounts 10

Total 2,957,100,000 2,935,900,000

For R Vender Gupta & Associates M.A. Tankiwala C. RamuluChartered Accountants Managing Director Director

Lalit Kumar S. Malhotra S. TyagiPartner DGM- Finance Company Secretary


Amount (Rs.)

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Schedules forming part of the Balance Sheet as at 31st March, 2005

GROSS BLOCK DEPRECIATION BLOCK NET BLOCK

Description As at Additions/ Ded/ As at As at For the Ded/ Total As at As at01.04.2004 reclassifi- Recl. 31.03.2005 31.03.2004 year Recl. Upto 31.03.2004 31.03.2005

cation 2004-05 31.03.2005during

the year

Land - Freehold 876,083,143 769,619 204,915 876,647,847 – – – – 876,083,143 876,647,847

- Right of Use 73,871,612 14,150,738 – 88,022,350 – – – – 73,871,612 88,022,350

Road & Culverts 205,372,533 – 1,315,000 204,057,533 6,699,447 3,326,137 33,937 9,991,647 198,673,086 194,065,886

Buildings 59,057,511 113,962 – 59,171,473 5,190,497 1,849,591 – 7,040,088 53,867,014 52,131,385

Lease HoldProperty-Land 332,864,197 – – 332,864,197 21,246,651 11,782,234 * 33,028,885 311,617,546 299,835,312

Plant & Machinery 75,503,318 78,260 – 75,581,578 7,472,936 4,016,000 – 11,488,936 68,030,382 64,092,642

Furniture & Fixture 4,279,191 – – 4,279,191 653,382 291,034 – 944,416 3,625,809 3,334,775

Total 1,627,031,505 15,112,579 1,519,915 1,640,624,169 41,262,913 21,264,996 33,937 62,493,972 1,585,768,592 1,578,130,197

Previous Year 1,605,250,105 22,386,547 605,147 1,627,031,505 20,035,130 21,275,690 47,907 41,262,913 1,585,214,975 1,585,768,592

* This amount of amortization of land has been classified under the head ‘Direct Revenue Expenses- SPM/COT' in Schedule 3

As at As at31st March, 2005 31st March, 2004

SCHEDULE 1

SHARE CAPITAL

A. AUTHORISED550,000,000 (As at 31st March, 2004 : 550,000,000)Equity Shares of Rs. 10/- each 5,500,000,000 5,500,000,000

5,500,000,000 5,500,000,000

B. ISSUED CAPITAL295,710,000 (As at 31st March, 2004 : 293,590,000) 2,957,100,000 2,935,900,000Equity Shares of Rs. 10/- each

2,957,100,000 2,935,900,000

C. SUBSCRIBED & PAID UP CAPITAL295,710,000 (As at 31st March, 2004 : 292,290,000)Equity Shares of Rs. 10/- each fully paid 2,957,100,000 2,922,900,000

2,957,100,000 2,922,900,000

SCHEDULE 2

FIXED ASSETS

Amount (Rs.)

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SCHEDULE 3

I. CAPITAL WORK IN PROGRESS (at Cost)Capital work in progress - Pipeline 201,448,531 199,804,858Capital work in progress - Refinery 409,202,542 525,051,131Capital work in progress - SPM/COT 50,541,226 50,541,226Advance to PSEB for Capital Expenditure 3,215,061 3,215,061Capital Expenditure not represented by assetowned by company 146,857,678 141,510,678Wind Energy Project 950,743 –

Total (I) 812,215,781 920,122,954

II. Incidental expenses during the construction(pending apportionment)Opening Balance 467,082,268 342,889,768Direct revenue Exp-SPM/COTLease Rent 32,492,213 31,363,140Amortization of land 11,782,234 11,782,234Survey and Feasibility Study 56,598 44,331,045 11,907,546 55,052,920

Direct revenue Exp-RefineryDFR Cost 3,456,000 5,460,000Consultancy to Invitation to Bid – 3,456,000 2,592,000 8,052,000

