BOARD'S REPORT Dear Members, On behalf of the Board of Directors, I take pleasure in presenting the Board's Report on the performance of your Company, together with the Audited Financial Statements and Auditors' Report and the Report of the C&AG of India for the financial year ended 31/03/2015. 1.0 THE STATEMENT OF COMPANY'S AFFAIRS: 1.1 PERFORMANCE AT A GLANCE • Crude processed at 14.65 MMT during the year 2014-15 against 14.55 MMT during the previous year 2013-14. • Turnover at Rs. 62,412 Crores during the year 2014-15 against Rs. 75,226 Crores for the previous year 2013-14. • Export Turnover at Rs. 22,790 Crores during the year 2014-15 against Rs. 35,392 Crores for the previous year 2013-14. • After Tax Loss Rs. 1,712 Crores during the year 201415 against Profit of Rs. 601 Crores for the previous year 2013-14 1.2 OPERATIONAL PERFORMANCE: • Your Company had processed highest ever crude of 14.65 MMT during the financial year 2014-15 compared to 14.55 MMT during the previous year. • The operating margin was 3.44 $/bbl during 2014-15 as against 1.69 $/bbl during 2013-14. • Your Company has achieved export turnover of Rs. 22,790 Crores during the financial year 2014-15 by exporting products viz., Motor Spirit, Naphtha, Mixed Xylene, High Speed Diesel, Jet fuel and Fuel Oil. 1.3 DIVIDEND AND TRANSFER TO RESERVES: During 2014-15, your Company has incurred loss of Rs. 1,712 Crores. Hence, your Directors have not recommended any dividend for FY 2014-15 and no amount has been transferred to General Reserve during the FY 2014-15. 1.4DEPOSIT: Your Company has not accepted any fixed deposit during the year from the public. As on 01/04/2014, certain customer advances remained unpaid which were classified as deemed deposits under the provisions of the Companies Act, 2013 and were refunded to customers during the year. 1.6 PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS: Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements. Full particulars of Loans given, Investments made and Guarantees given, and Securities provided are furnished in the notes to Financial Statements forms part of the Annual Report. The Authorised Share Capital of the company has been increased from Rs. 2,000 Crores to Rs. 3,000 Crores. The Issued, Subscribed and Paid up Equity Share Capital of your Company as on 31/03/2015 stood at Rs. 1,753 Crores. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options or sweat equity as any kind of securities. 1.8 MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF FINANCIAL YEAR AND DATE OF REPORT. There is no occurrence of material change and commitment made between the end of financial year and date of this report which has affected financial position of the company. 1.9 CREDIT PROFILE • After Annual surveillance, the highest Corporate Credit Rating has been reaffirmed by both ICRA and CRISIL in March 2015. • ICRA has reaffirmed "Ir AAA" to MRPL. • "[ICRA] AAA" for Rs. 3,000 Cr. Fund- Based limits of MRPL. • "[ICRA] A1+" to Rs. 4,000 Cr. Non-Fund based limits of MRPL. • "[ICRA] A1+" to Rs. 900 Cr. Commercial Paper Programme to MRPL. • CRISIL has reaffirmed the highest Corporate Credit Rating "[CCR AAA]" to MRPL. 2.0 MARKETING & BUSINESS DEVELOPMENT: Your Company has retained its strong market presence in its Refinery zone for various petroleum products and also been able to get a good market reach for Petcoke. Company could evacuate Petcoke and Sulphur on a consistent basis in domestic as well as export market. With entry of natural gas pipeline in North Karnataka & Goa, customers earlier using Fuel Oils are shifting to Gas, leading to shrinkage of liquid fuels market. However, due to commissioning of the Petcoke unit in MRPL, Company has carried good market development and has already attained market leadership for Petcoke sales in South India. Your Company continues to expand its market spread in the direct sales segment of petroleum products in the state of Karnataka and its adjoining states. Your Company has significant market share and direct customer relations for products such as Bitumen, Fuel Oil, Sulphur, Diesel, Petcoke and Mixed Xylene in its refinery zone. The total sales volume of direct marketing products during the FY 2014-15 was 0.81 MMT with a sales value of Rs. 1,926 Crores compared to volume of 0.46 MMT and sales value of Rs. 2,291 Crores in the previous FY 2013-14. The deregulation of HSD pricing has opened up opportunities for recommencing the retail business. Your company has significantly increased HSD sales in its refinery zone. Domestic sale of Sulphur has also increased considerably against previous year. Your Company has commissioned its first dealer operated Retail Outlet at Mangalore in December, 2014 and is in the process of setting up large number of retail outlets in its refinery zone. Your Company has set up a Polypropylene plant of 440 KTPA capacity and company has already appointed required channel partners in initial primary target markets for marketing of Polypropylene. Detailed Market study has been completed and Sales are expected to commence soon. In addition, Your Company is also developing its own storage infrastructure for Polypropylene in Karnataka. 