On behalf of the Board of Directors it gives me immense pleasure in presenting to youthe sixty-sixth Annual Report on the Performance of the Corporation together with theAudited Financial Statements for the financial year ended March 31 2018.
| || ||(Rs. / Crores) |
| || |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|FINANCIAL PERFORMANCE || || || || |
|Sales/Income from Operation ||243399.40 ||213904.15 ||243226.66 ||213488.95 |
|Profit before Depreciation Interest and Tax (PBDIT) ||13562.42 ||14583.03 ||12521.39 ||12091.77 |
|Depreciation & Amortization Expenses ||(2834.40) ||(2776.37) ||(2752.75) ||(2535.28) |
|Finance Cost ||(617.88) ||(609.24) ||(566.71) ||(535.65) |
|Profit before Tax (PBT) ||10110.14 ||11197.42 ||9201.93 ||9020.84 |
|Tax Expenses ||(2891.86) ||(2961.60) ||(2844.86) ||(2812.04) |
|Profit after Tax (PAT) ||7218.28 ||8235.82 ||6357.07 ||6208.80 |
|Balance brought forward from previous year ||17415.73 ||13382.37 ||16747.75 ||14740.12 |
|Amount available for Appropriation || || || || |
|Appropriations\ Others: || || || || |
|Debenture Redemption Reserve (net) ||75.78 ||- ||265.13 ||- |
|Dividend ||2321.29 ||(3477.70) ||2321.29 ||(3477.70) |
|Tax on distributed profits ||472.56 ||(707.98) ||472.56 ||(707.98) |
|Other Comprehensive Income that will not be reclassified ||57.06 ||(16.78) ||(56.67) ||(15.49) |
|to profit or loss(Net of tax) || || || || |
|Other Appropriations ||- ||- ||- ||- |
|Balance carried forward ||21973.01 ||17415.73 ||20632.77 ||16747.75 |
|SHAREHOLDERS' VALUE (`) || || || || |
|Earnings per Share ||47.37 ||54.05 ||41.72 ||40.74 |
|Cash Earnings per Share ||69.03 ||77.37 ||62.54 ||61.51 |
|Book Value per Share ||167.56 ||138.28 ||157.16 ||133.53 |
PHYSICAL PERFORMANCE (MMT)
| ||2017-18 ||2016-17 |
|Market Sales (Including Exports)# ||36.89 ||35.22 |
|Crude Thruput: || || |
|Mumbai Refinery ||8.64 ||8.51 |
|Visakh Refinery ||9.68 ||9.30 |
|Total Crude Thruput ||18.28 ||17.81 |
#Market Sales (including exports) as per Ind AS is 36.87 MMT for FY 2017-18 and 35.23MMT for FY 2016-17.
SALES/INCOME FROM OPERATIONS
Your Corporation has achieved Sales/Income from operations of ` 243226.66 crores in2017-18 as compared to ` 213488.95 crores in 2016-17 on standalone basis.
Your Corporation has earned Earnings before Interest Tax Depreciation &Amortisation (EBITDA) of ` 12521.39 crores in 2017-18 as against ` 12091.77 crores in2016-17 and profit after tax of ` 6357.07 crores in 2017-18 as compared to ` 6208.80crores in 2016-17 on standalone basis.
The Board in its meeting held on February 09 2018 declared an interim dividend of `14.50 per share.
The Board of Directors after taking into account the Financial Results of theCorporation during the year have recommended dividend of ` 2.50 per share (2016-17 : `1.10 per share). The total dividend for the year 2017-18 works out to ` 17.00 per share asagainst ` 30.00 per share for the year 2016-17.
The amount of proposed dividend totaling to ` 459.26 Crores inclusive of ` 78.31Crores for Corporate Dividend Tax on distributed profits shall be dispensed from theprofit after tax for the year.
The Board of Directors in their meeting dated 26th May 2017 and pursuant to theapproval of Shareholders through Postal Ballot have issued Bonus shares in the ratio ofone equity share of ` 10 each for two existing equity shares of ` 10 each in the month ofJuly 2017.
INTERNAL RESOURCES GENERATION
The Internal Resources generated during the year were ` 6735.53 Crores as compared to` 5534.65 Crores in 2016-17 on standalone basis.
CONTRIBUTION TO EXCHEQUER
Your Corporation has contributed a sum of ` 69751.51 Crores to the exchequer duringthe year by way of duties and taxes as compared to ` 67451.87 Crores in 2016-17 onstandalone basis.
