Your Directors have pleasure in presenting the Annual Report for the year ended 31March 2018.
The Company achieved the following results over the past three years:
| || || ||(in ` lakhs) |
| ||2015-16 ||2016-17 ||2017-18 |
|Net Sales ||6203 ||5584 ||7661 |
|EBIDTA ||4761 ||4311 ||5448 |
|EBIDTA / Net Sales ||77% ||77% ||71% |
Total Reserves and Surplus of the Company have increased from `26579 lakhs to ` 27800lakhs as on 31 March 2018. During the year under review an amount of `5.65 lakhstransferred to Site Restoration Fund.
Review of Operations
The Company has significantly increased profitability and cash flow from operationsyear over year due to increased production as a result of focused capital investment inproduction enhancement supported by improved hydrocarbon prices. Oil production increasedto 201276 bbls in 2017-18 from 165262 bbls in 2016-17 and gas production increased from6048214 m3 to 7622988 m3 in 2017-18. The company has successfully delivered fourquarters of growth in production.
Organizationalenhancementwithinternationallyaccomplishedmanagement and technicaladvisory team has been the key factor in delivering these results with demonstrableimprovement in operational execution better understanding of reservoir geology andproduction potential as well as more effective deployment of capital for productionenhancement. Indrora field has delivered its highest production since the discovery of thefield in 1968. Karjisan oil discovery has been put on regular production. Karjisan gasproduction has also commenced. Pilot production enhancement activities have also beensuccessful in Lohar which hold promise of improved recovery over the long term.
Last but not the least Bakrol the primary producing field in the Company hasundergone significant production enhancement activities in terms of hydraulic stimulationand production optimization and significantly improved production over last year andcontinues to deliver higher production. During the year the Company has also submittedits application for a 10-year extension beyond March-2020 of its Production SharingContracts for Lohar Bakrol and Indrora to DGH. The company believes that all regulatoryoperational and compliance requirements for contract extension are in place and theapplications are under review with DGH. Please also refer to the Management Discussion andAnalysis section of the Annual Report for further clarification regarding Company'soperations and policies.
The Directors are pleased to inform that in the financial year 2017-18 the Board ofDirectors have declared an interim dividend of 50% i.e. `5/- per share which shall bedeclared as final dividend for the year 2017-18 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) and 124(6) of theCompanies Act 2013 read with Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 and subsequent amendment thereto("the Rules") an amount of `718186.50 being Unclaimed Dividend for theFinancial Year 2010-11 alongwith 87988 equity shares were duly transferred to theInvestor Education and Protection Fund established by the Central Government.
Number of Meetings of the Board
There were eight Board Meetings held during the Financial Year 2017-18. 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 Company's business and Policy decisions are considered by Nomination andRemuneration Committee for appointment as Independent Director on the Board. The Committeeconsiders ethical standards of integrity qualification expertise and experience of theperson for appointment as Director and is not disqualified under Companies Act 2013 andrules made thereunder and accordingly recommend to the Board his / her appointment.
Remuneration to Whole-Time Director is governed under the relevant provisions ofCompanies Act 2013 and rules made thereunder. Independent/ Non-Executive Directorsexcluding Promoter Directors are paid sitting fees for attending the meetings of the 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 Nomination and RemunerationPolicy as approved by the Board may be accessed on Company's website at www.selanoil.com.The Board considers the Nomination and Remuneration Committee's recommendation and takesappropriate decision.
Contracts / Arrangements with Related Parties
All the related party transactions are entered on arm's length basis in the ordinarycourse of business and are in compliance with the applicable provisions of the CompaniesAct 2013 and the Listing Regulations. Details of all related party transactions arereported to the Audit Committee for scrutiny / review and referred for approval of theBoard on a quarterly basis. There are no materially significant related party transactionsmade by the Company with Promoters Directors or KMP etc. which may have potentialconflict with the interest of the Company at large which warrants the approval ofshareholders. Accordingly the disclosure of related party transactions as required underSection 134 (3)(h) of the Companies Act 2013 in Form AOC-2 is not applicable to theCompany. Omnibus approval is obtained for the transactions which are foreseen andrepetitive in nature. Transactions with related parties are conducted in a transparentmanner with the interest of the Company as utmost priority. Details of such transactionsare given in the accompanying Financial Statements. The Company's policy on Related PartyTransactions 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 Company's 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 Company's website atwww.selanoil.com.
