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कोची रिफाइनरीज निदेशकों की रिपोर्ट, कोची रिफाइनरीज निर्देशकों द्वारा रिपोर्ट

कोची रिफाइनरीज

बीएसई: 500873  |  NSE: COCHINREFN  |  ISIN: INE123A01012  |  Refineries

खोजें कोची रिफाइनरीज कनेक्शन
निदेशकों की रिपोर्ट वर्षांत : Mar '05
The year 2004-05 was an outstanding year for your Company, in every
 way.Thanks to sustained demand for petroleum products, the stand-alone
 refineries like your Company could perform well amidst hardening of
 crude oil prices and increasing subsidy burdens. And the year in
 reckoning is singularly important, as the environment related cleaner
 fuels project could be completed on time and also as the strategic SBM
 project, with its potential for considerable savings in your Company's
 crude transportation cost, is moving ahead.
 
 The merger move with Bharat Petroleum Corporation Limited, will
 complement the inherent strengths of both the organizations, unlock the
 latent potential and provide great operating synergies.  This will
 further enhance the competitive capability of the merged entity, and go
 a long way in creating a platform to establish a solid, unified
 presence in downstream and retail businesses.
 
 The Company realises that the time ahead is full of enormous
 challenges. It is projected that the world will see an increase in
 energy demand of about 50% by 2030, which will be a huge amount of
 energy. Our own nation's fuel energy needs are constantly on the
 rise.The need to preserve our precious energy resources and enhance
 energy security has never been so crucial.  The questions foremost in
 our mind are: what types of energy will be demanded in the future, how
 to ensure that adequate energy is available, and what steps will be
 needed to ensure our country can meet comfortably our longer-term
 energy needs.  Meeting the rapidly growing energy demand will require a
 broad portfolio of energy options.
 
 Newer technologies have to be harnessed to create environment-friendly
 transportation fuels in a cost effective manner. By upholding its
 corporate responsibilities and transforming the core competencies into
 actions, on a daily basis, your Company is well-positioned to
 successfully meet these challenges of our rapidly changing and
 developing nation.  It is on this note that your Directors present the
 43rd Annual Report on the working of your Company, together with the
 Audited Accounts for the financial year ended 31 March 2005.
 
 FINANCIAL PERFORMANCE
 
 The year 2004-05 was a good one for stand-alone refineries.  Refining
 margins were good and your Company has achieved its best ever
 performance in its history and attained an all time high gross sales
 turnover of Rs. 154,403 Million during the year against Rs. 117,158
 Million during 2003-04 registering a growth of 31.8%.The Profit Before
 Tax of Rs. 11,929 Million achieved during the year under report is a
 record as against Rs.9,062 Million in the previous year, registering a
 growth of 31.6%.
 
 The overall financial performance for the year 2004-05 along with the
 figures for the previous year is:
 
                                                       (Rs. in Million)
 
 Financial Performance at a Glance                 2004-05      2003-04
 
 Sales Turnover-Gross                           154,402.65   117,158.31
 Sales Turnover - Net of Excise Duty            131,345.02   100,609.77
 Profit Before Depreciation, Interest and Tax    13,567.13    10.682.32
 Interest                                           350.23       433.17
 Depreciation including prior period              1,287.50     1,187.05
 Profit Before Tax                               11,929.40     9,062.10
 Provision for Taxation-Current                   4,445.00     2,884.50
 Profit After Current Tax                         7,484.40     6,177.60
 Provision for Taxation - Deferred
 (Asset)/Liability                                (236.77)        46.73
 (Write back)/Provision for
 Taxation - Earlier Year                          (700.00)       580.00
 Profit After Tax                                 8,421.17     5,550.87
 
 The Directors propose to appropriate the Profit After Tax as under.
 
                                                  (Rs. in Million)
 
                                                2004-05     2003-04
 
 Towards Dividend                                775.43    1,661.64
 Towards Corporate Dividend Tax                  105.71      212.90
 For transfer to General Reserve                 842.12      555.10
 
 Net Worth
 
 The net worth of your Company at Rs.25,593 Million as on 31 March 2005,
 has grown by 41.8% more than previous year's net worth of Rs. 18,053
 Million.
 
 Contribution to Exchequer
 
 The Company continues to be a large contributor to the exchequer.  The
 Company contributed a sum of Rs.38,516 Million by way of taxes, duties,
 etc. during the year, against Rs.28,027 Million in 2003-04.
 
 Gross Margin
 
 The gross margin during the year 2004-05 was Rs.1,957 per tonne (US
 Dollar (USD) 5.9 per barrel} as compared to Rs. 1,351 per tonne (USD
 4.0 per barrel) in 2003-04. This significant increase in GRM was mainly
 due to optimal crude oil selection, operational efficiencies and
 favourable crude oil/products prices.
 
 Apart from the regular margins, the Company accounted past dues credits
 during the year to the tune of Rs.136 Million as compared to Rs. 1,805
 Million in 2003-04. However, in the absence of scheme of reimbursement
 of irrecoverable taxes by the Government of India, the Company had to
 absorb an amount of Rs.1,515 Million towards Central Sales Tax on
 Liquefied Petroleum Gas (LPG), Superior Kerosene Oil (SKO), Motor
 Spirit (MS) and High Speed Diesel (HSD).
 
 Dividend
 
 The Company had already declared and paid two interim dividends at 23%
 (Rs.2.30 per share) on 4 March 2005 and 33% (Rs.3.30 per share) on 16
 June 2005 for the year ended 31 March 2005. With these two interim
 dividends, the total dividend for the year ended 31 March 2005 works
 out to Rs.5.60 (56%) per share.This absorbed an amount of Rs.881.14
 Million including the corporate dividend tax.
 
