Your Directors are pleased to present the 30th Annual Report and Audited Statement ofAccounts of the Company for the year ended 31st March 2015.
1. FINANCIAL RESULTS
(Rs. in crores)
|PARTICULARS ||Current Year Ended 31st March 2015 ||Previous Year Ended 31st March 2014 |
|Gross Revenue from Operations ||6890.73 ||5783.94 |
|Profit before Finance Costs Depreciation and Exceptional Items ||994.41 ||703.65 |
|Less: || || |
|- Finance Costs ||281.91 ||226.19 |
|- Depreciation & Amortisation ||249.16 ||212.75 |
|- Exceptional Items ||53.08 ||73.92 |
|Profit before tax ||410.26 ||190.79 |
|Tax expense ||147.73 ||46.52 |
|Profit after tax ||262.53 ||144.27 |
|Previous Year Taxation Adjustments ||0.02 ||24.15 |
|Foreign Exchange Translation Difference ||(0.10) ||(0.11) |
|Less: Depreciation on assets where remaining useful life of assets is nil as per Companies Act 2013 (net of deferred tax of Rs. 566.83 lacs) ||10.71 ||- |
|Add: Balance brought forward from previous Year ||202.25 ||197.78 |
|Total amount available for appropriation ||453.99 ||366.09 |
|Less : Appropriations : || || |
|(a) Transfer to General Reserve ||180.00 ||100.00 |
|(b) Proposed dividend on Equity Shares ||29.00 ||27.62 |
|(c) Corporate Tax on dividends ||5.90 ||4.70 |
|(d) Debenture Redemption Reserve ||23.17 ||31.52 |
|Balance carried to Balance Sheet ||215.92 ||202.25 |
2. REVIEW OF OPERATIONS
|Products ||Qty Produced (MT/Lacs) ||Qty. Sold (MT/Lacs) |
| ||2014-15 ||2013-14 ||2014-15 ||2013-14 |
|Pipes & Pig Iron ||8.76 ||7.98 ||8.53 ||8.14 |
|Pellets ||12.00 ||7.18 ||11.95 ||6.95 |
The Financial year 2014-15 has witnessed an improvement in production and sales volumesas compared to financial year 2013-14. The gross revenue has registered an increase of 19%and the Profit after Tax (PAT) has shown an increase of 82% over financial year 2013-14mainly because of higher margin in large dia pipes and higher sales volumes of pellets.The Company expects further improvements in coming quarters/years through focus on variousmeasures to improve productivity efficiency and profitability. Following is the review ofvarious Products.:
Welded Line Pipes (SAW Pipes) Strategic Business Division: This business haswitnessed an improvement in production and sales volumes as compared to previous year. TheCompany expects further improvement in the pipe business backed by orders in hand with amix of exports and domestic orders.
Ductile Iron Pipes & Fittings (DI Pipes) Strategic Business Division: Duringthe year the finishing production capacity was aligned to match with the hot metalcapacity to cater the additional demand of pipes. This has resulted into higher productionand higher sales of DI pipes during 2014-15 as compared to 2013-14. The Company is furtherincreasing/ improving finishing line capacity of DI pipes. The Company expects furtherimprovements in production and sales in financial year 2015-16.
Seamless Tubes & Pipes (Seamless Pipes) Strategic Business Division: Theproduction level of seamless pipes during 2014-15 was almost same as in 2013-14. Howeverthe sales volume has declined marginally. The demand of seamless tubes and pipes remainedsubdued in line with the weaker trend in Oil & Gas markets. Falling oil prices haveadverse effect on demand of OCTG products. The Company is exploring new markets anddeveloping new product range to take care of adverse business environment.
Mining and Pellet Strategic Business Division: The production of pellets hasstabilized and the plant capacity utilization was at 100%. The Company would focus onimproving the productivity through efficiency in production process and by setting-upbalancing equipments for better yield.
The Board has subject to the approval of members at the ensuing annual generalmeeting recommended a dividend of Rs. 1/- per equity share of Rs. 2/- for the year ended31st March 2015.
The Boards recommendation for a stable and steady dividend is linked toCompanys long term requirements of funds for meeting the working capital needscapital expenditures for its growth plans & modernization and to finance such plans byretaining back the profits.
Together with the corporate tax on dividend the total outflow on account of equitydividend is Rs. 34.90 crores.
4. TRANSFER TO RESERVES
Your Board has proposed to transfer Rs. 180.00 crores and Rs. 23.17 crores to GeneralReserve and Debenture Redemption Reserve respectively.
