Annual Report 2006-07 HPCL

55th Annual Report 2006-07
Contents
Chairman‘s Message .......................................................... 4
Our Directors .................................................................. 7
Senior Management Team .................................................. 8
Offices, Auditors & Bankers ............................................ 11
Notice of AGM .............................................................. 12
Performance Profile ........................................................ 18
Director’s Report ........................................................... 26
Annexure to Director’s Report ........................................ 31
Management Discussion & Analysis Report ....................... 45
Special Focus Areas ....................................................... 52
Auditor’s Report ............................................................ 61
Balance Sheet ................................................................ 66
Profit & Loss Account .................................................... 67
Schedules to Accounts ................................................... 68
Cash Flow Statement ....................................................... 92
C & AG’s Comments ...................................................... 96
Joint Venture Companies ................................................. 97
Consolidated Financial Statements .................................. 100
Corporate Governance Report ....................................... 116
Annual Report of Guru Gobind Singh

Refineries Limited (Subsidiary Company) ......................... 138
3
Chairman’s Message
Dear Shareholder,
This is my first communication to you after taking charge as C&MD of your Corporation with effect
from April 01, 2007. I am sure you must have noticed that the Corporation has achieved significant
physical and financial performance for the year 2006-07. The Board of Directors have proposed a
final equity dividend of 120% for the year 2006-07 taking the total dividend for the year to 180% with
60% interim dividend already been paid to the Shareholders. While the details of the performance
of the Corporation have been given in detail in this report elsewhere, I would like to focus on some
important and strategic issues.
Both Mumbai Refinery and Visakh Refinery recorded significant performance during the year and
were able to achieve a thruput of 16.66 MMT representing 128% capacity utilization. The completion
of major maintenance programme at both the Refineries and the several initiatives taken aimed
towards improving unit performance, reduction in instances of downtime, maintenance and
upgradation of equipment have all contributed to the enhanced performance of the Refineries.
Optimum capacity utilization, improving yield pattern, production of high value products, innovative
blend management skills, energy conservation measures, close coordination with Marketing,
International Trade & Supplies Dept. etc. will be the focus area for the Refineries. When the
ongoing Refinery upgradation programme gets completed at both Mumbai and Visakh, it would
result in the refining capacity getting enhanced to 18 MMTPA and production of Euro III / Euro IV MS/
Euro III HSD, flexibility to process different types of crude including higher quantum of heavier crudes
by both the Refineries.
4
The Marketing Division has achieved highest ever sales volume of 21.69 MMT which resulted in the
Corporation recording the highest ever turnover of Rs.91,448 crores representing a growth of 23.5%.
The Mundra Delhi Pipeline is mechanically completed and Mumbai Pune Pipeline extension to
Solapur has been completed and commissioned by the Marketing Division.
In the core area of Refining and Marketing , while it would be our endeavour to ensure enhanced
performance in terms of Refinery thruput and Market sales, the marketing margins would continue
to be an area of concern. The crude oil prices continue to remain high and there appears to be no
indication currently of a significant fall in the price in the near future. On the contrary, further increase
cannot be ruled out. Crude oil prices are influenced not only by the market determined forces but
also other geo-political factors.
As a Government Company, your Corporation functions having regard to the overall economic
policies of the Government of India which include equitable distribution of petroleum products across
the cross sections of the society and more importantly at affordable prices. Hence the continued
subsidies on products like LPG and Kerosene and non-revision in the prices of products like petrol
and diesel resulting in under-recoveries. The Government continues to be seized of the matter and
is compensating your Corporation as well as other downstream oil companies thru issue of oil
bonds as well as making the upstream companies share a portion of the subsidy burden.
Having regard to the constraints as explained above, your Corporation continues to look for other
areas of revenue generation and profitability. The Corporation is focusing on opportunities in the
area of Exploration and Production, Natural Gas (CNG/LNG), Bio-diesel options , Wind Power Project
etc, The Corporation is pursuing such projects either through Joint Ventures or joint initiatives with
reputed companies who have core capabilities in the respective segment. Several steps have
been taken and the Corporation would scale up its activities in these areas in a phased manner.
Various HR initiatives taken and implemented during the last few years which included the ‘Balanced
Scorecard’ tool to set up performance targets and evaluation, Competency Mapping Process to
enhance employee capabilities, Six Sigma approach for quality improvement have all resulted in
enhanced capabilities, vigour and commitment in our employees. This fills me with the confidence
that the Organisation is fully equipped to take on the challenges in its pursuit of growth and thereby
the transition from a Downstream Company to an Integrated Energy Company.
5
The details of various ongoing major and other projects including the prestigious Joint Venture LPG
Cavern project which is nearing completion at Visakh have been given in the report. Your Corporation
is contemplating several new projects both in Refineries as well as Marketing with an outlay of Rs.30000
crores over the next 5 years. This would include Lube Oil Base stocks upgradation at MR, new VR
expansion project, SPM facilities at Visakh for importing crude oil in large carriers, mixed xylene and
propylene production at Mumbai and Visakh Refineries, petro-chemical complex at APSEZ at
Visakhapatnam. These projects when completed would bring in significant revenue contribution to
the Corporation. These projects would be financed both thru internal resources and borrowings.
Quality / Quantity assurances to customers, automation of facilities, increased thruput per retail
outlet, penetrating to rural and highway segments, aggressive marketing in the area of Lubricants,
Industrial and Consumer Business, Aviation, Bitumen which are non subsidy products, penetration
to rural and highway segment etc will be the focus area of Marketing Division in the coming period.
The Corporation’s 9 MMTPA grassroot Refinery project at Bhatinda, Punjab has received significant
boost in the form of the globally well known Mittals joining as a JV partner for implementing the
project. M/s. Mittal Energy Investments Pte Ltd., also received approval from the Government for
their equity investment through one of their Affiliate Company. Various critical project related activities
are in an advanced stage of finalization which includes financial closure, refinery configuration,
selection of process packages, engagement of various Consultants for the project. This project
which is estimated to cost close to Rs.18000 crores would be completed in a period of about 4
years from now. This will enable HPCL to have independent source of products to cater to its
requirement in the North and any excess would be exported. The Mundra Delhi Pipeline which
would be commissioned shortly would enable the Corporation to move its products from Mundra to
cater to its requirement in several areas in the North. It could be also utilized to move the product
from the Refinery at Punjab to other Market locations and also for exports, if required.
We are grateful to all our esteemed Shareholders, our Stakeholders like dealers, customers, vendors,
contractors business associates, employees and all others who have reposed their faith in HPCL.
Our Administrative Ministry, Ministry of Petroleum & Natural Gas, has been providing continuous
guidance and support in our efforts. We, on our part, would continue to take HPCL further towards
growth and profitability by meeting the challenges that we face and on capitalizing the opportunities
that arise. We look forward to your continued support in this ongoing journey.
Thank you,
ARUN BALAKRISHNAN
6
Our Directors
Shri Arun Balakrishnan Shri M B Lal

Chairman & Managing Director Chairman & Managing Director
(From 01.04.2007) (Till 31.03.2007)
Shri P K Sinha
Director
Shri C Ramulu Shri T L Sankar

Director - Finance Director
Shri Prabh Das

Director
Shri S Roy Choudhury Shri Rajesh V Shah

Director - Marketing Director
Shri P.V. Rajaraman

Director (From 20.07.07)
Shri M A Tankiwala Shri M Nandagopal

Director - Refineries Director
Prof. Prakash G. Apte

Director (From 20.07.07)
Shri V Viziasaradhi Prof. I M Pandey

Director - HR Director
(From 03.08.2007)
7
Senior Corporate Officers
Shri B.R. Mandal Shri S.K. Mukherjee Shri K. Murali Shri N.R. Narayanan Shri A.K. Bhide
Chief Vigilance Officer Executive Director - SH&E** Executive Director - R&D Company Secretary Executive Director - CF**
Shri K.S.R. Prasad Ms. Nishi Vasudeva Shri B. Mukherjee Shri O.P. Pradhan
Executive Director - IA & JVC Executive Director - IT & ERP Executive Director - T & T General Manager - CP & S
Shri S.P. Gupta Shri K.V. Rao Shri A.B. Pai

Financial Controller General Manager - IA & JVC General Manager - HRD
Shri Sandeep Joseph Shri G. Hariharan Shri D.M. Sabale Shri S.T. Sathiavageeswaran
General Manager - IR General Manager - Legal General Manager - SH&E General Manager - ERP
Shri M.V. Sreeram Shri R. Ganesan Shri D.K. Hota Shri Ajit Singh Shri L.M. Motwani
General Manager - IT (Corp.) General Manager - Tax General Manager - MRA & P DGM (I/C), DCO DGM - PR&CC
**: Retired from the services of the Corporation
8
Refineries Team
Shri S.V. Sahni Shri D.K. Deshpande Shri A.B. Sathe Shri A.S. Rao
Executive Director - CE, Executive Director - MR Executive Director - IT & S Executive Director - VR
Refineries
Shri P. A. B. Raju Shri B.K. Namdeo Shri S.C. Mehta Shri Rakesh Kumar
General Manager - Operations, VR General Manager - CEC General Manager - Operations, MR General Manager - Finance, MR
Shri V. Jagannathan Shri K. Srinivasan Shri R.M.N. Marar Shri G. Sriganesh

General Manager - Special General Manager - Projects, MR General Manager - Projects, VR General Manager - R & D
Assignment, VR
Joint Ventures
Shri K.R. Shankaran Shri T.K. Shri A.V. Sarma Shri R.K. Gupta Shri Rajan K. Pillai
Executive Chairman, PII* Kalyanaraman Managing Director, BGL* General Manager - Chief Executive Officer -
Director - Commercial, AGL* Projects, GGSRL* ISPRL*
*: On deputation
9
Marketing Team
Shri S.P. Chaudhry Shri S.K. Biswas Shri G.A. Shirwaikar Shri S.M. Palav
Executive Director - Retail Executive Director - P & P Executive Director - LPG General Manager - IT (Mktg.)
Shri A.B. Thosar Shri R. Sudhakara Rao Shri B. Gururajan Shri M.S. Damle
General Manager - Pipelines General Manager - Lubes General Manager - Retail General Manager -
(Branding / Loyalty Cards) West Zone
Shri Y.K. Gawali Shri S.Y. Narvekar Shri C.S. Krishnaswamy Shri P. Rajendran
General Manager - O&D General Manager - Industrial & General Manager - R&D & Quality General Manager - Marketing
Consumer Sales Control Projects
Shri S.P. Singh Shri S. Jeyakrishnan Shri R. Radhakrishnan Shri Rakesh Misri
DGM - Aviation DGM (I/C), East Zone DGM (I/C), South Zone DGM (I/C), North Zone
10
Offices, Auditors and Bankers

Registered Office & Headquarters Office Zonal Offices
Petroleum House, East Zone
17, Jamshedji Tata Road,
6, Church Lane,
Mumbai - 400 020. Post Box No.146,
e-mail: corphqo@hpcl.co.in Kolkata-700 001.
website: www.hindustanpetroleum.com
West Zone
Marketing Headquarters R&C Building,
Sir J.J. Road, Byculla,
Hindustan Bhavan, Mumbai - 400 008.
8, Shoorji Vallabhdas Marg,
Ballard Estate, Mumbai - 400 001. North Zone
6th & 7th Floor,
Mumbai Refinery Core 1 & 2, North Tower,
Scope Minar,
B.D. Patil Marg, Chembur, Laxmi Nagar,
Mumbai - 400 074. Delhi - 110 092.
Visakh Refinery South Zone

Thalamuthu Natarajan Building,
Post Box No. 15,
4th Floor, 8,Gandhi Irwin Road,
Visakhapatnam - 530 001. Post Box No. 3045, Egmore,
Chennai - 600 008.
Statutory Auditors Bankers

N.M. Raiji & Co. State Bank of India
Chartered Accountants Union Bank of India
Mumbai Punjab National Bank
Standard Chartered Bank
Sudit K. Parekh & Co. Bank of Baroda
Chartered Accountants Bank of India
Mumbai Citibank N.A.
Corporation Bank
Branch Auditors ICICI Bank
B.V. Rao & Co. HDFC Bank
Chartered Accountants Company Secretary
Visakhapatnam
Shri N. R. Narayanan
11
Notice of Annual General Meeting

HINDUSTAN PETROLEUM CORPORATION LIMITED
(A Government of India Enterprise)
REGISTERED OFFICE : 17 JAMSHEDJI TATA ROAD, MUMBAI 400 020
NOTICE
NOTICE is hereby given that the 55th ANNUAL GENERAL MEETING of the Members of Hindustan Petroleum
Corporation Limited will be held on Thursday, September 06, 2007, at 3.00 P.M. at “Yashwantrao Chavan
Pratishthan Auditorium, Chavan Centre, General Jagannath Bhosale Marg, Mumbai - 400 021”, to
transact the following business :
ORDINARY BUSINESS:
1. To receive, consider and adopt the Balance Sheet as on March 31, 2007, Profit and Loss Account for the
year ended on that date and Reports of the Board of Directors and Auditors thereon.
2. To declare Equity Dividend for the Financial Year 2006-2007.
3. To appoint a Director in place of Shri T.L. Sankar, who retires by rotation and is eligible for reappointment.
4. To appoint a Director in place of Shri Prabh Das, who retires by rotation and is eligible for reappointment.
5. To appoint a Director in place of Shri C. Ramulu, who retires by rotation and is eligible for reappointment.
6. To appoint a Director in place of Shri Rajesh V. Shah, who retires by rotation and is eligible for
reappointment.
7. To appoint a Director in place of Shri M.A. Tankiwala, who retires by rotation and is eligible for
reappointment.
8. To approve payment of Rs.15 Lakhs as remuneration to the Statutory Auditors of the Company to be
appointed by the Comptroller & Auditor General of India for auditing the Accounts of the Company for the
Financial Year 2007-08.
SPECIAL BUSINESS:
APPOINTMENT OF DIRECTORS:
9. To consider and, if thought fit, to pass, with or without modification(s), the following resolution as an
Ordinary Resolution.
“RESOLVED that Prof. Prakash G. Apte who was appointed as an Additional Director of the Company
by the Board of Directors under Article 112 of the Articles of Association of the Company with effect
from 20.07.2007 and who holds office under the said Article and pursuant to Section 260 of the
Companies Act, 1956 only upto the date of this Annual General Meeting, and who is eligible for re-
appointment under the relevant provisions of the Companies Act, 1956, and in respect of whom the
Company has received a notice in writing from a member signifying his intention to propose him as
a candidate for the office of the Director, be and is hereby appointed as a Director of the Company
liable to retire by rotation.”
12

“RESOLVED that Shri P.V. Rajaraman who was appointed as an Additional Director of the Company by
the Board of Directors under Article 112 of the Articles of Association of the Company with effect from
20.07.2007 and who holds office under the said Article and pursuant to Section 260 of the Companies
Act, 1956 only upto the date of this Annual General Meeting, and who is eligible for re-appointment under
the relevant provisions of the Companies Act, 1956, and in respect of whom the Company has received
a notice in writing from a member signifying his intention to propose him as a candidate for the office of
the Director, be and is hereby appointed as a Director of the Company liable to retire by rotation.”
“RESOLVED that Shri V. Viziasaradhi who was appointed as an Additional Director of the Company by
the Board of Directors under Article 112 of the Articles of Association of the Company with effect from
03.08.07 and who holds office under the said Article and pursuant to Section 260 of the Companies Act,
1956 only upto the date of this Annual General Meeting, and who is eligible for re-appointment under the
relevant provisions of the Companies Act, 1956, and in respect of whom the Company has received a
notice in writing from a member signifying his intention to propose him as a candidate for the office of the
Director, be and is hereby appointed as a Director of the Company liable to retire by rotation.”
BY THE ORDER OF THE BOARD

N.R. Narayanan
Company Secretary
Date : August 03, 2007

Regd. Office : 17, Jamshedji Tata Road
Churchgate, Mumbai - 400 020
NOTES :
1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY
TO ATTEND AND VOTE INSTEAD OF HIMSELF AND SUCH PROXY NEED NOT BE A MEMBER OF
THE COMPANY. Proxies in order to be effective, must be deposited at the Registered Office of the
Company not less than 48 hours before the time of the meeting.
2. The Explanatory Statement made pursuant to Section 173(2) of the Companies Act, 1956 in respect of
the item Nos. 8 to 11 of the Notice is annexed herewith.
3. Dividend on Equity Shares as recommended by the Directors for the year ended March 31, 2007, if
approved at the meeting, will be payable to those eligible members whose names appear :
(1) As Beneficial owners, as on August 21, 2007 as per the list to be furnished by National Securities
Depository Ltd. and Central Depository Services (India) Ltd. in respect of shares held in electronic
form, and
(2) As Members in the Register of Members of the Company after giving effect to all valid share transfers
in physical form lodged with the Company on or before August 21, 2007.
4. Members are requested to bring their copies of the Annual Report to the Meeting. Members / Proxies attending
the Meeting should bring the Attendance Slip, duly filled, for handing over at the venue of the meeting.
13

5. (a) Members holding shares in physical form are requested to advise immediately change in their address,
if any, quoting their Folio number(s), to M/s. Intime Spectrum Registry Limited (ISRL), the Registrars
at their address given below.
(b) Shareholders holding shares in dematerialised form are requested to advise immediately change in
address, if any, quoting their respective Client ID / DP ID Nos., to their respective Depository Participants
and not to M/s. ISRL or to the Company.
6. (a) Members holding shares in physical form, who have not given the Bank Particulars / Mandate, ECS
Mandates earlier or if there is any change in the details, are requested to send the same quoting the
Folio number(s), to our Registrars M/s. ISRL on or before August 21, 2007.
(b) All Shareholders who are holding shares in Dematerialised form are requested to advise change, if
any, in details of their bank account / ECS mandates to their respective Depository Participants
immediately to enable the Company to pay the dividend accordingly.
7. Members are hereby informed that Dividends which remain unclaimed / unencashed over a period of 7
years have to be transferred by the Company to Investor Education & Protection Fund constituted by the
Central Government under Section 205A and 205C of the Companies Act, 1956.
We give below the details of Dividends paid by the Company and their respective due dates of transfer to
the Fund of the Central Government if they remain unencashed.
Date of declaration of Dividend for the year Month & year of
Dividend transfer to the Fund
08.09.2000 1999-2000 (Final) Oct. 2007
28.09.2001 2000-2001 Oct. 2008
28.08.2002 2001-02 Sep. 2009
30.01.2003 2002-03 (Interim) Feb. 2010
24.09.2003 2002-03 (Final) Oct. 2010
22.12.2003 2003-04 (Interim) Jan. 2011
09.09.2004 2003-04 (Final) Oct. 2011
09.12.2004 2004-05 (Interim) Jan. 2012
21.09.2005 2004-05 (Final) Oct. 2012
14.09.2006 2005-06 Oct. 2013
20.12.2006 2006-07 (Interim) Jan. 2014
It may please be noted that no claim can be made by the shareholders for the unclaimed Dividends which
have been transferred to the credit of the Investor Education & Protection Fund of the Central Government
under the amended provision of Section 205B of the Companies (Amendment) Act, 1999.
In view of the above regulation, the shareholders who are yet to encash the dividend are advised to send
requests for duplicate dividend warrants in case they have not received the Dividend Warrants for any of
the above mentioned financial years and / or revalidation of unencashed Dividend Warrants still held by
them to the Registrars and Transfer Agents of the Company so that dividends can be encashed.
8. The name and address of Registrars and Transfer Agents of the Company is as follows :
M/s. INTIME SPECTRUM REGISTRY LTD.
Unit: HINDUSTAN PETROLEUM CORPORATION LTD.
C-13, Pannalal Silk Mills Compound
LBS Marg, Bhandup (West), Mumbai - 400 078
Telephone No.: 022 - 25963838 / Fax No.: 022 - 25946969
14

9. Appointment / Re-appointment of Directors
At the ensuing Annual General Meeting, S / Shri T.L. Sankar, Prabh Das, C. Ramulu, Rajesh V. Shah and
M.A. Tankiwala retire by rotation and being eligible, offer themselves for re-appointment.
EXPLANATORY STATEMENT IN PURSUANCE OF SECTION 173(2) OF THE COMPANIES ACT, 1956.
8. HPCL is a Government Company within the meaning of Section 617 of the Companies Act, 1956. In terms
of the provisions of Section 619 of the Companies Act, 1956, Statutory Auditor/s for a Government Company
is/are appointed by the Comptroller & Auditor General of India (C&AG). In terms of Section 224 (8) (aa) of
the Companies Act, 1956, the remuneration of the Auditors is required to be fixed by the Company in a
General Meeting or in such a manner as the Company in a General Meeting may determine.
The Board of Directors of the Company have recommended a remuneration of Rs.15 Lakhs plus out of
pocket expenses to the Statutory Auditors (including Joint / Branch Auditors, if any) of the Company to be
appointed by the C&AG for auditing the Accounts of the Company for the Financial Year 2007-08 for the
approval of the shareholders. The Corporation will shortly submit an application to the Comptroller &
Auditor General of India, regarding appointment of Statutory Auditors.
9. Prof. Prakash G. Apte was appointed as an Additional Director on the Board effective 20.07.2007. In terms
of Section 260 of the Companies Act, 1956 and Article 112 of the Articles of Association of the Company,
he holds office upto the date of this Annual General Meeting and is eligible for re-appointment. The
Company has received a notice proposing the candidature of Prof. Prakash Apte for the office of a Director
in terms of Sections 255 & 257 of the Companies Act, 1956.
Prof. Prakash Apte, is a Director, in the Indian Institute of Management, Bangalore. The Board recommends
appointment of Prof. Prakash Apte.
None of the Directors other than Prof. Prakash Apte are interested in the resolution.
10. Shri P.V. Rajaraman was appointed as an Additional Director on the Board effective 20.07.2007. In terms
he holds office upto the date of this Annual General Meeting and is eligible for re-appointment. The
Company has received a notice proposing the candidature of Shri P.V. Rajaraman for the office of a
Director in terms of Sections 255 & 257 of the Companies Act, 1956.
Shri P.V. Rajaraman was the former Chairman of Tamilnadu Industrial Investment Corporation. The Board
recommends appointment of Shri P.V. Rajaraman.
None of the Directors other than Shri P.V. Rajaraman are interested in the resolution.
11. Shri V. Viziasaradhi was appointed as an Additional Director on the Board effective 03.08.2007. In terms
he holds office upto the date of next Annual General Meeting and is eligible for re-appointment. The
Company has received a notice proposing the candidature of Shri V. Viziasaradhi for the office of a
Director in terms of Sections 255 & 257 of the Companies Act, 1956.
Shri V. Viziasaradhi was Executive Director – Industrial Relations. The Board recommends appointment
of Shri V. Viziasaradhi.
None of the Directors other than Shri V. Viziasaradhi are interested in the resolution.
BY THE ORDER OF THE BOARD
N.R. Narayanan
Company Secretary
Date : August 03, 2007
Regd. Office : 17, Jamshedji Tata Road
Churchgate, Mumbai - 400 020.
15
ANNEXURE TO ITEMS 3 TO 7 & 9 to 11 OF THE NOTICE
Details of Directors seeking appointment / re-appointment at the 55 th Annual General Meeting (in pursuance of Clause 49 of the Listing Agreement)
Name of the T.L. Sankar Prabh Das C. Ramulu Rajesh V. Shah M.A. Tankiwala Prakash G Apte P.V. Rajaraman V. Viziasaradhi
Director
Date of Birth 21.03.1934 30.10.1957 10.01.1948 01.10.1951 25.01.1949 12.02.1947 02.02.1944 19.07.1952
Nationality Indian Indian Indian Indian Indian Indian Indian Indian
Date of 21.01.1999 03.05.2005 14.08.2003 21.01.1999 01.06.2005 20.07.2007 20.07.2007 03.08.2007

Appointment on
the Board
Qualifications IAS (Retd.) IAS, B.Tech. B.Com, Degree in B.E. (Mech.) Ph.D (Eco.) - IAS (Retd.), B.Sc.,
M.Sc. (Chem.) (Hons), MBA ACA. ACS, Mathematics, Columbia M.Sc. (Physics), Post Graduate in
MA (Dev. Eco.) MBA MBA University, MA (Mgmt), Industrial
(Leeds, UK) PGDM-IIM, (Leeds, UK) Relations &
Calcutta, Personnel
B.Tech (Mech.) - Management
IIT, Bombay
List of Directorships 1. GGSRL • Engineers India • Prize Petroleum • Mukand Ltd. GGSRL • Power Finance Small Industries
held in other 2. Delhi Power Ltd. Co. Ltd. • Mukand Corporation, Development -
Companies Co. Ltd. • MRPL • GGSRL Engineers Ltd. New Delhi Bank of India
16
3. KSK Energy • HINCOL • Fusion • Bharat Earth
Ventures Investments & Movers Ltd.

Pvt. Ltd. Financial • GMR Infra-
4. Rain Services Ltd. structure Ltd.
Calcining Ltd. • Catalyst • Deposit
5. Small Scale Finance Ltd. Insurance and
Sustainable • Conquest Credit
Infrastructure Investments & Guarantee
Dev. Board Finance Ltd. Corporation
6. KSK Power • Kalyani (DICGC), RBI,
Venture Plc, Mukand Ltd. Mumbai
Isle of Man • Bengal Port Ltd. • UTI Trustee
7. Zenith • Jeewan Ltd. Company
Energy • India Thermal Pvt. Ltd.
Services Power Ltd. • National
• Mukand Securities
Vijayanagar Depository
Steel Ltd. Limited,
Mumbai
Independence Day Celebration
Independence Day being Celebrated at Corporate Headquarters.
Presentation of Service Awards to employees who completed more than 15 years of dedicated
service during Independence Day 2007 celebration at Corporate & Marketing Headquarters.
17
Performance Profile
Profile
Market Sales (Incl. Export)
Turnover
18
Performance Profile
Profile
2006-07 2006-07 2005-06 2004-05 2003-04 2002-03
FINANCIAL US$ Million Rs./Crores

Sales / Income from operations 22,143 96,918.15 76,920.26 65,218.33 57,511.13 54,259.48
Gross Profit 707 3,094.14 1,151.21 2,381.83 3,642.66 3,139.06
Depreciation 161 704.00 690.23 659.59 606.58 574.25
Interest 97 422.98 175.88 81.64 55.65 153.02
Tax (Incl. Def Tax) 88 386.15 (131.91) 363.27 1,076.49 874.43
Provision for Fringe Benefit Tax 2 9.84 11.38 - - -
Net Profit 359 1,571.17 405.63 1,277.33 1,903.94 1,537.36
Dividend 140 610.80 101.80 509.00 746.81 678.66
Tax on Distributed Profits 22 97.75 14.28 71.15 95.65 78.26
Retained Earnings 197 862.62 289.55 697.18 1,061.48 780.44
INTERNAL RESOURCES GENERATED 366 1,603.08 989.47 1,277.44 1,722.10 1,375.76
VALUE ADDED 1,419 6,209.19 4,198.13 5,208.06 6,061.19 5,115.14
WHAT CORPORATION OWNS

Gross Fixed Assets 3,573 15,638.48 13,479.25 12,393.17 11,387.43 10,754.32
Depreciation 1,558 6,817.64 6,141.85 5,449.53 4,809.32 4,319.12
Net Fixed Assets 2,015 8,820.84 7,337.40 6,943.64 6,578.11 6,435.20
Capital Work in Progress 970 4,243.56 2,363.88 786.84 496.14 347.68
Investments - JVCs & Subsidiary 235 1,029.73 825.76 825.76 817.34 784.14
Investments - Others 1,393 6,097.74 3,201.88 931.08 1,231.08 1,231.08
Net Current Assets 307 1,345.21 3,055.09 2,513.63 1,775.02 646.72
Deferred Tax Liability (325) (1,420.90) (1,384.44) (1,374.75) (1,454.08) (1,400.04)
Total 4,596 20,116.18 15,399.57 10,626.20 9,443.61 8,044.78
WHAT CORPORATION OWES

Net Worth 2,193 9,598.65 8,735.74 8,440.85 7,742.81 6,678.85
Share Capital 77 338.95 338.94 338.93 338.90 338.83
Reserves 2,116 9,259.70 8,396.80 8,101.92 7,403.91 6,340.02
Borrowings 2,403 10,517.53 6,663.83 2,185.35 1,700.80 1,365.93
Total 4,596 20,116.18 15,399.57 10,626.20 9,443.61 8,044.78
PHYSICAL Million Tonnes

CRUDE THRUPUT 16.66 13.82 13.94 13.70 12.93
Investments - Mumbai Refinery 7.42 6.25 6.12 6.11 6.08
Investments - Visakh Refinery 9.24 7.57 7.82 7.59 6.85
PIPELINE THRUPUT 6.73 5.65 6.05 6.14 6.11
MARKET SALES 21.69 19.42 20.09 19.53 18.84
Notes: 1. Previous year figures have been regrouped/reclassified wherever necessary

2. 1 US$ = Rs.43.77 (Exchange Rate as on 31.03.2007)
19
Performance Profile
Profile
Contribution to Exchequer
Distribution of Earnings 2006-2007
20
Performance Profile
Profile
2006-07 2006-07 2005-06 2004-05 2003-04 2002-03

FUND FLOW STATEMENT US$ Million Rs./Crores
Sources of Funds :
Profit after Tax 359 1,571.17 405.63 1,277.33 1,903.94 1,537.36
Depreciation 161 704.00 690.23 659.59 606.58 574.25
LPG Deposits 35 152.55 124.57 175.92 172.12 177.87
Borrowings (Net) 864 3,784.38 4,322.23 307.37 382.32 -
Share Capital 0 0.01 0.01 0.03 0.07 0.02
Share Premium 0 0.47 0.39 0.83 2.41 0.70
Redemption of Oil bonds 446 1,950.73 850.00 300.00 - 250.00
Receipt of Capital Grants from OIDB 0 - 4.94 - - -
Amortisation of Capital Grant
received from OIDB 0 (0.19) - - - -
Redemption/Sale of Investment 0 - - - 0.21 9.00
Prov. for Deferred Tax 8 36.46 9.69 (79.33) 54.04 226.99
Adj on account of sale/deletion
of Assets & Prov. for diminution
in Investment 23 99.30 1.66 6.81 43.37 7.92
Total 1,896 8,298.88 6,409.35 2,648.55 3,165.06 2,784.11
Utilisation of Funds :
Dividend 140 610.80 101.80 509.00 746.81 678.66
Tax on Distributed Profits 22 97.75 14.28 71.15 95.65 78.26
Capital Expenditure 936 4,096.30 2,694.43 1,322.63 941.32 577.58
Working capital : Increase/ (Decrease) (367) (1,607.02) 456.75 738.65 1,347.07 699.82
Repayment of Loans (Net) 0 - - - - 640.91
Investment - JVCs (Incl. Adv.
towards Equity & Share app.
Money pending allotment) 39 171.16 21.29 7.12 34.21 108.88
Investment Oil Bonds 1,126 4,929.89 3,120.80
Total 1,896 8,298.88 6,409.35 2,648.55 3,165.06 2,784.11
CONTRIBUTION TO EXCHEQUER
Excise Duty 1,679 7,349.34 5,852.34 6,189.05 6,128.99 5,661.39
Customs Duty 588 2,575.38 1,423.52 1,397.73 1,139.70 872.57
Sales Tax 2,152 9,416.65 8,811.86 7,977.27 6,986.11 6,168.46
Service Tax 5 23.57 11.13 6.74 0.15 -
Income Tax 16 72.29 (141.49) 629.82 617.70 433.91
Fringe Benefit Tax 2 9.82 11.07 - - -
Total 4,442 19,447.05 15,968.43 16,200.61 14,872.65 13,136.33
RATIOS
Gross Profit/Sales (%) 3.19 1.50 3.65 6.33 5.79
Net Profit/Sale (%) 1.62 0.53 1.96 3.31 2.83
Earnings Per Share (Rs.) 46.35 11.97 37.69 56.18 45.37
Cash Earnings Per Share (Rs.) 68.20 32.62 54.81 75.67 62.94
Avg. Sales/Employee (Rs. Crores) 8.40 6.87 6.13 5.08 4.70
Avg. Net Profit/Employee (Rs. Crores) 0.14 0.04 0.12 0.17 0.14
Debt Equity Ratio (Long term
debt to equity) 0.24:1 0.13:1 0.02:1 0.05:1 0.09:1
MANPOWER (Nos.) 10,891 10,778 10,561 11,088 11,213
21
Performance Profile
Profile
2006-07 2006-07 2005-06 2004-05 2003-04 2002-03
How Value is Added US$ Million Rs./Crores
Income:
Sales / Income from operations 22,143 96,918.15 76,920.26 65,218.33 57,511.13 54,259.48
Add: Increase/(Decrease)
in Inventory 56 243.55 1,408.96 34.87 357.50 1,187.90
22,198 97,161.70 78,329.23 65,253.20 57,868.63 55,447.38
Cost of Raw materials:
Raw Material Consumption 8,183 35,816.79 25,450.29 20,576.22 14,940.83 14,366.80
Purchase for resale 10,704 46,850.22 42,178.12 33,842.86 30,304.41 29,936.30
Packages 24 105.11 95.99 90.38 79.15 68.60
Stores & Spares 24 103.57 85.86 70.77 67.87 52.88
Utilities 37 160.58 129.60 114.34 104.10 107.40
18,971 83,036.27 67,939.86 54,694.57 45,496.36 44,531.98
Duties applicable to products 1,809 7,916.24 6,191.23 5,350.57 6,311.08 5,800.26
Total Value added 1,419 6,209.19 4,198.13 5,208.06 6,061.19 5,115.14
How Value is Distributed
Operations:
Operating & Service Costs 545 2,385.63 2,405.43 2,113.82 1,848.97 1,429.95
Employees’ Benefits 167 729.42 641.49 712.41 569.56 546.13
Providers of Capital
Interest on borrowings 97 422.98 175.88 81.64 55.65 153.02
Dividend 162 708.55 116.08 580.15 842.46 756.92
Income Tax/Fringe Benefit Tax 90 395.99 (120.53) 363.27 1,076.49 874.43
Re-deployment in Business
Retained Profit 197 862.62 289.55 697.18 1,061.48 780.44
Depreciation 161 704.00 690.23 659.59 606.58 574.25
Total Value distributed 1,419 6,209.19 4,198.13 5,208.06 6,061.19 5,115.14
22
Performance Profile
Profile
2006-07 2005-06 2004-05 2003-04 2002-03

SALES VOLUME * 000 Tonnes
Light Distillates
Liquified Petroleum Gas 2,650.51 2,526.37 2,510.97 2,282.47 2,025.44
Naphtha 2,223.37 1,876.85 2,160.90 2,245.74 1,966.02
Motor Spirit 2,377.89 2,078.61 2,035.96 1,948.79 1,873.63
Hexane 29.40 27.40 42.64 44.50 36.28
Propylene 33.37 31.75 32.61 31.58 30.00
Sub-total 7,314.54 6,540.98 6,783.08 6,553.08 5,931.37
Middle Distillates
Mineral Turpentine Oil 50.06 41.35 56.74 47.96 47.68
Aviation Turbine Fuel 596.83 504.18 409.34 277.95 224.55
Superior Kerosene Oil 1,793.02 1,732.63 1,766.41 1,792.98 1,840.18
High Speed Diesel 7,907.08 7,353.38 7,632.80 7,453.77 7,539.97
JBO/WO 3.57 4.83 6.91 8.50 8.24
Light Diesel Oil 154.74 196.27 289.98 309.69 342.78
Sub-total 10,505.31 9,832.64 10,162.18 9,890.85 10,003.40
Lubes & Greases 320.23 287.84 254.25 334.08 329.23
Heavy Ends
Furnace Oil 2,256.13 1,685.15 1,726.04 1,429.23 1,425.61
Low Sulphur Heavy Stock 351.15 388.03 457.25 554.14 570.86
Bitumen 756.54 543.48 574.31 656.79 506.42
Others 181.62 139.60 131.53 108.00 77.07
Sub-total 3,545.44 2,756.26 2,889.13 2,748.16 2,579.96
Total 21,685.52 19,417.72 20,088.64 19,526.17 18,843.96
* Including Exports
MARKETING NETWORK Numbers
Regional Offices 86 85 85 81 76
Terminals/Installations/TOPs 37 37 36 36 35
Depots 93 92 100 89 92
LPG Bottling Plants 42 41 40 40 40
ASFs 13 13 10 10 10
Retail Outlets 7909 7313 6667 5502 4863
SKO/LDO Dealers 1648 1648 1648 1647 1644
LPG Distributors 2238 2202 2153 1993 1898
LPG Customers (in crores) 2.39 2.28 2.17 1.99 1.77
23
Performance Profile
Profile
2006-07 2005-06 2004-05 2003-04 2002-03

PRODUCTION VOLUME - MUMBAI REFINERY 000 Tonnes
Light Distillates
Liquified Petroleum Gas 250.80 193.00 172.20 161.50 154.50
Naphtha 936.00 714.90 744.30 695.40 659.80
Motor Spirit 418.20 280.40 308.40 259.00 253.40
Hexane 27.00 35.30 38.90 42.80 36.10
Solvent 1425 7.80 6.10 8.90 11.20 11.20
Sub-total 1,639.80 1,229.70 1,272.70 1,169.90 1,115.00
Middle Distillates
Mineral Turpentine Oil 50.60 44.60 54.00 50.80 44.80
Superior Kerosene Oil 239.00 279.40 335.90 392.10 491.80
Light Diesel Oil 108.30 174.40 241.50 287.70 282.70
Sub-total 3,045.90 2,759.60 2,732.60 2,725.00 2,682.00
LOBS/TOBS 338.10 279.70 214.00 277.60 305.50
Heavy Ends
Furnace Oil 1,256.90 976.60 933.50 976.20 1,046.70
Bitumen 499.20 401.20 324.80 338.30 273.40
Others (Incl.input of BH Gas) 73.40 55.80 49.50 47.10 39.00
Sub-total 1,940.70 1,530.00 1,500.40 1,536.20 1,561.80
Total 6,964.50 5,799.00 5,719.70 5,708.70 5,664.30
Intermediate Stock Differential (16.00) 27.10 (3.90) (0.60) (3.20)
Fuel & Loss 470.30 422.50 402.20 400.20 418.20
Total 7,418.80 6,248.60 6,118.00 6,108.30 6,079.30
24
Performance Profile
Profile
2006-07 2005-06 2004-05 2003-04 2002-03

