The Members of
Your Directors hereby present this Thirty First (31st) Annual Report alongwith Audited Statements of Accounts of the Company for the Financial Year 2018-19.
The financial performance of the Company for the financial year ended on 31stMarch 2019 is summarized below:
(Rs. in Crore)
|Particulars || |
| ||31/03/2019 ||31/03/2018 ||31/03/2019 ||31/03/2018 |
|Revenue from operations ||80.12 ||48.85 ||215.93 ||167.73 |
|Other Income ||12.11 ||12.88 ||12.76 ||11.30 |
|Total Income ||92.23 ||61.73 ||228.69 ||179.03 |
|Profit/(Loss) Before Depreciation Finance Cost Exceptional items Extraordinary items & Tax ||(1.29) ||(34.65) ||11.23 ||(28.79) |
|Less: Depreciation and Finance Cost ||96.79 ||112.06 ||180.70 ||174.23 |
|Less: Exceptional items ||- ||- ||- ||- |
|Less: Extraordinary Items ||- ||- ||- ||- |
|Profit/(Loss) Before Taxation Provisions ||(98.08) ||(146.71) ||(169.47) ||(203.02) |
|Less: Current Tax ||- ||- ||2.08 ||0.26 |
|Less : Deferred Tax ||- ||6.05 ||(0.0036) ||6.07 |
|Profit / (Loss) After Tax ||(98.08) ||(152.75) ||(171.56) ||(209.35) |
|Balance Carried to Balance Sheet ||(98.08) ||(152.75) ||(171.56) ||(209.35) |
Consolidated Financial Statements:
The Consolidated Financial Statements of your Company for the financial year 2018-19are prepared in compliance with applicable provisions of the Companies Act 2013 read withthe Rules issued there under applicable Accounting Standards and the provisions of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referredto as the "Listing Regulations"). These statements have been prepared on thebasis of audited financial statements of your Company and of its subsidiaries as approvedby their respective Board of Directors.
Eversince Company has faced financial crises few years ago eventually resulting intoadmission of companys application before NCLT the company has suffered severelosses. Since the loss was reported even during the financial year 2018-19 under review nodividend has been recommended for the said year.
Transfer to Reserves:
In view of the company having not made any profits during the Financial Year underreview no amount was transferred to general reserve account.
Transfer to Investor Education and Protection Fund:
During the year under review an amount of Rs.911404/- which was part of dividenddeclared during the Financial Year 2010-11 and which remained unclaimed by beneficiarieswas transferred to IEPF in compliance of Section 124 (5) of the Companies Act 2013.
Reference to National Company Law Tribunal ("NCLT"):
Members may recall that consequent upon acute financial crises faced by the companyapproximately 6 years ago the company had tried to go in for restructuring of its debtsthrough CDR mechanism. However on failure of the CDR process and later repealing of SickIndustrial Companies Act 1985 resulting into abatement of companys reference beforeBIFR the company filed a reference under Section 10 of Insolvency and Bankruptcy codebefore Honble NCLT. Since the said reference has been admitted by Honble NCLTon 15th February 2019 the Corporate Insolvency Resolution Process has begun on the saiddate. While admitting aforesaid reference on the said date Honble NCLT has alsoappointed Mr. Nilesh Sharma as Interim Resolution Professional for conducting the CIRP inthe matter of our company. The statutory moratorium has also commenced on 15th February2019 i.e. the date of Honble NCLT order.
As per the provisions of Section 17 of the Insolvency and Bankruptcy Code theManagement of the affairs of the Corporate Debtors stand vested in the Interim ResolutionProfessional (IRP) and the powers of the Board of Directors of the Corporate Debtor standsuspended and be exercised by the Interim Resolution Professional.
Ever since the aforesaid commencement of CIRP IRP who has started functioning witheffect from 21st February 2019 has constituted a Committee of Creditors which keepsmeeting frequently to review the progress of CIRP in the desired direction.
Out of the Expression of Interests ("EOIS") received pursuant to theInvitation for Expression of Interests from the Prospective Resolution Applicants("PRAs") made by the IRP on 19th April 2019 and 31st May 2019 five PRAs wereincluded in the Final List and accordingly Requests for Resolution Plan ("RFRP")were issued to them on 15th July 2019 as per which they have to file their respectiveResolution Plan by 14th August 2019. Further to the ongoing process as the 180 daysinsolvency resolution process period is expiring on 14th August 2019 the Committee ofCreditors ("CoC") has at its Fourth meeting held on 8th July 2019 resolved toextend the insolvency resolution process period by 90 days subject to confirmation of thesame by the Honble National Company Law Tribunal. Accordingly an application willbe made by the IRP before the Honble NCLT requesting for extension of the insolvencyresolution process period by 90 days.
