To, The Members of Welspun Corp Limited
The directors have pleasure in presenting the 17th Annual Report of
your Company along with the Audited Financial Statement for the
financial year ended March 31, 2012.
Financial Results (Rs. in million)
For the year ended For the year ended
Partlculars 31.03.2012 31.03.2011 31.03.2012 31.03.2011
Income from operations 57,697.11 62,704.03 89,765.76 80,220.75
Profit before interest,
depreciation & tax 5,077.55 8,597.00 11,246.40 13,784.02
Less : Finance cost 2,470.96 1,696.72 3,999.24 2,240.27
Gross Profit / (Loss) 2,606.59 6,900.28 7,247.16 11,543.75
Less: Depreciation /
Amortization 1,843.52 1,656.65 3,515.23 2,439.47
Profit before tax for
the year 763.08 5,263.63 3,731.92 9,104.29
Less : Provision for
current taxation /
MAT etc. - 1,142.36 1,211.15 1,941.49
Provision for deferred
taxation 113.69 476.74 291.62 929.83
Profit after tax for
the year (after
Minority Interest) 649.38 3,644.52 2,385.43 6,330.25
Add : balance brought
forward from previous
year 13,415.48 11,074.89 16,466.07 11,439.75
Profit available for
appropriation 14,064.86 14,719.41 18.851.50 17,770.00
Transfer to General
Reserve 65.00 364.50 65.00 364.50
Transfer to Debenture
Redemption Reserve 357.14 463.39 357.14 463.39
Proposed Dividend on
equity shares & tax 132.37 475.74 132.37 475.74
Equity dividend & tax
of earlier years - 0.30 - 0.30
forward to the next year 13,510.35 13,415.48 18,296.99 16,466.07
Production and processing highlights for the year under report on
standalone basis were as under:
- Pipes: 473,617 MT (683,132 MT). The decline is mainly on account of
executing orders from subsidiary companies.
- Plates: 399,134 MT (396,507 MT)
- H. R. Coils: 107,880 MT (103,456 MT)
- Coating: 2,096 K sqm (852K sqm). This shows more demand for coated
- Power: 173,117 MWH (219, 803 MWH).
Depreciation charge increased mainly due to capitalization of LSAW
Plant and Plate and Coil Mill expansion projects for enhancing
productivity / debottlenecking at Anjar.
Finance Costs increased mainly on account of interest on Compulsorily
Convertible Debentures issued during the year under report and
consideration of foreign exchange difference related to Finance Costs.
The Board recommends a dividend @ 10% for the year ended March 31, 2012
i.e. Rs. 0.50/- per equity share of Rs.5/- each fully paid-up. In
respect of the dividend declared for the previous financial years, Rs.
5.20 million remained unclaimed as on March 31, 2012.
EXPANSION AND ACQUISITIONS
- Pipe Project in the United States of America
With the belief that the new investments will pave way for the Company
to continue on its path of becoming one of the most respected line-pipe
companies in the world, the Company through its subsidiary in the US is
expanding its facilities at an estimated investment of US.65 million
to manufacture ERW pipes with a capacity of 175,000 MTPA. With this
expansion, the Company''s total overall investment would touch US0
million since inception of the facility in the US. The pipes to be
produced by this US facility will primarily be used in the gas and oil
- Acquisition of Welspun Maxsteel Limited
During the year under report, the Company acquired 113,622,058 (87.35%)
equity shares of Welspun Maxsteel Limited, (hereinafter referred to as
WMSL), a company engaged in manufacturing of gas based Direct Reduced
Iron (''DRI), at an aggregate consideration of Rs. 8,042 million under
and pursuant to Share Purchase and Investment Agreement dated June 29,
2011 entered into amongst the Company, Insight Solutions Ltd., Welspun
Maxsteel Ltd. and Welspun Steel Ltd. Thus, WMSL became a subsidiary of
the Company w.e.f. the date of acquisition i.e. August 13, 2011.
During the year under report, the Company has raised funds by issuing
Compulsorily Convertible Debentures of Rs. 7,883.75 million and Global
Depository Receipts of Rs. 5,180.85 million. Un-utilized proceeds have
been invested in liquid securities as at March 31, 2012.
The long term fund of Rs. 10,000 million raised during the previous
financial year by issuing Secured Non- Convertible Debentures have been
utilized partly for capital expansion and long term working capital
requirement and pending utilization, the balance has been invested in
The entire Foreign Currency Convertible Bonds issued by the Company
during the financial year 2009-10 is outstanding and has not been
converted into equity shares. The proceeds have been utilized for the
purpose for which the same was raised and pending utilization, the
balance is lying in bank accounts outside India.
