Mangalore Refinery and Petrochemicals Directors Report, MRPL Reports by Directors

Mangalore Refinery and Petrochemicals

BSE: 500109|NSE: MRPL|ISIN: INE103A01014|SECTOR: Refineries
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Directors Report Year End : Mar '16    Mar 15
Dear Members,
 I, on behalf of the Board of Directors of your Company, am pleased to
 share with you and report the highlights, affairs and developments,
 your Company has made during the financial year ended March 31, 2016
 and present the 28th Annual Report on the business and operations of
 Mangalore Refinery and Petrochemicals Limited (MRPL) and its audited
 financial statements together with the Auditors'' Report and comments on
 the Accounts by the Comptroller and Auditor General (C&AG) of India.
 You will be delighted to know that your Company commissioned all the
 Units under Phase  III Refinery expansion project during the year and
 registered the highest ever throughput of 15.53 MMT.
 Financial Performance
 The standalone / consolidated financial highlights for the year ended
 31/03/2016 are summarized below:
                                                       (Rs. In Crores)
 Standalone Consolidated
                      Year ended   Year ended   Year ended   Year ended
                      31st March,  31st March,  31st March,  31st March,
                      2016         2015         2016         2015
 Turnover (Gross)         50864        62412       50983        62341
 Earnings before           2464        (1250)       2386        (1325)
 Interest, Tax
 Depreciation and
 Amortization (EBIDTA)
 Profit/(Loss) Before      1174        (2156)        306        (2295)
 Profit/ (Loss) 
 after Tax,                1148        (1712)        710        (1803)
 Minority Interest 
 and share of 
 Profit/ (Loss) of 
 Your company achieved turnover of Rs. 50864 crore during the financial
 year 2015-16 against Rs. 62412 crore during the financial year 2014-15.
 The decrease in sales is mainly on account of decline in product prices
 linked with declining crude price as also on account of more domestic
 of take. The Company earned a Profit of after tax (PAT) of Rs. 1148
 crore during the financial year 2015-16 against a loss of Rs. (1712)
 crore incurred during the financial year 2014-15. The Gross Refining
 Margin (GRM) for financial year 2015-16 was 5.20$/bbl as against (0.64)
 $/bbl during the financial year 2014-15.Your Company has retained its
 highest corporate rating [CCR AAA] affirmed by CRISIL and IRAAA by
 ICRA during the FY 2015-16.
 The financial year 2015-16 has been a very successful year for your
 Company. During the year, the Company''s Refinery processed 15.53 MMT of
 crude achieving an average utilization rate of 103.5% as against 14.63
 MMT during the financial year 2014-15. During the year, the Company
 achieved highest ever production and dispatch of LPG, Diesel, Coke and
 Throughput in MBPL pipeline.
 The Company has achieved direct sales of 1470 TMT against 820 TMT
 during 2014-15 and retail sales of 4.8 TMT against 2.53 TMT during
 Your Company has successfully penetrated the Polypropylene market in a
 short span of 9 months with a sales volume of 139 TMT and sales value
 of Rs. 1039 Crores. The company is in the process of expanding its
 markets reach in order to sell 440 TMT of Polypropylene per year. In
 addition, your Company is also setting up its own infrastructure for
 storage of Polypropylene. To leverage the highly Profitable
 Polypropylene and to position MRPL as a niche market player,
 comprehensive pricing of various grades of Polypropylene has been put
 in place along with customer enrolment activity. Del Credere Agents cum
 Consignment Stockist has been appointed to partner us in addressing
 major demand clusters in the South and West of India.
 Your Company has also succeeded in marketing the entire production of
 Petcoke on consistent basis. Company evacuated additional quantity of
 Sulphur in domestic as well as export market. The Company has achieved
 major breakthrough for bulk evacuation of Pet-coke and Sulphur by
 forging alliances with large Industrial houses which, in turn has
 helped the Delayed Coker Unit to run at 100 percent capacity
 utilization from 50 percent earlier. This has significantly increased
 specialty sales and improved Refinery margins.
 Your company continues to expand its market spread in the direct sales
 segment of petroleum products in the state of Karnataka and its
 adjoining states and has maintained significant market share and direct
 customer relations for products such as Bitumen, Fuel Oil, Sulphur,
 Diesel, Naphtha, Petcoke and Mixed Xylene in its Refinery zone.
 Your company has also maintained timely supplies to State Trading
 Corporation, Mauritius which has a long term supply contract with MRPL.
 The company supplied 1067 TMT of petroleum products to STC Mauritius at
 a sales value of Rs. 2774 Crores during FY 2015-16 against supply of
 1084 TMT and sales value of Rs. 4394 Crores in FY 2014-15.
 After deregulation of HSD pricing, your company has commenced the
 retail expansion plan by releasing the advertisement for appointment of
 dealers for retail outlets in the state of Karnataka & Kerala. The
 company is expecting to commission a sizeable number of retail outlets
 during FY 2016-17.
