ABOUT THE COMPANY
STERLING INTERNATIONAL ENTERPRISES LIMITED (SIEL) a Company established by
Sandesara Group is in the business of providing oil & gas related services. SIEL
operates internationally through its step down overseas subsidiaries. Its activities
include letting on hire of oil rigs, services in seismic data interpretation and oil
trading activities. Following is the brief summary of Operating Companies of SIEL:
BRITISH OIL & GAS EXPLORATION LIMITED (BOGEL) is a company incorporated in
British Virgin Island and is engaged in the business of leasing of oil rigs and associated
services. Currently it owns and operates four high capacity land rigs. It is deployed in
Nigeria. Going forward it is expected to be key business vertical.
STERLING OIL RESOURCES LIMITED (SORL, BVI) is a company incorporated in British
Virgin Island and is engaged
in the business of oil trading.
GEODYNAMICS GEOSPECTRA LIMITED (GDGSL), a company incorporated in British Virgin
Islands and is engaged in the business of providing services in the collection and
interpretation of seismic data. It has its operations mainly in Nigeria.
• GLOBAL ECONOMIC SCENARIO
Global growth, currently anticipated in World Economic Outlook remains on track, with
global output projected to grow by 3.5 % in 2017 and 3.6 % in 2018. Projected global
growth rates for 2017-18, though higher than the 3.2% estimated for 2016, are below
pre-crisis averages, especially for most advanced economies and for commodity-exporting
emerging and developing economies. (Source: IMF.ORG)
• OIL DEMAND AND SUPPLY SCENARIO
Global consumption of petroleum and other liquids is expected to increase to 98.46
million barrels per day in 2017 and to 100.08 million barrels per day in 2018. OECD liquid
fuels consumption is expected to increase from 46.85 million barrels per day in 2016 to
47.14 million barrels per day in 2017 and 47.5 million barrels per day in 2018.
In 2018, supplies from non-OPEC countries are expected at the level of 60.3 million
barrels per day. OPEC crude oil production is expected to average 32.3 million barrels per
day in 2017 and 32.8 million barrels per day in 2018.
According to London (ICIS), Crude oil demand will surpass in the fourth quarter of 2018
the psychological barrier of 100m bbl. /day on the back of 1.4m bbl. /day higher annual
demand growth as China and India command 44% of the rise in demand. Within the non-OECD
[developed countries] complex, Asia accounts for around two-thirds of the potential growth
and, in turn, China and India combined contribute two-thirds of the non-OECD Asian gain.
Furthermore, so important are these two countries to global demand that they will
contribute 44% of the global growth forecast in 2018,
It is further expected that supply growth from the US, Brazil, and members of the
Organization of Petroleum Exporting Countries in 2018 will contribute to world oil
inventories increasing by 100,000 b/d in 2018, with the largest builds expected in that
years second quarter. EIA also forecasts that implied global petroleum and liquid fuels
inventories will decline by 200,000 b/d in 2017 and then increase by an average of 100,000
b/d in 2018.
OPEC crude oil production is expected to average 32.3 million b/d in 2017 and 32.8
million b/d in 2018. The lower forecast takes into account OPECs announcement regarding
the extension of its production cuts.
• OIL PRICE SCENARIO
According to EIA, With lower forecast production from OPEC, EIA expects global oil
inventories to decline by an average of 200,000 b/d in 2017. If inventory draws of this
magnitude materialize in the coming months and gross US refinery runs remain above 17
million b/d, the possibility exists for some upward pressure on crude oil prices. EIA
expects Brent spot prices to average $54/bbl. in this years third quarter, up from an
average of $50/bbl. However, because US tight-oil production is relatively responsive to
changes in oil price, and given an estimated 6-month lag between a change in oil prices
and realized production, higher crude oil prices in mid-2017 have the potential to raise
US production in 2018.
China is the worlds largest net importer of crude oil, and in recent years Chinas
crude oil imports have increasingly come from countries outside the Organization of the
Petroleum Exporting Countries (OPEC), according to the US Energy Information
Administration. Leading non-OPEC suppliers included Russia (14 per cent of total imports),
Oman (9 %), and Brazil (5 %).
Among non-OPEC producers, other than the United States, declining liquids production in
some areas is expected to be countered by rising production in other areas, with total
liquid fuels production rising by 0.2 million b/d in both 2017 and 2018. Some of the
largest declines are expected to be in Mexico and in China. However, EIA expects
production growth in Canada, Brazil, and Kazakhstan to contribute to overall non-OPEC
increases.
(Source: EIA Outlook)
• STRATEGY
Operational Excellence
The Company has best in class technologies that provide better control over the
drilling phases and software used by drilling engineers improves safety and reduces the
time/cost of drilling activities.
Financial Improvement
Due to negative atmosphere of Oil and Gas industry, Companys performance during last
year was negatively impacted. It is expected to improve going forward with expected
stability in Oil prices. The Company proposes to restructure the existing debt and expects
steady cash flow to support the financial requirements.
Customer Focus
The Company is conducting the business with established customers of Oil & Gas
industry having a track record in Oil and Gas exploration and Production business. The
companys well-trained employees are able to offer customers premium service support for
all of their drilling needs.
