Bharat Petroleum Corporation Ltd

The Directors take pleasure in presenting their Report on the performance of BharatPetroleum Corporation Limited (BPCL) for the year ended 31^st March, 2010.

PERFORMANCE OVERVIEW

Group Performance

The aggregate Refinery throughput at BPCL’s Refineries at Mumbai and Kochi andthat of its subsidiary company, Numaligarh Refinery Limited (NRL) in 2009-10 was 23.03Million Metric Tonnes (MMT) as compared to 22.20 MMT in 2008-09. The BPCL Group ended theyear with market sales of 28.06 MMT as compared to 27.45 MMT in the previous year. Thegroup’s exports of petroleum products during the year stood at 2.70 MMT as against1.38 MMT in 2008-09.

The financial year saw the group achieve a sales turnover of Rs. 133,749.10 crores, ascompared to Rs. 147,336.82 crores recorded in 2008-09. The Profit after Tax stood at Rs.1,719.98 crores in 2009-10 as against Rs. 724.13 crores in the previous year. Aftersetting off the minority interest, the Group earnings per share increased to Rs. 45.15 inthe current year from Rs. 17.53 in 2008-09.

CONSOLIDATED GROUP RESULTS

Company Performance

During the year 2009-10, the crude throughput at BPCL’s refineries at Mumbai andKochi was 20.41 MMT as against the level of 19.94 MMT achieved in 2008-09. The marketsales of the company increased from 27.16 MMT in 2008-09 to 27.70 MMT in 2009-10.

FINANCIAL HIGHLIGHTS

BPCL’s sales turnover for 2009-10 stood at Rs. 131,499.72 crores, reflecting areduction of 9.55% over the previous year’s turnover of Rs. 145,392.07 crores.However, the sales in volume terms increased from 27.16 MMT in 2008-09 to 27.70 MMT in2009-10, registering an increase of 1.99%. The profit before tax for the year increased by132.65% over the preceding year to reach a level of Rs. 2,366.05 crores as compared to Rs.1,004.11 crores in 2008-09. After providing for tax, (including deferred tax and fringebenefit tax) of Rs. 828.43 crores as against Rs. 268.21 crores during the last year, theprofit after tax for the year stood at Rs. 1,537.62 crores, showing an increase of 108.94%over the level of Rs. 735.90 crores recorded in 2008-09.

The Board of Directors has recommended a dividend of 140% (Rs. 14 per share) for theyear on the paid-up share capital of Rs.361.54 crores which will absorb a sum of Rs.578.93 crores out of the profit after tax inclusive of Rs. 72.77 crores for CorporateDividend Tax on distributed profits. BPCL’s net worth as on 31^st March,2010 stands at Rs. 13,086.71 crores, as compared to Rs. 12,128.11 crores as at the end ofthe previous year.

The earnings per share amounted to Rs. 42.53 in 2009-10 as compared to Rs. 20.35 in2008-09. Internal cash generation during the year were higher at Rs. 1,898.10 crores asagainst Rs. 1,282.29 crores in 2008-09. BPCL’s contribution to the exchequer by wayof taxes and duties during 2009-10 amounted to Rs. 26,685.75 crores as againstRs.25,331.78 crores in the previous financial year.

Borrowings from banks decreased from Rs. 19,242.56 crores as at 31^st March,2009 to Rs. 18,743.87 crores at the close of the current financial year. TheCollateralized Borrowing and Lending Obligation (CBLO) through Clearing Corporation ofIndia Limited amounted to Rs. 500 crores as at the end of the year as compared to Rs. 150crores at the end of the previous year. Loans from Oil Industry Development Boardincreased to Rs. 921.37 crores as at 31^st March, 2010 as compared to Rs. 761.50crores at the end of the previous year. Debentures worth Rs. 1,000 crores were issuedduring the year and remained outstanding as on 31^st March 2010 in addition tothe debentures of Rs. 1,000 crores issued in 2008-09.

Public deposits as at 31^st March 2010 stood at Rs. 0.24 crores as comparedto Rs. 3.45 crores at the end of the previous year. The amount of deposits, matured butunclaimed, at the end of the year was Rs. 0.15 crores, which pertains to 35 depositors.

The total Capital Expenditure during the year 2009-10 amounted to Rs. 3,446.55 croresas compared to Rs. 2,389.34 crores during the year 2008-09.

The Comptroller and Auditor General of India (C&AG) has no comment upon orsupplement to the Statutory Auditors’ Report on the Accounts for the year ended 31^stMarch, 2010. The letter from C&AG is annexed as Annexure E.

REFINERIES

MUMBAI REFINERY

During the year 2009-10, Mumbai Refinery with an installed capacity of 12 MMTPA,processed 12.52 MMT of crude oil as against 12.26 MMT processed in 2008-09.Notwithstanding the turnarounds in some major units during the year, the refinery achieveda capacity utilization of 104% as compared to 102% in the previous year. The refineryachieved its highest ever production of several products including Liquefied Petroleum Gas(LPG), Methyl Tertiary Butyl Ether (MTBE), Aviation Turbine Fuel (ATF) and Lube Base Oils.The refinery also commenced the production of Euro IV quality Motor Spirit (MS) and HighSpeed Diesel (HSD) from February 2010. During the year, the refinery processed theNigerian crude oil - Agbami for the first time. The gross refining margin (GRM) for theyear stood at USD 1.78 per barrel as compared to USD 4.48 per barrel in 2008-09. This hastranslated into an overall gross margin of Rs. 792.63 crores for the year as compared toRs. 1,892.28 crores in 2008-09. The reduction in the GRM was mainly due to volatility inthe international prices of crude oil and finished products and unfavorable crude-productspreads.

KOCHI REFINERY:

Kochi Refinery recorded a throughput of 7.89 MMT in 2009-10 as compared to 7.68 MMTachieved in 2008-09. The capacity utilization of the refinery stood at 105% as compared to102.4% in the previous year. This was achieved despite a major shutdown undertaken inconnection with the capacity expansion of the refinery. The refinery also processed theAgbami crude oil for the first time. The refinery achieved its highest level of productionof ATF and packed Bitumen during the year. The gross refining margin for the year 2009-10was USD 4.87 per barrel as against USD 6.28 per barrel in the previous year. Thistranslated into an overall gross margin of Rs. 1,366.63 crores for the year as compared toRs. 1,658.78 crores in 2008-09.

The details of the performance of the Refineries, their activities and future plans arediscussed in the Management Discussion and Analysis Report (MD&A).

MERGER OF KRL WITH BPCL

As informed in the last year’s Report, merger of the erstwhile Kochi RefineriesLimited (KRL) with BPCL under Sections 391 to 394 of the Companies Act 1956 had beencompleted, following receipt of the Order dated 18^th August, 2006 issued by theMinistry of Company Affairs, New Delhi. One of the Shareholders of the erstwhile KRL hadfiled a Writ Petition in the Delhi High Court challenging the merger, and the same ispending as on date.

MARKETING

During the year 2009-10, BPCL’s market sales volume touched a level of 27.70 MMTas compared to 27.16 MMT in the previous year. This represented a growth rate of 1.99%over the previous year. BPCL’s market share amongst the public sector oil companiesstood at 22.38% as at 31^st March, 2010 as compared to 22.62% as at the end ofthe previous year.

A detailed discussion of the performance of the Marketing function is given in theMD&A.

Central India Refinery Project

Bharat Oman Refineries Limited (BORL), a company promoted by BPCL, is setting up a 6MMTPA capacity grass roots Refinery at Bina in Madhya Pradesh. Oman Oil Company Limited(OOC) is partnering BPCL in this project. The refinery is being set up along with crudeoil import facilities consisting of a Single Point Mooring (SPM) system and Crude OilStorage Terminal (COT) at Vadinar and cross-country crude oil pipeline from Vadinar toBina. The project is estimated to have an as-built capital cost of Rs.11,397 crores whichwill be funded with a debt equity ratio of 1.6:1.

