bpcl a-r 03 - morningstar, inc

BHARAT PETROLEUM

CORPORATION LIMITED

ANNUAL REPORT 2002-2003

TH

OM

SO

N P

RES

S

Grow

th T

hrou

gh Levera

ging C

omp

etencies

Every organization has an im

pressive range of strengths,but to accom

plish its loftiest goals, it would need to

synergize all its positive energies.

We at B

PC are continuously integrating solutions to helpm

aximize business opportunities across channels.

Our pursuit of leveraging technology to succeed in the m

arketplacehas led to pathbreaking initiatives in the oil industry.

In our endeavours towards sustainable developm

ent, we balance

economic progress w

ith safety, environmental care

and social responsibility.

We encourage people to share ideas and inform

ation in a veryextraordinary w

ay, creating insights,w

hich help make better business decisions.

Thus, BPC has expanded its horizons, leveraging its corecom

petencies of technology and people.

BP

C . . tra

nsla

ting op

portu

nities in

to success.

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Group Performance Highlights ContentsGroup Performance Highlights 2

Board of Directors 4

Bankers, Auditors andRegistered Office 5

Management Team 7

Notice to Members 8

Management Discussion& Analysis Report 12

Directors’ Report 36

Performance Profile 82

Auditors’ Report 91

Balance Sheet,Profit and Loss Account 96

Cash Flow Statement 124

Consolidated FinancialStatements 127

Annual Report ofKochi Refineries Limited

Annual Report ofNumaligarh Refinery Limited

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Bharat Bhavan,

4 & 6 Currimbhoy Road,

Ballard Estate,

Mumbai 400 001.

Board of Directors Bankers Auditors

Registered Office

State Bank of IndiaUnion Bank of IndiaCorporation BankBank of IndiaState Bank of PatialaCentral Bank of IndiaStandard Chartered Grindlays BankStandard Chartered BankABN Amro Bank N.V.ICICI BankHDFC BankState Bank of TravancoreIndian Bank

V. Sankar Aiyar & Co.

S. BEHURIA

Chairman & Managing Director(w.e.f. 1.7.2002)

Director (Marketing) (upto 30.6.2002)

U. SUNDARARAJAN

Chairman & Managing Director(upto 30.6.2002)

ASHOK SINHA

Director (Finance)

S. A. NARAYAN

Director (Human Resources)

S. RADHAKRISHNAN

Director (Marketing)(w.e.f. 1.11.2002)

M. ROHATGI

Director (Refineries)(w.e.f. 14.11.2002)

M. B. LAL

Director (Refineries)(upto 4.6.2002)

NARESH NARAD

Special Secretary, Ministry of Petroleum& Natural Gas (upto 11.11.2002)

M. S. SRINIVASAN

Additional Secretary, Ministry of Petroleum& Natural Gas (w.e.f. 3.12.2002)

S. VIJAYARAGHAVAN

Joint Secretary, Ministry ofPetroleum & Natural Gas

B. MOHANTY

Joint Advisor (Finance), Ministry ofPetroleum & Natural Gas

P. N. KHANDWALLA K. VASUDEVA P. P. KALIAPERUMAL

D.M. NAIK BENGRE

Company Secretary

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Management TeamMr. K. Subramanyam Chief Vigilance Officer

Mr. A. K. Agarwal Executive Director(Corporate Affairs)

Mr. A. K. Bansal Executive Director(Industrial & Commercial)

Mr. S. Chatterjee Executive Director(Human Resource Services)

Mr. S. K. Joshi Executive Director(Corporate Treasury)

Mr. S. Krishnamurti Executive Director (Retail)

Mr. T. K. Majumdar Executive Director (Legal)

Mr. S. Mohan Executive Director(Human Resources Development)

Mr. S. K. Phull Executive Director(Special Projects)

Mr. V. V. Ramamurthy Executive Director (Refinery)

Mr. S. S. Ramgarhia Executive Director (Coordination)

Mr. J. Ravichandran Executive Director (Audit)

Mr. C. K. Sengupta Executive Director (Finance)

Mr. S. K. Sharma Executive Director(International Trade)

Mr. R. K. Singh Executive Director (LPG)

Mr. R. P. Singh Executive Director(Integrated Information Systems)

Mr. V.K. Agrawal General Manager (RefineryModernisation), Refinery

Mr. N. Bhakta General Manager (Taxation)

Ms. Sumita Bose Roy General Manager(International Trade)

Mr. S. Chandramohan General Manager(Finance), Refinery

Mr. B. K. Datta General Manager (EnterpriseResource Planning)

Mr. Anurag Deepak General Manager(Industrial Business Development)

Mr. D.P. Dhall General Manager(Joint Venture Refineries)

Mr. S. P. Gathoo General Manager (Lubes)

Mr. Pallav Ghosh General Manager (Retail)Headquarters

Mr. Vinod Giri General Manager (Retail) East

Mr. K. K. Gupta General Manager (Logistics)

Mr. R. M. Gupta General Manager (Planning)

Mr. N. Haran General Manager (Real Estate)

Mr. Arjun Hira General Manager(Marketing Coordination)

Mr. U. N. Joshi General Manager (Aviation)

Mr. M. K. Kaul General Manager (Engineering& Advisory Services), Refinery

Mr. V. D. Kumar General Manager (Vigilance)

Mr. L. Lobo General Manager (Audit)

Mr. S. C. Maheshwari General Manager (RefineryModernisation), Refinery

Mr. S. P. Mathur General Manager (Retail), North

Mr. R. K. Mehra General Manager (Retail),West

Capt. M. J. Mohan General Manager(Corporate Affairs)

Ms. Nalini K. Murthy General Manager (PublicRelations & Brand)

Mr. D. Rajkumar General Manager (Cochin -Coimbatore - Karur Pipeline)

Mr. A. Ramakrishnan General Manager (Retail NetworkPlanning & Development)

Mr. S. Ramesh General Manager (Retail Strategy /Brand & Allied Retail Business)

Mr. D. M. Reddy General Manager (Personnel & Administration), Refinery

Mr. B. S. Sant General Manager (Bina RefineryProject Cell), Refinery

Ms. Dipti Sanzgiri General Manager(Finance), Retail

Mr. A. C. Sen General Manager (Health,Safety & Environment)

Mr. Amitabha Sengupta General Manager (HumanResource Services), West

Mr. K. V. Seshadri General Manager(Operations), Refinery

Dr. M. A. Siddiqui General Manager(Research & Development)

Mr. Manmohan Singh General Manager (Engineering &Projects), Marketing

Mr. J. S. Sokhi General Manager (Strategy)

Dr. A. B. Teltumbde General Manager(Special Projects)

Mr. S. Varadarajan General Manager (Retail) South

Mr. D. M. Naik Bengre Company Secretary

Mr. B. P. Singh Dy. General Manager (EmployeeSatisfaction Enhancement)

Chairman & Managing Director, Mr. S. Behuria, flanked by Director (Finance), Mr. Ashok Sinha, (right)

and Director (Human Resources), Mr. S.A. Narayan. Standing are Director (Marketing),

Mr. S. Radhakrishnan (left) and Director (Refineries), Mr. M. Rohatgi.

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Annual Report 2002-20038 9

NOTICE TO MEMBERS

Notice is hereby given that the 50th Annual General Meeting of the Members of Bharat Petroleum Corporation Limited will be

held in the Y.B.Chavan Auditorium, at Yeshwantrao Chavan Pratishthan, General Jagannath Bhosale Marg, Mumbai 400021,

on Monday, 18th August 2003, at 10.30 a.m. to transact the following Ordinary Business and Special Business:

A. Ordinary Business

1. To receive and adopt the Directors’ Report and the Report on Corporate Governance, the Audited Profit & Loss Account

for the year ended 31st March 2003 and the Balance Sheet as at that date with the Reports of the Statutory Auditors and

the Review of the Comptroller & Auditor General of India thereon.

2. To declare final dividend.

3. To appoint a Director in place of Shri Ashok Sinha, Director (Finance), who retires by rotation in pursuance of

Section 256 of the Companies Act, 1956. Shri Ashok Sinha, being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Shri S.A.Narayan, Director (Human Resources), who retires by rotation in pursuance

of Section 256 of the Companies Act, 1956. Shri S.A.Narayan, being eligible, offers himself for re-appointment.

5. To appoint a Director in place of Dr. B. Mohanty, Joint Advisor (Finance), Ministry of Petroleum & Natural Gas, who

retires by rotation in pursuance of Section 256 of the Companies Act, 1956. Dr. B. Mohanty, being eligible, offers himself

for re-appointment.

6. To fix the remuneration of the Statutory Auditors.

To consider and, if thought fit, to pass the following Resolution, with or without modifications, as a Special Resolution :-

“RESOLVED that in partial modification of the Resolution passed by the members at the Annual General Meeting held on

26th September 2001 pursuant to the provisions of Section 224(8)(aa) of the Companies Act, 1956, remuneration of the

single firm of Statutory Auditors appointed by the Comptroller and Auditor General of India (C&AG) under Section 619(2)

of the said Act, be and is hereby approved to be fixed at Rs. 8,50,000 in addition to actual reasonable travelling and out

of pocket expenses and service tax as applicable, for the year 2002-03 and for subsequent years, till further

recommendation for increase in the remuneration is approved.

RESOLVED FURTHER that the remuneration of Rs. 8,50,000 be and is approved to be shared by the Joint Statutory

Auditors, if appointment of Joint Statutory Auditors is made by the C&AG for the year 2003-04 and / or for any subsequent

years.”

B. Special Business

7. Appointment of Director

To consider and, if thought fit, to pass the following Resolution, with or without modifications, as an Ordinary Resolution:-

“RESOLVED that Shri M.S.Srinivasan, Additional Secretary, Ministry of Petroleum & Natural Gas, be and is hereby

appointed as a Director of the Company till he holds office in the MoP&NG or till he retires by rotation, whichever is

earlier.”



“RESOLVED that Shri S. Radhakrishnan be and is hereby appointed as a Director of the Company.”



“RESOLVED that Shri M. Rohatgi be and is hereby appointed as a Director of the Company.”

By Order of the Board of Directors

Sd/-

(D.M. Naik Bengre)

Company Secretary

Registered Office:

Bharat Bhavan,


Ballard Estate,

Mumbai - 400 001.

Date: 17th July, 2003

Notes :

1. Explanatory statements under Section 173 of the Companies Act, 1956, in respect of the above items of Special Business

and Explanatory Statement in respect of the Special Resolution at Item No 6 are annexed hereto.

2. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies, in the alternative, to attend

and vote instead of himself and such proxy need not be a member. Proxies, in order to be effective, should be duly

completed & affixed with the revenue stamp and be deposited at the Registered Office of the Company not less than

forty- eight hours before commencement of the Meeting.

3. In order to help us in providing appropriate answers backed by relevant financial data, the members may please send

their queries that they would desire to raise at the Annual General Meeting, at least one week in advance, to the

Company Secretary at the Registered Office.

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EXPLANATORY STATEMENTS FOR THE SPECIAL RESOLUTION AT ITEM NO. 6 AND FOR THE SPECIAL BUSINESS PURSUANT

TO SECTION 173 OF THE COMPANIES ACT, 1956.

Item No 6. Fixation of the remuneration of the Statutory Auditors

At the Annual General Meeting held on 26th September 2001, members had, by way of Special Resolution, fixed the remuneration

of the Statutory Auditors at Rs. 8,50,000, to be shared equally by the Joint Statutory Auditors (in addition to actual reasonable

travelling and out of pocket expenses and service tax as applicable) for the year 2001-02 and for subsequent years, till further

approval of the members for increase in the remuneration. As required under Section 619 of the Companies Act, 1956,

appointment of the Statutory Auditors of the Government Companies are made by the Comptroller and Auditor General of

India (C&AG). Accordingly, in respect of the year 2002-03, the C&AG had appointed a single Audit firm

i.e. M/s V. Sankar Aiyar & Company, Chartered Accountants, as Statutory Auditors of the Company, instead of two or more

firms as Joint Statutory Auditors as in the past. Approval of the members is requested for modification to the Special

Resolution passed earlier, for payment of entire remuneration of Rs. 8,50,000 to the single firm of Statutory Auditors for the

year 2002-03. However, for the future years, the C&AG may continue to appoint Joint Statutory Auditors.

Item No. 7. Appointment of Director

Shri M.S.Srinivasan, Additional Secretary, Ministry of Petroleum & Natural Gas was appointed as Additional Director, by the

Board of Directors, with effect from 3rd December 2002, under the provisions of Article 77A of the Articles of Association of the

Company, in accordance with the intention of the Government of India.

Shri M.S.Srinivasan, being an Additional Director, holds office up to the date of the ensuing Annual General Meeting. The

Company has received a notice, u/s 257 of the Companies Act, 1956, from a member, proposing the name of

Shri M. S. Srinivasan as Director of the Company. A brief resume of Shri M. S. Srinivasan, as required under Clause 49(VI)(A)

of the Listing Agreement, is provided separately in the Corporate Governance Report enclosed to the Directors’ Report. The

Directors recommend appointment of Shri M.S. Srinivasan as Director of the Company.

Except Shri M.S.Srinivasan, no other Director is interested or concerned in the Resolution.


Shri S. Radhakrishnan was appointed as Additional Director, by the Board of Directors, with effect from 1st November 2002,

under the provisions of Article 77A of the Articles of Association of the Company, in accordance with the intention of the

Government of India. Shri S. Radhakrishnan has further been appointed as Director (Marketing) under the provisions of the

Article 77(1)(d) (i) of the Articles of Association of the Company

Shri S. Radhakrishnan, being an Additional Director, holds office up to the date of the ensuing Annual General Meeting. The

Company has received a notice u/s 257 of the Companies Act, 1956, from a member, proposing the name of

Shri S. Radhakrishnan as Director of the Company. A brief resume of Shri S. Radhakrishnan, as required under

Clause 49(VI)(A) of the Listing Agreement, is provided separately in the Corporate Governance Report enclosed to the

Directors’ Report. The Directors recommend appointment of Shri S. Radhakrishnan as Director of the Company.

Except Shri S. Radhakrishnan, no other Director is interested or concerned in the Resolution.


Shri M. Rohatgi was appointed as Additional Director, by the Board of Directors, with effect from 14th November 2002, under

the provisions of Article 77A of the Articles of Association of the Company, in accordance with the intention of the Government

of India. Shri M. Rohatgi has further been appointed as Director (Refineries) under the provisions of the Article 77(1)(d) (i) of

the Articles of Association of the Company

Shri M. Rohatgi, being an Additional Director, holds office up to the date of the ensuing Annual General Meeting. The Company

has received a notice u/s 257 of the Companies Act, 1956, from a member, proposing the name of Shri M. Rohatgi as Director

of the Company. A brief resume of Shri M. Rohatgi, as required under Clause 49(VI)(A) of the Listing Agreement, is provided

separately in the Corporate Governance Report enclosed to the Directors’ Report. The Directors recommend appointment of

Shri M. Rohatgi as Director of the Company.

Except Shri M. Rohatgi, no other Director is interested or concerned in the Resolution.

By order of the Board of Directors

Sd/-

(D. M. Naik Bengre)

Company Secretary

Registered office:

Bharat Bhavan,


Ballard Estate,

Mumbai - 400 001.

Date: 17th July, 2003

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12 13 Annual Report 2002-2003

INDUSTRY STRUCTURE AND DEVELOPMENTS

The year 2002-03 has been a year of major changes in the

oil industry in the country. To star t with, Government

abolished the Administered Pricing Mechanism (APM)

applicable for mass consumption fuels in the domestic and

transport sectors effective 1st April, 2002. Pricing of these

products is now free, governed by market forces and depends

on the prices being declared by various players. With the

exception of the first two months of the current year, the

prices, particularly for Motor Spirit (MS) and High Speed

Diesel (HSD) have fluctuated every fortnight. This is a major

shift from the comparatively stable price levels offered by

the Government under APM. The move, although opposed

initially, is now well accepted in the market by the consumers.

Abolition of the APM also signified the end of the Government

regulated centralized production planning and distribution

process. Under this process, called the Supply Plan

Mechanism (SPM), production at all sources was

considered to be available as an ‘Industry’ product to any of

the marketing companies. This system is now replaced by

the commercially agreed product exchange arrangements -

initially for a period of two years.

Four additional players have been granted marketing rights

for automotive fuels. The market, which so far has remained

oligopolistic, is likely to turn more competitive in the next

few years.

The year also marked the continuation of the consolidation

process witnessed throughout the global oil industry. In India,

this process started with the oil marketing companies taking

over the stand alone refineries. During the end of last year,

Indian Oil Corporation Limited (IOC), through competitive

bidding, took over the strategic control of IBP Co. Limited.

Oil and Natural Gas Corporation Limited (ONGC) has now

started expanding its span of operation in the downstream

areas and has taken a 26% stake in Mangalore Refineries

and Petrochemicals Limited (MRPL) from the AV Birla group.

These changes would bring for th new challenges and

opportunities to Bharat Petroleum Corporation Limited (BPC)

- which will be discussed in detail later in this report.

Decanalisation of crude imports was another major change

in the working of BPC. For the first time, BPC looked at

impor t of crude oil independently for meeting the

requirements of its Mumbai Refinery and Kochi Refineries

Limited (KRL). Total imported crude oil requirement for the

BPC group is about 7.1 million metric tonnes (MMT), out of

which 4.85 MMT was sourced through term contracts.

Independent crude procurement has helped BPC to select

the right mix and grades of crude oils in order to maximize

margins. The scheduling of parcels has also helped in

reducing shipping costs and demurrage, both for BPC as

well as KRL.

The year would also be seen as a year of marked volatility

in international crude and product prices. The fear of a

prolonged war in Iraq, affecting global crude oil supplies,

drove international prices upwards from below US $ 20 to

US $ 37 per barrel. This resulted in a spiralling effect in the

domestic market. Although the Government announced

small duty concessions during July 2002, a major portion of

the increased prices was required to be shared between the

consumers and oil marketing companies. Domestic prices

moved with international prices for all industrial products.

In the case of MS and HSD, although there was an increase,

it was lesser than changes in the international prices.

However, in the case of domestic fuels, viz. Liquefied

Petroleum Gas (LPG) and Superior Kerosene Oil (SKO)

Public Distribution System (PDS), prices were retained at

the March 2002 levels and all cost increases were absorbed

by the oil marketing companies.

As far as the economy was concerned, after a relatively

poor performance in Financial Year (FY) 2001-02, the Indian

economy was poised for revival during FY 2002-03. The

Tenth Five Year Plan had also envisaged an average annual

growth rate of 8%. However, the rate of growth in India’s

Gross Domestic Product (GDP) during the fiscal year

2002-03 was about 4.1% due to an abysmal monsoon,

leading to drought and sharp decline in the agriculture sector

output, followed by continued sluggishness in the world

economy and the recent stand-off in the Gulf. The growth in

GDP was mainly due to the increased role of the services

sector. In line with GDP growth, the oil sector also saw a

small recovery in growth patterns. The overall oil demand

increased by 2% during the year.

OPPORTUNITIES AND THREATS

Deregulation of the sector has provided BPC with a set of

opportunities to harvest for better results. Under the APM,

growth in the market was on a planned basis with the

Government planning how much a company could grow.

There were restrictions on growth parameters like

development of new depots, establishment of new retail

outlets etc. Marketing plans were developed taking into

account the ‘Supply Plan Entitlement’ (SPE) of a particular

company. This always put a ceiling on the growth process

for a company. With the deregulation of the oil sector, the

company would now be able to exploit the full market

potential. The process of approval in these cases would

also be shortened in a major way.

Another major opportunity for BPC is in the pipelines sector.

The Government has now allowed any of the oil companies

to put up pipelines with a covenant that at least 25% of the

capacity should be allowed to be used by the industry. BPC

is already in the process of extending its Mumbai - Manmad

pipeline from Manmad to Indore. The project is likely to be

commissioned shortly. BPC is also looking at more pipeline

proposals and would actively par ticipate in all

commercially viable proposals.

Under the APM, margin fixation for BPC was usually done

after a gap of three to four years. Thus, the results always

reflected current costs, old margins and extraordinary items

released by the pool account. Many a time, in the recent

past, these pool receivables were not available in cash for

enhancement of capex of the company. As a result of

deregulation, marketing margins have star ted reflecting

current competitive levels. They now reflect the amounts

realizable for keeping the investments going. This has

resulted in a one time increase in profitability, both in book

profits and cash collections. This increased cash earning

would help BPC increase the speed of investment as well

as enable it to invest in new areas like exploration and

production of oil and gas and their marketing, which BPC

is looking at seriously.

The last year also witnessed positive growth in industry

sales - par ticularly in HSD. However, the non-realization

of projected growth rates in the Tenth Five Year Plan,

remains a major area of concern for the Refineries. The

increase in refining capacities in the country, coupled with

the stagnant growth over the last few years, has resulted

in expor table surpluses. These problems are more

pronounced in industrial products, which are also subject

to threats from alternate fuels - cheaper energy solutions

of coal and gas. BPC has been looking into expor t

alternatives for these products. In cer tain cases, the

realization on Naphtha exported has been even better than

concessional supplies to customers like fer tilizer

companies.

Changes in the environment related laws, consequent to

the Dr. Mashelkar Committee Report would require a high

level of investment to bring the Refinery products to new

environmentally acceptable levels. To compound the

problems, Mumbai High (MH) crude availability has been

reducing consistently over the years. BPC has been taking

various steps to meet all challenges on this account and

has already installed a Diesel Hydro-Desulphurisation

System. The ongoing Refinery Modernization Project (RMP)

also addresses many of these problems, while increasing

the refining capacity to 12 MMT per annum (MMTPA).

Recently, a project has been approved to upgrade a major

portion of MS production to Euro III standards - required for

metros in 2005. The Directors would assure you that the

technological superiority achieved in BPC’s Refineries

would be maintained through these steps and the stringent

environmental norms would be met at minimal cost.

The new players entering the oil sector would pose stiff

competition to the existing players. The market would turn

from a seller’s market to a buyer’s market and the

customers and consumers would be calling the shots. To

retain its position in the competitive market, BPC has been

taking a number of steps. The initiatives already taken

include a customer focused organization structure, new

technologies, guaranteed quality and quantity through ‘Pure

for Sure’ outlets, customer friendly schemes, B2B and B2C

initiatives, amongst others. The results that these initiatives

have produced are discussed separately while discussing

the performance - but these would help BPC in a major

way to overcome the challenges being forced by new

competition.

PERFORMANCE

BPC operates in a single segment viz. downstream oil

refining and marketing. The physical and financial

performance of each of the Strategic Business Units (SBU)

is discussed hereunder.

Management Discussion and Analysis Report

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Refinery

The Refinery has contributed nearly one third of the total corporate gross margin during the year 2002-03. Total margin

earned by the Refinery was Rs. 11,756 million on a throughput of 8.71 MMT of crude oil giving a rate of Rs. 1,350 per MT

(US $ 3.71 per barrel). This was a marked

improvement over last year’s achievement

of Rs. 858 per MT (US $ 2.4 per barrel).

The margin improvement was a result of

mainly two factors. Firstly, the Refinery

maximized the production of value added

products from an optimally selected crude

mix and secondly, the volatility prevailing in

the international prices of crude as well as

products were managed properly, converting

it into an advantage.

During the year, the Refinery processed

5.48 MMT of MH crude oil and 3.23 MMT of

imported crude oil. As reported earlier, the

imported crude oil was sourced directly from

the international markets, which gave

additional flexibility in selecting the right crude

oil mix, besides saving on costs. The

company also achieved considerable reduction in imported crude oil transportation cost, from Rs. 371 per MT in the last

year to Rs. 267 per MT in the current year. This was achieved by nominating vessels most appropriate for handling at

Mumbai port. This also resulted in considerable savings

in demurrage charges.

The company has signed a MOU with ONGC for supply

of MH crude for the period April 2002 to March 2004 on

5th June, 2003. The negotiated settlement resulted in

ONGC being paid the international price, linking MH

crude to appropriately benchmark crude. This would

result in some savings to the company.

Despite processing of lower quantity of lighter crude, the

Refinery has produced 77.1% of distillate production, the

highest in the last three years. This was achieved by

record Vacuum Gas Oil processing in the Fluid Catalytic

Cracking Unit through innovative plant changes,

modifications and judicious product mix. The production

of value added products like LPG, Aviation Turbine Fuel

(ATF) and Bitumen was the highest ever at 377 TMT, 298

TMT and 361 TMT respectively during the year.

Quality is the key thrust area in all spheres of activities of the Refinery. Consequent to consistent effor ts in improving

Quality Systems, the Refinery has migrated to ISO-9001 - 2000, cer tified by M/s. DNV of Netherlands. Continuous

upgrading of processes in the Refinery Quality Assurance Laboratory has resulted in a cer tification under ISO-17025

by National Accreditation Board for Testing and Calibration Laboratories (NABL), Government of India. Untiring effor ts

of the Refinery team in improving the quality systems at the Refinery has won accolades including the Ramakrishna

Bajaj National Quality Cer tificate of Merit Award for 2002 for the second consecutive year.

The existing suggestion scheme in the Refinery was modified so as to improve employee involvement and nur ture

creativity. The modified scheme was awarded a Special Prize in the ‘Excellence in Suggestion Scheme Contest -

2002’ for the ‘Best Administered Suggestion Scheme’ during the 13th National Convention of the Indian National

Suggestion Scheme Association (INSSAN).

The business scenario continues to be of surplus refining capacity in the country due to lower growth in demand for

petroleum products. To meet these challenges, the Refinery team is focusing on optimizing costs in the entire value

chain, from sourcing and transpor tation of crude, processing and optimization of product mix, and eventually realizing

better margins. The Refinery has planned a number of investments towards this end including implementation of the

Refinery Modernization Project which is scheduled for completion by next year. The Refinery’s endeavour is to

achieve value addition for all stakeholders, with utmost emphasis on safety of assets, both plant and machinery and

human resources, while ensuring customer satisfaction in product quality and service.

Refinery

BPC’s C&MD and Director (R) review the status of the

Refinery Modernization Project.

Hon’ble Minister for Petroleum & Natural Gas, Shri Ram Naik and

former Hon’ble Minister for Shipping, Shri Ved Prakash Goyal

inaugurate the Liquid Cargo Jetty Project at JNPT. Also seen are

Secretary (P&NG), Shri B.K. Chaturvedi and C&MD BPC.


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Retail

During this first year of deregulation, sales through the Retail channel touched an all time record of 11.89 MMT, up

from last year’s 11.5 MMT. This growth has been a result of sustained effor ts of the Retail team in implementing the

new initiatives introduced by BPC as well as consolidating the existing infrastructure and strengths.

During the past three years, BPC has aggressively focused on upgrading facilities and services at the retail outlets,

deploying the latest retail techniques and customer management tools alongwith superior infrastructure and technology

to make the consumer’s visit to the petroleum retail outlet an experience in itself. With the onset of the post APM

deregulated scenario, the spirit of competitiveness which has set in amongst the petroleum retailing companies

augurs well for the consumer, with each of the companies adopting innovative ways to provide the consumer with a

delightful experience.

The ‘Pure for Sure’ (PFS) initiative raised the threshold level of quality, quantity and service to a new high and with

1906 outlets certified as PFS, the network effect of this brand has resulted in a high level of customer satisfaction. The

PFS cer tified retail outlets cater to nearly 50% of MS volumes and 36% of HSD volumes across the country. Sales

growth registered in PFS outlets was higher in the city market segment of MS, which grew by 13.11% and highway

market segment in HSD, which grew at 9.48%, confirming the wide customer endorsement of this program.

BPC now has 4854 retail outlets, up from last year’s figure of 4711 outlets. In addition, 42 outlets were resited, taking

the number of total commissionings to 185. Out of the new outlets commissioned, 6 outlets were One Stop Truck

Shops (OSTS), taking the cumulative number of these outlets to 44. During the year, 11 new SKO-Light Diesel Oil

(LDO) dealerships were also commissioned and BPC now has 996 SKO-LDO dealers. As the usage of Natural Gas and

LPG as auto fuels is increasing, BPC has added Compressed Natural Gas (CNG) and Auto LPG at 45 retail outlets

across the country.

On the site security front, 308 more

sites were secured through long-

term leases or purchases. With

this, over 70% of the sites have

been secured. This puts BPC in a

very strong position to retain the

sites in the face of new competitors

entering the market.

One of the highlights of fuel

retailing in the country was the

introduction of ‘Speed’, the first

branded fuel in the countr y.

‘Speed’, a high performance petrol

with multi-functional fuel additives,

launched on 9th July, 2002, is now

available in approximately 380

outlets in 18 cities across the

country. Although other petroleum

companies were quick to follow

suit, ‘Speed’ continues to be the dominant brand in this category.

BPC made most of the first mover advantage, clocking sales of 88.3 TMT which works out to approximately 4% of all

India MS sales and cornering a 60% market share in the premium fuel segment. BPC bagged the ‘Award for Achieving

Brand Excellence in Marketing - Speed & Bharatgas’ at the 2nd Indian Express Awards for Marketing Excellence by the

Indira Group of Institutes along with the Indian Express Group.

Highway retailing too is emerging as a key area of vast opportunities.

With an improved network of highways, highway travel both for

business and leisure has been on the rise and this is one area where

the need for convenience is felt the most. BPC’s OSTS’ located on

the golden quadrilateral, offering a range of services including

dhabas, restrooms, shops etc under the ‘Ghar’ brand, endeavour to

create a ‘home away from home’ experience for the highway

customer. Convenient payment mechanisms like ‘Smar tFleet’ have

fur ther facilitated smooth and efficient transactions alongwith value

adds for the fleet owner. For the comfort of urban highway motorists,

BPC is also exploring branded fast food through tie-ups such as the

one with McDonald’s in Mathura and Doraha, Ludhiana.

The results of this differentiation have produced dramatic results in

sales performance. In fact, some of the highway retail outlets have

sales of 3000 - 4000 KL per month, which are many times more than

the industry average.

Retail

Director (M) receives the Award for Achieving Brand Excellence in Marketing.SmartFleet Card is a hit with fleet owners.


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BPC’s ‘Petro Bonus Program’, with a membership base of over 1.2 million loyal customers, is a giant step towards

forging a long lasting relationship with the customer. Continuous communication with customers through direct

mailers and customer meets have helped in understanding changing customer preferences and tailoring offerings to

suit customer needs. Equipped with smart card technology, this program combines convenience in payment alongwith

an inbuilt rewards program that rewards the customer every time he fuels. BPC’s SmartFleet program for fleet owners

now has a base of 0.3 million customers. Petro Card and Smar tFleet users now account for a turnover of nearly Rs.

20 billion. The total transaction value through Petro Card and Smar tFleet card amounts to nearly 7% of the total

turnover of MS, HSD & Lubricants. In keeping with global trends, BPC’s foray into the world of debit cards is

another step towards maximizing customer convenience in its retail outlets through offering multiple payment

options. ‘Smar tfill’, BPC’s co-branded Debit Card with Standard Char tered Bank, launched during the year

was yet another step towards keeping pace with the fast changing needs of the customer.

With the emergence of organized retailing in the country and a growing demand from consumers for a superior

shopping experience, convenience retailing has emerged as a key business area for petroleum companies, given

their wide retail presence, existing customer base and strategically located sites. Petrol retail outlets provide the right

framework for setting up convenience retail chains,

where the consumer has the opportunity of combining

shopping with the fuel l ing occasion. BPC’s

convenience retailing concept ‘In & Out’ is an

interesting concept where a number of typical

household errands are aggregated under one roof for

the benefit of the customers. Strategic alliances have

been formed with major brand owners and retailers in

the country to provide a wide range of services

viz. ATMs of leading banks, music stores from Planet

M and Music World along with hot and cold beverages

in an attractive ambience. BPC has 100 ‘In & Out’ stores

spread across 28 cities and customer footfall trends

have indicated that it has been successful in influencing

the buying patterns of the customer by giving him the

option of a convenient shopping experience.

The company registered an increase in market share in all three products marketed by the Retail Business Unit. The

MS sales at 2.38 MMT increased by 8.7% resulting in an increase in market share of 0.2% over last year. In HSD,

sales were 7.93 MMT, registering a growth of 2.8% and the company increased its market share by 0.4%. SKO sales

were placed at 1.56 MMT and the increase in market share was 0.1%.

Deregulation has brought in the expected increase in margins of retail products. The Retail business, which reflects

nearly 60% of the volumes, contributed only about 35% of the marketing margins till recently. During the current year,

the business has contributed 51% of the marketing margins. The margins were depressed substantially twice during

the year. Firstly, in the initial two months after deregulation, stable prices were maintained in view of competitive

pressure. A similar pressure was also experienced during the last two months, when international prices increased

substantially due to the pre-Iraq war, forcing players to absorb the increases without passing on the same to the

consumers. In future years, it is expected that retail margins would continue to be a major contributing factor to total

marketing margins.

BPC has set up ethanol doping facilities at 39 locations for implementing MOP&NG’s gazette notification, making

marketing of 5% ethanol doped MS mandatory in 9 States & 4 Union Territories. BPC is fully geared to meet the

statutory requirements. However, due to shor tfall in availability of ethanol, marketing of ethanol doped MS could

commence only in Uttar Pradesh and a few markets in Maharashtra & Gujarat. BPC, alongwith other industry members,

has introduced green fuels in 11 new cities during the year. For the 6th consecutive year, BPC got the Oil Industry

Safety Directorate (OISD) award in the ‘POL Marketing Organisation Category.’

During the years to come, Retail would remain the mainstay and focus area of the company. The investments in this

sector would be substantially increased and with continued focus on differentiating its proposition through customer

focussed initiatives, the company is confident of continued growth in the Retail business.

The In & Out Store beckons consumers with its attractive ambience.

Speed makes its mark.


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Industrial & Commercial (I&C)

The Industrial & Commercial (I&C) SBU had a very challenging year in 2002-03. The year star ted with a major setback

to the business in the form of the closure of one of BPC’s major Naphtha customers. This customer, who had been with

BPC for the last 25 years, had to cease manufacturing as its operations were un-economic. Despite this major

reversal, I&C achieved a sales volume of 5.30 MMT, recording a growth of 1.8%. The performance stands out

considering the general slowdown in the industrial growth of the country. The I&C SBU contributes to nearly 27% of the

company’s market volume and 14% of the marketing margins.

A number of I&C products were deregulated effective 1st April, 1998. However, the year 2002-03 saw the deregulation

of HSD, which also forms a major por tion of the I&C business. As competition in the HSD sector warms up, BPC is

confident that the I&C team of professionals, who have skill and competence to meet the challenges in the market

place, developed over the last 5 years of operations, can face this challenge. I&C registered good growth in sales of

Furnace Oil (FO), LDO and other products. The complete production of the decontrolled products, with the exception

of Naphtha, was marketed locally by I&C.

BPC’s B2B website, http://ebiz.bpc.co.in, has been immensely popular with customers. The initiative under B2B was

expanded to cover 6,900 customers, which amounts to almost 90% of I&C’s customer base. Approximately Rs.180

million wor th of business is being posted on a daily basis. BPC’s effor ts to integrate this por tal with the SAP system

have met with positive and encouraging responses from the customers. BPC has successfully achieved B2B integration

in the form of a Digital Document Exchange with Asian Paints, the first of its kind in the country, whereby the SAP

systems of both organizations have been seamlessly linked. It is proposed to extend this facility to other impor tant

customers in future.

After e-biz, the next logical step was that of e-banking. The e-banking initiative has been well liked by the customers

and pilots run during the year 2002-03 have brought in collections of nearly Rs. 400 million. The feedback from the

customers revealed that e-banking was not only easy and convenient, but also reduced the transaction cost, improved

financial and inventory management and increased the cash flow of the customers. BPC plans to bring about 20% of

its customers into the ambit of

e-banking during the financial

year 2003-04.

BPC has taken steps to provide

fur ther services to customers.

The PFS initiative, which was

very successful in Retail, has now

been extended to I&C customers

with the introduction of the Abloy

Locking System for tank lorries.

This would guarantee receipt of

unadulterated quality cer tified

products. All customers receiving

product from the Refinery, would

get a Quality Cer tificate issued

through the newly designed

inter face of the Laborator y

Information Management System (LIMS).

After the introduction of the new EXIM Policy by the Government of India from 1st April, 2002, BPC has star ted supplies

of FO and LSHS against Advance License. The advance licenses help the company to impor t crude oil with ‘Nil’ duty.

A por tion of the duty benefit is passed on to the customers. During the last year, five customers have taken advantage

of this scheme.

The I&C SBU would continue to be customer focused and strive to provide complete energy solutions to customers.

The products handled would include regassified LNG from the next year.

I & C

Berthing in progress at the Liquid Cargo Jetty at JNPT.

The Tata Power Company Ltd.


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of the channel and at the same time improving debt recovery for the company considerably by Rs. 714 million, from

Rs. 2,022 million on 31st March, 2002 to Rs. 1,308 million by 31st March, 2003.

Over the years, the Lubes business has embarked on a path wherein it develops its staff by providing a culture which

promotes dynamism, the ability to meet challenges, empowerment for every employee, innovation at all times and

finally passion to work. These elements have been the cornerstones of their success year after year.

Lubricants

The Lubricants business in India was deregulated in 1992-93. Since then, the increased number of players in the

market has put a lot of pressure on this business. During the last few years, par ticularly after restructuring, the Lubes

SBU has been striving hard and posting better results. This year, the Lubes volume sold was 117.27 TMT - an all time

high, surpassing the previous highest prior to deregulation of the Lubes business in 1992-93. The growth registered

over the past year was 12%, which is also a record for the company. The Lubes SBU has contributed to 0.6% of sales

volumes and about 6% of the gross marketing margins of the company.

Par ticularly notable was the fact that most of the growth has come from the value added products segment. This

achievement is remarkable, considering the extreme levels of competition in this segment and is mainly on account

of higher growth in the bazaar and industrial sales. The aggressive market penetration in the bazaar segment during

the year had lead to a growth of 77% in this segment. BPC believes that this would become a formidable channel in the

near future. The industrial sector has contributed a growth of 27%, which has largely come from the enrolment of

various businesses across the country. BPC continues to be a major supplier to the Railways and Defence sectors.

