Asian Energy Management Discussions

Economic Overview

Global Economy

The growth of the global economy during 2022 slowed to 3.2%, as per OECD data, bogged down by the economic fallout of the Russia-Ukraine war and the consequent disruptions caused in global commodity markets. This followed closely on the heels of the Covid-19 pandemic and the recovery from it, which cast a cloud over the two years prior to the war. The political fallout of the war and the turmoil created in the commodity markets caused the skyrocketing prices of essential commodities like crude oil, natural gas, coal, grains and cooking oil, fueling inflationary economic pressures across the globe.

The supply shocks that disrupted energy markets caused prices of essential commodities to reach unforeseen heights and remain elevated for much of 2022. These disruptions kicked off a temporary commodity super cycle and fueled inflation across economies in Europe, North America, Africa and Asia. The inflationary pressures kicked off a cycle of monetary policy tightening across the global economy. This cycle reversed a period of loose monetary policy regimes that were implemented in the backdrop of the 2008 financial crisis and the recession brought about by the Covid-19 pandemic. Commodity prices began to decrease and return closer to pre-Russia-Ukraine conflict levels near the end of the financial year. Elowever, inflation remained elevated across the global economies, fueled by factors like Covid-19 pandemic era supply chain disruptions, climate change, and labor market disruptions across advanced economies.

Indian Economy

Amidst the global turmoil, the Indian economy furthered its credentials as the worlds fastest-growing major economy, beating estimates to record an economic growth rate of 7.2% for 2022-23. Building on the rapid vaccination campaign conducted in the previous year, the economy underwent structural reforms enabled by factors, such as lower corporate tax rates, PLI schemes, and increased Government spending on capex and infrastructure. These measures further boosted Indias recovery from the effects of the Covid-19 pandemic. Additional measures

like increased offtakes of Russian crude oil and fertilizers insulated the economy from the heavy inflation seen in the West. However, the economy still experienced above- average inflation rates due to the higher commodity prices, triggering imported inflation and even forcing restrictions on exports of wheat, sugar, rice, and various metals and minerals, necessitating monetary tightening by the Reserve Bank of India. The impact of monetary tightening and stabilizing global commodity markets led to cooling inflation near the end of the financial year.

Energy Services

Industry Overview

The Global Scenario

The cyclical nature of the hydrocarbon industry moved into a heavy upswing for much of the past financial year, with prices of crude oil, natural gas and coal hitting levels unforeseen in more than a decade since the shale revolution kicked off in North America. According to Bank of America, Brent averaged USD 100.93, JKM LNG spot price averaged USD 33.98, and thermal coal averaged USD 334 for the year. The impact of the Russia-Ukraine conflict and Western sanctions on Russian energy destabilized the flow of global hydrocarbon market, because of which Government policies increasingly prioritized energy security, giving greater ease of operations to hydrocarbon producers.

Benefiting from rising demand from economies reopening post-Covid-19 pandemic lockdowns, policy measures aimed at maximizing output and higher revenue from higher prices, the industry was able to increase investments in new fields and substantially increase output across the global economy. According to the IEA, coal consumption increased by 1.2% in 2022 and surpassed a volume of 8 Billion tons for the very first time, led by a temporary increase in Europe to optimize energy security, and robust demand in the emerging economies of Asia. This has heavily benefited supplementary industries based around exploration and building infrastructure for hydrocarbon extraction.

The commodity super cycle, which has brought renewed optimism for the industry, might fizzle out earlier than expected, among other downside risks. Inflation in the West and monetary tightening have already led to commodity prices cooling down from the highs of late 2022 to below pre-Russia-Ukraine conflict levels, and prices are anticipated to decline further as the industry ramps up supplies and recessionary conditions are expected to persist for the coming financial year, leading to lower demand for hydrocarbons. Additionally, climate challenges faced by the planet worsen with every passing year, with droughts and heatwaves affecting billions across the globe, posing risks to agriculture, health, and well-being. The temporarily increased coal consumption by European economies is not projected to last as renewable energy infrastructure across the globe ramps up, and the industry must brace for an increasingly decarbonized future.

The Indian Scenario

As the worlds fastest-growing major economy and widely projected by many as the worlds newly most populousnation, India is still the worlds third-largest consumer of oil and second-largest consumer and producer of coal.

In the past financial year, demand for both commodities increased. According to Government data, petroleum consumption increased by 10.2%, despite stagnant domestic production, whereas coal consumption again exceeded a billion tons to reach 1,029 Billion tons, with production recording a rapid 14.76% growth to reach 893.08 Million tons. The countrys hydrocarbon industry benefited from the global commodity boom, Government interventions in pricing and the imposition of windfall restricted the gains compared to global corporations.

