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CPCL Annual Report 2007

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CHENNAI PETROLEUM CORPORATION LIMITED
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  • Nag

    araj

    & C

    o. P

    vt. L

    td.

  • Continuous Ambient Air Monitoring Station

  • 1Chennai Petroleum Corporation Limited

    Corporate Information 3

    Report to Shareholders 25

    Report of the Statutory Auditors 47

    Financial Information 53

    ECS Mandate Format 87

    Proxy / Attendance Slip 89

    REGISTERED OFFICENo.536, Anna Salai, Teynampet,Chennai - 600 018

    REFINERIESManali RefineryManali, Chennai - 600 068

    Cauvery Basin RefineryPanangudi VillageNagapattinam District, Tamil Nadu

    Visit CPCL atwww.cpcl.co.in

    PRINCIPAL BANKERState Bank of IndiaCorporate Accounts Group BranchGreams Road, Chennai - 600 006

    AUDITORSM/s. Padmanabhan Prakash & Co.Chartered Accountants, Chennai

    M/s. B. Purushottam & Co.Chartered Accountants, Chennai

    REGISTRARS &SHARE TRANSFER AGENTS

    M/s. Karvy Computershare Private LimitedPlot No. 17 to 24, Vithalrao Nagar,

    Madhapur, Hyderabad - 500 081

    G-1, Swathy Court,22, Vijayaraghava Road,T.Nagar, Chennai - 600 017

    33/1, Venkataraman Street,T. Nagar, Chennai - 600 017

    1 Corporate Information.pmd 9/6/2007, 6:29 AM1

  • 21 Corporate Information.pmd 9/6/2007, 6:29 AM2

  • 3Chennai Petroleum Corporation Limited

    Corporate Information

    Board of Directors 4

    Executives 5

    Notice 6

    Corporate Governance 10

    1 Corporate Information.pmd 9/6/2007, 6:29 AM3

  • 4Board of Directors

    Mr. S. BehuriaChairman

    Mr. K.K. AcharyaManaging Director

    Mr. N.C. SridharanDirector (Finance)

    Mr. S. ChandrasekaranDirector (Technical)

    Mr. K. BalachandranDirector (Operations)

    Mr. A.M. UplenchwarDirector (Pipelines)Indian Oil Corporation Limited(upto 31.07.2007)

    Mr. B.N. BankapurDirector (Refineries)Indian Oil Corporation Limited

    Mr. M. VaeziDirector,Naftiran Intertrade CompanyLimited

    Mr. Mansoor RadFinance Director,Naftiran Intertrade CompanyLimited

    Mr. L. SabaretnamChief Executive Officer,ICL Sugars Limited

    Mr. K. Suresh, I.A.S.Chairman, Chennai Port Trust

    Mr. Venkatraman SrinivasanSenior Partner,V. Sankar Aiyar & Co.,Chartered Accountants

    Prof. M.S. AnanthDirector, Indian Institute of Technology, (IIT),Chennai.

    Mr. K.L. KumarFormer Chairman & Managing Director,Kochi Refineries Limited

    Mr. Ravi Capoor, I.A.S.Executive Director, PetroleumConservation Research AssociationGovernment of India

    Mr. Pramod NangiaDirector (M),Government of India,

    Ministry of Petroleum & Natural Gas

    1 Corporate Information.pmd 9/6/2007, 6:29 AM4

  • 5Chennai Petroleum Corporation Limited

    Executives

    Mr. N. Sankaran

    Chief Vigilance Officer

    Mr. N.K. NatarajanGeneral Manager (Development and R & D)

    Mr. R. AnandGeneral Manager (Engineering & Services)

    Mr. V. NatarajanGeneral Manager (Finance)

    Mr. V. SrinivasanGeneral Manager (Human Resources)

    Mr. N.K. RajamaniGeneral Manager (Manufacturing)

    Mr. N.V. KalaivananGeneral Manager (Cauvery Basin Refinery)

    Mr. D. SelvarajGeneral Manager (Maintenance)

    Mr.K. SankarGeneral Manager (Projects)

    Mr. R. ChidambaramGeneral Manager (Logistics and Utilities)

    Mr. M. SankaranarayananCompany Secretary

    1 Corporate Information.pmd 9/6/2007, 6:29 AM5

  • 6Notice

    Notice is hereby given that the 41st

    Annual General Meeting of the Shareholders of the Company will be held at

    3.00 P.M. on Monday the 10th

    September 2007 at Kamaraj Arangam, 492, Anna Salai, Teynampet, Chennai-600 006 to

    transact the following businesses:

    ORDINARY BUSINESSES:

    1. To receive, consider and adopt the Audited Profit & Loss Account of the Company for the period from 1st

    April 2006

    to 31st

    March 2007 and the Audited Balance Sheet as at 31st

    March 2007, together with the Directors Report and the

    Auditors Report.

    2. To declare Dividend.

    3. To appoint a Director in place of Mr.Sarthak Behuria, who retires and being eligible, offers himself for re-appointment.

    4. To appoint a Director in place of Mr.N.C.Sridharan, who retires and being eligible, offers himself for re-appointment.

    5. To appoint a Director in place of Mr.S. Chandrasekaran, who retires and being eligible, offers himself for

    re-appointment.

    6. To appoint a Director in place of Mr.L.Sabaretnam, who retires and being eligible, offers himself for re-appointment.

    7. To appoint a Director in place of Mr.B.N.Bankapur, who retires and being eligible, offers himself for re-appointment.

    8. To appoint a Director in place of Mr.Venkatraman Srinivasan, who retires and being eligible, offers himself for

    re-appointment.

    9. To appoint a Director in place of Mr.K.Suresh, who retires and being eligible, offers himself for re-appointment.

    10. To appoint a Director in place of Mr.K.L. Kumar, who retires and being eligible, offers himself for re-appointment.

    11. To appoint a Director in place of Prof. M.S. Ananth, who retires and being eligible, offers himself for re-appointment.

    12. To appoint a Director in place of Mr.Ravi Capoor, who retires and being eligible, offers himself for re-appointment.

    13. To appoint a Director in place of Mr.Pramod Nangia, who retires and being eligible, offers himself for re-appointment.

    SPECIAL BUSINESS:

    14. APPOINTMENT OF MR.K. BALACHANDRAN AS A DIRECTOR

    To consider and, if thought fit, to pass, with or without modifications, the following resolution as an Ordinary

    Resolution:

    RESOLVED that Mr.K. BALACHANDRAN be and is hereby appointed as a Director of the Company.

    By order of the Board

    Date : 06.08.2007 M. SANKARANARAYANAN

    Place : Chennai Company Secretary

    1 Corporate Information.pmd 9/6/2007, 6:29 AM6

  • 7Chennai Petroleum Corporation Limited

    Notes:

    1. A member entitled to attend and vote at the meeting is entitled to appoint another person as his proxy to

    attend and vote instead of himself.

    2. The proxy need not be a member of the Company.

    3. The instrument of Proxies, in order to be effective, must be lodged at the Registered Office of the Company

    not later than 48 hours before the time of holding the meeting.

    4. Members/Proxies should bring their attendance slip, duly filled in, to the meeting.

    5. Members, who hold shares in the dematerialised form, are requested to bring their depository account

    number for identification at the time of Annual General Meeting.

    6. An Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 in respect of resolutions

    set out under Special Business of the Notice is annexed.

    7. The Register of Members and the Share Transfer Books of the Company will remain closed from 28.8.2007

    to 10.9.2007 (both days inclusive).

    8. Members are requested to immediately intimate any change in their addresses registered with the Company.

    9. Members are informed that the Company is extending the Electronic Clearing Service (ECS) facility to the

    Members to enable them to receive their Dividend through electronic mode to their bank account. In order

    to avail the ECS facility, the Members are requested to fill, sign and send the ECS mandate form, which

    forms part of this Annual Report, alongwith a photocopy of the cheque issued by the Bank for verifying the

    accuracy of the MICR Code Number, to:

    (a) M/s.Karvy Computershare Private Limited, Plot No.17 to 24, Vithalrao Nagar, Madhapur, Hyderabad

    500 081 (in case of Members holding shares in physical mode).

    (b) the Depository Participants concerned (in case of Members holding shares in electronic mode/

    dematerialized form).

    10. The shares of the company are compulsorily traded in dematerialized form and therefore, the shareholders

    are requested to dematerialize their shares to facilitate trading in CPCL shares.

    11. As per the provisions of the Companies Act, 1956, shareholders are entitled to make nomination in respect

    of shares held by them in physical form. Nomination form can be downloaded from the website of the

    company at www.cpcl.co.in.

    12. The Board of Directors have recommended a Dividend of 120% for the year 2006-2007. Dividend, upon its

    declaration at the Meeting, will be paid in respect of physical shares to those Members, whose names

    appear in the Register of Members of the Company as on 10th September 2007 and in respect of electronic

    shares, to those members, whose names appear in the Beneficial List to be furnished by the depositories

    to the Company for this purpose.

    13. A brief Resume of the Directors of the Company, seeking appointment/re-appointment at this Annual General

    Meeting, and their expertise in specific functional areas, is given as part of the Explanatory Statement.

    14. Inspection of Documents:- The relevant documents are available for inspection by the members at the

    Registered Office of the Company at any time during the working hours till the date of the meeting.

    1 Corporate Information.pmd 9/6/2007, 6:29 AM7

  • 8Explanatory Statement pursuant to Section 173 (2) of the Companies Act, 1956

    Item No.14

    Mr. K. Balachandran was appointed as an Additional Director with effect from 01.10.2006. As per the provisions of

    Section 260 of Companies Act, 1956, Mr.K.Balachandran will hold office only upto the date of the forty first AnnualGeneral Meeting.

    A Notice under Section 257 of the Companies Act, 1956 has been received proposing the appointment ofMr.K. Balachandran as a Director. Hence, this resolution is proposed.

    Memorandum of Interest:-

    None of the Directors is interested in the resolution except Mr.K.Balachandran.

    BRIEF RESUME OF THE DIRECTORS OF THE COMPANY, SEEKING APPOINTMENT/RE-APPOINTMENT AT THE

    41st ANNUAL GENERAL MEETING

    1. Mr.Sarthak Behuria was appointed on the Board effective 01.03.2005. He is an alumnus of St. Stephens College,

    Delhi and the Indian Institute of Management (IIM), Ahmedabad. He has more than three decades of experience

    in the field of refining and marketing. He joined Burma Shell in 1973 before he was absorbed in BPCL, where he

    served across the country, handling key portfolios in Supply and Distribution, Sales, Industrial Relations and

    Downstream Infrastructure. He took over as Director (Marketing) of BPCL in 1998, as CMD of BPCL in July 2002

    and Chairman of IOCL in March 2005.