As a par t of innovative strategies for growth, BPC entered into a co-branding arrangement with Tata Engineering and

Locomotive Company Limited (TELCO) and launched co-branded gear oil grades, automatic transmission fluid and

multipurpose grease for all commercial vehicles.

In addition to the domestic market, BPC is also looking at the expor t market to sell lubricants. During 2002-03, pilot

expor ts were done to Nepal and Bangladesh and the same are expected to increase considerably during the years to

come.

Both the blending & filling plants, Wadilube in Mumbai and Budge-Budge in Kolkata, were modernized during the year.

The entire production process was automated as part of the Plant Modernisation process which will lead to improvement

in blend efficiency, positive segregation, temperature controls and improved homogeneity giving consistent on-spec

product quality equivalent to international standards. It would also result in reduction in losses and clean and safe

working conditions.

BPC’s lubricants were marketed under three separate brands covering the petrol, diesel and two wheeler segments.

A market study pointed out that the brand recall would be much better if these are clubbed under an umbrella brand.

During the year, all automotive grades were clubbed under the umbrella brand, ‘MAK’, which was launched in

February 2003 across the country. In the shor t time since its launch, it has acquired an enviable position in the mind

space of the general public.

To suppor t the business initiatives, a major thrust was given to Research and Development (R&D). R&D has played

an impor tant role in extensive technical services suppor t to ensure that the business remains competitive year after

year. During the year, the business has developed 7 new grades and cost effective formulations for 10 existing grades.

These formulations would result in a saving of Rs.70 million per annum. Reiterating the company’s stress on quality

product supplies, a programme for establishment of 12 new laboratories across the country has been launched. Two

of these labs have been commissioned, while work on the rest is in progress. These labs would be commissioned in

the next year.

During the year, a Channel Finance Scheme for the Reseller segment was introduced through major bankers. Under

this scheme, BPC receives instant cash for supplies, while the bankers provide 30 days credit to the customers on a

non-recourse basis. The scheme received an encouraging response, meeting additional working capital requirements

Lubricants


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of customers and behavioral training is being impar ted to a large number of distributors and the company expects the

distributors to be much more customer friendly after this training.

LPG is now available to most of the urban consumers. However, there is a distinct need for LPG to be made available

to the rural population. BPC reaches them through 24 Rural Marketing Vehicles (RMVs) and smaller cylinders of 5 kg

weight. These cylinders were launched in 33 selected rural markets from 16th August, 2002, to cater to the fuel needs

of people in low income groups and hilly areas.

BPC is following an aggressive strategy to enhance the market for

piped LPG. The reticulated system provides safe and uninterrupted

supply of LPG to the consumers. Once enrolled, these customers

remain loyal to the company providing the service. Currently, the

system is extended to 629 flats and many more projects are under

implementation. These initiatives are on a small scale currently,

but have enormous potential in the years to come.

LPG sales would remain an important focus area for the company.

In profitability, in the long run, this can match the Retail business.

With quality service to the consumers, BPC would endeavour to

improve its market share.

Liquefied Petroleum Gas (LPG)

With a total volume of 2.03 MMT, the LPG business unit accounts for 10% of the company’s market sales. During the

year 2002-03, LPG sales grew at 13.5% over the previous year as compared to industry growth of 11.7% and the

market share improved from

24.5% to 24.9%. New customer

enrolment was 1.91 million, taking

the total customer population to

17 million. The distributor network

has been expanded with the

commissioning of 105 LPG

distributorships during the year,

taking the overal l number of

distributors to 1828.

Over the years, BPC has

judiciously increased its bottling

capacity and these plants now

cover the length and breadth of the

country. During the year, LPG

fi l l ing at bott l ing plants was

1.72 MMT against a capacity of

1.51 MMT, representing a capacity

utilization of 136%. In cer tain

smaller markets, in the coming years, the filling capacity is expected to increase fur ther, with new bottling plants

planned at Hazira, Pune, Vijaywada and Bangalore.

BPC has been a trendsetter in taking various initiatives that ensure comfor t, convenience and reliable service to

Bharatgas customers. All customers can book their refills round the clock at all distributorships, with guaranteed

delivery of refills within 24 hours, on all days of the week, at the convenience

of the customer. The customers are given a choice to even indicate the

timing of the deliveries. The new computer based package installed at all

distributorships helps tracking customer consumption and pro-active

deliveries. BPC has also pioneered the 24-hour Bharatgas Helpline, which

has been implemented in all major markets.

Noting the encouraging response from customers, BPC’s online LPG booking

facilities on its por tal http://www.ebharatgas.com has now been extended to

6.2 million customers in 51 cities. Booking of refills through the four digit

number ‘1712’ is also continuing in most major markets. In addition, 43

Customer Relation Centers are operational all over the country, to provide

assistance on all LPG related matters to the customers.

Customers’ image of the service provided by BPC is through their interface

with the distributors. Recognizing this, extensive training for better handling

LPG

The LPG Reticulated System is a

boon for housewives.

Hon’ble Minister of Petroleum & Natural Gas, Shri Ram Naik and Hon’ble

Minister of State for Petroleum & Natural Gas, Smt. Sumitra Mahajan launch

the 5 kg. Bharatgas cylinder at Jabalpur. C&MD BPC is seen on the left.

The striking Bharatgas Suraksha Rath.


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Aviation

The Aviation SBU accounts for nearly 3% of the market sales of BPC and about 5% of the margins. During the year 2002-03,

the Aviation Business unit sold 517 TMT of ATF to domestic and international airlines. This represents a growth of 2.4 % over

the previous year.

All over the globe, the aviation industry has been undergoing a considerable number of disasters and shocks. To star t

with, the 9/11 attack on the World Trade Center had affected the aviation industry and reduced travelling. Tensions in

the Arabian Gulf have also added to the problems. Recently, there was an impact due to the SARS problem. BPC has

a major market share in the international airlines business, many of whom have withdrawn from or curtailed operations

to India. Against this backdrop, the increased volumes signify an excellent achievement for the Aviation business unit.

BPC has been a preferred supplier of ATF for many of the international airlines in view of the various customer focused

initiatives that were taken to help them in a major way. To star t with, online and accurate information is available to

them through the SAP system. BPC has also recently implemented ‘Astra Nova’, an Apron Management System to

capture the data right from the apron and integrate it with SAP to get real-time information of all transactions and

activities at major airpor ts like Delhi, Mumbai, Kolkata, Chennai and Bangalore. The Aviation e-biz initiative has been

launched and Air India was enrolled as the first customer. The customers, through the internet, can view their

statement of accounts and delivery details of the flights, request for fuel for non-scheduled flights and access various

other features. Following the footsteps of the e-biz por tal for direct customers, this por tal would be the next success

story for BPC in the B2B area.

In addition to data management, guaranteed fuel supplies of the highest quality through BPC’s world class facilities at

many airpor ts is another major attraction for its customers. These facilities have been benchmarked with Shell

facilities and international standards, as a result of a Commercial and Technical agreement with Shell Aviation.

Signifying the confidence in BPC, customers including Emirates, Saudi Arabian Airlines, Silk Air and My Travel

Char ter flights have been enrolled in the last year to join the ever increasing family of BPC customers.

The Aviation business is a very promising business and BPC is confident of maintaining its position in this business

in the years to come.

Aviation

Astra Nova has changed the face of aircraft refuelling.


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Care Management, with the aim of researching

newer ways of providing customer service and

spreading awareness of customer service

standards.

BPC is also supporting a project under the aegis

of the Government of India to identify and

research key competencies required for

developing successful CEOs, in consultation

with the Hay Group of Management Consultants.

BPC received the ‘Innovative HR Practices

Award: Public Sector’ at the World HRD

Congress held in Mumbai in January 2003.

Health, Safety and Environment

The company accords the highest priority to

safety, health and environment issues. Safety

awareness level amongst Refinery employees,

including contractors’ employees, is continually

enhanced by conducting advanced safety training

courses. The Refinery web por tal was

extensively used for sharing information on safety and this initiative won the prestigious Delphi (USA) Best Practices

Award 2002 for the Refinery. There was a 12% reduction in overall injuries for BPC as well as contractors’ employees.

Fur ther, the Refinery achieved 5 million manhours without Lost Time Accident (LTA), during the year 2002-03.

The Refinery has been making concer ted effor ts in

improving the environment and had implemented

Environment Management System under ISO - 14001.

Solid waste minimization and annihilation was fur ther

stepped up by a combination of mechanical recovery

of oil from oily sludge and use of the environmentally

benign process of bio-remediation using specialized

microorganisms based on ‘Oil Zapper’ technology.

These effor ts of the Refinery were appreciated at

various forums and the Refinery was awarded the

pres t ig ious Federa t ion o f Ind ian Chamber o f

Commerce and Industry (FICCI) Award for the year

2001-02 in the field of Environmental Conservation

and Pollution Control at the hands of the Honourable

Prime Minister. BPC was also declared the winner of

the Gold Award in the Refinery sector for ‘Outstanding

Achievements’ in the field of Environment Protection

for the year 2001-02 by M/s. Greentech Foundation, a

non-profit organization.

Human Resources

BPC today has 12,470 employees on the rolls. One of the major strengths of BPC is its highly motivated staff. Most of

the changes and new initiatives under taken in the businesses would have been impossible without the committed

involvement of people at all levels.

Human Resource activities are focused towards par tnering with Strategic Business Units and Entities. The HR

interventions were designed to leverage BPC’s people potential in order to create energetic and enthusiastic manpower

to achieve stretched business goals.

Competency models for critical senior and frontline sales positions have been developed, which would form the basis

for people development, recruitment and placement decisions in the company. The implementation of the model in

these areas would help individuals to improve their capabilities and thereby, successfully achieve business goals.

With the entry of new players in the downstream marketing segment, retention of key people in the company would

become a challenge. While there are many HR schemes and benefits which help retention of employees, some

amount of attrition is inevitable. While the overall attrition rate due to voluntary separations in the management cadre

is only 1.7%, amongst the senior leadership levels it would be around 5%. Notwithstanding this, BPC believes it has

enough depth of management talent in the company which would fill in gaps created by unanticipated separations.

Fur ther, as a long-term strategy, in order to retain the skill profile of its employees, fresh blood is injected in the

organization by recruiting management and engineering graduates every year. BPC has always been able to attract

talent from some of the best educational institutions in the country.

The ‘IDEAS’ platform, that was created in the year 2000 to nur ture creativity and innovation amongst employees, is

now in its third year and has elicited an overwhelming response in the contest held in December 2002. During the

year, as many as 216 entries were received. Of them, 26 best ideas in four categories namely, Technical, Sales &

Marketing, Process & Systems Improvement and Human Resource Initiatives, won awards.

BPC constantly benchmarks its HR practices against national and international companies, by par ticipating in various

surveys and studies under taken by leading international HR consultants operating in the country. This par ticipation,

apar t from benchmarking BPC’s

practice, also identifies focus areas

for fur ther development.

A detai led review of the

Performance Management System

was under taken and a set of

measures, still to be implemented,

were evolved to normalize ratings

across businesses and entities.

BPC continues to support education

and management research in the

countr y. BPC inst i tuted a

Management Chair at the Indian

Institute of Management (IIM),

Lucknow in the area of CustomerDirector (HR) with Director, IIM, Lucknow on the occasion of instituting a

Management Chair in Customer Care Management.

Hon’ble Prime Minister, Shri Atal Bihari Vajpayee presents the

FICCI Award for Environmental Conservation and Pollution to

C&MD BPC.

Former Hon’ble Minister of State for Petroleum & Natural

Gas, Shri Santosh Gangwar presents the Greentech Gold

Award for Environment Protection to BPC.


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Outlook

The drivers of change and rapid growth acceleration viz. technology, competition and benchmarking against the best

international practices have become the order of the day. The country is now taking advantage of these factors.

Technology upgradation is taking place rapidly and the competition in the market place has become fierce. With the

removal of quantitative restrictions on impor ts, restructuring of custom duties and liberalization of Foreign Direct

Investment (FDI), the integration of India into the global economy is progressing rapidly. The recovery of global

growth, combined with moderate pick up in domestic demand, is expected to provide sufficient stimulus for the Indian

economy to reach the growth rate of about 6.5% in FY 2003-04 and thereafter.

Energy Demand

The consumption of petroleum products in India has grown at a CAGR of about 5.5% over the last decade, rising

from 56 MMT in 1990-91 to 101 MMT in 2002-03. The growth in oil consumption has generally been in line with the

overall economic growth in the past, although on a year to year basis the relationship is not apparent. The GDP

elasticity of demand for petroleum products, which was about 1.60 in the decade 1950-60, went down to 1.0 in the

1980s. With more and more GDP growth coming from the services sector, this elasticity is likely to go down

fur ther. Demand management,

efficient energy use and inter-fuel

substitution have brought down

the GDP elasticity to around 0.75.

Despite these discouraging

trends, par ticularly in the years

2000-01 and 2001-02, the small

recovery in the demand during

2002-03 has given hopes that the

demand would star t picking up

once again. In the long run, it is

expected that the energy demand

would eventually rever t back to

the old CAGR of about 5%. This

would be shared by the fossil

fuels, both liquid and gaseous.

Refining Capacity

The refining capacity build up in India has also witnessed a steady progress to fulfill the growing domestic

product demand. As of April 2003, India maintains a total installed refining capacity of about 114.6 MMT and has

attained self- sufficiency in the refining sector. Considering national oil security, stability of supply and

development of the economy, the Hydrocarbon Vision 2025 repor t has suggested that it is desirable that the

refining capacity build-up in India should be sufficient to meet at least 90% of the country’s demand of middle

distillates, which are the main product group.

The present refining capacity is expected to increase through creeping expansions of various refineries. The stringent

product quality specification that will be implemented in future will force all the refineries to go for ‘extensive

upgradation’ cum de-bottlenecking so as to balance economies of scale. To sum up, the country is expected to remain

long on the refining capacity in the shor t to medium term.

Safe practices and safety

have always been accorded

the highest priority in BPC

and hence, safety awareness

campaigns during festivals

and trade fairs at various

locations all over the country

had been undertaken. Safety

of consumers, quality and

productivity will continue to

be the focus area and BPC

continues to excel in this area.

During this year, BPC was

awarded a prestigious OISD

award for the overall safety

performance of LPG bottling

plants in the country.

Exports

As a result of the shortfall

in domestic demand, BPC is required to export Naphtha from the Mumbai Refinery. During the year, 457.77 TMT of

products were exported from Mumbai, realizing exports proceeds of US $104.47 million (Rs. 5070.87 million). The export

realization, including the advance licenses received, has always been higher than the crude and processing cost. Often,

it was also higher than realization from alternative sale to fer tilizer customers, who are supplied at concessional rates.

The other group refineries, Numaligarh Refinery Limited (NRL) and KRL also had to resort to a small quantum of exports

i.e. 58.60 TMT of Naphtha and 16 TMT of Furnace Oil respectively in consultation with BPC.

ENTRY IN EXPLORATION AND PRODUCTION OF OIL AND GAS

The BPC Group is now processing about 20 MMT of crude oil. In order to have reasonable supply security, hedging

of price risks and benefits of integrated supply chain in the volatile oil market, it has become necessary for BPC to

explore avenues for securing its own equity crude by entering the upstream sector. Fur ther, in view of the recent

trend of increasing displacement of liquid fuels by natural gas as an environment friendly product, it has also

become imperative that the company enters the gas business to maintain its share in the energy market in the

country. With these objectives, BPC has proposed an entry into the upstream sector, covering both oil as well as gas.

The Exploration & Production (E&P) business is considered a high risk, high return business. It is typically divided into

three phases, viz. Exploration, Development and Production with decreasing risk association. Sale of stakes in the

assets, called ‘farming-in’, is a regular feature in all the phases. In order to balance the risks, BPC would be looking

into a mix of exposure to all the three phases.

The Government of India has announced sale of new exploration blocks in New Exploration Policy 4th round (NELP IV).

Impressive discoveries have been repor ted in the earlier NELP blocks. BPC would be par ticipating in NELP IV in

par tnership with other experienced players in E&P. The investment por tfolio would be hedged through ‘farming-in’

opportunities. The envisaged budget for E&P expenditure would be in the range of Rs. 10,000-15,000 million over the

next five years. Exact phasing would depend on the oppor tunities.

Hon’ble Minister for Petroleum & Natural Gas, Shri Ram Naik presents the OISD

Awards to C&MD, BPC.

C&MD BPC presents the dividend cheque to Hon’ble Minister for Petroleum

& Natural Gas.


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International Market

The international petroleum market, post Iraq

war is likely to be quite different. The

market, during the past three decades or

so, was governed primarily by the

suppliers, through car tels like OPEC.

However, the US victory in Iraq, which has

an ability to be amongst the biggest

producers of crude oil, could change the

scenario. Iraq has the potential to produce

cheap crude oil and export the same. The

oil revenues would also be required to build

the economy of the country. World oil

demand, on the other hand, is quite sluggish

and may not match the extra inflows. This would create pressures on other players to reduce the output. Thus, unless there

is a major cut in the output by other players, the crude oil prices are likely to decline in the years to come.

Domestic Market Environment

The post-decontrol regime offers tremendous oppor tunities to realize the true value of marketing assets through

higher market-determined or even ‘replacement cost’ margins. Profitability is expected to improve and there would

be greater visibility in earnings. However, the entry of new players would pave the way for intense competition and

surplus product availability could force down product prices.

Regulatory Body and Competition law

It is expected that the Downstream Petroleum Regulatory Board (DPRB), would be established once the Bill giving enabling

powers to the Government is passed in Parliament. DPRB would regulate the downstream industry activities, promote

competitive markets under a regime of fair prices, ensure uninterrupted and adequate supply of products in all parts of the

country, set tariffs for shared use of infrastructure like pipelines, port facilities etc. The new competition laws would also

ensure fair trading practices and remove any barriers that prevent competition. Also, it would curb the ‘dominance’ and

abuse of infrastructural strengths by any single entity to gain competitive advantage and create entry barriers.

Increasing Importance of Gas

Recent trends indicate that Natural Gas is becoming the ‘preferred’ fossil fuel, considering the low environment

pollution potentials, both in the bulk consumer as well

as retail segments. The usage of Natural Gas is also

suppor ted by various agencies, including the Apex

Cour t. Currently the full quantity of natural gas is being

utilized with a considerable number of consumers

waiting for allocation. Recent findings by the various

E&P operators, both onshore and offshore and proposed

investments in LNG terminals indicate that Natural

Gas could be made available to these consumers. BPC

has a small participation in the Natural Gas sector through

joint ventures i.e. Indraprastha Gas Limited (IGL) and Petronet LNG Limited (PLL) and the same would be increased

through projects in E&P as well as on the city gas front.

FUTURE OUTLOOK

Under this scenario, it is expected that the market would be governed by the customer with his specific demands and

preferences. The Retail unit will have to be the main earner for the oil companies, as the major industrial consumers

would be negotiating harder for a reduction in margins. BPC’s initiatives are geared for servicing these high expectations

of the consumers. BPC is confident that they would remain the preferred fuel suppliers of all.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

BPC has a system of internal controls to ensure optimal utilization and protection of resources, IT security, speedy

and accurate repor ting of financial transactions and compliance with applicable laws and regulations as also internal

policies and procedures. For this purpose, the company has formulated a clearly defined organization structure,

authority limits and internal guidelines, rules for all operating units and service entities. SAP R/3 and Business

Information Warehouse (BIW) systems have fur ther enhanced the internal control mechanism.

BPC has an Internal Audit depar tment consisting of exper ts from various functions, which supplements the review of

key business processes and controls through regular audits. Audit repor ts, significant risk area assessment and

adequacy of internal controls are also periodically reviewed by the Audit Committee through meetings held with

management, internal audit and the statutory auditors.

BPC’s striking pavilion at PETROTECH 2003 won the Best Customer Focus Award.

Hon’ble Minister for Petroleum & Natural Gas, flanked by Director (M)

and Director (R), inaugurates the BPC pavilion at PETROTECH 2003.

The LPG Rural Marketing Vehicle is on its rounds.


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30000

25000

20000

15000

10000

5000

01998-99 1999-00 2000-01 2001-02 2002-03

GROSS PROFIT (Rs. in Million)

15,568

17,377

27,204

20,332

7,061 7,017 8,327 8,498

2,722

1,745

4,0406,154

1,854

2,3522,804

2,556

6,645

4,770

3,066

4,810

21,144

12,500

7,436

2,459

4,809

Depreciation

Interest

Tax

Profit After Tax

Imported

Bombay High

CRUDE PROCESSED (Million Metric Tonnes)RETURN ON CAPITAL EMPLOYED (Percentage)

1998-99 1999-00 2000-01 2001-02 2002-03

20

18

16

14

12

10

8

6

4

2

0

17.44

12.55

10.9410.49

15.99

EARNING PER SHARE (EPS) /DIVIDEND PER SHARE (DPS) (Rupees)

1998-99 1999-00 2000-01 2001-02 2002-03

45

40

35

30

25

20

15

10

5

0

*23.54 *23.39

27.76 28.33

41.67

*6.25 *6.257.50

11.00

15.00

EPS

DPS

*On Post-Bonus Capital

14000

12000

10000

8000

6000

4000

2000

0

8,990

10,894 10,998

12,30612,763

RESOURCES GENERATED (Rs. in Million)

16000

14000

12000

10000

8000

6000

4000

2000

0

11,865

14,223

9,241

12,347 12,494

1998-99 1999-00 2000-01 2001-02 2002-03

CAPITAL EXPENDITURE (Rs. in Million)

1998-99 1999-00 2000-01 2001-02 2002-03

1998-99 1999-00 2000-01 2001-02 2002-03

7.21 6.32 5.92 5.18 5.48

1.73 2.55 2.74 3.59 3.23

8.94 8.87 8.778.66 8.71

10

9

8

7

6

5

4

3

2

1

0

PRODUCTION (Million Metric Tonnes)

9

8

7

6

5

4

3

2

1

0

8.57 8.43 8.288.20

1.19 1.42 1.59 1.62

4.73 4.60 4.13 4.23

2.65 2.41 2.48 2.43

8.21

1.50

4.23

2.48

1998-99 1999-00 2000-01 2001-02 2002-03

MARKET SALES VOLUME (Million Metric Tonnes)

1998-99 1999-00 2000-01 2001-02 2002-03

20

18

16

14

12

10

8

6

4

2

0

Retail

Lubes

Direct

Aviation

LPG

0.100.11 0.11 0.11 0.12

0.46 0.49 0.51 0.51 0.52

1.21 1.43 1.61 1.79 2.03

4.82 5.21 5.33 5.20 5.30

10.91 11.44 11.79 11.54 11.89

17.50

18.6819.35 19.15

19.86

(All

un

its a

re i

n m

g/l

it ex

cep

t p

H)

22

20

18

16

14

12

10

8

6

4

2

0

8.5

7.4

15.0

5.3

10.9

20.0

10.0

TREATED EFFLUENT WATER QUALITYVIS-A-VIS STATUTORY STANDARDS

AT BPC REFINERY

1.2

1.0

0.0 0.

5

0.0

pH BOD TSS Oil Phenols Sulphides& Grease

Standards

Actuals

(All

units

are

in m

icro

gra

ms

per

met

er c

ub

e)

400

350

300

250

200

150

100

50

0

80.0

80.0

147.

5

360.

0

TYPICAL AMBIENT AIR QUALITYVIS-A-VIS STATUTORY STANDARDS

AT BPC REFINERY

SO2 NOX SPM

27.8

35.7

Standards

Actuals

Light Distillates Middle Distillates Heavy Distillates

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FINANCIAL HIGHLIGHTS

Rs. in Million

2002-03 2001-02

Sales Turnover - Gross 472,378.29 422,942.78

Gross Profit before Depreciation, Interest and Tax 27,204.07 21,144.16

Interest 2,459.46 3,066.47

Depreciation 4,809.24 4,809.85

Profit before tax 19,935.37 13,267.84

Provision for taxation - Current 6,805.00 3,940.00

Provision for taxation - Deferred 476.59 970.61

Excess/(Shor t) Tax provision in earlier years written back/provided for (153.50) 141.07

Net Profit 12,500.28 8,498.30

Transfer to Debenture Redemption Reserve 2,070.00 650.00

Balance brought forward from the previous year 0.01 0.01

Amount available for disposal 10,430.29 7,848.31

The Directors propose to appropriate this amount as under:

Towards Dividend:

Interim Dividend (declared & paid) - Rs. 2 per share 600.00 —

Final (proposed) Dividend - Rs. 13 per share 3,900.00 3,300.00

Towards Corporate Dividend Tax 499.69 —

For transfer to General Reserve 5,430.59 4,548.30

Balance carried to Balance Sheet 0.01 0.01

Summarised Cash Flow Statement:

Cash flows:

Inflow/(Outflow) from operations 24,334.57 26,942.13

Inflow/(Outflow) from investing activities (8,704.49) (18,779.09)

Inflow/(Outflow) from financing activities (7,511.75) (5,600.79)

Net increase/(decrease) in cash & cash equivalents 8,118.33 2,562.25

The Directors are pleased to present their report on BPC’s performance for the year ended 31st March, 2003.

PERFORMANCE OVERVIEW

Group Performance

The BPC Group companies excelled in

per formance during 2002-03. The

combined Refinery throughput at BPC’s

Refinery at Mumbai, KRL and NRL

increased from 17.87 MMT during the last

year to 18.17 MMT during the current year.

Group market sales increased from

19.90 MMT to 20.53 MMT. In addition, the

Group also expor ted 0.69 MMT of

products giving a total export turnover

of Rs. 6864.66 million.

Financially, the Group companies achieved

a sales turnover of Rs. 568.18 billion, up

from the last year’s level of Rs. 458.01

billion. Group profit after tax (PAT) increased

from Rs. 10,076.86 million to Rs. 18,224.40

million. After setting off the minority interest,

Group earnings per share increased from

Rs. 31.04 to Rs. 51.76.

Company Performance

The BPC Refinery had a crude throughput of 8.71 MMT, which was marginally lower than 8.77 MMT achieved during the last

year. Continuing efforts to increase production of value added products, the Refinery recorded the highest ever production of

LPG, ATF and Bitumen.

BPC’s domestic market sales increased from 19.15 MMT to 19.86 MMT registering a 3.71% growth. The market share

increased from 21.5% to 22.0%. Your Directors are pleased to recognize the commendable work done by one and all on the

sales front, wherein the increase in market share was achieved despite certain constraints.

Financially, BPC achieved a 21.77% growth in sales turnover from Rs.398.30 billion to Rs. 485.02 billion. In addition to the

volume increase, the increase in sales turnover was also due to increased prices, both in the international and domestic

markets.

The profitability of BPC was affected by three major factors. One of them was a systemic change, while the other two

were extraordinary items. To star t with, marketing margins on transpor tation fuels, MS and HSD, as well as domestic

fuels, SKO and LPG, improved as a result of abolition of the APM. Margins under the APM were a function of the

depreciated value of assets, from which they were linked to market factors during the current year. Since prices are

linked to impor t parity, consistent increase in the international prices also resulted in higher profit margins for BPC.

The third factor was loss suffered by the company in keeping the SKO and LPG prices frozen at the March 2002 levels,

despite price increases in the international market. The net impact of the extraordinary items in the current year was

Directors’ Reporthowever negligible. The gross profit before interest,

depreciation and tax increased by 28.66 % to Rs. 27,204.07

million. The profit before tax increased by 50.25% from

Rs. 13,267.84 million to Rs. 19,935.37 million. After

providing for tax, (including deferred tax) of Rs.7,435.09

million as against Rs. 4,769.54 million during the last

year, the profit after tax showed an increase of 47.09%

from Rs.8,498.30 million in the last year to

Rs. 12,500.28 million.

BPC was awarded Businessworld’s Most Respected

Company Award for the year 2003 in the Petroleum and

Petroleum Products Sector.

CONSOLIDATED GROUP RESULTS

Physical Performance

Crude Throughput (Million tonnes) 18.17 17.87

Market Sales (Million tonnes) 20.53 19.90

Financial Performance Rs. in Million

2002-03 2001-02

Net Sales/Income from Operations 568,183.63 458,011.19

Gross Profit 41,836.03 28,930.90

Interest 4,910.71 6,211.50


Profit before Tax 29,563.80 15,447.92

Provision for Taxation - Current 9,284.29 4,353.36

Profit after Current tax 20,279.51 11,094.56

Provision for Taxation - Deferred 1,901.57 1,158.77

Excess/(Short) provision for Taxation in earlier

years written back/provided for (153.54) 141.07

Net profit 18,224.40 10,076.86

Minority interest 2,697.04 766.26

Net Income of the group attributable to BPC 15,527.36 9,310.60

Group Earnings per share attributable to BPC (Rs.) 51.76 31.04

The review of the accounts by the Comptroller and Auditor General of India(C&AG) under Section 619(4) of the Companies Act,

1956 is annexed as Annexure D. The C&AG has no comments on the Accounts for the year ended 31st March, 2003.

Director (F) receives Businessworld’s Most Respected

Company Award in the Petroleum & Petroleum Products Sector.

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PROJECTS

Central India Refinery Project

A 6 MMTPA capacity grassroots Refinery at Bina in Madhya Pradesh with crude oil supply system consisting of a Single Point

Mooring System (SPM),Crude Oil Terminal (COT) at Vadinar and a 935 km long cross-country crude oil pipeline from Vadinar

to Bina is being set up by the joint venture company, Bharat Oman Refineries Limited (BORL), promoted by BPC and Oman

Oil Company Limited (OOCL).

The revised project cost duly approved by the Government of India is Rs. 63,540 million (September 2001 prices) including a Foreign

Exchange component of Rs. 20,250 million. So far BPC and OOCL have each contributed Rs. 755 million towards their share of equity

in the project. BPC would now contribute upto 50% of equity which has been approved by the Government of India. The project could

not be started because of a restraint letter dated 5th October , 2000, from the Chief Wild Life Warden, Government of Gujarat which

prevented BPC from carrying out activities in the National Marine Park area. The Supreme Court has, vide its order dated

15thJuly, 2002, stayed the operation of the restraint letter. However, the project cannot be commenced unless the Special Leave

Petitions (SLP) and Public Interest Litigations filed in the Supreme Court and Gujarat High Court are favorably disposed off.

The entire land for the Refinery and township blocks at Bina and crude oil terminal at Vadinar have been acquired. Acquisition

of Right of User (ROU)/Right of Way (ROW) along the entire 935 km length of cross-country pipeline has been almost

completed. The project’s implementation will be progressed further after favourable disposal of the SLPs under consideration

in the Supreme Court. In view of the changed scenario and latest developments, a review of the process configuration and

financing pattern is being undertaken.

Uttar Pradesh Refinery Project

To cater to long-term product requirements, BPC has a long term plan of setting up a 7 MMTPA capacity grassroots Refinery

at Lohagara in Allahabad District of Uttar Pradesh. The location of the project has been selected based on the maximum deficit

Hon’ble Dy. Prime Minister, Shri L.K. Advani, inaugurates associated facilities to Bina Refinery. From left are C&MD

BPC, Hon’ble Minister of Petroleum & Natural Gas, Shri Ram Naik, Hon’ble Chief Minister of MP, Shri Digvijay Singh,

H.E. Governor of MP, Shri Ram Prakash Gupta and Hon’ble Minister of State for Petroleum & Natural Gas,

Smt. Sumitra Mahajan. On the right is Secretary (P&NG), Mr. B.K. Chaturvedi.

Your Directors are pleased to recommend for your approval a final dividend of 130% (Rs.13.00 per share), on the paid up share

capital of Rs.3,000 million which will absorb Rs.3,900 million. The total dividend for the year will absorb Rs.4,500 million out

of profit after tax. After providing Rs.499.69 million for tax on distributed profits and Rs.0.01 million carried forward to the

balance sheet, Rs.5,430.59 million will remain for transfer to the general reserve. After this, BPC’s net worth as on

31st March, 2003 would stand at Rs.47,474.28 million, as compared to Rs.39,973.76 million as at the end of the previous year.

The earnings per share translates to Rs. 41.67 as compared to Rs. 28.33 during 2001-02. Internal cash generation during the

year was higher at Rs. 12,762.96 million as against Rs. 10,997.56 million last year. BPC contributed Rs. 128.12 billion to the

exchequer by way of taxes and duties vis-à-vis Rs. 105.14 billion during the last financial year. Borrowings from the banks

reduced to Rs. 17,445.05 million from Rs. 22,265.91 million at the close of the previous year. Loans from World Bank stood

at Rs. 3.18 million (previous year Rs. 26.84 million). Public deposits as at 31st March, 2003 stood at Rs. 3,706.60 million as

compared to Rs. 3,913.56 million at the end of the previous year. The amount of deposits, matured but unclaimed, at the end

of the year was Rs. 14.91 million, which pertains to 123 depositors. The total capital expenditure during the year 2002-03

(including investment in JVCs Rs. 251.50 million) amounted to Rs. 12,745.99 million.

BPC has been bestowed with the Silver Shield award for the best presented accounts for the year ended 31st March, 2002

amongst the Public sector / Joint sector companies and Non –financial Statutory Corporations by the Institute of Chartered

Accountants of India.

REFINERY

During 2002-03, the Refinery had another

excellent year of per formance. Crude

throughput was maintained at 8.71 MMT.

Production of value added products like LPG,

ATF and Bitumen was the highest ever at

377 TMT, 298 TMT and 362 TMT respectively.

The Refinery marginally increased the

distillate yield to 77.1%. The Refiners’ margin

was Rs. 1,350 per MT (US $ 3.71 per barrel).

The performance of the Refinery is explained

in detail in the Management Discussion and

Analysis Report.

MARKETING

On the marketing front as well, BPC continued

its track record of excellent performance. The

sales growth at 3.71% was higher than the industry sales growth. Market share increased from 21.5% to 22.0%. Export sales

were placed at 458 TMT. BPC achieved the highest sales growth in MS at 8.98%, HSD at 2.79%, LPG at 13.53% and FO at 3.45%

compared to the Industry growth of 8.93%, 2%, 11.67% and -4.11% respectively. A major achievement which needs mention

is that BPC’s premium fuel ‘Speed’ has achieved the role of market leader in the premium fuel segment. ‘Speed’ was

launched during July 2002 and in a span of about 9 months, has attracted nearly about 35% of the MS consumers wherever

it is marketed. With deregulation of the market and increasing trend in international prices, marketing margins are on the rise.

However, maintaining constant selling prices for mass consumption domestic fuels, despite input cost increases, has kept

the performance of the marketing function subdued. The performance of each marketing SBU is dealt with in detail in the

Management Discussion and Analysis Report.

Director (F) receives the Silver Shield from ICAI for the best presented

accounts amongst the public and joint sector companies in

2001-2002.

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BPC also has a Product and Application

Development Centre (P&AD) at Sewree, Mumbai

working in the area of improved lubricants and

additives. During the year, BPC pursued collaborative

research programs with national laboratories, IITs

and other institutions. BPC’s R&D Centres are

recognized by the Department of Scientific and

Industrial Research, Government of India.

The areas covered under R&D and the benefits

derived from R&D activities are detailed in Form

B of Annexure A of the Directors’ Report.

INTEGRATED INFORMATION SYSTEMS

The exemplary Enterprise Resource Planning

(ERP) (SAP R/3) implementation in BPC is already well known and has become a benchmark in its category of SAP

implementations. The successful deployment and rollout has fetched BPC a membership in the Global Industry Advisory

Council (GIAC) of SAP. The other members of the Advisory Council are British Petroleum, Chevron, Texaco, Exxon Mobil,

Petronas, Saudi Aramco, Shell, Stat Oil and Conoco Phillips. The Competency Centre has been recognised by SAP as a

‘Certified Customer Competency Centre’. This is a rare honour and BPC is the first oil company in ‘Asia Pacific’ to get this

recognition. This certification is valid for two years. BPC is upgrading its current SAP R/3 version to the Enterprise version,

in order to exploit the new features of the version for business benefits.

Availability of timely information is very important and is one of the critical success factors for any large organization.

Realizing this fact, BPC has gone ahead and implemented many modules under the Business Information Warehouse (BIW)

Project. This will exploit the increasing database within the SAP system for decision making purposes. The Security Audit of

IT infrastructure was completed during the year, which includes the vulnerability mitigation of servers and all communication

equipment. The Information Security Policy is being updated.

To effectively run its complex IT infrastructure, BPC has set up a state-of-the-art level-3 Data Centre at Greater NOIDA. It has

facilities and utilities like any large International Data Centre for continuous (24x7) operations. It will host business critical

servers and have a high speed Internet Gateway

for outside BPC connectivity and will be fully

operational during the year 2003. To provide higher

and reliable bandwidth to its remote locations, BPC

is setting-up a Ku Band VSAT Hub at Greater NOIDA.

The expected cost of this project would be Rs. 150

million and it is expected to be completed by

November 2003. It will also help to connect retail

outlets and LPG distributors to the BPC

communication network in future.

BPC has received the Golden Peacock Award -

2003 instituted by the Institute of Directors, New

Delhi for Quality and Innovative Services in the IT

sector during the year.

of petroleum products in the region. The crude oil import facilities being set up by BORL at Vadinar in Gujarat for the Bina

Refinery project will be augmented suitably to take care of the crude requirement of the U.P. Refinery too. The SPM, COT and

the crude pipeline from Vadinar to Bina will be shared and a new crude pipeline (approx. 400 kms long) will be laid from Bina

to Lohagara.

Approval has been received for diversion of 450 acres of forestland for this Refinery. Acquisition of the balance portion of land

for the Refinery & township is under progress. Environmental clearances for the Refinery, power plant and extension of crude

oil pipeline from Bina to Lohagara have been received. The estimated cost of the Refinery project along with the related

infrastructure and sharing of crude import and transportation facilities (SPM, COT and crude pipeline), amounts to Rs.61,800

million. It is planned to mechanically complete the project within 48 months from the date of receipt of all statutory approvals

and possession of land.