 PRODUCTION PERFORMANCE
 
 The Company achieved a crude oil thruput of 7.92 Million Metric Tonnes
 (MMT) against the Memorandum of Understanding (MoU) target of 7.55 MMT,
 the capacity utilisation being 105.7% compared to 104.7% achieved last
 year.The LPG production for the year was the highest ever at 423
 TMT.This is one of the highest among PSU refineries. Your Company is
 rated as EXCELLENT under the MoU signed with the holding company,
 Bharat Petroleum Corporation Limited (BPCL).This is the fourteenth
 consecutive time your Company scores the EXCELLENT rating. Till
 2002-03,your Company's MoU was with the Government of India.
 
 The Company has registered record performances in the following
 significant areas:
 
 * Highest Crude Oil thruput of about 7.92 MMT; previous record 7.85 MMT
 in 2003-04.
 
 * Highest processing of imported crude oil, about 5.80 MMT; previous
 record 5.61 MMT in 2003-04.
 
 * Highest production of value added products like LPG, MTO, Toluene,
 ATF and NRMB:
 
                              During the year    Previous Records
                              2004-05            with year in brackets
                              (Metric Tonnes)    (Metric Tonnes)
 
 Liquefied Petroleum Gas (LPG)
 Production                          422761        422700 (2003-04)
 
 Mineral Turpentine Oil (MTO)         52747        44011 (2003-04)
 Toluene                              41938        39265 (2000-01)
 Aviation Turbine Fuel (ATF)         139243        117687 (2002-03)
 
 Natural Rubberised Modified
 Bitumen (NRMB)                       34458        23789 (2003-04)
 
 * Highest product export of 0.767 MMT, worth about USD 213 Million;
 previous record 0.484 MMT worth about USD 94 Million in 2003-04.
 
 SAFETY
 
 The year 2004-05 was a year of achievements for the Company with regard
 to safety also. In 2004-05, the Company was awarded the International
 Safety Rating System (ISRS) Level 8 by M/s Det Norske Veritas AS. By
 implementing the ISRS, the Company rose to world standards in safety.
 The Company's Joint Safety Committee has been adjudged as the Best
 Safety Committee in Kerala by National Safety Council, Kerala Chapter.
 Further, Kerala Chapter of National Safety Council, has awarded the
 Company the 'Runner Up1 in outstanding performance in industrial safety
 among large size chemical industries in Kerala.
 
 The Company has undertaken major shut down maintenance of various
 process units and completed Capacity Expansion-cum-Modernisation
 Project (CEMP) Phase-I revamp activities of Diesel Hydro
 Desulphurisation (DHDS) Units. Despite such major activities, there
 were no reportable fire incidents during the year. All employees of the
 Company have undergone one-day fire and safety training programmes.
 These training programmes emphasize the importance of safety among
 employees. Also training programmes on fire and safety were conducted
 for all contract supervisors, contract workers and
 contractors/consultants working inside the Company. Internal safety
 audit and Oil Industry Safety Directorate (OISD) surprise audits were
 conducted and most of the recommendations were implemented. Periodic
 review is conducted to check the compliance level of these audit
 recommendations.
 
 ONGOING PROJECTS
 
 Crude Oil Receipt Facilities
 
 The project, having an approved cost of Rs.6,230 Million (which is
 under revision), is being implemented for reducing transportation cost
 of crude oil, by setting up independent crude oil receipt facilities
 consisting of a Single Buoy Mooring (SBM) suitable for berthingVery
 Large Crude Carriers (VLCC), a shore tank farm and connected pipelines.
 The revised scheduled date of completion of the project is May 2007.
 
 Bitumen Revamp Project
 
 This project involves revamp of the existing bitumen blowing unit
 incorporating Biturox Process for making special grade bitumen in line
 with new specifications prescribed by the Bureau of Indian Standards.
 The investment approval for the project was obtained in April 2005. The
 approved project cost is Rs.259.70 Million and the project is scheduled
 for completion by October 2006.
 
 PROJECT PROPOSALS
 
 Capacity Expansion-cum-Modernisation Project (CEMP) - Phase II
 
 The processing of hydrocarbon fuels is closely linked to environmental
 concerns on a continuous basis too. Your Company fully recognises this
 and is investing to produce better quality, efficient fuels.This
 project involves a capacity addition by 2.0 MMTPA, modernisation of the
 refinery for cost reduction and setting up of facilities for meeting
 EURO-III equivalent product specification.The DFR for the CEMP Phase-II
 has been prepared. The Environmental Impact Assessment (EIA) and Rapid
 Risk Analysis (RRA) have also been carried out.  The project, costing
 Rs.19,945 Million, is expected to be completed by September 2009.
 
 Natural Gas Business
 
 The Government of India's initiatives to bridge the supply-demand gap
 of India's energy requirement have brought forth Liquefied Natural Gas
 (LNG), which is gaining acceptance as a clean, cost effective and
 thermally efficient fuel.The country's demand for LNG,forecast to grow
 by 15% a year, is the fastest in the world and is poised to change the
 energy mix of our country. In the context of Petronet LNG Limited (PLL)
 setting up the LNG terminal in Kochi, your Company has plans to take
 advantage of this emerging scenario by diversifying into Natural Gas
 business, the new growth sector.
 
 Petrochemical Business
 
 Profitability of global refining industry is always susceptible to
 price volatility, upgrading margins, costs for environmental compliance
 and competitive pressures. In this context, refinery/petrochemical
 interface-strategies to increase refinery profitability and for
 benefiting downstream operations have become a necessity. Identified as
 a potential area for value addition, your Company is now studying
 detailed feasibility of setting up a Propylene Recovery Unit using the
 post CEMP LPG pool.
 
