The Directors present this Twenty Seventh Annual Report of the Company
together with the Audited Statements of Accounts for the Financial Year
Members may recall that Financial Year 2012-13 comprised of 18 months
period commencing from 1st April, 2012 to 30th September, 2013. As a
consequential effect of extension of the said Financial Year by a
period of six months, the following Financial Year i.e. Financial Year
2013-14 comprised of only six months period i.e. 1st October, 2013 to
31st March, 2014. Members may note that the Financial Year 2014-15
under review however comprised of usual 12 months period commencing
from 1st April, 2014 to 31st March, 2015.
RESTRUCTURING OF COMPANY''S DEBTS Members may kindly recall that during
the aforesaid extended Financial Year 2012-13, your company had
suffered a serious blow in its operations due to various external and
internal reasons most of which were beyond the control of your
management. It is because of such adverse effect on company''s
operations that profitability had substantially fallen down, as a
direct result of which even the cash flows were affected very
adversely. Hence your company had no choice but to apply to Corporate
Debt Restructuring Cell in March, 2013 for restructuring of your
company''s debt in accordance with a policy of Reserve Bank of India
then in vogue. Finally the restructuring scheme approved by the CDR
Empowered Group as communicated to the company on 23rd September, 2013
started getting implemented by way of execution of a Master
Restructuring Agreement (MRA) between the company and its various
lenders on 19th November, 2013. Since post sanction of the said scheme
most of the lenders of the company started adopting a conservative
approach towards sanctioning of additional fund and non-fund based
facilities to the company, profits of the company had to substantially
fall as is evident from the table depicting the financial results
a) On Standalone Basis
The financial results during the year under review are summarized
(Rs. in Crore)
Particulars March 31,2015 March 31, 2014
(Twelve Months) (Six Months)
Gross Sales 151.18 199.37
Less: Excise Duty 4.86 7.0.
Net Sales 146.32 192.34
Other Income 3.94 25.87
Total Income 150.26 218.21
Profit/(Loss) Before Depreciation, (84.06) (31.91)
Finance Cost, Exceptional items & Tax
Less: Depreciation and Finance Cost 221.74 110.10
Less: Exceptional items 171.72 Nil
Profit/(Loss) Before Taxation (477.53) (142.01)
Less: Deferred Taxation 15.55
Profit / (Loss) After Tax (477.53) (126.46)
Balance Carried to Balance Sheet (477.53) (126.46)
In view of the period of the two financial years above being different
the data of current financial year is not comparable with last
financial year straightway. As can be observed during the year under
review the gross sales & total income have substantially fallen down,
resulting into your company incurring a loss of Rs.477 Crores. Such
situation is the direct after effect of what is stated in foregoing
b) On Consolidated Basis
The consolidated income from operations of the Company and its various
subsidiaries excluding the two subsidiaries in USA for the year ended
on March 31, 2015 got decreased from Rs. 807.04 Crores in the last
financial year to Rs. 305.47 crores as a result of which the net loss
of the Company got increased form Rs. 352.43 crores in the last
financial year to Rs. 579.04 Crores in the financial year under review
Keeping in mind the losses registered by the Company during the year
under review, your Directors have not recommended any dividend for the
TRANSFER TO RESERVES
In view of absence of profits during the financial year under review
your Directors were unable to transfer any amount to the General
INCREASE OF PAID UP CAPITAL
Since an essential condition of the restructuring of company''s debt was
conversion of part of the debt of different lenders into equity, your
company issued 45638441 equity shares of the face value of Rs.10/- per
share to the lenders at a premium of Rs.16/- per share in accordance
with a SEBI formula prescribed for this purpose. Such issuance of
additional equity resulted into enhancement of paid up capital of the
Company from its earlier level of Rs.5329.68 Lacs to 9893.53 Lacs.
In addition to the above, the process for allotment of 50619233 equity
shares at the same total price of Rs.26/- per share to a Creditor and
few promoters group entities has already been initiated and after
completion of the said allotment process your company''s paid up share
capital would get further enhanced from Rs. 9893.53 lacs to Rs.14955.45
Lacs which will be well within the present Authorized Capital of
Company of Rs.180 crores.
As is evident from the financial results stated above, the Company''s
performance has been very adversely affected due to the financial
crunch that the Company faced during the financial year 2012- 13. Apart
from the ripple effect of the aforesaid Company specific problem, your
company also had to suffer due to certain issues which directly
affected the pipeline industry in general. Delay in implementation of
the country wide projects such as national gas grid and water
distribution projects etc. added fuel to the fire as the demand for
steel pipes (the manufacturing of which is core competence of your
Company) got drastically reduced thereby straight away adversely
affecting the business prospects in a big way.
REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTIONS (BIFR)
Your Company suffered substantial operational losses during the
financial year 2012-13 as a result of which the Company''s net worth was
eroded, (since the accumulated losses exceeded the entire net worth).
As a result of such erosion the relevant provisions of Sick Industrial
Companies (Special Provision) Act, 1985 got triggered and therefore
your Company, in order to comply with section 15 of the said Act, had
to make reference to the Board for Industrial and Financial
Reconstructions (BIFR) for determination of the measures which shall be
adopted with respect to the Company. Such reference is currently being
processed at the Delhi office of BIFR.
ACCOUNTS STATEMENTS OF SUBSIDIARY COMPANIES
Your Company has five wholly owned subsidiaries in addition to two step
down subsidiaries and seven associate Companies.
Pursuant to the provisions of Section 129(3) of the Companies Act,2013
a statement containing salient features of Financial statements of the
Company''s subsidiaries (excluding the two subsidiaries in USA) in form
AOC-1 is attached to the financial statements of the Company.
As During the financial year 2014-15 PSL USA Inc.-the Company''s
subsidiary in USA and its step down subsidiary namely PSL North America
LLC filed voluntary petitions for relief under chapter XI of The United
States Bankruptcy code State of Delaware USA since the said subsidiary
Company suffered heavy losses in the last three years. Hence financial
results of these two companies have not been included.
ASSOCIATION WITH JINDAL TUBULAR - A SUBSIDIARY COMPANY OF JINDAL SAW
Consequent upon substantial reduction in the operations of the Company,
most of the manufacturing facilities of the Company in different
locations in the country were not getting optimally utilized. Moreover
even the fixed expenses including the payroll expense of the manpower
deployed at such locations were causing an additional drain on
Companies financial position. In order to mitigate the effect of these
two important factors, your company has executed an Operation
Maintenance and Management contract with Jindal Tubular Limited (JTL)
by way of which not only the valuable machinery installed at these
locations would remain continuously functional but even certain fixed
costs including the cost of man power at the said location would be
recovered from the revenue generated by Jindal Tubular Limited due to
the aforesaid contract.
At the beginning of the Financial Year under review the strength of
your company''s Board of Directors was 14 Directors which included Six
Whole Time Directors, One Non-executive Director, Five Independent
Directors and Two Nominee Directors.
However during the year under review the Directorate got changed due to
1. On 31st May, 2014 Shri M. M. Mathur,Whole Time Director ceased to be
on the Board consequent upon resignation submitted by him earlier.
2. On 15th July, 2014, Shri. G. Gehani, Whole Time Director & Company
Secretary ceased to be on the Board consequent upon resignation
submitted by him earlier..
3. On 15th November, 2014, Shri P. V. Apte, Independent Director left
for his heavenly abode.
4. On 28th November, 2014, Smt. Geeta Poojary, Nominee Director
resigned from the Board.
As a result of the aforesaid changes, at the end of the Financial Year
2014-15 your Board comprised of only Ten Directors including Four Whole
Time Directors, One Non-executive Director, Four Independent Directors
and One Nominee Director.
Members may note that in accordance with notifications issued by SEBI
sometime back it is now compulsory for every listed company to have
atleast one Woman Director on its Board. Since the earlier woman
Director Mrs. Geeta Poojary (who also happened to be a nominee of EXIM
Bank) had resigned some time back, your Board of Directors in its
meeting held on 13th May, 2015 (which date is although after close of
the Financial Year under review but is before the date of this report)
appointed Mrs. Manjula Bhatia who has adequate exposure in finance,
accounting and administrative functions as Non-executive Additional
Director holding the said office till the conclusion of the ensuing
Annual General Meeting. Since the company has received a notice under
Section 149(1) of Companies Act, 2013 for her appointment as a
Director, the Members would be requested to consider and if agreed to
appoint her as a Director on company''s Board liable to retire by
In view of what is stated above the aforesaid requirement of SEBI for a
Woman Director on every listed Company''s Board has been fully complied
with. Now the total strength of your Directors is Eleven Directors with
adequate mix of Whole Time Directors, Non- executive Directors,
Independent Directors, Nominee Director and Woman Director. The number
and ratio of the said Directors on Board is well in accordance with the
prescribed norms of Companies Act and Listing Agreement for the
KEY MANAGERIAL PERSONNEL
A. Company Secretary
Consequent upon resignation of Shri G. Gehani effective 15th July,2014
from the post of Whole Time Director and Company Secretary of the
Company, your Board had appointed Mr. Shashi Ranjan as a Company
Secretary of the Company with effect from 20th December, 2014.
