Bharat Petroleum Corporation

The Directors take pleasure in presenting their Report on the
 performance of Bharat Petroleum Corporation Limited (BPCL) for the year
 ended 31st March, 2008.
 
 PERFORMANCE OVERVIEW
 
 Group Performance
 
 The aggregate Refinery throughput at BPCLs Refineries at Mumbai and
 Kochi along with that of BPCLs subsidiary company, Numaligarh Refinery
 Limited (l\IRL) in 2007-08 was 23.52 Million Metric Tonnes (MMT) as
 compared to 22.28 MMT in 2006-07. The market sales of the BPCL Group
 increased to 26.08 MMT in 2007-08 from 23.66 MMT in the previous year.
 Besides, the Group had also exported 1.93 MMT of petroleum products
 during 2007-08 as compared to 1.72 MMT exported in 2006-07.
 
 On the financial front, the sales turnover for the year 2007-08 of the
 BPCL Group stood at Rs. 1,231,796.87 million, up from the last years
 level of Rs. 1,090,789.38 million. The Group Profit after Tax (PAT)
 decreased to Rs. 19,125.25 million in the current year from a level of
 Rs. 23,558.80 million in 2006-07. After setting off the minority
 interest, the Group earnings per share decreased from Rs. 59.33 in
 2006-07 to Rs. 48.94 in 2007-08.
 
 CONSOLIDATED GRPUP RESULTS
 
     					        2007-08       2006-07
  
 Physical Performance
 
 Crude Throughput (MMT)                            23.52         22.28
 
 Market Sales (MMT)                                26.08         23.66
 
 Financial Performance                                   Rs. in Million
 
 Sales / Income from Operations             1,231,796.87   1,090,789.38
 
 Less: Excise Duty Paid                      (119,365.77)   (106,597.07)
 
 Net Sales / Income from Operations         1,112,431.10     984,192.31
 
 Gross Profit                                  50,270.42      50,472.85
 
 Interest                                       7,148.91       5,756.80
 
 Depreciation & amortisation                   12,921.04      11,020.77
 
 Profit before tax                             30,200.47      33,695.28
 
 Provision for taxation - Current              10,258.88      10,055.98
 
 Less: MAT Credit                                 -              (66.63)
 
 Profit after Current Tax                      19,941.59      23,705.93
 
 Provision for Fringe Benefit Tax                 162.07         139.62
 
 Provision for taxation - Deferred                587.02         (60.94)
 
 Short provision for Taxation in earlier
 years provided for                                67.25          68.45
 
 Net Profit                                    19,125.25      23,558.80
 
 Minority Interest                              1,429.73       2,106.85
 
 Net Income of the group attributable to BPCL  17,695.52      21,451.95
 
 Group Earnings per share attributable 
 to BPCL (Rs.)                                     48.94          59.33
 
 Company Performance
 
 During the year 2007-08, BPCLs Mumbai Refinery had a crude throughput
 of 12.75 MMT, which was higher than the level of 12.03 MMT achieved
 during the last year.  Kochi Refinery also achieved a higher crude
 throughput at 8.20 MMT as compared to 7.75 MMT in 2006-07. The market
 sales of the company increased to 25.79 MMT from a level of 23.45 MMT
 in 2006-07.
 
 The sales turnover of the Company registered a growth of 13.24% over
 the previous year to reach a level of Rs. 1,216,840.69 million as
 compared to Rs. 1,074,522.70 million in 2006-07. Similarly, the gross
 profit before interest, depreciation and tax for the year stood at Rs.
 43,679.65 million, representing an increase of 3.89% over the previous
 year. The profit before tax for the year of Rs. 25,972.87 million has
 declined by 6.16 % as compared to Rs. 27,676.44 million in 2006-07.
 After providing for tax, (including deferred tax and fringe benefit
 tax) of Rs. 10,167.26 million as against Rs. 9,621.69 million during
 the last year, the profit after tax for 2007-08 stood at Rs. 15,805.61
 million as compared to Rs. 18,054.75 million in 2006-07, reflecting a
 decline of 12.46% over the previous year.
 
                                            	Rs. in Million
 
                                 	        2007-08      2006-07
 
 Sales Turnover-Gross                         1,216,840.69 1,074,522.70
 
 Gross Profit before Depreciation, 
 Interest and Tax                                43,679.65    42,044.22
 
 Interest                                         6,724.72     5,326.66
 
 Depreciation & amortisation                     10,982.06     9,041.12
 
 Profit before tax                               25,972.87    27,676.44
 
 Provision for Taxation - Current                 8,839.00     9,168.50
 
 Provision for Fringe Benefit Tax                   153.00       117.30
 
 Provision for Taxation - Deferred                1,108.00       267.53
 
 Short provision for taxation in earlier 
 years provided for                                  67.26        68.36
 
 Net Profit                                      15,805.61    18,054.75
 
 Transfer from/(to) Debenture Redemption Reserve       -       4,450.00
 
 Balance brought forward from the previous year       0.01    26,829.10
 
 Amount available for disposal                   15,805.62    49,333.85
 
 The Directors propose to appropriate this 
 amount as under:
 
 Towards Dividend:
 
 Interim Dividend (declared & paid)                    -       2,169.25
 
 Final (proposed) Dividend - Rs. 4 per share      1,446.17     3,615.42
 
 Towards Corporate Dividend Tax                      91.61       918.68
 
 For transfer to General Reserve                 14,267.83    42,630.49
 
 Balance carried to Balance Sheet                     0.01         0.01
 
 Summarised Cash Flow Statement:
 
 Cash Flows:
 
 lnflow/(Outflow) from operations                 4,171.30    46,466.54
 
 lnflow/(Outflow) from investing activities     (35,539.52)  (58,995.97)
 
 lnflow/(Outflow) from financing activities      (1,977.36)   (3,236.47)
 
 Net increase/(decrease) in cash & cash 
 equivalents                                    (33,345.58)  (15,765.90)
 
 
 The Board of Directors has recommended a dividend of 40% (Rs.4 per
 share) for the year on the paid-up share capital of Rs.3,615.42
 million, which would absorb a sum of Rs. 1,537.78 million out of the
 profit after tax, inclusive of Rs. 91.61 million towards Corporate
 Dividend Tax on distributed profits. BPCLs net worth as on 31st March,
 2008 was Rs. 116,768.40 million, as compared to Rs. 102,735.41 million
 as at the end of the previous year.
 
 The earnings per share stood at Rs. 43.72 in 2007-08 as compared to Rs.
 49.94 during 2006-07. Internal cash generation during the year was
 higher at Rs. 26,363.28 million as against Rs. 22,177.03 million in the
 previous year. BPCLs contribution to the exchequer by way of taxes and
 duties during the year increased to Rs. 260,475.75 million from Rs.
 243,562.22 million during the last financial year.
 
 Borrowings from banks as on March 31, 2008 stood at Rs. 133,402.49
 million as against Rs.91,179.57 million at the close of the previous
 year. The Collateralised Borrowing and Lending Obligation (CBLO)
 through Clearing Corporation of India Limited amounted to Rs. 10,000
 million as at the end of the year, as compared to Rs. 8,660 million at
 the end of the previous year. Borrowings from Oil Industry Development
 Board decreased to Rs. 6,532.40 million as compared to Rs. 7,681.40
 million at the end of the previous year.
 
 Public deposits as at 31st March 2008 stood at Rs. 288.02 million as
 compared to Rs. 626.11 million at the end of the previous year. The
 amount of deposits, matured but unclaimed, at the end of the year was
 Rs. 4.81 million, which pertains to 67 depositors.
 
