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Cover Back Cover www.abanindia.com ABAN LOYD CHILES OFFSHORE LTD Eighteenth Annual Report 2003-2004

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Page 1: ABAN LOYD CHILES OFFSHORE LTDthe power of working as a team. ... of the members of ABAN LOYD CHILES OFFSHORE LTD. will be held on ... Dividend through ECS for the year 2003-2004 should

CoverBack Cover

www.abanindia.com

ABAN LOYD CHILES OFFSHORE LTDEighteenth Annual Report 2003-2004

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Inside Cover Inside Back Cover

ContentsNotice 01 Corporate profile 05 Interview with the Managing Director 14 Management’s discussion and analysis 15

Directors’ report 20 Corporate governance report 23 Auditors’ report 29 Balance Sheet 32 Profit and Loss Account 33

Schedules to Accounts 34 Balance Sheet Abstract 48 Cash Flow Statement 49 Statement to Section 212 50

Subsidiary Company Accounts 51 Consolidated Accounts 66 Corporate Information 82

Mr. M. A. Abraham

A tribute toEnterprise, Leadership, Humility.

A man of great modesty and humility, compassion and a forgiving nature. A visionary who believed thatsuccess could be achieved with courage and confidence. A leader, who set a personal example withcontinuous innovation of thought, a culture of hard work and determined effort and believed totally inthe power of working as a team.

Mr. Abraham touched all in the most compelling manner, impacting their lives in myriad ways. Hisunflagging enthusiasm, his courage against various odds and his vision guided him from success tosuccess. Daring to dream, he encouraged all with his dauntless courage. A people’s person in hisbusiness and organisational approach, Mr. Abraham personally reached out to thousands of familieswho benefited from his humane outlook and humanitarian work, in the fields of education, health, socialand community projects.

With his passing away, the family and friends of Mr. Abraham and all Aban-ites, have suffered a grievousloss. May God give us strength to bear the loss. May his memory be always alive in our hearts and mayhis life’s work guide us in our future quests.

May his soul rest in peace and his spirit live on forever in all our future endeavours.

Concept, research and visualisation by ([email protected])Processed at Stylo Graphic Imaging ([email protected])

Mr. Renny Abraham

A tribute toEnthusiasm, Intelligence, Empathy.

A life taken in the prime of youth. A force sundered along the path to greater success. A star fallen atits zenith.

Fired by the Aban vision, Renny Abraham, dreamed of great heights and envisioned greater successes.With a keen willingness to learn, explore and innovate, he touched all around him, firing their imaginationand urging them to achieve more; reach higher. With his untimely death at the age of 34, a very dearcolleague who showed great promise of building a bright future has been cruelly snatched from all thosewho loved him.

May his promise be fulfilled and may his soul rest in peace.

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NOTICE is hereby given that the Eighteenth Annual General Meetingof the members of ABAN LOYD CHILES OFFSHORE LTD. will be held onFriday the 17th September 2004 at 10.15 A.M. at the Auditoriumof Madras School of Social Work, 32 Casa Major Road, Egmore,Chennai-600 008 to transact the following business:

Ordinary Business

1. To consider and adopt the Balance Sheet as at 31st March2004 and the Profit and Loss Account for the year ended onthat date and the report of the Directors’ and Auditors’ thereon.

2. To declare a Dividend for the year ended 31st March 2004.

3. To appoint a Director in place of Mr. P. Venkateswaran, whoretires by rotation and being eligible offers himself for re-appointment.

4. To appoint a Director in place of Mr. C. P. Gopalkrishnan whoretires by rotation and being eligible offers himself for re-appointment.

5. To appoint Auditors and fix their remuneration.

Special Business

6. To consider and if thought fit to pass with or without modification(s)the following resolution as an Ordinary Resolution:

“RESOLVED THAT Mr. K. Bharathan , who was appointed as anAdditional Director of the Company by the Board on 26.12.2003and who holds office as per Section 260 of the CompaniesAct, 1956 up to the date of this Annual General Meeting andin respect of whom the Company has received a notice inwriting pursuant to section 257 of the Companies Act, 1956,proposing his candidature for the office of Director, be andis hereby appointed as a Director of the Company, liable toretire by rotation.”

7. To consider and if thought fit to pass with or without modification(s)following resolution as a Special Resolution:

“RESOLVED THAT subject to such approvals as may be necessaryand pursuant to section 198, 269, 309, 310 and all otherapplicable provisions if any, of the Companies Act, 1956 theCompany hereby approves the redesignation of Mr. Reji Abraham,as Managing Director of the Company for a period from19.07.2004 to 25.09.2007, under the terms and conditionsas to remuneration as set out below:

A. Remunerationa) Salary

In the range of Rs. 50,000/- to Rs. 1,50,000/-per month.

b) Perquisitesi) Housing

Expenditure by the Company on hiring furnishedaccommodation shall be subject to a ceiling of 60percent of salary.If the Company does not provide accommodation tothe Managing Director the HRA will be paid to him @60 percent of Basic Salary.Reimbursement of Gas, electricity, water expenses etc.shall be as per actuals.

ii) Medical Reimbursement :Reimbursement of expenses incurred for self and familysubject to a ceiling of one month’s salary in a year orthree months salary over a period of three years andmedical insurance premium be paid up to Rs. 50,000/- p.a.

iii) Leave Travel ConcessionReimbursement of expenditure incurred for the ManagingDirector and his family once in a year subject to a maximumof one month's salary.

iv) Club FeesActual fees for a maximum of two clubs. No admissionand/or life membership fees will be paid.

v) InsuranceThe premium shall be paid as per the rules of the Company.

vi) a. Company contribution towards Provident fund as per theRules of the Company but not exceeding 12 percent ofthe salary.

b. Company’s contribution towards Superannuation fund asper the rules of the Company, but it should not togetherwith the Company’s contribution to Provident Fund exceed27 percent of the salary.

Contribution to Provident Fund and Superannuation Fundshall not be included in the computation of ceiling onperquisites to the extent these either singly or put togetherare not taxable under the Income Tax Act.

vii) Gratuity shall not exceed half a month’s salary for eachcompleted year of service.

viii) Car for use on Company’s business and telephone atresidence will not be considered as perquisites. Personallong distance calls on telephone and use of car for privatepurpose shall be billed by the Company.

ix) Leave :Privilege LeaveOn full pay and allowance as per the Rules of the Company.Encashment of the leave at the end of the tenure will notbe included in the computation of ceiling on perquisites. He

Aban Loyd Chiles Offshore Ltd.Regd. Off : Janpriya Crest, 113, Pantheon Road, Egmore, Chennai - 600 008

NOTICE TO MEMBERSNOTICE TO MEMBERS

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will also be entitled to Casual leave and sick leave as perthe leave Rules of the Company.

c) Commission2 (Two) percent of the net profits of the Company subjectto the overall ceiling laid down under sections 198 and 309of the Companies Act, 1956.The Board or any committee thereof, be and is herebyauthorised in its absolute discretion and from time to timeto fix within the range stated above the salary payable toMr Reji Abraham.

B. Minimum RemunerationNotwithstanding anything stated herein, wherein any financialyear during the currency of tenure of the Managing Director,the Company has no profit or its profits are inadequate, theCompany shall pay the remuneration in accordance with theprovisions of Section II of Part II of Schedule XIII of the CompaniesAct, 1956 as amended from time to time.RESOLVED FURTHER that the Managing Director Mr. RejiAbraham shall not be liable to retire by rotation during his tenureas Managing Director.

By Order of the BoardChennai C.P. Gopalkrishnan19th July 2004 Director (Finance) & Secretary

Notes1. A Member entitled to attend and vote at the Meeting is

entitled to appoint a proxy to attend and vote instead ofhimself and such proxy need not be a member of the Company.

2. The instrument appointing proxy, in order to be effectiveshould be lodged at the Registered Office of the Companynot less than 48 hours before the Meeting. A Blank proxyform is attached.

3. Explanatory Statement pursuant to Section 173(2) of theCompanies Act,1956 relating to the Special Business to betransacted at the Meeting is annexed hereto.

4. The Register of Members and Share Transfer Books willremain closed from 10.09.2004 to 17.09.2004 (Both daysinclusive).

5. Members are requested to intimate the Company’s Registrarand Share Transfer Agent regarding any change in theiraddress immediately at its Registrar and Share TransferAgent’s Office quoting their folio numbers.

6. Shareholders are requested to bring their copy of AnnualReport to the Meeting.

7. Members who hold shares in dematerialised form are requestedto bring their Client ID and DP ID numbers for easy identificationof attendance at the Meeting.

8. Members are requested to send the Bank Account details toensure safe and prompt receipt of dividend warrants and toavoid any fraudulent encashment of such warrants.

9. Members and Proxies should bring the attendance slips duly

filled in for attending the Meeting.

10. The Dividend will be paid to Members whose name appearin the Register of Members as on 17.09.2004 subject to theprovisions of the Companies Act,1956.

11. Members holding shares in Electronic Form are advised thattheir address and Bank details as furnished to the Companyby the respective Depositories viz. NSDL & CDSL will beprinted on the dividend warrants. Shareholders holding sharesin the Physical form who wish to avail ECS facility mayauthorise the Company with their ECS Mandate in theprescribed form which can be obtained from the Company’sRegistrar and Share Transfer Agent. Request for payment ofDividend through ECS for the year 2003-2004 should belodged with Registrar and Share Transfer Agent on or before09.09.2004.

12. With respect to payment of Dividend the Company providesthe facility of ECS to all Shareholders holding in Electronicand Physical Forms residing in the following cities:

Ahmedabad, Bangalore, Bhuvaneshwar, Chandigarh, Chennai,Guwahati. Hyderabad, Jaipur, Kanpur, Kolkata, Mumbai,Nagpur, New Delhi, Patna, Trivandrum.

13. The Company has already transferred all unclaimed dividendsdeclared up to the financial year ended 31st March 1995 to theGeneral Revenue Account of the Central Government as requiredby the Companies unpaid Dividend (Transfer to the GeneralRevenue Account of the Central Government) Rules 1978.Shareholders who have so far not claimed or collected theirdividends upto the aforesaid financial year are requested to claimtheir Dividend from Registrar of Companies, Shastri Bhawan, 26Haddows Road, Chennai 600 006 in the prescribed form whichwill be furnished on receipt of request by the Registrar and ShareTransfer Agents.

14. The Company has already transferred all the unclaimeddividend declared for the year ended 31st March 1996 tothe Investor Education and Protection Fund (IEPF) establishedby the Central Government pursuant to Section 205 C of theCompanies Act, 1956.

15. Pursuant to the provision of Section 205 A(5) of the CompaniesAct, 1956 dividend for the financial year ended 31st March1997 and thereafter which remain unclaimed for a period ofseven years will be transferred by the Company to the InvestorEducation and Protection Fund (IEPF) established by theCentral Government pursuant to Section 205 C of theCompanies Act, 1956.

16. Shareholders who have not so far encashed the Dividendwarrant(s) are requested to seek issue of Duplicate warrant(s)by writing to the Company’s Registrar and Share TransferAgents immediately.

Shareholders are requested to note that no claims shall lieagainst the Company or the said fund in respect of any amountwhich were unclaimed and unpaid for a period of seven yearsfrom the dates that they first become due for payment andno payment shall be made in respect of such claims.

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EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956 IN RESPECTOF SPECIAL BUSINESS CONTAINED IN THE NOTICE DATED 19TH JULY 2004

Item No.6Mr. K. Bharathan was appointed as Additional Director effective 26.12.2003. Notice pursuant to Section 257 has been received from amember proposing the candidature of Mr. K. Bharathan as Director of the Company. Hence the resolution under item No.6 is placedbefore the meeting for approval.Note : None of the Directors except Mr. K.Bharathan are concerned or interested in the item of business.

Item No.7The Board of Directors recommend the re-designation of Mr. Reji Abraham as Managing Director for a period from 19.07.2004 to25.09.2007 and a revision in remuneration payable to Managing Director. Hence the item no.7 is placed before the Meeting for approval.

Note : None of the Directors except Mr. Reji Abraham are concerned or interested in the item of business.

The terms of variation of the contract and interest set out in the resolution and in the Explanatory Statement may be treated as theabstract and Memorandum under Section 302 of the Companies Act, 1956.

By Order of the BoardChennai C.P. Gopalkrishnan19th July, 2004 Director (Finance) & Secretary

17. The Members who are holding shares in identical order ofnames in more than one folio are requested to intimate tothe Company’s Registrar’s and Share Transfer Agent the folionos of such accounts and to send their share certificates toenable the consolidation of the folios under one account.The share certificate will be returned to the Members aftermaking the necessary endorsement.

18. Members desirous of getting any information on the accountsor operations of the Company are requested to forwardqueries to the Company at least 7 working days prior to themeeting, so that the required information can be madeavailable to the meeting.

19. Directors seeking reappointmenta. Mr. P. Venkateswaran aged 53 years was appointed as

Director (Operations) effective 01.08.2001. He is theMember of Shareholders’/Investors’ Grievance Committee.

b. Mr. C.P. Gopalkrishnan aged 48 years was appointed asDirector (Finance) effective 01.08.2001. He is theMember of Shareholders’/Investors’ Grievance Committee.

c. Mr. K. Bharathan aged 54 years was appointed asAdditional Director effective 26.12.2003 being eligibleoffers himself for the appointment as Director. He is amember of Audit Committee and Chairman ofShareholders’ / Investors’ Grievance Committee.

d. Mr. Reji Abraham aged 38 years was appointed asDirector in the year 1994 and appointed as WholetimeDirector since 1997. He is a promoter Director. He isredesignated as the Managing Director of the Companyeffective 19.07.2004.

20. Members holding shares in physical form and desirous ofmaking the nomination in respect of their shareholding in theCompany as permitted under section 109 A of the CompaniesAct, 1956 are requested to submit to the Company theprescribed form 2B.

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Details of Director seeking redesignation as Managing Director of the Company and appointment as Director of thecompany.

Name of Director Mr.Reji Abraham Mr.K. Bharathan

Date of Birth 23.06.1966 15.4.1950

Date of Appointment 09.02.1994 26.12.2003

Date of Appointment as Wholetime Director 26.09.1997 N.A.

Qualification B.E, MBA ACA

Experience in specific functional areas In Business for 13 years Banking and Insurance

List of Public Limited Companies in India in which Aban Energies Limited, The Perunad Tamilnadu Urban DevelopmentDirectorship held Plantations Limited, Aban Power Fund Limited

Company Ltd, Ratan Plantations Limited,Asian Techs Limited, West MountainPower Limited, Saipem Aban Drilling Co.Ltd.

Membership of Committes in the Company Audit Committee – MemberShareholders’/Investors’ Grievance Committee –Chairman

Membership of Committees in other Companies --- ---

Chairmanships of Committees in other Companies --- ---

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• Business: Aban Loyd Chiles Offshore Limited (Aban), the largest Indianoffshore drilling company in the private sector, is an Indo-US joint ventureestablished in 1986 with the express objective to provide drilling andother oil field services in the offshore hydrocarbon exploration andproduction in India.

• Fleet : Three offshore drilling rigs - Aban II, Aban III and Hitdrill-I - anda floating production unit called 'Tahara'. Fleet currently deployed inBombay High and Pondicherry coast.

• Clients: ONGC and Hardy Exploration and Production (India) Inc.

• Investor presence: Listed on the Madras, Mumbai, National and Delhistock exchanges, enjoying a market capitalization of Rs. 382 cr as on 31 March 2004 in the Stock Exchange Mumbai.

• Performance: Over the years, Aban Loyd has grown into a 375 memberorganization with revenues of Rs 292 cr and a profit after tax ofRs 47 cr in 2003-2004.

CORPORATE PROFILE

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The fact that the consumption of oil and gas will

increase in the coming decades provides a good

rationale and a solid foundation for the Company’s

sustainable growth.

There are a number of reasons that make it so:

• Oil and gas, preferred sources of energy around

the world, are fast replacing coal.

• Oil and gas constitute 62 per cent of the total

global energy consumption, a figure that is

increasing.

• The world oil consumption has increased from

66.65 million barrels per day in 1991 to 76.88

million barrels per day in 2002.

• Oil consumption in India kept in step: it increased

from 1.26 million barrels / day in 1991 to 2.09

million barrels /day in 2002.

• This urgency has translated into action with a

significant rise in oil and gas exploration and

production activities within the country.

The continuous increase in oil exploration and

production signifies a growing and sustained demand

for rigs, leading to better day rates and a long term

income sustainability for drilling companies like Aban.

Aban’s sustainability is principally derived from its business profile: drilling and otheroil field services to support exploration and hydrocarbon production in India.

A sustainable industry

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In 1987, the Company went into business with a

small fleet of two Mat-supported rigs – 200 feet and

250 feet jack-up offshore drilling rigs named Aban-I

and Aban-II respectively. These rigs were deployed

in the Bombay High and East coast of India.

Over the years, the Country encouraged enhanced

oil exploration through attractive policies, the Company

responded by broadening its fleet asset base through

purchase of a 300 feet jack-up offshore drilling rig

called Ile D’Amsterdam from Mahindra & Mahindra

Ltd. in the year 1992. Nine years later, it acquired

Hitech Drilling Services India Ltd that owned a 300

feet jack-up offshore drilling rig called Hitdrill-1 and

a floating production unit called Tahara, making it the

largest private owner of rigs in India.

The Company expects to strengthen its income profile

through the following initiatives:

• It has entered into a Memorandum of Agreement

with Pride Foramer S.A.S. for the purchase of one

300 feet jack-up offshore drilling rig called Pride

West Virginia currently operating in Bombay High.

• The Company is making constant efforts to expand

its involvement in oil and gas exploration and is

constantly looking for opportunities to acquire

suitable drilling units.

• It is also considering the possibility of expanding

into allied businesses connected to the oil and

gas industry.

• It has entered into exploration and production of

hydrocarbons through an agreement with Prize

Petroleum Company Limited for the development

of three marginal ONGC fields in Gujarat, an

experience that the Company expects to leverage

for growth.

These business-enhancing initiatives are expected to

lead into vertical integration, ensuring the Company

a safe and steady growth stream of income and

enhancing its margins over the foreseeable future.

Aban’s sustainability is underpinned by the broadening of its income base.

A broadening income base

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Enhanced valueof services

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Aban’s service comprises the deployment of qualified

crew to oil field operators in the regions of their

interest. The company’s rigs and trained personnel

facilitate the drilling of wells from which oil is extracted

and their periodic workover to remove obstructants.

This expertise extends from shallow to deepwater

exploration as well as marginal field development,

representing a wide service spectrum. Over the years,

the Company has distinguished itself through an

effective leverage of its vast experience leading to

success in the drilling of complicated wells in the

Bombay High.

This reputation has been derived from pursuing a

culture of providing to customers:

• High end equipment and infrastructure.

• Trained and experienced crew.

• A high uptime of rig equipment.

• Completion of assignments ahead of deadlines,

leading to cost saving and enhanced productivity.

• A migration from a vendor’s mindset to a

partnership approach.

Over the years, Aban has been short-listed as a

suitable vendor for drilling services by all Indian oil

majors translating into the successful deployment of

all its rigs in 2003-2004.

Aban’s sustainability is reinforced by the willingness of its existing customers to enterinto repeat business with enhanced value.

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Continuous investmentin people and asset

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This priority has been reflected in the following

initiatives:

• Planned repairs and maintenance programmes

that ensure that the underwater structures are

maintained for structural integrity.

• Its asset commitment has been marked by ongoing

equipment upgrades and replacements for

enhanced performance.

• In this process, the performance standards of the

Company’s assets are always at par with that of

international standards and can be compared to

any other unit of equivalent class.

• Periodic in-house and external audits by

internationally reputed agencies to identify areas

of improvement.

• The use of the latest techniques in bench-marking,

leading to a culture of continuous improvement.

• On-going training in the latest drilling and safety

practices.

Over the years, these initiatives have helped the

Company keep in step with the dynamic industry

changes leading to a sustainability in capability,

competence and income.

Aban’s sustainability is derived from the ongoing investment in its members and assets,leading to better asset reliability and availability.

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Q. The Company posted substantially higher profits and revenues in 2003-2004 compared to the previous year. Whatare the reasons behind this dramatic improvement?

A. The Company increased its revenues by 16 per cent and profit before tax by 117 per cent for a number of reasons. Firstly, our rigscommanded higher day rates compared to the previous year due to improved industry conditions. Secondly, our efficient rigsmanagement minimised downtime and strengthened revenues. Thirdly, our efficient treasury operation reduced our interest costand maximised returns from the available surplus. Fourthly, we derived a favorable INR-USD exchange rate through forward exchangecontracts for our dollar receivables.

Q. Shareholders would like to know whether this improvement is one-off or sustainable?

A. Very sustainable! We expect to enhance the number of rigs, leading to an increased income possibility. Our rigs are already bookedfor the major part of 2004-2005 and the existing attractive drilling rates will be applicable throughout the period and improved ratesat the time of renewal. We also expect to continuously raise our rig maintenance standards leading to a further reduction in downtime.Besides our management has also taken adequate steps to protect our revenue stream from foreign exchange fluctuations whereverpossible.

Q. There is an apprehension that a decline in oil prices could adversely affect the Company’s business.

A The drilling day rates are not only influenced by oil price movements but also by the demand-supply position of rigs in the internationalmarket. At present, oil rigs (like jack-up drilling rigs) are not easily available leading one to conclude that the existing firm rates aremost likely to continue.

Q. The capital investment required to grow is prohibitive. How does the Company expect to mobilise this capital expenditure?

A. The Company has reached a point where it is generating an attractive cash flow from its operations. We see this self-generationcapability as a big de-risking initiative. Besides, the company’s low debt-equity ratio of just 1.35 as on 31st March 2004 provides itwith a considerable borrowing room and the low prevailing cost of finance makes it possible for the Company to finance the costwithout compromising on its need to report sustainable growth.

Q. How competitive are the Company’s rigs? Can they lead to an expansion of the Company’s interests into the internationalmarkets?

A. I must assure shareholders that thanks to our cost-efficiency, the Company’s rigs are internationally competitive: their uptime andsafety standards are at par with some of the, most dependable rigs in the world. With the resources available today – in terms ofrigs and cash – the Company has pretty well managed to address the demand coming out of domestic oil operators but as morecapital is available, the Company would be in a position to tap the international drilling markets where a good business potentialexists.