The Governments capital expenditure spending boost of 35.4% lifted economic growth throughout the economy, particularly in energy and infrastructure sectors, as evident from the growth of core industry sectors like steel, cement, and coal, with the core industries recording a growth of 7.6% for 2022-23. Much of this increased demand was successfully fulfilled by rising domestic coal production, although the same success was not seen in the petroleum industry, with crude oil production declining by 2.8% and natural gas production stagnant with a mere 2.8% rise, attributed to aging fields and a lack of new discoveries. Such downside risks to the hydrocarbon industry create challenges but also opportunities, particularly in the need to increase exploration for new prospects and enhance domestic production over the long-term.

Industry Outlook

According to the IMF, Indian economic growth in the upcoming year is estimated to be 6%, dragged down by recessionary conditions in advanced economies, while maintaining its status as the worlds fastest-growing major economy. The Indian Governments focus on infrastructure growth is expected to continue, and the Union Government Budget for 2023-24 further hiked capital expenditure by 37.4%. According to the Ministry of Coal, it is projected that coal consumption will reach 1.27 Billion tons in 2023-24.


The economy is still reliant on abundant fuel for 70% of its electricity generation, and the past financial year saw record forex outgo on 162.46 Million tons of imported coal, 30% higher than the preceding financial year.

Building on the nearly 15% growth of domestic production to 893 Million tons for 2022-23, the Government has laid out an ambitious target of 1.31 Billion tons of domestic production for 2024-25. However, this target can only be achieved with significant investments in infrastructure. These measures are aimed at boosting the countrys self-reliance and energy security, and is expected to be coupled with ambitious plans to enhance exploration for coal and petroleum prospects in onshore and offshore sites across the nation.

The outlook for oilfield service companies is promising both domestically and internationally, with Consegic Business Intelligence estimating the industry will grow at a healthy rate of 5.9% until 2030 to reach a global market size of USD 468.58 Billion, with the majority of the growth coming from the Middle East and Asia-Pacific regions, and much of the growth coming in areas, such as drilling services, seismic services, and operations and maintenance services. Much of this growth will come from India, China, Malaysia, and Thailand.

Company Overview

Asian Energy Services Limited (also referred to as ‘AESL or ‘the Company) is an energy services company dedicated to specialized services for the energy sector, particularly the hydrocarbon and minerals sectors. Services offered include seismic data acquisition, and the design, building, operations, and maintenance of facilities and infrastructure for the hydrocarbon and mineral sectors, with esteemed clientele ranging from ONGC, Oil India Limited, and CMPDIL in the public sphere to stalwarts like Vedanta Resources and Oilmax Energy in the private sector.

This past financial year saw the continued structural evolution of 2022-23 as AESL entrenched itself deeper into the new verticals of designing and building coal handling plants and running O&M for oilfields alongside its legacy business of seismic. Building on the successful completion of seismic campaigns in Chhattisgarhs Rajadai, the Company also successfully completed seismic campaigns contracted by Vedanta in Assams Jagun, and won another seismic project in the same region for the upcoming financial year. AESL is poised to partake in bidding for upcoming seismic programs. These include National Seismic Program I hosted by Oil India Limited, National Seismic Program II hosted by the Government of India, OLAP block seismic exploration by the likes of ONGC, Oil India Limited and Vedanta, as well as the seismic projects for mineral exploration newly introduced by the coal ministry.

The Company is built on the growth of coal infrastructure across the nation by furthering advancement on its existing projects for coal handling plants at Hura, Singareni, and Gevra, dotted across the nations mineral belt. Rapid progress was made in Hura, which is on track to be commissioned during 2023-24, and Singreni, which is on track to be commissioned during early 2024-25. Developments under the O&M vertical also sped along as the Company built on its success in running O&M atSuvali for Vedanta and Amguri for Oilmax by being awarded O&M contracts for the Indrora field, situated in Gujarat, for Oilmax and the PY-3 field, situated offshore near Tamil Nadu, owned by a consortium of Hardy Oil and Gas, HO EC, Invenire Energy and ONGC.

In 2023-24, AESL will focus on expanding its seismic portfolio and further consolidating progress on projects in the CHP and O&M verticals. Additionally, the Company will partake in opportunities presented by the fast- developing nations rapidly growing energy industries.

Financial Review (Consolidated Basis)

Revenue from Operations

Revenue from operations decreased by 57.79% from Rs 25,047.11 Lakhs in 2021-22, to Rs 10,995.14 Lakhs in 2022-23.

Profit After Tax (PAT)

AESL posted a loss of Rs. 4,444.22 Lakhs in 2022-23 compared to profit of Rs. 3,881.11 Lakhs in 2021-22.

Earnings Per Share (EPS)

The EPS/loss per equity share for the year is Rs. (11.77), as against Rs. 10.25 in the previous financial year.

Net Worth

The business net worth stood at Rs. 19,945.25 Lakhs as of March 31, 2023, compared to Rs. 24,157.27 Lakhs as of March 31, 2022.


The debt as of March 31, 2023 stands at Rs. 355.61 Lakhs, compared to Rs. 331.89 Lakhs as of March 31, 2022.

