The Members of PSL LIMITED
Your Directors hereby present the Twenty Eight Annual Report along with AuditedStatements of Accounts of the Company for the Financial Year 2015-16.
(Rs. in Crore)
|Particulars || |
|31/3/2016 ||31/3/2015 ||31/3/2016 ||31/3/2015 |
|Gross Sales ||101.87 ||151.18 ||276.75 ||304.37 |
|Less: Excise Duty ||1.04 ||4.86 ||1.04 ||4.85 |
|Net Sales ||100.83 ||146.32 ||275.72 ||299.52 |
|Other Income ||5.22 ||3.94 ||5.74 ||6.75 |
|Total Income ||106.06 ||150.26 ||281.46 ||306.26 |
|Profit/(Loss) Before Depreciation Finance Cost Exceptional items & Tax ||(1205.33) ||(84.06) ||(1181.82) ||(117.08) |
|Less: Depreciation and Finance Cost ||150.65 ||221.74 ||241.03 ||290.22 |
|Less: Exceptional items ||Nil ||171.72 ||Nil ||171.72 |
|Profit/(Loss) Before Taxation Provisions ||(1355.98) ||(477.53) ||(1422.85) ||(579.02) |
|Less: Current Tax ||Nil ||Nil ||27.13 ||Nil |
|Profit / (Loss) After Tax ||(1355.98) ||(477.53) ||(1423.13) ||(579.02) |
|Balance Carried to Balance Sheet ||(1355.98) ||(477.53) ||(1423.13) ||(579.02) |
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the company for the financial perio d 2015-16are prepared in compliance with applicable provisions of the Companies Act2013Accounting Standards and SEBI (Listing Obligation and Disclosure Requirements)Regulations2015.
In view of losses incurred by the Company during the year under review your Directorshave not recommended any dividend for the said year.
TRANSFER TO RESERVES
In view of absence of profits during the financial year under review your Directorswere unable to transfer any amount to the General Reserve Account.
INCREASE OF PAID UP CAPITAL
In compliance of one of the essential Conditions of package of Restructuring ofCompanys Debts approved for the Company by CDR Empowered Group on 23rd September2013 your Company in its Board Meeting held on 24th May2016 allotted 25999232 equityshares of the face value of Rs.10/- per share to the seven Promoter Group Entities and onelender of the Company at a premium of Rs.16/- per share in accordance with a SEBI formulaprescribed for this purpose. Such allotment of additional equity resulted into enhancementof paid up capital of the Company from its earlier level of Rs.9893.53 Lacs to Rs.12493.45Lacs.
The Company has procured in-principle approvals from the Bombay Stock Exchange andNational Stock Exchange for allotment of aforesaid shares and process for listing of theseshares has also been initiated.
RESTRUCTURING OF COMPANYS DEBTS
The Company in the Month of March 2013 approached the Corporate Debt RestructuringCell for restructuring its debts as the Company was not in a position to repay its debtsdue to huge losses. Consequently the CDR Empowered Group vide its letter of Approvalapproved the Restructuring scheme of the company in accordance with the Reserve BankGuidelines.
In accordance with the aforesaid restructuring scheme the Company has executed variousdocuments in favour of the CDR Lenders including conversion of certain portion of debt ofCDR lenders into the equity of the Company. The promoters also brought in somecontribution partly in cash and partly in kind. However since the Companysoperations and profitability could not see a positive trend due to lack of orders andfinancial crunch the Company was not in a position to make the repayment of theRestructured debts. Since the Companys Net worth had got eroded in the FinancialYear 2012-13 the Company also approach BIFR in order to meet the mandatory statutoryrequirement of Sick Industrial Companies (Special Provision) Act 1985
REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTIONS (BIFR)
Your Company has filed a reference on 19th June 2015 in Form A' under Section 15of Sick Industrial Companies (Special Provision) Act 1985 to the Board for Industrial andFinancial Reconstructions (BIFR) for determination of the measures which shall be adoptedwith respect to the Company. The aforesaid reference has been accepted by the Board on 8thSeptember 2015 and the same has been registered as case no. 119/2015.
