Bharat Petroleum Corporation Ltd Management Discussions.

Humanity witnessed the severest of global health and economic crisis of modern times as the COVID-19 pandemic paralyzed the world and impacted lives in an unforeseen manner. The crisis is unprecedented in several ways and one of the vilest in peacetime in at least the last century. As the world remained locked down for weeks together in its fight against the pandemic, economy, travel, trade and human life suffered severely. While the world is trying to gather the pieces and jumpstart the economic engine, uncertainty looms large.

Economic Developments: Distress in stress

The world economy grew at a slower pace of sub 3% levels in the year 2019, lower than that witnessed in the year 2018, due to adverse impacts of trade protectionism, geopolitical tensions, financial stress in key emerging market economies, heightened social unrest in many countries and weather related disasters. In end 2019, just as the global economy was looking forward to stabilizing supported by easing of trade barriers , abating of Brexit concerns, adoption of accommodative monetary policies by Central Banks and bottoming out of manufacturing activity and global trade, the worst pandemic in decades of modern history hit hard. The COVID-19, which emanated in China in December 2019, engulfed within its fold almost the entire world within a span of few weeks. With no known remedies available to combat the fast spreading deadly pandemic, nations across the world responded by enforcing lockdowns, mandating social distancing, instituting preventive protocols and augmenting healthcare systems on a war footing - measures aimed at slowing down the spread of the virus and containing the damage. The last time the world faced a pandemic crisis of the scale of COVID-19 was in 1918, when the indomitable H1N1 influenza spread across the world claiming millions of human lives.

The disruption in economic activity, global trade and travel has triggered a deep economic crisis across the world. In spite of genuine attempts to counter adverse impacts of

the crisis through a plethora of fiscal and monetary policy stimulus and financial support, the global economic growth is expected to slip deep into the negative zone by the end of year 2020, much worse than that witnessed during the 2008-09 financial crisis. In the event that the pandemic recedes in the second half of 2020 and economic activity normalizes with policy support and gradual unwinding of containment measures, the world economy is expected to grow at a higher pace in 2021. However, the global growth projection is overwhelmed with uncertainty, as it hinges on factors extremely difficult to predict at this stage, like the pathway of the pandemic, the efficacy of containment measures and the pace and extent of unwinding, response to policy stimulus, financial market movements, behavioral changes affecting spending and investment, global trade and travel, business and consumer confidence and volatility in commodity prices.

The pandemic has posed severe risks to the global economy. It is considered as the worst crisis since the Great Depression during the 1930s. The crisis has a contagion nature and a domino effect with maximum risk to the lower strata of economies, businesses and population. The disruptions in global and domestic supply and value chains, interruption in international trade and travel, lower productivity levels, closure of work places, suspension of activity and postponement of investment may lead to workforce layoffs, reduced income levels and reduced spending, which will further exert downward pressure on demand, leading to more business closures and job losses. The stress in the financial markets, liquidity crunch and rising debts can amplify the effects further with limited room available with policymakers. Downsides notwithstanding, targeted timely and massive fiscal, monetary and financial market reforms and measures may facilitate resumption of economic activity towards normal levels and neutralize the effect of the shock, especially in the sectors and sections worst affected by the pandemic. Enhanced international cooperation,

information sharing, coordinated medical research and interventions and provision of financial assistance to weaker economies would be required for a broad-based recovery in the global economy. Nevertheless, checking the spread of the virus and finding an effective cure for the disease remain the critical prerequisites.

While the Indian economy grew at a slower pace of around 4.2% in the year 2019-20 due to factors like slowing consumption, declining investments, muted export growth and deepening financial stress, the outlook for 2020-21 looked encouraging before the onset of COVID-19. The improving rural demand and return of optimism in manufacturing and investment, supported by fiscal and monetary policy stimulus by the Government and the RBI, especially the tax reforms, infusion of liquidity, reduction in interest rates and enabling monetary transmission, had created an environment conducive for higher growth. However, the COVID-19 pandemic drastically changed the scenario. Indias swift response to the situation is appreciated world over, however, the economic cost of lockdowns and containment measures is massive and has to be borne by the economy. While the stimulus announced by the RBI and Government, coupled with a benign international crude oil price scenario, is expected to provide some cushion to the falling growth, however, due to the pandemic situation, it may be severely impacted.

The Consumer Price Index (CPI) inflation in the country averaged at 4.76% in the year 2019-20 as against 3.43% in the previous year. The headline inflation rose consistently month over month and peaked in the month of January 2020 before declining and settling at 5.84% in March 2020. The changes in the food and vegetable prices defined majority of the movement in CPI inflation during the year 2019-20. Looking ahead, inflation may soften in the coming months, as food prices ease further with expected record production and impact of lower prices of crude oil percolate in the economy. However, the

trajectory of inflation will be determined by the evolution of the COVID-19 situation and the pace of economic recovery.

The outbreak of pandemic bore heavily on the foreign exchange rates across the emerging market economies, with the Indian Rupee (INR) touching a staggering low of 76.15 against the USD dollar (USD) in the month of March 2020 and depreciating by around 9.0% by the close of year 2019-20. The INR came under intensified depreciation pressures towards end February 2020, as global trade disrupted and risk aversion gained prominence. Prior to this, the INR vs USD exchange rate remained range bound in the territory of INR 68.3 to INR 72.2 per USD, impacted by developments around US-China trade tensions, movement in crude oil prices and policy measures announced by the Government for attracting capital inflows. The rupee averaged at INR 70.89 per USD as against INR 69.91 per USD in the previous year, registering an average depreciation of 1.4% year on year. The COVID-19 situation continued to put pressure on the INR, which further depreciated to all-time lows in early 2020-21.

With absolute uncertainty around unfolding of the COVID-19 situation, economic recovery is inundated with significant downside risks stemming from the migration of labour, fractured and unaligned supply chains, suboptimal operations, demand and supply shocks, liquidity crisis especially in the unorganized and small scale businesses, and distorted fiscal position.

On the side of optimism, higher proportion of domestic consumption in the economy, demographic dividend, potential to emerge as an alternate manufacturing hub and targeted timely fiscal and monetary policy measures by the Government can cushion the shock and place the economy back on the growth trajectory faster than many other major economies in the world.

Trends in the Oil and Gas Sector

The Oil and Gas sector has been abuzz with activity and witnessing transformational trends since the past few years driven mainly by growing climatic concerns and technological developments. The world has been moving faster towards de-carbonization of energy and electrification of mobility, extensively supported by policy imperatives and capital commitments besides improving quality of fuels and adopting reduced emission norms, a remarkable achievement being the implementation of IMO 2020 regulations with effect from January 2020. However, with the world reeling under a severe economic crisis due to the pandemic, forcing redistribution of resources and reshuffle in investment priorities, and with emissions reducing substantially due to reduction in energy demand, there is increased uncertainty around the pace of transition.

During the year 2019, global energy demand grew by a meagre 0.9%, registering a decline of around 60% in growth as compared to 2018. The slowdown in global economy and lesser heating and cooling requirements due to milder weather in some of the major economies contributed to lower growth in primary energy demand. The major decline in growth was recorded in coal and gas, with the former de-growing by 1.7%, while the latter growing by only 1.8%, as compared to a growth of 0.7% and 4.6% in 2018 respectively. Despite declining for the third time in the past five years, coal still remains the second largest source of energy after oil, and the single largest source of electricity. However, for the first time in the year 2019, the electricity generation from low carbon sources - nuclear and renewables - was more than from coal. Renewables recorded the fastest rate of growth at 3.7%, and the highest absolute growth in the year 2019 with double digit growth in both solar and wind power. Oil, including biofuels, grew by just 0.8% (or 0.8

million barrels per day) in 2019, the third lowest rate in the last ten years. The decline in oil demand in advanced economies was more than offset by increase in demand in the rest of the world, led by China and India, though demand growth in India was lower than in 2018.

Regionally, with 3.4% growth in energy demand, China claimed the lions share (90%) of net global energy demand growth in 2019, while the European Union and United States registered a de-growth of 1.9% and 0.6% respectively. India recorded a growth of just 0.9% in energy demand, staggeringly lower from 4% in 2018 and the lowest ever so far, as the economic activity slowed and power demand fell, particularly from irrigation and manufacturing. The growth rate in energy demand in many advanced economies and major emerging economies trailed the economic growth rate, as the benefits of energy efficiency accrue from technological developments and switching to low carbon solutions.

After two years of increase, the global energy-related CO2 emissions remained almost stable in 2019, contributed by milder weather, improvements in energy efficiency and increasing transition to gas, renewables and nuclear power, offsetting the impact of growth in economic activity. While advanced economies recorded a decline in emissions mainly from the power sector, the rest of

the world experienced an overall increase; however, the emission growth rate was much lower in India, Indonesia and to some extent in China.

The COVID-19 pandemic has the energy sector witnessing some extraordinary occurrences, movements and trends. With the worldwide lockdowns and curtailment of activity, global energy demand declined; however, the decline was asymmetrical across sectors. Digital applications, residential and healthcare sectors witnessed a surge in demand, which was more than offset by reduction in demand from commercial, industrial and mobility sectors. During the first quarter of 2020 itself, global energy demand declined by a shocking 3.8% and CO2 emission levels lowered by an unprecedented 5%. Moving ahead, the energy demand and emission levels are likely to remain subdued for a longer period of time as the pandemic situation evolves and economic activity normalizes; however, some structural changes are imminent with the world realizing the power of climatic catastrophes and digitalization emerging as a powerful enabler and even a substitute.

The international prices of crude oil and natural gas continued to be volatile in the year 2019-20 influenced by slowing global economic activity, developments on the US-China trade war, tensions in the Middle East, Brexit worries, US sanctions on Venezuela and Iran, act of terrorism in Saudi Arabia in September 2019, changing supply side dynamics amongst top oil producers and

above all, the outbreak of COVID-19 pandemic. During the year 2019-20, the benchmark Brent crude as well as the Indian basket of crude oil averaged at around USD 61 per barrel as against USD 70 per barrel for both the crudes in 2018-19. Moving in the range of around USD 50 per barrel to USD 75 per barrel for almost the entire year, the Brent crude oil prices collapsed in the month of March 2020, hit by a double whammy of declining demand due to the pandemic and overflowing supplies due to supply war amongst major producers. This culminated in substantial inventory pile up, both onshore and offshore, shooting up the freight market significantly. The Brent Crude prices fell to a low of around USD 13 per barrel in the month of April 2020, the lowest in the last 20 years. In an unimaginable and unprecedented slide, the benchmark WTI crude futures, which are widely tracked and traded especially in the US, fell to a level of negative USD 37.63 per barrel in erratic trade during mid- April 2020. The prices have strengthened since then as global demand - supply rebalanced with production cuts by Opec+ in line with the deal clinched in April 2020 and gradual reopening of the global economy. Nevertheless, uncertainty continues.

During the year 2019-20, the Brent Dubai differential averaged at USD 0.7 per barrel in favour of Brent, as against USD 0.8 per barrel in the previous year. The Brent crude traded at a premium to Dubai crude for most part of the year with intermittent reversal of spreads

from premium to discount. This was more pronounced during the period January 2020 to March 2020, when the discount to Dubai crude rose as high as 5.7 per barrel during March 2020. The trend continued in subsequent months with Dubai crude quoting at discount to Brent crude most of the times.

In tandem with the crude prices, the product prices witnessed high volatility during the year 2019-20, averaging lower than the levels of the previous year. Motor Spirit (MS) (Unleaded Singapore Platts) (Petrol) prices averaged at USD 67 per barrel, as against USD 76 per barrel in the previous year while the prices of High Speed Diesel (HSD) (Diesel) averaged at around USD 74 per barrel as against USD 85 per barrel in the previous year. The average prices of Naphtha and Jet Fuel / Kerosene (SKO) were USD 55 per barrel and USD 73 per barrel as against USD 65 per barrel and USD 84 per barrel respectively in the previous year.

Unlike 2018-19, the MS cracks (Product prices FOB Singapore minus Dubai Crude) remained positive throughout the year 2019-20 except in the second fortnight of March 2020 when the cracks became negative and touched unprecedented lows of around negative USD 6 per barrel. The MS cracks averaged at USD 6.7 per barrel against USD 5.9 per barrel in previous year, 14% higher. However, the average cracks of Naphtha, Jet Fuel/ Kero and HSD were weaker than the previous year. The average cracks of Naphtha were negative USD 5.5 per barrel against negative USD 4.1 per barrel in the previous year, Jet Fuel/Kero cracks averaged at USD 12.6 per barrel against USD 14.6 per barrel in the previous year and HSD cracks averaged at USD 14.1 per barrel against USD 15.1 per barrel in the previous year, registering a decline of 34%, 14% and 7%, respectively.

The global oil market, which was already facing challenges due to geopolitical tensions, weaker economic activity, rising energy efficiency, excessive refining capacity and energy transition trends, has further been distressed by the pandemic, amplifying the probability of a much longer depressed crude and product price scenario. Responding to the situation, the global oil companies have slashed their capex spends and resorted to cash conservation measures to ease off the pressure on liquidity and profitability and effectively serve their debt obligations. On the geopolitical front, with the emergence of US as a strong influencer while Saudi Arabia - Russia relations run hot and cold, the global crude market is seeing a subtle shift in the fulcrum of dominance.

Indian Petroleum Sector

For a country which is the third largest consumer of oil after the US and China, and which imports around 85% of its requirements every year, a low and stable oil price regime is a boon. Capitalizing on reduced foreign exchange outflow on account of a lower oil and petroleum product import bill, which constituted more than 25% of the countrys total import bill in 2019-20, India gets enough leg room to constructively manage its balance of payments, fiscal and monetary policy situation. However, as the COVID-19 pandemic throttles economic activity, the low oil prices offer little respite. The countrywide lockdown, which started in the last week of March 2020, contracted the consumption of petroleum products by around 18% during the month itself and moderated the full year consumption growth to negligible levels. Consequently, the year 2019-20 ended at around 213.7 MMT as against 213.2 MMT in the previous year. The natural gas consumption grew by around 5.5% during the year 2019-20, as against 2.8% in the previous year due to increased adoption of gas in the country supported by reduction in international LNG prices.

With crude oil imports remaining static, oil prices averaging lower than the previous year and the INR depreciating marginally against the USD during the year 2019-20, the countrys crude oil import bill reduced by around 9%, from USD 111.9 billion in the year 2018-19 to USD 101.4 billion in the current year. While the country imported around 227.0 MMT of crude oil in the year 201920, as against 226.5 MMT in the previous year, the price of the Indian crude basket averaged at around USD 61 per barrel as against USD 70 per barrel, a decline of 13% against the previous year. The Indian Rupee averaged at INR 70.89 per USD in year 2019-20 as against INR 69.91 per USD in the previous year, a depreciation of 1.4%.

