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Deep Energy Resources Ltd.

BSE: 532760 | NSE: DEEPENR |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE677H01012 | SECTOR: Oil Drilling And Exploration

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Annual Report

For Year :
2018 2017 2015 2014 2013 2012 2011 2010 2009

Director’s Report

To

The Members

Deep Industries Limited,

Ahmedabad

The Directors have pleasure in presenting 28th Annual Report together with the audited financial statement of your Company for the Financial Year ended 31st March, 2018.

FINANCIAL RESULTS:

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013, read with Rule 7 of the (Companies Accounts) Rules, 2014.

The standalone and consolidated financial performance of the Company, for the Financial Year ended on 31st March, 2018 are summarized below:

(Rs. In Lakhs)

Particulars

Standalone

Consolidated

2017-18

2016-17

2017-18

2016-17

Revenue from Operations

30049.25

27738.05

31267.54

27738.05

Other Income

668.71

928.79

698.32

929.40

Total Income

30717.96

28666.84

31965.86

28667.45

Less: Total Expenses

18989.42

17740.58

20097.06

17740.55

Profit Before Tax

11728.54

10926.26

11868.80

10926.90

Less: Tax Expenses

4126.48

3406.99

4124.00

3406.93

Profit/(Loss) for the Year

7602.06

7519.26

7744.80

7519.96

Other Comprehensive Income/ (Loss) for the year

4.83

(14.85)

4.82

(14.85)

Total Comprehensive Income/ (Loss) for the year

7606.89

7504.41

7745.42

7030.15

Earning per Equity Share (Basic and Diluted)

23.76

25.05

24.19

23.47

COMPANY PERFORMANCE (STANDALONE & CONSOLIDATED BASIS):

1. The Company’s Standalone revenues from operations increased to Rs. 30049.25 Lakhs in the year 2017-18 from Rs. 27738.05 Lakhs in 2016-17 showing growth of 8.33 % compared to the previous year, while Consolidated revenues from operations increased to Rs. 31267.54 Lakhs in the year 2017-18 from Rs. 27738.05 Lakhs for the year 2016-17.

2. Company’s Standalone net profit increased to Rs. 7602.06 Lakhs in the year 2017-18 from Rs. 7519.26 Lakhs in the year 2016-17 showing growth of 1.10 % as compared to previous year.

However, your Directors are expecting to achieve better results in time to come and to continue the position of market leader in coming years.

Subsidiary Performance:

Deep Industries Limited has five subsidiaries as follows as Deep Natural Resources Limited, Prabha Energy Private Limited, Deep Energy LLC, Deep Onshore Drilling Services Private Limited and Deep International DMCC.

- Deep Natural Resources Limited has earned total revenue of Rs. 8365.00 in the year 2017-18 as compared to revenue earned of Rs. 9643.00in the year 2016-17. And it has earned total profit of Rs. 355.70 in the year 2017-18 as compared to total profit earned of Rs. 2852.00 in the year 2016-17.

- Prabha Energy Private Limited has earned total revenue of Rs. 29.48 Lakhs in the year 2017-18 as compared to revenue earned of Rs. 0.44 Lakhs in the year 2016-17. And it has earned total profit of Rs. 8.72 Lakhs in the year 2017-18 as compared to total profit earned of Rs. 0.16 Lakhs in the year 2016-17.

- Deep Onshore Drilling Private Limited has earned total revenue of Rs. 4732.00 in the year 2017-18 And it has earned total profit of Rs. 2547.00 in the year 2017-18

- Deep Energy LLC has loss of Rs. 0.008 Lakhs in the year 2017-18 as compared to loss of Rs. 0.5 Lakhs incurred in the year 2016-17.

- Deep Intenational DMCC has Profit of Rs. 136.45 Lakhs in the year 2017-18.

