hindustan oil exploration company ltd share price Directors report


The Members of

Hindustan Oil Exploration Company Limited

Your directors have pleasure in placing before you the 39th Annual Report on the business and operations of your Company along with the audited financial statements for the financial year ended March 31, 2023.


(Rs. in lakhs)



2022-23 2021-22 2022-23 2021-22
Revenue from operations 38,104.82 13,050.47 55,891.53 15,572.52
Other Income 2,790.85 1,680.41 879.55 1,146.39
Total Income 40,895.67 14,730.88 56,771.08 16,718.91
Total Expenses 24,528.94 7,711.84 35,831.02 11,224.20
Profit before share of profit of associate, exceptional items and tax 16,366.73 7,019.04 20,940.06 5,494.71
Share of profit of associate - - 11.11 (89.71)
Profit before exceptional items and tax 16,366.73 7,019.04 20,951.17 5,405.00
Exceptional items - (3,436.53) (1,221.99) (3,436.53)
Profit before tax 16,366.73 3,582.51 19,729.18 1,968.47
Tax expense - - 324.36 (30.90)
Profit for the year 16,366.73 3,582.51 19,404.82 1,999.37
Other comprehensive income 3.17 (4.06) 3.17 (4.06)
Total comprehensive income for the year 16,369.90 3,578.45 19,407.99 1,995.31

Note: The above figures are extracted from the audited standalone and consolidated financial statements prepared as per Indian Accounting Standards find AS)


During the year, your Company produced and sold 4.59 BCF of gas and 0.18 million barrels of oil (previous year: 3.39 BCF of gas and 0.08 million barrel of oil). In oil equivalent term the production for the current year is 1.04 mmboe (0.84 mmboe in the previous year).

On a standalone basis, the revenue for the current year has increased to Rs.38,104.82 lakhs from Rs.13,050.47 lakhs in the previous year. Other income for the current year is Rs.2,790.85 lakhs as against Rs.1,680.41 lakhs in the previous year.

The cost towards production expenses has increased to Rs.16,951.92 lakhs compared to Rs.2,225.18 lakhs in the previous year and the total expenses for the current year has increased to Rs.24,528.94 lakhs as compared to Rs.7,711.84 lakhs in the previous year on account of commencement of production from B-80 field. This also includes the non-cash cost of depreciation, depletion and amortisation and finance cost towards unwinding of decommissioning of Rs.3,527.28 Lakhs in the current year as against Rs.2,089.72 lakhs incurred during the previous year.

On a standalone basis, the profit before exceptional items and tax has increased to Rs.16,366.73 lakhs as compared to Rs.7,019.04 lakhs in the previous year. The profit after tax is Rs.16,366.73 lakhs as against the profit of Rs.3,582.51 lakhs in the previous year. The cash and cash equivalent in the company as on March 31, 2023 is Rs.13,866.98 lakhs, compared to Rs.1,327.40 lakhs in the previous year. The gross working capital has increased from Rs.28,531.51 lakhs in the previous year to Rs.61,027.91 lakhs.

On a consolidated basis, revenue from operations has increased from Rs.15,572.52 lakhs to Rs.55,891.53 lakhs and the profit after tax for the current year is Rs.19,404.82 lakhs compared to Rs.1,999.37 lakhs in the previous year.

Capital Expenditure

During the year under review, a capital expenditure of Rs.4,324.02 lakhs ( Rs. 21,617.88 lakhs for previous year) was incurred for development activities in the discovered fields of Block B-80, Rs.501.20 lakhs ( Rs. 75.88 lakhs for previous year) for Dirok and Rs.1.53 lakhs ( Rs. 76.24 lakhs for previous year) for other development activities.

Transfer to reserves

During the year under review, no amount was transferred to the capital reserves of the company. The land and buildings of the company are stated at cost and are not being revalued.

Measures taken to improve the operational & financial performance

Your Company has been appropriately addressing the challenges posed by the evolving situation with renewed vigour, while ensuring the wellbeing of the employees and the communities in which we operate.

Your Company continues to closely monitor any material changes to future economic conditions and manage their impact and costs across the organization.


