BOARD OF DIRECTORS Sharma Associates, Chartered Accountants REGISTERED OFFICE M/s. Maharaj...

BOARD OF DIRECTORS

Shri R. S. Sharma ChairmanShri U. K. Basu Managing DirectorShri D. K. Sarraf Director (From 27/07/2010)Shri L. K. Gupta Director (Finance)(Upto 31/5/2010)Dr. A. K. Balyan Director (Upto 15/07/2010)Shri Sudhir Vasudeva DirectorShri V. K. Dewangan Government Director (Upto 31/3/2010)Shri Vivek Kumar Government DirectorShri S. Roy Choudhury Director (Upto 19/1/2010)Shri K. Murali Director (From 19/1/2010)Shri G. M. Ramamurthy Independent DirectorDr. A. K. Rath Independent Director (From 16/02/2010)

COMPANY SECRETARY AUDITORSShri B. Sukumar M/s. S.R.R.K Sharma Associates,

Chartered Accountants

REGISTERED OFFICE M/s. Maharaj N.R.Suresh & Co,Mudapadav, Kuthethoor, Chartered AccountantsP.O Via Katipalla,Mangalore-575030, Karnataka SOLICITORSTel.No.: 0824-2270400 M/s. Mulla & Mulla & Craigie Blunt & CaroeWebsite: www.mrpl.co.in

BANKERSState Bank of India,Canara Bank,Punjab National BankBank of BarodaCorporation Bank,United Bank of IndiaCitibank N.A

INVESTOR RELATION CELLMRPLLGF, Mercantile House,15, K.G. Marg, New Delhi-110 001Tel.: 011-23463100, Fax : 011-23463201E-mail : [email protected]

REGISTRAR AND TRANSFER AGENTM/s. LINK INTIME INDIA PVT.LTDC-13 Pannalal Silk Mills Compound,L.B.S Marg, Bhandup (West),Mumbai- 400 078Tel.: 022-25963838 / 25946970Fax : 022-25946969Email : [email protected]

C O N T E N T S PAGE NO.

Directors’ Report .................................................................. 2

Management Discussion and Analysis Report .............. 11

C & AG’s Comments ......................................................... 13

Auditors’ Report .................................................................. 14

Balance Sheet ..................................................................... 16

Profit & Loss Account ........................................................ 17

Cash Flow Statement ........................................................ 18

Schedules ............................................................................ 28

Balance Sheet Abstract and Company'sGeneral Business Profile ................................................... 34

Report on Corporate Governance .................................... 35

Report on Secretarial Audit ............................................... 41

Notice for Annual General Meeting .................................. 43

Terms of Appointment of Managing Director ................. 45

Mangalore Refinery and Petrochemicals Limited

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Annual Report 2009-10

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Dear Members,Your Directors are pleased to present the 22nd Annual Report of theCompany, together with the audited accounts for the financial year ended31st March, 2010.It is gratifying to note that your company has put in a very creditableperformance in the background of the industry scenario, and theperformance results of other peers. The Company has also created certainnew benchmarks of excellence during the year under review. Some of theperformance highlights are enumerated below:1) Overall refinery performance was found to be qualified for “excellent”

rating of MoU with Government of India.2) Highest ever distillate yield of 72.8% at 12.5 MMTPA operating level.3) Lowest ever own fuel consumption with energy index of 58.27 MBN.4) Highest ever product sales of 7.40 MMT in the domestic market.5) Highest ever direct marketing sales of 800 TMT.6) Highest ever products dispatched through Mangalore–Hassan–

Bangalore pipeline of 2.485 MMT.7) Achieved Gross Refining Margin of 5.46 $/bbl despite low crack

margins from the products in the International market.8) Accident free operation of the refinery during the year achieving the

safety record of 1002 days without any Reportable Accident andmoving towards previous record of 1301 days.

9) Based on previous years consistent track record, name plate capacity ofthe refinery increased from 9.69 MMTPA to 11.82 MMTPA.

10) Commenced supply of BS-IV Grade petrol and diesel w.e.f. January2010 in line with industry implementation programme.

11) The Company successfully completed the revamp of Gas Oil HydroDesulphurization unit ahead of schedule and within budgeted cost.The same was commissioned and dedicated it to the Nation on30.04.2010.

12) MRPL signed an MOU with Government of Karnataka for aninvestment proposal of ` 15,798 Crore comprising the Phase IIIRefinery Project and associated projects on 3rd June, 2010 at theGlobal Investors Meet held at Bangalore.

13) Your Company is the first refinery to begin processing the newly discoveredhighly viscous Rajasthan Crude ‘Mangala’ in October 2009.

1 . 1 F I N A N C I A L P E R F O R M A N C E

( ` in Crore)

Year ended Year ended31st March, 31st March,

2 0 1 0 2 0 0 9

Turnover 3 6 , 0 8 1 4 2 , 7 1 9

Profit before Depreciation Interest and Tax 2,196 2,337Interest and Finance Charges 115 143Gross Profit after interest but before Depreciation and Tax 2,081 2,194Depreciation and Amortisations 389 382Profit Before Tax 1 , 6 9 2 1 , 8 1 2Provision for Taxation 580 619

Profit after Tax 1 , 1 1 2 1 , 1 9 3Balance of Profit/(Loss) brought forward from previous year 2557 1640Surplus available forappropriation 3 , 6 6 9 2 , 8 3 3Appropriations:Proposed dividend on Preference Shares ( ` 9,186) 0.00 0.00Proposed Dividend on Equity Shares 210 210Tax on Dividend 35 36Transfer to General reserve 28 30Balance carried to 3,396 2,557 Balance Sheet

3 , 6 6 9 2 , 8 3 3

1 . 2 D I V I D E N DDespite marginally lower Profit After Tax during the year (ascompared to the previous year), the Board of the Company hasdecided to recommend a dividend payout of 12%. This will absorb` 245 Crore including ` 35 Crore as tax on dividend.

1 . 3 O P E R A T I O N A L P E R F O R M A N C EThe Refinery throughput was 12.50 MMT crude oil (12.59 MMT)achieving 106 % capacity utilisation (107%). It may be noted herethat Company has increased the nameplate capacity of the refineryfrom 9.69 MMTPA to 11.82 MMTPA based on a review of successfulutilization of design margins available in the units over a period of 4years, duly approved by the Board in their meeting held on 16.02.2010.The refinery produced 11.68 MMT (11.78 MMT) of finished productsduring the year.Your Company has always focused on improving the domestic offtakeand achieved highest domestic sales of 7.40 MMT (7.30 MMT). Thefocus has been to ensure uninterrupted product supply to the domesticsegment which also gives better margin.

1 . 4 E X P O R T SThe exports of Petroleum products (Motor Spirit, Naphtha, MixedXylene, ATF, HSD, VGO and FO) during the year amounted to` 11041 Crore (` 11636 Crore) which represents about 37% (38%)of the total dispatches of 11.72 MMT (11.76 MMT ).As you are aware, your company had a long term contract uptoJuly 2010 with State Trading Corporation (STC), Mauritius for supplyof approx. one MMTPA of petroleum products (MS, HSD, ATF &FO) which is the total requirement of Mauritius. The terms forrenewal of the contract for a further period of 3 years has beenfinalized and the new Supply Agreement has been signed on1.07.2010 which is effective 01.08.2010 till 31.07.2013. The contractenvisages supply of 1.10 MMT per annum of Petroleum productsduring 2010-13 with +/- 10% at STC’s, Mauritius option and thetotal value of this deal at current prices is about 2 billion USD.The Company continues to be accredited with Premier Trading HouseStatus (till March 2012) by Director General of Foreign Trade (DGFT),Government of India based on its export performance.

DIRECTORS’ REPORT

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Figures given in the bracket at para 1.3 & 1.4 relate tothe previous year.

1 . 5 SAFETY PERFORMANCE

� Safety at MRPL has the constant support and commitmentof the Top Management and incorporates the higheststandards of safety amongst its employees and contractworkmen. Periodic Audits (both External and Internal), Mockexercises (both Onsite & Offsite), regular training updatesand a positive attitude towards safe work practices haveensured a safe and healthy work environment. All processplant modifications are verified through a Hazard andOperability Study (HAZOP) before implementation.

� The Refinery completed 1002 days without Reportable LostTime Injury (RLTI) as on 31-03-2010 i.e., 6.93 Million Manhours without RLTI.

� In the year 2009, MRPL was adjudged as the ‘Best SafeRefinery’ for the three years (2006-07, 2007-08 and 2008-09) among the Indian Refineries and also adjudged as thesecond best safe refinery for the year 2008-09 by OilIndustry Safety Directorate (OISD).

1 . 6 E N V I R O N M E N T M A N A G E M E N T

In Environment Management, the company’s Philosophy is to performbeyond Compliance - that is to perform better than minimum requiredby statutes. The refinery is certified with ISO 14001: 2004 forEnvironment Management Systems.

The following are some of the major new initiatives taken up by thecompany in addition to various other environment managementmeasures done on a continuous basis including checking of VolatileOrganic Compounds Emission at 38,000 points in the refinery andtaking corrective measures therefor:

� Environment Impact Assessment including Risk Assessmentfor Quality Improvement Project (GOHDS revamp) and atoperating level of 13.6 MMTPA of the refinery (consideringcurrent ongoing CDU – I revamp) conducted by M/s. NationalEnvironmental Engineering Research Institute (NEERI),Nagpur.

� Environment Clearance obtained from Ministry of Environment& Forests for Quality Improvement Project and operation ofrefinery at expanded capacity of 13.6 MMTPA during prePhase III expansion project.

� An “Awareness Cum Interaction Programme” on HazardousWaste (Management, Handling & Transboundary Movement)Rules 2008 jointly organized with Karnataka State PollutionControl Board for neighbouring industries.

� A Sulphur Pelletisation Unit is being installed to avoid Dustemissions in the Sulphur Recovery Unit.

� Microbiological study commenced for treated effluent byCollege of Fisheries.

� Work Environment Study is being carried out by RegionalLabour Institute, Chennai to monitor the entry of harmfulmaterials into the human systems at work place.

� Continuous Ambient air quality management system installedin the refinery to monitor the various pollutants SO2, NO,NO2, NOx, H2S, CO, SPM, RSPM, HC Methane, HC non –methane and Total HC. All pollutants are always well withinthe stipulated limit.

� Manual Stack Monitoring is carried out in all process units byM/s. Environment Management System, Mangalore.

� Bioremediation of 1000 MT oily sludge has been completedby The Energy and Resources Institute, New Delhi.

1 . 7 M A R K E T I N G

1 .7 .1 Direct Marketing:

The Direct marketing sales of the Company continued its growthduring the year 2009-10. The Direct Marketing Sales including ATFand LSHS were up at 808.04 TMT as compared to last year salesof 775.37 TMT.

Bitumen group sales for 2009-10 were 345.24 TMT as compared to328.48 TMT in 2008-09, with a growth of 5%. MRPL was successfulin penetrating adjoining States of Tamilnadu, Kerala, Andhra Pradeshand Maharashtra.

1 .7 .2 Retail Operations:

MRPL continued to follow a non aggressive and cautious approach inmarketing of HSD and petrol in view of the Government regulation inpricing. As of 1st April, 2010, MRPL is operating HiQ retail outlets oneeach at Maddur and Hubli in Karnataka. However, plans are in placeto enter into Retail Operation with deregulation in prices and clearancefrom MoP&NG.

1 .7 .3 Joint Ventures in Marketing:

1.7.3.1 The joint venture of your Company with Shell B.V. Netherland viz.,“Shell MRPL Aviation Fuels and Services Private Limited” formarketing of ATF to both Domestic and International airlines atIndian airports, achieved a operating profit of ` 145.45 Million(previous year operating loss ` 26.20 Million) and post-tax profit of` 45.34 Million (previous year post tax loss of ` 44.75 Million) in itsfirst full year of operation after wiping out the losses incurred in theprevious year.

During the year, the sales under the Delivery Company (DELCO)model were 68,927 KL (previous year 35,517 KL). The companyhas fuelled 11,106 flights (previous year 4,598 flights). The marketshare during the year was 15.2% at Bangalore airport and 2.8% atHyderabad airport.

Sales under the Contracting Company (CONCO) model were3,43,133 KL (previous year 18,312 KL). The Airport Authority ofIndia has accorded approval for Mobile Refueling operation atMangalore, Goa, Calicut, Ahmedabad, Coimbatore and Trivandrum.The company is ready to commence its operation at Mangalore assoon as new terminal becomes operational.

1.7.3.2 As you are aware, your Company and Ashok Leyland Group hadincorporated a joint venture company viz., “Mangalam RetailServices Limited” for creating one stop-shop commercial complexesin the highway segment, which were also to have Retail Outlets(RO) of your Company. As the entire business model is planned

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based on RO set up, this JV has not been able to make any progressas your Company had put on hold setting up of ROs to avoidadverse impact on margins.

2 . A W A R D S A N D R E C O G N I T I O N S

Your Company has received the following awards/ recognitionsduring the year:

� MRPL has been adjudged as the Most Safe Refinery forthe Three years (2006-07, 2007-08 and 2008-09) by OilIndustry Safety Directorate (OISD), MoP&NG after evaluationof all the 17 PSU refineries in India.

� MRPL has also been conferred with 2nd Prize by OISD inthe safe refinery category for the year 2008-09.

� MRPL is the Joint Winner in the Jawaharlal Nehru CentenaryAward for Energy Performance of Refineries for 2008-09 inGroup-1 category by Centre for High Technology (CHT),MoP&NG.

� MRPL has been rated ‘Excellent’ in MOU performance byONGC for 2008-09.

� MRPL has been rated number one company in terms ofturnover per employee on All India basis by Business Todaymagazine (BT 500 2009 edition).

� MRPL received “Certificate of Merit” on 18.02.2010 in theBest HR practices 2009 competition organised by NationalInstitute of Personnel Management, Kolkata.

� MRPL has been conferred Export Excellence Award 2010(Best Manufacturer Exporter Award) - Large Category - Goldby Federation of Karnataka Chambers of Commerce andIndustry on 5.06.2010.

� MRPL secured the best export award in overall category“Silver” in the State Level Export Excellence Award for theyear 2007-08 and 2008-09 from Government of Karnataka.

3 . IMPROVED CREDIT PROFILE

3.1 Your Directors are pleased to inform you that ICRA Limited hasreaffirmed Issuer Rating “IR AAA” (pronounced IR Triple A) to yourcompany. This rating indicates the highest credit quality ratingassigned by ICRA and the rated entity i.e., MRPL carries the lowestcredit risk.

3.2 ICRA has reaffirmed “LAAA” (pronounced L Triple A) the highestcredit quality rating under ICRA’s long term rating scale for` 900 crore Fund Based Working Capital Limit of MRPL.

3.3 ICRA has also reaffirmed the “A1+” (pronounced A one plus), thehighest and relatively stronger credit quality rating under ICRA’sshort Term rating scale for Rs.5,500 crore Non-fund Based Limit ofMRPL.

3.4 CRISIL has reaffirmed the “CCR AAA” (pronounced “CCR TripleA”) rating indicating highest degree of strength with regard tohonouring debt obligations.

4 . P R O J E C T S

4 . 1 Phase III Refinery Project :

As you are aware, your company is currently implementing PhaseIII Refinery Project with an objective of increasing profitability by

increasing the refining capacity to 15MMTPA, to process more oflow price high Sulphur/high acid heavy crude oils, increasing thedistillate yield by upgrading low value black oils, producing valueadded products like Polypropylene and upgradation of its total dieselpool to superior (Euro III/IV) grade. The estimated cost of the projectis ` 12160.26 Crore.

Orders have been placed for all the units like PFCC, SRU & PPU,Captive Power Plant (CPP), Hydrogen & DHDT Units, CHT, DCUetc. as well as all utility packages like Nitrogen, Compressed Air,Raw Water, Cooling water DM water and Waste Water TreatmentPlant. The total value of orders placed as on 15.07.2010 is` 9703 Crore.

The implementation is progressing satisfactorily. The Project hasachieved a progress of 51.2% as on 15.07.2010. The project is expectedto achieve the mechanical completion by October 2011 as planned andcommissioning in phases by end of financial year 2011-12.

4 . 2 Polypropylene Project

As you are aware that company has been setting up Polypropyleneunit integrated with the Phase III project at an estimated capex of` 1803.78 Crore. M/s. Engineers India Limited (EIL) has beenengaged to implement the project under Open Book Execution (OBE)methodology. M/s. Novelene Technology, Germany have beenselected as licensor for the project. The project is expected toachieve mechanical completion by April 2012 as planned.

4 . 3 SPM project

As reported last year, the Company is proposing to set up a SinglePoint Mooring (SPM) facility in the sea of Mangalore Port area withan objective to receive crude in (very large crude carrier) VLCCtankers. The same facility can also be used for receipt of crude forIndian Strategic Petroleum Reserves (ISPRL) being set up byGovernment of India at Mangalore very near to our refinery. Thedraft DFR has been received from M/s. Consulting EngineeringServices (I) Pvt. Ltd. and M/s. SBI Capital Markets Ltd. have donean independent financial appraisal of the Project. The estimatedproject cost is ` 1170.59 Crore.

M/s. Indian Strategic Petroleum Reserves Ltd., (ISPRL) is setting upCrude Oil Storage Cavern of 1.5 MMT at Mangalore. The SPM projectenvisaged utilizing a part of the ISPRL Mangalore Cavern for receiptand intermediate storage of Crude oil on proportionate cost sharingbasis. The environment clearance from Ministry of Environment andForest (MoEF), Government of India and clearance from Ministry ofShipping is expected shortly. The SPM project proposal has beenapproved by MRPL Board and is being taken up for approval by theBoard of ONGC. The project is targeted to be completed by May2012.

4 . 4 Internal Projects :

GOHDS Revamp :

GOHDS Revamp was taken up to increase the capacity of GOHDSby 30% and for up-gradation of quality with respect to Sulphur contentmeeting Euro IV Standards.

This project was originally scheduled to be completed by August2010. Subsequently, it was decided to complete it by end March2010 advancing the completion by nearly 5 Months. This

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advancement was planned to meet the requirement of Euro IV normsfor fuels in the major cities from 01/04/2010 onwards as per thedirectives of the Supreme Court.

The revamped GOHDS unit was successfully completed on10.04.2010 and was dedicated to Nation by the Secretary, Petroleumand Natural Gas, GoI on 30.04.2010.

CDU / VDU1 REVAMP :

This Project is for enhancing the CDU / VDU Phase 1 unit capacityby 30% on substantial basis with improvement in yield with betterenergy efficiency. The Basic Engineering was done by M/s.EIL whoare the suppliers of Basic Engineering & Detailed Engineering forthe original unit. Project Management Consultant (PMC) for theproject is M/s. Uhde India Pvt. Ltd. (UIPL). The LSTK Contractoris M/s. Toyo Engineering India Ltd. The contractual completionschedule is March 2011. The implementation is ahead of scheduleand the progress achieved as on 20/07/2010 is 57% as against thescheduled 49%.

TANKAGES :

With a view to improving the flexibility in operations, the constructionof the following tanks have been completed during the year:

1) 2 Diesel Tanks - 12300 m3 Capacity

2) 1 Kerosene Tank - 1790 m3 Capacity

3) ATF tank - 3500 m3 Capacity

4) Mixed Xylene tank - 5000 m3 Capacity

SULPHUR PASTILLATION UNIT (SPU) :

SPU Project is mechanically completed. Instrumentation jobs withrespect to panels have also been completed. Conveyor erectionjob by M/s. Cobit is at the completion stage. Plant is undercommissioning which is expected to be completed by last week ofJuly 2010.

4 . 5 Aromatics Complex

As you are aware that the ONGC Mangalore Petrochemicals Ltd(OMPL) has been jointly promoted by ONGC and MRPL with 46%and 3% equity holding for implementing the Aromatics Project toproduce Paraxylene and Benezene, value added products, usingNaptha feedstock from MRPL at Mangalore Special Economic Zone(MSEZL). MSEZL has already allotted requisite land and site gradingactivity are in advanced stages. M/s. UOP, USA are the TechnologyLicensors for the project and M/s. Toyo Engineering (India) Ltd arethe Project Management Consultants. The project cost is estimatedat ` 5,750 crore. The company has already achieved financial closureand tied up debts for ` 3,758 crore. The company has awarded majorcontracts for its Process units with M/s. L & T Ltd for ` 2,035 croreand for Power Plant (CPP) with M/s. Thermax Ltd for ` 588 crore onLumpsum Turnkey (LSTK) basis. Further the company has awardedcontracts on LSTK basis for DM Plant, Cooling water system, Storagetanks, Plant Communication System etc. Company is in the advancedstage of finalizing LSTK contracts for Raw Water System, Effluentwater system etc. The mechanical completion of the project isexpected in end November 2012 and commercial production isexpected in February 2013. The company is also in the process ofselection of offtakers for its product with reputed companies.

5 . B A R M E R C R U D E

Your company was the first refinery to begin processing the newlydiscovered and highly viscous Barmer Crude in October 2009. Duringthe financial year 2009-10, the company received 0.2 MMT ofRajasthan crude as per Government allocation.

6 . CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION AND FOREIGN EXCHANGE EARNINGS &OUTGO AND PARTICULARS OF EMPLOYEES

The additional information required to be disclosed pursuant toSection 217(1)(e) of the Companies Act, 1956 read with theCompanies (Disclosure of Particulars in the Report of Directors)Rules, 1988 with respect to conservation of energy, technologyabsorption and foreign exchange earnings & outgo is given in‘Annexure - I’ which forms part of this Report.

7 . P A R T I C U L A R S O F E M P L O Y E E S

The particulars required to be shown in terms of the provisions ofSection 217(2A) of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975 as amended withrespect to particulars of employees are furnished in Annexure.However in terms of proviso (b) (iv) of Section 219 (1) of theCompanies Act, 1956, the above annexure which is not sent withthe accounts will be available for inspection by the members at theRegistered office of the Company during working hours for a periodof 21 days before the date of AGM. Any member who is interestedto obtain such particulars may write to Investor Relations Cell ofthe company at Delhi.

