Chennai Petroleum Corporation

want to welcome our shareholders. Thank you for 
 joining us today. On behalf of the shareholders 
 and everyone present here, I would like to acknowledge 
 the employees of CPCL and want to extend my appreciation 
 for the work they do so well. 
 
 It is a pleasure today to report on the progress 
 of CPCL, to reflect on a year of achievement, and 
 to look ahead to a challenging future. It has been 
 41 years packed with some of the achievements, laurels 
 and satisfaction - days that have gone by like the speed 
 of light with much work done, and much achieved. 
 
 The Director's report, Annual accounts and the review 
 of accounts of the Comptroller & Auditor General of 
 India have been sent to you earlier. With your permission 
 I take them as read. 
 
 I am sure you will share my sense of joy and 
 satisfaction at yet another year of robust performance
 by your Company. So how have we done? I will let the facts 
 tell the story: 
 
 During the year, the Company had processed the 
 highest ever crude of 10.402 MMT. The Manali Refinery 
 achieved a capacity utilization of 103%. 
 
 All-time high turnover of Rs. 29,349 crore, 
 representing growth of 15.5% as compared to the 
 previous year. 
 
 The Profit After Tax was Rs. 565 Cr, increase by 
 17.5%. Gross Refining Margin for the year was 
 US $ 5 per barrel. 
 
 Dividend of 120% of the Paid-up share capital 
 proposed. 
 
 Excellent credit ratings have been maintained, 
 with a strong financial foundation. 
 
 The Earnings Per Share of the Company stood at 
 Rs.37.96. 
 
 By all accounts, we have succeeded, but striving 
 toward our vision is a never-ending challenge. 
 Today's success is only a prelude to the next 
 chapter in our story. While we look back with 
 pride on these achievements, we also look ahead 
 with confidence toward new opportunities to build 
 strong CPCL, more technologically advanced, and 
 more efficient than ever before.
 
 What we do and how we do, leave an impression on 
 our society. We must be constantly aware of the bigger
 picture how we are all part of the larger global 
 economy, and society. Today India is becoming an 
 export hub for petroleum products with the setting 
 up of a number of refineries. From being a net importer 
 of petroleum products, India has already graduated 
 to become a net exporter of petroleum products and 
 exported 31.2 MMT of petroleum products in 2006-07. 
 
 Consumption of petroleum products in the country 
 was 114 MMT in 2006-07. The demand for petroleum 
 products is expected to grow by 2.9% annually to 
 about 132 MMTPA by 2011-12. The per capita primary 
 energy consumption in India is about 423.2 MT of 
 oil equivalent, which is barely 1/5th of the global 
 per capita energy consumption, thus having great 
 opportunity for growth. 
 
 Your Company has incurred an expenditure of 
 Rs.2314 Crore during the Xth Plan Period as 
 against the outlay of Rs. 2400 crore, which is 
 96.5% of the Plan Outlay utilization. The major 
 achievements of the Xth Plan outlay were 3 MMTPA 
 Refinery Expansion and FCCU Debottlenecking Project. 
 
 During the year 2006-07, the Company has 
 successfully commissioned an additional 2.5 MGD 
 Sewage Reclamation Plant at a cost of Rs. 47 crore 
 in order to enhance the water availability for Manali 
 Refinery. An offsite automation project for improving 
 the blending operations of MS, Diesel and Furnace 
 Oil to meet the product specification without 
 quality giveaway has been completed at a cost of 
 about Rs. 26.8 crore. 
 
 Sea Water Desalination 
 
 In order to ensure uninterrupted operation of 
 the Manali Refinery even during the periods of 
 water scarcity, the Company is implementing a 
 5.8 MGD Sea Water Desalination Plant at an estimated 
 cost of Rs. 231.34 crore which is expected to be 
 ready for commissioning by December 2007. 
 
 Gas Turbine 
 
 Your Company is installing a 20 MW Gas Turbine 
 at an estimated cost of Rs. 157.88 crore which 
 will enhance the reliability and quality of 
 captive power generation at Manali Refinery 
 and the project is expected to be completed 
 by end of this year. 
 
 Crude Oil Pipeline 
 
 Your Company is installing a new Crude Oil 
 Pipeline from Chennai Port to Manali Refinery 
 in place of the existing Pipeline. This Project 
 is expected to be completed within twelve months 
 subject to the Right of Way is made available by 
 Chennai Port Trust. 
 
 Windmill 
 
 I am happy to inform that CPCL has set up a 
 Windmill Farm Project of 17.6 MW capacity in 
 Melakaraipatti village near Pushpathur, Dindigul 
 District, Tamilnadu, at a cost of Rs. 89.80 crore 
 for achieving significant abatement in Green House 
 gas emissions. 11 out of 22 units of 800 KW Windmill 
 Generators have already been commissioned and 
 synchronized with the grid. The remaining units 
 are under commissioning. The power generated 
 through this wind energy will be ultimately 
 utilized to run our desalination plant at Ennore. 
 This Project is being considered as a potential 
 Clean Development Mechanism Project. 
 
