Dear Shareholders,
 
 It gives me great pleasure to present to you the 59th Annual report for
 the year 2010-11.
 
 The Indian economy has recovered swiftly from the slowdown resulting
 from the financial crisis of 2008-09.  The GDP growth rate was 8.5% in
 2010-11 compared to 8% in 2009-10. The growth, however, was accompanied
 by persistently high inflation. inflation rate has remained above 8%
 throughout the year.
 
 Global oil prices, which had remained stable within the -85 per
 barrel range for most part of 2010, started rising in the latter part
 and reached 5 per barrel by March 2011. The rise was due to strong
 growth in the global oil demand and the impact of turmoil in the
 Middle-East.
 
 The consumption of petroleum products in India increased by 2.6% in
 2010-11. A total of 143 MMT of petroleum products were consumed during
 the year. Increasing prosperity and rising vehicle ownership boosted
 the demand for transport fuels. Petrol and diesel consumption recorded
 growth rates of 11% and 7% respectively. Diesel prices were largely
 unchanged as inflation remained a major concern. Gas made further
 inroads in the industrial segment replacing oil demand. Demand for
 industrial fuels such as FO/LSHS and Bitumen declined.
 
 India''s rising energy demand will increase demand for energy sources
 including natural gas. Natural gas burns more cleanly than other fuels,
 an important attribute in an era of rising concerns about greenhouse
 gas emissions and its impact on climate.
 
 The turnover of HPCL increased by 22% to Rs. 1,32,670 crores during the
 year. Profit after tax increased to Rs. 1539 crores during 2010-11 from Rs.
 1301 crores in 2009-10 after absorbing an under recovery of Rs. 1509
 crores on the sales of sensitive petroleum products. Although
 borrowings have increased, the interest cost has been brought down
 through prudent treasury management. High cost debt has been retired
 and substituted with low cost debt.
 
 Our refineries achieved combined throughput of 14.75 MMT achieving
 nearly 100% capacity utilization despite shutdown of key units for
 revamp and turnaround activities. This year has seen completion of
 significant projects and revamp of our refineries at Mumbai and Visakh
 for handling additional throughput and improved flexibility in handling
 different varieties of crude oil. Refining margins in both our refineries
 were in the  to  per barrel range compared to .5 to  per barrel
 last year.
 
 The sales for HPCL in 2010-11 reached 27 MMT, including exports. In the
 domestic market we have grown by 5.5% recording a growth of about 3%
 above Industry and achieved 25.5 MMT of sales. We have increased sales
 of MS, HSD, LPG, FO and LDO. Naphtha sales were impacted by the
 availability of Natural gas. We are focused on strengthening our
 network in the rural markets.
 
 We have continued to build on our pipeline capabilities. We have
 achieved a throughput of about 13 million tons against a target
 throughput of 10 million tons through our pipelines.
 
 We have submitted bids for city gas distribution for 4 cities during
 the year. We are also in discussions with State Government of West
 Bengal to implement the CGD project in the city of Kolkata through a
 Joint Venture company.  As a step to establish presence in the growing
 field of alternate energy, we have commissioned additional 25 MW
 capacity in Wind Farm project taking the total capacity to 50 MW of
 power generation.
 
 We have leveraged ICT tools and the platform provided by the ERP
 extensively to bring in process efficiency, better control and
 transparency during the year.
 
 We have completed several important projects during the year.
 
 We have commissioned a new Fluidized Catalytic Cracking Unit (FCCU-II)
 of capacity 1.45 MMTPA at Mumbai Refinery and revamped the second FCCU
 at Visakh Refinery from 0.6 to 1.0 MMTPA. These projects will help in
 maximizing production of MS and LPG. The Single Point Mooring (SPM)
 facilities at Visakh have been completed which will result freight
 savings.
 
 The Lube Oil Base Stock (LOBS) project at Mumbai Refinery has been
 commissioned enhancing LOBS production capacity to 400 TMTPA. We have
 also commissioned a new Grease & Specialty Product Plant at Silvassa
 with a capacity of 4.7 TMTPA.
 
 The mechanical completion of 250 Km. long Bathinda – Ramanmandi –
 Bahadurgarh pipeline has been achieved during the year. We have
 commissioned the World''s largest Flex Speed Carousal at Cherlapally LPG
 plant and the largest exclusive fully automated Black Oil terminal in
 the country at Visakhapatnam.
 
 The Sugar Mills at Sugauli & Lauriya have been completed and
 commissioned in March 2011. The construction of the Cogen and Ethanol
 plants is in advanced stage and commissioning is expected during
 2011–12.
 
 The HMEL Refinery project is nearing completion and commissioning is
 expected in the current financial year. This is our first Refining project
 in the northern part of the country and will ease product availability
 issues in the region.
 
 We have a large pool of experienced and dedicated manpower whose hard
 work has been instrumental in achieving our goals. I would like to
 acknowledge their effort in all that we have achieved so far. We will
 continue to provide a productive working environment and ensure that
 our people continue to deliver the best performance.
 
 HPCL has a great history for meeting the fuel and energy needs of our
 country.We have a responsibility to cater to the increasing domestic
 fuel demand. We are focused on making HPCL financially safe and secure
 by planning for the future and balancing the business portfolio to
 insulate the company from the impact of increasing crude oil prices.
 
 To build value to the shareholders, we have identified five strategic
 areas as our priority over the next few years, viz.
 
 1.  Improve Profitability & Build the upstream business.
 
 2.  Increase the Refining capacity to meet the marketing demand.
 
 3.  Achieve sustained Sales growth above industry.
 
 4.  Provide differentiated customer experience through strong
 operational excellence.
 
 5.  Aggressively pursue growth opportunities in Natural Gas & Alternate
 Energy.
 
 Our customers, business associates and shareholders have always been a
 source of strength and I thank them for their support. The Ministry of
 Petroleum & Natural Gas has guided and supported us in all our efforts.
 We look forward to their continued support in all our endeavors.
 
 Thank you,
 
 S. Roy Choudhury