manufacture of hi-strength pioneers€¦ · automatic ultrasonic testing machine. through this...

PSL Pioneers

Manufacture of H

i-Strength

API 5L X-80 Pipes

22nd ANNUAL REPORT2009-2010

PSL LIMITED

Some Pictures of the Production of High-Strength API 5L X-80 Pipes

Formed pipe at Pay-off Table

48”ODx 17.5mm WT Pipe under formation

Some Pictures of the Production of High-Strength API 5L X-80 Pipes

Formed pipe at Pay-off Table

48”ODx 17.5mm WT Pipe under formation

Yet Another Bold Initiative…

High-Strength API 5L X-80 PipesThe manufacture of

PSL :

PSL, after achieving the important milestone a few years ago of being

the single largest Pipe Manufacturer in India, has now boldly achieved

another distinction by initiating the production of High-Strength API 5L

X-80 Pipes. Coupling this major technological advancement with the

earlier achievement of crossing the mark of One Million Metric Tonnes

annual production capacity, supports the claim of being “the First in

India” on both occasions.A view of the Pipe Mill

Pioneering the introduction of High-Strength API 5L X-80 Steel Pipes of up

to 25mm thickness that can withstand enormous pressure assists in not only

serving the environment, but also helps customers in reducing costs. Such

an initiative has again proved that, as in the past, PSL’s quest for excellence

continues. The utilization of API 5L X70 or 5L X-80 Steel within pipelines, as

recommended by the American Petroleum Institute, makes the pipes well

suited for Cross Country Gas Pipelines that traverse long distances. In

commencing production of API 5L X80 pipes, which reduce the requirement

of steel tonnage consumed by around 15%, PSL has facilitated customers

in reducing the cost of developing pipelines within India, and sustaining the

environment by reducing consumption of Iron Ore.

End Bevelling Machine

PSL is confident that after the successful supply of 48” ODx17.5mm API 5L

X-80 Steel pipes, manufactured for a vast stretch comprising 200 KMs of

the Dahej Vijaypur Pipeline Up-gradation Project of GAIL (India) Ltd., the

company will bag many more such orders in the near future.

Automatic Ultrasonic Testing Machine

Through this major development, PSL’s belief that it will continue to play an important role in shaping the India of tomorrow is once again reaffirmed.

Successful manufacture of these Pipes for the first time in India has once again proved that

“Perfection is PSL’s Motto” “Excellence is our Creed”

API 5L X-80 Steel Pipes

122nd Annual Report 2009-10

Corporate Information ................................................................................................................................... 2

PSL’s Existence ............................................................................................................................................... 3

The Growth Pattern ........................................................................................................................................ 4

Key Financial Parameters ................................................................................................................................ 5

Notice ............................................................................................................................................................. 6

Directors’ Report ......................................................................................................................................... 11

Corporate Governance Report ..................................................................................................................... 16

Management Discussion and Analysis Report ............................................................................................... 23

Auditor Certificate on Corporate Governance .............................................................................................. 25

CEO/CFO Certification ................................................................................................................................ 26

STANDALONE STATEMENTS

Auditors’ Report ........................................................................................................................................... 27

Balance Sheet .............................................................................................................................................. 30

Profit & Loss Account ................................................................................................................................... 31

Schedules .................................................................................................................................................... 32

Cash Flow Statement ................................................................................................................................... 46

Balance Sheet Abstract ................................................................................................................................ 47

Statement of Subsidiary Companies u/s 212 of the Companies Act,1956 ................................................... 48

CONSOLIDATED STATEMENTS

Auditors’ Report ........................................................................................................................................... 51

Balance Sheet ............................................................................................................................................... 52

Profit & Loss Account .................................................................................................................................. 53

Schedules .................................................................................................................................................... 54

Cash Flow Statement .................................................................................................................................... 70

SUBSIDIARY COMPANIES STATEMENTS

PSL Corrosion Control Services Limited’s

Directors’ Report ........................................................................................................................................ 73

Auditors’ Report ........................................................................................................................................... 76

Balance Sheet ............................................................................................................................................... 78

Profit & Loss Account .................................................................................................................................. 79

Schedules ................................................................................................................................................... 80

Balance Sheet Abstract ................................................................................................................................. 88

Pipeline Systems Limited’s

Auditors’ Report .......................................................................................................................................... 91

Consolidated Accounts ................................................................................................................................ 92

PSL USA INC’s

Independent Auditors’ Report ...................................................................................................................... 99

Consolidated Accounts ............................................................................................................................... 100

PSL LIMITED22nd ANNUAL REPORT 2009-10

CONTENTS

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BOARD OF DIRECTORS Ashok Punj ------------------ Managing DirectorAlok PunjM. M. MathurG. S. SauhtaR. K. BahriD. N. SehgalS. P. BhatiaG. Gehani ---- Director & Company SecretaryC. K. GoelN. C. SharmaPrakash V. ApteAshok SharmaHarry H. ShourieParesh J. ShahHarsh Pateria

COMPANY SECRETARY & COMPLIANCE OFFICER G. Gehani

CHIEF FINANCE OFFICER K. Ramanathan

STATUTORY AUDITORS Suresh C. Mathur & Co.Chartered Accountants, New Delhi.

SHARE TRANSFER AGENTS Karvy Computershare Private Limited17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081

SUBSIDIARY COMPANIES IN INDIA — PSL Corrosion Control Services LimitedSurvey No. 377/2, Zari Cause Way Road,Kachigam, Daman,Union Territory of Daman & Diu

ABROAD — Pipeline Systems LimitedC/o IFS, IFS Court, 28 Cybercity, Ebene, Mauritius

— PSL USA INCCorporation Trust Center, 1209, Orange Street,Wilmington, New Castle, 19801, Delaware, USA

— PSL North America, LLCCorporation Trust Center1209, Orange Street, Wilmington, Delaware

— PSL FZEP.O. Box No. 42131,Inner Harbour Plot No. HJ - 02Hamriyah Free Zone, Sharjah, U.A.E.

PRINCIPAL BANKERS — ICICI Bank Limited— State Bank of India— Bank of Baroda— Standard Chartered Bank— Export Import Bank of India— IDBI Bank Limited— Axis Bank Limited— Syndicate Bank— Canara Bank— Indian Overseas Bank— Union Bank of India— ING Vysya Bank Limited— Yes Bank Limited— DBS Bank Limited— Deutsche Bank— Indian Bank— Kotak Mahindra Bank— Development Credit Bank

CORPORATE

INFORMATION

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REGISTERED OFFICE — Kachigam, Daman,Union Territory of Daman & Diu - 396 210

CORPORATE OFFICE — PSL Towers,615, Makwana Road, Marol, Andheri ( E )Mumbai - 400 059

LEGAL & SECRETARIAL OFFICE — 3rd Floor, ‘Punj House’,M-13 A, Connaught Circus,New Delhi - 110 001.

MARKETING OFFICES

- In Western India — PSL Towers,615, Makwana Road, Marol, Andheri ( E )Mumbai - 400 059

- In Northern India — “PSL HOUSE”B-96, Greater Kailash – I,New Delhi - 110 048.

- In Southern India — Meridian House, 8/2, Montieth Lane,Egmore, Chennai - 600008.

PROJECTS OFFICE — 3rd Floor, ‘Punj House’,M-13 A, Connaught Circus,New Delhi - 110 001.

PLANTS

- Within Indian Boundaries — Survey No. 35, 37, 41, 301/1 and 308/1 & 2,Varsana & Nani Chirai, Anjar & Bhachau, Kutch, Gujarat

— Survey No. 38/1, 38/2, 39, 40 & 42Varsana Anjar, Kutch, Gujarat

— East of N.H -8 A, Kandla Road,Gandhidham, Kutch, Gujarat

— Plot No.4 & 5, Sector 12/B, Kandla Road,Gandhidham, Kutch, Gujarat

— Kachigam, Daman,Union Territory of Daman & Diu - 396210

— No. 22 Vaiyavoor, Maduranthakam TalukKancheepuram Distt., Tamil Nadu

— Survey No. 207, Industrial Development AreaGurrampalem, Pendurthi,Vishakhapatnam, Andhra Pradesh

— Plot 2A, APIIC, Layout Phase-II,Peddapuram - 533437, KakinadaDistt. East Godavari, Andhra Pradesh

— Survery No.124, Khadat,Pilwai, Towards Mahudi RoadTaluka - MansaDistt. Gandhinagar, Gujarat

— Khasra No. 46, 48, 73, 82.Village - Gaduda, Tehsil - PhagiJaipur, Rajasthan

- Across the Seas — 13092, Sea Plane Road, Bay St. Louis,Mississippi 39520 U.S.A.

— Post Box 42131, Inner Harbour,Plot No. HJ 02, Hamriyah Free Trade Zone,Sharjah, UAE

EXISTENCE

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Highlights2009 - 10

TurnoverRs. 2810.65 Crs.

(US $ 622.65 Million)

Operating ProfitRs. 292.63 Crs.


Gross ProfitRs. 183.64 Crs.


Profit Before TaxRs. 117.29 Crs.


Profit After TaxRs. 88.29 Crs.


Total AssetsRs. 2797.47 Crs.


2008-09 2009-102007-08

400000

350000

300000

250000

200000

150000

100000

50000

0

Gradual Growth of Total Income

Rs.

in L

acs

During the Year(s)

* The data for this financial year has been annualised since the said financial yearcomprised of 18 months period

Consistent Dividend

2008-09 2009-102007-08

60

50

40

30

20

10

0

During the Year(s)

In P

erce

ntag

e

Operating Profit -10 Years’ Profile

2008-09 2009-102007-08

30000

25000

20000

15000

10000

5000

0

During the Year(s)

Rs.

in L

acs

THE

GROWTH

PATTERN

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(Rs. in Lacs)

PARTICULARS 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2000-01* 1999-00

Total Income 281065.51 354995.04 226176.61 168561.37 156338.22 167745.16 92942.05 42516.39 45371.54 26054.06

Total Expenditure 251802.24 326543.53 202855.41 151199.79 141409.34 157765.84 84505.77 36261.96 39665.00 21341.12

Operating Profit 29263.27 28451.51 23321.20 17361.58 14928.90 9979.32 8436.28 6254.43 5706.54 4712.94

Interest 10898.71 10071.93 5785.56 4349.77 4852.93 3242.80 2947.22 2931.39 2104.60 1608.77

Gross Profit 18364.55 18379.58 17535.64 13011.81 10075.97 6736.52 5489.06 3323.04 3601.93 3104.17

Depreciation 6634.81 5706.64 5119.60 4392.29 3385.96 2335.48 1638.86 1601.42 1125.67 1102.62

Profit Before Tax 11729.74 12672.93 12416.04 8619.52 6690.01 4401.04 3850.19 1721.62 2476.26 2001.54

Taxation 2900.00 4080.00 3939.00 2404.00 1771.00 1200.00 1050.00 250.00 411.33 265.00

Profit After Tax 8829.75 8592.93 8477.04 6215.52 4919.01 3201.04 2800.19 1471.62 2064.92 1736.54

Dividend Rate 40%# 50% 50% 50% 50% 45% 50% 40% 40% 35%

Equity 5333.20 4258.19 4258.13 3406.07 3195.45 2892.07 2892.02 2892.02 2892.02 2892.02

Reserves 78509.37 58593.49 52298.00 30213.64 23051.50 13866.66 13861.20 13303.66 13144.16 12108.96

* The data for this financial year has been annualised since the said financial year comprised of 18 monthsperiod.

# 25% already paid as Interim Dividend in May 2010 whereas balance 15% already recommended by Boardshall be Paid after Shareholder’s approval in forthcoming Annual General Meeting.

Broad Financial Parameters of Last Decade

KEY

FINANCIAL

PARAMETERS

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Notice

ToThe Members ofPSL LIMITED

Notice is hereby given that Twenty Second Annual General Meeting of the Company will be held on Thursday, the 30th dayof September, 2010 at 9.30 A.M. at Hotel “Cidade De Daman” at Devka Beach, Nani Daman- 396210, in Union Territory ofDaman & Diu, to transact the following business:-

ORDINARY BUSINESS

1. To receive, consider and adopt the Audited Balance Sheet of the Company as on 31st March, 2010, the Profit & LossAccount for the year ended on that date and the Reports of Board of Directors and Auditors thereon.

2. To declare Dividend on Equity Shares for the year ended on 31st March, 2010.

3. To appoint a Director in place of Shri S. P. Bhatia, who retires from the said office of Director, by rotation and beingeligible, offers himself for re-appointment.

4. To appoint a Director in place of Shri C. K. Goel, who retires from the said office of Director, by rotation and beingeligible, offers himself for re-appointment.

5. To appoint a Director in place of Shri G. Gehani, who retires from the said office of Director, by rotation and beingeligible, offers himself for re-appointment.

6. To appoint a Director in place of Shri Paresh J. Shah, who retires from the said office of Director, by rotation and beingeligible, offers himself for re-appointment.

7. To appoint a Director in place of Shri Harsh Pateria, who retires from the said office of Director, by rotation and beingeligible, offers himself for re-appointment.

8. To appoint Statutory Auditors for holding the office from the conclusion of this Annual General Meeting until theconclusion of the next Annual General Meeting and to fix their remuneration and in this connection to consider and ifthought fit to pass with or without modification(s) the following Resolution as an “Ordinary Resolution”.

“RESOLVED THAT M/s. Suresh C. Mathur & Co., Chartered Accountants, having their office at 64, Regal Building,Connaught Place, New Delhi - 110 001 be and are hereby appointed as Statutory Auditors of the Company for theFinancial Year 2010-11 to hold office from the conclusion of this Annual General Meeting until the conclusion of thenext Annual General Meeting.”

“RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to finalise theremuneration payable together with out of pocket expenses, if any, to the so appointed Auditors.”

SPECIAL BUSINESS

9. PLACE OF PROFIT

To consider and if thought fit to pass with or without modification(s), the following Resolution as a “Special Resolution”.

“RESOLVED THAT pursuant to Section 314(1B) and other applicable provisions of the Companies Act, 1956, the Companyhereby accords its consent, subject to the approval of the Central Government, to Shri Keshav Punj, son of Shri AshokPunj, Managing Director of the Company for holding and continuing to hold office or place of profit in the Company, ata monthly remuneration as mentioned in the Explanatory statement together with the usual allowances and benefits,amenities and facilities including accommodation, medical facilities, leave travel allowance, personal accident insurance,superannuation fund, retiring gratuity and provident fund benefits applicable to other employees occupying a similarpost or posts within the same salary scale or grade, with authority to the Board of Directors to sanction at their discretion,increment(s) within the grade as they may deem fit and proper and to sanction at their discretion and in due course,promotion to the next higher grade or grades together with the usual allowances and benefits as applicable to suchgrade or grades and to give increments within that grade or grades as they may deem fit and proper.”