    Mr.Sarthak Behuria is presently the Chairman of Indian Oil Corporation Limited, Bongaigaon Refinery and

    Petrochemicals Limited, IndianOil Tanking Limited, Lanka-IOC Limited and IndianOil Skytanking Limited.

    2. Mr.N.C.Sridharan was appointed on the Board effective 05.03.2004, as Director (Finance). He is a Chartered Accountant

    and an Associate Member of the Institute of Company Secretaries of India. He has three decades of experience in

    Engineering, Chemical and Pharmaceuticals, Fibre, Cement, Cotton Spinning and Software industries in Corporate

    Finance, Treasury, Accounts, Loans Syndication, Project Finance, Commercial Taxation Direct & Indirect and Secretarial

    & Legal. Prior to his appointment as Director (Finance), he was General Manager (Finance) in CPCL.

    Mr.N.C.Sridharan is also a Director on the Board of Indian Additives Limited and National Aromatics and

    Petrochemicals Corporation Limited. He is a member of the Shareholders/ Investors Grievance Committee and

    Board Projects Sub-Committee of CPCL and Audit Committee of Indian Additives Limited.

    3. Mr.S.Chandrasekaran was appointed on the Board effective 2.7.2006, as Director (Technical). He holds B.Tech

    Degree in Chemical Engineering from the Regional Engineering College, Trichy. Prior to joining CPCL in 1981,

    he had worked in Fertilizers Corporation of India Limited for six years. He has more than two decades of

    experience in the areas of Operations, Projects and Development, which includes two years as Head of Operations

    Section in KNPC, Kuwait. Prior to his appointment as Director (Technical), he was General Manager (i/c) in CPCL.

    Mr. S. Chandrasekaran is also a Director on the Board of National Aromatics and Petrochemicals Corporation Limited.

    He is a Member of the Shareholders / Investors Grievance Committee and Board Projects Sub-Committee of CPCL.

    4. Mr.L.Sabaretnam was appointed on the Board effective 28.02.2002. He is a Post-Graduate in Business

    Administration from the University of Madras. He is the Chief Executive Officer of ICL Sugars Limited.

    Mr.L.Sabaretnam is the Chairman of Oriental Solutions Private Limited, Oriental Billing Services Private Limited,

    Archi Structural Constructions India Pvt. Ltd., and LMS Builders & Engineers Pvt. Ltd. He is a Director of Biosynth

    Life Sciences India Limited and Instream Solutions Limited.

    He is an Advisor of India Cements Limited and Trustee of T.S.Narayanaswamy College of Arts and Science. He is

    a member of various business associations and social bodies.

    Mr.L.Sabaretnam is the Chairman of the Audit Committee, Shareholders/Investors Grievance Committee and

    Board Projects Sub- Committee of CPCL.

    5. Mr.B.N.Bankapur was appointed on the Board effective 17.01.2005. He is a Chemical Engineer from National

    Institute of Technology, University of Mysore. He has three decades of experience in different areas of Refinery

    Technology. He has also gained valuable experience in different activities like monitoring / execution and

    commissioning of Indias first riser type FCC Project, trouble shooting, process safety and pollution control.

    Mr.B.N.Bankapur is presently the Director (Refineries) of Indian Oil Corporation Limited. He is also a Director on

    the Board of Engineers India Limited. He is a Member of the Board Projects Sub-Committee of CPCL. He is also

    a Member of the Audit Committee of Engineers India Limited.

    1 Corporate Information.pmd 9/6/2007, 6:29 AM8

  • 9Chennai Petroleum Corporation Limited

    6. Mr.Venkatraman Srinivasan was appointed on the Board effective 15.4.2005. He is a Commerce Graduate and

    Fellow Member of the Institute of Chartered Accountants of India. He is a Senior Partner of M/s.V.Sankar Aiyar & Co.,

    Chartered Accountants, Mumbai, who are the Statutory Auditors of many leading corporate houses in the country.

    Mr.Venkatraman Srinivasan is also a Director on the Board of Karanja Infrastructure Pvt. Ltd. and Credit Analysis

    and Research Limited (CARE). He is a Member of the Audit Committee of CPCL. He is also the Chairman of the

    Audit Committee, Investment Committee, ESOP Compensation Committee and Remuneration Committee of

    CARE. He is also a Member of the Nomination Committee of CARE.

    7. Mr.K.Suresh was appointed on the Board effective 19.10.2004. He holds a Masters Degree in Fisheries Science

    from the College of Fisheries, University of Agricultural Sciences, Bangalore. He also holds a Masters Degree in

    Science from University of Manchester, Institute of Science and Technology, Manchester, U.K. He belongs to the

    1982 batch of Indian Administrative Service. He is currently the Chairman, Chennai Port Trust. He has more than

    two decades of experience in different Departments of Government of Madhya Pradesh.

    Mr.K.Suresh is also a Director on the Board of Ennore Port Limited and Sethusamudram Corporation Limited. He

    is the Chairman of the Audit Committee and Member of the Share Transfer Committee of Ennore Port Limited. He

    is also a Member of the Audit Committee and Recruitment Committee of Sethusamudram Corporation Limited.

    8. Mr.K.L.Kumar was appointed on the Board effective 31.12.2005. He holds a Bachelors Degree in Mechanical

    Engineering. He has 15 years of experience in Engineering Consultancy Services in various organizations. He

    has also served 22 years in Kochi Refineries Limited, where he joined as DGM (Technical Services) and elevated

    to the post of CMD. He served as CMD of Kochi Refineries Limited for 11 years.

    Mr.K.L.Kumar is also a Director on the Board of Kerala Chemicals and Proteins Limited. He is a Member of the

    Audit Committee of CPCL. He is also a Member of Audit Committee, Shareholders/Investors Grievance Committee

    and Remuneration Committee of Kerala Chemicals and Proteins Limited.

    9. Prof.M.S.Ananth was appointed on the Board effective 31.12.2005. He holds a B.Tech and a Masters Degree in

    Engineering and Ph.D from Florida University. Presently, he is Director, Indian Institute of Technology, Chennai.

    He joined as Assistant Professor at IIT, Chennai and elevated to the post of Director. He worked as a Visiting

    Professor in various Universities all over the World. He is also a Fellow Member in various Professional Bodies.

    He is also a Director of Neyveli Lignite Corporation Limited and Medlab Asia. He is also the Chairman of the Audit

    Committee of Neyveli Lignite Corporation Limited.

    10. Mr.Ravi Capoor was appointed on the Board effective 27.2.2006. He belongs to Indian Administrative Service

    (IAS). He has more than two decades of multi-sectoral experience in the areas of Energy, Handicrafts industry,

    Tourism development, Education, etc. Presently, he is Executive Director, Petroleum Conservation Research

    Association, Government of India.

    Mr.Ravi Capoor is also a Director on the Board of Engineers India Limited.

    11. Mr.Pramod Nangia was appointed on the Board effective 27.2.2006. He is a Bachelor in Economics and Laws

    from the University of Delhi. He belongs to Indian Revenue Service (IRS). He joined IRS in 1985 and over the

    years, has specialized in the administration and functioning of direct taxes in India. Presently, he is Director

    (Marketing) in the Ministry of Petroleum and Natural Gas, Government of India.

    12. Mr. K. Balachandran was appointed on the Board effective 01.10.2006. He is a graduate in Chemical Engineering

    from Government Engineering College, Trichur. He has a Post Graduate Diploma in Management from the

    Management Development Institute, Gurgaon under the National Management Programme. He joined Indian Oil

    Corporation Limited in 1977 as a Graduate Engineer Trainee. He has worked through various levels in the

    Refineries of IOCL at Gujarat and Barauni, handling assignments in Operations, Technical Services and Project

    Commissioning. He has also served in the Refineries Division Headquarters of IOCL.

    Mr. K. Balachandran has been trained in Petroleum Refining Engineering at the Indian Institute of Petroleum,

    Dehradun and in Refinery Planning and Economics at the College of Petroleum Studies, Oxford.

    Prior to his appointment as Director (Operations), he was General Manager (Technical) at Gujarat Refinery of IOCL.

    Mr. K. Balachandran is also a Director on the Board of Indian Additives Limited. He is a Member of the Audit

    Committee of Indian Additives Ltd.

    By order of the Board

    Date : 06.08.2007 M.SANKARANARAYANAN

    Place : Chennai Company Secretary

    1 Corporate Information.pmd 9/6/2007, 6:29 AM9

  • 10

    Corporate Governance

    1.0 COMPANYS PHILOSOPHY ON CORPORATE GOVERNANCE

    Corporate Governance is a systemic process by which Companies are managed to enhance their wealth

    creating capacity. CPCL is of the view that the Governance process should ensure that various resources which

    are utilized by the Company meets not only the aspirations of the shareholders but also the expectations of the

    society.

    Trusteeship, transparency, empowerment, accountability and ethical corporate citizenship remain the core

    principles of the Corporate Governance philosophy of CPCL. CPCL is firm in its belief that the practice of each

    of the above principles will create the right corporate culture that fulfills the true purpose of Corporate Governance.

    CPCL always strives to adopt best Corporate Governance practices and in recognition of this fact, CPCL was

    shortlisted as one of the top twenty five companies, adopting good Corporate Governance Practices by the

    Institute of Company Secretaries of India for the year 2006 out of 200 companies.

    CPCL is also one among the 17 finalists, out of 77 participants in the Golden Peacock Award for Excellence in

    Corporate Governance for the year 2006 organized by the Institute of Directors, New Delhi.

    2.0 GOVERNANCE STRUCTURE

    2.1 The practice of Corporate Governance in CPCL is at the following three levels which are interlinked :

    a) BOARD OF DIRECTORS :

    The Board of Directors of the Company comprises of professionals with experience in different

    functional areas, representatives from Indian Oil Corporation Limited, the holding Company and from

    National Iranian Oil Company, the foreign collaborator and eminent personalities with expertise in

    technology, Finance and Industry as Independent Directors.

