Contents Page # 1 18 th Annual Report - FY

Transcription

1

2 Contents Page # 1. Chairman Message Our Directors, Offices, Auditors & Bankers Notice of 18 th Annual General Meeting Directors Report Report on Corporate Governance Management Discussion and Analysis Report Secretarial Audit Report Extract of Annual Return (MGT-9) Details of Contracts entered into with Related Party Transactions Standalone Financial Statements a. Auditor s Report b. Balance Sheet 55 c. Statement of Profit & Loss 56 d. Significant Accounting Policy & Notes e. Cash Flow Statement Consolidated Financial Statements a. Auditor s Report b. Balance Sheet 84 c. Statement of Profit & Loss 85 d. Significant Accounting Policy & Notes e. Cash Flow Statement Statement containing salient features of the Financial Statement of Subsidiary C & AG Comments on Financial Statements Auditors Certificate on Corporate Governance th Annual Report - FY

3 Chairman s Message Dear Shareholders, It gives me great pleasure to present to you the 18 th Annual Report for the financial year Keeping in view the long term strategy, your company is taking steps to enter the future with a strong foothold. Capability building and Balanced Asset Portfolio are the key focus areas for the future upstream strategy of the company. Company has laid down plans and initiated actions for developing competent team having expertise in all domains of upstream operations. Company is actively pursuing new opportunities for acquisition of producing / near development E&P assets to have a balanced portfolio. With the sharp and sustained fall in crude prices, the year was a difficult period for upstream oil companies. Your company,during the year, has provided for a diminution in value of investment in it s subsidiary company as a prudent measure. However, before providing for this diminution, your company has posted a profit of Rs 2.59 crores, which is higher than the profit posted last year. The company will continue its efforts to build its upstream portfolio keeping in view the long term strategy of the company and market dynamics. We are fortunate to have a dedicated team and we will continue to nurture the talent and capabilities of our people by creating a work environment conducive to innovation and growth. Our customers, business associates and shareholders have always been a source of strength and I thank them for their support. The Ministry of Petroleum & Natural Gas has guided and supported us in all our efforts. We look forward to their continued support in all our endeavours. Thank you, M. K. Surana Prize Petroleum Company Limited 2

4 BOARD OF DIRECTORS Shri Mukesh Kumar Surana Shri P. K. Joshi Chairman (DIN ) Director (DIN ) (w.e.f ) (w.e.f ) Shri J. Ramaswamy Shri B. K. Namdeo Director (DIN ) Director (DIN ) (w.e.f ) (w.e.f ) SENIOR MANAGEMENT Shri Vikram Gulati Chief Executive Officer Shri M. Ananth Krishnan Chief Financial Officer Dr. Prabhakar Thakur Head (Technical) Shri Anup Kumar Ganguly Head (Commercial) Shri Asheesh Garg Company Secretary 3 18 th Annual Report - FY

5 Registered Office Prize Petroleum Company Limited (A Wholly Owned Subsidiary of HPCL) Jeevan Bharati Building, Tower 1, 11 th Floor, 124 Indira Chowk, Connaught Circus, New Delhi Corporate Office Project Office Prize Petroleum Company Limited Prize Petroleum Company Limited (A Wholly Owned Subsidiary of HPCL) Plot No. 851, Opposite Church Lane 3 rd Floor, UCO Bank Building, Sector-8, Sansad Marg, Gandhinagar, New Delhi Gujarat Statutory Auditors M/s BGJC & Associates Chartered Accountants Firm Registration No N C. P. No Raj Tower-1 Ganpati Sadan - 99 Secretarial Auditors M/s Satyender Kumar & Associates Company Secretaries G-1, Alaknanda Community Centre, Sector - 40, New Delhi Gurgaon , (Haryana) Bankers Corporation Bank M-41, Connaught Circus New Delhi State Bank of India 4 th Floor, Main Branch, 11, Sansad Marg New Delhi Prize Petroleum Company Limited 4

6 08 th August 2016 To, Members/ Directors/ Auditors, You are cordially invited to attend the Eighteenth Annual General Meeting (the AGM ) of the members of Prize Petroleum Company Limited (the Company ) on Wednesday, 31 st August, 2016, at 12:30 pm at the Registered Office of the Company in Jeevan Bharati Building, Tower 1, 11 th Floor, 124 Indira Chowk, Connaught Place, New Delhi The Notice of the meeting containing the business to be transacted, is enclosed. Kindly make it convenient to attend the meeting. By Order of the Board of Directors, Asheesh Garg Company Secretary ACS PAN- AJFPG9383G Enclosures: 1. Notice of the AGM 2. Admission Slip 3. Proxy form (MGT-11) 4. Consent by Shareholder for shorter notice 5. Route Map 5 18 th Annual Report - FY