However since Mr. Shashi Ranjan in order to join a Public Sector
Company, had also submitted his resignation from the post of Company
Secretary as a result of which he was relieved off his duties on 11th
B. Chief Financial Officer
Member may note that in accordance with the provisions contained in
Companies Act, 2013 which became effective from 1st April, 2014, a CFO
was required to be necessarily appointed Mr. V. Subramaniam, who was a
qualified Chartered Accountant as well as a Company Secretary was
appointed on 1st January, 2014 as the CFO of the Company. However, for
certain personal reasons although the said CFO has submitted his
resignation from the services of the Company 29th June,2015 he is yet
to be formally released from his duties.
The Board of Directors met four times during the financial year
2014-15, the details of which are given in the Corporate Governance
Report that is annexed to this Report. The intervening gap between any
two meetings was not only within the period prescribed by the Companies
Act,2013 but it was also in accordance with relevant provisions of
As stated above the Board of Directors of your Company not only
comprises of appropriate numbers but even ratio of Executive and
Non-executive Directors is in accordance with prescribed norms. While
inducting fresh members on the Board it is ensured that the Board has
appropriate mix of Members with different experience levels, knowledge
and educational qualifications in different Sectors and discipline
relating to the company''s business. Fortunately professionals from
different fields having large exposure in their respective fields are
contributing very effectively on your Company''s Board. Due care has
been taken to nominate such members of the Board on different Standing
and Non-standing Committees who are professionally close to the mandate
of such committees. At each meeting of the Board a chairman from
amongst the Independent Directors is chosen to chair the meeting. This
methodology helps in ensuring that all the Independent Directors are
able to chair the meetings turn by turn. Moreover as a matter of
practice the chairman so chosen ensures that the management has taken
adequate steps to implement the various decisions taken by the Board in
its earlier meetings. Again although the minutes of different meetings
of Board of Directors of different subsidiaries of the company are
placed at the meeting of the Board of the company for noting, the Board
discuss the matter arising out of such minutes to not only understand
the progress of different subsidiaries on different fronts but to also
appreciate the problems being faced by such subsidiaries in their day
to day working as well as issues confronting them for enhancement of
In general the Board of Directors of your company also ensures that:
i) The company duly complies with statutory requirements prescribed in
different laws applicable to the company as well to the relevant state
laws applicable to specific plant of the company located in different
ii) The remunerations paid to Whole Time Directors is in accordance
with the recommendation of the Remuneration Committee as well as by the
iii) The overall pay roll expenses of the company is reflective of the
size of the company, operations of the company and the capacity of the
company to pay.
iv) Due care is also taken to ensure that the remuneration package is
in consistent with the recommended best practices in the country.
1. The Company Secretary as Compliance Officer ensures timely
compliance of SEBI Regulations, Applicable Law, Rules and Regulations
and provisions of Listing Agreement. He also responds to different
type of grievances and queries (including the ones related to dividend)
2. In compliance of Clause 32 of the Listing Agreement executed by the
Company with the different Stock Exchanges the Cash Flow Statement in
the format prescribed by SEBI is annexed to this report.
3. In compliance of Clause 32 of the Listing Agreement and Accounting
Standard AS-21, the consolidated financial statements are attached,
which form part of the Annual Report.
4. In compliance of Clause 49 VI (ii) of the Listing Agreement,
Quarterly Compliance Report in the prescribed format is regularly sent
to Stock Exchanges.
5. In accordance with statutory obligations, Secretarial Audit is done
on quarterly basis to reconcile the total admitted capital with the two
depositories in the country namely National Securities Depository
Limited (NSDL) & Central Depository Services limited (CDSL) and the
total issued and listed capital. A Practicing Company Secretary
appointed by the Company for this purpose furnishes Audit Report to
this effect which have been regularly submitted to the various Stock
exchanges with which the Company''s shares are listed.
INTERNAL CONTROL AND ADEQUACY
Your Company has a proper and adequate system of Internal Control to
ensure that all assets are safeguarded and protected against losses
from unauthorized use or disposition and transactions are authorized,
recorded and reported correctly. The Internal Control is designed to
ensure that financial and other records are available for timely
preparing Financial Statements.
The Internal Control System is supplemented by an extensive audit
conducted by well structured Internal Audit Department of the Company.
The said audit is by and large conducted on quarterly basis to review
the adequacy and effectiveness of internal controls and to suggest
improvement for strengthening them. Proper reviews are carried out to
ensure follow-up on the audit observations.
Pursuant to the requirement of Clause 49 of the Listing Agreement, the
Company has constituted a Risk Management Committee. The Risk
Management Committee has been entrusted with the responsibility to
assist the Board Members about the risk assessment and its minimization
procedure. Detail of the Risk Management is set out in the Corporate
Governance Report which forms part of this Report.
CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A separate section on Corporate Governance and Management Discussion
Analysis Report forming a part of Director''s Report and the certificate
from the Company''s Auditors confirming compliance of conditions on
Corporate Governance stipulated in Clause 49 of the Listing Agreement
is included in the Annual Report.
