On behalf of the Board of Directors of your Company it gives me immense pleasure toshare with you the highlights developments and the progress that your Company has madeduring the financial year ended March 31 2017 and to present the 29th Annual Report onthe business and operations of Mangalore Refinery and Petrochemicals Limited (MRPL) andits audited financial statements together with the Auditors' Report and comments on thefinancial statements by the Comptroller and Auditor General (C&AG) of India. You willbe delighted to know that financial year 2016-17 has been yet another year of achievementsfor your Company. The Company registered the highest ever throughput of 16.27 MMT.
STATE OF COMPANY'S AFFAIRS
Your Board is reporting the affairs of the Company for the FY 2016-17 as under:
The standalone / consolidated financial highlights for the year ended 31/03/2017 aresummarized below:
( Rs. In Crore)
| ||Standalone ||Consolidated |
| ||Year ended ||Year ended ||Year ended ||Year ended |
| ||31st March ||31st March ||31st March ||31st March |
| ||2017 ||2016 ||2017 ||2016 |
|Profit Before Tax ||5531.41 ||1158.30 ||5053.85 ||286.51 |
|Less: Current Tax ||1185.37 ||234.56 ||1185.38 ||234.56 |
|Deferred Tax ||702.36 ||(223.20) ||575.26 ||(453.82) |
|Profit For The Year ||3643.68 ||1146.94 ||3293.21 ||505.77 |
|Add: Other ||(5.03) ||0.32 ||(4.90) ||(0.12) |
|Comprehensive || || || || |
|Income || || || || |
|Total ||3638.65 ||1147.26 ||3288.31 ||505.65 |
|Comprehensive || || || || |
|Income for the Year || || || || |
|Less: Total ||- ||- ||(179.55) ||(318.13) |
|Comprehensive || || || || |
|Income Attributable || || || || |
|to Non Controlling || || || || |
|Interest || || || || |
|Total ||3638.65 ||1147.26 ||3467.86 ||823.78 |
|Comprehensive || || || || |
|Income Attributable || || || || |
|to owners of the || || || || |
|Company || || || || |
|Add: Balance in Profit ||4198.67 ||3051.41 ||3803.47 ||2979.69 |
|and Loss Account || || || || |
|(Adjusted) || || || || |
|Sub-Total ||7837.32 ||4198.67 ||7271.33 ||3803.47 |
| ||Standalone ||Consolidated |
| ||Year ended ||Year ended ||Year ended ||Year ended |
| ||31st March ||31st March ||31st March ||31st March |
| ||2017 ||2016 ||2017 ||2016 |
|Appropriation || || || || |
|Transferred to General ||- ||- ||- ||- |
|Reserve || || || || |
|Dividend on Equity ||1051.56 ||- ||1051.56 ||- |
|Shares || || || || |
|Tax on Dividend ||214.07 ||- ||214.07 ||- |
|Closing Balance ||7837.32 ||4198.67 ||7271.33 ||3803.47 |
|(Including other || || || || |
|Comprehensive || || || || |
|Income) || || || || |
Your company achieved turnover of Rs. 59415 crore during the financial year 2016-17against Rs. 50864 crore during the financial year 2015-16. The Company earned a profitafter tax (PAT) of Rs. 3644 crore during the financial year 2016-17 against profit of Rs.1147 crore earned during the financial year 2015-16. The Gross Refining Margin (GRM) forfinancial year 2016-17 was 7.75 $/bbl as against 5.20 $/bbl during the financial year2015-16. Your Company has retained its highest corporate rating "[CCR AAA]"afirmed by CRISIL and IrAAA by ICRA during the FY 2016-17.
The financial year 2016-17 has been a remarkable year for your Company. Some of themajor highlights for the year 2016-17 are as under:
Highest ever Gross crude processed for FY 2016-17 was 16.27 MMT against theprevious highest of 15.69 MMT during FY 2015-16 registering an increase of 3.69 % inthroughput. This high performance could be achieved by optimal crude mix better equipmentreliability timely shutdown adherence and commendable operational discipline.
New Crudes processed during FY 2016-17 were Paz3or (High TAN) Yombo &Soorosh.
Yombo Crude from Congo processed was with the lowest ever API of 16.4.
Received first parcel of crude oil for delivery into Mangalore cavern of IndianStrategic Petroleum Reserves Ltd (ISPRL). The first parcel of 260 TMT of Iran Mix wasreceived in VLCC MT DINO.
Highest ever production and dispatch of Poly - propylene LPG MS HSD andthroughput in MBPL pipeline.
MRPL dispatched first parcel of HSD- Euro VI to HPCL during the month ofOctober 2016.
MRPL has been awarded BEST MANUFACTURER EXPORT AWARD - MEDIUM / LARGE'(Petroleum & Petroleum products) for the year 2014-15 acknowledging the performanceas the foremost exporter in the state of Karnataka.
MARKETING AND BUSINESS DEVELOPMENT
Your company continues to expand its market spread in the direct sales segment ofpetroleum products in the state of Karnataka and its adjoining states. Your Company hasmaintained significant market share and direct customer relations for products such asBitumen Fuel Oil Sulphur Diesel Naphtha Petcoke and Mixed Xylene in its refineryzone. The total sales volume of direct marketing products including Polypropylene duringthe FY 2016-17 has been 1858 TMT with a sales value of Rs. 5132 Crores compared to salesvolume of 1610 TMT with a sales value of Rs. 3308 Crores in the previous FY 2015-16. MRPLhas already achieved dominant market share for its MANGPOL branded Polypropylene in itsmarketing zone in a very short time. MRPL also continues to maintain leadership positionfor sales of Bitumen Sulphur Pet Coke and Xylol in its marketing zone.
