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Hindustan Petroleum Corporation Ltd (HINDPETRO) -BSE
274.4 2.55 (0.94%) 22-Sep-2021 |10:55
PREV.CLOSE OPEN PRICE HIGH(Rs) LOW(Rs) VOLUME(Rs) 52AVG.RANGE MARKET CAP(Rs.Cr) P/E Div Yield (%) Eps (Rs)
271.85 271.85 275.65 271.8 38621 312 - 163.3 38563.24 4 8.57 67.99
Directors Report

Dear members

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

Maharatna status

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

Highlights

(Rs / crore)

Consolidated

Standalone

2019-20 2018-19 2019-20 2018-19
Financial performance
Sales/ income from operation 2,86,574.27 2,95,986.87 2,86,250.27 2,95,712.56
Earnings before interest, tax, depreciation & amortization and exceptional items 6,885.94 13,910.14 6,961.63 13,077.21
Depreciation & amortization expenses (3,369.87) (3,085.30) (3,304.39) (3,012.61)
Finance cost (1,138.85) (785.64) (1,081.72) (725.94)
Profit before tax and exceptional items 2,377.22 10,039.20 2,575.52 9,338.66
Exceptional items - income/(expense) (1,002.93) - (1,002.93) -
Profit before tax (pbt) 1,374.29 10,039.20 1,572.59 9,338.66
Tax expense 1,264.44 (3,348.57) 1,064.67 (3,310.00)
Profit after tax (pat) 2,638.73 6,690.63 2,637.26 6,028.66
Balance brought forward from previous financial year 26,923.39 21,973.01 24,941.79 20,632.77
Amount available for appropriation
Appropriations/ others:
Debenture redemption reserve (net) (513.46) (17.34) (625.00) -
Dividend (1,432.39) (1,371.44) (1,432.39) (1,371.44)
Tax on distributed profits (294.43) (281.90) (294.43) (281.90)
Other comprehensive income that will not be reclassified to profit or loss (net of tax) (161.50) 12.60 (158.05) 15.87
Other appropriations 324.89 (82.17) 324.89 (82.17)
Balance carried forward 27,485.23 26,923.39 25,394.07 24,941.79
Shareholders rs value ( rs )
Earnings per share 17.32 43.91 17.31 39.56
Cash earnings per share 29.36 68.09 30.23 63.02
Book value per share 203.31 199.50 190.06 184.90

 

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

# market sales (including exports) as per ind as is 39.64 mmt for financial year 2019-20 and 38.71 mmt for financial year 2018-19.

Sales/ income from operations

Your corporation has achieved sales/ income from operations of rs 2,86,250.27 crore in the financial year 2019-20 as compared to rs 2,95,712.56 crore in the financial year 2018-19 on a standalone basis.

Profit

Your corporation has reported earnings before interest, tax, depreciation & amortization (ebitda) of rs 6,961.63 crore without considering an exceptional expense of rs 1,002.93 crore in the financial year 2019-20 as against rs 13,077.21 crore in the financial year 2018-19 and profit after tax of rs 2,637.26 crore in the financial year 2019-20 as compared to rs 6,028.66 crore in the financial year 2018-19 on a standalone basis.

Dividend

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

The amount of final dividend as recommended by the board totaling to rs 1,485.73 crore will be paid out of profits (after tax) earned for the financial year.

Internal resources generation

Your corporation has generated internal resources of rs 2,879.29 crore during the financial year 2019-20 as compared to rs 7,949.88 crore during the financial year 2018- 19 on a standalone basis.

Contribution to exchequer

Your corporation has contributed a sum of rs 76,133.41 crore to the exchequer during the financial year 2019- 20 by way of duties and taxes, as compared to rs 73,350.33 crore during the financial year 2018-19 on a standalone basis.

Refinery performance

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

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

Your corporation is setting up a new 9 mmtpa capacity greenfield refinery cum petro-chemical complex at pachpadra in barmer district of rajasthan through a joint venture company, hpcl rajasthan refinery limited. There has been significant progress during the year in the execution of works. Engineering & procurement activities are progressing well with placement of various purchase orders in 2019-20. Grading of site and construction of boundary wall, major internal roads, power utility facilities, water reservoir etc. Have been completed. Construction of some of the major process units, utility plants, approach road and fabrication of major long lead items etc. Are under progress. Further, approval for environment clearance for township, consent to establish for 'mangla crude pipeline rs have been received.

