Directors' Report 2014-2015 To the Shareholders of Chennai Petroleum, On behalf of the Board of Directors of your Company, it is my privilege to present the 49th Annual Report on the working of your Company, together with the Audited Statement of Accounts, Auditors' Report and the Report of the Comptroller & Auditor General of India on the Accounts for the year ended March 31, 2015. Highlights of Financial Performance during the year 2014-15 : The Financial performance in the last quarter of the financial year was positive due to better operating performance coupled with stable crude and product prices resulting in higher operating profits. Despite achieving highest ever crude throughput in FY 2014-15, the decline in turnover was due to steep fall in crude and product prices from October 2014 mainly due to supply glut in the international market. As a result, the profitability was impacted significantly during the year due to inventory losses. The company posted a Profit/ (loss) before tax of Rs. (742.39) crore. However, the Profit/ (Loss) after tax was lower at Rs. (38.99) crore consequent to recognition of deferred tax asset in the current year in respect of carry forward business loss and unabsorbed depreciation to the extent of deferred tax liability of Rs. 703.40 crore accounted in previous years in line with the opinion received by the company from the Institute of Chartered Accountants of India. Dividend The Board of Directors of the Company has not recommended any dividend for the year 2014-15 due to loss. Book Value The book value per share of your Company was Rs. 111.15 as on 31.03.2015 as compared to Rs. 115.67 as on 31.03.2014. Reserves and Surplus The Reserves and Surplus as on March 31, 2015 was Rs. 1506.07crore as compared to Rs. 1573.44 crore as on March 31, 2014. Value Addition The value addition during the year was Rs. 466.40 crore as compared to Rs. 1283.15 crore in the previous year. Public Deposit Scheme Your Company has not accepted any public deposits during the year 2014-15 and no public deposit was outstanding as on 31.03.2015. Transfer of Unclaimed Dividend to IEPF Your Company has transferred to the Investor Education and Protection Fund the required amount as per the Companies Act, within the stipulated time. Operational Performance The total thruput of the company during the year was 10782 TMT as compared to 10624 TMT in the previous year. The distillates yield was the highest at 72.1% as against the previous best of 71.4% in 2013-14. The Fuel and Loss for the year was the lowest at 8.65% as compared to 8.78% in the last year. Manali Refinery achieved the highest ever crude thruput of 10,251 TMT as compared to the previous best of 10065 TMT in 2013-14. Fluidised Catalytic Cracking Unit (FCCU) achieved the highest throughput of 1075 TMT as against the previous best of 1065 TMT in FY 2013-14. The thruput of Continuous Catalytic Reforming Unit (CCRU) was the highest at 389 TMT as against the previous best of 359 TMT in 2013-14. Similarly, the thruput of Diesel Hydro treating Unit (DHDT) was the highest at 2186 TMT. The NMP Lube Extraction Unit also registered the highest thruput of 425 TMT as against the previous best of 390 TMT in 2003-04. The Energy Index for Manali Refinery was also the lowest at 62.3 MBTU/ BBL/NRGF as against the previous best of 62.5 MBTU/BBL/NRGF in 2013-14.Production of Propylene, MS and HSD in Manali Refinery also surpassed the highest levels at 37 TMT, 1050 TMT and 4474 TMT respectively. Manali refinery processed two new crudes viz., DAS crude from Abu Dhabi and Brass River from Nigeria. By processing these new crudes, the Company realized the benefit of adding new crudes to the basket. During the year, Cauvery Basin Refinery achieved a crude thruput of 531 TMT and received the award for achieving highest crude volume from Marg Karaikal Port. The Fuel & Loss was lower at 4.08 wt% as compared to 4.76 wt % in the previous year. MoU PERFORMANCE Your Company signed a MoU incorporating performance parameters with Indian Oil Corporation Limited, the holding Company, for the year 2014-15, as per the guidelines issued by the Department of Public Enterprises (DPE). MARKETING Majority of the fuel products produced by CPCL are being marketed by M/s.Indian Oil Corporation Limited. Around 11 new customers were registered during the year for supply of Food Grade.Hexane, Sulphur and Paraffin wax. Four Customer Meets were conducted at various locations for Wax, Sulphur and other direct customers. Agreement was entered into with Cetex Petrochemicals Limited for a period of4 years for supply of 6000 MT per annum of MEKFS. PROJECTS Completed Projects New MS, Naphtha and Slop Tanks In order to accommodate increased production of MS and Naphtha, one Naphtha and one MS tank, each of 10,000 KL capacity was constructed and commissioned in October 