“RESOLVED FURTHER THAT remuneration payable to, Shri Keshav Punj, as aforesaid, will be subject to such modification(s) as the Central Government may suggest or require, which the Directors are hereby authorised to accept on behalf ofthe Company and which may be acceptable to the incumbent and are not less favorable to the Company.”

10. RATIFICATION OF ISSUANCE OF CORPORATE GUARANTEE TO ICICI BANK

To consider and if thought fit to pass with or without modification(s), the following Resolution as a “Special Resolution”

“RESOLVED THAT in accordance with Section 372A and any other applicable provisions of the Companies Act, 1956or other statutory requirements which may be relevant in this connection, an approval of the Company be and is hereby

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accorded and is deemed to have been so accorded for issuance of an unconditional and irrevocable corporate guaranteeby the Company in favour of ICICI Bank Limited (ICICI Bank) who, at the request of PSL North America LLC, hadsanctioned a non-fund based credit facility of USD 20 million (in addition to the corporate guarantee for USD 30 millionalready provided for the facilities availed earlier) sanctioned by the said ICICI Bank to PSL North America LLC, hereinafterreferred to as “PSL NA”, for business requirements of the said company which will now result in the said companyavailing the complete aggregated facilities for USD 50 million sanctioned by the said bank vide its initial Credit ArrangementLetter (CAL) bearing no.89/IBGNYK/15903 dated 8th January, 2009, guaranteeing the due repayment of the said financialfacility by the said Company together with payment of interest and other monies payable by the borrower to ICICI Bankin respect of the said Credit.”

“RESOLVED FURTHER THAT the issuance and extension of the said Corporate Guarantees by the Company be and ishereby ratified.”

By Order of the Board of Directors ofRegd. Office :- PSL LIMITEDKachigam, DamanUnion Territory of Sd/-Daman & Diu - 396 210 (G. GEHANI)

Director &Dated : 30th July, 2010 Company Secretary

Notice

NOTES:

1. An Explanatory Statement pursuant to Section 173 (2) of the Companies Act, 1956 in respect of matters covered under“Special Business” is annexed hereto.

2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING IS ENTITLED TO APPOINT APROXY TO ATTEND THE MEETING AND VOTE ON A POLL, IF ANY, INSTEAD OF HIMSELF/HERSELF AND THEPROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXY FORM DULY FILLED IN MUST REACH THE REGISTEREDOFFICE OF THE COMPANY AT LEAST FORTY-EIGHT HOURS BEFORE THE MEETING. A BLANK PROXY FORM ISANNEXED TO THIS NOTICE.

3. The Register of Members and Share Transfer Books of the Company will remain closed from the 24th day of September,2010 to 30th day of September, 2010 (both days inclusive) for determining the names of members eligible for dividendon Equity Shares, if any, declared at the meeting. Dividend, if approved at the meeting will be paid to those memberswhose names appears as:-

(a) Beneficial owners, as at the end of business hours on 23rd day of September, 2010 as per lists to be furnished byNSDL and CDSL in respect of shares held in electronic form and;

(b) Members in the Register of Members as on 30th day of September, 2010 after giving effect to valid transfer requestsreceived before the close of business hours on 23rd September, 2010.

4. The Final Dividend of Rs. 1.50 per share recommended by the Board of Directors of the Company in its meeting held on29th May, 2010 is in addition to the Interim Dividend of Rs. 2.50 on each fully paid-up share declared and paid by theBoard in May, 2010.

5. Members who have still not paid allotment money (as applicable) are requested to pay the outstanding amount includingthe Interest calculated on outstanding allotment money at the rate of 18% per annum from the last date of payment till31st March, 2001 and thereafter, at the rate of 9% p.a. from 1st April, 2001 till the actual date of payment, by a DemandDraft drawn in favour of “PSL PUBLIC ISSUE-ALLOTMENT MONEY”, payable at Mumbai.

6. Members desirous of getting any information in respect of Accounts of the Company and proposed Resolutions arerequested to send their queries in writing to the Company at its Registered Office, so as to reach at least seven daysbefore the date of the Meeting, to enable the company to furnish the required information at the Meeting.

7. For convenience of Members, an attendance slip is annexed to the proxy form. Members/Proxies are requested to affixtheir signatures at the space provided therein and hand over the attendance slip at the venue of the meeting. The Proxyof a Member should mark on the attendance slip as “Proxy”.

8. Members/Proxies attending the meeting are requested to bring their copy of the Annual Report for reference at theMeeting.

9. Members still holding physical shares are requested to send their Permanent Account Number (PAN) details whilelodging their requests to the Company/Share Registrars for transfer of their said physical shares, failing which the transferrequests shall be rejected and the submitted transfer documents will be returned to the Lodger/Buyer.

10. As required by Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the relevant details ofShri S. P. Bhatia, Shri C. K. Goel, Shri G. Gehani, Shri Paresh J. Shah and Shri Harsh Pateria, Directors, are annexedherewith.

11. Shareholders who have not encashed/received dividend for the financial year ended on 31st March, 2003 (Final Dividend)to 31st March 2010 (Interim Dividend) may please approach the Company for payment of such unpaid dividend.

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EXPLANATORY STATEMENT( In Compliance of Section 173(2) of the Companies Act, 1956 )

ITEM NO.9 : PLACE OF PROFIT

Pursuant to the provisions of Section 314 and other applicable provisions, if any, of the Companies Act, 1956, the consent ofthe Company was accorded sometime back by way of Special Resolutions passed in that behalf in earlier General Meetingsfor appointment of Shri Keshav Punj, S/o of Shri Ashok Punj, Managing Director of the Company as an “Executive”.

Since his appointment he has indeed contributed to the affairs of the company with adequate zeal, maturity and necessaryenthusiasm ultimately resulting in success of the concerned matters. It is, therefore, proposed that he be suitably rewardedwith enhancement in his remuneration.

Keeping in view the overall salary structure in the industry, the pay scales at various levels in the Company havesince been revised. In view of such revisions, the Basic Salary of Shri Keshav Punj is proposed to be fixed in the grade ofRs. 40000-6000-70000 w.e.f. 1st April, 2010. In addition to the Basic Salary, Shri Keshav Punj will be entitled to the allowances,perquisites and benefits as per rules of the Company in vogue, the value whereof will not exceed twice the annual salary.

Since Shri Ashok Punj, Managing Director and Shri Alok Punj, Director are interested in the holding of Office or place ofprofit carrying a total monthly remuneration in excess of Rs. 50,000 by their aforesaid relative, the prior consent of themembers by a Special Resolution and approval of the Central Government is required in terms of Section 314(1B) of theCompanies Act, 1956. After the consent of the members is so obtained, an application will be made to the Central Governmentfor its approval. The payment of aforesaid remuneration to the above named incumbent will commence from the day of theCentral Government approval.

The Board of Directors recommends the Resolution for your approval.

Hence, the Resolution at Item No. 9.

Except Shri Ashok Punj and Shri Alok Punj being the relatives of Shri Keshav Punj, no other Director is in any way concernedor interested in the said Resolution.

ITEM NO.10 : RATIFICATION OF ISSUANCE OF CORPORATE GUARANTEE TO ICICI BANK

PSL North America LLC, a Subsidiary and Joint Venture of the Company, was incorporated on 9th November, 2006 under thelaws of State of Delaware, USA. As the objective of incorporation of the said Company in US was to set up a full fledgedmanufacturing facility to manufacture Steel Pipes up to 24 meter length in US itself, in a very short time of incorporation,adequate land was taken on long lease in the State of Mississippi, USA. Immediately thereafter, erection of the state of the artPlant was achieved in a record time. Since the Company was fortunate enough to bag prestigious orders even before erectionof its Plant, the production had to be commenced at the earliest, thereby necessitating the arrangement of adequate WorkingCapital.

Accordingly, in response to the request of the Company, the New York Branch of ICICI Bank sanctioned Non-Fund BasedCredit Facilities aggregating to US$ 50 Million on 8th January, 2009. However, the Company agreed to avail the subjectfacilities aggregating to only US$ 30.00 Million.

As the said Subsidiary Company comparatively a new entity in US, had established its first manufacturing facility, the abovelender namely ICICI Bank agreed to sanction the aforesaid Non Fund Based Credit Facilities up to US$ 50 Million subject tothe holding Company (PSL Ltd.) agreeing to issue Corporate Guarantee in favour of the said Bank to Guarantee the re-payment due by PSL North America LLC.

The Board of Directors of the company, accorded its approval for issuance of Corporate Guarantee to ICICI Bank, New YorkBranch to secure the non-fund based credit facilities of USD 20 million (in addition to corporate guarantee for USD 30million already provided) for facilities availed earlier in accordance with the approval of shareholders given in the lastAnnual General Meeting of the company held on 21st July, 2009.

As Section 372A of the Companies Act, 1956, permits the Board of Directors of the Company to give such CorporateGuarantees, provided the Board’s decision is confirmed by way of a Resolution passed by the members of the Company in aGeneral Meeting of the Company within a period of twelve months from the decision of the Board to this effect.

Hence, the Resolution at Item No.10.

Other than Shri Ashok Punj, Shri Alok Punj and Shri G. S. Sauhta, who are Directors on the Board of PSL North America LLC,no other Director is concerned or interested in the said Item No.10.

By Order of the Board of Directors ofRegd. Office :- PSL LIMITEDKachigam, DamanUnion Territory of Sd/-Daman & Diu - 396 210 (G. GEHANI)

Director &Dated : 30th July, 2010 Company Secretary

Explanatory Statement

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Particulars Shri G. Gehani

Date of Birth

Qualification

Expertise in specificfunctional area

Directorship held inother companies

Brief Resume

27th January, 1953

FCS, M.Com, LL.B, DPM & IR and DCL & SP

Legal & Secretarial

Nil

Shri G.Gehani, born in 1953, is a fellow Member of Institute of Company Secretary of India (ICSI) and has to hiscredit a few other degrees and Diplomas in different disciplines such as M.Com, LLB, DPM & IR and DCL & SP.Since completion of his Company Secretaryship way back in 1978 and prior to joining PSL in 1991 he worked atvarious Senior positions in Public and Private Sector Companies such as Pawan Hans, CCIC, Taj Group of Hotelsetc.

Hence, out of total 31 years of post qualification experience, Shri Gehani has been heading the Legal & SecretarialDepartment of PSL Limited for more than 19 years now. He had effectively contributed in successful completion ofCompany’s maiden IPO, FCCB issue, Right issue and few Preferential Allotments which directly helped in raisingadequate funds for establishment of new Production Facilities.

Shri Gehani has been associated with various Professional and Social Organisations of the country for last 23 yearsand has held Senior responsible positions in some of them.

Additional Information

Particulars Shri C.K. Goel

Date of Birth

Qualification



Brief Resume

16th November, 1957

Diploma in Mech. Engg., Business Management, Refrigeration and Air Conditioning

General Management & Production

NIL

Shri C.K. Goel, born in 1957 has a post graduate diploma in Mechanical Engineering with specialization apart froma Diploma in Business Management, Refrigeration & Air Conditioning. He had joined PSL way back in 1978 and hasnow completed 31 years of working in responsible positions. Before taking over as Incharge of an important productionfacility at Varsana in Gujarat, which includes the latest Two-Step Helical Spiral Pipe Mill, Shri Goel has handled andheaded various Projects and Operations in Company’s different plants.

ADDITIONAL INFORMATION

Particulars Shri S.P. Bhatia

Date of Birth

Qualification


Directorship held inother Companies

Brief Resume

18th December, 1951

B.Sc. Engg. (Mechanical)

Management of various Projects

Punj Corporation Private Limited

Shri S.P. Bhatia, born in 1951 is a BSc. Engg. (Mechanical) from Regional Engineering College, Kurukshetra. ShriBhatia is working with the Group since 1983 and has served in different capacities in various divisions of the Groupsuch as Insulation, Pipe Coating, Pipe Making, etc. Shri Bhatia, as head of the Projects Department, has beenresponsible for setting up of various projects and facilities at different locations of the Company in India. He has alsobeen responsible for acquiring know-how on behalf of PSL from Byard Engg. Consultants – UK, UMRAN – Turkeyand Dr. G.Valle- Italy, PWS- Germany & S.I.M- Korea for Pipe Making and Induction Bending Technologies.

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Additional Information

Particulars Shri Harsh Pateria

Date of Birth

Qualification



Brief Resume

24th September,1958

B.Sc

Effective Management of various business orgainsations, involved in diverse activities.

Primo Pick N. Pack Limited (Chairman)

Shri Harsh Pateria born in 1958, after his academic attainments promoted a company under the name and style ofPrimo Pick N. Pack Limited, which was incorporated in 1985. Additionally, he started getting involved in few otherbusiness activities. Since then he has very ably managed the various business ventures and has acquired adequateexposure in company’s management involving different activities associated with scheduling, planning, organisingand implementing the policies of the organisations in an optimal manner. Considering his vast exposure as anindustrialist, Shri Harsh Pateria was co-opted as “Director” in the Annual General Meeting held on 4th September,2008.

Since his appointment Shri Pateria has been rendering valuable services to the company by way of being not only onCompany’s Board, but even on few important committees of Board such as Audit Committee and RemunerationCommittee.

Date of Birth

Qualification



Brief Resume

2nd May, 1958

B.Com, LL.B, Solicitor

Law Suits

NIL

Shri Paresh Shah born in 1958, is an eminent lawyer. He is a Partner of a very reputed legal firm namely, Shah &Sanghavi and has variety of experience on various aspects of corporate legal matters. He has been practicing at HighCourt of Bombay for the last 28 years. Since his appointment Shri Shah has been rendering valuable services to thecompany by way of being not only on Company’s Board but even on few important committees of Board such asRemuneration Committee and Shareholder’s/Investor’s Greivance Committee.

Particulars Shri Paresh J. Shah

ADDITIONAL INFORMATION

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Directors’ Report

ToThe Members ofPSL Limited

The Board of Directors take pleasure in presenting their TwentySecond Annual Report and the Audited Statements of Account forthe Financial Year ended on 31st March, 2010.

FINANCIAL PERFORMANCE

The summary of the Financial Results of the Company for the yearended on 31st March, 2010 and appropriation of divisible profits isgiven below :-

(Rs. in Crores)

Particulars Current Year Previous Year

Sales 2761.52 3487.96Other Income 49.13 61.99Total Income 2810.65 3549.95Add/ Less : Change in stock -29.58 -319.17Total 2781.07 3230.78Net Profit before depreciationand interest was 292.63 284.52After deducting interest anddepreciation of 175.33 157.79The profit for the year beforeTaxation Provisions amounted to 117.30 126.73From which is deducted a TaxationProvision of 29.00 40.80Leaving thereby a Net Profit of 88.30 85.93Which your directors haverecommended to beappropriated as follows:a) Transfer to General Reserves 8.83 10.00b) Dividend Payment

(i) Interim NIL 10.63Add: Tax NIL NIL 1.81 12.44

(ii) Final (Proposed) 21.32 10.65Add:Tax (proposed) 3.54 24.86 24.86 1.81 12.46 34.90

c) Prior year payments 2.85 36.54 -1.92 32.98Thereby leaving a balance of 51.76 52.95

for carrying over to next year’s account.

