Director's Report
Home >> Markets >> Corporate Information >> Director's Report
Hindustan Petroleum Corporation LtdIndustry : Refineries
BSE Code:500104
ISIN Demat:INE094A01015
Book Value(Rs):157.16
NSE Symbol:HINDPETRO
Div & Yield %:6.81
Market Cap (Rs Cr.):38042.23
P/E(TTM):5.32
EPS(TTM):46.93
Face Value(Rs):10
  Change Company 

DEAR MEMBERS

On behalf of the Board of Directors, it gives me immense pleasure in presenting to you the sixty-fifth Annual Report on the Performance of the Corporation, together with the Audited Financial Statements for the financial year ended March 31, 2017.

HIGHLIGHTS
(` / Crores)

Consolidated

Standalone
2016-17 2015-16 2016-17 2015-16
FINANCIAL PERFORMANCE
Sales/Income from Operation 2,13,904.15 1,97,655.81 2,13,488.95 1,97,437.53
Profit before Depreciation, Interest and Tax (PBDIT) 14,583.03 10,304.37 12,091.77 9,083.45
Depreciation & Amortization Expenses (2,776.37) (2,846.09) (2,535.28) (2,653.21)
Finance Cost (609.24) (723.18) (535.65) (653.60)
Profit before Tax (PBT) 11,197.42 6,735.10 9,020.84 5,776.64
Tax Expenses (2,961.60) (2,060.41) (2,812.04) (2,050.48)
Profit after Tax (PAT) 8,235.82 4,674.69 6,208.80 3,726.16
Balance brought forward from previous year 13,498.08 10,421.72 14,740.12 12,621.96
Amount available for Appropriation
Appropriations/Others:
Debenture Redemption Reserve (net) - 148.17 - 148.17
Dividend (3,477.70) (1,456.10) (3,477.70) (1,456.10)
Tax on distributed profits (707.98) (296.43) (707.98) (296.43)
Other Comprehensive Income that will not be (16.78) (3.62) (15.49) (3.64)
reclassified to profit or loss(Net of tax)
Other Appropriations - 9.65 - -
Balance carried forward 17,531.44 13,498.08 16,747.75 14,740.12
SHAREHOLDERS' VALUE (`)
Earnings per Share 81.07 46.02 61.12 36.68
Cash Earnings per Share 116.06 81.39 92.26 70.05
Book Value per Share 207.42 164.03 200.29 176.89

* The Financials for the year 2016-17 and 2015-16 have been prepared under Ind AS

PHYSICAL PERFORMANCE (MMT ) 2016-17 2015-16
Market Sales (Including Exports)# 35.22 34.21
Crude Thruput:
Mumbai Refinery 8.51 8.01
Visakh Refinery 9.30 9.22

# Market sales (Including Exports) as per Ind AS is 35.23 MMT for FY 2016-17 and 34.19 MMT for FY 2015-16.

SALES/INCOME FROM OPERATIONS

Your Corporation has achieved Sales/Income from operations of ` 2,13,488.95 crores in 2016-17 as compared to ` 1,97,437.53 crores in 2015-16 on standalone basis.

PROFIT

Your Corporation has earned Gross Profit of ` 12,091.77 crores in 2016-17 as against ` 9,083.45 crores in 2015-16 and profit after tax of ` 6,208.80 crores in 2016-17 as compared to ` 3,726.16 crores in 2015-16 on standalone basis.

DIVIDEND

The Board, in its meeting held on February 13, 2017 declared an interim dividend of ` 22.50 per share. Further, the Board in its meeting held on March 23, 2017 declared second Interim Dividend of ` 6.40 per share. The total interim dividend declared is ` 28.90 Per Share.

The Board of Directors, after taking into account the Financial Results of the Corporation during the year, have recommended dividend of `1.10 per share (2015-16 : ` 16 per share). The total dividend for the year 2016-17 works out to ` 30.00 per share as against ` 34.50 per share for the year 2015-16.

The amount of proposed dividend totaling to ` 111.75 crores, inclusive of ` 22.75 crores for Corporate Dividend Tax on distributed profits, shall be dispensed from the profit after tax for the year.

BONUS SHARES

Pursuant to the approval of the Shareholders in its meeting dt. Sept. 08, 2016, your company has issued bonus shares in the ratio of two equity shares of ` 10/- for one existing equity share of ` 10/- each in September, 2016.

Further, the Board of Directors in their meeting dated 26th May, 2017 have recommended the issue of Bonus shares in the ratio of one equity share of ` 10 /- for two existing equity shares of ` 10 each.

