Your Directors have pleasure in presenting the 34th Annual Report on the business and operations of your Company together with the Audited Statement of Accounts for the year ended 31st March, 2014.
Your Company's performance for the financial year ended 31st March, 2014 is stated below:
(Rs In Crores)
|Year Ended||Year Ended||Year Ended||Year Ended|
|Revenue from operations (Gross)||12,972.73||11,121.88||13,875.94||12,128.47|
|Less: Excise Duty on sales||1,019.69||835.67||1,000.74||823.73|
|Revenue from Operations (Net)||11,953.04||10,286.21||12,875.20||11,304.74|
|Profit before other Income, Finance Cost,||885.66||614.97||1016.19||708.56|
|Depreciation, Exceptional Items,|
|Tax & Amortisation (EBIDTA)|
|Add: Other Income||40.06||44.13||39.10||35.04|
|Less Finance Costs||1,234.70||990.29||1,295.13||1,043.44|
|Less: Depreciation / Amortisation||687.66||701.31||728.39||740.14|
|Profit /(Loss)Before Tax & Exceptional Items||(996.64)||(1,032.50)||(968.23)||(1,039.99)|
|Add: Exceptional Items - Gain/(Loss)||(416.90)||(166.96)||(418.74)||(183.99)|
|Profit/(Loss) Before Tax||(1,413.54)||(1,199.46)||(1,386.97)||(1,223.98)|
|Less: Tax Expenses||(23.45)||(378.64)||(20.67)||(381.94)|
|Net Profit /(loss) after Tax||(1390.09)||(820.82)||(1,366.30)||(842.04)|
|Share in Profit / (Loss) of Associate||-||-||(0.38)||(0.41)|
|Net Profit / (Loss) (After Adjustment for Associate &||(1,390.09)||(820.82)||(1368.24)||(840.71)|
|Amount brought forward||-||618.69||-||530.87|
|Debenture Redemption Reserve written back||3.14||3.77||3.14||3.77|
|Amount available for Appropriation||(1,386.95)||(198.36)||(1,365.10)||(306.07)|
|Transfer to General Reserve||-||-||0.42||0.08|
|Less: Being deficit, Set off from General Reserve||430.21||(198.36)||320.92||(306.15)|
|Net surplus/(deficit) in statement of Profit & Loss||(956.74)||-||(1,044.60)||-|
The financial results of the Company during the year 2013-14 have been adversely impacted inter alia on account of Continued dumping of stainless steel flat products in India and in particular the continued influx of cheap stainless steel from China.
Continued build up of capacity in China despite the prevailing situation of excess production vis-a-vis local consumption and continued slowdown in local demand.
Adverse Duty Structure for the Domestic Stainless Steel Industry, both in terms of import duty on raw materials as well as finished goods vis-a-vis other countries and in particular with reference to China.
Increase in basic custom duty on import of Steel Scrap.
Increase in raw material cost due to volatile currency.
(A) Hisar Division
Year 2013-14, shows a little recovery and stabilization, however, was a tough year for stainless steel industry on account of surplus capacities in other countries and dumping by China all around the world. JSL, Hisar Unit is able to achieve its highest ever dispatches of 673,254 MT in the year and crossed land mark achievement of 1.0 Million Ton Stainless steel dispatches from the organization. All the production facilities are aligned to serve value added products. The total steel melting shop production was approx. 7.20 Lac ton for the year.
The focus of the Company during the year for Hisar plant was on value added products and the Company achieved highest ever dispatches of 3370 MT coins and 9,004 MT finished Razor Blade Stainless strips of 0.10 mm or less thickness razor blade steel.
During the year Bright annealing facilities in CR complex has been modified & re-commissioned to cater white good sector market in feritic grade providing unit to leverage its strength and convert to higher value added products in the coming years. Others finishing facilities like slitting and eye wrapping line in SPD has been installed to cater rising market.