7 Notice for the 18 th Annual General Meeting of the Company (Under the Companies Act, 2013 & Secretarial Standard-II) NOTICE is hereby given that the EIGHTEENTH ANNUAL GENERAL MEETING of the members of PRIZE PETROLEUM COMPANY LIMITED will be held on Wednesday, 31 st August, 2016, at 12:30 pm, at the Registered Office of the Company in Jeevan Bharati Building, Tower 1, 11 th Floor, 124 Indira Chowk, Connaught Place, New Delhi to transact the following business:- ORDINARY BUSINESS 1. To receive, consider and adopt the Audited Financial Statements including Consolidated Financial Statements of the Company for the financial year ended on 31st March, 2016, together with the Board's Report, the Report of Auditors thereon and Comments of the Comptroller & Auditor General of India, in terms of Section 143(6) of the Companies Act, To consider and if thought fit to pass with or without modification(s) the following resolution as an Ordinary Resolution: RESOLVED THAT Audited Financial Statements including Consolidated Financial Statements of the Company for the financial year ended on 31st March, 2016 together with the Board s Report, the Report of Auditors thereon,and Comments of the Comptroller & Auditor General of India, in terms of Section 143(6) of the Companies Act, 2013 as circulated to the shareholders and laid before the meeting be and are hereby received, considered and adopted. 2. To appoint a Director in place of Shri P. K. Joshi (DIN ), who retires by rotation and being eligible, offers himself for reappointment: To consider and if thought fit to pass with or without modification(s) the following resolution as an Ordinary Resolution: RESOLVED THAT Mr. P. K. Joshi (DIN ) who was appointed as a Director of the Company, retires by rotation in terms of provisions of 122 and 142 of Articles of Association, and being eligible for re-appointment under the relevant provisions of the Companies Act, 2013 offers himself for re-appointment, be and is hereby re-appointed as a Director of the Company liable to retire by rotation. SPECIAL BUSINESS 3. Appointment of Mr. J. Ramaswamy as Director of the Company (DIN ): To consider, and if thought fit, to pass, with or without modification(s) the following resolution as Ordinary Resolution(s): RESOLVED THAT in accordance with the provisions of Section 160 of the Companies Act, 2013 and all other applicable provisions, if any, of the Companies Act, 2013 or any Prize Petroleum Company Limited 6

8 statutory modification(s) or re-enactment thereof, Mr. J. Ramaswamy, who was appointed as an Additional Director with effect from 1st October, 2015 pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and Article 129 of the Articles of Association of the Company and who holds office under the said Articles up to the date of this Annual General Meeting and who is eligible for re-appointment under the relevant provisions of the Companies Act, 2013 and in respect of whom the Company has received a notice in writing from a member signifying his intention to propose him as a candidate for the office of the Director, be and is hereby appointed as a Director of the Company liable to retire by rotation. 4. Appointment of Mr. M. K. Surana as Director of the Company (DIN ): To consider, and if thought fit, to pass, with or without modification(s) the following resolution as Ordinary Resolution(s): RESOLVED THAT in accordance with the provisions of Section 160 of the Companies Act, 2013 and all other applicable provisions, if any, of the Companies Act, 2013 or any statutory modification(s) or re-enactment thereof, Mr. M. K. Surana, who was appointed as an Additional Director with effect from 1st April, 2016 pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and Article 129 of the Articles of Association of the Company and who holds office under the said Articles up to the date of this Annual General Meeting and who is eligible for re-appointment under the relevant provisions of the Companies Act, 2013 and in respect of whom the Company has received a notice in writing from a member signifying his intention to propose him as a candidate for the office of the Director, be and is hereby appointed as a Director of the Company not liable to retire by rotation. Kindly make it convenient to attend the meeting. By Order of the Board of Directors Prize Petroleum Company Limited Asheesh Garg Company Secretary ACS PAN- AJFPG9383G Date : 8 th August, 2016 Regd. Off : Jeevan Bharti Building, 11 th Floor, Tower 1, 124, Connaught Place, Indira Chowk, New Delhi th Annual Report - FY

9 NOTES: (a) Explanatory Statement pursuant to Section 102 (1) of the Companies Act, 2013 is enclosed and form part of this notice. (b) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. Pursuant to Section 105 of the Companies Act, 2013 read with Rule 19 of the Companies (Management and Administration) Rules, 2014 a person can act as proxy on behalf of members not exceeding fifty and holding in the aggregate not more than ten percent of the total share capital of the company carrying voting rights. A member holding more than ten percent of the total share capital of the company carrying voting rights may appoint a single person as proxy and such person shall not act as a proxy for any other person or shareholder. (c) The written and duly signed instrument appointing a proxy must be deposited at the Registered Office of the Company not later than forty eight hours prior to the time of commencement of the meeting. (d) Corporate members intending to send their authorized representative to attend and vote on their behalf at the Meeting are requested to send an instrument of proxy duly signed by the authorized official. (e) All documents referred to in the Notice are open for inspection at the Registered Office of the Company during business hours. By Order of the Board of Directors Prize Petroleum Company Limited Asheesh Garg Company Secretary ACS PAN- AJFPG9383G Date : 8 th August, 2016 Regd. Off : Jeevan Bharti Building, 11 th Floor, Tower 1, 124, Connaught Place, Indira Chowk, New Delhi Prize Petroleum Company Limited 8

