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Hindustan Petroleum Corporation Ltd.

BSE: 500104 Sector: Oil & Gas
NSE: HINDPETRO ISIN Code: INE094A01015
BSE 00:00 | 13 Apr 231.65 6.00
(2.66%)
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226.85

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232.55

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224.60

NSE 00:00 | 13 Apr 231.55 5.15
(2.27%)
OPEN

225.60

HIGH

232.65

LOW

225.60

OPEN 226.85
PREVIOUS CLOSE 225.65
VOLUME 96201
52-Week high 259.20
52-Week low 163.30
P/E 3.92
Mkt Cap.(Rs cr) 33,834
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 226.85
CLOSE 225.65
VOLUME 96201
52-Week high 259.20
52-Week low 163.30
P/E 3.92
Mkt Cap.(Rs cr) 33,834
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Hindustan Petroleum Corporation Ltd. (HINDPETRO) - Director Report

Company director report

Dear members

On behalf of the board of directors it gives me immense pleasure in presenting thisreport on the performance of the corporation for the financial year ended march 31 2020.

Maharatna status

In a significant milestone in the annals of your corporation government of india hasconferred 'maharatna rs status on october 24 2019 featuring us in an elite list of 10central public sector enterprises in india. The honour coming with huge responsibilitiesis a most cherished moment to every stakeholder of the corporation and the boardrededicates themselves to the services of the members.

Highlights

(Rs / crore)

Consolidated

Standalone

2019-20 2018-19 2019-20 2018-19
Financial performance
Sales/ income from operation 286574.27 295986.87 286250.27 295712.56
Earnings before interest tax depreciation & amortization and exceptional items 6885.94 13910.14 6961.63 13077.21
Depreciation & amortization expenses (3369.87) (3085.30) (3304.39) (3012.61)
Finance cost (1138.85) (785.64) (1081.72) (725.94)
Profit before tax and exceptional items 2377.22 10039.20 2575.52 9338.66
Exceptional items - income/(expense) (1002.93) - (1002.93) -
Profit before tax (pbt) 1374.29 10039.20 1572.59 9338.66
Tax expense 1264.44 (3348.57) 1064.67 (3310.00)
Profit after tax (pat) 2638.73 6690.63 2637.26 6028.66
Balance brought forward from previous financial year 26923.39 21973.01 24941.79 20632.77
Amount available for appropriation
Appropriations/ others:
Debenture redemption reserve (net) (513.46) (17.34) (625.00) -
Dividend (1432.39) (1371.44) (1432.39) (1371.44)
Tax on distributed profits (294.43) (281.90) (294.43) (281.90)
Other comprehensive income that will not be reclassified to profit or loss (net of tax) (161.50) 12.60 (158.05) 15.87
Other appropriations 324.89 (82.17) 324.89 (82.17)
Balance carried forward 27485.23 26923.39 25394.07 24941.79
Shareholders rs value ( rs )
Earnings per share 17.32 43.91 17.31 39.56
Cash earnings per share 29.36 68.09 30.23 63.02
Book value per share 203.31 199.50 190.06 184.90

 

Physical performance (mmt) 2019-20 2018-19
Market sales (including exports)# 39.60 38.72
Crude thruput:
Mumbai refinery 8.07 8.67
Visakh refinery 9.11 9.77
Total crude thruput 17.18 18.44

# market sales (including exports) as per ind as is 39.64 mmt for financial year2019-20 and 38.71 mmt for financial year 2018-19.

Sales/ income from operations

Your corporation has achieved sales/ income from operations of rs 286250.27 crore inthe financial year 2019-20 as compared to rs 295712.56 crore in the financial year2018-19 on a standalone basis.

Profit

Your corporation has reported earnings before interest tax depreciation &amortization (ebitda) of rs 6961.63 crore without considering an exceptional expense ofrs 1002.93 crore in the financial year 2019-20 as against rs 13077.21 crore in thefinancial year 2018-19 and profit after tax of rs 2637.26 crore in the financial year2019-20 as compared to rs 6028.66 crore in the financial year 2018-19 on a standalonebasis.

Dividend

The board of directors after taking into account the financial results of thecorporation during the financial year have recommended final dividend of rs 9.75 pershare for the financial year 2019-20 as compared to rs 15.90 per share for the financialyear 2018-19 that comprise of rs 9.40 per share as final dividend and rs 6.50 per share asinterim dividend.

The amount of final dividend as recommended by the board totaling to rs 1485.73 crorewill be paid out of profits (after tax) earned for the financial year.

Internal resources generation

Your corporation has generated internal resources of rs 2879.29 crore during thefinancial year 2019-20 as compared to rs 7949.88 crore during the financial year 2018- 19on a standalone basis.

Contribution to exchequer

Your corporation has contributed a sum of rs 76133.41 crore to the exchequerduring the financial year 2019- 20 by way of duties and taxes as compared to rs 73350.33crore during the financial year 2018-19 on a standalone basis.

Refinery performance

Your corporation's refineries situated at mumbai and visakh have delivered a sustainedsuperior performance as evident from their successful roll out of nationwide bs-VI gradefuels before the deadline stipulated by the government of india and achieving a capacityutilization of 108.70% amidst newer challenges. Effective management of intermediatestreams evacuation as well as meticulous handling of two grades of ms and hsd duringinterim period of rollout of bs-VI grade of fuels at both the refineries has been one ofthe notable feature this year. The refineries have recorded thruput of 17.18 mmt ascompared to 18.44 mmt during previous year the lower thruput being attributed to shutdown taken for upgrading to bs-VI fuel grade norm. The refineries have set new benchmarksand surpassed few previous landmarks in the course of their excellent performance duringthe current financial year prominent among them are: mumbai refinery's achievement ofhighest ever lube oil base stock (lobs) production with 478.13 tmt surpassing previousyear's best of 472.81 tmt. Visakh refinery in a first of a kind has processed wti crudefrom us. Production of vlsfo (very low sulphur fuel oil having sulphur content of lessthan 0.5%) was commenced at visakh refinery to support a new world order on oceanpollution i.e. Imo 2020 regulations that kicked in effective january 01 2020 for thefirst time.

