25 Apr 2017 | Livemint.com

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Hindustan Oil Exploration Company Ltd.

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Hindustan Oil Exploration Company Ltd. Accounting Policy

REPORT ON CORPORATE GOVERNANCE

At HOEC, Corporate Governance is about maintaining a relationship based on transparency and trust with all stakeholders, shareholders, employees, suppliers, customers, investors, communities or policy makers. We believe that sound governance system, anchored to the principles of transparency and trust, is integral to creating and enduring value. HOEC has a defined policy framework for ethical conduct of business.

In accordance with Clause 49 of the Listing Agreement with BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE) and some of the best practices followed internationally on Corporate Governance, the report containing the details of corporate governance systems and processes at Hindustan Oil Exploration Company (HOEC) Limited is as follows:

1. STATEMENT ON COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE

Corporate Governance is a set of systems and practices to ensure that the affairs of the Company are managed to ensure accountability, transparency and fairness in all its transactions and meet its stakeholder's aspirations and societal expectations. Good governance practices stem from a progressive culture and positive mindset of an organization.

It is crucial to foster and sustain a culture that integrates all components of good governance by carefully balancing the complex interrelationship among the board of directors, audit committee, accounting & corporate secretarial team, auditors and senior management.

HOEC not only adheres to the prescribed corporate governance practices as per Clause 49 but is also committed to adopt emerging best principles and practices worldwide. It is our endeavor to achieve higher standards and provide oversight and guidance to the management in strategy implementation, risk management and fulfillment of stated goals and objectives.

Additionally, the Company has adopted and implemented certain non-mandatory guidelines issued by the Ministry of Corporate Affairs and as amended from time to time relating to the appointment of Directors, training, risk management, rotation of Auditors and / or its Partners.

The Board's actions and decisions are aligned with the Company's best interests. It is committed to the goal of sustainably increasing the Company's value. The Company has defined guidelines and established framework for the meetings of the Board and its Committees. These guidelines seek to systematize the decision-making process at the meeting of the Board and the Committees in an informed and efficient manner.

The Board critically evaluates strategic direction of the Company, management policies and their effectiveness. The agenda for Board reviews include strategic review from each of the Board committees, a detailed analysis and review of annual strategic plans, operating plans, capital allocation, budgets and financial reports.

At the heart of our processes is the extensive use of technology. This ensures robustness and integrity of financial reporting, internal controls, allows optimal use and protection of assets, facilitates accurate and timely compilation of financial statements and management reports and ensures compliance with statutory laws, Regulations and Company Policies.

Over the years, governance processes and systems have been strengthened at HOEC. Corporate Governance is a journey for constantly improving sustainable value creation. We have undertaken several initiatives towards maintaining the highest standards of governance and these include formulating the Management Systems and Guidelines, policies and the following codes and its adherence.:

• HOEC Guideline for Prohibition of Insider Trading

• HOEC Directors' Code of Conduct

• Whistle Blower Policy

• HOEC Anti-Corruption Guideline

• HOEC Management and Control Model

• Our People Policy

• Corporate Governance Policy

• Procurement Management System Guideline

• Human Resources Guideline

• Operational Excellence Policy

• Health Safety and Environment (HSE) Policy

• Policy on Security

• Corporate Policy on Anti Sexual Harassment of Employees

In addition, the Company has a strong sense of participation in community development such as using and developing local sources wherever possible for our operations. Its established systems encourage and recognize employee participation in environmental and social initiatives that contribute to organizational sustainability, conservation of energy, and promotion of safety and health.

2. BOARD OF DIRECTORS

(i) Board composition and category of Directors

As on 31 March 2015, the Company has 6 (Six) Directors of which 4 (Four) Directors are Non-Executive Directors and the 2 (Two) Directors are Executive Directors.

The Chairman of the Board is a Non-Executive Independent Director and one director is Non-Executive Independent woman Director. Accordingly, the composition of the Board is in compliance with clause 49 of the Listing Agreement entered into with the Stock exchanges.

As required under Section 149(3) of the Companies Act, 2013 & Listing Agreement, Ms. Sharmila Amin a Woman Director, has been appointed as an Independent Director on the Board.

(ii) Functions of the Board

Board is the highest decision making body subject to the powers and matters reserved to Members that may be exercised in their meeting.

Board accords its approval to all the key decisions of the Company. For day to day routine operations, the Board has delegated authority to the Managing Director. All matters of strategic or material nature are placed before the Board with background, proposal, situational and option analysis, notes and relevant documents to enable Board to take informed decisions.

(iii) Separation of Board's supervisory role from Executive Management

The Company, in line with the best corporate governance practice, has separated the Board's supervisory role from that of the executive management.

(iv) Selection of Independent Directors and their Role

Considering the requirement of skill sets on the Board, eminent people having an independent standing in their respective field / profession and who can effectively contribute to the Company's business and policy decisions are considered by the Nomination & Remuneration Committee for appointment as Independent Directors on the Board. The committee,

inter alia, considers qualification, positive attributes, area of expertise and number of Directorships and memberships held in various committees of other companies by such persons. The Board considers the Committee's recommendations and takes appropriate decision.

