DIRECTORS' REPORT Dear Members, On behalf of the Board of Directors, I hereby present the 56th Annual Report on the operations of the Company containing Audited Statements of Accounts together with the Auditors' Report and Comments of the Comptroller and Auditor General of India for the year ended March 31, 2015. 1. SIGNIFICANT HIGHLIGHTS The financial and operational performance of the Company is as under:- During the year, Company has made planned investment of Rs. 3,774 crore against budget estimates of Rs 3,632 crore which is highest in any year by OIL till date and expects to increase in future with the increase in exploratory and operational activities. B Operational Highlights (i) Production of Crude Oil During the year, crude oil production was 3.440 MMT (inclusive of production from Kharsang JVC) as against production of 3.502 MMT in FY14. Main reason for shortfall in achievement is due to direct and consequential losses arising out of blockades, bundhs etc in operational areas and indirect loss due to rig days loss in work-over and drilling. (ii) Natural Gas Production The natural gas production was 2722 MMSCM in FY15 against 2626 MMSCM in FY14 which is higher by 4%. The sale of natural gas during the year was 2181 MMSCM against 2090 MMSCM in FY14. (iii) LPG Production During FY15, LPG Production was 43570 MT against 46640 MT in FY14. The sale of LPG was 43,456 MT in FY15 against 46,786 MT in FY14 (iv) Renewable Energy During the FY15, OIL commissioned third wind energy project of 54MW which is split project in Gujarat and Madhya Pradesh in March, 2015 (16 MW Wind Farm at Patan in Gujarat on 26.03.2015 and 38 MW Wind Farm at Chandgarh in Madhya Pradesh on 28.03.2015). With commissioning of this project, total renewable energy capacity of the Company is now 126.60 MW. OIL generated revenue of Rs 67.50 crore in FY15 from renewable sources (which includes revenue from solar plants of 5.23 MW). The generation from various renewable plants is as under: a. 5 MW Solar Power Plant at Ramgarh, Rajasthan produces 92,47,797 kWh of Electricity which was sold to Rajasthan Electricity Board (DISCOM, Rajasthan Govt.). b. 13.6 MW Wind Farm at Ludravaa, Rajasthan produces 1,91,99,249 kWh of Electricity which is sold to Rajasthan Electricity Board (DISCOM, Rajasthan Govt.). c. 54 MW Wind Farm at Dangari, Rajasthan produces 9,94,42,503 kWh of Electricity which is sold to Rajasthan Electricity Board (DISCOM, Rajasthan Govt.) C Exploration Highlights Your Company has made 12 oil and gas discoveries during the year 2014-15 of which 11 are in upper Assam Basin. The twelfth discovery is a gas find in NELP-VI block KG-ONN-2001/1 falling in East Godavari district of Andhra Pradesh and Puducherry. In addition, exploratory drilling was initiated in NELP block RJ-ONN-2004/2 in Rajasthan and in block MZ-ONN-2004/1 in the State of Mizoram. In overseas, one of the two appraisal wells drilled over Lassa oil discovery in Gabon proved presence of oil, thus helping in appraisal of the discovery. A new overseas exploration venture was added to the portfolio of the Company by signing the contract for two offshore acreages in Myanmar, in which OIL is the operator. 2. ACREAGE The domestic operations of the Company are spread over areas under onshore Petroleum Exploration License (PEL) and Petroleum Mining Lease (PML) in the states of Assam, Arunachal Pradesh, Mizoram, Andhra Pradesh, Puducherry and Rajasthan. Besides, your Company is venturing into shallow and deep water in KG Basin, Cauvery, Andaman and Mumbai offshore either jointly or in partnership with other consortium partners. Your Company is operating in 5 (five) PEL and 22 (twenty two) PML areas, allotted under the nomination regime in the states of Assam, Arunachal Pradesh and Rajasthan. Your Company at the end of NELP IX bidding round as on 31.03.2015 is holding Participating Interest (PI) in total of 27 NELP Blocks out of which OIL has the right of operatorship / joint operatorship in 12 and as non-operator in 15 blocks. In addition your Company is holding 90% PI in one CBM Block (AS-CBM-2008/IV) in Assam. Your Company is also holding 40% PI in JV block of Kharsang PSC and 44.086% PI in Pre-NELP block AAP-ON-94/1. 