The augmentation projects at refineries namely the increase in capacity of mumbairefinery to 9.5 mmtpa and visakh refinery to 15 mmtpa along with state- of-art complexityenhancements including bottom upgradation facilities are progressing well.

Your corporation is setting up a new 9 mmtpa capacity greenfield refinery cumpetro-chemical complex at pachpadra in barmer district of rajasthan through a jointventure company hpcl rajasthan refinery limited. There has been significant progressduring the year in the execution of works. Engineering & procurement activities areprogressing well with placement of various purchase orders in 2019-20. Grading of site andconstruction of boundary wall major internal roads power utility facilities waterreservoir etc. Have been completed. Construction of some of the major process unitsutility plants approach road and fabrication of major long lead items etc. Are underprogress. Further approval for environment clearance for township consent to establishfor 'mangla crude pipeline rs have been received.

The particulars with respect to conservation of energy technology absorption foreignexchange earnings & outgo are furnished in annexure i. The particulars relatingto control of pollution and other initiatives by refineries are furnished in annexureII.

Operating performance of refineries

The important operating achievements during the financial year 2019-20 are as below:

Parameter Unit Mumbai refinery Visakh refinery
Crude thruput Tmt 8065 9115
Capacity utilization % 107.5 109.4
Distillate yield % 77.0 72.1
Fuel and loss % 7.13 7.46
Specific energy consumption Mbtu/ bbl/ nrgf 84.5 84.1
Gross refinery margin $/bbl 3.63 (1.30)

Marketing performance

During the financial year 2019-20 your corporation has delivered an excellentperformance exceeding various milestones achieved during previous years. With a salesvolume of 39.60 million tonnes including exports during the year (2018-19: 38.72 milliontonnes) the winning momentum continued during the year.

In domestic sales segment your corporation recorded a volume of 37.74 million tonnesduring the financial year (2018-19: 37.97 million tonnes) holding to its previous year'smarket share of about 21% amongst the public sector oil marketing companies (omcs). In thebackdrop of subdued demand growth for petroleum products intense competition and thenation-wide lock-down that had its impact on sales in the last week of the financial yearthe achievement is significant.

In the motor-fuel segment your corporation has achieved a sales volume of 24.39million tonnes during the financial year 2019-20. The year witnessed commissioning of1194 retail outlets (taking the total of retail outlets to 16476 as of march 31 2020)and 166 new cng stations highest in recent years. To enhance overseas footprint yourcorporation has commissioned its first outlet in bhutan as a part of the tie-up with statetrade corporation of bhutan limited (stcbl) for setting up of retail outlets and supply ofmotor fuels in bhutan. The thrust over digital payments continued during the year with thelaunch of 'hp-pay rs a unified payment app first of its kind in the industry tofacilitate purchase of motor fuels domestic lpg and lubricants by customers.

The lpg business vertical set a new record during the financial year 2019-20 clockinga sales volume of 7 million tonnes. The year witnessed commissioning of 245 newdistributorships (taking the total number of dealership to 6110 at the end of thefinancial year) commissioning of 50th lpg bottling plant at sugauli bihar and enrolmentof 37.53 lakhs new domestic customers including 19.56 lakhs customers enrolling underpradhan mantri ujjwala yojana (taking the total number of domestic customers and within itpmuy beneficiaries to 8.40 crore and 2.15 crore respectively at the end of the financialyear).

The success saga of lubricant business continued during financial year 2019-20retaining the pole position for the 7th consecutive year with a sales volume of 650 tmtamidst highly competitive business environment having participation from mnc segmentprivate and public sector companies. The value added lubes category recorded its highestever sales of 518 tmt including exports and registering a growth of 6% over previous year.The lube sbu exported 16.75 tmt lubricants to 10 countries earning the status of largestexporter of lubricants from india amongst psus.

In industrial & consumer business line your corporation recorded overall sales ofabout 5 mmt. The strategy of maximising volumes in three focused products helped to cross1 mmt sales volume in fuel oil (fo) diesel and bitumen individually for the fifthconsecutive year. Your corporation launched a new product very low sulphur fuel oil(vlsfo) to leverage the opportunities of low sulphur marine fuels complying tointernational maritime organization (imo) norms effective january 01 2020.

The gas business the future of fuel has been gathering pace with setting up of citygas distribution (cgd) network in geographical areas of ambala-kurukshetra (haryana) andkolhapur (maharashtra) through joint venture company hpoil gas private limited (hogpl).Independent of this the corporation is also setting up such networks on a standalonebasis in 10 geographical areas in the states of haryana uttar pradesh uttarakhand andwest bengal. Construction activities have commenced in 5 mmtpa lng regasification terminalat chhara gujarat in joint venture with shapoorji group.

In aviation business line your corporation achieved a sales volume of 732 tmt.Aviation service facilities (asfs) was augmented by setting up new facilities at nagpurranchi and vidyanagar in the state of karnataka taking the total asfs to 44.

Our environmentally conscious nation leapfrogged from bs-IV grade fuel to bs-VI gradeon april 01 2020. The operations & distribution arm the backbone of the corporationswung early into action and contributed to this success by keeping entire network readywith this grade of fuel on time. The corporation has handled a thruput of 53.50 milliontonnes. Towards leveraging technology in operations central optimised logistics assistant(cola) that ensures supply chain optimization with centralized planning of the tank truckscheduling was implemented during the year enabling efficient product movement across thecountry.

