Dear Partners and Shareholders
I am delighted to present the Company's Annual Report to you for the year 2018-19. Thishas been a year of challenge and change yet it has also been a year in which we haverealised the opportunities. Today the Company has a market capitalisation of Rs. 246Crores and managed to overcome all the major challenges so far. Despite facing varioushurdles our financial results showed a positive outcome this year. We reported aconsolidated net profit of Rs. 918 Lacs as compared to a net profit of Rs. 1050Lacs in last fiscal year. We know that we still have many miles to go irrespective of whatwe have achieved so far and for this we are well-positioned and have refocused on manyopportunities in the pipeline of projects in 2019-20 to capitalise on our learnings andcapabilities.
The year 2018 marked the decade since the recession after all these years the economicactivity has improved due to easing monetary policies and positive consumer sentiments.The balance sheet of the central banks of the four major economies the UnitedStates Euro Area United Kingdom and Japan quadrupled from pre-crisis level. Howeverhigh household debt uncertainty surrounding geo-political events and rising protectionistrhetoric caused roadblocks in the second half of the 2018. The reason behind thedeceleration from previous year was the trade tension and tariff implementation by majoreconomies. The advanced economies decelerated by 200 basis point to 2.2%. Despite theslowdown the US economy expanded at a good pace on the back of tax-cuts and hikedinterest rate on the US long-term bonds. Emerging Market and Developing Economies (EDME)showed a growth of 4.5% majorly moved by Asian countries. Increased urbanisation growinglabour force and rising middle class have contributed towards boosting growth for theemerging economies.
With conflict surrounding middle Eastern region including Iraq Syria and Yemenrecovery from the collapse associated with the war is now expected to be slower thanpreviously anticipated. In emerging economies India remains one of the attractiveeconomies due to number of factors such as stable Government reforms improvement in easeof doing business localisation and digital transformation.
In 2018 Brent crude oil reached the highest level in the recent past climbing aboveUS$ 80/barrel for the first time in four years before slowing down by the end of the year.Despite the OPEC agreement to curb production for 2018 the global total oil productionincreased sharply. The United States remained the top producing country which wasfollowed by Russia and Saudi Arabia Petrochemicals along with passenger vehicles heavycommercial vehicles and aviation industry will keep the oil and gas demand on rise.Technologically to catch up with the transformation pace more and more oil and gascompanies are looking to implement the Artificial Intelligence (AI) analytics roboticsand block chain to increase efficiency productivity reliability and predictability ofoperations.
India is the third largest consumer of oil in the world after China and the US. Duringthe year it imported 82.59% of crude oil and 45.89% of LNG. India's projected oil demandis going to grow at a rate of 4% during 2016 - 2030 against the world average of 1%. Toattract investment and increase domestic output the Government has decided not to chargeany share of profit on hydrocarbons produced from less explored areas. Access to Seismicdata has led the Government to offer new acreages and it expects the area underhydrocarbon exploration in the country to enhance to 300000 sq km by March 2020. Furtherto accelerate production the Government is to provide concessional royalty if productioncommenced within four years for on land and shallow water blocks and five years for deepand ultra-deep-water blocks.
Our Driving Factors
We have projects at multiple geographies with multiple revenue streams from a varietyof sources. Integrated oil and gas services provided by us help to offer our clients lowcost solution. Our dedicated crew of professionals brings in an experience knowledgeableviewpoint and the ability to overcome challenges. Our crew successfully acquired seismicdata in the border security region of Rajasthan. Also they bounced back stronglypost-monsoon to execute projects in the steep topography and harsh environment of theNorth-Eastern region and Ganga Basin. The repayment of loans helped us to bring down thenet debt to zero and improve our debt to equity ratio.
The Company is continuing to manage projects on tough terrains and under difficultconditions through high level of patience and determination to ensure the best achievableoutcome and have positive effects on customer relations. This was very much reflected inthe financial year 2018-19 despite facing various challenges with a mix of projectssuccessfully closed out before expectation. We successfully completed seismic projects inU.P as well as in Rajasthan. Even where the outcome was not in line with expectations itwas managed to its best conclusion. As the challenge reduces new contracts are coming onstreams which were bid and won. One of these include execution of MOPU upgradation inNigeria and another one we received was a binding letter of Intent from Oilmax Energy forsurface facilities for its Charaideo field in Assam. Moreover the Company has received acontract from ONGC Limited for 2D seismic data acquisition in Himalayan area worth Rs.24.69 Crores and are on course to start operations in financial year 2019-20. Furthermorewe are trying to secure newer projects going ahead.
We see a significant scope of opportunities in the domestic as well as internationalmarkets. Our focus is not just on the seismic business but also we aim to bag the EPCprojects. Apart from this we are confident enough in securing projects in MOPU/O&Msegments. Our credibility has helped us bag orders which will be rewarded in comingfinancial years. Through sub-contracting of projects we continue to improvise ouroperational efficiency and profit metrics by cutting down the fixed and operational costs.
My sincere thanks to long-serving Board members who have contributed in making of theCompany. I would also like to welcome the all the new members on the Board. Apart frombeing the Chief Executive Officer it is a privilege to take over as the Whole-TimeDirector of the organisation. Mr. N.M. Borah has been appointed as the new Chairman whohas extensive experience in the oil and gas exploration and production industry.Simultaneously Mr. Mukesh Jain and Mr. Devesh Bhargava were appointed as the newDirectors. This defines our depth in the Management. I wish them the very best as theywill steer the Company forward into the future.
Thanking our Stakeholders
A heartfelt thanks to our stakeholders which comprise the community clients andsub-contractors around the globe for collaborating with us. We strongly adhere to theregulatory authorities' systematic framework within the industry in which we operate. Webeing a responsible organisation believe strongly in involving locals by nurturing themwith the aim of improving their quality of life and employing more than thousands ofpeople for our seismic operations. To our shareholders thank you for being patient andinvesting in Asian Oilfield Services Limited. We will strive to provide you with a goodlong-term return in the subsequent years to come.
Lastly my thanks to the employees of the various companies within the Group for thecontribution made by them! I wish to extend my gratitude to everyone at Asian OilfieldServices Limited for their persistent work ethic and commitment to the Company. We lookforward with excitement to the challenges and opportunities that lie ahead.
With warm wishes
CEO & Whole-Time Director