Your Directors have pleasure in presenting the Annual Report for the year ended 31March 2020.
The Company achieved the following results over the past two years :
(Rs. in lakhs)
| ||2018-19 ||2019-20 |
|Net Sales ||9333 ||8960 |
|EBIDTA ||7470 ||6365 |
|EBIDTA / Net Sales ||80% ||71% |
Total Reserves and Surplus of the Company have increased from 310 crores to 312 croresas on 31 March 2020. The Board has not recommended any transfer to General Reserves fromthe profits during the year under review.
Review of Operations
The Company continues to achieve high levels of profitability despite severe downwardpressure on oil prices demand disruptions and severe political upheaval in many oilproducing nation states.
The Company had submitted applications for 10 year extension for the Bakrol and Loharfields and these approvals were received from Ministry of Petroleum and Natural Gas(MoPNG).
The Company also returned the Indrora field to ONGC on completion of the 25 year leaseperiod as the field continued to remain highly unprofitable and capital intensive despitevarious attempts by the Company to improve its productivity by application of varioustechnologies that were of limited success. The Company is also in the process ofsurrendering the Ognaj field due to rapid urbanisation in the block area.
The Company also continued its efforts at streamlining and optimizing its operationsand management structure and was able to achieve faster decision making while reducingthe overall cost burden to the Company.
Most importantly the Company has remained actively engaged along with industry bodieswith the Government of India on a host of measures aimed at improving the overallperformance of oil and gas producing assets in the country. In the areas of fiscalreforms operational freedom for implementation of work programmes ease of doingbusiness attracting foreign investment in the sector ongoing reporting requirements andincentives for introduction of new technologies have all been areas that discussions arebeing held with the Government on an ongoing basis.
Finally towards the end of the fiscal year the Company along with the rest of theCountry and the world faced the unprecedented assault of the Covid-19 pandemic onbusinesses and their ability to deal with challenges of the kind never experienced in thepast. This issue has been addressed in greater detail in the Section on Material Changesand Commitments on pages 3 and 4 of this Annual Report. We are confident that the Companywill be able to address this situation in a proactive manner continue its operations andproduce the best financial results possible given the circumstances while maintainingfocus on the health and safety of our employees and service providers.
Please also refer to the Management Discussion and Analysis section of the AnnualReport for further clarification regarding Company operations and policies.
An interim dividend of 50% i.e. Rs. 5/- per share has been declared by the Board ofDirectors which shall be declared as final dividend for the year 2019-20 in the upcomingAGM subject to approval by the shareholders of the Company. The dividend together withdividend distribution tax resulted in cash outlay of Rs. 916.22 lakhs.
Transfer to IEPF
An Investor Education and Protection Fund ("IEPF" or "Fund") hasbeen established by the Central Government in compliance with applicable provisions ofthe Companies Act 2013 ("Act") read with the Investor Education and ProtectionFund Authority (Accounting Audit Transfer and Refund) Rules 2016 and subsequentamendments thereto ("IEPF Rules") whereby all unpaid or unclaimed dividends bythe members are required to be transferred by the Company to the Fund after completion ofseven years from the date of the dividend becoming unpaid / unclaimed the shares inrespect of which dividend has not been paid or claimed by the members for a period ofseven consecutive years or more shall also be transferred to a demat account created bythe IEPF Authority.
Further according to the IEPF Rules the Company had sent individual notices to theconcerned members and also advertised in the newspapers to enable those members who havenot claimed their dividends for seven consecutive years or more to take appropriate actionto claim their unpaid dividend amount which has not been claimed for seven consecutiveyears or more.
During the year an amount of Rs. 1760920 being unclaimed dividend for the FinancialYear 2012-13 alongwith 14111 equity shares were duly transferred to the Fund establishedby the Central Government.
In Compliance with the Companies Act 2013 and the IEPF Rules Members /claimants whoseshares and /or unclaimed dividend Which have/has been transferred to the IEPF DematAccount or the Fund as the case may be may claim the shares or apply for refund bymaking an application to the IEPF authority in Form IEPF-5 (available on http:// www.iepf.gov.in ) along with requisite fee as decided bythe IEPF authority from time to time. Only one consolidated claim in a financial year canbe filed by the member/claimant as per the IEPF Rules.