INTERNAL RESOURCES GENERATION

The Internal Resources generated during the year were ` 5,534.65 crores as compared to ` 5,421.69 crores in 2015-16 on standalone basis.

CONTRIBUTION TO EXCHEQUER

Your Corporation has contributed a sum of ` 65,674.37 crores to the exchequer during the year by way of duties and taxes, as compared to ` 52,234.73 crores in 2015-16 on standalone basis.

MEMORANDUM OF UNDERSTANDING (MOU) WITH GOVERNMENT OF INDIA

Your Corporation has been signing a Memorandum of Understanding (MOU) with the Ministry of Petroleum & Natural Gas. The performance of the Corporation for the year 2016-17 qualifies for "Excellent" rating basis self-evaluation.

REFINERY PERFORMANCE

FY 2016-17 was a stellar year for your refineries, which have recorded the best ever crude processing with a combined refining throughput of 17.81 MMT surpassing previous year's thruput of 17.23 MMT with a capacity utilization of 113 %. This improvement in performance could be achieved by sustaining the good endeavours viz. sustained equipment reliability, timely shutdown adherence and commendable operational discipline.

Higher crude processing translated into enhanced production of petroleum Products with your refineries recording best ever LPG (840 TMT), MS (3,286 TMT), HSD (6,962 TMT), LOBS (431 TMT) and Bitumen (1,216 TMT) production respectively.

In a continuous effort to upgrade the product quality and for compliance to BS IV specification Motor Spirit ("MS") and High Speed Diesel ("HSD"), necessary modifications in this aspect were completed. Thus, your refineries have successfully switched over complete production of MS and HSD to BS IV specification much in advance of April 2017, the timeline given by MoP&NG.

With Sustained commitment towards environmental protection, your Corporation has always been a frontrunner to implement initiatives for reduction of emissions, Mumbai refinery has successfully ensured mechanical completion of Tail Gas Treating Unit (TGTU) in the Sulphur recovery Train at DHDS, the technology which was offered by M/s Engineers India Limited (EIL). Visakh refinery has successfully commissioned Tail Gas Treating Unit (TGTU) in DHDS SRU III. With this, all the SRUs at Visakh refineries have TGTU facilities.

Continuing its focus towards a safe and secure work environment, both refineries have put in place a robust system to bring in safety awareness amongst personnel in their respective assignments on a regular basis. Both refineries have undertaken safety Management evaluation by external agencies. In this year, Mumbai refinery has achieved best ever safety record since its inception with 18.33 Million Safe Man Hours as of 31st March 2017 i.e. 2092 incident free days since 7/10/2011.

The planned capacity enhancement under Mumbai Refinery Expansion Plan (MREP) to 9.5 MMTPA and Visakh Refinery Modernization Plan (VRMP) to 15 MMTPA has obtained all the necessary statutory clearances during the year. Basic engineering for the package is completed and residual process engineering finalized. Projects team has been working relentlessly to manage space for the projects by site clearance activities through reorientation/removal of old assets. The project includes Bottoms Upgradation and BS VI fuel production in compliance to GOI guidelines for Implementation by 1st April 2020.

Your Corporation's R&D Centre at Bengaluru was dedicated to the nation by Hon'ble Minister of State – Independent charge, Ministry of Petroleum & Natural Gas. The facility has worked on number of technologies /products viz. H2 PSA Technology, HPFurnOKare, SprayMax FCC Feed Nozzle, HP-ENOCT, HP-DAK to name a few. During 2016-17, 13 Indian and 13 International Patents have been filed and two key technologies have been developed/ demonstrated on a commercial scale.

The particulars with respect to conservation of Energy, Technology Absorption, Foreign Exchange Earning & Outgo are detailed in

Annexure I.

The particulars relating to control of Pollution and other initiatives by Refineries are listed in Annexure II. Operating Performance of Refineries (Refinery-wise ):

Parameter Unit Mumbai Refinery Visakh Refinery
Crude Thruput TMT 8,510 9,304
Capacity utilization % 113 112
Distillate yield % 77.7 74.0
Fuel & Loss % 7.2 7.3
Specific Energy Consumption* MBTU/BBL/ NRGF 87.9 78.9
Gross Refinery Margin $/Bbl 6.95 5.51

* Specific Energy Consumption for the year is as per CHT New MBN method

MARKETING PERFORMANCE

The year 2016-17 saw your Corporation benefiting from the strategic plans implemented across different business verticals, which include several meticulously executed customer-centric initiatives at its Retail, LPG, Institutional, Government, Aviation, Lubes, Gas and Renewables marketing streams.