 Bottoms Upgrading
 
 Declining sweet crude oil reserves and resulting price escalation for
 quality crude oils, coupled with increasing share of Natural Gas in the
 world energy backet and stringent environment norms world over, have
 drastically reduced the demand for Furnace Oil with high sulfur
 content. This has also resulted in widening the gap in light-heavy fuel
 price differential. It is, hence, imperative for your Company to look
 into the possibility of surmounting this threat and add value to its
 business at the same time, so that future operability and refining
 margins are assured. A scoping study for setting up suitable bottoms
 upgradation facilities for processing the Company's bottoms of the
 barrel has been initiated with the help of an External Consultant.
 
 PROJECTS COMPLETED
 
 Capacity Expansion-cum-Modernization Project (CEMP)-Phase I
 
 The project was envisaged for setting up of facilities for quality
 upgradation of auto fuels, MS and HSD, to meet the Bharat Stage II (BS
 II) emission norms and for Fluid Catalytic Cracking Unit (FCCU) revamp
 for increased severity and capacity. The approved project cost is
 Rs.2,730 Million. The DHDS unit revamp for quality upgradation of auto
 fuels, MS and HSD to meet BS II emission norms was completed in
 December 2004 and now the total MS/HSD supplied by the Company conforms
 to BS II emission norms.The FCCU revamp job was taken up along with
 annual FCCU turn around started in April 2005 and the revamped FCCU has
 been commissioned.
 
 Revamp of 3.3 kV/415 V Systems
 
 This project is the second phase of High Tension/Low Tension system
 modernization, wherein the balance 3.3 kV and 415V switch boards at
 various sub-stations are replaced with the new generation equipment.The
 project costing Rs. 110 Million has been commissioned in May 2005.
 
 Rain Water Harvesting Project
 
 The Company takes environmental responsibilities with ail earnestness
 and pioneers environmental initiatives of the State.  The Rain Water
 Harvesting Project stands as a testimony to this care. In the first
 phase,facilities were provided for collecting rain water from the roofs
 of the buildings in the refinery complex. The water so collected was
 routed as raw water, quarry/cooling tower make-up water. This facility
 was commissioned on 28 January 2005. In the second phase, a detention
 pond of capacity 1,20,000 M3 was constructed to collect storm water
 from various tank farms and the facility was commissioned on 31 May
 2005.
 
 Bitumen Emulsion Plant
 
 To have environmental friendliness in the application of conventional
 bitumen, a bitumen emulsion plant having a capacity of 10 tonnes per
 hour was installed to produce bitumen emulsion.The plant was
 commissioned in February 2005.
 
 Ecological Park
 
 As part of this project, major portion of wet land available as part of
 the refinery's effluent treatment system has been developed as an
 ecological park by planting different species of trees, flowering
 plants, herbal trees etc. 3752 plants of different types were planted
 in the ecological park. The work was completed in November 2004 and,
 now the ecological park and the treated effluent water bed attract
 different living species, including certain seasonal migratory birds.
 
 RESEARCH & DEVELOPMENT
 
 Set up in 1988 and recognized by the Department of Scientific and
 Industrial Research (DSIR), Government of India, the Company's R&D
 Centre is continuously engaged in research to develop value added
 products from the refinery streams.  Natural Rubber Modified Bitumen
 and. Bitumen Emulsion are the popular value added products developed by
 this Centre.  Presently, R&D is carrying out experiments for the
 formulation of Premium Diesel and Bio-Diesel.The R&D Centre functions
 in collaboration with esteemed institutions like Indian Institute of
 Petroleum, Dehradun and Indian Institute of Technology, Chennai.
 Optimisation and innovative improvements in the process operations and
 undertaking exploratory research to find out new avenues for growth and
 diversification are the other objectives of the R&D Centre. Apart from
 other petroleum testing facilities, the R&D Centre is equipped with
 facilities for evaluation of crude oil and Fluid Catalytic Cracking
 (FCC) catalyst.The FCC pilot plant and FCC offline simulation software
 have been extensively utilized for the evaluation of new improved
 catalysts and additives.
 
 Particulars as required by the Companies (Disclosure of Particulars in
 the Report of Board of Directors) Rules, 1988, are given in Annexure.
 
 COMMUNITY WELFARE SCHEMES
 
 The Company promotes with special care the educational and economic
 interest of weaker section, in particular, of the Scheduled Castes and
 Scheduled Tribes and protects them from social injustice and all forms
 of exploitation. Your Company essentially plays the role of an
 effective catalyst by providing support to these sections, to meet
 their challenges.
 
 The Company's community development programmes target basic areas of
 urgent developmental needs. Hence, the Company focuses its attention on
 the poorest of the poor, those living in the villages, mentally and
 physically handicapped, and those suffering from illness. Regular
 activities include: rural medical camps, medical insurance schemes,
 scholarships to SCI ST students, free IT education for students,
 noon-feeding and milk supply to anganwadis, housing for homeless,
 drinking water & sanitation, employment generation programmes and
 educational assistance.
 
 At the same time, other community relations activities intended to
 benefit a larger section of the people around are also planned and
 implemented. These include providing automatic traffic signals on the
 highways, maintaining public parks, providing street lights, arranging
 drinking water facilities etc.
 
 The Company also takes interest in preserving and developing art and
 culture, as well as promoting sports and games. The Company regularly
 conducts seminars, symposia and talks involving different streams of
 the society on areas like environment, women's empowerment, children's
 development, safety etc.
 
 WELFARE OF WEAKER AND OTHER SECTIONS OF THE EMPLOYEES
 
 The Company continued to bestow greater importance towards the welfare
 of the weaker sections amidst its employees. The Company devotes full
 focus on this area and took steps in accordance with the Government
 directives in regard to reservation in posts for SC/ST/OBC/Physically
 Handicapped/Ex-Servicemen. As at the end of the year under report, the
 Company had 244 Scheduled Castes, 52 Scheduled Tribes and 297 Other
 Backward Classes, out of the total staff strength of 1924 permanent
 employees. Out of these 1924 permanent employees, 272 were
 Ex-Servicemen, 40 Physically Handicapped and 617 from Minority
 Communities. The Company is complying with the provisions of the
 Disability Act, 1995.
 
