Dear Shareowners,

On behalf of the Board of Directors and on my personal behalf, I welcome you all to this 19th Annual General Meeting of Numaligarh Refinery Limited. Notice of the AGM, Directors’ Report and Audited Accounts has been tabled and with your kind permission, I consider them as read.

I am pleased to inform you that NRL has completed another year with sustained profitability despite formidable challenges on several fronts. During 2011-12, the Company achieved its highest ever performance in all physical parameters namely Crude Processing, Distillate Yield and Specific Energy Consumption since commercial production began in the year 2000. The Distillate Yield was the highest in the Indian Oil Industry. The company has also achieved the highest ever sales volume in a single year. However, despite such notable achievements, net profit had declined as compared to the previous year due to circumstances that were not under the Company’s control.

The decline in profitability during 2011-12 is attributable mainly to customs and excise duty restructuring by the Government in June 2011. To improve the profitability of the company, value added projects pertaining to production of Paraffin and Micro-crystalline Wax and petrochemical grade Naphtha, are in advanced stages of implementation.

The Company has demonstrated utmost resilience in mitigating challenges arising out of a major refinery fire incident on 7th April of the current financial year. The fire was controlled within a short time with minimal damage to equipment and significantly, without any injury or casualty.

I shall now highlight some of the important aspects relating to the Company’s business during the financial year 2011-12.

Physical Performance

During the year, NRL achieved record performance in physical parameters and the results were better than the respective ‘Excellent’ MOU targets. Crude throughput was at an all time high of 2825 TMT. Distillate Yield was 91.52% while Specific Energy Consumption was 59.7 MBN, both, were the best levels achieved since the commissioning of the refinery. NRL’s total production of petroleum products during the year stood at 2755 TMT.

During the year, natural gas utilization facilities at the Hydrogen Unit were successfully commissioned. Utilisation of natural gas has not only contributed in improving distillate yield but has reduced operating costs, thereby improving the refining margin.

Financial Performance

During 2011-12, the Company’s sales turnover was Rs. 14,028 crores representing an increase of 56%over the previous year. Profit before tax was Rs. 287 crores while profit after tax stood at Rs. 183.7 crores. The profitability in the last three quarters of the year was adversely impacted by the duty restructuring in June 2011. Gross Refinery Margin for the year was USD 11.97 per barrel including excise benefit of USD 6.21 per barrel.

Earning per share for the year was Rs. 2.50. Your Directors are pleased to recommend for your approval, a dividend of 10%, which is Re. 1/- per fully paid equity share of Rs. 10/- each.

The Company’s net worth has consistently increased over the years, reaching Rs. 2699 crores as on 31st March, 2012.

During the year, NRL contributed Rs. 860 crores to the Central Exchequer and Rs. 556 crores to the State Exchequers.

I am pleased to mention that the Report of the Comptroller and Auditor General (C&AG) of India on the accounts of the Company for the year ended 31st March, 2012 does not carry any comment or observation. NRL has thus been certified with ‘nil’ comments by the CAG for the 14th consecutive year.

Safety

There was no lost time accident during 2011-12. As on 31st March, 2012, NRL’s cumulative LTA free manhours reached 18.3 million, representing over 10 years of LTA free operations, which is continuing.

Environment

On the environmental front, besides maintaining all parameters well within norms, 100% effluents generated from the refinery and township, were reused within the refinery.

Marketing

During the year, out of 2.73 MMT of products marketed by the Company, 19% were sold within North East and balance 81% were moved out. Bulk of products, aggregating 81%, was sold to BPCL. Retail sales amounted to 7.1%.

On retail marketing front, as on 31st March, 2012, NRL had 75 Retail Outlets of which, 67 were within North East. NRL, not being covered under government’s compensation scheme for losses in retail marketing, started rationalization of retail marketing activities in 2010-11. During 2011-12, due to higher oil prices, NRL’s retail under-recoveries persisted despite the rationalization exercise in previous year. Towards a plausible solution to this problem, actions were taken for handing over NRL’s entire retail network to BPCL. As on date, all operating ROs have been handed over to BPCL.

Projects

Your Company is pursuing a broad array of growth opportunities by way of implementing value added projects so as to remain profitable and ensure sustained growth.

Expenditure on Plan projects during the 11th Five Year Plan (2007-12) was Rs. 652 crores against approved outlay of Rs. 625 crores.

Two major projects currently under implementation are the Wax project and the Naphtha Splitter project. Overall progress of the ongoing Wax project and the Naphtha Splitter project reached 27% and 78% respectively.

NRL’s plan outlay for 12th Five Year Plan is Rs. 8,955 crores of which 90% pertains to refinery expansion. The company is exploring the possibility of expanding the refining capacity from the current level of 3 MMTPA together with the options of sourcing and transporting the additional crude oil requirements.

NRL has invested in two joint venture companies. NRL’s investment in the equity of M/s Brahmaputra Cracker & Polymer Limited as on date stands at Rs. 127 crores. A sum of Rs. 43 crores has been invested in M/s DNP Limited for the Duliajan-Numaligarh natural gas pipeline project which was commissioned in 2011.

Corporate Social Responsibility

Thrust areas of NRL’s CSR initiative include (i) income generation from agriculture and allied activities; (ii) education; (iii) infrastructure development; (iv) health and (v) promotion of art/sports/literature & culture.

During 2011-12, the Company had effectively implemented several schemes for promotion of education such as ‘Gyandeep’, ‘Prerona’ and ‘Dronacharya’. Free medical camps were extensively organized in collaboration with VK NRL Hospital, Numaligarh. Towards promotion of self employment, necessary assistance were provided to various self-help groups for setting up handlooms, poultry farms, piggeries and fisheries. A pioneering scheme titled, ‘System of Rice Intensification’ (SRI) was introduced, benefiting several farmers with increased rice productivity. In addition, several schemes for development of infrastructure in villages and towns surrounding the refinery were implemented during the year.

An amount of Rs. 5.86 crores was spent during the year on CSR activities compared to Rs. 4.97 crores in the previous year.

Corporate Governance

NRL being a non listed Company, stipulations as contained in clause 49 of the stock exchange listing agreement are not mandatory. However, as a good corporate governance practice and as per guidelines on Corporate Governance for Central Public Sector Enterprises issued by the Department of Public Enterprises in May, 2010, relevant information on areas covered under Corporate Governance disclosures for the year 2011-12 has been incorporated in the Annual Report. The Company has complied with the requirements of corporate governance as stipulated in the Guidelines except for non-compliance on clause 3.1.4 relating to the number of independent directors on the Board of the Company and 4.1.1 relating to composition of Audit Committee.

Acknowledgements

The Directors gratefully acknowledge the support from the Central Government particularly, the Ministry of Petroleum & Natural Gas, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Railways, Income Tax, Customs and Central Excise Department as well as from the Government of Assam.

The Directors place on record their deep appreciation to NRL’s valued customers, dealers, contractors, suppliers and bankers for their continued support and patronage.

I, on my behalf and on behalf of my colleagues on the Board would like to record our sincere gratitude for the invaluable contribution made and guidance provided by Shri S.K. Joshi, Shri N.M. Borah, Shri Jatinderbir Singh and Shri Partha Sarathi Das, who had relinquished the office of Director of the Company since the date of last AGM.

The Directors express their sincere gratitude to each and every shareholder of NRL, particularly Bharat Petroleum Corporation Limited, Oil India Limited and Government of Assam for reposing their confidence and support to the Company’s management.

I express my sincere appreciation for the invaluable contribution and cooperation of my colleagues on the Board in charting the road map of the Company for continuous growth and profitability, thereby steering it to greater heights.

On my personal behalf and on behalf of the Directors it is my pleasure to convey our deep appreciation to all employees of NRL for their hard work, commitment and whole hearted support for achieving company’s goals and targets.

As I conclude, I sincerely thank each and every one of you, our stakeholders, for the confidence and trust reposed upon us. We remain committed to sustain growth, improve our performance continually and live up to your expectations.

Thank you,

Dear Shareowners,

On behalf of the Board of Directors and on my personal behalf, I welcome you all to this 18th Annual General Meeting of Numaligarh Refinery Limited. Notice of the Annual General Meeting, Directors’ Report and Audited Accounts has been tabled and with your kind permission, I consider them as read.

I am pleased to inform you that NRL has completed yet another year with sustained profitability, overcoming challenges on several fronts.

I shall highlight some of the significant aspects about the Company’s business during the financial year 2010-11.

During first quarter of 2010-11, NRL completed the Diesel Quality Upgradation Project within approved project cost of Rs. 435 crores. Implementation of this project has enabled the Company to produce Euro-III and limited quantities of Euro-IV HSD besides augmenting capacities of secondary processing units.