Your Company continues to expand its Polymer product range with new grades and has alsoexpanded its market reach. Your company achieved sales of 264 TMT Polypropylene in FY2016-17 as against sales of 139 TMT in FY 2015-16. Your Company has also succeeded inmarketing the entire production of Pet Coke on consistent basis with a sales volume of 838TMT in 2016-17. Company also evacuated higher quantity of Sulphur in domestic markettargeting major customer in adjoining states. The surplus Sulphur is being exported inlarger parcel sizes. Your company has also maintained timely supplies to State TradingCorporation Mauritius which has a long term supply contract with MRPL. The companysupplied 1049 TMT of petroleum products to STC Mauritius with a sales value of Rs. 2860Crores in FY 2016-17 against sales volume of 1057 TMT at a sales value of Rs. 2757 Croresduring FY 2015-16.
Your company has commenced the retail expansion plan by releasing the advertisement forappointment of dealers for retail outlets in the state of Karnataka & Kerala and is inthe process of expanding its retail network in the its refinery zone. Letter of Intentshave been issued to several shortlisted applicants for time bound commissioning of newretail outlets. Feasibility study for additional retail outlet locations is under progressand the company is expecting to commission a sizeable number of retail outlets during nextfew years.
Your Company Shell MRPL Aviation Fuel Services Limited has steadily acquired businessfor sale of Aviation Turbine Fuel (ATF) at Indian airports. The company achieved aturnover of Rs. 554.29 Crores during FY 2016-17 against Rs. 317.97 Crores in the previousFY 2015-16.
Your Company has been assigned Excellent Rating for the FY 2015-16 by Department ofPublic Enterprises Government of India.
At a glittering Earth Day function organised by Srishti Publications at the IndiaInternational Centre New Delhi on 22/04/2017 MRPL bagged Runner up in the manufacturingcategory after an intense scrutiny and veri3cation by an expert panel.
Shri H Kumar Managing Director has been conferred with the FORE - Top RankersExcellence Award' for Organisational Excellence at the 18th National Management Summit onLeading Transformation of Organisations in the Digital Age' at New Delhi.
PROCUREMENT OF GOODS AND SERVICES FROM MSEs
In line with the public procurement Policy for Micro and Small Enterprises (MSEs)Order 2012 for the year 2016-17 against the set target of 20% your Company hasachieved 21.7% procurement of goods and services from Micro and small Enterprises (MSEs)and 40.3% (excluding proprietary items and catalysts & chemicals).
PROJECTS Existing Projects: BS VI Upgradation
As per Auto Fuel Policy and directives from MoP&NG the entire country has to movetowards BS VI quality specifications for MS and HSD by 01/04/2020. Products from theRefineries have to meet BSVI quality specifications from 01/01/2020. Further MoP&NGhas directed the refineries to complete necessary modifications and constructionactivities and attain mechanical completion by July 2019 and roll out the products to Oilmarketing companies from 01/01/2020. MRPL requires additional units for MS andRevamp/Catalyst changes for HSD. As part of this project new FCC Gasoline TreatmentFacility Sulphur Recovery Unit Nitrogen and Utilities and Revamps of CHTU and DHDT isbeing carried out.
Axens EIL UOP are the licensors for the various units and EIL have been appointed asEPCM Consultant for the job. The Environment Clearance for the project was recommended bythe EAC on 18/04/2017.
Engineering of these units are in advanced stages and tendering for material and workshave commenced.
CCR2 Unit Revamp
MRPL currently has two numbers of NHT/ Plat former Unit. Both the units are ofidentical capacity and licensed by M/s UOP. The feedstock to the unit is heavy naphthafrom crude distillation units and Hydrocracker units. The objective of the unit is toupgrade the low octane heavy naphtha to High octane reformate. The existing CCR-2 unit isbeing revamped to produce higher quantity of Reformate yielding higher quantity of MS.UOP are the Licensor and M/s L&T Chiyoda are appointed as EPCM consultant for theproject. The ordering works are in progress and the revamped unit is expected to getcommissioned in 2018-19.
Railway Siding for Pet Coke
Dispatches by Railway Wagons will improve safety in transportation reducedenvironmental pollution Make MRPL products conveniently available in competitive marketsand improve commercial realisation to MRPL. Construction of state of the art Railwaysiding for smooth evacuation of Petcoke with M/s Konkan Railway is being carried out. TheRailway siding will be executed by M/s Konkan Railway Corporation Ltd and M/s Mecon havebeen appointed as the EPCM consultant to execute the balance of plant of the Projectconsisting of Closed conveyor system Loading silos with Rapid Loading Systems Measuringdevices Pollution control facilities etc.
The project is under execution and Engineering has been completed. Tendering is inprogress and the project is expected to complete in December 2018.
Future Projects: 2G Ethanol
Your company has been mandated by the Ministry of Petroleum and Natural Gas(MoP&NG) to set up a 2G ethanol plant in Karnataka State. 2nd generation bio-fuels or"Advance Bio-fuels" are produced from sustainable feedstock which are not incompetent for fodder (viz. Surplus Rice straw Wheat straw Maize cobs Maize stalkBagasse Cotton stalk etc) .
Based on the Biomass feedstock assessment study your company is planning to set-up a2G ethanol plant with a capacity of 60 KLPD. The Prefeasibility study of the project hasbeen completed. As the next course of action MRPL is planning to take up the detailedfeasibility study.
The benefits from the advance bio-fuels will be
Ethanol is blended with petrol as a part of ethanol blending program from theGovernment this will help in reducing the oil import bill of the country.
and CO emissions thereby reducing the Reduction in CO2 greenhouse gasemissions.
