MANAGEMENT DISCUSSION & ANALYSIS REPORT Overview Global Vectra Helicorp Limited (GVHL) is the largest private sector helicopter operator in India. GVHL is listed on the National Stock Exchange and the Mumbai Stock Exchange and is an ISO 9001-2008, ISO 14001-2004, and OHSAS 18001-2007 certified company. These certifications overarch all GVHL activities, including flight operations, engineering, safety, quality control and commercial systems. GVHL is also proud to be long term Corporate Member of the Rotary Wing Society of India (RWSI). GVHL's prime objective is to continue to deliver world class standards of safety and service to India's helicopter industry and to be the leader in Offshore Oil & Gas operations. We are extremely positive with regard to the continued growth in the helicopter industry in India and abroad. To capitalize on this, GVHL will continue to expand its fleet and adapt its services to meet the dynamic needs of these markets. The Company's current size is 23. It is also managing (Operation and Maintenance ) of 2 Helicopter of one of its Company's customer. FLYING HOURS Being the largest private sector helicopter operator in India, GVHL has always ensured that safety is paramount in its operations and has recorded approx. 200,000 accident free hours to date and has also been commended for our safety initiatives, including an award from BGEPIL as the best vendor for safety in the year 2009 and the RWSI Aircraft Maintenance Engineer Safety Award for the year 2013. OPERATIONS, MAINTENANCE & PERSONNEL The major maintenance base for our large offshore fleet is Mumbai, where all maintenance work is carried out, including 3000 hours check on its Bell 412 fleet of aircraft in our 6000 sqm state-of-the-art hangar. This facility meets international quality standards and maintains all relevant certifications from the Directorate General Civil Aviation (DGCA) as a CAR 145 approved maintenance organization. There are 78 Pilots and 85 engineering personnel with 30 Technicians, 7 licensed AMEs for AW 139 Helicopters and 37 licensed AMEs on the Bell 412 Helicopter on its rolls. GVHL has a total staff of 325 personnel, including pilots, engineers, safety, quality and commercial teams and all support staff. AUDITS GVHL is actively involved in regular and stringent audit activities from some of the most prominent oil companies in the world including British Petroleum, Total, British Gas, ONGC, Reliance, Dolphin Geo, CGG and Cairn, through their renowned auditing agencies like Hart Aviation, GSR, Airclaim Services, and Aviation Management Services. It is also fully compliant with all Indian Directorate General Civil Aviation (DGCA) auditing schedules (Operations, Maintenance, Safety and Quality) and follows a rigorous Internal Audit program. Further, GVHL undergoes thorough, independent financial auditing on a quarterly and annual basis. CLIENTS Our offshore operations are dedicated to providing Air logistics services to the Oil & Gas industry majors like Oil and Natural Gas Corporation (ONGC), Cairn India, Reliance Industries Limited (RIL), Transocean (TSF), Shelf Drilling, British Petroleum, Gujarat State Petroleum Corporation (GSPC), Baker Hughes, Japan Drilling Company (JDC) and many more, under long term contracts with an outstanding market share of the offshore helicopter market in India. Dolphin Geophysical Pte Ltd., Polarcus, Fugro, CGG VERITAS, Results Marine, Schlumberger & Western Geco have been our major Seismic partners for whom we have flown satisfactorily on the East and West Coast of India in the recent past and are hopeful for the same in the near future as well. GVHL provides services to its clients under long-term contracts. These contracts range from one to five years with renewal options. Companies involved in offshore E&P activities have to use helicopter services extensively for Crew Change, Cargo and Medevac and recently we have started operating under Production contract with ONGC. SERVICES With a modern and technologically advanced fleet of helicopters, Global Vectra Helicorp Limited has a wide range of capability to provide essential onshore and offshore services to strategic sectors, including: • Oil and Gas • Geophysical Survey • Corporate and VVIP flights • Aerial Photography • Religious Tourism • Emergency services • Underslung operations • Power Grid Maintenance GVHL's unblemished safety track record also makes it the brferred provider for a range of corporate, religious and leisure travel. It has world class maintenance facilities and highly skilled engineers and experienced pilots to ensure safe, secure and uninterrupted services to the nation. BASES GVHL has its main operations and maintenance base at Juhu Airport, Mumbai with sub-bases (at brsent) in various parts of India including: S. Yanam, Rajahmundary, Vishakhapatnam (Vizag), Vijayawada, Bhubaneshwar, Gadimoga, Porbandar, Itanagar, Cochin, Kakinada, Pondicherry, Barmer, Dimapur, Katra and Chandigarh. SYSTEMS IN PLACE GVHL is totally committed to maintaining the highest possible standards in its operations, maintenance and safety. GVHL introduced in India, a full and formal Safety Management System (SMS) as per international recommendations and in compliance with the requirements of the Global Oil/Gas Industry and International Civil Aviation Organisation (ICAO). As part of our continuing effort to further enhance our management systems, we utilise an ERP (Enterprise Resource Planning) System from IFS AB, a Swedish