Annual Report - BPCL - 2008-2009

BHARAT PETROLEUM CORPORATION LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

The Directors take pleasure in presenting their Report on the performance
of Bharat Petroleum Corporation Limited (BPCL) for the year ended 31st
March, 2009.



PERFORMANCE OVERVIEW:

Group Performance:

The aggregate Refinery throughput at BPCLs Refineries at Mumbai and Kochi,
along with that of BPCLs subsidiary company, Numaligarh Refinery Limited
(NRL) in 2008-09, was 22.20 Million Metric Tonnes (MMT) as compared to
23.52 MMT in 2007-08. The market sales of the BPCL Group in 2008-09 stood
at 27.45 MMT, as compared to 26.08 MMT in the previous year. The group's
exports of petroleum products during the year was 1.38 MMT as against 1.93
MMT in 2007-08.

The sales turnover for the year of the BPCL Group increased to
Rs.147,336.82 crores from the previous year's level of Rs. 123,179.69
crores. The Group Profit after Tax (PAT) amounted to Rs. 724.13 crores in
2008-09 as against Rs. 1,912.52 crores in the previous year. After setting
off the minority interest, the Group earnings per share declined to
Rs.17.53 in 2008-09 from Rs. 48.94 in the previous year.

CONSOLIDATED GROUP RESULTS 2008-09 2007-08

Physical Performance:
Crude Throughput (MMT) 22.20 23.52
Market Sales (MMT) 27.45 26.08

Financial Performance Rs. in Crores

Sales/Income from Operations 147,336.82 123,179.69
Less: Excise Duty Paid (10,779.70) (11,936.58)
Net Sales/Income from Operations 136,557.12 111,243.11
Gross Profit 4,800.60 5,027.04
Interest 2,404.32 714.89
Depreciation & amortisation 1,261.71 1,292.10
Profit before tax 1,134.57 3,020.05
Provision for taxation - Current 674.06 1,025.89
Profit after Current Tax 460.51 1,994.16
Provision for Fringe Benefit Tax 14.40 16.21
Provision for taxation - Deferred (285.11) 58.70
Short provision for Taxation in earlier 7.09 6.73
years provided for
Net Profit 724.13 1,912.52
Minority Interest 90.37 142.97
Net Income of the group attributable to BPCL 633.76 1,769.55
Group Earnings per share attributable to 17.53 48.94
BPCL (Rs.)

Company Performance:

During the year 2008-09, BPCLs Mumbai Refinery achieved a crude throughput
of 12.26 MMT as compared to 12.75 MMT achieved during the last year. Kochi
Refinery also saw the crude throughput decline to 7.68 MMT in 2008-09 from
8.20 MMT in 2007-08. The lower throughputs for the two refineries were on
account of the planned shutdowns during the year. However, the market sales
of the company increased from 25.79 MMT in 2007-08 to 27.16 MMT in the
current year.

FINANCIAL HIGHLIGHTS:

Rs. in Crores
2008-09 2007-08

Sales Turnover-Gross 145,392.07 121,684.07
Gross Profit before Depreciation, Interest 4,246.01 4,367.97
and Tax
Interest 2,166.37 672.47
Depreciation & amortisation 1,075.53 1,098.21
Profit before tax 1,004.11 2,597.29
Provision for Taxation - Current 490.00 883.90
Provision for Fringe Benefit Tax 13.25 15.30
Provision for Taxation - Deferred (242.13) 110.80
Short provision for taxation in earlier years 7.09 6.73
provided for
Net Profit 735.90 1,580.56
Amount available for disposal 735.90 1,580.56
The Directors propose to appropriate this
amount as under:
Towards Dividend:
Final (proposed) Dividend - Rs.7 per share 253.08 144.62
Towards Corporate Dividend Tax 31.45 9.16
For transfer to Debenture Redemption Reserve 300.00 -
For transfer to General Reserve 75.00 1,426.78
Balance carried to Balance Sheet 76.37 -
Summarised Cash Flow Statement:
Cash Flows:
Inflow/(Outflow) from operations 6,212.34 417.13
Inflow/(Outflow) from investing activities (9,908.75) (3,553.95)
Inflow/(Outflow) from financing activities (2,285.32) (197.74)
Net increase/(decrease) in cash & cash (5,981.73) (3,334.56)
equivalents

BPCLs sales turnover for 2008-09 at Rs. 145,392.07 crores was higher by
19.48% as compared to the turnover of Rs. 121,684.07 crores recorded in
2007-08. However, the profit before tax for the year stood at Rs. 1,004.11
crores which represented a reduction of 61.34% over the previous year's
level of Rs. 2,597.29 crores. After providing for tax, (including deferred
tax and fringe benefit tax) of Rs. 268.21 crores, as against Rs. 1,016.73
crores during the last year, the profit after tax for the year stood at
Rs.735.90 crores, showing a decrease of 53.44% over the level of Rs.
1,580.56 crores in 2007-08. The fall in the profitability is attributable
to the adverse impact of the volatile prices of crude oil and finished
products during the year and the fluctuations in foreign exchange rates.
Besides, the interest costs for the year increased significantly on account
of higher borrowings for meeting the working capital requirements during
the year.

The Board of Directors has recommended a dividend of 70% (Rs. 7 per share)
for the year on the paid-up share capital of Rs. 361.54 crores, which will
absorb a sum of Rs. 284.53 crores out of the profit after tax, inclusive of
Rs. 31.45 crores for Corporate Dividend Tax on distributed profits. BPCLs
net worth as on 31 st March, 2009 stands at Rs. 12,128.11 crores, as
compared to Rs. 11,676.83 crores as at the end of the previous year.

The earnings per share amounted to Rs. 20.35 in 2008-09 as compared to
Rs.43.72 during 2007-08. Internal cash generation during the year was lower
at Rs. 1,282.29 crores as against Rs. 2,636.33 crores in 2007-08. BPCLs
contribution to the exchequer by way of taxes and duties during 2008-09
amounted to Rs. 25,331.78 crores as against Rs. 26,047.58 crores in the
last financial year.

Borrowings from banks increased from Rs. 13,340.25 crores as at 31st March,
2008 to Rs. 19,242.56 crores at the close of the year. The Collateralised
Borrowing and Lending Obligation (CBLO) through Clearing Corporation of
India Limited amounted to Rs. 150 crores as at the end of the year, as
compared to Rs. 1,000 crores at the end of the previous year. Loans from
Oil Industry Development Board increased to Rs. 761.50 crores as at 31st
March, 2009 compared to Rs. 653.24 crores at the end of the previous year.
Debentures worth Rs. 1,000 crores were issued during the year and remained
outstanding as on 31st March, 2009.

Public deposits as at 31 st March, 2009 stood at Rs. 3.45 crores, as
compared to Rs. 28.80 crores at the end of the previous year. The amount of
deposits, matured but unclaimed, at the end of the year was Rs. 0.21
crores, which pertains to 41 depositors.

The total Capital Expenditure during the year 2008-09 amounted to
Rs.2,389.34 crores as compared to Rs. 2,066.52 crores during the year 2007-
08.

The Comptroller and Auditor General of India (C&AG) has no comment upon or
supplement to the Statutory Auditors' Report on the Accounts for the year
ended 31st March, 2009. The letter from C & AG is annexed as Annexure E.

REFINERIES:

MUMBAI REFINERY:

During the year 2008-09, Mumbai Refinery, which has an installed capacity
of 12 MMT, processed 12.26 MMT of crude oil, as against 12.75 MMT processed
in the previous year. The refinery recorded its highest ever production of
several products including Motor Spirit (MS) and High Speed Diesel (HSD).
The refinery processed Saharan Blend crude oil for the first time during
the year. The gross refinery margin for the current year stood at USD 4.48
per barrel of crude oil processed, as compared to USD 4.60 per barrel in
2007-08. This translated into an overall gross margin of Rs. 1892.28 crores
for the year, as compared to Rs. 1772.87 crores in 2007-08.

KOCHI REFINERY:

Kochi Refinery achieved a throughput of 7.68 MMT during this year, as
compared to 8.20 MMT in 2007-08. The capacity utilization of the refinery
stood at 102.4%. The refinery processed two new crude oils i.e. Antan from
Nigeria and Saharan Blend from Algeria. The refinery achieved its highest
level of production of several products including Aviation Turbine Fuel
(ATF), Euro-III HSD, Low Sulphur High Flash HSD (LSHF HSD) and Bitumen
during the year. The gross refining margin for the year 2008-09 was USD
6.27 per barrel of crude oil processed, as against USD 7.18 per barrel in
the previous year.

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

MERGER OF KRL WITH BPCL:

As informed in the last year's Report, merger of the erstwhile Kochi
Refineries Limited (KRL) with BPCL under Sections 391 to 394 of the
Companies Act 1956 had been completed, following receipt of the Order dated
18th August, 2006 issued by the Ministry of Company Affairs, New Delhi. One
of the Shareholders of the erstwhile KRL had filed a Writ Petition in the
Delhi High Court challenging the merger, and the same is pending as on
date.

MARKETING:

During the year, BPCLs market sales volume touched a level of 27.16 MMT, as
compared to 25.79 MMT in the previous year. This represented a growth rate
of 5.31 over the previous year, which is in line with the average growth
rate of 5.6% achieved by the public sector oil companies. BPCLs market
share amongst the public sector oil companies stood at 22.62% as at 31 st
March, 2009 representing a marginal decline from the level of 22.68% as at
the end of the previous year. BPCL has achieved the highest growth in
Bitumen sales at 4.14% amongst the public sector oil companies.

A detailed discussion of market performance is covered in the MD & A.

PROJECTS:

Central India Refinery:

Bharat Oman Refineries Ltd. (BORL), a Company promoted by BPCL along with
Oman Oil Company Limited (OOCL), is setting up a 6 MMTPA capacity grass
roots Refinery at Bina in Madhya Pradesh along with a Crude Oil / Supply
system consisting of a Single Point Mooring (SPM) system, Crude Oil Storage
Terminal (COT) at Vadinar in Gujarat and a 934 kms long cross-country crude
oil pipeline from Vadinar to Bina. BPCL and OOCL have contributed a sum of
Rs. 75.5 crores each towards the equity share capital of BORL.

The as built capital cost of the project is estimated to be Rs. 10,378
crores. The project is being financed at a debt /equity mix of 1.6:1 and is
expected to be mechanically completed by December 2009. BPCL, with the
approval of the Government of India, decided to enhance its equity
contribution in BORL up to 50%, amounting to Rs. 1,996 crores. BPCL has
contributed a sum of Rs. 900 crores in 2006-07 and Rs. 400 crores in 2008-
09 towards subscribing for shares in BORL. BPCLs total equity contribution
in BORL as at 31 st March, 2009 thus stands at Rs. 1,375.5 crores.

Work on the project is progressing as per schedule. As on 15th June, 2009,
the physical progress stood at 94.5%. The commitments made as on that date
were Rs. 10,109.72 crores and the cumulative expenditure stood at
Rs.7,513.38 crores.

Bina Despatch Terminal:

The Bina Despatch Terminal is designed to facilitate the marketing of
products from the new refinery at Bina being set up by BORL. The project
envisages setting up of storage and despatch facilities including 4.45 lakh
Kilolitres (KLs) White Oil tanks, 8400 MT LPG mounded storage and LPG Bulk
despatch facilities, along with associated pumping units, electrical,
instrumentation and fire fighting facilities adjacent to the new refinery.
The revised cost of the project is Rs. 639.11 crores.

Work on all fronts is progressing smoothly. The project has achieved an
overall progress of 83.7% till 31st May, 2009. The cumulative expenditure
till that date stood at Rs. 388.60 crores. The terminal is scheduled for
completion in synchronization with commissioning of Bina Refinery.

Bina Kota Pipeline:

The project envisages the laying of an 18' (45.72 cm) dia, 257 km long
cross-country multiproduct pipeline from Bina to Kota, to facilitate the
economic evacuation of MS, HSD, Superior Kerosene Oil (SKO) and ATF from
the new refinery at Bina. The pipeline will be connected to the existing
multi-product Mumbai-Manmad-Manglya-Piyala-Bijwasan pipeline at Kota, in
order to facilitate distribution of Bina Refinery products to the markets
in the northern region. The pipeline is designed for an initial throughput
of 2.8 MMTPA and the approved cost of the project is Rs. 405.82 crores.

The pipeline laying activity is in full swing and the project has achieved
an overall progress of 66.2% as at 31st May, 2009. The cumulative
expenditure as on that date stood at Rs. 144.33 crores. The pipeline is
slated for completion in synchronization with the commissioning of Bina
Refinery.

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

The project envisages facilities for the production of auto fuels i.e. MS
and HSD conforming to Euro - III / IV equivalent norms along with
modernization and capacity expansion of the refinery from the present 7.5
MMTPA to 9.5 MMTPA. The estimated cost of the project is Rs. 3,941.41
crores.

The project has achieved an overall progress of 74.1 as on 31st May, 2009
and the cumulative expenditure stood at Rs. 1,071.18 crores. The project is
scheduled for completion in December, 2009.

Fuels Quality Upgrade Project at Mumbai Refinery:

The project involves making plant modifications for improving the quality
of MS & HSD to meet the Euro IV equivalent norms for supply to the Mumbai
market from April, 2010. The project involves revamping of the existing
Diesel / Naphtha Hydrodesulphurization Unit and putting up new FCC Gasoline
Splitting Facilities with an approved project cost of Rs. 390 crores. A
process package and detailed engineering have been completed. All equipment
and bulk materials have been ordered and partly received. Civil and
structural jobs are in progress. The project has achieved a physical
progress of 63.7% and the cumulative expenditure as on 31st May, 2009 was
Rs. 63.69 crores. The project is scheduled for completion in January, 2010.

Hydrocracker Revamp and Setting up of a new Continuous Catalytic
Regenerated Reformer (CCR) at Mumbai Refinery:

The project envisages revamping the Hydrocracker Unit (HCU) to increase the
capacity from 1.75 MMTPA to 2.0 MMTPA with capability to upgrade the High
Sulphur Diesel components to HSD conforming to Euro III / IV
specifications. Further, to upgrade Naphtha to MS conforming to Euro III /
IV specifications, a 0.9 MMTPA capacity Continuous Catalytic Regenerative
(CCR) Reformer Unitis also being setup. The approved cost of the project is
Rs. 825 crores and the project is scheduled for completion in December,
2011. Besides meeting the additional requirements of Euro IV fuels, this
project will pave the way for further upgrading the quality to meet Euro V
standards.

Planned jobs for the Hydrocracker Revamp were carried out during the recent
turnaround of the Hydrocracker Unit in March 2009 to achieve the increased
unit capacity. Long lead equipments have been ordered and will be installed
on receipt. For CCR, a Process Licensor has been appointed and a process
package is being developed. Dismantling and relocation of existing tankages
and other equipments is in progress. Cumulative expenditure as on 31st May,
2009 stood at Rs. 30.08 crores and the total commitments on the project
have exceeded Rs. 120 crores.

Propylene Recovery Unit (PRU):

A Propylene Recovery Unit (PRU) to produce 50,000 MT per annum of 95%
purity chemical grade propylene is being set up in Kochi Refinery. The
project costing Rs. 95 crores is nearing completion.

LPG Import Facilities at JNPT with Strategic Storage at Uran:

The proposal envisages development of LPG import facilities at Jawaharlal
Nehru Port Trust (JNPT). The project involves the installation of marine
unloading arms and associated facilities, laying of 12' (30.48 cm) pipeline
from JNPT to Uran LPG Plant and development of refrigerated storage at
Uran. The approved cost of the project is Rs. 304.4 crores. Basic
engineering designs/ HAZOP study have been completed. All major contracts
and procurement packages are under finalization. The project has achieved
an overall progress of 12% and is scheduled for completion by the end of
the financial year 2010-11.

Strategic Storage for LPG:

Strategic storage for LPG, at a total outlay of Rs. 190 crores is being
made by providing 23 mounded storage vessels at 12 different locations.
These are designed to increase bulk storage for operation and avoid dry-
outs in plant operation after standardization of size and capacity, cost
optimization and vessel fabrication. Statutory approvals for all these
locations have been obtained. The work at all locations is in various
stages and shall be completed by the end of the financial year 2009-10.