DIVIDEND:

Your Directors have recommended final dividend ofRs. 1.5/- (15%) per Equity Share each ofRs. 10/- for financial year ended on 31st March, 2018, the Proposal is subject to the approval of shareholders at the ensuing Annual General Meeting will be paid to (i) those Equity Shareholders whose name appear in the Register of Members ofthe Company after giving effect to all valid share transfers in physical form lodged with the Company on or before 18th September, 2018 (Record Date) and (ii) to those members whose particulars as beneficial owners are furnished for this purpose, by the Depositories, viz. National Securities Depository Limited and Central Depository Services (India) Limited.

TRANSFER TO RESERVES:

The Board has not transferred the amount to General Reserves and an amount ofRs. 27,090.47 Lakhs is retained as surplus in the Statement of profit and Loss of Standalone financials.

FIXED DEPOSITS:

During the year under review, your Company has not accepted any fixed deposits within the meaning of Chapter V of the Companies Act, 2013.

SHARE CAPITAL:

The paid up Equity Share Capital as on March 31, 2018 was Rs. 32.00 Crore. During the period under review, the Company has not granted any stock options nor sweat equity. The Company has also not purchased of its own shares by employees or by trustees for the benefit of employees.

Your Company’s equity shares are available for dematerialization through National Securities Depository Limited and Central Depository Services (India) Limited. As of March 31, 2018, 99.99% of the equity shares of your Company were held in demat form.

PARTICULARS OF LOANS, GURANTEES OR INVESTMETS:

During the year under review, the Company has not given any loan and provided any guarantee. The Company has made investment under the provisions of Section 186 of Companies Act, 2013. The said details are given in the notes to the Financial Statements.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT- 9, as required under Section 92 ofthe Companies Act, 2013 is annexed to this Report as Annexure-A and forms integral part of this report.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANY:

Your Company has total 5 subsidiaries as on 31st March, 2018 as under

1) Prabha Energy Pvt. Ltd.

2) Deep Natural Resources Ltd.

3) Deep Energy LLC

4) Deep Onshore Drilling Services Pvt. Ltd.

5) Deep International DMCC

The annual financial statements and related detailed information ofthe subsidiary companies shall be made available to the shareholders ofthe holding and seeking such information on all working days during business hours. The financial statements of the subsidiary companies shall be kept for inspection by any shareholder/s during working hours at the Company’s registered office and that ofthe respective subsidiary companies concerned. As provided under Section 129(3) ofthe Companies Act, 2013 and rules made thereunder a statement containing the salient features ofthe financial statement of its subsidiaries in AOC-1 format under the rules is attached to the financial statements .

SCHEME OF ARRANGEMENT:

The Board of Directors ofthe Company at its meeting held on 26 May, 2018 have, inter alia, considered and approved the draft Scheme of Arrangement in the nature of Demerger in accordance with the provisions of section 230 to 232 and other applicable provisions ofthe Companies Act, 2013 between Deep Industries Limited (Demerged Company) and Deep CH4 Limited (Resulting Company) and their respective shareholders and creditors.

The Scheme of Arrangement provides for transfer and vesting of Oil and Gas Services Undertaking from the Demerged Company into the Resulting Company. The Oil and Gas Exploration and Production business shall continue to be carried on by the Demerged Company.

Pursuant to the Scheme becoming effective, the Resulting Company shall issue shares to the shareholders ofthe Demerged Company and subsequently such shares shall be listed on Bombay Stock Exchange Limited (‘BSE’) and National Stock Exchange Limited (‘NSE’). Pursuant to such issuance of shares by Resulting Company, the shareholders ofthe Demerged Company shall become shareholders in Resulting Company in the same ratio (inter se) as they hold shares in the Demerged Company.

The Scheme as aforesaid is subject to necessary approvals by the Stock Exchanges, Securities and Exchange Board of India, shareholders and creditors ofthe companies, Ahmedabad Bench ofthe National Company LawTribunal and such other statutory and regulatory approvals as may be required.

DIRECTORS:

Appointment:

During the year under review, there was no appointment and resignation of any directors. However, Mr. Premsingh Mangatsingh Sawhney, Mr. Dharen Shantilal Savla, Mr. Sanjay Harkishandas Parekh has been resigned from the post of Directorship and Mr. Hemendrakumar Chamanlal Shah has been appointed as an Additional Independent Director with effect from 26.06.2018.