10 EXPLANATORY STATEMENT IN PURSUANCE OF SECTION 102(1) OF THE COMPANIES ACT, 2013 Item No. 3 Mr. J. Ramaswamy was appointed as an Additional Director on the Board of the company effective 1st October, In terms of Section 161 of the Companies Act, 2013 and Article 129 of the Articles of Association of the Company, he holds office up to the date of the next Annual General Meeting and is eligible for re-appointment. The Company has received a notice proposing the candidature of Mr. J. Ramaswamy for the office of a Director in terms of Section 152 and 160 of the Companies Act, Mr. J. Ramaswamy took charge as Director- Finance of HPCL effective 1st October, Prior to his taking over as Director Finance of HPCL, he was Executive Director-Corporate Finance of HPCL for two years. A Member of the Institute of Chartered Accountants of India, Shri Ramaswamy brings with him rich experience of over 3 decades in handling various challenging assignments in HPCL in the fields of Refinery and Marketing Finance, Internal Audit and Treasury Management. He has also been actively participating in various seminars and workshops at the National level. He is liable to retire by rotation in the company. The Company will be benefitted from Mr. J. Ramaswamy s varied experience. The Board recommends appointment of Mr. J. Ramaswamy as Director of the Company. None of the Directors, Key Managerial Personnel or their relatives are in any way concerned or interested in the passing of above said Resolution, except to the extent of their shareholdings. Item No. 4 Mr. M. K. Surana was appointed as an Additional Director on the Board of the company effective 1st April, In terms of Section 161 of the Companies Act, 2013 and Article 129 of the Articles of Association of the Company, he holds office up to the date of the next Annual General Meeting and is eligible for re-appointment. The Company has received a notice proposing the candidacy of Mr. M. K. Surana for the office of a Director in terms of Section 152 and 160 of the Companies Act, Shri M. K. Surana is a Mechanical Engineer, with Master s degree in Financial Management. He took charge as Chairman and Managing Director of Hindustan Petroleum Corporation Ltd., a Govt. of India Enterprise with effect from 1st April, Prior to this, he was Executive Director HPCL & worked as Chief Executive Officer since last more than three years in the Company. He has been working with HPCL since last more than three decades in various positions at Mumbai refinery, Visakh refinery and Headquarters office. He has vast experience in Oil and Gas industry th Annual Report - FY

11 The Company will be benefitted from Mr. M. K. Surana s varied experience. The Board recommends appointment of Mr. M. K. Surana as Director of the Company. None of the Directors, Key Managerial Personnel or their relatives are in any way concerned or interested in the passing of above said Resolutions, except to the extent of their shareholdings. By Order of the Board of Directors Prize Petroleum Company Limited Asheesh Garg Company Secretary ACS PAN- AJFPG9383G Date : 8 th August, 2016 Regd. Off : Jeevan Bharti Building, 11 th Floor, Tower 1, 124, Connaught Place, Indira Chowk, New Delhi Prize Petroleum Company Limited 10

12 PRIZE PETROLEUM COMPANY LIMITED Registered Office: Jeevan Bharti Building, 11th Floor, Tower I, 124, Connaught Place, Indira Chowk, New Delhi ADMISSION SLIP I hereby record my presence at the 18th Annual General Meeting on Wednesday, 31 st August, 2016, at 12:30 pm at the Registered Office in Jeevan Bharti Building, 11th Floor, Tower I, 124, Connaught Place, Indira Chowk, New Delhi SIGNATURE OF THE ATTENDING MEMBER/PROXY Regd. Folio No. PROXY FORM (MGT-11) [Pursuant to section 105(6) of the Companies Act, 2013 and rule 19(3) of the Companies (Management and Administration) Rules, 2014] CIN : U74899DL1998GOI Name of the Company : PrizePetroleum Company Limited Registered office : Jeevan Bharti Building, 11th Floor, Tower I, 124,Connaught Place, Indira Chowk, New Delhi Name of the member(s) : Registered address : Id : Folio No./Client Id : DP ID : I/We, being the member(s) of shares of the above named company, hereby appoint: Name : Address : Id : Signature : Or failing him/her Name : Address : Id : Signature : th Annual Report - FY

13 As my/our Proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 18 th Annual General Meeting of the Company to be held on Wednesday, 31 st August, 2016, at 12:30 pm at the Registered Office in Jeevan Bharti Building, 11th Floor, Tower I, 124, Connaught Place, Indira Chowk, New Delhi and any adjournment thereof in respect of such resolutions as are indicated below: Resolution No Signed this... day of, 2016 Affix Re. 1/- Revenue Stamp Signature of shareholder Signature of Proxy holder(s) Note: This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours before the commencement of the meeting. Prize Petroleum Company Limited 12

14 THE COMPANIES ACT, 2013 Consent by Shareholder for shorter notice [Pursuant to Section 101(1)] To The Board of Directors Prize Petroleum Company Limited New Delhi Dear Sir, I son of resident of holding equity shares of Rs.10/- each in the Company in my own name hereby give consent, pursuant to Section 101 of the Companies Act, 2013 to hold the 18th Annual General Meeting of the Company to be held on Wednesday, 31 st August, 2016, at 12:30 pm at the Registered Office in Jeevan Bharti Building, 11th Floor, Tower I, 124, Connaught Place, Indira Chowk, New Delhi at shorter notice. Signature Name (In Block Letters) th Annual Report - FY

15 Route Map of Registered Office Jeevan Bharti Building, 11 th Floor, Tower 1, 124, Indira Chowk, Connaught Place, New Delhi Prize Petroleum Company Limited 14