 During the year, the Company has been conferred with following awards
 and recognitions :
 ''Niryat Shree'' Gold Trophy in the Residual sector for Non MSME category
 by Federation of Import Export Organization (FIEO). MD, MRPL received
 the award from Hon''ble President of India on 4th May, 2016 in a
 glittering ceremony held at Vigyan Bhawan, New Delhi.
 Export Excellence Award, 2015 in Best Exporter Award (Medium/large
 category) from the Federation of Karnataka Chamber of Commerce and
 Certificate of recognition of ''Highest Ever Central Excise Duty payment
 and Incremental growth''
 First prize for outstanding performance in the area of Hindi
 Implementation for the year 2015-16 for fifth consecutive year by
 TOLIC, Mangalore.
 After successful commissioning of the Phase-III major units such as
 Delayed Coker Unit, Petrochemical grade Fluidised Catalytic Cracking
 Unit (PFCCU), Diesel Hydro treating Unit and the latest Polypropylene
 Unit, MRPL''s product base has expanded to include Pet coke, Ultra Low
 sulfur Diesel and Polypropylene.  MRPL is establishing value partners
 to expand market base and partner sustainable growth. MRPL has already
 initiated actions for upgrading the MS & HSD qualities to meet BS VI
 specifications which will come into force from April 2020. Further
 incremental optimizations such as fare gas recovery, energy
 optimizations activities have also been pursued.
 Phase - III Refinery Project
 All the units of the Phase III Refinery capacity expansion and up
 gradation project and the last unit PFCCU which was commissioned in
 August, 2014 are running at full capacities today. This has resulted in
 complete conversion of HSD and Petrol to Euro 4 grades, increased the
 distillate yield with production of high value products viz Propylene,
 Gasoline from low value black oils. The total expenditure incurred by
 your Company on Phase -III Refinery project is around Rs. 13265 Crore
 as on 31/03/2016.
 Polypropylene Project (PP)
 Polypropylene unit of Capacity 440 KTPA, (Licensor Technology from M/s
 Lummus Novolen Technology GmbH, Germany) integrated with Phase -III
 Refinery Project was commissioned successfully on 17/06/2015.
 Commercial production has started and was dedicated to the Nation by
 Shri Dharmendra Pradhan, Hon''ble Petroleum and Natural Gas Minister.
 The total expenditure incurred by your Company on Polypropylene project
 is around Rs. 1611 Crore as on 31/03/2016. The various grades of
 Polypropylene produced by the unit were received well in the market and
 was able to capture substantial market share in south zone in a short
 Following new projects are being taken up for better logistics, value
 addition and Profitability improvement :
 (a) Railway Siding - A state of the art Railway siding for smooth
 evacuation of Petcoke and Polypropylene.
 (b) Revamp of CCR2 - The existing CCR-2 unit is being revamped to
 produce greater quantity of Reformate, yielding greater quantity of MS.
 (c) Relocation of loading facilities & additional tankages -This
 project will provide greater flexibility to your company and allow for
 greater marketing outreach.
 (d) Flare Gas Recovery System - This project recovers gases that are
 lost from the fare and utilize it as fuel, thereby saving cost. This
 also helps to reduce the Carbon footprint of your company by reducing
 greenhouse gas emissions.
 (e) Additional Petcoke Silos for marketing - This facility allows your
 company to attain greater flexibility in marketing of Pet-Coke and to
 mitigate environmental impact of concentrated loading.
 Your Company is committed to ensure environmental friendly operations
 to achieve highest standards of environmental excellence. MRPL
 continues to leverage environment and sustainable development as an
 ingredient of its business policies and strategic plans. The major
 actions taken in 2015-16 on this front includes the following:
 Audit of New Mangalore Portjetties for oil spill management by Oil
 Industry Safety Directorate (OISD).
 SOx & NOx Stack Online Analyzer data of Phase  III units connected to
 CPCB server in the month of June, 2015.
 Periodic Manual Stack Monitoring is being carried out by MoEF/KSPCB
 approved external agency.
 Ambient Air Quality Monitoring is carried out by MoEF/ KSPCB approved
 external agency in and around the Refinery at 9 locations as per
 revised National Ambient Air Quality Monitoring Standards.
 Environment Awareness Programs are being organized periodically in the
 neighboring villages in association with Karnataka State Pollution
 Control Board.
 Continuous Online Monitoring Analyzers are being installed to monitor
 Treated Effluents for various parameters in line with the directions of
 Central Pollution Control Board (CPCB).
 Treated effluents are monitored on a daily basis at both Refinery end &
 at discharge end. A Fortnightly Marine Environment Impact Assessment
 study was carried out by M/s. Central Marine Fisheries Research
 Institute, Mangalore from 7 monitoring locations in the vicinity of
 Treated effluent disposal point at sea & 3 Stations in the seashore.
 So far, no adverse effect on the marine environment, was found.
 Ten Nos. of Ground Water monitoring stations in and around Refinery
 have been set up and regular monitoring of ground water quality is
 being carried out along with Karnataka State Pollution Control Board
 Low sulphur Fuel oil being used in the Refinery furnaces and boilers.
