Fuelling Future... Delivering Growth Annual Report 2020-21 Contents 2020-21 Highlights
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Fuelling Future... Delivering Growth Annual Report 2020-21 Contents 2020-21 Highlights 01 CORPORATE OVERVIEW ` ` 2,69,243 Crore Fuelling Future... Delivering Growth ---------------------------- 01 Turnover Chairman’s Message -------------------------------------------- 02 Board of Directors ----------------------------------------------- 08 Senior Management Team -------------------------------------- 10 Key Performance Indicators ------------------------------------ 13 Offices, Auditors & Bankers ------------------------------------ 14 ` 18,714 Crore EBITDA 02 STATUTORY REPORTS ` 10,664 Crore Notice of Annual General Meeting ------------------------------ 15 PAT Performance Profile --------------------------------------------- 28 Directors’ Report ------------------------------------------------ 34 Annexures to Directors’ Report --------------------------------- 46 Corporate Governance Report ---------------------------------- 76 Management Discussion & Analysis Report ------------------ 98 36.63 MMT Business Responsibility Report -------------------------------- 119 Sales Volume 03 FINANCIAL STATEMENTS 16.42 MMT Auditors’ Report ------------------------------------------------- 133 Refining Thruput Balance Sheet ---------------------------------------------------- 148 Statement of Profit & Loss -------------------------------------- 149 Cash Flow Statement -------------------------------------------- 152 Notes to Financial Statements ---------------------------------- 154 C&AG’s Comments ---------------------------------------------- 216 ` 70.57 Consolidated Financial Statements ----------------------------- 217 EPS Notes to Consolidated Financial Statements ------------------ 232 Financial Details of Subsidiaries -------------------------------- 305 Human Resource Accounting ----------------------------------- 310 Joint Venture Companies ---------------------------------------- 311 Fuelling Future... Delivering Growth Future belongs to those who believe in the beauty of their dreams. It belongs to the dreamers who weave magic with strokes of their sweat. They look up at the sky and envision dreams taking flight. Their gazing look at the barren dessert, visualise civilisations taking shape. A trip down the coasts, and they spot the faint lines of prosperity carrying hope. We, at HPCL, believe in fuelling these dreams to brighten up the future. A future where each house is filled with the aroma of warmth and freshness of clean air. A future where each journey is a travelogue of happiness. A future where the sun shines bright and the wind washes away all blues. A future that is green, clean, prosperous and always growing. We are equally conscious that the best things in life are mostly beyond our eyesight and most often felt from the heart. We share your dreams and wish to put our dedication at par. We are a motivated force, continuously working to touch your hearts to ‘Fuel the Future and Deliver Growth’ in everyone’s life. HINDUSTAN PETROLEUM CORPORATION LIMITED Chairman's Message Navigating through a challenging environment, your Company has delivered its highest ever Profit After Tax (PAT) of ` 10,664 Crore during the Financial Year 2020-21, crossing the ` 10K Crore mark for the first time Dear Shareholder, For the Global Energy Industry, Oil was by far the hardest hit. Restrictions It gives me immense pleasure to present the 69th Annual Report on mobility, containment measures and economic disruptions related on the performance of your Company for the year 2020-21. The to the COVID-19 outbreak led to sharpest oil demand contraction in year was very challenging for the nation and its people due to calendar year 2020 in decades. Indian economy was equally impacted the pandemic. At this hour of crisis, your Company salutes the by the unprecedented crisis. The lockdown measures imposed to tireless efforts and incredible courage of all the frontline workers fighting contain the pandemic, affected the economic activities resulting in COVID-19 pandemic with complete dedication. My heart goes out to contraction of the real Gross Domestic Product (GDP) by 7.3% in everyone out there who has suffered the loss of their loved ones. Given 2020-21. In addition, the pandemic posed new challenges related to the scientific progress achieved, I am confident that the continuous business continuity, supply chain management and concerns related efforts and strict discipline will eventually make us win over the crisis. to health and safety of the workforce. During the year, the most satisfying achievement of the Company is Consequent to the several proactive, preventive and mitigating measures its proactive efforts in helping the nation fight against the pandemic. taken