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Mangalore Refinery And Petrochemicals Ltd.

BSE: 500109 Sector: Oil & Gas
NSE: MRPL ISIN Code: INE103A01014
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VOLUME 311241
52-Week high 142.75
52-Week low 76.25
P/E 10.46
Mkt Cap.(Rs cr) 21,837
Buy Price 0.00
Buy Qty 0.00
Sell Price 124.60
Sell Qty 1736.00
OPEN 120.50
CLOSE 121.50
VOLUME 311241
52-Week high 142.75
52-Week low 76.25
P/E 10.46
Mkt Cap.(Rs cr) 21,837
Buy Price 0.00
Buy Qty 0.00
Sell Price 124.60
Sell Qty 1736.00

Mangalore Refinery And Petrochemicals Ltd. (MRPL) - Director Report

Company director report

Dear Members

I on behalf of the Board of Directors of your Company am pleased to share with youand report the highlights affairs and developments your Company has made during thefinancial year ended March 31 2016 and present the 28th Annual Report on thebusiness and operations of Mangalore Refinery and Petrochemicals Limited (MRPL) and itsaudited financial statements together with the Auditors' Report and comments on theAccounts by the Comptroller and Auditor General (C&AG) of India. You will be delightedto know that your Company commissioned all the Units under Phase - III refinery expansionproject during the year and registered the highest ever throughput of 15.53 MMT.

Financial Performance

The standalone / consolidated financial highlights for the year ended 31/03/2016 aresummarized below:

(' In Crores)

Standalone

Consolidated

Year ended 31st March 2016 Year ended 31st March 2015 Year ended 31st March 2016 Year ended 31st March 2015
Turnover (Gross) 50864 62412 50983 62341
Earnings before Interest Tax Depreciation and Amortization (EBIDTA) 2464 (1250) 2386 (1325)
Profit/(Loss) Before Tax 1174 (2156) 306 (2295)
Profit/ (Loss) after Tax Minority Interest and share of profit/ (Loss) of associates. 1148 (1712) 710 (1803)

Your company achieved turnover of ' 50864 crore during the financial year 2015-16against ' 62412 crore during the financial year 2014-15. The decrease in sales is mainlyon account of decline in product prices linked with declining crude price as also onaccount of more domestic off take. The Company earned a profit of after tax (PAT) of '1148 crore during the financial year 2015-16 against a loss of ' (1712) crore incurredduring the financial year 2014-15. The Gross Refining Margin (GRM) for financial year2015-16 was 5.20$/bbl as against (0.64) $/bbl during the financial year 2014-15.YourCompany has retained its highest corporate rating "[CCR AAA]" affirmed by CRISILand IrAAA by ICRA during the FY 2015-16.

OPERATIONAL PERFORMANCE

The financial year 2015-16 has been a very successful year for your Company. During theyear the Company's refinery processed 15.53 MMT of crude achieving an average utilizationrate of 103.5% as against 14.63 MMT during the financial year 2014-15. During the yearthe Company achieved highest ever production and dispatch of LPG Diesel Coke andThroughput in MBPL pipeline.

The Company has achieved direct sales of 1470 TMT against 820 TMT during 2014-15 andretail sales of 4.8 TMT against 2.53 TMT during 2014-15.

MARKETING AND BUSINESS DEVELOPMENT

Your Company has successfully penetrated the Polypropylene market in a short span of 9months with a sales volume of 139 TMT and sales value of ' 1039 Crores. The company is inthe process of expanding its markets reach in order to sell 440 TMT of Polypropylene peryear. In addition your Company is also setting up its own infrastructure for storage ofPolypropylene. To leverage the highly profitable Polypropylene and to position MRPL as aniche market player comprehensive pricing of various grades of Polypropylene has been putin place along with customer enrolment activity. Del Credere Agents cum ConsignmentStockist has been appointed to partner us in addressing major demand clusters in the Southand West of India.

Your Company has also succeeded in marketing the entire production of Petcoke onconsistent basis. Company evacuated additional quantity of Sulphur in domestic as well asexport market. The Company has achieved major breakthrough for bulk evacuation of Pet-cokeand Sulphur by forging alliances with large Industrial houses which in turn has helpedthe Delayed Coker Unit to run at 100 percent capacity utilization from 50 percent earlier.This has significantly increased specialty sales and improved Refinery margins.

Your company continues to expand its market spread in the direct sales segment ofpetroleum products in the state of Karnataka and its adjoining states and has maintainedsignificant market share and direct customer relations for products such as Bitumen FuelOil Sulphur Diesel Naphtha Petcoke and Mixed Xylene in its refinery zone.