Q. What is the Company’s vision for the future?

A. The Company expects to continuously invest in its business and emerge among the top ten international players within the next 5-7years.

QUESTIONS SHAREHOLDERS WOULD LIKE TO ASK THE MANAGING DIRECTOR

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Thanks to our cost-efficiency,the Company’s rigs are internationally competitive.”“

INDUSTRY STRUCTURE ANDDEVELOPMENTS

Drilling division

The oil and gas industry continues tospend a large amount of capital forupstream exploration and production.Its capital expenditure far outstripsspending in other sectors. As existingreserves get depleted, finding anddeveloping new supplies will becomeincreasingly critical. This criticality isapparent if we study the followingstatistics:

• Against a demand of about 107million tonnes in 2002-2003, totaloil production in India was 33 milliontonnes - just 30 per cent ofdemand.

• India imports 78 million tonnes ofcrude oi l annual ly. Impor tdependence is uncomfortably high.India spent Rs 84,000 cr (Rs 840billion) last year on crude oilimports, about 67 per cent of whichwas sourced from the Middle East.

• The per capita annual consumptionof energy in India is around 0.32tonnes of oil equivalent comparedto 8.80 tonnes of oil equivalent fora country like the United States,but this picture is expected tocorrect itself as India’s economygrows.

• According to its Ministry ofPetroleum and Natural Gas, India

consumed more than 100 milliontonnes of oil in the last financialyear 2002-2003 and the demandis increasing steadi ly withprojections that by 2035 (that is,in about three decades from now)the demand will be as high as 350million tonnes.

Extensive exploration is presently beingcarried out in untapped regions. Forinstance, four rounds of the NewExploration Licensing Policy (NELP)have been completed. Contracts havebeen awarded for 90 oil and gasexploration blocks and 16 CBM blocks.So far, a round Rs 200 bn($ 1 = Rs 46) of investment has beencommitted in the 70 blocks awardedunder the first three rounds of theNELP. Of this, Rs. 50 bn has beeninvested in 20 blocks. For the newblocks awarded under NELP IV, Indiaexpects a cumulative investment ofanother Rs 55 bn and another Rs 3.5bn in the CBM blocks. For the firsttime, exploration has been undertakenin deepwater areas with as many as34 blocks awarded.

In the last two years, India reported21 discoveries, including major gasfinds in the Krishna-Godavari Basin bythe Reliance-Niko Consortium and CairnEnergy, in Vasai by ONGC, near Suratby Niko and in Rajasthan by CairnEnergy.

For the first time, India has venturedto depths of over 850 metres in thedeep-sea. As India looks to exploremore deep-sea blocks includingsedimentary basins beyond BombayHigh – the largest producing block inthe country – the Directorate Generalof Hydrocarbon is keen to tap foreignexpertise for cost-effective production.In view of this growing potential, severalNorwegian oil companies are exploringcollaboration opportunities fordeepwater exploration in India.

Interestingly, the Government of Indiais encouraging state-owned oilcompanies to acquire stakes ininternational oil fields. India's sharefrom these global oil fields will jumpmore than three-fold to 13 milliontonnes of crude by 2007, anopportunity for offshore serviceproviders to leverage their experienceand relationships to work in internationalwaters.

Besides, the number of upstream oilsector projects being undertakencurrently in India provide attractiveopportunities for offshore equipmentsuppliers and services providers.

* Oil and Natural Gas Corporation Ltd:ONGC has announced its future plansto invest in deepwater oil explorationand accretion of reserves. They wantto focus on deepwater drilling to depths

MANAGEMENT’S DISCUSSION AND ANALYSIS

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of 1000 to 3000 mts for locatinghydrocarbon reserves. ONGC has beenawarded five deepwater blocks underNELP and is seeking strategic alliancesto jointly undertake these projects.Nearly 35 deepwater wells are to bedrilled as part of ONGC's five-year plan(2002-2007) at an estimated cost ofRs. 23.22 billion.

ONGC is also implementing a Rs 80billion redevelopment plan to increaseproduction from its Bombay Highoffshore oil and gas fields. Of the 32million tonnes of oil produced in Indiaannually, the Bombay High, India’slargest offshore oilfield, accounts for14.2 million tonnes of crude oil and2.4 million tonnes of condensates. Thefield holds nearly 1600 million tonnesof oil, of which only 300 million tonneshave been commercially exploited.

ONGC hopes to produce an additional75 million tonnes of oil and oil equivalentgas by 2030 t h rough t h i sredevelopment programme. Of the 227wells scheduled to be drilled as partof the programme, ONGC hascompleted drilling at 67 wells and hasrecovered incremental oil and oilequivalent gas of 4.5 to 5 milliontonnes. It hopes to add around 2 million

tonnes of oil and oil equivalent gasevery year. For this operation, theCompany plans to deploy two rigs fordeepwater exploration.

Wind Energy Division

There is a wide gap between demandand supply of power in India. There isalso considerable environmental andresource degradation arising out of ahigh dependence on fossil fuels. Whenimported, this exacerbates India’sforeign exchange burden. These factorssuggest that renewable energy will bea good alternative to concentrate uponin meeting the requirement of cleanpower in India.

Renewable energy systems possessan installed capacity of nearly 3500MW in India entailing an investment ofaround US$ 5 billion, accounting formore than 3 per cent of overallgeneration capacity in India’s powersector. India is the fifth largest producerof wind power in the world afterGermany, the US, Denmark and UKwith an installed capacity of 2485 MW(as on March 2004) against India’sgross wind power potential of 45,000MW (about 5.5 per cent of thepotential). In 2003-2004, there was awind power capacity addition of 615

MW, an annual record in India. TamilNadu alone accounted for 371 MW.

S ta te - o f - t he - a r t w i nd powertechnologies, too, are now indigenous,with wind electric generators going upto 1250 KW, developed andmanufactured in the country. A newconcept of mega-wind farms ownedby the private sector is being testedto increase its popularity.

SEGMENT-WISE PERFORMANCE

Rs. in lakhs

Revenues 2003-04

Drilling 27247Wind energy 1954Profit/ (Loss)Drilling 10237Wind energy (2426)

OUTLOOK

Drilling

There is a growing emphasis on oilexploration and production within Indiaas oil and gas demand far exceedsproduction. The government’s policyhas encouraged private sectorparticipation, domestic and foreign, inthe industry leading to an increasedrigs demand, resulting in better day

India's share from global oil fields will jump more than three-foldto 13 million tonnes of crude by 2007, an opportunity for offshoreservice providers to leverage their experience.

16

rates for drilling companies. Aban,being the largest private sector drillingservices provider in the country,possesses the right resources toaddress this increasing demand. In the

opinion of the management, drilling day

rates are expected to turn firmer than

the current levels. However, a potential

risk is a downturn in the international

oil price, which could stagger

investments and hence lead to a decline

in day rates.

Wind Energy Division

The Company will continue to strive to

maintain the windmills with high machine

availabil ity to ensure maximum

generation.

F INANCIAL PERFORMANCEREVIEW

The Company recorded a 16 per centincrease in total income mainly onaccount of a higher rig utilisation (rigdays) and higher day rates. Profit beforetax increased from Rs. 35.98 cr in2002-2003 to Rs. 78.10 cr in 2003-04, a remarkable increase of 117 percent. The Company achieved a 30 percent reduction in interest cost throughthe replacement of high cost debt withlower cost debt and accelerated loan

repayment.

OPERATIONAL PERFORMANCEREVIEW

Drilling

Aban Loyd Chiles Offshore Limited isIndia’s largest private sector offshoredrilling services provider. It providesoilfield operators with equipment likerigs or floating production system unit(FPU) for the exploration and productionof oil from marginal oil fields as well asrigs engaged in the workover of wells.It earns its revenues from the day ratepaid by these operators.

Offshore drilling accounted for 93 percent of the Company’s revenues in2003-2004. All the company’s rigs areon a charter-hire basis for the wholeyear to reputable oil explorationoperators like Oil and Natural GasCorporation Ltd. (ONGC) and HardyExploration & Production India Inc. (HEPI).

Aban-III and Hitdrill-1 continued drillingoperations in the Bombay High undercharter-hire contracts with ONGC Ltdat remunerative day rates. The FPUTahara continued to perform productionoperations for HEPI. Aban II continuedto be deployed with ONGC in the

Cauvery Basin offshore oilfield.

Frontier Aban Drilling India Ltd, thecompany’s joint venture with FrontierDril l ing ASA, continued dril l ingoperations during 2003-2004 throughthe operation of its drill ship FrontierIce under a charter-hire drilling contractwith ONGC Ltd. This joint venture wasfruitful in terms of providing experiencein drill ship operations and deep waterdrilling activity in India.

As a part of its strategy for incomegrowth, the Company entered into aMemorandum of Agreement with PrideForamer S.A.S, France, for thepurchase of one Freide & Goldmandesign 300 feet jack-up offshore drillingrig named Pride West Virginia. The rigis presently operating in the BombayHigh under a charter-hire drillingcontract with ONGC. The proceduralformalities for completing the transferof the rig to the Company are underway.

When acquired, this will be the biggestexpansion undertaken by the Companyfollowing the acquisition of HitechDrilling Services India Ltd in the year2001.

The Company controlled costs throughcareful operational supervision and the

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adaptation of the latest techniques forpreventive maintenance. Its Aban-III rigcompleted a major refurbishment anda retrofit programme in an Indianshipyard in April 2003. Meticulousproject execution ensured that repairswere completed without additional costor time overruns. The rig went on steamfrom the third week of April 2003.

The Company strengthened itsprofitability through optimal assetutilisation and maintenance approvedby international agencies like AmericanBureau of Shipping and Bureau Veritas.In 2003-2004, it added laurels andrecognition to its drilling capabilitieswith an accreditation for the ISO9001:2000 from KPMG QualityRegistrars and the Dutch Council forCertification.

Marginal fields development

During 2003-2004, Aban entered intoactivities relating to the developmentof marginal fields. Along with PrizePetroleum Company Limited (promotedby Hindustan Petroleum Corporation,ICICI Venture Capital Limited and HDFCLimited), it entered into a contract withONGC Limited for development of threemarginal onshore oilfields in Gujarat.While the Company will utilise its

considerable experience in drilling,production and design to develop thesemarginal fields, Prize will be responsiblefor detailed geological, geo-physicalreservoir management and themonitoring of production from marginalfields. The service contract with ONGCwill provide valuable opportunities tothe Company to gain insight andexperience in oilfield operations anddevelopment.

Wind Energy Division

The company’s wind energy divisiongenerated 709 lakh units of powerduring 2003-04, yielding a revenue ofRs. 1954 lakhs. This division developedwind energy projects and indigenisedthe development of critical systems inwind energy generators. This helpedreduce costs and downtime, optimisingutilisation.

OPPORTUNITIES AND THREATS

Drilling

For the first time in the last few years,India ventured into the deep-seareaching depths of over 850 metres.As India looks to explore deep-seablocks including sedimentary basins,Aban hopes to enlarge its exposure indeep water drilling following a detailed

technical and financial feasibilityanalysis. The Company expects toextend its operations to the internationalmarket. It has extended its areas ofservices through a contract with ONGCfor onshore marginal fields developmentopportunities. The Company will be ina position to leverage the experiencegained through this contract to seekfurther opportunities in oilfield operationand development.

As oil exploration is bound to increasesubstantially with the correspondingincrease in demand for drilling services,the company does not see any threatin the near future from its operations.

Wind Energy Division

India’s potential of renewable power isestimated at 82,000 MW. Windaccounts for 60 per cent of therenewables target. The Ministry of Non-Conventional Energy Sources(MNES)Government of India, has undertakenmeasures to facilitate the growth ofboth grid and off-grid renewable energypower through specific programmes.The Draft Renewable Energy Policy,prepared by the MNES, has set anincremental renewable energy capacitygoal of 10,000 MW by 2012, about

The Company has a well-qualified and experienced work forceof around 375 members with 10-15 years experience in relatedoperations.

18

10 per cent of new power generationcapacity.

RISKS AND CONCERNS

Drilling

A downturn in international oil pricesleading to a reduction in drillingoperations and day rates is an inherentmarket risk, which the Company isgeared to manage through cost controland other prudent business practices.

Wind Energy Division

The generation of power depends onwind velocity. The Company hasmitigated this risk by maintaining itswindmills in good working condition,leading to a high machine availability.

INTERNAL CONTROL SYSTEMSAND ADEQUACY

The Company’s system and process

in all areas are regularly reviewed by

internal audit and the report are placed

for consideration by the Audit

C o m m i t t e e o f t h e B o a rd .MATERIAL DEVELOPMENTS IN THEHUMAN RESOURCE/INDUSTRIALRELATIONS FRONT

•The Company has taken adequatemeasures to protect employee safetyand health and also minimise theadverse worksite effect on theenvironment.

• The Company adopts measures forthe continuous improvement of healthat work places through on-the-jobtraining, periodic health checkup atshore-based medical centres andthe continuous monitoring ofemployees’ health by certifiedmedical officers posted on all theinstallations.

• The Company has a well-documentedsafety policy, safety managementsystem manual, incident/ accidentrepo r t i ng s ys tem, haza rd

identification and reporting systemas well as other safety proceduresand guidel ines that ensureoperational safety.

• The Company carries out a periodicinspection / audit to ensure acompliance of the HSE policy andprocedures. The Company complieswith all prevailing and applicablegovernment and statutory regulationsin its areas of operation.

• The Company has a well-qualifiedand experienced work force ofaround 375 members with 10-15years experience in relatedoperations. In addition to thequalification of the employee, theCompany considers the prospectiveemployee ’s prac t ica l workexperience and general level ofcompetence at the t ime ofrecruitment.

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DIRECTORS’ REPORT

1. Financial results

(Rupees in lacs) Year ended Year ended

31st March 2004 31st March 2003

Income from operations 27683 24384Other income 1518 772Less: Expenditure 14376 13953Profit before interestand depreciation 14825 11203Less: Interest 2575 3684Less: Depreciation 3810 3292Goodwill amortised 629 629Profit for the year before tax 7811 3598Provision for taxation 2100 284Provision for deferred tax 981 2406Profit after tax & amortisationof goodwill 4730 908Profit brought forward fromthe previous year 10640 10248Available for appropriation 15370 11156Proposed dividend 553 369Additional tax on dividend 72 47Transfer to general reserve 500 100Balance carried forward 14245 10640

15370 11156

2. Management’s Discussion and AnalysisIn this annual report, we have attached a section coveringManagement’s Discussion and Analysis issues that highlightsthe company’s industry and market factors, opportunities/threats, a segment-wise performance outlook, risk and concerns,adequacy of internal control systems, financial and operationalperformance as well as issues of human resource anddevelopment.

3. PerformanceDuring 2003-2004, the performance of the Company wassatisfactory. The rigs Aban II, Aban III and Hitdrill–1 were deployed

under existing contracts with ONGC. The Floating Productionunit continued to be deployed under contract with HardyExploration & Production (India) Inc.

The Company has received a Letter of Intent from ONGC Ltd.for fresh contract for Rig Aban II for a period of two years.

The Contract with Hardy Exploration and Production (India) Incfor Floating Production Unit Tahara is extended for a furtherperiod of three years.

Besides, in 2003-2004, the windmills owned by the Companygenerated 709 lac units.

4. Subsidiary Company

Aban Energies Limited: The Company was engaged in themaintenance of windmills during the year under review. Asrequired under section 212 of the Companies Act, 1956, theaudited 2003-2004 statement of accounts as well as the reportof the Board of Directors and Auditors Report of Aban EnergiesLimited are annexed.

5. DividendThe Directors are pleased to recommend a dividend of 75 percent on the paid up equity capital of the Company.

6. DirectorsDirectors Mr. P. Venkateswaran and Mr. C.P. Gopalkrishnanretire by rotation and, being eligible, offer themselves forreappointment. It is also proposed to redesignate Mr. RejiAbraham as Managing Director for the period commencing from19.07.2004 to 25.09.2007.

Mr. K. Bharathan was appointed as Additional Director effective26.12.2003. Additional Director so appointed will hold officetill the date of the ensuing Annual General Meeting and beingeligible offer himself for reappointment.

The Board regrets to note the sad demise of Director Mr. RennyAbraham on 05.10.2003 and Managing DirectorMr. M.A. Abraham on 12.06.2004. The Board placed on recordits sincere appreciation of the valuable services rendered bythe deceased Directors towards the growth of the Company.

Mr. Frank A Wojtek has resigned as Director effective 31.10.2003.The Board records its sincere appreciation of the valuableservices rendered by the retiring Director during his tenure.

7. Directors’ Responsibility StatementPursuant to the requirement under Section 217(2AA) of the

The Directors of your company are pleased to present the Eighteenth Annual Report along with the Accounts for the year ended31st March 2004.

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Companies Act, 1956, with respect to the directors’ responsibilitystatement, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financialyear ended on 31st March 2004, the applicable accountingstandards were followed along with a proper explanationrelating to material departures.

(ii) that the Directors selected such accounting policies andapplied them consistently and made judgements andestimates that were reasonable and prudent so as to givea true and fair view of the state of affairs of the companyat the end of the financial year and of the profit of thecompany for the year under review.

(iii) that the Directors took proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956 to safeguardthe assets of the company as well as prevent and detectfraud and other irregularities.

(iv) that the Directors prepared the accounts for the financialyear ended on 31st March 2004 on a going concern basis.

8. Stock ExchangesYour company’s shares are listed in the following stockexchanges:

Madras Stock Exchange Ltd., The Stock Exchange, Mumbai,National Stock Exchange of India Ltd. and The Delhi StockExchange Association Ltd.

The listing fees were paid in full to all these stock exchangesfor 2004-2005.

9. AuditorsM/s Ford, Rhodes, Parks & Co., Chartered Accountants, Chennai,hold office until the conclusion of the ensuing Annual GeneralMeeting and, being eligible, are recommended for re-appointment.

10. Particulars of EmployeesAs required by the provisions of section 217 (2A) of theCompanies Act, 1956, read with the Companies (Particulars ofEmployees) Rules, 1975, the names and relevant particularsof the employees who were employed throughout the financialyear / part of the financial year under review and were in receiptof remuneration for the financial year in aggregate of not lessthan Rs.24,00,000 per annum (Rs.2,00,000 per month or partthereof), are annexed.

11. In terms of section 217(1) of the Companies Act, 1956 (asamended) and the Companies (Disclosure of Particulars inReport of the Board of Directors) Rules 1988, your Directors

furnish hereunder the additional information as required.

A. Conservation of EnergyThe company’s activities are not energy intensive. However,measures are taken at all levels for the conservation ofenergy.

B. Research and DevelopmentThe company’s research activities are mainly directedtowards training, evaluation and upgrading the skills ofpersonnel and import substitution of equipment, tools andspares.

C. Technology absorption, adoption and innovationEfforts are being taken to maximise indigenisation of rigsand windmill operation and to reduce the dependence onimported equipment used in rigs and windmills.

D. Foreign exchange earnings and outgo(Rupees in lacs)

2003-04 2002-03Foreign exchange earned during the year 25,793 22,181

Foreign exchange outflow during the year 3,960 4,029

12. Compliance CertificateA certificate from the Auditors of the company has beenattached to this report which testifies that the requirementsof a sound Corporate Governance process, as stipulated underclause 49 of the listing agreement with the stock exchanges,was met.

13. AcknowledgementsThe Directors’ take this opportunity to express their sincereappreciation for the dedicated service and contribution of theemployees towards the stability and the growth of the company.

The Directors also record their sincere appreciation for thesupport and co-operation received from Bankers, FinancialInstitutions relevant Central and State Government Ministriesvalued clients (particularly Oil and Natural Gas Corporation Ltd.and Hardy Exploration and Production India Inc.), BusinessAssociates and Members of the Company.

For and on behalf of the Board

Place: Chennai Reji Abraham V.S. RaoDate: 19th July 2004 Managing Director Vice Chairman

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CORPORATE GOVERNANCEABAN’S GOVERNANCE PHILOSOPHYAban Loyd Chiles Offshore Ltd (Aban) is commited to maintaininghigh standards of Corporate Governance and protecting shareholdersinterests and the Company endeavors transparency at all levels.

In the following paragraphs, the Company has submitted a reporton its Governance practices in compliance with clause 49 of thelisting agreement with the Stock Exchanges

BOARD OF DIRECTORSComposition of BoardAban’s Board had at the beginning of the year nine Directors (twopromoter- wholetime Directors, one promoter non executive director, two independent Non-Executive Directors, two Executive Directors,and one Nominee Director representing ICICI Bank Ltd and onedirector representing the collaborator). The Board functioneddirectly or through various focused committees (Audit Committee

and Shareholders’ Grievance Committee). The Board and itscommittees met at regular intervals. The Board is vested withfunctions related to goal-setting, performance evaluation andcontrol.

During the year one promoter non Executive Director has passedaway and one director representing the collaborator resigned andone independent director has been inducted to the Board.

Board of Directors meetings were held 7 times in 2003-2004 onthe following dates: 26/04/2003, 14/07/2003, 26/09/2003,31/10/2003, 26/12/2003. 30/01/2004, 21/02/2004.

The names of the Directors on the Board, their attendance at themeetings and the other Directorships that they held as on31st March 2004 are set out below:

* Represents Memberships / Chairmanships of Audit Committee, Shareholders/Investors’ Grievance Committee and RemunerationCommittee.