3. OIL AND GAS RESERVES Your Company has a strong oil and gas reserves 4. CAPITAL STRUCTURE The paid-up capital of the Company is Rs 601.14 crore divided into 60,11,35,955 shares of Rs.10/-each with no change in the Government of India holding of 67.64% of total paid up capital. The Earning per Share (EPS) of the Company as on March 31, 2015 is Rs. 41.76/- as compared to Rs. 49.59/- at the end of previous financial year. 5. DIVIDEND Based on the provisional financial trend, your Company paid Interim Dividend @ 100% amounting to Rs. 601.14 crore for the FY 2014-15. The Board of Directors are now pleased to recommend a final dividend @100% on the paid up capital amounting to Rs. 601.14 crore for the FY 2014-15, subject to the approval of the shareholders at the ensuing Annual General Meeting. guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statements. (Please refer to Note No 14, 15, 21 & 31.16 to the standalone financial statements) 8. RELATED PARTY TRANSACTIONS All contracts / arrangements / transactions entered by the Company during FY15 with related parties were either in ordinary course of business and / or at arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transaction. The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at www.oil-india.com. Attention is also invited to Note 31.4 to the financial statement and Form AOC 2 attached herewith. 9. HUMAN ASSETS Human Resource Management at OIL is an integrated approach focusing on organization's faith to work with people and work through them to manage change and strive for continued excellence. OIL works towards building positive employee-organization relationship through nurturing initiatives, innovations and aspirations with best HR practices and commitment and provide professional working environment. HR policies and practices are always sensitive to employee needs. As on March 31, 2015, Company has 7845 employees consisting of 1435 Executives and 6410 Unionised Employees in the Company. 10. SPORTS OIL believes that sports today is an integral part of all round development of human personality and achieving excellence in sports has real bearing on national prestige and morale. Therefore, employees are encouraged to play and excel in sports. As a result of above encouragement, Oil India participated in National and International Sports Events in Table Tennis, Cricket, Chess and brought laurels to the Company. Oil India Limited actively supports and promotes sports under the umbrella of Petroleum Sports Promotion Board (PSPB) and also under various Government of India recognized bodies. 11. IMPLEMENTATION OF GOVERNMENT DIRECTIVES FOR PRIORITY SECTIONS The Company attempts to comply with the directives of the Government of India for priority sections of the society. The representations of various priority sections in Executive and Unionized Employees categories in the Company as on March 31, 2015 is as under 12. I MPLEMENTATION OF SEXUAL HARASSMENT PREVENTION, PROHIBITION AND REDRESSAL ACT, 2013 In accordance with the Government Guidelines and Norms, OIL has constituted the Internal Complaints Committee (ICC) at its different spheres to look into offences related to sexual harassment of women at the workplaces. These Complaints Committees are headed by women and not less than half of its members are women. Further, to prevent the possibility of any undue pressure or influence from senior levels, such Complaints Committee involves a third party (Female), who is either principal of the educational institute or Social Worker or person of repute. The Committee is deemed to be Inquiring Authority for the purpose of such misconduct and the report of the ICC shall be considered as Inquiry Report under the Rules. During the year under review, no case was referred to the committees. 13. CORPORATE GOVERNANCE As stipulated under Clause-49 and 55 of the Listing Agreement, the Management Discussion & Analysis Report, Corporate Governance Report and the Business Responsibility Report have been furnished as a part of this Annual Report. Your Company also complies with the Corporate Governance Guidelines enunciated by the Department of Public Enterprises, Government of India. 14. RTI ACT, 2005 In order to promote transparency and increased accountability, Company has put in place the mechanism for implementation of Right to Information Act 2005. CPIO / CAPIO at offices across the country have been nominated to provide the information to the citizen of the country under the Act. The names, designation and address of the CPIO/CAPIO are available on the website. Company has also uploaded information manual on the web portal containing details like organization structure, powers and duties of officers, rules and regulations, directory of officers, remuneration of officers, remuneration of workmen and information of the public at large. Complaints received during the year were expeditiously replied. 