Your corporation continues to lay emphasis on environment protection sustainabilitymeasures and steps for reduction in green house gas (ghg) emissions by promoting bio fuelsin transportation. The corporation has continued its participation in ethanol blendingprogram of government of india towards this objective and procured 460 million litre ofethanol during the financial year which has taken overall ethanol blending to 4.9%. Inaddition the corporation recorded the blending of highest ever quantity (50 millionlitre) of biodiesel during the financial year 2019-20.

Your corporation is currently operating petroleum product pipeline network of 3775 kmwith mainline capacity of 32.55 mmtpa and branch line capacity of 15.57 mmtpa. The everexpanding pipeline network continued its march during financial year 2019-20 withcommissioning of palanpur-vadodara pipeline including a marketing terminal at vadodara anduran - chakan lpg pipeline besides expanding the existing pipeline networks of mundradelhi pipeline (mdpl) ramanmandi bahadurgarh pipeline (rbpl) and visakh vijayawadasecundarabad pipeline (vvspl). The pipeline vertical handled a thruput of 21.20 milliontonnes.

Treasury management

The financial year 2019-20 has been very challenging yet exciting year from treasuryperspective. With ambitious capacity expansion programs under execution the capex targetsfor financial year were by far the highest in the history of your corporation. Thefinancial year began with formulating the treasury strategy with twin objectives ofdiversification of funding sources and optimizing the cost of borrowings for creating asound capital structure to meet the long-term funding needs of your corporation.

Your corporation made its foray in to non-convertible debenture (rupee bond) marketsand its maiden unsecured ncd issuance was oversubscribed close to 9 times with highinvestor demand from various investor groups. Considering the high demand and to create ayield curve for the corporation's ncds 4 subsequent ncd issuances for tenures spreadingacross 3/5/10 years maturity were completed during the financial year at lowest everyields across all maturities in the history of your corporation. Recognizing the exemplaryperformance of your corporation in the primary segment of domestic bond market yourcorporation was conferred with “outstanding performer on bsebond platform” awardin psu category by bse (bombay stock exchange).

Diversifying its borrowing base your corporation also successfully raised a us$ 300million loan to fund the capex needs from a consortium of indian and foreign banks atcompetitive rates. During the financial year loan assistance from oil industrydevelopment board at a concessional interest rate was also availed in respect of theenvironment improvement assets attributable to mumbai and visakh refinery expansionprojects.

During the financial year bharat bond etf the first ever corporate bond etf waslaunched by government of india with the objective of creating additional source offunding for cpses by deepening the bond market with retail participation. Your

Corporation is the only public sector oil marketing company that participated in both 3years and 10 years tenure issuances of bharat bond etf at one of the most competitiverates thereby benefitting from this government of india initiative to reduce its overallborrowing costs and expanding investor base.

Your corporation effectively used a variety of borrowing instruments to optimize itscost of working capital. The short-term borrowing requirements were met through tripartyrepo dealing system commercial papers mibor linked loans revolving line of credit inusd and cash credit facility from consortium banks.

As on march 2020 your corporation commanded international long term issuer rating of“baa2” with “negative outlook” from moody's investors services and“bbb-“ with “stable outlook” from fitch ratings both ratings being atpar with india's sovereign rating. In june 2020 moody's investors services revisedindia's sovereign rating from “baa2” to “baa3” (with “negativeoutlook”) and consequent to it your corporation's rating too was modified &aligned with india's sovereign rating to “baa3” with “negativeoutlook”. Further fitch ratings revised its outlook on india's sovereign rating(bbb-) from “stable” to “negative” and accordingly the outlook forthe corporation was also modified and aligned with india's sovereign rating to“bbb-” with “negative outlook”.

Your corporation continues to command highest domestic rating for long term(“aaa” with “stable” outlook) and short term (“a1+”)facilities from crisil india rating and research limited and icra.

Impact of covid-19 on business

The covid-19 pandemic is globally inflicting high economic and human costs. The thrustof the nations has been on protecting lives and allowing time for the health care systemsto cope up by resorting to lockdowns isolation restricting movements etc. To slowdownthe spread of the virus.

The whole of oil industry including your corporation witnessed general fall in demandfor petroleum products in the aftermath of covid-19 pandemic. Significant drop in crudeoil prices was witnessed in march/ april 2020 which recovered to some extent subsequently.During this period your corporation continued its operations without disruption toensure supply of essential petroleum products.

The impact of covid-19 pandemic on the physical and financial performance of thecorporation for the financial year 2019-20 was lesser as the lockdown was announced onlyin the last week of march 2020. However sharp fall in crude oil prices in march/ april2020 did have inventory loss impact.

There was a significant fall in demand of petroleum products in the month of april 2020due to lockdown in the country and sales was down by over 48.5% as compared to april 2019.However with the relaxations announced by the central government and some of the stategovernments related to movement of people goods and services the demand for petroleumproducts gradually improved subsequently. Sales of petroleum products in may 2020 wasabout 77% compared to may 2019 and sales in june 2020 was about 91% as compared to june2019. Ms and hsd sales were down by 62% and 55% respectively in april 2020 compared toapril 2019 which improved to reach to about 85% level in june 2020 compared to june 2019.Sharp increase in demand for lpg was witnessed during the lockdown period. The corporationincreased the production of lpg by optimizing its operations and supplied an average 12.5lakh cylinders per day to the customers during april-june 2020.