The indigenous crude oil production, which is less than 1% of the global oil production, declined for the eighth consecutive year in 2019-20, falling 6% to 32.2 MMT from

34.2 MMT in the previous year. The output from ageing fields continued to decline, coupled with operational issues encountered in some of the fields during the year.

Indias refining capacity leads consumption of petroleum products by a significant margin, positioning it as a net exporter, with exports to the tune of around 25% of the total production in 2019-20. With no major capacity addition in the past two years, the countrys refining capacity has been almost static and was at 249.9 MMT as of 1st April 2020. During the year 2019-20, the country processed around 254.4 MMT of crude, as against 257.2 MMT in the previous year, with PSUs and their group companies contributing 65% of the total processing. The domestic refineries processed around 76% high Sulphur crude during the year.

As the pace of economic growth slowed in 2019-20, the consumption of petroleum products ended almost flat at around 213.7 MMT, as against 213.2 MMT in the previous year. Diesel, which constituted 39% of the total consumption of petroleum products in 2019-20, registered a de-growth of 1%, while Petrol and LPG, which constituted 14% and 12% respectively grew by 6% each.

The countrys flagship PMUY initiative, aimed at promoting cleaner cooking fuel and ensuring good health of women, particularly in the rural areas, saw achievement of the

target of 8 crore LPG connections by the first week of September 2019, seven months ahead of schedule. With this, the LPG active consumer base has increased to 27.9 crore consumers as of 31st March, 2020, leading to more than 97% coverage in the country. The fringe benefit of the initiative in supporting the needy in current times of socio-economic trouble was realized as the Government announced provision of three free refills in three months with effect from April 2020. This will also give a fillip to the Companys efforts to enhance the usage of LPG amongst PMUY consumers, which is necessary for sustainability of the scheme.

Bearing testimony to the nations commitment towards a greener and cleaner environment, BS VI fuels (petrol and diesel), equivalent of Euro VI grade, were rolled out across the country on the scheduled date of 1st April 2020. Leapfrogging from extant BS IV standards, in just three years, India joined the elite club of select nations of the world using such cleaner fuels.

In a landmark move aimed at improving customer service levels and augmenting the retail network, particularly in rural areas, the Government revised the 17 year old guidelines for marketing of transportation fuels, relaxing the rules and lowering the entry barriers, thereby encouraging participation of private and foreign players in the sector. The move will enhance competition in the industry and drive efficiencies, enhance customer service and ensure deeper penetration of retail outlets.

Towards the objective of making India a gas based economy, enhancing contribution of gas in the energy basket from current levels of around 6% to 15% by 2030, the Government has taken many visionary steps. These include promoting creation of necessary infrastructure like City Gas Distribution (CGD) networks, Gas grid, LNG terminals, allotting "Public Utility" status to CGD and incentivizing adoption of gas through prioritized allocation of cheaper domestic gas for households and transportation. The Geographical Areas awarded in the 9th and 10th bidding rounds of CGD networks are in various stages of progress and once operational, would cover around 70 percent of Indias population and 53 percent of the geographical area. The National Gas Grid has been planned to be expanded to 27,000 KMs from the present 16,200 KMs for wider integration of gas sources to consumption hubs.

Over the years, the country has implemented several reforms and taken various initiatives towards overall economic progress and development and in particular, for the oil and gas sector, keeping pace with the changing market dynamics, emerging trends, countrys

requirements and aspirations. The country has formulated a lofty Energy Vision propped on the four pillars of Energy Access, Energy Efficiency, Energy Sustainability and Energy Security with Energy Justice as an integral part of the overall objective. Ambitious targets have been set across all pillars with particular mention of promotion of gas based economy, increase in biofuels, diversification of sources of crude oil and natural gas, transition to electric vehicles and enhancement of renewables capacity. They are being pursued with all-out efforts and the country is progressing well towards achieving them.

Opportunities and Threats

Energy has been instrumental in ushering in all developments in the modern world. As important and major constituents in the energy basket, Oil and Gas have played a key role in energizing the lives of millions of people around the globe and kept the wheels of the world economy moving for centuries now. In recent times, growing climatic concerns and technological developments have compelled focus on and accelerated efforts towards de-carbonization of energy, thus building expectations of fossil fuels running out of favor sooner than later. However, with expectations of softer crude oil price regime, reduced CO2 emission levels due to muted economic activity and changes in consumer behavior, oil and gas are expected to continue fueling the world longer than expected earlier.

The ongoing pandemic has brought the world almost to a standstill, pushing it back by many years. As economies across the world rise in their battle against the pandemic, economic activity and demand is expected to revive; however, it will take some time for it to even return to the previous levels. Any increase in severity of the pandemic will be disastrous for health and economy. India is likely to bounce back quicker than most of the major economies in the world, riding on its demographic dividend and high domestic consumption. Nevertheless, the economic cost of lockdown is severe and unsettling. In these difficult times, companies need to take an introspective approach for eliminating redundancies, improving efficiencies and optimizing spends to sail through the turbulent waters and at the same time adapt to new market conditions to continue to serve its customers.

The volatility in international prices of crude oil have a profound impact on the socio-economic situation of an import dependent country like India. A low oil price scenario, like the one prevailing now, creates an environment conducive for growth and development without constraining the economy and finances. However, depressed product cracks have jeopardized

the refining margins and posed a serious threat to the profitability of the sector, which is already under pressure due to demand decline.

As the world and the country embraces and pursues Energy Transition, it creates both an opportunity and a threat for the oil and gas sector. While the threat ascends in the form of reduced demand and consequent decline in business, the opportunities manifest in the form of diversification and progression from Oil and Gas to Energy. With more than 50% of the total petroleum product demand emanating from the transportation sector, the growing electrification of mobility is likely to decelerate the demand of transportation fuels, particularly in personal and shared mobility. However, demand in segments like commercial vehicles, LPG, industrial, commercial and marine fuels and petrochemicals will continue to keep the sector live. On the other hand, it also provides an opportunity for the oil marketing companies to spearhead the transition and offer battery charging solutions dwelling on their extensive presence and vast infrastructure. The global trends in adoption of EVs, policy incentives and technological developments reducing total cost of ownership need to be closely monitored.

As the country progresses towards its target of scaling up renewable energy capacity, backed by policy incentives and technological developments, there has been a consistent increase in the share of renewable energy sources in power generation, with generation capacity standing at more than 23% now. However, for it to become a critical part of the countrys energy mix, continued capacity creation, development of grid infrastructure and finding low cost solutions to the problem of energy storage and performance consistency are imperative. Nonetheless, renewable energy presents an exciting opportunity for the companies to offset their carbon footprints and contribute to cleaner and greener environment.

With oil and gas demand likely to decrease due to increasing adoption of electric vehicles and rise of renewable energy, Petrochemicals present themselves as a counter balance to the Oil and Gas industry. Globally, oil and gas companies are increasingly pursuing integration along the petrochemical value chain. The new age crude- to-chemicals process offers an opportunity to delink petrochemical production from conventional intermittent refining/processing. India, which consumes roughly one fourth of the worlds average of petrochemicals on a per capita basis, is likely to see a surge in demand as the standards of living improve, consumption rises and the country progresses towards becoming a developed economy. However, harmful effects of petrochemicals

particularly, the plastics, on health and environment, needs to be addressed through behavioral changes, regulatory provisions, technological upgradation, better handling and disposal and recycling, to ensure sustainability and scalability. The oil and gas companies need to recalibrate their strategies and plan the capital investments appropriately to include petrochemicals as a critical component of refining reconfigurations and expansions and an important constituent of their product basket.

Towards achieving crude oil import reduction, extending financial support to agriculture sector, addressing environmental concerns, particularly emanating out of indiscriminate burning of stubble and converting waste to energy, the country has taken various policy initiatives to promote Biofuels like Compressed Bio Gas, 1st and 2nd Generation Ethanol and Used Cooking Oil based Bio diesel and set ambitious targets to increase their blending percentage into transportation fuels. Oil Marketing companies are supporting and pursuing these initiatives towards greener fuels, thus ensuring achievement of national objectives along with profitable and sustainable growth. However, availability of funds at competitive rates for the projects, evolving technology and low crude oil price regime pose challenges for viability and scalability of such green initiatives.

Natural Gas being a cleaner and greener fuel has seen extensive acceptance and adoption across the world. The natural gas market in the country is poised for accelerated growth in making India a gas based economy, presenting itself as a natural diversification for oil companies and a necessary hedge in the product portfolio. An early and widespread adoption of natural gas, however, hinges on faster creation of gas infrastructure, taxation and pricing reforms and incentivizing switchover to gas. To enhance the share of LNG in transportation sector, automobile manufacturers need to keep pace and roll out LNG driven commercial and personal vehicles as the gas marketing infrastructure grows in the country.

Risks, Concerns and Outlook

The current pandemic situation has put the world in a tight spot inflicting substantial damage to human lives, economies and business and consumer confidence across the world. With the pathway of the pandemic uncertain and proven remedy not being available, there are significant downside risks and serious concerns around economic revival and resumption of activity, so much so that even the targeted stimulus packages handed out by the governments across the world may not be sufficient to reinvigorate the ailing economy faster.

Negative surprises on the pandemic can deteriorate the condition with even more loss of lives, numerous business closures, widespread poverty and unemployment, further increase in income inequality, deterioration in the law and order situation and precipitation of a sovereign debt crisis, particularly in smaller and weaker economies. In the event that the pandemic is contained in time without any relapse, central banks and governments stand resolute with their reform agenda and the benefit of the stimulus packages reach the targeted sections quickly, the economies can turn around faster and tide over the wave. Nevertheless, the global economy is likely to feel the after effects of the pandemic for a longer time and it will take a while for demand to return to normal levels.

A low international crude oil price regime bodes well for the Indian economy which imports around 85% of its requirements and pays the price in foreign currency. It helps in controlling inflation, managing the current account and fiscal deficit situations and containing input costs for many industries and sectors. However, some of the benefits of low prices get offset with depreciation of the Indian Rupee against the US Dollar, which has been the case recently owing to global economic turmoil caused by the pandemic. Also, a significant increase in freight rates and insurance premiums, due to Middle East disruptions, the recent pandemic situation and excessive floating inventory, has increased the landed cost of crude oil.

The significant erosion in oil and gas demand and high volatility in prices have distressed the profitability and liquidity position of oil and gas companies across the world and led to spending cuts, postponement of capital investments and reduction in shareholder dividends, as cash conservation takes precedence. Going forward, rate of economic revival, developments on the global geopolitical front particularly the US-China tensions and Middle-East stability, and demand-supply rebalancing shall have substantial impact on oil and gas prices. With demand expected to remain muted in the near future and crude oil prices likely to be volatile as the pandemic situation evolves, the domestic oil refining and marketing companies face significant profitability pressures due to truncated operations, lower product cracks and incurrence of inventory losses and fixed costs. Appropriate spend optimization measures, efficiency enhancement efforts and prioritization of capital expenditures would be required to ride out these turbulent times with minimal impact.

The debate around Peak of Oil and pace of energy transition has once again gathered momentum against the backdrop of the pandemic. A case in favour of an early maturity of the oil industry stems from a bleak outlook of oil demand, renewed environmental concerns, on-track

energy transition plans as hinted by global oil and gas majors, and consumer behavioral changes driving down the demand for transportation fuels. On the other hand, a low oil price regime, healthy demand expected from the petrochemicals sector and reduction in emissions due to subdued economic activity may push the oil plateau by some more years. Besides, the trends in energy transition will depend upon an interplay of a number of other factors like technological advancements driving cost competitiveness of substitutes, increasing efficiency of the ICE engine, oil market dynamics, Government policy choices and decision on subsidies, particularly in the current scenario of constrained finances, and investment priorities of companies and consumers. Nevertheless, Energy Transition continues to be included in both - the risk registers as well as strategy documents of the oil and gas companies across the world.

The domestic oil and gas market is set to witness enhanced competition with low entry barriers and existing players enhancing their activities. While a competitive market promotes efficiency, innovation, quality and enhanced customer value, it also constrains industry margins, increases vulnerability and reduces predictability in earnings of the market players. As the sector faces multiple pressures, the marketing strategies of the oil and gas companies need to be realigned to the emerging reality and the corporate culture be infused with agility to tackle the dynamic environment.

The pandemic has reinforced the importance of Health, Safety and Environment and repositioned them as the topmost priority for the society and business, as any slippage on this account can be catastrophic to lives and assets. A healthy and motivated workforce, safe working conditions which now need to be pandemic ready and environment friendly operations ensures sustainability with profitability. To mitigate the risks, safety needs to be instituted as a culture through constant end user education and zero tolerance for non-compliance of the standard operating and safety procedures, along with safe upkeep of equipment, information and data.

Inadequacy of infrastructure remains a serious concern for an aspiring economy like India. While demand of petroleum products have grown at a considerable rate over the years in the country, the infrastructure has not undergone commensurate expansion, leading to inadequacies, deficient growth and opportunity losses. As the country treads the growth path and oil and gas demand increases, robust infrastructure would be required to support the progress and development and ensure energy justice, access and efficiency. A focused and targeted approach is needed to augment the road,

port, pipeline, storage, processing and distribution infrastructure to foster efficiencies, harness the growth potential and capitalize on sudden opportunities like the one that emerged in the form of crashing crude oil prices and low demand.

The importance of Digitalization cannot be overemphasized in the current times, as the crisis shapes the operating and interacting norms across the world, impacting the demand for aviation and transportation fuels. However, as a key component of corporate DNA, the case for digital proliferation in organizations has further strengthened, particularly in the Oil and Gas sector which has seen limited digital adoption. The new age digital technologies have potential to significantly drive cost optimization, enable efficient asset creation, operation, maintenance and management, enhance predictability in upstream assets, improve yields, streamline processes, deliver integrated and intelligent information, redefine human resource interface, reshape customer experience and effectively manage recording and compliances.

India has led the world in economic growth in recent years and is expected to be the growth leader of the world in the next few decades, emerging as one of the worlds top three superpowers. The country has undertaken massive structural and policy reforms to promote growth, ease of doing business, competitiveness, inclusiveness, digitalization, entrepreneurship and Make in India, attract foreign investments, augment infrastructure, strengthen corporate governance, bolster the banking and financial sector, perpetrate an efficient tax structure and enhance Indias image in the international arena. The current crisis has put the country in a sweet spot to emerge as a Global Factory as the world searches for alternative places in Asia for setting up business. With the country embarking on its Self-Reliant India Mission, the Government has emphasized and encouraged entrepreneurs to boost local production, improve quality standards to international levels, enhance efficiency and promote local goods. Though a slew of reforms have been announced in this direction, there is more scope and a need to strengthen execution and timely percolation to the targeted sectors.