The particulars with respect to conservation of energy, technology absorption, foreign exchange earnings & outgo are furnished in annexure i. The particulars relating to control of pollution and other initiatives by refineries are furnished in annexure II.

Operating performance of refineries

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

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

Marketing performance

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

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

In the motor-fuel segment, your corporation has achieved a sales volume of 24.39 million tonnes during the financial year 2019-20. The year witnessed commissioning of 1,194 retail outlets (taking the total of retail outlets to 16,476 as of march 31, 2020) and 166 new cng stations, highest in recent years. To enhance overseas footprint, your corporation has commissioned its first outlet in bhutan as a part of the tie-up with state trade corporation of bhutan limited (stcbl) for setting up of retail outlets and supply of motor fuels in bhutan. The thrust over digital payments continued during the year with the launch of 'hp-pay rs a unified payment app, first of its kind in the industry to facilitate purchase of motor fuels, domestic lpg and lubricants by customers.

The lpg business vertical set a new record during the financial year 2019-20, clocking a sales volume of 7 million tonnes. The year witnessed commissioning of 245 new distributorships (taking the total number of dealership to 6,110 at the end of the financial year), commissioning of 50th lpg bottling plant at sugauli, bihar and enrolment of 37.53 lakhs new domestic customers including 19.56 lakhs customers enrolling under pradhan mantri ujjwala yojana (taking the total number of domestic customers and within it pmuy beneficiaries to 8.40 crore and 2.15 crore respectively at the end of the financial year).

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

In industrial & consumer business line, your corporation recorded overall sales of about 5 mmt. The strategy of maximising volumes in three focused products helped to cross 1 mmt sales volume in fuel oil (fo), diesel, and bitumen individually for the fifth consecutive year. Your corporation launched a new product, very low sulphur fuel oil (vlsfo), to leverage the opportunities of low sulphur marine fuels complying to international maritime organization (imo) norms effective january 01, 2020.

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

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

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

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

Your corporation is currently operating petroleum product pipeline network of 3,775 km with mainline capacity of 32.55 mmtpa and branch line capacity of 15.57 mmtpa. The ever expanding pipeline network continued its march during financial year 2019-20 with commissioning of palanpur-vadodara pipeline including a marketing terminal at vadodara and uran - chakan lpg pipeline besides expanding the existing pipeline networks of mundra delhi pipeline (mdpl), ramanmandi bahadurgarh pipeline (rbpl) and visakh vijayawada secundarabad pipeline (vvspl). The pipeline vertical handled a thruput of 21.20 million tonnes.

Treasury management

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

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

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

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

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

Your corporation effectively used a variety of borrowing instruments to optimize its cost of working capital. The short-term borrowing requirements were met through triparty repo dealing system, commercial papers, mibor linked loans, revolving line of credit in usd and cash credit facility from consortium banks.

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

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

Impact of covid-19 on business

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

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

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

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

By optimizing the day to day crude run rate and regulating the product procurements from other sources, the corporation could achieve an overall capacity utilization of almost 100%, both at mumbai and visakh refineries for the period april-june 2020. The corporation managed the crude oil inventory by optimizing the scheduling of crude cargos in line with refinery operations. Product inventories were managed by leveraging cross country product pipeline network and pan india marketing infrastructure of the corporation.

All critical supply locations of your corporation continued operating during the lockdown period with all health, hygiene and safety measures in place. All the supply distribution locations including bulk storage terminals and depots, lpg bottling plants, aviation fuel stations, lube blending plants etc., functioned with optimized manpower under the advisories of the respective state governments and local administrations to maintain supply of pol products.

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

Project construction sites were required to be closed after announcement of nationwide lockdown under directives form concerned authorities. However, after announcement of relaxations from central government and some of the state governments, project sites have been restarted gradually from april 20, 2020 but resumption to pre-covid level may take some time. The exact impact on individual project schedules will largely depend on the geographical location of the project, covid severity at the location, duration of impact, level of restrictions prevailing in the area, availability of the resources locally or otherwise, stage and complexity of the project etc.