PERFORMANCE HIGHLIGHTS

A) FOR THE COMPANY ON STANDALONE BASIS

1. DURING THE YEAR UNDER REVIEW

The total income of the company during the year stood atRs. 2810.65 Crores. The net profit before depreciation andinterest rose from Rs. 284.52 Crores in the previous year toRs. 292.63 Crores during the year under review, therebyrecording a growth of 2.85%. The year gone by witnessedextreme turbulence and volatility which, coupled withliquidity crunch, has resulted in a decrease in profit (Profitbefore Tax on 31st March, 2010 stood at Rs.117.30 Croresas compared to Rs.126.73 Crores for the previous year).Fortunately, despite such decrease, your Company was ableto contain its adverse impact partially through improvementin operations and to some extent through exercising a strictcontrol on expenses.

2. FOR THE YEAR UNDER REVIEW

a) The General Reserves Account is proposed to becredited with an amount of Rs.8.83 Crores.

b) In addition to an Interim Dividend of Rs.2.50 per sharepaid by the Company in May, 2010, the Board has(subject to your approval at the forthcoming AnnualGeneral Meeting) recommended payment of Rs.1.50per share as final dividend, thereby aggregating to atotal dividend of Rs.4/- per share for the financial year2009-10.

B) FOR THE SUBSIDIARY COMPANIES

Members are aware that during the last few years, yourCompany, after achievement of an important milestone of beingthe first and only Indian Company of having an installedcapacity of more than One Million Metric Tonnes, has taken abold initiative of spreading its wings across the borders. To bagsizeable proportion of Pipe making orders arising in MiddleEast, a Plant having an annual capacity of 75000 Tonnes wasset up in Hamriyah Free Trade Zone of Sharjah. Not satisfiedwith merely gulf business, your Board of Directors took anotherbold decision - this time with a view to bag Pipe ManufacturingBusiness emanating in North America - a State-of-the-art TwoStep Pipe Mill was therefore installed to manufacture Pipes upto as much as 24 Meters length as against the traditional 20Meters length till then manufactured by your Company in itsIndian Plants. As a direct result of such rapid internationalexpansion, your Company now has following Subsidiaries :-

1. PSL Corrosion Control Services Limited, India - a WhollyOwned Subsidiary Company.

2. Pipeline Systems Limited, Mauritius - a Wholly OwnedSubsidiary Company.

3. PSL USA INC, USA - a Wholly Owned SubsidiaryCompany.

4. PSL FZE, Sharjah, UAE - a Wholly Owned Subsidiary ofPipeline Systems Limited.

5. PSL North America LLC, USA - a Joint Venture Companywith majority stake of PSL USA INC.

The performance of each individual Wholly Owned SubsidiaryCompany is as follows:-

1. PSL CORROSION CONTROL SERVICES LIMITED

This Company is presently engaged in providing Anti-Corrosive treatment on Steel Bars supplied by its valuedcustomers engaged in infrastructural activities. Such Coatingtreatment directly enhances the strength and life of theRebars - so very essential for various important constructionprojects, particularly in costal areas. Such services areprovided through its two strategically located plants atDaman & Chennai, to be able to cater to both Westernand Eastern parts of the country, respectively. TheCompany's income, which was Rs.40.44 Crores in theprevious year, got enhanced to Rs.48.68 Crores in the yearunder review thereby registering 20.38 % growth. The profitafter tax during the said year however shot up by as muchas 68%. (Previous year Rs.6.14 Crores and Current yearRs.10.32 Crores).

2. PIPELINE SYSTEMS LIMITED [with PSL FZE -UAE]

This Company was incorporated on 4th November, 2004at Mauritius as a wholly owned subsidiary of yourCompany. Subsequently, another Company namely PSLFZE was established at Sharjah in UAE as a wholly ownedsubsidiary of Pipeline Systems Limited. The Companythrough its subsidiary has set up a manufacturing Unit inHamriyah Free Trade Zone, Sharjah, UAE which is primarilyengaged in manufacturing of Steel Pipes and providing Anti-Corrosive Coating on them. The first major order baggedby the company was for a total value of US$ 45 Million.

During the year under review, the company has scalednew heights and set new benchmarks in terms of incomeand profit. The total consolidated income of the Companywhich was US$ 8.42 Million in the previous year, stood atUS$ 33.80 Million in the year under review, thereby

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Directors’ Report

recording an impressive growth of 301%. The net profitwas registered at US $ 22,76,659 as against US $ 3,90,462in the previous year thereby registering an exceptionallyhigh growth of 483%.

During the year under review, your Company contributedan additional amount of US$ 20.14 Lacs to the EquityCapital of the said Company both by way of cashremittances as well as by equipment supplies. Thus, theaggregate amount of investments made by your Companyin the said Company amounted to US$ 264.75 Lacs as on31st March, 2010, being the last day of the Financial Year2009-10.

3. PSL USA INC. (with PSL NORTH AMERICA LLC)

PSL USA INC was incorporated on 4th December, 2006in the State of Delaware, USA primarily to bag contractsfor manufacture of pipes, keeping in view the upsurge inthe pipe laying activity, in North America. In order to carryout the activities of PSL Limited, PSL USA INC entered in ajoint venture namely PSL North America LLC, a companyincorporated under the laws of State of Delaware. The saidjoint venture is between three companies namely, PSL USAINC (78% shareholding), HSAW Solutions LLC (12%shareholding )and Lloyd Systems INC (10% shareholding).

A plant using state of the art technology to manufacture 24meter long pipes has been set up by the Company inMississipi, USA. The Company bagged its first order fromFlorida Gas Company valuing US$ 418 Million. Thecommercial dispatches for the same started in May, 2009.Since this year was the first year of production, theconsolidated sales of the Company and its subsidiary stoodat US$ 217 Million in the year under review as against nilin the previous year. The net income of US $ 1.55 Millionwas registered in the year under review, compared to netincome of US$ 0.13 Million in the previous year.

C) CONSOLIDATED PERFORMANCE

In spite of the effects of unprecedented global recession in US(where PSL has established an important Unit) and the MiddleEast (where another Pipe Coating Unit was set up few yearsago), the performance of the Foreign Subsidiaries / Units wasindeed gratifying, resulting into a noteworthy Consolidated Salesof Rs.3,941.05 Crores as against Rs.3,559.92 Crores in theprevious year thereby representing an impressive 11% hike.Effective cost control methodologies strictly implemented inthe entire Group, further showed commendable results sincethe Profit after Tax recorded at Rs.122.66 Crores was 29%higher than Rs.94.84 Crores in the previous year.

CAPITAL ENHANCEMENT

1. FCCB BUYBACK

Your company in the year 2005 raised US$ 40 Million byissuance of Zero Coupon Foreign Currency Convertible Bonds(FCCBs) in the international market. The said convertible Bonds,which are listed on Singapore Stock Exchange, can at any timebefore August, 2010 be converted into Company's Equity Sharesat a prefixed conversion rate. Out of a total of 40 Million USDollars worth FCCB's, the Company received conversionnotices from holders of FCCB's, in different tranches,aggregating to US$ 37.50 Million. Consequently 86,61,511Equity Shares of Rs.10/- each were allotted by the Company tothe relevant FCCB holders. As on 30th July, 2010 Bonds worthUS $ 2.50 Million are pending for conversion. As per the offeringcircular dated 1st September, 2005, the bonds pending

conversion, will be redeemed on the maturity date i.e.7th September, 2010.

2. QUALIFIED INSTITUTIONAL PLACEMENT

As the pipeline business is growing due to increased demandfrom oil and gas sector and other sectors, your Directors felt itnecessary to enhance your Company's production capacity. Astrategic approach was therefore adopted to not only enhancethe capacity of domestic plants but also invest in Company'soverseas subsidiaries. To be able to successfully finance theexpansion initiatives detailed above, your company issued107,50,000 Equity Shares of Rs. 10/- each at a premium ofRs. 128.90 per share to Qualified Institutional Buyers (QIBs) inaccordance with Qualified Institutional Placement (QIP)Guidelines issued by SEBI. Such allotment helped the companyto raise Rs. 149.32 Crores in August, 2009.

OPERATIONAL ACHIEVEMENTS

Your Company has been a leader in pipe technology in India sinceinception and this fact has been reinforced by your Company'sperformances in the current period in executing the first ever API5L X-80 (highest grade pipeline steel) project, aggregatingapproximately 150,000 MT, all of which will be commissioned inthe current calendar year by the customer.

At this time, this will become one of the few X-80 Grade Pipelines,anywhere in the world, put into operation.

It is a matter of great pride that the entire supply of X-80 pipe forthis project was entrusted to PSL and with the commissioning ofthe pipeline later this year, it shall become a feather in yourCompany's cap which confirms its status both as a leader in pipetechnology and as an international leader in line pipe supply anddevelopment.

A measure of the customer's appreciation for this performance liesin repeat orders which have been flowing from the same customsersto PSL, reflecting a confidence he has in your Company's ability tomeet such technological challenges.

1. PROGRESS ON OVERSEAS FRONT

a) NORTH AMERICA PROJECT

Your Company's subsidiary in the U.S. "M/s. PSL NORTHAMERICA LLC" has achieved a unique milestone in its veryfirst year of operation by successfully executing a majorU.S. pipeline project entrusted, by it in 2008. The projectrequired the procurement of steel and manufacture of pipesaggregating approximately 160,000 MT of High PressureGas Pipe. Your Company's ability to execute the projectwithin the requisite time frame will be an inspiration forcustomers in the U.S., to entrust it with further project work.

The complete set of equipment for pipe manufacture,external and internal coating has been installed,commissioned, and successfully operated, making PSLNORTH AMERICA LLC, a lead supplier of line pipe to theU.S. and Canadian markets.

b) UAE PROJECT

Despite the substantial slow down in the Middle Eastmarket, in general, your Company's Sharjah basedsubsidiary - PSL FZE was successful in securing a majorPort Construction project, from a MultinationalConstruction Company and is in the process of completing,again within the requisite schedule, supply of high thickness(25.4 mm) piling pipe whose’s capability is a benchmarkof your Company, as very few Spiral Pipe manufacturers

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have the ability to achieve production of this thickness in ahigher steel grade.

The Company is participating in several tenders in theregion and expects to have a busy and successful yearending March, 2011.

Your Company is evaluating, based on strong local demand,the possibility of doubling its capacity from the presentinstalled 75,000 MT per annum to 150,000 MT per annumwithin the current Financial Year.

2. DOMESTIC PROGRESS

Your Company is the only one among its peer group, to havemultiple geographically diverse manufacturing locations whichenables it to compete successfully on a regional basis. These regionallocations are all enabled, duly certified by agencies such as API toexecute High Pressure Gas Pipe projects as and when required.

Your Board gets great pleasure to report that the first major gas pipesupply order is likely to be awarded to the Company's Chennaiunit in the near future.

The major expansion undertaken by your Company in the yearunder reporting was to add a capacity of 300,000 MT per annum atits unit at Vishakhapatnam, thereby bringing the total capacity to375,000 MT per annum. This enhanced capacity is likely to befully engaged in executing projects for transportation of KG BasinGas from Kakinada, the landfall point for such gas, which is inclose proximity to the Company's Vishakhapatnam pipemanufacturing unit. This strategic advantage of Vishakhapatnamwill extend to several projects in the region such as :

- Kakinada - Haldia Pipeline

- Kakinada - Chennai Pipeline

- Kakinada - Bangalore Pipeline

- Haldia - Jagdishpur Pipeline.

In view of the likely implementation of the Natural Gas Grid in thecoming 3 to 5 years, your Company expects to fully engage itscapacities, which have been put in place, essentially to servicethese regional requirements.

APPROPRIATIONS

DIVIDEND

Adhering to its earlier practice, your Company declared an InterimDividend of Rs.2.50 per Equity Share in May, 2010. Taking intoaccount the financial results of the year under review, your Directorshave recommended a Final Dividend of Rs.1.50 per Equity Share(subject to your approval at the forthcoming Annual GeneralMeeting) on all eligible fully paid up Equity Shares in addition tothe Interim Dividend of Rs.2.50 per share paid earlier. Thus, thetotal dividend for the Financial Year 2009-10 would work out toRs. 4.00 per Equity Share. With this your Company would completeits fifteenth year of successive payment of dividend ever since itsmaiden Public Issue in February, 1995.

TRANSFER TO RESERVES

The Board has recommended a transfer of Rs. 8.83 Crores to thegeneral reserve, out of the amount available for appropriations andan amount of Rs. 51.76 Crores is recommended to be retained inthe Profit and Loss Account.

ACCOUNTS OF THE SUBSIDIARY COMPANIES

In compliance of Section 212 of the Companies Act, 1956, theduly audited annual accounts of PSL Corrosion Control ServicesLimited, Pipeline Systems Limited and PSL USA INC - the threeWholly Owned Subsidiary Companies of the Company - for the

Financial Year ended on 31st March, 2010 are attached. As requiredunder the Listing Agreement executed with the Stock Exchanges, aconsolidated financial statement of the Company is attached hereto.

DIRECTORATE

Your Board is pained to report that Company's Chairman Shri Y. P.Punj left for his heavenly abode on 12th December 2009, leavingbehind a legacy of a team of highly motivated and well experiencedarmy of officers and workers to take your Company forward.

The Board comprises of excellent professionals having expertise invaried fields and hence is fully competent to steer the Companytowards achievement of its high valued goals in an optimum manner.

In accordance with the provisions of Section 255 and 256 of theCompanies Act, 1956, and Articles of Association of the Company,Shri S. P. Bhatia, Shri C. K. Goel, Shri. G Gehani, Shri Paresh J.Shah and Shri Harsh Pateria, Directors retire by rotation at theensuing Annual General Meeting of the Company and beingeligible offer themselves for reappointment. Brief resume of theDirectors proposed to be reappointed and nature of their expertisein specific functional area are also included in the table annexedto the notice.

STATUTORY COMPLIANCES

1. The Company Secretary as Compliance Officer ensures timelycompliance of SEBI regulations, applicable laws, rules andregulations and provisions of Listing Agreement. He alsoresponds to different types of grievances and queries includingthe ones related to dividend of shareholders.

