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Directors Reports

Aban Offshore Ltd (INDUSTRY : Crude Oil & Natural Gas)

  • BSE Code: 523204
  • NSE Symbol: ABAN
  • ISIN Demat: INE421A01028
  • Book Value ( ₹ ) -127.29
  • Face Value ( ₹ ) 2
  • Market Cap ( ₹ Cr. ) 251.85
  • P/E (TTM): 0.00
  • EPS (TTM): 0.00
  • Div Yield (%): 0.00

The Directors of your company are pleased to present the Thirty Sixth Annual Report along with the accounts for the year ended 31st March, 2022.

1. Financial Results

(Rupees in Millions)

Particulars Standalone Consolidated
For the year ended
31 March, 2022 31 March, 2021 31 March, 2022 31 March, 2021
Income from Operations 820.67 1,559.32 5983.40 10,694.69
Other Income 114.79 331.09 149.52 2,235.75
Less: Expenditure 499.71 953.43 4861.57 8,780.19
Profit before Interest and Depreciation 435.75 936.98 1271.53 4,150.25
Less: Interest 793.28 815.11 10966.34 11,057.10
Less: Depreciation/Impairment 744.89 2,994.85 12375.90 13351.19
Profit/(Loss) for the year before Tax (1102.41) (2,872.98) (22070.89) (20,258.04)
Exceptional items (Profit/(Loss)) 98.82 332.64 54.13 332.64
Profit/(Loss) before Tax (1003.59) (2,540.34) (21529.76) (19925.40)
Share of Profit/(Loss) of Associates - - (11.02) 3.09
Current Tax - - 176.18 30.31
Deferred Tax 53.82 (227.32) 53.82 (227.32)
Profit/(Loss) after Tax for the year from continuing operations (1057.40) (2,313.02) (21770.78) (19,725.30)
Other comprehensive Income - - (5126.49) -
Profit/(Loss) for the year (1057.40) (2,313.02) (21770.79) (19,725.30)
Profit brought forward from the previous year (28819.63) (26,499.19) (185430.80) (165,697.94)
Available for appropriation (29877.04) (28,812.21) (207201.59) (1,85,423.24)
Net gain/(loss) through OCI - - - -
Expected return on plan assets & net actuarial gain/ (Loss) 3.61 (7.42) 3.61 (7.56)
Transfer to Capital Redemption Reserve - - - -
Transfer to General Reserve - - - -
Balance Carried forward (29873.43) (28,819.63) (207198.04) (1,85,430.80)

2. Performance

The Revenue earned during the year under review stood at Rs.935.46 Million. Company suffered loss this year too due to steep fall in day rates as well as impairment of plant and machinery. Rigs under contract were working satisfactorily.

3. Changes in Share Capital

There was no change in the Share Capital of the Company during the year under review.

4. Subsidiary Companies Indian

Aban Energies Limited

The Subsidiary Company activities relating to the maintenance of windmills of the Company has been satisfactory.

International

Rigs under Contract were performing satisfactorily.

The subsidiary company accounts details are available in the Companys website.

Rigs DD1, DD3 and Aban VII owned by our step down subsidiary were sold and delivered during the last financial year ended 31st March, 2022.

5. Consolidation of Accounts

The consolidated financial statements of the Company are prepared in accordance with the provisions of Section 129 of the Act, 2013 read with the Companies (Accounts) Rules, 2014 and Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) along with a separate statement containing the salient features of the financial performance of subsidiaries/associates, in the prescribed form. The audited consolidated financial statements together with Auditors Report forms part of the Annual Report.

As per IND AS-108, if the revenue of an operating segment is less than 10 percent of the combined revenue of all operating segment then it is not mandatory for a company to report separately information about that segment. The revenue from Wind Energy division is less than 10 percent of the combined revenue of all operating segments. Hence the Company is not reporting its Wind Energy revenue as a separate segment in its financials.

6. Managements Discussion And Analysis

Management Discussion and Analysis Report for the year under review as stipulated under Regulation 34 (2) (e) of SEBI (LODR) Regulations, 2015 is presented in a separate section forming part of the Annual Report.

7. Dividend

In the view of losses suffered by the Company, the Board of Directors do not recommend any dividend.

8. Directors

Mr. P.Venkateswaran is liable to retire by rotation and being eligible offers himself for re-appointment.

The Board recommenced the re-appointment of Mr. Reji Abraham as Managing Director of the Company for a period of 5 years subject to the approval of shareholders.

9. Disclosures under Companies Act, 2013:

Extract of Annual Return:

The Extract of the Annual Return is updated in the website of the Company under the following link http://abanoffshore.com/pdf/mgt-7-2022.pdf

Number of Board Meetings:

The Board of Directors met 8 (Eight) times in the year 2021-22. The details of the Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report.

Constitution of Committees:

The details of various committees formed and their attendance during the year are given in the Corporate Governance Report.

Role of Audit Committee

The Role of Audit Committee is given in the Corporate Governance Report.