Every Independent Director, at the first meeting of the Board in which he/she participates as a Director and thereafter at the first meeting of the Board in every financial year, gives a declaration that he/she meets the criteria of independence as provided under law.

As mandated under the existing Clause 49 of the Listing Agreement, the Independent Directors on the Board of the Company:

• Apart from receiving Director's remuneration, do not have any material pecuniary relations or transactions with the Company, its Promoters, Directors, Senior Management or its Holding Company, Subsidiaries and Associates which may affect independence as Director;

• Are not related to promoters or persons occupying management positions at the Board level or at one level below the Board;

• Have not been executive(s) of the Company in the immediately preceding three financial years;

• Are not partner(s) or executive(s) or were not partner(s) or executive(s) during the preceding three years, of any of the following:

- Statutory Audit firm or the internal audit firm that is associated with the Company.

- Legal firm(s) and consulting firm(s) that have a material association with the Company.

• Are no material supplier(s), service providers(s) or customer(s) or lessor(s) of the Company, which may affect independence of the Director;

• Are not substantial shareholders of the Company i.e. do not own two per cent or more of the block of voting shares:

• Are not less than 21 years of age

None of the Directors of the Company are related to each

The Independent Directors have vast and diversified professional and operational experience in the areas of general management, finance, insurance and public administration. This pool of rich and diverse experience enriches and adds value to the discussions and decisions arrived by the board.

(vi) Board Meetings

The Board is required to have four (4) regular scheduled meetings per financial year. During the year under review, ten Board meetings were held and the gap between any two meetings did not exceed limits specified.

Board Meetings held during the year:

(vii) Directors resigned / retiring during the year and re-appointments / appointments

During the year the Non-Executive Independent Directors Mr Dhruv S Kaji resigned on 25 September 2014, Mr. R. Vasudevan and Mr. V. S. Rangan resigned on 8 October, 2014. Though Mr. Sunil Behari Mathur resigned on 8 October 2014, he re-joined the Board on 17 November, 2014 as Non-Executive Chairman & Independent Director. Mr. Manish Maheshwari, only whole time executive director functioning as Managing Director submitted the resignation on 8 October, 2014. The Board places on record its appreciation for the valuable services rendered by the directors.

Ms. Sharmila Amin joined the board as Non-Executive Independent Woman Director on 17 December, 2014. Mr. P. Elango, joined as Additional Director and the Managing Director for a period of 3 years from 02 February, 2015 subject to the approval of the members in the ensuing

Annual General Meeting. Mr. R. Jeevanandam, joined as Additional Director and Chief Financial Officer for a period of 3 years from 02 February, 2015 subject to the approval of the members in the ensuing Annual General Meeting.

The details of directors being appointed / re-appointed are given elsewhere in this Annual Report and forms part of this Report.

(viii) Code of Conducts for the Directors and Senior Executives

In compliance with Clause 49 of the Listing Agreement, Company has laid down and implemented the Directors' Code of Conduct and Code of Ethics for Senior Management of the Company.

All Board Members, Senior Management, and personnel who are one level below the Senior Management level, but instrumental in the critical operations / functions are covered under the said Codes. Company continues

to ensure effective implementation and enforcement of these Codes to achieve the objectives enshrined in these Codes. All the employees are updated and sensitized about these Codes. Copies of the Codes are available on the intranet for reference and compliance by all the employees. These Codes have been also posted on the Company's website: www.hoec.com All the employees under the scope of these Codes have affirmed their compliance thereof.

(ix) Code of Conduct for prevention of Insider Trading

Pursuant to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, as amended from time to time, the Company has laid down and adopted a Code of Conduct for Prevention of Insider Trading based and modeled on said Regulations. The said Code incorporates the amendments made in the aforementioned Insider Trading Regulations from time to time. The Company inter-alia observes a closed period for trading in securities of the Company for Directors / Officers and Designated Employees of the Company for the period of at-least seven days prior to the consideration of quarterly / yearly results.

The trading window is also closed in anticipation of price sensitive information / announcements / events. The said closure extends up to at least 48 hours after the disclosure of the said results / price sensitive information / announcements / events to the Stock Exchanges.

The Board periodically reviews compliance of the laws applicable to the Company. The functional heads, the Managing Director and the Assistant Company Secretary jointly give certificate of compliance to the Board for its review and noting. These certificates also contain reasons and action plan to remedy non-compliance, if any.

(x) Information provided to the Board

The following information is placed before the Board of Directors:

• Strategic plan covering immediate to long term proposition.

• Annual operating plans of business, capital budget and updates / revisions duly reviewed and recommended by the Audit Committee.

• Quarterly results of the Company along with various reports.

•Annual Financial results of the Company, Auditors' Report and the Report of the Board of Directors'.

•Minutes of the Audit Committee,  Shareholders / Investors Grievance Committee and •Compensation & Remuneration Committee of the Board.

•Information on recruitment and remuneration of senior officers just below the Board level, including appointment or removal or resignation of the senior officers and the Company Secretary.