The other major event during the year was completion of the Natural Gas pipeline in February 2011. Utilisation of Natural Gas in lieu of Naphtha as fuel and feed has since resulted in reduction in operating costs besides leading to increase in Distillate Yield.

Physical Performance

Crude throughput during 2010-11 was 2.25 MMT which was in line with crude receipt. Distillate Yield during the year was 84.70%. Distillate Yield during 1st quarter of the year was affected due to lower secondary processing. However, Distillate Yield improved in subsequent quarters. In fact, NRL’s Distillate Yield during 3rd and 4th quarters of 2010-11 were highest in the Industry. Specific Energy Consumption during the year was 69.0 MBN.

During 2010-11, product evacuation at 2.07 MMT was higher than total production of 2.01 MMT. 20% of the products from the refinery were evacuated by road, 28% by rail and 52% through the Numaligarh-Siliguri product pipeline.

Safety

Sustaining excellence on the Safety front, NRL’s cumulative LTA free manhours as on 31st March, 2011 reached 16.2 million which translates to over 9 years of accident free operations.

Environment

On the environmental front, besides maintaining all environmental parameters within norms, 100% effluents were reused during the year.

Steam Turbine Generator Operation

Operation of the 12 MW Steam Turbine Generator was stabilized during the year and the STG is now generating power consistently.

Financial Performance

During 2010-11, NRL recorded the highest ever Sales Turnover at Rs. 8972 crores. Profit before tax increased by 15% to Rs. 415 crores. Profit after tax rose by 20% to Rs. 279 crores. The compounded annual growth rate for PAT was 29%. GRM during 2010-11 was $15.39 per barrel including Excise Duty benefit of $8.72 per barrel.

Earning per share in 2010-11 was Rs. 3.80 compared to Rs. 3.15 in the previous year. Internal generation of cash during 2010-11 at Rs. 467 crores was higher compared to Rs. 393 crores in 2009-10.

As on 31st March, 2011 NRL’s Net Worth increased to Rs. 2601 crores while debt equity ratio was recorded at 0.04.

During the year, NRL contributed Rs. 792 crores to the Central Exchequer while contribution to the State Exchequers amounted to Rs. 354 crores.

The Report of the Comptroller and Auditor General (C&AG) on accounts of the Company for the year ended 31st March 2011 does not carry any comment or observation. NRL has been certified with ‘nil’ comments by the C&AG for the 13th consecutive year which is a testimony to the prudent accounting policies and business practices being followed by the Company.

Marketing

During 2010-11, NRL registered a sales volume of 2.14 MMT against previous year’s figure of 2.36 MMT. Retail and direct sale to customers amounted to 0.31 MMT while 1.83 MMT products were sold through Oil Marketing Companies.

During the year, NRL has not pursued any major initiative for expansion of the Company’s retail network due to prevailing uncertainties in retail pricing policies. However, NRL’s focused attention towards ensuring delivery of right quality and quantity of products and services to customers continues.

During the year, 92.8% of NRL’s retail sales were from DNV certified ROs. The Company has achieved a market share of 13% in the North East with only 6% of the total Retail Outlets in the region. The average sale per RO of NRL during 2010-11 was 250 KLPM which was much higher than the industry average of 140 KLPM.

NRL had carried out a rationalization exercise of the Company’s retail network outside the North East with BPCL in order to limit the extent of retail under-recoveries. Based on the rationalization process, NRL will continue its retail marketing activities within the Freight Economy Zone of Numaligarh Refinery. An agreement has been signed with BPCL during the year based on which, 39 operating ROs of NRL were handed over and 38 identified dealerships LOIs are being transferred.

Siliguri Terminal Operation

The Siliguri Marketing Terminal achieved a combined throughput of 1.09 MMT during the year vis-à-vis 0.77 MMT in the previous year. The Terminal has been certified under ISO 9001, 14001 and OHSAS 18001.

Ongoing Projects

NRL has two major projects currently under implementation. The Wax Project is being implemented at a project cost of Rs. 577 crores. This project is progressing as per schedule. The Naphtha Splitter project being implemented at a project cost of Rs. 60 crores is targeted for completion by May 2013. Implementation of the project would enable production of 160 TMT per annum of petrochemical grade Naphtha for the Assam Gas Cracker.

Corporate Social Responsibility

During 2010-11, expenditure on CSR activities increased to Rs. 4.97 crores from Rs. 4.71 crores in the previous year. Increased emphasis is being given for promotion of education for the girl-child, health care and improving sanitation facilities in villages around the refinery. During the year, NRL sponsored one fully equipped boat clinic named ‘Numali’ for providing health service to the marginalized river island population, an innovative boat clinic programme initiated by Centre for North East Studies and Policy Research (C-NES) under NRHM.

Corporate Governance

NRL being a non listed Company, stipulations as contained in clause 49 of the listing agreement are not mandatory. However, as a good corporate governance practice and as per guidelines on Corporate Governance for Central Public Sector Enterprises issued by DPE in May, 2010, relevant information on areas covered under Corporate Governance disclosures for the year 2010-11 has been incorporated in the Annual Report. The Company has complied with the requirements of corporate governance as stipulated in the Guidelines except for non-compliance of clause 3.1.4 relating to the number of independent directors on the Board of the Company and 4.1.1 relating to composition of Audit Committee.

Acknowledgement

I join the other Directors in conveying our deep appreciation to all members of the NRL family for their sincerity, devotion and perseverance that has helped the Company to operate profitably despite several adversities.

The Directors gratefully acknowledge the support from the Central Government particularly, the Ministry of Petroleum & Natural Gas, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Railways, Income tax, Customs and Central Excise Department as well as from the Government of Assam.

The Directors place on record their deep appreciation to NRL’s valued customers for their unstinted devotion to the Company’s brand.

The Directors also thank NRL’s dealers, contractors, suppliers and bankers for their contribution towards the Company’s success.

I, on my behalf and on behalf of my colleagues on the Board would like to record our sincere thanks for the invaluable contribution made and guidance provided by Shri Ashok Sinha, who relinquished the office of Director and Chairmanship of the Company w.e.f. 19th August, 2010.

I would also like to record our gratitude to Shri S. Radhakrishnan who relinquished the office of Director and Chairmanship of the Company w.e.f. 1st March, 2011.

The Board places on record its sincere gratitude to Shri B.K. Das who relinquished the office of Managing Director of the Company w.e.f. 31st March, 2011. Shri Das was associated with the Company from the days of the refinery project construction and had successfully steered the Company out of several compelling adversities. Shri Das was one of the pioneers of NRL’s growth and success story.

The Directors express their sincere gratitude to each and every shareholder of NRL, particularly Bharat Petroleum Corporation Limited, Government of Assam and Oil India Limited for reposing their confidence and support to the Company’s management.

I express my sincere appreciation for the invaluable contribution and cooperation of my colleagues on the Board in charting the road map of the Company for continuous growth and profitability, thereby steering it to greater heights.

As I conclude, I sincerely thank each and every one of you, our stakeholders, for the confidence and trust reposed upon us. We remain committed to sustain and continually improve our performance and live up to your expectations.

Thank you,

Dear Shareowners,

On behalf of the Board of Directors and on my personal behalf, I welcome you all to this 17th Annual General Meeting of Numaligarh Refinery Limited. Notice of the Annual General Meeting, Directors’ Report and Audited Accounts has been tabled and with your kind permission, I consider them as read.

I am pleased to inform that NRL has completed a decade of profitable operations, successfully overcoming challenges on diverse fronts during the year 2009-10. In terms of the Company’s performance against parameters set in the Memorandum of Understanding signed with BPCL for the year 2009-10, NRL has once again achieved an ‘Excellent’ rating. This marks the seventh successive year of sustained excellence in MOU performance.

I would now briefly touch upon some of the major highlights of NRL during the financial year that has just gone by.

Physical Performance

During the year 2009-10, the Refinery processed 2619 TMT of crude oil against the MOU target of 2300 TMT. However the Distillate yield at 85.32% was lower than the MOU target of 88.00% on account of non-availability of Natural Gas from June 2009. However the yield was better than the yield of 84.72% recorded in 2008-09. Specific Energy Consumption for 2009-10 at 67.6 MBN was better than the MOU target of 70.0 MBN and the previous year’s figure of 70.7 MBN.

The total production quantity during the year was 2364 TMT which included 309 TMT of Motor Spirit and 1635 TMT of High Speed Diesel. The year 2009-10 also saw the refinery achieving the distinction of being the first refinery in the North East to produce Euro-IV grade products.