BORL has an authorized share capital of Rs. 7,000 crores. BPCL and OOC had invested Rs.75.5 crores each in the equity share capital of BORL. BPCL, with the approval of theGovernment of India, decided to enhance its equity contribution in the equity of BORL tothe extent of 50%. OOC agreed to make an additional investment of Rs. 1,219.67 crores in81.31 crores equity shares at a premium of Rs. 5 per share for which the Investors RightsAgreement (IRA) was signed between BPCL, OOC and BORL in November 2009. The agreedinvestment has been brought in and OOC was allotted 81.31 crores equity shares in May2010. As on 31^st March, 2010, BPCL had contributed a sum of Rs. 1,300 crorestowards subscribing for shares in BORL. An amount of Rs. 813.11 crores from this wasconverted into 81.31 crores equity shares at par and allotted to BPCL in May 2010. Thebalance amount of Rs. 486.89 crores was converted into 48.69 crore warrants representingthe right to subscribe to 48.69 crore equity shares of Rs. 10 each. BPCL has also madeadditional investment of Rs. 448.79 crores against which it was allotted 29.92 crorewarrants, which will be entitled for equal number of equity shares of Rs. 10 each at alater date. Till the time the total equity of BORL is tied up, BPCL and OOC will hold 50%shares each in BORL. On a future date, BPCL and OOC will be holding about 49% and 26%respectively in the fully diluted equity of BORL.

The refinery is slated to commence commercial production in the current year. The crudeoil receipt facilities at Vadinar and crude oil tankages & intermediate producttankages at the refinery site have been commissioned. The Vadinar – Bina crude oilpipeline has been commissioned and crude oil has been received in the refinery tanks. TheCrude Distillation Unit was commissioned on 29^th June, 2010. The cumulativecapital expenditure as on 30^th June, 2010 amounted to Rs. 9,938 crores. Thetotal commitments made up to that date was Rs. 11,012 crores.

Bina Product Despatch Terminal

The Bina Product Despatch Terminal is designed to facilitate the marketing of productsfrom the new refinery at Bina. The dispatch terminal was completed with a tankage of 4.45lakh kilolitres for storing white oils, 10 bay road loading gantry and single spur railloading gantry for white oils, 6 x 1400 MT LPG mounded storage, 4 bays road loading gantryfor LPG, and other associated infrastructural facilities, adjacent to the Bina refinery.The terminal facilities are mechanically complete. Receipt and road dispatch facilitiesfor LPG and SKO have been commissioned. The balance commissioning will be synchronizedwith the commissioning of the Bina Refinery. The approved cost of the project is Rs.639.11 crores and the cumulative expenditure as on 30^th June, 2010 stood at Rs.565.33 crores.

Bina Kota Product Pipeline

The project, with an approved cost of Rs. 405.82 crores, involved the laying of an18" (45.72 cm) dia, 257 km long cross-country product pipeline from Bina to Kota, tofacilitate the economic evacuation of MS, HSD, Superior Kerosene Oil (SKO) and ATF fromthe new refinery at Bina.

The pipeline is designed for an initial throughput of 2.8 MMTPA and will be connectedto the existing multi-product Mumbai-Manmad-Manglya-Piyala-Bijwasan pipeline at Kota tofacilitate distribution of products from the Bina refinery to the markets in northernIndia. The pipeline is mechanically complete and will be commissioned on receivingproducts from the Bina Refinery. The cumulative expenditure on the project as on 30^thJune, 2010 stood at Rs. 358.29 crores.

Capacity Expansion cum Modernization Project (CEMP) – Phase II at Kochi Refinery

The project was undertaken to put up facilities for production of auto fuels i.e. MSand HSD conforming to Euro III /IV equivalent norms along with modernization and capacityexpansion of the refinery from 7.5 MMTPA to 9.5 MMTPA. The approved cost of the project isRs. 3,941 crores.

The capacity expansion of the refinery was completed in July 2009 and the balancefacilities are expected to be completed by October 2010. The overall physical progress ofthe project is 96.10 % as on 30^th June 2010 and the total expenditure as onthat date stood at Rs. 2,731.93 crores.

Fuels Quality Upgrade Project at Mumbai Refinery

The project costing Rs. 390 crores was undertaken to make plant modifications at theMumbai refinery for improving quality of MS and HSD to meet the Euro IV equivalent norms.The capacity of the Diesel Hydrodesulphurization Unit has been enhanced from 1.4 MMTPA to2 MMTPA and a new FCC Gasoline Splitter at the Refinery was erected. The project has beencompleted and the units commissioned in January 2010.

Continuous Catalytic Regeneration Reformer (CCR) Facilities and Hydrocracker Revamp

The project is being undertaken to increase the production of Euro IV grade MS and HSDat Mumbai Refinery. This involves revamping of the Hydrocracker Unit to increase thecapacity from 1.75 MMTPA to 2.0 MMTPA and setting up of a 0.9 MMTPA capacity ContinuousCatalytic Regeneration (CCR) Reformer Unit at a cost of Rs. 825 crores. The project isscheduled for completion by December 2011. As on 30^th June, 2010, the projecthas achieved physical progress of 19.67 %. The cumulative expenditure as on that date wasRs. 62.54 crores and the total commitment has exceeded Rs. 211.05 crores.

LPG Import Facilities at JNPT with Strategic Storage at Uran

The project is being undertaken to develop LPG import facilities at Jawaharlal NehruPort Trust (JNPT) including installation of marine unloading arms and associatedfacilities; laying of 12" (30.48 cm) pipeline from JNPT to Uran LPG plant anddevelopment of refrigerated storage at Uran. The approved cost of the project is Rs.304.40crores.

The project has achieved an overall progress of 65.6% as on 30^th June, 2010and is scheduled for completion in December 2010. The cumulative expenditure as on 30^thJune, 2010 stood at Rs. 111.39 crores.

Strategic Storage for LPG

Strategic storage for LPG, at a total cost of Rs. 193 crores, is being provided byputting 23 mounded storage vessels at 12 different locations. These were re-designed afterstandardization of size and capacity, cost optimization and vessel fabrication. The workat locations is expected to be completed by December, 2010.

RESEARCH & DEVELOPMENT (R&D)

Research and development (R&D) is an integral part of BPCL’s strategy forachieving sustainable growth and profitability. To enhance R&D capabilities, BPCL iscontinuously strengthening the infrastructure and manpower resources at its CorporateR&D Centre, Greater Noida, Uttar Pradesh as well as at its Product & ApplicationDevelopment Centre, Sewree, Mumbai and the R&D Centre at Kochi Refinery. BPCL’sinitiatives in the area of R&D are discussed separately in the MD&A.

Further, the areas covered under R&D and the benefits derived from R&Dactivities are detailed in Form B of Annexure A to the Directors’ Report.

NON-CONVENTIONAL ENERGY INITIATIVES

BPCL has placed strong emphasis on the development of non-conventional/ renewablesources of energy. A number of initiatives have been undertaken in tappingnon-conventional energy sources like bio-diesel, wind energy, solar energy and fuel cellsin order to develop alternate sources of energy.

BPCL has focused on promoting green fuels with a view to protect the environment byreducing pollution and dependency on imported fuels. Tracts of unproductive, barren andnon cultivable fallow land are being used for the growth of Jatropha and Karanj plants.The plantations would contribute towards environment protection, prevention of soilerosion and provide feedstock for manufacturing bio-diesel. BPCL has promoted BharatRenewable Energy Limited, a joint venture company with the objective of entering theBio-diesel Value Chain in the state of Uttar Pradesh. "Project Triple One" hasbeen launched with the aim of cultivating one million acres (404686.3 hectares) ofwasteland, creating one million jobs and producing one million tonnes of Bio-diesel fromthe plantation to replace diesel over the next 10 years.

BPCL has been one of the first energy companies to successfully generate power throughwindmills. Windmills with a capacity of 5 MW (four windmills of 1.25 MW each) in the hillyrange of Kappatguda in Karnataka are currently in operation and the power produced by themis being sold to Karnataka State Electricity grid. BPCL has plans to make furtherinvestments in windmills in the states of Rajasthan, Maharashtra, Gujarat and MadhyaPradesh.

Work is going on for the setting up of a 1 MW capacity grid connected solar farm atBPCL’s LPG bottling plant in Lalru in the state of Punjab. As the power generatedfrom the plant is proposed to be sold to the Punjab State Electricity Board, BPCL hassigned a Power Purchase Agreement with the Board. The farm which will be spread across anarea of 4 acres (1.62 hectares) has been conceived to avail of carbon emission creditsunder the Kyoto protocol.