PRODUCTION VOLUME - VISAKH REFINERY 000 Tonnes
Light Distillates
Liquified Petroleum Gas 343.60 273.76 296.81 323.55 279.40
Naphtha 1,195.20 928.74 812.59 845.98 602.70
Motor Spirit 811.20 661.81 677.37 734.83 676.30
Propylene 33.20 32.92 32.15 31.66 29.70
Sub-total 2,383.20 1,897.23 1,818.92 1,936.02 1,588.10
Middle Distillates
Mineral Turpentine Oil - - - 1.71 1.10
Superior Kerosene Oil 1,016.00 824.17 715.32 731.81 637.30
JBO/WO 3.80 3.62 5.38 7.75 7.30
CO 0.00 28.05 - - -
Light Diesel Oil 70.90 63.71 89.21 110.54 113.80
Sub-total 4,833.40 3,934.32 4,073.94 3,676.07 3,554.10
Heavy Ends
Furnace Oil 989.50 839.31 926.45 848.47 623.00
Bitumen 230.80 156.75 240.09 288.51 220.90
Others 20.90 8.78 11.68 11.32 11.10
Sub-total 1,462.20 1,295.81 1,444.72 1,532.93 1,243.40
Total 8,678.80 7,127.36 7,337.58 7,145.02 6,385.60
Intermediate Stock Differential 29.30 (6.66) 7.01 (18.86) 58.20
Fuel & Loss 536.40 453.60 477.59 465.32 407.50
Total 9,244.50 7,574.30 7,822.18 7,591.48 6,851.30
25
Directors’ Report
TO THE MEMBERS
On behalf of the Board of Directors, I have great pleasure in presenting to you the fifty fifth Annual Report on the
working of the Company, together with the Audited Accounts for the year ended 31st March 2007. The period
was yet another year of excellent all round performance by the company.
HIGHLIGHTS
FINANCIAL (Rs./Crores) 2006-07 2005-06
Sales/Income from Operations 96,918.15 76,920.26

Profit before Depreciation, Interest and Tax 3,094.14 1,151.21
Depreciation (704.00) (690.23)
Interest (422.98) (175.88)
Profit before Tax 1,967.16 285.10
Provision for Tax
Current Tax (652.67) (78.45)
Deferred Tax (36.46) (9.69)
Taxation of earlier years written back 302.98 220.05
Fringe Benefit Tax (9.84) (11.38)
Profit after Tax 1,571.17 405.63
Balance brought forward from previous year 6,186.63 5,937.64
Appropriations
General Reserve (157.12) (40.56)
Proposed Dividend : Interim (203.60) -
Final (407.20) (101.80)
Tax on distributed profits (97.75) (14.28)
Balance carried forward 6,892.13 6,186.63
PHYSICAL PERFORMANCE (MMT)
Market Sales (incl. Exports) 21.69 19.42
Crude Thruput:
- Mumbai Refinery 7.42 6.25
- Visakh Refinery 9.24 7.57
SHAREHOLDERS’ VALUE (Rupees)
Earnings Per Share 46.35 11.97
Cash Earnings Per Share 68.20 32.62
Book Value Per Share 283.19 257.74
DIVIDEND
Your Directors, after taking into account the financial results of the Company during the year, have recommended
dividend of 180% (including interim dividend of 60%) for the year 2006-07 as against 30% dividend paid for the
year 2005-06. The dividend for 2006-07, including dividend tax provision will absorb Rs.708.55 crores (2005-06:
Rs. 116.08 crores).
26
Directors’ Report
SALES/INCOME FROM OPERATIONS
Your Company has achieved sales/income from operations of Rs. 96,918.15 crores as compared to Rs.76,920.26
crores in 2005-06.
PROFIT
Your Company has earned gross profit of Rs. 3,094.14 crores as against Rs. 1,151.21 crores in 2005-06 and
profit after tax of Rs. 1,571.17 crores as compared to Rs. 405.63 crores in 2005-06.
INTERNAL RESOURCES GENERATION
The Internal Resources generated were Rs. 1,603.08 crores as compared to Rs. 989.47 crores in 2005-06.
CONTRIBUTION TO EXCHEQUER
Your Company has contributed a sum of Rs.19,447.05 crores to the exchequer by way of duties and taxes, as
compared to Rs. 15,968.43 crores in 2005-06.
DIRECTORS’ RESPONSIBILITY STATEMENT
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors state that:
(i) In the preparation of the Annual Accounts, all the applicable Accounting Standards have been followed
along with proper explanation relating to material departures.
(ii) The Company has selected such Accounting Policies and applied them consistently and made judgments
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 2007 and of the Profit & Loss Account of the company for the year ended on
that date.
(iii) 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.
(iv) These Accounts have been prepared on a going concern basis.
MEMORANDUM OF UNDERSTANDING WITH GOVERNMENT OF INDIA
The Corporation has been achieving
an all round “Excellent” rating vis-à-
vis MOU targets for fifteen consecutive
years upto 2005-06 as a result of the
concerted efforts of all the employees.
The performance of the Corporation of
the year 2006-07 also qualifies for
“Excellent” rating basis self
assessment. The details of
performance vis-à-vis MOU 2006-07
targets are enclosed (Annexure I).
Signing of MOU with Govt. of India for the year
2007-08. Seen in the photograph are Shri M. S.
Srinivasan, Secretary - MOP & NG, Shri P. K. Sinha,
Jt. Secy. & Financial Advisor - MOP & NG,
Shri Prabh Das, Jt. Secy. (Refineries) - MOP & NG
and Shri M. B. Lal, then C & MD
27
Directors’ Report
REFINERY PERFORMANCE
HPCL refineries achieved the highest ever combined
crude thruput of 16.66 MMT as against 13.82 MMT
achieved during 2005-06.
During the year, Mumbai Refinery achieved crude thruput
of 7.42 MMT as against 6.25 MMT for the year 2005-06,
which corresponds to capacity utilization of 134.80%.
The Fuel and Loss at Mumbai Refinery was 6.34% during
the year, an improved performance over the previous
year’s fuel and loss of 6.76%.
During the year, Visakh Refinery achieved crude thruput
of 9.24 MMT as against 7.57 MMT for the year 2005-06,
Shri M.S. Srinivasan, Secretary - MOP&NG Inaugurating Mumbai Refinery which corresponds to capacity utilization of 123.20%.
Sub-station
The Fuel and Loss at Visakh Refinery was 5.80% during
the year, an improved performance over the previous year’s fuel and loss of 5.99%.
Gross refining margins of Mumbai Refinery averaged at $ 4.78 per barrel as against $ 3.22 per barrel for the year
2005-06. Gross refining margins of Visakh refinery averaged at $ 3.51 per barrel as against $ 2.56 per barrel for
the year 2005-06. Both refineries are on the verge of completing new facilities to produce environment friendly fuel.
MARKETING PERFORMANCE
The market sales (including exports) registered 21.69 MMT as against 19.42 MMT recorded in 2005-06. The
company achieved highest ever turnover of Rs. 91,448.03 crores during the year as against Rs.74,044.11 crores
during 2005-06.
VIGILANCE
The vigilance function in HPCL is instrumental to create
an environment of proactive vigilance and transparency.
The stress has been on preventive vigilance rather than
being on fault finding mission. During the vigilance
awareness week from 6th to 10th November 2006, various
interactive sessions were conducted across the country
in various offices of HPCL, to increase the awareness
among the employees and other stakeholders at large
about the specific role and functions of vigilance
department in the organization. To reduce the scope of
corruption, measures such as e-procurement, e-disposal, Signing of MOU with Transparency International India (TII) on Integrity
Pact Programme. Seen in the photograph (L-R) are Shri B.R. Mandal, Chief
e-payment and e-tendering are initiated by leveraging Vigilance Officer, Admiral R.H. Tahiliani, Chairman - TII, Shri Arun
technology. Balakrishnan, CMD, and Shri S. Roy Choudhury, Director - Marketing
INDUSTRIAL RELATIONS
The Industrial Relations climate during the year 2006-07 continued to be generally harmonious in the Corporation.
OFFICIAL LANGUAGE IMPLEMENTATION
Progressive use of Hindi in the Corporation continues to receive due importance. More details are given in the
Management Discussion & Analysis Report.
28
Directors’ Report
SC / ST LIAISON
The overall representation of SC / ST employees in
the Corporation is 27.89%. During the year, your
Corporation has carried out a number of Welfare /
Development activities. Further details are given in
the Management Discussion & Analysis Report.
CORPORATE GOVERNANCE
The Corporation has complied with the various
requirements of Corporate Governance. The details
in this regard form part of this Annual Report (being
given separately).
MANAGEMENT DISCUSSION & ANALYSIS Smt Sheila Dixit, Hon’ble Chief Minister of Delhi presenting the Golden
REPORT Peacock Corporate Governance Award 2006 to Shri N R Narayanan, Company
Secretary
This report has been given separately.
PARTICULARS OF EMPLOYEES
A statement providing the information as required under Section 217 (2A) of the Companies Act, 1956 is
annexed herewith (Annexure IV). The details regarding the number of women employees vis-à-vis the total
number of employees in each group is also annexed (Annexure V).
DIRECTORS
HPCL Board presently comprises of 10 Directors. The Whole-time Directors are S/Shri Arun Balakrishnan, C&MD,
C. Ramulu, Director-Finance, S. Roy Choudhury, Director-Marketing and M.A. Tankiwala, Director-Refineries.
The Part-time Directors are S/Shri P.K. Sinha, Prabh Das, T.L. Sankar, Rajesh V. Shah, M.Nandagopal and
I.M. Pandey.
Shri P.K. Sinha, Joint Secretary & Financial Advisor, MOP&NG and Shri Prabh Das, Joint Secretary, MOP&NG
continue to be ex-officio Part-time Directors of the Corporation.
S/Shri T.L. Sankar, Rajesh V. Shah, M. Nandagopal and I. M. Pandey continue to be part-time non-official
Directors of the Corporation.
Shri M.B. Lal, Chairman & Managing Director retired from the services of the Corporation on 31.03.2007 upon
attainting the age of superannuation. Shri Arun Balakrishnan, Director-Human Resources who was appointed
as the Chairman and Managing Director of the Corporation by the Government of India assumed charge as
C&MD effective 01.04.2007. S/Shri C. Ramulu, Director-Finance, S. Roy Choudhury, Director-Marketing and
M.A. Tankiwala, Director-Refineries continue as the whole time Directors of the Corporation.
As per the provisions of Section 256 of the Companies Act, 1956, S/Shri T.L. Sankar, Prabh Das, C. Ramulu,
Rajesh V. Shah and M.A. Tankiwala are the Directors who will retire by rotation at the next AGM and are eligible
for reappointment.
The Board of Directors place on record their sincere appreciation of the valuable services rendered by
Shri M. B. Lal during his tenure on the Board.
29
Directors’ Report
ACKNOWLEDGEMENTS
The Directors gratefully acknowledge the valuable guidance and support extended by the Government of India,
Ministry of Petroleum and Natural Gas, other Ministries, Petroleum Planning & Analysis Cell and the State
Governments.
The Directors also acknowledge the contribution made by the large number of dealers and distributors spread
all over the country towards improving the service to our valued customers as well as for the overall performance
of the Company.
The employees of the Company have continued to display their total commitment towards the pursuit of excellence.
Your Directors take this opportunity to place on record their appreciation for the valuable contribution made by
the employees and look forward to their services with zeal and dedication in the years ahead to enable the
Company to scale even greater heights.
Your Directors are thankful to the shareholders for their faith and continued support in the endeavors of the
Company.
For and on behalf of the Board of Directors
ARUN BALAKRISHNAN
Chairman & Managing Director
May 29, 2007
HPCL Directors at a Board Meeting held on August 22, 2007
30
Annexure to Directors’ Report

Annexure – I
MOU TARGETS VERSUS ACTUAL PERFORMANCE : 2006-07
CRITERIA UNIT Target Actual

“Excellent” Achieved
Level
COMMON PARAMETERS (A)
I. STATIC FINANCIAL PARAMETERS:
a) Financial Performance Indicators:
i) Gross Margin / Gross Block % 24.14 27.15
ii) Net Profit / Net Worth % 18.28 22.74
iii) Gross Profit / Capital Employed % 27.15 33.68
b) Financial Indicators (size):
i) Gross Margin Rs. Crs. 4097 4246
ii) Gross Sales Rs. Crs. 65545 91448
c) Financial Returns:
i) PBDIT / Total Employment Rs. Lakhs 36.47 38.99
ii) Added Value / Gross Sales % 4.55 4.80
II. DYNAMIC PARAMETERS:

EMPLOYEE TRAINING & MOTIVATION
No. of Training Programmes Designed Nos. 7 10
Leadership Development No. of programs 12 18
Competency Profiling for Officers No. of officers 150 644
Six sigma Projects No. of Projects 15 30
Learning Organisation Workshops
(For Non -management Employees) No. of workshops 24 28
Development of Internal faculty – Officers Nos. 25 48
III. CUSTOMER SATISFACTION:

Retail % 98 98
LPG % 98 98
Direct Sales % 98 98
Aviation % 98 99
IV. R & D for Sustained & Continuous Innovation:

No. of Products Launched /R&D efforts Nos. 5 5
Filing of Patents Dates 31-01-2007 20-11-2006
31

Level
V. Project Implementation / Modernisation:
MR-Green Fuels & Emission Control Project
Date of Approval: 16/10/2002, Approved Cost: Rs. 1,850 Crs.
Completion of civil structure works for NHT/CCR/ISOM Dates Jun-06 Jun-06
Completion of mechanical works for SWS/ARU/Prime G Dates Oct-06 Apr-07
Erection of all columns of NHT/CCR/ISOM Dates Oct-06 Sep-06
VR-Clean fuels & Emission Control Project
Date of Approval: 30/04/2003, Approved cost : Rs. 2,147.80 Crs.
Mechanical completion of GTGs-5 alongwith HRSG Dates Dec-06 Dec-06
Mechanical completion of sea water cooling tower Dates Sep-06 Sep-06
Mechanical completion of Cryogenic Nitrogen Plant Dates Nov-06 Oct-06
Loni – Solapur Pipeline Project
Date of Approval : 30/01/2004, Approved cost: Rs. 335.17 Crs.
Despatch of Mainline and Booster pumps for Vashi and

Loni Pump stations (FOB basis) Dates Jun-06 May-06
Completion of Pipeline laying from Loni to Solapur Dates Nov-06 Sep-06
Mundra-Delhi Pipeline Project
Date of Approval: 28/07/2004, Approved cost: Rs. 1,623.84 Crs.
Completion of Plant Buildings at Mundra & Bahadurgarh Dates Sep-06 Sep-06
Completion of Line Pipe Manufacturing Dates Nov-06 Sep-06
Completion of Line Pipe Coating Works Dates Dec-06 Sep-06
SAFETY PARAMETERS:
Reportable accidents in Refineries Accident/Million 0.40 0.40

Man Hrs.
Number of surveillance Safety Audits to

be conducted by SH&E Dept. Nos. 24 27
32

Level
EVALUATED MARKS – DYNAMIC PARAMETERS

SPECIFIC PARAMETERS (B)
I. Sector Specific:
Crude Thruput:
Mumbai Refinery MMT 6.20 7.42
Visakh Refinery MMT 7.10 9.24
Distillate Yields:
Mumbai Refinery Wt% 68.00 70.87
Visakh Refinery Wt% 76.50 76.78
Specific Energy consumption:
Mumbai Refinery MBTU/NRGF 102.40 90.70
Visakh Refinery MBTU/NRGF 100.10 87.90
Market Share:
MS - Retail % 25.62 24.01
HSD - Retail % 23.69 21.54
II. Enterprise Specific & Efficiency Parameters:

Addition of Branded Fuels in Club HP outlets
POWER Nos. 2200 2402
TURBOJET Nos. 2800 3515
Addition of LPG Distributorships % 75 100
Branding of Retail Outlets (Club HP) Nos. 3500 3528
Average Refining cost (Excl. Depreciation,
turnaround & one time expenses) Rs./MT 389 313
Average Marketing cost (Excluding Depreciation) Rs./MT 535 528
OVERALL RATING EXCELLENT
33

Annexure – II
Particulars with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earning/
Outgo as per Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.
ENERGY CONSERVATION & TECHNOLOGY ABSORPTION
I. CONSERVATION OF ENERGY
a) Energy Conservation measures undertaken and Additional Investment / proposals for
implementation on conservation of energy
Mumbai and Visakh Refineries accorded highest priority to energy conservation and have undertaken
several Encon measures by operational improvements and implementing of Encon projects. Various
Encon measures undertaken during 2006-07 are as follows:
Mumbai Refinery
i. Improved heaters / boilers efficiency from 86.5 % to 87.2 % by periodic surveys, cleaning & decoking
of the tubes.
ii. Improved condensate recovery by 4 T/hr by replacing steam traps with efficient steam traps and
cleaning of Naphtha stabilizer re-boiler.
iii. Repaired / replaced primary & secondary seals of six floating roof storage tanks to reduce emission
losses.
iv. Improved CDU / VDU heaters efficiency around 2 - 2.8% by on-line chemical cleaning.
v. Techno economic study of GTGs is being conducted by M/s NTPC to evaluate and reduce energy
consumption and power generation cost.
vi. Carried out the study of LNG firing in heaters / boilers based upon economic consideration / environmental
norms and proposal is being developed accordingly.
vii. Steam leak survey was carried out by CHT nominated team as a part of Oil & Gas Conservation
Fortnight in Jan 07 and steam leak performance was found excellent.
viii. Organised Oil Conservation Fortnight during January 15 to 31, 2007 to generate mass awareness in
public for conservation of petroleum products. During the fortnight, several activities like free PUC
check up for vehicles, display of oil conservation posters & slogan/quiz drawing competitions in various
schools at Chembur area were conducted.
ix. Proposal has been developed to replace FRE-CDU rotary Air Pre-heater with stationery Air Pre-heaters
to improve the furnace efficiency and pre heat augmentation.
x. Schemes have been developed to convert FRE & LR–VDU natural draft furnace to energy efficient
balance draft furnace.
xi. Proposal has been developed to generate low pressure flash steam from Light Ends Unit condensate.
xii. Initiatives have been undertaken to optimize FR / FRE crude exchangers preheat to improve the crude
preheat temperature.
xiii. It has been planned to route CDU-I & II vacuum column off gas to respective CDU furnaces.
34

Visakh Refinery
i. Conducted comprehensive energy audit / Hydrogen Loss survey during the year and recommendations
are under implementation.
ii. Reduced steam leaks approx. 2.5 T/hr by installing MST 21 steam traps on Copper tracing lines.
iii. Reduced Specific fuel consumption to approx. 0.37 MT / MWH in CPP as compared to 0.391 MT/
MWH during 2005-06 and achieved estimated energy saving of 3828 SRFT (Rs 8.38 crores).
iv. Conducted a training program on Energy conservation along with M/s National Productivity Council,
Chennai to create the awareness.
v. Improved CDU / VDU heater efficiency by on-line furnace tubes chemical cleaning.
vi. Organised Oil Conservation Fortnight during January 15 to 31, 2007 to generate mass awareness in
public for conservation of petroleum products. During the fortnight, several activities like display of oil
conservation posters / slogans, distribution of literature on energy conservation and organising quiz /
drawing competitions in the schools.
vii. Steam leak survey was carried out by CHT nominated team as a part of Oil & Gas Conservation
Fortnight in Jan 07 and steam leak performance was found excellent.
viii. Initiated steam purity study for improving turbine steam quality.
b) Impact of above on energy conservation measures and consequent impact on cost of
production of goods.
Various measures undertaken during the year 2006-07 would result in estimated energy savings of
approx. 19451 SRFT, which is equivalent to Rs 31.14 crores.
c) Total energy consumption and energy consumption per unit of production:
Please refer Form – A of the Annexure to the Directors’ Report.
Visakh Refinery GTG Piling In Progress 2004 Visakh Refinery GTG Completed in 2006
35

II. TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION
a) Efforts made towards technology absorption, adaption & innovation information is given in Form B
b) Imported Technology (Imported during last 5 years) :
Technology Imported Year of Whether fully If not absorbed,

Import absorbed or not Reasons
Mumbai Refinery:
Diesel Hydro De-sulfurisation
Unit 2nd Reactor at MR 2004 Yes
Continuous Catalytic Reformer 2004 No Plant under construction
Isomerisation Unit 2004 No Plant under construction
Fluidized Catalytic Cracking Unit 2004 No Plant under construction
Flue Gas Desulphurization 2004 No Plant under construction
Visakh Refinery:
Diesel Hydro De-sulfurisation
Unit 2nd Reactor 2005 Yes
Continuous Catalytic Reactor 2004 No Plant under construction
Isomerisation Unit 2004 No Plant under construction
Fluidized Catalytic Cracking Unit (Revamp) 2004 No Plant under construction
Sulfur Recovery Unit 2005 No Plant under construction
Flue Gas Desulphurization 2005 No Plant under construction
III. FOREIGN EXCHANGE EARNING AND OUTGO

a) Activities relating to exports:
Various initiatives have been taken to increase exports and for development of new export markets
for products and services. Efforts are on to access international markets and to tap export potential
for free trade products and lubricants.
b) Total Foreign Exchange used and earned:
Please refer Notes to Accounts – Schedule 20 B, Note 12 F,G,H, & I.
36

FORM-A
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
MUMBAI REFINERY
(A) Power and Fuel Consumption 2006-07 2005-06
1. (a) Electricity Purchased
Units (Million KWH) 122.22 36.36
Total Amount (Rs. Crores) 51.44 22.12
Rate Per Unit (Excluding demand charges) (Rs./KWH) 3.32 3.61
Maximum Demand Charges (Rs. Crores) 10.85 9.01
(b) Own Generation
Through Steam Turbine / Generator
Units per tonne of fuel 2405.85 2538.11
Cost per unit (Rs./KWH) 9.39 7.32
2. Furnace Oil / LSHS
Quantity (Thousand tonnes) 191.87 165.00
Total amount (Rs. Crores) 297.76 231.50
Average rate (Rs./Ton) 15519.00 14030.00
3. Naphtha
Average rate (Rs./Ton) 25802.00 21471.00
4. LPG
Average rate (Rs./ Ton) 24568.00 22743.00
5. Refinery Gas
6. BH Gas
7. Coke
(B) Consumption per Unit of Production
Electricity (KWH/Ton of crude) 45.62 46.96
Fuel Oil (Tons/TMT of crude) 42.19 47.30
Gas (Tons/TMT of crude) 10.43 8.13
Coke (Tons/TMT of crude) 4.37 3.51
37

VISAKH REFINERY
(A) Power and Fuel Consumption 2006-07 2005-06
1. (a) Electricity purchased
Rate Per Unit(Rs./KWH- excluding demand charges) 3.18 4.75
Electricity Exported (Million KWH) 0.00 0.01
Maximum Demand charges (Rs. Crores) 3.10 2.43
(b) Own Generation (CPP)
Units Per Ton of Fuel 2697.67 2558.40
Cost Per Unit (Rs./KWH) 5.45 4.83
2. Furnace Oil /LSHS
Quantity (TMT) 129.88 128.38
Average Rate (Rs./Ton) 16246.54 14205.38
3. CPP Fuel
Quantity (TMT) 111.81 97.32
4. Naphtha (DHDS)
5. Refinery Gas
6. Coke
(B) Consumption per unit of production
Electricity KWH/Ton of Crude 33.34 33.90
Liquid fuel (Tons/TMT of Crude) 31.31 33.83
Gas fuel (Tons/TMT of Crude) 11.70 11.87
Coke Fuel ( Tons / TMT of Crude ) 9.18 9.45
38

FORM B
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ADAPTION & INNOVATION
1. RESEARCH & DEVELOPMENT (R&D)
COLLABORATIVE R & D PROJECTS
MOU have been finalised with Research collaborators for the following projects:
a. Energy efficient De-asphalting process using supercritical solvent recovery (With IIP, EIL & CHT)
In the energy efficient super-critical approach, solvent recovery is done under supercritical process
conditions, resulting in an overall energy savings of about 20 to 40 percent (mainly in utilities) and
lower solvent losses.
After incorporating the required hardware modification in the Mumbai Refinery PDA unit , test run
was successfully carried out in Sept 2006. It was observed that under supercritical conditions,
separation of propane & DAO was achieved in high pressure separator by isolating re-boiler &
minimising steam consumption in heater.
Test run has confirmed that steam saving of about 3.0 - 3.5 T/hr (worth Rs. 3.0 - 3.5 crores / year)
can be achieved under the supercritical process conditions.
b. Optimisation studies of food grade Hexane manufacturing unit and feasibility study for producing
polymer-grade Hexane (With IIP)
Study was initiated along with IIP during 2004-05 for optimizing the existing Mumbai Refinery
Hexane plant operating conditions to explore the possibility to produce WHO and Polymer grade
Hexane, which have more stringent quality specifications w.r.t. sulphur & benzene content.
A feasibility study and test run has been planned during 2007-08.
c. Optimisation studies of NMP Lube Extraction Unit (With IIP)
Study was initiated along with IIP during 2004-05 to optimize Mumbai Refinery NMP Lube Extraction
Unit operating parameters to obtain specific product quality & thruput maximisation. Improvement
in colour, sulphur and saturates is also expected by increasing the severity of hydrofining and
selection of suitable catalyst. A substantial energy saving is also expected by pinch analysis of
heat exchangers in the unit.
A controlled test run was conducted jointly by IIP-HPCL personnel. The test run samples are
being analyzed by IIP for Physico Chemical Characterisation.
d. Improvement of Propylene Purity (With IICT Hyderabad)
Proposal has been signed with IICT Hyderabad to improve the purity of Propylene through
membrane separation, which is economical, safe, energy efficient, environmental friendly and
simplicity in process.
Validation of Membrane and test run with pure gas was done. Test run with gas mixture is being
carried out.
e. Implementation of Advance Process Control Technology
Visakh refinery has engaged M/s Honeywell to Implement Advance Process Control Technology
in all process units.
39

f. Collaborative Research Project with RTI, USA.
A MoU has been signed between Hindustan Petroleum Corporation Limited and Research Triangle
Institute (RTI) International based in North Carolina, USA on 16.01.2007 for collaboration in R&D,
which would cover one or more of the following areas:
a. Advisory support for the establishment of a catalyst laboratory and its associated development
for synthesis and evaluation.
b. Diesel desulphurisation including demonstration scale-up, protocols, knowledge transfer and
IP access to assist in achieving tight timelines for 2010 quality standards, and
c. Resid gasification including characterisation.
g. Collaborative Research Project with TERI, New Delhi
A MoU has been signed between Hindustan Petroleum Corporation Limited and The Energy and
Resources Institute (TERI), New Delhi on 18.01.2007. This agreement is for “Screening and
selection of efficient microbial strains for Bio hydrogen production” project.
h. Collaborative Research Project with IIT, Kanpur
A MoU has been signed between Hindustan Petroleum Corporation Limited and Indian Institute of
Technology (IIT), Kanpur on 21.03.2007. This agreement is for “Industrial HiGee Applications in
the Refining Sector” project.
i. Collaborative Research Project with IIT Kanpur / ART / Chevron
Earlier HPCL has entered into an agreement with IIT Kanpur/ART/Chevron for few collaborative
research projects undertaken at Kanpur. A proposal has been submitted for sponsorship of the
following two additional projects under the same collaboration:
a. Supported Ionic Liquid Catalysis and Hydrodynamics in Packed bed.
b. Modeling of mass transfer effects in resid FCC.
j. Collaborative Research Project with GITAM, Visakhapatnam
A MoU has been signed between Hindustan Petroleum Corporation Limited and Gandhi Institute
of Technology and Management (GITAM), Visakhapatnam on 06.01.2001. This agreement covers
the following areas:
a. Effect of Nano-particle inclusion in the lubricating properties of lubricants.
b. Bioremediation: Bio desulphurisation of petroleum oil by non pathogenic microorganisms.
c. Bioremediation of petroleum oil by non pathogenic microorganisms.
EXPENDITURE ON R&D
Capital Expenditure : NIL
Revenue Expenditure : Rs. 46.89 Lakhs
2. UPGRADATION INITIATIVES
MUMBAI REFINERY
a) Altered CDU-II process parameters suitably to maximise ATF pool by blending MH / PG ATF. It has
improved ATF production substantially. It resulted in highest-ever ATF production of 659.9 TMT during
the year against previous best of 571.4 TMT during 2005-06.
40

b) Implemented online blending and blends optimisation, which enabled to maximise HSD production.
c) Initiated to produce heavy FO (bunker fuel of 380cst viscosity) for exports, which enabled to increase
HSD produce .
d) Optimised FCC operations by importing VGO feed from MRPL, which enabled to achieve highest ever
FCC thruput (968.1 TMT) and highest ever production of value added products like LPG & MS during
the year.
VISAKH REFINERY
a) Optimized Gasoline Sulphur reduction additive in FCC catalyst to increase medium / high sulphur
crude processing to improve margins.
b) Used DESOx additive to increase HS crude processing by controlling SO2 emissions to improve
margins.
c) Commissioned LPG Merox caustic regeneration facility to reduce chemical consumption and to improve
product quality.
ANNEXURE-III
Control of Pollution & other initiatives taken by Refineries are as follows:
MUMBAI REFINERY:
A. HAZARDOUS WASTE MANAGEMENT
Crude sludge Treatment
Mumbai Refinery has started Ex-situ cleaning of crude tanks (crude sludge) by applying mechanical
oil recovery process from April 2003 onwards. About 8000M3 of crude sludge was processed in phase
I and in Phase II; about 17500M3 of crude sludge was processed. In Phase III during financial year
2006 - 07, 4216 M3 sludge was processed and the cumulative amount of oil recovered was 2966 M3
with a net gain of about Rs. 2.9 Crores.
Hazardous Waste Disposal
In line with the Hazardous Waste Management rules, Mumbai Refinery has become a member of
M/s. Mumbai Waste Management Ltd., and disposed off about 561 MT of different hazardous wastes
such as spent catalysts, Oily silt and non-oily insulation to M/s. MWML,Taloja.
B. AIR EMISSION CONTROL & MONITORING
The present Ambient Air Analysers (SO2, NOx, SPM, RSPM & CO) which have become obsolete have
been replaced with latest art of technology analyzers (Manufacturers: M/s. Environment S.A., France) in
all three Ambient Air Stations. All the three stations are connected to a Central PC in PS&E’s room in new
Admin. building for monitoring the analysed data online.
C. EFFLUENT WATER TREATMENT & CONTROL
Installation of RDS: Refinery is to install two nos. of Rotary Drum Skimmers (RDS) upstream of Old &
New API separators for better recovery of free oil and reduce load on API Separators. Expected to be
installed in 2007-08.
Integrated Effluent Treatment Project (IETP): Replacement of existing ETP-I & ETP-II with new Integrated
ETP by adopting Cyclic Activated Sludge treatment followed by Membrane Bio-Reactor and TTP, has
been approved. Design basis and Process Package finalisation has been completed, LSTK bids
review completed by PMC consultant M/s. EIL. Presently, PO placement is in progress.
41

Tank farm Modification Project: Tank farm modifications in Fuels Refinery to segregate Oily water &
Rain water and reduce load on New Integrated ETP / API Separators has been approved under NPCB
2006-07. Presently, placement of PMC on M/s. EIL is in progress.
Action initiated for improving the underground sewer system based on the recommendations of in-
house survey for better monitoring and control/operation of ETP-II / API Separators. Various sewer
streams of under ground sewer system were flushed to facilitate free flow of oily water, routing of the
system was checked and drawings were updated accordingly. All the jobs predominantly have been
completed.
D. ISO 14001:2004 CERTIFICATE RENEWAL
Mumbai Refinery has been awarded with “EMS/ ISO-14001:2004” certification for implementing and
operating the “Environmental Management System” (EMS) with revised standards, with continual
improvement, by the appointed ‘Certification Agency’ i.e. M/s. SGS India Pvt. Ltd. in June 2006.
“EMS/ ISO-14001:2004” certification validity period is up to May 2009.
The ‘Two Surveillance Verification / Certification Audit’ was successfully conducted by the appointed
“Certification Agency”, M/s. SGS India Pvt. Ltd. as per the charted second tenure ISO-14001 Audit
program. The “Certification Agency” (SGS) has recommended the continuation of the Certification of
EMS/ISO-14001:2004 Std. for HPCL-MR based on their observations during the Verification/ Certification
Audit.
Instituted “The Best Internal Auditor Of The Year Award” (ISO-14001: 2004) in the year 2007.
This award will be presented every year to the best internal Auditor.
E. PUBLIC AWARENESS ACTIVITIES
As a part of public awareness campaign, following environmental awareness activities were carried out:
Observed ‘INTERNATIONAL EARTH DAY’ on 22 April 2006. Banners were displayed at prominent
location in refinery premises containing environment protection messages.
Mumbai Refinery celebrated “World Environment Day”, on 05 June 2006 by organising an informative
lecture on ‘Environmental Management through Legislation’. Shri Ashok Jain, Legal Advisor of
Maharashtra Pollution Control Board delivered the lecture.
HPCL - Mumbai Refinery being the winner of “GREENTECH ENVIRONMENT EXCELLENCE GOLD
AWARD”, during the last four consecutive years in a row, presented an advertisement in the “Post-
Event Souvenir - 2006”, published by “Greentech Foundation”, New Delhi. The advertisement
displays the message on Environment Protection, to get publicity as a part of environment awareness
campaign of Mumbai Refinery.
HPCL has also published an advertisement in ENVIRON FRIEND INSTITUTE MAGAZINE as a part of
MR public awareness campaign on Environment Protection.
42

VISAKH REFINERY:
A. EMISSIONS MANAGEMENT
Treated DHDS-SWSG I & II in DHDS-SRU.
Treated VBU gas in ARI-SRUs when DHDS was not in operation.
B. LIQUID EFFLUENT MANAGEMENT
H2O2 dosing system was modified to reduce the consumption.
Modification of Clarifier-II top scum collection pit to improve upon the clarifier performance.
Aeration facility in ETP-II equalisation east tank.
C. HAZARDOUS WASTE MANAGEMENT
Washed all the empty chemical drums internally using in-house developed facility and sold about 800
washed empty drums to registered recycler.
D. OTHER ACTIVITIES UNDERTAKEN
ISO 14001: 2004 recertified in May 2006 which is valid till May 2009.
Service Factors of SRUs has been maintained at 100% matching with gas generation.
Service Factors of all analysers in the three Continuous Ambient Air Monitoring Stations (CAAMS) and
one Weather Monitoring Station (WMS) are maintained at 100%.
Service Factors of online stack analysers has improved to 95%.
Excess Oil Ingress prevention project is in progress.
Zero Effluent Discharge study by EIL was completed.
Sour Water Segregation study by EIL was completed.
ETP-II Bioreactor Performance Improvement study by NEERI was completed.
Processed about 4,000 m3 of oily sludge (cumulative 38,000 m3 of sludge).
Process Safety Risk Management programme is under implementation as per OSHA-PSM and EPA
RMP.
Initiated action for entering into an agreement with Visakh Port Trust for Offsite Oil Spill
Response Plan.
43

Annexure - IV
Information as per Section 217(2A), read with Companies (Particulars of Employment) Rules, 1975 and
forming part of the Directors’ Report for the period 1st April 2006 to 31st March 2007.
Sr. Name Designation / Remuneration Qualifications Exper- Date of Age Last Employment
No Nature of Duties ience Joining
(Years)
1 2 3 4 5 6 7 8 9
1 PATIL S N LPG OPERATOR(SG) 806,790 DME 37 10 August 1969 60 KOSAN GAS COMPANY PVT LTD
2 TRIVEDI N C CHIEF ADMIN. ASST. 640,351 HSC/INTER/PUC 39 13 March 1968 60 KOSAN GAS COMPANY PVT LTD
3 GULRAJANI VEENA HASHMATRAI DEPOT MANAGER 1,794,625 SSC/SSLC 40 17 May 1967 60 M/S. ARCHITECTS PARTNERSHIPS
4 DIXIT ANAND NARAYAN CH MANAGER - OPERATIONS 1,509,697 B.COM 34 7 January 1973 58 KHOSLA PLASTICS PVT LTD
5 SARODE D K CH REGIONAL MANAGER 2,003,038 BE (MEHANICAL) 32 2 January 1975 60 MILITARY ENGG SERVICES
6 SAVLA S K GEN MANAGER-ENGG & PROJ 2,598,922 BE (ELECTRICAL) 32 14 April 1975 60 REMI UDYOG, MUMBAI
7 TURE JAGANNATH KASHIRAM SR MANAGER - OPERATIONS 1,687,171 BSC 30 7 January 1977 60 MAHARASHTRA LEGISLATURE
ASSEMBLY OFFICE
8 PAL SUDIP KUMAR DGM-CRUDE 975,689 B TECH (CHEMICAL) 24 22 September 1983 48 NIL
9 ARTE VANITA SANJAY DY GEN MGR - PERFORMANCE MGT 1,243,709 B.COM, MMS 23 5 February 1984 46 NIL
10 DE SOURAV EXECUTIVE SALES OFFICER - LPG 665,256 B TECH (CIVIL), DMM 13 27 December 1993 37 D R SARKAR R K & ASSOCIATES,
CALCUTTA
11 AGRAWAL SAMEER MANAGER - FINANCE 1,025,258 B.COM,FCA/ACA 12 16 August 1995 38 M/S. JINDAL & ASSOCIATES
12 NAIR ANUJ KUMAR NARAYANAN SR CONST. ENGR. (VISAKH TML) 403,813 B TECH (MECHANICAL) 10 30 May 1997 33 TELESYSTEM (INDIA) PVT LTD
13 GANGINENI MOHANA VAMSI DEPUTY MANAGER - FINANCE 440,435 CISA, DSM, FCA/ACA 8 5 July 1999 31 M/S. BRAHMAYYA & CO.
14 ROY KALYAN K MANAGER - INSTALLATION 1,046,762 BA 27 8 April 1980 52 M/S. WISS - CHAS
15 MATHUR BHAVNA EXECUTIVE SALES OFFICER 825,699 MA 31 7 December 1976 55 RAMA INDUSTRIES
16 KUMAR SUNIL MANAGER - PROCESS 643,977 BE (CHEMICAL) 18 1 September 1989 43 NIL
17 FRANCIS ANDREWS CHIEF ADMN. ASST 637,667 BA 24 27 July 1983 60 RADIO AND LINE CORPS OF SIGNALS
INDIAN ARMY
18 JOSEPH C V SR. MAINT. TECH/OPT 672,409 NON SSC 28 1 October 1979 60 NIL
19 PATIL K N DY MGR-MNTC 1,173,197 SSC/SSLC 32 2 March 1975 60 M/S. KUMUD CONSTRUCTIONS
20 SANYAL PINAKI RANJAN ROTATING EQUIPMENT ENGINEER 783,723 BE(MEHANICAL) 18 1 February 1989 44 NIL
21 J S C B KUMAR MANAGER - ECONOMICS 1,043,787 B TECH (CHEMICAL) 16 29 October 1990 39 NIL
22 RAJU S S DY MGR-QC 1,140,792 MSC 31 6 January 1976 60 NIL
23 MURTHY K V S N SUPDT - P&U 955,137 LICENSIATE IN 24 9 September 1983 60 INDIAN AIR FORCE
MECHANICAL ENGG
24 RAHIM NAJI K MANAGER - ROTARY 1,080,923 B TECH (MECHANICAL) 16 29 October 1990 42 NIL
25 RAMANATHAN RAMKUMAR DY MGR - TECH. 755,295 B TECH (CHEMICAL) 15 28 October 1991 38 NIL
26 DINESH MAHANTY MANAGER - MINOR PROJECTS 1,068,383 BSC ENGG (CIVIL) 15 6 August 1992 40 NIL
1 Employees listed in the statement were employed for part of the year and were in receipt of remuneration at the rate of not less than
Rs. 200,000/- per month.
2 Employment in the corporation is non-contractual
3 Employment provides for termination of services by either party giving one month’s notice
4 None of the Employees are related to any of the Directors.
Annexure - V
STATEMENT SHOWING WOMEN EMPLOYEES AS ON MARCH 31, 2007
Group Total No. of No. of Women % of Women
Employees Employees Employees
A 4074 277 6.80
B* — — —
C 6619 422 6.38
D 198 9 4.55
TOTAL 10891 708 6.50
*HPCL has no posts classified under group ‘B’ as the entry in non-management grades has been re-classified
in group ‘C’ effective 01.01.1994.
44
Management Discussion & Analysis Report

