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The Members of
Your Directors hereby present this Thirty First (31st) Annual Report along with 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 31st March, 2019 is summarized below:
(Rs. in Crore)
|Revenue from operations||80.12||48.85||215.93||167.73|
|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 2018-19 are prepared in compliance with applicable provisions of the Companies Act, 2013 read with the Rules issued there under, applicable Accounting Standards and the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the "Listing Regulations"). These statements have been prepared on the basis of audited financial statements of your Company and of, its subsidiaries as approved by their respective Board of Directors.
Eversince Company has faced financial crises few years ago eventually resulting into admission of companys application before NCLT, the company has suffered severe losses. Since the loss was reported even during the financial year 2018-19 under review no dividend has been recommended for the said year.
Transfer to Reserves:
In view of the company having not made any profits during the Financial Year under review, no amount was transferred to general reserve account.
Transfer to Investor Education and Protection Fund:
During the year under review an amount of Rs.9,11,404/- which was part of dividend declared during the Financial Year 2010-11 and which remained unclaimed by beneficiaries was 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 company approximately 6 years ago, the company had tried to go in for restructuring of its debts through CDR mechanism. However on failure of the CDR process and later repealing of Sick Industrial Companies Act, 1985 resulting into abatement of companys reference before BIFR, the company filed a reference under Section 10 of Insolvency and Bankruptcy code before Honble NCLT. Since the said reference has been admitted by Honble NCLT on 15th February, 2019 the Corporate Insolvency Resolution Process has begun on the said date. While admitting aforesaid reference on the said date Honble NCLT has also appointed Mr. Nilesh Sharma as Interim Resolution Professional for conducting the CIRP in the matter of our company. The statutory moratorium has also commenced on 15th February, 2019 i.e. the date of Honble NCLT order.
As per the provisions of Section 17 of the Insolvency and Bankruptcy Code, the Management of the affairs of the Corporate Debtors stand vested in the Interim Resolution Professional (IRP) and the powers of the Board of Directors of the Corporate Debtor stand suspended and be exercised by the Interim Resolution Professional.
Ever since the aforesaid commencement of CIRP, IRP who has started functioning with effect from 21st February, 2019 has constituted a Committee of Creditors which keeps meeting frequently to review the progress of CIRP in the desired direction.
Out of the Expression of Interests ("EOIS") received pursuant to the Invitation for Expression of Interests from the Prospective Resolution Applicants ("PRAs") made by the IRP on 19th April 2019 and 31st May 2019, five PRAs were included 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 respective Resolution Plan by 14th August 2019. Further to the ongoing process, as the 180 days insolvency resolution process period is expiring on 14th August 2019, the Committee of Creditors ("CoC") has at its Fourth meeting held on 8th July 2019, resolved to extend the insolvency resolution process period by 90 days subject to confirmation of the same by the Honble National Company Law Tribunal. Accordingly, an application will be made by the IRP before the Honble NCLT requesting for extension of the insolvency resolution process period by 90 days.
As stated in the preceding paragraphs vis-a-vis the status of companys petition before NCLT, although the CIRP commenced on 15th February, 2019, company has been putting in its best efforts to ensure that the operations of the company are continued in the best interest of the company. Such continuation of the operations not only enables continuous functioning of companys different plants at different locations but it also enables the company to meet some of its fixed costs which are necessarily required to be incurred for keeping the company active.
Due to such sustained efforts put in by the management of the company the companys total income which was merely 61 crores in the previous Financial Year ended on 31st March, 2018 got increased to Rs.92 crores during the year under review. Such enhancement of more than 51% is adequate evidence of the sincere efforts being put in by the 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 also satisfactory 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 by Honble NCLT various secured creditors of the company through M/s. Edelweiss Assets Reconstruction Co. Ltd. filed an OA before the Debt Recovery Tribunal in New Delhi with an objective of procuring a recovery order from the said Court for the different amounts payable by the company to different secured creditors.Similarly another creditor of the company namely Indian Bank has also filed an OA to Debt Recovery Tribunal (DRT) for recovery of its debt. While after the said filing of two OAs, regular hearings in the DRT Court were being held, the company informed the said DRT Court about the admission of companys application under Section 10 of Insolvency and Bankruptcy Code by Ahmedabad bench of NCLT. As a direct result of commencement of moratorium period both the aforesaid proceedings in the DRT Court against the company have been stayed against the company. 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 in addition to the two step down subsidiary companies were performing reasonably well due to which their financial performance was also clubbed with the financial performance of the company on standalone basis so as to get the figures of consolidated performance. However, as some time back for two subsidiary companies in US namely PSL USA Inc. and PSL North America LLC Chapter-XI proceedings were initiated in US Courts in the State of Delaware in USA, the said two US subsidiaries of the company stopped functioning. Accordingly all the assets of PSL North America LLC were sold for US$ 100 Million to pay all the creditors of the said subsidiary companies. As these developments resulting into complete stoppage of activities of the said companies the financial results of all subsidiaries have not been included in the consolidated results.
