Dear Shareholders,
The Directors take immense pleasure in presenting the 33rd
Annual Report along with the CompanyRss audited Financial Statements for the financial
year ended March 31, 2023.
Financial Performance and State of the Companys affairs Highlights of
financial performance on standalone basis
| Particulars |
FY 22-23 |
FY 21-22 |
| Revenue from Operations |
1,378,213 |
1,196,894 |
| Total Revenue including Other Income |
1,385,715 |
1,200,028 |
| Earnings before finance cost, depreciation/ amortisation,
Exceptional items, and Tax (EBIDTA) |
183,112 |
50,675 |
| Profit before Exceptional Items and Tax |
1,27,544 |
13,490 |
| Profit/(Loss) before Tax |
1,27,544 |
13,490 |
| Tax (reversal) |
31,628 |
3,191 |
| Net Profit after Tax |
95,916 |
10,299 |
Global Market
The year FY 2022-23 gone by was marked by a range of significant
events, both in the economic and political arena. Despite initial concerns about the
ongoing impact of global pandemic, the global economy continued the notable rebound with
GDP growth surpassing prepandemic levels in several regions.
As per International Monetary Funds estimates, the global economic
activity expanded by 3.4% CY 2022, higher than its own estimates of 3.2%. These growth
figures are lower than the 6.1% growth recorded in CY 2021, which was aided by the rebound
from a lower base of the pandemic year CY 2020.
While the world started to put the COVID-19 scenarios behind them, some
countries like China continued to face a few outbreaks followed by extended movement
restrictions, dampening the reopening growth boom. However, China too pivoted and opened
up its economy from its stringent Zero-COVID policy towards the end of the year, leading
to expectations of higher growth for the country as well as the entire global economy in
the year ahead.
The world was divided in finding the way forward for its resolution on
the geo-political developments that impacted the world. The EU and the US declared
sanctions which prohibited importing Russian seaborne crude oil and petroleum products
while also trying to enforce a price ceiling on Russias energy exports to other nations.
The threat of these sanctions and their implementation drove energy prices to some
unforeseen highs during the last year. Brent Oil prices reached a high of near USD 140/bbl
while cracks margins on oil products like Singapore gasoil cracks traded as high as USD
75/bbl and gasoline crack traded near
USD42/bbl at its peak. The sanctions imposed on the Nord Stream
pipelines carrying natural gas to Europe spiked the gas prices to new lifetime highs
during the year.
The imposition of sanctions and price caps led to the redirection of
trade flows on a large scale. Russian crude exports to EU came to a halt and the flows
were redirected to countries much farther like India and China. Similarly, Russian oil
product exports found new homes in Africa, the Middle East and the Far East nations. The
redirection of flows, while easing global energy prices from the highs, led to an initial
higher move on oil tanker freights, as ships carrying crude and products were moving much
farther due to the newly emerging routes and trade flows. Meanwhile
on the gas front, Europe initially saw prices surge to as high as 343
Euro/ megawatt hour (MWh) in its efforts to refill its gas storage ahead of the winters,
where it has been the traditional fuel of choice for heating and industrial purposes. A
late and unusually warm winter along with self-rationing and delay in imposition of
sanctions, helped Europe with inventory level replenishment and avoid the exceptionally
high gas prices for this winter.
On the macroeconomic front, the Central Banks across the world have
been fighting to tame the multidecade high inflation monster that had been unleashed as a
consequence of years of monetary stimulus/ quantitative easing/welfare spending by the
Governments across the world
ever since the Great Financial Crisis of 2008 and further exacerbated
during the COVID pandemic. The broken down supply chains resulting from COVID were just
about recovering when the geo-political situation and subsequent sanctions further fuelled
up inflation. As a measure to quell inflation and bring it down to acceptable levels,
Central Banks led by the US Federal Reserve raised interest rates substantially during the
past year. However, the high interest rates required to fight against sticky global
inflation are bound to dampen the global economic activity and growth during the current
year. High interest rates have already led to the inversion of yield curves in most large
economies, indicating the stress in the financial systems and pointing to the possibility
of a recession up ahead.
The financial system stress recently led to the collapse of a few
stressed banks in the US and Europe, though the risk of contagion has so far been averted
by timely intervention by the Central Banks.
Global Refinery Margins strengthened on the back of higher cracks from
conventional fuels. The continued recovery in oil demand, easing of COVID restrictions and
steady improvement in mobility indices to pre-pandemic levels continued to get reflected
in the oil price and refining margins rose during the year. While crude oil prices
witnessed extreme volatility unseen in the past few years, the refining margins got a
further boost with restrictions on trade-flows from the geo-political fallout. A tight
product balance amid fears of scarcity from the sanctions, pick-up in fuel consumption,
industrial activities and pent-up holiday/travel demand combined to provide a positive
stimulus to product markets led to a strong performance by refined product margins. With
double-digit refining margins for a larger part of the year, refiners had reason to run a
high capacity utilisation rates, thereby building up inventories which had reached near
the 5-year lows, especially on the distillates.
The IMF projects global GDP growth to be subdued at 2.8% in 2023, with
downside risks of recession in the Western world, especially Europe and the US. Unusually
high uncertainty surrounds this forecast and downside risks to the global outlook emerge
from a possible worsening of the current geo-political situation, escalation of sanctions
on Russia as well as continuation of inflationary pressures amid slowing growth.
Hence, refinery margins, which had recovered from the pandemic lows
last year on strong diesel and gasoline cracks, may moderate from the current levels in
the year ahead.
Domestic Market Overview
FY 2022-23 was a year of economic growth for India. India is on track
to become the worlds third largest economy by 2027 basis global trends and key investments
in infrastructure space. Industry witnessed robust logistics indicators such as steady
growth in rail freight, container traffic in 2022, a strong recovery registered in
automobile sales, specifically in passenger vehicles, tractors and 3-wheelers. The agri
sector also continued to show resilience, posting a strong 3.6% growth for the 5th
straight year. IIP is showing consistent upward trend with steel consumption, cement
production and other underlying metrics showing a holistic growth.
India registered a growth in the total Petroleum Oil and Lubricants
production during FY 2022-23 over the previous year
Growth in the consumption of petroleum products during April-Mar 2023
with a volume of 222.3 MMT compared to the volume of 201.7 MMT during the same period of
the previous year.
India registered a growth of 4.8% in the total Petroleum Oil and
Lubricants (POL) production during FY 2022-23 over the previous year. The consumption of
petroleum products during April-Mar 2023 with a volume of 222.3 MMT reported growth of
10.2% compared to the volume of 201.7 MMT during the same period of the previous year.
This growth was led by 13.4% growth in MS, 12% in HSD & 47.1% in ATF consumption
besides FO/LSHS, Petcoke, LPG and others during the period. With this growth, demand has
surpassed pre-pandemic levels of FY 2019-20.
The global Oil and Gas industry witnessed high volatility in crude oil
and finished product prices in FY 2022-23. India imports a significant portion of its
crude oil requirements. Therefore, the prices of petrol and diesel in the country are
linked to their respective prices in the international market. However, to insulate the
Indian consumers from the impact of high volatility in the international market and manage
inflation, prices of petrol and diesel were kept relatively stable in India despite record
high international prices. This created stress on profitability of domestic marketing of
petroleum products.
