Hindustan Petroleum Corporation Ltd Management Discussions.

A. BUSINESS ENVIRONMENT & OUTLOOK Economic Backdrop

The COVID-19 pandemic affected world economy in 2020. Governments across the world adopted several actions like lockdowns, quarantine and social distancing to ‘flatten the curve of the infections. The global economy contracted by over 3% in 2020 in view of the pandemic-induced restrictions.

The Indian economy was also impacted by the unprecedented crisis in 2020-21 due to the COVID-19 pandemic. The lockdown measures, imposed to contain the pandemic, affected the economic activities resulting in contraction of the real Gross Domestic Product (GDP) by 7.3% in 2020-21. Consequent to the several proactive preventive and mitigating measures taken by Government, the rebound from the COVID-19 induced slump has been sharp in the third quarter of 2020 as real GDP growth turned positive. The health care crisis has subsided during second quarter of 2021. With aggressive vaccination programme and fiscal stimulus, economic activity is witnessing a resumption.

Energy Scenario

The COVID-19 pandemic impacted the energy sector on the back of high contraction in demand. The period during 2020 saw new uncertainties for the energy sector and fundamental shifts in the energy ecosystem. The primary energy demand dropped by an estimated 4.5% in 2020 compared to the previous year.

For the first time in the 21st Century, primary energy consumption in India saw a decline by 5.9% in 2020, due to the pandemic mirroring the decline in GDP by about 7.3%. The largest decline in energy demand occurred in oil with a drop of 9.9% reflecting reduced road and air transport activity. Transport, currently the fastest-growing end-use sector in terms of energy demand, and urbanisation is expected to foster growth in energy demand in India. Industries are also witnessing a rebound as supply chain re-established with emergence of new pathways and a transition to clean and green energy solutions.

International Crude Oil Market

Measures to restrain the spread of COVID-19 triggered an estimated 8.7 million barrels per day (mbpd) (8.7%) drop in oil demand in 2020 compared to the previous year. Demand for transport fuel declined by 14% from 2019 levels. In April 2020, at the peak of the pandemic, global oil demand fell by more than 20% compared to pre-COVID levels.

Globally, Brent crude oil prices varied in a wide range during 2020-21. Brent prices fell to an average of US$ 18.8 per barrel in April 2020, the lowest monthly average price in real terms since February 1999. The low prices were the result of significant declines in oil consumption that caused a sharp rise in global oil inventories. However, Brent prices increased through much of the rest of 2020 because of rising oil demand and reduced production. Brent prices rose to a monthly average of US$ 49.9 per barrel in December 2020 because of expectations of future economic recovery based on continued news about the viability of multiple COVID-19 vaccines. Brent prices in early January 2021 reached their highest levels in 10 months after Saudi Arabia announced a one-month unilateral cut to its crude oil production for February 2021, which is in addition to its OPEC+ commitments. Brent prices have shown a rising trend in March 2021, reflecting expectations of rising oil demand as both COVID-19 vaccination rates and global economic activity have increased combined with ongoing crude oil production limits from members of the Organisation of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+). On an overall basis, Brent averaged at US$ 44.4 per barrel for 2020-21, which is about US$ 16.6 per barrel below the average of US$ 61.0 per barrel in 2019-20.

Indian Crude Oil Basket

Following the collapse of the international crude price due to concerns over rising COVID-19, Indian crude oil basket price for April 2020 settled at US$ 20 per barrel. In line with the recovery in crude prices, the Indian crude oil basket price rose in Q1 of 2020-21 following OPEC+ agreement on crude supply cuts. Following a recovery in May 2020 & June 2020, average Indian crude oil basket price for Q1 of 2020-21 was US$ 30.3 per barrel as compared to an average of US$ 50.7 per barrel in previous quarter. During Q2 of 2020-21, the Indian crude oil basket price recovered to US$ 43 per barrel tracking gain in international oil markets. In Q3 of 2020-21, the balancing act of demand recovery and supply interruption due to hurricanes followed by lower demand due to second wave of COVID-19 infection in West of Suez kept Indian crude oil basket price in check as it settled at average of US$ 44.6 per barrel. In Q4 of 2020-21 optimistic demand recovery, strict compliance by OPEC+, additional voluntary supply cuts by Saudi Arabia and the emergence of various potential COVID-19 vaccines supported crude prices. Further, winter storm in February 2021 tightened the crude supplies, which pushed crude price to fifteen months high in March 2021. For Q4 of 2020-21 Indian crude oil basket prices settled at an average of US$ 60.2 per barrel, the highest level in the financial year.

Benchmark Refining Margins

Singapore refining margins in Q1 of 2020-21 collapsed for the first time to negative territory of US$ -0.94 per barrel, as demand for all transportation fuels fell drastically amid lockdowns by nations due to the pandemic. Gasoline and Jet fuel margins were the first to fall, in April 2020 settling at US$ -0.95 per barrel and US$ 0.87 per barrel respectively as these fuels saw the sharpest drop in demand. Naphtha margins improved due to demand from petrochemical plants. Gasoil margins remained steady in Q1 of 2020-21, settling at US$ 7.48 per barrel due to large number of turnarounds in Asian region and robust demand from China in May 2020 where demand recovered to previous year level. In April 2020, High Sulphur Fuel Oil (HSFO) and Very Low Sulphur Fuel Oil (VLSFO) margins gained some strength due to high demand for floating storage vessels as market players began storing fuels amidst record low prices. Overall, Q1 of 2020-21 was the weakest quarter for Singapore refining margins since data tracking began.

Singapore refining margins improved slightly to US$ 0.05 per barrel in Q2 of 2020-21 amid recovery in Naphtha & Gasoline margins due to improvement in demand from South Asia, lower refinery run rates and higher refinery turnarounds year-on-year. Gasoline margins received support from hurricane season in US Gulf Coast during August 2020, when 3 mbpd of refinery capacity was taken offline. Gasoil margins were weak for the quarter, settling at US$ 4.99 per barrel as heavy rainfall and floods in China, typhoons in South Korea and Japan, and prolonged monsoon in India, dampened gasoil demand. This was also followed by higher exports out of India and China. The demand for jet fuel also remained low amid rising cases and lesser number of leisure and discretionary trips by people. Gasoil margins were the lowest ever in September 2020, settling at US$ 2.68 per barrel as rising COVID-19 cases in India and Asia, led to fall in demand due to muted driving and industrial activities. Fuel Oil margins made a recovery amid lower supply and power generation demand form Middle East.

In Q3 of 2020-21, the Singapore refinery margins improved to settle at US$ 1.22 per barrel as 3 mbpd of Asian refinery capacity went under maintenance. The month of October 2020 saw the strongest refining margins of US$ 1.57 per barrel since the pandemic began. Naphtha margins stayed strong in October 2020 as 6 MMTPA steam-cracking capacity was offline for turnarounds and LPG prices remained high amid robust petrochemical margins. Gasoline margins continued their strength in October 2020 due to strong recovery from India and continued onslaught of hurricanes in US Gulf Coast, but fell in November 2020 and December 2020 due to second wave of COVID-19 in Europe. Gasoil margins improved from September 2020 lows, amid refinery turnarounds, improvement in demand for heating during winter.

Refining margins in Q4 of 2020-21 rose to 12-month high with Singapore refining margin settling at US$ 1.79 per barrel. Naphtha margins continued to be strong throughout the quarter as offline steam cracker capacity returned from turnarounds and new steam cracking facilities started in China, boosting demand. Asian Gasoline demand recovery in January 2021 was hampered by surging cases in South East Asia and the tightening restrictions there, although the outage of 5.7 mbpd of refinery capacity and of 2.2 mbpd of Gasoline production in US due to the winter storm, boosted margins. Cold weather in Japan lent support to Jet fuel margins, where the fuel is used for heating purposes, further aided by recovery of domestic air travel in China to pre-pandemic level amid Lunar New Year holiday season. Gasoil demand in India and China remained resilient amid low daily numbers of new cases, although, waning demand for heating and a third wave of COVID-19 in Europe, pressured margins to return to US$ 5 per barrel level in March 2021. Low Sulphur Fuel oil enjoyed robust margins in Q4 of 2020-21 amid low supply due to refinery outage and soaring LNG and LPG prices, which forced utility firms in North Asia to use the fuel as alternative fuel for power generation.

Consumption of Petroleum Products

Indias petroleum product demand contracted by 9.1% in the financial year ended 31st March, 2021 the first in more than two decades, as a stringent lockdown imposed to curb the spread of the pandemic pummelled economic activity. The consumption was 194.6 MMT in 2020-21 against 214.1 MMT is 2019-20.

The petroleum product consumption in H1 of 2020-21 was heavily impacted with consumption reaching 73.9% and 88.7% of historical in first quarter and second quarter respectively. With relaxation of COVID-19 related restrictions and economic growth in positive territory, the consumption recovered in the last quarter of 2020-21 registering a growth of 2.4% over the same period in 2019-20.

During the year, Domestic LPG posted growth of 4.8% from 26.3 MMT to 27.6 MMT supported by Pradhan Mantri Garib Kalyan Yojana (PMGKY) scheme of Government of India (GOI) to provide free cylinders to the BPL households as COVID-19 relief and increased LPG consumption in houses due to lockdowns. While Naphtha sales were almost flat at 14.2 million tonnes, bitumen (used in road construction) rose 5.9% to 7.11 million tonnes as the Government stepped up construction activity to reboot the economic activities. Diesel consumption fell 12% to 72.72 million tonnes while petrol demand shrank 6.7% to

27.95 million tonnes mainly attributable to the lockdowns related restrictions on movements and its impact on economic activities. During the year, the consumption of FO (furnace oil) saw a de-growth of 4.8% mainly due to reduced demand from fertiliser and steel sectors due to lockdown. With the airlines remaining shut for the most part of the year, jet fuels (ATF) consumption fell by 54% to 3.7 MMT. Consumption of kerosene continued its decline, with de-growth of 25% over the previous year mainly due to increased substitution with LPG, leading to low household consumption of kerosene.

Outlook

Global growth is expected to recover to about 6% in 2021, on the back of expected moderation in new infections, aggressive rollout of the vaccination programme and large monetary and fiscal support. However, the uncertainty about the pandemic, further waves and possibility of new variants and its containment may pose risks to the global demand outlook.

As regards domestic economic activity, it is widely expected that the economic activity will rebound strongly in 2021-22. Rapid vaccination drive, large pent-up demand, investment-enhancing measures by the Government and better external demand provide an upside to the baseline growth path while surge in infections, new mutants and global financial market volatility pose downside risks. Going forward, rural demand is likely to remain resilient on good prospects for the agriculture sector. Urban demand and demand for contact-intensive services is also expected to strengthen with the spread of vaccination. The fiscal stimulus under AatmaNirbhar Bharat 2.0 and 3.0 schemes, increased capital outlays and the investment-enhancing proposals in the Union Budget 2021-22 will likely accelerate public investment and crowd-in private investment. While the domestic financial conditions are expected to remain supportive in view of the guidance from Government that systemic liquidity would continue to remain comfortable over the ensuing year, the risks of spill overs from volatility in global financial markets remain elevated.