Additional source of income to the farmers.
Power from open source:
MRPL is planning to meet all its future requirements through purchase of power throughopen access. A feasibility study was conducted by M/s PTC India Ltd. Basis thisfeasibility a route survey and cost estimation for new facility to access power at 220kvlevel is under progress. This project is expected to complete in FY 2019-20.
To mitigate the risk of river water as a single source of water an alternate source ofwater is being planned through the installation of desalination plant. The Project hasobtained permission from the Government of Karnataka. Feasibility studies along withstudies for Environment Impact Assessment etc is being done. The project is expected to becommissioned in FY 2019-20.
USING INFORMATION AND COMMUNICATION TECHNOLOGY FOR PRODUCTIVITY ENHANCEMENT
MRPL has taken initiatives to leverage on Information Technology for improving businessprocesses by implementing SAP (Systems and Application Products for Data processing)across all business functions. To run these applications a state of the art Data Centrehas been functioning at Mangalore site for supporting 24 x 7 business operations. RecentlyMRPL has completed technical upgrade of SAP from EHP 3 to EHP 7 to enhance functionalitiesof SAP system. MRPL has migrated its SAP system to GST Regime by incorporating allnecessary changes in the system and it has gone live on 01/07/2017. With a strong focus onmoving towards digitization MRPL has initiated systems for digitization of documents andis in the process of implementing paperless E-Office system. All employees related selfservices has been digitized with the implementation of online systems like LeaveManagement System Medical System Travel Management Time management Monthly claims etc.These systems are being migrated to app based solution (SAP Fiori). MRPL is continuouslyupgrading its IT security to meet the new challenges of information threat therebyprotecting all important information from any type of misuse. All IT infrastructures areprovided to employees to carry out their regular business activities.
HEALTH SAFETY & ENVIRONMENT PERFORMANCE
The company's Philosophy on the HSE is to perform better than minimum required bystatutes. The major Achievements on the Environment Management front include:
Environmental Impact Assessment (EIA) study carried out by M/s NationalEnvironmental Engineering Research Institute (NEERI) Nagpur for proposed BS-VI (Stage-1)Auto Fuel Quality Compliance & Associated Projects Facilities in line with theapproved Terms of Reference (ToR) obtained from Ministry of Environment Forest &Climate Change (MoEF&CC) New Delhi.
Hydrogeological Investigation & Modelling study is being carried out by M/s.National Institute of Hydrology (NIH) in the Refinery.
Grid Analysis study carried out by M/s. National Environmental EngineeringResearch Institute (NEERI) Nagpur to assess Environmental Impacts of MRPL Phase-III unitsoperation on Air Ground Water & Noise quality in surrounding villages. Draft reportreceived and a presentation was given to Technical Advisory Committee of Karnataka StatePollution Control Board (KSPCB).
As a part of Oil & Gas Conservation Month 2017 a campaign was conducted tomake neighbouring Villages Chelairu Soorinje Jokatte & Permude as Smoke FreeVillage' by facilitating LPG connections free of cost to those households using onlybiomass/ wood as cooking fuel.
As per agreement between MRPL and M/s. Ramky Engineers (State Pollution ControlBoard approved TSDF Operator) total 1120 MT of Solid Hazardous Waste was disposed during2016-17.
Total 287 MT of Spent Catalyst generated from Petro Fluidized Catalytic CrackingUnit (PFCCU) was disposed during 2016-17 for co-processing in Cement Plant.
Replacement of street light fixtures by LED undertaken.
In Air conditioning package units of phase-3 R22 (Ozone depleting agents)replaced by R407C refrigerant.
As part of greenbelt development 20 acres of plantation developed in PilikulaBiological Park Mangalore.
Following activities were conducted to spread awareness on tree plantation:
Distribution of saplings in schools of neighbouring villages to spreadawareness amongst students.
Mass tree plantation as a part of Koti Vriksha Andolan was carried outwith active involvement of neighbouring villagers.
Contribution made to Karnataka State Forest Department towards the treeplantation program.
3325012 m3 of Treated Municipal Sewage Water was utilized for CoolingTower makeup (April 2016 to March 2017) to reduce fresh water intake.
Two Fog Generators procured and installed in the refinery to mitigate thedust pollution if any from Coke Laydown and Sulphur Recovery Unit area.
Work Environment Monitoring carried out in the Refinery by M/s. ShivaAnalyticals Bengaluru to access the impact of air borne chemicals in the work zone area.
ONGC Group Sustainability Report generated incorporating MRPL'sSustainability Performance for the year 2015-16.
Following proposals are initiated/completed to control pollution issues:
1. Covering of Sulphur Open Storage Yard & Coke pit;
2. Installation of closed blow out diverters at the top of the DCU Cokedrums-completed;
3. Shifting of existing Pet Coke loading silos to a distance ~700m from theneighbouring residential area;
4. Noise reduction from SRU Incinerator blower by providing acoustic insulation on thedischarge line up to Thermal incinerator-completed;
5. Shifting of existing Phase-3 slop tanks away from the existing location;
6. Construction of Railway Siding for reducing road transport.
Surprise safety audit by OISD External Safety Audit and audit by PESO werecarried out.
294 days without Reportable Lost Time Injuries (RLTI) as on 31/03/2017.
3.41 Million Man Hours worked as on 31/03/2017.
Annual Medical Checkup of employees was carried out in three categories incompliance with the Rules under Factories Act and Karnataka Factories Rules.
Two Occupational Health Centre (OHC) with 24x7 availability of Medical Staff arefunctional.
Services of MRPL Hospital are available not only for the employees and theirdependants but for Out Patients as well.
CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY DEVELOPMENT
Corporate Social Responsibility (CSR)
MRPL's social welfare and community development initiatives focus on the key areas ofeducation health care & sanitation and overall development of basic infrastructure inand around its operational area/ Dakshina Kannada & Udupi District/Karnataka State.These projects are largely in accordance with Schedule VII of the Companies Act 2013.
MRPL has spent Rs. 1.45 Crore (previous year Rs. 4.11 Crore) for various CSR activitiesduring the year 2016-17. Pursuant to Rule 9 of Companies (Corporate Social ResponsibilityPolicy) Rules 2014 the Annual Report on CSR activities for 2016-17 is annexed herewith asAnnexure A'.
Sustainability Development and Performance
Sustainability efforts of your Company in foregoing year were intensi3ed with footstepstowards the longevity of the company success in an era of continuous challenges. We as acompany have emphasized on long term viable approaches in all segments of theorganization. Embracing environmentally sustainable business practices were prioritized inall endeavors of the organization. Sustainable business processes to 3nd novel solutionsconsidering better and greener alternatives were initiated. Educating employees oneco-conscious business sustainable business culture in all segments of company were givenutmost importance. The focus on ensuring sustainability to build a culture ofaccountability throughout the organization was charted.
Your company improved its water foot print by enhancing intake of sewage treated waterfrom City Corporation. Fresh water was eco-consciously replaced by treated sewage waterfrom Mangalore by a quantity equivalent to 2 Million imperial gallons per day. This dualbenefit of reducing fresh water intake and consuming urban effluent from city was secondedby using additional 1.5 Million imperial gallons per day treated effluent recycle to thecooling towers. Your company furthering its commitment to reduce its fresh water footprintis setting up a Reverse Osmosis system at a cost of Rs. 15 Crore to further processtreated sewage water received from the City to make the water usable directly in therefinery processes. Your company had initiated actions for Zero Liquid Discharge (ZLD)considering availability of fresh water for refinery processes. The water foot print ofthe refinery complex is envisaged to be improved with novel practices and engineeringtechniques.
Your company ventured into renewable sources to supply its energy demands. Your companyinitiated processes for harnessing solar energy that is available in abundance. A roadmaphas been drawn to setup 5.6 MWe of solar power plant from all available rooftops. Yourcompany aims to invest around Rs. 40 Crore in this project.
Your company had an innovative approach for improving the surrounding topography. Thegreen cover of surrounding area was envisaged to be made denser by signing a Memorandum ofUnderstanding (MOU) with Pilikula Nisarga Dhama Vamanjoor Mangaluru to take up thegreenbelt development) at Pilikula Nisarga Dhama Mangalore. In the novel cause termed"Let us plant a forest - Creation of Green Belt" MRPL sponsored plantation andsubsequent maintenance for a period of three years in 20 acres of land by planting 2000plants in Pilikula Nisarga Dhama with native species of Western Ghat.
Your company is endeavoring towards cleaner technologies by reducing vehicularemissions in refinery premises by switching to battery operated vehicles to itssupervisory staff.
Naturally available sun light is used to alleviate the warehouse radiance using a noveltechnique of "SkyPipe "by harvesting day light.
Your company has envisaged an action plan to replace all existing street lights andoffice lighting to low power consuming LED's in its premises. Substantial progress hasbeen made on this and we anticipate being 100% LED illuminated by 2018. Total saving of163500 W and future saving of 80000 W in next one year is envisaged by the scheme Yourcompany had practiced and will endure to take the footpath of sustainability in all theupcoming endeavors.
PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARY/ JOINT VENTURES/ ASSOCIATE
The details on the performance and financial position of Subsidiary Associate andJoint Venture Companies are given in Management Discussion and Analysis (MDA) Report.Pursuant to Section 129(3) of the Companies Act 2013 read with Rule (5) of the Companies(Accounts) Rules 2014 a statement on the performance and financial position of thesubsidiary and Joint Venture Companies is provided as an Annexure to the ConsolidatedFinancial Statements.
In accordance with the provisions of the SEBI guidelines the Company has framed apolicy for determining material subsidiaries that can be accessed on the Company'swebsite. Your company has one subsidiary i.e ONGC Mangalore Petrochemicals Limited (OMPL).As per the Material Subsidiary Policy OMPL is not a material subsidiary of the Companyapplying the test of materiality.
ANNUAL REPORT OF SUBSIDIARY AND CONSOLIDATED FINANCIAL STATEMENT
The Audited Consolidated financial statements for the year ended 31st March 2017 ofthe Company and its subsidiaries form part of the Annual Report in accordance with Section129 of the Companies Act 2013 and the Ind AS 110 on "Consolidated FinancialStatements" read with Ind AS 28 on "Investments in Associates and JointVentures". In accordance with section 136 of the Companies Act 2013 the auditedfinancial statements including the consolidated financial statements and relatedinformation of the Company and audited accounts of the subsidiary Company are available onthe Company's website. These documents will also be available for inspection duringbusiness hours at the registered office of the Company at Mangalore.
INDIAN ACCOUNTING STANDARDS (IND AS) IFRS CONVERGED STANDARDS
The Ministry of Corporate Affairs (MCA) on February 16 2015 notified that IndianAccounting Standards (Ind AS) are applicable to certain classes of companies from April 12016 with a transition date of 01/04/2015. Ind AS has replaced the previous Indian GAAPprescribed under Section 133 of the Companies Act 2013 ("the Act") read withRule 7 of the Companies (Accounts) Rules 2014 and are applicable to the Company from01/04/2016. The reconciliations due to transition from previous GAAP to Ind AS have beenset out in Note 51 in the notes to accounts in the standalone and consolidated financialstatements.