Refinery Modernization Project

In order to upgrade the Mumbai Refinery for

producing environment-friendly products in line

with future specifications and also for reducing

source emissions (SO2), the Refinery

Modernization Project (RMP), with an

approved cost of Rs. 18,310 million is being

implemented. This project, besides improving

distillate yield and energy efficiency of the main

processes, will enhance the crude oil

processing capacity to 12 MMTPA. The process

units comprise a Hydrocracker Unit, Hydrogen

Unit, Crude Distillation Units (CDU) / Vacuum

Distillation Units (VDU), Sulphur Recovery

Units (SRU) and offsite utilities. The project is

progressing as per schedule and is expected

to be commissioned by October 2004.

Extension of Mumbai - Manmad Product Pipeline to Manglia (Indore)

The project envisages laying of a 14" dia, 358 km cross-country product pipeline from Manmad to Manglia (Indore) with

intermediate pumping facilities at Jhulwania and product storage facilities at the Pipeline Receipt Terminal at Manglia. The

pipeline is designed for a throughput of 2.5 MMTPA for transporting petroleum products. The approved cost of the project is

Rs. 3,360.7 million with a foreign exchange component of Rs. 695 million. Work is progressing ahead of schedule and the

project is expected to be completed before the scheduled completion date of April 2004.

RESEARCH & DEVELOPMENT

BPC recognizes R&D as a high priority area in its strategy to have a cutting edge through innovation. The R&D infrastructure

at the Corporate Research & Development Centre (CRDC) at Greater Noida and its research activities have been further

strengthened during the year. The new facilities added include a Hydro-processing Pilot Plant, Reformer Pilot Plant and

advanced analytical equipment such as a Gas Chromatograph-Mass spectrometer (GC-Mass). The major research projects

being pursued are - identification of improved catalysts and additives for Refinery processes; process simulation and

modelling; residue upgradation; technology development for clean fuels; development of value added products such as

polymer modified bitumen etc.

The R&D Sewree Team wins Chairman’s Best Idea of the Year

Award at the Ideas-2002 Contest.

Work on BPC’s Refinery Modernization Project is underway.

Director (F) receives the Golden Peacock Award 2003 for Quality

& Innovative Services in IT from Shri Yash Chopra, film producer.

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consumers were made aware of their rights by providing them with printed leaflets on the Citizens’ Charter. Various consumer

focused activities are further discussed in detail in the Management Discussion and Analysis Report.

VIGILANCE

The ultimate aim of the Vigilance setup is to assist the BPC management to achieve the highest standards of stewardship of

shareholders’ funds towards the best possible use of resources. Awareness being the first step towards action, BPC

enthusiastically organized programmes during Vigilance Awareness Week from 31st October to 6th November, 2002 at all its

locations, with wholehearted participation of the employees. The Vigilance machinery acted effectively on complaints and

information from other sources, with the purpose of safeguarding stakeholder’s interest, ensuring in the process that motivated

complaints, if any, were effectively weeded out. Adequate briefing has been given to the administrative ministry i.e. Ministry

of Petroleum & Natural Gas (MOP&NG) and Central Vigilance Commission to enable them to reach just conclusions.

SUBSIDIARY COMPANIES

Numaligarh Refinery Limited

BPC holds 62.96% of the paid up equity in NRL. The 3 MMTPA Refinery completed one year of Lost Time Accident free

operation on 18th February, 2003 for the first time since commissioning. It also received Management System Certification

with respect to ISO–9001(Quality Management System), ISO-14001(Environment Management System) and OHSAS-18001

(Occupational Health & Safety Management System) from Det Norske Veritas (DNV). NRL also achieved the distinction of

receiving International Safety Rating System (ISRS) – Level 8 from DNV, one of the most prestigious Loss Control Management

System benchmarking tools. The crude oil processed during the year was 1.88 MMT, as compared to 2.31 MMT during the

previous year. This is attributed to inadequate availability of North-East crude and consequential fall in supplies from ONGC

and Oil India Limited (OIL). For the year ending 31st March, 2003, NRL achieved a turnover of Rs.28.05 billion and earned a

profit after tax of Rs.1,746.25 million as against a turnover of Rs. 22.61 billion and profit after tax of Rs.1,229.79 million for the last

year. The proposed dividend stands at Rs.0.72 per share as against a dividend of Rs. 0.51 per share paid for the previous year.

INDUSTRIAL RELATIONS

The Industrial Relations situation was peaceful and cordial during the year 2002-03. Special programmes on Transformational

Leadership were organised during the year for employees who are in leadership roles of BPC’s Unions. Subsequent to the

Long Term Settlement signed in 2001, redundant work practices at many operating locations were eliminated, resulting in

greater operational efficiency and improved productivity. There is constant endeavour to shift the work force from back-end

to value added, new front-end jobs, so as to maximize manpower utilization.

FULFILLMENT OF SOCIAL OBLIGATIONS

In its endeavour to fulfill social responsibilities, BPC undertook welfare activities in many underdeveloped villages adopted

by it. Financial assistance was provided to various institutions to support their welfare activities. During the year, stitching

machines for sal leaf were provided to women at Sandhamara village in the Nayagarh District of Orissa, to make them

economically self reliant. For preventing sea erosion to Satpatti village at Palghar, BPC sponsored construction of an anti-sea

erosion bund wall at a cost of Rs. 22.5 million.

BPC sportspersons continued to excel and bring laurels in sports. Devendra Joshi, BPC’s Billiard/Snooker player was awarded

the prestigious Arjuna Award by the Government of India in September 2002 for excellence in sports. Jwala Gutta and Shruti

Kurien won the Senior National Badminton and National Games Women’s Doubles Title at Guwahati in January 2003 and

Hyderabad in December 2002 respectively. Neelima Chowdary won the National Games Singles (Badminton) title. Poulomi

Ghatak has been selected to represent India at the Asian Table Tennis Championships at Bangkok. All of them also represented

India in their respective sports at the Commonwealth Championships at Manchester. S. Kidambi represented India at the Asian

Individual Chess Championships at Doha, Qatar in February 2003. Abhijit Kale was selected for the triangular one day series in

Bangladesh in April 2003 and for the India “A” team on the tour to West Indies in February/March 2003.

Details relating to employees belonging to Scheduled Caste (SC), Scheduled Tribe (ST) and Other Backward Classes (OBCs)

are given in Annexure C.

A special recruitment drive was undertaken to recruit physically challenged persons for fulfilling the obligations under the

“Persons with Disabilities”, (Equal Opportunity, Protection of Rights and Full Participation) Act 1995.

IMPLEMENTATION OF THE OFFICIAL LANGUAGE POLICY

The Official Language Implementation Committees set up at various levels, to promote the use of Hindi at work, reviewed

from time to time the progress made in Official Language Implementation. Hindi Workshops were conducted regularly. All

publicity materials were prepared in bilingual forms. Various competitions and cultural programmes were organised at

locations all over the country, on the occasion of Hindi Fortnight, which was celebrated from 14th - 28th September , 2002. BPC

was accorded the Millennium Rashtriya Rajbhasha Shield Honour for promotion of Hindi by Rashtriya Hindi Academy.

Rajbhasha Shri & Rajbhasha Kirti Honours were conferred on two senior staff by Bharatiya Rajbhasha Vikas Sansthan,

Dehradun. BPC’s Ahmedabad Territory Office bagged the first prize in the entire Western Region among all Public Sector

Undertakings for doing excellent work in Hindi.

CITIZENS’ CHARTER

Citizens’ Charter, a tool for ensuring transparency in educating and communicating with customers about their rights, apart

from listing various infrastructure / services being offered to customers, is always in the forefront of all BPC’s activities. The

financial year was very eventful for BPC, particularly from the point of view of enhanced customer service standards. The

Grievance Redressal Mechanism was also fully established and positioned at various consumer contact points. While

conducting safety clinics at different levels, apart from the usual health, safety and environment messages, Bharatgas

The BPC Board Members and Company Secretary, representatives from KRL and NRL, and Secretary (P&NG),Shri B.K. Chaturvedi strategize for the future.

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transportation through this mode is intended to provide a competitive edge vis-à-vis other modes of transportation. Petronet

CCK Ltd. registered a turnover of Rs. 145.79 million and a loss of Rs.101.08 million for the year ended 31st March, 2003.

Petronet LNG Limited

PLL, a joint venture company, was set up for importing LNG and setting up LNG terminals at Dahej and Kochi, to supply natural

gas for generation of power. It was promoted by BPC, IOC, ONGC and Gas Authority of India Limited (GAIL) - public sector

companies contributing equally with 50% equity- and balance 50% equity to be raised over time from private/public sector

power plants, fertilizer units and other industries, of which Gaz de France holds 10% equity. So far, BPC has contributed

Rs.275 million in PLL. PLL has signed a long-term Sale Purchase Agreement with Ras Gas of Qatar to supply LNG to

regassification terminals, initially at Dahej and then Kochi, for a period of 25 years for a quantity of 7.5 MMTPA. Almost 74 %

of the overall construction work is complete at Dahej as at end March 2003, and in line with the schedule, supply of LNG at

Dahej is expected to commence from December 2003.

Indraprastha Gas Limited

IGL is a joint venture company set up with GAIL as the other partner, for implementing the project for supply of CNG to the

household and automobile sectors in Delhi. BPC has invested Rs.315 million in IGL, which amounts to 22.5% of its equity.

Besides commissioning over 100 CNG stations, IGL has laid considerable infrastructure for supply of piped natural gas as

also connections to numerous domestic and commercial consumers. IGL registered a turnover of Rs. 3,543.50 million for the

year 2002-03 as compared to Rs. 1,286.57 million in the previous year. The profit after tax for the year 2002-03 was Rs.539.83

million as compared to Rs. 65.36 million in the previous year.

Petronet CI Limited

Petronet CI Limited is a joint venture company set up for laying a pipeline of about 1760 kms for evacuation of petroleum

products from Refineries at Jamnagar/Koyali to feed the various consumption zones in Central India. BPC has equity

participation of 11%, aggregating to Rs. 4.51 million. The project was to be implemented on Build Own Operate and Transfer

(BOOT) basis, for which the bids invited evoked a poor response. The viability of the pipeline is being reviewed by the

promoters, considering recent developments.

VI e Trans Private Limited

An investment of Rs.1 million, amounting to 33.33% of the total equity of VI e Trans Pvt. Ltd. was made in May, 2001. The company

is engaged in providing logistic support systems for the Indian surface industry and its users, with the help of electronic and

physical infrastructure and web-based systems. With certain further initiatives, and opening of 203 tracking stations across the

country (including 137 in BPC’s petrol pumps), the company is expected to make further progress. The company registered a

turnover of Rs. 7.75 million and registered a loss of Rs.14.85 million for the year ended 31st March, 2003, vis-a-vis a turnover

of Rs.2.24 million and a loss of Rs.33.04 million in the previous year. Although the company’s gross revenue

increased substantially during the current year, it will require some more time to stabilize in terms of profitability.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

The details regarding energy conservation, technology absorption and foreign exchange used and earned as required by

Section 217(1)(e) of the Companies Act, 1956, are given in Annexure A.

MEMORANDUM OF UNDERSTANDING WITH MINISTRY OF PETROLEUM & NATURAL GAS

BPC, for the fourteenth successive year, has entered into a Memorandum of Understanding with the MOP&NG for the year

2003-04. For the 12th consecutive year (year ending March 2002), BPC has achieved an ‘Excellent’ rating and received a Merit

Certificate for the year. For 2002-03, based on an internal evaluation of performance, BPC once again merits an ‘Excellent’

rating subject to approval by the Government of India.

Kochi Refineries Limited

BPC holds 54.81% of the paid up equity of KRL. During the year, KRL concluded the configuration study for Capacity Expansion-

cum-Modernization Project, which is proposed to be implemented in two phases. It involves inter-alia, implementation of

facilities required for eventually upgrading MS and HSD to conform to Euro-III norms, expansion of crude oil refining capacity

by 2.5 MMTPA and modernization of the Refinery to reduce operating costs. The capital outlay is envisaged at approximately

Rs.18,000 million.

KRL was adjudged the ‘Second Best Performer’ among the Refineries under group I for safety performance during the year

2001-02. It has also decided to engage the SAP/R3 software by way of an Integrated Refinery Information System and

considerable progress has been made. KRL achieved a turnover of Rs.104.80 billion for the year 2002-03 as against Rs.67.58

billion in the previous year. Profit after tax for the year 2002-03 was Rs.4,560.17 million as compared to Rs.687.66 million in the

previous year. KRL has declared a dividend of 100% for the year 2002-03 against 22% paid for the previous year.

JOINT VENTURES

Bharat Shell Limited

Bharat Shell Limited (BSL), a joint venture between BPC

and Shell Overseas Investment BV (Shell) of Holland,

markets Shell branded lubricants. During the financial year,

BSL achieved sales of Rs.2,467.05 million as compared to

Rs.2,611.29 million during the previous year. BSL has made

a marginal profit of Rs.62.86 million for the current year

against a loss of Rs.591.05 million in the previous year

(which included extraordinary loss of Rs.455.57 million on

sale of the LPG business). BSL also had a foray in the LPG

business. However, consequent to losses resulting from

closure of this business, BSL has applied for and received

the Delhi High Court permission to reduce its paid up capital

from Rs.10 per share to Rs.2.50 per share. As a result, the

face value of BPC investment stood reduced to Rs.245

million from Rs.980 million.

Petronet India Limited

Petronet India Limited (PIL), a joint venture company in which BPC has 16% equity participation, with investment of Rs.160

million, was formed as a non-Government financial holding company, to give impetus to the development of pipeline

networks throughout the country. PIL is facilitating pipeline access on a common carrier principle, through its joint ventures

for the pipelines put up by them, viz. Vadinar-Kandla (Sikka-Kandla section) and Kochi–Karur pipelines. PIL registered a gross

revenue of Rs.44.45 million against Rs.74.39 million in the previous year; correspondingly, the profit after tax was Rs.10.81

million against Rs.25.50 million in the previous year.

Petronet CCK Limited

Petronet CCK Ltd. is a joint venture company between BPC and PIL, in which BPC has 26% equity, amounting to Rs. 260

million. During the year, it completed its financial closure by raising its paid up capital to Rs.1000 million with induction of 3

additional investors viz. State Bank of India, Infrastructure Development Finance Company Ltd. (IDFC) and KRL. Petronet CCK

Ltd. also commenced commercial pumping from September 2002. Pumping till March 2003 amounted to 0.60 MMT. Pipeline

Director (HR) inaugurates the Mathura Housing Complex.

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DIRECTORS

Shri U. Sundararajan, Chairman & Managing Director, retired on 30th June, 2002, on attaining the age of superannuation. The

Directors have placed on record their gratitude for guidance received by the Board from Shri U. Sundararajan as Chairman &

Managing Director. Shri M.B.Lal, Director (Refineries) relinquished the office of Director (Refineries) on 4th June, 2002 on his

appointment as the Chairman & Managing Director, Hindustan Petroleum Corporation Limited. The Directors have placed on

record their appreciation of varied contributions and valuable services rendered by him in various capacities. Shri Naresh

Narad, on completion of his tenure as Special Secretary, Ministry of Petroleum & Natural Gas, resigned from Directorship of

BPC with effect from 11th November, 2002. The Directors have placed on record their appreciation of the valuable contributions

made and guidance given by Shri Naresh Narad, for the development and progress of BPC’s business.

Shri M.S.Srinivasan, Additional Secretary, Ministry of Petroleum & Natural Gas, was appointed as Additional Director under

Article 77A of the Articles of Association of the Company with effect from 3rd December, 2002. Shri S. Radhakrishnan,

Executive Director (Marketing Coordination) was appointed as Additional Director under Article 77A of the Articles of

Association, with effect from1st November, 2002. Shri Radhakrishnan also assumed the office of Director (Marketing) from

that date, in pursuance of his appointment by the President of India. Shri M. Rohatgi, Executive Director (Refinery) was

appointed as Additional Director under Article 77A of the Articles of Association, with effect from 14th November, 2002.

Shri Rohatgi assumed the office of Director (Refineries) from that date, in pursuance of his appointment by the President of

India. All the above three Directors, having been appointed as Additional Directors, hold office till the ensuing Annual General

Meeting. Notices under Section 257 have been received, proposing their names for appointment as ‘Directors retiring by

rotation’ at the ensuing Annual General Meeting.

As required under Section 256 of the Companies Act, 1956, Shri Ashok Sinha, Shri S.A.Narayan and Dr. B. Mohanty will retire

by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment as Directors at the

said Meeting.

STATUTORY AUDITORS

M/s V. Sankar Aiyar & Company, Chartered Accountants, Mumbai, were appointed as Statutory Auditors for the year 2002-03

by the C&AG under the provisions of Section 619(2) of the Companies Act, 1956. They will hold office till the ensuing Annual

General Meeting. The C&AG will be approached for the appointment of Statutory Auditors for the financial year 2003-04.

ACKNOWLEDGEMENTS

The Directors convey their appreciation of the valuable services rendered by employees at all levels, without whose valuable

contributions the excellent performance of BPC would not have been possible.

The Directors place on record their deep appreciation towards BPC’s valued customers for their continued cooperation,

patronage and confidence and look forward to the continuance of this mutually supportive relationship in future.

The Directors also gratefully acknowledge the support and guidance received from various ministries of the Government of

India, particularly from the Ministry of Petroleum & Natural Gas, in BPC’s operations and developmental plans.

The Directors sincerely thank BPC’s dealers, distributors, contractors and suppliers for their contribution to its success.

The Directors express their sincere thanks to each and every shareowner whose enthusiasm, dedication, commitment and

cooperation has made the achievement of a satisfying performance possible.

For and on behalf of the Board of Directors

Sd/-

Mumbai S. Behuria

17th July, 2003 Chairman & Managing Director

PARTICULARS OF EMPLOYEES UNDER SECTION 217(2A)

As there are no employees who are drawing the specified remuneration, particulars of employees under Section 217(2A) of

the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 for the year ended

31st March, 2003 are not required to be given.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the Report on Corporate Governance,

together with the Auditors’ Certificate regarding Compliance of the Code of Corporate Governance, is annexed as Annexure B.

The Annual Report also contains a separate section on

Management Discussion and Analysis. The forward

looking statements made in the Management Discussion

and Analysis Report are based on certain assumptions

and expectations of future events. The Directors cannot

guarantee that these assumptions and expectations are

accurate or will materialise.

BPC has received the Golden Peacock Award for

Excellence in Corporate Governance for the year 2001-02,

in the PSU/Large category, from the Institute of Directors.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956,

the Directors of BPC confirm that:

The financial statements are prepared in conformity with

the Accounting Standards issued by the Institute of Chartered Accountants of India and the requirements of the Companies

Act, 1956, to the extent applicable to BPC, on the historical cost convention, as a going concern and on accrual basis. There

are no material departures from prescribed Accounting Standards in the adoption of the accounting standards. The accounting

policies used in the preparation of the financial statements have been consistently applied, except where otherwise stated in

the Notes on Accounts.

The Board of Directors and the management of BPC accept responsibility for the integrity and objectivity of these financial

statements. The estimates and judgements relating to the financial statements have been made on a prudent and reasonable

basis, in order that the financial statements reflect in a true and fair manner, the form and substance of transactions, and

reasonably present BPC’s state of affairs and profits for the year. To ensure this, BPC has taken proper and sufficient care in

installing a system of internal control and accounting records, for safeguarding assets and for preventing and detecting frauds

as well as other irregularities, which is reviewed, evaluated and updated on an ongoing basis. BPC’s internal auditors have

conducted periodic audits to provide reasonable assurance that the established policies and procedures of the company have

been followed. However, there are inherent limitations that should be recognised in weighing the assurance provided by any

system of internal controls.

The financial statements have been audited by the Statutory Auditor– M/s. V. Sankar Aiyar & Co, Chartered Accountants.

The Audit Committee of the Board meets periodically with the internal auditors and the statutory auditors to review the manner

in which the auditors are performing their responsibilities, and to discuss auditing, internal control and financial reporting

issues. To ensure complete independence, the statutory auditors and the internal auditors have full and free access to the

members of the Audit Committee to discuss any matter of substance.

BPC receives the Golden Peacock Award for Corporate

Governance from Hon’ble Minister of Labour, Shri Sahib

Singh Varma.

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ANNEXURE A

Efforts made by BPC in regard to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo,

which are required to be given under Section 217 (1)(e) of the Companies Act,1956, are as under :-

A. CONSERVATION OF ENERGY

(i) Energy Conservation measures taken:

Energy conservation efforts received continuous focus both in terms of improvement in operations/maintenance

as well as development of new projects. Continuous monitoring of fuel consumption and hydrocarbon loss is

undertaken using sophisticated instruments and data acquisition system. An elaborate energy accounting system

and Management Information System are an important feature of BPC’s Refinery.

(ii) Additional investments and proposals, if any, being implemented for and impact of the measures for reduction of

consumption of energy and consequential impact on the cost of production of goods.

The following energy conservation and loss control measures were adopted during the year at a cost of about

Rs. 7.2 million which have resulted in a fuel & loss saving of about 301 MT per annum equivalent to

Rs. 3.75 million per annum.

(a) Conversion of one fixed roof tank to a fixed cum internal floating roof type on light hydrocarbon service.

(b) Installation of secondary vapour seals in seven floating roof tanks on light hydrocarbon service.

(c) Provision of Fibre Reinforced Plastic (FRP) blades for eighteen air fin cooler fans in the Heavy Crude Unit

(HCU).

A Joint Energy Audit of BPC Refinery, Mumbai was carried out by representatives from M/s. Center for High

Technology (CHT), MOP&NG. Also as a part of Oil Conservation Fortnight, a Joint Oil Conservation Survey in the

area of steam leaks was carried out during January, 2003 with external members nominated by M/s. CHT.

During the next three years, the Refinery has planned to implement the following energy conservation and loss

control projects at an estimated cost of Rs. 21.5 million :

a. Provision of Fibre Reinforced Plastic (FRP) blades for air fin coolers in the Catalytic Cracking Unit (CCU),

Fluid Catalytic Cracking Unit (FCCU) and Aromatic Units.

b. Installation of secondary vapour seals in eleven floating roof tanks on crude oil and light hydrocarbon service.

c. Conversion of one fixed roof tank to fixed cum internal floating roof type on light hydrocarbon service.

In addition, the Refinery is installing highly energy efficient equipments as a part of the on-going Refinery

Modernization Project (RMP).

(iii) Details regarding total energy consumption and energy consumption per unit of production etc. are given in the

prescribed Form A, annexed hereto.

B. TECHNOLOGY ABSORPTION

The Refinery is undertaking the following projects to obtain the benefits of the latest technological developments and

advances:

• Revamping of FCCU by incorporating advanced Feed Injection Technology for improving FCCU yield. The following

technology has been obtained for the project:

Advanced Feed Injection Technology: M/s. Stone & Webster, USA.

• As a part of the Refinery Modernization Project (RMP), a Hydrocracker unit is being set up to produce superior

quality middle distillates and reduce overall SO2 emissions from the Refinery. The following Licenses have been

obtained for the project:

Hydrocracker : Chevron Lummus Global, USA

Hydrogen : Haldor Topsoe, Denmark

Sulphur Recovery : Delta Hudson, Canada

Details regarding the efforts made in technology absorption as per the prescribed Form B are annexed hereto.

C. FOREIGN EXCHANGE EARNINGS / OUTGO

(i) Activities relating to exports; initiatives taken to increase exports; development of new export markets for products

and services; and export plans:

(a) Exports

During the year there has been a significant increase in exports of products by BPC which amounted to

457.77 TMT realizing an exports proceeds of US$ 104.47 million (Rs. 5,070.87 million) which is an increase

of 395% in quantity and 574% in value vis-à-vis 2001 – 02. In addition, BPC successfully exported 58.60 TMT

of Naphtha on behalf of NRL and 16 TMT of Furnace Oil on behalf of KRL.

With a view to develop the export market and enable higher export realisation, BPC has undertaken activities

like improvement of quality specifications, increased parcel size, enlistment with importers in the neighbouring

countries, identification of actual users, etc.

(b) Import of Base Oils

During the year 2002-03, BPC impor ted 7.7 TMT of Base Oils amounting to US$ 2.76 million

(Rs. 133.68 million).

(c) Import of Crude Oil

The total import of crude oil for BPC & KRL was 7.71 MMT amounting to F.O.B. cost of US$ 1,512 million

(Rs. 73,008 million) during the year 2002-03. Import for BPC was 3.25 MMT amounting to F.O.B. cost of

US$ 630 million ( Rs 30,400 million).

(ii) The details of foreign exchange earnings and outgo are given below:

Rupees in million

2002-03 2001-02

Earnings in Foreign Exchange 11,913.11 6,554.09

– includes receipt of Rs 5,415.00 million (Rs 4,316.47 million) in Indian

currency out of the repatriable funds of foreign airline customers.

Foreign Exchange Outgo 32,895.92 1,039.72

– on account of purchase of raw materials, capital goods, chemicals,

catalysts, spare parts, international trading activities.

ANNEXURE TO THE DIRECTORS’ REPORT

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FORM A

Form for disclosure of particulars with respect to conservation of energy

A. Power & Fuel Consumption 2002-03 2001-02

1. Electricity

a. Purchased

Units (million KWH) 0.35 1.92

Total Amount (Rs. million) 75.62 72.78

Rate/Unit (Rs./KWH)* 217.62 37.90

b. Own Generation

Through Steam Turbine/Generator/

Captive Power Plant (CPP)

Units (million KWH) 289.86 289.91

Units per Ton of Fuel 2,725.02 2,681.42

Cost/Unit (Rs./KWH)** 3.04 2.00

2. Coal Nil Nil

3. Furnace Oil/Liquid Fuel

LSHS Qty - MT 168,646 153,075

Total amount (Rs. million) 1,520.48 1,113.10

Avg. Rate (Rs./Unit) 9,015.80 7,271.62

IBP-60 Qty - MT 8,409 8,454

Total amount (Rs. million) 106.66 87.72

Avg. Rate (Rs./Unit) 12,683.55 10,375.60

4. Others/Internal Generation

External Fuel :

Bombay High Associated Gas (BHAG)

Qty - (MT) 1,045 791


Average Rate (Rs./Unit) 4,238.82 4,210.93

Internal Fuel :

Refinery Gas Qty - (MT) 87,816 99,301



Pressure Swing Adsorption (PSA)

Off Gas Qty - (MT) 11,581 11,789



FCC Units Coke Qty - MT 85,717 89,811



* Cost per unit of power purchased has increased due to increase in demand charges and lower purchase of power from

TATA in 2002-03 as compared to 2001-02.

** Cost per unit of power generation in CPP has increased due to increase in fuel cost, increase in duty on power, etc.

B. Energy Consumption per unit of production

Unit Stds. if any 2002-03 2001-02

#

Production of Petroleum products MT 8,221,095 8,279,117

Electricity KWH / MT 35.30 35.25

LSHS / IBP-60 Kg/MT 21.54 19.51

Gas (Excluding CPP) Kg/MT 12.22 13.51

FCC Units Coke Kg/MT 10.43 10.85

# No fixed consumption parameter can be attributed to a particular product as the product pattern of the Refinery is governed

by supply / demand scenario of products and Government directives. It is also a function of quantity / type of crude

processed, planned shutdown of processing units for maintenance / inspection and severity of operations of processing

units which varies widely.

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x) The following new products were developed:

a) Speed - the first branded gasoline fuel in the country with the largest market share and offering advantages

of increased mileage, smoother drivability and reduced emission levels to the user.

b) High performance petrol engine oil developed for latest generation cars with potential to extend the oil and

engine life.

c) Customized rust preventive oils.

d) Improved grades of engines oil for stationary gas engines.

e) Five exclusive grades for Defence as an indigenous alternative.

f) Improved OEM specific hydraulic oils.

g) Alternate formulations for seven existing grades with cost advantage and flexibility in operation.

3. Future Plan of Action

a) Intensifying the program of identification and evaluation of new improved catalysts, and additives to maximize

yields/quality from catalytic processes in the Refinery.

b) Upgradation of the bottom of barrel including improved/multi-grade bitumens, emulsified bitumens.

c) Development of new processes for ultra low sulphur MS and HSD.

d) Enlargement of crude basket and optimization of its processing in the Refinery.

e) Value added products/solvents from the Refinery streams.

f) Bio-technological processes including bio-desulphurization.

g) Setting up of Engine Test Lab at CRDC for product development and performance evaluations.

h) Developing the following grades / products :

i) High performance diesel engine oil.

ii) Increasing of portfolio of rust preventive oils.

iii) High performance greases.

iv) Exclusive grades for Defence.

v) Alternate formulations for existing grades.

vi) Bearing oil for steel plants.

vii) Radiator coolant.

4. Expenditure on R&D during 2002-03

(Rs. in million)

a) Capital Expenditure 125.41

b) Revenue/Recurring Expenditure 64.41

c) Total Expenditure 189.82

d) Total R&D Expenditure as a % of total turnover Negligible

FORM B

Form for disclosure of particulars with respect to Technology Absorption

RESEARCH & DEVELOPMENT (R&D)

1. Specific areas in which R&D is being carried out by the company:

i) Catalysts and catalytic processes.

ii) Residue upgradation.

iii) Detailed crude evaluation.

iv) Value added products.

v) Modelling and simulation of Refinery processes.

vi) Studies on emission reduction from transportation fuels.

vii) Corrosion and Antifoulant studies.

viii) Analytical methods development.

ix) Product and application development:

a) Branded premium petrol viz. Speed.

b) High performance engine oil for gasoline and diesel.

c) Customer specific rust preventive oils.

d) Gas engine oil for stationary natural gas engines.

e) Exclusive lubricant grades for Defence.

f) Original Equipment Manufacturer (OEM) specific hydraulic oils.

g) Alternate formulations for existing lubricant grades.

2. Benefits derived as a result of above R&D:

i) Improved cost effective catalyst selected and conditions for usage optimized for CCU.

ii) Developed process for polymer modified bitumen and plans initiated for commercialization.

iii) Detailed crude evaluation data generated on crude oils being processed / likely to be processed in the Refinery so

as to aid optimization of Refinery operations and products quality.

iv) Through use of additives, improved quality LSHS developed.

v) Model developed for fluid catalytic cracking process simulation / optimization and successfully used for identifying

optimal conditions for one of the fluid cracking units in the Refinery.

vi) Data on fuel efficiency improvement as well as emission improvements gathered and analyzed to optimize

blending dosages of Methyl Tertiary Butyl Ether (MTBE) in Gasoline.

vii) Corrosion in Naphtha Hydro Desulphurization and Sour Water Stripper of DHDS studied and preventive measures

identified.

viii) Performance evaluations of various antifoulants used for fouling control in LR heat exchangers carried out.

ix) Developed methods for identification and quantification of additives in branded fuels.

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ANNEXURE B

Report on Corporate Governance

Being an investor friendly Company, BPC has always looked at Corporate Governance practices as a means of

maximization of stakeholders’ wealth. The Corporate Governance in BPC is not restricted to implementation of the

Code for the sake of fulfilling the requirements of the Securities and Exchange Board of India (SEBI) but the same is

followed in letter and spirit. The interest of all the stakeholders, including the shareholders, employees, customers and

the Government exchequer, are given paramount importance while taking commercial decisions. BPC has received

the Golden Peacock Award for excellence in Corporate Governance for the year 2001-02, in the PSU/Large category,

from the Institute of Directors.

1. Company’s Philosophy on Code of Governance

BPC’s corporate philosophy on Corporate Governance has been to ensure fairness to the stakeholders through

transparency, full disclosures, empowerment of employees and collective decision making.

2. Board of Directors

BPC being a Government Company, the Government has decided the composition of the Board of BPC, which comprises

five Whole-time (Executive) Directors including the Chairman & Managing Director, three Part-time (Ex-Officio) Directors

and four Part-time (Independent) Directors.

As per the Articles of Association of the Company, the number of Directors shall not be less than three and more than

twelve. As on 31st March 2003, there were eleven Directors on the Board comprising five Whole-time (Executive)

Directors, and six Non-Executive Directors i.e. three Part-time (Ex-Officio) Directors and three Part-time (Independent)

Directors. Hence, the Non-Executive Directors had a majority strength on the Board. Meetings of the Board and of the

shareholders were chaired by the Chairman & Managing Director.

During the year 2002-03, none of the Non-Executive Directors of BPC had any pecuniary relationship / transaction with

the Company.

None of the Directors held either membership of more than 10 Board Committees or Chairmanship of more than 5

Committees (as specified in Clause 49) across all the Companies in which he was a Director.

The required information as enumerated in Annexure I to the Clause 49 of the Listing Agreement is made available to

the Board of Directors.

The details regarding the Board Meetings; Directors attendance thereat and the Annual General Meeting; Directorships

and Committee positions held by the Directors are as under :-

Board Meetings

Nine Board Meetings were held during the financial year on the following dates:-

3rd June 2002 26th June 2002 31st July 2002 19th August 2002 29th September 2002

29th October 2002 10th December 2002 24th January 2003 14th March 2003


TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Efforts, in brief, made towards technology absorption, adaptation and innovation

BPC has undertaken the following projects to obtain the benefits of the latest technological developments and advances:

• Revamping of FCCU by incorporating advanced Feed Injection Technology from M/s. Stone & Webster, USA for

improving FCCU yield.

• As a part of RMP, the Hydrocracker unit is being set up to produce superior quality of middle distillates and reduce

overall SO2 emissions from the Refinery.

2. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development,

import substitution, etc.

Benefits derived as a result of the above efforts are given in seriatim:

• Yield improvement

• Reduction of overall SO2 emissions from the Refinery and manufacture of superior quality of middle distillates.

3. Information regarding imported technology (imported during last five years reckoned from the beginning of the

financial year).

(a) Technology Imported:

• Reduction of Sulphur content in HSD from 1% weight Sulphur to 0.25 % weight Sulphur by adopting the

following technologies:

� Hydro-Desulphurisation technology from M/s. Universal Oil Products (UOP), USA.

� Technology for production of Hydrogen from M/s. Haldor Topsoe, Denmark.

� Maximum Claus Recovery Concept (MCRC) technology for enhanced recovery of sulphur from

off-gases from M/s. Delta Hudson, Canada, through M/s. Engineers India Limited (EIL).

� Production of superior quality harder grade Bitumen by adapting “BITUROX” technology from

M/s. Porner, Austria.

� FCC – Feed Injection Technology from M/s Stone & Webster.

(b) Year of Import:

i. Hydro-Desulphurisation Technology for HSD 1999

Hydrogen Production Technology 1999

MCRC Technology 1999

ii. BITUROX Technology 2000

iii. Stone & Webster Feed Injection Technology 2001

(c) Has Technology been fully absorbed?

Yes.

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

Not applicable.

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Dire

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i) Review of the Company’s financial and risk management policies.

j) Examining the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders

(dividend) and creditors.

Five meetings of the Audit Committee were held during the financial year on the following dates:-

20th June 2002 23rd July 2002 25th October 2002 25th November 2002 14th February 2003

Attendance at the Audit Committee Meetings :-

Names of the members No. of meetings attended % Attendance at the Last

Annual General Meeting

Prof. K. Vasudeva 5 100 Attended

Chairman

Dr. P.N. Khandwalla 5 100 Attended

Member

Shri P.P. Kaliaperumal 5 100 Attended

Member

The Committee at its meetings held on 25th October 2002 and 29th May 2003, reviewed the Half Yearly Financial Statements

for the half year ending 30th September 2002 and the Annual Financial Statements for the year ending 31st March 2003,

respectively, before the same were submitted to the Board for approval.

4. Remuneration Committee

BPC being a Government Company, appointment and remuneration of Whole-time Directors are determined by the Government

through the Ministry of Petroleum & Natural Gas. The Part-time (Ex-Officio) Directors do not receive any remuneration from the

Company. The Part-time (Independent) Directors receive sitting fees of Rs.5,000 for each Board/Committee meeting attended by

them. However, the Board at the meeting held on 14th March 2003 constituted the Remuneration Committee comprising one Part-

time (Ex-Officio) Director as the Chairman and two Part-time (Independent) Directors as members, to formulate and review

policies related to remuneration / perquisites / incentives to the Whole-time (Executive) Directors and below Board level

Executives. The quorum for the meetings of the Committee is two members in which the presence of the Part-time (Ex-Officio)

Director and one Par t-time (Independent) Director is essential. Presently, the Committee is functioning with

Shri M.S. Srinivasan, Additional Secretary, MoP&NG as Chairman of the Committee and Dr. P. N. Khandwalla and

Prof. K. Vasudeva, Par t-time (Independent) Directors as members. Shri Ashok Sinha, Director (Finance) and

Shri S.A. Narayan, Director (Human Resources) are the permanent invitees for the meetings of the Committee. The Remuneration

Committee at its meeting held on 25th April 2003 reviewed the activities of the Human Resources function.

3. Audit Committee

BPC took the initiative to introduce Corporate Governance in the organisation during the year 1996 itself by constituting

the Audit Compliance Committee. The said Committee was reconstituted and renamed as the Audit Committee in the

year 2000 and the role, powers and functions of the Audit Committee were described and approved by the Board.

The Audit Committee comprises all the four Non-Executive (Independent) Directors. The quorum for the meetings of the

Committee is two members. Presently, the Committee is functioning with three members namely, Prof. K. Vasudeva

who is the Chairman of the Committee, Dr. P.N. Khandwalla and Shri P.P. Kaliaperumal. The knowledge of Finance &

Accounting of Dr. P.N. Khandwalla, who is a Chartered Accountant and M.B.A., supplements effective functioning of the

Audit Committee.

Shri Ashok Sinha, Director (Finance) and Dr. B. Mohanty, Director are permanent invitees at the meetings of the

Committee. Shri J.Ravichandran, ED(Audit) coordinates the meetings of the Audit Committee and also attends the said

meetings as permanent invitee. In addition, the other Whole-time Directors attend the meetings when the items

pertaining to their functions are considered. The Statutory Auditors also attend the meetings, on invitation, while the

Half Yearly and Annual Financial Statements are reviewed by the Committee.

