DIRECTORSYour Directors have pleasure in presenting the Twenty Fourth Annual Report along withaudited accounts for the year ended 31st March 2010. The summarised financialresults of the company are given hereunder: | 1. FINANCIAL RESULTS | | | | | (Rs. In lacs) | | Particulars | (Standalone) | (Consolidated) | | For the year ended | For the year ended | | 31st March 2010 | 31st March 2009 | 31st March 2010 | 31st March 2009 | | Income from Operations | 1,18,200 | 1,00,501 | 3,35,866 | 3,05,009 | | Other Income | 18,183 | 22,458 | 2,181 | 40,427 | | Less Expenditure | 48,611 | 47,179 | 1,49,905 | 1,31,738 | | Profit before Interest and Depreciation | 87,772 | 75,780 | 1,88,142 | 2,13,698 | | Less Interest | 33,714 | 25,506 | 97,682 | 85,530 | | Less Depreciation | 10,912 | 9,724 | 46,156 | 60,147 | | Profit for the year before Tax | 43,146 | 40,550 | 44,304 | 68,021 | | Provision for Tax | 15,900 | 15,850 | 26,506 | 26,350 | | Fringe Benefit Tax | | 105 | | 108 | | Provision for Deferred Tax | (798) | (1,381) | (799) | (1,381) | | Profit after Tax before share in Earnings of Joint Ventures | 28,044 | 25,976 | 18,597 | 42,944 | | Share in Earnings of Joint Ventures | | — | 12,504 | 11,160 | | Minority Interest | | — | | 35 | | Profit brought forward from the previous year | 47,627 | 34,032 | 60,563 | 18,875 | | Available for appropriation | 75,671 | 60,008 | 91,664 | 72,944 | | Proposed Dividend- Equity | 1,566 | 1,361 | 1,566 | 1,361 | | Tax on Dividend – Equity | 266 | 231 | 266 | 231 | | Proposed Divided – Preference | 2,789 | 2,726 | 2,789 | 2,726 | | Tax on Dividend – Preference | 474 | 463 | 474 | 463 | | Transfer to General Reserve | 2,900 | 2,600 | 2,900 | 2,600 | | Transfer to Capital Redemption Reserve | 5,000 | 5,000 | 5,000 | 5,000 | | Balance Carried forward | 62,676 | 47,627 | 78,669 | 60,563 | 2. PERFORMANCE The Revenue earned during the year under review stood at 136283 Lacs The rigs Aban II,Aban III, Aban IV, Aban V, Aban VI, Drillship Aban Ice and Floating Production Unit Taharawere working satisfactorily under the existing contracts. LOI received for rig Aban II forone well, the operations under the new contract commenced on 18th April 2010. Steps arebeing taken to market the rigs all over the world. 3. CHANGES IN SHARE CAPITAL During the year the following changes were effected in the Share Capital of the Company a) Issue of Shares under Aban Employee Stock Option Scheme 16740 Equity Shares ofRs.2/- each were issued allotted upon exercise of options under the Employee Stock OptionScheme 2005. b) During the year 5697135 Equity Shares of Rs.2/- each were issued and allotted underQualified Institutional Placements (QIP). c) The Company had forfetited 16,000 EquityShares of Rs.2/-each of which Re.1/- per share paid-up, out of the above 2,600 EquityShares forfeited were annuled during the year under review. 4. SUBSIDIARY COMPANIES INDIAN SUBSIDIARY\ Aban Energies Limited The Subsidiary Company activities relating to the operation and maintenance ofwindmills of the Company have been satisfactory. INTERNATIONAL The Company experienced an unforeseen set back in the total loss of one of its valuedassets Aban Pearl, which sank in the Venezuelan waters on 13th May 2010. Thevessel was duly insured and our claim is under process. The Board reviewed the impact ofthis loss in terms of financial and technical and business presctives and felt that setback can be compensated by taking suitable alternative measures 5. CONSOLIDATION OF ACCOUNTS The Audited consolidated accounts and cash flow statement comprising Aban Offshore Ltdand its Subsidiaries in accordance with the Accounting Standard Rules 2006 prescribed bythe Institute of the Chartered Accountants of India in this regard is attached. Government of India, Ministry of Company Affairs, vide their letter No. 47/224/2010CLIII dated 08.04.2010 has granted its approval under section 212(8) of the Companiesaudited accounts for the year ended 31st March 2010 from not attaching the full text ofthe financial