Other Incidental ExpensesSalary and Wages (Reimbursed toHolding Co.) 19,195,370 25,784,221Travel/Conveyance/TransportationCharges 5,182,211 6,568,748Professional Charges 296,973 2,376,082Sponsorship/Subscription 570,721 649,437Outsourced services 3,364,120 3,126,921Rent 1,886,912 4,058,694Insurance 675 2,342Postage, Telephone Telegram and Telex 902,880 1,079,679Staff Welfare Expenses 932,355 1,330,151Security Charges 1,827,360 1,890,740Fuel, Electricity and Water 1,061,692 1,699,829Stationary and Office Supplies 299,978 344,377Repair and Maintenance to others 1,488,021 1,133,535Repair and Maintenance to building 26,044 345,216Books and Periodicals 24,560 20,853General Expenses 1,498,634 1,094,917Audit Fees (Inclusive of service tax) 55,000 54,000Income Tax 5,760 17,907Rates and Taxes 114,540 6,000Depreciation 9,482,763 9,464,712

Sub Total 48,216,569 61,048,361

Amount (Rs.)

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Prior period credit/debitIncidental Expenses – 349,925Depreciation (33,937) 48,182,632 (19,163) 61,379,123

Sub Total 563,051,945 467,373,811

LessInterest on Term Deposits 14,637 10,772Miscellaneous Income 1,027,086 1,041,723 280,771 291,543

Total (II) 562,010,222 467,082,268

Grand Total [(I) +(II)] 1,374,226,003 1,387,205,222

SCHEDULE 4

SUNDRY DEBTORS (Unsecured)

Debt outstanding for a period exceeding six monthsConsidered good – –Considered doubtful – –Other debtsConsidered good (Due from HPCL, holding company) 67,641,473 29,486,334

Total 67,641,473 29,486,334

SCHEDULE 5

CASH AND BANK BALANCE

Cash on hand 100,000 140,000Balance with Schedule Bank– On Current Account with Punjab National Bank 3,508 808– On Fixed/Recurring Deposit Account – 412,261

Total 103,508 553,069

SCHEDULE 6

OTHER CURRENT ASSETS

Interest Accrued on bank deposits but not due 2,627 7,677Interest accrued and due on bank deposits 10,990 4,436

Total 13,617 12,113

Amount (Rs.)

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SCHEDULE 7

LOAN AND ADVANCES (Unsecured, considered good)

(Advance recoverable in cash or kind for thevalue to be received)Security Deposits Paid 8,706,782 9,316,910TDS on Interest Income 3,061 1,883CENVATABLE Claim 25,692,288 40,530,929Income Tax Refund due – 16,723Other Advances 42,550 95,650

Total 34,444,681 49,962,095

SCHEDULE 8

CURRENT LIABILITIES AND PROVISIONS

A. Current LiabilitiesDuties and Taxes 104,873 2,119,891Sundry Creditors 6,916,866 8,372,077Earnest Money Deposits 72,127 1,082,127Retention Money 1,752,018 6,010,593Security Deposits Received 3,274,070 3,260,936Adhoc deductions 2,026,426 2,806,767Liabilities for– Works Contract 106,798,347 113,533,550– Expenses 2,523,445 5,911,670

123,468,172 143,097,611

B. ProvisionsIncome Tax 5,357 3,864

5,357 3,864

Total 123,473,529 143,101,475

SCHEDULE 9

MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)

Preliminary Expenses 20,803,000 20,803,000Proposed Public Issue Expenses 5,211,050 5,211,050

26,014,050 26,014,050


Amount (Rs.)

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Statement of Significant Accounting Policies and Notes forming partof Accounts as at 31st March, 2005SCHEDULE 10

A. SIGNIFICANT ACCOUNTING POLICIES

a. Accounts are prepared under the historical cost convention in accordance with Generally AcceptedAccounting Principles (GAAP), Accounting Standards issued by the Institute of Chartered Accountantsof India (ICAI) and the provisions of the Companies Act, 1956. All income and expenditure havingmaterial bearing are recognized on the accrual basis, except where otherwise stated.

b. Land

Land acquired on lease for less than 99 years is treated as lease hold land. Cost of “Right of Use”is capitalized. Lease hold land is amortized over the period of lease.

c. Fixed Assets

Cost of Fixed Assets comprises of purchase price, duties, levies and any directly attributable costof bringing the asset to its working condition for its intended use.

d. Intangible assets

1. Cost of “Right of Use” is capitalized. However, such “Right of Use” being perpetual in nature isnot amortized.

2. Expenditure on Intangible assets in the nature of “Assets not owned by the Company” areamortised over a period of five years after commencement of commercial production

e. Depreciation

1. Depreciation on fixed assets is provided on straight line basis, in the manner and at the ratesprovided under Schedule XIV of the Companies Act, 1956. Depreciation is charged Prorata onmonthly basis on assets, from/upto and inclusive of the month of capitalization/sale, disposalor deletion during the year.