The role and responsibilities of the Committee include the following :-

a) Overseeing the Company’s Financial Reporting Process and the disclosure of financial information to ensure that the

financial statements are correct, sufficient and credible.

b) Recommendation for fixation of Audit Fee.

c) Review with management the Half Yearly and Annual Financial Statements before submission to the Board.

d) Review of adequacy of Internal Control Systems with the management, External and Internal Auditors.

e) Review of adequacy of the Internal Audit function, including the structure of the Internal Audit department etc.

f) Review of findings of the Internal Auditors and the implementation of recommendations on significant audit findings.

g) Review of findings of any internal investigations by the Internal Auditors into matters where there is suspected fraud

or irregularity or failure of Internal Control Systems of material nature etc.

h) Review of the nature and scope of audit with the External Auditors before the audit commences and post audit review

of areas of concern.

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5. Investors’ Grievance Committee

The Committee, comprising Prof. K. Vasudeva, Director and Shri Ashok Sinha, Director (Finance), monitors the

shareholders'/investors' complaints and redressal of their grievances. Prof. K. Vasudeva is the Chairman of the

Committee. The Committee, at its meeting held on 14th February 2003, reviewed the services to the shareholders/

investors including response to complaints / communications, status of pending dividend payments and expressed its

satisfaction on the performance of the Investors Relation department of the Company.

Shri D.M. Naik Bengre, Company Secretary, acts as the Compliance Officer for matters related to investor relations.

During the year, there was no complaint to SEBI by any investor against BPC. However, one complaint is pending with

SEBI for the last two years as the matter related to ownership of shares is in dispute between the transferor and the

transferee. Transfer formalities are kept in abeyance as the Bombay High Court had ordered 'status quo' in the matter.

There were two complaints from investors received through the Stock Exchange, Mumbai with regard to non-receipt of

dividend and Annual Report for the year 2001-02 and the same were dealt with appropriately to the satisfaction of the

investors.

All valid share transfer requests received during the year were duly processed and approved within the stipulated

period of 30 days. 8 share transfer requests in physical form were received from 20th March 2003 to 28th March 2003

and the same were processed in the month of April 2003, however within the stipulated time period of 30 days from the

date of receipt.

6. Annual / Extraordinary General Meetings

Venue

Nehru Centre Auditorium,

Discovery of India Building,

Dr. Annie Besant Road,

Worli, Mumbai 400018

Y.B. Chavan Auditorium

Yeshwantrao Chavan Pratishthan,

General Jagannath Bhosale Marg,

Mumbai 400021

47th Annual General Meeting

Extraordinary General Meeting



Date and Time of the Meeting

28th September 2000

at 10.30 a.m.

21st November 2000

at 10.30 a.m.

26th September 2001

at 11.00 a.m.

25th September 2002

at 10.30 a.m.

During the year 2002-03, a Special Resolution for amendment to the Memorandum of Association, under Section 17 of

the Companies Act, 1956, by way of addition to the Object clause for carrying out new business related to grocery, was

approved by the shareholders by way of Postal Ballot as required under Section 192A of the said Act. Shri S.M. Weling,

practising Company Secretary, was the Scrutinizer for conducting the Postal Ballot.

5819 Ballot papers were received from the shareholders representing in all 23,20,30,143 equity shares (77.34% of

equity). Out of the same, 5500 Ballots representing 23,19,42,821 equity shares (77.31% of equity) were in favour and

195 Ballots representing 54,932 equity shares (0.02% of equity) were against the Special Resolution. 124 Ballots

representing 32,390 equity shares (0.01% of equity) were rejected being invalid. Accordingly, approval of the shareholders

to the Special Resolution was announced at the Annual General Meeting held on 25th September 2002.

a) Details of remuneration paid to the Whole-Time Directors during the financial year 2002-03 are as follows:-

Names of Directors

Shri S. BehuriaChairman & ManagingDirector

Shri Ashok SinhaDirector (Finance)

Shri S.A. NarayanDirector (HumanResources)

Shri S. RadhakrishnanDirector (Marketing)w.e.f. 1st November2002

Shri M. RohatgiDirector (Refineries)w.e.f. 14th November2002

Shri U. SundararajanChairman & ManagingDirector(upto 30th June 2002)

Shri M.B.LalDirector (Refineries)(upto 4th June 2002)

All elements of

remuneration packagesof the Directors,i.e. salary, benefits,

bonus, pension etc.

Rs.

946574.20

827976.04

799850.41

319355.80

353530.36

769515.87

160958.15

Details of fixedcomponent andperformance

linked incentives

Rs.

FixedComp : 654319

PLIS : 82507.20

FixedComp : 639921.79

PLIS :80288.45


PLIS : 78731.09

FixedComp : 256355

PLIS 33629.80


PLIS : 30738.38


PLIS : 20322.30


PLIS : 12947.82

OtherBenefits

Rs.

209748

107765.80

94941.94

29371

88735.56

485765.30

19709

Service Contracts, notice period,severance fees

On contract for five years which isrenewable for further similarperiods.

Notice period : Three months









Retired on attaining the age ofSuperannuation i.e. 30th June 2002.

Relinquished the office of Directorw.e.f. 4th June 2002 on hisappointment as C&MD of HPCL.

BPC has not introduced any Stock Options Scheme PLIS : Performance Linked Incentive Scheme

b) During the year, the Part-time (Independent) Directors Dr. P.N. Khandwalla, Shri P.P. Kaliaperumal and Prof. K. Vasudevareceived sitting fees of Rs. 70,000, Rs. 65,000 and Rs, 75,000 respectively, for attending the meetings of the Board /Committees.

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Shri S. Radhakrishnan was appointed as Director (Marketing) on 1st November 2002 under Article 77A of the Articles

of Association of the Company, in accordance with the intention of the Government of India. Being an additional Director,

he holds office upto the date of the Annual General Meeting. The Company has received a notice, u/s 257 of the

Companies Act, 1956, from a member, proposing his name as Director of the Company.

6. Shri M. Rohatgi

Shri M. Rohatgi is a B.Tech. (Chem) from Indian Institute of Technology, Delhi and M.B.A. from Faculty of Management

Studies, University of Delhi. He has wide experience in Refinery Management. He is also a Director on the Boards of

Kochi Refineries Ltd, Numaligarh Refinery Ltd and Bharat Oman Refineries Ltd.

Shri M. Rohatgi was appointed as Director (Refineries) on 14th November 2002 under Article 77A of the Articles of

Association of the Company, in accordance with the intention of the Government of India. Being an additional Director,

he holds office upto the date of the Annual General Meeting. The Company has received a notice, u/s 257 of the

Companies Act, 1956, from a member, proposing his name as Director of the Company.

7. Disclosures and Compliance

Except where the Company has incurred expenses on behalf of joint ventures as co-promoter and the same are

recoverable from the joint venture companies, there were no transactions of material nature with the promoters or the

Directors or the management, subsidiaries etc, that may have potential conflict with the interests of the Company at

large. The details of 'Related Party Disclosures' are shown in Note 13 forming part of Accounts.

BPC has been particular in adhering to the provisions of the laws and guidelines of regulatory authorities including SEBI

and covenants in the agreements with the Stock Exchanges and Depositories. During the last three years there was no

instance of non-compliance of any provisions of laws, guidelines from regulatory authorities and the matters related

to capital markets.

8. Code of Conduct, Procedure and Disclosures for Prevention of Insider Trading and Code of Corporate Disclosure

Practices

Pursuant to the requirements of SEBI (Prohibition of Insider Trading) Regulations, 1992 as amended, the Company has

adopted a ‘Code of Conduct, Procedure and Disclosures for Prevention of Insider Trading in the Securities of Bharat

Petroleum Corporation Limited’ and ‘Code of Corporate Disclosure Practices’. Shri D.M. Naik Bengre, Company

Secretary, has been appointed as the Compliance Officer for implementation of the said Codes.

9. Means of Communication of Financial performance

In order to give wide publicity and to reach the shareholders and other investing public, the Half-yearly and Quarterly

Results were published in various editions of 12 newspapers having wide circulation across the country, such as The

Economic Times, The Times of India, The Hindu, The Financial Express etc. A report on limited review of the Financial

Results for the Half Year ended 30th September, 2002 was obtained from the Auditors of the Company and filed with the

Stock Exchanges. The Financial Statements for the first quarter ended June 2002, half year ended September 2002 and

third quarter ended December 2002 were sent to the individual shareholders at their registered addresses.

Periodical financial per formance of the Company is displayed on the website of the Company at

www.bharatpetroleum.com and on the Electronic Data Information Filing and Retrieval System (EDIFAR),

website of SEBI.

10. Management Discussion & Analysis Report

The Annual Report also contains a detailed chapter on Management Discussion & Analysis.

6A Brief Resumes of Directors seeking re-appointment

1. Shri Ashok Sinha, Director (Finance)

Shri Ashok Sinha, Director (Finance) is a B.Tech. (Electrical) from the Indian Institute of Technology, Kanpur and M.B.A.

from Indian Institute of Management, Bangalore. He has 26 years of experience in the Petroleum Industry. He has been

conferred with the India CFO Award- 2001 for Information and Knowledge Management by the Economic Intelligence

Unit (EIU) India and American Express. He is also a Director on the Boards of Kochi Refineries Ltd., Numaligarh

Refinery Ltd., Petronet LNG Ltd., Bharat Oman Refineries Ltd. and Bharat Shell Ltd.

Shri Ashok Sinha was appointed as Director (Finance) on 22nd November 1996. He is liable to retire by rotation at the

ensuing Annual General Meeting, and being eligible, offers himself for re-appointment.

2. Shri S.A. Narayan, Director (Human Resources)

Shri S.A. Narayan, Director (Human Resources), is a B.Sc.(Hons) and M.A. in Personnel Management from Tata

Institute of Social Sciences, Mumbai. He has also completed his L.L.B. from University of Mumbai. Shri S.A. Narayan

has handled different aspects of personnel and HR in BPC during the last 25 years, besides another five years in private

and multinational Corporations. He is also a Director on the Boards of Kochi Refineries Ltd., Numaligarh Refinery Ltd.

and Petronet India Ltd.

Shri S.A. Narayan was appointed as Director (Human Resources) on 10th June1998. He is liable to retire by rotation

at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment.

3. Dr. B. Mohanty

Dr. B. Mohanty, Joint Advisor (Finance), Ministry of Petroleum & Natural Gas, is a member of the Indian

Economic Service. He is an M.Sc. from Glasglow Caledonian University, U.K. and Ph.D in Economics from Tokyo

University of Agriculture. He has held senior positions in various Ministries of the Government of India. He is also

a Director on the Boards of Hindustan Petroleum Corporation Ltd., Balmer Lawrie Investments Ltd., and Guru

Gobind Singh Refineries Ltd.

Dr. B. Mohanty was appointed as Director on 16th November 1998. He is liable to retire by rotation at the ensuing Annual

General Meeting, and being eligible, offers himself for re-appointment.

4. Shri M.S. Srinivasan

Shri M.S. Srinivasan, Additional Secretary, Ministry of Petroleum & Natural Gas, is a senior IAS officer and B. Tech in

Civil Engineering from the Indian Institute of Technology, Madras and M. P. A. from Harvard University, U.S. He is also

a Director on the Boards of Indian Oil Corporation Ltd. and Hindustan Petroleum Corporation Ltd.

Shri M.S. Srinivasan was appointed as Additional Director w.e.f. 3rd December 2002, by the Board of Directors, under

the provisions of Article 77A of the Articles of Association of the Company, in accordance with the intention of the

Government of India. Being an Additional Director, he holds office up to the date of the Annual General Meeting. The

Company has received a notice, u/s 257 of the Companies Act, 1956, from a member, proposing his name as Director

of the Company.

5. Shri S. Radhakrishnan

Shri S. Radhakrishnan is a B.Tech (Mech.) from Indian Institute of Technology, Madras and M.B.A. from Indian Institute

of Management, Bangalore. He has wide ranging experience in marketing of petroleum products. Prior to appointment

as Director (Marketing), he was holding the position of Managing Director in Bharat Shell Ltd. He is also a Director on

the Boards of Kochi Refineries Ltd., Numaligarh Refinery Ltd., Petronet India Ltd. and Indraprastha Gas Ltd.

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Registrar and Transfer Agents Share Transfers are handled in-house i.e. at the Investor Relations Department, Bharat

Bhavan III, Ground Floor, Walchand Hirachand Marg, Ballard Estate,

Mumbai 400001.

Share Transfer System A Committee comprising two Whole-time Directors considers the requests for transfer/

transmission of shares, dematerialisaton of shares etc. A Committee comprising four

Directors i.e. two Whole-time Directors and two Part-time (Ex-officio) Directors

considers request for issue of share certificates. Transfers in physical form are

registered after ascertaining objections, if any, from the transferors and no valid

transfer applications are kept pending beyond the stipulated period of thirty days.

Requests for dematerialization of shares are processed and confirmation is given to

the respective depositories National Securities Depository Limited (NSDL) and Central

Depository Services India Limited (CDSL) within 15 days.

Distribution of shareholding Shareholder No. of Shares % of

as on 31st March , 2003 Held Holding

1) Government of India 198600060 66.20

2) Unit Trust of India 18380697 6.13

3) Life Insurance Corporation of India 19057867 6.35

4) Other Financial Institutions/Banks/Mutual Funds 15077789 5.03

5) Foreign Institutional Investors 30637289 10.21

6) Private Corporate Bodies 4160055 1.39

7) Non Resident Indians/Overseas Corporate Bodies 241738 0.08

8) Employees 3353800 1.12

9) Others 10490705 3.49

300000000 100.00

Distribution of shareholding on number of shares held by shareholders and shareholding

pattern are given in Annexure III

Dematerialization of shares Out of the shares held by the shareholders other than the Government, 98.43% are held

and liquidity in dematerialised form as on 31st March, 2003.

Outstanding GDRs /ADRs/ Warrants The Company has not issued any GDRs /ADRs/ Warrants etc.

Plant Locations Refinery : Bharat Petroleum Corporation Limited

Mahul, Mumbai 400 074

Lubricant : Bharat Petroleum Corporation Limited

Plants Wadilube Installation

Mallet Road, Mumbai - 400 009

Bharat Petroleum Corporation Limited

24, Parganas, Budge - Budge 743 319

Address for correspondence Investor Relations Department, Bharat Petroleum Corporation Limited,

Bharat Bhavan III, Ground Floor, Walchand Hirachand Marg,

Ballard Estate, Mumbai 400 001

Telephone No. 022-22713001-004

11. General Shareholder Information

SEBI has included BPC shares for compulsory trading in dematerialised form even for retail investors. Due to special

efforts made to educate the shareholders regarding the benefits of holding shares in dematerialised form, the Company

has achieved dematerialisation of 98.43% of its shares listed for trading on the Stock Exchanges (excluding shares held

by Government of India).

Annual General Meeting : Monday, 18th August 2003 at 10.30 a.m. at the Y.B. Chavan Auditorium, Yeshwantrao

Date, Time and Venue Chavan Pratishthan, General Jagannath Bhosale Marg, Mumbai 400 021.

Financial Calendar BPC follows the financial year from April to March. The Unaudited Results for the first

three quarters and the Audited Results for the year ended 31st March, 2003 were taken

on record by the Board and published on the following dates:-

Quarter Ended Date of Board Meeting Date of Publication

Apr-June 2002 31st July 2002 1st August 2002

July-Sept 2002 29th October 2002 30th October 2002

Oct-Dec 2002 24th January 2003 25th January 2003

Year ended

31st March 2003 29th May 2003 30th May 2003

Dividend Payment Dates

Interim Payment of Interim Dividend at Rs. 2.00 per share was approved by the Board at its

meeting held on 24th January 2003. The record date for deciding the entitlement of the

shareholders/beneficial owners was fixed as 4th February 2003 and Dividend was

paid on 12th February 2003 as per the entitlement.

Final The Board has recommended the Final Dividend @ Rs. 13.00 per share for the

consideration of the shareholders at the ensuing Annual General Meeting. If approved

by the shareholders, the same will be paid on or before 25th August 2003.

Date of Book Closure 18th July 2003 to 14th August 2003 (both days inclusive) for the purpose of determining

the names of shareholders/beneficial owners who would be entitled to the notice

of Annual General Meeting and Final Dividend on equity shares for the year

ended 31st March 2003, if approved by the shareholders.

Listing on Stock Exchanges The Company's shares are listed on :

Stock Exchange Security Code

The Stock Exchange, Mumbai 500547

The Delhi Stock Exchange Association Ltd. 02087

The Calcutta Stock Exchange Association Ltd. 12072

The Madras Stock Exchange Ltd. BPO

The National Stock Exchange of India Ltd. BPCL

The Listing Fees have been paid for the year 2003-04 to all the above Exchanges.

ISIN Number for NSDL & CDSL

for equity shares INE029A01011

Market Price Data : High, low

during each month in the last

financial year Please see Annexure I

Performance in comparison to

broad based indices i.e.BSE100 Please see Annexure II

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Annexure III

Distribution of Shareholding as on 31st March 2003

No. of equity shares held No. of Shareholders No. of Shares % to the total

Upto 5000 52662 13030327 4.34

From 5001 10000 161 1140775 0.38

From 10001 50000 183 4226993 1.41

From 50001 100000 52 3898519 1.30

From 100001 500000 77 16688242 5.56

From 500001 1000000 15 11329488 3.78

From 1000001 2000000 9 11446211 3.81

From 2000001 3000000 3 7246365 2.42

From 3000001 & above 5 230993080 77.00

53167 300000000 100.00

Shareholding Pattern of BPC as on 31st

March 2003

Annexure I

Market Price Data : Prices of BPC Shares Traded on the Major Stock Exchanges

Month(s) Mumbai Stock Exchange National Stock Exchange

(April 2002 - 2002-03 2002-03(March 2003)

High Low Monthly High Low MonthlyVolume Volume

(Rs. per (Rs. per (Rs. per (Rs. pershare) share) share) share)

April 351.40 273.15 11978974 350.70 267.85 21364693

May 313.50 241.50 14039734 312.85 228.35 27716407

June 294.45 242.10 9971279 296.00 241.10 21408082

July 311.00 267.00 14595406 311.40 262.00 29324345

August 314.95 265.05 10595176 320.00 265.10 21474371

September 276.90 171.05 29883138 277.00 170.80 62478857

October 216.90 168.10 25035719 220.00 169.35 52067443

November 196.80 178.70 11112212 197.90 156.40 24304600

December 233.40 191.50 35288692 233.90 192.00 77801241

January 240.70 188.20 24871641 240.40 185.00 62713672

February 228.60 192.10 10202705 228.60 192.00 28761389

March 228.00 205.05 7406645 232.00 204.80 16315835

Annexure IIPerformance in Comparison to Broad Based Indices i.e. BSE 100

Share Price Monthly High Quotation / BSE 100

500

400

300

200

100

0

3500

3000

2500

2000

1500

1000

500

0Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sept-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03

BP

C S

har

e P

rice

BPC Share Price BSE 100

351.4

313.5294.45 311 314.95

276.9

216.9

196.8

233.4 240.7 228.6 228.0

BS

E 1

00

66.20% Government of India

6.13% Unit Trust of India

6.35% Life Insurance Corporation of India

10.21% Foreign Institutional Investors

0.08% Non Resident Indians / Overseas Corporate Bodies

5.03% Other Financial Institutions / Banks / Mutual Funds

1.39% Private Corporate Bodies

1.12% Employees

3.49% Others

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AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

To

The Members ofBharat Petroleum Corporation Limited

We have examined the compliance of conditions of Corporate Governance by Bharat Petroleum Corporation Limited, for theyear ended 31st March 2003, 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 limitedto a review of the procedures and implementation thereof, adopted by the Company for ensuring the compliance of theconditions of Corporate Governance. It is neither an audit or an expression of opinion on the financial statements of theCompany.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company hascomplied with the conditions of Corporate Governance as stipulated in Clause 49 of the abovementioned Listing Agreement.

As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we have to state that as per therecords maintained by the Investors Grievance Committee, there were no investor grievances against the Company remainingunattended/pending for more than 30 days except in one case, wherein transfer of certain shares remains to be effectedconsequent to restraint order and injunction of the Bombay High Court.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency oreffectiveness with which the management has conducted the affairs of the Company.

For V.SANKAR AIYAR & CO.Chartered Accountants

Sd/-S. VENKATRAMAN

Partner

Place : MumbaiDate : 17th July, 2003

ANNEXURE C

Statement showing the total number of Employees and the number of Scheduled Castes, Scheduled Tribes and Other

Backward Classes amongst them as on 1st January, 2003

Group/ Total No. Scheduled Percentage Scheduled Percentage Other Percentage

Class of Castes to Total Tribes to Total Backward to Total

Employees Employees Employees Classes Employees

(1) (2) (3) (4) (5) (6) (7) (8)

A (I) Other than

lowest rung

of Group A 2876 457 15.89 145 5.04 71 2.47

(ii) Lowest rung

of Group A 820 129 15.73 47 5.73 98 11.95

B 2724 407 14.94 167 6.13 47 1.73

C 3181 578 18.17 224 7.04 114 3.58

D (excluding Safai

Karamcharis) 2836 566 19.96 181 6.38 282 9.94

D (Safai Karamcharis) 95 58 61.05 7 7.37 8 8.42

Group/Class: A - Management; B/C = Skilled/Semi Skilled Workmen; D = Unskilled Workmen

Note: Reservations for OBCs implemented w.e.f. 8th September, 1993.

(b) Particulars of Recruitment During the Period 1st January, 2002 to 31st December, 2002

Vacancies Notified During The Period Vacancies Filled By

Group / Other SC ST Other SC ST

Class Community Community

(1) (2) (3) (4) (5) (6) (7)

A 57 8 3 56 8 4

B 4 — — 3 1 —

C 17 — 1 17 — 1

D (Excl. Safai

Karamcharis) 16 — 2 16 — 2

D ( Safai

Karamcharis) — — — — — —

Statement showing the total number of Employees and the number of Scheduled Castes (SC) and Scheduled Tribes (ST) -

(a) Position as on 1st January, 2003

Group/Class Total No. Of EMPLOYEES BELONG TO

Employees Other SC ST

Community

(1) (2) (3) (4) (5)

A 3696 2918 586 192

B 2724 2150 407 167

C 3181 2379 578 224

D (Excl. Safai Karamcharis) 2836 2089 566 181

D ( Safai Karamcharis) 95 30 58 7


Sd/-

Partner

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No. of No. of STs No. of STs No. of SCs No. of RemarksReservations Candidates Vacancies Candidates Reserva-lapsed Appointed Carried Appointed tionsafter Carrying Forward against LapsedForward for Out of col. 2 Out of col. 3 from the Vacancies afterThree Years Previous Reserved Carrying

Year for SCs in Forward forthe 3rd Yr. Threeof Carry Years

Excess Shortfall Forward+ –

No. of VacanciesReserved for

Scheduled Tribes

9 10 11 12 13 14 15 16

- 3 3 4 1 - - -

- - - - 2 - - -

- 1 1 1 2 - - -

- 2 2 2 9 - - -

- - - - 2 - - -

- 8 8 12 14 - - -

- 1 1 1 10 - - -

- 1 1 1 15 - - -

Statement showing the Number of Reserved Vacancies filled by Members of Scheduled Castes and Scheduled Tribes

during the year 2002

Group/ Total No. Total No. No. of SCs No. of SCs No. of STsClass of of of Candidates Vacancies CandidatesPosts Vacancies Vacancies Appointed Carried Appointed

Occurred Actually Forward againstFilled Out of col. 2 Out of col. 3 from the Vacancies

Previous ReservedYear for SCs in

the 3rd Yr.of Carry

Excess Shortfall Forward+ –

No. of VacanciesReserved for

Scheduled Castes

1 2 3 4 5 6 7 8

POSTSFILLED BYDIRECTRECRUITMENT

Group “A” 68 68 8 8 8 8 -

Group “B” 4 4 - - 1 38 -

Group “C” 18 18 - - - 83 -

Group “D” 18 18 - - - 198 -(Excl. SafaiKaramcharis)

D (Safai - - - - - 52 -Karamcharis)

POSTS FILLEDBY PROMOTION

Group “A” 112 112 16 16 16 1 -

Group “B” 22 22 7 7 6 4 -

Group “C” 6 6 - - - 94 -

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(Rs. in million)

2000-01 2001-02 2002-03ASSETS

(e) Gross Block 81,967.39 92,806.14 99,732.88

(f) Less : Cumulative Depreciation 36,571.43 41,206.55 45,689.18

(g) Net Block 45,395.96 51,599.59 54,043.70

(h) Capital Work-in-progress 6,267.56 4,416.48 9,618.45

(i) Investments 14,073.13 23,394.43 21,062.12

(j) Current Assets, Loans & Advances

(i) Inventories 33,131.75 29,120.91 44,035.80

(ii) Sundry Debtors 10,073.11 9,829.04 8,428.52

(iii) Cash & Bank balances 3,930.09 3,445.09 6,742.56

(iv) Loans & Advances 17,320.97 13,144.32 23,801.37

(v) Other Current Assets 17.12 12.48 11.60

64,473.04 55,551.84 83,019.85

(k) Misc. expenditure not written off — — —

(l) Accumulated loss — — —

TOTAL 130,209.69 134,962.34 167,744.12

(m) Working Capital [j-d(i) – c(vi)] 17,648.28 7,422.48 5,121.25

(n) Capital Employed (g + m) 63,044.24 59,022.07 59,164.95

(o) Net Worth [a + b(i) + b(ii) +b(iv) – k – l] 40,785.46 39,965.40 47,465.99

(p) Networth per Rupee of paid up capital (in Rupees) 13.60* 13.32 15.82

* Post Bonus

2. Ratio Analysis

Some important financial ratios on the financial health and working of the Company at the end of last 3 years are asunder:

(in Percentage)2000-01 2001-02 2002-03

A. Liquidity Ratio

i) Current Ratio [ j / (d(i) + c(vi) ] 137.69 115.42 106.57

ii) Current assets to total net assets 49.51 41.16 49.49

iii) Working capital to capital employed 27.99 12.58 8.66

B. Debt Equity Ratio

[c(i to v but excluding short term loans)/o] 45.95 40.51 32.42

ANNEXURE D

Review of the accounts of Bharat Petroleum Corporation Ltd.

for the year ended 31st March 2003, by the Comptroller and Auditor General of India

Note : Review of accounts has been prepared without taking into account comments under section 619(4) of the CompaniesAct 1956.

1. Financial Position

The table below summarises the financial position of the Company under broad headings for the last three years :

(Rupees in million)

2000-01 2001-02 2002-03

LIABILITIES

(a) Paid Up Capital 3,000.00* 3,000.00 3,000.00

(i) Government 1,986.00 1,986.00 1,986.00

(ii) Others 1,014.00 1,014.00 1,014.00

* Post Bonus

(b) Reserves & Surplus

(i) Free Reserves & Surplus 37,785.46 36,315.40 41,745.99

(ii) Share Premium Account — — —

(iii) Capital Reserve 8.43 8.36 8.29

(iv) Debenture Redemption Reserve — 650.00 2,720.00

(c) Borrowings

(i) From Government of India * 60.26 26.84 3.18

(ii) From Financial Institutions — — —

(iii) Foreign Currency Loans — — —

(iv) Cash Credit 18,000.00 15,265.91 17,445.05

(v) Others 23,494.30 23,164.21 15,383.28

(vi) Interest accrued and due 26.83 30.44 27.08

*Relending of World Bank Loan

(d) (i) Current Liabilities & Provisions 46,797.93 48,098.92 77,871.52

(ii) Provision for retirement benefits 1,036.48 1,413.29 2,074.17

(iii) Deferred tax liability (net) — 6,988.97 7,465.56

TOTAL 130,209.69 134,962.34 167,744.12


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(Rupees in million)Utilisation of Funds

Addition to fixed assets/capital work in progress 12,565.61

Dividend 4,999.69

Decrease in loan funds 5,601.55

Total 23,166.85

6. Working Capital

The working capital of the Company as on 31st March 2001, 2002 and 2003 was Rs. 17648.28 million, Rs. 7422.48million and Rs. 5121.25 million respectively. The decrease in working capital during the current year was mainly dueto increase in Current Liabilities and Provisions offset to an extent by the increase in Inventory holdings, Loans &Advances and Cash & Bank balances.

7. Working Results

The working results of the Company during the last three years are given below :

(Rupees in million)

2000-01 2001-02 2002-03

a) Net Sales (excluding excise duty) 420,058.40 354,925.51 430,139.12

b) Profit before tax 11,131.22 13,267.84 19,935.37

c) Profit after tax excluding dividend tax 8,326.63 8,498.30 12,500.28

8. Inventory

The inventory position as at the end of last three years is as follows : (Rupees in million)

2000-01 2001-02 2002-03

i) Raw Materials 2,869.09 2,451.08 2,761.32

ii) Stores & Spares (including in transit) 519.53 590.02 538.57

iii) Stock-in-Process 635.69 458.31 1,139.24

iv) Finished Goods 28,763.13 25,570.56 39,556.40

v) Packages 344.31 50.94 40.27

a) The stock of raw materials at the close of each year was equivalent to about 0.3 month’s consumption in 2002-03as against 0.4 month’s in 2001-02 and 0.5 month’s in 2000-01.

b) The stores and spares (including packages) at the end of 2002-03 represented 5.5 months’ consumption asagainst 5.6 months’ in 2001-02 and 7.2 months’ in 2000-01.

c) Finished Goods at the end of the year amounted to about 0.98 months’ sales during 2002-03 as against 0.77months’ in 2001-02 and 0.75 months’ in 2000-01.

(in Percentage)

2000-01 2001-02 2002-03

C. Profitability Ratios

a) Profit before tax to

i) Capital employed 17.66 22.48 33.69

ii) Net Worth 27.29 33.20 42.00

iii) Sales including excise duty 2.42 3.33 4.11

b) Profit after tax to Equity (o) excluding 20.42 21.26 26.34dividend tax

c) Earnings per share (in Rupees) 27.76* 28.33 41.67

* Post Bonus

3. Reserves & Surplus

The reserves and surplus of the Company were 15 times its paid up capital as on 31st March, 2003 as against 12times as on 31st March, 2002 and 13 times as on 31st March, 2001.

4. Investments

The Company’s investments reduced from Rs. 23394.43 million as at the end of 31st March, 2002 to Rs. 21062.12million as at the end of 31st March, 2003. The reduction is mainly due to the sale of 6.96% Oil Companies Special Bonds2009 worth Rs. 2600.00 million.

As against weighted average cost of borrowings of 9.93 % (6.28 % post tax), the weighted average yield on investmentsduring the year was 5.18 % (3.27 % post tax).

5. Sources and Utilisation of Funds

Funds amounting to Rs. 23166.85 million from internal and external sources were realised as well as utilised during theyear as per details given below :

(Rupees in million)Sources of Funds

Funds generated from operation :

Profit after tax 12,500.28

Add : Depreciation 4,785.78

Add : Deferred tax 476.59

Add : Loss on sale of assets 7.11 17,769.76

Sale/write off of fixed assets 126.56

Sale of Investments 2,332.31

Decrease in working capital 2,938.22

Total 23,166.85

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COMMENTS OF THE COMPTROLLER & AUDITOR GENERAL OF INDIA U/S 619 (4) OF THE

COMPANIES ACT, 1956 ON THE ACCOUNTS OF BHARAT PETROLEUM CORPORATION LTD. FOR

THE YEAR ENDED 31ST MARCH, 2003.

9. Sundry Debtors

a) The position of sundry debtors for the last three years ending 31st March, 2003 is as follows:

Debts Percentageconsidered of Debtors

Sundry doubtful & to salesYear Debtors provided for (including

(Rs. in Million) (Rs. in Million) excise duty)

2000-01 10712.38 639.27 2.33

2001-02 11075.37 1246.33 2.78

2002-03 10573.10 2144.58 2.18

b) The following table indicates the debts outstanding for more than one year as on 31st March, 2003.

(Rupees in million)Department /Undertakings Others

(i) Debts outstanding for more than one year butless than two years. 161.27 1,133.46

(ii) Debts outstanding for more than two years butless than three years 96.67 135.08

(iii) Debts outstanding for three years and more 432.59 857.93

10. Dues receivable from/payable to Petroleum Planning & Analysis Cell (PPAC)

As of March 2003, the Company has an amount of Rs. 11427.35 million receivable from PPAC towards various regularsettlements. The amount of net outstanding claims/(surrender) as at the end of 3 years is given below.

(Rupees in million)

Balance Claims/ Interest Total AmountYear (Surrenders)

2000-01 9,030.50 321.29 9,351.79

2001-02 2,365.63 628.32 2,993.95

2002-03 10,799.03 628.32 11,427.35

The increase in the dues from PPAC as on 31.03.2003 as compared to the previous year is mainly due to subsidy claims.

11. Dividend

The Company has declared an interim dividend of 20% and also recommended a final dividend of 130% forthe year 2002-03, as against 110% for 2001-02. The dividend payout ratio, calculated as a percentage of totaldividend paid/proposed to profit after tax during the last three years ended 31st March, 2003 was 40.0, 38.8and 29.5 respectively.

Sd/-BALVINDER SINGH

Mumbai Principal Director of Commercial Audit &8th July, 2003 ex-officio Member, Audit Board II

I have to state that the Comptroller and Auditor General of India has no comments upon or supplement to the Auditors’ Report

under Section 619(4) of the Companies Act, 1956 on the accounts of Bharat Petroleum Corporation Limited for the year ended

31st March, 2003.

Sd/-

BALVINDER SINGH

Principal Director of Commercial Audit &

ex-officio Member, Audit Board-II, Mumbai.

Mumbai

8th July, 2003

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TOTAL FUNDS EMPLOYED DISTRIBUTION OF EACH RUPEE EARNED

1,00,000

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

01998-99 1999-00 2000-01 2001-02 2002-03

46,890

60,874

82,37585,450

Deferred Tax Liability(net)

Borrowings

Reserves

Equity

(Rs. in Million)

1,500

28,718

16,672

1,500

33,447

25,927

3,000

37,794

41,581

6,989

36,974

38,487

3,000 3,000

44,474

32,859

7,465

87,798

2001-2002 2002-200376.96 77.76 Raw Materials, Purchase of Products for resale and packages

11.37 10.90 Duties, Taxes etc.

2.55 2.55 Transportation

2.29 2.00 Stores and other operating expenses

1.56 1.32 Employees’ remuneration and other benefits

0.76 0.50 Interest on Borrowings

1.20 0.99 Depreciation

1.19 1.52 Income Tax

0.82 0.92 Dividend

1.30 1.54 Retained Profits

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1994-95 1993-94 1992-93 1991-92 1990-91 1989-90 1988-89 1987-88 1986-87 1985-86 1984-85 1980-81 1976

1891 2610 2685 2062 1397 1008 623 1204 105 67 175 1268 3596

5491 4596 4550 4900 5514 6024 5535 5352 5467 6311 5279 3603 159

7382 7206 7235 6962 6911 7032 6158 6556 5572 6378 5454 4871 3755

8788 8644 8653 8372 8329 8525 7367 7858 6667 7574 6619 5769 4312

32.29 31.20 31.49 32.29 30.87 31.09 29.29 27.83 27.78 28.08 25.75 22.22 19.97

54.62 53.59 53.88 54.95 55.70 57.07 60.12 59.38 60.39 59.35 54.36 55.66 55.93

13.09 15.21 14.63 12.76 13.43 11.84 10.59 12.79 11.83 12.57 19.89 22.12 24.10

5.4 4.7 4.2 4.2 4.5 4.5 5.6 5.6 5.8 6.2 4.5 4.9 5.7

57511 22037 56612 69564 68426 56499 59624 45928 18603 20112 0 0 0

13437 7047 11070 9048 10877 8843 7494 8414 4948 4455 0 0 0

16740 15306 14443 13551 13101 12836 11720 10720 9899 9410 8789 6473 4519

66681 74154 82911 95091 87459 94672 92725 84691 74763 72414 69425 60813 40939

20.2 20.0 19.5 18.8 18.9 18.9 18.7 18.5 18.3 18.7 18.3 17.2 15.3

16 16 14 12 10 10 10 9 9 8 8 7 5

118 117 98 94 83 78 69 69 65 62 60 57 61

16 14 14 13 13 13 12 11 9 8 8 3 2

1.57 1.52 1.37 1.17 1.01 0.91 0.87 0.74 0.75 0.67 0.66 0.66 0.61

4214 4090 4040 4005 3965 3894 3822 3741 3663 3567 3486 3311 3183

16 16 15 15 15 15 14 8 4 2 2 — —

948 866 816 793 767 740 704 651 616 518 409 154 90

5.37 4.78 4.35 4.05 3.77 3.61 3.31 3.03 2.70 2.32 1.96 0.59 0.49

11207 11299 11167 11158 11029 10616 10578 10203 9397 8321 7894 5808 4847

133863 115203 102349 88828 73951 60816 54762 50797 44878 31650 26642 15124 6728

7618 5456 4735 4028 3488 3010 2424 1903 1843 1772 930 394 103

2603 1365 1431 1031 961 1030 789 635 816 776 533 125 24

437 467 383 442 372 314 334 338 342 307 189 38 19

4578 3624 2921 2555 2155 1666 1301 930 685 689 208 231 60

1690 1470 1220 1070 877 440 258 150 82 76 70 127 43

33 21

2921 2175 1701 1485 1278 1226 1043 780 603 613 138 104 17

2002-03 2001-02 2000-01 1999-00 1998-99 1997-98 1996-97 1995-96

1. Crude Oil Processed (000 Tonnes)

Imported 3230 3587 2743 2546 1731 1222 1486 1110

Indigenous 5481 5183 5919 6323 7205 6720 6108 6240

TOTAL 8711 8770 8662 8869 8936 7942 7594 7350

2. Production Quantity (000 KL) 10291 10355 10348 10643 10861 9648 8986 8816

Light Distillates % 34.32 33.51 34.74 32.69 34.85 34.47 32.54 33.27

Middle Distillates % 50.73 50.45 49.43 53.45 53.90 54.29 55.23 54.74

Heavy Ends % 14.95 16.04 15.83 13.86 11.25 11.24 12.23 11.99

3. Fuel and Loss as % of Crude Processed 5.6 5.6 5.4 4.9 4.5 4.8 4.8 5.6

4. Aromatics Production (MT)

Benzene 69798 56360 75293 76351 70496 57169 81533 60575

Toluene 20013 16610 16344 19569 16990 18664 20689 13182

5. Market Sales (000 KL) 25735 24766 24894 24193 22348 20847 20097 18731

6. Lubricants Production (MT) 112730 99875 96624 100396 102684 86951 69164 67876

7. Market Participation % 22.0 21.5 21.4 20.7 20.6 20.5 20.4 20.3

8. Marketing Network

Installations 17 19 19 19 16 16 16 16

Depots 153 171 164 146 131 128 131 122

Aviation Service Stations 19 19 19 19 16 15 16 16

Total Tankages (Million KL) 3.13 3.23 2.94 2.88 2.72 2.30 1.81 1.62

Retail Outlets 4854 4711 4562 4489 4423 4407 4373 4312

Number of LPG Bottling Plants 40 40 38 32 27 21 19 18

LPG Distributors 1828 1729 1421 1345 1200 1179 1146 1062

LPG Customers (No. Million) 16.99 15.28 13.80 11.40 9.11 8.03 6.93 6.02

9. Manpower (Nos.) 12494 12586 12670 12638 12264 12094 11704 11499

10. Sales and Earnings (Figures in Rs. Million)

i) Sales and Other Income * 475844 425597 471532 358911 258299 209187 181564 150234

ii) Gross Profit before

Depreciation, Interest & Tax 27204 21144 20332 17377 15568 12143 9775 9101

iii) Depreciation 4809 4810 6645 6154 4040 3824 2258 2179

iv) Interest 2459 3066 2556 1854 1745 1122 821 394

v) Profit before Tax 19935 13268 11131 9369 9783 7197 6696 6528

vi) Tax 7281 4911 2930 2330 2770 1870 2370 2670

vii) Excess/(Short) provision for Taxation

in earlier years written back/provided for (154) 141 126 (22) 48 (113) (250) -

viii) Profit after Tax # 12500 8498 8327 7017 7061 5214 4076 3858

* Figures from 1986-87 includes Sales to Other Oil Companies.