•Materially important litigations, show cause, demand, prosecution and penalty notices.

•Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems etc.

•Any material default in financial obligation to and by the Company.

•Any issue, which involves liability claims of substantial nature, including any judgment or order, which may have passed strictures on the conduct of the Company.

•Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material.

•Non-compliance of any regulatory, statutory, or listing requirements and shareholders service such as non­payment of dividend, delay in share transfer etc.

•Prior approval for sale of material nature of investments, subsidiary, assets, which is not in normal course of business.

•Status of each of the projects and criticalities, if any on a quarterly basis.

•General notices of interest of Directors.

•Appointment, remuneration and resignation of Directors.

•Formation / Reconstitution of Board Committees.

•Terms of reference of Board Committees.

•The minutes of the Board meetings of unlisted Subsidiary Company.

•Declaration of Independent Directors at the time of appointment / annually.

•Dividend declaration, if any.

• Quarterly summary of all long-term borrowings made, bank guarantees issued, loans and investments made.

• Significant changes in accounting policies and internal controls.

• Statement of significant transactions, related party transactions and arrangements entered by unlisted subsidiary company.

• Appointment of and the fixing of remuneration of the Auditors after taking into account the recommendations of the Audit Committee.

• Internal Audit Findings and Reports (through the Audit Committee).

• Proposals for major investment, mergers and acquisitions.

• Details of any joint venture, acquisitions of companies or collaboration agreement.

• Status of business risk exposures, its management and related action plans.

• Investment of surplus funds.

• Significant labour problems and their proposed solutions. Any significant development in Human Resources / Industrial Relations front like implementation of Voluntary Retirement Scheme, etc.

• Brief on statutory developments, changes in Government policies, etc. with impact thereof, Directors' responsibilities arising out of any such developments.

• Compliance Certificate certifying compliance with all Laws as applicable to the Company.

• Reconciliation of Share Capital Audit Report under SEBI (Depositories and Participants)  Regulations, 1996.

The agenda and notes on the agenda items are circulated to the Directors, in advance, in the defined agenda format. All material information is incorporated in the agenda for facilitating meaningful and focused discussions at the meeting. Where it is not practicable to attach any document to the agenda, the same is tabled before the meeting with specific reference to this effect in the agenda. In special and exceptional circumstances, additional or supplementary item(s) on the agenda are permitted by the Chairman.

The Asst. Company Secretary records the minutes of the proceedings of each Board and Committee meeting. Draft minutes are circulated to all the members of the Board / Committee for their comments. The minutes are entered in the Minutes Book within thirty (30) days from conclusion of the meeting.

The Asst. Company Secretary, while preparing the agenda, notes to the agenda, minutes, etc. of the meeting(s), is responsible for and is required to ensure adherence to all the applicable laws and regulations including the Companies Act, 2013 read with the Rules and Regulations issued thereunder along with Secretarial Standards. The aforesaid are submitted generally as part of the agenda papers / Board Notes in advance of the Board Meetings and / or presented during the Board Meeting.

The Board & also the Chairman have the authority to engage experts, advisors and counsels to the extent it considers appropriate to assist in the functioning of the Board. Mr. Minesh Bhatt, Assistant Company Secretary and Compliance Officer, was the Secretary of all Board Committees. A qualified Company Secretary Mr. K. Premnatha is appointed on 10 August, 2015 and who will be functioning as Company Secretary & Compliance Officer.

(xi) Procedure at the Committee Meetings

The Company's guidelines relating to the Board Meetings are also applicable to the Committee Meetings as far as practicable. Each Committee and also their Chairman have the authority to engage outside experts, advisors and counsels to the extent it considers appropriate to assist in its function. Minutes of proceedings of the Committee Meetings are circulated to the concerned committee members for approval and then placed before the Board Meeting for noting.

3. AUDIT COMMITTEE

On 17 December, 2014, the Audit committee was re-constituted with Mr. Sunil Behari Mathur as Chairman, Mr. Paolo Ceddia and Ms. Sharmila Amin as members. On 28 May, 2015 Mr. R. Jeevanandam was also inducted as a Member. All the members of this Committee possess relevant financial / accounting expertize / exposure. Mr. Minesh Bhatt, Assistant Company Secretary is the Secretary to the Audit Committee.

Powers of the Audit Committee The Audit Committee is empowered:

• To investigate any activity within its terms of reference

• To seek information from any employee

• To obtain outside legal or other professional advice

• To secure attendance of outsiders with relevant expertise, if it considers necessary

Role of the Audit Committee inter alia, includes the following:

• Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

• Recommending to the Board, the appointment, reappointment and, if required, the replacement or removal of statutory auditors, including cost auditors, and fixation of audit fees and other terms of appointment.

• Approving payment to statutory auditors, including cost auditors for any other services rendered by them.

• Reviewing with the management, annual financial statements and auditors report thereon before submission to the Board for approval, with particular reference to:

- Matters required to be included in the Directors' Responsibility Statement to be included in the Directors' Report.

- Changes, if any, in accounting policies and practices and reasons for the same.

- Major accounting entries involving estimates based on the exercise of judgment by the management.

