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The Directors have pleasure in presenting the Annual Report for the year ended 31 March 2018.
The Company achieved the following results over the past three years:
(in Rs. lakhs)
EBIDTA / Net Sales
Total Reserves and Surplus of the Company have increased from Rs.26,579 lakhs to Rs.27,800 lakhs as on 31 March 2018. During the year under review, an amount of Rs.5.65 lakhs transferred to Site Restoration Fund.
Review of Operations
The Company has significantly increased profitability and cash flow from operations year over year, due to increased production as a result of focused capital investment in production enhancement, supported by improved hydrocarbon prices. Oil production increased to 201,276 bbls in 2017-18 from 165,262 bbls in 2016-17 and gas production increased from 6,048,214 m3 to 7,622,988 m3 in 2017-18. The company has successfully delivered four quarters of growth in production.
Organizational enhancement with internationally accomplished management and technical advisory team has been the key factor in delivering these results, with demonstrable improvement in operational execution, better understanding of reservoir geology and production potential as well as more effective deployment of capital for production enhancement.
Indrora field has delivered its highest production since the discovery of the field in 1968. Karjisan oil discovery has been put on regular production. Karjisan gas production has also commenced. Pilot production enhancement activities have also been successful 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 has undergone significant production enhancement activities in terms of hydraulic stimulation and production optimization and significantly improved production over last year and continues to deliver higher production.
During the year, the Company has also submitted its application for a 10-year extension beyond March-2020 of its Production Sharing Contracts for Lohar, Bakrol and Indrora to DGH. The company believes that all regulatory, operational and compliance requirements for contract extension are in place and the applications are under review with DGH.
Please also refer to the Management Discussion and Analysis section of the Annual Report for further clarification regarding Company''s operations and policies.
The Directors are pleased to inform that in the financial year 2017-18, the Board of Directors have declared an interim dividend of 50%, i.e. Rs.5/- per share, which shall be declared as final dividend for the year 2017-18 subject to approval by the shareholders of the Company in the forthcoming AGM.
Transfer to IEPF
During the year, in accordance with the provisions of section 124(5) and 124(6) of the Companies 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 ''718,186.50 being Unclaimed Dividend for the Financial Year 2010-11 alongwith 87,988 equity shares were duly transferred to the Investor 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 the same forms part of the Corporate Governance Report.
Declaration of Independence by Directors
Declaration given by Independent Directors meeting the criteria of Independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 is received and taken on record.
Directors Responsibility Statement
In accordance with the provisions of Section 134(5) of the Companies Act, 2013, the Board of Directors do hereby confirm that in the preparation of the Annual Accounts, the applicable Accounting Standards have been duly complied with and the Directors have selected the necessary accounting policies and applied them consistently. Judgments / estimates have been made that are evenhanded and prudent, so as to give an accurate and rational view of the affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period. The Directors have also taken ample care for the maintenance of adequate accounting records in conformity with the provisions of Companies Act, 2013, for upkeep of the assets of the Company and for preventing and detecting fraud and other irregularities, and that the Directors have prepared the annual accounts on a going concern basis. The Directors have laid down internal financial controls to be followed by the Company and such Internal financial controls are adequate and operating effectively. Lastly, the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.
Policy on Directors'' Appointment and Remuneration
Considering the requirement of skill set on the Board, eminent people having an independent standing in their respective field / profession and who can effectively contribute to Company''s business and Policy decisions are considered by Nomination and Remuneration Committee for appointment as Independent Director on the Board. The Committee considers ethical standards of integrity, qualification, expertise and experience of the person for appointment as Director and is not disqualified under Companies Act, 2013 and rules made thereunder and accordingly recommend to the Board his / her appointment.
Remuneration to Whole-Time Director is governed under the relevant provisions of Companies Act, 2013 and rules made thereunder. Independent/ Non-Executive Directors excluding 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 and Key Managerial Personnel, which is approved by the Board of Directors, subject to approval of shareholders where necessary. The level and composition of Remuneration so determined shall be reasonable and sufficient to attract, retain and motivate Directors and Senior Management to run the Company. The objective and broad framework of the Remuneration Policy is to consider and determine the remuneration, based on the fundamental principles of payment for performance, for potential and for growth. The Nomination and Remuneration Policy 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 takes appropriate decision.