Overview
The Indian economy continued to be one of the most dynamic economies in the world in 2006-07, recording a
growth of 9.4%. The growth has been supported by a sustained increase in savings and capital formation over
last few years. Capital inflows have supplemented domestic savings, boosting capital formation in the country.
On sectoral basis, growth in 2006-07 was underpinned by double-digit growth in the Industry and Services
sector. The Agriculture sector posted a modest growth of about 3%.
Crude oil prices generally remained above $55 per barrel throughout 2006-07 due to geopolitical tensions,
outages in oil producing regions such as Nigeria, Alaska and tight capacity along the entire oil supply chain, be
it production, refining or pipeline. The problem has been exacerbated by mismatch between installed refinery
capacity and crude type. Indian crude basket price averaged around $62 per barrel during 2006-07. High prices
have also caused a fundamental power shift in the oil industry. Resource nationalism has resurfaced with a
number of oil producing states consolidating their hold on oil resources. Increasingly, state-owned enterprises
of oil consuming nations are aggressively seeking access to resources competing and co-opting with other
state-owned companies. Current conditions portend high prices in near-term future also.
The robust growth in the Indian economy is reflected in petroleum product consumption. Consumption rose by
about 6% during 2006-07, the highest growth recorded since 1999-00. However, oil production in the country
continues to be stagnant around 33 MMT. A number of basins owned by ONGC/OIL have matured. Resultant
decline in production has been made up by private and joint venture fields. The country is dependent on oil
imports for more than 75% of its crude requirements. In 2006-07, about 111 MMT of crude oil valued at $48
billion was imported while about 32 MMT of petroleum products were exported. In value terms, petroleum
product exports were around $18 billion during 2006-07. Private sector refineries are the major source of exports.
Most of the private players have virtually exited the indigenous market.
Company Overview
Hindustan Petroleum, with about 16% market share, is one of the major players in Indian downstream oil
sector. The Company is ranked 336 in the Fortune 500 of 2007. Total turnover of the Company in 2006-07 was
Rs. 91,448.03 crores. Profit after tax was Rs.1,571.17 crores as against Rs.405.63 crores in 2005-06. The
Government continued to shield the consumer from high oil prices through subsidy sharing mechanism involving
downstream oil companies, the Government and upstream oil companies. Refineries also shared the burden
through Trade parity pricing mechanism comprising of 80% import parity prices (IPP) & 20% export parity
prices as against full IPP paid to refineries earlier. Further, Stand alone refineries did not offer any discounts on
PDS Kerosene & Domestic LPG during the year. The net under recovery absorbed by HPCL on marketing of
sensitive products during 2006-07 was about Rs.772 crores. Refining and marketing is the core area for the
Company and its efforts are directed at ensuring smooth flow of petroleum products throughout the length and
breadth of the country at the least possible cost.
With the spiraling crude prices, price inflexibility and squeeze on margins, the treasury management has been
under severe pressure throughout the year. The average borrowings have gone up to Rs. 6,147 crores as of 31st
March 2007 in relation to the figure of Rs. 2,991 crores the previous year. The Corporation resorted to many
innovative solutions such as proper mixture of long term and short term borrowings, funds through ECB route,
very close monitoring of collections and fund flow. Further the year 2006-07 saw a very volatile foreign exchange
market. Suitable steps to minimize the adverse impacts have been taken by timely hedging of foreign exchange
exposures and proper mix of hedging instruments.
45

Refining
Refineries at Mumbai and Visakh processed 16.66 MMT of crude
in 2006-07 as against 13.82 in 2005-06. Capacity utilization by
refineries amounted to 128%. Gross refining margins (GRM) of the
Mumbai Refinery averaged $4.78 per barrel as against $3.22 per
barrel for the year 2005-06 while the Visakh Refinery posted a GRM
of $3.51 per barrel versus $2.56 per barrel for the year 2005-06. The
refineries are in the process of upgrading their facilities to produce
Euro-III equivalent grade of gasoline and diesel. The projects envisage
a cost of around Rs. 4000 crores. Once completed, projects will
Shri M.S. Srinivasan, Secretary - MOP&NG at Synergy also increase refining capacity. The Mumbai refinery envisages
Meet, Mumbai Refinery
increase in refining capacity from the current 5.5 MMTPA to 7.9
MMPTA while the Visakh refinery capacity would increase to 8.33 MMTPA from the current level of 7.5 MMTPA.
Both the refineries have brought down the fuel and loss levels to improve the profitability of the operations.
A risk management policy has been developed and approved to manage exposure to fluctuations in crude oil
and product prices. Accordingly, after due training, a trading desk has been established and derivative trading
activity commenced in February 2007. The establishment of an integrated software solution for the trading team
is in progress.
Retail
The business environment in the petro-retailing in India has changed significantly. Oil Companies are transitioning
from providing random experience to providing differentiated experience in customized formats at the retail outlets.
Sales of auto-fuels and SKO/LDO through Retail SBU contribute about 57% of the Company sales. In 2006-07,
673 new retail outlets were commissioned to expand the reach of the Company taking the total to 7986 as on
March 2007. To achieve its Retail Vision, the Company has developed a Retail Value Proposition, keeping the
“Customer experience” as the core of strategy. Brand strategy has been aligned to customer needs by focusing
on Driver brands – Power, Turbojet, Loyalty Cards, HP Junction, Club HP, Hamara Pump, “Fleurs” Clean toilets.
Through these initiatives, aim is to deliver compelling, differentiated and consistent experience to the customers.
HP Junction Outlet at Pattarsi, Chandigarh
46

HPCL has positioned a number of retail outlets on the platform of “Outstanding Customer & Vehicle Care” and
branded these as “Club HP” outlets. During 2006-07, 662 outlets were branded as “Club HP” taking the total
number to 3515. Club HP outlets now constitute 44% of total Retail network. To ensure consistency in the
delivery of superior customer services, all the Club HP Outlets are certified by M/s Bureau Veritas, a reputed
third party agency. Market research shows that customers demand several non-fuel offerings at fuel outlets. It
provides a great opportunity for the Company to sweat the retail outlet real estate. The focus now is to partner
with the best in class brands in the relevant categories.
As incomes rise, rural markets present an attractive opportunity to expand market share. ‘Hamara Pump’
format is targeted specifically at rural market. In 2006-07, 318 “Hamara Pumps” were commissioned taking the
total number to 925 as on March end 2007. Seeds, pesticides and fertilizers are also being sold to the farmers
through 60 “Kisan Vikas Kendras” set up at select “Hamara Pump” outlets.
Fuel adulteration remains a major area of concern for consumers. The Company has undertaken a number of
initiatives to address these concerns by leveraging technology. These include inter-alia retail automation, vehicle
management system and electronic sealed parcel delivery system. Retail Automation provides end to end
solution in monitoring the sales and stocks online and eliminates manual intervention. The features include real
time density display at the point of sale to enhance customer confidence; plugging loop holes across the
supply chain through GPS/GSM technology based Vehicle Management System. As an added check, Marker
doping in SKO was also commenced by the Company with effect from 01/10/2006 to curb kerosene adulteration
in auto- fuels.
The Company aims to increase its market share in petrol/diesel retail segment from current 22% through these
initiatives.
Pipelines
In an endeavor to enhance product availability and
minimize transportation cost two major pipeline projects
viz. Mundra-Delhi pipeline and Pune-Solapur were planned
by the Company. Pune Solapur Pipeline was
commissioned in November 2006 while mechanical
completion of the Mundra Delhi Pipeline has been achieved
in April 2007. Mundra Delhi Pipeline
LPG
The LPG Business line accounts for approximately 13% of the total volume base of HPCL. HPCL was the first
Company to brand LPG Marketing under the platform of “Ji Haan” with focus on instant service to LPG customers.
The Company launched a web-based registration system for new and double bottling connections. Also, a
Complaint Management System, a portal for integrating customer complaints, was launched to provide an
efficient, effective and user-friendly system for handling of customer complaints so as to reduce the lead-time in
reaching and resolving complaints.
Suraksha rubber hoses were promoted through various means like street plays, banners, posters, leaflets etc.,
to ensure safety of the user. Campaigns involved NGOs, Self Help Groups & Tribal Groups also to improve
effectiveness. The Company introduced a co-branded “Green Label” series of higher thermal efficiency stoves in
47

all markets across India. These stoves have thermal
efficiency of minimum 68% and provide 10% savings in fuel
expenses for customers.
The unique ‘HP Gas Rasoi Ghar’ concept was further
extended at hospitals and forest areas. Today, there are
over 1740 ‘Rasoi Ghars’ operating across the country
benefiting over 25,000 families.
All the bottling plants have been upgraded with the ‘state-
of-art’ world class bottling and quality assurance facilities
to ensure the weight and safety of cylinders.
Madurai LPG Bottling Plant In order to curb the misuse of subsidized fuel for non-
domestic purposes, the Company has intensified controls and surveillance to ensure refill supplies to genuine
customers including colour coding of domestic/non-domestic cylinders. Intensive efforts have been initiated in
non-domestic segment. As a result, the non-domestic sector posted a growth of 62% in 2006-07.
Industrial & Aviation Fuels
HPCL Refuelling US Air Force One and A380
In the last few years, demand for industrial fuels especially FO/LSHS and Naphtha has been affected by
greater availability of gas and trend is expected to continue in future. However, despite decline in sales at the
aggregate industry level, HPCL posted a growth of 2.2% in FO/LSHS sales in 2006-07. Massive road construction
projects have created a huge demand for Bitumen and the Company has seized this opportunity by posting a
growth of 33% in Bitumen sales. Scorching growth in the Aviation sector is another growth area for the Company
and the same is reflected in 18% growth in ATF sales.
Lubricants
HPCL has a strong legacy in the lubricants sector and it is being
strengthened continuously through introduction of new products.
The Company continues to promote major brands through innovative
promotional activities. A new brand of Diesel Engine Oil “HP Milcy
Turbo 15W40” was launched last year. Upgraded version of “HP
Racer 4 Excel”, which is an API SL level product, was also
introduced. In the industrial /direct segment, the Company continued
to focus on core sectors such as Railways, Coal, and Steel etc.
Launch of HP ACE, genuine oil for Tata petrol cars and on corporate/genuine oil tie-ups. Strong R&D focus enables
the Company to continuously upgrade its product offerings in line with evolving customer needs.
48
Alternate Energy sources

The current market imperatives are motivating the oil companies look at alternate energy sources like bio
diesel, ethanol etc. HPCL has also developed its plans and is implementing projects in the field of alternate
energy. HPCL has signed an agreement with G.B.Pant University for tissue culture research to improve the
yield from Jatropha seeds. The Company is in the process of finalizing contract farming for cultivation of
Jatropha in an area of about 5000 acres in collaboration with the Govt of Chattisgarh and TERI. Ethanol
extracted from Molasses is blended 5% with petrol as an alternate option. Projects are under implementation
for setting up of 100MW electricity generation capacity through wind mill turbines and initial commissioning
of 2 turbines of 5 MW capacity has been completed.
Information Technology
Information technology is being harnessed by the Company to improve productivity across the functions. The
Enterprise Resource Planning (ERP) system is now operational on Oracle Software across the Company. The
migration of all balances from the legacy systems has been completed. The functionality of the ERP system is
being further enhanced by development of various add-on functionalities using work flow applications. The
system has substantially reduced the time taken for closing of accounts. Tracking of cost of operations has
become easy and there is an improvement in management control due to standardization of various business
processes. A Data Centre is being set up in Hyderabad to provide complete backup and mirror image for the
main IT base in Mumbai, thereby, ensuring uninterrupted operations in case of an emergency.
Human Resources
Bustling economy has created huge
demand for trained manpower across
industries. As a result, contrary to earlier
trend of attrition at junior levels, the
Company is facing increasing attrition at
the middle-management level. This is one
of the major challenges facing the
Company today. Replacing this level of
Outstanding Achievers 2006 with C&MD and Directors
experience requires at least 2 to 3 years of

training to existing employees. Specific
processes have been put in place to continually
upgrade skills of the employees through training
and rotational assignments. On an average 300
new officers have been recruited in last two years
to mitigate manpower crunch in future.
All India Employees Annual Sports Meet 2007
49
Official Language Implementation

Progressive use of Hindi in the Corporation continues to receive due importance. Details are given under the
segment Special Focus Areas.
Corporate Governance
The Corporation has completed the steps required to comply with the various Corporate Governance regulations
including those relating to Compliance of Clause 49 of the Listing Guidelines, as notified by SEBI A separate
segment on Corporate Governance has been included in the Annual Report.
Corporate Social Responsibility
Glimpses of CSR activities
HPCL is a conscious Corporate Citizen and Corporate social responsibility is an integral part of HPCL’s outlook.
The Company takes conscious steps to nurture and protect the environment and provide valuable support to
various social causes. During 2006-07, the Company spent Rs. 7.61 crores as part of component plan spanning
areas like education, health care, vocational training etc. As an unique initiative, the Company focused on
specific causes like girl child education, AIDS prevention campaigns, computer education to children, support
and development of street children etc., through distinctly rolled out nine different projects. These were monitored
by the Company in association with NGOs and other welfare organizations. HPCL remains committed to
support such noble causes.
Diversification & Joint Ventures
Although, refining and marketing is the core area for the Company, new opportunities are being explored to
access new revenue streams and even out variations in cash flows from downstream business. Accordingly, the
Company has ventured in upstream and city gas distribution. The Company has shares of about 10- 20 %
share in the 15 blocks awarded to various consortia under NELP-VI, taking the total blocks to 22 numbers
including blocks in Oman and Australia. For distribution of CNG and City gas distribution in the States of Andhra
Pradesh, Madhya Pradesh and Rajasthan the Company has entered into Joint venture with GAIL.
The Government of Andhra Pradesh has nominated HPCL as an anchor Company for development of Petroleum,
Chemicals and Petrochemicals Investment Region (PCPIR) in Visakh. The Company is in talks with national
and international companies for development of the PCPIR.
50

LPG cavern storage facility being set up in
Visakhapatnam, in joint venture with TOTAL,
is nearing completion. The project is the first
of its kind in south and south-east Asia.
A joint venture has been established with Mittal
Energy Investments Pte. Ltd. for setting up of
a green field refinery at Bhatinda, Punjab. This
will be a state-of-art refinery with an initial
capacity of 9 MMTPA. The Project is expected
Shri Arun Balakrishnan, C&MD handing over GGSRL Share Certificate to Shri L N Mittal, to cost around Rs. 18000 crores and the
Founder Promoter of Mittal Investments s.a.r.l (MI) facilities include refinery units, pipeline from
Mundra to Bhatinda, crude oil receiving terminal, SPM and jetty at Mundra port. The Project has achieved the
financial closure and is expected to be completed by the year 2011.
Indian economy is expected to grow at around 8% in near future. As income levels rise, demand for petroleum
products will also increase, thereby providing great opportunity for oil companies. The Company will continue to
consolidate its core business while making judicious investments in related business fields. The Company has
finalized an investment outlay of over Rs 11000 cores in XI Plan. Some of the major projects under XI plan
include Lube Oil Base Stock Upgradation at Mumbai Refinery, upgradation and retrofitting for production of
Euro IV Compliant fuels, facilities for Mixed Xylene and Propylene production at Mumbai and Visakh Refineries,
and Delayed Coker unit for bottoms upgradation at Visakh.
The Company remains firmly committed to meeting the fuel requirements without compromising on Quality and
Quantity, extending the refining capacity through brown field and green-field additions, maintaining and improving
its market share across segments and grow in the organic and inorganic growth areas of the value chain. The
Company also maintains very good relations with major international oil companies and is planning to leverage
on their financial strengths and best practices on mutually reciprocate areas for a win win combination.
The continued support of the government has always been critical for our success and enables effective
implementation of various government policies and initiatives.
Cautionary Statement
Matters covered in the Management Discussion and Analysis describing the Company’s objectives, projections,
estimates, expectations may be “forward looking statements” within the meaning of applicable securities, laws
and regulations. The actual performance could vary from those projected or implied. Important or unforeseen
factors that could make a difference to the Company’s operations include economic conditions affecting demand/
supply and price conditions in the domestic market in which the Company predominantly operates, changes in
regulations, and other incidental factors.
The road ahead is challenging. The Corporation could continue to face pressures on margins. The scenario calls
for action plans not only to sustain in current position but also to look for avenues to sustain the growth and
development. The various initiatives that have been highlighted would provide the platform to the Corporation to
chart its activities aligned to its Corporation Vision. The Corporation with its strong fundamentals and growth plans
is confident of meeting the challenges ahead and live up to the expectations of all segments of its Stakeholders.
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SAFETY, HEALTH & ENVIRONMENT CARE

HPCL maintains high standards of
safety, health and environmental care at
all its operating locations, always
ensuring that increasing scale of
operations have no negative impact on
the standards of safety, health and
environment and without losing sight of
its long term goal of zero injuries,
incidents / accidents and environmental
violations. HPCL has made significant
improvements in its safety performance
over the years.
HPCL is committed to conducting
business with a strong focus on
Shri Sunil Porwal, Secretary (Labour), Government of Maharashtra lighting the lamp during the
Seminar on Disaster Management & Safety Preparedness. Also seen in the photgragph are Shri
preserving the environment, sustainable
Arun Balakrishnan, C&MD, Shri U S Jha, Chairman (RCF), Shri Kiran Kadam, Chief Fire Officer,
Mumbai Fire Service and Shri S K Mukherjee, Executive Director (SH&E) development, safe work place and
enrichment of the quality of life of employees, customers and the community. Established systems and procedures
are constantly revised for continual improvement to achieve the higher standards of safety, occupational health
and environment protection.
HPCL has well equipped health care facilities / arrangements at all major locations. Occupational Health is
focus area for HPCL and all issues pertaining to occupational health are addressed comprehensively.
Our Refineries and major Marketing locations have been awarded ISO 14001 & OHSAS 18001 certifications.
The Corporation’s major Safety, Health & Environment achievements include:
Safety
Visakha Refinery completed 4.72 Million Man Hours without any Lost Time Accident.
Mumbai Refinery completed 0.63 Million Man Hours without any Lost Time Accident.
Ajmer LPG Plant have been awarded ISRS level 7.
Kondapalli, Visakha & khapri LPG plants have been awarded ISRS level 6.
MLIF, Kondapalli, Pampore, Jind, Jammu, Ajmer , Raipur , Patna LPG Plants have been awarded OHSAS
18001-1999 certificate.
Environment
Adopting ECO – friendly technologies such as changeover from phenol to NMP solvent and changeover
from Oleum to NMP. These initiatives have been widely appreciated and have won for HPCL various national
& international awards / citations. Diesel Desulphurisation facilities are fully operational in both the Refineries.
Significant reduction in SO2 emission has been brought about in both the Refineries through design and
operating strategies.
Both the Refineries have commenced supply of BIS – II MS / HSD and EURO – III HSD. Project for Euro –
III MS is under implementation.
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Both the Refineries have taken initiative for treating the crude tank sludge in an environmental friendly
manner using in-situ BLABO technology of M/s Balmer Lawrie & Co Ltd.
Over 75% of the petroleum products from the refineries are being evacuated through pipelines. Dependence
on road transport for evacuation of products has been reduced significantly, resulting in considerable
reduction in auto emissions into atmosphere.
In line with the Hazardous Waste Management rules, different hazardous wastes like spent catalyst, oily
silt, non-oily insulation etc are being disposed off to ‘Treatment, Storage & Disposal Facility’, a Pollution
Board approved hazardous waste disposal facility.
In order to comply the future proposed liquid effluent norms, replacement of existing ETP-I & ETP-II with
new Integrated ETP by adopting Cyclic Activated Sludge treatment followed by Membrane Bio-Reactor and
TTP, has been approved and work placement is in progress.
Ambient Air Quality is being monitored and maintained as per National Ambient Air Quality Standard.
On-line monitoring of pollutants like CO, NOx, HC, SO2, SPM from all the stacks are being carried out.
Extensive green coverage has been provided in and around the refineries and housing colonies.
Health
No cases of occupational illness diagnosed and reported.
Periodical medical examination for employees completed as per schedule.
Special medical examination for canteen workers, welders and fire & safety personnel.
Health awareness programs on topics like heart disease, HIV, AIDS, Yoga, meditation etc. organized for
employees, family members & community.
Vaccinations for various diseases.
Training programmes on cardio-pulmonary resuscitation (CPR), First Aid, lifestyle management and
occupational health conducted at various locations.
Specialized training for medical personnel to handle cardiac emergencies conducted.
Study on hygiene practices covering canteens and guest houses.
Awards
The Corporation’s commitment to excellence won several national awards and accolades for outstanding
performance in the field of Safety & Environment.
Mumbai Refinery
conferred with “GREENTECH AWARD” for the
year 2006 under the ‘Environmental Excellence’
category by Greentech Foundation, New Delhi.
conferred with “GOLDEN PEACOCK AWARD”
for the year 2006 for excellence in Environmental
Management Systems.
His Excellency - Governor of Himachal Pradesh, Shri V S
Kokje handing over the Golden Peacock Environment
Management Award to Shri K. Srinivasan, GM (Projects), MR
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won the ‘SURAKSHA PURASKAR’ from National Safety Council in 2006 for developing and
implementing
won “GREENTECH SAFETY GOLD AWARD 2006” for excellent safety record in Refinery
sector.
Lube Blending
“OISD SAFETY AWARD 2005-06” has been conferred for best performance category.
“Greentech Environment Excellence Award 2006” was conferred on Silvassa Lube plant.
Aviation
Santacruz ASF has been conferred with “Safety Innovation Award 2006” by The Institute Of Engineers,
Safety & Quality Forum.
Aviation SBU bagged “ Greentech Environment Excellence Award 2006” for Santacruz ( Gold), Palam
( Silver) & Cochin ( Bronze) ASF Stations.
LPG
Jammu LPG Plant has been conferred with “Safe Industry Award 2006” & “Green Industry Award”
from Govt. of Jammu & Kashmir.
OFFICIAL LANGUAGE IMPLEMENTATION

Official Language Implementation has been
given utmost importance in the Corporation.
Efforts taken in the direction of associating
Official Language with productivity of various
Strategic Business Units of the Organisation
further gained momentum. A social, Literary
and Cultural Institution “Ashirwad” awarded
HPCL first prize for Official Language
Implementation for the year 2005-2006.
“Hindi Pakhwada” was celebrated from 11-25

September, 2006 to create an awareness about
Official Language Implementation and to
motivate employees. To further enhance the
Shri B Mukherjee, then Executive Director (HRD) receiving the Ashirwaad Award for
Best Implementation of Official Language. vocabulary and knowledge of Official Language
among the employees and to encourage the hidden talents of our employees, various competitions such as group
discussions, news reading, elocution, letter and essay writing and poetry writing etc., were organised. Eminent
personalities dedicated towards propagation of Hindi were invited as Judges. Various activities were carried out
during the year. A compilation of poems “Kavita Ke Rang Tasveeron Ke Sang” written by the employees was
published. Some of the important activities are :-
MS Office 2003 Hindi Computer training programmes were organised at Head Quarters Office, Zonal level
and both the Refineries.
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Workshops for senior managers and above were organised. Also Workshops and Conferences for the
Officers/Clerical Staff to encourage employees for implementation of Official Language as also to rejuvenate
their capabilities in Official Language were organised at HQO, all Zonal offices and both the Refineries.
All India Hindi Mahotsav 2007 was organised by HQO wherein employees of four Zones and both the
Refineries participated along with their family members. Similarly, Hindi Utsav was organised by all Zonal
offices and both the Refineries.
Inspections were carried out by the Sub-Committee of the Parliament Committee on Official Language at
Bhubaneshwar, Bangalore and Udaipur Regional Offices and the efforts of our Corporation in this regard
were appreciated.
The Corporation continues to head the Town

Official Language Implementation Committee in
Mumbai for Government Undertakings/
Corporations since its formation. Half yearly
meetings were held. During TOLIC Meetings, the
progress of implementation of TOLIC members
is reviewed and discussed on effective
implementation of Official Language and
experiences are shared so that others can benefit
from it. Besides, Symposium / programmes -
Behavioural and Functional were conducted by
Launch of TOLIC Magazine by Shri Arun Balakrishnan, C&MD
various member Organisations under the aegis
of TOLIC. HPCL also organised a training program on Positive Health and Energizing life for TOLIC members.
Activities about Hindi Pakhwada and Hindi Utsav were published in In-House magazine ‘HP News’ and other
activities performed by TOLIC members were also published in “TOLIC” News.
Other activities specified in the Annual Program 2006-2007 issued by the Official Language Department were
also carried out.
GLOBAL COMPACT PROGRAMME

HPCL has been participating in the UN Global Compact Programme which is aimed at promoting Global
Compact principles. It also lays emphasis on Responsible Corporate Citizenship. As a part of this programme,
HPCL undertakes several Corporate Social Responsible programme which are highlighted in the MDA Report.
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JOINT VENTURES
Manglore Refinery and Petrochemicals Ltd. (MRPL)
MRPL with a capacity of 3 MMTPA was commissioned in March 1996. The capacity of the refinery was enhanced
to 9 MMTPA during 1999-2000 . ONGC acquired the entire equity stake of IRIL in MRPL on 03.03.2003 and also
infused Rs 600 crores into MRPL as additional equity on 30.03.2003. The FIs/Lenders of MRPL converted Rs
365 crores of debt into equity and Rs 160 crores debt into ZCBs. Consequent to the above, HPCL’s equity
stands at 16.95% after which a fresh Shareholder Agreement dated 03.03.2003 has been signed by HPCL with
ONGC to take care of the intersts of HPCL. MRPL has declared a dividend of 8% for the financial year 2006-07.
HPCL and MRPL have been exchanging intermediate process streams between their refineries to supplement
efforts to meet new environmental norms in respect of products like MS and HSD on mutually agreed terms
Hindustan Colas Ltd. (HINCOL)
The performance of HINCOL, a Joint Venture Company jointly promoted with M/s COLAS SA, France continues
to be encouraging. HINCOL currently operates six manufacturing plants across India, manufacturing international
quality value-added bituminous products such as bitumen emulsions & cutbacks and modified bitumen.
During the year, HINCOL consolidated its growth further by achieving a 42% growth in volumes and an all
impressive 118% growth in profitability. The products of HINCOL are widely used by agencies associated with
road construction.
The introduction of cost effective emulsifiers for emulsion and cost effective modifiers for Modified Bitumen has
helped HINCOL to be competitive in the market. The market is widely receptive of the concept of Emulsions in
HDPE drums which has enhanced the brand perception of HINCOL. The focus on Invert Emulsions (SS1)
enabled HINCOL to realise better margins on its products.
The Joint Venture Company maintained the dividend of 15% during the year 2006-07
South Asia LPG Co. Pvt. Ltd. (SALPG)
This Joint Venture Company with Total Gas and

Power India (a wholly owned subsidiary of Total
of France) was incorporated on November 16,
1999, with HPCL’s equity participation of 50%.
SALPG is constructing the first underground
cavern storage facility in the country. The SALPG
project envisages the construction of a 60,000
MT LPG Underground Mined Cavern with its
associated receiving & despatch facilities at
Visakhapatnam. The storage will be the largest
LPG storage facility in South Asia and would
Progress of the underground cavern storage enable meeting the growing demand of LPG in
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Special FFocus
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India and also the export of LPG to the deficit markets in South Asia / South East Asia.
The financial outlay for the project is Rs.333.30 crores and it is being financed through Debt-Equity of 2.33:1.
Debt is fully tied up with a consortium of seven banks led by State Bank of India. The financial closure of the
project has already been achieved.
The SALPG cavern would be the second deepest mined cavern in the world. Geostock of France is the consultant
for the project and the facility is being constructed by Larsen and Toubro Ltd. The construction work for the
underground cavern has been completed and for the above ground facilities the same is in progress. The project
is expected to be commissioned by September 2007.
Petronet India Ltd. (PIL)
Petronet India Ltd. (PIL) was formed in May 1997 as a joint venture company with 50% equity by oil PSUs and
balance 50% being taken by private companies/financial institutions. Special Purpose Vehicles (SPVs) were
floated by PIL with oil companies for implementing individual pipeline projects, viz, Petronet MHB, Petronet
CCK and Petronet VK which are operating companies.
Since oil companies are now having pipelines independently, PIL has initiated action to disinvest its equity
holding in individual JVCs.
Petronet MHB Ltd. (PMHBL)
HPCL alongwith Petronet India Ltd.(PIL) had promoted Petronet MHB Ltd (PMHBL) for the construction and
operation of Mangalore – Hassan - Bangalore pipeline. PIL and HPCL were the promoters of PMHBL, each
having 26% equity participation. ONGC has joined as a strategic partner in the Company by taking 23% equity.
The product pipeline from Mangalore to Bangalore, with a tap off point at Hassan, has been executed at a cost
of 639 crores. The pipeline is meeting the transportation needs between Mangalore, Hassan and Bangalore.
Due to lower thruput and pipeline tariff, the operational and financial viability of the project has been affected.
PMHBL has gone for the Debt restructuring process. The same has been approved and is under implementation.
As a part of this process, PMHBL has allotted equity shares to ONGC, HPCL and lending banks. Their equity
shareholding in PMHBL now stands at 28.77%, 28.77% and 34.56% respectively.
PMHBL achieved a throughput of 1.428 MMT during the year 2006-07, which is 40% higher compared to 1.013
MMT achieved during 2005-06.
Prize Petroleum Co. Ltd.

HPCL, in partnership with ICICI and HDFC, had formed this Joint Venture E&P Company viz Prize Petroleum
Company Ltd for participating in exploration and production of hydrocarbons. Prize Petroleum Company Ltd is
also providing consultancy services related to E&P.
During the year, Prize Petroleum along with its consortium partners, M/s Hindustan Petroleum Corporation
Limited and M3nergy has signed Service Contract for an offshore field cluster consisting of three fields (Cluster-
7). The Company has also been awarded an onshore block along with a consortium partner under NELP VI and
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signed Production Sharing Contract with MOP &

NG. The company is a Joint Executing Operator
for these offshore and onshore fields.
The company has drilled 3 new wells at Hirapur

field and one well at Khambel field. The total crude
oil production from these fields was 74,412 bbls
during 2006-07. The total revenue during 2006-07
was Rs.402 lacs which is higher by 211% over
the revenue of Rs 190 lacs of the last year.
Bhagyanagar Gas Ltd.

ONGC signs service contract for development of three Offshore Marginal Fields with
Bhagyanagar Gas Ltd. (BGL) has been the consortium of Prize Petroleum Company Ltd (Prize), Hindustan Petroleum
Corporation Ltd. (HPCL) and Trenergy (Malaysia). Seen in the photograph are
incorporated on August 22, 2003 as a Joint Shri M. B. Lal, former C & MD and Shri R. S. Sharma, Chairman - ONGC.
Venture Company by GAIL and HPCL for distribution and marketing of environmental friendly fuels (green fuels)
viz. CNG and Auto LPG for use in the transportation, in the state of Andhra Pradesh. HPCL and GAIL would hold
22.5% of the equity while 5% would be held by the
Government of Andhra Pradesh and 50% by Strategic/
Financial investors.
BGL successfully launched CNG in Hyderabad during

the year 2006-07. At present, Vijayawada and
Hyderabad are the two cities to have CNG as alternate
fuel in the entire South India. The joint venture
company commissioned 5 CNG dispensing stations
in Vijayawada and Hyderabad taking the total number
of CNG dispensing stations to 8. BGL is also
operating 4 Auto LPG Outlets – 3 in Hyderabad and
Exchange of Agreements between Shri C N Trivedi, then MD (BGL) and Shri one in Tirupati. BGL signed an agreement with
M V Krishna Rao, Vice C&MD (APSRTC) in the august presence of Shri Kanna
Lakshminarayana, the Hon’ble Minister for Transport & Cooperation, Andhra APSRTC for supplying CNG to its buses at
Pradesh State Government
Vijayawada.
Aavantika Gas Ltd.
Aavantika Gas Limited has been incorporated on June 07, 2006 as a Joint Venture Company by GAIL and
HPCL for distribution and marketing of environmental friendly fuels (green fuels) viz. CNG and Auto LPG for use
in the transportation, in the State of Madhya Pradesh.
The joint venture company has drawn up the Business Plan for implementing its activity initially at Indore.
Construction of first CNG Mother Station and four Daughter Stations at Indore is in progress.
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AWARDS / RECOGNITIONS
Greentech Safety Awards - 2006 from Shri G. Vinod – Hon’ble Minister for Labour Employment, Handlooms
& Textiles – Govt. of Andhra Pradesh for outstanding achievements in the field of Safety, Health & Environment:
Gold Award bagged by Mumbai Refinery / Mangalore POL Terminal/ Mangalore LPG Import facility /
Mazagaon Lube Plant / Santacruz ASF
Silver Award bagged by Loni LPG Plant / Palam ASF / Dum Dum ASF /
Bronze Award bagged by Chennai ASF
National Safety Council Award – “Suraksha Puraskar” to Mumbai Refinery for outstanding Performance in
Occupational Safety & Health Management Systems from Shri K. Chandra Sekhar Sahu, Hon’ble Minister
of State for Labour and Employment.
Green Industry Award for 2005-06 to Jammu LPG Bottling Plant for Pollution Control & Development of
Greenery from Mayor of Jammy Smt. Bharti Bakshi.
Reader’s Digest Trusted Brands Survey 2006 Platinum Award to Club HP for outstanding achievement of “Acha
Lagata Hai” Brand of Club HP from Ms.Rosemarie Wallace MD Reader’s Digest (Asia Pacific Region).
Golden Peacock Global Award and certificate for Environmental Leadership – 2006 and Certificate Award to
Mumbai Refinery from Institute of Directors for various SH&E initiatives in Environment Management from
Hon’ble Governer of Himachal Pradesh, Shri Vishnu Sadashiv Kokje/Mahadev Mehra – Environment
Foundation, UK & WCFCG.
Golden Peacock Environment Management Award 2005 to Santacruz ASF from Institute of Directors for
outstanding contributions to Petroleum Industry from Hon’ble Governor of Himachal Pradesh, Shri Vishnu
Sadashiv Kokje.
Corporate Social Responsibility Award for 2004-05 from The Energy and Resources Institute (TERI) for
efforts towards good Corporate citizenship & sustainable initiatives amongst Corporate turnover above
Rs.500 Crores from Shri R.K.Pachauri, Director General, TERI.
Awaaz Consumer Award for 2006 from Awaaz CNBC TV for India’s most Preferred Auto Fuel from Shri L.
Mansingh, Secretary-Consumer Affairs Govt. of India.
Greentech Environment Excellence Awards for 2006 from Hon’ble Governor of Goa Shri S.C.Jamir & Shri Wilfred
D’souza, Dy. Chief Minister of Goa for highest achievements in the field of Safety & Environment Management:
Gold Award Under petroleum Refining Sector category bagged by Mumbai Refinery
Gold Award under Aviation Sector category Santacruz ASF / Palam ASF / Cochin ASF
Bronze Award under Petroleum Sector category bagged by Silvassa Lube Plant / Mangalore POL
Terminal
Excellence Award under Marketing sector category bagged by Nasik LPG Plant / Loni LPG Plant
Greentech Foundation Safety Innovation Award bagged by Santacruz ASF
Images Retail Award for 2006 - “the Retailer of the year” Fuel & Forecourt Award for excellence in the
Business of Retail in India by India Retail Forum.
India’s 25 Innovative Companies Award of 4Ps Business & Marketing Power Brand Award institutionalized
by Planman Media from Shri Aleque Padamsee – Ad Guru & Consultant for innovative approach in business
and marketing.
59
Special FFocus
ocus Areas
HPCL ranked 14th for ASTD Best Award - 2006 from American Society for Training & Development for
innovative learning and development practices in the organization from Shri Tony Bingham – President &
CEO, ASTD.
HPCL bagged OISD Award 2005-06 for the 3rd consecutive year from Oil Industry Safety Directorate for the
best performance in Lube Blending Category from Shri Murli Deora, Hon’ble Minister for Petroleum and
Natural Gas, MOP&NG.
Golden Peacock Corporate Governance Award 2006 from Institute of Directors for Corporate Governance
from Hon’ble Chief Minister of New Delhi, Smt.Sheila Dixit.
Suraksha Puraskar 2005 to MLIF from National Safety Council – Karnataka Chapter for Safety Practices
from Shri A.S.Laxmanan, Chairman – NSC, Karnataka.
Popular Consumer Award to Lubes SBU from DNA & DAKS for Master Brand in the Oil & Lubricants
category from Shri K.U. Rao, Chief Executive Officer, DNA & Ms.Ritika Dalal, CEO, DAKS.
Fellowship conferred upon Shri Arun Balakrishnan by All India Management Association for achievements
and contribution in the field of Professional Management from Shri Priya Ranjan Deshmukh – Hon’ble
Union Minister for Information, Broadcasting & Parliamentary Affairs.
Vishala Bharati Gaurav Satkar conferred upon Shri C. Ramulu by Delhi Telegu Academy for dedicated and
outstanding contributions to the field of Financed in the Oil Industry from Shri Ponnala Lakshmaiah, Hon’ble
Minister for Major Irrigation Government of Andhra Pradesh.
Shri Murli Deora, Hon’ble Minister for Petroleum & Natural Gas presents Shri S.P. Chaudhry, Executive Director (Retail) alongwith the retail team
OISD Award. receiving the Images Retail Award 2006.
Shri G. Vinod – Hon’ble Minister for Labour Employment, Handlooms & Textiles Shri R Radhakrishnan, then DGM (Training) receiving the ASTD Best Award
– Govt. of Andhra Pradesh presenting the Greentech Safety Award 2006. from Shri Tony Bingham, President & CEO, ASTD.
60
Auditors’ Report
TO THE MEMBERS OF HINDUSTAN PETROLEUM CORPORATION LIMITED
1. We have audited the attached Balance Sheet of Hindustan Petroleum Corporation Limited as at
March 31, 2007, and also the Profit and Loss Account and Cash Flow Statement of the Company for the
year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. These Standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by Companies (Auditor’s Report)
(Amendment) Order, 2004 (together ‘the Order’), issued by the Central Government of India in terms of sub-
section (4A) of section 227 of the Companies Act, 1956, we give in the Annexure, a statement on the
matters specified in paragraph 4 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief,
were necessary for the purpose of the audit;
(b) In our opinion, proper books of account, as required by law, have been kept by the Company, so far as
it appears from our examination of these books, and proper returns, adequate for the purposes of our
audit, have been received from the branches;
(c) The Branch Auditors’ report, made available to us, has been appropriately dealt with while preparing
our report;
(d) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in
agreement with the books of account;
(e) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report
comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies
Act, 1956;
(f) On the basis of the written representations received from directors of the Company, as at March 31,
2007 and taken on record by the Board of Directors, we report that none of the directors is disqualified
as at March 31, 2007, from being appointed as a director in terms of clause (g) of sub-section (1) of
Section 274 of the Companies Act, 1956; and
(g) In our opinion, and to the best of our information and according to the explanations given to us and
read with Note No. 6 to Schedule 20B, regarding treatment of certain Income Tax benefits, the said
accounts give the information required by the Companies Act, 1956, in the manner so required and
give a true and fair view in conformity with the accounting principles generally accepted in India;
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2007;
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For N.M. Raiji & Co. For Sudit K. Parekh & Co.
Chartered Accountants Chartered Accountants
Vinay D. Balse Srikant V. Jilla
Partner Partner
Membership No. 39434 Membership No. 39461
Place : New Delhi
Date : May 29, 2007
61
Annexure to the Auditors’ Report