# After adjusting prior period tax.

PERFORMANCE PROFILE

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1994-95 1993-94 1992-93 1991-92 1990-91 1989-90 1988-89 1987-88 1986-87 1985-86 1984-85 1980-81 1976

27907 23685 20566 17525 15234 13246 11224 9549 7518 6005 4947 963 461

15455 13741 11928 10237 8940 7873 6832 5991 4276 3596 3292 471 226

2578 1838 839 1238 1139 802 314 142 908 1093 583 869 259

18033 15579 12767 11475 10079 8675 7146 6133 5184 4689 3875 1340 485

1500 500 500 500 500 500 279 279 279 279 166 145 145

12455 11021 9010 7475 6140 4962 4057 3070 2062 1496 1035 498 190

13955 11521 9510 7975 6640 5462 4336 3349 2341 1775 1201 643 335

4078 4058 3257 3500 3439 3213 2810 2784 2843 2914 2674 697 150

- - - - - - - - - - - - -

18033 15579 12767 11475 10079 8675 7146 6133 5184 4689 3875 1340 485

5032 3376 2967 2366 2139 2154 1855 1358 1425 1350 650 212 26

15622 9261 8886 7863 6820 4813 4994 3873 3405 2922 2235 1008 281

2724 2362 2042 1600 1971 1361 1199 1100 1156 1030 877 1 22

9.3 8.4 7.8 7.0 6.6 6.1 5.5 4.7 5.2 7.5 4.3 3.2 1.8

22.9 20.7 19.5 20.3 21.1 25.0 28.4 26.7 29.3 41.2 12.1 17.4 6.7

194.8 435.1 340.1 296.9 255.6 245.1 391.7 273.0 216.7 220.2 83.3 71.8 11.5

849.2 2103.1 1748.5 1461.5 1210.2 979.8 1379.7 1021.5 738.9 534.3 689.8 412.4 170.9

50.6 43.1 47.8 44.1 46.5 45.5 44.3 48.4 51.1 49.0 37.5 33.5 21.8

30.4 28.6 29.5 28.0 28.7 25.2 23.8 23.7 19.0 19.0 8.4 19.7 12.6

19.4 17.2 17.2 16.3 17.0 18.5 19.9 19.4 16.7 16.9 5.6 8.9 3.5

0.3 0.4 0.3 0.4 0.5 0.6 0.6 0.8 1.2 1.6 2.2 1.1 0.4

19.48* 43.51 34.01 29.69 25.56 24.51 37.45 28.01 21.71 22.01 6.07 4.68 0.72

93.04@ 230.42 190.21 159.49 132.80 109.24 155.69 120.23 84.04 63.74 52.23 27.97 14.56

2002-03 2001-02 2000-01 1999-00 1998-99 1997-98 1996-97 1995-96

11. What the Company Owned (Rs. Million)

i) Gross Fixed Assets 109351 97222 88235 76295 62228 50463 39491 32502

(including Capital Work-in-Progress)

ii) Net Fixed Assets 63662 56016 51663 45916 37886 30050 22762 17940

(including Capital Work-in-Progress)

iii) Net Current Assets 24136 29434 30712 14958 9004 9832 11695 4622

(including Investments)

Total Assets Net (ii + iii) 87798 85450 82375 60874 46890 39882 34457 22562

12. What the Company Owed (Rs. Million)

i) Share Capital 3000 3000 3000 1500 1500 1500 1500 1500

ii) Reserves and Surplus 44474 36974 37794 33447 28718 23738 19349 15818

iii) Net Worth (i + ii) 47474 39974 40794 34947 30218 25238 20849 17318

iv) Borrowings 32859 38487 41581 25927 16672 14644 13608 5244

v) Deferred Tax Liability (net) 7465 6989 - - - - - -

Total Funds Employed (iii + iv + v) 87798 85450 82375 60874 46890 39882 34457 22562

13. Internal Generation (Rs. Million) 12763 10998 12306 10894 8990 8227 5782 5544

14. Value Added (Rs. Million) 51972 43716 41448 36925 30018 24447 20769 19555

15. Earnings in Foreign Exchange (Rs. Million) 11913 6554 8700 5730 2993 3567 4172 3610

16. Ratios

i) Gross Profit before

Depreciation, Interest & Tax as

% age of Sales and Other Income 5.6 5.3 4.4 5.2 7.1 10.1 9.1 9.6

ii) Profit after Tax as % age of

average Net Worth 28.6 21.0 22.0 21.5 25.5 22.6 21.4 24.7

iii) Profit after Tax as % age of

Share Capital 416.7 283.3 277.5 467.8 470.7 347.6 271.7 257.2

iv) Average Net Worth as % age of

Share Capital 1457.5 1346.1 1262.4 2172.2 1848.5 1536.2 1272.2 1042.4

v) Gross Profit before

Depreciation, Interest & Tax as

% age of Capital Employed 34.8 26.1 26.7 31.1 38.5 34.0 33.0 45.9

vi) Profit before Tax as % age of

Capital Employed 25.5 16.4 14.6 16.8 24.2 20.1 22.6 33.0

vii) Profit After Tax as % age of

Capital Employed (ROCE) 16.0 10.5 10.9 12.5 17.4 14.6 13.8 19.5

viii) Debt Equity Ratio 0.69 0.96 1.02 0.7 0.6 0.6 0.7 0.3

17. Earning per Share (Rupees)

— Pre-Bonus # 83.34 56.65 55.51 46.78 47.07 34.76 27.17 25.72

— Post-Bonus # 41.67 28.33 27.76

18. Book Value per Share (Rupees) 158.25 133.25 135.98@ 232.98 201.45 168.25 139.00 115.45

* Issue of Bonus Shares in the ratio 2 :1.

# After adjusting prior period tax.

@ On Post-Bonus Capital.

PERFORMANCE PROFILE (Contd.)

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1994-95 1993-94 1992-93 1991-92 1990-91 1989-90 1988-89 1987-88 1986-87 1985-86 1984-85 1980-81 1976

(Rs. Million)

2921 2175 1701 1485 1278 1226 1043 780 603 613 138 104 17

2605 1366 1431 1031 961 1028 868 634 861 776 535 128 24

— — — — — — — — — — — — —

— — — — — — — — — — — — 171

— — — — — — — — — — — — —

20 802 — 62 226 403 25 — — 240 746 620 115

788 520 254 373 176 285 214 222 276 328 260 12 11

— — 539 — — — — 546 — — — — —

38 8 41 12 2 26 19 5 — 27 3 1 (75)

6372 4871 3966 2963 2643 2968 2169 2187 1740 1984 1682 865 263

4348 3187 3162 2340 2030 2095 1728 2071 1538 1107 1544 231 26

495 165 165 150 100 100 56 56 39 39 23 20 15

— — — — — — — — — — — — —

— — 245 — — — — 60 71 — — — —

922 722 394 67 275 21 10 — — — 6 — 1

607 797 — 406 238 752 375 — 92 838 109 614 221

6372 4871 3966 2963 2643 2968 2169 2187 1740 1984 1682 865 263

2002-03 2001-02 2000-01 1999-00 1998-99 1997-98 1996-97 1995-96

SOURCES OF FUNDS

OWN

Profit after Tax * 12500 8498 8326 7017 7061 5214 4076 3858

Depreciation 4785 4829 6459 6165 4011 3838 2251 2181

Investment 2332 — — 231 5139 — — 765

Shareholders’ Investment — — — — — — — —

Deferred Tax Provision 477 971 — — — — — —

BORROWINGS

Loans (net) — — 15655 9254 2029 1036 8364 1166

LPG Deposits 1827 1981 3847 3449 1683 2473 1205 971

Decrease in Working Capital 1138 8618 — — — 7746 — —

Adjustment on account of

Deletion/Re-classification etc. 63 59 141 28 17 25 18 51

23123 24956 34428 26144 19940 20332 15914 8992

APPLICATION OF FUNDS

Capital Expenditure 12494 9241 12347 14223 11865 11151 7091 4718

Dividend 4500 3300 2250 1875 1875 750 495 495

Tax on distributed profits 500 — 230 413 206 75 49 —

Repayment of Loans (net) 5629 3094 — — — — — —

Investment — 9321 8638 — — 8356 790 —

Increase in Working Capital — — 10963 9633 5994 — 7489 3779

23123 24956 34428 26144 19940 20332 15914 8992

* After adjusting prior period tax.

SOURCES AND APPLICATION OF FUNDS

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2002-03 2001-02 2000-01 1999-00 1998-99

Light Distillates :

Naphtha 1072 1085 1111 1118 1184

LPG 377 353 365 341 363

Motor Spirit 883 856 847 791 939

Special Boiling Point Spirit/Hexane 31 35 45 45 57

Benzene 70 56 75 76 70

Toluene 20 17 16 20 17

Polypropylene Feedstock 7 4 4 3 1

Others 25 21 19 20 17

Sub Total 2485 2427 2482 2414 2648

Middle Distillates :

Aviation Turbine Fuel 298 279 224 219 200

Superior Kerosene Oil 807 811 766 610 718

High Speed Diesel 2824 2938 2919 3547 3611

Light Diesel Oil 199 112 128 99 90

Mineral Turpentine Oil 105 94 97 124 117

Sub Total 4233 4234 4134 4599 4736

Heavy Ends :

Furnace Oil 608 649 707 566 290

Low Sulphur Heavy Stock 534 615 585 580 626

Bitumen 361 354 295 274 274

Sub Total 1503 1618 1587 1420 1190

Grand Total 8221 8279 8203 8433 8574

Lubricants Production (MT)

2002-03 2001-02 2000-01 1999-00 1998-99

112730 99875 96624 100396 102684

Quantity of LPG Filled in Cylinders (MT)

2002-03 2001-02 2000-01 1999-00 1998-99

1871631 1708370 1573383 1375498 1217009

PRODUCTION (’000 MT)

2002-03 2001-02 2000-01 1999-00 1998-99

Sales Market Sales Market Sales Market Sales Market Sales Market

Share Share Share Share Share

( % ) ( % ) ( % ) ( % ) ( % )

Light Distillates :

Naphtha 1263 17.2 1379 17.2 1326 16.4 1203 15.4 1160 16.6

LPG (Bulk & Packed) 2030 24.9 1788 24.5 1612 24.3 1431 24.2 1211 24.0

Motor Spirit 2384 31.3 2192 31.2 2062 31.1 1825 30.8 1682 30.5

Special Boiling Point Spirit/Hexane 34 38.2 36 37.2 46 43.8 48 40.5 56 39.3

Benzene 66 55.0 59 60.8 78 53.8 74 52.7 70 48.7

Toluene 19 30.2 17 31.5 15 24.6 20 25.8 18 24.9

Polypropylene Feedstock 5 3 4 3 1

Others 54 30 28 20 5

Sub Total 5855 5504 5171 4624 4203

Middle Distillates :

Aviation Turbine Fuel 5 1 7 22.4 506 22.3 509 22.6 486 22.1 456 21.4

Superior Kerosene Oil 1656 16.6 1653 15.9 1791 16.4 1786 16.4 1766 16.4

High Speed Diesel 8853 24.1 8743 23.9 9237 24.2 9214 23.5 8725 23.3

Light Diesel Oil 1 8 1 12.6 132 10.9 152 10.6 171 12.9 157 12.1

Mineral Turpentine Oil 1 0 1 42.1 94 44.8 101 45.3 122 50.2 115 59.0

Sub Total 11308 11128 11790 11779 11219

Others :

Furnace Oil 1331 19.6 1281 18.5 1238 19.4 1168 16.7 954 14.0

Low Sulphur Heavy Stock 8 0 1 17.0 711 15.3 607 12.2 586 12.3 608 13.3

Bitumen 4 4 4 15.8 421 17.4 440 16.6 414 16.4 417 17.1

Lubricants 1 1 7 12.3 105 12.8 99 12.3 104 11.7 101 11.2

Sub Total 2693 2518 2384 2272 2080

Grand Total 19856 22.0 19150 21.5 19345 21.4 18675 20.7 17502 20.6

Note: Market Share is based on Sales Volumes of Public Sector Oil Companies.

SALES VOLUME (’000 MT)

PAGES 82-90_FINAL.p65 7/19/2003, 8:34 PM88-89

Performance Highlights

90

Rs. M

illion2

00

2-0

32001-02

Value o

f Pro

ductio

n (Refinery)

10

77

63

71305

Less : D

irect Materials C

onsum

ed9

69

55

64907

Added V

alue1

08

08

6398

Marketing O

perations

41

16

437318

Value ad

ded

by M

anufacturing &

Trading Operations

51

97

243716

Add : O

ther Incom

e (including

P.Y.A)

35

36

2601

Tota

l Valu

e G

enera

ted

55

50

846317

HOW VALUE IS DISTRIBUTED

Rs. M

illion2

00

2-0

32001-02

1.O

PER

ATION

S

Op

erating &

Service C

osts

21

84

618919

2.EM

PLO

YEES

’ BEN

EFITS

Salaries, W

ages &

Bo

nus4

51

44714

Other B

enefits1

94

36

45

71540

6254

3.P

RO

VID

ER

S O

F CA

PITA

L

Interest on B

orro

wings

24

59

3066

Dividend

50

00

74

59

33006366

4.IN

CO

ME TA

X6

95

93799

5.R

E-INV

ESTM

ENT IN

BU

SIN

ESS

Depreciation

48

09

4810

Deferred Tax

47

7971

Retained P

rofit

75

01

12

78

75198

10979

Tota

l Va

lue D

istribu

ted

55

50

846317

HOW VALUE IS GENERATED

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Auditors’ Report

91

An

nu

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ep

ort 2

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2-2

00

3

AUDITORS’ REPORT TO THE MEM

BERS OFBHARAT PETROLEUM

CORPORATION LIMITED

1.W

e have audited the attached Balance S

heet of Bharat P

etroleum C

orporation Limited, as at 31st M

arch, 2003 and also

the Profit and Loss A

ccount and Cash Flow

Statem

ent of the Com

pany for the year ended on that date annexed thereto.

These financial statements are the responsibility of the C

ompany’s m

anagement. O

ur responsibility is to express an

opinion on these financial statements based on our audit.

2.W

e conducted our audit in accordance with auditing standards generally accepted in India. Those S

tandards require that

we plan and perform

the audit to obtain reasonable assurance about whether the financial statem

ents are free of

material m

isstatement. A

n audit includes examining, on a test basis, evidence supporting the am

ounts and disclosures

in the financial statements. A

n audit also includes assessing the accounting principles used and significant estimates

made by m

anagement, as w

ell as evaluating the overall financial statement presentation. W

e believe that our audit

provides a reasonable basis for our opinion.

3.A

s required by the Manufacturing and O

ther Com

panies (Auditor’s R

eport) Order, 1988, issued by the C

entral Governm

ent

of India in terms of sub-section (4A

) of Section 227 of the C

ompanies A

ct, 1956, we enclose in the A

nnexure a statement

on the matters specified in paragraphs 4 and 5 of the said O

rder.

4.Further to our com

ments in the A

nnexure referred to in Paragraph 3 above w

e report that:

(i)w

e have obtained all the information and explanations, w

hich to the best of our knowledge and belief w

ere

necessary for the purposes of our audit;

(ii)in our opinion, proper books of account as required by law

have been kept by the Com

pany so far as appears from

our examination of those books;

(iii)the B

alance Sheet, P

rofit and Loss Account and C

ash Flow S

tatement dealt w

ith by this report are in agreement

with the books of account;

(iv)in our opinion, the B

alance Sheet, P

rofit and Loss Account and C

ash Flow S

tatement dealt w

ith by this report

comply w

ith the Accounting S

tandards referred to in sub-section (3C) of S

ection 211 of the Com

panies Act, 1956;

(v)on the basis of w

ritten representations received from the D

irectors, other than Governm

ent nominee D

irectors, as

on 31st March, 2003, and taken on record by the B

oard of Directors, w

e report that none of the Directors is

disqualified from being appointed as D

irector under clause (g) of sub-section (1) of Section 274 of the C

ompanies

Act, 1956. The D

epartment of C

ompanies A

ffairs vide their General C

ircular No. 8/2002 dated 22nd M

arch, 2002

have clarified that Governm

ent nominated D

irectors are exempted from

the provision of Section 274(1)(g) of the

Com

panies Act, 1956;

(vi)in our opinion and to the best of our inform

ation and according to the explanations given to us, the said accounts

read with the notes and the significant accounting policies thereon, give the inform

ation required by the Com

panies

Act, 1956, in the m

anner so required and give a true and fair view in conform

ity with the accounting principles

generally accepted in India:

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ANNEXURE TO AUDITORS’ REPORT

(Referred to in paragraph 3 of our report of even date)

1. The Company has maintained proper records showing full particulars including quantitative details and situation of

fixed assets except for items like pipes, valves, meters, instruments and other similar items peculiar to a continuous

process industry. We are informed that fixed assets, other than LPG cylinders with customers, are verified by the

Marketing Division over a two-year period and by the Refinery over a three-year period. In our opinion the frequency

of verification is reasonable. We are informed that there are no material discrepancies as compared to book records

in respect of assets verified during the year.

2. None of the fixed assets have been revalued during the year.

3. The stocks of finished goods, stores, spare parts and raw materials, except those lying with contractors and in transit

have been physically verified during the year by the management. In our opinion, the frequency of physical verification

is reasonable.

4. The procedures of physical verification of stocks followed by the management are reasonable and adequate in

relation to the size of the Company and the nature of its business.

5. The discrepancies observed on physical verification of stocks as compared to book records were not material and

they have been properly dealt with in the accounts.

6. On the basis of our examination of stock records, we are of the opinion that the valuation of stocks is fair and proper

in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year.

7. The Company has taken loans, secured or unsecured, from companies, firms or other parties listed in the register

maintained under Section 301 of the Companies Act, 1956. The rate of interest and other terms and conditions of such

loans are not prima facie, prejudicial to the interests of the Company. We are informed that there are no companies

under the same management as defined under sub section (1B) of Section 370 of the Companies Act, 1956.

8. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties other than to its

joint venture companies as listed in the register maintained under Section 301 of the Companies Act, 1956. The rate

of interest and other terms and conditions of such loans, wherever applicable, are, prima facie, not prejudicial to the

interests of the Company. We are informed that there are no companies under the same management as defined under

sub-section (1B) of Section 370 of the Companies Act, 1956.

9. Employees and other parties, including companies in which the Company is a member, to whom loans and advances

in the nature of loans have been given by the Company are generally repaying the principal amount and interest

wherever stipulated except in case of a joint venture company which has not paid interest and in the case of a loan to

another joint venture company amounting to Rs. 30.70 million against which Rs. 6.50 million has been received and

for the balance Rs. 24.20 million necessary provision has been made by the Company.

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2003;

(b) in the case of the Profit and Loss Account, of the profit for the year ended on that date and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For V. SANKAR AIYAR & CO.

Char tered Accountants

Sd/-

S. VENKATRAMAN

Par tner

Place : New Delhi

Dated : May 29, 2003

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20. The Company is not a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the

Sick Industrial Companies (Special Provisions) Act, 1985.

21. In respect of Company’s trading activities, damaged goods, which were not significant, have been determined and

necessary provision has been made in the accounts.



Sd/-

S. VENKATRAMAN

Par tner

Place : New Delhi

Dated : May 29, 2003

10. In our opinion and according to the information and explanations given to us, having regard to the explanation that

some of the items purchased are of a special nature and suitable alternative sources do not exist for obtaining

comparable quotations, there is an adequate internal control procedure commensurate with the size of the Company

and the nature of its business, for the purchase of stores, raw materials including components, plant and machinery,

equipment, other assets and for the sale of goods.

11. According to the information and explanations given to us, purchases of goods/materials and sale of goods/materials

and services exceeding Rs.50,000 in value for each type thereof, made in pursuance of contracts or arrangements

entered in the register maintained under Section 301 of the Companies Act, 1956, have been made at prices which are

reasonable having regard to prevailing market prices for such goods/materials/services and/or at prices at which

such transactions for similar goods/materials/services are entered with other parties.

12. As explained to us, the Company has a regular procedure for determination of unserviceable or damaged stores, raw

materials and finished goods. Adequate provision has been made in the accounts for the loss arising on the items so

determined.

13. In respect of deposits accepted from the public, the Company has complied with the directives issued by the Reserve

Bank of India and the provisions of Section 58A of the Companies Act, 1956 and the rules framed thereunder.

14. As explained to us, the Company has maintained reasonable records for sale and disposal of realisable by-products

and scrap.

15. The Company has an adequate internal audit system commensurate with its size and the nature of its business.

16. We have broadly reviewed the books of account maintained by the Company pursuant to the order made by the Central

Government for the maintenance of cost records in respect of two products, namely Benzene and Toluene, under

Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed accounts and

records have been made and maintained. We have however, not made, nor are required to make any examination of

these records with a view to determine whether they are accurate or complete.

17. The Company is generally regular in depositing Provident Fund and Employees’ State Insurance dues with the

appropriate authorities.

18. There were no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty and excise

duty which have remained outstanding as at 31st March, 2003, for a period of more than six months from the date they

became payable.

19. According to the information and explanations given to us, no personal expenses of employees or directors have been

charged to revenue account other than those payable under contractual obligations or in accordance with generally

accepted business practices.

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2001-02SCHEDULE Rs. Million Rs. Million

INCOMESale of products N 485,023.53 398,294.77Miscellaneous income O 3,465.42 2,653.98Increase/(Decrease) in Inventory P 14,666.77 (3,369.95)TOTAL 503,155.72 397,578.80

EXPENDITUREPurchase of products for resale 294,959.92 238,325.45Raw materials consumed Q 98,690.56 66,380.99Packages consumed 476.68 507.93Duties, taxes etc. and other chargesapplicable to products 53,169.27 45,590.40Transportation 12,449.90 10,201.54Consumption of stores, spares and materials R 183.46 243.13Power and Fuel S 510.98 454.10Employees’ remuneration and other benefits T 6,456.97 6,253.72Interest U 2,459.46 3,066.47Other operating and administration expenses V 9,124.12 8,423.98Depreciation 4,809.24 4,809.85TOTAL 483,290.56 384,257.56

Profit 19,865.16 13,321.24Prior period income/(expenses) net W 70.21 (53.40)

Profit before tax 19,935.37 13,267.84Provision for Taxation- Current Tax 6,805.00 3,940.00- Deferred Tax (Net) 476.59 970.61Excess/(Shor t) provision for Taxationin earlier years written back/provided for (153.50) 141.07

Profit after tax 12,500.28 8,498.30Transfer to Debenture Redemption Reserve 2,070.00 650.00Balance brought forward 0.01 0.01Disposable Profit 10,430.29 7,848.31

Appropriations :Interim dividend paid (after deduction of tax at source) 600.00 —Final (proposed) dividend(subject to deduction of tax at source) 3,900.00 3,300.00Corporate Dividend Tax on proposed Dividend 499.69 —

4,999.69 3,300.00Transfer to General Reserve 5,430.59 4,548.30

Balance Carried to Balance Sheet 0.01 0.01Earnings per Share- Basic 41.67 28.33- Diluted 41.67 28.33Statement of Significant Accounting Policies andNotes forming par t of Accounts X

PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2003

For and on behalf of the Board of Directors As per our attached repor t of even date

Sd/- For and on behalf ofS. BEHURIA V. SANKAR AIYAR & CO.Chairman and Managing Director Char tered Accountants

Sd/- Sd/- Sd/-ASHOK SINHA D. M. NAIK BENGRE S. VENKATRAMANDirector (Finance) Company Secretary Par tner

New DelhiDated : 29th May, 2003

31/03/2002

SCHEDULE Rs. Million Rs. Million

I. SOURCES OF FUNDS

1. Shareholders’ funds :

Share Capital A 3,000.00 3,000.00

Reserves and Surplus B 44,474.28 36,973.76

47,474.28 39,973.76

2. Loan funds : C

Secured Loans 24,425.31 22,423.19

Unsecured Loans 8,433.28 16,064.21

32,858.59 38,487.40

3. Deferred tax liability (net) 7,465.56 6,988.97

TOTAL 87,798.43 85,450.13

II. APPLICATION OF FUNDS

1. Fixed Assets : D

Gross block 99,732.88 92,806.14

Less : Depreciation 45,689.18 41,206.55

Net block 54,043.70 51,599.59

Capital work-in-progress E 9,618.45 4,416.48

63,662.15 56,016.07

2. Investments F 21,062.12 23,394.43

3. Current assets, loans and advances :

Inventories G 44,035.80 29,120.91

Sundry debtors H 8,428.52 9,829.04

Cash and bank balances I 6,742.56 3,445.09

Other current assets J 11.60 12.48

Loans and advances K 23,801.37 13,144.32

83,019.85 55,551.84

Less : Current liabilities and provisions :

Liabilities L 73,389.39 44,785.60

Provisions M 6,556.30 4,726.61

79,945.69 49,512.21

Net current assets 3,074.16 6,039.63

TOTAL 87,798.43 85,450.13

Statement of Significant Accounting

Policies and Notes forming par t of

Accounts. X



Sd/- Sd/- Sd/-ASHOK SINHA D. M. NAIK BENGRE S. VENKATRAMANDirector (Finance) Company Secretary Par tner

New DelhiDated : 29th May, 2003

BALANCE SHEET AS AT 31ST MARCH, 2003

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31/03/2002Rs. Million Rs. Million

Secured Loans

Bonds

BPCL Millennium Bonds Series - I (Option I) - Redeemable at par on 1stDecember 2006 with put and call option on 1st December 2004 (Securedby mor tgage created on cer tain immovable proper t ies of theCorporation)* 2,500.00 2,500.00

BPCL Millennium Bonds Series - I (Option II) - Redeemable at par on 15thDecember 2004 with put and call option on 15th December every year till2003 (Secured by mor tgage created on cer tain immovable proper ties ofthe Corporation) — 150.00

BPCL Debentures 2008 - Redeemable at par on 1st June 2008 with put and calloption on 1st June 2006 (Secured by mortgage created on certain immovableproperties of the Corporation) ** 4,450.00 4,450.00

Banks

Working Capital Loans/Cash Credit 17,445.05 15,265.91(Secured in favour of the participating banks ranking pari passu interalia byhypothecation of raw materials, finished goods, stock-in-process, book debts,stores, components and spares and all movables both present andfuture)

Interest accrued and due 27.08 30.44

Others

Term Loan - (Refinanced through Government of India) (Secured byhypothecation of cer tain plant and machinery at Refinery) 3.18 26.84[Due for repayment within one year Rs 3.18 million (previous yearRs. 23.66 million)]

24,425.31 22,423.19* Interest payable at the rate of 12% per annum.

** Interest payable at the rate of 9.95% per annum on Rs. 3,450 million and

at 9.90% per annum on Rs. 1,000 million.

SCHEDULE ‘C’ — LOAN FUNDS

Unsecured Loans

Public deposits 3,706.60 3,913.56

[Due for repayment within one year Rs. 1388.93 million(previous year Rs. 1733.96 million)]

Short Term

From Banks # — 7,000.00

Others 4,726.68 5,150.65

[Due for repayment within one year Rs. 700.22 million(previous year Rs. 423.97 million)]

8,433.28 16,064.21Total 32,858.59 38,487.40

# Includes Rs. Nil (previous year Rs. 7,000 million) raised through Commercial Paper. Maximum amount raised during the

year through Commercial Paper Rs. 7,000 million (previous year Rs. 10,500 million).

31/03/2002

Rs. Million Rs. Million

Authorised

300 million equity shares of Rs.10 each 3,000.00 3,000.00

3,000.00 3,000.00

Issued, subscribed and paid-up

300 million equity shares of Rs.10 each fully paid-up * 3,000.00 3,000.00

Total 3,000.00 3,000.00

* Includes :

i) 22.95 million shares of Rs. 10 each on which Rs. 7.20 per share was paid in cash and were conver ted into fully

paid by capitalisation of Capital Reserve.

ii) 277 million shares of Rs. 10 each allotted as fully paid bonus shares by capitalisation of Capital Reserve and

General Reserve.

SCHEDULE ‘A’ — SHARE CAPITAL

31/03/2002


Capital Reserve

As per last Balance Sheet 8.36 8.43

Less : Amor tisation of Capital Grant (0.07) (0.07)

8.29 8.36

Debenture Redemption Reserve

As per last Balance Sheet 650.00 —

Add : Transfer from Profit & Loss Account 2,070.00 650.00

2,720.00 650.00

General Reserve

As per last Balance Sheet 36,315.39 37,785.45

Add : Transfer from Profit & Loss Account 5,430.59 4,548.30

Less : Deferred tax adjustment — (6,018.36)

41,745.98 36,315.39

Surplus as per Profit & Loss Account 0.01 0.01

Total 44,474.28 36,973.76

SCHEDULE ‘B’ — RESERVES AND SURPLUS

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4.6

85

8.7

47

.74

—6

6.4

82

98

.20

29

8.2

1

NO

TES:-

1)La

nd :-

a)Fr

eeho

ld la

nd i

nclu

des

Rs.

286.1

2 m

illion (

prev

ious

yea

r R

s. 2

83.5

3 m

illio

n) w

ith m

ore

than

99 y

ears

lea

sepe

riod.

b)Fr

eeho

ld la

nd in

clud

es R

s. 3

6.8

2 m

illio

n (p

revi

ous

year

Rs.

36.

82 m

illio

n) c

apita

lised

at C

here

lapa

lli d

epot

, Kur

nool

LPG

Pla

nt a

nd K

akin

ada

Coa

stal

Ter

min

al fo

r whi

ch c

onve

yanc

e de

eds

are

yet t

o be

exe

cute

d.c)

Incl

udes

the

follo

win

g w

hich

thou

gh in

the

poss

essi

on o

f Cor

pora

tion,

the

leas

e de

eds

are

yet t

o be

regi

ster

ed :

i)La

nd a

cqui

red

on le

ase

for a

per

iod

exce

edin

g 99

yea

rs R

s.9.0

9 m

illio

n (p

revi

ous

year

Rs.

9.09

mill

ion)

ii)O

ther

leas

ehol

d la

nd -

Gro

ss B

lock

Rs.

5.9

9 m

illio

n (p

revi

ous

year

Rs.

5.99

mill

ion)

, Net

Blo

ck R

s. 5

.24 m

illio

n(p

revi

ous

year

Rs.

5.30

mill

ion)

d)Fr

eeho

ld la

nd in

clud

es la

nd c

ostin

g R

s.21.2

7 m

illio

n (p

revi

ous

year

Rs.

21.2

7 m

illio

n) w

hich

is in

the

proc

ess

of b

eing

sold

sub

ject

to a

ppro

val o

f com

pete

nt a

utho

rity.

2)B

uild

ings

incl

ude

:-a)

Ow

ners

hip

flats

of R

s. 1

32.6

9 m

illio

n (p

revi

ous

year

Rs.

61.

76 m

illio

n) in

pro

pose

d/ex

istin

g co

-ope

rativ

e so

ciet

ies.

b)V

alue

of s

hare

s of

Rs.

0.0

4 m

illio

n (p

revi

ous

year

Rs.

0.04

mill

ion)

out

of w

hich

the

Cor

pora

tion

is y

et to

rece

ive

shar

ece

rtifi

cate

s of

the

valu

e of

Rs.

0.0

1 m

illio

n (p

revi

ous

year

Rs.

0.01

mill

ion)

c)R

esid

entia

l fla

ts a

nd o

ffice

com

plex

whi

ch a

re in

pos

sess

ion

of th

e C

orpo

ratio

n an

d in

resp

ect o

f whi

ch th

e le

ase

deed

sar

e ye

t to

be re

gist

ered

:- G

ross

Blo

ck R

s. 3

8.0

5 m

illio

n (p

revi

ous

year

Rs.

38.0

5 m

illio

n), N

et B

lock

Rs.

34.2

1 m

illio

n(p

revi

ous

year

Rs.

34.

77 m

illio

n).

3)La

nd, P

lant

& M

achi

nery

, Tan

ks &

Pip

elin

es, R

ailw

ay S

idin

gs a

nd B

uild

ings

join

tly o

wne

d in

var

ying

ext

ent w

ith o

ther

Oil

Com

pani

es/R

ailw

ays

:- G

ross

Blo

ck R

s. 1

,553.0

4 m

illio

n (p

revi

ous

year

Rs.

1,3

32.5

9 m

illio

n), D

epre

ciat

ion

Rs.

259.2

8m

illio

n (p

revi

ous

year

Rs.

189

.84

mill

ion)

, Net

Blo

ck R

s. 1

,293.7

6 m

illio

n (p

revi

ous

year

Rs.

1,1

42.7

5 m

illio

n).

4)B

uild

ings

, Pla

nt &

Mac

hine

ry a

nd S

undr

ies

incl

udes

Rs.

81.0

6 m

illio

n (p

revi

ous

year

Rs.

81.0

6 m

illio

n) to

war

ds a

sset

s,ow

ners

hip

of w

hich

doe

s no

t ves

t with

the

Cor

pora

tion.

Thi

s am

ount

has

bee

n am

ortis

ed o

ver a

per

iod

of fi

ve y

ears

. The

amou

nt c

harg

ed o

ff a

s de

prec

iatio

n fo

r the

cur

rent

yea

r is

Rs.

14.5

7 m

illio

n (p

revi

ous

year

Rs.

14.

84 m

illio

n)5)

Dep

reci

atio

n on

pro

ject

ass

ets

to th

e ex

tent

cap

italis

ed a

gain

st th

e co

mpl

eted

cap

ital p

roje

cts,

is a

djus

ted

agai

nst i

ts o

rigin

alco

st a

nd it

s ne

t boo

k va

lue

is s

how

n un

der G

ross

Blo

ck c

olum

n. T

he b

alan

ce d

epre

ciat

ion

ther

eon

is in

clud

ed u

nder

Cap

ital

wor

k-in

-pro

gres

s.6)

Ded

uctio

n fr

om G

ross

Blo

ck (c

olum

n 4)

incl

udes

:-a)

Writ

e ba

ck o

f exc

ess

capi

talis

atio

n of

Rs.

78.9

0 m

illio

n (p

revi

ous

year

Rs.

206

.66

mill

ion)

b)C

onse

quen

t to

adju

stm

ent r

efer

red

in p

ara

(5) a

bove

, Rs.

Nil

(pre

viou

s ye

ar R

s.0.

46 m

illio

n)c)

Del

etio

ns d

urin

g th

e ye

ar R

s. 3

65.7

8 m

illio

n (p

revi

ous

year

Rs.

252

.72

mill

ion)

d)A

sset

s re

-ins

tate

d du

ring

the

year

Rs.

-7.0

5 m

illio

n (p

revi

ous

year

Rs.

Nil)

7)D

epre

ciat

ion

for t

he y

ear (

colu

mn

7) in

clud

es :-

a)C

harg

ed to

cap

ital w

ork-

in-p

rogr

ess

Rs.

0.7

3 m

illio

n (p

revi

ous

year

Rs.

0.73

mill

ion)

b)C

harg

ed to

Pro

fit &

Los

s A

ccou

nt R

s. 4

,809.2

4 m

illio

n (p

revi

ous

year

Rs.

4,8

09.8

5 m

illio

n)c)

Cha

rged

to P

revi

ous

year

exp

ense

s R

s. 1

2.6

4 m

illio

n (p

revi

ous

year

Rs.

43.

94 m

illio

n)8)

Ded

uctio

ns fr

om d

epre

ciat

ion

(col

umn

8) in

clud

es w

ithdr

awal

of d

epre

ciat

ion

:-a)

On

exce

ss c

apita

lisat

ion

Rs.

36.0

9 m

illio

n (

prev

ious

yea

r Rs.

25.

14 m

illio

n)b)

On

dele

tion

durin

g th

e ye

ar R

s. 3

06.6

7 m

illio

n (p

revi

ous

year

Rs.

193

.80

mill

ion)

c)C

onse

quen

t to

adju

stm

ent r

efer

red

in p

ara

(5) a

bove

, Rs.

