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Welspun Corp Directors Report, Welspun Corp Reports by Directors
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Welspun Corp
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Download Annual Report PDF Format 2013 | 2012 | 2011 | 2010
Directors Report Year End : Mar '13    Mar 12
To The Members, Welspun Corp Limited
 
 The directors have pleasure in presenting the 18th Annual Report of
 your Company along with the Audited Financial Statement for the
 financial year ended March 31,2013.
 
 FINANCIAL RESULTS                                  (Rs. in millions)
 
                             Standalone               Consolidated
 
                        For the year ended         For the year ended
 
 Particulars
 
                     31.03.2013   31.03.2012   31.03.2013   31.03.2012
 
 Revenue from 
 operations (Net)     66,321.65    57,697.11   108,700.50    89,765.76
 
 Profit before 
 finance cost, 
 depreciation tax      6,696.73     5,077.55    10,289.04    11,246.40
 
 Less: Finance 
 cost                  2,988.98     2,470.96     4,930.77     3,999.24
 
 Gross Profit/
 (Loss)                3,707.75     2,606.59     5,358.27     7,247.16
 
 Less: Depreciation/
 Amortization          2,289.91     1,843.52     4,761.21     3,515.23
 
 Profit before 
 tax for the year 
 (before 
 exceptional item)     1,417.84       763.07       597.06     3,731.92
 
 Exceptional items       538.20          -       1,090.87         -
 
 Profit before tax 
 for the year 
 (after exceptional 
 item)                   879.64       763.07      (493.81)    3,731.92
 
 Less : Provision 
 for taxation
 
 Current Taxation         126.09       71.64        47.19     1,256.06
 
 MAT Credit 
 Entitlement             (126.09)     (71.64)     (133.99)      (44.91)
 
 Deferred Taxation        348.78      113.69       477.11       291.62
 Profit after tax 
 for the year (after 
 Minority Interest)       530.86      649.38      (703.23)    2,385.43
 
 Add: balance 
 brought 
 forward from 
 previous 
 year                  13,510.35    13,415.48    18,296.99   16,466.07
 
 Profit available 
 for appropriation     14,041.21    14,064.86    17,593.76   18,851.50
 
 Transfer to 
 General Reserve           53.09        65.00        56.27       65.00
 
 Transfer to/(from) 
 Debenture Redemption 
 Reserve                 (321.92)      357.14      (321.92)     357.14
 
 Proposed Dividend 
 on equity shares 
 tax                      153.81       132.37       153.81      132.37
 
 Equity dividend & 
 tax of earlier 
 years                      0.20          -           0.20         -
  
 Balance carried 
 forward to the 
 next year             14,156.03    13,510.35    17,705.40   18,296.99
 
 PERFORMANCE
 
 Production and processing highlights for the year under report on stand
 alone basis are as under:
 
 - Pipes:631,133MT(473,617MT).
 
 - Plates:260,247MT(399,135MT).This show lesser in digamous procurement
 to plates for manufacturing.
 
 - H.R.Coils: 209,546MT(107,880 MT). This shows more in digamous
 procurement of coils for manufacturing.
 
 - Coating:4,142K sqm (2,096 Ksqm).This shows more demand for coated
 pipes.
 
 - Power: 122,585MWH(173,117MWH).
 
 (For the above as pect son consolidated basis, refer the Management
 Discussion and Analysis included in the Annual Report)
 
 Depreciation charge for the year under Report increased as compared to
 the previous year mainly due to capitalization of Offline Pipeline
 Project at Mandya in Karnataka; full year depreciation effect in
 respect of LSAW Plant and on increased capital expenditure for
 enhancing productivity /debottlenecking at Plate and Coil Millat Anjar.
 
 Finance Costs increased mainly on account of interest on increased
 borrowings in the form of the External Commercial Borrowings and the
 Non-Convertible Debentures borrowed/ issued during the year under
 report and charging of interest on foreign currency convertible bonds
 which were capitalize deadlier as per Accounting Standard 16 on
 borrowing cost.
 
 Exceptional Items of Rs. 538.20 million is the write off of loan given
 to Welspun Natural Resources Private Limited (a wholly owned subsidiary
 of the Company) for contributing the Company''s share in the expenditure
 for Thailand Block of the joint venture Company viz. Adani Welspun
 Exploration Limited, which has been relinquished during the year after
 seismic studies and carrying out detailed diligence.
 
