PSL Directors Report, PSL Reports by Directors
BSE: 526801|NSE: PSL|ISIN: INE474B01017|SECTOR: Steel - Tubes & Pipes
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Directors Report Year End : Mar '14    « Sep 13
Dear Members,
 The Directors present this Twenty Sixth Annual Report of the Company
 together with the Audited Statements of Accounts for the Financial Year
 The Financial Year 2013-14 ended on 31st March, 2014 comprised of a
 period of six months only i.e. 1st October, 2013 to 31st March, 2014.
 Such shortening of the Financial Year was the consequential effect of
 extension of the previous Financial Year 2012-13 which comprised of
 eighteen months period instead of usual twelve months period.
 The financial performance during the year under review is summarized
 below :
 (Rs. in Crore)
 Particulars                        Current Year I       Previous Year
                                    (Six Months)         (18 Months)
 Sales                                   192.34           2483.66
 Other Income                             25.87             13.64
 Total Income                            218.21           2497.30
 Profit before depreciation
 and finance                            (31.91)           (63.21)
 cost is
 After deducting depreciation
 and                                     110.10            530.00
 Finance cost of
 The profit/ (loss) for the
 year before                           (142.01)          (593.21)
 Taxation Provisions is
 From which is deducted a
 deferred                                 15.55            (2.05)
 Taxation Provision of
 Thereby Leaving a Net Profit
 / (Loss) of                           (126.46)          (595.26)
 Which your directors have
 recommended to
 be appropriated as follows :-
 a)   Transfer to General Reserve          0.00   0.00
 b)   Proposed Dividend                    0.00   0.00
 c)   Prior Year Payments                  0.00   5.25       5.25
 Thereby leaving a balance of          (126.46)          (600.51)
 for carrying over to next
 year''s account.
 The Financial Year 2013-14 under review comprised of only six months
 period i.e. from 1st October, 2013 to 31st March, 2014 whereas the
 previous Financial Year 2012-13 comprised of eighteen months period
 i.e. 1st April, 2012 to 30th September, 2013. Hence the data in two
 columns above cannot be compared in a simplistic manner.
 Moreover financial crunch experienced by the Company in the Financial
 Year resulting into restructuring of Company''s debt (as also stated in
 the last Annual Report) also adversely affected Company''s performance
 in a very significant manner.
 In view of the aforesaid cause and effect relationship of the said
 financial crunch and restructuring of debts the operations were
 substantially reduced during the year. Your Company, therefore, only
 could achieve a total income of only Rs. 218.21 Crores in the financial
 year under review as against Rs. 2497.30 Crores in the extended
 previous Financial Year comprising of eighteen months period. Although
 operational expense were also substantially reduced in addition to
 lower deprecation as well as finance cost, the year under review still
 ended with a net loss of Rs. 126.46 Crores on standalone basis.
 Since the subsidiaries of the Company continued to generate turnover
 (although at a lower scale) on consolidated basis the total income was
 recorded at Rs. 816.60 Crores. However due to decrease in sales volume
 which reduced variable cost but because of constant fixed cost and
 adverse business conditions a Net Loss after tax was recorded at Rs.
 336.95 Crores.
 During the six months period under review comprised in the Financial
 Year 2013-14, the entire economy was badly affected due to policy
 paralysis mainly because of the uncertainties prevailing on political
 front as a result of pre and post general election scenario. To add to
 the woes of industry, while a stable government was finally elected
 indicating good signs of growth in future, the change of the Government
 in Centre of a different political party, many of the earlier
 Government''s Plans and policies with respect to Industry in general and
 Steel Sector in particular were stalled pending formulation of new
 policies by new government of a different political party.
 The glaring example of what is stated above is abnormal delay in
 countrywide projects such as National Gas Grid and Water Distribution
 projects etc. Delays in such projects of national importance directly
 reduced the demand for Steel Pipes the manufacturing of which is a core
 competency of your Company.
 As members are aware that while in the past company grew at an
 exponential rate suddenly from the last Financial Year your Company''s
 operations were severally affected due to the various reasons including
 the following which were mainly external and beyond the control of
 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 fluctuations in Exchange Rate
 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 to CDR Cell in March, 2013 for restructuring of
 Company''s outstanding 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 (LOA) dated 23rd
 September, 2013.
 Consequent upon the aforesaid issuance of the LOA dated 23rd September,
 2013, the various formalities associated with implementation of CDR
 scheme (including Master Restructuring Agreement (MRA) dated 19th
 November, 2013) have been executed between the Lenders and the Company.
 As on date all the CDR Lenders except State Bank of India (which has
 now transferred its debt to Assets Reconstruction Company) have
 executed MRA vide which their respective outstanding debts payable by
 the Company shall stand restructured in accordance with the scheme
 approved by CDR Empowered group.
 Consequently super majority have been achieved since 88.24% lenders by
 numbers and 76.69 % lenders by value have as on date signed the Master
 Restructuring Agreement.
 Your Company has five subsidiaries and two step down subsidiaries
 1.  PSL Corrosion Control Services Limited
 2.  PSL Gas Distribution Private Limited
 3.  PSL Infrastructure and Ports Private Limited
 4.  Pipeline Systems Limited
 6.  PSL North America LLC (A stepdown subsidiary of PSL USA INC.)
 7.  PSL FZE (A stepdown subsidiary of Pipeline Systems Ltd.)
 In accordance with the General Circulars issued by the Ministry of
 Corporate Affairs, Government of India, the Balance Sheet, Statement of
 Profit and Loss and other documents of subsidiary companies are not
 required to be attached with the Balance sheet of the holding company
 subject to compliance of few conditions specified in the circular. In
 accordance with the scheme of the said circular, the Board of Directors
 of your Company has granted its consent by way of passing a Resolution
 for not attaching the copy of Balance Sheet, Profit & Loss Account and
 other documents of the various subsidiaries with the Annual Accounts of
 your Company.