As the world stands on the threshold of a new reality brought about by the pandemic, and India strengthens its resolve to overcome the virus and revive the economy, BPCL is fully seized of the various dimensions of this new normal and is set to leverage the new horizons which would emerge. Exhibiting agility and resilience and with concerted focus on risk matrix and resource management, BPCL is evaluating the various facets of this transition, and has put in place appropriate strategies and plans to not just overcome the impact of this disruption,

but also to identify and capitalize on the new unfolding opportunities. With its professional management, total customer focus and robust governance systems, as always, BPCL is poised to rise above the challenges and establish itself firmly at a higher level. As the company prepares for historic transition in its ownership structure, it is expected to unlock tremendous value by way of enhanced professionalism, access to advanced technologies, newer global market, a diversified product portfolio and improved availability of resources and capital, and create significant value for all stakeholders.

PERFORMANCE

REFINERIES

Although the year 2019-20 was a very challenging year, BPCLs two refineries, Mumbai and Kochi achieved the highest ever refinery throughput of 31.91 MMT as against the previous best of 31.01 MMT in 2018-19. BPCL achieved a Gross Refining Margin (GRM) for the year 2019-20 at USD 2.50 per barrel (4182 Crores) as compared to USD 4.58 per barrel (7319 Crores) realized in the year 2018-19. BPCL achieved the lowest ever Specific Energy Consumption of 66.0 (MBTU/Barrel/ Energy complexity factor) MBN in 2019-20 compared to 68.6 MBN in 2018-19 through implementation of various Energy Conservation (Encon) Schemes.

With an increase of over 2.9% in the refineries throughput over the last year, they produced the highest ever products (MS, HSD, Propylene, Hexane and Lube Oil Base Stock) albeit having the challenge of producing upgraded products like Very Low Sulphur Furnace Oil (VLSFO), BS-VI MS and HSD. To improve margins, the refineries adopted several measures such as optimum capacity utilization of both primary & secondary processing units. For the first time, annual turnaround of process units and catalyst replacement were carried out during the monsoon season, which is the lean demand period. Kochi Refinery (KR) was the first PSU oil Refinery in India to export VLSFO (15 TMT) on 7th February, 2020.

As part of its Integrated Management System, surveillance audit and recertification of both the refineries were completed for conformance to the new standards of ISO 9001:2015 and 14001: 2015 for Quality, Environment & Occupational Health and Safety Management Systems. Many activities were done and some are in progress to improve the awareness and strengthen the Quality Management System (QMS) system.

BPCLs Quality Control (QC) laboratories have always strived to maintain the highest quality standards to comply with the norms set by reputed external certified agencies and accreditation bodies. Both the refinery

laboratories maintained their performance and continued to perform excellently in the international laboratory proficiency testing scheme. QC received approval from Bureau of Indian Standards (BIS) for testing competency and product quality for specialty product, Food Grade Hexane. A state-of-the-art petrochemical laboratory was constructed as part of PDPP project in the Centralized Quality Control Laboratory at Kochi.

During the year, various digital initiatives were taken in the refineries thereby achieving good progress in the areas of the industrial internet of things, machine learning, artificial intelligence, etc. For the first time ever, a digital enabled turnaround was carried out in the CDU-4 unit of MR in collaboration with the startup companies. First of its kind, the digitally enabled Gasoline Treatment Unit (GTU) in MR has helped in faster commissioning of the unit enabled faster collection, processing, and action on daily performance plant data. Wireless transmitters installed on every pump helped in continuous monitoring and improved reliability. Other initiatives like smart parking, drone based inspection, digital twins, robotic process automation, etc. were carried out in the refineries to leverage the latest digital technologies available and generate significant value.

The refineries have a well established effective Energy Management System (EnMS), accredited with ISO 50001:2011 certification and activities for migration to ISO 50001:2018 have been initiated. There have been numerous efforts for optimizing plant operation and implementing energy conservation schemes across the refineries. These relentless efforts have brought down the Specific Energy Consumption to 62.5 MBN in 2019-20 as compared to 64.5 MBN in 2018-19 at MR and 68.5 MBN in 2019-20 as compared to 71.5 MBN in 2018-19 at KR, their lowest individual values ever.

BPCL refineries have always given priority to care for the environment and its protection. The refineries have already incorporated pollution control measures in their design itself and they always strive to enhance sustainability and efficiency by exploring avenues of sustainable developments. All the conventional lights in MR were replaced with energy efficient LEDs resulting in huge savings. Other initiatives like rainwater harvesting, sewage treatment plant, solar power plant, hazardous waste management, etc. were taken in both the refineries during the year. Various other "Go-Green Initiatives" have also been implemented across different parts and functions of the refinery.

People are the greatest resource in BPCL. Breaking the gender wall, 11 Women Officers have taken the charge

of various Process Units in all 3 rotating shifts at MR for the first time. BPCL has always invested in learning and development. Throughout the year, a series of training programs and learning initiatives based on individual and organizational needs were implemented for employees to engage in and enhance their skills, both in the technical domain as well as Visionary Leadership workshops, Team Building Outbound programs, etc. During the year, focus was on developing and imparting emerging skills which the organization needs in the coming years. The Company has also offered in-house technical expertise to external organizations from both within India and abroad. New learning methodologies such as e-learning modules, case studies etc. were also introduced during the year.

RETAIL

Indian petroleum retailing, including the private sector in the year 2019-20 registered negative growth of (0.2%), whereas the retail business of Public Sector Oil Companies (PSUs) registered negative growth of (1.6%). The market share of PSUs in Indian petroleum retail dropped from 91.1% last year to 90.1% this year. The year 2019-20 witnessed the impact of economic slowdown, aggressive network expansion by private players and the effect of COVID-19 in the last quarter. All these resulted in negative growth in sales volume. By focusing on customer-centric initiatives in existing markets and prioritizing network expansion in less represented markets, the Retail Strategic Business Unit (SBU) avoided major volume erosion.

The Retail Business recorded total market sale of 26.96 MMT. The sales volume of MS at 7.79 MMT was 5.1% higher over previous year 2018-19. HSD sales volumes stood at 18.37 MMT, witnessing negative growth of (3.0%). In the alternate fuels segment, BPCL recorded growth of 7.2% on the sale of Compressed Natural Gas (CNG) with sales volume for the year being 475 TMT. Auto LPG registered negative growth of (6.8%) with a sales volume of 28.58 TMT. Government policy linked SKO sales stood at 297 TMT, with de-growth of (38.1%).

With focus on providing environment friendly fuel facilities at Retail Outlets (ROs), CNG was commissioned at 114 ROs during the year 2019-20. Sales of premium branded fuel, ‘Speed were 308 TKL with a conversion of 2.8%.

During the year, 1447 new retail outlets were commissioned by BPCL, the highest ever in a financial year amongst PSUs, 571 of which were in key priority rural markets. 17 Company Owned and Company Controlled (COCO) Outlets and 6 One Stop Trucker and Shops (OSTSs) Outlets were commissioned during the year. The total number of retail outlets at the end of 201920, taking into account those newly commissioned during

the year and those decommissioned, stood at 16,234. 174 ROs were revived towards creating a healthier and more effective network.

BPCL has 5,710 Pure For Sure (PFS) ROs and 1,555 PFS Platinum certified ROs. The certifications are carried out by a third party inspection agency for maintaining the business promise of trust, efficient fuelling and courteous service. The ‘NextGen PURE FOR SURE initiative was launched in Delhi, Kolkata, Mumbai, Bengaluru, Chennai and Hyderabad, covering 530 ROs. These ROs display new retail visual identity, featuring technology led brand positioning. These ROs leverage best-in-class technology for receipt of products into ROs, using geo-fencing technology in Tank Lorries (TLs). The ROs have adopted digital payment integration of fuelling through automation, which is the ultimate measure towards customer trust and transparency.

BPCL provided financial inclusion services at 6,631 ROs through Fino Payments Bank. BPCL has partnered with Fino Payments Bank, which offers Business Correspondent (BC) services, which include Aadhar- enabled Payment System (AePS), Micro ATMs, Domestic Money Transfer, Content Management System and Bill Payments. In the rural market, these are offered under the ‘Umang brand across 3,761 select ROs. These ROs also offer Government to Citizen Services through online portals. Fino BC services generated Gross Merchandise Value of 2,120 Crores through the BPCL retail network.

BPCL has 150 "In & Out" convenience stores, 121 Quick Service Restaurants through alliances with food brands and "Ghar Dhabas" for the trucking community. Money transfer, Two-wheeler insurance, Energy Efficiency Services Limited (EESL)s LED appliances, Mother Dairy and Amul products were offered across select ROs. Towards environment protection, a new product named ‘Adblue has been made available at 496 outlets for new generation Heavy Commercial Vehicles.

With 13,308 ROs equipped with Auto-RSP facilities, digital transactions in BPCL ROs increased to 32.42% in March 2020 from 28.41% in April 2019. With tie-ups with wallet companies/National Payment Corporation of India (NPCI), monthly Unified Payments Interfaced (UPI) transactions increased to 137.67 Crores in March 2020 from 7.49 Crores in April 2019.

BPCL has 310 COCO outlets, including 150 OSTSs, where customers experience superior quality and a wide array of services that are expected of a model outlet. The signature brand of COCO outlets on highways, i.e. the OSTSs, are strategically positioned on major highways to give transporters and drivers an experience of ‘a home away

from home. These outlets, in addition to conventional services, offer premium loyalty services under the brand ‘SmartFleet for fleet customers, a customer care center, truckers air gauge, greasing facility, driver rest rooms and secured parking. During the year 2019-20, in order to bring assurance to the highway customers, the Retail SBU launched an Integrated Payment Solution at all OSTSs and select Highway ROs. BPCL retail automation integrates credit / debit card payment and loyalty transactions of customers.

In an attempt to reach a step closer to the customer, the mobile app, ‘SmartDrive was enhanced for a more user-friendly experience for the ever growing population of mobile users. To increase digital transactions at ROs, additional features were brought into the SmartDrive Mobile App for urban customers. The Retail SBU enrolled 3.94 Lakh urban customers in the BPCL SBI co-branded credit card program, taking the card base to 5.78 lakhs and making it the fastest growing co-branded credit card in the country. The Company offered multiple options like mobile, email, website and callcenter to stay connected with the customers and dealer network. Apart from these, the Retail SBU also conducted fortnightly customer connect campaigns, Ghar Utsav at all OSTS ROs to bring synergy and improve engagement with all the stakeholders. The Retail SBU launched a Quick Oil Change proposition, "Mak Quik" across 4,372 ROs for increased convenience of two wheeler customers.

The Retail SBU launched a Driver Insurance Scheme giving Accident Insurance Benefits of 3 lakhs to drivers and 1.50 lakhs to helpers. In 2019-20, 7.54 lakh drivers and helpers were enrolled in the scheme.

In an endeavour to support its frontline resources, 34,250 Driveway Salesmen (DSMs)/ Tank Lorry (TL) crew were enrolled into the Bharat Arogya Yojana Medical Insurance scheme and 12,994 DSMs/TL crew were covered under the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) (pension scheme). BPCL has certified 20,518 DSMs/TLs crew under the Recognition of Prior Learning-4 program of the Government of India.

To enhance the automation system capabilities, the Retail SBU introduced wireless Forecourt Controller (FCC), Android based Electronic Data Capture (EDC) terminal, an Integrated Payment solution and unique cloud architecture in the automation landscape, the first among PSUs. All the Multi Product Dispensers (MPDs) are updated with the highest security level features for stamping/e-cards replacement. The Retail SBU strengthened the Vapour Recovery System (VRS) type Stage II and Stage IB at 103 ROs of National Capital Territory of Delhi (NCT) and 455 ROs of National Capital Region (NCR).

In the year 2019-20, under MOP&NGs initiative of "Door-to-Door HSD delivery" service, the Retail SBU commissioned 118 Bowsers under the brand name "FuelKart", the highest among PSUs. Under this initiative, customers having heavy stationery equipment/machinery, get diesel at their doorstep through Geo-fencing/OTP enabled Bowsers.

Towards the Clean Energy mission, a pilot project was launched for battery swapping facilities at 6 ROs in Kochi and Lucknow. An MOU has been executed with M/s. REIL (a Public Sector Enterprise) for setting up EV charging stations.

BPCL has developed the Corporate Safety Management Framework (CSMF) including the Life Saving Rules and Technical Guidelines for ensuring the highest level of safety standards. In response to the COVID-19 pandemic, comprehensive Standard Operating Practices (SOPs) were issued to all ROs in line with the Central/ State Government directives. All DSMs and RO staff compulsorily wear masks. Sanitizers are made available on the forecourt for the use of DSMs & DSWs. DSMs / DSWs are advised to maintain minimum 2 meter distance from each other and from customers. Digital payments by customers are being encouraged in order to reduce currency handling. BPCL has introduced SmartDrive with QR code facility and APOS (Android Point of Sale) to promote touch-less payment.

To reduce environmental pollution and improve air quality, all marketing installations, depots and retail outlets were converted for handling BS-VI grade auto fuel, which was rolled out from 1st April 2020. BPCL achieved ethanol blending of 4.22% during the year 2019-20.

To improve the operational efficiency of supply locations, a Retail Auto Invoice System (RAIS) was implemented in 72 locations resulting in efficient usage of resources. BPCL also implemented Electric Mechanical (EM) locks across 40 locations covering about 7,000 TL, achieved 96% visual identity on 10,439 TLs out of targeted 10,878 TLs and achieved automation and interlock uptime of over 98% across India.

INDUSTRIAL AND COMMERCIAL (I&C)

During the year 2019-20, I&C SBU recorded domestic sale of 6.18 MMT and registered high growth of 7.5% against de-growth of (0.9%) in the Industry, following the trend of the previous year. The SBU also increased its domestic market share amongst PSUs in an extremely competitive market to 18.4%, a significant jump over the previously reported market share of 15.6%.

In a highly competitive business landscape, the SBU has been able to register volume growth and improve

profitability at the same time. This has been made possible with the SBUs undivided focus on appropriate pricing interventions, sales of high margin products, registering growth in the refinery economic zone, scanning value driven market opportunities and optimizing logistics costs.

The SBU focused on seamless customer service through automation and digitalization, thereby offering the best value for customers. The SBU renewed its long term customer relationship with major Corporates by signing MoUs through a consistent approach of treating customers as valued partners in its growth journey. Overall 47 major MoUs were signed in the year 2019-20.