by Government, the rebound from the COVID-19 induced slump During the lockdown period, your Company made every effort to serve has been sharp in the third quarter as real GDP growth turned positive the nation by ensuring uninterrupted supplies of essential commodities and further strengthened in the fourth quarter. The country’s fuel like cooking gas and transport fuels across the length and breadth demand which has contracted to almost 50% in April 2020 rebounded of the country while ensuring safety of its workforce. Significant sharply with gradual relaxation of lockdown restrictions to end the year technology solutions were implemented to ensure that employees with almost 91% of the 2019-20 full year demand. can work seamlessly from remote locations / home to ensure product availability. The Company undertook various relief measures for needy Crude oil prices varied in a wide range during 2020-21, falling and less privileged people including migrant labour and strengthening significantly in the beginning of the year largely driven by demand the health infrastructure. contraction due to COVID-19 lockdown. Crude oil prices rebounded 02 CORPORATE STATUTORY FINANCIAL OVERVIEW REPORTS STATEMENTS subsequently due to sharp recovery in demand as the lockdowns been successfully completed on its expiry date of 14th May 2021. In were relaxed coupled with significant production cuts announced by its entire Buy-back program, HPCL bought back 10.53 Crore Equity OPEC+ countries. Shares utilising a total amount of ` 2,954 Crore which includes all transaction costs and taxes. I am happy to share that navigating through a challenging environment, your Company has delivered its highest ever Profit after Tax (PAT) of Considering importance of natural gas in future energy mix of the ` 10,664 Crore during the Financial Year 2020-21, crossing the ` 10K country, in a significant development, HPCL acquired balance 50% of Crore mark for the first time which has been possible only due to the equity in its JV Company HPCL Shapoorji Energy Private Limited tireless efforts of all employees, channel partners and unwavering faith (HSEPL) making it a wholly-owned subsidiary of HPCL. HSEPL is of all our stakeholders. Your Company exhibited high degree of agility, setting up 5 MMTPA capacity LNG regasification terminal at Chhara in resilience and responsiveness during the crisis which has earned Gujarat for which construction is in progress. goodwill from its customers and public at large. During 2020-21, both HPCL refineries at Mumbai and Visakh maintained The significant improvement in the profitability in spite of challenges sound physical performance with combined capacity utilisation of due to COVID-19 pandemic was a result of efficient planning, robust 104% and thruput of 16.42 MMT despite the demand contraction operational performance and effective supply chain management. and constraints due to COVID-19 pandemic. Adapting continually It was further helped by favourable exchange rate variations and to the unprecedented challenges from COVID-19, effective logistics inventory gains. The Company achieved gross sales of ` 2,69,243 management, sound crude sourcing plans and speedy evacuation of products have helped HPCL to exhibit the sturdy performance. Mumbai Crore during the year. Your Company continues to return value to its refinery achieved highest annual production of Lube Oil Base Stocks shareholders consistently with robust balance sheet and cash flows. The Board of Directors of your Company has proposed payment of a final dividend of ` 22.75 per share for the financial year 2020-21. To create value for the stakeholders, your Company initiated ‘Share Your Company exhibited high degree of Buy Back’ program in November 2020 through market transactions agility, resilience and responsiveness for a maximum value of ` 2,500 Crore at maximum rate of ` 250 per share. As of 31st March 2021, your Company has bought 7.18 Crore during the crisis which has earned goodwill shares at a total value of ` 1,986 Crore. The Buy-back program has from its customers and public at large Visakh Refinery Modernisation Project - Overview Annual 69th Report 03 2020-21 HINDUSTAN PETROLEUM CORPORATION LIMITED SPO 90 N, SPO-II and 150 N-II. Visakh Refinery achieved highest Your Company continues to lay strong emphasis on operational annual production of LDO, VLSFO, MTO and JBO. Mumbai Refinery efficiency & cost optimisation with continued focus on productivity also launched a new product Solvent-3275 during the year. enhancement measures with usage of technology. During the year, 18 more locations were added as ‘SMART’ terminals with end-to-end Your Company delivered robust marketing performance in 2020-21. automation & seamless integration of various processes resulting HPCL has recorded sales volume of 36.63 MMT, notwithstanding