By optimizing the day to day crude run rate and regulating the product procurementsfrom other sources the corporation could achieve an overall capacity utilization ofalmost 100% both at mumbai and visakh refineries for the period april-june 2020. Thecorporation managed the crude oil inventory by optimizing the scheduling of crude cargosin line with refinery operations. Product inventories were managed by leveraging crosscountry product pipeline network and pan india marketing infrastructure of thecorporation.

All critical supply locations of your corporation continued operating during thelockdown period with all health hygiene and safety measures in place. All the supplydistribution locations including bulk storage terminals and depots lpg bottling plantsaviation fuel stations lube blending plants etc. functioned with optimized manpowerunder the advisories of the respective state governments and local administrations tomaintain supply of pol products.

The working at the non-critical locations was streamlined with work-from-home norms andminimal physical presence to ensure proper social distancing enabled through mobilecommunications digital connectivity and dedicated portals.

Project construction sites were required to be closed after announcement of nationwidelockdown under directives form concerned authorities. However after announcement ofrelaxations from central government and some of the state governments project sites havebeen restarted gradually from april 20 2020 but resumption to pre-covid level may takesome time. The exact impact on individual project schedules will largely depend on thegeographical location of the project covid severity at the location duration of impactlevel of restrictions prevailing in the area availability of the resources locally orotherwise stage and complexity of the project etc.

Your corporation has adequate fund based limits with consortium as well asnon-consortium banks for meeting its working capital requirements.

Your corporation has put in place a comprehensive strategy and developed standardoperating procedures to ensure health and safety of its stakeholders (employees serviceproviders contract work force petrol pump dealers & customer attendants lpgdistributors delivery boys etc.) While also ensuring business continuity. Digitaltechnology is extensively leveraged for information-sharing.

The impact assessment of covid-19 is a continuing process given the uncertaintiesassociated with its nature and duration. In the assessment of the management with thephased opening up of various sectors of economy and proactive policy initiatives from thegovernment the situation could gradually move back towards normalcy with some demandcontraction in the near term.

Internal financial controls

Your corporation has adequate internal financial controls for ensuring the orderly andefficient conduct of its business including adherence to the corporation's policies; thesafeguarding of its assets; the prevention and detection of frauds and errors; theaccuracy and completeness of the accounting records and the timely preparation of reliableinformation commensurate with the operation of your corporation.

As part of this exercise the design of internal controls and its operatingeffectiveness for the key business processes is tested by external consultant who observedthat there are no material weaknesses noted in internal controls over financial reporting.The entire activity of review and assessment of internal controls was carried out underthe guidance of a steering committee set-up for this purpose.

Risk management policy

As we enter the era of profound transformation in the energy sector the landscape ischanging rapidly. While organizations strive to mitigate the downside as well as theoutside risks your corporation understands the imperativeness to continuously identifyand embrace the upside risk opportunities and enable the business to achieve the shortterm and long-term strategies by leveraging these opportunities.

Your corporation has established an enterprise risk management (erm) framework underthe corporation's risk management charter and policy 2007 which is embedded at theforefront of business strategies and focuses on the stronger deeper and trust-basedrelationship with the stakeholders. It provides necessary support to the business to steerthrough the continuously evolving risk terrain through dynamic risk management approachthat embraces disruption and enhances resiliency and trust.

The risk management steering committee (rmsc) receives regular insights on riskexposures faced by the corporation along with the mitigation and treatment plans therebyenabling it to provide prompt interventions. The board is also updated regularly on therisk assessment and mitigation procedures.

Technology is enabled to support the enterprise risk management processes with a focuson optimizing risk exposures and automating risk reporting across the corporation. Reputedprofessional external consultants have also been engaged to establish a mechanism to bringthe outside view to effectively enhance the visibility of external business risks andsupport the change management in the transformation of existing erm processes.

Vigilance

Your corporation has a full-fledged vigilance department headed by chief vigilanceofficer. The department operates on the guidelines of central vigilance commission onvigilance management

In public sector enterprises and guided further by instructions issued by thedepartment of personnel and training; ministry of petroleum and natural gas from time totime. The complaints are handled as per the complaint handling policies stipulated invigilance manual 2017 of the central vigilance commission.

The prime focus of vigilance activities has been preventive and participative vigilanceby having regular interaction with employees and other stakeholders to spread awarenessamong the masses. The highlights of the year include review of various operating areas forsystemic improvements carrying out investigation of complaints handling of surpriseinspections of depots terminals lpg plants regional offices lpg distributors retailoutlets tank trucks tender review conducting various focused grouptraining programs foremployees coordinating with various agencies like cvc cbi mop&ng etc.

Vigilance awareness week was observed under the central theme for the year“integrity - a way of life”. Various outreach activities viz. Focused grouppresentations quizzes drawing/ painting competitions skits/ street plays workshopstechnical talks grievance redressal camps gram sabhas rallies/ walkathons school/college programs etc. Were undertaken during this week.

Industrial relations

Your corporation with its proactive approach maintained very cordial and harmoniousindustrial relations (ir) all through the financial year 2019-20. Not only there was noloss of productivity due to ir issues the year witnessed productivity increase across locati on s demonstratin g the maturi ty of our unions and commitment of employees.Various settlements were signed with unions in the areas of productivity enhancementredeployment etc. In an atmosphere of trust and healthy ir climate.

Your corporation also took proactive steps regarding wellbeing of contract workmen andensured their coverage under pradhan mantri jan dhan yojana and prime minister surakshabeema yojana. To promote digital india and cashless economy all contract labourersdeployed across the corporation are paid their wages through neft. Further variousprograms across the corporation were organized for contract workmen / stakeholders so thatthey use various modes of cashless payments. The safety and wellbeing of contract workmenbeing paramount under 'prerna rs program a unique initiative to imbibe safe work cultureand improve well-being of contract workmen 83 programs covering 5451 contract workerswere conducted during this financial year.

