DIRECTORS' REPORT Your Directors have pleasure in presenting the Annual Report for the year ended 31st March, 2015. Review of Operations The operations of the Company continued in a smooth and uninterrupted manner during the course of the year. The drilling campaign of the Company was in progress during the year, with new wells drilled in the Bakrol and Indrora fields. Efforts were also ongoing to increase higher production volumes from wells recently drilled, as new data analysis opens greater opportunities. In terms of assessment of the complex geology formations at different depths in our oil and gas fields, the Company continued to push the limits of technical options and challenges with various service providers. Simultaneously, the Company was fully engaged on all aspects of well design and completion strategies with consulting firms in North America. As is the case with all the Oil Companies worldwide, the dramatic decline in oil prices has affected the revenues of the Company. With this significant drop in oil prices internationally during the year, the Company continues to monitor its expense commitments more closely than ever before, to ensure that profitability levels remain the highest possible under these challenging circumstances. Please also refer to the Management Discussion and Analysis Report section of the Annual Report for more comprehensive discussion of the Company's operations. Final Dividend The Directors are pleased to inform that in the financial year 2014-15, the Board of Directors have declared an interim dividend of 50%, i.e. ? 5/- per share, which shall be declared as final dividend for the year 2014-15 subject to approval by the shareholders of the Company in the forthcoming AGM. Board of Directors Mrs. Rohini Kapur was inducted as an Additional Director with effect from 31st March 2015 to hold office upto the ensuing Annual General Meeting of the Company. The brief details relating to Mrs. Rohini Kapur are furnished in the explanatory statement to the notice of the ensuing AGM. Number of Meetings of the Board There were nine Board Meetings held during the Financial Year 2014-15. 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. Judgements / 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. And 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 an 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 are paid sitting fees for attending the meetings of the Board/Committees thereof. The Company's policy on Directors remuneration is given in Corporate Governance Report which forms part of this Annual Report.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 done on Arm's length basis. The Company presents a Statement of all related party transactions before the Audit Committee on a quarterly basis specifying the nature, value and terms and conditions of transaction. 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 Risk Management The Company has robust systems for Risk Assessment and mitigation which is reviewed periodically. 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 operate and grow in a socially responsible way. 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 Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, 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. Amortisation of DHP Expenses Effective from the current year 2014-15, the amortization of expenses has been extended by 5 years beyond the existing lease period, keeping in view that the investments made in recent years for drilling of new wells are expected to continue to result in oil and gas production significantly beyond the original contract period. The Government also has the power to extend the PSCs for upto 5 years, and management is of the view that there is a reasonable likelihood of this taking place. Despite this change in the amortization period, the provision for amortization is higher than other alternate methods of calculation generally in use by the Oil and Gas Industry, thereby maintaining an overall conservative bias in the preparation of Company's Balance Sheet and Profit & Loss Statements for the year. The Auditors have taken note of the above changes in their Audit Report and their opinion is not modified in respect of this matter. Auditors and their Report The Auditors, M/s V Sankar Aiyar & Co., Chartered Accountants, have been appointed as Statutory Auditors of the Company at the last Annual General Meeting held on 07.08.2014 for a period of three years , subject to ratification at every Annual General Meeting. Therefore, ratification of appointment of Statutory Auditors is being sought from the members at the ensuing AGM. The Company has received confirmation from M/s V Sankar Aiyar & Co. to the effect that their re-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 re-appointment. Cost Accounting Records The Company has maintained Cost Records as required by Cost Accounting Record Rules (Petroleum Industry) 2002. In terms of the Ministry of Corporate Affairs order dated 2nd May, 2011, Cost Records in respect of each year commencing from 1st April, 2011 has to be Audited by Cost Auditor, holding a valid certificate of practice under the provisions of Cost and Works Accountants Act, 1959. In compliance with the aforesaid requirement the Cost Accounting Records of the company for the financial year 2014-15 are being audited by Mr. S. N. Balasubramanian, Qualified Cost Accountant. The Cost Audit for the year ended 31st March, 2014 was carried out by the same Auditor and the report was filed on 6th October, 2014. 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 2014-15 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 Pursuant to Clause 49 of the Listing Agreement, 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 (Manager) 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. 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. 43 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 31st March 2015 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 place on record their gratitude and 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. 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 acknowledge the exemplary contribution made by 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 R. KAPUR Chairman Date : 30th May, 2015 Place : New Delhi |