Your Directors have pleasure in presenting the Annual Report for the year ended 31March 2017.
The Company achieved the following results over the past three years : (in Rs )
| ||2014-15 ||2015-16 ||2016-17 |
|Net Sales ||792893686 ||620268715 ||558382743 |
|EBIDTA ||687216394 ||476101134 ||428945044 |
|EBIDTA / Net Sales ||87% ||77% ||77% |
Total Reserves and Surplus of the Company have decreased from Rs 2669821290to Rs 2658034704 as on 31 March 2017. During the year under review an amount of Rs812000 transferred to Site Restoration Fund.
Review of Operations
The Company continues to achieve very high levels of profitability and cash flow fromits operations in Gujarat having generated Rs 34.95 crores of cash flow in 2016-17 onproduction of 165262 bbls of oil alongwith Associated Natural Gas.
The most significant changes made by the Company are in the areas of corporatemanagement and field operations. In both cases the Company has added senior experiencedstaff to significantly upgrade the technical understanding of our reservoirs and theimplementation of improved production management techniques and procedures across allfield operations.
The above management changes supplemented by advisory services of international reputeare expected to result in significant production gains starting in 2017-18. Even with oilprices remaining in the USD 50-60 / barrel for the foreseeable future cash flows fromoperations should improve significantly going forward.
During the year the Company was also intimated by the Directorate General ofHydrocarbons (DGH) and the Ministry of Petroleum and Natural Gas that Production SharingContracts (PSCs) expiring in the next 3 years would be extended by 10 years subject tosatisfactory compliance of the extension guidelines and procedures.
As a result of this significant development and in view of the overall strengthening ofthe management team field development plans are being revised and reformulated toaccelerate production growth in the coming years going forward.
Please also refer to the Management Discussion and Analysis section of the AnnualReport for further clarification regarding Companys operations and policies.
The Directors are pleased to inform that in the financial year 2016-17 the Board ofDirectors have declared an interim dividend of 50% i.e. Rs 5/- per share which shall bedeclared as final dividend for the year 2016-17 subject to approval by the shareholders ofthe Company in the forthcoming AGM.
Transfer to IEPF
During the year in accordance with the provisions of section 124(5) of the CompaniesAct 2013 an amount of Rs 772474.50 being Unclaimed Dividend for the Financial Year2009-10 was transferred to the Investor Education and Protection Fund established by theCentral Government.
Number of Meetings of the Board
There were ten Board Meetings held during the Financial Year 2016-17. Details of thesame forms part of the Corporate Governance Report.
Declaration of Independence by Directors
Declaration given by Independent Directors meeting the criteria of Independence asprovided in sub-section (6) of Section 149 of the Companies Act 2013 is received andtaken on record.
Directors Responsibility Statement
In accordance with the provisions of Section 134(5) of the Companies Act 2013 theBoard of Directors do hereby confirm that in the preparation of the Annual Accounts theapplicable Accounting Standards have been duly complied with and the Directors haveselected the necessary accounting policies and applied them consistently. Judgments /estimates have been made that are evenhanded and prudent so as to give an accurate andrational view of the affairs of the Company at the end of the financial year and of theprofit or loss of the Company for that period. The Directors have also taken ample carefor the maintenance of adequate accounting records in conformity with the provisions ofCompanies Act 2013 for upkeep of the assets of the Company and for preventing anddetecting fraud and other irregularities and that the Directors have prepared the annualaccounts on a going concern basis. The Directors have laid down internal financialcontrols to be followed by the Company and such Internal financial controls are adequateand operating effectively. Lastly the Directors have devised proper systems to ensurecompliance with the provisions of all applicable laws and such systems were adequate andoperating effectively.
Policy on Directors Appointment and Remuneration
Considering the requirement of skill set on the Board eminent people having anindependent standing in their respective field / profession and who can effectivelycontribute to Companys business and Policy decisions are considered by Nominationand Remuneration Committee for appointment as Independent Director on the Board. TheCommittee considers ethical standards of integrity qualification expertise andexperience of the person for appointment as Director and is not disqualified underCompanies Act 2013 and rules made thereunder and accordingly recommend to the Board his /her appointment. Remuneration to Whole-Time Director is governed under the relevantprovisions of Companies Act 2013 and rules made thereunder. Independent/ Non-ExecutiveDirectors excluding Promoter Directors are paid sitting fees for attending the meetings ofthe Board / Committees thereof.
The Nomination and Remuneration Committee recommends the remuneration of Directors andKey Managerial Personnel which is approved by the Board of Directors subject to approvalof shareholders where necessary. The level and composition of Remuneration so determinedshall be reasonable and sufficient to attract retain and motivate Directors and SeniorManagement to run the Company. The objective and broad framework of the RemunerationPolicy is to consider and determine the remuneration based on the fundamental principlesof payment for performance for potential and for growth. The Board considers theNomination and Remuneration Committees recommendation and takes appropriatedecision.