8 . H U M A N R E S O U R C E S

� During the year 2009-10, the Company continued to enjoycordial and harmonious relations with the collectives and asan evidence of the same, not a single man-hour was lost onaccount of any industrial disturbance during the entire year.

� The Long Term Settlement (LTS) with the Employees Unioncame to an end on 31st March, 2007. Negotiations for thefresh LTS are in progress.

� As regards the pay revision for Board level and below Boardlevel executives which was due from January 01, 2007, basedon the approval of the Board for implementation of pay revisionas per the Department of Public Enterprises, Government ofIndia, (DPE) Guidelines and taking into consideration thePresidential Directives issued by the Ministry of Petroleum andNatural Gas for implementation of the pay revision, yourCompany has implemented the same.

� The Company recruited 75 employees during the year 2009-10.Out of these, 11 belonged to Scheduled Caste (SC), 2belonged to Scheduled Tribes (ST), 15 from Other BackwardClasses (OBC) and 15 women employees were recruited.

� The number of employees as on March 31, 2010 was 1312,including 72 women employees. The number of employeesbelonging to SC, ST & OBC categories were 75, 24 and321 respectively.

� During the year 2009 - 2010, Company devoted 2887 man-

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days for Training, Development and Learning which amountsto an average of 2.2 man-days per employee. This includedfunctional, developmental and special training programscovering the entire spectrum of employees.

9 . OFFIC IAL LANGUAGE:

MRPL is implementing Official Language Policy in letter and spiritas per the Annual Programme prescribed by the Department ofOfficial Language, Ministry of Home Affairs, Govt. of India. In orderto propagate Hindi among the employees, Hindi Workshops areorganised on a regular basis at Mangalore, Mumbai and BangaloreOffices. Regular Hindi classes for Prabodh, Praveen & Pragya arebeing conducted for employees. In order to increase thecorrespondence in Hindi, by the employees, special efforts weremade to install Hindi software on the computers and nearly 88%computers are installed with Hindi software APS 2000++. Tomotivate employees who pass final Hindi examinations, Incentiveschemes are introduced such as Cash award and Personal Pay.

For promoting the use of Hindi, Hindi Fortnight was celebrated andmany Hindi competitions such as Hindi Essay, Dictation, Translation,Songs, Extempore speech etc. were conducted for the employees,their children and family members in the month of September 2009.Competitions are also held in Hindi for employees and their familymembers during National Safety Day, Environment Day and Vigilanceawareness week. Official Language inspections of internaldepartments and subordinate offices were carried out. Specialawards were given to the three toppers of MRPL School childrenwho stood first three in the public exam of class X in Hindi language.

MRPL participated at Town Official Language ImplementationCommittee (TOLIC) level Hindi competitions and won thirteen prizesand stood First at TOLIC level competition. Quarterly, Half yearlyand Yearly reports are sent to all the controlling Agencies/Departments / MoP&NG on time by highlighting the progress madein promotion of Hindi in the company. Hindi Hasya Kavi Sammelanwas organised on 10.2.2010. Six National level Hindi humour poetsparticipated in the programme. As per Official Language Rule, OfficialLanguage Implementation Committee (OLIC) meeting wasconducted in all the four quarters under the Chairmanship ofManaging Director. All out efforts are being made to promote Hindiin the company.

1 0 . V IG ILANCE FUNCTION:

Vigilance awareness and preventive vigilance activities werecontinuously carried out during the year by surprise inspections,Intensive type detailed examination, study of major work orders /purchase orders. Deemed single tenders, tenders on nominationbasis were selectively taken for scrutiny.

Transparency initiatives leveraging technology in MRPL had beenone of the major achievements of Vigilance department. During theyear Vigilance has played a major catalytic role in introducingtechnology leverages in the company on core areas.

Vigilance Awareness Week was observed to educate employeesand to have preventive vigilance through awareness programmeconducted from 03.11.2009 to 07.11.2009 in Mangalore and MRPLoffices at Bangalore, New Delhi and Mumbai with a theme

“Preventive Vigilance”. Evolution and role of vigilance was dulyexplained to the participants with special emphasis on WhistleBlower Policy. Programmes including quiz, elocution etc. foremployees were also conducted. The Managing Directoradministered oath to all officers on 03.11.2009.

Various competitions viz., Essay competition, Quiz competition,Poster competition, Slogan competition on the Theme “PreventiveVigilance” were held for employees.

Various educative lecture programme conducted for newly appointedgraduate engineer trainees on “Facets and role of Vigilance”.

With thrust on technology as an effective preventive role Vigilancedepartment impressed upon various functions to automate towardstransparent and smooth transaction which reduced human interfaceas per CVC guidelines. With constant follow up with managementteam the initiatives were taken in the areas of E-payment, E-procurement, Bio metric identification and technology based solutionfor personal facilities like canteen have been top objective towardsimproving Vigilance administration by leveraging technology. E-procurement through Reverse Auction was commenced and continuedduring the year.

Keeping in view the requirement of Clause 49, company hasformulated and put in place a Whistle Blower Policy.

1 1 . S E C U R I T Y M E A S U R E S

11.1 CISF Induction:

As reported last year, the management has decided to induct CentralIndustrial Security Force (CISF) to guard the Refinery. Sanction hasbeen obtained from Ministry of Home Affairs for 200 CISF personneland the first batch of 122 is expected to join anytime from now. Allgates and access control to the Refinery will be handed over to CISF.Security of township, NMPT oil jetties, Sarapady Pump House willbe looked after by the in-house Security department with contractsecurity personnel.

11 .2 CCTV Surveillance:

Complete area of the Refinery is covered by state of the art CCTVNetwork. Few cameras are netted with OFC cables and rest ofthem are working on wireless technology. CCTV network is designedto cover all the access control gates and other strategic locations.The CCTV surveillance is going to be further more strengthened byinstalling 10 more cameras shortly.

11 .3 Access Control:

Access to Plant area will be better controlled by New Plant Gate whichis segregating Plant and Nonplant area. This gate will have additionallyX-Ray baggage screening machines and Multizone door frame metaldetectors for frisking and searching. This gate will also have turnstilesintegrated with biometric punch card system for strict access controlas well as to prevent un-authorised entry.

11 .4 IB Recommendations:

Intelligence Bureau (IB) visits once in every two years to inspectSecurity arrangements, identify grey area, and to recommend/suggestimprovements. IB last visited MRPL during Sep 2008 and is expected

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to visit this year. Out of the 27 recommendations, 21 have alreadybeen complied and actions with regard to compliance of remaining 6recommendations are in progress.

11 .5 Internal Security Audit – ONGC:

Besides IB, ONGC carries out Security Audit of MRPL internally.Their recommendations are being implemented.

11 .6 Mock Drills:

Regular mock drills are conducted exclusively on Security. Districtlevel security exercises are conducted alongwith State police andCoast guard. Recently, Coast guard and State police conducted amock exercise ‘SAGAR KAVACH’, by involving various industriesincluding MRPL in the coastal belt.

1 2 . CORPORATE SOCIAL RESPONSIBILITY (CSR)INIT IATIVES

As a socially responsive organisation, the Company is committedto the well being of the communities around the refinery area andwith this objective, it has taken up a number of schemes/developmental activities during 2009-10. The expenditure incurredon CSR activities during the year was ` 12.54 Crore (` 4.21 Crorein previous year) in the core areas viz., Education, Health &Sanitation, Infrastructure, SC / ST Development Scheme, MRPLRehabilitation Colony, Women Empowerment Programme. Thecompany had contributed ` 4.95 Crore to Chief Minister’s CalamityRelief Fund towards construction of houses in flood affectedDevadurga Taluka of Raichur Dist. This is in addition to ` 50 lakhscontributed to the Chief Minister’s Calamity Relief Fund earlier.

1 3 . D I R E C T O R S

13.1 HPCL has nominated its Director (Refineries), Shri K. Murali on theBoard of MRPL on 19.01.2010 in place of Shri S. Roy Choudhury.Shri K. Murali is a Chemical Engineer by profession having 30 yearsof rich experience in HPCL in the various areas of refinery.

13.2 Shri V. K. Dewangan, Director MoP&NG on completion of his tenurewith GoI had resigned on 31.03.2010.

13.3 Shri L. K. Gupta, Director (Finance), MRPL resigned from theCompany and Shri U. K. Basu, Managing Director has assumedadditional charge of Director (Finance) w.e.f. 31.05.2010.

13.4 Dr. A. K. Balyan, Director resigned on 15.07.2010 from the Boardof MRPL /ONGC consequent to his selection and appointment asMD & CEO, Petronet LNG Ltd.

13.5 The Board wishes to place on record its appreciation for theservices rendered by Shri S. Roy Choudhury, Shri V. K. Dewangan,Shri L. K. Gupta and Dr. A. K. Balyan during their tenure as Directorson the Board of the Company.

13.6 Government of India has appointed Dr. A. K. Rath, IndependentDirector on the Board of your company effective 16.02.2010. Dr.Rath, a doctorate in Business Administration and IAS Officer (1973cadre), carries with him over 37 years of experience in variousMinistries of Central /State Government. Dr. Rath is currently

Professor and Chair of the Public Policy and ManagementProgramme at MDI, Gurgaon.

13.7 In accordance with the provisions of the Companies Act, 1956 andArticles of Association of the company, Dr. A. K. Rath shall holdoffice upto the date of the Annual General Meeting. The companyhas received notice from a shareholder proposing his name to theoffice of the Director at the ensuing AGM.

13.8 ONGC has nominated its Director (Finance), Shri D. K. Sarraf onthe Board of MRPL on 27.07.2010 in place of Dr. A. K. Balyan.Shri D. K. Sarraf is an Associate Member of Institute of Cost &Works Accountants of India and the Institute of Company Secretariesof India having 30 years of experience in Oil Industry.

13.9 In accordance with the provisions of the Companies Act, 1956 andArticles of Association of the Company, Shri D. K. Sarraf and ShriVivek Kumar will retire by rotation at the 22nd Annual General Meetingof the Company. Shri D. K. Sarraf and Shri Vivek Kumar, beingeligible, offer themselves for re-appointment.

13.10 Brief resume of the Directors seeking appointment / re-appointment,together with the nature of their expertise in specific functional areas,the names of the companies in which they hold the directorshipand the membership /chairmanship of committees of the Board,and their shareholding in the Company as stipulated under Clause49 of the Listing Agreement with the Stock Exchanges are given inthe Annexure to the AGM notice.

13.11 You might be pleased to note that a Director (Technical) positionhas been approved by the Government of India. Accordingly, Director(Technical) has been shortlisted by the PESB after selection processand his letter of appointment is awaited. As regards filling up of theposition of Director (Finance), Company has taken up with MoP&NGfor initiating the action on a fast track basis.

13.12 The Company continues to pursue with the Government of India(Ministry of Petroleum & Natural Gas) for appointment of requisitenumber of Independent Directors on the Board of the Companypursuant to the provisions of the Listing Agreement.

1 4 . DIRECTORS’ RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of theCompanies Act, 1956 your Directors state that:

i) In the preparation of the Annual Accounts, the applicableaccounting standards have been followed and that there areno material departures from the same;

ii) They have selected such accounting policies and applied themconsistently and made judgments and estimates that arereasonable and prudent, so as to, give a true and fair view ofthe state of affairs of the Company at the end of the financialyear viz., 31st March, 2010 and of the Profit & Loss of theCompany for the year ended on that date;

iii) They have taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventingand detecting fraud and other irregularities;

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iv) They have prepared the Annual Accounts of the Companyon a going concern basis.

1 5 . FORFEITURE OF SHARES

In the public issue of PCDs / NCDs made by your company inMay 1992, some of the shareholders had not paid allotment / callmoney on the shares allotted to them inspite of several remindersfrom the company.

After following the due procedure, your Board of Directors at theirmeeting held on 19.01.2010 forfeited 3,03,550 Equity sharespertaining to 1638 shareholders for non-payment of allotment / callmoney arrears. The Stock Exchanges and the defaulted shareholderswere advised on the forfeiture of the shares. The forfeited shareshave been cancelled and accordingly the paid-up equity capital ofthe company as on 31.03.2010 stands revised at ` 1752,59,87,770.

1 6 . FIXED DEPOSIT

The Company has not accepted any fixed deposit during the yearfrom the public.

1 7 . C O R P O R A T E G O V E R N A N C E

17.1 The Company has complied with all the mandatory provisions ofClause 49 of the Listing Agreement relating to the CorporateGovernance requirements, except with the requirement of numberof Independent Directors on the Board of the Company. YourCompany is pursuing with the Administrative Ministry, MoP&NG forappointment of additional Independent Directors on the Board. TheAnnual Report contains a separate section on Corporate Governance.

17.2 Your Company is listed with the Bombay Stock Exchange Limitedand National Stock Exchange of India Limited.

17.3 As required under Clause 49 of the Listing Agreement with StockExchanges, your Company has obtained the Certificate from theAuditors of the Company, for Compliance of Corporate Governancewhich is annexed to and forms part of the Annual Report.

17.4 As a measure of good corporate governance, your Company hasvoluntarily taken up Secretarial Audit for the year 2009-10 and aReport obtained from M/s. Rathi & Associates, Practising CompanySecretaries is annexed to this Annual Report.

17.5 The Company has also complied with the voluntary guidelines ofDPE except with regard to appointment of required number ofIndependent Directors and pre-approval of related party contractsby the Audit Committee. DPE has since modified the guidelinesand made it mandatory for the year 2010-11 onwards. The reviewof related party contracts is retained after deleting the requirementof pre-approval.

17.6 As you are aware that MRPL Secretarial Department has beenaccredited with ISO 9001 : 2008 certificate on 12.05.2009 by M/s.Bureau Veritas Certification India (P) Ltd (BV). The certificate isvalid till May, 2012 and BV will conduct yearly surveillance auditfor two years. Accordingly, the first surveillance audit was conductedby M/s. BV on 07.05.2010 and confirmed the continuation of ISO9001 : 2008 accreditation to the Secretarial Department.

17.7 The Management Discussion and Analysis Report forms part ofthe Directors’ Report annexed as Annexure-II.

1 8 . A U D I T O R S

18.1 M/s. S.R.R.K. Sharma Associates, Bangalore and M/s. Maharaj N.R. Suresh & Co., Chennai have been appointed as joint StatutoryAuditors of the Company for the Financial Year2009 - 10 by Comptroller & Auditor General of India (C&AG).

18.2 The report of the C&AG at Annexure III forms part of this Report.You will be pleased to note that your Company has got a “NIL”comments Certificate from C&AG for the 8th year in a row.

18.3 As per the requirement of Central Government and pursuant toSection 233B of the Companies Act, 1956, the cost accountsmaintained by the Company are being audited by Cost Auditors.M/s. JV Associates have been appointed as Cost Auditors for theyear 2009-10 with approval of Ministry of Corporate Affairs,Government of India.

1 9 . A C K N O W L E D G E M E N T

19.1 Your Directors sincerely thank the Government of India (GoI), Ministryof Petroleum and Natural Gas (MoP&NG), Ministry of Finance (MoF)and other Ministries and Departments of the Central Governmentand the State Government of Karnataka, Andhra Pradesh, Tamilnaduand Kerala and District Authorities at Mangalore for their valuablesupport and continued co-operation.

19.2 Your Directors gratefully acknowledge the support and directionprovided by the parent company, ONGC.

19.3 Your Directors wish to thank the shareholders for the continuedconfidence reposed on the Management and the Company.

19.4 Your Directors acknowledge the continuing co-operation and supportreceived from New Mangalore Port Trust, Financial Institutions,Banks and all other stakeholders such as suppliers of crude oil andother inputs, vendors, contractors, transporters and others.

19.5 Your Directors recognize the patronage extended by the valuedcustomers for the products of the company and promise to providethem the best satisfaction.

19.6 Your Directors wish to place on record their sincere appreciation ofthe sustained and dedicated efforts put in by all the employeescollectively and concertedly as a Team.

19.7 The company salutes its visionary Shri Subir Raha, former Chairmanand Managing Director of ONGC Group Company who passed awayon 1st February, 2010. He was the person who visualized as earlyas in 2003 that MRPL will one day touch the sky with glory. Trueto his dream, MRPL has grown and created many records ofexcellence in all the spheres of its operations and the graphs ofthe performance has been only going upwards. It is he who madethe miracle of a PSU company turning around a private sectorcompany. MRPL was turned around in just one year by ONGC.After takeover by ONGC in the year 2003, MRPL has not lookedback and continues to aim and achieve new heights.

For and on behalf of the Board

Place: New Delhi (R. S. SHARMA)Date: 31st July, 2010 Chairman

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FORM - A

A . CONSERVATION OF ENERGYCompany continued its emphasis on energy conservation throughoperational optimization, continuous monitoring and implementationof several energy conservation schemesa) Major energy conservation measures taken during the year

i) On-line chemical cleaning activity carried-out in CrudeDistillation unit and Visbreaker unit furnaces.

ii) Hydrocracker unit’s Low pressure separator off-gases routedto CCR-2 unit PSA system for additional Hydrogen recovery.

iii) CCR unit Net gas routed to Isomerisation unit forminimizing fresh Hydrogen requirement.

iv) Increased CCR unit net gas routing to Hydrogen headerfor minimising hydrogen loss to fuel gas system.

v) Hydrocracker unit-1 Kerosene product air cooler modifiedfor Sponge Absorber service for improving LPG recovery.

b) Additional investments and proposals, if any, being implemented/under consideration for reduction of consumption of energy /resourcesContinuing :i) Amine flash column off-gases routing to Sulfur Recovery

Unit-3 incinerator for minimising flaring.ii) Condensate recovery in Crude Distil lation unit and

Hydrocarcker units.iii) Routing CCR unit Net gas to Gas Oil Hydrodesulfurisation

Unit for H2 optimisation.iv) Amine absorption system solvent changing over from DEA

to MDEA.v) Hydrogen recovery from Refinery Fuel gas and CCR PSA

Tail gas streams.New:i) Application of Energy saving Ceramic coating on the

furnace internal refractory surface for fuel consumptionreduction.

ii) Refinery steam lines insulation repair / refurbishment.iii) Hot VDO routing to GOHDS unit for reducing energy

consumption for reheating.iv) Slop recycling provision with coalescer in CDU-1 and VBU2

units.c) The measures (a) above resulted in Energy consumption

reduction by ~ 4760 MT/Year, which is equivalent to a net savingof approx. ` 185 Million/year. The saving estimated from themeasures (b) above is approximately ` 430 Million.

d) Fuel & Loss in the Refinery for the year 2009-10 was 6.51 %,whereas it was 6.42% in 2008-09. F&L is comparatively higheron account of higher secondary units throughputs. The RefineryEnergy index (MBTU/BBL/NRGF) is lower at 58.27 for the year2009-10 as compared to 59.07 for the year 2008-09.

e) Energy Conservation awardMRPL was the joint winner of the First Prize in the prestigious‘Jawaharlal Nehru Centenary Award’ for Energy performance amongIndian PSU Refineries’ for the year 2008-09, instituted by the Ministryof Petroleum & Natural Gas (MoP&NG), through Centre for HighTechnology. Continuing the good performance, MRPL has achievedthe lowest ever MBN of 58.27 for the year 2009-10.

MRPL’s Energy performance during the last four years is asfollows

Year Crude Complexity, Energy Index,throughput, NRGF MBN (MBTU/Bbl/

MMTPA (Net (CHT method) NRGF)Crude Basis)

2009-10 12.497 5.371 58.272008-09 12.586 5.277 59.072007-08 12.547 5.359 61.552006-07 12.532 4.962 63.13

ANNEXURE –I

Total Energy consumption and Energy consumption per unit of production:

A ) Power and Fuel Consumption

Current Previousyear year

2009-10 2008-091 . Electricity

a) PurchasedUnit (Million KWH) 17.37 23.99Total Amount (` Million) ** 103.05 123.76Rate / Unit (`/KWH) ** 5.93 5.16

** Includes demand charges of ` 20.70 Million (` 19.97 Million for2008-09)Unit cost per KWH excluding demand charges is ` 4.64 for 2009-10 (` 4.53 for 2008-09)

b) Own Generationi) Through Diesel Generator (at Sarpady)

Unit (Million KWH) 0.03 0.02Unit per ltr. Of Diesel (KWH/ltr.) 3.10 3.32Cost / Unit (`/KWH) 10.31 9.89

ii) Through Steam turbine generatorUnit (Million KWH) 593.96 571.08Unit per liter of Fuel Oil (KWH/ltr) 2.03 2.10Cost / Unit (`/KWH) 9.97 9.76

2 . Fuel OilQuantity (MT) (Oil+Gas) 774,210 735,452Total Amount (` in Million) 16,378.84 15,794.98Average Rate (` /MT) 21,155.55 21,476.56

3 . Others / Internal GenerationDiesel (at Sarapady)Quantity (K.Ltr.) 9.66 5.39Total Cost (` in Million) 0.31 0.18Rate (` /K.Ltr.) 31990.00 32881.20

4 . Consumption per unit productionTotal crude processed (TPA) 12,496,95012,586,085Total Fuel Consumed (TPA) 813,696 808,388(includes fuel and loss)Total Electricity (Million KWH) 605.5709 588.54(after deducting external supply)Fuel Consumption, MT of 0.0651 0.0642Crude processedElectricity Consumption, / 48.46 46.76MT of Crude processed (KWH)

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FORM - BA ) Research and Development (R&D)

1 . Specific Areas in which R&D carried out by the company2009-10:

� Crude AssayCrude Assay was carried out using TBP apparatus.Mangala (Rajasthan Crude)ForcadosIran MixUmm ShaifMasilaEscravosSeria LtMumbai High+MangalaBongaMurbanEnfield

� Spent Caustic Treatment using microbial cell technology.Bench scale experiments were carried out to treat spent caustic andother effluents using cell technology. Experiments are being continued.

� Study of additive degradation in used lubricating oilsusing FTIR.Methodology to identify additive degradation products using FTIRinstrument has been established. Study is being continued.