While recent geo-political uncertainty remains, the impact of a recent
upsurge in COVID-19 have not led to any restrictions and does not have significant impact
on the Indian economy. The governmentRss thrust on capital expenditure, the automobile
industry and oil demand is expected to grow further in FY 2023-24. Indias favourable
demographic helping drive domestic consumption and decouple from the global economy.
IndiaRss GDP growth outlook for FY 2023-24, as per IMF, is among the highest for large
nations, with the countrys growth slated to be 5.9%.
International Supply and Trade
It was a volatile year for crude and product prices in FY 2022-23. Even
so, Nayaras international business segment was successful in navigating these
uncertainties through clearly defined strategies, foresight, and support from a robust
internal framework. Our international departments, driven by Supply & Trading, ensured
positive export net-backs to relevant destination benchmarks. This was made possible
through the Companys experienced trading teams, detailed risk management systems, as well
as strong in-house shipping and operational support. All this is coupled with robust
controls and governance in place.
A key initiative included Nayaras continual pursuance to expand its
international customer and supplier base. This resulted in a rise in customer
participation for the firms global exports. Counterparties include a robust list of
trading houses, oil majors, and national oil companies. Nayara will continue to build on
these strong relationships to ensure stable procurement of feedstocks for our refinery,
and optimal supply of our products to the global marketplace.
Refinery
Operational Excellence
Vadinar refinery processed 18.69 MMT of crude achieving approx. 93%
capacity utilisation in FY 2022-23. Refinery took a turnaround during November 2022 which
resulted in lower utilisation for FY 2022-23.
Your Company has achieved 99.8% operational availability outside
turnaround for major process units in FY 2022-23. Refinery Turnaround was completed safely
in 29 days (against plan of 30 days) followed by safe startup and stabilisation of units.
As a first step towards petrochemical integration of Refinery, revamp
of the Fluidised Catalytic Cracker Unit (FCCU) was carried out during the turnaround for
maximising
Propylene yield from the unit. Propylene Recovery Unit (PRU) and
Polypropylene (PP) Units are expected to be commissioned in FY 2023-24, which will mark
the Companys maiden foray in the historically high-margin and high-growth petrochemicals
business.
During the turnaround, the catalyst replacement was carried out in
major hydroprocessing units. Besides this, metallurgy upgradation, execution of various
schemes for improving reliability and removing process constraints, enhancing flexibility
in processing tough crudes, reduction in energy consumption and maintenance and inspection
(M&I) jobs for various equipment were carried out in all process units, utilities,
captive power plant and marine facilities.
Various optimisation projects across functions were taken up which
resulted in the optimisation of hydrocarbon inventories resulting in reduced working
capital, widening of crude basket and energy efficiency improvement. In view of higher
natural gas prices, hydrogen was produced from alternate feedstocks resulting in reduction
of raw material costs.
As part of facility augmentation at Vadinar site, the following
infrastructure development activities were taken up during FY 2022-23:
a. A new covered coal stockyard was constructed which will result in
reducing dependency on third party for storing coal and also aid in environment
protection.
b. A full surface fire-fighting facility was commissioned for
enhancement of our fire-fighting capability for large crude oil storage tanks.
c. A new associate colony was constructed for providing accommodation
facility to contractual workforce.
Vadinar refinery processed 97% of heavy and ultra-heavy crudes and
produced 87% of high margin distillates. Your Company is continuously exploring market
opportunities for processing different crudes with a focus to reduce the overall raw
material cost. One new grade of crude was processed during FY 2022-23 expanding the crude
basket to 127 crude grades. Production of Domestic MS and Domestic HSD were at a record
level of 2.6 MMT and 5.5 MMT (including LDO & HFHSD) respectively, which is the
highest ever production for any financial year. As an endeavour to enhance margins from
existing assets, new value-added product LSHS (Low Sulphur Heavy Stock) was produced and
introduced in the market.
Marketing
Nayaras mission is "In India, for India". With this clear
guideline, we first supply to our retail outlets, following which we offer all additional
volumes to PSUs and domestic customers for sale. By Nayaras focus on domestic sales, less
than 40% of our products are exported and traded internationally.
Retail
Your Companys Retail business faced significant headwinds for a major
period of FY 2022-23. The global geo-political situation led to an unprecedented increase
in crude oil prices and refined product cracks in international markets. However domestic
retail selling price has shown limited traction. This led to significant under recoveries
in the Retail business.
Along with the impact of the shifting market dynamics, retail also
navigated an evolving regulatory and compliance environment domestically with the
introduction of mandates such as Universal Service Obligation and Excise Export Duty.
As a result, there was a severe impact on profitability in the Retail
channel. This situation led to a loss of retail volumes by approx. 50% as compared to FY
2021-22.
Adverse business conditions for a prolonged period also had negative
impact on franchisee partners. The Company ensured continuous and open dialogue with the
franchisee partners to understand and acknowledge their concerns while developing
initiatives to extend support and addressing their pain points.
As per the long-term strategy, the Company continued to add new retail
outlets in focused geographies. The Company successfully completed "Project
Bharat" by achieving mandatory network presence in remote service area within the
timeline of May 2022.
Despite difficult business conditions, RO rebranding project maintained
traction and completed rebranding of 1,083 ROs in FY 2022-23. In December 2022, we crossed
a historic milestone of 3,000 Nayara branded outlets. Towards the end of FY 202223, more
than 50% of the RO network was with Nayara brand out of a total of 6,300+ outlets.
The Company continues in its efforts to automate the entire supply
chain. The Company has automated approximately 98% of its retail outlets, a step closer to
becoming a Rsfuture- ready organisation. The Company plans to embark on a journey to
utilise automation as an enabler to deliver better services and experience to end
consumers by the end of FY 2023-24.
The Company is exploring various initiatives to make our network
future- ready, which includes non-fuel retail opportunities, mobility solutions, alternate
fuels including CNG, battery swapping and EV Charging points. Multiple Non-Fuel Retail
(NFR) opportunities are identified under food, auto services and other services
categories. A pilot programme is in progress to test these ideas to develop strong
business case before mass rollout of NFR across the network.
The Company continued to contribute towards the Government of IndiaRss
mandate on biofuels blending as a key driver for decarbonisation and self-reliance, and
regard it as critical for reducing dependency on imported crude. Nayara Energy continues
to move towards improving the ethanol blending in MS being supplied through our retail
outlets with 10% blending in MS compliance achieved from December 2022.
The Company is committed towards meeting the enhanced blending in line
with Government guidelines and have reached 12% ethanol blending as well at the end of the
financial year. Additionally, the Company has achieved biodiesel blending readiness at
Vadinar refinery and plan to start biodiesel blending despite challenges in availability
in the market. As a longterm strategy, to ensure compliance with Government mandate, the
Company is planning to invest into ethanol manufacturing plants.
As an initial step, it is proposed to invest in such plants within the
next 3 to 5 years. This will provide necessary reliability of ethanol supply to our retail
network.
Being the largest fuel retailing private player, Nayara EnergyRss focus
continues to expand and meet the growing demand, thereby building job opportunities and
entrepreneurship. The Company is positively impacting close to approximately 50,000+
forecourt salesman and communities around our retail network.
Institutional Business
Institutional Business maintained its focus on maximising volume and
earning from "On purpose" product portfolio consisting of High Speed Diesel
(HSD), Light Diesel Oil (LDO) & Mineral Turpentine Oil (MTO) products along with other
evacuation products like Petcoke, Sulphur and Fly ash. The Company has added new high
margin products like Light Sulphur Heavy Stock (LSHS) in April 2022 and Polymer Modified
Bitumen (PMB) in August 2022.