The matter for consideration of PSL Limited as Sick Company' under the provisionsof the Sick Industrial Companies (Special Provision) Act 1985 is pending by BIFR.
During the year under review your Company continued to remain in a grim situationwhich had commenced during the Financial Year 2012-13 as a direct consequential effect ofacute financial crunch then faced by the Company. Even generally the pipeline industry inthe Country experienced inadequacy of orders primarily due to delay in implementation ofNatural Gas Grid and creation of excess capacity in Industry. The cumulative effect of allthese factors virtually forced the Company to remain to lie low as a result of which theconsolidated turnover remained restricted to less than Rs. 300 crores. Although seriousefforts were made to minimize the operational costs the year under review ended with aconsolidated loss of Rs. 1423 crores on account of factors such as depreciation financialcost and other exceptional items.
ACCOUNTS STATEMENTS OF SUBSIDIARY COMPANIES
Your Company has five wholly owned subsidiaries in addition to two stepdownsubsidiaries and seven associate Companies as on 31st March2016. There has been nomaterial change in the nature
of the business of the Subsidiaries. During the year in question the Board of Directorsreviews the affairs of the subsidiaries periodically.
Pursuant to provisions of Section 129(3) of the Companies Act 2013 the Company hasprepared consolidated financial statement of the Company which forms part of this AnnualReport. Further a statement containing salient features of Financial Statements of oursubsidiaries (excluding the two subsidiaries in USA) in the prescribed format AOC-1 isappended to the financial statements of the Company.
Further pursuant to the provisions of section 136 of the Companies Act 2013 theAudited financial statement consolidated financial statement along with relevantdocuments and separate audit accounts in respect of subsidiaries are available on thewebsite of the company.
Due to continuous losses suffered by the PSL USA Inc.-the Companys subsidiary inUSA and its stepdown subsidiary namely PSL North America LLC has voluntary filed petitionsfor relief under chapter XI of The United States Bankruptcy code State of Delaware USA.All the assets of PSL North America LLC were sold to a Company for US$ 100 Million sincechapter XI proceeding are still not completed. The impairment of loss/profit on sale ofassets will be ascertained/recognized in the current year by the Company. Hence financialresults of these two companies have not been included.
ASSOCIATION WITH JINDAL TUBULAR - A SUBSIDIARY COMPANY OF JINDAL SAW LIMITED
Your Company had in the year 2014 entered into an "Operation Maintenance andManagement" contract with Jindal Tubular Limited (JTL) in order to mitigate recurringcost of maintenance of the plant and machinery as well as cost of manpower deployed onvarious locations of Companys manufacturing activity. As a result JTL tookpossession of the Companys Three plants on various dates and commenced manufacturingactivities in accordance with the terms and conditions of the aforesaid agreement. Howeverthe aforesaid arrangement did not yield any expected returns as the JTL has not shown anyprofits during the period of agreement.
During the year under review Shri S.P. Bhatia a Whole Time Director of the Companyexpressed his unwillingness to continue on the Board of the company and submitted hisresignation due to his personal reasons. The resignation was accepted by the Board witheffect from 29th February 2016. The Board while accepting his resignation recorded itsdeep appreciation for the valuable services rendered by Shri. S.P. Bhatia during histeure.
As per conditions mentioned under CDR package ICICI Bank appointed Mr. Sandip Sharmaas Nominee Director of the Board of your Company. However ICICI bank vide its letterdated March 23 2016 withdrew him as our Nominee Director from the Board of your Company.
Consequent upon said changes your Board comprised of only Nine Directors including theManaging Director two Whole Time Directors two Non-executive Directors and FourIndependent Directors.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 134(3)(C) of the Companies Act 2013and 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 March2016 the applicable accounting standards have been followed and there are no materialdepartures.
b) That the Director have selected appropriate accounting policies in consultation withStatutory Auditors are applied consistently to give a true and fair view of the state ofaffairs of the company at the end of Financial Year under review and Profit & LossAccount of the period under report.
c) Proper and sufficient care has been taken for maintenance of adequate accountingrecords and for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities.