statements of subsidiaries namely Aban Energies Ltd, India, Aban Holdingspte Ltd and Aban Singapore Pte. Ltd, Aban 7 Pte Ltd, Aban 8 Pte Ltd and Aban Abraham PteLtd. Aban Pearl Pte. Ltd, Aban International Norway AS, Sinvest AS, DDI Holding AS, DeepDrilling Invest Pte Ltd., Deep Drilling 1 Pte Ltd., Deep Drilling 2 Pte Ltd., DeepDrilling 3 Pte Ltd., Deep Drilling 4 Pte Ltd., Deep Drilling 5 Pte Ltd., Deep Drilling 6Pte Ltd., Deep Drilling 7 Pte Ltd., Deep Drilling 8 Pte Ltd., Beta Drilling Pte Ltd.,Venture Drilling Pte Ltd., Sinvest (Cyprus) Ltd Pursuant to the said approval, necessary disclosures have been made in respect of thesaid subsidiaries in this annual Report along with the Statement pursuant to Section 212of the Companies Act, 1956. The Audited Accounts of the said Subsidiaries and the related detailed information willbe made available to the investors of the Companies / Subsidiaries seeking suchinformation. The Annual Accounts of the Subsidiary Companies will be kept available forinspection by any investor at the Registered Office of the Company till the conclusion ofAnnual General Meeting. The subsidiary Company accounts details shall be available in the Company’swebsite. 6. MANAGEMENT'S DISCUSSION AND ANALYSIS Management Discussion and Analysis Report for the year under review as stipulated underclause 49 of the Listing Agreement with the Stock Exchanges in India is presented in aseparate section forming part of the Annual Report. 7. DIVIDEND The Directors are pleased to recommend a dividend of 8% p.a., 9% p.a and 9.25% p.arespectively on the Non Convertible Cumulative Redeemable Preference Share capital of theCompany and a dividend of 180% (Rs.3.60 per share) on the paid up Equity Share Capital ofthe Company for the year ended 31st March 2010 8. DIRECTORS The Directors Mr.P. Murari and Mr. V.S. Rao retire by rotation and, being eligible,offer themselves for reappointment. 9. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, withrespect to the Directors’ Responsibility Statement, it is hereby confirmed: (i) that in the preparation of the Annual Accounts for the financial year ended on 31stMarch 2010, the applicable accounting standards had been followed along with a properexplanation relating to material departures. (ii) that the Directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for the year under review. (iii) that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956to safeguard the assets of the Company and for preventing and detecting fraud and otherirregularities (iv) that the Directors had prepared the accounts for the financial year ended on 31stMarch 2010 on a going concern basis. 10. STOCK EXCHANGES Your Company’s Equity shares were listed in the following stock exchanges: Madras Stock Exchange Ltd., Bombay Stock Exchange Limited, and The National StockExchange of India Ltd. The Preference Shares aggregating to Rs.306 crores issued by the Company are listedwith Bombay Stock Exchange Ltd. The Foreign Currency Convertible Bonds issued by the Company are listed with theSingapore Exchange Limited. The necessary stock exchange regulations are complied with. The necessary listing feesfor the year 2010 -11 is paid to the respective stock exchanges 11. AUDITORS M/s Ford, Rhodes, Parks & Co., Chartered Accountants, Chennai, hold office untilthe conclusion of the ensuing Annual General Meeting and, being eligible, are recommendedfor re-appointment. 