3.0 HEALTH, SAFETY AND ENVIRONMENT PERFORMANCE Your Company have achieved 1212 accident free days as on 18/05/2015 with 12.10 million man hours worked. The various units of Phase - III Refinery Upgradation and Expansion Project and storage tanks were commissioned safely during the year. Your Company is committed towards imparting continuous training in fire and safety practices. Regular Mock exercises were conducted considering the various emergency scenarios in plant and non plant areas. Your Company believes in "Perform beyond Compliance" - that is to perform better than minimum required by statutes. The Refinery of your Company is a certified ISO 14001: 2004 for Environment Management Systems by TUV Rheinland. The major achievements on the Environment Management and performance are summarized as under: In Environment Management, the company's Philosophy is to perform beyond Compliance - that is to perform better than minimum required by statutes. The major Achievements on the Environment Management front include: • Water Audit Study conducted in the Refinery by M/s. National Productivity Council, Hyderabad. • Marine Quality Monitoring at Single Point Mooring (SPM) conducted by M/s. College of Fisheries, Mangalore. • Utilization of Sewage Treatment Plant (STP) water as make-up to cooling towers carried out. This measure is directly resulted in reduction of fresh water consumption. • A Sulphur Pastillation Unit is commissioned as a part of Phase - III Project to reduce the dust emissions. • Inspection of Tier - I facility of SPM was carried out by OISD & Indian Coast Guard in the month of March, 2015. • CTBD (Cooling Tower Blow Down) system of WWTP - III commissioned in the month of March, 2015. • VOC Recovery system is commissioned in WWTP - III. • SOx & NOx Stack Online Analyzer data of Phase - I & II units connected to CPCB server in the month of March, 2015. • Hydrocarbon detectors at strategic locations in the refinery are provided. • VOC Emission monitoring carried out in the refinery through reputed agency at 74000 points and corrective measures are taken to effectively minimize the same, wherever needed. • Periodic Manual Stack Monitoring is being carried out by MoEF/KSPCB approved external agency. • Ambient Air Quality Monitoring is carried out by MoEF/ KSPCB approved external agency in and around the refinery at 9 location including 4 locations in Phase - III area as per revised National Ambient Air Quality Monitoring Standards published by Ministry of Environment & Forests. • An advanced technology has been employed for cleaning Crude Tanks in the refinery which results in lower oil content in the Tank sludge. • Environment Awareness Programmes was organized periodically in the neighboring villages in association with Karnataka State Pollution Control Board. • 70-75% of the total treated Effluent is recycled back to the cooling towers. • Continuous online monitoring of Analyzers installed to monitor Treated Effluents for parameters like pH, Sulphide, Dissolved Oxygen, Phenols, before discharged to sea. • Treated effluents are monitored on a daily basis at both Refinery end & at APMC yard. • A Fortnightly Marine Environment Impact Assessment study is being carried out through College of Fisheries, Mangalore from 7 monitoring stations set-up in the vicinity of Treated effluent Disposal point (at sea) & 3 Stations in the Seashore. The results indicate no adverse effect on the marine environment. • The Company is meeting the stipulations of KSPCB with regard to the quality of treated effluent, which is well below the standards in every aspect, on a continuous basis. • Ten Nos. of Ground Water monitoring stations in and around the Refinery have been set up and regular monitoring of ground water quality is being carried out along with Karnataka State Pollution Control Board (KSPCB). • Low sulphur Fuel oil was being used in all the Refinery furnaces and boilers, simultaneously maximizing the usage of ultra low Sulphur fuel gas generated in the refinery process units. • Sulphur Recovery Units (SRUs) are operated at efficiency greater than 99%. • Annual Submarine pipeline inspection carried out by National Institute of Oceanography (NIO). 4.0 PROJECTS 4.1 Phase - III Refinery Upgradation and Expansion Project: The commissioning of all the Secondary Process Units of Phase -III Refinery Upgradation and Expansion project were completed in September 2014, these units will increase the distillate yield and produce high value products viz Propylene, Gasoline from low value black oils. Crude Distillation Unit (CDU), Hydrogen Generation Unit (HGU) and Diesel Hydrotreater Unit (DHDT) were commissioned in the previous financial years. The delay in commissioning of the process units was mainly on account of non-availability of reliable steam and Power from CPP. The total expenditure incurred by your Company on Phase -III Refinery Upgradation and Expansion project is around Rs. 12,485 Crores as on 31/03/2015. Your refinery is now capable of processing most difficult crudes from 18 API (blended) to 46 API gravity and light to heavy / sour to sweet crudes and also capable to handle High TAN Crudes also. 4.2 Single Point Mooring (SPM): Your Company has setup SPM along with coastal booster pumping station within the port limits at a location of 16 Km from the shore having the draft availability of 32 M for handling Very Large Crude Carrier (VLCC), at a cost of Rs. 1,044 Crores (Actual cost as on 31/03/2015 is Rs. 807 Crores). The SPM is constantly unloading Suez Max (about 135,000T of cargo) ships since commissioning in August, 2013. As on 31/03/2015, 108 ships has been unloaded at SPM, handling total crude cargo of approximately 14.5 Million Tonnes. This facility has also decongested existing berth at New Mangalore Port, during non-monsoon periods. 