Oil Country Tubular Ltd Management Discussions

a) Structure and Developments, Opportunities and Threats, Performance, Outlook, Risks and Concerns:

The Company had undergone Corporate Insolvency Resolution Process (CIRP) during the period 28 January 2020 to 20 September 2022, and there have been very minimal operations during the CIRP period. The Company having come out of CIRP process restored the Plant & Machinery to fully functional status and started executing the Orders from June 2023.

The Government of India under the Make in India Policy decided that Government / Public Sector Agencies will procure the requirement only from indigenous sources through Government-e-Marketplace (GeM) Portal when even a single manufacturer is available in India, which benefits the Indian manufacturers.

The Company received Orders from OIL on development basis and on successful execution of these Orders; the Company will be technically qualified for different products. Since the Company does not have a supply record for the past three years, the fastest way of getting technically qualified is by executing the Development Orders. Though the Company has a supply record of more than three decades, the Bid Evaluation criteria does not consider the same. With regard to the financial criteria, the Company will be meeting the turn over criteria for the small tenders from April 01, 2024 and will be bidding for the same.

The Company has given representations to ONGC/ OIL to relax/ amend the Bid Evaluation Criteria which will enable OCTL to participate in all the Tenders. Primarily, the Bid Evaluation Criteria are based on the past three years record, which the Company does not have as there were practically no operations due to NCLT process. The Company also gave representation to the Ministry of Steel and the Standing Committee under DMI&SP Policy in its meeting with ONGC, OIL and Company representatives, discussed the matter and the Standing Committee recommended to ONGC to hand hold industries under crisis and not to lose potential manufacturing capacity.

The Company is hopeful that ONGC and OIL will consider the recommendation of the Standing Committee and relax the Bid Evaluation Criteria which will enable OCTL to participate in all the Tenders.

The Company has approached the Banks for Non-fund based working capital limits of Rs. 100 Crores covering Bid Bonds, Performance Bank Guarantees and Letter of Credit for raw material procurement. The Company is hopeful of sanction of NonFund based Working Capital limits by the second quarter ending.

The Crude oil prices are on the rise and it is an indication of increased requirement of tubulars for the exploration and drilling activities. The requirement of tubulars is more than 100,000 MT in India and the Company expects to have orders for the supply of premium connections and drilling products. Further, the Company is also bidding for supply of drilling products internationally and expects to convert them to Orders during the year.

Internal Control Systems and their Adequacy:

Management has put in place effective Internal Control Systems to provide reasonable assurance for:

• Safeguarding Assets and their usage.

• Maintenance of Proper Accounting Records and

• Adequacy and Reliability of the information used for carrying on Business Operations.

Key elements of the Internal Control Systems are as follows:

(i) Existence of Authority Manuals and periodical updating of the same for all Functions.

(ii) Existence of clearly defined organizational structure and authority.

(iii) Existence of corporate policies for Financial Reporting and Accounting.

(iv) Existence of Management information system updated from time to time as may be required.

(v) Existence of Annual Budgets and Long Term Business Plans.

(vi) Existence of Internal Audit System.

(vii) Periodical review of opportunities and risk factors depending on the Global / Domestic Scenario and to undertake measures as may be necessary.

The Company has appointed an Independent Auditor to ensure compliance and effectiveness of the Internal Control Systems in place.

The Audit Committee is regularly reviewing the Internal Audit Reports for the auditing carried out in all the key areas of the operations. Additionally the Audit Committee approves all the audit plans and reports for significant issues raised by the Internal and External Auditors. Regular reports on the business development, future plans and projections are given to the Board of Directors. Internal Audit Reports are regularly circulated for perusal of Senior Management for appropriate action as required.

Normal foreseeable risks of the Companys assets are adequately covered by comprehensive insurance. Risk assessments, inspections and safety audits are carried out periodically.

b) Financial and Operational Performance:

The Highlights of Financial Operational Performance are given below: ( In Lakhs)

c) Human Resources Development and Industrial Relations:

The Company has constituted an Internal Complaint Committee (ICC) in pursuant to the provisions of Companies Act, 2013 for prevention, prohibition and redressal of complaints / grievances on the sexual harassment of women at work places, Industrial Relations.

d) Cautionary Statement:

Statements in the Management Discussion and Analysis and Directors Report describing the Companys strengths, strategies, projections and estimates, are forward-looking statements and progressive within the meaning of applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors. Readers are cautioned not to place undue reliance on the forward looking statements.