During FY 2022-23, the Company saw overall industry decline for direct
business on account of a steady increase in the product price and large price arbitrage of
diesel in bulk against Retail. In FY 2022-23, bulk market witnessed a decline in HSD
consumption by approx. 43% over FY 2021-22. However, in this extremely challenging
environment Nayara continued to retain customers and grew its HSD volume by 13% over FY
2021-22. Our overall on-purpose product portfolio market share grew to 6% from 4% in FY
2021-22.
Nayara EnergyRss bulk HSD market share doubled in FY 2022-23 from 3% to
6%. This was largely possible due to expanding existing customer base by entering into new
segments and new markets beyond our addressable region. Our association with key customers
grew stronger as our service levels remained our priority. We signed up the agreement with
major paint manufacturers for sale of our MTO and grew our market share to 11% in FY
2022-23 from 8% in FY 2021-22.
The Company continued to maximise its earning potential on bitumen
based on the production economics and managed timely and efficient evacuation of our
solids inventories namely petcoke and sulphur. The Institutional business will continue
its focus on growing market share and effectively seeding the market with newly launched
products.
Supply and Distribution
Nayara Energy witnessed a strong domestic demand in FY 2022-23.
With strong margins in Oil Marketing Companies (OMC) business, OMC
volumes were maximised to expand netback for the Company. OMC sales in FY 2022-23 were
143% as against the plan.
OMC sales comprised of approximately 48% of domestic sales in FY
2022-23. Strong OMC sales ensured that Nayara would achieve regulatory requirements of
selling mandated share of productions of fuels in the domestic market and tap high
realisation potential in the case of domestic OMC sales.
In July 2022, Nayara operationalised rail fed depot at Pali, Rajasthan.
This is a state-of-the-art rail-fed facility completed on schedule against all odds
including disruptions due to the pandemic. This facility will ensure supply security for
Nayara in the state of Rajasthan and help enhance partnership with OMCs.
Facility augmentation completed at all coastal supply locations to
ensure availability of storage and blending facility for ethanol. Ethanol blending
commenced at all supply locations of Nayara Energy in FY 2022-23, the Company commissioned
two tanks in Vadinar, one each for storage of Ethanol and EBMS. With this, the supply of
Ethanol Blended MS (EBMS) started to all Nayara rail- fed locations from Vadinar, thereby
maximising economic gains due to ethanol blending.
The Company also augmented hired tankages at Mangaluru in accordance
with business expansion plans in the Karnataka market. The Company is looking for land
parcels in Madhya Pradesh, Uttar Pradesh and Telangana for potential depots. The Company
is also exploring our options to acquire hired terminal capacity in coastal locations in
the states of Odisha and West Bengal to improve our supply security.
In the logistics domain, improved Vehicle Tracking System (VTS) with
integration of driver monitoring camera and voice box introduced. This enables Nayara to
monitor drivers while they are driving the Tanker Trucks and alert them in case system
identifies lapse of concentration. Improved VTS tracking is expected to bring in more
discipline and reduction in driving policy violations.
Asset Development
As reported earlier, Nayara Energy has adopted a phase-wise Asset
Development Strategy to enter into the petrochemicals sector and is well-positioned to
become a strong petrochemical player due to its unique advantages in terms of the
opportunity of integration with the refinery, proximity to the port and location of the
refinery in western India which is the largest petrochemical consumption region of the
country.
Nayara EnergyRss focus on petrochemical is well-supported by the
intensive growth of petrochemical products.
Polyolefin consumption in India grew 8.2 % (PP 7.7% and PE 8.6%) during
2022-23 to reach a level of 13.5 MMTPA, 6.6 MMTPA in PP and 7.0 MMTPA in PE. Import of PP
in India has reached a level of 1.6 MMTPA which will create sufficient space for easy
market entry for Nayara EnergyRss PP project.
During the last year, demand for petroleum products also grew strongly
at a rate of 10.2% to reach a level of 222 MMTPA.
Nayara Energy is currently implementing Phase 1 of the strategy aimed
to maximise propylene recovery from existing refinery assets of Fluidised Catalytic
Cracking (FCC) Unit by increasing its severity and recovering this propylene in a
Propylene Recovery Unit and then converting it into polypropylene in a
new Polypropylene Unit of 450,000 metric tonnes per annum.
Major scope of Phase 1 Project is as follows:
• Revamp of FCC and LPG treatment units
• Construction of a new Propylene Recovery Unit (PRU) and
augmentation of existing utilities
• Construction of a new Polypropylene Unit (PP) and related
off-sites and utilities (OSBL facilities)
The Company awarded Engineering, Procurement & Construction (EPC)
contracts to various parties to complete the scope of work as mentioned above.
Despite the two waves of the COVID-19 pandemic during the project
execution period, the work at our project site has progressed well and the Company has
achieved overall project progress of more than 91% and completed 15 million safe man hours
work at the project site by the end of March 2023.
In December 2022, the Company has completed the revamp of the FCC Unit
and Unsaturated LPG Treatment Unit along with the Refinery turnaround. The revamped FCC
Unit was commissioned safely and 100 per cent unit throughput was achieved. With the
completion of the FCC revamp, we have made significant progress on our petrochemical
entry.
For Propylene Recovery Unit, pre commissioning activities have started
and the Company expects to complete the work in the first quarter of FY 2023-24.
For Polypropylene Unit, approximately 95% material has arrived at the
site and complete focus is on the completion of remaining construction activities. With
this, your Company is confident to complete the project and start off Polypropylene
production by the end of FY 2023-24.
As Polypropylene is a new product for the Company, the Company has
recruited an experienced petrochemical marketing team to support this new product segment.
Business-readiness and preparedness including marketing capability development to place
polypropylene product in the Indian market is progressing as per plan.
Phase 2 of Asset Development Strategy is the construction of a World
Scale Steam Cracker Project with downstream derivative units fully integrated with the
refinery. Nayara Energy has carried out a detailed feasibility study of the project, with
a focus on capex affordability and further expandability of Steam Cracker, which can
provide opportunities for partnership. Post seeking Board approval, the Company intends to
start FEED stage activities.
Financial Performance
Revenue from operations was at I 1,378,213 million for the financial
year ended March 31, 2023, compared to I 1,196,894 million for the financial year ended
March 31, 2022. Earnings before interest, tax, depreciation and amortisation (EBITDA) was
higher by 261% at I 183,112 million in FY 2022-23 from I 50,675 million in the preceding
financial year. While the external market and optimal crude sourcing strategies supported
the physical performance, the benefits accrued out of these factors were largely offset by
the under-recoveries on retail sales of MS & HSD and levy of special additional excise
duty on export of petroleum products viz. gasoil, gasoline, ATF, etc. However, the
CompanyRss flagship performance and profitability improvement programme "One
Lakshya" aided in delivering exceptional performance in a challenging business
environment.
The Company earned a Profit After Tax (PAT) of I 95,916 million in FY
2022-23 against a PAT of I 10,299 million in the preceding financial year. To conserve
financial resources, the Board of Directors have not recommended any dividend for the
financial year ending March 31, 2023. Further, no amounts are proposed to be transferred
to the General Reserve during the FY 2022-23.