Financial Performance

NRL achieved a sales turnover of ` 7874 crores in 2009-10. This was lower than the turnover of ` 8764 crores recorded in the previous year mainly due to lower product prices. The gross refining margin for the year was $ 11.19 per barrel. Profit after tax for the year stood at `. 232.08 crores as compared to `. 235.64 crores in 2008-09. The compound annual growth rate (CAGR) of profit after tax as on 31 st March, 2010 over a period of 10 years stands at 30.19%. Earning per share for 2009-10 was `. 3.15. Internal generation of cash during 2009-10 was higher at `. 393.27 crores as against `. 340.02 crores in the previous year. NRL’s net worth as on 31st March, 2010 stands at ` 2450.04 crores. With a Debt equity ratio of 0.02, NRL is literally a debt-free company. During the year, NRL contributed `. 803.12 crores to the Central Exchequer while contribution to the State Exchequers amounted to `. 378.08 crores.

The Report of the Comptroller and Auditor General (C&AG) on the accounts of the Company for the year ended 31st March 2010 does not carry any comment or observation. NRL has been certified with ‘nil’ comments by the C&AG for the 12 th consecutive year, a reflection of sound accounting policies and business practices followed by the Company.

Safety

During 2009-10, NRL’s excellence in terms of safety management continued with 14 Million Loss Time Accident (LTA) free man-hours as on 31 st March, 2010. NRL has thus sustained over eight years of operations without any major accident in the refinery, which is continuing.

Environment

During 2009-10, 100% liquid effluents were re-used in the refinery as well as in the township. During the year, effluent and air quality parameters were closely monitored and maintained within stringent pollution control norms.

Integrated Information Systems

NRL received the internationally acclaimed ISO-27001 certification for Information Security Management System effective 1 st April, 2009. This certification besides being the first in the country’s oil industry, is a testimony of the Company’s pioneering efforts to uphold highest standards in management of information technology. During 2009-10, the Company’s business operations at the new Marketing Terminal in Siliguri were seamlessly integrated with SAP ERP servers at Numaligarh. Also, during the year, NRL introduced electronic Cash Management System (e- CMS) and upgraded the electronic Disaster Recovery system.

Marketing

During 2009-10, NRL maintained a cautious approach in developing the Company’s retail network in view of prevailing uncertainties in retail marketing. During 2009-10, NRL sustained competitive edge in the market with sales from most ROs exceeding industry average numbers. During the year, per-pump-throughput of NRL ROs within North East was 256 KL per month and the Company’s share in the region improved to 13% from 12% as at the end of the previous year. The rationalization process of NRL’s retail network outside the North East region started during the year following advice from MOP&NG.

Initiatives for Long Term Sustenance

NRL has identified a number of Value Added Projects for long term sustenance through consolidation and growth, which are being implemented in a phased manner. I shall briefly touch upon the major value added projects of NRL.

(i) Siliguri Marketing Terminal

The Marketing Terminal at Siliguri constructed by the Company was commissioned in May 2009 and has since been in smooth operation. During its first year, 774 TMT of products comprising MS, HSD and SKO were despatched from the Terminal. Commissioning of the Siliguri Terminal has brought down the freight cost and CST under-recoveries.

(ii) 12 MW STG

During the year, NRL started generating power from a 12 MW Steam Turbine Generator utilizing waste pressure energy and heat energy from surplus steam in the refinery. This initiative has resulted in generation of Carbon Credits for redemption at a future date that would bring in additional gains for the Company.

(iii) Diesel Quality Upgradation Project

In order to produce Euro-III and Euro-IV grades of HSD at 100% capacity utilization of the refinery, NRL has implemented the Diesel Quality Upgradation Project. The project involved substantial revamp of existing process units. Refinery shutdown for implementing the project commenced on 16 th March, 2010. This major project has been successfully implemented within the approved project cost of `. 435 crores. Project completion was achieved in 51 engineering days against the approved estimate of 60 engineering days. Consequent to implementation of the project, capacity of the Hydrocracker Unit has been augmented by 30%, Hydrogen Unit by 25% and Sulphur Recovery Unit by 35%.

(iv) Naphtha Splitter Project

NRL is setting up a Naphtha Splitter Unit within the refinery premises at an estimated cost of `. 60 crores for producing petrochemical grade Naphtha for the Assam Gas Cracker Project. The EPCM consultant for the project has been selected. The project is targeted to be completed during 4 th quarter of 2012-13.

(v) Wax Project

This Project for production of Paraffin and Micro-Crystalline Wax was cleared by the NRL Board during 2009-10, which has subsequently been approved by the BPCL Board in June 2010. Cost of the project has been approved at `. 577 crores and the project is expected to be completed by first quarter of 2014-15.

(vi) Joint Ventures

NRL has equity participation in two joint venture projects. In the Assam Gas Cracker Project which is being implemented by M/s Brahmaputra Chemicals and Polymer Ltd., NRL has 10% equity participation. As on 31 st March, 2010, NRL had contributed `. 27.56 crores out of its total estimated contribution of `. 110 crores. The Assam Gas Cracker Project is scheduled for completion by April 2012.

The other joint venture project is the Natural Gas Pipeline Project from Duliajan to Numaligarh, being implemented by M/s DNP Ltd. where NRL has 26% equity participation. As on 31 st March, 2010, NRL had contributed `. 27.56 crores out of its total contribution of `. 35.08 crores. Facilities for receiving and utilization of Natural Gas at Numaligarh Refinery are ready. Natural Gas is expected to be available for utilization in the refinery during the 3 rd quarter of the current financial year.

Corporate Social Responsibility (CSR)

During 2009-10, expenditure on CSR activities increased by 16% to `. 4.71 crores, which was 2% of net profit during the previous year. NRL’s CSR schemes encompass defined areas under agriculture, education, infrastructure development, community health, promotion of sports and culture. Innovative schemes like demographic survey of villages surrounding the refinery and medical camps every alternate day have been incorporated in the Company’s CSR programme.

Corporate Governance

NRL has been consistently making efforts in adopting best governance practices that are critical to ensure optimization of returns and satisfaction levels accruing to all its stakeholders. The interest of all stakeholders including shareholders, employees, customers and the Government exchequer are given paramount importance while taking commercial decisions. As a part of good governance practice as well as in compliance with the Corporate Governance guidelines issued by the Department of Public Enterprises, relevant information on areas covered under Corporate Governance disclosures for the year 2009-10 has been incorporated in the Annual Report. The Company has complied with the requirements of corporate governance as stipulated in the Guidelines except for non-compliance of clause 3.1.4 relating to the number of independent directors on the Board of the Company and 4.1.1 relating to composition of Audit Committee.

Acknowledgements

I join the other Directors in conveying our deepest appreciation to all members of the NRL family for their sincerity, devotion and perseverance that has helped the Company to operate profitably despite several adversities.

The Directors gratefully acknowledge the support from the Central Government particularly, the Ministry of Petroleum & Natural Gas, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Railways, Income tax, Customs and Central Excise Department as well as from the Government of Assam.

The Directors place on record their deep appreciation to NRL’s valued customers for their unstinted devotion to the Company’s brand.

The Directors also thank NRL’s dealers, contractors, suppliers and bankers for their contribution towards the Company’s success.

I, on my behalf and on behalf of my colleagues on the Board would like to record our sincere thanks for the invaluable contribution made and guidance provided by Shri Ashok Sinha, who had relinquished the office of Director and Chairman of the Company w.e.f.19 th August, 2010, for the development and progress of NRL’s business during his tenure as Director and Chairman of the Company.

The Directors express their sincere gratitude to each and every shareholder of NRL, particularly Bharat Petroleum Corporation Limited, Government of Assam and Oil India Limited for reposing their confidence and support to the Company’s management.

I express my sincere appreciation for the invaluable contribution and cooperation of my colleagues on the Board in charting the road map of the Company for continuous growth and profitability, thereby steering it to greater heights.

As I conclude, I sincerely thank each and every one of you, our stakeholders, for the confidence and trust reposed upon us. We remain committed to sustain and continually improve our performance and live up to your expectations.

Financial Performance

During 2008-09, NRL achieved the highest ever sales turnover of Rs. 8853 crores against the previous highest of Rs. 8764 crores recorded during 2007-08. The Company posted a profit after tax of Rs. 235.64 crores for the year ended 31st March, 2009. This was lower than previous year’s net profit of Rs. 372.81 crores mainly on account of factors such as reduction in tariff protection, reduction in excise benefit and reduced spread between product and crude prices. In June 2008, Government had announced reduction in customs duty on MS, HSD and ATF by 5% besides lowering excise duty on MS and HSD by Re. 1/- per litre. This has had an adverse impact on NRL’s profitability. It resulted in lower tariff protection from the earlier level of 7.5% to 2.5% for MS and HSD and from 10% to 5% on ATF and consequential lesser realization from sales of MS, HSD and ATF. Further, the quantum of excise duty benefit earned by NRL from sales of MS and HSD has come down.

