Hindustan Petroleum : Annual Report 2022 23

Dear Shareholders,

It gives me great pleasure to present the 71st Annual Report on the performance of your Company for the year 2022-23. Your Company continues to 'Deliver Happiness' ensuring the availability of affordable energy to meet the nation's energy needs. Our sustained efforts during the year have seen your Company mount new peaks of success and register several 'best ever' milestones and significant achievements across all spheres of business.

The global economy grew by 3.4% in 2022 despite the multifarious challenges posed by geopolitics, the associated inflationary pressures and economic woes in countries around the world. With a growth rate of 7.2%, India's output rebounded to its pre- pandemic level in 2022-23, reinforced by the government's capex push and resilient private consumption. Moreover, the world's second-largest vaccination drive, with more than 2 billion doses, also served to lift consumer sentiment, which helped prolong the rebound in consumption. India was the fastest-growing major economy in 2022-23, despite the three shocks of COVID-19, the geo-political challenges, synchronized policy rate hikes to curb inflation, etc.

Escalated geopolitical tensions and resultant financial volatility led to a significant surge in the prices of oil and other commodities at the end of the previous financial year. The prices of crude oil continued their rising trend in 2022-23, with benchmark crude prices averaging US$ 96.2 per barrel, the highest since 2013-14. The price volatility was substantial, with crude prices peaking at US$ 123.7 per barrel in June 2022 and reaching a level of US$ 78.6 per barrel by March 2023. Against the backdrop of the increased prices and volatility of global crude prices, India's petroleum product consumption also hit a new record in the financial year 2022-23, reaching the highest- ever level of 222.3 MMT. HPCL continued to meet the nation's energy needs even while marketing margins were suppressed for certain petroleum products.

I am happy to share that while navigating these challenging environments, Gross sales of your Company registered a growth of 24.7% in 2022-23, rising from H 3,72,642 Crore in 2021-22 to H 4,64,684 Crore, reaching a new peak. Your Company achieved its highest-ever annual sales of 43.45 MMT during the period, with a growth rate of 11% compared

Chairman's Message

Annual

71st Report

2022-23

to the historical. The highest-ever crude throughput of 19.09 MMT was achieved by our refineries, which is 36.7% higher than the 13.97 MMT of crude processed during the previous year. Average GRMs for 2022-23 were US$ 12.09 per barrel compared to US$ 7.19 per barrel during the corresponding period of the previous year, recording an increase of 68.2%. The exceptionally high international oil prices along with suppressed marketing margins on select transport fuels, severely impacted the profitability, resulting in Net Loss of H 8,974 Crore in 2022-23.

In a noteworthy development, the ongoing Visakh Refinery Modernization Project (VRMP) attained the critical milestone of commissioning the 9 MMTA Crude Distillation Unit (CDU-4), which is highly energy efficient. On the operations front, our refineries at Mumbai and

Visakhapatnam recorded an excellent performance, clocking the highest-ever combined refining throughput of 19.09 MMT and capacity utilization of 107%. Meticulous crude sourcing, right crude mix and expeditious evacuation of finished products, duly complemented by improved refinery reliability and standardized operating processes, were the key contributors to the performance of refineries. With the stabilization of the expanded capacity, Mumbai Refinery achieved its highest ever annual crude throughput of 9.8 MMT. The highest production of MS, HSD and LOBS was achieved during the year.

Your Company recorded robust growth in sales across various business lines during 2022-23 on the back of a wide array of customer-centric initiatives supported by a strong supply chain network. Market sales have touched a new peak of 43.45

MMT during the year, recording the highest-ever sales for major products. The growth was 11% in comparison with sales achieved in the previous year. In retail business, the year 2022-23 saw the highest sales volume of 28.2 MMT. Sales of petrol and diesel increased by 16.2% and 16.5% respectively and LPG sales growth was 4.9%. The domestic LPG segment gained market share for the seventh consecutive year. Your Company is the second-largest LPG marketer in the country. Your Company maintained its dominance in lubricant sales and continued to occupy the leadership position in the market, recording year- on-year growth of 16% and a market share increase of 2.48%. During the year, the Industrial & Consumer (I&C) business line recorded overall sales of 4.32 MMT. With the continuing recovery in air travel, HPCL achieved ATF sales of 692.5 TMT

Corporate Overview

Statutory Reports

Financial Statements