 Usage of ultra low sulphur fuel gas generated in the Refinery process
 units is also being maximized.
 Sulphur Recovery Units (SRUs) are operated at efficiency greater than
 Annual Submarine pipeline inspection has also been carried out by M/s.
 National Institute of Oceanography (NIO).
 The Refinery is certified with ISO 14001: 2004 for Environment
 Management Systems by TUV Rheinland.
 1531 Number of days worked without Reportable Lost Time Injuries as on
 Nil Reportable Lost Time Injuries (RLTI) during the year.
 16.81 Million Man Hours worked as on 31/03/2016,.
 Corporate Social Responsibility (CSR)
 Your Company''s social welfare and community development initiatives
 focus on the key areas of education, health care and overall
 development of basic infrastructure in and around its operational
 areas. These projects are largely in accordance with Schedule VII of
 the Companies Act, 2013.
 Your company has spentRs.4.11 Crores (previous yearRs.4.81 crore) for
 various CSR activities during the year 2015-16. Pursuant to Rule 9 of
 Companies (Corporate Social Responsibility Policy) Rules, 2014 the
 Annual Report on CSR activities is annexed herewith as Annexure ''A''.
 Sustainability Development and Performance
 Sustainability efforts of your Company last year centered on drawing
 action plans towards minimizing carbon footprint through managing
 complex projects and operations, addressing risk and opportunity, and
 engaging externally. The Company also made progress on defining
 supplier expectations for business conduct and on addressing related
 risks in our supply chain. The Company continues to work to reduce
 greenhouse gas emissions in our operations and to integrate climate
 change- related activities and goals into our business planning. The
 Plan further provides guidance regarding integrating sustainable
 development with our business operations. Your Company has laid down
 priority areas as well as short and long term actions to be undertaken
 for meeting the objectives of the plan. Key identified areas includes:
 Hydrocarbon value chain optimization
 Energy consumption optimization
 Water and Waste Management
 Customer development and growth partnership.
 Specific enablers have also been identified to facilitate the
 implementation of action plans developed for above four areas.
 Your Company is consolidating its position in potential hydrocarbon
 value chain optimization avenues for sustainable development. The
 pivotal emphasis is on recovering value from low value hydrocarbons
 such as pet-coke, Refinery of gas and internal fuel oil. Efforts are on
 the anvil to exploit such potentials to enhance share holders value.
 Your Company is also considering other sustainable options to utilize
 the pet coke for fringe in utility boilers to produce steam for power
 generation along with capture of the associated pollutant - sulfur
 molecule. This is expected to not only help in production of cheaper
 power, but also ensure timely evacuation of this product from the
 Refinery complex. Another advantage envisaged is the reduction in
 internal fuel oil consumption which is currently being fired in the
 boilers, for up-gradation into various lighter molecules like
 Polypropylene, diesel etc.  via the delayed coking route. In-house
 feasibility study of the project with support from potential technology
 suppliers is being taken-up.
 Your Company is also looking into the option of recovering valuable
 ethylene from low value PFCC of gas and supplying into downstream
 petrochemical complexes. Also, the recovered ethylene can be used as a
 co-monomer along with propylene to produce hetero-polymers of
 polypropylene for enhancing market value. The in-house viability study
 along with the potential increase in Profitability estimations are
 being carried out with inputs from downstream petrochemical complexes
 and ethylene recovery technology suppliers.
 The Phase-3 Refinery Complex captive power plant facilities and some of
 the process heaters are designed to burn Natural Gas as fuel. The
 Phase-3 Hydrogen generation unit is also designed to consume Natural
 Gas as an alternate feedstock.  The infrastructure to bring natural gas
 to Mangalore is being assessed by various gas suppliers. Subject to
 economics, utilization of natural gas will not only reduce SOx
 emissions but also open up the avenue of converting the low value
 internal fuel oil into high value hydrocarbons.
 Pursuant to Section 129 (3) of the Companies Act, 2013 read with Rule
 (5) of the Companies (Accounts) Rules, 2014, the salient features of
 financial statement of Subsidiary and Joint Ventures in Form AOC-1 is
 attached as Annexure ''B'' which forms part of this report.
 The Audited Consolidated financial statements for the year ended 31st
 March, 2016 of the Company and its subsidiaries form part of the Annual
 Report in accordance with Section 129 of the Companies Act, 2013 and
 the Accounting Standard (AS)-21 on Consolidated Financial Statements
 read with AS-23 on Accounting for Investments in Associates and AS-27
 on Financial Reporting of Interests in Joint Ventures.  In accordance
 with section 136 of the Companies Act, 2013, the audited financial
 statements, including the consolidated financial statements and related
 information of the Company and audited accounts of the subsidiary
 Company are available on the Company''s website. These documents will
 also be available for inspection during business hours at the
 registered office of the Company at Mangalore.
 ONGC Mangalore Petrochemicals Limited (OMPL) is the only subsidiary
 company. Your company continues to hold 51% of equity shares in OMPL
 and 49% is held by ONGC.
