Delivering on Promises
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Delivering on Promises 11 12 ANNUAL REPORT Essar Oil Limited ABRIDGED ANNUAL REPORT 2011-12 CORPORATE INFORMATION BOARD OF DIRECTORS BANKERS (As on November 9, 2012) ICICI Bank Ltd. State Bank of India Shashi Ruia, Chairman IDBI Bank Ltd. Prashant Ruia Punjab National Bank Naresh K. Nayyar, Deputy Chairman HDFC Bank Ltd. Lalit Kumar Gupta, Managing Director & CEO Axis Bank Ltd. Chakrapany Manoharan, Director (Refinery) Indian Overseas Bank Oriental Bank of Commerce Philip S. Aiken Indian Bank Dilip J. Thakkar Central Bank of India K. N. Venkatasubramanian Bank of India K. V. Krishnamurthy State Bank of Patiala Melwyn Rego, Nominee of IDBI Bank Ltd. Allahabad Bank V. K. Sinha, Nominee of LIC of India Syndicate Bank Suneet Shukla, Nominee of IFCI Ltd. Bank of Baroda State Bank of Mysore COMPANY SECRETARY Sheikh S. Shaffi REGISTERED OFFICE Khambalia Post, Post Box No. 24 Dist. Jamnagar – 361 305, Gujarat TRANSFER AGENTS Tel: +91-2833-661444 M/s Datamatics Financial Services Ltd. Fax: +91-2833-662929 Unit: Essar Oil Limited Email: [email protected] Plot No. B-5, Part B Cross Lane, MIDC, Andheri (East), Mumbai – 400 093 Tel: +91-22-66712151 to 66712156 CORPORATE OFFICE Fax: +91-22-66712209 Essar House, Post Box No. 7945 Email: [email protected] 11, Keshavrao Khadye Marg Website: www.dfssl.com Mahalaxmi, Mumbai – 400034 Tel: +91-22-66601100 Fax: +91-22-23544281/ 23540450 AUDITORS Website: www.essar.com M/s Deloitte Haskins & Sells, Ahmedabad CONTENTS COMPANY OVERVIEW Delivering on Promises 2-3 An Insight into Essar Oil 4-5 Chairman’s Message 6-7 MD & CEO’s Message 8-11 MANAGEMENT DISCUSSION AND ANALYSIS 12-31 SUSTAINABILITY 32-39 Essar Oil Summary 40-41 GOVERNANCE Board of Directors’ Profiles 42-45 Directors’ Report 46-54 Report on Corporate Governance 55-61 FINANCIALS Abridged Revised Financial Statements for 2011-12 62-81 Financial Statements of Subsidiary for 2011-12 82-93 Abridged Revised Standalone Financial Statements for 2008-09 94-110 Abridged Revised Consolidated Financial Statements for 2008-09 111-122 Abridged Revised Standalone Financial Statements for 2009-10 123-140 Abridged Revised Consolidated Financial Statements for 2009-10 141-153 Abridged Revised Financial Statements for 2010-11 154-172 NOTICE Notice Convening 22nd AGM 173-181 Proxy Form and Attendance Slip > CRUDE DISTILLATION UNIT (CDU) AT VADINAR DURING CONSTRUCTION OIL & GAS COMPANY OVERVIEW MANAGEMENT DISCUSSION & ANALYSIS DELIVERING ON PROMISES – CREATING LONG-TERM SUSTAINABLE VALUE The journey which started as a dream to build a world-class refinery at Vadinar has finally come true. The completion of the refinery expansion and optimisation project has been a huge turning point for Essar Oil Ltd. We are proud to have dedicated a world-class refinery to the nation – India’s second-largest single location refinery – one of the world’s most complex refineries. With the completion of our expansion projects, we have now moved out of the capex mode. Commercialisation of our assets represents a significant opportunity for us, given the rising domestic and global oil demand. As we move ahead, we’re poised for consolidating our market position. We endeavour to participate in fulfilling India’s energy requirement. We continually strive to deploy innovative practises to create benchmarks in the refining industry and focus on strengthening our balance sheet to create long-term sustainable value for our shareholders. > WEST VIEW OF TRAIN 1 EXPANSION AT VADINAR 2 Essar Oil Limited SUSTAINABILITYGOVERNANCE FINANCIALS Abridged Annual Report 2011-12 3 OIL & GAS COMPANY OVERVIEW MANAGEMENT DISCUSSION & ANALYSIS AN INSIGHT INTO ESSAR OIL Essar Oil (part of the US$ 27 billion by revenue Essar Group and majority owned by LSE-listed Essar Energy plc) is a fully-integrated oil and gas company of international scale with strong presence across the hydrocarbon value chain – from exploration and production to refining and oil retail. It has a portfolio of onshore oil and gas blocks, with about 1.7 billion barrels of oil equivalent in reserves and resources. It owns and operates a highly complex state of the art 20 MMTPA refinery at Vadinar and pan India retail presence through over 1,400 retail stations. ESSAR OIL EXPLORATION & PRODUCTION REFINING MARKETING 5 CBM 20 MMPTA 1,400 + (Coal Bed Methane) Gas blocks refinery in Vadinar, Gujarat retail outlets with pan-India with 100% ownership in each presence 2nd LARGEST 1.7 BBOE single location refinery in India 1st PVT. CO. (billion barrels of oil equivalent) to open retail outlets for petroleum products of total oil reserves & resources Among one of the most complex refineries in the world 2,700 sq. km 1st COMPANY of acreage in India to