4.3 Polypropylene Unit: The Polypropylene (PP) unit has been set up with the licensor M/s Novolen Technology, Germany in integration with the Phase - III Project at an estimated Capex of Rs. 1,804 Crores. The total expenditure incurred on this project is Rs. 1,227 Crores as on 31/03/2015. The feed-in has been achieved during March, 2015. The unit was inaugurated on 05/04/2015 by the Hon'ble Minister of Petroleum and Natural Gas (Independent Charge) and commercial production has been started since 18/06/2015. 5.0 AWARDS AND RECOGNITION: • Won the "Export Excellence Award, 2014" in Best Exporter Award (Medium/large category) from the Federation of Karnataka Chamber of Commerce and Industry (FKCCI) for FY 2013-14 in recognition of its Rs. 35,392 Crores worth of export. • Won the Silver at "Niryat Shree Award -2014" in the residual sector of the MSME at FIEO (Federation of Indian Export Organisation). • MRPL has conferred the prestigious "Skoch Foundation Order -of-Merit Award" for the best project in the country. • Shri Vishnu Agrawal, Director Finance of MRPL was adjudged winner of the 'BT-STAR Excellence Award in the category PSU- small,- DIRECTOR-FINANCE OF THE YEAR' post a rigorous evaluation process by the Jury of the BT-Star Excellence Awards, 2015. • MRPL won the first prize for outstanding performance in the area of Hindi Implementation for the year 2014-15 for fourth consecutive year by TOLIC, Mangalore. 6.0 PERFORMANCE OF SUBSIDIARY/ JOINT VENTURES: Pursuant to Section 129 (3) of the Companies Act, 2013 read with Rule (5) of the Companies (Accounts) Rules, 2014, the salient features of Financial statement of Subsidiary and Joint Ventures in Form AOC-1 is attached as Annexure 'A' which forms part of this report. 6.1 SUBSIDIARY COMPANY: Your Company has adopted a Policy on determining Material Subsidiary, which is available at www.mrpl.co.in . 6.1.1 ONGC Mangalore Petrochemicals Limited (OMPL) ONGC Mangalore Petrochemicals Limited (OMPL) is the only subsidiary company. Your company holds 51% of equity shares in OMPL since 28/02/2015 and the balance 49% held by parent company ONGC. OMPL has set up an Aromatic Complex with an annual capacity 914 KTPA of Para-xylene and 283 KPTA of Benzene in Mangalore Special Economic Zone as value chain integration project of ONGC & MRPL. The total project cost is about Rs. 6,875 Crore and it has commenced commercial operation from 1st October, 2014. 0.26 MMT of Para-xylene and 0.06MMT of Benzene, have since been exported in the financial year, as the production is being ramped up. The revenue for FY 2014-15 is Rs. 1,728.25 Crores (Previous Year Rs. 0.026 Crores) with Pre-tax loss of Rs. 914.30 Crores (Previous Year loss of Rs. 1.18 Crores) and post-tax loss of Rs. 914.30 Crores (Previous Year loss of Rs. 0.47 Crores). 6.2 JOINT VENTURE(S) 6.2.1 Shell MRPL Aviation Fuel Services Limited (SMAFSL) MRPL Joint Venture (JV) with Shell B.V. Netherland known as Shell MRPL Aviation Fuel Services Limited (SMAFSL) supplies Aviation Turbine Fuel (ATF) to both domestic and international airlines at several Indian airports. The revenue for FY 2014-15 is Rs. 636 Crores (Previous Year Rs. 662 Crores) with Pre-tax profit of Rs. 10.69 Crores (Previous Year Rs. 18.40 Crores) and post-tax profit of Rs. 7.74 Crores (Previous Year Rs. 12.30 Crores). 6.2.2 Mangalam Retail Services Limited (MRSL) Mangalam Retail Services Limited (MRSL) the Joint Venture (JV) Company with Ashok Leyland Project Services Limited (ALPSL) was incorporated on 03/05/2006 to set up commercial complexes for promoting retail plan of MRPL. In absence of any viable business plan, the continuance of the JV is being examined. The JV has not commenced any business activities. Hence there is no business transaction during the FY 2014-15. The Account of the JV was audited for the purpose of consolidation. 7.0 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO : Information required to be disclosed pursuant to Section 134(3)(m) of The Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 with respect to conservation of energy, technology absorption and foreign exchange earnings & outgo are furnished in Annexure 'B' which forms part of this Report. 8.0 EXTRACT OF ANNUAL RETURN : Information required to be disclosed pursuant to Section 134(3)(a) of The Companies Act, 2013 with respect to the details forming part of the extract of the Annual Return in form MGT-9 are furnished in Annexure 'C' which forms part of this Report. 9.0 MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES: Your Company being a Govt. company is exempted to furnish information under Section 197 of the Companies Act, 2013 vide Ministry of Corporate Affairs (MCA) Notification dated 05/06/2015. 