    The primary role of the Board is to provide strategic guidance and supervision. The Board exercises

    appropriate control to ensure that the Company is managed in a professional manner to fulfill the

    aspirations of all the stakeholders.

    b) EXECUTIVE COMMITTEE :

    The Executive Committee of the Company comprises of Managing Director, Functional Directors,

    Chief Vigilance Officer and Company Secretary. This Executive Committee meets once in 15 days

    to review the performance of the Company.

    c) MANAGEMENT COMMITTEE :

    The Management Committee of the Company comprises of all the Heads of Department, which

    meets once in a month to review the performance of the Company and share key information.

    3.0 BOARD OF DIRECTORS

    3.1 The Board of Directors of CPCL consisted of sixteen Directors as on 31.03.2007.

    3.2 The break-up of the total composition of the Board as on 31.3.2007 is as follows:

    3.2.1 One Non-Executive Chairman, who is the Chairman of Indian Oil Corporation Limited (the

    Holding Company).

    3.2.2 Four whole-time Functional Directors, viz., Managing Director, Director (Technical), Director

    (Finance) and Director (Operations).

    1 Corporate Information.pmd 9/6/2007, 6:29 AM10

  • 11

    Chennai Petroleum Corporation Limited

    3.2.3 Director (Pipelines) and Director (Refineries) of Indian Oil Corporation Limited.

    3.2.4 One Director, who is the Chairman, Chennai Port Trust.

    3.2.5 Two Directors nominated by National Iranian Oil Company, one of the promoters, in terms of the

    Formation Agreement.

    3.2.6 Two Directors from the Administrative Ministry, viz., Ministry of Petroleum and Natural Gas. **

    3.2.7 Four non-official Directors.

    ** One of the Directors from MoP&NG, viz., Mr. Ravi Capoor has been appointed as Executive

    Director, Petroleum Conservation Research Association (PCRA) with effect from 17.04.2007 as

    per the Communication received from MoP&NG.

    3.3 Out of the total number of sixteen Directors as on 31.3.2007, twelve Directors were Non-Executive

    Directors. The Company has a Non-Executive Chairman. The number of Independent Directors, in such

    a case, needs to be one-third of the total number of Directors. With the total number of non-executive

    independent Directors being five as on 31.3.2007, the Company met the requirement of minimum

    number of Independent Directors as stipulated in the Listing Agreement.

    3.4 Conduct of Board Meetings

    The Board Meetings are governed by a structured agenda. All the Board agenda items alongwith

    detailed agenda notes are circulated atleast one week in advance to enable the Board to take informed

    decisions. The action taken report in respect of decisions taken at the previous Board Meetings are

    placed before the subsequent meetings of the Board for effective follow-up.

    3.5 Information placed before the Board

    Apart from the items that are required to be placed before the Board under the statute for approval and

    also as per the requirements of the Listing Agreement, items like Physical performance, Financial

    performance including Investment of surplus funds, borrowal of funds, Cash Flow Statement, Capital

    Budgets, Revenue Budgets, manpower position, etc. are placed for review by the Board.

    3.6 Six Board Meetings were held during the year 2006-07. The dates on which the Board Meetings were

    held are given below:

    Board Meeting No. Board Meeting Date

    243 14.05.2006

    244 25.07.2006

    245 25.08.2006

    246 23.10.2006

    247 20.01.2007

    248 29.03.2007

    3.7 Details relating to:

    (a) Attendance of Directors at the Board Meetings held during the financial year April 2006 to March

    2007 and at the last Annual General Meeting held on 25.08.2006,

    (b) Number of other directorships, and

    1 Corporate Information.pmd 9/6/2007, 6:29 AM11

  • 12

    Mr.S.Behuria 6 Yes 6 - -

    Mr. K.K. Acharya 6 Yes 2 - -

    Mr.N.C.Sridharan 6 Yes 2 2 -

    Mr.R.Sankaran

    (Refer Note 1) - - 1 1 -

    Mr. S. Chandrasekaran

    (Refer Note 2) 5 Yes 1 1 -

    Mr.A.Kasturi Rangan

    (Refer Note 3) 3 Yes 1 1 -

    Mr. K. Balachandran

    (Refer Note 4) 3 NA 1 1 -

    Mr.A.M.Uplenchwar 6 Yes 6 5 -

    Mr.B.N.Bankapur 3 No 2 1 -

    Mr.L.Sabaretnam 6 Yes 8 - 3

    Mr.K.Suresh 3 Yes 3 3 1

    Mr. Venkatraman Srinivasan 5 Yes 3 2 4

    Mr. K.L. Kumar 3 Yes 1 4 -

    Prof. M.S. Ananth 3 No 3 - 1

    Mr. Ravi Capoor 3 No 1 - -

    Mr. Pramod Nangia 4 Yes 1 1 -

    Mr. Mansoor Rad or his alternate Director 6 Yes 1 2 -

    Mr.M.Vaezi or his alternate Director 5 Yes 1 3 -

    Notes:-

    1. Mr.R. Sankaran, Director (Technical), ceased to be a Director on attaining the age of superannuation effective

    30.04.2006. No Board Meetings were held during his tenure, in the financial year 2006-07.

    2. Mr. S. Chandrasekaran was appointed as Director (Technical) effective 02.07.2006. After his appointment, five

    Board Meetings were held in the Financial year 2006-07.

    3. Mr. A. Kasturi Rangan, Director (Operations), ceased to be a Director on attaining the age of superannuation

    effective 30.09.2006. During his tenure, three Board Meetings were held in the financial year 2006-07.

    4. Mr. K. Balachandran, General Manager (Technical Services), Indian Oil Corporation Limited was appointed as

    Director (Operations) effective 01.10.2006. After his appointment, three Board Meetings were held in the

    financial year 2006-07.

    (c) Number of memberships / chairmanships held by the Directors in the committees of various companies,

    are given below:

    Name of the Directors No. of Board Whether Other Committee Committee

    Meetings attended last Directorships Memberships Chairmanships

    attended AGM?

    1 Corporate Information.pmd 9/6/2007, 6:29 AM12

  • 13

    Chennai Petroleum Corporation Limited

    4.0 COMMITTEES OF THE BOARD

    4.1 Currently, there are three Sub-Committees of the Board, viz., Audit Committee, Shareholders/ Investors

    Grievance Committee and Projects Sub-Committee.

    4.2 The terms of reference of the above Committees are determined by the Board from time to time. Meetings

    of each Committee are convened as and when necessary. The minutes of each Committee after approval

    by the concerned Chairman are circulated to the members of the Committee for information and also to

    the concerned officials for necessary action. The approved minutes are also placed before the meeting

    of the Board for information.

    4.3 AUDIT COMMITTEE

    4.3.1 Composition of the Committee as on 31.3.2007:-

    1. Mr.L.Sabaretnam, Chief Executive Officer, ICL Sugars Limited, Chennai.

    2. Mr.Mansoor Rad, Financial Director, Naftiran Intertrade Company Limited or his Alternate Director.

    3. Mr. Venkatraman Srinivasan, Senior Partner, M/s. V. Sankar Aiyar & Co., Chartered Accountants,

    Mumbai.

    4. Mr.K.L. Kumar, Former Chairman and Managing Director, Kochi Refineries Limited, Kochi

    Note : Mr. Mansoor Rad, Financial Director, Naftiran Intertrade Company Limited, Tehran, Iran was inducted as

    a member of the Audit Committee in place of Mr. M.B. Samiei Khonsari effective 14.05.2006.

    Mr.L.Sabaretnam is the Chairman of the Committee.

    4.3.2 Terms and reference of Audit Committee:-

    The Audit Committee has been vested with the following powers and functions:

    4.3.3 POWERS

    1. To investigate any activity within its terms of reference;

    2. To seek information from any employee;

    3. To obtain outside legal or other professional advice;

    4. To secure attendance of outsiders with relevant expertise, if it considers necessary.

    5. To have full access to information contained in the records of the company and external professional

    advice, if necessary.

    4.3.4 FUNCTIONS

    1. Oversight of the Companys financial reporting process and the disclosure of its financial information

    to ensure that the financial statement is correct, sufficient and credible.

    2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or

    removal of the statutory auditor and the fixation of audit fees.

    3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

    4. Reviewing with the management, the annual financial statements before submission to the Board for

    approval, with particular reference to :

    a) Matters required to be included in the Directors Responsibility Statement to be included in the

    Boards Report in terms of Clause (2AA) of Section 217 of the Companies Act, 1956.

    b) Changes, if any, in accounting policies and practices and reasons for the same.

    c) Major accounting entries involving estimates based on the exercise of judgement by management.

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  • 14

    d) Significant adjustments made in the financial statements arising out of audit findings.

    e) Compliance with listing and other legal requirements relating to financial statements.

    f) Disclosure of any related party transactions.

    g) Qualifications in draft audit report.

    5. Reviewing with the management, the quarterly financial statements before submission to the Board

    for approval.

    6. Reviewing with the management, the performance of statutory and internal auditors, adequacy of the

    internal control systems.

    7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit

    department, staffing and seniority of the official heading the department, reporting structure coverage

    and frequency of internal audit.

    8. Discussion with internal auditors any significant findings and follow up thereon.

    9. Reviewing the findings of any internal investigations by the internal auditors into matters where there

    is suspected fraud or irregularity or a failure of internal control systems of a material nature and

    reporting the matter to the Board.

    10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit

    as well as post-audit discussion to ascertain any area of concern.

    11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders,

    shareholders (in case of non-payment of declared dividends) and creditors.

    12. To review the functioning of the Whistle-Blower Mechanism, in case the same is existing.

    13. Any other functions that may be assigned by the Board to the Audit Committee from time to time.

    4.3.5 The first Audit Committee Meeting for the financial year 2006-07 was held on 13.05.2006. Mr.L.Sabaretnam

    and Mr.Venkatraman Srinivasan were present. Leave of absence was granted to Mr. K.L. Kumar.

    4.3.6 The second meeting was held on 25.07.2006. Mr.L.Sabaretnam, Mr.Venkatraman Srinivasan and

    Mr.Mansoor Rad were present. Leave of Absence was granted to Mr. K.L. Kumar.

    4.3.7 The third meeting was held on 23.10.2006. Mr.L.Sabaretnam, Mr.Venkatraman Srinivasan,

    Mr. K.L. Kumar and Mr.Mansoor Rad were present.

    4.3.8 The fourth meeting was held on 20.01.2007. Mr.L.Sabaretnam, Mr.Venkatraman Srinivasan and

    Mr.Mansoor Rad were present. Leave of Absence was granted to Mr. K.L. Kumar.