(Referred to in Paragraph 3 of our Report of even date)
1. (a) The Company has maintained proper records showing full particulars including quantitative details and
situation of fixed assets except for items likes pipes, valves, meters, instruments and other similar
items peculiar to a continuous process industry.
(b) As explained to us, the Company, having regard to the size and nature of its business, has adopted a
practice of carrying out physical verification of its fixed assets, except LPG cylinders and fixed assets
of the erstwhile Kosan Gas Company undertaking, not handed over, on a staggered basis, over a
period of five years in the case of furniture, fixtures and office equipment and over a period of three
years in the case of Plant and Machinery and other assets. We were informed that discrepancies
noticed on such verification as compared to the book records have been properly dealt with in the
books of account. The existence of fixed assets situated at the residence of employees has, however,
been ascertained on a self-declaration basis.
(c) Fixed Assets disposed off during the year were not substantial and, therefore, do not affect the going
concern assumption.
2. (a) As explained to us, the inventories were physically verified during the year by the Management at
reasonable intervals.
(b) The procedures of physical verification of stocks followed by the management are reasonable and
adequate in relation to the size of the Company and the nature of its business. In the case of materials
lying with third parties, certificates confirming stocks held have been received from them.
(c) The Company has maintained proper records of inventory. We were informed that discrepancies noticed
on such verification, as compared to the book records, were not material and have been properly dealt
with in the books of account.
3. Based on the audit procedures applied by us and according to the information and explanations given to
us, the Company has neither granted nor taken loans, secured or unsecured to/from companies, firms or
other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently,
sub clauses (b), (c), (d), (e), (f) and (g) of sub-para (iii) of para 4 of the Order are not applicable.
4. In our opinion and according to the information and explanations given to us, and having regard to the
explanations that some of the items are of a specialized nature, in respect of which suitable alternative
sources do not exist for obtaining comparative quotations, there are adequate internal control procedures
commensurate with the size of the Company and nature of its business for the purchase of inventory and
fixed assets and for the sale of goods and services.
5. In our opinion and according to the information and explanation given to us, there are no contracts and
arrangements referred to in Section 301 of the Companies Act, 1956 entered into during the year that need
to be entered in the register maintained under that Section. Accordingly, sub clause (b) of sub-para (v) of
para 4 of the Order is not applicable to the Company for the current year.
6. In our opinion, and according to the information and explanations given to us, the Company has complied
with the directives issued by the Reserve Bank of India and the provisions of Section 58A and Section 58AA
62

or any other relevant provisions of the Companies Act, 1956, and the rules framed there under with regard
to deposits accepted from the public. We have been informed that no order has been passed by the
Company Law Board or National Company Law Tribunal or Reserve Bank of India.
7. In our opinion, the Company has an internal audit system commensurate with its size and the nature of its
business.
8. We have broadly reviewed the books of account maintained by the Company in respect of products where,
pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed
under Section 209 (1) (d) of the Companies Act, 1956. We are of the opinion that prima facie the prescribed
accounts and records have been maintained and are being made. We have not, however, made a detailed
examination of the records with a view to determine whether they are accurate or complete.
9. (a) According to the information and explanations given to us and on the basis of our examination of the
books of account, the Company has, during the year, been generally regular in depositing with the
appropriate authorities, undisputed statutory dues, including Provident Fund, Investor Education and
Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax,
Custom Duty, Excise Duty, Cess and any other material statutory dues.
(b) According to the information and explanations given to us and on the basis of our examination of the
books of account, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax,
Service Tax, Custom Duty, Excise Duty, Cess were in arrears, as at March 31, 2007, for a period of
more than six months from the date they became payable.
(c) According to the information and explanations given to us, dues relating to Sales Tax/Custom Duty/
Wealth Tax/Service Tax/Excise Duty/Cess, which have not been deposited on account of disputes
with the related authorities, have been reflected in the table below:
STATUTE FORUM WHERE AMOUNT IN PERIOD TO WHICH

PENDING Rs. / Crores THE AMOUNT RELATES
Central Excise Act, 1944 Commissioner (A) 70.86 1988-1994, 1994-1995, 1996-1999,
1999-2000, 2000-2003, 2001-2006
Assistant
Commissioner 51.95 1994-2002, 2000-2002, 2001-2004
CESTAT 430.75 1993-1995, 1994-2005, 1996-2002,

1997-2001, 1998-2003, 1999-2004,
2000-2001, 2001-2006
Department of
Revenue 0.97 1999-2000,2001-2004,2004-2005
554.53
63
STATUTE FORUM WHERE AMOUNT IN PERIOD TO WHICH

PENDING Rs. / Crores THE AMOUNT RELATES
Various Central and Board of Revenue 0.19 1985-1986,1986-1987

State Sales Tax
Acts
Civil Court 0.14 2001-2005
Rajasthan Kar Board 2.58 1999-2000, 2002-03
Sales Tax Appellate

Tribunal 95.97 1985-1989, 1987-1988, 1994-1997,
1994-2002, 1994-2003, 1994-2004,
1995-2003, 1995-1997, 1996-1998,
2001-2004
High Courts 967.17 1979-1987, 1987-1991, 1987-1996,

1991-1993, 1994-1996, 1994-2003,
1994-2004, 2000-2001, 2001-2003,
2005-2006
Commissioner /
DCCT / ADC /
JCCT / ACCT 2,116.56 1976-1979, 1985-1988, 1989-2006,
1991-1994, 1994-1995, 1994-2004,
1995-1997,1997-2001, 1999-2002,
2002-2006
3,182.61
Customs Act, 1962 CESTAT 18.74 1992-1999
18.74
Service Tax CESTAT 0.13 2003-2004
0.13
Grand Total 3,756.00
64

10. The Company does not have any accumulated losses at the end of the financial year and has not incurred
cash losses in the financial year and in the financial year immediately preceding such financial year.
11. According to the information and explanations given to us, and based on checks carried out by us, the
Company has not defaulted in repayment of dues to financial institutions or banks. The question of default
in repayment of dues to debenture holders does not arise since no debentures were outstanding during the
financial year.
12. According to the information and explanations given to us, the Company has not granted loans and advances
on the basis of security by way of pledge of shares, debentures and other securities.
13. In our opinion and according to information and explanations given to us, the Company is not a chit fund or
a nidhi/mutual benefit fund/society. Therefore the provisions of sub-para (xiii) of para 4 of the Order are not
applicable to the Company.
14. According to the information and explanations given to us, the Company is not dealing or trading in shares,
securities, debentures and other investments. Therefore the provisions of sub-para (xiv) of para 4 of the
Order are not applicable to the Company.
15. In our opinion and according to information and explanations provided to us, the Company has not provided
guarantees for loans taken by others from banks and financial institutions.
16. In our opinion, the term loans taken during the year have been applied for the purpose for which they were
raised.
17. According to the information and explanations given to us, and on an overall examination of the Balance
Sheet of the Company, funds raised on short-term basis have, prima facie, not been used during the year
for making long-term investments.
18. According to the information and explanations given to us, during the year the Company has not made any
preferential allotment of shares to parties and companies covered in the Register maintained under Section
301 of the Companies Act, 1956.
19. The Company has not raised any monies by way of issue of debentures. Therefore, the provisions of sub-
para (xix) of para 4 of the Order are not applicable to the Company.
20. The Company has not made any public issue of securities during the year.
21. According to information and explanations given to us and based on audit procedures performed and
representations obtained from the management, we report that no material fraud on or by the Company,
has been noticed or reported during the year under audit.

Partner Partner
Place : New Delhi

Date : May 29, 2007
65
Balance Sheet as at 31st March, 2007

March,
Rs./ Crores
SCHEDULE 2006-07 2005-06
SOURCES OF FUNDS
Shareholders’ Funds:
a) Capital 1 338.95 338.94
b) Reserves and Surplus 2 9,259.70 8,396.80
9,598.65 8,735.74
Loan Funds:
a) Secured Loans 3 1,005.48 1,486.16
b) Unsecured Loans 4 9,512.05 5,177.67
10,517.53 6,663.83
Deferred Tax Liability 1,420.90 1,384.44
TOTAL 21,537.08 16,784.01
APPLICATION OF FUNDS
Fixed Assets: 5
a) Gross Block 15,638.48 13,479.25
b) Less: Depreciation 6,817.64 6,141.85
c) Net Block 8,820.84 7,337.40
d) Capital Work-in-Progress 6 4,243.56 2,363.88
13,064.40 9,701.28
Investments 7 7,127.47 4,027.64
Current Assets, Loans and Advances:
a) Inventories 8 8,098.40 7,810.29
b) Sundry Debtors 9 1,577.78 1,392.26
c) Cash and Bank Balances 10 86.79 42.59
d) Other Current Assets 11 92.33 11.38
e) Loans and Advances 12 1,609.40 1,753.46
11,464.70 11,009.98
Less:
Current Liabilities and Provisions: 13
a) Liabilities 8,891.77 7,394.74
b) Provisions 1,227.72 560.15
10,119.49 7,954.89
Net Current Assets 1,345.21 3,055.09
TOTAL 21,537.08 16,784.01
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
AND NOTES FORMING PART OF ACCOUNTS 20
ARUN BALAKRISHNAN
C.RAMULU FOR N. M. RAIJI & CO. FOR SUDIT K. PAREKH & CO.
Director-Finance Chartered Accountants Chartered Accountants
N.R. NARAYANAN VINAY D. BALSE SRIKANT V. JILLA
Company Secretary Partner Partner
Place : New Delhi

Date : May 29, 2007
66
Profit and Loss A

Profit ccount for the year ended 31st Mar
Account ch, 2007
March,
Rs./ Crores
SCHEDULE 2006-07 2005-06
INCOME
Sale of Products 91,448.03 74,044.11
(Net of Discount Rs. 728.98 crores; 2005-06 Rs.564.67 crores)
Less : Excise Duty Paid 7,876.89 6,014.23
Net Sales 83,571.14 68,029.88
Recovery under Subsidy Schemes 5,470.12 2,876.15
Other Income 14 684.51 349.46
89,725.77 71,255.49
INCREASE /(DECREASE) IN INVENTORY 15 243.55 1,408.96

EXPENDITURE AND CHARGES
Purchase of Products for resale 46,850.22 42,178.12
Raw materials consumed 35,816.79 25,450.29
Packages consumed 105.11 95.99
Excise Duty on Inventory differential 45.40 177.00
Transhipping Expenses 1,749.46 1,520.14
Payments to and provisions for Employees 16 729.42 641.49
Exploration Expenses 20.11 12.42
Other Operating Expenses 17 1,564.72 1,437.79
Depreciation/Amortisation 704.00 690.23
Borrowing Cost 18 422.98 175.88
88,008.21 72,379.35
PROFIT FOR THE YEAR BEFORE PRIOR PERIOD
ADJUSTMENTS AND TAXES 1,961.11 285.10
PRIOR PERIOD ADJUSTMENTS 19 (6.05) -
PROFIT BEFORE TAXES 1,967.16 285.10
PROVISION FOR CURRENT TAXATION 652.67 78.45
PROVISION FOR DEFERRED TAXATION (NET) 36.46 9.69
PROVISION FOR TAXATION OF EARLIER YEARS WRITTEN BACK (302.98) (220.05)
PROVISION FOR FRINGE BENEFIT TAX 9.84 11.38
PROFIT AFTER TAXES 1,571.17 405.63
Balance brought forward 6,186.63 5,937.64
PROFIT AVAILABLE FOR APPROPRIATION 7,757.80 6,343.27
APPROPRIATED FOR:
General Reserve 157.12 40.56
Interim Dividend 203.60 -
Proposed Final Dividend 407.20 101.80
Tax on Distributed Profits 97.75 14.28
BALANCE CARRIED FORWARD 6,892.13 6,186.63
EARNINGS PER SHARE (in Rs.) - Basic & Diluted 46.35 11.97
(2006-07 : EPS = Net Profit - Rs. 1,571.17 crores / Weighted avg. no. of shares - 33.895 crores;
2005-06 : EPS = Net Profit - Rs. 405.63 crores / Weighted avg. no. of shares - 33.894 crores)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
AND NOTES FORMING PART OF ACCOUNTS 20
ARUN BALAKRISHNAN
Place : New Delhi
Date : May 29, 2007
67
Schedules forming part of the Balance Sheet

Rs./ Crores
2006-07 2005-06
1. CAPITAL
A. Authorised:
75,000 Cumulative Redeemable Preference Shares of Rs. 100/- each 0.75 0.75
34,92,50,000 Equity Shares of Rs.10/- each 349.25 349.25
350.00 350.00
B. Issued, Subscribed & Called up:
33,93,30,000 Equity Shares of Rs.10/- each fully paid up 339.33 339.33
Less: Calls unpaid by Others 0.38 0.39
338.95 338.94
NOTES :-
(1) 77,50,000 fully paid up equity shares of Rs. 10/- each were allotted to
the shareholders of Lube India Limited on the amalgamation of that
company for consideration other than cash.
(2) 52,00,000 fully paid up equity shares of Rs. 10/- each were allotted to
the President of India, for consideration other than cash, on the
amalgamation of Caltex Oil Refining India Limited with the Corporation.
(3) 26,44,30,000 shares of Rs. 10/- each were allotted as fully paid bonus
shares by capitalisation of Capital Reserve, Capital Redemption
Reserve and accumulated profits.
2. RESERVES AND SURPLUS

Share Premium Account
As per last Balance Sheet 1,164.12 1,164.12
Less : Calls Unpaid 12.41 12.88
1,151.71 1,151.24
Capital Grant
As per last Balance Sheet 4.94 -
Received during the year - 5.02
4.94 5.02
Less: Amortised during the year (0.19) (0.08)
4.75 4.94
General Reserve
Add : Transfer from Profit & Loss Account 157.12 40.56
1,211.11 1,053.99
Profit and Loss Account
Surplus as per Account annexed 6,892.13 6,186.63
9,259.70 8,396.80
68

Rs./ Crores
2006-07 2005-06
3. SECURED LOANS
i. Collateral Borrowing and Lending Obligation (CBLO) 460.00 1,010.00
(Secured by Pledge of Oil Bonds)
[Due for repayment within one year - Rs. 460 crores;
2005-06 : Rs. 1,010 crores]
ii. Overdrafts from Banks 545.48 476.16
(Secured by hypothecation of Stock-in-Trade)
1,005.48 1,486.16
4. UNSECURED LOANS
Fixed Deposits 0.02 0.02
Clean Loans from Banks 5,830.00 2,300.00
(Due for repayment within one year - Rs. 5,830 crores;
2005-06 : Rs. 2,300 crores)
Short Term Loans from Banks 1,356.87 1,768.05
(repayable in foreign currency)
[Due for repayment within one year - Rs. 1,356.87 crores;
2005-06 : Rs. 1,768.06 crores]
Term Loan From Oil Industry Development Board 1,250.00 650.00
(Due for repayment within one year - Rs. 200 crores; 2005-06: Nil)
Syndicated Loans from Foreign Banks (repayable in foreign currency) 1,075.16 459.60
[Due for repayment within one year - Rs. Nil; 2005-06: Rs. Nil]
9,512.05 5,177.67
69

5. FIXED ASSETS (A & B) Rs. /Crores
Gross Block Additions/ Deductions/ Gross Block Depreciation Total Net Net
at cost Reclassifi- Reclassifi- at cost and Depreciation Block Block
as at cations cations as at Amortisation and as at as at
01-04-2006 31-03-2007 for the year Amortisation 31-03-2007 31-03-2006
2006-2007 upto
31-03-2007
A. OTHER THAN INTANGIBLE ASSETS

1. Land -Freehold (C) 210.99 266.69 - 477.68 - - 477.68 210.99
2. Roads and Culverts (E&F) 643.88 128.64 0.86 771.66 11.47 68.45 703.21 586.81
3. Buildings (D) 1,237.30 263.06 1.63 1,498.73 27.49 183.79 1,314.94 1,080.62
4. Leasehold Property - Land 93.10 2.00 5.06 90.04 3.02 23.04 67.00 73.07
5. Railway Siding and 274.76 6.64 - 281.40 12.82 127.21 154.19 160.38
Rolling Stock (E)
6. Plant and Equipment(E, F & G) 10,586.54 1,477.82 20.85 12,043.51 614.11 6,161.40 5,882.11 5,022.96
7. Furniture, Fixtures 297.32 36.52 12.34 321.50 23.72 168.47 153.03 142.34
and Office/Lab.
Equipment
8. Transport Equipment 91.25 10.53 1.28 100.50 7.17 53.07 47.43 44.19
9. Unallocated capital 0.20 - - 0.20 - 0.20 - -
Expenditure on
Land Development
Total (A) 13,435.34 2,191.90 42.02 15,585.22 699.80 6,785.63 8,799.59 7,321.36
B. INTANGIBLE ASSETS
1. Right of Way 1.72 6.95 - 8.67 - - 8.67 1.72
2. Technical / Process Licences 9.47 0.84 - 10.31 0.52 3.11 7.20 6.88
3. Software 32.72 1.85 0.29 34.28 3.90 28.90 5.38 7.44
Total (B) 43.91 9.64 0.29 53.26 4.42 32.01 21.25 16.04
GRAND TOTAL (A+B) 13,479.25 2,201.54 42.31 15,638.48 704.22 6,817.64 8,820.84 7,337.40
Previous Year 12,393.17 1,121.34 35.26 13,479.25 690.23 6,141.85 7,337.40
A. Includes assets costing Rs. 0.07 Crore (2005-2006: Rs. 0.14 Crore) of erstwhile Kosan Gas Company not handed over to the
Corporation consisting of : Freehold Land Rs.76,191/- (2005-2006 : Rs.76,191/-) Building Rs.0.06 Crore (2005-2006 : Rs. 0.06
Crore) Plant & Equipment Rs. 30,454/- (2005-2006 : Rs. 0.07 Crore). Consequently, cumulative Depreciation on the Fixed Assets
amounting to Rs. 0.05 Crore (2005-2006: Rs.0.12 Crore) has not been provided for. In case of Land, the Kosan Gas Company
were to give up their claim. However, in view of the tenancy right sought by third party, the matter is under litigation.
B. Includes Rs. 74.75 Crores (2005-2006 : Rs.63.66 Crores) being the Corporation’s Share of Cost of Land & Other Assets jointly
owned with Other Oil Companies.
C. Title Deeds to some of the lands acquired are still to be obtained. In certain cases, registration of the title of the assets is pending
as the legal formalities are yet to be completed.
D. Includes Rs.0.01 lakh (2005-2006 : Rs.0.01 lakh) being share application money in Co-operative Housing Societies.
E. Includes Rs. 42.56 Crores (2005-2006 : Rs. 40.50 Crores) towards Plant and Machinery, Roads & Culverts and Railway Sidings
& Rolling Stock, ownership of which does not vest with the Corporation. These assets are amortised at the rate of depreciation
specified in Schedule XIV of the Companies Act,1956.
F. Includes following assets which are used for distribution of PDS Kerosene under Jana Kalyan Pariyojana against which
financial assistance is being provided by OIDB. (Rs./Crores)
Description First Cost (31/03/2007) First Cost (31/03/2006)
Roads & culverts 0.16 0.16
Buildings 1.70 1.70
Plant & Equipment 3.30 3.30
Total 5.16 5.16
G. Includes Assets retired from active use and held for disposal - Gross Block : Rs.4.97 Crores / Net Block : Rs.0.82 Crore (2005-
2006 : NIL)
70

Rs./ Crores
2006-07 2005-06
6. CAPITAL WORK-IN-PROGRESS (at Cost)
Unallocated Capital Expenditure
and Materials at Site 3,683.14 1,609.56
Advances for Capital Expenditure 83.68 91.24
Capital Stores 33.44 423.87
Capital Stores lying with Contractors 109.87 117.60
Capital goods in transit 124.62 40.38
4,034.75 2,282.65
Construction period expenses pending apportionment
(Net of recovery) :
Establishment charges 57.36 39.14
Interest 130.06 34.51
Other Borrowing Cost 21.09 7.50
Depreciation 0.30 0.08
208.81 81.23
4,243.56 2,363.88
7. INVESTMENTS
I. LONG TERM INVESTMENTS (at Cost):

A. TRADE INVESTMENTS
Quoted
1. Mangalore Refinery and Petrochemicals Ltd.
29,71,53,518 Equity Shares of Rs. 10/- each fully paid up 471.68 471.68
2. 6.96% Oil Companies Government Of India Special Bonds 2009 - 81.00
3. 7.00% Oil Companies Government Of India Special Bonds 2012* 777.02 777.02
Unquoted
1. Guru Gobind Singh Refineries Ltd. (Wholly owned subsidiary)
33,54,60,000 Equity Shares of Rs. 10/- each fully paid-up 335.46 295.71
(3,97,50,000 Equity Shares of Rs. 10/- each
purchased/allotted during the year)
2. Hindustan Colas Ltd.
47,25,000 Equity Shares of Rs. 10/- each fully paid up 4.73 4.73
3. Petronet India Ltd.
Less : Provision for Diminution (16.00) -
4. Petronet MHB Ltd.
5. Prize Petroleum Co. Ltd
99,99,600 Equity Shares of Rs. 10/- each fully paid up 10.00 10.00
71

Rs./ Crores
2006-07 2005-06
6. South Asia LPG Co. Pvt. Ltd.
7. Bhagyanagar Gas Ltd.
12,497 Equity Shares of Rs. 10/- each fully paid up 0.01 0.01
8. Avantika Gas Ltd.
12,498 Equity Shares of Rs. 10/- each fully paid up 0.01 -
(12,498 Equity Shares of Rs. 10/- each
TOTAL(A) 1,806.75 1,683.78
B. OTHER INVESTMENTS
Quoted
1. Government Securities of the face value of Rs. 0.02 crore
(2005-06 : Rs. 0.02 crore)
- Deposited with Others 0.02 0.02
- On hand - Rs. 0.25 lakh (2005-06 : Rs. 0.25 lakh) 0.00 0.00
2. Scooters India Ltd.
Unquoted
1. Government Securities of the face value of Rs. 0.24 lakh
(2005-06 : Rs. 0.24 lakh)
- Deposited with Others - Rs. 0.10 lakh (2005-06 : Rs. 0.10 lakh) 0.00 0.00
- On hand** - Rs. 0.14 lakh ( 2005-06 : Rs. 0.14 lakh) 0.00 0.00
2. East India Clinic Ltd.
- 1/2% Debenture of face value of Rs.0.15 lakh
- Rs.0.15 lakh (2005-06 : Rs.0.15 lakh) 0.00 0.00
- 5% Debenture of face value of Rs.0.07 lakh
- Rs.0.07 lakh (2005-06 : Rs.0.07 lakh) 0.00 0.00
3. Shushrusha Citizen Co-operative Hospital Limited
100 Equity Shares of Rs. 100/- each fully paid up
- Rs. 0.10 lakh (2005-06 : Rs. 0.10 lakh) 0.00 0.00
4. Petroleum India International (Association of Persons)***
Contribution towards Seed Capital 0.05 0.05
TOTAL (B ) 0.08 0.08
TOTAL LONG TERM INVESTMENTS 1,806.83 1,683.86
Less: Provision for loss on Investments** - Rs. 0.14 lakh 0.00 0.00
(2005-06 : Rs. 0.14 lakh)
TOTAL: I 1,806.83 1,683.86
72

Rs./ Crores
2006-07 2005-06
II. CURRENT INVESTMENTS (at Cost or Fair Value whichever is lower)
TRADE INVESTMENTS
Quoted
i. 7.07% Oil Marketing Companies’ GOI Special Bonds, 2009 - 400.00
ii. 7.33% Oil Marketing Companies’ GOI Special Bonds, 2009 - 398.92
iii. 7.44% Oil Marketing Companies’ GOI Special Bonds, 2012 - 400.00
iv. 7.47% Oil Marketing Companies’ GOI Special Bonds, 2012 * 393.77 400.00
v. 7.59% Oil Marketing Companies’ GOI Special Bonds, 2015 - 344.74
vi. 7.61% Oil Marketing Companies’ GOI Special Bonds, 2015 380.92 400.12
vii. 7.75% Oil Marketing Companies’ GOI Special Bonds, 2021 991.51 -
viii. 8.01% Oil Marketing Companies’ GOI Special Bonds, 2023 838.08 -
ix. 8.13% Oil Marketing Companies’ GOI Special Bonds, 2021 691.47 -
x. 8.20% Oil Marketing Companies’ GOI Special Bonds, 2024 1,006.95 -
xi. 8.40% Oil Marketing Companies’ GOI Special Bonds, 2026 1,017.94 -
TOTAL CURRENT INVESTMENTS - II 5,320.64 2,343.78
TOTAL [I+II] 7,127.47 4,027.64
Cost Market / Redemption Value
2006-07 2005-06 2006-07 2005-06
Aggregate of quoted Investments 6,653.74 3,674.59 7,094.89 4,458.23
Aggregate of unquoted Investments 574.11 354.13
7,227.84 4,028.72
* Pledged with Clearing Corporation of India Limited against CBLO Loan

** Includes Rs. 0.14 lakh (2005-06 : Rs. 0.14 lakh) not in the possession of
the Company
*** Members in Petroleum India International (AOP) where Hindustan
Petroleum Corporation Ltd., Bharat Petroleum Corporation Ltd.,
Bongaigaon Refineries & Petrochemicals Ltd., Kochi Refineries Ltd.,
Engineers India Ltd.,IBP Co. Ltd., Indian Petrochemicals Corporation
Ltd., Chennai Petroleum Corporation Ltd. have a share of 12.50 % each
8. INVENTORIES
(As per Inventory taken, valued and certified by the Management)
Raw Materials (Including in-transit - Rs. 799.54 crores;
2005-06 : Rs. 632.94 crores) 1,897.14 1,856.59
Finished Products
(Including in-transit between locations - Rs. 52.04 crores;
2005-06 : Rs. 39.53 crores) 5,636.65 5,384.74
Stock in Process 398.11 406.47
Packages 7.92 6.36
7,939.82 7,654.16
Stores and Spares * (Including in-transit - Rs. 7.07 crores; 158.58 156.13
2005-06 : Rs. 7.35 crores) 8,098.40 7,810.29
* Includes stock lying with contractors Rs. 0.96 crore
(2005-06 : Rs. 1.39 crores)
73

Rs./ Crores
2006-07 2005-06
9. SUNDRY DEBTORS : (Unsecured)
Over six months :
Considered good 74.19 294.89

Considered doubtful [Refer Note 20B (4)] 63.61 36.58
Others :
Considered good 1,519.35 1,097.37

1,657.15 1,428.84
Less: Provision for Doubtful Debts 79.37 36.58
1,577.78 1,392.26
10. CASH AND BANK BALANCES
Cash on hand 1.38 2.89
Cheques Awaiting Deposit 5.19 0.41
With Scheduled Banks:
On Current Accounts 76.90 36.11
On Non-operative Current Accounts* 0.01 0.01
On Fixed Deposit Accounts ** 3.24 3.11
With Others:
In Current Account with Municipal Co-operative
Bank Ltd. (maximum balance during the year
Rs. 0.11 crore, 2005-06 : Rs. 0.09 crore) 0.07 0.06
86.79 42.59
* Represents amount deposited as per Court Order pending

final disposal.
** Includes lodged as security deposit
with Mumbai Port Trust - Rs. 0.54 crore ( 2005-06 : Rs.0.54 crore)
and with IAAI - Rs. 0.24 crore (2005-06 : Rs.0.24 crore).
11. OTHER CURRENT ASSETS

Interest accrued on Bank Deposits and Investments 92.33 11.38
74

Rs./ Crores
2006-07 2005-06
12. LOANS AND ADVANCES
Secured, considered good :
Advances recoverable in cash or in kind or
for value to be received * 350.48 356.72
Interest Accrued thereon 125.16 114.44
Unsecured, considered good :
Advances recoverable in cash or in kind or
for value to be received 61.99 52.60
Balances with Excise, Customs, Port Trust etc. 258.17 256.77
Other Deposits 135.23 142.57
Prepaid Expenses 9.95 7.18
Amounts recoverable under Subsidy Schemes 21.74 41.11
Share application money pending allotment 8.46 61.27
Advance towards equity 17.00 13.00
Other Accounts Receivable ** 621.22 707.80
Unsecured, considered doubtful :
Accounts Receivable & Deposits 2.92 2.99
1,612.32 1,756.45
Less : Provision for Doubtful Receivables 2.92 2.99
1,609.40 1,753.46
* Includes Rs. 0.38 crore, (2005-06 : Rs.0.31 crore) due from Directors;
maximum balance - Rs. 0.42 crore, (2005-06 : Rs.0.33 crore) and
Rs. 0.01 crore (2005-06 : Rs. 0.01 crore) due from an Officer; maximum
balance - Rs. 0.02 crore, (2005-06 : Rs.0.01 crore)
** Includes Rs. 10.88 crores (2005-06 : Rs.10.83 crores) being amount due
towards Company’s share of profit in Petroleum India International
75

Rs./ Crores
2006-07 2005-06
13. CURRENT LIABILITIES AND PROVISIONS
A. Current Liabilities
Sundry Creditors
i) Total outstanding dues of small scale industrial undertakings * 3.78 3.38
ii) Total outstanding dues of creditors other than small scale 4,372.63 3,373.66
industrial undertakings
Deposits from Dealers/Consumers for LPG Cylinders 2,826.45 2,673.90
Accrued Charges/Credits 106.50 122.83
Interest accrued but not due on loans 47.38 25.59
Preference share capital redeemed remaining unclaimed/unencashed 0.01 0.01
Unclaimed Dividend** 11.52 11.19
Other Liabilities 1,391.73 1,080.70
8,891.77 7,394.74
B. Provisions
Provision for Tax (Net) 578.25 301.78
Provision for Dividend 407.20 101.80
Provision for Pension 41.40 39.84
Provision for other retirement benefits 131.03 102.14
Provision for Fringe Benefit Tax 0.64 0.31
1,227.72 560.15
10,119.49 7,954.89
* Outstanding Dues of Small Scale Undertakings for More than 30 Days :

M/s PYRO ELECTRIC INSTRUMENTS G M/s S.K.M.L. ENTERPRISES, M/s NEWAGE INDUSTRIES M/s M. SAGAR, M/s KEVIN ENTERPRISES
PRIVATE LTD. M/s SRI MANOJ ELECTRICAL WORKS, M/s K.V. FIRE CHEMICALS (INDIA) M/s SRI TRINADHA ELECTRICAL WORKS, M/s JOSEPH
LESLIE DRAGER MFG.PVT. LTD. M/s LEVCON INST. PVT. LTD., M/s GASKETS (INDIA) PRIVATE LTD M/s CHEMTROLS ENGINEERING LTD, M/s EX-
PROTECTA M/s REMI PROCESS PLANT & MACHINERY, M/s SHANMUKA ENGINEERING WORKS M/s SRI BALAJI ASSOCIATES, M/s EBY
FASTENERS M/s PACKINGS & JOINTINGS GASKET, M/s CDC CARBOLINE INDIA PVT LTD. M/s SOUTHERN GASKET PRODUCTS, M/s A.K. DEY
& COMPANY M/s IGP ENGINEERS PVT LIMITED, M/s HYDRO - PNEUMATICS M/s MADRAS INDUSTRIAL PRODUCTS, M/s DEMBLA VALVES PVT.
LIMITED M/s GOODRICH GASKET (P) LIMITED, M/s H. GURU INDUSTRIES M/s SEBIM VALVES INDIA PVT. LTD., M/s A.N. INSTRUMENTS PRIVATE
LTD M/s VIRGO ENGINEERS LIMITED, M/s JAYALAKSHMI ENGINEERING CON M/s FLOWAY VALVES PVT. LIMITED, M/s PRECISION ENGINEERING
WORKS M/s J R U CONTROLS PVT. LTD., M/s COASTAL AMMONIA PRIVATE LTD M/s GUJARAT INFRAPIPES PVT LTD., M/s ASSOCIATED
SUPPLIERS M/s M.S. FITTINGS MANUFACTURING, M/s PRIME MOVER GOVERNER SERVICES M/s A.V. VALVES LIMITED, M/s SRIRAM & CO M/
s ECONO VALVES PRIVATE LIMITED, M/s X TECHS M/s CHAUDHRY HAMMER WORKS PVT.LTD., M/s COROMANDEL PAINTS & CHEMICALS M/
s FLASH FORGE PVT LIMITED, M/s GEETHA ENTERPRISES M/s SWARAN SINGH & CO, M/s RAO WELDING WORKS M/s PRESIDENT
ENGINEERING WORKS, M/s LEAK STOP EXPERTS M/s MULTITHREAD FASTENERS, M/s PRECISION MANAGEMENT COUNCIL M/s AEP
COMPANY, M/s NCON TURBO TECH (PVT) LTD M/s PTD FASTENERS PVT. LIMITED, M/s GANGOTRI TURBO TECH. ENGG. M/s NIREKA
ENGINEERING & CO.PVT LTD., M/s MODERN ELECTRICAL WORKS M/s SWAN ENTERPRISES PVT. LIMITED, M/s MAHALAKSHMI ENGINEERS
M/s SRI GAJALAKSHMI INDUSTRIES, M/s PAVANI ENTERPRISES M/s VOLTAMP TRANSFORMERS PVT. LTD., M/s GOPAL ENGINEERING WORKS
M/s WAAREE INSTRUMENTS LTD, M/s PRAVASI ENTERPRISES M/s SWARAN SINGH & CO, M/s GANESH ENGINEERING WORKS M/s MASTAN
ENGINEERING WORKS, M/s SABARI ENGINEERING CONTRACT M/s TAS ENGINEERING CO PVT LTD, M/s USHA ENGINEERING WORKS M/s
TECHNIKA, M/s SRI SANARI ELECTRICAL & ENG M/s GLOBAL ENTERPRISES, M/s SHIVA JYOTHI ENTERPRISES M/s M. SOMESWARA RAO,
M/s SRI GANESH ELE & REWINDING M/s RAMAKRISHNA ELECTRICAL WIND, M/s S. VENKATA RAO M/s PRATHYUSHA SAFETY MFG. CO,
M/s UNITED ELECTRICAL & REWINDING M/s PIPEFIT ENGINEERS, M/s S.K. AHMED M/s SOHAN ENGINEERING ENTERPRISES, M/s INMACRO
M/s CARTAL TECHNICAL SERIVCES, M/s STEEL SAMRAT (India) M/s PAVAN KUMAR BLASTINGS, M/s J.J. INDUSTRIES M/s AES ENERGY
WORKS(P) LTD, M/s SURESH ENGINEERING WORKS M/s H.M. TECHNOLOGIES, M/s IGP ENGINEERS LTD. M/s PREM ENTERPRISES,
M/s SWAN ENTERPRISES PVT. LTD. M/s MICROCARE COMPUTERS PVT LTD, M/s RANK CONTROLS & INSTRUMENTS M/s UNITED ELECTRICAL
& REWINDING, M/s MIKROFLO FILTERS (P) LTD. M/s C & I SYSTEMS, M/s CHHABI ELECTRICALS M/s FIX FIT FASTENERS MFG PVT. LTD.,
M/s EVANS ELECTRICALS M/s PAVING STONE, M/s HI-TEC VALVES M/s SHARP TANKS & STRUCTURE PVT. LTD., M/s TECHNO PROCESS
EQUIPMENTS LTD M/s PACE ENGINEERS INDL., M/s JOSEPH LESLIE DRAGGER M/s TEEKAY TUBES PVT. LTD.,
** No amount is due as at the end of the year for credit to Investors’ Education and Protection Fund.
76
Schedules forming part of the Profit and Loss A

Profit ccount
Account
Rs./ Crores
2006-07 2005-06
14. OTHER INCOME
Interest (Gross): *
On Investments 265.08 73.56
On Deposits 0.11 0.15
On Staff Loans 16.56 16.75
On Customers’ Accounts 10.18 17.55
On Others 3.31 12.46
295.24 120.47
Dividend income 21.51 30.42
Share of Profit from Petroleum India International (AOP) 0.95 1.03
Rent Recoveries 41.27 37.21
Profit on sale of Long Term Investments - 4.78
Exchange rate variation (Net) 202.63 37.36
Miscellaneous Income ** 122.91 118.19
389.27 228.99
684.51 349.46
Note:
* Tax deducted at source amounts to Rs. 1.19 crores (2005-06 : Rs. Nil)
** Miscellaneous Income Includes Rs. 0.19 crore (2005-06 : 0.09 crore) on
account of amortisation of capital grant and Rs. Nil (2005-06 : Rs. 4.95
crores) on account of recognition of revenue grant from OIDB during the year
15. INCREASE / (DECREASE) IN INVENTORY

