Your Directors are pleased to present the 21st Annual Report and the Company's auditedaccounts for the financial year ended March 31 2014:
1. Consolidated Financial Highlights:
| || || |
|Particulars ||31 March 2014 ||31 march 2013 |
|Gross Income ||1252.98 ||559.96 |
|Operating Profit before Depreciation and Interest ||9.95 ||30.00 |
|Depreciation ||141.45 ||88.17 |
|Profit/(Loss) before interest tax and exceptional items ||(131.50) ||(58.17) |
|Interest ||94.69 ||31.86 |
|Profit/(Loss) before tax and exceptional items ||(226.19) ||(90.03) |
|Exceptional items ||7.82 ||13.84 |
|Tax expenses ||0.25 ||(0.92) |
|Net Loss after tax and exceptional items for the period from continuing operations ||234.27 ||102.95 |
In view of loss incurred the Board regrets its inability to recommend payment ofdividend to the shareholders.
3. Credit Rating
CRISIL has revised its rating for the Company on the long term Bank facilities to'Stable' from 'Negative' while reaffirming the rating at BB+ for long term Bank facilityand A4+ for short term Bank facility. Strong credit rating by leading credit rating agencyreflect the Company's financial discipline and prudence.
4. Operations in Retrospect
During the year under review consolidated revenue from operation increased to H1252.98 million as against H 555.96 million in the corresponding period of the previousyear. Loss before tax stood at H 226.21 million as compared to H 90.03 million in theprevious year whereas the loss after tax rose to H 234.27 as compared to loss of H 102.95million registered in the previous year.
5. Operational highlights
During the financial year 2013-14 Asian Oilfield has made significant gains in termsof execution of its strategy to grow the overseas business. We were awarded our firstlarge 3 D job in Kurdistan in Northern Iraq. During the execution on this contract Asianachieved a few significant milestones and also created a world record that wasacknowledged by our customers. Some of the notable achievements include:
a. Deployment of Asian Oilfield's largest ever 3D crew.
b. First ever Vibroseis operation.
c. First ever Crew outside of the US to deploy in excess of 4000 real time wirelessremote units.
d. Holder of the world record for the largest active Real time Spread ever deployed byany Seismic company.
In India the activity continued to be low and sporadic. Asian Oilfield continued itsJob Services Contract for ONGC in Western India.
After the successful Completion of the 3D work additional 2D Vibroseis work wasawarded by Gazprom and this was successfully completed in the third quarter of 2013.
In the Last quarter of 2013 a significant 3D project was awarded to AOSL in OILSEARCHin Kurdistan to acquire over 500 Square Kms of 3D data. Preparations are underway tocomplete the mobilisation and commence operations. This survey will further challenge thecapabilities of AOSL and its success will go a long way in establishing us a majorregional player in the Middle East and South Asian Region.
6. future Outlook
There have been a few interesting developments in the global landscape. With thesuccess in gas production in shale and the also in the Gulf of Mexico US has beensteadily reducing its dependency on imports and the trend line is very clear. Since 1949for the very first time US has become a net exporter of Petroleum Products in 2011.
Due to the 'Arab Spring' there have been disruptions in the production levels of theNorth African countries such as Libya Algeria and Egypt. The political disruptions haveslowed down the onshore exploration activity and the major Oilfield services companieshave significantly reduced their operations. Iraq continues to be unstable and hasexperienced disruption in its exploration activities.
Kurdistan in North Iraq has managed to maintain peace and calm in the region underits control. This has led to a rise in the seismic programs being tendered.
The tentative uptick of economic activity in the US and Europe is unlikely to push upcrude oil prices significantly. Moderating growth in China could put downward pressure oncrude prices. In absence on any adverse geopolitical event average monthly crude pricesare likely to trend lower than the average price in last 12 months.
However Organisation of Petroleum Exporting Countries (OPEC) may lower its output asit has done in the past in the face of moderation in crude price. While global crudeprices could slip below USD100/bbl in some instances it is unlikely to remain at suchlevels for a sustained period. Hence there appears to be stability in the short to mediumterm scenario.
In line with our strategy AOSL in the Middle East market is aggressively looking toconsolidate its position in Iraq and Egypt. The aim is to strengthen our presence in Iraqand sequentially grow the business by optimal utilisation of existing assets. Howevergiven the volatile nature of the Middle East region we are also planning to diversifyinto East African and south / Far East markets.
In the Post Election India there are signs of the exploration picking up pace. Thiscould result in a higher than normal exploration activity and could potentially spur thedemand for good quality seismic services in the onshore domain. We have established astrong sales and Operations team in India to ensure that we are ready to take advantage ofany the growing exploration activity.
7. Report on Corporate Social Responsibility:
The Company embraces responsibility for impact of its operations and actions on allstakeholders including society and community at large. Management's commitment workethics and business processes at the Company encourages all its employees and otherparticipants to ensure a positive impact and its commitment towards corporate socialresponsibility.
