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
(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)
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
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
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.
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.
RESTRUCTURING OF DEBTS
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
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
ACCOUNTS STATEMENTS OF SUBSIDIARY COMPANIES
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
5. PSL USA INC.
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
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.
TRANSFER TO RESERVES
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.
INTERNAL CONTROL AND ADEQUACY
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.
CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS REPORT
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.
DIRECTORS'' RESPONSIBILITY STATEMENT
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
AUDITORS'' REPORT AND OBSERVATIONS
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.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
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
PARTICULARS OF EMPLOYEES
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
Your Directors thank the Customers, Suppliers, Dealers, Government
Authorities, Financial Institutions, Lenders, Bankers, Consultants,
Solicitors, Auditors & Shareholders for the continued support during
Your Directors also place on record their deep appreciation for the
hard work, cooperation and support by the employees at levels in these
For and on behalf of the Board of Directors
of PSL LIMITED
(ALOK PUNJ) (ASHOK PUNJ)
Director Managing Director
Date: 5th August, 2014