Mangaluru: Addressing a press conference, D.K.Sarraf, Chairman of Mangalore Refinery and Petrochemicals Limited after the 29th Annual General Meeting Annual submitted its profits and performance report for the financial year 2016-17 along with the audited financial statements.

Chairman said, “India has emerged as the fastest growing major economy in the world and has grown at 7.1% during FY 2016-17. Growth is expected to accelerate to 8% in future driven by gradual implementation of structural reforms, higher disposable income and improvement in economic activity”.

Oil is an important component in the energy basket and with continued consumption growth expected in future, particularly in the emerging global markets, the demand for oil is expected to rise in the next 5 years, passing the 100 mb/d threshold in 2019 and reaching about 104 mb/d by 2022. Developing countries account for all of the growth and Asia dominates, with about 7 out of every extra 10 barrels consumed globally. India became second largest contributor to the global oil demand growth in terms of the incremental oil demand, overtaking China in 2016-17. Oil products demand in India is expected to grow annually by 7-9% over the next 5-10 years. Gas is the way forward. The country is focused on expanding its gas-based infrastructure – building up pipeline networks as well as regasification facilities in tandem with developing domestic gas fields. LNG terminal capacity is expected to grow from the current levels of about 16 million tonne to 30 million tonne per year by 2022.

Performance:
The financial year 2016-17 has been a remarkable year for your Company. MRPL continued the tradition of setting several new records in terms of its achievements during the year:

• Achieved turnover of ` 59,415 Crore against a turnover of ` 50,864 Crore in the previous year.
• Profit after tax (PAT) of ` 3,644 Crore, highest-ever in MRPL’s history against a profit of ` 1,148 Crore in the previous year.
• Recommended dividend of ` 6/- per equity share of ` 10/- each, highest-ever in MRPL’s history.
• Highest-ever Gross throughput of 16.27 MMT against the previous highest of 15.69 MMT registering an increase of 3.69 % by optimal crude mix, better equipment reliability, timely shutdown adherence and commendable operational discipline.
• Highest-ever Gross Refining Margin (GRM) of 7.75$/bbl as against 5.20 $/bbl during 2015-16.
• Market capitalisation of your Company has gone up from ` 8,360 Crore on 31st March, 2014 to ` 21,829 Crore now; 2.6 times.
• Price of each share you hold has gone up from ` 48 per share on 31st March, 2014 to ` 125 per share now.
• Dispatched first parcel of HSD-Euro VI to HPCL during the month of October, 2016.
• A new crude – Yomba from Congo – with lowest-ever API of 16.4 was processed during the year.
• Indian Strategic Petroleum Reserves Ltd (ISPRL) received first parcel of 260 TMT of Iran Mix for delivery into Mangalore cavern.

Marketing:
D.K.Sarraf Chairman said, “MRPL has always considered marketing as a key to its competitiveness and has been strategizing on improving the margins on the various refinery products by dynamically identifying specific margin levers with changes in market environment. MRPL also continues to maintain leadership position for sales of Bitumen, Sulphur, Pet Coke and Xylol in its marketing zone. MRPL has already achieved dominant market share for its MANGPOL branded Polypropylene in its marketing zone in a very short time attaining the reputation of exceptional quality for its Polypropylene brand. Your Company continues to expand its market spread in the direct sales segment of petroleum products in the state of Karnataka and its adjoining states”.

It is a matter of pride that the company continues to be the sole supplier of petroleum products to Mauritius since August 2006; the existing contract is valid upto July 2019. Your Company’s joint venture, Shell MRPL Aviation Fuel Services Limited has steadily acquired business for sale of Aviation Turbine Fuel (ATF) at Indian airports,achieving a turnover of `554 Crore during FY 2016-17 against `318 Crore during FY 2015-16.

Company’sGrowth:
During the financial year 2016-17 the company has achieved new heights of performance both on physical and financial parameters and surpassed its past performance by setting up several new benchmarks. The company has formulated aggressive plans to forge ahead in the refining and petrochemical sector. After increasing its capacity from 10 MMTPA to 15 MMTPA in 2014, MRPL is now considering increase in refining capacity to 25 MMTPA. The entire country has to move towards BS VI quality specifications by 1stApril, 2020 and the mechanical completion for all modifications and construction activities have to be attained by July 2019. As a part of this BS VI upgradation project, MRPL is aggressively working on installation of additional units for MS and Revamp/Catalyst changes for HSD with estimated project cost of `1,810 Crore and is confident of achieving the targeted dates for roll out of the upgraded products by 1stJanuary, 2020.

The existing CCR-2 unit in the refinery is being revamped to produce higher quantity of Reformate, yielding higher quantity of MS. CCR Revamp is expected to be completed by September, 2018 with approved project cost of ` 207 Crore. MRPL is also committed to creating infrastructure, through various projects under execution with project cost of `310 Crore approximately viz. setting up of a Marketing Terminal, Truck Loading Silos and Railway siding with a Rail wagon Loading Silo for movement of Pet-Coke. Addition of these infrastructures will help MRPL to cater to more diverse customers as well as increase its direct marketing customer base. Flare Gas Recovery Project of MRPL is expected to be completed by September, 2017 with approved project cost of `30 Crore. This project will help in extracting value from waste gases as well as reduce carbon footprint.