Your company has also maintained timely supplies to State Trading CorporationMauritius which has a long term supply contract with MRPL. The company supplied 1067 TMTof petroleum products to STC Mauritius at a sales value of ' 2774 Crores during FY 2015-16against supply of 1084 TMT and sales value of ' 4394 Crores in FY 2014-15.

After deregulation of HSD pricing your company has commenced the retail expansion planby releasing the advertisement for appointment of dealers for retail outlets in the stateof Karnataka & Kerala. The company is expecting to commission a sizeable number ofretail outlets during FY 2016-17.

RECOGNITIONS

During the year the Company has been conferred with following awards and recognitions:

• 'Niryat Shree' Gold Trophy in the Residual sector for Non MSME category byFederation of Import Export Organization (FIEO). MD MRPL received the award from Hon'blePresident of India on 4th May 2016 in a glittering ceremony held at VigyanBhawan New Delhi.

• "Export Excellence Award 2015" in Best Exporter Award (Medium/largecategory) from the Federation of Karnataka Chamber of Commerce and Industry.

• Certificate of recognition of 'Highest Ever Central Excise Duty payment andIncremental growth'

• First prize for outstanding performance in the area of Hindi Implementation forthe year 2015-16 for fifth consecutive year by TOLIC Mangalore.

PROJECTS

After successful commissioning of the Phase-III major units such as Delayed Coker UnitPetrochemical grade Fluidised Catalytic Cracking Unit (PFCCU) Diesel Hydro treating Unitand the latest Polypropylene Unit MRPL's product base has expanded to include Pet cokeUltra Low sulfur Diesel and Polypropylene. MRPL is establishing value partners to expandmarket base and partner sustainable growth. MRPL has already initiated actions forupgrading the MS & HSD qualities to meet BS VI specifications which will come intoforce from April 2020. Further incremental optimizations such as flare gas recoveryenergy optimizations activities have also been pursued.

A. COMPLETED PROJECTS

Phase - III Refinery Project

All the units of the Phase III Refinery capacity expansion and up gradation project andthe last unit PFCCU which was commissioned in August 2014 are running at full capacitiestoday. This has resulted in complete conversion of HSD and Petrol to Euro 4 gradesincreased the distillate yield with production of high value products viz PropyleneGasoline from low value black oils. The total expenditure incurred by your Company onPhase -III Refinery project is around ' 13265 Crore as on 31/03/2016.

Polypropylene Project (PP)

Polypropylene unit of Capacity 440 KTPA (Licensor Technology from M/s Lummus NovolenTechnology GmbH Germany) integrated with Phase -III Refinery Project was commissionedsuccessfully on 17/06/2015. Commercial production has started and was dedicated to theNation by Shri Dharmendra Pradhan Hon'ble Petroleum and Natural Gas Minister. The totalexpenditure incurred by your Company on Polypropylene project is around ' 1611 Crore as on31/03/2016. The various grades of Polypropylene produced by the unit were received well inthe market and was able to capture substantial market share in south zone in a shortperiod.

B) ONGOING PROJECTS

Following new projects are being taken up for better logistics value addition andprofitability improvement :

(a) Railway Siding - A state of the art Railway siding for smooth evacuation of Petcokeand Polypropylene.

(b) Revamp of CCR2 - The existing CCR-2 unit is being revamped to produce greaterquantity of Reformate yielding greater quantity of MS.

(c) Relocation of loading facilities & additional tankages -This project willprovide greater flexibility to your company and allow for greater marketing outreach.

(d) Flare Gas Recovery System - This project recovers gases that are lost from theflare and utilize it as fuel thereby saving cost. This also helps to reduce the Carbonfootprint of your company by reducing greenhouse gas emissions.

(e) Additional Petcoke Silos for marketing - This facility allows your company toattain greater flexibility in marketing of Pet-Coke and to mitigate environmental impactof concentrated loading.

HEALTH SAFETY AND ENVIRONMENT PERFORMANCE

Your Company is committed to ensure environmental friendly operations to achievehighest standards of environmental excellence. MRPL continues to leverage environment andsustainable development as an ingredient of its business policies and strategic plans. Themajor actions taken in 2015-16 on this front includes the following:

• Audit of New Mangalore Portjetties for oil spill management by Oil IndustrySafety Directorate (OISD).

• SOx & NOx Stack Online Analyzer data of Phase - III units connected to CPCBserver in the month of June 2015.

• Periodic Manual Stack Monitoring is being carried out by MoEF/KSPCB approvedexternal agency.