    4.3.9 The fifth meeting was held on 23.02.2007. Mr.L.Sabaretnam, Mr.Venkatraman Srinivasan and

    Mr.K.L. Kumar were present. Leave of absence was granted to Mr. Mansoor Rad.

    4.4 REMUNERATION COMMITTEE

    4.4.1 The need for a Remuneration Committee is not felt by the Company in view of the fact that the Company

    is a Government Company as per Section 617 of the Companies Act, 1956. The Remuneration of the

    whole time Functional Directors are fixed by the Government of India.

    4.4.2 The details of Remuneration paid to all the Functional Directors are given below:

    The remuneration of the whole time Functional Directors include basic salary, allowances and perquisites

    as determined by the Government of India. Also, they are entitled to provident fund and superannuation

    contributions as per the rules of the Company.

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  • 15

    Chennai Petroleum Corporation Limited

    Mr.K.K. Acharya,

    Managing Director 11.44 0.86 - 0.29 12.59

    Mr. N.C. Sridharan,

    Director (Finance) 7.59 0.58 0.59 1.14 9.90

    Mr.R.Sankaran,

    Director (Technical)

    (Refer Note 1) 4.57 0.06 0.06 0.02 4.71

    Mr. S. Chandrasekaran

    Director (Technical)

    (Refer Note 2) 9.66 0.77 0.72 0.17 11.32

    Mr.A.Kasturi Rangan,

    Director (Operations)

    (Refer Note 3) 8.74 0.75 0.37 0.08 9.94

    Mr. K. Balachandran

    Director (Operations)

    (Refer Note 4) 4.87 0.32 0.00 0.05 5.24

    Name of the Director Salaries & Contribution to Contribution to Other Total

    Allowances Provident Fund Superannuation Benefits

    Fund and Gratuity

    Note 1 : Details given are for part of the year only since Mr. R.Sankaran, superannuated on 30.04.2006.

    Note 2 : Details given are for part of the year only since Mr.S. Chandrasekaran assumed charge as

    Director (Technical) effective 02.07.2006.

    Note 3 : Details given are for part of the year only since Mr. A. Kasturi Rangan superannuated on 30.09.2006.

    Note 4 : Details given are for part of the year only since Mr. K. Balachandran assumed charge as

    Director (Operations) effective 01.10.2006.

    4.4.3 The whole time functional Directors are appointed for a period of five years or upto the date of

    superannuation, whichever event occurs earlier.

    4.4.4 No stock option scheme is prevalent in the Company.

    4.4.5 The Company pays sitting fees of Rs.10,000/- for each meeting of the Board/Sub-Committee of the

    Board, to each of the Non-Executive Directors, who are not the full-time employees of the shareholders.

    The details of the sitting fees paid during the financial year are given below:

    Mr.L.Sabaretnam - Rs. 1,60,000/-

    Mr.K.Suresh - Rs. 25,000/-

    Mr. Venkatraman Srinivasan - Rs. 90,000/-

    Mr. K.L. Kumar - Rs. 50,000/-

    Prof. M.S. Ananth - Rs. 30,000/-

    Note : The amount of sitting fee has been increased from Rs. 5000/- to Rs. 10000/- by the Board of Directors of the

    Company at the 244th Board Meeting held on 25.07.2006 for attending each Meeting of the Board / Sub-

    Committee of the Board.

    The gross value of the fixed component of the remuneration, as explained above, paid to the whole time

    functional Directors, during the financial year 2006-07 is given below:

    (Rs. in Lakhs)

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    4.4.6 Criteria for payment to Non-executive Directors :

    As per Article 90 A of the Articles of Association of the Company, the remuneration payable to the

    Directors of the Company, other than full-time Directors of the Company or Full-time employees of the

    Shareholders for attendance at Meetings of Board of Directors or any Committee thereof, shall be fixed

    by the Board of Directors of the Company from time to time.

    In line with the above article, the Board of Directors of the Company at the 220th Meeting held on

    28.10.2002 has fixed a sum of Rs. 5000/- as Sitting fees to certain categories of non-executive Directors

    who are not the full-time employees of the shareholders of the Company for attendance at every

    meeting of the Board of Directors or any Committee thereof.

    The above sum of Rs. 5000/- has been increased to Rs.10000/- by the Board of Directors of the

    Company at the 244th Board Meeting held on 25.07.2006.

    4.4.7 Shares held by Non-executive Directors:

    Mr. S. Behuria - 500 shares

    Mr. L. Sabaretnam - 50 shares

    4.4.8 Compliance with the Code of Conduct for Board Members and other Senior Management Personnel :

    As required under Clause 49 I (D) (ii) of the revised Clause 49 of the Listing Agreement, a declaration

    signed by the Managing Director of the Company that all the Board Members and Senior Management

    personnel have fully complied with the provisions of the Code of Conduct for Board Members and

    Senior Management Personnel during the financial year ending 31.03.2007 is placed below:

    This is to declare that all the Board Members and Senior Management personnel of the Company

    have furnished the Annual Compliance Report affirming that they have fully complied with the

    provisions of the Code of Conduct for the Board Members and the Senior Management Personnel

    of the Company during the financial year ended 31.03.2007 and the same was informed to the

    Board at the 249th Meeting held on 11.05.2007.

    Place : Chennai K.K. ACHARYA

    Date : 21.05.2007 Managing Director

    4.4.9 Code of Conduct for prevention of Insider Trading in dealing with the Securities of CPCL :

    The Board of Directors of the Company have formulated the Code of Conduct for prevention of Insider

    Trading in dealing with the securities of CPCL. The code, inter-alia, prohibits purchase / sale of shares

    of the Company by the designated employees and Directors while in possession of unpublished price

    sensitive information in relation to the Company.

    The Code is available in the Intranet of the Company.

    4.5 SHAREHOLDERS / INVESTORS GRIEVANCE COMMITTEE

    4.5.1 Composition of the Committee as on 31.3.2007:-

    1. Mr.L.Sabaretnam, CEO, ICL Sugars Limited

    2. Mr.N.C.Sridharan, Director (Finance)

    3. Mr.S.Chandrasekaran, Director (Technical)

    4. Mr.M.Vaezi, Director, Naftiran Intertrade Company Ltd.

    Mr. R. Sankaran, Director (Technical) was a member of the Committee till 30.04.2006 and

    Mr. S.Chandrasekaran, Director (Technical) was inducted as member of the Committee in his place.

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    Chennai Petroleum Corporation Limited

    4.6 BOARDS PROJECTS SUB-COMMITTEE (BPSC)

    4.6.1 The Composition of BPSC as on 31.03.2007 is as follows:

    1. Mr. L. Sabaretnam, CEO, ICL Sugars Limited

    2. Mr. A.M. Uplenchwar, Director (Pipelines), IOC

    3. Mr. B.N. Bankapur, Director (Refineries), IOC

    The above Committee was reconstituted by the Board at the 247th Board Meeting held on 20.01.2007 by

    induction of Director (Finance) and the concerned Functional Directors, viz., Director (Technical) and

    Director (Operations) as additional members.

    4.6.2 Terms of Reference

    (a) To approve Capital investment upto Rs. 100 crore and pre-feasibility expenses upto Rs. 20 crore.

    (b) To recommend Investment approval beyond Rs. 100 crore to the Board of CPCL for consideration.

    4.5.2 The first meeting for the financial year 2006-07 was held on 25.07.2006. Mr.L.Sabaretnam,

    Mr.S.Chandrasekaran, Mr.N.C.Sridharan and Mr.Mansoor Rad, Alternate member for Mr. M. Vaezi

    attended the Meeting.

    4.5.3 The second meeting was held on 20.01.2007. Mr.L.Sabaretnam, Mr.S. Chandrasekaran,

    Mr.N.C.Sridharan and Mr.Mansoor Rad, Alternate Member for Mr.M.Vaezi attended the Meeting.

    4.5.4 Name and designation of Compliance Officer:-

    Mr. V. Srinivasan, General Manager (HR) & Company Secretary or in his absence

    Mr. M. Sankaranarayanan, Deputy Secretary (upto 17.05.2007).

    Mr. M. Sankaranarayanan, Company Secretary or in his absence Mr. P. Shankar, Assistant Secretary

    (from 18.05.2007).

    4.5.5 Number of shareholders complaints received during the year 2006-07, Number not solved to the

    satisfaction of shareholders and Number of pending complaints for the period from 01.04.2006 to

    31.03.2007 are given below:

    1 Non-receipt of dividend warrants 0 284 284 284 0

    2 Non-receipt of refund orders 0 18 18 18 0

    3 Non-receipt of share certificates 0 147 147 147 0

    4 Non-receipt of stickers against payment

    of allotment / call money 0 17 17 17 0

    5 Non-receipt of confirmation of Demat

    requests 0 37 37 37 0

    6 Non receipt of Annual Reports 0 19 19 19 0

    7 Non-receipt of Duplicate Share

    Certificates 0 60 60 60 0

    Total 0 582 582 582 0

    Sl. Nature of Opening Received Total Solved Pending

    No complaints Balance during the during the as on

    as on Financial Financial 31.3.2007

    1.4.2006 year 2006-07 year 2006-07

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  • 18

    5.2 Postal Ballot Details

    Postal ballot was not conducted so far in the Company.

    6.0 DISCLOSURES

    6.1 Disclosures on materially significant related party transactions that may have potential conflict with the

    interest of the Company at large:

    Necessary disclosures under the Accounting Standards 18 relating to the Related Party transactions

    form part of the Accounts for the year 2006-07.

    6.2 Details of non-compliance by the Company, penalties, strictures imposed on the company by Stock

    Exchange or SEBI or any statutory authority, on any matter related to capital markets, during the last

    three years: - Nil

    6.3 Disclosure of Accounting treatment

    In the preparation of financial statement for the year 2006-07, the Company has not adopted an accounting

    treatment which is different from that prescribed in the Accounting Standard, in respect of any transaction.

    6.4 Details of compliance with certain clauses of Revised Clause 49 of the Listing Agreement

    6.4.1 Compliance of laws applicable to the Company :

    As per Clause 49 I (C) (iii), the Board shall periodically review compliance reports of all laws

    applicable to the company, prepared by the company as well as steps taken by the company to

    rectify instances of non-compliances.

    Accordingly, a system had been developed and institutionalized to ensure compliance with all

    laws applicable to the Company.

    The Board reviewed the Compliance Report of all laws applicable to the Company for the half

    year ended 30.09.2006 at the meeting held on 23.10.2006.