Risk Management is a formal and disciplined practice for addressing risk. Selan has inplace comprehensive risk assessment and minimization procedures which are reviewed byBoard periodically. The objective of risk management in the Company is to act as anenabler in maintaining its knowledge edge sustaining and expanding the business beingcompetitive and ensuring execution of projects within budgeted cost time and qualityresulting in improved turnover and profitability. The Company has laid down a well definedrisk management mechanism covering the risk mapping and trend analysis risk exposurepotential impact and risk mitigation process. It includes identifying risks assessingtheir probabilities and consequences developing management strategies and monitoringtheir state to maintain situational awareness of changes in potential threats.
Corporate Social Responsibility
The Company has in place CSR Policy in line with Schedule VII of the Companies Act2013 which is available at our Company's website www.selanoil.com. Selan is committed todriving societal progress while fulfilling its business objectives. With safety healthand environment protection high on its corporate agenda Selan is committed to conductbusiness with a strong environment conscience so as to ensure sustainable developmentsafe work places and enrichment of life of employees clients and the community. TheCorporate Social Responsibility Committee comprises of five members out of which four arenon- executive and independent Directors including the Chairman. Brief details about theCSR Policy developed and implemented by the Company on CSR initiatives taken during theyear is given in Annexure-C to this Report.
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 Company's 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. V. B. Mahajan passed away peacefully on 05 August2017. Mr. Mahajan had been a member of the Board for over 22 years since 1995 and wasthe senior most member of the Board of Directors. The Company places on record itsappreciation for the guidance provided by Mr. V. B. Mahajan over the years.
Mr. R. S. Sidhu was inducted as an Additional Director with effect from 18 August 2017to hold office upto the ensuing Annual General Meeting of the Company. Dr. D. J.Corbishley and Mr. T. Currimbhoy Independent Directors whose term expires on 01 April2019 being eligible offers themselves for re- appointment as Independent Directors witheffect from 01 April 2019 to 31March 2019.
The Company has received requisite notices in writing from members proposing theircandidature for the same. The Nomination and Remuneration Committee has recommended theirre-appointment for a further period of 5 years up to 31 March 2024. The Company hasreceived declarations from the said Independent Directors of the Company confirming thatthey meet the criteria of Independence as prescribed under sub-section (6) of Section 149of the Companies Act 2013 and Listing Agreement with the Stock Exchanges. The Board hasapproved their re-appointment subject to approval of shareholders in the ensuing AnnualGeneral Meeting.
Mr. R. Kapur Whole- time Director whose term expires on 01 October 2018 beingeligible offers himself for re- appointment. The Board has approved his re-appointmentwith effect from 01 October 2018 for a period of 5 years subject to approval ofshareholders in the ensuing Annual General Meeting.
The brief details relating to aforesaid appointments are furnished in the ExplanatoryStatement to the Notice of the ensuing Annual General Meeting.
Auditors and Their Report
M/s J. A. Martins & Co. Chartered Accountants (FRN:010860N) Statutory Auditors ofthe Company were appointed in the 32nd AGM to hold office until the conclusionof 37th AGM subject to ratification at every AGM. Therefore ratification ofappointment of Statutory Auditors is being sought from the members at the ensuing AGM.There are no qualifications or reservations or remarks or frauds reported by the Auditorsin their Report.