MEMORANDUM OF UNDERSTANDING (MOU) WITH GOVERNMENT OF INDIA
Your Corporation has been signing a Memorandum of Understanding (MOU) with the Ministryof Petroleum & Natural Gas. The performance of the Corporation for the year 2017-18qualifies for "Excellent" rating basis self-evaluation.
FY 2017-18 has carried forward the growth profile for your refineries and shown aremarkable performance for the third consecutive year. This sterling performance hasrecorded the best ever crude processing with a combined refining throughput of 18.3 MMTsurpassing previous year's thruput of 17.8 MMT with a capacity utilization of 115%.
Higher crude processing translated into enhanced production of Petroleum Products withyour refineries recording best ever MS HSD and LOBS production levels. Towardsdiversification of products Mumbai refinery has also added new grades of Lube productElasto 710 R and Elasto Supreme H (RAE).
For the first time USA crude "Mars Blend" was purchased by your Corporationand processed at Visakh refinery. Extending the pioneering effort towards usage of Gridpower Mumbai Refinery becomes first amongst PSUs to enter into power purchase agreementfor 10 MW Green power from NTPC Vidyut Vyapar Nigam Ltd.
Continuing its focus towards a safe and secure work environment both refineries haveput in place a robust system to bring in safety awareness amongst personnel in theirrespective assignments on a regular basis. Both refineries have undertaken safetymanagement evaluation by external agencies. In this year Mumbai refinery has achievedbest ever safety record since its inception with 21.54 Million Safe Man Hours.
Refineries have planned capacity enhancement under Mumbai Refinery Expansion Plan(MREP) to 9.5 MMTPA and Visakh Refinery Modernization Plan (VRMP) to 15 MMTPA. Back-endactivities like technology and licensor selection BDEP are completed and orders finalizedfor Major Process units utilities and long lead items for both these projects. Theproject includes Bottoms Upgradation and BS VI fuel production in compliance to GOIguidelines for implementation by 1st April 2020.
The green field refinery cum petrochemical project at Rajasthan has picked stride and"Commencement of work" for Rajasthan Refinery Project was inaugurated by Hon'blePrime Minister on 16.01.2018. For petrochemical complex PCPIR at Kakinada pursuant to aMoU between GoAP GAIL & HPCL detailed feasibility and financial appraisal study forpetrochemical complex at Kakinada was completed.
Your Corporation's R&D Centre (HPGRDC) was conferred as R&D Company ofthe Year' from The Energy & Climate Initiatives Society' at GlobalRefining & Petrochemicals Congress'. HPGRDC has worked on number of technologies/products viz. H2 PSA Technology SprayMax FCC Feed Nozzle HP-CORMIT HP DLA HP DWAHP-TRAE HPFurnOKare HP-ENOCT HP-DAK and HP2FCC Catalyst. During 2017-18 14 Indian and4 International Patents have been filed by HPGRDC
The particulars with respect to conservation of Energy Technology Absorption ForeignExchange Earnings & Outgo are detailed in Annexure I.
The particulars relating to control of Pollution and other initiatives by Refineriesare listed in Annexure II.
Operating Performance of Refineries (Refinery-wise):
|Parameter ||Unit ||Mumbai ||Visakh |
| || ||Refinery ||Refinery |
|Crude Thruput ||TMT ||8641 ||9635 |
|Capacity utilization ||% ||115.2 ||115.7 |
|Distillate yield ||% ||77.4 ||74.5 |
|Fuel & Loss ||% ||7.2 ||7.14 |
|Specific Energy ||MBTU/BBL/ ||84.38 ||77.33 |
|Consumption ||NRGF || || |
|Gross Refinery Margin ||$/Bbl ||7.40 ||6.20 |
The year 2017-18 saw your Corporation doing exceedingly well across all businessverticals -Retail LPG Direct Sales Aviation Lubes Gas and Renewables marketingstreams. Your Corporation has reinforced its winning streak by recording the best everphysical performance during 2017-18 by achieving a sales volume of 36.9 Million Tonnes(including exports) compared to sales of 35.2 Million Tonnes during the previous year2016-17. In the Domestic sales segment your Corporation recorded a growth of 4.4% overprevious year volume with market share of 23.66% (excluding Petcoke/ LNG) amongst PSUcompanies as on 31st March 2018.