12. ADDITIONAL DISCLOSURES In line with the requirements of Accounting Standards Rules 2006 of the Institute ofChartered Accountants of India, your Company has made additional disclosures in respect ofthe financial reporting of interests in the joint venture in the notes on accounts 13. PARTICULARS OF EMPLOYEES As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975, the names and relevant particularsof the employees who were employed throughout the financial year / part of the financialyear under review and were in receipt of remuneration for the Financial Year in aggregateof not less than Rs.24,00,000/- (Rs.2,00,000/- per month or part thereof), are annexed. A. CONSERVATION OF ENERGY The Company’s activities are not energy intensive. However measures are taken atall levels for the Conservation of Energy B. RESEARCH AND DEVELOPMENT The Company’s research activities are mainly directed towards training, evaluationand upgrading the skills of the personnel and import substitution of equipment, tools andspares. C. TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION Efforts are being taken to maximize indigenization of the Rig and Windmill operationand reduce the dependence on imported equipments used in Rigs and Wind Mills 14. In terms of Section 217(1) of the Companies Act, 1956 (as amended) and theCompanies (Disclosure of Particulars in Report of the Board of Directors) Rules 1988, yourDirectors furnish hereunder the additional information as required. FOREIGN EXCHANGE EARNINGS AND OUTGO | | (Rupees in lacs) | | 2009-2010 | 2008-2009 | | Foreign exchange earned during the year | 1,09,724.29 | 1,02,760.00 | | Foreign exchange outflow during the year | 7,789.80 | 9,633.98 | 15. CORPORATE GOVERNANCE A detailed note on the Company’s philosophy on Corporate Governance and such otherdisclosures as required under the listing agreement with the Stock Exchanges is separatelyannexed herewith and forms part of this report. 16. COMPLIANCE CERTIFICATE A Certificate from the Auditors of the company has been attached to this report whichtestifies that the requirements of a sound Corporate Governance process, as stipulatedunder Clause 49 of the listing agreement with the stock exchanges, was met. 17. ACKNOWLEDGEMENTS Your Directors wish to place on record their sincere appreciation for the supportreceived from Bankers, Financial Institutions, Central / State Governments, MinistriesValued Clients, Members, Investors and employees at all levels. | For and on behalf of the Board | | | Place : Chennai | Reji Abraham | V. S. Rao | | Date : 25.05.2010 | Managing Director | Chairman | CAUTIONARY STATEMENT Statement in the Management Discussion and Analysis describing the Company’sobjective’s estimates expectation of projection may be Forward Looking Statementwithin the meaning of applicable laws and regulations. Actual results could differmaterially from those expressed or implied. Important factors that could make a differenceto the Company’s operations include Government Regulations, Taw Laws, economicdevelopments in India and in the countries in which the Company conducts business,litigations and other allied factors. ANNEXURE TO THE REPORT OF THE DIRECTORS Statemet as at 31st March 2009 pursuant to clause 12 (Disclosure in the Directors’Report) of the Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 Employee Stock Options - 2005 | 2005 | 2006 | 2008 | 2009 | Total | | a) (i) No of options granted | 96200 | 47000 | 125000 | 175000 | 443200 | | b) Pricing Formula | Options were granted at the closing market price of the Equity Shares of the Company on the Stock Exchange where high volume of shares were traded on the day preceding the date of grant of options | | c) Exercise Price | 431.60 | 1288.25 & 1211.50 | | 3622.85 | 649.75 | | d) Total No. of Options vested | 218200 | | | | | | e) Total No. of Options exercise | 81390 | | | | | | f) Total No of equity shares arising as a result of exercise of options | 81390 Equity shares of Rs.2/- Per share fully paid | | g) Total No. of Options Lapsed | 23890 | | h) Variation of terms of Options | Nil | | i) Money realised by exercise of options | Rs.1,45,70,583/- | | j) Total No of options in force | 112920 | | j) Details of Options granted to | No. of Options granted during the year | | i) Senior Managerial Personnel | | | S. No. | Name | Designation | No. of Options granted during the year | | 1. | P. Venkateswaran | Deputy Managing Director | 31,000 | | 2. | C.P. Gopalkrishnan | Deputy Managing Director & Secretary | 31,000 | | 3. | A.P.S. Sandhu | Chief Operating Officer | 9.000 | | ii) Any other