RESEARCH & DEVELOPMENT (R&D):

Research and development (R&D) is an integral part of BPCLs strategy for
achieving sustainable growth and profitability. BPCL is continuously
strengthening and upgrading the infrastructure at its Corporate R&D Centre,
Greater Noida, Uttar Pradesh as well as at its Product & Application
Development Centre, Sewree, Mumbai and the R&D Centre at Kochi Refinery.
BPCLs initiatives in the area of R & D are discussed separately in the MD &
A.

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

NON-CONVENTIONAL ENERGY INITIATIVES:

BPCL has been committed towards the development of non-conventional energy
sources. One of the major thrust areas identified for this purpose is power
generation from wind energy. The four windmills commissioned by BPCL in the
hilly range of Kappatguda in Karnataka are currently in operation and the
power produced is being sold to the Karnataka State Electricity grid. This
was one of the projects identified to avail of carbon emission credits

under the Kyoto protocol. The project was approved by the United Nations
Framework Convention on Climate Change (UNFCCC) in February 2009.

In addition, Kochi Refinery's shore tank farm located in the coastal area
of the Puthuvypeen Special Economic Zone has been identified to harness the
wind energy potential. BPCL has approached the Centre for Wind Energy
Technology, Chennai to carry out a feasibility study. Clearance has been
obtained from the Naval and local authorities for setting up windmills in
the shore tank farm.

BPCL has been exploring the possibility of promoting green fuel, with a
view to protecting the environment by reducing pollution and dependence on
imported fuels. Towards this end, huge tracts of unproductive, barren and
non-cultivable land are proposed to be used forthe growth of Jatropha and
Karanj plants. The plantations would contribute towards environment
protection, prevention of soil erosion and feedstock for manufacturing Bio-
diesel while promoting sustainable development. In the state of Uttar
Pradesh, BPCL has launched 'Project Triple One' to enter the Bio-diesel
Value Chain through a joint venture company, M/s. Bharat Renewable Energy
Ltd.

Work is continuing on the project to set up a 1 MW capacity grid connected
solar farm at BPCLs LPG bottling plant in the state of Punjab. The project
has been conceived to avail of carbon emission credits under the Kyoto
protocol.

INDUSTRIAL RELATIONS:

The overall industrial relations were peaceful throughout the year. In
January 2009, there was an agitation by some sections of the Management
staff of the Corporation in response to a strike call by the Oil Sector
Officers' Association to press for salary revision. The agitation lasted
for 1 1/2 days. Extensive communication on business and other related
issues were undertaken covering all stakeholders i.e. Management, employees
and their associates / Unions during the year.

FULFILLMENT OF SOCIAL OBLIGATIONS:

As a responsible corporate citizen, BPCL accords significant importance to
Corporate Social Responsibility (CSR). The pan India presence means that
the People Interface' includes urban, semi-urban and rural areas besides
some of the remote tribal belts. Hence, CSR activities are undertaken with
the objective of making a meaningful impact in the lives of people, which
would lead to sustainable development. The thrust areas for CSR were
health, education, water conservation, environment conservation and
community development.

Emphasis was laid on equipping small groups of women, youth and farmers
with training, skills, subsequent to which they were encouraged to form
Self Help Groups (SHGs), to sustain some form of income generating
activities. One such effort has been the collaboration with Self Employed
Women Association (SEWA) in Lucknow, where around 100 women from in and
around village Babukheda near Lucknow are being trained in Chikankari
work', subsequent to which they will be given work on per piece basis
directly by SEWA. Together with the partners like SEWA, the SHGs are also
being supported for micro credit through banks.

Water conservation through Project Boond' continued, by adding 4 more
villages in Maharashtra and for the first time 2 villages in Bharatpur,
Rajasthan for rainwater harvesting. For the water conservation work which
was already undertaken, BPCL won the Asian CSR Award 2008' for Project
Boond -III. The Awards were instituted by the prestigious Asian Institute
of Management, Manila with co-sponsorship from Intel Corporation.

CSR received a lot of support through employee volunteers, who apart from
constructing check dams for water conservation, also took up teaching
school children of zilla parishad schools on the importance of water and
hence, conservation.

From the year 2008-09 onwards, the CSR budget of the Corporation is being
increased from 0.5% to 2% of the net profit of the previous financial year
of the Company, reflecting the extent of BPCLs commitment to the growth and
development of society.

PROMOTION OF SPORTS:

BPCL sportspersons continued to excel in the national as well as
international sports arena in various disciplines. Saina Nehwal created
history by becoming the first Indian woman to win a Super Series event in
Badminton when she won the Indonesian Open event. Currently ranked no 6,
Saina is one of the top women badminton players in the world. Chess player
Abhijit Gupta won the prestigious World Junior Chess Championship becoming
only the third Indian to do so. Another Chess player, Arun Prasad earned
his Grand Master norm in 2008-09. BPCL employees continue to be selected to
the national contingents in various disciplines. In Billiards and Snooker,
Devendra Joshi won the Silver Medal (time format) and Bronze Medal (point
format) in the IBSF World Billiards Championships. BPCL was awarded the
President's PSPB Trophy for II Runners-up during the year by virtue of
points obtained in various Petroleum Sports Promotion Board (PSPB)
tournaments.

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

BPCL has been following in letter and spirit, the Presidential directives
and other guidelines issued from time to time by Ministry of Petroleum &
Natural Gas, Ministry of Social Justice & Empowerment and the Department of
Public Enterprises relating to reservations / concessions for Scheduled
Castes/Scheduled Tribes/ Other Backward Classes. An adequate monitoring
mechanism has been put in place for sustained and effective compliance
across the Corporation. Rosters are maintained as per the directives and
are regularly inspected by the Liaison Officer of the Corporation as well
as the Liaison Officer of the Ministry of Petroleum & Natural Gas, to
ensure proper compliance of the directives.

Students belonging to Scheduled Castes / Scheduled Tribes and those who are
economically backward are provided with scholarships from the secondary
school level till graduation. Similar assistance is also provided for
pursuing courses at ITI.

BPCL also complies with directives under 'The Persons with Disabilities
(Equal Opportunities, Protection of Rights and Full Participation), Act
1995' relating to reservations and concessions for persons with
disabilities. The Company also makes special efforts for implementation of
the National Policy on persons with disability and has accordingly
introduced several facilities for their benefit.

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

IMPLEMENTATION OF THE OFFICIAL LANGUAGE POLICY:

The Official Language Implementation Committees function at the Corporate
and Regional offices, Refineries and major locations in order to implement
various provisions of the Official Language Act and Rules made thereunder.
Keeping in view the Annual Programme issued by the Government of India,
these Committees meet on a quarterly basis and take decisions in regard to
implementation of Hindi and review the progress made. Several Hindi
workshops and meetings of the Hindi Coordinators were organized. The First
Sub-Committee of the Parliamentary Committee on Official Language inspected
four locations and the Rajbhasha Vibhag of the Ministry of Home Affairs
carried out inspections at five locations. Inspections are also carried out
by senior officers of BPCL. Kochi Refinery and Kolkata Regional Office won
the Rajbhasha Rolling Trophy instituted by Kochi / Kolkata Town Official
Language Implementation Committee for Central Government public sector
undertakings and offices.

An attractive Incentive Scheme is in vogue to further enhance the Official
Language Implementation within the Corporation. Various competitions and
cultural programs were organized atworklocations during the Hindi fortnight
celebrations from 14th-28th September, 2008.

CITIZENS' CHARTER:

Citizens' Charter - a tool for ensuring transparency in educating and
communicating with the customers about their rights, apart from various
infrastructure / services being available for the customers, is always in
the forefront of all activities of the Company. Efforts are made to enhance
customer service levels. The Grievance Redressal Mechanism was taken care
of with well established systems at various consumer contact points.
Besides, BPCL has sought to leverage technology by making available a
feedback module in its website which the customer can have access to. An
Internet based online Grievance Redressal Mechanism (Centralised Public
Grievance Redress and Monitoring System) is helping in speedy redressal of
grievances. BPCL has disposed off 186 grievances online during the year.

The Right to Information Act 2005 has been implemented in BPCL. People
across the organization are familiar with the Act and BPCL has a unique
single window concept of all replies under the Act. During the period
ending 31st March, 2009, BPCL has received 1225 requests for information
and only 54 cases were referred to the Chief Information Commissioner, New
Delhi for review. No strictures have been passed against BPCL since the
inception of the Act in 2005.

VIGILANCE:

Corporate Vigilance in BPCL strives to enhance the ethical standards of the
organization and encourages sound business practices and good corporate
governance through an effective balance of preventive and detective
vigilance measures.

As a part of preventive vigilance, periodic/surprise inspections of
locations, depots and installations, retail outlets and LPG
distributorships were carried out. Inspections of major projects/works were
undertaken in line with the inspections carried out by the Chief Technical
Examiner. The observations and findings were brought to the notice of the
concerned departments together with specific recommendations for corrective
action and system improvements. Initiatives for the use of technology in
the areas of procurement and interface with vendors, contractors etc. were
promoted.

Corporate Vigilance continued to act effectively on complaints by
conducting detailed investigations. During the year, a total of 146
complaints were received and 77 investigations were completed and closed.
Also, 306 web-based complaints received during the year were disposed off.

An informative brochure on 'Public Interest Disclosures & Protection of
Informer' (PIDPI) Resolution, popularly know as the 'Whistle Blowers'
Resolution' was released as part of Vigilance Awareness Week on 3rd
November, 2008.

SUBSIDIARY COMPANIES:

Numaligarh Refinery Limited (NRL):

BPCL holds 61.65% of the paid up equity in Numaligarh Refinery Limited
(NRL) as on 31st March, 2009. NRL, which is a Mini Ratna company (Category
I) has a 3 MMTPA refinery at Numaligarh in Assam. The Refinery has, as on
31st March, 2009, completed 2598 days of Lost Time Accident free operations
(equivalent to 1.25 crore man-hours) since its commissioning. The quantum
of crude oil processed during the year 2008-09 was 2.25 MMT as compared to
2.57 MMT during the previous year. NRLs net worth as at the end of the year
stood at Rs. 2350.65 crores giving a book value of Rs. 31.95 per share. NRL
recorded a turnover of Rs. 8853.35 crores and profit after tax of Rs.

235.64 crores for the financial year ending 31 st March, 2009 as compared
to a turnover of Rs. 8764.16 crores and profit after tax of Rs. 372.81
crores in the previous year. The Board of Directors of NRL has recommended
a dividend of Rs. 1.50 per share as against Rs. 2.00 per share in the
previous year.

NRL has bagged the National Energy Conservation Award - 2008 (second prize)
from Bureau of Energy Efficiency under the Ministry of Power. NRL was also
awarded the Shreshtha Suraksha Puraskar in the manufacturing sector.

Bharat PetroResources Limited (BPRL):

Bharat PetroResources Limited (BPRL) was incorporated on 17th October, 2006
as a wholly owned subsidiary of BPCL to focus on exploration and production
activities. The company has an authorized capital of Rs. 1,000 crores. The
subscribed share capital of BPRL as on 31st March, 2009 was Rs. 502.55
crores. In India, BPRL has participating interests in 9 exploration blocks
which were acquired in the NELP IV, NELP VI and NELP VII rounds of bidding
in consortium with various partners. BPRL also has participating interests
in 5 blocks in the United Kingdom, Australia and Oman.

BPRL, through its wholly owned subsidiary company, Bharat PetroResources
JPDA Limited (BPR-JPDA Ltd.), has a participating interest of 25% in Block-
JPDA 06-103-East Timor in the joint petroleum development area between East
Timor and Australia.

BPRL had further incorporated a wholly owned subsidiary company, BPRL
International BV with an investment of Rs. 341.64 crores, which in turn,
has incorporated other subsidiary companies viz. BPRL Ventures BV and BPRL
Ventures Mozambique BV for undertaking exploration activities. BPRL
Ventures BV has participating interests in 10 blocks in Brazil. Similarly,
BPRL Ventures Mozambique BV has participating interests in a block in
Mozambique.

BPRL incurred a loss of Rs. 13.93 crores for the year ending 31st March,
2009 as compared to a loss of Rs. 7.38 crores for the year ending 31st
March, 2008.

Annual Accounts of the Subsidiary Companies:

In view of the dispensation granted by the Central Government under Section
212(8) of the Companies Act, 1956, copies of the Balance Sheet, Profit and
Loss Account, Directors' Report and the Auditors' Report of the Subsidiary
Companies are not attached to the Balance Sheet of the Company. In
compliance with the conditions of the dispensation, the Consolidated
Financial Statements have been presented in the Annual Report and financial
information of the Company's subsidiaries, as required, is disclosed in the
Annual Report as Annexure F to the Directors' Report for information. The
Audited Annual Accounts of the Subsidiary Companies and related detailed
information are open for inspection by any Member at BPCLs Registered
Office. Further, BPCL would make available these documents, on request, to
any of its Members and the said documents would also be posted on BPCLs
website.

JOINT VENTURE COMPANIES:

Petronet LNG Limited:

Petronet LNG Limited (PLL) was formed in April, 1998 for importing LNG and
setting up LNG terminals at Dahej and Kochi with facilities like jetty,
storage, regasification etc. to supply natural gas to various industries in
the country. PLL was promoted by four public sector companies viz. BPCL,
Indian Oil Corporation Limited (IOC), Oil & Natural Gas Corporation Limited
(ONGC) & GAIL (India) Limited (GAIL), who contributed 12.5% each to the
equity. The balance equity was raised over a period of time from Gaz de
France 10%, the Asian Development Bank 5.2% and balance 34.8% from the
public in March, 2004. BPCLs investment in the equity of PLL was Rs. 98.75
crores. As at 31st March, 2009, PLL had a net worth of Rs. 1,983.43 crores
with a book value of Rs. 26.45 per share. PLLs equity shares are listed on
the Stock Exchanges.

PLL has set up a LNG receipt terminal and regasification facilities of 5
MMPTA capacity at Dahej in Gujarat and makes commercial supplies of
regasified LNG from the said terminal. To meet the increasing demand of the
power and fertilizer sectors, expansion of the Dahej Terminal from 5 MMTPA
to 10 MMTPA, which had commenced in the year 2006, is now nearing
completion and would be ready for commercial use in the current financial
year. Another LNG Receiving and Regasification Terminal of 5 MMTPA is being
set up at Kochi.

Income from operations for the financial year ending on 31st March, 2009
amounted to Rs. 8,428.70 crores as compared to Rs. 6,555.31 crores in the
previous year. The company had a net profit of Rs. 518.44 crores for the
current year as compared to Rs. 474.65 crores achieved in 2007-08. PLL has
declared a dividend of 17.5% for the financial year 2008-09 as compared to
15% in the previous year.

Indraprastha Gas Limited:

Indraprastha Gas Limited (IGL) a Joint Venture Company with GAIL, was setup
in December, 1998 for implementing the project for supply of CNG to the
household and automobile sectors in Delhi. BPCL invested a sum of Rs. 31.50
crores in IGL for a 22.5% equity stake in the company. IGL has commissioned
over 166 CNG Stations (including 2 in Noida) which supply environment
friendly fuel to more than 2,28,000 vehicles. IGL also serves domestic and
commercial PNG customers in Delhi. The company is also extending its
business to the towns of Greater Noida and Ghaziabad.

As at 31st March, 2009, IGLs net worth stood at Rs. 684.42 crores with a
book value of Rs. 48.89 per share. During the year 2008-09, IGL registered
a turnover of Rs. 962.14 crores and a profit after tax of Rs. 172.47 crores
as compared to a turnover of Rs. 809.80 crores and profit after tax of
Rs.174.46 crores in the previous year. IGL has proposed a dividend of Rs. 4
per share for the year ended 31st March, 2009 which is unchanged from the
dividend declared for the previous year. The shares of the company are
listed on the Stock Exchange, Mumbai and National Stock Exchange of India
limited.