Official language implementation

Your corporation promotes the usage of hindi by motivating the employees throughsensitization persuasion and incentives. Recognition of linguistic and cultural talent ofthe employees and creating awareness about hindi at workplaces is facilitated byencouraging participation in all india hindi mahotsav hindi fortnight official languageconferences hindi competitions and hindi workshops.

Your corporation has been coordinating town official language implementation committee(tolic) of mumbai based psus since 1983 and guiding 65 mumbai based psus in the field ofofficial language implementation. Other than the tolic meetings the officials ofdifferent psus are trained through conducting various programs such as hindi translationlinguistic harmony hindi and employment role of hindi in insurance business etc. Thecorporation has taken a new initiative and published multilingual petroleum glossaryconsisting of 12 regional languages including hindi and english.

Your corporation has continuously been awarded with the official language shield thebest amongst oil psus by ministry of petroleum and natural gas government of india. Thecorporation has made a record in entire oil industry by receiving 55 rajbhasha awards fromgovernment of india and other agencies. The corporation has been awarded for 3rdconsecutive year with rajbhasha keerti pratham puraskar the highest award in officiallanguage implementation.

Corporate social responsibility

Your corporation's commitment towards 'delivering happiness rs is reflected in csrphilosophy of working cohesively with local communities at business locations to enhancetheir quality of life. The csr interventions are undertaken in the focus areas ofchildcare education health care skill development sports and environment and communitydevelopment. The corporation constantly strives to align its csr initiatives with variousgovernment driven initiatives viz. Swachh bharat abhiyan and skill india mission. The yearalso witnessed significant contribution of your corporation to 'transformation ofaspirational districts rs program of niti aayog government of india during the financialyear 2019-20 your corporation undertook the following major csr initiatives:

• swachh bharat abhiyan

Your corporation has contributed towards the national cause of swachh bharat abhiyan bydeveloping sanitation infrastructure and sensitizing communities. The employees andvarious stakeholders have participated in the mass-movement on cleanliness and hygiene andhave undertaken more than 100000 activities with direct and indirect participation.During observance of swachhta pakhwada and swachhta hi sewa campaigns more than 500000people from various parts of the country were sensitized about importance of maintainingpersonal hygiene and cleanliness.

Plastic free city/ village campaigns were conducted in various parts of the country forreducing single use plastic. A special drive for 'plastic-free ranchi rs was carried outwith participation of more than 300000 school students in jharkhand. More than 1000toilets were constructed / upgraded in schools hospitals and communities across india forefficient usage.

• skill development institutes

Your corporation supported skill india mission by establishing skill developmentinstitutes at visakhapatnam rae bareli ahmedabad kochi bhubaneswar and guwahati forimparting skills to youth in various sectors. The skill development institute has beenconceptualized by government of india and operationalized by oil and gas cpses with aspecial focus on imparting skills in industry-oriented trades for enhancing employabilityand bridging the skill gaps of the nation. Your corporation has also given its share ofcontribution towards construction of skill development institute at bhubaneswar (maincampus project) during the financial year.

• ‘transformation of aspirational districts rs program

Your corporation has taken several initiatives in aspirational districts aimed atsupporting the vision and action plan developed by district administration fortransformation of these districts. The focused interventions in seven allocated districtsnamely baran siddharth nagar nandurbar goalpara fatehpur jaisalmer and begusaraiwould lead to improved education

And health care facilities leading to better quality of life among people residing inthese districts.

• major initiatives:

• adapt: project adapt aimed at enhancing the quality of lives of 300 childrenwith special needs and young adults through providing education training and therapeutictreatment.

• akshaya patra: project akshaya patra

Provided nutritious mid-day meal to 20000 students studying in government schools withan endeavor that no child gets deprived of education because of hunger. The initiative hasresulted in not only the greater enrolment and attendance but also improved health andwell-being.

• agastya: project agastya provided hands- on science learning to around28000 school students through 10 mobile science labs and 1 science center covering 120schools. Various scientific concepts are imparted through usage of science models atgovernment schools to develop a scientific temperament amongst students.

• nanhi kali: project nanhi kali supported holistic development of girl childfrom tribal and urban slum locations. The project addressed challenges and constraintsfaced due to gender gap in communities and aimed to develop gender equality. During thefinancial year 13000 'nanhi kali rs girls were provided with remedial classes uniformsstationery items guidance and counselling on personal hygiene and career development.

• unnati: project unnati a digital initiative aimed at empowering schoolstudents first generation computer learners in remote locations through enhancement oflearning opportunities. The project provided basic computer education and equipped schoolswith computer labs to keep pace with developments in modern digital world. Through thiscomputer-training program 12000 students across the country could get benefitted.

• kashmir super-30 (medical): project kashmir super-30 (medical) providedmentoring and coaching to talented students from jammu & kashmir and ladakh regions.This residential training program gave wings to aspirations of marginalized youth forcompeting in medical entrance exams.

• dhanwantari: project dhanwantari focused on providing basic healthcarefacilities and services in remote rural areas and urban communities through 25 mobilemedical vans. The mobile medical van facility reached at the doorsteps of people in theremote rural and urban locations. The majority of beneficiaries were women children andelderly whose general health is neglected due to poverty and lack of resources andawareness.

• dil without bill: project dil without bill supported heart surgeries freeof cost for people with heart ailments from low-income group particularly children.Health camps were organized to raise awareness and identify patients with heart ailments.This project has given life and hope to thousands of families over the years. Through thisproject 600 successful heart surgeries were carried out in this financial year bringingsmiles to families of beneficiaries.