 The total Capital Expenditure during the year 2007-08 amounted to Rs.
 20,665.22 million as compared to Rs. 18,338.12 million during the year
 2006-07.
 
 The Comptroller and Auditor General of India (C&AG) has no comment upon
 or supplement to the Statutory Auditors report on the Accounts for the
 year ended 31st March 2008. The letter from C & AG is annexed as
 Annexure E.
 
 REFINERIES
 
 MUMBAI REFINERY
 
 During the year 2007-08, Mumbai Refinery processed 12.75 MMT of crude
 oil, as against 12.03 MMT processed in 2006-07, thereby achieving the
 highest level of crude oil processing in a single financial year.  The
 gross refinery margin for the current year stood at USD 4.60 per barrel
 of crude oil processed, as compared to USD 3.64 per barrel in 2006-07.
 This translated into an overall gross margin of Rs. 17,728.70 million,
 as compared to Rs.  14,908.40 million in 2006-07. The improvement in
 the gross margin was achieved through optimised crude selection,
 improved distillate yields, better product mix and favourable
 crude/product prices.
 
 KOCHI REFINERY
 
 During the year 2007-08, Kochi Refinery also achieved its highest ever
 crude oil processing in a single financial year. The Refinery processed
 8.2 MMT of crude oil during the year, as compared to 7.75 MMT of crude
 oil in 2006-07. The gross margin in 2007-08 stood at USD 7.18 per
 barrel of crude processed, as compared to USD 3.46 per barrel during
 2006-07. The improvement in the gross margin was due to optimised crude
 selection, higher capacity utilization, improved distillate yields and
 favourable crude/product prices.
 
 The details of the performance of the Refineries, their activities and
 future plans are discussed in the Management Discussion and Analysis
 Report (MD & A).
 
 MERGER OF KRL WITH BPCL
 
 As informed in the last years Report, the merger of the erstwhile
 Kochi Refineries Limited (KRL) with BPCL under Sections 391 to 394 of
 the Companies Act 1956 had been completed, following receipt of the
 Order dated 18th August 2006 issued by the Ministry of Company Affairs,
 New Delhi. One of the Shareholders of the erstwhile KRL had filed a
 Writ Petition in the Delhi High Court challenging the merger, and the
 same is pending as on date.
 
 MARKETING
 
 During the year, BPCLs market sales volume reached a level of 25.79
 MMT, which represented a growth of 9.98% over the volume of 23.45 MMT
 achieved in 2006-07. BPCLs growth rate was better than the average
 growth rate of 9.7% achieved by the public sector oil companies. BPCLs
 market share amongst the public sector oil companies of 22.7% as at
 31st March 2008 reflected a small increase over the levels as at the
 end of the previous year, when it stood at 22.6%. In line with the
 overall market, the year 2007-2008 saw a continuation in the sharp
 growth in the sales volume of Motor Spirit (MS) and High Speed Diesel
 (HSD). Sales volume of Aviation Turbine Fuel (ATF) and Liquefied
 Petroleum Gas (LPG) also increased during the year, while there was a
 decline in the sales of Benzene and Naphtha. BPCL achieved the highest
 growth in the Industry with regard to sales of Bitumen and Lubricants.
 In addition, BPCL has also exported 1.16 MMT of Naphtha, 0.47 MMT of
 Fuel Oil (FO) and 0.15 MMT of HSD during the year.
 
 A detailed discussion of marketing performance is covered in the MD &
 A.
 
 PROJECTS
 
 Central India Refinery Project
 
 A 6 Million Metric Tonnes per annum (MMTPA) capacity state-of-the-art
 grass roots Refinery at Bina, in Madhya Pradesh along with crude oil
 import facilities consisting of a Single Point Mooring (SPM) system,
 Crude Oil Storage Terminal (COT) at Vadinar and approximately 935 km
 long cross-country crude oil pipeline from Vadinar to Bina is being set
 up by the Joint Venture Company, Bharat Oman Refineries Limited (BORL).
 BORL has been promoted by BPCL and Oman Oil Company Limited (OOCL),
 with both the partners having contributed Rs. 755 million each towards
 the equity share capital.
 
 The as built capital cost of the refinery is estimated to be Rs.
 103,780 million, comprising expenditure towards land & site
 development, plant & machinery, licenses, know-how & basic engineering,
 Project Management Consultancy & other Consultancy, civil works &
 infrastructure, township, start-up expenses, contingencies, interest
 during construction, margin money for working capital etc. The project
 is proposed to be financed at a debt / equity mix of 1.6:1 and is
 expected to be commercially operational by December 2009.
 
 With OOCL having decided to limit its equity contribution to the
 present level of Rs.755 million, BPCL has, with the approval of the
 Government of India, decided to enhance its equity contribution in BORL
 upto 50%, amounting to Rs. 19,960 million. The sum of Rs. 9,000 million
 contributed by BPCL in 2006-07 towards subscribing for fully
 convertible debentures to be issued by BORL has since been converted
 into
 
 Share Application money for allotment of equity shares to BPCL. BPCLs
 total equity contribution in BORL as at March 31, 2008 stands at Rs.
 9,755 million. As at 31st March 2008, BORLs net worth stood at Rs.
 1,456 million and the book value per share was Rs. 9.64.  During the
 month of May 2008, BPCL has made a further contribution of Rs. 4000
 million towards Share Application money. BORL has filed the Draft Red
 Herring Prospectus (DRHP) with the Securities Exchange Board of India
 (SEBI) for an Initial Public Offer (IPO) of its shares.
 
 Work on the project is progressing smoothly. After completing the
 process design work, order for all major equipment for processing units
 and facilities, namely columns, vessels, high pressure reactors and
 other long lead items have been placed. Site grading work, road work
 and boundary work at the refinery, as well as at the Crude Oil
 Terminal, have been completed. The Hostel building at the refinery
 township is functional.  Construction and erection work for the various
 units are in progress at the refinery site. The overall physical
 progress achieved till July 15, 2008 is 66.3% and commitments made are
 in excess of Rs. 92,000 million.  Based on current trends, the refinery
 is expected to be commissioned as per schedule in December 2009.
 
 Bina Despatch Terminal
 
 BPCL has entered into the product purchase and sale agreement with BORL
 and would be undertaking the marketing of the refined products from the
 new refinery at Bina in Madhya Pradesh. The dispatch terminal is
 planned to facilitate the marketing of products from the refinery. The
 project envisages setting up of storage and dispatch facilities viz.
 multi-product rail / road gantries for loading tank wagons/trucks,
 necessary product storage facilities including 4.45 lakh Kilolitres
 (KL) White oil tanks, 8400 Metric Tonnes (MT) LPG mounded storage and
 LPG Bulk dispatch facilities, along with associated pumping units,
 electrical, instrumentation and fire fighting facilities adjacent to
 the refinery complex at Bina. The approved cost of the project is Rs.
 4,907.1 million.  The project is slated for commissioning in line with
 the commissioning of the refinery.
 
 Project Management Consultancy for the Terminal and for Railway siding
 work has been awarded. All major orders have been finalized. White Oil
 Tankage, LPG mounded storage, construction of civil buildings/roads/
 drains are in full swing. Civil works for the Railway siding have been
 awarded. The physical progress achieved has been around 24% and the
 cumulative expenditure on the project till May 31, 2008 was Rs. 1,028.3
 million.
 