Sabarmati Gas Limited:

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

BPCL and GSPC each have a share of 25% of the equity capital of the Company
and the balance has been offered to the Financial Institutions. SGL has set
up 5 CNG stations to meet the CNG requirements of vehicles.

SGL has achieved a turnover of Rs. 258.95 crores and profit after tax of
Rs. 11.94 crores for the financial year ending 31st March, 2009 as against
a turnover of Rs. 97.30 crores and a profit after tax of Rs. 4.76 crores in
the previous year. SGL has maintained a dividend of 15% for the financial
year ending 31 st March, 2009.

Central UP Gas Limited:

Central UP Gas Limited (CUGL) is a Joint Venture Company set up in March,
2005 with GAIL as the other partner, for implementing the project for
supply of CNG to the household, industrial and automobile sectors in Kanpur
in Uttar Pradesh. BPCL has invested Rs. 13.50 crores in the joint venture
for a stake of 22.5% in the equity of the company. CUGL has set up 7 CNG
stations in Kanpur and 1 in Bareilly. CUGL is planning to enter the
Allahabad and Rae Bareilly markets. It has also commenced its PNG
operations.

CUGL has achieved a turnover of Rs. 35.63 crores and profit after tax of
Rs. 7.95 crores for the financial year ending 31st March, 2009 as compared
to a turnover of Rs. 26.76 crores and a profit of Rs. 5.29 crores in the
previous year. CUGL has proposed a dividend of 3.5% for the current year
against 2.5% maiden dividend declared in the previous year.

Maharashtra Natural Gas Limited:

Maharashtra Natural Gas Limited (MNGL) was set up on 13th January, 2006 as
a Joint Venture Company with GAIL as the other partner for implementing the
project for supply of CNG to the household, industrial and automobile
sectors in Pune and its nearby areas. BPCLs investment in this project is
Rs. 22.5 crores for a 22.5% share of the equity capital. The Company has
completed its financial closure by inducting IDFC, ILFS and Axis

Bank as shareholders. The Company has commenced its operations in December
2008, and has set up 8 CNG stations during the year.

MNGL has achieved a turnover of Rs. 1.47 crores for the financial year
ending 31st March, 2009 and has incurred a loss of Rs. 3.96 crores for the
year.

Bharat Stars Services Private Limited:

Bharat Stars Services Private Limited (BSSPL), a Joint Venture Company
promoted by BPCL and ST Airport Pte. Ltd., Singapore was incorporated on
13th September, 2007 with an authorized capital of Rs. 10 crores for
providing into plane fuelling services at the new Bengaluru International
Airport.

BPCL & ST Airport Pte. Ltd. have each subscribed to 50% of the equity
capital of the JVC. BPCLs present contribution is Rs. 5 crores. The company
has commenced its operations at the new airport in Bengaluru from May,
2008.

BSSPL has achieved a turnover of Rs. 1.20 crores for the financial year
ending 31st March, 2009 and has incurred a loss of Rs. 0.33 crores after
providing for depreciation of Rs. 0.62 crores.

Bharat Renewable Energy Limited:

A new Joint Venture Company was incorporated on 17th June, 2008 for
production, procurement, cultivation plantation of horticulture crops such
as Jatropha and Pongamia, trading, research and development and management
of all crops and plantation including Biofuels in the state of Uttar
Pradesh, with an authorized capital of Rs. 30 crores. The Company has been
promoted by BPCL with Nandan Biomatrix Limited, Hyderabad and Shapoorji
Pallonji Company Limited through their affiliate. All the partners have
contributed equally to the capital of the new Company.

The Company's objective is to enter the Bio-diesel Value Chain. The Company
aims to produce 10 lakh tonnes of Bio-diesel from 10 lakh acres (404686.3
hectares) of marginal land and provide employment to 10 lakh people in the
next 10 years. In the current year, a beginning has been done by completing
plantation in about 2.5 acres (1.01 ha) of land in Sultanpur in Uttar
Pradesh and BREL has initiated action for plantation of Jathropa in around
5100 acres (2063.90 ha) of marginal land identified for this purpose.

Matrix Bharat Marine Services Pte Limited:

A new Joint Venture Company was incorporated in Singapore on 20th May, 2008
between BPCL and Matrix Marine Fuels, USA an affiliate of the Mabanaft
group of companies, Hamburg, Germany to carry on the bunkering business and
the supply of marine lubricants in the Singapore market, as well as
international bunkering including expansion in the Asian and Middle East
markets. It will also undertake development of international bunkering
facilities at Indian ports, risk management including hedging activities,
inventory management, quality blending and freight optimization by
utilizing the back haulage of time charter vessels for importing petroleum
products in India.

The authorised capital of this company is USD 4 million with equal
contribution by both the partners. Matrix Marine Fuels L.P USA has
subsequently transferred their share and interest in the joint venture in
favour of Matrix Marine Fuels Pte. Ltd., Singapore, another affiliate of
the Mabanaft group. The Company has already begun its activities of ex-pipe
bunkering operations from August, 2008. The company has recorded a turnover
of USD 67.99 million and loss of USD 0.14 million in the first year of
operation ending on 31 st December, 2008.

Petronet India Limited:

BPCL has 16% equity participation with an investment of Rs.16 crores in
Petronet India Limited, (PIL) a financial holding company. PIL had
facilitated pipeline access on a common carrier principle, through its
joint ventures for the pipelines put up by them viz. Vadinar-Kandla
(Sikka-Kandla section), Kochi-Karur and Mangalore-Hassan-Bangalore. PIL
registered a net loss of Rs. 27.01 crores for the financial year ending
31st March, 2009 as against a net loss of Rs. 0.74 crores in the previous
year.

The new pipeline policy has affected the working of the Company. As there
are no possibilities of future projects, promoters and other investors in
PIL reached a conclusion that continuation of PIL would not be viable.
Accordingly, the winding up process has been initiated by appointing ICICI
Securities Limited as financial advisor and consultant for the divestment
of PILs stake in the Joint Venture Companies.

Petronet CCK Limited:

BPCL has a 49% equity stake in Petronet CCK Limited (PCCKL) at an
investment of Rs. 49 crores. The Company owns the 292 km Kochi-Karur
pipeline, which commenced commercial operations from September, 2002.
Pumping volume during the current year amounted to 1.57 MMT against 1.35
MMT in the previous year.

PCCKL closed the financial year ending on 31st March, 2009 with a turnover
of Rs. 45.74 crores and net loss of Rs. 3.25 crores as against a turnover
of Rs. 41.04 crores and net loss of Rs. 2.57 crores in the previous year.
BPCL has initiated steps, subject to completion of all formalities, to
purchase the 26% equity share of Petronet India Limited in PCCKL.

CONSERVATION OF ENERGY, TECHNOLOGICAL ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO:

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

MEMORANDUM OF UNDERSTANDING WITH MINISTRY OF PETROLEUM & NATURAL GAS:

BPCL for the twentieth successive year has entered into a Memorandum of
Understanding for 2009-10 with the Ministry of Petroleum & Natural Gas. The
Corporation has been achieving an 'Excellent' performance rating, since
1990-91.

PARTICULARS OF EMPLOYEES UNDER SECTION 217(2A):

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

CORPORATE GOVERNANCE:

As required under Clause 49 of the Listing Agreement and Department of
Public Enterprises (DPE) Guidelines, the Report on Corporate Governance,
together with the Auditors' Certificate on compliance of Corporate
Governance, is annexed as Annexure B.

The forward looking statements made in the Management Discussion and
Analysis' are based on certain assumptions and expectations of future
events. The Directors cannot guarantee that these assumptions are accurate
or these expectations will materialize.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors of
BPCL confirm that:

1. In the preparation of the Annual Accounts, all the applicable Accounting
Standards have been followed alongwith proper explanation relating to
material departures.

2. The Company has selected such Accounting Policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the State of Affairs of the
Company as on 31st March, 2009 and of the Profit and Loss Account of the
Company for the year ended on that date.

3. The Company has taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.

4. These Accounts have been prepared on a going concern basis.

DIRECTORS:

Shri V.D. Gupta and Shri P.C. Sen, Directors resigned from the Board with
effect from 19th May, 2008. The Directors have placed on record their
appreciation of the valuable contributions made and guidance given by them
for the development and progress of the Company's business. Smt. Rama
Bijapurkar and Prof. S.K. Barua were appointed as Additional Directors
under Articles 77A of the Articles of Association of the Company with
effect from 20th May, 2008. The Shareholders have appointed them as
Directors of the Company at the AGM held on 22nd September, 2008.

Shri S.A. Narayan, Director (Human Resources) laid down his office with
effect from 9th June, 2008. The Directors have placed on record their
appreciation of the valuable contributions made and guidance given by him
for the development and progress of BPCLs business in general, and in the
Human Resources Development area in particular. Shri S. Mohan, Executive
Director (HRD), was appointed as Additional Director under Article 77A of
the Articles of Association of the Company with effect from 25th June,
2008. Shri Mohan also assumed the office of Director (Human Resources) from
that date in pursuance of his appointment by the President of India. The
Shareholders have appointed him as Director of the Company at the AGM held
on 22nd September, 2008.

Shri P.H. Kurian, ex-Secretary (Investment Promotion), Government of Kerala
resigned from the Board with effect from 15th June, 2009. The Directors
have placed on record their appreciation of the valuable contributions made
and guidance given by him for the development and progress of the Company's
business. Shri T. Balakrishnan, Principal Secretary (Industries &
Commerce), Government of Kerala was appointed as Additional Director with
effect from 17th June, 2009, by the Board of Directors, under the
provisions of Article 77A of the Articles of Association of the Company.
Being an Additional Director, he holds office upto the date of the Annual
General Meeting. The Company has received a notice under Section 257 of the
Companies Act, 1956, from a Member proposing his name for appointment as
Director retiring by rotation' at the ensuing Annual General Meeting.

As required under Section 256 of the Companies Act, 1956, Prof. N.
Venkiteswaran and Shri P.K. Sinha, Directors, will retire by rotation at
the ensuing Annual General Meeting, and being eligible, offer themselves
for re-appointment as Directors at the said Meeting. As required under the
Corporate Governance Code, brief bio-data of the above Directors who are
appointed/ reappointed at the Annual General Meeting are provided in the
Corporate Governance Report.

STATUTORY AUDITORS:

M/s. B.K. Khare & Co., Chartered Accountants, Mumbai, were appointed as
Statutory Auditors for the year 2008-09, by the Comptroller & Auditor
General of India (C&AG), under the provisions of Section 619(2) of the
Companies Act, 1956. They will hold office till the ensuing Annual General
Meeting. The application for the appointment of Statutory Auditors for the
financial year 2009-10 has been made to C&AG.

ACKNOWLEDGEMENTS:

The Directors recognize and acknowledge the services rendered by employees
at all levels, without whose efforts, BPCL would not have been able to
achieve its objectives and goals.

The Directors communicate their deep sense of gratitude to BPCLs valued
customers for their continued patronage and support and look forward to the
continuance and further strengthening of this mutually supportive
relationship in future.

The Directors express their sincere thanks for all the support and guidance
received from the various Ministries of the Government of India,
particularly from the Ministry of Petroleum & Natural Gas, which has been
instrumental in BPCL being able to function efficiently and executing its
business plans.

The Directors place on record their sincere appreciation of the role played
by BPCLs dealers, distributors, contractors and suppliers in its success.

The Directors also convey their sincere thanks to each and every shareowner
of BPCL for their continued support.

For and on behalf of the Board of Directors

Sd/-
Place: Mumbai Ashok Sinha
Date : 24th July, 2009 Chairman & Managing Director

MANAGEMENT DISCUSSION & ANALYSIS RETORT:

ECONOMIC DEVELOPMENTS:

The year 2008-09 was one of the most difficult years for businesses and
economies across the world. After the sustained bull run in the global
markets, turbulence became the order of the day. The crisis was
unprecedented in terms of its impact across the world. The systemic failure
of the credit markets, which was a consequence of the very high leverage
levels, differentiates this financial meltdown from the previous downturns
experienced by countries. Several Governments had to intervene to restore
confidence and build trust in the markets. Commodity prices came off
sharply from their record highs, catching many players on the wrong foot.
The share price indices fell sharply across the world. The currency markets
also experienced very high volatilities. Real estate prices which had run
up significantly on the back of easy flow of money crashed. Countries
across the world started experiencing recessionary trends leading to a
steep decline in the level of economic activity.

The Indian economy, which is largely driven by domestic demand, remained
one of the few bright spots in an otherwise gloomy environment. However,
the global crisis did have an impact, as the rate of growth came down. The
Gross Domestic Product (GDP), which had been growing at 9% levels in the
last few years, grew by 6.7% in 2008-09. With global financial institutions
trying to strengthen their liquidity position, the share markets witnessed
a sharp sell off by foreign institutional investors, which resulted in a
sudden and steep fall in the indices. Besides bringing down market
capitalisation substantially, the till then buoyant primary market also
dried up. In the recent past, there have been very few equity offerings in
the primary market. The crisis of confidence across the world led to cash
being conserved and efforts being made to liquidate investments in emerging
markets like India. There has also been a sharp fall in the value of the
Indian rupee with reference to the US dollar. The pace of the currency
depreciation caught many corporates by surprise.

TRENDS IN THE OIL & GAS SECTOR:

Crude oil prices had touched a peak of around USD 147 per barrel in July
2008. There has been a sustained fall in the prices since then, as demand
fell significantly on account of the global slowdown. With the major oil
producing countries resorting to cuts in production of crude oil, there was
some stabilisation of the prices. As per the estimates drawn up by the
Organisation of the Petroleum Exporting Countries (OPEC), in its July 2009
issue of the monthly oil market report, the global economic downturn is
likely to reduce the world oil demand by 1.6 million barrels per day in
2009 to average 83.8 million barrels per day. Growth in demand for oil is
expected only from countries like India and China. However, prices have
once again started creeping up on expectations of global economic activity
picking up.

The fall in prices is likely to slow down the pace of exploration
activities, as companies wait for markets to recover. The volatility in the
oil markets is therefore, likely to continue in the near future.

Although the year 2008-09 saw crude oil prices reach record levels, the
sharp correction in the prices during the course of the year has given some
respite to countries, which are largely dependent on imports for meeting
their oil requirements. However, as the efforts being made by Governments
to kick-start the economies bear fruit, demand is likely to go up, which
could impact prices.

In line with the crude oil prices, product prices in the world markets have
come down significantly. However, the average prices in 2008-09 of key
products like Motor Spirit (MS), High Speed Diesel (HSD), Liquefied
Petroleum Gas (LPG) and Aviation Turbine Fuel (ATF) have been quite high.
Although falling product prices have given some respite, alternative
sources of energy continue to attract attention, from the point of view of
both, lower prices and environmental considerations.

Over the last few years, heavier and sour crude oils formed a higher
proportion of the crude oil basket as the light/ heavy crude differentials
were quite high. Consequently, newer refineries with the latest facilities
were opting for heavier crude oils to take advantage of the differentials.
The year 2008-09 has seen a sharp reduction in the differential, with the
average spread between Brent and Dubai crude down to USD 1.68 per barrel
from a level of USD 5.03 per barrel in the previous year. Recently, the
differential has turned negative as demand for light crude in the major
economies declined and production of high sulphur crude was reduced. These
changes are expected to have an impact on the refinery economics.

INDIAN PETROLEUM SECTOR:

India's GDP is estimated to have grown by 6.7% in 2008-09. The key sectors
of the economy, including agriculture, manufacturing and services are
estimated to have grown at a slower rate as compared to the previous year.
Consequently, the rate of growth in the consumption of petroleum products
has reduced. As per the provisional figures released by the Petroleum
Planning & Analysis Cell in the Ministry of Petroleum & Natural Gas,
consumption of petroleum products in the country in 2008-09 has increased
by around 3.5% over the previous year, which is about 50% lower than the
growth rate in 2007-08. The consumption of petroleum products stood at
133.40 MMT, as compared to 128.95 MMT in 2007-08.