2014. Further, in order to handle slops more effectively, a new storage tank of 10,000 KL capacity was completed and commissioned in November 2014. Construction of 4 MG Reservoir As part of the Resid Upgradation Project enabling job, a new reservoir of 4 MGR was constructed and commissioned. Projects at Cauvery Basin Refinery Installation of 2 Crude oil storage tanks of 10,500 KL each is being implemented at an estimated cost of Rs. 25 Crore. The project has been mechanically completed in July 2015. ONGOING PROJECTS As a part of growth strategy, the Company has undertaken following projects aimed at capacity expansion, value addition and quality Upgradation. Mounded Bullets Currently the LPG, Propylene and Propane are stored in Horton Spheres and Butylene is stored in above ground bullets. As a risk reduction measure & also to provide intrinsically passive and safe environment and to eliminate BLEVE (Boiling Liquid Expanding Vapor Explosion) of LPG and petro chemical products, mounded bullet storage facility is under implementation at an outlay of Rs. 279 crore. The project is mechanically completed in March 2015. Resid Upgradation Project In order to maximize the distillates yield of the Manali Refinery and increase the percentage of High Sulphur Crude processing, the Company is implementing a Resid Upgradation Project at an estimated cost of Rs. 3110 Crore. This project involves installation of Delayed Coker Unit and Revamp of existing Hydro Cracker Unit along with other associated facilities. Construction of major units like Delayed Coker Unit (DCU) and Sulphur Recovery Unit (SRU) are in progress. Other Utilities and Offsite packages have also started. The scheduled mechanical completion date of the project has been revised from December 2015 to July 2016 on account of delay in obtaining clearance from Ministry of Environment & Forests, resulting in re-tendering for certain contracts and change in scope and configuration of certain OSBL systems. New Crude Oil Pipeline Activities are initiated to replace the existing 45 year old Crude oil pipeline running from Chennai Port to Manali Refinery with a New Crude oil Pipeline with state-of-the-art technology and safety features, to ensure reliable and faster crude transfer to refinery at a cost of Rs.. 257.87 crore. The new pipeline is aligned along the berm of Ennore Manali Road Improvement Project. The Coastal Regulatory Zone (CRZ) clearance from Ministry of Environment & Forests was received in January 2014. Clearance from Ministry of Road Transport and Highways (MORTH) has been obtained on 4th Apr 2015, followed by Petroleum and Explosives Safety Organisation (PESO) approval on 11th May 2015 The project is scheduled for completion by end November 2016. FUTURE PROJECTS BS- IV compliance - DHDS Revamp: As per the Auto Fuel Vision and Policy 2025 of Government of India, 100% BS-IV quality fuels have to be supplied by the refineries from April 2017 and 100% BS-V/VI quality fuels from April 2020. To comply with this directive, the existing Diesel Hydro-desulphurisation Unit (DHDS) is proposed to be revamped from 1.8 MMTPA to 2.34 MMTPA to ensure 100% BS-IV production from the Manali Refinery. After the revamp, the DHDS unit will be able to produce hydro treated diesel with less than 10 ppm sulphur. The feasibility report of this project (BSIV) is under preparation with a target to commission by 31st March 2017. INDIAN ADDITIVES LIMITED Your Company has only one Joint Venture viz., Indian Additives Limited (IAL), with Chevron Chemical Company (now Chevron Oronite Company), which was formed in the year 1989 for the manufacturing of Lube Additives. IAL achieved a turnover of Rs. 587.62 crore during the year 2014-15, as against Rs. 589.52 Crore in the previous year. The Profit after Tax for 2014-15 was Rs. 23.52 Crore as against Rs. 24.95 Crore in the previous year. The Board of IAL has recommended a dividend of 50% for the financial year 2014-2015. INFORMATION TECHNOLOGY Your company has taken rapid strides towards Green IT by focusing on the concept of paperless office with the successful implementation and processing of various employee claim in Employee Enterprise Portal system . In order to strengthen the IT security the Load Balancer was implemented which enables balancing of two ISP providers and automatic routing of internet services (Mail and Internet Services) with security features. During the year, web-based On-line suggestion scheme, Tender Grievances System, centralized timesheet process for refinery locations (CBR) were introduced. The website of your company was made user friendly by enabling screen reader access for persons with disabilities and the website is being updated regularly with news and events including Swachh Bharath activities. RESEARCH AND DEVELOPMENT (R&D) Your company's R&D policy lays emphasis on