- Significant adjustments made in financial statements arising out of audit findings.

- Compliance with listing and other legal requirements relating to financial statements.

- Disclosure of related party transactions.

- Qualifications in draft audit report.

• Reviewing with the management, the quarterly financial statements before submission to the Board for approval.

• Reviewing with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/ prospectus/notice, and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.

• Reviewing and monitoring the auditor's independence and performance and effectiveness of audit process.

• Approval or any subsequent modification of transactions of the Company with related parties.

• Scrutiny of inter-corporate loans and investments.

• Valuation of undertakings or assets of the Company, wherever it is necessary

• Evaluation of internal financial controls and risk management systems.

• Reviewing with the management, the performance of statutory auditors, including cost auditors and internal auditors, adequacy of internal control systems.

• Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit.

• Discussion with internal auditors, any significant findings and follow-up thereon.

• Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature, and reporting the matter to the Board Discussion with statutory auditors, before the audit commences, about the nature and scope of audit as well as post audit discussion to ascertain any area of concern.

• To look into the reasons for substantial defaults, if any, in the payment to depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.

• To review the functioning of the Whistle Blower mechanism.

• Approval of appointment of the CFO (i.e. the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing qualifications, experience and background of the candidate.

• Carrying out such other functions as may be specifically referred to the Committee by the Company's Board of Directors and/or other Committees of Directors.

• Reviewing financial statements, in particular the investments made by the Company's unlisted subsidiaries.

• Reviewing the following information:

- The Management Discussion and Analysis of financial condition and results of operations;

- Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;

- Management letters / letters of internal control weaknesses issued by the statutory

- Internal audit reports relating to internal control weaknesses; and

- The appointment, removal and terms of remuneration of internal auditors.

• To call for comments from the auditors about internal control systems, the scope of audit, including the observations of the auditors and review of financial statement before their submission to the Board and to discuss any related issue with the internal and statutory auditors and the management of the Company.

• Reviewing the financial statements and the investments made by HBIL, the unlisted subsidiary of the Company.

Senior Executives of Accounts Department, Finance Department, Secretarial department and representatives of statutory and internal auditors attend Audit Committee Meetings. The Chairman of the Audit Committee was present at the last Annual General Meeting held on  26 September, 2014.

4. NOMINATION AND REMUNERATION COMMITTEE

The Committee's constitution and terms of reference are in compliance with provisions of the Companies Act, 2013, Clause 49 of the Listing Agreement and Securities and Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended from time to time.

The Company has ensured that, the persons who are appointed as Independent Director(s) have the requisite qualifications and experience which would be useful to the Company and which in the opinion of the Company, would enable them to contribute effectively to the Company as Independent Directors.

(i) Terms of Reference

The terms of reference of the Nomination and Remuneration Committee, inter-alia, are to identify persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and to recommend to the Board their appointment and/ or removal; to decide the term of services and compensation payable to Whole-time / Managing Director; to formulate the criteria for determining qualifications, positive attributes and independence of a Director; to formulate the criteria for evaluation of Independent Directors and the Board; to recommend to the Board a policy, relating to the remuneration for the Directors, key managerial personnel and other employees; it is also entrusted with the duty to administer, monitor and formulate detailed terms and conditions of the Long Term Incentive Plan of the Company including the ESOS; and to discharge such other functions as may be referred by the Board from time to time and / or enforced by any statutory notification, amendment or modification, as may be applicable.

(ii) Composition of Committee

As on 01 April 2014, the committee was Chaired by Mr. Sunil Behari Mathur and other members were Mr R. Vasudevan and Mr. Dhruv S. Kaji were Non-Executive and Independent Directors.

Consequent to the resignation and reconstitution of the board, the Committee was reconstituted on 28 May, 2015 with Ms. Sharmila Amin as Chairperson and Mr. Sunil Behari Mathur and Mr. Paolo Ceddia as Members. The Committee comprises of three Non-Executive Directors and the Chairperson Ms. Sharmila Amin is a Non-Executive Independent Director.

(iii) Remuneration Policy

The Company inter-alia while deciding the remuneration package takes into consideration, the following:

(a) Employment scenario and demand for talent in the upstream oil and gas sector;

(b) Remuneration package of the industry / other industries for the requisite managerial talent; and

(c) The qualification and experience held by the appointee.

(iv) Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration Committees. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgement safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction with the evaluation process.

(v) Details of Remuneration of Directors

(a) Remuneration to Executive Directors during the year 2014-15

The Managing Director of the Company is appointed by the Board as per the recommendation of the Nomination Committee. Mr. P. Elango is the Managing Director of the Company.

The Executive Directors' remuneration comprises of salary, allowances, perquisites and bonuses if any which shall be approved by the Members at the Annual General Meeting as recommended by the Board.of shares, issue of duplicate shares, non-receipt of balance sheet, dividends etc. Oversee the performance of the Company's Registrars and Transfer Agents. The Committee also monitors the implementation and compliance with the Company's Code of Conduct for prohibition of Insider Trading.