16 DIRECTORS REPORT To: ALL MEMBERS OF PRIZE PETROLEUM COMPANY LIMITED On behalf of the Board of Directors of your Company, I take privilege in presenting to you the 18th Annual Report on the working of the Company along with Audited Financial Statements together with the Auditor s Report and Comments of the Comptroller and Auditor General of India for the financial year ended on 31st March, OPERATIONS: (a) Overseas Operations Your Company has participating interest (PI) in two E&P assets License i.e % PI in T/L1 and 9.75% PI in Permit T/18P in Australia. T/L1 includes Yolla producing field & T/18P includes Trefoil discovery. The said assets are held in wholly owned subsidiary, Prize Petroleum International Pte. Ltd., Singapore (PPIPL). During the year, drilling of two development wells is completed in Yolla producing field. Developmental studies are in progress in the discovered field. PPIPL s share of Hydrocarbon production from Yolla producing field (License: T/L1) during was 4,60,068 BOE (PY: 1,22,164 BOE- subsequent to deal completion, October 2014 to March, 2015). (b) Domestic Producing Fields During the year, total crude oil production from Hirapur & Sanganpur fields was 38,221 barrels and 296 barrels with cumulative production of 4,32,954 barrels and 14,648 barrels respectively. For Hirapur field, the Company has carried out geological & reservoir studies and Geological & Geophysical (G&G) models were generated. Final Development Plan (FDP) has been prepared and G&G model, reservoir model and economic analysis was presented to ONGC. Proposal for revision in price by removing the ceiling of international crude price was also submitted to ONGC. For Sanganpur field, the Company has carried out detailed interpretation of the available 3D seismic data & the G&G interpretation report has already been submitted to DGH with a new location for well drilling to enhance production from the field. However, due to current low crude oil price scenario, drilling of new well has been deferred. (c) Domestic Exploration Blocks Your Company was awarded one onshore exploration block SR-ONN-2004/1 of South Rewa Basin in Madhya Pradesh along with consortium partner Jaiprakash Associates Limited under NELP VI round of bidding. The area of this block is Sq. Km which is the largest onshore block awarded in India. Further due to non-availability of forest permission for carrying out any exploration in the national park and wildlife sanctuary situated within the block area, an area of 1456 Sq. Km has been reduced from Sq.Km. The Company has completed all the Minimum Work Program (MWP) commitments except drilling of 1 exploratory well for which Environment Clearances is not granted by Ministry of Environment & Forest (MoEF). Hence, Consortium has submitted approved Operating Committee Resolution for relinquishment of the block effective Oct 23, 2014 to Directorate General of Hydrocarbons (DGH) th Annual Report - FY

17 Further as per recent Policy Framework Guidelines issued by MoP&NG dated 10th November, 2014, consortium has requested DGH to allow to exit from the block without paying any Liquidity Damage (LD) towards non-drilling of 3rd well. The proposal is under review with DGH. 2. FINANCIAL RESULTS The summary of financial performance of the Company is as under: (i) Standalone Financial Statements: Descriptions Rs.in lacs Revenue from Hydrocarbons Income from Management Fee Interest on Fixed deposits Other Income Total Income (A) Production Cost G & G expenses G & A expenses Provision for Diminution in Investment Total Expenses (B) PBDIT ( ) Less: Depreciation/Depletion/Dry well PBIT ( ) Less: interest - - PBT ( ) Less: Tax /DTA (5.10) Profit/(Loss) after tax (PAT) ( ) (ii) Consolidated Financial Statements: Descriptions Rs.in lacs Revenue from Hydrocarbons Income from Management Fee Interest on Fixed deposits Other Income Total Income (A) Production Cost G & G expenses G & A expenses Total Expenses (B) PBDIT (435.67) Less: Depreciation/Depletion/Impairment PBIT ( ) ( ) Less: interest PBT ( ) ( ) Less: Tax /DTA (5.10) Profit/(Loss) after tax (PAT) ( ) ( ) Prize Petroleum Company Limited 16

18 Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with applicable Accounting Standards and Successful Efforts Method as per the Guidance Note on Accounting for Oil & Gas Producing Activities issued by The Institute of Chartered Accountants of India (ICAI) and the provisions of the Companies Act. There is no material changes and commitments affecting the financial position of the company occurred between the end of the financial year of the company to which the financial statements relate and the date of the report. CAPITAL STRUCTURE During the current year, the Company has received Rs crores (PY: Nil) from M/s Hindustan Petroleum Corporation Limited (HPCL) towards issuance of Twelve Crores Fifty Lacs Equity Shares of face value of Rs.10 each. Subsequent to this receipt, total paid up Equity Share Capital of the Company is Rs crores as on 31st March, FUTURE STRATEGY Your Company aims to acquire discovered blocks and producing assets in India and overseas with good upside potential to attain growth and for improving profitability in the ensuing years.so far as exploration strategy is concerned, it will be based on cautious evaluation of the risks involved. DIVIDEND The Directors do not recommend any dividend for the financial year ended 31st March, FIXED DEPOSITS Your Company has not accepted any Fixed Deposits during the year. CORPORATE GOVERNANCE The Company has complied with the requirements of Corporate Governance except the appointment of Independent Directors. The Holding Company, Hindustan Petroleum Corporation Limited (CPSE) has initiated process by suitably requesting MOP&NG for appointment of Non-official Directors on the Board of the Company. The detailed Corporate Governance Report forms part of this Directors Report vide Annexure- I. MANAGEMENT DISCUSSION AND ANALYSIS REPORT The Management Discussion and Analysis Report forms part of this Directors Report vide Annexure- II. PARTICULARS OF EMPLOYEES There is no employee in the Company in receipt of remuneration exceeding the limit prescribed under Rule 5 (2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended. MEMORANDUM OF UNDERSTANDING WITH HPCL As per guidelines issued by the Department of Public Enterprise (DPE),the Company has signed Memorandum of Understanding (MOU) with HPCL for the financial year The MOU rating of the company awarded was Excellent for the financial year VIGILANCE Corporate Vigilance guidelines relevant to HPCL, the holding company, are also applicable to the Company th Annual Report - FY