 SC/ST EMPLOYEES
 
 The prescribed information on SC/ST employees of the Company (Report I
 & II) are given in Annexure.
 
 WOMEN EMPLOYEES
 
 The Company has a total strength of 1924 employees out of which 85
 (4.42%) are women employees. Out of the 316 houses available in the
 Housing Colony, 16 (5.06%) houses were allotted to the women employees.
 
 HINDI IMPLEMENTATION
 
 The Company has continued with its efforts to propagate Hindi.  Hindi
 is encouraged to be used in day-to-day activities. The efforts are well
 in line with the policy of Hindi implementation in accordance with the
 Official Languages Act, 1963 and the Official Languages Rules, 1976.
 
 Efforts taken to encourage the use of Hindi include in-house training
 in Hindi, training in Hindi typewriting & Hindi stenography, Hindi
 Workshops, purchase of Hindi books, purchase of Hindi softwares to
 enable use of Hindi and English in official work, introduction of
 various incentive schemes, printing of all items of stationery
 bilingually, publication of quarterly Hindi house magazine `Jwala
 Dhwani Trimasik' etc.The Website of the Company has been hosted in
 Hindi also.
 
 STATUS OF CITIZENS'/CLIENT'S CHARTER
 
 The Company's business brings it in direct contact with diverse section
 of the society. Being a responsible corporate citizen, the Company
 believes that it has responsibility towards the society and people with
 whom it comes into contact and is committed to fulfil its
 responsibilities towards the society. While forming its policies, the
 Company takes into consideration the perceptions and concerns of the
 society and citizens regarding all aspects of operation. To actively
 facilitate this, the Company has a Grievance Cell functioning at
 Ambalamugal to take up the complaints/suggestions, if any, raised by
 the community in and around the Refinery. Actions are taken to redress
 the grievances received by the Cell and it has been functioning
 smoothly and regularly.
 
 VIGILANCE FUNCTION
 
 The Company has a full-fledged Vigilance Department headed by the
 Chief Vigilance Officer who has been appointed by the Government of
 India to look after the vigilance function effectively. In order to
 keep continuous vigil on the various functions, the Department chalks
 out various programmes and measures primarily in accordance with the
 directives of the Central Vigilance Commission and conducts regular as
 well as surprise inspections/checks of various-sensitive areas.
 Besides, comprehensive system studies are undertaken by the Department
 with a view to plugging loopholes in the system and suggesting
 improvement in procedure, as a measure of preventive vigilance. The
 Department strives to ensure transparency in all dealings. Similarly,
 existing systems and procedures are scrutinized regularly for updating
 the procedures and for eliminating the redundant in the changing
 scenario.
 
 Officers holding sensitive positions are being rotated periodically
 with a view to avoiding development of vested interest. Property
 returns by officers are being subjected to detailed scrutiny. The
 returns are being obtained annually, in place of the erstwhile practice
 of obtaining the returns biennially.
 
 Tendering procedures are streamlined and made more transparent so as to
 remove ambiguity from the minds of participating contractors and to
 eliminate scope of corruption.  A new tender information system has
 been evolved with a view to enabling the contractors/vendors to know
 the status of various tenders. This constitutes a greater step towards
 transparency. All tenders are put in the Website of the Company to
 ensure greater participation in tenders.
 
 All major works are audited/inspected by the Department for the correct
 execution of the jobs strictly adhering to contractual norms. This
 auditing is besides the examination of major contracts by the Chief
 Technical Officer of the Central Vigilance Commission.
 
 Another notable activity by the Vigilance Department was to observe
 Vigilance Awareness Week from 31 October 2004 to 6 November 2004, as
 part of the all India programme for sensitizing the employees in
 particular and, the public in general, on the importance of being a
 corruption-free organization/country. Various programmes were organized
 during the week, for awakening the employees and the public against
 evils of corruption.
 
 JOINT VENTURE COMPANY
 
 Petronet CCK Limited
 
 As reported last year, the Company has subscribed towards 23% of the
 equity capital of Petronet CCK Limited (PCCKL), which is a Joint
 Venture Company promoted by Bharat Petroleum Corporation Limited and
 Petronet India Limited.  PCCKL is poised for disinvestment. It operates
 the cross-country petroleum products pipeline connecting Kochi,
 Coimbatore and Karur.The pipeline transport during the year 2004-05 was
 1.323 MMT against the 0.942 MMT transported during the previous year,
 representing a growth of 38.2%.  During the year, PCCKL registered a
 turnover of Rs.369.45 Million compared to Rs.309.57 Million in the
 previous year and incurred a loss of Rs.22.85 Million against Rs.145.91
 Million in the previous year.
 
 ENERGY CONSERVATION
 
 The Company continues to bestow utmost importance to conservation of
 energy, by regular monitoring and analysis of fuel and utilities
 consumption, optimizing plant operations and proper up keep of plant
 and machinery.
 
 The Company has formed 25 Energy Conservation (ENCON) Clubs in various
 schools and colleges all over Kerala. Main objective of this Club is to
 drive home the concept of energy conservation and environmental
 protection in the minds of younger generation. The Company has
 organised various activities like seminars/workshops/quiz competitions
 etc. on energy conservation at different locations during Oil and Gas
 Conservation Fortnight. Presentations on energy conservation and
 environmental protection were made for the ENCON Club members visiting
 the Company.
 
 During the year, the Company undertook many major conservation measures
 like:
 
 * Replacement of metallic blade with Fibre Reinforced Plastic blade in
 CE7A/B air fin fans on a trial basis, at an investment of Rs.0.11
 Million with an expected savings of Rs.0.26 Million per annum.
 
 * Using hot condensate for production of bitumen emulsion as part of
 Bitumen Emulsion Project with an expected savings of Rs.0.15 Million
 per annum.
 