Name of Category of FY 2003-2004 As on 31st March 2004Directors Directorship Committee Positions

Attendance at No.of Other Directorships of other Companies* Board Meetings Last Public Private Member Chairman

AGMM. A. Abraham Executive- Promoter 3 No 4 6 – –Reji Abraham Executive – Promoter 7 Yes 8 6 --- –

Renny Abraham Non-Executive Promoter 2 Yes 2 4 --- –

V. S. Rao Non-Executive independent 6 Yes 2 Nil –- –

P. Murari Non-Executive Independent 6 Yes 10 Nil 6 2

S. Srinivasan Nominee –ICICI Bank Ltd. 7 Yes 4 Nil 2 ---

Frank A Wojtek Non- Executive – Promoter Nil No Nil Nil – –

P. Venkateswaran Executive 5 Yes 3 3 – –-

C.P. Gopalkrishnan Executive 6 Yes 3 1 – –-

K. Bharathan Non- Executive Independent 3 NA 1 Nil –- -–

1123

Information as per section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Amendment Rules1988 and forming part of the Directors Report for the year ended 31st March 2004

Employed throughout the Financial Year under review and were in receipt of remuneration for the Financial Year in aggregate of not lessthat Rs.24,00,000/- (Rupees twenty four lacs only) per annum or Rs.2,00,000/- (Rupees two lacs only) per month where employedfor part of the year

S. No Name Age Remuneration Nature of Duties/ Qualifica- Date Experi- Details ofYears Rs. Designation tions commence- ence previous

ment of in employ-employment years ment

1 M. A. Abraham 64 1,18,18,307 Managing Director MBA 24.10.1986 43 Business

2 Reji Abraham 38 63,44,307 Wholetime Director BE MBA 26.09.1997 13 Business

3. A.P.S. Sandhu 53 24,19,472 Vice President B.Sc 20.03.1992 28 Chief(Engg) Engineer,(Mech) ONGC Ltd.

Notes:(a) The Managing Director, Mr. M. A. Abraham and Mr. Reji Abraham, Wholetime Director, are related to each other and also related

to Director Mr. Renny Abraham(b) Remuneration includes salary and value of perquisites(c) Nature of employment is contractual

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GENERAL BODY MEETINGSThe details of the date and location of the Annual General Meetings held in the last three years are given below :

Annual General Meetings Day and Date Time Venue

Extra Ordinary General Meeting Wednesday 11.00 am Auditorium of Madras School of18.04.2001 Social Work, 32 Casa Major Road

Egmore, Chennai 600 008

Court Convened Meeting of Saturday 10.15 am Auditorium of Madras School ofEquity Shareholders 15.09.2001 Social Work, 32 Casa Major Road

Egmore, Chennai 600 008

15th Annual General Meeting* Friday 10.15 am Auditorium of Madras School of21.09.2001 Social Work, 32 Casa Major Road

Egmore, Chennai 600 008

16th Annual General Meeting** Friday 11.00 am Auditorium of Madras School of27.09.2002 Social Work, 32 Casa Major Road

Egmore, Chennai 600 008

17th Annual General Meeting*** Friday 11.00 am Auditorium of Madras School of26.09.2003 Social Work, 32 Casa Major Road

Egmore, Chennai 600 008

* Four special resolutions were passed and postal ballets were used / invited for voting.** One Special Resolutions was passed. No Postal ballots were used / invited for voting.

*** Three Special Resolution was passed. No Postal ballots were used / invited for voting.

DISCLOSURES

With regard to disclosures on materially significant related partytransactions of the Company of material nature with its Promoters,the Directors or the Management, their subsidiaries or relativesetc. that may have potential conflict with the interest of the Companyat large. Please refer Balance Sheet Notes on Accounts.

Details of Non-compliance by the Company, penalties, stricturesimposed on the Company by the Stock Exchange or SEBI or any

Statutory Authority or any matter related to Capital Markets duringthe last three years - Nil

MEANS OF COMMUNICATION

The quarterly and half-yearly unaudited financial results werepublished in Business Standard (English) and Makkal Kural in Tamil(regional language). The results were also displayed on the company’s web site at www.abanindia.com

Name Category No. of Meetingsattended

Mr. Renny Abraham Chairman 12

Mr. K. Bharathan Chairman 2

Mr. P. Venkateswaran Member 18

Mr. C.P. Gopalkrishnan Member 19

During the year the Company has received 131 complaints fromshare holders which were answered and resolved.

Name and Designation of Compliance Officer:Mr. C.P. Gopalkrishnan, Director (Finance) & Company Secretary

1125

The required information (as enumerated in Annexure I in clause49 relating to Corporate Governance) was made available to theBoard of Directors.

The Directors who will retire by rotation and offer themselves forreappointment are:

Mr. P. Venkateswaran and Mr. C.P. Gopalkrishnan.

Disclosures regarding re-appointment of DirectorsMr. P. Venkateswaran aged 53 years was appointed as Director(Operations) effective 01.08.2001 and he is the member ofShareholders’/ Investors’ Grievance Committee.

Mr. C.P. Gopalkrishnan aged 48 years was appointed as Director(Finance) effective 01.08.2001. He is the member of Shareholders’/Investors’ Grievance Committee.

Mr. K.Bharathan aged 54 years was appointed as additional Directoreffective 26.12.2003 being eligible offers himself for appointmentas Director.

Mr. Reji Abraham aged 38 years has been designated as ManagingDirector of the Company with effect from 19.07.2004 to25.09.2007.

REMUNERATION TO NON-EXECUTIVE DIRECTORS

No remuneration, other than sitting fees and other expenses(travelling, boarding and lodging incurred for attending the Board/Committee meetings) were paid to the non-executive Directors in2003-2004.

AUDIT COMMITTEE

Terms of ReferenceThe Audit Committee provided a direction to the audit and riskmanagement function of the Company and monitored the qualityof its internal audit. The responsibilities of the Audit Committeeincluded the following: overseeing the financial reporting processto ensure a proper disclosure of financial statements, recommending the appointment or removal of external auditors and fixing theirremuneration and reviewing the annual financial statements beforethey were submitted to the Board. Its scope also included a review of the adequacy of internal controls, the adequate structure andstaffing of the internal audit function, the review of internalinvestigation, the discussion of the scope of audit with externalauditors and investigating the reasons behind the substantial

defaults in the event of nonpayment to stake holders.

The Committee met three times during the year on 26.04.2003,14.07.2003 and 31.10.2003.

CompositionV. S. Rao, ChairmanP. Murari, MemberRenny Abraham, Member upto 5.10.2003K. Bharathan Member effective 26.12.2003

Name Category No. of Meetings attended

Mr. V. S. Rao Chairman 3

Mr. P. Murari Member 3

Mr. Renny Abraham Member 1

Mr. K. Bharathan Member N.A.

Mr. C.P. Gopalkrishnan, Director (Finance) & Secretary is theSecretary of the Committee.

SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE

The Company’s Shareholders/Investor Grievance Committeemonitored and redressed shareholder complaints relating to sharetransfer, the non-receipt of Annual Report or dividend.

CompositionMr. Renny Abraham, Chairman.upto 5.10.2003Mr. K. Bharathan, Chairman effetive 26.12.2003Mr. P. Venkateswaran, Member.Mr. C.P. Gopalkrishnan, Member.

The Committee met 20 times during the year on the following dates:

11.04.2003, 25.04.2003, 09.05.2003, 23,05,2003,

07.06.2003, 23.06.2003, 07.07.2003, 21.07.2003,

04.08.2003, 18.08.2003, 30.08.2003, 12.09.2003,

26.09.2003, 10.10.2003, 25.10.2003, 15.11.2003,

29.11.2003, 16.12.2003, 31.01.2004, 31.03.2004.

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LISTING ON STOCK EXCHANGESThe shares of the Company are listed on the following StockExchanges

Madras Stock Exchange Limited : Exchange Building, PostBox No.183, 11 Second Line Beach, Chennai – 600 001

The Stock Exchange Mumbai, Phiroze Jeejeebhoy Towers,21st Floor, Dalal Street, Mumbai – 400 001.

National Stock Exchange of India Limited, Exchange Plaza, 5thFloor, Plot No :: C/1 G Block, Bandra – Kurla Complex,Bandra (E), Mumbai 400 051

The Delhi Stock Exchange Association Limited, 3 & 4 /4B, AsafAli Road, New Delhi 110 002.

The listing fees for the Financial Year 2004-2005 were paid to theStock Exchanges where the Company’s Equity Shares are listed.

Stock Code in Madras Stock Exchange LimitedAbanlloyd

Stock Code in The Stock Exchange Mumbai523204

Stock Code in the National Stock Exchange of India LtdAbanlloyd

Stock Code in “The Delhi Stock Exchange Association Ltd.”101355

ISIN No. for Dematerialised shares (fully paid)INE421A01010

ISIN No. For Dematerialised shares (Partly Paid)IN9421A01018

INVESTORS’ HELP DESKRegistrars and Share Transfer Agent both Physical and DematMode.M/s Cameo Corporate Services Ltd.,Unit: Aban Loyd Chiles Offshore Ltd.,Subramanian Buildings, 1 Club House Road, Chennai - 600 002.Phone: 91-44-28460390Fax: 91-44-28460129

Investor complaints to be addressed to the Registrar and ShareTransfer Agent.

26

GENERAL INFORMATION TO SHAREHOLDERS

FINANCIAL CALENDAR

Financial Year 1st April 2004 to 31st March 2005

Board meeting for considering the accounts and Dividend 19.07.2004

Posting of annual report on or before 07.08.2004

Book closure dates 10.09.2004 to 17.09.2004Last date for the receipt of proxy forms 14.09.2004

Eighteenth AGM 17.09.2004

Dividend payment date 21.09.2004

Probable date of dispatch of dividend warrants 21.09.2004

Board meeting to consider unaudited results for thefirst 3 quarters of the financial year 2004-2005

Results of the quarter ended on 30th June 2004 19.07.2004

Results of the quarter ended on 30th September 2004 End of October 2004

Results of the quarter ended on 31st December 2004 End of January 2005

1127

NON- MANDATORY REQUIREMENTS

Remuneration committee: The company has not set up a Remuneration Committee.Shareholders’ rights: The half–yearly declaration of the financial performance including a summary of the significant events in lastsix months should be sent to the households of each shareholder. As the Company’s half-yearly results are published in English andTamil newspapers, the same are not sent to the households of the shareholders of the Company.

SHARE PRICE VOLUME

The monthly high and low quotation and the volume of shares traded on BSE & NSE are as under:

Particulars BSE NSEHigh Low Volume High Low Volume

April 2003 170 125 64189 158 125 297291

May 2003 209 135 247429 210 135 731322

June 2003 306 182 742439 305 181 1794479

July 2003 343 274 585838 343 274 1859470

August 2003 327 280 267965 326 280 625672

September 2003 363 286 193959 363 287 1186818

October 2003 392 335 97996 398 331 344119

November 2003 490 378 86568 494 385 361628

December 2003 516 471 55178 520 475 287791

January 2004 509 385 40567 505 393 254688

February 2004 424 367 82781 428 360 225562

March 2004 525 420 145682 532 420 509963

CATEGORIES OF SHAREHOLDERS AS ON 31ST MARCH 2004

Category Number of folios Number of shares %

Promoter 8 2571480 34.86Collaborator 1 1665850 22.58FIIs, NRIs/OCB 130 555567 7.53Mutual Funds, FIs, Banks 31 278291 3.77Bodies corporate 258 380541 5.16Public 11212 1925590 26.10Total 11640 7377319 100.00

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To the Members of Aban Loyd Chiles Offshore Limited

We have examined the compliance of conditions of Corporate Governance by Aban Loyd Chiles Offshore Limited for the year ended31st March, 2004, as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchanges in India.

The compliance of condition of Corporate Governance is the responsibility of the Management. Our examination was limited to proceduresand implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neitheran audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has compliedwith the condit ions of Corporate Governance as St ipulated in the above ment ioned List ing Agreement.

As required by the Guidance Note issued by The Institute of Chartered Accountants of India, we have to state that as per the recordsmaintained by the Company, there were no investor grievances remaining unattended/pending for more than 30 days.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectivenesswith which the management has conducted the affairs of the Company.

For Ford, Rhodes, Parks & Co.,

Chartered Accountants

R.SubramanianPlace: Chennai PartnerDate : 19th July, 2004 Membership No: 16059

DISTRIBUTION OF SHAREHOLDINGS AS ON 31ST MARCH 2004

Number of Equity Shares held Folio Share AmountNos. % Rs. %

Upto 500 11197 96.20 11020050 14.94

501-1000 250 2.15 1927400 2.61

1001-2000 84 0.72 1220840 1.66

2001-3000 29 0.25 741690 1.01

3001-4000 7 0.06 241920 0.33

4001-5000 11 0.09 510120 0.69

5001-10000 20 0.17 1548710 2.10

10001 and above 42 0.36 56496020 76.65

Total 11640 100.00 73706750 100.00

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

28

AUDITORS’ REPORT TO THE SHAREHOLDERSWe have audited the attached Balance Sheet of M/s Aban LoydChiles Offshore Limited, as at 31st March, 2004, and also theProfit And Loss Account and the Cash Flow Statement for the yearended on that date annexed thereto. These financial statementsare the responsibility of the Company’s Management. Ourresponsibility is to express an opinion on these financial statementsbased on our audit

We conducted our audit in accordance with the Auditing Standardsgenerally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatements. Anaudit includes examining on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significantestimates made by the management, as well as evaluating theoverall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

We report as follows:

1. As required by the Companies (Auditor’s Report) Order, 2003issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph1 above, we report that:

a. We have obtained all the information and explanations, whichto the best of our knowledge and belief were necessary forthe purposes of our audit ;

b. In our opinion, proper books of account as required by lawhave been kept by the Company, so far as appears fromour examination of the books ;

c. The Balance Sheet, Profit and Loss account and Cash FlowStatement dealt with by this report are in agreement withthe books of account ;

d. In our opinion, the Balance Sheet, Profit and Loss accountand Cash Flow Statement dealt with by this report complywith the Accounting Standards referred to in sub-section(3C) of Section 211 of the Companies Act,1956 ;

e. In our opinion and based on the information and explanationsgiven to us, the Directors of the Company do not prima faciehave any disqualification as on 31st March, 2004 in termsof clause (g) of sub-section (1) of Section 274 of theCompanies Act, 1956 ;

f. In our opinion and to the best of our information and accordingto the explanations given to us, the accounts read togetherwith the Notes thereon give the information required by theCompanies Act, 1956, in the manner so required and givea true and fair view in conformity with the accounting principlesgenerally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairsof the Company as at 31st March, 2004;

(ii) in the case of the Profit and Loss Account, of the profitfor the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cashflows for the year ended on that date.

For Ford, Rhodes, Parks & Co.,

Chartered Accountants

R. SubramanianPlace : Chennai PartnerDate : 19th July, 2004 Membership No: 16059

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30

ANNEXURE TO THE AUDITORS’ REPORT(i) (a) The Company has maintained proper records showing full

particulars including quantitative details and situation offixed assets.

(b) The Fixed Assets have been physically verified by theManagement wherever possible at the close of the yearas confirmed by the Management. As explained to us nomaterial discrepancies have come to the notice on suchphysical verification.

(c) The Company has not disposed off any substantial part ofFixed Assets during the year so as to affect its goingconcern status.

(ii) (a) The inventories have been physically verified during theyear by the Management. In our opinion the frequency ofverification is reasonable.

(b) The procedures of physical verification of inventoriesfollowed by the Management are reasonable and adequatein relation to the size of the Company and the nature of itsbusiness.

(c) In our opinion and according to the information andexplanations given to us, the company is maintaining properrecords of inventory. The discrepancies noticed onverification between the physical stocks and the bookrecords were not material and have been properly dealtwith in the books of account.

(iii) (a) The Company has neither granted any loans to nor takenany loans from companies, firms or other parties coveredin the register, maintained under Section 301 of theCompanies Act, 1956 during the year and hence thequestion of overdue amounts does not arise.

(b) Since the Company has neither granted any loans to nortaken any loans from Companies, firms or other partiescovered in the register, maintained under Section 301 ofthe Companies Act, 1956, in our opinion, the provisionsof clause 4(iii)(b), (c) and (d) of the Companies (Auditor’sReport) Order, 2003 are not applicable.

(iv) In our opinion and according to the information and explanationsgiven to us, there are adequate internal control procedurescommensurate with the size of the Company and the natureof its business with regard to purchases of inventories andfixed assets. During the course of our audit, we have notobserved any continuing failure to correct major weaknessesin internal controls.

(v) (a) According to the information and explanations given to us,we are of the opinion that the transactions that need to beentered into the register maintained under Section 301 ofthe Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information andexplanations given to us, the transactions made in pursuanceof contracts or arrangements entered in the registermaintained under Section 301 of the Companies Act, 1956and exceeding the value of rupees five lakhs in respect ofany party during the year have been made at prices whichare reasonable having regard to prevailing market pricesat the relevant time.

(vi) The Company has not accepted any deposits during the yearfrom the public within the meaning of the provisions of Section58A and 58AA of the Companies Act, 1956 and the rulesmade thereunder.

(vii) In our opinion the Company has an internal audit systemcommensurate with the size and nature of its business.

(viii) The Central Government has prescribed maintenance of costrecords under Section 209 (1) (d) of the Companies Act, 1956in respect of the wind power generating activity of the Company.We have broadly reviewed the accounts and records of theCompany in this connection and are of the opinion, that primafacie, the prescribed accounts and records have been madeand maintained. We have not, however, made a detailedexamination of the same.

(ix) (a) The Company is regular in depositing with appropriateauthorities undisputed statutory dues including ProvidentFund, Investor Education and Protection Fund, Income

(Referred to in paragraph 1 of our report of even date)

1131

Tax, Customs Duty, Sales Tax, Wealth Tax, Cess and othermaterial statutory dues applicable to it. We are informedthat the Employees’ State Insurance Scheme is notapplicable to the Company. According to the informationand explanations given to us, no undisputed amountspayable in respect of above were in arrears, as at 31stMarch, 2004 for a period of more than six months fromthe date they become payable.

(b) According to the information and explanations given to us,there are no dues of Provident Fund, Investor Educationand Protection Fund, Income Tax, Customs Duty, SalesTax, Wealth Tax and Cess which have not been depositedon account of any dispute.

(x) The Company has no accumulated losses as at 31stMarch, 2004 and has not incurred cash losses in the financialyear under report or in the immediately preceding financialyear.

(xi) In our opinion and according to the information and explanationsgiven to us, the Company has not defaulted in repayment ofdues to any financial institutions or banks. The Company doesnot have debenture loan.

(xii). Based on our examination of the records and the informationand explanations given to us, the Company has not grantedany loans and / or advances on the basis of security by wayof pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutualbenefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 are notapplicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading inshares, securities, debentures and other investments.Accordingly, the provisions of clause 4 (xiv) of the Companies(Auditor’s Report) Order, 2003 are not applicable to theCompany.

(xv) According to the information and explanations given to us,the Company has not given any guarantee for loans taken byothers from banks and financial institutions.

(xvi) In our opinion and according to the information and explanationsgiven to us, the term loans taken by the Company have beenapplied for the purposes for which they were raised.

(xvii) According to the information and explanations given to usand on an over all examination of the Balance Sheet of theCompany, we are of the opinion that the Company has utilisedRs.20 crores from short term funds towards repayment oflong term borrowings.

(xviii) The Company has not made any preferential allotment ofshares to parties and companies covered in the registermaintained under Section 301 of the Companies Act, 1956during the year.

(xix) No debentures have been issued by the Company during theyear and hence, the provisions of clause 4 (xix) of theCompanies (Auditor’s Report) Order,2003 are not applicableto the Company.

(xx) During the year the Company has not raised money by wayof public issue. Hence the provisions of clause 4 (xx) of theCompanies ( Auditor’s Report) Order, 2003 are not applicableto the Company.

(xxi) During the course of our examination of the books of account,we have neither come across any instance of fraud on or bythe Company, either noticed or reported during the year, norhave we been informed of any such case by the management.

For Ford, Rhodes, Parks & Co.,Chartered Accountants

R. SubramanianPlace : Chennai PartnerDate : 19th July, 2004 Membership No: 16059

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Per our report attachedOn behalf of the Board

For Ford, Rhodes, Parks & Co Reji Abraham P. Murari V.S. RaoChartered Accountants Managing Director Director Vice Chairman

R. Subramanian K. Bharathan S. Srinivasan P. Venkateswaran C.P. GopalkrishnanPartner Director Director Director (Operations) Director (Finance) & SecretaryMembership No. 16059

Chennai19th July, 2004

Balance SheetAs at 31st March, 2004

As at As at31st March, 2004 31st March, 2003

Schedule Rupees Rupees Rupees

I. SOURCES OF FUNDS 1. Shareholders' Funds

(a) Share Capital 1 7,37,06,750 7,37,06,750 (b) Reserves and Surplus 2 170,46,56,810 129,42,44,575

2. Loan Funds Secured Loan 3 240,86,80,026 307,98,93,451

3. Deferred Tax (Net) 4 44,20,73,331 34,39,48,703

Total Funds Employed 462,91,16,917 479,17,93,479

II. APPLICATION OF FUNDS 1. Fixed Assets 5

Gross Block 578,69,40,372 577,44,34,209 Less:Depreciation 289,71,28,570 251,72,50,209 Net Block 288,98,11,802 325,71,84,000 Add: Capital Work in Progress 7,04,79,866 224,80,332 296,02,91,668 327,96,64,332

2. Investments 6 76,47,17,488 23,03,77,5693. Current Assets,Loans and Advances

(a) Inventory of Stores & Spares (at cost) 23,00,36,284 22,96,93,534 (As certified by the Management) (b) Sundry Debtors 7 31,03,95,539 28,18,49,450 (c) Cash and Bank Balances 8 41,82,35,084 28,14,91,311 (d) Loans and Advances 9 15,19,62,761 49,53,15,454 111,06,29,668 128,83,49,749 Less: Current Liabilities and Provisions 10 (a) Current Liabilities 22,15,46,254 12,49,08,266 (b) Provisions 6,25,04,476 4,15,75,214 28,40,50,730 16,64,83,480 Net Current Assets 82,65,78,938 112,18,66,269

4. Miscellaneous Expenditure (to the extent not written off or adjusted ) 11 7,75,28,823 15,98,85,309

Total Assets 462,91,16,917 479,17,93,479

Notes to Accounts 16

Aban Loyd Chiles Offshore Ltd.

32

Profit and Loss AccountFor the year ended 31st March, 2004

Year ended Year ended

31st March, 2004 31st March, 2003

Schedule Rupees Rupees

I.INCOME

Income from Operations 12 276,83,11,911 243,84,35,447

Other Income 13 15,17,95,255 7,72,33,000

292,01,07,166 251,56,68,447

II.EXPENDITURE

Operating, Administrative and Other Expenses 14 143,70,37,762 139,47,41,112

Interest 15 25,74,90,811 36,84,55,256

Depreciation 38,10,30,994 32,91,90,286

Goodwill Amortised 6,29,32,560 6,29,32,557

Deferred Revenue Expenses Written off 5,73,700 5,73,700

213,90,65,827 215,58,92,911

Profit for the year before taxation 78,10,41,339 35,97,75,536

Less: Provision for taxation

- Current Tax 21,00,00,000 2,84,00,000

- Deferred Tax 9,81,24,628 24,06,00,000

Profit for the year after taxation 47,29,16,711 9,07,75,536

Add: Profit brought forward from Previous Year 106,40,45,090 102,48,44,768

Profit available for Appropriation 153,69,61,801 111,56,20,304

Transfer to General Reserve 5,00,00,000 1,00,00,000

Proposed Dividend 5,52,80,063 3,68,53,375

Tax on Dividend 72,24,413 47,21,839

Balance Carried to Balance Sheet 142,44,57,325 106,40,45,090

Notes to Accounts 16

Earnings per Equity Share of Rs. 10/- each 64.16 12.32

Aban Loyd Chiles Offshore Ltd.