• Ambient Air Quality Monitoring is carried out by MoEF/ KSPCB approved externalagency in and around the refinery at 9 locations as per revised National Ambient AirQuality Monitoring Standards.

• Environment Awareness Programs are being organized periodically in theneighboring villages in association with Karnataka State Pollution Control Board.

• Continuous Online Monitoring Analyzers are being installed to monitor TreatedEffluents for various parameters in line with the directions of Central Pollution ControlBoard (CPCB).

• Treated effluents are monitored on a daily basis at both Refinery end & atdischarge end. A Fortnightly Marine Environment Impact Assessment study was carried out byM/s. Central Marine Fisheries Research Institute Mangalore from 7 monitoring locations inthe vicinity of Treated effluent disposal point at sea & 3 Stations in the seashore.So far no adverse effect on the marine environment was found.

• Ten Nos. of Ground Water monitoring stations in and around Refinery have beenset up and regular monitoring of ground water quality is being carried out along withKarnataka State Pollution Control Board (KSPCB).

• Low sulphur Fuel oil being used in the Refinery furnaces and boilers. Usage ofultra low sulphur fuel gas generated in the refinery process units is also beingmaximized.

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

• Annual Submarine pipeline inspection has also been carried out by M/s. NationalInstitute of Oceanography (NIO).

• The refinery is certified with ISO 14001: 2004 for Environment ManagementSystems by TUV Rheinland.

• 1531 Number of days worked without Reportable Lost Time Injuries as on31/03/2016.

• Nil Reportable Lost Time Injuries (RLTI) during the year.

• 16.81 Million Man Hours worked as on 31/03/2016 .

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY DEVELOPMENT

Corporate Social Responsibility (CSR)

Your Company's social welfare and community development initiatives focus on the keyareas of education health care and overall development of basic infrastructure in andaround its operational areas. These projects are largely in accordance with Schedule VIIof the Companies Act 2013.

Your company has spent ' 4.11 Crores (previous year ' 4.81 crore) for various CSRactivities during the year 2015-16. Pursuant to Rule 9 of Companies (Corporate SocialResponsibility Policy) Rules 2014 the Annual Report on CSR activities is annexed herewithas Annexure 'A'.

Sustainability Development and Performance

Sustainability efforts of your Company last year centered on drawing action planstowards minimizing carbon footprint through managing complex projects and operationsaddressing risk and opportunity and engaging externally. The Company also made progresson defining supplier expectations for business conduct and on addressing related risks inour supply chain. The Company continues to work to reduce greenhouse gas emissions in ouroperations and to integrate climate change- related activities and goals into our businessplanning. The Plan further provides guidance regarding integrating sustainable developmentwith our business operations. Your Company has laid down priority areas as well as shortand long term actions to be undertaken for meeting the objectives of the plan. Keyidentified areas includes:

• Hydrocarbon value chain optimization

• Energy consumption optimization

• Water and Waste Management

• Customer development and growth partnership.

Specific enablers have also been identified to facilitate the implementation of actionplans developed for above four areas.

Your Company is consolidating its position in potential hydrocarbon value chainoptimization avenues for sustainable development. The pivotal emphasis is on recoveringvalue from low value hydrocarbons such as pet-coke refinery offgas and internal fuel oil.Efforts are on the anvil to exploit such potentials to enhance share holders value.

Your Company is also considering other sustainable options to utilize the pet coke forfiring in utility boilers to produce steam for power generation along with capture of theassociated pollutant - sulfur molecule. This is expected to not only help in production ofcheaper power but also ensure timely evacuation of this product from the refinerycomplex. Another advantage envisaged is the reduction in internal fuel oil consumptionwhich is currently being fired in the boilers for up-gradation into various lightermolecules like Polypropylene diesel etc. via the delayed coking route. In-housefeasibility study of the project with support from potential technology suppliers is beingtaken-up.

Your Company is also looking into the option of recovering valuable ethylene from lowvalue PFCC off gas and supplying into downstream petrochemical complexes. Also therecovered ethylene can be used as a co-monomer along with propylene to producehetero-polymers of polypropylene for enhancing market value. The in-house viability studyalong with the potential increase in profitability estimations are being carried out withinputs from downstream petrochemical complexes and ethylene recovery technology suppliers.

The Phase-3 Refinery Complex captive power plant facilities and some of the processheaters are designed to burn Natural Gas as fuel. The Phase-3 Hydrogen generation unit isalso designed to consume Natural Gas as an alternate feedstock. The infrastructure tobring natural gas to Mangalore is being assessed by various gas suppliers. Subject toeconomics utilization of natural gas will not only reduce SOx emissions but also open upthe avenue of converting the low value internal fuel oil into high value hydrocarbons.