2 Although the provision contained in Section 219 of theCompanies Act, 1956, permits the Company to send anabridged version of Company's Balance Sheet and Profit & LossAccount etc., your Company in order to comply with Clause32 of the Listing Agreement executed by it with different StockExchanges is sending herewith the full version of the aforesaidstatements along with various documents which are requiredto be attached with them, to all the Shareholders of theCompany.

3. In compliance of Clause 32 of the Listing Agreement executedby the Company with different Stock Exchanges, the Cash FlowStatement in the format prescribed by SEBI is annexed to thisreport.

4. In compliance of Clause 32 of the Listing Agreement andAccounting Standard (AS-21) on consolidated financialstatement, your directors have pleasure in attaching theConsolidated Financial Statements, which forms part of theAnnual Report and Accounts.

5. In compliance of Clause 49 (VI) (ii) of the Listing Agreement,Quarterly Compliance Report in the prescribed format isregularly sent to Stock Exchanges.

6. In accordance with statutory obligations, Secretarial Audit isdone on quarterly basis to reconcile the total admitted capital,with the two depositories in the country, namely, NationalSecurities Depository Limited (NSDL) & Central DepositoryServices Limited (CDSL), and shares in physical form with thetotal issued and listed capital. Audit Reports furnished to thiseffect by a Practicing Company Secretary appointed for thepurpose have been regularly submitted to the various Stockexchanges with which the Company's shares are listed.

INTERNAL CONTROL AND ADEQUACY

The company has a proper and adequate system of internal controlto ensure that all assets are safeguarded and protected against losses

Directors’ Report

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from unauthorized use or disposition, and transactions areauthorised, recorded and reported correctly. The internal control isdesigned to ensure that financial and other records are reliable, fortimely preparation of Financial Statements.

The Internal control system is supplemented by an extensive auditconducted by well structured Internal Audit Department of theCompany. The said audit is by and large conducted on quarterlybasis to review the adequacy and effectiveness of internal controlsand to suggest improvements for strengthening them. Proper reviewsare carried out to ensure follow-up on the audit observations.

CORPORATE GOVERNANCE & MANAGEMENT DISCUSSIONAND ANALYSIS REPORT

As required by Clause 49 of the Listing Agreement executed by theCompany with National and Bombay Stock Exchanges, a separateManagement Discussion and Analysis Report, CorporateGovernance Report and Auditors Certificate certifying complianceof conditions of Corporate Governance are made part of the AnnualReport.

BOARD COMMITTEES

For assisting Board of Directors in discharging its responsibilities invarious fields effectively and efficiently following five standingCommittees have been constituted by the Board :-

1. Audit Committee2. Committee of Directors3. Remuneration Committee4. Shareholders'/ Investors' Grievance Committee5. Share Transfer Committee

These Committees in their meetings, held during the year, takecertain decision in accordance with their respective mandates. Allsuch decisions are thereafter ratified by the Board.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, theDirectors to the best of their knowledge and belief confirm that:

- In the preparation of annual accounts, the applicable accountingstandards have been followed by the Company;

- The accounting policies in consultation with statutory auditorare applied consistently to give a true and fair view of the stateof affairs of the company at the end of Financial Year underreview and Profit & Loss Account of the period under report.

- Proper and sufficient care has been taken for maintenance ofadequate accounting records in accordance with the provisionsof the Companies Act, 1956, for safeguarding the assets of theCompany and for preventing and detecting fraud and otherirregularities and;

- The Annual Accounts have been prepared on a going concernbasis.

AUDITORS

The Auditors, M/s. Suresh C. Mathur & Co., Chartered Accountantshold office upto the conclusion of the ensuing Annual GeneralMeeting. The Company has received a requisite certificate fromthem pursuant to Section 224 (1B) of the Companies Act , 1956confirming their eligibility for re-appointment as Auditors of theCompany.

AUDITORS’ REPORT

The Report of the Auditors on the Annual Accounts of the Companyforms part of the Annual Report and is self-explanatory.

CONSERVATION OF ENERGY, TECHNOLOGY AND FOREIGNEXCHANGE EARNINGS AND OUTGO

Information relating to Conservation of Energy, TechnologyAbsorption, Research and Development and Exports and ForeignExchange Earnings and outgo and other information in terms ofSection 217(1) (e) of the Companies Act, 1956 and rules made thereunder is given in the Annexure forming part of this Report.

PARTICULARS OF EMPLOYEES

In compliance of Section 219(1)(b)(iv) of Companies Act, 1956 thisreport is being sent to the shareholders of the Company withoutcontaining therein the information in accordance with Sub-section2A of Section 217 of the Companies Act, 1956 read with Companies(Particulars of Employees) Rules, 1975. However, since the saidparticulars are made available at the Registered Office of theCompany, the members desirous of obtaining such particulars maywrite to the "Director & Company Secretary" of the Company at itsRegistered Office.

ACKNOWLEDGEMENTS

Board expresses its gratitude to the Customers, Suppliers, Dealers,Government Authorities, Financial Institutions, Foreign InstitutionalInvestors, Bankers, Consultants, Solicitors, Auditors & Shareholdersfor their continued co- operation and support during the year underreview. The Board further wishes to place on record their deepsense of appreciation for the committed services and contributionsmade by the employees of PSL Family based at various Domesticand International locations towards the growth of the Company.

For and on behalf of the Board of DirectorsPSL Limited

sd/- sd/-Place : Mumbai (ALOK PUNJ) (ASHOK PUNJ)Date : 30th July, 2010 Director Managing Director

Directors’ Report

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ANNEXURE TO THE DIRECTORS’ REPORT

Information pursuant to the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988

2009-10 2008-091. CONSERVATION OF ENERGY

A) Power and Fuel Consumption1. Electricitya) Purchased

Units (M.KWH) 39,028.97 38,223.72Total Amount (Rs.Crores)# 24.57 23.74Average Rate/Unit (Rs./KWH) 6.29 6.21

b) Own Generationi) Through Diesel Generator

Units (M.KWH) 7,625.729 12,899.169Units per liter of diesel oil (KWH) ## 2.78 2.72Average Cost/Unit (Rs./KWH) 12.52 13.41

ii) Through Steam Turbine/GeneratorUnits (M.KWH) NIL NILAverage Cost/Unit (Rs./KWH) NIL NIL

# Excludes electricity duty paid on purchases## Previous year’s figure modified

B) Technology AbsorptionsThe Company is doing research and development for improvement in their items of manufacturing.Specific areas in which R & D is carried out by the Company:-

1. Improvement of product quality and process efficiency2. Optimising production efficiency3. Cost deduction and economical efficient production4. Pollution Control - to have pollution free enviornment in and around factory areas.5. Environmental Care6. Optimisation of process parameters.

2. FOREIGN EXCHANGE EARNINGS AND OUTGO(Rs. in Crores) (Rs. in Crores)

Earnings 143.26 71.52Outgo on Royalty NIL NIL

For and on behalf of the Board of Directorsof PSL Limited

sd/- sd/-Place : Mumbai (ALOK PUNJ) (ASHOK PUNJ)Date : 30th July, 2010 Director Managing Director

Directors’ Report

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In compliance of Clause 49 of the Listing Agreement executed withthe Stock Exchanges, the report containing the details of Governancesystem forming part of the Directors' Report of PSL Limited is asunder:-

1) CORPORATE GOVERNANCE PHILOSOPHY

Your Company is of the firm view that Corporate Governance is asystematic process whereby companies are directed and controlledto enhance the wealth generating capacity for the benefit of all itsstakeholders. Corporate Governance gives us the confidence ofhaving put in the right building blocks for future growth and ensuringthat the Company achieves its ambitious plans in as prudent andsustainable manner as possible. The Corporate Governance policyof the Company encompasses the simple doctrine of integrity,accountability, transparency and fairness in whatever the companydoes.

The traditional views of governance as a regulatory and compliancerequirement has given way to adoption of governance normstailored to the specific needs of the Company. In line with the natureand size of operations of the Company, the Corporate Governanceframework in PSL Limited is based on the following principles:-

a) Transparency and Independence in all its operations whichimplies the maintenance of high degree of disclosure levels,without compromising in any way with compliance of law andregulations and the interest of the Company and its shareholders.

b) Compliance with applicable laws, rules and regulations, in allthe countries in which it operates both in letter and spirit.

c) Maintaining high quality products on a continuous basis.

d) Ensuring timely and accurate disclosure of all material,operational and financial information related to the Companyto all the stakeholders and protection of their rights and interests.

e) Ensuring independent verification and assured integrity offinancial reporting.

f) Ensuring appropriate systems and processes for internal controlson all operations, risk management and financial reporting.

g) Ensuring systematic flow of information to the members of theBoard to enable them to effectively discharge their fiduciaryduties.

h) Focusing on ethical business conduct by the management andemployees

i) Continuous focus on training and development of employeesand workers to achieve overall corporate objectives, whileensuring employee integration across national boundaries.

j) Through Corporate social responsibility, ensuring the promotionof ethical values and setting up exemplary standards of ethicalbehaviour in Company's interaction with its business partners,colleagues, shareholders and general public.

2) BOARD OF DIRECTORS

Composition

Ever since the norms pertaining to constitution of Board of Directorswere given adequate importance through statutory/ mandatory andnon-mandatory provisions, your Company had made a consciouseffort to ensure full compliance of prescribed norms in thisconnection. An appropriate mix of Executive / Non-executive andIndependent Directors to ensure proper governance and

management was in continuous existence till recently when theHon'ble Chairman Shri Y. P. Punj left for heavenly abode. Thepresent Board members have collective experience in diverse fieldslike finance, legal, banking, engineering and technology. The Boardof Directors, after Shri Y. P. Punj's (Non-executive Chairman) suddendeath, presently comprises of Eight Whole-Time Directors and SevenNon-Executive Directors of which six are Independent Directors.

COMPOSITION OF BOARD AND DIRECTORSHIPS (INCLUDINGMEMBERSHIP & CHAIRMANSHIP)

Sr. Name of the Category of No. of positions held

No. Directors Director Board Memberships

Memberships# of Standing

Committees##

1. Y. P. Punj* Non Executive 7 2*

Chairman*

2. Ashok Punj Managing Director 16** 1

3. Alok Punj Non-Executive 8 4

4. G.S. Sauhta Executive 4 Nil

5. R. K. Bahri Executive 3 Nil

6. M.M. Mathur Executive 1 2

7. D. N. Sehgal Executive 3 Nil

8. Prakash V. Apte Independent & 3 2

Non-Executive

9. N. C. Sharma Independent & 4 4

Non-Executive

10. Ashok Sharma Independent & 2 2

Non-Executive

11. Harry H. Shourie Independent & 3 1

Non-Executive

12. S. P. Bhatia Executive 2*** 2

13. C. K. Goel Executive 1 Nil

14. G. Gehani Executive 1 4

15. Paresh J. Shah Independent & 1 2

Non-Executive

16. Harsh Pateria Independent & 2 2

Non-Executive

* Expired on 12th December, 2009.

** Appointed as Director in Punj Corporation Private Limited w.e.f 14th

January, 2010, Rosoboronterra India Private Limited w.e.f. 27th May, 2010

and in Rosoboronavia India Private Limited w.e.f. 30th June, 2010.

*** Appointed as Director in Punj Corporation Private Limited w.e.f 22nd

January, 2010.

# This includes Directorship held in PSL Limited and other Public Limited

Companies, Subsidiaries of Public Limited Companies, Private Limited

Companies and Foreign Companies.

## This includes Committee Membership held in PSL Limited as well as in

other Companies.

The day-to-day management of the Company is controlled byManaging Director subject to the supervision and control of Boardof Directors. He is assisted by seven Whole-time Directors and otherheads of Divisions/ Departments.

None of the Director is a member of more than 10 Board levelcommittees of public company or is a Chairman of more than 5such committees across all companies in which they are Director.

ATTENDANCE AT MEETINGSDuring financial year 2009-10, the Board met 5 (Five) times. Thedates of the said five Board meetings were 28th May, 2009, 10thJune, 2009, 28th July, 2009, 29th October, 2009 & 29th January,2010. In compliance of Clause 49 (I) (c) of Listing Agreement, itwas consciously ensured that the gap between any two BoardMeetings did not exceed four months.

Corporate Governance

Committee

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The last Annual General Meeting of the Company was held on21st July, 2009. A table depicting the attendance of Directors atvarious Board meetings held during the financial year 2009-10 andat the Annual General Meeting last held is given below :-

2. To review with management Quarterly and AnnualFinancial Statements and ensure their accuracy andcorrectness before submission to the Board.

3. To review the adequacy and effectiveness of InternalAudit function, the internal control systems, compliancewith the Company's policies and applicable laws andregulations.

4. To discuss and review Internal Audit Reports and theReports of the External Auditors with the managementand follow up thereon.

5. To review related party transactions i.e. transactions ofthe Company of material nature with promoters or themanagement, their subsidiaries or relatives etc. that mayhave potential conflict with the interest of the Companyat large.

6. To discuss and review Company's financial and riskmanagement policies.

7. To review such matters as are considered appropriateby it or referred to it by the Board.

In addition to the above, the committee also discharges such otherrole/functions as envisaged under Clause 49 of the Listing Agreementof the Stock Exchanges and the provisions of Section 292A of theCompanies Act, 1956. Minutes of the meetings of the AuditCommittee are circulated to Members of the Committee as well asto the Board.

Role of Internal Auditors

PSL considers the Internal Audit Department as a powerful toolwith clear focus on risk control and governance. Internal auditingassesses and promotes strong ethics and values within theorganization and serves as an educational resource regardingchanges and trends in the business and regulatory environment.

At PSL Internal Audit team aims at:-

- effectiveness and efficiency of operations;- reliability of financial reporting;- compliance with laws and regulations of all major functional

areas such as purchase, store, quality, production, technical,marketing, sales & finance;

- providing objective assurance to the Board on all major findingsduring their audit.

(ii) Composition, Meeting and Attendance

a) Composition:

The Audit Committee comprises of six members. Thepresent composition of the Committee is as follows:-

S.No. Name of Member ED/ NED/ I& NED* Position

1. Alok Punj Non-Executive Director Member2. Prakash V. Apte Independent & Non- Member

Executive Director3. N.C. Sharma Independent & Non- Member

Executive Director4. Harry H. Shourie Independent & Non- Member

Executive Director5. Harsh Pateria Independent & Non- Member

Executive Director6. G.Gehani Director & Company Member

Secretary

* ED: Executive Director; I& NED: Independent and Non-Executive Director;

NED: Non-Executive Director

Members of the Audit Committee have requisite financial andmanagement expertise and have held or hold senior positions inreputed organizations.


*Expired on 12th December, 2009.