19 ANNUAL ACCOUNTS OF SUBSIDIARY Prize Petroleum International Pte. Ltd., Singapore (PPIPL) a wholly owned subsidiary of the Company was incorporated on 23rd January, PPIPL has minority stake in two E & P blocks in Australia i.e % in license T/L1 and 9.75% in permit T/18P. Based on the audited financial statements, the subsidiary earned hydrocarbon revenue of Rs crores (PY- Rs crores) during the current financial year. As per the provisions of Sec 129 (3) of the Companies Act, 2013 read with rule 5 of the Companies (Accounts) Rules, 2014, a separate statement containing salient features of financial statements of subsidiary has been attached in Form AOC-1 with Consolidated Financial Statements for the year The Consolidated Financial Statements form part of this Annual Report. STATUTORY AUDITORS Comptroller & Auditor General of India (C&AG) has appointed M/s. BGJC & Associates, Chartered Accountants as Statutory Auditors of the Company for the financial year and they will retire at the conclusion of the coming Annual General Meeting. There is no qualification, reservation or adverse remark made by the Statutory Auditors in their report. SECRETARIAL AUDITORS M/s. Satyender Kumar & Associates, Companies Secretaries have been appointed as Secretarial Auditors of the Company for the financial year in line with the provisions of Section 204 of the Companies Act, The Secretarial Auditor Report is annexed vide Annexure III. On the observations made by the Secretarial Auditor, the Company has taken up the issue with the concerned authorities/officials for necessary action. DIRECTORS Board of the company presently comprises of 4 part time Directors. Shri M. K. Surana, Shri Pushp Kumar Joshi, Shri B. K. Namdeo and Shri J. Ramaswamy are Directors on the Board of the Company. The following are the details of Directors appointment/ Cessation: 1. Subsequent to superannuation of Shri K. V. Rao, Director (DIN ) of the Company, Shri J. Ramaswamy (DIN ) was appointed as Director of the Company effective 1st October, Subsequent to superannuation of Ms. Nishi Vasudeva, Director (DIN ) of the Company, Shri M. K. Surana (DIN ) was appointed as Director of the Company effective 1st April, 2016 During the year, as per the provisions of the Companies Act, Shri P. K. Joshi Director (DIN ) of the Company retires by rotation at the next Annual General Meeting and is eligible for reappointment. During the year, 5 (five) meetings of the Board of Directors were held. The details of the same are given in the Corporate Governance Report. The EXTRACT OF ANNUAL RETURN Pursuant to Section 92 (3) of the Companies Act, 2013 read with rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return is as Annexure IV. Prize Petroleum Company Limited 18

20 RISK MANAGEMENT POLICY The Risk Management Manual and Risk Register of the Company has been developed & approved by the Board of the Directors. Identified risks reportable to the Board shall be put up before the Board for its review. LOAN, GUARANTEE AND INVESTMENT During the year, the Company made Equity Investment of USD 79,90,000 (Equivalent to Rs.51,40,29,450/-) into M/s Prize Petroleum International Pte. Ltd., Singapore, wholly owned subsidiary Company. However, the Company has not given Loan and Guarantee covered under section 186 of the Companies Act, CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES As per the provisions of Rule 8 (2) of the Companies (Accounts) Rule 2014, the particulars of contracts or arrangements with related parties referred to in sub-section(1) of Section 188 of the Companies Act, 2013 are mentioned in the Form AOC-2 vide Annexure V which is part of the Directors Report. AUDIT COMMITTEE As per the provisions of Section 177 of the Companies Act, 2013, the Company has an Audit Committee. The Committee held four Audit Committee Meetings during the year. Presently, the members of the Audit Committee are: 1. Mr. P. K. Joshi 2. Mr. B. K. Namdeo 3. Mr. J. Ramaswamy The Audit Committee is functioning in accordance with the terms of reference set out for it by the Board of Directors. The Committee shall be re-constituted after appointment of Independent Directors. REMUNERATION COMMITTEE As per the provisions of Section 178 of the Companies Act, 2013, the Company has a Remuneration Committee. The Remuneration Committee held two Meetings during the year. Presently, the members of the Remuneration Committee are: 1. Mr. P. K. Joshi 2. Mr. B. K. Namdeo 3. Mr. J. Ramaswamy The Committee shall be re-constituted after appointment of Independent Directors. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION The Company has plans to conserve the gas as produced in the field along with oil. The plan will be implemented once full scale field development plans are in place and quantity of gas is sufficient for commercial exploitation. As of date, the gas produced at our Sanganpur field is utilized for generation of power for captive consumption. The upgraded G&G and Reservoir Engineering software facility has been used effectively to interpret geological and geophysical data of existing onshore assets of the Company th Annual Report - FY