PERFORMANCE OF SUBSIDIARY/ JOINT VENTURES

Pursuant to Section 129 (3) of the Companies Act 2013 read with Rule (5) of theCompanies (Accounts) Rules 2014 the salient features of financial statement ofSubsidiary and Joint Ventures in Form AOC-1 is attached as Annexure 'B' which formspart of this report.

ANNUAL REPORT OF SUBSIDIARY AND CONSOLIDATED FINANCIAL STATEMENT

The Audited Consolidated financial statements for the year ended 31st March 2016 ofthe Company and its subsidiaries form part of the Annual Report in accordance with Section129 of the Companies Act 2013 and the Accounting Standard (AS)-21 on "ConsolidatedFinancial Statements" read with AS-23 on "Accounting for Investments inAssociates" and AS-27 on "Financial Reporting of Interests in JointVentures". In accordance with section 136 of the Companies Act 2013 the auditedfinancial statements including the consolidated financial statements and relatedinformation of the Company and audited accounts of the subsidiary Company are available onthe Company's website. These documents will also be available for inspection duringbusiness hours at the registered office of the Company at Mangalore.

SUBSIDIARY COMPANY

ONGC Mangalore Petrochemicals Limited (OMPL) is the only subsidiary company. Yourcompany continues to hold 51% of equity shares in OMPL and 49% is held by ONGC.

OMPL has set up an Aromatic Complex with an annual capacity 914 KTPA of Para-xylene and283 KPTA of Benzene in Mangalore Special Economic Zone. During the year 0.56 MMT ofPara-xylene and 0.17 MMT of Benzene were exported and the revenue for FY 2015-16 was '4188.87 Crores. The Company incurred loss of ' 875.35 Crores mainly due to InterestDepreciation and lower capacity utilization. A scheme of amalgamation of OMPL with

your Company has been filed with the Ministry of Corporate Affairs which is underprocess.

Your Company has adopted a Policy on determining Material Subsidiary which isavailable at company's website.

JOINT VENTURES

The company has two Joint Ventures viz. Shell MRPL Aviation Fuels and Services Limited(SMAFSL) with Shell B.V. Netherlands where in your company holds 50% of share capital andMangalam Retail Services Limited (MRSL) with Gulf Oil a Hinduja Group Company whereinyour Company holds 49.98% of share capital. The accounts of JV companies have beenconsolidated with MRPL's Accounts.

Shell MRPL Aviation Fuels and Services Limited (SMAFSL)

Shell MRPL Aviation Fuels and Services Limited (SMAFSL) supplies aviation turbine fuel(ATF) to both domestic and international airlines at several Indian airports. The revenuefor FY 2015-16 is ' 324 Crores (Previous Year ' 636 Crores) with Pre-tax profit of ' 4.72Crores (Previous Year ' 10.69 Crores) and post-tax profit of ' 3.82 Crores (Previous Year' 7.74 Crores). The company commenced its operation at Chennai during 2015-16. The Companyis currently present in 10 airports and entered into a facilitation model with HPCL forthe three airports of Mumbai Kolkata and Delhi. The Company paid a dividend of ' 0.75Crores to MRPL during the FY 2015-16. M/s ICRA has reaffirmed "A1+ to the non fundworking capital limits of ' 50 million which indicates highest credit quality.

Mangalam Retail Services Limited (MRSL)

Mangalam Retail Services Limited (MRSL) the Joint Venture (JV) Company with Gulf Oil anHinduja Group Company for promoting retail plan of MRPL. MRPL holds 49.98 % of shares inthis Company. In absence of any viable business plan the continuance of the JV is beingexamined. The JV has not commenced any business activities. Hence there is no businesstransaction during the FY 2015-16. The Accounts of the JV was audited for the purpose ofconsolidation.

INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS

The financial statements have been prepared in accordance with the generally acceptedAccounting Principles (GAAP) and in accordance with all applicable Accounting Standards.Your Company its subsidiary and joint venture Companies have adopted Ind AS with effectfrom 1st April 2016 pursuant to the Companies (Indian Accounting Standard)Rules 2015 notified by the Ministry of Corporate Affairs vide notification dated 16thFebruary 2015.

TRANSFER TO RESERVES

No amount has been transferred to General Reserves for the financial year 2015-16.

DIVIDEND

In view of inadequacy of profits in the last three financial years the Board did notrecommend any dividend for the FY 2015-16.