• suraksha: project suraksha focused on prevention of hiv/aids among truckersand surrounding communities by educating them about safe-sexual behaviour practices andproviding diagnosis and treatment of stis through seven 'khushi rs clinics on highways.

• swavalamban: project swavalamban is a dynamic industry-oriented skilldevelopment initiative aimed at training the less- privileged youth for livelihoodgeneration. In the financial year 2019-20 2000 students benefited through training invarious trades like assistant electrician sewing machine operator solar paneltechnician data entry operators. The project aimed to equip marginalized youth with skillset to enable them in earning livelihood for themselves and their families.

• other csr activities

Your corporation's csr endeavors in the thematic areas of school education nutritionand healthcare have contributed to availability/ upgradation of basic school and collegeinfrastructure and medical care amenities at government facilities in remote locationsspread across the country.

Various other sustainable and green initiatives like development of rainwaterharvesting techniques in arid zones water body augmentation/ rejuvenation projectsinstallation of sustainable energy facilities in communities sapling plantation indifferent geographies have led to empowerment of the underprivileged communities.

The academic efforts of more than 16900 meritorious students fromsocially-economically weaker communities were supplemented by providing scholarships. Withan aim to promote sports in the country scholarships were granted to talentedsportspersons. Contribution was made towards armed forces flag day fund for the caresupport welfare and rehabilitation schemes for ex-servicemen (esm) and their dependents.

• awards & accolades

In recognition of its csr initiatives there were several awards and accolades receivedduring the financial year prominent among them were 'national csr awards 2019 rsinstituted by ministry of corporate affairs government of india; 'swachh iconic placeproject site golden temple amritsar rs by ministry of drinking water and sanitation; 'pseexcellence awards 2018 as runner up in the navratna and maharatna category for csr andsustainability rs by indian chamber of commerce; zee business world csr congress award;'best csr project for childcare rs at public relations society of india (prsi) nationalawards 2019.

The details of csr activities of the corporation containing details of csr committeemembers brief outline of the csr policy overview of the csr initiatives prescribedexpenditure amount spent etc. That form part of directors rs report are furnished in annexureIII.

Corporate governance

Your corporation continues to adopt the best practices of corporate governance toensure transparency integrity and accountability in its functioning. The

Corporate governance report highlighting these endeavours has been incorporated as aseparate section that form part of the annual report for the financial year 2019-20.

Procurement of goods & services from mses

The government of india has notified a public procurement policy for micro and smallenterprises (mses) order 2012 and its amendments thereof. In line with said policy yourcorporation had set an annual goal of sourcing a minimum procurement of 25% of its totalrequirements from mses and within it 4% of total requirement has been earmarked forprocurement from mses owned by sc/st entrepreneurs and another 3% from womenentrepreneurs. For the benefit of mses the mse procurement details are regularly uploadedon sambandh portal of ministry of msme besides displaying the annual procurement plan onthe corporation's website.

Against the above set target for financial year 201920 your corporation has achieved30.47% ( rs 3753.35 crore). To promote the objectives of procurement from mses as laiddown in public procurement policy 32 vendor development programs/ buyer-supplier meet formses were conducted during financial year. Further in various buyer seller meetsorganized by micro small and medium enterprises - development institute (msme-di)confederation of indian industry (cii) and federation of indian chambers of commerce andindustry (ficci) the corporation's procurement processes were articulated throughdetailed presentation to mse vendors with an intent to increase awareness of vendorregistration process tendering process availability of treds platform etc.

Your corporation is registered with treds digital platform an institutional mechanismset up by reserve bank of india to facilitate the trade receivable financing of msmes fromcorporate buyers through multiple financiers. Integrating its erp system with that of 3 ofthe service providers namely; treds limited mynd solutions private limited andreceivables exchange of india limited the corporation has enabled the msmes to auctiontheir trade receivables at competitive rates through online bidding by financiers.Numerous msme vendors have on-boarded this platform and benefitted with the billdiscounting facility that provides liquidity.

Prevention of sexual harassment at workplace

Your corporation has complied with Provisions relating to the constitution of internalcomplaints committee (icc) under the sexual harassment of women at workplace (preventionprohibition and redressal) act 2013. 23 workshops were organized across the corporationduring the financial year 2019-20 to educate employees on the subject.

Management discussion & analysis report

Management discussion & analysis report forms part of the annual report for thefinancial year 2019-20.

Financial statements of subsidiaries

In terms of proviso to section 136(1) of the companies act 2013 your corporation willplace separate audited financial statements in respect of each of its subsidiary companyon its website and also provide a copy of separate audited financial statements in respectof each of its subsidiary companies to any shareholder of the corporation who seeks thesame. The financial statements of the subsidiary companies will also be kept open forinspection at the registered offices of the corporation/ the respective subsidiarycompanies.

Pursuant to Provisions of section 129(3) of the companies act 2013 a separatestatement containing salient features of the financial statements of subsidiary/associate/ joint venture companies in form aoc-1 is attached along with financialstatements.

Cost audit

The maintenance of cost records as specified under section 148(1) of the companiesact 2013 is mandated and accordingly such accounts and records are made and maintained.The cost audit for the financial year 2018-19 was carried out and the cost audit reportswere filed with the ministry of corporate affairs within the stipulated date of filing.

Directors

Your corporation's board presently comprises of 10 directors. The whole time directorsare shri mukesh kumar surana (chairman & managing director) shri pushp kumar joshi(director - human resources) shri vinod s. Shenoy (director - refineries) shri r.Kesavan (director - finance) and shri rakesh misri (director - marketing).