Nil

(pre

viou

s ye

ar R

s.0.

46 m

illio

n)d)

Con

sequ

ent t

o ad

just

men

t ref

erre

d in

par

a (6

)-(d

) abo

ve, R

s. -2.7

8 m

illio

n (p

revi

ous

year

Rs.

Nil)

9)G

ross

Blo

ck in

clud

es R

s. 1

38.3

2 m

illio

n (p

revi

ous

year

Rs.

156

.24

mill

ion)

tow

ards

ass

ets

held

for d

ispo

sal a

t dis

cont

inue

dlo

catio

ns in

resp

ect o

f whi

ch a

dditi

onal

dep

reci

atio

n ha

s be

en p

rovi

ded

to re

cogn

ise

the

expe

cted

loss

on

disp

osal

. The

am

ount

of a

dditi

onal

dep

reci

atio

n so

pro

vide

d du

ring

the

year

is R

s. 2

4.0

8 m

illio

n (p

revi

ous

year

Rs.

67.

83 m

illio

n).Rs

. M

illi

on

SCHE

DULE

‘D’ —

FIX

ED A

SSET

S

GR

OS

S

BL

OC

KD

EP

RE

CIA

TIO

NN

ET

B

LO

CK

DE

DU

CT

ION

SD

ED

UC

TIO

NS

ON

A

CC

OU

NT

ON

A

CC

OU

NT

AS

AT

O

F R

ET

IRE

ME

NT

/A

S A

TU

PT

O

OF

RE

TIR

EM

EN

T/

UP

TO

AS

AT

AS

AT

PA

RT

ICU

LA

RS

01

.04

.20

02

AD

DIT

ION

SR

EC

LA

SS

IFI-

31

.03

.20

03

31

.03

.20

02

TH

IS

YE

AR

RE

CL

AS

SIF

I-3

1.0

3.2

00

33

1.0

3.2

00

33

1.0

3.2

00

2C

AT

ION

SC

AT

ION

S

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10

)(1

1)

1.

LA

ND

(a)

Fre

eh

old

1,9

40

.00

26

2.3

6(6

.00

)2

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8.3

6—

——

—2

,20

8.3

61

,94

0.0

0(b

)L

ea

se

ho

ld5

92

.81

33

.44

17

.65

60

8.6

06

6.6

39

.61

—7

6.2

45

32

.36

52

6.1

8(c

)R

ight

of

way

38

.26

——

38

.26

——

——

38

.26

38

.26

2.

BU

ILD

ING

S1

4,6

17

.59

1,6

58

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45

.92

16

,23

0.3

11

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5.0

63

11

.87

34

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1,6

62

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14

,56

8.2

91

3,2

32

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3.

RA

ILW

AY

SID

ING

S1

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9.7

45

6.9

44

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1,6

32

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40

5.3

17

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47

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01

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34

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LA

NT

an

dM

AC

HIN

ER

Y2

0,0

81

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1,3

80

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12

5.7

12

1,3

36

.00

6,9

15

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92

2.0

01

00

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37

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13

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65

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5.

TAN

KS

an

d P

IPE

LIN

ES

18

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1.0

77

35

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10

7.0

21

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79

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5,3

63

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93

7.4

89

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96

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an

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5.5

47

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EH

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ES

70

4.3

78

0.2

21

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70

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37

3.6

05

2.9

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74

15

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35

4.9

03

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8.

OT

HE

R A

SS

ET

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isp

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ng

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mp

s3

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9.2

95

92

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4.4

34

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7.0

38

49

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19

2.0

84

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40

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03

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23

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21

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3.8

94

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32

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03

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——

(c)

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nd

rie

s6

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7.1

47

34

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61

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7,6

60

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2,0

97

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54

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TO

TA

L9

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41

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PR

EV

IOU

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.96

PAGES 96-126_FINAL.p65 7/19/2003, 8:38 PM100-101

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SCHEDULE ‘F’ — INVESTMENTS

Face Book ValueNo. Value 31/03/2002

Rs. Million Rs. Million Rs. Million

IN GOVERNMENT SECURITIESNON TRADE - QUOTED

1. Deposited with Local Authorities

5 3/4 % Loan 2002 — — 0.037 % Loan 2009 0.21 0.17 0.177 1/2 % Loan 2010 0.19 0.19 0.198 % Loan 2011 0.03 0.02 0.02

2. 6.96% Oil Companies Special Bonds 2009 @ 7,580.00 7,580.00 10,180.007,580.38 10,180.41

NON TRADE - UNQUOTED

Indira Vikas Patra — — *(Deposited with Local Authorities)

— *

IN SHARES, DEBENTURES AND BONDS

TRADE - UNQUOTED

1. Equity Shares of Rs. 2.50 each 98,000,000 245.00 245.00 980.00(fully paid up) of Bharat Shell Limited (98,000,000)(refer note B-5 of Schedule ‘X’)

2. Equity Shares of Rs.10 each 75,500,000 755.00 755.00 755.00(fully paid up) of Bharat Oman (75,500,000)Refineries Limited

3. Equity Shares of Rs.10 each 16,000,000 160.00 160.00 160.00(fully paid up) of Petronet India Limited (16,000,000)

4. Equity Shares of Rs.10 each 5,250,000 52.50 52.50 52.50(fully paid up) Cochin International (5,250,000)Airpor t Limited

5. Equity Shares of Rs.10 each 26,000,000 260.00 260.00 13.00(fully paid up) of Petronet CCK Limited (1,299,998)

6. Equity Shares of Rs.10 each 451,000 4.51 4.51 0.11(fully paid up) of Petronet CI Limited (11,000)

7. Equity Shares of Rs.10 each 6,295 0.06 0.06 #(fully paid up) of Petronet LNG Limited (45)

8. Equity Shares of Rs.10 each 31,500,000 315.00 315.00 315.00(fully paid up) Indraprastha Gas Limited (31,500,000)

9. Equity Shares of Rs.10 each 100,000 1.00 1.00 1.00(fully paid up) VI e Trans Private Limited (100,000)

10. Equity Shares of Rs.10 each 7,500,000 75.00 75.00 75.00(fully paid up) of Petroleum Infrastructure (7,500,000) Limited

1,868.07 2,351.61Less : Provision for diminution in value of investment

in Petroleum Infrastructure Ltd. 75.00 75.00in Bharat Shell Ltd. — 735.00

1,793.07 1,541.61

@ Previous year grouped under Non-Trade unquoted

* Rs. 1,000/-

# Rs. 450/-


Capital work-in-progress (at Cost)

Work-in-progress 6,391.29 2,990.28Capital Advances (Unsecured, Considered good) 1,034.31 586.81Capital stores including lying with contractors 1,375.77 638.72Capital goods in transit 267.19 3.72

Construction period expenses 31/03/2002

Opening balance 196.95 310.72Add : Expenditure during the year

Establishment charges 90.58 64.96Interest 258.85 262.57Depreciation 0.73 0.73Others 86.57 98.56

633.68 737.54Less : Allocated to assets during

the year (83.79) (540.59)Balance pending allocation at theend of the year 549.89 196.95

Total 9,618.45 4,416.48

SCHEDULE ‘E’ — CAPITAL WORK-IN-PROGRESS

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(As taken, valued and cer tified by the Management) @

31/03/2002


Stores and spares 524.05 554.34

Stores and spares in Transit 14.52 35.68

Raw materials 2,761.32 2,451.08

Stock- in-process 1,139.24 458.31

Finished products 39,556.40 25,570.56

Packages 40.27 50.94

Total 44,035.80 29,120.91

@ Inventory valuation is as per Significant Accounting Policy no. 7.

SCHEDULE ‘H’ — SUNDRY DEBTORS(Unsecured, Considered good unless otherwise stated)

31/03/2002


Debts outstanding for over six months :

Considered good * 1,215.46 2,275.68

Considered doubtful 2,144.58 1,246.33

3,360.04 3,522.01

Other debts 7,213.06 7,553.36

10,573.10 11,075.37

Less : Provision for doubtful debts (2,144.58) (1,246.33)

Total 8,428.52 9,829.04

* Includes Rs. 3.31 million (previous year Rs. 3.40 million) which are secured.

SCHEDULE ‘G’ — INVENTORIESSCHEDULE ‘F’ — INVESTMENTS (Contd.)

Face Book ValueNo. Value 31/03/2002

Rs. Million Rs. Million Rs. Million

NON TRADE - QUOTED

1. 10.5 % Tax-free Bonds of Konkan Railway 300,000 300.00 285.00 285.00Corporation Limited of Rs. 1000/- each (300,000)

2. Units of The Unit Trust of India,1964 8,872,589 88.73 88.75 112.55Scheme of Rs.10 each (8,872,589)

Less : Provision for diminution in value of investmentin Unit Trust of India — 23.77

373.75 373.78NON TRADE - UNQUOTED

1. Debentures (Irredeemable - Fully Paid up)- 6 1/2 % debentures of 15 0.01 0.01 0.01Bengal Chamber of Commerce & Industry (15)- 5 % debentures of East India Clinic Limited 1 0.06 0.06 0.06

(1)2. Ordinary Shares (Fully paid up) of Sindhu 6 0.01 0.02 0.02

Resettlement Corporation Ltd. (6)0.09 0.09

IN SUBSIDIARY COMPANIES

QUOTED

1. Equity Shares of Rs. 10 each 75,889,660 758.90 6,591.02 6,591.02(fully paid up) of Kochi Refineries Limited (75,889,660)

UNQUOTED

2. Equity Shares of Rs.10 each 463,188,856 4,631.89 4,631.89 4,631.89(fully paid up) of Numaligarh Refinery (463,188,856)Limited

11,222.91 11,222.91

IN ASSOCIATION OF PERSONSNON TRADE - UNQUOTEDCapital Contribution in Petroleum IndiaInternational 0.50 0.50Share in accumulated surplus ofPetroleum India International 91.42 75.13as at 31st March 2002(31st March 2001)

Member Companies #Bharat Petroleum Corporation LimitedBongaigaon Refinery & Petrochemicals LimitedKochi Refineries LimitedEngineers India LimitedHindustan Petroleum Corporation LimitedIBP Company LimitedIndian Petrochemicals Corporation LimitedChennai Petroleum Corporation Limited

91.92 75.63Total 21,062.12 23,394.43

All investments are long-term investments# Each member company has an equal share and the total capital of AOP is Rs. 5.00 million.

Aggregate value of Unquoted Securities Rs. 6,516.97 million (previous year Rs. 16,429.22 million).Aggregate value of Quoted Securities Rs. 14,545.15 million (previous year Rs. 6,965.21 million).

Market value of Quoted Securities Rs. 11,429.05 million (previous year Rs. 4,610.07 million).

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(Unsecured, Considered good unless otherwise stated)


Loans (Secured) :To companiesConsidered doubtful 1.05 1.05Less : Provision for doubtful loans (1.05) (1.05)

To staff * 4,908.69 4,413.34

Loans :To companiesConsidered good 3.50 —Considered doubtful 28.08 34.48Less : Provision for doubtful loans (28.08) (34.48)

To others 92.23 66.76

Advances :Share Application money pending allotment/Advance towards equity shares 274.94 526.40Advances recoverable in cash, or in kind or for value to be received ** 1,538.88 2,788.48Advances considered doubtful 42.92 60.89Less : Provision for doubtful advances (42.92) (60.89)

6,818.24 7,794.98

Material given on Loan (Secured) 4.92 4.92Less : Deposits Received (4.92) (4.92)

Dues from Pool Account (Petroleum Planning & Analysis Cell -Government of India) 11,427.35 2,993.95

Due from Subsidiaries# 3,015.97 —

Claims :Considered good 1,073.21 644.95Considered doubtful 134.17 130.16Less : Provision for doubtful claims (134.17) (130.16)

1,073.21 644.95

Advance Income Tax (Net of provision for taxation) 1,040.77 1,240.07

Deposits :With Customs/Excise/Por t Trust etc. (repayable on demand) 158.75 344.55Others 267.08 125.82

425.83 470.37Considered doubtful 0.19 0.25Less : Provision for doubtful deposits (0.19) (0.25)

425.83 470.37

Total 23,801.37 13,144.32

* Include :Due from Officers : Rs. 19.17 million (previous year Rs. 19.25 million)Maximum balances : Rs. 20.36 million (previous year Rs. 22.94 million)

Due from Directors : Rs. 0.73 million (previous year Rs. 1.94 million)Maximum balances : Rs. 0.81 million (previous year Rs. 2.11 million)

** Includes an amount of Rs. 59.80 million (previous year Rs. 51.27 million) alongwith interest of Rs. 60.14 million(previous year Rs. 52.20 million) deposited as per court order in Land Compensation cases for which appeals arepending.

# Includes Intercorporate Deposits placed with subsidiary - Kochi Refineries Limited : Balance as at the year end Rs. Nil(previous year Rs. Nil)

Maximum balance Rs. 750 million (previous year Rs. 125 million)

31/03/2002


Cash on Hand 2,224.66 1,942.74

[Includes drafts and cheques of Rs. 2,099.66 million

(previous year Rs. 1,809.23 million) on hand]

With Scheduled banks :

In current accounts 2,064.91 1,141.26

In deposit accounts 2,153.82 3.77

Remittances in transit 299.17 357.32

Total 6,742.56 3,445.09

SCHEDULE ‘J’ — OTHER CURRENT ASSETS

31/03/2002


Interest accrued on investments 7.96 11.89

Interest accrued on bank deposits 3.64 0.59

Total 11.60 12.48

SCHEDULE ‘K’ — LOANS AND ADVANCESSCHEDULE ‘I’ — CASH AND BANK BALANCES

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2001-02


Interest on bank deposits and others* 407.48 911.56Tax deducted at source - Rs. 43.14 million (previous year Rs. 115.01 million)

Interest from subsidiaries (gross) 0.23 0.08Tax deducted at source - Rs. 0.05 million (previous year Rs. 0.02 million)

Income from InvestmentsLong TermInterest** 671.00 46.71DividendTax deducted at source - Rs. 42.33 million (previous year Rs. Nil)

from subsidiaries 403.18 201.06from others — 8.87

From AOP (Petroleum India International) 16.29 11.87Profit on Sales/Maturity 53.99 0.01

Excess provision for expenses written back 36.61 112.65

Other income# 1,876.64 1,361.17

Total 3,465.42 2,653.98

* Includes interest received from Income tax authoritiesRs. 27.57 million (previous year Rs. 263.12 million) and from Oil Co-ordination CommitteeRs. Nil (previous year Rs. 448.67 million)

** Includes interest received from Oil bonds Rs. 639.46 million (previous year Rs. 3.94 million)# Includes amortisation of capital grants Rs. 0.07 million (previous year Rs. 0.07 million)

SCHEDULE ‘P’ — INCREASE/(DECREASE) IN INVENTORY

2001-02Rs. Million Rs. Million

31/03/2002

Value of closing stock ofFinished goods 39,556.40 25,570.56Stock-in-process 1,139.24 458.31

40,695.64 26,028.87Less :Value of opening stock ofFinished goods 25,570.56 28,763.13Stock-in-process 458.31 635.69

26,028.87 29,398.82

Total 14,666.77 (3,369.95)

SCHEDULE ‘Q’ — RAW MATERIALS CONSUMED

2001-02


Opening Stock 2,451.08 2,869.09

Add : Purchases 99,000.80 66,382.08Stock taken on loan — 5,802.72

Less : Stock given on loan — (6,221.82)Closing Stock (2,761.32) (2,451.08)

Raw Material Consumed 98,690.56 66,380.99


Current Liabilities :

Sundry creditors 31/03/2002Total outstanding dues to Small Scale Industries(SSI’s) 144.53 163.86Total outstanding dues to creditorsother than SSI’s 32,572.24 9,070.76 32,716.77 9,234.62Due to subsidiaries 4,875.00 2,253.46

Materials taken on loan 2.55 0.67Less: Deposits given (2.55) (0.67) — —

Deposits from Customers 7.17 5.92Deposits for containers 21,614.44 19,787.38Unclaimed Dividend* 8.74 4.74Unclaimed Deposits* 14.91 13.81Other liabilities 13,561.13 12,808.94Interest accrued but not due on loans 591.23 676.73

Total 73,389.39 44,785.60

* These figures do not include any amounts, due and outstanding, to be credited to Investor Education andProtection Fund.

SCHEDULE ‘M’ — PROVISIONS

31/03/2002


Provision for Taxation (Net of Tax paid) 82.44 13.32

Proposed dividend 3,900.00 3,300.00

Corporate Dividend Tax on proposed dividend 499.69 —

Provision for retirement benefits 2,074.17 1,413.29

Total 6,556.30 4,726.61

SCHEDULE ‘N’ — SALE OF PRODUCTS

2001-02


Sales 472,378.29 422,942.78

Subsidy on LPG (Domestic) & SKO (PDS) 13,497.10 —

Net Recovery from/(payment to) Pool Account (Petroleum Planning &

Analysis Cell - Government of India) (851.86) (24,648.01)

Total 485,023.53 398,294.77

SCHEDULE ‘O’ — MISCELLANEOUS INCOMESCHEDULE ‘L’ — LIABILITIES

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Repairs and maintenance :

Machinery 1,292.58 997.79Building 104.40 114.03Others 718.08 727.80

2,115.06 1,839.62

Insurance 276.22 158.58Rent 827.68 770.38Rates and taxes 466.52 401.58Charities and donations 6.93 32.22Remuneration to Auditors 1.32 1.42Utilities 280.58 262.70Write off :

Bad debts and claims 153.08 71.54Diminution in value of investments 758.80 —Less: Provision made earlier (758.77) —Others 33.98 298.07

Provision for :Doubtful debts and advances 877.83 555.02Diminution in value of investments — 758.77

Charges paid to other oil companies 486.76 102.01Travelling and conveyance 655.38 571.13Telephone, Telex, Cables, Postage etc. 271.01 222.13Loss on sale/write off of Fixed Assets (net) 7.11 50.99Brokerage on Public Deposit 14.27 7.53Other expenses 2,650.36 2,320.29

Total 9,124.12 8,423.98

SCHEDULE ‘W’ — PRIOR PERIOD INCOME/(EXPENSES) (NET)


Sale of products 442.54 (8.74)Miscellaneous Income 1.74 9.27Purchase of product for resale (406.48) 24.51Employees’ Remuneration and Other Benefits (13.63) —Duties, taxes etc. and other product charges — (18.10)Transportation — 0.97Rent, Rates & Taxes — (18.31)Other operating and administration expenses 22.58 (23.16)Interest — (1.04)Depreciation 23.46 (18.80)

Total 70.21 (53.40)

SCHEDULE ‘V’ — OTHER OPERATING AND ADMINISTRATION EXPENSES

2001-02


Stores, spares and materials 791.90 878.68

Less : Charged to other revenue accounts (608.44) (635.55)

Total 183.46 243.13

SCHEDULE ‘S’ — POWER AND FUEL

2001-02


Power and Fuel 4,735.04 3,660.82

Less : Consumption of fuel out of own production (4,224.06) (3,206.72)

Total 510.98 454.10

SCHEDULE ‘T’ — EMPLOYEES’ REMUNERATION AND OTHER BENEFITS

2001-02


Salaries and wages 4,514.34 4,714.12

Contribution to provident fund and other funds 524.39 341.05

Contribution to gratuity fund 133.25 166.67

Welfare expenses 1,284.99 1,031.88

Total 6,456.97 6,253.72

SCHEDULE ‘U’ — INTEREST

2001-02


On Bonds 567.21 606.47

On Fixed Loans 634.01 1,528.34

Others 1,258.24 931.66

Total 2,459.46 3,066.47

SCHEDULE ‘R’ — CONSUMPTION OF STORES,SPARES AND MATERIALS

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7. INVENTORY

7.1 RAW MATERIAL AND INTERMEDIATE

Raw material and Intermediate are valued at cost. Cost is determined as follows:

7.1.1 Crude oil on first in first out basis.

7.1.2 Base oil and additives on weighted average cost.

7.1.3 Intermediate Stocks at raw material cost plus cost of conversion.

In case there has been a decline in the price of raw material and the realisable value of the finishedproducts is expected to be lower than the cost of the finished products, raw material and intermediateare valued at net realisable value.

7.2 FINISHED PRODUCTS

7.2.1 Finished products other than Lubricants are valued at cost on first in first out basis or at net realisablevalue, whichever is lower.

7.2.2 Lubricants are valued at weighted average cost or at net realisable value, whichever is lower.

7.3 Stores are valued at weighted average cost. Slow moving/obsolete items identified as surplus are valued atRe nil.

7.4 Packages are valued at weighted average cost or at net realisable value, whichever is lower.

8. CENVAT

Cenvat credit on eligible Revenue/Capital purchase is recognised on receipt of such materials.

9. CLAIMS AND PROVISIONS

Claims/Surrenders on/to Petroleum Planning and Analysis Cell, Government of India are booked on ‘in principleacceptance’ thereof on the basis of available instructions/clarifications subject to final adjustments after Pool audit, asstipulated. Other claims are booked when there is a reasonable certainty of recovery. Provisions, as appropriate, aremade based on the merits.

10. SALES

Sales are net of trade discounts and include, inter alia, excise/customs duties, claim from Petroleum Planning andAnalysis Cell, Government of India and other elements allowed by the Government from time to time.

11. RAW MATERIALS CONSUMED

Raw materials consumed is net of claims from Petroleum Planning and Analysis Cell, Government of India.

12. CLASSIFICATION OF INCOME/EXPENSES

12.1 Research and development expenditure other than capital expenditure is charged to revenue in the year theexpenditure is incurred.

12.2 The cost of know-how related to process of manufacture is charged to revenue in the year in which it is incurred.

12.3 Being not material :

12.3.1 Income/expenditure upto Rs. 0.50 million in each case pertaining to prior years is charged to thecurrent year.

12.3.2 Prepaid expenses upto Rs. 0.01 million in each case, are charged to revenue as and when incurred.

SCHEDULE ‘X’ — (Contd.)

A. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

1. ACCOUNTING CONVENTION

The financial statements are prepared under historical cost convention in accordance with the mandatory accountingstandards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956,adopting accrual system of accounting except where otherwise stated.

2. USE OF ESTIMATES

The preparation of financial statements requires management to make certain estimates and assumptions that affectthe amounts reported in the financial statements and notes thereto. Differences between actual results and estimatesare recognised in the period in which they materialise.

3. FIXED ASSETS

3.1 LAND

3.1.1 Land acquired on lease where period of lease exceeds 99 years is treated as freehold.

3.1.2 Cost of right of way for laying pipelines is capitalised.

3.2 FIXED ASSETS OTHER THAN LAND

Expenditure on assets, other than plant and machinery, LPG cylinders and pressure regulators, not exceedingRs.1,000 per item is charged to revenue.

3.3 Machinery spares that can be used only in connection with an item of fixed asset and their use is expected tobe irregular are capitalised. Replacement of such spares is charged to revenue.

3.4 EXPENDITURE DURING CONSTRUCTION PERIOD

Direct expenses including borrowing cost and crop compensation for laying pipelines incurred during constructionperiod on capital projects are capitalised. Indirect expenses of the project group are allocated only to theprojects costing Rs. 50 million and above.

4. BORROWING COSTS

Borrowing costs attributable to acquisition, construction or production of qualifying asset are capitalised as part of thecost of that asset, till the month in which the asset is ready for use. Other borrowing costs are recognised as an expensein the period in which these are incurred.

5. DEPRECIATION

5.1 Premium paid for acquiring leasehold land for lease period not exceeding 99 years, is amortised over theperiod of lease.

5.2 LPG cylinders and pressure regulators and other fixed assets costing not more than Rs. 5,000 each, aredepreciated @ 100 percent in the year of capitalisation.

5.3 Depreciation on assets not owned by the Corporation is amortised over a period of five years from the year ofcapitalisation.

5.4 Depreciation on other fixed assets is provided under the straight line method, at rates prescribed under ScheduleXIV to the Companies Act, 1956. Additions to fixed assets during the year are being depreciated on pro rata basisfrom the beginning of the month in which such assets are capitalised.

6. INVESTMENTS

6.1 Current investments are valued at lower of cost or fair market value.

6.2 Long-term investments, other than investments in Government Securities and Public Sector Bonds, are valuedat cost. Provision for diminution is made to recognise a decline, other than of temporary nature, in the value ofsuch investments.

6.3 Government Securities and Public Sector Bonds are valued at lower of cost or redemption price.

SCHEDULE ‘X’ — STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTESFORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2003

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B. NOTES FORMING PART OF ACCOUNTS

1. Deferred Tax Liability

As per the requirement of the Accounting Standard 22 on “Accounting for Taxes on Income” issued by the Institute

of Chartered Accountants of India the net deferred tax liability charged to Profit during the year is Rs. 476.59

million (previous year Rs. 970.61 million). The year end position of Deferred Tax Liability and Asset is given

below :

Rs. Million

31-3-2003 31-3-2002

DEFERRED TAX LIABILITY

Difference of Book Depreciation & Tax Depreciation 8,780.72 8,013.04

Others 451.85 324.26

Total 9,232.57 8,337.30

DEFERRED TAX ASSETS

Provisions Disallowed for Tax Purposes 1,142.53 847.80

Disallowed u/s 43B of Income Tax Act,1961 624.48 500.53

Total 1,767.01 1,348.33

Net Deferred Tax Liability 7,465.56 6,988.97

2. The Corporation is operating under a single segment i.e. downstream petroleum sector (Refining and Marketing).

3. Write off – others includes unmatched items in bank accounts of Rs. 10.44 million (previous year Rs. 77.94 million)

(net).

4. Provision for taxation in the Profit and Loss Account includes Rs 5.00 million (previous year Rs. 2.50 million) towards

wealth tax.

5. The Corporation holds 49% equity in Bharat Shell Limited (BSL) which had accumulated losses as on 31-3-2002. During

the year 2001-02 the Corporation had provided Rs. 735.00 million towards diminution in value of investment in equity

shares of BSL. During the current year BSL carried out financial restructuring through reduction of the face value of the

share capital of the company from Rs. 10.00 per share to Rs. 2.50 per share on fully paid basis. Consequently the value

of Corporation’s holding in BSL stands reduced to Rs. 245.00 million from Rs. 980.00 million. Accordingly Rs. 735.00

million has been written off during the current year towards permanent diminution in the value of investment in BSL. The

write off has been adjusted against the provision made earlier.

6. The Corporation has numerous transactions with other oil companies, which are reconciled on an ongoing basis and are

subject to confirmation. Adjustment if any, arising therefrom are not likely to be material.

7. The Corporation follows open items system of maintaining customers accounts included in “Sundry Debtors”. The

transactions continue to appear in the customer accounts till such time the same are matched and cleared. This is an

ongoing process. The clearance of such open items is not likely to have a material impact on the outstanding or

classification in the accounts.


12.3.3 Liabilities for expenses, other than for transportation, rent and property taxes are provided for only ifthe amount exceeds Rs. 0.01 million in each case.

12.3.4 Deposits placed with Government agencies/local authorities which are perennial in nature are chargedto revenue in the year of payment.

12.4 Income from sale of scrap is accounted for on realisation.

13. RETIREMENT BENEFITS

13.1. Contribution to Provident Fund is charged to revenue.

13.2. Gratuity, leave encashment and other retirement benefits are actuarially valued at the year end and provided forin the accounts.

14. DUTIES ON BONDED STOCKS

14.1 Customs duty on Raw materials/Finished goods lying in bond are provided for at the applicable rates exceptwhere liability to pay duty is transferred to consignee.

14.2 Excise duty on Finished stocks lying in bond is provided for, at average of the assessable value applicable ateach of the locations at maximum rates based on end use except where liability to pay duty is transferred toconsignee.

15. FOREIGN CURRENCY TRANSACTIONS

15.1 Transactions in foreign currency are accounted at the exchange rate prevailing on the date of transaction.Exchange fluctuations between the transaction date and the settlement date in respect of fixed assets areadjusted in carrying cost. Gains/losses on revenue transactions are recognised in Profit and Loss Account.

15.2 Current assets and current liabilities involving transactions in foreign currency are converted at exchange ratesprevailing on the date of Balance Sheet. Any profit/loss arising out of such conversion is charged to Profit andLoss Account.

15.3 Borrowings in foreign currency for acquisition of fixed assets are converted at exchange rate prevailing on thedate of Balance Sheet or forward contract rates, as the case may be. Exchange fluctuations/hedging costs areadjusted to the cost of assets and corresponding liability account.

16. GOVERNMENT GRANTS

16.1 In case of depreciable assets, the cost of the asset is shown at gross value and grant thereon is taken to CapitalReserve as deferred income, which is recognised in the Profit and Loss Account over the useful life of the asset.

16.2 Government grants of the nature of promoters’ contributions are credited to Capital Reserve and treated as partof Shareholders’ funds.

17. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

17.1 Capital commitments and Contingent liabilities disclosed are those which exceed Rs.0.10 million in each case.

17.2 Contingent liabilities in respect of show cause notices issued by various Government authorities are consideredonly when converted into demand.

18. TAXES ON INCOME

18.1 Provision for current tax is made in accordance with the provisions of the Income Tax Act , 1961.

18.2 Deferred tax on account of timing difference between taxable and accounting income is provided using the taxrates and tax laws enacted or substantially enacted by the Balance Sheet date.


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Pvt. Ltd., Sunrays Engineers Pvt. Ltd., Super Industries, Verny Containers Limited, Vidhya Cyls Pvt. Ltd., Abasi Engineering

Works, Bangalore Spemach Pvt. Ltd., BSJ Shau Manufacturers (India), Driescher & Panickker Switch Gear Ltd.,

Electronics Devices, Global Engineers, Jaypee Industries Pvt. Ltd., Jindal Forging Pvt. Ltd., Mercantile & Industrial

Development Co. Ltd., S.S. Fabs, Hyderabad Cylinders Pvt. Ltd., Sri Balaji Valves Pvt. Ltd., Tee Kay Metals Pvt. Ltd., PCS

Industries Ltd., Padavi Engineers & Pressure VE Ltd., R.M. Cylinders (P) Ltd., M.E.M. Industries Pvt. Ltd., Chennai

Valves, OM Containers, Pioneer Products Line, Parmar Technoforge, Combined Couriers, Shri Sainath Enterprises,

Sawan Engineers, Gratex Industries Ltd., Siepmann’s Card Systems Pvt. Ltd., Sign Technic Industries Pvt. Ltd., Triangle

Simulation P. Ltd., DE’s Technico, Industrial Engrs. & Fabricator Pvt. Ltd., Balaji Electrical Engg. Works., Jaishri Engineering

Corporation, Sinex Systems Pvt. Ltd., Airox Nigen Equipments Pvt. Ltd., Patalay Pneumatics, Vaibhav Body Builders,

Safess Quality Management Pvt. Ltd., Das Construction Co., Metcraft Engg Corporation, S.V. Enterprises, Akash

Constructions, B.T. Perumal, C. Ganeson, Divya Constructions, E. Anil Kumar, GSN Prasad & Co., I. Muni Mohan Reddy,

J. Venkateswara Rao, M.A. Thomas, M. Veeraiah, Paws Pest Aways, R.V. Narayana Murthy, S.V. Enterprises, Sardar

Singh Sahani & Sons, Sridhar Constructions, V.K. Enterprises, Vishnu Engineering, Sai Constructions, Devraj V. R., K.N.

Rajan.

The above information is given to the extent available with the Corporation.

13. Related Party Disclosures as per Accounting Standard 18

Names of the Related parties : Indraprastha Gas Limited, Petronet India Limited, Bharat Shell Limited, Petronet

(JVC) CCK Limited, Petronet CI Limited, Petronet LNG Limited, Bharat Oman Refineries

Limited, VI e-trans Limited, Petroleum Infrastructure Limited, Cochin International

Airport Limited.

Key Management Personnel : M/s. S. Behuria (Chairman & Managing Director) U. Sundararajan (Chairman &

Managing Director - upto 30.06.2002), M. Rohatgi (Director Refineries),

M.B. Lal (Director Refineries - upto 04.06.2002), S. Radhakrishnan (Director

Marketing), Ashok Sinha (Director Finance), S. A. Narayan (Director HR).

Nature of Transactions

Rs. Million

2002-03 2001-02

Joint Venture Companies (JVC)

a. Purchase of goods 80.31 52.80

b. Rendering of Services — 1.88

c. Receiving of Services 234.22 1.65

d. Interest received 2.36 —

e. Sale of materials 27.51 —

f. Purchase of materials 0.60 —

g. Equity contribution 251.46 —

h. Loans and advances 23.50 4.40

i. Outstanding as on 31.3.2003

- Receivable 37.58 53.14

- Payable 58.95 2.34

j. Management Contracts 48.58 28.20

(Employees on deputation to JVC)

k. Guarantees given 637.50 —

Key Management Personnel (Whole time directors)

Details of remuneration to directors are given in note 16 of Notes to Accounts.


8. Sundry debtors include Rs. 618.94 million (previous year Rs. 618.94 million) (net) due from a customer, pertaining to

the period November 1992 to June 1996 and September 1997 to January 1999, towards price revision of a product,

disputed by the customer. The dispute was referred to an arbitrator, who has awarded the case in favour of the

Corporation along with interest. Both single bench and division bench of the Mumbai High Court confirmed the award

passed in favour of the Corporation. The customer has filed Special Leave Petition in the Supreme Court challenging the

division bench order. In view of the pendency of the matter in the Supreme Court, no effect is given in the accounts in

respect of interest awarded by the arbitrator.

9. The Corporation has undertaken to provide Petronet CCK Ltd., a JV Company interest bearing advances to cover

shortfalls, if any, in payments of principal and/or interest to lenders under the facility agreement signed between the

lenders and Petronet CCK Ltd.

10. The Corporation jointly with other promoter companies has provided guarantees/commitment letter towards meeting

certain construction cost and certain obligations of Petronet LNG Limited to the supplier of LNG/consortium of shippers

of LNG. The Corporation’s guarantee is limited to 25% of the obligation and Petronet LNG Limited has provided counter

guarantee to the Corporation to this extent.

11. Earnings per share

2002-03 2001-02

Profit after Tax Rs. million 12500.28 8498.30

Weighted average shares million nos. 300 300

outstanding during the year

Basic earnings per share Rs. 41.67 28.33

Diluted earnings per share Rs. 41.67 28.33

12. The names of the Small Scale Industrial Undertakings to whom the Corporation has outstanding for more than 30 days

are as under :

M/s. Nandan Impex Pvt. Ltd., Amforge Industries, Central Stores Supply Co., Chhabi Electricals Pvt. Ltd., Chandra Engg.

& Mech. Pvt. Ltd., Chemtrols Engg. Ltd., Commercial Supplying Agency, Daya Lubricants Pvt.Ltd., Delta Corporation.,

Dembla Valves Pvt.Ltd., Detection Instruments (I) Pvt. Ltd., EBY Fasteners, ENCON (INDIA), Exelite Insulations, Flameproof

Equipments Pvt. Ltd., Flash Forge Pvt. Ltd., Flow Chem Industries, Francis Leslie & Co., Gamzen Plast P. Ltd., Gujarat

Infrapipes Pvt. Ltd., Hydropneumatics, IGP Engineers Pvt. Ltd., Joseph Leslie Drager Manufacture Pvt. Ltd., Kartik

Steels Limited, Laraon Engineers & Consultants Pvt. Ltd., Laxmi Air Control Pvt. Ltd., Liquid Controls (India) Pvt. Ltd.,

M.S. Fittings Manufacturing Co. Pvt. Ltd., Madras Industrial Product., Mecord Systems & Services Pvt. Ltd., Multitex

Filteration Engineers Pvt. Ltd., New Fire Engineers, Newage Industries, Nitin Fire Protection Industries Ltd., Paramount

Forge, Phin-O-Chem Industries Pvt. Ltd., Polycab Industries, Premier Grinders & Packers Ltd., Procon Engineers,

Ramgor Industries, Ravat Engineering Works, Rockwin Flowmeter India Pvt. Ltd., Safety Services, Shreenath Packaging

Industries, Spring Supports Manufacturing, Shridhar Engineering and Rubber Products Pvt., Ltd., Steelage Industries

Limited, Super Fire Engineering Pvt. Ltd., Super Gasket Industries, Supreme Electroplast Industries, Syndicate Engineering

Industries., Taurian Tubes, Teekay Tubes Pvt. Ltd., The Punjab Steel Works, Turbomachinery Engineering Industries Pvt.

Ltd., Vimal Fire Controls Pvt. Ltd., Wadia Body Builders, Zenith Rubber & Plastic Works, Stanhope Seta Ltd., Negman

Industries & Electronics (P) Ltd., Mohan Electricals, Nirma Pipes & Fittings Industries, Venus Enterprises, Acoustics

India Pvt. Ltd., Ashkin Die Castings, Asso. Cyls and Accessories Pvt. Ltd., Chandawat Udyog Cyls Ltd., Dessma Engg

Pvt., ECP Industries Limited, G.D.R. Cylinders (P) Ltd., Global Gas Cylinders Ltd., Gujarat Equipments Pvt. Ltd.,

International Cylinders Pvt. Ltd. Jesmajo Indtl Fabrications - K, Kanyaka Parameshwari Engg. Pvt. Ltd., Konark Cylinders

& Containers., Kurnool Cylinders Private Ltd., Mahaveer Cylinders Ltd., Max Valves & Regulators Pvt. Ltd., Pentax

Engineering P. Ltd., Reliable Enterprises, Sanghvi Cylinders Ltd., Southern Cylinders Pvt. Ltd., Sree Srinivas Cylinders


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18. Licensed Capacity, Installed Capacity (as certified by the Management) and actual production in respect ofgoods manufactured :

Licensed Installed ActualCapacity Capacity Production

(a) Fuel refinery

(i) In million metric tonnes p.a. N.A. 6.90 * 8.71(N.A.) (6.90) * (8.77)

(ii) Production in kilolitres (KL)Light distillates — — 3,531,359

(3,469,706)

Middle distillates — — 5,220,691(5,224,405)

Others — — 1,538,680(1,661,231)

(b) Aromatics

(i) Benzene in metric tonnes (MT) 98,300 105,700 69,798(98,300) (105,700) (56,360)

(ii) Toluene in M.T. 17,600 23,100 20,013(17,600) (23,100) (16,610)

(c) Lubricants in M.T. 96,384 90,000 112,730(96,384) (90,000) (99,875)

(d) Sulphur in M.T. N.A. 30,000 11,950(N.A.) (30,000) (14,411)

* The designed capacity is based on processing of neat Middle East Crude.