supporting refinery operations by providing technological inputs to meet the corporate objective of technical excellence in all aspects of refinery operations, promoting indigenous technologies for refinery processes in association with National Laboratories/ Academic institutions and developing new products and upgrade the quality of the existing petroleum products. Formulation of Aromatic, Naphthenic and Paraffinic type Rubber Process Oils from refinery streams were carried out. Further, studies were carried out using effluent water stream as medium for growth of algae and the algae grown in effluent water was further converted to Biocrudes and studied by Hydrothermal liquefaction process. Studies were carried out for the feasibility of using DHDS unit for Hydrotreating of VGO using commercial catalysts to ascertain whether the Hydrotreated VGO could be used as additional feed for FCC unit meeting the Gasoline sulfur requirements. In addition, the feasibility of producing Microcrystalline wax from BN Slack wax was studied using Lab de-oiling set up and based on that, a trial run was successfully conducted in the Wax plant for the production of Micro Crystalline Wax. Your company has filed a patent on "Processing and distillation techniques for algal biocrude to produce drop-in biofuels". A paper on " Biocrude Production from Microalgae and characterization of TBP distillates of Algal biocrude blended with Petrocrude" was presented in the International Refining and Petrochemicals Conference held in Verona Italy in June 2014. SAFETY PERFORMANCE Safety Management System at CPCL aims at enhancing safety performance by promoting safety awareness and maintaining excellent standards for safety of people, plant and environment. Safety systems and procedures have been made mandatory for all employees and contractors including visitors. Inherent Safe Design aspects are considered in the initial stage itself and utmost importance given for strict safety compliance. During the year, one old foam Tender has been replaced and new one put into service. As per the OISD norms, provision of automatic rim seal fire detection and protection system for large size floating roof tanks job is in progress. Radiography awareness program was conducted for employees by inviting experts from Indira Gandhi Centre for Atomic Research (IGCAR) Kalpakkam. Onsite Emergency Mock Drills were conducted twice at Manali Refinery. Joint Director & Dy Director, Industrial Safety & Health witnessed the drills. Job Safety Analysis was carried out for all critical jobs. Off site emergency preparedness mock drill was conducted in CBR in December 2014. NSPC audit of Chidmbaranar Oil Jetty was completed by Tamilnadu Maritime Board in October 2014 and by National Hydrographic Office in November 2014. In recognition of your company's efforts in adhering to the best safety practices, Manali Refinery received the prestigious State Safety Award (First Prize) under Chemical Industries Category during December 2012 from the Government of Tamilnadu in November 2014. Cauvery Basin Refinery was bestowed with the Safety Appreciation Award from National Safety Council- TN Chapter for 2012 and also the Prashansa Patra for the assessment period 2010-2012 from National Safety Council, Mumbai, in October 2014. ENVIRONMENTAL PERFORMANCE Your Company recognizes the impact of industrial operations on environment & believes that commitment to environment protection is fundamental to the company's values which ensure sustainable development. Therefore, your company's development plan encompasses a variety of schemes towards minimizing the impact of Refining operations on Environment. Bench scale study for treated water quality improvement and Fire water quality improvement were completed at IIT, Madras and CLRI, Chennai respectively. As part of solid waste management, new sludge pit and two bio remediation pits were completed. In Cauvery Basin Refinery, Green House Emission Survey was conducted. Significant initiatives taken in the area of air pollution control include the following: • Continuous operation of Volatile Organic Compounds (VOC) Adsorption system in ETP II to reduce VOC emission. • Continuous efforts to reduce Greenhouse Gases (GHG) emissions by energy efficiency improvement, alternate energy generation & by Leak Detection and Repair Program(LDAR) • Real time data transfer to State Pollution Control Board from Continuous Ambient Air Quality Monitoring Stations • Use of Low NOx Burners to reduce NOx emission from major heaters • Finalization of advanced wastewater treatment to maximize reclamation of Refinery waste water. • Adoption of in-situ sludge treatment for Crude oil tank bottom sludge to reduce sludge generation in tank In recognition of the unique measures undertaken for the preservation of environment, the Cauvery Basin