A 5 KVA solar cum wind power generator has been commissioned at one of BPCL’sCompany Owned Company Operated (COCO) Retail Outlets near Kolkata. A 5 KVA solar powergenerator has also been installed at a COCO Outlet at Bangalore.

INDUSTRIAL RELATIONS

The overall Industrial Relations climate remained peaceful throughout the year. Allorganizational and employee related issues were handled with a collaborative approach andregular communication was ensured to all employees on all important issues affecting themand the Organisation. Discussions have been initiated with the Unions for signing a freshwage settlement with them.

FULFILLMENT OF SOCIAL OBLIGATIONS

BPCL views Corporate Social Responsibility (CSR) as one of its core commitments tosociety at large. With BPCL committing 2% of the net profit of the previous financial yeartowards CSR, focus was placed on building a robust internal system for not onlyundertaking CSR projects, but also on effective management of the projects and evaluationof the outcome.

‘Education’ and ‘Water Conservation’ were the two core thrust areasalthough health, community development and environment conservation also remain important.For the first time, targets were set in the area of CSR in the Memorandum of Understandingthat BPCL signs every year with the Ministry of Petroleum & Natural Gas. A target ofmaking 4 villages ‘drought free’ through rainwater harvesting and alsoundertaking Computer Assisted Learning Programmes for 2500 children in 11 Zilla Parishadschools near Uran in Raigad Dist, Maharashtra has been agreed upon. These targets havebeen achieved and BPCL is now in constant communication with officials of the educationdepartment on sustaining the project, which can help in undertaking similar projects inthe coming days. BPCL has also partnered with the NGO Pratham in rolling out adistrictwide Education Enhance Programme in the districts of Nandurbar in Maharashtra andSagar in Madhya Pradesh. Through this programme, BPCL plans to reach out to more than 1200schools in both the districts, with an aim to ensure that every child in the district fromclass I to IV is able to read and write. BPCL is also supporting a programme to providevocational guidance for the unemployed youth in these districts.

Apart from ensuring the successful implementation of the CSR projects, staff memberswere encouraged to join in the CSR efforts. The CSR projects received enthusiastic supportfrom employee volunteers, who in their personal time, contributed towards waterconservation projects, and also in teaching children from the lower socio-economic strata.The employees put in around 1921 volunteering hours. One of BPCL’s employees has alsoaccepted a two year assignment with an organization "Teach For India", in whichhe is teaching the children from the lower socio-economic strata, in a municipal school.

Several projects, which were being supported in remote rural and tribal areas, weresocially audited on their impact for the first time, and the recommendations, which mostlydwelled on making beneficiaries self-reliant and empowering communities, have been actedupon.

PROMOTION OF SPORTS

BPCL sportspersons continued to excel in the national as well as international sportsarena in several disciplines. Saina Nehwal reached a career high ranking of World no. 2among ladies after winning the India Open GP Gold and the Singapore Super Series events.Saina went on to retain her title at the Indonesia Super Series event, which she had wonin 2009 also. She was awarded the Padma Shri and Arjuna awards by the Government of India.Recently, she was named as the recipient of the Rajiv Gandhi Khel Ratna award which is thehighest recognition accorded to an Indian sportsperson. Jwala Gutta won the Yonex ChineseTaipei Grand Prix Badminton tournament in the mixed doubles event. In Table Tennis,Poulomi Ghatak, who received the Arjuna Award, won a record 4 titles in the NationalChampionships. In Chess, S. Kidambi became the fourth player from BPCL to earn the GrandMaster norm. Joby Mathew won the Gold Medal in the World Arm Wrestling championships. BPCLcontinues to contribute significantly to the Indian contingents in various sportingdisciplines. BPCL was awarded the newly instituted "Excellence in Sports" trophyfor its contribution in the field of sports. BPCL also bagged the II Runners-up"Presidents Trophy" based on the points obtained in various Petroleum SportsPromotion Board (PSPB) tournaments conducted during the year.

RESERVATION AND OTHER WELFARE MEASURES FOR SCHEDULED CASTES/SCHEDULED TRIBES/ OTHERBACKWARD CLASSES AND PERSONS WITH DISABILITIES

BPCL has been following in letter and spirit, the Presidential Directives and otherGuidelines issued from time to time by the Ministry of Petroleum & Natural Gas,Ministry of Social Justice & Empowerment and the Department of Public Enterprisesrelating to reservations / concessions for Scheduled Castes / Scheduled Tribes / OtherBackward Classes. Adequate monitoring mechanisms have been put in place for sustained andeffective compliance uniformly across the Corporation. Rosters are maintained as per theDirectives and are regularly inspected by the Liaison Officer of the Corporation as wellas the Liaison Officer of the Ministry of Petroleum & Natural Gas, to ensure propercompliance of the Directives.

Students belonging to Scheduled Castes / Scheduled Tribes and those who areeconomically backward are encouraged by being awarded scholarships for pursuing courses atIndustrial Training Institutes (ITI) & secondary school education up to graduationlevel.

BPCL also complies with provisions under "The Persons with Disabilities (EqualOpportunities, Protection of Rights and Full Participation), Act 1995" relating toproviding employment opportunities and concessions for persons with disabilities. Specialrecruitment drives were conducted to fulfill the obligations in line with the provisionsof employment opportunities.

Details relating to representation/appointment of Scheduled Castes / Scheduled Tribes /Other Backward Classes and Persons with Disabilities are enclosed as Annexure D.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The Official Language Implementation Committees (OLIC) continue to function at theCorporate and Regional offices, Refineries and major locations in order to implementvarious provisions of the Official Language Act and Rules across the company. Keeping inview the Annual Programme issued by the Government of India, these Committees meet on aquarterly basis and take decisions with regard to implementation of Hindi and review theprogress made. Several Hindi workshops were conducted. The Parliamentary Committee onOfficial Languages visited three locations while Corporate Hindi Cell inspected Kochi andMumbai Refineries and three marketing locations. Rajyabhasha Vibhag of the Ministry ofHome Affairs carried out inspections at two locations. All these Committees expressedtheir appreciation of the efforts taken by the Corporation.

The Hindi software "ISM V5 Office" was procured and installed in all officesof BPCL. "Hindi Software Training" programmes are also conducted in the RegionalOffices and Refineries. An attractive Incentive Scheme is in vogue to further enhanceOfficial Language implementation. Initiative has been taken to implement an e-library forHindi books on the Corporate Intralink.

CITIZENS’ CHARTER

Citizens’ Charter – a tool for ensuring transparency in educating andcommunicating with the customers about their rights, apart from various infrastructure /services being available for the customers, is always in the forefront of all activitiesof the Company. Efforts are made to enhance customer service levels. The GrievanceRedressal Mechanism was taken care of with well established systems at various consumercontact points. Besides, BPCL has sought to leverage technology by making available afeedback module in its website which the customer can have access to. An Internet basedonline Grievance Redressal Mechanism (Centralised Public Grievance Redress and MonitoringSystem) is helping in speedy redressal of grievances. BPCL has disposed off 231 grievancesonline during the year. BPCL has started toll free numbers so that customers can call fromanywhere in the country for registration of complaints.

The Right to Information Act 2005 has been implemented in BPCL. People across theorganization are familiar with the Act and BPCL has a unique single window concept for allreplies under the Act. During the period ending 31^st March, 2010, BPCL hasreceived 1753 requests for information and only 67 cases were referred to the ChiefInformation Commissioner, New Delhi for review. No strictures have been passed againstBPCL since the inception of the Act in 2005.

VIGILANCE

Corporate Vigilance in the Company has played a proactive role and initiatedimplementation of several system improvements and brought about simplification ofprocedures for achieving the best possible use of resources and for facilitating effectiveand speedy decision making in a transparent manner.

Vigilance Awareness Week was inaugurated by Justice B. Srikrishna and was observed from3^rd to 7^th November, 2009 at all locations throughout the country. AVendor Interaction Programme was organized at Kochi Refinery covering 90 vendors duringVigilance Awareness Week and issues raised were deliberated by the senior management. Suchvendor meets have highlighted the company’s commitment to transparency and enabledthe company to get feedback on the issues faced by vendors, improving interaction levelsas well as contributing to confidence building and generation of greater levels of trustamong all stakeholders. Under the aegis of Vigilance, an Integrity Club was started inKochi Refinery School, which has received an excellent response.