For assisting the Board of Directors in discharging its
responsibilities in various fields effectively & efficiently, various
Standing and Non-standing Committees are constituted by the Board from
time to time. The detail of all standing committees along with their
composition and meeting held during the year under review are given in
the Report of Corporate Governance which forms part of this Report.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 134(3)(C) of the
Companies Act, 2013 and subject to disclosures in the Annual Accounts,
your Directors state as under:
a) In the preparation of annual accounts of the financial year ended on
31st March,2015, the applicable accounting standards have been followed
and there are no material departures.
b) That the Director have selected appropriate accounting policies in
consultation with Statutory Auditors are applied consistently to give a
true and fair view of the state of affairs of the company at the end of
Financial Year under review and Profit & Loss Account of the period
c) Proper and sufficient care has been taken for maintenance of
adequate accounting records and for safeguarding the assets of the
Company and for preventing and detecting fraud and other
d) Annual Accounts have been prepared on a going concern basis.
e) That the Directors have laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and are operating effectively.
f) That the Directors have devised proper system to ensure compliance
with the provisions of all applicable laws and that such systems are
adequate and operating effectively.
DECLARATION BY INDEPENDENT DIRECTOR
The Company has received declarations from all the Independent
Directors of the company confirming the they meet the criteria of
Independent as prescribed both under the Act and Clause 49 of the
Listing Agreement executive by the Company with the Stock Exchanges.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the
financial year were on arm''s length basis and were in the ordinary
course of the business. There are no materially significant related
transactions made by the Company with Promoters, Key Managerial
Personnel or other designated persons which may have potential conflict
with interest of the Company at large.
STATUTORY AUDITORS AND AUDITORS'' REPORT
M/s Suresh C. Mathur & Co. Chartered Accountants, Auditor of the
Company retire at the ensuing Annual General Meeting. They have offered
themselves for re-appointment for which they are eligible. The Company
has received a Certificate from the retiring Auditors to the effect
that the appointment if made, would be within the limits prescribed
vide Section 139 of the Companies Act, 2013 and that they are not
disqualified for re-appointment.
The notes to the accounts referred to in Auditor''s Report are self-
explanatory and therefore do not call for any further comments by the
Board of Directors. Auditor''s Adverse Observations and Management
Response to Auditor''s Adverse Observations are given in the Annexure-1
forming part of this Report.
Pursuant to the provisions of Section 148 of the Companies Act, 2013,
the Board of Directors have re-appointed Mr. V.V. Deodhar, a practicing
Cost Accountant as a Cost Auditor to conduct the Cost Audit of Steel
Pipe Products for the Financial Year 2015-16 at a consolidated fees of
Rs.4.00 Lacs subject to ratification of the same by Shareholders of the
Pursuant to the provisions of Section 204 of the Companies Act,2013 and
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules,2014 a firm of Practising Company Secretary was appointed to
undertake the Secretarial Audit of the Company for the year ended 31st
The Secretarial Audit Report for the financial year ended 31st
March,2015 is annexed herewith which form a part of this Report as
The Secretarial Audit Report does not contain any qualification,
reservation of adverse remark.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has established a vigil mechanism and whistle Blower Policy
to deal with instances of fraud and mismanagement, if any, and
conducting business with integrity, including in accordance with all
applicable laws and regulations. The details of the Vigil Mechanism and
Whistle Blower Policy are given in the Corporate Governance Report and
also posted on the website of the Company.
EXTRACT OF THE ANNUAL REPORT
In accordance with Section 134(3)(a) of the Companies Act,2013 an
extract of Annual Return in Form MGT-9 is annexed herewith as
Annexure-III to this Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The particulars as prescribed by 134(3)(m) of the Companies Act, 2013
read with Rule 8 (3) of the Companies (Accounts) Rules,2014 regarding
conservation of energy, technology absorption and foreign exchange
earnings and outgo are given in the Annexure- IV forming part of this
PARTICULARS OF EMPLOYEES
Disclosure pertaining to remuneration and other details as required
under Section 197(12) of the Act with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are
provided in this Annual Report as Annexure-V.
The particulars of employees required to be furnished pursuant to
Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and
5(3) of the Companies (Appointment and Remuneration of Management
Personnel) Rules,2014 forms part of this Annual Report.
Your Directors place on record its appreciation for the assistance and
support received from Customers, Suppliers, Dealers, Government
Authorities, Financial Institutions, Lenders, Bankers, Monitoring
Committee, Monitoring Institution, Consultants, Solicitors, Auditors &
Shareholders and look forward to their continued co-operation.
Your Directors also thanks the employees at all levels for the
dedication and hard work put in to surge ahead in these challenging
For and on behalf of the Board of Directors
(ASHOK PUNJ) (ALOK PUNJ)
Managing Director Director
Date: 10th August, 2015