DIRECTOR’S REPORT To the Members, OPERATIONS: The Company achieved a turnover of Rs.263.64 Crores during the current year as against Rs.359.54 Crores during the previous year. The exports during the year has been Rs.192.74 Crores as compared to Rs.285.07 Crores during the previous year 2013-14. The Order Book position as on 31st March, 2015 stood at Rs.55 Crores. During the year, there has been a steep fall in the global crude oil prices by more than 50% from a high of 115 USD/barrel, adversely affecting the exploration and drilling activities world over. The Rig Count has continued to follow the oil prices displaying some of the sharpest declines in the history. Procurement of the Company’s products by the Oil and Gas exploration companies for the fiscal year 2014-15 were deferred due to the sharp fall in the crude oil prices. For the domestic market, the tenders/bids have been announced only during March, 2015 and orders are expected to be finalized not before the first quarter of Financial Year 2016. During the year, the workers struck work in a concerted manner from second half of 2014-15 without any notice or reasonable cause affecting the operations of the Company leading to liquidated damages due to delay in supplies. Partial operations of the Facility were possible with the Engineers and Staff. The Company incurred a loss and under the circumstances the Board of Directors have not recommended any dividend for the year 2014-15. PROSPECTS: The decline in the Rig Count due to the steep fall in the global crude oil prices has a direct bearing on the Drilling and Exploration activities. The current situation is expected to continue during the financial year 2015-16. The market is expected to improve slowly during the second half of the year 2015-16. With inventory available on the ground, the selling prices will be under pressure. Further, the increase in the cost of power and consumables will have an impact on the margins. During the power holidays and power restrictions period imposed by the State, the Company has no option but to purchase the power from the open access at a higher price. With the expectation of an improvement in the market conditions for Oil Drilling and Exploration during the year, the Company will endeavor to perform better than last year. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: As required under Clause 49 of the Listing Agreements with Stock Exchanges, the Management Discussion and Analysis Report is enclosed as a part of this report. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION: Your Company has taken adequate steps to adhere to all the stipulations laid down in Clause 49 of the Listing Agreement. A report on Corporate Governance is included as a part of this Annual Report. Certificate from the Statutory Auditors of the company M/s. C K S Associates, Chartered Accountants confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is included as a part of this report. LISTING WITH STOCK EXCHANGES: The Company confirms that it has paid the Annual Listing Fees for the year 2015-16 to NSE and BSE where the Company’s Shares are listed. DEMATERIALISATION OF SHARES: 90.86% of the company’s paid up Equity Share Capital is in dematerialized form as on 31st March, 2015 and balance 9.14% is in physical form. The Company’s Registrars are M/s XL Softech Systems Ltd., having their registered office at 3 Sagar Society, Road No.2, Banjara Hills, Hyderabad - 500 034. Number of Board Meetings held : The Board of Directors duly met 6 times during the financial year from 1st April, 2014 to 31st March, 2015. The dates on which the meetings were held are as follows : 24th April, 2014, 5th June, 2014, 23rd July, 2014, 30th October, 2014, 11th December, 2014 and 29th January, 2015. DIRECTORS: Confirmation of Appointment : Pursuant to the provisions of the section 161(1) of the Companies Act, 2013 read with the Articles of Association of the company, Mrs. K. Indira is appointed as Additional Director and she shall hold office only up to the date of this Annual General Meeting and being eligible offer herself for re-appointment as Director. Appointment of Independent Directors : Mr. A P Vitthal will retire by rotation at the ensuing Annual General Meeting and, being eligible, offer himself for reappointment. Datuk Syed Hisham Bin Syed Wazir will retire by rotation at the ensuing Annual General Meeting and, being eligible, offer himself for reappointment. Your Directors state that Mr. A P Vitthal who is Proposed to be appointed as Independent Director possess appropriate balance of skills, expertise and knowledge and is qualified for appointment as Independent Director. Your Directors state that Datuk Syed Hisham Bin Syed Wazir who is Proposed to be appointed as Independent Director possess appropriate balance of skills, expertise and knowledge and is qualified for appointment as Independent Director. Your Directors recommend the appointment of Mr. A P Vitthal and Datuk Syed Hisham Bin Syed Wazir as Independent Directors as proposed in the notice for the Annual General Meeting. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. DIRECTORS RESPONSIBILITY STATEMENT : Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company hereby state and confirm that: a) in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for the same period; c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) they have prepared the annual accounts on a going concern basis; e) they have laid down internal financial controls in the company that are adequate and were operating effectively. f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively. AUDIT OBSERVATIONS : Auditors’ observations are suitably explained in notes to the Accounts and are self-explanatory. AUDITORS: i)Statutory Auditors : The Auditors, M/s. C K S Associates, Chartered Accountants, Hyderabad retire at this Annual General Meeting and being eligible, offer themselves for reappointment. ii) Cost Auditors : M/s. Sagar & Associates, Cost Accountants were appointed as Cost Auditors for auditing the cost accounts of your Company for the year ended 31st March, 2015 by the Board of Directors. The Cost Audit Report for the year 2013-14 has been filed under XBRL mode within the due date of filing. iii)Secretarial Audit : According to the provision of section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report submitted by Company Secretary in Practice is enclosed as a part of this report Annexure-A. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO : Information required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in the Annexure-B to this report. CORPORATE SOCIAL RESPONSIBILITY (CSR) : In terms of section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of your Company have constituted a CSR Committee. The Committee comprises of all Independent Directors. CSR Committee of the Board has developed a CSR Policy under Health Care activity which is enclosed as part of this report Annexure-C. Additionally, the CSR Policy has been uploaded on the website of the Company at www.octlindia.com under investors/ policy documents/ CSR Policy link. VIGIL MECHANISM : In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.octlindia.com under investors/policy documents/Vigil Mechanism Policy link. RELATED PARTY TRANSACTIONS : Related party transactions that were entered during the financial year were on an arm’s length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company’s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the particulars of contracts entered during the year as per Form AOC-2 is enclosed as Annexure-D. The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules thereunder and the Listing Agreement. This Policy was considered and approved by the Board has been uploaded on the website of the Company at www.octlindia.com under investors/ policy documents/Related Party Policy link. EXTRACT OF ANNUAL RETURN : The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-E. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES: The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Particulars of Employees) Rules, 1975, in respect of employees of the Company and Directors is furnished hereunder: DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY: The Company has been addressing various risks impacting the Company and the policy of the Company on risk management is provided elsewhere in this Annual Report in Management Discussion and Analysis. ACKNOWLEDGEMENT: Directors take this opportunity to express their thanks to various departments of the Central and State Government, ONGC, Oil India Limited, Multinational Companies operating in India and Abroad for Oil and Gas Exploration and Drilling, Bankers, Material Suppliers, Customers and Shareholders for their continued support and guidance. The Directors wish to place on record their appreciation for the dedicated efforts put in by the Engineers and Employees of the Company at all levels. For and on behalf of the Board of Directors K SURYANARAYANA Chairman Place : Hyderabad Date : 30.04.2015 |