company and one of the world's leading providers of business software. Through this system we have integrated the management data of Flight Operations, Maintenance Repair and Overhaul (MRO) processes, Quality Control, Logistics, Inventory Management, Human Resources/Payroll and Finance. MISSION STATEMENT To become one of the world's leading and brferred helicopter services providers. We deliver superior returns to our shareholders by tirelessly pursuing new growth opportunities while always ensuring our sustained profitability. Above all, we are committed to the safety of human life, whether with our customers, our own company or the society we work in. In recognition of this commitment, we deliver high quality, cost effective and safe helicopter services in the markets we serve. We are dedicated to creating a workplace that respects and values people from diverse backgrounds and enables all employees to do their work to the best of their capabilities. Oil And Gas Industry In India INTRODUCTION The oil and gas sector is a core industry in India. It is of strategic importance and plays a pivotal role in influencing decisions across other important spheres of the economy. In 1997-98, the New Exploration Licensing Policy (NELP) was envisioned to deal with the ever-growing gap between demand and supply of gas in India. As per a recent report, the oil and gas industry in India is anticipated to be worth US$ 140 billion by 2016. With India's economic growth closely linked to energy demand, the need for oil and gas is projected to grow further, rendering the sector a fertile ground for sustained investment. To cater to the increasing demand, the Government of India has adopted several policies, including allowing 100 per cent foreign direct investment (FDI) in many segments of the sector, such as natural gas, petroleum products and refineries. The government's participation has made the oil and gas sector in the country a better target of investment and today, it attracts both domestic and foreign investment, as attested by the brsence of the likes of Reliance Industries Ltd (RIL), Cairn India, British Petroleum and Shell. MARKET SIZE Backed by new oil fields, domestic oil output is anticipated to grow to 1 MBPD by FY16 anddomestic production now accounts for more than three-quarters of the country's total gas consumption. State-owned ONGC dominates the upstream segment (exploration and production), accounting for approximately 60 per cent of the country's total oil output. IOCL operates a network of over 11,000 kms of crude, gas and product pipelines, with a capacity of 1.6 MBPD of oil and 10 million metric standard cubic metres per day (MMSCMD) of gas. This is around 30 per cent of the nation's total pipeline network. IOCL is the largest company, operating 10 out of 22 Indian refineries, with a combined capacity of 1.3 MBPD. INVESTMENT According to data released by the Department of Industrial Policy and Promotion (DIPP), the petroleum and natural gas sector attracted foreign direct investment (FDI) worth in excess of US$ 6.5 billion up to January 2015. ADVANTAGES TO INDIA GROWING DEMAND India is the world's fourth-largest energy consumer (2014); oil and gas account for more than 37 per cent of total energy consumption. Demand for primary energy in India is to increase threefold by 2035 to 1,516 million Tonnes of Oil Equivalent from 563 million Tonnes of Oil Equivalent in 2012. SUPPORTIVE FDI GUIDELINES The government allows 100 per cent Foreign Direct Investment (FDI) in upstream and private sector refining projects. The FDI limit for public sector refining projects has been raised to 49 per cent without any disinvestment or dilution of domestic equity in the existing PSUs. POLICY SUPPORT Government has enacted various policies such as the New Exploration Licensing Policy (NELP) and Coal Bed Methane (CBM) policy to encourage investments. In a new policy released in 2013 enabled companies that have existing petroleum and mining licenses to apply for shale oil & gas licences. WORLD'S FOURTH-LARGEST ENERGY CONSUMER India's energy demand is expected to double to 1,464 Mtoe by 2035 from 595 Mtoe in 2013. Moreover, the country's share in global primary energy consumption is projected to increase two fold by 2035. FOURTH-LARGEST CONSUMER OF OIL AND PETROLEUM PRODUCTS Oil consumption is estimated to reach 4.0 mbpd by FY16, expanding at a CAGR of 3.2 per cent during FY08-FY16F. By 2025, India is expected to overtake Japan to become the third-largest consumer of oil. FOURTH-LARGEST LNG IMPORTER IN 2013 LNG imports accounted for about one-fourth of total gas demand. India's gas demand is estimated to more than double over the next five years. OIL SUPPLY AND DEMAND IN INDIA DEMAND • Oil consumption is estimated to expand at a CAGR of 3.3 per cent during FY2008-16F to reach 4.0 mbpd by 2016. • Due to the expected strong growth in demand, India's dependency on oil imports is likely to increase further • Rapid economic growth is leading to greater outputs, which in turn is increasing the demand of oil for production and transportation • With rising income levels, demand for automobile is estimated to increase SUPPLY In FY14, imports accounted for approximately 80 per cent of the country's total oil demand Despite being a net importer of crude oil, India has become a net exporter of petroleum products by investing in refineries designed for export, particularly in Gujarat Backed by new oil fields, domestic oil output