execute Agreements with all ~10% the 3 PSU OMCs of India’s total refining capacity > MAIN ENTRANCE OF THE VADINAR REFINERY 4 Essar Oil Limited SUSTAINABILITYGOVERNANCE FINANCIALS HIGHLIGHTS REVENUE* ( ` CRORE ) EBITDA* ( ` CRORE ) 60,000 3,000 50,000 2,500 63,340 40,000 2,000 2,779 53,119 30,000 45,131 1,500 2,101 42,402 1,938 20,000 1,000 10,000 500 853 09-10 10-11 11-12 H1 12-13 09-10 10-11 11-12 H1 12-13 THROUGHPUT (MMT) CP GRM (US$/BBL) 15 6 5 6.41 14.76 10 13.5 13.5 4 4.53 3 4.23 9.55 5 2 1 1.6 09-10 10-11 11-12 H1 12-13 09-10 10-11 11-12 H1 12-13 * Based on reopened accounts and before exceptional items Abridged Annual Report 2011-12 5 OIL & GAS COMPANY OVERVIEW MANAGEMENT DISCUSSION & ANALYSIS CHAIRMAN’S MESSAGE SHASHI RUIA Dear Shareholders, It gives me immense pleasure to Indian economy. Notwithstanding countries in Asia and Latin present our annual report for the the recent policy impasse and America. As a result, the working financial year ended March, 2012. adverse macroeconomic factors, population is expected to increase The year gone by will be known over the last five years, the Indian by around 30% and the urban as stepping stone in the history of economy has grown around 35% population is expected to increase Essar Oil, which transforms our pulling many people out of poverty from around 31% today to over dream to build a highly complex and increasing the wealth of the 40%, over the next 20 years. If world-class refinery into reality. We middle-class. As more and more India is to meet its 12th Five Year did encounter several challenges people in India see roads opening Plan target of 9% GDP growth in our journey, but, our resilience up to a better way of life, they want each year from 2012 to 2017, has paid off and we have emerged to improve their living conditions. then according to India’s Planning successful despite the odds Fundamental to these needs is Commission, this will require and have delivered on promises the provision of energy; be that energy supplies to grow at a rate made to our shareholders. I electricity or petroleum products of between 6.5% and 7% per year, wish to reassure you that we for cars and other transportation. which is above the rates of the last are committed to delivering Demand for energy is rising rapidly five years. long-term sustainable value for and our world-class Vadinar our shareholders. I am deeply refinery is fully-geared to cater Strategy indebted to each one of you for to the requirement of petroleum Our strategy is to create a world- your patience and faith in your products to the Indian as well as class, low-cost, integrated energy Company. international markets. company focused on India and positioned to capitalise on India’s Business Outlook In the long-term, India is very growing energy demand. Our We are optimistic and look well placed since it has a young focus has now shifted from being forward to a positive business population, not only in comparison a project-focused company to scenario. One of the reasons for to advanced economies, but also an operating company. As an our optimism is the outlook for the in relation to the larger developing operating company, we would like 6 Essar Oil Limited SUSTAINABILITYGOVERNANCE FINANCIALS WE HAVE OBSERVED A BIG PUSH FROM THE CENTRAL GOVERNMENT WHICH, WE BELIEVE, WILL BRING OUR COUNTRY’S GDP BACK ON A 8%-9% GROWTH TRAJECTORY. to focus on operational excellence the Vadinar refinery into a leading and implement innovative refinery in the country today. practices in our business to set new benchmarks for the There are regulatory issues industry. The completion of the like approvals of pricing for Vadinar refinery expansion and CBM, complete deregulation of optimisation projects brings the petroleum retail marketing etc. major capital expenditure cycle which are affecting the growth in our refining business to an potential. During last few months, end. The focus will now move to we have observed a big push from ensuring that all assets operate the Central Government on various in line with the expectations, and reform agenda which we believe, we start to deliver the promised will bring our country’s GDP back WE ARE cash flows and profitability which on 8%-9% growth trajectory. will be utilised to de-leverage our These hurdles, however, will not COMMITTED AND balance sheet and maximise the deter us from our ambitions to shareholder’s value. become a world-class integrated DETERMINED energy player. We are committed TO CREATE People and determined to create enduring An organisation breathes through and long-lasting value for all our ENDURING the lungs of its people and flies on stakeholders. the strength of their dreams. No AND LONG- asset can be built, operated and LASTING VALUE managed without people.