While the consumption of transportation fuels like MS and HSD have grown
over the previous year, the rate of increase has been lower as compared to
2007-08. While consumption of MS has grown by 9%, consumption of HSD
increased by 8.4%. There has been growth in the consumption of Naphtha,
which is not expected to be sustained in the current year on account of the
increased availability of gas in the domestic market. While the demand for
LPG has remained flat, Bitumen consumption has shown an increase. All other
products have declined in line with the weak growth witnessed in the
economy. The decline in the demand of ATF is reflective of the slowdown in
the Aviation sector.

As crude oil prices surged in the global markets, the price of the Indian
basket of crude moved up significantly and had peaked at USD 142.04 per
barrel in July 2008. However, with the decline in prices, the average cost
of the Indian basket of crude in 2008-09 at USD 83.6 per barrel represented
an increase of 5.45% over the level of USD 79.3 per barrel in 2007-08.
Despite the volatility of prices in the international markets, the
percentage increase in the average cost of the Indian basket of crude was
much lower as compared to the last few years. The unprecedented rise in the
prices of crude oil, coupled with the inability to pass on the entire
burden to the consumer, had put an enormous strain on the liquidity
position of the refining and marketing companies. The subsequent sharp
decline in prices, while providing relief, has also led to significant
inventory losses, considering the time lag between purchase of crude oil
and sale of the finished products.

India continues to be dependent on imports for meeting a major portion of
the country's crude oil requirements. The quantity of crude oil imported
during the year 2008-09 amounted to 128.16 MMT, which represented an
increase of 6.49 MMT over the previous year. The outgo on these imports
stood at USD 75.7 billion (Rs. 3,41,887 crores) as against USD 68 billion
(Rs. 2,72,699 crores) in 2007-08. The current financial year has seen oil
prices inch up on expectations that global economies will recover soon even
as major oil producers have cut production.

The year saw a reduction in the quantity of petroleum product imports.
Product imports declined from 22.46 MMT to 18.29 MMT The outgo on product
imports also declined to USD 13.5 billion (Rs. 60,893 crores) from USD 15.1
billion (Rs. 61,000 crores) in the previous year. During the same period,
India's export of petroleum products has also declined. Exports, which
stood at 40.8 MMT in 2007-08, fell to 36.9 MMT in the year under review.
The foreign exchange earned on these exports stood at USD 26.3 billion
(Rs.1,17,458 crores) in 2008-09 as compared to USD 27.6 billion
(Rs.1,10,789 crores) in 2007-08.

The extreme volatility in the crude oil prices had put a big strain on the
finances of the downstream oil refining and marketing companies. The
Government had made some fiscal changes with a view to ease the burden on
the oil companies. In addition to upstream oil companies extending
discounts on crude oil purchased by the refining companies, the Government
also issued bonds to the oil marketing companies to compensate for the
losses suffered on sale of the four sensitive products. Prices of MS, HSD
and LPG for domestic consumption were increased in June 2008. All these
measures were directed towards mitigating the growing under-recoveries of
the refining and marketing companies. Notwithstanding these efforts, these
companies had to pass through some very tough times and their borrowings
increased substantially. Besides the increased interest burden, oil
companies incurred losses on the sale of bonds owing to the decline in the
bond prices. The decline in the international prices also helped in
providing relief to the oil companies. The benefit of the falling prices
was passed on to consumers by way of reduction in the retail prices of MS,
HSD and LPG in December 2008 and January 2009.

India continues to be long on refining capacity in comparison to the
domestic demand. The domestic crude oil processing in 2008-09 was of the
order of 157.1 MMT as compared to 150.81 MMT in the previous year. With
fresh refining capacity having come in the recent past and considering
refinery projects in different stages of completion, India's refining
capacity will be in excess of domestic demand.

With the stabilisation of oil prices, the private players, who had
withdrawn from the marketing of MS and HSD, are drawing up plans to re-
enter the market. The public sector units can expect to face increased
competition from these players. However, the effects of the economic
slowdown could impact the demand for petroleum products.

OPPORTUNITIES AND THREATS:

Even as many countries are grappling with fears of economic recession,
India is expected to remain an oasis of growth. With the focus largely on
the huge domestic market, the country's GDP is expected to keep growing,
although sustaining the 9% growth rates of the recent past may be tough. In
this scenario, oil and gas companies will have ample opportunities to grow
as they go about meeting the demand of the energy hungry economy.

The Government is contemplating the deregulation of pricing of transport
fuels i.e. MS and HSD. This will bring with it more opportunities and
greater challenges. Companies will need to manage their capital expenditure
plans in this challenging environment, as these will be critical for
sustaining and growing market share.

One of the key challenges facing the oil refining and marketing companies
will be the need to make available MS and HSD complying with higher product
specifications from April 2010 onwards. The refineries in Mumbai and Kochi
are gearing themselves to comply with these requirements. In addition, the
refining capacity of Kochi Refinery will increase with the expected
commissioning of the expansion project by the end of the year. Besides
increasing the availability of products, the enhanced refining capacity
will contribute towards better utilisation of crude oil import facilities,
which were commissioned in Kochi during the previous year.

Work on the new grass roots refinery at Bina in Madhya Pradesh is
progressing and the project, which is being executed by Bharat Oman
Refineries Limited (BORL), a Joint Venture Company promoted by BPCL, is
expected to be commissioned on schedule. Owing to the difficult situation
in the capital markets, BORL has not been able to go ahead with its plans
for raising funds by way of an Initial Public Offering. Notwithstanding
this, BPCL has ensured that work on the project has progressed smoothly by
bringing in additional funds by way of debt. The commissioning of the
refinery will strengthen BPCLs position in terms of product availability in
some of the key markets in the country.

The high levels of refining margins have to some extent mitigated the
burden caused by the inability to pass on the impact of the rising prices
of sensitive petroleum products like MS, HSD, LPG (Domestic) and Superior
Kerosene Oil (SKO). The price differential between heavy and light crude,
coupled with the ability of refiners to process heavier crude oils, was the
key to achieving higher margins. With the light heavy crude oil price
differentials narrowing significantly in the recent past, the advantages
arising out of the ability to process heavier crude could diminish.

The retail market continues to offer great potential from the point of view
of long term growth and profitability. At the same time, there are many
challenges. With oil prices stabilising, private players who had vacated
the market are expected to return. The liquidity concerns had some impact
on the capital expenditure plans. There are also concerns around retail
site security, particularly in urban centres, with landowners demanding
sharp increases in rents or vacation of the sites. Changes in the relevant
statutes have made it more difficult for oil companies to secure legal
protection in such situations. This issue is being addressed by securing
new sites on long leases or by way of outright acquisition of strategic
sites. BPCL, with its traditional strengths in this area, is confident of
being able to deal with the challenges and sustain its leading position in
the market.

The LPG business continues to bear the burden of under-recoveries on
account of the selling price being lower than the cost in the case of
domestic sales. Although the easing of LPG prices in the international
market has provided some respite, the shortfall in sales realisation
continue to hurt the business. The focus has therefore, remained on
enhancing value in important areas like supply chain management, the '
Beyond LPG' initiative and sale of value added products like Bharat Metal
Cutting Gas.

The Industrial & Commercial business poses several challenges. The increase
in sale of products like Naphtha may not be sustained as increased volumes
of domestically produced Gas becomes available in the country. With the
joint venture for the bunkering business having commenced operations, BPCL
is looking at securing a good share of bunkering volumes, which can help in
increasing sales. As additional volumes from private refineries enterthe
market, the level of competition has increased. The speed at which the key
sectors of the economy recover will hold the key to the fortunes of the
business.

The Lubricants business has had to face the brunt of the economic slowdown.
There has been pressure on margins in different segments of the market.
Exports to neighbouring countries are an important area of focus. Efforts
are also directed at leveraging the strength of producing one of the
country's finest quality Group II base oils.

The Indian aviation sector is facing very difficult times. With the
passenger load factors coming down sharply, airlines have reduced their
flights. The overall market volume of ATF is expected to shrink. The ATF
market has therefore, become highly competitive. Emerging trends indicate a
move towards consolidation amongst the airlines. Besides, they are
increasingly looking at the low cost carrier model as a means of survival.
With margins shrinking and larger amounts blocked in meeting the higher
working capital needs, tough times are likely to continue for the Aviation
business.

BPCL has been an early mover in the Gas market and retains a significant
presence, both in the RLNG and in the city gas distribution markets. The
market is expected to witness significant changes with the domestic
production of gas set to increase.

Securing crude oil supplies has been a key objective of BPCL. BPCLs wholly
owned subsidiary company, Bharat PetroResources Limited (BPRL), which is
spearheading BPCLs foray in the upstream exploration and production sector,
has participating interest in 26 blocks in India and abroad.

The year gone by was an extremely difficult year. The sharp economic
downturn has impacted all businesses. As the Government sought to protect
the economy from the full impact of the rising crude oil prices, the
downstream refining and marketing companies had to cope with severe
liquidity constraints. Increased borrowings led to significant rise in the
interest cost. Further, although oil bonds were received as compensation
for under-recoveries, the delay in receipt of these bonds, coupled with the
adverse movements in the yields, have affected the profitability for the
year. The sharp depreciation in the Indian rupee against the US dollar led
to considerable amount of foreign exchange losses. Finally, the sharp fall
in prices in the international markets in the later part of the year led to
refining and marketing companies having to suffer losses on account of the
fall in inventory values.

With cash being at a premium, there was an urgent need to have a close look
at all aspects of operations. BPCL has viewed this as an opportunity to put
in place mechanisms and processes which can bring long term benefits for
the Organisation. These efforts are expected to stand BPCL in good stead in
the coming days. There are indications that the economic situation will
start improving. At the same time, the volatility in oil prices is expected
to remain a serious concern. BPCL is confident of not only facing the
challenges, but also increasing its market participation.

PERFORMANCE:

The performance of the various Strategic Business Units (SBUs) and Entities
is discussed in detail in the following paras.

REFINERIES:

Mumbai Refinery:

Mumbai Refinery achieved a crude throughput of 12.26 MMT in 2008-09 as
compared to 12.75 MMT in 2007-08. The capacity utilization of the refinery
stood at 102.18%. The lower throughput during the year was on account of
the planned turnaround of some of the key units of the refinery. The
refinery profitability was enhanced by the increased production of value
added products like MS, HSD, Lube Oil Base Stocks (LOBS) and Bitumen. The
gross refinery margin for the year amounted to Rs. 1,892.28 crores, which
works out to USD 4.48 per barrel of crude oil processed, as compared to the
margin of USD 4.6 per barrel in the previous year.

The refinery successfully demonstrated its capability in handling major
turnaround activities for several units simultaneously, thus minimising
throughput loss. This was made possible by introducing new techniques and
practices on the field like chemical decontamination for complete cleaning
of process equipment and ceramic coating for energy conservation. In an
endeavour to satisfy customer requirements, Mumbai Refinery has continued
to modernize and expand its Quality Assurance Laboratory and equipped it
with new generation analytical instruments for enhancing overall laboratory
productivity & reliability. The laboratory was awarded seven gold
certificates for achieving 100% satisfactory performance during the year in
the Shell Main Products Correlation Scheme of M/s. Shell Global Solutions,
Netherlands. The refinery is implementing the 'Meridian - Asset Integrity
Management System (AIMS)' for inspection of refinery equipment and
pipelines. This will help in enhancing the mechanical integrity and
reliability of static equipment and pipelines in the Refinery.

On the safety front, the Refinery achieved 4 million man-hours without any
Lost Time Accident (LTA). The Occupational Health and Safety Management
System of the refinery was upgraded to OHSAS 18001:2007. An external safety
audit was carried out under the guidance of Oil Industry Safety Directorate
(OISD).

During the year, Mumbai Refinery has initiated energy saving audits in
several areas and implemented a number of energy conservation projects.
Mumbai Refinery has also been making concerted efforts for excelling in
environment preservation performance.

Mumbai Refinery had, in the previous year, initiated a focused program for
refinery margin improvement under Project KARMA - Key Activities for
Refinery Margin Augmentation. As part of this project, potential
improvement opportunities across 10 themes, including refinery
scheduling/planning, blending, steam & power; hydrogen management etc. were
identified. Out of a total of 35 ideas identified, 11 ideas were fully
implemented in 2008-09 and benefit amounting to approximately Rs. 125
crores (30 cents/barrel) has been realized.

Mumbai Refinery continued its tradition of winning Business Excellence
Awards when it was bestowed with the prestigious Ramakrishna Bajaj National
Quality Performance Excellence Award 2008 under the Manufacturing Category.
The Refinery has achieved the rare distinction of winning this award for
the second time in a row. The seven key categories covered leadership,
strategic planning, customer & market focus, measurement, analysis and
knowledge management, workforce focus, process management & business
results. The Refinery team's suggestion on Reduction in Bitumen Lorry
Turnaround Time in Mumbai Refinery' was adjudged the Best Suggestion and
awarded the first prize in the 19th Annual Convention organized by INSSAN
(Indian National Suggestion Schemes' Association) at Jamshedpur. This
prestigious award has been won by Mumbai Refinery for the second year in
succession.

Kochi Refinery:

The year saw Kochi Refinery achieving a throughput of 7.68 MMT as compared
to 8.20 MMT in the previous year. The capacity utilization of the refinery
stood at 102.4%. The refinery achieved its highest level of production of
ATF, Euro-III HSD, LSHFHSD and Bitumen, besides filling a record number of
5,26,443 Bitumen drums. The gross refining margin for the year 2008-09 was
USD 6.27 per barrel of crude oil processed, as against USD 7.18 per barrel
in the previous year.

Kochi Refinery's Quality Control Laboratory continued its participation in
the Shell Main Products Correlation Scheme of M/s. Shell Global Solutions,
Netherlands and was awarded four gold certificates for achieving 100%
satisfactory performance in the scheme during the financial year 2008-09.
Kochi Refinery has implemented Phase I of the Asset Integrity Management
System (AIMS), an initiative to enhance mechanical integrity and
reliability of static equipment in the Refinery.

During the year, there was no accident / fire incident at Kochi Refinery.
The refinery achieved 13 million man-hours of operation without any Lost
Time Accident during the year.

On the environment conservation front, Kochi Refinery installed an
additional Ambient Air Quality Monitoring System (AAQMS) at the Shore Tank
Farm area, Puthuvypeen, to monitor 11 key Pollutant Parameters on a
continuous basis. The traditional Bitumen Blowing Unit for Bitumen
production was replaced with state-of-the-art Biturox Technology for
production of various grades of Bitumen.

Quality Circles have been a key improvement initiative for Kochi Refinery
since 2004. The refinery has 14 Quality Circles spanning functional areas
like Manufacturing, Power & Utilities, Maintenance, Oil Movement & Storage,
Finance and Human Resources.

The refinery received the Safety Innovation Award for Implementing
Innovative Safety Management System from The Institution of Engineers
(India), Delhi State Centre. It was also awarded the First prize for
outstanding performance in Industrial Safety among Large Factories
(Employing more than 500 workers) in the Chemical / Petroleum category,
from the Department of Factories & Boilers, Government of Kerala, second
prize for the Occupational Health Centre from amongst all the factories in
Kerala from the Department of Factories & Boilers, Government of Kerala and
the Gold award for outstanding achievement in safety management in the
Petroleum Refinery sector, from the Greentech Foundation.

During the year, major community initiatives like construction of a new
operation theatre and infrastructure facilities at Government hospitals,
building of roads, culverts and bridges at rural areas, were undertaken. A
medical camp was conducted exclusively for the tribal population in a
remote settlement inside the forest of Malayattur Range in the Western
Ghats.

The Integrated Refinery Business Improvement Program was initiated at Kochi
Refinery with the help of M/s. Shell Global Solutions International and
Centre for High Technology, New Delhi. This program is aimed at developing
solutions to reduce the gaps in performance of the refinery in the areas of
energy management, operational performance and overall refinery margin, in
comparison with the Asia Pacific and Global refineries, as identified in
the benchmarking exercise undertaken earlier. A total of 19 Proposals for
Improvement (PFIs) were identified during the assessment phase of the
program, with a total benefit potential of 34 cents/barrel. Of these,
implementation of four PFIs has been completed and benefits are being
realized. The remaining PFIs are under various stages of implementation.