Cost Accounting Records
During the year under review Mr. R. Krishnan Cost Accountant (Membership No. 7799)was appointed as Cost Auditor for the Financial Year 2017-18 in place of Mr. S. N.Balasubramanian Cost Auditor who expired on 20 November 2017. The remuneration of theCost Auditor as recommended by the Audit Committee and approved by the Board of Directorswill be `120000/- per annum which is subject to ratification by the members in theensuing Annual General Meeting. The Board of Directors has on the recommendation of AuditCommittee approved the appointment of Mr. R. Krishnan Cost Accountant (Membership No.7799) as the Cost Auditor of the Company for the Financial Year 2018-19 at a remunerationof `120000/- per annum. The proposed remuneration of the Cost Auditor would be ratifiedby the members in the ensuing AGM. The Cost Audit for the year ended 31 March 2017 wascarried out by Mr. S. N. Balasubramanian and the report was filed on 16 October 2017.
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 V.Sankar Aiyar & Co. Chartered Accountants were appointed as Internal Auditors for theFinancial Year 2017-18 to conduct the internal audit of the functions and activities ofthe Company. They have submitted their Report to the Chairman of the Audit Committee andthis was further reviewed by the Management and taken on record.
Corporate Governance Report
Corporate Governance stems from the belief and realization that corporate citizenshiphas a set of responsibilities which must be fulfilled for a company to progress andsucceed over the long term. In compliance with the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 Management Discussion and Analysis and aReport on Corporate Governance alongwith Certificate from Auditors regarding compliance ofconditions of Corporate Governance is annexed to Directors' Report. A declaration by theCEO regarding the compliance with the Code of Conduct also forms part of this AnnualReport.
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. These are routinely tested and certified byStatutory as well as Internal Auditors. 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 Company's operations in future.
SELAN has always believed that appropriate standard of conduct should be maintained bythe employees in their conduct and that there should be a safe indiscriminatory andharassment free (including sexual harassment) work environment for every individualworking in the company. SELAN has a Policy on Prevention of Sexual Harassment ofWomen at Workplace' which provides for protection against sexual harassment of women atworkplace and for prevention and redressal of such complaints. During the year underreview the Company has not received any complaint of sexual harassment from any of thewoman employee of the Company.
The Audit Committee comprises of four members out of which three are non-executive andindependent Directors including the Chairman. The Audit Committee's composition powersand role are included in Corporate Governance Report. All the recommendations made by theAudit Committee were accepted by the Board of Directors.
CEO / CFO Certification
Mr. N. Sethi President & CEO and Mr. A. K. Maurya CFO of the Company havecertified to the Board that all the requirements of the Listing Obligations inter aliadealing with the review of financial statements and Cash flow statement for the year ended31 March 2018 transactions entered into by the Company during the said year theirresponsibility for establishing and maintaining internal control systems for financialreporting and evaluation of the effectiveness of the internal control system and making ofnecessary disclosures to the Auditors and the Audit Committee have been duly compliedwith.
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. 48 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 2018 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 at all levels for their hard work dedication and commitmentwithout which the Company would not have been able to undertake the challenging targets inall areas of operations. The Company believes in empowering its employees through greaterknowledge team spirit and developing greater sense of responsibility. We are fortunate tohave such a team whose endeavors have laid a strong foundation for the success of theorganization as a whole. Your Directors also wish to place on record their deep sense ofappreciation for the committed services by all the employees of the Company. On behalf ofthe Company we wish to convey our appreciation to the Ministry of Petroleum and NaturalGas (MoPNG) Directorate General of Hydrocarbons (DGH) Ministry of Environment andForests (MoEF) Government of India and the Bankers of the Company for their continuoussupport cooperation and guidance. The Directors particularly wish to acknowledge andplace on record the continuous support and guidance of all the shareholders and moreimportantly for the confidence reposed in the Company's management.
| || |
For and on behalf of the Board
|Place : New Delhi ||R. KAPUR |
|Date : 15 May 2018 ||Chairman |
| ||(DIN : 00017172) |