Directors Retire by Rotation:

In accordance with the provisions of section 152[6] of the Act and in terms of the Articles of Association of the Company, Mr. Rupesh Kantilal Savla (DIN:00126303), Managing Director will retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment. The Board recommends his re-appointment.

Independent Directors:

The terms and conditions of appointment of Independent Directors are in accordance with the applicable Regulations of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and also as per the provisions ofthe Companies Act, 2013 (“Act”) read with Schedule IV to the Act.

Your Company has received annual declarations from all the Independent Directors ofthe Company under sub - section (7) of section 149 confirming that they meet with the criteria of Independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1 )(b) ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and there has been no change in the circumstances which may affect their status as Independent Director during the year.

KEY MANAGERIAL PERSONNEL

There is no change in Key Managerial Personnel during the year. However Mr. Dharen Shantilal Savla has been resigned from the post of directorship (Whole Time Director) with effect from 26.06.2018.

Policy on Appointment & Remuneration of Directors, Key Managerial Personnel and other Employees

The Board has on its recommendation of Nomination and Remuneration Committee, framed a Policy relating to appointment & remuneration of Directors, Key Managerial Personnel & other employees in relation in accordance with SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 and Section 178(3) of the Companies Act, 2013, is given in the Corporate Governance Report forming part ofthe Annual Report.

Criteria for Performance Evaluation

During the year under review, the board considered and refined the criteria as well as the process for performance evaluation of itself, that of its Committees and individual Directors as follows:

Evaluation

Criteria For evaluation

Board

- Degree of fulfillment of key responsibilities including focus on strategic and policy issues.

- Effectiveness of Board process and information sharing.

- Board culture and dynamics.

- Quality of decisions.

- Establishment and delineation of responsibilities to Committees.

- Quality of relationship between Board and the Management.

Committee

- Degree of fulfillment of key responsibilities.

- Frequency and effectiveness of meetings.

- Committee dynamics, especially openness of discussions, including with the Board.

- Adequacy of Committee composition.

- Quality of relationship of the committee with the Board and the Management.

Individual Directors

- Participation in Board in terms of adequacy (time & content).

- Contribution through expertise and perspective.

- Guidance / support to Management outside Board / Committee meetings.

Manner of evaluation of board, its committees and individual directors

The evaluation of Board, its Committees and Individual Directors was carried out as per the process and criteria laid down by the Board of Directors based on the recommendation of the Nomination and Remuneration Committee.

The obtaining and consolidation of feedback from all Directors for the evaluation of the Board and its Committees, Individual Directors (i.e. Independent and Non Independent Directors), were co-ordinated by the Chairman ofthe Board and the feedback received was discussed in the meeting in case of evaluation of the Board and Committee and was discussed with Individual Directors in case of their evaluation.

The evaluation of Chairperson was co-ordinated by the Chairman ofthe Independent Directors meeting.

DETAILS OF MEETINGS OF THE BOARD AND ITS COMMITTEES:

The details of the number of meeting of Board of Directors and its Committees, held during the financial year indicating the number of meetings attended by each directors are given in the Corporate Governance Report which forms a part of this report.

COMPOSITION OF AUDIT COMMITTEE:

The board has constituted audit committee which comprise two non-executive Independent Directors namely Mr. Kirit Joshi (Chairman), Mr. Arun Mandke (Member) and One Executive Non- Independent Director, Mr. Paras Savla(Member). More details are given under Corporate Governance Report.