 DIVIDEND
 
 The Board recommends dived end@ 10% for the year ended March 31, 2013
 i.e. Re. 0.50/- per equity share of Rs.5/- each fully paid-up.  In
 respect of the dividend declared for the previous financial
 years,Rs.5.30 million remained un claimed as on March 31, 2013.
 
 SCHEME OF ARRANGEMENT IN THE NATURE OF DEMERGER
 
 The Board of Directors of the Company has approved, subject to approval
 under Sections 391 to 394 and Section 100 of the Companies Act, 1956
 and other applicable provisions thereof, a scheme of arrangement for
 restructuring of business by transfer of all the assets and the
 liabilities of the infrastructure business (including energy, water,
 road), the direct reduced iron (DRI) business, oil and gas, and EPC
 contracting business (the Other Businesses) to Welspun Infra
 Enterprises Limited (the Resulting Company, a wholly owned subsidiary
 of the Company), by the Company with the Appointed Date being April 1,
 2012 and the share exchange ratio of 1 (one) equity share of Rs.  10
 each fully paid-up of Welspun Infra Enterprises Limited for every 20
 (Twenty) equity shares of Rs. 5 each fully paid-up of the Company (the
 Scheme).
 
 The Schemes subject to approval of the shareholders and the credit or
 of both the Companies and also the regulators and the Court.
 
 Your Board expects that the proposed demerger would enable the
 Companies to focus on and enhance their respective businesses by
 streamlining the operations; to carry on and conduct their respective
 businesses more efficiently and synergetic ally; and to pursue
 different business strategies and raisers ounces for meeting the
 irrespective grow the requirements.
 
 FUNDSUTILIZATION
 
 During the year under report, the Company has raised funds by issuing
 Secured Non- Convertible Debentures of Rs. 3,428 million, which have
 been utilized for the purposes as mentioned in the respective
 Information Memorandum issued for the issue. Un-utilized proceeds have
 been invested in liquid securities as at March 31, 2013.
 
 Out of US0 million Foreign Currency Convertible Bonds (FCCB)
 issued by the Company during the financial year 2009-10, the Company
 has bought back and cancelled FCCB of US.5 million during the year
 under review by raising external commercial borrowings and out of
 internal sources. The FCCBs outstanding as at the end of the year under
 review were US.50 million. 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.
 
 CHANGE IN THE CAPITAL OF THE COMPANY
 
 During the year under review, the equity share capital of the Company
 increased by : I) 128,375 equity shares due to allotment of shares upon
 exercise of options under the Employee Stock Option Scheme of the
 Company; and ii) 35,038,889 equity shares upon compulsory conversion of
 One Compulsorily Convertible Debenture.
 
 DIRECTORS
 
 Since the last report, the following changes took place in the Board of
 Directors
 
 (i) Mr. Utsav Baijal (DIN  02592194) was appointed as a nominee of
 Insight Solutions Ltd. (the Investor) w.e.f. November 10, 2012 in
 terms of the Investment Agreement dated June 29, 2011.
 
 (ii) Mr.B.K.Goenka relinquished from the position of the Executive
 Chairman w.e.f. August 14,2012.However,he continue das the Non-
 Executive Chairman.
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, Mr.Ram Gopal Sharmaand Mr.
 Nirmal Gangwal retire by rotation at the forthcoming Annual General
 Meeting and being eligible, have been recommended for re- appointment.
 
 The term of appointment of Mr. Utsav Baijal expires at the forthcoming
 Annual General Meeting; the Company has however received notice under
 Section 257 of the Companies Act,1956 from a member proposing his
 candidature for the office of director.
 
 Details about these Directors are given in the Notice of the ensuing
 Annual General Meeting being sent to the shareholders along with the
 Annual Report.
 
 DIRECTORS ARE SPONSIBILITY 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, 2013, 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 safe
 guarding 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 31,2013 on a going concern basis.
 
 AUDITORS
 
 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.
 
 AUDITORS''REPORT
 
 The Auditors A observation read with Notes to Accounts are
 self-explanatory and there for edonotcall for any comment.
 