10.0 CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY DEVELOPMENT : 10.1 Corporate Social Responsibility (CSR): Your Company's social welfare and community development initiatives focus on the key areas of education, health care and overall development of basic infrastructure in and around its operational areas. These projects are largely in accordance with Schedule VII of the Companies Act, 2013. The CSR objective of your Company in line with DPE guidelines is promoted under the name of "SAMRAKSHAN". This captures the spirit and commitment to protect, preserve and promote the social, cultural and environmental heritage and wealth in and around the area of our business and to usher in sustainable development. Facilitating Midday Meal to support continuing Education, setting up of computer room, Anganwadi building, skill development training for youths, infrastructural development etc. is a part of the Samrakshan activities. In addition, your Company is committed to mission of "Swachh Vidhyalaya Abhiyan" and has undertaken construction of 50 toilets in Govt. schools. Your Company has taken up the construction of One wing of Government Lady Goschen Hospital, Mangalore under its "CSR - SAMRAKSHAN" Programme, at a cost of Rs. 21.70 Crores. Lady Goschen Hospital is a 162 year old hospital for Women, established in the year 1849 and is located at the heart of Mangalore City. It has 260 beds, mainly catering to the health care needs of patients from poorer section of society. About 75% of the patients who come for treatment to this hospital belong to Below Poverty Line (BPL) category. Your company has spent Rs. 4.81 Crores (Previous Year Rs. 3.47 Crores) for various CSR activities during the year 2014-15. Pursuant to Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 the Annual Report on CSR activities is annexed herewith as Annexure 'D'. 10.2 Sustainability Development Performance: • Sustainability efforts of your Company is centering on drawing action plans towards minimizing our carbon footprint through managing complex projects and operations, addressing risk and opportunity, and engaging externally. We also continue our focus on defining supplier expectations for business conduct, and on addressing related risks in our supply chain. • We continue to work to reduce greenhouse gas emissions in our operations and to integrate climate change-related activities and goals into our business planning. • The Plan further provides guidance regarding integrating sustainable development with our business operations. Your Company has laid down priority areas as well as short and long term actions to be undertaken for meeting the objectives of the plan. Key identified areas include: • Hydrocarbon value chain optimization • Energy consumption optimization • Water and Waste Management • Customer development and growth partnership Specific enablers have also been identified to facilitate the implementation of action plans developed for above four areas. Your Company is consolidating its position in potential hydrocarbon value chain optimization avenues for sustainable development. The pivotal emphasis is on recovering value from low value hydrocarbons such as petcoke, refinery offgas and internal fuel oil. After successful commissioning of the Phase-III major units such as Delayed Coker Unit, Petrochemical grade Fluidised Catalytic Cracking Unit (PFCCU), Diesel Hydrotreating Unit and the latest Polypropylene Unit, MRPL's product base has expanded to include Pet coke, Ultra Low sulfur Diesel and Polypropylene. Your Company is establishing value partners to expand market base and partner sustainable growth. Your Company is also considering other sustainable options to utilize the pet coke for firing in utility boilers to produce steam for power generation along with capture of the associated pollutant - sulfur molecule. This is expected to not only help in production of cheaper power, but also ensure timely evacuation of this product from the refinery complex. Another advantage envisaged is the reduction in internal fuel oil consumption which is currently being fired in the boilers, for upgradation into various lighter molecules like Polypropylene, diesel etc. via the delayed coking route. In-house feasibility study of the project with support from potential technology suppliers is being taken-up. Water and waste management is given top priority by Your Company to reduce refinery's impact on the environment. The refinery recycles more than 70% of its treated effluents and has also been maximizing intake of treated municipal sewage to reduce fresh water intake. The refinery has also commissioned its sludge processing facility to effectively address disposal concerns. Your Company is also looking into the option of recovering valuable ethylene from low value PFCC off gas and supplying into downstream petrochemical complexes. Also, the recovered ethylene can be used as a co-monomer along with propylene to produce hetero-polymers of polypropylene for enhancing market value. The in-house viability study along with the potential increase in profitability estimations are being carried out with inputs from downstream petrochemical complexes and ethylene recovery technology suppliers. The Phase-III Refinery Complex Captive power plant facilities and some of the process heaters are designed to burn Natural Gas as fuel. The Phase-III Hydrogen generation unit is also designed to consume Natural Gas as an alternate feedstock. The infrastructure to bring natural gas to Mangalore is being assessed by various gas suppliers. Subject to economics, utilization of natural gas will not only reduce SO emissions but also open up the avenue of converting the low value internal fuel oil into high value hydrocarbons. 