P = Present

LOA = Leave of Absence

NR = Statutorily Not Required to attend

3) COMMITTEES OF BOARDIn order to ensure that all matters of each important area concerningeffective governance of the Company and also to ensure truecompliance of the requirements of the Corporate Governancenorms, your Board has constituted different Committees, some ofwhich are Standing Committees whereas others are need based,constituted for achieving specific short time objective. TheseCommittees are:-

1. Audit Committee

2. Remuneration Committee3. Share Transfer Committee Standing Committees4. Shareholders'/Investors' Grievance Committee5. Committee of Directors6. Bond Conversion Committee7. QIP Committee Need based Committees

8. Dividend Declaration Committee

The terms of reference of these Committees are either determinedby statute or are fixed by the Board.

BRIEF ABOUT STANDING COMMITTEES

A) AUDIT COMMITTEE(i) Terms of reference

The Board of Directors constituted an audit committee inthe year 2002. In addition to the members of the auditcommittee, the committee meetings are attended by theChief Finance Officer, Internal Auditors and StatutoryAuditors of the company wherever necessary, and thoseexecutives of the company who are considered necessaryfor providing inputs to the committee. The Committee actsas a link between the management, external, internal auditorsand the Board of Directors of the Company. The role andterms of reference of Audit Committee covers areasmentioned under clause 49 of the Listing Agreement withthe Stock Exchanges read with the provisions contained insection 292A of the Companies Act, 1956 as amended fromtime to time. The audit committee is entrusted with thefollowing responsibilities:-

1. To oversee the financial reporting process and disclosureof financial information.

Name of Board Meetings Meetings LastDirectors attended AGM

28.05.09 10.06.09 28.07.09 29.10.09 29.01.10 No. 21.07.09

Sh. Y. P. Punj* LOA P LOA P -* 2 NR

Sh. Ashok Punj P P P P P 5 P

Sh. Alok Punj P P P P P 5 P

Sh. G.S.Sauhta P P LOA P P 4 NR

Sh. R.K.Bahri LOA P P P P 4 P

Sh. M.M.Mathur LOA LOA P P LOA 2 NR

Sh. D.N.Sehgal LOA LOA P P P 3 NR

Sh. Prakash V. Apte P P P P P 5 P

Sh. N.C. Sharma P P P P P 5 NR

Sh. Ashok Sharma P LOA LOA P LOA 2 NR

Sh. Harry H. Shourie LOA LOA P P P 3 NR

Sh. Paresh J. Shah LOA P LOA P P 3 NR

Sh. S.P.Bhatia P LOA LOA P P 3 NR

Sh. C.K.Goel P LOA P LOA P 3 NR

Sh. G.Gehani P P P P P 5 P

Sh. Harsh Pateria P LOA P P P 4 NR

Directors No. 10 9 11 15 13

Attended % 63 56 69 94 *87

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Meetings & Attendance

Four Audit Committee Meetings were held during the year. Thedates on which the said meetings were held and the attendance areas follows:-

Date of Meeting Name of Member Attendance

Alok Prakash N. C. Harry Harsh G.

Punj V. Apte Sharma H. Pateria Gehani No %

Shourie

28.05.09 P P P LOA - * - * 3 75

28.07.09 P P P P P P 6 100

29.10.09 P P P P P P 6 100

29.01.10 P P P P P P 6 100

Meetings (No.) 4 4 4 3 3 3

Attended (%) 100 100 100 75 100 100

* Appointed as member in Board meeting held on 28th May, 2009.

P = Present

LOA = Leave of Absence

B) REMUNERATION COMMITTEE

(i) Terms of reference

The Board of Directors had constituted a RemunerationCommittee in the year 2002. The broad terms of referenceof the Remuneration Committee are as under:-

- to recommend / review remuneration of the ManagingDirector, Whole-time Directors and their relativesbased on Company's policy and financial status,Industry trends, performance and past remuneration.

- Such other matters as the Board may from time to timerequest the Remuneration Committee to examine andrecommend/approve.

(ii) Remuneration Policy

The Company has a credible and transparent policy indetermining and accounting for the remuneration of theExecutive Directors. Their remuneration is governed by theexternal competitive environment, track record, potential,individual performance and performance of the Companyas well as industry standards.

(iii) Composition

The Committee presently comprises of following five Non-Executive Directors of the Company.

S. No. Name of Member Position

1. Y.P. Punj* Member2. Alok Punj Member3. Prakash V. Apte Member4. Ashok Sharma Member5. Paresh J. Shah** Member6. Harsh Pateria** Member


** Appointed as member in Board meeting held on 28th May, 2009.

(iv) Meeting

All members except Shri Y.P.Punj attended the meetingconvened on 28th May, 2009, wherein the revisedremuneration package of three Whole-Time Directorsnamely Shri S.P.Bhatia, Shri G.Gehani and Shri C.K.Goelwas considered and recommended to the Board.

C) SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE


The role and terms of reference of this committee are: -

- to review and redress complaints of Shareholders' andInvestors'.

- to appoint Compliance Officer and determine the roleand responsibilities of such Officer.

- to review routine matters such as transfer of shares, non-receipt of Balance Sheets, non-receipt of warrants fordeclared dividends.

- to ensure timely attention to investors' complaints andresolution thereof.

- other matters related to shares.

The main object of the Committee is to strengthen investorrelations.

(ii) Composition

The Committee comprises of following four Members:-

S. No. Name of Member Position

1. Alok Punj Chairman

2. N.C. Sharma Member

3. Ashok Sharma Member

4. Paresh J. Shah Member

5. G. Gehani Secretary

(iii) Meeting & Attendance

During the year under review, a meeting of Shareholders'/Investors' Grievance Committee was held on 29th October,2009. All the members of the Committee attended themeeting.

(iv) Compliance Officer

Shri G. Gehani -Director & Company Secretary continuesto act as "Compliance Officer" for complying with therequirements of SEBI Regulations and the compliance ofListing Agreements executed by the Company with theStock Exchanges.

(v) Investor Grievance Redressal

During the year under review, the Committee noted that atotal of 55 complaints were received from the shareholdersand all of them were immediately resolved to the fullsatisfaction of the shareholders. There were no outstandingcomplaints.

D) COMMITTEE OF DIRECTORS

The Board is authorised to constitute one or moreCommittees delegating thereto powers and duties withrespect to specific purposes. Board has formed one suchCommittee, i.e. Committee of Directors. Meetings of suchCommittee are held as and when need arises.

(i) Terms of referenceThe major role and terms of reference of the committee is todeliberate and decide upon all such routine and urgentmatters, which cannot wait till convening of the next BoardMeeting. All decisions of the committee are placed beforethe Board for noting and ratification by the Board in its nextmeeting.

(ii) Composition

The Committee presently comprises of the following fivemembers.

S.No. Name of Member Position

1. Y.P.Punj* Member *

2. Ashok Punj Member

3. Alok Punj Member

4. M.M.Mathur Member

5. G.Gehani Member

6. S.P.Bhatia Member



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(iii) Meetings & Attendence

During the year under review, 41 meetings were held.Attendance of the members at the meetings was as follows:

S.No. Name of Member No of meetings attended

1. Y.P.Punj* 232. Ashok Punj 363. Alok Punj 294. M.M.Mathur 55. G.Gehani 66. S.P.Bhatia 5


Minutes of meetings of the Committee of Directors are circulatedto the members of the Committee as well as to the Board.

E) SHARE TRANSFER COMMITTEE


The role and terms of reference of the Share TransferCommittee is to give approval of transfer/ transmission/deletion of name in case of joint shareholder of physicalEquity Shares of the Company lodged with the Company/Registrar and Transfer Agent.

(ii) Composition

The Committee presently comprises of following three

members:-

S.No. Name of Member Position

1. M.M.Mathur Member2. G.Gehani Member3. S.P.Bhatia Member

During the year under review, 9 meetings were held whereina total of 16 share transfer cases comprising of 1800 EquityShares were approved. All decisions of the Committee areplaced before the Board of Directors from time to time for itsnoting and ratification.

(iii) Meetings

During the year under review, 9 meetings were held.Attendance of the members at the meetings was as follows:

S.No. Name of Member No of meetings attended

1. M.M.Mathur 72. G.Gehani 83. S.P.Bhatia 9

REMUNERATION OF DIRECTORS

EXECUTIVE DIRECTORS

Each of the eight Executive Directors of the Company have beenappointed by the shareholders of the Company. Such appointmentsare generally for a tenure of five years at one time. They are paidremuneration, which is duly recommended by the RemunerationCommittee, confirmed by the Board and then approved by theshareholders in the subsequent Annual General Meetings.

Remuneration paid to different Executive Directors is summarizedbelow:-

Sr. Name Salary (Basic + Perquisites Retirement Commission Total

No. HRA)

1 Ashok Punj 11,527,500 39,600 8,28,000 Nil 12,395,100

2 G.S.Sauhta 11,527,500 21,600 1,863,000 Nil 13,412,100

3 R. K. Bahri 11,527,500 1,189,600 1,863,000 Nil 14,580,100

4 M.M. Mathur 11,527,310 713,612 1,863,000 Nil 14,103,922

5 D.N. Sehgal 11,527,500 1,189,600 1,863,000 Nil 14,580,100

6 S.P.Bhatia 4,149,000 304,149 672,300 Nil 5,125,449

7 C.K.Goel 3,336,150 588,283 672,300 Nil 4,596,733

8 G.Gehani 4,149,000 447,400 672,300 Nil 5,268,700

Total 69,271,460 4,493,844 10,296,900 Nil 84,062,204

NON-EXECUTIVE DIRECTOR

Independent Directors on the Board of PSL are Non-ExecutiveDirectors who:-- Apart from receiving Sitting fee, do not have any material

pecuniary relationship or transaction with the Company, itsPromoters, its Directors, its Senior Management or itsSubsidiaries and Associates.

- are not related to Promoters or Senior Management Personnel.- have not been Executives of the Company in the immediately

preceding three Financial Years.

The Board has seven Non-Executive Directors of which six areIndependent Directors.

The remuneration (in the form of Sitting Fees) paid to these Non-Executive Directors during the year is as follows :-

Sr. No. Name of Directors (in Rs.)

1 Sh. Y. P. Punj* 40,000

2 Sh. Alok Punj 100,000

3 Sh. Prakash V. Apte 100,000

4 Sh. N. C. Sharma 100,000

5 Sh. Ashok Sharma 40,000

6 Sh. Harry H. Shourie 60,000

7 Sh. Paresh J. Shah 60,000

8 Sh. Harsh Pateria 80,000

Total 5,80,000


4. GENERAL BODY MEETINGS

Ever since inception of the Company in 1987, adequate importancehas been attached to direct interaction of the management withCompany's shareholders so as to directly know their views ofdifferent important matters placed before them for considerationthrough the medium of Annual General Meetings. All AnnualGeneral Meetings have been convened in absolute compliance ofvarious relevant statutory provisions including the different timelimits, etc.

The necessary particulars of the last Five Annual General Meetingsare as follows:-

For Date Time Venue No. of

Financial Special

Year Resolutions

Considered

2008-09 21st July, 9.30 A.M. Hotel 'Miramar', Devka 6

2009 Beach, Nani Daman, U. T.

of Daman & Diu 396 210

2007-08 4th 9.30 A.M. "Cidade de Daman", 3

September, Devka Beach, Nani

2008 Daman, U. T. of Daman

& Diu 396 210

2006-07 27th 9.30 A.M. "Cidade de Daman", 4



& Diu 396 210

2005-06 31st 9.30 A.M. "Cidade de Daman", 2

August, Devka Beach, Nani


& Diu 396 210

2004-05 29th 9.30 A.M. "Cidade de Daman", NIL



& Diu 396 210


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5. DISCLOSURES

i. RELATED PARTY TRANSACTIONS

There were no material significant related party transactionsof the Company with the Directors or the management ortheir relatives that may have any potential conflict withinterest of the company at large.

ii. STATUTORY COMPLIANCE, PENALTIES ANDSTRICTURES

There was no instance of non-compliance by the company.Similarly, no penalties or strictures were imposed on thecompany by the Stock Exchanges or SEBI or any otherstatutory authority on any matter related to the capitalmarkets during the last three years.

iii. It is affirmed that no person entitled to access the AuditCommittee was denied the said access.

IV. NON MANDATORY REQUIREMENTS

The Non Mandatory requirement such as constitution of aRemuneration Committee has been adopted by thecompany.

6. CODE OF CONDUCT

The code of conduct has been laid down for all Board Membersand Senior Management of the Company. The said code ofconduct is posted on the website of the company. The Boardmembers and senior management personnel have affirmed theircompliance of the said code for the financial year 2009-10. Adeclaration to this effect is annexed at the end of this report.

7. CEO/CFO CERTIFICATION

Certificate from Chief Executive Officer/Managing Director andChief Financial Officer for the financial year ended on31st March, 2010 is annexed at the end of this report.

8. MEANS OF COMMUNICATION

(a) Information to Stock Exchanges and Newspaper Publicity

- Quarterly/Annual Results of the Company are published inthe newspapers in terms of Listing Agreement. These resultsare promptly submitted to Stock Exchanges. Additionally,in strict compliance of Listing Agreement requirements, theCompany has always promptly reported dates of variousBoard Meetings, General Meetings, Book Closures/ RecordDate to the Stock Exchanges and also published theinformation pertaining thereto in reputed newspapers for theinformation of shareholders. The Quarterly and AnnualFinancial Results of the Company are normally publishedin "Business Standard" / "Financial Express" / "Hindu BusinessLine".

- Price sensitive information like receiving of orders/ awardsand other matters that are relevant to the shareholders havebeen timely informed to Stock Exchanges.

(b) Company's Website

- The Company regularly inserts important information suchas Quarterly/Annual Financial Results, Shareholding patternetc. on the Company's website www.psllimited.com at theearliest.

- The Company by way of press releases in leading financialnewspapers communicates significant information aboutimportant developments to the shareholders.

(c) Electronic Data Information Filing & Retrieval (EDIFAR)

- In terms of Clause 51 of the Listing Agreement, the companyregularly post all the prescribed information, statements andreports on the Electronic Data Information Filing & Retrieval(EDIFAR). The Stock Exchanges on the recommendation ofSEBI vide its circular dated 5th April, 2010 deleted the saidclause. With effect from 1st April, 2010, the company is not

required to post information, statements and reports on theElectronic Data Information Filing & Retrieval (EDIFAR). .

d) The Management’s Discussion and Analysis Report forms partof the Annual Report.

9. GENERAL SHAREHOLDERS INFORMATION

a) Registered Office Kachigam, Daman

Union Territory of Daman & Diu- 396 210.

b) Annual General Meeting Date : 30th September, 2010

Day : Thursday

Time : 9.30 A.M.