With a clear focus on Diesel as a growth driver for the SBU, I&C exceeded the milestone of 1500 TMT sales of Diesel, the highest in the past 7 years. The MoU with Karnataka State Road Transport, one of the major customers with volume of 500 TMTPA of Diesel, was renewed for a period of 1 year.

During 2019-20, I&C commissioned 68 Consumer Pumps for its customers across the country covering various sectors like mining, industrial, State Transport Undertakings and Defence over varied geographies. The focused strategy on adding value to the customer and improving ease of operations by installing consumer pumps led to the improved bottom line for the Diesel business. During the year, I&C sold 1502 TMT of Diesel to Direct Customers, which led to the market share improvement of 0.35% amongst PSUs and a growth of 1.14%, the best amongst all PSUs.

Taking a leap in its focus on trading activities, the SBU forayed into trading of Petrochemicals by importing and selling Butyl Acrylate to major customers in the paint sector. Commencing sales of Bitumen sourced from importers at 7 ports to meet the growing demand of the infrastructure sector was another feather added to the trading portfolio. The I&C SBU also traded imported Furnace Oil at Ennore to feed the southern region.

Grabbing opportunities arising out of the changes in the global market of bunkering, I&C launched VLSFO in the market, meeting IMO 2020 specifications from both Mumbai and Kochi and gained an indomitable position quickly. Solvent D 80, a niche product in the household insecticide and specialized coating segment, has also been added in the I&C portfolio.

The year stands out in I&Cs journey of technological advancement with a number of digital initiatives taken to improve internal processes and create an improved customer experience. These include analytical dashboards, consumer stock tracking and upgrading features of mobile applications for faster market response.

The SBU has further enhanced its logistics capabilities and has achieved a major milestone this year. Through its logistics initiatives like product exchange with OMCs, I&C has achieved significant cost and freight optimization along with improved customer satisfaction.

Buoyed by the unparalleled growth achieved by the SBU in this year and the performance of past years, I&C now looks forward to moving ahead with renewed vigour for new opportunities that the future can offer, even in the most challenging times ahead.

GAS

The Gas SBU handled 1,700 TMT of Gas in the year 2019-20. Out of this volume, 318 TMT of Gas was supplied to MR and 601 TMT to KR to meet their internal requirements. The remaining 781 TMT of Gas was supplied to various customers in Fertilizer, Power, City Gas Distribution (CGD), Steel and other industries across the country.

During 2019-20, BPCL enrolled three new LNG customers for supplies through Tank Lorry, including the prestigious ISRO (Propulsion Unit), Mahendragiri (Tamil Nadu). These customers are expected to take around 300 MT of LNG every year. Although currently in terms of volumes, the share of the Tank Lorry LNG segment is limited, it is set to increase over a period of time with forays into another technological segment i.e. L-Compressed Natural Gas (CNG) Stations, which would be supplying gas to the neighbouring areas that are currently away from the vicinity of the pipeline. BPCL is undertaking its first pilot project of a L-CNG Station in Aurangabad (Maharashtra).

BPCL, through its wholly owned subsidiary Bharat Gas Resources Ltd (BGRL), is planning to put up a LNG Regasification Terminal along the east coast of India. The BPCL Board has accorded its approval for going ahead with the Regasification Terminal. The detailed feasibility study for the same has been completed.

Financial closure has been achieved for all 13 Geographical Areas (GAs) under the 9th and 10th CGD rounds, won through its subsidiary BGRL, and necessary documents have been submitted to Petroleum and Natural Gas Regulatory Board (PNGRB). BPCL CGD projects have been progressing in full swing to ensure completion of targets as committed by the Company. The total capital expenditure incurred in BPCL & BGRLs CGD projects during the year 2019-20 is approx. 351 Crores.

During the year, BPCL commissioned its first CGD network in Rupnagar GA which includes commissioning of City Gas Station (CGS), District Regulating Station (DRS), Piped Natural Gas (PNG) network and 4 CNG

stations. During the year, BPCL also commissioned 4 CNG stations in Yamunanagar and 5 in Saharanpur CGD GA. Besides, 68 CNG stations were commissioned at BPCL Retail Outlets other than the above GAs.

LUBRICANTS

The Indian lubricant market is the worlds third largest growing market. As per Petroleum Planning and Analysis Cell (PPAC)s report, India consumed 3,640 TMT of lubricants in the year 2019-20 and it is expected to grow by 2.8% in the year 2020-21. The industry is made up of over 30 players, thus making the lubricant industry highly competitive.

Over the years, MAK Lubricants has established a well- entrenched position in the automotive and industrial segments. The marketing of MAK Lubricants is mainly through Retail Outlets, Bazaar network, Authorized Service Stations, industrial and institutional customers. Apart from domestic markets, MAK Lubricants has expanded its footprints in other countries and is establishing itself as a reliable brand in international markets. Through aggressive marketing at the ground level, MAK Lubes ensured a spectacular performance in the year. It gained market share of 5.4% among PSUs, with total market share of 21.1% among PSUs.

In the 16,234 BPCL retail outlets, the focus remained on generating secondary sales at the forecourt. Initiatives like Quick Oil Change (QOC) machine with focus on rural ROs, product-specific campaigns, Below-The-Line (BTL) activities, Digital Mobile App, etc. improved visibility and awareness of the brand and offered a unique value proposition to customers. Through various initiatives and a strong presence in social media, the Lubes SBU enrolled over six lakhs customers in the MAK QUIK app.

In the Bazaar channel, retailers and mechanics are vital influencers. Many customized programs for mechanics such as mechanic training, mechanic engagement program and ground-level activities were conducted. To cope with the market requirement, the Lubes SBU introduced new products, which helped the SBU to capture niche segments. New distributors were appointed to strengthen the network pan-India.

In the Direct channel, the demand for Industrial lubricants is observed to have a strong correlation with the Index of Industrial Production (IIP), which is largely driven by economic activity. MAK drove the industrial business through the acquisition of new customers, introduction of new products, and value-added services to the direct customers, despite a tough external environment. The Company strengthened its OEM portfolio by entering into a new agreement with KIA Motors and renewed the

agreement with TATA Motors for marketing its Genuine Oil and grew significantly in the personal and commercial mobility space.

MAK continued to deliver its strong performance in SAARC countries by proliferating its presence in the secondary market through the channel partners. Under network expansion into other countries, MAK expanded its footprint in a few Gulf Cooperation Council (GCC) countries.

There was an unprecedented impact on the Lubricant demand in March 2020 due to the COVID19 pandemic, which has created uncertainty in demand during the year 2020-21. However, expansion opportunities such as automobile manufacturing, automotive components, construction activities and the power sector will drive growth. MAK will ensure its significant presence and penetration in personal and commercial mobility. BPCL is also working with many industrial and OEM customers to build enduring partnerships and augment product development with new technology. MAK will continue to invest in training and development to enhance the capability of channel partners and their staff to compete and excel in the market place.

LPG

The LPG Strategic Business Unit (SBU) registered sale of 6.87 MMT with a growth of 5.8% and growth of 0.02% in market share in the LPG Domestic segment in the year 2019-20. LPG has an overall market share of 26.28% amongst major OMCs. Network expansion has been a priority for providing accessibility of LPG to all households in the country, especially in rural areas. The LPG SBU added 214 Distributors during the year, thereby taking the total distributor network to 6,110. Newly added Distributors have been commissioned mainly in the rural areas to extend benefit to Ujjwala customers and facilitate service to overall 8.25 crore households.

To support the expanding customer base, second cylinder facility was extended to 17.8 lakh customers leading the ‘Double Bottle Connection coverage to 3.23 crore customers, which is 39.1% of the total consumer base.

Pradhan Mantri Ujjwala Yojana (PMUY) envisaged providing LPG connections to women belonging to poor households with a target of 8 crores by March 2020. This target of 8 crore LPG connections was achieved by the OMCs during the first week of September 2019, 7 months ahead of schedule. The Company had released 23.67 Lakh connections during the year 2019-20 and overall 2.105 crore connections since inception of the PMUY. With the launch of the PMUY in 2016, LPG coverage has increased from 62% to 97.5% as on end March 2020.

LPG Plants in BPCL continue to maintain their record of following the best practices in HSSE, coupled with improvement in productivity and cost leadership. During the year 2019-20, BPCLs bottling capacity was 6.2 MMT, recording growth of 7.2% and achieving capacity utilization of more than 100% in 52 Bottling Plants across the country. To meet the increasing demand of LPG, several steps were taken to enhance bottling capacities, tankages and import receipt terminals. BPCL commissioned a new Bottling Plant at Baitalpur (UP) through the O&M (Operations and Maintenance) Model to reduce operating cost. Mechanical commissioning of the LPG Import Terminal at Haldia and Bottling Plants at Bolangir (Odisha) and Madurai (Tamil Nadu) have already been completed. Construction work for a new Bottling Plant at Bokaro (Jharkhand) is in an advanced stage.

The Plant Automation project was completed at 4 plants- Pune, Sholapur, Bakania and Jalgaon. In addition to the Bulk LPG Tankers, a Vehicle Tracking System (VTS) has been installed in the fleet of Packed LPG Trucks for monitoring purpose as well as for effective planning in the Plants. Imparting training to Bulk LPG Tanker drivers, to create a pool of trained drivers, continues to be one of the focus areas under the Safety initiative. At the Centre of Excellence, 11 workshops covering 217 participants with 578 man days, were conducted during the year.

BPCL commissioned a 169 km long cross country LPG pipeline from Uran to Chakan & Shikrapur, of 1 MMTPA capacity, in partnership with HPCL. A Joint Venture of IOCL, HPCL and BPCL was formed for the longest LPG pipeline of 2757 kms from Kandla to Gorakhpur with an investment of about 10,000 Crores.

A major drive was undertaken to enroll new Point Of Sales for marketing 5 Kg Free Trade LPG (FTL) cylinders, wherein 17,500 new customers were enrolled to increase reach to the targeted customer segment of IT professionals, BPO employees, students, roadside eateries, etc., who are outside the established LPG connection refill system.

In synergy with team Corporate Research and Development Center (CRDC), the LPG SBU successfully launched the in-house developed cost effective "NxtGen Bharat Metal Cutting Gas (BMCG)"- an Industrial gas fortified with an innovative Nano-additive, which has a long shelf life of 8 months vis-a-vis the earlier one month. The product offers excellent performance, a smoother finish with minimal slag, better stability and also saving towards fuel and time. This revised version of the product offers a new business edge to the Company in the competitive Metal Cutting Business.

BPCL has proactively joined the Digital India program and embarked upon several customer-centric initiatives such as bookings through WhatsApp for domestic consumers, pay and book facility on Amazon, payment solution through Phone Pay, Bharat Bill Payments System (BBPS), SBI YONO, FINO & Google Pay and geo-tagging of refill deliveries.

AVIATION

The Aviation SBU achieved its highest ever sales of 2005 TMT with 0.8% growth against industry de-growth of (1.3%) by retaining large volume customers in the domestic and international segments. The negative growth of the industry was due to the collapse of Jet Airways in April 2019, which had 15% market share and the onset of the COVID-19 pandemic, followed by a lockdown in the later part of March 2020.

The Aviation SBU incurred 30.8 Crores on capital assets, mainly on account of purchase of refuellers, additional tankage and revamping of the fire-fighting facility at Cochin, and procurement of self-bunded tanks. The SBU commissioned new Aviation Fueling Stations (AFSs) at Madurai and the IAF station at Panagarh, RCS airports at Kalaburagi and Pakyong, self-bunded tanks for the Army at advanced landing grounds at Misamari and Rupa two tanks at Budge Budge installation, additional tanks at Tirupati AFS and Raipur AFS, and ATF Testing Facility at Devanagonthi Installation. In-principle permission was obtained from Centre for Military Airworthiness and Certification (CEMILAC) to start ATF Pipeline Transfer (PLT) in the multi-product pipeline from Bina to Piyala and Piyala to Bijwasan with pipeline compatible kerosene plug as interface.

The Aviation SBU accords highest priority to safety and the environment, hence strictly adheres to Quality Assurance and Standard Operating Procedures. There was no incident of fire and nil lost time accidents (LTA). There were no major deviations in Quality, Operations and Safety audits this year.

A Junior Business Council has been formulated to leverage new ideas and the boundless energy of young officers. Familiarization programs were organized for IAF personnel. Refresher courses were organized for BPCL and ‘into-plane refueling staff. All locations are now covered for centralised invoicing of sales at AFSs.

CORPORATE STRATEGY AND BUSINESS DEVELOPMENT (CS&BD)

The key focus of CS&BD is to explore new strategic opportunities across the value chain to enhance efficiencies, find new business models and act as a

catalyst for innovation and excellence in execution. The set-up has been continuously working along with various SBUs to analyze long term trends and suggest requisite interventions to overcome imminent business challenges, use digital innovations to stay connected with all customers and ultimately deliver performance on a sustained basis.

BPCLs Startup initiative, christened as "Project Ankur" was started in 2017, in line with Government of Indias "Startup India" initiative, recognizing the importance of Startups as an innovation engine. The aim of Project Ankur is to develop a supportive ecosystem that nurtures entrepreneurship in the country by backing innovative ideas/concepts that have the potential to grow into promising Startups and create a multiplier effect on the entire ecosystem. BPCL has initially allocated 25 Crores for this purpose and this fund is being distributed as grants to deserving applicants. Till 31.03.2020, 25 Startups were funded, amounting to a total of about 24.9 Crores, of which about 19.60 Crores has already been disbursed. BPCL is also providing mentoring and guidance to these Startups. Additionally, BPCLs Startup cell has been facilitating Startups to engage with SBUs through separate contractual arrangements to implement new initiatives and test services provided by them.

To collaborate on Startups and have a steady pipeline of applicants, BPCL has signed MoUs with Kerala Startup Mission (KSUM), Invest India, New Delhi, IIT Madras, KIIT, Bhubaneswar, Axilor Ventures, Bangalore and IIM Kozhikode, Kerala.

During the year, an additional corpus of 25 Crores for the second phase of Project Ankur was approved for a 3 year period. With a view to attract the best entrepreneurial talent and channelize creative and innovative energies towards solving industrial problems, BPCL had launched a grand challenge for Startups, wherein 6 problem statements were provided and a grant of 50 lakhs would be given to the winner of each one. Further, winners would also get an opportunity to carry out the Proof of Concept of the same with BPCL.

Going forward, BPCL is committed to support startups in a variety of ways, including grant funding, equity investment, business exposure, mentoring and guidance.