 Refinery Capacity Expansion 
 
 Recognising the need for appropriate updation 
 of refinery infrastructure, your Company is 
 carrying out debottlenecking of Refinery III 
 Unit of the Manali Refinery from 3 MMTPA to 
 4 MMPTA at an estimated cost of Rs. 134 crore, 
 which is expected to be completed by mid 2009. 
 
 Auto Fuels Quality Upgradation 
 
 For meeting the future specifications of Euro 
 IV standard for MS and HSD, several initiatives 
 have been taken like: 
 
 Revamping of Catalytic Reformer Unit to Continuous 
 Catalytic Reformer Unit, 
 
 - New Gasoline Isomerisation unit and 
 
 Diesel Hydrotreating Unit at a total cost of about 
 Rs.2400 Crore . 
 
 These Projects are likely to be completed by 2009-10. 
 
 Keeping pace with rapid growth of the Indian Economy 
 and the vision of creating the world class Energy 
 Company with dominant presence in south India, 
 your company has chalked out ambitious plans 
 for implementing several growth-oriented projects. 
 
 Resid Upgradation Project 
 
 For improving the distillate yield of the 
 Manali Refinery from 67% to 75%, besides reducing 
 the production of low value Fuel Oil, a Resid 
 Upgradation Project along with Delayed Coker
 Unit and associated facilities is being 
 taken up at a cost of about Rs.3000 Crores. 
 Process Design Package for the Delayed Coking 
 Unit is under preparation by the Licensor and 
 the same will be available to us by January 
 2008 for engineering and execution. 
 
 Propylene Recovery Unit 
 
 For tapping the full potential of the 
 Propylene available in LPG stream from FCCU, 
 an additional 50,000 TPA Propylene Recovery 
 Unit is proposed to be put up at Manali Refinery. 
 Capacity of the existing plant will also be augmented 
 to enhance Propylene production capacity by 
 10% over the current level of 30,000 Tonnes per annum. 
 
 15 MMTPA Refinery cum Petrochemical Complex 
 
 Your Company is also considering a proposal 
 for setting up of a 15 MMTPA Grass root 
 Refinery-cum-Petrochemical Complex at 
 Ennore along with Indian Oil Corporation Limited. 
 The Pre-Feasibility Studies of this project 
 is in progress. Discussions with the State 
 Government for land acquisition have commenced. 
 The estimated cost of the Project is Rs. 45,000 cr. 
 
 Refinery Business Improvement Programme 
 
 I am glad to inform that your Company 
 has engaged M/s. Shell Global International 
 to undertake study for margin improvements, 
 energy and loss reduction and improving plant 
 reliability at Manali Refinery. 
 The recommendations from the study after 
 implementation are likely to improve the 
 refining margins by 50 cents per barrel. 
 
 Environmental Performance 
 
 Your Company takes constant efforts to preserve 
 and protect the environment and as a result, 
 achieve significant reduction in emissions 
 from its operations. 
 
 I will highlight some of the major environmental 
 protection facilities commissioned successfully 
 during the year. 
 
 DeNOX facility at Refinery-III Complex of 
 Manali to minimize the emission of Nitrous 
 Oxide to the atmosphere. RO Rejects Recovery 
 Plant of 80 KL/hr. capacity at a cost of Rs.2 Crore
 for recovery of 40 KL/hr of water from the Rejects. 
 An Additional 2.5 MGD capacity Sewage Reclamation 
 Plant at a cost of Rs.47 Crore to enhance the 
 water availability by processing metro sewage. 
 I am pleased to inform that your Company has already 
 taken initiatives to implement Clean Development
 Mechanism (CDM) projects like. 
 
 Energy efficiency and fuel switching measures 
 in Hydrogen production process by use of Pressure 
 Swing Adsorption system.Energy efficiency and fuel 
 avoidance through Heat Recovery Steam Generator 
 combined with Back Pressure Turbine. 17.6 MW windmill
 power to be used to run 5.8 MGD Sea Water Desalination 
 Plant. Safety Performance 
 
 Your Company is strongly committed to provide 
 all round safe-working conditions. Your Company 
 also constantly strives and implements best safety 
 practices. Your Company periodically imparts safety 
 education and training, which remains the focal point 
 of attention in safety management. 
 
 The Company has undertaken several measures for 
 improving the Safety Management Systems like 
 
 Onsite Emergency preparedness plan updated for 
 both Manali and Cauvery Basin Refinery. 
 
 Onsite emergency mock drills in association with
 mutual aid partners and statutory authorities 
 in both the Refineries. 
 