employee who received grant in any one year of options amounting to 5% or more of the options granted during the year | Nil | | iii) Identified employees who were granted options during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant) | None | | k) Diluted Earnings per Share (EPS) pursuant to issue of Equity Share on exercise of options calculated in accordance with the accounting standard (AS 20) | Rs. 61.22 | | Earnings per share | | | l) Method of calculation of employee compensation cost | The employee compensation cost has been calculated using the intrinsic value method of accounting to account for the options issued under the Aban Employee Stock Option Scheme. The Stock based Compensation cost as per the intrinsic value method for the financial year 2009 -10 is Nil | | Difference between the employee compensation cost so computed at (i) above and the employee compensation cost that shall have been recognized if it had used the fair value of the options | Rs. Nil | | The impact of this difference on profits and on EPS of the Company | NOT APPLICABLE | | m) Weighted average exercise prices and weighted average fair values of options granted for options whose exercise price either equals or exceeds or is less than the market price of the stock | Weighted average exercise price Rs. 1507.60 | | Weighted average fair value Rs. 473.86 | | n) A description of the method and significant assumptions used during the year to estimate the fair values of Options | The fair value of each option is estimated using the Black Scholes Option pricing model after applying the key assumptions | | i) Risk free interest rate - 6.9694% | | ii) Expected Life - 3 years | | iii) Expected volatility - 43.72% | | iv) Expected dividends - Rs. 3.42 per share | | v) The price of the unlying | | Share in the market at the Time of option grant - Rs. 787.05 | Annexure to the Directors' Report Information as per section 217(2A) of the Companies Act, 1956 read with Companies(Particulars of Employees) (amendment) Rules 1988, and forming part of the DirectorsReport for the year ended 31st March 2010. Employed throughout the Financial Year underreview, were in receipt of remuneration for the Financial year in aggregate of not lessthan Rs. 24,00,000/-(Rupees Twenty four lakhs only) per annum or Rs.2,00,000/- (Rupees TwoLakhs only) per month where employed for the part of the year | S. No. | Name | Age | Remuneration | Nature of Duties / Designation | Qualification (s) | Date of Commenment of Employment | Experience in Years | Details of Previous Employment | | 1 | A.C.D’souza * | 53 | 65,55,684 | Tool Pusher | SSC | 2/5/1987 | 34 | Derrick Man, Zapata Offshore Drilling Co. | | 2 | A.P.S Sandhu | 58 | 1,04,42,388 | Chief Operating Officer | B.Sc Engg (Mechanical) | 20/3/1992 | 34 | Chief Engineer - ONGC Ltd | | 3 | Anil Kishore Sharma | 42 | 45,15,539 | Rig Manager | B.E. (Mech) | 18/3/2009 | 28 | Soudi Aramco - Drilling Supervisor | | 4 | Babu George * | 46 | 22,72,254 | Driller | SSC, ITI | 4/1/1998 | 17 | Floor Man - Arya Offshore | | 5 | C.D. Thomas | 49 | 30,24,398 | Chief Mechanic | SSLC | 1/4/1998 | 31 | Mechanic / Fitter - Amar Engineering Company | | 6 | C.P. Gopalkrishnan | 54 | 81,05,605 | Deputy Managing Director & Secretary | B.Com (Hons) , ACA, ACS, LLB | 11/11/1987 | 31 | Deputy Manager - Nirlon Synthetic Fibres and Chemicals Ltd | | 7 | Felix D’Mello | 59 | 47,18,906 | Tour Pusher | SSC | 1/7/1993 | 36 | Asst Driller - Arya Offshore | | 8 | James Ravichandran | 50 | 76,54,857 | Chief Mechanic | ITI | 13/4/1988 | 26 | Not Applicable | | 9 | K. C. Kushalappa | 45 | 65,48,402 | Rig Manager | B.E. (Industrial and Production Engineering) | 27/3/1992 | 22 | G.E.T. in Triveni Engineering Works Ltd | | 10 | K. Jayarajan | 49 | 70,66,765 | Dy.General Manager (Drilling) | B.Sc Engg (Mechanical) | 11/8/1997 | 28 | Dy . SE (Drilling) - ONGC Ltd | | 11 | K. John Thomas | 61 | 29,30,249 | Chief Electrician | ITI | 9/5/1990 | 30 | Electrician - Aban constructions | | 12 | K.D. Joseph * | 