Refinery was awarded the Green Award for industries by TamilNadu Pollution Control Board in June 2014, for the year 2013-14. ENERGY CONSERVATION Your Company continues its efforts to implement various measures aimed at reducing the energy consumption and achieving energy conservation, which are expected to yield a saving to the extent of 12500 SRFT/ annum. Your company has achieved the lowest ever energy index of 63.0 MBN. The following Energy Conservation measures were taken up in 2014-15: • FCCU oxygen enrichmentOxygen rich stream from N202 plant was routed to FCCU resulting in stopping of one auxiliary air compressor. • High pressure hydrogen from Diesel Hydro-Treater (DHDT) was routed to Wax HiFi resulting in stopping of hydrogen make up compressor to wax plant. • CCR off gas was routed to OHCU/DHDT as make up gas thereby reducing hydrogen generation through Naphtha steam reforming. • Steam trap management of entire refinery to minimize steam loss. The details of proposals implemented for energy conservation are given in Annexure IV. In appreciation of its energy conservation measures, your Company was awarded the second prize by Centre for High Technology (CHT) for Furnaces / Boilers insulation efficiency in the Refinery Technology Meet held at Chennai in November 2014. QUALITY MANAGEMENT - TPM / ISO Your company by practicing TPM carried out various improvements in energy, equipment reliability and quality. During the year, first surveillance audit was carried out for Safety, Health, Environmental and Quality Integrated Management System (SHEQ IMS). The CISF of Manali Refinery was certified for QMS 9001:2008 and it is the first in Indian Refineries to get certification on Quality Management Standard. HUMAN RESOURCES Your Company regards its employees as one of the key drivers of growth by providing a congenial work environment. The total manpower of your Company as on 31st March 2015 was 1628, comprising of 744 supervisors and 884 non-supervisors (1688 as on 31st March 2014, comprising of 778 supervisors and 910 non-supervisors). During the year, to promote cordial industrial relations climate, the Functional Management conducted 9 meetings with the Office Bearers of Union and Officers Association on various occasions. Further, 11 structured communication meetings with Office bearers of Welfare Associations were conducted. Memorandum of Settlement under section 18(1) and 2(p) of the Industrial Disputes Act 1947 on work related Allowance/facilities, Cafeteria approach and on Career Progression Policy for workmen was signed between Management and recognized union. Further, during the year, communication meetings with the Functional Management were conducted wherein physical and financial performances of the Company were discussed. Suggestion for productivity and profitability improvements were received from the employees. Your Company has been taking continuous effort for developing its human resources by organizing training programs for employees at all levels. During the year, 2.5 Man-days per employee for training was achieved meeting the target and in total 4120 Man-days training were provided to employees in various training programs. In order to develop the technical knowledge, the Core course Program was conducted at Refinery Engineering School of Training (RESOT) for Supervisory employees. Training Programs on Leadership Development including Risk Management were conducted. In addition to the formal training, programmes aimed at developing the technical and non-technical skills of the employees, innovative programs on physical and mental health of the employees like yoga, meditation, etc were also conducted. Your Company has been meticulously following the Presidential Directives and various instructions of the Government relating to the welfare of the SC, ST, OBC, and differently abled persons. Out of the total manpower, there were 396 SC employees (previous year: 414) and 37 ST employees (previous year: 38) as on 31.03.2015 constituting 24.32% and 2.27% of the total manpower respectively. The reports relating to representation of SCs / STs / OBCs in the prescribed proforma as on 01.01.2015 is given in the Annexure - I. Your Company is implementing the provisions of the Disabilities Act 1995 by way of 3% reservation for differently abled persons. In addition, various concessions and relaxations are being extended to physically challenged persons in the recruitment process. Your Company is committed towards prevention of sexual harassment of women at workplace and takes prompt action in the event of reporting of such incidents. In this regard, an Internal Complaints Committee has been constituted to deal with sexual harassment complaints and conduct enquiries, if any. There were no complaints of sexual harassment during the year. WELFARE OF WOMEN Your Company firmly