Contracts / Arrangements with Related Parties
All the related party transactions are entered on arm''s length basis in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Regulations. Details of all related party transactions are reported to the Audit Committee for scrutiny / review and referred for approval of the Board on a quarterly basis. There are no materially significant related party transactions made by the Company with Promoters, Directors or KMP etc. which may have potential conflict with the interest of the Company at large which warrants the approval of shareholders. Accordingly, the disclosure of related party transactions as required under Section 134 (3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable to the Company. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. Transactions with related parties are conducted in a transparent manner with the interest of the Company as utmost priority. Details of such transactions are given in the accompanying Financial Statements. The Company''s policy on 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 formal mechanism to the Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or Policy. This policy provides for adequate safeguards against victimization of employees who avail of the 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 Audit Committee. This policy is available on the Company''s website at www.selanoil.com.
Risk Management is a formal and disciplined practice for addressing risk. Selan has in place comprehensive risk assessment and minimization procedures, which are reviewed by Board periodically. The objective of risk management in the Company is to act as an enabler in maintaining its knowledge edge, sustaining and expanding the business, being competitive and ensuring execution of projects within budgeted cost, time and quality, resulting in improved turnover and profitability. The Company has laid down a well defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process. It includes identifying risks, assessing their probabilities and consequences, developing management strategies and monitoring their 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 Act, 2013 which is available at our Company''s website www.selanoil.com. Selan is committed to driving societal progress, while fulfilling its business objectives. With safety, health and environment protection high on its corporate agenda, Selan is committed to conduct business with a strong environment conscience, so as to ensure sustainable development, safe work places and enrichment of life of employees, clients and the community. The Corporate Social Responsibility Committee comprises of five members, out of which four are non- executive and independent Directors including the Chairman. Brief details about the CSR Policy developed and implemented by the Company on CSR initiatives taken during the year is given in Annexure-C to this Report.
In compliance with the provisions of the Companies Act, 2013 and Regulation 17(10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an Annual Performance Evaluation of its own performance, Directors individually and that of its Committees. During the year, a Separate Meeting of Independent Directors was held to assess the performance of Non-Independent Director and the Chairperson of the Company as well as the Board as a whole. Performance Evaluation is based on their contribution to Company''s objectives and plans, efficient discharge of their responsibilities, participation in Board / Committee meetings and other relevant parameters.
Board of Directors and KMP
During the year under review, Mr. V. B. Mahajan passed away peacefully on 05 August 2017. Mr. Mahajan had been a member of the Board for over 22 years, since 1995, and was the senior most member of the Board of Directors. The Company places on record its appreciation 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 2017 to 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 April 2019, being eligible, offers themselves for reappointment as Independent Directors, with effect from 01 April 2019 to 31March 2019.
The Company has received requisite notices in writing from members proposing their candidature for the same. The Nomination and Remuneration Committee has recommended their re-appointment for a further period of 5 years up to 31 March 2024. The Company has received declarations from the said Independent Directors of the Company confirming that they meet the criteria of Independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and Listing Agreement with the Stock Exchanges. The Board has approved their re-appointment subject to approval of shareholders in the ensuing Annual General Meeting.
Mr. R. Kapur, Whole- time Director whose term expires on 01 October 2018, being eligible, offers himself for re- appointment. The Board has approved his re-appointment with effect from 01 October 2018 for a period of 5 years, subject to approval of shareholders in the ensuing Annual General Meeting.
The brief details relating to aforesaid appointments are furnished in the Explanatory Statement 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 of the Company, were appointed in the 32nd AGM to hold office until the conclusion of 37th AGM, subject to ratification at every AGM. Therefore, ratification of appointment 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 Auditors in 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 the Cost Auditor as recommended by the Audit Committee and approved by the Board of Directors will be Rs.120,000/- per annum which is subject to ratification by the members in the ensuing Annual General Meeting.