Closing Stock:
Finished Products 5,636.64 5,384.74
6,034.75 5,791.20
Less: Opening Stock:
5,791.20 4,382.24
243.55 1,408.96
16. PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

Salaries, Wages, Bonus etc. * 556.86 461.66
Contribution to Provident Fund 41.04 36.69
Pension, Gratuity etc. 7.46 24.29
Employee Welfare Expenses ** 125.87 119.83
Less: Recoveries 1.81 0.98
124.06 118.85
729.42 641.49
* Includes Rs. 28.30 crores (2005-06 : Rs.12.89 crores) towards Leave

Encashment on the basis of actuarial valuation
** Includes Rs. 0.59 crores (2005-06 : Rs.4.28 crores) towards Post
retirement medical benefits on the basis of actuarial valuation
77
Schedules forming part of the Profit and Loss A

Profit ccount
Account
Rs./ Crores
2006-07 2005-06
17. OTHER OPERATING EXPENSES
Consumption of Stores, Spares and Chemicals 103.57 85.86
Power and Fuel 1,681.58 1,306.32
Less : Fuel of own production consumed 1,667.64 1,287.65
13.94 18.67
Repairs and Maintenance - Buildings 18.95 19.17
Repairs and Maintenance - Plant & Machinery 241.23 277.95
Repairs and Maintenance - Other Assets 7.65 6.75
Insurance 19.20 20.24
Rates and Taxes 29.16 23.37
Irrecoverable Taxes and Other Levies 203.40 257.90
Equipment Hire Charges 3.36 2.08
Rent 123.42 104.57
Travelling and Conveyance 74.25 68.23
Printing and Stationery 9.96 8.68
Electricity and Water 146.64 110.93
Charities and Donations 14.56 8.91
Stores & spares written off 4.87 2.48
Loss on Sale of Current Investment 18.49 -
Loss on Sale of Long Term Investment 1.54 -
Provision for Diminution in value of Current Investments 83.30 1.08
(After adjusting provision no longer required
written back Rs. 1.08 crores, 2005-06 : Rs. Nil)
Provision for Investment 16.00 -
Provision for Doubtful Receivables - (1.18)
written back Rs. Nil , 2005-06 : Rs. 1.22 crores)
Provision for Doubtful Debts 42.79 5.02
written back Rs. 4.23 crores , 2005-06 : Rs. 3.76 crores)
Provision for asset under reconciliation no longer required - (7.68)
Loss on Sale/ write off of Fixed Assets/ CWIP 3.41 7.59
Security Charges 32.92 31.50
Advertisement & Publicity 110.27 105.30
Sundry Expenses and Charges (Not otherwise classified) 222.50 247.75
Consultancy & Technical Services 19.34 32.62
1,564.72 1,437.79
18. BORROWING COST
Interest on :
Long Term Loans 3.00 -
Short Term Loans 385.12 149.60
Overdraft from Banks 18.32 9.07
Others 0.10 0.07
Other Borrowing Costs 16.44 17.14
422.98 175.88
19. PRIOR PERIOD DEBITS / (CREDITS)
Excise duty provision reversed (6.05) -
(6.05) 0.00
78
Statement of Significant AAccounting

ccounting PPolicies
olicies and Notes forming part of AAccounts
ccounts
20 A. SIGNIFICANT ACCOUNTING POLICIES
Accounts are prepared under the historical cost convention in accordance with Generally Accepted
Accounting Principles (GAAP), Accounting Standards issued by The Institute of Chartered Accountants
of India (ICAI) and the relevant provisions of the Companies Act, 1956. All income and expenditure
having material bearing are recognised on accrual basis, except where otherwise stated. Necessary
estimates and assumptions of income and expenditure are made during the reporting period and
difference between the actual and the estimates are recognised in the period in which the results
materialise.
1. FIXED ASSETS
Land acquired on lease for 99 years or more is treated as freehold land.
2. INTANGIBLE ASSETS
a. Cost of Right of Way for laying pipelines is capitalised as Intangible Asset and being perpetual in
nature, is not amortised.
b. Costs incurred on technical know-how / license fee relating to process design / plants / facilities
are capitalised as Intangible Assets.
c. Cost of Software directly identified with hardware is capitalised along with the cost of hardware.
Application software is capitalised as Intangible Asset.
3. CONSTRUCTION PERIOD EXPENSES ON PROJECTS
a. Related expenditure (including temporary facilities and crop compensation expenses) incurred
during construction period in respect of plan projects and major non-plan projects are capitalised.
b. Financing cost incurred during the construction period on loans specifically borrowed and utilised
for projects is capitalised.
c. Financing cost, if any, incurred on general borrowings used for projects is capitalised at the
weighted average cost.
4. DEPRECIATION
a. Depreciation on Fixed Assets is provided on the Straight Line method, in the manner and at the
rates prescribed under Schedule XIV to the Companies Act, 1956 and is charged pro rata on a
monthly basis on assets, from / upto and inclusive of the month of capitalisation / sale, disposal
or deletion during the year.
b. All assets costing upto Rs. 5,000/-, other than LPG cylinders and pressure regulators, are fully
depreciated in the year of capitalisation.
c. Premium on leasehold land is amortised over the period of lease.
d. Machinery Spares, which can be used only in connection with an item of fixed asset and the use
of which is expected to be irregular, are depreciated over a period not exceeding the useful life of
the principal item of fixed asset.
e. Intangible Assets other than application software are amortised on a straight line basis over the
useful life of the parent asset.
f. Application software are normally amortised over a period of four years, or over its useful life,
before it becomes obsolete, whichever is earlier.
79

ccounting PPolicies
ccounts
5. IMPAIRMENT OF ASSETS
At each balance sheet date, an assessment is made of whether there is any indication of impairment.
An impairment loss is recognised whenever the carrying amount of assets of cash generating units
(CGU) exceeds their recoverable amount.
6. FOREIGN CURRENCY AND DERIVATIVE TRANSACTIONS
a. Foreign Currency transactions during the year are recorded at the rates of exchange prevailing on
the dates of transactions.
b. All foreign currency assets, liabilities and forward contracts are restated at the rates ruling at the
year end.
c. All exchange differences are dealt with in the profit and loss account, except those relating to
acquisition of fixed assets, which are adjusted in the cost of assets and those covered by forward
contract rates, where the premium / discount arising from such contracts are recognised over the
period of contracts.
d. The realised gain or loss in respect of commodity hedging contracts, the pricing period of which
has expired during the year, are recognised in the Profit & Loss Account along with the underlying
transaction. However, in respect of contracts, the pricing period of which extend beyond the
balance sheet date, suitable provision is made for likely loss, if any.
7. INVESTMENTS
a. Long-term investments are valued at cost and provision for diminution in value thereof is made,
wherever such diminution is other than temporary.
b. Current investments are valued at the lower of cost and fair value.
8. INVENTORIES
a. Crude oil is valued at cost on First In First Out (FIFO) basis or at net realisable value, whichever
is lower.
b. Raw material for lubricants and finished lubricants are valued at weighted average cost or at net
realisable value whichever is lower.
c. Stock-in process is valued at raw material cost plus cost of conversion or at net realisable value,
whichever is lower.
d. Finished products other than Lubricants are valued at cost (on FIFO basis) or at net realisable
value, whichever is lower.
e. Empty packages are valued at weighted average cost.
f. Stores and spares are valued at weighted average cost.
g. Value of surplus, obsolete and slow moving stores and spares, if any, is reduced to net realisable
value. Surplus items, when transferred from completed projects are valued at cost / estimated
value, pending periodic assessment / ascertainment of condition.
9. DUTIES ON BONDED STOCKS
Excise / Customs duty is provided on stocks stored in Bonded Warehouses (excluding goods exempted
from duty / exports or where liability to pay duty is transferred to consignee).
80

ccounting PPolicies
ccounts
10. GRANTS
a. In case of depreciable assets, the cost of the asset is shown at gross value and grant thereon is
treated as Capital Grants, which are recognised in the Profit and Loss Account over the period
and in the proportion in which depreciation is charged.
b. Grants received against revenue items are recognised as income.
11. PROVISIONS
A provision is recognised when there is a present obligation as a result of a past event and it is
probable that an outflow of resources will be required to settle the obligation in respect of which a
reliable estimate can be made.
12. EXPLORATION & PRODUCTION EXPENDITURE
“Successful Efforts Method” of accounting is followed for Oil & Gas exploration and production activities
as stated below:
a. Cost of surveys, studies, carrying and retaining undeveloped properties are expensed out in the
year of incurrence.
b. Cost of acquisition, drilling and development are treated as capital work-in-progress when incurred
and are capitalised when the well is ready to commence commercial production.
c. Accumulated costs on exploratory wells in progress are expensed out in the year in which they
are determined to be dry.
The proportionate share in the assets, liabilities, income and expenditure of joint operations are accounted
as per the participating interest in such joint operations.
13. RETIREMENT BENEFITS
Liability towards leave encashment, pension, post - retirement medical benefits and gratuity to
employees is determined on actuarial valuation done at the year end. Liability so determined is funded
in the case of gratuity and provided for in other cases.
14. SALE OF PRODUCTS
Sales are net of discount, include applicable excise duty, surcharge and other elements as are allowed
to be recovered as part of the price but exclude VAT/sales tax.
15. RESEARCH & DEVELOPMENT
Expenditure incurred on research activities are charged off in the year in which they are incurred.
Expenses directly related to development activities which are capable of generating future economic
resources, are treated as intangible assets.
16. TAXES ON INCOME
a. Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.
b. Deferred tax on account of timing difference between taxable and accounting income is provided
by using tax rates and tax laws enacted or substantively enacted as at the balance sheet date.
81

ccounting PPolicies
ccounts
17. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
Contingent Liabilities and Capital Commitments are considered only for items exceeding Rs.1.00
Lakh in each case. Contingent Liabilities in respect of show cause notices are considered only when
converted into demands.
18. ACCOUNTING/CLASSIFICATION OF EXPENDITURE AND INCOME
a. Insurance claims are accounted on acceptance basis.
b. All other claims/entitlements are accounted on the merits of each case/realisation.
c. Raw materials consumed are net of discount towards sharing of under-recoveries.
d. Income and expenditure of previous years, individually amounting to Rs. 5 lakhs and below are
not considered as prior period items.
20 B. NOTES FORMING PART OF ACCOUNTS

1. In respect of sale of sensitive petroleum products (MS, HSD, LPG (Domestic) and SKO (PDS)), as
advised by the Ministry of Petroleum & Natural Gas, a part of the under-recovery suffered by the
Corporation during the year was compensated by ONGC and GAIL, by offering discounts on prices of
crude, SKO and LPG purchased from them. Accordingly, the Corporation has accounted the discount
received as follows:
(a) Rs.3,238.73 crores (2005-06 : Rs.2,531.11 crores) discount received, on crude oil purchased
from ONGC, has been adjusted against ‘Raw Material Cost’.
(b) Rs.922.41 crores (2005-06 : Rs.690.48 crores) discount received on purchase of SKO (PDS) and
LPG (Domestic) from ONGC and GAIL has been adjusted against ‘Purchase of Product for Resale’.
2. Oil Bonds issued by the Government of India towards under-recoveries suffered by the Corporation on
sale of sensitive petroleum products during 2006-07 for Rs.4,929.89 crores (2005-06 : Rs. 2,344.86
crores), have been accounted under ‘Recovery under Subsidy Schemes’.
3. The process of eliminating inter divisional margin on inventories has been extended during the year to
include finished lubricants leading to reduction in the closing valuation of inventories as of March 31,
2007 and profit for the year by Rs. 50.38 crores.
4. During the year Significant Accounting Policy with respect to accounting of Machinery Spares was
modified in line with the opinion obtained from Expert Advisory Committee of the Institute of Chartered
Accountants of India, resulting in an increase in profit before tax by Rs. 0.69 crore (net).
5. (a) Inter-Oil Company transactions are reconciled on a continuous basis. However, year end balances
are subject to confirmation/reconciliation.
(b) Customers’ Accounts are reconciled on an ongoing basis and are not likely to have a material
impact on the outstanding or classification of the accounts.
(c) In respect of doubtful debts, in addition to specific provisions made, an ad-hoc provision @ one
per cent of outstanding domestic debts (other than those relating to oil marketing companies and
subsidiary/joint venture companies) as of March 31, 2007 has also been made resulting in an
additional provision of Rs.15.76 crores.
82

ccounting PPolicies
ccounts
6. Considering the uncertainties attached to certain benefits under the Income Tax Act, the Corporation
has been accounting for such tax benefits in the year they are allowed in the assessments. Accordingly,
the Corporation, upon completion of assessment for the financial year 2003-04 (assessment year
2004-05) has reversed provision for tax amounting to Rs. 302.98 crores (2005-06: Rs. 217.36 crores).
7. The Corporation has, as at the balance sheet date, entered into forward contracts amounting to USD
589 million (2005-06: USD 389.13 million) to hedge its foreign currency exposure towards loans/
Export Earnings. The Corporation does not generally hedge the risks on account of foreign currency
exposure for the payment of Crude. Exposures not hedged as of balance sheet date amounted to USD
555.99 million (2005-06: USD 403.99 million) towards purchase of crude and USD 144 million (2005-
06: USD 50 million) in respect of loans taken.
8. Deferred Tax Assets/(Liabilities) arising due to timing differences comprise of:
Rs./Crores
2006-07 2005-06
Deferred Tax Asset
Provision for Gratuity / Pension 14.07 13.41
Provision for Medical Benefits 4.40 4.16
Provision for Leave Encashment 32.84 22.99
Others 73.92 36.61
Total (A) 125.23 77.17
Deferred Tax Liability
Depreciation (1,503.60) (1,418.89)
Others (42.53) (42.72)
Total (B) (1,546.13) (1,461.61)
Deferred Tax Liability (A + B) (1,420.90) (1,384.44)
9. Pending finalisation of the salary revision in respect of management employees effective 01 January
2007, no provision has been made in the accounts for the differential amount payable, if any, as the
amount is not determinable.
10. Related Party disclosure:
(Rs. /Crores)
Particulars Subsidiary Company Joint Venture Companies Total
2006-07 2005-06 2006-07 2005-06 2006-07 2005-06
Sales - - 198.16 267.02 198.16 267.02
Purchases 0.74 6.16 7,760.36 6,907.32 7,761.11 6,913.48
Sale of Assets - - - - - -
Investment in Land 13.99 - - - 13.99 -
Investment in equity 35.46 - 128.21 - 163.67 -
Adv. Towards equity 7.50 - 12.00 5.00 19.50 5.00
Share application
pending allotment 3.48 4.29 0.21 12.00 3.69 16.29
Interest - - 0.72 0.90 0.72 0.90
Services - - 0.41 (1.36) 0.41 (1.36)
Others 3.50 2.69 6.24 2.28 9.74 4.97
83

ccounting PPolicies
ccounts
The names of related parties are as follows:

Subsidiary Company: Guru Gobind Singh Refineries Ltd.
Joint Venture Companies: Mangalore Refinery and Petrochemicals Ltd., Hindustan Colas Ltd.,
Prize Petroleum Co. Ltd., Petronet India Ltd., Petronet MHB Ltd.,
South Asia LPG Co. Pvt. Ltd., Bhagyanagar Gas Ltd., and Aavantika
Gas Limited
Key Management Personnel: Shri M. B. Lal, Chairman & Managing Director
Shri Arun Balakrishnan, Director - Human Resources *
Shri C. Ramulu, Director - Finance
Shri S. Roy Choudhury, Director - Marketing
Shri M. A. Tankiwala, Director - Refineries
* Appointed as Chairman & Managing Director effective April 01, 2007 in place of Shri M. B. Lal
Details of remuneration to directors are given in note 20 B. 12 E of Notes to Accounts.
The Corporation has entered into production sharing oil & gas exploration contracts with Govt. of India in
consortium with other body corporates, details of which are as under :
A) Name of the Block Participating Interest
of HPCL in %
31/03/2007 31/03/2006
In India
Under NELP IV
KK- DWN-2002/2 20 20
KK- DWN-2002/3 20 20
Under NELP V
AA-ONN-2003/3 15 15
Under NELP VI
CY-DWN-2004/1 10 -
CY-DWN-2004/2 10 -
CY-DWN-2004/3 10 -
CY-DWN-2004/4 10 -
CY-PR-DWN-2004/1 10 -
CY-PR-DWN-2004/2 10 -
84

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ccounts
KG-DWN-2004/1 10 -
KG-DWN-2004/2 10 -
KG-DWN-2004/3 10 -
KG-DWN-2004/5 10 -
KG-DWN-2004/6 10 -
MB-OSN-2004/1 20 -
MB-OSN-2004/2 20 -
RJ-ONN-2004/1 20 -
RJ-ONN-2004/3 15 -
Others
ONGC Cluster 7 60 -
Outside India
BLOCK 56-OMAN 12.50 -
BLOCK WA-388-P, AUSTRALIA 20 -
B) The approval of assignment of Cambay block- CB-ONN-2002/3 in favour of the Company by Prize Petroleum
Co. Ltd, awarded under NELP IV is awaited from Ministry of Petroleum and Natural Gas.
11. In compliance with AS-27 ‘Financial Reporting of Interest in Joint Ventures’, the required information is
as under:
a) Jointly Controlled Entities
Country of Percentage of Percentage of

Incorporation ownership ownership
interest as on interest as on
31st March, 2007 31st March, 2006
Hindustan Colas Ltd. India 50.00 50.00

South Asia LPG Company Pvt. Ltd. India 50.00 50.00
Prize Petroleum Company Ltd. India 50.00 50.00
Mangalore Refinery and
Petrochemicals Ltd. India 16.95 16.95
Bhagyanagar Gas Ltd. India 25.00 25.00
Petronet India Ltd. India 16.00 16.00
Petronet MHB Ltd. India 28.77 26.00
Avantika Gas Ltd. India 25.00 -
85

ccounting PPolicies
ccounts
b) In respect of jointly controlled entities, the Corporation’s share of assets, liabilities, income,
expenses, contingent liabilities and capital commitments as furnished below, have been included
on the basis of audited / unaudited financial statements received from these joint venture companies:
Rs. / Crores
2006-07 2005-06
i. Assets
Long Term Assets 1,027.61 977.88
Investments 15.16 13.00
Current Assets 800.25 674.22
ii. Liabilities
Loans (Secured & Unsecured) 520.95 741.76
Current Liabilities & Provisions 572.75 438.56
Deferred Tax Liability 83.57 9.75
iii. Income 4,954.86 4,298.58
iv. Expenses* 4,868.03 4,252.14
v. Contingent Liabilities 141.30 142.65
vi. Capital Commitments 50.29 113.81
* Including Tax
Rs. / Crores
2006-07 2005-06
12 A. Estimated amount of contracts remaining to
be executed on Capital Account not provided for 2,600.38 3,492.52
B. No provision has been made in the accounts in
respect of the following disputed demands/claims
since they are subject to appeals/representations
filed by the Corporation
i. Income Tax 0.20 -
ii. Sales Tax/Octroi 3,241.37 1,811.78
iii. Excise/Customs 574.70 788.64
iv. Land Rentals & Licence Fees 91.37 65.41
v. Others 37.12 29.69
3,944.76 2,695.52
C. Contingent Liabilities not provided for in respect
of appeals filed against the Corporation
i. Income Tax 0.00 10.55
ii. Sales Tax/Octroi 84.43 84.53
iv. Employee Benefits/Demands
(to the extent quantifiable) 89.37 72.15
v. Guarantees on behalf of others 160.88 158.53
vi. Claims against the Corporation not
acknowledged as debts 200.65 189.07
vii. Others 20.57 -
631.45 584.42
86

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ccounts
Rs. / Crores
2006-07 2005-06
D. Payment to Auditors:
- Audit fees 0.13 0.11
- Tax audit fees 0.01 0.01
- Other Services 0.09 0.05
- Reimbursement of expenses 0.03 0.03
0.26 0.20
E. Managerial Remuneration :
- Salary and Allowances 0.61 0.52
- Contribution to Provident Fund and other funds 0.04 0.05
- Pension and Gratuity 0.02 0.02
- Other benefits 0.14 0.14
F. C.I.F.value of imports during the year (excludes

canalised imports):
- Raw materials 27,746.34 19,923.73
- Stores, Spares and Chemicals 42.68 53.93
- Capital Goods, Components and Spares 205.80 85.16
G. (i) Expenditure in foreign currency on account of:

Engineering, Technical and other services,
demurrage charges, royalties and other matters 107.74 105.79
(ii) Foreign Currency payments for crude 27,260.55 19,058.79
H. Earnings in foreign exchange: (On accrual basis)

Export of goods calculated on FOB basis 5,198.84 3,271.39
Includes Rs. 449.57 crores (2005-06 : Rs. 453.11 crores)
received in Indian currency out of repatriable funds
of foreign airlines customer
I. Value of Raw Materials, Spare Parts and

Components consumed
(i) Raw Materials
- Imported (in %) 82.33 81.75
- Imported (in Value) 29,486.89 20,913.10
- Indigenous (in %) 17.67 18.25
- Indigenous (in Value) 6,329.91 4,669.08
87

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Rs. / Crores
2006-07 2005-06
(ii) Spare Parts & Components:

- Imported (in %) 33.11 22.02
- Imported (in Value) 30.27 26.90
- Indigenous (in %) 66.89 77.98
- Indigenous (in Value) 61.15 95.27
J. Licensed capacity at year end in Metric Tonnes p.a.

(a) Petroleum fuel and lube products 13,000,000 13,000,000
(b) Lubricating Oils 122,173 122,173
(c) Textile Auxiliaries 3,391 3,391
(d) Hydraulic Brake Fluid 556 556
(e) Insecticides 782 782
(f) Greases 5,913 5,913
K. Installed capacity at year end in Metric Tonnes

per annum as certified by the Management on
which the Auditors have relied upon:
(a) Petroleum fuel and lube products 13,000,000 13,000,000
(b) Lubricating Oils,Greases and Textile Auxiliaries * 319,779 319,779
(c) Hydraulic Brake Fluid and Insecticides 4,062 4,062
* Product manufacturing facilities are
interchangeable
L. Production in Metric Tonnes:

(a) Petroleum fuel and lube products
i. Bulk Petroluem Products 15,358,188 12,734,631
ii. Lubricating Oil Base Stocks(including
Transformer Oil Base Stocks) 338,074 279,757
iii. Carbon Black Feed Stock 35,324 27,818
iv. Rubber Processing oil 32,274 22,555
(b) Lubricating Oils 155,164 130,519
(c) Textile Auxiliaries 575 554
(d) Hydraulic Brake Fluid 309 -
(e) Insecticides 331 360
(f) Greases 2,490 2,100
88

ccounting PPolicies
ccounts
M. Information for each class of goods purchased, sold and stocks during the year :
Rs./Crores
Opening Stock Purchases Sales Closing Stock
2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06
Bulk MT 1892101 1556197 13448825 13555011 28808571 25903093 1889164 1892101
Petroleum Value 5,160.43 3,876.43 46,840.56 42,136.65 89,259.71 72,373.63 5,320.28 5,160.43
Products
Lubricating MT 18634 31033 - - 55763 58486 52813 18634

Oil Base Stocks Value 58.99 61.95 - - 259.44 216.61 148.13 58.99
(Including
Transformer oil
Base stock)
Carbon Black MT 1157 193 - 26852 34278 53301 1203 1157

Feed Stock Value 1.98 0.24 - 41.47 64.34 97.48 1.86 1.98
Axle Oil MT 28 40 - - 16 12 12 28
Value 0.13 0.13 - - 0.06 0.03 0.06 0.13
Lubricating MT 24223 31308 - - 279648 274479 28143 24223

Oils Value 147.87 155.88 - - 1,830.11 1,334.01 147.30 147.87
Textile MT 41 33 - - 593 546 23 41

Auxillaries Value 0.24 0.14 - - 4.02 3.00 0.16 0.24
Insecticides MT 397 584 - - 304 547 424 397

Value 3.43 2.99 - - 2.31 3.89 3.48 3.43
Greases MT 1894 1985 1480 - 3833 2191 2031 1894

Value 11.67 9.30 9.66 - 28.04 15.46 15.38 11.67
Automotive
Accessories Value - 0.11 - - - - - -
Total 5,384.74 4,107.17 46,850.22 42,178.12 91,448.03 74,044.11 5,636.65 5,384.74
No adjustment for transit/operational/temparature variation/consumption for own operation have been made in
regard to quantitative information
89

ccounting PPolicies
ccounts
Rs. / Crores
2006-07 2005-06
N. Raw Materials consumed:
(a) Crude Oil Processed:
- Tonnes 16,659,701 13,795,237
- Value 35,365.11 25,210.51
(b) Other Petroleum Products
- Tonnes 75,385 51,879
- Value 324.26 150.06
(c) Additives, Inhibitors and Chemicals:
- Value 72.29 73.03
(d) Non-Petroleum Products:
- Value 55.14 16.69
O. Expenditure incurred on Research and Development
- Capital 0.00 0.78
- Revenue 2.92 0.71
P. Interest on Project specific borrowings capitalised 142.40 41.31
Q. Exchange Differences
i) Adjusted in the carrying amount of
Fixed Assets during the accounting period 4.25 0.13
ii) In respect of Forward Exchange contracts
to be recognised in Profit or Loss for one or 207.75 94.66
more subsequent accounting periods
90

ccounting PPolicies
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R. Information regarding Primary Segment Reporting as per AS-17 for the year ended March 31, 2007 is
as under:
Rs. / Crores
2006-07 2005-06
Downstream Exploration Total Downstream Exploration Total
Petroleum & Production Petroleum & Production
Revenue
External Revenue 89,408.07 - 89,408.07 71,098.79 - 71,098.79
Inter-segment Revenue - - - - - -
Total Revenue 89,408.07 - 89,408.07 71,098.79 - 71,098.79
Result
Segment Results 2,211.88 (20.11) 2,191.77 317.78 (12.42) 305.36
Less: Unallocated Expenses - - - - - -
Net of unallocated Income - - - - - -
Operating Profit 2,211.88 (20.11) 2,191.77 317.78 (12.42) 305.36
Less:
Borrowing Cost 422.98 175.88
Provision for diminution
in investments 99.30 1.08
Loss / (Profit) on Sale of
Investments 20.03 -
Add: Interest/Dividend
(Incl. Share of profit from PII) 317.70 151.92
Profit/(Loss) on Sale
of Investments - 4.78
Less: Taxes (including
Deferred tax / FBT) 395.99 (120.53)
Other Information
Segment Assets 23,931.09 4.58 23,935.67 20,154.45 - 20,154.45
Corporate Assets 7,720.90 4,584.45
Total Assets 31,656.57 24,738.90
Segment Liabilities 9,012.11 40.56 9,052.67 7,509.65 15.87 7,525.52
Corporate Liabilities 13,005.25 8,477.64
Total Liabilities 22,057.92 16,003.16
Capital Expenditure 4,091.72 4.58 4,096.30 2,694.43 - 2,694.43
Depreciation 704.22 - 704.22 690.31 - 690.31
Notes:
1. The Company is engaged in the following business segments:
a) Downstream i.e. Refining and Marketing of Petroleum Products.
b) Exploration and Production of Hydrocarbons Segments have been identified taking into account the
nature of activities and the nature of risks and returns.
2. Segment Revenue comprises the following:
a) Turnover (Net of Excise Duties).
b) Subsidy from Government of India.
c) Other income (excluding interest income, dividend income and investment income).
3. There are no geographical segments.
13. Previous year’s figures have been regrouped / reclassified wherever necessary.
91
Cash Flow Statement for the year ended 31st March, 2007
March,
Rs./ Crores
2006-07 2005-06
A. Cash Flow From Operating Activities
Net Profit before Tax & Extraordinary items 1,967.16 285.10
Adjustments for :
Depreciation / Amortisation 704.00 690.23
Provision for assets under reconciliation written back - (7.68)
Loss on Sale/write off of Fixed Assets/ CWIP 3.41 7.59
Amortisation of capital grant (0.19) (0.08)
Spares written off 4.87 2.48
Provision for diminution in value of investments 99.30 1.08
Borrowing Cost 422.98 175.88
Exchange rate difference on loans - 7.71
Provision for Doubtful Receivables written back - (1.18)
Interest Income (265.19) (73.72)
Share of Profit from PII (0.95) (1.03)
Dividend Received (21.51) (30.42)
(Profit)/Loss on sale of Oil bonds 20.03 (4.78)
Operating Profit before Working Capital Changes 2,976.70 1,056.20
(Increase) / Decrease in Working Capital :
Trade Receivables (228.31) (348.67)
Other Receivables 95.25 838.52
Inventories (292.98) (2,098.81)
Trade and other Payables 1,319.59 1,026.94
893.55 (582.02)
Cash generated from operations 3,870.25 474.18
Direct Taxes / FBT refund / (paid) - Net (82.74) 130.41
Cash Flow before extraordinary items 3,787.51 604.59
Extraordinary items - -
Net Cash from operating activities (A) 3,787.51 604.59
B. Cash Flow From Investing Activities
Purchase of Fixed Assets (including Capital Work
in Progress / excluding interest capitalised) (3,851.02) (2,482.91)
Sale of Fixed Assets 10.47 1.74
Purchase of Investment (Including share application money
pending allotment/Adv. towards Equity) (5,101.05) (3,143.17)
Sale Proceeds of Oil bonds 1,930.70 854.78
Interest received 184.24 62.69
Dividend Received 21.51 30.42
Share of profit from PII 0.95 1.03
Net Cash from investing activities (B) (6,804.20) (4,675.42)
92
Cash Flow Statement for the year ended 31st March, 2007
March,
Rs./ Crores
2006-07 2005-06
C. Cash Flow From Financing Activities
Proceeds from Calls in Arrear(Net) 0.48 0.40
Long term loans raised 1,249.99 902.00
Fixed deposits / debentures repaid - (0.09)
Short term loans raised / (repaid) 2,586.41 3,408.81
Interest Paid on Loans (497.41) (174.03)
Dividend paid (including dividend distribution tax) (347.90) (386.57)
Capital grant against purchase of assets - 5.02
Net Cash from financing activities (C) 2,991.57 3,755.54
Net Increase / (Decrease) in Cash and
Cash Equivalents (A) + (B) + (C) (25.12) (315.29)
Cash & Cash Equivalents as on 1st April (Opening) :

Cash / Cheques on Hand 3.30 1.80
Balances with Scheduled Banks
- On Current Accounts 36.11 196.74
- Others 3.12 3.03
Balances with other Banks 0.06 0.06
42.59 201.63
Overdrafts from Banks (476.16) (319.91)
(433.57) (118.28)
Cash & Cash Equivalents as on 31st March (Closing):
- Others 3.25 3.12
86.79 42.59
(458.69) (433.57)
Net Increase / (Decrease) in Cash and Cash Equivalents (25.12) (315.29)
Note: Previous year’s figures have been regrouped / reclassified

wherever necessary.
FOR AND ON BEHALF OF THE BOARD

ARUN BALAKRISHNAN
Date : May 29, 2007

Place : New Delhi
93
Balance Sheet Abstract and Company ’s General Business Pr

Company’s ofile
Profile
I. REGISTRATION DETAILS
REGISTRATION NO. : 0 8 8 5 8 STATE CODE: 1 1
BALANCE SHEET DATE: 3 1 0 3 2 0 0 7
II. CAPITAL RAISED DURING THE YEAR (Amount in Rs.Thousands)

PUBLIC ISSUE RIGHTS ISSUE
N I L N I L
BONUS ISSUE PRIVATE PLACEMENT
N I L N I L
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs.Thousands)
TOTAL LIABILITIES TOTAL ASSETS
2 1 5 3 7 0 7 8 7 2 1 5 3 7 0 7 8 7
SOURCES OF FUNDS
PAID -UP CAPITAL RESERVES & SURPLUS
3 3 8 9 5 3 9 9 2 5 9 6 9 3 3
SECURED LOANS UNSECURED LOANS
1 0 0 5 4 8 5 8 9 5 1 2 0 4 6 0
DEFFERED TAX LIABILITY
1 4 2 0 8 9 9 7
NET FIXED ASSETS INVESTMENTS
1 3 0 6 4 4 0 5 5 7 1 2 7 4 6 7 0
NET CURRENT ASSETS MISC.EXPENDITURE
1 3 4 5 2 0 6 2 N I L
ACCUMULATED LOSSES
N I L
IV. PERFORMANCE OF THE COMPANY (Amount in Rs.Thousands)
TURNOVER TOTAL EXPENDITURE
9 1 4 4 8 0 2 9 5 8 7 7 6 4 6 5 4 7
PROFIT /LOSS BEFORE TAX PROFIT /LOSS AFTER TAX
+ 1 9 6 7 1 6 2 1 + 1 5 7 1 1 6 7 3
EARNINGS PER SHARE IN RS. DIVIDEND RATE %
4 6 . 3 5 1 8 0
V. Generic Names of Three Principal
Products of the Company
(as per monetary terms )
Item Code No. (ITC Code) 2 7 1 0
Product Description B U L K P E T R O L E U M
P R O D U C T S
Item Code No. (ITC Code) 2 7 1 0 0 0 4 1 / 6 1
Product Description L U B R I C A N T S
Item Code No. (ITC Code) 2 9 0 1 2 2 0 0
Product Description P R O P Y L E N E
ARUN BALAKRISHNAN C. RAMULU N.R.NARAYANAN
Chairman & Managing Director Director - Finance Company Secretary
Place : New Delhi
Date : May 29, 2007
94
Statement pursuant to Section 212 of the Companies Act, 1956

relating to Subsidiar
Subsidiaryy Companies.
1. Name of the Subsidiary company Guru Gobind Singh Refineries Ltd.
2. Financial period of the subsidiary company ended 31st March 2007
3. Total issued Share Capital of the subsidiary company 33,89,40,000 Equity Shares of Rs.10 each
4. Number of shares held in the subsidiary company 33,54,60,000 Equity Shares of Rs. 10 each
5. Percentage of shares held in the subscribed capital

of the subsidiary 100%
6. The net aggregate amount, so far as it concerns

the members of the company and is not dealt within
the accounts, of the Subsidiary’s
i) Profit / (Loss) for the year ended 31st March 2007 NIL
ii) Profit / (Loss) of the previous financial years of

the subsidiary since it became the Company’s
subsidiary NIL
7. The net aggregate amount, so far as it concerns the

members of the Company and is dealt within the
Company’s accounts, of the subsidiary’s
i) Profit / (Loss) for the year ended 31st March 2007 NIL
ii) Profit / (Loss) of the previous financial years of the

subsidiary since it became the Company’s subsidiary NIL
For and on behalf of the Board
ARUN BALAKRISHNAN C. RAMULU N.R.NARAYANAN

Chairman & Managing Director Director - Finance Company Secretary
Place : New Delhi

Date : May 29, 2007
95
C & AG’s Comments

AG’s
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619 (4) OF
THE COMPANIES ACT, 1956 ON THE ACCOUNTS OF HINDUSTAN PETROLEUM CORPORTION LIMITED
FOR THE YEAR ENDED 31 MARCH 2007
The preparation of financial statements of Hindustan Petroleum Corporation Limited for the year ended
31 March 2007 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 and 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 2007.
I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under
section 619 (3) (b) of the Companies Act, 1956 of the financial statements of Hindustan Petroleum Corporation
Limited for the year ended 31 March 2007. 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
Revathy Iyer
Principal Director of Commercial Audit
& ex-officio Member, Audit Board-II, Mumbai.
Place: Mumbai
Date: 4 July, 2007
96
Joint Ventures
Ventures
Sl. Name of the Date of Major Shareholdings Nature of Operations

No. Joint Venture Incorporation
1. Mangalore Refinery & 07.03.1988 ONGC - 71.62% Refining of crude oil and
Petrochemicals Ltd. HPCL - 16.95% manufacturing of petroleum
products.
2. Hindustan Colas Ltd. 17.07.1995 HPCL - 50.00% Manufacture and Marketing
COLASIE - 50.00% of Bitumen Emulsions &
Modified Bitumen.
3. Petronet India Ltd. 26.05.1997 HPCL - 16.00% To act as nodal agency for
Financial / developing identified and
Strategic prioritized petroleum
Investors - 50.00% products pipelines in the
Other PSUs - 34.00% country.
4. Petronet MHB Ltd.* 31.07.1998 HPCL - 28.77% Operation and maintenance
Petronet of petroleum products
India Ltd. - 7.89% pipeline between
ONGC - 28.77% Mangalore-Hassan-
Financial / Bangalore.
Strategic
Investors - 34.57%
* Company has gone through the process of financial restructuring
5. Prize Petroleum Co. Ltd. 28.10.1988 HPCL - 50.00% Exploration and production
ICICI & activities in the oil and gas
Associates - 45.00% sector.
HDFC - 5.00%
6. South Asia LPG Co. 16.11.1999 HPCL - 50.00% Construction of LPG
Pvt. Ltd. TOTAL - 50.00% underground cavern storage
of 60,000 MT capacity and
associated receiving and
despatch facilities at
Visakhapatnam.
7. Bhagyanagar Gas Ltd. 22.08.2003 HPCL - 25.00% Distribution and marketing
GAIL - 25.00% of environmental friendly
AP Govt. - 50.00% fuels (green fuels) viz.
CNG and Auto LPG in the
State of Andhra Pradesh.
8. Aavantika Gas Ltd. 07.06.2006 HPCL - 25.00% Distribution and marketing
GAIL - 25.00% of environmental friendly
Financial - 50.00% fuels (green fuels) viz.
Institutions CNG and Auto LPG in the
State of Madhya Pradesh.
97
Auditors’ Report
AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF HINDUSTAN PETROLEUM CORPORATION

LIMITED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF HINDUSTAN PETROLEUM
CORPORATION LIMITED, ITS SUBSIDIARY AND ITS INTERESTS IN JOINT VENTURE COMPANIES
1. We have audited the attached Consolidated Balance Sheet of Hindustan Petroleum Corporation
Limited, its Subsidiary and its interests in Joint Venture Companies as at March 31, 2007, the Consolidated
Profit and Loss Account and Consolidated Cash Flow Statement for the year ended on that date annexed
thereto, which we have signed under reference to this report. These financial statements are the
responsibility of Hindustan Petroleum Corporation Limited’s Management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with Generally Accepted Auditing Standards in India. These
Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial
statements are prepared, in all material respects, in accordance with an identified financial reporting
framework and are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinion.
3. The audited financial statements of the Subsidiary reflecting total assets of Rs. 338.94 crores as at
March 31, 2007 and Nil revenue for the year ended on that date and of six of the Joint Venture Companies
reflecting total assets of Rs. 1,258.30 crores as at March 31, 2007 and revenue of Rs. 4,954.69 crores for
the year ended on that date, have been audited by other auditors, on which we have relied. We have also
relied on unaudited provisional financial statements of two other Joint Venture Companies, viz. Avantika
Gas Limited and Petronet India Limited, reflecting total assets of Rs. 12.18 crores as at March 31, 2007
and revenues of Rs. 0.17 crores for the year ended on that date, for the purpose of our examination of the
consolidated financial statements.
4. We report that the consolidated financial statements have been prepared by the Company in accordance
with the requirements of Accounting Standard 21 “Consolidated Financial Statements” and Accounting
Standard 27 “Financial Reporting of Interests in Joint Ventures”, issued by the Institute of Chartered
Accountants of India, on the basis of separate audited financial statements of Hindustan Petroleum
Corporation Limited, its subsidiary and six Joint Venture Companies and unaudited provisional financial
statements of two Joint Venture Companies.
5. On the basis of information and explanations given to us and read with note no. 12 of Schedule 20
regarding treatment of Income Tax benefits, and in consideration of separate audit reports on individual
financial statements, of Hindustan Petroleum Corporation Limited, its Subsidiary and Joint Venture
Companies, in our opinion, the consolidated financial statements give a true fair view in conformity with
the accounting principles generally accepted in India:
98
Auditors’ Report
(a) in the case of the Consolidated Balance Sheet, of the consolidated state of affairs of Hindustan
Petroleum Corporation Limited, its Subsidiary and its Joint Venture Companies as at March 31,
2007;
(b) in the case of the Consolidated Profit and Loss Account, of the consolidated results of operations of
Hindustan Petroleum Corporation Limited, its Subsidiary and its Joint Venture Companies for the
year ended on that date; and
(c) in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of Hindustan
Petroleum Corporation Limited, and its Subsidiary and eight Joint Venture Companies for the year
ended on that date.

