PSL Directors Report, PSL Reports by Directors
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Directors Report Year End : Sep '13    « Mar 12
The Directors hereby present this Twenty Fifth Annual Report of the
 Company together with the Audited Statements of Accounts for the
 Financial Year 2012-13
 The Financial Year 2012-13 which in the normal course would have
 completed on 31st March, 2013 was extended by a period of 6 months
 after necessary approval from Registrar of Companies to that effect.
 Thus, the so extended Financial Year 2012-13 comprised of 18 month
 period ended on 30th September, 2013.
 The financial performance during the extended year under review is
 summarized below :
                                              (Rs. in Crores)
 Particulars                              Current year     Previous year
 Sales                                         2483.66           2277.94
 Other Income                                    13.64             13.05
 Total Income                                  2497.30           2290.99
 Profit before depreciation and finance         (63.21)           432.60
 cost is
 After deducting depreciation and               530.00            362.94
 Finance cost of
 The profit/ (loss) for the year before        (593.21)            69.66
 Taxation Provisions is
 From which is deducted a Taxation                2.05             15.50
 Provision of
 Thereby Leaving a Net Profit / (Loss) of      (595.26)            54.16
 Which your directors have recommended 
 to be appropriated as follows :-
 a) Transfer to General Reserve          0.00              5.42
 b) Proposed Dividend                    0.00             24.78
 c) Prior Year Payments                  5.25     5.25     5.57    35.77
 Thereby leaving a balance of                  (600.51)            18.39
 for carrying over to next year''s 
 Despite the decline in the growth rate in Indian Economy, your
 company''s total income amounted to '' 2497.30 Crores during the year
 under review in comparison to '' 2290.99 Crores in the previous year.
 The Net Loss before and after tax stood at '' (593.21) Crores and ''
 (595.26) Crores respectively.
 Broadly some of the factors contributing to the decline in the
 financial performance of the Company during the year under review are
 detailed below:
 1) Delay in implementation of National Gas Grid
 2) Excess capacity in the industry leading to aggressive pricing
 3) Low capacity utilization
 4) Increase in Interest cost
 5) Adverse Movement in Exchange Rate
 a) Due to the loss incurred by the company, no amount is proposed to be
 transferred to the General Reserve account.
 b) Due to the reason as stated above, the debit balance of Profit &
 Loss Account proposed to be carried to Balance Sheet is '' 600.51
 c) Keeping in mind the loss incurred by the Company, the directors do
 not recommend any dividend for the extended financial year ended 30th
 September, 2013.
 During the year under review, the consolidated total income stood at ''
 3208.19 Crores as compared to '' 2715.56 Crores in the previous year.
 The Net Loss before and after tax amounted to '' (641.02) Crores and ''
 (659.92) Crores respectively.
 Members will agree that ever since Company''s incorporation way back
 in 1987 adequate growth of the Company was registered in most of the
 financial years eventually enhancing the turnover as well as
 profitability year after year. As can be seen from the financial
 snapshot for last 10 years included in a table forming part of this
 Annual Report without a break in any year Company''s reserves grew
 substantially which directly permitted your Board to recommend sizable
 dividends (not below 40%) year after year.
 While all these years company grew at an exponential rate suddenly
 during the Financial Year 2012-13 your Company''s operations were
 severally effected due to reasons (outlined above) which were mainly
 external. Such reduced operations had to create an adverse impact on
 the liquidity of the Company as a result of which your Company had no
 choice but to apply in March, 2013 to CDR Cell for restructuring of
 Company''s debt through CDR mechanism envisaged under the guidelines
 issued by the Reserve Bank of India After considering Company''s
 proposal, the final restructuring scheme was approved by CDR Empowered
 group on 23rd August, 2013 which was duly communicated to the Company
 by the CDR Cell vide its letter of approval dated 23rd September, 2013.
 The scheme inter-alia provide for rescheduling of re-payment schedule,
 downward revision of interest rates, pledge of shares by promoters,
 contribution into share capital by promoters and promoters group & a
 right of conversion to Company''s CDR Lenders to convert the portion
 of their respective outstanding Working Capital facility into equity
 capital of the company.
 Consequent upon the aforesaid issuance of the LOA dated 23rd September,
 2013, the various formalities associated with implementation of CDR
 scheme (including execution of Master Restructuring Agreement dated
 19th November, 2013) are being carried out.
 Your Company is engaged in the business of manufacturing HSAW/ Spiral
 pipes, Providing of pipe coating & ancillary services such as induction
 pipe bending, turnkey HSAW plant manufacturing etc. Your Company is the
 largest manufacturer of HSAW pipes in India and has 1.40 million MTPA
 capacity in locations across India & 525000 MTPA capacities overseas.