As stated in the preceding paragraphs vis-a-vis the status of companys petitionbefore NCLT although the CIRP commenced on 15th February 2019 company has been puttingin its best efforts to ensure that the operations of the company are continued in the bestinterest of the company. Such continuation of the operations not only enables continuousfunctioning of companys different plants at different locations but it also enablesthe company to meet some of its fixed costs which are necessarily required to be incurredfor keeping the company active.
Due to such sustained efforts put in by the management of the company thecompanys total income which was merely 61 crores in the previous Financial Yearended on 31st March 2018 got increased to Rs.92 crores during the year under review. Suchenhancement of more than 51% is adequate evidence of the sincere efforts being put in bythe companys management to meet as much fixed costs of the company as are feasible.
In the similar fashion the companys performance on consolidated basis was alsosatisfactory as the consolidated turnover of Rs.179 crores during the preceding year i.e.2017-18 got enhanced to Rs.228 crores during the year under review.
Status of OA filed by Creditors against the company in Debt Recovery Tribunal:
Members may note that prior to the admission of Companys reference byHonble NCLT various secured creditors of the company through M/s. Edelweiss AssetsReconstruction Co. Ltd. filed an OA before the Debt Recovery Tribunal in New Delhi with anobjective of procuring a recovery order from the said Court for the different amountspayable by the company to different secured creditors.Similarly another creditor of thecompany namely Indian Bank has also filed an OA to Debt Recovery Tribunal (DRT) forrecovery of its debt. While after the said filing of two OAs regular hearings inthe DRT Court were being held the company informed the said DRT Court about the admissionof companys application under Section 10 of Insolvency and Bankruptcy Code byAhmedabad bench of NCLT. As a direct result of commencement of moratorium period both theaforesaid proceedings in the DRT Court against the company have been stayed against thecompany. However both the matter will proceed against the other defendants.
Performance of Subsidiary Companies:
Members are aware that till recently all the five subsidiaries of the company inaddition to the two step down subsidiary companies were performing reasonably well due towhich their financial performance was also clubbed with the financial performance of thecompany on standalone basis so as to get the figures of consolidated performance. Howeveras some time back for two subsidiary companies in US namely PSL USA Inc. and PSL NorthAmerica LLC Chapter-XI proceedings were initiated in US Courts in the State of Delaware inUSA the said two US subsidiaries of the company stopped functioning. Accordingly all theassets of PSL North America LLC were sold for US$ 100 Million to pay all the creditors ofthe said subsidiary companies. As these developments resulting into complete stoppage ofactivities of the said companies the financial results of all subsidiaries have not beenincluded in the consolidated results.
Additionally two other subsidiary companies namely PSL Gas Distribution Pvt. Ltd. andPSL Infrastructure & Ports Pvt. Ltd. also could not generate any revenue due to thereasons beyond their control.Inspite of such practical difficulties and in order to complywith Regulation 24 of SEBI (LODR) Regulations 2015 your Board has been reviewingperformance of both active as well as non-active subsidiaries of the company on quarterlybasis.
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 ofsubsidiaries (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.
The total present strength of Directors in the Board of your company is 9 Directorsincluding the Managing Director 4 Non-Executive Directors and 4 Independent Directors. Inaccordance with Article 122 of your companys Article of Association the ManagingDirector is not to be included for determining the total number of Directors who retire byrotation. Also in accordance with Section 152(6)(e) of Companies Act 2013 theIndependent Directors are also not required to be included for determining the Directorswho retire by rotation.
In view of the said statutory position only 4 directors will be directors who areliable to retire by rotation and only 2 Directors i.e. Shri Alok Punj and Mrs. Manjula N.Bhatia will retire at the forthcoming Annual General Meeting. Mr. Alok Punj and Mrs.Manjula N. Bhatia have offered themselves for reappointment and their reappointment ishereby recommended.
Moreover the five year term of all the four existing Independent Directors of theCompany is expiring on 25th September 2019. Since all four of them have accorded theirconsent for reappointment for a further period of five years (which is permitted under theexisting law) they are proposed to be reappointed subject to necessary approval ofshareholders at their ensuing general meeting.
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) While preparing the annual accounts of the financial year ended on March 31 2019the applicable accounting standards have been followed and there are no materialdepartures.
b) That the Directors have selected appropriate accounting policies in consultationwith Statutory Auditors and applied them consistently to give a true and fair view of thestate 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 accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
d) Annual Accounts have been prepared on a going concern basis.
e) The directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
f) The Directors have devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively.