TRANSFER TO RESERVES
No amount has been transferred to General Reserves for the financial year 2016-17.
The Board of Directors has recommended a dividend of Rs. 6 per equity share for the FY2016-17. The dividend shall be paid after the approval of members at the Annual GeneralMeeting. The dividend has been recognized in accordance with Company's Policy on DividendDistribution. The Dividend Distribution Policy of the Company is annexed herewith as AnnexureB' to this report.
Your company has not accepted any deposits during the year pursuant to Section 74 ofthe Companies Act 2013 and Rules thereunder.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
There have been no loans / guarantees given or securities provided during the financialyear 2016-17 under the provisions of Section 185 / 186 of the Companies Act 2013. Thedetails of investments covered under the provisions of Section 186 of the Act are given innotes to financial statements provided in this Annual Report.
The company has not issued any shares during the FY 2016-17. The Issued Subscribed andPaid up Equity Share Capital of your Company as on 31/03/2017 was Rs. 1753 Crore.
MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OFFINANCIAL YEAR AND DATE OF REPORT
There has been no change in the nature of business during the year. No material changesor commitments have occurred after close of the year till the date of this report whichaffects the financial position of the Company.
Your company values its human resources the most. To keep their morale high yourcompany extends several welfare benefits to the employees and their families by way ofcompensative medical care education housing and social security. During the financialyear 2016-17 various welfare related policies have been implemented by the Company forits employees.
The Company maintains an Employee Club known as MRPL Employees Club (MEC). The Cluboffers a wide range of pastime activities for the employees and their dependents. AnInternal Departmental Cricket Tournament was also organised by MRPL Employees Club (MEC).
37th PSPB Inter Unit Carrom Tournament was held in MRPL Employees Club from 20/02/2017to 04/03/2017. Players of International repute representing various Oil PSU companiesparticipated in the prestigious tournament. IOCL won both Men's & Women's team eventsand ONGC was the Runner-up in both the team categories.
Your Company continues to enjoy cordial and harmonious relations and not a singleman-hour was lost on account of any industrial disturbance during the year 2016-17.
Reporting on SC / ST / PWD
Presidential Directives and other guidelines issued by Department of PublicEnterprises Ministry of Petroleum & Natural Gas Ministry of Social Justice andempowerment from time to time with regard to reservation in services for Scheduled CastesScheduled Tribes other backward castes and Persons with disabilities. An adequatemonitoring mechanism has been put in place for sustained and effective compliance. Liaisonofficers are appointed to ensure implementation of the Government Directives. ReservationRosters are maintained as per the directives and are regularly inspected by the Liaisonofficer of the company as well as the Officials from MoP&NG to ensure propercompliance of the Directives. MRPL also complies with provisions under "The Personswith Disabilities (Equal
Opportunities Protection of Rights and Full Participation) Act 1995 relating toproviding employment opportunities for Persons with Disabilities (PWDs). As on 31/03/2017there are 28 permanent employees with disabilities on the roll of MRPL. During the yearyour Company has recruited 120 employees comprising of 3 women employees and 46 SchedulesCaste (SC) / Schedule Tribe (ST) employees. Total employee strength as on 31/03/2017 was1917 including 132 women employees 252 SC/ST employees and 28 employees belonging topersons with disability category (PWD). 821 employees belong to Management cadre whereas1096 employees belong to Non-Management cadre. During the Year 2016-17 the Companydevoted 5142 Mandays for training development and learning which amounts to 3.71 Mandaysper employee for Management staff and 2.42 Mandays per employee for Non-Management staff.In accordance with para-29 of the Presidential Directive statistics relating torepresentation of SCs / STs in the prescribed performa SC / ST/ OBC Report I andSC / ST / OBC Report II is attached as Annexure C' to thereport.
Skill Development Centre
As a part of National Skill Development Mission of the Government of India MRPL hasset up "MRPL Kaushal Vikas Kendra" (MRPL KVK) on 12/02/2017. The first batch of60 candidates of MRPL KVK is undergoing skill development training in "CNCOperator-Turning" and "Industrial Electrician" course at Nettur TechnicalTraining Foundation (NTTF) Bangalore.
Women employees constituted over 6.88 percent of the Company's workforce. During theyear programmes on women empowerment and development including programmes on gendersensitization were orgainsed. Your Company has an Internal Complaints Committee (ICC)required under Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. There have been no cases reported to the Committee for thefinancial year 2016-17.
Your Company is implementing Official Language Policy as per the Annual Programmeprescribed by the Department of Official Language Ministry of Home Affairs Govt. ofIndia. In order to propagate and promote Hindi among the employees Hindi Workshops wereorganized on a regular basis at Mangalore Mumbai Delhi & Bangalore Offices. Atregular intervals inspection of internal departments and subordinate officesrecords/documents for usage and promotion of Hindi were carried out.
Also Hindi Fortnight was celebrated and many Hindi competitions such as HindiDictation Handwriting Admin
Glossary Hindi Padho Samajho & Tick karo News reading etc were conducted for theemployees and their family members in the month of September 2016. In addition one moreHindi competition (Admin Glossary) was conducted in January 2017 for employees.Competitions were held in Hindi language for employees and their family members duringNational Safety Day Environment Day Security awareness week and Vigilance awarenessweek. Hindi usage is promoted by conducting special quiz competition for senior officerssuch as GMs & GGMs during Hindi month celebrations.
Hindi classes were arranged regularly to employees to qualify in Prabodh Praveen &Pragya examinations and Hindi Steno examination. Employees are motivated to pass finalHindi examinations through Incentive schemes such as Cash award & Personal Pay etc. Toincrease the correspondence in Hindi in the organization Unicode facilities wereactivated on all computers used for daily office work.