DEPOSITS

Your company has not accepted any deposits during the year pursuant to Section 74 ofthe Companies Act 2013 and Rules thereunder. Your Company is to refund certain customeradvances which were unclaimed and various steps to refund them are being taken.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

There have been no investments made loans / guarantees given or securities providedduring the financial year 2015-16 under the provisions of Section 185 / 186 of theCompanies Act 2013. The details of investments made in earlier years covered under theprovisions of Section 186 of the Act are given in notes to financial statements providedin this Annual Report.

SHARE CAPITAL

The company has not issued any shares during the FY 2015-16. The Issued Subscribed andPaid up Equity Share Capital of your Company as on 31/03/2016 was ' 1753 Crores.

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

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

HUMAN RESOURCES

Your company values its human resources the most. To keep their morale high yourcompany extends several welfare benefits to the employees and their families by way ofcompensative medical care education housing and social security. During the financialyear 2015-16 30 HR policies in line with Indian Oil Corporation Ltd (IOCL) were revisedand notified. Promotions for management and non management staff were released on time andS1 grade was introduced along with other pending issues as per long term settlement (LTS).

Your Company continues to enjoy cordial and harmonious relations and not a singleman-hour was lost on account of any industrial disturbance during the year 2015-16.

During the year your Company has recruited 116 employees comprising of 6 womenemployees and 13 Schedules Caste (SC) / Schedule Tribe (ST) employees. Total employeestrength as on 31/03/2016 was 1812 including 130 women employees 210 SC/ST employees and26 persons with disabilities (PWD). 816 employees belong to Management cadre whereas 996employees belong to Non-Management cadre. During the year 2015-16 your Company devoted3669 Mandays for Training Development and Learning which amounted to an average of 2.16Mandays per employee which includes functional developmental and special trainingprograms covering the entire spectrum of employees.

The Company maintains an Employee Club known as MRPL Employees Club (MEC). The Cluboffers a wide range of pastime activities for the employees and their dependents. AnInternal

Departmental Cricket Tournament was also organised by MRPL Employees Club (MEC).

Presidential Directives and other guidelines issued by Department of PublicEnterprises Ministry of Petroleum & Natural Gas Ministry of Social Justice andempowerment from time to time with regard to reservation in services for Scheduled CastesScheduled Tribes other backward castes and Persons with disabilities. An adequatemonitoring mechanism has been put in place for sustained and effective compliance. Liaisonofficers were appointed to ensure implementation of the Government Directives. Rosters aremaintained as per the directives and are regularly inspected by the Liaison officer of thecompany as well as the Liaison officer of MoP&NG to ensure proper compliance of theDirectives. Special Reservation Cell on SC/ST is constituted for redressal of grievancesof Scheduled Castes and OBC employees.

MRPL also complies with provisions under "The Persons with Disabilities (EqualOpportunities Protection of Rights and Full Participation) Act 1995 relating toproviding employment opportunities for Persons with Disabilities (PWDs). As on 31/03/2016there were 26 permanent employees with disabilities on the roll of MRPL.

WOMEN EMPOWERMENT

Women employees constituted over 6 per cent of the Company's workforce. During theyear programs on women empowerment and development including programs on gendersensitization were organized. Your company has an Internal Complaints Committee (ICC)required under Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. There have been no cases reported to the Committee for the FY2015-16.

OFFICIAL LANGUAGE

Competitions were also held in Hindi language for employees and their family membersduring National Safety Day Environment Day Security awareness week and Vigilanceawareness week. In order to propagate Hindi among the employees Hindi Workshops are beingorganized on a regular basis at Mangalore Mumbai Delhi & Bangalore Offices. In orderto promote Hindi in the Company Hindi fortnight was celebrated and many Hindicompetitions such as Hindi Padho Samajho exam Tick karo Hindi Dictation HandwritingAdmin. Glossary News reading etc were conducted for the employees their children andfamily members in the month of September 2015. A special quiz competition was alsoconducted for GMs & GGMs during Hindi month celebrations. OL inspections of internaldepartments and subordinate offices were carried out. Special awards were given to thetwelve topper students of DPS School Mangalore who scored the highest marks in Class-XHindi examination.

Your Company won the first prize in Town Official Language Implementation Committee(TOLIC) under the category of PSU Central Government offices for outstanding performancein the area of Hindi implementation for the year 2015-16.

In order to propagate Hindi in the Refinery a Hindi In House Journal namely "MRPLPRATIBIMB" is being published. As per OL Rule OLIC meeting was conducted in all thefour quarters under the chairmanship of MD. Meetings were organized specially for OfficialLanguage liaison Officers during the year. Constant efforts for promotion of Hindi overthe years have resulted in significant increase in usage of Hindi in the Refinery.