In the Motor-Fuel segment your Corporation has achieved a sales volume of 23.76Million Tonnes as against 22.78 Million Tonnes during 2016-17. Your Corporationcommissioned 669 new retail outlets out of which 256 outlets cater to customers in ruralarea crossing the magic mark of 15000 retail outlets and the network totalling to 15062outlets. Under Digital India initiative impressive 96.4% retail outlets were providedwith availability of three digital payment modes. Further your Corporation completedautomation at 3558 retail outlets which is the highest amongst OMCs.
Domestic LPG marketing continued to be a thrust area for your Corporation. An enrolmentof 77.20 Lakhs new LPG Gas (Domestic) customers has been completed during the year whichincludes 41.25 Lakhs customers enrolled under Pradhan Mantri Ujjwala Yojana during2017-18. Your Corporation's domestic LPG customer base now stands at a robust 692.8 Lakhswherein the domestic fuel quantity supplied during the financial year 2017-18 stands at5.28 Million Tonnes. The other government initiative "Give It Up" campaign wasalso a thrust area for your Corporation which has helped in a significant way to promotethe PMUY programme. Your Corporation was the first Oil Marketing Company to roll out ownedLPG rakes under Liberalised Wagon Investment Scheme (LWIS) of the Ministry of Railways.Your Corporation commissioned Panagarh LPG plant with a bottling capacity of 250 TMTPAwhich is the biggest LPG plant in Asia.
In the Aviation business line your Corporation achieved a sales volume of 729 TMT withgrowth of 5.4%. During 2017-18 three new ASFs at Srinagar Tirupati and Patna werecommissioned. Under Regional Connectivity Scheme 3 new locations were comissioned atVidyanagar Jalgaon and Mundra.
Your Corporation continues to cross new milestones in the significantly profitableLubricants business segment in the Indian market in which players from the MNC segmentprivate sector and public sector are very active. Your Corporation achieved a landmarktotal Lubricants sales of 603 TMT and has retained its No. 1 position for the fifthconsecutive year and crossed 600
TMT for the second year in succession. Your Corporation has commenced lube marketing inMyanmar.
In the emerging Natural Gas Business a consortium of HPCL & OIL has beenauthorized by PNGRB for setting up of CGD network in Kolhapur and Ambala-Kurukshetra. Inthe renewable energy front your Corporation commissioned 750 kW Capacity Solar CaptivePlant at Bahadurgarh POL terminal.
Your Corporation continued to focus on enhancing the efficiency and reliability inoperations of the Operations Distribution and Engineering locations which has helped toregister the highest ever throughput of 50 MMT through its POL installations. New depot atNalagarh was commissioned during the year taking the total of the operating POLinstallations to 82. Various new initiatives were launched during this year includingSMART Terminal concept which would increase efficiency transparency and safetyleveraging technology to maximize accuracy at supply points by minimizing human error.
Simultaneously your Corporation has also achieved an all-time high pipeline thruput of20.4 MMT during the year which commensurately aided in minimizing the product placementcosts. Commissioning of Ramanmandi Bhatinda Pipeline capacity augmentation and directpumping facility at Bahadurgarh-Trikrikalan pipeline commenced.
In support of Swachh Bharat Abhiyan (SBA) during the year your Corporation constructed1956 number of clean Toilets in Retail Outlets on SH/NH with separate facilities formen/women. A detailed discussion of the performance of the Marketing function is given inthe Management Discussion & Analysis. Goods and Service Tax (GST) has beensuccessfully rolled out in your Corporation w.e.f. 01st July 2017. This touched a largenumber of IT systems including ERP. It involved design and development of a number of newprocesses and applications enhancement of existing processes to ensure compliance datamigration and generation of output as required by GSTN. All this was implemented withminimum change for end User.
During the year your Corporation has successfully issued a maiden foreign currencybond of USD 500 Million at semi-annual coupon rate of 4.00 percent p.a. for a period of 10years. The issue was oversubscribed more than 6 times with a final order book size overUSD 3 billion from close to 225 investors accounts. Issue also has achieved a pricetightening of 32.5 bps over an initial price guidance which is one of largest tighteningseen for any Investment Grade issuer out of India in recent years. The issue eventuallypriced on the tighter end at UST10 + 167.50 bps. Leveraging your Corporation's reputationand image in the international market your Corporation was able to re-finance high costECB loans to the tune of US$ 500 million at a significantly lower cost besides extendingtheir maturity.
Your Corporation effectively used a variety of borrowing instruments to optimize itscost of borrowings. The short term borrowing requirements was met through CollateralizedBorrowing and Lending Obligations (CBLO) Commercial Papers (CP) MIBOR Linked Loan andCash Credit facility from consortium banks. Revolving line of credit in USD was alsoeffectively utilized to manage changes in fund requirement.