NRL’s net worth as on 31st March, 2009 increased to Rs. 2350.65 crores from Rs. 2244.10 crores as at 31st March, 2008. However, earnings per share in 2008-09 declined to Rs. 3.20 from Rs. 5.07 in 2007-08 on account of the lower profits. Internal generation of cash during 2008-09 was Rs. 340.02 crores against Rs. 476.67 crores in 2007-08. During 2008-09, term loan amounting to Rs. 27.98 crores was repaid. Earning through interest amounted to Rs. 35.98 crores during 2008-09. Debt equity ratio of NRL stood at 0.02 as on 31.3.2009 making NRL virtually a debt-free Company.

Gross Refining Margin (GRM) for 2008-09 was 6.98 dollars per barrel and adjusted GRM after accounting for freight and CST under-recovery was 1.21 dollars per barrel. This compares favorably with the previous year’s figures of 6.36 dollars per barrel and minus 0.87 dollars per barrel respectively.

During the year, the Company paid Rs. 129.56 crores towards Entry Tax to the Assam Government and had to bear the burden of Rs. 439.95 crores on account of freight and CST under-recoveries.

Report of the Comptroller and Auditor General (C&AG) on the accounts of the Company for the year ended 31st March 2009 does not carry any comment or observation. You will be glad to know that NRL has been getting NIL comments from C&AG for eleven consecutive years which is a testimony of the sound accounting practices followed by the Company.

Physical Performance

During 2008-09, the Refinery processed 2.25 million tonnes of crude against the MOU target of 2.50 million tonnes. The shortfall in crude processing was mainly due to the time taken for stabilization post refinery turnaround. During 2008-09, NRL could achieve a distillate yield of 84.72% which was the better than the MOU target of 84.70% and was among the highest in the industry. Specific Energy Consumption during 2008-09 was 70.7 Million British Thermal Unit/Per Barrel/Nelson Refinery Gross Factor (MBN) as against the MOU target of 70.0 MBN.

During 2008-09, the total production quantity was 2.02 million tonnes while total evacuation ex-Refinery was 1.99 million tonnes . Production included 1.39 million tonnes of HSD out of which 0.29 million tonnes was in Euro-III grade, 0.27 million tonnes of MS including 0.05 million tonnes of Euro - III MS, 0.20 million tonnes of SKO and 0.04 million tonnes of ATF. The Coke Calcination Unit operated on a sustained basis producing 53 thousand metric tonnes of Calcined Petroleum Coke.

Safety, Environment & Awards

During 2008-09, NRL’s excellence in terms of safety management has been aptly reflected through achievement of 12.05 million Loss Time Accident (LTA) free man hours as on 31st March, 2009, which is continuing.

The year 2008-09 was the third consecutive year for NRL to have successfully re-used 100% liquid effluent treated in the refinery as well as in the township thereby continuing the zero discharge status. Liquid effluent and air quality parameters were constantly monitored and maintained well within revised pollution control norms. In recognition of the Company’s excellence in areas of safety, environment management, energy conservation, several awards were conferred to the Company since March 2008. Important awards includes the TERI Corporate Environment Excellence Award, 2008 for the second successive year; National Energy Conservation Award, 2008 also for the second successive year; Greentech Gold Safety Award, 2008; Oil and Gas Conservation Award, 2008 from CHT; Oil Industry Safety Award, 2007-08 from OISD; and BPCL Chairman’s Appreciation Award 2008 in Green category.

Integrated Information Systems

During 2008-09, the Company’s business transactions continued to be carried out through SAP ERP suite of applications. Steps have been initiated for migrating from SAP version 4.7 to 6.0 thereby upgrading the facility. During the year, transactions and operations of Siliguri Marketing Terminal were integrated with the servers in the refinery. You will be glad to know that NRL’s Integrated Information System (IIS) function has achieved the prestigious ISO 27001:2005 Certification for its Information Security Management System (ISMS) from DNV, Netherlands. This is a significant achievement being the first among all oil PSUs in the country. This will also ensure appropriate safety controls within the organization to safeguard information and intellectual property assets.

Marketing

Unlike other PSU Oil Marketing Companies, NRL has not been covered under government’s compensation mechanism with regard to under-recoveries from retail marketing. Consequently, NRL has to absorb the entire burden of retail under-recoveries. Due to unprecedented rise in crude oil and product prices without corresponding increase in end selling prices, NRL incurred very high under-recoveries during first seven months of 2008-09. However, during the last five months of the year, retail business turned profitable. In view of prevailing uncertainties in retail business, development of NRL’s retail network was kept on hold during 2008-09.

Initiatives for Long Term Sustenance

With the objective of improving profitability, the Company has been pursuing several value-added projects which present an opportunity for achieving consolidation and sustained growth.

During the year 2008-09, the Siliguri Marketing Terminal Project was completed within the approved project cost of Rs. 186.23 crores. The Terminal is linked to the Numaligarh-Siliguri product pipeline project of Oil India Limited. Road and rail despatches from the Terminal commenced in May 2009 and June 2009 respectively. With commencement of pumping through the product pipeline and loading of products ex-Siliguri Marketing Terminal, freight under-recovery to NRL in positioning products outside the North East region would come down significantly.

The Company is presently implementing a major project in the refinery for diesel quality upgradation to meet auto fuel quality norms at a project cost of Rs. 434.94 crores. This project would facilitate production of Euro-III as well as limited quantities of Euro-IV HSD at 100% capacity utilization of the refinery. The project is expected to be completed by April 2010.

NRL has also identified a project for production of paraffin and micro-crystalline wax utilizing inherent properties of Assam Crude. Financial appraisal and a market survey pertaining to the project have been completed. Implementation of the project would add value to the product slate of the Company.

NRL is a co-promoter in two joint venture projects. In Brahmaputra Cracker and Polymer Limited, the company implementing the Gas Cracker project in Dibrugarh district of Assam, NRL has 10% share holding. NRL would be contributing a sum of Rs 110 crores to the equity of the JV and as on March 31, 2009, NRL’s investment stood at Rs. 32.47 crores. NRL has also committed to supply 160 TMT of petrochemical grade naphtha per annum to the Gas Cracker. Towards this end, a Naphtha Splitter Project is being set up within the refinery under the Company’s Non-Plan Capex Budget at a project cost of Rs. 32.22 crores. In the other joint venture company, M/s DNP Limited, NRL has 26% share holding. The joint venture company is implementing a Natural Gas Pipeline project from Duliajan to Numaligarh. The gas pipeline is in advanced stage of completion. As on 31st March, 2009, NRL has paid its entire equity contribution amounting to Rs. 27.56 crores. Upon commissioning of the pipeline, NRL not only stands to earn through dividends, but the Company’s refining margin would also improve as a result of natural gas utilization in lieu of naphtha as feed and fuel.

Under the Non-Plan capital expenditure budget, NRL is implementing a 12 Mega Watt Steam Turbine Generator project at a project cost of Rs. 38.52 crores. This project is in final stage of completion and has been successfully registered as a Clean Development Mechanism (CDM) project with the United Nations Framework Convention on Climate Change (UNFCCC). Apart from reduction in cost of power generation, the project would permit substantial earnings for the Company through trading in carbon-credits.

Corporate Social Responsibility

During 2008-09, an amount of Rs. 4.03 crores was spent in implementing schemes under Corporate Social Responsibility encompassing defined areas under agriculture, education, infrastructure development, community health and promotion of sports and culture. In the MOU for 2009-10, signed between NRL and BPCL, a new parameter on “Utilisation of fund approved for activities under CSR” has been incorporated. From the current financial year onwards, CSR budget of NRL has been enhanced to 2% of net profit, or the previous year’s allocation, whichever is higher.

Acknowledgements

I join the other Directors in conveying our deepest appreciation to all members of the NRL family for their sincerity, devotion and perseverance that has helped the Company to operate profitably despite several adversities.

Your Directors gratefully acknowledge the support from the Central Government particularly, the Ministry of Petroleum & Natural Gas, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Railways, Income tax, Customs and Central Excise Department as well as from the Government of Assam.

The Directors place on record their deep appreciation to NRL’s valued customers for their unstinted devotion to the Company’s brand.

Your Directors also thank NRL’s dealers, contractors, suppliers and bankers for their contribution towards the Company’s success.

Your Directors express their sincere gratitude to each and every shareholder of NRL, particularly Bharat Petroleum Corporation Limited, Government of Assam and Oil India Limited for reposing their confidence and support to the Company’s management.

I express my sincere appreciation for the invaluable contribution and cooperation of my colleagues on the Board in charting the road map of the Company for continuous growth and profitability, thereby steering it to greater heights.

As I conclude, I sincerely thank each and every one of you, our stakeholders, for the confidence and trust reposed upon us. We remain committed to sustain and continually improve upon your trust and confidence.