1133

Per our report attachedOn behalf of the Board

For Ford, Rhodes, Parks & Co Reji Abraham P. Murari V.S. RaoChartered Accountants Managing Director Director Vice Chairman

R. Subramanian K. Bharathan S. Srinivasan P. Venkateswaran C.P. GopalkrishnanPartner Director Director Director (Operations) Director (Finance) & SecretaryMembership No. 16059

Chennai19th July, 2004

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Schedules annexed to and forming part of the accounts

As at As at31st March, 2004 31st March, 2003

Rupees Rupees

1 SHARE CAPITAL

Authorised 18,00,00,000 Equity Shares of Rs.10 each 180,00,00,000 180,00,00,0002,00,00,000 Cumulative Redeemable Preference Shares of Rs.10 each 20,00,00,000 20,00,00,000

200,00,00,000 200,00,00,000Issued62,78,760 Equity Shares of Rs.10 each. (Previous Year: 62,78,760 6,27,87,600 6,27,87,600

Equity Shares of Rs.10 each)10,85,271 Equity Shares of Rs.10 each fully paid up and 13,288 Equity

Shares of Rs.10 each partly paid upto Rs.5 issued pursuant toScheme of Amalgamation of Hitech Drilling Services India Ltd with the Company. (Previous Year: 10,85,271 Equity Shares of Rs.10 each fullypaid up and 13,288 Equity Shares of Rs.10 each partly paid upto Rs.5) 1,09,19,150 1,09,19,150

7,37,06,750 7,37,06,750Subscribed and Paid-up 73,64,031 Equity Shares of Rs.10 each fully paid. (Previous Year:73,64,031 Equity Shares of Rs.10 each) 7,36,40,310 7,36,40,310 13,288 Equity Shares of Rs.10 each,partly paid upto Rs.5 (PreviousYear : 13,288 Equity Shares of Rs.10 each, partly paid upto Rs.5) 66,440 66,440Total 7,37,06,750 7,37,06,750

Aban Loyd Chiles Offshore Ltd.

34

Schedules annexed to and forming part of the accounts

As at As at31st March, 2004 31st March, 2003

Rupees Rupees

3 SECURED LOANS

a. Term Loans from Banks (includes foreign currency loan of Rs.22,11,00,000) 222,40,22,752 299,34,49,847b. Cash Credit from Banks 18,31,47,896 8,25,89,214c. Others 15,09,378 38,54,390

Total 240,86,80,026 307,98,93,451

Notes: 1. Term Loans from Banks are secured by first charge on the offshore drilling rigs and accessories, floating production unit, windmills

and all movable assets , both present and future. Further, one of the term loan from banks is secured by a mortgage of a certainportion of land and equitable mortgage of office property of the Company.

2. Cash Credits from Banks are secured by way of hypothecation of inventory of stores and spares , Book debts and by way of secondcharge on the Rigs of the Company.

3. Other loans represent hire purchase liability secured by hypothecation of certain vehicles of the Company.

Aban Loyd Chiles Offshore Ltd.

4 DEFERRED TAX (NET)Deferred tax Asset on timing differences Provision for dimunition in the value of investments (65,687) (13,79,778)On deferred dry docking charges and deferred expenses (7,36,86,135) (1,54,71,519)Deffered Tax Liability on timing differences On depreciation 51,58,25,153 36,08,00,000 Total 44,20,73,331 34,39,48,703

5 FIXED ASSETS (Rupees)

GROSS BLOCK DEPRECIATION NET BLOCKDescription of the asset As at 1st Additions Deductions As at 31st As at 1st Additions On Deduc- As at 31st As at 31st As at 31st

April,2003 during the during the March,2004 April,2003 during the tions during March,2004 March,2004 March,2003year year year the year

Goodwill 31,46,62,768 _ 6,29,32,560 25,17,30,208 _ – – – 25,17,30,208 31,46,62,768Land-Freehold 15,05,61,096 – 81,96,424 14,23,64,672 – – – – 14,23,64,672 15,05,61,096Building 15,49,33,491 – – 15,49,33,491 1,53,39,254 25,59,251 – 1,78,98,505 13,70,34,986 13,95,94,237Offshore Jackup Drilling Rigs, –Floating Production unit andconnected machineries 262,42,28,099 6,08,71,191 – 268,50,99,290 208,89,05,560 15,65,32,287 – 224,54,37,847 43,96,61,443 53,53,22,539Other Machineries 8,08,24,706 – – 8,08,24,706 7,67,35,196 – – 7,67,35,196 40,89,510 40,89,510Wind Mills 238,04,08,018 1,79,86,296 – 239,83,94,314 30,21,94,448 21,42,91,211 – 51,64,85,659 188,19,08,655 207,82,13,570Office Equipment 2,99,47,997 31,83,561 4,40,650 3,26,90,908 2,22,18,261 44,17,000 3,94,427 2,62,40,834 64,50,074 77,29,736Furniture and Fixtures 1,71,54,248 358,392 – 1,75,12,640 50,13,926 12,38,097 – 62,52,023 1,12,60,617 1,21,40,322Vehicles 2,17,13,786 33,57,893 16,81,536 2,33,90,143 68,43,564 19,93,148 7,58,206 80,78,506 1,53,11,637 1,48,70,222Total 577,44,34,209 8,57,57,333 7,32,51,170 578,69,40,372 251,72,50,209 38,10,30,994 11,52,633 289,71,28,570 288,98,11,802 325,71,84,000Capital Work- in- progress 7,04,79,866 2,24,80,332Total 577,44,34,209 8,57,57,333 7,32,51,170 578,69,40,372 251,72,50,209 38,10,30,994 11,52,633 289,71,28,570 296,02,91 ,668 327,96,64,332Previous Year 460,34,03,114 124,05,45,482 6,95,14,387 577,44,34,209 218,82,31,353 32,91,90,286 1,71,430 251,72,50,209 327,96,64,332 242,39,23,565

1135

2 RESERVES AND SURPLUS(a) Capital Reserve 33,500 33,500(b) Securities Premium Account - As per last Balance Sheet 12,84,03,600 12,84,03,600(c ) Investment Allowance Reserve-Utilised 5,24,00,000 5,24,00,000(d) General Reserve - At the beginning of the year 4,93,62,385 3,93,62,385

Add: Transfer from Profit and Loss Account 5,00,00,000 9,93,62,385 1,00,00,000(e) Profit and Loss Account 142,44,57,325 106,40,45,090

Total 170,46,56,810 129,42,44,575

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Schedules annexed to and forming part of the accounts

As at As at No. of Shares Face Value 31st March,2004 31st March,2003 Rupees Rupees Rupees

6 INVESTMENTS ( At cost)

Long Term Investments A. Trade Investments

Fully Paid Equity Shares- Unquoted (a) Aban Energies Limited

( A wholly owned Subsidiary Company) 2,00,070 10.00 20,00,700 20,00,700(b) Aban Informatics Private Limited 3,00,750 10.00 1,98,49,500 1,98,49,500(c) Frontier Aban Drilling (India) Limited 49,993 100.00 49,99,300 49,99,300(d) Aban Power Company Limited 1,19,01,529 10.00 11,90,15,290 -

B. Others (Non Trade) Equity Shares Quoted -Fully paid Agri Marine Exports Ltd 5,400 10.00 - 67,500Arihant Threads Ltd 13,600 10.00 1,70,000 1,70,000Corporate Couriers Ltd 10,400 10.00 - 4,16,000Himalaya Granites Ltd 1,400 10.00 - 42,000Indo Germa Products Ltd 8,800 10.00 - 88,000Industrial Development Bank of India 16,800 10.00 - 13,65,000Kongarar Integrated Fibres Ltd 200 10.00 - 2,000Kongarar Textiles Ltd 500 10.00 - 22,500Mardia Steel Ltd 8,100 10.00 - 4,05,000Metrochem Industries Ltd 200 10.00 - 22,000Mirza Tanners Ltd 2,800 10.00 - 68,600Orient Organic Ltd 1,500 10.00 - 15,000Punjab Woolcombers Ltd 300 10.00 27,000 27,000Ram Kaashyap Investments Ltd 500 10.00 - 5,000Ram Ratna Wires Ltd 300 10.00 - 3,000Wintac Ltd 700 10.00 - 70,000Samrat Ashoka Exports Ltd 200 10.00 - 12,000Shri Karthik Papers Ltd 3,100 10.00 - 31,000Shreyas Shipping Ltd 1,400 10.00 - 28,000Southern Fuels Ltd 1,100 10.00 - 11,000State Bank of Travancore 245 100.00 1,47,000 1,47,000Stiefel Und Schuh (India) Ltd 300 10.00 - 3,000Thambbi Modern Spinning Mills Ltd 1,300 10.00 - 65,000The ICICI Bank Ltd 2,100 10.00 7,86,374 7,86,374The Waterbase Ltd 10,500 10.00 - 5,04,000Partly Paid Equity Shares Nutech Financial Services Ltd 17,700 10.00 - 1,03,828

Aban Loyd Chiles Offshore Ltd.

36

Schedules annexed to and forming part of the accounts

As at As at No. of Units Face Value 31st March,2004 31st March,2003 Rupees Rupees Rupees

Current Investments ( At lower of cost and fair value) (See note: 3 ) HDFC Income Fund (G) 250000.00 10.00 25,00,000 25,00,000Kotak Mahindra Liquid Institutional Plan -Dividend 1101026.90 10.00 - 1,10,36,251Chola Mutual Fund -Liquid Institutional Plan 502274.60 10.00 - 50,22,746DSP Merill Lynch Liquidity Fund -Dividend 1079837.76 10.00 - 1,33,96,359Deutsche Premier Bond Fund Inst. Plan-Dividend 1018246.99 10.00 - 1,00,00,000HDFC Floating Rate Income Fund -Dividend 4989522.00 10.00 5,00,00,000 4,02,04,315Prudential ICICI Liquid Plan-Dividend 1697592.80 10.00 - 2,01,02,724IL & FS Liquid Fund-Dividend 986020.22 10.00 - 1,00,47,349JM Mutual Fund-Short term-Dividend 513993.47 10.00 52,97,227 50,58,292Birla Bond Plus Plan-B Growth 1812476.84 10.00 2,01,19,580 2,01,19,580HSBC Equity Fund-Dividend 986319.75 10.00 - 1,00,47,245Grindlays Floating Rate-Dividend 7956755.53 10.00 8,01,26,916 2,01,79,249Templeton Mutual Fund-Growth Plan 262421.17 10.00 - 50,00,000Templeton India Liquid Fund-Weekly Plan 3017449.58 10.00 - 3,01,80,229Templeton India Short Term Income Plan-Growth 13344.55 1,000.00 1,50,00,000 -Sundaram Money Fund 499251.63 10.00 50,37,301 -HDFC Cash Management Fund 6125961.20 10.00 6,51,58,172 -Franklin Templeton Monthly Income Plan 213057.89 10.00 25,00,000 -Reliance Monthly Income Plan 250000.00 10.00 25,00,000 -Prudential ICICI Monthly Income Plan 226207.50 10.00 25,00,000 -DSP Merill Lynch Monthly Income Plan 237022.99 10.00 25,00,000 -Deutsche Floating Rate Fund 5123763.78 10.00 5,14,41,611 -Prudential ICICI Floating Rate Fund 16989337.53 10.00 17,07,83,213 -DSP Merill Lynch Floating Rate Fund 3283504.32 10.00 3,28,77,945 -Templeton India Floating Rate Fund 6679718.97 10.00 6,68,19,483 -Birla Floating Rate Fund 1941015.96 10.00 2,00,76,302 -Kotak Mahindra Floating Rate Fund 2032758.49 10.00 2,03,88,036 -Chola Freedom Income Short Term Fund 227155.15 10.00 22,79,638 -Templeton India Growth Plan-Bonus 17840.71 10.00 - -Sundaram Bond Saver -Bonus Option 92077.73 10.00 - -Chola Freedom Income Short Term Fund -Bonus 450275.51 10.00 - Sub Total 76,49,00,588 23,42,23,641Less: Provision for Dimunition in Value of Long Term Investments 1,83,100 38,46,072

Total 76,47,17,488 23,03,77,569Aggregate Value of Quoted Investments 61,90,35,798 20,73,74,141Aggregate Market Value of Quoted Investments 62,85,65,425 20,52,30,199

Aban Loyd Chiles Offshore Ltd.

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Schedules annexed to and forming part of the accounts

8 CASH AND BANK BALANCES

Cash on Hand 1,52,709 2,88,149Balances with Scheduled Banks - In Current Accounts 5,72,20,407 15,20,34,886- In Deposit Accounts 36,08,61,968 12,91,68,276Total 41,82,35,084 28,14,91,311

9 LOANS AND ADVANCES

(Recoverable in cash or in kind or for value to be received,unsecured,considered good) Loans and Advances (Includes Share Application money pending allotment Rs.99,97,500/-) (Previous Year: Rs. Nil) 12,75,99,500 35,76,92,531Sundry Deposits 1,17,66,483 3,62,05,983Advance payment of taxes (Net of Provision for Taxation) 1,25,96,778 10,14,16,940Total 15,19,62,761 49,53,15,454

10 CURRENT LIABILITIES AND PROVISIONS

A) Current Liabilities(a) Amount due to Small Scale Industrial Undertakings 2,16,133 1,33,221(b) Sundry Creditors-others 21,19,94,300 11,04,39,003(c ) Unclaimed Dividends (No amount is due to Investor Education and Protection Fund) 56,48,305 55,19,407

(d) Interest accrued but not due on secured loans 36,87,516 88,16,63522,15,46,254 12,49,08,266

(B) Provisions (a) Proposed Dividend 5,52,80,063 3,68,53,375(b) Tax on Dividend 72,24,413 47,21,839

6,25,04,467 4,15,75,214Total 28,40,50,730 16,64,83,480

As at As at31st March, 2004 31st March, 2003

Rupees Rupees

7 SUNDRY DEBTORSConsidered Good-Unsecured (a) Outstanding for more than six months 4,27,70,932 5,04,48,711(b) Others 26,76,24,607 23,14,00,739 Total 31,03,95,539 28,18,49,450

Aban Loyd Chiles Offshore Ltd.

38

Schedules annexed to and forming part of the accounts

As at As at31st March, 2004 31st March, 2003

Rupees Rupees Rupees

11 MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) (a) Deferred Expenditure 5,73,700 11,47,400

Less: Written off 5,73,700 – 5,73,700(b) Dry Docking Expenditure at the beginning of the year 15,93,11,609 24,10,94,389

Less: Write off during the year and included under Repairs to Machinery in the Profit and Loss Account 8,17,82,786 7,75,28,823 8,17,82,780Total 7,75,28,823 15,98,85,309

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13 OTHER INCOME

(a) Rental Income(Gross) 12,00,000 13,00,000(b) Dividend Income (Gross) 1,63,76,635 52,411(c ) Interest on Bank Deposits (Gross) 22,37,309 34,11,963(d) Interest-Others (Gross) 16,38,593 25,00,881(e) Interest on Income-tax refund 10,30,689 1,71,00,645(f) Provision no longer required 36,62,972 –(g) Service Charges (Gross) 64,79,305 42,62,000(h) Others (Gross) 11,91,69,752 4,76,35,397(i) Profit on Sale of Investments (Net) – 9,69,703

Total 15,17,95,255 7,72,33,000

Notes:(i) Tax deducted at source on a, b, c, d, g, h Rs.8,40,138/- (Previous year -Rs.20,59,781/-)(ii) Others (Gross) in (h) above includes net gain on cancellation of forward exchange contracts Rs. 10,30,23,641/- (Previous year

Rs. 68,30,986/-).

For the year ended For the year ended31st March, 2004 31st March, 2003

Rupees Rupees

12 INCOME FROM OPERATIONS

Drilling Revenue 257,92,71,455 221,81,33,573Income from Wind Power Generation 18,90,40,456 22,03,01,874Total 276,83,11,911 243,84,35,447

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Schedules annexed to and forming part of the accounts

Year ended Year ended31st March, 2004 31st March, 2003

Rupees Rupees

14 OPERATING, ADMINISTRATIVE AND OTHER EXPENSES

Consumption - Stores and Spares 35,36,16,724 25,65,61,939Salaries and Bonus 14,77,94,208 13,96,18,987Contribution to Provident funds and Other funds 1,46,29,345 66,40,199Staff Welfare 63,20,520 89,17,633Rent, Rates and Taxes 50,07,929 34,30,880Rental Charges for Machinery 40,41,67,905 45,36,38,016Repairs to Machinery 16,48,30,430 14,68,28,537Insurance 14,96,06,452 16,45,25,154Drilling Services and Management Fees 7,52,69,784 6,50,26,676Consultancy and Professional Fees 2,94,53,042 7,39,54,844Catering Expenses 73,48,275 96,69,273Postage, Telegram and Telex 46,62,615 52,30,857Printing and Stationery 14,95,087 19,41,281Travelling Expenses 2,57,25,046 2,97,26,503Guarantee Commission , Bank and Other Charges 2,18,02,163 1,29,65,186Loss on Sale of Assets (Net) 53,20,017 41,43,000Loss on Sale of Investments (Net) 11,05,045 -Auditors' Remuneration :

Audit Fees 2,70,000 2,62,500Tax Audit Fees 1,96,000 1,62,000For Other Services 3,57,643 2,61,604Other Expenses reimbursed 88,500 9,12,143 57,000

Other Expenses 1,79,71,032 1,11,79,043Total 143,70,37,762 139,47,41,112

15 INTEREST

On Long Term Loans 25,21,82,011 35,70,23,394Others 53,08,800 1,14,31,862Total 25,74,90,811 36,84,55,256

Aban Loyd Chiles Offshore Ltd.

40

Schedules annexed to and forming part of the accounts

1. SIGNIFICANT ACCOUNTING POLICIESACCOUNTING CONVENTIONS AND CONCEPTSA. Financial statements are based on historical cost convention and on the basis of a going concern and comply with the Accounting

Standards refered to in section 211(3C) of the Companies Act,1956.The Company follows mercantile system of accounting andrecognises income and expenditure on an accrual basis.

B. Fixed AssetsFixed Assets are capitalised at cost inclusive of installation expenses and interest upto the date the asset is put to use. The originalcost of Fixed Assets acquired through foreign currency loans are adjusted for any exchange difference between actual paymentof principal and the original cost booked and by revaluation of closing foreign currency loan at the rate prevailing on the closingday.

C. DepreciationDepreciation on Fixed Assets is provided on the Straight Line basis at rates prescribed in Schedule XIV of the Companies Act,1956on a pro-rata basis. Depreciation on certain Downhole Equipments included in Plant and Machinery is provided at a higher rateon straight line method based on technical evaluation of the expected useful life. Depreciation on windmills is provided at a higherrate on straight line method based on technical evaluation of the expected useful life.

D. Inventory ValuationInventory of Stores and Spares are valued at cost based on First in First out Cost formula.

E. Foreign Currency TransactionsTransactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Current assets andCurrent liabilities are translated at year end exchange rates and the realised exchange gains or losses are recognised in the Profitand Loss Account. Wherever forward exchange contracts are entered into, the exchange differences are dealt with in the Profitand Loss Account over the period of the contracts.

F. Investments(a). Long Term Quoted Investments are valued at cost unless there is a permanent fall in the value.A provision for dimunition ismade to recognise a decline other than temporary,in the value of long term Investments.(b). Long Term Unquoted Investments in Subsidary Company being of long term nature are valued at cost and no loss is recognisedin the fall in their networth unless there is a permanent fall in their networth.(c). Current Investments are valued at lower of cost and fair value of the category of such investments.

G. Proposed DividendThe Dividend as proposed by the Board of Directors is provided in the books of account pending approval at the Annual GeneralMeeting.

H. Retirement BenefitsContribution to Provident Fund is made monthly at a predetermined rate to the Provident Fund authorities and debited to the Profitand Loss Account on accrual basis.The Company has an arrangement with Life Insurance Corporation of India (LIC) to administerits Gratuity schemes.The premium advised by LIC is debited to the Profit and Loss Account on an accrual basis .The provisionfor leave encashment has been made on the basis of actuarial valuation.

I. Borrowing CostBorrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost ofsuch assets.A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use.All otherborrowing costs are charged to revenue.

J. Amortisation Of ExpenditureExpenditure incurrred until 31st March 2002,in connection with dry docking of rig is amortised over a beneficial period of fiveyears from the year of completion of dry docking and such amortised amount is included under the head Repairs to Machinery

16 NOTES ATTACHED TO AND FORMING PART OF THE ACCOUNTS

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Schedules annexed to and forming part of the accounts

Purchased Sold

Prudential ICICI - Monthly Income Plan 226207.50 –Reliance - Monthly Income Plan 250000.00 –Deutsche Floating Rate 5123763.78 -Prudential ICICI Floating Rate Fund 16989337.54 -DSP ML Floating Rate Fund 11023751.61 7740247.29Templeton Floating Rate Short Term Fund 17324184.15 10644464.88Birla Floating Rate Fund 1941015.96 –Kotak Floating Rate Fund 2032758.48 –JM Mutual Fund -Short Term-Dividend Plan 23111.66 –Templeton Mutual Fund -Templeton India Growth Plan – 262421.17Reliance Short Term Fund 5985309.01 5985309.01Chola freedom Short Term Fund - Dividend 227155.15 –K-Bond Wholesale Plan-Bonus Option – 47476.46

31.3.2004 31.3.2003Rs. Rs.