To facilitate prompt services to the shareholders of the Company, Assistant Company Secretary is authorized to approve the Share Transfer and its related processes / procedures / activities viz., splitting, consolidation, replacement, issue of duplicate share certificate, dematerialization and re-materialization of equity shares etc. Asst. Company Secretary also acted as a Compliance Officer to the Stakeholders Relationship Committee.

The Stakeholder Relationship Committee's composition and the terms of reference meet with the requirements of Clause 49 of the Listing Agreement and provisions of the Companies Act, 2013.

The Chairman of the Stakeholders Relationship Committee till 8 October, 2014 was Mr. R. Vasudevan and thereafter the committee was reconstituted on 17 December, 2014 with Ms. Sharmila Amin as Chairperson, Mr. Sunil Behari Mathur and Mr. Paolo Ceddia as members. On reconstitution of the Board on 28 May, 2015, the Committee has been re-constituted with Ms. Sharmila Amin as Chairperson and Mr. R. Jeevanandam and Mr. P. Elango as members.

 (b) Remuneration to Non-Executive Directors during the year 2014-2015

Non-Executive Directors of the Company are entitled to receive sitting fees for the Board and other committee meetings. The details of sitting fees paid during the year are as under:

5. STAKEHOLDERS RELATIONSHIP COMMITTEE

The terms of reference of the Stakeholders Relationship Committee inter-alia are to look into the shareholders/ investors complaints pertaining to transfer and transmission of shares, issue of duplicate shares, non-receipt of balance sheet, dividends etc. Oversee the performance of the Company’s Registrars and Transfer Agents. The Committee also monitors the implementation and compliance with the Company’s Code of Conduct for prohibition of Insider Trading.

To facilitate prompt services to the shareholders of the Company, Assistant Company Secretary is authorized to approve the Share Transfer and its related processes / procedures / activities viz., splitting, consolidation, replacement, issue of duplicate share certificate, dematerialization and re-materialization of equity shares etc. Asst. Company Secretary also acted as a Compliance Officer to the Stakeholders Relationship Committee.

The Stakeholder Relationship Committee’s composition and the terms of reference meet with the requirements of Clause 49 of the Listing Agreement and provisions of the Companies Act, 2013.

The Chairman of the Stakeholders Relationship Committee till 8 October, 2014 was Mr. R. Vasudevan and thereafter the committee was reconstituted on 17 December, 2014 with Ms. Sharmila Amin as Chairperson, Mr. Sunil Behari Mathur and Mr. Paolo Ceddia as members. On reconstitution of the Board on 28 May, 2015, the Committee has been re-constituted with Ms. Sharmila Amin as Chairperson and Mr. R. Jeevanandam and Mr. P. Elango as members.

Any queries regarding the Company may please be addressed to the Company Secretary & Compliance Officer at:  Hindustan Oil Exploration Company Limited,  'Lakshmi Chambers', 192, St. Mary's Road, Alwarpet,  Chennai-600 018, (Tamil Nadu) India.  Tel: +91-(044) 66229000, Fax: +91-(044) 66229011 / 12 E-mail: hoecshare@hoec.com  

6. CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

The Board of Directors at their meeting held on 28.05.2015 constituted a committee called as Corporate Social Responsibility Committee with Mr. Sunil Behari Mathur as Chairman, Mr. P. Elango and Ms. Sharmila Amin as members with a mandate to formulate a CSR policy and the subsequent implementation of the policy effective from the financial year  2015-2016.

7. RISK MANAGEMENT COMMITTEE

Business Risk Evaluation and Management is an on-going process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks as also identify business opportunities.

The objectives and scope of the Risk Management Committee broadly comprises:

• Oversight of risk management performed by the executive management;

• Reviewing the BRM policy and framework in line with local legal requirements and SEBI guidelines;

• Reviewing risks and evaluate treatment including initiating mitigation actions and ownership as per a pre-defined cycle;

• Defining framework for identification, assessment, monitoring, mitigation and reporting of risks.

On 28 May, 2015 the Risk Management was constituted with Mr. P. Elango, Managing Director as Chairman, Mr. R. Jeevanandam and Ms. Sharmila Amin as members.

8. INDEPENDENT DIRECTORS' MEETING

During the year under review, the Independent Directors met on 25 September 2014, inter alia, to discuss:

• Evaluation of the performance of Non-independent Directors and the Board of Directors as a whole.

• Evaluation of the performance of the Chairman of the Company, taking into account the views of the Executive and Non-executive directors.

• Evaluation of the quality, content and timelines of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

All the Independent Directors were present at the Meeting except Mr. R. Vasudevan who was on leave of absence.

9. PROMOTERS

Eni UK Holding Plc, Burren Shakti Limited and Burren Energy India Limited (referred to as "Eni Group") collectively hold 47.18% of the paid-up capital of the Company Eni Group, the promoters have declared that they have not pledged any of their shareholding in the Company. During the year, the Company has received a request for excluding their names as promoters which is not considered by the Stock Exchanges and the status quo as promoter is maintained.

