15.0.5.2008

CPCL’s IMPRESSIVE GROWTH PERFORMANCE DURING 2007-08

The turnover for the year 2007-08 was the highest-ever at Rs.32,889 Crore as against Rs.29,349 Crore in the previous year, registering an increase of about 12.06%.

The Profit Before Interest, Depreciation and Taxes (PBIDT) for the year 2007-08 is Rs.2,168 Crore against Rs.1,311 Crore achieved in the previous year an increase of 65.36%.

The Profit Before Tax is Rs.1,722 Crore as against Rs.881 crore for the previous year, an increase of 95.46%.

The Profit After Tax (PAT) for the current year is Rs.1,123 Crore against Rs.565 Crore for the previous year i.e. an increase of 98.76%.

CPCL achieved GRM of US$.8.47 per barrel for the year 2007-08, net of under recoveries, as against US$ 5.0 per barrel for 2006-07.

The Board of Directors has declared an Interim Dividend of 50% and recommended a final dividend of 120% aggregating to 170% on the paid up equity share capital of the Company

Crude Oil and Natural Gas Processing:

CPCL achieved Crude thruput of 10.26 Million Metric Tonnes.

Our Manali Refinery achieved a record crude thru’put of 9802 Thousand Metric Tonnes (TMT). Previous best was 9783 TMT achieved in 2006-07.

Crude thruput at Cauvery Basin Refinery (CBR) was lower due to restricted availability of crude from Narimanam oil field of ONGC and PY- 3 field operated by M/s. Hardy Oil and Gas.

Although crude processing was low , CBR processed highest-ever Natural Gas of 77.5 TMT for LPG recovery (106% capacity utilization), compared to the previous best of 72.2 TMT during the year 2006-07. Gas processing has progressively increased from 54.83 TMT in 2004-05 to the current level. We have recently signed an agreement with GAIL for getting additional 17000 SCMD of Natural Gas, which has considerably higher LPG content.

Crude Basket:

As a step towards reducing raw materials input cost, widening of crude oil basket is one of our main focus areas. During 2007-08, CPCL processed 4 new crudes, i.e. Umm Shaiff (UAE), Essider (Libya), Cabinda (Angola) and Arab Mix 50:50 (Saudi Arabia). During the last 3 years, CPCL has processed 10 new crudes and in 2008-09 3 more new crudes (Arab medium from Saudi Arabia, N’Kossa from Congo and Melita from Libya) will be processed in next three months.

High Sulphur Crude Processing:

Maximizing high sulphur crude processing is another thrust area for CPCL. We have steadily increased the Sulphur content in our Crude Basket from 1.49% during the year 2004-05 to 1.64% in 2007-08. Processing of high sulphur crude at Manali Refinery during 2007-08 was 67.2%, which has increased from 66.4% last year.

Highest Production and Sale:

Keeping pace with high demand of petroleum products, CPCL has made highest ever production of MS, ATF, Diesel, Wax, Propylene and Asphalt at Manali Refinery. Also achieved all time record in sales of Paraffin Wax, Bitumen, Sulphur, Propylene and Food Grade Hexane. CPCL’s direct sales growth for speciality products has been 9% for the year.

Product Exports:

Exported 795 TMT of Naphtha, Fuel Oil and Lube Oil Base Stocks (LOBS) during the year. First time LOBS exported to Sri Lanka for commissioning the Lube Blending plant of Lanka IOC. Diesel export has been stopped in view of high domestic growth. Total value of Export is Rs.1621 crore.

Energy Conservation and Refinery Operation Improvement Programme:

Energy Index of Manali Refinery has been improving over the years and it was at its best at 74.8 MBTU/BBL/NRGF during 2007-08 compared to the previous year at 76 MBTU/BBL/NRGF. CPCL has identified 22 energy conservation measures to bring down energy consumption index to 72 in the next 2 years and further down to 70.

CPCL has also taken up an Integrated Refinery Business Improvement Programme through an external Consultant, which will include Fuel and Loss reduction, Margin Enhancement and Reliability Improvement. Under this programme, 14 Proposals for Improvement (PFIs) have been taken up for implementation, which would give annual benefit of US $ 22 million, i.e. US cents 31/barrel of Crude processing. Some of the major PFIs include FCC capacity increase, OHCU capacity increase, Reliability and Risk Management, VBU conversion increase and Energy Conservation measures.

Product Pipelines:

· Chennai-Tiruchi-Madurai Product Pipeline (CTMPL) achieved highest ever capacity of 1.3 Million Metric Tonnes (MMT) by transferring MS, SKO and HSD from Manali Refinery.

· Dedicated ATF pipeline from Manali Refinery to Chennai Airport will be ready by June ‘08.

· A White oil pipeline was commissioned at Nagapattinam in Oct. ‘07 for loading Naphtha and Diesel in tanker for coastal movement. This has helped in savings in positioning cost of products ex-CBR.