Your Company has capital requirements to implement its business plans and to continue the development of PY-1, Dirok and other marginal fields at Cambay in the near future, which will be met through internal accruals and the existing working capital by proper scheduling of project activities. Our near-term focus is to secure the best possible value from the excellent set of opportunities presented by our portfolio of discovered resources along with prudent capital allocation and carefully planned market strategies. If necessary, additional capital and debt will be raised to develop the blocks in the existing portfolio and for any inorganic opportunities.


Your Company is positioned on a growth trajectory and is actively pursuing both exploration opportunities and appraisal / development of discoveries established in its existing portfolio. To finance this growth, the Company needs financial resources in the immediate term and hence your Directors do not recommend any dividend for the year


Your Company has not accepted any deposits from public and as such, no amount on account of principal or interest are outstanding as at the balance sheet date.


Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 have been disclosed in the Standalone Financial Statements provided in this Annual Report.


There is no change in the nature of business carried out by the Company.


There is no change in share capital during the year. The company has not issued any shares with differential rights as to voting, dividend or otherwise.


Your Company is now identified as a "Listed entity with no promoter" with effect from March 13, 2023 and is led by a qualified and experienced management team who have experience and knowledge in the oil and gas sector, including in the fields of administration, marketing and human resource management.


Your Company has two subsidiaries namely, Hindage Oilfield Services Limited and Geopetrol International Inc.

Hindage Oilfield Services Limited:

Hindage Oilfield Services Limited (Hindage) is in the business of Oil Field Services (OFES).

Geopetrol International Inc.:

Geopetrol International Inc. (GPII) is a Company incorporated in the Republic of Panama. GPII is registered as a foreign company in India and operates through an Indian Project Office. GPII has 25% participating interest in Kharsang oil field in Arunachal Pradesh.

GPII holds the entire share capital of Geopetrol Mauritius Ltd (GML), a company established under the laws of Mauritius holding Category I Global Business License, which is in the business of investment in oil and gas exploration and services.

GML has an Indian Associate Company viz., Geoenpro Petroleum Limited (Geoenpro), in which GML holds 50% of the paid-up share capital. Geoenpro is the Operator of Kharsang Block with 10% participating interest.

There has been no material change in the business of the subsidiaries. During the year, the Board of Directors of your Company have reviewed the affairs of the subsidiary companies.

Pursuant to Section 129(3) of the Companies Act, 2013, the Indian Accounting Standards (Ind AS) and relevant provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Consolidated Financial Statements of the Company have been prepared which form part of this Annual Report.

Also, a statement containing salient features of the Companys subsidiaries is appended as Annexure - I to the Boards Report in the prescribed Form AOC-1.

Further, in accordance with Section 136 of the Companies Act, 2013, the Annual Audited Financial Statements including the Consolidated Financial Statements and related information of the Company and the Audited Financial Statements of the subsidiary companies are available on the companys website https://www. hoec.com/results-and-reports/annual-reports100/.


The financial statements of the Company reflect its share of assets, liabilities, income and expenditure of the joint venture operations, which are accounted on the basis of available information on a line-by-line basis with similar items in the Companys Accounts, to the extent of the participating interest of the Company, as per various "Production Sharing Contracts" (PSCs) and "Revenue Sharing Contracts" (RSCs). The financial statements of the Unincorporated Joint Ventures are prepared by the respective Operators in accordance with the requirements prescribed by the respective PSCs and RSCs.


As pen SEBI Listing Regulations, the Corporate Governance Report with the Auditors Certificate thereon, and the integrated Management Discussion and Analysis including the Business Responsibility and Sustainability Report are set out in a separate section and form part of this Annual Report.


Pursuant to Section 92(3) read with Section 134(3Ka) of the Act, the Annual Return as on March 31, 2023, is available on the Companys website at https://www.hoec.com/results-and-reports/annual-reports-new/

14. DIRECTORS AND KEY MANAGERIAL PERSONNEL Changes in Directorate during FY 2022-23:

During the year, there were no changes in the Directorship position in the Company.

Further, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.

Key Managerial Personnel:

During FY 2022-23, Ms. Josephin Daisy resigned from her position as Company Secretary on June 30, 2022 and Ms. Deepika CS was appointed as Company Secretary w.e.f. August 12, 2022.