Since the last report, the following changes took place in the Board of
(i) Mr. Mintoo Bhandari was appointed as a nominee of Insight Solutions
Ltd. (the Investor) w.e.f. August 18,2011 in terms of the Investment
Agreement dated June 29, 2011.
(ii) Resignation of Mr. M. L. Mittal, Executive Director (Finance)
w.e.f. September 30, 2011
(iii) Resignation of Mr. Asim Chakraborty, Director (wholetime) w.e.f.
October 4, 2011.
(iv) Mr. Rajesh Mandawewala relinquished from the position of the
Managing Director w.e.f. April 26, 2012 to hold a senior position at
(v) Mr. Braja Mishra was appointed as the Managing Director w.e.f.
April 26, 2012.
Your directors appreciate Mr. M.L.Mittal and Mr.Asim Chakraborty for
their services as a member of the Board.
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Mr. K.H. Viswanathan and Mr.
Rajkumar Jain retire by rotation at the forthcoming Annual General
Meeting and being eligible, have been recommended for re-appointment.
Details about these Directors are given in the Notice of the ensuing
Annual General Meeting being sent to the shareholders along with Annual
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, your directors
hereby confirm that:
(i) in the preparation of the accounts for the financial year ended
March 31, 2012, the applicable accounting standards have been followed
along with proper explanation relating to material departures;
(ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for the year under review;
(iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) they have prepared the accounts for the financial year ended March
31, 2012 on a going concern basis.
Your Company''s Auditors M/s. MGB & Co., Chartered Accountants retire at
the ensuing Annual General Meeting and being eligible, have given their
consent to act as the Auditors of the Company for the forthcoming
tenure. Members are requested to consider their re-appointment as the
Auditors of the Company and to fix their remuneration by passing an
ordinary resolution under Section 224 of the Companies Act, 1956.
With reference to the Comment No. (xxi) in the Annexure to the
Auditor''s Report (CARO), we report that the Company has terminated the
service of the employee who indulged in malpractices and have taken
appropriate legal actions. The Management is of the view that the
outcome of the legal action will not have any material adverse
implication on the state of the affairs of the Company.
EMPLOYEE STOCK OPTION SCHEME
The Company has granted stock options to eligible directors and
employees of the Company and its subsidiary companies.
The particulars required to be disclosed pursuant to Clause 12 of SEBI
(Employees Stock Option Scheme) Guidelines 1999 are given below:
Difference in employee compensation cost based on intrinsic value and
The Company has adopted intrinsic value method for valuation and
accounting of the aforesaid stock options as per SEBI guidelines, and
accordingly has accounted credit of Rs. 1.51 million as employee
compensation for the year ended March 31, 2012.
Had the Company valued and accounted the aforesaid stock options as per
the Black Scholes Model, the net profit for the year would have been
higher by Rs. 1.18 million and the diluted earnings per share would
have been Rs.2.97 per share instead of Rs.2.96 per share.
Details of stock options as required to be disclosed pursuant to Clause
12 of SEBI (ESOS and ESPS) Guidelines, 1999 are given below:
a Options granted During the year, no Option was granted.
b Options vested (excluding vested portion of lapsed Options) 2,090,375
(vested during the year 16,625)
c Options exercised 86,125
d Total number of equity shares arising as a result of exercise of
e Options lapsed 69,750
f Total number of Options in force 408,125
g Money realized by exercise of Options Rs. 6,785,656.25
h The pricing formula Exercise price is to be at 25% discount to the
latest available closing market price of the equity shares of the
Company, prior to the date of grant.
i Variation of terms and conditions N.A.
j Employee wise Whole Time Directors Nil
to Employee who received a grant in any Nil
one year of option amounting to 5% or
more of option granted during that year
Employees, who were granted option, Nil
during one year, equal to or exceeding
1% of the issued capital (excluding o/s
warrants & conversions) :
k Diluted EPS Rs. 2.96 as compared to Rs. 16.94 of last year
THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF
DIRECTORS) RULES, 1988
In terms of the above Rules, your directors are pleased to give the
particulars as prescribed therein in the Annexure, which forms a part
of the Directors'' Report.