 Bina Kota Pipeline Project
 
 The project envisages the laying of an 18 dia, 265 km long
 cross-country product pipeline from Bina to Kota, to facilitate the
 economic evacuation of MS, HSD, Superior Kerosene Oil (SKO) and ATF
 from the new refinery at Bina. The pipeline will be connected to the
 existing multi- product Mumbai-Manmad-Manglya-Piyala-Bijwasan pipeline
 at Kota, in order to facilitate distribution of the products from the
 Bina refinery to the markets in the northern region. The pipeline is
 designed for an initial throughput of 2.8 MMTPA and is estimated to
 cost Rs. 4,058.2 million.
 
 Detailed route survey / Cadastral survey has been completed. Geotech
 investigation for rivers has also been completed. Exemption from the
 Ministry of Environment & Forests has been obtained. Negotiation for
 procurement of land for 6 stations out of 8 stations has been
 completed.  Nearly 85% of all the No Objection Certificates (NOCs) have
 been obtained. Project Management Consultancy has been awarded to
 Engineers India Limited. Orders have also been placed for line pipes
 and OFC cables.  Physical progress of around 22% has been achieved.
 The project is slated for commissioning in line with the commissioning
 of the refinery.
 
 Uttar Pradesh Refinery Project
 
 The Company has plans for setting up a new grass roots refinery in the
 State of Uttar Pradesh, which would help in meeting its long term
 product requirements. However, work on the implementation of the
 project is expected to start only after the ongoing new refinery
 project at Bina in Madhya Pradesh is complete and the refinery
 commences its operations.
 
 Capacity Augmentation of the Mumbai-Manmad-Manglya Multi-product
 Pipeline
 
 BPCL is transporting petroleum products from its Mumbai Refinery
 through a 252 km long 18 dia. multi- product pipeline to Manmad
 terminal and further through a 358 km long 14 dia. multi-product
 pipeline to Manglya terminal. The extension of the
 Mumbai-Manmad-Manglya pipeline to Piyala and the feeder line from
 Piyala to Delhi were commissioned in 2006-07. During the current year,
 the capacity augmentation of the Mumbai-Manglya multi- product pipeline
 has been completed and commissioned at a cost of Rs. 1,170 million.
 This has enhanced the pipeline capacity from 4.3 MMTPA to 6 MMTPA in
 the Mumbai-Manmad section and from 1.4 MMTPA to 3.5 MMTPA in the
 Manmad-Manglya Section. These changes would help to economically
 evacuate the additional products from the Mumbai refinery to cater to
 the requirements of the northern region of the country.
 
 Capacity Expansion cum Modernization Project (CEMP) - Phase II at Kochi
 Refinery
 
 This project envisages facilities for production of auto fuels i.e. MS
 & HSD conforming to Euro-lll/IV equivalent norms and capacity expansion
 of the refinery from the present 7.5 MMTPA to 9.5 MMTPA. While the
 project activities are in progress, prices of commodities like steel
 have increased substantially. Accordingly, Engineers India Limited, who
 are the consultants for the project, have worked out the revised cost
 based on March 2008 prices. The project is estimated to cost
 Rs.39,414.1 million, including a foreign exchange component of
 Rs.4,918.4 million. The project is slated for completion in December
 2009.
 
 Cumulative physical progress as on May 31, 2008 was 30.04% and the
 cumulative expenditure till that date was Rs. 3,172 million.
 Commitments made till the end of May 2008 stood at Rs. 22,565 million.
 
 Crude Oil Receipt Facilities at Kochi
 
 The crude oil receipt facilities project consisting of SPM, Shore Tank
 Farm, associated pipelines and pumping facilities to enable receipt of
 crude oil in Very Large Crude Carriers (VLCC) was mechanically
 completed on November 30,2007. The first tanker was moored to the SPM
 buoy on December 3,2007 and the first VLCC tanker on January 30, 2008.
 The project was completed within the approved cost of Rs. 8,210
 million. The use of VLCC for transporting crude oil to Kochi will lead
 to a significant reduction in the freight cost of both the Kochi and
 Mumbai refineries.
 
 Fuels Quality Upgrade Project at Mumbai Refinery
 
 The objective of the project is to make plant modifications for
 improving the quality of MS & HSD to meet the Euro IV equivalent norms
 for meeting the demand in Mumbai from April 2010. The project involves
 revamping of the existing Diesel/Naphtha
 
 Hydrodesulphurisation unit and putting up FCC gasoline splitting
 facilities. Implementation activities for the project, with an approved
 cost of Rs. 3,900 million, have commenced. The process packages have
 been received.  Purchase orders for all long delivery items have been
 placed. The project has achieved a physical progress of 15.89 % and the
 cumulative expenditure as on May 31, 2008 was Rs. 61.4 million. The
 commitments made have exceeded Rs. 500 million. The project is
 scheduled for completion in January 2010.
 
 Further, to increase the production of Euro IV MS & HSD and improving
 profitability, Mumbai Refinery has taken action to build a 900 TMTPA
 Continuous Catalytic Regenerative (CCR) Reformer unit and revamp the
 existing Hydrocracker unit at a cost of Rs. 8250 million.  This will
 help to meet the additional requirements of Euro IV fuels in future,
 and pave the way for further upgrading the quality to meet higher
 standards like EuroV.
 
 Revamp of Bitumen Blowing Unit at Kochi Refinery
 
 For meeting the demand of new grades of Bitumen products and new
 specifications of paving grade Bitumen as per Bureau of Indian
 Standards, Kochi Refinery has installed a new Bitumen Blowing unit at
 an approved cost of Rs. 292 million using Biturox technology. The unit
 was commissioned on June 19, 2008. The new Biturox unit was installed,
 instead of the existing conventional Bitumen Blowing Unit, to
 manufacture different grades of Bitumen like Penetration Grade,
 Viscosity Grade and Multi Grade as per the proposed future
 specifications for Bitumen. The unit design incorporates environment
 friendly features of reactor off gas incinerator followed by flue gas
 scrubber, making it the cleanest unit of its kind in the world. Also,
 about 2 TPH MP steam (equivalent to about 600 Tonnes per annum fuel
 oil) is produced by waste heat recovery from incinerator off gases.
 
 Propylene Recovery Unit (PRU)
 
 A Propylene recovery unit (PRU) to produce 50,000 MT per annum of 95 %
 purity chemical grade propylene is being set up in Kochi Refinery. The
 project, costing Rs. 950 million, is scheduled to be completed by March
 2009.
 
 RESEARCH & DEVELOPMENT (R&D)
 
 Research and development (R&D) is an integral part of BPCLs strategy
 for achieving sustainable growth and profitability. To enhance R&D
 capabilities, BPCL is continuously strengthening the infrastructure and
 manpower resources at its Corporate R&D Centre, Greater Noida, Uttar
 Pradesh as well as at its Product & Application Development Centre,
 Sewree, Mumbai and the R&D Centre at Kochi Refinery. BPCLs initiatives
 in the area of R & D are discussed separately in the MD & A.
 
 Further, the areas covered under R & D and the benefits derived from
 R&D activities are detailed in Form B of Annexure A to the Directors
 Report.
 
 NON-CONVENTIONAL ENERGY INITIATIVES
 
 BPCL has been undertaking several initiatives in the area of
 non-conventional energy sources. The current year saw the continuation
 of efforts in this area.
 
 With a view to generate power required for captive consumption using
 renewable sources, 5 MW capacity windmills have been put up in the
 state of Karnataka at a cost of Rs. 260 million. Work on the project
 was completed in July 2007 and the windmills are currently in
 operation. The generation of electricity is in line with the plan.
 
