Jindal Drilling & Industries Ltd Directors Report.

To the Members,

Your Directors are pleased to present the 36th Annual Report, together with the Companys audited financial statements for the financial year ended March 31, 2020.

FINANCIAL RESULTS (Rs in crore)

Particulars 2019-20 2018-19
Revenue 216.2 207.39
Other Income 33.63 53.92
Total Income 249.83 261.31
Expenditure excluding Interest & Dep. 178.11 199.49
Interest 12.55 12.55
Profit Before Depreciation & Tax 59.17 49.27
Depreciation 25.76 8.94
Profit Before Tax 33.41 40.33
Income Tax 7.2 6.22
Net Profit 26.21 34.11

RESULTS OF OPERATIONS

Total income of the Company during the year was Rs 249.83 crore as against Rs 261.31 crore in the previous year. The Company earned profit of Rs 33.41 crore as against profit of Rs 40.33 crore in the previous year and net profit of Rs 26.21 crore as against net profit of Rs 34.11 crore in the previous year. During the year Company operated 5 Jackup Rigs, 6 Directional Drilling sets (on average basis) and 22 Mud Logging units.

There is no change in the nature of business of the Company during the year.

DIVIDEND

Your Directors are pleased to recommend dividend of Rs 0.50/- (i.e. 10%) per equity share of Rs 5/- each, for the year ended 31st March, 2020, subject to the approval of the members at the ensuing Annual General Meeting.

TRANSFER TO RESERVES

During the year, no amount is proposed to be transferred to the General Reserves.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of Section 129(3) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 the Company has prepared Consolidated Financial Statements as per Indian Accounting Standard Ind AS- 110 on Consolidated Financial Statements read with Ind AS- 27 on Interest in Joint Ventures. The Audited Consolidated Financial Statements along with Auditors Report thereon forms part of this Annual Report.

JOINT VENTURE COMPANIES

Your Company has two Joint Venture Companies namely, Discovery Drilling Pte. Ltd. (DDPL), Singapore and Virtue Drilling Pte. Limited (VDPL), Singapore.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Raghav Jindal, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. During the year, Mr. Saurabh Agrawal appointed as Company Secretary & Compliance Officer with effect from 10th April, 2019. During the year under review, your Company has appointed Mr. Raj Kamal Aggarwal as an Additional Director of the Company in the category of Non-Executive and Non-Independent Directors w.e.f. February 07, 2020. The Board recommends his appointment as Non-Executive and Non-Independent Director of the Company. The Company has received a notice, in writing, under Section 160 of the Act proposing the candidature of Mr. Raj Kamal Aggarwal.

At the 35th Annual General Meeting of the Company, the members approved the re-appointment of Mr. Krishna Kumar Khandelwal, Mr. Vijay Kumar Kaushik and Mrs. Saroj Bhartia as Independent Directors of the Company for a second term of 5 (five) consecutive years on the Board of the Company w.e.f. from September 26, 2019 to September 25, 2024.

In the opinion of the Board, the Independent Directors appointed/re-appointed during the year under review are persons of high repute, integrity and possess the relevant expertise and experience in their respective fields.

All Independent Directors of the Company have given declaration that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In the opinion of the Board, Independent Directors fulfil the conditions specified in the Act, Rules made thereunder and Listing Regulations and are independent of the management.

During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company. Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company are Shri Radhey Shyam Gupta, Chief Executive Officer, Mr. Saurabh Agrawal, Company Secretary and Shri Pawan Kumar Rustagi, Chief Financial Officer as on March 31, 2020.

BOARD MEETINGS

During the year 2019-20, 5 (Five) meetings of the Board of Directors were held. The details of meetings are given in the Corporate Governance Report, which forms part of this report.

BOARD EVALUATION

The Board of Directors has carried out the Annual performance evaluation of its own, Board Committees and Individual Directors pursuant to the provisions of the Companies Act, 2013 and the Corporate Governance requirements as prescribed under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The performance of the Board was evaluated by the Board after seeking inputs from all Directors on the basis of the criteria such as Board composition and structures, effectiveness of Board processes, information and functioning etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of the criteria such as composition of Committees, effectiveness of Committee meetings etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the criteria such as contribution of the Individual Director to the Board and Committee meetings.