The Company's commitment to excellence in Health and Safety is embedded in theCompany's core values. The Company has a stringent policy of 'safety for all' whichdrives all employees to continuously break new ground in safety management for the benefitof people property environment and the communities where we operate on sites. TheCompany is aware of the environmental impact of its operations and it continually strivesto reduce such impact.
The Company respects human rights values its employees and invests in technologies andsolutions for economic growth. The Company has initiated to support social and communitywelfare activities touching the lives of people around the project locations and ensuringthe highest standards of safety and environment protection in our operations.
8. Health Safety and Environment (HSE):
Asian Oilfield Services Limited has put emphasis on HSE as its prime focus in thebusiness. The Company's HSE Management system (HSE-MS) has been reinforced and rolled outwith new initiatives. The HSE-MS is used to establish Company-wide safety managementobjectives guiding principles and processes.
The Company has a stringent policy / motto of "NO ONE GETS HURT" which inturn drives our employees to continuously break new grounds in safety management for thebenefit of the people property environment and the communities where we operate.
The Company's commitment to excellence in HSE is embedded in the Company's core valueswhile at the same time ensuring the highest standards of safety and environment protectionin our operations.
9. Consolidated Financial Statement
In accordance with the Accounting Standard (AS) - 21 on Consolidated FinancialStatements read with AS - 23 on Accounting for Investments in Associates and AS - 27 onFinancial Reporting of Interests in Joint Ventures the audited consolidated financialstatement is provided in the Annual Report.
Details of major subsidiaries of the Company and their business operations during theyear under review are covered in the Management's Discussion and Analysis Report. Inaccordance with the General Circular issued by the Ministry of Corporate AffairsGovernment of India the Balance Sheet Statement of Profit and Loss and other documentsof the subsidiary companies are not being attached with the Balance Sheet of the Company.However the financial information of the subsidiary companies is disclosed in the AnnualReport in compliance with the said circular. The Company will provide a copy of separateannual accounts in respect of each of its subsidiary to any shareholder of the Company whoasks for it and the said annual accounts will also be kept open for inspection at theRegistered Office of the Company and that of the respective subsidiary companies.
11.Board of Directors:
In terms of Section 152 of the Companies Act 2013 and in terms of Article 125 ofArticles of Association of the Company Mr. Sanjay Bhargava Director retires at theensuing Annual General Meeting. The Company has received requisite notice in writing frommembers proposing Mr. Sanjay Bhargava for appointment as Director of the Company.
The Company has pursuant to the provisions of Clause 49 of the Listing Agreementsentered into with Stock Exchanges appointed Mr. Naresh Chandra Sharma Mr. Ajit Kapadiaand Mr. Rabi Narayan Bastia as Independent Directors of the Company. The Company hasreceived declarations from the said Independent Directors of the Company confirming thatthey meet the criteria of independence as prescribed both under sub-section (6) of Section149 of the Companies Act 2013 and under the said Clause 49. In accordance with theprovisions of Section 149(4) and proviso to Section 152(5) of the Companies Act 2013these Directors are being appointed as Independent Directors to hold office as per theirtenure of appointment mentioned in the Notice of the forthcoming AGM of the Company.
The Board of Directors at their meeting held on 12th August 2014 appointed Mr. AshwinMadhav Khandke as an Additional Director on the Board in terms of Section 152 of theCompanies Act 2013 read with Article No. 114 of Articles of Association of the Company.Mr. Ashwin Madhav Khandke holds office upto the date of ensuing Annual General Meeting.The Company has received requisite notice in writing along with deposit from membersproposing Mr. Khandke for appointment as a Director of the Company.
Mr. Ashwin Madhav Khandke is also appointed as Wholetime Director of the Company for afurther period of 3 years with effect from 12th August 2014 and the necessary resolutionin this regard is being proposed at the ensuing Annual General Meeting for the approval ofthe members.
A brief note on Directors retiring by rotation and eligible for appointment andre-appointment as a Director as well as Independent Directors being appointed isfurnished in the Report on Corporate Governance.
12. Directors' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies Act 1956 withrespect to Directors' Responsibility Statement it is hereby confirmed that:
i) in the preparation of the annual accounts for the year ended March 31 2014 theapplicable accounting standards read with requirements set out under Schedule VI to theCompanies Act 1956 have been followed and there are no material departures from thesame;
ii) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2014 and of the Loss ofthe Company for the year ended on that date;
iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; and
iv) the Directors have prepared the annual accounts of the Company on a 'going concern'basis.
13. Management's Discussion and Analysis Report
Management's Discussion and Analysis Report for the year under review as stipulatedunder Clause 49 of the Listing Agreement with the Stock Exchanges in India is presentedin a separate section forming part of the Annual Report.
14. Auditors and Auditors' Report
Deloitte Haskins & Sells Chartered Accountants Statutory Auditors of the Companyhold office till the conclusion of the ensuing Annual General Meeting and are eligible forre-appointment.
The Company has received letters from all of them to the effect that their re -appointment if made would be within the prescribed limits under Section 141(3)(g) of theCompanies Act 2013 and that they are not disqualified for re-appointment.
The Notes on Financial Statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments.