35 | 4,66,627 | Electrician Engineering | Diploma in Electrical | 22/4/2002 | 13 | Assistant Electrician, Jagson International | | 13 | K.N. Pai | 47 | 27,41,711 | Driller | B.Com | 16/6/1988 | 22 | Not Applicable | | 14 | Khem Bahadur Thappa | 42 | 30,87,469 | Driller | SSC | 1/2/1993 | 17 | Asst. Driller-Arya Offshore | | 15 | Kulvir Kotwal * | 35 | 30,01,987 | Sub Sea Engineer | B.E. (Mech) | 4/1/2007 | 9 | Asst. Sub Sea Engineer, Great Eastern Shipping Company Ltd. | | 16 | Kurian Job | 59 | 40,47,314 | Chief Mechanic | SSLC, ITI | 1/2/1996 | 29 | Tool Room incharge - Sterio Industries | | 17 | M.A. Khan | 45 | 30,84,769 | Driller | SSC | 9/7/1997 | 21 | Derrick Man, Arya Offshore Services | | 18 | Madhusudhan Sharma | 48 | 37,49,237 | Chief Mechanic | S.S.C | 1/8/1991 | 18 | Not Applicable | | 19 | P. Venkateswaran | 59 | 1,34,51,608 | Deputy Managing Director | B. Tech | 1/10/1986 | 37 | Project Manager - Aban Constructions | | 20 | P.L. Kaul | 60 | 45,34,271 | Rig Manager | B.Sc : Diploma in Mech. Engg | 9/10/1995 | 39 | Rig Super in tendant - H.E.G Ltd | | 21 | P.T. Cherian | 48 | 37,96,776 | Chief Electrician | HSC, Diploma in Electrical Engg. | 10/4/1997 | 19 | Not Applicable | | 22 | Radhesham Varma | 52 | 46,91,841 | Rig Manager | B.E. (Mech) | 26/9/2008 | 28 | Saudi Aramco - Drilling Supervisor | | 23 | Rajiv Banga * | 39 | 20,54,610 | Asst. Driller | HSC | 20/3/1992 | 18 | Not Applicable | | 24 | Reji Abraham | 44 | 9,79,21,089 | Managing Director | BE, PGDM | 26/9/1997 | 19 | Business | | 25 | S. Srinivasan | 42 | 34,72,616 | Vice President - Corporate Planning | B. Tech, MBA | 1/4/2007 | 19 | Asst .General Manager, ICICI Bank Ltd. | | 26 | S.S.Bhatia | 40 | 31,12,167 | Driller | SSC | 1/7/1993 | 23 | Floor Man - Mahindra & Mahindra | | 27 | Sajith .D | 52 | 26,76,726 | Barge Engineer | SSLC, Diploma in Telecommunication Engineering | 11/8/1988 | 35 | Indian Navy - Radio Operator, Qatar Communications Ltd - Radio Operator. | | 28 | Sandipta Bose | 45 | 61,69,684 | Offshore Installation Manager | B.Sc, MA (Eco) | 9/9/1996 | 24 | Sr. Operator cum Acting Supervisor in United Engineering Services | | 29 | Sunil Kumar Mohanthy | 39 | 26,59,070 | Production Superintendent - Tahara | M.TECH (PETROLEUM ENGINEERING), B.TECH (PETROLEUM ENGINEERING) | 4/5/1997 | 14 | Geological Technologies Ltd - Production Engineer | | 30 | Suresh Kumar | 49 | 82,77,296 | Tool Pusher | B.E. (Mechanical) | 1/4/2002 | 28 | Rig Super in tendant - Jagson International | | 31 | T. Ravi | 45 | 46,65,675 | Offshore Installation Manager | B. Tech / PGDBA | 1/4/2005 | 18 | Petrofac International, Sharjah | | 32 | T.B. Sashi | 51 | 45,92,732 | Tour Pusher | SSC, ITI | 10/3/1987 | 30 | Not Applicable | | 33 | Tara Kharakwal | 46 | 39,31,214 | Driller | B.A. Diploma in Electrical Engineering | 1/2/1993 | 26 | Floor Man - Mahindra & Mahindra | | 34 | Tomar R.S. | 44 | 24,34,473 | Driller | SSC | 6/1/1997 | 19 | Roustabout, Arya Offshore Ltd | | 35 | V. Chattopadhyaya | 48 | 35,39,047 | Asst. Gen Manager (Production) | B. Tech (Chemical Engg) | 8/5/1997 | 23 | Executive Engineer - Production , ONGC Ltd | | 36 | V.K. Vinodhan | 57 | 42,88,808 | Rig Manager | B.Sc Engg (Mechanical) | 23/11/2004 | 34 | Base Manager - NICO Resources Ltd | | 37 | Vijay Saheta | 44 | 43,53,654 | General Manager (Finance) | B. Com, ACA | 16/7/1992 | 19 | Deputy Manager (Taxation) - WIMCO Ltd | | 38 | Vinod Pillai | 48 | 26,52,725 | Deputy Gen. Manager | M.Com; MHRM | 28/2/1992 | 26 | Sr. Executive (Personnel & Administration) - SS Ispat Ltd | | 39 | Vishal Mehan | 33 | 49,84,764 | Sub Sea Engineer | B.E. (Mech) | 19/3/2005 | 8 | Asst Sub Sea Engineer, Great Eastern Shipping Co. Ltd | | 40 | Walter C Lopes | 42 | 38,73,641 | Chief Electrician | SSC, ITI | 2/2/1992 | 17 | Not Applicable | Notes (a) Remuneration includes Salary and taxable value of perquisities as per Income taxrules (b) Nature of employment is contractual * Employed for part of the year
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