DIRECTOR’S RESPONSIBILITY STATEMENT:

In terms of section 134[3][c] of the Companies Act, 2013, in relation to the financial statements ofthe Company for the year ended 31st March, 2018, the board of Directors state that:

(a) in preparation ofthe annual financial statements, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any,

(b) such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view ofthe state of affairs ofthe Company as on March 31, 2018 and of the profit of the Company for the year ended on that date,

(c) proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities,

(d) the annual financial statements have been prepared on going concern basis,

(e) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively, and

(f) the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

INTERNAL FINANCIAL CONTROL SYSTEM AND THIER ADEQUACY:

The details in respect of internal financial control and their adequacy are included in the Management and Discussion & Analysis, which forms part of this report.

RISK MANAGEMENT:

The Company manages, and monitors on the principal risks and uncertainties that can impact its ability to achieve its objectives. Pursuant to section 134 (3) (n) ofthe Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, The Company has framed Risk Management Policy. At present the company has not identified any element of risk which may threaten the existence of the company.

A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimize the impact of risks identified and taking advance actions to mitigate it. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non-business risks. The Company has formally framed a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure.

Discussion on risks and concerns are covered in the Management Discussion and Analysis Report, which forms part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY(CSR):

The Company has constituted a Corporate Social Responsibility (CSR) Committee and has framed a CSR Policy. The brief details of CSR Committees are provided in the Corporate Governance Report. The Annual Report on CSR activities is provided in Annexure-B.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT,2013:

The Company is committed to creating a healthy & conductive working environment that enables women employees to work without fear of prejudice, gender and sexual harassment and/or any such orientation in implicit or explicit form. The Company considers sexual harassment as a gross misconduct. Pursuant to the provisions of “The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules framed there under, the Company has adopted a “Policy on Protection of Women against Sexual Harassment at Work Place”. Through this Policy, the Company seek to provide protection to its women employees against sexual harassment at work place and thereby provide mechanism for redressal of complaints relating to matters connected therewith or incidental thereto.

The following is a summary of sexual harassment complaints received and disposed off during the year.

- No. of complaints received. - NIL

- No. of complaints disposed off - Not Applicable

INDUSTRIAL RELATIONS:

The Company is committed to nurturing, enhancing and retaining top talent through superior Learning and Organizational Management.

During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Separate reports on Corporate Governance compliance along with the required Certificate from Practicing Company Secretary of the Company regarding compliance of the conditions of Corporate Governance and Management Discussion and Analysis as stipulated by SEBI (Listing Obligation & Disclosures Requirement) Regulations, 2015 forms part of this Annual Report.

PROHIBITION OF INSIDER TRADING

The Company has adopted a Code of Conduct for Prohibition of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires preclearance for dealing in the Company’s shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Company has formulated the Code of Practices and Procedures for Fair Disclosure in terms of the requirements of SEBI (Prohibition of Insider Trading) Regulations, 2015. The Board is responsible for implementation of the Code. The Policy is available on our website. www.deepindustries.com.

RELATED PARTY TRANSACTIONS:

All contracts/arrangement/transactions entered into by the Company during the Financial Year with related parties were on an arm’s length basis and were in the ordinary course of business and were placed before the audit committee for their approval, wherever applicable. Your Company had not entered into any transactions with related parties which could be considered material in terms of Section 188 of the Companies Act, 2013. Accordingly, the disclosure of related party transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC- 2 is as attached in Annexure- C.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENT RELATE AND THE DATE OF THE REPORT:

There have been no material changes and commitments, affecting the financial position of the Company since the close of financial year i.e. since 31st March, 2018 Further, it is confirmed that there has been no change in the nature of business of the Company.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY:

There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status and the Company’s future operations.

AUDITORS:

Statutory Auditors and their Report:

M/s Dhirubhai Shah & Co. LLP, Chartered Accountants, Ahmedabad [Firm Registration No. 102511W] were appointed as Statutory Auditors of your Company at the 26th Annual General Meeting held on September 22, 2016 for a term of five consecutive years from conclusion of 26th Annual General Meeting till the conclusion of Thirty First Annual General Meeting to be held in the year 2021.

The Company has received written consent letter along with certificate from Auditor under the provisions ofthe Companies Act, 2013, to the effect that their appointment, if made, would be within the prescribed limits and are not disqualified for appointment and further they are independent of management.