As on March 31, 2023, Mr. P Elango, Managing Director, Mr. R. Jeevanandam, Executive Director & CFO and Ms. Deepika CS, Company Secretary are the Key Managerial Personnel (KMP) of the Company.


The Company has received necessary declaration from each independent director that he/she meets the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In the opinion of the Board, the independent directors fulfil the conditions specified in these regulations and are independent of the management. There has been no change in the circumstances affecting their status as an Independent Director during the year.


Pursuant to the provisions of the Companies Act, 2013 and the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Board has carried out an annual evaluation of its own performance, the Committees of the Board and individual directors. The manner in which the evaluation has been carried out is explained in the Corporate Governance Report.


During the year, eleven (11) Board Meetings were held. The details of meetings are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.


Currently, the Board has five (5) Committees, namely Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee. The composition of the Board and its Committees are provided in the Corporate Governance Report section of this Annual Report. During the year, all recommendations made by the respective Committees were approved by the Board.


The Board of Directors have framed a policy which lays down a framework for the remuneration payable to Directors and other Key Managerial Personnel. The details of the policy are stated in the Corporate Governance Report.


The Board of Directors have framed a policy which lays down a framework for distribution of dividend by the Company in accordance with the provisions of the Act and the Listing Regulations. The details of the policy are available on the Companys website at https://www.hoec.com/grow-with-us/policies/


Details of the remuneration paid to the Executive and Non-Executive Directors of the Company are given in the Corporate Governance Report section of this Annual Report.


All related party transactions that were entered into during the year under review were on an arms length basis and in the ordinary course of business.

Your Directors draw the attention of the members to Note No. 46 to the standalone financial statements and Annexure II to this report which sets out the related party disclosures.


There were no material changes in the business operations since the closure of the financial year.


There were no material orders passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations in future.


The financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS), the relevant provisions of the Companies Act, 2013 and the Rules made thereunder, guidelines issued by SEBI and guidance note on Accounting for oil and gas producing activities (Ind AS) issued by the Institute of Chartered Accountants of India.

The financial statements are prepared under the historical cost convention on accrual basis except for certain financial instruments that are measured at fair values, and guidelines.

In terms of Section 134(5) of the Companies Act, 2013, your directors, to the best of their knowledge and belief and according to the information and explanation obtained by them, state that:

(i) in the preparation of annual accounts for the financial year ended March 31 , 2023, the applicable accounting standards have been followed and there are no material departures;

(ii) they have 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;

(iii) they have 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;

Civ) they have prepared the annual accounts on a going concern basis;

(v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

Cvi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by the Board and Audit Committee, the Companys internal financial controls were adequate and effective during the year under review.


The statement pertaining to particulars of employees including their remuneration as required to be reported under the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 [including any statutory modification(s) or re-enactment(s) thereof, for the time being in force] (the Rules) are set out in Annexure III to this Report. However, as per the provisions of Section 136 of the Act, the Reports and Accounts for the Financial Year 2022-23 are being sent to the Members and others entitled thereto, excluding this statement. The said statement is available for inspection by the members at the Registered Office of the Company during business hours on working days up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary. The disclosures pertaining to the remuneration of Directors, KMP and employees as required under Section 197(12) of the Act, read with Rule 5(1) of the Rules are provided in Annexure III to this Report.


Audit Reports for the financial year ended March 31, 2023:

• The Auditors Report on the standalone and consolidated financial statements forms part of this Annual Report and do not contain any qualifications, reservations or adverse remark.

• The Secretarial Audit Report for the year is included as Annexure IV to this Report and it does not contain any qualification, reservation or adverse remark. The Company complies with all applicable secretarial standards.

• Your Company has maintained cost records which were duly audited in terms of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014. The cost audit report for the financial year ended March 31, 2023 was filed with the Central Government within the prescribed timelines.

• The Internal Auditors findings are discussed, and actions, as required, are taken as per the directions of the Audit Committee on an ongoing basis to improve efficiency in operations.

• Neither the Statutory Auditors nor the Secretarial Auditors have reported to the Audit Committee under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would be required to be mentioned in the Boards Report.