Global oil demand, which plunged as much as 30% during the worst of the pandemic lockdowns in March & April 2020, has rebounded back to over 95% of the pre-COVID high by March 2021. The demand, still reeling from the effects of the pandemic, is likely to catch up with its pre-COVID levels by 2023. While the near-term recovery in global oil demand will primarily stem from transportation fuels, the petrochemical sector will dominate growth over the medium term. The demand growth is predominantly expected to come from emerging and developing economies, underpinned by rising populations and incomes. India is the third largest consumer of oil in the world and about one third of the total primary energy demand is met by oil. As Indian economy rebounds from its contraction from the previous year with recovery in industrial activities and with Government spending, fuel consumption is projected to rise. We remain focussed on delivering consistent, competitive, profitable and responsible growth through sustainable business models and leveraging new opportunities in product portfolio and geographies.

B. FINANCIAL PERFORMANCE

For the financial year 2020-21, HPCL has achieved Profit After Tax (PAT) of Rs.10,664 Crore resulting in earnings per share of Rs.70.57.

HPCL continues to command strong credit ratings assigned by various credit rating agencies as under:

Instrument Rating Agency Rating as on 31st July, 2021 Outlook as on 31st July, 2021 Remark
International Long Term Rating / USD Bond rating Moodys Baa3 Negative At par with Indias sovereign rating
International Long Term Rating / USD Bond rating Fitch BBB- Negative At par with Indias sovereign rating
Long Term Debt CRISIL AAA Stable Highest rating grade by CRISIL
Long Term Debt India Ratings AAA Stable Highest rating grade by India Ratings
Long Term Debt ICRA AAA Stable Highest rating grade by ICRA

Gross Sales

Gross sales of the Corporation (inclusive of excise duty) in the financial year 2020-21 was Rs.2,69,243 Crore as compared to

Rs.2,86,250 Crore in the financial year 2019-20. The total sale of products for the year 2020-21 was 36.59 MMT as against 39.64 MMT for the year 2019-20.

Profit Before Tax

The Corporation has earned a Profit Before Tax (PBT) of Rs.14,247 Crore in 2020-21 as compared to Rs.1,573 Crore in 2019-20.

Provision For Taxation

Net amount of Rs.3,583 Crore has been provided on account of income tax for 2020-21 as against income tax reversal of

1,065 Crore provided during 2019-20.

Profit After Tax

The Corporation has earned a Profit After Tax (PAT) of

Rs.10,664 Crore during 2020-21 as compared to Rs.2,637 Crore during 2019-20.

Depreciation And Amortisation

Depreciation for the year 2020-21 was Rs.3,553 Crore as against

3,304 Crore for the year 2019-20.

Borrowings

The Borrowings (excluding lease liabilities) of the Corporation were Rs.40,009 Crore as on 31st March, 2021 as compared to

Rs.40,528 Crore as on 31st March, 2020. Long-term borrowings were through Non-Convertible Debentures (NCDs), Foreign Currency bonds, Loans from foreign banks and Oil Industry Development Board (OIDB). Short-term borrowings during the year were mainly through short term Rupee loans from banks, Collateralized Borrowing and Lending Obligations (CBLO)/ Tri-partite Repo System (TREPS) and from Commercial papers. The long term debt (excluding lease liability) to equity ratio stands at 0.70 as on 31st March, 2021 as against 0.84 as on 31st March, 2020 and considering the overall borrowing (long-term and short-term, excluding lease liabilities) the debt equity ratio stands at 1.11 as on 31st March, 2021 as against 1.40 as on 31st March, 2020.

Capital Assets

Net fixed assets (including capital work-in-progress) increased to

Rs.74,147 Crore as on 31st March, 2021 from Rs.65,444 Crore as on 31st March, 2020.

Investments

Investments as on 31st March, 2021 were Rs.14,993 Crore as compared to Rs.12,512 Crore as on 31st March, 2020.

Gross Refining Margins (GRMs)

The Gross Refining Margin for HPCL averaged at US$ 3.86 per barrel for the year 2020-21 as against US$ 1.02 per barrel for the year 2019-20.

Gross Refining Margin of Mumbai Refinery averaged at US$ 4.10 per barrel for the year 2020-21 as against US$ 3.63 per barrel for the year 2019-20.

Gross Refining Margin of Visakh Refinery averaged at US$ 3.67 per barrel for the year 2020-21 as against US$ (1.30) per barrel for the year 2019-20.

Earnings Per Share (EPS)

Earnings Per Share for the year 2020-21 are Rs.70.57 as compared to Rs.17.31 for the year 2019-20.

Dividend

The Board of Directors have recommended final dividend of

Rs.22.75 per share for the financial year 2020-21.The amount of final dividend as recommended by the Board would result in total payout of Rs.3,227 Crore.

Key Financial Ratios

Key financial ratios for the Corporation are provided as under:

Ratio Description 2020-21 2019-20
Debtors Turnover Ratio 9 5
(No. of days)
Inventory Turnover Ratio 43 29
(No. of days)
Interest Coverage Ratio (Times) 16.57 2.45
Current Ratio 0.70 0.65
Long term Debt Equity Ratio 0.70 0.84
(excluding Lease Liabilities)

C. STRATEGY

The progress of the 5-year strategy roadmap to traverse through the uncertainties and challenges of future business environment were continued to be monitored during the year. As envisaged in the roadmap, HPCL is focussed on expanding its refineries and marketing infrastructure towards strengthening the existing business. The greenfield & brownfield refinery expansion projects are in an advanced stage of completion and are expected to be progressively commissioned from second quarter of FY 2021-22 onwards. Various marketing infrastructure expansion projects were commissioned during the year towards enhancing capacities & market reach.

Towards building a diversified and flexible business portfolio aligned with the needs of changing market, natural gas & petrochemical are recognised as new growth drivers. In Natural gas sector, HPCL/HPCL JVs are enhancing its presence with availability of the authorisation for setting up of CGD network in 20 geographical areas in nine states with planned participation in the entire value chain of Natural gas. Petrochemical is considered to be the key lever for future growth as the per capita consumption in India is low and has potential for growth. Large-scale investments are underway for building the Petrochemical manufacturing capacities through Joint Venture route to capitalise on this opportunity. The marketing strategy for petrochemicals has been formulated and the pre-marketing plan is under implementation amid changing industry dynamics, trends in demand pattern, change in global trade flows etc.

Towards enhancement of R&D capabilities, the existing R&D infrastructure is being augmented and new labs are under development. Towards developments of new products & technologies of future, HPCL is enhancing R&D capabilities along with expansion of R&D infrastructure for covering new age products & technologies. Expansion of business footprints in overseas geographies shall help in more opportunities and 6 new countries have been added in FY 2020-21 in the portfolio. The Corporation continued to leverage subsidiary company "HPCL Middle East FZCO" set up in Dubai Free Trade Zone in expanding the overseas footprints. New avenues of value creation in the EV ecosystem including battery swapping and energy storage solutions are being explored in collaboration with various technology start-ups & OEMs. Incubation of 23 start-ups by HPCL is a step towards exploration of emerging opportunities in business portfolio. HPCL is also leveraging its vast retail network for non-fuel allied businesses.

Digital technologies are fast evolving to become a key driver for business transformation and delivering value to customers. With the formulation of strategy for use of various digital technological innovations in businesses, focussed approach is being undertaken by the Corporation towards application of emerging technologies in business. The digital transformation in the organisation has been initiated with finalisation of the digital vision and strategy roadmap. Key focus themes in leveraging the emerging technologies, conversion of enterprise data into insights and streamlining of business processes etc. has been identified for implementation.

D. INTEGRATED MARGIN MANAGEMENT

Integrated Margin Management group continued with optimisation of Net Corporate Realisation (NCR) across the entire manufacturing Supply chain aligning various Strategic Business Units to a common corporate goal. For enhancing Net Corporate Realisation (NCR), various initiatives were taken in key performance areas viz., Crude thruput maximisation in refineries, leveraging margin improvement opportunities in crude oil and product sourcing, enhancing value-added products and improving capacity utilisation of cross-country pipeline network.

During peak COVID-19 lockdown period i.e., first and second quarter of 2020-21, crude processing in refineries was optimised by managing crude oil logistics as well as timely evacuation of products. Due to volatilities, continuous assessments of demands across the markets were undertaken by tracking the situations at district level in all regions. Efforts were taken to utilise the available storage capacities across the country including the option of floating storage. Pipelines pumping plans and Coastal and Rail linkages were dynamically modified for maximising product evacuation, inventory management and optimising product sourcing.

The structured initiative of the Initiative Management Office (IMO) called ‘Idea Junction to manage and execute various ideas generated across the Corporation has continued during the year. The activity gained more traction during the current year with processing of over 3,400 ideas and over 30% employee participation.

Activities towards stabilizing refinery margins with formalised hedging strategies and providing hedging solutions for crude, products and intermediates were continued during the year. Specific hedging to take advantage of market structure was also carried out to support operations and business.

E. REFINING PERFORMANCE Crude Oil Imports

HPCL imported 12.04 MMT crude oil in 2020-21 as compared to import of 13.30 MMT during the previous year and procured 4.10 MMT crude oil from indigenous sources. Out of total crude import of 12.04 MMT, 9.45 MMT was high sulphur crude oil and 2.59 MMT was low sulphur crude oil. Free on Board (FOB) cost of imported crude oil was US$ 3,891.55 Million (Rs.28,695 Crore) in 2020-21 as compared to US$ 6,018.43 Million (Rs.42,809 Crore) in the previous year. The average cost of crude oil imported in 2020-21 stood at US$ 43.32 per barrel as compared to US$ 61.34 per barrel in the previous year. The average exchange rate was Rs.73.74 per US$ in 2020-21 as compared to

71.13 per US$ in the previous year.

Refining

During 2020-21, both HPCL refineries at Mumbai and Visakh recorded sound physical performance with combined capacity utilisation of about 104% despite the constraints due to COVID-19 pandemic and reduced product demand in H1.

HPCL refineries have recorded refining thruput of 16.42 MMT in 2020-21 as compared to 17.18 MMT in previous year. Adapting continually to the unprecedented challenges from COVID-19, effective logistics management, sound crude sourcing plans and speedy evacuation of products have helped HPCL to exhibit the robust performance. Mumbai refinery achieved highest annual production of Lube Oil Base Stocks SPO 90 N, SPO-II and 150 N-II. Visakh refinery achieved highest annual production of LDO, VLSFO, MTO and JBO. New product Solvent-3275 was launched from Mumbai refinery.

Health, safety and environment form an integral part of both refineries of HPCL. Mumbai refinery has achieved best ever safety performance by clocking 30.08 million man-hours of safe operations in FY 2020-21. On the environment front, Mumbai refinery has installed a rooftop solar panel with capacity of 305 KW during the year. Mumbai refinery continues to source about 70% of its power requirement from the grid.

Reliability improvement and maximising asset utilisation has always been a priority of refineries. In this direction, HPCL ensured the time bound turnaround of existing units i.e. Propane Dewaxing Unit at Mumbai refinery and catalyst replacement of DHDS unit at Visakh refinery. In addition, trials of dewatering and sludge inhibiting chemical and corrosion inhibitor, developed by HP Green and R&D centre, were carried out during the year in Mumbai and Visakh refineries respectively.

The capacity augmentation projects at both refineries are in advanced stages of completion. Visakh Refinery Modernisation Project (VRMP) to enhance the capacity of Visakh refinery from 8.3 to 15 MMTPA is in the advanced stage of construction. Execution of Residue Upgradation Facilities (RUF) project as part of VRMP project is also progressing well at Visakh refinery. Mumbai Refinery Expansion Project (MREP) to enhance the capacity from 7.5 to 9.5 MMTPA is in advanced stage. Shutdown of Mumbai refinery is scheduled in 2021-22 for commissioning of new units along with revamp of existing production facilities. As part of the MREP project in Mumbai refinery, tankage facility with 38 Hydrocarbon tanks and 2 Firewater tanks has been mechanically completed.