Members are requested to ensure that they claim the dividends and shares referredabove before they are transferred to the said Fund. Details of shares /shareholders inrespect of which dividend has not been claimed are provided on our website at www.selanoil.com . The shareholders are encouraged toverify their records and claim their dividends of all the earlier seven years if notclaimed.
|Year ||Amount ||Due date for transfer of unclaimed/ unpaid amount of Dividend to IEPF |
|2013 - 14 ||1561095 ||06 April 2021 |
|2014 - 15 ||1557095 ||06 April 2022 |
|2015 - 16 ||1625685 ||10 April 2023 |
|2016 - 17 ||2078995 ||09 April 2024 |
|2017 - 18 ||1529195 ||25 March 2025 |
|2018 - 19 ||1243285 ||23 February 2026 |
|2019 - 20 ||1463125 ||02 April 2027 |
The Company has appointed a Nodal Officer under the provisions of IEPF the details ofwhich are available on the website of the Company at www.selanoil.com under InvestorInformation section.
Buyback Of Equity Shares
The Company successfully completed the planned Buyback of Equity Shares on 05 July2019. The Company in this Buyback purchased 1200000 equity shares for a total cumulativeconsideration of Rs. 2125.66 lakhs. Consequently the paid- up share capital of theCompany is reduced to Rs.1520.00 lakhs as on 31 March 2020.
Meetings of the Board & Committees
There were eleven Board Meetings held during the Financial Year 2019-20. Details of theBoard and Committee meetings forms part of the Corporate Governance Report.
Declaration of Independence by Directors and statement on compliance of Code of Conduct
The Independent Directors of the Company have submitted a declaration meeting thecriteria of Independence as provided in Section 149(6) of the Companies Act 2013 andregulation 25(8) of SEBI (LODR) Regulations 2015. The above Declaration has been taken onrecord. Further The Independent Directors have also complied with the Code forIndependent Directors prescribed in Schedule IV of the Act.
Directors Responsibility Statement
The Board of Directors do hereby confirm that in the preparation of the AnnualAccounts the applicable Accounting Standards have been duly complied with and theDirectors have selected the necessary accounting policies and applied them consistently inaccordance with the provisions of Section 134(5) of the Companies Act 2013. Judgments /estimates have been made that are even handed 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. In accordance with the provisions of theCompanies Act 2013 the Directors have ensured that Proper and sufficient care has beentaken for the maintenance of adequate accounting records safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities. The Directorshave prepared the annual accounts on a going concern basis and have laid down internalfinancial controls to be followed by the Company and such Internal financial controls areadequate and operating effectively. Finally proper systems have been devised by theDirectors to ensure compliance with the provisions of all applicable laws and to ensurethat such systems are adequate and operating effectively.
Policy on Directors Appointment and Remuneration
The role of the Nomination Committee is to review the structure skills and compositionof the Company Board. The Committee considers suitable nominations for appointments to theBoards and makes appropriate recommendations based on qualifications skill andexperience of the Key Managerial Personnel. It recommends the remuneration of Directorsand Key Managerial Personnel which is approved by the Board of Directors subject toapproval of shareholders where necessary. Considering the requirement of skill set on theBoard eminent people having an independent standing in their respective field /profession and who can effectively contribute to Company business and Policy decisions areconsidered by Nomination and Remuneration Committee for appointment as IndependentDirector on the Board. The Committee gives due consideration to ethical standards ofintegrity qualification expertise and experience of the person for appointment asDirector and ensures that such a person is not disqualified under Companies Act 2013 andrules made thereunder and accordingly recommends his / her appointment to the Board.
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 as per the provisions of the CompaniesAct 2013 for attending the meetings of the Board / Committees thereof.
The level and composition of remuneration so determined by the Nomination andRemuneration Committee shall be reasonable and sufficient to attract retain and motivateDirectors and Senior Management to run the Company. The objective and broad framework ofthe Remuneration Policy is to consider and determine the remuneration based on thefundamental principles of payment for performance potential and growth. The Nominationand Remuneration Policy as approved by the Board may be accessed on Company website atwww.selanoil.com . The Board considers the Nomination and Remuneration Committeerecommendations and subsequently takes appropriate decisions.
Contracts / Arrangements with Related Parties
There are no materially significant related party transactions made by the Company withPromoters Directors or KMP etc. which may have potential conflict with the interest ofthe Company at large and which warrants the approval of shareholders. Accordingly thedisclosure of related party transactions as required under Section 134 (3)(h) of theCompanies Act 2013 in Form AOC-2 is not applicable to the Company. However all
the related party transactions are entered on arm length basis in the ordinary courseof business and are in compliance with the applicable provisions of the Companies Act2013 and the SEBI (LODR) Regulations 2015. Details of all related party transactions arereported to the Audit Committee for scrutiny-review and referred for approval of the Boardon a quarterly basis. Omnibus approval is obtained for the transactions which are foreseenand repetitive 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 policy on Related PartyTransactions is available at our website www.selanoil.com .