Globally, Electric Vehicles are being looked at as the solution to the challenges faced due to increasing pollution levels across the world. In order to capitalize on the opportunity and enjoy first mover advantage in India, BPCL has been working on various business options in the EV value chain. During the year, BPCL launched the "E-Drive" initiative - an innovative electric vehicle

mobility model based on battery swapping. BPCL worked closely with IIT Madras and other stakeholders, including battery and automobile manufacturers for using BPCLs Retail Outlets as swapping stations. This initiative was launched on a pilot basis in February 2020 for 3 Wheelers in Lucknow and Kochi.

Further, Corporate Strategy is partnering with Marketing SBUs for digital transformation in the Corporation. With the objective of making BPCLs customer interfacing units technology relevant at all times and to get a single view of the customer across the organization, "Project Anubhav" has been initiated. This will be further extended to cross-sell and up-sell BPCLs goods and services to customers. A few initiatives under Project Anubhav include a Customer Engagement Platform, Command Control Center, Digital Marketing Platform and Integrated Supply Chain Management solutions. Further, the Retail SBU and Corporate Strategy are working towards digitally enabled solutions, using the design thinking principles to improve Retail Outlet performance through enhanced customer experience at ROs.

BPCL has initiated action to set up an Integrated Messaging platform to connect all BPCL communication to any messaging channel, unifying all customer interactions into a consistent omni-channel conversation. A pilot for LPG booking through WhatsApp has been carried out.

A state-of-the-art Corporate Digital Center is being set up at the head office to comprehensively build a common data warehouse across the organization, essentially to enable integrated and more effective decision making by top management. It will encompass data visualization and data analytics to arrive at Predictive Analytics and enriching analytics with Artificial Intelligence and Machine Learning to evolve into Prescriptive Solutions.

The Corporate Strategy department, along with Businesses, has from time to time been carrying out various initiatives for cost rationalization and improvement in process efficiency in BPCL. Also, being constantly on the lookout for new business opportunities, BPCL is charting out the growth trajectory and developing business cases for future investment by working on key areas of potential future growth such as Petrochemicals, Alternate Energy, Renewable Energy, Global forays, etc.

HUMAN RESOURCES (HR)

BPCL constantly strives to enhance HR Practices and processes. In line with this philosophy, the company has embarked on the journey of creating a comprehensive Functional Competency Framework for the organization.

As a part of this initiative, unique roles are identified across the organization and these roles are mapped with competencies required to succeed in these roles. A Competency Dictionary is defined for 307 roles spanning across the organization.

BPCL is in the process of upgrading to Maturing Level 3 of the People Capability Maturity Model (PCMM) which is a proven set of people management practices that provide a roadmap for continuously improving the capability of an organizations workforce.

The cornerstones of BPCLs capability/skill building for the organization were Instructor-led Training, Digital Learning, Alternate Learning & Purposeful Engagement. The core focus of the learning strategy remained leadership building and critical skills through the Behavioural Learning Framework and other customized training programs with the objective of grooming leaders and subject matter experts for the organization. This was complemented by 62 officers pursuing their Executive Management Course at SP Jain Institute of Management Research, 3 officers pursuing an Executive M Tech course at Institute of Chemical Technology, Bhubaneshwar and 496 officers were extended learning opportunities through Management Development Programmes at Premier Institutes. The total training mandays for the year 2019-20 covering internal and external training was 31,761 mandays.

Digital Learning was leveraged to provide opportunity for employees to learn anytime or anywhere through EBSCO resources and the Linked-In Learning Library. BPCLs ability to curate relevant content to ensure personalized learning led to high adoption rates. The Learning Management System in place ensured better user experience and enabled us to make data driven decisions on learning.

BPCL continued its efforts of capturing tacit knowledge of employees by encouraging them to create Learning videos and hosting them on the VIZDOME platform, making it a rich repository of knowledge. Other alternate learning platforms like SOCRATIX, the case study competition and MERCURIX, the story telling competition provided experiential learning to participants, apart from being an excellent platform for identifying talent.

Ensuring that the workplace allows both profession and passion to blend was achieved through "iPassion", a platform for pursuing hobbies and interests. Apart from nurturing their passion through workshops, employees were provided an opportunity to showcase their talent at iPassion Night.

Empowering women employees and harnessing their potential to achieve greater success on both personal and professional front was initiated through 20 different initiatives covering 494 women employees across the Corporation like leadership, financial wellness, physical wellness, work-life balance, self-defence etc.

Junior Business Council (JBC): The JBC was started in April 2019 to groom young leaders (JG C to JG E) of tomorrow by giving them exposure to real integrated business challenges, providing a platform at the highest levels of decision-making as well as to channelize their enthusiasm, agility, entrepreneurial spirit and nurture holistic thinking capability.

EMPLOYEE SATISFACTION ENHANCEMENT (ESE)

ESE is a unique and innovative initiative taken by the organization to make BPCL ‘A Great Place to Work by being a facilitator towards keeping the employees healthy, vibrant and energized. The ESE team continued its endeavours by working towards 360 degree wellness of employees, living up to BPCLs core purpose of energizing lives. ESE followed a plan of enhancing employee satisfaction through employee wellness, employee connect and prompt grievance redressal.

Proactive grievance identification & resolution

BPCL, recognizes that unless adequately and promptly resolved, health and wellness issues may result in lower productivity and demoralized work force, something that no organization can afford. The ESE team carries the mandate to reach out to maximum number of employees in a proactive manner, to listen to them, to understand their concerns and resolve those. During the year, ESE teams conducted 88 awareness sessions across 80 locations and proactively interacted with over 1300 employees as sharing and learning exercise.

Employee Assistance Program (EAP)

It is with the objective of having a healthy, energized and productive workforce, that ESE introduced free and confidential psychological counselling services for all employees (and their dependents) through an EAP vendor under the initiative - Roshni Plus.

Registration opens up a new window for wellness for them and their families, access to a self- help library, selfassessment tests and free and confidential counselling sessions. Employee Assistance Program (EAP) registrations have crossed 6000 and during the year, 195 counselling sessions, 289 self-assessment tests and 47 Health Risk Assessments were conducted . In addition, 1343 topical articles were shared under EAP.

Employee wellness

Interdependence of emotional well-being and physical well-being was highlighted through various platforms. Aiming to motivate employees positively, ESE regularly publishes articles on topics like parenting, councelling, resilence, choices, support systems, suicide prevention, self-confidence, mental and emotional health, etc. An "Inter-Connect" e-Zine focusing on wellness was introduced this year and has been well received.

Employee connect

ESE connects with employees in many ways. 25 workshops, seminars and sessions with external faculty were organized covering over 1900 employees across the country. Workshops and seminars on "mindfulness", "professional Image", "resilience", "legal will planning", "budget and tax planning, a happy retired life" and "life style diseases" were organised. Employee engagement activities included exhibitions on handicrafts, handmade umbrellas, Onam Mela and organic womens fabrics. Quiz contests on Mothers Day and World Diabetes Day were organized. World Environment day was celebrated at KR with the objective of creating awareness in employees about environment needs like water conservation, planting trees, recycling of kitchen waste/E-waste and conservation of natural resources. Employees are wished on their special occasions such as birthday, promotion and retirement, engendering feelings of being cared for.

INTEGRATED INFORMATION SYSTEMS (IIS)

Team IIS has been continuously creating value for the businesses by enabling new business processes and enhancing existing processes.

Digital Initiatives: Digitally signed product invoices

were enabled for the Aviation and Gas Businesses and about 88,500 invoices were mailed to customers. During the year digitally signed purchase orders for Supply of Goods and Services was introduced and 7000 purchase orders have been mailed to vendors since February 2020.

A Retail Auto Invoicing System (RAIS) was implemented at 72 locations resulting in increased efficiency of the product despatch process and increased transparency among the supply location, dealer and transporter. The Retail business is seeing this as an opportunity to rationalize the numbers of officers deployed for planning product despatches.

ERP and the GeM portal have been interfaced to facilitate sharing of the purchase order, invoice and payment information and 250 purchase orders have been shared so far.

BPCL enabled rural customers to digitally book LPG Cylinder refills, at 2.5 lakhs Customer Service Centres (CSCs), a Government of India facility to deliver e-Services to rural and remote locations.

HEALTH, SAFETY, SECURITY & ENVIRONMENT (HSSE)

BPCL practices the ‘Safety First, Safety Must mantra across the organization and believes in imbibing the principles of Sustainable Development with the highest concern and commitment for Health, Safety and Security of employees, contractors and all other stakeholders and communities. Safe operations and implementation of health, safety and environmental initiatives remain at the core of all business activities for BPCL.

BPCLs commitment towards safety is evident, as KR has achieved 64.42 million man-hours for employees without Lost Time Accidents as on 31.3.2020 whereas MR stands at 2.25 million man-hours. The Behaviour Based Safety (BBS) program, which helps in changing the existing unsafe workplace behaviours by identifying and using the right behaviour has been successfully implemented at Refineries. This has given results and helped in decreasing the number of unsafe conditions substantially. KR is in an advanced stage of implementation of Process Safety Management (PSM) principles and MR has also initiated the same.

It has always been the constant endeavour of BPCL to achieve its mission of Zero Incidents, Zero Harm and Zero Excuses. To ensure emergency preparedness, mock drills are regularly conducted at all locations to keep everyone in the state of readiness. A comprehensive report is prepared using root cause analysis, learnings and recommendations to prevent any recurrence of incidents. In addition, technological advancements have helped in reduction of in-transit transport accidents as well as those at consumer premises.

Internal and External Audits are considered to be an integral part of operations and their compliance is given very high importance. This year, there is a reduction in old pending External Safety Audit recommendations by 95%. Root Cause Analysis of incidents is undertaken to increase collaborative learning for safer operations and greater adoption of best practices. Governance practices of the safety systems & Standard Operating Procedures (SOPs) of the critical processes are regularly monitored to ensure safe working across all locations. BPCL regularly conducts HSSE workshops, and other initiatives like "Safety Voice", "Safety Moment", "Safety Share", "Virtual HSSE Town Hall Meeting" etc. where information on best practices is disseminated which helps to ensure collaborative learning for safer operations across all

locations. BPCL recently organized a "One Energy- One Force, One Vision" forum for integration, standardization and replication of HSSE initiatives in Marketing and Refinery units.

All the locations of BPCL strictly adhere to SOPs and guidelines to ensure safety of operations. Asset Integrity plays an important role in determining the safety, operational performance and profitability of the organization, hence, to ensure integrity of the assets, they are continuously examined, monitored, inspected, periodically maintained and replaced.

A portal has been developed for capturing incident reporting, which is a very critical activity to disseminate the learnings and take necessary corrective actions. . The internal and external incidents reported in the system are investigated, analyzed and thoroughly reviewed. Use of an industrial drone was carried out in MR for monitoring of ongoing jobs to improve safety and productivity. Robotic cleaning of manholes of underground pits was carried out without manual intervention. BPCL always looks forward implementation of technological innovations which improve safety across the businesses.

Global warming and climate change are the biggest environmental issues that the world is facing today. BPCL believes that innovations and technological advances can improve performance and energy efficiency of operations. Towards this objective, BPCL has implemented various initiatives. A Flare Gas Recovery System (FGRS) for emission reduction and energy conservation is operational in the Refineries. MR has implemented many energy conservation schemes having potential savings of 19,882 MTOEs/Year & reduction of CO2 emission by 62,742 MT/Year, whereas KR energy conservation schemes have potential savings of 16,927 MTOEs/Year & reduction of CO2 emission by 53,466 MT/Year.

BPCL is capturing data on parameters like energy, water, and waste, etc. from the Refineries and Marketing locations across India and implementing various initiatives to minimize the operational impacts on the environment. BPCL trusts that transitioning to clean energy alternatives will help protect our environment hence, it has been increasing its renewable energy capacity. The capacity has increased to 43.43 MW in the year 2019-2o as compared to 31.70 MW during the year 2018-19. Energy efficient lighting capacity has been increased to 17.95 MW in the year 2019-20 as compared to12.66 MW during the year 2018-19. MR became the first Refinery in India to convert 100% of its conventional lights into LED lights. This initiative resulted in power saving of 9,840 MWH/annum corresponding to a benefit of 9.6 Crores/

annum & reduction in CO2 emission by 7,085 MT/annum. These initiatives on renewables have resulted in an annual reduction of approx. 104376 MT of CO2 equivalent. Besides, the other sustainable initiatives of Ujjwala Yojna/ transportation of product through pipelines and use of Biofuel in MS and HSD helped in reduction of emissions by 1686,400 MTCO2e. In the year 2019-20, BPCL has taken a target of planting one million trees by end 2022 to improve biodiversity. Approx. 72,000 trees were planted this year taking the total number to more than 3.2 lakhs in the year 2019-20. BPCL has also increased its carbon sink by sequestration of CO2 with trees of more than 7,800 MT CO2 this year.

BPCL is fully aware of the importance of water and has been working towards increasing the rainwater harvesting capacity to reduce the dependency on other sources of water. The total catchment area under rainwater harvesting has been increased to 823732 m2 in the year 2019-20, as compared to 7,78,939 m2 in previous year. BPCL has recently carried out a Water Conservation Study in both the Refineries. Efficient consumption of fresh water and waste water generated is regularly monitored. Effluent treatment plants are installed at both Refineries and the treated water is used for non-potable uses. BPCL has set up a Sewage Treatment Plant in collaboration with Rashtriya Chemicals & Fertilizers for treating 22.75 Million Litres /Day (MLD) of Municipal Sewage to produce 15 MLD of treated water to reduce the environmental impact, which helped in reduction of dependency of raw water from Brihanmumbai Municipal Corporation (BMC) by 35% i.e. approx. 6 MLD.

BPCL is following the rule of reduce, reuse and recycle of waste in all its operations. Use of single use plastic has been prohibited across Businesses. The BPCL has also adopted composting in a big way to dispose of organic waste in a responsible manner from the Refineries and other Marketing locations. Approx. 350 tons of organic waste has been converted into compost and used for gardening purposes in year 2019-20. BPCL disposes off Hazardous waste also as a responsible company and "Zero Waste to Land Fill Certification" was carried out for one Retail and One Lubricant location on a pilot basis successfully.

BPCL has institutionalized sustainability as a core parameter in its philosophy. The focus is on safe operations and energy efficiency, improved processes and technologies, reduced resource consumption, minimising the impact of operations on the environment and creating a healthy, safe and secure workplace. The latest report on Sustainability was published following the GRI Standards framework in the year 2018-19. The

Sustainable Development Reports of Bharat Petroleum are assured by an independent third-party assurance provider as per Accounting Ability (AA) 1000 Assurance Standard (AS) 2008 and International Standards of Assurance Engagement (ISAE) 3000. BPCLs efforts on Sustainability were recognized by various institutions and agencies through Awards and Accolades this year.