Thrust on continuous performance improvement has been a key focus area of refineries. Both refineries are participating in performance benchmarking study conducted by Solomon Associates, USA, for the fifth successive bi-annual period. Both refineries have shown sustained improvement in Energy Intensity Index (EII) over last 4 cycles. Both refineries are also participating in Refinery Performance Improvement Programme (RPIP) towards process optimisation & energy consumption improvement.

Effective energy utilisation and energy conservation remains to be a priority of refineries. Consistent implementation of recommendations on energy conservation has helped refineries in achieving savings of about 27,125 SRFT/year (Standard Refinery Fuel Tonnage per year).

To further enhance product sufficiency, HPCL is setting up a new 9 MMTPA Greenfield Refinery and Petrochemical Complex at Pachpadra in Barmer District of Rajasthan through a joint venture company, HPCL Rajasthan Refinery Limited (HRRL). HRRL has achieved significant progress during the year 2020-21 in spite of several constraints posed by the COVID-19 pandemic. Engineering & Procurement activities of some of the major process units have been completed. Construction activities of major process units such as Crude Distillation Unit, Vacuum Distillation Unit, Delayed Coker Unit, Vacuum Gas Oil Hydro Treating Unit, Diesel Hydro Treating Unit, Hydrogen Generation Unit, Petro Fluidised Catalytic Cracking Unit and Dual Feed Cracker Unit etc. are in progress. In addition, construction of water reservoirs for plant use, raw water pipeline, crude pipeline to refinery, Effluent Treatment Plant, Cooling Towers, Off site jobs & Pipe Racks etc. are also in progress.

F. MARKETING PERFORMANCE

HPCL has achieved total sales volume of 36.6 MMT during FY 2020-21 with a market share of about 21.3% amongst public sector Oil Marketing Companies (OMCs). This performance was achieved against the backdrop of intense competition and demand contractions due to COVID-19 pandemic situation. In spite of the challenges, HPCL continued its operations without any disruption to ensure availability of petroleum products for essential services and public while ensuring the safety and wellbeing of its stakeholders and the workforce. The details of performance under various market business lines are as under:

Retail

In retail sales, total sales volume of 22 MMT was achieved with gain in market share in Total Motor Fuels (TMF) sales in PSU category.

A number of initiatives were undertaken during the year to enhance customer value and reach. During 2020-21, HPCL commissioned 2,158 retail outlets, which has been the highest ever in a year, taking the total retail outlets to 18,634 as of 31st March, 2021. CNG facilities were provided at 203 Retail outlets taking the total number of retail outlets with CNG facilities to 674, thereby ensuring availability of alternate fuels and offering more choices to customers. 369 numbers of Door-to-Door Mobile Dispensers were commissioned during the year to meet the requirement of select customers for getting fuel delivered at their premises. Auto LPG continues to be available at select retail outlets and Electric Vehicle (EV) charging facilities were enhanced to 84 retail outlets ensuring wider fuel choices to customers. Towards enhanced customer experience with usage of technology & integrated payment solutions, over 5,100 number of smart automated retail outlets under "Club HP Connect" brand were rolled out during the year. To increase operational efficiency & productivity, 100% automation has been ensured across the retail outlet network during the year.

To enhance the convenience of customers, faster transactions and reduced waiting time, digital modes of payment are continually being promoted at retail outlets. Integrated Payment System (IPS) with integration of Point of Sale (POS) machine with dispensing units (DUs) were installed at 6,924 retail outlets providing easy and smart payment options to the customers. To increase the adoption of digital modes of payment by customers with more choices, HPCL launched the HPCL-UBI Co-Branded contactless Rupay Credit Card with features of ‘National Common Mobility during the year. HPCL is the first amongst the Oil Marketing Companies to launch the National Common Mobility Card (NCMC) which is inter-operable across different transport systems in the country. The transactions through the unified ‘HP Pay mobile app has shown substantial increase during the year providing complete fuel management solutions to customers in the form of control, convenience, security and attractive reward points. HPCL was the first among Oil Marketing Companies to enable the usage of ‘FASTag for payments towards purchase of fuel/lubricants at retail outlets in 2020-21 thereby enhancing the digital payment options to consumers. Multiple payment options, incentives on usage of digital transactions, continued campaigns through various platforms etc. resulted in achieving over 40% payments through digital modes in Total Motor Fuels (TMF) sales as of 31st March, 2021. HPCL is actively working on the usage of technology for further expansion of business.

During the year, HPCL launched new fuel additives under brand names of ‘HP PoWer Petrol Plus and ‘HP Turbojet Diesel Plus for adding in petrol & diesel respectively to increase the variety of offerings to customers. The availability of super premium branded Petrol, ‘PoWer 99 for high-end cars and two-wheelers was scaled up by making it available at 40 outlets across 22 cities. Launching 100 numbers of branded lube oil change stations under ‘Club HP Lube Stations brand across India has enhanced the service offerings to customers. The marketing of Diesel Exhaust Fluid (DEF) in the brand name of ‘HP-DEF has been enhanced to over 60% retail outlets towards catering to the growing demand of Diesel Exhaust Fluid for usage in BS-VI vehicles. HPCL also commissioned its first bulk Diesel Exhaust Fluid dispensing facility at Ankleshwar, Gujarat offering better cost viability to truck and bus owners, as compared to packed product.

The flagship loyalty programme of HPCL ‘Drive Track Plus continues to maintain its momentum for customer retention and growth in commercial vehicles segment offering a combination of control, convenience, security and attractive rewards to fleet owners and drivers. Onboarding of major OEMs of commercial vehicles, aggregators, NBFCs, large fleet transporters, small fleet owners etc. in the ‘Drive Track Plus platform helped in garnering additional volumes during the year.

HPCL continued to focus on non-fuel business (Allied Retail Business) with a wide range of facilities for the customers across the network including ATMs, take away food counters, ‘C stores, vehicle accessories etc., through tie-ups with leading banks, food brands and Original Equipment Manufacturers (OEMs).

Continuing the Corporations commitment towards environment and sustainability, HPCL installed Stage I vapour recovery systems (VRS) at all outlets and Stage II VRS at outlets in NCR/NCT/Chembur area of Mumbai. In addition, Stage II VRS were provided in 114 retail outlets at 46 cities across India. Installation of Vapour Recovery systems makes the retail outlets more ecofriendly with reduction of polluting emissions in the atmosphere. In line with the Corporations commitment to move towards a low carbon economy, solar panels were installed at 1,146 retail outlets during the year taking the total number of retail outlets with solar power to 4,648 outlets.

The first HPCL branded retail outlet opened in Bhutan in the previous year, in collaboration with State Trade Corporation of Bhutan Limited (STCBL), has achieved the status of the highest selling retail outlet in Bhutan in 2020-21.

LPG

‘HP Gas, the LPG brand of HPCL is one of the most preferred brands among domestic and non-domestic LPG customers and serves over 8.7 Crore consumers. During 2020-21, HPCL achieved its highest ever LPG sales of 7.41 MMT, registering a growth of 5.3% over previous year.

‘HP Gas has enrolled over 22.8 lakh new customers during the year and 112 new regular LPG distributorships were commissioned taking the total number of distributors to 6,192. In April 2020, Government of India introduced the Pradhan Mantri Garib Kalyan Yojna (PMGKY) scheme giving free LPG refills to PMUY beneficiaries (3 per beneficiary) to mitigate the hardships faced by the BPL households due to the economic disruption caused by the global pandemic. As of 31st March, 2021, total 3.81 Crore refills were delivered to the beneficiaries by HPCL under the scheme.

Towards enhancing the number of offerings to consumers and value creation, HPCL launched the high performance branded LPG ‘HP GAS FLAME PLUS for its Commercial and Industrial customers in 2020-21. The product offers quicker heating, reduced gas consumption, reduced process time and savings to customers. HPCL also sustained its focus in the Free Trade LPG (FTL) segment to meet the needs of consumers, especially the small vendors & young professionals. In this category, over 3 million ‘APPU cylinders in package sizes of 5kg and 2kg were sold during the year and achieved market share of over 45% in this highly competitive segment.

To increase the adoption of digital modes of payments for refill booking and towards better customer convenience, ‘HP Gas refill booking and payment was made available on AMAZON and via its voice-assistant ALEXA. New services and features were integrated in ‘HP PAY app and ‘HP GAS Vitran app for customer value maximisation. These customer-centric initiatives helped ‘HP Gas in recording the highest ever digital transaction of over 25% in March 2021.

Numerous initiatives were undertaken during the year to enhance the use of technology, innovation and digitalisation towards improving the productivity in bottling operations. Industry first, fully automated skid mounted facility has been commissioned for bottling 5kg cylinders at Usar LPG plant. The highest ever LPG bottling of 7.2 MMT has been achieved during the year on the back of various productivity enhancement initiatives implemented in LPG plants across the country. For the reduction of logistic cost, one new LPG rake was commissioned during the year under the Liberalised Wagon Investment Scheme of railways.

HPCL continued its focus on augmenting the bottling capacity in tandem with growing LPG demand. HPCL commissioned the master godown for storage of 36,600 LPG cylinders in Leh. The facility will strengthen HPCLs endeavour to provide uninterrupted supplies of LPG especially during winters when Leh gets cut off from the rest of the country. Towards enhancement of LPG bottling capacities to meet the increasing market demand, construction of the 51st LPG plant of the Corporation at Rayagada in the state of Odisha with bottling capacity of

60 TMTPA has been completed. LPG bottling capacity augmentation projects were completed and commissioned in Gandhinagar, Jabalpur, Bahadurgarh, Yediyur and Pampore LPG Bottling Plants with total capacity addition of 270 TMTPA during the year. Mounded storage vessels and allied facilities were commissioned at Unnao LPG bottling plant enhancing the storage capacity to 1,500 MT. Projects of setting up of new LPG bottling plants at Gonda (Uttar Pradesh), Goalpara (Assam), Barhi (Jharkhand), Patalganga (Maharashtra), Abu Road (Rajasthan) and Sitarganj (Uttarakhand) are under progress for enhancing the bottling capacities by 630 TMTPA.

To promote sustainable development and carbon footprint reduction, HPCL implemented secondary realignment in packed cylinder movement resulting in reduction of 82.45 lakh kilometres of truck movement. The operation of newly commissioned Champaran LPG plant during the year resulted in an additional reduction of 8.27 lakh kilometres of truck movement. In addition, various sustainability initiatives such as tree plantations, rainwater harvesting systems etc. were implemented at various LPG plants.

Lubricants

The Indian lubricant market is one of the fastest growing markets in the world and third largest in terms of consumption. The total demand for finished lubricants is estimated to be about 2,500 TMT and process oils contribute to about one third of this demand.

HPCL recorded overall sales volume of over 600 TMT during the year retaining our market leadership position for eighth year in a row. On the back of multiple offerings and service capabilities by the Corporation, highest ever sales of value-added lubes of 545 TMT was achieved during the year representing a growth of 6% over historical. HPCL exported 14.8 TMT of Lubricants to 16 countries and enhanced its footprints in six new countries during the year.

HPCL remains the largest producer of base oils in the country with capability of producing Group I, Group II and III base oils. HPCL is effectively leveraging the production capacities of base oil in terms of flexibility in manufacturing a wide range of products at lube blending plants. HPCL continues to improve operational efficiencies at lube blending plants with infrastructure augmentation, automation and with various other innovative solutions. For further strengthening of the marketing channels and widening the geographic reach and market presence, over 50 new channel partners were added during the year through online mode in the pandemic situation.