Whistle Blower Policy
To provide a formal mechanism for the Directors and employees to report their concernsabout unethical behavior actual or suspected fraud or violation of the Company Code ofConduct or Policy the Company has adopted a Vigil Mechanism/Whistler Blower Policy. ThisPolicy provides for adequate safeguards against victimization of employees who avail ofthe mechanism and also provides for direct access to the Chairman of the Audit Committee.It is affirmed that no personnel of the Company has been denied access to the AuditCommittee. This policy is available on the Company website at www.selanoil.com .
The Company has laid down a well defined risk management mechanism covering the riskmapping and trend analysis risk exposure potential impact and risk mitigation process.It includes identifying risks assessing their probabilities and consequences developingmanagement strategies and monitoring their state to maintain situational awareness ofchanges in potential threats. As Selan operates in a dynamic operating environment wehave in place comprehensive risk assessment and minimization procedures which arereviewed by Board periodically. The objective of risk management in the Company is to actas an enabler in maintaining its knowledge edge sustaining and expanding the businessbeing competitive and ensuring execution of projects within budgeted cost time andquality resulting in improved turnover and profitability.
The Board has carried out an Annual Performance Evaluation of its own performanceDirectors individually and that of its Committees in compliance with the provisions of theCompanies Act 2013 and Regulation 17(10) of the SEBI (LODR) Regulations 2015. During theyear a Separate Meeting of Independent Directors was held to assess the performance ofNon-Independent Directors the Chairperson of the Company as well as the Board as a whole.Performance Evaluation is based on their contribution to Company objectives and plansefficient discharge of their responsibilities participation in Board/Committee meetingsand other relevant parameters.
Board of Directors and KMP
Ms. Pooja Agnihotri and Ms. Vinni Gupta Company Secretary & Compliance Officer ofthe Company resigned during the year. Ms. Gunjan Gupta Compliance Officer of the Companyalso resigned during the year. Ms. Deepa Bhalla has been subsequently appointed as theCompany Secretary and Compliance Officer of the Company w.e.f. 16 May 2020. The Boardplaces on record its appreciation for the services rendered by Ms. Pooja Agnihotri Ms.Vini Gupta and Ms. Gunjan Gupta.
The Company has eminent individuals from diverse fields as Directors on its Board whobring in the required skills integrity competence expertise and experience that arerequired for making effective contribution to the Board.
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 conclusion of 37thAGM.
There are no qualifications or reservations or adverse remarks or frauds reported bythe Auditors in their Report.
The Board of Directors have in accordance with the terms of Section 148 of theCompanies Act 2013 and on the recommendation of Audit Committee approved the appointmentof Mr. R. Krishnan Cost Accountant (Membership No. 7799) as the Cost Auditor of theCompany for the Financial Year 2020-21 at a remuneration of Rs.120000/- per annum toconduct the audit of its cost accounting records. The proposed remuneration of the CostAuditor shall be ratified by the members in the ensuing AGM. The Cost Audit for the yearended 31 March 2019 was carriedout byMr. R. Krishnan and thereportwasfiled on 04 October2019. There are no qualifications or reservations or adverse remarks or frauds reported bythe Auditors in their Cost Audit Report.
M/s Nityanand Singh & Co. (ICSI membership no. 2668 and Certificate of Practice no.2388) Practicing Company Secretaries have been reappointed by the Board of Directors ofthe Company for conducting Secretarial Audit of the Company for financial year 2019-20. Interms of provisions of section 204(1) of the Companies Act 2013 the Secretarial AuditReport forms part of this Annual Report as Annexure - A. There are no qualifications orreservations or adverse remarks or frauds reported by the Auditors in their SecretarialAudit Report.
M/s V Sankar Aiyar & Co. (FRN: 109208W) Chartered Accountants were appointed asInternal Auditors for the Financial Year 2019-20 in compliance with the provisions ofSection 138 of the Companies Act 2013 to conduct the internal audit of the functions andactivities of the Company. Their Report to the Chairman of the Audit Committee had beensubmitted and this was further reviewed by the Management and had been taken on record.
Corporate Governance Report
Corporate Governance is ensured by taking ethical business decisions in a fair andtransparent manner with a fair commitment to values while meeting stakeholderexpectations. In compliance with the SEBI (LODR) Regulations 2015 Management Discussionand Analysis and a Report on Corporate Governance alongwith Certificate from Auditorsregarding compliance of conditions of Corporate Governance is annexed to Directors Report.A declaration by the Whole-Time Directors regarding the compliance with the Code ofConduct also forms part of this Annual Report.