Temporary surplus of funds was invested at best rates deriving substantial income onsuch investment. These funds were invested in term deposit with approved public sector andother scheduled banks (other than Cooperative Banks) debt schemes of public sector mutualfunds and Treasury Bills.
Your Corporation has commanded best possible international long term issuer rating of"Baa2" with "Stable" outlook from M/s. Moody's Investors Services and"BBB- "rating from Fitch Ratings with "stable" outlook. Both ratingsare at par with sovereign rating. In addition to maintaining highest domestic rating forlong term and short term facilities from CRISIL and India Rating and Research Limitedduring the year your Corporation has obtained from ICRA a long-term rating of"AAA" with "stable" outlook and a short-term rating of "A1+"to the bank facilities Non-Convertible Debentures and Commercial Papers programme ofHPCL.
INTERNAL FINANCIAL CONTROLS
Your Corporation has adequate Internal Financial Controls for ensuring the orderly andefficientconduct 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 ofreliable information which is commensurate with the operation of your Corporation. Aspart of this exercise the design of internal controls and its operating effectivenessfor the key business processes is tested by independent experts. Based on the reviewcarried out independent experts have confirmed that they are satisfied with theeffectiveness and adequacy of Internal Controls over Financial Reporting. The entireactivity of review and assessment of Internal Controls was carried out under the guidanceof a Steering Committee set-up for this purpose.
RISK MANAGEMENT POLICY
Risk is inherent to all businesses and the key to success is to anticipate take andmanage the right risks. In today's VUCA (Volatile Uncertain Complex and Ambiguous)world the external and internal environment is changing at an ever increasing pace andwhich in turn requires businesses to not only manage the existing risks but anticipateemerging risks and deploy mitigating strategies on a continuous basis. It is imperativefor businesses to design a robust enterprise risk management framework to identify allexisting and emerging risks minimize the impact and seize the opportunities created bythese continuously evolving changes.
Your Corporation has adopted a well-defined process for managing its risks on anongoing basis and for conducting the business in a risk conscious manner. There aredefined processes for identification assessment and mitigation of risks on an ongoingbasis. Risk assessment is considered as critical input for decision making related tostrategy formulation and capital allocation.
Your Corporation has also leveraged technology to integrate and automate the entireprocess of enterprise risk management. Your Corporation has also engaged the services ofan independent expert to assist in continued implementation of effective Risk Managementframework and improve the framework further. These self-regulatory ERM processes andprocedures form part of our Risk Management Charter and Policy 2007.
Risk Management Steering Committee (RMSC) continues to provide its guidance in thisregard. Your Corporation has put in place mechanism to inform Board Members about the riskassessment and minimization procedures and periodical review to ensure that executivemanagement controls risks by means of a properly identified framework.
During the year as a part of Preventive Vigilance outreach activity various campaignswere run for administering E-Integrity Pledge. More than 2.70 lakhs E-Integrity pledgeswere taken by employees and other stakeholders like vendors dealers customers etc. thrue-kiosks LPG consumer IVRS etc Interactions with employees including new recruits andother stakeholders were held. Surprise inspections were carried out. Coordination withagencies like CBI CVC Vigilance wing of MOP&NG etc. was done apart from carrying outinvestigation of complaints received from offices of MOP&NG CVC CBI and othersources.
During the year your Corporation's Vigilance Department was conferred with VigilanceExcellence Award in the Outstanding category from the Central Vigilance Commission (CVC).
Review of several operating areas for system improvement was also carried out duringthe year.
As a result of a proactive approach Industrial Relations remained harmonious acrossthe Corporation. It is worth mentioning that not only was there no loss of productivitydue to IR issues but also this year witnessed productivity increase across locationswhich amply demonstrate the maturity of our Unions and commitment of employees. VariousSettlements were signed with the Unions in the areas of Productivity EnhancementRedeployment etc. which is the outcome of Trust and the healthy IR climate in yourCorporation.
Union representatives play a major role and act as communication channel/change agentsfor communicating and implementing of various policies and initiatives. Therefore it isimperative that the various initiatives and policies are shared with the importantstakeholder so as to communicate with the non-management employees apart from our regularcommunication channels. In this regard 8 workshops were held under the program "HPConnect" across all zones/refineries in which 236 employees were covered. Moreoverin order to develop the leadership skills of union leaders a week long program wasconducted at Hyderabad.
