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Jindal Stainless Directors Report, Jindal Stainles Reports by Directors
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Jindal Stainless
BSE: 532508|NSE: JSL|ISIN: INE220G01021|SECTOR: Steel - Medium / Small
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Directors Report Year End : Mar '13    « Mar 12
TO THE MEMBERS,
 
 The Directors have pleasure in presenting the 33rd Annual Report on the
 business and operations of your Company together with the Audited
 Statement of Accounts for the year ended 31st March, 2013.
 
 Financial Results
 
 Your Company''s performance for the financial year ended 31st March,
 2013 is stated below:
 
 (Rs. in Crores)
 
 Particulars Standalone Consolidated
  
                        Year Ended   Year Ended   Year Ended   Year Ended 
                        31.03.2013   31.3.2012    31.03.2013   31.03.2012
 
 Revenue from 
 operations (Gross)     11,121.88    8,498.33     12,128.47     9,364.29
 
 Less: Excise Duty
 on sales                  835.67      607.28        823.73       598.98
 
 Revenue from
 Operations (Net)       10,286.21    7,891.05     11,304.74     8,765.31
 
 Profit before other 
 Income, Finance 
 Cost, Depreciation,       614.97      904.04        708.56       947.65 
 Exceptional Items, 
 Tax & Amortisation 
 (EBIDTA)
 
 Add: Other Income          44.13       75.31         35.04        57.88
 
 Less: Finance Costs       990.29      516.80      1,043.44       570.17
 
 Less: Depreciation / 
 Amortisation              701.31      408.61        740.14       448.50
 
 Profit /(Loss)Before
 Tax & Exceptional
 Items                  (1,032.50)      53.94     (1,039.99)      (13.14)
 
 Add: Exceptional 
 Items - Gain/(Loss)      (166.96)    (207.76)      (183.99)     (231.45)
 
 Profit/(Loss)
 Before Tax             (1,199.46)    (153.82)    (1,223.98)     (244.59)
 
 Less: Tax Expenses       (378.64)     (49.91)      (381.94)      (63.15)
 
 Net Profit /(loss) 
 after Tax                (820.82)    (103.91)      (842.04)     (181.44)
 
 Share in Profit / 
 (Loss) of Associate            -           -         (0.41)       (1.22)
 
 Minority Interest              -           -          1.74         2.89
 
 Net Profit / (Loss)      (820.82)    (103.91)      (840.71)     (179.78) 
 (After Adjustment 
 for Associate & 
 Minority Interest)
 
 Add:
 
 Amount brought forward    618.69      716.58        530.87       704.63
 
 Debenture Redemption 
 Reserve written back        3.77        6.01          3.77         6.01
 
 Amount available for
 Appropriation            (198.36)     618.69       (306.07)      530.87
 
 General Reserve                -           -          0.08            -
 
 Less: Being deficit,
 Set off from General 
 Reserve                  (198.36)          -       (306.15)           -
 
 Net surplus in
 statement of Profit 
 & Loss                        -       618.69             -       530.87
 
 During the year, the Gross Revenue from operations of your Company on
 standalone basis has increased by 31% at Rs. 11,121.88 crore as
 compared to Rs. 8,498.33 crore during previous financial year 2011-12.
 The Profit before other income, Finance Cost, Depreciation, Exceptional
 Items, Tax & Amortisation on standalone basis stood at Rs. 614.97 crore
 as compared to Rs. 904.04 crore during previous year.
 
 Further, during the year, the Consolidated Gross Revenue from
 operations of your Company has increased by 30% at Rs. 12,128.47 crore
 as compared to Rs. 9,364.29 crore during previous financial year
 2011-12. Consolidated Profit before other income, Finance Cost,
 Depreciation, Exceptional Items, Tax & Amortisation stood at Rs. 708.56
 crore as compared to Rs. 947.65 crore during previous year.
 
 The financial results of the Company during the year 2012-13 have been
 adversely impacted inter-alia on account of (i) Economic slowdown in
 Europe and most large countries in Asia, resulting into weak demand for
 Stainless Steel internationally, squeezing margins in markets; (ii)
 Over capacity in China and dumping of Stainless Steel material into
 India leading to reduced margins in the Company''s markets; (iii)
 Owing to above factors, the Company slowed down the ramp-up of Jajpur,
 Odisha Stainless Steel operations leading to lower margins as the
 Company could not enjoy economies of scale at that plant; and (iv)
 Monopolistic pricing policies of certain PSU companies leading to
 erosion of margins in ferro chrome unit.
 