Special awards were given to 30 students of Delhi Public School (DPS) in MRPL Townshipwho have scored highest marks in Class-X Hindi examination.
Your Company participated at TOLIC level Hindi competitions and won Eight prizes andstood Second at the TOLIC level competitions. Hindi solo song competition was conductedfor employees of TOLIC member organizations at MRPL. In addition Hindi debate competitionwas also organized for Degree College students of Mangalore University as a part of Hindimonth celebrations under the auspices of TOLIC Mangalore. MRPL has been awarded firstprize for outstanding performance in hindi implementation for the year 2016-17 at TOLIClevel.
In order to propagate and to promote usage of Hindi in the company in house HindiJournal namely "MRPL PRATIBIMB" is being published. MRPL follow the guidelinesof Official Language (OL) and conducted Official Language Implementation Committee (OLIC)meeting during four quarters of the year under chairmanship of MD to review and for actionplan for improving usage of Hindi in MRPL. Your company is making continuous efforts forpromoting Hindi usage in the organization by encouraging employees through trainingsworkshops seminars and incentives.
RIGHT TO INFORMATION ACT 2005
Company's RTI manual is available on Company's website which discloses all requiredinformation. During the year 174 applications were received out of which 150 weredisposed off before 31/03/2017 01 application was transferred to other Public Authorityand balance 23 applications were disposed off after 31/03/2017.
Security of MRPL Refinery is designed to comply with Oil Sector InfrastructureProtection Plan (OSIPP) and the Security Audit recommendations given by MHA from time totime.
Physical Protection of the Refinery is handled by Central Industrial Security Force(CISF). The Company has recently inducted an additional contingent of 62 CISF personnel tofurther augment security arrangements in Phase-3 area of the Refinery. Proposal to furtheraugment the CISF strength is under consideration of the MHA.
Security is on top of the agenda of MRPL and to ensure preparedness periodic mockdrills on work-place security preparedness are conducted. To promote awareness on securityissues among all stake holders Security Awareness Weeks are organised periodically. Anintegrated CCTV cum Electronic Intrusion Detection system is under implementation tofurther strengthen electronic surveillance of the Refinery.
Your company has developed a structured mechanism of vigilance functions and itspractices are focused towards creation of value to stakeholders. The practices involvemultilayer checks and balances to improve transparency. Vigilance awareness and preventivevigilance activities were continuously carried out during the year. New Chief VigilanceOfficer Shri Rajeev Kushwah ITS has taken charge on 15/04/2017. In compliance with CVCinstructions your company has implemented a complaint handling policy in which allcomplaints received from various sources are recorded and can be examined by vigilance.MRPL corporate website has been revamped by including the system for registering theonline complaints. The details on the best vigilance practices and links to various usefulwebsites is also provided in the MRPL Corporate website. Your company has achieved highestcompliance level with regard to e-procurement e-tender and e-payment.
In line with instructions of CVC your company had conducted Vigilance Awarenessprograms for spreading awareness on evil effects of corruption. A public kiosk was set upat Mangalore City Corporation facilitating the citizens of Mangalore to take E-IntegrityPledge. A walkathon was conducted in Surathkal to spread the awareness on transparency inpublic life. Debate competition was also conducted for the school children. MRPL and AllIndia Radio Mangalore conducted several vigilance awareness programs during the year.
DoPT has developed a web enabled online system for vigilance status of employeesworking in Government sector. Your company is in process of updating the vigilance statusof Board level and below board level employees in the web system.
Leveraging the technology to enhance transparency has been a thrust area of action inwhich vigilance has placed a catalytic role. The website of company displays downloadabletender document publication of information of work awarded on nomination basispublication of post award information of contracts.
Whistle Blower Policy
The Whistle Blower Policy is formulated to provide a vigil mechanism for Directors andEmployees to raise genuine concerns about unethical behaviour actual or suspected fraudor violation of the Company's code of conduct or ethics policy. It also provides foradequate safeguard against victimisation of persons who use such mechanism. The Policyprovides necessary safeguards for protection of Directors and Employees who avail thevigil mechanism from reprisals or victimization for whistle blowing in good faith and toprovide opportunity to Directors and Employees for direct access to the Chairperson of theAudit Committee in exceptional cases. The policy is available on the Company's website.During the year no complaints were received under Whistle Blower Policy.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
Information required to be disclosed pursuant to Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 with respect toConservation of Energy Technology Absorption and Foreign Exchange Earnings & Outgoare furnished in Annexure- D' which forms part of this Report.
MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES
MRPL being a Government Company is exempted from the provisions of Section 197(12) ofthe Companies Act 2013 and relevant Rules in view of the Notification dated 05/06/2015issued by Ministry of Corporate Affairs (MCA).
The functional directors of the Company are appointed by the administrative Ministryi.e. MoP&NG within the terms & conditions as per DPE guidelines.
EXTRACT OF ANNUAL RETURN
Information required to be disclosed pursuant to Section 134(3)(a) of the CompaniesAct 2013 with respect to the details forming part of the extract of the Annual Return inform MGT-9 are furnished in Annexure- E' which forms part of this Report.
RELATED PARTY TRANSACTIONS & PARTICULARS OF CONTRACTS / ARRANGEMENTS WITH RELATEDPARTY
All transactions entered with related parties during the financial year 2016-17 were onarm's length basis and in ordinary course of business. Further there were no materialrelated party transactions during the year with the Promoters Directors or Key ManagerialPersonnel. The Company has adopted a Related Party policy and procedure which isavailable at company's website.
