A hearty welcome to you all at the 51st Annual General Meeting of your Corporation.
On behalf of the Board of Directors and my colleagues at IndianOil, I thank each
one of you for making it convenient to attend this important meeting and registering
your solidarity with us. The notice convening the meeting, the Directors' Report
and the Annual Audited Accounts have been with you for some time now, and with your
permission, I take them as read.
Perspectives of a Year of Resurgence
The year 2009-10 was turbulent to say the least and the unprecedented recession
worldwide continued to impact people. Added to this was the volatility in crude
oil prices. In fact, the intra-year volatility of crude oil prices was perhaps the
largest during the last two years, with prices touching a low of USD 40/bbl in 2008,
only to recover dramatically the next year. There was a slump in demand and the
global upstream oil and gas sector behaved rather predictably by cutting back on
new and existing exploration projects.
The Indian economy emerged out of the grip of recessionary forces, helped by a strong
show by the industrial and services sectors. The strength of our economy, which
is primarily driven by domestic consumption; the robustness of our financial system
and most notably, the foresight and prudence displayed by the Reserve Bank of India,
were all contributory in insulating the Indian economy from the turmoil in the international
market. The Indian oil & gas sector was, to a certain extent, shielded from global
happenings and demand continued to rise. While oil consumption in the developed
countries has been falling, the consumption in emerging economies is actually rising.
As a nation, our consumption is likely to go up even further powered by the strength
of our domestic demand.
During the year, your Corporation sold over 63 million tonnes of petroleum products
registering a growth of 3.52%. Our determination to retain our leadership, in the
face of an uncertain retail pricing scenario, was displayed by the sustained efforts
made in commissioning new retail outlets in urban and rural areas. We continue to
dominate the market in the competitive branded fuels, lubricants and large volume
consumer business. Our Indane LPG brand earned the coveted status of a 'Superbrand'
during the year, and it will now be further expanded through the launch of the Rajiv
Gandhi Grameen LPG Vitarak Yojana.
Our refineries achieved a crude throughput of over 50 million tonnes during the
year, but this was marginally lower than last year due to the planned shutdowns
at a few refineries. Your Corporation's refineries together achieved a capacity
utilisation of over 100% and the dispatches of BS-IV quality fuels were done much
in advance of the deadline. IndianOil pipelines registered the highest-ever operational
throughput of about 65 million tonnes. With the commissioning of the Chennai-Bengaluru
Product Pipeline, the total network of pipelines touched 10899 km. R&D continues
to drive our innovations and 181 product formulations were developed and 65 approvals
obtained from Original Equipment Manufacturers.
Recently, when an oil spill threatened the marine ecosystem off Mumbai and polluted
the beaches, IndianOil, along with TERI helped in cleaning up the spill. In another
incident of oil spillage caused by a sinking ship at Paradip Port, your Corporation
played an important role in the clean-up operations. This we were able to do because
of the highly acclaimed modified OiliVorous-S technology for bio-remediation of
oily sludge, jointly developed by IndianOil and TERI. This development proved highly
useful in bio-remediation of oily sludge accumulated in our oil installations.
Your Corporation's sales turnover for the year touched 2,71,074 crore while profit
after tax touched a high of ` 10,221 crore. The profits were driven by revenues
from our diversification forays as well as compensation for under recoveries by
the Government of India. The Earnings Per Share for the current year is ` 42.10
as compared to ` 12.15 in the previous year. Your Corporation has been consistently
declaring dividend for the past 44 years and this year too, the Board of Directors
has recommended a dividend of `13 per equity share of ` 10 each on the post-Bonus
paid-up Share Capital, as against ` 7.50 per share in the previous year.
So far, your Corporation has paid a cumulative dividend of ` 15,419 crore excluding
a dividend of ` 3,156 crore payable for the current year, subject to the approval
by shareholders. Your Corporation makes enormous contribution to the Exchequer in
the form of duties and taxes and during the year, ` 57,680 crore was our contribution
to the state and central exchequer. For the first quarter of the current fiscal,
your Corporation posted a loss of ` 3,388 crore as compared to a profit of ` 3,683
crore for the same quarter during the previous year. The loss is mainly on account
of unmet under-recoveries, lower refining margins and foreign exchange variation
Your Corporation has been conferred with the 'Maharatna' status and is one among
the four companies selected by the Government. The status provides for enhanced
autonomy and a larger flexibility in operations which would help us in effectively
implementing our strategic plans.
Exploration and Production
Initially, IndianOil entered the E&P segment as partners in different consortia
to acquire participating interests in oil assets in India and abroad. In the next
stage, we have qualified as operators and your Corporation has been granted a Petroleum
Exploration License for one of the blocks in the Cambay basin for which exploration
activities were initiated. In continuation of our E&P forays abroad, we have been
awarded a project for the development of the Carabobo heavy oil region of Venezuela
in a consortium with Repsol of Spain, Petronas of Malaysia, ONGC Videsh Ltd. and
Oil India Ltd. The Corporation is facing challenges in getting skilled manpower
for some of its new verticals such as E&P and Petrochemicals, which require manpower
with specialised skill sets that are diverse and different from those of our downstream
Gas is more than just an energy option for our nation. It is a source of clean and
green energy that promises to transform the Indian economy and help build a truly
sustainable society. Your Corporation is poised to tap the vast opportunities that
will open up with consumers increasingly switching from liquid to gas. IndianOil
sold 1.68 million tonnes of Natural Gas during the year. We have ventured into the
development of City Gas Distribution networks in alliance with various partners.