Your Corporation has reinforced its winning streak, by recording a best ever physical performance during 2016-17, by achieving a sales volume of 35.22 Million Tonnes (including exports), compared to sales of 34.21 Million Tonnes during the previous year 2015-16. In the Domestic sales segment, your Corporation recorded a growth of 2.5% over previous year volume. Amongst public sector oil companies, your Corporation has increased its market share by 0.16%, to reach a market share of 23.63% (excluding Petcoke/ LNG) as on 31st March, 2017.

In the mainstay Motor-Fuel segment, your Corporation has achieved a sales volume of 22.78 Million Tonnes and increased its market share in MS and HSD (combined) by 0.08%. Strategic expansion of its network saw the commissioning of 624 new retail outlets during 2016-17, which include 209 retail outlets positioned to cater to customers in rural areas. The network reach has further spread and deepened across markets, with the retail outlet strength rising to 14,412 by the year end.

Your Corporation has also significantly improved its market share in other key customer segments i.e., Diesel (Retail & Direct Consumers), LSHS, Bitumen, Lubricants, Aviation Fuel & LPG, which have contributed to its top line and bottom line.

Domestic LPG marketing is a vital part of your Corporation, and unremitting focus has been given to maintaining excellence in all customer service areas, across India. A significant addition to the customer base has made through the noble Pradhan Mantri Ujwala Yojana (PMUY), by which your Corporation has strived to reach the benefit of this user friendly fuel to persons at the bottom of the pyramid.

An enrolment of 87.07 Lakhs new LPG Gas (Domestic) customers has been completed during the year, which includes 53.85 Lakhs customers enrolled under PMUY during 2016-17. Your Corporation's domestic LPG customer base now stands at a robust 612 Lakhs, wherein the domestic fuel quantity supplied during the financial year 2016-17 stands at 4.89 Million Tonnes. Another path breaking initiative piloted by the government is the "#GiveItUp" campaign, by which more than 30 Lakhs consumers of domestic LPG have been motivated give up LPG Subsidy, which has helped in a significant way to promote the PMUY programme.

In the Aviation Business Line, your Corporation achieved a sales volume of 691 TMT and increased its market share by 0.34% amongst PSU companies, and is now supplying Jet Fuel to all the ten scheduled domestic airlines of the country.

Your Corporation has maintained its pole position in the significantly profitable Lubricants business segment in the Indian market, in which players from the MNC segment, private sector and public sector are very active. Your Corporation has created a new sales benchmark with an all-time high total Lubes sales of 607 TMT during the year, by which it has retained its No. 1 position for the fourth year in succession.

Your Corporation continued to focus on enhancing the efficiency and reliability in operations of the O&D assets, which has helped to register the highest ever throughput of 47 MMT through its POL installations. Simultaneously, your Corporation has also achieved an all-time high pipeline thruput of 17.9 MMT during the year, which commensurately aided in minimizing the product placement costs. Your Corporation has always considered supply and distribution infrastructure to be the essential corner-stone which determines the success of its long term business development plans. Close monitoring of infrastructure development projects during the Financial Year 2016-17 has led to creation of facilities at important greenfield locations and significant enhancement of capacity and handling capabilities at existing brownfield supply locations across the country. Thrust on strengthening infrastructure saw the commissioning of a new LPG Bottling Plant at Bhopal in the State of Madhya Pradesh and commissioning of Mangalore Hasan Solur Mysore LPG Pipeline (MHSMLPG) in Karnataka State.

Your Corporation has played well its role as a conscientious corporate citizen in two other important government led initiatives i.e., Swachh Bharat Abhiyan (SBA) and thrust towards Digital Payments vis--vis cash based transactions.

In support of SBA, 89 Toilet blocks were constructed in villages and schools, for the benefit of people in the vicinity of our supply locations. Retail Outlets located on the country's Highway being an important touchpoint for the traveling public, exclusive toilet facility for Ladies at 330 Retail Outlets has been developed during the year, supplementing the existing Gents toilets at these locations.

At your Corporation, 99.8% of the payment receipts, from institutional customers, dealers and other business associates, is through digital i.e., electronic payment routes. The Retail Outlet and LPG Distributor networks of your Corporation played a vital role during the de-monetisation, as one of the points authorized by the government to accept high denomination notes, thereby creating substantial goodwill amongst the citizens served by them. Hand in hand with the above, your Corporation's Retail and LPG network also single-mindedly strived to motivate customers to adopt digital payments as a way of life e.g., Bank Debit Cards payment with ‘nil' bank charges, Mobile wallet payment etc.