2. Premium on lease hold is amortized over the period of lease.

f. Expenses during Construction Period

The direct project expenditure incurred during the construction period has been shown under thehead “Capital Work in Progress” which will be transferred to relevant fixed assets as and when theyare completed.

Indirect expenditure incurred during construction period has been shown under the head “IncidentialExpenditure relating to project (pending apportionment)” which will be apportioned to fixed assetsupon completion of the project.

g. Miscellaneous Expenditure

The expenditure shown under the head “Miscellaneous Expenditure (to the extent not written off/adjusted)” will be amortized over a period of five years after commencement of commercial production.

B. NOTES FORMING PART OF ACCOUNTS

1. The entire equity contribution to Guru Gobind Singh Refineries Limited (GGSRL) has been made byHPCL. Hence, GGSRL is a wholly owned subsidiary of HPCL and a Government company underSection 617 of the Companies Act, 1956.

2. The Company has prepared the Statement of Incidental Expenditure during construction instead ofa Profit and Loss Account. The necessary details as per Part II of Schedule VI of the CompaniesAct, 1956, have been disclosed in the said statement.

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3. Cost of land (Freehold) Rs. 8766 Lakhs (Previous Year Rs. 8760 Lakhs) comprises of :

(i) Land at refinery site : Rs. 8758 lakhs (Previous Year Rs. 8760 lakhs).

The necessary action for transfer of the above land viz “Intakal” process has been completedand the Company is in the process of signing conveyance deed.

(ii) Rs. 8 Lakhs deposited with statutory authorities viz Sub Divisional Officers/Tehsildar towardsland acquisition along pipeline route for pumping and service stations. The ownership of theland has not yet been transferred in the name of the Company.

4. There were no amounts due payable to Small Scale and/or Ancillary industrial suppliers on accountof Principal and/or interest as at the close of the year exceeding Rs. One lakh for more than thirtydays.

5. The entire manpower of the Company except the Managing Director has been assigned by HindustanPetroleum Corporation Limited (HPCL), the Holding company on full time basis. The Managing Directorof the Company continues his lien with HPCL and his salary and other emoluments are administeredby HPCL. Accordingly, no provision has been made for retirement benefits in the books of the Companyand Section 217 (2A) of the Companies Act, 1956 is not applicable for the Company.

6. A provision for Income Tax of Rs. 5357/- (Previous Year Rs. 3864/-) has been made on the interestreceived on term deposit with the Bank as per the rates applicable under Income Tax Act, 1961.

7. The amount of cenvat claim in Schedule-7 represents excise duties and counter vailing duties paidby the Company which shall be utilized as a set off from the excise duty payments.

8. Information pursuant to the provision of paragraph 3, 4C and 4D of part II of Schedule VI of theCompanies Act, 1956.

a. As the Company is in process of construction of Refinery and its associated facilities, henceinformation containing in paragraph 3 and 4C of Part II of Schedule VI is not applicable.

2004-05 2003-04

b. Expenditure in foreign currency on account of :Purchase of Books/Magazine 1.11 0.16

9. Contingent Liabilities not provided for in respect of

(i) Land Compensation*(plus interest if any) 17326.00* 17326.00*

(ii) Claims against the Company not acknowledged as debts 1649.22 1289.00

10. Estimated amount of contract remaining to be executed onCapital Account not provided for 7211.05 7110.00

11. Related Party disclosure(With H.P.C.L., Holding Company)

(i) Issuance of Share Capital 212.00 1071.00

(ii) Expenses Reimbursed 7.24 20.77

Statement of Significant Accounting Policies and Notes forming partof Accounts as at 31st March, 2005

(Rs./Lakhs)

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2004-05 2003-04(iii) Sale of steel plates