15. IMPLEMENTATION OF OFFICIAL LANGUAGE (RAJBHASHA) In pursuance of Official Language Policy / Act / Rules / Orders of the Govt. of India efforts are continuing towards increasing the use of Hindi in Official work. Hindi Workshops were conducted regularly so as to enable officers and employees to work in Hindi conveniently and efficiently. Meetings of Official Language Implementation Committee were held in each quarter. The responsibility of the Chairmanship of Duliajan Town Official Language Implementation Committee (TOLIC) was also borne by our Company. In-house Journal "OIL NEWS" was published in Trilingual form i.e. Assamese, Hindi and English. Hindi Month was observed in a befitting manner in all spheres of OIL. To propagate Official Language Hindi, amongst employees and school going children, various literary competitions were held during Hindi Month Celebration. Important documents, to be laid on the table of Parliament, were also brought out in bilingual form. 16. VIGILANCE " Vigilance Wing" in the organisation is headed by Chief Vigilance Officer, which helps in ensuring functioning of the organization in a transparent manner. The main thrust of Vigilance is placed on the preventive vigilance rather than punitive vigilance. Towards this objective, system improvement measures were undertaken on the basis of scrutiny of various Contracts & Purchases. Intensive inspections were also carried out on the systems and subsequently, corrective measures were undertaken. As per CVC's directive, Vigilance Awareness Week was organized during the year at Field Headquarters, Corporate Office, other spheres of operations and no. of programmes were conducted during the week. Programme on "Contract Management & Vigilance Perspective in PSUs" were also conducted at Field Headquarters with eminent faculty from outside the organization. To create awareness and sensitize employees of the organization about the rules and regulations on Contracts & Procurement procedures, Conduct, Discipline & Appeal Rules and Central Vigilance Commission (CVC) guidelines; eleven nos. of "Keep in Touch" (KIT) and "Vigilance Sensitisation Programme" were conducted in various spheres of the organization. A new initiative was taken by the organization by conducting a vendor Meet with Unsuccessful vendor at Mumbai in August, 2014. Quarterly issues of in-house Vigilance Journal 'In-Touch' along with a special issue were published during the year. 17. RESEARCH AND DEVELOPMENT The Company accords utmost importance to up-gradation of technologies and expertise in various areas of activities through its own Research & Development Centre. During the year, the Company established state of art Petroleum Biotechnology Centre known as "Jaivalaya". In the FY15, Company has filed two International Patent applications for "System and method for screening solvents for dissolving tank Bottom sludge" and "a method for preventing deposition in Oil wells with Packers". 18. SUBSIDIARIES/ COMPANIES IN WHICH OIL HAS SHAREHOLDING SUBSIDIARIES 1. Oil India Sweden AB Oil India Sweden AB is a wholly owned subsidiary of Oil India Limited. The company was incorporated on the 20th of November 2009 as a private limited company (AB). The activities of the Company are: to own shares in other companies, perform administrative tasks and associated activities; to incorporate, to participate in and to finance companies or businesses etc. 2. Oil India Cyprus Ltd. Oil India Cyprus Limited was incorporated in Cyprus on 21 October 2011 as a private limited liability Company under the Cyprus Companies Law, Cap. 113. Oil India Limited holds 76% in the Company. The balance 24% is held by Oil India Sweden AB. 3. Oil India (USA) Inc. Oil India (USA) Inc. is a wholly owned subsidiary of OIL with Branch Office at Houston, USA. It holds 20% stake in Niobrara Shale Oil and Gas Asset. 4. Oil India International Limited (OIIL) OIIL, a 100% subsidiary of Oil India Limited was incorporated on 20.09.2013. The registered office of OIIL is situated in New Delhi. OIIL received the commencement of business certificate on 28.02.2014. 