In the recent past, the upward surge in crude oil prices, coupled with poor
crack spreads, have put the refinery margins under pressure. This situation
is unlikely to change significantly in the near future. Further, the
refineries are mandated to upgrade the quality of their auto fuel products
(MS and HSD) to meet Euro-III/IV specifications by April 2010. The Mumbai
and Kochi refineries are gearing up to meet these and other challenges
facing them. The thrust is on reducing the operating and energy costs by
rationalization and fuel substitutions on one hand and undertaking
initiatives on improving value generation by optimizing the crude and
product mix, on the other. The refineries have demonstrated their
capability of implementing focused programs by engaging a large cross-
section of their employees for generating and implementing innovative ideas
for sustained improvement and deriving significant value for BPCL.
Attention is also being given to creating mechanisms for identifying the
best practices across various key processes and getting the same
implemented across the refineries. The underlying objective of all these
initiatives is to ensure that every opportunity for creating value is
utilised fully.

RETAIL:

During the year 2008-09, retail sales of the public sector oil companies
grew by 10.21% over the previous year. The growth in sales can be partly
attributed to the fact that private players had scaled down their retail
operations, owing to rising under-recoveries on the sale of MS and HSD.
BPCL closed the year with a retail sales volume of 16.16 MMT as compared to
14.75 MMT in 2007-08.

The sales of MS during 2008-09 stood at 3.22 MMT, reflecting a growth of
10.84% over the previous year's volume of 2.90 MMT However, in line with
the overall industry trend, the sale of branded petrol declined with
Speed' declining from 770.6 TMT in 2007-08 to 610.5 TMT in the current
year. HSD sales volume during the year was 11.22 MMT, which represented a
growth of 10.8% over the previous year's volume of 10.13 MMT However, like
in MS, the sale of the branded product 'Hi Speed Diesel' declined from 970
TMT in 2007-08 to 781.6 TMT in the current year.

As regards the alternate fuels, CNG sales recorded a growth of 10.37% in
2008-09 with a sales volume of 151.78 TMT However, the increase in the
price of LPG saw sales of Auto LPG decline by 20.94% from 67.95 TMT in
2007-08 to 53.72 TMT in the current year. BPCL has entered into a strategic
tie-up with General Motors India for authorizing selected Vehicle Care
Centres as GM Authorized Service Stations, with four such service stations
being unveiled in 2008-09.

During the year, BPCL commissioned 151 retail outlets, as compared to 1287
retail outlets commissioned by the industry. There was continued growth in
the Highway sector where the throughput per outlet grew from 241 KL per
month to 263 KL per month. The throughput per outlet in the highway outlets
catering to the trucker network grew from 763 KL per month to 842 KL per
month. BPCLs overall throughput per outlet of 205 KL was 9% higher than the
industry average. Further, in terms of market effectiveness, a ratio of
market share of sales volume to market share of outlets, BPCL continued to
occupy the top position in the industry.

The Logistics group handled a volume of 38.5 million KLs during the year,
representing a growth of 8.7% over the previous year. Optimisation of
Inventory, while ensuring adequate availability to meet market demand, was
one of the thrust areas during the year. Ethanol blending facilities have
been provided at supply locations. The Vehicle Tracking System now covers
95% of the tank lorries used for delivering MS/HSD to the outlets.

The 'Pure for Sure' (PFS) network was further expanded during the year and
currently, 6581 retail outlets are certified under the PFS banner. At
present, 9.1 out of every 10 litres sold through the BPCL network is sold
through a PFS outlet. Retail Automation continued to be an area of focus
and BRASS - FIT (Bharat Retail Automation Solution and Services - Real
Time) was made operational at 300 outlets. The total number of outlets
covered under this initiative now stands at 1902. BROMA (Bharat Retail
Outlet Maintenance Application) has been developed to provide transparency
and a comprehensive solution for Retail Outlet complaint management and
during 2008-09, the same was extended to all outlets. The system has also
been integrated with BPCLs SAP system for making vendor payments.

The 'Petro Card' programme now has 1.7 million customers and the SmartFleet
base grew to 1.04 million with the enrolment of 45,444 vehicles during the
year. Card sales accounted for a substantial value of Retail's MS/HSD
market sales turnover. The telecom sector was provided with a customised
technology solution for managing their towers under the SmartFleet
programme.

The Allied Retail Business, covering C-stores, Quick Service Restaurants,
financial and travel related services etc. ended the year with a turnover
of Rs. 306 crores, representing a growth of 45 %. The network of 282 In &
Out stores achieved a turnover of Rs. 138 crores, which was 26% higher than
the previous year. ATMs continued to be a focus area under the alliance
management strategy and alliances with 24 Banks make up for 227 ATMs which
are currently operating. Quick Service Restaurant sales through the
Alliance network during 2008-09 grew by 25%.

The retail business is expected to be challenging in the days to come.
Managing volatility of prices and growing customer expectations will be the
key to success in the retail segment. BPCL is looking at leveraging and
building upon its traditional strengths in this segment. It is focused on
achieving efficiency and cost effectiveness in the area of product
placement and management of inventory. Capital productivity is stressed
upon to ensure that funds are directed at areas which offer the best
potential in terms of growth. BPCL is confident of being able to hold its
own and continue growing in the retail market.

INDUSTRIAL AND COMMERCIAL:

The year 2008-09 was a challenging one for the Industrial & Commercial
business. The impact of the economic downturn on many of the customers,
volatility of prices, large scale imports by traders and end users etc.
were some of the factors affecting the business during the year.
Notwithstanding these challenges, the sales volumes during the year crossed
the 7 MMT mark for the second year in succession. The greater thrust on

Bitumen marketing resulted in BPCL achieving the highest growth in Bitumen
sales of 4.14%, as compared to the industry average of 1.09%. BPCL has also
improved its market share in Bitumen by 0.4%. While the Industry as a whole
witnessed a fall in sales of FO/LSHS due to lower demand from various
industrial segments, BPCL could contain the negative growth to 1.6%, which
is the lowest among the public sector oil marketing companies. Higher
demand from Naphtha based power plants led to a sharp rise in Naphtha
sales. There was however, a fall in RLNG sales volumes due to the higher
spot prices.

During the year, the focus was shifted to speedy collection of outstandings
from customers. Consequently, the quantum of customer balances has reduced
and in terms of number of days of sale, it has come down to 10 days, as
against 15 days during the previous year. Besides, the quantum of
collections through RTGS/NEFT has also increased substantially during the
year to reach a level of Rs. 8,250 crores. As on date, nearly 30% of the
turnover of the business is realised through these payment modes.

The business has a clear understanding of the challenges that lie ahead. It
is equipping itself to deal with these in the most effective manner. While
strategies are being put in place to meet the growing and diverse needs of
customers, attention is also being placed on various aspects of business
operations with a view to achieve greater efficiency. There is also
increased focus on reducing the working capital cycle by ensuring better
management of receivables from customers. The business is also looking at
strengthening its presence in the bunkering sector.

LUBRICANTS:

The economic slowdown has adversely affected the Lubricants business unit,
which ended the year with a sales volume of 203.22 TMT, as compared to
231.99 TMT achieved in 2007-08. The decline in the sales volume was mainly
on account of the lower sales of base oil during the year. However,
notwithstanding the difficult market conditions, the sales volumes of
finished lubricants has grown by 3.1% with the Reseller Channel growing by
5% and industrial segment by 2%.

During the year, segment specific oils like MAK D-Gen and MAK Auto XL were
introduced to cater to niche markets. The network of MAK distributors was
expanded with the objective of gaining leadership position in high value

grades. BPCLs service initiatives viz. MAK Garage and MAK Mobile Van, have
also been well received. On the retail front, service initiatives like Hero
Honda City Works, TATA Authorised Service Stations, V-Care and Quick Oil
Change programs were effectively implemented to give quality service to
customers. On the exports front, BPCL consolidated its presence in Sri
Lanka, Nepal and Bangladesh and has commenced supplies to the Chinese
market.

The Group II base oil, MAKBase', produced by Mumbai Refinery, is one of
the finest in the country. It has been mainly consumed for manufacturing of
MAK Lubricants. In addition, the base oil was sold to other manufacturers,
besides being exported.

The tough economic environment will continue to pose challenges to the
business. BPCL aims to leverage its strengths in terms of a captive source
of world class base oil and a well established brand. Attention is also
being placed on achieving greater efficiencies in the area of supply chain
management. With a growing number of new Genuine Oil tie-ups with reputed
manufacturers and a better presence in the market, BPCL is confident of
retaining and sustaining its position in the market even in these difficult
times.

LPG:

The LPG business continues to operate in a difficult environment. With the
domestic LPG consumers being more or less insulated from price volatility
in the international markets, the business continued to have under-
recoveries, which affected the liquidity position. Although the Government
has put in place a compensation mechanism, the time lag involved in the
process has had an adverse impact.

BPCLs total LPG sales during 2008-09 grew by 3.43% to reach a level of 3033
TMT The population of the domestic LPG customers crossed the 26 million
mark with the addition of 1.4 million new customers during the year. In the
commercial packed segment, where the product is sold at market determined
prices, BPCLs sales grew by 27.7% over the previous year. Sales of Auto LPG
from the 74 Auto LPG stations established across the country stood at 53.72
TMT A new LPG bottling plant with a capacity of 44 TMTPA was commissioned
during the year at Patna in Bihar. BPCL currently has 49 LPG Bottling
Plants with a rated capacity of 2126 TMTPA. The total bottling of LPG
during the year was 2741 TMT, representing a capacity utilization of
128.9%. A total of 38200 households have been connected through the LPG
Reticulated system or piped LP Gas' system.

The Beyond LPG' initiative registered a turnover of Rs.444 crores,
representing a growth of 27.6% over the previous year. During the year,
another 500 distributors got enrolled in this initiative and are selling a
large variety of non-fuel products through this channel. Bharat Metal
Cutting Gas (BMCG) has been another successful innovation from BPCL. It is
growing in popularity, given its performance efficiency and low cost vis-a-
vis Acetylene. Sales of BMCG in 2008-09 stood at 4735 MT BPCL has also
formed strategic alliances in several countries in the Middle East to
market BMCG. BPCL has been selected to partner Kenya Pipeline Company for
putting up LPG facilities in Nairobi, Kenya.

BPCL continues to accord the highest priority to Health, Safety Security &
Environment initiatives. Initiatives such as monitoring security system

scorecard, implementation of improvement measures, thrust on sustainable
development, and focus on reporting and correcting even the smallest unsafe
situation were undertaken.

Focus continues to remain on deriving maximum value from the commercial
segment, which operates in a free market mechanism, while at the same time
ensuring that the domestic consumers are served in the best possible
manner. Efforts are on to achieve faster turnaround and better utilization
of capital assets like LPG equipment with a view to optimize capital
investments. Benchmarking of operations and incorporating best practices at
the LPG plants are being stressed upon. All these are expected to bring in
significant value for BPCL.

AVIATION:

After a period of sustained growth, the Indian aviation sector experienced
severe turbulence during the year. There has been a fall in both,
international and domestic air traffic as airlines reduced flights.
Consequently, the oil industry saw the sales volume of ATF fall by 3.48%
during 2008-09. BPCLs ATF sales volumes declined from 959 TMT in 2007-08 to
916.60 TMT in 2008-09.

One of the key developments during the year was the move by the Indian oil
industry towards a transparent formula based pricing for ATE BPCLs joint
venture with ST Airport Services Pte Ltd. of Singapore viz. Bharat Stars
Services Private Limited commenced operations as the Into-plane Operator at
the new international airport in Bengaluru. BPCL also commissioned its 23rd
Aviation fuelling station at Nanded in Maharashtra.

The ATF business has undergone a paradigm shift in the recent past. As
airlines focus on optimising their costs, they have been aggressively
seeking lower prices. Consequently, there is intense competition as oil
companies seek to protect their volumes. The reduction of flights has only
added to the pressure. BPCL is focused upon making its presence felt in the
market by aggressively reaching out to customers and thereby, protecting
its market share.

HUMAN RESOURCES:

BPCL considers the quality of its human resources as one of its core
strengths. People at all levels are involved in all the key initiatives
undertaken by the Organisation. As on 31st March, 2009, BPCL had 14016
employees on its rolls.

The initiative started in 2006-07 to develop world class leadership in the
Organisation and developing the next generation of leaders was carried
forward. A large number of employees in the senior and middle management
level were subjected to a detailed assessment and their leadership profiles
were reviewed to align them to the future roles they could assume. In order
to render the desired focus to this strategic initiative, during the year,
the project team which had worked in this area was embedded as part of the
Human Resources team.

The training programs are being completely redesigned to offer each
employee an opportunity to develop future abilities, matching expectations
with opportunity. The focus is on helping employees unleash their potential
by unlearning old skills and acquiring new ones. Accordingly, a number of
customized training programs have been introduced during the year, keeping
in mind business priorities and enhancement of employees' ability to drive
change.

During the year, 29 students going abroad for pursuing higher studies were
provided financial support by way of scholarship under the BPCL scholarship
scheme for higher studies, which is aimed at promoting excellence in higher
education of meritorious students.

The IDEAS' platform is an initiative to recognize and promote creativity
at the workplace. It has helped promote employee commitment and
involvement, besides improving efficiency. During the year 2008-09, with a
view to engage more creative minds to achieve excellence and also enhance
the learning process, the platform was launched in three categories:
'Creative Stroke' for ideas that have been successfully implemented,
'Mind's Eye', for ideas that might not have found the right avenue for
implementation, but have huge potential in terms of business benefits and
'Echo' for replication of ideas already implemented in another location. In
all, 468 entries were received under 'Creative Stroke', 124 under 'Echo'
and 317 under the 'Mind's Eye' categories. A total of 44 awards were given
in recognition of the contribution made by the participants.

BPCL is the first and only company in the public sector to take the
employee friendly initiative of creating an Employee Satisfaction
Enhancement Cell entrusted with the responsibilities of resolving
employees' grievances and enhancing overall employee satisfaction. One of
its focus areas is to reach out to maximum number of employees in a
proactive manner to listen to them, understand their issues and concerns
and resolve them. Keeping in mind this key responsibility, the ESE Cell
launched an Employee Assistance Programme called ESE-Roshni in 2008-09.
This is another first for any oil company in India. Through the program,
counselling services are provided to the management staff and their
dependent family members by professional counsellors at no cost to them.
This helps a person to cope more effectively with everyday issues that
adversely impact his/her work performance, health and wellbeing. The
counselling services are made available through three different channels;
face to face counselling (seeing the counsellor in person), telephonic
counselling by talking to the counsellor over telephone and by writing the
problem and seeking counselling through email. The program has received an
excellent response, with a large number of staff and their family members
having registered to use the service. These measures and initiatives have
reinforced BPCL as a caring and employee friendly organisation.

INTEGRATED INFORMATION SYSTEMS:

Information Technology is a key area of strength and hence, a competitive
advantage for BPCL. Investment has been made during the year in
implementing various strategic initiatives and process improvements.

During the year, the upgrade of the non-HR SAP environment to ERP ECC 6.0
was completed successfully and subsequently, the SAP R/3 production system
was migrated to the Unicode system. BPCL has commenced the implementation
of Governance, Risk and Compliance (GRC) solution of SAP which is an
essential step in providing system based controls and risk mitigation
mechanism while handling business processes. The 'Access control' component
of the GRC solution was implemented in the LPG business as a pilot. This
will be rolled out across businesses in 2009-10. The Transportation
Planning & Vehicle Scheduling (TP&VS) component of SAP Supply Chain
Management was implemented in Jalgaon LPG plant for packed cylinder
dispatches and will be extended to all LPG locations during 2009-10.