(B) Odisha Division
Despite slowdown in global economy the performance of Jajpur, Odisha improved substantially as compared to last year. During the year under review Steel Melting Shop produced 4,13,863 MT as compared to 3,13,258 MT, Hot Strip Mill produced 4,00,947 MT against 3,00,435 MT, Plate Finishing Shop produced 35,634 MT against 25,169 MT and facilities in CRM produced 3,32,535 MT against 2,54,597 MT produced last year.
The stainless steel facilities at Odisha have substantially enhanced the product portfolio of the company including wider width products of up to 1650 mm. Our products were are approved by many reputed organisations like IGCAR and BHEL, Trichy for 300 series and YAMAHA Motors India for 409L grade.
Jajpur unit received accreditations like Construction Product Regulations (CPR) and Pressure Equipment Directives (PED) Certifications thereby enabling our products to sell in the European market for Construction and Pressure applications.
The production at Ferro Alloys during the year was 1,35,678 MT against 83,290 MT produced last year which is 63% more as compared to last year. In spite of challenges in procuring chromite ore from domestic sources at cost effective prices, we could achieve the production by consuming concentrated ore and high usage of imported hard lumpy ore.
Both the power plants (2X125MW) generated power 1,190.925 million units (net) as compared to 1,089.53 million units (net) in the last year. Out of the total generation 88.828 million units were exported to Hisar plant and 22.92 million units sold through exchange. The Cokeoven facility was operated under lease till Oct, 2013. Total coke produced were 2,17,193 MT.
Jindal Chromite Mine produced 28055 MT of chrome concentrate from its beneficiation plant. The mine has reached the ultimate pit bottom so far as the friable ore is concerned and there has been no friable ore production during the year. However, lumpy chrome ore production from the mines was 64086 MT. The mine dispatched 39471 MT of chrome concentrate and 50237 MT of chrome ore to our Vizag Plant during the year.
(C) Vizag Division
The Vizag Plant produces High Carbon Ferro Chrome with annual capacity of 40,000 Tons per annum. Vizag Unit uses Chrome Ore supplied from captive Jindal Chromite Mine and Transfers the output to the Hisar Plant. The division has achieved 77% of the Installed capacity by producing 30,648 Tons of High Carbon Ferro Chrome during the year 2013-14 as compared to 20,169 Tons during the preceding year. The Production is less during the year 2013-14 due to Power restrictions/holiday being imposed by the APEPDCL time to time during 2013-14.
Further Vizag Unit dispatched 28,137 tons (including of 19,900 for Job Work A/c) to JSL-Hisar during the year 2013-14 as compared to 21,069 tons Job Work A/c during the preceding year. The Job work A/c production was stopped w.e.f. 21.11.2013
Pursuant to the Reworked Corporate Debt Restructuring Scheme approved by CDR EG and Rework Letter of Approval ("Rework LOA") issued on September 18, 2012, the approved Reworked CDR package has been implemented by all CDR lenders and the Company had executed all the necessary documents.
During the year under report, the Company had arranged execution of corporate guarantee of 13 promoter group companies (out of total 30 promoter group companies) and is in discussions with the remaining promoter group companies for resolution of pending issues related to collateral security.
Restructuring / Reorganisation of the Company
The Board of Directors has constituted a 'Reorganization Committee' to explore and evaluate various options of reorganizing the Company's assets in an optimal way. The said Committee is empowered to work upon, determine and decide upon the relevant suitable structure.
During the year, the Company has received conversion notice for entire remaining 300 FCCBs amounting to USD 1.50 million and subsequently the company has allotted 547,458 fully paid equity shares.
During the quarter ended 31st March, 2014, the Company has raised Rs 100,00,00,566, by way of issue and allotment of 1,07,50,000 equity shares of Rs 2/- each and 1,58,10,440 Cumulative Compulsory Convertible Preference Shares (CCCPS) of face value of Rs 2/- each at a price of Rs 37.65 per equity share /CCCPS (including a premium of Rs 35.65 per equity share/ CCCPS) in accordance with SEBI (ICDR) Regulations, 2009 to JSL Overseas Limited, a member of promoter group, on preferential basis.