    4.6.3 The first Meeting in the financial year 2006-07 was held on 25.07.2006. Mr.L.Sabaretnam,

    Mr. A.M. Uplenchwar and Mr. B.N. Bankapur were present.

    4.6.4 The second Meeting in the financial year 2006-07 was held on 25.08.2006. Mr.L.Sabaretnam and

    Mr.A.M.Uplenchwar were present. Leave of absence was granted to Mr. B.N. Bankapur.

    4.6.5 The third Meeting in the financial year 2006-07 was held on 23.10.2006. Mr.L.Sabaretnam,

    Mr. A.M. Uplenchwar and Mr. B.N. Bankapur were present.

    4.6.6 The fourth Meeting in the financial year 2006-07 was held on 16.12.2006. Mr.L.Sabaretnam,

    Mr. A.M. Uplenchwar and Mr. B.N. Bankapur were present.

    5.0 GENERAL BODY MEETING

    5.1 Location and time, where last three Annual General Meetings were held and number of special resolutions

    passed:

    AGM Date Location Time No. of Special

    Resolutions passed

    23.08.2004 Kamaraj Arangam,

    492, Anna Salai,

    Chennai-600 006 03.00 pm Nil

    24.08.2005 -do- 03.00 pm Nil

    25.08.2006 -do- 03.00 pm Nil

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  • 19

    Chennai Petroleum Corporation Limited

    6.4.2 Risk Assessment and Minimisation Procedures :

    As per Clause 49 IV (C), the Company shall lay down procedures to inform Board members

    about the risk assessment and minimization procedures. These procedures shall be

    periodically reviewed to ensure that executive management controls risk through means of

    a properly defined framework.

    Accordingly, a system had been developed and procedures have been laid down on risk

    assessment and minimization.

    Pursuant to the recommendations of the Committee constituted by the Company to lay down

    procedures for Risk Assessment and Minimization, the Company received reports relating

    to various risks such as Crude Oil Sourcing, Pricing, Security, Risk due to nature of business,

    Project Implementation Risks, Human Resources Risks and Legal & Litigation Risks. These

    reports were reviewed by the Executive Committee of the Company. The Board of Directors

    of the Company also reviewed the salient features of these reports at the 248th Board Meeting

    held on 29.03.2007.

    6.4.3 Internal Control Systems - CEO / CFO Certification :

    As per Clause 49 V, the CEO / CFO of the Company shall certify to the Board regarding the

    effectiveness of the internal control systems for financial reporting.

    Systems have been developed to review the internal controls and to institutionalize the

    system of internal controls in the Company to enable the Managing Director and Director

    (Finance) certify to Board regarding the effectiveness of Internal Control System for financial

    reporting.

    The required certification from the Managing Director and Director (Finance) being the CEO

    and CFO respectively was obtained and placed before the Board of Directors at the 249th

    meeting held on 11.05.2007.

    6.4.4 Certificate of compliance with the requirements of Clause 49 of the Listing Agreement :

    Clause 49 of the Listing Agreement requires every listed Company to obtain a certificate

    from either the auditors of the Company or a Practicing Company Secretary regarding

    compliance of conditions of Corporate Governance and annex the certificate with the Directors

    Report, which is sent annually to all the shareholders. The Company has obtained a

    certificate to this effect from the Auditors of the Company and the same is given as annexure

    to the Directors Report.

    7.0 MEANS OF COMMUNICATION

    7.1 The Board of Directors of the Company takes on record the Un-audited Financial Results in the prescribed

    form within one month of the close of every quarter and announces the results to all the Listed Stock

    Exchanges. The same are also published, within 48 hours in the following newspapers normally:

    The Hindu, New Indian Express, The Economic Times, Financial Express, News Today and

    Makkal Kural (Tamil).

    7.2 The Quarterly Results, Half yearly Results and the Annual Results are placed on the Companys web site

    at www.cpcl.co.in. Press Releases are given on important occasions. They are also placed on Companys

    website.

    7.3 Management Discussion and Analysis Report forms part of the Directors Report 2006-07.

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    8.0 GENERAL SHAREHOLDER INFORMATION

    1. 41st Annual General Meeting:-

    Date & Time : 10.09.2007 ; 3.00 PM

    Venue : Kamaraj Arangam, No.492, Anna Salai,Chennai 600 006

    2. Financial Calendar : April March

    3. Book Closure Date : 28.08.2007 to 10.09.2007 (both days inclusive)

    4. Dividend despatch date : Within 30 days from the date of declaration.

    5. Listing on Stock Exchanges : The Shares of the Company are listed on the Stock Exchanges at

    Chennai, Mumbai and National Stock Exchange of India Limited.

    The listing fees for the year 2006-07 has been paid.

    6. Stock Code : Madras Stock Exchange Ltd.-CPCL / BSE 500110

    Trading Symbol in NSE : CHENN PETRO

    Trading Symbol in Madras

    Stock Exchange : CHENNAI PET

    ISIN No. for dematerialized

    shares : INE 178A 01016

    Month High Low Closing High Low Closing

    Apr. 2006 264.40 201.00 241.60 263.90 223.00 240.20

    May 2006 271.90 208.60 219.95 273.65 209.00 219.55

    June 2006 227.90 135.10 178.95 222.00 142.50 178.20

    July 2006 189.65 159.50 181.80 190.00 160.00 181.55

    Aug. 2006 222.00 174.60 196.25 221.70 179.00 196.40

    Sep. 2006 240.00 196.50 207.25 239.90 196.05 207.35

    Oct. 2006 212.90 166.05 202.30 212.50 166.00 201.35

    Nov. 2006 226.00 196.35 220.75 228.90 197.15 220.95

    Dec. 2006 223.00 195.15 217.95 222.00 198.00 216.30

    Jan. 2007 255.00 204.20 214.35 236.00 207.10 213.55

    Feb. 2007 216.75 180.00 193.40 217.00 181.00 193.35

    Mar. 2007 195.05 170.00 187.70 199.00 173.25 187.90

    7. Market Price Data High, Low and Close during each month in the last Financial Year (in Rupees)

    Bombay Stock ExchangeNational Stock Exchange

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    Chennai Petroleum Corporation Limited

    9. REGISTRARS AND SHARE TRANSFER AGENTS:

    (a) Hyderabad Office:

    M/s. Karvy Computershare Private Limited

    Plot No. 17 to 24, Vithalrao Nagar Madhapur,

    Hyderabad 500 081 Phone : 040 2342 0818 / 2342 0828 Fax : 040 - 2342 0814

    E-mail: [email protected], [email protected], [email protected]

    (b) Chennai Offices:

    (i) No.33/1, Venkataraman Street, T.Nagar, Chennai 600 017.

    Phone : 2815 1793 & 2815 4781 Fax : 2815 1794

    (ii) G-1, Swathy Court 22, Vijayaraghava Road, T. Nagar, Chennai 600 017.

    Phone : 2815 3445 / 2815 1034 Fax : 2815 3181

    E-mail: [email protected]

    9.0 SHARE TRANSFER SYSTEM

    9.1 To expedite the share transfer process, the Board of Directors has constituted a committee consisting of

    Mr.V.Srinivasan, General Manager (HR) & Company Secretary, Mr.M.Sankaranarayanan, Deputy Secretary

    and Mr.P.Shankar, Assistant Secretary of the company to approve share transfers, transmission of shares,

    dematerialisation requests and rematerialisation requests.

    Month Closing Index Closing Index

    Price(Rs.) Price(Rs.)

    Apr. 2006 241.60 3557.60 240.20 12042.56

    May 2006 219.95 3071.05 219.55 10398.61

    June 2006 178.95 3128.20 178.20 10609.25

    July 2006 181.80 3143.20 181.55 10743.88

    Aug. 2006 196.25 3413.90 196.40 11699.05

    Sep. 2006 207.25 3588.40 207.35 12454.42

    Oct. 2006 202.30 3744.10 201.35 12961.90

    Nov. 2006 220.75 3954.50 220.95 13696.31

    Dec. 2006 217.95 3966.04 216.30 13786.91

    Jan. 2007 214.35 4082.70 213.55 14090.92

    Feb. 2007 193.40 3745.30 193.35 12938.09

    Mar. 2007 187.70 3821.55 187.90 13072.10

    Bombay Stock ExchangeNational Stock Exchange

    8. Performance of CPCLs Shares in comparison to BSE and NSE Index:

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  • 22

    9.2 The number of transfers approved and shares transferred from 01.04.2006 to 31.03.2007 are given

    below:

    9.3 The number of meetings held for approving the Share Transfers from 01.04.2006 to 31.03.2007 is 45.

    9.4 The number of demat requests approved and shares dematted from 01.04.2006 to 31.03.2007 in National

    Securities Depository Ltd. (NSDL) are given below:-

    Sl. Particulars Number of

    No. Shares

    Involved

    1 Number of transfer deeds received 1010 109850

    2 Transfer deeds processed 664 72500

    3 Defective transfer deeds sent to the proposed

    transferee for rectification of defects 346 37350

    9.5 The number of meetings held for approving the demat requests through NSDL from 01.04.2006 to

    31.03.2007 is 46.

    Sl. Particulars Number of

    No. Shares

    Involved

    1 Number of demat requests received 1900 253181

    2 Number of demat requests processed 1710 227811

    3 Number of demat requests rejected, for non-receipt

    of physical share certificates within 30 days as per the

    requirement of NSDL 190 25370

    9.7 The number of meetings held for approving the demat requests through CDSL from 01.04.2006 to

    31.03.2007 is 42.