The Company recognizes and embraces the importance of a diverse Board in its success.We believe 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:
Four meetings of the Board were held during the financial year 2018- 19 the details ofwhich are given in the Corporate Governance Report that is annexed to this Report asAnnexure VI. The intervening gap between any two meetings was not only within theperiod prescribed by the Companies Act 2013 but it was also in accordance with SEBI(LODR) 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 Act2013 and Regulations 25of SEBI (LODR) Regulations2015.
Policy on Directors appointment remuneration and other details:
Your Company has constituted a Nomination and Remuneration Committee which is empoweredto nominate the number of members of the Board and various standing committees based ontheir different experience levels knowledge and educational qualifications in differentSectors and discipline relating to the Companys business.
The remunerations paid to Executive Directors are in accordance with the recommendationof the Nomination & Remuneration Committee as well as by the prescribed law. Due careis also taken to ensure that the remuneration package is consistent with the recommendedbest practices in the country.
Familiarization Programme for Directors:
All new Directors including Independent Directors inducted on the Board go through astructured orientation programme. Presentations are made by Executive Directors and SeniorManagement giving an overview of our operations to familiarize the new IndependentDirectors with the Companys business operations. The new Independent Directors aregiven an orientation on the Companys products group structure and subsidiariesBoard constitution and procedures matters reserved for the Board and the major risks andrisk management strategy. Details of orientation given to the existing IndependentDirectors in areas of strategy operations & governance safety health andenvironment industry & regulatory trends competition and future outlook are providedin the Corporate Governance Report.
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.
Your Company has constituted a Risk Management Committee as a measure of goodgovernance although not mandatory on our Company. The details of the Committee and itsterms of reference are set out in the Corporate Governance Report.
Your Company has adopted a Risk Management Policy pursuant to the provisions ofSection 134 of the Act to identify and evaluate business risks and opportunities formitigation of the same. This framework seeks to create transparency minimize adverseimpact on business objective and enhance your Companys competitive advantage. Therisk framework defines the risk management approach across the enterprise at variouslevels including documentation and reporting.
Performance Evaluation of the Board:
Pursuant to provision of Section 178 of the Companies Act 2013 read with Regulation19(4) of SEBI (Listing Obligation and Disclosure Requirement) Regulations 2015 theBoard in consultation with the Nomination and Remuneration committee has formulated aframework containing the process criteria for the performance evaluation of the entireBoard of the Company its committees Individual directors including Independentdirectors.
Evaluation of the Board is on various aspects of their functioning such as adequacy ofthe constitution and composition of the Board and its committees matters addressed in themeeting processes followed at the meeting Boards focus regulatory compliance andCorporate Governance etc are in place. Similarly for evaluation of Directorsperformance various parameters like Directors profile contribution in Board andCommittee meetings performance of duties regulatory compliance and governance etc. areconsidered.
The Nomination and Remuneration committee of Company has carried out the evaluation ofWhole Time Directors of the Company.
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.
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 bywell-structured 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.
Corporate Governance Report:
The Report on Corporate Governance as stipulated under Schedule V of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of the AnnualReport.
The requisite certificate from M/s. V Parekh & Associates Chartered Accountantsconfirming compliance with the conditions of Corporate Governance as stipulated under theaforesaid Schedule V is attached to the Report on Corporate Governance.
Management Discussion and Analysis Report:
The Management Discussion and Analysis Report as stipulated under Schedule V of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 forms an integralpart of this report and gives details of the overall industry structure & developmentopportunities & threats internal controls systems and their adequacy financialperformance with respect to operational performance etc.
Contracts or Arrangements with related parties under Section 188(1) of the CompaniesAct 2013:
With reference to Section 134(3)(h) of the Companies Act 2013 all contracts andarrangements with related parties under Section 188(1) of the Act entered by the Companyduring the financial year were in the ordinary course of business and on an armslength basis. Further there were no transactions with related parties which qualify asmaterial transactions under the SEBI Listing Regulations. Thus disclosure in form AOC-2in terms of Section 134 of the Companies Act 2013 is not required.
The details of the related party transactions as per Accounting Standard 18 are set outin Note 36 to the Standalone Financial Statements forming part of this report.
The Company has also formulated a policy on Related Party Transactions as approved bythe Board of Directors which has been uploaded on the website of the Company.