The year saw the launch of the business application centric SAP based
portal (myPortal) in April 2009. The Employee Self Service application for
management staff was commissioned by migrating processes relating to
employee claims and reimbursements to the myPortal' platform. In the
coming days, myPortal would become the major application portal aggregating
information from different SAP and non-SAP systems. The information
dashboard for top management was also launched through myPortal'.

A number of initiatives aimed at achieving process improvements were
completed. These include the roll out of the Planned Delivery Programme
solution in the retail locations of the Northern and Southern regions and
implementation of B2B solution for transactions with IOC. BPCL has
introduced an innovative and indigenously developed state-of-the-art re-
fuelling system known as Apron Fuel Management System (AFMS) to cater
exclusively to the aviation industry. This complete Point of Sale (POS)
solution significantly reduces the fuelling time to the aircrafts and
generates Fuel Delivery Tickets without manual intervention, thereby
facilitating the electronic exchange of data.

In line with the efforts to support all business applications, redesign and
revamp of the BPCL network connecting major locations through Multi
Protocol Label Switching (MPLS) VPN technology Network was undertaken. MPLS
is aimed at augmenting the network infrastructure. MPLS provides for
increased bandwidth, better uptime and better manageability. Already 124
locations are put on MPLS links during the year, with further plans to
expand the same to a total of 185 locations. This has released the hitherto
primary VSAT connections which have been redirected to connect BPCLs Retail
Outlets. As on date, 427 outlets have been connected through VSAT for
betterment of customer services and also to support new outlet based
applications. The state-of-the-art VSAT hub site was upgraded with the
latest technology. This has contributed to capacity enhancement,
reliability and reachability. The In-Route bandwidth capacity has increased
from 2 Mbps to 5 Mbps with better uptime commitment during the rainy
season.

BPCLs foray into the SAP training arena continued and BPCLs SAP Training
Centre at Mumbai offered various programmes for external participants.
Besides, BPCL continued to deploy its specialised resources to leading
clients in India and abroad.

In the current scenario, where security of the Information Technology
environment is critical, BPCL has continued to focus on securing its
corporate IT assets and applications through client level security under
the initiative of Endpoint Security systems.

HEALTH, SAFETY, SECURITY & ENVIRONMENT:

During the year, enhanced efforts continued to address Health, Safety,
Security and Environment matters and attain sustainable performance at all
workplaces and beyond. Employee engagements were sought to be achieved
through active participation and sharing best practices across businesses
and entities. Training courses and workshops for company employees with
classroom & field training programmes were imparted during the year. An
unique program on Workplace Health & Hygiene was launched, where trained
officers were included as trainers to impart necessary knowledge to the
employees and contract workmen at locations.

Given the prevailing scenario, BPCL with its countrywide spread faces a
unique challenge to ensure security for people and property. All locations
were sensitized and advised to develop and put in place a 'Security Plan'
and to monitor security practices. An online reporting system has been
extended to report any security related incident at locations.

On the environment front, focus continued on Clean Development Mechanism
(CDM) initiatives. During the year, the 5 MW windmill project at Kappatguda
village in Karnataka state was approved by United Nations Framework
Convention on Climate Change (UNFCCC) effective 27th February, 2009. BPCL
has accrued the Verified Emission Reductions (VERs) from the date of
commissioning of the project till the date of registration of UNFCCC.
Certified Emission Reductions (CERS) will start accruing from 28th
February, 2009. Several other CDM proposals are being processed for various
approvals.

During the year BPCL published its 2nd Corporate Sustainability Report
for the year 2007-08. The report has been published as per GRI norms with
A+ rating. BPCL is the first Company amongst public sector undertakings to
receive A+ rating and the second in the oil sector. The report has been
assessed by an independent third party assurance provider, M/s. DNV as per
AA1000AS standard. BPCL is the second company in India to be assured as per
this standard.

INTERNATIONAL TRADE AND RISK MANAGEMENT:

The year saw crude oil prices in the international markets touch record
highs, reaching a peak of USD 147.27 per barrel before receding. As the
prices fell sharply, the average price of dated Brent crude oil in 2008-09
at USD 84.55 per barrel was only marginally higher than the average price
of USD 82.11 per barrel in the previous year. However, there was a
substantial fall in the sweet/ sour crude oil (Dated Brent/ Dubai)
difference from USD 5.03 per barrel in 2007-08 to USD 1.68 per barrel in
2008-09.

During the year, BPCL had imported 12.7 MMT of crude oil as compared to
14.5 MMT imported in 2007-08. In value terms, the total cost of the
imported crude oil amounted to USD 7960.93 million (Rs. 36,114.26 crores)
as compared to USD 8448.95 million (Rs. 33,827.18 crores) in 2007-08. The
average FOB price stood at USD 85.3 per barrel as compared to USD 79.2 per
barrel in the previous year. The ratio of Term to Spot' purchase of
imported crude was 85:15, which was also significantly higher than the
level in 2007-08 when it stood at 79:21. Further, BPCL had imported 1057
TMT of HSD, 254 TMT of SKO and 195 TMT of LPG to meet the shortfall in
supply from domestic sources.

On the exports front, BPCL exported 1381.88 TMT of refined products during
the year, which was lower than the level of 1934.04 TMT during the previous
year. Export of Fuel Oil was down by 1.22% to 466.41 TMT from the previous
year's level of 472.16 TMT Export of Naphtha came down from 1,154.87 TMT in
2007-08 to 703.45 TMT in the current year. The lower export volume was due
to higher domestic demand. The foreign exchange earnings from these exports
amounted to USD 757 million (Rs. 3,362 crores) as against USD 1,174 million
(Rs. 4,727.62 crores) during the previous year.

Logistic support was provided for imports, exports and coastal movements of
products at the least cost. A combination of Time Charter, Contract of
Affreightment and Voyage Charter were used to ensure logistic security and
optimize the freight cost.

Hedging of refinery margins continued to be an area of focus to manage the
volatility affecting the refining margins. During the course of the year,
hedging volumes for refinery margins was around 11.6 million barrels, as
against 12.6 million barrels during 2007-08. All the deals were executed on
the e-tender platform developed in-house to reduce the response time. The
hedging activity was expanded to cover exposures arising out of Platinum
required for the reformer catalyst at Kochi refinery. Besides, fixed price
deals to end consumers of the Industrial & Commercial business were
provided for about 72 TMT of Naphtha supplies.

The Risk Management Committee continued to provide direction and guidance,
besides carrying out regular review of hedging positions. New counter
parties were registered and trades were distributed among the concerned
counter parties judiciously.

RESEARCH & DEVELOPMENT:

BPCL is continuously enhancing its Research & Development capabilities at
the Corporate R&D Centre, Greater Noida, Uttar Pradesh, Product &
Application Development Centre, Sewree, Mumbai and the R&D Centre at Kochi
Refinery. During the year, the Corporate R&D Centre made significant
contributions in value addition at the Refineries through development and
commercialization of in-house developed products like (i) Fuel additive for
high octane MS, (ii) Corrosion inhibitor additive for gasoline-ethanol
blends, (iii) Bharat Metal Cutting Gas (BMCG) additive and (iv) Suggesting
fuel oil blending schemes to Refineries. A cost effective process was
developed during the year for conversion of non-edible oils with high free
fatty acid content to bio-diesel and the process is being scaled up for
setting up a pilot plant for process demonstration. Major research projects
have been initiated in the emerging areas of coal to clean liquid fuels,
bio-fuels and hydrogen storage.

Kochi Refinery has developed a unique environment protection technology for
removing toxic hydrogen sulphide gas produced when crude oil is heated to
high temperatures. This technology for desulphurisation of very low
pressure off-gas generated from the Vacuum Distillation Unit, which has
been developed with in-house expertise, is being commercialised.

The Corporate R&D Centre filed five patent applications to protect the
intellectual property resulting from innovative research. As a part of new
initiatives, BPCL entered into research collaborations with a number of
leading research institutes including (i) Department of Microbiology,
Osmania University, Hyderabad, for the development of microbial enzymes for
production of ethanol from lignocellulosic biomass (ii) Tamil Nadu
Agricultural University, Coimbatore to establish techno-commercial
feasibility of Bio-diesel production from microalgae, (iii) IIT, Roorkee
for designing the new cutting torch for reducing pre-heat time, (iv) IIT,
Madras for the development of rigorous mathematical models for entrained
bed, fluidized bed and moving bed gasifiers.

BPCL, along with EIL, has been identified as the nodal agency for research
and development studies in the area of liquid fuels production from high
ash Indian Coal and Petcoke. The duration of this project is 4 years. An
MOU has been signed with EIL and Centre for High Technology. The total cost
of this project is Rs. 33 crores, of which 50% would be funded by the Oil
Industry Development Board.

EXPLORATION AND PRODUCTION OF CRUDE OIL AND GAS:

BPCLs wholly owned subsidiary company, Bharat PetroResources Limited
(BPRL), which was incorporated in October 2006, is spearheading BPCLs foray
into the upstream exploration and production sector. BPRL has joined hands
with other players having considerable experience in this sector and has as
on date secured participating interests in 26 exploration blocks. Of this,
17 blocks are located abroad and 9 blocks were secured under the New
Exploration Licensing Policy (NELP) bidding rounds held by the Government
of India. If the past few years were for acquisition for exploration
acreages, the year 2008-09 predominantly has been the year of consolidation
with streamlining of operations in Brazil; moving ahead decisively on
Indian and overseas work programs and venturing into the unexplored virgin
basin of Mozambique. The award of Joint Operatorship with Hindustan Oil
Exploration Company Limited in the Rajasthan block during the NELP VII
round of bidding was a major achievement for BPRL.

Exploration activities are progressing in the 3 blocks acquired under NELP
IV. However, due to the non- availability of deep water drilling rigs,
further drilling in the Krishna Godavari and Mahanadi basins is delayed.
Activities on data acquisition, processing and interpretation are underway
in all the blocks acquired under the NELP VI and NELP VII rounds of
bidding.

The acquisition of EnCana Brasil Petroleo Limitada (an affiliate of EnCana
Corporation, Canada) was successfully completed during the year after
receipt of all approvals from the authorities in Brazil. A Joint Venture
Company, VB Brasil Petroleo Limitada, was incorporated in Brazil by BPRL
and M/s. Videocon Industries Limited for the purpose of the acquisition.
Both the promoters have an equal stake in the capital of the new company.
Consequent to the acquisition, BPRL has secured participating interest in
10 blocks in Brazil. Of this, 9 are operated by Brazil's National Oil
Company, Petrobras, an experienced deepwater operator. The other block is
operated by Anadarko Petroleum Corporation, also an operator with
significant deepwater experience in the United States and Gulf of Mexico.
Exploration work on these blocks is currently on. The funding of the Brazil
operations have been done through BPRLs subsidiaries incorporated in the
Netherlands.

BPRL has recently acquired a 10% participating interest in the Offshore
Area 1 in Mozambique which is located in the unexplored Rovuma Basin in
East Africa. Work is progressing in the blocks in Australia, East Timor,
United Kingdom and Oman where BPRL had acquired participating interest in
the previous years.

Besides spreading its wings both in India and abroad, BPRL is also
concentrating on developing the technical expertise and capabilities that
would be needed in the days to come. Induction of geoscientists,
development of in-house talent and augmentation of workstations are some of
the steps in this direction. BPRL is confident of meeting the challenges
that will come up as work progresses in the various blocks.

AWARDS AND RECOGNITION:

BPCL won the prestigious PetroFed Oil & Gas Marketing Company of the Year'
for the year 2007-08. BPCL has been conferred the award for the second year
in succession. It has been instituted to recognize and celebrate the
leaders, innovators and pioneers in the Oil & Gas industry.

BPCL was bestowed with the prestigious Asian CSR Award 2008' in the
Environmental Excellence category for Project Boond - III, a rainwater
harvesting project in Maharashtra. This award was presented by the Asian
Institute of Management, Centre for Corporate Social Responsibility and
Intel Corporation in Singapore.

BPCL has secured the 289th rank during 2008-09 in the prestigious list of
Fortune Global 500. Apart from BPCL, only six other Indian companies have
made it to the list of top 500 companies compiled by Fortune Magazine.

Financial Express, one of the country's leading business newspapers
recently ranked BPCL as 9th in India in the FE 500 list of companies. The
parameters considered included net sales, gross profit and market cap.

The BPCL brand has been recognized as Business Superbrand 2008, the ranking
given to exceptional brands on the criteria of market dominance, longevity,
goodwill, customer loyalty and market acceptance.

BPCL also bagged the Association of Business Communicators of India (ABCI)
Awards in the Table Calendar, Corporate Website Promotions and External
Magazine categories.

M/s. Brand Finance has evaluated BPCL and rated it as one of the Ten Top
Company Brands of India. The BPCL brand was valued at US $ 2.386 billion.
BPCL has achieved the 9th position amongst corporates across categories; in
the petroleum category, BPCLs power ratings are better than its
competitors.

BPCL has once again made a mark in the global energy industry by ranking
96th globally and 17th in Asia, as per Platts 250 Global Energy Companies
2008. This ranking is based on outstanding financial performance using four
key metrics - asset worth, revenues, profits and return on invested
capital.

BPCL was awarded the Reader's Digest Most Trusted Brand Award in the Gold
category for the third year in succession. This is in recognition of its
customer-centric propositions, which have always been a key focus area for
the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

BPCL has a system of internal controls to ensure optimum utilization and
protection of resources, IT security, speedy and accurate reporting of
financial transactions and compliance with applicable laws and regulations,
as also internal policies and procedures. For this purpose, the company has
formulated a clearly defined organization structure, authority limits and
internal guidelines, rules for all operating units and service entities.
ERP Solution and Business Information Warehouse systems have further
enhanced the internal control mechanism.

BPCL has an Internal Audit department consisting of experts from various
functions, which supplements the review of key business processes and
controls through regular audits. Audit reports, significant risk area
assessment and adequacy of internal controls are also periodically reviewed
by the Audit Committee through meetings held with Management, Internal
Audit and the Statutory Auditors.

ANNEXURE TO THE DIRECTORS REPORT:

ANNEXURE A

Efforts made by BPCL in regard to Conservation of Energy, Technology
Absorption, Foreign Exchange Earnings & Outgo, which are required to be
given under Section 217 (1)(e) of the Companies Act,1956, are as under:

A) CONSERVATION OF ENERGY:

(i) Energy conservation measures taken and additional investment/proposals
for conservation of energy:

Energy conservation efforts received continuous focus, both in terms of
improvement in operations/maintenance as well as development of new
projects. Continuous monitoring of fuel consumption and hydrocarbon loss is
undertaken using sophisticated instruments and data acquisition system. An
elaborate energy accounting system and Management Information System are
important features of Refinery operations.

As a part of Oil & Gas Conservation Fortnight 2009, M/s. Centre for High
Technology had organised a detailed 'Steam Leak' survey in the Refineries
along with external experts. In addition, various awareness programs on the
Oil Conservation theme were conducted, both inside & outside the
refineries, including free PUC check up for vehicles.

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

Mumbai Refinery:

The following energy conservation and loss control measures were adopted
during the year 2008-09 which have resulted in significant fuel savings:

* Maximisation of crude throughput in the modern highly energy efficient
Integrated Crude & Vacuum Unit.

* Antifoulant chemical injection in all Crude & Vacuum Units.

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

* Regular cleaning of pre-heat exchangers of process units.

* A comprehensive 'Steam Generation and Distribution Study' was carried out
by M/s. Tata Consulting Engineers covering steam trap, steam insulation and
leak survey.

* High emissivity ceramic coating was applied to process heater tubes and
refractory walls of the new Crude Unit and Vacuum Unit furnaces (F 101 &
102) during the March 2009 shutdown, to improve furnace efficiency.

* Special type insulation for bare hot tubes of the NHGU furnace.

* Foam/chemical cleaning of air fin coolers in the new Crude Unit complex
and C3-C4 Unit to improve performance.

* 'Chemical decontamination' technique was adopted for the first time in
the refinery during turnaround. This helps in improved heat exchanger
cleaning and better hydrocarbon freeing for carrying out plant turnaround
jobs.