21 FOREIGN EXCHANGE The Foreign Exchange outgo during the year was Rs lacs (Previous Year Rs lacs). The details of Foreign Exchange outgo are given in Note 27 (III) (5) in Notes forming part of Financial Statements. HEALTH, SAFETY & ENVIRONMENT (HSE) Exploration and production of hydrocarbons being a multi- dimensional exercise, is likely to have some adverse impact on the natural environment. To minimize adverse effect on the environment and also to ensure that hydrocarbon exploration and development activities are not hampered due to such constraints, the Ministry of Environment and Forests, Government of India has formulated legislations that are required to be followed by upstream companies that have operations in environmentally sensitive areas. Environmental Impact Assessment studies are carried out prior to commencement of seismic survey, drilling operations and the development of the field for production so that the impact on biodiversity and ecological sensitivity can be reduced through mitigating measures. Ministry of Environment & Forest (MoEF), Central/State Pollution Control Board & other government agencies monitor and regulate the above hazards through Environment Protection Act, 1986 and other applicable regulations / conventions. Your Company is committed to maintain high standards of health, safety, and environment protection in its operations and has initiated the progressive implementation of HSE management systems in all the facets of E&P activities. Adequate measures were taken at onshore marginal fields to maintain proper HSE management systems as per standard oil-field practices followed in E & P sector. NEBOSH International General Certificate course/training was provided to officers to have greater understanding of safety issues in line with international standards. DIRECTORS RESPONSIBILITY STATEMENT In terms of Section 134(3) (C) of the Companies Act, 2013, your Directors state that: i. In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. iii. iv. The Company has selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31st March, 2016 and of the Statement of Profit and Loss of the Company for year ended on that date; The Company has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; The Company has prepared the Annual Accounts on a going concern basis; v. The Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. Prize Petroleum Company Limited 20

22 INDEPENDENT DIRECTORS No Independent Director has been appointed in the Company. However the holding Company, HPCL has initiated process by suitably requesting MOP&NG for appointment of Non-official Directors on the Board of the Company. CORPORATE SOCIAL RESPONSIBILITY (CSR) During the year, the Board approved the CSR and Sustainability Policy for your company. The company has incurred Rs.4.50 lacs towards its CSR activities. This amount has been given to NGO CanKids.KidsCan to support children suffering from cancer. ACKNOWLEDGEMENT Your Directors wish to place on record their sincere thanks to various Government agencies including Ministry of Petroleum and Natural Gas, Directorate General of Hydrocarbons, Bankers, etc. for extending full cooperation in connection with conduct of its business. Your Directors also thank the Parent Company,Hindustan Petroleum Corporation Limited, for their constructive co-operation and significant contributions to the activities of the Company. Your Directors also thank all business associates, who have played vital role in enabling the Company to succeed in the E&P Sector. Your Directors also wish to express their deep sense of appreciation for the dedicated services rendered by the employees of the Company and look forward to their whole hearted contributions for the growth of the company in the years ahead. For and on behalf of the Board M.K. Surana Chairman DIN Date: Encl: As above th Annual Report - FY

23 Annexure I I. Philosophy on Corporate Governance: REPORT ON CORPORATE GOVERNANCE Corporate governance is an ethically driven business process that is committed to values and conduct aimed at enhancing an organization s wealth generating capacity. This is ensured by taking ethical business decisions and conducting the business with a firm commitment to values, while meeting stakeholders expectations. Good governance practices stem from the culture and mindset of the organization. Your Company is committed to meet the aspirations of all our stakeholders and believes in adopting best corporate practices for ethical conduct of business. It is well recognized that an effective Board of Directors is a pre-requisite for strong and effective corporate governance. Our Board and Committees thereof are formed as per the requirement of Companies Act and guidelines on Corporate Governance issued by Department of Public Enterprises, Government of India. II. Board of Directors: As per the Articles of Association of the Company, the number of Directors shall not be less than three and more than twelve. As on 31st March, 2016, the Company s Board comprised of four part-time Directors. None of the Non-executive Directors of the Company had any pecuniary relationship / transaction with the Company, during the year. Details regarding the Board Meetings, Directors attendance thereat, Annual General Meeting (AGM); Directorships and Committee positions held by the Directors are given separately. Board Meetings: a) Five Board Meetings were held during the Financial Year on the following dates: Board Meeting No. Location Date 77th Delhi 7th May, th Delhi 17th August, th Mumbai 16th November, th Mumbai 27th January, st Delhi 29thMarch, 2016 b) Details of Board Meetings held and attended by Directors during the Financial Year is as under: Prize Petroleum Company Limited 22

24 Name of Director DIN Period No. of Board No. of Board Meetings held Meetings attended Ms. Nishi Vasudeva st April, 2015 to st March, 2016 Shri P. K. Joshi st April, 2015 to st March, 2016 Shri K. V. Rao st April, 2015 to th Sept, 2015 Shri B. K. Namdeo st April, 2015 to st March, 2016 Shri J. Ramaswamy st October, 2015 to st March, 2016 c) The day-to-day business is conducted by the management team headed by Chief Executive Officer (CEO) of the Company under the superintendence, control and direction of the Board of directors. The Board holds periodic meetings to review and discuss the performance of the Company, review of operations and other pertinent issues relating to the Company. d) Further, no case and/or suit of any material or substantial nature are pending against the Company. III. Brief Profile of Directors: i. Ms. Nishi Vasudeva (From to ) Non-Executive Director Ms. Vasudeva is an MBA from Indian Institute of Management, Calcutta.She was appointed as Director (DIN ) of the Company with effect from 1st March, Ms. Nishi Vasudeva took charge as Chairman and Managing Director of Hindustan Petroleum Corporation Ltd., a Govt. of India Enterprise with effect from 1st March, Prior to this, she was Director - Marketing of HPCL from 4th July, She is the first woman to be appointed as C&MD of a Navratna PSU. Ms. Nishi Vasudeva has wide experience spanning over 3 decades in diverse functions including Corporate Strategy & Planning, Marketing and Information Systems. She has played a key role in the development of several high impact strategies for the Corporation as well as in design and implementation of mission, critical initiatives of the organization which include Business Process Re-engineering, Enterprise Resource Planning etc. Ms. Vasudeva represented HPCL in various important industry forums like the Committee for Development of Perspective Plan for Hydrocarbons which carried out an in-depth analysis of the Petroleum Sector and was instrumental in laying the road map for deregulation/dismantling of the APM and ushering in reforms in the Oil & Gas Sector th Annual Report - FY