(b) Special Resolutions passed at the Annual General Meeting (AGM) for the last 3 years are as under:

• Ratification of remuneration paid to Mr Manish Maheshwari, Managing Director of the Company for the period April 01, 2012 to 31 March, 2013 being in excess of the limits specified in Schedule XIII of the Companies Act,  1956 on 25 September, 2013.

• Alteration of Clause V of Memorandum of Association of the Company for increase in the authorized share capital from INR 200 crore to

INR 500 Crore on 26 September, 2014.

• Alteration of Article 3 of Articles of Association of the Company for increase in the authorized share capital from INR 200 crore to INR 500 Crore on 26 September, 2014.

• Appointment of Mr Manish Maheshwari as the Managing Director of the Company w.e.f. 26 September, 2014 for a period of 5 years.

• Approval and ratification of remuneration paid to Mr. Manish Maheshwari, Managing Director of the Company for the period 01 April, 2013 to 31 March, 2014 being in excess of the limits specified in Schedule V of the Companies Act,  2013 on 26 September, 2014.

Special Resolution passed through postal ballot, if any:

No Special Resolution was passed through postal ballot during the last three years. None of the businesses proposed to be transacted in the ensuing Annual General Meeting require passing a resolution through postal ballot.

11. DISCLOSURES:

(a) Disclosure on materially significant related party transactions i.e. transactions of the Company material in nature, with its promoters, the directors and the management, their relatives or subsidiaries, etc. that may have potential conflict with the interests of the Company at large:

None of the transactions with any of the related parties were in conflict with the interest of the Company. All related party transactions are negotiated on arm's length basis and are intended to further the interests of the Company. Attention of members is drawn to the disclosure of transactions with related parties set out in Note no. 30 of the financial statements, forming part of the Annual Report.

(b) Details of non-compliance by the Company, penalties, strictures imposed on the Company by the Stock Exchange or SEBI or any authority on any matter related to capital markets during last three years.

There has been no instance of non-compliance by the Company on any matter related to capital markets during the last three years and hence no penalties or strictures have been imposed on the Company by the Stock Exchanges or SEBI or any other statutory authority except for the following:

There was a delay of 32 days in respect of compliance under Clause 41 of the Listing Agreement for furnishing the Unaudited Financial results for the quarter ended 30th September, 2014. The above delay in compliance resulted in total penalty of INR  27,69,866 to BSE & NSE. 12. MEANS OF COMMUNICATION

(a) Quarterly / Annual Results

Quarterly / Annual Results of the Company are published in the news papers viz. Business Standard, Business Line (all editions), Loksatta and also are displayed on the Company's website www.hoec.com

(b) News Releases, Presentations, etc.

Official news releases and Official Media Releases are sent to the Stock Exchanges and also displayed on the Company's website. The shareholders information is also made available in Company's website www.hoec.com The Annual Report of the Company is also available on the website in a user-friendly and downloadable form. No presentations are made to institutional investors or to the analysts. For financial year 2015-16, Company has appointed Stellar IR advisors for the purpose of Investor Relations.

(c) Annual Report

Annual Report containing, inter-alia, Audited Annual Accounts, Consolidated Financial Statements, Directors' Report, Auditors' Report and other important information is circulated to members and others entitled thereto. The Management's Discussion and Analysis (MD&A) Report forms part of the Annual Report and is displayed on the Company's website www.hoec.com

(d) Chairman's Communique

Printed copy of the Chairman's Speech is distributed to the shareholders at the Annual General Meeting. The same is also placed on the website of the Company.

(e) SEBI Complaints Redressal System (SCORES)

As per SEBI, the investor complaints are processed in a centralized web-based redressal system. The salient features of this system are:

Centralized database of all complaints, online upload of Action Taken Reports (ATRs) by the concerned companies and online viewing by investors of actions taken on the complaint and its current status.

(f) Electronic Filing with the Stock Exchanges

i) NSE Electronic Application Processing System (NEAPS) is a web based application designed by NSE for Corporates. The Shareholding pattern, Corporate Governance Report and other announcements are also filed electronically  on NEAPS.

ii) BSE Corporate Compliance & Listing Centre (the 'Listing Centre') is a web-based application designed for Corporates. All periodical compliance filings like shareholding pattern, corporate governance report, media releases, among others are also filed electronically on the Listing Centre.

(g) Designated Exclusive e-mail-id

The Company has designated email-id hoecshare@hoec.com exclusively for investor servicing.

(h) Green Initiative

As a responsible corporate citizen, the Company supports the 'Green Initiative' taken by the Ministry of Corporate Affairs, Government of India (MCA), by its Circulars, enabling electronic delivery of documents including the Annual Report to the shareholders at their e-mail address registered with the Depository Participants (DPs) / Registrars & Share Transfer Agents.

Shareholders, who have not registered their e-mail addresses so far, are requested to register their e-mail addresses. Those holding shares in demat form can register their e-mail address with their concerned DPs. Shareholders who hold shares in physical form are requested to register their e-mail addresses with Link Intime India Pvt. Ltd. by sending a letter, duly signed by the first / sole-holder quoting details of Folio No. Company's website is a comprehensive reference on the Company's management, business, policies, corporate governance, investor relations, HSE, subsidiary, updates and news. The Company website www.hoec.com <http://www.hoec.com> serves to inform the shareholders, by giving complete financial details, annual reports, shareholding patterns, corporate benefits, information relating to stock exchanges, registrars and share transfer agent etc.