* During turnaround, the service of the combustion technology expert from
M/s. Hamworthy Combustion Global Solutions was obtained, to get suggestions
for adopting the best practices, leading to improved efficiency of the
furnaces.

* Replacement of two modules of air pre-heater in the CDU 1 B2 furnace for
improved heat recovery.

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

* Processing of the hydrogen rich Catalytic Reformer Unit (CRU) off gas in
the Hydrocracker Unit PSA system and new Hydrogen Unit to reduce overall
Naphtha consumption for hydrogen generation.

* A comprehensive survey on 'Instrument Air Supply System' was carried out
to identify and rectify instrument air leaks.

* 'Dry ice blast' cleaning of the convection section of heaters to improve
efficiency.

* Stopping of one Fuel Oil turbine at Boiler House - for saving in steam
consumption.

* Use of energy saving CFL lamps.

* Energy saving device/torroidal core transformers for energy saving in
lighting circuits.

* Conversion of motors from delta to star motor windings for power saving.

* Installation of Capacitor banks to maximize the power factor.

* Replacement of GT2 rotor and accessories for fuel saving and eliminating
hot gas path inspection.

* Replacement of High Efficiency Boiler-2 Forced Draft (FD) fan with
Variable Frequency Drive.

* Reduction of hydrocarbon slops by tighter operational control.

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

* Continuous monitoring & control of flare.

* Regular steam insulation & leak surveys.

In addition, Mumbai Refinery is implementing/planning to implement various
energy conservation and loss control projects as given below:

* Processing of Crude Distillation Unit-2 Long Residue in the energy
efficient Vacuum Distillation Unit which will result in energy saving as
well as yield improvement.

* Provision of Variable Speed Drives for the CDU NB2A Heater FD fan & CDU
131 Heater ID Fan.

* Use of the 'Chemical Decontamination' technique for Units during
turnaround for effective equipment hydrocarbon freeing and improved heat
exchanger cleaning.

* Air pre-heater modules replacement, wherever necessary, during turnaround
of Units.

* Phased replacement of Steam Headers Insulation.

Kochi Refinery:

The following energy conservation and loss control measures were adopted
during the year 2008-09, resulting in significant fuel savings:

* Reduction in power consumption by stopping the raw water pump in PIBU.

* Conversion of metallic blades to FRP blades for 25 air fin fans.

* Optimization of excess air in UB 10 & UB 7 Steam generators through an
automatic air fuel ratio based combustion control scheme.

* Replacement of Naphtha stabilizer reboiler (LH1) with a steam reboiler.

* Replacement of mineral wool insulation by perlite.

* Provision of LP steam air heater ahead of cast air pre-heater (APH) in
the Crude heater to mitigate cold end corrosion and reduce the downtime of
APH.

* Removal of overhead column compressor in the Crude Distillation Unit-1 by
routing overhead gas directly to heaters after amine wash.

* Swapping of MP steam with LP steam for product strippers in FCCU & CDU1.

* Waste heat recovery through steam generation in Biturox unit.

* Friction reducing internal coating for two cooling water pumps and one
crude oil pump.

* Excess oxygen reduction in NH2 heater

The following additional proposals for energy conservation are in advanced
stages of implementation:

* Provision of LP steam air heater ahead of cast APH in two furnaces to
mitigate the cold end corrosion and reduce the downtime of air pre-heaters.

* Optimizing the excess air through the implementation of automatic air
fuel ratio based combustion control in DDH1, DHH11 (H2 plant Reformer
heater), CH1A/B and UB -8/9 boilers.

* Optimization of auxiliary firing potential and increase of steam load in
FCCU waste heat boiler.

The following awards related to the Energy & Environment function were
received by Kochi Refinery during the year 2008-09:

Year Award Authority Category

1. 2008 State Pollution Control Kerala State Pollution For outstanding
Award-2008 Control Board achievement in
Excellence Award pollution
control

2. 2008 National Energy Bureau of Energy In appreciation
Conservation Award- Efficiency, Ministry of the
First Prize, of Power, Govt. of achievements in
Refinery Sector India the Refineries
sector

3. 2008 Kerala State Energy Energy Management For commendable
Conservation Award Centre, Kerala achievements in
Energy
Conservation and
Management

Impact of the measures for reduction of consumption of energy &
consequential impact on the cost of production of goods:

Fuel savings as a result of the energy conservation measures implemented in
the refineries during the year 2008-09 correspond to total savings
potential of 10487 tonnes of fuel oil equivalent.

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

B) TECHNOLOGY ABSORPTION:

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

Mumbai Refinery:

* In line with the action plan for meeting the auto fuel quality upgrade of
part production of Euro IV quality Diesel by April 2010, the DHDS unit
catalyst was changed to new generation TK 576 BRIM catalyst supplied by
M/s. Haldor Topsoe.

* FCC LPG Merox catalyst was replaced with a new sweetening catalyst
jointly developed by BPCL R&D and Indian Institute of Petroleum, Dehradun.

Kochi Refinery:

* The Naphtha Stabilizer reboiler in CDU-1 was converted to a steam type
reboiler (more efficient than the current fired heater type reboiler)
during December 2008. The reboiler was designed by M/s. Engineers India
Limited.

* A coke catcher was installed in the VBU during November/December 2008 to
reduce the deposition of coke in the Vis-breaker fractionator. The
modification was carried out in-house with technology support from M/s.
Shell Global Solutions.

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

C) FOREIGN EXCHANGE EARNINGS/OUTGO:

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

a. Exports:

BPCL exported 1381.88 TMT of refined products during the year as compared
to 1934.04 TMT during the previous year. While Fuel Oil exports were down
by 1.22% to 466.41 TMT from the previous year level of 472.16 TMT, Naphtha
exports were down by 39.09% to 703.45 TMT vis-a-vis 1154.84 TMT in the
previous year. The lower export volume was due to higher domestic demand.
The contribution to the foreign exchange earnings were at USD 757 million
(Rs. 3,362 crores) as against USD 1,174 million (Rs. 4,727 crores) during
the previous year.

On the shipping front, International Trade Department continued its prime
focus of providing logistic support for imports, exports and coastal
movements of products at least cost. Combination of Time Charter, Contract
of Affreightment and Voyage Charter were used to ensure logistic security
and optimize the freight cost.

b. Imports:

Crude Oil:

The crude oil prices reached their historical highs during the year when
West Texas Intermediate (WTI) reached a record level of 147.27 USD/bbl on
11th July, 08. However, thereafter crude oil prices started reducing
drastically month after month due to the global economic meltdown and
stabilized at around 45 USD/bbl during the last quarter.

The average price of Dated Brent crude oil increased marginally by 2%
during the year from 82.3 USD/bbl in 2007/08 to 83.9 USD/bbl in 2008/09.
The sweet/sour (Dated Brent/Dubai) difference also reduced substantially
from 4.9 in 2007/08 to 2.1 USD/bbl in 2008/09 mainly on account of the
economic slowdown, especially in the US, resulting in lower demand for LS
crude oil and OPEC cuts on HS crude oil.

Actual crude Imports for our Mumbai & Kochi refineries during the year were
as under:

2008-09 2007-08

Crude imports MMT 12.7 14.5
Value USD Billion 8.0 8.4
Avg. FOB Price USD/bbl 85.3 79.2

The ratio of Term to Spot' purchase of imported crude was 85:15, implying
security of volume tie up.

Product Imports:

During the year, BPCL imported 1057 TMT of HSD, 254 TMT of SKO and 195 TMT
of LPG to meet the shortfall in supply from domestic sources.

c. Hedging:

During the year the price of crude and products continued to be highly
volatile. Hedging of refinery margins continued to be an area of focus to
manage the volatility affecting the refining margins. During the course of
the year, hedging volumes for refinery margins were around 11.6 million
barrels as against 12.6 million barrels during 2007-08. All the deals were
executed on the e-tender platform developed in-house to reduce the response
time.

Besides refinery margin exposures, hedging activity was expanded to cover
exposures arising out of Platinum required for Kochi reformer catalyst.
2000 Troy ounce of the precious metal was hedged for protecting the cost
involved. In addition, fixed price deals to end consumers of I&C were
provided for about 72 TMT Naphtha supplies.

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

Rs. Crores
2008-09 2007-08

Earnings in Foreign Exchange 6,567.42 7,440.16
- includes receipt of Rs.1,249.85
crores (previous year Rs.1,527.03
crores) in Indian currency out of
the repatriable funds of foreign
airline customers and Rs.8.44
crores (previous year Rs.9.75
crores) of INR exports to Nepal
and Bhutan.

- Includes Rs. 353.78 crores
(previous year Rs.704.27 crores)
on CFR basis.

Foreign Exchange Outgo 45,261.07 34,560.75
- on account of purchase of Raw
Materials, Capital Goods,
Chemicals, Catalysts, Spare
Parts, International Trading
Activities.

FORM A:

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY:

1) MUMBAI REFINERY:

2008-09 2007-08

A) Power and Fuel Consumption:
1) Electricity:
a) Purchased:
Units (Million KWH) 43.28 39.80
Total Amount (Rs. Crores) 29.00 27.37
Rate/Unit (Rs./KWH) 6.70 6.88
b) Own Generation:
Through Steam Turbine/Generator:
Units (Million KWH) 503.78 520.62
Units (KWH) per Ton of Fuel 3,037.73 3,059.51
Cost/Unit (Rs./KWH) 6.25 5.70
2) Coal Nil Nil
3) Furnace Oil/Liquid Fuel:
LSHS Qty - MT 260,416 266,856
Total amount (Rs. Crores) 575.49 479.85
Avg. Rate (Rs./Unit) 22,098.86 17,981.44
IBP-60 Qty - MT 42,822 42,141
Total amount (Rs. Crores) 137.59 128.61
Avg. Rate (Rs./Unit) 32,131.41 30,520.00
4) Others/Internal Generation:
Bombay High Associated Gas (BHAG) Qty-(MT) 229 111
Total amount (Rs. Crores) 0.26 0.12
Avg. Rate (Rs./Unit) 11,225.16 10,468.27
Internal Fuel Refinery Gas Qty - (MT) 125,691 128,732
Total amount (Rs. Crores) 277.76 231.48
Avg. Rate (Rs./Unit) 22,098.86 17,981.44
PSA Off Gas Qty - (MT) 100,375 116,203
Total amount (Rs. Crores) 39.13 36.86
Avg. Rate (Rs./Unit) 3,898.48 3,172.12
FCC Units Coke Qty - MT 87,405 88,514
Total amount (Rs. Crores) 193.16 159.16
Avg. Rate (Rs./Unit) 22,098.86 17,981.44

Notes:

1) Increase in power purchased cost is mainly due to planned shutdown of
GT1, GT2 & GT3 & higher power import due to increase in electrical load due
to operation of RMP Units.

2) Cost per unit of Power Purchased has decreased due to higher purchase of
power from M/s. TATA Power.

3) Cost per unit of power generated in CPP has increased due to increase in
fuel cost & depreciation.

B) Energy consumption per unit of production:

Unit Stds. 2008-09 2007-08
if any*

Production of Petroleum MT 11436521 11883604
products
Electricity KWH/MT 47.84 47.16
LSHS/IBP-60 Kg/MT 26.51 26.00
Gas (Excluding CPP) Kg/MT 19.79 20.62
FCC Units Coke Kg/MT 7.64 7.45

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

2) KOCHI REFINERY:

A) Power and Fuel Consumption:
2008-09 2007-08

1) Electricity:
a) Purchased:
Units (Million KWH) 39.56 39.13
Total amount (Rs. Crores) 21.19 18.40
Rate/Unit (Rs./KWH) 5.36 4.70
b) Own Generation:
i) Through Gas Turbine generation in CPP 145.83 148.37
(Million KWH)
Units (KWH) per kg of fuel oil/gas 2.88 2.87
Cost/Unit (Rs./KWH) 5.56 6.04
ii) Through Steam Turbine Generation (Million KWH) 73.76 78.26
Cost/Unit (Rs./KWH) 6.60 5.84
2) FCC coke for steam generation:
Quantity (tonnes) 67,030 71,974
Total Cost (Rs. Crores) 134.54 118.84
Average rate (Rs./MT) 20,071 16,511
3) LSHS:
Quantity (tonnes) 243,866 233,436
Total Cost (Rs. Crores) 489.46 385.42
Average rate (Rs./MT) 20,071 16,511
4) DHDS Naphtha:
Quantity (tonnes) 38,173 42,090
Total Cost (Rs. Crores) 97.53 105.82
Average rate (Rs./MT) 25,549 25,141
5) Others (Refinery Fuel Gas) (Excluding
fuel used for Power Generation):
Quantity (tonnes) 83,221 94,805
Total Cost (Rs. Crores) 167.03 156.53
Average rate (Rs./MT) 20,071 16,511

Notes:

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

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

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

B) Energy consumption per unit of production:

Unit Stds. 2008-09 2007-08

Production of Petroleum products MT if any* 7192203 7686634
Electricity KWH/MT 34.81 33.69
FCC Units Coke Kg/MT 9.32 9.36
LSHS Kg/MT 33.91 30.37
DHDS Naphtha and Refinery Fuel Kg/MT 16.88 17.81
Gas

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

FORM B:

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION:

RESEARCH & DEVELOPMENT (R&D):

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

i) Catalytic Processes
ii) Development of Catalysts and Catalyst additives
iii) Development of fuel additives/blending schemes
iv) Detailed Crude Evaluations and Crude compatibility studies
v) Development of nanomaterials for on-board gas storage applications
vi) Development of Process scheme for bio-lubricants
vii) Development of Optimal Blending Scheme for Cutter reduction in FO
viii) Modeling and Simulation of refinery processes
ix) Corrosion and fouling
x) Advanced Tech support to Refinery & Marketing Operations
xi) Alternate fuels - Bio-ethanol, Bio-Diesel, Hydrogen, Solar PV cells
xii) Long life Diesel Engine Oil for heavy commercial vehicles
xiii) Passenger Car Engine Oil for latest models
xiv) Bio-degradable Cutting Oil
xv) High Performance Greases
xvi) Defence specific grades
xvii) Alternate formulation for existing grades

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

i) Optimum catalysts and additives were selected for KR and MR FCC plants
based on R&D.

ii) LPG Sweetening Catalyst jointly developed by BPCL and IIP
Dehradun is being used at Mumbai Refinery. Cost effective CO promoter
catalyst developed in-house has been in use at FCC unit of MR. Indian
Patent filed.

iii) (a) In-house developed BMCG product is being commercially produced and
marketed in India & overseas resulting in substantial benefits to the
Corporation.

(b) A cost effective route for producing MS-97 has been developed and
commercialised at BPCL installations resulting in substantial savings.

(c) Successful commercial trials were conducted for the in-house developed
corrosion inhibitor for ethanol-MS blends.

iv) Detailed crude evaluations aided in enhancing value realisation and
enlarging the crude basket. Crude blend compatibility studies helped in
processing opportunity crude. Processing of high TAN crude oils with
existing refinery metallurgy is being explored through R&D developed
process schemes.

v) Potential adsorbent for natural gas storage has been identified &
synthesized. They are being scaled up for testing for on board application.

vi) For the development of bio-lubricants, trial batches have been made for
metal working fluid applications and refrigeration lubes are being
evaluated at P & AD for formulation development.

vii) Developed a model based on the physical properties using Aspen Plus,
Crude Manager to predict important properties of FO to reduce the quality
giveaways. R&D studies helped Mumbai Refinery to maximize blending of LSHS
into FO resulting in substantial benefits to the Corporation.

viii) Energy Optimization Studies conducted for enhanced crude pre-heat
heat recovery through pinch analysis resulted in reduced fuel consumption
in MR. Simulation studies of Naphtha Splitter Unit of NRL for producing
suitable quality of Naphtha enabled NRL in taking sound Capex decisions for
the upcoming Naphtha cracker.

ix) (a) Implementation of selected antifoulant with optimal dosage in MR
crude-preheat trains resulted in improved heat recovery. (b) Implementation
of selected demulsifier in MR CDU Units resulted in improved desalting and
reduced overhead corrosion. (c) Studies on Mumbai-Manmad-Bijwasan (MMB)
pipeline corrosion resulted in developing an in-house monitoring system for
reducing the corrosion.

x) Advanced Tech support to Refinery and Marketing operations for resolving
technical problems/effecting improvements, such as:

(a) Tech support for producing modified bitumen products, viz., CRMB, for
launching VG grade bitumen.