More than 114 training workshops/seminars involving 1800 participants were held withthe objective of enhancing Vigilance Awareness among the employees/vendors. Workshops onDealerships / Distributorships were conducted at all regions covering 139 participants. Aspart of preventive vigilance activities, inspections including surprise inspections weredone at 467 Retail Outlets, 161 LPG Distributorships and 167 locations including depotsand installations. Based on the outcome of such inspections, preventive/administrativeactions and system improvements were initiated.

To increase transparency in interface with vendors, contractors, suppliers and serviceproviders, the coverage of tenders hosted on the corporate website has been increased toinclude tenders of Original Equipment Manufacturers and Proprietary items also. TheIntegrity Pact has been implemented for all tenders with value in excess of Rupees onecrore.

Numaligarh Refinery Limited (NRL)

NRL was incorporated in 1993 with an authorized capital of Rs. 1,000 crores. It is aMini Ratna company (Category I) and has a 3 MMTPA refinery at Numaligarh in Assam. BPCLholds 61.65% of the paid up equity in NRL as on 31^st March, 2010. The refineryprocessed 2.62 MMT of crude oil during the year 2009-10 as compared to 2.25 MMT processedin the previous year. As on 31^st March, 2010, the Refinery completed 8 yearsand 1 month of Lost Time Accident (LTA) free operations (equivalent to 1.40 croresman-hours) since the date of the last LTA. NRL achieved a turnover of Rs.7,874.09 croresfor the financial year ending 31^st March, 2010 which is lower than the turnoverof Rs. 8,853.35 crores in 2008-09. The company’s profit after tax for the year stoodat Rs.232.08 crores, as against profit after tax of Rs.235.64 crores in the previous year.The earnings per share (EPS) for the year 2009-10 amounted to Rs. 3.15 as against Rs. 3.20in 2008-09. The Board of Directors of NRL have maintained the dividend by recommending apayout of Rs. 1.50 per share of Rs. 10 each. NRL had a net worth of Rs.2,450.04 crores anda book value of Rs.33.30 per share as at 31^st March, 2010.

Bharat PetroResources Limited (BPRL)

BPRL was incorporated on 17th October, 2006 as a wholly owned subsidiary company ofBPCL, with the objective of implementing BPCL’s plans in the upstream exploration andproduction sector. The company has an authorized capital of Rs.1,000 crores. As on 31^stMarch, 2010, the subscribed share capital of BPRL was Rs. 702.55 crores. The explorationand production activities of BPRL and its subsidiary companies extend to 26 explorationblocks where they hold participating interests (PI). Of this, 9 blocks are in India and 17are abroad. Besides India, BPRL has blocks in Australia, Brazil, East Timor, Indonesia,Mozambique and the United Kingdom. BPRL’s total acreage in all these blocks is around81,000 sq.km, of which approx. 91% is offshore acreage. These blocks are in various stagesof exploration.

During the year 2009-10, significant level of exploration activities were undertaken,particularly in Brazil and Mozambique. M/s. Anadarko Petroleum Corporation (Anadarko), theOperator of the offshore block in Brazil, has announced that the ‘Wahoo-1’ wellin block BM-C-30 in the Campos Basin flowed at a test rate of approx. 7500 barrels per dayof crude oil and approx. 4 million ft³ (0.11 million m³) per day ofassociated natural gas. The ‘Windjammer’ well drilled during the first quarterof 2010 in Rovuma Basin, in the deep water offshore Mozambique, encountered hugequantities of gas in the wildcat well. The drilling of the balance wells in Mozambique iscontinuing.

BPRL had formed a wholly owned subsidiary company, Bharat PetroResources JPDA Limited(BPR-JPDA LTD) through which it holds a participating interest of 20% in Block-JPDA06-103-East Timor in the Joint Petroleum Development Area between Australia and EastTimor. Further, BPRL has incorporated a wholly owned subsidiary company, BPRLInternational BV, Netherlands which in turn, has incorporated three wholly ownedsubsidiary companies viz. BPRL Ventures BV, BPRL Ventures Mozambique BV and BPRL VenturesIndonesia BV, for undertaking exploration activities in various countries. BPRL VenturesBV has 50% stake in IBV (Brazil) Petroleo Limitada, which has participating interestsranging from 20% to 40% in 10 blocks in Brazil. BPRL Ventures Mozambique BV hasparticipating interest of 10% in a block in Mozambique, and BPRL Ventures Indonesia BVholds participating interest of 12.50% in a block in Indonesia.

BPRL earned income of Rs.0.42 crores for the financial year ending 31^stMarch, 2010 and had a loss of Rs.35.72 crores as compared to an income of Rs.4.87 croresand loss of Rs.13.93 crores for the financial year ending 31^st March, 2009.

Annual Accounts of the Subsidiary Companies

In view of the dispensation granted by the Central Government under Section 212 (8) ofthe Companies Act, 1956, copies of the Balance Sheet, Profit and Loss Account,Directors’ Report and the Auditors’ Report of the Subsidiary Companies are notattached to the Balance Sheet of the Company. In compliance with the conditions of thedispensation, the Consolidated Financial Statements have been presented in the AnnualReport and financial information of the Company’s subsidiaries, as required, isdisclosed in the Annual Report as Annexure F to the Directors’ Report forinformation. The Audited Annual Accounts of the Subsidiary Companies and related detailedinformation are open for inspection by any Member at BPCL’s Registered Office.Further, BPCL would make available / furnish these documents, on request, to any of itsMembers and the said documents would also be posted on BPCL’s website.

Petronet LNG Limited (PLL)

PLL was formed in April, 1998 for importing LNG and setting up LNG terminals withfacilities like jetty, storage, regasification etc. to supply natural gas to variousindustries in the country. The company was incorporated with an authorized share capitalof Rs 1,200.00 crores. PLL was promoted by four public sector companies viz. BPCL, IndianOil Corporation Limited (IOC), Oil & Natural Gas Corporation Limited (ONGC) & GAIL(India) Limited (GAIL). Each of the promoters holds 12.50% of the equity capital of PLL.The balance equity was raised over a period of time with Gaz de France having a 10% equitystake and Asian Development Bank holding 5.20% of the equity. The balance 34.80% is heldby the public after the company had made an initial public offering in March, 2004.BPCL’s equity investment in PLL currently stands at Rs.98.75 crores. As at 31^stMarch, 2010, PLL had a net worth of Rs.2,234.86 crores with a book value of Rs. 29.80 pershare.

The expansion of the regasification capacity at Dahej from 5 MMPTA to 10 MMTPA wascommissioned in July 2009. The capacity is being further expanded to 12.50 MMTPA. The workon the green field terminal at Kochi has already commenced and the terminal is likely tobe commissioned by December 2011.

PLL recorded a sales turnover of Rs. 10,602.94 crores in the financial year ending ason 31^st March, 2010 as compared to Rs.8,428.70 crores recorded in 2008-09. Thenet profit for the year stood at Rs. 404.50 crores as compared to Rs.518.44 croresachieved in the previous year. Consequently, the EPS has declined from Rs. 6.91 in 2008-09to Rs. 5.39 in 2009-10. PLL has maintained the dividend of 17.50% for the financial year2009-10.

Indraprastha Gas Limited (IGL)

IGL, a Joint Venture Company with GAIL, was set up in December, 1998 with an authorizedshare capital of Rs. 220 crores for implementing the project for supply of CompressedNatural Gas (CNG) to the household and automobile sectors in Delhi. BPCL invested Rs.31.50crores in IGL for a 22.50% stake in its equity. IGL has commissioned over 241 CNG Stationswhich supply the environment friendly fuel to more than 3,50,000 vehicles. IGL has morethan 1,70,000 domestic PNG Customers and over 373 commercial customers in Delhi. Thecompany is also extending its business to the towns of Greater Noida and Ghaziabad.

IGL registered a turnover of Rs. 1,213.13 crores and a profit after tax of Rs. 215.49crores for the financial year ending as on 31^st March, 2010 as compared to aturnover of Rs.962.14 crores and a profit after tax of Rs.172.47 crores during theprevious year. IGL has declared a dividend of Rs. 4.50 per share against a dividend of Rs.4.00 per share in the previous year. IGL’s net worth was Rs. 825.48 crores with abook value of Rs.58.93 per share as at 31^st March, 2010. The shares of thecompany are listed on the Stock Exchange, Mumbai and National Stock Exchange of Indialimited.