25 ii. Shri M. K. Surana (From ) Non-Executive Director Shri M. K. Surana is a Mechanical Engineer, with Master s degree in Financial Management.He was appointed as Director (DIN ) of the Company with effect from 1stApril, Shri Surana took charge as Chairman and Managing Director of Hindustan Petroleum Corporation Ltd., a Govt. of India Enterprise with effect from 1st April, Prior to this, he was Executive Director HPCL &worked as Chief Executive Officer since last more than three years in the Company. He has been working with HPCL since last more than three decades in various positions at Mumbai refinery, Visakh refinery and Headquarters office. He has vast experience in Oil and Gas industry. iii. Shri Pushp Kumar Joshi (From ) Non-Executive Director Shri Pushp Kumar Joshi is a Bachelor of Law and Post Graduate in Personnel Management & Industrial Relations from XLRI, Jamshedpur. He was appointed as Director (DIN ) of the Company with effect from 1st July, Shri Joshi joined Hindustan Petroleum Corporation Ltd., a Govt. of India Enterprise in He took charge as Director (Human Resources) of HPCL with effect from 1st August, Prior to this he was holding key portfolios in Human Resources viz. Executive Director HRD, and Head HR of Marketing Division. He has held various key positions in Human Resources and Industrial Relations functions at HQO, Marketing and Refineries Divisions of HPCL. He has been responsible for the design and deployment of key HR policies and practices that are employee oriented and aim at building high performance culture. He spearheaded various HR practices with strong business focus in HPCL viz; Project Akshay the leadership development programme, Productivity Improvement Initiatives, leveraged the IT Platform for Internal Customer care, various Technical & Behavioral training programs, HR- Business Process Reengineering (BPR), Implementation of JDE (HR), Health Management System, HR Green Credit etc. He is liable to retire by rotation. iv. Shri K. V. Rao (From to ) Non-Executive Director Shri K. V. Rao is a fellow member of the Institute of Chartered Accountants of India. He was appointed as Director (DIN )of the Company with effect from 1st June, Shri K. V. Rao took charge as Director (Finance) of Hindustan Petroleum Corporation Ltd., a Govt. of India Enterprise with effect from 1st June, Prior to this appointment, Shri Rao was Executive Director - Corporate Finance, a position he handled for last 5 years. Shri Rao has various academic distinctions to his credit, which includes being a rank holder in CA and B.Com. He has also been actively participating in various seminars and workshops, both at national and international levels. Shri Rao brings with him rich experience of over 3 decades in handling various challenging assignments in HPCL in the fields of Corporate Finance, Treasury Management, Internal Audit and Marketing & Refinery Finance. Prize Petroleum Company Limited 24

26 v. Shri B. K. Namdeo (From ) Non-Executive Director Shri B. K. Namdeo is Bachelor in Mechanical Engineering and Master of Technology from IIT, Mumbai. He was appointed as Director (DIN )of the Company with effect from 1st July, Shri B. K. Namdeo took charge as Director (Refineries) of Hindustan Petroleum Corporation Ltd., a Govt. of India Enterprisewith effect from 1st July, Prior to taking over as Director- Refineries, he was Executive Director- InternationalTrade & Supplies, HPCL. He has over 32 years of experience in various refinery functions and has held key positions in Central Engineering (Refinery Projects), Operations, Projects and Maintenance of the Refineries in HPCL. Shri Namdeo brings with him rich experience of over 3 decades in handling various challenging assignments in the refinery divisions of HPCL. He is liable to retire by rotation. vi. Shri J. Ramaswamy (From ) Non-Executive Director Shri J. Ramaswamy is a fellow member of the Institute of Chartered Accountants of India. He was appointed as Director (DIN )of the Company with effect from 1st October, Shri J. Ramaswamy took charge as Director (Finance) of Hindustan Petroleum Corporation Ltd., a Govt. of India Enterprise with effect from 1st October, Prior to this appointment, Shri Ramaswamy was Executive Director - Corporate Finance of HPCL for two years. Shri Ramaswamy has been actively participating in various seminars and workshops at the National level. Shri Ramaswamy brings with him rich experience of over 3 decades in handling various challenging assignments in HPCL in the fields of Refinery and Marketing Finance, Internal Audit and Treasury Management. He is liable to retire by rotation. IV. Audit Committee Meetings: i. In term of Section 177 of the Companies Act, 2013, the Board had constituted the Audit Committee of the Company. It comprises of the three Non-Executive Directors. The same shall be re-constituted after appointment of Independent Directors. ii. The Board of Directors had approved the terms of reference of the Audit Committee. iii. The quorum for the meeting of the Committee is two members. iv. Shri P. K. Joshi is the Chairman of the Committee, who possess the requisite knowledge for effective functioning of the Audit Committee. The Company Secretary acts as the Secretary of the Audit Committee. v. Four Audit Committee Meetings were held during the Financial Year on the following dates: Audit Committee Meeting No. Location Date 32nd Delhi 7th May, rd Delhi 17th August, th Mumbai 16th November, th Delhi 29th March, th Annual Report - FY