Standalone and Consolidated Financial Statements
The audited Standalone Financial Statements, prepared as per the Indian
Accounting Standards (Ind AS) for the financial year ended March 31, 2023, form part of
this Annual Report. The audited Consolidated Financial Statements of the Company, as
required under Section 129 of the Companies Act 2013 (Act), also form a part of this
Annual Report.
Key Financing Activities
During FY 2022-23, the Company redeemed I 22,850 million of
NonConvertible Debentures (NCDs) after obtaining requisite approvals from the lenders. The
Company had issued these NCDs during FY 2021-22 as Secured, Listed, Rated, Redeemable
Non-Convertible Debentures with face value of I 10,00,000 (Rupees One
Million) each on private placement basis. With early redemption of the
NCDs on March 29, 2023, these NCDs have now been delisted from BSE.
To manage the working capital requirements in highly volatile crude oil
price scenario, the Company managed to get its working capital limits reassessed at the
same enhanced level as last year. During the financial year, the Company tied-up working
capital limits with various domestic and international banks.
The Company was successfully able to obtain its maiden unsecured limits
from one of the international banks. The Company also entered into long-term prepayment
against the supply of product cargoes during the year which supported the CompanyRss
working capital requirements, optimise its operational costs and secure the offtake of
product cargoes.
The Company had achieved financial closure for Phase 1 petrochemicals
project with project term lenders in FY 2021-22. The Company has now successfully drawn
more than 50% of the project debt in multiple tranches as per project requirements which
has supported in the smooth progress of the Phase 1 project. The Company will continue to
draw the balance amount basis project progress.
In its recent review, CARE Ratings Limited reaffirmed the CompanyRss
credit rating to RsAA-Rs and updated the Outlook to RsStableRs on the back of strong
business and financial performance during the year.
Holding and Subsidiary Companies
Your Company does not have any holding company. Rosneft Singapore Pte
Limited and Kesani Enterprises
Company Limited continue to hold 49.13% shareholding each in Nayara
Energy Limited.
The Company has been informed by Kesani Holdings Limited (the immediate
holding company of Kesani Enterprises Company Limited (KECL)) about the acquisition of a
49.88% stake in its ultimate holding entity by Hara Capital S.a.r.l. (100% subsidiary of
Mareterra Group Holding S.r.l.) from Trafigura Pte Limited effective January 10, 2023.
There was no change in the position of subsidiary companies during the
FY 2022-23. The Company does not have any associates.
A report on the performance and financial position of each of the
subsidiaries, in Form AOC -1, forms a part of this Annual Report and hence is not repeated
here for the sake of brevity.
The financial statements of these subsidiaries for the financial year
ended March 31, 2023, and other related information will be made available to any member
of the Company or its subsidiaries seeking such information at any point in time. The same
is also available for inspection by any member at the CompanyRss Registered Office/
Corporate Office.
Share Capital
There was no change in the CompanyRss authorised, issued, subscribed
and paid-up share capital during the FY 2022-23.
Information Technology
In an era of growing demands for information services, Nayara IT
continues to be a key strategic enabler for business at Nayara Energy. While our FY
2021-22 goals focused on COVID-19 response and recovery priorities to support hybrid
models of working; in FY 2022-23 the Company has strengthened investments in information
assets to provide secure, highly reliable technology infrastructure along with responsive,
high-quality support so as to meet the ever-changing needs of the business.
Safeguarding data and information at Nayara is one of the main tasks of
IT. As part of our continued commitment to strengthening Digital Resilience, the Company
has initiated a review of IT and OT Operating Policies and Procedures across systems and
components. The Company has improved cyber-security safeguards and implemented a
governance framework for User Access Management through automated SAP GRC workflows. The
Company has taken an important step towards its vision of private-cloud operations by
upgrading its IT infrastructure to deliver software-defined datacentre and networks. The
Company has also embarked on a 3-year programme to upgrade and refresh the IT and OT
network at the refinery.
The Company has extended the existing SAP platform to support the
operational readiness of the upcoming Petrochemicals unit. The Company is also working
with partners to deliver new SAP functionalities like Treasury Management and Transport
Management. Implementation of the Digital Operations Execution Systems (DOES) was
kicked-off and is an important step towards enhanced safety and productivity of field
operations. To support new products PMB (Polymer Modified Bitumen) and LSHS (Low Sulphur
Heavy Stock), the Company added new capabilities on SAP for automated end-to-end Bitumen
Stock transfer process, and LSHS Sales Process. The capabilities of the Refinery
turnaround software platform were effectively demonstrated during refinery turnaround
2022.
The retail outlet automation journey continued at a strong clip, with
automation rolled out to nearly 6,050 outlets.
Pilot programmes were launched for video analytics at key outlets.
Once completed, the programme will provide insights into the
demographic and behaviour patterns of customers, enabling Nayara to offer personalised
shopping experiences and improved customer service while simultaneously improving safety
and process compliance. A new depot was commissioned at Pali, supported by IT and OT
infrastructure deployment, including CCTV and personnel access systems.
Some of the other key IT-led initiatives across our business functions
that have enhanced data security, improved operations, increased efficiencies and created
digital capabilities, are refresh and upgrade of Microsoft portfolio, Data-erasure
software, Laptoptracking software, Laptop-refresh, Identity and Access Management systems
upgrade and other initiatives.
Safety and Occupational Health
Nayara Energy, as a responsible employer and accountable member of the
society, has recently set the goal to go beyond legal requirements and Indian industry
best practices, and create a significant impact in road transportation safety.
Whereas, the big effort taken by Nayara Energy to improve the safety
performance gets paid off with excellent occupational and process safety; road safety
remains a challenge. With great regret, the Company has to report six fatal road accidents
in relation to our business, one contractor employee and five third-party fatalities.
Nayara Energys Total Recordable Injury Rate (TRIR) is 0.09 as of March
31, 2023, compared to 0.14 in the previous reporting period. This significant reduction is
the result of the Companys continuous strive to achieve the best safety standards, by
setting ambitious goals, increasing competency and awareness across the organisation and
initiating several programmes, together with the contractors working at Nayara Energys
sites. (refer graph: Total Recordable Injury Rate)
During the Indian National Road Safety months of January and February,
followed by the National Safety Week beginning of March, your Company initiated and
performed a variety of campaigns, together with all associates, at the refinery, depots
and retail outlets, project sites and office locations. The remarkable proactive
contributions by employees and contractors, together with an incredible genius creativity
starting from safety models visualising standards, to vivid quizzes for knowledge tests up
to joyful skits, made these campaigns unforgettable events. These programmes have even
spanned clients at retail outlets; they were either recognised for or reminded to wear a
helmet while driving a two-wheeler vehicle.
The refinery underwent the most important turnaround in 2022 without
any major incident including the very successful commissioning of the Fluid Catalytic
Cracking Unit and the Crude Oil Distillation Unit. The use of drones and cameras for
monitoring highly critical activities yielded fruitful results. For our employees, almost
5,500 days, counting more than 55 million working hours, and over 10 million work hours
for our contractors were recorded without any major injury. The Training Centre (Nalanda
Knowledge Centre) has been certified again for the set-up and quality of trainings through
the Director of Industrial Safety & Health in Jamnagar.