 OMPL has set up an Aromatic Complex with an annual capacity 914 KTPA of
 Para-xylene and 283 KPTA of Benzene in Mangalore Special Economic Zone.
 During the year, 0.56 MMT of Para-xylene and 0.17 MMT of Benzene were
 exported and the revenue for FY 2015-16 was Rs. 4,188.87 Crores. The
 Company incurred loss of Rs. 875.35 Crores mainly due to Interest,
 Depreciation and lower capacity utilization. A scheme of amalgamation
 of OMPL with your Company has been fled with the Ministry of Corporate
 Affairs, which is under process.
 Your Company has adopted a Policy on determining Material Subsidiary,
 which is available at company''s website.
 The company has two Joint Ventures viz. Shell MRPL Aviation Fuels and
 Services Limited (SMAFSL) with Shell B.V. Netherlands where in your
 company holds 50% of share capital and Mangalam Retail Services Limited
 (MRSL) with Gulf Oil, a Hinduja Group Company wherein your Company
 holds 49.98% of share capital. The accounts of JV companies have been
 consolidated with MRPL''s Accounts.
 Shell MRPL Aviation Fuels and Services Limited (SMAFSL)
 Shell MRPL Aviation Fuels and Services Limited (SMAFSL) supplies
 aviation turbine fuel (ATF) to both domestic and international airlines
 at several Indian airports. The revenue for FY 2015-16 is Rs. 324
 Crores (Previous Year Rs. 636 Crores) with Pre-tax Profit of Rs. 4.72
 Crores (Previous Year Rs. 10.69 Crores) and post-tax Profit of Rs. 3.82
 Crores (Previous Year Rs. 7.74 Crores). The company commenced its
 operation at Chennai during 2015-16.  The Company is currently present
 in 10 airports and entered into a facilitation model with HPCL for the
 three airports of Mumbai, Kolkata and Delhi. The Company paid a
 dividend of Rs. 0.75 Crores to MRPL during the FY 2015-16. M/s ICRA has
 reaffirmed A1  to the non fund working capital limits of Rs.  50
 million which indicates highest credit quality.
 Mangalam Retail Services Limited (MRSL)
 Mangalam Retail Services Limited (MRSL) the Joint Venture (JV) Company
 with Gulf Oil an Hinduja Group Company for promoting retail plan of
 MRPL. MRPL holds 49.98 % of shares in this Company. In absence of any
 viable business plan, the continuance of the JV is being examined. The
 JV has not commenced any business activities. Hence, there is no
 business transaction during the FY 2015-16. The Accounts of the JV was
 audited for the purpose of consolidation.
 The financial statements have been prepared in accordance with the
 generally accepted Accounting Principles (GAAP) and in accordance with
 all applicable Accounting Standards. Your Company, its subsidiary and
 joint venture Companies have adopted Ind AS with effect from 1st April,
 2016 pursuant to the Companies (Indian Accounting Standard) Rules, 2015
 notified by the Ministry of Corporate Affairs vide notification dated
 16th February, 2015.
 No amount has been transferred to General Reserves for the financial
 year 2015-16.
 In view of inadequacy of Profits in the last three financial years, the
 Board did not recommend any dividend for the FY 2015-16.
 Your company has not accepted any deposits during the year pursuant to
 Section 74 of the Companies Act, 2013 and Rules thereunder. Your
 Company is to refund certain customer advances which were unclaimed and
 various steps to refund them are being taken.
 There have been no investments made, loans / guarantees given or
 securities provided during the financial year 2015-16 under the
 provisions of Section 185 / 186 of the Companies Act, 2013.  The
 details of investments made in earlier years covered under the
 provisions of Section 186 of the Act are given in notes to financial
 statements provided in this Annual Report.
 The company has not issued any shares during the FY 2015-16.  The
 Issued, Subscribed and Paid up Equity Share Capital of your Company as
 on 31/03/2016 was Rs. 1753 Crores.
 There has been no change in the nature of business during the year. No
 material changes or commitments have occurred after close of the year
 till the date of this report which affects the financial position of
 the Company.
 Your company values its human resources the most. To keep their morale
 high, your company extends several welfare benefits to the employees
 and their families by way of compensative medical care, education,
 housing and social security. During the financial year 2015-16, 30 HR
 policies in line with Indian Oil Corporation Ltd (IOCL) were revised
 and notified. Promotions for management and non management staff were
 released on time and S1 grade was introduced along with other pending
 issues as per long term settlement (LTS).
 Your Company continues to enjoy cordial and harmonious relations and
 not a single man-hour was lost on account of any industrial disturbance
 during the year 2015-16.
 During the year, your Company has recruited 116 employees comprising of
 6 women employees and 13 Schedules Caste (SC) / Schedule Tribe (ST)
 employees. Total employee strength as on 31/03/2016 was 1812 including
 130 women employees, 210 SC/ST employees and 26 persons with
 disabilities (PWD).  816 employees belong to Management cadre whereas
 996 employees belong to Non-Management cadre. During the year 2015-16,
 your Company devoted 3669 Mandays for Training, Development and
 Learning which amounted to an average of 2.16 Mandays per employee
 which includes functional, developmental and special training programs
 covering the entire spectrum of employees.