� Study on Fluorescence Characteristics of Petroleumfractions having different Boiling range.Florescence characteristics of petroleum distillate products werestudied using Luminescence Spectrometer to check the presenceof PNA and HPNA compounds.

� Biological Oxygen Demand (BOD) and Chemical OxygenDemand (COD) depletion study across various stagesof Effluent Treatment Plant (ETP).BOD and COD content was analysed across various stages ofboth ETP I and II to monitor the depletion by both chemical andbiological process.

� Study on Salt content of various crude, desaltingperformance of De-salter Units.Salt Content in crude, de-salter feed & de-salter product of Phase Iand Phase II units was monitored while processing different crudes tocheck the De-salter performance and to optimize the De-emulsifier &de-salting chemical additive dosage.

2 . Benefits derived as a result of the above R&D:� Assay of various crude was carried out using TBP apparatus.

Product yield pattern and quality of cuts obtained from the Crudeassays helped Operation to optimize unit-operating conditions toachieve the same yield pattern and product quality.

� Spent caustic treatment with innovative cell technology fordestroying the odour causing phenols and sulphur species wasstudied at lab scale. Experiments are being continued.

� Establishment of methodology to study the degradation of additivesin lubricating oil using FTIR Instrument will help ConditioningMonitoring Group to check the performance of lubricating oil systems.

� Monitoring of PNA and HPNA in the petroleum products especially inPlatformer and Gas Oil Desulphurization unit products, indicates runaway reaction as well as deterioration in Catalytic activity due to PNAand HPNA absorption on catalyst active sites.

� Biological Oxygen Demand (BOD) and Chemical Oxygen Demand(COD) depletion study across various stages of effluent treatmentplant has helped Operations to monitor and control the final treated

effluent Quality as per KSPCB requirement. Also helped to optimizethe chemical dosages and to improve the microbial activity.

� Study on salt content of various crude and De-salting performanceof De-salter Units of Phase I and Phase II help operation to optimizethe consumption of De-emulsifier and De-salting chemical dosage.

3 . Future plan of Action:� Crude Evaluation.� Additive Evaluation.� Study on Bitumen and modified bitumen.� Continue the study of additive degradation in used lubricating oils

using FTIR.� Continue the Spent Caustic Treatment using microbial cell

technology.4 . Expenditure on R&D:

� Capital : NIL� Revenue : ` 18.3 lakhs� Total : ` 18.3 lakhsSet up of Research and Development department has been included inexisting expansion programme of refinery.

B ) Technology Absorption, Adaptation & Innovationi) Efforts, in brief, made towards technology absorption, adaptation

and innovation.a) Technologies for process units of Phase -I & II have been

fully absorbed.b) Light Naphtha Isomerisation unit commissioned during end-2006.c) Gas Oil Hydro-desulfurisation unit capacity revamp activity

taken-up for increasing plant capacity by 30%.ii) Benefits derived as a result of the above efforts, e.g., product

improvement, cost reduction, product development, importsubstitution, etc.Refinery throughput sustained at 12.5 MMTPA capacity, even whilemeeting Clean Fuel specifications, which required highercomplexity operations.GOHDS unit capacity revamp has improved Refinery capability ofproducing Euro-III and Euro-IV grade Diesel.

iii) In case of imported technology (imported during last 5 yearsreckoned from the beginning of the financial year), followinginformation may be furnished.a) Technology imported

Isomerisation process, Variable frequency drives, GOHDSunit capacity revamp.

b) Year of import2004-05 and 2008-09.

c) Has technology been fully absorbed?Yes for Isomerisation process, VFDs and GOHDS unitcapacity Revamp.

d) If not fully absorbed, areas where this has not taken place,reasons therefore and future plans of action.Not applicable.

C ) FOREIGN EXCHANGE EARNINGS AND OUTGO

(` in Crore)

2009-2010 2008-2009

Foreign Exchange Earnings – 11041.34 11636.18FOB value of exportsForeign Exchange Outgo 26329.72 28880.31

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1 . The Economy

Global economy, particularly the developed world, is still strugglinghard for complete revival. During 2009, the global economy declinedby 0.6%; advanced economies by 3.2%. However, with 5.7% growthIndia emerged as the second largest growing economy in the world,only after China (8.7%). International Monetary Fund (IMF) projects(July, 2010) that India may register 9.5% growth in 2010.Indian Gross Domestic Product (GDP), at factor cost at constantprices (2004-05), regisered a growth of 7.4% in FY’10 against 6.7%during FY’09. The country will sustain growth and its sustainancerequires all out support by all the sectors, particulaly oil industrywhich will have to meet the growing demand for petroleum products.

2 . The IndustryIn recent years, India, the fourth largest consumer of crude oil,posted robust growth in consumption of petroleum products.Consumption increased at a CAGR of 5.1% during the last five years(FY’06 to FY’10). Petroleum products increased by 3.4% from 133.60MMT in FY’09 to 138.18 MMT in FY’10.

Consumption of Petroleum Products (MMT)

Products FY ’09 FY ’10 % increase

LPG 12.34 13.11 6.19

M S 11.26 12.82 13.86

Naphtha 13.91 10.24 -26.40

S K O 9.30 9.30 0.01

A T F 4.42 4.63 4.61

H S D 51.71 56.32 8.92

Fuel Oils 12.59 11.59 -7.95

Bitumen 4.75 4.92 3.62

Pet. Coke 6.17 6.75 9.47

Others 7.15 8.51 19.00

Total 1 3 3 . 6 0 1 3 8 . 1 8 3.42

FY’10 data provisional, Source: MoP&NG, GoI

Except Naphtha and Fuel Oil, consumption of most of the productsincreased substantially. Consumption of these two products, mainlyused as substitute fuels, decreased due to sufficient availability ofnatural gas with commencement of production from East Coast fromApril, 2009.Consumption of High Speed Diesel (HSD) and Motor Sprit (MS)increased by 8.92% and 13.86% respectively mainly on account ofrecord number of sales of passenger as well as transport vehicles.Consumption of Liquified Natural Gas (LPG) increased by 6.19% asOil Marketing Companies (OMCs) released large number of newconnections.Crude oil & products importCrude oil import in the country increased at a CAGR of 11.4% duringlast five years (FY’06 to FY’10). During FY’10, crude oil import hasbeen 153.25 MMT (including that for the exported products); 15.4%more over FY’09 (132.78 MMT). Besides that 14.66 MMT of petroleumproducts was also imported; 28% less over FY’09 (20.37 MMT).

The country having surplus refining capacity (Refining capacity 184MMTPA; against consumption of 138.18 MMT in FY’10), exported46.05 MMT of petroleum products; 19.4% more over FY’09 (38.57MMT). The net value of import for crude oil and petroleum productsin FY’10 has been ` 2,661.66 billion; 8.7% less compared to ` 2,914.17billion during FY’09 because of lower petroleum products pricesglobally.

(MMT)

MANAGEMENT DISCUSSION AND ANALYSIS REPORT (MDA)

ANNEXURE –II

Crude oil price and under-recoveriesDuring FY’10 the average crude oil price (Indian basket) has beenUS$ 69.76/bbl against US$ 83.57/bbl during FY’09. The priceincreased at a staggering CAGR of 20.8% during the period FY’05 toFY’09. However, retail prices of four sensitive petroleum productsi.e., HSD, MS, LPG & SKO were controlled by the government tomake these products available to the consumers at affordable prices.Protected prices kept consumers isolated from volatility in theinternational oil market; however, it affected the financials of nationaloil companies in upstream as well as downstream sectors whichcontinued sharing under-recoveries.Government of India decontrolled the price of Motor Sprit (MS) on 25th

June, 2010 and hiked the prices for HSD, LPG and SKO. The pricerevision will help the industry to reduce under-recoveries to someextent only. However, uncertainty with the present adhoc mechanismwill remain a concern for the industry. Indian refiners, like your Company,remain heavily dependent on imported crude oil. During FY’10 importdependency has been 77.2%. This demands rationalization of domesticpetroleum products prices to reflect international prices.

3 . Opportunities & ThreatsIndia presently having 5th largest refining capacity in the world is fastemerging as a refining hub. At the end of the XI Plan (FY’12), refiningcapacity is projected to increase to 255 MMTPA; likely the 4th largestcapacity in the world after USA, China and Russian federation.Considering average 3.5% growth (on year to year basis) inconsumption, with enhanced refining capacity, the country may be ina position to export more than 70 MMTPA of petroleum products tothe global markets. This may make India the largest exporter ofrefined products in Asia.Growing demand for all types of petroleum products is an opportunityfor your Company as domestic off-take may increase.

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New Greenfield refineries, having large scale and world-leadingcomplexity, like your Company, has advantage in terms of refiningmargins compared to that of older refineries with less complex facilities.Further, your Company equipped to process heavier and cheapercrude grades with lower input costs and higher refining margins hasagain a competitive advantage. High-end products from such refineriesretail in international markets at a premium. With these strengths,enlarging export market for petroleum products is an opportunity foryour Company.Your Company is upgrading refining capacity to 15 MMTPA whichmay translate as an opportunity in terms of cost effective operations.Integration in value-chain, which your Company is aggressivelypursuing, is also an opportunity.Surplus refining capacity in the country has all the dynamics tointensify competition. The protected market in the country does notallow other players to enter into retail marketing.

4 . Risks and ConcernsThe Company operates in a business environment that ischaracterized by increasing globalization of markets, intensifyingcompetition and more complex technologies. These characteristicshave their own sets of risks which your Company factors in itsoperations and dealings.M/s.KPMG engaged for Risk Management, has identified certainrisks and formulated a well defined policy framework includingimplementation procedure and monitoring mechanism for the same.The procedure and monitoring is already in place, which is proving tobe helpful for timely and appropriate actions.Your Company has taken a comprehensive mega risk insurancecover for its assets to safeguard them from unforeseen risks as wellas from the loss of profit due to business interruptions.Like all other refining companies, your Company is also exposed tothe risk of volatility in international prices of crude oil and petroleumproducts.Domestic sales contribute to a major part of the revenue of theCompany. The state of the economy, the evacuation of product byPSU OMCs for domestic market and price fixation of major productsby Government of India therefore, influence the turnover andprofitability. Customs and Excise duty regime on petroleum productsand crude oil also exert significant influence on margins of yourCompany.Your Company’s forex transactions towards payment of crude oil andreceipts from export of petroleum products involve approximatelyUS$ 6 to 8 billion per year. The Company, therefore, faces thechallenge to manage fluctuation in forex market arising out ofdepreciation/appreciation of US$ vis-a-vis Indian Rupee. YourCompany exports about 40% of its products. At the same time,domestic sales are also linked with US$ (trade parity price). As such,there is a natural hedge to a large extent. However, for taking care ofthe forex fluctuation risks, a Foreign Exchange Risk ManagementPolicy formulated, by M/s. Ernst & Young, has been adopted by yourCompany.A Forex Risk Management Committee (FRMC) has been constitutedwhich meets regularly to review forex management practices followedby your Company. Services of an independent Forex Risk Advisor isalso being taken for assisting the FRMC. Reuters Dealing Terminalinstalled to transact forex transactions with online quotes from many

empanelled banks has been working very satisfactorily.5 . Strategic business pursuits

Your Company has continuously been diversifying the sources forcrude oil supplies by adding more countries and types of crude oil.NIOC (NOC of Iran), ADNOC (NOC of Abu Dhabi) and SAUDIARAMCO (NOC of Saudi Arabia) continue to remain main suppliersfor sour grade crude.Your Company was the first refinery in India to process the RajasthanCrude in October 2009 and it has signed an MOU with M/s. CAIRNIndia Ltd. for supply of 0.2 MMTPA of crude oil for FY’10 and 0.4MMTPA for FY’11.Your Company, keeping in view negative differential in the Brent vs.Dubai crude oil, stepped up spot purchase of sweet crude oil linkedwith Brent benchmark during FY’10 and imported 0.91 MMT of sweetcrude as against 0.09 MMT in FY’09.Your Company exports major products like HSD, ATF and MX. It hasbeen supplying approximately 1.0 MMTPA of petroleum products toState Trading Corporation, Mauritius under a 3 year term contract, signedin July 2007. The supply agreement has been renewed for three yearsperiod (from 01.08.2010 to 31.07.2013) and was signed on 1.07.2010.The contract envisages supply of 1.10 MMTPA (+/- 10% a STC’s Mauritiusoption) of petroleum products during the contract period.Your Company continues to focus on developing export market keepingin view enhanced production after completion of ongoing Phase-IIIRefinery Project.Receivables from product sales and staggered crude payments enableaccrual of surplus funds for various durations. Your Company hasbeen prudently making investment of these surplus funds for decentreturn as per Department of Public Enterprise (DPE) guidelines;however, ensuring that cash flow requirements for working capitaland project are met on time.Your Company continued to follow a non-aggressive and cautiousapproach in marketing of HSD and MS in view of the present priceregulation mechanism. It is operating two HiQ retail outlets; one eachat Maddur and Hubli in Karnataka. However, plans are in place toenter into Retail operation with deregulation in prices and clearancefrom MoP&NG.

6 . OutlookYour Company is establishing an Aromatic Complex in MangaloreSEZ through an SPV - ONGC Mangalore Petrochemicals Ltd (OMPL)- promoted in association with the parent company ONGC, for value-multiplication of excess available Naphtha to produce Paraxyleneand Benzene. The project also envisages sharing of various streamsbetween refinery and Aromatic complex to improve project economics.Your Company is also in discussion with ONGC Petro Addition Ltd.(OPaL), an SPV promoted by ONGC, for long-term supply of Naphthaas a raw material.The present configuration of refinery produces significant quantity ofBlack Oil which drags the refining margins. The Phase III RefineryProject, besides increasing the refining capacity to process high Acidand high Sulphur, heavy crudes, will enable improvement in distillateyield by eliminating black oil pool. The project is expected tosignificantly improve refining margins, ensuring long-term economicviability of your Company’s operations.

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COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THE COMPANIES ACT,1956 ON THE ACCOUNTS OF MANGALORE REFINERY AND PETROCHEMICALS LIMITED, MANGALORE FOR THE YEAR ENDED31ST MARCH, 2010.The preparation of financial statements of Mangalore Refinery and Petrochemicals Limited, Mangalore, for the year ended 31st March, 2010 inaccordance with the financial reporting framework prescribed under the Companies Act, 1956 is the responsibility of the management of the Company. TheStatutory Auditors appointed by the Comptroller and Auditor General of India under Section 619(2) of the Companies Act, 1956 are responsible for expressingopinion on these financial statements under section 227 of the Companies Act, 1956 based on independent audit in accordance with the auditing andassurance standards prescribed by their professional body, The Institute of Chartered Accountants of India. This is stated to have been done by them videtheir Audit Report dated 12th May, 2010.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under section 619(3)(b) of the Companies Act, 1956 ofthe financial statements of Mangalore Refinery and Petrochemicals Limited, Mangalore for the year ended 31st March, 2010. This supplementaryaudit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the StatutoryAuditors and Company personnel and a selective examination of some of the accounting records. On the basis of my audit nothing significant has come tomy knowledge, which would give rise to any comment upon or supplement to Statutory Auditor’s report under section 619(4) of the Companies Act, 1956.

For and on the behalf of the Comptroller & Auditor General of India

(C.H. Kharshiing, IA&AS)Place : Bangalore Pr. Director of Commercial AuditDated: 15.6.2010 & ex-officio Member, Audit Board, Bangalore.

The ongoing Phase-III project envisages setting up a modern PetroFCC unit to produce about 21% Propylene (a high value petrochemicalfeed stock); the highest by any Indian Refinery. Your Company isalso setting up a Polypropylene Unit, integrated with Phase III RefineryProject, for value multiplication of Propylene produced in FCC.The estimated capital expenditure of ` 121,600 Million for Phase IIIRefinery Project is proposed to be financed through a debt and equityratio of 2:1. The equity contribution is proposed to be met out of internalaccruals. The Parent company, ONGC has also sanctioned term loanof ` 50,000 Million for this project at interest rate of 3.85% belowSBIPLR. Oil Industry Development Board (OIDB) has also sanctioneda medium-term loan of ` 2,000 Million. The arrangement for balancerequirement of borrowing will be made in due course.Detailed Feasibility Report (DFR) for proposed Single Point Mooring(SPM) at Mangalore, within New Mangalore Port Limits, with aninvestment of around ` 11,710 Million has been completed. Theproposed SPM facility may enable your Company to source crude oilthrough Very Large Crude Carriers (VLCC) with substantial saving infreight charges. This will also enable your Company to source crudeoil from Venezuelan and West African markets which can be processedeconomically. The SPM Project has been approved by your Company’sBoard and is being put up to ONGC Board for approval. The Projectis targeted for completion by May, 2012.M/s Indian Strategic Reserves Ltd., (ISPRL) is setting up Crude OilStorage Cavern of 1.5 MMT at Mangalore. The SPM project envisagedutilizing a part of the ISPRL Mangalore Cavern for receipt andintermediate storage of Crude oil on proportionate cost sharing basis.

7 . Internal Control SystemsYour Company has institutionalized a prudent internal control systemsand procedures to ensure optimal use of its resources. The internalaudit department of your Company carries regular audits of variousoperational and financial matters and its observations are periodicallyreviewed by the Audit Committee of the Board.

As reported last year, in order to have a mechanism for establishingand maintaining internal controls for financial reporting, M/s. KPMGwas engaged as a consultant and its recommendations were adopted.As per the procedure suggested by M/s. KPMG, Head of respectiveSections and Internal Audit facilitate CEO/CFO certification to assureadequacy and efficacy of internal control environment.Apart from the above, the Company’s Vigilance Department hasbeen carrying out various preventive vigilance activities by means ofinspections, detailed examinations, study of major work orders/purchase orders, scrutiny of deemed single tenders and tenders onnomination basis.

8 . PerformanceThe refinery achieved a crude throughput of 12.50 MMT during FY’10( as against 12.59 MMT in FY’09) with a gross refining margin of US$5.46/bbl (US$ 5.33/bbl in FY’09) and produced 11.68 MMT of finishedproducts (11.78 MMT in FY’09).Turnover during the year was ` 360809 Million (` 427189 Million);including exports amounting to ` 110834 Million (` 116077 Million).Profit After Tax (PAT) has been ` 11124 Million for FY’10 (Rs. 11925Million).

9 . Human ResourcesYour Company has employees’ strength of 1,312 (as on 31.03.2010),including 72 women employees. The number of employees belongingto SC, ST and OBC categories has been 75, 24, and 321 respectively.

1 0 . Cautionary StatementStatements in the Management Discussion and Analysis Report 4andDirectors Report describing the Company’s objectives, projectionsand estimates, are forward-looking statements and progressive withinthe meaning of applicable laws and regulations. Actual results mayvary from those expressed or implied, depending upon economicconditions, Government Policies and other incidental factors. Readersare cautioned not to place undue reliance on the forward lookingstatements.

ANNEXURE –III

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AUDITORS’ REPORTTo,The MembersMangalore Refinery and Petrochemicals LimitedMangalore.We have audited the attached Balance Sheet of Mangalore Refineryand Petrochemicals Limited as at 31st March, 2010, the Profit andLoss Account and the Cash Flow Statement for the year ended on thatdate together with the schedules annexed thereto which are in agreementwith the books of account maintained. These financial statements are theresponsibility of the Company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generallyaccepted in India. Those Standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes, examining on a testbasis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles usedand significant estimates made by the management as well as evaluatingthe overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.1. As required by the Companies (Auditor’s Report) Order, 2003 as

amended by the Companies (Auditor’s Report) Amendment Order,2004 issued by the Government of India in terms of section 227(4A) of the Companies Act, 1956, we enclose in the Annexure astatement on the matters specified in Paragraphs 4 and 5 of thesaid Order.

2. Further to our comments in the Annexure referred to above, wereport that:i) We have obtained all the information and explanations, which

to the best of our knowledge and belief were necessary forthe purpose of our audit.

ii) In our opinion, proper books of account as required by lawhave been kept by the Company so far as appears fromour examination of those books.

iii) The Balance Sheet, Profit & Loss Account and Cash Flow

Statement dealt with this report are in agreement with booksof account maintained.

iv) In our opinion, the Balance Sheet and Profit and Loss Accountand Cash Flow Statement dealt with by this report read withthe notes thereon are in Compliance with the AccountingStandards referred to in sub-section (3C) of section 211 ofthe Companies Act, 1956 to the extent applicable.

v) Being a Government Company provision of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956, isnot applicable as per notification no GSR 829(E) datedOctober 21, 2003, issued by the Department of CompanyAffairs.

vi) In our opinion and to the best of our information andaccording to the explanations given to us, the said accountsread together with the significant accounting policies andother notes on accounts attached thereto, give theinformation required by the Companies Act, 1956, in themanner so required and give a true and fair view inconformity with the accounting principles generally acceptedin India.a) in the case of the Balance Sheet, of the state of

affairs of the Company as at 31st March, 2010.b) in the case of the Profit and Loss Account, of the

profit for the year ended on that date; andc) in the case of the Cash Flow Statement, of the cash

flows of the Company for the year ended on thatdate.

For S. R. R. K. SHARMA ASSOCIATES For MAHARAJ N.R.SURESH & COChar te red Accoun tan ts Char te red Accoun tan ts( ICAI Reg is t ra t i on No . 003790S) ( ICAI Reg is t ra t i on No . 001931S)

G.S.KRISHNAMURTHY JAYADEVAN N RPar tne r Pa r tne rMembersh ip No . 13841 Membersh ip No . 23838

P lace : New De lh iDa te : 12 th May , 2010 .

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR AUDIT REPORT OF EVEN DATE ON THE ACCOUNTS OF MANGALOREREFINERY AND PETROCHEMICALS LIMITED FOR THE YEAR ENDED 31ST MARCH, 20101. (a) The Company has maintained proper records showing full

particulars, including quantitative details and situation of fixedassets

(b) All the assets have not been physically verified by the managementduring the year but there is a regular programme of verificationwhich in our opinion, is reasonable having regard to the size ofthe Company and the nature of its assets. No materialdiscrepancies have been noticed on such verification.

(c) The Company has not disposed off substantial part of fixed assetsduring the year.