4. a. Managerial RemunerationSalary & Allowances 72,72,000 68,32,000

Monetary Value of Perquisites 20,08,976 20,49,966 Sitting fees 1,03,000 66,000 Commission 1,30,46,097 66,30,503

2,24,30,073 1,55,78,469b. Computation of Net Profit in accordance with Section 309(5) of the

Companies Act, 1956 and calculation of Managing Director andWholetime Director's Commission.Net Profit as per Profit & Loss Account 78,10,41,339 35,97,75,536Add. Directors' Remuneration 2,23,27,073 1,55,12,469Director's Sitting Fees 1,03,000 66,000Depreciation as per Books 38,10,30,994 32,91,90,286Loss on sale of Assets (Net) 53,20,017 41,43,000Deferred Expenses Written off 5,73,700 5,73,700Loss on sale of Investments (Net) 11,05,045 –Goodwill Amortised 6,29,32,560 6,29,32,557

125,50,02,922 77,21,93,548Less. Depreciation per Section 350 of the Companies Act,1956 38,10,30,994 32,91,90,286 Provision for diminution in value of investments no longer required 36,62,972 – Profit on Sale of Investments(Net) – 9,69,703

38,46,93,966 33,01,59,989Profit as per Section 309(5) of the Companies Act, 1956 86,97,39,762 44,20,33,559Commission to Managing Director @ 1% 86,97,398 44,20,336Commission to Wholetime Director @ 0.5% 43,48,699 22,10,167

1,30,46,097 66,30,503

Aban Loyd Chiles Offshore Ltd.

1143

Schedules annexed to and forming part of the accounts

in Profit and Loss Account.The balance unamortised amount of such expenditure is carried forward under the head MiscellaneousExpenditure in the Balance Sheet.

K. Taxes on IncomeThe Income tax provision comprises of current tax and deferred tax. Current tax is the amount of tax payable in respect of incomefor the period.In accordance with the Accounting Standard 22 - Accounting for Taxes on Income issued by the Institute of CharteredAccountants of India, the deferred tax on timing difference between book profit and tax profit for the year is accounted basedon the rates and laws that have been enacted or substantially enacted as on the Balance Sheet date. However deferred tax assetsarising from timing difference are recognised to the extent of their actual realisabil ity in future years.

31.3.2004 31.3.2003Rs Rs.

2. Contingent liabilities not provided fora. Guarantees given by banks on behalf of the Company 26,42,46,758 33,58,71,510b. Liability in respect of partly paid shares held as Investment – 73,172c. Corporate Guarantee given by the Company – 5,32,66,731

3. During the year the Company acquired and sold the following Current Investments:

Particulars Purchased Sold

Investments in Units in Mutual Funds Units UnitsHSBC Cash Fund 6880555.06 7866874.80Deutsche Short Maturity Fund 9578361.54 9578361.54DSP ML Short Term Fund 13970263.83 15052981.14IL & FS Liquid Account-Dividend Plan - 986020.22Chola Mutual Fund -Liquid Plan-Dividend 784486.00 1287364.57Templeton India Liquid Fund 1503569.65 4521019.23Kotak Mahindra Liquid Plan - Dividend 3211390.48 4312417.38DSP ML Liquid Fund 2879.62 1082717.38Grindlays Cashfund - Dividend 18907422.85 18907422.85Prudential ICICI Liquid Plan - Dividend 40899458.14 42597050.94Templeton India Short Term Income Plan 144608.82 131264.27Sundaram Money Fund 3973260.56 3474008.93Prudential ICICI Short Term Plan 11664750.49 11664750.49Grindlays Floating Rate Dividend 37446698.16 31495373.67HDFC Floating Rate Income Fund-Short Term - Dividend 5080577.85 4063971.27IDBI Principal Mutual Fund 3016502.44 3016502.44Chola Freedom Income Short Term Fund - Growth 1119655.86 1119655.86HSBC Income Fund - Short Term Plan 12510577.71 12510577.71IL & FS Bond Fund 2992720.98 2992720.98HDFC Hi Interest - Short Term Plan 16704949.81 16704949.81Templeton India Liquid Fund 1500560.33 1500560.33KMMF K Bond Short Term Plan 1267777.27 1267777.27Grindlays Super Saver Income Fund - Medium Term 9479210.31 9479210.31Grindlays Super Saver Income Fund - Short Term 4939712.64 4939712.64Deutsche Premier Bond Fund 3876547.30 4894794.29HDFC Cash Management Fund 29650548.83 23524587.63Prudential ICICI Flexible Income 462128.56 462128.56JM Short Term Fund 4971090.90 4971090.90Franklin Templeton - Monthly Income Plan 213057.89 –DSP ML Savings Plus - Monthly Income Plan 237022.99 –

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Schedules annexed to and forming part of the accounts

31.3.2004 31.3.2003

Units Value (Rs) Units Value (Rs)

5. Licence/Installed Capacities Not Applicable Not Applicable

6. Generation of Wind Power (Net) 7,08,91,060 18,90,40,456 8,09,70,504 22,03,01,874

7. Value of Imports by the Company on CIF basisa. Capital items 1,94,68,239 4,78,00,035b. Stores & Spare Parts 6,89,11,089 6,22,10,395

8. Expenditure in Foreign Currency (Cash Basis) a. Interest on Foreign Currency Loans 66,33,455 1,37,907

b. Drilling Services & Management Fees 4,43,78,394 2,13,98,180c. Travel and Others 39,94,370 27,70,080d. Consultancy fees 1,20,75,066 94,81,640e. Storage Tanker and other hire charges 21,46,21,173 25,05,79,268f. Insurance 1,22,44,561 –

9. Income Earned in Foreign Exchange

Drilling Revenue 257,92,71,455 221,81,33,573

10. a. Value of Imported Stores & Spares Consumed 6,88,44,360 5,70,33,901 % of above to total consumption 19.47% 22.23% b. Value of Indigenous Stores & Spares consumed 28,47,72,364 19,95,28,038 % of above to total consumption 80.53% 77.77%

11. Dividend remitted in Foreign Currency No.of Non-Resident No. of Equity Net Dividend Shareholders Shares held remitted (Rs.)

For Financial Year 2002-03 1 16,65,850 83,29,250 Previous year 1 16,65,850 56,13,914

12. Related Party disclosure: Enterprise where control exists

1. Subsidiary Company Aban Energies Limited

Other related parties with whom the company had transactions 1. Joint Venture Frontier Aban Drilling (India) Limited

2. Key Management personnel (a) Mr. M A Abraham - Managing Director (b) Mr. Reji Abraham - Wholetime Director (c) Mr. Renny Abraham - Non-Executive Director (d) Mr. P Venkateswaran - Director-Operations (e) Mr. C P Gopalkrishnan - Director(Finance) & Secretary (f) Mr. V S Rao - Non-Executive Director (g) Mr. P Murari - Non-Executive Director (h) Mr. S. Srinivasan - Non-Executive Director (Nominee of ICICI Bank Limited)

(i) Mr. Frank A Wojtek - Non-Executive Director (j) Mr.K. Bharathan – Non-Executive Director

Aban Loyd Chiles Offshore Ltd.

44

Schedules annexed to and forming part of the accounts

Transction with Related Parties During the year

Nature of Transacton Subsidiary company Joint Venture Enterprise Key Management PersonnelRs. Rs. Rs.

2003-04 2002-03 2003-04 2002-03 2003-04 2002-03

i) Machinery maintenance 1,01,76,000 3,59,05,711 --- --- --- –charges paid

ii) Rent received --- --- 12,00,000 13,00,000 --- –iii) Service Charges Received --- --- 12,97,729 3,39,25,098 --- –iv) Service charges paid --- --- 9,49,141 --- --- ---v) Remuneration --- --- --- --- 2,24,30,273 1,57,78,469vi) Purchase of Assets 1,19,67,017 --- --- --- --- –vii) Amount Advanced --- --- --- 1,26,60,000 --- –viii) Amount Outstanding as at

31.03.2004 receivable/(payable) 1,54,26,315 2,02,11,331 37,01,663 1,12,00,364 27,80,000 29,86,000

13. Segment Reporting A. Primary segment as per the Accounting Standard 17-segment reporting issued by the Institute of Chartered Accountants of India The Company's primary segments are Offshore Oil Drilling services and Wind Power generation The above business segments have been identified considering the nature of services rendered and the internal financial reporting

system.Income and Expenses have been accounted for based on their relationship to the operating activities of the segment

B. Secondary Segment Since the the Company does not have any Overseas Operations there are no reportable geographical segments.

Primary Segment Information

2003-04 2002-03Rs. Rs. Rs. Rs.

1. Segment revenue - Drilling 272,47,18,481 229,10,24,573- Wind Energy 19,53,88,685 292,01,07,166 22,46,43,874 251,56,68,447

2. Segment Result - Drilling 102,36,62,283 55,54,21,549- Wind Energy (24,26,20,944) 78,10,14,339 (19,56,46,013) 35,97,75,536

3. Segment Assets - Drilling 262,98,70,740 240,73,39,444- Wind Energy 204,63,59,244 467,62,29,984 226,21,52,036 466,94,91,480

4. Segment liabilities - Drilling 155,76,59,213 206,85,51,717 - Wind Energy 107,25,67,067 263,02,26,280 113,62,50,000 320,48,01,717

5. Depreciation - Drilling 16,67,39,783 15,80,48,453- Wind Energy 21,42,91,211 38,10,30,994 17,11,41,833 32,91,90,286

6. Capital Expenditure - Drilling 5,74,52,428 5,07,10,104

- Wind Energy 1,79,86,297 7,54,38,725 118,32,53,548 123,39,63,652

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Schedules annexed to and forming part of the accounts

17. Disclosure under Accounting Standard 27-Financial Reporting of Interests in joint ventures. The Company’s interests, as a venture,in jointly controlled entry is :

Name of the Company Country of Incorporation Proporton of ownership Proportion of ownershipInterest 2003-04 Interest 2002-03

Frontier Aban Drilling (India) Limited India 33.33% 33.33%

The Company’s interests in this joint venture is reported as Long Term Investments (Schedule-6) and stated at cost. The Company’sshare of each assets, liabilities, income and expenses (each without elimination of the effect of transactions between the Companyand the joint venture) related to its interest in the joint venture are :

The following are the aggregate amounts of each of the assets, liabilities, income and expenses relating to the Company’s interestin the joint venture :

As at As at31st March, 2004 31st March, 2003

Rs. in lacs Rs. in lacsAudited Unaudited

1. Assets 1. Fixed Assets (Net) 17.86 17.31

2. Deferred Tax (Net) 3.31 – 3. Current Assets, Loans and Advances

a) Inventories 78.97 133.75 b) Sundry Debtors 568.05 534.85 c) Cash and Bank Balances 41.53 55.78 d) Loans and Advances 178.32 312.75 4. Miscellaneous Expenditure (to the extent not written off or adjusted) – 56.40

2. Liabilities 1. Secured Loans – 161.43

2. Current Liabilities and Provisions 782.89 843.68

3. Contingent Liabilities 168.35 207.83

14. Sundry Debtors include Rs. 1,54,26,315/- (Previous Year Rs. 2,02,11,331/-) due from the Subsidiary Company, Aban Energies Ltd.Maximum amount outstanding at any time during the year Rs. 2,08,73,177/- (Previous Year Rs. 7,15,83,431/-)

15. Loans and Advances include loan to wholetime Directors of the Company who were officers at the time of taking the loanRs. 27,80,000/- (previous year Rs. 29,86,000/-). Maximum amount outstanding at any time during the year Rs. 29,86,000/- (Previousyear Rs. 31,28,000/-).

16. Earning per Share is calculated as shown below : (Equity shares of Rs. 10/- each)

2003-04 2002-03No. of shares No. of shares

Share CapitalFully paid 73,64,031 73,64,031Partly paid Calculated as fully paid 6,644 6,644

73,70,675 73,70,675Profit after tax Rs. 47,29,16,711 9,07,75,536Earning per Share Rs. 64.16 12.32

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46

Schedules annexed to and forming part of the accounts

For the year ended For the year ended31st March, 2004 31st March, 2003

Rs. in lacs Rs. in lacsAudited Unaudited

4. Income Income from operations 2266.63 2456.51

Other Income 12.21 26.36

5. Expensesa) Stores and Spares consumed 607.68 404.35b) Employee costs 27.59 46.49c) Other Expenses 1528.37 1888.72d) Interest 19.50 16.56

e) Depreciation 2.60 1.91f) Deferred Revenue expenses written off 56.34 61.46

6. Provision for taxation - current 35.99 – - deferred (24.40) –

18. Previous year’s figures are re-grouped/re-arranged whenever necessary.

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1147

Per our report attachedOn behalf of the Board

For Ford, Rhodes, Parks & Co Reji Abraham P. Murari V.S. RaoChartered Accountants Managing Director Director Vice Chairman

R. Subramanian K. Bharathan S. Srinivasan P. Venkateswaran C.P. GopalkrishnanPartner Director Director Director (Operations) Director (Finance) & SecretaryMembership No. 16059

Chennai19th July, 2004

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Cash Flow Statement

2003-04 2002-03

A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit Before Tax 7,810.41 3,597.76Adjustments For:Miscellaneous Expenditure 5.74 5.74Amortised Dry Docking expenses 817.83 817.83Depreciation 3,810.31 3,291.90Goodwill written off 629.33 629.33Interest 2,574.91 3,684.55

Income from Non -Trade Investments (212.83) (230.66)Profit on sale of Investments – (9.70)Loss on sale of Investments 11.05 –Provision no longer required (36.63) –Loss on sale of Fixed Assets 53.20 41.43

Operating Profit Before Working Capital Changes 15,463.32 11,828.18Adjustments For:Inventories (3.43) (232.86)Trade and other receivables 2,087.51 2,418.18Trade and other payables 1,017.68 140.40

Cash Generated From Operations 18,565.08 14,153.89Interest paid (2,626.20) (3,796.47)Direct taxes paid (1,211.80) (518.11)Net Cash From Operating Activities 14,727.08 9,839.31

B CASH FLOW FROM INVESTING ACTIVITIES:Purchase of fixed assets (1,337.57) (12,542.74)Sale of fixed assets 38.46 22.67Interest and dividend received 385.18 68.91Purchase of Investments (34,829.88) (6,244.28)Sale of Investments 29,512.06 4,604.32Net Cash Used In Investing Activities (6,231.75) (14,091.12)

C CASH FLOW FROM FINANCING ACTIVITIES:Proceeds/(Repayment) of Long Term Borrowings (6,712.13) 5,518.97Dividend paid (415.75) (294.83)Net Cash (Used In)/ From Financing Activties (7,127.88) 5,224.14Net Increase /(Decrease) In Cash And Cash Equivalents 1,367.44 972.33Cash And Cash Equivalents at the beginning of the year 2,814.91 1,842.58Cash And Cash Equivalents at the end of the year 4,182.35 2,814.91

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1149

For the year ended 31st March, 2004

Balance Sheet Abstract

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48

Date Month Year

Balance Sheet Abstract and Companies General Business Profile

I Registration Details

Registration No. State Code

Balance Sheet Date

II Capital raised during the year

Public Issue Rights Issue

Bonus Issue Private Placement

III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Assets Total Liabilities

Sources of Funds

Paid-up Capital

Reserve & Surplus Secured Loans

Deferred Tax Total

Application of Funds

Net Fixed Assets Investments

Net Current Assets Misc. Expenditure

Total

IV Performance of Company (Amount in Rs. Thousands)

Turnover Other Income

Total Expenditure Profit before tax

Profit after tax Earnings per share in Rs.

Dividend Rate

V Generic Names of Principal Products/Services of the Company (as per monetary terms)

Item Code No. (ITC Code) Product Description

N I L

N I L N I L

N I L

1 8

3 1 0 3 2 0 0 4

1 3 4 7 3

Additional Information as per Part IV of Schedules VI to the Companies Act, 1956

4 6 2 9 1 1 7 4 6 2 9 1 1 7

7 3 7 0 7

1 7 0 4 6 5 7 2 4 0 8 6 8 0

4 4 2 0 7 3 4 6 2 9 1 1 7

2 9 6 0 2 9 2 7 6 4 7 1 7

8 2 6 5 7 9 7 7 5 2 9

4 6 2 9 1 1 7

2 7 6 8 3 1 2 1 5 1 7 9 5

2 1 3 9 0 6 6 7 8 1 0 4 1

4 7 2 9 1 7 6 4 . 1 6

7 5 %

8 4 2 8 3 1 . 0 2

8 9 0 5 2 0 . 0 0

N A

Oil Well Drilling

Oil /Gas Production

Wind Power Generation

As at 31st March, 2004

Per our report attachedOn behalf of the Board

For Ford, Rhodes, Parks & Co Reji Abraham P. Murari V.S. RaoChartered Accountants Managing Director Director Vice Chairman

R. Subramanian K. Bharathan S. Srinivasan P. Venkateswaran C.P. GopalkrishnanPartner Director Director Director (Operations) Director (Finance) & SecretaryMembership No. 16059

Chennai19th July, 2004

Rs. in lacs

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Statement Pursuant to Section 212 of the Companies Act, 1956

Aban Loyd Chiles Offshore Ltd.

1. Name of the Subsidiary Company Aban Energies Limited2. Financial Year of the Subsidiary Company Year ended 31.03.20043. Shares of the Subsidiary Company held by Aban Loyd Chiles Offshore Limited

(a) Number of Shares 2,00,070(b) Face value Rs. 10(c) Paid up value Rs. 10(d) Extent of Holding 100%

4. Net aggregate amount of Profit/(Loss) of the Subsidiary Company so far as they concernthe members of Aban Loyd Chiles Offshore Limited not dealt with in the accounts ofAban Loyd Chiles Offshore Limited amount to :(a) For the Subsidiary Company’s financial year ended on 31.03.2004 10,04,026(b) for the previous financial year of the subsidiary since it became

the Holding Company’s subsidiary (1,31,47,628)5. Net aggregate amount of Profit/(Loss) of the Subsidiary Company, dealt with in the

Accounts of Aban Loyd Chiles Offshore Limited amount to :(a) For Subsidiary Company’s financial year ended 31.03.2004 Nil(b) for the previous financial year of the Subsidiary since it became the Holding

Company’s subsidiary Nil6. As the financial year of the Subsidiary Company coincides with the financial year of the

Holding Company, Section 212(5) of the Companies Act is not applicable.

50

Directors’ Report

Your Directors have pleasure in presenting the Seventh AnnualReport of your Company for the year ended 31st March 2004

1. Financial Results (Rupees in Lakhs)

Year ended Year ended31st March 31st March

2004 2003

Income from Operations 123.81 362.08

Other Income --- 22.65

Less : Expenditure 110.40 371.03

Profit/(loss) before Interest &

Depreciation 13.41 13.70

Less : Depreciation 2.19 2.09

Profit /(Loss) for the year 11.22 11.61

Provision for Tax 1.00 0.00

Provision for Deffered tax 0.18 0.42

Profit after Tax 10.04 11.19

2. Performance

The Company has earned an income from operations ofRs.123.81 Lacs . The Company has earned a net profit ofRs.10.04 Lacs after Tax. The Company is looking at variousopportunities available for further improvement in profitablity

3. DividendIn view of accumulated loss the directors did not recommendany dividend for the year ended 31st March 2004 .

4. DirectorsThe Director Mr.P.Venkateswaran retires by rotation and beingeligible offers himself for reappointment.

The Board regrets to note the sad demise of Director Mr. RennyAbraham on 05.10.2003 and Director Mr. M.A. Abraham on12.06.2004. The Board places on record its sincere appreciationfor the valuable services rendered by the deceased Directorsfor the growth of the Company during their lifetime.

5. Directors’ Responsibility StatementPursuant to the requirement under section 217(2AA) of the

Companies Act, 1956 with respect to Directors Responsibility

Statement it is hereby confirmed:

(i) that in the preparation of the annual accounts for thefinancial year ended 31st March 2004 the applicableaccounting standards had been followed along with properexplanation relating to material departures:

(ii) that the directors had selected such accounting policiesand applied them consistently and made judgements andestimates that were reasonable and prudent so as to givea true and fair view of the state of affairs of the Companyat the end of the financial year and of the profit of the

Company for the year under review.

(iii) that the Directors had taken proper and sufficient care forthe maintenance of adequate accounting records inaccordance with the provisions of the Act, for safeguardingthe assets of the Company and for preventing and detectingfraud and other irregularities.

(iv) that the Directors had prepared the accounts for the financialyear ended 31st March 2004 on a going concern basis.

6. AuditorsM/s. Ford, Rhodes, Parks & Co., Chartered Accountants,Chennai hold office until conclusion of the ensuing AnnualGeneral Meeting and being eligible are recommended forreappointment.

7. Secretarial Compliance CertificateThe Secretarial Compliance Certificate pursuant to Section383 A of the Companies Act, 1956 issued byMr. G. Ramachandran, Company Secretary in practice is annexed.

8. Particulars Of EmployeesNone of the employees of the Company were drawingremuneration exceeding Rs.24,00,000/- (Rupees twenty fourlacs only) per annum or Rs.2,00,000/- (Rupees two lacs only)per month or part thereof. Hence no particulars of employeesU/S 217(2A) of the Companies Act, 1956 need to be furnished.

In terms of section 217(1) of the Companies Act 1956 (asamended) and the Companies (Disclosure of particulars inReport of Board of Directors) Rules 1988, your Directors furnishhereunder the addit ional information as required.

A. Conservation of EnergyThe Company’s activities are not energy intensive

B. Research & development :The Company’s research activities are directed towardsupgrading skills of the personnel. Efforts are being takento maximise indigenization.

C. Technology Absorption, Adoption and Innovation : TheCompany has absorbed the technology.

2003-2004 2002-2003D. Foreign Exchange

Earnings : Nil Nil Outgo Nil Nil

9. AcknowledgementsThe Directors wish to place on record their sincere appreciationfor the valuable support extended by Employees, Bankers andBusiness Associates.

For and on behalf of the Board

Chennai Reji Abraham P. VenkateswaranDate: 16th July 2004 Director Director

Aban Energies Limited

1151

Per our report attachedOn behalf of the Board

For Ford, Rhodes, Parks & Co Reji Abraham P. Murari V.S. RaoChartered Accountants Managing Director Director Vice Chairman

R. Subramanian K. Bharathan S. Srinivasan P. Venkateswaran C.P. GopalkrishnanPartner Director Director Director (Operations) Director (Finance) & SecretaryMembership No. 16059

Chennai19th July, 2004

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I have examined the registers, records, books and papers of AbanEnergies Limited, No.113 (Old No.96) Pantheon Road,Egmore, Chennai 600 008 as required to be maintained underthe Companies Act, 1956, (the Act) and the rules made thereunderand also the provisions contained in the Memorandum and Articlesof Association of the Company for the financial year ended on 31stMarch 2004.