15.Secretarial Audit Report
As a measure of good corporate governance practice the Board of Directors of theCompany appointed Mr. Jayesh Vyas Practicing Company Secretary to conduct theSecretarial Audit. The Secretarial Audit Report for the financial year ended March 312014 is provided in the Annual Report.
The Secretarial Audit Report confirms that the Company has complied with all theapplicable provisions of the Companies Act 1956 the 98 sections of the Companies Act2013 notified vide Ministry of Corporate Affairs Gazette Notification No. S.O. 2754(E)dated September 12 2013 the Securities Contracts (Regulation) Act1956 DepositoriesAct 1996 the Foreign Exchange Management Act 1999 to the extent applicable to OverseasDirect Investment (ODI) and Foreign Direct Investment (FDI) all the Regulations andGuidelines of SEBI as applicable to the Company including the Securities and ExchangeBoard of India (Substantial Acquisition of Shares and Takeovers) Regulations 2011 theSecurities and Exchange Board of India (Prohibition of Insider Trading) Regulations 1992Listing Agreement with the BSE Limited and the Memorandum and Articles of Association ofthe Company.
16. Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars relating to energy conservation technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 217(1)(e) of theCompanies Act 1956 read with the Companies (Disclosure of Particulars in the Report ofBoard of Directors) Rules1988 are provided in Annexure II to this Report.
17. Corporate Governance
The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by SEBI. The Company has alsoimplemented several best corporate governance practices as prevalent globally.
The Report on corporate governance as stipulated under Clause 49 of the ListingAgreement forms part of the Annual Report.
The requisite certificate from the Auditors of the Company confirming compliance withthe conditions of corporate governance as stipulated under the aforesaid Clause 49 isattached to the Report on corporate governance.
18.Listing of Securities:
The Company's equity shares are listed on the BSE Limited. The annual listing fee forthe financial year 2013-14 has been paid to BSE.
All the properties of the Company are adequately insured against fire and other risks.
The Board places on record its deep appreciation for the continued support receivedfrom various clients vendors and suppliers and technical partners Bankers GovernmentAuthorities Employees at all levels and Shareholders in furthering the interest of theCompany
For and on behalf of the Board
|Date: 12.08.2014 ||Naresh Chandra Sharma |
|Place: Mumbai ||Chairman |
Annexure - A
ANNEXURE TO THE DIRECTORS' REPORT
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo:
The particular as prescribed under Section 217 (1) (e) of the Companies Act 1956 areappended hereto and forms part of the report:
(A) CONSERVATION OF ENERGY:
a) Energy conservation is an ongoing process and there is a continuous effort to createawareness and motivate the employees to conserve energy. The various measures taken by theCompany are as under :
1. Wherever possible local power connections were tapped and the running of generatorsis minimal.
2. Inefficient engines have been replaced with new ones for the efficient and economicrunning.
3. All the engines are maintained properly to keep the fuel consumption minimal.
4. Running of automobiles is controlled by reducing trips wherever possible andlocating the working crew close to work spot.
b) Additional investment and proposals for reduction of consumption of energy :-
1. Utilization of energy sources with over capacity is limited / zeroed.
2. Additional manpower is deployed for maintenance of the equipment to optimize theirutilization.
3. Induction of new equipment contributed to reduction of number of existing operatingunit for the same output.
c) Impact of the above measures :
With the implementation of the various energy conservation measures energy cost hasreduced and consequently there is a positive impact on the cost of service.
(B) TECHNOLOGY ABSORPTION:
a) Research and Development (R&D):
1. Specific area in which R&D carried out by the Company :
No new technologies have been introduced during the year under review; however theCompany intends to deploy the same at relevant point of time.
2. Benefits derived as a result of R & D : Nil
3. Future plan of action: The Company is in process of streamlining the operations andimproving productivity per unit per man operation.
4. Expenditure on R & D: Nil
b) Technology Absorption Adaptation &Innovation :
1. Efforts made toward technology absorption adaptation & innovation.
a) Indigenous development of drilling units modules have been adapted.
b) International standard has been observed in the adoption and manufacture of newitems drilling technology is indigenous.
2. Benefits derived as a result of the above efforts e.g. product improvement costreduction product development import substitution etc.
Improved quality time efficiency and cost reduction.
3. In case of imported technology following information is furnished below :
|Technology imported ||: Nil |
|Year of Import ||: Nil |
|Has technology been fully absorbed ||: N.A. |
|If not fully absorbed areas where this has not taken place reason and future plans of action ||: N.A. |
(C) FOREIGN EXCHANGE EARNING &OUTGO :
|Particulars ||2013-14 ||2012-13 |
|a. Foreign Exchange Earnings || || |
|Seismic Survey and other related Charges ||Nil ||19341757 |
|Interest on loan to Subsidiary ||39719909 ||Nil |
|b. Foreign Exchange outgo towards || || |
|Traveling expenses ||3720550 ||3472105 |
|Capital goods ||10256727 ||48888227 |
|Revenue Payment ||226824 ||4481424 |