 Lest one forgets
 
 Shri Dominic Presentation, Hon'ble Minister for Sports & Fisheries
 flagging off the Marathon organised as part of Oil & Cos Conservation
 Fortnight observance.
 
 * Replacement of conventional burners in EHI heater with low Nox
 burners completed in May, 2005.
 
 Additional investments and proposals being implemented for reduction of
 energy consumption are:
 
 * Insulation of plant fuel tank No. 190.
 
 * Condensate recovery from Vacuum Residue/Plant Fuel Tank Farm.
 
 * Internal coating of cooling water pump in Aromatic Recovery Unit to
 improve pump efficiency.
 
 * Replacement of conventional burners in RHI heater with new, more
 efficient low Nox burners.
 
 Particulars as required by the Companies (Disclosure of Particulars in
 the Report of Board of Directors) Rules, 1988, with regard to Energy
 Savings, are given in Annexure.
 
 ENVIRONMENTAL PROTECTION
 
 The Company continued to strive for improvement of environmental
 performance and protection by meeting all the environmental standards
 laid down by various regulatory bodies with respect to discharge of
 effluent water and gaseous emissions.
 
 The major environmental projects implemented by the Company during the
 year were:
 
 * Two secured landfill facilities for storing hazardous waste generated
 within the refinery at a cost of Rs.5.80 Million.  One pit of 590 M3
 capacity is for storing FCCU catalyst fines and spent molecular sieves
 and the second pit of 390 M3 capacity is for storing chemical sludge
 from Effluent Treatment Plant.
 
 * Rainwater-harvesting scheme to collect rainwater from roof of the
 refinery buildings. Another rainwater harvesting scheme was
 commissioned by constructing a detention pond of capacity 1,20,000 M3
 to collect storm water from various tank farms.
 
 * An eco-park covering an area of 5.5 acres of land in which 3752
 plants of II varieties were planted.
 
 * Around 5000 tonnes of oil sludge was processed and an approximate
 quantity of 1850 tonnes of oil was recovered during the year 2004-05.
 
 MANAGEMENT DISCUSSION AND ANALYSIS REPORT
 
 A. Industry Scenario
 
 The year 2004-05 was a very good year for the Refinery Sector.  The
 consumption of petroleum products increased by 4.6% in the fiscal as
 compared to the previous year. There was an increase of 4.5% in
 production of petroleum products including fractionators and in
 absolute terms, the indigenous production continued to be higher than
 domestic consumption, with imports of crude oil registering an increase
 of 6% in quantity and 39.8% in value.
 
 The upward trend in crude oil and product prices had a positive effect
 on the Company's margins and to a great extent, this was responsible
 for the increase in profits during the current year.
 
 The entry of CNG/LNG in the Indian market would also change the product
 demand. In a phased manner.all metros and a number of select cities
 including Kochi.are slated to switch over to CNG for fuel for vehicles,
 for achieving reduced emissions. The implementation of BS II auto fuels
 in certain designated cities reflects the commitment of the industry to
 the concerns of pollution and these moves are a step towards
 environment friendly fuels.
 
 B. Opportunities & Threats
 
 Opportunities
 
 * New emerging business opportunities in gas sector with new domestic
 discoveries as well as LNG related activities.
 
 * Government of India's renewed interest in energy security of our
 country, which could lead to new policy initiatives and resulting
 growth opportunities to become globally competitive.
 
 * Projected GDP growth rate of 7% beyond 10th Plan period and
 consequent growth of demand for petroleum products.
 
 * Location advantage of being a coastal refinery with acquirable land
 in proximity.
 
 * BPCL's strengths for business promotion. 
 
 Threats
 
 * Lower level of refining sophistication compared to global standards.
 
 * Sole dependency on single business of crude oil refining.
 
 * Excess domestic refining capacity, resulting in surplus production of
 Naphtha, Furnace Oil and High Speed Diesel.
 
 * Low business volumes resulting in decreased market presence/share.
 
 C. Marketing of Products
 
 The Company is marketing directly the free trade products viz.,
 Benzene, Toluene, Special Boiling Point Spirit, Mineral Turpentine Oil,
 Poly Iso Butenes, Sulphur etc.The Company also sells directly certain
 de-controlled products i.e., Furnace Oil (FO), Low Sulphur Heavy Stock,
 Naphtha and Bitumen to designated customers. The Company also markets
 specialty products like Natural Rubber Modified Bitumen, Bitumen
 Emulsion Rapid Setting and Diesel Additive. The rest of the products
 are being marketed through the holding company, BPCL.
 
 The Company has also made a small entry into retail marketing through
 two outlets,whichare currently branded as BPCL COCO outlets. Salient
 features on Direct Market activities of the Company during the
 Financial Year 2004-05 are as given below:
 
 * Achieved all time record sale of 54TMT in MTO, bettering the previous
 year's record of 44 TMT
 
 * Registered all time record sale of 34 TMT in NRMB, a product
 developed through in-house Research & Development. Previous record was
 last year's sale of 24 TMT.
 
 * Among aromatic products.Toluene recorded all time high sales of
 40,326 MT, surpassing previous year's sale of 39,764 MT.
 
 * Poly Iso Butene (PIB) sales for the financial year is an all time
 record touching 4,389 MT. Previous best was 4,341 MT achieved during
 the year 1999-00.
 
 * Exported around 0.767 MMT of products during 2004-05 valued at around
 USD 213 Million.This is against export of around 0.484 MMT during
 2003-04 valued at USD 94 Million.
 
 * The Company received Three Star certification and was accorded the
 status of an Export House in accordance with the provisions of the
 EXIM Policy by the Ministry of Commerce & Industry, Government of
 India, on account of its performance in export of products and earning
 valuable foreign exchange.
 