Many of the products handled being intrinsically vulnerable from fire safety standpoint, your Corporation has exercised the maximum care throughout the logistics chain. Constant vigilance in this regard has enabled your Corporation to practically eliminate serious incidents across the supply network, during the year.

Your Corporation vigilantly monitors the emerging trends in the market place, as well as the continuously evolving customer preferences. These are continuously analysed for developing and implementing strategic initiatives, repositioning of its products and services as per the evolving market needs along with a sustained effort to make the best use of technology to engage customers in innovative and impactful ways.

A detailed discussion of the performance of the Marketing function is given in the Management Discussion & Analysis.

TREASURY MANAGEMENT

During the year the company has repaid Long Term External commercial borrowings (ECB) of USD 1000 million (` 6,813 crores). Your Corporation effectively used a variety of borrowing instruments to optimize its cost of borrowings. The short term borrowing requirements was met through Collateralized Borrowing and Lending Obligations (CBLO), Commercial Papers (CP), MIBOR Linked Loan, USD Revolving Line of Credit (RLC) and Cash Credit facility from consortium banks. Effective Treasury management and timely hedging of LIBOR interest rate risk resulted in reduction in interest cost of the Corporation from ` 654 crores during FY 2015-16 to ` 536 crores during FY 2016-17.

Temporary surplus of funds were invested at best rates deriving substantial income on such investment. These funds were invested in term deposit with public sector banks, debt schemes of public sector mutual funds and Treasury Bills. The income from temporary surplus funds was increased from ` 51 crores in financial year 2015-16 to ` 126 crores in financial year 2016-17.

Your Corporation was able to retain long term issuer rating of "Baa3" with positive outlook from M/s. Moody's Investors Services and BBB- rating from Fitch Ratings with "stable" outlook. Both ratings are at par with sovereign rating.

INTERNAL FINANCIAL CONTROLS

Your Corporation has adequate Internal Financial Controls for ensuring the orderly and efficient conduct of its business, including adherence to the Corporation's policies; the safeguarding of its assets; the prevention and detection of frauds and errors; the accuracy and completeness of the accounting records; and the timely preparation of reliable information, which is commensurate with the operation of the Corporation. As part of this exercise, the design of internal controls, and its operating effectiveness, for the key business processes is tested by independent experts. Based on the review carried out, independent experts have confirmed that they are satisfied with the effectiveness and adequacy of Internal Controls over Financial Reporting. The entire activity of review and assessment of Internal Controls is carried out under the guidance of a Core Committee set-up for this purpose.

RISK MANAGEMENT POLICY

Your Corporation has adopted a well-defined process for managing its risks on an ongoing basis and for conducting the business in a risk conscious manner. These self-regulatory processes and procedures are contained in our Risk Management Charter and Policy, 2007. The Corporation has a structured and comprehensive Risk Management Framework, under which the risks are identified, assessed, monitored and reported, as a part of a normal business practice. Your Corporation has leveraged technology to seamlessly integrate and automate the entire process of risk monitoring and reporting which also facilitate company-wide process of managing the risks. Our risk management system is fully aligned with the corporate and operational objectives.

The Corporation has engaged the services of an independent expert to assist in continued implementation of effective Risk Management Framework. In that direction, Risk Management Steering Committee (RMSC) continues to provide its guidance. Your Corporation has put in place mechanism to inform Board Members about the risk management and minimisation procedures, and periodical review to ensure that executive management controls risks by means of a properly defined framework.

VIGILANCE

The vigilance function of your Corporation, in addition to its regular duties, has regularly interacted with other functions for promoting awareness amongst users about the proper method for achieving set objectives while complying with system and procedure guidelines and other rules of your Corporation.

During the year, based on the theme of Public Participation in promoting integrity and Eradicating Corruption, a campaign was launched for administering E-Integrity Pledge. More than 12,000 E-Integrity pledges were taken by employees and other stakeholders like vendors, dealers etc.

Interactions with employees including new recruits and other stakeholders were held. Also surprise inspections were carried out. Co-ordination with agencies like CBI, CVC, Vigilance wing of MOP&NG etc. was done apart from carrying out investigation of complaints received from offices of MOP&NG, CVC, CBI and other sources.

Review of operating areas for such as Terminal Automation system, activities of R&D centres, Outlet Diagnostic and Monitoring Tool etc. for system improvement was also carried out during the year.

INDUSTRIAL RELATIONS

As a result of proactive approach, Industrial Relations remained also harmonious across the Corporation. It is worth mentioning that not only there was no loss of productivity due to IR issues, the year also witnessed productivity increase across locations which amply demonstrates the maturity of our Unions and commitment of employees. Various Settlements were signed with the Unions in the areas of Productivity Enhancement, Redeployment etc. which is the outcome of Trust and the healthy IR climate in your Corporation.