 During the year, BPCL has identified Maharashtra & Rajasthan as two
 states for setting up windmills. It is proposed to install 10 MW
 capacity windmills at an estimated project cost of Rs.520 million in
 the two states. The capacity in each state will be 5 MW, involving an
 outlay of Rs. 260 million and the project will be progressed once the
 availability of land is firmed up.
 
 A1 MW capacity grid connected Solar farm is proposed to be set up at
 BPCLs LPG Bottling plant in Lalru in the state of Punjab. The technical
 and financial evaluation of the proposal are under process. Discussions
 are also on with Punjab Energy Development Authority for connecting the
 Solar farm to the grid, release of payment for the electricity
 generated and other related matters.
 
 A prototype for studying Hydrogen Fuel Cell technology has been
 developed at Bangalore LPG Plant. The project involves production of
 Hydrogen by electrolysis of water with potassium hydroxide as catalyst.
 The energy required for electrolysis is generated using a small
 windmill of 1.5 KW which can work with limited wind speed of 5 m/s. The
 Hydrogen produced is supplied to a 1.2 KW capacity Proton Exchange
 Membrane Fuel Cell, which in turn generates power for use in the yard
 lighting of the LPG Bottling plant at Bangalore. As there is no use of
 energy from outside, the system is renewable and regenerative.  Fossil
 fuels convert chemical energy into mechanical energy and then to
 electrical energy, thereby generating noise and air pollution. However,
 in fuel cell technology, chemical energy is directly converted into
 electrical energy and thus, pollution is eliminated. In the next stage
 of development, the use of Hydrogen will be extended for Administration
 building lighting and for powering of personal computers.
 
 BPCL has also continued with its foray into the Biodiesel Value Chain.
 Surplus land at the existing supply locations and LPG bottling plants
 has been identified and the process of plantation of Jatropha trees has
 continued.  The fruits of these plantations would be available in 2 - 3
 years. The plantation will continue in the coming years in locations
 where vacant land is identified.
 
 In addition, BPCL has held discussions with various State Governments
 to set up the Biodiesel Value Chain.  In the state of Uttar Pradesh,
 the proposal has reached an advanced stage, with the Government
 agreeing to support the project by encouraging the Panchayats to grow
 Jatropha plants on their land, with the payment for saplings /
 seedlings including cost of plantation etc.  being released from the
 National Rural Employment Guarantee (NREG) Scheme. The Government of
 Uttar Pradesh has issued orders to this effect on 25th March 2008,
 based on which the Board has approved the setting up of the Biodiesel
 Value Chain in the State.  The project envisages plantation in 1
 million acres of wasteland and production of Biodiesel of 1 million
 tonnes, which would provide employment / self- employment to 1 million
 people by the year 2015.
 
 A joint venture company, Bharat Renewable Energy Limited has been
 formed, which will be responsible for the collection of Jatropha fruits
 and the process of crushing the fruits, esterification etc. The new
 company has been formed as a joint venture company between BPCL, Nandan
 Biomatrix Limited, Hyderabad, who have expertise in agri-business and
 Shapoorji Pallonji Co.  Limited, a leading player in the construction
 arena. The State Government of Uttar Pradesh has provided a list of 30
 Districts, where wasteland of around 10 lakh acres are under
 identification by local Village Panchayats and the same would be
 submitted to the District Collector.  The new company is expected to
 launch the activities, initially for an area of 2 lakh acres in the
 ensuing .  monsoon, for which identification of land and process to set
 up a Nursery Production Centre has been initiated in Chitrakoot Region.
 The total cost for the entire project is expected to be of the order of
 Rs. 22,000 million.
 
 BPCL has also approached the Government of Chhattisgarh to sign a
 Memorandum of Understanding to take on lease 1 lakh acres of land,
 which will be put under Jatropha cultivation for producing 1,00,000
 tonnes of Biodiesel every year. It is estimated that the total project
 cost would be approximately Rs.5,000 million.
 
 Ethanol Blended Petrol
 
 The Ministry of Petroleum & Natural Gas has notified marketing of 5%
 Ethanol Blended Petrol (EBP) in 20 States & 4 Union Territories. Public
 tenders, which were floated for Ethanol procurement for all the
 notified States & Union Territories in September 2006, have been
 finalized for 17 states, while for 3 states the same could not be
 finalized, due to high rates or on account of stipulated excise
 procedures not permitting the same.
 
 INDUSTRIAL RELATIONS
 
 The Industrial Relations have been peaceful throughout the year, except
 when there was a brief industrial unrest in April 2007 in respect of an
 incentive payment.  However, there was no impact on company operations.
 Extensive communication on business and other related issues were
 undertaken between all stakeholders i.e.  management, employees and
 their associates / Unions during the year.
 
 FULFILLMENT OF SOCIAL OBLIGATIONS
 
 As a responsible corporate citizen, BPCL accords importance to
 Corporate Social Responsibility (CSR) and takes it as one of the areas
 of focus. CSR is a part of the overall vision of the Corporation,
 touching the pulse of rural & tribal India. Community Development
 Programs were undertaken to bring all round development in adopted
 villages, consisting of economically and socially backward population
 and significant resources were allocated towards these activities.
 Sustainability of the initiatives is the key motto, factoring in the
 needs, community and cultural sensitivities.
 
 Developmental activities were undertaken in adopted villages across the
 country. The main impetus of activities was given in the fields of
 health, education, infrastructure development and usage of non-
 conventional alternate energy sources. In all the
 
 Community Development programs, BPCL propagates energy conservation and
 ecological balance through methods such as afforestation, rainwater
 harvesting, re-generation of mangroves and promotion of usage of
 alternate fuel sources such as Bio-Gas, Solar Energy etc.
 
 In the year 2007-08, groups of women / youth from various communities
 in India were imparted training for livelihood support through
 activities like zardosi work, sericulture, candle and incense stick
 making etc. All the trained women are now supplementing the family
 income through the newly acquired skills. A lot of emphasis was laid on
 the formation of Self Help Groups (SHGs) in the communities. In a few
 villages of Orissa, through such SHGs, banana & papaya fruit saplings
 were given to the villagers, who were also provided market linkages.
 BPCL also supported the construction of a female maternity ward along
 with ultrasound machine in Vivekananda Tribal Hospital in Jagdalpur,
 Bastar, Chattisgarh, which caters mainly to the tribal population
 residing in the area.  This effort led to the bettering of pre-natal &
 post-natal care.
 
 Under Project Boond, BPCL, in collaboration with the NGO, The Bridge
 Trust and with the financial assistance received from the Oil Industry
 Development Board, has transformed 9 villages near Kasara Ghat in Thane
 District, Maharashtra, converting them from water scarce to water
 positive. The work mainly comprised repairs / deepening of wells,
 building bunds to capture and store rainwater, repairs and leak
 proofing of existing bunds, building water tanks, construction of
 underground bunds, construction of Kolhapur Type (KT) weir dams,
 construction of gabions etc. The project was executed through complete
 village participation. For this project, BPCL received the Excellent
 Water Efficient Unit Award- Beyond the Fence at the National Awards
 for Excellence in Water Management 2007 from the Confederation of
 Indian Industry (Cll). BPCL also bagged the award for the Most
 Innovative Case Study in the area of water management.
 