 * KRL Retail Outlet at Ambalamugal became the largest selling Retail
 Outlet in Kerala among retail outlets of all the Oil Marketing
 Companies by clocking total sales of 750.401 KL (MS + HSD) during the
 month of January 2005.
 
 D. Outlook
 
 The Indian economy is expected to register an actual GDP growth rate of
 6.9% during the current year. It is expected that the demand for
 petroleum products would reflect the growth of the Indian economy. With
 surplus domestic production and likely switch over to Natural Gas, oil
 companies would have to look to the export market for evacuation of
 petroleum products.Your Company would also have to continue export to
 tide over any domestic product off-take limitations.
 
 E. Risks & Concerns
 
 The increase in refining capacity of the country coupled with skewed
 domestic demand pattern for certain products have resulted in
 exportable surpluses. For industrial petroleum products, there exists
 an added dimension to this due to threat of replacement by cheaper and
 cleaner fuels like Natural Gas.  Consequent to implementation of auto
 fuel norms to subsequent cleaner levels of EURO-III/IV specifications
 by the Government, increased levels of investments would be required by
 the refiners.
 
 The Government policy further calls for energy security by attaining
 global competitiveness through exploration and development of
 alternative sources of energy including natural gas, and renewable
 fuels, pricing, marketing and distribution network, and the regulatory
 mechanism, and strengthening of the Public Sector Undertakings in the
 oil and gas sectors.This would result in explosive growth in refining
 capacity, retail outlets, pipeline infrastructure etc. and would
 reshape the Indian oil industry posing stiff competition. Your Company
 is taking adequate measures to cope with the situation and enhance its
 competitive edge by modernization of the refinery for cost reduction.
 
 F. Adequacy of Internal Controls
 
 Internal control is a matter of vital importance for the Company.  The
 Company has time tested and adequate system of internal controls to
 ensure that all the assets are safeguarded and protected against
 unauthorized use and that all transactions are authorized, recorded and
 reported correctly. The internal Control Systems are supplemented by
 clearly defined level of authority, documented policies, guidelines,
 systems and procedures. The Department Manuals are also available for
 reference which bring out the Policies, Rules and Procedures to be
 followed.The Internal Control System ensures that the financial and
 other records are reliable and the various Statutes, Rules, Internal
 Instructions and Guidelines are strictly complied with, in the
 day-to-day transactions.
 
 The Company has an Internal Audit Department comprising Finance and
 Technical personnel that covers on a continuous basis the operations
 and services spanning all areas and functions of the Company. The
 adequacy of Internal Control Systems and adherence to Management
 Policies and Guidelines and compliance with various Statutes and Laws
 are also verified by the Internal Audit Department.
 
 The Audit Committee of the Board also reviews the adequacy of internal
 checks and controls. Significant audit findings are also reviewed by
 the top management and Audit Committee of the Board. Implementation of
 SAP R/3 system coupled with Business Process Cycle Audits has tightened
 the controls further.
 
 G. Discussion on Financial Performance
 
 The Company has achieved a record net turnover of Rs. 131,345 Million
 for the year ended 31 March 2005 as against Rs. 100,610 Million last
 year, registering a growth of 30.5%. The increase was mainly due to
 increase in sales volume and higher selling prices. Due to favourable
 price situations, the Company achieved larger volume of exports worth
 Rs.9,604 Million during the year as compared to Rs.4,306 Million in the
 last year.
 
 The Gross Profit before depreciation, interest and tax has increased to
 Rs. 13,567 Million as against Rs. 10,682 Million during the previous
 year, showing an increase of 27%. The Profit Before Tax has also
 increased to Rs. 11,929 Million from Rs.9,062 Million during the
 previous year. The increase in profit is due to higher production
 levels, optimal crude oil selection, better refinery margins,
 accounting of past dues and reduction in interest. This increase has
 been possible in spite of non-availability of Central Sales Tax
 reimbursement scheme for LPG/SKO/MS and HSD during the year, resulting
 in an under-recovery of Rs. 1,515 Million. The upward trend in the
 product prices vis-a-vis crude oil prices during the year was the main
 factor for better refinery margins. It may, however, be noted that in
 periods when the prices are falling, the margins could be lower.
 
 The provision for taxation for the current year is higher at Rs.4,208
 Million as compared to Rs.2,931 Million for the previous year. The
 increase in taxation is due to higher profits for the year. Income tax
 of Rs.700 Million has been written back during the year out of
 provisions created in earlier years, based on favourable orders
 received from Income Tax Appellate authorities. The Net Profit for the
 year is Rs.8,421 Million as against Rs.5,551 Million during the
 previous year.
 
 H. Human Resources Development/Training
 
 The Company realises that Human Resources (HR) are its greatest asset,
 which provides its competitive edge. Your Company is determined to
 build on the progress it has already made in this area. In the long
 term, it means leveraging on its human resources strength to
 differentiate itself in an increasingly competitive energy industry.
 
 To facilitate these goals, the Company's HR systems have been
 continuously geared up towards developing an organization which
 encourages employees to realise their potential; and, enables employees
 at all levels to appreciate the organizational challenges. Specific HR
 initiatives were undertaken during the year as part of the HRD Master
 Plan, like HR Climate Survey, KRL Day Celebrations and Manpower Study,
 towards building a performance oriented culture and to strengthen the
 HR systems and practices.The Company has established common values and
 working philosophise that its personnel can perform to achieve the
 Company's goals with greater alignment.
 
 The Company continued its efforts in providing human resource
 developmental inputs to the employees through training programmes and
 through other learning opportunities to develop their knowledge, skills
 and attitudes. The Company believes that transparency and teamwork
 improved productivity at all levels.
 