19. Raw materials consumed :Quantity Value

KL MT Rs. Million

Crude Oil — 8,740,417 95,881.72(8,737,126) (63,693.51)

Others — 19,076 298.58(14,922) (240.57)

Base oil 102,506 — 1,635.42(90,888) (1,575.56)

Additive — 13,968 874.84(12,858) (871.35)

98,690.56(66,380.99)

14. Capital Commitments and Contingent Liabilities :31/03/2002

Rs. Million Rs. Million14.1 Capital Commitments :

Estimated amount of contracts remaining to be executed oncapital account and not provided for 11,425.13 8,649.53

14.2 Contingent Liabilities :

(a) In respect of taxation matters of prior years 839.42 609.51

(b) Other Matters :

(i) Surety bonds executed on behalf of other oilcompanies for excise/customs duties for which BPCLhas signed as surety 1,262.76 1,222.03

(ii) Claims against the Corporation not acknowledged as debts :

(a) Excise and customs matters 2,756.51 3,843.71(b) Sales tax matters 5,642.57 4,579.64(c) Others 1,352.42 1,156.04

These include Rs. 1,801.83 million (previous year

Rs. 2,760.29 million) against which the Corporation has

a recourse for recovery and Rs. 438.37 million (previous

year Rs. 464.93 million) on capital account.(iii) Claims on account of wages, bonus/ex-gratia payments

in respect of pending cour t cases. 72.90 153.54

(iv) Guarantees on behalf of other companies* 2,548.75 2,862.50

* Corporation has jointly with other promoter companies, given guarantees in favour of banks and financialinstitutions for short term loans extended to Petronet LNG Limited. The Corporation’s share in the guaranteeis Rs. 3,500 million. Petronet LNG Limited has given counter guarantee in favour of the Corporation for thesaid amount. Based on the outstanding loan of Rs. 10,195 million in the books of Petronet LNG Limited as on31.03.2003, the Corporation’s share is Rs. 2,548.75 million.

15. 15.1 The net amount of exchange difference credited to the Profit and Loss Account is Rs. 91.00 million (previousyear debited Rs. 30.78 million).

15.2 The amount of exchange difference credited to the carrying cost of fixed assets is Rs. 1.77 million (previousyear Rs. 1.10 million).

15.3 The exchange difference amounting to Rs. 0.51 million (previous year Rs. Nil) in respect of forward exchangecontract will be recognised in the Profit and Loss Account of one or more subsequent accounting periods.

16. Managerial Remuneration :2001-02


Salary and allowances 2.54 2.51Contributions to Provident Fund and other funds 0.35 0.30Other benefits 1.61 1.72

4.50 4.53

Includes Rs. 0.37 million (previous year Rs.0.91 million) paid on account of salary revision as per directive of Departmentof Public Enterprises/Ministry of Petroleum & Natural Gas.

17. Remuneration to Auditors :2001-02


(a) Audit Fees 0.85 0.85(b) Fees for other services-cer tification 0.42 0.44(c) Reimbursement of out of pocket expenses 0.05 0.13

1.32 1.42

SCHEDULE ‘X’ — (Contd.)SCHEDULE ‘X’ — (Contd.)

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21. Value of imports calculated on C.I.F. basis (excludes imports through canalising agents) :2001-02

Rs. Million Rs. Million(a) Raw Materials (including crude oil) 31,561.25 178.39(b) Capital goods 286.29 297.65(c) Components and spare par ts (including packages, chemicals

and catalysts) 218.22 125.91

22. Expenditure in foreign currency (on cash basis) :2001-02

Rs. Million Rs. Million(a) Purchase of products 82.04 176.07(b) Know-how 10.11 22.89(c) Professional Consultancy Fees 92.70 158.32(d) Royalty — 0.04(e) Other matters 645.31 80.45

23. Value of raw materials, stores/spare parts and components including packages, chemicals & catalysts consumed(on derived basis) :(Import includes import through canalisation.)

Imported Indigenous TotalRs. Million % Rs. Million % Rs. Million

Crude Oil 34,704.29 36.19 61,177.43 63.81 95,881.72(33,165.98) (52.07) (30,527.53) (47.93) (63,693.51)

Others 13.04 4.37 285.54 95.63 298.58(Nil) (Nil) (240.57) (100.00 ) (240.57)

Base Oil 149.89 9.17 1,485.53 90.83 1,635.42(179.87) (11.42 ) (1,395.69) (88.58 ) (1,575.56)

Additive 50.57 5.78 824.27 94.22 874.84(61.48) (7.06) (809.87) (92.94) (871.35)

Stores/Spare parts andComponents (including 87.99 6.94 1,180.59 93.06 1,268.58packages,chemicals & catalysts) (88.84) (6.41) (1,297.77) (93.59) (1,386.61)

24. Earnings in foreign exchange :2001-02

Rs. Million Rs. MillionExpor ts at F.O.B. value on own account # 11,908.82 6,550.95Management contract 4.29 3.14# Includes receipt of Rs. 5415.00 million (previous year Rs.4316.47 million)

in Indian currency out of the repatriable funds of foreign airline customers.

25. Expenditure on social overheads :2001-02

Rs. Million Rs. Million(a) Expenditure on township 8.68 9.85

[net of recovery Rs. 1.93 million (previous year Rs.2.48 million)](b) Medical facilities over and above statutory requirements 1.88 1.47(c) Social and cultural activities 48.62 25.21(d) Depreciation on capital assets 7.71 7.74

(as indicated in Schedule ‘D’)

26. Profit and Loss Account includes expenditure on :2001-02

Rs. Million Rs. Million(a) Enter tainment 1.75 1.37(b) Public relations and publicity 30.90 59.25(c) Remuneration to staff employed for public relations work 10.07 10.50

27. Research and development :2001-02

Rs. Million Rs. Million(a) Revenue expenditure 64.41 39.90(b) Capital expenditure 125.41 331.14


28. Value Added 51,971.65 43,716.34

20. Finished goods purchased, sold and stocked :

Opening Stock Purchases

Petroleum Quantity Value Quantity ValueProducts MT Rs. Million MT Rs. Million

Light Distillates 394,871 6,869.86 4,616,816 95,905.78(395,287) (6,962.93) (4,526,648) (66,626.21)

Middle Distillates 1,302,635 16,234.14 11,579,589 186,043.25(1,380,144) (19,616.46) (11,994,212) (162,816.59)

Others 169,300 1,550.53 1,194,190 11,830.68(147,383) (1,191.17) (1,100,275) (8,878.88)

Aromatics

(a) Benzene 733 14.15 — —(2,080) (36.98)

(b) Toluene 435 7.83 — —(537) (8.73)

Lubricants 20,860 894.05 1,152 99.46(23,582) (946.86) (1,851) (69.19)

Base Oil — — — —(2,658) (53.67)

Crude Oil — — 101,436 1,053.21(Nil) (Nil)

Others (Grocery) — — — 23.99(Nil)

25,570.56 294,956.37(28,763.13) (238,444.54)

Sales Closing Stock

Petroleum Quantity Value Quantity ValueProducts MT Rs. Million MT Rs. Million

Light Distillates 7,003,248 164,906.86 407,259 9,795.25(6,505,816) (123,317.98) (394,871) (6,869.86)

Middle Distillates 15,781,588 279,348.96 1,378,419 26,738.40(16,219,151) (243,758.83) (1,302,635) (16,234.14)

Others 2,671,193 31,192.08 175,704 2,012.81(2,605,613) (24,088.38) (169,300) (1,550.53)

Aromatics

(a) Benzene 66,188 1,644.30 4,349 111.01(58,845) (923.10) (733) (14.15)

(b) Toluene 19,473 481.45 258 5.98(16,939) (343.71) (435) (7.83)

Lubricants 117,276 6,369.13 19,764 890.38(104,532) (5,809.10) (20,860) (894.05)

Base Oil — — — —(2,658) (53.67)

Crude Oil 101,436 1,053.21 — —(Nil) (Nil)

Others (Grocery) — 27.54 — 2.57(Nil) (Nil)

485,023.53 39,556.40(398,294.77) (25,570.56)

(a) Purchases excludes inter product transfers.

(b) Purchases of petroleum products exclude payments to third parties for processing fees Rs. 94.11 million(previous year Rs. 83.42 million) but include own consumption and samples Rs. 90.56 million (previous yearRs. 202.50 million).


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30. Figures of the previous year have been regrouped wherever necessary, to conform to current year presentation.

Signature to Schedules ‘A’ to ‘X’

For and on behalf of the Board of Directors

Sd/-S. BEHURIA

Chairman and Managing DirectorSd/- Sd/-

ASHOK SINHA D. M. NAIK BENGRE

Director (Finance) Company Secretary

Place : New DelhiDated : May 29, 2003

29. STATUTORY INFORMATION PURSUANT TO PART-IV OF SCHEDULE-VI TO THE COMPANIES

ACT, 1956

Balance Sheet Abstract and Companies General Business Profile

I. Registration Details

Registration No. 8931/TA/III of 1952 - 53 State Code 1 1

Balance Sheet Date 3 1 0 3 2 0 0 3

Date Month Year

II. Capital raised during the year (Rs. million)Public Issue Right Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of Mobilisation and Deployment of Funds (Rs. million)Total Liabilities Total Assets

1 6 7 7 4 4 . 1 2 1 6 7 7 4 4 . 1 2

Sources of Funds Paid-up Capital Reserves & Surplus(excluding deferred tax 3 0 0 0 . 0 0 4 4 4 7 4 . 2 8liability) Secured Loans Unsecured Loans

2 4 4 2 5 . 3 1 8 4 3 3 . 2 8

Application of Funds Net Fixed Assets Investments6 3 6 6 2 . 1 5 * 2 1 0 6 2 . 1 2

Net Current Assets Misc. Expenditure3 0 7 4 . 1 6 N I L

Accumulated LossesN I L *Includes Capital work-in-progress

IV. Performance of Company ( Rs. million)Turnover Total Expenditure

4 8 8 4 8 8 . 9 5 * 4 6 8 5 5 3 . 5 8+ - Profit/Loss Before Tax + - Profit/Loss After Tax

+ 1 9 9 3 5 . 3 7 + 1 2 5 0 0 . 2 8Earning per Share in Rs. Dividend rate %

4 1 . 6 7 1 5 0

* Includes miscellaneous income

V. Generic Names of Three Principal Products/Services of Company (as per monetary terms)

Item Code No. (ITC Code) 2 7 1 0

Product Description PETROLEUM PRODUCTS


Product Description BENZENE


Product Description LUBRICANTS

Note : ITC code of products as per Indian Trade Classification based on harmonised commodity description andcoding system by Ministry of Commerce, Directorate General of Commercial Intelligence & Statistics.


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For the year ended 31st March 2003 2002

Notes Rs. Million Rs. Million

B Net Cash Flow on Investing Activities

Purchase of fixed assets Note 5 (12,232.13) (8,977.55)

Sale of fixed assets 52.00 7.93

Investment in Joint Venture Companies

Petronet India Ltd. — (94.46)

Petroleum India International (16.29) —

Petronet CCK Ltd. (247.00) —

Petronet CI Ltd. (4.40) —

Petronet LNG Ltd. (0.06) —

VIeTrans Private Ltd. — (1.00)

Purchase of Investment — (10,180.00)

Sale of Investments 2,600.03 200.26

Income from Investment 740.18 55.80

Dividend Received 403.18 209.93

Net Cash Flow on Investing Activities (8,704.49) (18,779.09)

C Net Cash Flow on Financing Activities

Long term Borrowings 1,535.39 5,299.38

Repayment of loans (2,339.97) (5,349.72)

Interest paid (2,807.17) (3,070.95)

Interim Dividend Paid (600.00) (1,200.00)

Dividend Paid (3,300.00) (1,050.00)

Corporate Dividend Tax — (229.50)

Net Cash Flow on Financing Activities (7,511.75) (5,600.79)

D Net Increase/(Decrease) in Cash and

Cash equivalents (A+B+C) 8,118.33 2,562.25

CASH FLOW STATEMENT — (Contd.)



A Cash Flow from Operating Activities

Net Profit Before tax and prior period items 19,865.16 13,321.24

Adjustments for :


Interest paid 2,459.46 3,066.47

Foreign Exchange Fluctuations Note 3 (91.00) 30.78

(Profit)/Loss on Sale of fixed assets 7.11 50.99

Income from Investments (741.51) (58.67)

Dividend Received (403.18) (209.93)

Other Non-Cash items Note 4 241.41 1,539.91

Operating Profit before Working Capital Changes 26,146.69 22,550.64

Invested in :

Trade Receivables 1,247.44 (368.82)

Other receivables (10,854.14) 5,159.88

Inventory (14,948.90) 3,712.77

Current Liabilities & Payables 29,386.81 702.11

Cash generated from Operations 30,977.90 31,756.58

Direct Taxes paid (6,690.08) (4,779.85)

Cash flow before prior period items 24,287.82 26,976.73

Prior Period Items 70.21 (53.40)

Non-Cash items (23.46) 18.80

Net Cash from Operating Activities 24,334.57 26,942.13

CASH FLOW STATEMENT

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126

2002 2001Cash and Cash equivalents as at 31st March Rs. Million Rs. Million

Cash in Hand 1,942.74 1,698.60

Cash at Bank 1,145.03 1,823.57

Cash in transit 357.32 407.92

Cash Credit from scheduled banks (15,265.91) (18,000.00)

Unsecured loans from scheduled banks/ICDs/CPs (7,000.00) (7,313.16)

(18,820.82) (21,383.07)

Cash and Cash equivalents as at 31st March 2003 2002

Cash in Hand 2,224.66 1,942.74

Cash at Bank 4,218.73 1,145.03



Unsecured loans from scheduled banks/ICDs/CPs — (7,000.00)

(10,702.49) (18,820.82)

Net change in Cash and Cash equivalents 8,118.33 2,562.25

Explanatory notes to Cash Flow Statement

1. The Cash Flow Statement is prepared in accordance with the format prescribed by Securities and Exchange Board ofIndia and as per Accounting Standard 3 prescribed by the Institute of Chartered Accountants of India.

2. In Part-A of the Cash Flow Statement, figures in brackets indicate deductions made from the Net Profit for deriving the netcash flow from operating activities. In Part-B and Part-C, figures in brackets indicate cash outflows.

3. The net profit/loss arising due to conversion of current assets/current liabilities receivable/payable in foreign currencyis furnished under the head "Foreign Exchange Fluctuations".

4. “Other Non-Cash items” include excess provisions written back, foreign exchange adjustments, diminution in valueof investment, transfer to Capital reserve, Bad debts and materials written off and miscellaneous adjustments notaffecting cash flow.

5. “Purchase of Fixed Assets” include the additional liability of Rs.1.77 million (2001-02- Rs. 1.10 million) arising onaccount of exchange rate variation during the year.

6. Figures of the previous year have been regrouped wherever necessary, to conform to current year’s presentation.

CASH FLOW STATEMENT — (Contd.)



Sd/-S. VENKATRAMANPar tner

Place : New DelhiDated : 29th May, 2003

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128 129 Annual Report 2002-2003

5. On the basis of the information and explanations given to us and on consideration of the separate audit repor ts on

individual audited financial statements of the Company, its subsidiaries and joint ventures, in our opinion the

consolidated financial statements together with the notes thereon and attached thereto give a true and fair view

in conformity with the accounting principles generally accepted in India:-

(i) in the case of the Consolidated Balance Sheet, of the consolidated state of affairs of the Company and its

subsidiaries as at 31st March, 2003;

(ii) in the case of the Consolidated Profit and Loss Account, of the consolidated results of operations of the

Company and its subsidiaries for the year ended on that date; and

(iii) in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Company and its

subsidiaries for the year ended on that date.



Sd/-

S. VENKATRAMAN

Par tner

Place: New Delhi

Date: July 4, 2003.

AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

The Board of Directors

Bharat Petroleum Corporation Ltd.

1. We have examined the attached Consolidated Balance Sheet of Bharat Petroleum Corporation Ltd. ('the Company')

and its subsidiaries as at 31st March, 2003, the Consolidated Profit and Loss Account and the Consolidated Cash

Flow Statement for the year ended on that date, both annexed thereto. These consolidated financial statements are

the responsibility of the Company's management and include the interests of the Company in eight joint venture

companies in accordance with Accounting Standard 27 “Financial Repor ting of Interests in Joint Ventures”. Our

responsibility is to express an opinion on these consolidated financial statements based on our examination.

2. We did not audit the financial statements of the two Subsidiary Companies, whose financial statements in the

aggregate, reflect total assets of Rs.71,575.94 million as at 31st March, 2003 and total revenues of Rs.136,153.29

million for the year ended on that date. We have also not audited the financial statements of six joint venture

companies. The financial statements of these subsidiary companies and joint venture companies have been

audited by other auditors and we have relied upon such audited financial statements for the purpose of our

examination of the consolidated financial statements. The repor ts on these audited financial statements have

been furnished to us and our opinion, in so far as it relates to the amounts included:-

(a) in respect of the Subsidiary Companies and

(b) in respect of the interests of the Company in these joint venture companies,

is based solely on the repor ts of the other auditors.

3. We conducted our audit in accordance with the generally accepted auditing standards in India. These standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are prepared, in all material respects, in accordance with an identified financial repor ting framework and are free

of material misstatement. An audit includes, examining on a test basis, evidence suppor ting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by management, as well as evaluating the overall financial statements presentation.

We believe that our audit provides a reasonable basis for our opinion.

4. We repor t that the consolidated financial statements have been prepared by the Company in accordance with the

requirements of Accounting Standard 21 "Consolidated Financial Statements" and Accounting Standard 27 "Financial

Reporting of Interests in Joint Ventures", issued by the Institute of Chartered Accountants of India and as explained

in Note No.A(1) of Schedule X to the Consolidated Financial Statements and on the basis of:-

(a) The separate audited financial statements of the Company and its subsidiaries, included in the Consolidated

Financial Statements and

(b) In so far as the interests of the Company in joint venture companies included in the Consolidated Financial

Statements, the separate audited financial statements of the joint venture companies.

Au

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130 131 Annual Report 2002-2003

2001-02SCHEDULE Rs. Million Rs. Million

INCOMESale of products N 568,183.63 455,006.26Excise Duty Refund — 3,004.93Miscellaneous income O 3,528.79 2,799.68Increase/(Decrease) in Inventory P 17,136.74 (3,397.10)

TOTAL 588,849.16 457,413.77EXPENDITURE

Purchase of products for resale 243,561.58 204,804.19Raw materials consumed Q 200,263.60 131,989.49Packages consumed 615.39 576.97Duties, taxes etc. and other chargesapplicable to products 68,656.53 60,788.28Transportation 14,086.17 10,783.85Consumption of stores, spares and materials R 512.57 482.16Power and Fuel S 647.71 602.73Employees' remuneration and other benefits T 7,624.29 7,634.59Interest U 4,910.71 6,211.50Other operating and administration expenses V 11,069.76 10,606.20Depreciation 7,361.52 7,271.48Misc. Expenditure Written off 36.62 41.69TOTAL 559,346.45 441,793.13Profit 29,502.71 15,620.64Prior period income/(expenses) net W 61.25 (172.72)Profit before exceptional item & tax 29,563.96 15,447.92Loss on Sale of Liquefied Petroleum Gas Business (0.16) —Profit before tax 29,563.80 15,447.92Provision for Taxation- Current Tax 9,284.29 4,353.36- Deferred Tax (Net) 1,901.57 1,158.77Excess/(Shor t) provision for Taxation in earlieryears written back/provided for (153.54) 141.07Profit after tax 18,224.40 10,076.86Minority Interest 2,697.04 766.26Net Income of the Group 15,527.36 9,310.60Less:- Deferred tax net for earlier years 567.79 —Transfer to Debenture Redemption Reserve 2,070.00 650.00Balance brought forward 3,625.39 4,996.00Disposable Profit 19,212.00 14,422.86Appropriations:Dividend paid including dividend tax — 0.70Interim dividend paid (after deduction of tax at source) 600.00 —Final (proposed) dividend (subject to deduction of tax at source) 4,721.93 3,576.62Corporate Dividend Tax on proposed Dividend 746.98 —

6,068.91 3,577.32Transferred to Special Reserve 3.73 —Transfer to General Reserve 7,464.72 4,617.10Balance Carried to Balance Sheet 5,674.64 6,228.44Earnings per Share- Basic 51.76 31.04- Diluted 51.76 31.04Statement of Significant Accounting Policiesand Notes forming par t of Accounts X

CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2003




Place : New DelhiDated : July 4, 2003

31/03/2002

SCHEDULE Rs. Million Rs. Million

I. SOURCES OF FUNDS

1. Shareholders' funds :

Share Capital A 3,000.00 3,000.00Reserves and Surplus B 48,187.51 38,170.82

51,187.51 41,170.822. Minority Interest :

Share Capital 3,350.25 3,350.25Reserves and Surplus 6,815.58 5,228.10

10,165.83 8,578.353. Loan funds : C

Secured Loans 29,007.15 29,337.21Unsecured Loans 29,179.87 34,923.73

58,187.02 64,260.944. Deferred tax liability (net) 12,268.44 9,796.72

TOTAL 131,808.80 123,806.83II. APPLICATION OF FUNDS

1. Fixed Assets : DGross block 149,879.29 140,156.97Less : Depreciation 57,549.31 50,355.42Net block 92,329.98 89,801.55Capital work-in-progress E 13,503.57 6,047.16

105,833.55 95,848.712. Investments F 8,650.01 13,094.653. Current assets, loans and advances :

Inventories G 54,894.47 37,319.86Sundry debtors H 14,443.40 13,691.93Cash and bank balances I 11,564.07 4,869.78Other current assets J 23.91 24.77Loans and advances K 27,932.44 18,589.85

108,858.29 74,496.19Less : Current liabilities and provisions :

Liabilities L 81,165.26 52,021.17Provisions M 10,402.62 7,674.83

91,567.88 59,696.00Net current assets 17,290.41 14,800.19

4. Miscellaneous Expenditure to the extent

not written off or adjusted 34.83 63.28TOTAL 131,808.80 123,806.83Statement of Significant Accounting Policies andNotes forming par t of Accounts. X

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2003






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132 133 Annual Report 2002-2003

31/03/2002


Capital Reserve

As per last Balance Sheet 434.11 1,131.75

Less : Amor tisation of Capital Grant (0.07) (0.07)

Less : Adjustment on acquisition of subsidiaries — (697.57)

434.04 434.11

Capital Reserve on acquisition of subsidiaries 1,729.88 1,729.88

Debenture Redemption Reserve

As per last Balance Sheet 650.00 —

Add : Transfer from Profit & Loss Account 2,070.00 650.00

2,720.00 650.00

General Reserve

As per last Balance Sheet 36,976.08 39,108.61

Add : Transfer from Profit & Loss Account 7,464.72 4,617.10

Less : Deferred tax adjustment — (6,018.36)

Less : Amount capitalized — (3.00)

Less : Adjustment on acquisition of subsidiaries — (728.27)

44,440.80 36,976.08

Special Reserve 3.73 —

Surplus as per Profit & Loss Account 5,674.64 6,228.44

Less: Deferred tax adjustment of Subsidiaries — (2,619.59)

5,674.64 3,608.85

55,003.09 43,398.92

Less : Minority Interest (6,815.58) (5,228.10)

Total Reserves 48,187.51 38,170.82

SCHEDULE ‘B’ — RESERVES AND SURPLUS (CONSOLIDATED)

31/03/2002


Authorised

300 million equity shares of Rs.10 each 3,000.00 3,000.00

3,000.00 3,000.00

Issued, subscribed and paid-up

300 million equity shares of Rs.10 each fully paid-up 3,000.00 3,000.00

Total 3,000.00 3,000.00

SCHEDULE ‘A’ — SHARE CAPITAL (CONSOLIDATED)


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134 135 Annual Report 2002-2003


Unsecured Loans

Public deposits 3,706.60 3,913.56

[Due for repayment within one year Rs. 1388.93 million

(previous year Rs. 1733.96 million)]

Short Term

From Banks # 3,417.61 8,763.29Foreign Currency Loan from Bank 359.38 —Others 1,100.48 93.54

Others 20,595.80 22,153.34

[Due for repayment within one year Rs. 4163.16 million

(previous year Rs. 3319.29 million)]

29,179.87 34,923.73

Total 58,187.02 64,260.94

# Includes Rs. Nil (previous year Rs. 7,000 million) raised through Commercial Paper. Maximum amount raised duringthe year through Commercial Paper Rs. 7,000 million (previous year Rs. 10,500 million).

SCHEDULE ‘C’ — LOAN FUNDS (CONSOLIDATED)(Contd.)


Secured LoansBonds

BPCL Millennium Bonds Series - I (Option I) - Redeemable at par on 1stDecember 2006 with put and call option on 1st December 2004 (Securedby mor tgage created on cer tain immovable proper t ies of theCorporation) * 2,500.00 2,500.00

BPCL Millennium Bonds Series - I (Option II) - Redeemable at par on 15thDecember 2004 with put and call option on 15th December every year till2003 (Secured by mor tgage created on cer tain immovable proper ties ofthe Corporation) — 150.00

BPCL Debentures 2008 - Redeemable at par on 1st June 2008 with put andcall option on 1st June 2006 (Secured by mor tgage created oncer tain immovable proper ties of the Corporation) ** 4,450.00 4,450.00

BanksTerm LoansSecured by Hypothecation of Plant & Machinery of NRL 2,032.14 4,178.80[Due for repayment within one year Rs 293.33 million (previous yearRs 282.04 million)]Secured against Township Land & Building of NRL 415.30 415.30[Due for repayment within one year Rs 68.00 million

(previous year Rs Nil million)]Secured against Bank Deposits of KRL — 63.00[Due for repayment within one year Rs Nil (previous year Rs. 63.00 million)]Secured by first charge by way of hypothecation of all the movableproper ties of Petronet LNG Limited, both present and future ranking paripassu with all the lenders[Due for repayment within one year Rs 1,015.63 million(previous year Rs. Nil)] 1,015.63 —

Working Capital Loans/Cash Credit 18,304.37 17,512.59(Secured in favour of the par ticipating banks ranking pari passu inter aliaby hypothecation of raw materials, finished goods, stock-in-process,bookdebts, stores, components and spares and all movables both present andfuture)

Interest accrued and due 27.08 40.51

OthersTerm Loans(Refinanced through Government of India)Secured by hypothecation of cer tain plant and machinery at BPCL Refinery 3.18 27.01[Due for repayment within one year Rs 3.18 million(previous year Rs. 23.66 million)]

Secured by hypothecation of all the movable proper ties, both presentand future of Petronet LNG Limited[Due for repayment within one year Rs 258.75 million(previous year Rs. Nil)] 258.75 —Secured by hypothecation of Car & Computer of VI eTrans Pvt. Limited 0.70 —

29,007.15 29,337.21

* Interest payable at the rate of 12% per annum.** Interest payable at the rate of 9.95% per annum on Rs. 3,450 million and at 9.90% per annum on Rs.1,000 million.

SCHEDULE ‘C’ — LOAN FUNDS (CONSOLIDATED)


Co

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men

ts

136 137 Annual Report 2002-2003


Capital work-in-progress (at Cost)

Work-in-progress 8,885.83 4,105.93Capital Advances (Unsecured, Considered good) 1,181.28 768.09Capital stores including lying with contractors 1,375.77 644.46Capital goods in transit 280.95 26.33

Construction period expenses

Opening balance 1,223.13 659.76Add : Expenditure during the year

Establishment charges 146.51 85.94Interest 349.75 262.57Depreciation 2.48 0.73Others 149.74 149.37

1,871.61 1,158.37Less : Allocated to assets during the year (91.87) (706.73)Other Adjustment — 50.71Balance pending allocation at the end of the year 1,779.74 502.35

Total 13,503.57 6,047.16

SCHEDULE ‘E’ — CAPITAL WORK-IN-PROGRESS (CONSOLIDATED)R

s. M

illio

n

GR

OS

S B

LOC

KD

EPR

ECIA

TIO

N

N

ET B

LO

CK

PA

RTI

CU

LAR

SA

S A

TA

DD

ITIO

NS

DED

UC

TIO

NS

ON

AS

AT

UPT

OTH

IS Y

EAR

DED

UC

TIO

NS

UPTO

AS

AT

AS

AT

01-0

4-20

02A

CC

OU

NT

OF

31

-03

-20

03

31-

03-2

002

ON

AC

CO

UN

T O

F 3

1-0

3-2

00

33

1-0

3-2

00

331

-03-

2002

RET

IREM

ENT/

RET

IREM

ENT/

REC

LAS

SIF

ICAT

ION

SR

ECLA

SS

IFIC

ATIO

NS

(1

)(2

)(3

)(4

)(5

)(6

)(7

)(8

) (

9)

(10

)(1

1)

1.LA

ND

(a)

Free

hold

2,53

9.98

399.

98(6

.00)

2,9

45

.96

——

——

2,9

45

.96

2,50

9.23

(b)

Leas

ehol

d63

8.28

34.3

917

.65

65

5.0

270

.36

10.9

2—

81

.28

57

3.7

452

6.18

(c)

Rig

ht o

f way

38.2

678

.07

—1

16

.33

——

——

11

6.3

338

.26

2.B

UIL

DIN

GS

18,1

39.9

81,

837.

2946

.73

19

,93

0.5

41,

629.

0438

9.42

35.0

51

,98

3.4

11

7,9

47

.13

16,3

19.6

2

3.R

AIL

WAY

SID

ING

S1,

946.

2656

.94

4.25

1,9

98

.95

471.

2694

.00

2.93

56

2.3

31

,43

6.6

214

75.0

1

4.P

LAN

T an

d M

AC

HIN

ERY

58,7

95.3

42,

652.

631,

057.

206

0,3

90

.77

14,0

99.5

83,

014.

5810

2.35

17

,01

1.8

14

3,3

78

.96

44,2

07.3

0

5.TA

NK

S a

nd P

IPEL

INES

22,2

79.6

91,

771.

3810

7.02

23

,94

4.0

56,

805.

641,

217.

5390

.19

7,9

32

.98

16

,01

1.0

715

,473

.64

6.FU

RN

ITU

RE

and

FITT

ING

S74

2.53

111.

8021

.92

83

2.4

129

2.80

51.9

115

.95

32

8.7

65

03

.65

438.

88

7.VE

HIC

LES

783.

1992

.43

20.2

98

55

.33

408.

4360

.01

14.8

84

53

.56

40

1.7

736

6.65

8.O

THER

AS

SET

S

(a)

Dis

pens

ing

Pum

ps3,

889.

2959

2.17

4.43

4,4

77

.03

849.

4019

2.08

4.60

1,0

36

.88

3,4

40

.15

3,03

9.89

(b)

LPG

Cyl

inde

rs a

nd A

llied

Equ

ipm

ent

23,5

14.7

21,

733.

8944

.83

25

,20

3.7

823

,514

.72

1,73

3.89

44.8

32

5,2

03

.78

——

(c)

Sun

drie

s7,

817.

8278

1.02

69.7

28

,52

9.1

22,

377.

3461

8.88

41.7

02

,95

4.5

25

,57

4.6

05,

406.

89

TOTA

L14

1,12

5.34

10,1

41.9

91,

388.

041

49

,87

9.2

950

,518

.57

7,38

3.22

352.

485

7,5

49

.31

92

,32

9.9

889

,801

.55

PR

EVIO

US

YEA

R12

7,58

9.23

13,0

12.3

544

4.61

14

0,1

56

.97

43,2

54.7

37,

324.

5022

3.81

50

,35

5.4

28

9,8

01

.55

84,3

34.5

0

SCHE

DULE

‘D’ —

FIX

ED A

SSET

S (C

ONSO

LIDA

TED)

NO

TES

:-

1)La

nd:-

a)Fr

eeh

old

lan

d o

f th

e g

rou

p in

clu

des

Rs.

61

6.2

9 m

illi

on

(p

revi

ou

s ye

ar R

s.5

43

.25

mill

ion

) fo

r w

hic

h

conv

eyan

ce d

eed

/ r

egis

trat

ion

/ ex

ecut

ion

of t

itle

dee

ds

are

pen

din

g.

b)L

ease

hold

land

of t

he g

roup

incl

udes

gro

ss b

lock

Rs.

40

.99

mil

lion

(p

revi

ous

yea

r R

s.1

5.0

8 m

illio

n)

whi

ch th

oug

h in

the

po

sses

sio

n, th

e le

ase

dee

ds

are

yet t

o b

e re

gist

ered

.

c)Fr

eeho

ld la

nd o

f BP

CL in

clud

es la

nd c

ost

ing

Rs.

21

.27

mil

lion

(pre

vio

us y

ear

Rs.

21

.27

mill

ion)

whi

ch

is in

the

pro

cess

of b

eing

so

ld s

ubje

ct to

appro

val o

f co

mpet

ent a

utho

rity

.

2)B

uild

ings

per

tain

ing

to B

PC

L in

clud

e:-

a)O

wn

ersh

ip f

lats

of

Rs.

13

2.6

9 m

illi

on

(p

revi

ou

s ye

ar R

s.6

1.7

6 m

illio

n)

in p

rop

ose

d /

exi

stin

g c

o-

op

erat

ive

soci

etie

s.

b)R

esid

entia

l fla

ts a

nd o

ffic

e co

mpl

ex w

hich

are

in p

osse

ssio

n of

BP

CL

and

in r

espe

ct o

f w

hich

the

lea

se

dee

ds

are

yet t

o b

e re

gis

tere

d :-

Gro

ss B

lock

Rs.

38

.05

mil

lion

(p

revi

ous

yea

r R

s.3

8.0

5 m

illio

n), N

et

Blo

ck R

s. 3

4.2

1 m

illi

on

(p

revi

ous

yea

r R

s.3

4.7

7 m

illio

n).

3)L

and

, Pla

nt &

Mac

hin

ery,

Tan

ks &

Pip

elin

es, R

ailw

ay S

idin

gs

and

Build

ing

s jo

intly

ow

ned

by

BP

CL

in v

aryi

ng

exte

nt

wit

h o

ther

Oil

Co

mp

anie

s /

Rai

lway

s :-

Gro

ss B

lock

Rs.

1,5

53

.04

mil

lio

n (

pre

vio

us

year

Rs.

1,3

32

.59

mill

ion

), D

epre

ciat

ion

Rs.

25

9.2

8 m

illi

on

(p

revi

ou

s ye

ar R

s.1

89

.84

mill

ion

), N

et B

lock

Rs.

1,2

93

.76

mil

lio

n

(pre

vious

yea

r R

s.1

,14

2.7

5 m

illio

n).

4)B

uild

ing

s, P

lan

t &

Mac

hin

ery

and

Su

nd

ries

incl

ud

es R

s. 1

30

.60

mil

lio

n (

pre

vio

us

year

Rs.

13

0.6

0 m

illio

n)

tow

ards

ass

ets,

ow

ners

hip

of w

hich

doe

s no

t ves

t with

the

grou

p. T

his

amou

nt h

as b

een

amor

tised

ove

r a p

erio

d

of f

ive

year

s. T

he

amo

unt c

har

ged

off

as

dep

reci

atio

n fo

r th

e cu

rren

t yea

r is

Rs.

24

.32

mil

lion

(p

revi

ous

yea

r

Rs.

29

.26

mill

ion)

.

5)G

ross

Blo

ck o

f the

gro

up in

clud

es R

s. 2

66

.31

million

(pr

evio

us y

ear R

s. 1

56

.24

mill

ion)

tow

ards

ass

ets

held

for

disp

osal

at

disc

ontin

ued

loca

tions

in

resp

ect

of w

hich

add

ition

al d

epre

ciat

ion

has

bee

n pr

ovid

ed to

reco

gnis

e

the

exp

ecte

d lo

ss o

n d

isp

osa

l. T

he a

mo

unt o

f ad

diti

ona

l dep

reci

atio

n so

pro

vid

ed d

urin

g th

e ye

ar is

Rs.

44

.58

mil

lion

(pre

vio

us y

ear

Rs.

67

.83

mill

ion)

.


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ts

138 139 Annual Report 2002-2003

(As taken, valued and cer tified by the Management) @

31/03/2002


Stores and spares 1,685.26 1,813.72

Stores and spares in Transit 119.81 138.64

Raw materials 5,561.22 5,089.80

Stock- in-process 3,279.42 1,291.42

Finished products 44,203.68 28,935.34

Packages 45.08 50.94

Total 54,894.47 37,319.86

@ Inventory valuation is as per Significant Accounting Policy no. 8.

SCHEDULE ‘H’ — SUNDRY DEBTORS (CONSOLIDATED)(Unsecured, Considered good unless otherwise stated)

31/03/2002


Debts outstanding for over six months :

Considered good * 1,419.43 2,402.66

Considered doubtful 2,181.72 1,250.01

3,601.15 3,652.67

Other debts 13,023.97 11,289.27

16,625.12 14,941.94

Less : Provision for doubtful debts (2,181.72) (1,250.01)

Total 14,443.40 13,691.93

* Includes Rs. 11.55 million (previous year Rs. 3.40 million) which are secured.

SCHEDULE ‘G’ — INVENTORIES (CONSOLIDATED)SCHEDULE ‘F’ — INVESTMENTS (CONSOLIDATED)


IN GOVERNMENT SECURITIESNON TRADE - QUOTED 7,950.38 11,010.41IN SHARES, DEBENTURES AND BONDSTRADE - UNQUOTED 212.94 2,363.11Less : Provision for diminution in value of investment 75.00 810.00

137.94 1,553.11

IN OTHER SECURITIES

NON TRADE - QUOTED 373.75 397.55Less : Provision for diminution in value of investment — 23.77

373.75 373.78

NON TRADE - UNQUOTED 0.10 0.10

IN ASSOCIATION OF PERSONS

NON TRADE - UNQUOTEDCapital Contribution in Petroleum India International 1.00 1.00Share in accumulated surplus of Petroleum India 186.84 156.25International as at 31st March 2002 (31st March 2001)

Total 8,650.01 13,094.65

All investments are long-term investments.