BPCL has taken various steps to continue its essential services during the time of the COVID-19 pandemic. BPCL has published a comprehensive COVID manual with details on procedures to be followed at operating locations and offices, use of Personal Protective Equipments (PPEs) and disinfectants and recommending ways to manage stress levels during this time for all its employees and stakeholders.

BPCL endeavors to improve its performance on Health, Safety, Security and Environment continuously and minimising its operational impact on its stakeholders.

Bio-fuels

The Government of India has prepared a road map to reduce import dependency in the oil & gas sector by implementing a five pronged strategy which includes adopting biofuels as one of them. With the aim of increasing the ethanol blending percentage in petrol to 20% and in diesel to 5% by 2030, ethanol was procured from additional feed stocks like 100% sugar cane juice, B heavy molasses and damaged food grains resulting in blending percentage of petrol by 4.22%. The storage cover has also been increased from 11 days to 15 days at marketing locations.

To meet the blending targets, BPCL is setting up a 2G Bio ethanol Refinery in Bargarh district of Odisha. The proposed refinery has been designed for a production capacity of 100 Kilo Litres per Day (KLPD) of 2G ethanol using approximately 400 MT/day of biomass as the feedstock (rice straw/ maize stalk). The 2G ethanol produced shall be used for blending in petrol. As on date, engineering works for proprietary equipment are in an advanced stage and manufacturing of equipment at the Licensors workshop and construction of temporary facilities at site are in progress. The overall physical progress of the project as on March 2020 is 20.1%. The project is expected to be completed in 2022.

BPCL has also taken initiatives in the field of production of Compressed Bio-Gas (CBG) from biomass waste/ biomass sources like agricultural residue, sugarcane press mud, municipal solid waste, etc. The company has invited Expressions of Interest (EOIs) from potential entrepreneurs to set-up CBG plants. In response to the EOIs, applications for setting-up 94 plants have been

received. A total of 79 Letters of Intent (LOIs) have been issued for a production capacity of 337 Tonnes per Day (TPD) (111 TMTPA).

BPCL has also taken initiatives for production of Bio diesel from used cooking oil for which offers have been received for setting up of 8 plants, with a combined biodiesel production capacity of 196 TPD. The offers are under evaluation and post evaluation LOIs will be issued.

INTERNATIONAL TRADE & RISK MANAGEMENT (ITRM)

The ITRM set-up is primarily responsible for all import and export related activities of BPCL, including procurement of crude oil both indigenous as well as imported, import of petroleum products to bridge the gap between domestic demand and availability and export of petroleum products which are surplus after meeting domestic demand. The associated services of freight chartering and shipping operations are also facilitated by ITRM. In addition to the above physical activities, ITRM actively participates in the paper (financial derivatives) market for the purpose of Risk Management by covering refineries operating cost and other associated costs.

ITRM steered BPCL towards a journey on setting up its independent Crude Oil Trading Desk, in partnership with M/s Shell, after revision in crude oil import policy by the Government of India in mid-2016. BPCL is the first and only Oil PSU to embark on such a journey, with the objective of aligning to the best global practices adopted by major Oil Companies across the world and continually enhancing value in the arena of crude oil sourcing/ trading. During the last 2 years, BPCL has also achieved the feat of sourcing crude oil from all six continents (Asia, Africa, Australia, Europe, North America & South America), through the Trading Desk approach. Also, with continual exposure to the best global practices of M/s Shell through targeted learning programs, the ITRM Trading team of BPCL has continually up-skilled itself to take over independent Trading Desk operations in future.

During 2019-20, ITRM further diversified its crude oil sources and ensured enhanced value by importing several new grades of crude oil across geographies, based on processing requirements and prevailing economics. For the first time, crude oil grades such as Lula and Iracema were imported from Brazil and CPC Blend crude oil cargo was imported from Kazakhstan, considering arbitrage opportunities, global supply-demand and overall economics.

Conscious efforts were made to diversify sourcing of LPG from the Middle East region in 2019-20 with the import of LPG from US and Norway for the first time. Tapping the market opportunity in the year 2019-20, ITRM marked

its presence in the bunker market and BPCL became the first oil marketing company in India to export Very Low Sulphur Fuel Oil (VLSFO 0.5% Sulphur max.) International Maritime Organization (IMO) compliant fuel grade post implementation of new IMO fuel specifications that came into effect from 1st January, 2020.

The freight chartering market witnessed extreme volatility throughout 201 9-20. Heightened unrest in the Arab Gulf region in June and September 2019, US sanctions on Chinese Shipping company, implementation of IMO 2020 rules to reduce Sulphur emissions and subsequent increase in cost of bunker fuels, and increase in World Scale rates, all contributed to sharp rise in freight costs. However, judicious mix of vessel types, optimization of cargo size and meticulous planning has ensured lesser impact in freight chartering.

BPCL is exposed to price risk arising from adverse movement in prices of crude oils procured from both international as well as domestic sources, petroleum products sold in the domestic market as well as exported, and freight charges of ships in-chartered for transportation of imported cargoes, as all these prices are benchmarked against international prices. BPCL has a comprehensive Commodity Risk Management Policy wherein all such price risks have been identified and the process for monitoring, measuring, mitigating and reporting have been laid down.

During the year 2019-20, ITRM hedged BPCLs exposure to the above commodity price risks in the international Over-The-Counter (OTC) market in accordance with BPCLs Commodity Risk Management Policy.

ITRM continues to focus on optimization of landed crude cost, maximization of product export value, enrichment of the commodities hedging portfolio and management of inherent risks. Going forward, given the unprecedented economic conditions due to the pandemic situation, and the consequent impact on oil prices, the role of ITRM shall assume greater significance.

RESEARCH AND DEVELOPMENT (R&D)

During 2019-20, the R&D Centers of BPCL continued the trend of developing energy efficient technologies, novel products, cleaner fuels and providing valuable technical support to SBUs.

The R&D team developed a refrigeration based Vapour Recovery System (VRS) to recover hydrocarbon vapour and successfully commissioned the pilot at BPCLs COCO Retail Outlet, Greater Noida. Preliminary results showed more than 80% of hydrocarbon vapour emissions reduction during unloading of the tank-lorry.

In collaboration with Centre of High Technology (CHT) and Engineers India Limited (EIL), a new desalter internal design was developed and successful trials were conducted in Kochi Refinery. The novel design was found to be superior to the existing desalter internal design and scaling-up of innovation is being premeditated.

An in-house developed rapid tool (K-Model) for crude oil blend compatibility prediction has been successfully implemented in refinery operations. The tool enables arriving at an optimum compatible crude oil blend and processing feasibility on real time basis. In this context, K-Model helped the refineries in taking timely decisions of selecting opportunity crudes for co-processing with regular crude oils, resulting in substantial value addition. Likewise, the tool viz. BPMARRK for rapid crude assay has been implemented in refinery operations for Realtime Monitoring & Optimization of Crude Distillation Units.

R&D also developed a Gasoline Sulphur Reduction additive GSR-CAT, which is continuously being used in the refineries. The average sulphur reduction of 32% in gasoline sulphur has been achieved with 10% GSR catalyst additive, leading to savings in costs.

Commercial production of Water Detecting Paste (WDP) for determination of water in Ethanol Blended MS (EBMS) and Quick Test Method (QTM) kit for determination of ethanol in EBMS has been initiated and implemented in Retail operations on a pan India basis.

R&Ds corrosion inhibitor formulation for preventing crude oil pipeline internal corrosion has been scaled- up for performance demonstration in the Vadinar-Bina Pipeline (VBPL). This will be the first instance of using corrosion inhibitors in the BPCL crude oil pipeline.

R&D came up with an improved version of Bharat Metal Cutting Gas (BMCG) viz. NxtGen BMCG, which is commercialized. The NxtGen BMCG formulation offers a smooth cutting finish with minimal slag. Bharat FurnoChem, a furnace cleaning chemical was developed and its performance was demonstrated in MR. The use of Bharat FurnoChem helped in maximizing crude throughput.

Other products such as synthetic petrol engine oil for latest generation passenger cars, advanced engine oil for modern 4-stroke motorcycles, high performance gas engine oil for new generation auto rickshaws were developed for generating new business. Development of transmission fluid for EVs, food grade lubricants, high viscosity warp sizing oil for the textile sector are other outcomes of research activities carried out.

During the year, the continuous in-house R&D efforts have resulted in grant of 15 patents and filing of 10 patent applications.

EXPLORATION AND PRODUCTION OF CRUDE OIL AND GAS OPERATIONS OF THE COMPANY THROUGH WHOLLY OWNED SUBSIDIARY

Operations of the Company

Bharat PetroResources Limited (BPRL) has participating interest (PI) in twenty seven blocks of which fifteen are located in India and twelve overseas, along with equity stake in two Russian entities holding the license to four producing blocks in Russia. Seven of the fifteen blocks in India were acquired under different rounds of New Exploration Licensing Policy (NELP), five blocks were awarded under Discovered Small Fields (DSF) Bid Round I and three blocks were awarded under the Open Acreage Licensing Policy (OALP) Bid Round I. Out of twelve overseas blocks, five are in Brazil, two in United Arab Emirates and one each in Mozambique, Indonesia, Australia, Israel and Timor Leste. The blocks of BPRL are in various stages of exploration, appraisal, predevelopment and production. The total acreage held by BPRL and its subsidiaries is around 32304 km2 of which approximately 57% is offshore.

The PI in respect of Blocks in India, Israel and Australia are held directly by BPRL. BPRL has wholly owned subsidiary companies located in the Netherlands, Singapore and India. The PI in the Block-JPDA 06-103, in Timor Leste is held by BPRLs wholly owned subsidiary company in India, i.e. Bharat PetroResources JPDA Limited. The subsidiary located in the Netherlands, i.e. BPRL International BV, in turn has four wholly owned subsidiary companies viz. BPRL Ventures BV, BPRL Ventures Mozambique BV, BPRL Ventures Indonesia BV and BPRL International Ventures BV. BPRL Ventures BV has 50% stake in IBV Brasil Petroleo Limitada, which currently holds PI ranging from 20% to 40% in five blocks in off shore Brazil. BPRL Ventures Mozambique BV has PI of 10% in a block in Mozambique, and BPRL Ventures Indonesia BV holds PI of 12.5% in a block in Indonesia. BPRL, through BPRL International Ventures BV, has 30% stake in Falcon Oil and Gas BV, which holds 10% stake in the Lower Zakum concession in offshore Abu Dhabi, UAE. Further, BPRLs wholly owned subsidiary in Singapore, i.e. BPRL International Singapore Pte Ltd (BISPL) holds 33% each in two Special Purpose Vehicles (SPV) i.e. Taas India Pte Ltd (TIPL) and Vankor India Pte Ltd (VIPL) which hold 29.9% and 23.9% in the Russian entities LLC TYNGD and JSC Vankorneft respectively. BISPL further holds 50% stake in Urja Bharat Pte Limited (UBPL) in Singapore which is the Operator of Onshore Block 1 Concession in Abu Dhabi with 100% PI.

RUSSIA

BPRL along with Oil India Limited (OIL) and Indian Oil Corporation Limited (IOCL), jointly referred to as the Indian Consortium (IC), holds 23.9% stake in JSC Vankorneft and 29.9% stake in LLC Taas Yuryakh Neftegazodobycha ("TYNGD"). In JSC Vankorneft, Rosneft holds 50.1% shares, ONGC Videsh Ltd. (OVL) (through its subsidiary) holds 26% shares and IC (through subsidiary companies) holds the remaining 23.9%.

In TYNGD, Rosneft (through subsidiary) holds 50.1% shares, BP (through a subsidiary) holds 20% shares and IC (through subsidiary companies) holds the remaining 29.9% shares.

During the year 2019-20, JSC Vankorneft produced approx. 13.43 MMT of Oil and 5.8 BCM of Gas (BPRLs effective share being 1.06 MMT Oil and 0.46 BCM Gas). During the year 2019-20, IC received dividend amounting to approx. USD 364 Million (with BPRLs effective share of approx. USD 120 Million).

During the year 2019-20, TYNGD produced approx. 4.20 MMT of Oil and 1.45 BCM of Gas (BPRLs effective share being 0.41 MMT Oil and 0.14 BCM Gas). During the year 2019-20, IC received dividend amounting to approx. USD 241 Million (with BPRLs effective share of approx. USD 80 Million).

UNITED ARAB EMIRATES (UAE)

BPRL, in consortium with OVL and IOCL acquired 10% stake in the offshore producing oil asset, Lower Zakum Concession in Abu Dhabi, UAE. The ICs share in the Lower Zakum Concession is held through Falcon Oil & Gas B.V, a SPV incorporated in the Netherlands, where BPRL holds 30% shares through its step down subsidiary BPRL International Ventures B.V in the Netherlands. The Concession has a term of 40 years effective from March 2018. The international shareholders in the Lower Zakum concession are JODCO (10%, a wholly owned subsidiary of Japans INPEX Corporation), China National Petroleum Corporation (10%), Italys ENI (5%) and Frances Total S.A. (5%). The Abu Dhabi National Oil Company (ADNOC) holds a majority 60% stake in the concession. The Lower Zakum field, located in Abu Dhabi Offshore shallow water, has been producing crude oil since 1967. The Indian Consortiums entitled crude oil from the concession has been approx. 15.23 million barrels during the year 201920. During the year 2019-20, BPCL Group Refineries have lifted approx. 5.1 million barrels of Das Blend Crude Oil as its equity oil from the Lower Zakum Concession.

BPRL, jointly with IOCL, was awarded the Onshore Block 1 Concession as an operator with 100% PI in March 2019 under Abu Dhabi 2018 Block Bid Round. The block is held by Urja Bharat Pte Limited (UBPL), a 50:50 Joint Venture company of wholly owned subsidiaries (WOS) of BPRL and IOCL incorporated in Singapore. Onshore Block 1 covers an area of 6,162 km2 located in the Al Dhafra region around Ruwais City and the refining complex, including the coastal region to the west. There are two existing undeveloped oil and gas fields in the area, named Ruwais and Mirfa, which will be appraised by the consortium, in addition to available prospects/leads for exploration.

MOZAMBIQUE

BPRL, through its Netherlands based step-down subsidiary company, i.e., BPRL Ventures Mozambique B.V, holds 10% PI in the Rovuma Offshore Area 1 concession in Mozambique. Total E&P Mozambique Area 1 Limitada, a wholly owned step-down subsidiary of Total S.A. is the Operator with 26.5% PI and the other consortium partners are Mitsui E&P Mozambique Area 1 Limited (20%), ENH Rovuma Area Um, S.A. (15%), ONGC Videsh Rovuma Limited (10%), Beas Rovuma Energy Mozambique Limited (10%) and PTTEP Mozambique Area 1 Limited (8.5%).