In my opinion and to the best of my information and according tothe examinations carried out by me and explanations furnished tome by the Company, its officers and agents, I certify that in respectof the aforesaid financial year:

1. The Company has kept and maintained all registers as statedin Annexure `A’ to this certificate, as per the provisions andthe rules made thereunder and all entries therein have beenduly recorded.

2. The Company has duly filed the forms and returns as statedin Annexure ̀ B’ to this certificate with the Registrar of Companies,Regional Director, Central Government, Company Law Boardor other authorities, wherever applicable, under the Act andthe rules made thereunder.

3. The Company is a Public Limited Company having the prescribedpaid-up capital.

4. The Board of Directors duly met 5 (Five) times on 26.04.2003,12.07.2003, 25.09.2003, 31.10.2003 and 30.01.2004 inrespect of which meetings proper notices were given and theproceedings were properly recorded and signed in the MinutesBook maintained for the purpose. No circular resolutions werereported to be passed during the period under scrutiny.

5. The Company has not closed its Register of Members, and /or Debenture holders during the financial year under review.

6. The Annual General Meeting for the financial year ended on31st March 2003 was held on 25th September 2003 aftergiving due notice to the members of the Company and theresolutions passed thereat were duly recorded in Minutes Bookmaintained for the purpose.

7. No Extra Ordinary General Meeting was held during the periodunder scrutiny.

8. The Company has not advanced loan amount to its directorsand/or persons or firms or companies referred in the Section295 of the Act, 1956.

9. The Company has not entered into any contracts falling withinthe purview of Section 297 of the Act, 1956.

10. The Company has made necessary entries in the registermaintained under Section 301 of the Act.

11. As there were no instances falling within the purview of Section314 of the Act, the Company is not required to obtain anyapprovals from the Board of Directors, Members or CentralGovernment.

12. The Company has not issued any duplicate share certificatesduring the period under review.

13. The Company has:

(i) not made any allotment of shares and there were no transferor transmission of securities during the financial year.

(ii) not declared any dividend for the year under review.

(iii) not declared any dividend for the year under review andtherefore, the question of paying /posting warrants to themembers or transferring any unpaid dividend to a separateaccount does not arise.

(iv) no amounts in unpaid dividend account, application moneydue for refund, matured deposits, matured debentures andany interest accrued thereon, for a period of seven yearsand therefore the question of transfer of such amounts tothe Investors Education and Protection Fund does not arise.

(v) duly complied with the requirements of Section 217 of theAct.

14. The Board of Directors of the Company is duly constituted.The Company did not appoint additional directors, alternatedirectors and directors to fill casual vacancies during the yearunder scrutiny.

Compliance Certificate

Registration No : 18-38108Authorised Capital : Rs. 25,00,000/-Paid-up Capital : Rs. 20,00,700/-

ToThe MembersAban Energies LimitedChennai.

Aban Energies Limited

52

15. The Company has not appointed any Managing Director /Whole-time Director / Manager during the financial year.

16. The Company has not appointed any sole-selling agents duringthe period under review.

17. The Company was not required to obtain any approvals of theCentral Government, Company Law Board, Regional Director,Registrar of Companies and/or such authorities prescribedunder the various provisions of the Act.

18. The Directors have disclosed their interest in otherfirms/companies to the Board of Directors pursuant to theprovisions of the Act and the rules made thereunder.

19. The Company has not issued any shares/debentures/othersecurities during the financial year under review.

20. The Company has not bought back any shares during thefinancial year under review.

21. The Company has not redeemed any preferenceshares/debentures during the year under review.

22. The Company has not declared any Dividend / Rights Sharesand Bonus Shares during the year under review and hence thequestion of keeping in abeyance rights to dividend, rightsshares and bonus shares pending registration of transfer ofshares does not arise.

23. The Company has neither invited nor accepted Fixed depositsincluding unsecured loans falling within the purview of Sections58A and 58AA read with Companies (Acceptance of Deposit)Rules, 1975.

24. The Company has not made any borrowings during the financialyear under review.

25. The Company has not made loans and investments, or givenguarantees or provided securities to other bodies corporateduring the financial year under review.

26. The Company has not altered the provisions of the Memorandumwith respect to situation of the company’s registered office

from one state to another during the year under scrutiny.

27. The Company has not altered the provisions of the Memorandumwith respect to the objects of the company during the yearunder scrutiny.

28. The Company has not altered the provisions of the Memorandumwith respect to name of the company during the year underscrutiny.

29. The Company has not altered the provisions of the Memorandumwith respect to share capital of the company during the yearunder scrutiny.

30. The Company has not altered its Articles of Association duringthe year under scrutiny.

31. I was informed that there was no prosecution initiated againstor show cause notices received by the company during theperiod under scrutiny for offences under the Act.

32. The Company has not received any money as security fromits employees during the period under scrutiny and hence theprovisions of Section 417 of the Companies Act, 1956, arealso not applicable.

33. The Employees of the Company are covered under theEmployees Provident Funds Miscellaneous Provisions Act,1952 and hence the provisions of Section 418 of the CompaniesAct is not applicable to the Company.

G RamachandranPlace: Chennai Company Secretary in PracticeDate: 16th July 2004 ACS 9865 C.P. NO.3056

Aban Energies Limited

1153

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ANNEXURE A

Registers as maintained by the Company:

1. Register and Index of Shareholders2. Register of Transfers.3. Register of Directors4. Register of Directors’ Share holding.5. Minutes of the Meeting of Board of Directors6. Minutes of the Meeting of the Annual General Meetings.7. Minutes of the Meeting of the Extraordinary General Meetings.8. Register of Contracts, Companies and firms in which Directors

of the Company are interested u/s. 301.9. Books of Accounts u/s.209.

Compliance Certificate

Aban Energies Limited

54

Aban Energies Limited

We have audited the attached Balance Sheet of M/s Aban EnergiesLimited as at 31st March, 2004, and the Profit And Loss Accountfor the year ended on that date, annexed thereto. These financialstatements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financialstatements based on our audit.

We conducted our audit in accordance with the Auditing Standardsgenerally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatements. Anaudit includes examining on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significantestimates made by the management, as well as evaluating theoverall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

We report as follows:

1. As required by the Companies (Auditor’s Report) Order, 2003issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph1 above, we report that:

a. We have obtained all the information and explanations whichto the best of our knowledge and belief were necessary forthe purposes of our audit ;

b. In our opinion, proper books of account, as required by law,have been kept by the Company, so far as appears fromour examination of those books ;

c. The Balance Sheet, and Profit and Loss account dealt withby this report are in agreement with the books of account ;

d. In our opinion, the Balance Sheet, and Profit and Loss accountdealt with by this report comply with the Accounting Standardsreferred to in sub-section (3C) of Section 211 of theCompanies Act, 1956 ;

e. In our opinion and based on the information and explanationsgiven to us, the Directors of the Company do not primafacie have any disqualification as on 31st March, 2004 interms of clause (g) of sub-section (1) of Section 274 of theCompanies Act, 1956 ;

f. In our opinion and to the best of our information andaccording to the explanations given to us, the accountsread together with the Notes thereon give the informationrequired by the Companies Act, 1956, in the manner sorequired and give a true and fair view, in conformity withthe accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairsof the Company as at 31st March, 2004; and

(ii) in the case of the Profit and Loss Account, of the profitfor the year ended on that date.

For FORD, RHODES, PARKS & CO.,Chartered Accountants

R. SubramanianPlace : Chennai PartnerDate : 16th July 2004 Membership No: 16059

1155

G RamachandranPlace: Chennai Company Secretary in PracticeDate: 16th July 2004 ACS 9865 C.P. NO.3056

Auditors Report To The Shareholders

ANNEXURE B

Documents filled with Registrar of Companies

If delay infilling, whether

Sl. No. Nature of Event Form No. Pursuant to Date filled with Whether requisiteSection ROC filled within Additional fees

the time limit Paid

1. Balance Sheet, Profit & LossAccount along with Notice andDirectors Report for the year-ended 31.03.2003. Sch VI 220 21.10.2003 Yes N.A.

2. Compliance Certificate for theyear ended 31.03.2003 383A 21.10.2003 Yes N.A

3. Annual Return as on 25.9.2003 Sch V 159 21.11.2003 Yes N.A.

4. Cessation of Director due to Death 32 303 5.11.2003 No Yes

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Aban Energies Limited

Duty, Sales Tax and other material statutory dues applicableto it. According to the information and explanations givento us, no undisputed amounts payable in respect of abovewere in arrears, as at 31st March, 2004 for a period ofmore than six months from the date they became payable.

(b) According to the information and explanations given tous, there are no dues of Provident Fund, Employees’ StateInsurance, Income Tax, Customs Duty and Sales Taxwhich have not been deposited on account of any dispute.

(x). The accumulated losses of the Company as at 31st March2004, are more than fifty percent of its net worth and theCompany has not incurred any cash losses during the financialyear ended on that date or in the immediately precedingfinancial year.

(xi). The Company does not have any dues to financial institutions,banks or to debenture holders during the year and hence theprovisions of clause 4 (xi) of the Companies (Auditors’ Report)Order, 2003 are not applicable.

(xii) Based on our examination of the records and the informationand explanations given to us, the Company has not grantedany loans and / or advances on the basis of security by wayof pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutualbenefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 are notapplicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading inshares, securities, debentures and other investments.Accordingly, the provisions of clause 4 (xiv) of the Companies(Auditor’s Report) Order, 2003 are not applicable to theCompany.

(xv) According to the information and explanations given to us,the Company has not given any guarantee for loans taken byothers from banks and financial institutions.

(xvi) The Company has not taken any Term loan during the yearand hence, the provisions of clause 4(xvi) of the Companies(Auditor’s Report) Order, 2003 are not applicable to theCompany.

(xvii) The Company has neither raised funds on short term basisnor taken long term loan during the year and hence theprovisions of clause 4 (xvii) of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company.

(xviii). The Company has not made any preferential allotment ofshares to parties and Companies covered in the registermaintained under section 301 of the Companies Act, 1956during the year.

(xix) No debentures have been issued by the Company during theyear and hence, the provisions of clause 4 (xix) of theCompanies (Auditor’s Report) Order, 2003 are not applicableto the Company.

(xx). During the year the Company has not raised money by wayof public issue. Hence the provisions of clause 4 (xx) of theCompanies ( Auditor’s Report) Order, 2003 are not applicableto the Company.

(xxi) During the course of our examination of books of account,we have neither come across any instance of fraud on or bythe Company, either noticed or reported during the year, norhave been informed of any such case by the management.

For FORD, RHODES, PARKS & CO.,Chartered Accountants

R. SubramanianPlace : Chennai PartnerDate : 16th July 2004 Membership No: 16059

Annexure to the Auditors’ Report(Referred to the Paragraph 1 of our Report of even date)

1157

(i). (a) The Company has maintained proper records showingfull particulars including quantitative details and situationof fixed assets.

(b) The Fixed Assets have been physically verified by theManagement wherever possible at the close of the yearas confirmed by the Management. As explained to us,no material discrepancies have come to the notice onsuch physical verification.

(c) The Company has not disposed off any substantial partof Fixed Assets during the year so as to affect its goingconcern status.

(ii). (a) The inventories have been physically verified during theyear by the Management. In our opinion the frequency ofverification is reasonable.

(b) The procedures of physical verification of inventoriesfollowed by the Management are reasonable and adequatein relation to the size of the Company and the natureof its business.

(c) In our opinion and according to the information andexplanations given to us, the Company is maintainingproper records of inventory. The discrepancies noticedon verification between the physical stocks and the bookrecords were not material and have been properly dealtwith in the books of account.

(iii). (a) The Company has neither granted any loans to nor taken any loans from companies, firms or other partiescovered in the register, maintained under Section 301 ofthe Companies Act, 1956 during the year and hence thequestion of overdue amounts does not arise.

(b) Since the Company has neither granted any loans to nortaken any loans from Companies, firms or other partiescovered in the register, maintained under Section 301 ofthe Companies Act, 1956, in our opinion, the provisions

of clause 4(iii)(b), (c) and (d) of the Companies (Auditor’sReport) Order, 2003 are not applicable.

(iv). In our opinion and according to the information and explanationsgiven to us, there are adequate internal control procedurescommensurate with the size of the Company and the natureof its business with regard to purchases of inventories andfixed assets. During the course of our audit, we have notobserved any continuing failure to correct major weaknessesin internal controls.

(v). (a) According to the information and explanations given tous, we are of the opinion that the transactions that needto be entered into the register maintained under Section301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information andexplanations given to us, the transactions made inpursuance of contracts or arrangements entered in theregister maintained under Section 301 of the CompaniesAct, 1956 and exceeding the value of rupees five lakhsin respect of any party during the year have been madeat prices which are reasonable having regard to prevailingmarket prices at the relevant time.

(vi). The Company has not accepted any deposits during the yearfrom the public within the meaning of the provisions of Section58A and 58AA of the Companies Act, 1956 and the rulesmade thereunder.

(vii). In our opinion the Company has an internal audit systemcommensurate with the size and nature of its business.

(viii). The Central Government has not prescribed maintenance ofcost records under Section 209 (1) (d) of the CompaniesAct, 1956.

(ix). (a) The Company is regular in depositing with appropriateauthorities undisputed statutory dues including ProvidentFund, Employees’ State Insurance, Income Tax, Customs

Aban Energies Limited

Annexure to the Auditors’ Report(Referred to the Paragraph 1 of our Report of even date)

56

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Balance Sheet

As at As at31st March, 2004 31st March, 2003

Schedule Rupees Rupees Rupees

I. SOURCES OF FUNDS

1. Shareholders' Funds

Share Capital 1 20,00,700 20,00,700

2. Deferred Tax (Net) 1,86,923 1,69,023

Total Funds Employed 21,87,623 21,69,723II. APPLICATION OF FUNDS

1. Fixed Assets 2

Gross Block 21,68,022 21,50,772

Less: Depreciation 6,73,721 4,55,107

Net Block 14,94,301 16,95,665

2. Current Assets,Loans and Advances

(a) Inventory of Stores & Spares (at cost) 36,33,929 45,27,092

( As certified by the Management)

(b) Sundry Debtors 3 4,42,000 21,99,604

(c) Cash and Bank Balances 4 3,65,981 28,90,777

(d) Loans and Advances 5 23,11,656 40,92,363

67,53,566 1,37,09,836

Less:Current Liabilities and Provisions 6

(A) Current Liabilities 1,67,54,846 2,50,39,645

(B) Provisions 14,49,000 13,49,000

1,82,03,846 2,63,88,645

Net Current Assets (1,14,50,280) (1,26,78,809)

3. Miscellaneous Expenditure (to the 7

extent not written off or adjusted ) -- 5,239

Profit and Loss Account 1,21,43,602 1,31,47,628

Total Assets 21,87,623 21,69,723Notes to Accounts 9

Per our report attached On behalf of the Board

For Ford, Rhodes, Parks & CoChartered Accountants

R. Subramanian Reji Abraham P. VenkateswaranPartner Director DirectorMembership No. 16059

Chennai16th July 2004

Aban Energies Limited

58

As at 31st March, 2004Profit and Loss Account

Aban Energies Limited

1159

For the year ended 31st March, 2004

Year ended Year ended

31st March, 2004 31st March, 2003

Schedule Rupees Rupees

I. INCOME

Income from Service rendered 1,23,80,736 3,62,08,133

Other Income – 22,65,131

1,23,80,736 3,84,73,264

II. EXPENDITURE

Operating, Administrative and Other Expenses 8 1,10,34,957 3,70,97,703

Depreciation 2,18,614 2,09,048

Preliminary Expenses written off 5,239 5,239

1,12,58,810 3,73,11,990

Profit for the year before taxation 11,21,926 11,61,274

Less: Provision for taxation

- Current Tax 1,00,000 –

- Deferred Tax 17,900 41,793

Profit for the year after taxation 10,04,026 11,19,481

Add: Profit brought forward from Previous Year (1,31,47,628) (1,42,67,109)

Balance Carried to Balance Sheet (1,21,43,602) (1,31,47,628)

Notes to Accounts 9

Earnings per Equity Share of Rs.10 each 5.02 5.60

Per our report attached On behalf of the Board

For Ford, Rhodes, Parks & CoChartered Accountants

R. Subramanian Reji Abraham P. VenkateswaranPartner Director DirectorMembership No. 16059

Chennai16th July 2004

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Schedules annexed to and forming part of the accounts

2 FIXED ASSETS (Rupees)

GROSS BLOCK DEPRECIATION NET BLOCKDescription of the asset As at 1st Additions Deductions As at 31st As at 1st Additions On Deductions As at 31st As at 31st As at 31st

April,2003 during the during the March,2004 April,2003 during the during the March,2004 March,2004 March,2003year year year year

Wind Mills – 1,18,32,190 1,18,32,190 – – – – – – –Office Equipment 2,40,072 17,250 – 2,57,322 74,202 37,097 – 1,11,299 1,46,299 1,65,870Vehicles 19,10,700 – – 19,10,700 3,80,905 1,81,517 – 5,62,422 13,48,278 15,29,795Total 21,50,772 11,849,440 1,18,32,190 21,68,022 4,55,107 2,18,614 – 6,73,721 14,94,301 16,95,665Previous Year 21,18,470 32,302 – 21,50,772 2,46,059 2,09,048 – 4,55,107 16,95,665 18,72,411

As at As at31st March, 2004 31st March, 2003

Rupees Rupees

1 SHARE CAPITAL

Authorised 2,50,000 Equity Shares of Rs.10 each 25,00,000 25,00,000 25,00,000 25,00,000Issued 2,00,070 Equity Shares of Rs.10 each. (Previous Year: 2,00,070 20,00,700 20,00,700Equity Shares of Rs.10 each)

20,00,700 20,00,700Subscribed and Paid-up 2,00,070 Equity Shares of Rs.10 each fully paid. (Previous Year: 2,00,070 Equity Shares of Rs.10 each) 20,00,700 20,00,700(The shares are held by the Holding Company Aban Loyd Chiles Offshore Ltd and their Nominees)Total 20,00,700 20,00,700

As at As at31st March, 2004 31st March, 2003

Rupees Rupees

3 SUNDRY DEBTORSConsidered Good-Unsecured (a) Outstanding for more than six months 2,15,000 1,25,000(b) Others 2,27,000 20,74,604

Total 4,42,000 21,99,604

Aban Energies Limited

60

Schedules annexed to and forming part of the accounts

As at As at31st March, 2004 31st March, 2003

Rupees Rupees

4 CASH AND BANK BALANCES

Cash on Hand 33,846 2,92,349Balances with Scheduled Banks on Current Account 3,32,135 25,98,428Total 3,65,981 28,90,777

Aban Energies Limited

7 MISCELLANEOUS EXPENDITURE

Miscellaneous Expenditure(To the extent not written off or adjusted)Preliminary Expenditure 5,239 10,478Less : Written off 5,239 5,239Total – 5,239

6 CURRENT LIABILITIES AND PROVISIONS

A) Current Liabilities(a) Amount due to Small Scale Industrial Undertakings – 47,124(b) Sundry Creditors-others 1,67,54,846 2,49,92,521

(B) Provisions Taxations 14,49,000 13,49,000Total 1,82,03,846 2,63,88,645

5 LOANS AND ADVANCES

(Recoverable in cash or in kind or for value to be received,unsecured,considered good) Loans and Advances 2,14,174 22,51,384Sundry Deposits 30,500 15,500Advance payment of taxes 20,66,982 18,25,479Total 23,11,656 40,92,363

1161

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Schedules annexed to and forming part of the accounts

Year ended Year ended31st March, 2004 31st March, 2003

Rupees Rupees

8 OPERATING, ADMINISTRATIVE AND OTHER EXPENSESConsumption - Stores and Spares 8,93,163 1,52,30,737Salaries and Bonus 40,71,931 36,62,855Contribution to Provident funds and Other funds 3,97,897 4,56,031Staff Welfare 3,21,533 5,21,186Rent, Rates and Taxes 1,93,701 5,83,598Rental Charges for Machinery – 1,67,476Repairs to Machinery 5,13,029 57,86,306Insurance 53,203 5,44,437Consultancy and Professional Fees 7,54,718 43,75,329Freight and Forwarding Expenses 2,87,073 7,06,004Postage, Telegram and Telex 95,040 1,16,560Printing and Stationery 48,433 69,159Travelling Expenses 20,94,259 21,81,396Interest 200 1,86,591Hire finance charges 47,423 57,964Auditors' Remuneration : Audit fees 27,000 25,000 Taxation Matters 16,200 15,575 Other expenses reimbursed 4,400 47,600 20,375Other Expenses 12,15,754 23,91,124

Total 1,10,34,957 3,70,97,703

9 NOTES ATTACHED TO AND FORMING PART OF THE ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIESACCOUNTING CONVENTIONS AND CONCEPTSA. Financial statements are based on historical cost convention and on the basis of a going concern and comply with the Accounting

Standards refered to in section 211(3C) of the Companies Act,1956.The Company follows mercantile system of accounting andrecognises income and expenditure on an accrual basis.

B. Fixed AssetsFixed Assets are capitalised at cost inclusive of installation expenses .

C. Depreciation Depreciation on Fixed Assets is provided on the Straight Line basis at rates prescribed in Schedule XIV of the Companies Act,1956

on a pro-rata basis.

D. Inventory ValuationInventory of Stores and Spares are valued at cost based on First in First out Cost formula.

E. Foreign Currency Transactions Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction Current assets and

Current liabilities are translated at year end exchange rates and the realised exchange gains or losses are recognised in theProfit and Loss Account.

Aban Energies Limited

62

Schedules annexed to and forming part of the accounts

Aban Energies Limited

1163

F. Retirement BenefitsContribution to Provident Fund is made monthly at a predetermined rate to the Provident Fund authorities and debited to the Profitand Loss Account on accrual basis.The Company has an arrangement with Life Insurance Corporation of India (LIC) to administerits Gratuity schemes.