Partner Partner
Place : New Delhi

Date : May 29, 2007
Signing of Agreement for External Commercial Borrowing

Between HPCL & M/s DePfa Investment Bank
Launch of DRP Module by Shri S Roy Choudhury, Director (Marketing) Signing of ‘Contract of Affreightment’ with SCI
99
Consolidated Balance Sheet as at 31st March, 2007

March,
Rs./Crores
SCHEDULE 2006-07 2005-06
SOURCES OF FUNDS
Shareholders’ Funds:
a) Capital 1 340.51 340.50
b) Reserves and Surplus 2 9,227.34 8,294.29
9,567.85 8,634.79
Share Application Money Pending Allotment 1.24 28.40
Loan Funds:
a) Secured Loans 3 1,189.33 1,753.82
b) Unsecured Loans 4 9,842.41 5,648.44
11,031.74 7,402.26
Deferred Tax Liability 1,504.47 1,394.19
TOTAL 22,105.30 17,459.64
Fixed Assets: 5
a) Gross Block 17,250.73 14,983.41
b) Less: Depreciation 7,394.38 6,640.22
c) Net Block 9,856.35 8,343.19
d) Capital Work-in-Progress 6 4,546.09 2,635.09
14,402.44 10,978.28
Investments 7 6,112.90 3,214.87
Current Assets, Loans and Advances:
a) Inventories 8 8,528.45 8,134.39
b) Sundry Debtors 9 1,790.40 1,594.43
c) Cash and Bank Balances 10 125.76 56.01
d) Other Current Assets 11 92.63 11.55
e) Loans and Advances 12 1,724.53 1,852.41
12,261.77 11,648.79
Less:
Current Liabilities and Provisions: 13
a) Liabilities 9,423.79 7,808.54
b) Provisions 1,254.55 578.47
10,678.34 8,387.01
Net Current Assets 1,583.43 3,261.78
Miscellaneous Expenditure to the extent not
written off or adjusted 6.53 4.71
TOTAL 22,105.30 17,459.64
NOTES FORMING PART OF CONSOLIDATED ACCOUNTS 20
ARUN BALAKRISHNAN FOR N.M.RAIJI & CO. FOR SUDIT K. PAREKH & CO.
Chairman & Managing Director Chartered Accountants Chartered Accountants
C. RAMULU VINAY D. BALSE SRIKANT V. JILLA
Director-Finance Partner Partner
N.R. NARAYANAN
Company Secretary
Place : New Delhi
Date : May 29, 2007
100
Consolidated Pr ofit & Loss A

Profit ccount for the year ended 31st Mar
Account ch, 2007
March,
Rs./Crores
SCHEDULE 2006-07 2005-06
INCOME
Sale of Products 97,019.84 78,881.98
Less: Excise duty Paid 8,520.42 6,575.07
Net Sales 88,499.42 72,306.91
Recovery under Subsidy Schemes 5,470.12 2,876.15
Other Income 14 711.09 358.93
94,680.63 75,541.99
INCREASE / (DECREASE) IN INVENTORY 15 378.40 1,359.64
EXPENDITURE AND CHARGES

Purchase of Products for resale 46,854.33 42,180.80
Raw materials consumed 40,462.38 29,349.43
Packages consumed 111.65 101.28
Excise duty on inventory differential 57.20 171.95
Transhipping Expenses 1,749.53 1,520.15
Payments to and provisions for Employees 16 741.59 651.84
Exploration Expenses 20.74 12.44
Other Operating Expenses 17 1,664.49 1,551.27
Depreciation/Amortisation 778.18 762.07
Borrowing Cost 18 459.81 220.91
Miscellaneous Expenditure written off 0.06 6.01
92,899.96 76,528.15
PROFIT FOR THE YEAR BEFORE PRIOR
PERIOD ADJUSTMENTS AND TAXES 2,159.07 373.48
PRIOR PERIOD DEBITS / (CREDITS) (NET) 19 (6.05) -
PROFIT BEFORE TAXES 2,165.12 373.48
PROVISION FOR CURRENT TAXATION 667.45 85.54
PROVISION FOR DEFERRED TAXATION (NET) 111.79 44.07
PROVISION FOR TAXATION IN EARLIER YEARS
WRITTEN BACK (298.22) (219.88)
PROVISION FOR FRINGE BENEFIT TAX 10.08 11.68
PROFIT AFTER TAXES 1,674.02 452.07
BALANCE BROUGHT FORWARD 6,197.29 5,926.50
PROFIT AVAILABLE FOR APPROPRIATION 7,871.31 6,378.57
APPROPRIATED FOR:
General Reserve 157.36 40.67
Interim Dividend 203.60 -
Proposed Final Dividend 431.67 123.32
Market Development Fund - -
BALANCE CARRIED FORWARD 6,976.77 6,197.29
EARNINGS PER SHARE (in Rs.) 49.39 13.34
(2006-07 : EPS = Net Profit - Rs. 1674.02 crores / Weighted avg. no. of shares - 33.895 crores;
2005-06 : EPS = Net Profit - Rs. 452.07 crores / Weighted avg. no. of shares - 33.894 crores )
NOTES FORMING PART OF CONSOLIDATED ACCOUNTS 20
N.R. NARAYANAN
Company Secretary
Place : New Delhi
Date : May 29, 2007
101
Schedules forming part of the Consolidated Balance Sheet
Rs./Crores
2006-07 2005-06
1. CAPITAL
A. Authorised :
75,000 Cumulative Redeemable
Preference Shares of Rs. 100/- each 0.75 0.75
34,92,50,000 Equity Shares of Rs. 10/- each 349.25 349.25
350.00 350.00
B. Issued :
33,93,30,000 Equity Shares of Rs.10/- each 339.33 339.33
C. Issued, Subscribed & Called up :
Less: Calls unpaid by Others 0.38 0.39
338.95 338.94
Preference Shares 1.56 1.56
340.51 340.50
2. RESERVES AND SURPLUS

Share Premium Account
Less : Calls Unpaid 12.46 12.93
1,032.20 1,035.79
Capital Grant
As per Last Balance Sheet 4.94 -
Received during the year - 5.02
Less: Amortised during the year 0.19 0.08
4.75 4.94
Capital Reserve 0.08 0.08
Market Development Reserve 1.40 1.40
General Reserve
Add : Transfer from Profit & Loss Account 157.36 40.67
1,212.14 1,054.79
Profit & Loss Account Surplus as per Account annexed 6,976.77 6,197.29
9,227.34 8,294.29
3. SECURED LOANS
Collateral Borrowing and Lending Obligation (CBLO) 460.00 1,010.00
Overdrafts from Banks 545.49 476.16
Rupee Term Loan 28.82 26.32
Long Term Loans from Banks 63.07 138.16
Interest accrued and due - 11.34
Foreign Currency Loan 45.39 64.02
Others 46.56 27.82
1,189.33 1,753.82
102
Rs./Crores
2006-07 2005-06
4. UNSECURED LOANS
Fixed Deposits 0.02 0.02
From Oil Industry Development Board 1,250.00 650.00
Clean Loans 5,830.00 2,300.00
Syndicated Loans from Foreign Banks 1,075.16 459.60
Foreign Currency Loans 44.51 186.38
Advance towards Equity 1.25 2.64
Interest Accrued & Due - 1.05
Short Term Loans From Banks 1,356.87 1,770.93
Sales Tax Deferment Loan 30.33 23.57
Bank Overdraft 0.02 -
Others 254.25 254.25
9,842.41 5,648.44
5. FIXED ASSETS Rs./Crores

Gross Block Additions/ Deductions/ Gross Block Depreciation Total Net Block Net Block
at cost Reclassifi- Reclassifi- at cost and Depreciation as at as at
as at cations cations as at Amortisation and 31-03-2007 31-03-2006
01-04-2006 31-03-2007 for the year Amortisation
2006-2007 upto
31-03-2007
A. OTHER THAN INTANGIBLE ASSETS

1. Land - Freehold 300.13 266.87 - 567.00 - - 567.00 300.13
2. Roads and Culverts 664.99 128.64 0.86 792.77 11.82 70.16 722.61 606.56
3. Buildings 1,296.40 264.44 1.63 1,559.21 28.84 194.10 1,365.11 1,130.76
4. Leasehold Land 132.51 7.34 14.96 124.89 4.57 28.27 96.62 107.65
5. Railway Siding and
Rolling Stock 274.78 6.64 - 281.42 12.82 127.21 154.21 160.39
6. Plant and Machinery 11,856.22 1,568.81 23.63 13,401.40 684.77 6,709.34 6,692.06 5,814.07
7. Furniture, Fixtures
and Office/Laboratory
Equipment 317.06 36.74 12.42 341.38 25.31 174.62 166.76 157.48
8. Transport Equipment 92.82 10.92 1.54 102.20 7.34 53.64 48.56 45.21
9. Unallocated Capital Expenditure
on Land Development 0.20 - - 0.20 - 0.20 - -
10. Share of FA in Joint Venture
- ONGC Onshore Marginal Fields 0.01 2.10 - 2.11 0.05 0.05 2.06 0.01
- Project Sanaganpur 0.27 1.61 - 1.88 - - 1.88 0.27
Total (A) 14,935.39 2,294.11 55.04 17,174.46 775.52 7,357.59 9,816.87 8,322.53
1. Right of Way 18.12 7.47 - 25.59 - 0.01 25.58 18.12
2. Technical/Process Licences 14.37 0.84 - 15.21 1.50 6.71 8.50 9.16
3. Software 32.82 1.87 0.29 34.40 3.93 29.00 5.40 7.47
Total (B) 65.31 10.18 0.29 75.20 5.43 35.72 39.48 34.75
Assets not in use held for disposal - 1.07 - 1.07 0.66 0.66 0.41 -
Less : Provision - - - - - 0.41 (0.41) -
Total (C) - 1.07 - 1.07 0.66 1.07 - -
GRAND TOTAL (A+B+C) 15,000.70 2,305.36 55.33 17,250.73 781.61 7,394.38 9,856.35 8,357.28
Previous Year 13,884.19 1,155.69 56.45 14,983.43 764.48 6,640.22 8,343.21
103
Rs./Crores
2006-07 2005-06
6. CAPITAL WORK-IN-PROGRESS (at cost)
Unallocated Capital Expenditure and Materials at Site 3,878.91 1,786.06
Advances for Capital Expenditure 84.93 93.52
Capital Stores 33.45 426.72
Capital Stores lying with Contractors 109.87 117.60
Capital goods in transit 124.62 40.38
4,231.78 2,464.28
Construction period expenses pending apportionment (Net of recovery) 0.15 0.22
Establishment charges 148.85 121.86
Interest 135.05 34.51
Depreciation 9.17 6.72
314.31 170.81
4,546.09 2,635.09
7. INVESTMENTS
I. LONG TERM INVESTMENTS (at cost) :
Quoted
1. Mangalore Petrochemicals Ltd. 0.00 -
2. 6.96% Oil Companies Government Of India Special Bonds 2009 - 81.00
3. 7.00% Oil Companies Government Of India Special Bonds 2012 781.64 781.64
Unquoted
1. Petronet MHB Limited 6.93 0.05
2. Petronet VK Limited 4.16 4.16
Less : Provision for Investment (2.72) -
3. Petronet CCK Limited 4.16 4.16
Less : Provision for Investment (1.99) -
4. Petronet CI Limited 0.60 0.60
Less : Provision for Investment (0.60) (0.60)
TOTAL (A) 792.18 871.01
B. OTHER INVESTMENTS
Quoted
1. Government Securities of the face value of Rs. 0.02 crore
(2005-06 : 0.02 crore)
Deposited with Others 0.02 0.02
On hand (Rs. 25,000/- ) 0.00 0.00
2. Scooters India Ltd.
104
Rs./Crores
2006-07 2005-06
Unquoted
1. Government Securities of the face value of Rs. 0.24 lakh
(2005-06 : 0.24 lakh)
Deposited with Others - Rs. 0.10 lakh (2005-06 : 0.10 lakh) 0.00 0.00
On hand - Rs. 0.14 lakh (2005-06 : 0.14 lakh) 0.00 0.00
2. East India Clinic Ltd.
1/2% Debentures of face value of Rs. 0.15 lakh (2005-06 : 0.15 lakh) 0.00 0.00
5% Debentures of face value of Rs. 0.07 lakh (2005-06 : 0.07 lakh) 0.00 0.00
3. Shushrusha Citizen Co-operative Hospital Limited
100 Equity Shares of Rs. 100 each fully paid up Rs. 0.10 lakh
(2005-06 : 0.10 lakh) 0.00 0.00
4. Petroleum India International (AOP)
Contribution towards Seed Capital 0.05 0.05
TOTAL (B) 0.08 0.08
TOTAL LONG TERM INVESTMENTS 792.26 871.09
Less: Provision for loss on Investments** - Rs. 0.14 lakh 0.00 0.00
TOTAL I 792.26 871.09
II. CURRENT INVESTMENTS

(at Cost or Fair Value whichever is lower)
Quoted
i. 7.07% Oil Marketing Companies’ GOI Special Bonds, 2009 - 400.00
ii. 7.33% Oil Marketing Companies’ GOI Special Bonds, 2009 - 398.92
iii. 7.44% Oil Marketing Companies’ GOI Special Bonds, 2012 - 400.00
iv. 7.47% Oil Marketing Companies’ GOI Special Bonds, 2012 * 393.77 400.00
v. 7.59% Oil Marketing Companies’ GOI Special Bonds, 2015 - 344.74
vi. 7.61% Oil Marketing Companies’ GOI Special Bonds, 2015 380.92 400.12
vii. 7.75% Oil Marketing Companies’ GOI Special Bonds, 2021 991.51 -
viii. 8.01% Oil Marketing Companies’ GOI Special Bonds, 2023 838.08 -
ix. 8.13% Oil Marketing Companies’ GOI Special Bonds, 2021 691.47 -
x. 8.20% Oil Marketing Companies’ GOI Special Bonds, 2024 1,006.95 -
xi. 8.40% Oil Marketing Companies’ GOI Special Bonds, 2026 1,017.94 -
TOTAL (A) 5,320.64 2,343.78
TOTAL CURRENT INVESTMENTS - II 5,320.64 2,343.78
TOTAL [I + II] 6,112.90 3,214.87
* Pledged with Clearing Corporation of India Limited against CBLO Loan

** Includes Rs. 0.14 lakh (2005-06 : Rs. 0.14 lakh) not in the possession of the Company
105
Rs./Crores
2006-07 2005-06
8. INVENTORIES
Raw Materials 2,070.78 2,062.99
Packages 8.17 6.44
8,355.04 7,967.12
Stores and Spares 173.41 167.27
8,528.45 8,134.39
9. SUNDRY DEBTORS : (Unsecured)

Over six months :
Considered good 79.49 317.22
Considered doubtful 66.61 39.63
Others :
Considered good 1,726.67 1,277.21
Considered doubtful 1.24 0.17
1,874.01 1,634.23
Less: Provision for Doubtful Debts 83.61 39.80
1,790.40 1,594.43
10. CASH AND BANK BALANCES

Cash on hand 1.40 2.90
Cash & Cheques Awaiting Deposit 7.02 1.12
With Scheduled Banks:
On Current Accounts 86.40 42.13
On Non-operative Current Accounts 0.01 0.39
On Fixed Deposit Accounts 30.86 9.41
With Others:
In Current Account with Municipal Co-operative
Bank Ltd. (maximum balance during the year
Rs. 0.11 crore ; 2005-06 : Rs. 0.09 crore) 0.07 0.06
125.76 56.01
11. OTHER CURRENT ASSETS

Interest accrued on Bank Deposits and Investments 92.63 11.55
106
Rs./Crores
2006-07 2005-06
12. LOANS AND ADVANCES
Secured, considered good :
Advances recoverable in cash or in kind or for value to be received 353.32 359.35
Interest Accrued thereon 125.16 114.44
Unsecured, considered good :
Advances recoverable in cash or in kind or for value to be received 155.86 88.36
Balances with Excise, Customs, Port Trust etc. 270.99 266.20
Prepaid Expenses 17.79 7.30
Amounts recoverable under Subsidy Schemes 21.74 41.11
Advance towards Equity 10.25 9.67
Share Application Money Pending Allotment 3.73 46.21
Other Accounts Receivable 627.99 774.59
Unsecured, considered doubtful :
Accounts Receivable & Deposits 3.10 3.16
1,727.63 1,855.57
Less : Provision for Doubtful Receivables (3.10) (3.16)
1,724.53 1,852.41
13. CURRENT LIABILITIES AND PROVISIONS

A. Current Liabilities
Sundry Creditors
i) Total outstanding dues of small scale industrial undertakings 3.87 3.45
ii) Total outstanding dues of creditors other than small
scale industrial undertakings 4,879.37 3,751.89
Deposits from Dealers/Consumers for LPG Cylinders 2,826.45 2,673.90
Accrued Charges/Credits 106.50 122.83
Interest accrued but not due on loans 48.07 26.26
Interest accrued and due on Debentures 0.52 0.86
Preference share capital redeemed
remaining unclaimed/uncashed 0.01 0.01
Unclaimed Dividend 12.12 11.19
Unpaid Matured Debentures / fixed deposits 1.98 2.33
Other Liabilities 1,408.43 1,107.82
9,423.79 7,808.54
B. Provisions
Provision for Tax (Net) 574.14 294.03
Proposed Dividend 431.67 123.32
Provision for Gratuity / Pension 41.44 39.87
Provision for other retirement benefits 133.27 103.64
Provision for Fringe Benefit Tax 0.67 0.32
1,254.55 578.47
10,678.34 8,387.01
107
Schedules forming part of the Consolidated Profit & Loss A

Profit ccount
Account
Rs./Crores
2006-07 2005-06
14. OTHER INCOME
Interest (Gross):
On Investments 265.41 73.57
On Deposits 0.37 0.40
On Staff Loans 16.56 16.74
On Customers’ Accounts 10.18 17.55
On Others 6.66 15.14
299.18 123.40
Dividends 21.51 30.42

Share of Profit from Petroleum India International (AOP) 0.95 1.03
Rent Recoveries 41.27 37.21
Profit on sale of Investments - 4.78
Exchange rate variation (Net) 208.14 25.31
Miscellaneous Income 140.04 136.78
411.91 235.53
711.09 358.93
15. INCREASE / (DECREASE) IN INVENTORY

Closing Stock:
6,276.19 5,897.79
Less: Opening Stock:
5,897.79 4,538.15
378.40 1,359.64
16. PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

Salaries, Wages, Bonus etc. 567.61 470.82
Contribution to Provident Fund 41.81 37.36
Pension, Gratuity etc. 7.48 24.31
Employee Welfare Expenses 126.50 120.33
Less: Recoveries 1.81 0.98
124.69 119.35
741.59 651.84
108
Schedules forming part of the Consolidated Profit & Loss A

Profit ccount
Account
Rs./Crores
2006-07 2005-06
17. OTHER OPERATING EXPENSES
Consumption of Stores, Spares and Chemicals 107.15 95.01
Power and Fuel 1,864.96 1,468.94
Less : Fuel of own production consumed 1,848.09 1,447.67
16.87 21.27
Repairs and Maintenance - Buildings 19.34 19.22
Repairs and Maintenance - Plant & Machinery 248.78 282.90
Repairs and Maintenance - other assets 9.58 8.09
Insurance 21.71 22.64
Rates and Taxes 29.41 23.92
Irrecoverable Taxes and Other Levies 276.51 335.40
Equipment Hire Charges 3.35 2.08
Rent 124.99 105.78
Travelling and Conveyance 74.86 68.74
Printing and Stationery 10.03 8.72
Electricity and Water 146.95 111.21
Charities and Donations 14.56 8.91
Loss on Sale/ write off of Fixed Assets/ CWIP 3.92 7.71
Stores & spares written off 5.27 2.50
Provision for Dimunition in value of Current Investments 83.30 1.21
Loss on Sale of Current Investment 18.49 -
Loss on Sale of Long Term Investment 1.54 -
Provision for Investments 4.71 -
Provision for Doubtful Debts and write-off 43.81 6.52
Provision for Doubtful Receivables - (1.17)
Provision for assets under reconciliation no longer required - (7.68)
Security Expenses 33.04 31.60
Advertisement & Publicity 110.48 105.40
Consultancy and Technical Charges 19.97 33.03
Sundry Expenses and Charges (Not otherwise classified) 235.87 258.26
1,664.49 1,551.27
18. BORROWING COST
Interest on :
Long Term Loans 25.11 33.88
Short Term Loans 385.33 149.78
Overdraft from Banks 18.32 9.07
Others 14.61 11.04
459.81 220.91
19. PRIOR PERIOD DEBITS/(CREDITS)
Excise Duty Reversed (6.05) -
(6.05) -
109
Notes forming part of the Consolidated Financial Statements
20. Notes forming part of the Consolidated Financial Statements for the year ended 31st March, 2007
1. Basis of preparation
The Company has prepared the consolidated financial statements by consolidating its accounts with its
wholly owned subsidiary in accordance with Accounting Standard 21 (Consolidated Financial Statements)
and its Joint Ventures in accordance with Accounting Standard 27 (Reporting for Financial Interest in Joint
Ventures)
2. Principles of Consolidation
The Financial Statements of all these companies are prepared according to uniform accounting policies,
in accordance with Generally Accepted Accounting Principles in India.
3. Companies included in Consolidation
Subsidiary % Holding
Guru Gobind Singh Refineries Limited 100.00
Joint Ventures % Holding
Hindustan Colas Limited 50.00
South Asia LPG Company Pvt. Ltd. 50.00
Prize Petroleum Company Limited 50.00
Mangalore Refinery and Petrochemicals Limited 16.95
Bhagyanagar Gas Limited 25.00
Petronet India Limited 16.00
Petronet MHB Limited 28.77
Avantika Gas Limited 25.00
4. In respect of sale of sensitive petroleum products (MS, HSD, LPG (Domestic) and SKO (PDS)), as
advised by the Ministry of Petroleum & Natural Gas, a part of the under-recovery suffered by the Parent
Company during the year was compensated by ONGC and GAIL, by offering discounts on prices of
crude, SKO and LPG purchased from them. Accordingly, the Parent Company has accounted the discount
received as follows:
(a) Rs.3238.73 crores (2005-06 : Rs.2531.11 crores) discount received, on crude oil purchased from
ONGC, has been adjusted against ‘Raw Material Cost’.
(b) Rs.922.41 crores (2005-06 : Rs.690.48 crores) discount received on purchase of SKO (PDS) and
LPG (Domestic) from ONGC and GAIL has been adjusted against ‘Purchase of Product for Resale’.
5. Oil Bonds issued by the Government of India towards under-recoveries suffered by the Parent Company
on sale of sensitive petroleum products during 2006-07 for Rs.4929.89 crores (2005-06 : Rs. 2344.86
crores), have been accounted under ‘Recovery under Subsidy Schemes’.
6. During the year, the process of eliminating inter divisional margin on inventories by the parent company
has been extended to include finished lubricants leading to reduction in the closing valuation of inventories
as of March 31, 2007 and profit for the year by Rs. 50.38 crores.
7. During the year, the Policy with respect to accounting of Machinery Spares was modified in line with the
opinion obtained from Expert Advisory Committee of the Institute of Chartered Accountants of India by the
Parent Company, resulting in an increase in profit before tax by Rs. 0.69 crore (Net).
8. In respect of doubtful debts in the Parent Company, in addition to specific provisions made, an ad-hoc
provision @ one per cent of outstanding domestic debts (other than those relating to oil marketing companies
110
and subsidiary/joint venture companies) as of March 31, 2007 has also been made resulting in an additional
provision of Rs.15.76 crores.
9. Other Significant Accounting Policies and additional information
The other Significant Accounting Policies have been set out in the notes to accounts of the parent
Company Hindustan Petroleum Corporation Limited as the same have been applied to the accounts of
the parent, subsidiary and joint ventures. Additional information not impacted by consolidation is also set
out in the notes to the accounts of the parent company.
10. Figures pertaining to the Subsidiary Company and Joint Ventures have been reclassified wherever necessary
to conform to the Company’s Financial Statements.
11. Related Party disclosure:
Rs. / Crores
2006-07 2005-06
Sales 6.16 -
Purchases 0.12 0.16
Dividend 0.35 0.35
Advance towards equity - 1.25
Share application money pending allotment - 6.00
Services 0.51 0.27
Others 0.05 -
Interest paid - 0.01
Services received 0.82 1.52
The names of parties are as follows:

Joint Venture Companies : M/s. Colasie, M/s. Colas SA, Gas Authority of India Ltd.
Key Management Personnel : Shri M. B. Lal, Chairman & Managing Director
Shri Arun Balakrishnan, Director - Human Resources*
Shri C. Ramulu, Director - Finance
Shri S. Roy Choudhury, Director - Marketing
Shri M. A. Tankiwala, Director - Refineries
Shri R. Rajamani, Managing Director (from April 20, 2006)
Shri L. K. Gupta, Director (from May 12, 2006)
Dr. M. N. Prasad, Manager
* Appointed as Chairman & Managing Director of the Parent Company effective April 01, 2007 in place of
Shri M. B. Lal
Details of remuneration to directors are given in Note 13 (E) of Consolidated Notes to Accounts
12. Considering the uncertainties attached to certain benefits under the Income Tax Act, the Parent Company
(Hindustan Petroleum Corporation Limited) has been accounting for such tax benefits in the year they are
allowed in the assessments. Accordingly, the Parent Company, upon completion of assessment for the
financial year 2003-04 (assessment year 2004-05) has reversed provision for tax amounting to Rs. 302.98
crores (2005-06 : Rs. 217.36 crores).
111
Rs./ Crores
2006-07 2005-06
13 A. Estimated amount of contracts remaining to be executed
on Capital Account not provided for 3,344.65 3,669.64
B. No provision has been made in the accounts in respect of
the following disputed demands/claims since they are subject
to appeals/representations and a substantial portion
thereof is recoverable from Pool Account
i. Income Tax 0.20 -
ii. Sales Tax/Octroi 3,241.37 1,811.78
iv. Land Rentals & Licence Fees 91.37 65.41
v. Others 37.12 29.69
C. Contingent Liabilities not provided for in respect of
i. Income Tax 3.73 25.27
ii. Sales Tax/Octroi 149.34 131.53
iv. Employee Benefits/Demands 89.37 72.15
(to the extent quantifiable)
v. Guarantees on behalf of others 168.84 171.17
vi. Claims against the Corporation not acknowledged as debts 259.16 231.58
vii. Enhancement of Compensation against land acquired 23.78 23.00
viii. Service Tax 0.08 0.08
ix. Others 34.00 5.78
D. Payment to Auditors:
- Audit fees 0.19 0.17
- Tax audit fees 0.02 0.02
- Other services 0.10 0.09
- Reimbursement of expenses 0.12 0.06
E. Managerial Remuneration :
- Salary and Allowances 0.92 0.71
- Contribution to Provident Fund and other funds 0.06 0.06
- Pension and Gratuity 0.02 0.02
- Other benefits 0.19 0.18
F. Deferred Tax Assets/(Liabilities) arising due to timing differences
comprises of:
Deferred Tax Assets
Provision for Gratuity/Pension 14.10 13.43
Provision for Medical Benefits 4.40 4.16
Provision for Leave Encashment 32.84 22.99
Provision for doubtful debts 0.04 0.04
Unabsorbed Losses and Allowances 81.41 156.88
Others 81.70 39.90
Total 214.49 237.41
Deferred Tax Liabilities
Depreciation 1,676.44 1,589.24
Others 42.53 42.36
Total 1,718.97 1,631.60
Deferred Tax Asset/(Liability) (1,504.47) (1,394.19)
112
G. Information regarding Primary Segment Reporting as per AS-17 for the year ended March 31, 2007 is as
under: Rs./Crores
2006-07 2005-06
Downstream Exploration Total Downstream Exploration Total
Petroleum & Production Petroleum & Production
Revenue
External Revenue 94,358.99 - 94,358.99 75,382.36 - 75,382.36
Inter-segment Revenue - - - - - -
Total Revenue 94,358.99 - 94,358.99 75,382.36 - 75,382.36
Result
Segment Results 2,426.02 (20.74) 2,405.28 448.41 (12.44) 435.97
Less: Unallocated Expenses - - - - - -
Net of unallocated Income - - - - - -
Operating Profit 2,426.02 (20.74) 2,405.28 448.41 (12.44) 435.97
Less:
Interest & Other Borrowing
Costs 459.81 220.91
Provision for dimunition in
investments 88.01 1.21
Loss on Sale of Investments 20.03 -
Add:
Interest/Dividend (Incl Share
of profit from PII) 321.64 154.85
Provision for dimunition in
Investments written back - -
Prior year Income 6.05 -
Profit on Sale of Investments - 4.78
Less: Taxes (including
Deferred tax / FBT) 491.10 (78.59)
Other Information
Segment Assets 26,074.54 4.58 26,079.12 22,085.85 - 22,085.85
Corporate Assets 6,704.52 3,760.80
Total Assets 32,783.64 25,846.65
Segment Liabilities 9,494.59 41.21 9,535.80 7,895.51 15.89 7,911.40
Corporate Liabilities 13,679.99 9,300.46
Total Liabilities 23,215.79 17,211.86
Capital Expenditure 3,982.09 4.58 3,986.67 2,662.08 - 2,662.08
Depreciation 780.63 - 780.63 768.79 - 768.79
Notes:
1. The Group is engaged in the following business segments:
a) Downstream i.e. Refining and Marketing of Petroleum Products.
b) Exploration and Production of Hydrocarbons.
Segments have been identified taking into account the nature of activities and the nature of risks
and returns.
2. Segment Revenue comprises the following:
a) Turnover (Net of Excise Duties).
b) Subsidy from Government of India.
c) Other income (excluding interest income, dividend income and investment income).
3. There are no geographical segments.
14. Previous year’s figures have been regrouped/reclassified wherever necessary.
113
Consolidated Cash Flow Statement for the year ended 31st March, 2007
March,
Rs./Crores
2006-07 2005-06
Net Profit before Tax & Extraordinary items 2,165.12 373.48
Adjustments for :
Depreciation / Amortisation 778.18 762.07
Miscellaneous Expenditure written off 0.06 6.01
Provision for assets under reconciliation written back - (7.68)
Loss on Sale/write off of Fixed Assets/ CWIP 3.92 7.71
Amortisation of capital grant (0.19) (0.09)
Spares written off 5.27 2.50
Provision for diminution in investments 88.01 1.21
Interest Expense 459.81 220.91
Provision for Doubtful Receivables written back - (1.17)
Interest Income (265.78) (123.40)
Share of Profit from PII (0.95) (1.03)
Dividend Received (21.51) (30.42)
(Profit)/Loss on sale of Oil bonds 20.03 (4.78)
Operating Profit before Working Capital Changes 3,275.78 1,211.84
(Increase) / Decrease in Working Capital :
Trade Receivables (239.78) (385.76)
Other Receivables 85.98 850.88
Inventories (399.33) (2,096.70)
Trade and other Payables 1,492.48 1,099.74
939.35 (531.84)
Cash generated from operations 4,215.13 680.00
Direct Taxes / FBT refund / (paid) - Net (98.85) 117.87
Cash Flow before extraordinary items 4,116.28 797.87
Net Cash from operating activities ( A ) 4,116.28 797.87

Purchase of Fixed Assets (including Capital Work
in Progress / excluding interest capitalised) (3,986.67) (2,662.08)
Sale of Fixed Assets 24.94 1.85
Purchase of Investment (Including share application money
pending allotment/Adv. towards Equity) (4,898.93) (3,136.38)
Misc Expenditure incurred by GGSRL (1.88) (1.98)
Sale Proceeds of Oil bonds 1,930.70 854.78
Interest received 184.70 112.49
Dividend Received 21.51 30.42
Share of profit from PII 0.95 1.03
Net Cash from investing activities ( B ) (6,724.68) (4,799.87)
114
Consolidated Cash Flow Statement for the year ended 31st March, 2007
March,
Rs./Crores
2006-07 2005-06
Proceeds from Calls in Arrear(Net) 0.48 0.39
Share application money received/(paid) (27.16) 6.00
Advance towards equity received (1.39) 1.24
Long term loans raised 1,143.08 924.31
Fixed deposits / debentures repaid (0.35) (36.01)
Short term loans raised / (repaid) 2,430.83 3,423.40
Interest Paid on Loans (564.86) (213.02)
Dividend paid (including dividend distribution tax) (371.83) (421.26)
Capital grant against purchase of assets - 5.02
Net Cash from financing activities (C) 2,608.80 3,690.07
Cash Equivalents (A) + (B) + (C) 0.40 (311.93)
Cash & Cash Equivalents as on 1st April (Opening) :
- Others 9.80 10.14
56.01 211.91
(420.15) (108.22)
Cash & Cash Equivalents as on 31st March (Closing):
- Others 30.87 9.80
125.76 56.01
(419.75) (420.15)
Net Increase / (Decrease) in Cash and Cash Equivalents 0.40 (311.93)
Note: Previous year’s figures have been regrouped / reclassified wherever necessary.
FOR AND ON BEHALF OF THE BOARD
N.R. NARAYANAN
Company Secretary
Place : New Delhi
Date : May 29, 2007
115
Corporate Governance
HPCL lays special emphasis on conducting its affairs within the framework policies, internal and external
regulations and in a transparent manner. Being a Government Company its activities are subject to review by
several external authorities like the Comptroller & Auditor General of India (CAG), the Central Vigilance
Commission (CVC), Parliamentary Committees etc.
Decision making process:
At the apex level is the HPCL Board of Directors (The Board). The Board has constituted several sub-committees,
such as the Committee of Functional Directors (CFD), the Audit Committee, the Investment Committee, the HR
Committee, the Investor Grievance Committee, etc. The composition of these Committees is given in this
Report. The meetings of these committees are convened on need basis and minutes of these meetings are
placed for information of the Board. Majority of the members of the Committees except the CFD are Independent
Non-Executive or Government nominated Directors with the Whole Time Directors playing a facilitating role.
The Corporation has constituted an Executive Council comprising of Chairman & Managing Director, the Functional
Directors and the SBU Heads of the Corporation. This Council discusses important issues concerning the
organization, analyses the same and recommends the ‘way forward’ in respect of matters discussed. Emphasis
is laid on team approach, mutual support of functions and joint deliberations on issues by the Council which has
enhanced further the decision making process. It has thus facilitated an integrated thinking process and an
aligned approach across the Corporation for achieving the Corporate Vision and each one of the aspirational
aspects contained in the Vision Statement.
Advisory Council
The Advisory Council constituted by the Corporation in the year 2005 is meeting regularly. The Council comprises
of S/Shri V. K. Shunglu, Ex-CAG, Shri N.R. Narayana Murthy, Chairman and Chief Mentor, Infosys Technologies
Limited, Shri Manab Bose, Managing Director, Connectivity Consulting (P) Ltd., Shri Naresh Narad, Member,
Public Enterprises Selection Board, Ms. Shailaja Chandra Chairperson, Public Grievance Commission and Ms.
Rama Bijapurkar, Marketing Consultant, Strategic Marketing Consulting.
Details of important on-going activities, future plans etc., are placed before the Council. The suggestions /
observations made by the Council Members are borne in mind while progressing the activities further.
The advice from this Eminent Group immensely benefits the Corporation.
Exercise of Authority:
The Corporation has well documented Limits of Authority Manual, Purchase Manual, Chart of Accounts, etc.,
facilitating the decentralized decision making process in the organization spread out in the country at various
levels of the organization.
Limits of Authority Manual (LAM):
The LAM lays down the authorities that can be exercised at various levels, i.e., the Board, Committee of
Functional Directors, the Executive Committee, the Contracts Committee, the Bids Committee and the senior
individual positions, etc., for different activities of the Corporation. The manual is divided into segments,
representing different functions, like, Sales, Crude & Shipping, Capital Projects, Operations & Distribution,
Finance, HR, etc., and provides for a decision making process through various committees as above, represented
by inter-functional groups including Finance. This ensures a transparent, well considered and streamlined
decision making process adhering to the laid down systems and procedures and thereby leaving no room for
arbitrariness.
Purchase Manual:
This Manual lays down elaborate procedures to be followed while undertaking purchases and in finalisation of
contracts. It lays down, inter-alia, the purchasing authorities at various levels, norms and processes for procurement.
116
Corporate Governance (Contd.)