11.0 RELATED PARTY TRANSACTIONS : All transactions entered with Related Parties for the year were on arm's length basis and in ordinary course of business. Further, there are no material related party transactions during the year with the Promoters, Directors or Key Managerial Personnel. The Company has adopted a Related Party policy and procedure, which is available at www.mrpl.co.in . All Related Party Transactions are placed before the Audit Committee as also to the Board for approval. Omnibus approval was obtained on a quarterly basis for transactions which are of repetitive nature. 11.1 Particulars of contracts or arrangements with related parties: The particulars of every contract or arrangements entered into by the Company with Related Parties referred in Section 188(1) of the Companies Act, 2013 disclosed in Form No. AOC - 2 attached as Annexure 'E'. MCA vide Notification dated 05/06/2015, has exempted the applicability of Section 188 (1) of the Companies Act, 2013 for a transaction entered into between two Government Companies.. In view of the same shareholders approval has not been solicited for the transactions with Govt. Companies. 12.0 HUMAN RESOURCES: • Your Company continued to enjoy cordial and harmonious relations with the collectives and as evidence to the same not a single man-hour was lost on account of any industrial disturbance during the year 2014-15. • During the year, your Company has recruited 33 employees comprising of 2 women employees and 15 Scheduled Caste (SC) / Scheduled Tribe (ST) employees • Total employee strength as on 31/03/2015 was 1720 including 125 women employees, 202 SC/ST employees and 7 Physically Challenged employees. 742 employees belong to Management cadre whereas, 978 employees belong to Non-Management cadre. • During the year 2014-15, Your Company devoted 4078 Mandays for Training, Development and Learning which amounted to an average of 2.39 Mandays per employee. This includes functional, developmental and special training programs covering the entire spectrum of employees. 13.0 OFFICIAL LANGUAGE: Your Company is implementing Official Language Policy in letter and spirit as per the Annual Programme prescribed by the Department of Official Language, Ministry of Home Affairs, Government of India. In order to propagate Hindi among the employees, Hindi Workshops are organised on a regular basis at Mangalore, Mumbai, Delhi & Bangalore Offices. Regular Hindi classes such as Prabodh, Praveen & Pragya in addition to Hindi Stenography are being conducted for employees. In order to increase the correspondence in Hindi, by the employees, special efforts are made to activate Unicode facilities on all the computers used in your Company. To motivate employees for Hindi usage, various incentive schemes are introduced such as Cash award & Personal Pay. 14.0 RIGHT TO INFORMATION ACT, 2005: Your Company's RTI manual is available on its website www.mrpl.co.in which discloses all required information. During the year, 112 applications were received, out of which 96 were disposed off before 31/03/2015 and balance 16 applications were disposed off after 01/04/2015. 15.0 SECURITY MEASURES: The Refinery security is designed and operated in compliance with guidelines given by Oil Sector Infrastructure Protection Plan (OSIPP) and the Security Audit recommendations given by the IB (MHA) from time to time. The Refinery is completely secured and protected inside including newly expanded refinery operations area under Phase-III and the Refinery surrounding premises all the times through deployment of Central Industrial Security Force (CISF) personnel. Refinery Security is on priority due to increased threats and it is ensured through emergency preparedness, conducting periodic mock drills by security personnel. In order to promote awareness on security issues among all stake holders, Security Awareness programmes along with government authorities are organized periodically. 16.0 VIGILANCE FUNCTION : Your Company has developed a structured mechanism of vigilance functions and its practices are focused towards creation of value for all the stakeholders. The practices involve multi-layer checks and balances to improve transparency. Vigilance Awareness and Preventive vigilance activities were continuously carried out during the year. Guidelines of Central Vigilance Commission (CVC) are being followed. Officers in sensitive posts are rotated regularly. Whistle Blower Policy for employees is in place which ensures that a genuine whistle blower is granted due protection from any victimization. In compliance with CVC instruction, your Company has implemented a complaint handling policy in which all complaints received from various sources can get recorded and can be examined by Vigilance. Further, in line with CVC instructions, your Company has achieved high compliance level with regard to e-payment and e-tender. Leveraging of technology to enhance transparency has been a thrust area of action in which vigilance has played a catalytic role. The website of the Company displays downloadable tender document, publication of information of works awarded on nomination basis, publication of post award information of contracts. Full time Chief Vigilance Officer (CVO) is posted and he can be contacted at cvo@mrpl.co.in for any complaint having vigilance angle. 