Additionally two other subsidiary companies namely PSL Gas Distribution Pvt. Ltd. and PSL Infrastructure & Ports Pvt. Ltd. also could not generate any revenue due to the reasons beyond their control.Inspite of such practical difficulties and in order to comply with Regulation 24 of SEBI (LODR) Regulations, 2015 your Board has been reviewing performance of both active as well as non-active subsidiaries of the company on quarterly basis.
Pursuant to provisions of Section 129(3) of the Companies Act, 2013 the Company has prepared consolidated financial statement of the Company which forms part of this Annual Report. Further, a statement containing salient features of Financial Statements of subsidiaries (excluding the two subsidiaries in USA) in the prescribed format AOC-1 is appended to the financial statements of the Company.
Further pursuant to the provisions of section 136 of the Companies Act, 2013 the Audited Financial Statement, Consolidated Financial Statement along with relevant documents and separate audit accounts in respect of subsidiaries are available on the website of the Company.
The total present strength of Directors in the Board of your company is 9 Directors including the Managing Director, 4 Non-Executive Directors and 4 Independent Directors. In accordance with Article 122 of your companys Article of Association the Managing Director is not to be included for determining the total number of Directors who retire by rotation. Also in accordance with Section 152(6)(e) of Companies Act, 2013, the Independent Directors are also not required to be included for determining the Directors who retire by rotation.
In view of the said statutory position only 4 directors will be directors who are liable 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 is hereby recommended.
Moreover, the five year term of all the four existing Independent Directors of the Company is expiring on 25th September, 2019. Since all four of them have accorded their consent for reappointment for a further period of five years (which is permitted under the existing law), they are proposed to be reappointed subject to necessary approval of shareholders at their ensuing general meeting.
Directors Responsibility Statement:
Pursuant to the provisions contained in Section 134(3)( c ) of the Companies Act, 2013 and 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, 2019, the applicable accounting standards have been followed and there are no material departures.
b) That the Directors have selected appropriate accounting policies in consultation with Statutory Auditors and applied them consistently to give a true and fair view of the state 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 accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets 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 the Company and that such internal financial controls are adequate and were operating effectively.
f) The Directors have devised proper system to ensure compliance with the provisions of all 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, perspective, knowledge, skill regional and industry experience, cultural and geographical background, age, 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 diversity of 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 of which are given in the Corporate Governance Report that is annexed to this Report as Annexure VI. The intervening gap between any two meetings was not only within the period 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 has received necessary declaration from each Independent Directors that he meets the criteria of Independence laid down in section 149(6) of the Companies Act,2013 and Regulations 25 of SEBI (LODR) Regulations,2015.
Policy on Directors appointment, remuneration and other details:
Your Company has constituted a Nomination and Remuneration Committee which is empowered to nominate the number of members of the Board and various standing committees based on their different experience levels, knowledge and educational qualifications in different Sectors and discipline relating to the Companys business.
The remunerations paid to Executive Directors are in accordance with the recommendation of the Nomination & Remuneration Committee as well as by the prescribed law. Due care is also taken to ensure that the remuneration package is consistent with the recommended best practices in the country.
Familiarization Programme for Directors:
All new Directors including Independent Directors inducted on the Board go through a structured orientation programme. Presentations are made by Executive Directors and Senior Management giving an overview of our operations to familiarize the new Independent Directors with the Companys business operations. The new Independent Directors are given an orientation on the Companys products, group structure and subsidiaries, Board constitution and procedures, matters reserved for the Board, and the major risks and risk management strategy. Details of orientation given to the existing Independent Directors in areas of strategy, operations & governance, safety, health and environment, industry & regulatory trends, competition and future outlook are provided in the Corporate Governance Report.
For assisting the Board of Directors in discharging its responsibilities in various fields effectively & efficiently, various Standing and Non-standing Committees are constituted by the Board from time to time. The detail of all standing committees along with their composition and meeting held during the year under review are given in the Report of Corporate Governance which forms part of this Report.
Your Company has constituted a Risk Management Committee as a measure of good governance, although not mandatory on our Company. The details of the Committee and its terms of reference are set out in the Corporate Governance Report.
Your Company has adopted a Risk Management Policy, pursuant to the provisions of Section 134 of the Act, to identify and evaluate business risks and opportunities for mitigation of the same. This framework seeks to create transparency, minimize adverse impact on business objective and enhance your Companys competitive advantage. The risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.
Performance Evaluation of the Board:
Pursuant to provision of Section 178 of the Companies Act, 2013 read with Regulation 19(4) of SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015, the Board, in consultation with the Nomination and Remuneration committee has formulated a framework containing the process, criteria for the performance evaluation of the entire Board of the Company, its committees, Individual directors including Independent directors.