The Corporation took proactive steps to ensure that all our contract workmen were covered under Pradhan Mantri Jan Dhan Yojana and Prime Minister Suraksha Bima Yojana. To promote Digital India and cashless economy, it was ensured that all Contract Labour deployed across your Corporation are paid their wages through National Electronic Fund Transfer ("NEFT"). Further, various programs across your Corporation were organized for Contract workmen so that they can use various modes of cashless payments. At your Corporation, we believe that safety and wellbeing of all stake holders including Contract Workmen is of paramount importance. Under the ( ‘Prerna' ) program launched by the Corporation to imbibe safe work culture and improve well-being of contract workmen, 109 ‘Prerna' Programs covering 5,153 Contract workmen were conducted during year 2016-17.

This year also your Corporation has been conferred with the prestigious "Global HR Excellence Award" for "Organization with Best Employee Relation Practices" at a ceremony held during the 25th edition of World HRD Congress on February 15, 2017 at Mumbai.

OFFICIAL LANGUAGE IMPLEMENTATION

Your Corporation gives significant importance towards implementation of Official Language. Keeping in mind the harmony, encouragement and motivation, necessary compliance of constitutional provisions pertaining to Official Language is ensured by using hindi as business language. By using Modern technology use of Hindi is ensured in the field of Information Technology. Through MOP&NG OL Conference, All India Hindi Mahotsav, Official Language Conferences, competitions and Hindi workshops your Corporation creates awareness among its employees for progressive use of Hindi. Your Corporation has headed Mumbai (PSU) Town Official Language Implementation Committee since 1983 and has been awarded by Official Language Dept. GOI and has been appreciated by Secretary-OL, MHA, GOI. Thus, your Corporation also provides guidance to the other Public Sector Undertakings for OL Implementation.

Your Corporation has bagged 37 awards in Official Language Implementation, including Petroleum and Natural Gas OL Shield for last two consecutive years thus maintaining a lead position in the entire Oil Industry for which special appreciation has been received from the Ministry of Petroleum & Natural Gas.

CORPORATE SOCIAL RESPONSIBILITY

Your Corporation has taken a leap forward this year in direction of achieving its corporate vision by meeting its social commitment through taking steps beyond the mandates of various statutes and guidelines. Continuing with efforts to create a heathy, educated and empowered nation, your Corporation has spent its CSR Budget in the areas of Child Care, Education, Health Care, Sports, Skill Development, Environment and Community Development. Your Corporation believes in creating social capital for the community as well as business through its CSR efforts to accelerate social development.

Your corporation collaborated and undertook innovative CSR projects in the year 2016-17 that brought together collective efforts to positively impact the quality of life of those who are marginalized and less privileged. The focused efforts of your Corporation towards social development through creation of community infrastructure and social intervention has led to empowerment and socio-economic welfare of the host communities.

Your Corporation is constantly adding value to the sustainable solutions to societal problems and all the CSR activities of the Corporation has remained aligned with National Developmental Policies & Programs and has followed the standards of Global Developmental Practices. The projects and intervention models have been able to make sustained and long term impacts on the society. Your Corporation has adopted the strategy of ‘Bridging the Gaps' by identifying gaps in the existing system and narrowing them rather than creating new parallel systems.

As a conscientious Corporate citizen, recognizing the need of Child Care, a model of inclusivity and equal opportunity was created by your Corporation under project ADAPT. Through therapies, special education and skill development, the project makes special children independent and also sensitizes the stakeholders at large to accept them as equal members of society.

Your Corporation's CSR Projects are in sync with Government's focus on education and girl child. Project ‘Nanhi Kali' contributes to education of girl child and women empowerment through proper academic, material and social support. This results in reducing the school dropout and holistic development of girl child.

Project ‘Akshayapatra' supplements the efforts of Government Mid-Day Meal Scheme resulting in reduction in mal-nutrition and improved school attendance.

Project ‘Unnati' aims to support the Digital India initiative, by spreading computer literacy among the school children from under privileged communities in semi urban and rural areas.

Project ‘Agastya' ignites the curious minds of the school children by fueling scientific temper at the young age. The mobile science labs provide the infrastructure and learning opportunities for the same.

As a part of focus on health care, amongst other projects our project ‘Dil without Bill' offers free heart surgeries for patients belonging to economically weaker section. Beneficiaries are identified through medical camps in different parts of the country.