 The Company maintains an Employee Club known as MRPL Employees Club
 (MEC). The Club offers a wide range of pastime activities for the
 employees and their dependents. An Internal Departmental Cricket
 Tournament was also organised by MRPL Employees Club (MEC).
 Presidential Directives and other guidelines issued by Department of
 Public Enterprises, Ministry of Petroleum & Natural Gas, Ministry of
 Social Justice and empowerment from time to time with regard to
 reservation in services for Scheduled Castes, Scheduled Tribes, other
 backward castes and Persons with disabilities. An adequate monitoring
 mechanism has been put in place for sustained and effective compliance.
 Liaison officers were appointed to ensure implementation of the
 Government Directives. Rosters are maintained as per the directives and
 are regularly inspected by the Liaison officer of the company as well
 as the Liaison officer of MoP&NG to ensure proper compliance of the
 Directives. Special Reservation Cell on SC/ST is constituted for
 redressal of grievances of Scheduled Castes and OBC employees.
 MRPL also complies with provisions under The Persons with Disabilities
 (Equal Opportunities, Protection of Rights and Full Participation) Act,
 1995 relating to providing employment opportunities for Persons with
 Disabilities (PWDs). As on 31/03/2016, there were 26 permanent
 employees with disabilities on the roll of MRPL.
 Women employees constituted over 6 per cent of the Company''s workforce.
 During the year, programs on women empowerment and development,
 including programs on gender sensitization were organized. Your company
 has an Internal Complaints Committee (ICC) required under Sexual
 Harassment of Women at Workplace (Prevention, Prohibition and
 Redressal) Act, 2013.  There have been no cases reported to the
 Committee, for the FY 2015-16.
 Competitions were also held in Hindi language for employees and their
 family members during National Safety Day, Environment Day, Security
 awareness week and Vigilance awareness week. In order to propagate
 Hindi among the employees, Hindi Workshops are being organized on a
 regular basis at Mangalore, Mumbai, Delhi & Bangalore Offices. In order
 to promote Hindi in the Company , Hindi fortnight was celebrated and
 many Hindi competitions such as Hindi Padho, Samajho exam Tick karo,
 Hindi Dictation, Handwriting, Admin.  Glossary, News reading etc were
 conducted for the employees, their children and family members in the
 month of September 2015. A special quiz competition was also conducted
 for GMs & GGMs during Hindi month celebrations. OL inspections of
 internal departments and subordinate offices were carried out.  Special
 awards were given to the twelve topper students of DPS School,
 Mangalore who scored the highest marks in Class-X Hindi examination.
 Your Company won the first prize in Town Official Language
 Implementation Committee (TOLIC) under the category of PSU Central
 Government offices for outstanding performance in the area of Hindi
 implementation for the year 2015-16.
 In order to propagate Hindi in the Refinery, a Hindi In House Journal
 namely MRPL PRATIBIMB is being published. As per OL Rule, OLIC
 meeting was conducted in all the four quarters under the chairmanship
 of MD. Meetings were organized specially for Official Language liaison
 Offers during the year. Constant efforts for promotion of Hindi over
 the years have resulted in significant increase in usage of Hindi in
 the Refinery.
 Your Company''s RTI manual is available on company''s website which
 discloses all required information. During the year, 172 applications
 were received, out of which 163 were disposed of before 31/03/2016 and
 balance 9 applications are being disposed of.
 Security of MRPL Refinery is designed to comply with Oil Sector
 Infrastructure Protection Plan (OSIPP) and the Security Audit
 recommendations given by MHA from time to time.
 Physical Protection of the Refinery is handled by Central Industrial
 Security Force (CISF). Proposal to augment the CISF strength to extend
 protection to Refinery - Phase-3 area is under consideration of the
 Security has always been on priority of the Company and to ensure
 preparedness, periodic mock drills on work-place security preparedness
 are conducted. Security Awareness Weeks are organised periodically to
 promote awareness on security issues among all stake holders. An
 integrated CCTV cum Electronic Intrusion Detection system is under
 implementation to further strengthen electronic surveillance of the
 Your company has developed a structured mechanism of vigilance
 functions and its practices are focused towards creation of value of
 all the stakeholders. The Practices involve multi-layer checks and
 balances to improve transparency.  Vigilance Awareness and Preventive
 vigilance activities were continuously carried out during the year.
 Guidelines of Central Vigilance Commission (CVC) are being followed.
 Officers in sensitive posts are rotated regularly.
 In compliance with CVC instruction, your company has implemented a
 complaint handling policy in which all complaints received from various
 sources can get recorded and can be examined by vigilance. Further, in
 line with CVC instructions, your Company has achieved high compliance
 level with regard to e-procurement, e-tender and e-payment.
 Leveraging of technology to enhance transparency has been a thrust area
 of action in which vigilance has played a catalytic role. The website
 of the Company displays downloadable tender document, publication of
 information of works awarded on nomination basis, publication of post
 award information of contracts.
