jindal drilling & industries ltd share price Management discussions



The Statements in the Directorss Report and Managegement Discussion & Analysis Report contains "Forward Looking Statements" about the business, financial performance, skills and prospects of the Company. Statements about the plans, intentions, expectations, belifes, estimates, predictions or similer expression for future are Forward Looking Statements.

Forward Looking Statements should be viewed in the context of many risk issues, and events that could cause the actual performance to be different from that contemplated in the Directors Report and Management Discussion & Analysis Report, including but limited to, risk arising from uncertainities as to future Oil & Gas prices and their impact on investment programmes by Oil & Gas companies and domestic, economic and polotical conditions. We can not assure that outcome of the Forward Looking Statement will be realised and disclaim any duty to update any information in the same.

Global Economic Overview

Global GDP in FY 2023 was affected by the Russia-Ukraine war and resultant dislocations in supply chains, leading to surging food and energy inflation. Central banks raised interest rates sharply in response. This built in expectation of global slowdown and recession. The global GDP is estimated to have grown at a subdued 3.4% in 2022, versus 5.9% in the prior year. It was a year of continued uncertainty and turbulence.

The world grappled with geopolitical tensions, high inflation & increase in cost-of-living. Russias invasion of Ukraine and the ongoing war had a cascading impact as the world saw significant reorientation and adjustment across many economies. According to data from the International Monetary Fund (IMF), countries across the globe were impacted and saw slower growth as compared to robust performance in Calendar Year 2021. In year 2022, Advanced Economies (US, Euro Area, Japan, etc.) grew at a slow pace of 2.7% as against a strong growth of 5% in the year 2021.

The US economy too lost some steam as it managed a growth of 2.1% as against 5.6% in the year 2021. The Euro Area grew shade better clip compared to US at 3.5%. ‘Emerging Markets and Developing Economies considered traditionally as growth engines collectively posted a growth of 4.5% as against 6.5% growth in the year 2021. The worst hit was China which saw the continued impact of COVID-19 during the calendar year as its growth slowed down to 3% against 8.1% in the year 2021. Overall, given the turbulence, the impact was evident as the global economy witnessed a growth of 3.4% for the year 2022 as against a plus 5% for the year 2021.

India Market Overview

In the financial year 2022-23 (FY23) India became the fifth largest economy in the world, surpassing the UK. It also assumed the presidency of the G20 forum for the first time, highlighting the global spotlight on India. The macroeconomic fundamentals of the Indian economy are under control and are showing signs of broad based recovery across industry. Despite the ongoing global headwinds caused by external factors like post-pandemic spill overs, supply chain disruptions due to the escalating Russia-Ukraine conflict and potential recessionary pressures facing developed economies, the Indian economy continued to move ahead and effectively steered the global economic headwinds.

Multiple initiatives by the government including PLI schemes, national logistic reforms, increased spending on infrastructure, robust local demand, conducive domestic policy environment, etc. have helped the country to race past other economies and be the fastest-growing economy among the seven largest emerging markets and developing economies. In this back drop India seems to be in a bright spot with the overall growth remaining at robust level.

Global and Indian Economic outlook

The economic outlook for FY24 continues to be one of uncertainty as the Russian-Ukraine war continues and the chances for further economic disruptions still prevalent. The biggest setback to global economy including India can be due to risk of shortages, lasting inflation, elevated oil and energy prices and rising interest rate environment. According to data from IMF, the global economy growth is expected to fall from 3.4% in 2022 to 2.8% in 2023, before inching up to 3.0% in 2024. Advanced economies are expected to see an especially muted growth from 2.7% in 2022 to 1.3% in 2023.

According to Reserve Bank of India (RBI) and IMF, the overall growth rate for the Indian economy for FY24 is forecasted to be between 6.0-6.5%. The Indian economy is likely to benefit from increased infrastructure spend, banking credit growth, and a possible rural bounce-back due to easing inflation and would continue to be the fastest- growing economy in the world. On the other side, risks include a lower-than-average monsoon, weak global demand, slow pickup of private capex, and FII outflows due to rising US policy rates.

Oil & gas Industry

Amid such uncertain economic and operational uncertainly the company has adopted conservative strategy to mitigate risk. The focus is on reducing cost, increase in operational deficiency, employed safety and conserving cash. The Company is focusing on sustainable profitable growth.

Oil prices started the year on a strong note maintaining their strength due to geo-political factors. Though, this was followed by decline in prices due to weakness in global demand, Fed interest rate hikes and weak growth outlook in major global economies around the world. Brent Crude Oil rose by 19% on a year-on-year basis in FY23 on account of geo-political factors, supply disruptions, and rise in Natural Gas prices. The prices are expected to remain at elevated levels based on current condition.

Review of Operations

Safety performance of Jindal rigs-Discovery I, Virtue I, Jindal Supreme and Jindal Explorer successfully achieved "Zero Accident "in year 2022. Rigs ‘Discovery I and ‘Jindal Supreme completed 6 years without Lost Time Incident.

Training is crucial for enhancement of knowledge and skill enhancement. Jindal Drilling crew undergo regular "Safety Trainings". This has helped in achieving impressive safety records. Regular Training for safety conducted on rigs include Hand & Finger Safety, Heat Stress, Work Place Risk Assessment, Hazard identification etc.

Jindal Drilling has successfully continued to be certified for "ISO 45001:2018 (OHSMS), ISO14001:2015 (EMS) and ISO 9001:2015 (QMS)" by DNV.