Relevant Extract of the Annual Return is given in Annexure - B to this Report. A copyof the Annual Return is placed on the website of the Company at www.selanoil.com .
Loans Guarantees or Investments
The Company has not given any loan or guarantee or provided securities during the year2019-20 which may attract the provisions of Section 186 of the Companies Act 2013however details of investments covered under the provisions of Section 186 of theCompanies Act 2013 form part of the notes to the Financial Statements provided in thisAnnual Report.
No Deposits had been accepted by the Company during the year under report. Further theCompany also did not have any deposits remaining unpaid or unclaimed at the end of theyear.
Internal Financial Controls and their adequacy
In compliance with the provisions of Section 134(5)(e) of the Companies Act 2013 theDirectors have an overall responsibility for ensuring that the Company has implemented arobust system and framework of Internal Financial Controls. This provides the Directorswith reasonable assurance regarding the adequacy and operating effectiveness of controlswith regard to reporting operational and compliance risks. The Audit Committee evaluatesthe internal financial control systems periodically and ensures that the Company hasdevised appropriate systems and framework including proper delegation of authoritypolicies and procedures effective IT systems aligned with business requirements riskbased internal audits risk management framework and whistle blower mechanism. These areroutinely tested and certified by Statutory as well as Internal Auditors.
Significant and Material orders passed by the Regulators Courts Tribunals Statutoryor Quasi- Judicial bodies
No significant or material orders were passed by the Regulators or Courts or Tribunalsor Statutory or Quasi- Judicial bodies which impacts the going concern status and Companyoperations in future.
SELAN Rs.Policy on Prevention of Sexual Harassment of Women at WorkplaceRs. is in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules made thereunder which provides forprotection against sexual harassment of women at workplace and for prevention andredressal of such complaints received by the Company. SELAN has always believed thatappropriate standard of conduct should be maintained by the employees in their conduct andthat there should be a safe indiscriminatory and harassment free (including sexualharassment) work environment for every individual working in the Company. InternalComplaints Committee has been set up to redress complaints if any received regardingsexual harassment. We affirm that adequate access would be provided to any complainant whowished to register a complaint under the Policy. During the year under review the Companyhas not received any complaint under the Policy.
The Audit Committee comprises of five members out of which four are Non-Executive andIndependent Directors including the Chairman. The Audit Committee composition powers androle are included in Corporate Governance Report. All the recommendations made by theAudit Committee were accepted by the Board of Directors. Mr. M. Singh Chairman of thecommittee during the financial year has adequate financial and accounting knowledge.
CEO / CFO Certification
Mr. R. Kapur Whole-Time Director and Mr. V. Kirpal CFO of the Company havecertified to the Board that all the requirements of the SEBI (LODR) Regulations 2015inter- alia dealing with the review of Financial Statements and Cash Flow Statement forthe year ended 31 March 2020 transactions entered into by the Company during the saidyear their responsibility for establishing and maintaining internal control systems forfinancial reporting and evaluation of the effectiveness of the internal control systemsand making of necessary disclosures to the Auditors and the Audit Committee have been dulycomplied 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. 52 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 2020 and the date of this report.
The outbreak of Covid-19 (Coronavirus) has been posing a very big challenge not only tothe individuals but also to the businesses worldwide. It has impacted the Global Economyunprecedently by creating an all round scare uncertainty and exposing the entire businessecosystem to risks. As a consequence there has been a sudden and rapid drop in demand ofproducts & services as safety & survival come to the core in this pandemic.
The Company has also been facing the challenges due to the Covid-19 and consequentlockdown situation. A brief of the challenges being faced are as follows:
a) Getting the Field Labour to attend field work and to keep them healthy and safe.
b) Obtaining timely tanker services to ensure crude transportation to custody transferpoint of ONGC.
c) Challenges in the timely supply of material and services for continued &uninterrupted operations during the ongoing lockdown situation.
d) Low capacity utilization by the Indian Oil Corporation Limited (IOCL) refinery dueto drop in demand with a potential cut in the crude offtake.
e) Challenges being faced by gas buyers of the Company in obtaining the raw materialand chemicals affecting their ability to offtake allotted quantities of gas. Further dueto drop in demand their customers not picking up the finished product resulting in stockpiles.
f) With a view to mitigate the challenges described above and to ensure continuedoilfield operations the Company has decided to scale down operations. The impact of theseactions will be felt in F.Y. 2020-21 with possibly lower production and profitability.Further keeping the safety of people and operations paramount the Company undertook aseries of preventive measures to minimize or nullify the potential impact of Covid-19situation on business continuity.