2. (a) We are informed that the inventories of stores and spares arephysically verified by the management on a continuing basis asper a programme of perpetual inventory. Inventories of other itemshave been physically verified at the year end, the frequency ofwhich, in our opinion is reasonable, having regard to the size ofthe Company and nature of its business.

(b) In our opinion and according to the explanation given to us, theprocedures of physical verification of inventory followed by themanagement are reasonable and adequate in relation to the sizeof the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and asinformed to us, discrepancies noticed on physical verification bythe management, which are reported to be not material, samehave been properly dealt with in the books of account of theCompany.

3. (a) The Company has not granted any loans, secured or unsecuredto companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956.

(b) The Company has not taken any loans, secured or unsecured,from companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations givento us, internal control procedures are fairly adequate, commensuratewith the size of the Company and nature of its business for the purchaseof inventory and fixed assets and with regard to the sale of goods andservices. During the course of our audit no major weakness has beennoticed in the internal control systems.

5. According to the information and explanations given to us, Companyhas not entered into any transactions that need to be entered in a registermaintained pursuant to section 301 of the Companies Act, 1956.

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6. The Company has not accepted any deposits from the public during theyear and hence the directives issued by the Reserve Bank of India and theprovisions of sections 58A, 58AA or any other relevant provisions of theCompanies Act, 1956 and the rules framed thereunder are not applicable.

7. The Company has an internal audit system, the scope and coverage ofwhich is commensurate with its size and nature of its business.

8. We have broadly reviewed the records maintained by the Companypursuant to the order by the Central Government under section 209 (1)(d) of the Companies Act, 1956, for maintenance of Cost records inrespect of the products of the Company and are of the opinion thatprima facie, the prescribed accounts and records have been made andmaintained. However, we are not required to and have not carried outany detailed examination of such records.

9. (a) The Company has been generally regular in depositing undisputedstatutory dues including Provident Fund, Employee’s StateInsurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty,Excise Duty, Cess, Investor Education and Protection Fund,Service Tax and other statutory dues with the appropriateauthorities during the year. There are no arrears of undisputedstatutory dues of material nature outstanding for a period of morethan 6 months from the date on which they became payable.

(b) According to the information and explanations given to us and as perour verification of records of the Company, the following disputedamounts of tax not provided for in the accounts of the Company andnot deposited with appropriate authorities as at 31st March, 2010:

10. There are no accumulated losses at the end of the financial year.The Company has also not incurred cash losses during the yearand in the immediately preceding financial year.

11. According to information and explanations given to us and as perour verification of the records of the Company, the Company hasnot defaulted in repayment of dues to the financial institutions andbanks.

12. The Company has not granted any loans or advances on the basisof security by way of pledge of share, debenture and other securities.

13. Since the Company is not a Chit Fund/Nidhi/Mutual Benefit Fund/Society, the relative reporting requirements are not applicable.

14. Since the Company is not dealing or Trading in shares, securities,Debentures or other investments, the relative reporting requirementsare not applicable.

15. According to the information and explanations given to us and asper the verification of the records of the Company, the terms andconditions of the guarantee given by the Company, for the loanstaken by New Mangalore Port Trust from banks and financialinstitutions, are not prejudicial to the interest of the Company.

Except for the above, Company has not given any guarantee forloans taken by others from banks or financial institutions.

16. According to the information and explanations given to us, theCompany has not availed any fresh term loans during the year.

17. According to the information and explanations given to us and asper the verification of the records of the Company, on an overallbasis, the Company has not utilized short-term funds for long termpurposes.

18. The Company has not made any preferential allotment of shares tothe parties and companies covered in the register maintained undersection 301 of the Act.

19. The Company has not issued any debentures during the year.20. The Company has not raised any money by public issues during

the year.21. According to the information and explanations given to us and as

per the verification of the records of the Company, no fraud eitheron or by the Company, having a material financial impact, has beennoticed or reported during the year.

For S. R. R. K. SHARMA ASSOCIATES For MAHARAJ N.R.SURESH & COChartered Accountants Chartered Accountants(ICAI Registration No. 003790S) (ICAI Registration No. 001931S)

G . S . K R I S H N A M U R T H Y JAYADEVAN N RPartner PartnerMembership No. 13841 Membership No. 23838

Place: New DelhiDate: 12th May, 2010.

Name of the Nature of Total Amount Paid and or Balance Amt Period to which Forum whereStatute the dues (` Millions) Provided Outstanding the amount relates dispute is pending

(` Million) (` Million) (financial year)

The Karnataka Sales Sales Tax/ 1,188.76 377.20 811.56 1993-2008 Commercial TaxTax Act, 1957/ Entry Tax/ Appellate Authorities/Central Sales Tax Interest and Hon’ble High Court ofAct, 1956/ Penalty Karnataka.Entry tax –The Karnataka Tax Before Govt. ofon Entry of Goods Karnataka for conciliationAct, 1979. and settlement

Income Tax Act, 1961 Income Tax/ 244.51 94.93 149.58 1992-2006 Income Tax AppellateInterest/Penalty Authorities

Central Excise Act, 1944 Central Excise 146.45 41.08 105.37 1996-2007 Central Excise Appellate Authorities/Duty/Interest/Penalty Ministry of Finance, Government of India

The Customs Act, 1962 Custom Duty 128.82 Ni l 128.82 1996-2007 Customs Appellate Authorities

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BALANCE SHEET AS AT 31ST MARCH, 2010S C H E D U L E AS AT 31.03.2010 AS AT 31.03.2009

(` in Million) (` in Million)

I . SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital A 17,618 .50 17,618.31Reserves and Surplus B 38,347 .02 29,675.68LOAN FUNDSSecured Loans C 3,421 .35 2,389.40Unsecured Loans D 13,542 .62 17,478.64DEFERRED TAX LIABILITY (NET) 6 ,602 .22 5,685.53

T O T A L 79,531 .71 72,847.56II. APPLICATION OF FUNDS

FIXED ASSETS EGross Block 74,351 .65 74,240.50Less : Depreciation/ Amortisation 41,428 .08 37,661.38Net Block 32,923 .57 36,579.12Capital Work in Progress F 18,602 .85 4,149.54

51,526 .42 40,728.66I N V E S T M E N T S G 16,236 .62 6,428.93CURRENT ASSETS, LOANS AND ADVANCESInterest Accrued 1 ,059 .62 213.04Inventories H 31,143 .55 18,904.30Sundry Debtors I 16 ,572 .20 12,869.79Cash and Bank Balances J 23,440 .08 17,711.22Loans and Advances K 5,849 .78 10,287.47

78,065 .23 59,985.82LESS : CURRENT LIABILITIES & PROVISIONSCurrent Liabilities L 63,098 .82 31,293.14Provisions M 3,197 .74 3,002.71

66,296 .56 34,295.85Net Current Assets 11,768 .67 25,689.97

T O T A L 79,531 .71 72,847.56

Significant Accounting Policies RNotes on Accounts SSchedules referred to above form part of the Balance Sheet

As per our report of even date attached For and on behalf of the Board

For S.R.R.K. Sharma Associates For MAHARAJ N.R.SURESH & Co R. S. SHARMAChartered Accountants Chartered Accountants ChairmanICAI Registration No. : 003790S ICAI Registration No. : 001931S

U. K. BASUManaging Director

G . S . K R I S H N A M U R T H Y JAYADEVAN N RPartner Partner L. K. GUPTAMembership No. 13841 Membership No. 23838 Director(Finance)

B. SUKUMARNew Delhi : 12th May, 2010 Company Secretary

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PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010S C H E D U L E For the year ended For the year ended

31.03 .2010 31.03.2009(` in Million) (` in Million)

I N C O M EIncome from OperationsSale of Products (Gross) 360,809.09 427,188.85Less : Excise Duty 41,957.35 44,751.44Sale of Products (Net) 318,851.74 382,437.41Other Income N 6,819.09 1,866.41Increase/(Decrease) in Stocks O 2,958.77 (5,968.56)

328,629.60 378,335.26EXPENDITURERaw Materials Consumed 302,308.72 345,127.41Purchase of Trading Goods 0 .02 0.25Operating and Other Expenses P 4,355.25 9,844.37

306,663.99 354,972.03Profit for the year before Interest, Depreciation, 21,965.61 23,363.23Prior Period and TaxInterest & Finance Charges Q 1,154.98 1,434.51Depreciation/ Amortisation 3,893.27 3,823.16Profit Before Prior Period and Tax 16,917.36 18,105.56Adjustments Related to Prior Period (net) (1.09) (11.01)(Refer Note No. 23 of Schedule S - Notes to Accounts)Profit Before Tax 16,918.45 18,116.57Provision for Wealth Tax 3 .25 2.90Provision for IncomeTax

Current Tax 4,865.81 5,319.56Fringe Benefit Tax - 12.47Prior Year’s Tax Adjustments 8 .92 478.46Deferred Tax 916.70 377.74

Profit after Taxation 11,123.77 11,925.44Balance of Profit brought forward from Previous year 25,567.15 16,401.69Balance available for Appropriation 36,690.92 28,327.13AppropriationsProposed Dividend on Preference Shares 0 .01 0.01Proposed Dividend on Equity Shares 2,103.12 2,103.48Corporate Dividend Tax 349.30 357.49Transfer to General Reserve 279.00 299.00Balance carried to Balance Sheet 33,959.49 25,567.15Earnings per Equity Share :(Face Value ` 10/- Per Share)Basic (in `) 6 .35 6.80Diluted (in `) 5 .87 6.27Significant Accounting Policies RNotes on Accounts SSchedules referred to above form part of the Profit and Loss Account






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CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010For the year ended For the year ended


A . CASH FLOW FROM OPERATING ACTIVITIESProfit Before Tax 16,918 .45 18,116.57Adjustments for :- Depreciation / Amortisation 3,901.94 3,816.95- Loss/ (Profit) on sale of Fixed Assets 53.44 12.18- Provisions Written back (92.19) (16.60)- Provision for Doubtful Debts/ Advances 175.65 178.12- Provision for Non-Moving Inventory/ Stock Loss 3.00 9.38- Interest Expense 1,154.98 1,434.51- Interest/ Dividend Income (2,641.30) (1,440.84)- Prepayment Loan Benefit - (18.99)Operating Profit before Working Capital changes 19,473 .97 22,091.28Adjustment for :- Trade and other receivables (3,219.38) 4,125.99- Inventories (12,242.25) 17,329.25- Trade payable and provisions 27,940.43 (15,914.73)Cash generated from operations 31,952.77 27,631.79- Direct taxes paid (net of refunds) (4,707.68) (7,693.12)Cash flow before Prior Period items 27,245.09 19,938.67- Prior Period items (cash items) (9.76) (4.80)Net Cash flow from Operating Activities (a) 27 ,235 .33 19,933.87

B . CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed assets (10,827.30) (2,803.93)Sale of Fixed assets 6.97 85.33Interest/ Dividend Income received 1,794.72 1,286.40Investment in Associate/ Joint venture companies 0.00 (150.00)Investments (Net) (9,807.69) 172.43Net Cash flow from Investing Activities (b) (18,833.30) (1,409.77)

C . CASH FLOW FROM FINANCING ACTIVITIESProceeds from Issue of Share Capital 0.19 0.10Proceeds from Long Term Borrowings (4,775.76) (555.44)Proceeds from Short Term Borrowings 1,946.70 (446.01)Interest and Finance charges paid (1,162.34) (1,440.41)Dividend and Dividend tax paid (2,460.98) (2,460.98)Net Cash flow from Financing Activities (c) (6,452.19) (4,902.75)Net Increase / (Decrease) in Cash and Cash Equivalents (a+b+c) 1 ,949 .84 13,621.35Cash and Cash Equivalents as at the beginning of the year 17 ,616 .08 3,994.73Cash and Cash Equivalents as at the end of the year 19 ,565 .92 17,616.08

1 ,949 .84 13,621.35

AS AT 31.03.2010 AS AT 31.03.2009(` in Million) (` in Million)

1) Cash and Cash EquivalentsCash balances including imprest 1.62 0.61Cheques on Hand 20.89 50.04Bank Balances with Scheduled Banks** 19,543.41 17,565.43

19,565 .92 17,616.08** Excludes balances in current account/deposit account of interest warrant/refund accounts, under lien, pledge with banks / Govt. authorities` 3,874.16 Million ; (Previous year ` 95.14 Million)

2) Previous year’s figures have been re-grouped / re-arranged wherever necessary to conform to the current year’s presentation.As per our report of even date attached For and on behalf of the BoardFor S.R.R.K. Sharma Associates For MAHARAJ N.R.SURESH & Co R. S. SHARMAChartered Accountants Chartered Accountants ChairmanICAI Registration No. : 003790S ICAI Registration No. : 001931S




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SCHEDULES FORMING PART OF THE BALANCE SHEETAS AT 31.03.2010 AS AT 31.03.2009

SCHEDULE A : (` in Million) (` in Million)SHARE CAPITALA U T H O R I S E D1,900,000,000 Equity Share of ` 10 each 19,000 .00 19,000.00(Previous Year 1,900,000,000 Equity Shares of ` 10 each)100,000,000 Non-Cumulative, Redeemable, 1 ,000 .00 1,000.00Preference Share of ` 10 each 20,000 .00 20,000.00(Previous year 100,000,000 Preference Shares of ` 10 each)

T O T A L 20,000 .00 20,000.00ISSUED, SUBSCRIBED AND PAID-UPEquity Share Capital 17,525 .99 17,529.02(1,752,598,777 (Previous year 1,752,902,327) Equity Shares of` 10 each fully paid up (out of the above 1,255,354,097 numbers(Previous Year 1,255,354,097 numbers) held by ONGC Limited,the Holding Company)Less : Allotment/ Call money in arrears (from other than Directors) - 2.57Add: Forfeited Shares (amount originally paid-up) 0 .65 -

17,526 .64 17,526.45Preference Share Capital 9 1 . 8 6 91.86(9,186,242 (Previous year 9,186,242) 0.01% ,Non-Cumulative,Redeemable Preference Shares of ` 10 each fully paid-up(Redeemable in two equal annual installments on 1st July, 2011and 1st July, 2012)

T O T A L 17,618 .50 17,618.31Notes:During the year company has forfeited 3,03,550 Equity Sharesdue to non receipt of allotment and/or call money from EquityShareholders. Accordingly the Paid up Equity Share Capital hasbeen reduced from ` 17,529.02 Million to ` 17,525.99 Million

SCHEDULE B :RESERVES AND SURPLUSSecurities Premium Account (as per last Balance Sheet) 3 ,490 .53 3,490.53General ReserveAs per Last Balance Sheet 6 1 8 . 0 0 319.00- Transferred from Profit and Loss Account 2 7 9 . 0 0 299.00

8 9 7 . 0 0 618.00Surplus in Profit & Loss Account 33,959 .49 25,567.15

T O T A L 38,347 .02 29,675.68SCHEDULE C:SECURED LOANS FROM BANKS(a) Foreign Currency Term Loans - 914.75(b) Rupee Term Loans (Interest Free) 1 ,428 .09 1,428.09(c) Working Capital Facilities 1 ,993 .26 46.56

T O T A L 3,421 .35 2,389.40

NOTES TO SCHEDULE C1 . Foreign Currency Term Loan from State Bank of India, Tokyo Branch of ` Nil (Previous year ` 914.75 Million) is secured by the letter of comfort/guarantees

issued by the local bank in favour of the overseas lending branch. This letter of comforts/guarantees are secured by equitable mortgage/hypothecationof the Company’s immovable and movable properties (save and except book debts) both present and future.

2 . Rupee Term Loans from Banks of ` 1,428.09 Million(Previous year ` 1,428.09 Million) alongwith all interest, cost charges, expenses and other monieswhatsoever payable to Lenders are secured/to be secured by :i) Equitable mortgage over the immovable properties, both present & future;ii) Hypothecation over the present and future movable properties;

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iii) These Rupee Term Loans are convertible into Equity Shares in case of default in repayment of loans.

3 . Working Capital Facilities from banks are secured by way of hypothecation of Company’s stocks of raw materials, finished goods, stock-in-process,stores, spares, components, book debts, outstanding money receivables, claim, bills, contracts, engagements, securities, both present and future andfurther secured/to be secured by residual charge on Company’s immovable and movable properties (save and except Current Assets) both present andfuture, ranking pari passu inter se and including a lien over Company’s Fixed Deposit amounting to ` 3751.40 Million (Previous Year ` Nil).

4 . Charges created/to be created in favour of lenders as referred to in note 1&2 shall rank pari passu inter se and are subject to the charge(s) created/ tobe created by the company in favour of its bankers on the company’s stock of raw materials, semi-finished goods, consumable stores and book debtsand such other movables as may be specifically permitted to secure its working capital requirements in the ordinary course of business.


SCHEDULE D :UNSECURED LOANSFrom OthersFrom Holding Company 10,800 .00 15,000.00(Including ` Nil ( Previous year ` 600 Million)due for payment within one year)Sales Tax Deferment Loan (Interest Free) 2 ,742 .62 2,478.64(Including ` Nil ( Previous year ` Nil Million) due 13,542 .62 17,478.64for payment within one year)

T O T A L 13,542 .62 17,478.64

SCHEDULE E

FIXED ASSETS (` in Million)PARTICULARS REF. USEFUL GROSS BLOCK - AT COST DEPRECIATION / AMORTISATION NET BLOCK

NOTE LIFE(IN Sale/ Deletions/YEARS) Additions Adjustments Provided Adjustments

As at during the during the As at Upto during the during the Upto As at As at01.04.2009 year year 31.03.2010 01.04.2009 year year 31.03.2010 31.03.2010 31.03.2009

A. TANGIBLE ASSETSLand - Freehold 17.51 0.14 - 17.65 - - - - 17.65 17.51Land - Leasehold 1 242.58 0.28 - 242.86 0.29 0.08 - 0.37 242.49 242.29Buildings 2,763.09 54.30 - 2,817.39 563.61 52.88 - 616.49 2,200.90 2,199.48Plant & Machinery 2 , 3 70,753.96 264.15 260.27 70,757.84 37,003.45 3,808.86 131.34 40,680.97 30,076.87 33,750.51Furniture & Fittings 95.34 13.34 0.67 108.01 48.44 6.96 0.16 55.24 52.77 46.90Vehicles 202.96 43.03 8.00 237.99 33.17 20.74 2.99 50.92 187.07 169.79Sub-total (A) 74,075.44 375.24 268.94 74,181.74 37,648.96 3,889.52 134.49 41,403.99 32,777.75 36,426.48B. ASSETS NOT IN USEHELD FOR DISPOSAL 4Land - Free hold 77.96 - - 77.96 - - - - 77.96 77.96Others 5 3.71 2.60 3.63 2.68 2.74 2.60 2.66 2.68 0.00 0.97Sub-total (B) 81.67 2.60 3.63 80.64 2.74 2.60 2.66 2.68 77.96 78.93Total (A+B) 74,157.11 377.84 272.57 74,262.38 37,651.70 3,892.12 137.15 41,406.67 32,855.71 36,505.41C. INTANGIBLE ASSETSGoodwill ** 10 20.13 - - 20.13 4.03 2.01 - 6.04 14.09 16.10Software 10 3.76 0.71 - 4.47 0.56 0.43 - 0.99 3.48 3.20Software 4 3.03 4.36 - 7.39 0.72 1.13 - 1.85 5.54 2.31Software 7 56.47 0.81 - 57.28 4.37 8.16 - 12.53 44.75 52.10Sub-total (C) 83.39 5.88 - 89.27 9.68 11.73 - 21.41 67.86 73.71Total (A+B+C) 74,240.50 383.72 272.57 74,351.65 37,661.38 3,903.85 137.15 41,428.08 32,923.57 36,579.12Previous year 73,716.39 766.55 242.44 74,240.50 33,988.12 3,818.20 144.94 37,661.38

** Represents consideration for purchase of business (Nitrogen Plant) in excess of book value of net assets acquired.

NOTE:1 . Lease hold land (Gross Block) includes:

: ` 235.13 Million (Previous Year ` 234.85 Million) which has not been amortised in view of the fact that eventually the ownership will get transferred tothe Company on expiry of the lease period.

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SCHEDULE F :CAPITAL WORK-IN-PROGRESS(Including Project expenses to be Capitalised appropriately)a) Capital Work-in-Progress 14,731 .90 2,529.88b) Advances for Capital Expenditure 3 ,595 .68 1,745.90c) Project expenditure to be Capitalised appropriately

Opening balance 9 7 . 8 3 45.23Salaries, Wages & Gratuity 1 0 2 . 2 1 33.71Contribution to P.F & Superannuation Fund 5 .87 3.36Staff Welfare Expenses - 0.02Rates & Taxes 0 .48 0.41Insurance 1 5 9 . 5 7 1.22Miscellaneous Expenses 2 3 . 5 0 12.63Depreciation 1 .91 1.25

3 9 1 . 3 7 97.8318,718 .95 4,373.61

d) Less : Amount Capitalised to Fixed assets during the year 1 1 6 . 1 0 224.07TOTAL (a+b+c-d) 18 ,602 .85 4,149.54

SCHEDULE G :INVESTMENTS - AT COSTLong Term Investments : Trade (Unquoted)a) 1,500 equity shares of ` 10 each of ONGC Mangalore 0 .02 0.02

Petrochemicals Ltd. fully paidb) 7% Oil Companies Government of India Special Bonds, 2012 2 7 2 . 7 8 272.78

(27278 no of bonds, face value @ ` 10,000 each)c) 1,50,00,000 Equity Shares of ` 10 each of Shell MRPL 1 5 0 . 0 0 150.00

Aviation Fuels & Services Pvt. Limited4 2 2 . 8 0 422.80

Current Investments : Non-Trade (Unquoted)d) Investments in Units of UTI

I) UTI Liquid Cash Plus (Current Year 2,180,705.98 units 2 ,223 .11 -@ ` 1019.4457) (Previous Year Nil)

II) UTI Treasury Advantage Fund : Institutional Plan 13,590 .71 6,006.13(Current Year 1,35,87,803.44 units @ ` 1000.2141) 15,813 .82 6,006.13(Previous Year 60,04,369.404 units @ ` 1000.2929)

T O T A L 16,236 .62 6,428.93

: ` 11.52 Million (Previous Year ` 11.52 Million) which is in the process being surrendered to Competent Authority. Net Block ` 11.52 Million (Previous Year` 11.52 Million).: ` 4.25 Million (Previous Year ` 3.97 Million), which is in possession of the company and in respect of which formal lease deeds are yet to be executed.Net Block ` 3.93 Million (Previous Year ` 3.94 Million).