Consequently, the paid-up share capital of the Company has increased from Rs 40,81,55,094 to Rs 46,23,70,890 divided into 215,375,005 equity shares of Rs 2/- each and 1,58,10,440 Cumulative Compulsory Convertible Preference Shares (CCCPS) of Rs 2/- each.
The Board, considering the Company's performance and financial position for the year under review, has not recommended any dividend on equity shares of the Company for the year ended 31st March, 2014.
Transfer to Investor Education and Protection Fund
Pursuant to section 205C of the Companies Act, 1956, the Company has transferred unclaimed and unpaid amounts aggregating to Rs 27,19,400 to Investor Education and Protection Fund of Government of India during the year 2013-14.
Employees Stock Option Scheme
During the year under review, 4,26,024 stock options were vested in eligible employees. The disclosure, under Clause 12 of Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is set out in Annexure to this Report.
During the year, the Company's IT & SAP department has stabilized the SAP ECC 6.0 environment and has established a delivery team and mechanism for the Business Support. This Support Mechanism on SAP has enabled and empowered the Business users in continuing to conduct real-time transactions and analysis, across the locations on a single platform. It is the endeavour of the SAP team to further enhance the capabilities of the JSL SAP platform for a delightful Business User experience. The IT team of the company has also been successful in providing secure and non-disruptive IT (Hardware, Network, Software) services to your company throughout the year. Many initiatives like Exchange Migrations, Multi-platform mobile solutions, Barcoding and Management Analytics, etc have been planned & delivered.
The IT & SAP department plan to rollout further Business Enhanced support & solutions to your company in the coming year as well.
As on 31st March, 2014, your Company has 17 direct and step down subsidiaries, namely (i) Jindal Stainless UK Limited; (ii) Jindal Stainless FZE, Dubai; (iii) PT Jindal Stainless Indonesia; (iv) Jindal Stainless Italy S.r.l.; (v) Jindal Stainless Madencilik Sanayi VE Ticaret A.S., Turkey (vi) Jindal Stainless Steelway Limited; (vii) JSL Lifestyle Limited; (viii) JSL Architecture Limited; (ix) Green Delhi BQS Limited; (x) JSL Media Limited; (xi) JSL Group Holdings Pte. Ltd., Singapore; (xii) JSL Ventures
Pte. Ltd., Singapore; (xiii) JSL Europe S.A., Switzerland; (xiv) JSL Minerals & Metals S.A., Switzerland; (xv) Jindal Aceros Inoxidables S. L., Spain; (xvi) JSL Logistics Limited; and (xvii) Iberjindal S.L., Spain.
Pursuant to the general circular No. 51/12/2007-CL-III dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, the balance sheet, profit and loss account and other documents of the subsidiary companies are not attached with the balance sheet of your Company. The annual accounts and other related documents of the subsidiaries are available at the website of the Company and will be made available to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will be kept open for inspection by any shareholder at the registered office of the Company during normal business hours. The consolidated financial statements of the Company include the financial results of all the subsidiary companies.
The members, if they desire, may write to Company Secretary at O.P. Jindal Marg, Hisar - 125005 (Haryana) to obtain the copy of the annual report of the subsidiary companies.
The Board of Directors has appointed Mr. Rajinder Parkash Jindal as an additional director and designated him as Executive Director with effect from 6th January, 2014. The Board of Directors has also appointed Mr. Girish Sharma as an additional director with effect from 29th May, 2014. The Board has also approved appointment and terms of remuneration of Mr. Rajinder Parkash Jindal as Whole Time Director of the Company, subject to the approval of the Shareholders. The said appointment and remuneration of Mr. Rajinder Parkash Jindal and appointment of Mr. Girish Sharma will be placed before the shareholder for their approval.