During 2020-21, HPCL continued to put strong focus on its customers from core sectors and OEMs, further consolidating its business with improved participation and renewal of partnerships. The business continues to be benefited immensely from the close interactions between OEM and R&D teams of HPCL with stakeholders acknowledging the strengths and capabilities of HPCL. Towards enhancing customer loyalty and getting valuable customer insights, HPCL continued its engagements with customers during the year. Over 300 technical seminars / conferences with more than 3,500 participations were conducted during the year with extensive usage of digital platforms.

During the year, HPCL gave further impetus in marketing of the lubricants and specific products for BS-VI compliant engines. The commercial production and sales of Diesel Exhaust Fluid (DEF) was scaled up with sales crossing 12.5 TMT during the year, sold majorly through our wide network of retail outlets. Continued focus on the automotive segments for past few years, especially in the 4 stroke engine oil lubricants segment helped HPCL to register double digit growth in 2020-21 in motorcycle engine oil segment with the backing of ‘RACER brand of lubricants along with other products.

During the year, Lube R&D continued to play an innovative and proactive role with developments of new products for Government and private sector customers. Close interaction with Army, Air Force and other agencies enabled a number of approvals for new products. Fully equipped laboratories for testing of various petroleum products across the country enable HPCL to maintain high standards of product quality.

Direct Sales (Industrial & Consumer sales)

HPCLs Industrial and Consumer (I&C) business-line handles the institutional sales of fuels, bitumen, naphtha and other bulk products consumed by industries, mining, construction, power plants, shipping, etc. in both private and Government sectors and also carries out exports of these products to various overseas markets.

During 2020-21, HPCLs Industrial and Consumer (I&C) business line recorded overall sales of about 4.8 MMT in spite of business slowdown due to restrictions / lockdown related to COVID-19. The strategy of maximising volumes in three focus products helped HPCL to cross 1 MMT sales volume in Furnace Oil (FO), Diesel and Bitumen individually for the sixth consecutive year. Highest-ever sales in LDO, Mineral Turpentine Oil (MTO) and Jute Batching Oil (JBO) were achieved during the year.

Large and strategic key accounts play a pivotal role in growth of I&C business. HPCL supplies bulk Diesel to various public and private entities, including Indian Railways, State Transport Undertakings (STUs), defence units and industrial consumers. The focus on major road construction companies with long-term partnerships have contributed to enhanced sales in 2020-21. HPCL also caters to the fuel requirements of army and paramilitary forces such as BSF, ITBP, SSB, CRPF and Border Roads Organisation (BRO) for supply of fuels and bitumen, delivering products to even their most-remote locations. HPCL is committed to strengthen its relations with the key accounts through various customer-centric initiatives. Customer Relationship Management (CRM) tool has been fully rolled out during the year which helped in facilitating quicker and more efficient responses to customer leads and offering better customer experience.

Special focus has been maintained in retention of existing business and solicitation of new customers in the MSME sector to sustain growth in all product lines. HPCL continued to generate interest for its niche specialty products developed by its HP Green R&D Centre such as HP-FurnOKare (for descaling and maintenance of furnaces), HP CORRMIT (Corrosion Inhibitor), HP DLA (Diesel Lubricity Additive) etc.

Infrastructure remains to be a key strength of HPCL in delivering products at competitive prices to the consumers. HPCL could move various grades of Bitumen to its bulk storage facilities at Haldia and Chennai at optimal cost leveraging its chartered coastal vessels infrastructure. HPCL also made strong inroads in the bitumen market of North India by leveraging HMEL bitumen facility at Bathinda. HPCL launched branded bitumen in the name and style of HP BITUMEN VG-40 SUPER suitable for airport runway pavements & heavy-duty highways.

HPCL is also exporting products like FO, Bitumen, Hexane, JBO and MTO.

Aviation

HPCL supplies Aviation Turbine Fuel (ATF) to both domestic and international airline customers through its business unit, ‘HP Aviation having a countrywide network of Aviation Fuelling Stations called as Aviation Service Facility (ASF). ‘HP Aviation fuelling service meets the stringent International regulations for handling ATF. During 2020-21, HPCL achieved ATF sales volume of 398 TMT.

Aviation fuel network was strengthened with commissioning of new ASFs at Shirdi & Kurnool during the year. Currently HP Aviation operates 46 ASFs across the country to meet the fuel requirements of customers across the country. During the peak of pandemic, HPCL ensured round the clock refuelling service at various airports attending to rescue, emergency, repatriation and medical flights on 24x7 basis.

HP Aviation continues to be an important ATF supplier to major domestic, international customers and other scheduled and non-scheduled airline operators.

Natural Gas

Govt of India is taking various initiatives to make India a gas-based economy by increasing the share of Natural Gas in overall Energy Basket. HPCL has also undertaken several initiatives to expand its presence in the Natural Gas sector by increasing footprints in the midstream and downstream gas market in India.

HPCL is operating City Gas Distribution (CGD) networks in

8 Geographical Areas (GAs) in the states of Andhra Pradesh, Telangana and Madhya Pradesh through Joint Venture companies Aavantika Gas Limited (AGL), Bhagyanagar Gas Limited (BGL) and Godavari Gas Pvt. Limited (GGPL). HPCL is also operating a CNG network in Ahmedabad on a standalone basis.

Towards further enhancement of the presence in the sector, HPCL is setting up CGD networks in 10 GAs in the states of Haryana, Uttar Pradesh, Uttarakhand and West Bengal on a standalone basis. In addition, HPCL is setting up CGD networks in GAs of Ambala - Kurukshetra (Haryana) and Kolhapur (Maharashtra) districts through joint venture company HPOIL Gas Pvt. Limited (HOGPL). During the year, 51 new CNG Stations were commissioned in these 10 GAs. During the year, CNG facilities were provided at 203 retail outlets making the total number of retail outlets with CNG facilities to 674.

To further the presence in the Natural Gas market, HPCL commenced the import of LNG from the International Market during the year. HPCL also secured allocation of gas produced from non-regulated fields (marketing freedom gas) and thereby securing natural gas supplies for domestic marketing. HPCL commenced its gas marketing activities during the year by supplying Natural Gas to Industrial Customers.

To participate in the entire value chain of Natural Gas including sourcing & marketing, HPCL is building a 5 MMTPA LNG regasification terminal at Chhara port (Gir Somnath District) in Gujarat through JV Company HPCL Shapoorji Energy Pvt. Ltd. (HSEPL). During the year, HPCL has acquired 50% equity from SPPPL (SP Ports Pvt. Ltd.) resulting in HSEPL becoming 100% subsidiary of HPCL. Construction of the terminal is in progress.

HPCL is also participating in development of three cross-country natural gas pipelines (Mehsana to Bathinda, Bathinda to Srinagar and Mallavaram to Bhilwara) through Joint Venture companies viz. GSPL India Gasnet Limited (GIGL) and GSPL India Transco Limited (GITL).

The details of the various Joint venture companies & subsidiaries for natural gas infrastructure & marketing has been provided in the section on ‘Joint Venture Companies & Subsidiaries.

Supplies, Operations & Distribution

Supplies, Operations and Distribution (SOD) continued to play the pivotal role in maintaining a robust supply chain management and seamless product movement from supply source to the end consumer in stipulated time in spite of challenges during the pandemic outbreak. SOD achieved thruput of 47.3 MMT and maintained uninterrupted supplies of petroleum products from refineries to oil installations / consumers spread across the country. Robust control and monitoring systems at operating locations with strict adherence to SOPs ensured safe operations during the year. HPCL conducted regular HSSE workshops, safety talks, dissemination of Information on best practices etc. to ensure collaborative learnings and enhanced safety culture in the Corporation.

HPCL has constantly leveraged technology and digitisation towards optimisation of resources and enhancement of efficiency & security. During the year, a centralised biometric access control system has been commissioned at 40 locations with contact less features. During the year, HPCL added 18 more locations as ‘SMART terminals with automation & seamless integration of various processes resulting in enhanced operational and cost efficiency, safety and stakeholder convenience. Total number of ‘SMART terminals stands at 50 as of 31st March, 2021.

HPCL continues to lay strong thrust on environment preservation. Towards prevention of release of Volatile Organic Compounds (VOC) to atmosphere and for complying with regulations, Vapour Recovery Units (VRU) were commissioned at 13 POL locations during the year taking the total number to 19 locations as of 31st March, 2021.

Pipelines & Projects

HPCL is currently operating a petroleum product pipeline network of 3,775 km with mainline capacity of 32.55 MMTPA and branch line capacity of 15.57 MMTPA. During 2020-21, total pipeline thruput of 19.1 MMT was recorded. HPCL achieved a thruput of 1.5 MMT in its LPG pipelines, registering a robust 38% growth.

To further expand the pipeline network and capacities for enhanced logistic efficiencies and the associated environmental benefits, a number of pipeline projects are under execution with an estimated investment of about Rs.6,000 Crore. HPCLs major ongoing pipeline infrastructure projects include

(i) Extension of VVSPL from Vijayawada to Dharmapuri and construction of marketing terminal at Dharmapuri

(ii) Hassan Cherlapally LPG Pipeline and

(iii) Barmer Palanpur Pipeline. These pipeline projects are expected to increase HPCLs pipeline capacity to over 41 MMTPA and network length to about 5,300 kilometres thus significantly strengthening HPCLs position in key markets. HPCL has also teamed up with IOCL and BPCL in development of Indias longest LPG pipeline from Kandla to Gorakhpur (2,757 km) through joint venture route.

Energy efficiency and cost optimisation have been key focus areas for pipeline operations. With sustained efforts towards efficiency and conservation, the Specific Energy Consumption in pipeline operations has been significantly reduced during the year. On the back of various cost optimisation initiatives implemented during the year, HPCL has improved performance on the Solomon Global Benchmarking of Manageable Non Volume Expenditure (MNVE) in Indian Pipelines average performance and is in top quartile.

To leverage technology for enhanced productivity and Safety in pipeline operations, OFC (Optical Fibre Cable) based Pipeline Intrusion Detection System (PIDS) was implemented in 169 Km of Pipeline Network during the year, taking the total length of pipeline covered by PIDS to 3,716 km.

During 2020-21, supply infrastructure was further strengthened with addition of Madurai Railway Siding facility. This facility will ensure uninterrupted supply of products through rail movement to Madurai Depot, which caters to the demand of POL Products in and around 8 districts of Tamil Nadu. In addition, Hissar POL Depot in state of Haryana was mechanically completed and commissioning activities are in progress. To ensure enhanced storage capacities and product availability to meet the market demand, additional 84.34 TKL of Tankage were added during the year at various locations.

G. RESEARCH AND DEVELOPMENT

Hindustan Petroleum Green Research & Development Centre (HPGRDC) has been set up with an objective to provide advanced technological support to Marketing SBUs and Refineries. HPGRDC aims to provide operational excellence, develop and adopt innovative, path breaking technologies and to become a knowledge hub. The research centre is provided with state-of-the-art infrastructure facilities comprising energy efficient green buildings with built-up area of 3 lakh square feet in a sprawling campus of 120 acres. The Phase-I of the research centre is set up with nine laboratories and the Phase-II of research centre is under construction for seven new laboratories. During 2020-21, construction of Petrochemicals and Polymers Lab, Lubes Research Lab, Corrosions Studies Lab and Green Hydrogen Generators with PEM electrolyser were completed as part of Phase II project.