Your Corporation took proactive steps to ensure that all our contract workmen werecovered under Pradhan Mantri Jan Dhan Yojana and Prime Minister Suraksha Beema Yojana. Topromote Digital India and cash less economy it was ensured that all Contract Labourdeployed across the Corporation are paid their wages through NEFT. Further variousprograms across the Corporation were organized for Contract workmen to enable them usevarious modes of cashless payments.
At your Corporation we believe that safety and wellbeing of all stake holdersincluding Contract Workmen is of paramount importance. Under the (Prerna) program launchedby the Corporation to imbibe safe work culture and improve well-being of contract workmen248 Prerna Programme covering 10743 Contract workmen were conducted during year 2017-18.
OFFICIAL LANGUAGE IMPLEMENTATION
The usages of Hindi is ensured in the business of your Corporation by motivating theemployees through persuasion incentive and harmony and Hindi is being promoted byutilizing various facilities available in the field of Information & Technology. Topromote the linguistic and cultural talent of the employees awareness about Hindi iscreated in the offices through All India Hindi Mahotsav Hindi Fortnight OfficialLanguage ConferencesHindi Competitions and Hindi Workshops etc.
During the year 2017-18 your Corporation was awarded with the highest award RajbhashaKeerti Pratham Purskar. HPCL also got Rajbhasha Keerti Pratham Purskar for excellentcoordination and notable achievements of Town Official Language Implementation Committee(PSUs) Mumbai. Thus Hon'ble President of India awarded your Corporation with two highestPurskars on the occasion of Hindi Diwas on 14th September 2017 at Vigyan Bhawan NewDelhi.
Your Corporation is coordinating Town Official Language Implementation Committee ofMumbai based PSUs since 1983 and thereby guiding Mumbai based 64 PSUs in the fieldofOfficial Language Implementation. Other than the TOLIC Meetings we have trained theofficials of different PSUs through conducting various programmes such as Team BuildingDigital India IT & Hindi and Innovation in HR.
Your Corporation has been awarded with the Official Language Shield by Ministry ofPetroleum and Natural Gas Government of India for the last three years. Last year HPCLhas made a record in entire Oil Industry by receiving 43 O.L. Awards from Government fieldtheof India. Besides this in technical Corporation has taken new initiative andconducted Technical Hindi Article Competition and Technical Hindi Seminar also for whichour efforts were specially appreciated by Ministry of Petroleum and Natural Gas.
CORPORATE SOCIAL RESPONSIBILITY
Your Corporation has always believed in being a catalyst of transformation through itsCSR endeavors. Your Corporation is committed to delivering happiness by making meaningfulchanges in the lives of people through its community engagement and holistic societaldevelopment. Being a responsible corporate citizen the constant effort is to maximizepositive impact of our initiatives by integrating and internalizing CSR into the core ofbusiness operations.
Your Corporation reached out to larger sections of marginalized societies in FY 2017-18through innovative value-driven and well-designed CSR projects that brought togethercollective effort to positively impact the lives of marginalized and less privileged.
National Development Policies Sustainable Development Goals and flagship schemes ofGovernment of India have been the primary guiding forces behind all our CSR initiatives inthe focus areas of Child Care Education Health Care Skill Development SportsEnvironment and Community Development. Your Corporation has always believed in adoptingstrategies aimed at Bridging the Gaps' by identifying gaps in the existing systemand narrowing them rather than creating new parallel systems. Your Corporation initiatedsome ambitious projects this year complementing its efforts to create a healthy educatedand empowered nation.
To work towards promoting Sanitation and Hygiene in government schools an e-WASHprogram was initiated which aims to inculcate good hygiene practices among school studentsas well as local communities. "Kashmir Super 30 (Medical)" was set up incollaboration with Indian Army to enthuse a new ray of hope for the underprivilegedstudents of Kashmir and prepare them to compete at the national level to secure admissioninto medical colleges. Your Corporation spearheaded a first-of-its-kind collaborativeproject by OMCs to improve facilities at Tulip Garden Srinagar. Contribution was alsomade towards Armed
Forces Flag Day Fund which is utilized for providing financial assistance to needyEx-Servicemen war widows and their dependents. Your Corporation also provided support toenhance the quality of health care services in the fieldof cancer treatment and diagnosisat Tata Memorial hospital.
Impacting the lives of school-going children by lending support to their educationalpursuits has been the aim of our projects Nanhi Kali Akshayapatra Unnati and Agastya.
