Updates: Shiv Vani Oil and Gas Exploration Ltd

CMP: Rs.13.25, Target: Rs.40
All Time High for the Scrip: Rs.690-plus

With reference to the earlier announcement regarding FCCB matter, Shiv-Vani Oil & Gas Exploration Services Ltd recently informed the BSE about the status of the matter:

1. That on February 11, 2014 the Queen's Division Bench, London Passed Summary Judgment against Shiv-Vani Oil & Gas Exploration Services Ltd in the Application filed by Citicorp International Limited for recovery of million.

2. That on February 18, 2014 Citicorp filed an Application against Shiv-Vani claiming cost of 230,000 GBP incurred in the said litigation, which was listed on April 04, 2014 for Arguments.

3. That on February 25, 2014, Shiv-Vani had moved an application for STAY of Judgment dated February 11, 2014 seeking Stay of Judgment. The same was also listed on April 04, 2014 for Arguments

4. The limitation period for filing Appeal to challenge the Judgment dated February 11, 2014 was upto March 03, 2014. As we received opinions that we have no good defense/grounds to challenge the judgment dated February 11, 2014, we have decided not to file Appeal. Therefore, Our Solicitors withdrew from record and also withdrawn the Application filed for STAY of Judgment, as without filing Appeal or without challenging the Judgment, the Stay Application cannot sustain.

5. That on April 04, 2014, Court passed Orders in Application filed by Citicorp awarding cost of 210,000 GBP."

Now, I have spoken briefly with the sources and these are my findings: 

(i) The company would internally settle the FCCB issue, in discussion with the consortium of Banks who are currently dealing with its CDR scheme. Though there are still liquidity issues in the company but the management hopes, it to lighten in the coming months.
As you must be aware that the company did expansion in the year of 2008-2010 mainly through debts, which were repayable in a short term period of 3-5 years, while the equipments acquired out of these debts have a working life of about 25 to 30 years. These short term loans thus created a mismatch in the cash flows of the Company. Therefore, with a view to have a detailed analysis on the financing model of the Company, it appointed SBI Capital Markets Ltd to suggest the various options available to the company at that juncture. SBI Capital Markets Limited, to improve the cash flows, suggested for the re-structuring of the term loans of the company. Therefore, with the consents of almost all its lenders, the company opted for restructuring of its debts through Corporate Debt Restructuring (CDR) Scheme of RBI, and accordingly filed  its  CDR proposal with CDR –EG, who have admitted its proposal in their meeting held on 25 July, 2013 for finalization of CDR package, which is in progress as of now.
(ii) The company is still executing contracts with ONGC, which is contrary to the general rumors spread by vested groups.

(iii) During the FY14, the Company started the following contracts:
(a) Charter hiring of 2 drilling rigs of 2000 HP at Dhuliajan, Assam – awarded by Oil India Ltd.
(b) Charter hiring of 2 drilling rigs of 2000 HP at Karikal, Tamilnadu.
(c) Charter hiring of 1 drilling rig 1500 HP at Ahmedabad awarded by IOCL.
(d) Charter hiring of 1 drilling rig of 1000 HP at Ahmedabad awarded by ONGC.
Two Deep Drilling Rigs have been sent to Iraq for operations in Iraq which has started operations. 
(iv) EPC Project: A contract for setting up gas gathering station (GGS) and laying pipelines at Sonamura in Agartala was awarded by ONGC in FY 2011-12, which is under operation.
The Company is executing work on one contract for providing coal handling facilities on the contract awrded by Mahanadi Coalfields Limited (MCL), a subsidiary of Coal India Limited for Ananta siding V&VI, Jagannath area of Telcher Coalfields near Telcher, Odisha.

Disadvantage in CBM Operations: The contract for Coal Bed Methane development and exploration and exploitation was permanently called off by ONGC as it could not acquire the land for that project.