Following the announcement of Final Investment Decision (FID) on 18th June, 2019 by Area 1 Consortium partners to develop a 2-Train (2 x~6.44 MMTPA) onshore initial LNG Project utilizing the gas from offshore Golfinho-Atum reservoirs, the Golfinho-Atum Field Development Plan has become effective and Development and Production Period of 30 years has commenced.

All major construction contracts such as onshore Engineering, Procurement &Construction (EPC) and offshore Engineering, Procurement, Construction & Installation (EPCI) (CPI) have been executed and engineering, procurement and construction activities have commenced.

Area 1 partnership on 15th July, 2020, has finalized senior debt financing of US$ 14.9 Billion to advance the 2-Train LNG project. The senior debt comprises of a mix of Export Credit Agencies (ECA) Direct Loans, ECA Covered Facilities, Commercial Bank facilities, and a loan facility with one multilateral development institution.

BRAZIL

IBV Brasil Petroleo Limitada (incorporated in Brazil) a joint venture company of BPRL Ventures BV, and Videocon Energy Brazil Ltd, step down subsidiaries of BPRL & Videocon Industries Limited respectively, holds PI in 5 blocks in 3 concessions in Brazil.

In Sergipe Alagoas (BM-SEAL-11) concession, which currently consists of three blocks, Petrobras is the Operator with 60% PI and IBV holds the remaining 40% PI. During the exploration periods, four discoveries of oil and gas i.e. ‘Barra, ‘Farfan, ‘Cumbe and ‘Barra#1 have been made in this concession. The Operator i.e., Petrobras concluded Extended Well Testing (EWT) in Farfan field and the EWT data is being analyzed/evaluated for assessing reservoir extent and based on the results further development activities would be commenced.

In Potiguar (BM-POT-16) concession, Petrobras is the Operator with 30% PI, the other partners are IBV (20% PI), Petrogal (20% PI) and BP (30% PI). The minimum commitment activities have been completed, including drilling of one exploration well called "Ararauna" in POT-M-760. Based on the oil and gas shows observed in Ararauna well, ANP (Regulator) has approved Ararauna appraisal plan, covering both the blocks in BM-POT-16 concession, consisting of firm commitment of drilling one well and G&G studies.

In Campos (BM-C-30) concession, BP with 35.7% PI is the operator and other partners are IBV Brasil (35.7% PI) and TOTAL (28.6% PI). During the exploration period in the concession, Wahoo discovery was announced. After the completion of the exploratory period in November 2010, the consortium decided to move on to Appraisal phase. Under the Appraisal plan, drilling of two firm Appraisal wells, screening of Development concepts and Pre-FEED (Front End Engineering Design) studies on identified facility options were completed. The consortium is studying various options including possible tie back arrangement with nearby developed oil fields before any firm commitment is made towards field development.

INDONESIA

A subsidiary of BPRL, i.e. BPRL Ventures, Indonesia BV, has PI of 12.5% in Nunukan Block in Indonesia. Other Joint Venture partners are PT Pertamina Hulu Energi with 64.5% PI as Operator; and Videocon Indonesia with 23% PI. The minimum work programme committed as per the Production Sharing Contract (PSC) under the exploration phase has been achieved. The exploratory / appraisal wells drilled in the block proved to be successful and indicated presence of oil and gas. The Drill Stem Tests (DST) conducted also confirmed producible hydrocarbons from these wells and has led to Oil & Gas discoveries in Badik, West Badik and Parang fields of the block.

As part of further exploratory/appraisal activities, drilling campaign in Parang / Keris fields is being planned by the operator. The drilling of appraisal wells in Parang field is currently in progress.

ISRAEL

BPRL has 25% PI in the License of exploration Block 32 awarded to the Indian Consortium in the 1st Offshore Bid Round 2016, conducted by the State of Israel. OVL is the Operator while IOCL and OIL are the other partners in the block, each having a PI of 25%. The seismic (2D & 3D) data collection, prospectivity assessment and the report on data evaluation, re-processing requirements, prospective assessment etc. was carried out and the reports were submitted to Israeli Petroleum Commissioner on 28th March, 2019. The report along with prospectivity analysis of the block has been submitted to the regulator and the submission of final report on "Drill or drop decision" is expected by December 2020.

AUSTRALIA

BPRL farmed into EP - 413 (on-land) Shale Gas Block, in December 2010 and currently has a PI of 27.803% in the block in consortium with Norwest Energy NL (Operator, 27.945% PI), and AWE Perth Pty Ltd (44.252% PI) (formerly known as Arc Energy Ltd), 100% subsidiary of Australia Worldwide Exploration. Pending revised regulations on hydraulic fracture stimulation, the regulator granted the extension of the permit till 22nd February, 2023 and the activities related to the five year monitoring programme under the Environmental Management Plan (EMP 2015) and the maintenance / care of the suspended well are being taken up now.

TIMOR LESTE

BPRL, through its wholly owned subsidiary, Bharat PetroResources JPDA Limited, currently holds 20% PI in the Block JPDA 06-103. The other consortium members are Videocon JPDA 06-103 Limited & GSPC JPDA Limited, both holding 20% PI, Pan Pacific Petroleum (JPDA 06-103) Pty Limited holding 15% PI, Oilex Limited (as Operator) holding 10% PI and Japan Energy E&P JPDA Pty Limited holding 15% PI in the said block. PSC has been terminated and Arbitration Proceedings with the Regulator are in progress in the International Chamber of Commerce (ICC), Singapore.

Relinquished Foreign Block

UNITED KINGDOM

The Plug and Abandonment activities of the well have been completed during the year 2019-20.

INDIA

A. Operated Blocks

i) NELP IX Block (CB-ONN-2010/8, Cambay Basin)

Under NELP-IX bid round, BPRL led consortium was awarded one on-land block CB-ONN-2010/8, in Cambay

basin. BPRL is the Lead Operator with 25% PI and the other consortium partners are GAIL (India) Ltd - 25% PI (Jt. Operator), Engineers India Ltd (EIL) - 20% PI, BF Infrastructure Ltd (BFIL) - 20% PI and Monnet Ispat& Energy Ltd (MIEL) - 10% PI. Due to MIELs cash call payment default under the Joint Operating Agreement (JOA), the other non-defaulting parties have agreed to distribute MIELs 10% PI in proportion to their existing share for which a request has been submitted to Director General of Hydrocarbons (DGH) for approval and the matter is under active consideration at DGH. There are two discoveries in the block CB-ONN-2010/8 in exploratory wells Pasunia#01 (PA#01) and Pasunia#02 (PA#02). The approval of Petroleum Mining Lease (PML) from Govt. of Gujarat has been received on 26.02.2019 for a period of 15 years. Environmental Clearance (EC) for starting production and development activities has been granted by MoEF&CC on 30.07.2019. Presently, various tendering activities are in progress for implementation of approved the Field Development Plan (FDP).

ii) OALP I Block (CB-ONHP-2017/9, Cambay Basin)

The block CB-ONHP-2017/9 in Cambay basin, Gujarat was awarded to BPRL as Operator with 100% PI under OALP Bid Round- I and the Revenue Sharing Contract (RSC) of the block was signed with Govt. of India on 01.10.2018. BPRL farmed out 40% PI in the block to ONGC on 23.12.2019. Petroleum Exploration License (PEL) has been granted by Govt. of Gujarat on 25.07.2019. Processing of the existing raw 3d data has been completed and interpretation is in progress for identification of drillable prospects.

iii) DSF Blocks

BPRL has also been awarded 5 Contract Areas (2 offshore and 3 onshore) through the Discovered Small Field (DSF) bid rounds of 2016. The two offshore blocks (B15 and B127E) are in the Mumbai Offshore basin, two in Rajasthan (Bakhri Tibba and Sadewala) and one in Cauvery Basin, Tamil Nadu (Karaikal). PML for Karaikal is yet to be received while the PML for other blocks has been received. Based on the in-house Geological & Geophysical (G&G) studies, a techno-commercial analysis was carried out for the Contract Areas B15, B127E, Bakhri Tibba and Sadewala The report has been submitted to DGH and is awaiting the approval of the Management Committee in this regard.

B. Non Operated Blocks

iv) NELP IV Block (CY-ONN-2002/2 Madanam Field, Cauvery Basin)

BPRL has a PI of 40% in an On-land Block CY- ONN-2002/2 in Cauvery Basin wherein ONGC is the

Operator with 60% PI. Construction activities for the setting up of Central Processing Facility (CPF) at Madanam, and laying of pipelines for evacuation of Oil/ Gas from the block are under progress. During the year 2019-20, the consortium completed drilling and testing of three development wells. The block currently has a daily average oil production of 1750 BBLs. During the financial year 2019-20, 659,530 barrels (104,857m3) of oil and associated gas of 30,741,107m3 has been produced from the block.

v) NELP VI Block (CY-ONN-2004/2, Cauvery Basin)

BPRL has a PI of 20% in an On-land Block CY-ONN-2004/2 in Cauvery Basin wherein ONGC is the Operator with 80% PI. The FDP was approved on 13.7.2017 and accordingly the block has entered into the Development Phase. The first two development wells drilled as per the development plan did not yield the desired results due to which additional studies like Critically Stressed Fracture (CSF) and Geo-Mechanical studies are currently being undertaken by the operator to firm up the way forward.

vi) NELP VII Block (RJ-ONN-2005/1, Rajasthan Basin)

BPRL has a PI of 33.33% in RJ-ONN-2005/1, an On- land block in Rajasthan in consortium with Hindustan Oil Exploration Corporation (HOEC, 33.34% PI), and IMC Limited (33.33% Pi). HOeC is the Lead Operator and BPRL is the Joint Operator of this block. The Petroleum Exploration License (PEL) for the block was granted by the Government of Rajasthan on 13th July, 2009. BPRL and IMC have submitted joint proposal for recommencement of exploration activities in the block in order to complete the MWP commitments of drilling of six wells after the Lead Operator HOEC expressed interest to withdraw from the block. The proposal is under consideration by DGH.

vii) NELP IX Blocks

In the Cambay Basin, CB-ONN-2010/11, an On-land block was awarded by GOI to a Consortium consisting of GAIL, BPRL, EIL, BFIL and MIEL. GAIL with 25% PI is the Operator of the block. BPRL with 25% PI is the Joint Operator of the block. Due to MIELs cash call payment default under the JOA, the other non- defaulting parties have agreed to distribute MIELs 15% PI in proportion to their existing share for which a request has been submitted to DGH for approval. The FDP of Galiyana 1 has been approved on 10th February, 2020 and an additional area of 13.43 sq. km falling beyond the block area has also been granted for development activities which are in progress. M/s BFIL is not participating in the development plan, whose PI is unconditionally transferred to the Operator M/s GAIL.

In the Assam Basin, AA-ONN-2010/3, an On-land block was awarded by Government of India to a consortium consisting of OIL, ONGC and BPRL. OIL with 40% PI is the Operator of the block. BPRL is having 20% PI and ONGC holds 40% PI in the block. The Petroleum Exploration License (PEL) for the block was granted by the Government of Assam with effect from 12th December, 2013 which is valid up to 11th December, 2020 Pre-drilling activities for the committed MWP well are currently in progress.

MB-OSN-2010/2, a shallow water offshore block in Mumbai Offshore basin was awarded by GOI to a consortium consisting of OIL (operator, 50% PI), HPCL (30% PI) and BPRL (20% PI). The proposal for relinquishment of the block MB-OsN-2010/2 has been approved by DGH and relinquishment is in progress.

viii) OALP I blocks

BPRL farmed into the OALP - I block AA-ONHP-2017/12 with PI of 10% in December 2019. The other consortium partners of the block are OIL (60% PI) as operator, IOCL (20% PI) and NRL (10%). The total block is 489 sq. km in area of which 488.50 sq. km is located in Assam, 0.5 sq. km is located in Arunachal Pradesh. PEL for the respective block areas were granted by Govt. of Assam on 3rd July, 2019 and Govt. of Arunachal Pradesh on 18th December, 2019.

BPRL farmed into the OALP - I block CY-ONHP-2017/1 with PI of 40% in December 2019. The other consortium partner in the block is ONGC (60% PI) as operator. Out of the total block area of 731 sq. km, 579 sq. km is onshore area and the remaining 152 sq.km is offshore area. PEL has been granted for the offshore area and the Operator is awaiting PEL grant for the onshore area.

BUSINESS PROCESS EXCELLENCE CENTRE (BPEC)

During the year 2019-20, BPEC processed 4.43 Lakh invoices amounting to 14,500 crores. There was a marked improvement in the processing cycle with more than 85% of the invoices being processed within 3 to 15 days of receipt at BPEC.

Micro Small and Medium Enterprises (MSMEs) play a vital role especially for a developing country like India, by contributing to its economic growth, stability and providing employment opportunities, thereby reducing the poverty level. To give strength to Government of Indias vision, BPCL has created a separate cell for MSMEs to ensure uninterrupted payments to MSME Vendors in particular.

Trade Receivables Discounting System (TReDS) is a digital platform to support MSMEs to get their invoices financed at a competitive rate through an auction wherein

multiple registered financiers can participate. BPCL started invoice discounting for MSME vendors from December 2018 onwards. During 2019-20, BPCL discounted 1920 invoices valuing 100 crores as against 30 crores during 2018-19.

In pursuance of the vision of centralisation, digitalisation and automation, BPEC centralized processes like customer account clearing, collection management, dispute management, clearing of NEFT / RTGS amounts held in bank clearing accounts, issue of debit / credit notes and customer master governance for all SBUs and entities. This has helped in bringing effective controls and governance in customer accounts. Further, frequent communication with the customers has led to increased transparency and enhanced trust.

BRAND & PUBLIC RELATIONS

The Corporate Brand & PR team has assiduously built on the foundation of a vaunted brand image through the years. Aided by the refining, marketing and upstream arms of the Company, BPCL has been delivering functional and social expectations of the public on one hand and crafting a unique identity on the other, leading to an enviable reputation in corporate circles.

Reputation Management

Brand & PR employed a three pronged strategy to boost the Companys reputation by firstly, providing media support to initiatives undertaken by SBUs and Entities; secondly, by positive storytelling on achievements and contributions to society and thirdly, by leveraging social media.

Using the platform of a Reputation Strategy Meet, location heads and key role holders were anointed as members of the Bharat Petroleum Response Force (BPRF) to uphold the reputation of BPCL in all their endeavours. BPCL has unleashed the power of Online Reputation Management (ORM) as a potent online listening and responding tool to improve the equity of Brand Bharat Petroleum. With this robust ORM tool, BPCL is equipped to monitor and respond to around 20,000 conversations across the Internet every month. The ORM tool helps in monitoring feedback, suggestions and complaints and also generates reports on parameters like demographics and sentiment analysis. With the rising popularity of digital and social media, customers have increasingly resorted to these modes of communication; hence, resolution of these complaints have been accorded top priority.