PARTICULARS OF EMPLOYEES
As per the provisions of Section 217(2A) of the Companies Act, 1956
read with the Companies (Particulars of Employees) Rule, 1975 as
amended, the names and other particulars of the employees are set out
in the Annexure to the Directors'' Report. However, as per the
provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the
Report and Accounts are being sent to all the shareholders of the
Company excluding the aforesaid information. Any shareholder interested
in obtaining such particulars may write to the Company Secretary at the
Registered Office of the Company.
ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE
Information in accordance with the provisions of Section 217(1)(e) of
the Companies Act, 1956, regarding conservation of energy, technology
absorption and foreign exchange earnings and outgo is given in the
Annexure forming part of Directors'' Report.
The Ministry of Corporate Affairs vide its General Circular No. 2 /
2011 dated February 8, 2011 granted general exemption to the companies
from attaching a copy of the Balance Sheet, the Profit and Loss Account
and other documents of its subsidiary companies as required to be
attached under Section 212 of the Companies Act, 1956 to the Balance
Sheet of the holding company subject to fulfillment of conditions
stipulated in the Circular.
Therefore, the said documents of the following subsidiary companies
viz. (1) Welspun Pipes Limited, (2) Welspun Tradings Limited, (3)
Welspun Natural Resources Private Limited, (4) Welspun Plastics Private
Limited, (5) Welspun Pipes Inc, (6) Welspun Tubular LLC, (7) Welspun
Global Trade LLC, (8) Welspun Mauritius Holdings Limited, (9) Welspun
Middle East Pipe Coatings Company LLC, (10) Welspun Middle East Pipe
Company LLC, (11)
Welspun Middle East DMCC, (12) Welspun Maxsteel Limited, (13) Welspun
Infratech Limited, (14) Welspun Road Projects Private Limited, (15)
Welspun Projects Limited, (16) Welspun Infra Projects Private Limited,
(17) MSK Projects (Himmatnagar Byepass) Private Limited, (18) MSK
Projects (Kim Mandavi Corridor) Private Limited, (19) Welspun Water
Infrastructure Private Limited, (20) Welspun Energy Transportation
Private Limited, (21) Welspun BoT Projects Private Limited, (22) ARSS
Bus Terminal Private Limited and (23) Anjar Road Private Limited will
not be attached to the Annual Report. However, the aforesaid documents
relating to the subsidiary companies and the related detailed
information will be made available upon request by any member or
investor of the Company. Further, the Annual Accounts of the
subsidiary companies will be kept open for inspection by a member or an
investor at the Registered Office of the Company or the respective
As required under the exemption, a statement containing the requisite
information for each subsidiary is attached with this Report.
The Company has not accepted any public deposit within the meaning of
the Companies (Acceptance of Deposit) Rules, 1975 and, as such, no
amount on account of principal or interest on public deposit was
outstanding on the date of the Balance Sheet.
LISTING WITH STOCK EXCHANGES
The Company''s equity shares are listed on the Bombay Stock Exchange
Limited (BSE) and the National Stock Exchange of India Limited (NSE).
The Secured Non-Convertible Debentures are listed on the Bombay Stock
Exchange Limited. The Foreign Currency Convertible Bonds and Global
Depository Receipts (GDR''s) are listed at Singapore Securities Trading
Annual listing fees for the year 2012-13 have been paid to BSE, NSE and
A separate report on Corporate Governance is annexed hereto as a part
of this Report. A certificate from the Company Secretary in Practice
regarding compliance of conditions of Corporate Governance as
prescribed under Clause 49 of the Listing Agreement is attached to this
Report. A separate report on Management Discussion and Analysis is
enclosed as a part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
As stipulated by Clause 32 of the Listing Agreement with the Stock
Exchanges and Circular No. 2/2011 dated February 8, 2011 issued by the
Ministry of Corporate Affairs under Section 212(8) of the Companies
Act, 1956, the Consolidated Financial Statements have been prepared by
the Company in accordance with the applicable Accounting Standards
issued by the ICAI. The Audited Consolidated Financial Statements
together with Auditors'' Report thereon forms a part of the Report.
Your directors express and place on record deep appreciation to
Financial Institutions, Banks, Government Authorities, Customers,
Suppliers and Shareholders of the Company. Your directors also wish to
place on record their sincere appreciation of the dedicated services,
hard work, solidarity and profuse support by all the employees of the
Company and their families at all levels without which the Company''s
achievement would not have been possible.
For and on behalf of the Board
Date: May 29, 2012 B.K. Goenka