 Workers' Participation in Management
 
 Workers' Participation in Management (WPM) is an important area where
 the Company devotes attention. This allows the Company to harness the
 untapped energy and imagination of its personnel towards more
 productive purposes. The continued excellence in the performance of the
 Company stands testimony to this. Currently, your Company has various
 Committees such as Joint Safety Committee.Works Committee, Quality
 Circle where workmen representatives are also members and Club
 Committee, Employees' Credit Co-operative Society, Employees' Consumer
 Co-operative Society where the workmen representatives are also elected
 to be Office-bearers. These Committees have been functioning
 successfully.
 
 Employee Profile
 
 As on 31 March 2005, the Company employed a total of 1924 employees, of
 which 585 were Officers and 1339 belonged to Non-executive cadre.
 
 Industrial Relations
 
 The Company continued to have a good Industrial Relations climate
 during the year under report and received full co-operation from the
 employees at all levels.
 
 MEMORANDUM OF UNDERSTANDING WITH BHARAT PETROLEUM CORPORATION LIMITED
 
 The Company is rated 'Excellent' in accordance with the Memorandum of
 Understanding entered into with Bharat Petroleum Corporation Limited
 for the year 2004-05. As stated earlier, this is the fourteenth
 successive year that the Company has achieved the 'Excellent' rating.
 
 PARTICULARS OF EMPLOYEES
 
 As there are no employees drawing the specified remuneration,
 particulars of Employees under Section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975
 for the year ended 31 March 2005, are not given.
 
 EXPORTS
 
 The Company has exported 13 parcels of Furnace Oil totalling 336 TMT
 valued at USD 57 Million, 14 parcels of Naphtha totalling 376 TMT
 valued at USD 141 Million and 2 parcels of Light Diesel Oil of 55 TMT
 valued at USD 15 Million. The total value of exports during the year
 was Rs.9,604 Million as against Rs.4,306 Million during the previous
 year.
 
 COMPLIANCE CERTIFICATE ON CORPORATE GOVERNANCE
 
 A certificate on the compliance of conditions of Corporate Governance
 has been obtained from the Statutory Auditors of the Company and the
 same is given at Annexure. The Annual Report also contains a separate
 section on Corporate Governance as required under Clause 49 of the
 Listing Agreement with the Stock Exchanges.
 
 The forward looking statements made in this report are based on certain
 assumptions and expectations of future events. The Directors cannot
 guarantee that these assumptions and expectations are accurate or will
 materialise.
 
 DIRECTORS' RESPONSIBILITY STATEMENT
 
 In accordance with Section 217(2AA) of the Companies Act, 1956, your
 Directors wish to inform:
 
 * that in the preparation of the Annual Accounts,the applicable
 Accounting Standards had been followed along with proper explanation
 relating to material departures.
 
 * that the Directors had selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company at the end of the financial year and of the profit or
 loss of the Company for that period.
 
 * that the Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities.
 
 * that the Directors had prepared the Annual Accounts on a going
 concern basis.
 
 MERGER WITH BPCL
 
 The Boards of Directors of your Company, as well as BPCL, had
 considered a proposal for merger of your Company with BPCL and accorded
 in-principle approval on 26 October 2004 and 29 October 2004
 respectively. In this regard, your Company appointed M/s N.M. Raiji &
 Co., Mumbai and BPCL appointed ICICI Securities Limited, Mumbai for
 carrying out the valuation of these Companies with fair opinion
 certificate to be issued by Ernst & Young Pvt Ltd., Mumbai. Based on
 the report submitted by the Financial Advisors, the Boards of both the
 Companies, at their meeting held on 17 January, 2005, approved the
 Scheme of Amalgamation with a swap ratio of 1:2.25 i.e. 4 fully paid up
 equity shares of Rs. 10/- each of BPCL for every 9 fully paid up equity
 shares of Rs. 10/- each of your Company with the Appointed Date as 1st
 April 2004.The approval is, however, subject to the necessary approvals
 of the Government of India/Shareholders/Creditors of BPCL/KRL and other
 Judicial/Regulatory authorities as may be required under the applicable
 laws.
 
 The Scheme of Amalgamation presently awaits initial approval of the
 Government of India. Other procedural formalities would be complied
 with in due course.
 
 BOARD OF DIRECTORS
 
 The Directors place on record their gratitude for the guidance and
 assistance received by the Board from Shri S Behuria, Chairman &
 Managing Director, BPCL,who resigned as Director with effect from 28
 February 2005 and took up the post of Chairman & Managing Director,
 Indian Oil Corporation Limited.  Your Company has achieved impressive
 record of growth during his tenure of service as Chairman.
 
 Your Directors also place on record their appreciation of the valuable
 guidance, services and assistance rendered by Shri NK Singh, Director,
 Ministry of Petroleum & Natural Gas, who resigned from the post of
 Director with effect from 25 August 2004. .
 
 Shri VP Joy, Director, Ministry of Petroleum & Natural Gas, has been
 appointed as an Additional Director on 10 September 2004.
 
 Shri Ashok Sinha, CMD I/C, BPCL, has been appointed as Non-executive
 Part-time Chairman of your Company with effect from 1st March 2005.
 
 In accordance with the Article 69 of the Articles of Association of the
 Company and Section 260 of the Companies Act, 1956, Shri Ashok Sinha,
 Shri S A Narayan, Shri S Radhakrishnan, Shri Mukesh Rohatgi. Shri B K
 Das, Shri John Mathai and Shri V P Joy will retire at the ensuing
 Annual General Meeting, and being eligible, offer themselves for
 appointment/re-appointment.
 
 AUDITORS
 
 The Comptroller & Auditor General of India has appointed Messrs Elias
 George & Co., Chartered Accountants, Kochi for auditing the Accounts of
 the Company for the year ended 31 March 2005.
 
 ACKNOWLEDGEMENT
 
 The Directors place on record their heartfelt gratitude to all the
 employees at all levels for their untiring efforts and commitment,
 without which the excellent performance of the Company would not have
 been achieved.
 