Qty. 8008.47 MT 3201.99 MT

Amount 1399.70 571.80

(iv) Cost of Employees assigned to Company 189.15 265.05

12. Managerial Remuneration

As Managing Director

(i) Salary and Allowances 6.77 6.14

(ii) Gratuity 0.29 0.26

(iii) Contribution to Provident Fund 0.83 0.65

(iv) Other Benefits 1.57 1.12

13. Auditors Remuneration (Incl. of service tax)

(i) Audit Fees 0.55 0.54

(ii) Certification work 0.05 0.05

14. Amounts due from the Directors to the Company :

(i) As on 31.03.2005 Nil Nil

(ii) Maximum amount due during the year Nil Nil

15. Intangible assets (not internally generated)

(i) Assets owned by the Company : Right of Use 880.00 739.00

Amounts paid to Competent Authority for acquiring “Right ofUse” to lay the pipeline and expenditure on investigating thetitle and measurement of the land. The “Right of Use” is aperpetual right of use of land but the ownership of the landdoes not rest with the Company.

(ii) Assets not owned by the Company 1469.00 1415.00

Amount paid for construction and widening of approach roadsshown under Capital work in progress (Schedule-3). Theownership of the same rests with Punjab Government.

16. Previous year’s figures have been regrouped, recast and reclassified wherever necessary.

17. Schedule “1” to “10” form an integral part of the Balance Sheet and “Statement of IncidentalExpense during Construction”.

18. Figures under Schedule “1” to “9” have been rounded off to the nearest rupee.

Statement of Significant Accounting Policies and Notes forming partof Accounts as at 31st March, 2005

(Rs./Lakhs)

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Balance Sheet Abstract and Company's General Business Profile

SCHEDULE VI PART IV OF THE COMPANIES ACT, 1956I. REGISTRATION DETAILS

REGISTRATION NO. : STATE CODE :

BALANCE SHEET DATE :

U 2 3 2 0 1 P B 2 0 0 0 P L C 2 4 1 2 6

3 1 0 3 2 0 0 5

1 6

II. CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousands)

N I L

PUBLIC ISSUE

N I L

BONUS ISSUE

N I L

RIGHTS ISSUE

3 4 2 0 0

PRIVATE PLACEMENT

III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs. Thousands)

3 0 8 0 5 7 4

TOTAL LIABILITIES

3 0 8 0 5 7 4

TOTAL ASSETS

SOURCES OF FUNDS

2 9 5 7 1 0 0

PAID-UP CAPITAL

N I L

SECURED LOANS

N I L

RESERVES AND SURPLUS

N I L

UNSECURED LOANS

APPLICATION OF FUNDS

2 9 5 2 3 5 6

NET FIXED ASSETS*

( 2 1 2 7 0 )

NET CURRENT ASSETS

N I L

ACCUMULATED LOSSES

N I L

INVESTMENTS

2 6 0 1 4

MISC. EXPENDITURE

IV. PERFORMANCE OF COMPANY (Amount in Rs. Thousands)

N I LTURNOVER

N I LPROFIT/LOSS BEFORE TAX

+

N I LEARNING PER SHARE IN RS.

N I LTOTAL EXPENDITURE

N I LPROFIT/LOSS AFTER TAX

+

N I LDIVIDEND RATE %

V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS OF COMPANY (as per monetary terms)ITEM CODE NO. (ITC CODE)PRODUCT DESCRIPTION B U L K P E T R O L E U M P R O D U C T S

2 7 1 0

ITEM CODE NO. (ITC CODE)PRODUCT DESCRIPTION

ITEM CODE NO. (ITC CODE)PRODUCT DESCRIPTION

M.A. TANKIWALA C. RAMULU S. MALHOTRA S. TYAGIManaging Director Director DGM - Finance Company Secretary


* Include capital work-in-progress, incidental expenses and advances against capital assets.