During 2020-21, nine products / technologies were developed and launched. The key products and technologies developed include

i) HP Gas Flame Plus (Additive for improving LPG efficiency)

ii) HP DEWA (Crude Dewatering Additive)

iii) HP DWA (Dewaxing Aid) iv) HP THERMOPRO D (Antifoulant formulation for DHDS units)

v) HP FilmMax (Film forming amine formulation for CDU / VDU)

vi) HP FilmMax HT (Film forming amine formulation for Hydrotreaters),

vii) HP DEMU (Demulsifier formulation for crude desalter).

During the year 2020-21, HPGRDC filed 28 patents taking the cumulative Indian and International Patent applications to 287. During the year, 44 patents were granted to HPGRDC taking the cumulative patents granted to 90 as on 31st March, 2021. During the year, 8 HPGRDC papers were published in various international journals.

H. CENTRAL PROCUREMENT

Central Procurement Organisation (CPO) at HPCL has enhanced standardisation, efficiency and transparency ensuring policy compliances in handling procurement for various SBUs on a centralised basis. CPO ensures adoption of various Government directives/policies to strengthen the ecosystem for MSMEs and promote indigenisation of products and services. It has also helped in effective vendor management.

CPO has actively driven various initiatives undertaken by Government of India to strengthen the ecosystem for MSEs in the country. Procurement for commonly used goods and services through GeM (Government e-Marketplace) was encouraged. The concerted efforts to on-board MSE vendors under TReDS (Trade Receivable Discounting System) resulted in vendor invoices of Rs.162.88 Crore being discounted through the platform.

I. QUALITY ASSURANCE

In line with the directive of the Ministry of Petroleum & Natural Gas (MoP&NG), HPCL has a dedicated Quality Assurance (QA) cell with officers posted in all the zones and its functioning is independent of refining & marketing functions. QA cell carries out surprise inspections covering retail outlets, Kerosene (PDS) distributorships, LPG distributorships, supply locations in compliance with the revised Marketing Discipline Guidelines (MDG) & HQO directives.

During 2020-21, Quality Assurance (QA) cell carried out inspections at 2,096 retail outlets, 13 Kerosene (PDS) distributorships, 254 LPG distributorships and 10 LPG bottling plants. Establishment of robust QA systems has enabled HPCL set high customer service benchmarks for supply locations & channel partners and helped provide high quality products and services to customers.

J. INFORMATION TECHNOLOGY & DIGITAL INITIATIVES

Business processes at HPCL are effectively managed by Enterprise Resource Planning (ERP) system and a large number of other applications including workflow applications and portals to address specific requirements. A robust IT infrastructure has been put in place to support the same with adequate security and data integrity controls.

The year 2020-21 has been impacted by COVID-19 pandemic affecting the regular working in various operating locations & plants due to lockdown restrictions imposed to contain the pandemic. Significant technology solutions were implemented in 2020-21, ensuring employees can work seamlessly from remote locations / home to ensure business continuity including provisions for virtual meeting, upgradation of existing IS infrastructure, acquisition of licences etc.

To enhance business efficiency with standardisation, inter-operability and auto reporting of invoices into GST return, provision for generation of electronic invoice (‘e-invoice) with printing of Invoice Reference Number (IRN) embedded in

QR code was implemented by integrating HPCL ERP system with that of GSTN system. For convenience of vendors, HPCL bill tracking system (BTS) was modified to enable vendors to upload e-invoice with valid IRN embedded in QR code. Vendors were also enabled to upload a digitally signed invoice thus eliminating requirement of submission of paper invoice.

Information security continues to be a key focus area of HPCL. HPCL implemented advanced security solutions to accurately identify Advanced Persistent Threat (APT) attacks to protect core information assets. Stringent security controls were put in place during the year to ensure data privacy.

ERP Modernisation

The project of modernisation of the existing ERP system is being undertaken in the organisation towards greater business flexibility, higher digital agility and enhanced efficiencies. The ERP modernisation project is gaining momentum with procurement of software solutions during the year.

Digital Initiatives

In order to leverage new-age technologies like Analytics, Artificial Intelligence (AI), Internet of Things (IoT), Machine Learning, Augmented & Virtual Reality (AR & VR) etc., HPCL has embarked upon a Digital Transformation exercise and various initiatives are under implementation.

K. HEALTH, SAFETY & ENVIRONMENT

HPCL conducts the business with strong focus on Health, Safety & Environment (HSE) aspects of the operations and with robust Sustainability Development (SD) Model and Framework. Safe operations and implementation of health and environmental initiatives continue to be at the core of all business activities. HPCL has been making continuous improvements in the systems and procedures to enhance HSE performance across all spheres of business activities. Monitoring of various processes, audits at regular intervals and application of learning form an integral part of HPCLs HSE system for identification and implementation of opportunities for improvement.

Health

Employees health and wellbeing is paramount for HPCL. The Corporation undertakes various initiatives on a regular basis to ensure preventive and curative health services for employees. HPCL organises several health education programmes, awareness sessions and diagnostic camps for employees, their families and other stakeholders. The year 2020-21 was impacted by COVID-19 pandemic. HPCL has taken all actions towards ensuring the health and wellbeing of employees / stakeholders including work from home arrangements for employees, sanitisation of premises, ensuring mandatory checks on COVID-19, conducting awareness sessions about COVID-19, distribution of masks & PPE kits, diligent implementation of guidelines issued by authorities from time to time etc. HPCL has taken steps for vaccination of employees, contract workmen, drivers, dealer men, delivery men etc.

In the wake of the outbreak of the pandemic worldwide, locations conducted numerous programmes to raise awareness on general precautions, mandatory guidelines, treatment and myths around the prevention and spread of COVID-19 apart from streamlining workforce allocation and work-from-home arrangements to ensure uninterrupted business operations.

Safety

HPCL emphasises providing safety in all facets of operation to its employees and all stakeholders. To achieve the goal of ‘Zero accident and ‘Zero damage to the environment, stringent HSE management systems have been put in place across all locations to strengthen HSE governance and compliance through surveillance audits and benchmarking. Risk management systems are in place to identify potential risks and protective measures to minimise incidents. HPCL strives for continuous learning from industry incidents and upgrades systems by leveraging information technology. To ensure safe working across all locations & construction sites, governance practices of the safety systems & procedures of the critical processes are regularly monitored. At major projects sites, dedicated safety teams are monitoring the safety aspects during construction to ensure focussed attention to safety.

Environment

To achieve environmental stewardship, HPCL is adopting best-in-class operating systems, practices, technologies and procedures oriented towards environmental preservation. Major installations have adopted Environment Management Systems (EMS) to ensure continuous improvement in environment protection.

HPCL has state-of-the-art Effluent Treatment Plants for treating and recycling effluent water. Best-in-class technologies such as Volatile Organic Compound (VOC) monitoring and Leak Detection and Repair (LDAR) programme have been adopted for monitoring and controlling fugitive emissions at major installations. Gaseous emissions to the environment and ambient air quality are continuously monitored with the usage of latest technologies including real-time data transfer to regulatory agencies in major locations. Hazardous waste treatment and disposal systems are available at various locations in line with the best practices in industry. Environment awareness programmes are regularly conducted in the Corporation towards traction to sustainability in all facets of business.

Sustainable Development

HPCL is committed to achieve the economic, ecological and social responsibility objectives of sustainable development consistently in all operations and activities. The refineries and major marketing locations have implemented internationally accepted ‘Environmental Management Systems based on ISO-14001 Standards. With a focus on greening the operations, both refineries and marketing locations are focussed on implementation of sustainability initiatives leading to energy efficiency, water conservation, rainwater harvesting, reuse and recycling of effluents, monitoring and mitigation of GHG emissions etc. During 2020-21, Confederation of Indian Industry (CII) conducted a comprehensive rating assessment based on various sustainability parameters at two marketing locations of HPCL and the locations were certified with Platinum and Gold ‘Green Co Ratings. This has taken the total number of ‘Green Co certified HPCL locations to nine as of 31st March, 2021. All capability building initiatives towards sustainability such as training programmes, awareness sessions, sustainability quizzes, newsletters and technical bulletins were continued to enhance awareness on sustainability.

Renewable Energy

HPCL is leveraging Renewable energy sources to reduce the carbon footprints and electricity cost across the value chain and is continuously expanding the wind and solar power generation capacities. During 2020-21, HPCL has installed captive solar power capacity of 11.4 MWp across various locations, taking the total solar power capacity to 43.95 MWp as of 31st March, 2021.

HPCL has also set up wind power capacity of 100.90 MW which generated about 17.05 Crore kWh of electricity during 2020-21.

Bio Fuels

Government of India, through the National Policy on Biofuels-2018, aims to increase usage of biofuels in transportation sector towards energy security and climate change mitigation. In line with the policy, HPCL continues to give emphasis in environment protection, sustainability measures and reduction in Green House Gases (GHG) emissions with promotion of bio-fuels. During 2020-21, HPCL achieved Ethanol blending of 6.18% by blending 58.84 Crore litres of Ethanol in Motor Spirit (MS). In addition, HPCL recorded blending of 4.1 Crore litres of Biodiesel during the year.

To have a footprint in alternate fuels in transportation sector, HPCL is actively participating in Government of Indias SATAT (Sustainable Alternative Towards Affordable Transportation) initiative for promotion of Compressed Bio Gas (CBG). HPCL had invited Expression of Interest (EOI) from potential investors and entrepreneurs for setting up CBG plants and offering CBG to

HPCL for marketing through the Retail Network. During 2020-21, HPCL released Letters of Intent (LOIs) for setting up of 100 CBG plants with estimated production capacity of 232 TMTPA taking total LOIs to 151 numbers with capacity of 307 TMTPA.

HPCL is constructing a Second Generation Ethanol bio refinery at Bathinda, Punjab with 100 KL per day ethanol production capacity from biomass. The technology licensor for the project has been appointed and fabrication of various equipment are in progress. HPCL is also setting up a Compressed Biogas (CBG) plant of 15 MT/day capacity at Badaun, Uttar Pradesh. CBG produced from the Plant shall be sold through HPCL retail outlets.

L. GOVERNANCE

Corporate Governance

A separate segment on corporate governance forms part of the annual report. However, it would be relevant to point out here that the Corporation is giving utmost importance to compliance with corporate governance requirements including compliance of regulations, transparent management processes and adherence to both internal and external value norms. HPCL has implemented a robust grievance redressal mechanism.

Internal Control Processes

The Corporation has an independent Internal Audit department. The Internal Audit department consists of professionally qualified officers from finance and technical functions, supplementing the internal control processes through an extensive audit programme. The internal audits are carried out across all the spheres of business operations of HPCL to review the implementation of business processes and control. Internal audits are carried out as per the annual audit programme approved by the Audit Committee of the Board and significant audit observations are periodically reviewed by the Audit Committee of the Board.

Risk Management

While agility and adaptability remain the cornerstones to evolve and align to tomorrows world, businesses at HPCL are synchronising with Enterprise Risk Management (ERM) processes to facilitate achievement of its business strategies and provide guidance to daily operations. HPCL has deployed an optimised mix of the bottom-up and top-down approach to gather robust risk insights covering Strategic Business Units (SBUs), functions and projects. Risk considerations are embedded into the rhythm of the business, including the strategic business planning process, resulting in risk-informed initiatives and programmes.

This process is further strengthened by a digital IT platform that provides an enterprise-wide view of risks and mitigation plan that enables the Corporation to take a holistic approach towards informed decision-making. The Digital platform enables receipt of continuous risk insights through monitoring of key parameters. It allows gathering insights on proactive risk-health triggers and reduces performance variability through prompt action rather than receiving ex post facto risk information.