16.1 Whistle Blower Policy for Directors & Employees: The Whistle Blower Policy is formulated to provide a vigil mechanism for Directors and Employees to raise genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. It also provides for adequate safeguard against victimisation of persons who use such mechanism. The Policy provides necessary safeguards for protection of Directors and Employees who avail the vigil mechanism from reprisals or victimization, for whistle blowing in good faith and to provide opportunity to Directors and Employees for direct access to the Chairperson of the Audit Committee in exceptional cases. The policy is available on the Company's website www.mrpl.co.in . 17.0 DIRECTORS & DIRECTORS' RESPONSIBILITY STATEMENT 17.1 Following changes took place in Board of Directors and Key Managerial Personnel of your Company. • Shri H. Kumar assumed the office of Managing Director w.e.f 14/08/2014 and elected as a Director in the 26th Annual General Meeting held on 13/09/2014. • Shri M. Venkatesh has assumed the office of Director (Refinery) with effect from 1st April, 2015. He was appointed as Additional Director who vacates his office as Additional Director and being eligible offers himself for appointment as Director (Refinery) in the 27th Annual General Meeting. • Shri Nalin Kumar Srivastava, Deputy Secretary, MoP&NG was appointed as Additional Director with effect from 5th March, 2015, who vacates his office as Additional Director and being eligible offers himself for appointment as Director in the 27th Annual General Meeting. • Smt. Perin Devi, Director of MoP&NG was appointed as Additional Director with effect from 14th May, 2015, who vacates her office as Additional Director and being eligible offers herself for appointment as Director in the 27th Annual General Meeting.. • Shri Vishnu Agrawal who retires by rotation and being eligible offers himself for re-appointment as a Director. letter and spirit as per the Annual Programme prescribed by the Department of Official Language, Ministry of Home Affairs, Government of India. In order to propagate Hindi among the employees, Hindi Workshops are organised on a regular basis at Mangalore, Mumbai, Delhi & Bangalore Offices. Regular Hindi classes such as Prabodh, Praveen & Pragya in addition to Hindi Stenography are being conducted for employees. In order to increase the correspondence in Hindi, by the employees, special efforts are made to activate Unicode facilities on all the computers used in your Company. To motivate employees for Hindi usage, various incentive schemes are introduced such as Cash award & Personal Pay. 14.0 RIGHT TO INFORMATION ACT, 2005: Your Company's RTI manual is available on its website www.mrpl.co.in which discloses all required information. During the year, 112 applications were received, out of which 96 were disposed off before 31/03/2015 and balance 16 applications were disposed off after 01/04/2015. 15.0 SECURITY MEASURES: The Refinery security is designed and operated in compliance with guidelines given by Oil Sector Infrastructure Protection Plan (OSIPP) and the Security Audit recommendations given by the IB (MHA) from time to time. The Refinery is completely secured and protected inside including newly expanded refinery operations area under Phase-III and the Refinery surrounding premises all the times through deployment of Central Industrial Security Force (CISF) personnel. Refinery Security is on priority due to increased threats and it is ensured through emergency preparedness, conducting periodic mock drills by security personnel. In order to promote awareness on security issues among all stake holders, Security Awareness programmes along with government authorities are organized periodically. 16.0 VIGILANCE FUNCTION : Your Company has developed a structured mechanism of vigilance functions and its practices are focused towards creation of value for all the stakeholders. The practices involve multi-layer checks and balances to improve transparency. Vigilance Awareness and Preventive vigilance activities were continuously carried out during the year. Guidelines of Central Vigilance Commission (CVC) are being followed. Officers in sensitive posts are rotated regularly. Whistle Blower Policy for employees is in place which ensures that a genuine whistle blower is granted due protection from any victimization. In compliance with CVC instruction, your Company has implemented a complaint handling policy in which all complaints received from various sources can get recorded and can be examined by Vigilance. Further, in line with CVC instructions, your Company has achieved high compliance level with regard to e-payment and e-tender. Leveraging of technology to enhance transparency has been a thrust area of action in which vigilance has played a catalytic role. The website of the Company displays downloadable tender document, publication of information of works awarded on nomination basis, publication of post award information of contracts. Full time Chief Vigilance Officer (CVO) is posted and he can be contacted at cvo@mrpl.co.in for any complaint having vigilance angle. 16.1 Whistle Blower Policy for Directors & Employees: The Whistle Blower Policy is formulated to provide a vigil mechanism for Directors and Employees to raise genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. It also provides for adequate safeguard against victimisation of persons who use such mechanism. The Policy provides necessary safeguards for protection of Directors and Employees who avail the vigil mechanism from reprisals or victimization, for whistle blowing in good faith and to provide opportunity to Directors and Employees for direct access to the Chairperson of the Audit Committee in exceptional cases. The policy is available on the Company's website www.mrpl.co.in . 