 Your Company has strategically located pipe mills and coating
 facilities in Chennai, Kandla, Vizag, Ahmedabad, Jaipur, Daman,
 Mississippi (through its subsidiary company ''PSL North America
 LLC'') and Sharjah (through its subsidiary company ''PSL FZE'') to
 cater to domestic as well as overseas market.
 During the year under review, your Company witnessed certain
 constraints due to external factors that affected its operational
 performance. Several delays in Implementation of the National Gas Grid
 projects due to jurisdictional disputes between public sector
 undertakings and drastic drop and reduction in national gas output have
 adversely impacted the pipeline sector in India.  In anticipation of
 the demand leading from the gas grid and other pipeline projects, the
 production capacity have been added on exponential basis, However, as
 the demand has not picked up as expected, a situation of over supply in
 the Industry arose which resulted into cut down on margins & hence
 worsened the financial position of the businesses operating within the
 pipeline sector.
 Due to the delays in implementation of country-wide projects such as
 the gas grid & water distribution projects, the accumulation of raw
 materials increased which resulted into higher inventory and lower
 capacity utilization. Other factors which added to the downfall were
 the stretched working capital cycle of the company due to higher levels
 of inventory and debtors resulting into increased Interest Cost and
 adverse movement in exchange rate.
 Despite the aforesaid difficulties and strained liquidity position,
 your Company has managed to complete a host of projects on time and
 within budget.
 PSL USA Inc., incorporated in December, 2006 in the state of Delaware,
 USA. This Company was incorporated as a wholly owned subsidiary of the
 Company to primarily take up contracts for manufacturing of pipes,
 keeping in view the upsurge in pipe laying activity in North America.
 During the Financial Year 2007, PSL USA Inc. floated a joint venture
 (with 78 % holding) namely PSL North America LLC. A plant using state
 of the art technology to manufacture 24 meter long pipes, with
 installed capacity of 300,000 MTPA has been set up by the Company in
 Mississippi, USA. The Company has executed an order for Florida Gas
 Transmission Company LLC & is currently executing an order received
 from ETC Texas Pipeline limited for approx  million.
 Your Company''s associate in the UAE - PSL FZE is engaged in
 manufacturing of steel pipes, anti-corrosive coating of steel pipes and
 export of steel pipes with a capacity of 150,000 MTPA. The Company has
 executed major orders for Hanwa Co. Ltd for $ 40 million and
 Saipem-Afcons Joint Venture for $ 22 million. The Company is now
 actively executing a major order received from Saline Water Conversion
 Corporation for $ 80 million.
 In view of high depreciation, interest and in the absence of profits
 during the current financial year, your Directors are unable to
 recommend any dividend for the year under review.
 Keeping in mind the loss registered by the Company during the year
 under review, the Board of Directors did not propose transfer of any
 amount to the General Reserve Account.
 In terms of the General Exemption granted by Ministry of Corporate
 Affairs, Government of India vide its general circular no. 2/2011 dated
 8th February, 2011 regarding attaching of financial documents of the
 subsidiary companies with the Balance Sheet of the Holding Company
 subject to compliance of few conditions specified in the circular, the
 Board of Directors of the Company has granted its consent by way of
 resolution for not attaching the copy of Balance Sheet, Profit & Loss
 Account and other documents of the various subsidiaries with the Annual
 Accounts of the Company.
 The Company will also make available the Annual Accounts of the
 subsidiary companies and the related detailed information to any member
 of the Company who may be interested in obtaining the same. Further,
 these documents of the subsidiary companies will also be kept for
 inspection at the Registered Office of the Company and at the corporate
 office of the respective subsidiary companies. As required under the
 aforesaid circular, a summarized statement of financial position of the
 subsidiaries has been appended to this Annual Report.
 As stipulated by Clause 32 of the Listing Agreement executed by the
 Company with the Stock Exchanges, the consolidated financial statements
 have been prepared by the Company in accordance with the applicable
 accounting standards issued by the Institute of Chartered Accountants
 of India. The Audited Consolidated Financial Statements together with
 Auditors'' Report form part of this Annual Report.
 During the year under review:-
 (1) Shri Paresh J. Shah, an Independent and Non-Executive Director of
 the Company expressed his unwillingness to continue on the Board of the
 Company and submitted his resignation due to his prior commitments and
 conflict of interest in the professional assignments handled by him.
 The resignation was accepted by the Board of Directors in its meeting
 held on 15.05.2013. The Board while accepting his resignation recorded
 its deep appreciation for the valuable services rendered by Shri Paresh
 J. Shah during his tenure.
 (2) In exercise of the right granted to ICICI Bank by way of
 restructuring agreement, the bank has appointed Shri Sandip Sharma as a
 Nominee Director on the Board of your Company w.e.f 12th August,
 2013. The aforesaid appointment of Shri Sandip Sharma was also taken on
 record by the Board of Directors in its meeting held on 30th October,
 In terms of provisions of Section 256 of Companies Act, 1956 Shri G.