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

Your corporation has put in place a comprehensive strategy and developed standard operating procedures to ensure health and safety of its stakeholders (employees, service providers, contract work force, petrol pump dealers & customer attendants, lpg distributors, delivery boys etc.) While also ensuring business continuity. Digital technology is extensively leveraged for information-sharing.

The impact assessment of covid-19 is a continuing process given the uncertainties associated with its nature and duration. In the assessment of the management, with the phased opening up of various sectors of economy and proactive policy initiatives from the government, the situation could gradually move back towards normalcy with some demand contraction in the near term.

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, commensurate with the operation of your corporation.

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

Risk management policy

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

Your corporation has established an enterprise risk management (erm) framework under the corporation's risk management charter and policy 2007, which is embedded at the forefront of business strategies and focuses on the stronger, deeper and trust-based relationship with the stakeholders. It provides necessary support to the business to steer through the continuously evolving risk terrain through dynamic risk management approach that embraces disruption and enhances resiliency and trust.

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

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

Vigilance

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

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

The prime focus of vigilance activities has been preventive and participative vigilance by having regular interaction with employees and other stakeholders to spread awareness among the masses. The highlights of the year include review of various operating areas for systemic improvements, carrying out investigation of complaints, handling of surprise inspections of depots, terminals, lpg plants, regional offices, lpg distributors, retail outlets, tank trucks, tender review, conducting various focused grouptraining programs for employees, coordinating with various agencies like cvc, cbi, mop&ng etc.

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

Industrial relations

Your corporation, with its proactive approach, maintained very cordial and harmonious industrial relations (ir) all through the financial year 2019-20. Not only there was no loss of productivity due to ir issues, the year witnessed productivity increase across l ocati on s, demonstratin g the maturi ty of our unions and commitment of employees. Various settlements were signed with unions in the areas of productivity enhancement, redeployment etc. In an atmosphere of trust and healthy ir climate.

Your corporation also took proactive steps regarding wellbeing of contract workmen and ensured their coverage under pradhan mantri jan dhan yojana and prime minister suraksha beema yojana. To promote digital india and cashless economy, all contract labourers deployed across the corporation are paid their wages through neft. Further, various programs across the corporation were organized for contract workmen / stakeholders so that they use various modes of cashless payments. The safety and wellbeing of contract workmen being paramount, under 'prerna rs program, a unique initiative to imbibe safe work culture and improve well-being of contract workmen, 83 programs covering 5,451 contract workers were conducted during this financial year.

Official language implementation

Your corporation promotes the usage of hindi by motivating the employees through sensitization, persuasion and incentives. Recognition of linguistic and cultural talent of the employees and creating awareness about hindi at workplaces is facilitated by encouraging participation in all india hindi mahotsav, hindi fortnight, official language conferences, hindi competitions and hindi workshops.

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

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

Corporate social responsibility

Your corporation's commitment towards 'delivering happiness rs is reflected in csr philosophy of working cohesively with local communities at business locations to enhance their quality of life. The csr interventions are undertaken in the focus areas of childcare, education, health care, skill development, sports and environment and community development. The corporation constantly strives to align its csr initiatives with various government driven initiatives viz. Swachh bharat abhiyan and skill india mission. The year also witnessed significant contribution of your corporation to 'transformation of aspirational districts rs program of niti aayog, government of india during the financial year 2019-20, your corporation undertook the following major csr initiatives:

• swachh bharat abhiyan

Your corporation has contributed towards the national cause of swachh bharat abhiyan by developing sanitation infrastructure and sensitizing communities. The employees and various stakeholders have participated in the mass-movement on cleanliness and hygiene and have undertaken more than 1,00,000 activities with direct and indirect participation. During observance of swachhta pakhwada and swachhta hi sewa campaigns, more than 5,00,000 people from various parts of the country were sensitized about importance of maintaining personal hygiene and cleanliness.