2 . Includes ` 782.98 Million (Previous Year ` 782.98 Million) being Company’s share of an asset jointly owned with another Company. Net Block` 203.41 Million (Previous Year ` 244.75 Million).

3 . Sale/adjustments during the year includes exchange difference, being net decrease in the value of foreign currency liability adjusted to the carrying costof fixed assets ` 75.01 Million (Previous year ` 307.80 Million net Increase).

4 . Assets not in use and held for sale is shown at lower of cost or estimated realisable value.5 . Includes ` 0.41 Million (Previous Year ` 0.97 Million) towards additional depreciation provided to recognise the expected loss on disposal.6 . Depreciation provided during the year includes:

a . Charged to Profit & Loss Account : ` 3,893.27 Million (Previous Year ` 3,823.16 Million).b. Charged to Adjustments related to Prior Period (Net) : ` 8.67 Million (Previous Year ` (6.21) Million).c . Charged to Capital Work in Progress: ` 1.91 Million (Previous Year ` 1.25 Million).

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Details of Investment purchased and sold during the year U N I T S N A V Cost (` in Million)Purchases :I) UTI Liquid Cash Plus 120,212,858.170 1,019.4457 122,550.48II) UTI Treasury Advantage Fund : Institutional Plan 31,354,148.130 1,000.2141 31,360.86Sales:I) UTI Liquid Cash Plus 118,032,152.187 1,019.4457 120,327.37II) UTI Treasury Advantage Fund : Institutional Plan 23,770,714.090 1,000.2141 23,775.80


SCHEDULE H :I N V E N T O R I E SStores, Spares & Chemicals 1 ,237 .79 889.21(including in transit ` 70.97 Million ; Previous Year ` 13.13 Million)Less : Provision for Non Moving Inventories 8 5 . 7 0 82.70

1 ,152 .09 806.51Raw Materials(Including in Transit ` 6,338.62 Million ; Previous year ` 4,214.34 Million) 17,763 .85 8,828.95Stock-in-Process 1 ,090 .92 692.84Finished products 11,143 .67 8,582.98Less : Provision for Stock loss 6 .98 6.98

11,136 .69 8,576.00T O T A L 31,143 .55 18,904.30

SCHEDULE I :SUNDRY DEBTORS (Unsecured : Unless Otherwise Stated)Debts due for more than six monthsConsidered Good 7 0 1 . 7 5 274.04Considered Doubtful 5 9 0 . 4 7 415.39

1 ,292 .22 689.43OthersConsidered Good 15,870 .45 12,595.74Considered Doubtful 1 7 . 0 3 16.47

15,887 .48 12,612.2117,179 .70 13,301.64

Less : Provision for Doubtful Debts 6 0 7 . 5 0 431.85T O T A L 16,572 .20 12,869.79

(Above “Considered Good” includes ` 289.54 Million(Previous Year ` 291.84 Million) backed by bank guarantees)

SCHEDULE J :CASH & BANK BALANCESCash balances including imprest** 1 .62 0.61Cheques on hand 2 0 . 8 9 50.04Balance with Scheduled BanksIn Current Accounts ( Including Refund/ Interest Accounts etc.) 2 0 7 . 2 6 103.03In Deposit Accounts ( Including Under Lien/ Pledge 23,210 .31 17,557.54with Banks/ Customs Authorities)

23,417 .57 17,660.57T O T A L 23,440 .08 17,711.22

** Includes Gold Coins valued ` 1.36 Million; (Previous year ` 0.30 Million)

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SCHEDULE K :LOANS AND ADVANCESUnsecured and Considered Good unless and otherwise statedLoan to Port Trust/ Employees* 2 3 8 . 6 9 424.77Advances recoverable in cash or in kind or for value to be receivedConsidered good 4 ,957 .64 4,661.30Considered doubtful 5 .17 19.65

4 ,962 .81 4,680.95Less : Provision for doubtful advances 5 .17 19.65

4 ,957 .64 4,661.30Inter Corporate Deposits - 4,900.00Advances against the proposed issue / allotment of equity shares 2 8 5 . 9 8 214.48Material Given on Loan (Secured by cash deposit) - 2.23Balance with Customs, Port Trust, etc. 3 0 7 . 5 5 43.83Other Deposits 5 9 . 9 2 40.86

T O T A L 5,849 .78 10,287.47* Represents loans having repayment schedule of more than 7 years.

SCHEDULE L :CURRENT LIABILITIESSundry CreditorsDues to Micro and Small Enterprises 0 .74 -Dues to Others 61,925 .24 29,702.49

61,925 .98 29,702.49Advance from Customers 4 0 7 . 5 9 449.02Investor Education and Protection Fund (IEPF) shall be credited by:(a) Unpaid Dividend* 1 0 2 . 3 3 75.25(b) Unpaid Matured Debentures* 4 .28 42.42(c) Interest Accrued on above* 0 .74 7.77

1 0 7 . 3 5 125.44Other Liabilities 6 5 7 . 9 0 812.56Interest accrued but not due - 7.36Liability on Foreign Currency Forward Contracts - 969.04Less : Foreign Currency Receivables on Forward Contracts - 772.77

- 196.27T O T A L 63,098 .82 31,293.14

* Not due for payment to IEPF

SCHEDULE M :PROVIS IONSProvisions For Taxation (Including Wealth Tax) 18,231 .54 13,353.55Provisions for Fringe Benefit Tax 4 3 . 4 6 43.46

18,275 .00 13,397.01Less : Advance Payments of Tax (Including Wealth Tax) 17,737 .06 13,033.67Less : Advance Payments of Fringe Benefit Tax 4 5 . 9 8 41.69

4 9 1 . 9 6 321.65For Retirement BenefitsGratuity 3 0 . 7 9 53.77Leave Encashment 1 8 0 . 3 8 136.89Post Retirement Medical & Other Retirement Benefits 2 3 . 0 2 13.72Long Service Emblem 1 9 . 1 6 15.70

2 5 3 . 3 5 220.08For Proposed DividendsPreference Dividend 0 .01 0.01Equity Dividend 2 ,103 .12 2,103.48Corporate Dividend Tax 3 4 9 . 3 0 357.49

2 ,452 .43 2,460.98T O T A L 3,197 .74 3,002.71

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SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNTFor the year ended For the year ended


SCHEDULE N :

OTHER INCOME

Income from Investments

Long Term Investment : Interest 19 .09 19.09

Current Investment : Dividend 363.71 387.77

Interest Income : Others 2,258.50 1,033.98

(Tax deducted at source ` 206.39 Million; Previous year ` 183.81 Million)

Excess Provision/ Liabilities no longer required written back (net) 92 .19 16.60

Other Miscellaneous Income 181.63 389.98

Exchange Fluctuations (net) 3,903.97 -

Prepayment Loan Benefit - 18.99

TOTAL 6,819.09 1,866.41

SCHEDULE O:

INCREASE/(DECREASE) IN STOCKS

Closing Stock

Stock-in-Process 1,090.92 692.84

Finished Products 11,143.67 8,582.98

Less: 12,234.59 9,275.82

Opening stock

Stock-in-Process 692.84 1,473.30

Finished products 8,582.98 13,771.08

9,275.82 15,244.38

TOTAL 2,958.77 (5,968.56)

SCHEDULE P:

OPERATING AND OTHER EXPENSES

Payment to and Provisions for Employees(refer note no. 5 in Schedule S (Notes on Accounts)

Salaries, Wages, Bonus & Gratuity 806.21 988.76

Contribution to PF & Other Funds 83 .93 80.90

Staff Welfare Expenses 68 .81 60.64

958.95 1,130.30

Power & Fuel 16,482.69 15,924.17

Less: Own Consumption 16,378.84 15,794.98

103.85 129.19

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Repairs & Maintenance

Plant & Machinery 658.59 579.95

Buildings 86 .23 19.70

Others 122.90 96.90

867.72 696.55

Stores, Spares and Chemicals Consumed 816.11 397.31

Less : Shown under other heads of Expenditure 375.44 274.45

440.67 122.86

Packing Materials Consumed 93 .83 126.62

Rent 55 .29 90.46

Insurance 99 .06 95.54

Rates & Taxes 9 .65 7.25

Sales Tax 744.16 913.55

Excise Duty on Stocks (Net) 150.07 (354.54)

Directors’ Sitting Fees 0 .54 0.50

Loss on Sale/Provision for Fixed Assets (Net) 9 .69 4.44

Exchange Fluctuation (Net) (refer note no. 8.2 in Schedule S) - 6,104.96(Notes on Accounts)

Provision for Doubtful Debts 175.64 160.04

Provision for Doubtful Advances - 18.08

Provision for Non-Moving Inventory/ Stock Loss 3 .00 9.38

Miscellaneous Expenses 643.13 589.19

TOTAL 4,355.25 9,844.37

SCHEDULE Q:

INTEREST AND FINANCE CHARGES

On Fixed Loans 917.16 1,146.53

Others 237.82 287.98

TOTAL 1,154.98 1,434.51

For the year ended For the year ended31.03 .2010 31.03.2009

(` in Million) (` in Million)

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SCHEDULE R

SIGNIFICANT ACCOUNTING POLICIES

1 . Accounting Conventions and Basis of Presentation /Accounting

1.1. The financial statements are prepared under the historicalcost convention, in accordance with the Generally AcceptedAccounting Principles (GAAP), the provisions of the CompaniesAct, 1956 and the Accounting Standards issued under theCompanies (Accounting Standards) Rules, 2006.

1.2. All income and expenses to the extent considered receivable/ payable with reasonable certainty are accounted for onaccrual basis.

2 . Use of Estimates

The preparation of financial statements requires estimates andassumptions to be made that affect the reported amount of assetsand liabilities on the date of the financial statements and the reportedamount of revenues and expenses during the reporting period. Thedifference between the actual results and estimates are recognisedin the period in which the results are known / materialised.

3 . Cash Flow Statement

Cash Flow Statement has been prepared in accordance with theindirect method prescribed in Accounting Standard - 3 issued underthe Companies (Accounting Standards) Rules, 2006 and as requiredby the Securities and Exchange Board of India.

4 . Fixed Assets

4.1. Land is stated at historical cost less amortisation whereverapplicable.

4.2. Other Fixed assets are stated at historical cost lessaccumulated depreciation and impairment.

4.3. Spares received along with the Plant or Equipment and thosepurchased subsequently for specific machinery and havingirregular use are capitalised.

4.4. During the period of construction, directly identifiable expensesare capitalised at the first instance and all other allocableexpenses are capitalised proportionately on the basis of thevalue of the assets.

4.5. Historical Cost for this purpose includes purchase prices,duties (net of cenvat), taxes, incidental expenses, erection /commissioning expenses, technical knowhow fee, professionalfee and interest etc., up to the date, the asset is put to use.

5 . Impairment

Impairment of cash generating units / assets is ascertained andconsidered where the carrying cost exceeds the recoverable amountbeing the higher of net realisable amount and value in use.

6 . Depreciation / Amortisation

6.1. Depreciation on Fixed Assets (including those taken on lease)is provided on Straight Line Method, at the rates and in themanner specified in Schedule XIV to the Companies Act,1956.

6.2. Cost of leasehold land is amortised over the lease period.Cost of leasehold lands where the transfer of ownership tothe company on expiry of the lease period is eventually certainare not amortised.

6.3. Depreciation on amounts capitalised on account of foreignexchange fluctuation is provided prospectively over residuallife of the assets.

6.4. Depreciation on spares having irregular use and purchasedsubsequent to the installation of specific machinery is providedprospectively over residual life of the specific machinery.

7 . Intangible Assets

Cost incurred on intangible asset, resulting in future economic benefitsare capitalised as intangible assets and amortised on equated basisover the estimated useful life of such assets.

8 . Investments

8.1. Long term investments are valued at cost. Provision is madefor any diminution, other than temporary in the accounts.

8.2. Current Investments are valued at lower of cost and fairvalue.

9 . Inventories

Inventories are valued at lower of cost and net realisable value. Costof inventories comprises of purchase cost and other costs incurred inbringing inventories to their present location and condition. The costhas been determined as under:

9.1. Raw material - on First in First out (FIFO)basis.

9.2. Finished Products - at Raw material andConversion cost.

9.3. Stock-in-Process - at Raw material andProportionate Conversioncost.

9.4. Stores, Spares and - on weighted average cost basis.other trading Goods

1 0 . Revenue Recognition

10 .1 . Sales are recognised on transfer of custody to customers andincludes all statutory levies except Value Added Tax (VAT)and is net of discounts.

10 .2 . Dividend income is recognised when the right to receive thedividend is established.

10 .3 . Interest income is recognised on a time proportion basis.

1 1 . C l a i m s

11 .1 . Claims/Surrenders on/to Petroleum Planning and Analysis Cell,Government of India are booked on ‘in principle acceptance’thereof on the basis of available instructions/clarificationssubject to final adjustments, as stipulated.

11 .2 . Insurance Claims

In case of total loss of asset, on intimation to the insurer,

SCHEDULES FORMING PART OF BALANCE SHEET AND PROFIT & LOSS ACCOUNT

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either the carrying cost of the asset or insurance value (subjectto deductible excess) whichever is lower is treated as claimsrecoverable from insurance company. In case insurance claimis less than the carrying cost of the asset, the difference ischarged to Profit and Loss Account.

In case of partial or other losses, expenditure incurred /payments made to put such assets back into use, to meetthe third party or other liabilities (Less deductible excess) ifany, are accounted for as claims receivable from insurancecompany. Insurance Policy Deductible Excess are expensedin the year the corresponding expenditure is incurred.

As and when claims are finally received from the insurancecompany, the difference, if any, between the claim receivablefrom insurance company and claims received is adjusted toProfit and Loss Account.

11 .3 . All other claims and provisions are booked on the merits ofeach case.

1 2 . Foreign Currency Transactions

12 .1 . Foreign Currency Transactions are accounted for at theexchange rates prevailing on the date of the transactions.

12 .2 . The foreign currency assets / liabilities of monetary items aretranslated using the exchange rates prevailing on the BalanceSheet date.

12 .3 . The exchange differences on settlement / translation areadjusted:

( i) to the cost of Fixed Assets, if the foreign currencyliability relates to Fixed Assets imported from outsideIndia , and

( ii) to the Profit and Loss Account in other cases. Whereverforward contracts are entered into, the exchangedifferences and premium / discount are dealt with inthe Profit and Loss Account over the period of thecontracts.

12 .4 . The mark to market losses (net) in respect of un-expiredforward contracts entered into to hedge the risk of changes inforeign currency exchange rates on future export sales againstthe existing contract are recognised in the Profit and LossAccount.

1 3 . Retirement Benefits

13 .1 . All short term employee benefits are recognised at theirundiscounted amount in the accounting period in which theyare incurred. Employee Benefits under defined contributionplans comprising provident fund and superannuation fund arerecognised on the undiscounted obligations of the companyto contribute to the plan. The same is paid to Provident FundTrust Authorities and to Life Insurance Corporation of Indiarespectively, which are expensed during the year.

13 .2 . Employee benefits under defined benefit plans comprising ofGratuity, leave encashment, long service emblem, postretirement medical benefits and other retirement benefits are

recognised based on the present value of defined benefitobligation, which is computed on the basis of actuarial valuationusing the Projected Unit Credit Method. Actuarial liability inexcess of respective plan assets is recognised during theyear.

13 .3 . Actuarial gains and losses are recognised in the Profit andLoss Account as income or expenses.

13 .4 . Undiscounted amount of short-term liability on account of un-availed leave is determined and provided for as at the yearend.

13 .5 . Provision for Gratuity as per actuarial valuation is funded witha separate trust.

1 4 . L e a s e s

14 .1 . Lease rentals in respect of finance lease are segregated intocost of assets and interest component by applying the implicitrate of return.

14 .2 . Assets acquired on lease where a significant portion of therisks and rewards of ownership are retained by the lessor areclassified as operating leases. Lease rentals are charged tothe Profit and Loss Account on accrual basis.

1 5 . Borrowing Costs

Borrowing costs that are attributable to acquisition, construction orproduction of qualifying assets, are capitalised as part of the cost ofsuch assets. A qualifying asset is an asset that necessarily takes asubstantial period of time to get ready for intended use. All otherborrowing costs are charged to the Profit and Loss Account.

1 6 . Research and Development Expenditure

Capital expenditure on Research and Development is capitalisedunder the respective fixed assets. Revenue expenditure thereon ischarged to Profit and Loss Account.

1 7 . Taxes on Income

17 .1 . Current tax is determined on the basis of taxable incomecomputed in accordance with the provisions of the IncomeTax Act, 1961.

17 .2 . Deferred tax is recognised on timing differences betweentaxable and accounting income/expenditure that originates inone period and are capable of reversal in one or moresubsequent period(s). Deferred Tax Asset is recognised onthe basis of virtual/reasonable certainty about its realisability,as applicable.

1 8 . Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurementare recognised when there is a present obligation as a result of pastevents and it is probable that there will be an outflow of resources.Contingent Assets are neither recognised nor disclosed in the financialstatements. Contingent liabilities, if material, are disclosed by way ofnotes.

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In respect of all these claims, which are being contested by the companyas not admissible, it is not practicable to make a realistic estimate ofthe outflow of resource, if any, for settlement of such claim pendingresolution / award from Arbitrators / Court.

1.3. Disputed tax / Duty demands pending in appeal:

a) Income Tax: ` 244.51 Million (Previous Year ` 345.13 Million).b) Commercial Tax: ` 1,188.76 Million (Previous Year ` 1,684.92

Million) – includes ` 500.46 Million (Previous Year ` 500.46Million) relating to projects. (Against this ` 377.20 Million is paidunder protest and included under loans & advances.)

c) Excise Duty: ` 146.45 Million (Previous Year ` 188.96 Million).(Against this ` 41.08 Million is paid under protest and is includedunder loans & advances.)

d) Custom Duty: ` 128.82 Million (Previous year ` 124.21 Million).1.4. The estimated amount of contracts remaining to be executed on capital

account and not provided for (net of advances) ` 93,391.12 Million(Previous Year ` 54,814.59 Million).

2 . Loans and Advances :2.1. Loans and advances include refund claims for Custom Duty on project

imports ` 378.71.Million (Previous year ` 378.71Million) and CommercialTaxes ` 500.63 (Previous year ` 315.68 Million).A further refund due towards Commercial Taxes ` 2884.43 Million isalso included therein for which there is a matching liability to pay tocustomers on receipt of the refund which is included under SundryCreditors (Others).

SCHEDULE S

NOTES ON ACCOUNTS

1 . Contingent Liabilities not provided for in respect of :

1.1. Corporate Guarantee given by the Company towards loan of` 3,372.30 Million sanctioned by certain bankers / financialinstitutions to New Mangalore Port Trust (NMPT) for constructionof Jetties. Amount outstanding as at the close of the year afteradjusting the repayment made by NMPT is ` Nil (Previous Year` 69.47 Million).

1.2. Claims against the Company not acknowledged as debt :

(b) One of the customers has lodged aclaim for damages for pre-closure ofthe contract. The company hasdisputed the claim basis forcemeagre condition. In case ofnon acceptance of the stand takenby the company the amount will bedebited to the Profit & Loss Account.

3 Others(a) The New Mangalore Port Trust

(NMPT) has claimed from thecompany notified wharfage chargesfor one of the Jetty. The companyhas approached the Tariff Authorityof Major Ports (TAMP) for fixation ofthe wharfage rates based on TariffPolicy. The differential amountbetween the wharfage rate to befixed by the TAMP and the wharfagerate being paid by the company,if any, will be debited / creditedto the Profit & Loss Account.

(b) This represents the potentialliability which the company hasundertaken towardsreimbursement to lessorsin case of any liability in theirrespective tax assessments. Incase on any claim by lessors thesame will be debited to Profit &Loss Account.

4 Total

85.20 85.20

177.38 -

133.67 133.67

749.21 648.21

1 Claims of Contractors / vendors inArbitration / Court(a) Some of the contractors for supply

and installation of equipment havelodged claims on the companyseeking revision of time ofcompletion without liquidateddamages, extended staycompensation and extra claims etc.,which are contested by the companyas not admissible in terms of theprovisions of the respectivecontracts. In case of unfavourableawards the amount payable wouldbe capitalised (` 300.92 Million)/ Reimbursable (` 37.73 Million)[Previous year ` 321.51 Millionand ` 35.86 million respectively]

(b) A shipping company had gone forarbitration, disputing the mutualsettlement reached with thecompany. The claim has beenwithdrawn during the year.

2 Claims / counter claims of Customers(a) The company had gone into an

international arbitration at Londonagainst one of its export customers.The Arbitration Tribunal hasdismissed the company‘s claimsrelating to throughput loss andnon-fulfillment of contractualobligations and has ordered thecompany to bear the customer’sadvocate cost along with refund ofpart of adhoc amount paid by thecustomer alongwith interest.The company has preferred anappeal in the Mumbai High Courtagainst this arbitral award.In case of unfavourable award theamount payable would be debitedto Profit & Loss Account.

(` in Million)

Sl. Particulars As on As onNo 31.03.2010 31.03.2009

338.65 357.37

- 57.60

14.31 14.37

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3 . Commercial Tax Incentives:3.1. The Company, as per the Government of Karnataka notification, is

entitled to Sales Tax deferment loan as follows:

Refinery Maximum Availment Repayment termsProject Amount period

(` inMillion)

Phase I 400.00 11 years from the 11 annual instalments on year to year(3 MMTPA) per annum date of issue of basis commencing from the date of

notification viz, completion of the deferment period.29th August, 1998 The benefit of exemption has expired

on 28.08.2009 and repayment ofinstalments has been effected.

