To the Members
The Directors have pleasure in presenting before you the 33rd Annual Report of the Company together with the Audited Statements of Accounts forthe year ended 31st March 2019.
The performance during the period ended 31 st March 2019 has been as under:
|(Rs. in Lakhs)|
|2||Profit / (Loss) Before Interest and Depreciation||(4802.67)||(1401.14)|
|4||Gross Profit / (Loss)||(6331.27)||(3361.10)|
|5||Provision for Depreciation||2136.61||2163.13|
|6||Net Profit / (Loss) Before Tax||(8467.88)||(5524.23)|
|7||Provision for Tax||(167.58)||(1825.91)|
|8||Net Profit / (Loss) After Tax||(8300.30)||(3698.32)|
|9||Balance of Profit brought forward||-||-|
|10||Balance available for appropriation||(8264.39)||(3702.34)|
|11||Transfer to General Reserve||8264.39||3702.34|
The Gross Income of the Company is Rs. 2810.53 Lakhs during the current Financial Year 2018-19 as against Rs. 1125.68 Lakhs during the previous Financial Year. Though the Company had an Order book position of? 270 Crores in the year an Order worth Rs. 240 Crores was cancelled by the Customer due to non-issue of the Performance Bank Guarantee by the Banks which had an adverse impact on the Operations and led to low turnover. The Company is working with the Banks for a One Time Settlement in resolving the working capital issues and expects a resolution during the year 2019-20. The Company incurred Liquidated Damages of? 503.03 Lakhs due to late delivery.
The Company has Orders on hand to the tune of Rs. 40 Crores. The Company expects to have the raw material in place once the resolution on the Working Capital is arrived at latest by second Quarter of 2019.
The Company products Casing Tubing and Drill Pipe are primarily used in the Oil and Gas sector for the drilling and exploration of Oil and Gas. Demand for Oil & Gas is increasing every year leading to more exploration and drilling for Oil & Gas reserves. The crude oil prices have been fluctuating during the year and the Brent Crude Oil price on an average is at 64 USD/ barrel. Brent crude oil serves as the benchmark price for purchase of oil worldwide.
With the brent crude oil prices expected to increase the deployment of rigs will increase further which is presently at 2213 Worldwide. The number of Rigs in operation in India are 121 increasing from 112 the previous year. The active rigs are a direct indication of demand forthe casing tubing and drill pipes used in drilling completing producing and processing hydrocarbons.
Further the Government of India has issued revised Steel Policy for providing preference to domestically manufactured Iron and Steel Products which includes seamless pipes covering casing tubing and drill pipes in Government procurement agencies thereby strengthening the manufacturing sector.
The Company will be in a position to actively participate in the growing market for the Products once the working capital issues are resolved by second quarter of 2019.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
As required under Regulations of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 the Management Discussion and Analysis Report is enclosed as a part of this report.
CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:
Your Company has taken adequate steps to adhere to all the stipulations laid down in Reg. 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015. A report on Corporate Governance is included as a part of this Annual Report. Certificate from the Statutory Auditors of the company M/s G Nagendrasundaram & Co. Chartered Accountants confirming the compliance with the conditions of Corporate Governance as stipulated under above regulation is included as a part of this report.
LISTING WITH STOCK EXCHANGES:
The Company confirms that it has paid the Annual Listing Fees for the year 2019-20 to NSE and BSE where the Company's Shares are listed.
DEMATERIALISATION OF SHARES:
96.73% of the company's paid up Equity Share Capital is in dematerialized form as on 31st March 2019 and balance 3.27% is in physical form. The Company's Registrars are M/s XL Softech Systems Ltd. having their registered office at 3 Sagar Society Road No.2 Banjara Hills Hyderabad - 500 034.
Number of Board Meetings held:
The Board of Directors duly met 5 times during the financial year from 1st April 2018 to 31st March 2019. The dates on which the meetings were held are as follows: 26th April 201813th June 201811th August 201812th November 2018 and 11th February 2019.
Independent Directors Declaration:
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act 2013.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Companies Act 2013 Directors of your Company hereby state and confirm that:
a) in the preparation of the annual accounts for the year ended 31 st March 2019 the applicable accounting standards have been followed along with proper explanation relating to material departures;
b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the Profit / (Loss) of the company for the same period;
c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls in the company that are adequate and were operating effectively.
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.
Auditors' observations are suitably explained in notes to the Accounts and are self-explanatory.
i) Statutory Auditors:
M/s.G.Nagendrasundaram & Co. Chartered Accountants Hyderabad Statutory Auditors have been appointed for a period of Five Years at the 31 st Annual General Meeting until 36th Annual General Meeting subject to ratification every year at the conclusion of next Annual General Meeting.
ii) Cost Auditors:
The Company is required to appoint Cost Auditors if the turnover of the Company is more than Rs.100 Crores in the previous year. Since the turnover of the Company is below? 100 Crores threshold during the year 2018-19 the Cost Auditors are not required to be appointed forthe year2019-20.
iii) Secretarial Audit:
Ms.Manjula Aleti Practicing Company Secretary in practice was appointed as Secretarial Auditor to conduct the Secretarial Audit of the Company for the year 31st March 2019 as per the section 204 of the Companies Act 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Secretarial Audit Report for the year ended 31st March 2019 (in Form MR-3) submitted by Company Secretary in Practice is enclosed as a part of this report Annexure-A.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information required under section 134(3)(m)ofthe Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is given in the Annexure-B to this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
In terms of section 135 and Schedule VII of the Companies Act 2013 the Board of Directors of your Company have constituted a CSR Committee. The Committee comprises of all Independent Directors. CSR Committee of the Board has developed a CSR Policy under Health care and Education activities which are enclosed as part of this report Annexure-C. Additionally the CSR Policy has been uploaded on the website of the Company atwww.octlindia.com under investors/ policy documents/CSR Policy link.
