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 '15    « Mar 14
 Dear Members,
 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
 i.e. 2014-15.
 Keeping in mind the losses registered by the Company during the year
 under review, your Directors have not recommended any dividend for the
 said year.
 In view of absence of profits during the financial year under review
 your Directors were unable to transfer any amount to the General
 Reserve Account.
 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.
 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.
 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.
 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
 following reasons:
 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.
 Woman 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
 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
 May, 2015.
 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
 Listing Agreement.
 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
 their business.
 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
 prescribed law.
 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)
 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 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 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.
 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.
 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
 under report.
 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.
 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.
 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.
 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.
 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.
 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.
 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
 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
                                                             PSL LIMITED
                                Sd/-                         Sd/-
                                (ASHOK PUNJ)                (ALOK PUNJ)
                                Managing Director            Director
 Place: Mumbai
 Date: 10th August, 2015
Source : Dion Global Solutions Limited
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