 Operations 
 
 (A) Hisar Division:
 
 Despite the slowdown in Global economy Hisar plant has been able to
 achieve 98% of its planned capacity at Steel melting shop by producing
 719,353 MT of steel as compared to 723,418 MT during financial year
 2011-12. Hot Rolling Mills were utilized as per market dynamics and
 produced 523,200 MT as compared to 540,671 MT during financial year
 2011-12.  During the year, Cold Rolled Annealed Pickled production was
 243,458 MT as compared to 257,335 MT during financial year 2011-12.
 
 Your Company focused on effective utilization of available resources
 and productivity improvement at various lines to achieve cost
 efficiency. Steel melting shop has achieved landmark of 50 heats in a
 day, similarly others lines have also performed efficiently in this
 slow down period to meet the expectations.
 
 During the year, two new Grades JSLU - DD & JSLU - SD have been
 launched to cater to utensils market. Now, these Grades are welcomed
 and accepted by markets and are in regular production. During the year
 no major capital expenses have been incurred and ongoing projects have
 been completed in Special product division.
 
 (B) Odisha Division
 
 Your Company has been successfully operating stainless steel making
 facility at Jajpur, Odisha, with a capacity of 800,000 tons per annum
 and has been rolling of stainless steel products from this facility for
 over two years. The ramp-up and stabilization of finishing facilities
 are in progress. During the year under review, steel melting shop
 produced 313,258 tons, hot strip mill processed 300,435 tons and
 facilities in cold rolling mill processed 255,130 tons of stainless
 steel. The stainless steel facilities under operations at Odisha are
 state of art facilities and have substantially enhanced the product
 portfolio of the Company including wider width products of upto 1600
 mm.
 
 The ferro alloys production during the year stood at 83,290 tons. There
 were challenges in procuring the chrome ore from domestic sources at
 cost effective prices, which impacted the overall production and the
 capacity utilizations during the year. However, in order to reduce the
 costs, the Company worked on imported low Grade chrome ore from Gulf,
 improving chromium recoveries & higher usage of hard lumpy ore &
 replacing usage of coke with anthracite coal. The Company has also
 taken up the matter with various Government agencies to rationalize the
 chrome ore bidding process.
 
 The operations at 250 MW thermal power plant were adversely affected on
 account of higher input prices of thermal coal and drop in prices of
 surplus power sold to the state Grid. It operated mostly on imported
 low ash coal from Indonesia blended with Indian coal. Both the two
 power plants were producing power and generated around 1089.53 million
 units (net), of which around 34.13 million units were exported to Hisar
 plant. The power plant has achieved highest ever PLF of 107.19% on 22nd
 January, 2013. It also achieved PLF of more than 100% for many days
 consistently during the 4th Quarter. The production at 14 MW power
 plant was 50.32 million units (net).
 
 Jindal Chromite Mine produced 28,955 MT of chromite ore concentrate
 from its beneficiation plant and also achieved 96,022 MT chrome ore
 from Mines pit for the year, which is much higher than previous year
 production. The mines dispatched 20,568 MT of concentrate ore and
 23,099 MT of chrome ore to Vizag plant during the year.
 
 The coke oven facility was operated under lease with work arrangement
 for conversion of coal into coke. The coke oven battery successfully
 produced metallurgical coke with gradual ramp-up. For the year, the
 total production out of the coke oven facility stood at 251,593 tons of
 coke.
 
 (C) Vizag Division
 
 The Vizag Plant produces High Carbon Ferro Chrome with annual capacity
 of 40,000 Tons per annum. Vizag Unit uses Chrome Ore supplied from
 captive Sukhinda Chromite Mines and transfers the output to Hisar
 Plant. The division has achieved 50% of the installed capacity by
 producing 20,169 tons of High Carbon Ferro Chrome during the year
 2012-13 as compared to 24,832 tons during the preceding year. The
 production was less during the year 2012-13 due to Power restrictions
 being imposed by the APEPDCL from September''2011 onwards.
 
