On behalf of the Board of
Directors and on my personal behalf, it is my pleasure to extend to each one of
you a cordial and warm welcome to the Twelfth Annual General Meeting of your
Company.
The report of the directors
on the performance of the company during the financial year 2000-01 and the
annual statement of accounts are with you and with your permission, I shall
take them as read.
Current economic scenario:
The recent terrorist attack in US has given a body blow to the US economy,
which is reverberating in the other economies as well. Our economy is no
exception. This has led to a period of uncertainty all over the globe. In
India, this uncertainty is further compounded by the slowdown in the Indian
economy. The deceleration of economic activity for the second year in
succession is a matter of concern. After a long time, exports have declined by
4.8% in June this year compared to a growth of 25% last year. The import bill
especially of crude oil is ballooning adding to the overall import bill of the
country. However, leading indicators of industrial activity and business
confidence suggest that modest recovery in the industrial sector is likely in
the second half of the year. The prime minister’s recent pronouncement on the
resolve of the government to arrest the economic slowdown may add to the
business confidence. The lifting of sanctions by the US on India also is
expected to have a soothing effect on the economy. However, there is an urgent
need to enhance the production of crude domestically and increase refining
capacity to lessen the burden on the oil pool deficit.
Financial closure
achieved:
As far as your company
is concerned, I am happy to report that the 10.5 MMTPA Refinery Project has
achieved full financial closure and the company is at an advanced stage of
complying with certain pre-disbursement conditions stipulated by the financial institutions
and banks, after which the work at the refinery site will resume. The
implementation of the refinery is 63% complete and the amount invested on the
same is Rs6300 crore (including expenditure on terminal) as on June 30, 2001.
After restarting the project work, the refinery is expected to be commissioned
within 18 to 24 months.
EOL eligible for
retail marketing:
The government is proceeding
ahead with the deregulation of the Oil sector as scheduled. You will be happy
to know that your company has become eligible to market petro products as per government
guidelines. Your company’s marketing division is preparing for the challenging
task of dealing with the free market situation that will be ushered in by April
2002, when the Administered Price Mechanism is likely to be dismantled. Even
though there is an oversupply in the near term in petro-products, the long-term
prospects look encouraging.
Your company plans to be
ready with the supply and distribution model, comprehensive retail marketing
plan, including brand strategy and efficient marketing organization including
participation in disinvestment programs of IBP to leverage this opportunity. In
line with this strategy, your company has initiated process to open about 1700
retail outlets in the next 3-4 years.
I am pleased to inform you
that your company has been pre-qualified for bidding for acquisition of stake
in privatization proposal of IBP, a public sector marketing company. If this
materializes, your company will have a strong competitive edge to market its
products.
Exploration in top
gear:
On the Exploration and Production front, your company has made substantial progress
during the year. This division commenced drilling of its first exploratory well
in the Rajasthan onshore Block, RJ-ON-90/5, in February 2001 and has since
completed the well with encouraging results. Plans are afoot to drill another
well in close proximity to the first well to fully establish the potential of
this block. Meanwhile, your company has inducted the Romanian National Oil
Company – Petrom S.A. as operator with 21% participating interest in an
offshore Block BB-OS/5 located north of Mumbai High oil field. This company,
besides sharing the risk associated with the exploration, will also impart the
state-of-the-art technology for better implementation. An offshore well is
planned to be drilled in the last quarter of 2001 in this block. In addition,
exploration work is commencing on the prospective Cachar block, CR-ON-90/1,
lying in the petroliferous North-East where, in the first phase, we are
required to acquire seismic data.
Ratna ready for
signing PSC:
Your company has completed the formalities pertaining to the Production Sharing
Contract (PSC) for the Ratna and R-series fields near Ratnagiri and is awaiting
the final signing.
Foray into CBM
exploration:
Your company had also evaluated the current coal bed methane (CBM) offering by
the Government of India and has bid for three prospective blocks in the coal-rich
Damodar Valley. We expect that during the current year, approval of the government
would be received for conducting CBM exploration in Block CB-ON/3 in the
Mehsana District of Gujarat where, your company drilled three wells earlier to
establish the CBM potential.
Energy division
doing well:
The Energy division of your company continues to perform well in view of high
oil prices internationally. This has led to a sharp increase in the utilization
of land rigs and hardening of charter rates. It is expected that the occupancy
of rigs will stay high in the near term. Your company has currently contracts
worth about US$ 80 million in hand. Two rigs in Oman, which were coming off
contract, during April 2000 to March 2001, have received extensions, which
ensure continued deployment through the current financial year. With current
market trends, three rigs coming off contracts are expected to get fresh
employment at better rates. Two rigs have become operational in the Saudi
market, one of which in the last financial year and one during this year. This
has added to the growth in energy business. These developments are expected to
generate substantial demand for drilling contractors in the coming years and
the company is expected to obtain a good deal of business.
As I said last year, it is
our dream to make your company globally competitive and a force to reckon with,
we shall strive and endeavor to achieve this goal with single-minded dedication.
I seek your whole-hearted support to make this a reality. I thank you for
sparing your valuable time to be here with us today. I thank all the employees,
bankers, stakeholders and my fellow Board members for their encouragement and
support during the year.
Thanking you,
Chairman
Note: This does not
purport to be the proceedings of the 12th Annual General Meeting held on
September 28, 2001.