13. COMPLIANCE CERTIFICATE OF THE AUDITORS

Certificate from M/s. S. Sandeep & Associates, Company Secretary in Practice confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49, is attached to the Directors' Report forming part of the Annual Report. This Certificate has also been forwarded to the Stock Exchanges where the securities of the Company are listed.

14. ADOPTION OF MANDATORY AND NON-MANDATORY REQUIREMENTS OF CLAUSE 49 OF THE LISTING AGREEMENT.

The Company has complied with all the mandatory requirements and has adopted some of the non-mandatory requirements of Clause 49. In respect of adoption of non-mandatory requirements, the Company will review its implementation from time to time.

(a) Training of Board members

The Board members are provided with the necessary documents / brochures, reports and internal policies to enable them to familiarize with the Company's procedures and practices. Further periodic presentations are made at the Board and Board Committee Meetings, on business and performance updates of the Company, global business environment, business strategy and risks involved. Also quarterly updates on relevant statutory changes and landmark judicial pronouncements encompassing important laws are regularly circulated to the Directors.

(b) Compliance with Accounting Standards

In the preparation of the financial statements, the Company has followed the Accounting Standards notified pursuant to Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provision of the Companies Act, 1956 read with General Circular 8/2014 dated April 04, 2014, issued by the Ministry of Corporate Affairs. The significant accounting policies which are consistently applied have been set out in the Notes to the Financial Statements.

(c) Certification

Managing Director and Chief Financial Officer of the Company give quarterly and annual certification on financial reporting and internal controls to the Board in terms of Clause 41 and 49 of the Listing Agreement.

(d) Whistle Blower Policy

The Company promotes ethical behaviour in all its business activities and has put in place a mechanism of reporting illegal or unethical behaviour. The Company has a whistle blower policy wherein the employees are free to report violations of laws, rules, regulations or unethical conduct to their immediate supervisor or such other person as may be notified by the management to the workgroups. During the year, no personnel have been denied access to the Audit Committee. The Whistle Blower Policy is available on the website of the Company at www.hoec.com The confidentiality of those reporting violations is maintained and they are not subjected to any discriminatory practice.

The Ethics Helpline can be contacted to report any suspected or confirmed incident of fraud / misconduct on: Mr. Sunil Behari Mathur  Plot No. 10, A-10, Vasant Vihar, New Delhi - 110057 E-Mail: ombudsperson@hoec.com

(e) Non-mandatory requirements

In respect of adoption of other non-mandatory requirements, the Company will review its implementation from time to time.

(f) Subsidiary Company

The Company does not have any material unlisted subsidiary and hence is not required to have an Independent Director on the Board of such subsidiary. The Audit Committee reviews the financial statements of the Company's unlisted subsidiary Company. The minutes of the meeting of the Board of Directors of the subsidiary company are periodically placed before and reviewed by the Board of Directors of the Company.

(g) Quarterly Compliance Report

The quarterly compliance report has been submitted to the Stock Exchanges where the Company's equity shares are listed in the requisite format duly signed by the Assistant Company Secretary & Compliance Officer, pursuant to Clause 49 of the Listing Agreement.

(h) Reconciliation of Share Capital Audit Report under SEBI (Depositories and Participants) Regulations, 1996. A qualified Company secretary in practice carried out a Share Capital Audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued / paid-up capital is in agreement with the total number of shares in physical form and the total number of shares held with NSDL and CDSL. The Auditors' Certificate in this regard is submitted to BSE Limited and the National Stock Exchange of India Limited and also placed before Stakeholders' Relationship Committee and the Board of Directors.

15. GENERAL SHAREHOLDERS INFORMATION

31st AGM -Day, Date, Time and Venue.

Friday, the 25th September, 2015 at 10:30 a.m. "Tropicana Hall", The Gateway Hotel Vadodara, Akota Gardens, Akota, Vadodara - 390 020

Financial Year

1st April to 31st March

Book Closure Date

Friday the 18th day September, 2015 to Friday the 25th day of September, 2015 (both days inclusive).

Dividend Payment Date

The Board has not recommended dividend for the FY 2014-15

Quarterly Financial Information

Results for the quarter ending on:

30 June, 2015 : By first week of August 2015

30 September, 2015 : By first week of November 2015

31 December, 2015 : By first week of February 2016

31 March, 2016 : By third week of May  2016

Registrar & Transfer Agents

Link Intime India Private Limited (Unit: Hindustan Oil Exploration Company Limited) B- 102 & 103, Shangrila Complex First Floor, Opp. HDFC Bank Limited Near Radhakrishna Char Rasta, Akota Vadodara-390020, Gujarat (India). Email : vadodara@linkintime.co.in Tel : +91 (0265) 2356573, 2356794 Fax : +91 (0265) 2356791

Board Meeting for consideration of Accounts for the financial year ended 31 March, 2015 and recommendation of dividend

28 May, 2015 and the Board has not recommended dividend for the FY 2014-2015.

Posting of Annual Reports

From 28 August, 2015 to 31 August, 2015.