Project ADAPT aims to create a model of inclusivity and equal opportunity and offersspecial education state-of-the-art therapies along with skill development opportunitiesto differently abled children in an enabling environment in order to bring them intomainstream.
Our projects Dil without Bill Suraksha and Dhanwantari in the focus area of healthcare aim to provide preventive and curative health care facilities. As a part of SkillIndia Mission Project Swavalamban provides skill training to youth and school dropoutsfrom under-privileged areas in various trades like mechanical electrical constructiongeriatric care etc. with an aim to enhance their employability.
Your Corporation enthusiastically participated in Swachh Bharat Abhiyan' theflagship movement of Government of India which aims to achieve the vision of CleanIndia' by 2019.
With a focus on creation of sanitation infrastructure and awareness generation amongmasses your corporation undertook various innovative projects in collaboration withvarious stakeholders for effective implementation. This included improvement of sanitationfacilities at 20 prominent locations in Mumbai construction of school toilets andcommunity toilets and various other initiatives for improvement of sanitationinfrastructure and other facilities.
Your Corporation has adopted Golden Temple under the Swachh Iconic Places' aninitiative focused on select heritage spiritual and cultural places in the country.
Your Corporation's employees at business locations across the length and breadth of thecountry actively participated in Swachhta Pakhwada and Swachhta Hi Sewa campaigns and tookup various innovative activities under Swachh Bharat Abhiyan in collaboration withMunicipal Corporations/ District Administration/ Indian Railways.
With an aim to develop entrepreneurial abilities third phase of EntrepreneurshipDevelopment Project was launched for aspiring youth from SC/ST communities in order toequip them with the required skills for transformation from job-seekers to job-creators.Scholarships were also provided to meritorious students from SC ST OBC and PWDcommunities to energize academic talent.
To strengthen the Skill India' initiatives of the Government of Indiacontribution was made for the promotion of higher education and employability skillstowards five Skill Development
Institutes at Rae Bareilly Guwahati Visakhapatnam Kochi and Bhubaneshwar andtowards the establishment of Indian Institute of Petroleum and Energy.
Your Corporation also contributed ` 25.27 crore towards Pradhan Mantri Ujjwala Yojna(PMUY) which aims to safeguard health of women and children by providing them cleancooking fuel so that they don't have to work in smoky unhealthy kitchens or wander aboutto collect firewood.
Various other local area development initiatives carried out and driven by sheerpassion and altruism of our officers enabled us to reach out to the most unreached sectionof marginalized societies thus bringing more smiles.
Your Corporation's CSR endeavors were recognized in the form of awards bestowed atdifferent platforms. Golden Temple-Amritsar adopted by your Corporation won theBest Iconic Place' award under National Swachh Bharat Awards by the Ministry ofDrinking Water and Sanitation. Your Corporation was also conferred with The Golden PeacockAward PRSI National Awards 2017 Child Care PRSI National Awards 2017 PSUand SKOCH Blue Economy Award for its projects and intervention models which aim to createlong term and with the Ministry ofsustainable impacts. The details of CSR activities ofyour Corporation containing details of CSR Committee Members brief outline of the CSRpolicy overview of the CSR initiatives prescribed expenditure amount spent etc. formingpart of Director's report are provided in Annexure III.
Your Corporation continues to adopt the best practices of Corporate Governance toensure transparency integrity and accountability in its functioning. The corporateGovernance Report highlighting these endeavours has been incorporated as a separatesection forming part of the Annual Report.
PROCUREMENT OF GOODS & SERVICES FROM MSES
In line with the Public Procurement Policy for Micro & Small Enterprises (MSEs)Order 2012 for the year 2017-18 against the set target of 20% your Corporation hasachieved 31.21% (` 3011.97 Crores) procurement of goods and services from Micro &Small Enterprises (MSEs).
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
A workshop was conducted for Internal Complaint Committee members across theCorporation in order to help them understand their roles and responsibility. Further 8workshops were conducted across several locations to apprise employees of the provisionsof the act.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
A detailed Management Discussion and Analysis Report forms part of this Annual Report.
FINANCIAL STATEMENTS OF SUBSIDIARIES
In terms of Proviso to Section 136 (1) of the Companies Act 2013 your Corporationwill place separate audited accounts in respect of each of its subsidiary on its website& also provide a copy of separate audited financial statement in respect of each ofits subsidiary to any shareholder of the Company who asks for it. The FinancialStatements of the subsidiary companies will also be kept open for inspection at theregistered office of the Company and that of the respective subsidiary companies.