Thank you,

Chairman

Dear Shareowners,

On behalf of the Board of Directors and on my own behalf, I would like to extend a warm welcome to each one of you to this 15 th Annual General Meeting of Numaligarh Refinery Limited. Notice on the Annual General Meeting, Directors’ Report and Audited Accounts have been tabled and with your kind permission, I take them as read.

I am happy to inform on this occasion that NRL had completed yet another year of profitable business notwithstanding critical challenges that had come in the Company’s way during 2007-08. Sales turnover and crude processing were at their highest levels since commissioning of the refinery in the year 2000. During the year, the Company also excelled on the safety and environment management fronts. I would briefly touch upon some of the highlights on Company’s performance during the financial year 2007-08.

Financial Performance

During 2007-08, NRL achieved record sales turnover of Rs. 8764 crores, which was higher than previous year’s turnover of Rs. 7930 crores by 10.5%. The Company posted a net profit after tax of Rs. 372.81 crores for the year ended 31 st March, 2008, which was 35% lower than previous year’s net profit of Rs. 568.80 crores. The decline in profitability during 2007-08 was primarily on account of the burden of sales tax and pipeline transportation charges on crude oil that had to be paid following directive from the government and also due to higher under-recoveries in retail sales.

NRL’s net worth as on 31 st March 2008 stood at Rs. 2244.10 crores compared to Rs. 2044.97 crores at the end of the previous year. Earnings per share at Rs. 5.07 however, declined by Rs. 2.92. Internal generation of cash during 2007-08 was Rs. 476.62 crores against Rs. 676.46 crores in 2006-07. During 2007-08, term loan amounting to Rs. 102.98 crores was repaid. Focused attention towards optimizing treasury operations resulted in earning of interest income amounting to Rs. 34.64 crores during 2007-08. The Company has adopted payments through the e-payment mechanism since August 2007. Taxes, duties, payment to vendors are being effected through this route. I am also happy to announce that- NRL is today, a virtually debt-free company, with a negligible debt equity ratio of 0.03.

Numaligarh Refinery’s gross refining margin (GRM) for 2007-08 was 6.36 dollars per barrel. The adjusted GRM after accounting for freight and CST under-recoveries was however, minus 0.87 dollars per barrel against 3.42 dollars per barrel in the previous year. Lower GRM in 2007-08 was mainly due to the impact of sales tax and pipeline transportation charges on crude accounted for during the year, which amounted to 4.82 dollars per barrel.

During the year, the Company had to absorb Rs. 123.42 crores towards Entry Tax levied by the State Government and Rs. 165.79 crores towards CST under-recovery.

Report of the Comptroller and Auditor General on accounts of the Company for the year ended 31 st March 2008 did not carry any comment or observation.

Physical Performance

During 2007-08, Numaligarh Refinery processed 2.568 million tonnes of crude oil compared to 2.504 million tonnes in 2006-07, which was the highest ever since commissioning of the refinery. Capacity utilization of the refinery thus improved to 85.6%. Notwithstanding record achievement in crude processing, the MOU target of 2.6 million tonnes could not be met as crude oil supply during the year was only to the extent of 2.542 million tonnes. Other MOU physical parameters, namely distillate yield, fuel and loss, specific energy consumption recorded improved performance. During the year, net distillate yield was 84.84% and refinery fuel and loss could be contained at 10.24%. Specific energy consumption (SEC) for the year at 66.1 MBN was the lowest ever since commissioning. In terms of the MOU for 2007-08, signed with BPCL, your Company has achieved ‘Excellent’ performance rating for the fourth successive year.

During 2007-08, against a total production of 2 .301 million tonnes, evacuation was marginally higher at 2 .314 million tonnes. The refinery produced 1 .554 million tonnes of HSD including 361 thousand metric tonnes of Euro-III grade HSD. Production also included 52 thousand metric tonnes of LPG, 285 thousand metric tonnes of Motor Spirit, 60 thousand metric tonnes of ATF and 98 thousand metric tones of raw and calcined petroleum coke. The MS plant operated at 124% capacity producing 230 thousand metric tonnes of MS, while capacity utilization of the LPG bottling plant during the year was 112%.

Safety, Environment & Awards

During 2007-08, Numaligarh Refinery continued its excellence in terms of safety management, completing over six years of loss-time-accident (LTA) free operations. A cumulative of 10.3 million LTA free manhours was recorded as on 31 st March, 2008 which is a commendable achievement in the oil industry.

The refinery at Numaligarh as well as the neighbouring Township continues to maintain the standard of ‘zero effluent discharge’ since October 2006. In recognition of the Company’s excellence in areas of environment management, energy conservation and safety, several awards were received by NRL since March 2007. Important awards were the TERI Corporate Environment Excellence Award 2008 (after having won the award for 2007 too); National Energy Conservation Award 2007; Shrestha Suraksha Puraskar 2006; Greentech Gold Safety Award 2008; Oil and Gas Conservation Award 2008 from Center of High Technology and Oil Industry Safety Award 2007-08 from the Oil Industry Safety Directorate.

Integrated Information Systems

During 2007-08, the Company’s business continued to operate smoothly o n the SAP ERP platform. The new marketing terminal set up in Siliguri has been successfully integrated with refinery servers in Numaligarh. Real time connectivity among Company’s offices at various locations were upgraded during the course of the year.

Marketing

Retail Outlet operations of NRL continued to achieve high degree of success in 2007-08. NRL Energy Station at Jorabat, which is the highest seller in Eastern region of the Country, registered record sales of 3006 KL in March’08. During 2007-08, most Retail Outlets of the Company performed well above their competitors in their respective trading areas. However, unlike other PSU Oil Marketing Companies, NRL is not covered under government’s compensation mechanism in respect of under-recoveries in retail marketing. Therefore, the entire burden of under-recoveries from retailing of MS and HSD in 2007-08 had to be absorbed by the Company, resulting in negative impact on profitability. The Company is however, actively pursuing with concerned authorities for reasonable compensation to offset for retail under-recoveries. The matter is under consideration of the government.

Initiatives for Long Term Sustenance

For long term sustenance and growth, NRL has identified a few value added projects. One such project was commissioning of the Motor Spirit (MS) Plant in 2006-07 with technology from M/s Axens, France implemented at a cost of Rs. 297 crores. The MS plant operated above its rated capacity in 2007-08, contributing significantly to the Company’s profitability. Another project, namely the Siliguri Marketing Terminal Project is being implemented in Siliguri at a cost of Rs. 150 crores as a linked project to the product pipeline from Numaligarh to Siliguri. Commissioning activities are presently in progress. The product pipeline would lead to reduction in freight under-recoveries for the Company besides providing a reliable and efficient mode of product evacuation from Numaligarh Refinery. A Diesel Quality Upgradation Project is being implemented in the refinery at a cost of Rs. 435 crores to facilitate production of Euro-III HSD at 100% capacity utilization as well as required quantities of Euro-IV HSD from April 2010 to meet requirements of the Auto Fuel Policy.

The Company is in advanced stage of installing a 12 Mega Watt Steam Turbine Generator (STG) in the refinery for generation of power utilizing excess steam in the refinery at a cost of Rs. 33 crores. Besides saving in fuel cost, the STG project would provide the opportunity for significant earnings in terms of trading through generated ‘carbon credits’. The project has been successfully registered as a ‘Clean Development Mechanism’ (CDM) project with United Nations Framework Convention on Climate Change (UNFCCC), with a crediting period of 10 years starting December 2008. Another CDM project, namely ‘Natural Gas Utilisation Project’ is also being pursued. This project would lead to substitution of naphtha by relatively cheaper natural gas as fuel and feed in the refinery, besides resulting in lower generation of green-house-gases (CO 2) and potential benefits from redemption of ‘carbon credits’.

NRL is a stakeholder in two joint venture companies. In M/s Brahmaputra Cracker and Polymer Limited (BCPL), the company implementing the Assam Gas Cracker project in Dibrugarh district at a cost of Rs. 5461 crores, NRL has 10% equity holding besides commitment to supply around 160 thousand metric tonnes of petrochemical grade naphtha. M/s DNP Limited is the other joint venture company implementing a natural gas pipeline project from Duliajan to Numaligarh at a cost of Rs. 318 crores where NRL has 26% equity holding. Implementation of both joint venture projects are in progress and on completion, are expected to yield reasonable returns to the Company.

Three other projects for production of high value ‘needle coke’, ‘paraffin and microcrystalline wax’, ‘petrochemical grade naphtha’ are also being pursued by the Company.

Community Development

During 2007-08, NRL had stepped up efforts towards community development activities. An amount of Rs. 3.50 crores was spent during the year against Rs. 3.09 crores in the previous year to sponsor activities under defined heads such as, agriculture, assistance to educational institutions, infrastructure development, community health and promotion of sports, cultural events.