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Rupees in Millions

2004-05 2003-04Cash Flow from Operating ActivitiesNet Profit before Tax and Extraordinary items – –Adjustments for :

Depreciation/Amortisation – –Interest – –Dividend received – –Deletion of Fixed Assets/CWIP – –Interest received on Long Term Investments – –Interest received on Fixed Deposits – –Misc. Expenses to the extent written off (Public Issue Expenses) – –Provision for Doubtful Debts and write offs – –Profit on sale of Investment – –Provision for Loss on Investments – –

Operating Profit before Working Capital changes – –

Adjustments for :Trade Receivables (38.16) (29.49)Other Receivables 15.52 (40.67)Other Current Assets – (0.01)Inventories – –Trade and other Payables (32.63) 1.06

(55.27) (69.11)

Amounts recoverable from Pool Account – –

Cash generated from operations (55.27) (69.11)Provision for taxes (Net) – –

Cash Flow before extraordinary items (55.27) (69.11)Extraordinary items – –

Net Cash from operating activities (A) (55.27) (69.11)

Cash Flow from Investing Activities

Purchase of Fixed Assets (incl. Capital Work 20.61 (128.95)in Progress/excluding interest capitalised)Sale of Fixed Assets – –Preliminary expenses – –Purchase of Investment – –Redemption of Investments – –Interest received on Fixed Deposits – –Interest received on Investments – –Dividend received – –

Net Cash used in investing activities (B) 20.61 (128.95)

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2004-05 2003-04Cash Flow from Financing Activities

Proceeds from issue of Share Capital :– Share Allotment/Call monies (incl. Share Premium) 34.20 198.90– Excess Share Application Money (adj.)Proposed public issue expenses – (0.44)Repayment of Loans – –Loans raised during the year – –Interest other than for Long Term Loans – –Interest on Long Term Loans (including interest capitalised) – –Dividends paid – –

Net Cash used in financing activities (C) 34.20 198.46


Cash & Cash equivalents as on 1st April (Opening) :Cash on Hand 0.14 0.16Balances with Scheduled Banks– On Current Accounts – –– Others 0.42 –Balances with other Banks – –Overdrafts from Banks – –

0.56 0.16

Cash & Cash equivalents as on 31st March (Closing):Cash on Hand 0.10 0.14Balances with Scheduled Banks– On Current Accounts – –– Others – 0.42Balances with other Banks – –Overdrafts from Banks – –

0.10 0.56


For R. Vender Gupta & AssociatesChartered Accountants

Lalit Kumar S. MalhotraPartner DGM - Finance


Rupees in Millions


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C & AG's Comments

Comments of the Comptroller and Auditor General of India under Section 619 (4) of the Companies Act,1956 on the accounts of Guru Gobind Singh Refineries Limited for the year ended 31st March, 2005.(Addendum to the Directors' Report dated May 09, 2005)

I have to state that the Comptroller and Auditor General of India has no comments upon or supplement to theAuditor’s Report under Section 619(4) of the Companies Act, 1956 on the accounts of Guru Gobind SinghRefineries Limited for the year ended 31st March, 2005.

(A.K. Singh)Principal Director of Commercial Audit

& Ex-officio Member, Audit Board-II, New DelhiPlace : New DelhiDate : 19.07.2005

Review of Accounts of Guru Gobind Singh Refineries Limtied for the year ended 31st March, 2005 by theComptroller and Auditor General of India

Note: Review of Accounts has been prepared without taking into account the qualifications contained in theStatutory Auditor’s Report.

1. FINANCIAL POSITION

The table below summarises the financial position of the Company under broad headings for the lastthree years:

Rs./Crores

As at As at As at31st March, 31st March, 31st March,

2003 2004 2005LIABILITIESa) Paid up Capital

i) Government – – –ii) Others 272.40 292.29 295.71

b) Reserves & Surplusi) Free Reserves and Surplus – – –ii) Share Premium Account – – –iii) Capital Reserve – – –

c) Borrowings fromi) Govt. of India – – –ii) OIDB – – –iii) Foreign Currency Loans – – –iv) Cash Credit – – –v) Others – – –

d) i) Current Liabilities & Provisions 15.53 15.61 12.34ii) Provision for Gratuity – – –

Total 287.93 307.90 308.05

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Review of Accounts

Rs./Crores

As at As at As at31st March, 31st March, 31st March,

2003 2004 2005ASSETSe) Gross Block 160.52 162.70 164.06

Less : Depreciation 2.00 4.12 6.25f) Net Block 158.52 158.58 157.81g) Capital work in progress 125.88 138.72 137.42h) i) Producing properties : – – –

ii) Less : Depletion – – –iii) Net Amount – – –

i) Pre-producing properties – – –j) Investment – – –k) Deferred Tax Asset – – –l) Current Assets, Loans and Advances 0.97 8.00 10.22m) Misc. Expenditure not written off 2.56 2.60 2.60