17 Mobile Medical Vans under Project ‘Dhanwantari' provides free basic health care facilities in the ‘last mile connect' to the remotest parts of the country and urban slums. This is achieved by providing facilities at the doorsteps of the community.

Long Distance Truck drivers are the most vulnerable in our supply chain. To address their sensitive issues of STIs and HIV/AIDS, Project Suraksha reaches out to them by offering free medical consultation, counselling and other outreach services through ‘Khushi Clinics' at our retail outlets on Highways.

Your Corporation has been at the forefront of Skill India Mission and has been providing skill training to youth from under privileged areas. Project ‘Swavalamban' trains school dropouts in various skill trades like automobile, hospitality, welding, driving, construction etc. enhancing their employability. The project also covers difficult geographical areas which includes naxal affected areas and conflict areas of J&K.

Your Corporation is establishing Indian Institute of Petroleum and Energy, Visakhapatnam and has also contributed to the Skill Development Institutes at Visakhapatnam and Kochi. These initiatives will result in promoting higher education and employability skills.

To address the needs of the host communities, number of development programs were implemented to reach out to the last mile of population. Programs like development of Rain shed bio-industrial areas, organic farming, farmers cooperatives and self-help groups etc. were executed through community participation.

Your Corporation has enthusiastically participated in ‘Swachh Bharat Abhiyan' by engaging all its stakeholders including employees and citizens alike. Corporation focused on creation of infrastructure for sanitation and awareness among masses. Beneficiaries of CSR Projects also actively participated in the Abhiyan. Your Corporation also collaborated with Municipal Corporations and Panchayats in various states for achieving the objectives of Swachh Bharat Abhiyan.

Supporting the goals of Make in India and Stand Up India, we have a unique Entrepreneurship Development Project for aspiring youth from SC and ST Communities. This program trains entrepreneurs on all round aspects of a startup.

To energize the academic talent among meritorious students from SC, ST, OBC and PWD Communities, scholarships worth ` 6.03 Crores were distributed to 10,932 school and college students.

Your Corporation was the proud winner of the Platts Global Energy Award-2016 for Corporate Social Responsibility and gained recognition at the international level. The judges acknowledged the work of Your Corporation by saying that "nobody.. and we mean nobody does CSR better than your Corporation".

Your Corporation has endeavoured to ensure the maximum impact, from the well planned initiatives undertaken during the year, with the expenditure being commensurate with the mandatory average net profit of the company for last three financial years. The details of CSR activities of your Corporation containing details of CSR Committee Members, brief outline of the CSR policy, overview of the CSR initiatives, web link of CSR Policy, projects and Programmes, prescribed expenditure, amount spent etc., forming part of Director's report are provided in Annexure III

CORPORATE GOVERNANCE

Your Corporation continues to adopt the best practices of Corporate Governance to ensure transparency, integrity and accountability in its functioning. The corporate Governance Report highlighting these endeavours has been incorporated as a separate section, 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 2016-17, against the set target of 20 %, your Corporation has achieved 33.72% (` 2,519 Crores) procurement of goods and services from Micro & Small Enterprises (MSEs).

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

Your Corporation's emphasis is to provide a Safe Workplace for its employees. During the year ending 31.03.2017, neither any complaint of sexual harassment had been filed nor any complaint pending for enquiry. Further, your Corporation has conducted one workshop for the members of Internal Complaint Committee formed as per the provision of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, Redressal ) Act, 2013 at Hyderabad.

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, the Company will 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 of its subsidiary, to any shareholder of the company who asks for it. The Financial Statements of the subsidiary companies will also be kept open for inspection at the registered office of the Company and that of the respective subsidiary companies.

Pursuant to provisions of Section 129(3) of the Companies Act, 2013 a separate statement containing salient features of the Financial Statement of Subsidiary/Associate/Joint Venture Companies in Form AOC-1 is attached along with Financial Statements.

COST AUDIT

The Cost Audit for the financial year 2015-16 was carried out and the Cost Audit Reports were filed with the Ministry of Corporate Affairs before the stipulated date of filing.

DIRECTORS

Your Corporation's Board presently comprises of 11 Directors. The Whole Time Directors are Shri Mukesh Kumar Surana (Chairman

& Managing Director), Shri Pushp Kumar Joshi (Director – Human Resources), Shri J. Ramaswamy (Director- Finance), Shri S. Jeyakrishnan (Director – Marketing) and Shri Vinod S. Shenoy (Director – Refineries).

Shri J Ramaswamy is also the Chief Financial Officer (CFO) of the Corporation in terms of requirement of Section 203 of the Companies Act, 2013.