believes that women employees play a pivotal role in the human capital profile of the Company. As on 31.03.2015, 88 women employees are on the rolls of the Company, of whom 42 are in the Supervisory Grade and 46 are in Non supervisory Grade, constituting 5.65% of the total Supervisory employees and 5.20% of the total Non-supervisory employees respectively. International Women's Day 2015 was celebrated by the women employees of CPCL on 9th of March 2015 with the theme "Make it happen" CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY DEVELOPMENT Corporate Social Responsibility is one of the pivotal functions of your Company .The Company sees itself as an integral part of society and is conscious of its responsibilities towards betterment of quality of life of the communities at large. The CSR Policy of the Company can be accessed at the website of the Company under the link <http://www.cpcLco.in/corporate_information-cor_governance.htm>. The CSR&SD activities mainly focus on Health, Education, Women Empowerment, Skill Development, and Environment Protection & Renewable Sources of Energy for ensuring sustainable development of the society to which it belongs. Even though the company has incurred an average net loss during the preceding three financial years, an amount of Rs. 116.58 lakhs was spent during the year 2014-15 for various CSR&SD Projects and initiatives. A detailed report on CSR activities as per the provisions of the Companies Act, 2013 alongwith CSR Highlights during the year are attached at Annexure - II to the report. OCCUPATIONAL HEALTH SERVICES (OHS) CENTRE Your Company's Occupational Health Services (OHS) Centre is dedicated to prevention of illness and injuries amongst all the employees and is well equipped with the best of the infrastructures to handle any eventuality. All possible hazards in the work place were monitored as per the established hygiene monitoring schedule, to ensure a congenial work environment and the hazards were within the acceptable levels. The health surveillance was carried out and about 90% of the employees working in the hazardous area underwent the annual health check up. In addition, the contract workers who were to work at heights and confined spaces were screened for physical fitness before they were posted to the jobs. Various programs were organized to promote wellness and create awareness of illness for the employees. PUBLIC GRIEVANCES Your Company is committed to provide prompt response to public grievances and a Grievance redressal system is in place. Details and contact number of Public Grievance Officer are displayed in the website of the Company, viz. www.cpcLco.in . As on 31.03.2015, there were no complaints pending. CORPORATE GOVERNANCE In line with the provisions of Clause 49 of the Listing Agreement and DPE Guidelines on Corporate Governance, a separate section on Corporate Governance forms part of this Annual Report. AUDIT COMMITTEE The Composition of the Committee as on 31.3.2015 is as under: • Mr. G.Ramaswamy Independent Director - Chairman. • Mr. S.Krishna Prasad, Director (Finance) -Member • Ms. Perin Devi, Government Director- Member • Mr. Yasin Rezazadeh, Director -NICO - Member The recommendations of the Audit Committee during the year were accepted by the Board. Being a Government Company, the company has requested Ministry of Petroleum and Natural Gas, Government of India, to consider appointment of minimum one additional independent director immediately to comply with the quorum requirement of minimum two independent directors. SECRETARIAL AUDIT The Secretarial Audit Report for the year 2014-15 confirms that the company has complied with all the applicable provisions of the Companies Act 2013 and the rules made there under and other applicable acts, rules, guidelines, standards etc. except the clause relating to appointment of Independent Directors. The appointment of additional independent directors is under the consideration of Government of India. The report, duly certified by a practising Company Secretary, is attached as Annexure - III to the Report. Your Company being a Government Company, the selection and appointment of Directors, terms of appointment and the remuneration payable to Directors is decided by the Government of India as per the Government guidelines and not by the Board of Directors. In view thereof, the Company has not reconstituted its Remuneration Committee to include the terms provided under the Companies Act, 2013. The performance evaluation of the directors other than directors representing Naftiran Inter trade Company, one of the promoters of the company, is carried out by the Administrative Ministry (MoP&NG), Government of India as per applicable Government guidelines. CODE OF CONDUCT The Board of Directors of your Company has enunciated a code of conduct for the Directors