Sabarmati Gas Limited (SGL)

SGL, a Joint Venture Company promoted by BPCL and Gujarat State Petroleum Corporation(GSPC) was incorporated on 6^th June 2006 with an authorized capital of Rs.100crores for implementing the City Gas distribution project for supply of CNG to thehousehold and automobile sectors in the city of Gandhinagar, Mehsana and SabarkanthaDistricts of Gujarat.

Both the promoters have a stake of 25% each in the equity capital of SGL and thebalance has been subscribed to by financial institutions. SGL has set up 13 CNG stations.SGL has achieved a turnover of Rs.297.91 crores and profit after tax of Rs. 27.72 croresfor the financial year ending 31^st March, 2010 against a turnover of Rs.260.45crores and a Profit after tax of Rs.18.12 crores in the previous year. The company hasproposed to maintain dividend on equity shares at the rate of 15% for the financialyear ending 31^st March, 2010.

Central UP Gas Limited (CUGL)

CUGL is a Joint Venture Company set up in March, 2005 with GAIL as the other partner,for implementing the project for supply of CNG to the household, industrial and automobilesectors in Kanpur and Bareilly in Uttar Pradesh. The company was incorporated with anauthorized share capital of Rs. 60 crores. The joint venture partners have each investedRs.15 crores in the joint venture, with each partner having an equity stake of 25% in thecompany. The balance equity share capital has been subscribed to by financial institutionsincluding Asian Development Bank (ADB), Infrastructure Development Finance Company Limited(IDFC) and Infrastructure Leasing & Financial Services Limited (IL&FS). CUGL hasset up 9 CNG stations. The company has commenced its PNG operations.

CUGL has achieved a turnover of Rs. 42.42 crores and profit of Rs. 7.19 crores for thefinancial year ending 31^st March, 2010 as compared to turnover of Rs.35.64crores and a profit of Rs.7.88 crores in the previous year. The EPS for the year stood atRs. 1.26 as against Rs. 1.39 in 2008-09. The Board of Directors has recommended thepayment of dividend at 3.50%, the same as last year.

Maharashtra Natural Gas Limited (MNGL)

MNGL was set up on 13^th January, 2006 as a Joint Venture Company with GAILfor implementing the project for supply of CNG to the household and automobile sectors inPune and its nearby areas. The company was incorporated with an authorized share capitalof Rs. 100 crores. BPCL and GAIL have invested Rs. 22.50 crores each in MNGL’s equitycapital. The Maharashtra Government will hold a 5% stake in the company. MNGL hascompleted its financial closure by inducting IDFC, ILFS and Axis Bank as shareholders. TheCompany has set up 13 CNG stations till 31^st March, 2010.

MNGL has achieved a turnover of Rs. 10.92 crores for the financial year ending 31^stMarch, 2010 and loss of Rs. 1.56 crores for the year as against a turnover of Rs.1.48crores and a loss of Rs.3.68 crores for the period 7^th October, 2008 to 31^stMarch , 2009.

Bharat Stars Services Private Limited (BSSPL)

BSSPL, a Joint Venture Company promoted by BPCL and ST Airport Pte Limited, Singaporewas incorporated on 13^th September, 2007 with an authorized capital of Rs.10crores for providing into plane fuelling services at the new Bengaluru InternationalAirport. The authorized share capital of BSSPL was subsequently enhanced to Rs. 20 crores.

The two promoters have each subscribed to 50% of the equity capital of BSSPL andBPCL’s present investment stands at Rs.10 crores. The company, which commenced itsoperations at the new international airport in Bengaluru from May, 2008, has recently beenissued the Letter of Award for implementing into plane fuelling services at the new T3Terminal at Delhi International Airport. A new company Bharat Stars Services (Delhi)Private Limited is being formed for undertaking operations in Delhi. The company is alsoplanning to enter Calicut Airport and other nearby airports and intends to set up FixedBase Operations to augment its revenues.

BSSPL has achieved a turnover of Rs.2.90 crores for the financial year ending 31^stMarch, 2010 and profit of Rs.0.64 crores as against a turnover of Rs.1.19 crores and aloss of Rs.0.33 crores in the previous year

Bharat Renewable Energy Limited (BREL)

BREL was incorporated on 17^th June, 2008 for undertaking the production,procurement, cultivation and plantation of horticulture crops such as Karanj, Jatropha andPongamia, trading, research and development and management of all crops and plantationincluding Biofuels in the state of Uttar Pradesh, with an authorized capital of Rs.30crores. The company has been promoted by BPCL with Nandan Biomatrix Limited, Hyderabad andShapoorji Pallonji Company Limited through their affiliate. Each of the partners will havean equal stake in the equity capital of the joint venture. The project envisagesplantation of Jatropha in 1 million acres (404686.3 hectares) of marginal land which hasthe potential of generating employment / self employment for 1 million people andproducing 1 million tonnes of Bio-diesel with an investment of Rs. 2,200 crores over thenext 10-15 years.

The Government of Uttar Pradesh has approved the project under ‘JeevanJyoti,’ a scheme of the Government which has the benefit of release of funds underthe Mahatma Gandhi National Rural Employment Guarantee (MGNREG) scheme. BREL hasidentified 60,438 acres (24,459 hectares) of wasteland for plantation. Efforts are alsobeing made to source saplings of Jatropha under the aegis of Bio Tech Park, Lucknowthrough approved nurseries and franchisees. Work is on for getting necessary approvals forthe identified land and in preparing the land for plantation. BREL has earnedmiscellaneous income of Rs.0.08 crores for the financial year ending 31^stMarch, 2010 and incurred loss of Rs.1.44 crores as against a miscellaneous income ofRs.0.05 crores and a loss of Rs.0.24 crores in the previous year.

Matrix Bharat Marine Services Pte Limited (MBMS)

MBMS is a Joint Venture Company incorporated in Singapore on 20^th May, 2008for carrying on the bunkering business and supply of marine lubricants in the Singaporemarket as well as international bunkering including expanding into Asian and Middle Eastmarkets. The company has been promoted by BPCL and Matrix Marine Fuels L.P USA, anaffialiate of the Mabanaft group of companies, Hamburg, Germany. The authorised capital ofthe company is USD 4 million, which is equivalent to about Rs.20 crores. Both the partnershave contributed equally to the share capital. Matrix Marine Fuels L.P USA hassubsequently transferred their share and interest in the joint venture in favour of MatrixMarine Fuels Pte Limited, Singapore, another affiliate of the Mabanaft group.

The company has begun the ex-pipe bunkering operations in August, 2008. The companywill also undertake development of international bunkering facilities at Indian ports,risk management including hedging activities, inventory management, and quality blendingand freight optimization by utilizing the back haulage of time charter vessels forimporting petroleum products in India. MBMS has achieved a turnover of USD 229.84 millionand loss of USD 0.65 million for the financial year ending on 31^st December,2009 as compared to a turnover of USD 67.99 million and loss of USD 0.13 million for theyear ending on 31^st December, 2008.

Petronet India Limited (PIL)

BPCL has 16% equity participation with an investment of Rs.16 crores in PIL which wasformed as a non-government financial holding company to give impetus to the development ofpipeline networks throughout the country. PIL had facilitated pipeline access on a commoncarrier principle, through joint ventures for the pipelines put up by them vizVadinar-Kandla, Kochi-Coimbatore-Karur and Mangalore-Hassan-Bangalore. PIL registeredincome of Rs. 0.41 crores and a net loss of Rs. 0.94 crores for the financial year ending31^st March, 2010 as against income of Rs. 0.52 crores and a net loss ofRs.27.06 crores (including provision for diminution of long term investment) in theprevious year.

The new pipeline policy announced by the Government of India some time back hasaffected the future of the company as interested companies are permitted to undertakepipeline projects and PIL does not have any new projects in hand. As such, promoters andother investors in PIL have reached a conclusion that continuation of PIL would not beviable. Accordingly, the winding up process has been initiated and the process ofdivesting PIL’s 26% equity in the 3 Joint Venture Companies promoted by it is inprogress. The Board of Directors of BPCL, in its meeting held in December 2006, acceptedPIL’s offer to buy its 26% stake in the equity of Petronet CCK Limited where BPCLalready holds 49% of the paid up share capital. This is awaiting receipt of approval ofthe Government of India.