Venue : “Cidade De Daman”,Devka Beach, NaniDaman, U.T. of Daman &Diu-396 210

c) Financial Calendar - April to March of each year

d) Un-audited/Audited

Results approval Quarter Ended on Board meetingheld on

- First 30th June, 2009 28th July, 2009

- Second 30th Sept., 2009 29th Oct., 2009

- Third 31st Dec., 2009 29th Jan., 2010

- Year 31st March, 201029th May, 2010

e) Dates of Book closure Friday, the 24th day of September,2010 to Thursday, the 30th day ofSeptember, 2010 (Both daysinclusive)

f) Dividend 11th October, 2010Payment Date Interim dividend paid @ Rs. 2.50/-

per Equity Share in May, 2010.

Final dividend recommended @Rs. 1.50/- per Equity Share.

g) Listing at Stock Bombay Stock ExchangeExchanges National Stock Exchange

h) ISIN No. Under the depository System, theISIN allotted to the company’sequity shares is INE474B01017

i) Stock Codes Bombay Stock Exchange - 526801National Stock Exchange - PSL

j) Share Market Price Data High/Low of Company’s shares infor the year 2009-10 BSE & NSE is as follows :-


Particulars BSE NSE

Price of Shares Price of Shares

High Low High Low

April 2009 107.90 79.25 107.95 77.50

May 2009 142.00 91.10 141.00 91.00

June 2009 162.40 109.10 159.90 110.00

July 2009 130.80 98.05 130.75 99.00

August 2009 164.40 121.50 164.00 121.00

September 2009 188.00 155.20 188.00 155.10

October 2009 179.90 138.00 179.90 138.10

November 2009 158.00 126.35 164.70 125.50

December 2009 183.00 146.45 182.45 146.00

January 2010 188.40 141.00 189.50 140.60

February 2010 157.20 139.65 156.40 139.05

March 2010 158.80 135.10 158.40 135.35

(in Rs.)

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k) Comparison to Broad Performance in comparison toBased Index broad based index such as Nifty

index and BSE Sensex


Share Price ComparisonParticulars PSL Quoted BSE (Sensex) PSL Quoted NSE (Nifty)

at BSE at NSE

Share Price 87.00 9745.77 84.00 3023.85

01.04.09 (Open)

Share Price 137.25 17527.77 137.35 5249.10

31.03.10 (Close)

Increase/decrease in % 57.76% 79.85% 63.51% 73.59%

l) Share Transfer Agents Karvy Computershare PrivateLimited17–24, Vittal Rao Nagar,Madhapur, Hyderabad - 500 081.

m) Share Transfer System - The Company's Equity Shares arecompulsorily traded in demat modeat the Stock Exchanges.Equity Shares in physical formlodged for transfer are processed byShare Transfer Agent of thecompany namely KarvyComputershare Private Limited.Share transfers are registered andreturned within fifteen days fromthe date of lodgment if thedocuments are complete in allrespects.- In terms of Clause 47C of theListing Agreement entered intobetween the Company anddifferent Stock Exchanges apracticing Company Secretary hasbeen appointed by the Company toexamine the records andprocessing of share transfer andthereafter issue half yearlycertificate which is sent to the StockExchanges.- In accordance with SEBI'srequirement, a practicing CompanySecretary has been appointed bythe Company who on quarterlybasis conducts secretarial audit forreconciliation of total issued sharecapital with depositories and inphysical form.

n) Distribution of Distribution of Shareholding ofShareholding the company as on 31st March, 2010

Category No. of % of Amount % of

From To cases cases (Rs.) Amount

01 - 5000 20941 87.45 26577650.00 4.9714%

5001 - 10000 1579 6.59 12504970.00 2.3390%

10001 - 20000 709 2.96 10644010.00 1.9909%

20001 - 30000 214 0.89 5481050.00 1.0252%

30001 - 40000 95 0.40 3319060.00 0.6208%

40001 - 50000 87 0.36 4110880.00 0.7689%

50001 - 100000 125 0.52 9398940.00 1.7580%

100001 & above 195 0.81 462572550.00 86.5253%

o) Demateri- 99.42% of the equity shares of thealization of company have been demateria-Shares lised.

p) Outstanding FCCBs In September 2005, the Company

had issued Zero Coupon Foreign

Currency Convertible Bonds

(FCCBs) having an aggregate value

of US Dollars 40 Million. Since

these Bonds carried an option to

Bond Holders to convert them at a

pre-fixed rate before 8th August

2010, Bond holders, aggregating

US Dollars 37.50 Million, have got

their Bonds converted into Equity

Shares till 30th July, 2010, thereby

leaving outstanding Bonds worth

USD 2.50 Million. In the

eventuality of all FCCBs getting

converted, the total share

capital (without any further

enhancement) would be

5,40,45,213 equity shares of Rs. 10/

- each & the holding of Promoter

Group would then fall from existing

level of 39.25 % to 38.82%.

q) Plant/Office Location - The Company’s Plants are located

at Varsana, Nanichirai,

Gandhidham, Maduranthakam

(near Chennai), Daman,

Vishakhapatnam, Mahudi (near

Gandhinagar, Gujarat), Jaipur.

- In addition to the aforesaid

domestic plants,

1. Plant has been set up by PSL

FZE a Subsidiary of the

Company at Post Box No.

42131 Inner Harbour, Plot no,

HJ02, Hamriyah Free Trade

Zone, Sharjah in UAE.

2. Office has been set up by PSL

USA INC, Subsidiary of the

Company, at Corporation Trust

Center, 1209, Orange Street,

Wilmington, New Castle,

19801, Delaware in USA.

3. Plant has also been set up by

PSL-North America LLC,

Subsidiary of PSL USA INC, in

13092, Sea Plane Road, Bay St.

Louis, Mississippi 39520, USA.

4) Addresses for correspondence from Shareholders for queries/complaints, if any: -

a) Shri G. Gehani b) Karvy ComputershareDirector & Company Private LimitedSecretary (Share Transfer AgentsLegal & Secretarial Office of PSL Limited)3rd Floor, ‘Punj House’ 17–24 Vittalrao Nagar,M-13 A, Connaught Circus, Madhapur,New Delhi - 110 001. Hyderabad - 500 081.

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10. OTHER USEFUL INFORMATION FOR SHAREHOLDERS

UNCLAIMED DIVIDEND

i) As in compliance of Section 205 C of the Companies Act,1956, it is mandatory for the Company to transfer dividendremaining unclaimed for a period of seven years from thedate they become due for payment to Investor’s Education& Protection Fund (IEPF) established by the CentralGovernment, the Company has already transferred alldividends declared up to and including Interim Dividendfor 2002-03 and remained unclaimed to the said Fund.

As some amount from the dividends declared thereafter andtabulated below has still not been transferred to the aforesaidfund, the claimants of the said amount are requested toimmediately contact the Company.

Financial Type of Dividend Date Due date for

Year dividend No. of declaration transfer by the

of dividend company to

IEP Fund

2002-2003 Final 14th 25/09/2003 24/10/2010

2003-2004 Interim 15th 22/01/2004 20/02/2011

2003-2004 Final 16th 23/09/2004 22/10/2011

2004-2005 Interim 17th 19/01/2005 17/02/2012

2004-2005 Final 18th 25/09/2005 24/10/2012

2005-2006 Interim 19th 22/01/2006 20/02/2013

2005-2006 Final 20th 31/08/2006 29/09/2013

2006-2007 Interim 21st 18/01/2007 16/02/2014

2006-2007 Final 22nd 27/09/2007 26/10/2014

2007-2008 Interim 23rd 15/01/2008 13/02/2015

2007-2008 Final 24th 04/09/2008 02/10/2015

2008-2009 Interim 25th 30/01/2009 29/02/2016

2008-2009 Final 26th 21/07/2009 20/08/2016

2009-2010 Interim 27th 26/04/2010 25/05/2017

ii) Members holding shares in physical form are requestedto notify/send the following to the company's RTA toenable them to provide better services :-

a) Any change in the address/bank details,

b) Particulars of the bank A/c in case the same havenot been sent earlier.

iii) Members holding shares in electronic form are advisedthat their address/ Bank details as furnished to the companyby the respective depositories viz CDSL & NSDL, will beprinted on the dividend warrants. Members are requestedto inform the concerned DPs in case of any change intheir address etc, to facilitate better and quicker service.

iv) Although 99.42 % of Company's shares have already beendematerialized, members still holding their shares inphysical form are requested to get them dematerializedso that their eventual trading at the Stock Exchanges isfacilitated.

v) For better service to the investors and Shareholders,members are requested to submit their valuablesuggestions to the Secretarial and Legal Deptt. of theCompany.

DECLARATION BY THE CEO UNDER CLAUSE 49 OF THE LISTING AGREEMENT

REGARDING ADHERENCE TO THE CODE OF CONDUCT

In accordance with Clause 49 sub clause 1 (D) of the Listing Agreement with the Stock Exchanges, I herebyconfirm that, all the Directors and Senior Management personnel of the Company have affirmed compliance ofCompany’s Code of Conduct for the Financial Year ended on 31st March, 2010.

For PSL LIMITED

Sd/-

Place : Mumbai (Ashok Punj)

Date : 29th May, 2010 Managing Director

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Management Discussion and Analysis Report

INDUSTRY STRUCTURE & DEVELOPMENT

The financial crisis precipitated in September, 2008brought the world to a standstill and pushed most of thedeveloped economies into recession. The financial year2009-10 began on a positive note with the economiesworld over showing signs of recovery from the seriousrecessionary effects. The Indian economy stabilized inthe first quarter of the financial year2009-10 itself, when it clocked a GDP growth of 6.1%as against 5.8% in the fourth quarter of the precedingyear. It registered a strong rebound in the second quarter,when the growth rate rose to 7.9%.

In the year 2008-09 financial crisis had a limited impacton the Indian pipe industry affecting new oil and gasExploration and Production (E&P) projects worldwide dueto fall in global commodity prices including crude oilresulting into reduced orders. Leaving the worst financialcrisis behind, the pipeline industry remained optimisticregarding the potential demand for the pipe sector.

With the global economy returning to sustained growth,the pipeline industry is expected to accelarate. Thisrecovery is very encouraging for it has come aboutdespite a slackened economic growth. More importantly,it is the result of a renewed momentum in themanufacturing sector. The global demand for pipes islikely to increase as the E&P (exploration and production)projects of oil and gas companies which were previouslystalled or revoked, are being given new lease of life basedon the inevitable rise in crude oil process. This new spurtin demand will be positive for future growth.Replacement demand from developed nations remainsever so strong while domestic demand from the oil andgas sector is robust. Also, with the pipeline network ofIndia for oil & gas transport being lower at 17,576 kmsas on April 2009, (32% penetration level) it represents ahuge scope for growth of the pipe industry.

OPPORTUNITIES AND THREATS

India has become the global pipe manufacturing hub,especially of SAW pipes primarily due to its lower cost,high quality and geographical advantages. Even on theinternational front, while the demand for Pipe iscontinuously on rise mainly due to souring Crude Oilprices, adequate manufacturing capacity is lacking. Thereplacement demand from USA and European countries,having a vast pipeline infrastructure, will be huge.

A positive trend in the Indian pipe industry is expectedto continue on the back of higher E&P activities due toresurgence in crude oil price, increased efforts by theGovernment of India (GOI) on infrastructuredevelopment for laying pipelines for oil & natural gastransport (e.g. the National Gas Grid project),replacement demand from North America and Europeancountries, water & sewage transport and irrigationfacilities etc. Hence ample opportunities are availableboth on national as well as international front for PSL.

No particular industry offers only opportunities and nothreats. Hence, even the pipeline industry which is highlyRaw Material (RM) intensive with the RM cost accountingfor more than 70-80% of the total cost for pipe companiesalso enjoys opportunities and suffers from threats. Thesecompanies rely heavily on imports and, hence, suchcompanies have backward integration facilities to reducedependency on imports and price volatility. Freight costis another key cost component due to higher importsand exports. With the expected short-term increase inprices, pipeline companies will be benefited in thecoming years as customers will try to place advanceorders at attractive rates.

The Pipeline Industry suffers from various threats, someof which are :-

1. Heavy proportion of the single raw-material i.e. Steel,to the total cost of the finished product.

2. High Freight cost due to heavy weight and volume.

3. Higher requirement of expensive Working Capital.

4. High volatility in prices of HR Coils.

5. Sizeable impact of adverse fluctuation of foreignexchange on the raw-material cost endangeringrespectable profitability.

6. High dependence of big value Projects on politicalenvironment.

As most of the above threats are based on external factors,individual businesses have very little control over thesame. They can, at the most, minimize the adverse effectsof some of them, but cannot eliminate the effectaltogether.

OUTLOOK

With improvement in economic scenario, better liquidityenvironment, recent pick up in growth rate inmanufacturing sector, the business is expected to grow.With potential for growth, adequate manufacturingcapacities coupled with various management strategies,access to global market, management is optimistic aboutthe growth of the Company in the coming years.

The biggest challenge faced by pipe manufacturer is therising raw material costs. However, PSL overcomes suchhurdles with continuous improvement in internalefficiencies and cost – competitive production.

The strategically located plants of PSL, are an addedadvantage to the company, in terms of saving thetransportation cost of the manufactured pipes to thedesired destination fixed by its customers. The Companynow has a total of 11 Pipe Mills in India with a totalproduction capacity of more than 1 Million MetricTonnes of Pipes, which has enabled the Company toacquire the status of being the single largest manufacturerin India.

During the year, PSL has also set up and commissioned

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Management Discussion and Analysis Report

its new 300,000 MT per annum helical two-step (HTS)Vishakhapatnam pipe manufacturing facility, which willcater to the growing gas pipeline market by providinglarge-diameter steel pipes and coating services in theEastern part of the country. During the year, anothermanufacturing facility of 150,000 MT worth of pipe atMadhuranthakam facility, near Chennai, in SouthernIndia was commissioned.

The two facilities have been strategically positioned inthese locations so as to enhance the company’s regionalmanufacturing presence near energy & infrastructureprojects coming up in the Eastern & Southern parts ofthe country. The company is, thus, well equipped to caterto the upward trend in demand for steel pipe resultingfrom the various projects being implemented by largecompanies such as GAIL, Reliance, GSPL, Cairn Energy,GMR and others.

On international front, the high oil prices lead toincreased cash flow for oil and gas companies, whichare deployed into drilling activities to curtail demand-supply gap. Due to the above reason there is considerableincrease in the demand of pipes which is further expectedto increase in the next 4-5 years. As the production,however, does not usually match the required demand,there is a huge demand and supply mismatch, whichprovides immense opportunity for pipe manufacturers.

RISKS AND CONCERNS

The nature of Company’s business is such that variousrisks have to be confronted which not only exist in thesaid business but even grow at a respectable pace.However, these risks are no different than the ones facedby the industry as a whole. A comprehensive andintegrated risk management framework forms the basisof all the efforts of the Company. Formal reporting andcontrol mechanisms ensure timely informationavailability and facilitate proactive risk management.These mechanisms are designed to cascade down to thelevel of the line managers so that risks at the transactionallevel are identified and steps are taken towards mitigationin a decentralized fashion.