The Government Directors are Ms. Urvashi Sadhwani and Shri Sandeep Poundrik. The Part Time Non Official Directors (Independent) are Shri Ram Niwas Jain, Smt. Asifa Khan, Shri G.V. Krishna and Dr. Trilok Nath Singh.

As per the provisions of Section 152 of the Companies Act, Shri Sandeep Poundrik and J. Ramaswamy retire by rotation at the next Annual General Meeting and being eligible offer themselves for re-appointment.

DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR

Appointment:

O Shri S. Jeyakrishnan, Director Marketing (Whole Time Director) & Shri Vinod S. Shenoy , Director Refineries (Whole Time Director) were appointed as Additional Directors on the Board of your Corporation, effective 01.11.2016.

O Smt.Asifa Khan and Shri G.V. Krishna were appointed as Non-Official Independent Directors on the Board of your Corporation, effective 13.02.2017.

O Dr. Trilok Nath Singh was appointed as Non-Official Independent Director on the Board of your Corporation effective 20.03.2017.

Cessationship:

O Shri B. K. Namdeo, Director Refineries (Whole Time Director) and Shri Y.K. Gawali, Director Marketing (Whole Time Director) have ceased to be Directors of the Corporation effective 31.10.2016 on attaining the age of superannuation.

The Board places on record its sincere appreciation for the valuable services rendered by the above Directors during their tenure as Directors of the Corporation.

NUMBER OF MEETINGS OF THE BOARD

During the year 10 (Ten) Board meetings were convened and held. The details of the Board Meetings are given in Corporate Governance Report.

MANAGERIAL REMUNERATION & PARTICULARS OF EMPLOYEES

Your Corporation, being a Govt. Company, is exempted to furnish information under Section 197 of companies Act, 2013 vide Ministry of Corporate Affairs (MCA) Notification dated 05/06/2015.

There was a reference by C&AG with regard to the requirement of shift allowance being part of allowances within the ceiling of 50% of Basic pay. Corporation has represented on this matter to MOP&NG.

The details regarding the number of women employees vis--vis the total number of employees in each group is also given as herein below:

Group Total No. of No. of Women % of Women
Employees Employees Employees
A 5,858 610 10.41
B* - - -
C 3,796 289 7.61
D 768 20 2.60
TOTAL 10,422 919 8.82

*Your Corporation, has no posts classified under group ‘B' as the entry in non-management grades has been re-classified in group ‘C' effective 1.1.1994.

PERFORMANCE EVALUATION OF BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Your Corporation, being a Government Company, the Performance Evaluation of the Company is carried 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. As per MCA Notification dated

5th June, 2015, Compliance of Section 134 (3) (p) are exempted for Government Companies as Performance Evaluation of Directors are carried out by the MOP&NG as per its own evaluation methodology.

DECLARATION BY INDEPENDENT DIRECTORS

All Independent directors have given a declaration that they meet the criteria of independence as laid down under Section 149(6) of Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. Statement of declaration required 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 under Section 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 Central Public Sector Enterprise, the remuneration payable to Key Managerial Persons and other employees are fixed by the Government of India. However, payment like Performance Related Pay is placed for the approval of Nomination and Remuneration Committee.

AUDIT COMMITTEE

The composition of Audit committee, as required under section 177(8) of the companies Act, 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 any recommendation of the Audit Committee.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Company has appointed Shri Upendra Shukla, Practising Company Secretary to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as Annexure IV. There is no qualification, reservation or adverse remark made by the Practising Company 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 the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return is annexed as Annexure V.

RELATED PARTY TRANSACTIONS

The details of transactions entered into with the Related Parties during the year 2016-17 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 read with Rule (5) of the Companies (Accounts) Rules, 2014, the salient features of Financial Statement of Subsidiary and Joint Ventures in Form AOC-1 forms part of the Annual Report separately.

COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE

Godavari Gas Private Limited (GGPL) was incorporated on 27th September 2016 with your Corporation holding 26% equity stake and balance 74% being held by Andhra Pradesh Gas Distribution Corporation Limited (APGDC).

No company have ceased to be subsidiary, joint venture or associate of your Corporation during 2016-17.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the Financial Year 2016-17 there is no Order or Direction of any Court or Tribunal or Regulator which either affects your Corporation's status as a going concern or 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 the Corporation has a separate Vigilance Department administering the Vigilance matters.