(b) Commercial trial has been taken of the in-house developed technology
for polypacked bitumen.

xi) Identified potential sustainable lignocellulosic feedstock for bio-
ethanol production. Optimized the process parameters for the maximization
of fermentable sugars at lab scale.

xii) Long life Diesel Engine Oil for heavy commercial vehicles - extends
the drain period of Engine Oil for the latest high performance vehicles
besides increasing our share in this segment.

xiii) Passenger Car Engine Oil for the latest models - provides an
opportunity to increase our market share in this segment.

xiv) Bio-degradable Cutting Oil - protects the environment, besides
providing a viable option to customers.

xv) High Performance Grease - helps us to increase our market share in the
Steel manufacturing segment, besides providing a viable alternative to
customers.

xvi) Defence specific grades - provide an indigenous alternative to
Defence.

xvii) Alternate formulation for existing grades - helps in reducing the
input cost, besides providing flexibility in operation.

3) Future Plan of Action:

i) Development of process scheme for the production of bio-ethanol and bio-
lubricants.

ii) Development of catalyst/additive for refining processes.

iii) Development of new process technologies using the additive approach
for improving product quality.

iv) Intensifying and enlargement of activities in the area of Refinery
processes and resid upgradation.

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

vi) Controlling Corrosion and fouling in Refinery units.

vii) Value added Products/Solvents from the Refinery streams.

viii) Bio-technological processes.

ix) Modelling and simulation of Refinery processes.

x) Coal to Resid Technologies.

xi) Alternate Fuels & Energy Devices Developing the following grades /
products:

i) Diesel Engine Oil meeting the latest international specifications
ii) Transmission Oil OEM specific
iii) Metal Working Fluid
iv) Synthetic Gear Oil
v) Synthetic Refrigeration Compressor Oil
vi) Defence specific grades

4) Expenditure on R&D during 2008-09:

(Rs. in Crores)
Value

Capital Expenditure 7.68
Revenue/Recurring Expenditure 22.56
Total 30.24
Total R&D Expenditure as a % of total turnover Negligible

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:

A) MUMBAI REFINERY:

1) Efforts, in brief, made towards technology absorption, adaptation and
innovation:

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

A) In line with an action plan for meeting the auto fuel quality upgrade of
part production of Euro IV quality Diesel by April 2010, the DHDS unit
catalyst was changed to the latest generation TK 576 BRIM catalyst supplied
by M/s. Haldor Topsoe.

B) FCC LPG Merox catalyst was replaced with a new sweetening catalyst
jointly developed by BPCL R&D and Indian Institute of Petroleum, Dehradun.

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

A) Time required for catalyst regeneration was saved resulting in faster
start-up of the unit. Will reduce total unit down time required for revamp
jobs scheduled next year.

B) This has enabled import substitution.

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

(a) Technology imported:

Technology:

Year of import

Fixed Bed Platforming process from M/s. UOP USA 2003
for production of high octane Motor Spirit blend
stock and for increasing capacity.

Isodewaxing/Hydrofinishing technology from M/s. 2003
Chevron Lummus Global for production of Group-II
Lube Oil Base Stocks.

DHDS Reactor catalyst change to new generation 2007
HDS catalyst TK 576 BRIM supplied by M/s. Haldor
Topsoe, Denmark in December 2007 as a part of
the unit revamp for producing Euro IV Diesel.

Naphtha HDS catalyst was the latest Catalyst from 2007
M/s. Haldor Topsoe

(b) Has Technology been fully absorbed?:

Yes.

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

Not applicable.

B) KOCHI REFINERY:

1. Efforts, in brief, made towards technology absorption, adaptation and
innovation:

The Refinery has implemented the following projects to obtain the benefits
of the latest technological developments and advances during 2008-09:

a) Naphtha Stabilizer reboiler:

The Naphtha Stabilizer reboiler in CDU-1 was converted to a steam type
reboiler (more efficient than the current fired heater type reboiler)
during December 2008. The reboiler was designed by M/s. EIL.

b) Coke Catcher in Vis-Breaker Unit:

A coke catcher was installed in VBU during November/December 2008 to reduce
the deposition of coke in the Vis-breaker fractionator. Modification
carried out in-house with technology support from M/s. Shell Global
Solutions.

c) Treatment of overhead gases from the Crude column and KHDS product
separator:

Facilities for treating Crude Unit overhead gases and KHDS product
separator gases by scrubbing with Di Ethanol Amine for removing H2 S, was
commissioned in March 2009.

d) Introduction of Auxiliary Firing in CO boiler:

Due to operation of FCCU in full combustion mode after revamp, CO boiler
steam output had come down from 80 TPH to about 40 TPH. By
introducing/increasing auxiliary firing in waste heat boilers, almost 100%
additional energy spent can be recovered as useful output. With auxiliary
firing, stack losses remain more or less constant and overall efficiency of
the system improved considerably. As fuel gas was not adequately available,
the CO boiler fuel oil firing system was revamped with new fuel oil heater
and replacement of two burners. Steam output from the CO boiler was
increased from 40 TPH to 60 TPH.

e) Swapping of stripping steam in CDU-1 and FCCU from MP to LP steam:

Stripping steam in crude column and product strippers in CDU-1 and FCCU
have been changed over to LP steam from MP steam, by laying a dedicated LP
steam header from LP steam extraction line of Steam Turbine Generator
(STG). Dedicated LP steam header ensures required super heat for the steam
admitted to strippers.

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

a) Naphtha Stabilizer reboiler:

Replacement of fired heater with new steam Naphtha reboiler in CDU-1
reduces the fuel cost due to better efficiency of boilers than the existing
heater.

b) Coke Catcher in Vis-Breaker Unit:

A coke catcher was installed in the bottom portion of the vis-breaker
fractionator. This has resulted in the reduction of plugging of heavy
materials in the heat exchangers, which are installed in the fractionator
bottom circuit exchanging with crude. The project was commissioned during
November/December 2008.

c) Treatment of overhead gases from the Crude column and KHDS product
separator:

Amine absorbers were installed in the Crude column overhead gas accumulator
overhead circuit and KHDS product separator off gases to utilize the gases
as fuel gas directly in the fired heaters. This reduces the load in the
main Amine Absorption Unit (AAU), thereby increasing its efficiency.

d) Introduction of Auxiliary Firing in CO boiler:

As a result of the introduction of auxiliary firing in the CO boiler,
system efficiency, reliability and spare capacity have improved.

e) Swapping of stripping steam in CDU-1 and FCCU from MP to LP steam:

Additional LP steam demand thus created enables increased LP steam
extraction and reduces costly condensation load in STG. Estimated savings
is about 2070 TPA of fuel oil.

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

a) Technology Imported:

Technology Year of import

FCC - Feed Injection Technology, Riser termination 2003
Device, Packed Stripper from M/s. Stone & Webster
for yield improvement.

Process technology for blocked out mode operation 2003
of VGO and Diesel in DHDS from M/s. Axens, France

Process technology for sweetening (MEROX) of 2004
catalytically cracked gasoline form M/s. UOP USA

Colloidal Mill technology for production of 2004
Bitumen Emulsion from M/s. ENH Engineering,
Denmark.

DHDS Reactor catalyst change to new generation 2006
HDS catalyst supplied by M/s. Axens, France in
December 2006 to produce Low Sulphur Diesel for
meeting the Euro III diesel demand.

SPM system capable of receiving VLCCs by M/s. 2007
Blue Water Energy Services, Netherlands

Biturox unit, capable of producing four 2008
different grades (VG-10NG-20NG-30 and VG-40)
of Bitumen was commissioned during June 2008.
Along with the Biturox Unit an incinerator, a
scrubber and a wet air oxidation system were
installed to convert sulphides to sulphates.
This is the world's first eco friendly Biturox
Unit.

b) Has Technology been fully absorbed?:

Yes.

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

Not applicable.

ANNEXURE-D

ANNUAL STATEMENT SHOWING THE REPRESENTATION OF SCHEDULED CASTES (SC),
SCHEDULED TRIBES (ST) AND OTHER BACKWARD CLASSES (OBC) AS ON 1st JANUARY,
2009 AND NUMBER OF APPOINTMENTS MADE DURING THE CALENDAR YEAR 2008:

NAME: BHARAT PETROLEUM CORPORATION LTD.

Number of Employees
Groups (As on 1.1.2009)
Total SCs STs OBCs
1 2 3 4 5

Group-A 4699 768 269 396
Group-13 3459 493 188 220
Group-C 3348 550 205 329
Group-D(Excluding Safai 2444 496 153 254
Karamcharis)
Group-D (Safai 71 42 3 6
Karamcharis)
Total 14021 2349 818 1205

Number of appointments made during the
calendar year 2008
Groups By Direct Recruitment
Total SCs STs OBCs
1 6 7 8 9

Group-A 234 33 15 33
Group-B - - - -
Group-C 133 20 3 44
Group-D(Excluding Safai - - - -
Karamcharis)
Group-D (Safai - - - -
Karamcharis)
Total 367 53 18 77

Number of appointments made during the
calendar year 2008
Groups By Promotion
Total Scs STS
1 10 11 12

Group-A 82 15 2
Group-13 145 25 10
Group-C 132 12 2
Group-D(Excluding Safai - - -
Karamcharis)
Group-D (Safai - - -
Karamcharis)
Total 359 52 14

Number of appointments made during the
calendar year 2008
Groups By Other Methods
Total Scs STS
1 13 14 15

Group-A 11* - -
Group-B 3** - -
Group-C - - -
Group-D(Excluding Safai - - -
Karamcharis)
Group-D (Safai - - -
Karamcharis)
Total 14 - -

* 1 Sportsperson recruited in Management - Group A (entry level) & 10
Sportspersons promoted from Non-Management - Group B' to Management -
Group A (entry level).

** 3 Sportspersons recruited in Non-Management-Group B'.

ANNUAL STATEMENT SHOWING THE REPRESENTATION OF SCHEDULED CASTES (SC),
SCHEDULED TRIBES (ST) AND OTHER BACKWARD CLASSES (OBC) IN VARIOUS GROUP A'
SERVICES AS ON 1st JANUARY, 2009 AND NUMBER OF APPOINTMENTS MADE IN THE
SERVICE IN VARIOUS GRADES DURING THE CALENDAR YEAR 2008:

NAME: BHARAT PETROLEUM CORPORATION LTD.

Pay Scale A B C D E F G H I J K L M N
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

12000-17500 1021 173 74 184 225 31 15 30 82 15 2 11* - -
13750-18750 1181 182 70 139 6 2 - 3 - - - - - -
16000-20800 1001 203 78 67 2 - - - - - - - - -
17500-22300 643 134 35 4 - - - - - - - - - -
18500-23900 464 55 9 2 1 - - - - - - - - -
19000-24750 207 12 2 - - - - - - - - - - -
19500 & above 182 9 1 - - - - - - - - - - -
TOTAL 4699 768 269 396 234 33 15 33 82 15 2 11 - -

A = Representation of SCs/STs/OBCs (As on 1.1.2009) - Total

B = Representation of SCs/STs/OBCs (As on 1.1.2009) - SCs

C = Representation of SCs/STs/OBCs (As on 1.1.2009) - STs

D = Representation of SCs/STs/OBCs (As on 1.1.2009) - OBCs

E = Number of appoints made during the calendar year - By Direct
Recruitment - Total

F = Number of appoints made during the calendar year - By Direct
Recruitment - SCs

G = Number of appoints made during the calendar year - By Direct
Recruitment - STs

H = Number of appoints made during the calendar year - By Direct
Recruitment - OBCs

I = Number of appoints made during the calendar year - By Promotion - Total

J = Number of appoints made during the calendar year - By Promotion - SCs

K = Number of appoints made during the calendar year - By Promotion - STs

L = Number of appoints made during the calendar year - By Other Methods -
Total

M = Number of appoints made during the calendar year - By Other Methods -
SCs

N = Number of appoints made during the calendar year - By Other Methods -
STs

* 1 Sportsperson recruited in Management - Group 'A' (entry level) & 10
Sportspersons promoted from Non-Management - Group 'B' to Management -
Group 'A' (entry level).

ANNUAL STATEMENT SHOWING THE REPRESENTATION OF THE PERSONS WITH
DISABILITIES AS ON 1st JANUARY, 2009 AND DIRECT RECRUITMENT/PROMOTION
DURING THE CALENDAR YEAR 2008:

NAME: BHARAT PETROLEUM CORPORATION LTD.

Group Number of Employees as on
1.1.2009
(1) (2) (3) (4) (5)

Total VH HH OH
A 4699 4 2 25
B 3459 7 4 69
C 3348 14 7 35
D/DS 2515 6 6 30
TOTAL 14021 31 19 159

Group Direct Recruitment - 2008
No. of Vacancies
Reserved

(1) (6) (7) (8)
VH HH OH

A 2 2 3
B - - -
C 2 1 1
D/DS - - -
TOTAL 4 3 4

Group Direct Recruitment - 2008
No. of Appointments made
(1) (9) (10) (11) (12)
Total VH HH OH

A 234 - - 2
B - - - -
C 133 - - -
D/DS - - - -
TOTAL 367 0 0 2

Group Promotion - 2008
No. of Vacancies
Reserved
(1) (13) (14) (15)
VH HH OH

A - - -
B - - -
C 1 1 2
D/DS - - -
TOTAL 1 1 2

Group Promotion - 2008
No. of Appointments made
(1) (16) (17) (18) (19)
Total VH HH OH

A 82 - - -
B 145 1 - 1
C 132 - - 4
D/DS - - - -
TOTAL 359 1 0 5

Note:

(i) VH Stands for Visually Handicapped, HH stands for Hearing Handicapped &
OH stands for Orthopaedically Handicapped.

(ii) There is no reservation for persons with disabilities in case of
promotion to Group A & B Posts. However, persons with disabilities can be
promoted to such posts, provided the concerned post is identified suitable
for persons with disabilities.

iii) There are no promotions within Group D.

ANNEXURE E

ADDENDUM:

COMMENTS OF THE COMPTROLLER & AUDITOR GENERAL OF INDIA:

COMMENTS OF THE COMPTROLLER & AUDITOR GENERAL OF INDIA U/S 619 (4) OF THE
COMPANIES ACT, 1956 ON THE ACCOUNTS OF BHARAT PETROLEUM CORPORATION LIMITED
FOR THE YEAR ENDED 31 MARCH, 2009:

The preparation of financial statements of Bharat Petroleum Corporation
Limited for the year ended 31 March 2009 in accordance with the financial
reporting framework prescribed under the Companies Act, 1956 is the
responsibility of the management of the company. The statutory auditors
appointed by the Comptroller and Auditor General of India under Section 619
(2) of the Companies Act, 1956 are responsible for expressing opinion on
these financial statements under section 227 of the Companies Act, 1956
based on independent audit in accordance with the auditing assurance
standards prescribed by their professional body the Institute of Chartered
Accountants of India. This is stated to have been done by them vide their
Audit Report dated 29 May 2009.

I, on the behalf of the Comptroller & Auditor General of India, have
conducted a supplementary audit under section 619 (3) (b) of the Companies
Act, 1956 of the financial statements of Bharat Petroleum Corporation
Limited for the year ended 31 March 2009. On the basis of my audit nothing
significant has come to my knowledge which would give rise to any comment
upon or supplement to Statutory Auditors' report under section 619 (4) of
the Companies Act, 1956.

For and on the behalf of the Comptroller and
Auditor General of India

Sd/-
SARIT JAFA
Principal Director of Commercial Audit &
Place: Mumbai ex-officio Member, Audit Board II,
Date : 26th June 2009 Mumbai