The particulars of every contract or arrangements entered into by the Company withRelated Parties referred in Section 188(1) of the Companies Act 2013 in the prescribedForm No. AOC - 2 attached as Annexure-F'. MCA vide Notification dated05/06/2015 has exempted the applicability of Section 188 (1) of the Companies Act 2013for a transaction entered into between two Government Companies.
DIRECTORS & DIRECTORS' RESPONSIBILITY STATEMENT Changes in the Board of Directorsand Key Managerial Personnel during the financial year 2016-17
MRPL being a Central Public Sector Enterprise (CPSE) Directors on the Board of thecompany are appointed by the Administrative Ministry i.e. Ministry of Petroleum andNatural Gas (MoP&NG) Government of India and therefore the provisions of Section134(3) (e) of the Companies Act 2013 regarding policy on Directors appointment andremuneration shall not apply in view of the MCA notification dated 05/06/2015.
Shri A.K. Sahoo assumed the office of Director (Finance) on 01/02/2016 and wasappointed as a Director in the 28th Annual General Meeting held on 03/09/2016 in place ofShri Vishnu Agarwal who superannuated from the services of the Company. Shri Diwakar NathMisra Director (GP) MoP&NG was appointed as Additional Director with effect from09/03/2016 and was also appointed as a Director in the 28th Annual General Meeting held on03/09/2016. Shri B.K. Namdeo Nominee Director HPCL ceased to be a Director consequentupon his superannuation from the services of HPCL on 31/10/2016 and Shri Vinod S. ShenoyDirector (Refinery) HPCL was appointed as Director in casual vacancy with effect from08/11/2016. The Board places on record its appreciation for the valuable services renderedby the outgoing Directors during their respective tenure.
Ms. Manjula C. nominated as Non Official Independent Director by MoP&NG with effectfrom 31/01/2017 was appointed as an Additional Director by the Board with effect from31/01/2017 vacates her office in this AGM and being eligible offers herself forappointment as Director in the 29th Annual General Meeting.
FORMAL ANNUAL EVALUATION
MRPL being a Government Company the provisions of Section 134(3)(p) of the CompaniesAct 2013 in respect of annual evaluation of the Board Committees and individual Directorsshall not apply in view of the MCA notification dated 05/06/2015. However as perRegulation 17 of SEBI Listing Regulations 2015 formal annual evaluation of independentDirector had been carried out by the Board. No meeting was held by the IndependentDirectors during the year as the company had only one Independent Director.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to provisions of Section 134 of the Companies Act 2013 the Board ofDirectors of your Company has made the following statement for FY 2016-17: a) In thepreparation of the Annual Financial Statements for the year ended March 31 2017 theapplicable Ind AS have been followed along with proper explanation relating to materialdepartures; b) The Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit of the company for that period; c) The Directors havetaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe company and for preventing and detecting fraud and other irregularities; d) TheDirectors have prepared the Annual Financial Statements on a going concern basis; e) TheDirectors have laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively; and f)The Directors have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively. As per SEBIListing Regulations 2015 Audit Committee has reviewed the Directors' ResponsibilityStatement.
NUMBER OF BOARD MEETINGS
The Board of Directors of your Company had six (6) Meetings during the FY 2016-17. Themaximum interval between any two meetings did not exceed 120 days as prescribed in theCompanies Act 2013. Details of the Board Meetings held have been furnished in theCorporate Governance Report which forms part of this Report.
The Audit Committee has been constituted as per the terms of reference prescribedunder Section 177 of the Companies Act 2013 read with Rule 6 of the Companies (Meetingsof the Board and its Powers) Rules 2014 Regulation 18 of SEBI Listing Regulation 2015and Guidelines on Corporate Governance for Central Public Sector Enterprise issued byDepartment of Public
Enterprise Government of India. There have been no instances where the recommendationsof the Audit Committee were not accepted by the Board of Directors. The details of AuditCommittee are disclosed in the Corporate Governance Report which forms part of thisReport.
Due to non-availability of sufficient number of Independent Directors the AuditCommittee is not constituted as per the provisions of the Companies Act 2013 & SEBIListing Regulation 2015.
NOMINATION AND REMUNERATION COMMITTEE
Pursuant to Section 178 of the Companies Act 2013 and Regulation 19 of SEBI ListingRegulations 2015 and DPE guidelines on Corporate Governance for CPSE your Company hasconstituted a Nomination and Remuneration Committee. The details on the Nomination andRemuneration Committee are disclosed in Corporate Governance Report which forms part ofthis report.
MRPL is a Schedule-A' category-1 Miniratna Central Public Sector Enterprise(CPSE). The appointment terms conditions and remuneration of Managing Director andFunctional Directors (Whole-time Directors) are fixed by the Department of PublicEnterprises (DPE) Govt. of India. MRPL being a Central Public Sector Enterprise (CPSE)Directors on the Board of the company are appointed by the Administrative Ministry i.e.Ministry of Petroleum and Natural Gas (MoP&NG) Government of India. Due tonon-availability of sufficient number of Independent Directors the Nomination andRemuneration Committee is not constituted as per the provisions of the Companies Act 2013& SEBI Listing Regulation 2015.
RISK MANAGEMENT POLICY
In line with the requirements of SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 your Company has developed and rolled out a comprehensiveEnterprise-wide Risk Management (ERM) Policy throughout the organization. The AuditCommittee periodically reviews the risk assessment and minimization process in MRPL.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS
There are no significant and material orders passed by the Regulators/ Courts/Tribunals that would impact the going concern status of the Company and its futureoperations.