The Board has duly reviewed the Statutory Auditors’ Report on the Accounts. The observations and comments, appearing in the Auditors’ Report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors as provided under section 134 ofthe Act.

Secretarial Auditors & Secretarial Audit Report:

Pursuantto provisions of section 204 ofthe Act and the Companies [Appointment and Remuneration of Managerial Personnel] Rules, 2014, the Board has appointed M/s Shilpi Thapar & Associates, a firm of Company Secretaries in Whole-Time Practice to undertake the Secretarial Audit of the Company for the financial year 2017-18.

The Secretarial Audit Report for the Financial Year 2017-18 carried out by M/s Shilpi Thapar and Associates, (CP No.:6779, FCS: 5492), in the form “MR-3” is annexed herewith as Annexure - D. The Secretarial Audit Report does not contain any major qualification, reservations or adverse remarks which call for explanation.

Internal Auditors:

The board has Re-appointed M/s R.R Khandol & Co., Chartered Accountant (FRN: 0112488) as an Internal Auditors ofthe Company for F.Y 2018-19.

REPORTING OF FRAUDS BY AUDITORS:

During the year under review, the Statutory Auditors and the Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) ofthe Companies Act, 2013.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM:

The Company promotes ethical behavior in all its business activities and has established a vigil mechanism for its Directors, Employees and Stakeholders associated with the Company to report their genuine concerns. The Vigil Mechanism as envisaged in the Companies Act, 2013 and the Rules prescribed thereunder and the SEBI (Listing Obligations andDisclosure Requirements) Regulations, 2015 is implemented through the Whistle Blower Policy, to provide for adequate safeguards against victimization of persons who use such mechanism and make provision for direct access to the Chairperson of the Audit Committee.

The Whistle Blower Policy has been appropriately communicated within the Company and has also been posted on the Website of the Company http://www.deepindustries.com/Pages/Policies.aspx.

LISTING OF SHARES:

The Equity Shares ofthe Company are listed on the Bombay Stock Exchange Limited (BSE) with scrip code No. 532760 and on National Stock Exchange of India Limited (NSE) with scrip code of DEEPIND. The Company confirms that the annual listing fees to both the stock exchanges for the financial year 2018-19 have been paid.

INSURANCE:

All movable properties as owned by the Company continued to be adequately insured against risks.

PARTICULARS OF EMPLOYEES:

The information required under Section 197(12) ofthe Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the separate annexure forming part of this Report as Annexure- E.

There was no employee drawing salary as prescribed under Section 197 ofthe Companies Act, 2013 read with rule 5(2) & (3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

HUMAN RESOURCES:

The well disciplined workforce which has served the Company lies at the very foundation ofthe Company’s major achievements and shall well continue for the years to come. The success of the Company and good track record are largely attributable to the remarkable commitment, dedication and hard work of the employees. The Company has strongly embedded core values and all employees are trained and encouraged to use these values in their daily operations and the bases for making decisions. The management has always carried out systematic appraisal of performance and imparted training at periodic intervals. The Company has always recognized talent and has judiciously followed the principle of rewarding performance. This has helped to ensure all employees are aligned and focused on key objectives and key performance indicators critical for the Company’s performance. Remuneration and performance are strongly linked togetherthrough bonus schemes and increments.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNING AND OUTGO:

The information to be disclosed under Section 134 (3) (m) ofthe Companies Act, 2013 read with Companies (Accounts) Rules, 2014, are set out in Annexure- F to this Report.

AKNOWLEDGEMENTS:

Your Directors wish to place on record their deep sense of appreciation for the commitment displayed by all the employees of the Company resulting in successful performance during the year under review.

Our Directors also take this opportunity to place on record the co-operation, assistance and continued support extended by the Banks, Government Authorities, Vendors and Shareholders during the year under review.

for and on behalf of the Board of Directors

Date : August 20, 2018 PARAS SAVLA

Place : Ahmedabad Chairman & Managing Director

DIN:00145639

Director’s Report