(accumulated project expenditure)n) Accumulated loss – – –

Total 287.93 307.90 308.05

o) Working capital (m-d(i)) (14.56) (7.61) (2.12)p) Capital employed (g+i+k+p) 143.96 150.97 155.69q) Net worth (a+b(i)+b(ii)-n-o) 269.84 289.69 293.11r) Net worth per rupee of Paid up Capital (in Rs.) 0.99 0.99 0.99

1. The working capital of the Company for the year 2002-03, 2003-04 and 2004-05 was (-) Rs.14.56crores, (-) Rs.7.61 crores and (-) Rs.2.12 crores respectively. The increase in working capital during2004-2005 was due to decrease in Current Liabilities.

2. The Capital employed of the Company for the year 2002-03, 2003-04 and 2004-05 was Rs.143.96crores, Rs.150.97 crores and Rs.155.69 crores respectively. The increase in capital employed wasdue to increase in working capital.

3. The net worth of the Company for the year 2002-03, 2003-04 and 2004-05 was Rs.269.84 crores,Rs.289.69 crores and Rs.293.11 crores respectively. The increase in networth was due to increasein paid up capital of the Company.

4. Decrease in Capital work-in progress is due to sale of Steel plates to HPCL.

2. WORKING RESULTS

Working results of the Company during the last three years are given below:

2002-03 2003-04 2004-05i) Sales – – –ii) Less : Excise Duty – – –iii) Net Sales – – –iv) Other or Misc. Income – – –v) Profit/Loss before tax and prior period adjustment – – –vi) Prior period adjustment – – –vii) Profit/Loss before tax and after prior period adjustment – – –viii) Tax provisions – – –

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Rs./Crores

2002-03 2003-04 2004-05

ix) Profit after tax – – –x) Prepaid dividend – – –

As the Management of the Company has put on hold all the major activities pertaining to therefinery, hence there was no sales/income.

3. RATIO ANALYSIS

Some important ratios on the financial health and working of the Company at the end of last 3 years aregiven below :

Percentage

2002-03 2003-04 2004-05

A) Liquidity Ratio Current Ratio : (Current Assets to Current 0.06 0.51 0.83

Liabilities and Provisions and Interest Accruedand due but excluding Provision for Gratuity)

B) Debt Equity Ratio Nil Nil Nil Long Term Debt to Net Worth [c(i) to c(v) but excluding the Short-Term Loans]

C) Profitability Ratio Nil Nil Nil Profit before tax to

a) i) Capital Employed ii) Net Worth iii) Sales

b) Profit after tax to equity capital c) Earnings per share (in Rs.) of Rs. 100 each

4. SOURCES AND USES OF FUNDS Rs./Crores

Sources of Funds (Equity contribution) 3.42 Funds from operations – - Profit after tax – - Capital reserve addition – - Project Expenditure written off – - Depreciation (Increase) 2.13 Deferred Tax Asset – Increase in Borrowings –

Total 5.55

Utilisation of funds Increase in Fixed Assets 1.36 Increase in Working Capital 5.49 Investment – Repayment of OIDB Loan – Increase in Misc. expenditure (Project Expenditure) (1.30) Decrease in Capital work-in-progress –

Total 5.55

Review of Accounts

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Review of Accounts

Rs./Crores

5. SUNDRY DEBTORS

Year Debts Provision for Total Sales PercentageConsidered Doubtful Debtors of Debtors

good Debts to Sales 2002-03 – – – – – 2003-04 2.95 – 2.95 – – 2004-05 6.76 – 6.76 – –

The Sundry debtors have increased from Rs.2.95 crores in 2003-2004 to Rs.6.76 crores in 2004-2005

6. INVENTORY

Inventory position as at the end of last three years was as follows:

2002-03 2003-04 2004-05

i) Stores and Spares – – –ii) Capital Stores – – –iii) Stock-in-trade – – –iv) Others – – –

As the Management of the Company has put on hold all the major activities pertaining to therefinery, hence there was no sales/income.

(A.K. Singh)Principal Director of Commercial Audit

& Ex-officio Member, Audit Board-II, New DelhiPlace : New DelhiDate : 14.07.2005

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Corporate Governance

Your Company adopts the best corporate governance practices in order to maintain transparency, accountabilityand ethics.