 Promotion of Sports
 
 BPCL sportspersons continued to excel in the national as well as
 international sports arena in the disciplines of Cricket, Hockey,
 Badminton, Chess, Table Tennis, Kabaddi, Volleyball, Billiards,
 Snooker, Bridge and Golf.  BPCLs sportspersons have won several
 distinctions and plaudits. G.N.Gopal and Abhijit Gupta achieved the
 
 Grand Master norm in chess. There are a few more who are waiting in the
 wings to achieve this title. BPCL continues to contribute to the
 national sports contingents by way of adding players to national teams.
 S.Sreesanth and Pragyan Ojha in Cricket, Tushar Khandekar, William
 Xalxco and Ravi Pal in Hockey, Poulami Ghatak and Neha Agarwal in Table
 Tennis, Saina Nehwal, Anup Sridhar, Arvind Bhat, Jwala Gutta, Shruti
 Kurian and Aditi Mutatkar in Badminton, and Marianne Karmarkar in
 Bridge, represented India in various international events and won
 accolades. BPCL had a presence in the Beijing Olympics with Anup
 Sridhar and Saina Nehwal in Badminton and Neha Agarwal in Table Tennis
 being part of the Olympic contingent. Jitesh Joshi, Nilesh Shinde and
 Nitin More were members of the Maharashtra Kabbadi Team which won the
 National Championship title after 28 years.  Manan Chandra won the
 Bronze medal in the snooker event at the Asian Indoor Games held at
 Macau in October 2007. The recently concluded Indian Premier League T20
 cricket tournament saw BPCLs Abhishek Nayar, Pragyan Ojha, Uday Kaul,
 S Sreesanth and Anup Revandkar in action. BPCL was awarded the
 Presidents PSPB Trophy for II Runner-up during the year by virtue of
 points obtained in various Petroleum Sports Promotion Board (PSPB)
 tournaments.
 
 SC/ST Employees
 
 Details relating to employees belonging to Scheduled Caste (SC),
 Scheduled Tribe (ST) and Other Backward Classes (OBC) are given in
 Annexure D.
 
 Persons with Disabilities
 
 BPCL has been providing reservations and concessions for Persons with
 Disabilities since 1981, based on Government instructions. The
 reservations were earlier provided for Group C and Group D posts.
 However, after the enactment of The Persons with Disabilities (Equal
 Opportunities, Protection of Rights and Full Participation), Act 1995,
 the reservations have been extended to posts in Group A and Group B
 with effect from February 1996. The company has identified positions in
 Group A & B, positions which could be reserved for filling up by
 persons with disabilities It is the Companys endeavor to achieve the
 desired percentage for persons with disabilities during direct
 recruitment. BPCL has 210 persons with disabilities employed in the
 organisation as at 31st March, 2008.
 
 Various concessions and facilities are extended to the persons with
 disabilities including age relaxation of
 
 5/10 years, giving them a sympathetic consideration during interviews,
 provision of hearing aids for hearing impaired persons, appropriate
 equipment required by orthopaediacally challenged persons and special
 talking computers for the visually handicapped staff.  Besides, the
 Company has made special efforts for implementation of the National
 Policy for persons with disability.
 
 IMPLEMENTATION OF THE OFFICIAL LANGUAGE POLICY
 
 The Official Language Implementation Committees function at the
 Corporate, Regional and Location levels, in order to promote the use of
 Hindi at workplaces.  These Committees review from time to time the
 progress made in Official Language Implementation. Several Hindi
 workshops and meetings of the Hindi Co-ordinators were organized in
 BPCL. The First Sub-Committee of the Parliamentary Committee on
 Official Language inspected six locations and Rajbhasha Vibhag of
 Ministry of Petroleum & Natural Gas carried out inspections at six
 locations. Similar inspections were carried out by Rajbhasha Vibhag,
 Ministry of Home Affairs. All these Committees expressed their
 appreciation for the efforts taken by BPCL.
 
 Unlimited License for Hindi Software ISM V5 Office has been
 procured for all BPCL Offices and Hindi Software Training programs
 are being carried out in batches in all the Regions and the two
 Refineries. BPCL was accorded with the Rajbhasha Kirti Sammaan by
 Bhartiya Rajbhasha Vikas Sansthan, Dehradun. Kochi Refinery won the
 Rajbhasha Rolling Trophy instituted by Kochi Town Official Language
 Implementation Committee. BPCL has also assisted the Ministry of
 Petroleum & Natural Gas in the preparation / development of Petroleum
 Shabdavali.
 
 An attractive Incentive Scheme is in vogue to further enhance Official
 Language Implementation within the company. Various competitions and
 cultural programs were organized at work locations during the Hindi
 fortnight celebrations from 14th- 28th September, 2007.
 
 CITIZENS CHARTER
 
 Citizens Charter - a tool for ensuring transparency in educating and
 communicating with the customers about their rights, apart from various
 infrastructure / services being available for the customers, is always
 in the forefront of all activities of the Company. Efforts are made to
 enhance customer service levels. The Grievance Redressal Mechanism was
 taken care of with well established systems at various consumer contact
 points.  Besides, BPCL has sought to leverage technology by making
 available a feedback module in its website, which the customer has
 access to. Customers are encouraged to write in their complaints to the
 feedback module and efforts are made to reply to the feedback within 24
 to 48 hours. In case of complex issues, it is escalated to the next
 higher level, where the matter is sorted out in the next 7 to 10 days.
 A continuous monitoring system has been put in place to review the
 pattern of complaints and feedback on the basis of which the persistent
 problem areas are attended to.
 
 The Right to Information Act, 2005 has been implemented in BPCL. People
 across the organization are familiar with the Act and BPCL has a unique
 single window concept of all replies under the Act. During the period
 ending March 31, 2008, BPCL has received 888 requests for information
 and only 45 cases were referred to the Chief Information Commissioner.
 None of the cases had any punitive action.
 
 VIGILANCE
 
 Corporate Vigilance in a public sector entity is no longer secondary to
 corporate performance and goes hand in hand with good business. With
 the emphasis on good Corporate Governance, there is a need for
 Vigilance now to go beyond their traditional roles and become an
 integral part of business strategy. Corporate Vigilance encourages
 ethical standards and sound business practices.
 
 The Central Vigilance Commission (CVC) has strongly emphasized that
 Vigilance is an integral part of public administration and the key to
 minimize corruption. The role of Corporate Vigilance in BPCL has become
 multi- dimensional today - disseminating preventive vigilance measures,
 facilitating commercial decision making with transparency and
 accountability and facilitating & strengthening systems, not only in
 the area of procurement, but in all spheres of operations. Corporate
 Vigilance in BPCL communicates the important guidelines issued from
 time to time by CVC and ensures that they are always deliberated at the
 highest levels and implemented at the earliest.
 
 CVC had issued comprehensive directives on leveraging of technology for
 increasing transparency. Realizing the importance of effective
 implementation of technology as a means of increasing productivity,
 BPCL has already implemented many of the initiatives contained in the
 illustrative list attached to the circular of the CVC.  Major
 initiatives implemented are the ERP System, e-Procurement and the
 Integrity Pact.
 
 The implementation of these initiatives has also seen the development
 of new risks, which have exposed the Company to new forms of fraud,
 corruption and other malpractices. It is now the endeavour of Corporate
 Vigilance to identify new areas of risk and to develop new risk
 management tools and integrate them into the main business processes.
 
 BPCL has gone in for implementation of the Integrity Pact. With the
 approval of the CVC, 3 Independent External Monitors have been
 appointed and workshops have been held with the majority of vendors to
 enroll them in this program.
 