Active Social Media Presence

Various digital initiatives and unique campaigns have helped BPCL enhance and amplify its presence and

customer engagement on social media. BPCL owned social media assets like Facebook, Twitter, LinkedIn, Instagram and YouTube were leveraged to promote digital content for enhancing the BPCL brand. Some of the major campaigns like MAK Oil Change, BPCL SBI Co-branded card, Bharatgas on Amazon, Bharat First, Har Ek Kaam Desh Ke Naam and Corona Warriors gained tremendous traction.

The BPCL Facebook page achieved a historic milestone of one million followers. With this achievement, BPCL now stands tall with the highest number of Facebook followers in the oil and gas industry in India. BPCL has developed a positive and active social media culture with a strong follower base of over 13.34 lakhs, more than 800 lakh impressions, 170 lakh video views and 50 lakh engagements.

Knowledge Exchange

BPCL has also participated in many major conferences like the Refinery Technology Meet (RTM) organized by Centre for High Tech, CERA Conference by FIPI, 17th National Conference by Engineering Council of India, 44th All India Public Relations Conference by Public Relations Society of India, International Conclave on Occupational Health by Indian Association of Occupational Health, 47th National Convention for Company Secretaries organized by Institute of Company Secretaries of India, apart from many others.

As a corporate working towards uplifting the weaker sections of society, BPCL regularly contributes to various fund-raising events organized by NGOs. Moreover, as a good corporate citizen, BPCL has sponsored many events organized by the Indian Express, CII, Bombay Management Association, Indian Society of Training & Development, Global Compact of India, ASSOCHAM and SCOPE, to name a few. BPCL also associated with Somaiya Institute of Management Studies and Research, Mumbai in a Case Study Challenge to build Brand Equity for BPCL amongst the student community.

Braving the COVID-19 Pandemic

The COVID-19 pandemic has impacted the whole world and redefined the way we do business. BPCL has responded swiftly and efficiently to the changing dynamics, remaining true to its core purpose of ‘Energising Lives of the nation. All functions have gone the extra mile to render service, especially the LPG & Retail SBUs in Marketing and the Refineries ensuring product availability.

Brand & PR synchronised social, digital and print media to create a brand image of the Company as the major value contributor for individuals and society. The

communication strategy entailed reaching more than one crore people, through a combination of videos and static posts on BPCLs work, people and activities. There were celebrity testimonial videos to promote BPCLs Corona Warriors, vast media coverage, both print and digital, covering the entire supply chain, showcasing how the Company is responding to various consumer segments. Younger followers of BPCLs Instagram handle were engaged with celebrity chats.

BPC Tarang

The in-house radio channel, BPC Tarang was revamped and repositioned to reach out to employees with relevant, informative, educational and motivational content, blending in a bit of entertainment. Episodes were broadcast, covering psychologists and doctors, to help employees cope with the evolving situation during the lockdown. Team IS educated employees on the use of various technical tools for work from home. To motivate employees, the ‘Salute Corona Warriors series was also launched, showcasing the frontline staff, including workmen.

Brand studies show that post this pandemic, brand communications will leave the age of hyperindividualization and move into a period in which society and social thinking are valued commodities. Brand BPCL will continue to follow this communication strategy.

AWARDS & RECOGNITION

In the prestigious Fortune Global 500 list for 2020, BPCLs rank is 309. BPCLs rank is 601 in the Forbes Global 2000 list for 2020, a considerable rise from the rank of 628 in the 2019 list. For its outstanding global, financial and industry performance, BPCL has been ranked among the top 20 Oil and Gas Refining and Marketing companies in the Platts Top 250 Global Energy Company Rankings for 2019. BPCL ranks 4th in Oil & Gas Refining and Marketing in the Asia/Pacific Rim, 7th in Oil & Gas Refining and Marketing globally and 12th in overall performance in the Asia/Pacific Rim. On an overall global performance, BPCL has been ranked 44th.

BPCL received the Federation of Indian Petroleum Industry (FIPI) Oil & Gas Award 2019, under the category ‘Oil Marketing - Company of the Year for leading performance for Direct and Retail Sales through customer-centric initiatives.

At the Refining and Petrochemical Technology Meet (RPTM 2020), while Kochi Refinery (KR) was declared the Winner in ‘Innovation Awards 2018-19 under the ‘Innovation in Refinery category for BPMARKK (Usage for Predicting Crude Yields), Mumbai Refinery (MR)

received the Innovation Award for in-line Crude Blending. Corporate Research & Development Centre (CRDC) was adjudged the ‘Winner under the ‘Best Innovation in R&D Institute category for ‘K Model: Quick & Accurate Prediction of Crude Oil Blend Compatibility and Blend Optimisation of N Number of Crude Oils. CRDC was also awarded a Commendation Certificate for the development of ‘Bharat-Divided Wall Column Technology. KR received the Refinery Performance Improvement Award (Second Prize) for commendable performance among Indian Refineries and MR got the Best Conceptualisation and Representation prize under "Best Poster" category for its Intelligent Plant Concept on Digital start-up - Gasoline Treatment Unit, using state-of-the-art Business Wi-Fi network and mobility solutions.

MR was adjudged the winner for 2018-19 in the InterRefinery Swachhata Ranking for 18 PSU Refineries, by Centre for High Technology (CHT). Another feather in its cap was the ‘Certificate of Merit under National Quality Award & ‘MQH - Best Practices Competition conducted by IMC - RBNQA (Ramkrishna Bajaj National Quality Award) Trust, Mumbai.

MR achieved ‘Silver Rating in the assessment for ‘Green Co by CII , and was the first Refinery to be rated under ‘Green Co Rating Certification. MR bagged the India Manufacturing Excellence (Future Ready Factory under Platinum Category) from M/s Frost & Sullivan, in recognition of the excellence achieved in the areas of superior leadership, technological innovation, customer service and strategic product development. MR also bagged a Prize in the ‘Boiler 2020 Competition, conducted by Inspectorate of Boilers.

Integrated Expansion Refinery Project (IREP) at KR was adjudged as the Winner of the ‘Top Refining Project of the year 2019 by the international journal, Hydrocarbon Processing (HP). KR bagged the Apex India Platinum Award 2019 for Occupational Health and Safety for the Propylene Derivative Petrochemical Project (PDPP) for the second consecutive year. The PDPP received the Safety Innovation Award 2019 from the Institution of Engineers (India). KR also received the HSE Excellence Oil & Gas Company of the Year Award 2019 for the third consecutive year by the Synnex Group. Yet another achievement for KR was the SKOCH Order-of-Merit Certificate for its Safety Management System.

CRDC bagged three Awards during the Frost & Sullivan Project Evaluation & Recognition Program (PERP) 2019 under the category ‘Process Innovation Leadership in the Manufacturing Sector. These were the Winner Award for Bharat-Divided Wall Column (B-DWC) Technology:

Improving Separation Efficiency and its Application for Maximizing Gasoline Production in Refinery. CRDC was also conferred the ‘Sustainability Award for the Best Green Product in the Petrochemical Sector for ‘Development & Commercialisation of Indigenously developed Gasoline Sulphur Reduction Catalyst (Bharat GSR CAT) for Refineries during the Federation of Indian Chambers of Commerce and Industry (FICCI) Chemicals and Petrochemicals Awards 2019.

BPCL bagged the ‘Best-In-Class Supply Chain and Procurement Diversity Initiative Award from Express Logistics & Supply Chain (ELSC) for widening of crude oil baskets and their ranking based on economics, which helped in sourcing 8 new crude oil grades and procuring crude oil from 18 different countries from 6 continents in the year 2018-19. BPCL was also adjudged the Winner in the Manufacturing Supply Chain Awards 2020 presented by Future Supply Chain Solutions Limited, under the category of ‘Quality Excellence in Planning, Processes & Systems for its initiative of "Reduction in Transportation and Logistics Cost by developing a Pan-India model for Secondary Optimization" in the Company.

Internal Audit won the ‘Excellence Award in the ‘Best Application of Technology category,forthe implementation of ‘One Click Audit and leveraging technology as a tool in improving internal controls and governance from Institute of Internal Auditors. BPCL bagged the Digital PSU Award at the 7th PSU awards, organised by Governance Now for two digital initiatives - Retail Auto Invoicing System (RAIS) and Leveraging Machine Learning for solving IT issues in BITSS (BPCL IT Services System - for IS related Complaints Management).

Corporate HSSE received the ‘Order of Merit Award under the category ‘Sustainability and Kochi Refinery won the Silver Award under the category ‘Green Initiatives at the SKOCH Leadership Awards. HSSE also won the Corporate Governance and Sustainability Vision Award 2020 from the Indian Chamber of Commerce (ICC) for taking positive steps to manage and measure its economic, environmental and social performance and integrating sustainability into core business model.

The Golden Peacock Sustainability Award was conferred on HSSE for outstanding contribution, commitment, professionalism and actions that made a visible impact on Sustainability and Environment. Yet another achievement was the Responsible Business of the Year Award from Social and Business Enterprise Responsible Awards (SABERA) for excellent contributions towards Community, Sustainability and Environment. HSSE also received the Gold Category award for Global Sustainability 2019 by

Energy and Environment Foundation in recognition of its outstanding contribution, professionalism, commitment and action towards positive impact on the environment.

KR won the National Institute of Personnel Management (NIPM) Kerala Chapter Best Corporate Citizen Award among large companies for the third consecutive year. KR also bagged top honours for Health, Education and Women Empowerment in the Rotary CSR Awards 2019. KR also won the Kerala Management Association (KMA) CSR Awards 2019 for Education for the Roshni Educational Project for the children of inter-state workers.

BPCLs resounding performance during the Swachhata Pakhwada in July 2019 won the First place among Oil & Gas PSUs for 50,020 activities. Mumbai Refinery bagged the first place among refineries and BORL secured the third place.

BPCL won Awards for its In-house magazine - Petro Plus and Corporate Intranet - I-Connect at the Annual Awards of the Association of Business Communicators of India (ABCI). BPCL bagged several awards at the Public Relations Society of India (PRSI) National Awards 2019 for Excellence in the field of Communications and Public Relations - Best Corporate Website, Best Use of Social Media in Campaign for the MAK Oil Change campaign, Best Use of Social Media for PR & Branding for BPCL Customer Service, Best House Journal (Hindi) and Best PSU Implementing RTI. BPCL was awarded First Prize by SCOPE for the Best Corporate Communication Campaign & Program at the SCOPE Corporate Communication Excellence Awards 2019.

KR won the prestigious Rajbhasha Rolling Trophy 2019 of Kochi Town Official Language Implementation Committee (TOLIC) for the Best Implementation of Official Language among PSUs in Kochi. They also received the Trophy for the Best Hindi House Magazine for JwalaDwani Varshiki.

KR was adjudged the winner of the ‘Suraksha Puraskar 2019 in the Very Large Industries category by the National Safety Council of India, Kerala Chapter and the Department of Factories & Boilers, Govt. of Kerala for the year 2019.

Bareilly LPG Plant won the 4th level Award Prashansa Patra in the NSCI Safety Awards - 2019 among the MSME Sector across India. Bangalore LPG Plant was awarded for ‘Outstanding Performance in Best Safe Practices in

the Oil Industry for year 2019-20 by the Department of Factories & Boilers, Industrial Health and Safety, Govt. of Karnataka.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Corporation has a robust internal control system (including Internal Financial Controls over Financial Reporting) that facilitates efficiency, reliability and completeness of accounting records and timely preparation of reliable financial and management information. The internal control system ensures compliance with all applicable laws and regulations, facilitates an optimum utilization of resources and protects the Corporations assets and interests of investors. The Corporation has a clearly defined organizational structure, well documented decision rights, detailed manuals and operating procedures for its business units and service entities to ensure orderly and efficient conduct of its business. The internal control systems (including Internal Financial Controls over Financial Reporting) are reviewed on an ongoing basis and necessary changes are carried out to align with the changing business/statutory requirements.

The state-of-the-art ERP solutions (SAP) and Business Information Warehouse has inbuilt controls including the authorization controls. This further enhances controls and seamless exchange of information with access controls. The SAP systems provide an audit trail of the transactions. The Corporation has a whistle blower policy and anti-fraud policy to address fraud risk.

The Corporations independent Audit function, consisting of professionally qualified persons from accounting, engineering and IT domains, review the business processes and controls to assess the adequacy of the internal control system through risk focused audits. The Internal Audit Department plans the annual audit plan to cover various aspects of the business. The audit reports published by the Internal Audit Department are shared with the Statutory/Government Auditors, who review the efficacy of internal financial controls. Key business process changes have been reviewed by the internal team before implementation.

The Audit Committee of the Board regularly reviews significant findings of the Internal Audit Department covering operational, financial and other areas and provides guidance on internal controls.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

In Accordance with SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios along with detailed explanations are given below:

Sl. No. Ratio Type Unit 2019-20 2018-19 Variation (In %) Explanation for changes
1 Debtors Turnover Ratio No. of Days 6.62 6.41 3.17%
2 Inventory Turnover Ratio No. of Days 23.46 23.01 1.96%
3. Interest Coverage Ratio (Profit Before interest and Tax + Depreciation)/Finance cost Times 3.96 11.33 -65.05% The interest coverage ratio has declined during current year as compared to previous year mainly on account of substantial decrease in profit before tax from 10,439.62 Cr to 2,671.04 Cr coupled with increased finance cost
4. Current Ratio Times 1.10 1.12 -2.12%
5. Debt Equity Ratio (Excluding Lease obligation) Times 1.26 0.79 59.49% Debt Equity Ratio has increased due to higher borrowings during the year. Borrowing has increased mainly on account of capital expenditure coupled with lower internal accruals during the year.
6. Operating Profit Margin Ratio (OPM) OPM = (Profit before Exceptional Items and Tax minus Other Income)/Sales % 0.21 2.22 -90.75% The variation in operating profit margin ratio is mainly due to significant decrease in the Operating Profit Margin during the year. The Operating Profit Margin has been reduced mainly due to significant decrease in Refining Margin coupled with depreciation of Indian Rupee vis-a-vis Dollar which has resulted in significant foreign exchange loss during the current year.
7 Net Profit Margin Ratio % 0.82 2.12 -61.22% The net profit margin ratio has declined mainly on account of reduced profit after tax
8 Return on Net Worth % 8.00 19.41 -58.78% The return on net worth has declined mainly on account of reduced profit after tax