Risk Management Steering Committee (RMSC) continues to provide direction and guidance to the operating management. The risk registers and risk profiles are regularly reviewed by RMSC to identify emerging risks and monitor the progress of implementation of various mitigation steps. The RMSC shares regular updates with the Board regarding all aspects of risk management. RMSC besides reviewing the risk reports on a periodical basis also encourage businesses to foresee risks in advance, which when managed well, can contribute to risk enablement and sustainable growth.

Integrity Pact

HPCL has signed MoU with ‘Transparency International and has implemented the Integrity Pact with effect from 1st September, 2007. The Integrity Pact is an integral part of procurement process for all tenders above Rs.1 Crore. The Corporation has complied with ‘Integrity Pact (IP) to enhance ethics and transparency in the process of awarding contracts.

Right to Information (RTI)

HPCL is a Public Authority under the RTI Act 2005 and complies with all the requirements of the Right to Information Act 2005. HPCL receives and handles RTI requests through the RTI online portal at www.rtionline.gov.in , which is the unified RTI portal of the Government of India. Regional Managers/Officers across the country, representing different departments have been appointed as Central Public Information Officers (CPIOs) and Senior Management as the First Appellate Authorities (FAAs) to handle the RTI requests received from Indian Citizens. The requirements of the RTI Act 2005 are duly complied with, including related proactive disclosures.

Vigilance

Vigilance mechanism in HPCL is based on the guidelines from Central Vigilance Commission (CVC) on vigilance management in public sector enterprises and instructions issued from time to time by the Department of Personnel and Training (DoPT) as well as the administrative ministry i.e. Ministry of Petroleum

& Natural Gas (MoP&NG). Vigilance complaints are handled as per the complaint handling policies stipulated in Vigilance Manual 2017 of CVC.

Under preventive vigilance, various activities are conducted by HPCL including surprise and regular inspections, study of systems & procedures and regular interaction with employees, stakeholders & public at large. In addition, Vigilance Department also undertakes initiatives for creating public awareness by conducting active interactive sessions in schools & colleges, promoting ethical values & sharing case studies with employees through in-house Vigilance publication ‘Jagaran and observing vigilance awareness week every year.

Global Compact

HPCL is also a member of the Global Compact Society of India, which is the unit of the UN Global Compact, the largest voluntary corporate initiatives in the world. It offers a unique platform to engage companies in responsible business behaviour through the principles of Human Rights, Labour Standards, Environmental norms and Ethical practices. All these areas receive constant attention of the management to ensure continuous compliance.

M. HUMAN RESOURCE MANAGEMENT

HPCL recognises the value of Human Resources in delivering accelerated performance and contributing to the growth of the organisation. Human Resources activities are aimed at creating a conducive environment for employees to thrive and help them deliver excellence in their respective areas. Guided by the vision and overall strategy of HPCL, the focus is to build an agile and future-ready workforce by establishing strong linkages between employees, processes and organisational values.

The year 2020-21 was impacted by the pandemic. HPCL embraced the various changes in human resource management system including recruitments through online systems, provision and support for employees to work from home, ensuring health & safety of employees in the pandemic situation etc., with active use of technology to ensure continuity in business & operations towards delivering value to customers.

With development and implementation of SOPs, sanitisation & hygiene drives were regularly undertaken at operating locations, administrative offices, transit houses etc. An initiative, christened as ‘Sachet was introduced for HPCL employees, their families and other stakeholders to be mindful and conscious in current COVID-19 times. Several webinars for awareness on COVID-19 and vaccination drive were conducted under the initiatives for existing and retired employees during the year. Project named as ‘Humrahee was launched in August 2020 in which virtual group sessions moderated by psychologists and life coaches, giving a platform for employees to share their learnings, concerns, fears, insights, experiences related to COVID-19 in the spirit of providing mutual support and caring. Being an essential services category, tie-ups were made with various hospitals to get the employees vaccinated across locations.

To ensure the welfare of the frontline COVID-19 warriors viz. contract labourers, LPG deliverymen, Retail Outlet Forecourt Salesmen, transport crew, security guards etc., special medical insurance scheme, group personal accident insurance scheme and special Ex-Gratia scheme were implemented during the year. Towards creation of awareness about the pandemic among all stakeholders, sessions were conducted covering a wide range of subjects such as mental wellbeing, precautions against the pandemic, vaccination and precautions during travelling etc.

Talent Acquisition and Management

During 2020-21, HPCL has successfully revamped the online application and document verification system and incorporated advanced features with greater efficiency and transparency in view of COVID-19 situation. To streamline the recruitment process and bring in uniformity, the information to the candidates were captured in audio-visual form and presented to candidates.

The flagship induction programme, ‘Samavesh was continued during the year for on-boarding of new recruits by facilitating their smooth transition to HPCLs culture and values and providing them exposure to various spheres of HPCLs business activities. The programmes were conducted online in view of COVID-19.

Capability Building

Towards creation of value for business functions through progressive learnings and building capabilities of employees, a wide array of multi-modal learning and development programmes were offered to the employees during the year. Adaptive learning strategies were implemented with delivery of custom learning experience that addresses the unique needs of each employee with introduction of publishing weekly digest of training modules, facility for self-nominations and availability of multimodal learning systems etc. In view of the COVID-19 restrictions, the digital learning systems has been extensively used during the year with usage of e-learning, virtual reality learning, webinars, simulations etc. A total of 41,322 man-days of training was imparted to management employees through various capability building interventions during 2020-21, which translated to around 7 training man-days per officer.

HP Academy

The e-learning platform, ‘HP Academy, containing online modules with learning content for all marketing SBUs and refineries continued to grow, covering more than 70% of employees. Bite-sized learning modules were introduced in the platform towards delivering training in smaller chunks for making the learning easy and at the convenience of employees depending on work priorities. Digital Libraries, EBSCO and Magzter continue to be available on ‘HP Academy platform hosting a collection of scientific journals, eBooks, business magazines, audio books and a wide range of online reading materials. The platform hosts over 1,800 hrs of learning content including over 350 technical and behavioural online courses and inspirational videos.

Tie-ups with Academic Institutes

HPCL collaborated with Prominent / Centre of Excellence Institutes including various IIMs, XLRI Jamshedpur, Indian Institute of Foreign Trade, IIT Bombay, etc. for long, medium and short duration Management Development Programmes to build Technical and Behavioural Capabilities of young officers. Total 318 officers of HPCL have undergone training in these reputed institutes in 2020-21. To enhance the technical competencies of the refinery officers, impartation of full time M. Tech. programme in Chemical Engineering at IIT Bombay were continued.

Performance Management

HPCL has a robust performance management system for objective assessment, career progression and development of individuals based on Balanced Score Card Methodology.

Reward & Recognition

"HP Outstanding Achievers Awards" have been instituted to recognise the outstanding achievements of officers in the junior management category. During 2020-21, 60 officers were recognised with Outstanding Achievers Award.

"HP Gaurav Awards" recognises outstanding efforts, sustained excellence in work, commitment, adherence to safety measures and adherence to high standards of conduct in discharge of duties amongst Non-Executive category of employees. During 2020-21, 101 employees were felicitated with HP Gaurav Award.

Industrial Harmony

HPCL takes pride in having cordial and productive relations with Unions for more than two decades. The effective grievance management system, fairness & emphasis on transparency, has resulted in alignment of Unions & employees to the Corporations vision.

Harmonious industrial relations have been sustained through continual and proactive engagement with different unions. Nineteen settlements with different unions were signed during the year on productivity, redeployment, commencement of new shifts etc. and have been implemented within record timelines.

Employee Engagement Initiatives

Employee engagement initiatives are conducted with the objective of creating an enabling, participative, nurturing & winning work culture at HPCL and for reaching out to the families of the employees to build a stronger bond with the HP Family. Towards this objective, various programmes were conducted in 2020-21 with the active use of ‘HP Pariwar App including clay-modelling workshops, workshop on mandala art, fitness & workout sessions, science education programmes etc. HPCL collaborated with worlds one of the largest online fitness and nutrition communities to promote ‘Fit India Movement across the Corporation with a view to make fitness an integral part of daily lives. An online app based competition cum series of total 18 online training sessions were conducted during the year under this programme.

‘Reboot@35+ was undertaken for officers in the age group of 35 to 50 years focussed on self-development in personal, professional, family and social domains with mindfulness as its core theme. Team ‘Reboot@35+ launched the first-ever All India Mega Talent Hunt -‘HP Got Talent to showcase the abundant talent of our HP Family in 2020-21.

Employees & their family members continue to contribute and create a positive impact in society through ‘HP Sampark platform. The platform enables the employees and families of HPCL to serve the community voluntarily by donating their time and expertise. During 2020-21, ‘HP Sampark in collaboration with an NGO started a campaign for providing ration kits for one month for the benefit of tribal children. Over 2,200 tribal families were benefited from the programme in 2020-21.

A 24x7 Employee Assistance Programme (EAP), ‘Paramarsh was continued during the year to provide counselling services to employees, their spouses, and dependent children.

The ‘HP Shakti Club endeavours to bring the female force of HP Family together to create friendships & joyful moments and give back to the society through philanthropic and social initiatives. The Club has undertaken over 120 initiatives during the year including mask distribution, health camps, COVID-19 awareness drives, donation to the needy & deprived in the society etc. touching more than 20,000 lives.

Prevention of Sexual Harassment at Workplace (POSH)

To inculcate appropriate workplace behaviour and promote gender sensitisation, a number of online POSH workshops were organised across the Corporation during 2020-21. Internal Complaint Committees (ICC) were also reconstituted for marketing zones and refineries in view of the reassignment, superannuation, separation or completion of 3 years as a member.

SC/ST Welfare Programmes

During the year, welfare initiatives designed for the SC/ST/OBC communities were undertaken, which included online sessions by All India HP SC/ST Employees Welfare Association (HPSEWA) on various subjects. Awareness Drive on Indian constitution through lectures, knowledge bites, quizzes were organised to mark 71 years of Indian Constitution.

Promotion of Sports Activities

HPCL plays a significant role in promotion of sports and regularly participates in various tournaments organised under the aegis of Petroleum Sports Promotion Board (PSPB) and All India Public Sector Sports Promotion Board (AIPSSPB).

During 2020-21, HPCL organised the All India Inter Unit Online Bridge Tournament for employees and Chess Tournament for employees and for their families. The tournaments were conducted in online mode in view of the pandemic situation. A sports portal has been developed during the year, which enables the submission of various applications form in online mode for participation in PSPB Tournaments and Inter Unit Cricket Tournaments and thereby speedy and easier processing of applications.

Official Language Implementation

HPCL promotes the usage of Hindi by motivating the employees through sensitisation, persuasion and incentives. Recognition of linguistic and cultural talent of the employees and creating awareness about Hindi at workplaces is facilitated by encouraging participation in All India Hindi Mahotsav, Hindi fortnight, official language conferences, Hindi Competitions and Hindi Workshops. HPCL is the coordinator for ‘Town Official Language Implementation Committee (TOLIC) for Mumbai since 1983 and the Corporation is guiding Sixty-five (65) Mumbai-based offices of PSUs in the area of official language implementation. Other than the co-ordination of TOLIC Meetings, HPCL have trained the officials of different PSUs by conducting various programmes that included Hindi translations, promotion of linguistic harmony & regional languages etc. During 2020-21, the Rajbhasha Kirti First Prize was awarded to HPCL for its Hindi House Journal "HP Samachar" for the year 2018-19 by the Government of India.

