While shareholders will be disappointed at the first glance of our Company's financialsin 2013-14 permit me to assure them that the Company is in good health and it is onlysome time before this translates into stronger numbers.
The reason why one is saying so comes from an understanding of where we were threeyears ago and where we find ourselves today. In 2011 we were a marginal and regionalplayer with a singular India focus; in 2014 we are a successful Asian player with a trackrecord based on successful project delivery customer goodwill growing order book andtechnology investments.
Within the global seismic exploration space Asian Oilfield Services is being seen asan attractive young and exciting company driven by passion challenge-embrace and customerdelight as distinct from other companies driven by people employment and equipmentownership.
This distinctiveness comes not a day too soon. In the global seismic exploration spacethere is a need to deliver quicker; there is a need to manage geo-political-socialtension; there is a premium on the ability to protect the environment. In view of thesepriorities the business of seismic services is not about seismic services any more areality which warrants service providers to evolve adapt and reinvent themselves in linewith the demands of the day.
I am pleased to state that Asian Oilfield has in the space of just three yearsreinvented its personality and emerged as one such company.
The year 2013-14 was one of mixed fortunes for the Company. While we successfullyexecuted overseas projects worth US$ 17.8 million for oil majors like Gazprom and GujaratState Petroleum Corporation Limited (GSPCL); enhancing visibility in the Middle Easternand South-East Asian markets the Company could not make significant headway in the Indianmarkets which reported negligible sectoral expenditure.
In this challenging environment the Company recognised that the only way to establishits brand was through scheduled delivery of existing projects leading to customer delight.
Even though we are in a space that is dominated by multinationals leaving little spacefor smaller companies Asian Oilfield has demonstrated unusual operational nimbleness tocompete with prominent players reflected in a stronger brand recall and growing orderbook size.
At Asian Oilfield our principal differentiator is the combination of our work cultureand business strategy which is best defined in that one word called 'spirit'.
Over the last three years the management at Asian Oilfield has virtually reinventeditself through various initiatives:
Proactively responded with an asset-light business model leveraging theavailability of low-cost leasable crews and assets till the time the business acquirescritical mass to justify captive ownership.
Widened focus from mere data capture to data processing services that empowercustomers to take informed drilling decisions. In doing so the Company expects tograduate towards solutions-orientation and emerging as a reservoir managementorganisation.
Extended to services overseas on account of the limited nature of the Indian marketregulatory constraints and lower margins. The Company established its presence in Iraq andthe Middle East and entered Indonesia during the last fiscal.
Invested in cutting-edge real-time wireless system (RT System 2) emerging asthe first company outside the US to acquire this cable-less technology. This technologywill reduce the number of field operators strengthening productivity and profitability.Going forward this differentiated technology ownership will enhance deal flow superiordelivery and repeat business.
Focused on effective governance; the management and employees share collectiveresponsibility for compliance with local regional national and internationalregulations.
Emerging financial trend
As a validation of its financial strategy the Company's share price climbed from a52-week low of RS.12 in July 2013 to RS.69.45 as on March 31 2014 reflecting enhancedinvestor confidence.
The forthcoming months of the current financial year could prove challenging owing tothe war-like situation in the Middle East. However the Company is operating in arelatively stable area and its operation are less effected. As a result we continue tosustain our operations. The Company has bid for US$35 million worth of projects which arein the final stages of being awarded.
Major part of the Global onshore oil reserves are in the Middle East and North Africa(MENA) geography. However most of the oil service company assets such as seismic anddrilling crews are deployed in areas other than MENA. Hence there is a mismatch betweenthe demand and supply of the region. This is where Asian Oilfield is strategically lookingto expand its operations.
While the market scenario remains temporarily unclear optimism emanates from the factthat the market space is marked by low competition. Over the recent past two leadingplayers withdrew services in the Middle East creating a wider space for our Company. Onthe positive front the Indian markets are likely to transform over the next few quartersas the top oil companies intend to invest over US$100 million over the next two years.
Going ahead the Company aims to grow other product lines and graduate from an imagingcompany into a reservoir enterprise that empowers customers to enhance their spending andproductivity; and is on track of achieving a top line of over RS.3000 million by 2016.
Sincerely Rahul Talwar