5. Oil India International B.V (OIIBV) Oil India International B.V, a 100% subsidiary of OIL was incorporated in Netherlands on 2nd May, 2014. COMPANIES IN WHICH OILHAS SHAREHOLDING 1. Numaligarh Refinery Ltd (NRL) Numaligarh Refinery Limited was incorporated in 1993. NRL is a Category -I Mini Ratna PSU having a 3 MMTPA Refinery at Numaligarh, in Golaghat District of Assam. The Company is a subsidiary of Bharat Petroleum Corporation Limited. OIL is holding 26% of the paid up equity in NRL. 2. Brahmputra Cracker and Polymer Ltd (BCPL) BCPL was incorporated on January 8, 2007 with the objective of establishing a gas cracker project complex at Lepetkata, Dibrugarh, Assam, inter alia, to process natural gas, naphtha or any petroleum product and to distribute and market petrochemical products in India and abroad. The registered office of BCPL is located at Guwahati, Assam. OIL holds 10% equity share capital of BCPL. 3. Suntera Nigeria 205 Ltd. Our Company acquired a 25% equity stake in Suntera Nigeria 205 Limited, Nigeria pursuant to a Share Purchase Agreement signed with Suntera Cyprus and IOCL on August 31, 2006. Suntera Nigeria 205 Limited was incorporated with the main object to engage in the petroleum business including the prospecting and exploration for and production and development of crude oil and natural gas. The registered office of Suntera Nigeria is at Nigeria. 4. DNP Ltd. DNP Limited was incorporated on June 15, 2007. The main object of DNP Limited is acquisition, transportation and distribution of natural gas in all forms. The registered office of DNP Limited is situated at Guwahati, Assam. Our Company has acquired a 23% equity stake in DNP Limited. 5. IndOil Netherlands B.V Oil India Sweden AB owns 50% of the shares in Indoil Netherlands B.V which in turn holds 7 per cent equity interest in Petrocarabobo SA (joint venture company), Project Carabobo-1, Venezuela. The principal activity of Indoil Netherlands B.V. is making investment in companies engaged in exploration, production, marketing, trade, transport and extraction of oil, gas, hydrocarbons and minerals. 6. Beas Rovuma Energy Mozambique Ltd. (BREML) OIL holds 40% share in BREML. BREML holds 10% PI in the Rovuma Area 1 Offshore Block in Mozambique. 7. world Ace Investments Ltd. OIL (through OIIBV) holds 50% share in World Ace Investments Ltd, a company incorporated in Cyprus. World Ace Investments Ltd. holds 100% share in LLC Stimul-T, Russia which is the license holder for License 61, Tomsk Region, Russia. A report on the performance and financial position of the subsidiaries, associates and Joint venture Companies of OIL as per prescribed format (Form AOC1) of the Companies Act 2013 forms part of this annual report. 19. STATUTORY REQUIREMENTS Your Directors have made necessary disclosures as required under various provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Information on the conservation of energy, technology absorption, R&D, foreign exchange earnings & outgo etc. as required under Section 134 of the Companies Act, 2013 and the rules made thereunder is given in the Annexure forming part of this Report. In view of the exemptions to the Government Companies from applicability of the section 197 of the Act by the Government of India, OIL is not required to annex the details of the Employees who drew remuneration exceeding the limits laid down in the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. 20. STATUTORY AUDITORS, COST AUDITORS AND SECRETARIAL AUDITORS The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s. Saha Ganguli and Associates and M/s B M Chatrath & Co. were appointed as Joint Statutory Auditors for the financial year 2014-15. Comments of the C&AG forms part of this Report. The Cost Audit Report for the financial year 201314 was filed within the statutory time limit. M/s Mani & Co is the Cost Auditor of the Company for the financial year 2014-15. The report is being finalized and will be filed as per the schedule. Secretarial Compliance Report confirming compliance to the applicable provisions of the Companies Act, 2013, Listing Agreement, SEBI guidelines and all other relevant rules and regulations relating to Capital Market, obtained from M/s RMG Associates, Practicing Company Secretaries is annexed. With respect to the qualification about the composition of the Board of Directors, OIL has brought the matter before MOP&NG and requested them to appoint appropriate number of Independent Directors on the Board of the Company. 21. EXTRACTS OF ANNUAL RETURN The extracts of the Annual Return are attached herewith as Annexure (Form MGT-9) to this Report. 