17.0 DIRECTORS & DIRECTORS' RESPONSIBILITY STATEMENT 17.1 Following changes took place in Board of Directors and Key Managerial Personnel of your Company. • Shri H. Kumar assumed the office of Managing Director w.e.f 14/08/2014 and elected as a Director in the 26th Annual General Meeting held on 13/09/2014. • Shri M. Venkatesh has assumed the office of Director (Refinery) with effect from 1st April, 2015. He was appointed as Additional Director who vacates his office as Additional Director and being eligible offers himself for appointment as Director (Refinery) in the 27th Annual General Meeting. • Shri Nalin Kumar Srivastava, Deputy Secretary, MoP&NG was appointed as Additional Director with effect from 5th March, 2015, who vacates his office as Additional Director and being eligible offers himself for appointment as Director in the 27th Annual General Meeting. • Smt. Perin Devi, Director of MoP&NG was appointed as Additional Director with effect from 14th May, 2015, who vacates her office as Additional Director and being eligible offers herself for appointment as Director in the 27th Annual General Meeting.. • Shri Vishnu Agrawal who retires by rotation and being eligible offers himself for re-appointment as a Director. • Shri V G Joshi, ceased to be a Director consequent upon his superannuation from the services of MRPL on 31st March, 2015. • Shri P. Kalyanasundaram, ceased to be a Director w.e.f 4th March, 2015 consequent upon his superannuation from the services of Government of India. • Shri C. L. Shah, Smt. Neela Gangadharan, Prof. Jayant M. Modak, Prof. Usha Kiran Rai and Capt. John Prasad Menezes ceased to be Additional Director w.e.f. 14/09/2014. The Board places on record appreciation for the valuable contributions made by them during their tenure as Directors of the Company. 17.2 Directors' Responsibility Statement: To the best of knowledge and belief and according to the information and explanations received, Directors make the following statement in terms of Section 134(3)(c) of the Companies Act, 2013. The Board of Directors confirm as under for the Financial Year 2014-15: a) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures; b) 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 of the profit and loss of the company for that period; c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 and 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) The Directors have prepared the Annual Accounts on a going concern basis; e) The Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. 17.3 Formal Annual Evaluation & Board Diversity: Your company is Schedule "A" category -1 Miniratna Central Public Sector Enterprise (CPSE) governed by Department of Public Enterprise (DPE), Government of India and its Administrative Ministry i.e. Ministry of Petroleum & Natural Gas (MoP&NG) Government of India. The Board Diversity is maintained as the Administrative Ministry i.e., MoP&NG appoints various categories of Directors on the Board. The evaluation of the Company is made by MoU signed with ONGC, the holding Company pursuant to DPE guidelines. The formal evaluation process is based on evaluation of MoU parameters for various operational and physical Parameters. MCA vide notification dated 05/06/2015, has exempted the Govt. Company from the formal annual evaluation by the Board on its own performance pursuant to Section 134(3) (p) of the Companies Act, 2013, as the Directors are evaluated by the Administrative Ministry i.e., MoP&NG, Govt. of India. The Directors are appointed by the Govt. of India and terms and conditions of their service is also determined by Govt. of India. The detailed terms and conditions are furnished in the Corporate Governance Report. 18.0 NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS: The Board of Directors of your Company had Nine (9) Meetings during the FY 2014-15. Details of the Board Meetings held for the year 2014-15 have been furnished in the Corporate Governance Report and forms part of this Report. 19.0 AUDIT COMMITTEE: The Audit Committee was constituted on the terms of reference as prescribed under Section 177 of the Companies Act, 2013 read with Rule 6 of the Companies (Meetings of the Board and its Powers) Rules, 2014, Clause 49 of the Listing Agreement with the Stock Exchanges and Guidelines on Corporate Governance for Central Public Sector Enterprise issued by Department of Public Enterprise, Government of India. The detail of Audit Committee is disclosed in the Corporate Governance Report which forms part of this Report. 20.0 NOMINATION AND REMUNERATION POLICY: MRPL is a 'Schedule A' category-1 Miniratna Central Public Sector Enterprise (CPSE). The appointment, terms, conditions and remuneration of Managing Director and Functional Directors (Whole-time Directors) are fixed by the Department of Public Enterprises (DPE), Govt. of India. Pursuant to Clause 49 of the Listing Agreement and DPE guidelines on Corporate Governance for CPSE, your Company has constituted a Nomination and Remuneration Committee. The details on the Nomination and Remuneration committee is disclosed in Corporate Governance Report which forms part of this report. 