Integrity Pact
The Corporation has initiated the process of introducing “Integrity Pact” (IP) to bring in transparency and integrity
in the process of awarding contracts. An MOU has been signed with ‘Transparency International’ on July 13,
2007. The Integrity Pact would be a part of tender documents to be signed by the Company and by the
successful vendor / bidder. Failure by the bidder to return the Integrity Pact duly signed along with the bid shall
lead to outright rejection of such bid. It provides for responsibilities and obligation of both the parties.
The Integrity Pact aims to achieve the following :
To enable companies to achieve transparency in its functioning by providing assurances to them that :
Their competitors will also follow transparent process
Government procurement, privatization or licensing agencies will undertake to prevent corruption,
including extortion, by their officials and to follow transparent procedures and
To enable governments to reduce the high cost and the distortionary impact of corruption on public
procurement, privatization or licensing.
Beyond the individual contract in question, the IP is also intended to create confidence and trust in the decision
making process in general, a more ethical environment and public support in the country for the government’s
procurement, licensing activities, etc.
Disclosures :
Given below are the various information forming part of Corporate Governance disclosures :-.
1. BOARD OF DIRECTORS :
1.1 Composition of Board of Directors
Executive Directors including Chairman (Whole-time) 4

Non-Executive Govt. Directors (Ex-officio) 2
Non-Executive Independent Directors (non-official) 6
Total 12
1.2 Board Meetings:
Thirteen Board Meetings were held during the Financial Year on the following dates:
18th April 2006 25th May 2006 22nd June 2006 26th July 2006
18th October 2006 27th October 2006 1st November 2006 15th November 2006
12th December 2006 20th December 2006 31st January 2007 19th February 2007
22nd March 2007
117
1.3 Particulars of Directors including their attendance at the Board / Shareholders’ Meetings
Names of Academic No. of No. of Attendance Details of Directorships Memberships held in
Directors Qualifications Board Meetings at the last in Companies Committees as specified
Meetings attended AGM in Clause 49 of the Listing
held Agreement
FUNCTIONAL DIRECTORS
Shri Arun ** B.E.(Chem), 13 13 Yes 1. GGSRL Nil

Balakrishnan PGDBM (IIM 2. HINCOL
Bangalore) 3. Prize Petroleum Co.Ltd.
4. Petronet India Ltd.
Shri M.B. Lal * B.E.(Chem), 13 12 Yes 1. GGSRL Nil
PGDBM (IIM 2. HINCOL
Ahmedabad) 3. Prize Petroleum Co.Ltd.
Shri C. B.Com, ACA, ACS, 13 12 Yes 1. GGSRL Member - Audit Committee:
Ramulu MBA (Leeds, UK) 2. HINCOL GGSRL
3. Prize Petroleum Co. Ltd. Member – Investors’
Grievance Committee:
HPCL
Chairman - Audit Committee:
118
a) HINCOL
b) Prize Petroleum Co. Ltd.
Shri S. Roy B.E. (Mech.) 13 10 Yes 1. HINCOL Nil
Choudhury 2. Petronet MHB Ltd.
3. Bhagyanagar Gas Ltd.
4. Aavantika Gas Ltd.
5. MRPL
Shri M.A. B.E. (Mech.) 13 13 Yes GGSRL Nil
Tankiwala
NON-EXECUTIVE DIRECTORS (a) PART-TIME (EX-OFFICIO)
Shri P.K. IAS, M.Phil in 13 11 - 1. IOCL Member – Establishment

Sinha Social Sciences 2. BPCL & Remuneration Committee:
& Master Diploma IOCL
in Public
Administration
Shri Prabh IAS, B.Tech.(Hons), 13 11 - 1. Engineers India Ltd. Chairman – Investor
Das MBA 2. MRPL Grievance Committee:
Engineers India Ltd.
held Agreement
(b) PART-TIME DIRECTORS (NON-OFFICIO)
Shri T.L. IAS, M.Sc. 13 11 Yes 1. GGSRL Member - Remuneration

Sankar (Chemistry), 2. Delhi Power Co. Ltd. Committee:
MA (Dev. Eco.) 3. KSK Energy Ventures Rain Calcining Ltd.
Pvt. Ltd. Chairman - Audit Committee:
4. Rain Calcining Ltd a) HPCL
5. Small Scale Sustainable b) Rain Calcining Ltd.
Infrastructure Dev. Board c) GGSRL
6. KSK Power Venture Plc., Member – Audit Committee:

Isle of Man KSK Energy Ventures Ltd.
7. Zenith Energy Services Chairman – Shareholders’
Investors Grievances Committee:
Rain Calcining Ltd.
Shri Rajesh Degree in 13 5 - 1. Mukand Ltd. Member - Audit Committee &

V Shah Mathematics, 2. Mukand Engineers Ltd. Shareholders’ Grievances
119
MBA 3. Fusion Investments Committee:
& Financial Services Ltd. HPCL
4. Catalyst Finance Ltd. Member – Shareholders’
5. Conquest Investments & Committee
Finance Ltd. Mukand Engineers Ltd
6. Kalyani Mukand Ltd. Member - Shareholders’
7. Bengal Port Ltd. Investors Grievances
8. Jeewan Ltd. Committee:
9. India Thermal Power Ltd. HPCL
10. Mukand Vijayanagar Chairman – Audit Committee:
Steel Ltd. a) Catalyst Finance Ltd.
b) Conquest Investments &
Finance Ltd.
c) Fusion Investments &
Financial Services Ltd.
held Agreement
Shri M. B.Sc. 13 6 - 1. Mohan Breweries & Chairman - Shareholders’

Nandagopal (Agriculture) Distilleries Ltd. Investors Grievances
2. Thirumagal Mills Ltd. Committee:
3. Arthos Breweries Ltd. HPCL
4. S V Sugar Mills Ltd. Member - Audit Committee:
5. Mira Textiles & Industries HPCL
(India) Ltd.
6. D1 Mohan Bio Oils Ltd.
7. Binny Engg. Ltd.
8. TCP Ltd.
9. Vestas RRB Ltd.
10. Bhankerpur Distilleries
Ltd.
11. Sagar Sugars & Allied
Products Ltd.
12. Binny Ltd.
120
13. Mohan Meakin Ltd.
14. Balaji Breweries Ltd.
Shri I.M. PH.D 13 6 - 1. Industrial Finance Member – Audit, Remuneration &

Pandey in Finance Corporation of India Ltd. Investors Grievances Committee
2. Cochin Shipyard Ltd. Industrial Finance Corporation
3. Indo-Rama Polymers, of India Ltd.
Thailand Member – Audit Committee:
HPCL
* : Shri M.B. Lal, C & MD retired from the services of the Corporation after attaining the age of superannuation on 31.03.07.
** : Shri Arun Balakrishnan was appointed as Chairman & Managing Director effective 01.04.2007.

1.4 PROFILES OF DIRECTORS:
Shri Arun Balakrishnan
Shri Arun Balakrishnan took charge as Chairman & Managing Director of the Corporation effective
April 01, 2007.
Shri Arun Balakrishnan is a Chemical Engineer and an alumni of the Indian Institute of Management,
Bangalore. He joined HPCL in 1976 as a Management Trainee. He has held various positions in
Marketing and Corporate functions around the country. These include positions such as Regional
Manager of Orissa, Director-Planning - OCC, General Manager - International Operations, General
Manager - Lubricants & Specialities and Chief General Manager - Direct Sales.
He is credited with launching a number of successful lubricant brands and for spreading the HP Lubes
distributors network in the ASEAN countries. Shri Arun Balakrishnan attended a program on Management
in the United Kingdom under the Colombo Plan Program. He has also attended various seminars and
conferences related to Petroleum & Energy.
Shri Mahesh B. Lal
Shri Lal is a Chemical Engineer from Indian Institute of Technology, Kanpur and a Post Graduate
Diploma in Management from IIM, Ahmedabad. Shri Lal has a vast and extensive experience in the
Petroleum Industry. He was earlier Advisor - Refineries in the Ministry of Petroleum & Natural Gas,
Government of India. In this capacity, he was the Government Director on the Boards of Kochi Refineries
Ltd., IBP Co. Ltd. and Numaligarh Refineries Ltd. Thereafter, he was Director (Operations) of Madras
Refineries Ltd. (now Chennai Petroleum Corporation Limited) before moving back to Bharat Petroleum
Corporation Limited as Director (Refineries). IIT Kanpur bestowed the distinguished Alumnus Award on
Shri Lal in the year 2002.
Shri Lal retired from the services of the Corporation on attaining the age of superannuation on
March 31, 2007.
Shri P.K. Sinha
Shri P.K. Sinha, Joint Secretary & Financial Advisor, Ministry of Petroleum & Natural Gas is a Post
Graduate from Delhi School of Economics and an IAS officer of U.P. Cadre. Shri P.K. Sinha also holds
M.Phil in Social Sciences and Masters Diploma in Public Administration. Shri Sinha has served both
in the Central and State Governments, including as District Magistrate of Jaunpur and Agra Districts,
Commissioner of Varanasi Division and Principal Secretary, Irrigation, Uttar Pradesh. Shri Sinha has
also served in the Ministry of Power, Department of Youth Affairs and Sports in the Central Government
before joining the MOP&NG.
Shri Prabh Das
Shri Prabh Das, Joint Secretary of Ministry of Petroleum & Natural Gas, is a member of Indian
Administrative Service. He is a B.Tech (Hons) from IIT, Kharagpur. He has also completed his Master
of Business Administration from Southern Cross University, Australia. He has worked as a District
Magistrate and Collector in Midnapur & Jalpaiguri Districts for a period of 5 years. Shri Prabh Das has
121

also worked as a Deputy Secretary / Director in the Department of Ocean Development and Ministry
of Commerce, Government of India. He has also worked as a Special Secretary (Transport) Government.
of West Bengal and Chief Executive Officer of Calcutta Metropolitan Development Authority.
Shri Prabh Das joined the Ministry of Petroleum & Natural Gas as Joint Secretary in March 2003.
He is also a Director on the Boards of Mangalore Refineries & Petrochemicals Ltd. and Engineers
India Ltd.
Shri T. L. Sankar
Shri Sankar is a retired Indian Administrative Service Officer with M.Sc. (Chemistry), Madras and M.A.
(Development Economics) from Williams College, USA. Shri Sankar has held several assignments for
the Government of Andhra Pradesh, the Government of India, and international organizations in his 35
years career with the Indian Administrative Service. He continues to be associated with several
Committees of the Government of India in the areas of Energy Economics, Public Policy Analysis,
and restructuring of Public Enterprises. He has served as the Principal of Administrative Staff College
of India; Director General - National Institute of Rural Development, Director, Institute of Public
Enterprises, Hyderabad, Advisor to the Governments of India, Bangladesh, Sri Lanka, Tanzania and
North Korea on energy policy and as Leader of the United Nations Team to design Regional Energy
Development Programme and the Asian Development Bank’s Regional Energy Survey. He was also
the Chairman, Gas Price Revision Committee. He was a member of the Power Minister’s Committee
of Eminent Persons and the Independent Standing Group under Justice P.N. Bhagawati. Shri Sankar
has jointly edited two books, co-authored one, wrote several book chapters, and articles in national
and international journals.
Shri Rajesh V. Shah
Shri Rajesh V. Shah obtained his first degree in Mathematics from the University of Cambridge in
1973, later obtained a Master’s Degree in Business Administration from the University of California,
Berkeley. He has also attended the Programme for Management Development (PMD) from Harvard
Business School in 1983.
Shri Shah is presently the Co-Chairman of Mukand Ltd. In this capacity, he is responsible for all the
diverse activities of the Company, which is India’s leading speciality steel producer and executing
projects for road construction and power plants.
He has served on various business councils, is a past president and has been a member of the
National Council of the apex Indian business body, the Confederation of Indian Industry (CII) since
1986. He has been a member of the International Young Presidents’ Organization (YPO) and was also
Chairman of the YPO International Conference held in Mumbai in February, 1996 and on the International
Board of Directors in the same year.
Shri Rajesh Shah has been a strong believer in bringing about change within his Company through the
application of ‘Total Quality Management’ and has been awarded the Qimpro Gold Standard in 1990
and Platinum Standard in 1994 by Qimpro (an affiliate of Juran International Inc., USA), for his contribution
in building India Inc.
122

Shri M. Nandagopal
Shri M. Nandagopal is a B.Sc (Agriculture) from Agricultural University, Coimbatore. He is an Industrialist
holding the position of Director in various Companies. He is the Managing Director of Mohan Breweries
& Distilleries Ltd. He is a Trustee in Sri Ramachandra Medical College & Research Institute, Chennai,
Sakthi Trust, Delhi and Mother Service Society, Pondicherry. Shri M.Nandagopal is also a member of
Cosmopolitan Club and Madras Cricket Club.
Shri I.M. Pandey
Shri I.M. Pandey has done his Ph. D in Finance from Delhi School of Economics, University of Delhi.
Currently, Professor at the Indian Institute of Management, Ahmedabad (IIMA), Shri Pandey is also
Dean of School of Management, Asian Institute of Technology, Bangkok. Shri Pandey is a Director on
the Boards of IFCI, Cochin Shipyard Limited and Indo-Rama Polymers, Thailand. In the past, he
served as Member of Controller of Capital Issues, Government of India, Member of Ahmedabad Stock
Exchange, Member of IDBI Western Advisory Board, and Member of Board of Directors of IDBI-Principal.
Shri I.M. Pandey has carried out research focussed on Corporate Finance Policies and practices,
strategic finance management and financial market in the emerging economies. He has published
several articles in these areas. He has authored ten books, six monographs and many management
cases. Shri I.M. Pandey is also on the editorial boards of several journals in India and abroad. Shri I.M.
Pandey is consultant to many public and private sectors organizations, and has conducted management
training programmes for many domestic and multinational companies.
Prof. Prakash G. Apte
Prof. Prakash G. Apte is the Director and UTI Chair Professor at the Indian Institute of Management
Bangalore. His special areas of interest are international finance, exchange rate behaviour, financial
derivatives and risk management.
Prof. Apte holds a Ph.D. in Economics from Columbia University, PGDM from IIM Calcutta and
B. Tech. from IIT Bombay. He has taught Economics at the Vassar College, Poughkeepsie, USA and
Columbia University. He was a Consultant at Edison Electric Institute, New York and a Project Manager
at Centron Industrial Alliance, Bombay.
Prof. Apte has published four books - International Financial Management, Global Business Finance,
Text Book of Econometrics and Macro Economics and several articles in professional journals and
economic and financial periodicals. He has served on expert committees appointed by NSE, SEBI
and RBI. He is on the Board of several companies and institutions such as BEML, Power Finance
Corporation and IIT-B. He is also a consultant to several leading organizations in government, public
and private sectors. He has been a Visiting Faculty at the Katholieke Universiteit Leuven, Belgium,
Goteborg University, Sweden and S.P. Jain Centre of Management, Singapore.
Shri P. V. Rajaraman
Shri P.V. Rajaraman is a retired IAS Officer. He holds Master's degrees in Physics ( Madras University)
and Management (University of Leeds, U.K.) He has worked as Director in the Ministry of Chemicals
and Fertilizers, Government of India, Managing Director, India Cements, Chairman and Managing
Director, Tamilnadu Housing Board , Commissioner of Sugar and Chairman and Managing Director,
Tamilnadu Sugar Corporation, Secretary to the Government of Tamilnadu in the Commercial Taxes,
123

Home and Finance Departments, Development Commissioner and Chairman, Tamilnadu Industrial
Investment Corporation.
Shri P.V. Rajaraman is a Director on the Board of the Small Industries Development Bank of India.
Shri C. Ramulu
Shri C. Ramulu is currently holding the portfolio of Director- Finance. Shri C. Ramulu is a Chartered
Accountant and Company Secretary and is a rank holder at the All India level. Shri C. Ramulu secured
distinction in MBA from the University of Leeds, U.K.
Shri C. Ramulu commenced his career in the Petroleum Industry with Caltex India Ltd., which was
nationalized and merged with HPCL. His wide experience encompasses Financial Management in
varied positions spread across the organization in Refining, Marketing and Corporate Divisions and
General Management including Strategy, Planning, Management of Joint Ventures, etc. He has attended
several International Senior Management Programmes. He has also presented several papers at National
& International Conferences, Seminars, etc. Shri Ramulu successfully handled the Public issue of
HPCL for raising equity capital of Rs.1200 Crores.
Shri S. Roy Choudhury
Shri S. Roy Choudhury is a Mechanical Engineer from the University of Assam. He commenced his
career in the Petroleum Industry with Assam Oil Company, Digboi, a subsidiary of Burma Oil Company.
Shri S. Roy Choudhury joined HPCL on June 21, 1982 as a Construction Engineer.
He has held various positions in the Company in Refinery, Marketing (Operations), Projects and Sales
Divisions of HPCL. He is well known in the Oil Industry for his knowledge and expertise in the cross
Country Pipeline Projects.
Shri M.A. Tankiwala
Shri M.A. Tankiwala was the Managing Director of Guru Gobind Singh Refineries Ltd. (GGSRL), a fully
owned subsidiary of HPCL and was instrumental in developing the grass root project.
He also served on the Board of Mangalore Refineries & Petrochemicals Limited (MRPL) the first
refinery in the Joint Sector as Managing Director (Technical) and ensured that due share was given to
MRPL in meeting the country’s energy demand.
Shri M.A. Tankiwala, a Graduate in Mechanical Engineering, commenced his career in the Mumbai
Refinery of HPCL. He has had a wide exposure to the Petroleum Industry, spanning more than three
decades in the Refining Sector.
He has worked in both Mumbai and Visakh Refineries of HPCL in various capacities and contributed
to the growth and development of the refinery operations of the Corporation.
Shri V. Viziasaradhi
Shri V. Viziasaradhi has done Graduation and Post Graduation in Industrial Relations and Personnel
Management from University of Andhra. He joined HPCL in December 1979. Before joining HPCL, he
had 4 years of experience in Bharat Heavy Plate & Vessels.
He has had a wide exposure to the Petroleum Industry over 28 years in Human Resources and
Industrial Relations in Refineries, Marketing and Corporate Divisions of HPCL.
Prior to taking over as Director(HR), Shri V. Viziasaradhi was Executive Director (Industrial Relations)
of HPCL.
124

2. REMUNERATION OF DIRECTORS :
HPCL being a Government Company, the remuneration payable to its whole-time directors is approved
by the Government and advices received through the Administrative Ministry, viz., Ministry of Petroleum
& Natural Gas.
The non-official part–time Directors are paid Sitting Fees for Board Meetings attended by them.
HPCL does not have a policy of paying commission on profits to any of the Directors of the company.
The remuneration payable to officers below Board level is also approved by the Government of India.
3. BOARD SUB-COMMITTEES :
A. Audit Committee :
The Audit Committee comprises of Non-Executive Directors as follows:
1. Shri T L Sankar Non-Executive Independent Director
2. Shri P.K. Sinha * Non-Executive Govt. Director
3. Shri Rajesh V Shah Non-Executive Independent Director
4. Shri M. Nandagopal Non-Executive Independent Director
5. Shri I.M. Pandey ** Non-Executive Independent Director
* : Shri P.K.Sinha has resigned from the Audit Committee effective November 01, 2006.
** : Shri I.M. Pandey was inducted in the Audit Committee effective November 01, 2006.
Shri T. L. Sankar is the Chairman of the Audit Committee.
The terms of reference of the Audit Committee are as provided under the Companies Act, 1956 and
other applicable regulations.
The scope of the Audit Committee includes the following:
Reviewing with the Management the annual financial statements before submission to the Board.
Reviewing with the Management, Statutory Auditors and Internal Auditors, the adequacy of internal
control systems.
Reviewing the adequacy of internal audit function, including the structure of the internal audit
department, staffing and seniority of the official heading the department, reporting structure, coverage
and frequency of internal audit.
Discussion with internal auditors on any significant findings and follow up thereon.
Reviewing the findings of any internal investigations by the internal auditors into matters where
there is suspected fraud or irregularity or a failure of internal control systems of a material nature
and reporting the matter to the Board.
Reviewing the Company’s financial and risk management policies.
The Committee, at the meeting held on May 29, 2007, reviewed the Annual Accounts for the year
2006-07, before the Accounts were adopted by the Board.
Dates when Audit Committee Meetings held:
25th May, 2006 25th July, 2006 26th July, 2006 18th October 2006
27th October, 2006 31st January 2007 29th May, 2007
125

Attendance at the Audit Committee Meetings:
Name of No. of No. of % of

the Members Meetings held Meetings attended attendance
Shri T. L. Sankar 7 7 100%
Shri P.K. Sinha * 5 1 20%
Shri Rajesh V. Shah 7 4 57%
Shri M. Nandagopal 7 5 71%
Shri I.M. Pandey ** 2 1 50%
* : Shri P.K.Sinha has resigned from the Audit Committee effective November 01, 2006.
** : Shri I.M. Pandey was inducted in the Audit Committee effective November 01, 2006.
B. Committee on HR Policies :
The Company has constituted the Board Sub - Committee on HR Policies to look into various
aspects including remuneration as well as Compensation and Benefits for the employees. The
Committee comprised of:
1. Shri T.L. Sankar - Non-Executive Independent Director
2. Shri Rajesh V. Shah - Non-Executive Independent Director
3. Shri Arun Balakrishnan *
* : Shri Arun Balakrishnan was appointed as Chairman & Managing Director effective 01.04.2007.
Director-Human Resources, is the Convenor of the Committee.
C. Investment Committee :
The Company has constituted the Investment Committee with the following members.
1. Shri T. L. Sankar - Non-Executive Independent Director
3. Shri Prabh Das - Non-Executive Government Director
4. Shri C. Ramulu
Shri T. L. Sankar is the Chairman of the Committee. This Committee reviews investment proposals
before they are placed before the Board for its consideration.
D. Investor Grievances Committee:
The Company has constituted an Investor Grievances Committee comprising of Non-Executive Directors
as follows :
1. Shri M. Nandagopal - Non-Executive Independent Director
3. Shri C. Ramulu **
** Shri C. Ramulu was inducted as member of Investors Grievances Committee effective
April 18, 2006.
Shri M. Nandagopal is the Chairman of the Committee.
The Committee reviews the status of Investor Grievances and Services and other important matters of
investors’ interest.
126

Dates of Investor Grievance Committee Meetings:
18th April, 2006 25th July, 2006 31st January, 2007 29th May, 2007
E. Remuneration Committee:
HPCL has not felt the need for a Remuneration Committee in view of the fact that the Company is a
Government Company as per Section 617 of the Companies Act, 1956 and since the remuneration of
the Whole-Time Functional Directors are fixed by the Government of India.
The details of Remuneration paid to all the Functional Directors are given below:
The remuneration of the whole time Functional Directors include basic salary, allowances and
perquisites as determined by the Government of India. Moreover, they are entitled to provident
fund and superannuation contributions as per the rules of the Company.
The gross value of the fixed component of the remuneration, as explained above, paid to the
Whole-time Functional Directors, during the financial year 2006-07 is given below:
(Rs. in Lakhs)
Name of the Salaries & Contribution to Contribution to Other Total

Director Allowances Provident Superannuation Benefits
Fund Fund and
Gratuity
Arun Balakrishnan ** 13.38 0.86 0.32 2.29 16.85
M.B. Lal * 12.88 0.85 0.31 2.22 16.27
C. Ramulu 12.76 0.86 0.37 2.74 16.73
S. Roy Choudhury 11.00 0.70 0.28 2.43 14.40
M.A. Tankiwala 11.44 0.73 0.29 0.57 13.03
* : Shri M.B. Lal retired from the services of the Corporation after attaining the age of superannuation
on 31.03.07.
** : Shri Arun Balakrishnan was appointed as Chairman & Managing Director effective 01.04.2007.
4. Sitting Fees for the year 2006-2007:
The details of Sitting Fees paid to Part-time Independent Directors for the year 2006-07 for attending the
Board / Sub-committee meetings are given below:
DETAILS OF SITTING FEES PAID TO PART-TIME INDEPENDENT DIRECTORS FOR THE YEAR 2006-
07 FOR ATTENDING MEETINGS
(Figures in Rs.)
Details of Meetings T.L.Sankar Rajesh V.Shah M.Nandagopal I.M.Pandey
Board 110000 50000 60000 60000
Audit 70000 40000 50000 10000
HR - - - -
Investor - 20000 40000 -
Retail - - - -
Total Sitting fees paid 180000 110000 150000 70000
127

5. DIRECTORS’ SHAREHOLDING
Shri T. L. Sankar is holding 150 shares of the Corporation as of date. Other than Shri T. L. Sankar none of
the other non-officio and ex-officio Directors of the Corporation are holding any shares in the Corporation.
6. RIGHT TO INFORMATION ACT 2005
The Right to Information Act, 2005(RTI) that became effective 12 th October 2005 is being complied
with by HPCL. HPCL has hosted detailed information in its WEB portal
“www.hindustanpetroleum.com”, and update the same on need basis. Officers across the country,
representing different departments, have been appointed as Public Information Officers and
Appellate Authorities to deal with the queries from the Indian Citizens.
7. Shares Department Activities :
HPCL has a Shares Department under the Company Secretary, which monitors the activities of R&T
Agents and looks into the issues relating to shareholders. Share transfers, transmissions and other
important matters are approved by the Share Transfer Committee.
Presently, HPCL has over 94037 shareholders. The Corporation regularly interacts with the shareholders
through letters, investors’ meets, at the AGM, wherein the activities of the Corporation, its performance
and its future plans are provided to the Shareholders.
The Company has been taking appropriate steps to ensure that Shareholder related activities are given
due priority and references/representations, if any are resolved at the earliest.
The Company Secretary of the Corporation is the Compliance Officer in terms of the requirements of The
Stock Exchange, Mumbai.
The quarterly results are published in the English and Vernacular newspapers. The Company also organises
Press Meets and Press Releases. The Financial Performance and other details are also posted on the
Company’s web-site viz. www.hindustanpetroleum.com.
8. During the year 2006-07, there were no material transactions with Directors or their relatives having
potential conflict with the interests of the Company at large.
There have been no instances of non-compliance by the Company or penalties, strictures imposed on the
Company by any Stock Exchange or SEBI or any Statutory Authority, on any matters relating to capital
markets during the last 3 years.
9. DETAILS OF ANNUAL GENERAL MEETINGS :
9.1 Location and time, of the three Meetings held :
Year Location Date Time
2005-06 Y.B. Chavan Auditorium, Mumbai 14.09.06 3.00 p.m.
9.2 Whether Special Resolutions were passed in last 3 AGM’s?

Yes
9.3 Whether Special Resolutions were put through postal ballot last year?
No.
9.4 Are votes proposed to be conducted through postal ballot this year?
No.
128

10. MEANS OF COMMUNICATION :
Half yearly report Press Advertisements, advices to Stock Exchanges, etc.

Quarterly results Mainly business / regional newspapers, like Economic Times,
Which newspapers Times of India, Financial Express, Indian Express, Loksatta, etc.
normally published in
Websites where quarterly www.hindustanpetroleum.com
results are displayed
Whether it also displays Yes
official news releases &
presentations made to
institutional investors
/ analysts
Whether Management Yes
Discussion & Analysis
Report is a part of
Annual Report
Whether shareholder Shareholder information has been incorporated in the Annual Report.
information section The Company also communicates with the shareholders from time
forms part of to time.
Annual Report
11. GENERAL SHAREHOLDER INFORMATION :

11.1 55th Annual General Meeting
Date and Time : September 06, 2007
at 3.00 PM
Venue : Yashwantrao Chavan Pratishthan Auditorium,
General Jagannath Bhosale
Marg, Next to Sachivalaya
Gymkhana,
Mumbai-400 021
11.2 Financial calendar
Financial reporting for Qtr. ending 30/06/07 End Jul. 2007

Financial reporting for Qtr. ending 30/09/07 End Oct. 2007
Financial reporting for Qtr. ending 31/12/07 End Jan. 2008
Financial reporting for Qtr. ending 31/03/08 End May 2008
Annual General Meeting for year ending 31/03/2008 Aug-Sep. 2008
129

11.3 Book Closure : August 22, 2007 to September 06, 2007
11.4 Dividend payment date (tentative) : September 11, 2007
11.5 (a) Listing on Stock Exchanges as of 31.03.07 :
The Bombay Stock Exchange Ltd. The National Stock Exchange of India Ltd.
Phiroze Jeejeebhoy Towers, Exchange Plaza, 5th Floor,
Dalal Street, Mumbai – 400 001 Plot No. C/1, G-Block,
Bandra-Kurla Complex,
Bandra (East), Mumbai – 400 051
The Calcutta Stock Exchange The Delhi Stock Exchange
7 Lyons Range , Kolkata 700001 DSE House, 3/1, Asaf Ali Road,
New Delhi – 110 002
The Shareholders at the 54th AGM of the Corporation held on 14th September, 2006 have approved
delisting of HPCL shares from Chennai / Delhi & Calcutta Stock Exchanges. We have already
obtained the approval of delisting from Chennai Stock Exchange. The process of delisting the
shares from Delhi / Calcutta Stock Exchanges is in progress.
11.5 (b) Listing fees : Listing fees for financial year
2006-07 have been paid to the
Stock Exchanges in April, 2006.
11.6 Stock Codes :
BSE : 500104
NSE : HINDPETRO
ISIN (for trading in Demat form) : INE094A01015
11.7 Stock Market Data :
HPCL Share Price – BSE

Year High Rs. Low Rs.
2006-07 361.00 206.00
2005-06 348.00 283.30
2004-05 538.50 225.55
2003-04 542.45 269.40
2002-03 329.60 166.50
Performance in comparison to broad based indices

As on HPCL Share BSE 30 SENSEX NSE 50 NIFTY
price Rs.
31-3-2007 246.70 13072.10 3821.55
31-3-2006 322.90 11279.96 3402.55
31-3-2005 305.95 6492.82 2035.65
31-3-2004 507.60 5590.60 1771.90
31-3-2003 294.40 3048.72 978.20
130

HPCL SHARE PRICE MONTHLY DATA
Month Mumbai Stock Exchange National Stock Exchange
High Low Close Volume High Low Close Volume

Rs. Rs. Rs. Nos. Rs. Rs. Rs. Nos.
April 2006 360.00 311.00 320.00 2476270 359.90 310.00 320.15 6240063
May 2006 361.00 288.00 306.05 2627275 360.00 290.00 306.75 6585617
June 2006 311.50 211.10 235.50 2508863 316.60 211.05 235.45 7591430
July 2006 242.00 206.00 224.65 1351440 241.50 198.20 224.95 4115282
Aug 2006 292.90 211.00 277.95 9935451 292.70 211.55 277.65 29979864
Sept 2006 312.80 273.95 279.65 11020147 315.00 272.50 279.70 31240785
Oct 2006 332.00 279.45 324.85 11234883 337.55 279.70 324.90 29824744
Nov 2006 337.00 278.50 281.45 6917848 337.45 278.10 281.80 24095484
Dec 2006 298.55 243.30 278.40 4159695 298.75 242.45 278.50 15177864
Jan 2007 330.00 275.00 311.70 3718650 334.90 275.20 312.10 14083394
Feb 2007 310.70 262.05 270.80 2273836 314.45 261.15 271.60 8998624
Mar 2007 277.00 238.90 246.70 2227496 275.90 238.25 247.80 8829771
HPCL SHARE PRICE V/S NSE NIFTY - 2006-07
HPCL SHARE PRICE V/S BSE SENSEX - 2006-07
131

PER SHARE AND RELATED DATA :
2006-07 2005-06 2004-05 2003-04 2002-03 2001-02
Per Share Data Unit
EPS Rs. 46.35 11.97 37.69 56.18 45.37 23.26
CEPS Rs. 68.20 32.62 54.81 75.67 62.94 42.85
Dividend Rs. 6.00 3.00 15.00 22.00 20.00 10
Book Value Rs. 283.19 257.74 249.05 228.47 197.12 174.07
Share Related Data Unit
Dividend Payout % 45.10 28.62 45.42 44.23 49.24 43.06
Price to Earnings* Multiple 5.32 26.98 8.12 9.03 6.49 12.49
Price to Cash Earnings* Multiple 3.62 9.90 5.58 6.71 4.68 7.47
Price to Book Value * Multiple 0.87 1.25 1.23 2.22 1.49 1.67
*Based on March 31 Rs. 246.70 322.90 305.95 507.60 294.40 290.60

closing prices
11.8 Registrars and Transfer Agents : M/s. INTIME SPECTRUM REGISTRY LTD
C-13, Pannalal Silk Mills Compound,
LBS Marg,
Bhandup (W),
Mumbai - 400 078.
11.9 Share Transfer System
Activities relating to Share Transfers are carried out by M/s. ISRL who are the Registrars and
Transfer Agents of the Company, who have arrangements with the Depositories, viz., National
Securities Depository Limited and Central Depository Services (India) Limited. The transfers and
dematerialisation requests, duplicate share certificate cases are approved by the Shares
Committee. Share transfers are registered and Share Certificates are despatched within a period
of 30 days from the date of receipt, if the documents are correct and valid in all respects.
The number of shares transferred during last the two years:
2006-07 59,100
2005-06 79,200
132

11.10 Status of Investor Services:
Investor correspondence replied during the year are as follows:
Nature of Correspondence Number
1. Share Transfers and related issues 65
2. Transmission of Shares / Nomination for shares 184
3. Issue of Duplicate share certificates 219
4. Dividend related issues 1882
5. ECS / Bank Mandates / Request for Change of Address 1048
6. Call Money Payment Correspondence / Reminders 397
7. SEBI / Stock Exchange / Legal cases 12
8. Others 415
Total 4222
All complaints received from SEBI, Stock Exchanges, Department of Company Affairs, etc.,
have been appropriately dealt with.
11.11 Dematerialisation of shares and liquidity:
The total number of shares dematerialised as on 31.03.2007 is 162577192 representing 97.79%

of share capital excluding shares held by the Government of India.
Trading in Equity shares of the Company is permitted only in dematerialised form, w.e.f.,
February 15, 1999 as per notification issued by the Securities and Exchange Board of India
(SEBI).
11.12 Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion date and

likely impact on equity
There are no outstanding Warrants to be converted into Equity shares.
Detachable Tradeable Warrants issued alongwith public issue shares in April 1995 were
converted into equity shares during the period February 1997- April 1997. The Warrant
certificates were not called back by the Company and bear no value.
133
11.13 Plant Locations:
The Corporation has 2 Refineries located at Mumbai and Visakh. It has 86 Regional offices,
37 Terminals / Installations / Tap off Points, 93 Depots, 42 LPG Bottling Plants, 7909 Retail
outlets, 13 ASFs, 1648 SKO / LDO Dealers and 2238 LPG Distributors etc., located all over
the country.
11.14 Address for correspondence
Registrars and Transfer Agents: Company’s Shares Department:
M/s. INTIME SPECTRUM REGISTRY LTD. Shares Department

Unit:HINDUSTAN PETROLEUM HINDUSTAN PETROLEUM
CORPORATION LTD. CORPORATION LIMITED
C-13, Pannalal Silk Mills Compound, 2nd Floor, Petroleum House,
LBS Marg, 17, Jamshedji Tata Road,
Bhandup (West), Mumbai - 400 078 Churchgate, Mumbai - 400 020
Telephone No.: 022 – 25963838. Telephone No.: 022 - 2286 3900
Ext.3204/3201/3233/3239/3208
Fax No.: 022 - 25946969 Fax No.: 022-2287 4552/2284 1573
11.15 DISTRIBUTION SCHEDULE AS ON 31.03.2007
No. of Shares Physical Holding Dematerialised Total

Holding Shareholding Percentage
No. of No. of No. of No. of No. of No. of Share Holding

Share Shares Share Shares Share Shares holders
Holders Holders Holders
1-500 14745 2697847 72050 8559118 86795 11256965 92.30 3.32
501-1000 658 481840 3933 2947480 4591 3429320 4.88 1.01
1001-5000 74 124821 2064 3909650 2138 4034471 2.27 1.19
5001-10000 3 19050 179 1329589 182 1348639 0.19 0.40
10001 & Above 3 173429250 328 145831355 331 319260605 0.35 94.09
TOTAL 15483 176752808 78554 162577192 94037 339330000 100.00 100.00
134

11.16 Shareholding pattern as on :
31/03/2007 31/03/2006
Category No. of No. of % No. of No. of %
Share Shares Share Shares
holders Holders
President of India 1 173076750 51.01 1 173076750 51.01
Financial Institutions 23 59329055 17.48 28 56128800 16.54
FIIs/OCBs 155 53018946 15.62 160 78890243 23.25
Banks 16 1033322 0.30 34 1488303 0.44
Mutual Funds 73 24139353 7.11 41 5186993 1.53
NRIs 3085 1185976 0.35 3206 1078869 0.31
Employees 974 435240 0.13 1053 467585 0.14
Others 89710 27111358 7.99 87610 23012457 6.78
Total 94037 339330000 100.00 92133 339330000 100.00
SHAREHOLDING PATTERN AS ON MARCH 31, 2007
135
11.17 Code of Conduct:
In compliance with the terms of clause 49 of the Listing Agreement with Stock Exchanges, “Code
of conduct for Board Members and Senior Management Personnel of Hindustan Petroleum
Corporation Limited” has been devised and made effective 1.1.2006. The purpose of this Code is
to enhance further ethical and transparent process in managing the affairs of the company. This
Code has been made applicable to
a) All Whole-Time Directors
b) All Non-Whole Time Directors including Independent Directors under the provisions of law
and
c) Senior Management Personnel.
This code would be read in conjunction with the Conduct, Discipline & Appeal Rules for Officers
applicable to Whole time Directors and Senior Management Personnel.
All the Board Members and Senior Management Personnel have provided the Annual Compliance
Certificate duly signed by them as on March 31, 2007.
11.18 Compliance of Clause 49 of the Listing Agreement:
The Corporation is complying with the various mandatory and non-mandatory Corporate Governance
requirements envisaged under Clause 49 of the Listing Agreement with the Stock Exchanges.
136
Declaration of the Chairman & Managing Director

This is to certify that the company has laid down Code of Conduct for all Board Members and
Sr. Management of the Company and the same are uploaded on the website of the company -
www.hindustanpetroleum.com.
Further certified that the Members of the Board of Directors and Sr. Members have affirmed and
having complied with the code as applicable to them during the year ended March 31, 2007.
Arun Balakrishnan
Auditor ’s Certificate on Corporate Governance

uditor’s
To,
The Board of Directors of
Hindustan Petroleum Corporation Limited
We have examined the compliance of Corporate Governance by Hindustan Petroleum Corporation Limited,
for the year ended on March 31, 2007, as stipulated in Clause 49 of the Listing Agreement of the said Company
with stock exchanges in India.
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination
was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of
the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial
statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the
Company has complied with the conditions of Corporate Governance as stipulated in the abovementioned
Listing Agreement.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the
efficiency or effectiveness with which the management has conducted the affairs of the Company.
For and on behalf of For and on behalf of

N.M. Raiji & Co. Sudit K. Parekh & Co.
Vinay D. Balse Shrikant V. Jilla

Partner Partner
(Membership No. 39434) (Membership No. 39461)
Place : Mumbai
Dated : 23-07-2007
137
Guru Gobind Singh Refineries Limited
Board of Directors
Shri Arun Balakrishnan Shri C Ramulu Shri M A Tankiwala Shri Sudhir Maheswari Shri B P Banka
Chairman Director Director Director Director
(From 25.07.2007) (From 25.07.2007)
Shri T L Sankar Shri C B Singh Shri S P Chaudhry

Director Director Director
(Till 24.07.2007) (Till 24.07.2007)
(Till 24.07.2007)
Registered Office Administrative Office

Village : Phulokhari 3rd Floor, UCO Bank Building,
Taluka : Talwandi Saboo Sansad Marg,
District : Bhatinda New Delhi : 110001
State : Punjab
Statutory Auditors Bankers

M/s Rawla & Company Punjab National Bank
Chartered Accountants State Bank of India
New Delhi
Company Secretary
Shri Sidhartha Tyagi
138
Directors’ Report
On behalf of the Board of Directors of your Company, I present the 6th Annual Report on the working of your
Company together with the Audited Statement of Accounts, the Auditors Report and the Review of the Accounts
by the Comptroller and Auditor General of India for the financial year ended on 31st March 2007. As you are
aware, your Company was incorporated on December 13, 2000 with the objective of setting up a 9 MMTPA
grass root refinery along with associated facilities in the State of Punjab.
As on March 31, 2007, your company is a wholly owned subsidiary of Hindustan Petroleum Corporation Limited
(HPCL). As the implementation of this project needed mobilization of huge financial resources, induction of a
Joint Venture Partner was considered very vital to accelerate the implementation process. After protracted
negotiations, HPCL has on March 2, 2007 entered into a Joint Venture Agreement (JVA) with a partner of
International repute viz. M/s Mittal Investments S.a.r.l (MI) for execution of this project at current core capital
cost of Rs. 17,200 crores.
As per the JVA, both the partners viz.