I Particulars

2022-23 2021-22

Debtors Turnover Ratio

0.96 2.21

Current Ratio

1.92 2.30

Operating Profit Ratio

26% 41%

Net Profit/Loss Margin

(40%) 15%

Change in Return on Net Worth

(22.28%) 16%

Risk and Mitigation




Environmental Risk

As the global focus on the consequences of climate change intensifies, non-compliance with environmental standards can have adverse implications for AESL. Such non-compliance may ultimately impact the long-term demand for coal and potentially lead to a decrease in coal prices.

AESL has established a comprehensive Health, Safety, and Environment (HSE) policy to uphold business excellence and prioritize customer satisfaction. Recognizing the nature of the industry, the Company implements environmental protection measures in conjunction with its coal activities to promote environmental conservation.

Supply Chain Risk

AESLs ability to meet clients requirements and market demand is at risk due to the unavailability of raw materials caused by supply chain disruptions.

AESL is continuously making efforts to enhance its supply chain in order to optimize business operations and improve efficiency.

Financial Risk

AESLs financial risk is influenced by factors, such as the ability and willingness to reduce debt, minimize overhead costs, improve critical ratios, and increase profitability. Additionally, the volatility of the Indian rupee further contributes to the financial risk.

AESL has demonstrated a consistent commitment to reducing debt and bolstering reserves and surplus, resulting in an improvement in its expense to sales ratio. These efforts have also contributed to strengthening the balance sheet of the Company.



Geopolitical factors and weather volatility pose significant risks in the energy sector. Additionally, the shift in energy consumption patterns from traditional oil and gas sources to renewable energy sources is another major concern.

AESL has strategically pursued project development in significant oil and gas regions, both domestically and internationally. This approach has helped the Company mitigate potential issues that may arise from a specific location.

Considering the sustained demand for oil and gas, AESL maintains confidence in its business model. Furthermore, the versatility of crude oil that is utilized in various industries, such as plastics, pharmaceuticals, paint, chemicals, and asphalt, serves as a catalyst for the Companys growth.

Competition Risk

The growing number of seismic suppliers in the market could potentially affect AESLs ability to secure deals.

To thrive in this environment, the Company leverages several strategies. This includes offering better prices, nurturing long-term client relationships, and demonstrating a strong track record of successfully completing projects. These factors collectively contribute to the Companys ability to secure contracts.

Regulatory Risk and Legal Risk

AESLs global operations are influenced by the varying legal frameworks in different geographical locations, which can result in variations in its global presentation.

AESLs legal department diligently identifies and adheres to every regulatory obligation, demonstrating a strong commitment to compliance.

Human Resources

AESL values its team as the foundation of its operations and is committed to empowering and motivating them. The primary objective is to nurture the personal and professions development of employees, while also inspiring them to achieve their highest potential. To boost productivity and efficiency, the Company promotes the formation of crossfunctional teams across all hierarchical levels. Additionally, it acknowledges the importance of gender equality by ensuring equal opportunities for women. AESL gives top priority to refining its human resource policies and internal procedures to cultivate a culture of ongoing improvement, heightened accountability, and increased responsibility among its team members.

AESL places a strong emphasis on fostering motivation and enhancing productivity by recognizing individual accomplishments and promoting a culture of continuous improvement. The Companys comprehensive business and human resource strategy prioritizes equality in employment as a fundamental aspect. It is committed to eradicating workplace discrimination at all levels, regardless of any defined characteristics. Furthermore, AESL holds an ISO 9000:2015 certification, which serves as a testament to its dedication to quality management.


AESL places great importance on adhering to environmenta regulations and upholding high-quality standards to ensure the safety of all stakeholders. This commitment is a vital aspect of the Companys operations as it strives for excellence and customer satisfaction. It is dedicated to protecting the health, safety, and security of its employees and all individuals associated with its business. Regular inspections and maintenance are conducted on equipment and assets to prevent potential disasters, and AESL has implemented strict standard operating procedures within its facilities for the well-being of workers and visitors. Furthermore, the Companys personnel undergo extensive training to acquire comprehensive knowledge and understanding of quality, safety, and environmental standards.

Internal Control System

An internal control system ensures the adherence to and adequacy of all internal controls and mechanisms within the Company. The Audit Committee, constituted by the Board of Directors, evaluates the efficacy and sustainability of the internal control systems and suggests improvements, if any. The Company has adequate internal financial controls in place with regards to the financial statements. Such controls were evaluated throughout the year, but no reportable material weaknesses in the design or operations were observed.

Cautionary Statement

Statements in this Report on Management Discussion and Analysis relating to the Companys objectives, projections, estimates, expectations, or predictions may be forward- looking within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results might differ materially from those expressed or implied depending upon factors such as climatic conditions, global and domestic demand-supply conditions, raw material costs, availability, and prices of finished goods, foreign exchange market movements, changes in Government regulations, tax structure, economic and political developments within India and the countries where the Company conducts its business, and other factors such as litigation and industrial relations. The Company assumes no responsibility in respect of the forward- looking statements herein, which may undergo changes in the future on the basis of subsequent developments, information, or events.