22. AWARDS AND RECOGNITIONS Oil India Limited received the following awards during the year 2014-15 • Oil India Ltd. wins the National Safety Award (Mines) for 2012 in the category of "Longest Accident Free Period" for the "Engineering Oil Mines" on 20.03.2015. • Oil India Limited was declared the winner of 15th Annual Greentech Environment Award, 2015. • OIL-Center of Excellence for Energy Studies has received recognition from the Department of Scientific and Industrial Research, Govt. of India vide letter No. TU/IV-RD/1181/2014 dated 15-September 2014 as an In-house R&D unit of Oil India Limited from 21-August 2014. • 4th Annual Greentech HR Award 2014 for 'Training Excellence (Gold Category)' by Greentech Foundation for the third consecutive year at a function at Bangalore. • Golden Peacock National Training Award for the year 2014. The award was handed over by Hon'ble Shri Oomen Chandy, Chief Minister of Kerala at Trivandrum • Golden Peacock National Training Award for the year 2015. The award was announced on 26th March 2015 and handed over in a ceremony held in Dubai during April 2015. • Malaysia Best Employer Brand Award in Excellence in Training category. The award was announced on 25th March 2015. • 'Best Company in CSR & Sustainability' Award in the India Today PSUs Awards, 2014: Oil India Limited was awarded the 'Best Company in CSR & Sustainability', in the Navratna segment, in the maiden 'India Today PSUs Awards, 2014' on 22nd August, 2014. • OIL won the best display award in raw space category in the exhibition GEO INDIA 2015 (11th to 14th January, 2015) at Noida. • OIL won the best stall award in the raw space category in Assam International Trade & Industrial Fair, 2015 at Jorhat, Assam. 23. CHANGES IN THE BOARD OF DIRECTORS (i) Pursuant to MOP&NG's letter no. C-31014/4/2012-CA/FTS:22762 dated 1st August, 2014, Shri Sudhakar Mahapatra assumed the office of Director (Exploration & Development), Oil India Limited with effect from 4th August, 2014 vice Shri B.N.Talukdar who was relieved from the post of Director (E&D), OIL at the close of working hours of 5th February, 2014 on his joining as DG, DGH. (ii) Pursuant to MOP&NG's Letter no. C-31014/1/2013-CA/FTS:23934 dated 7th May, 2015, Shri Biswajit Roy has assumed the charge of Director (HR&BD) of Oil India Limited w.e.f 8th May, 2015 vice Shri N.K. Bharali who superannuated from the services of the Company on 31st January, 2015. (iii) Pursuant to MOP&NG Letter No. C-31033/1/2012-CA (Part-III)/FTS: 37857 dated. 7th May, 2015 Shri U.P. Singh, Joint Secretary (Exploration), MOP&NG of GOI was inducted as Government Nominee Director on the Board of Oil India Limited w.e.f 11th May, 2015 vice Shri Subhasish Panda, who had ceased to be Government Nominee Director on the Board of Oil India Limited w.e.f 7th May, 2015. (iv) Pursuant to MOP&NG's Letter no. C-31014/3/2013-CA/FTS:26283 dated 4th March, 2015, Shri P.K. Sharma has assumed the charge of Director (Operations) of Oil India Limited w.e.f 1st June, 2015 vice Shri S.Rath who superannuated from the services of the Company on 31st May, 2015. 24. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section134 (5) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, Directors of the Company confirm that: a) i n the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) the directors had 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 and loss of the company for that period; c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) the directors had prepared the annual accounts on a going concern basis; e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 25. ACKNOWLEDGEMENT With the initiatives emanating from the vision of making the Company as fastest growing energy company with highest profitability and with our combined zeal, commitment, experience and expertise, your Directors look forward to a year of fruitful operations. Your Directors acknowledge the guidance and support of the Ministry of Petroleum & Natural Gas, all other Ministries and Agencies in Central and State Governments. Your Directors express their gratitude and thanks to the Shareholders, Auditors, Customers, Suppliers and other business partners/associates for their continued co-operation and patronage. Your Directors wish to place on record their deep sense of appreciation for the devoted services of all Oil Indians for its success. For and on behalf of the Board of Directors. Sd/- (S.K.Srivastava) Chairman & Managing Director Dated: 30.06.2015 Place: Noida |