Pursuant to provisions of Section 129(3) of the Companies Act 2013 a separatestatement containing salient features of the Financial Statement ofSubsidiary/Associate/Joint Venture Companies in Form AOC-1 is attached along withFinancial Statements.
The Cost Audit for the financial year 2016-17 was carried out and the Cost AuditReports were filed Affairs before the stipulated date of filing.
Your Corporation's Board presently comprises of 13 Directors. The Whole Time Directorsare Shri Mukesh Kumar Surana (Chairman & Managing Director) Shri Pushp Kumar Joshi(Director Human Resources) Shri J Ramaswamy (Director- Finance) Shri SJeyakrishnan (Director Marketing) and Shri Vinod S Shenoy (Director Refineries).
Shri J Ramaswamy is also a Chief Financial Officer the Corporation in terms ofrequirement of Section 203 of the Companies Act 2013.
The Government Directors are Shri Sandeep Poundrik and Ms. Sushma Taishete. The PartTime Non Official Directors (Independent) are Shri Ram Niwas Jain Smt. Asifa Khan Shri GV Krishna Dr. Trilok Nath Singh Shri Amar Sinha and Shri Siraj Hussain.
As per the provisions of Section 152 of the Companies Act Shri Pushp Kumar Joshi andShri S Jeyakrishnan will retire by rotation at the next Annual General Meeting and beingeligible offer themselves for re-appointment.
DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNEDDURING THE YEAR
Shri Amar Sinha and Shri Siraj Hussain were appointed as IndependentDirectors on the Board of your Corporation effective 21.09.2017.
Ms. Sushma Taishete was appointed as Government Director (Part-TimeEx-Officio) on the Board of your Corporation effective 05.12.2017
Smt. Urvashi Sadhwani Government Director (Part-Time Ex-Officio) has ceasedto be Director of your Corporation effective 24.11.2017.
The Board places on record its sincere appreciation for the valuable services renderedby Smt. Urvashi Sadhwani during her tenure as Director of the Corporation
NUMBER OF MEETINGS OF THE BOARD
During the year 12 (Twelve) Board meetings were convened and held. The details of theBoard Meetings are given in Corporate Governance Report.
MANAGERIAL REMUNERATION & PARTICULARS OF EMPLOYEES
Your Corporation being a Govt. Company is exempted to furnish information underSection 197 of Companies Act 2013 vide Ministry of Corporate Affairs (MCA) Notificationdated 05.06.2015.
There was a reference by C&AG during review of accounts with regards shiftallowance being part of 50% of Basic Pay. Corporation has represented on this matter toMOP&NG. The details regarding the number of women employees vis--vis the totalnumber of employees in each group is also given as herein below:
|Group ||Total No. of Employees ||No. of Women Employees ||% of Women Employees |
|A ||6069 ||688 ||11.34 |
|B* ||- ||- ||- |
|C ||3601 ||256 ||7.11 |
|D ||682 ||18 ||2.64 |
|TOTAL ||10352 ||962 ||9.29 |
*Your Corporation has no posts classified under group B' as the entry innon-management grades has been re-classified in group C' effective 1.1.1994.
PERFORMANCE EVALUATION OF BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
Your Corporation being a Government Company the performance evaluation of the Companyis carried out by the Administrative Ministry i.e. Ministry of Petroleum and Natural Gas(MOP&NG) through the process of Memorandum of Understanding in each Financial Year.Further there is also performance evaluation of Functional Directors by MOP&NG.Compliance of Section 134(3)(p) are exempted for Government Companies as PerformanceEvaluation of Directors are carried out by MOP&NG as per its own evaluationmethodology.
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 & Disclosure Requirements) Regulations 2015. Statement of declarationrequired under Section 149(6) have been obtained from 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 05.06.2015.
POLICY FOR REMUNERATION OF KEY MANAGERIAL PERSON AND OTHER EMPLOYEE
Your Corporation being a Government Company the remuneration payable to KeyManagerial Persons and other employees are fixed by the Government of India. Howeverpayment like Performance Related Pay is placed for the approval of Nomination andRemuneration Committee.
The composition of Audit committee as required under section 177(8) of the companiesAct 2013 is given as under:
|Sl.No. ||Name ||Category |
|1. ||Shri Ram Niwas Jain ||Part-Time Non Official Director |
| || ||(Independent) - Chairman |
|2. ||Shri G V Krishna ||Part-Time Non Official Director |
| || ||(Independent) - Member |
|3. ||Shri J Ramaswamy ||Whole Time Director Member |
During the year there were no such cases observed where the Board had not accepted anyrecommendation of the Audit Committee.