Also in a separate meeting of Independent Directors, performance of Non-Independent Directors, Board as a whole and the chairman was evaluated, taking into account the views of Executive and Non-Executive Directors. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Companys policy on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Directors and other matters provided in Section 178(3) of the Companies Act, 2013 has been disclosed in the Corporate Governance report, which forms part of the Directors Report.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of the Companies Act, 2013 read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the Rules"), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF Authority after the completion of 7 years. Further, according to the 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 transferred unpaid/ unclaimed dividend for the FY 2011-12 along with relevant shares to the Investor Education and Protection Fund (IEPF). The details are also available on the website of the Company www.jindal.com

RISK MANAGEMENT

Adequate measures have been adopted by the Company to anticipate, plan and mitigate the spectrum of risks it faces. All working sites are analyzed to minimize risks associated with protection of environment, safety of operations and health of people at work and monitored regularly with reference to statutory regulations and guidelines. Improving work place safety continued to be top priority at working site. The Companys business operations are exposed to a variety of financial risks such as market risks (foreign exchange risk, internal rate risk and price risk), Liquidity risk etc.

The Board has approved the Risk Management Policy of the Company and authorized the Audit Committee to implement and monitor the Risk Management plan for the Company and also identify and mitigate the various elements of risks, if any, which in the opinion of the Board may threaten the existence of the Company.

INTERNAL FINANCIAL CONTROLS

As per the provisions of Section 134(5)(e) of the Companies Act, 2013 the Company has in place adequate Internal Financial Controls with reference to the Financial Statements. Audit Committee periodically reviews the adequacy of internal financial controls. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, your Directors state:

(i) that in the preparation of the Annual Accounts for the year ended 31st March, 2020, the applicable accounting standards had been followed and there are no material departures; (ii) that the accounting policies selected and applied are consistent and the judgments and estimates made 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 financial year and of the profit of the Company for that period; (iii) that proper and sufficient care has been taken 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) that the Annual Accounts for the year ended 31st March, 2020 have been prepared on a going concern basis.

(v) that 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; and (vi) that the Directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return, as required under Section 92(3) of the Companies Act, 2013, in form MGT-9 is annexed with this Report and the same is also available on the website of the Company i.e. www.jindal.com.

AUDIT COMMITTEE

The Audit Committee of the Company consists of Shri K. K. Khandelwal, Chairman, Shri D. P. Jindal and Shri Vijay Kaushik as its other members. The terms of reference are in conformity with the requirements of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 including Part C of Schedule II of SEBI (LODR) regulations, 2015.

VIGIL MECHANISM

The Company has adopted a Whistle blower policy and has established the necessary Vigil Mechanism for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of conduct. The said policy has been disclosed on the Companys website under the web link http://jindal.com/jdil/pdf/Vigil-Mechanism-JDIL.pdf

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility Committee has formulated a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of the CSR Policy and recommending the amount to be spent on CSR activities, which has been approved by the Board. The CSR Policy may be accessed on the website of the Company. The Annual Report on CSR activities in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 is appended as Annexure to this Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, guarantees and investments have been disclosed in note no. 39 of the notes forming part of the Standalone Financial Statements of the Company.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All contracts/ arrangements/transactions entered into by the Company with the related parties during the year were in the ordinary course of business and on an arms length basis.

Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are appended in Form AOC-2 as Annexure to this Report.

CORPORATE GOVERNANCE REPORT

Your Company has been practicing the principles of good Corporate Governance over the years. The Company has complied with the Corporate Governance requirements as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A seprate section on Corporate Governance Report along with a Certificate of the Auditors of your Company confirming the compliance, is annexed and forms an integral part of this report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of your Companys performance is discussed in the Management Discussion and Analysis Report which forms part of this Annual Report.

INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has constituted an Internal Complaint Committee under Section 4 of the Sexual Harassment of Women at Workplace (Preventions, Prohibition and Redressal) Act, 2013. Mr. Saurabh Agrawal appointed a member of such committee during the year. Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is as under: a. number of complaints filed during the financial year-NIL b. number of complaints disposed of during the financial year-NIL c. number of complaints pending as on end of the financial year-NIL

AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and rules framed thereunder, M/s Kanodia Sanyal & Associates, Chartered Accountants; (FRN-008396N), were appointed as Statutory Auditors of the Company from the conclusion of 33rd Annual General Meeting of the Company until the conclusion of 38th Annual General Meeting.