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013 a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.octlindia.com under investors /policy documents /Vigil Mechanism Policy link.
RELATED PARTY TRANSACTIONS:
Related party transactions that were entered during the financial year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company's Promoters Directors Management or their relatives which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the particulars of contracts entered during the yearas per Form AOC-2 is enclosed as Annexure-D.
The Board of Directors of the Company has on the recommendation of the Audit Committee adopted a policy to regulate transactions between the Company and its Related Parties in compliance with the applicable provisions of the Companies Act 2013 the Rules thereunder and the Listing Agreement. This Policy was considered and approved by the Board has been uploaded on the website of the Companyatwww.octlindia.com under investors/ policy documents/Related Party Policy link.
EXTRACT OF ANNUAL RETURN :
The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-E.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered underthe provisions of Section 186 of the Companies Act 2013 are given in the notes to the Financial Statements.
REMUNERATION RATIO OF THE DIRECTORS I KEY MANAGERIAL PERSONNEL (KMP) I EMPLOYEES:
The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and Companies (Particulars of Employees) Rules 1975 in respect of employees of the Company and Directors is furnished hereunder:
1) Details of percentage increase in the remuneration paid to Key Managerial Personnel (KMP)
|S. No||Name||Designation||Remuneration paid FY 2018-19||Remuneration paid FY 2017-18||Increase in|
|(Rs. Lakhs)||(Rs. Lakhs)||(%)|
|2||Mr.Sridhar Kamineni||Managing Director (KMP)||49.44||49.44||0|
|3||Mr.Ch.Venkata Sastry||CFO (KMP)(Upto 10-09-2018)||3.89||8.46||0|
|4||Ms.Priyanka Garg||CS (KMP)|
|(Appointed on 13-06-2018)||1.92||0||0|
|5||Mr. J Ramamuni Reddy||CFO (KMP)||1.17||0||0|
2) Particulars of Employees:
As required under the provisions of Companies Act 2013 and Rule 5(2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 there are no employees falling under the category thus no information is required to be given in the report.
DEVELOPMENT AND IMPLEMENTATION OF ARISK MANAGEMENT POLICY:
The Company has been addressing various risks impacting the Company and the policy of the Company on risk Management is provided elsewhere in this Annual Report in Management Discussion and Analysis.
Directors take this opportunity to express their thanks to various departments of the Central and State Government ONGC Oil India Limited Multinational Companies operating in India and Abroad for Oil and Gas Exploration and Drilling Bankers Material Suppliers Customers and Shareholders for their continued support and guidance.
The Directors wish to place on record their appreciation for the dedicated efforts put in by the Engineers and Employees of the Company at all levels.
|By Order of the Board of Directors|
|For Oil Country Tubular Limited|
|Place : Hyderabad||K SURYANARAYANA|
|Date : 08.08.2019||Chairman|
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING AND OUTGO ETC:
Information on conservation of Energy Technology absorption Foreign Exchange earnings and outgo required to be disclosed under Section 134 of the Companies Act 2013 read with Companies (Accounts) Rules 2014 are provided hereunder:
|(A) Conservation of Energy:|
|(i) the steps taken or impact on conservation of energy||Energy conservation continues to receive priority attention at all levels. All efforts are made to conserve and optimise use of energy with continuous monitoring improvement in maintenance and distribution systems and through improved operational techniques.|
|(ii) the steps taken by the company for utilising alternate sources of energy|
|(iii) the capital investment on energy conservation equipments;|
|(B) Technology absorption:|
|(i) the efforts made towards technology absorption;||Updation of Technology is a Continuous process absorption implemented and adapted by the Company for innovation. Efforts are continuously made to develop new products required in the Engineering Industry & in the Oil and Gas Industry.|
|(ii) the benefits derived like product improvement cost reduction product development or import substitution;||The Company has been able to successfully indigenize the toolings to a large extent and successfully developed new products by virtue of technology absorption adaptation and innovation.|
|(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)||Not applicable since 5 years period is over|
|(a) the details of technology imported;|
|(b) the year of import;|
|(c) whether the technology been fully absorbed;|
|(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof;|
|(iv) the expenditure incurred on Research and Development.||No expenditure has been incurred on Research and Development during the current Financial Year.|
Expenditure on R& D
|(Rs. in Lakhs)|
|D||Total R&D expenditure as a percentage of total turnover||-||-|
FORM NO. AOC-2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules 2014.
Form for Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub section (1) of section 188 of the Companies Act 2013 including certain arm's length transaction under third proviso is given below:
1. Details of contracts or arrangements or transactions not at Arm's length basis :
2. Details of contracts or arrangements or transactions at Arm's length basis :