10. Directors Responsibility Statement

Pursuant to the requirement under Section 134 (3) of the Companies Act, 2013, with respect to the Directors Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the Annual Accounts for the financial year ended on 31st March 2022, the applicable accounting standards had been followed along with a proper explanation relating to material departures.

(ii) the Directors had selected such accounting policies and applied them consistently and made judgements 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 that period.

(iii) the Directors had 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.

(iv) the Directors had prepared the accounts for the financial year ended on 31st March 2022 on a going concern basis.

(v) 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.

(vi) 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.

11. Statement of Declaration by Independent Directors as required under 149(6) of the Companies Act, 2013

All the Independent Directors have given the declarations that they meet the criteria of Independence as laid down under Section 149 (6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. In the opinion of the Board they fulfill the conditions of Independence as specified in the Act and Rules made there under and are independent of the management.

12. Explanation by the Board on every qualification, reservation or adverse remark or disclaimer made -

a) By the Auditor in his report on Consolidated Financial Statement -. The disclaimer of opinion is on preparation of the financial statements on a going concern basis. The Management has considered the operations of the Group and the Company as going concerns notwithstanding that the Group and the Company has incurred net loss, has charged impairment loss on rigs of the Group and the Company, inventory write-down, defaulting on payment of borrowings that have become due for payment and breach of certain covenants of the borrowings that have given right to the lenders to demand the borrowings to be paid immediately and have therefore expressed existence of material uncertainties on the going concern assumption. The Management believes that the use of the going concern assumption in the preparation of the financial statements for the financial year ended 31st March, 2022 is still appropriate. The Company and Group have entered into binding sale and purchase agreements for the sale of some of the rigs and the Management is in discussions with its lenders to obtain approval for and implementation of an appropriate debt resolution plan. In view of the foregoing the impact of the disclaimer of opinion cannot be ascertained.

b) By the Practicing Company Secretary in his Secretarial Audit Report - Nil

13. Particulars of loans, guarantees or investments under section 186 of the Companies Act, 2013

Details of loans, guarantees and investments covered under the provision of Section 186 of the Companies Act, 2013 are given in Notes to the financial statements.

14. Particulars of Contracts or arrangements with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 in the prescribed form

All Related Party Transactions that were entered into during the financial year were on an arms length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and the listing Regulation. There were no materially significant Related Party Transactions made by the Company during the year that would have required the shareholder approval as required under the listing regulation.

All Related Party Transactions are placed before the Audit Committee for approval. Suitable disclosures as required under AS 18 have been made in the Notes to the Financial Statements. Form AOC-2 is shown in Annexure B

The Board had approved the amendment to the policies on Related Party Transactions and Material Subsidiary. The Policies have been uploaded in the website, under the weblink: http://abanoffshore.com/ RelatedPartyTransactionsPolicy.pdf

15. Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report

There were no material changes and commitments affecting the financial position of the Company between the end of financial year March 31,2022 and the date of the Report. However rigs Aban V and Aban VI were sold and delivered during the Current year.

16. Statement indicating development and implementation of a risk management policy for the company including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company.

The Companys robust risk management framework identifies and evaluates business risks and opportunities. The Company recognizes that these risks need to be managed and mitigated to protect its shareholders and other stakeholders, to achieve its business objectives and enable sustainable growth. The risk framework is aimed at effectively mitigating the Companys various business and operational risks, through strategic actions. Risk management is embedded in our critical business activities, functions and processes. The risks are reviewed from the change in the nature and extent of the major risks identified since the last assessment. It also provides control measures for risks and future action plans.

The Company believes that the overall risk exposure of present and future risks remains within risk capacity.

17. Corporate social responsibility initiatives taken during the year

The Company has constituted CSR Committee in accordance with section 135 of the Companies Act, 2013. The CSR Committee has formulated and recommended to the Board, a CSR Policy indicating the activities to be undertaken by the Company, which has been approved by the Board. The average profit for the last three financial years of the Company is Negative. Hence the need to spend on CSR does not arise. The detailed report is given in a separate Annexure E in the Annual Report. The CSR Policy may be accessed on the Companys website at http:// abanoffshore.com/pdf/CSR_Policy.pdf

18. Board Evaluation

Pursuant to the provisions of Section 134(3) (p) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as the evaluation of the workings of its Committees. The evaluation by the Board of its own performance and that of its committees and individual directors were done as per the manner determined by the Chairman and Independent Directors and the same has been explained in Corporate Governance report.

19. The details of directors or key managerial personnel who were appointed or have resigned during the year

The Board recommends the reappointment of Mr.Reji Abraham as Managing Director for a further period of five years effective 26.09.2022.

20. The name of companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year

Aban Hydrocarbons Pte Limited ceased to be the associate of the Company

21. The details relating to deposits, covered under Chapter V of Companies Act, 2013

During the year under review, your Company did not accept any deposits within the meaning of provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

22. The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future

No significant and material orders were passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company.

23. The details in respect of adequacy of internal financial controls with reference to the Financial Statements.

Details of the same are provided in the Management Discussion and Analysis attached to this Report.