and Senior Management Personnel, which has been circulated to all concerned and has also been hosted on the company's website. The code can be accessed at <http://www.cpcl.co.in/code_conduct.htm>. The Directors and Senior Management Personnel have affirmed compliance with the code of conduct. RISK MANAGEMENT POLICY To ensure alignment of Risk Management system with the corporate and operational objective and to improve upon the existing procedure, the Executive Committee of the company at its 246th Meeting held on 26.04.2011 constituted a Committee comprising of officials from various functional areas to identify the risks in the present context, prioritise them and formulate proper action plan for implementation. The Committee has formulated the Risk Management Policy. The Action Taken Report on the Risk Management Policy for the year 2014-15 was reviewed by the Audit Committee and Board at the Meeting held on 23.05.2015. INTERNAL FINANCIAL CONTROLS Your Company has adequate Internal Financial Controls for ensuring the smooth conduct of its business with focus on checks and controls on systems and procedures, safeguarding the assets, prevention and detection of frauds and errors, accuracy of the accounting records and the timely preparation of reliable financial information. The Company has a separate Internal Audit department headed by a Senior Manager who directly reports to the Managing Director. The Internal Audit department comprises of officials from finance, who carry out extensive audit throughout the year. STATUTORY AUDITORS M/s. Chandran & Raman, Chennai and M/s S.Venkatram & Co., Chennai were appointed as Joint Statutory Auditors of the Company for the financial year 2014-2015 by the Comptroller and Auditor General of India. The Board of Directors of the Company fixed a remuneration of Rs. 10 lakh (Rs. 5 lakh to each of the Joint Statutory Auditors) in addition to the out-of-pocket expenses, if any, and applicable service tax. There are no qualifications in the Statutory Auditors report dated 23.05.2015 on the annual accounts for the financial year 2014-15. M/s. K. Suryanarayanan, Cost and Management Accountant, Chennai was appointed as the Cost Auditor of Manali Refinery and Cauvery Basin Refinery of the Company for the financial year 2014-15 in respect of Petroleum and Petrochemical sector at a total remuneration of Rs. 1,70,000/- plus applicable taxes and out of pocket expenses, if any, to conduct the audit of Cost Accounts maintained by the Company and X 30000/- plus applicable taxes towards certification fee for compliance report in respect of activity of power generation, subject to the ratification by the shareholders in the Annual General meeting. The cost audit for the year 2013-14 was carried out and the cost audit report was filed with the Ministry of Corporate Affairs in the prescribed form within the stipulated time period. PUBLIC PROCUREMENT POLICY FOR MSMEs Your company has complied with the Public Procurement Policy for MSMEs as per the directives of the Government of India. Necessary provision has been made in the tenders indicating the eligibility of MSMEs to participate in the tender. As against the target of 20% for procurement from MSMEs, the actual procurement of your Company from MSMEs during the year was 37%. RELATED PARTY TRANSACTIONS (RPTs) In line with the provisions of the Companies Act, 2013 and the Listing Agreement, a policy on material RPTs has been framed, which can be accessed on the website of the company under the link <https://www.cpcl.co.in/InvestorCenter> Grievances. Your Company has undertaken transactions with related parties during the year. These transactions are in the ordinary course of business and on arms length basis. As per the RPT Policy, approval of Audit Committee has been obtained for all RPTs. During the year, there was no material RPTs. The disclosures related to Related Party Transactions in accordance with applicable accounting standards are provided at Note-28 of the Annual Accounts. Limited RIGHT TO INFORMATION The Right to Information Act, 2005 is applicable to your company. In accordance with the provisions of the RTI Act, necessary disclosures have been made in the website of the company. During the year, 37 applications under the RTI Act were received and responded in time. VIGILANCE The Vigilance Department of your company continues to improve and strengthen Vigilance Mechanism by conducting periodic/surprise inspections, major inspections and systems studies focusing on areas of improvement. Training programs, and lectures on vigilance functions, procedures to be followed in procurement, contracts and execution of works were conducted to create awareness as part of capacity building and to bridge knowledge gap, if any. Focus is maintained on leveraging of technologies as a result of which the