N. CORPORATE SOCIAL RESPONSIBILITY (CSR)

HPCLs efforts to ensure mandated expenditures on CSR reaffirm the continuing commitment of Corporation towards societal development. HPCL undertook various activities under the focus areas of childcare, education, health care, skill development, sports and environment & community development, positively influencing lives of less privileged. As a responsible corporate, HPCL collaborated with various stakeholders to support COVID-19 relief measures by contributing to ‘Prime Ministers Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund). HPCL also has undertaken various other relief measures such as distribution of food packets and ration materials, provision of Personal Protective Equipment (PPE) kits, provision of Cold Chain Equipment in four states / U.T. to support vaccination drive etc.

During 2020-21, under ‘Project ADAPT, HPCL endeavoured to enhance the quality of lives of Children with Disabilities (CWD) through provision of online education, individual training and online therapeutic treatment. Under Project Nanhi Kali, girls were provided with online remedial classes, material kits, sports curriculum and other guidance & counselling on personal hygiene and career development.

HPCL also took part in Project Kashmir Super-30 (Medical) which supports the Sadhbhavna (Goodwill) efforts undertaken by Indian Army in Kashmir valley by providing mentoring and coaching to aspiring Medical students from Jammu and Kashmir region giving wings to academic aspirations of youth for their career development. HPCL also supported Armys initiative in ‘Winning Hearts and Minds of the local population of Ladakh by creating a Centre of Wellness and Excellence in Ladakh-Super- 45 to support less-privileged yet aspiring students of Ladakh region in enabling them to compete in various streams like Engineering, Medical and other career-oriented programmes.

To provide healthcare facilities in remote locations, Mobile Medical Vans were run under ‘Project Dhanwantri. Under Project ‘Dil without Bill, free of cost heart surgeries were conducted with special focus on children. With an aim to increase employability and bridge skill-gap, skills training in various industry-oriented trades were provided to school dropouts from socio-economic backward communities. To improve employability, HPCL supported Skill India Mission by contributing to Skill Development Institutes at five locations.

To take forward Government of Indias flagship programme of Swachh Bharat Abhiyan, around 100 toilets and 250 sources of clean drinking water were constructed/renovated during 2020-21. Apart from providing sanitation infrastructure, mass awareness campaigns were also undertaken under Swachhta Pakhwada focussed on spreading awareness on COVID-19 appropriate behaviour.

Aspirational District programme, an all-India initiative and unique experiment in ensuring the transformation of under-developed pockets of India was launched by the Honble Prime Minister in January 2018. Anchored in NITI Aayog, the Aspirational Districts Programme intends to turn development into a mass movement, facilitated by Governments at different levels: Centre, State and District. HPCL supported projects in twenty-seven aspirational districts.

HPCL laid special focus to develop infrastructure and provide facilities in rural areas. Contribution was made to the Armed Forces Flag Day Fund for the care, support, welfare and rehabilitation schemes for Ex-Servicemen (ESM) and their dependents.

O. JOINT VENTURE COMPANIES AND SUBSIDIARIES

HPCL also conducts business through subsidiaries and joint venture companies in various areas including oil refining and petrochemicals, value-added bituminous products, marketing of POL products, POL pipelines, natural gas pipelines, LPG pipeline, City Gas Distribution (CGD), LPG cavern, LNG terminal, Aviation fuel farm facilities and biofuels. The brief about performance of joint venture and subsidiary companies during the year 2020-21 is as given under:

HPCL-Mittal Energy Ltd. (HMEL)

HPCL-Mittal Energy Ltd. (HMEL) is a joint venture between HPCL and Mittal Energy Investments Pte. Ltd., Singapore with equity holding of 48.99% each.

HMEL is a leading integrated refining and petrochemical company in India with operations that span crude oil refining, petrochemical production & marketing. It owns and operates a 11.3 MMTPA Guru Gobind Singh Refinery (‘GGSR) at Bathinda, in Punjab.

During 2020-21, HMEL recorded 10.07 MMTPA of Crude processing in spite of challenges faced on account of lockdown due to COVID-19. Consolidated total revenue of Rs.52,589 Crore and Profit After Tax (PAT) of Rs.403.60 Crore has been achieved during the year.

HMEL is in the process of setting up of a Petrochemical facility, the Guru Gobind Singh Polymer Addition Project (GGSPAP) within the existing GGSR premises at Bathinda, Punjab. The project scope comprises of setting up of a world-class cracker unit to produce optimised Ethylene and setting up of associated downstream polymer units to produce LLDPE, HDPE, Butane and Impact Polypropylene (PP). The Construction activities are in advanced stage of completion. Major utility plants like the Compressed Air & Nitrogen Plant and raw water treatment plant have already been commissioned and Electrical sub-stations have been energised. Pre-Commissioning activities have commenced for process units. After commissioning of the petrochemical complex, the capacity of polymer production is expected to be about 2 MMTPA.

South Asia LPG Company Pvt. Ltd. (SALPG)

South Asia LPG Company Pvt. Ltd. (SALPG) is a joint venture between HPCL and Total Holding India with equity holding of 50% each. SALPG owns and operates an underground LPG cavern having 60 TMT capacity and associated receiving and despatch facilities at Visakhapatnam.

During 2020-21, SALPG achieved highest ever throughput of 1.83 MMT registering a growth of 9.4%. SALPG has achieved total revenue of Rs.217.85 Crore and recorded Profit After Tax (PAT) of Rs.129.04 Crore.

SALPG has been continuously paying dividend for the last 11 years. SALPG Board has recommended total dividend of 140% for FY 2020-21.

SALPG bagged 5 star rated EHS Excellence Award 2020 from Confederation of Indian Industry (CII), Southern region, Chennai.

Prize Petroleum Company Ltd. (PPCL)

Prize Petroleum Company Ltd. (PPCL) is a wholly-owned subsidiary of HPCL. PPCL is the upstream arm of HPCL and is in the business of Exploration and Production (E&P) of Hydrocarbons as well as providing services for management of E&P blocks.

PPCL has a wholly-owned subsidiary namely Prize Petroleum International Pte Ltd. (PPIPL), incorporated in Singapore. PPIPL has participation interest of 11.25% and 9.75% in two E&P blocks [T/L1 and T/18P (retention leases T/RL2, T/RL4 & T/RL5) respectively] in Australia. During 2020-21, PPIPL has achieved its share of production of 283,149 BoE (Barrels of Oil Equivalent) from Yolla producing field (T/L1).

During 2020-21, PPCL has recorded total revenue of Rs.96.82 Crore on consolidated basis.

Hindustan Colas Pvt. Ltd. (HINCOL)

HINCOL is a joint venture of HPCL and Colas S.A., France with equity shareholding of 50% each. HINCOL is engaged in manufacturing and marketing of Bitumen derivatives, which are widely used in Road/Air Field construction in India. In addition to Bitumen derivatives, it also carries out niche Road Maintenance activities like Micro surfacing & Slurry sealing. HINCOL owns and operates 10 strategically located manufacturing plants complying with the requirements of International Standard ISO 9001:2015, 14001:2015 and 45001:2018.

During 2020-21, HINCOL recorded its highest-ever sale of 332 TMT registering a growth of 32% despite the challenges from COVID-19 pandemic. It also registered its highest-ever Emulsion sales of 210 TMT during the year, growing at 10%. During 2020-21, the Company achieved a total revenue of

1,158.75 Crore and Profit After Tax (PAT) of Rs.155 Crore.

HINCOL has been paying dividend for the last 21 years and has declared total dividend of 800% for 2020-21.

The Company commissioned its 10th Plant near Guwahati, Assam in addition to augmenting its existing facilities to meet the growing market demand. During the year, HINCOL, in association with Dust-A-Side, Ireland established a 50:50 Joint Venture company, ‘DUST-A-SIDE HINCOL Limited for providing Dust Management solutions in Mining Industries in India.

HPCL Rajasthan Refinery Ltd. (HRRL)

HPCL Rajasthan Refinery Ltd. (HRRL) is a joint venture of HPCL and Government of Rajasthan with 74% equity participation by HPCL and 26% by Government of Rajasthan. HRRL is setting up a 9 MMTPA greenfield refinery and petrochemical complex in the state of Rajasthan.

The project of setting up the refinery achieved significant progress during the year in spite of several constraints posed by the COVID-19 pandemic. Engineering & Procurement activities of some of the major process units have been completed.. Construction activities of major process units such as Crude Distillation Unit, Vacuum Distillation Unit, Delayed Coker Unit, Vacuum Gas Oil Hydro Treating Unit, Diesel Hydro Treating Unit, Hydrogen Generation Unit, Petro Fluidised Catalytic Cracking Unit and Dual Feed Cracker Unit etc. are in progress. In addition, construction of water reservoirs for plant use, raw water pipeline, crude pipeline to refinery, Effluent Treatment Plant, Cooling Towers, Off site jobs & Pipe Racks etc. are in progress.

Mangalore Refinery and Petrochemicals Ltd. (MRPL)

Mangalore Refinery and Petrochemicals Ltd. (MRPL) is a joint venture of HPCL and ONGC wherein ONGC holds 71.63% of equity, HPCL holds 16.96% equity, and balance equity is held by public. MRPL is a schedule ‘A Miniratna, Central Public Sector Enterprise (CPSE) and operates 15 MMTPA refinery at Mangaluru in Karnataka.

During 2020-21, MRPL achieved refining thruput of 11.50 MMT and recorded consolidated total revenue of Rs.50,992 Crore.

Natural Gas supply was established to MRPL through Kochi-Mangalore natural gas pipeline in March 2021 and natural gas is presently being used as feed to Hydrogen Unit in the refinery.

Ratnagiri Refinery and Petrochemical Ltd. (RRPCL)

Ratnagiri Refinery and Petrochemicals Ltd. (RRPCL) is a joint venture company promoted by IOCL, BPCL and HPCL with equity participation in the ratio of 50:25:25. RRPCL has planned to set up a 60 MMTPA refinery along with integrated petrochemical complex at west coast of Maharashtra. Saudi Aramco and ADNOC have also signed an MoU to partner with RRPCL to jointly execute the project along with IOCL, BPCL and HPCL.

The pre-project activities like data collection and other geo-physical requirements for environment clearance are in progress.

HPCL Biofuels Ltd. (HBL)

HPCL Biofuels Ltd. (HBL) is a wholly-owned subsidiary company of HPCL. HBL was promoted as a backward integration initiative to enable HPCLs foray in manufacturing of ethanol for blending in Petrol. HBL has two integrated Sugar-Ethanol-Cogeneration plants at Sugauli and Lauriya districts in the state of Bihar.

During 2020-21, HBL has recorded total revenue of Rs.183.71 Crore and cane crushing of 399 TMT. HBL achieved sugar production of 38,958 MT, ethanol production of 7,175 KL and power generation of 31,396 MWh during 2020-21.

Petronet MHB Ltd. (PMHBL) Petronet MHB Ltd. (PMHBL) is a joint venture of HPCL and ONGC with equal equity holding of 49.996% each. PMHBL owns and operates a multiproduct petroleum pipeline to transport MRPL refinerys petroleum products to various parts of Karnataka.

During 2020-21, PMHBL has achieved thruput of 2.139 MMT and reported total revenue of Rs.111.28 Crore and Profit After Tax (PAT) of Rs.51.81 Crore.

In order to tap into renewable resources and to promote usage of clean and green energy, PMHBL has installed Ground mounted Solar PV Power Plant at a total capacity of 3.63 MWp at its Mangalore, Hassan & Devangonthi Stations including SV stations.