 Periodic/surprise inspections of various Retail Outlets/ LPG
 Distributors/locations etc. were carried out by Corporate Vigilance
 along with the concerned officials from the business units. Inspections
 of major works were undertaken in line with the inspections carried out
 by the Chief Technical Examiner. The observations during such
 inspections were brought to the notice of the concerned departments
 along with specific recommendations for corrective action.
 
 Vigilance Awareness Week was observed from 12th to 16th November, 2007
 at all locations throughout the country with active participation by
 customers, clients, dealers, distributors and all other stakeholders.
 
 The changes brought about by the consistent efforts of Corporate
 Vigilance, BPCL in the areas of transparency, fairness and consistency,
 have culminated in the signing of an MOU with Transparency
 International India for adoption of the Integrity Pact.
 
 SUBSIDIARY COMPANIES
 
 Numaligarh Refinery Limited (NRL)
 
 BPCL held 61.65% of the paid up equity in Numaligarh Refinery Limited
 (NRL) as on 31st March, 2008. NRL, which is a Mini Ratna company
 (Category I), has a 3 MMTPA refinery at Numaligarh in Assam. As on 31st
 March, 2008, the refinery achieved 2233 days of continuous Lost Time
 Accident (LTA) free operations (more than 6 years) with 10.29 million
 cumulative LTA free man-hours since its last LTA on February 18, 2002.
 The quantum of crude oil processed during the year 2007-08 was 2.57 MMT
 as compared to 2.50 MMT during the previous year. As at 31st March,
 2008, NRL had a net worth of Rs.22,440.97 million with a book value of
 Rs.30.51 per share. For the year ended 31st March, 2008, NRL achieved a
 turnover of Rs.87,641.59 million and earned a profit aftertax of
 Rs.3,728.11 million, as against a turnover of Rs.79,303.22 million and
 profit after tax of Rs.5,688.03 million in the previous year. The Board
 of Directors of NRL has recommended a dividend of Rs.2.00 per share as
 against Rs.2.50 per share in the previous year. NRL has till the end of
 March 2008, commissioned a total of 108 retail outlets, of which 61 are
 in the north-east region of the country.
 
 NRL was awarded the TERI Corporate Environment Excellence Award for the
 year 2008. The award, instituted by The Energy and Research
 Institute, is in recognition of the leadership efforts towards
 Environment Management and Innovative initiatives amongst Corporations
 with turnover above Rs. 500 crores. NRL also won the Greentech Gold
 Safety Award 2008 instituted by Greentech Foundation, New Delhi in
 recognition of the efforts for excellent environment management. The
 company was also the recipient of the National Energy Conservation
 Award 2007 (2nd Prize) in the Refineries sector instituted by the
 Bureau of Energy Efficiency (BEE) under the Ministry of Power. NRL has
 also been selected for Oil Industry Safety Awards 2007- 2008 (2nd
 Prize) instituted by the Oil Industry Safety Directorate for excellence
 in safety performance and Oil and Gas Conservation Awards for 2008
 (2nd Prize) in the areas of Furnace /Boiler Efficiency under Category
 -2 for Group -1 refineries instituted by Centre for High Technology
 (CHT).
 
 Bharat PetroResources Ltd (BPRL)
 
 With an authorized capital of Rs. 10,000 million, Bharat PetroResources
 Ltd (BPRL) was incorporated on 17th October 2006 as a wholly owned
 subsidiary of BPCL. The company has been formed to implement BPCLs
 plans in the exploration and production sector.  The subscribed share
 capital of BPRL as on March 31, 2008 was Rs.1,025.53 million. BPRL
 would exercise all the rights acquired and perform all the obligations
 undertaken by BPCL before the incorporation of BPRL under various
 agreements for participation, in consortiums for exploration and
 production of petroleum, crude oil and natural gas. As at 31st March,
 2008, BPRL has participating interests in 12 exploration blocks, of
 which 8 were acquired in the NELPIV and NELP VI rounds of bidding in
 consortium with various partners in India. The remaining four blocks
 are located in the United Kingdom, Australia and Oman.
 
 BPRL has, through its wholly owned subsidiary company, Bharat
 PetroResources JPDA Limited (BPR-JPDA LTD), a participating interest of
 25% in Block-JPDA 06-103-East Timor in the joint petroleum development
 area between East Timor and Australia.
 
 BPRL has been on the lookout for new opportunities both in India and
 abroad, to enhance its portfolio of exploration and production assets.
 
 After accounting for miscellaneous income of Rs. 8.46 million, BPRL had
 incurred a loss of Rs.73.77 million for the year ended 31st March,
 2008.
 
 Annual Accounts of the Subsidiary Companies
 
 In view of the dispensation granted by the Central Government under
 Section 212(8) of the Companies Act, 1956, copies of the Balance Sheet,
 Profit and Loss Account, Directors Report and the Auditors Report of
 the Subsidiary Companies are not attached to the Balance Sheet of the
 Company. In compliance with the conditions of the dispensation, the
 Consolidated Financial Statements have been presented in the Annual
 Report and the summarized Balance Sheet and Profit and Loss Account of
 Subsidiary Companies are also enclosed as Annexure F to the Directors
 Report for information. The Audited Annual Accounts of the Subsidiary
 Companies and related detailed information are open for inspection by
 any member at BPCLs Registered Office. Further, BPCL would make
 available these documents, on request, to any of its members and the
 said documents would also be posted on BPCLs website.
 
 JOINT VENTURE COMPANIES
 
 Petronet LNG Limited
 
 Petronet LNG Limited (PLL) was formed in April 1998 for importing LNG
 and setting up LNG terminals at Dahej and Kochi with facilities like
 jetty, storage, regasification etc.  to supply natural gas to various
 industries in the country.  PLL was promoted by four public sector
 companies viz.  BPCL, IOCL, ONGC & GAIL, who contributed 12.5% each to
 the equity. The balance equity was raised over a period of time from
 Gaz de France 10%, the Asian Development Bank 5.2% and balance 34.8%
 was raised from the public in March 2004. BPCLs equity investment
 involved an outlay of Rs.987.50 million. As at 31st March, 2008 PLL had
 a net worth of Rs.16,185.49 million with a book value of Rs.21.58 per
 share. PLLs equity shares are listed on the Stock Exchanges.
 
 PLL has set up a LNG receipt terminal and regasification facilities of
 5 MMPTA capacity at Dahej in Gujarat and started commercial supplies of
 regasified LNG from the said terminal from 9th April, 2005. To meet the
 increasing demand of the power and fertilizer sectors, expansion of the
 Dahej Terminal from 5 MMTPA to 10 MMTPA, which had commenced in the
 year 2006, is now nearing completion and would be ready for commercial
 use in the next financial year. Another LNG Receiving and
 Regasification Terminal of 5 MMTPA will be set up at Kochi, for which
 activities have been geared up.
 
 Income from operation for the current financial year was Rs.65,553.14
 million as compared to Rs.55,006.05 million in 2006-07. The net profit
 for the year 2007-08 stood at Rs.4,746.53 million as against the level
 of Rs.3,132.54 million achieved in the last year. PLL has declared a
 dividend of 15% for the financial year 2007-08 as compared to 12.5% of
 last year.
 
 Indraprastha Gas Limited
 
 Indraprastha Gas Limited (IGL), a Joint Venture Company with GAIL
 (India) Limited, was set up in December, 1998 for implementing the
 project for supply of CNG to the household and automobile sectors in
 Delhi.  BPCL invested Rs.315 million in IGL for a 22.5% stake in the
 equity. IGL has commissioned over 163 CNG Stations (including 2 in
 Noida) which supply environment friendly fuel to more than 2,25,000
 vehicles. IGL has more than 1,22,000 domestic PNG Customers and over
 307 commercial customers in Delhi. The company is also extending its
 business to the towns of Greater Noida and Ghaziabad.
 