payment of bills to vendors/ contractors is effected through ECS/EFT. All open tenders are published also in CPCL website in order to ensure competition and transparency. In line with CVC's guidelines Notice Inviting Tenders, tender documents and details of Purchase Orders/ Contracts awarded were hosted in the CPCL website. Procurement and contracts are being initiated through "e-tendering" mode and the value of the Tenders finalized through E-tender portal is being monitored and steps for improving the performance is taken continuously. Vigilance Awareness Week Programme was observed from 27th October to 1st November, 2014 with the theme - "Combating Corruption - Technology as Enabler". Various programmes including Interaction Meet with Contractors, Customer Meet, Lecture sessions, Essay competitions and Slogan competitions were conducted both in Manali and Nagapattinam Refinery Units. As part of Integrity Pact implementation, major contracts above value of X 5.0 crore are covered under the Pact. OFFICIAL LANGUAGE POLICY In compliance of Official Language Act, 1963, Official Language Rules, 1976 and orders issued by Government of India from time to time, efforts were continued during the year for increasing the progressive use of Hindi in Official work. The Managing Director of the Company is the Chairman of the Official Language Implementation Committee, which meets every quarter to review the progress of implementation of Official Language Policy. During the year Prabodh, Praveen and Pragya classes were conducted for the benefit of employees. 11 employees passed Hindi Examination conducted under Hindi Teaching Scheme. Employees were encouraged by paying incentives every quarter for doing work in Hindi. Four Hindi Workshops were organized for the benefit of employees. As part of the Hindi day celebrations, Hindi Competitions were conducted and winners of the competitions were awarded prizes during the celebrations. STATUTORY INFORMATION • Particulars of employees drawing a remuneration of Rs. 60 lakhs or more per annum, if employed throughout the financial year or Rs. 5 lakhs per month, if employed for part of the financial year, during 2014-15 as required under Section 197 of the Companies Act, 2013 and rules made there under - Nil. • Statutory details of Energy Conservation and Technology Absorption, R&D activities and Foreign Exchange Earnings and Outgo, as required under the Companies Act, 2013 and the rules prescribed thereunder are given in the Annexure and form part of this Report (Annexure - IV). • Certificate received from the Auditors of the Company regarding compliance of conditions of Corporate Governance, as required under Clause 49 of the Listing Agreement and also the compliance with the guidelines on Corporate Governance issued by Department of Public Enterprises, Government of India is Annexed and forms part of this Report (Annexure - V) • Management Discussion and Analysis Report as required under Clause 49 IV F of the Listing Agreement is annexed and forms part of the Report (Annexure - VI). REPORTING UNDER SECTION 23(1)(B) OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985 In line with the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 CPCL has reported to the BIFR in October 2014, due to erosion of more than 50% of peak networth over the last four financial years as on 31.03.2014. CPCL has reported a loss of Rs. 38.99 crore for the year ended 31.03.2015. The company initiated various measures to improve the physical and financial performance during the year. The Company has achieved excellent physical performance during the year 2014-15 by registering the highest distillate yield of 72.1% and the lowest Fuel & Loss of 8.65%, as a result of various energy conservation and margin improvement measures implemented by the company. The company is also in the process of implementing a Resid Upgradation project at an approved cost of Rs. 3110 Crores, which is expected to help in boosting the bottom line of the company. Despite excellent operational performance, the fall in networth from to Rs. 1722 Cr as on 31.03.2014 to Rs. 1655 Cr as on 31.03.2015 was mainly attributed to extraneous factors beyond the control of the company. Factors like the steep fall in Crude and Product prices from July 2014 in the international market and the consequent inventory losses significantly impacted the profitability of the Oil industry and CPCL in particular, being a standalone refining company. Considering further reduction in networth as on 31.03.2015, the company is required to report to BIFR within 60 days from the date of adoption of accounts by the shareholders of the company. Due to the implementation of various measures to improve physical and financial performance and with the stabilisation of crude and product prices from Quarter IV of FY 2014-15, the