21.0 RISK MANAGEMENT POLICY: Your Company has a well-defined policy framework for Enterprise Risk Management formulated by M/s. Deloitte, Risk Managers are continuously monitoring the Risks pertaining to their area. Risk Management Committee was reconstituted consisting of majority of Directors pursuant to Clause 49 (VI) of Listing Agreement which monitors and evaluates the risk overview document once in quarter and recommends the same to the Audit Committee for evaluation. The Risk Management Committee's overview document is duly reviewed by the Audit Committee and placed before the Board on quarterly basis. 22.0 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS: There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operations. 23.0 CORPORATE GOVERNANCE: • Your company has complied with all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance requirements and mandatory guidelines on Corporate Governance for CPSEs issued by DPE, Government of India, except the Composition of Board of Directors, in relation to requisite number of Independent Directors. • The Annual Report contains a separate section on Corporate Governance, which forms part of this Report. • Pursuant to Clause 55 of Listing Agreement, Annual Business Responsibility Report (ABRR) has been prepared for the financial year and the same has been uploaded on the website of the company www.mrpl.co.in • Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, your Company has obtained the Certificate from the Joint Statutory Auditors of the Company, towards Compliance of Corporate Governance which forms part of this report. 24.0 MANAGEMENT DISCUSSION AND ANALYSIS: In terms of Clause 49 (VIII) (D) of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report for the FY 2014-15 duly reviewed by Audit Committee and approved by Board and forms part of this Report. 25.0 INTERNAL FINANCIAL CONTROL: Your Company has a well established Internal Control system to ensure an effective internal control environment that provides assurance on the efficiency of conducting business, including adherence to the Company'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 financial disclosures. The Internal Auditor certifies on the assurance of adequacy of Internal Control System on quarterly basis which are regularly reviewed by the Audit Committee. Details on the Internal Control System is disclosed in the MDA which forms part of this report. 26.0 AUDITORS: 26.1 Joint Statutory Auditors: M/s Gopalaiyer and Subramanian, Coimbatore and M/s A Raghavendra Rao and Associates, Mangalore have been appointed as Joint Statutory Auditors of the Company for the FY 2014-15 by Comptroller & Auditor General of India (C&AG). They have audited the Financial Statements and along with Balance Sheet for the Financial Year ended 31/03/2015 and submitted their report which forms part of this report. 26.2 Comptroller and Auditor General (C&AG) Report: The Comptroller and Auditor General (C&AG) have submitted their report which forms part of this report. 26.3 Secretarial Auditors: Your Company has engaged M/s Ullas Kumar Melinamogaru & Associates, Practicing Company Secretaries, Mangalore for conducting Annual Secretarial Audit for the year 2014-15 pursuant to Section 204 of the Companies Act, 2013. M/s Ullas Kumar Melinamogaru & Associates, Practicing Company Secretaries, Mangalore have issued Annual Secretarial Audit Report (Form MR-3) for the year 2014-15 which forms part of this report and is furnished as Annexure 'F'. 26.4 Cost Auditors: Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost accounts maintained by the company for the FY 2014 -15 are being audited by Cost Auditors M/s. Bandyopadhyaya Bhaumik & Co., Kolkata with approval of Ministry of Corporate Affairs, Government of India. 27.0 ACKNOWLEDGEMENT: 27.1 Your Directors sincerely thank the Government of India (GoI), Ministry of Petroleum and Natural Gas (MoP&NG), Ministry of Finance (MoF), Ministry of Corporate Affairs (MCA), Department of Public Enterprise (DPE), Ministry of Environment and Forest (MoEF), Ministry of External Affairs (MEA), Ministry of Shipping (MoS), Ministry of Home Affairs (MHA), other Ministries and Departments of the Central Government and the Government of Karnataka, for their valuable support, guidance and continued cooperation. 27.2 Your Directors gratefully acknowledge support and direction provided by the parent company, Oil and Natural Gas Corporation Limited (ONGC) and the support of Hindustan Petroleum Corporation Limited (HPCL), the Promoters of the company. Your Directors wish to thank the shareholders for the continued confidence reposed on their Company. Your Directors acknowledge the continuing co-operation and support received from New Mangalore Port Trust, Financial Institutions, Banks and all other stakeholder such as suppliers of crude oil, vendors, contractors, transporters. Your Directors recognize the patronage extended by the valued customers for the products of the Company and promise to provide them the best satisfaction. Your Directors wish to place on record their sincere appreciation of the sustained and dedicated efforts put in by all the employees collectively and concertedly as a Team known as "Team MRPL". For and on behalf of the Board (Dinesh Kumar Sarraf) Chairman Place: New Delhi Date: 09/07/2015 |