 The Directors gratefully acknowledge continued valuable co-operation
 and support extended to the Company by the Central Government,
 particularly, the Ministry of Petroleum & Natural Gas. The Directors
 also thank the Government of Kerala for its continued co-operation and
 patronage.
 
 The Directors would like to place on record their appreciation to all
 the Shareholders for the trust reposed by them on the Company, in
 particular, Bharat Petroleum Corporation Limited, the holding company,
 whose guidance helped in strengthening Company's competitiveness in all
 its business activities.
 
                          For and on behalf of the Board of Directors
 
 Mumbai                   Ashok Sinha
 5 August, 2005           Chairman
 
 ANNEXURE TO THE DIRECTORS' REPORT
 
 FORM B
 
 (SEE RULE 2)
 
 FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION
 
 RESEARCH & DEVELOPMENT (R&D)
 
 1) Specific areas in which R&D carried out by the Company :     
 
 a) Development of value added products eg. Rubber Spray Oil, Petroleum
 Hydrocarbon Solvent, Natural Rubber Modified Bitumen, MTO and High
 Performance Diesel Additive from Refinery Streams.
 
 b) Evaluation and selection of FCC Catalysts.
 
 c) Evaluation of crude oil.
 
 d) Formulation of speciality products.
 
 e) Development of Bio-Diesel
 
 2) Benefits derived as a result of the above R&D in-house R&D know-how
 has been under regular production run. :
 
 a) A commercial plant for speciality hydrocarbon solvent based on
 
 b) Through laboratory and pilot plant studies, selection of new
 improved catalysts made for the commercial FCC plant.
 
 c) Selected FCC catalyst additives for enhancement of LPG & MS
 production.
 
 d) A commercial plant for the production of natural rubberised bitumen
 based on in-house R&D know-how has been under regular production run.
 
 e) A commercial plant has been set up to manufacture high performance
 diesel additive based on R&D studies.
 
 f) Technical support to the existing FCC and crude units in the
 following areas:
 
 i) Crude oil evaluation.
 
 ii) Evolving different schemes by computer simulation and modelling.
 
 3) Future plan of action  :     
 
 a) To continue FCC related R&D studies using FCC Pilot Plant and other
 facilities.
 
 b) To undertake plant simulation and optimization studies.
 
 c) To pursue exploratory research for development of value added
 products.
 
 d) Formulation of bio-diesel from rubber seed oil.
 
 e) Formulation of bitumen emulsion using more indigenous emulsifiers.
 
 4) Expenditure on R&D  :     
 
 a) Capital                                :  Rs. 3.47 Million
 b) Recurring                              :  Rs. 14.49 Million
 c) Total                                  :  Rs. 17.96 Million
 d) Total R&D Expenditure as a percentage
    of total turnover                      :  0.01%
 
 Technology Absorption, Adaptation and Innovation
 
 1) Efforts, in brief, made forwards technology absorption, adaptation
 and innovation :
 
 R&D has made efforts to adapt the imported FCC (Fluid Catalytic
 Cracking) technology and optimize and operation of the plant through
 laboratory, pilot plant and simulation studies.
 
 2. The in-house technology for production of Natural Rubber Modified
 Bitumen adopted for commercial production and optimisation of process
 carried out.
 
 2) Benefits derived as a result of the above efforts  :       
 
 1. The R&D efforts have enabled selection of suitable
 catalyst/additives for obtaining improved yields of products in the
 commercial plant.
 
 2. Natural Rubber Modified Bitumen: A superior quality bitumen was
 prepared on a commercial scale. The plant is first of its kind in
 India.
 
 3) In case of imported technology (imported during the last 5 years
 reckoned from the beginning of the financial year), following
 information may be furnished:
 
 a) Technology Imported  :   
 
 Bitumen Emulsion Unit by M/s. ENH Engineering, Denmark
 
 b) Year of Import : 2004-05
 
 c) Has the technology been fully absorbed  :  Yes
 
 d) If not fully absorbed, areas where this has not
    taken place, reasons therefore and future
    plans of action                                :   Not Applicable
 
 Statement of Foreign Exchange Earnings and Outgo
 
 A) Activities relating to exports, initiatives taken to increase
 exports, development of new export markets for products and services
 and export plans:
 
 Since the domestic movement of Furnace Oil, Naphtha and Light Diesel
 Oil was not sufficient, Company exported 13 parcels of Furnace Oil, 14
 parcels of Naphtha and 2 parcels of Light Diesel Oil. This was resorted
 to achieve higher thruput and improve overall profit.
 
 B) Total Foreign Exchange used and earnings:
 
 Foreign Exchange Earned   :  Rs. 9,694.96 Million
 Foreign Exchange Used     :  Rs. 236.61 Million
स्रोत: रेलीगरे टेचनोवा

न्यूज़ फ़्लैश

  • MARKET CUES : FIIs ने कैश में `562 Cr की बिकवाली की
  • MARKET CUES : DIIs ने कैश में `83 Cr की खरीदारी की
  • MARKET CUES : FIIs ने F&O में `2952 Cr की खरीदारी की
  • MARKET CUES : इंडेक्स फ्यूचर्स में `442 Cr की बिकवाली की
  • MARKET CUES : इंडेक्स ऑप्शंस में `2957 Cr की खरीदारी की
  • MARKET CUES : स्टॉक फ्यूचर्स में `465 Cr की खरीदारी की
  • UBS ON BHARTI AIRTEL : BUY रेटिंग, लक्ष्य `415/Sh
  • CS ON UNION BANK : Neutral रेटिंग, लक्ष्य घटाकर `56/Sh
  • CS ON VARROC ENGINEERING : Neutral रेटिंग, लक्ष्य घटाकर `490/Sh
  • CS ON BHARTI AIRTEL : Neutral रेटिंग, लक्ष्य बढ़ाकर `380/Sh

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