 Whistle Blower Policy for Directors & Employees
 The Whistle Blower Policy is formulated to provide a vigil mechanism
 for Directors and Employees to raise genuine concerns about unethical
 behaviour, actual or suspected fraud.  The Policy provides necessary
 safeguards for protection of Directors and Employees who avail the
 vigil mechanism from reprisals or victimization, for whistle blowing in
 good faith and to provide opportunity to Directors and Employees for
 direct access to the Chairperson of the Audit Committee in exceptional
 cases. The policy is available on the Company''s website. During the
 year, no complaints were received under Whistle Blower Policy.
 Information required to be disclosed pursuant to Section 134(3)(m) of
 the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts)
 Rules, 2014 with respect to Conservation of Energy, Technology
 Absorption and Foreign Exchange earnings & outgo are furnished in
 Annexure ''C'' which forms part of this Report.
 MRPL, being a Government Company, is exempted from the provisions of
 Section 197 (12) of the Companies Act, 2013 and relevant Rules in view
 of the Notification dated 05/06/2015 issued by Ministry of Corporate
 Affairs (MCA).
 The functional directors of the Company are appointed by the
 administrative Ministry i.e. MoP&NG within the terms & conditions as
 per DPE guidelines.
 Information required to be disclosed pursuant to Section 134(3)(a) of
 the Companies Act, 2013 with respect to the details forming part of the
 extract of the Annual Return in form MGT-9 are furnished in Annexure
 ''D'' which forms part of this Report.
 The Securities and Exchange Board of India (SEBI) on 02/09/2015, issued
 SEBI (Listing Obligations and Disclosure Requirements) Regulations,
 2015 (hereinafter referred to as SEBI Listing Regulations, 2015) with
 the aim to consolidate and streamline the provisions of the Listing
 Agreement for different segments of capital markets to ensure better
 enforceability. The said Regulations were effective December 1, 2015.
 The Company entered into Uniform Listing Agreement with BSE Limited and
 National Stock Exchange of India Limited during December, 2015.
 All transactions entered with related parties during the financial year
 2015-16 were on arm''s length basis and in ordinary course of business.
 Further, there were no material related party transactions during the
 year with the Promoters, Directors or Key Managerial Personnel. The
 Company has adopted a Related Party policy and procedure, which is
 available at company''s website.
 The particulars of every contract or arrangements entered into by the
 Company with Related Parties referred in Section 188(1) of the
 Companies Act, 2013, in the prescribed Form No. AOC - 2 attached as
 Annexure ''E''. MCA vide Notification dated 05/06/2015, has exempted the
 applicability of Section 188 (1) of the Companies Act, 2013 for a
 transaction entered into between two Government Companies.
 Policy on Directors'' Appointment
 MRPL being a Government Company, the provisions of Section 134(3) (e)
 of the Companies Act, 2013 shall not apply in view of the MCA
 notification dated 05/06/2015.
 Changes in the Board of Directors and Key Managerial Personnel during
 the financial year 2015-16.
 Shri M. Venkatesh assumed the office of Director (Refinery) on 1st
 April, 2015 and elected as a Director in the 27th Annual General
 Meeting held on 08/08/2015. Shri Nalin Kumar Srivastava, Deputy
 Secretary, MoP&NG was appointed as Additional Director with effect from
 5th March, 2015 and elected as a Director in the 27th Annual General
 Meeting held on 08/08/2015. Shri Nalin Kumar Srivastava, ceased to be a
 Director w.e.f 3rd March 2016 consequent upon withdrawal of his
 nomination by MoP&NG.  Smt. Perin Devi, Director of MoP&NG was
 appointed as additional Director with effect from 14th May, 2015 and
 elected as a Director in the 27th Annual General Meeting held on
 08/08/2015. Shri A. K.  Sahoo, assumed the office of Director (Finance)
 with effect from 1st February, 2016. He vacates his office as
 Additional Director in this AGM and being eligible offers himself for
 appointment as Director (Finance) in the 28th Annual General Meeting.
 Shri Diwakar Nath Misra, Director (GP) of MoP&NG was appointed as
 Additional Director with effect from 9th March, 2016, vacates his
 office as Additional Director in this AGM and being eligible offers
 himself for appointment as Director in the 28th Annual General Meeting.
 Shri Vishnu Agrawal, ceased to be a Director consequent upon his
 superannuation from the services of MRPL on 31st January, 2016.The
 Board places on record its appreciation for the valuable services
 rendered by the outgoing Directors during their respective tenure.
 Independent Directors on the Board of Directors of the Company are yet
 to be nominated by the Ministry of Petroleum and Natural Gas
 (MoP&NG).The matter is regularly followed with the Ministry.
 MRPL being a Government Company, the provisions of Section 134(3) (p)
 of the Companies Act, 2013 shall not apply in view of the MCA
 notification dated 05/06/2015.