 COSTAUDITREPORT
 
 The Company had appointed M/s. Kiran J.Mehta&Co., Cost Accountants as
 the Cost Auditor so the Company. M/s. Kiran J.Mehta & Co., a
 partnership firm of Cost Accountants, is functioning for last three
 decades. It started in the year 1977 as a proprietorship concern by Mr.
 KiranJ.Mehta. Mr.  Mehta was awarded Certificate of Meriting, the
 intermediate as well as the final, examinations of ICWAI at the
 national level. The firm has it she ad office at Ahmadabad and a Branch
 at Vadodara.
 
 The Company h as appointed M/s Kiran J. Mehta and Co., (FRN- 000025)
 Cost Accountants for conducting Cost Audit for the Company for the
 financial year 2012-13. The Cost Audit for the year is in progress and
 the report will be e-filed to Ministry of Corporate Affairs, Government
 of India, in due course. The Cost Audit Report for the year 2011-12 was
 e-filed on December 26, 2012. The extended due date for e-filing of the
 Cost Audit report for the year 2011-12 was February 28, 2013.
 
 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 bed is closed 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
 fair value:
 
 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. 6.60 million on account of
 lapse of Options during the year as employee compensation for the year
 ended March 31, 2013.
 
 Had the Company valued and accounted the at ore said stock options as
 per the Black Sholes Model, the net profit for the year would have been
 higher by Rs.5.05 million and the diluted earning supercharge would
 have been Rs.2.31 per share instead of Rs. 2.29 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. 
                         The Company has however agreed to grant, 
                         subject to approval of the Central 
                         Government, 2,050,029 Options over a period
                         of 3 years to the Managing Director.
 
 b Options vested 
 (excluding vested 
 portion of lapsed 
 Options)                Nil
 
 c Options exercised     128,375
 
 d Total number of 
 equity shares arising 
 as a result of 
 exercise of
 Options                 128,375
 
 e Options lapsed        246,875
 
 f Total number of 
   Options in force       32,875
 
 g Money realized 
   by exercise of 
   Options               Rs. 10.27 million
 
 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 
   details 
   of options 
   granted to
 
             Whole Time
             Directors   o Nil
 
             Employee
             who re-
             ceived a 
             grant in 
             any one 
             year of 
 ]           option 
             amounting
             to 5%
             or more 
             of option
             granted 
             during 
             that year
 
                         o Nil
 
             Employees, 
             who were 
             granted 
             option, 
             during one
             year, equal 
             to or
             exceeding 
             1% of the
             issued 
             capital 
            (excluding 
             o/s warr-
             ants & 
             conver-
             sions) :
 
                         o Nil
 
 k Diluted 
 EPS         Rs.2.31
             as compared
             to Rs. 2.96
            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 there in the Annexure, which form sap art 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 the Accounts are being sent to all the shareholders of the
 Company excluding the adores aid information. Any shareholder
 interested in obtaining such particulars may write to the Company
 Secretary at the Registered Office of the Company.
 
 ENERGY, TECHNOLOGY AND FOR EIGNEXCHANGE
 
 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.
 
 SUBSIDIARY COMPANIES
 
 The Ministry of Corporate Affairs vide its General Circular No.2/2011
 dated February 8,2011 (the Circular) 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 By pass)
 Private Limited, (18) MSK Projects (Kim Mandavi Corridor) Private
 Limited, (19) Welspun Water In restructure
 
 Private Limited, (20) Welspun Energy Transportation Private Limited,
 (21) Welspun BoT Projects Private Limited (22) Anjar Road Private
 Limited, (23) Welspun Infra Enterprises Limited and (24) ARSS Bus
 Terminal 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 bemade 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 subsidiary company.
 
 As required under the Circular, a statement containing the requisite in
 formation for each subsidiary is attached with this Report.
 
 FIXEDDEPOSITS
 
 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 out
 standing on the date of the Balance Sheet.
 
 LISTINGWITHSTOCKEXCHANGES
 
 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 the Global
 Depository Receipts are listed at Singapore Securities Trading Limited
 (SGX-ST).
 
 Annual listing fees for the year 2013-14 have been paid to BSE, NSE and
 SGX-ST
 
 CORPORATEGOVERNANCE
 
 A separate report on the Corporate Governance is annexed hereto as a
 part of this Report. A certificate obtained from the Company Secretary
 in Practice regarding compliance of the conditions of the 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 the Clause32 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.
 
 ACKNOWLEDGEMENT
 
 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
 
                                        B.K.Goenka
 
 Place: Mumbai
 
                                        Chairman
 
 Date: May 30, 2013
Source : Dion Global Solutions Limited
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