 As a result of the concerted efforts taken by 
 your Company in the areas of Safety and adoption 
 of best safety practices, your Company has won 
 various awards and accolades. 
 
 Human Resources Development 
 
 Your Company firmly believes that employees 
 are the key drivers of any organization and 
 responsible for achieving the organizational 
 goals and objectives. Towards this end, the 
 Company regularly imparts training to its 
 employees to hone their skills. 
 
 During the year, several new HR initiatives 
 were introduced like Mentoring for newly recruited 
 officers, organizing field visits by HR Officers, 
 Open House session of employees with the top 
 management, etc. 
 
 Various tools like Employee Communication System, 
 Knowledge Base and Environment Scan are made available 
 in the Intranet of the Company in order to keep the 
 employees abreast of the various developments not 
 only within the Company but also in the Oil and 
 Gas Industry. 
 
 Your Company believes in developing a culture of 
 listening and responsive management for encouraging 
 the employees to think out of the box, innovate and 
 use positive strategies to motivate the employees 
 and then rewarding them for their performance. 
 For encouraging the participation of the employees 
 in the functioning of the Company, your Company has 
 a suggestion scheme which has elicited widespread 
 response. 86 employees were presented with the 
 suggestion award for the calendar year 2006. 
 
 Corporate Social Responsibility 
 
 Community Development also occupies a pivotal 
 position in your Company's performance benchmarks. 
 During the year 2006-07, several Medical and Eye 
 Camps were conducted for the benefit of over 2200 
 people living in and around the Manali and 
 Nagapattinam villages. 
 
 One of the key areas in our Corporate Social 
 Responsibility Programme is to develop the 
 employability skills of the rural youth. 
 Towards this end, your Company has 
 
 Sponsored a Nurses Training Programme for the 
 benefit of around 30 economically disadvantaged 
 girls during October 2006, which will improve the 
 lives of their families. Organized a skill development 
 programme for the benefit of around 110 unemployed 
 scheduled caste youth in and around the Manali 
 Refinery at the National Small Industries Corporation, 
 Guindy, Chennai. Your Company has effectively played 
 the role of a responsible corporate neighbour by 
 contributing a sum of Rs. 90 lakhs in 2006-07 
 towards several Community Development activities 
 in the proximity of its Refineries focusing 
 primarily on health care, education, infrastructure, 
 sports, socio-cultural and development activities. 
 
 Encouraging Outlook 
 
 Your Company has achieved an impressive and 
 inspiring performance during the first quarter 
 of 2007-08. The total Crude Oil processed was 
 2.591 MMT.The Turnover of the Company in the first 
 quarter was Rs.7472.57 crore. Profit After Tax in 
 the first quarter of 2007-08 also recorded a growth 
 of 27% at Rs. 323.15 crore as against Rs. 254.58 
 crore in the corresponding quarter of the previous 
 financial year. The Gross Refining Margin during 
 the first quarter was an impressive US $ 8.76 
 per bbl as compared to US $ 6.64 per bbl during 
 the corresponding quarter of the previous year. 
 
 Your Company is confidently marching ahead with 
 the above promising trends to scale new heights 
 of glory in the years to come. 
 
 Corporate Governance 
 
 Your Company has complied with all the mandatory 
 requirements of Corporate Governance guidelines 
 issued by Securities and Exchange Board of India. 
 In recognition of your Company's efforts to adopt 
 best Corporate Governance practices, your Company 
 has been shortlisted as one of the top 25 Companies 
 for adopting Good Corporate Governance practices by 
 the Institute of Company Secretaries of India. 
 During the year 2006-07, your Company also won 
 recognition through the Golden Peacock Award for 
 Excellence in Corporate Governance instituted by 
 the Institute of Directors, New Delhi. 
 
 Shram Bhushan Award
 I am happy to inform that two employees of our 
 Company, Mr. Maria Paul Vasco and Mr. K. Indran 
 have been awarded the Prime Minister’s Shram Bhushan 
 Award for the year 2005in recognition of their 
 distinguished performance, innovative abilities, 
 outstanding contribution in the field of productivity 
 and exhibition of exceptional courage and presence of mind.
 
 Acknowledgement 
 
 I take this opportunity to thank each and every 
 one of the stakeholders for their continuing support 
 and confidence reposed on the Company. I am confident 
 that with the unstinted support and co-operation of 
 all the stakeholders, the Company will be able to 
 accelerate its pace in achieving its objectives and goals. 
 
 I am optimistic that your Company will display 
 dynamism, exhibit skills and show ingenuity in 
 tackling the future challenges by bettering its 
 own performance and upgrading its technologies. 
 
 Finally, I thank the Government of India, Government 
 of Tamil Nadu and our foreign collaborator, 
 National Iranian Oil Company, Banks, Oil Industry 
 Development Board and Financial Institutions for 
 their continued co-operation. 
 
 I thank all my colleagues on the Board for their 
 co-operation.