Acknowledgements

I join the other Directors in conveying our deepest appreciation to all members of the NRL family for their sincerity, devotion and perseverance in respective fields, which has helped the Company to grow from strength to strength and arrive at the high echelon of success it so rightly deserves.

Your Directors gratefully acknowledge the support and guidance received from Central Government particularly, the Ministry of Petroleum & Natural Gas, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Railways, Income tax, Customs and Central Excise Department as well as from the Government of Assam and other Government agencies.

The Directors place on record their deep appreciation to NRL’s valued customers for their continued cooperation, patronage and confidence and look forward to the continuance of this mutually supportive relationship in future.

Your Directors also thank NRL’s dealers, contractors, suppliers and bankers for their contribution to the Company’s success.

Your Directors express their sincere thanks to each and every shareholder of NRL particularly Bharat Petroleum Corporation Limited, Government of Assam and Oil India Limited for reposing their confidence and support to the Company’s management.

I express my sincere appreciation for the invaluable contribution and cooperation of my colleagues on the Board in charting the road map of the Company for continuous growth and profitability, thereby steering it to greater heights.

As I conclude, I sincerely thank each and every one of you, our stakeholders, for the confidence and trust reposed upon us. We remain committed to sustain and continually improve upon your trust and confidence.

Chairman

Dear Shareowners,

On behalf of the Board of Directors and on my own behalf, I would like to extend a very warm welcome to each one of you in this 14th Annual General Meeting of the Company. The Notice convening the AGM, Directors' Report and the Audited Accounts are already with you and with your permission, I take them as read.

It gives me great pleasure to present the 14th Annual Report with the audited accounts of the Company for the financial year 2006-07. I am extremely happy to inform you that the year 2006-07 has seen the Company achieve its best financial results since the commencement of commercial operations. I take this opportunity to share with you some of the highlights of the year gone by.

Financial Performance

The year 2006-07 saw your Company surpassing all the previous records and attaining credible growth in almost all spheres of its activities. The sales turnover witnessed a growth of 36.25% to touch a level of Rs. 7930.32 crores compared to Rs. 5820.37 crores during the previous year. The profit after tax of Rs. 568.80 crores is also the highest achieved as against the previous highest of Rs. 448.93 crores achieved in the previous year, registering a growth of 26.70%. The rise in profit compared to previous year is mainly due to higher capacity utilization, higher realization of prices, improved product mix, optimization of operations, stringent cost control measures, and savings in interest cost.

NRL's net worth as on 31st March 2007 stood at Rs.2044.97 crores as compared to Rs. 1,691.33 crores at the end of the previous year. Earnings per Share increased to Rs.7.73 from Rs. 6.10 during the previous year. The internal generation of cash during the year was Rs. 676.46 crores as against Rs. 574.42 crores in the previous year. During the year, term loan amounting to Rs. 252.5 crores have been repaid. Effective cash management along with speedy and higher sales realization has resulted in interest savings of Rs 14.15 crores during the year. On an overall basis, the long term loan to equity ratio improved to 0.09 as against 0.26 in the previous year.

While the overall performance has been excellent, the Gross Refining Margin has been marginally lower at US $ 3.42 per barrel as compared to US $3.44 per barrel in the previous year. This was mainly due to increase in international crude oil prices, increase in freight cost as well as under recoveries of Central Sales Tax (CST).

During the year, the Company had to absorb Rs. 107.21 crores including provisions on account of Entry Tax levied by the Government (previous year Rs. 78.76 crores) and Rs. 204.03 crores towards under recovery of CST (previous year Rs. 157.59 crores). Additionally, an amount of Rs. 154.47 crores has been provided towards sales tax reimbursement and pipeline transportation cost applicable for crude oil purchased from M/s Oil India Limited (OIL) for the year 2006-07 as per directive of the Government. In respect of crude oil purchased from ONGC during the year 2006-07, sales tax reimbursement and pipeline cost amounting to Rs. 82.04 crores has been provided in the first quarter of 2007-08 as per the Government directive received in this regard.

As in the earlier years, the report of the C & AG on the accounts of the Company for the year ended 31st March 2007 did not carry any comments or observations.

Physical Performance

During the year, the refinery processed 2.504 MMT of crude oil as against 2.133 MMT in the previous year. This is the highest ever crude throughput achieved by the refinery since its commissioning in 2000. The capacity utilization of the crude distillation unit stood at 83.5% which was slightly higher than the target set in the Memorandum of Understanding (MOU) signed with the holding Company Bharat Petroleum Corporation Limited (BPCL). Other operating MOU parameters, namely, distillate yield, fuel and loss, specific energy consumption also recorded improved performance compared to the MOU targets. During the year, net distillate yield was 84.74% and Refinery fuel and loss could be contained at 10.53% with hydrocarbon loss performance at 0.37%. The refinery specific energy consumption (SEC) for the entire year stood at 72.5 MBTU/BBL/NRGF, which has been the best achieved sofar. Based on the overall performance, the Company has been able to maintain 'excellent' rating under the MOU in the year 2006-07 also.

During the year, the refinery produced 367 TMT of Euro III grade HSD and 1134 TMT of Bharat Stage II grade HSD. Further, 54 TMT of LPG, 208 TMT of MS, 84 TMT of ATF and 41 TMT of CPC were produced during the year.

Integrated Information Systems

During 2006-07, the Company witnessed smooth functioning of the SAP R/3 ERP software. To protect mission-critical data from service interruptions under all circumstances, and to minimize loss of revenue due to unexpected downtime and to provide timely and effective recovery, NRL has implemented a Disaster Recovery site at its Kolkata Office . Disaster Recovery Planning (DRP) is about continual replication of live SAP system at a remote location and making use of the same if there is a major disaster at the 'live' site. The successful commissioning of the DR site was a significant milestone.

Extensive auditing exercise has been carried out during the year to ensure that adequate checks and controls exist in the SAP system and also to streamline procedures and practices. In order to ensure a secure computing environment, Networking and Data Security audit has been carried out successfully through external professional agency during the year.

Accolades and Accreditations

Your Company always recognizes Health and Safety as vital in all areas of operations and adheres to strict compliance of all safety rules. NRL is firm on its commitment towards continual development in Loss Control Management right from its inception and able to maintain its nil record of Loss Time Accidents and also major fire incidents during the year 2006-07. To further strengthen its system based management, the Company has been re-certified with ISO: 9001, ISO: 14001 & OHSAS: 18001. NRL has achieved one major milestone in environment management by achieving "zero" discharge of treated effluents in Effluent Treatment plant inside refinery since 1st October 2006.

NRL has been awarded the 1st prize of "TERI Corporate Environment Excellence Award 2007" in recognition of its leadership efforts towards environment management and innovative initiatives amongst corporations with turn over above Rs. 500 crores. NRL also has the distinction of achieving 'Green Tech Environment Excellence Award' for five consecutive years. Further, NRL is the recipient of third prize in the Oil & Gas Conservation Fortnight (OGCF) awards for 2006 and also 'Shrestha Suraksha Puraskar' (Second level) in the Manufacturing sector for the year 2006 by National Safety Council.

Clean Development Mechanism (CDM) Initiatives

NRL has implemented a host of precautionary measures to protect the environment. As a step towards reduction of green house gas (GHG) emission as well as energy consumption, the Company is installing one 12 mega-watt Steam Turbine Generator (STG). The installation of STG shall result in savings of Naphtha as fuel (in the existing Gas Turbine Generators) with corresponding reduction in Green House Gas (GHG) emissions (CO ). The project is having potential to receive benefits under the Clean Development Mechanism (CDM) of Kyoto Protocol under United Nations Framework Convention to Climatic Change (UNFCCC). Validation audit for the same has already been carried out by M/s DNV. Similar steps are also proposed to be initiated for the process of substitution of Naphtha by natural Gas as fuel and feed in the refinery units.

Marketing

During the year the Company could achieve a sales figure of 2.124 MMT of petroleum products through marketing companies of which 1.884 MMT were through BPCL. Besides, 0.209 MMT of Naphtha, MS, HSD, Sulphur and RPC/CPC were directly marketed by NRL. The total sales of all products amounted to 2.333 MMT.

Expansion of NRL's retail marketing network in various parts of the country has gathered momentum with 74 outlets commissioned sofar of which 42 are in the North East. Development activities are in progress for another 197 Retail Outlets. Your Company is enthusiastically pursuing branding activities with the aim of ensuring that NRL's brand image reflects the values that the Company stands for i.e., caring, customer centric and service with professional approach. Sofar, seven retail outlets of NRL have been certified by M/s DNV under Q&Q protocol and the certification process is in progress at several other outlets.

Sales from these outlets have been quite encouraging and the Company has been able to establish a new and fresh brand image, earning a loyal set of customers in the process. During 2006-07, retail market share of MS/HSD in the North East has gone up to 8.4% as against 7.0% in the previous year. It is noteworthy that NRL's Retail Outlet at Jorabat has become the highest selling outlet in the whole of Eastern Region during 2006-07with a combined MS/HSD sales volume of around 2083 kilolitres (KL) per month.