During the year under review your Board has appointed Ms. Yashika Chawla as a"Company Secretary and Compliance officer" of the Company w.e.f. 1st December2018.
1. Statutory Auditors and Auditors Report
Members may recall that at the 29th Annual General Meeting of the Company held on 28thSeptember 2017 member had resolved for appointment of M/s. V. Parekh & AssociatesChartered Accountants as Statutory Auditors of the Company for a continuous period of 5years commencing from Financial Year 2017-18. Since out of said 5 years only 2 years hadexpired so far M/s. V. Parekh & Associates would continue to act as StatutoryAuditors for the Financial Year 2019-20 also.
The notes to the accounts referred to in Auditors Report are self-explanatory andtherefore do not call for any further comments by the Board of Directors. AuditorsAdverse Observations and Management Response to Auditors Adverse Observations aregiven in the Annexure-I forming part of this Report.
2. Cost Auditors:
Since your company is required to comply with Section 148 of the Companies Act 2013Mr. V.V. Deodhar a Practicing Cost Accountant was re-appointed to act as Cost Auditor ofthe company for the Financial year 2019-20. The consolidated fees of Rs.2 lacfor his saidassignment will be required to be ratified by the members of the company at the ensuingannual general meeting.
3. Secretarial Auditor:
A firm of Practising Company Secretary namely "Avi Sangal & Associates"was appointed to undertake the Secretarial Audit of the Company for the year ended March31 2019 as required under Section 204 of the Companies Act 2013 read with rule 9 ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
The Secretarial Audit Report for the financial year ended March 31 2019 is annexedherewith which form a part of this Report as Annexure-II.
Particulars of Loans Guarantees and Investments:
Pursuant to provisions of Section 186 of the Companies Act 2013 the particulars ofLoans Guarantees and Investments are disclosed in the Financial Statement.
During the year the Company has not accepted any public deposits under the CompaniesAct 2013.
Vigil Mechanism/Whistle Blower Policy:
The Company promotes ethical behavior in all its business activities and in line withthe best governance practices your Company has formulated a system i.e. vigil mechanism/whistle blower policy through which Directors and employees of the Company and otherperson dealing with the Company may report to the Chairman of the Audit committee anyinstance of unethical behavior actual or suspected fraud or violation of theCompanys Code of Conduct. The details of the Vigil Mechanism and Whistle BlowerPolicy are given in the Corporate Governance Report and also posted on the website of theCompany.
Extract of the Annual return:
The extract of Annual Return as on March 31 2019 in the prescribed Form No. MGT-9pursuant to Section 92(3) of the Companies Act 2013 read with Rule 12(1) of the Companies(Management and Administration) Rules 2014 is attached as Annexure - III to thisReport.
Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo:
Pursuant to provisions of Section 134 of the Companies Act 2013 read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 the details of Conservation of Energy TechnologyAbsorption Foreign Exchange Earnings and Outgo are attached as Annexure IVto this Report.
Disclosure under Sexual Harassment of Women at the Workplace(Prevention Prohibition& Redressal) Act 2013:
IIn your Company all employees are of equal value. There is no discrimination betweenIndividuals at any point on the basis of race colour gender religion social originage etc. Here every individual is expected to treat his/her colleagues with respect anddignity.
In compliance of the Sexual Harassment of Women at Workplace (Prevention Prohibition& Redressal) Act 2013 (Act) and Rules made thereunder your Company hasconstituted Internal Committees (IC) for different locations of Companys units. Nocomplaint of sexual harassment was reported during the year.
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) Rules 2014 forms part of this Annual Report.
Corporate Social Responsibility:
As unfortunately your Company has been continuously incurring losses during last 5years the conditions contained in Section 135 of Companies Act 2013 are no moreapplicable. Hence there is norequirement with respect to compliance of the said section135.
Your Directors place on record gratitude to the Government Authorities FinancialInstitutions Lenders Bankers for the assistance they extended to the Company.YourDirectors also wish to place on record their thanks and appreciation for the continuingsupport and efforts of Consultants Solicitors Auditors & Shareholders and lookforward to their continued co-operation.
Your Directors would further like to thank the employees at all levels for thededication and hard work put in to surge ahead in these challenging times.
| ||PSL LIMITED |
| ||Undergoing Corporate |
| ||Insolvency Resolution |
| ||Process |
|Sd/- ||Sd/- |
|Ashok Punj ||R K Bahri |
|Managing Director ||Director |
|(Member of Suspended ||(Member of Suspended |
|Board of Directors) ||Board of Directors) |
|Place: Mumbai || |
|Date: 16thJuly 2019 || |