 Further Vizag Unit despatched 21,069 tons to JSL, Hisar during the year
 2012-13 as compared to 24,805 tons during the preceding year on Job
 work account.
 
 Debt Restructuring
 
 During the year, your Company''s proposal in relation to re-work of its
 term debt obligations (Rework Scheme) under CDR mechanism was
 approved by CDR EG and Rework Letter of Approval (Rework LOA) was
 issued on September 18, 2012.  The Rework Scheme inter-alia includes
 reworking of repayment schedule, interest funding, adjustments in
 interest rates to ensure protection of net present value of the
 respective facilities, etc. w.e.f. 31st March, 2012 (Reworking
 Cut-off Date).  Consequently, the Amended & Restated Master
 Restructuring Agreement (Amended MRA) has been executed on
 September 25, 2012 with certain lenders. As on date of this report,
 except HDFC Bank, all CDR lenders have executed the necessary
 documents.
 
 Besides reworking of its domestic term debt obligations, your Company
 during the year has also successfully completed the restructuring of
 its debt obligations in relation to ECB facilities of USD 250 million
 availed for the part financing of Odisha Phase II project and has
 executed requisite amendment agreements with all the ECB lenders. The
 revised terms inter-alia include deferment of repayment schedule and
 increase in interest rates etc.
 
 Share Capital
 
 During the year under review, the Company allotted 10,21,922 equity
 shares upon conversion of 560 Convertible Bonds of US$ 5,000 each.
 
 Further, in order to meet the requirements of approved Reworked
 Corporate Debt Restructuring (CDR) Scheme, the Company had obtained
 approval of the Shareholders by means of Special Resolutions passed
 through Postal Ballot on 15th February 2013, for issuance of equity
 shares to a Promoter Group Company (hereinafter referred to as the
 proposed allottee in following manner:
 
 (i) 1,35,50,000 equity shares of face value of Rs. 2/- each on or
 before 31st March, 2013, and
 
 (ii) 1,35,50,000 equity shares of face value of Rs. 2/- each on or
 before 30th June, 2013.
 
 Pursuant to the aforesaid Shareholders'' approval, the Company
 allotted the 1st tranche of 1,35,50,000 equity shares of face value of
 Rs. 2/- each at an issue price of Rs. 74/- each (including a premium of
 Rs. 72/- per equity share) amounting to Rs. 100.27 crore on
 preferential basis to a promoter group company, on 30th March, 2013.
 Consequently, the paid-up share capital of the Company has increased
 from Rs. 38,10,55,094 to Rs. 40,81,55,094 divided into 20,40,77,547
 equity shares of Rs. 2/- each.
 
 However, upon request of the proposed allottee, the Board of Directors,
 subject to necessary shareholders'' approval, has approved the
 infusion of balance amount of Rs. 100.27 crore by way of preferential
 allotment of 1,35,50,000 equity shares at an issue price of Rs. 74/-
 each (including a premium of Rs. 72/- per equity share) on or before
 31st March, 2014 instead of 30th June, 2013. This will align with the
 requirement of Reworked CDR approval which stipulates that the balance
 capital be infused into the Company on or before 31st March, 2014.
 
 Dividend
 
 The Board, considering the Company''s performance and financial
 position for the year under review, has not recommended any dividend on
 equity shares of the Company for the year ended 31st March, 2013.
 
 Transfer to Investor Education and Protection Fund
 
 Pursuant to section 205C of the Companies Act, 1956, the Company has
 transferred unclaimed and unpaid amounts aggregating to Rs. 20,13,600
 to Investor Education and Protection Fund of Government of India during
 the year 2012-13.
 
 Employees Stock Option Scheme
 
 During the year under review, 5,34,771 stock options were vested in
 eligible employees. The ESOS Compensation Committee granted 1,50,000
 stock options to eligible employees under the ESOP Scheme of the
 Company. The disclosure, under Clause 12 of Securities and Exchange
 Board of India (Employee Stock Option Scheme and Employee Stock
 Purchase Scheme) Guidelines, 1999 is set out in Annexure to this
 Report.
 
 Information Technology
 
 During the year, the Company has completed the implementation of SAP
 ECC 6.0 version. This SAP-ERP implementation project named as
 Project Manthan has gone live from 1st May, 2013. This project
 will integrate all business processes of your Company across all the
 locations, on a real time basis and help in quick transactional and
 decision making processes and ultimately assist the management in
 enhancing stakeholder''s value.
 