Phase II 2,500.00 14 years from the 14 annual instalments on year to year(6 MMTPA) per annum* date of issue of basis commencing from the date of

notification viz., completion of the deferment period.14th August, 2000

*Can also be availed as exemption of CST.

3.2. Sales tax deferment loan shown under Unsecured Loans includes asum of ` 290.17 Million (Previous Year ` 290.17 Million) relating to CSTon excise duty included under refund from Commercial Tax Department(refer note no.2.1 above) for the years 2000-01and 2001-02, which wereearlier paid under protest and are now being claimed as sales taxdeferment loan by the Company.

4 . The Company is yet to receive response for its confirmation letters fromsome of the Sundry Debtors, Loans and Advances and Sundry Creditors.Reconciliation and adjustment will be effected on receipt of confirmations,which in the opinion of the management will not be significant.

5 . Provision for Wage Revision

The Ministry of Petroleum and Natural Gas has approved revision ofpay & allowances of management employees of the company in linewith DPE approved scales of pay effective from 1st January, 2007 &26th November, 2008 respectively. Accordingly wage revision in respectof Management employees has been given effect. The Non Managementemployees wage revision is due for revision effective from 1st April, 2007and the negotiation with the employees union is in progress. Pendingfinal negotiation, the company has made provision for wage revision onestimated basis for the year ended 31st March, 2010 amounting to` Nil (Previous Year ` 39 Million) and is shown under “Payment to andProvision for Employees” in Schedule P.

6 . Following expenses are included under other heads ofexpenses

Insurance ` 20.46 Million (Previous year ` 11.47 Million)

7 . Dues to Micro, Small & Medium Enterprises:

The classification of the suppliers under Micro, Small and MediumEnterprises Development Act, 2006 is made on the basis of informationmade available to the company. No interest amount remain unpaid tosuch Micro and Small Enterprises as on 31.03.2010 and no paymentswere made to such enterprises beyond the “appointed day” during theyear. Also the company has not paid any interest in terms of Section 16of the above-mentioned act or otherwise. Amount outstanding to theseenterprises for the year ended 31st March, 2010 is ` 0.74 Million(Previous Year: ` Nil)

8 . Forward Contracts to cover Forex Risk

8.1. Forward contracts of ` Nil is outstanding as on 31st March, 2010 (US$56.17 Million as on 31st March, 2009 ), which were entered into, to hedgethe risk of changes in foreign currency exchange rates on future exportsales against existing long term export contract.

8.2. As the company is not following Accounting Standard 30 – FinancialInstruments Recognition and Measurement, keeping in view of theprinciple of prudence, the Company, has recognised an amount of ` Nil(Previous Year : ` 226.38 Million) towards the mark to market (MTM)loss (net) as on 31st March. 2010 (included under the head exchangefluctuation (net) in Schedule P) on outstanding forward contractsmentioned at para 8.1.

9 . Disclosures as required under Accounting Standard 15(Revised) is given below:

9.1. Brief Description: A general description on the type of Defined BenefitPlans are as follows:

a) Earned Leave Benefit (EL): Accrual – 32 days per year.Accumulation up to 300 days allowed. EL accumulated in excessof 60 days is allowed for encashment while in service.

b) Sick Leave (SL): Accrual – 10 days per year. Encashmentwhile in service is not allowed. Encashment on retirement ispermitted and entire accumulation is allowed for encashment.

c) Gratuity:15 days salary for every completed year of service.Vesting period is 5 years and the payment is restricted to` 10,00,000.

d) Long Service Emblem: On completion of each milestone ofservice from the date of joining and also at the time of retirement,employees will be gifted with Gold Coin, weight depends on themilestone of service completed.

e) Post Retirement Medical Benefits: After retirement, onpayment of one time employee’s share of premium, the employeeand his/her spouse will be covered under Group Medical Insurance.The cover amount depends on designation of employee at thetime of retirement.

f) Retirement Benefits: At the time of superannuation, employeesare entitled for reimbursement of expenses towards travel,transportation of personal effects from their place of retirement tothe new location upto certain limits depending on the designationof the employee at the time of retirement and one month’s salaryas settling allowance.

9.2. The following contributions to Defined Contributions Plans are treatedas expenses during the year:

(` in Million)

Defined Contribution Expenses recognised Contribution for KeyPlan during 2009-10 Management Personnel

Employer’s contribution 45.24 0.21to Provident Fund (35.65 ) (0.21 )

[32.07] [0.26]

Employer’s contribution to 37.43 0.27Superannuation Fund (24.70) (0.22)

[18.08] [0.30]

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9.3. The amount recognised in the Balance Sheet for post employmentbenefit plans are as under:

(` in Million)

Sl Particulars Gratuity Post RetirementNo. (Funded) Retirement Benefits

MedicalBenefit

1 Present value of Funded 175.15 - -Obligation (135.27 )

[78.41]2. Fair Value of Plan Asset 144.36 - -

(81.50)[56.27]

3. Present Value of - 16.74 6.28Unfunded Obligation (8.08) (5.64)

[6.67] [5.11]4. Unrecognised Past - - -

Service Cost5. Net Liability 30.79 16.74 6.28

(53.77 ) (8.08) (5.64)[22.14] [6.67] [5.11]

9.4. The amount included in the fair value of plan assets of gratuity fundare as follows:

(` in Million)

Defined Contribution Plan Expenses Recognisedduring 2009-10

Reporting Enterprise’s own financial Nilinstruments (Nil)

[Nil]

Any Property occupied by, or other assets Nilused by the reporting enterprise (Nil)

[Nil]

9.5. Reconciliation showing the movements during the period in the netliability recognised in the balance sheet:

(` in Million)

Sl. Particulars Gratuity Post RetirementNo . (Funded) Retirement Benefits

MedicalBenefits

1 Opening defined 135.27 8.08 5.64benefit obligation (78.41) (6.67) (5.11)

[56.27] [6.11] [Nil]2 Service Cost 12.55 0.46 0.13

(8.52 ) (0.43) (0.13)[5.44] [0.44] [0.11]

3 Interest Cost 11.41 0.64 0.44(6.79) (0.56) (0.40)[4.91] [0.54] [0.35]

4 Actuarial losses 16.94 8.13 0.21(gains) (45.54) (0.68) (0.60)

[10.64] -[0.34] [4.70]5 Liability transfer in 0.12 - -

(0.18)[1.86]

6 Benefits paid -1.14 -0.58 -0.14(-4.17) (-0.26) (-0.61)-[0.71] -[0.08] -[0.05]

7 Closing defined 175.15 16.74 6.28benefit obligation (135.27) (8.08) (5.64)

[78.41] [6.67] [5.11]

9.6. The total expenses recognised in the statement of profit and lossare as follows:

(` in Million)

Sl. Particulars Gratuity Post RetirementNo . (Funded) Retirement Benefits

MedicalBenefits

1 Current Service 12.55 0.46 0.13Cost (8.52) (0.43) (0.13)

[5.44] [0.44] [0.11]2 Interest on 11.41 0.64 0.44

obligation (6.79) (0.56) (0.40)[4.91] [0.54] [0.35]

3 Expected return on -10.78 - -plan assets (-6.11)

[Nil]4 Net actuarial losses 17.61 8.13 0.21

/ (gains) recognised (44.57) (0.68) (0.61)in the year [10.64] -[0.34] [4.70]

5 Past Service Cost - - -6 Losses / (Gains) on - - -

curtailments andsettlements

7 Total included in 30.79 9.23 0.78‘employee benefit (53.77) (1.67) (1.13)expenses’. [20.99] [0.64] [5.16]

8 Actual return on 10.11 -plan assets (7.09)

[Nil]

9.7. Principal actuarial assumptions at the balance sheet date (expressedas weighted averages):

Sl. Part iculars Gratuity Pos t RetirementNo. (Funded) Retirement Benef i ts

MedicalBenef i ts

1 Discount Rate 8.00% 8.00% 8.00%(7.75%) (7.75%) (7.75%)[8.00%] [8.00%] [8.00%]

2 Expected return on plan 8.00% - -assets previous

3 Expected return on plan 9.00% - -assets Current

4 Annual increase in - 5.00% -premium of med (5.00%)claim policy [5.00%]

5 Annual increase in Salary 5.00% - 5.00%(5.00%) (5.00%)[5.00%] [5.00%]

9.8. Gratuity (Funded) Defined Benefit Obligation - Category of PlanAssets (` in Million)

Sl. Part iculars Amount (%)No .

1 Government of India Bonds 55.36 38.35%(21.55) (26.45%)[14.51] [25.79%]

2 Corporate Bonds 73.08 50.62%(47.70) (58.52%)[27.48] [48.84%]

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3 State Govt. Bonds 12.18 8.44%(12.20) (14.97%)

[8.68] [15.42%]4 Others 3.74 2.59%

(0.05) (0.06%)[5.60] [9.95%]

5 Total 144.36 100.00%(81.50) (100.00%)[56.27] [100.00%]

9. 9. Sensitivity of Post Retirement Medical Expenses (` in Million)

Sl. Part iculars AmountNo .

1 Change in Liability for 1% -0.80increase in discount rate (-1.34)

[-1.02]

2 Change in Liability for 1% +0.91decrease in discount rate (+1.07)

[+1.28]

3 Change in Service Cost for 1% -0.06increase in discount rate (-0.04)

[-0.07]

4 Change in Service Cost for 1% +0.12decrease in discount rate (+0.09)

[+0.08]

Note : Figures in parenthesis ( ) represents figure of 2008-09 and [ ]represents figures of 2007-08

1 0 . Segment Reporting

The Company is engaged in the business of refining crude oil, allactivities of the Company revolve around this business and the operationsare in India. As such there is no other reportable segment as defined bythe Accounting Standard 17 – Segment Reporting issued under theCompany (Accounting Standard) Rules, 2006.

1 1 . Information as per Accounting Standard (AS-18) on RelatedParty Disclosures is given below:

11.1. The Company is a state controlled enterprise and the transactions withother state controlled enterprises are not required to be disclosed asper AS-18.

11.2. Key Management Personnel:

Functional Directors:

(i) Shri. U.K.Basu, Managing Director

(ii) Shri L.K.Gupta, Director (Finance).

Remuneration paid to the above-mentioned Directors during the year is` 5.63 Millions (Previous year ` 4.30 Million) – Refer Note No. 12 givenbelow.

11.3. Related Party details:(` in Million)

Particulars ONGC Shell MRPL Mangalam MangaloreMangalore Aviation Retail SEZ

Petroche- Fuels Services Limitedmicals & Services Limited

Limited Pvt. Limited

Relationship Associate Joint Joint Associate

Venture Venture

Sale of Products Nil 1643.97 Nil Nil

(Nil) (1090.74) (Nil) (Nil)

Reimbursement of 52.40 Nil Nil 39.25

expenditure by MRPL (Nil) (Nil) (Nil) (73.02)

Salary and other 34.86 2.76 Nil 7.63

establishment related (24.96) (2.97) (Nil) (4.05)

expenses incurred by

MRPL reimbursable

by JV/ Associate.

Advance Against Land Nil Nil Nil 117.33

(Nil) (Nil) (Nil) (Nil)

Advance against Equity 75.00 Nil -3.50 Nil

investment in JV / (150.00) (150.00) (4.50) (Nil)

Associates

Amount receivable/ 290.84 144.18 1.00 743.98

(payable) as on (210.36) (15.33) (4.50) (621.90)

31st March, 2010.

Note : Figures in parenthesis represents previous year figure.

1 2 . Managerial Remuneration:

(Remuneration paid or payable to Directors) (` in Million)

2009-2010 2008-2009

Functional Directors

Salaries & Allowances 2.46 2.82

Contribution to Provident & Other Funds 0.48 0.43

Other Benefits & Perquisites # 2.69 1.05

Independent Directors:

Sitting Fees 0.54 0.50

# Includes adhoc advance paid on account of pay revision due from1st January, 2007

The above figures do not include Provision for Leave, Gratuity and PostRetirement Benefits as per Revised AS-15 since the same were notascertained for individual employees.

The performance related pay is considered on paid basis.

Loan & Advances outstanding from Directors – ` Nil(Previous year – ` Nil),

Maximum amount of Loans & Advances outstanding during the year` 0.42 Million (Previous year ` Nil)

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13. Disclosure as required under Accounting Standard – 27 on ‘ FinancialReporting of Interests in Joint Ventures’ is as given below:

(` in Million)

Name of the Jo in t S h e l l M R P L A v i a t i o n F u e l M a n g a l a m R e t a i l

Venture Services Pvt . L imited Services Limited

Proportion of the 50% 45%ownership interest

Country of incorporation India India

Aggregate amount of

interest in Joint Venture 2009-10 2008-09 2009-10 2008-09

(MRPL’s share) (Audited) (Un-audited) (Audited) (Un-audited)

Assets 285.86 248.18 1.07 4.01

Liabilities 135.57 120.55 0.02 0.02

Income 926.80 533.20 0.08 0.06

Expenditure incl Tax 904.13 555.57 0.02 0.03

Expenses

Contingent Liabilities Nil Nil Nil Nil

Capital Commitments Nil Nil Nil Nil

1 4 . Operating Leases:

14.1. The company has taken various premises under cancellable operatinglease.

14.2. These lease agreements are normally renewed on expiry of the term.

14.3. Lease rental expenses for 2009-10 in respect of above operating leasesare ` 40.87 Million (previous year ` 38.80 Million)

15. Basic and Diluted Earnings Per Share:

31.3 .2010 31.3 .2009(` in Million) (` in Million)

Numerator – Net Profit

Basic 11,123.77 11,925.44

Diluted 11,123.77 11,925.44

Denominator–Average number ofEquity Shares outstanding duringthe year

Basic 1,752,658,655 1,752,902,327

Diluted 1,895,467,890 1,900,735,516

Nominal Value per share ` 10 each ` 10 each

Earnings Per Share

Basic (in Rupees) 6.35 6.80

Diluted (in Rupees) 5.87 6.27

Reconciliation of Basic andDiluted Earnings Per ShareNet Profit 11,123.77 11,925.44Add interest on dilutive portionof loans (Net of tax) - -

Average No. of Equity shares 1,752,658,655 1752,902,327Number of shares in respect of 142,809,235 147,833,189loans having conversion clause

1,895,467,890 1,900,735,516

1 6 . Current Tax:Provision for Current Tax is made in accordance with the provisions of theIncome Tax Act, 1961.

1 7 . Deferred Tax

The break up of net Deferred Tax Liability/Asset is as under:

Part iculars As on 31.3.2010 As on 31.3.2009(` in Million) (` in Million)

Timing differences on Deferred Deferred Deferred Deferredaccount of: T a x T a x T a x T a x

A s s e t Liability A s s e t Liability

Unabsorbed depreciation - -and allowances

Book and Income tax 7,139.58 - 7,727.41depreciation

Others 537.36 2,041.88 -

Total 537.36 7,139.58 2,041.88 7,727.41

Net Deferred Tax Liability 6,602.22 5,685.53

1 8 . Disclosure on Research & Development Expenditure

The company during the year has carried out activities relating to study ofCrude Assay, Spent Caustic Treatment, additive degradation, FluorescenceCharacteristics of Petroleum fractions, Biological Oxygen Demand andChemical Oxygen Demand depletion, salt content of various crude andevaluation of Crude Assay as a part of its R & D activities. The totalexpenditure incurred by the company during the year on the abovementioned Research & Development activities is Rs.1.83 Million (PreviousYear – ` 7.99 Million).

(` in Million)

Part iculars R e v e n u e Capital TotalExpenditure Expenditure

Expenditure incurred during the year 1.83 Nil 1.83(0.90) (7.09) (7.99)

Note : Figures in parenthesis represents previous year figure.

1 9 . Foreign Exchange Exposures

19.1.Exposures which are hedged(` in Million)

Particulars As on 31.03.2010 As on 31.03.2009

Foreign Equivalent Foreign EquivalentCurrency R u p e e s Currency R u p e e s

Against export receivables Nil Nil US $ 18.84 951.98

19.2. Exposures not hedged by Derivative instruments or otherwise (net):

(` in Million)

Part iculars As on 31.03.2010 As on 31.03.2009

Foreign Equivalent Foreign EquivalentCurrency R u p e e s Currency R u p e e s

Imports USD 980.91 44,709.88 279.56 14,383.36

Creditors Euro 0.0247 1.51 0.0025 0.17

Creditors JPY 5.49 2.69 - -

Creditors USD 0.0447 2.03 1.85 95.11

Exports USD 159.21 7,111.91 82.42 4,164.68

Loans USD Nil Nil 17.92 921.98

2 0 . Additional Information pursuant to the provisions of 3, 4B, 4Cand 4D of Part II of Schedule – VI to the Companies Act, 1956:

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Schedules referred to above form part of the accounts






20.1. Licensed Capacity, Installed Capacity and Actual Production:

(As certified by the Management and relied upon by the Auditors)

2009-2010 2008-2009

Qty. Value ` in Qty. Value ` in

(M.T) Million (M.T) Million

Licensed Capacity Delicensed Delicensed

Installed Capacity # 11,820,000 - 9,690,000 -

Opening stock of 376,622 8,582.98 363,581 13,771.08Petroleum products

Closing stock of 335,524 11,143.67 376,622 8,582.98Petroleum products

Actual production of 11,683,254 - 11,777,697 -Petroleum products *

Sale of Petroleumproducts 11,724,352 360,809.09 11,764,656 427,188.85

*Excludes own consumption: 774,221 MT (Previous year 735,452 MT)

#The installed capacity stands increased to 11.82 MMTPA from 9.69 MMTPAon account of consistent utilisation of design margins over a period of last 4years

20.2. Value of Imports on CIF basis: (` in Million)

2009-2010 2008-2009Capital Goods 3.80 12.75Raw materials 262,124.50 287,891.50Stores, Spares & Chemicals 836.12 148.79

20.3. Expenditure in Foreign Currency:(On Actual Payment basis) (` in Million)

2009-2010 2008-2009Interest 44.25 102.43Others 288.48 647.58

20.4. Earnings in Foreign Currency (` in Million)

2009-2010 2008-2009Exports (FOB Value) 110413.41 116361.82Deputation of Specialists 5.51 -

20.5. Auditor’s Remuneration:(` in Million)

2009-2010 2008-2009Audit Fees 1.50 1.00Tax Audit Fees 0.30 0.20For Certification 0.59 0.47Reimbursement of Expenses 0.25 0.09

2 1 . Consumption of Raw Materials, Stores, Spares and Chemicals2009-2010 2008-2009

(In M.T) Value (%) (In M.T) Value (%)in ` in `

Million Million

Raw Material:Crude Oil

Imported 10,629,528 255,397.39 84.48% 10,808,451 289,737.39 83.95%

Indigenous 1,867,422 46,786.87 15.48% 1,777,634 55,251.87 16.01%

Raw Material:CRMB Modifier Cost

Imported - -

Indigenous 124.46 0.04% - 138.15 0.04%

Total 12,496,950 302,308.72 100% 12,586,085 345,127.41 100%

Stores, Sparesand Chemicals

Imported 466.84 57.20% 90.20 22.70%

Indigenous 349.27 42.80% 307.11 77.30%

Total 816.11 100% 397.31 100%

2 2 . The details about Non-resident shareholders are as follows:

Particulars As on As on31.03.10 31.03.09

Number of Non-resident shareholders 22,011 23,352No. of shares held by Non-resident 16,913,716 14,878,421shareholdersDividend remitted to Non-resident ` 20.30 ` 22.20shareholders during the year Million Million

2 3 . Details of Prior Period (Income) / Expenses (Net) are as under:

(` in Million)

Particulars 2009-2010 2008-2009Depreciation (Net) 8.67 (6.21)Repair & Maintenance - (2.33)Rent - (1.06)Miscellaneous Expenses 2.96 (1.41)Sales (12.72) -

Total (1.09) (11.01)

24. Previous year’s figures have been re-grouped / re-arranged wherevernecessary to conform to the current year’s presentation.

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BALANCE SHEET ABSTRACT AND A COMPANY’S GENERAL BUSINESS PROFILE

I . REGISTRATION DETAILS

REGISTRATION NO. : 08 /08959/ 1988 STATE CODE : 08 BALANCE SHEET DATE : 31st MARCH 2010

I I . CAPITAL RAISED DURING THE YEAR (AMOUNT IN ` THOUSANDS)

PUBLIC ISSUE* RIGHT ISSUE BONUS ISSUE PRIVATE PLACEMENT

186 NIL NIL NIL

* represents realisation of allotment/call money in arrears

I I I . POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. THOUSANDS)

TOTAL LIABILITIES : TOTAL ASSETS:

79,531,710 79,531,710

SOURCES OF FUNDS

PAID UP RESERVES AND SECURED UNSECURED DEFERRED

CAPITAL SURPLUS LOANS LOANS TAX LIABILITY

17,618,500 38,347,020 3,421,353 13,542,620 6,602,220

APPLICATION OF FUNDS

NET FIXED INVESTMENTS NET CURRENT MISC. ACCUMULATED

ASSETS ASSETS EXPENDITURE LOSSES

51,526,420 16,236,620 11,768,670 NIL NIL

IV. PERFORMANCE OF COMPANY (AMOUNT IN RS. THOUSANDS)

TURNOVER TOTAL PROFIT/(LOSS) PROFIT/(LOSS)

EXPENDITURE BEFORE TAX AFTER TAX

318,851,740 308,752,385 16,918,450 11,123,770

EARNINGS PER SHARE DIVIDEND @ %

6.35 12.00%

V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANY

(AS PER MONETARY TERMS)

ITEM CODE NO (ITC CODE) PRODUCT DESCRIPTION

271019.30 HIGH SPEED DIESEL OIL


271019.20 FUEL OIL


271011.19 MOTOR SPIRIT

Schedules referred to above form part of the accounts






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1) CODE OF CORPORATE GOVERNANCE:

ISO CERTIFICATION FOR SECRETARIAL DEPARTMENT

MRPL Secretarial Department is ISO 9001:2008 certified by M/s Bureau Veritas India(Pvt.) Limited towards :

1) Compliance of Companies Act,1956 and Other allied matters.