Pali Depot, which was inaugurated on July 8, 2022 was constructed in
approx. 200,000 work days with NIL Lost Time Injury. The commissioning of Pali Depot has
resulted in reduction of product movement by road which has helped in strengthening the
HSE performance. Around 19 million kilometres of transportation on the road, one of the
highest safety risks in the Oil & Gas Industry, have been avoided around 30%.
Further, defensive driver training was conducted to improve our HSE
standards, wherein 2,183 TT drivers were imparted training during last year.
Besides the risk based Emergency Response Disaster Management Plan,
mock drills like the bomb threat drill together or the major spill exercise at the
National Highway, both involving the district police and administration, are important
measures implemented to tackle the variety of emergencies.
First-aid, cardiopulmonary resuscitation and an eye-check camp was
organised especially for tank truck drivers, and blood donation campaigns were organised,
and employees and associates showed high participation.
The Phase 1 petrochemical construction project made steady progress
with good HSE performance during the year, clocking more than 15 million safe workhours,
without any lost time injury. Several critical activities, including a major revamp work,
hot jobs at varying heights, excavations, confined space entry and critical heavy lifts
were carried out at several locations inside the operating refinery as well as the
polypropylene construction site, where continuous emphasis was given on behavioural safety
trainings.
People
Our people drive the entire value chain of the business and thus,
people management is at the core of all our business processes and growth. At Nayara, we
value each and every employee, who bring their own unique individual strengths, views and
ideas for achieving organisational aspirations.
To stay competitive in todays dynamic world, Nayara Energys people
strategy is framed to engage, retain, and empower our people to develop their skills so
that they are prepared to face existing and new challenges. Therefore, our focus has been
to strengthen learning culture, capability building, leadership development, employee
engagement and wellbeing. These focus areas are driven in alignment with our culture
pillars "Result, Caring, Learning and Purpose".
Supporting business by ensuring we have the workforce onboarded and
ready for the critical business expansions
As the world of work changed and adapted to the pandemic and economic
headwinds, so too did the talent acquisition landscape. Our focus has always been hiring
best talent for the organisation and providing best employee experience to our prospective
candidates.
We have strong campus connect programmes through which we induce young
talents at the bottom of the pyramid. To promote job rotation and career progression, we
also have an in-house platform "Aspire".
• 150+ job rotations
• 400+ hiring in FY 2022-23
• 85% hiring done through low cost channels
• 20% positions filled internally (IJPs)
• 92% retention of new hires
Building a Learning Culture
Across Nayara, we encourage people to remain curious and open. Nayara
provides ample opportunities in the form of classroom programmes, online programmes, and
stretch assignments, along with support in the form of tools, mentoring, and coaching by
providing access to online learning resources across the organisation, we have achieved
the following:
• 66% increase in leadership programmes from last year
• 4.85/5 average feedback rating
• 67% people have gone through at least one classroom programme
• Penetration of online programmes went up by 70%
Leadership Development
We initiated Leadership Development journey in 2022. Development of new
leadership capabilities is the need of the hour in this dynamic world of business. As it
is beneficial for both the organisation and people.
In line with the expectations, we have developed leadership development
journeys for all levels in the organisation with premier B-schools. Various leadership
development programmes such as ALDP (Advance Leadership Development Programme), Excellence
in Leadership Programme, Foundation of Leadership Programme and Emerging Leader Programme
were launched during FY 2022-23
• 2.65 average training man-days
• 950+ Saksham certified - to execute technical jobs successfully
• 406+ classroom programmes
• 800+ online programmes
• Launched Manthan to promote cross-functional learning 20+
internal subject matter experts.
Focusing on Employee Experience and Wellness
• Focusing on Employee Experience and Wellness - To foster a work
environment to enrich employee experience and improved stakeholder performance, we use
Gallup Employee Engagement survey which along with action planning workshop acts as a
catalyst to drive improved business result through motivated and engagement workforce.
• Strengthening Team Engagement - In our endeavour to strengthen
the team engagement and enhance working relations, the Human Resources team and Functional
Heads co-created outbound team programmes.
• Leader Connect Sessions - All across business units we have
different platforms for employees to share and understand our strategy and ask questions
to leaders. Sessions are facilitated from management committee members to CEO. These
sessions have helped in breaking boundaries and driving engagement by addressing people
concerns.
• Driving Recognition Culture
- Our Rewards & Recognition programmes aim at valuing and
motivating employees thereby encouraging them to achieve higher levels of performance.
• EPA - Employee Assistance Programme - We continued to share
communication, articles and webinar details related to Balancing Work and Life, Managing
Emotions at Workplace, Learning to Relax Laughter, Humour and Play to Reduce Stress at
Work.
•1,778 recognitions across different verticals and levels in the
year 2022.
Compensation and Benefits
Nayara Energys compensation philosophy is to extend to all its
employees a fair, equitable and competitive rewards programme with a principle of
"parity within and comparability outside" to drive high performance culture and
attract and retain top talent.
a) As a new-age organisation, we are continuously watching the market
for new trends and looking at the area of compensation in particular to ensure we remain
competitive. We have taken a one significant leap to stay in line with the dynamic market
landscape and thus, carried out salary correction exercises across the organisation to
ensure alignment with current market conditions, with transparent and objectively- driven
metrics.
b) Our performance management system supports our employees to achieve
their optimal potential, as per objectively-driven performance scorecards to achieve the
organisations Annual Business Plan.
c) To further strengthen People Process effectiveness, one of our
special project for 2022 was to review and overhaul the job evaluation framework. Through
this project, we could refine the organisational structure to establish a clear span of
control in line with the growth plan, role clarity and grade fitment.
POSH Compliance
The Company has zero tolerance for any form of harassment or
discrimination. It has established a framework of policies and processes to ensure a safe,
harassment-free and empowering work environment for all its employees. Following RsThe
Sexual Harassment at Workplace (Prevention, Prohibition and Redressal) Act, 2013Rs
[RsPrevention of Sexual Harassment (POSH) ActRs], the Company has set up Internal
Committees at its offices to promote a safe working environment across the organisation.
Regular sensitisation sessions are conducted along with mandatory online modules
implemented for all employees.
During FY 2022-23, your Company has not received any complaints under
POSH guidelines.
CSR Programme
The Board of Directors, on the recommendation of the CSR and
Sustainability Committee, constituted under Section 135(1) of the Companies Act 2013, has
adopted a CSR policy identifying the activities to be undertaken by the Company. The
policy can be accessed on the Companys website: https://www.navaraenergv.
com/sustainabilitv/csr-policv. An annual report on CSR containing the details of the
CSR policy adopted by the Company and other particulars specified in the Companies
(Corporate Social Responsibility Policy) Rules, 2014 is annexed to this report as Annexure
- A. On account of accumulated revenue losses, and as per the provisions of Section 198 of
the Act, the Company was not required to mandatorily spend any amount on CSR during FY
2022-23. Nonetheless, consistent with the CSR strategy and commitments made to the
Government of Gujarat at Vibrant Gujarat 2019 and communicated in the run up to Vibrant
Gujarat 2022, Nayara proposed CSR expenditure of I 169.6 million for FY 2022-23. Of the
allocated amount, I 111.17 million could be expended while I 58.43 millior remained
unspent. Major reasons for thi underspent included delays in approvals of Memorandum of
Understanding (MoU) with the Government of Gujarat for Project Tushti 2.0 and MoU with
implementing partner for Gram Samruddhi. Likewise, land clearance for the construction of
a health and multi-utility training centre took longer than expected.