Auditors for the financial year ending March 31, 2024:

Statutory Auditor

At the 36th AGM of the Company held on September 30, 2020, the Members approved re-appointment of M/s. Deloitte Haskins & Sells LLP (FRN: 117366 W/W 100018), Chartered Accountants, as Statutory Auditors for a second term of five (5) years to hold office from the conclusion of the 36th AGM of the Company until the conclusion of 41st AGM.

Secretarial Auditor

In terms of Section 204 of the Companies Act, 2013 and rules made there under M/s. S. Sandeep & Associates, Company Secretaries in Practice are appointed to conduct the secretarial audit.

Cost Auditor

The Board of Directors have appointed Mr. K. Suryanarayanan, a Cost Accountant in Practice, as Cost Auditor of the Company at a fee of Rs.2,00,000 (Rupees Two Lakhs only) plus applicable taxes and out of pocket expenses, subject to ratification of the said fees by the shareholders at the ensuing Annual General Meeting.

Internal Auditor

The Board has engaged M/s. Guru & Ram LLP, Chartered Accountants, as its Internal Auditors. Their scope of work includes review of internal controls and its adherence, statutory compliances, health, safety and environment compliance, compliance towards related party transactions and risk assessments.


The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis section of this Annual Report


Your Company embraces technological innovation and operates in an environmentally responsible manner to provide tangible benefit to all stakeholders. During the year under review, several steps were taken towards conservation of energy and technological advancement. A few of these are listed below:

A) Conservation of Energy:

a) In an effort to become more energy efficient, the Company has taken the following steps:

1. BEE Star rated equipment has been procured, wherever feasible, to minimize energy consumption.

2. To fulfil its duty as a responsible corporate citizen and to adhere to climate change policy, the Company is continuously taking effective steps to reduce Green Houses Gas (GHG) emissions, wherever feasible.

3. As far as possible, in-house power requirements in all operating Blocks are met using natural gas- based generators, with diesel-based generators only being utilized in emergency situations. The

Company is exploring the option of solar energy and is assessing its viability in meeting operational requirements.

4. The Company regularly monitors air emission sources and ambient air quality to ensure that emission levels are below statutory limits.

5. All lights, except emergency lights, have automatic timers installed, which turn them off during daytime, thereby minimizing energy consumption.

6. Ain compressors and fire water jockey pumps are timer controlled to reduce their runtime.

7. Periodical preventive maintenance and condition monitoring of ageing equipment is carried out to increase life expectancy of assets, eliminate premature replacement and lower energy consumption.

8. Designing and project planning are carried out in a way so as to minimize environmental damage and maximize resource efficiency during project execution and life cycle.

9. Installed solar streetlights at various selected locations of our operational areas.

10. Rainwater harvesting carried out to recharge ground water resource at operational areas.

11. Ground water samples in HOEC operational areas are analysed to ensure that quality levels are within the statutory limits.

12. All air conditioner temperatures are set to 250C to optimise power consumption.

13. Calculating Greenhouse gas emission and declaring HOEC Dirok own benchmark of GHG emission reported every year.

14. As part of energy conservation, changing of sodium vapour lamps with LED fittings has been initiated at PY-1 site.

b) Steps taken by the Company for utilizing alternate source of energy: The Company is in the process of formulating a policy for use of solar energy and on pilot basis has successfully experimented by installing solar street lamps at our operational areas in Assam Block.

c) Capital investment on energy conservation equipment: Replaced Manual operated choke valve with remote operated choke valve on one of the high producing well at Dirok field of Assam which helps to reduce frequent travel to wellsites & reduce fuel consumption.

d) Impact of the measures mentioned in (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: Reduction in energy consumption and GHG emissions, as a result of minimal use of air conditioning and deployment of energy efficient systems. This in turn, has led to reduced consumption of power and fuel, thereby resulting in lower costs.

B) Technology absorption:

(a) Technology absorption, adaptation and innovation:

The Company has adopted an energy efficient Modular approach for its Gas Processing Plant in Assam, with Variable Frequency Drives (VFDs) installed in the Plants equipment and machineries.

HOEC is following leak detection and repair (LDAR) program to monitor the gas leaks if any and to arrest the same through standard repair program to control the emission.