Petronet CCK Limited (PCCKL)

BPCL has invested a sum of Rs. 49 crores for a 49% stake in the equity capital ofPCCKL, a Joint Venture promoted with PIL with an authorized share capital of Rs.135crores. The company owns the 292 km long multi-product Kochi-Karur pipeline fromBPCL’s installation at Irimpanam to Karur for transportation of MS, HSD and SKO. Thepipeline commenced commercial operations from September 2002.

The pumping volume during the year 2009-10 amounted to 1.72 MMT as against 1.57 MMT inthe previous year. PCCKL registered a turnover of Rs.45.82 crores and net profit ofRs.4.40 crores for the financial year ending 31^st March, 2010 as compared to aturnover of

Rs.45.70 crores and loss of Rs.3.25 crores in the previous year. BPCL has initiatedsteps subject to completion of all formalities to purchase the 26% equity share of PIL inPCCKL.

Delhi Aviation Fuel Facility Pvt.Ltd

A new Joint Venture Company, Delhi Aviation Fuel Facility Private Limited, has beenpromoted by BPCL, IOCL and Delhi International Airport Limited (DIAL) for implementingAviation Fuel Facility for the new T3 Terminal at Delhi International Airport, New Delhi.BPCL and IOCL will subscribe to 37% of the share capital of the joint venture while thebalance will be held by DIAL. BPCL’s onsite assets at the Delhi Airport will betransferred to the joint venture. Valuation of the assets is being done to determine theconsideration for the transfer. The company has commenced operations from July 2010.

CONSERVATION OF ENERGY, TECHNOLOGICAL ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO

The details regarding energy conservation, technology absorption and foreign exchangeused and earned as required by Section 217(1)(e) of the Companies Act, 1956, are given inAnnexure A.

MEMORANDUM OF UNDERSTANDING WITH MINISTRY OF PETROLEUM & NATURAL GAS

BPCL for the twenty-first successive year has entered into a Memorandum ofUnderstanding (MOU) for the year 2010-11 with the Ministry of Petroleum & Natural Gas.BPCL has been achieving an "Excellent" performance rating since 1990-91. BPCLalso has the distinction of winning the Prime Minister’s MOU Award for‘Excellence in Performance’ for 1998-99, 2000-01, 2002-03 and 2006-07. BPCL wasbestowed with the Prime Minister’s MOU Award for ‘Excellence inPerformance’ for 2006-07 in October 2009.

PARTICULARS OF EMPLOYEES UNDER SECTION 217(2A)

Information required under Section 217(2A) of the Companies Act, 1956, read with theCompanies (Particulars of Employees) Rules, 1975, is enclosed as Annexure C.

ANNEXURE TO THE DIRECTORS’ REPORT

ANNEXURE A

Efforts made by BPCL in regard to Conservation of Energy, Technology Absorption,Foreign Exchange Earnings & 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 and additional investment/proposals forconservation of energy: Energy conservation efforts received continuous focus, both interms of improvement in operations/ maintenance as well as development of new projects.Continuous monitoring of fuel consumption and hydrocarbon loss is undertaken usingsophisticated instruments and data acquisition system. An elaborate energy accountingsystem and Management Information System is an important feature of BPCL Mumbai and KochiRefineries operation.

As a part of Oil & Gas Conservation Fortnight 2010, M/s. CHT had organised adetailed "Furnace Efficiency & Insulation Effectiveness" survey for BPCLRefineries along with external experts. In addition, various awareness programs on the OilConservation theme were conducted, both inside & outside the refineries, includingfree PUC check up for vehicles.

(ii) Additional investments & proposals, if any, being implemented for & impactof the measures for reduction of consumption of energy & consequential impact on thecost of production of goods.

Mumbai Refinery

The following energy conservation and loss control measures were adopted during theyear 2009-10 which have resulted in significant fuel savings :

• High emissivity ceramic coating was applied to process heater tubes andrefractory walls of the new Crude Unit and Vacuum Unit furnaces (F 101 & 102) duringMarch 2009 shutdown, to achieve better heat absorption in the radiant section and fuelsaving.

• Special type insulation was installed on bare hot tubes of the NHGU furnace.

• Foam / chemical cleaning of air fin coolers in the new Crude Unit complex andC3C4 Unit to improve performance.

• "Chemical decontamination" technique was adopted for the first time inthe refinery during turnaround. This helps in improved heat exchanger cleaning and betterdecontamination for carrying out plant jobs.

• During turnaround, services of the combustion technology expert from M/sHamworthy Combustion Global Solutions was obtained, to get suggestions for adopting thebest practices leading to improved efficiency of the furnaces.

• Replacement of air pre-heater in CDU 2 furnace for improved heat recovery.

• Installation of Step-less control in the Make-up-Gas Compressor (MUG) of theHydrocracker Unit to reduce power consumption.

• Modification in LOBS plant to warm up feed pump – fuel saving by reducingfurnace load.

• Processing of the hydrogen rich Catalytic Reformer Unit (CRU) off gas in theHydrocracker Unit PSA system and new Hydrogen Unit to reduce overall Naphtha consumptionfor hydrogen generation.

• "Dry ice blast" cleaning of the convection section of heaters toimprove efficiency.

• Stopping of Naphtha fuel pumps in CPP – LNG replacing Naphtha fuel in Gasturbines.

• Chemical cleaning of HVU heater process tubes during shutdown to improve heatabsorption.

• Impellor trimming of VDU pump for power saving.

• Use of energy saving CFLlamps.

• Energy saving device/torroidal core transformers for energy saving in lightingcircuits.

• Installation of Capacitor banks to maximize power factor

• A comprehensive survey on the "Instrument Air Supply System" wascarried out to identify and rectify instrument air leaks.

• A survey of "Fuel oil line insulation effectiveness" was carried outto improve the fuel oil temperature for better viscosity at burners.

• Maximisation of crude throughput in modern highly energy efficient IntegratedCrude & Vacuum Unit.

• Antifoulant chemical injection in all Crude & Vacuum units.

• Injection of fire side chemical additive in HVU / CRU Heater.

• Regular cleaning of preheat exchangers of process units.

• Reduction of slops by tighter operational control.

• Continuous monitoring & control of all parameters of Furnaces & Boilers.

• Continuous monitoring & control of flare.

• Regular steam Insulation & steam leak surveys.

• Replacement of Insulation for various Steam Headers.

• Replacement of leaky steam traps & regular attending to steam leaks

Energy conservation and loss control measures planned for implementation in futureyears:

BPCL Mumbai Refinery is implementing / planning to implement various energyconservation and loss control projects as given below:

• Processing of CDU 2 LR in energy efficient VDU which will result in energysaving as well as yield improvement.

• Provision of Variable Speed Drives for CDU NB2A Heater FD fan & CDU B1HeaterID Fan.

• Extension of "Chemical Decontamination" technology for other unitsduring turnaround.

• Air fuel ratio controller in DHDS charge heater.

• APH replacement in CMU F01/F02, CDU B1 & NB2A furnaces.

• Trial run of on line chemical injection in select furnaces for improving heatabsorption.

• On line chemical cleaning of radiation tubes of select furnaces.

• Stopping of Naphtha feed pump in Old Hydrogen unit – 100% LNG feedreplacing Naphtha.

• Antifoulant chemical injection treatment to prevent crude side fouling inexchangers.

• Phase wise replacement of steam headers insulation.

During the year, Mumbai refinery was awarded the first prize for having achieved thebest "Specific Energy Consumption" for FY 2007-08 among refineries under thecategory of Composite Energy index 5 by Center For high Technology (MoP&NG).

Kochi Refinery

The following energy conservation and loss control measures were adopted during theyear 2009-10, resulting in significant fuel savings:

• Commissioning of HP to MP steam turbine for cooling water pump in DHDS.

• LP steam extraction from recycle gas compressor in DHDS.

• DEA flow optimization in fuel gas Amine Absorption Unit.

• Cascade control for reboilers in Aromatic Recovery Unit.

• Automatic Combustion Control for DHDS charge heater.

• LP steam air pre-heater for crude charge heaters.