The potential for gas is huge and as India catches up with the world in the share
of gas in the overall bouquet of primary fuels, your Corporation is poised to tap
the shift in the consumption pattern. The big opportunity is the rolling out of
City Gas Distribution networks in urban centres. This is expected to rightly shift
subsidised domestic LPG to the BPL families.
I am happy to inform that your Corporation's largest petrochemicals investment,
the Naphtha Cracker and downstream polymer units at Panipat have been commissioned
smoothly and the first batch of polymers dispatched. We have already developed a
marketing interface that would reach high quality petrochemical products in time
to suit the customer's production cycle. A Styrene Butadiene Rubber unit is being
set up at Panipat in a joint venture with TSRC Corporation, Taiwan and Marubeni
Corporation, Japan, which will add value to the intermediate streams of our Panipat
Naphtha Cracker Complex.
Investing for the Future
As a leading energy corporate in a rapidly growing emerging economy, challenges
& opportunities are plentiful for the Corporation. With domestic demand projected
to grow at a higher rate over the long term, your Corporation has laid out strategic
plans to meet the future demand for petroleum products in India. The biggest opportunity
is on the infrastructure front with an unprecedented array of projects lined up
for implementation, like new highways, ports, airports and power projects. The automobile
and manufacturing sectors are also notching up good growth rates. We are on the
cusp of perhaps one of the biggest opportunities of our lifetime. And when a need
has been felt, we have always delivered.
Our projected investments of over ` 47,000 crore in new and additional refining
capacity, enhanced pipeline network and marketing touch-points ensure that our nation
will always have a secure and reliable energy resource for development. The Corporation's
15 MMTPA Paradip Refinery Project on the east coast is also a significant addition
to the nation's refining infrastructure and opens up significant export opportunities.
In the recent years, while the rapid growth in the Indian economy has increased
its appetite for petrochemicals, the per capita consumption still continues to be
way below the world average. The demand for petrochemicals in the domestic segment
in India is very strong and slowly, we are seeing the established markets move to
specialty polymers while much of India and China are focusing on commodity polymers.
In a world that is increasingly dependent on fossil fuels, the task is to explore
alternative forms of energy and your Corporation has been at the forefront in tapping
such opportunities. We have one of the largest captive plantations for bio-fuel
production in India and we have begun marketing solar lanterns in select markets.
Our MoU with the Nuclear Power Corporation of India Ltd., for investing in the nuclear
energy sector in the country, is expected to gain traction in the years to come.
Your Corporation is in the process of undertaking a major environmental mapping
exercise for putting in place information systems for monitoring and management
of its carbon footprint.
Backing our efforts on sustainability is our commitment to a safe and secure work
place. An exclusive group for Safety, Health & Environment drives all initiatives
in IndianOil to ensure compliance with safety systems and procedures at our various
installations and locations. We had a traumatic experience when a fire mishap destroyed
our Jaipur terminal in October 2009. We have learnt from the incident and are in
the process of further upgrading facilities across installations. Your Corporation
handles products that are very sensitive by nature and the endeavour is to ensure
the strict compliance of all standard operating practices.
Corporate Social Responsibility
Your Corporation is always focused on ensuring that all business practices and future
plans are synergised with our philosophy of sustainability. Our commitment and sense
of corporate social responsibility is reflected in the decision of the IndianOil
Board to enhance the annual Corporate Social Responsibility (CSR) expenditure to
2% of the retained profits of the year 2009-10.
We continue to make contributions to society through the provision of a wide range
of socio-economic benefits to the underprivileged, merit awards to needy students,
sports scholarships as well as initiatives in providing hospitals, clean drinking
water, health & medical care and education in rural areas. Our community kitchen
projects backed by the provision of LPG to BPL families have made a remarkable contribution.
Your Corporation has been implementing the provision of 3% reservation for physically
handicapped and disabled persons diligently. We have been meticulously following
the various directives regarding reservation in services for Scheduled Castes, Scheduled
Tribes, Physically Challenged and OBCs. It has been our endeavour to utilise 25%
of community development funds for aiding underprivileged people from the weaker
sections of the society.
Your Corporation is diligently focused on maintaining the highest standards of Corporate
Governance by ensuring transparency in all aspects of its operations. The Corporate
Governance Report has been incorporated as a separate section in the Annual Report
and your Corporation complies with the Corporate Governance guidelines for Government
Companies as enunciated by the Department of Public Enterprises, Government of India.
IndianOil has also formulated a code of conduct for the Directors and senior management
personnel of the Corporation.
On behalf of the Board of Directors, I thank the members of the IndianOil family
for their dedicated efforts which helped us in successfully facing the turbulent
financial year 2009-10. The Board also wishes to thank all shareowners of IndianOil
for their trust and confidence. I also thank the Government of India as well as
the various State Governments for their valuable guidance and support in all our
endeavours. I also thank our esteemed customers who have made us what we are, for
their patronage and continued support.
The Board wishes to place on record its appreciation for the commendable performance
and immense contribution made by Shri Sarthak Behuria during his chairmanship, which
enabled IndianOil to achieve greater heights of glory and excellence. The Board
also wishes to place on record its appreciation for the significant contribution
and guidance rendered by Shri S. Sundareshan, Shri P. K. Chakraborti and Shri V.
C. Agrawal during their tenure on the Board.
I now move the Annual Accounts for adoption.