RIGHT TO INFORMATION ACT 2005

Your Company's RTI manual is available on company's website which discloses allrequired information. During the year 172 applications were received out of which 163were disposed off before 31/03/2016 and balance 9 applications are being disposed off.

SECURITY MEASURES

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

Physical Protection of the Refinery is handled by Central Industrial Security Force(CISF). Proposal to augment the CISF strength to extend protection to Refinery - Phase-3area is under consideration of the MHA.

Security has always been on priority of the Company and to ensure preparednessperiodic mock drills on work-place security preparedness are conducted. Security AwarenessWeeks are organised periodically to promote awareness on security issues among all stakeholders. An integrated CCTV cum Electronic Intrusion Detection system is underimplementation to further strengthen electronic surveillance of the Refinery.

VIGILANCE FUNCTION

Your company has developed a structured mechanism of vigilance functions and itspractices are focused towards creation of value of all the stakeholders. The Practicesinvolve multi-layer checks and balances to improve transparency. Vigilance Awareness andPreventive vigilance activities were continuously carried out during the year. Guidelinesof Central Vigilance Commission (CVC) are being followed. Officers in sensitive posts arerotated regularly.

In compliance with CVC instruction your company has implemented a complaint handlingpolicy in which all complaints received from various sources can get recorded and can beexamined by vigilance. Further in line with CVC instructions your Company has achievedhigh compliance level with regard to e-procurement e-tender and e-payment.

Leveraging of technology to enhance transparency has been a thrust area of action inwhich vigilance has played a catalytic role. The website of the Company displaysdownloadable tender document publication of information of works awarded on nominationbasis publication of post award information of contracts.

Whistle Blower Policy for Directors & Employees

The Whistle Blower Policy is formulated to provide a vigil mechanism for Directors andEmployees to raise genuine concerns about unethical behaviour actual or suspected fraud.The Policy provides necessary safeguards for protection of Directors and Employees whoavail the vigil mechanism from reprisals or victimization for whistle blowing in goodfaith and to provide opportunity to Directors and Employees for direct

access to the Chairperson of the Audit Committee in exceptional cases. The policy isavailable on the Company's website. During the year no complaints were received underWhistle Blower Policy.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

Information required to be disclosed pursuant to Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 with respect toConservation of Energy Technology Absorption and Foreign Exchange earnings & outgoare furnished in Annexure 'C' which forms part of this Report.

MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES

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

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

EXTRACT OF ANNUAL RETURN

Information required to be disclosed pursuant to Section 134(3)(a) of the CompaniesAct 2013 with respect to the details forming part of the extract of the Annual Return inform MGT-9 are furnished in Annexure 'D' which forms part of this Report.

UNIFORM LISTING AGREEMENT

The Securities and Exchange Board of India (SEBI) on 02/09/2015 issued SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (hereinafter referred to asSEBI Listing Regulations 2015) with the aim to consolidate and streamline the provisionsof the Listing Agreement for different segments of capital markets to ensure betterenforceability. The said Regulations were effective December 1 2015. The Company enteredinto Uniform Listing Agreement with BSE Limited and National Stock Exchange of IndiaLimited during December 2015.

RELATED PARTY TRANSACTIONS & PARTICULARS OF CONTRACTS / ARRANGEMENTS WITH RELATEDPARTY

All transactions entered with related parties during the financial year 2015-16 were onarm's length basis and in ordinary course of business. Further there were no materialrelated party transactions during the year with the Promoters Directors or Key ManagerialPersonnel. The Company has adopted a Related Party policy and procedure which isavailable at company's website.

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

DIRECTORS & DIRECTORS' RESPONSIBILITY STATEMENT Policy on Directors' Appointment

MRPL being a Government Company the provisions of Section 134(3) (e) of the CompaniesAct 2013 shall not apply in view of the MCA notification dated 05/06/2015.

Changes in the Board of Directors and Key Managerial Personnel during the financialyear 2015-16.