The government nominee directors are shri sunil kumar ex-officio joint secretary(refineries) ministry of petroleum and natural gas and shri subhash kumar director -finance (ongc) part-time director representative of oil and natural gas corporationlimited (ongc).

The independent directors are shri amar sinha shri siraj hussain and shri g. Rajendranpillai.

As per the Provisions of section 152 of the companies act 2013 shri pushp kumar joshiand shri subhash kumar are the directors who are liable to retire by rotation at the nextannual general meeting and being eligible offer themselves for re-appointment.

Details of directors or key managerial personnel who were appointed or have resignedduring the financial year appointment:

• shri sunil kumar was appointed as government nominee director on the board ofyour corporation effective may 30 2019.

• shri g. Rajendran pillai was appointed as an independent director on the boardof your corporation effective july 15 2019.

• shri r. Kesavan was appointed as director - finance (whole time director) on theboard of your corporation effective september 05 2019.

• shri rakesh misri was appointed as director - marketing (whole time director) onthe board of your corporation effective october 17 2019.

Cessation:

• shri sandeep poundrik has ceased to be government nominee director of yourcorporation effective may 01 2019 on ceasing to be an official of administrative ministryi.e. Ministry of petroleum and natural gas.

• shri s. Jeyakrishnan has ceased to be director - marketing (whole time director)of your corporation effective july 01 2019 on attaining superannuation.

• shri ram niwas jain has ceased to be independent director of your corporationeffective november 20 2019 on completion of his tenure of re-appointment for 1 year.

• smt. Asifa khan and shri g. V. Krishna have ceased to be independent directorsof your corporation effective february 13 2020 on completion of their tenure in officefor 3 years.

• dr. T. N. Singh has ceased to be independent director of your corporationeffective march 20 2020 on completion of his tenure in office for 3 years.

The board places on record its sincere appreciation for the valuable services renderedby shri sandeep poundrik shri s. Jeyakrishnan late shri ram niwas jain smt. Asifa khanshri g.v. Krishna and dr. T. N. Singh during their tenure as directors of the corporation.

Number of meetings of the board

During the financial year 2019-20 10 board meetings were convened and held. Thedetails of these meetings are given in corporate governance report for the financial year.

Managerial remuneration &

Particulars of employees

Your corporation being a government company is exempted to furnish information undersection 197 of companies act 2013 vide ministry of corporate affairs (mca) notificationdated june 05 2015.

In one of the earlier years on a reference by c&ag during supplementary audit ofannual accounts with regard to payment of shift allowance your corporation hasrepresented to ministry of petroleum and natural gas. Pending clarification payment ofshift allowance has been kept in abeyance.

The details regarding the number of women employees vis-a-vis the total number ofemployees in each group is given herein under:

Group Total no. Of employees No. Of women employees % of women employees
Management 5898 693 11.75
Non management 3798 226 5.95
Total 9696 919 9.48

Performance evaluation of board its committees and individual directors

Your corporation being a government company the performance evaluation of theperformance of the corporation its board and indirectly its committees are carried out bythe administrative ministry i.e. Ministry of petroleum and natural gas (mop&ng)through the process of memorandum of understanding entered into for each financial year.Further there is also performance evaluation of functional directors by mop&ng.

The compliance to section 134(3)(p) is exempted by virtue of mca notification datedjune 05 2015 for government companies as performance evaluation of directors is carriedout by mop&ng as per its own evaluation methodology.

Declaration by independent directors

All independent directors have given a declaration that they meet the criteria ofindependence as laid down under section 149(6) of companies act 2013 and sebi (listingobligations and disclosure requirements) regulations 2015. A statement of declarationrequired under section 149(7) has been obtained from all the independent directors.

Policy for selection and appointment of directors and their remuneration

Your corporation being a government company is exempted to furnish information undersection 134(3) (e) of the companies act 2013 vide mca notification dated june 05 2015.

Opinion of board regarding integrity expertise and experience (including theproficiency) of the independent director appointed during the year

Your corporation being a government company under the administrative control ofministry of petroleum and natural gas (mop&ng) the power to appoint directors(including independent directors) vests with government of india. The selection ofindependent directors is done by search committee (constituted by government of india)from a mix of eminent personalities having requisite expertise and experience in diversefields. Shri g. Rajendran pillai m.a. llb practicing in the district court kollam hasbeen appointed by mop&ng as an independent director on the board during the financialyear 2019-20. Necessary declaration has been received from him about his enrolment in theindependent directors rs data bank of indian institute of corporate affairs (iica) infebruary 2020. In line with rule 6(4) of the companies (appointment and qualification ofdirectors) rules 2014 shri pillai has successfully qualified the online proficiency selfassessment test for independent director's databank on july 19 2020.

Policy for remuneration of key managerial personnel and other employees

Your corporation being a government company the remuneration payable to its keymanagerial personnel and other employees are fixed by the government of india. Howeverpayment like performance related pay is placed for the approval of nomination andremuneration committee.

Audit committee

The present composition of audit committee that requires reporting under section177(8) of the companies act 2013 is given as under:

Name Category
1. Shri amar sinha Independent director - chairman
2. Shri siraj hussain Independent director - member
3. Shri r kesavan Whole time director - member

The changes in the composition of audit committee

During the financial year 2019-20 and till date are:

1. Shri ram niwas jain independent director on the board of the corporation had beenthe chairman of the audit committee till he ceased to be director effective november 202019.

2. Shri g. V. Krishna independent director on the board of the corporation and memberof the audit committee during the financial year 201920 was appointed as chairman of theaudit committee effective january 08 2020 and had held this post till he ceased to bedirector effective february 13 2020.