The premium advised by LIC is debited to the Profit and Loss Account on an accrual basis

G. Taxes On Income Taxes on Income will comprise of current tax and deferred tax.Deferred tax is calculated in accordance with the Accounting

Standard 22 issued by the Institute of Chartered Accountants of India.Deferred tax asset is recognised subject to considerationof prudence.

2. LICENCE/INSTALLED CAPACITIES Not Applicable

Amount in Rupees

31.03.2004 31.03.2003Value in Rs. Value in Rs.

3. Details of IncomeOperating and Maintenance Service 1,23,80,736 3,62,08,133

4. Value of Imports by the Company on CIF basisStores & Spare Parts – –

5. a. Value of Imported Stores & Spares Consumed – –% of above to total consumption – –

b. Value of Indigenous Stores & Spares consumed 8,93,163 1,52,30,737% of above to total consumption 100% 100%

6. Sundry Creditors include Rs. 1,54,26,315/- due to Holding Company M/s Aban Loyd Chiles Offshore Ltd (Previous year : Rs. 2,02,11,331/-)

7. Previous years figures are re-grouped/re-arranged wherever necessary.

Per our report attached On behalf of the Board

For Ford, Rhodes, Parks & CoChartered Accountants

R. Subramanian Reji Abraham P. VenkateswaranPartner Director DirectorMembership No. 16059

Chennai16th July 2004

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Balance Sheet Abstract

Date Month Year

Balance Sheet Abstract and Companies General Business Profile

I Registration Details

Registration No. State Code

Balance Sheet Date

II Capital raised during the year (Amount in Rs. ‘000)

Public Issue Rights Issue

Bonus Issue Private Placement

III Position of Mobilisation and Deployment of Funds (Amount in Rs. ‘000)

Total Assets Total Liabilities

Sources of Funds

Paid-up Capital

Reserve & Surplus Secured Loans

Deferred Tax Total

Application of Funds

Net Fixed Assets Investments

Net Current Assets Misc. Expenditure

Profit & Loss Account Total

IV Performance of Company (Amount in Rs. ‘000)

Turnover Other Income

Total Expenditure Profit before tax

Profit after tax Earnings per share in Rs.

Dividend Rate

V Generic Names of Principal Products/Services of the Company (as per monetary terms)

Item Code No. (ITC Code) Product Description

N I L

N I L N I L

N I L

1 8

3 1 0 3 2 0 0 4

3 8 1 0 8

Additional Information as per Part IV of Schedules VI to the Companies Act, 1956

2 1 8 8 2 1 8 8

2 0 0 1

N I L N I L

1 8 7 2 1 8 8

1 4 9 4 N I L

( 1 1 4 5 0 ) N I L

1 2 1 4 4

1 2 3 8 1 N I L

1 1 2 5 9 1 1 2 2

1 0 0 4 5 . 0 2

N I L

N A

2 1 8 8

Aban Energies Limited

64

Maintenance of Wind Mills

As at 31st March, 2004

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To the Board of Directors of Aban Loyd Chiles Offshore Limited

on the Consolidated Financial Statement.

We have audited the attached Consolidated Balance Sheet of Aban

Loyd Chiles Offshore Limited and its Subsidiary Company, Aban

Energies Limited, as at 31st March, 2004 and also the related

Consolidated Profit and Loss Account and the Cash Flow Statement

for the year ended on that date annexed thereto. The audited

financial statement of the Joint Venture Company Frontier Aban

Drilling (India) Limited as at 31st March, 2004, to the extent of

the interest in the joint venture have also been considered in

preparation of the Consolidated Accounts.

These financial statements are the responsibility of the Aban Loyd

Chiles Offshore Limited’s Management. Our responsibility is to

express an opinion on these financial statements based on our

audit. We conducted our audit in accordance with generally accepted

Auditing Standards in India. Those Standards require that we plan

and perform the audit to obtain reasonable assurance about

whether the financial statements are prepared, in all material

respects, in accordance with an identified financial reporting

framework and are free of material misstatements. An audit

includes, examining on test basis, evidence supporting the amounts

and disclosures in the financial statements. An audit also includes

assessing the accounting principles used and significant estimates

made by management, as well as evaluating the overall financial

statements. We believe that our audit provides a reasonable basis

for our opinion.

We report that the consolidated financial statements have been

prepared by the Aban Loyd Chiles Offshore Limited’s Management

in accordance with the requirements of Accounting Standards

issued by the Institute of Chartered Accountants of India and on

the basis of the separate audited financial statements of Aban

Loyd Chiles Offshore Limited, its subsidiary, Aban Energies Limited,

and audited financial statement of its joint venture Company,

Frontier Aban Drilling (India) Limited.

On the basis of the information and explanations given to us and

on the consideration of the separate audit reports on individual

audited financial statements of Aban Loyd Chiles Offshore Limited,

its aforesaid subsidiary, Aban Energies Limited, and audited Financial

Statements of Joint Venture Company, Frontier Aban Drilling (India)

Limited, we are of the opinion that ;

(a) The Consolidated Balance Sheet gives a true and fair view of

the consolidated state of affairs of Aban Loyd Chiles Offshore

Limited, its subsidiary and its share of Assets and Liabilities

in the Joint Venture Company as at 31st March, 2004 ;

(b) The Consolidated Profit and Loss Account gives a true and fair

view of the consolidated results of operations of Aban Loyd

Chiles Offshore Limited, its subsidiary and its share of result

from the Joint Venture Company, for the year then ended; and

(c) The Consolidated Cash Flow Statement gives a true and fair

view of the consolidated cash flows of Aban Loyd Chiles Offshore

Limited, its subsidiary and its share of Cash Flow from Joint

Venture Company for the year then ended.

For FORD, RHODES, PARKS & CO.,Chartered Accountants

R. SubramanianPlace : Chennai Partner

Date : 19th July, 2004 Membership No: 16059

Auditors’ Report

65 66

Consolidated Balance SheetAs at 31st March, 2004

As at As at31st March, 2004 31st March, 2003

Schedule Rupees Rupees Rupees

I. SOURCES OF FUNDS

1. Shareholders' Funds

(a) Share Capital 1 7,37,06,750 7,37,06,750

(b) Reserves and Surplus 2 169,80,28,574 128,66,73,199

2. Loan Funds

Secured Loan 3 240,86,80,026 309,60,36,586

3. Deferred Tax (Net) 4 44,19,28,993 34,41,17,726

Total Funds Employed 462,23,44,343 480,05,34,261

II APPLICATION OF FUNDS

1. Fixed Assets 5

Gross Block 579,13,44,906 577,85,07,334

Less:Depreciation 289,82,53,241 251,78,96,087

Net Block 289,30,91,665 326,06,11,247

Add: Capital Work in Progress 7,04,79,866 2,24,80,332

296,35,71,531 328,30,91,579

2. Investments 6 75,77,17,488 22,33,77,569

3. Current Assets,Loans and Advances

(a) Inventory of Stores & Spares (at cost) 24,15,67,131 24,75,96,101

(As certified by the Management- Including share in joint venture)

(b) Sundry Debtors 7 35,22,15,870 31,73,22,427

(c) Cash and Bank Balances 8 42,27,54,335 28,99,60,753

(d) Loans and Advances 9 17,06,57,191 52,93,34,562

118,71,94,527 138,42,13,843

Less:Current Liabilities and Provisions 10

(a) Current Liabilities 30,11,63,550 21,41,04,542

(b) Provisions 6,25,04,476 4,15,75,214

36,36,68,026 25,56,79,756

Net Current Assets 82,35,26,501 112,85,34,087

4. Miscellaneous Expenditure (to the

extent not written off or adjusted ) 11 7,75,28,823 16,55,31,026

Total Assets 462,23,44,343 480,05,34,261

Notes to Accounts 16

Per our report attached On behalf of the Board

For Ford, Rhodes, Parks & CoChartered Accountants

R. Subramanian Reji Abraham C.P. GopalkrishnanPartner Managing Director Director (Finance) & SecretaryMembership No. 16059

Chennai19th July 2004

Aban Loyd Chiles Offshore Ltd.Aban Loyd Chiles Offshore Ltd.

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67

Consolidated Profit And Loss AccountFor the year ended 31st March, 2004

Year ended Year ended

31st March, 2004 31st March, 2003

Schedule Rupees Rupees

I INCOME

Income from Operations 12 299,49,74,525 268,40,86,190

Other Income 13 15,52,20,538 8,24,36,768

315,01,95,063 276,65,22,958

II EXPENDITURE

Operating, Administrative and Other Expenses 14 165,98,46,867 163,57,91,211

Interest 15 25,94,88,807 37,03,56,223

Depreciation 38,15,09,787 32,95,90,105

Goodwill Amortised 6,29,32,560 6,29,32,557

Deferred Revenue Expenses Written off 5,78,939 5,78,939

236,43,56,960 239,92,49,035

Profit for the year before taxation 78,58,38,103 36,72,73,923

Less: Provision for taxation

- Current Tax 21,36,99,500 2,84,00,000

- Deferred Tax 9,57,01,861 24,06,41,793

Profit for the year after taxation 47,64,36,742 9,82,32,130

Add: Profit brought forward from Previous Year 105,73,05,017 101,06,48,101

Profit available for Appropriation 153,37,41,759 110,88,80,231

Transfer to General Reserve 5,00,00,000 1,00,00,000

Proposed Dividend 5,52,80,063 3,68,53,375

Tax on Dividend 72,24,413 47,21,839

Balance Carried to Balance Sheet 142,12,37,283 105,73,05,017

Notes to Accounts 16

Earnings per Equity Share of Rs. 10/- each 64.64 13.33

Schedules annexed to and forming part of the consolidated accounts

As at As at31st March, 2004 31st March, 2003

Rupees Rupees

1 SHARE CAPITAL

Authorised 18,00,00,000 Equity Shares of Rs.10 each 180,00,00,000 180,00,00,0002,00,00,000 Cumulative Redeemable Preference Shares of Rs.10 each 20,00,00,000 20,00,00,000

200,00,00,000 200,00,00,000Issued62,78,760 Equity Shares of Rs.10 each. (Previous Year: 62,78,760 6,27,87,600 6,27,87,600

Equity Shares of Rs.10 each)10,85,271 Equity Shares of Rs.10 each fully paid up and 13,288 Equity

Shares of Rs.10 each partly paid upto Rs.5 issued pursuant toScheme of Amalgamation of Hitech Drilling Services India Ltd with the Company. (Previous Year: 10,85,271 Equity Shares of Rs.10 each fullypaid up and 13,288 Equity Shares of Rs.10 each partly paid upto Rs.5) 1,09,19,150 1,09,19,150

7,37,06,750 7,37,06,750Subscribed and Paid-up 73,64,031 Equity Shares of Rs.10 each fully paid. (Previous Year:73,64,031 Equity Shares of Rs.10 each) 7,36,40,310 7,36,40,310 13,288 Equity Shares of Rs.10 each,partly paid upto Rs.5 (Previous

Year : 13,288 Equity Shares of Rs.10 each, partly paid upto Rs.5) 66,440 66,440Total 7,37,06,750 7,37,06,750

2 RESERVES AND SURPLUS

(a) Capital Reserve 33,500 33,500(b) Securities Premium Account - As per last Balance Sheet 12,84,03,600 12,84,03,600(c ) Investment Allowance Reserve-Utilised 5,24,00,000 5,24,00,000(d) General Reserve - At the beginning of the year 4,92,91,943 3,92,91,943 Add: Transfer from Profit and Loss Account 5,00,00,000 9,92,91,943 1,00,00,000

(e) Share in joint venture (33,37,752) (7,60,861)

(f) Profit and Loss Account 142,12,37,283 105,73,05,017Total 169,80,28,574 128,66,73,199

68

Per our report attached On behalf of the Board

For Ford, Rhodes, Parks & CoChartered Accountants

R. Subramanian Reji Abraham C.P. GopalkrishnanPartner Managing Director Director (Finance) & SecretaryMembership No. 16059

Chennai19th July 2004

Aban Loyd Chiles Offshore Ltd.Aban Loyd Chiles Offshore Ltd.

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Schedules annexed to and forming part of the consolidated accounts

69

As at As at31st March, 2004 31st March, 2003

Rupees Rupees

3 SECURED LOANS

a. Term Loans from Banks (includes foreign currency loan of Rs.22,11,00,000) 222,40,22,752 299,34,49,847b. Cash Credit from Banks 18,31,47,896 8,25,89,214c. Others 15,09,378 38,54,390

240,86,80,026 307,98,93,451Share in joint venture – 1,61,43,135Total 240,86,80,026 309,60,36,586

Notes: 1. Term Loans from Banks are secured by first charge on the offshore drilling rigs and accessories, floating production unit, windmills

and all movable assets , both present and future. Further, one of the term loan from banks is secured by a mortgage of a certainportion of land and equitable mortgage of office property of the Company.

2. Cash Credits from Banks are secured by way of hypothecation of inventory of stores and spares , Book debts and by way of secondcharge on the Rigs of the Company.

3. Other loans represent hire purchase liability secured by hypothecation of certain vehicles of the Company.

4 DEFERRED TAX (NET)

Deferred tax Asset on timing diferrences Provision for dimunition in the value of investments (65,687) (13,79,778)On deferred dry docking charges and deferred expenses (7,36,86,135) (1,54,71,519)Deferred Tax Liability on timing differencesOn depreciation 51,60.12,076 36,09,69,023

44,22,60,254 34,41,17,726Share in Joint Venture (3,31,261) –Total 44,19,28,993 34,41,17,726

5 FIXED ASSETS (Rupees)

GROSS BLOCK DEPRECIATION NET BLOCKDescription of the asset As at 1st Additions Deductions As at 31st As at 1st Additions On Deductions As at 31st As at 31st As at 31st

April,2003 during the during the March,2004 April,2003 during the during the March,2004 March,2004 March,2003year year year year

Goodwill 31,46,62,768 – 6,29,32,560 25,17,30,208 – – – – 25,17,30,208 31,46,62,768Land-Freehold 15,05,61,096 – 81,96,424 14,23,64,672 – – – – 14,23,64,672 15,05,61,096Building 15,49,33,491 – – 15,49,33,491 1,53,39,254 25,59,251 – 1,78,98,505 13,70,34,986 13,95,94,237Offshore Jackup Drilling Rigs,Floating Production unit andconnected machineries 262,42,28,099 6,08,71,191 – 268,50,99,290 208,89,05,560 15,65,32,287 – 224,54,37,847 43,96,61,443 53,53,22,539Other Machineries 8,08,24,706 – – 8,08,24,706 7,67,35,196 – – 7,67,35,196 40,89,510 40,89,510Wind Mills 238,04,08,018 1,79,86,296 239,83,94,314 30,21,94,448 21,42,91,211 51,64,85,659 188,19,08,655 207,82,13,570Office Equipment 3,01,88,069 32,00,811 4,40,650 3,29,48,230 2,22,92,463 44,54,097 3,94,427 2,63,52,133 65,96,097 78,95,606Furniture and Fixtures 1,71,54,248 3,58,392 1,75,12,640 50,13,926 12,38,097 62,52,023 1,12,60,617 1,21,40,322Vehicles 2,36,24,486 33,57,893 16,81,536 2,53,00,843 72,24,469 21,74,665 7,58,206 86,40,928 1,66,59,915 1,64,00,017

577,65,84,981 8,57,74,583 7,32,51,170 578,91,08,394 251,77,05,316 38,12,49,608 11,52,633 289,78,02,291 289,13,06,103 325,88,79,665Capital Work- in- progress 7,04,79,866 2,24,80,332Share in joint venture 19,22,353 3,14,159 – 22,36,512 1,90,771 2,60,179 – 4,50,950 17,85,562 17,31,582TOTAL 577,85,07,334 8,60,88,742 7,32,51,170 579,13,44,906 251,78,96,087 38,15,09,787 11,52,633 289,82,53,241 296,35,71,531328,30,91,579Previous Year 460,55,21,584 124,05,77,784 6,95,14,387 577,65,84,981 218,84,77,412 32,93,99,334 1,71,430 251,77,05,316 328,13,59,997242,57,95,976Previous Year Sharein Joint Venture – 19,22,353 – 19,22,353 – 1,90,771 – 1,90,771 17,31,582 –Total-Previous Year 460,55,21,584 124,25,00,137 6,95,14,387 577,8507,334 218,84,77,412 32,95,90,105 1,71,430 251,78,,96,087 328,30,91,579242,57,95,976

As at As at No. of Shares/ Face Value 31st March,2004 31st March,2003 Units Rupees Rupees Rupees

6 INVESTMENTS ( At cost)

Long Term Investments: A. Trade Investments

Fully Paid Equity Shares- Unquoted (a) Aban Informatics Private Ltd 3,00,750 10.00 1,98,49,500 1,98,49,500(b) Frontier Aban Drilling (India) Ltd 49,993 100.00 – –(c) Aban Power Company Limited 1,19,01,529 10.00 11,90,15,290 –Note: For consolidation purposes,value of investment amounting toRs.49,99,300 in the joint venture company Frontier Aban Drilling (India) Ltdhas been adjusted.

B. Others (Non Trade) Equity Shares Quoted -Fully paid Agri Marine Exports Ltd 5,400 10.00 – 67,500Arihant Threads Ltd 13,600 10.00 1,70,000 1,70,000Corporate Couriers Ltd 10,400 10.00 – 4,16,000Himalaya Granites Ltd 1,400 10.00 – 42,000Indo Germa Products Ltd 8,800 10.00 – 88,000Industrial Development Bank of India 16,800 10.00 – 13,65,000Kongarar Integrated Fibres Ltd 200 10.00 – 2,000Kongarar Textiles Ltd 500 10.00 – 22,500Mardia Steel Ltd 8,100 10.00 – 4,05,000Metrochem Industries Ltd 200 10.00 – 22,000Mirza Tanners Ltd 2,800 10.00 – 68,600Orient Organic Ltd 1,500 10.00 – 15,000Punjab Woolcombers Ltd 300 10.00 27,000 27,000Ram Kaashyap Investments Ltd 500 10.00 – 5,000Ram Ratna Wires Ltd 300 10.00 – 3,000Wintac Ltd 700 10.00 – 70,000Samrat Ashoka Exports Ltd 200 10.00 – 12,000Shri Karthik Papers Ltd 3,100 10.00 – 31,000Shreyas Shipping Ltd 1,400 10.00 – 28,000Southern Fuels Ltd 1,100 10.00 – 11,000State Bank of Travancore 245 100.00 1,47,000 1,47,000Stiefel Und Schuh (India) Ltd 300 10.00 – 3,000Thambbi Modern Spinning Mills Ltd 1,300 10.00 – 65,000The ICICI Bank Ltd 2,100 10.00 7,86,374 7,86,374The Waterbase Ltd 10,500 10.00 – 5,04,000Partly Paid Equity Shares Nutech Financial Services Ltd 17,700 10.00 --- 1,03,828Current Investments ( At lower of cost No. of units Face Valueand fair value) (See note: 3 ) Rs HDFC Income Fund (G) 250000.00 10.00 25,00,000 25,00,000Kotak Mahindra Liquid InstitutionalPlan -Dividend 1101026.90 10.00 – 1,10,36,251

Schedules annexed to and forming part of the consolidated accounts

70

Aban Loyd Chiles Offshore Ltd.Aban Loyd Chiles Offshore Ltd.

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71

Schedules annexed to and forming part of the consolidated accounts

7 SUNDRY DEBTORSConsidered Good-Unsecured (a) Outstanding for more than six months 3,34,27,617 5,05,73,711(b) Others 26,19,83,607 21,32,64,012 29,54,11,224 26,38,37,723

Share in joint venture 5,68,04,646 5,34,84,704Total 35,22,15,870 31,73,22,427

As at As at No. of Units Face Value 31st March,2004 31st March,2003 Rupees Rupees Rupees

Chola Mutual Fund -Liquid Institutional Plan 502274.60 10.00 – 50,22,746DSP Merill Lynch Liquidity Fund -Dividend 1079837.76 10.00 – 1,33,96,359Deutsche Premier Bond Fund Inst. Plan-Dividend 1018246.99 10.00 – 1,00,00,000HDFC Floating Rate Income Fund -Dividend 4989522.00 10.00 5,00,00,000 4,02,04,315Prudential ICICI Liquid Plan-Dividend 1697592.80 10.00 – 2,01,02,724IL & FS Liquid Fund-Dividend 986020.22 10.00 – 1,00,47,349JM Mutual Fund-Short term-Dividend 513993.47 10.00 52,97,227 50,58,292Birla Bond Plus Plan-B Growth 1812476.84 10.00 2,01,19,580 2,01,19,580HSBC Equity Fund-Dividend 986319.75 10.00 – 1,00,47,245Grindlays Floating Rate-Dividend 7956755.53 10.00 8,01,26,916 2,01,79,249Templeton Mutual Fund-Growth Plan 262421.17 10.00 – 50,00,000Templeton India Liquid Fund-Weekly Plan 3017449.58 10.00 – 3,01,80,229Templeton India Short Term Income Plan-Growth 13344.55 1,000.00 1,50,00,000 –Sundaram Money Fund 499251.63 10.00 50,37,301 –HDFC Cash Management Fund 6125961.20 10.00 6,51,58,172 –Franklin Templeton Monthly Income Plan 213057.89 10.00 25,00,000 –Reliance Monthly Income Plan 250000.00 10.00 25,00,000 –Prudential ICICI Monthly Income Plan 226207.50 10.00 25,00,000 –DSP Merill Lynch Monthly Income Plan 237022.99 10.00 25,00,000 –Deutsche Floating Rate Fund 5123763.78 10.00 5,14,41,611 –Prudential ICICI Floating Rate Fund 16989337.53 10.00 17,07,83,213 –DSP Merill Lynch Floating Rate Fund 3283504.32 10.00 3,28,77,945 –Templeton India Floating Rate Fund 6679718.97 10.00 6,68,19,483 –Birla Floating Rate Fund 1941015.96 10.00 2,00,76,302 –Kotak Mahindra Floating Rate Fund 2032758.49 10.00 2,03,88,036 –Chola Freedom Income Short Term Fund 227155.15 10.00 22,79,638 –Templeton India Growth Plan-Bonus 17840.71 10.00 – –Sundaram Bond Saver -Bonus Option 92077.73 10.00 – –Chola Freedom Income Short Term Fund-Bonus 450275.51 10.00 – –Sub Total 75,79,00,588 22,72,23,641Less: Provision for Dimunition in Value of Long Term Investments 1,83,100 38,46,072Total 75,77,17,488 22,33,77,569Aggregate Value of Quoted Investments 61,90,35,798 20,73,74,141Aggregate Market Value of Quoted Investments 62,85,65,425 20,52,30,199

Schedules annexed to and forming part of the consolidated accounts

72

10 CURRENT LIABILITIES AND PROVISIONS

(A) Current Liabilities

(a) Amount due to Small Scale Industrial Undertakings 2,16,133 1,80,385(b) Sundry Creditors-others 21,33,22,831 11,52,20,193(c ) Unclaimed Dividends (No amount Is due to Investor Education and Protection Fund) 56,48,305 55,19,407(d) Interest accrued but not due on secured loans 36,87,516 88,16,635

22,28,74,785 12,97,36,580 Share in joint venture 7,82,88,765 8,43,67,962

30,11,63,550 21,41,04,542(B) Provisions

(a) Proposed Dividend 5,52,80,063 3,68,53,375(b) Tax on Dividend 72,24,413 47,21,839

6,25,04,476Total 36,36,68,026 25,56,79,756

9 LOANS AND ADVANCES

(Recoverable in cash or in kind or for value to be received,unsecured, considered good) Loans and Advances (Includes Share Application money pending allotment Rs.99,97,500/-) (Previous Year: Rs. Nil) 12,78,13,674 35,99,43,915Sundry Deposits 1,17,96,983 3,62,21,483Advance payment of taxes (Net of Provision for taxation) 1,32,14,760 10,18,93,419

15,28,25,417 49,80,58,817Share in joint venture 1,78,31,774 3,12,75,745Total 17,06,57,191 52,93,34,562

As at As at31st March, 2004 31st March, 2003

Rupees Rupees8 CASH AND BANK BALANCES

Cash on Hand 1,86,555 5,80,498Balances with Scheduled Banks - In Current Accounts 5,75,52,542 15,46,33,314- In Deposit Accounts 36,08,61,968 12,91,68,276

41,86,01,065 28,43,82,088Share in joint venture 41,53,270 55,78,665Total 42,27,54,335 28,99,60,753

Aban Loyd Chiles Offshore Ltd.Aban Loyd Chiles Offshore Ltd.