Shri M. Venkatesh assumed the office of Director (Refinery) on 1st April2015 and elected as a Director in the 27th Annual General Meeting held on08/08/2015. Shri Nalin Kumar Srivastava Deputy Secretary MoP&NG was appointed asAdditional Director with effect from 5th March 2015 and elected as a Directorin the 27th Annual General Meeting held on 08/08/2015. Shri Nalin KumarSrivastava ceased to be a Director w.e.f 3rd March 2016 consequent uponwithdrawal of his nomination by MoP&NG. Smt. Perin Devi Director of MoP&NG wasappointed as additional Director with effect from 14th May 2015 and elected asa Director in the 27th Annual General Meeting held on 08/08/2015. Shri A. K.Sahoo assumed the office of Director (Finance) with effect from 1st February2016. He vacates his office as Additional Director in this AGM and being eligible offershimself for appointment as Director (Finance) in the 28th Annual GeneralMeeting. Shri Diwakar Nath Misra Director (GP) of MoP&NG was appointed as AdditionalDirector with effect from 9th March 2016 vacates his office as AdditionalDirector in this AGM and being eligible offers himself for appointment as Director in the28th Annual General Meeting. Shri Vishnu Agrawal ceased to be a Directorconsequent upon his superannuation from the services of MRPL on 31st January2016.The Board places on record its appreciation for the valuable services rendered by theoutgoing Directors during their respective tenure.

Independent Directors on the Board of Directors of the Company are yet to be nominatedby the Ministry of Petroleum and Natural Gas (MoP&NG).The matter is regularly followedwith the Ministry.

FORMAL ANNUAL EVALUATION

MRPL being a Government Company the provisions of Section 134(3) (p) of the CompaniesAct 2013 shall not apply in view of the MCA notification dated 05/06/2015.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to provisions of Section 134 of the Companies Act 2013 the Board ofDirectors of your Company has made the following statement for FY 2015-16:

a) In the preparation of the Annual Accounts for the year ended March 312016 theapplicable Accounting Standards have been followed along with proper explanation relatingto material departures;

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

c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records

in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

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

e) The Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and

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

NUMBER OF BOARD MEETINGS

The Board of Directors of your Company had seven (7) Meetings during the FY 2015-16.The maximum interval between any two meetings did not exceed 120 days as prescribed in theCompanies Act 2013. Details of the Board Meetings held have been furnished in theCorporate Governance Report which forms part of this Report.

AUDIT COMMITTEE

The Audit Committee has been constituted as per the terms of reference prescribedunder Section 177 of the Companies Act 2013 read with Rule 6 of the Companies (Meetingsof the Board and its Powers) Rules 2014 Regulation 18 of SEBI Listing Regulation 2015and Guidelines on Corporate Governance for Central Public Sector Enterprise issued byDepartment of Public Enterprise Government of India. There have been no instances wherethe recommendations of the Audit Committee were not accepted by the Board of Directors.The details of Audit Committee are disclosed in the Corporate Governance Report whichforms part of this Report. MRPL being a Central Public Sector Enterprise (CPSE) Directorson the Board of the company are appointed by the Administrative Ministry i.e. Ministry ofPetroleum and Natural Gas (MoP&NG) Government of India.

Due to non-availability of Independent Directors the Audit Committee is notconstituted as per the provisions of the Companies Act 2013 & SEBI ListingRegulation 2015.

NOMINATION AND REMUNERATION COMMITTEE

Pursuant to Section 178 of the Companies Act 2013 and Regulation 19 of SEBI ListingRegulations 2015 and DPE guidelines on Corporate Governance for CPSE your Company hasconstituted a Nomination and Remuneration Committee. The details on the Nomination andRemuneration Committee are disclosed in Corporate Governance Report which forms part ofthis report.

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

Due to non-availability of Independent Directors the Nomination and RemunarationCommittee is not constituted as per the provisions of the Companies Act 2013 & SEBIListing Regulation 2015.

RISK MANAGEMENT POLICY

Your Company has a well-defined policy framework for Enterprise Risk Managementformulated by Deloitte. Risk Managers are continuously monitoring the Risks pertaining totheir area. Risk Management Committee was reconstituted consisting of majority ofDirectors pursuant to Regulation 21 of SEBI Listing Regulation 2015 which monitors andevaluates the risk overview document once in quarter and recommends the same to the AuditCommittee for evaluation. The Risk Management Committee's overview document is dulyreviewed by the Audit Committee and placed before the Board on quarterly basis.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS

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

CORPORATE GOVERNANCE

The Companies Act 2013 and SEBI Listing Regulations 2015 have strengthened thegovernance regime in the country. Your Company is in compliance with the governancerequirements provided under the Companies Act 2013 and SEBI Listing Regulations 2015 andhas complied with all the mandatory provisions of the Companies Act 2013 and Rules madethereunder and SEBI Listing Regulation 2015 relating to the Corporate Governancerequirements and mandatory guidelines on Corporate Governance for CPSEs issued by DPEGovernment of India except for the presence of requisite number of Independent Directorson the Board and Board Committees. The Corporate Governance Report for the FY 201516 formspart of this Report.