24. Internal financial control:

Your Company maintains appropriate systems of internal controls, including monitoring procedures, to ensure that all its assets are safeguarded against loss from unauthorized use/misuse or disposition. Company policies, guidelines and procedures provide for adequate checks and balances and are meant to ensure that all transactions are authorized, recorded and reported correctly. Your company through its own internal audit department carried out periodic audits at all locations and functions. The internal audit department reviews the efficiency and effectiveness of these systems and procedures. Added objectives including evaluating the reliability of financial and operational information and ensuring compliances with applicable laws and regulations. The observations arising out of the audit are periodically reviewed and compliance ensured. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to Company policies, (b) safeguarding of its assets, (c) prevention and detection of frauds and errors, (d) the accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.

25. Stock Exchanges

Your Companys Equity shares are listed in BSE Limited and National Stock Exchange of India Ltd.

Preference Shares aggregating to Rs. 2,610 million issued by the Company which were listed in BSE Limited are under suspension since the preference shares were not redeemed on due dates owing to severe cash flow strain.

Necessary stock exchange regulations are complied with. Applicable listing fees for the year 2022-23 have already been paid to the stock exchanges.

26. Compliance of Secretarial Standards

The Company has complied with the applicable Secretarial Standards issued by Institute of Company Secretaries of India.

27. Vigil Mechanism / Whistle Blower Policy

The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and Employees to report about unethical behavior or violation of the Companys Code of Conduct. The 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.

Your Company hereby affirms that no Director/ employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.

The whistle blower policy has been hosted in the Companys website under the weblink: http://abanoffshore.com/pdf/whistleblowerpolicy.pdf.

28. Disclosure under the Sexual Harassment of women at workplace (Prevention, prohibition and Redressal) Act, 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of women at workplace (Prevention, prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the year 2021-22 nor were any pending unresolved complaints as on 31st March, 2022.

29. Auditors

M/s. P.Murali & Co, Chartered Accountants, Chennai continue to hold office till the conclusion of this Annual General Meeting.

M/s. Ford Rhodes Parks & Co. LLP, Chartered Accountants, Chennai are being recommended for appointment as Statutory Auditors to hold office from the conclusion of this AGM till the conclusion of 41st AGM.

30. Additional Disclosures

In line with the requirements of Accounting Standards Rules 2006 of the Institute of Chartered Accountants of India, your Company has made additional disclosures in respect of the financial reporting of interests in joint venture in the notes on accounts.

31. Particulars of Employees

In accordance with proviso to Section 136(1) of the Companies Act, 2013, the Directors Report is being sent to all shareholders excluding the statement prescribed under Rule 5(1), 5(2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The said statement is available for inspection by the Members at the registered office of the Company during office hours till the date of the Annual General Meeting.

32. The particulars prescribed under Section 134 (3) (m) of the Companies Act, 2013 read with Rule (3) (A) (B) & (C) of the Companies (Accounts) Rules, 2014, -

(A) Conservation of Energy

The Company has undertaken several initiatives in this area for the past few years to reduce the carbon foot prints.

• Alternate low energy consumption options were identified to optimize energy.

• This involved distillation plants being replaced by low energy desalination plants.

• DOL starters are being replaced by drives to save on energy usage.

• Energy efficient motors are being used when replacement is required.

• Low energy consuming LED systems are procured as replacements to CFL/Tube lights.

• Asset health monitoring and systems were put in place to extend lube oil service hours. This will enable reduce environmental burdens on deposal of waste oil.

(B) Technology Absorption

• Vibration and noise analysis being implemented to predict early warnings for equipment failures.

• Torsional vibration analysis being implemented on engine driven equipment.

• VFD drives are being used in place of traditional DOL starters.

• Advanced Corrosion prevention programs are implemented to minimize steel and piping deterioration.

Foreign exchange earnings and outgo

(Rupees in Millions)

2021- 22 2020-21
Foreign exchange earned during the year 854.01 1,581.65
Foreign exchange outflow during the year 322.23 650.45

33. Corporate Governance

A detailed note on the Companys philosophy on Corporate Governance and such other disclosures as required under the listing regulations is separately annexed herewith and forms part of this report.

34. Compliance Certificate

A Certificate from the Auditors of the company has been attached to this report which testifies that the requirements of a sound Corporate Governance process as stipulated under Schedule V of the SEBI(Listing Obligations & Disclosure Requirements) Regulations,2015 with the stock exchanges, was met.

35. Acknowledgements

Your Directors wish to place on record their sincere appreciation for the contribution made by the employees at all levels. The Directors also record their sincere appreciation of the support and co-operation received from the Bankers, Financial Institutions, Investors, relevant Central and State Governments Ministries, Valued Clients and Members of the Company.

Cautionary Statement

Statement in the Management Discussion and Analysis describing the Companys objectives estimates expectation of projection may be Forward Looking Statement within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include Government Regulations, Taw Laws, economic developments in India and in the countries in which the Company conducts business, litigations and other allied factors.

For and on behalf of the Board
Reji Abraham P.Murari
Managing Director Chairman
Place :Chennai
Date : May 26, 2022