INTERNAL CONTROL SYSTEM AND THEIRADEQUACY

The company has a robust audit process comprising bothinternal and external audits to ensure adequacy andeffectiveness of controls. The internal controls areformulated and implemented by the management withan objective to achieve efficiency in operations, optimumutilization of resources and effective monitoring andcompliance with applicable laws. The qualified,experienced and independent Audit Committee of theBoard of Directors regularly reviews plans, significantaudit findings, compliance with accounting standardsand other legal requirements relating to financialstatements

FINANCIAL PERFORMANCE WITH RESPECT TOOPERATIONAL PERFORMANCE

The financial statements have been prepared inaccordance with the requirements of the Companies Act,1956 and the applicable accounting standards issuedby the ICAI .The management of PSL accepts the integrityand objectivity of these financial statements as well asthe various estimates and judgments used therein.

To minimize the occurrences of inefficient operationalperformance due to lack of timely decision making,adequate deliberation of powers to Senior and MiddleManagement has been resorted to. Most of the powershave been decentralized to the different operationallevels at widely spread network of Company’s plants.However, important areas like requirement of funds atdifferent Units and evolution of suitable mechanism toraise such funds is done in a centralized manner.

At operational level, apart from routine upgradation ofthe production facilities as may be required from time totime, continuous planning for setting up of new Projectsat appropriate locations is done at the Headquarter levelwith the help of suitable inputs from experienced UnitHeads.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT

Human Resources has always been most valuable assetfor PSL and the company constantly seeks to attract andretain the best available talent. Human resourcemanagement incorporates a process driven approachthat invests regularly in the training and developmentneeds of its employees through succession planning, jobrotation, on the job training and extensive trainingworkshops and programs. The Company holds variousemployee engagement programs in order to boostemployee morale, inculcate a feeling of team work andcreate a mechanism to recognize individual and teamcontributions to the organization. The employee turnoverfor many years at a stretch is adequate evidence of thesuccessful operation of the aforesaid philosophy of theCompany. With the work force of more than 2500individuals comprising of very well experienced staff andcompetent Executives at different levels, virtually noindustrial problem is experienced by the Company atany of its Units.

CAUTIONARY STATEMENT

Certain Statements made in this report relating toCompany’s objectives, outlook, future plans etc. mayconstitute “forward looking statement” within themeaning of applicable laws and regulations. Actualperformance may differ materially from such estimatesor projections, whether express or implied. Importantfactors that could make a difference to the Company’soperations; include Government Regulations, Taxregimes, Economic developments within India andcountries in which the company conducts business andother allied factors.

2 PSL Notice 6-26.p65 9/9/2010, 11:33 AM24


25

Compliance Certificate

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

The MembersPSL Limited

We have examined the compliance of conditions of Corporate Governance by PSL Limited, for the Year endedon March 31, 2010 as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examinationwas limited to the procedures and implementation thereof, adopted by the Company for ensuring the complianceof the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financialstatements of the Company.

In our opinion and to the best of our information and according to the explanations given to us.

i). We certify that the Company has complied with the mandatory conditions of Corporate Governance asstipulated in the above-mentioned Listing Agreement.

ii). We state that there are no investor grievance(s) pending for a period exceeding one month against thecompany as per the records maintained by the “Shareholder’s/Investor’s” Grievance Committee.

iii). We further state that such compliance is neither an assurance as to the future viability of the company northe efficiency or effectiveness with which the Management has conducted the affairs of the company.

For & on behalf ofSuresh C. Mathur & Company

Chartered Accountants

Sd/-Place : Mumbai Suresh C. MathurDate : 29th May, 2010 Partner

M. No. 1276

2 PSL Notice 6-26.p65 9/9/2010, 11:33 AM25


26

CEO/CFO Certificate

CEO/CFO CERTIFICATION

The Board of DirectorsPSL LIMITED

Ref: Financial Statements for the year 2009 – 2010– Certification by Managing Director/CEO and CFO

We, Ashok Punj, the Managing Director of PSL LIMITED appointed in accordance with provisions of the CompaniesAct, 1956 and K. Ramanathan the CFO of PSL LIMITED hereby certify that:

(a) We have reviewed Financial Statements and the Cash Flow Statement for the Financial Year 2009-10 andthat to the best of our knowledge and belief:

(i) These statements do not contain any false or materially untrue statement or omit any material fact orcontain statements that might be misleading;

(ii) These statements together present a true and fair view of the company’s affairs and are in compliancewith existing accounting standards, applicable laws and regulations.

(b) There are, to the best of our knowledge and belief, no transactions entered into by the company during theyear which are fraudulent or illegal or violative of the company’s code of conduct.

(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and thatwe have evaluated the effectiveness of internal control systems of the company pertaining to financial re-porting and we have disclosed to the Auditors and the Audit Committee, deficiencies in the design oroperation of such internal controls, if any, of which we are aware and the steps we have taken or propose totake to rectify these deficiencies.

(d) We have indicated to the Auditors and the audit committee that :-(i) there have been no significant changes in internal control over financial reporting during the year;

(ii) there have been no significant changes in accounting policies during the year; and

(iii) there have been no instances of significant fraud of which we have become aware of and, hence, therehas been no involvement of any management person or any employee having a significant role in thecompany’s internal control system over financial reporting.

Sd/- Sd/-(Ashok Punj) (K. Ramanathan)Managing Director Chief Finance Officer (CFO)

Place: MumbaiDate: 29th May, 2010

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27

Auditors’ Report

To

The Members of PSL Limited

1. We have audited the attached Balance Sheet as at March

31, 2010 and also the Profit and Loss account and the

Cash Flow statement for the year ended on that date

annexed thereto. These financial statements are the

responsibility of the company’s management. Our

responsibility is to express an opinion on these financial

statements based on our audit.

2. We conducted our audit in accordance with auditing

standards generally accepted in India. These standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial

statements are free of material mis-statement. An audit

includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting

principles used and significant estimates made by

management, as well as evaluating the overall financial

statement presentation. We believe that our audit

provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order,

2003 issued by the Central Government of India in terms

of sub-section (4A) of Section 227 of the Companies

Act, 1956, we enclose in the Annexure a statement on

the matters specified in paragraphs 4 & 5 of the said

Order.

4. Further to our comments in the annexure referred to

above, we report that:

(i) We have obtained all the information and

explanations, which to the best of our knowledge

and belief were necessary for the purposes of our

audit.

(ii) In our opinion, proper books of account as required

by law have been kept by the Company so far as

appears from our examination of those books.

(iii) The Balance Sheet, Profit and Loss account and

Cash Flow statement dealt with by this report are

in agreement with the books of account.

(iv) In our opinion, the Balance Sheet, Profit and Loss

account and Cash Flow statement dealt with by

this report comply with the accounting standards

referred to in sub-section (3C) of Section 211 of

the Companies Act, 1956.

(v) On the basis of the written representations received

from the Directors, as on March 31, 2010 and taken

on record by the Board of Directors, we report that

none of the Directors is disqualified as on March

31, 2010 from being appointed as a Director in

terms of clause (g) of sub-section (1) of Section 274

of the Companies Act, 1956.

(vi) In our opinion and to the best of our information

and according to the explanations given to us, the

said accounts read together with the significant

accounting policies in schedule “Q” and notes

appearing thereon give the information required

by the Companies Act, 1956, in the manner so

required and give a true and fair view in conformity

with the accounting principles generally accepted

in India;

(a) In the case of the Balance Sheet, of the state of

affairs of the company as at March 31, 2010;

(b) In the case of the Profit and Loss account, of

the profit for the year ended on that date; and

(c) In the case of Cash Flow Statement, of the cash

flows for the year ended on that date.

For & on behalf of

Suresh C. Mathur & Company


Registration No. 000891N

Sd/-

SURESH C. MATHUR

Place: Mumbai Partner

Date : 29th May, 2010 Membership No.1276

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR

REPORT OF EVEN DATE

1. The Company has maintained proper records showing

full particulars, including quantitative details at factory

level. Consolidation of the Assets including quantity

& value is under progress at the Corporate Office. In

accordance with the phased programme for

verification of fixed assets, certain items of fixed assets

were physically verified by the management during

the year and no material discrepancies were noticed

on such verification.

2. The inventory of the Company has been physically

verified by the management during the year. In our

opinion, the frequency of verification is reasonable.

In our opinion and according to the information and

explanations given to us, the procedures of physical

verification of inventory followed by the management

were found reasonable and adequate in relation to

the size of the Company and the nature of its business.

On the basis of our examination of records of

inventory, in our opinion, the Company has

maintained proper records of inventory and the

discrepancies noticed on physical verification between

the physical stocks and the book records were not

material in relation to the operations of the Company.

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28

Auditors’ Report

3. According to information and explanation given to us

the company has not granted any loans secured or

unsecured to Companies, Firms or other parties which

are of the nature required to be covered under Section

301 of the Companies Act 1956. However the

company has given Rs. 605.25 lacs as interest free

advance to a wholly owned subsidiary during the year,

which is repayable on demand.

4. In our opinion and according to the information and

explanations given to us, there are adequate internal

control procedures commensurate with the size of the

Company and the nature of its business for the

purchase of inventory, fixed assets and for the sale of

goods. Further, on the basis of our examination and

according to the information and explanations given

to us, we have neither come across nor have we been

informed of any instance of major weaknesses in the

aforesaid internal control procedures.

5. In our opinion and according to the information and

explanations given to us, the transactions made in

pursuance of contracts of arrangements entered in the

register maintained under Section 301 of the

Companies Act, 1956 and exceeding the value of

rupees five lakhs in respect of any party during the

year have been made at prices which are reasonable

having regard to prevailing market prices at the relevant

time.

6. The Company has not accepted any deposits from the

public.

7. In our opinion, the Company has an internal audit

system, commensurate with the size of the Company

and the nature of its business.

8. We have broadly reviewed the books of account

maintained by the Company in respect of products

where, pursuant to the Rules made by the Central

Government, the maintenance of cost records has been

prescribed under Section 209 (1)(d) of the Companies

Act, 1956. We are of the opinion that prima facie the

prescribed accounts and records have been

maintained. We have not, however made a detailed

examination of the records with a view to determining

whether they are accurate or complete.

9. According to the records of the Company, the

Company is regular in depositing undisputed statutory

dues including with-holding of taxes, Provident Fund,

Employees State Insurance, Income Tax, Sales Tax,

Wealth Tax, Custom Duty, Excise Duty, Service Tax,

Cess and other Statutory Dues applicable to it with

the appropriate authorities. According to the

information and explanations given to us, no

undisputed amounts payable in respect of Income Tax,

Fringe Benefit Tax, Wealth Tax, Sales Tax, Customs

Duty, Service Tax, Excise Duty and Cess were

outstanding, at the year end for a period of more than

six months from the date they became payable.

As on March 31, 2010, according to the records of the

Company the following are the particulars of disputed

dues on account of Excise Duty, Customs, Income Tax,

Service Tax and Sales Tax that have not been deposited.

Sr. Nature of Amount Period to Forum where the

No. Dues Under Which the dispute is pending

Dispute Amount

(Rs. in Lacs) Relates

1 Central Excise 25 2004-2005-2006 Tribunal, Ahmedabad

2 — do — 3752 2006 Tribunal, Ahmedabad

3 — do — 1467 2008 Commissioner Rajkot

4 — do — 1452 2008 Commissioner Rajkot

5 — do — 8 2010 Jt. Commissioner

C.Ex.Puducherry

6 Customs 179 2009 DRI

7 — do — 127 2009 Commissioner of

Customs, Kandla

8 Service Tax 45 2008 Tribunal, Chennai

9 — do — 10 2009 Jt.Commissioner C.Ex.

Puducherry

10 — do — 209 2009 Commissioner C.Ex.

Puducherry

11 — do — 66 2009 Asst. Commissioner,

Service Tax, Rajkot

12 — do — 2 2009 Asst. Commissioner,

Service Tax, Vizag

13 — do — 15 2009 Asst. Commissioner ,

Service Tax, Vizag

14 Sales Tax 43 2000-01 Pending in AP High

Court

15 — do — 14 1999-2000 Tribunal, Ahmedabad

16 — do — 1200 2003-04-05 AP High Court

17 Income Tax 723 2005-2006 Commissioner of

Income Tax (Appeal)

18 — do — 154 2006- 2007 Commissioner of

Income Tax (Appeal ) &

ITAT

19 — do — 478 2007-2008 Commissioner of

Income Tax (Appeal)

10. The Company has no accumulated losses at the end

of the financial year and it has not incurred any cash

losses in the current and immediately preceding

financial year.

11. Based on our audit procedures and on the information

and explanations given by the management, we are

of the opinion that the Company has not defaulted in

repayment of dues to financial institution, and banks.

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29

Auditors’ Report

12. According to the information and explanations given

to us and based on the documents and records

produced to us, the Company has not granted loans

or advances on the basis of security by way of pledge

of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund or a

nidhi/mutual benefit fund/society. Therefore, the

provisions of clause 4(xiii) of the Companies (Auditor’s

Report) Order, 2003 are not applicable to the

Company.

14. In our opinion, the Company is not dealing in or trading

in shares, securities, debentures and other investments.

Accordingly, the provisions of clause 4(xiv) of the

Companies (Auditor’s Report) Order, 2003 are not

applicable to the Company.

15. Based on information and explanations given to us by

the management, term loans were applied for the

purpose for which the loans were obtained.

16. According to the information and explanations given

to us and on an overall examination of the Balance

Sheet and Cash Flow statement of the Company, we

report that no funds raised on short-term basis have

been used for long-term investment and no long-term

funds have been used to finance short-term assets

(excludes Long Term working capital).

17. The Company has not made any preferential allotment

of shares to parties and Companies covered in the

Register maintained under Section 301 of the

Companies Act, 1956 during the year.

18. The Company has raised Rs. 10,75,00,000/- (Rupees

Ten Crore Seventy Five Lakhs only) as share capital

during the year by way of preferential allotment to

private investors.

19. Based upon the audit procedures performed for the

purpose of reporting the true and fair view of the

financial statements and as per the information and

explanations given by the management, we report that

no fraud on or by the Company has been noticed or

reported during the course of our audit.