Evaluation of the Board is on various aspects of their functioning, such as adequacy of the constitution and composition of the Board and its committees, matters addressed in the meeting, processes followed at the meeting, Boards focus, regulatory compliance and Corporate Governance etc, are in place. Similarly for evaluation of Directors performance, various parameters like Directors profile, contribution in Board and Committee meetings, performance of duties, regulatory compliance and governance etc., are considered.
The Nomination and Remuneration committee of Company has carried out the evaluation of Whole Time Directors of the Company.
In a separate meeting of Independent Directors, performance of Non Independent Directors, performance of the Board as a whole was evaluated, taking into account the views of Executive Directors and Non- Executive Directors.
Internal Control and Adequacy:
Your Company has a proper and adequate system of Internal Control for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.
The Internal Control System is supplemented by an extensive audit conducted by well-structured Internal Audit Department of the Company. The said audit is by and large conducted on quarterly basis to review the adequacy and effectiveness of internal controls and to suggest improvement for strengthening them. Proper reviews are carried out to ensure follow-up on the audit observations.
Corporate Governance Report:
The Report on Corporate Governance as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.
The requisite certificate from M/s. V Parekh & Associates, Chartered Accountants confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid 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 the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this report and gives details of the overall industry structure & development, opportunities & threats, internal controls systems and their adequacy, financial performance with respect to operational performance, etc.
Contracts or Arrangements with related parties under Section 188(1) of the Companies Act, 2013:
With reference to Section 134(3)(h) of the Companies Act, 2013, all contracts and arrangements with related parties under Section 188(1) of the Act, entered by the Company during the financial year, were in the ordinary course of business and on an arms length basis. Further, there were no transactions with related parties which qualify as material transactions under the SEBI Listing Regulations. Thus, disclosure in form AOC-2 in 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 out in 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 by the 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 December, 2018.
1. Statutory Auditors and Auditors Report
Members may recall that at the 29th Annual General Meeting of the Company held on 28th September, 2017 member had resolved for appointment of M/s. V. Parekh & Associates, Chartered Accountants as Statutory Auditors of the Company for a continuous period of 5 years commencing from Financial Year 2017-18. Since out of said 5 years only 2 years had expired so far, M/s. V. Parekh & Associates would continue to act as Statutory Auditors for the Financial Year 2019-20 also.
The notes to the accounts referred to in Auditors Report are self-explanatory and therefore do not call for any further comments by the Board of Directors. Auditors Adverse Observations and Management Response to Auditors Adverse Observations are given 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, 2013 Mr. V.V. Deodhar a Practicing Cost Accountant was re-appointed to act as Cost Auditor of the company for the Financial year 2019-20. The consolidated fees of Rs.2 lacfor his said assignment will be required to be ratified by the members of the company at the ensuing annual 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 March 31, 2019 as required under Section 204 of the Companies Act, 2013 read with rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The Secretarial Audit Report for the financial year ended March 31, 2019 is annexed herewith 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 of Loans, Guarantees and Investments are disclosed in the Financial Statement.
During the year, the Company has not accepted any public deposits under the Companies Act, 2013.
Vigil Mechanism/Whistle Blower Policy:
The Company promotes ethical behavior in all its business activities and in line with the 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 other person dealing with the Company may report to the Chairman of the Audit committee, any instance of unethical behavior, 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 Corporate Governance Report and also posted on the website of the Company.
Extract of the Annual return:
The extract of Annual Return as on March 31, 2019 in the prescribed Form No. MGT-9, pursuant 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 this Report.
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) of the Companies (Accounts) Rules, 2014 the details of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are attached as Annexure IV to 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 between Individuals at any point on the basis of race, colour, gender, religion, social origin, age, etc. Here every individual is expected to treat his/her colleagues with respect and dignity.
In compliance of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (Act) and Rules made thereunder, your Company has constituted Internal Committees (IC) for different locations of Companys units. No complaint 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 the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in this Annual Report as Annexure V.
The particulars of employees required to be furnished pursuant to Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration 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 5 years the conditions contained in Section 135 of Companies Act, 2013 are no more applicable. Hence, there is norequirement with respect to compliance of the said section 135.
Your Directors place on record gratitude to the Government Authorities, Financial Institutions, Lenders, Bankers for the assistance they extended to the Company.Your Directors also wish to place on record their thanks and appreciation for the continuing support and efforts of Consultants, Solicitors, Auditors & Shareholders and look forward to their continued co-operation.
Your Directors would further like to thank the employees at all levels for the dedication and hard work put in to surge ahead in these challenging times.
|Ashok Punj||R K Bahri|
|(Member of Suspended||(Member of Suspended|
|Board of Directors)||Board of Directors)|
|Date: 16thJuly, 2019|