All operations and activities have been carried out keeping in view the environmental requirements and we are in compliance with international conventions like MARPOL and national environment regulations under MoPNG.

Green Initiatives taken by rigs include Waste Segregation, Plastic reuse, using Trach Compactor for compressing plastic wastes, Periodic maintenance of equipment to check engine exhausts and green plantations are few to mention.

Operational efficiency and Drilling performance of Jindal rigs over the years have set new benchmarks & have worked at efficiency of more than 99.1%.

In the year 2022, rigs Discovery I, Virtue I, Jindal Star, Jindal Supreme and Jindal Explorer were operational and deployed in Mumbai High offshore fields, West Coast India under ONGC contracts.

The company successfully received renewal contracts at much higher rates upon conclusion of existing contracts.

Rig ‘Jindal Supreme, a "SLOT Category" MODU engaged in drilling exploratory wells has received appreciation from ONGC for successful completion of five numbers of Exploratory wells in FY 2022-23 and achieving highest commercial speed of 3046 m/Rig Month in target well B_57N#D. The cumulative meterage drilled by Jindal Supreme in FY 2022- 23is 11242 mtrs. In October 2022, Team Jindal Supreme deployed at another well B-192#U to explore primary Mukta, L-VI Formation and Secondary Bassein Formation, drilled 17-1/2" section of 1016 meters in 20 hours and created a benchmark for other rigs to emulate, the rig achieved successful drilling along with completing 2330 days of accident- free operation.

Rig ‘Jindal Explorer continued its full-fledged operations under the ongoing ONGC contract.

All 5 rigs have shown excellent operational efficiency and safety performance, along keeping with best industry standards and practices.


FY 2022-23 FY 2021-22 % Change

Debtors Turnover

3.31 2.62 26

Inventory Turnover

13.65 10.40 312

Interest Coverage Ratio

19.90 12.05 653

Current Ratio

1.47 1.33 11

Debt Equity Ratio

0.08 0.15 464

Operating Profit Margin (%)

39.90% 32.13% 24

Net Profit Margin (%)

29.49% 20.67% 435

Explanation of percentage change in ratios greater than 25%

1. Debtors Turnover - Due to increase in turnover and better collection measures.

2. Inventory Turnover - Due to increase in turnover & reduction in inventory.

3. Interest Coverage Ratio - Due to improvement in profitability.

4. Debt Equity Ratio - Due to repayment of long term loan.

5. Net Profit Margin - Due to saving in charter hire rental.

Human Resources

The Company has a firm belief that human capital is core to development of Company and the Company philosophy of wider inclusion and participation from employees has resulted in the transformative growth to enable the Company to reach where it is currently. The pandemic resulted in focus on employee safety which was achieved through an agile workforce and development of world class occupational health and safety protocols. As on 31st march 2023 the Company has a total count of 665 employees.

Risks and Concerns

The Company has in place a robust risk management framework that identifies and evaluates business risks and opportunities. The Company recognises that these risks need to be managed effectively and mitigated to protect the interest of the shareholders and stakeholders, to achieve business objectives and create sustainable value and growth.

Internal controls and systems

The Company believes that internal controls are one of the key pillars of governance, which provides a platform to the management to operate, within a framework of appropriate checks and balances.

The Company has a robust internal control framework, which has been established considering the nature, size and complexity of its operations and risks in the business. The framework comprises, inter alia, a well-defined organisation structure, roles and responsibilities, documented policies and procedures, financial delegation of authority for various business activities, etc.

These policies are complimented by a management information and monitoring system, which ensures compliance with internal processes, as well as with applicable laws and regulations. The Companys internal control environment ensures efficient conduct of operations, security of assets, prevention and detection of frauds/errors, accuracy and completeness of accounting records and the timely preparation of reliable financial information.

The Company has an independent, external Audit Firm that is responsible for providing assurance on compliance with operating systems, internal policies, and legal requirements, as well as suggesting improvements to systems and processes. The Internal Audit monitors and evaluates the efficacy, and adequacy of internal control systems in the Company. The audit is carried out across all functional areas. The independent internal audit functionally reports to the Audit Committee of the Company. Key internal audit findings are presented to the Audit Committee at its quarterly meetings.

Environmental, Social and Governance (ESG)

The Company has identified four key areas of sustainability priority - health & safety, people & society, climate & environment, and responsible business. We recognize the responsibility of our business and our sector to support the achievement of the UN Sustainable Development Goals [SDGs]. Our operations and material topics present particularly strong opportunities to have a meaningful and sustainable impact on the attainment of several SDGs to our business. The Company values engagement with our stakeholders, including our customers, employees, and regulatory bodies, to understand and meet their expectations regarding sustainability, strategy, and we communicate our sustainability performance to them on an ongoing basis through various channels.

The company has a set of policies, processes, and procedures aligned with industry best practices and implemented across our operations for Health, Safety & Environment [HSE]. The system provides a framework for identifying, assessing, and controlling health, safety, and environment risks throughout our operations. The system monitors our HSE performance and continuously improves the necessary safeguards to protect our employees, assets, service providers and customers. Our HSE system is regularly reviewed and updated to ensure that it remains effective in mitigating risks and improving our safety performance.

For and on behalf of the Board

D.P. Jindal


DIN: 00405579

Place: New Delhi

Date: 1st August, 2023