Nayara Energys CSR has its pronounced presence in the states of Gujarat
(Jamnagar and Devbhumi Dwarka districts), and Maharashtra (Wardha) with comprehensively
designed CSR projects ranging across three broad thematic areas -
• Health and Sanitation
• Sustainable Livelihoods
• Education and Skilling
Health and Sanitation
Comprehensive Health Project
In our target villages, the population that is less mobile and more
vulnerable, i.e. women, elderly and children, face difficulties accessing quality primary
healthcare. These villages also have high incidences of malaria, and anaemia. Nayara
EnergyRss Comprehensive Health Project is the oldest CSR initiative of the Company
designed to ensure access to affordable primary healthcare services in 20 villages
neighbouring the refinery and Wardha depot. It offers services through community health
centre, mobile health clinic, emergency ambulance services (4nos), specialised health
camps, and monitoring of anaemia and malaria.
Highlights for the Year:
• Over 57,000 consultations conducted through Mobile Health Clinic
(MHC or MHV) and Community Health Centre, across 15 villages of Jamnagar and Devbhumi
Dwarka, and 6,700 consultations via MHV in four villages neighbouring Wardha Depot.
• Regular specialised health camps and awareness sessions held for
8,500 persons in 15 villages near the Refinery. Capacity building, behaviour change
communication and sensitisation are key features of these camps.
• 650 people in Wardha villages attended specialised camp and
awareness session on important health days such as World Health Day, World Tobacco Day,
and World Cancer Day.
• Ophthalmic check-ups done for 230 tanker truck (TT) drivers;
CPR and first-aid trainings provided to 168 TT drivers in Wardha depot.
• 2,225 nutrition kits provided to over 1,450 Tuberculosis
patients and their families in Jamnagar and Devbhumi Dwarka districts. Sustained
medication, personalised care and awareness has led to improved body mass index in
patients, thereby pacing up recovery substantially.
Project Tushti Despite great strides in major development
indicators, some districts in Gujarat still fare poorly in nutrition status. Project
Tushti is an exclusive public-private partnership project, with Nayara collaborating
closely with the Government of Gujarat, striving to make 249 villages in the Dwarka region
malnutrition-free.
It offers end-to-end solutions to issues faced by families as well as
systemic strengthening.
Project Swachh Halar - Integrated Waste Management
To support "Swachh Bharat (Clean India) Mission", Nayara
collaborated with United Nations Development Program (UNDP) for implementation of
Integrated Waste Management project in Jamnagar, Devbhumi Dwarka and 15 villages
surrounding the refinery. The project aims to improve the waste value chain through
investment in approaches, systemic enhancements, and behaviour change along with
innovation.
Highlights for the Year:
• The projects recently concluded Phase 1 accomplished 79% decline
in moderately underweight
and 69% decline in severely underweight children (over absolute
baseline targets).
• More than 2,500 children screened through Poshan Rath (mobile
malnutrition screening services); about 600 underweight children identified, out of which
74 were
Highlights for the Year:
• Over 1,300 tonnes of wet and dry plastic waste segregated in 17
wards of Jamnagar and Khambhalia Municipal Corporations
• Door-to-door waste collection practices in over 50,000
households across Jamnagar and Khambhalia (Urban and Rural). About 17,000 households are
practicing source segregation.
• Awareness sessions held on the adverse impacts of single use
plastic and waste segregation in 86 schools in 17 wards of Jamnagar and Khambhalia
Municipal Corporations. brought from high risk to safe zone through dedicated Child
Malnutrition Treatment Centres (CMTC) in Bhanvad and Dwarka.
• Approximately 2,800 pregnant and lactating mothers counselled on
child and maternal health; counselling sessions on reproductive health held for over 2,000
adolescent girls.
• More than 600 Poshan Vatika nutrition kits distributed and
healthy meal recipe booklets disseminated.
• Over 5,000 patients provided with digitalised diagnostic
services via Health Kiosks.
Project Gram Samruddhi - Livelihood and Water Resource Development
The primary livelihood for majority of the households in our target
villages is agriculture, followed by livestock and allied activities. Geographically,
these villages are coastal and fall in the semi arid zone, affecting crops with high soil
salinity and low rainfall, leading to poor harvest, and insufficient fodder for livestock,
thus limiting their incomes and livelihood scope.
This is a first-of-its-kind public-private partnership aims to double
farmersRs income through climate-smart agriculture and integrated water resource
management across 11,000 hectares in 15 villages in the districts of Jamnagar and Devbhumi
Dwarka by 2026.
Highlights for the Year:
• Additional water storage capacity of 2.6 mcm created in the
year. Since 2013-14, the project has created additional water storage capacity of 17.89
mcm.
• Over 600 farmers trained through a demonstration farm in Jakhar;
and 1,000 farmers trained in livestock management.
• Livestock of 2,600 farmers provided with artificial insemination
(AI) services across 15 villages surrounding the refinery. Over 22,000 cattle de-wormed.
• Widespread vaccination and personalised vet care helped
successfully contain the outbreak of Lumpy virus.
• 150 women trained in basic and advanced stitching skills.
Over 1,000 women of 73 selfhelp groups provided financial literacy
trainings.
Continuing education through NIOS
As schools in target villages offer only elementary education (i.e. up
to the 8th grade), a large number of students drop out and do not pursue higher
education. This leads to low skill levels and the loop continues to affect their income
potential in the long-run.
Nayara encourages such dropout students in restarting their formal
education journey through The National Institute of Open Schooling (NIOS). More than 200
students enrolled and appeared for the exams in the year 2022-23, out of which 100
completed their secondary and senior secondary education.
Awards & Accolades
The Company received several Awards & Accolades for FY 2022-23,
which include Global Sustainability Leadership Awards, FICCI National
Project EXCEL
Agriculture in both Jamnagar and Devbhumi Dwarka districts are affected
by scarce rainfall and soil salinity, making it imperative to have additional sources of
income. Project EXCEL, in collaboration with UNDP, focuses on promoting employable and
entrepreneurial skills among women, youth, and farmers. Linking households to citizens
social entitlements is also a key element of the project.
CSR Awards, UBS Forums Award and India Journal CSR Excellence Award for
our flagship projects like Project Tushti and Gram Samruddhi. HonRsble Governor of Gujarat
and USAID (United States Agency for International Development), at different platforms,
appreciated Nayaras nutrition support initiatives for TB patients.
Embedding Sustainability
The Company has been championing sustainability through its ongoing
activities towards environmental conservation and energy excellence, community well-being
and inclusive development and best-in-class governance practices. With an intent to
further embed sustainability into the core functioning of the organisation, the Company
undertook a meticulous materiality assessment activity covering 21 Environment, Social,
and Governance (ESG)
Highlights of the Year:
• 3,500 youth trained in 21st century employability skills
including IT skills, apparel manufacturing and self-employment skills like beauty and
wellness. 1,000 youth attended awareness sessions and over
400 undertook entrepreneurship development programme.
• 4,000 farmers provided with marketing linkages post-training on
business and marketing skills, to assure better profits and better buying-selling
practices.
• Micro/Nano enterprises launched by more than 100 women, who are
first-generation entrepreneurs.
