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History of Exxoteq Corporation Ltd.

The Comp. was incorporated as a Private Limited Comp. on August 13, 1982, & was converted into a Public Limited Comp. by obtaining a fresh Certificate of Incorporation on November 30, 1988.

The Comp. is today engaged primarily in offering specialised services in the field of oil & gas exploration & development on-land & offshore for Indian & Overseas market.

Business Development :

The Comp. acquired an Anchor Handling Tug [BOSS-1s] in August 1986, built at Shimoda Dockyard in Japan in the year 1982, at a cost of US $ 3.5 million. BOSS-1 was financed by a foreign currency loan from Union Bank of Switzerland, Zurich, which was secured by way of Deferred Payment Guarantee by Indian Banks with Canara bank in the lead. This tug BOSS-1 was hired out to the Mazagon Docks Ltd [MDLs] & was in its service till May 1990 when it became due for its statutory drydocking & afloat repairs.

In January 1989, the Comp. acquired BOSS PRITHVI at a cost of US $ 8.925 million with foreign currency loan assistance from a consortium of Financial Institutions purchased from M/s Sonat Offshore Ventures Inc. USA. BOSS PRITHVI was built in the year 1974 at Bethlehem Shipyard, USA. The Rig has been in operation in India since 1982 on contract with Oil and Natural Gas Commission [ONGCs]. During the period between January 1989 & October 1989, the Rig operated at offshore locations in Bombay High, Cochin & Saurashtra.

BOSS PRITHVI is the country first & only column stabilized Semi-submersible drilling rig owned by an Indian Company. It combines the versatility of drilling in both shallow & deep waters right through the monsoon periods unlike the other offshore drilling units such as drill-barges & even drill-ships due to safety constraints. Jack-up rigs, on the other hand can't drill in water depths exceeding 300 to 350 ft.

In June 1989, BOSS acquired another vessel, BOSS VISHWA, a Dual System Dynamically Positioned Drill Ship. This vessel was acquired from M/s Kingfisher Drilling Ltd., UK, at a cost of US $ 12 million only with financial assistance from Indian Bank. The Comp. was unable to obtain long term charter contracts for this vessel. In the absence of extended remunerative charter contracts & mounting overheads for upkeep of vessel & also due to the pressure of Bank, the Comp. sold BOSS VISHWA during the year 1990-91 & cleared off the loans availed for acquiring the vessel. The vessel was sold at a net profit of Rs 89 lakhs approximately.

The main aim of Comp. is to indigenise specialist services necessary for the offshore & onshore oil and gas industry activities. The Comp. & its main promoters had earlier won contacts from Oil and Natural Gas Commission [ONGCs] & Mazagon Dock Limited [MDLs] against global/domestic tenders both for itself as well as for associates & principals it had chosen to work with.

Outstanding Loans from Financial Institutions/Banks Financial Institutions :

Despite the fact that the Comp. secured the ONGC award for a 2 + 1 + 1 year contract in March 1990 which also allowed for a 20% advance of 2-year Primary Term, to enable repayment of drydock dues, the Comp. couldn't commence the said ONGC contract on Acc. of management gridlock with co-promoters & thus defaulted on the payments to FIs.

Due to non-availability of further finances for the drydocking dues of the Company Drilling Rig & afloat repairs on the Anchor Handling Tug, the vessels became non-operational from April 1990 & May 1990 respectively, & the Company operations came to a grinding halt. As a result of this, the Comp. defaulted on its commitments to Financial Institutions/Banks. the outstanding loans to be Financial Institutions as on 31/10/1993 stood at Rs 2673.46 lacs.

With a view to reactivate the operations of the company, the management of BOSS have entered into an understanding with Financial Institutions & have signed Consent Terms in this regard.

outstanding dues of Financial Institutions & the gist of consent terms arrived with them in the suit filed are as follows:

For the purchase of Semi-submersible Rig 'Boss Prithvi' [the Rigs], the Comp. had obtained Foreign Currency Loans aggregating to US $ 6.25 million from the Industrial Credit & Investment Corporation of India Limited [ICICIs], Industrial Development Bank of India [IDBIs], The Industrial Finance Corporation of India Limited [IFCIs] which was originally known as Industrial Finance Corporation of India & SCICI Limited [SCICIs] [hereinafter called 'the Financial Institutions's].

The aforesaid loans from the Financial Institutions are secured by a first charge on the Rig.

In December 1989, the Comp. sent the Rig for Dry Docking to Dubai for carrying out major statutory repairs. As the Comp. was unable to pay the dues of Dubai Dry Dock, a suit was filed by Dubai Dry Dock against the Comp. for recovery of its dues & Decrees were passed against the Comp. for U.S. $ 2.62 million with interest thereon. The Rig is presently under attachment of Dubai Dry Dock in execution of said Decrees. The Comp. proposes to pay the dues of Dubai Dry Dock out of proceeds of this Public Issue.