Pursuant to Schedule V of the SEBI Listing Regulations 2015 the Auditors' certificateon compliance of conditions of Corporate Governance also forms part of the Annual report.The Auditors have made observations on the appointment of Independent Directors on theBoard of the Company. The Company is pursuing with the Ministry of Petroleum & NaturalGas (MOP&NG) for the appointment of requisite number of Independent Directors.

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

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

b) Whistle Blower Policy

c) Related Party Transactions - Policy and Procedures

d) CSR & SD Policy

e) Material Subsidiary Policy

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

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

h) Policy on preservation of Documents

i) Training Policy for Board of Directors.

BUSINESS RESPONSIBILITY REPORT

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

MANAGEMENT DISCUSSION AND ANALYSIS

In terms of Regulation 34 of the SEBI Listing Regulations 2015 the Management'sDiscussion and Analysis Report (MDA) for the FY 2015-16 forms part of this Report.

INTERNAL FINANCIAL CONTROL

Your Company has a well established Internal Financial Control System to ensure anadequate and effective internal control environment that provides assurance on efficiencyof conducting business including adherence to Company's policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof accounting records and the timely preparation of reliable Financial information. TheCompany has appointed an external firm of Chartered Accountants M/s K.Verghese & Co.as Internal Auditors for the FY 2015-16 and 2016-17 which is assisted by the Company'sInternal Audit Department. The reports of the Internal Auditors are reviewed by the AuditCommittee and the corrective actions on their advice/suggestions wherever required aretaken. The internal financial control is based on quarterly and annual gap analysis onwhich the CEO/CFO certifies the Audit Committee as well Board for approving financialstatements.

AUDITORS

Joint Statutory Auditors

M/s Shreedhar Suresh & Rajagopalan Chennai and M/s A Raghavendra Rao andAssociates Mangalore were the Joint Statutory Auditors of the Company for the FY 2015-16.They have audited the Financial Statements for the Financial Year ended 2015-16 andsubmitted their report which forms part of this report. There is no qualification in theAuditors Report on the Financial Statements of the company. Notes to the Accounts referredto in the Auditors Report are self-explanatory and therefore do not call for any furthercomments.

Secretarial Auditors

Your Company has engaged M/s Ullas Kumar Melinamogaru & Associates PracticingCompany Secretaries Mangalore for conducting Annual Secretarial Audit for the year2015-16 pursuant to Section 204 of the Companies Act 2013. M/s Ullas Kumar Melinamogaru& Associates Practicing Company Secretaries Mangalore have issued Secretarial AuditReport for the year 2015-16 which forms part of this report as Annexure "F".The Auditors have made observations on the appointment of Independent Directors on theBoard of the

Company and overtime working hours as per the provisions of the Factories Act 1948.The Company is pursuing with the Ministry of Petroleum & Natural Gas (MoP&NG)Govt. of India for the appointment of requisite number of Independent Directors. Asregards the observations on working hours the same has been taken up with the Departmentof Public Enterprises by the Industry Group.

Cost Auditors

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 the cost accounts maintained by the company forthe FY 2015 -16 are being audited by Cost Auditors M/s. Bandyopadhyaya Bhaumik & Co.Kolkata. M/s. Bandyopadhyaya Bhaumik & Co. Kolkata have been re-appointed as CostAuditor for FY 2016-17.

COMMENTS OF C&AG ON THE JOINT STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED ANDSTANDALONE FINANCIAL STATEMENTS FOR THE FY 2015-16

The Comments of Comptroller & Auditor General of India (C&AG) forms part ofthis report and are attached as "Annexure-G". You would be pleased toknow that your company has received NIL comments from C&AG for the year 2015-16.

ACKNOWLEDGEMENT

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

Your Directors gratefully acknowledge support and direction provided by the parentcompany Oil and Natural Gas Corporation Limited (ONGC) and the support of HindustanPetroleum Corporation Limited (HPCL) as Promoters of the company. Your Directorsacknowledge the continuing co-operation and support received from New Mangalore PortTrust Financial Institutions Banks and all other stakeholder. Your Directors recognizethe patronage extended by the valued customers for the products of the Company and promiseto provide them the best satisfaction. Your Directors wish to place on record theirsincere appreciation of the sustained and dedicated efforts put in by all the employeescollectively and concertedly as a Team known as "Team MRPL".

For and on behalf of the Board
Sd/-
(Dinesh Kumar Sarraf)
Chairman
(DIN:00147870)
Place: New Delhi
Date: 03/08/2016