A. Board Meetings :

During the year ended 31st March, 2005, four Board Meetings were held on the following dates :

29th April, 2004 28th July, 2004 26th October, 2004 25th January, 2005

These meetings were attended by the members of the Board, as under :

Shri M.B. Lal B.E. (Chem), 4 2 Yes 1. HPCL NilChairman PGDBM (IIM, 2. HINCOL

Ahmedabad) 3. SALPG

Shri M.A. B.E. (Mech.) 4 4 No Nil NilTankiwalaManagingDirector

Shri D.S. Mathur B.Tech, 4 4 Yes 1. HPCL Member -Director M.Sc., 2. PPCL Audit Committee :

PGDPE GGSRL

Shri N.K. Puri* DME 1 1 No 1. HPCL NilDirector 2. PMHB

3. MRPL4. BGL5. SALPG

Shri C. Ramulu A.C.A. 4 3 Yes 1. HPCL Chairman -Director A.C.S. 2. HINCOL Audit Committee :

M.B.A. 3. PPCL a) HINCOL4. SALPG b) PPCL

Member -Audit Committee :GGSRL

Dr. B. Mohanty** M.Sc. 3 1 No 1. HPCL Member -Director (Dev. Mgmt.) 2. BPCL Audit Committee :

Ph.D. (Eco) 3. BLIL a) GGSRLb) HPCLc) BLIL

Member InvestorGrievanceCommittee :HPCL

Names of Academic No. of No. of Attendance Details of Directorships MembershipsDirectors Qualifications Board Meetings at the last in Companies held in

Meetings attended AGM Committee asheld specified in


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Shri T.L. Sankar M.Sc. (Chemistry), 4 3 No 1. Rain Calcining Ltd. ChairmanDirector MA (Dev. Eco.), 2. KSK Energy Ltd. Audit Committee :

IAS Ventures Ltd. a) HPCL3. HPCL b) Rain Calcining4. Delhi Power Co. Ltd. Ltd.5. Small Scale c) GGSRL

SustainableInfrastructure MemberDevelopment RemunerationBoard Committee :

Rain Calcining Ltd.ChairmanShareholders'Investor Committee :Rain Calcining Ltd.

Shri S.P. B.E. (Mech.) 3 3 Yes Nil NilChaudhry*** M.B.A.Director

Names of Academic No. of No. of Attendance Details of Directorships MembershipsDirectors Qualifications Board Meetings at the last in Companies held in

Meetings attended AGM Committee asheld specified in


* Retired on attaining the age of superannuation on 30/04/2004.** Ceased to be Director effective 29/10/2004.*** Appointed as Director effective 14/05/2004.

B. Audit Committee :

An Audit Committee has been constituted comprising of the following members:

1. Shri T.L. Sankar, Director - Chairman of the Audit Committee

2. Shri D.S. Mathur, Director - Member of the Audit Committee

3. Shri C. Ramulu, Director - Member of the Audit Committee

The Committee reviewed the accounts for the financial year 2004-05 of the Company before it was submittedfor consideration of the Board.

C. Details of Annual General Meetings :

Location and time, where last two Annual General Meetings of the Company held :

Year Location Date Time

2002-03 Kailash Building, 08.09.2003 5.30 p.m.7th floor, 26, K.G Marg,New Delhi - 110 001.

2003-04 Petroleum House 29.09.2004 3.00 p.m.17, Jamshedji Tata Road,Mumbai - 400 020.

HPCL stall at the 6th International Petroleum Conference and Exhibition held in January 2005 at New Delhi (PETROTECH 2005)

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Our vision.....★ HPCL delights customers by superior understanding and fulfilling their

stated and latent needs with innovative product and services.

★ HPCL commands highest reputation and is known for its sensitivity

and responsiveness for concerns of its customers and other stakeholders.

★ HPCL always acts faster than the competitors in the most cost effective

way.

★ HPCL is the highest performer in Rate of Growth and Return on

Investment.

★ HPCL is a Learning and Innovative Organization.

★ HPCL provides an environment of trust, pride and camaraderie

Our Anthem.....



Documents

AnnualReport2004-05 hpcl