is anticipated to grow to 1.0 mbpd by FY16 Demand is expected to increase due to higher economic growth, ensure less dependency on imported crude and a desire to use cleaner fuel. • During 2013-14, natural gas constituted about 7.8 per cent of the energy mix. • With India developing gas-fired power stations, consumption is up more than 160 per cent since 1995. • Demand is not likely to simmer down any time soon, given strong economic growth and rising urbanisation. • Gas consumption is likely to expand at a CAGR of 21.0 per cent during FY2008-17F. SUPPLY India's LNG imports are forecast to increase at a CAGR of 33 per cent during 2012-17. • India had 47 trillion cubic feet of proven natural gas reserves at the beginning of 2014. Approximately 34 per cent of total reserves are located onshore, while 66 per cent are offshore. • Domestic production accounts for more than three-quarter of the country's total gas consumption. • Imports constitute the rest; in 2014, imports of LNG stood at in excess of 17 bcm. • India increasingly relies on imported LNG; the country was the fifth-largest LNG importer in 2014, accounting for almost 6 per cent of global imports. DOMESTIC GAS PRODUCTION AND IMPORTS (BCM) UPSTREAM SEGMENT: DEVELOPMENT ACTIVITIES EXPLORATION AND Gftshpfi During FY12, 1,631,000 metres of wells were explored and developed in India. During the same period, 756 wells were drilled in the country. State-owned oil companies undertake most of the upstream drilling and exploration work. ONGC, the leader in the upstream segment, accounts for 59 per cent of India's total crude oil output. ROAD AHEAD Through 2015-16, India's demand for gas is set to touch 124 MTPA against a domestic supply of 33 MTPA and higher imports of 47.2 MTPA, leaving a shortage of 44 MTPA, as per projections by the Petroleum and Natural Gas Ministry of India. Moreover, Business Monitor International (BMI) brdicts that India will account for 12.4 per cent of Asia-Pacific regional oil demand by late 2015. • In recent years, major discoveries in the Barmer basin in Rajasthan and the offshore Krishna-Godavari basin by smaller companies such as the Gujarat State Petroleum Corporation and Andhra Pradesh Gas Infrastructure Corporation hold some potential to diversify the country's production. • Oil companies are focusing on vertical integration for next stage of growth. For instance, oil producer Oil India Ltd is planning to build and operate refineries, while Indian Oil is planning to enter oil & gas exploration. • Most Indian companies are now targeting shale gas reserves as a source of energy in future, however, the recent downturn in oil prices has seen some activity reduce in this sector. • Companies are looking forward to developing JVs and technical partnerships with experienced foreign companies to improve domestic capabilities to develop shale reserves. • Indian companies are enhancing production through redevelopment plans to increase recovery rates of hydrocarbon from oil wells; ONGC in Mumbai High has achieved great success in implementing this. • With exploration increasing not only in the country, but also in outside geographies, companies are pumping up R&D to focus on gasification technology and bio energy. GOVERNMENT INITIATIVES Some of the major initiatives taken by the Government of India to promote the oil and gas sector are: • India and Norway have discussed a bilateral relationship between the two countries in the field of oil and natural gas and decided to extend cooperation in hydrocarbon exploration. • To strengthen the country's energy security, oil diplomacy initiatives have been intensified through meaningful engagements with hydrocarbon rich countries. • PAHAL - Direct Benefit Transfer for LPG consumer (DBTL) scheme launched in 54 districts on November 11, 2014 and expanded to rest of the country on January 1, 2015 will cover 15.3 crore active LPG consumers of the country. • 24 x 7 LPG service via web launched to provide LPG consumers an integrated solution to carry out all services at one place, through MyLPG.in, from the comfort of their home. • Special dispensation for North East Region: For incentivising exploration and production in North East Region, 40 per cent subsidy on gas price has been extended to private companies operating in the region, along with ONGC and OIL. INTERNAL CONTROL SYSTEMS AND ADEQUACY GVHL has a proper and effective system of internal control to ensure that all activities are monitored and controlled against unauthorized use or disposition of the assets and that all transactions are authorized, recorded and reported correctly. The Company ensures adherence to all internal control policies and procedures, as well as maintaining compliance with all regulatory guidelines. The Audit Committee of the Board of Directors appraised the adequacy of internal controls. HUMAN RESOURCES The Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Various HR initiatives are taken to continually review and align the HR Policies to the requirements of the business. As on March 31, 2015 the Company has a total workforce of 325 employees. CAUTIONARY STATEMENT Statements in this Report on Management Discussion and Analysis describing the Company's objectives, projections, estimates, figures and expectation may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those exbrssed or implied. The company assumes no responsibility in respect of forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events. |