 With this SAP Go-live, the IT & Manthan teams have initiated a New SAP
 era and have laid a foundation for further IT lead business benefit
 projects in your Company.
 
 Subsidiary Companies
 
 As on 31st March, 2013, your Company has 17 direct and step down
 subsidiaries, namely (i) Jindal Stainless UK Limited; (ii) Jindal
 Stainless FZE, Dubai; (iii) PT Jindal Stainless Indonesia; (iv) Jindal
 Stainless Italy S.r.l.; (v) Jindal Stainless Madencilik Sanayi VE
 Ticaret A.S., Turkey (vi) Jindal Stainless Steelway Limited; (vii) JSL
 Lifestyle Limited; (viii) JSL Architecture Limited; (ix) Green Delhi
 BQS Limited; (x) JSL Media Limited; (xi) JSL Group Holdings Pte. Ltd.,
 Singapore; (xii) JSL Ventures Pte. Ltd., Singapore; (xiii) JSL Europe
 S.A., Switzerland; (xiv) JSL Minerals & Metals S.A., Switzerland; (xv)
 Jindal Aceros Inoxidables S.  L., Spain; (xvi) JSL Logistics Limited;
 and (xvii) Iberjindal S.L., Spain.
 
 Pursuant to the general circular No. 51/12/2007-CL-III dated 8th
 February, 2011 issued by the Ministry of Corporate Affairs, Government
 of India, the balance sheet, profit and loss account and other
 documents of the subsidiary companies are not attached with the balance
 sheet of your Company. The annual accounts and other related documents
 of the subsidiaries are available at the website of the Company and
 will be made available to any member of the Company who may be
 interested in obtaining the same. The annual accounts of the subsidiary
 companies will be kept open for inspection by any shareholder at the
 registered office of the Company during normal business hours. The
 consolidated financial statements of the Company include the financial
 results of all the subsidiary companies.
 
 The members, if they desire, may write to Company Secretary at O.P.
 Jindal Marg, Hisar - 125005 (Haryana) to obtain the copy of the annual
 report of the subsidiary companies.
 
 Directors
 
 The Board of Directors has appointed Mr. Uday Kumar Chaturvedi as an
 additional director and designated him as Chief Executive Officer
 with effect from 27th May, 2013. The Company has received Notice
 pursuant to section 257 of the Companies Act, 1956, from a member
 signifying his intention to propose Mr. Chaturvedi as a candidate for
 the office of Director. The Board has also approved appointment and
 terms of remuneration of Mr. Chaturvedi as Whole Time Director
 designated as Chief Executive Officer of the Company, subject to the
 approval of the Shareholders. The said appointment and remuneration of
 Mr. Uday Kumar Chaturvedi is recommended for the approval of the
 Shareholders in the Notice forming part of this Annual Report.
 
 As on the date of this report, Mr. Jurgen Hermann Fechter, Mr. Ramesh
 R. Nair and Mr. Subash Singh Virdi resigned from the Board of Directors
 of the Company w.e.f. 6th February, 2013, 2nd April, 2013 and 27th May,
 2013 respectively. The Board places on record its sincere appreciation
 for the valuable contributions made by them during their tenure.
 
 Mr. Suman Jyoti Khaitan, Mr. T.S. Bhattacharya and Mr. James Alistair
 Kirkland Cochrane, Directors, will retire by rotation at the ensuing
 Annual General Meeting of the Company and, being eligible, offer
 themselves for re-appointment.
 
 Brief resumes of the Directors being appointed / re-appointed, nature
 of their expertise in specific functional areas, details of
 Directorship in other companies and the membership/ chairmanship of
 committees of the board, as stipulated under Clause 49 of the listing
 agreement with the stock exchanges, are given in the Notice forming
 part of the annual report.
 
 Fixed Deposits
 
 The Company has accepted/renewed deposits amounting to Rs.
 21,12,61,000/- during the year under review. There were no overdue
 deposits on 31st March, 2013, except Rs. 92,87,000/- which remain
 unclaimed.
 