To protect an Elephant Corridor in Assam, the Company laid a 21 km long pipeline, 1.5 metres below the ground, from its Gas Gathering Station (GGS) to its Modular Gas Processing Plant (MGPP). This also led to HOEC being able to reduce its footprint in the eco sensitive zone.

A sonic, natural draft, horizontal flare system provided with an enclosure, is being used at the Companys MGPP in Assam, in an effort to reduce harm to the surrounding environment.

HOEC is in process of reducing carbon footprint by major and minor process changes, supplying surplus power to state grid, tea factories etc, and also by creating additional carbon sink through plantation, adopting green energy sources to the extent possible.

Conversion of existing conventional lightings to energy efficient LED lights in a phased manner.

We also plan to adopt new technology like surface jet pump (ejector) to increase well production efficiency.

(b) Remote operated choke valve was imported and installed on one of the high producing well.

(c) No Research and Development expenditure was incurred during the year.

(d) No benefits like product improvement, product development or import substitution were derived during the year

C) Foreign exchange earnings and outgo:

(a) Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans:

Company is engaged in production of crude oil and natural gas. The existing Government policies and Production Sharing Contracts (PSCs), to which Company is a party, is subject to domestic market obligations till self-sufficiency in domestic production of hydrocarbons.

(b) Particulars FY 2022-23 ( Rs. in lakhs) FY 2021-22 (Rs. in lakhs)
Foreign exchange earning Nil Nil
Expenditure in foreign currency:
Operating expenditure 8,956.59 750.57
Capital expenditure 341.20 4,968.58


The Company has in place a CSR policy which is available on our website at https://www.hoec.com/growing- responsibly/csr/ A brief outline of the CSR policy of the Company and the initiatives undertaken on CSR activities during the year are set out in Annexure V of this Report as per the format prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014. The details of the composition and meetings of the CSR Committee are provided in the Corporate Governance Report section of this Annual Report.


The Risk Management Committee identifies and monitors the risks associated with the Companys operations. The Committee is responsible for reviewing the risk factors and ensuring effective mitigation and management. In addition, the Audit Committee oversees the areas of financial risks and controls.

The development and implementation of risk management policy has been covered in the Managements Discussion and Analysis Report, which forms part of this Annual Report.


The Company continues to pursue the best practices to develop its human capital. The Company has a transparent Performance Appraisal System with focus on the organizational objectives aligned with Key Performance Indicators. An objective performance measurement with an assessment of potential and identification of training needs for individual growth are being pursued.

The total permanent employee count, as on March 31, 2023, was 89 and the annualized attrition rate for the year stands at 11.6 %.


The Company has in place a Corporate Policy on Anti-Sexual Harassment of Employees, in terms of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has also been duly constituted and during the year under review no complaints were received from any employee.


Pursuant to the provisions of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (as amended from time to time), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF, after completion of seven years. Further according to the said Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority.

Accordingly, the Company has duly transferred all unclaimed and unpaid dividends and the corresponding shares as per the above requirements to the IEPF. Details of the same are provided in the Shareholder information section of the Corporate Governance Report and are also available on our website at https://www.hoec.com/grow-with-us/shareholder-information05/

Your Company has filed necessary forms with the Ministry of Corporate Affairs in this regard.


The Company confirms that it has paid the Annual Listing Fees as applicable to National Stock Exchange of India Ltd. and BSE Ltd. where the Companys shares are listed.


Your Directors place on record their gratitude for the support and co-operation received from Government agencies namely the Ministry of Petroleum & Natural Gas, Directorate General of Hydrocarbons, Ministry of Defence, Ministry of Environment and Forests and the State Governments of Assam, Gujarat, Maharashtra and Tamil Nadu and the authorities working under them. Your Directors express their gratitude to the Companys stakeholders, shareholders, business partners and bankers for their understanding and support and look forward to their continued support in future. Your Directors value the professionalism, dedication and commitment of the HOEC team to overcome any challenges and to drive growth.

For and on behalf of the Board of Directors

Date : 25-05-2023 P Elango R Jeevanandam Deepika CS
Place: Chennai Managing Director Director & CFO Company Secretary