Innovation
Technology plays a pivotal role in the Oil & Rigs industry. With tradition of
innovation, the Company uses the latest technologies in all of its dealings.
Human Resources
The Company is dynamically engaged in identifying people/ employees with high skill
& performance & also continue to emphasis on the training and development of its
work force for better productivity and job satisfaction.
• FINANCIAL PERFORMANCE
The financial statements of the Company have been prepared in accordance with Indian
Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards)
Rules, 2015 (as amended from time to time). The Company has adopted Ind AS w.e.f. April
01, 2016.
The highlights of Sterling International Enterprises Limiteds (SIEL) consolidated
financial performance for FY 2016-17 are as follows:
Revenue from Operations was Rs.4,633.86 million Loss Before taxation was (1060.90)
million Loss after taxation was (1058.02) million
Net Worth as at March 31, 2017 stood at Rs.20,682.20 million
• TOTAL INCOME
SIELs consolidated total income from operations for the current year is Rs.4,633.86
Million as compared to the total income of Rs.4,398.98 Million in the previous period. The
company is focusing more towards its business of leasing drilling rigs considering the
potential of this business.
• LOSS AFTER TAX
Profit after tax for the current year stood at (1,058.02) million as compare to
(199.75) Million last year.
• BALANCE SHEET OVERVIEW: Net Worth
During the year, Share capital of SIEL remained unchanged at Rs.271.40 million divided
into fully paid equity shares of Rs.1 each. Net worth of the company for the current year
stood at Rs.20,682.20 Million.
Net Fixed Assets
The Companys consolidated net fixed assets and capital work in progress stood at
Rs.12,942.30 Million, compared to Rs.15,942.82 Million as at previous year end.
• OPPORTUNITIES & THREAT
Macro-Economic Environment
From a global macro-economic prospective, two major factors are affecting the oil
exploration activities, (i) the general economic slowdown in the emerging economics and
(ii) reduction in oil prices. The majority of the Companys assets are deployed with the
small-medium terms contacts, mitigating the business from the economic volatility
Strengthening Economic Partnerships
In the current sluggish economic environment, there are many potential opportunities
that African leaders can tap into. Nigeria, Africa is creating a opportunities that will
be about strengthening the economic integration within the various regional economic
communities, in order to increase intra-African trade.
Cyclical Nature of Industry
Slowdown in the global economy & reduction in oil prices have not lead to a
complete stoppage in oil exploration industry, validating the inherent industry vitality.
Rig day rates did not decline proportionately with the decline in crude prices. But in the
event if oil prices persisting at low rates for an extended period, oil exploration majors
may be forced to cut explorations and drilling activities to conserve the liquidity.
As long as onshore oil exploration continues, there will be sufficient opportunities to
the rig industry and will also create opportunities for services related to collection and
interpretation of seismic data.
Oil Price fluctuations
The feasibility of global oil exploration & drilling industry is directly depended
on crude oil prices. The last year was marked as bad year for oil market and Oils plunge
below $50/bbl from triple digits a year ago has seen demand react more swiftly than supply
and it is continued in the present year also.
Health Safety & Environment Rights
All our operations are carried out in strict compliance with relevant health, safety
and environmental regulations coupled with compliance of all statutory obligations
concerning human resources. The company has a well-defined Preventive Maintenance System
(PMS) in place to ensure optimum utilization of equipment.
Technology
Normally, oil rigs is having a life span of longer years. Presently, the Company is
operating four high capacity land rigs. We have been continuously using innovative
practices and new technology to reduce the environmental impact with the aim of reducing
costs related to remediation and waste disposal.
• INTERNAL CONTROL SYSTEM
The Company has satisfactory system of internal controls commensurate with size and the
nature of business activities. These have been designed to ensure that the assets are
safeguarded from unauthorized uses or losses. The Company has internal audit system and it
meets the Statutory Auditors to ascertain, inter alia, their views on the adequacy of
internal control system in the Company. It also assesses the Companys strategic risk
management policy and suggests risk mitigation measures for all the key operations.
• HUMAN RESOURCES, INDUSTRIAL RELATION & STATUTORY COMPLIANCES
The Company always recognized the important role their employees in the organization.
The Company is providing modern workplace considering the health & safety measures to
improve the productivity of human capital. The training, incentives and appraisals
programs are conducted on regular basis.
The industrial relation was harmonious and friendly throughout the year.
The Company is regular in statutory compliances.
• WAY FORWARD
The drilling industry is based on certain external key factors like fluctuating oil and
gas prices and changes in the exploration and development budgets of field developers.
Going forward, the Companys operations involving leasing of rigs on hire is expected to
remain key business driver and is expected to show improvement in the coming years. The
company will continue to focus on operations at Africa region where it has strong
presence.
|
For and on behalf of the Board of Directors |
|
|
Chetan Sandesara |
Nitin Sandesara |
| Place : Mumbai |
Director |
Director |
| Date : May 29, 2017 |
(DIN: 00255671) |
(DIN: 00255496) |
+91-9892691696