Smt. Savitri Jindal, Chairperson has resigned from the Board of Directors with effect from 28th October, 2013. The Board has conferred upon her the title of "Chairperson Emeritus" with effect from 28th October, 2013 and she will continue to provide her guidance on future endeavors of the Company.
Mr. Uday Kumar Chaturvedi, Mr. Rajeev Bakshi and Mr. James Alistair Kirkland Cochrane resigned from the Board of Directors of the Company w.e.f. 31st December, 2013, 20th February, 2014 and 24th February, 2014 respectively. The Board places on record its sincere appreciation for the valuable contributions made by them during their tenure.
Mr. Naveen Jindal and Mr. Jitender P. Verma, who retires by rotation at the ensuing Annual General Meeting under the erstwhile provisions of the Companies Act, 1956 and being eligible offer themselves for reappointment.
Brief resume of the abovementioned Directors, nature of their expertise in specific functional areas, details of Directorship in other companies and the membership/ chairmanship of committees of the board, as stipulated under Clause 49 of the listing agreement with the stock exchanges, are given in the Notice forming part of the annual report.
The Company has accepted/renewed deposits amounting to Rs 13,69,70,000 during the year under review. There were no overdue deposits on 31st March, 2014, except Rs 1,04,76,000 which remain unclaimed. The Company has stopped accepting / renewing any fresh deposits with effect from 1st April, 2014.
Particulars Regarding the Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The Information relating to energy conservation, technology absorption, foreign exchange earnings and outgo required to be disclosed under The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure-1 forming part of this report.
Particulars of Employees
As required by the provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 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.
Auditors and Auditors' Report
M/s. Lodha & Co. and M/s. S.S. Kothari Mehta & Co., joint statutory auditors of the Company, hold office until the conclusion of the ensuing annual general meeting and are eligible for re-appointment. The Company has received letters from them with their willingness to continue as auditors of the Company, if appointed and have confirmed that the said appointment, if made,would be within the limits prescribed under the Companies Act, 2013 and that they are not disqualified for re-appointment.
In terms of Rule 6 of the Companies (Audit and Auditors) Rules, 2014, M/s. Lodha & Co. and M/s. S.S. Kothari Mehta & Co. having held office as Joint Statutory Auditors and M/s. N.C. Aggarwal & Co. having held office of Branch Auditors of Vizag division for a period of more than 10 years prior to the commencement of the Companies Act, 2013, are eligible to be appointed as Auditors for a period of only three more years, that is until the conclusion of 37th Annual General Meeting of the Company.
The notes to the accounts referred to in the auditors' report are self-explanatory and, therefore, do not call for any further comments.
In accordance with the Order dated 30th June, 2011 issued by the Ministry of Corporate Affairs pursuant to Section 233B of the Companies Act, 1956, your Company is required to get its cost accounting records audited by a Cost Auditor and has accordingly appointed M/s. Ramanath Iyer & Co., Cost Accountants, for this purpose for FY 2013-14. The Cost Audit for FY 2012-13 was completed within specified time and report was filed with the Central Government.
The Board of Directors at its meeting held on 29th May, 2014 has on the recommendation of the Audit Committee, re-appointed M/s. Ramanath Iyer & Co., Cost Accountants for conducting the audit of cost audit records in respect of Steel business of the Company for the financial year 2014-15. The said appointment is subject to ratification of the members in terms of Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014.
Directors' Responsibility Statement
Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to directors' responsibility statement, it is hereby confirmed that:
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed;
(b) the Directors 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 as at 31st March, 2014 and of the profit of the Company for the year ended on that date;
(c) the Directors 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; and
(d) the Directors have prepared the annual accounts of the Company on a 'going concern' basis. Corporate Governance
A separate section on corporate governance and a certificate from the practicing company secretary regarding compliance of conditions of corporate governance as stipulated under clause 49 of the listing agreement with the stock exchanges, forms part of the annual report.