AUDITORS REPORT

The observations of the Auditors are explained wherever necessary in the appropriate Notes on Accounts. The Auditors Report does not contain any qualification, reservation or adverse remark except given below: The Directors wish to state that the Statutory Auditors of the Company has given modified opinion on the Consolidated Financial Statements of the Company for the year ended 31st March, 2020. The qualification in the Consolidated Financial Statement and management response to the aforesaid qualification is given as under:-

Auditors Qualification Managements Reply
a. Details of Audit Qualification: We draw your attention to the following qualifications to the Auditors Report of the financial statements of Virtue Drilling Pte Ltd and Discovery Drilling Pte. Ltd, both Joint Ventures Companies of the Parent Company issued by an independent firms of Singapore vide its Report dated June 26, 2020 and June 26, 2020 respectively reproduced by us as under : Impact is not quantified by the Auditor, As per management, valuation of Investment is fair.
In Virtue Drilling Pte Ltd: -
The Company has investment in unquoted shares of US$64,517,969 (2019:US$148,597,969) held in its related parties. These investments are carried at their original cost of investments as management is of the view that cost approximates fair value. Management has not determined the fair value of these investments using acceptable valuation methods as required by FRS 109, financial instruments. Consequently, we are unable to determine whether any adjustments to the carrying value of the investments as at March 31, 2020 would be required to be made. Since investment in non-listed companies, management could not obtained valuation report.
In Discovery Drilling Pte Ltd.: -
The total assets of the company as at 31 March 2020 include investment securities comprising of investment in equity shares amounting to US$ 1,499,460 (2019: US$ 2,354,460) and investment in perpetual preference shares amounting to US$ 14,299,742 (2019: US$ 150,479,742). The company has classified the investment securities at fair value through other comprehensive income. As per FRS 109 these investments have to be stated at fair value on the date of adoption and should be re measured at fair value at every subsequent reporting date. The management has estimated that the cost of these investments approximates its fair value and hence no fair value gain or loss were recognised. However, we are unable to satisfy ourselves on the fairness of valuation of investment securities amounting to US$ 15,799,202 (2019: US$ 73,634,202) out of the total amount of investment securities referred above. There were no other alternative audit procedures that we could perform to satisfy ourselves on the accuracy and valuation of investment securities. We were unable to determine and quantify whether any adjustments might have been found necessary in respect of investment and the elements making up the statement of comprehensive income, statement of changes in equity and statement of cash flows.
Also, during the year the company accounted for fair value loss on investment securities amounting to US$ 855,000. However, we are unable to verify the basis of the impairment and fair value of the financial instrument.

SECRETARIAL STANDARDS

The Directors state that applicable Secretarial Standards i.e. SS-1 and SS-2 relating to ‘Meetings of the Board of Directors and ‘General Meetings respectively have been duly followed by the Company.

SECRETARIAL AUDIT

The Board has appointed Mr. Namo Narain Agarwal, (FCS No. 234) Company Secretary in practice to conduct Secretarial Audit for the financial year ended 31st March, 2020. The Secretarial Audit Report for the year ended 31st March, 2020 is annexed herewith as an annexure to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

ANNUAL SECRETARIAL COMPLIANCE REPORT

The Company has undertaken an audit for the financial year 2019-20 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder.

The Annual Secretarial Compliance Report has been submitted to the stock exchanges.

FIXED DEPOSITS

The Company has not accepted any deposits from Public within the meaning of the directives issued by the Reserve Bank of India, provisions of section 73 to 76 of the Companies Act, 2013 and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the Balance Sheet.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 is annexed hereto.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed with this report. Particulars of employees, as required under Section 197(12) of the Companies Act, 2013 (Act) read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report. However, in pursuance of Section 136(1) of the Act, this report is being sent to the shareholders of the Company excluding the said information. The said information is available for inspection by the members at the registered office of the Company during working hours up to the date of the Annual General Meeting. Any member interested in obtaining such information may write to the Company Secretary at the corporate office of the Company.

COST RECORDS

The maintenance of cost records, as specified by the Central Government under sub section (1) of Section 148 of the Companies Act, 2013 is not required by the Company and accordingly such accounts and records are not being maintained.

MATERIAL CHANGES & COMMITMENTS

No material changes and commitments, affecting the financial position of the Company have occurred after the end of the financial year ended March 31, 2020 and till the date of this report.

COURT/TRIBUNAL ORDERS

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

ACKNOWLEDGEMENT

The Board expresses its grateful appreciation of the assistance and co-operation received from Central and State Governments, Clients viz. ONGCL, Oil India, GAIL, GSPC, Banks & Financial Institutions and Shareholders. Your Directors wish to place on record their deep sense of appreciation for the devoted contribution made by the employees and associates at all levels.

For & on behalf of the Board of Directors
D. P. JINDAL
Place : Gurugram
Chairman
Dated : 21st August, 2020 DIN: 00405579