4,15,75,214

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Schedules annexed to and forming part of the consolidated accounts

As at As at31st March, 2004 31st March, 2003

Rupees Rupees

11 MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted) (a) Deferred Expenditure 5,78,939 11,57,878

Less: Written off 5,78,939 – 5,78,939

(b) Dry Docking Expenditure at the beginning of the year 15,93,11,609 24,10,94,389Less: Write off during the year and included under 8,17,82,786 7,75,28,823 8,17,82,780 Repairs to Machinery in the Profit and Loss Account 7,75,28,823 15,98,85,548 Share in joint venture -- 56,40,478Total 7,75,28,823 16,55,31,026

Year ended Year ended31st March, 2004 31st March, 2003

Rupees Rupees

12 INCOME FROM OPERATIONS

Drilling Revenue 257,92,71,455 221,81,33,573Income from Wind Power Generation 18,90,40,456 22,03,01,874

276,83,11,911 243,84,35,447Share in joint venture 22,66,62,614 24,56,50,743Total 299,49,74,525 268,40,86,190

13 OTHER INCOME

(a) Rental Income(Gross) 12,00,000 13,00,000(b) Dividend Income (Gross) 1,63,76,635 52,411(c ) Interest on Bank Deposits (Gross) 22,37,309 34,11,963(d) Interest-Others (Gross) 16,38,593 25,00,881(e) Interest on Income-tax refund 10,30,689 1,71,00,645(f) Provision no longer required 36,62,972 –(g) Service Charges (Gross) 86,84,041 45,64,422(h) Others (Gross) 11,91,69,752 4,99,00,528(i) Profit on Sale of Investments (Net) – 9,69,703

15,39,99,991 7,98,00,553Share in joint venture 12,20,547 26,36,215Total 15,52,20,538 8,24,36,768

Note: 1) Tax deducted at source on a, b, c, d, g,h Rs.8,40,138/- (Previous year -Rs.20,59,781/-) 2) Others (gross) in (h) above includes net gain on cancellation of forward exchange contracts Rs 10,30,23,641/- (Previous Year

Rs 68, 30,986/-)

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Year ended Year ended31st March, 2004 31st March, 2003

Rupees Rupees

14 OPERATING, ADMINISTRATIVE AND OTHER EXPENSES

Consumption - Stores and Spares 35,47,96,960 27,24,98,680Salaries and Bonus 15,18,66,139 14,32,81,842Contribution to Provident funds and Other funds 1,50,27,242 70,96,230Staff Welfare 66,42,053 94,38,819Rent, Rates and Taxes 52,01,630 40,14,478Rental Charges for Machinery 40,41,67,905 41,78,99,781Repairs to Machinery 15,51,67,459 15,26,14,843Insurance 14,96,59,655 16,50,69,591Drilling Services and Management Fees 7,52,69,784 6,50,26,676Consultancy and Professional Fees 3,02,07,760 7,83,30,173Catering Expenses 73,48,275 96,69,273Postage, Telegram and Telex 47,57,655 53,47,417Printing and Stationery 15,43,520 20,10,440Travelling Expenses 2,78,19,305 3,19,07,899Guarantee Commission , Bank and Other Charges 2,18,02,163 1,29,65,186Loss on Sale of Assets (Net) 53,20,017 41,43,000Loss on Sale of Investments (Net) 11,05,045 –Auditors' Remuneration :

Audit Fees 2,97,000 2,87,500Tax Audit Fees 2,12,200 1,74,500For Other Services 3,57,643 2,85,054Other Expenses reimbursed 92,900 9,59,743 57,000

Other Expenses 1,91,86,786 1,35,70,167 143,78,49,096 139,56,88,549

Share in joint venture 22,19,97,771 24,01,02,662Total 165,98,46,867 163,57,91,211

15 INTEREST

On Long Term Loans 25,21,82,011 35,70,23,394Others 53,56,423 1,16,76,417

25,75,38,434 36,86,99,811Share in joint venture 19,50,373 16,56,412Total 25,94,88,807 37,03,56,223

Schedules annexed to and forming part of the consolidated accounts

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Schedules annexed to and forming part of the consolidated accounts

Consolidated Financial Statements of Aban Loyd Chiles Offshore Ltd and its subsidiary Aban Energies Ltd and audited figures of joint venture

16 NOTES ATTACHED TO AND FORMING PART OF THE ACCOUNTS

1. The Consolidated Financial Statements have been prepared in accordance with the Accounting Standard-21 and AccountingStandard-27 issued by the Institute of Chartered Accountants of India.

2. The Audited Annual Accounts of the wholly owned subsidiary M/S Aban Energies Ltd, and Audited Financial Statements of joint venturecompany Frontier Aban Drilling (India) Ltd have been considered in the preparation of these Consolidated Financial Statements.

3. The details of the related entities are given below:

Name of the Company Nature of Relation Percentage of Accounts consideredholding

1. Aban Energies Ltd Subsidiary 100% 31.03.2004 (audited)

2. Frontier Aban Drilling(India) Limited Joint Venture 33.33% 31.03.2004 (audited)

1. SIGNIFICANT ACCOUNTING POLICIESACCOUNTING CONVENTIONS AND CONCEPTS

A. Financial statements are based on historical cost convention and on the basis of a going concern and comply with the AccountingStandards refered to in section 211(3C) of the Companies Act, 1956. The Company follows mercantile system of accounting andrecognises income and expenditure on an accrual basis.

B. Fixed AssetsFixed Assets are capitalised at cost inclusive of installation expenses and interest upto the date the asset is put to use. Theoriginal cost of Fixed Assets acquired through foreign currency loans are adjusted for any exchange difference between actualpayment of principal and the original cost booked and by revaluation of closing foreign currency loan at the rate prevailing onthe closing day.

C. DepreciationDepreciation on Fixed Assets is provided on the Straight Line basis at rates prescribed in Schedule XIV of the Companies Act,1956on a pro-rata basis. Depreciation on certain Downhole Equipments included in Plant and Machinery is provided at a higher rateon straight line method based on technical evaluation of the expected useful life. Depreciation on windmills is provided at a higherrate on straight line method based on technical evaluation of the expected useful life.

D. Inventory ValuationInventory of Stores and Spares are valued at cost based on First in First out Cost formula.

E. Foreign Currency Transactions Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Current assets and

Current liabilities are translated at year end exchange rates and the realised exchange gains or losses are recognised in the Profitand Loss Account. Wherever forward exchange contracts are entered into, the exchange differences are dealt with in the Profitand Loss Account over the period of the contracts.

F. Investments(a) Long Term Quoted Investments are valued at cost unless there is a permanent fall in the value.A provision for dimunition is

made to recognise a decline other than temporary,in the value of long term Investments.(b) Current Investments are valued at lower of cost and fair value of the category of such current investments .

G. Proposed Dividend The Dividend as proposed by the Board of Directors is provided in the books of account pending approval at the Annual General

Meeting.

H. Retirement Benefits Contribution to Provident Fund is made monthly at a predetermined rate to the Provident Fund authorities and debited to the Profit

and Loss Account on accrual basis.The Company has an arrangement with Life Insurance Corporation of India (LIC) to administerits Gratuity schemes. The premium advised by LIC is debited to the Profit and Loss Account on an accrual basis. The provisionfor leave encashment has been made on basis of actuarial valuation.

Schedules annexed to and forming part of the consolidated accounts

I. Borrowing Cost Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of

such assets.A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use.All otherborrowing costs are charged to revenue.

J. Amortisation Of Expenditure Expenditure incurrred until 31st March,2002, in connection with dry docking of rig is amortised over a beneficial period of five

years from the year of completion of dry docking and such amortised amount is included under the head Repairs to Machineryin Profit and Loss Account.The balance unamortised amount of such expenditure is carried forward under the head MiscellaneousExpenditure in the Balance Sheet.

K. Taxes On IncomeThe Income tax provision comprises of current tax and deferred tax. Current tax is the amount of tax payable in respect of incomefor the period.In accordance with the Accounting Standard 22 - Accounting for Taxes on Income issued by the Institute ofChartered Accountants of India, the deferred tax on timing difference between book profit and tax profit for the year is accountedbased on the rates and laws that have been enacted or substantially enacted as on the Balance sheet date. However deferredtax assets arising from timing difference are recognised to the extent of their actual realisability in future years.

31.03.2004 31.03.2003Rs Rs.

2. Contingent liabilities not provided fora. Guarantees given by banks on behalf of the Company 26,42,46,758 33,58,71,510b. Liability in respect of partly paid shares held as Investment – 73,172c. Corporate Guarantee given by the Company – 5,32,66,731

3. During the year the Company acquired and sold the followingCurrent Investments:

Particulars Purchased SoldInvestments in Units in Mutual Funds Units Units

HSBC Cash Fund 6880555.06 7866874.80Deutsche Short Maturity Fund 9578361.54 9578361.54DSP ML Short Term Fund 13970263.83 15052981.14IL & FS Liquid Account-Dividend Plan - 986020.22Chola Mutual Fund -Liquid Plan-Dividend 784486.00 1287364.57Templeton India Liquid Fund 1503569.65 4521019.23Kotak Mahindra Liquid Plan - Dividend 3211390.48 4312417.38DSP ML Liquid Fund 2879.62 1082717.38Grindlays Cash Fund - Dividend 18907422.85 18907422.85Prudential ICICI Liquid Plan - dividend 40899458.14 42597050.94Templeton India Short Term Income Plan 144608.82 131264.27Sundaram Money Fund 3973260.56 3474008.93Prudential ICICI Short Term Plan 11664750.49 11664750.49Grindlays Floating Rate Dividend 37446698.16 31495373.67HDFC Floating Rate Income Fund-Short Term - Dividend 5080577.85 4063971.27IDBI Principal Mutual Fund 3016502.44 3016502.44Chola Freedom Income Short Term Fund - Growth 1119655.86 1119655.86HSBC Income Fund - Short Term Plan 12510577.71 12510577.71IL & FS Bond Fund 2992720.98 2992720.98HDFC Hi Interest - Short Term Plan 16704949.81 16704949.81Templeton India Liquid Fund 1500560.33 1500560.33KMMF K Bond Short Term Plan 1267777.27 1267777.27Grindlays Super Saver Income Fund - Medium Term 9479210.31 9479210.31Grindlays Super Saver Income Fund - Short Term 4939712.64 4939712.64Deutsche Premier Bond fund 3876547.30 4894794.29

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Schedules annexed to and forming part of the consolidated accounts

5. Related Party disclosure: Enterprise where control exists

1. Subsidiary Company Aban Energies Limited

Other related parties with whom the Company had transactions 1. Joint Venture Frontier Aban Drilling (India) Limited

2. Key Management personnel (a) Mr. M A Abraham - Managing Director (b) Mr. Reji Abraham - Wholetime Director (c) Mr. Renny Abraham - Non-Executive Director (d) Mr. P Venkateswaran - Director-Operations (e) Mr. C P Gopalkrishnan - Director(Finance) & Secretary (f) Mr. V S Rao - Non-Executive Director (g) Mr. P Murari - Non-Executive Director (h) Mr. S. Srinivasan - Non-Executive Director (Nominee of ICICI Bank Limited)

(i) Mr. Frank A Wojtek - Non-Executive Director (j) Mr.K. Bharathan – Non-Executive Director

Purchased SoldUnits Units

HDFC cash management fund 29650548.83 23524587.63Prudential ICICI flexible income 462128.56 462128.56JM short term fund 4971090.90 4971090.90Frankling Templeton - Monthly Income Plan 213057.89 –DSP ML savings plus - Monthly Income Plan 237022.99 –Prudential ICICI - Monthly Income Plan 226207.50 –Reliance - Monthly Income Plan 250000.00 –Deutsche floating rate 5123763.78 –Prudential ICICI floating rate fund 16989337.54 –DSP ML floating rate Fund 11023751.61 7740247.29Templeton floating rate Short Term fund 17324184.15 10644464.88Birla Floating rate fund 1941015.96 –Kotak Floating rate fund 2032758.48 –JM Mutual Fund -Short Term-Dividend Plan 23111.66 –Templeton Mutual Fund -Templeton India Growth Plan – 262421.17Reliance short term fund 5985309.01 5985309.01Chola freedom Short Term fund - Dividend 227155.15 –K-Bond Wholesale plan-Bonus Option – 47476.46

31.3.2004 31.3.2003Rs. Rs.

4. a. Managerial RemunerationSalary & Allowances 72,72,000 68,32,000

Monetary Value of Perquisites 20,08,976 20,49,966 Sitting fees 1,03,000 66,000 Commission 1,30,46,097 66,30,503

2,24,30,073 1,55,78,469

Schedules annexed to and forming part of the consolidated accounts

6. Segment Reporting A. Primary segment as per the Accounting Standard 17-segment reporting issued by the Institute

of Chartered Accountants of India The group’s primary segments are Offshore Oil Drilling services, Wind Energy services and Wind Power generation The above business segments have been identified considering the nature of services rendered and the internal financial reporting

system.Income and Expenses have been accounted for based on their relationship to the operating activities of the segment

B. Secondary Segment Since the the Company does not have any Overseas Operations there are no reportable geographical segments.

Primary Segment Information2003-04 2002-03

Rs. Rs. Rs. Rs.1. Segment revenue

- Drilling 272,47,18,481 229,10,24,573- Wind Energy 19,75,93,421 22,72,11,427- Share in joint venture 22.78,83,161 315,01,95,063 24,82,86,958 276,65,22,958

2. Segment Result - Drilling 102,36,62,283 55,54,21,549- Wind Energy (24,14,99,018) (19,44,84,739)- Share in joint venture 36,74,838 78,58,38,103 63,37,113 36,72,73,923

3. Segment Assets - Drilling 262,98,70,740 240,73,39,444- Wind Energy 203,71,13,814 226,87,05,430- Share in joint venture 7,91,03,849 474,60,88,403 9,25,75,626 476,86,20,500

4. Segment liabilities - Drilling 155,76,59,213 206,85,51,717- Wind Energy 107,38,95,598 114,10,78,313- Share in joint venture 7,82,88,765 270,98,43,576 10,05,11,097 331,01,41,127

5. Depreciation - Drilling 16,67,39,783 15,80,48,453- Wind Energy 21,45,09,825 17,13,50,881- Share in joint venture 2,60,179 38,15,09,787 1,90,771 32,95,90,105

6. Capital Expenditure - Drilling 5,74,52,428 5,07,10,104

- Wind Energy 1,80,03,547 118,32,85,850- Share in joint venture 3,14,159 7,57,70,134 19,22,353 123,59,18,307

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7. Loans and Advances include loan to wholetime Directors of the Company who were officers at the time of taking the loan

Rs. 27,80,000/- (previous year Rs. 29,86,000/-). Maximum amount outstanding at any time during the year Rs. 29,86,000/- (Previousyear Rs. 31,28,000/-).

8. Interest in joint venturesThe Company’s interest in joint venture is reported as Long Term Investments at 31st March, 2004 (Schedule-6) and stated at cost.

Transction with Related Parties During the year

Nature of Transacton Joint Venture Enterprise Key Management PersonnelRs. Rs.

2003-04 2002-03 2003-04 2002-03

i) Rent received 12,00,000 13,00,000 – –ii) Service Charges Received 12,97,729 3,39,25,098 – –iii) Service charges paid 9,49,141 – – –iv) Remuneration – – 2,24,30,073 1,55,78,469v) Amount Advanced – 1,26,60,000 – –vi) Amount Outstanding as at

31.3.2004 receivable/(payable) 37,01,663 1,12,00,364 27,80,000 29,86,000

Aban Loyd Chiles Offshore Ltd.Aban Loyd Chiles Offshore Ltd.

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Per our report attached On behalf of the Board

For Ford, Rhodes, Parks & CoChartered Accountants

R. Subramanian Reji Abraham C.P. GopalkrishnanPartner Managing Director Director (Finance) & SecretaryMembership No. 16059

Chennai19th July 2004

Schedules annexed to and forming part of the consolidated accounts

On adoption of Accounting Standard 27 during the year, the Company’s interest in this joint venture accounted for proporionateconsolidation are

79

As at 31st March, 2004 As at 31st March, 20039 (Audited) Rs. in lacs (Unaudited) Rs. in lacs

I. ASSETS 1. Fixed Assets (Net) 17.86 17.32

2. Deferred Tax (Net) 3.31 – 3. Current Assets, Loans and Advances

a) Inventories 78.97 133.75 b) Sundry Debtors 568.05 534.85 c) Cash and Bank Balances 41.53 55.78 d) Loans and Advances 178.32 312.75 4. Miscellaneous Expenditure (to the extent not written off or adjusted) – 56.41

II. LIABILITIES 1. Shareholders’ Funds - Reserves and Surplus 55.15 55.762. Secured Loans – 161.43

3 .Current Liabilities 782.89 843.68

III. CONTINGENT LIABILITIES 168.35 207.83

For the year ended For the year ended31st March, 2004 31st March, 2003(Audited) Rs. in lacs (Unaudited) Rs. in lacs

IV. INCOMEIncome from operations 2,266.63 2,456.51Other Income 12.21 26.36

V. EXPENSESa) Stores and Spares consumed 607,68 404.56b) Employee Cost 27.59 46.49c) Other expenses 1,528.37 1,888.72d) Interest 19.50 16.56e) Depreciation 2.60 1.91f) Deferred Revenue expenses written off 56.34 61.46Profit before Taxation 36.76 63.38Provision for taxaton - Current 35.99 – - deferred (24.40) –Profit after Taxation 25.17 63.38

9. Earning per share is calculated as shown below : (Equity shares of Rs. 10/- each)2003-04 2002-03

No of shares No. of sharesShare CapitalFully paid 73,64,031 73,64,031Partly paid Calculated as fully paid 6,644 6,644

73,70,675 73,70,675Profit after tax Rs. 47,64,36,742 9,82,32,130Earning per share Rs. 64.64 13.33

10. Previous year’s figures are re-grouped/re-arranged wherever necessary.

Consolidated Cash Flow StatementFor the year ended 31st March, 2004

1180

2003-04 2002-03

A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit Before Tax 7,858.38 3,672.74Adjustments For:Miscellaneous Expenditure 5.79 5.79Amortised Dry Docking expenses 874.23 817.83Depreciation 3,815.10 3,295.90Goodwill written off 629.33 629.33Interest 2,594.89 3,703.56Income from Non -Trade Investments (212.83) (230.66)Profit on sale of Investments – (9.70)Loss on sale of Investments 11.05 –Provision no longer required (36.63) –Loss on sale of Fixed Assets 53.20 41.43

Operating Profit Before Working Capital Changes 15,592.51 11,926.22Adjustments For:Inventories 60.29 (364.54)Trade and other receivables 2,197.39 1,599.96Trade and other payables 931.46 902.01

Cash Generated From Operations 18,781.65 14,063.65Interest paid (2,646.18) (3,815.48)Direct taxes paid (1,268.90) (522.11)Net Cash From Operating Activities 14,866.57 9,726.06

B CASH FLOW FROM INVESTING ACTIVITIES:Purchase of fixed assets (1,340.88) (12,562.29)Sale of fixed assets 38.46 22.67Interest and dividend received 385.18 68.91Purchase of Investments (34,829.88) (6,244.28)Sale of Investments 29,512.06 4,604.32Net Cash Used In Investing Activities (6,235.06) (14,110.67)

C CASH FLOW FROM FINANCING ACTIVITIES:Proceeds/(Repayment) of Long Term Borrowings (6,873.57) 5,680.40Dividend paid (415.75) (294.83)Net Cash (Used In)/From Financing Activties (7,289.32) 5,385.57Net Increase /(Decrease) in Cash and Cash Equivalents 1,342.19 1,000.96Cash and Cash Equivalents as at the beginning of the year 2,843.82 1,842.86Cash and Cash Equivalents – share in joint venture 41.53 55.79Cash and Cash Equivalents as at the end of the year 4,227.54 2,899.61

Per our report attached On behalf of the Board

For Ford, Rhodes, Parks & CoChartered Accountants

R. Subramanian Reji Abraham C.P. GopalkrishnanPartner Managing Director Director (Finance) & SecretaryMembership No. 16059

Chennai19th July 2004

Rs. in lacs

Aban Loyd Chiles Offshore Ltd.Aban Loyd Chiles Offshore Ltd.