 However, the Company will make available the Annual Accounts of the
 said 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.
 Keeping in mind the loss registered by the Company during the year
 under review, your Directors have not recommended any dividend for the
 year under review.
 In view of absence of profits during the current financial year, your
 Directors are unable to transfer any amount to the General Reserve
 (A) Whole time Director
 During the year under review Shri D.N. Sehgal, a Whole Time Director of
 the Company expressed his unwillingness to continue on the Board of the
 Company and submitted his resignation due to his personal reason. The
 resignation was accepted by the Board with effect from 1st April, 2014.
 The Board while accepting his resignation recorded its deep
 appreciation for the valuable services rendered by Shri D. N. Sehgal
 during his tenure.
 In addition to the above since close of financial year 2013-14 and till
 date of this report following changes have occurred in the composition
 of the Board of Directors of the Company due to resignations and fresh
 a) On 2nd April, 2014 Mr. M.M. Mathur submitted his resignation from
 the post of Whole Time Director due to personal reasons. His
 resignation was accepted by the Board with effect from 31st May, 2014.
 b) On 17th June, 2014 Mr. G. Gehani submitted his resignation to the
 Managing Director of the Company from the post of Whole Time Director &
 Company Secretary due to his personal reasons.  His resignation was
 accepted by Managing Director subject to post facto approval of the
 Board with effect from 15th1 July, 2014. Subsequently the Board in its
 meeting held on 5th August, 2014 ratified the action of Managing
 Director of accepting the resignation of Mr. G. Gehani.
 The Board of Director placed on record the immense contribution made by
 both the aforesaid Director namely Mr. M. M. Mathur and Mr. G. Gehani
 during their long association with the Company.
 c) In terms of provisions of Section 152 of the Companies Act, 2013
 Shri R. K. Bahri and Shri S. P. Bhatia 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.
 (B) Independent Director
 The Company had, pursuant to the provisions of Clause 49 of the Listing
 Agreement entered into with Stock Exchanges, appointed Mr. Ashok
 Sharma, Mr. Naresh Chandra Sharma, Mr. Prakash Vinayak Apte, Mr. Harsh
 Pateria and Mr. Harry Shourie as Independent Directors of the Company.
 As per Section 149(4) of the Companies Act, 2013, which came into
 effect from 1st April 2014, every listed public Company is required to
 have at least one-third of the total numbers of directors as
 Independent Directors.  In accordance with the provisions of Section
 149 of the Act, these directors are being appointed as Independent
 Directors to hold office as per the tenure of appointment mentioned in
 the Notice of the forthcoming Annual General meeting of the Company.
 (C) Nominee Director
 On the recommendation of the Export-Import Bank of India - an important
 lender of the company, the Board of Directors in its meeting held on
 30th May, 2014 appointed Mrs. Geeta Poojary as a Nominee Director on
 the Board of the Company.
 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
 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.
 Your Company has set up a proper and adequate system of Internal
 Control headed by a Senior Person, who is a qualified Cost Accountant
 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.
 In compliance of Clause 49 of the Listing Agreement executed by the
 Company with the stock exchanges, the report on Corporate Governance
 and Management Discussion and Analysis Report are annexed to this
 report and form part of the Annual Report.
 The requisite Certificate from the Auditors of the Company confirming
 compliance with the conditions of Corporate Governance as stipulated
 under the aforesaid Clause 49 is attached to this 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
 1.  Audit Committee
 2.  Committee of Directors
 3.  Remuneration Committee (Now known as Nomination and Remuneration
 4.  Shareholders''/Investors'' Grievance Committee (Now known as
 Stakeholders Relationship Committee)
 5.  Share Transfer Committee
 Many meeting of these Committees were convened during the year for
 considering various important matter placed before them and decision
 were taken in accordance with their respective mandates. All such
 decisions are 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 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.
 The Auditors, M/s Suresh C. Mathur & Co. Chartered Accountants hold
 office until the conclusion of the ensuing Annual General Meeting and
 are eligible for reappointment for the financial year 2014-15.
 The Company has received a letter from the Statutory Auditors to the
 effect that their re-appointment for the financial year 2014-15, if
 made, would be within the limits prescribed vide Section 139 of the
 Companies Act, 2013 and that they are not disqualified for
 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-I forming part of this
 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/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 2014-15 at a consolidated fees of Rs. 4.00 Lacs subject
 to ratification of the same by Shareholders of the Company.
 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 Secretarial & Legal Department of
 the Company.
 Your Directors thank the Customers, Suppliers, Dealers, Government
 Authorities, Financial Institutions, Lenders, Bankers, Consultants,
 Solicitors, Auditors & Shareholders for the continued support during
 the year.
 Your Directors also place on record their deep appreciation for the
 hard work, cooperation and support by the employees at levels in these
 challenging times.
                             For and on behalf of the Board of Directors
                                                          of PSL LIMITED
                                                 Sd/-               Sd/-
                                          (ALOK PUNJ)       (ASHOK PUNJ)
                                             Director  Managing Director
 Place: Mumbai
 Date: 5th August, 2014
Source : Dion Global Solutions Limited
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