 Pursuant to provisions of Section 134 of the Companies Act, 2013, the
 Board of Directors of your Company has made the following statement for
 FY 2015-16:
 a) In the preparation of the Annual Accounts for the year ended March
 31, 2016, the applicable Accounting Standards have been followed along
 with proper explanation relating to material departures;
 b) The Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the company at the end of the financial year and of the Profit of
 the company for that period;
 c) The Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 2013 for safeguarding the assets of
 the company and for preventing and detecting fraud and other
 d) The Directors have prepared the Annual Accounts on a going concern
 e) The Directors have laid down internal financial controls to be
 followed by the company and that such internal financial controls are
 adequate and were operating effectively; and
 f) The Directors have devised proper systems to ensure compliance with
 the provisions of all applicable laws and that such systems are
 adequate and operating effectively.
 The Board of Directors of your Company had seven (7) Meetings during
 the FY 2015-16. The maximum interval between any two meetings did not
 exceed 120 days as prescribed in the Companies Act, 2013. Details of
 the Board Meetings held, have been furnished in the Corporate
 Governance Report which forms part of this Report.
 The Audit Committee has been constituted as per the terms of reference,
 prescribed under Section 177 of the Companies Act, 2013 read with Rule
 6 of the Companies (Meetings of the Board and its Powers) Rules, 2014,
 Regulation 18 of SEBI Listing Regulation, 2015 and Guidelines on
 Corporate Governance for Central Public Sector Enterprise issued by
 Department of Public Enterprise, Government of India. There have been
 no instances where the recommendations of the Audit Committee were not
 accepted by the Board of Directors. The details of Audit Committee are
 disclosed in the Corporate Governance Report which forms part of this
 Report. MRPL being a Central Public Sector Enterprise (CPSE), Directors
 on the Board of the company are appointed by the Administrative
 Ministry i.e. Ministry of Petroleum and Natural Gas (MoP&NG),
 Government of India.
 Due to non-availability of Independent Directors, the Audit Committee
 is not constituted as per the provisions of the Companies Act, 2013 &
 SEBI Listing Regulation, 2015.
 Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of
 SEBI Listing Regulations, 2015 and DPE guidelines on Corporate
 Governance for CPSE, your Company has constituted a Nomination and
 Remuneration Committee.  The details on the Nomination and Remuneration
 Committee are disclosed in Corporate Governance Report which forms part
 of this report.
 MRPL is a ''Schedule A'' category-1 Miniratna Central Public Sector
 Enterprise (CPSE). The appointment, terms, conditions and remuneration
 of Managing Director and Functional Directors (Whole-time Directors)
 are fixed by the Department of Public Enterprises (DPE), Govt. of
 India. MRPL being a Central Public Sector Enterprise (CPSE), Directors
 on the Board of the company are appointed by the Administrative
 Ministry i.e. Ministry of Petroleum and Natural Gas (MoP&NG),
 Government of India.
 Due to non-availability of Independent Directors, the Nomination and
 Remuneration Committee is not constituted as per the provisions of the
 Companies Act, 2013 & SEBI Listing Regulation, 2015.
 Your Company has a well-defined policy framework for Enterprise Risk
 Management formulated by Deloitte. Risk Managers are continuously
 monitoring the Risks pertaining to their area. Risk Management
 Committee was reconstituted consisting of majority of Directors
 pursuant to Regulation 21 of SEBI Listing Regulation, 2015 which
 monitors and evaluates the risk overview document once in quarter and
 recommends the same to the Audit Committee for evaluation. The Risk
 Management Committee''s overview document is duly reviewed by the Audit
 Committee and placed before the Board on quarterly basis.
 There are no significant and material orders passed by the Regulators /
 Courts / Tribunals that would impact the going concern status of the
 Company and its future operations.
 The Companies Act, 2013 and SEBI Listing Regulations, 2015 have
 strengthened the governance regime in the country.  Your Company is in
 compliance with the governance requirements provided under the
 Companies Act, 2013 and SEBI Listing Regulations, 2015 and has complied
 with all the mandatory provisions of the Companies Act, 2013 and Rules
 made thereunder and SEBI Listing Regulation, 2015 relating to the
 Corporate Governance requirements and mandatory guidelines on Corporate
 Governance for CPSEs issued by DPE, Government of India, except for the
 presence of requisite number of Independent Directors on the Board and
 Board Committees. The Corporate Governance Report for the FY 2015- 16
 forms part of this Report.
 Pursuant to Schedule V of the SEBI Listing Regulations, 2015, the
 Auditors'' Certificate on compliance of conditions of Corporate
 Governance also forms part of the Annual report. The Auditors have made
 observations on the appointment of Independent Directors on the Board
 of the Company. The Company is pursuing with the Ministry of Petroleum
 & Natural Gas (MOP&NG) for the appointment of requisite number of
 Independent Directors.
 Pursuant to requirements of the Companies Act, 2013 and SEBI Listing
 Regulations, 2015, following policies/codes have been formulated and
 uploaded on the Company''s website at :
 a) Code of Conduct for Board Members and Senior Management Personnel,
 b) Whistle Blower Policy,
 c) Related Party Transactions  Policy and Procedures,
 d) CSR & SD Policy,
 e) Material Subsidiary Policy,
 f) The Code of Internal Procedures and Conduct for prohibition of
 Insider Trading in Dealing with the securities of MRPL,
 g) Policy on Materiality for disclosure of events to the Stock
 h) Policy on preservation of Documents,
 i) Training Policy for Board of Directors.