company is expected to show positive results in FY 2015-16. In addition to various measures taken by the company to improve the physical performance, the proposal for capital infusion by issue of preference shares to IOCL on private placement basis upto Rs. 1000 crore, approved by the Board will augment the networth of the company significantly. DIRECTORS Mr.L.Sabaretnam and Mr.Venkatraman Srinivasan, Independent Directors ceased to be directors on the Board of CPCL effective 16.09.2014. Mr.T.S.Ramachandran, Director (Technical) superannuated from the services of the company effective 30.11.2014. Mr. Gautam Roy has been appointed as Managing Director effective 14.10.2014. Mr.U.Venkata Ramana has been appointed as Director (Technical) effective 01.12.2014. Mr.S.Krishna Prasad has been appointed as Director (Finance) effective 09.01.2015. Ms.Perin Devi, Director (R&V), Ministry of Petroleum and Natural Gas, Government of India has been appointed as a Director effective 12.03.2015 in place of Shri.Mohan Lal. Mr.Alireza Zamani and Mr.Yasin Rezazadeh have been appointed as Directors representing Naftiran Intertrade Company Limited, one of the promoters of the Company effective 23.03.2015 in place of Mr.M.H.Ghodsi and Mr.A.Azmoodeh respectively. The Company has received a Certificate of Independence from Mr.G.Ramaswamy, Independent Director confirming that he meets the criteria prescribed for Independent Directors under the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Since the company has only one independent director, a separate meeting of Independent Directors could not be held as per provisions of the Companies Act, 2013 and Listing Agreement. During the year, 9 meetings of the Board of Directors were held. The details of the meetings attended by each Director are provided in the Corporate Governance Report. No significant and material orders were passed by the Regulators or Courts or tribunals, which impact the going concern status and companies operation in future. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has framed a whistle blower policy wherein the employees are free to report any improper activity resulting in violations of laws, rules, regulations or code of conduct by any of the employees, to the Competent Authority or Chairman of the Audit Committee, as the case may be. Any such complaint is reviewed by the Competent Authority or Chairman of the Audit Committee. The confidentiality of those reporting violations are maintained and they are not subjected to any discriminatory practice. No employee has been denied access to the Audit Committee. The policy on Vigil Mechanism / Whistle Blower can be accessed on the Company's website at the link <https://www.cpcl.co.in/investor> centre grievances/. During the year, no complaint has been received under the Whistle-Blower Policy. DETAILS OF LOANS / INVESTMENTS / GUARANTEES Your Company has not provided Loans / Guarantees /Security to any person, body corporate and joint ventures during the year. EXTRACT OF ANNUAL RETURN As required under the provisions of the Companies Act, 2013, the extract of Annual Return for the financial year ended 31st March, 2015 in prescribed form MGT-9 is attached at Annexure - VII to this report. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirements under Section 134(5) the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed, that, i) in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed and that there are no material departures from the same; ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review; iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) the Directors have prepared the annual accounts for the financial year ended March 31, 2015, 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 operating effectively. vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively. ACKNOWLEDGEMENT Your Board of Directors would like to express its sincere appreciation for the dedicated efforts made and valuable services rendered by the members of CPCL family. The Board would also like to thank the Government of India, particularly the Ministry of Petroleum & Natural Gas, Other Ministries, Indian Oil Corporation Ltd, Naftiran Intertrade Company Ltd, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Oil Industry Safety Directorate and the various State Governments, regulatory and statutory authorities for their valuable guidance and support. The Board is grateful to all its stakeholders for their continued support and confidence reposed in the Company. Your Directors place on record their appreciation of the valuable contributions made by Mr.L.Sabaretnam, Mr.Venkatraman Srinivasan, Mr.T.S.Ramachandran, Mr.Mohan Lal, Mr.M.H.Ghodsi and Mr.Ahmad Azmoodeh, Directors, during their tenure. For and on behalf of the Board (B.Ashok) Chairman Date : 03.08.2015 Place : New Delhi |