• More than 5,000 households linked to social welfare and
entitlement schemes.
topics concerning downstream oil and gas sector as per international
sustainability frameworks. The assessment was designed to be overarching and encompassed
the diverse perspectives of 6 cohorts of stakeholders - local communities, regulators,
lenders, investor groups, employees and management. The Company further conducted an ESG
performance benchmarking exercise, rigorously measuring the as-is status against 62 KPIs
and 181 sub-indicators. We are drawing on the wealth of insights collated during this
exercise to evolve a convergent roadmap towards longterm sustainability.
Governance
The Corporate Governance is a vital part of our business framework. It
is designed to ensure compliance, transparency, and integrity in all work areas.
Directors
Following changes took place in the Board positions in FY 2022-23:
The Board of Directors appointed Mr. Prasad K. Panicker as Chairman in
place of Mr. Charles Anthony (Tony) Fountain who stepped down as Executive Chairman and
Board member w.e.f. from October 2, 2022 on mutual consent with the Company. Mr. Panicker
took over the responsibility of Chairman in addition to his responsibility as Heat of
Refinery of the Company. Further on the expiry of his earlier term, the Board of Directors
reappointed Mr. Prasad K. Panicker as Wholetimi Director, designated as Chairman &
Head of Refinery for a period of 3 years effective from February 17, 2023 to February 16,
2026 (both days inclusive).
Mr. Sachin Gupta, nominee from Kesani Enterprises Company Limited was
appointed as Director of the Company w.e.f. August 3, 2022 in place of Mr. Jonathan
Kollek. Mr. Andrey Bogatenkov, nominee of Rosneft Singapore Pte Limited (Rosneft
Singapore) was appointed as Director of the Company w.e.f. August 12, 2022 in place of Mr.
Krzysztof Zielicki. Pursuant to the nomination received from Kesani Enterprises, Mr. Anton
Kabachinskiy was appointed as Director of the Company w.e.f. October 3, 2022 in place of
Mr. Tony Fountain. Further, pursuant to the letter received from Kesani Enterprises, Mr.
Chin Hwee Tan and Mr. Sachin Gupta ceased to be Directors of the Company w.e.f. February
9, 2023 and Mr. P. N. Vijay and Mr. Abhimanyu Bhandari, both nominated by Kesani
Enterprises, were appointed as Directors w.e.f. February 9, 2023 in their place.
The first term of office of Independent Directors namely Ms. Naina Lal
Kidwai and Mr. Deepak Kapoor ended on October 8, 2022 and December 17, 2022 respectively.
The Board of Directors approved reappointment as Ms. Naina Lal Kidwai and Mr. Deepak
Kapoor as Independent Directors for a second term of five years starting from October 9,
2022 and December 18, 2022 respectively.
The Company received declarations of independence, as stipulated under
Section 149 (6) of the Act and Regulation 16 (1) (b) of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, from the Independent Directors.
The Board of Directors wishes to place its sincere appreciation for the
valuable services rendered by Mr. Tony Fountain as Chairman of the Company. The Board of
Directors also places on record appreciation of services rendered by Mr. Jonathan Kollek,
Mr. Krzysztof Zielicki,
Mr. Chin Hwee Tan and Mr. Sachin Gupta during their association with
the Company
Directors Responsibility Statement
Pursuant to the provisions of Section 134(3)(c) of the Act, it is
hereby confirmed that:
• In the preparation of the annual accounts for FY 2022-23,
applicable accounting standards were followed along with proper explanation relating to
material departures
• The Directors selected accounting policies, applied them
consistently and made judgements and estimates that were reasonable and prudent so as to
give a true and fair view of the CompanyRss state of affairs at the end of FY 2022-23 and
of the profit and loss for the same period
• The Directors took proper and sufficient care for maintaining
adequate accounting records in accordance with the provisions of the Act, to safeguard the
CompanyRss assets, and prevent and detect fraud and other irregularities
• The Directors prepared the accounts for the year ended March 31,
2023, on a going concern basis
• The Directors devised proper systems ensuring compliance with
the provisions of all applicable laws, and that such systems were adequate and operating
effectively
Policy on Appointment of Directors and Remuneration
The Board has adopted a policy for appointment, remuneration, training,
and evaluation of Directors and employees. The policy, inter-alia, included the criteria
and procedures for selection, identification and appointment of Directors, criteria for
appointment of Senior Management Executives, remuneration to Executive and Non-Executive
Directors, training and performance evaluation of the Board, among others, and other
matters provided under Section 178(3) of the Act. The above policy is available on the
Companys website at https://www.navaraenergv.com/ investors/information
Performance Evaluation of the Board, Chairman, Committees, and
Individual Directors
A formal performance evaluation of the Board, its Committees, the
Chairman, and Individual Directors, for FY 2022-23 was carried out. The Independent
Directors evaluated the performance of the Chairman, NonIndependent Directors, and the
Board.
Feedback from Individual Directors was sought, based on a structured
questionnaire. The evaluation was reviewed by the Nomination and Remuneration Committee
and the Board of Directors.
Key Managerial Personnel
The following executives were designated as Key Managerial Personnel
under the Act during FY 2022-23:
• Mr. Prasad K. Panicker - Chairman & Head of Refinery
• Mr. Charles Anthony Fountain - Executive Chairman (up to October
2, 2022)
• Dr. Alois Virag - Chief Executive Officer
• Ms. Rajani Kesari - Chief Financial Officer (w.e.f. January 2,
2023)
• Mr. Anup Vikal - Chief Financial Officer (up to August 18, 2022)
• Mr. Mayank Bhargava - Company Secretary
Audit Committee
During the year, Ms. Victoria Cunningham was appointed as member of the
Audit Committee in place of Mr. Chin Hwee Tan w.e.f. February 8, 2023. As of March 31,
2023, the Audit Committee comprised of Mr. Deepak Kapoor (Independent Director) as its
Chairman along with Ms. Naina Lal Kidwai (Independent Director) and Ms. Victoria
Cunningham as its members. During FY 2022-23, all the recommendations of the Audit
Committee were accepted by the Board.
Risk Management
To deal with an ever-changing risk landscape, Nayara Energy has a
robust risk management framework in the form of a comprehensive Risk Management Policy and
Risk Appetite Statement that drives a risk aware culture across the organisation and
ensures all the risks are effectively identified and managed.
The Company has a Risk & HSE Committee which regularly reviews the
organisations risk profile and keeps a track of all existing and potential risks. These
risks are further classified into intolerable, critical and moderate category depending
upon probability of the occurrence and potential impact. Based on the appetite and
corresponding tolerances as finalised under risk appetite statement, a clear and
well-defined RsRisk Assessment Criteria has been laid down to facilitate an objective
impact assessment. The Company effectively addresses its key risks by implementing
appropriate and adequate risk response plans and/or internal control measures that brings
down the risks to acceptable and manageable levels.
Ongoing monitoring of risks and its severity is facilitated by robust
reporting on top risks and performance metrices to management and Risk & HSE Committee
on a periodic basis. In case of any major external event having any potential impact on
business operations, a task force comprising of senior members of the Management is
constituted to monitor the risk levels on regular basis and ensure that appropriate
mitigation plans are put in place to manage the same.
Overall, in the opinion of the Board, the Company has a well-defined
framework, processes and reporting structure for identifying and managing all key risks
that the Company is facing.
Internal Financial Controls
Nayara Energy has in place a robust system and framework of Internal
Financial Controls. This framework provides a reasonable assurance regarding the adequacy
of design and operating effectiveness of controls with regard to financial reporting,
operational and compliance risks.