· Pre-project activities have commenced for a 1.45 MMTPA Product pipeline from Chennai to Bangalore.

Projects’ Progress:

Windmill:

A Wind Mill project with a capacity of 17.6 MW was commissioned during September ’07. Power generated from this windmill farm will be used for the requirements of CPCL’s 5.8 MGD Desalination plant through wheeling arrangements with TNEB. The total cost for the project was Rs. 90.00 crore. The possibility of installing additional Wind Mills is being explored.

Projects Under Implementation:

Manali Refinery Capacity Augmentation from 3 MMTPA to 4 MMTPA:

Estimated cost is Rs.134.34 crore. Project completion by mid 2009.

Revamp of existing NHDT/CRU to a Continuous Catalytic Reformer:

To produce higher quantity of MS and its quality improvement to meet Euro-IV spec., the existing Naphtha Hydrotreating / Catalytic Reforming unit is being revamped at an estimated cost of Rs. 234.09 crore. This project is expected to be completed by Sept. ’09.

Preparedness for Auto Fuel Quality Upgradation to Euro – IV Standard:

To produce MS/HSD to meet Euro-IV specification, the Auto Fuel Project at an estimated cost of Rs. 2420 crore is planned. Order placed for DHDT/NHT ISOM unit on “Open Book Estimates” (OBE) basis to EIL and ordering of long lead equipments is in progress. This project is expected to be commissioned in stages from Dec. ’09 onwards.

Gas Turbine Project:

20 MW Gas Turbine is being installed at an approved cost of Rs.158 crore for reliability and self-sufficiency in power requirement. Execution of the Heat Recovery Steam of the GT is in final stage of completion. The Project will be commissioned by June ’08.

Sea Water Desalination Project:

A project for installation of a 5.8 MGD Sea Water Desalination plant at an estimated cost of Rs.231.34 crore is in advanced stage of implementation. Sea water intake pump house was inaugurated on 24^th March ‘08 and pump commissioned. Full Desalination facility is expected to be ready by mid 2008.

New Crude Tanks:

Two more crude tanks are being added to the present strength to augment the crude storage capacity at Manali, at an estimated cost of Rs. 80.57 crore. These additional tanks are expected to be in place by August ‘09.

New Crude Oil Pipeline:

A new crude oil pipeline as a replacement of the existing aging crude oil pipeline is proposed to be laid from Chennai Port to Manali Refinery along the route of the proposed Port Connectivity Road. The estimated project cost is about Rs. 65.43 crore.

New Project Initiatives:

Resid Upgradation Project:

· To improve distillates yield and refinery margins, a Resid upgradation project is planned at an estimated cost of Rs. 3200 crore. Licensor selection and preparation of process package has been completed for the Delayed Coker Unit. Scoping study has been completed for revamp of Hydrocracker unit. Selection of Licensor for the Sulphur Recovery Unit is in progress. The Resid Upgradation project is expected to be completed by end 2011.

15 MMTPA Refinery Cum Petrochemical Project:

· It is proposed to set up 15 MMTPA New Grassroot Refinery-cum-Petrochemical Complex at Ennore near Chennai for which the Preliminary Feasibility studies have been prepared by M/s.EIL. Joint surveys with TIDCO and State Govt. officials have led to about 3300 acres of lands being identified for this project. Prior to acquisition of this land, we are pursuing with MOE&F / TNPCB regarding the acceptability of the identified location from the environmental angle.

Corporate Social Responsibility:

CPCL has spent Rs. 156 lakhs towards Community Development activities as below:

· Rs. 76 lakh was incurred towards undertaking Community Development activities around Manali and CBR, focusing on health care, educational infrastructure, sports development, preserving cultural heritage, women empowerment, and other infrastructural development at our rural neighbourhood.

· OIDB drought relief trust sanctioned Rs. 26 lakhs to CPCL for construction of 3 overhead tanks for supply of water to Manali neighbouring villages. This job has been executed. Further, OIDB sanctioned Rs.16 lakhs for renovation of 2 ponds in Manali, for which work is in progress.

· A sum of Rs.30 lakhs was donated to National Agro Foundation’s (NAF) Integrated Rural Development Initiatives. NAF has named their Tissue Culture Laboratory Block located at their R&D Centre, Anna University, Taramani Campus, Chennai, after CPCL.

· As you know CPCL runs a Polytechnic School in Manali. During 2007-08, new sections have been opened in this school. CPCL has also started providing Nurses training programme for women from the neighbouring villages every year.

Awards:

· Two of the CPCL employees have bagged the prestigious Prime Minister’s Shram Bhushan Award conferred on them under the Public Sector category.

· Second time in a row, CPCL figured in top 25 companies adopting good Corporate Governance Practices in the year 2007 by Institute of Company Secretaries of India (ICSI).

· CPCL Received Top Duty Paying Assessee Award from Chief Commissioner of Central Excise.

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