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 theCompany and that such internal financial controls are adequate and are operatingeffectively.
f) That the Directors have devised proper system to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
KEY MANAGERIAL PERSONNEL
A. Company Secretary
During the year under review consequent upon resignation of Mr. Shashi Ranjan effectivefrom 11th May 2015 from the post of Company Secretary of the Company your board hadappointed Mrs. Geeta Girdher as a Company Secretary and Compliance Officer of the Companyw.e.f. 10th November2015. However she was relieved off her duties on 15th March 2016.
B. Chief Financial Officer
During the year under review Mr. V. Subramaniam a qualified Chartered Accountant aswell as a Company Secretary was working as a CFO of the Company. However due to personalreasons he submitted his resignation from the services of the Company on 29th June2015.
The Company recognizes and embraces the importance of a diverse Board in its success.We believes that a truly diverse Board will leverage differences in thought perspectiveknowledge skill regional and industry experience cultural and geographical backgroundage ethnicity race and gender which will ensure us retain our competitive advantage.The Board has adopted the Board Diversity policy which sets out the approach to diversityof the Board of Directors.
NUMBER OF MEETINGS OF THE BOARD
Five meetings ofthe Board were held during the financial year 201516 the details ofwhich are given in the Corporate Governance
Report that is annexed to this Report. The intervening gap between any two meetings wasnot only within the period prescribed by the Companies Act 2013 but it was also inaccordance with SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015.
DECLARATION BY INDEPENDENT DIRECTORS
Pursuant to provision of section 149(7) of the Companies Act 2013 the Company hasreceived necessary declaration from each Independent Directors that he meets the criteriaof Independence laid down in section 149(6) of the Companies Act 2013 and Regulations 25of SEBI (Listing Obligation and Disclosure Requirements) Regulations2015.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS
Your Company has been constituted a Nomination and Remuneration Committee which isempowered to nominate the number of members of the Board and various standing committeesbased on their different experience levels knowledge and educational qualifications indifferent Sectors and discipline relating to the companys business.
The remunerations paid to executive Directors are in accordance with the recommendationof the Remuneration Committee as well as by the prescribed law.
Due care is also taken to ensure that the remuneration package is in consistent withthe recommended best practices in the country.
The Board of Directors has carried out evaluation and performance of the various Boardcommittees after seeking input from the Committee members on the basis of the criteriasuch as the composition of Committee effectiveness of committee meeting noting ofminutes etc.
The Nomination and Remuneration committee of Company has carried out the evaluation ofWhole Time Directors of the Company pursuant to provision of Section 178 of the CompaniesAct 2013 read with Regulation 19(4) of SEBI (Listing Obligation and DisclosureRequirement) Regulations 2015.
In a separate meeting of Independent Directors performance of Non-independentDirectors performance of the Board as a whole was evaluated taking into account theviews of Executive Directors and Non- executive Directors.
For assisting the Board of Directors in discharging its responsibilities in variousfields effectively & efficiently various Standing and Non-standing Committees areconstituted by the Board from time to time. The detail of all standing committees alongwith their composition and meeting held during the year under review are given in theReport of Corporate Governance which forms part of this Report.
INTERNAL CONTROL AND ADEQUACY
Your Company has a proper and adequate system of Internal Control for ensuring theorderly and efficient conduct of its business including adherence to the Companyspolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial disclosures.
The Internal Control System is supplemented by an extensive audit conducted by wellstructured Internal Audit Department of the Company. The said audit is by and largeconducted on quarterly basis to review the adequacy and effectiveness of internal controlsand to suggest improvement for strengthening them. Proper reviews are carried out toensure follow-up on the audit observations.
The Board of Directors of the Company has formulated a Risk Management Committee whichhas been entrusted with the responsibility to assist the Board Members about the riskassessment and its minimization procedure. Major risk identified by the business andfunctions are systematically addressed through mitigating actions on a continuing basis.
