SELAN Directors Report

DIRECTORS'''' REPORT


The Directors have pleasure in presenting the Annual Report for the year ended 31 March 2017.


Financial Review


The Company achieved the following results over the past three years:


(in Rs.)
































2014-15



2015-16



2016-17



Net Sales



792,893,686



620,268,715



558,382,743



EBIDTA



687,216,394



476,101,134



428,945,044



EBIDTA / Net Sales



87%



77%



77%



Total Reserves and Surplus of the Company have decreased from Rs. 2,669,821,290 to Rs. 2,658,034,704 as on 31 March 2017. During the year under review, an amount of Rs. 812,000 transferred to Site Restoration Fund.


Review of Operations


The Company continues to achieve very high levels of profitability and cash flow from its operations in Gujarat, having generated Rs.34.95 crores of cash flow in 2016-17 on production of 165,262 bbls of oil, along with Associated Natural Gas.


The most significant changes made by the Company are in the areas of corporate management and field operations. In both cases, the Company has added senior experienced staff to significantly upgrade the technical understanding of our reservoirs and the implementation of improved production management techniques and procedures across all field operations.


The above management changes, supplemented by advisory services of international repute are expected to result in significant production gains starting in 2017-18. Even with oil prices remaining in the USD 50-60 / barrel for the foreseeable future, cash flows from operations should improve significantly going forward.


During the year, the Company was also intimated by the Directorate General of Hydrocarbons (DGH) and the Ministry of Petroleum and Natural Gas that Production Sharing Contracts (PSCs) expiring in the next 3 years, would be extended by 10 years, subject to satisfactory compliance of the extension guidelines and procedures.


As a result of this significant development and in view of the overall strengthening of the management team, field development plans are being revised and reformulated to accelerate production growth in the coming years going forward.


Please also refer to the Management Discussion and Analysis section of the Annual Report for further clarification regarding Company''''s operations and policies.


Final Dividend


The Directors are pleased to inform that in the financial year 2016-17, 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 2016-17 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) of the Companies Act, 2013 an amount of Rs. 772,474.50 being Unclaimed Dividend for the Financial Year 2009-10 was transferred to the Investor Education and Protection Fund established by the Central Government.


Number of Meetings of the Board


There were ten Board Meetings held during the Financial Year 2016-17. 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 there under 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 there under. 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 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. 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. All related party transactions are presented to the Audit Committee and the Board. 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


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. The Company''''s risk identification and assessment process is dynamic and hence it has been able to identify, monitor and mitigate the most relevant strategic and operational risks, both during periods of accelerated growth and recessionary pressures.


Corporate Social Responsibility


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. 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.


Board Evaluation


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. S. K. Singh retired from the Board with effect from 24 September 2016. The Company wishes to place on record its appreciation for the services rendered by Mr. S. K. Singh to the Company and wishes him the best of health in his retirement years going forward.


Mrs. R. Kapur retired by rotation during last Annual General Meeting with effect from 28 September 2016.


Ms. S. B. Dalal was inducted as an Additional Director with effect from 26 December 2016 to hold office upto the ensuing Annual General Meeting of the Company. The brief details relating to Ms. S. B. Dalal are furnished in the explanatory statement to the Notice of the ensuing Annual General Meeting.


Mr. Neeraj Sethi was appointed as President and CEO of the Company with effect from 21 January 2017. The Company is pleased to welcome Mr. Sethi to Selan and expect him to exploit the significant opportunities present in the Company''''s asset base as well as the wider hydrocarbon sector, and in the process drive significant enhancement in shareholder value.


Auditors and Their Report


M/s V Sankar Aiyar & Co., Chartered Accountants, (FRN:109208W) Statutory Auditors of the Company, who were appointed in the 29th AGM hold office until the conclusion of 32nd AGM as they are not eligible for further re-appointment as per the provisions of Companies Act, 2013. The Board places on record appreciation for the services rendered by the Auditors during their association with the Company.


There are no qualifications or reservations or remarks made by the Auditors in their Report.


Furthermore, it is proposed to appoint M/s J. A. Martins & Co., Chartered Accountants (FRN: 010860N) as the Statutory Auditors of the Company for a term of five years from the conclusion of this 32nd AGM till the conclusion of 37th AGM, subject to ratification of appointment at every AGM hereinafter. The Board recommends the same for approval of the members at the upcoming AGM as per the relevant provisions of the Companies Act, 2013 and rules made thereunder. The Company has received confirmation from M/s J. A. Martins & Co. to the effect that their appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for appointment.


Cost Accounting Records


The Board of Directors has on the recommendation of Audit Committee, approved the appointment of Mr. S. N. Balasubramanian, Cost Accountant as the Cost Auditor of the Company for the Financial Year 2017-18 at a remuneration of ''''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 2016 was carried out by the same Auditor and the report was filed on 12 September 2016.


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.


Internal Auditor


In compliance with the provisions of Section 138 of the Companies Act, 2013, M/s S. N. Nanda & Co. were appointed as Internal Auditors for the Financial Year 2016-17 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


In compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis and a Report on Corporate Governance along with 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.


Deposits


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. 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.


Women Empowerment


SELAN is fully committed to uphold and maintain the dignity of every woman employee working with it. It believes that every woman shall have the right to work in an environment free from any form of Sexual Harassment. 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.


Audit Committee


The Audit Committee comprises of five members, out of which four 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. Neeraj Sethi, 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 2017, 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. 42 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 2017 and the date of this report.


Personnel


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.


Acknowledgements


Your Directors would like to express their earnest appreciation for the valuable efforts of every employee of the organization 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 value the trust shown by the shareholders in their ability to manage the Company. We expect that with the ongoing encouragement and support of our shareholders, we shall be successful in achieving the desired objectives in the near future.



For and on behalf of the Board


Place: New Delhi ROHIT KAPUR


Date: 20 May 2017 Chairman


(DIN : 00017172)

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