 As at 31st March, 2008, IGLs net worth was Rs. 5,764.60 million with a
 book value of Rs. 45.76 per share. IGL registered a turnover of Rs.
 8,097.98 million for the year 2007-08 as compared to Rs.7,058.66
 million in the previous year. Profit after tax for the year 2007-08 was
 Rs. 1,744.56 million as compared to Rs.1,379.62 million during the
 previous year. IGL has declared a dividend of 40% for the year 2007-08
 as against 30% in the previous year. The shares of the company are
 listed on the Stock Exchanges.
 
 Sabarmati Gas Limited
 
 Sabaramati Gas Limited (SGL), a Joint Venture Company promoted by BPCL
 and Gujarat State Petroleum Corporation Limited (GSPC), was
 incorporated on 6th June 2006 with an authorized capital of Rs.1000
 million, for implementing the City Gas distribution project for supply
 of CNG to the household and automobile sectors in the city of
 Gandhinagar, Mehsana and Sabarkantha Districts of Gujarat.
 
 BPCL & GSPC will each subscribe to 25% of the equity capital of the
 JVC. The balance will be offered to the Financial Institutions. BPCLs
 present contribution is Rs.407.02 million. SGL has set up 5 CNG
 stations to meet the CNG requirements of vehicles. SGLs net worth was
 Rs.828 million as at 31st March, 2008.
 
 For the year ending 31st March, 2008 the Company has achieved a
 turnover of Rs.973.05 million against a turnover of Rs.198.88 million
 for the previous year and profit after tax of Rs.47.57 million for the
 year 2007-08 as against profit aftertax of Rs.5.63 million in the
 previous year. SGL has declared dividend of 10% for the financial year
 ending 31st March 2008, which was the same as declared for the year
 ended 31st March 2007.
 
 Central UP Gas Limited
 
 Central UP Gas Limited (CUGL) is a Joint Venture Company set up in
 March, 2005 with GAIL (India) Limited as the other partner, for
 implementing the project for supply of CNG to the household, industrial
 and automobile sectors in the city of Kanpur in Uttar Pradesh.
 
 The joint venture partners have each invested a sum of Rs. 134.75
 million in the joint venture, with each partner having an equity stake
 of 22.5% in the company.  Financial Institutions have subscribed to the
 balance equity of the company. CUGL has completed its financial closure
 and has commenced operations. CUGL has set up 5 CNG stations in Kanpur
 and 1 in Bareilly. CUGL is planning to spread its wings to Allahabad
 and Rae Bareilly and has carried out techno-commercial and market
 feasibility studies.
 
 For the financial year ending 31st March, 2008, the company has
 achieved a turnover of Rs. 267.64 million as compared to Rs.72.44
 million in the previous year and profit aftertax of Rs. 52.91 million
 as against a loss of
 
 Rs.4.28 million in the previous year. The company has recommended a
 maiden dividend of 2.5% for the year ended 31st March 2008.
 
 Maharashtra Natural Gas Limited
 
 Maharashtra Natural Gas Limited (MNGL) was set up on 13th January, 2006
 as a Joint Venture Company with GAIL (India) Limited as the other
 partner for implementing the project for supply of CNG to the
 household, industrial and automobile sectors in Pune and its nearby
 areas. BPCLs investment in this project is Rs.225 million for a 22.5%
 share of the equity capital.  The Company is expected to commence
 operations during 2008.
 
 Bharat Stars Services Private Limited
 
 Bharat Stars Services Private Limited, a Joint Venture Company promoted
 by BPCL and ST Airport Re Limited, Singapore, was incorporated in
 September, 2007 with an authorized capital of Rs.100 million for
 providing into plane fuelling services at Bengaluru International
 Airport.
 
 BPCL & ST Airport Pte Limited have each subscribed to 50% of the equity
 capital of the new Company.  BPCLs present equity contribution is
 Rs.34 million. The company has commenced operations from May, 2008
 onwards with the opening of the Airport for traffic.
 
 Petronet CCK Limited
 
 BPCL has 49% equity in Petronet CCK Limited (PCCKL) at an investment of
 Rs.490 million. The Company owns the 292 km Kochi-Karur pipeline, which
 commenced commercial operations from September 2002. As at 31st March
 2008, PCCKL had net worth of Rs.560 million with a book value of
 Rs.5.60 per share. Pumping volume during the current year amounted to
 1.35 MMT against 1.21 MMT of the previous year.
 
 PCCKL registered a turnover of Rs.410.37 million and net loss of
 Rs.25.68 million as against a turnover of Rs.358.80 million and net
 loss of Rs.65.62 million of the previous year. BPCL has initiated
 steps, subject to completion of all formalities, to purchase 26% equity
 share of Petronet India Limited in PCCKL.
 
 Petronet India Limited
 
 BPCL has 16% equity participation with an investment of Rs.160 million
 in Petronet India Limited, (PIL) a financial holding company. PIL had
 facilitated pipeline access on a common carrier principle, through its
 joint ventures for the pipelines put up by them viz Vadinar-Kandla
 (Sikka- Kandla section), Kochi-Karur and Mangalore-Hassan- Bangalore.
 For the financial year 2007-08, PIL registered gross revenue of Rs.
 6.85 million as against Rs.10.86 million in the previous year. The
 company had a net loss of Rs.7.42 million against a net loss of
 Rs.12.96 million in 2006-07.
 
 The new pipeline policy has affected the working of the Company. As
 there are no possibilities of future projects, promoters and other
 investors in PIL reached a conclusion that continuation of PIL would
 not be viable.  Accordingly, the winding up process has been initiated
 by appointing ICICI Securities Limited as financial advisor and
 consultant for the divestment of PILs stake in the joint venture
 companies.
 
 VI eTrans Private Limited
 
 BPCL had invested a sum of Rs.1 million for a 33.33% share of the
 equity of VI eTrans Private Limited in 2000-01. The Company is engaged
 in providing logistic support systems for the Indian surface transport
 industry and its users, with the help of electronic and physical
 infrastructure and web-based systems.
 
 BPCL has reached an understanding with the co-promoters to sell its
 stake in the company and the same is under process.
 
 As per Provisional Accounts, the Company registered a turnover of Rs.
 31.24 million for the year ended 31st March 2008 as against a turnover
 of Rs. 32.77 million in the previous year. The Company ended the year
 with a loss of Rs. 0.30 million for the current year, as compared to a
 loss of Rs. 1.52 million in the previous year.
 
 Bharat Renewable Energy Limited
 
 A new Joint Venture Company was incorporated on June 17, 2008 for
 production, procurement, cultivation, plantation of horticulture crops
 such as Jathropha, Pongamia, trading, research and development and
 management of all crops and plantations including Biofuels in the state
 of Uttar Pradesh, with an authorized capital of Rs.300 million. The
 company has been promoted by BPCL along with Nandan Biomatrix Limited,
 Hyderabad and Shapoorji Pallonji Co Limited, with all the partners
 contributing equally to the capital of the new company.
 