Plastic free city/ village campaigns were conducted in various parts of the country for reducing single use plastic. A special drive for 'plastic-free ranchi rs was carried out with participation of more than 3,00,000 school students in jharkhand. More than 1,000 toilets were constructed / upgraded in schools, hospitals and communities across india for efficient usage.

• skill development institutes

Your corporation supported skill india mission by establishing skill development institutes at visakhapatnam, rae bareli, ahmedabad, kochi, bhubaneswar and guwahati for imparting skills to youth in various sectors. The skill development institute has been conceptualized by government of india and operationalized by oil and gas cpses, with a special focus on imparting skills in industry-oriented trades for enhancing employability and bridging the skill gaps of the nation. Your corporation has also given its share of contribution towards construction of skill development institute at bhubaneswar (main campus project) during the financial year.

• ‘transformation of aspirational districts rs program

Your corporation has taken several initiatives in aspirational districts aimed at supporting the vision and action plan developed by district administration for transformation of these districts. The focused interventions in seven allocated districts, namely, baran, siddharth nagar, nandurbar, goalpara, fatehpur, jaisalmer and begusarai would lead to improved education

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

• major initiatives:

• adapt: project adapt aimed at enhancing the quality of lives of 300 children with special needs and young adults through providing education, training and therapeutic treatment.

• akshaya patra: project akshaya patra

Provided nutritious mid-day meal to 20,000 students studying in government schools with an endeavor that no child gets deprived of education because of hunger. The initiative has resulted in not only the greater enrolment and attendance but also improved health and well-being.

• agastya: project agastya provided hands- on science learning to around 28,000 school students through 10 mobile science labs and 1 science center covering 120 schools. Various scientific concepts are imparted through usage of science models at government schools to develop a scientific temperament amongst students.

• nanhi kali: project nanhi kali supported holistic development of girl child from tribal and urban slum locations. The project addressed challenges and constraints faced due to gender gap in communities and aimed to develop gender equality. During the financial year, 13,000 'nanhi kali rs girls were provided with remedial classes, uniforms, stationery items, guidance and counselling on personal hygiene and career development.

• unnati: project unnati, a digital initiative, aimed at empowering school students, first generation computer learners in remote locations through enhancement of learning opportunities. The project provided basic computer education and equipped schools with computer labs to keep pace with developments in modern digital world. Through this computer-training program, 12,000 students across the country could get benefitted.

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

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

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

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

• swavalamban: project swavalamban is a dynamic industry-oriented skill development initiative aimed at training the less- privileged youth for livelihood generation. In the financial year 2019-20, 2,000 students benefited through training in various trades like assistant electrician, sewing machine operator, solar panel technician, data entry operators. The project aimed to equip marginalized youth with skill set to enable them in earning livelihood for themselves and their families.

• other csr activities

Your corporation's csr endeavors in the thematic areas of school education, nutrition and healthcare have contributed to availability/ upgradation of basic school and college infrastructure and medical care amenities at government facilities in remote locations spread across the country.

Various other sustainable and green initiatives like development of rainwater harvesting techniques in arid zones, water body augmentation/ rejuvenation projects, installation of sustainable energy facilities in communities, sapling plantation in different geographies have led to empowerment of the underprivileged communities.

The academic efforts of more than 16,900 meritorious students from socially-economically weaker communities were supplemented by providing scholarships. With an aim to promote sports in the country, scholarships were granted to talented sportspersons. Contribution was made towards armed forces flag day fund for the care, support, welfare and rehabilitation schemes for ex-servicemen (esm) and their dependents.

• awards & accolades

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

The details of csr activities of the corporation containing details of csr committee members, brief outline of the csr policy, overview of the csr initiatives, prescribed expenditure, amount spent, etc. That form part of directors rs report are furnished 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 that form part of the annual report for the financial year 2019-20.

Procurement of goods & services from mses

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

Against the above set target for financial year 201920, your corporation has achieved 30.47% ( rs 3,753.35 crore). To promote the objectives of procurement from mses as laid down in public procurement policy, 32 vendor development programs/ buyer-supplier meet for mses were conducted during financial year. Further, in various buyer seller meets organized by micro small and medium enterprises - development institute (msme-di), confederation of indian industry (cii) and federation of indian chambers of commerce and industry (ficci), the corporation's procurement processes were articulated through detailed presentation to mse vendors with an intent to increase awareness of vendor registration process, tendering process, availability of treds platform, etc.