    Sl. Particulars Number of Shares

    No. Demat Request

    Form (DRF)

    1 Number of demat requests received 541 64610

    2 Number of demat requests processed 454 54510

    3 Number of demat requests rejected,

    for non-receipt of physical share certificates

    within 30 days as per the requirement of CDSL 87 10100

    9.6 The number of demat requests approved and shares dematted from 01.04.2006 to 31.03.2007 in Central

    Depository Services (India) Ltd. (CDSL) are given below:

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    Chennai Petroleum Corporation Limited

    11.0 SHAREHOLDING PATTERN AS ON 31.03.2007

    SHAREHOLDERS No. OF SHARESTOTAL

    Physical

    TOTAL%TO

    SHARES

    No. OF

    SHAREHOLDERS

    Electronic Physical Electronic

    Indian Oil Corporation

    Limited 0 77265200 77265200 51.89 0 1 1

    Naftiran Inter-trade

    Co. Ltd. 0 22932900 22932900 15.40 0 1 1

    Public (including

    Employees) 1712246 4967092 6679338 4.48 15321 27439 42760

    Bodies Corporate 29900 1988958 2018858 1.36 86 578 664

    Banks, FIs and

    Insurance Companies 100 16043195 16043295 10.77 1 15 16

    Mutual Funds and UTI 10800 1010222 1021022 0.69 17 6 23

    Foreign Institutional

    Investors 4500 21780890 21785390 14.63 12 47 59

    Non-Resident Indians/

    OCBs 781200 384197 1165397 0.78 5889 1542 7431

    Total 2538746 146372654 148911400 100.00 21326 29629 50955

    Shareholding of Shareholders Share Amount

    nominal value

    Rs. Number % to Total Rs. % to Total

    Upto - 5000 49354 96.87 54959720.00 3.69

    5001 - 10000 906 1.78 7302530.00 0.49

    10001 - 20000 384 0.75 5593720.00 0.38

    20001 - 30000 98 0.19 2508970.00 0.17

    30001 - 40000 41 0.08 1479240.00 0.10

    40001 - 50000 33 0.06 1574140.00 0.11

    50001 - 100000 63 0.12 4249650.00 0.28

    100001 & above 76 0.15 1411446030.00 94.78

    TOTAL 50955 100.00 1489114000.00 100.00

    10.0 DISTRIBUTION OF SHAREHOLDING AS ON 31.03.2007

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    12.0 TOP TEN SHAREHOLDERS AS ON 31.03.2007 (OTHER THAN PROMOTERS)

    Sl. Name of the Shareholder No.of Shares Shares

    No. as a percentage

    of total no.of shares

    1 LIFE INSURANCE CORPORATION OF INDIA 5043571 3.39

    2 HSBC GLOBAL INVESTMENT FUNDS A/C HSBC

    GLOBAL INVESTMENT FUNDS MAURITIUS LIMITED 4265654 2.86

    3 GENERAL INSURANCE CORPORATION OF INDIA 3342991 2.24

    4 THE NEW INDIA ASSURANCE COMPANY LIMITED 3221060 2.16

    5 SANFORD C BERNSTEIN AND CO. DELAWARE

    BUSINESS TRUST-EMERGING MARKETS VALUE SERIES 2855840 1.92

    6 CALIFORNIA PUBLIC EMPLOYEES RETIREMENT

    SYSTEM MANAGED BY ALLIANCE CAPITAL

    MANAGEMENT, LLP 2787429 1.87

    7 MATTHEWS INDIA FUND 2467744 1.66

    8 UNITED INDIA INSURANCE COMPANY LIMITED 1915572 1.29

    9 NATIONAL INSURANCE COMPANY LTD 1831000 1.23

    10 CITIGROUP GLOBAL MARKETS MAURITIUS

    PRIVATE LIMITED 1619631 1.09

    TOTAL 29350492 19.71

    13.0 DEMATERIALISATION OF SHARES AND LIQUIDITY

    The dematting facility exists with both the National Securities Depositories Limited (NSDL) and Central Depository

    Services (India) Limited (CDSL) for the convenience of shareholders. As on 31.03.2007, 14,63,72,554 equity

    shares have been dematerialized, representing 98.27% of the subscribed capital.

    14.0 OUTSTANDING GDRs/ADRs/WARRANTS OR ANY CONVERTIBLE INSTRUMENTS, CONVERSION DATE

    AND LIKELY IMPACT ON EQUITY

    The Company has not issued GDR / ADR / Convertible instruments.

    15.0 PLANT LOCATIONS

    Manali Refinery, Manali, Chennai-600 068. [Phone No.044-25944000]

    Cauvery Basin Refinery, Panangudi Village, Nagapattinam District, Tamilnadu, Pin: 611 002. [Phone No.04365-

    256402]

    16.0 ADDRESS FOR CORRESPONDENCE

    Chennai Petroleum Corporation Limited,

    No.536, Anna Salai, Teynampet, Chennai-600 018.

    Phone: 044-24349542 Fax : 044- 2434 1753

    Email: [email protected]

    Companys Website Address: www.cpcl.co.in

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  • 25

    Chennai Petroleum Corporation Limited

    Report to

    Shareholders

    Directors Report 26

    Annexures to Directors Report 41

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  • 26

    Directors Report (Including Management Discussion and Analysis)

    To the Shareholders of Chennai Petroleum Corporation Limited,

    On behalf of the Board of Directors of your Company, I have great pleasure in presenting the 41st

    Annual Report of

    your Company, alongwith the Audited Statement of Accounts, for the Financial Year ended March 31, 2007.

    CORPORATE OVERVIEW

    Highest ever crude throughput of 10402 Thousand Metric Tonnes (TMT) against the previous best of 10362 TMT

    achieved in the year 2005-2006.

    Overall Energy Index for the year at 76.1 MBTU/BBL/NRGF as against 78.6 in the year 2005-2006.

    Product exports increased to 827 TMT as against 643 TMT in the previous year. Export of 380 cst grade Fuel Oil

    commenced for the first time and 257 TMT exported during the year 2006-2007.

    Highest ever Defence supply of 152 TMT of Navy Grade Diesel and 55 TMT of LVFO/LDO.

    Increase in Direct Customer Base by 225 customers for Paraffin Wax, Sulphur and Food Grade Hexane compared

    to the last years increase of 171.

    Standard & Poor (S&P), the worlds leading credit rating agency, identified CPCL as one of the seven Indian

    Companies having potential to emerge as Challengers to the Worlds leading Blue chip companies.

    Dun & Bradstreet (D&B), the worlds leading provider of business information services, ranked CPCL as 6th

    as per

    total income in the Oil Refining & Marketing Sector for its 2006 edition of Indias Top 500 Companies.

    Highest ever production of Motor Spirit (MS), Aviation Turbine Fuel (ATF), High Speed Diesel (HSD), Propylene

    and products for Defence requirements at Manali Refinery.

    Achieved capacity utilization of 103% in Manali Refinery as against 102% in 2005-2006. Capacity utilization of major

    secondary units, viz., FCCU, improved to 113% and Once Through Hydrocracker Unit (OHCU) improved to 110%.

    A new Sewage Reclamation Plant of 2.5 MGD capacity commissioned in December 2006.

    DeNOx facility, the first of its kind in India, commissioned at Manali Refinery, to minimize the NOx emissions.

    Highest ever distillate yield of 81.37% in Cauvery Basin Refinery, as against the previous best of 78.51% achieved

    in the year 2005-2006.

    Manali Refinery ranked second amongst the Refineries in the Country for improvement in Energy Consumption

    during the year 2005-2006 and was awarded the Jawaharlal Nehru Centenary Award for Energy Performance,

    instituted by MOP&NG.

    Overall energy consumption for the year in Cauvery Basin Refinery at 131.18 MBTU/BBL/NRGF (MBN) is the

    lowest ever.

    Highest ever Gas processing of 72170 MT surpassing the previous best of 63908 MT in 2003-2004, in Cauvery

    Basin Refinery.

    Manali Refinery received the State level Safety Award for longest accident free man hours for the year 2003 and 2004.

    Cauvery Basin Refinery received the Safety Appreciation Award from National Safety Council, Tamil Nadu Chapter

    for 2006 and also the 5th

    Annual Greentech Safety Award for the year 2006.

    Continuous operation of Cauvery Basin Refinery without fire since inception in 1993. Achieved highest ever safe

    mandays working of 2137 (previous best of 2118 mandays in 2001).

    MANAGEMENT DISCUSSION AND ANALYSIS

    Industry Structure & Developments

    The increase in demand of petroleum products has been propelled by the emerging economies of BRIC (Brazil,Russia, India and China) and this has fuelled the worlds energy requirements, particularly the fossil fuels such asCoal, Crude oil and Natural gas. While the demand for oil and gas is growing at about 3 to 4 % per annum for theemerging economies, new supplies have not kept pace with the sudden surge in the demand, particularly from theemerging economies of China and India. This is definitely leading to a new world order.

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    Chennai Petroleum Corporation Limited

    The political upheaval in Iraq, disturbances in Nigeria, standoff in Iran and limited availability of spare production capacity

    have compounded the already delicate energy balance to make crude prices very volatile. This has led several countries,

    including India, to look into new areas for Energy security. Oil companies in India have been scouting for oil abroad as

    never before. Also, the recent NELP-VI bidding for exploration within the country has attracted very good response. The

    recent KG basin strike of huge gas potential has brought excitement to both local and international players.

    Growing demand, a turbulent supply market, lack of spare production capacity and continuous turmoil in several oil

    producing countries had pushed up crude oil prices to record levels beyond $ 75 per barrel in 2006. Prices are

    currently hovering over $ 70 per barrel.

    This huge volatility in crude oil prices impacted Indian economy as India depends on oil imports for about 76 % of its

    demand. Due to stagnant indigenous crude oil production and increase in petroleum products demand, the self-

    sufficiency is estimated to decline from 27.8% in 2007-08 to 16.8% in 2011-12.

    The current refining capacity of India is 149 MMTPA and availability of products, is expected at 143 MMT in 2007-08,

    which is 27 MMT higher than the demand of 116 MMT and is expected to grow to 235 MMTPA by the end of the XI

    Plan period in 2012. The availability of products which is expected at 143 Million Tonnes in 2007-08 will be almost

    27 Million Tonnes higher than the demand of 116 Million Tonnes. By 2011-12, the refining capacity is expected to

    grow to 241 MMTPA which will create a surplus refining capacity of 96 million tonnes, which is more than half of the

    current refining capacity.

    Opportunities and Threats

    As per the Energy Information Administration, USA, global petroleum prices are remaining elevated because of weak

    inventories, strong demand and concerns about a long term supply crunch.

    The continued high crude oil prices will have an adverse impact on the global economy prospects, though not at a

    level experienced in 1970s. The crude oil production in India is almost stagnant which is an area of concern, even

    though, on gas front there are bright prospects with huge KG Basin Gas discovery, which will be commercially

    available during 2009-10. The huge finds at KG Basin and potential new finds at Mahanadi and Cauvery Basin will

    lead to a substantial shift in the Indian energy balance.

    The Compounded Annual Growth Rate (CAGR) of the refining sector during the next 5 years is expected to be at

    9.54% as against domestic demand CAGR of 2.93% and hence India is now targeting itself as a regional hub for

    export of petroleum products. The present product exports is about 20 MMTPA, while the exportable surplus would

    be about 96 MMTPA by 2012.