Your Corporation has a Whistle Blower Policy approved by the Board and the same is placed on the website of the Corporation. Weblink of whistle blower policy is stated herein below:-Weblink: https://www.hindustanpetroleum.com/documents/pdf/Whistle_Blower_policy.pdf DETAILS OF DEPOSITS

Particulars Amount
(`/ 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

 

Date : 26th May, 2017 For and on behalf of the Board of Directors
Sd/-
MUKESH KUMAR SURANA
Chairman & Managing Director

   

Adani Ports & Special Economic Zone Ltd     379.55   Down   -1.25 (-0.33%)   Asian Paints Ltd     1,292.10   Down   -16.55 (-1.26%)   Axis Bank Ltd     608.60   Down   -17.35 (-2.77%)   Bajaj Auto Ltd     2,773.80   Down   -86.85 (-3.04%)   Bajaj Finance Ltd     2,570.40   Down   -34.20 (-1.31%)   Bajaj Finserv Ltd     6,527.60   Down   -22.35 (-0.34%)   Bharat Petroleum Corporation Ltd     355.10   Down   -8.90 (-2.45%)   Bharti Airtel Ltd     373.70   Down   -8.35 (-2.19%)   Bharti Infratel Ltd     266.70   Down   -0.15 (-0.06%)   Cipla Ltd     663.70   Down   -1.20 (-0.18%)   Coal India Ltd     273.20   Down   -1.75 (-0.64%)   Dr Reddys Laboratories Ltd     2,584.15   Up   15.65 (0.61%)   Eicher Motors Ltd     28,900.35   Down   -763.35 (-2.57%)   GAIL (India) Ltd     374.80   Up   2.25 (0.60%)   Grasim Industries Ltd     1,066.85   Up   1.65 (0.15%)   HCL Technologies Ltd     1,083.90   Up   5.50 (0.51%)   HDFC Bank Ltd     1,989.20   Down   -3.00 (-0.15%)   Hero Honda Motors Ltd     3,111.45   Down   -16.45 (-0.53%)   Hindalco Industries Ltd     234.15   Down   -7.20 (-2.98%)   Hindustan Petroleum Corporation Ltd     249.40   Down   -8.95 (-3.46%)   Hindustan Unilever Ltd     1,664.95   Up   59.50 (3.71%)   Housing Development Finance Corporation Ltd     1,855.70   Down   -23.15 (-1.23%)   ICICI Bank Ltd     318.85   Down   -6.85 (-2.10%)   Indiabulls Housing Finance Ltd     1,158.25   Down   -42.60 (-3.55%)   Indian Oil Corporation Ltd     152.60   Down   -3.95 (-2.52%)   IndusInd Bank Ltd     1,862.15   Down   -14.90 (-0.79%)   Infosys Technologies Ltd     719.10   Down   -6.85 (-0.94%)   ITC Ltd     303.25   Up   1.25 (0.41%)   Kotak Mahindra Bank Ltd     1,215.30   Down   -15.10 (-1.23%)   Larsen & Toubro Ltd     1,327.90   Down   -16.85 (-1.25%)   Lupin Ltd     929.35   Down   -20.85 (-2.19%)   Mahindra & Mahindra Ltd     946.55   Down   -4.30 (-0.45%)   Maruti Suzuki India Ltd     8,399.15   Down   -138.65 (-1.62%)   NIFTY (S&P CNX)     11,278.90   Down   -98.85 (-0.87%)   NTPC Ltd     169.70   Down   -2.55 (-1.48%)   Oil & Natural Gas Corpn Ltd     173.90   Up   2.20 (1.28%)   Power Grid Corporation of India Ltd     198.90   Down   -3.00 (-1.49%)   Reliance Industries Ltd     1,217.15   Down   -8.75 (-0.71%)   State Bank of India     273.80   Down   -11.50 (-4.03%)   Sun Pharmaceuticals Industries Ltd     642.50   Down   -3.70 (-0.57%)   Tata Consultancy Services Ltd     2,070.75   Down   -3.40 (-0.16%)   Tata Motors Ltd     251.50   Down   -8.75 (-3.36%)   Tata Steel Ltd     612.75   Down   -3.65 (-0.59%)   Tech Mahindra Ltd     754.70   Down   -12.85 (-1.67%)   Titan Company Ltd     824.90   Up   1.45 (0.18%)   UltraTech Cement Ltd     4,059.95   Down   -43.55 (-1.06%)   UPL Ltd     709.05   Down   -14.45 (-2.00%)   Vedanta Ltd     230.15   Down   -4.75 (-2.02%)   Wipro Ltd     332.55   Up   2.65 (0.80%)   Yes Bank Ltd     323.55   Up   4.95 (1.55%)   Zee Entertainment Enterprises Ltd     464.55   Down   -10.70 (-2.25%)      NSE Data  -  www.nseindia.com (5 minutes delayed) syndicated by www.cmots.com