PMHBL Integrated Management System (IMS) is certified for Quality Management System-ISO-9001-2015, Environmental Management System-ISO-14001, OHSAS-18001 and Energy Management System- ISO-50001-2011. The Company deployed various updated technologies/solutions for its operations as per International standards.

PMHBL Board declared total dividend of 60% for 2020-21.

Bhagyanagar Gas Ltd. (BGL)

Bhagyanagar Gas Ltd. (BGL) is a joint venture of HPCL and GAIL with equal equity holding of 48.73% each.

BGL has a CGD network comprising of 2,157 km MDPE pipeline and 172 km steel pipeline and is serving 2,44,459 domestic customers. BGL also operates 126 CNG stations in the cities of Hyderabad, Vijayawada and Kakinada in the states of Andhra Pradesh and Telangana.

During 2020-21, BGL has achieved sales volume of 15,817 MT of CNG and 390.53 lakh Standard Cubic Meter (SCM) of PNG, registering a growth of 40% in PNG sales over the previous year. BGL has recorded total revenue of Rs.173.18 Crore and Profit After Tax (PAT) of Rs.8.58 Crore during the year.

Aavantika Gas Ltd. (AGL)

Aavantika Gas Ltd. (AGL) is a joint venture of HPCL and GAIL with equal equity holding of 49.99% each.

AGL has a CGD network comprising of 2,328 km MDPE pipeline and 103 km steel pipeline and is serving 91,420 domestic customers. AGL also operates 67 CNG stations in the cities of Indore, Ujjain, Pithampur and Gwalior in the state of Madhya Pradesh.

During 2020-21, AGL has achieved sales volume of 18,801 MT of CNG and 303.45 lakh SCM of PNG, registering a growth of 10% in PNG sales over the previous year. AGL has also reported total revenue of Rs.209.52 Crore and Profit After tax (PAT) of

42.80 Crore during the year.

GSPL India Gasnet Ltd. (GIGL)

GSPL India Gasnet Ltd. (GIGL) is a joint venture of Gujarat State Petronet Ltd. (GSPL), Indian Oil Corporation Ltd. (IOCL), Bharat Petroleum Corporation Ltd. (BPCL) and HPCL. HPCL has 11% equity participation in the company and balance equity is held by GSPL (52%), IOCL (26%) and BPCL (11%).

GIGL has been authorised to lay two cross-country gas pipelines Mehsana to Bathinda Pipeline (MBPL) and Bathinda to Srinagar Pipeline (BSPL). The initial sections of the projects viz. Barmer-Pali Pipeline, Palanpur-Pali Pipeline and Jalandhar Amritsar Pipeline are in operation from 2018-19 onwards. During 2020-21, the Company has transported 995.5 MMSCM of gas and recorded total revenue of Rs.180.40 Crore and Profit After Tax (PAT) of Rs.16.21 Crore.

GSPL India Transco Ltd. (GITL)

GSPL India Transco Ltd. (GITL) is a joint venture of GSPL, IOCL, BPCL and HPCL. HPCL has 11% equity participation in the Company and balance equity is being held by GSPL (52%), IOCL (26%), and BPCL (11%).

GITL has been authorised to lay 1,881 long km pipeline from Mallavaram to Bhilwara. The initial section of Project from Reliance Gas Transmission India Limited interconnection point at Kunchanapalli to Ramagundam Fertilisers & Chemicals Limiteds Plant at Ramagundam has been commissioned in 2019-20. During the year, the Company has transported about 88.18 MMSCM of gas and has recorded total revenue of Rs.45.25 Crore.

Godavari Gas Pvt. Ltd. (GGPL)

Godavari Gas Pvt Ltd. (GGPL) is a joint venture between Andhra Pradesh Gas Distribution Corporation Limited (APGDC) and HPCL with equity stakes in the ratio of 74:26.

GGPL has been formed to develop and operate city gas distribution network in East Godavari and West Godavari districts of Andhra Pradesh. GGPL has a CGD network comprising of 620 km MDPE pipeline and 93 km steel pipeline and is serving 1,00,232 domestic customers. GGPL also operates 31 CNG stations in East Godavari and West Godavari districts of Andhra Pradesh.

During 2020-21, GGPL has achieved sales volume of 705 MT of CNG and 26.26 lakh SCM of PNG. GGPL has recorded total revenue of Rs.10.60 Crore during the year.

HPOIL Gas Pvt. Ltd. (HOGPL)

HPOIL Gas Pvt. Ltd. (HOGPL) is a joint venture between HPCL and OIL India Ltd. (OIL) with equity shareholding of 50% each.

HOGPL has been formed to develop and operate CGD networks in geographical areas of Ambala-Kurukshetra districts in the state of Haryana and Kolhapur district in the state of Maharashtra. HOGPL has a CGD network comprising of 462.79 km MDPE pipeline and 34.47 km steel pipeline and is serving 9,612 domestic customers. HOGPL also operates

14 CNG stations Ambala-Kurukshetra districts and Kolhapur district.

During 2020-21, HOGPL has achieved sales volume of 1,685 MT of CNG. PNG sales started to domestic households in March 2021. HOGPL has recorded total revenue of Rs.11.20 Crore during the year.

HPCL Shapoorji Energy Pvt. Ltd. (HSEPL)

HPCL Shapoorji Energy Pvt. Ltd. (HSEPL), floated as 50:50 joint venture between HPCL and SP Ports Pvt. Ltd. (SPPPL), became a 100% subsidiary of HPCL on 30th March, 2021 subsequent to acquisition of 50% stake by HPCL from SPPPL.

HSEPL has been formed to build and operate a 5 MMTPA LNG regasification terminal at Chhara Port in Gir Somnath district of Gujarat. Major facilities at LNG terminal include marine facilities for berthing and unloading of LNG carrier, storage tanks, regasification facilities and associated utilities.

The project is under execution at site. Construction of 2 Number LNG storage tanks, regasification facilities, jetty facilities, other associated facilities etc. are in progress at site.

Mumbai Aviation Fuel Farm Facility Pvt. Ltd. (MAFFFL)

Mumbai Aviation Fuel Farm Facility Pvt. Ltd. (MAFFFL) is a joint venture of Mumbai International Airport Private Limited (MIAL), IOCL, BPCL and HPCL with equity holding of 25% each.

The Company is engaged in operation and maintenance of the existing aviation fuel farm facilities and provides Into-plane services at Chhatrapati Shivaji International Airport (CSIA), Mumbai. The Company will construct, maintain and operate the new integrated fuel farm facility on an open access basis. The construction of the integrated fuel farm is in advanced stage of completion.

MAFFFL achieved thruput of 6.06 lakh KL during 2020-21. MAFFFL has registered total revenue of Rs.50.90 Crore and Profit After Tax (PAT) of Rs.1.56 Crore during 2020-21.

HPCL Middle East FZCO (HMEF)

HPCL Middle East FZCO, a wholly-owned subsidiary of HPCL has been formed for marketing of lubricants and other petroleum products across various markets of Middle East and Africa.

The Company is registered under the DAFZA (Dubai Airport Free Zone Authority) and has trade licence for trading in lubricants and greases, petrochemicals and refined oil products.

HPCL Middle East FZCO has registered a sale of 818 TMT of value-added lubricants recording growth of 435% over previous year. HPCL Middle East FZCO has recorded total revenue of 4.55 million AED (Rs.9.20 Crore) during the year.

IHB Ltd. (IHBL)

IHB Ltd. (IHBL) is a joint venture company promoted by IOCL, BPCL and HPCL with equity participation in the ratio of 50:25:25. The Company was converted into a Public Limited Company and new certificate of incorporation was received on 6th April, 2021.

IHB Ltd. was incorporated to construct, operate and manage about 2,800 km long Kandla-Gorakhpur LPG Pipeline, longest LPG pipeline in the world, for meeting the LPG demand of the bottling plants enroute the pipeline in Gujarat, Madhya Pradesh and Uttar Pradesh. Statutory clearances & acquisition of Right of Way (ROW) has been done for major part of the pipeline length and pipeline laying is in progress at multiple fronts.

P. AWARDS RECEIVED

During the year 2020-21, HPCL was conferred with a number of awards and recognitions at various forums. The following is the list of awards received by HPCL during 2020-21:

1. "Oil Marketing Company of the Year" for leadership in oil marketing business in India by Federation of Indian Petroleum Industry (FIPI)

2. "Shrestha Suraksha Puraskar" to Visakh Refinery Modernisation Project (VRMP) - Full Conversion Hydrocracker Unit (FCHCU) construction site by ‘National Safety Council of India (NSCI)

3. "International Safety Award 2020" bestowed on Delhi Terminal, Ramamandi Rewari Pipeline and Coimbatore IRD by British Safety Council

4. Bhopal LPG Plant, Calicut ASF, Kanpur Terminal and Mundra Terminal awarded "Greenco Platinum Rating" at the 9thVirtual Greenco Summit organised by the Confederation of Indian Industry Green Business Centre (CII-GBC)

5. First Prize for "Swachhta Hi Sewa" campaign and ‘Outstanding Contribution Award for Swachhta Pakhwada campaign by Ministry of Petroleum and Natural Gas and Ministry of Drinking Water and Sanitation

6. CII SCALE Award ‘Excellent category in Oil, Gas and Petrochemical Category for Digital interventions at various customer interface points, last mile logistics planning, and productivity & process improvements through process digitisation

7. "Exceed Platinum Award" under the category ‘Environment Sustainability in Oil Refining Sector by Sustainable Development Foundation of ‘Ek Kaam Desh Ke Naam

8. "Tech Circle Award" for Excellence in Digital Execution by Mosaic Digital

9. "Digital Tech Sabha Award" in ‘Enterprise category for the project of ‘Smart LPG Plant

10. "PRSI National Awards 2020" by Public Relations Society of India for (i) Best Corporate Website for second consecutive year, (ii) Best House Journal in ‘English Category to HP

News, (iii) Best House Journal in ‘Hindi Category to HP Samachar, (iv) Best use of Social Media, (v) Best Corona Awareness Campaign

11. "59th ABCI Awards 2020" by Association of Business Communicators of India for (i) HP Corporate Website, (ii) Annual Report 2017-2018, (iii) HP Samachar under the Indian Language Publication, (iv) Expressions under the Photo Feature category and (v) Sustainability Report 2017-18

12. "Innovation in Capability Building" award by AIAC (All India Achievers Conference) towards the various learning platform and training modules

13. "National Quality Award" in the Gold category to Proficiency Testing Project of Quality Control Department (Marketing) by Quality Control Council of India

14. "Saksham Award 2020" to State Level Coordinator, Chandigarh for ‘Best Overall Performance among small states & UTs category for Oil & Gas Conservation activities carried out during Saksham 2020

15. Felicitation by Honble Governor of Maharashtra for humanitarian services rendered during COVID-19 pandemic by HPCL

16. Felicitation by Honble Governor of Telangana & Lieutenant Governor of Puducherry, for the excellent efforts made by HPCL to ensure smooth supply of Petrol, Diesel and LPG refill to consumers in the State of Telangana during the COVID-19 pandemic

Q. CAUTIONARY STATEMENT

Matters covered in the Management Discussion and Analysis report describing the Corporations objective, projections, estimates and expectations may be ‘forward-looking statements within the meaning of applicable securities laws and regulations. The actual performance could vary from those projected or implied. Important or unforeseen factors that could make a difference to the Corporations operations include economic conditions, demand / supply and price conditions in the domestic and international market, changes in regulations and other incidental factors.