Aggregate value of Unquoted Securities Rs. 325.88 million(previous year Rs. 12,720.46 million).

Aggregate value of Quoted Securities Rs. 8,324.13 million

(previous year Rs. 374.19 million).

Market value of Quoted Securities Rs. 8,672.02 million

(previous year Rs. 401.98 million).


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140 141 Annual Report 2002-2003

(Unsecured, Considered good unless otherwise stated)


Loans (Secured) :To companiesConsidered doubtful 1.05 1.05Less :Provision for doubtful loans (1.05) (1.05)To staff * 5,521.86 4,954.84

Loans:To companiesConsidered good 3.50 —Considered doubtful 28.08 34.48Less :Provision for doubtful loans (28.08) (34.48)To staff 62.88 47.81To others 95.09 68.11

Advances:Share Application money pending allotment/Advance towards equity shares 182.23 744.90Advances recoverable in cash, or in kind or for value to be received ** 2,029.27 3,290.23Advances considered doubtful 48.59 66.76Less : Provision for doubtful advances (48.59) (66.76)

7,894.83 9,105.89

Material given on Loan (Secured) 4.92 4.92Less : Deposits Received (4.92) (4.92)

Dues from Pool Account (Petroleum Planning & Analysis Cell - Government of India) 14,584.59 5,033.50

Claims :

Considered good 3,407.31 2,321.75Considered doubtful 134.17 130.16Less : Provision for doubtful claims (134.17) (130.16)

3,407.31 2,321.75Advance Income Tax ( Net of provision for taxation) 1,492.10 1,596.83

Deposits :With Customs/Excise/Por t Trust etc. (repayable on demand) 215.84 370.09Others 337.77 161.79

553.61 531.88Considered doubtful 0.19 0.25Less : Provision for doubtful deposits (0.19) (0.25)

553.61 531.88

Total 27,932.44 18,589.85

* Include :Due from Officers : Rs 21.64 million (previous year Rs 20.88 million)Maximum balances : Rs 23.32 million (previous year Rs 24.72 million)

Due from Directors : Rs 2.49 million (previous year Rs 4.44 million)Maximum balances : Rs 3.44 million (previous year Rs 4.94 million)

** Includes an amount of Rs.59.80 million (previous year Rs. 51.27 million) alongwith interest of Rs. 60.14 million(previous year Rs. 52.20 million) deposited as per court order in Land Compensation cases for which appeals arepending.

SCHEDULE ‘K’ — LOANS AND ADVANCES (CONSOLIDATED)SCHEDULE ‘I’ — CASH AND BANK BALANCES (CONSOLIDATED)

31/03/2002


Cash on Hand 2,501.20 2,079.61

[Includes drafts and cheques of Rs. 2,372.95 million (previous

year Rs. 1,945.09 million) on hand]

With Scheduled banks :

In current accounts 2,556.22 1,220.19

In deposit accounts 6,178.01 1,212.66

With Other Banks:

Balance with Citi Bank, New York

Time deposit (subject to confirmation) * *

Remittances in transit 328.64 357.32

Total 11,564.07 4,869.78

* Balance Rs. 1055.70

Maximum balance at any time during the year Rs. 0.001 million.

SCHEDULE ‘J’ — OTHER CURRENT ASSETS (CONSOLIDATED)

31/03/2002


Interest accrued on investments 8.10 12.21

Interest accrued on bank deposits 15.81 12.56

Total 23.91 24.77


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142 143 Annual Report 2002-2003

2001-02


Interest on bank deposits and others * 609.69 1,136.25Tax deducted at source - Rs.101.74 Million (previous year Rs. 118.62 million)

Income from InvestmentsLong TermInterest ** 696.75 47.03Dividend — 8.87

From AOP ( Petroleum India International) 32.58 15.20

Profit on Sales/Maturity 54.00 0.01

Excess provision for expenses written back 39.52 112.65

Other income # 2,096.25 1,479.67

Total 3,528.79 2,799.68

* Includes interest received from Income tax authorities Rs. 27.57 million (previous year Rs. 263.12 million) and from OilCo-ordination Committee Rs. Nil (previous year Rs.448.67 million).

** Includes interest received from Oil bonds Rs. 683.17 million (previous year Rs. 4.26 million).

# Includes amortisation of capital grants Rs 0.07 million (previous year Rs 0.07 million).

SCHEDULE ‘P’ — INCREASE/(DECREASE) IN INVENTORY (CONSOLIDATED)

2001-02


Value of closing stock ofFinished goods 44,203.68 28,935.34Stock-in-process 3,279.42 1,291.42

47,483.10 30,226.76

Less :Value of opening stock ofFinished goods 29,049.75 31,799.79Stock-in-process 1,296.61 1,824.07

30,346.36 33,623.86

Total 17,136.74 (3,397.10)

SCHEDULE ‘Q’ — RAW MATERIALS CONSUMED (CONSOLIDATED)

2001-02


Opening Stock 5,125.67 5,067.28

Add : Purchases 200,699.15 132,426.10Stock taken on loan — 9,390.87

Less : Stock given on loan — (9,804.96)Closing Stock (5,561.22) (5,089.80)

Raw Material Consumed 200,263.60 131,989.49

SCHEDULE ‘O’ — MISCELLANEOUS INCOME (CONSOLIDATED)


Current Liabilities :

Sundry creditorsTotal outstanding dues to Small Scale Industries (SSI’s) 147.55 168.95Total outstanding dues to creditors other than SSI’s 43,631.99 17,893.35

Materials taken on loan 2.55 0.67Less : Deposits given (2.55) (0.67)

Deposits from Customers 7.17 5.92Deposits for containers 21,618.39 19,787.38Unclaimed Dividend * 19.62 16.07Unclaimed Deposits * 14.91 13.81Other liabilities 15,133.60 13,457.75Interest accrued but not due on loans 592.03 677.94

Total 81,165.26 52,021.17

* These figures do not include any amounts, due and outstanding, to be credited to Investor Education and Protection Fund.

SCHEDULE ‘M’ — PROVISIONS (CONSOLIDATED)

31/03/2002


Provision for Taxation (Net of Tax paid) 148.99 13.32

Proposed dividend 4,721.93 3,576.62

Corporate Dividend Tax on proposed dividend 746.98 —

Provision for retirement benefits 2,212.88 1,513.05

Provision for excise duty refund 2,571.84 2,571.84

Total 10,402.62 7,674.83

SCHEDULE ‘N’ — SALE OF PRODUCTS (CONSOLIDATED)

2001-02


Sales 555,093.77 477,232.47

Subsidy on LPG (Domestic) & SKO (PDS) 13,497.10 —

Net Recovery from/(payment to) Pool Account

(Petroleum Planning & Analysis Cell - Government of India) (407.24) (22,226.21)

Total 568,183.63 455,006.26

SCHEDULE ‘L’ — LIABILITIES (CONSOLIDATED)


Co

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144 145 Annual Report 2002-2003


Repairs and maintenance :

Machinery 1,975.87 1,614.57Building 139.30 148.44Others 762.35 776.61

2,877.52 2,539.62

Insurance 557.10 366.20Rent 934.72 839.50Rates and taxes 502.25 795.05Charities and donations 12.31 36.28Remuneration to auditors 2.63 1.89Utilities 298.68 289.54Write off :

Bad debts and Claims 188.92 134.50Less : Provision made (34.79) —Diminution in value of investments 758.80 —Less : Provision made earlier (758.77) —Others 47.30 298.07

Provision for :Doubtful debts and advances 888.50 718.44Diminution in value of investments — 758.77Others 55.28 84.66

Miscellaneous expenditure written off 0.35 —Charges paid to other oil companies 486.76 80.71Travelling and conveyance 781.83 656.04Telephone, Telex, Cables, Postage etc. 298.80 247.48Loss on sale/write off of Fixed Assets(net) 7.48 52.02Brokerage on Public Deposit 14.27 7.53Other expenses 3,149.82 2,699.90Total 11,069.76 10,606.20

SCHEDULE ‘W’ — PRIOR PERIOD INCOME/(EXPENSES) (NET)(CONSOLIDATED)


Sale of products 444.04 (8.74)Miscellaneous Income 1.74 10.72Purchase of product for resale (406.48) 24.51Employees’ Remuneration and Other Benefits (14.34) —Duties, taxes etc. and other product charges — (21.34)Transportation 1.28 0.97Consumption of stores, spares and materials (1.57) (1.65)Rent, Rates & Taxes (1.30) (18.31)Other operating and administration expenses 21.11 (58.64)Interest (0.47) (73.10)Depreciation 17.24 (27.14)

Total 61.25 (172.72)

SCHEDULE ‘V’ — OTHER OPERATING AND ADMINISTRATIONEXPENSES (CONSOLIDATED)

2001-02


Stores, spares and materials 1,345.66 1,287.71

Less : Charged to other revenue accounts (833.09) (805.55)

Total 512.57 482.16

SCHEDULE ‘S’ — POWER AND FUEL (CONSOLIDATED)

2001-02


Power and Fuel 10,518.38 8,065.05

Less : Consumption of fuel out of own production (9,870.67) (7,462.32)

Total 647.71 602.73

SCHEDULE ‘T’ — EMPLOYEES’ REMUNERATION AND OTHERBENEFITS (CONSOLIDATED)

2001-02


Salaries and wages 5,319.28 5,846.67

Contribution to provident fund and other funds 632.69 399.74

Contribution to gratuity fund 169.94 173.62

Welfare expenses 1,502.38 1,214.56

Total 7,624.29 7,634.59

SCHEDULE ‘U’ — INTEREST (CONSOLIDATED)

2001-02


On Bonds 567.21 606.47

On Fixed Loans 2,894.75 4,153.45

Others 1,448.75 1,451.58

Total 4,910.71 6,211.50

SCHEDULE ‘R’ — CONSUMPTION OF STORES, SPARESAND MATERIALS (CONSOLIDATED)


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146 147 Annual Report 2002-2003

SCHEDULE ‘X’ — (CONSOLIDATED) (Contd.)

Petronet CI Limited 11.00 IndiaPetronet LNG Limited 12.50 IndiaBharat Oman Refineries Limited 50.00 IndiaVI eTrans Private Limited 33.33 India

2. ACCOUNTING CONVENTION

The financial statements are prepared under historical cost convention in accordance with the mandatoryaccounting standards issued by the Institute of Chartered Accountants of India and the provisions of the CompaniesAct, 1956, adopting accrual system of accounting except where otherwise stated.

3. USE OF ESTIMATES

The preparation of financial statements requires management to make cer tain estimates and assumptions thataffect the amounts repor ted in the financial statements and notes thereto. Differences between actual resultsand estimates are recognised in the period in which they materialise.

4. FIXED ASSETS

4.1 LAND

4.1.1 Land acquired on lease where period of lease exceeds 99 years is treated as freehold.

4.1.2 Cost of right of way for laying pipelines is capitalised.

4.2 FIXED ASSETS OTHER THAN LAND

Expenditure on assets, other than plant and machinery, LPG cylinders and pressure regulators, not exceedingRs.1,000 per item is charged to revenue.

4.3 Machinery spares that can be used only in connection with an item of fixed asset and their use is expectedto be irregular are capitalised. Replacement of such spares is charged to revenue.

4.4 EXPENDITURE DURING CONSTRUCTION PERIOD

Direct expenses including borrowing cost and crop compensation for laying pipelines incurred duringconstruction period on capital projects are capitalised. Indirect expenses of the project group are allocatedonly to the projects costing Rs 50 million and above.

5. BORROWING COSTS

Borrowing costs attributable to acquisition, construction or production of qualifying asset are capitalised as partof the cost of that asset, till the month in which the asset is ready for use. Other borrowing costs are recognisedas an expense in the period in which these are incurred.

6. DEPRECIATION

6.1 Premium paid for acquiring leasehold land for lease period not exceeding 99 years, is amor tised over theperiod of lease.

6.2 LPG cylinders and pressure regulators and other fixed assets costing not more than Rs 5,000 each, aredepreciated @100 percent in the year of capitalisation.

6.3 Depreciation on assets not owned by the Corporation is amor tised over a period of five years from theyear of capitalisation.

6.4 In case of Indraprastha Gas Limited, mother compressors and online compressors are being depreciatedon straight line basis over a period of 7 years.

6.5 Depreciation on other fixed assets is provided under the straight line method, at rates prescribed underSchedule XIV to the Companies Act, 1956 except in case of two joint venture companies Bharat OmanRefineries Limited and VI eTrans Private Limited who have provided depreciation under the written downvalue method. Additions to fixed assets during the year are being depreciated on pro rata basis from thebeginning of the month in which such assets are capitalised.

SCHEDULE ‘X’ — STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMINGPART OF ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2003 (CONSOLIDATED)

A. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF CONSOLIDATION:

The Consolidated Financial Statements relate to Bharat Petroleum Corporation Limited (the Company) itssubsidiary companies and the interest of the Company in joint ventures, in the form of jointly controlled entities.

(a) Basis of accounting:

(i) The Financial Statements of the subsidiary companies and the joint venture companies (JVCs)used in the preparation of the Consolidated Financial Statements are drawn upto the same reportingdate as that of the Company i.e. 31st March, 2003.

(ii) The Consolidated Financial Statements have been prepared in accordance with the AccountingStandards issued by the Institute of Char tered Accountants of India, and generally acceptedaccounting principles.

(b) Principles of Consolidation:

The Consolidated Financial Statements have been prepared on the following basis:-

(i) The Financial Statements of the Company and its subsidiary companies (which are not in thenature of joint ventures) have been consolidated on a line-by-line basis by adding together thebook values of like items of assets, liabilities, income and expenses. The intra group balances andintra group transactions and unrealised profits or losses resulting from intra group transactionsare fully eliminated.

(ii) The Accounting Standard (AS-27), on “Financial Reporting of Interests in Joint Ventures” issued bythe Institute of Char tered Accountants of India, has become effective for accounting periodscommencing on or after 1st April, 2002.

Accordingly, the Consolidated Financial Statements include the interest of the Company in JVCs,which has been accounted for using the propor tionate consolidation method of accounting andrepor ting whereby the Company’s share of each of the assets, liabilities, income and expenses ofa jointly controlled entity is considered as separate line items in the Consolidated FinancialStatements.

(iii) The share of equity in the subsidiary companies as on the date of investment, being in excess ofthe cost of investment of the Company is recognised as “Capital Reserve on Acquisition ofSubsidiaries” and shown under the head “Reserves and Surplus” in the Consolidated FinancialStatements.

(iv) Minority interest in the Net Asset of consolidated subsidiaries consists of the amount of equityattributable to the minority shareholders as on the dates on which investments are made by theCompany in the subsidiary companies and further movements in their share in the equity subsequentto the dates of investments as stated above.

(c) The subsidiary companies and the JVCs which are included in consolidation and the percentage ofownership interest therein of the Company as on 31st March, 2003 are as under :

Percentage ofownership interest Country ofas on 31/03/2003 Incorporation

SubsidiariesKochi Refineries Limited 54.81 IndiaNumaligarh Refinery Limited 62.96 India

Joint Venture Companies (JVC)

Indraprastha Gas Limited 22.50 IndiaPetronet India Limited 16.00 IndiaBharat Shell Limited 49.00 IndiaPetronet CCK Limited 26.00 India


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148 149 Annual Report 2002-2003

SCHEDULE ‘X’ — (CONS OLIDATED) (Contd.)

13.3 Being not material :

13.3.1 Income/expenditure upto Rs 0.50 million in each case per taining to prior years is charged to thecurrent year except in case of Bharat Shell Ltd, Indraprastha Gas Ltd, Petronet India Ltd, PetronetLNG Ltd, Petronet CCK Ltd, Petronet CI Ltd, Bharat Oman Refineries Ltd, VI eTrans Pvt Ltd where inno such policy exist.

13.3.2 Prepaid expenses upto Rs 0.01 million in each case, are charged to revenue as and when incurredexcept in case of Bharat Shell Ltd, Indraprastha Gas Ltd, Petronet India Ltd, Petronet LNG Ltd,Petronet CCK Ltd, Petronet CI Ltd, VI eTrans Pvt Ltd wherein no such policy exist.

13.3.3 Liabilities for expenses, other than for transpor tation, rent and proper ty taxes are provided for onlyif the amount exceeds Rs 0.01 million in each case except in case of Bharat Shell Ltd, IndraprasthaGas Ltd, Petronet India Ltd, Petronet LNG Ltd, Petronet CCK Ltd, Petronet CI Ltd, VI e Trans Pvt Ltdwherein no such policy exist.

13.3.4 Deposits placed with Government agencies/ local authorities which are perennial in nature arecharged to revenue in the year of payment.

13.4 Income from sale of scrap is accounted for on realisation.

14. RETIREMENT BENEFITS

14.1. Contribution to Provident Fund is charged to revenue.

14.2. Gratuity, leave encashment and other retirement benefits are actuarially valued at the year end andprovided for in the accounts except in case of

a) Bharat Shell Ltd. and Petronet LNG Ltd. towards leave encashment and superannuation, and

b) Petronet CCK Ltd. and Petronet CI Ltd. towards leave encashment and gratuity

where the method of valuation is other than actuarial.

15. DUTIES ON BONDED STOCKS

15.1 Customs duty on Raw materials/Finished goods lying in bond are provided for at the applicable ratesexcept where liability to pay duty is transferred to consignee.

15.2 Excise duty on Finished stocks lying in bond is provided for, at average of the assessable value applicableat each of the locations at maximum rates based on end use except where liability to pay duty is transferredto consignee.

16. FOREIGN CURRENCY TRANSACTIONS

16.1 Transactions in foreign currency are accounted at the exchange rate prevailing on the date of transaction.Exchange fluctuations between the transaction date and the settlement date in respect of fixed assets areadjusted in carrying cost. Gains/losses on revenue transactions are recognised in Profit and Loss Account.

16.2 Current assets and current liabilities involving transactions in foreign currency are conver ted at exchangerates prevailing on the date of Balance Sheet. Any profit/loss arising out of such conversion is charged toProfit and Loss Account.

16.3 Borrowings in foreign currency for acquisition of fixed assets are conver ted at exchange rate prevailing onthe date of Balance Sheet or forward contract rates, as the case may be. Exchange fluctuations/hedgingcosts are adjusted to the cost of assets and corresponding liability account.

17. GOVERNMENT GRANTS

17.1 In case of depreciable assets, the cost of the asset is shown at gross value and grant thereon is taken toCapital Reserve as deferred income, which is recognised in the Profit and Loss Account over the usefullife of the asset.

17.2 Government grants of the nature of promoters’ contributions are credited to Capital Reserve and treated aspar t of Shareholders’ funds.


7. INVESTMENTS

7.1 Current investments are valued at lower of cost or fair market value.

7.2 Long-term investments, other than investments in Government Securities and Public Sector Bonds, arevalued at cost. Provision for diminution is made to recognise a decline, other than of temporary nature, inthe value of such investments.

7.3 Government Securities and Public Sector Bonds are valued at lower of cost or redemption price.

8. INVENTORY

8.1 RAW MATERIAL AND INTERMEDIATE

Raw material and Intermediate are valued at cost. Cost is determined as follows:

8.1.1 Crude oil on first in first out basis.

8.1.2 Base oil and additives on weighted average cost.

8.1.3 Intermediate Stocks at raw material cost plus cost of conversion.

In case there has been a decline in the price of raw material and the realisable value of the finishedproducts is expected to be lower than the cost of the finished products, raw material and intermediate arevalued at net realisable value.

8.2 FINISHED PRODUCTS

8.2.1 Finished products other than Lubricants are valued at cost on first in first out basis or at netrealisable value, whichever is lower.

8.2.2 Lubricants are valued at weighted average cost or at net realisable value, whichever is lower.

8.3 Stores are valued at weighted average cost. Slow moving/obsolete items identified as surplus are valuedat Re Nil.

8.4 Packages are valued at weighted average cost or at net realisable value, whichever is lower.

9. CENVAT

Cenvat credit on eligible Revenue/Capital purchase is recognised on receipt of such materials.

10. CLAIMS AND PROVISIONS

Claims/Surrenders on/to Petroleum Planning and Analysis Cell, Government of India are booked on ‘in principleacceptance’ thereof on the basis of available instructions/clarifications subject to final adjustments after Poolaudit, as stipulated. Other claims are booked when there is a reasonable cer tainty of recovery. Provisions, asappropriate, are made based on the merits.

11. SALES

Sales are net of trade discounts and include, inter alia, excise/customs duties, claim from Petroleum Planningand Analysis Cell, Government of India and other elements allowed by the Government from time to time.

12. RAW MATERIALS CONSUMED

Raw materials consumed is net of claims from Petroleum Planning and Analysis Cell, Government of India.

13. CLASSIFICATION OF INCOME/EXPENSES

13.1 Research and development expenditure other than capital expenditure is charged to revenue in the yearthe expenditure is incurred.

13.2 The cost of know-how related to process of manufacture is charged to revenue in the year in which it isincurred.


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150 151 Annual Report 2002-2003


High Cour t confirmed the award passed in favour of BPCL. The customer has filed a Special Leave Petition in theSupreme Court challenging the division bench order. In view of the pendency of the matter in the Supreme Court,no effect is given in the accounts in respect of interest awarded by the arbitrator.

7. Earnings per share2002-03 2001-02

Profit after Tax Rs. million 15,527.36 9,310.60

Weighted average shares million nos. 300.00 300.00

Outstanding during the year

Basic earnings per share Rs. 51.76 31.04

Diluted earnings per share Rs. 51.76 31.04

8. Related Party Disclosures as per Accounting Standard 18

i) Key Management Personnel : M/s. S. Behuria (Chairman & Managing Director)(Whole Time Directors) U. Sundararajan (Chairman & Managing Director - upto

30.06.2002), M. Rohatgi (Director Refineries), M. B. Lal(Director Refineries - upto 04.06.2002), S. Radhakrishnan(Director Marketing), Ashok Sinha (Director Finance),S. A. Narayan (Director HR).

ii) Remuneration to key management personnel: Rs 4.59 million.

9. Capital Reserve of Numaligarh Refinery Limited (NRL) represents grant of Rs. 1,000 million received from theGovernment of India during the project.

10. Government of India, Ministry of Finance (Depar tment of Revenue) Notification No. 33/99-Central Excise dated8/7/1999 as amended vide Notification No. 3/2000- Central Excise dated 9/2/2000, which provides for refundof excise duty paid in respect of goods cleared from Numaligarh Refinery, was in operation till February 2002.However, during the year 2001-02, Excise authorities disallowed the refund claim of Numaligarh RefineryLimited (NRL) for the entire additional duty of excise on HSD amounting to Rs. 2,571.84 million and unilaterallydeducted an amount of Rs. 107.54 million from refund dues of the company.

NRL has preferred an appeal with the appellate authority. Pending decision of the appellate authority, provisionof Rs. 2,571.84 million which was made during 2001-02, has been retained in the books of accounts.

11. NRL is eligible for 100% Income Tax exemption pursuant to the provisions of section 80IB of the Income Tax Act,1961. However, as per the requirements of the provisions of section 115 JB of the Income Tax Act, 1961,Rs. 257.13 million (previous year Rs. 103.36 million) has been provided towards Minimum Alternate Tax(MAT).

12. In respect of KRL, excess income tax provision of Rs.155 million was written back and credited to the Profit &Loss account during 2000-01 towards accumulated losses and unabsorbed depreciation of erstwhile CRBLsubject to fulfillment of the conditions specified in the then Section 72A of the Income Tax Act. The application forIncome Tax relief is pending for disposal before the Central Government. On account of this, no fur ther adjustmentis considered necessary in the Accounts for the year.

13. In case of Petronet CI Limited :

a) though invoice for Rs. 52.00 million (Propor tionate Share Rs. 5.72 million) has been received towardsconsultancy contract awarded for supervision of pre-project activities, pending receipt of the relevant

SCHEDULE ‘X’ — (CONSOLIDA TED) (Contd.)

18. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

18.1 Capital commitments and Contingent liabilities disclosed are those which exceed Rs.0.10 million in eachcase except

a) in case of Petronet LNG Ltd wherein Contingent liabilities, which are considered significant andmaterial by the company, are disclosed

b) in case of Bharat Shell Ltd, Indraprastha Gas Ltd, Petronet India Ltd, Petronet CCK Ltd, Petronet CI Ltd,VI eTrans Pvt. Ltd. the same are disclosed in full.

18.2 Contingent liabilities in respect of show cause notices issued by various Government authorities areconsidered only when conver ted into demand.

19. TAXES ON INCOME

19.1 Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.

19.2 Deferred tax on account of timing difference between taxable and accounting income is provided using thetax rates and tax laws enacted or substantially enacted by the Balance Sheet date.

B. NOTES FORMING PART OF ACCOUNTS

1. Deferred Tax Liability

As per the requirement of the Accounting Standard 22 on “Accounting for Taxes on Income” issued by theInstitute of Char tered Accountants of India the net deferred tax liability charged to Profit during the year isRs. 1,901.57 million (previous year Rs. 1,158.77 million). The year end position of Deferred Tax Liability andAssets is given below :


DEFERRED TAX LIABILITY

Difference of Book Depreciation & Tax Depreciation 15,228.84 11,120.27

Others 453.84 324.26

Total 15,682.68 11,444.53

DEFERRED TAX ASSETS

Provisions Disallowed for Tax Purposes 1,187.33 847.80

Disallowed u/s 43B of Income Tax Act,1961 693.98 766.95

Others 1,532.93 33.06

Total 3,414.24 1,647.81

Net Deferred Tax Liability 12,268.44 9,796.72

2. The group is operating under a single segment i.e. downstream petroleum sector and all other activities of thegroup revolve around this segment.

3. Write off - others include unmatched items in bank accounts of Rs. 10.44 million (previous year Rs. 77.94million) (net) in respect of Bharat Petroleum Corporation Limited (BPCL).

4. Provision for taxation in the Profit and Loss Account of the group includes Rs. 5.25 million (previous yearRs. 2.71 million) towards wealth tax.

5. BPCL has numerous transactions with the other oil companies, which are reconciled on an ongoing basis andare subject to confirmation. Adjustment if any, arising therefrom are not likely to be material.

6. Sundry debtors include Rs. 618.94 million (previous year Rs. 618.94 million) (net) due from a customer, inrespect of BPCL, per taining to the period November 1992 to June 1996 and September 1997 to January 1999,towards price revision of a product, disputed by the customer. The dispute was referred to an arbitrator, who hasawarded the case in favour of BPCL along with interest. Both single bench and division bench of the Mumbai


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152 153 Annual Report 2002-2003

17. 17.1 The net amount of exchange difference credited to the Profit and Loss Account is Rs. 91.50 million

(previous year debited Rs. 30.78 million).

17.2 The amount of exchange difference credited to the carrying cost of fixed assets is Rs. 1.24 million(previous year Rs. 0.09 million).

17.3 The exchange difference amounting to Rs. 0.51 million (previous year Rs. Nil) in respect of forwardexchange contract will be recognised in the Profit and Loss Account of one or more subsequent accountingperiods.

18. Managerial Remuneration : 2001-02


Salary and allowances 10.00 6.00

Contributions to Provident Fund and other funds 1.25 0.66

Other benefits 3.46 2.77

14.70 9.43

Includes Rs. 0.37 million (previous year Rs. 0.91 million) paid on account of salary revision by BPCL as perdirective of Depar tment of Public Enterprises/Ministry of Petroleum & Natural Gas.

19. Remuneration to Auditors : 2001-02

Rs. Million Rs. Million(a) Audit fees 1.64 1.20(b) Fees for other services-cer tification. 0.87 0.60(c) Reimbursement of out of pocket expenses 0.17 0.15

2.68 1.95

20. Research and development : 2001-02

Rs. Million Rs. Million(a) Revenue expenditure 76.20 49.61(b) Capital expenditure 128.66 337.64

204.86 387.25

21. Figures of Subsidiaries and Joint Venture Companies have been regrouped wherever necessary.

22. Previous year figures are not comparable as investments in the Joint Venture Companies in that year wereaccounted in accordance with Accounting Standard 13 - Accounting for Investments.

SCHEDULE ‘X’ — (CONSOLIDA TED) (Contd.)

suppor ting no provision has been made towards the liability on account of consultancy fees.

b) the Company has on 13th January 2003 cancelled the contracts awarded for Route survey, soil resistivityand soil stratification survey, cadastral survey etc. to various par ties. In the opinion of the management,based on internal assessment of estimated quantum of work carried out by the contractors, the liabilitythereon is not likely to exceed Rs. 30.00 million (Propor tionate Share Rs. 3.30 million). No provision forthe same has been made in the absence of bills and claims of contractors.

14. In case of Bharat Oman Refineries Limited, certain royalty payments to some of the process licensors aggregatingRs. 53.24 million (Proportionate Share Rs. 26.62 million) have become due during the current year. The companyis negotiating with these process licensors for postponing the payments to future dates and this liability has notbeen accounted in the books of account and is par t of ‘Estimated amount of contracts remaining to be executedon capital account and not provided for’.

15. As indicated in Significant Accounting Policies in respect of cer tain JVCs cer tain accounting policies followedtowards Depreciation, Retirement Benefits and Classification of Income/ Expenses are not in line with thatfollowed by BPCL. However considering the nature of transactions the impact is not expected to be material hadthe accounting policy of BPCL been followed.

16. Capital Commitments and Contingent Liabilities : 31/03/2002


16.1 Capital Commitments :

Estimated amount of contracts remaining to be executed on

capital account and not provided for 13,426.83 9,521.97

16.2 Contingent Liabilities :

(a) In respect of taxation matters of prior years 1,578.21 1,407.63

(b) Other Matters :

i) Surety bonds executed on behalf of other oil companies for

excise/customs duties for which BPCL has signed as surety 1,262.76 1,222.03

ii) Claims against the Corporation not acknowledged as debts :

(a) Excise and customs matters 3,294.58 4,440.88

(b) Sales tax matters 6,111.05 4,914.74

(c) Others 3,391.71 3,411.06

These include Rs. 2,301.51 million (previous year Rs. 3,327.80 million) against which thereis a recourse for recovery and Rs. 1,471.15 million (previous year 1,715.83 million) oncapital account.

iii) Claims on account of wages, bonus/ex-gratia payments inrespect of pending cour t cases 72.90 153.54

iv) Guarantees on behalf of other companies (*) 1,413.46 2,862.50

* Includes guarantees given by BPCL jointly with other promoter companies, in favour of banks andfinancial institutions for shor t term loans extended to Petronet LNG Limited. BPCL’s share in theguarantee is Rs. 3,500 million. Petronet LNG Limited has given counter guarantee in favour ofBPCL for the said amount. Based on the outstanding loan of Rs. 10,195 million in the books ofPetronet LNG Limited as on 31.03.2003, BPCL’s share for the purpose of consolidation isRs. 1,274.38 million.



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154 155 Annual Report 2002-2003



B Net Cash Flow on Investing Activities

Purchase of fixed assets Note 5 (14,235.59) (9,960.20)

Adjustment for retirement/reclassification of Fixed Assets Note 6 922.11 —

Sale of fixed assets 57.18 8.84

Proceeds from sale of LPG Business 21.24 —

Miscellaneous Expenses written Off 5.79 —

Pre Operating Expenses (7.23) —

Investment in JVC — (95.46)

Investment in Petroleum India International (AOP) (16.29) —

Purchase of Investment (81.29) (11,080.08)

Sale of Investments 3,060.03 200.26

Income from Investment 770.14 59.19

Dividend Received — 8.87

Net Cash Flow on Investing Activities (9,503.90) (20,858.58)

C Net Cash Flow on Financing Activities

Long term Borrowings 6,643.76 6,187.06

Repayment of loans (9,753.11) (8,530.28)

Interest paid (5,259.68) (6,484.38)

Interim Dividend Paid (600.00) (1,200.00)

Dividend Paid (3,577.09) (1,204.36)

Corporate Dividend Tax — (265.91)

Net Cash Flow on Financing Activities (12,546.12) (11,497.87)

D Net Increase / (Decrease) in Cash and Cash equivalents (A+B+C) 11,105.67 2,620.44

CASH FLOW STATEMENT (CONSOLIDATED) — (Contd.)



A Cash Flow from Operating Activities

Net Profit Before tax and prior period items 29,502.71 15,620.64

Adjustments for :


Interest paid 4,910.71 5,869.59

Foreign Exchange Fluctuations Note 3 (91.50) 30.78

(Profit) / Loss on Sale of fixed assets 7.48 52.02

Income from Investments (783.33) (62.24)

Dividend Received — (8.87)

Interest Income — (35.55)

Other Non-Cash items Note 4 317.73 1,807.98

Operating Profit before Working Capital Changes 41,225.32 30,545.83

Invested in :

Trade Receivables (3,399.13) (7,415.82)

Other receivables (12,705.69) 29,367.80

Inventory (17,464.33) 4,521.20

Current Liabilities & Payables 34,591.50 (16,868.93)

LPG Business 19.42 —

Cash generated from Operations 42,267.08 40,150.08

Direct Taxes paid (9,155.40) (5,027.60)

Cash flow before prior period items 33,111.68 35,122.48

Prior Period Items 61.25 (172.72)

Non Cash items (17.24) 27.14

Net Cash from Operating Activities 33,155.69 34,976.90

CASH FLOW STATEMENT (CONSOLIDATED)


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156 157 Annual Report 2002-2003



Cash in Hand 2,081.60 1,910.48

Cash at Bank 2,531.66 2,008.61



Unsecured loans from scheduled banks / ICDs / CPs (7,000.00) (7,313.16)

(17,845.97) (22,263.26)


Cash in Hand 2,501.20 2,079.61

Cash at Bank 8,734.23 2,432.85



Unsecured loans from scheduled banks / ICDs / CPs — (7,000.00)

(6,740.29) (19,642.82)

Net change in Cash and Cash equivalents 11,105.67 2,620.44

Explanatory Notes to Cash Flow Statement

1. The Cash Flow Statement is prepared in accordance with the format prescribed by Securities and Exchange Boardof India and as per Accounting Standard 3 prescribed by the Institute of Char tered Accountants of India.

2. In Par t-A of the Cash Flow Statement, figures in brackets indicate deductions made from the Net Profit for derivingthe net cash flow from operating activities. In Par t-B and Par t-C, figures in brackets indicate cash outflows.

3. The net profit / loss arising due to conversion of current assets / current liabilities receivable / payable in foreigncurrency is furnished under the head "Foreign Exchange Fluctuations" .

4. “Other Non-Cash items” include excess provisions written back, foreign exchange adjustments, diminution invalue of investment, transfer to Capital reserve, Bad debts and materials written off and miscellaneous adjustmentsnot affecting cash flow.

5. “Purchase of Fixed Assets” include the additional liability of Rs. 1.24 million (previous year Rs. 0.09 million)arising on account of exchange rate variation during the year.

6. Adjustments on account of retirement / reclassification of Fixed Assets includes Rs. 921.69 million (previousyear Rs. Nil) on account of CENVAT credit taken into account.

7. Opening cash and cash equivalent on 1st April 2002 includes Rs. 1796.85 million towards proportionate share ofJVCs.

8. Previous years' figures are not comparable as investment in the Joint Venture companies in that year wereaccounted in accordance with Accounting Standard 13 - Accounting for Investments.

9. Figures of the previous year have been regrouped wherever necessary, to conform to current year's presentation.

For and on behalf of the Board of Directors For V. Sankar Aiyar & Co.


S. BEHURIA S. VENKATRAMAN

Chairman & Managing Director Par tner


CASH FLOW STATEMENT (CONSOLIDATED) — (Contd.)

Nam

e of

the

Fin

anci

al

Year

No.

of

share

sExt

ent

ofTh

e net

aggre

gate

am

ount

of t

he

Subsi

dia

ryTh

e net

aggre

gate

am

ount

of t

he

Subsi

diary

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dia

ryen

din

g o

f th

ehel

d b

yh

old

ing

Com

pany’

s P

rofi

t/(L

oss)

so

far

as

it c

once

rns

the

Com

pany’

s P

rofi

t/(L

oss)

so

far

as

it c

once

rns

the

Com

pany

Subsi

dia

ryB

PC

as

onm

ember

s of

the

Hol

din

g C

ompany

and n

ot d

ealt

mem

ber

s of

the

Hol

din

g C

ompany

and d

ealt

wit

hC

om

pa

ny

31.3

.2003

wit

h i

n t

he

acc

ounts

of

the

Hol

din

g C

ompany

in t

he

acc

ounts

of

the

Hol

din

g C

ompany

(exc

ept

to t

he

exte

nt

dea

lt w

ith i

n c

ol.

7 &

8)

12

34

56

78

For t

he fi

nanc

ial y

ear

For

the

prev

ious

For t

he fi

nanc

ial y

ear

For

the

prev

ious

ende

d on

31.

3.20

03fin

anci

al y

ears

sin

ce it

ende

d on

31.

3.20

03fin

anci

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cam

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subs

idia

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beca

me

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(Rs.

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illio

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s. In

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(Rs.

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s. In

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Ko

chi

31

.3.2

00

37

5,8

89

,66

05

4.8

1%

24

99

.43

60

.49

16

6.9

51

59

.37

Ref

iner

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shar

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fLt

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each

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31

.3.2

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34

63

,18

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56

62

.96

%1

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9.4

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ach

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and

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f D

irect

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. B

ehuri

aA

. S

inha

D.M

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Ben

gre

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& M

anag

ing

Dire

ctor

Dire

ctor

(Fin

ance

)C

ompa

ny S

ecre

tary

Pla

ce :

Mum

bai

Dat

e :

1st J

uly,

200

3

STAT

EMEN

T RE

GARD

ING

SUBS

IDIA

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OMPA

NIES

PUR

SUAN

T TO

SEC

TION

212

OF

THE

COM

PANI

ES A

CT, 1

956

Sd/- Sd/-


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