CORPORATE GOVERNANCE REPORT & MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As per SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015Corporate Governance Report with Auditors Certificate thereon and ManagementDiscussion Analysis Report are attached which form part of this report.
RELATED PARTY TRANSACTIONS
The transactions entered with Related Parties during the period under review were onarms length basis and were in the ordinary course of the business. There were nocontracts or arrangements or transactions entered into during the year ended on March 312016 which were not at Arms length basis and details of material contracts orarrangement or transaction at arms length basis are nil. Thus disclosure in formAOC-2 is not required.
STATUTORY AUDITORS AND AUDITORS REPORT
The Auditors M/s Suresh C. Mathur & Co. Chartered Accountants Auditor of theCompany retire at the ensuing Annual General Meeting. They have offered themselves forre-appointment for which they are eligible.
Pursuant to provisions of Section 139 of the Companies Act2013 the Company hasreceived a Certificate from the retiring Auditors to the effect that the appointment ifmade would be in accordance with the Companies Act 2013 and that they are notdisqualified for re-appointment.
The notes to the accounts referred to in Auditors Report are selfexplanatory andtherefore do not call for any further comments by the Board of Directors.
Auditors Adverse Observations and Management Response to Auditors AdverseObservations are given in the Annexure-1 forming part of this Report.
In accordance with the provisions of Section 148 of the Companies Act 2013 Mr. V.V.Deodhar a practicing Cost Accountant was re-appointed by the Board of Directors as a CostAuditor of your Company for conducting the Cost Audit of "Steel Pipe Products"for the Financial Year 2016-17 at consolidated fees of Rs.4.00 Lacs subject toratification of the same by Shareholders of the Company.
A firm of Practising Company Secretary namely "Avi Sangal & Associates"was appointed to undertake the Secretarial Audit of the Company for the year ended 31stMarch2016 as required under Section 204 of the Companies Act2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules2014.
The Secretarial Audit Report for the financial year ended 31st March2016 is annexedherewith which form a part of this Report as annexure-II.
The Secretarial Audit Report does not contain any qualification reservation of adverseremark.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Pursuant to provisions of Section 186 of the Companies Act2013 the particulars ofLoans Guarantees and Investments are disclosed in the Financial Statement.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has formulated a vigil mechanism/whistle Blower Policy. This has provided amechanism for Directors and employees of the company and other person dealing with theCompany to Report to the Chairman of the Audit committee any instance of unethicalbehaviour actual or suspected fraud or violation of the Companys Code of Conduct.The details of the Vigil Mechanism and Whistle Blower Policy are given in the CorporateGovernance Report and also posted on the website of the Company.
EXTRACT OF THE ANNUAL RETURN
As provided under section 92(3) of the Act the extract of Annual Return is given inAnnexure-III in the prescribed Form MGT-9 which forms part of this Report.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information relating to conservation of energy technology absorption and foreignexchange earnings and outgo as required under section 134(3)(m) of the Companies Act 2013read with Rule 8 (3) of the Companies (Accounts) Rules2014 are given in the Annexure-IVforming part of this Report.
PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Act with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are providedin this Annual Report as Annexure-V.
The particulars of employees required to be furnished pursuant to Section 197(12) ofthe Companies Act 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment andRemuneration of Management Personnel) Rules2014 forms part of this Annual Report.
Your Directors are pleased to place on record their appreciation for the assistance andsupport received from Customers Suppliers Dealers Government Authorities FinancialInstitutions Lenders Bankers Monitoring Committee Monitoring Institution ConsultantsSolicitors Auditors & Shareholders and look forward to their continued co-operation.
Your Directors also thanks the employees at all levels for the dedication and hard workput in to surge ahead in these challenging times.
| ||For and on behalf of the Board of Directors of PSL LIMITED || |
| ||Sd/- ||Sd/- |
| ||(ASHOK PUNJ) ||(ALOK PUNJ) |
|Place: Mumbai ||Managing Director ||Director |
|Date: 3rd August 2016 || || |