2) Compliance of Listing Agreement and SEBI Regulations with regard to Securities.

3) Services to Board of Directors, Investors and other stakeholders of the Company.

MRPL is committed to good governance practices that create long-term sustainable value for its stakeholders. MRPL’s Corporate Governanceframework is based on the following principles:

� Ensuring maximum disclosure of information to the Board/Committees of the Board for meaningful and focused discussions in meetings;

� Commitment to a transparent system and values;

� A sound system of internal control with a thrust on integrity and accountability;

� Timely and adequate disclosure of all material information to all Stakeholders;

� Compliance with applicable laws, guidelines, rules and regulations;

� Equitable and fair treatment to all its stakeholders including employees, customers, vendors, shareholders, lending institutions and societyat large.

2) BOARD OF DIRECTORS :

A ) Composition and Category of Directors (as on 31st March, 2010)

Executive Directors : 2

Non Executive Directors : 7

1) PRESENT DIRECTORS

Director Executive/ Category No. of other No. of outsideNon-Executive Directorship Committees

Public Private Member Chairman

Shri R.S. Sharma Chairman, Non-Executive Promoter Company’s 8 0 - -Director

Shri U.K. Basu Executive Managing Director 3 1 2 -

Shri L.K Gupta Executive Director (Finance) 3 1 - 1

Dr. A.K.Balyan Non-Executive Promoter Company’s 8 0 1 -Director

Shri Sudhir Non-Executive Promoter Company’s 3 - 1 -Vasudeva Director

Shri Vivek Kumar Non-Executive Government Director - - - -(Director, Ministry ofPetroleum & NaturalGas)

Shri K. Murali Non-Executive Promoter Company’s 3 - - -Director

Shri.G.M. Ramamurthy Non-Executive Independent Director 1 2 - -

Dr. A. K. Rath Non-Executive Independent Director - - - -

* Note: At present there are two Independent Directors on the Board of MRPL. Company being a Government Company, has taken up withAdministrative Ministry viz. Ministry of Petroleum and Natural Gas, Government of India for appointment of requisite number ofIndependent Directors to comply with the requirement of Clause 49(IA) of Listing Agreement. The matter is being followed up withthe Administrative Ministry on a regular basis. ONGC, the holding company has also taken up with MoP&NG for appointment ofone of its Independent Directors on the Board of MRPL, its subsidiary pursuant to the provision of DPE Guidelines. It is understoodthat the appointment is in the advanced stage of approval by Government of India.

CORPORATE GOVERNANCE REPORT FOR THE YEAR 2009-2010

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2) PAST DIRECTORS

Director Executive/ Category No. of other No. of outsideNon-Executive Directorship Committees

Publ ic Private M e m b e r Chairman

Shri V. P. Singh Non-Executive Independent Director 2 1 - 1

Shri S. Roy Choudhury Non-Executive Promoter Company’s Director 5 - 2 -

Shri V. K. Dewangan Non-Executive Government Director - - - -(Director, Ministry of Petroleum& Natural Gas)

Changes in the Board of Directors during 2009-2010

(1) Shri V.P. Singh ceased to be a Director of the Companyw.e.f 26/06/2009 consequent upon his completion of tenureas a Director on the Board of ONGC (Parent Company).

(2) Shri K. Murali has been nominated as Director of theCompany w.e.f. 19/01/2010 by HPCL in place of Shri S.Roy Choudhury.

(3) Dr. A.K. Rath has been appointed as an Independent Directorof the Company w.e.f 16/02/2010 by Ministry of Petroleum& Natural Gas, Government of India.

(4) Shri V.K. Dewangan resigned from the Board of the Companyw.e.f 31/03/2010 consequent upon his completion of Centraltenure as Director in Ministry of Petroleum & Natural Gaswith Government of India.

B ) Attendance of Directors at the Board Meeting held duringthe financial year 2009-10 and last AGM.

1) PRESENT DIRECTORS

Director No. of Board No. of Board AttendedMeetings held Meetings Lastduring the year attended A G M

Shri R. S. Sharma 11 11 Yes

Shri U.K Basu 11 11 Yes

Shri L. K. Gupta 11 11 Yes

Dr. A. K. Balyan 11 8 Yes

Shri SudhirVasudeva 11 9 Yes

Shri Vivek Kumar 11 9 Yes

Shri K. Murali 11 *1 Please refernote below

Shri G. M.Ramamurthy 11 9 YesDr. A. K. Rath 11 **2 Please refer

note below* Has attended one of two meetings held after his appointment on 19/01/2010.** Has attended all two meetings held after his appointment on 16/02/2010.

NOTE:(1) Shri K. Murali has been appointed as Director w.e.f 19/01/

2010 i.e. after the date of last AGM.

(2) Dr. A. K. Rath has been appointed as Director w.e.f 16/02/2010 i.e. after the date of last AGM.

2) PAST DIRECTORS

Director No. of Board No. of Board AttendedMeetings held Meetings Last

during the year attended AGM

Shri V.P. Singh 11 1 Please refernote below

Shri S. Roy Choudhury 11 4 YesShri V.K. Dewangan 11 6 Yes

NOTE:

(1) Shri V.P. Singh ceased to be the Director of the Companyw.e.f 26/06/2009 (before the date of last AGM) consequentupon his completion of tenure as a Director on the Board ofONGC (Parent Company).

(2) Shri S. Roy Choudhury ceased to be a Director of theCompany w.e.f 19/01/2010 consequent upon his nominationwithdrawn by HPCL.

(3) Shri V.K. Dewangan resigned from the Board of theCompany w.e.f 31/03/2010 consequent upon his completionof Central tenure as Director in Ministry of Petroleum &Natural Gas with Government of India.

C ) Details of Board Meetings held during the financial year2009-10.

Date of meeting P l a c e

27th May, 2009 New Delhi10th June, 2009 New Delhi30th June, 2009 New Delhi23rd July, 2009 New Delhi26th August, 2009 New Delhi19th September, 2009 Mangalore28th October, 2009 New Delhi26th November, 2009 New Delhi19th January, 2010 New Delhi16th February, 2010 New Delhi27th March, 2010 Mangalore

3) AUDIT COMMITTEE

i) Terms of Reference:

The scope of functions and terms of reference of the Audit

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4. Shri L. K. Gupta - Member

The Company’s policy provides for payment of sitting fees only toits Non-Executive Independent Directors for attending the Committeeand Board meetings.

Details of remuneration paid to the Independent Non-ExecutiveDirectors during 2009 – 10 are as follows:

Directors Sitting Fees (Rs.)

Shri G. M. Ramamurthy 4,95,000Dr. A. K. Rath 30,000Shri V. P. Singh 30,000

Details of remuneration of MD and D(F) during 2009-10on paid basis including arrears: (Amount in `)

Part iculars M D D(F) Total

Salaries and 11,81,180 12,78,099 24,59,279Allowances

Contribution to 2,14,867 2,63,385 4,78,252PF & Other Funds

Other Perquisites 9,46,709 17,48,220 26,94,929& Benefits

Total 23 ,42 ,756 32,89 ,704 56,32 ,460

� Service Contract –5 years or the date of superannuationwhichever is earlier.

� Notice period : Three Months Notice or on paymentof three months salary in lieu thereof.

� Severance fees : Not Applicable

� Stock Options details : Not Applicable

Whether issued at discount : Not Applicable

Period over which it isaccrued and is exercisable : Not Applicable

Director’s Shareholding: As per the declaration received by theCompany as on 31st March, 2010, the following Director holds EquityShares of the Company as follows:

Name of the Director No. of Shares held

Shri Sudhir Vasudeva 300

5) SHAREHOLDERS’/ INVESTORS’ GRIEVANCECOMMITTEE

(i) The Company has constituted Shareholders’/ Investors’Grievance Committee to look into the redressal ofshareholders’ and investors’ complaints.

Present Composition of Shareholders’/ Investors’Grievance Committee as on 31.03.2010.

1) Shri G. M. Ramamurthy – Chairman (IndependentDirector)

2) Shri U.K. Basu – Member

3) Shri L. K. Gupta – Member

(ii) The Company also has a Share Transfer Committeecomprising of the following members as on 31st March, 2010for approval of share transfers etc.

Committee are as prescribed under Section 292A of theCompanies Act, 1956 and Clause 49 of the ListingAgreement with the Stock Exchanges.

ii) Composition of Audit Committee

Members as on 31st March, 2010:

1. Shri G.M. Ramamurthy – Chairman (IndependentDirector)

2. Dr. A. K. Rath – Independent Director

3. Shri Sudhir Vasudeva – Member

� The Company complies with the requirement ofClause 49 of the Listing Agreement as regardsto constitution of the Audit Committee.

� Managing Director, Director (Finance), GeneralManager (Internal Audit) and Statutory Auditorsare the permanent invitees in all the AuditCommittee meetings.

� Company Secretary is the Secretary to AuditCommittee.

iii) Details of the Audit Committee Meetings held during thefinancial year 2009-10

Date of Meeting No. of members attended

26.05.2009 323.07.2009 318.09.2009 228.10.2009 319.01.2010 2

Attendance in Audit Committee Meetings

* One Independent Director was present in the meeting held on23.07.2009, 18.09.2009, 28.10.2009 and 19.01.2010 as there wasonly one Independent Director available in the Board as on the dateof the meeting.

Director No. of Meetingsattended

Shri G. M. Ramamurthy 5

Shri Sudhir Vasudeva 3

Dr. A. K. Rath Please refer note below

NOTE:

* No meetings were held after his appointment on 16/02/2010.

4) R E M U N E R A T I O N C O M M I T T E E :

MRPL being a Government Company, appointment and terms &conditions of remuneration of Executive Directors (Whole-timeDirectors) are determined by the President of India.

As required by Clause 49 of the Listing Agreement and also byDPE Guidelines on Corporate Governance, the Company hasconstituted a Remuneration Committee in April 2009. The Committeecomprises following Directors as on 31/03/2010:

1. Shri G. M. Ramamurthy - Chairman(Independent Director)

2. Shri Vivek Kumar - Member

3. Shri U. K. Basu - Member

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1. Shri S. Bandyopadhyay - GM (Finance)

2. Shri B. Sukumar - Company Secretary

3. Shri K. Vijay Kumar - DGM (Contracts)

Note:

i) Name and designation of the Compliance Officer: Shri B.Sukumar, Company Secretary.

ii) No. of Shareholder’s complaints received during the year2009-2010: 476

iii) No. of complaints not resolved to the satisfaction of theshareholders as on 31.03.2010: NIL

iv) No. of pending share transfers as on 31.03.2010: NIL

6) DETAILS OF GENERAL BODY MEETINGS

i) Location, place and time where last 3 AGMs were held

Year Location Date Time

2009 Registered Office 19/09/09 3.30 p.mof the CompanyMudapadav,Kuthethoor P.O.Via Katipalla,Mangalore –575 030

2008 Registered Office of 02/08/08 3.30 p.mthe CompanyMudapadav,Kuthethoor P.O.Via Katipalla,Mangalore –575 030

2007 Registered Office of 14/09/07 4.00 p.mthe CompanyMudapadav,Kuthethoor P.O.Via Katipalla,Mangalore –575 030

ii) Whether any special resolutions passed in the previous 3AGMs?Yes, one special resolution was passed in the 21st AGM for(a) Increasing the number of Directors in MRPL Board

from 12 to 16, and(b) Decreasing the number of Nominee Directors of

ONGC from 2 to 1 for the purpose of Quorum forthe Board Meeting.

iii) Any special resolutions were put through Postal ballot last year:No special resolution was put through postal ballot in thelast AGM.

iv) Persons who conducted the Postal Ballot exercise:Not Applicable.

v) Procedure for Postal Ballot:Not Applicable.

7) DISCLOSURES :i) Materially Significant related party transactions:

(a) The Company is a State controlled enterprise and there areno transactions to be disclosed as per the Accounting

Standard 18 (AS - 18) of Related Party Disclosures issuedby the Institute of Chartered Accountants of India except‘b’ and ‘c’ mentioned below.

(b) Key Management Personnel:Whole-time Directors:(i) Shri U. K. Basu : Managing Director(ii) Shri L. K. Gupta : Director (Finance)Details of Transactions during financial year 2009-2010:The Remuneration paid to Managing Director and Director(Finance) for the FY 2009-10.- Salaries and Allowances ` 2.46 Millions.- Contribution to Provident Fund ` 0.48 Millions.- Other perquisite and benefits ` 2.69 Millions including

` 2.36 Millions paid towards Performance Related Payas per Department of Public Enterprise guideline dated9th Feb,2009.

(Excluding accrued leave salary and gratuity since the sameis not available for individual employees)

(c) Enterprises in which significant influence is exercised:

N a m e Relationship Nature ofTransaction

ONGC Mangalore AssociatePetrochemicalsLimited Details

furnished inShell MRPL Joint Venture Para11.3 ofAviation Fuel & Schedule S.Services Private (Notes onLimited Accounts)

Mangalam Retail Joint VentureServices Limited

Mangalore SEZ AssociateLimited

ii) Details of non-compliance by the company, penalties, stricturesimposed by the Stock Exchange or SEBI or any authority on anymatter related to capital markets during last 3 years: NIL

iii) Non-Mandatory Requirements:

a. The Company maintains a Chairman’s office at its expense.

b. MRPL being a Government Company, appointment and termsand conditions of remuneration of Executive Directors (whole-time directors) are determined by the President of Indiaexcept the Performance Related Pay which is approved bythe Remuneration Committee within the limits fixed underDPE Guidelines.

c . As the Company’s Quarterly/ Half Yearly Financial resultsare displayed on the website of the company, the half-yearlyreport is not sent to each Shareholders residence.

d. There are no qualifications in the Auditor’s report on thefinancial statements to the shareholders of the Company.

e. There is no formal policy at present for training of the Boardmembers of the Company as the members of the Board areeminent and experienced professionals. During the yearCompany has nominated Shri G.M.Ramamurthy, IndependentDirector for attending programme on Corporate Governance

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conducted by DPE on 22/07/2009.Shri L.K.Gupta, Director(Finance) was nominated for workshop on CorporateGovernance by MoP&NG on 6/5/2009.Shri V.K.Dewangan,Director was nominated for 5th Director Conclave on CorporateGovernance conducted by SCOPE on 10-11 March, 2010.

f . There is no formal mechanism existing in performanceevaluation of non-executive directors.

g. Whistle Blower Policy: In view of the Central VigilanceCommission Machinery available and the Central GovernmentNotification applicable to the Company on the subject matter,the company has no formal Whistle Blower Policy. Howeverthe Company has since formulated a Whistle Blower Policywhich has been approved by the Board on 12/05/2010 forits Implementation.

iv) CODE OF CONDUCT FOR MEMBERS OF THE BOARDAND SENIOR MANAGEMENT

The Board at its meeting held on 30th January, 2006, has adopted aCode of Conduct (‘Code’) for Members of the Board and SeniorManagement. This Code is a comprehensive code applicable toExecutive and Non-executive Directors as well as members of theSenior Management i.e. Managerial Personnel at the level of SeniorGeneral Manager and above of the Company. A copy of the Codehas been placed on the Company’s website www.mrpl.co.in

The Code has been circulated to all the members of the Board andSenior Management and compliance of the same has been affirmedby them. A declaration signed by Managing Director is given below:

I hereby confirm that:

The Company has obtained affirmation from all themembers of the Board and Senior Management, that theyhave complied with the Code of Conduct for Members ofBoard and Senior Management, in respect of the financialyear 2009-10.

U.K. BasuManaging Director

v) MRPL CODE ON INSIDER TRADING

In pursuance of the Securities and Exchange Board of India(Prohibition of Insider Trading) (Amendment) Regulations, 2008 theBoard has approved the amended “Code of Conduct for Preventionof Insider Trading”. This Code is followed by all DesignatedEmployees of the Company.

vi) CEO & CFO CERTIFICATION

In terms of revised Clause 49 of the Listing Agreement, thecertification by the CEO & CFO on the financial statements andinternal controls relating to financial reporting has been obtained.

8) MEANS OF COMMUNICATION:i) Quarterly results were : Yes

published in news paperii) Newspaper in which the Economic Times,

results were published. (English)Hindu Business Line,(English)Indian Express,(English)

Financial Express,(English)Business Standard,(English)Navbharat Times,(Hindi)Udayavani (Manipal),(Kannada)

iii) Website where the : www.mrpl.co.inresults are displayed

iv) Official news releasesdisplayed in : www.mrpl.co.in

v) Any presentation made : Noto the institutionalinvestors or to the analysts.

9) GENERAL SHAREHOLDERS INFORMATION

22nd Annual General Meetingi) Date and time : 4th September, 2010,

3.30 p.m.ii) Venue : Registered Office

Mudapadav, Kuthethoor P.O.Via Katipalla,Mangalore –575 030

iii) Financial Year : 2009 – 2010iv) Book Closure Date : 17.07.2010 to 24.07.2010v) Dividend Payment : On or after 04/09/2010

Datevi) Listing on Stock : 1) Bombay Stock Exchange Ltd.

(BSE)2) The National Stock

Exchange of India Ltd. (NSE)The Listing Fees for the year 2009-10 have been paid.vii) Stock code

BSE : 500109NSE : MRPLDemat ISIN : INE103A01014

viii) Market Price Data

Month (2009-2010) B o m b a yStock Exchange

High ` Low `

April 2009 57.25 40.95May 2009 79.30 45.00June 2009 102.20 72.80

July 2009 87.90 68.90August 2009 93.15 77.90September 2009 93.95 84.00

October 2009 92.50 72.25November 2009 83.25 70.40December 2009 81.80 74.80

January 2010 91.00 74.50February 2010 81.40 71.90March 2010 80.35 73.55

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NSE (NIFTY) 2009-10 BSE SENSEX 2009-10ix) Performance in comparison to broad based indices such as NSE NIFTY and BSE Sensex:

x) Registrar and Transfer Agent: M/s Link Intime India Private Limited., C-13, Pannalal Silk Mills Compound, L.B.S Marg, Bhandup (W), Mumbai – 400078 have been appointed as Company’s R&T Agent w.e.f 1/1/2010. Earlier, M/s MCS Ltd was our R&T Agent upto 31/12/09 as per the terms ofcontract of appointment.

xi) Share transfer system:The share transfer work is being handled by Company’s R&T agents, M/s. Link Intime India Pvt Ltd., who are also having connectivity with thedepositories viz. NSDL and CDSL. The transfers are approved by the Share Transfer Committee on weekly basis. Share transfers are registeredand dispatched within a period of 30 days from the date of receipt provided they are complete in all respects.

xii) Distribution of Shareholding as on 31st March, 2010No. of Equity No. of shareholders No. of shares % of Equity capitalShares held holding shares in held in held in

Physical Form Demat Form Physical Form Demat Form Physical Form Demat Form1-500 262102 268202 47031308 46716744 2.68 2.67501-1000 1223 16720 939825 13439052 0.05 0.771001-2000 220 5895 324257 8902602 0.01 0.512001-3000 34 1565 84625 4018420 0 0.233001-4000 14 613 48308 2208149 0 0.134001-5000 20 498 93950 2358436 0.01 0.145001-10000 12 676 89950 4936651 0 0.2910001 & above 8 489 297282318 1324124182 16.96 75.55Total 2 6 3 6 3 3 2 9 4 6 5 8 345894541 1406704236 1 9 . 7 1 8 0 . 2 9

xiii) Shareholding Pattern as on 31st March, 2010

Part iculars No. of Percen-Shares tage

Oil and Natural Gas Corpn. Ltd. 1,25,53,54,097 71.62Hindustan Petroleum Corpn. Ltd. 29,71,53,518 16.95Resident Individuals 13,61,27,833 7.77Non Resident Individuals 1,58,76,780 0.91Domestic Companies 98,30,068 0.56Non Domestic Companies NIL NILGIC & Subsidiaries 6,40,565 0.04Banks & Financial Institutions 3,29,47,229 1.88Mutual Funds 4,64,9760 0.27Central/State Govt. Institutions 2,700 0Trusts 16,227 0Total 1752598777 1 0 0

xiv) Dematerialization of Shares and liquidityAs on 31st March 2010, 1406704236 equity shares representing 80.29%, is in dematerialized form.Trading in Equity shares of the Company is permitted only indematerialized form w.e.f. February 15, 1999 as per the notificationissued by Securities and Exchange Board of India.

xv) Outstanding GDR/ ADR/ Warrants or any convertible instruments,

conversion date and impact on equity: NILxvi) Plant Location : Mudapadav, Kuthethoor P.O.Via Katipalla,

Mangalore-575 030. Karnataka.xvii) Address for Correspondence:

COMPANY’S INVESTOR RELATIONS CELL:Mangalore Refinery and Petrochemicals LimitedLGF, Mercantile House,15, K.G. Marg, New Delhi-110 001Tel.: 011-23463100, Fax : 011-23463201E-mail : [email protected]

REGISTRAR & SHARE TRANSFER AGENTS:M/S Link Intime India Private Limited,UNIT: MRPLC - 13, Pannalal Silk Mills Compound,L. B. S. Marg, Bhandup (West), Mumbai - 400 078.Tele. No.: 25946970, 25963838, Fax No.: 25946969Email: [email protected]

COMPANY’S REGISTERED OFFICE :Mangalore Refinery and Petrochemicals Limited (MRPL)Mudapadav, Kuthethoor, P.O.Via Katipalla,Mangalore-575 030. Karnataka.Tele.No.:0824-2270400, Fax No.: 0824-2270013Email: [email protected]

MRPL NSE NIFTY

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AUDITORS’ CERTIFICATE ON COMPLIANE OF CONDITIONS OF CORPORATE GOVERNANCEThe Members,Mangalore Refinery and Petrochemicals LimitedMangalore.

We have examined the compliance of conditions of Corporate Governance by MIs. Mangalore Refinery and Petrochemicals Limited for the year ended31st March, 2010, as stipulated in clause 49 of the Listing Agreement of the said Company with stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementationthereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression ofopinion on the financial statements of the company.