Please refer to the Management Discussion and Analysis section of this Annual Report.
The Company has bought back 1200000 equity shares from the shareholders during thebuyback period due to which the paid-up equity share capital of the Company stood at Rs.1520 lakh (Rupees Fifteen Crore and Twenty Lakh Only) consisting of 152 lakh equityshares of face value of Rs. 10/- each as on 31 March 2020.
The Company has not issued any equity shares or preference shares or any securitieswhich carry a right or option to convert such securities into shares employee stockoptions debentures bonds or any nonconvertible securities warrants etc.
Corporate Social Responsibility
Selan as a responsible Corporate is committed to drive societal progress whilefulfilling its business objectives. With safety health and environment protection high onits corporate agenda Selan is committed to conduct business with a strong environmentalconscience so as to ensure sustainable development safe work places and enrichment oflife of employees clients and the community. The Company has in place a CSR Policy inline with Schedule VII of the Companies Act 2013 and is available at the Company websitewww. selanoil.com. The Corporate Social Responsibility Committee comprises of fivemembers out of which four are Non- Executive and Independent Directors including theChairman. Brief details about the CSR Policy developed and implemented by the Company onCSR initiatives taken during the year is given in Annexure - C to this Report.
Compliance with Secretarial Standards
The Company is in compliance with the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India.
1. Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
(a) Issue of shares or other convertible securities.
(b) Issue of equity shares with differential rights as to dividend voting orotherwise.
(c) Issue of equity shares (including sweat equity shares and employee stock options)to employees of the Company under any scheme.
(d) Issue of debentures bonds warrants or any other nonconvertible securities.
2. The Company does not have any subsidiaries. Hence Wholetime Director of the Companydid not receive any remuneration or commission during the year from any of itssubsidiaries.
3. The Company has not revised its Financial Statement and Report during the threepreceding financial years.
4. There are no applications filed for corporate insolvency process ! by afinancial or operational creditor or by the company itself under the Insolvency andBankruptcy Code 2016 before the NCLT.
5. The Company has not obtained any credit rating from any credit rating agency.
6. Disclosures relating to Subsidiaries Associates and Joint Ventures
- Not Applicable.
7. The Company has not commenced any new business nor t discontinued / sold or disposedoff its existing business.
8. Currently the Company operates in only one Business Segment that is Production ofCrude Oil and Natural Gas. There is no change in the status of the Company and financialyear.
9. The Company has not made any acquisition merger expansion modernization ordiversification and there is no development or acquisition or assignment of materialIntellectual Property Rights.
10. No material event has taken place which has impact on the affairs of the Companyexcept the impact of Covid -19 pandemic.
11. During the financial year ended 31 March 2020 securities of the Company have notbeen suspended from trading on any of the Stock Exchanges where they are listed.
12. Company has obtained a certificate from Mr. Nityanand Singh Company Secretary inpractice confirming that none of the f Directors on the Board of the Companyhave been debarred or disqualified from being appointed or continuing as Directors ofCompanies by the Board / Ministry of Corporate Affairs or any ; such statutory authority.
The information required pursuant to Section 197 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) l Rules 2014 in respect ofemployees of the Company is provided in 1 Annexure - D.
The Directors hereby wish to place on record the enthusiasm and unstinting efforts ofevery employee at all levels for their hard work dedication and commitment without whichthe Company would not . have been able to undertake the challenging targets inall areas of Rs. operations. SELAN believes in empowering its employees through tgreater knowledge team spirit and developing greater sense of responsibility. We arefortunate to have such a team whose endeavors have laid a strong foundation for thesuccess of the organization as a whole. Your Directors also wish to place on record theirdeep sense of appreciation for the committed services rendered by all the employees of theCompany.
On behalf of the Company we wish to convey our appreciation to the Ministry ofPetroleum and Natural Gas (MoPNG) Directorate General of Hydrocarbons (DGH) Ministry ofEnvironment and Forests (MoEF) Government of India and the Bankers of the Company fortheir continuous support cooperation and guidance. The Directors particularly wish toacknowledge and place on record the continuous support and guidance of all theshareholders and more importantly for the confidence reposed in the Company management.
| ||For and on behalf of the Board |
| ||R. KAPUR |
|Place : New Delhi ||Chairman |
|Date : 18 July 2020 ||(DIN : 00017172) |