Management Discussion and Analysis Report
Management discussion and analysis report as required under the listing agreements with the stock exchanges is enclosed with this report.
Your Directors would like to express their gratitude for the valuable assistance and co-operation received from shareholders, banks, government authorities, customers and vendors. Your Directors also wish to place on record their appreciation for the committed services of all the employees of the Company.
|For and on behalf of the Board of Directors|
|Chairman and Managing Director|
|Place: New Delhi|
|Date : 29th May, 2014|
Particulars required under the companies (Disclosure of particulars in the report of board of directors) rules, 1988.
a) Conservation of energy
Energy Conservation measures taken:-
a. Audit of thermal and auxiliary equipments & harmonic study.
b. Installed higher efficiency pumps with VVVF Drives in Steel Melting shop.
c. Installed reactors & capacitors at 11kv to improve power factor.
d. Improved combustion efficiency in Annealing furnaces and bell annealing furnaces.
e. Energy consumption in air / N cum by 8% through optimization of air lines & compressors.
b) Additional investment and proposals, if any being implemented for reduction in consumption of energy.
a. Laying of N2 line from O2 plant to Cracked NH3 manufacturing plant saved compressor energy.
b. New high efficiency pumps and VVVF Drives.
c) Impact of above measures
a. Improved power factor.
b. Reduced energy consumption per ton of steel.
a) Conservation of energy
Energy Conservation measures taken:-
1. Hot Strip Mill Energy Conservation
(a) Modification in Descaling Water System with replacement of nozzles supporting less water flow and more impact leading to reduction in Motor Power Consumption during Operation.
(b) Work Roll Cooling modified with reduced Motor operation from 03 to 02 Nos.; achieved through impeller trimming and improving pump efficiency.
(c) Reduced Motor Power Consumption in Laminar Cooling Water System by lowering the motor power rating as satisfactory to meet requirement.
2. Cold Rolling Mill Energy Conservation
(a) Improvement in Operation Practices through 41 Energy Saving Projects
(b) Installation of Reactive Power Compensation devices and improvement in Power Factor and Reduction in Power Demand.
3. Captive Power Plant Energy Conservation
(a) Impeller Trimming for Cooling Water Pump (02 No) as satisfactory to meet requirement.
(b) Modification in Compressed Air line, Impeller trimming leading to operation of 02 Compressor instead of 03.
4. Ferro Alloy Plant Energy Conservation
(a) Reduction in Power Rating of Root Blowers, Jacket Cooling Pump and Compressors as sufficient to meet the requirement.
(b) Efficient Utilisation of Furnace Oil & Waste Oil in Briquetting Plant; Optimisation of Use of Dryer, limiting 4.8-5 kg of Oil Consumption per MT of Gross Briquette Production
(c) Increase in Capacity Utilisation of Ferro Alloy Furnaces resulting into reduction in Auxiliary Consumption. FORM - "A"
FORM FOR DISCLOSURE OF PARTICULARS TO CONSERVATION OF ENERGY (Excluding Ferro Alloys Division being not covered)
|A. POWER AND FUEL CONSUMPTION|
|Units (in '000 Kwh)*||7,93,979.16||7,76,966.00|
|Total Amount (Rs In Lacs)||35,827.12||38,461.23|
|Rate/Unit (Rs )||4.51||4.95|
|* Net of exports to HSEB|
|(b) Own Generation|
|(i) Through diesel generator|
|Units (in '000 Kwh)# Unit per Litre of Oil||573.88 4.66||5,799.67 3.66|
|Cost/Unit (Rs )||248.05||45.96|
|# Excluding diesel generator auxiliary consumption|
|(ii) Through Thermal Coal|
|Units (in '000 Kwh)||12,26,093.02||12,66,554.00|
|Unit per Litre of Oil||1.05||1.19|
|Cost/Unit (Rs )||3.51||5.11|