HPCL and MI shall hold 49% equity stake
each in the company and the balance
2% would be held by Financial
Institution(s).
Your company during the year has also

finalized the refinery configuration & cost
estimate for execution of the 9 MMTPA
refinery and its associated facilities. The
refinery has been configured for
processing heavy and sour crudes to take
Photograph taken during Execution of Financing Documents of GGSRL
advantage of the price differentials vis-à-
vis light and sweet crudes. Refinery margins would be higher because of the flexibility to process low cost
opportunity crudes and produce high value products. The refinery would be capable of meeting the Euro-IV
quality norms for transport fuels. The Nelson Complexity Index (NCI), which is a measure of the refinery’s
capability to upgrade low value heavy crudes to high value products, is quite high at 9.6 vis-à-vis its peers. The
major products from the refinery would be LPG, Naphtha, MS, HSD, Kerosene, Jet Fuel, Polypropylene, Coke
etc. The refinery shall cater to the demand of the States of Punjab, J&K, Himachal Pradesh, Delhi and parts of
Haryana and Rajasthan.
M/s SBI Capital Markets Limited (SBICAP) have carried out the financial appraisal of the project and are the
lead managers for debt syndication requirements for the project. The overall financial, liquidity and profitability
parameters of the project are robust.
A green belt having various species of trees and a width of approx. 125 meters along the refinery boundary,
covering an area of 120 hectares, is under development through the State Forest Department.
139
Directors’ Report
STATUTORY DISCLOSURES
(A) Particulars of Employees u/s 217(2A) of the Companies Act, 1956:
There are no employees under the category covered by Section 217 (2A) of the Companies Act, 1956.
(B) Conservation of Energy:
As required under 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules, 1988 regarding Energy Conservation and Technology Absorption,
the Board hereby discloses as follows:
(i) That the Board, as part of its existing internal control measures, is striving for the conservation of
Energy under the supervision of Managing Director on a continuous basis and is satisfied that the
utilisation of energy is optimum for the present working of the Company.
(C) Technology Absorption:
The Company has not made any absorption, adaptation & import of technology from the date of incorporation.
(D) Foreign exchange earnings and outgo:
The required information in respect of foreign exchange earnings and outgo is given in Note no. 8(b) of the
Accounts.
DIRECTORS
Shri M.B. Lal has ceased to be the Director of your Company consequent to his retirement as C&MD of HPCL
upon attaining the age of superannuation effective March 31, 2007. In his place, M/s Hindustan Petroleum
Corporation Limited (HPCL) has nominated Shri Arun Balakrishnan, Chairman & Managing Director, HPCL as
Director of your Company effective April 03, 2007.
Subsequently, Shri Balakrishnan has been appointed as Chairman of your Company. He has been co-opted as
additional Director, liable to retire at the ensuing Annual General Meeting and is eligible for reappointment.
As per the provisions of Section 256 of the Companies Act, 1956, and the Articles of Association of your
Company, S/Shri M.A. Tankiwala and S.P. Chaudhry, retire by rotation at the forthcoming Annual General
Meeting and being eligible, offer themselves for reappointment under the provisions of Section 255 of the Companies
Act, 1956.
S/Shri T.L. Sankar, C.B. Singh & C. Ramulu continue to be the part time Directors and Shri B.S. Sant as
Managing Director of the Company.
Your Directors place on record their sincere appreciation for the invaluable services rendered by Shri M.B. Lal,
and extend a warm welcome to Shri Arun Balakrishnan.
140
Directors’ Report
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 217 (2AA) of the Companies Act, 1956, your Directors state that:
(i) In the preparation of the annual accounts for the financial year 2006-07, the applicable accounting standards
have been followed along with proper explanation relating to material departures.
(ii) The Company has selected such accounting policies and applied them consistently and made judgments
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, 2007.
(iii) 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.
(iv) These accounts have been prepared on a going concern basis.
ACCOUNTS
There being no commercial activities, the Company is only required to prepare the Balance Sheet for the period
of 12 Months from 01/04/2006 to 31/03/2007.
ACKNOWLEDGMENT
Your Directors acknowledge with thanks the continued help, support and guidance received from the Government
of India, especially, the Ministry of Petroleum and Natural Gas, Department of Public Enterprises, Government
of Punjab, Punjab State Industries Development Corporation, Government of Gujarat, Government of Rajasthan,
Government of Haryana & the holding Company HPCL in guiding the Company in its activities. Your Directors
also take this opportunity to place on record their appreciation on the valuable contribution made by the employees.
For and on behalf of the Board of Directors
Arun Balakrishnan
Date: May 04, 2007 Chairman
141
Auditor ’s Report
uditor’s
To,
The Members,
GURU GOBIND SINGH REFINERIES LIMITED
1. We have audited the attached Balance Sheet of M/s. Guru Gobind Singh Refineries Limited as on 31st
March, 2007 along with Statement of Incidental Expenses incurred for the year ended on that date annexed
thereto. No Profit & Loss Account has been prepared since the Company is under construction stage
during the year. These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our Audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. These
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India in
terms of subsection (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said order.
4. Further to our comments in the annexure referred to in above, we report that:
a) We have obtained all the information and explanations, which to best of our knowledge and belief were
necessary for the purpose of our audit.
b) In our opinion, proper books of account, as required by law, have been kept by the Company so far as
appears from our examination of these books.
c) The Balance Sheet and the Statement of Incidental Expenses dealt with by this report are in agreement
with books of accounts.
d) In our opinion, the said Balance Sheet and Statement of Incidental Expenses incurred during
Construction Period dealt with by this report complies with the accounting standards, referred in
Section 211 (3C) of the Companies Act, 1956.
e) On the basis of written representations received from the Directors, as on March 31, 2007 and taken
on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31,
2007 from being appointed as a Director of the Company under clause (g) of sub-section (1) of Section
274 of the Companies Act, 1956.
142
Auditor ’s Report
uditor’s
f) In our opinion, and to the best of our information and according to explanations given to us, the said
Accounts read together with the notes thereon, give the information required by the Companies Act,
1956, in the manner so required and give a true & fair view in conformity with the accounting principles
generally accepted in India.
(i) In so far as it relates to Balance Sheet, of the state of affairs of the Company as on 31st March,
2007; and
(ii) In so far as it relates to “Statement of Incidental Expenses”, of the expenses incurred for the year
ended on that date.
For Rawla & Company

Chartered Accountants
Y.P. Rawla
Partner
Membership No.: 10475
Place : New Delhi

Date : May 04, 2007
143
Anne xure to the A

Annexure uditor
Auditor ’s Report
uditor’s
(Referred to in paragraph 3 of our report of even date)
(1) (a) The Company has maintained a register showing full particulars including quantitative details and
situation of fixed assets.
(b) All the assets have been physically verified by the management during the year and there is a regular
programme of verification which, in our opinion is reasonable having regard to the size of the Company
and the nature of its assets. No material discrepancies were noticed on such verification.
(c) During the year, the Company has not disposed of any fixed assets except possession of 80 acres of
land given to M/s. Hindustan Petroleum Corporation Limited, Holding Company pending execution of
final agreement.
(2) As the Company is under construction stage therefore the clause of physical verification and maintaining
of proper records relating to inventory is not applicable to the Company.
(3) The Company had not taken/granted any loans, secured or unsecured during the year from other/to
Companies covered in the register maintained under Section 301 of the Companies Act, 1956, hence this
clause is not applicable to the Company.
(4) In our opinion and according to the information and explanations given to us, there are adequate internal
control procedures commensurate with the size of the Company and the nature of its business with regard
to fixed assets. As the Company is under construction stage therefore this clause relating to inventory and
sale of goods is not applicable. During the course of our audit, we have not observed any major weaknesses
in internal control.
(5) (a) According to the information and explanations given to us, there are no such transactions which
needs to be entered into the register maintained in pursuance of Section 301 of the Companies Act,
1956.
(b) In our opinion and according to the information and explanations given to us, there are no transactions
made in pursuance of contracts or arrangements entered into the register maintained in pursuance of
Section 301 of the Companies Act, 1956, hence this clause is not applicable.
(6) The Company has not accepted any deposits from public during the year, hence the requirements of
Section 58A and Section 58AA of Companies Act, 1956 and Rules framed there under are not applicable.
(7) In our opinion, the Company has an internal audit system commensurate with the size and nature of its
business.
(8) The Company is under construction stage, therefore, maintenance of Cost Records under Section 209(1)(d)
of the Companies Act, 1956 is not applicable to the Company.
(9) (a) The Company is regular in depositing with Appropriate Authorities undisputed statutory dues including
Income Tax, Sales Tax, Excise Duty, Custom Duty, Cess and other material statutory dues applicable
during the year to the Company.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect
of Income Tax, Sales Tax, Excise Duty, Custom Duty and Cess were in arrears, as at March 31, 2007
for a period of more than six months from the date they became payable.
(c) According to the information and explanation given to us, there are no disputed dues of Sales Tax,
Income Tax, Custom Duty, Excise Duty and Cess.
144
Annexure to the A
Annexure uditor
Auditor ’s Report
uditor’s
(10) The Company is under construction stage hence this clause of accumulated losses is not applicable.
(11) The Company has not taken any loan from Bank & Financial Institution, and not issued any debenture;
hence this clause is not applicable to the Company.
(12) The Company has not granted any loans and advances against pledge of shares, debentures and other
securities; hence this clause is not applicable.
(13) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the
provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the
Company.
(14) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other
investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003
are not applicable to the Company.
(15) In our opinion, the Company has not given any guarantee for loans taken by others from banks or financial
institutions; hence this clause is not applicable.
(16) In our opinion, the Company has not applied for any term loan; hence this clause is not applicable.
(17) According to the information and explanations given to us and on the basis of overall examination of the
balance sheet of the Company, we report that no fund raised on short-term basis have been used for long-
term investment; hence this clause is not applicable.
(18) According to the information and explanations given to us, the Company has not made preferential allotment
of shares to parties and companies covered in the register maintained under Section 301 of the Companies
Act, 1956; hence this clause is not applicable.
(19) According to the information and explanations given to us, the Company has not issued any Debenture
during the period covered by the audit report; hence this clause is not applicable.
(20) The Company has not raised any money by public issue; hence this clause is not applicable.
(21) According to the information and explanations given to us, no fraud on or by the Company has been
noticed or reported during the course of our audit.
For Rawla & Company

Y.P. Rawla
Partner
Membership No.: 10475
Place : New Delhi

Date : May 04, 2007
145
Balance Sheet as at 31st March, 2007

March,
Amount (Rs.’000)
Schedule 2006-07 2005-06
SOURCES OF FUNDS
Shareholder’s funds:
a) Share Capital 1 3,354,600 2,957,100
b) Share Application Pending Allotment 34,800 42,900
TOTAL 3,389,400 3,000,000
Fixed Assets:
a) Gross Block 2 1,621,997 1,670,154
b) Less: Depreciation 96,536 83,771
c) Net Block 1,525,461 1,586,383
d) Capital Expenditure (In respect of assets
not owned by the Company) 3 21,460 49,935
e) Capital Work in Progress 4 1,557,378 1,354,718
3,104,299 2,991,036
Current Assets, Loan & Advances:
a) Sundry Debtors 5 122,586 13,985
b) Cash and Bank Balance 6 706 3,339
c) Other Current Assets 7 12 8
d) Loans and Advances 8 141,303 34,073
264,607 51,405
Less:
Current Liabilities and Provisions:
a) Liabilities 9 42,471 88,355
b) Provisions 239 21
42,710 88,376
Net Current Assets 221,897 (36,971)
Miscellaneous Exp.
(to the extent not written off or adjusted) 10 63,204 45,935
TOTAL 3,389,400 3,000,000
STATEMENT OF SIGNIFICANT ACCOUNTING
POLICIES AND NOTES FORMING PART OF ACCOUNTS 11
As per our report of the even date

For Rawla & Company B.S. Sant C.Ramulu
Chartered Accountants Managing Director Director
Y.P. Rawla S. Malhotra S.Tyagi
Partner DGM-Finance Company Secretary
Place : New Delhi

Date : May 04, 2007
146

Amount (Rs.’000)
2006-07 2005-06
SCHEDULE 1
SHARE CAPITAL
A AUTHORISED
6,000,000,000, (Previous year : 550,000,000)
Equity Shares of Rs. 10/- each 60,000,000 5,500,000
60,000,000 5,500,000
B ISSUED CAPITAL
338,940,000, (Previous year : 300,000,000) 3,389,400 3,000,000
Equity Shares of Rs. 10/- each 3,389,400 3,000,000
C SUBSCRIBED & PAID UP CAPITAL

335,460,000, (Previous year : 295,710,000)
Equity Shares of Rs. 10/- each fully paid up 3,354,600 2,957,100
3,354,600 2,957,100
SCHEDULE 2
FIXED ASSETS
Amount (Rs.’000)
GROS S BLOCK DEPRECIATION BLOCK NET BLOCK
Additions/ Ded/ As at As at For the Ded/ Total Up to As at As at
reclassifi- Recl. 31.03.07 01.04.06 year Recl. 31.03.07 31.03.06 31.03.07
Description As at
cation 2006-07
01.04.06
during
the year
A. TANGIBLE ASSETS
Land- Freehold 876,648 - - 876,648 - - - - 876,648 876,648
Road & Culverts 204,057 - - 204,057 13,318 3,326 - 16,644 190,739 187,413
Buildings 59,171 - - 59,171 8,889 1,850 - 10,739 50,282 48,432
Land- Lease Hold 332,864 50,541 98,943 284,462 44,811 14,275* 11,564 47,522 288,053 236,940
Plant & Machinery 75,603 462 266 75,799 15,517 4,608 3 20,122 60,086 55,677
Furniture & Fixture 4,289 - 93 4,196 1,236 289 16 1,509 3,053 2,687
TOTAL (A) 1,552,632 51,003 99,302 1,504,333 83,771 24,348 11,583 96,536 1,468,861 1,407,797
Right of Use 117,522 142 - 117,664 - - - - 117,522 117,664
TOTAL (B) 117,522 142 - 117,664 - - - - 117,522 117,664
GRAND TOTAL (A+B) 1,670,154 51,145 99,302 1,621,997 83,771 24,348 11,583 96,536 1,586,383 1,525,461
Previous year 1,640,624 29,530 - 1,670,154 62,494 21,277 - 83,771 1,578,130 1,586,383
* The amount of amortization on leasehold land over a period of 30 years has been reflected under the “Direct Revenue Expenses-SPM/COT” & “Prior period debits” in Schedule 4(II)
Leasehold land appearing in “Capital Work in progress-SPM/COT” of Rs. 50,541 thousands capitalised during the year.
Land Freehold Includes:
Rs. 875,800 thousands (Previous year Rs. 875,800 thousands) towards 1,992.575 acres of Refinery land at Bathinda for which the Company is in advanced stage for conclusion of
“Conveyance Deed”.
Rs. 800 thousands (Previous year Rs. 800 thousands) towards 15.84 acres of land along the Pipeline route for pumping/service stations, deposited with statutory authorities viz Sub
Divisional Officers / Tehsildar, documents pending registration.
147

Amount (Rs.’000)
2006-07 2005-06
SCHEDULE 3
CAPITAL EXPENDITURE
NOT REPRESENTED BY ASSET
OWNED BY THE COMPANY
Capital Expenditure not represented
by asset owned by the Company 50,389 144,190
Less : Amortised during the year 28,929 94,255*
TOTAL 21,460 49,935
* Includes Rs. 6,54,17,000 pertaining

to period prior to 2005-06
SCHEDULE 4
I CAPITAL WORK IN PROGRESS (at cost)

Capital work in progress - Pipeline 196,412 201,247
Capital work in progress - Refinery 541,052 356,060
Advance for Capital Expenditure 3,215 3,215
Capital work in progress - Wind Power - 1,390
Capital work in progress - SPM/COT - 50,542
TOTAL (I) 740,679 612,454
II Incidental expenses during construction

(pending apportionment)
Opening Balance 742,264 562,010
Direct revenue Exp-SPM/COT

Lease Rent 26,337 32,637
Amortisation of land 10,077 36,414 11,782 44,419
Direct revenue Exp-Refinery
Amortisation Assets not
owned by the Company 28,929 28,838
Configuration and cost study 6,044 34,973 8,916 37,754
148

Amount (Rs.’000)
2006-07 2005-06
Other Incidental Expenses

Salary & Wages (Reimbursed to holding co.) 21,820 15,338
Travel/ Conveyance/Transportation Charges 4,779 3,043
Professional Charges 1,375 597
Outsourced Services 3,222 2,622
Rent 1,373 1,502
Insurance 3 1
Postage & Telephone 780 682
Staff Welfare Expenses 370 309
Security Charges 1,992 1,754
Fuel Electricity & Water 1,014 928
Stationary & Office Supplies 415 338
Repair & Maintenance 1,838 1,719
Books & Periodicals 47 155
General Expenses 2,307 4,563
Audit Fees 50 56*
Rates & Taxes 207 113
Depreciation 9,633 9,495
Provision for Fringe Benefit Tax 519 428
Provision for Income Tax 22 51,766 3 43,646
Prior period
Debit 4,638 65,417
Credit (53,291) (48,653) (10,555) 54,862
Sub Total 816,764 742,691
Less:
Interest on Term Deposits 65 9
Misc. Income - 65 418 427
Sub Total 65 427
Total (II) 816,699 742,264
Grand Total (I + II) 1,557,378 1,354,718
* Inclusive of service tax
149

Amount (Rs.’000)
2006-07 2005-06
SCHEDULE 5
SUNDRY DEBTORS (Unsecured)
Debt outstanding for a period exceeding six months
Considered good - -
Considered doubtful - -
Other debts - -
Considered good (Due from HPCL, holding Company) 122,586 13,985
Total 122,586 13,985
SCHEDULE 6
CASH AND BANK BALANCE

Cash on hand 130 100
Balance with Schedule Bank

On Current Account with Punjab National Bank 576 3,239
Total 706 3,339
SCHEDULE 7
OTHER CURRENT ASSETS
Interest Accrued on bank deposits but not due 12 8
Total 12 8
SCHEDULE 8
LOANS AND ADVANCES
(UNSECURED CONSIDERED GOOD)
(Advance recoverable in cash or kind for

the value to be received)
Security Deposits Paid 9,479 8,928
TDS on Interest Income 15 -
CENVATABLE Claim 55,207 25,112
Other Advances 76,602* 33
Total 141,303 34,073
* Includes Rs. 75,000 thousands (Previous year: Nil) paid as

deposit towards land litigation case, refer note 9(a)
150

Amount (Rs.’000)
2006-07 2005-06
SCHEDULE 9
CURRENT LIABILITIES AND PROVISIONS
A Current Liabilities
Duties and Taxes 1,392 2,698
Sundry Creditors - 9,169
Earnest Money Deposits 218 96
Retention Money & Deductions 5,121 3,403
Security Deposits Received 4,132 3,183
Other Liabilities 41 -
Liabilities for
Works Contract 29,645 55,731
Expenses 1,922 995
ROU Compensation - 13,080
42,471 88,355
B Provisions
Income Tax 22 3
Fringe Benefit Tax 217 18
239 21
Total 42,710 88,376
There are no outstanding dues towards
Small Scale Industrial Undertakings
for more than 30 days
SCHEDULE 10
MISCELLANEOUS EXPENDITURE
(To the extent not written off or adjusted)
Preliminary Expenses 20,803 20,803
Financial Appraisal & Advisory 9,595 5,287
Sponsorships 10,210 10,210
Project Launch Expenses 21,006 9,635
Wind Power Project 1,590 -
63,204 45,935
151

ccounting PPolicies
ccounts
SCHEDULE 11
A. SIGNIFICANT ACCOUNTING POLICIES
a. Accounts are prepared under the historical cost convention in accordance with Generally Accepted
Accounting Principles (GAAP) & Accounting Standards issued by the Institute of Chartered Accountants
of India (ICAI) and the provisions of the Companies Act, 1956. All income and expenditure having
material bearing are recognised on the accrual basis, except where otherwise stated.
b. Land
Land acquired on lease for less than 99 years is treated as leasehold land. Cost of “Right of Use” is
capitalized. Leasehold land is amortised over the period of lease.
c. Fixed Assets
Cost of Fixed Assets comprises of purchase price, duties, statutory levies (net of Cenvatable claim) and
any directly attributable cost of bringing the asset to its working condition for its intended use.
d. Intangible Assets
1. Cost of “Right of Use” is capitalised. However, such “Right of Use” being perpetual in nature is not
amortized.
2. Expenditure on Intangible assets in the nature of “Assets not owned by the Company” are amortised
after completion of assets over a period of five years or its period of utility, whichever is less.
e. Depreciation
1. Depreciation on fixed assets is provided on straight line basis, in the manner and at the rates
provided under Schedule XIV of the Companies Act, 1956. Depreciation is charged pro-rata on
monthly basis on assets, from/ up to and inclusive of the month of capitalisation/ sale, disposal
or deletion during the year.
2. Premium on leasehold land and amount incurred on development of such land are amortised over
the period of lease.
f. Expenses During Construction Period
The direct project expenditure incurred during the construction period has been shown under the head
“Capital Work in Progress” which will be transferred to relevant fixed assets as and when they are
completed.
Indirect expenditure relating to project have been shown under the head “Incidental Expenditure during
construction relating to project (pending apportionment)” which will be apportioned to fixed assets
upon completion of the project.
g. Miscellaneous Expenditure
The expenditure shown under the head “Miscellaneous Expenditure (to the extent not written off/
adjusted)” will be amortised over a period of five years after commencement of commercial production.
152

ccounting PPolicies
ccounts
B. NOTES FORMING PART OF ACCOUNTS
1. The entire equity contribution to Guru Gobind Singh Refineries Limited (GGSRL) has been made by
Hindustan Petroleum Corporation Limited (HPCL). Hence, GGSRL is a wholly owned subsidiary of
HPCL and a Government company u/s 617 of the Companies Act, 1956.
2. The Company has prepared the “Statement of Incidental Expenditure during construction” instead of a
Profit and Loss Account. The necessary details as per Part II of Schedule VI of the Companies Act,
1956, have been disclosed in the said statement.
3. The Company has acquired 310 acres of land on 30 year lease, out of which possession of 80 acres
has been given to HPCL on cost basis and margins, if any, to be considered up to the date of transfer.
The aforesaid transfer is pending execution of agreement and approval from M/s Mundra Port Special
Economic Zone (MPSEZ).
4. The Company has over the years spent an amount of Rs. 15.90 lakhs towards feasibility of establishing
Wind Energy Project. As the Company has suspended the Wind Power Project, the amount spent on
the activity has been considered as Miscellaneous expenses.
5. The entire manpower of the Company, except the Managing Director, has been assigned by HPCL, on
full time basis and are continuing their lien with HPCL and their salary and retirement benefits are
regularly disbursed to HPCL. Accordingly, provision for retirement benefits in respect of such employees
is not required to be made in the books of the Company.
Further the provisions of Section 217 (2A) of the Companies Act, 1956 are not applicable to the
Company.
6. The amount of CENVAT claim in Schedule-8 represents excise duties, countervailing duties and service
tax paid by the Company which shall be utilized as a set off from the excise duty and service tax
payments as and when the Company commences commercial production.
7. A Project Management Consultancy (PMC) contract has been awarded by the Company during the
year pursuant to approval of a revised configuration.
The amounts already spent by the Company on PMC and feasibility activities with regard to its earlier
configuration and capacities are currently reflected under “Capital Work in Progress” and “Incidental
Expenses” account. These amounts shall be suitably treated to the extent of its actual usage in the
project activities.
8. Information pursuant to the provision of paragraph 3, 4C and 4D of Part II of Schedule VI of the

Companies Act, 1956.
a. As the Company is in process of construction of Refinery and its associated facilities, hence
information containing in paragraph 3 & 4C of Part II of Schedule VI is not applicable.
153

ccounting PPolicies
ccounts
(Rs./Lakhs)
2006-07 2005-06
b. Expenditure in foreign currency on account of :
(i) Purchase of Books/Magazines 0.06 0.06
(ii) Business Travel & Training fees 5.85 6.80
9. Contingent Liabilities not provided for in respect of
(a) Land- Refineries 2,378.33* 2,300.00
* Amount towards enhancement of land compensation
as per orders of Hon’ble District Court, Bathinda for
land owners who had filed an appeal u/s 18 of Land
Acquisition Act, 1894. The Company has filed appeal
in the Hon’ble Punjab & Haryana High Court against
the order and obtained a stay of demand from Hon’ble
Supreme Court against the payment of enhanced
compensation. As per the order of Hon’ble Supreme
Court, the Company has deposited Rs. 7.50 crores with
District Court, Bathinda, pending outcome of the appeal
in High Court.
Interest if any, on the amount shall be accounted for in
the year of receipt.
(b) Others 369.76 354.76
10. Claims against the Company not acknowledged as 996.06 952.37
debts
11. Estimated amount of contract remaining to be 69,398.30 6,384.00
executed on Capital Account not provided for
12. Related Party disclosure
(With HPCL, Holding Company)
(a) Issuance of Share Capital 3,894.00 -
(b) Share Application (Pending Allotment) 348.00 429.00
(c) Expenses Reimbursed 14.39 -
(d) Sale of steel plates
Qty.(MT) 175.34 3,383.52
Amount 31.24 503.42
(e) Cost of Employees assigned to Company 210.84 151.50
(f) Transfer of land 1,395.25 -
154

ccounting PPolicies
ccounts
(Rs./Lakhs)
2006-07 2005-06
13. Capital Work in Progress (Refinery) includes

(a) Steel plates- Qty.(MT) 6,169.24 6,344.58
(b) Steel plates- Amount 1,335.98 1,361.58
14. Managerial Remuneration
As Managing Director
(a) Salary & Allowances 5.33 2.53
(b) Gratuity 0.27 0.10
(c) Contribution to Provident Fund 0.75 0.12
(c) Other Benefits 1.66 0.10
15. Auditors Remuneration
(a) Audit Fees 0.50 0.56*
(b) Certification work 0.15 0.05
* Inclusive of service tax
16. Amounts due from the Directors to the Company
(a) As on 31.03.2007 - -
(b) Maximum amount due during the year - -
17. Intangible assets (not internally generated)
(a) Assets owned by the Company : Right of Use 1,176.63 1,175.00
Amounts paid to Competent Authority for acquiring
“Right of Use” to lay the pipeline and expenditure on
investigating the title & measurement of the land.
The “Right of Use” is a perpetual right of use of land
but the ownership of the land does not rest with the
Company.
(b) Assets not owned by the Company (net of
Amortisation): 214.60 499.35
Represents expenditure incurred towards
construction & widening of roads, the ownership
of which rests with Government of Punjab.
155

ccounting PPolicies
ccounts
(Rs. /Lakhs)
2006-07 2005-06
18. Prior period Credits/ Debits
(a) Credits
(i) Service Tax - 3.45
(ii) Sponsorship Expenses - 102.10
(iii) Project Launch Expenses 113.71 -
(iv) Lease Rental 303.56 -
(v) Amortisation of Lease Hold Land 115.64 -
(b) Debits
(i) Amortisation of Assets not owned by Company - 654.17
(ii) Depreciation/ Amortisation 46.38 -
19. Previous year’s figures have been regrouped, recasted and reclassified wherever necessary.
20. Schedule “1” to “11” form an integral part of the Balance Sheet and “Incidental Expense during
Construction”.
21. Figures under Schedule “1” to “10” have been rounded off to the nearest thousand rupees.
156
Balance Sheet Abstract and Company ’s General Business Pr

Company’s ofile
Profile
Schedule VI Part IV of Companies Act, 1956
I. REGISTRATION DETAILS
REGISTRATIONNO. : U 2 3 2 0 1 P B 2 0 0 0 G O I 0 2 4 1 2 6 STATECODE: 1 6
BALANCE SHEET DATE : 3 1 0 3 2 0 0 7
II. CAPITAL RAISED DURING THE YEAR (Amount in Rs.Thousands)

PUBLIC ISSUE RIGHTS ISSUE
N I L N I L
BONUS ISSUE PRIVATE PLACEMENT
N I L 3 8 9 4 0 0
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs. Thousands)
TOTAL LIABILITIES TOTAL ASSETS
3 4 3 2 1 1 0 3 4 3 2 1 1 0
SOURCES OF FUNDS
PAID-UP CAPITAL RESERVES & SURPLUS
3 3 5 4 6 0 0 N I L
SECURED LOANS UNSECURED LOANS
N I L N I L
NET FIXED ASSETS INVESTMENTS
3 1 0 4 2 9 9 N I L
NET CURRENT ASSETS MISC.EXPENDITURE
2 2 1 8 9 7 6 3 2 0 4
ACCUMULATED LOSSES
N I L
IV. PERFORMANCE OF THE COMPANY (Amount in Rs. Thousands)
TURNOVER TOTAL EXPENDITURE
N I L N I L
PROFIT /LOSS BEFORE TAX PROFIT /LOSS AFTER TAX
+ N I L + N I L
EARNINGS PER SHARE IN RS. DIVIDEND RATE %
N I L N I L
V. Generic Names of Three Principal
Products of the Company
(as per monetary terms )
Item Code No. (ITC Code) 2 7 1 0
Product Description B U L K P E T R O L E U M
P R O D U C T S
Item Code No. (ITC Code)
Product Description
Item Code No. (ITC Code)
Product Description
*Includes Capital Work in Progress, Incidental Expenses, Capital Expenditure & Advance against Capital Assets.
B.S. SANT C. RAMULU S. MALHOTRA S. TYAGI

Managing Director Director DGM Finance Company Secretary
Place : New Delhi
Date : May 04, 2007
157
Cash Flow Statement for the YYear

ear ended 31st March, 2007
March,
(Rupees in Millions)
2006-07 2005-06

Net Profit before Tax & Extraordinary items
Adjustments for :
Depreciation / Amortisation - -
Interest - -
Dividend received - -
Deletion of Fixed Assets/CWIP - -
Interest received on Long Term Investments - -
Interest received on Fixed Deposits - -
Misc. Expenses to the extent written off - -
Provision for Doubtful Debts & write offs - -
Profit on Sale of Investment - -
Provision for Loss on Investments - -
Operating Profit before Working Capital changes - -
Adjustments for :
Trade Receivables (108.60) 53.66
Other Receivables (107.23) 0.38
Other Current Assets - -
Inventories - -
Trade and other Payables (45.67) (35.10)
(261.50) 18.94
Amounts recoverable from Pool Account - -
Cash generated from operations (261.50) 18.94
Provision for taxes (Net) - -
Cash Flow before extraordinary items (261.50) 18.94
Net Cash from Operating activities (A) (261.50) 18.94
Purchase of Fixed Assets (incl. Capital Work (212.56) (38.68)
in Progress / excluding interest capitalised)
Sale of Fixed Assets 99.30 -
Preliminary / Pre-operative expenses (17.27) (19.92)
Purchase of Investment - -
Redemption of Investments - -
Interest received on Fixed Deposits - -
Interest received on Investments - -
Dividend received - -
Net Cash used in Investing Activities (B) (130.53) (58.60)
158
Cash Flow Statement for the YYear

ear ended 31st March, 2007
March,
(Rupees in Millions)
2006-07 2005-06

Proceeds from issue of Share Capital :
- Share Allotment/Call monies (incl. Share Premium) 397.50 -
- Excess Share Application Money (adj.) - -
- Share Application money pending allotment (8.10) 42.90
Proposed public issue expenses - -
Repayment of Loans - -
Loans raised during the year - -
Interest other than for Long Term Loans - -
Interest on Long Term Loans (including interest capitalised) - -
Dividends paid - -
Net Cash used in Financing Activities (C) 389.40 42.90
Cash Equivalents (A) + (B) + (C) (2.63) 3.24
Cash & Cash Equivalents as on 1st April 06 (Opening) :
Cash on Hand 0.10 0.10
- On Current Accounts 3.24 -
- Others - -
Balances with other Banks - -
Overdrafts from Banks - -
3.34 0.10
Cash & Cash Equivalents as on 31st March 07 (Closing):
Cash on Hand 0.13 0.10
- Others - -
Balances with other Banks - -
Overdrafts from Banks - -
0.71 3.34
Cash Equivalents (2.63) 3.24
For Rawla & Company

Y.P. Rawla S. Malhotra
Partner DGM- Finance
Place : New Delhi
Date : May 04, 2007
159
C & AG’s Comments

AG’s
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER
SECTION 619 (4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS OF GURU
GOBIND SINGH REFINERIES LTD. FOR THE YEAR ENDED 31ST MARCH 2007
The preparation of financial statements of Guru Gobind Singh Refineries Ltd. for the year
ended 31-03-2007 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 is 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 and 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 04-05-2007.
I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementary
audit under section 619 (3) (b) of the Companies Act, 1956 of the financial statements of Guru
Gobind Singh Refineries Ltd. for the year ended 31-03-2007. This supplementary audit has
been carried out independently without access to the working papers of the statutory auditors
and is limited primarily to the inquiries of the statutory auditors and company personnel and a
selective examination of some of the accounting records. 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 an on the behalf of the

Comptroller and Auditor General of India
(Saroj Punhani)
Principal Director of Commercial Audit
& Ex-officio Member, Audit Board-II, New
Delhi.
Place : New Delhi
Date : 25.06.2007
160

Annual Report 2006-07 HPCL

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Annual Report 2006-07 HPCL

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55th Annual Report 2006-07

Our Directors .................................................................. 7

Senior Management Team .................................................. 8

Offices, Auditors & Bankers ............................................ 11

Notice of AGM .............................................................. 12

Performance Profile ........................................................ 18

Director’s Report ........................................................... 26

Annexure to Director’s Report ........................................ 31

Management Discussion & Analysis Report ....................... 45

Special Focus Areas ....................................................... 52

Auditor’s Report ............................................................ 61

Balance Sheet ................................................................ 66

Profit & Loss Account .................................................... 67

Schedules to Accounts ................................................... 68

Cash Flow Statement ....................................................... 92

C & AG’s Comments ...................................................... 96

Joint Venture Companies ................................................. 97

Consolidated Financial Statements .................................. 100

Corporate Governance Report ....................................... 116

Annual Report of Guru Gobind Singh

Shri Arun Balakrishnan Shri M B Lal

Shri C Ramulu Shri T L Sankar

Shri Prabh Das

Shri S Roy Choudhury Shri Rajesh V Shah

Shri P.V. Rajaraman

Shri M A Tankiwala Shri M Nandagopal

Prof. Prakash G. Apte

Shri V Viziasaradhi Prof. I M Pandey

Senior Corporate Officers

Shri S.P. Gupta Shri K.V. Rao Shri A.B. Pai

**: Retired from the services of the Corporation

Shri V. Jagannathan Shri K. Srinivasan Shri R.M.N. Marar Shri G. Sriganesh

Offices, Auditors and Bankers

Visakh Refinery South Zone

Statutory Auditors Bankers

Notice of Annual General Meeting

2. To declare Equity Dividend for the Financial Year 2006-2007.

Notice of Annual General Meeting

BY THE ORDER OF THE BOARD

Date : August 03, 2007

Notice of Annual General Meeting

Notice of Annual General Meeting

Nationality Indian Indian Indian Indian Indian Indian Indian Indian

Date of 21.01.1999 03.05.2005 14.08.2003 21.01.1999 01.06.2005 20.07.2007 20.07.2007 03.08.2007

Ventures Investments & Movers Ltd.

Independence Day Celebration

Independence Day being Celebrated at Corporate Headquarters.

Market Sales (Incl. Export)

2006-07 2006-07 2005-06 2004-05 2003-04 2002-03

FINANCIAL US$ Million Rs./Crores

INTERNAL RESOURCES GENERATED 366 1,603.08 989.47 1,277.44 1,722.10 1,375.76

VALUE ADDED 1,419 6,209.19 4,198.13 5,208.06 6,061.19 5,115.14

WHAT CORPORATION OWNS

Total 4,596 20,116.18 15,399.57 10,626.20 9,443.61 8,044.78

WHAT CORPORATION OWES

Total 4,596 20,116.18 15,399.57 10,626.20 9,443.61 8,044.78

PHYSICAL Million Tonnes

Notes: 1. Previous year figures have been regrouped/reclassified wherever necessary

Distribution of Earnings 2006-2007

2006-07 2006-07 2005-06 2004-05 2003-04 2002-03

2006-07 2006-07 2005-06 2004-05 2003-04 2002-03

How Value is Added US$ Million Rs./Crores

in Inventory 56 243.55 1,408.96 34.87 357.50 1,187.90