In our opinion and to the best of our information and according to the explanations given to us and the representation made by the Management, we certifythat the Company has complied with the conditions of Corporate Governance as stipulated in clause 49 of the above mentioned Listing Agreement exceptrelating to appointment of Independent Directors other than government nominees on the Board of the Company, which is being pursued with the Ministryof Petroleum and Natural Gas, Government of India. During the year, four audit committee meetings are attended by one Independent Director who wasonly available on the Board.We state that no investor grievance is pending with the company as at 31st March, 2010 for a period exceeding one month against the Company as per theCertificate of the Registrar and Transfer Agents of the Company.We further state that such compliance is neither an assurance as to the future viability of the company not the efficiency or effectiveness with which themanagement has conducted the affairs of the company.

For S. R. R. K. SHARMA ASSOCIATES For MAHARAJ N.R.SURESH & COChartered Accountants Chartered Accountants(ICAI Registration No. 003790S) (ICAI Registration No. 001931S)

(S. R. R. K. SHARMA) (N.R. Suresh)Partner - Partner -Membership No. 18088 Membership No.021661

Place : MumbaiDate : 8th June, 2010

Secretarial Audit ReportToThe Board of DirectorsMangalore Refinery and Petrochemicals LimitedPost Kuthethur,Katipalla, Mangalore – 575 030

We have examined the registers, records and documents of Mangalore Refinery and Petrochemicals Limited (“the Company”) for the financial year endedon 31st March 2010, as maintained under the provisions of:

� The Companies Act, 1956 and the Rules made under that Act;

� The Depositories Act, 1996 and the Regulations and Bye-laws framed under that Act;

� Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 more particularly as under:

- Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997; and

- Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

� Equity Listing Agreement entered into with Bombay Stock Exchange Limited and National Stock Exchange of India Limited; and

� Guidelines on Corporate Governance for Central Public Sector Enterprises 2007 and Guidelines on Corporate Governance for Central Public SectorEnterprises 2010 issued by Government of India, Ministry of Heavy Industries and Public Enterprises, Department of Public Enterprises.

Based on the examination and verification of registers, records and documents produced to us and according to explanations furnished to us by theCompany, its officers and agents, in our opinion, we report as under:

1. The Company has complied with the provisions of the Companies Act, 1956 (“the Act”) and the Rules made under the Act, and Memorandum andArticles of Association of the Company with regard to:

a. Maintenance of Statutory Registers and incorporating entries therein.

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rematerialization of securities and reconciliation of records ofdematerialized securities with all securities issued by the Company.

3. The Company has complied with the provisions of Securities andExchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations, 1997 with respect to disclosures andmaintenance of records required under the Regulations.

4. The Company has complied with the provisions of Securities andExchange Board of India (Prohibition of Insider Trading) Regulations,1992 with regard to disclosures and maintenance of records requiredunder the Regulations.

5. The Company has complied with the provisions of the ListingAgreement entered into with Bombay Stock Exchange Limited andNational Stock Exchange of India Limited except Clause 49(I)(A)(ii)with respect to requirement for minimum number of IndependentDirectors on the Company’s Board of Directors and Clause 49(II)(B)with respect to presence of minimum two Independent Directors inthe meetings of the Audit Committee held on 23/07/2009,18/09/2009, 20/10/2009 and 19/01/2010 due to insufficient numberof Independent Directors on the Board. We have been informedthat the said matter is being pursued with the Administrative Ministryi.e Ministry of Petroleum and Natural Gas, Government of India.

6. The Company has complied with the provisions of Guidelines onCorporate Governance for Central Public Sector Enterprises 2007and Guidelines on Corporate Governance for Central Public SectorEnterprises 2010 issued by Government of India, Ministry of HeavyIndustries and Public Enterprises, except for Clause 3.1 with respectto the requirement of minimum number of Independent Directorsother than Government Nominees on the Board of the Companyand Clause 4.4 with respect to presence of minimum twoIndependent Directors in the meetings of the Audit Committee heldon 23/07/2009, 18/09/2009, 20/10/2009 and 19/01/2010 due toinsufficient number of Independent Directors on the Board. We havebeen informed that the said matter is being pursued with theAdministrative Ministry i.e. Ministry of Petroleum and Natural Gas,Government of India.

We further report that:

a. The Company has obtained all necessary approvals of theCentral Government and/or other authorities under the Act,wherever required.

b. There was no prosecution initiated against, or show causenotice received by the Company and no fines or penaltieswere imposed on the Company under the Companies Act,1956; SEBI Act, 1992; Depositories Act, 1996 and regulationsand Guidelines framed thereunder.

For Rathi & AssociatesCompany Secretaries

Himanshu S. KamdarPartner

Place : Mumbai FCS No. 5171Dated : 4th June, 2010 COP No. 3030

b. Constitution of the Board of Directors and appointment,retirement and re-appointment of Directors;

c . Payment of Remuneration to Managing Director and Director– Finance;

d. Meetings of Directors and Committees thereof held includingpassing of resolutions by circulation;

e. Disclosure of interest in other firms/companies by theDirectors to the Board of Directors;

f . Service of Notice and other documents to the Members;

g. The 21st Annual General Meeting held on19th September, 2009;

h. Recording and maintenance of the minutes of theproceedings of General Meetings and Meetings of the Boardand committees thereof;

i. Filing of applicable forms and returns with Registrar ofCompanies and/or Central Government;

j. Closure of Register of Members and Share Transfer Books;

k . Declaration and payment of Dividend to Equity Shareholdersand Preference Shareholders;

l. Appointment and payment of remuneration to StatutoryAuditors and Cost Auditors;

m. Approval for Transfers of Shares and/or issue of duplicateshare certificates by duly constituted committee of theBoard;

n. Transfer of Unpaid/unclaimed amounts to Investor Educationand Protection Funds, wherever required;

o. Investment of the Company’s funds in other bodiescorporate;

p. Charges created and/or modified to secure the borrowingsmade by the Company and satisfaction thereof; and

q. Obtaining consent of the Members, the Board of Directorsand Committee of Directors wherever required.

In connection with the above, it has been noted that theshareholders of the Company passed an Ordinary Resolution underSection 293(1) (a) of the Companies Act, 1956 at the 21st AnnualGeneral Meeting held on 19th September, 2009, with respect topower of the Board of Directors to create charge/hypothecation/mortgage on any or all of the properties of the Company to securethe borrowings of the Company. As regards the provisions of Section192A of the Companies Act, 1956 read with Rule 4(f) of theCompanies (Passing of the resolution by Postal Ballot) Rules, 2001pertaining to matters under said Section 293(1)(a), the Companyhas taken a view that the said Rule 4(f) would apply in case of“sale of whole or substantially the whole of undertaking of a companyas specified under sub-clause (a) of sub-section (1) of Section 293”whereas the aforesaid ordinary resolution pertains to creation/hypothecation/mortgaging of any or all of the properties of theCompany to secure its borrowings. Hence, the said Rule 4(f) didnot apply to the aforesaid ordinary resolution.

2. The Company has complied with the provisions of Depositories Act,1996 and Regulations framed there under with regard to dematerialization/

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AGM NOTICE

NOTES :

1 . A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND ANDVOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER. THE PROXY FORM SHOULD BE LODGED WITHTHE COMPANY AT ITS REGISTERED OFFICE, NOT LATER THAN FORTY-EIGHT HOURS BEFORE THE TIME OFCOMMENCEMENT OF THE MEETING.

2. Dividend on Equity Shares as recommended by the Board of Directors, if declared at the Meeting, will be payable to those Members, whose namesappear on the Register of members of the Company or beneficial owners with depositories after giving effect to valid share transfers in physical formlodged with the Company at the close of business hours on 16.07.2010 to their registered addresses and the respective Beneficial Owners as per thelists furnished by National Securities Depository Limited and Central Depository Services (India) Limited, at the close of business hours on 16.07.2010.

3. Members may kindly note :(a) Change of Registrar & Transfer Agent of the company effective 01/01/2010 from M/s. MCS Ltd to M/s. Link Intime India Pvt

Ltd., C-13 Pannalal Silk Mills Compound, L.B.S Marg, Bhandup (West), Mumbai- 400 078 (Tel.: 022-25963838 / 25946970Fax : 022-25946969 Email : [email protected])

(b) Relocation of Investor Relation Cell, MRPL from Mumbai to New Delhi at LGF, Mercantile House, 15, K.G. Marg, NewDelhi-110 001, (Tel.: 011-23463100, Fax : 011-23463201)

4. Members are therefore requested to provide their Folio Number alongwith Bank Account Number, Name and Address of the Bank/Branch to M/s. LinkIntime India Private Limited, Registrar & Share Transfer Agent of the Company at C-13, Pannalal Silk Mills Compound, L.B.S Marg, Bhandup (West),

NOTICE is hereby given that the 22nd Annual General Meeting of the Members of Mangalore Refinery and Petrochemicals Limited will be held at theRegistered office of the Company at Mudapadav, Kuthethoor, P.O Via Katipalla, Mangalore – 575 030 on Saturday, 4th September, 2010 at 3.30p.m.to transact, with or without modifications, as may be permissible, the following business:

O R D I N A R Y B U S I N E S S

1. To receive, consider and adopt the Balance Sheet as at 31st March, 2010 and the Profit & Loss Account for the year ended on that date together withthe Reports of the Directors, Auditors and Comptroller and Auditor General of India thereon.

2. To confirm the payment of dividend on the Preference Shares for the financial year ended 31st March, 2010.

3. To declare dividend on Equity Shares for the financial year ended 31st March, 2010.

4. To appoint a Director in place of Shri. D. K. Sarraf who retires from office by rotation and being eligible offers himself for re-appointment.

5. To appoint a Director in place of Shri Vivek Kumar who retires from office by rotation and being eligible offers himself for re-appointment.

6. To fix and/or to determine the payment of remuneration to the Auditors of the Company to be appointed by the Comptroller and Auditor General ofIndia for auditing the accounts of the Company for the financial year 2010-11.

S P E C I A L B U S I N E S S

1. To appoint Dr. A.K. Rath (who was appointed as an additional Director with effect from 16/02/2010 by the Board of Directors pursuant to Article 140of the Company’s Articles of Association and who holds office under the said article and Section 260 of the Companies Act, 1956 only upto the dateof this meeting and in respect of whom, the Company has received a notice in writing alongwith a deposit of Rs. 500/- under Sec 257 of theCompanies Act, 1956 from a member signifying his intention to propose him as a candidate for the office of a Director) as a Director of the Companyand to consider and if thought fit to pass the following resolution which will be proposed as an ordinary resolution:

“RESOLVED that pursuant to the provisions of Sections 257, 260 and all applicable provisions, if any, of the Companies Act, 1956 Dr. A.K. Rathbe and is hereby elected and appointed as a Director of the Company liable to retire by rotation.”

By Order of the Board.

B. SUKUMARMumbai, 4th August, 2010 Company Secretary

Registered Office :Mudapadav, Kuthethoor P.O.Via Katipalla,Mangalore - 575 030

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ANNEXURE TO THE NOTICEEXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.Dr. A.K. Rath was appointed as an Additional Director by the Board of Directors with effect from 16.02.2010, under the Article 140 of the Articles ofAssociation of Company read with Section 260 of the Companies Act, 1956. According to the provisions of the said Article and Section 260 of theCompanies Act, 1956, he holds office upto the date of the ensuing Annual General Meeting. The Company has received a notice from a member underSection 257 of the said Act, proposing his candidature for the office of director.

As required under Clause 49 of the Listing Agreement on Corporate Governance, a brief resume of the director is furnished in the attachment.Dr. A.K. Rath is interested in the resolution as it concerns his appointment.

Mumbai – 400 078, in respect of shares held in physical mode and to their respective DPs for shares held in demat mode to enable the Company topay the dividend accordingly.

5. Members holding more than one Share Certificate in the same name under the different Ledger Folios are requested to apply for consolidation of suchFolios and send the relevant Share Certificates to the said Registrars.

6. The Company has entered into Agreements with both the Depositories viz. National Securities Depository Limited (NSDL) and Central DepositoryServices (India) Limited (CDSL) for custody and dematerialisation of securities. Members can avail of the depository facilities by approaching any ofthe Depository Participants of NSDL or CDSL.

7. The Companies (Amendment) Act, 1999 extended the nomination facility to individuals holding shares in Companies. Shareholders holding shares inphysical form and in particular whose holding is in single name, are requested to avail of the above facility by furnishing to the Company theparticulars of their nomination. Shareholders can download prescribed Nomination Form at “Investor Services” link of the Company website i.e.www.mrpl.co.in.

8. The Company has listed its shares at the Bombay Stock Exchange Limited and The National Stock Exchange of India Limited. Upto date listing feeshave been paid to both the Stock Exchanges.

9. In respect of appointment/reappointment of the Directors, a statement containing details of the concerned Directors is annexed to this notice pursuantto the provisions of Clause 49 of Listing Agreement.

DETAILS OF THE DIRECTORS’ SEEKING APPOINTMENT/REAPPOINTMENT AT THE22nd ANNUAL GENERAL MEETING

Name of Director

Date of Birth

Date of Appointment/Reappointment

Expertise in specific functionala reas

Shri D.K. Sarraf

03/09/1957

27/07/2010

Presently Director (Finance), ONGC andhas over 30 years of rich & variedexperience in the Oil Industry. Served inOil India Ltd., ONGC Videsh Ltd and OilCo-ordination Committee under MoP&NG.

Shri Vivek Kumar

21/02/1966

02/08/2008

He is an I.A.S. Officer and hasover 17 years experience inPublic Affairs having helddifferent administrative posts inWest Bengal. He has workedwith West Bengal Rural EnergyDevelopment CorporationLimited as Executive Director.He has designed andimplemented innovativeschemes for power distributionin the countryside as a part ofPower Sector reforms in thecount ry .

Dr. A.K. Rath

09/01/1949

16/02/2010

Presently, Professor andChair of the Public Policy andManagement programme atMDI Gurgaon. He is an IAS(1973 cadre) and has put inover 35 years of service inthe Government of India. Hehas served as a Director inSAIL, RINL, NMDC, KIOCLand MECON during histenure as AdditionalSecretary and FinancialAdvisor in the Ministry ofSteel. He was the architectof the landmark Right ofChildren to Free andCompulsory Education Bil l ,2008 .

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Name of DirectorQuali f icat ion

List of outside Directorshipsheld

Chairman/ Member of theCommittees of the Board ofDirectors of the Company

Chairman/ Member of theCommittees of Director ofother Companies in which heis a Director

Shareholding in MRPL as on31st March, 2010

DETAILS OF THE DIRECTORS’ SEEKING APPOINTMENT/REAPPOINTMENT AT THE22nd ANNUAL GENERAL MEETING

Shri D.K. Sarraf

Associate Member of ICWA and ICSI.

1 . Oil and Natural Gas Corporation Ltd.

2 . ONGC Videsh Ltd.

3 . Mangalore SEZ Ltd.

4 . ONGC Tripura Power Co. Ltd.

5 . North East Transmission Co. Ltd.

N I L

O N G CMember :(i) Audit & Ethics (Permanent invitee)(ii) Project Appraisal(ii i) Shareholders' / Investor Grievances(iv) Human Resource Management(v) Remunerat ion(vi) Health Safety & Environment(vi i ) Financial Management(vii i) COD for redressal of Grievances of

the PartiesONGC VideshMember - Audit CommitteeONGC Tripura Power Co. LtdMember - Audit CommitteeNorth East Transmission Co. LtdMember - Audit Committee

100 Shares

Shri Vivek Kumar

Post-Graduate from DelhiUniversity with Master's Degreein Polit ical Science, withspecialisation in InternationalRelat ions.

N I L

N I L

N I L

N I L

Dr. A.K. Rath

Doctorate Degree inBusiness Administration.

1. Coal India Ltd.

N I L

N I L

N I L

ABSTRACT OF TERMS OF APPOINTMENT OF SHRI U K BASU MANAGING DIRECTOR OFTHE COMPANY PURSUANT TO SECTION 302 OF THE COMPANIES ACT, 1956a) Pay : In the pay scale of ` 75,000 – 90,000/-

b) D. A. : In accordance with new IDA scheme spelt out in the Dept. Of Public Enterprise, OM dated 26.11.2008 and 02.04.2009.

c) Residential accommodation: Company’s own accommodation.

d) Conveyance : Entitled for the staff car for private use up to 1000 km at Delhi, Mumbai, Chennai, Kolkata, Bengaluru & Hyderabad and750 km all the other cities.

e) Others : Leave, Contributory Provident Fund, Gratuity, Productivity Linked Incentives, Medical facilities, Travel allowance, Leave TravelConcession, Disability leave, Two club membership etc. in accordance with MRPL Rules.

f) Period : 5 years or till the superannuation or until further orders whichever is earlier. Termination with 3 months notice from either side or onpayment of three months salary in lieu thereof.

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FIVE YEAR PERFORMANCE AT A GLANCE(` in Million)

2009-10 2008-09 2007-08 2006-07 2005-06What We OweSHARE CAPITAL 17,618.50 17,618.31 17,618.21 17,618.04 17,618.04RESERVES 38,347.02 29,675.68 20,211.22 9,949.92 6,335.35Net Worth 55,965.52 47,293.99 37,829.43 27,567.96 23,953.39Borrowings 16,963.97 19,868.04 20,580.68 23,683.07 33,072.72Deferred Tax Liability 6,602.22 5,685.53 5,307.79 5,989.56 1,371.34

T O T A L 79,531 .71 72 ,847 .56 63 ,717 .90 57 ,240 .59 58 ,397 .45

What We OwnFixed Assets (Including Capital WIP) 92,954.50 78,390.04 75,053.07 74,028.40 71,885.91Less : Depreciation 41,428.08 37,661.38 33,988.12 30,363.80 26,834.85

51,526 .42 40 ,728 .66 41 ,064 .95 43 ,664 .60 45 ,051 .06Investments 16,236.62 6,428.93 6,451.36 272.80 272.78Net Current Assets 11,768.67 25,689.97 16,201.59 13,303.19 13,073.61

T O T A L 79,531 .71 72 ,847 .56 63 ,717 .90 57 ,240 .59 58 ,397 .45

IncomeSales (Net Of Excise Duty) 318,851.74 382,437.41 325,751.28 284,646.10 247,831.23Other Income 2,915.12 1,866.41 740.73 411.99 767.81Exchange Fluctuation (net) : Gain 3,903.97 - 1,374.86 325.21 -Increase/ (Decrease) in stocks 2,958.77 (5,968.56) 1,048.01 7,983.22 (2,933.91)

T O T A L 328,629 .60 378,335 .26 328,914 .88 293,366 .52 245,665 .13

ExpenditureRaw Materials 302,308.74 345,127.66 300,840.43 271,072.55 228,314.30Operating expenses 1,679.76 1,280.26 1,335.52 1,098.57 1,248.62Sales Tax & Excise Duty on Stocks (net) 894.23 559.01 2,242.82 3,324.22 2,428.12Salaries & Other Expenses 958.95 1,130.30 1,248.17 552.06 479.62Exchange Fluctuation (net) : Loss - 6,104.96 - - 711.15Administration & Other Expenses 821.22 758.83 662.04 735.75 574.38Interest 1,154.98 1,434.51 1,475.89 2,145.26 1,877.67Depreciation 3,893.27 3,823.16 3,778.18 3,548.56 3,500.17Miscellaneous Expenditure Written off - - - - 305.27

T O T A L 311,711 .15 360,218 .69 311,583 .05 282,476 .97 239,439 .30

Profit Before Tax 16,918.45 18,116.57 17,331.83 10,889.55 6,225.83Provision for Taxation 5,794.68 6,191.13 4,609.55 5,634.32 2,509.68Profit After Tax 11,123.77 11,925.44 12,722.28 5,255.23 3,716.15Dividend 2,103.13 2,103.49 2,103.49 1,402.33 1,227.04Dividend Distribution Tax 349.30 357.49 357.49 238.33 172.09Financial IndicatorsPAT to Turnover (Net) 3.49% 3.12% 3.91% 1.85% 1.50%PAT to Capital Employed 13.99% 16.37% 19.97% 9.18% 6.36%EBIDTA to Turnover 6.89% 6.11% 6.93% 5.83% 4.81%

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MANGALORE REFINERY AND PETROCHEMICALS LIMITEDRegistered Office : Mudapadav, Kuthethoor P.O. Via. Katipalla, Mangalore 575 030, Karnataka.

ATTENDANCE SLIP

22nd Annual General Meeting4th September, 2010

Regd. Folio No. *D.P Id

No. of Shares held *Client Id

I certify that I am a registered Shareholder/ Proxy for the Registered Shareholder of the Company.

I hereby record my presence at the 22nd Annual General Meeting of the Company held on Saturday, 4th September, 2010 at3.30 p.m at Mudapadav, Kuthethoor P.O. Via. Katipalla , Mangalore 575 030, Karnataka.

Members’/Proxy's Name in Block Letters Members'/Proxy's Signature

Note : Please fill this Attendance Slip and HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL

*Applicable for investors holding shares in electronic form.

MANGALORE REFINERY AND PETROCHEMICALS LIMITEDRegistered Office : Mudapadav, Kuthethoor P.O. Via. Katipalla, Mangalore 575 030, Karnataka.

FORM OF PROXY

22nd Annual General Meeting4th September, 2010

Regd. Folio No. *D.P Id

No. of Shares held *Client Id

I/We of being a Member /Members of the above named Company hereby appoint of or failing him of as my/our proxy to vote for me/us on my/our behalf at the Twenty Second Annual General Meeting of the Company to be heldon Saturday, 4th September, 2010 at 3.30 p.m. and at any adjournment thereof.

Signed this day of 2010.

*Applicable for investors holding shares in electronic form.

(Signature)

Note: This form in order to be effective should be duly stamped, completed and signed and must be deposited at the RegisteredOffice of the Company, not less than 48 hours before the time of commencement of the meeting.

Affix` 1

Revenue stamp

BOARD OF DIRECTORS Sharma Associates, Chartered Accountants REGISTERED OFFICE M/s. Maharaj...

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