5. SHARE CAPITAL
Your Directors have allotted 43530596 Compulsorily Convertible Debentures (CCDs) onpreferential basis under the Securities and Exchange Board of India (Issue of Capital andDisclosure Requirements) Regulations 2009 at a price of Rs. 81.10 per CCD. Each of theseCCDs was to be converted into one equity share of Rs. 2/- each in three tranches. The twotranches of 13808414 CCDs and 14498696 CCDs have already been converted into equalnumber of equity shares on 25.03.2015 and 07.05.2015 respectively. By conversion of theseCCDs the paid-up share capital of Company stands increased to Rs. 609061262 comprisingof 304530631 equity shares of Rs. 2/- each. Remaining 15223486 CCDs will beconverted into equal number of equity shares during the financial year 2016-17.
6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis as stipulated under Clause 49 of the ListingAgreement with Stock Exchanges forming part of this report has been given under separatesection in the Annual Report.
7. CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Companies Act 2013 ("the Act") and AccountingStandard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accountingfor Investments in Associates and AS
- 27 on Financial Reporting of Interests in Joint Ventures the audited consolidatedfinancial statement are provided in the Annual Report.
8. SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
During the year under review companies listed in Annexure 1 to this Report have becomeor ceased to be Companys subsidiaries joint ventures or associate companies. Areport on the performance and financial position of each of the subsidiaries associatesand joint venture companies as per the Companies Act 2013 is provided as form AOC-1 tothe consolidated financial statement and hence not repeated here for the sake of brevity.
The policy for determining material subsidiaries as approved may be accessed on theCompanys website at the link: http://www.jindalsaw.com/pdf/Policy%20for%20Determining%20Material%20Subsidiaries.pdf
9. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under section 134 of the Companies Act 2013 with respectto Directors Responsibility Statement it is hereby confirmed by the Board ofDirectors: - a. that in the preparation of the annual accounts for the financial yearended 31st March 2015 the applicable accounting standards had been followed along withproper explanation relating to material departures; b. that they had selected suchaccounting policies and applied them consistently and made judgments and estimates thatwere reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and of the profit of the Company for the yearended on that period. c. that they had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d. that they had prepared the accounts for thefinancial year ended 31st March 2015 on a going concern basis.
e. that they had laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and are operating effectively; andf. that they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
10. DIRECTORS AND KEY MANAGEIAL PERSONNEL
Ms. Sminu Jindal Managing Director (DIN: 00005317) and Shri Neeraj Kumar Group CEOand Whole-time Director (DIN: 01776688) of the Company retire by rotation and beingeligible offer themselves for re-appointment.
Shri Hawa Singh Chaudhary (DIN: 00041370) has been re-appointed as Whole-time Directorfor a further period of 2 years w.e.f. 1st November 2015 by the Board of Directorssubject to approval of the shareholders. The Company has received the notices undersection 160 of the Companies Act 2013 along with deposit of requisite amount from theshareholders proposing the candidature of Shri Hawa Singh Chaudhary (DIN: 00041370) forthe office of the Whole- time Director of the Company. As per section 134(3)(q) of theCompanies Act 2013 read with rule 8(5) of Companies (Accounts) Rules 2014 detail ofdirectors or Key Managerial Personnel who were appointed and resigned during the year aregiven below:- During the year Ms. Tripti Puneet Arya (DIN: 00371397) and Ms. Shradha Jatia(DIN: 00016940) were appointed as Non-executive Directors of the Company.
Dr. S. K. Gupta (DIN: 00011138) Shri Devi Dayal (DIN: 01083282) Shri Girish Sharma(DIN: 05112440) Dr. Raj Kamal Agarwal (DIN: 00005349) and Shri Ravinder Nath Leekha (DIN:00888433) Independent Directors of the Company were appointed as Independent Directorsunder section 149 of the Companies Act 2013 and Clause 49 of the Listing Agreement for aperiod upto 5 years.
In order to broad base the Board the Directors on 10th July 2015 appointed ShriAbhiram Tayal (DIN: 00081453) (Independent Director) as additional Director. As per theprovisions of section 161 of the Companies Act 2013 he holds office up to the ensuingannual general meeting.