BPCL has entered into an agreement with Bangladesh Petroleum Corporation Limited on 17th May 2007 for supply of HSD (0.15% Sulphur) from Numaligarh Refinery utilizing the National Waterway No 2, that is the Brahmaputra River. This will lead to enhanced economic activity on water routes and open up new opportunities in this area. Statutory clearances are being obtained to commence dispatches.

NRL is also continuing supply of MS and HSD to M/s. Essar Oil Limited and M/s Reliance Industries Limited in the North East. M/s Shell India has also entered into an agreement with NRL to source MS and HSD for their upcoming retail outlets in the North East.

VALUE ADDITION PROJECTS

You are aware that Numaligarh Refinery was conceived more as a developmental project and there were certain inherent limitations associated with it. However, NRL has been taking strategic actions / initiatives from the project implementation stage itself to grow and sustain profitability. In this highly competitive environment, NRL need to continuously evolve and equip itself with latest business practices and technologies to remain ahead of competition. Towards this end, the Company has undertaken a number of projects which will lead to value addition and sustain refinery margin in the long run.

The "Motor Spirit Project" with a rated capacity of 185 TMT of MS per annum, was successfully commissioned in 2006-07 within the approved project cost of Rs. 296.86 crores. The plant has been producing high value MS conforming to BS-II and Euro-III grade since July 2006 and March 2007 respectively. Construction of the "Siliguri Marketing Terminal Project" at a project cost of Rs. 149.57 crores is in advance stage of completion. The project is targeted to be mechanically completed by December 2007 except few facilities and will be fully commissioned in synchronization with commissioning of the Numaligarh-Siliguri product pipeline being laid by M/s Oil India Limited by April, 2008. Another important project under implementation is the "12 Mega Watt Steam Turbine Generator (STG)" with an estimated project cost of Rs. 30 crores. This project is a part of the Company's efforts towards continuous improvement of energy conservation and overall efficiency of plant operation. The project is expected to be completed by March, 2008. In line with 'Auto Fuel Policy', NRL has been producing HSD conforming to BS-II & Euro-III grade up to 90% capacity utilization of Crude Distillation Unit. Since the present capacity utilization of refinery is restricted upto 90% for producing BS-II & Euro-III grade HSD, actions have been initiated for revamping the Hydrocracker and Hydrogen Unit for production of Euro-III HSD at 100% capacity utilization to meet the requirement of 'Auto Fuel Policy' from April 2010. Detailed Feasibility Report for the revamp project is under preparation through M/s Engineers India Limited (EIL).

Apart from the above projects currently under implementation of NRL, the Company has also been participating in two joint venture projects namely, "Duliajan-Numaligarh Natural Gas Pipeline Project" and "Assam Gas Cracker Project" at Lepetkata in Dibrugarh district. NRL has initiated actions for substitution of Naphtha by natural gas as fuel for Power Plant and as feed and fuel in Hydrogen Plant. The substitution of Naphtha by natural gas is expected to improve the net refining margin for the Company. In this regard, the Company signed an agreement with M/s OIL for supply of 1.0 MMSCMD of natural gas to NRL. For implementation, operation and maintenance of the natural gas pipeline project from Duliajan to Numaligarh, M/s AGCL and NRL have formed a Joint Venture Company in the name and style of M/s DNP Limited with equity participation of 40% by NRL and 60% by M/s AGCL. Implementation of the project is in progress and is expected to be completed by October, 2008. For implementation of the proposed Gas Cracker project at an approved project cost of Rs. 5461 crores, a new Company in the name and style of M/s Brahmaputra Cracker & Polymer Limited has been formed on 8th January, 2007. NRL's equity participation in the joint venture is 10%, amounting to Rs. 111 crores. For implementation of the above value added projects, NRL has earmarked Rs. 625 crores in its XIth Five Year Plan (2007-12).

Future Projects

NRL has also identified a few more value added projects in its "Perspective Plan" (2007-2017) for implementation in future in a phased manner. Of these projects, the "Naphtha Splitter" for supplying 160 TMTPA of petroleum grade Naphtha to the proposed Assam Gas Cracker project as feed stock, will be completed in synchronization with the Gas Cracker Project. NRL is also preparing detailed feasibility report through M/s EIL for production of paraffin and micro-crystalline wax. Necessary studies have also been taken up for production of Needle Coke for adding value to Raw Petroleum Coke (RPC) and Calcined Petroleum Coke (CPC) produced in the refinery. Further, a study is in progress for examining the feasibility of low cost augmentation of refining capacity by 30%, i.e. from 3.0 to 4.0 MMTPA. NRL's perspective plan also includes production of Euro-IV MS/HSD in line with 'Auto Fuel Policy', for which necessary studies have been initiated.

Community Development

With a strong commitment towards socio-economic upliftment of the region, NRL has initiated definitive measures for improving the lives of the people in the neighbouring areas through innovative and people friendly programmes. Presently, the Company's attention is focused on major thrust areas such as Agri-allied / Income Generation activities, Education, Infrastructure Development, Community Health and Promotion of Art, Sports, Literature and Culture.

Acknowledgements

I join the other Directors to convey our deepest appreciation to all the members of NRL family for their sincerity, devotion and perseverance in their respective fields, which has helped the Company to grow from strength to strength and arrive at the high echelon of success it so rightly deserves.

Your Directors gratefully acknowledge the support and guidance received from Central Government particularly, the Ministry of Petroleum & Natural Gas, Petroleum Planning and Analysis Cell, Oil Industry Development Board, Railways, Income tax, Customs and Central Excise Department as well as from the Government of Assam and other Government agencies.

The Directors place on record their deep appreciation to NRL's valued customers for their continued cooperation, patronage and confidence and look forward to the continuance of this mutually supportive relationship in future.

Your Directors also thank NRL's dealers, contractors and suppliers and bankers for their contribution to NRL's success.

Your Directors express their sincere thanks to each and every shareowners of NRL particularly Bharat Petroleum Corporation Limited , Government of Assam and Oil India Limited for reposing their confidence and support to NRL management.

I express my sincere appreciation for the invaluable contribution and cooperation of my colleagues on the Board in charting the road map of the Company for continuous growth and profitability, thereby steering it to greater heights.

As I conclude, I sincerely thank each and every one of you, our shareowners, for the confidence and trust you have reposed on us. We will try our best to surpass your expectations.

Thank you,

Ashok Sinha
Chairman

Guwahati
14th September 2007

Dear Shareowners,

On behalf of the Board of Directors and on my own behalf, I would like to extend a very warm welcome to each one of you in this 13th Annual General Meeting of the Company. The Notice convening the AGM, Directors’ Report and the Audited Accounts are already with you and with your permission, I take them as read.

It gives me great pleasure to present the 13th Annual Report with the audited accounts of the Company for the financial year 2005-06. I am extremely happy to inform you that the year 2005-06 has seen the Company achieve its best financial results since the commencement of commercial operations. I take this opportunity to share with you some of the highlights of the year gone by.

Financial Performance

The year 2005-06 saw your Company attaining an all time high gross turnover of Rs. 5,820.37 crores registering a growth of 35.39% over the previous year. The profit after tax of Rs. 448.93 crores achieved during the year was also the highest ever as against Rs.409.15 crores in the previous year, thereby registering a growth of 9.72%. A combination of positive factors like higher realization of price, improved product mix, optimization of operations, stringent cost control measures, decrease in deferred tax liability and sChairman’s address for 13th AGM of NRLavings in interest cost have contributed towards the growth in the profit after tax during the year.

NRL’s net worth as on 31st March 2006 stood at Rs.1,691.33 crores as compared to Rs. 1,401.46 crores at the end of the previous year. Earnings per Share increased to Rs. 6.10 from Rs. 5.56 during the previous year. Due to better cash management and higher sales realization, there has been an interest saving of Rs.20.79 Crores during the year 2005-06 and the long-term loan to equity ratio has improved to 0.26 as against 0.32 at the end of the previous year.

While the overall performance has been excellent, the Gross refining margin of the Company has declined to US$ 3.44 per barrel as compared to US$ 7.05 per barrel in the previous year. This can be attributed to the spiraling international crude prices, the Company’s inability to pass on the full impact of the increases to the customers, change in methodology of calculation of refinery transfer prices and withdrawal of 6% discount on rail freight from North East Refineries. Also during the year, the Company had to absorb an amount of Rs. 142.59 Crores towards under recovery of CST and Rs. 78.76 Crores on account of Entry Tax on crude oil purchased from OIL and ONGC.