Contracts/Arrangements with Related Parties
All the related party transactions are entered on arms length basis in theordinary course of business and are in compliance with the applicable provisions of theCompanies Act 2013 and the Listing Regulations. There are no materially significantrelated party transactions made by the Company with Promoters Directors or KMP etc. whichmay have potential conflict with the interest of the Company at large which warrants theapproval of shareholders. Accordingly the disclosure of related party transactions asrequired under Section 134 (3)(h) of the Companies Act 2013 in Form AOC-2 is notapplicable to the Company. All related party transactions are presented to the AuditCommittee and the Board. Omnibus approval is obtained for the transactions which areforeseen and repetitive in nature. Transactions with related parties are conducted in atransparent manner with the interest of the Company as utmost priority. Details of suchtransactions are given in the accompanying Financial Statements. The Companys policyon Related Party Transactions is available at our website www.selanoil.com.
Whistle Blower Policy
The Company has adopted a Vigil Mechanism / Whistle Blower Policy to provide a formalmechanism to the Directors and Employees to report their concerns about unethicalbehavior actual or suspected fraud or violation of the Companys Code of Conduct orPolicy. This policy provides for adequate safeguards against victimization of employeeswho avail of the mechanism and also provides for direct access to the Chairman of theAudit Committee. It is affirmed that no personnel of the Company has been denied access tothe Audit Committee. This policy is available on the Companys website atwww.selanoil.com.
The objective of risk management in the Company is to act as an enabler in maintainingits knowledge edge sustaining and expanding the business being competitive and ensuringexecution of projects within budgeted cost time and quality resulting in improvedturnover and profitability. The Company has laid down a well defined risk managementmechanism covering the risk mapping and trend analysis risk exposure potential impactand risk mitigation process. The Companys risk identification and assessment processis dynamic and hence it has been able to identify monitor and mitigate the most relevantstrategic and operational risks both during periods of accelerated growth andrecessionary pressures.
Corporate Social Responsibility
Selan is committed to driving societal progress while fulfilling its businessobjectives. With safety health and environment protection high on its corporate agendaSelan is committed to conduct business with a strong environment conscience so as toensure sustainable development safe work places and enrichment of life of employeesclients and the community. Brief details about the CSR Policy developed and implemented bythe Company on CSR initiatives taken during the year is given in Annexure-C to thisReport.
In compliance with the provisions of the Companies Act 2013 and Regulation 17(10) ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Boardhas carried out an Annual Performance Evaluation of its own performance Directorsindividually and that of its Committees. During the year a Separate Meeting ofIndependent Directors was held to assess the performance of Non-Independent Director andthe Chairperson of the Company as well as the Board as a whole. Performance Evaluation isbased on their contribution to Companys objectives and plans efficient discharge oftheir responsibilities participation in Board / Committee meetings and other relevantparameters.
Board of Directors and KMP
During the year under review Mr. S. K. Singh retired from the Board with effect from24 September 2016. The Company wishes to place on record its appreciation for the servicesrendered by Mr. S. K. Singh to the Company and wishes him the best of health in hisretirement years going forward.
Mrs. R. Kapur retired by rotation during last Annual General Meeting with effect from28 September 2016.
Ms. S. B. Dalal was inducted as an Additional Director with effect from 26 December2016 to hold office upto the ensuing Annual General Meeting of the Company. The briefdetails relating to Ms. S. B. Dalal are furnished in the explanatory statement to theNotice of the ensuing Annual General Meeting.
Mr. Neeraj Sethi was appointed as President and CEO of the Company with effect from 21January 2017. The Company is pleased to welcome Mr. Sethi to Selan and expect him toexploit the significant opportunities present in the Companys asset base as well asthe wider hydrocarbon sector and in the process drive significant enhancement inshareholder value.
Auditors and Their Report
M/s V. Sankar Aiyar & Co. Chartered Accountants (FRN:109208W) Statutory Auditorsof the Company who were appointed in the 29th AGM hold office until theconclusion of 32nd AGM as they are not eligible for further re-appointment asper the provisions of Companies Act 2013. The Board places on record appreciation for theservices rendered by the Auditors during their association with the Company.
There are no qualifications or reservations or remarks made by the Auditors in theirReport.
Furthermore it is proposed to appoint M/s J. A. Martins & Co. CharteredAccountants (FRN: 010860N) as the Statutory Auditors of the Company for a term of fiveyears from the conclusion of this 32nd AGM till the conclusion of 37thAGM subject to ratification of appointment at every AGM hereinafter. The Board recommendsthe same for approval of the members at the upcoming AGM as per the relevant provisions ofthe Companies Act 2013 and rules made thereunder. The Company has received confirmationfrom M/s J. A. Martins & Co. to the effect that their appointment if made would bewithin the prescribed limits under Section 141(3)(g) of the Companies Act 2013 and thatthey are not disqualified for appointment.
Cost Accounting Records
The Board of Directors has on the recommendation of Audit Committee approved theappointment of Mr. S. N. Balasubramanian Cost Accountant as the Cost Auditor of theCompany for the Financial Year 2017-18 at a remuneration of Rs 120000 per annum. Theproposed remuneration of the Cost Auditor would be ratified by the members in the ensuingAGM. The Cost Audit for the year ended 31 March 2016 was carried out by the same Auditorand the report was filed on 12 September 2016.
