MANAGEMENT DISCUSSION AND ANALYSIS REPORT
FORWARD LOOKING STATEMENT
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.
Ratios |
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 |
|
Chairman |
|
DIN: 00405579 |
Place: New Delhi |
|
Date: 1st August, 2023 |
|
+91-9892691696