ONGC Mangalore Petrochemicals Limited (OMPL) is your Company’s subsidiary with 51% shareholding, balance 49% being held by ONGC. OMPL’s revenue from operations was `5,257 Crore during the financial year 2016-17 against `4,188 Crore during 2015-16.OMPLincurred loss after tax of `366 Crore during the financial year 2016-17 against ` 649 Crore during 2015-16 mainly due to Interest, depreciation and lower capacity utilization.

Corporate Social Responsibility (CSR):
Announcing about the (CSR), he said, Company has given high priority to its social responsibilities. MRPL’s social welfare and community development initiatives focus on the key areas of education, health care & sanitation and overall development of basic infrastructure in and around its operational area/ Dakshina Kannada and Udupi District in the state of Karnataka. MRPL spent `1.45 Crore for various CSR activities during the year 2016-17 and an amount of `33.87 Crore has been earmarked on CSR activities during 2017-18.

SustainabilityDevelopment: Announcing about developments Sustainability efforts of your Company in foregoing year were intensified for longevity of the company’s success in an era of continuous challenges. We as a company have emphasized on long-term viable approaches in all segments of the organization. Sustainable business processes to find novel solutions considering better and greener alternatives were initiated. Educating employees on eco-conscious and sustainable business culture in all segments of company were given utmost importance. Your Company improved its water foot print by enhancing intake of sewage treated water from City Municipal Corporation replacing fresh water to the extent of 2 Million imperial gallons per day. Your Company has initiated actions for Zero Liquid Discharge (ZLD) considering availability of fresh water for refinery processes.

The company has also ventured into renewable energy sources and a grid interactive solar power system is being installed by utilising all available rooftops inside MRPL’s premises. As a first stage, 6 MW of power production capacity is being installed at a cost of `46 Crore;this project would reduce Carbon Footprint of MRPL.
A Memorandum of Understanding (MOU) has been signed with Pilikula Nisarga Dhama, Vamanjoor, Mangaluru to take up greenbelt development at Pilikula Nisarga Dhama, Mangalore. MRPL has also supported the environment campaign of afforestation and its subsequent maintenance for three years in 20 acres of land by planting 2,000 plants under the initiative “Let us plant a forest – Creation of Green Belt”.

The Company has initiated an action plan to replace all existing street lights and office lighting to low power consuming LED’s in its premises and the refinery is anticipated to be 100% LED illuminated by 2018. MRPL has always practiced and will continue to adopt the footpath of sustainability in all its upcoming endeavours” he said.

Health, Safety and Environment:
The Company has laid highest priority in integrating health, safety and environmental (HSE) aspects into business decisions. To ensure good health of our employees, the company has ensured functioning of its two Occupational Health Centres (OHC) with 24×7 availability of Medical Staff. The Company has an in-house hospital in the refinery complex, services of which are available not only to the employees but to near-by residents as well.

In MRPL, there is a continuous focus on adopting the best international standards, which has helped the refinery in building an excellent safety record over the years. MRPL has achieved 294 accident free days with 3.41 million man hours worked as on 31st March, 2017. Surprise& External safety audits conducted by OISD and audit by PESO carried out in MRPL have emerged as a powerful organizational improvement tool rather than just a way to monitor compliance.

MRPL while contributing to the growth of the national economy, has always given a high priority to protection of environment by adopting environment friendly processing technologies, utilization of treated municipal sewage water as well as monitoring the quality of the environment both in and around the refinery. Your company has initiated several projects to ensure a clean environment in the surroundings of the refinery. LPG connections were provided by MRPL free of cost to give access to clean cooking fuels and create ‘Smoke Free Village’ for the neighbouring village communities in Chelairu, Soorinje, Jokatte and Permude.

Corporate Governance:
MRPL’s philosophy of Corporate Governance stems from its belief that the spirit of good governance lies in adherence to highest standards of transparency, accountability, ethical business practices, compliance of law in true letter and spirit, adequate disclosures, corporate fairness, social responsiveness and commitment to the organization to meet stakeholders’ aspirations and societal expectations. Your Company has been complying with all the requirements of corporate governance as stipulated in the Companies Act, 2013, Listing Regulation, and DPE guidelines, except for the appointment of requisite number of Independent Directors on the Board and Board Committees. Ms. Manjula C has joined as an Independent Director in January, 2017.The issue of appointment of requisite number of Independent Directors on MRPL’s Board has been taken up with the Ministry of Petroleum &Natural Gas.

Acknowledgements:
Dear Shareholders, this is my last Annual General Meeting at MRPL, before I superannuate upon reaching the age of 60 years in September, 2017. I am happy to report that with the confidence that you have reposed in the Board of MRPL and the dedication of the Team MRPL, your Company could grow significantly multiplying the value of shareholders during my tenure. I have all the reasons to believe that such value creation would continue in the future as well.

We would like to thank the Government of India, Government of Karnataka and HPCL for their continued support and guidance. I also acknowledge that the growth of your company would not have been possible without the continued support of the parent company, Oil and Natural Gas Corporation Limited.

The commendable performance of MRPL during 2016-17 is due to the whole hearted commitment and dedication of the entire workforce across the organisation. We would like to place on record my sincere appreciation to the “Team MRPL” for the untiring efforts of every employee towards the growth of your Company