Shri Indresh Batra (DIN: 00093471) had resigned from the office of Managing Directorw.e.f. 17th May 2014 and Shri Sanjeev Shankar (DIN:06872929) and Shri Kuldip Bhargava(DIN:00011103) resigned from the office of Director w.e.f. 1st May 2015 and 15th July2015 respectively due to their pre-occupation. The Board places on record its appreciationfor the services rendered by Shri Indresh Batra Shri Sanjeev Shankar and Shri KuldipBhargava during their association with the Company.
Shri Narendra Mantri has been designated as Chief Financial Officer of the Companyw.e.f. 27th July 2015 in place of Shri Naresh Kumar Agarwal who has moved to otherposition in the Company.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under section 149(6)of Companies Act 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges.
11. BOARD EVALUATION
The Company has devised a Policy for Performance Evaluation of Independent DirectorsBoard Committees and other Directors which includes criteria for performance evaluationof the non-executive directors and executive directors under section 178(1) of theCompanies Act 2013. This may be accessed on the Companys website at the link:http://www.jindalsaw.com/pdf/Criteia%20for%20Pe rformance%20Evaluation.pdf On the basis ofthe Policy for Performance Evaluation of Independent Directors Board Committees andother Directors a process of evaluation was followed by the Board for its own performanceand that of its Committees and individual Directors. The details of the same have beengiven in the report on Corporate Governance annexed hereto.
The details of programme for familiarization of Independent Directors with the Companytheir roles rights responsibilities in the Company nature of the industry in which theCompany operates business model of the Company and related matters have been uploded onthe website of the Company at the link:http://www.jindalsaw.com/pdf/Familiarization%20Programme%20for%20Independent%20Directors.pdf
12. CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirement set out by Stock Exchanges. The report onCorporate Governance as stipulated under the Listing Agreement forms an integral part ofthis Report. The requisite certificate from the Auditors of the Company confirmingcompliance with the conditions of corporate governance is attached to the report onCorporate Governance.
13. CREDIT RATING
During the year your companys credit rating is "CARE AA(-)" for thelong-term borrowings and short-term borrowings is "CARE A1(+)" by CreditAnalysis & Research Limited (CARE).
14. CONTRACTS AND ARRANGEMENT WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an armslength basis. During the year the Company had not entered into any material contract /arrangement / transaction with related parties.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Companys website at thelink:http://www.jindalsaw.com/Common/Uploads/ContentTemplate/140_Download_RELATEDPARTYTRANSACTIONPOLICY.pdf
Your Directors draw attention of the members to Note 44 to the financial statementwhich sets out related party disclosures.
15. CORPORATE SOCIAL RESPONSIBILTY (CSR)
The Corporate Social Responsibility Committee (CSR Committee) formulated andrecommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicatingthe activities to be undertaken by the Company which has been approved by the Board.
The CSR Policy may be accessed on the Companys website at the link:http://www.jindalsaw.com/CSR%20Policy/HEAD_TM__93. The key philosophy of all CSRinitiatives of the Company is driven by core value of inclusion.
The Company is committed to ensure that all development activities/initiativesundertaken in the field of education health care sanitation community welfare skilldevelopment employment generation infrastructure development promotion of nationalheritage and culture etc. are accessible to most marginalized segment of societies such aschildren women elderly and those with disabilities. The Company would also undertakeother initiatives in compliance with Schedule VII to the Act.
During the year the Company has spent Rs. 5.25 crores on CSR activities.
The Annual Report on CSR Activities is annexed herewith as Annexure 2.
16. RISK MANAGEMENT
During the year your Directors have constituted a Risk Management Committee which hasbeen entrusted with the responsibility to assist the Board in (a) overseeing and approvingthe Companys enterprise wide risk management framework; and (b) identifying andassessing that all the risks that the organization faces such as strategic financialcredit market liquidity security property IT legal regulatory reputational andother risks and to ensure that there is an adequate risk management infrastructure inplace capable of addressing those risks. A Risk Management Policy was reviewed andapproved by the Committee.
The Company manages monitors and reports on the principal risks and uncertainties thatcan impact its ability to achieve its strategic objectives. The Companys managementsystems organisational structures processes standards code of conduct and behaviorstogether form the Management System that governs how the Company conducts the business andmanages associated risks.
17. INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation was observed.
18. AUDITORS & THEIR REPORT A. STATUTORY AUDITORS
M/s N.C.Aggarwal & Co. Chartered Accountants (Registration No. 003273N) Auditorsof the Company retire at the ensuing annual general meeting and being eligible offerthemselves for re-appointment. The Company has received confirmation from M/s N.C.Aggarwal & Co. regarding their consent and eligibility under Sections 139 and 141 ofthe Companies Act 2013 read with the Companies (Accounts) Rules 2014 for appointment asthe Auditors of the Company. As required under Clause 41 of the Listing Agreement theAuditors have also confirmed that they hold a valid certificate issued by the Peer ReviewBoard of the Institute of Chartered Accountants of India.