27 vi. Details of Audit Committee Meetings held and attended by Members during the Financial Year is as under: Name of Committee Period No. of Audit No. of Audit Committee Meeting Committee held attended Shri P. K. Joshi 1st April, 2015 to st March, 2016 Shri K. V. Rao 1st April, 2015 to th September, 2015 Shri B. K. Namdeo 1st April, 2015 to st March, 2016 Shri J. Ramaswamy 1st October, 2015 to st March, 2016 vii. The Audit Committee has reviewed the quarterly, half yearly and Annual Financial Statements for the financial year V. Remuneration Committee Meetings: i. Pursuant to the provisions of the Companies Act, 2013, the Board had constituted the Remuneration Committee of the Company. It comprises of the three Non-Executive Directors. The same shall be re-constituted after appointment of Independent Directors. ii. The quorum for the meeting of the Committee is two members. iii. Shri P. K. Joshi is the Chairman of the Committee. The Company Secretary acts as the Secretary of Committee. iv. Two Remuneration Committee Meetings were held during the Financial Year on the following dates: Remuneration Committee Meeting No. Location Date 1st Delhi 17th August, nd Delhi 29th March, 2016 v. Details of Remuneration Committee Meetings held and attended by Members during the Financial Year is as under: Name of Committee Period No. of Remuneration No. of Remuneration Committee Meeting held Committee Attand Shri P. K. Joshi 1st April, 2015 to st March, 2016 Shri K. V. Rao 1st April, 2015 to th September, 2015 Shri B. K. Namdeo 1st April, 2015 to st March, 2016 Shri J. Ramaswamy 1st October, 2015 to st March, 2016 Prize Petroleum Company Limited 26

28 VI. Annual General Meetings: The details of last three Annual General Meetings held: Financial Year Date Place th September, 2015 Delhi th September, 2014 Delhi th August, 2013 Delhi Special Resolutions, if any, passed in the above meetings are in line with the provisions of the Articles of the Associations of the Company and the Companies Act. VII. Extra-Ordinary General Meetings: No Extra-Ordinary General Meeting of the Company was held during the financial year VIII. Board /Committee Meetings and Procedures: The agenda is circulated well in advance to the Board Members. The items in the agenda are supported by detailed information wherever required to enable the Board/Committee to take appropriate decisions. IX. Recording Minutes of proceedings at the Board / Committee: Minutes of the proceedings of each Board/Committee meeting are recorded. Draft minutes are circulated amongst all members of the Board/Committee for their critical appreciations and suggestions. The suggestions are incorporated in the minutes, which are finally approved by the Chairman of the Board/Committee. These minutes are confirmed in the next Board Meeting. Minutes of sub Committees constituted by the Board are also noted by the Board in its next meeting. X. Dematerialization of Shares: The Company had executed the Tripartite Agreement with National Securities Depository Limited (NSDL). The Company s ISIN for its security is ISIN-INE714J01019.Out of crores Equity Shares issued and paid up face value of Rs.10 each, 7 crores Equity shares have been dematerialized upto 31st March, XI. Compliance Certificate: Corporate Governance: Certificate from M/s BGJC & Associates, Chartered Accountants, confirming compliance with the conditions of Corporate Governance as stipulated under DPE Guidelines on Corporate Governance is annexed in the Annual Report. XII. Secretarial Compliance Report: M/s Satyender Kumar & Associates, Practicing Company Secretaries was appointed as Secretarial Auditor of the Company for FY in line with provisions of Section 204 of the Companies Act, Secretarial Audit Report obtained from M/s Satyender Kumar & Associates, Practicing Company Secretaries is annexed in the Annual Report th Annual Report - FY

29 XIII. Risk Management: The Company has developed Risk Management Manual and Risk Register of the Company which has been approved by the Board of Directors. The risks which in the opinion of the Board may threaten the existence of the company have been identified. XIV. Remuneration to Directors: a) The Company is a Wholly Owned Subsidiary of HPCL. All the Directors of the Company are nominees of HPCL. The part-time Directors do not receive any remuneration from the Company. The remuneration paid to Chief Executive Officer of the Company is disclosed in the Notes to the Accounts of the Financial Statements. b) The detail of Directors Shareholdings in the Company as on is as under: Certificate Name DIN Number of Equity Share 012 Shri K. V. Rao Shri B. K. Namdeo XV. General Shareholders Information: i. The Corporate Identity Number of the Company is U74899DL1998PLC ii. The Company follows the financial year from April to March. iii. Share holding pattern as on : The Company has become a Wholly Owned Subsidiary of HPCL effective 22nd December, HPCL along with its nominees is holding entire paid up equity capital. The break-up of paid up capital is as under: Description Paid up Capital (Rupees) 24,50,00,000 equity shares of face value 245,00,00,000 of Rs.10 each fully paid up (*) Total 245,00,00,000 (*) Out of these, 800 equity shares are held by Individuals on behalf of the Company. XVI. Means of Communication: The Company s website contains related information in a user-friendly manner. Annual Report containing inter-alia, Audited Financial Statements, Consolidated Financial Statements, Directors Report, Auditors Report, Management Discussion & Analysis Report (MD&AR) and Corporate Governance Report including information for shareholders. XVII. Management Discussion and Analysis Report: Management Discussion and Analysis Report is covered in the Directors Report. Prize Petroleum Company Limited 28