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

Prevention of sexual harassment at workplace

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

Management discussion & analysis report

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

Financial statements of subsidiaries

In terms of proviso to section 136(1) of the companies act, 2013, your corporation will place separate audited financial statements in respect of each of its subsidiary company on its website and also provide a copy of separate audited financial statements in respect of each of its subsidiary companies to any shareholder of the corporation who seeks the same. The financial statements of the subsidiary companies will also be kept open for inspection at the registered offices of the corporation/ 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 statements of subsidiary/ associate/ joint venture companies in form aoc-1 is attached along with financial statements.

Cost audit

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

Directors

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

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

The independent directors are shri amar sinha, shri siraj hussain and shri g. Rajendran pillai.

As per the Provisions of section 152 of the companies act, 2013, shri pushp kumar joshi and shri subhash kumar are the directors who are liable to 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 financial year appointment:

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

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

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

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

Cessation:

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

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

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

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

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

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

Number of meetings of the board

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

Managerial remuneration &

Particulars of employees

Your corporation, being a government company is exempted to furnish information under section 197 of companies act, 2013 vide ministry of corporate affairs (mca) notification dated june 05, 2015.

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

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

Group Total no. Of employees No. Of women employees % of women employees
Management 5,898 693 11.75
Non management 3,798 226 5.95
Total 9,696 919 9.48

Performance evaluation of board, its committees and individual directors

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

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

Declaration by independent directors

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

Policy for selection and appointment of directors and their remuneration

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

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

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

Policy for remuneration of key managerial personnel and other employees

Your corporation, being a government company, the remuneration payable to its key managerial personnel 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 present composition of audit committee, that requires reporting under section 177(8) of the companies act, 2013 is given as under:

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

The changes in the composition of audit committee

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

1. Shri ram niwas jain, independent director on the board of the corporation had been the chairman of the audit committee, till he ceased to be director, effective november 20, 2019.

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

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

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

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

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

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

During the year, there were no 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 and regulation 24a of the sebi (lodr) regulations, 2015, your corporation has appointed m/s. Dholakia and associates llp, practicing company secretary to undertake the secretarial audit of the corporation for the financial year 2019-20. The report of secretarial audit in form no. Mr-3 is annexed herewith and marked as annexure IV. The report does not contain qualification, reservation or adverse remark except that the corporation did not have minimum number of independent directors on the board for the period from november 20, 2019 to march 31, 2020 and did not have independent woman director on the board of the company for the period from february 13, 2020 to march 31, 2020 as stipulated under regulation 17(1) of sebi (lodr) regulations, 2015.

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

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

Compliance with applicable secretarial standards

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

Related party transactions

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

Extract of annual return

Pursuant to section 92(3) of the companies act, 2013 read with rule 12(1) of the companies (management and administration) rules, 2014, an extract of the annual return in form no. Mgt-9 is annexed herewith and marked as annexure VI. The same is also hosted on the website of the corporation www.hindustanpetroleum.com

Performance and financial position of subsidiaries, joint ventures and associates

The details on the performance and financial position of subsidiary, associate 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 statements of subsidiary, associate and joint venture companies in form no. Aoc-1 form part of the annual report for the financial year 2019-20, separately.

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

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

Significant and material orders passed by the regulators or courts

During the financial year 2019-20, there is no order or direction of any court 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. The web link of whistle blower policy is stated herein below:

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

Details of deposits

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

Directors responsibility statement

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

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

II. The directors have 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 the profit and loss of the company for that period.

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

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

V. The directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively.

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

Acknowledgements

The board of directors gratefully acknowledge the valuable guidance and support extended by the government of india, ministry of petroleum and natural gas, other ministries, state governments and various statutory and local authorities.

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

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

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

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

For and on behalf of the board of directors

Sd/-

Mukesh kumar surana

Chairman & managing director

Date : august 20, 2020

   

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