Mangalore Refinery and Petrochemicals

Dears members,
 
 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.
 
 MRPL Revived
 
 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
 management control.
 
 - 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
 500.
 
 - 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.
 
 Transaction Trends
 
 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
 during 2003-04.
 
 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.
 
 New Opportunities
 
 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
 years.
 
 Your Company has received license for marketing transport fuels through
 500 Retail Outlets.
 
 Looking Back
 
 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.
 
 Looking Ahead
 
 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.
 
 Acknowledgements
 
 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.