    The emerging challenges for the refining sector are mainly to implement the emerging technologies to meet the predominant

    demand for Distillate Yields, improve the quality of petroleum products to make them more environment-friendly and

    globally competitive, improve efficiency in refinery operations and create adequate infrastructure for exports. Large

    quantity of exports will also call for major investment in port infrastructure, pipelines network and tankages.

    India has large reserves of trained and highly skilled manpower available at a relatively lower cost compared to

    advanced countries. However, with growing demand for knowledgeable and skilled manpower from different sectors

    of Industry, there will be a constraint in availability. Hence, recruiting and retraining manpower will be a major thrust

    area. The country has acquired rich experience in the installation and efficient operation of petroleum refineries in

    the last 40 years. It is, therefore, expected that the operating cost will be low and the value-addition in Indian

    refineries will be of a very high order and that the setting up of refineries in India for the domestic market as well as

    for exports would be economically attractive.

    At present there is a mandatory provision for 5% blending of Ethanol in Petrol. This scheme of Ethanol blending

    which began initially in select nine states, was subsequently extended to cover the entire country.

    The development of alternative sources of energy including Bio-Fuels, remains one of the critical elements for

    achieving the countrys energy security. There is now an increased awareness of Bio-Diesel as a substitute for

    normal diesel and the formulation of the Bio-Diesel Policy by Government is a major step in boosting initiatives in this

    direction and is also expected to contribute to the development of rural economy in a very big way. The overall policy

    initiatives of the Industry should focus on seeking energy independence by 2030.

    Risks, Concerns and Outlook

    The rising demand for oil from energy hungry Asia and a rebounding US economy could meet a supply squeeze later

    in the year 2007. Further, the civil unrest in oil rich Nigeria, is adding to the concerns about political unrest in the

    Middle East further disrupting the supply.

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    The volatile refining margins all over the world came down during third quarter of 2006-07 on account of steep decline

    of diesel crack and huge inventory losses suffered by the Oil Companies. During the year 2006-07, the losses of the

    Marketing Companies on account of selling Auto fuels was partly compensated by the Refineries with the reduction in

    Customs Duty on MS / HSD from 10% to 7.5% with effect from 16th

    June 2006 together with a revised Trade Parity Price

    mechanism of MS / HSD at 80:20 of import and export price as against 60:40 in vogue during the period September

    2005 to 15th

    June 2006. The subsidy sharing mechanism of LPG / SKO by way of discounts offered by Refineries to

    Marketing Companies, which was introduced in 2005-06 was withdrawn in 2006-07.

    However, the refineries have to concentrate on improving distillate yields and value-added products, reduce energy

    consumption and operating & other controllable costs to remain competitive and profitable.

    Your company, in order to meet the above risks and concerns, is taking all necessary initiatives to improve distillate

    yields, diversify crude baskets at competitive price, optimize crude mix, maximize transportation of crude through

    Suez max tankers, control energy consumption, reduce operating cost and monitor refinery performance on a

    continuous basis.

    Internal Control Systems and their Adequacy

    Your Company firmly believes that a strong Internal Control framework is essential for good Corporate Governance

    and that freedom of Management should be exercised within the framework of proper checks and balances.

    Your Company has laid down documented manuals, policies and guidelines covering various aspects of the business,

    processes and operations. Recently, the company has revised and updated the manual on Delegation of Authorities

    and Procedures, taking into account operational necessities and administrative flexibilities.

    Your Company has a strong Internal Audit function at the Corporate level which carries out risk-focused audits across

    all activities of the Company and identifies areas where risk management processes need to be improved. The Audit

    Committee of the Board provides valuable suggestions and strategic guidance on internal controls and ensures that

    the recommendations of the Internal Audit are implemented effectively.

    Pursuant to the recommendations of the Committee constituted by the Company to lay down procedures for Risk

    Assessment and Minimization, the Company received reports from concerned Heads of Department relating to

    various risks such as Crude Oil Sourcing, Pricing, Security, Risk due to nature of business, Project Implementation

    Risks, Human Resources Risks and Legal & Litigation Risks. These reports were reviewed by the Executive Committee

    of the Company. The Board of Directors of the Company also reviewed the salient features of these reports and would

    continue to review such reports periodically.

    Note: The figures for the year 2006-07 do not include LPG (6.28 TMT) and Naphtha (1.809 TMT) produced from

    Natural Gas in the LPG Recovery Unit at Cauvery Basin Refinery.

    PERFORMANCE OVERVIEW

    Physical Performance 2006-2007 2005-2006

    CRUDE THRUPUT (in TMT)

    Imported 8750.7 8854.7

    Indigenous 1651.5 1507.0

    Total 10402.2 10361.7

    PRODUCTION (in TMT)

    Light Ends 2075.7 2064.8

    Middle Distillates 5051.6 5010.5

    Heavy Ends 2117.5 2106.8

    Lube Base Stocks 187.3 195.9

    Wax 25.1 25.5

    Others (Intermediaries) 16.9 15.1

    Others (fuel gas consumed) (19.1)

    Fuel & Loss 947.2 943.1

    Total 10402.0 10361.7

    Year

    2 Report to Shareholders.pmd 9/6/2007, 6:30 AM28

  • 29

    Chennai Petroleum Corporation Limited

    Cauvery Basin Refinery:

    Highest ever distillate yield of 81.37% as against previous best of 78.51% achieved in the year 2005-2006.

    Overall energy consumption for the year at 131.18 MBTU/BBL/NRGF (MBN), the lowest ever as against previousbest of 140.08 achieved in the year 2003-2004.

    Highest ever Gas processing of 72170 MT surpassing the previous best of 63908 MT in 2003-2004. Chidambaranar Oil Jetty completed 100 shipments of crude oil handling in March 2007.

    Achieved highest ever accident free mandays at 2137 as compared to the previous best of 2118 days.

    (Figures in TMT)

    Product 2006-2007 Previous Best (year)

    Motor Spirit 779.2 754.5 (2005-06)

    Aviation Turbine Fuel 696.9 554.9 (2005-06)

    Navy Diesel 152.7 117.5 (2005-06)

    Euro III HSD 596.7 562.8 (2005-06)

    Total High Speed Diesel 3304.6 3244.1 (2005-06)

    Propylene 26.9 26.0 (2005-06)

    The Company has registered an all time high Turnover during

    the year 2006-2007, 15.5% jump compared to previous year.

    The profit after Tax also witnessed an increase of 17.5% at

    Rs.565.27 Crore as compared to Rs.480.96 Crore during the

    year 2005-2006. The Internal Resources generated during the

    current year was higher at Rs.798.20 Crore, compared to

    Rs.530.15 crore during the previous year and the value addition

    was at Rs.1784.83 crore during the current year as against

    Rs.1606.46 crore during the previous year.

    The salient features of operations during the year include the following:

    Manali Refinery :

    Achieved a capacity utilization of 103% against 102% in 2005-2006.

    Capacity utilization of major secondary units, viz. FCCU improved from 110% to 113% and Once ThroughHydrocracker (OHCU) improved from 106% to 110%.

    Processed three new Crudes during the year, viz. Marib-Light (Yemen), Azeri Light (Azerbaijan) & Girassol (Angola)to widen the crude basket.

    RCO brought for the first time from CBR to Manali and processed in FCCU for value addition.

    Highest ever production of the following products:

    Financial Performance (Rs. in crore)

    2006-2007 2005-2006Percentage

    increaseGross Turnover 29349.49 25407.84 15.5

    Profit before Interest, Depreciation and Tax 1311.12 1133.24 15.7

    Interest 188.30 174.03 8.2

    Depreciation and Amortization 241.94 235.84 2.6

    Profit before Tax 880.88 723.37 21.8

    Provision for Taxation

    - Current Tax (Net) 304.17 223.90 35.8

    - Deferred Tax 6.73 15.97 - 57.9

    - Fringe Benefit Tax 4.71 2.54 85.4

    Profit after Tax 565.27 480.96 17.5

    Value Added 1784.83 1606.46 11.1

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  • 30

    An amount of Rs.356.21 crore is proposed to be carried to

    Reserves and Surplus, thus, totalling to Rs.2488.74 crore

    as on 31.3.2007, as against Rs. 2132.53 crore as on

    31.3.2006.

    The book value per share of your Company has surged

    from Rs.153.05 in the year 2005-2006 to Rs.177.15 in the

    year 2006-2007.

    Your Company has not accepted any fresh public deposits

    during the year 2006-07.

    Your Company has transferred to the Investor Education and

    Protection Fund the required amount as per Section 205(C)

    (2) of the Companies Act, 1956, within the stipulated time.

    SHARE CAPITAL

    The Subscribed Share Capital of the Company as on 31.3.2007 was 14,89,11,400 Equity Shares of Rs.10/- each.

    This was lower than the previous year figure of 14,89,43,200 Equity Shares of Rs.10/- each due to forfeiture of 31800

    shares for non payment of allotment money / call money. The forfeiture was given effect from 26.10.2006.

    DIVIDEND

    Your Board of Directors is pleased to recommend a Dividend

    of 120% on the paid-up share capital of the Company for

    the year 2006-2007, which is at the same level as declared

    last year. The Dividend will absorb a sum of Rs.209.96

    crore, including dividend distribution tax and the surcharge

    thereon.

    MoU PERFORMANCE

    Your Company continued to perform well during the year also

    and achieved Excellent rating in the provisional assessment.

    MARKETING

    While major fuel products produced by your Company

    continued to be marketed by Indian Oil Corporation Limited,

    the Holding Company, CPCL has carved out a niche in

    marketing specialty products to a large number of retail

    customers and petrochemical feedstock to downstream

    units. The total direct sales of specialty products and

    petrochemical feedstock increased from 489 TMT in

    2005-06 to 589 TMT in 2006-07 with an impressive growth

    of 20%, amidst competition from imports and other domestic

    companies.

    * Recommended to the share holders for approval at

    the Annual General meeting scheduled to be held on

    10.09.07

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    Chennai Petroleum Corporation Limited

    1 Naphtha 213.7 170.4 25.4

    2 Propylene 27.5 25.7 7.0

    3 Paraffin wax 25.3 24.3 4.1

    4 Food Grade Hexane 6.4 6.2 3.2

    5 Linear Alkyl Benzene Feedstock 47.7 49.5 (3.6)

    6 Poly Butene Feedstock 7.2 5.7 26.3

    7 Methyl Ethyl Ketone Feedstock 6.7 5.3 26.4

    8 Slack Wax 3.8 3.3 15.5

    9 Sulphur 42.6 40.6 4.9

    Sl. Product Sales (TMT) Sales (TMT) % Increase

    No. 2006-07 2005-06

    PROJECTS

    Your Company continues to give utmost priority to implementation of projects. The expenditure during the X plan

    period (2002-2007) was Rs. 2314 crore against the outlay of Rs. 2400 Crore. The outlay during the XI Plan period is

    Rs. 3575 Crore.