The Board of Directors has on the recommendation of Audit Committee, 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 remuneration of Rs.120,000/- per annum. The proposed remuneration of the Cost Auditor would be ratified by the members in the ensuing AGM. The Cost Audit for the year ended 31 March 2017 was carried 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 of Companies Act, 2013, Listing Agreement, SEBI guidelines and all other related rules and regulations obtained from our Secretarial Auditors, M/s Nityanand Singh & Co., Company Secretaries 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 the Financial Year 2017-18 to conduct the internal audit of the functions and activities of the Company. They have submitted their Report to the Chairman of the Audit Committee and this was further reviewed by the Management and taken on record.
Corporate Governance Report
Corporate Governance stems from the belief and realization that corporate citizenship has a set of responsibilities, which must be fulfilled for a company to progress and succeed over the long term. In compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis and a Report on Corporate Governance alongwith Certificate from Auditors regarding compliance of conditions of Corporate Governance is annexed to Directors'' Report. A declaration by the CEO regarding the compliance 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 the year 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 any deposits 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 overall responsibility for ensuring that the Company has implemented robust system and framework of Internal Financial Controls. This provides the Directors with reasonable assurance regarding the adequacy and operating effectiveness of controls with regard to reporting, operational and compliance risks. The Company has devised appropriate systems and framework including proper delegation of authority, policies and procedures, effective IT systems aligned with business requirements, risk based internal audits, risk management framework and whistle blower mechanism. These are routinely tested and certified by Statutory as well as Internal Auditors. The Audit Committee evaluates the internal financial 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 Tribunals which impacts the going concern status and Company''s operations in future.
SELAN has always believed that appropriate standard of conduct should be maintained by the employees in their conduct and that there should be a safe, indiscriminatory and harassment free (including sexual harassment) work environment for every individual working in the company. SELAN has a ''Policy on Prevention of Sexual Harassment of Women at Workplace'' which provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. During the year under review, the Company has not received any complaint of sexual harassment from any of the woman employee of the Company.
The Audit Committee comprises of four members, out of which three are non-executive and independent Directors including the Chairman. The Audit Committee''s composition, powers and role are included in Corporate Governance Report. All the recommendations made by the Audit 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 have certified to the Board that all the requirements of the Listing Obligations, inter alia, dealing with the review of financial statements and Cash flow statement for the year ended 31 March 2018, transactions entered into by the Company during the said year, their responsibility for establishing and maintaining internal control systems for financial reporting and evaluation of the effectiveness of the internal control system and making of necessary disclosures 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 of particulars under Section 134(3)(m) of the Companies Act, 2013, to the extent where it relates to the conservation of energy and technology absorption. Particulars with regard to foreign exchange outgo appear as point no. 48 of the Notes forming Part of the Accounts.
Material Changes and Commitments
There have not been any material changes and commitments affecting the financial position of the Company between the end of the Financial year of the Company as on 31 March 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 employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Annual Report excluding the aforesaid annexure is being sent to the shareholders of the Company and others entitled thereto. Any member interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.
Your Directors would like to express their earnest appreciation for the valuable efforts of every employee at all levels for their hard work, dedication and commitment without which the Company would not have been able to undertake the challenging targets in all areas of operations. The Company believes in empowering its employees through greater knowledge, team spirit and developing greater sense of responsibility. We are fortunate to have such a team whose endeavors have laid a strong foundation for the success of the organization as a whole. Your Directors also wish to place on record their deep sense of appreciation for the committed services by all the employees of the Company.
On behalf of the Company, we wish to convey our appreciation to the Ministry of Petroleum and Natural Gas (MoPNG), Directorate General of Hydrocarbons (DGH), Ministry of Environment and Forests (MoEF), Government of India and the Bankers of the Company for their continuous support, cooperation and guidance. The Directors, particularly, wish to acknowledge and place on record the continuous support and guidance of all the shareholders and, more importantly, 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)