• FRP blades for air-fin fans in crude unit.

• Stopping of one feed water pump of boiler UB8/9.

• Variable Speed Drives on-site trial runs conducted for 16 pumps in KochiRefinery.

• Energy Audit on Air conditioning systems conducted.

• Functioning of ENCON Clubs in Schools & Colleges revitalized with the numberof ENCON Clubs increasing from 25 to 50.

BPCL Kochi Refinery is implementing / planning to implement various energy conservationand loss control projects as given below:

• Optimization of pump drives through VFD installation in 15 drives

• Implementation of automatic air fuel ratio based combustion control for heatersEH1 and CH223

• Installation of LP steam air pre-heaters in DDH1 and CH 223

• Condensate recovery from LP steam APH in heaters CH1A/B, CH 21/22 and CH 223

• Replacement of sour water pump (SWP-5) with lower capacity pump CP-102.

• Recovering condensate from YE 101 (Biturox feed pre-heater)

• Step less control system in DHDS make up gas compressor

• Use of anti-foulant in crude pre-heat circuit to maintain pre-heat at SORconditions

• Modification of pre-heat circuit for enabling locating one of the CE 6exchangers downstream of Pre fractionator in case of crudes with high residue

• Pre-heat train optimization in CDU-1 along with vacuum column modification

• Change stripping steam in CDU-II from MP to LP by installing MP to LP turbodrive for compressor/ pumps (15 TPH steam)

• Routing of leak-off steam from seals of boilers UB8 / 9 auxiliary turbines tode-aerator

• Optimization of air conditioning systems in the refinery

Replacement of low efficiency crude charge heaters CH-1 A/B and kerosene charge heaterKH-1B with high efficiency heaters The following Energy & Environment awards werereceived by Kochi Refinery during the year 2009-10.

Fuel savings as a result of the energy conservation measures implemented in therefineries during the year 2009-10 correspond to the total savings potential of more than10700 tonnes of fuel oil equivalent (provisional).

(iii) Details regarding total energy consumption and energy consumption per unit ofproduction etc. are given in the prescribed Form A annexed hereto.

B. TECHNOLOGY ABSORPTION

The Refineries implemented the following projects to obtain the benefits of the latesttechnological developments and advances:

Mumbai Refinery

• In line with the action plan for meeting the auto fuel quality upgrade of partproduction of Euro IV quality Diesel by April 2010, the DHDS unit was revamped from 1.4MMTPA to 2.0 MMTPA based on the catalyst and technology supplied by M/s Haldor Topsoe.

• A new 2350 MT/D CC Gasoline Splitter Unit, designed by M/s EIL, was installed toseparate the high sulphur heavy component from the Catalytic Cracked Gasoline to make itsuitable for producing Euro-IV MS.

Kochi Refinery

• Propylene unit with a capacity of 50000TPA for producing chemical gradepropylene with a purity of 95% by weight was commissioned in August 2009.

• UP203 D Cooling Water pump in DHDS was converted from motor driven into turbine(HP to MP) driven.. Crude distillation unit II capacity was increased to 9.5 MMTPA from7.5 MMTPA.

• A new Naphtha splitter unit (NSU II) was added to CDU II as a feed preparationunit for CCR.

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

C. FOREIGN EXCHANGE EARNINGS / OUTGO

(i) Activities related to exports; initiatives taken to increase exports; developmentof new export markets for products and services; and export plans :

Crude Oil Imports

Crude oil prices moved from their low of USD 45 per barrel at the beginning of thefinancial year to around USD 80/bbl at the end of the financial year 2009-10. This wasmainly on account of optimism in the market following global financial recovery. Unlikethe earlier years and the general trend of sweet crude oil grades (Brent) commandingpremium over sour (Dubai) grades, the year 2009-10 saw Dubai prices commanding premiumover Brent price. This was mainly due to regional variation like reduced demand in theUnited States, strong demand in India and China, production cut by OPEC countries andstability in Nigeria resulting in increased production of low sulphur crude oil. In orderto take advantage of the prevailing low Brent-Dubai differential, BPCL carried outsuitable changes in strategy in procurement of crude oil by changing the crude oil mix ofits refineries.

The average price of Dated Brent Crude Oil reduced by about 18% during the year from $84.45/bbl in 2008-09 to $ 69.62/bbl in 2009-10. Further, the sweet / sour (Dated Brent /Dubai) difference reduced substantially from $ 1.6/bbl in 2008-09 to $ 0.05/bbl in2009-10.

During the year, BPCL imported 14.40 MMT of crude oil as compared to 12.70 MMT in2008-09. In value terms, the cost of imported crude oil on FOB basis amounted to USD 7560million (Rs.35419 crores) as compared to USD 7961 million (Rs.36114 crores) in 2008-09.The average price stood at USD 70.4 per barrel as compared to USD 85.3 per barrel in theprevious year. The ratio of "Term to Spot" purchase of imported crude oil was62:38 lower as compared to 85:15 in 2008-09 mainly due to production cut by OPEC. Forprocurement of spot cargo, BPCL sought better terms and conditions with the suppliers,expanded the vendor base, added new grades of crude oil and opened up new avenues forprocurement of crude oil from floating storage. All these steps have yielded substantialsaving to the Corporation.

Further, BPCL also facilitated procurement of 0.5 MMT Arab Mix crude oil for its jointventure refinery, Bharat Oman Refineries Ltd. (BORL) for initial start-up andcommissioning activities.

Product Import and Export

On the products front, BPCL imported 1588 TMT of HSD, 33 TMT of SKO, 211 TMT of MS, 228TMT of LPG to meet the shortfall in supply from domestic sources and 48 TMT of Reformateas blendstock during the year 2009-10.

During the year, BPCL exported 2698.91 TMT of refined products. This was higher thanthe level of 1381.88 TMT exported during the previous year. Export of Fuel Oil increasedfrom 664.29 TMT in 2008-09 to 982.58 TMT during 2009-10. Export of naphtha increased from703.45 TMT in 2008-09 to 1341.45 TMT during 2009-10. During the year, BPCL also exported352.39 TMT of High Sulphur Gas oil.

The foreign exchange earnings from these exports amounted to USD 1442 million (Rs.6,733crores) as against USD 757 million (Rs.3,362 crores) during the previous year. Inrecognition of its export performance, Director General of Foreign Trade awarded arecognition certificate to BPCL as a "Premier Trading House". This was animprovement over the earlier recognition status as a "Three Star Export House".

ii) The details of foreign exchange earnings & outgo are given below :-

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

Notes:

1. Decrease in power purchased cost is mainly due to higher power generation in GTs& lower power import.

2. Cost per unit of Power Purchased has decreased due to lower purchase of power fromM/s TATA Power.

3. Cost per unit of power generated in CPP has decreased due to decrease in fuel cost(LNG consumption) & depreciation.

B. Energy consumption per unit of production

* No fixed consumption parameter can be attributed to a particular product as theproduct pattern of the Refinery is governed by supply / demand scenario of products andGovt. directives. It is also a function of quantity / type of crude processed, plannedshutdown of processing units for maintenance / inspection and severity of operations ofprocessing units which varies widely.

2. KOCHI REFINERY

Notes :

1. Fuel for CPP consisted of Intermediates and Refinery Fuel Gas.

2. The purchased power is net of export to KSEB.

3. Cost of FCC coke, LSHS, Intermediates, Refinery Fuel Gas etc. are at average cost.

B. Energy consumption per unit of production

* No fixed consumption parameter can be attributed to a particular product as theproduct pattern of the Refinery is governed by supply/demand scenario of products andGovernment directives. It is also a function of quantity/type of crude processed, plannedshutdown of processing units for maintenance/inspection and severity of operations ofprocessing units, which varies widely.