 Matrix Bharat Marine Services Re Limited
 
 A new Joint Venture Company was incorporated in Singapore on 20th May,
 2008 between BPCL & Matrix Marine Fuels, USA an affiliate of the
 Mabanaft group of companies, Hamburg, Germany to carry out the
 bunkering business and the supply of marine lubricants in the Singapore
 markets, as well as international bunkering including expansion in the
 Asian and Middle East markets. It will also undertake development of
 international bunkering facilities at Indian ports, risk management
 including hedging activities, inventory management, quality blending
 and freight optimisation by utilising the back haulage of time charter
 vessels for importing petroleum products in India.
 
 The authorised capital of this company will be USD 4 million equivalent
 to about Rs.200 million with equal contribution by both the partners.
 Matrix Marine Fuels LR USA has subsequently transferred their share and
 interest in the joint venture in favor of Matrix Marine Fuels Re
 Limited, Singapore, another affiliate of the Mabanaft group.
 
 Bharat Shell Limited
 
 During the year, BPCL has sold its equity stake of 49% of Bharat Shell
 Limited (BSL), totalling 98,000,000 shares to Shell Overseas Investment
 B.V. for a consideration of Rs.1,524 million. The sale was completed
 after receipt of the approval of the Government of India. With this,
 BPCL has exited from the joint venture.
 
 CONSERVATION OF ENERGY, TECHNOLOGICAL ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 The details regarding energy conservation, technology absorption and
 foreign exchange used and earned as required by Section 217(1)(e) of
 the Companies Act, 1956, are given in Annexure A.
 
 MEMORANDUM OF UNDERSTANDING WITH MINISTRY OF PETROLEUM & NATURAL GAS
 
 BPCL has been signing a Memorandum of Understanding (MOU) with the
 Ministry of Petroleum & Natural Gas since 1990-1991. The Company has
 been achieving an Excellent performance rating since then. BPCL, for
 the nineteenth successive year, has entered into a MOU with the
 Ministry of Petroleum & Natural Gas for the year 2008-09.
 
 BPCL also has the distinction of having won the Prime Ministers MOU
 Award for Excellence in Performance during the years 1998-99,2000-01
 & 2002-03. Further, for the year 2006-07, BPCL has been shortlisted for
 the Prime Ministers award for MOU performance in the petroleum sector.
 
 PARTICULARS OF EMPLOYEES UNDER SECTION 217(2A)
 
 Information required under Section 217(2A) of the Companies Act, 1956,
 read with the Companies (Particulars of Employees) Rules, 1975, is
 enclosed as Annexure C.
 
 CORPORATE GOVERNANCE
 
 As required under Clause 49 of the Listing Agreement and Department of
 Public Enterprises (DPE) Guidelines on Corporate Governance, the Report
 on Corporate Governance, together with the Auditors Certificates on
 compliance of Corporate Governance, are annexed as Annexure B. The
 Annual Report also contains a separate section on the Management
 Discussion and Analysis, which is part of the Directors Report.
 
 The forward looking statements made in the Management Discussion and
 Analysis are based on certain assumptions and expectations of future
 events.  The Directors cannot guarantee that these assumptions are
 accurate or these expectations will materialise.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
 of BPCL confirm that:
 
 1.  In the preparation of the Annual Accounts, all the applicable
 Accounting Standards have been followed alongwith proper explanation
 relating to material departures.
 
 2.  The Company has selected such Accounting Policies and applied them
 consistently and made judgements and estimates that are reasonable and
 prudent so as to give a true and fair view of the State of Affairs of
 the Company as on 31st March 2008 and of the Profit and Loss Account of
 the Company for the year ended on that date.
 
 3.  The Company has taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956, for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities.
 
 4.  These Accounts have been prepared on a going concern basis.
 
 DIRECTORS
 
 Shri S.A.Narayan, Director (Human Resources), laid down his office with
 effect from 9th June 2008. The Directors have placed on record their
 appreciation of the valuable contributions made and guidance given by
 him for the development and progress of BPCLs business.
 
 Shri. D. N. Narasimha Raju, Joint Secretary, Ministry of Petroleum &
 Natural Gas, resigned from the Board with effect from 19th April 2007.
 Shri V.D.Gupta and Shri RC.Sen, Directors, resigned from the Board with
 effect from 19th May 2008. The Directors have placed on record their
 appreciation of the valuable contributions made and guidance given by
 them for the development and progress of the Companys Business.
 
 Shri RH. Kurian, Secretary (Investment Promotion), Government of
 Kerala, was appointed as Additional Director under Article 77A of the
 Articles of Association of the Company with effect from 23rd April
 2007. He was re-appointed at the Annual General Meeting held on 19th
 September 2007.
 
 Prof. N. Venkiteswaran was appointed as Additional Director under
 Article 77A of the Articles of Association of the Company with effect
 from 16th July 2007. He was re-appointed at the Annual General Meeting
 held on 19th September 2007.
 
 Smt. Rama Bijapurkar and Prof. S.K.Barua were appointed as Additional
 Directors under Article 77A of the Articles of Association of the
 Company with effect from 20th May 2008. As they have been appointed as
 Additional Directors, they hold office till the ensuing Annual General
 Meeting. Notices under Section 257 have been received, proposing their
 names for appointment as director retiring by rotation at the ensuing
 Annual General Meeting.
 
 Shri S.Mohan, Executive Director (HRD), was appointed as Additional
 Director under Article 77A of the Articles of Association of the
 Company with effect from 25th June 2008. Shri S.Mohan also assumed the
 office of Director (Human Resources) from that date, in pursuance of
 his appointment by the President of India. As he has been appointed as
 Additional Director, he will hold office till the ensuing Annual
 General Meeting. Notices under Section 257 have been received,
 proposing his name for appointment as director retiring by rotation
 at the ensuing Annual General Meeting.
 
 As required under Section 256 of the Companies Act, 1956, Shri
 RK.Sinha, Prof. A.H.Kalro and Shri R.K.Singh, Directors, will retire by
 rotation at the ensuing Annual General Meeting, and being eligible,
 offer themselves for re-appointment as Directors at the said Meeting.
 As required under the Corporate Governance Code, brief bio-datas of the
 above Directors who are appointed/ re-appointed at the Annual General
 Meeting are provided in the Corporate Governance Report.
 
 STATUTORY AUDITORS
 
 M/s. B.K.Khare & Co., Chartered Accountants, Mumbai, were appointed as
 Statutory Auditors for the year 2007-08, by the Comptroller & Auditor
 General of India (C&AG), under the provisions of Section 619(2) of the
 Companies Act, 1956. They will hold office till the ensuing Annual
 General Meeting. The application for the appointment of Statutory
 Auditors for the financial year 2008-09 has been made to C&AG.
 
 ACKNOWLEDGEMENTS
 
 The Directors convey their appreciation of the services rendered by
 employees at all levels, without whose valuable contribution, the
 excellent performance of BPCL would not have been possible.
 
 The Directors place on record their deep appreciation towards BPCLs
 valued customers for their continued cooperation, patronage and
 confidence and look forward to the continuance of this mutually
 supportive relationship in future.
 
 The Directors also gratefully acknowledge the support and guidance
 received from the various Ministries of the Government of India,
 particularly from the Ministry of Petroleum & Natural Gas, in BPCLs
 operations and developmental plans.
 
 The Directors sincerely thank BPCLs dealers, distributors, contractors
 and suppliers for their contribution to the Companys success.
 
 The Directors express their sincere thanks to each and every shareowner
 of BPC for their continued support.
 
 
                            For and on behalf of the Board of Directors
 
                                            Sd/-
 
 Mumbai                                 Ashok Sinha
 Date: 14th August, 2008        Chairman & Managing Director