Welcome to the 16th Annual General Meeting of you Company. The annual
Report for the financial year ending 31st March, 2004, along with the
audited Annual Accounts has been circulated with your permission, I
take these as read.
Dear Members it is indeed a privilege for me to report the first ever
Net Profit of your Company after full commissioning of the Refinery.
You had provided steadfast support during the long years progressively
eroded, inexorably leading to a clear year, while bringing you are
opportunity to subscribe to the equity of the parent company ONGE, I
had acknowledge this valuable support.
Please allow me to recall the milestones on the journey that began on
28th March, 2993, when in the EGM, you had approved the resolutions for
the takeover of your Company by ONGC with majority equity and exclusive
- Your Company has earned a net profit of Rs 459.42 Crore in 2003-04 as
against a net loss of Rs 411.81 Crore in the previous year.
- Your Company is no longer a potentially sick Company because the
accumulated losses have been reduced to less than 50% of the net worth
as on 31st March, 2004.
- Shares of your company were being traded below par for most of the in
the last 4 years, on the day of the takeover, the price on the BSE was
Rs 8.10 with market capitalization of Rs 643 Crore. The price reached
par value on 23rd April, 2003, and since then, peaked at Rs 69.20 on
9th January, 2004.
- The parent Company ONGC has created the highest sustained market
capitalization in India, retaining the ranking as the Most Valuable
Company over four consecutive six-monthly listings of Economic Times
- Under the same management your Company entered the elite club of BSE
Top 30 by market capitalization on 17th August, 2003, the market
capitalization on 17th August 2003, the market capitalization touched
the landmark of Rs 10,000 Crore on 17th January, 2004. The shares are
being trade in A category since 1st March, 2004.
The performance Boost
Dear Members, the true potential of the Refinery, a high-technology
asset created by by your Company, is being realized only now. It is
again my privilege to report the first ever 100% capacity utilization
of your Refinery the crude run of 10.046 Million Tonnes in 2003-04 was
104% of the rated capacity of 9.6 Million Tonnes per year. This was not
a one-off performance. In the first quarter of the current financial
year, the capacity utilization was 119%. The highlights.
- Crude mix has improved
- Yield pattern has improved.
- Energy utilization has improved.
- Transaction costs on crude purchase and shipping have been reduced.
- Unit costs have been reduced.
Year-on-year, the turnover of the company had increaded by 47% to Rs
12,612.22 Crore in 2003-04. In the first quarter of the current
financial year, the turnover has increased by 90% over the same period
last year. Because domestic sale from your Company was bottlenecked by
the Marketing Companies notwithstanding our protests to all concerned
your management proactively increased expert by 134% to 4,478 Crore
Your management utilized the Debt Restricting Package(DRP) option to
prepay the Rupee Term Loan aggregating to Rs 2,637 Crore carrying
interest at 9.15% per annum. For this the parent company had extended
an unsecured Term Loan up to Rs 2600 Crore at the Bank Rate of 6%. Of
this only Rs 2,400 Crore was utilized. Your Company financial health
has so improved that against this low-cost loan, Rs 450 Crore has been
prepaid already. These measures alone have led to an annualized saving
of Rs 109 Crore.
Capital investments are being made in several projects for product
Quality Improvement , value Addition and De-bottlenecking. Detailed
studies for profit maximization through value addition and forward
integration are in progress.
Your Company has finalized product sales agreements with Shell India
(Pvt.) Ltd. and Essar Oil Ltd., MOUs have been finalized with IOC, BPCL
and HPCL for product of take effective 1st April, 2004, for three
Your Company has received license for marketing transport fuels through
500 Retail Outlets.
Its been an exciting, exhilarating experienced the opportunity came to
ONGC out of desperation that a valuable National Asset was about to be
classified as a Non-performing Asset. Many had extended support, some
tried hard to derail the effort and few others had sniggered. The
results are there for all see. I hereby take this opportunity to
fondly remember Late Shri M.C. Bagrodia for his wise counsel and
request you to join me in praying for his soul.
Gross Refinery Margins (GRM) have been running high for all Indian
Refineries, the Customs Duty reductions effective 17th August, 2004,
will adversely affect the GRM of your Company to the order of Rs 400
Crore per year.
The Team at your Refinery is doing a commendable job and the increasing
benefits towards compensation and welfare are well deserved. The
uncertainties on the job security have been forgotten and they are even
getting involved in sharing expertise overseas.
Product demand has been steadily increasing will surely benefit from
this health growth.
On behalf of your Board and personally, I thank you and all other
stakeholders for your confidence and support, acknowledge the support
from the Government of India, the Government of Karnataka, the New
Mangalore Port Trust and all other concerned Authorities and Agencies.
I recognize the members of the the Board for their contribution to the
turnaround, unprecedented in Indias corporate history for depth, speed
and transparency. The MRPL story proves, once again that
professionalism matters, not ownership, it also shows what
professionals can achieve, if the owners let them fly.
Thanking you. Jai Hindi
Mangalore, (Subir Raha)
27th September, 2004 Chairman
Note: Excepts from the Chairmans speech at the 16th Annual General
Meeting held on 27th September, 2004, at Mangalore. This does purport
to be a record of the proceedings of the Annual General Meeting.