As in the earlier years, the report of the C & AG on the accounts of the Company for the year ended 31st March 2006 did not carry any comments or observations

Physical Performance

During the year 2005-06, the refinery processed 2.13 MMT of crude oil as compared to 2.04 MMT in the year 2004-05 and evacuated 1.95 MMT of products. There was a slight short fall in achieving the target set for crude processing on account of inadequate availability of crude oil. The first major planned Refinery Turn-Around was successfully completed during April-May’05 as per schedule. In addition, adsorbent in the PSA Unit of Hydrogen Plant was replaced on line within a record time of 11 days during the last quarter of 2005-06. Efforts continued towards maximizing production of the high value distillates due to which the net distillate yield achieved stood at 85.1% wt. This was one of the highest in the country. Refinery fuel and loss was in line with the MOU target of 10.3%. This included hydrocarbon loss performance of 0.34%, which was the lowest achieved so far. The refinery specific energy consumption (SEC) for the year stood at 75.4 MBTU/BBL/NRGF, which has been the best achieved so far. In line with ‘Auto Fuel Policy’, during 2005-06 the refinery produced 951 TMT of BS-II grade HSD and 354 TMT of Euro III grade HSD without any additional capital investment. In terms of the MOU with BPC for 2005-06, the Company has achieved an excellent overall rating despite the constraints faced in terms of inadequate availability of crude.

SAP Implementation

The year just gone by saw the successful completion of the project IMPETUS (Improvement in Performance through Upgradation of System). The Company upgraded its ERP system to SAP R/3 Enterprise 4.7 version and successfully implemented it within a record time of five months. The ‘Go-Live’ was flagged off on 1st August 2005. The benefit realisation exercise carried out recently indicated achievement of substantial value addition during the first year itself.

Accolades and Accreditations

The Benchmarking study conducted by Shell Global Solution for Indian PSU Refineries based on operating data for the year 2004-2005 placed NRL in first tercile in 12 parameters, in second tercile in 4 and in third tercile in 8 considering 24 parameters in 5 different Performance Categories. It may be worthwhile to mention that the Company was ranked 1st in the parameter ‘Non turn around maintenance cost’ amongst the global refineries and also achieved 1st rank in 4 parameters amongst Indian PSU refineries.

The Company excelled in safety performance as well, continuing LTA free man-hours since the last LTA on 18th February 2002. As on 1st Sept, 2006, LTA free man-hours has crossed 7.5 million man hours equivalent to 1656 days. The Company is already the recipient of the rare distinction of level 9 under the protocol of International Safety Rating System (ISRS).

All the three ISO systems (ISO: 9001, ISO: 14001 & OHSAS 18001) were re-certified in August 2005 for the second time. The systems of ISRS and ISO have been integrated into one and the policy of total loss control management has been followed for all loss exposures. NRL was also conferred with the prestigious Greentech Safety Gold Award in Petroleum Refinery Sector for the Year 2006, in recognition of outstanding performance in the field of Health & Safety. The Greentech Environment Excellence Award was awarded for the fourth consecutive year giving due recognition to efforts made in the field of Environment Management. It is a matter of honour that NRL has also been conferred the POPAI OMA Silver award during 2006 under the category “Automobile Permanent “ for the Retail Visual Identity of its Energy Stations. The Company also bagged the “Award for Excellence”(1st prize) by Petroleum Conservation and Research Association (PCRA) in the Medium Project Category for the year 2004-05, which was presented during the year and the prestigious ’Jawaharlal Nehru Centenary Award’ for Energy efficiency for the year 2004-05. The selection of NRL as the second prize winner for Oil Industry Safety Awards for the year 2005-06 in the ‘Refineries’ Category bears further testimony to the dedicated efforts being made in the field of Safety.

Marketing

NRL’s foray into the retail marketing segment gathered momentum with the tally of commissioned retail outlets, aptly christened as “Energy Stations”, reaching 58 during the year as against 10 in the previous year. Of this, 36 Retail outlets are in the North East and the remaining in other parts of the country. Sales from these outlets have been quite encouraging and the Company has been able to establish a new and fresh brand image, earning a loyal set of customers in the process. One of the newly commissioned energy stations at Jorabat in Meghalaya (near Guwahati) was the highest selling outlet in the whole of Eastern Region during the period April-August’06 with a combined MS/HSD sales volume of 1869 KLPM. NRL now has a decent presence in retailing of MS/HSD in the North Eastern Region with a market share of 8.5% in the region. This is expected to increase progressively. M/s DNV has been engaged for certification of commissioned Retail Outlets under Quality & Quantity protocol and they have already certified two Retail outlets.
Efforts are also continuing for export of HSD to Bangladesh. In addition, the Company is also taking initiatives for setting up a Tap Off Point Terminal at Hajo near Guwahati, from the Numaligarh - Siliguri pipeline, to facilitate distribution of products to the markets located in lower Assam districts and in Meghalaya.

MS Project

I am happy to mention that a major milestone has been achieved in the current financial year 2006-07 with the successful completion of the Motor Spirit project within the approved project cost of Rs. 296.86 crores. The Project was mechanically completed on 31st May 2006. The Naphtha Hydro-treating Unit and Catalytic Reforming Unit have already been commissioned and MS production conforming to BS-II has commenced from end of July 2006. The Isomerisation Unit is expected to be commissioned by the end of September 2006. This will enable the Company to utilize the full capacity of 185 TMTPA for production of MS conforming to Euro-III and also enhance the production of LPG by about 21 TPA. The production of 185 TMT of MS annually by converting Naphtha would lead to further value addition and enhance the Company’s profitability.

Future Plans

In this highly competitive market scenario, we need to continuously evolve and equip ourselves with the latest business practices and technologies to remain ahead of the competition. Towards this end, the Company has undertaken projects which will lead to value addition and sustain refinery margins in the long run.

Work is currently on for setting up the Receipt and Despatch Terminal at Siliguri. This is scheduled to be commissioned by September 2007. Physical works at site and engineering & manufacturing jobs at vendors’ shops are progressing satisfactorily. In accordance with the ‘Pipeline Transportation Agreement’, M/s Oil India Limited (OIL) is constructing a 16” dia. product pipeline between Numaligarh and Siliguri with completion schedule of September 2007. The pipeline is expected to ease the constraint in product evacuation presently faced by NRL and would enable the evacuation of 1.72 million tonnes of white oil products viz. MS, HSD and SKO annually on a sustained basis leading to improved capacity utilization of the refinery.

An agreement with Oil India Ltd. for purchase of 1.0 MMSCMD of Natural Gas has been signed which would replace Naphtha as feed and fuel. An agreement with M/s Assam Gas Company Ltd. for transportation of Natural Gas from Duliajan to Numaligarh through a Gas Pipeline has also been signed. The supply of Natural Gas to NRL is expected to commence from September 2007. This would provide substantial value addition in terms of higher Net Refinery Margin.

Investments are being planned for upgrading facilities to meet Auto Fuel Policy guidelines. In line with the policy, NRL has been producing HSD conforming to BS-II specification and Euro-III HSD with a 90% capacity utilization. 100% capacity utilization with Euro-III HSD production would be achieved through revamp of Hydrocracker and Hydrogen Units. In this regard, process package for HCU revamp has already been received from M/s. Chevron Lummus Global and the preliminary report on Hydrogen Plant capacity enhancement study has been completed by M/s Haldor Topsoe.

Community Development

As a socially responsible corporate, NRL continues to actively pursue community development programmes with major thrust on promoting and executing schemes for socio - economic development of the region especially in the vicinity of the Refinery. Free primary medical & health services, financial assistance to schools and colleges in the nearby areas, award of scholarships to meritorious students, improvement of roads and drinking water facility and aid to Self-Help groups through self employment schemes are some of the initiatives taken by the Company in this direction.

Acknowledgements

I join the other Directors on the Board in acknowledging gratefully the guidance and support extended by the various Ministries particularly the Ministry of Petroleum & Natural Gas under the Govt. of India as well as the Assam Government. I would also like to thank all the stakeholders of the Company for their continued support in all our ventures.

I express my sincere appreciation for the invaluable contribution and cooperation of my colleagues on the Board in charting the road map of the Company for continuous growth and profitability, thereby steering it to greater heights.

We are indebted to our loyal set of customers who have been a constant source of inspiration for us to deliver better service. My sincere thanks to our dealers who have been our conduit to reaching out to our coveted customers. The contribution of our bankers, contractors and suppliers and other outside agencies deserve special mention, whose continued support has sustained our excellent performance through the years.

Last but not the least, I acknowledge in all sincerity the dedication, commitment and excellent performance of each and every employee of the Company, without which the sterling achievements of the Company would not have been possible.

As I conclude, I sincerely thank each and every one of you, our shareowners, for the confidence and trust you have reposed on us. We will try our best to surpass your expectations.

Thank you,

Ashok Sinha

Guwahati
22nd September 2006