FORM B

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION RESEARCH &DEVELOPMENT (R&D)

1. Specific areas in which R&D has been carried out by the Company :

i) Catalytic Processes

ii) Development of Catalysts and Catalyst additives

iii) Development of fuel additives/blending schemes

iv) Detailed Crude Evaluations and Crude compatibility studies

v) Development of nanomaterials for on-board gas storage and other applications

vi) Development of Process scheme for synthetic lubricants

vii) Modeling and Simulation of refinery processes

viii) Corrosion and fouling

ix) Advanced Tech support to Refinery & Marketing Operations

x) Alternate fuels – Bio-ethanol, bio-diesel, hydrogen

xi) Alternate energy devices – new generation solar PV cells

xii) Long life Diesel Engine Oil for heavy commercial vehicles.

xiii) Passenger Car Engine Oil for latest models.

xiv) Bio-degradable Cutting Oil

xv) High Performance Greases

xvi) Defence specific grade lubricants

xvii) Alternate lube formulations for existing grades

2. Benefits derived as a result of the above R&D :

i) Optimum catalysts and additives were selected / recommended for KR and MR FCCplants, resulting in improved yields/ product quality.

ii) LPG Sweetening Catalyst jointly developed by BPCL and IIP, Dehradun being used atMumbai Refinery in the FCC units has resulted in cost saving and better performance.

iii) Cost effective CO promoter catalyst developed in-house has been in use at FCC unitof KR. An Indian Patent has been filed for protecting IPR for this innovation.

iv) In-house developed BMCG product being commercially produced and marketed in India& overseas has resulted in substantial benefit to the Corporation.

v) A cost effective route for producing MS-97 has been developed and commercialized atBPCL installations resulting in substantial savings.

vi) Commercial trials were conducted successfully for the in-house developed corrosioninhibitor for ethanol-MS blend, which is expected to save costs.

vii) Detailed crude evaluations aided in enhancing value realization and enlarging thecrude basket. Crude blend compatibility studies helped in processing opportunity crudes.

viii) Developed a model based on the physical properties using Aspen Plus to minimizequality giveaways in Fuel Oil (FO) production resulting in substantial benefits to theCorporation.

ix) Energy Optimization Studies conducted for enhanced crude pre-heat heat recoverythrough pinch analysis resulted in reduced fuel consumption in MR.

x) (a) Implementation of selected antifoulant with optimal dosage in MR crude-pre-heattrains resulted in improved heat recovery.

(b) Implementation of selected demulsifier in MR CDU Units resulted in improveddesalting and reduced overhead corrosion.

(c) Studies on Mumbai-Manmad-Bijwasan (MMB) pipeline corrosion resulted in developingan in-house monitoring system for reducing the corrosion.

xi) Long life Diesel Engine Oil for heavy commercial vehicles - extends the drainperiod of engine oil for the latest high performance vehicles, besides increasing ourshare in this segment.

xii) Passenger Car Engine Oil for the latest models –provides an opportunity toincrease our market share in this segment.

xiii) Bio-degradable Cutting Oil –protects the environment, besides providingviable option to customers

xiv) High Performance Grease –helps us to increase our market share in the Steelmanufacturing segment, besides providing a viable alternative to customer.

xv) Defence specific grades –provide an indigenous alternative to Defence xvi)Alternate formulation for existing grades –helps in reducing the input cost, besidesproviding flexibility in operation.

3. Future Plans

i) Development of process scheme for the production of bio-fuels such as ethanol &bio-butanol and bio-lubricants.

ii) Intensifying and enlargement of activities in the area of Refinery processes andresid upgradation.

iii) Development of catalyst/additive for refining processes

iv) Development of new process technologies using the additive approach for improvingthe product quality

v) Enlargement of crude basket and identification of opportunity crudes and crudeblends

vi) Controlling Corrosion and fouling in Refinery units

vii) Value added products/ solvents from the Refinery streams

viii) Modelling and simulation of Refinery processes

ix) Coal to Resid Technologies

x) Alternate Fuels & Energy Devices such as bio-diesel, algal biofuels, hydrogenand solar PV cells.

Developing the following grades / products :

i) Diesel Engine Oil meeting the latest international specifications

ii) Transmission Oil OEM specific

iii) Metal Working Fluid

iv) Synthetic Gear Oil

v) Synthetic Refrigeration Compressor Oil

vi) Defence specific grades

4. Expenditure on R&D during 2009-10

1. Efforts, in brief, made towards technology absorption, adaptation andinnovation

The Refinery has undertaken the following projects to obtain the benefits of the latesttechnological developments and advances:

A. In line with an action plan for meeting the auto fuel quality upgrade of partproduction of Euro IV quality Diesel by April 2010, the DHDS unit was revamped from acapacity of 1.4 MMTPA to 2.0 MMTPA as per the revamp design supplied by M/s Haldor Topsoe.

B. A new 2350 MT/D CC Gasoline Splitter Unit, designed by M/s EIL, was installed tosplit the combined gasoline streams produced by the two Catalytic Cracking Units in therefinery into light and heavy components. The unit splits the feed stream into low sulphurOlefin rich lighter components (top & middle cuts) suitable for producing Euro III/IVMS and a bottom high sulphur heavy stream which is blended into HSD.

2. Benefits derived as a result of the above efforts, e.g. product improvement,cost reduction, product development, import substitution, etc.

A. With the increase in the diesel desulphurization capacity, the HSD product mix wasupgraded from BS-II/Euro-III to Euro-III/IV as per the requirements of the auto fuelpolicy of the Government of India.

B. This has enabled production of Euro-IV MS from the refinery.

3. In case of imported technology (imported during last five years reckoned fromthe beginning of the financial year), following information may be furnished:

(a) Technology imported:

(b) Has Technology been fully absorbed?

Yes.

(c) If not fully absorbed, areas where this has not taken place, reasons therefore andfuture plans of action:

Not applicable.

1. Efforts, in brief, made towards technology absorption, adaptation andinnovation

The Refinery has implemented the following projects to obtain the benefits of thelatest technological developments and advances during 2009-10 :

a. Propylene Recovery Unit

Propylene unit with a capacity of 50000TPA for producing chemical grade propylene witha purity of 95% by weight was commissioned in August 2009.

b. Commissioning of high pressure (HP) to medium pressure (MP) steam turbine for UP203D Cooling Water pump in DHDS.

Cooling Water pump in DHDS (UP203 D) was converted from motor driven into turbine (HPto MP) driven thus utilizing available HP steam.

c. CDU II Revamp

Crude Distillation Unit II capacity was increased from 3 MMTPA to 5 MMTPA as a part ofthe Capacity Expansion & Modernisation Project Phase II (CEMP-II). A new heater wasinstalled as Vac column feed heater and the existing Vac heater was utilized as balancingheater for crude distillation column. A prefractionator tower was added fordebottlenecking the crude distillation column at increased capacity.

The desalter in CDU II was modified for increased capacity during CDU II revamp basedon technology supplied by M/s Natco, UK.

d. Naphtha Splitter Unit.

A new Naphtha Splitter Unit (NSU II) was added to CDU II as feed preparation unit forCCR. The technology was provided by M/s UOP, USA and engineering and construction was byM/s EIL. NSU II will be taking Naphtha feed from the Crude Distillation Unit II.

2. Benefits derived as a result of the above efforts, e.g. product improvement,cost reduction, product development, import substitution, etc.

a. Propylene Recovery Unit

A new product viz., Chemical Grade Propylene (95% purity) was added to the productslate. This is expected to improve refinery profitability.

b. Commissioning of high pressure (HP) to medium pressure (MP) steam turbine for UP203D Cooling Water pump in DHDS.

HP to MP steam makeup through pressure reducing station (PRDS) was reduced from 25 TPHto 10 TPH. Conversion of the pump from motor driven to turbine driven resulted in a powersaving of 255KW (approximate annual benefit of Rs 0.9 Crores).

c. CDU II Revamp

The revamp increased the crude unit capacity of the refinery from 7.5 MMTPA to 9.5MMTPA. Along with other units being installed under CEMP-II project, this unit will enableproduction of required quantities of Euro III and Euro IV specification fuels apart fromimproving availability of all other products.

d. Naphtha Splitter Unit

This unit will prepare feed stream for the CCR Unit from CDU II Naphtha and is anessential requirement.

3. In case of imported technology (imported during last five years reckoned fromthe beginning of the financial year), following information may be furnished:

(a) Technology Imported:

(b) Has Technology been fully absorbed?

Yes.

(c) If not fully absorbed, areas where this has not taken place, reasons therefore andfuture plans of action:

Not applicable.

ANNEXURE C

Particulars of Employees under Section 217(2A) of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975 for the year ended 31st March 2010Employed for part of the financial year and in receipt of remuneration of more than Rs.2lakhs per month