Auditors remarks in their report read with the notes to accounts referred to bythem are self-explanatory.
B. COST AUDIT
Pursuant to Section 148 of the Companies Act 2013 read with rules made thereunder theBoard has re-appointed M/s. R. J. Goel & Co. Cost Accountants (Registration No.000026) to audit the Cost Accounts of the Company for the year ending 31st March 2016.Further their remuneration will be subject to ratification by shareholders.
The Company has submitted Cost Audit Report and other documents for the year ended 31stMarch 2014 with the Central Government by filing Form A-XBRL on 24th September 2014
C. SECRETARIAL AUDITOR
The Board had appointed Shri S. K. Gupta of M/s. S. K. Gupta & Co. CompanySecretaries to conduct Secretarial Audit of the Company for the financial year 2014-15.The Secretarial Audit Report for the financial year ended March 31 2015 is annexedherewith marked as Annexure-3 to this Report. The Secretarial Audit Report does notcontain any qualification reservation or adverse remark.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE (CSR COMMITTEE)
The CSR Committee presently comprises of Dr. Raj Kamal Agarwal Independent Directoras Chairman and Ms. Sminu Jindal Managing Director and Shri Neeraj Kumar Group CEO &Whole-time Director as other members.
The Audit Committee presently comprises of Independent Directors namely Dr. Raj KamalAgarwal (Chairman) Dr. S. K. Gupta Shri Devi Dayal Shri Ravinder Nath Leekha ShriGirish Sharma and Shri Neeraj Kumar Group CEO & Whole-time Director as other members.Shri Kuldip Bhargava (Chairman) of the committee had resigned from the directorship of theCompany w.e.f. 15th July 2015 and accordingly ceased to be Chairman of the AuditCommittee.
The Vigil Mechanism of the Company which also incorporates a whistle blower policy interms of the Listing Agreement. Protected disclosures can be made by a whistle blowerthrough an e-mail or a letter to the Compliance Officer or Group CEO & Whole-timeDirector or to the Chairman of the Audit Committee.
The Policy on vigil mechanism and whistle blower may be accessed on the Companyswebsite at the link: http://www.jindalsaw.com/Common/Uploads/ContentTemplate/139_Download_WhistleBlowerPolicy. pdf MEETINGS OF THE BOARD
Six meetings of the Board of Directors were held during the year. For further detailsplease refer report on Corporate Governance of this Annual Report.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED
Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security were proposed to beutilized by the recipient are provided in the standalone financial statement (Please referto Note Nos 12 13 14 18 & 54 to the standalone financial statement).
PARTICULARS REGARDING CONSERVATION OF ENERGY ETC.
Information persuant to the provision of Section 134 of Companies Act 2013 read withthe rule 8 of Companies (Accounts) Rules 2014 regarding conservation of energytechnology absorption and foreign exchange earnings and outgo are given in the statementannexed hereto as Annexure-4 EXTRACT OF ANNUAL RETURN
Extract of Annual Return of the Company is annexed herewith as Annexure-5 to thisReport.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms of the provisions of Section 197(12) of the Act read with rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules are provided as Annexure-6.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided as Annexure-7.
20. PUBLIC DEPOSITS
The Company has discontinued its Public Fixed Deposit Scheme w.e.f. 1st April 2014 andrepaid all the Public Fixed Deposits and interest thereon by 31st March 2015.
21. ANY SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE
During the financial year there is no such significant material orders passed by theregulators or courts or tribunals impacting the going concern status and companysoperations in future.
22. THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL)ACT 2013
Company has adopted a policy for prevention of Sexual Harassment of Women at workplaceand has formed a Committee for implementation of said policy. No complaint of harassmentwas received during the year.
Your Directors express their grateful appreciation to concerned Departments of Central/ State Governments Financial Institutions & Bankers Customers and Vendors for theircontinued assistance and co-operation. The Directors also wish to place on record theirdeep sense of appreciation for the committed services of the employees at all levels. Theyare also grateful for the confidence and faith that you have reposed in the Company as itsmember.
| ||For and on behalf of the Board |
|Place: New Delhi ||Prithvi Raj Jindal |
|Date: 27th July 2015 ||Chairman |