2. Dr. T. N. Singh independent director on the board of the corporation had been themember of the audit committee during the financial year 2019-20 till he ceased to bedirector effective march 20 2020.

3. Shri amar sinha independent director on the board of the corporation had been themember of the audit committee during the financial year 2019-20. He is appointed aschairman of the audit committee effective may 19 2020.

4. Shri siraj hussain independent director on the board of the corporation isappointed as the member of the audit committee effective january 08 2020.

5. Shri mukesh kumar surana chairman and managi ng di rector of the corporati on whohad held additional charge of director - finance during the financial year 2019-20 tillseptember 05 2019; had been a member of the audit committee till september 22 2019.

6. Shri r. Kesavan whole time director on the board of the corporation is appointed asmember of the audit committee effective september 23 2019.

During the year there were no cases observed where the board had not accepted anyrecommendation of the audit committee.

Secretarial audit

Pursuant to the Provisions of section 204 of the companies act 2013 and regulation 24aof the sebi (lodr) regulations 2015 your corporation has appointed m/s. Dholakia andassociates llp practicing company secretary to undertake the secretarial audit of thecorporation for the financial year 2019-20. The report of secretarial audit in form no.Mr-3 is annexed herewith and marked as annexure IV. The report does not containqualification reservation or adverse remark except that the corporation did not haveminimum number of independent directors on the board for the period from november 20 2019to march 31 2020 and did not have independent woman director on the board of the companyfor the period from february 13 2020 to march 31 2020 as stipulated under regulation17(1) of sebi (lodr) regulations 2015.

In this regard your corporation confirms that being a government company which isunder the administrative control of ministry of petroleum and natural gas (mop&ng)the power to appoint the directors (including independent directors) and finalizing theterms and conditions of appointment vest with government of india. The matter regarding

Appointment of required number of independent directors/ independent woman directorhave been taken up with mop&ng from time to time and the government is seized of thematter.

Compliance with applicable secretarial standards

Your corporation has complied with applicable secretarial standards in respect ofmeetings of board of directors (ss-1) and general meetings (ss-2) issued by the instituteof company secretaries of india.

Related party transactions

The details of transactions entered into with the related parties during the financialyear 2019-20 in form no. Aoc-2 is annexed herewith and marked as annexure v.

Extract of annual return

Pursuant to section 92(3) of the companies act 2013 read with rule 12(1) of thecompanies (management and administration) rules 2014 an extract of the annual return in formno. Mgt-9 is annexed herewith and marked as annexure VI. The same is alsohosted on the website of the corporation www.hindustanpetroleum.com

Performance and financial position of subsidiaries joint ventures and associates

The details on the performance and financial position of subsidiary associate andjoint venture companies are given in management discussion & analysis report. Furtherpursuant to section 129(3) of the companies act 2013 read with rule 5 of the companies(accounts) rules 2014 the salient features of financial statements of subsidiaryassociate and joint venture companies in form no. Aoc-1 form part of the annualreport for the financial year 2019-20 separately.

Companies which have become or ceased to be its subsidiaries joint ventures orassociates

A joint venture company ihb private limited is incorporated on july 09 2019 havingshareholding in the ratio 50:25:25 among indian oil corporation limited hindustanpetroleum corporation limited and bharat petroleum corporation limited respectively.Further no company has ceased to be subsidiary joint venture or associate of yourcorporation during the financial year 2019-20.

Significant and material orders passed by the regulators or courts

During the financial year 2019-20 there is no order or direction of any court ortribunal or regulator which either affects your corporation's status as a going concernor which substantially or significantly affects your corporation's business operations.

Vigil mechanism/whistle blower policy

Your corporation being a government company is subjected to the cvc guidelines and thecorporation has a separate vigilance department administering the vigilance matters. Yourcorporation has a whistle blower policy approved by the board and the same is placed onthe website of the corporation. The web link of whistle blower policy is stated hereinbelow:

Web link: https://www.hindustanpetroleum.com/ documents/pdf/whistle blowerpolicy.pdf

Details of deposits

Your corporation has not been accepting any deposits for the last several years asspecified in section 73 to section 76 of the companies act 2013 and therefore there donot call for any disclosure of deposits as required under rule 8(5)(v) of companies(accounts) rules 2014.

Directors responsibility statement

Pursuant to the requirement of section 134(3)(c) of the companies act 2013 it ishereby confirmed that:

I. In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures.

II. 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 theprofit and loss of the company for that period.

III. The directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the Provisions of the companies act 2013for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities.

IV. The directors have prepared the annual accounts on a going concern basis.

V. The directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and are operatingeffectively.

VI. The directors have devised proper systems to ensure compliance with the Provisionsof all applicable laws and that such systems were adequate and operating effectively.

Acknowledgements

The board of directors gratefully acknowledge the valuable guidance and supportextended by the government of india ministry of petroleum and natural gas otherministries state governments and various statutory and local authorities.

The board of directors profoundly thank government of india in honoring yourcorporation by conferring with the 'maharatna rs status.

The directors also acknowledge the contribution made by the large number of dealers anddistributors spread all over the country towards improving the service to thecorporation's valued customers as well as for the overall performance of the corporation.

The employees of the corporation have continued to display their total commitmenttowards the pursuit of excellence. Your directors take this opportunity to place on recordtheir appreciation for the valuable contribution made by the employees and look forward totheir services with zeal and dedication in the years ahead to enable the corporation toscale even greater heights.

Your directors are thankful to the shareholders for their faith and continued supportin the endeavors of the corporation.

For and on behalf of the board of directors

Sd/-

Mukesh kumar surana

Chairman & managing director

Date : august 20 2020

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