The framework ensures that the Company has policies and procedures for
ensuring orderly and efficient conduct of the business, safeguarding of assets of the
Company, prevention and detection of frauds, accuracy and completeness of accounting
records and timely preparation of reliable financial information.
The Company has devised appropriate systems and framework including
proper delegation of authority, effective IT systems aligned to business requirements,
risk based internal audits, risk management framework and whistleblower mechanism.
The CompanyRss Internal Financial Control framework, based on COSO
"Internal Control Integrated Framework" and COSO and IIA "The Three Line of
Defence Model" includes a procedure and risk and control matrices covering entity
level controls, process and operating level controls and IT general controls. Such
controls have been assessed during the year under review taking into consideration the
essential components of internal controls stated in the "Guidance Note on Audit of
Internal Financial Controls over Financial Reporting" issued by "The Institute
of Chartered Accountants of India". The entity level policies include anti-fraud
policies such as Ethics Code, Anti-Corruption Policy, Conflict of Interest, Whistle Blower
Policy and other policies (viz. organisation structure, HR policies, IT security
policies).
During the year, the Company strengthened the Internal Financial
Control framework by implementing new controls identified during framework Implementation
and periodic report on the status of the same. Further, new improvement opportunities are
being identified as a part of design assessment carried out during Internal Financial
Controls Testing every year. This encompasses a process of Quarterly self-certification of
design of the operational and financial controls in their respective business areas by the
Business Head/Finance Head.
During the year, the controls were tested and no material weakness in
design and effectiveness were observed. Nonetheless, the Company recognises that any
internal control framework, no matter how well- designed, has inherent limitations and
accordingly, regular audits and review processes ensure that such systems are reinforced
on an ongoing basis.
Vigil Mechanism
The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules
prescribed thereunder is implemented through the CompanyRss Whistle Blower Policy to
enable the Directors, employees and all stakeholders of the Company to report genuine
concerns (about unethical behaviour, actual or suspected fraud, or violation of the Code),
to provide for adequate safeguards against victimisation of persons who use such mechanism
and make provision for direct access to the Chairman of the Audit Committee.
Nayara Energy strictly follows a zero tolerance approach towards any
unethical practice. All reported concerns related to actual or suspected improper conduct
are independently investigated and strict actions are implemented to maintain highest
governance standards. A quarterly report on the complaints received is placed before the
Audit Committee for its review.
In FY 2022-23, we took multiple measures to increase awareness of the
code of conduct and the vigil mechanism through mandatory e-learning training on Ethics
Code and Communication. We also performed rigorous testing of a new hotline tool that will
be launched in CY 2023.
The new tool will focus on improved accuracy, reliability, productivity
and will strengthen the vigil mechanism at Nayara Energy.
Auditors and Audit
Statutory Auditor
The report given by S. R. Batliboi & Co. LLP, Statutory Auditors,
on the Companys standalone and consolidated financial statements for FY 2022-23, forms a
part of this Annual Report. There were no qualifications, reservations, adverse remarks,
or disclaimers given by the Auditors in their reports. The notes on financial statements,
referred to in the Auditors Report, are selfexplanatory and do not call for any further
comments.
Cost Auditor
In accordance with the provisions of Section 148 of the Act, the
Company maintained cost records as specified by the Central Government.
The Cost Audit Report, issued by M/s Chandra Wadhwa & Co. for the
financial year ended March 31, 2023, will be filed with the Ministry of Corporate Affairs
within the prescribed time period.
Secretarial Auditor
The Secretarial Audit Report, issued by M/s. Parikh Parekh &
Associates, Practicing Company Secretaries, for the year ended March 31, 2023, is attached
as Annexure - B to this Report. The Secretarial Audit Report does not contain any
qualification, reservation, or adverse remark.
Disclosures
Compliance with Secretarial Standard
Your Company fully complied with the provisions of Secretarial Standard
1 (SS 1) on Board/Committee meetings and Secretarial Standard 2 (SS 2) on the General
Meeting of Shareholders, issued by the Institute of Company Secretaries of India and
approved by the Central Government, pursuant to Section 118 of the Companies Act, 2013.
Number of Meetings of the Board
During the FY 2022-23, the Board of Directors met six times, i.e. on
May 26, 2022, May 27, 2022; July 14,
2022; August 12, 2022; November 11, 2022 and February 9, 2023. All
these meetings were well-attended by the Directors.
Particulars of Contracts or Arrangements with Related Parties
The details of contracts entered with related parties during the year
in compliance with the provisions of Section 188 of the Act are specified in Form AOC-2
and enclosed as Annexure - C. There were no material related party transactions undertaken
by the Company during the year that required shareholdersRs approval under Regulation
23(4) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 or
Section 188 of the Act. All related party transactions were in compliance with the
applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements),
Regulations 2015 and the Act.
Related party disclosures, as required by Ind AS 24, have been made in
note no. 43 to the standalone and consolidated financial statements of the Company.
Particulars of Loans given, Investments made, Guarantees given and
Securities provided
Particulars of investments made are provided in the standalone
financial statements (please refer note no. 7 of the standalone financial statements).
Since Nayara Energy belongs to the petroleum sector and operates Rsinfrastructure
facilities as defined under Schedule VI of the Act, it is not required to comply with
provisions relating to making of investments, loans, giving guarantees, or providing
security as prescribed in Section 186 of the Act.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings, and Outgo
The particulars relating to conservation of energy, technology
absorption, and foreign exchange earnings and outgo, as required to be disclosed under the
Act, are provided as Annexure - D to this Report.
Annual Return
The Annual Return for the financial year ended March 31, 2022, filed
with the Registrar of Companies, after the conclusion of the 32nd Annual
General Meeting, held on September 30, 2022, is placed on the Company website and can be
accessed at https:// www.navaraenergv.com/investors/ information
Further, the Annual Return of the Company as on March 31, 2023, is
available on the Companys website and can be accessed at https://
www.nayaraenergy.com/investors/ information
Fixed Deposits
The Company did not accept any deposits from the public in accordance
with the provisions of Sections 73 to 76 of the Act and the Rules framed thereunder.
Accordingly, the details required to be reported under Rule 8(5) of the Companies
(Accounts) Rules, 2014, were not applicable.
General Disclosures
Your Directors state that for the year ended March 31, 2023, no
disclosure was required in respect of the following items and accordingly confirmed as
under:
• The Executive Directors did not receive any remuneration from
the subsidiary companies.
• The Company neither revised the financial statements nor the
report of the Board of Directors.
• The Company did not issue equity shares with differential rights
as to dividend, voting, or otherwise or sweat equity shares.
• No significant or material orders were passed by the Regulators,
or Courts, or Tribunals, which impact the going concern status or operations in future.
• The Company did not buy back any shares during the year.
• No instance of fraud was reported to either the Audit Committee
or the Board of Directors.
Acknowledgement
The Board also recognises the efforts put in by Company executives for
their efforts in delivering the performance and maintaining resilience during these
difficult times. Their talent, passion and agility have made the Company sustain its
performance year-on-year.
The Board expresses its sincere appreciation and gratitude to Financial
Institutions, Banks, Customers, Suppliers, and Investors of the Company, for their
continual support. We also value the ongoing cooperation extended to the Company by the
Government of India, Gujarat and other state governments and various government agencies/
departments.
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