The Comp. had also committed numerous defaults in the payment of instalments of principal & interest to the Financial Institutions. The Financial Institutions, therefore, had filed a suit against the Comp. in the Bombay High Court bearing suit no 4179 of 1993 for recovery of their dues towards principal of loans, interest thereon, costs & other charges amounting to Rs 27,15,05,518/- as on June 30, 1993, with further interest [including compound interests], liquidated damages & other costs & charges thereon till payment or realisation.

The Comp. has entered into Consent Terms with the Financial Institutions & a decree has been passed against the Comp. for which Shri. Prem Sawhney, the Chairman & Managing Director of the Comp. has agreed to be a surety.

Banks :

The outstanding loans to the Consortium of Banks [Consortiums] as on 31.10.93 stood at Rs 1028.21 lakhs. The Court Order allows the Consortium to effect a sale of Anchor Handling Tug at a minimum reserve price of Rs 5.5 crores in settlement of their dues. The balance, if any, thereafter is to be repaid over a period of 72 months. However, the Comp. has made an application for the reconsideration of Consortium, in light of the positive developments leading to the signing of Consent Terms with the Financial Institutions.

The Comp. has made an application to the Consortium for rescheduling the repayments at a rate of Rs 21 lacs per month over a 76 month period commencing from the expiry of three months from the acceptance of Company proposal.

If this proposal doesn't meet with the Consortium approval, the Comp. shall file an appeal against the said sale order.

The erstwhile BCCI which is not included in the consortium had filed a suit against the Comp. for non payment of dues. The claim is for Rs 60 lakhs.

The Comp. is promoted by Mr. P V S Sawhney.

Mr. P V S Sawhney joined one of world premier government oil concerns, British petroleum, at their Head Office at London where he gained international exposure in the petroleum industry. Upon this return to India, he set up a Comp. for providing specialist services in the oil business. Mr. P V S Sawhney was involved in organising the design, construction & supply of India first drillship to ONGC, 'SAGAR PRABHAT' at Kiel in West Germany & was subsequently involved in the management, supervision & operation of same for one & a half years as sub-contractors to Viking Offshore A/S of Norway.

PROJECT LOCATION :

The Project involves contract drilling by way of charter hire of the Rig, BOSS PRITHVI to Oil Exploring Agencies/Companies in India and/or Abroad. 'BOSS 1' assists offshore marine installations, derrick barges etc in movement and/or fixation of their anchors at designated places & lifting, towing & pulling the same.

PRESET STATUS OF THE VESSELS : BOSS PRITHVI :

The drilling rig BOSS PRITHVI is of Semi-submersible type having a platform on the deck area which is supported by columns connected to large underwater displacement hulls/portions. The basic purpose of this design is to reduce the wave forces by locating the major support members beneath the water surface. As a result of improved stability, the rig can be used to drill upto 1,000 feet all through the year including monsoons, unlike drillships which are laid off during monsoons. Further, the semi- submersible type rig can also be converted into a floating production platform with some modifications for recovery & production of oil. The statutory drydocking repairs of the rig have been completed in Dubai & the rig would be brought back to the Indian shores after the prescribed payment is effected. BOSS PRITHVI was surveyed for assessing its CONDITION AND VALUATION by M/s Cleghorn Wilton and Associated Ltd., Dubai on behalf of the Indian Financial Institutions on an AS IS WHERE IS BASIS & was valued at US $ 25 million [approx Rs 78 croress] as per the valuation report dated 22/10/1991.

The Comp. recently sought the services of Indian competent authority M/s Ericson and Richards [in association with M/s Jimmy D Engineer and Co. Dubai, Surveyors & Loss Assessorss], for the inspection & report on the general condition & valuation of the rig during 1993. They have in their valuation report no DA/006/93 dated 16.5.93 estimated the residual life of rig as 10 years & have placed its present value at US $ 23 million [i.e. Rs 72.10 croress] assuming an exchange rate of 31.35 Rupees to a Dollar.

Resulting from the Consent Terms signed between the Comp. & the Financial Institutions, the earmarked proceeds from the Public issue shall be utilised to pay off the drydock dues & demobilize the Rig to Indian waters for deployment.

THE ANCHOR HANDLING TUG [BOSS-1s] : 'BOSS-1' has completed its statutory dry docking at Bombay port Trust during October/November 1993 & currently the minor repairs are in progress. The said expenditure is to be financed out of the proceeds of Public issue. The banks which had guaranteed the loan by Union Bank of Switzerland for purchase of 'BOSS-1' had filed a suit against the Comp. for recovering its dues.