 Gehani, Shri Harsh Pateria, Shri M.M. Mathur and Shri Alok Punj
 Directors shall retire by rotation and being eligible, offer themselves
 for reappointment at the ensuing Annual General Meeting. In Compliance
 of Clause 49 (IV) (G) of the Listing Agreement a brief resume of the
 said Directors is annexed to the notice to enable members to consider
 their re-appointment.
 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
 of shareholders.
 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 included in the Annual 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 obligation, 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. Audit Reports furnished to this effect
 by a Practicing Company Secretary appointed for the purpose have been
 regularly submitted to the various Stock Exchanges with which the
 Company''s shares are listed.
 Your Company has set up a separate Internal Audit Department headed by
 a Senior Person, who is a qualified Cost Accountant for carrying out
 the Internal Audit of Accounts of different branches and critically
 analyse the same after which a Consolidated Internal Audit Report is
 placed before the Audit Committee in its every quarterly meeting for
 detailed deliberations on the same.
 The team of Statutory Auditors being an External Body achieves adequate
 effectivity of its extensive Audit due to support of the Company''s
 Internal Audit Department. Both Statutory as well as Internal Auditor
 are regularly invited at the Audit Committee Meetings wherein more
 light is thrown on the regular Internal Audit checks carried out to
 ensure that the responsibilities given to different Senior Officers of
 the Company across all plants are executed effectively with an overall
 objective that the Company''s assets are safe guarded and protected
 against losses from unauthorized use or disposal.
 In compliance of Clause 49 of the Listing Agreement executed by the
 Company with the stock exchanges, a separate report on Corporate
 Governance and Management Discussion Analysis Report together Auditors
 Certificate on the compliance with the conditions of Corporate
 Governance are appended hereto and forms part of this 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.
 While the following five Standing Committees with a defined mandate
 given to them are permanent in nature, various Non- standing Committees
 are constituted for dealing with specific assignments, therefore their
 term automatically lapses after the assignment in question is completed
 are as under:
 1.  Audit Committee
 2.  Committee of Directors
 3.  Remuneration Committee
 4.  Shareholders''/ Investors'' Grievance Committee
 5.  Share Transfer Committee
 During the year under review meetings of these Committees were held
 periodically wherein certain important decisions in accordance with
 their respective mandates were taken which were thereafter ratified by
 the Board.
 Pursuant to the provisions contained in Section 217 (2AA) of the
 Companies Act, 1956 with respect to Directors Responsibility Statement,
 it is hereby confirmed that:
 - In the preparation of annual accounts of the year under review the
 applicable accounting standards read with the requirements set out in
 Companies Act, 1956/ 2013 have been followed
 - The 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 under report.
 - 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 irregularities.
 - The Annual Accounts have been prepared on a going concern basis.
 M/s. Suresh C. Mathur & Co. Chartered Accountants are proposed to be
 appointed as Auditors of the Company for the Financial Year 2013-14.
 The Company has also received the necessary certificate pursuant to
 Section 224(1B) of the Companies Act, 1956.
 Accordingly approval of the shareholders to the appointment of M/s
 Suresh C. Mathur & Co, Chartered Accountants as Auditors of the Company
 is being sought at the ensuing Annual General Meeting.
 The notes to the accounts referred to in Auditor''s Report are self-
 explanatory and therefore do not call for any further comments.
 Auditor''s Observations and Management response to Auditor''s
 Observations are given in the Annexure-I forming part of this Report.
 In accordance with the directions issued by Cost Audit Branch,
 Government of India vide an Order no. F.No.52/26/ CAB-2010 dated
 03.05.2011 pursuant to Section 233B of the Companies Act, 1956, your
 Directors have 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 2013-14.
 The particulars as prescribed by subsection (1) (e) of Section 217 of
 the Companies Act, 1956 read with Companies (Disclosure of particulars
 in the Report of Board of Directors) Rules, 1988, regarding
 conservation of energy, technology absorption and foreign exchange
 earnings and outgo are given in the Annexure-II forming part of this
 In compliance of Section 219(1)(b)(iv) of Companies Act, 1956 this
 report is being sent to the shareholders of the Company without
 containing therein the information in accordance with Sub-section 2A of
 Section 217 of the Companies Act, 1956 read with Companies (Particulars
 of Employees) Rules, 1975.  However, any member interested in obtaining
 such particulars may write to the Director & Company Secretary of
 the Company at its Registered Office.
 Your Directors place on record its appreciation for the assistance and
 support received from the lenders, Government authorities, customers
 and vendors and look forward to their continued co-operation.
 Your Directors also thank 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
                                                     of PSL LIMITED
                                   Sd/-               Sd/-
                                  (ASHOK PUNJ)       (ALOK PUNJ)
                                   Managing Director  Director
 Place: Mumbai
 Date: 14th February, 2014
Source : Dion Global Solutions Limited
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