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Company hasappointed Shri Upendra Shukla Practising Company Secretary to undertake the SecretarialAudit of the Company. The Report of the Secretarial Audit is annexed herewith as AnnexureIV. There is no qualification reservation or adverse remark made by the PractisingCompany Secretary in his Secretarial Audit Report.
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 isannexed as
RELATED PARTY TRANSACTIONS
The details of transactions entered into with the Related Parties during the year2017-18 are enclosed as Annexure VI.
PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES JOINT VENTURES AND ASSOCIATES
The details on the performance and financial position of
Subsidiary Associate and Joint Venture Companies are given in Management Discussion& Analysis Report. Further Pursuant to Section 129(3) of the Companies Act 2013 readwith Rule (5) of the Companies (Accounts) Rules 2014 the salient features of FinancialStatement of Subsidiary and Joint Ventures in Form AOC-1 forms part of the Annual Reportseparately.
COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES JOINT VENTURES ORASSOCIATE
Subsidiary and Joint Venture company incorporated during 2017-18: Subsidiary: HPCLMiddle East FZCO
HPCL Middle East FZCO a 100% Subsidiary of your Corporation was incorporated on 11thFebruary 2018 as a Free Zone Company under Dubai Airport Free Zone and Establishment Cardwas issued on 22nd March 2018 for the Company. The foreign subsidiary was established fortrading in Lubricants & Grease Petrochemicals and Refined Oil Products.
Ratnagiri Refinery and Petrochemicals Ltd. (RRPCL)
RRPCL was incorporated on 22nd September 2017 with Indian Oil Corporation Limited(IOCL) Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum CorporationLtd (HPCL) holding equity in the ratio 50%: 25%: 25% respectively.
Ujjwala Plus Foundation a joint venture of Indian Oil Corporation Limited (IOCL)Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)with fund contribution in the ratio 50%: 25%: 25% respectively was incorporated on 21stJuly 2017 as a not-for-profit Private Company Limited by Guarantee (without ShareCapital) under Section 8 of the Companies Act 2013.
Company dissolved during 2017-18: CREDA-HPCL Biofuel Limited (CHBL)
CHBL in which HPCL holds 74% of equity shareholding was dissolved with effect from08th March 2018.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
During the Financial Year 2017-18 there is no Order or Direction of any Court orTribunal or Regulator which either affects your Corporation's status as a going concern orwhich 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.
Your Corporation has a Whistle Blower Policy approved by the Board and the same isplaced on the website of the Corporation. Weblink of whistle blower policy is statedherein below: Weblink: https://www.hindustanpetroleum.com/documents/pdf/Whistle_Blower_policy.pdf
DETAILS OF DEPOSITS
|Particulars ||Amount |
| ||(Rs./ Crores) |
|i) Deposits accepted during the year ||NIL |
|ii) Deposits remaining unpaid or unclaimed as at the end of the year ||NIL |
|iii) Default in repayment of deposit or payment of Interest thereon during the year. ||NIL |
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement of clause (c) of sub-section (3) of
Section 134 of the Companies Act 2013 it is herebyconfirmed that: i. In thepreparation of the Annual Accounts the applicable Accounting standards have been followedalong with proper explanation relating to material departures. ii. The Directors haveselected such Accounting Policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the Financial Year and the profit and loss of thecompany for that period. iii. The Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities. iv. The Directors have prepared the AnnualAccounts on a going concern basis. v. The Directors have laid down internal financialcontrols to be followed by the Company and that such Internal Financial Controls areadequate and are operating effectively. vi. The Directors have devised proper systems toensure compliance with the provisions of all applicable laws and that such systems wereadequate and operating effectively.
The Board of Directors gratefully acknowledge the valuable guidance and supportextended by the Government of India Ministry of Petroleum and Natural Gas otherMinistries Petroleum Planning & Analysis Cell and the State Governments. TheDirectors also acknowledge the contribution made by the large number of dealers anddistributors spread all over the country towards improving the service to our valuedcustomers as well as for the overall performance of the Corporation. The employees of theCorporation have continued to display their total commitment towards the pursuit ofexcellence. Your Directors take this opportunity to place on record their appreciation forthe valuable contribution made by the employees and look forward to their services withzeal and dedication in the years ahead to enable the Corporation to scale even greaterheights.
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
Mukesh Kumar Surana
Chairman & Managing Director
Date : 22nd May 2018