 SEBI Listing Regulations, 2015 mandated inclusion of Business
 Responsibility Report (BRR) as part of the Annual Report for top 500
 listed entities based on market capitalization. In compliance with the
 Regulation, BRR forms part of this Report.
 In terms of Regulation 34 of the SEBI Listing Regulations, 2015 the
 Management''s Discussion and Analysis Report (MDA) for the FY 2015-16
 forms part of this Report.
 Your Company has a well established Internal Financial Control System
 to ensure an adequate and effective internal control environment that
 provides assurance on efficiency of conducting business, including
 adherence to Company''s policies, the safeguarding of its assets, the
 prevention and detection of frauds and errors, the accuracy and
 completeness of accounting records and the timely preparation of
 reliable Financial information. The Company has appointed an external
 frm of Chartered Accountants, M/s K.Verghese & Co., as Internal
 Auditors for the FY 2015-16 and 2016-17, which is assisted by the
 Company''s Internal Audit Department. The reports of the Internal
 Auditors are reviewed by the Audit Committee and the corrective actions
 on their advice/suggestions, wherever required, are taken. The internal
 financial control is based on quarterly and annual gap analysis on
 which the CEO/CFO certifies the Audit Committee as well Board for
 approving financial statements.
 Joint Statutory Auditors
 M/s Shreedhar, Suresh & Rajagopalan, Chennai and M/s A Raghavendra Rao
 and Associates, Mangalore were the Joint Statutory Auditors of the
 Company for the FY 2015-16.  They have audited the Financial Statements
 for the Financial Year ended 2015-16 and submitted their report which
 forms part of this report. There is no qualification in the Auditors
 Report on the Financial Statements of the company. Notes to the
 Accounts referred to in the Auditors Report are self-explanatory and
 therefore do not call for any further comments.
 Secretarial Auditors
 Your Company has engaged M/s Ullas Kumar Melinamogaru & Associates,
 Practicing Company Secretaries, Mangalore for conducting Annual
 Secretarial Audit for the year 2015-16 pursuant to Section 204 of the
 Companies Act, 2013. M/s Ullas Kumar Melinamogaru & Associates
 Practicing Company Secretaries, Mangalore have issued Secretarial Audit
 Report for the year 2015-16 which forms part of this report as Annexure
 F. The Auditors have made observations on the appointment of
 Independent Directors on the Board of the Company and overtime working
 hours as per the provisions of the Factories Act, 1948. The Company is
 pursuing with the Ministry of Petroleum & Natural Gas (MoP&NG), Govt.
 of India, for the appointment of requisite number of Independent
 Directors.  As regards the observations on working hours, the same has
 been taken up with the Department of Public Enterprises by the Industry
 Cost Auditors
 Pursuant to Section 148 of the Companies Act, 2013 read with the
 Companies (Cost Records and Audit) Amendment Rules, 2014, the cost
 accounts maintained by the company for the FY 2015 16 are being
 audited by Cost Auditors M/s. Bandyopadhyaya Bhaumik & Co., Kolkata.
 M/s. Bandyopadhyaya Bhaumik & Co., Kolkata have been re-appointed as
 Cost Auditor for FY 2016-17.
 The Comments of Comptroller & Auditor General of India (C&AG) forms
 part of this report and are attached as Annexure-G. You would be
 pleased to know that your company has received NIL comments from C&AG
 for the year 2015-16.
 Your Directors wish to thank the shareholders for the continued
 confidence reposed on their Company. Your Directors sincerely thank the
 Government of India (GoI), Ministry of Petroleum and Natural Gas
 (MoP&NG), Ministry of Finance (MoF), Ministry of Corporate Affairs
 (MCA), Department of Public Enterprises (DPE), Ministry of Environment
 and Forest (MoEF), Ministry of External Affairs (MEA), Ministry of
 Shipping (MoS), Ministry of Home Affairs (MHA), other Ministries and
 Departments of the Central Government and the Government of Karnataka,
 for their valuable support, guidance and continued co-operation.
 Your Directors gratefully acknowledge support and direction provided by
 the parent company, Oil and Natural Gas Corporation Limited (ONGC) and
 the support of Hindustan Petroleum Corporation Limited (HPCL), as
 Promoters of the company.  Your Directors acknowledge the continuing
 co-operation and support received from New Mangalore Port Trust,
 Financial Institutions, Banks and all other stakeholder. Your Directors
 recognize the patronage extended by the valued customers for the
 products of the Company and promise to provide them the best
 satisfaction. Your Directors wish to place on record their sincere
 appreciation of the sustained and dedicated efforts put in by all the
 employees collectively and concertedly as a Team known as Team MRPL.
                                     For and on behalf of the Board
                                               (Dinesh Kumar Sarraf) 
 Place: New Delhi 
 Date: 03/08/2016
Source :
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