Secretarial Audit Report
Secretarial Audit Report confirming compliance to the applicable provisions ofCompanies Act 2013 Listing Agreement SEBI guidelines and all other related rules andregulations obtained from our Secretarial Auditors M/s Nityanand Singh & Co. CompanySecretaries forms part of this Annual Report as Annexure-A.
In compliance with the provisions of Section 138 of the Companies Act 2013 M/s S. N.Nanda & Co. were appointed as Internal Auditors for the Financial Year 2016-17 toconduct the internal audit of the functions and activities of the Company. They havesubmitted their Report to the
Chairman of the Audit Committee and this was further reviewed by the Management andtaken on record.
Corporate Governance Report
In compliance with the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Management Discussion and Analysis and a Report on Corporate Governancealongwith Certificate from Auditors regarding compliance of conditions of CorporateGovernance is annexed to Directors Report. A declaration by the CEO regarding thecompliance with the Code of Conduct also forms part of this Annual Report.
Extract of the Annual Return
Relevant Extract of the Annual Return is given in Annexure - B to this Report.
Loans Guarantees or Investments
The Company has not given any loan or guarantee nor has made any investment during theyear under report attracting the provisions of Section 186 of the Companies Act 2013.
The Company has not accepted any deposits during the year under report nor did anydeposits remain unpaid or unclaimed at the end of the year.
Internal Financial Controls and their adequacy
As per Section 134(5)(e) of the Companies Act 2013 the Directors have an overallresponsibility for ensuring that the Company has implemented robust system and frameworkof Internal Financial Controls. This provides the Directors with reasonable assuranceregarding the adequacy and operating effectiveness of controls with regard to reportingoperational and compliance risks. The Company has devised appropriate systems andframework including proper delegation of authority policies and procedures effective ITsystems aligned with business requirements risk based internal audits risk managementframework and whistle blower mechanism. The Audit Committee evaluates the internalfinancial control system periodically.
Significant and Material orders passed by the Regulators / Courts / Tribunals
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impacts the going concern status and Companys operations in future.
SELAN is fully committed to uphold and maintain the dignity of every woman employeeworking with it. It believes that every woman shall have the right to work in anenvironment free from any form of Sexual Harassment. SELAN has a Policy onPrevention of Sexual Harassment of Women at Workplace which provides for protectionagainst sexual harassment of women at workplace and for prevention and redressal of suchcomplaints. During the year under review the Company has not received any complaint ofsexual harassment from any of the woman employee of the Company.
The Audit Committee comprises of five members out of which four are non-executive andindependent Directors including the Chairman. The Audit Committees compositionpowers and role are included in Corporate Governance Report. All the recommendations madeby the Audit Committee were accepted by the Board of Directors.
CEO / CFO Certification
Mr. Neeraj Sethi CEO and Mr. A. K. Maurya CFO of the Company have certified to theBoard that all the requirements of the Listing Obligations inter alia dealing with thereview of financial statements and Cash flow statement for the year ended 31 March 2017transactions entered into by the Company during the said year their responsibility forestablishing and maintaining internal control systems for financial reporting andevaluation of the effectiveness of the internal control system and making of necessarydisclosures to the Auditors and the Audit Committee have been duly complied with.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
The activities undertaken by your Company do not fall under the scope of disclosure ofparticulars under Section 134(3)(m) of the Companies Act 2013 to the extent where itrelates to the conservation of energy and technology absorption. Particulars with regardto foreign exchange outgo appear as point no. 42 of the Notes forming Part of theAccounts.
Material Changes and Commitments
There have not been any material changes and commitments affecting the financialposition of the Company between the end of the Financial year of the Company as on 31March 2017 and the date of this report.
The information required pursuant to Section 197 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company will be provided upon request. In terms of Section 136 of the Act theAnnual Report excluding the aforesaid annexure is being sent to the shareholders of theCompany and others entitled thereto. Any member interested in obtaining a copy of the saidannexure may write to the Company Secretary at the registered office of the Company.
Your Directors would like to express their earnest appreciation for the valuableefforts of every employee of the organization without which the Company would not havebeen able to undertake the challenging targets in all areas of operations. The Companybelieves in empowering its employees through greater knowledge team spirit and developinggreater sense of responsibility. We are fortunate to have such a team whose endeavors havelaid a strong foundation for the success of the organization as a whole. Your Directorsalso wish to place on record their deep sense of appreciation for the committed servicesby all the employees of the Company. On behalf of the Company we wish to convey ourappreciation to the Ministry of Petroleum and Natural Gas (MoPNG) Directorate General ofHydrocarbons (DGH) Ministry of Environment and Forests (MoEF) Government of India andthe Bankers of the Company for their continuous support cooperation and guidance.
The Directors value the trust shown by the shareholders in their ability to manage theCompany. We expect that with the ongoing encouragement and support of our shareholders weshall be successful in achieving the desired objectives in the near future.
| ||For and on behalf of the Board |
|Place : New Delhi ||ROHIT KAPUR |
|Date : 20 May 2017 ||Chairman |
| ||(DIN : 00017172) |