 Particulars Regarding the Conservation of Energy, Technology
 Absorption, Foreign Exchange Earnings and Outgo
 
 The Information relating to energy conservation, technology absorption,
 foreign exchange earnings and outgo required to be disclosed under The
 Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988 is given in Annexure - 1 forming part of this
 report.
 
 Particulars of Employees
 
 As required by the provisions of section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975,
 as amended, the names and other particulars of the employees are set
 out in the annexure to the Directors'' report. However, as per the
 provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the
 report and accounts are being sent to all the Shareholders of the
 Company excluding the aforesaid information. Any Shareholder interested
 in obtaining such particulars may write to the Company Secretary at the
 registered office of the Company.
 
 Auditors and Auditors'' Report
 
 M/s. Lodha & Co. and M/s. S.S. Kothari Mehta & Co., joint statutory
 auditors of the Company, hold office until the conclusion of the
 ensuing annual general meeting and are eligible for re-appointment. The
 Company has received letters from them to the effect that their
 appointments, if made, would be within the prescribed limits under
 section 224 (1B) of the Companies Act, 1956 and also that they are not
 otherwise disqualified within the meaning of sub section (3) of section
 226 of the Companies Act, 1956, for such appointment.
 
 The notes to the accounts referred to in the auditors'' report are
 self-explanatory and, therefore, do not call for any further comments.
 
 Cost Auditors
 
 The Board of Directors has re-appointed M/s. Ramanath Iyer & Co., Cost
 Accountants, the cost auditors for conducting the audit of cost audit
 records in respect of Steel business for the financial year 2013-14
 subject to approval of the Central Government. Particulars of Cost
 Auditor and Cost Audit Report, as required vide General Circular No.
 15/2011 dated 11th April, 2011 issued by Cost Audit Branch, Ministry of
 Corporate Affairs, Government of India, are as under:
 
 Name of the Cost Auditor: M/s. Ramanath Iyer & Co.
 
 Cost Accountants, 808,Pearls Business Park,
 
 Netaji Subash Place, Pitampura, New Delhi - 110 088
 
 Names and Membership No. of Partners of Firm Ms. R. Parvathy, M. No.
 13848
 
 Dr. D. Jagannathan, M. No. 5839 Mr. V. A. Sundaram, M. No. 818 Mr. S.
 Laxminarayana, M. No.7664 Ms. Sona Sharma, M. No. 31446
 
 Due date for filing of Cost Audit Report for the financial year 2011-12
 by the Cost Auditor with the Central Government
 
 Within 180 days from the close of company''s financial year, i.e. upto
 27th September, 2012. However, Central Government vide its various
 circulars issued from time to time extended the date of filing of Cost
 Audit Report in XBRL format upto 28th February, 2013.
 
 Date of actual filing of Cost Audit Report for the financial year
 2011-12 with the Central Government.
 
 Cost Audit Report for the financial year 2011-12 was filed by the Cost
 Auditor with the Central Government on 18th January, 2013.
 
 Directors'' Responsibility Statement
 
 Pursuant to the requirement under section 217(2AA) of the Companies
 Act, 1956 with respect to directors'' responsibility statement, it is
 hereby confirmed that:
 
 (a) in the preparation of the annual accounts, the applicable
 accounting standards have been followed;
 
 (b) the Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company as at 31st March, 2013 and of the profit of the Company
 for the year ended on that date;
 
 (c) the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities; and
 
 (d) the Directors have prepared the annual accounts of the Company on a
 ''going concern'' basis.
 
 Corporate Governance
 
 A separate section on Corporate Governance and a certificate from the
 practicing company secretary regarding compliance of conditions of
 corporate governance as stipulated under clause 49 of the listing
 agreement with the stock exchanges, forms part of the annual report.
 
 Management Discussion and Analysis Report
 
 Management discussion and analysis report as required under the listing
 agreements with the stock exchanges is enclosed with this report.
 
 Acknowledgement
 
 Your Directors would like to express their gratitude for the valuable
 assistance and co-operation received from shareholders, banks,
 government authorities, customers and vendors. Your Directors also wish
 to place on record their appreciation for the committed services of all
 the employees of the Company.
 
                           For and on behalf of the Board of Directors
  
 Place: New Delhi                                      Savitri Jindal
 
 Date : 27th May, 2013                                    Chairperson
Source : Dion Global Solutions Limited
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