The Companies Act 2013 and SEBI Listing Regulations 2015 have strengthened thegovernance regime in the country. Your Company is in compliance with the governancerequirements provided under the Companies Act 2013 SEBI Listing
Regulations 2015 and has complied with all the mandatory provisions of Companies Act2013 and Rules made thereunder and SEBI Listing Regulation 2015 relating to the CorporateGovernance requirements and mandatory guidelines on Corporate Governance for CPSEs issuedby DPE Government of India except for the presence of requisite number of IndependentDirectors on the Board and Board Committees. The Corporate Governance Report for the FY2016-17 forms part of this Report.
Pursuant to Schedule V of the SEBI Listing Regulations 2015 the Auditors' certificateon compliance of conditions of Corporate Governance also forms part of the Annual report.The Auditors have made observations on the appointment of Independent Directors on theBoard of the Company. The Company is pursuing with the Ministry of Petroleum & NaturalGas (MOPNG) for the appointment of requisite number of Independent Directors. Pursuant torequirements of the Companies Act 2013 and SEBI Listing Regulations 2015 followingpolicies/codes have been formulated and uploaded on the Company's website atwww.mrpl.co.in : a) Code of Conduct for Board Members and Senior Management Personnel; b)Whistle Blower Policy; c) Related Party Transactions Policy and Procedures; d) CSR& SD Policy; e) Material Subsidiary Policy; f) The Code of Internal Procedures andConduct for prohibition of Insider Trading in Dealing with the securities of MRPL; g)Policy on Materiality for disclosure of events to the Stock Exchanges; h) Policy onpreservation of Documents; i) Training Policy for Board of Directors; j) DividendDistribution Policy.
BUSINESS RESPONSIBILITY REPORT
SEBI Listing Regulations 2015 mandated inclusion of Business Responsibility Report(BRR) as part of the Annual Report for top 500 listed entities based on marketcapitalization. In compliance with the Regulation BRR forms part of this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
In terms of Regulation 34 of the SEBI Listing Regulations 2015 the Management'sDiscussion and Analysis (MDA) Report for the FY 2016-17 forms part of this Report.
INTERNAL FINANCIAL CONTROL
Your Company has a well-established and effcient internal control system and procedure.The Company has a well-defined delegation of financial powers to its various executivesthrough the manual of Delegation of Powers (DOP). The Company has in-house Internal AuditDepartment commensurate with its size of operations. Audit observations are periodicallyreviewed by the Audit Committee of the Board and necessary directions are issued wheneverrequired.
Joint Statutory Auditors
M/s Shreedhar Suresh & Rajagopalan Chennai and M/s A. Raghavendra Rao andAssociates Mangalore were the Joint Statutory Auditors of the Company for the FY 2016-17.They have audited the Financial Statements for the Financial Year 2016-17 and submittedtheir report which forms part of this report. There is no qualification in the AuditorsReport on the Financial Statements of the company. Notes to the Accounts referred to inthe Auditors Report are self-explanatory and therefore do not call for any furthercomments.
Your Company engaged M/s Kumar Naresh Sinha & Associates Practicing CompanySecretary Noida for conducting Annual Secretarial Audit for the year 2016-17 pursuant toSection 204 of the Companies Act 2013. M/s Kumar Naresh Sinha & AssociatesPracticing Company Secretary Noida has issued Secretarial Audit Report for the year2016-17 which forms part of this report as Annexure-G'. The Auditors havemade observations on the appointment of Independent Directors on the Board of the Companyand overtime working hours as per the provisions of the Factories Act 1948. The Companyis pursuing with the Ministry of Petroleum & Natural Gas (MoP&NG) Govt. of Indiafor the appointment of requisite number of Independent Directors. As regards theobservations on working hours the same has been taken up with the Department of PublicEnterprises by the Industry Group.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 the cost accounts maintained by the company forthe FY 2016 17 are being audited by Cost Auditors M/s. Bandyopadhyaya Bhaumik &Co. Kolkata.
M/s. Bandyopadhyaya Bhaumik & Co. Kolkata have been reappointed as Cost Auditorfor FY 2017-18.
COMMENTS OF C&AG ON THE JOINT STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED ANDSTANDALONE FINANCIAL STATEMENTS FOR THE FY 2016-17
The Comments of Comptroller & Auditor General of India (C&AG) forms part ofthis report and are attached as Annexure-H'. You would be pleased to knowthat your company has received NIL comments from C&AG for the year 2016-17.
Your Board of Directors wish to thank the shareholders for the continued confidencereposed on their Company. Your Directors sincerely thank the Government of India (GoI)Ministry of Petroleum and Natural Gas (MoP&NG) Ministry of Finance (MoF) Ministry ofCorporate Affairs (MCA) Department of Public Enterprises (DPE) Ministry of Environmentand Forest (MoEF) Ministry of External Affairs (MEA) Ministry of Shipping (MoS)Ministry of Home Affairs (MHA) other Ministries and Departments of the Central Governmentand the Government of Karnataka for their valuable support guidance and continuedco-operation.
Your Directors gratefully acknowledge support and direction provided by the parentcompany Oil and Natural Gas Corporation Limited (ONGC) and the support of HindustanPetroleum Corporation Limited (HPCL) as Promoters of the company. Your Directorsacknowledge the continuing co-operation and support received from New Mangalore PortTrust Financial Institutions Banks and all other stakeholder. Your Directors recognizethe patronage extended by the valued customers for the products of the Company and promiseto provide them the best satisfaction. The Board would like to express its sincereappreciation for the dedicated efforts made and valuable services rendered by all theemployees collectively and concertedly as a Team known as "Team MRPL" in theCompany's excellent achievements during the year 2016-17.
For and on behalf of the Board
(Dinesh K. Sarraf) Chairman
(DIN: 00147870) Place: New Delhi Date: 19/07/2017