Last date for receipt of Proxy Forms

Proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 24 hours before the commencement of the Meeting.

Probable date of dispatch of warrants : NA

a) Listing on Stock Exchanges

Equity Shares of the Company at present are listed at (1) Bombay Stock Exchange and (2) National Stock Exchange of India Limited (NSE). The Company has paid annual listing fees for the Financial Year 2015-2016 to the said Stock Exchanges.

(b) Stock / Scrip Code

The Company has established connectivity for trading of equity shares in the depository system with both depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

Name & Address of the Stock  Stock Code/  

BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001 : 500186 / HINDOILEXP

The National Stock Exchange  of India Limited, Exchange Plaza, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051 ; HINDOILEXP  INE345A01011

16. SHARE TRANSFER SYSTEM / DIVIDEND AND OTHER  RELATED MATTERS

(i) Share transfers

Share transfers in physical form are processed and the share certificates are generally returned to the transferees within a period of fifteen days from the date of receipt of transfer.

(ii) Nomination facility for shareholding

As per the provisions of the Companies Act, 2013, facility for making nomination is available for Members in respect of shares held by them. Members holding shares in physical form may obtain nomination form, from the Share Department of the Company or download the same from the Company's website. Members holding shares in dematerialized form should contact their Depository Participants (DP) in this regard.

(iii) Permanent Account Number (PAN)

Members who hold shares in physical form are advised that SEBI has made it mandatory that a copy of the PAN card of the transferee/s, members, surviving joint holders / legal heirs be furnished to the Company while obtaining the services of transfer, transposition, transmission and issue of duplicate share certificates.

(iv) Dividend

a. Payment of dividend through National Electronic Clearing Service (NECS)

The Company provides the facility for remittance of dividend to the Members through NECS. To facilitate dividend payment through NECS, Members who hold shares in Demat mode should inform their Depository Participant and such of the Members holding shares in physical form should inform the Company of the core banking account number allotted to them by their bankers. In cases where the core banking account number is not intimated to the Company / Depository Participant, the Company will issue dividend warrants to the Members.

b. Unclaimed Dividends- Transfer to Investor Education  and Protection Fund Your Company has transferred the funds lying unpaid or unclaimed for a period of more than seven years to Investor Education and Protection Fund (IEPF).

Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has already filed the necessary form and submitted the details of unpaid and unclaimed amounts lying with the Company with the Ministry of Corporate Affairs.

The Company is required to transfer dividends which have remained unpaid / unclaimed for a period of seven years to the Investor Education & Protection Fund and the dates by which the dividend amounts will be transferred to IEPF are as under:

Those Members whose dividends have remained unclaimed to date are requested to claim the same before transferring the monies to the Investor Education & Protection Fund  (IEPF).

(vi) Share Transfer System

Share Transfer in physical form requests are generally registered and returned within a period of 15 days from the date of receipt and request for dematerialization, re-materialization generally confirmed within a period of 21 days from the date of its receipt, if documents are complete in all respect. As on 31 March, 2015, 128,547,520 equity shares representing 98.50 % of total equity shares are dematerialized. Promoters hold their shareholding in dematerialized form.

17. There are no outstanding ADR/GDR/Warrants issued by the Company.

18. Facilities location

The Company is engaged in the business of Oil & Gas exploration, development & production and is at present operating at various fields as mentioned in section "Our Asset Portfolio" in the Annual Report. The address of the respective production facilities is summarized as follows:

(i) PY-1 Offshore Production facility SUN Platform, Offshore Cauvery Basin  Block PY-1, (Tamil Nadu), India.  PY-1 Gas Processing Plant Pillaiperumalnallur, Thirukadaiyur-609311 Nagapattinam Dist.

(ii) Palej Production Facility (PPF)  Block-CB-ON-7, Near Palej, Village Makan - 392 220 Vadodara Dist. (Gujarat), India

(iii) North Balol Gas Collection Station (GCS)  Block North Balol, Near Village Palaj-384 410  Mehsana Dist. (Gujarat), India.

(iv) Asjol Early Production System (EPS)  Block Asjol, Village Katosan - 384 430  Mehsana Dist. (Gujarat), India

19. Address for correspondence  Secretarial Department  Hindustan Oil Exploration Company Limited  'Lakshmi Chambers', 192, St. Mary's Road, Alwarpet  Chennai - 600018 (Tamil Nadu), India  Tel.: +91 (044) 66229000, (Ext. 106) Fax: +91 (044) 66229011/12 Email: hoecshare@hoec.com

E-Voting Facility to members

In compliance with provisions of Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014, the Company is pleased to provide members the facility to exercise their right to vote at the 31st Annual General Meeting (AGM) by electronic means and the business may be transacted through e-Voting Services provided by Central Depository Services (India) Limited.

For and on behalf of the Board of Directors

S.B. Mathur

DIN: 00013239

Chairman

Date: 10 August, 2015

 Place: Chennai