    Completed Projects

    2.5 MGD Capacity Sewage Reclamation Plant

    To enhance the availability of water for Manali Refinery, an additional 2.5 MGD capacity Sewage Reclamation Plant

    consisting of Biological treatment, Chemical treatment, Ultra filtration and Reverse Osmosis was commissioned in

    December 2006 at a cost of about Rs.47 Crore.

    Offsite Automation Project

    In order to improve the blending operations for meeting the product specifications, an Offsite Automation facility for

    Auto Blending of various components of MS, Diesel and Fuel Oil was completed at a cost of about Rs.26.8 Crore.

    On-going Projects

    Sea Water Desalination Project

    The project for installation of a 5.8 MGD Sea Water Desalination Plant at an estimated cost of Rs.231.34 crore is under

    implementation and is expected to be completed by December 2007. This project will ensure uninterrupted operation

    of the Refinery even during the periods of water scarcity in Chennai.

    Gas Turbine

    A project for installation of 20 MW Gas Turbine to enhance the reliability and quality of Captive Power Generation at

    Manali Refinery at an estimated cost of Rs.157.88 Crore is under implementation. The project is expected to be

    mechanically completed by October 2007.

    New Crude Oil Pipeline

    The project for laying of new 42" Crude Oil Pipeline as a replacement for the old 30" Pipeline from Chennai Port to

    Manali Refinery along the route of the proposed Port Connectivity Project, is proposed for implementation at a cost of

    Rs.65.4 Crore. The project is expected to be completed within twelve months after Right of Way clear of encroachments

    is made available by Chennai Port Trust in coordination with Tamil Nadu Road Development Corporation and

    National Highways Authority of India.

    The sales figures of various products in the current year as compared to the previous year alongwith the percentage

    increase are tabulated below :

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  • 32

    Windmill Farm Project

    To achieve significant abatement in greenhouse gas emissions, a project for setting up of a Windmill Farm of 17 MWcapacity in Melakaraipatti Village (near Pushpathur), Dindigul District, Tamil Nadu at a cost of Rs.89.80 Crore is underimplementation. This Project will be commissioned by November 2007.

    Refinery III Capacity Augmentation

    The project for Debottlenecking of Refinery III Unit of Manali Refinery from 3 MMTPA to 4 MMTPA capacity at anestimated cost of Rs.134 crore is in progress. The project is expected to be completed by March 2009. With theimplementation of this project, the Refining capacity at Manali will increase from 9.5 MMTPA to 10.5 MMTPA.

    The contract for Detailed Engineering, Procurement and Construction Management Services has been awarded toM/s Engineers India Limited.

    Auto Fuel Quality Upgradation Projects

    In order to meet the future specifications of MS and HSD, the following initiatives have been taken up by the Companyat an estimated cost of about Rs.1900 Crore:

    Revamp of Naphtha Hydrotreating (NHDT) and Catalytic Reformer Unit (CRU) to Continuous Catalytic Reformer Unit

    Setting up of new Isomerisation Unit

    Setting up of Diesel Hydrotreating Unit (DHDT)

    Process Licensors have been selected. The first two projects are expected to be completed by end of 2009 and thethird one by early 2010.

    Installation of Additional Crude Tanks at Manali Refinery

    A project for installing two more Crude Tanks to increase the Crude Storage capacity at Manali at an estimated costof Rs.56.60 crore is under implementation. The project is expected to be completed by May 2008.

    New Projects

    Resid Upgradation Project

    For improving the Distillate yield of Manali Refinery from 67% to 75%, besides reducing the production of Fuel Oil, aResid Upgradation Project with a Delayed Coker Unit alongwith associated facilities is being taken up at a cost ofabout Rs.3000 Crore. Licensor selection for the Delayed Coker Unit has been completed. Proposals have beenreceived from the Licensors for the New Sulphur Recovery Unit which is a part of the Resid Upgradation Project,which are under evaluation.

    Propylene Recovery Unit

    In order to tap full potential of the Propylene available in LPG from FCCU, an additional Propylene Recovery Unit isproposed to be put up at Manali Refinery.

    15 MMTPA Refinery-cum-Petrochemical Complex

    A new 15 MMTPA grassroots Refinery-cum-Petrochemical Complex is proposed to be set up at Ennore near Chennaion a Joint Venture basis with Indian Oil Corporation Limited. Process Configuration Study and Pre-Feasibility Reportare under preparation. CPCL has made a request to Government of Tamil Nadu for allocating 2500 acres of land inEnnore which was earmarked earlier for Petro-Park.

    DEVELOPMENT STRATEGIES

    Your Company organized interaction meetings with Indian Oil Corporation Limited, the Holding Company, in April2006 to discuss and deliberate on various strategies for the future growth and expansion of your Company. Actionstaken on various decisions at the interaction meeting were reviewed by Chairman and Functional Directors of IOCLin March 2007.

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    Chennai Petroleum Corporation Limited

    The decisions taken at these Strategy Meetings focused on the need to make investments in the following areas:

    Expansion of refining capacity by low cost debottlenecking

    Projects for meeting environmental norms

    Improvement of distillate yields

    Enhance captive generation of utilities, viz., water and power to minimize dependence on external sources.

    Improving infrastructure to market various products in domestic market as well as export.

    INDIAN ADDITIVES LIMITED

    Indian Additives Limited (IAL), a joint venture of your Company with M/s.Chevron Oronite Company LLC, manufacturinglubricant additives, achieved a turnover of Rs.159.13 Crore during the year 2006-07, as compared to Rs.150.09 crorein the previous year. The Profit after Tax was Rs.3.37 Crore (previous year Rs.2.66 crore). For the year 2006-2007,IAL has recommended a Dividend of 7.5% on the paid-up capital.

    INFORMATION TECHNOLOGY

    Your Company is conscious of the need to make optimum utilization of various advancements in Information Technologyin order to provide support for achieving operational excellence in various business activities of the Company.

    Several initiatives have been taken by the Company in this direction and significant among them include the following:

    Introduction of e-Seva system to enable the vendors / contractors / service providers to track the status of their bills.

    Implementation of ERP Software at Cauvery Basin Refinery.

    Implementation of Material Gate Pass System for effective online monitoring of movement of materials.

    Modification of the Companys ERP system to incorporate various changes in the VAT system introduced by theGovernment of Tamil Nadu.

    Introduction of various new features in the intranet system of the Company like Industry Information, Reports, Fire& Safety messages, Knowledge base, news and events, etc.

    RESEARCH AND DEVELOPMENT (R&D)

    The R&D Centre of your Company continue to extend active support to refinery operations by carrying out Pilot Plantevaluation of catalysts and feed stocks for secondary processing facilities, assay of new crudes etc. The requirementsof Refinery units like FCC, Hydro processing and Lube units regarding process troubleshooting and optimizationstudies are being catered to by this centre.

    A new Hydrotreating pilot plant has been commissioned and the same will be used for carrying out studies on DieselHydro-desulphurisation , Lube Hydrofinishing etc.

    New collaborative research programs with National Center for Catalysis Research at IIT, Madras have been initiatedby your Companys R&D Centre for the following:

    Development of Regenerable Adsorbents for removal of sulfur from Diesel fuel.

    Development of catalysts for End point reduction in Diesel.

    Initiation of collaborative project with Pavement Engineering group of IIT(M) in the area of Performance gradeBitumen with warrants for modifications

    Research alliance with Sud Chemie India Limited for development of suitable catalysts for Lube Hydrofinishing.

    SAFETY MANAGEMENT

    Your Company and its employees are conscious of their commitment to conduct business by adopting best safetypractices in handling equipment and material. Your Company adopts best safety practices at par with Indian andInternational Standards. All the safety activities are aimed at achieving credible safety performance at work not onlyby the employees, but also by the contract labourers.

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  • 34

    The Company has undertaken several measures to improve the safety management systems and procedures andsignificant among them include the following:

    Onsite Emergency preparedness plan revised / updated for both Manali and Cauvery Basin Refinery.

    On-site emergency mock drills conducted in November 2006 in association with mutual aid partners and statutoryauthorities at Manali Refinery. At Cauvery Basin Refinery, On-site mock drills were conducted in March 2007 inco-ordination with statutory authorities and IBP Co. Limited, the neighbouring industry.

    As a part of Disaster Management, One-day Awareness Programme on Off-site Emergency plan was organizedat Manali Refinery on 21.12.2006. Off-site mock drill was also conducted at Manali Refinery by District Collectorof Tiruvallur on 09.01.2007. At Cauvery Basin Refinery, Off-site mock drills were conducted on 04.01.2007 by theDistrict Collector, Nagapattinam.

    Twelve Safety Zones created in the Manali Refinery and allotted to Deputy General Managers. Each Zonalin-charge delivers safety talk once in a month.

    Revised procedure and instructions on issue of work permits for both Manali and Cauvery Basin Refinery as asupplement to Oil Industry Safety Directorate Standard 105 was released for strict compliance.

    Special devices like Fall Arrestors with Full body Harness and Catwalk ladders procured and issued for use whileworking at heights

    Implemented the recommendations of safety audit.

    Five Minute safety talk for the benefit of contractors & their workman at security Main gate organized every day.

    Reviewed and updated Safety Manual, Fire Manuals, Fire order and Fire Emergency Procedures.

    Awards / Achievements

    The concerted efforts taken by your company in the areas of safety and adoption of best safety practices has wonseveral awards and accolades as mentioned below:

    Manali Refinery received the State level Safety Award for longest accident free man hours for the year 2003 and2004. Award received on 11.09.2006.

    Cauvery Basin Refinery received the Safety Appreciation Award from National Safety Council, Tamil Nadu Chapterfor 2006 and also the 5

    th

    Annual Greentech Safety Award for the year 2006.

    ENVIRONMENT MANAGEMENT SYSTEM

    Caring for the Environment and taking constant efforts to preserve and protect the ecological balance continues toremain the avowed objective of the Company. As a result of various environmental conservation measures takenfrom time to time, the Company could achieve substantial reduction in pollution from its operations.

    The Environment Cell of the Company works dedicatedly for the upkeep of Ref


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