For & on behalf of

Suresh C. Mathur & Company



Sd/-

Suresh C. Mathur

Place : Mumbai Partner

Date : 29th May, 2010 Membership No.: 1276

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30

BALANCE SHEET AS AT 31ST MARCH, 2010[Rs. in lacs]

Schedule As at As atMarch 31, 2010 March 31, 2009

SOURCE OF FUNDS

SHARE HOLDERS’ FUNDSA) Share Capital A 5,333.20 4,258.19B) Reserves & Surplus B 78,509.37 83,842.57 58,593.49 62,851.68

LOAN FUNDSA) Secured Loans C 188,710.80 61,963.83B) Unsecured Loans D 6,128.50 194,839.30 1,273.75 63,237.58

Deferred Taxation Liability 1,065.70 42.51

TOTAL 279,747.57 126,131.77

APPLICATION OF FUNDS

FIXED ASSETS EA) Gross Block (At cost) 110,502.79 78,113.83B) Less: Depreciation 39,137.91 32,513.87C) Net Block 71,364.88 45,599.96D) Add: Capital Work in Progress 31,562.56 102,927.44 22,839.73 68,439.69

INVESTMENTS F 19,435.82 19,426.92

CURRENT ASSETS, LOANS & ADVANCESA) Inventories G 112,294.82 171,778.36B) Sundry Debtors H 50,469.02 52,326.42C) Cash and Bank Balances I 10,719.36 12,061.86D) Loans and Advances J 60,232.07 50,642.91

233,715.27 286,809.54LESS : CURRENT LIABILITIES & PROVISIONSA) Current Liabilities K 71,186.23 242,436.61B) Provisions L 5,144.73 6,107.77

76,330.96 248,544.38

NET CURRENT ASSETS 157,384.31 38,265.16

MISCELLANEOUS EXPENDITURE NIL NIL

TOTAL 279,747.57 126,131.77

NOTES TO ACCOUNTS Q

Balance Sheet

As per our report attached FOR AND ON BEHALF OF THE BOARD OF DIRECTORSFor Suresh C. Mathur & Co.Chartered Accountants

(SURESH C. MATHUR) M. VENKATESH K. RAMANATHAN ALOK PUNJ ASHOK PUNJPartner Sr. Vice President Chief Finance Officer G.S. SAUHTA M.M. MATHURM.No. 1276 (International Finance) D.N. SEHGAL R.K. BAHRI

S.P. BHATIA C.K. GOELPlace: Mumbai G. GEHANI (Director & Company Secretary)

Date: 29th May, 2010 Directors

3 PSL-27-48.p65 9/9/2010, 11:33 AM30


31

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010[Rs. in lacs]

Schedule For the Year Ended For the Year EndedMarch 31, 2010 March 31, 2009

INCOME M 281,065.51 354,995.03281,065.51 354,995.03

EXPENDITURERaw materials and Stores N 207,832.08 254,285.33Excise Duties and Taxes 16,836.40 32,618.37Manufacturing & Process Expenses (includes freight) 13,584.37 22,938.69Employees Remuneration & Benefits O 5,885.88 6,312.31Other Expenses P 7,663.51 10,388.83Interest on Term Loans & Overdrafts 10,898.71 10,071.93Depreciation 6,634.81 269,335.76 5,706.64 342,322.10

PROFIT BEFORE TAXATION 11,729.74 12,672.93Less: Provision for Taxation

Current Tax 1,876.82 4,118.73Fringe Benefit Tax NIL 80.00Deferred Tax 1023.18 2,900.00 (118.73) 4,080.00

PROFIT AFTER TAXATION 8,829.75 8,592.93Less:

Transfer to General Reserve 882.97 1,000.00Interim Dividend NIL 1,063.51Proposed Dividend 2,131.62 1,064.55Tax on Proposed Dividend 354.04 180.97Tax on Interim Dividend NIL 180.74

Prior Year ExpensesIncome Tax 285.03 3,653.66 (191.71) 3,298.06

BALANCE CARRIED OVER TO BALANCE SHEET 5,176.09 5,294.87

EARNINGS PER SHARE (BASIC) Rs. 18.03 20.12

(Face Value Rs.10/- each]

EARNINGS PER SHARE (DILUTED) Rs. 17.82 19.85

NOTES TO ACCOUNTS Q

Profit and Loss Account





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32

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2010[Rs. in lacs]

As at As atMarch 31, 2010 March 31, 2009

SCHEDULE “A” – SHARE CAPITAL

Authorised :100,000,000 EQUITY SHARES OF RS. 10 EACH 10,000.00 10,000.00

A. Issued & Subscribed :-53,460,911 EQUITY SHARES OFRS. 10/- EACH (PREVIOUS YEAR 42,710,911) 5,346.09 4,271.09(Of the above shares 10,750,000 fully paid-up and pari passu rankingequity shares of Rs. 10/- each were allotted consequent uponQualified Institutional Placement)

B. Paid up Capital53,460,911 EQUITY SHARES OF RS. 10/- EACH 5,346.09 4,271.09(PREVIOUS YEAR 42,710,911)(Of the above shares 10,750,000 fully paid-up and pari passu rankingequity shares of Rs. 10/- each were allotted consequent upon QualifiedInstitutional Placement)

LESS: ALLOTMENT MONEY IN ARREARS PERTAINING TOTHE SHARES ALLOTTED PRIOR TO MERGER. (Directors: Nil) 12.89 12.90

5,333.20 4,258.19

SCHEDULE “B” – RESERVES AND SURPLUS

A. General ReserveAs per Last Balance Sheet 4,874.25 3,874.25Add:Transfer from Profit & Loss Account 882.97 5,757.22 1,000.00 4,874.25

B. Security PremiumAs per Last Balance Sheet 29,092.11 29,092.11Add: Additions during the year 13,856.75 NIL

42,948.86 29,092.11Less: Allotment Money in Arrears (Directors Nil) 95.83 42,853.03 95.93 28,996.18

C. Investment Allowance Utilised Reserve 139.64 139.64As Per Last Balance Sheet

D. Profit and Loss AccountAs per last Balance Sheet 24,583.38 19,288.54Add: Transfer during the year 5,176.09 29,759.48 5,294.87 24,583.41

78,509.37 58,593.49

Schedules

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33



SCHEDULE “C” – SECURED LOANS

A. Term Loan from Financial Institutions, Banksand Non Banking Financial Institutions 29343.52 10,353.64[Secured against first charge on pari passubasis on some of the immovable & moveableassets of the Company ]

B Working Capital Term Loan from Scheduled Banks 20000.00 NIL[Secured against first charge on pari passu basis onsome of the immovable & moveable assets of theCompany]

C From Scheduled Banks 139,345.02 51,526.91[Secured against hypothecation of Current Assets andsecond charge on the assets as per [A&B] above]

D From Scheduled Banks 22.26 46.33[Motor Vehicle Loans]

E Interest Free Sales Tax Deferred Scheme ofGovt. of Tamil Nadu NIL 36.94[Secured against second charge on specific assetsof the Company ]

188,710.80 61,963.83

SCHEDULE “D” – UNSECURED LOANS

Foreign Currency Convertible Bonds(Redeemable in 2010 ) (Unsecured) 1,128.50 1,273.75

From Scheduled Banks 5,000.00 NIL

6,128.50 1,273.75

Schedules

3 PSL-27-48.p65 9/9/2010, 11:33 AM33


34

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32

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43

68

.23

CO

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S105.1

0 N

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05

.10

10

2.2

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2.8

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0.0

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.29

0.1

90

.01

NIL

0.2

10

.08

0.0

5

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TH

MO

VIN

G E

QU

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3,5

77

.01

22

.05

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3,5

99

.06

2,7

59

.35

25

0.6

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IL3

,01

0.0

15

89

.05

81

7.6

6

SHED

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NST

RU

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N4

95

.26

44

3.3

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38

.62

42

1.7

88

.16

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42

9.9

45

08

.68

73

.48

T O

T A

L7

8,1

13

.83

32

,40

6.7

81

7.8

2

110,5

02.7

9

32,5

13.8

6

6,6

34.8

1

1

0.7

7

39,1

37.9

1

71,3

64.8

8

4

5,5

99.9

8

TO

TAL

PR

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YEA

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1,2

30

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6,9

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27

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78

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5,7

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26

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32

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3.8

74

5,5

99

.96

44

,39

7.6

4

Schedules

3 PSL-27-48.p65 9/9/2010, 11:33 AM34


35



SCHEDULE “F” – INVESTMENTS

UNQUOTED [FULLY PAID UP] AT COST(I) LONG TERM INVESTMENTS :

COMPANY UNDER SAME MANAGEMENTa) 1,330,000 Equity Shares of Rs. 10/- each of

BHI LTD. (Previous year 1,330,000 Shares) 133.00 133.00b) 150,000 Equity Shares of Rs.10/- each of

Punj International Pvt. Ltd. 15.00 15.00(Previous Year 150,000 Equity Shares)

c) 7500 Equity Shares of Rs. 10/- each ofBroken Hills International Ltd. 0.75 0.75(Previous year 7500 equity shares)

d) 2000 Equity Shares of Rs. 100/- each ofPunj Investments Pvt. Ltd. 2.00 2.00(Previous year 2000 equity shares)

e) 860,000 Equity Shares of Rs. 10/- each ofEurocoustic Products Ltd.(Previous Year 860,000 Equity Shares) 86.00 86.00

f) 100,000 Equity Shares of Savvy ConsultantsPvt.Ltd. of Rs. 10/- each 10.00 10.00(Previous Year 100000 Equity Shares)

g) 92,000 Equity Shares of Punj CorporationPvt.Ltd. of Rs. 10/- each(Previous Year NIL) 9.20 255.95 NIL 246.75

(II) SUBSIDIARY COMPANYa) 14,00,020 Equity Shares of Rs. 10/- Each

of PSL Corossion Control Services Ltd. 140.00 140.00(Previous year 14,00,020 )

b) 26,475,242 Equity Shares of USD 1/- onPipeline Systems Ltd. Mauritius 10,636.24 10,636.24(Previous year 26,475,242 Equity Shares)

c) 20,003,083 Equity Shares of USD 1 /- onPSL USA, INC. 8,313.50 19,089.75 8,313.50 19,089.75(Previous year 20,003,083 Equity Shares)

(III) OTHERSa) 3 National Savings Certificates of

Rs. 10,000/- each. (Previous Year 3 Nos.) Nil 0.30b) 128 Shares @ 100/- in The Gandhidham

Mercentile Co-Op Bank Ltd. (Previous year 128) 0.13 0.13c) SBI Capital Protection Oriented Fund

(Mutual Fund) (Previous year 100) 100.00 100.13 100.00 100.42

19,445.82 19,436.92Less: Provision for diminution invalue of Investments [Savvy Consultants Pvt. Ltd.] 10.00 10.00

19,435.82 19,426.92

SCHEDULE “G” – INVENTORIES

(Certified by the Management)

Raw Materials, Consumables, Semi-finished Goods,Work in progress 98,059.90 160,075.29Finished Goods 14,234.92 11,703.07

112,294.82 171,778.36

Schedules

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36



SCHEDULE “H” – SUNDRY DEBTORS

(Unsecured but Considered Good)A. Debts outstanding for a period

of less than six months 44,373.54 45,511.67

B. Debts outstanding for a periodof more than six months 6,095.48 50,469.02 6,814.75 52,326.42

50,469.02 52,326.42

SCHEDULE “I” – CASH AND BANK BALANCES

A. Cash in Hand 53.35 116.52B. Funds in transit NIL 11.80C. In Current Account with Scheduled Banks 1,494.67 1,839.14D. In Deposit Account with Scheduled Banks 9,171.33 10,094.38

(Includes Rs. 5,739.01 Lacs Under Lien tothe Bank for facilities availed)(Previous year Rs. 6,711.81 Lacs under lien) 10,719.36 12,061.86

SCHEDULE “J” – LOANS AND ADVANCES

(Unsecured but Considered Good)

A Security Deposit 37,131.99 43,245.77(Includes Central Excise, Service Tax,VAT deposit of Rs. 33,927.95 Lacs)(Previous year Rs. 40,320.23 Lacs)

B Advance recoverable in cash or in kind or forthe value to be received (include advances forexpenses to companies in which some directors 21,785.14 5,424.62are interested Rs. 605.25 Lacs)(Previous year: Rs. 492.03 Lacs)

C Advance Payment against Taxes 1,314.93 1,972.52

60,232.07 50,642.91

SCHEDULE “K”– CURRENT LIABILITIES

A. Sundry Creditors for Purchases 48,022.95 230,100.77B. Other Current Liabilities 9,843.98 10,486.14C. Mobilization Advance 13,319.29 1,849.70

71,186.23 242,436.61

SCHEDULE “L” – PROVISIONS

Provision for Taxation - Current Tax 1,876.82 4,080.00Provision for redemption of FCCB 782.25 782.25Proposed Dividend 2,131.62 1,064.55Tax on Proposed Dividend 354.04 180.97

5,144.73 6,107.77

Schedules

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37

SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH 31, 2010

[Rs. in lacs]

For the Year Ended For the Year EndedMarch 31, 2010 March 31, 2009

SCHEDULE “M” – INCOME

Sales & Pipe Coating Receipts 276,152.06 348,795.72Other Income 4,913.44 281,065.51 6,199.32 354,995.04

281,065.51 354,995.04

SCHEDULE “N” – RAW MATERIALS AND STORES

A. Raw Materials ConsumedOpening Stock of Raw Materials 85,324.02 20,656.21Add: Purchases of Raw Materials 144,229.07 344,445.83

229,553.10 365,102.04Less: Closing Stock of Raw Materials 22,968.65 85,324.02

206,584.45 279,778.02B. Consumption of Stores

Opening Stock of Stores 5,240.69 4,285.73Add: Purchase of Stores 4,119.47 7,379.21

9,360.16 11,664.94Less: Closing Stock of Stores 5,154.31 5,240.69

4,205.85 210,790.30 6,424.24 286,202.26C. Change in Finished Goods & WIP (2,958.22) (31,916.93)

207,832.08 254,285.33

SCHEDULE “O” – EMPLOYEES’ REMUNERATION & BENEFITS

Salaries,Wages & Bonus 4,630.89 4,707.50Staff Welfare 611.34 773.77Contribution to Provident and other Funds 643.66 831.05

5,885.88 6,312.31

SCHEDULE “P” – OTHER EXPENSES

Conveyance 65.33 59.87Travelling Expenses 348.63 422.57Postage, Telegrams and Telephones 111.87 131.12Printing and Stationery 103.36 117.27Rent, Rates & Taxes 530.23 523.16Electricity Charges 57.78 73.01Professional Charges 145.12 825.51Repair and Maintenance (Plant) 74.96 119.39Repair and Maintenance (Building) 41.21 60.28Repair and Maintenance (Others) 305.42 376.31Insurance 196.21 234.00Auditors’ Remuneration 18.00 18.00Vehicle Expenses 175.54 180.46General Expenses 1,172.95 2,078.52Agency Commission 35.32 94.78Prepayment, Syndication, Processing Fees to Bank 1,613.15 685.13Bank Charges 2,668.41 4,389.43

7,663.51 10,388.83

Schedules

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SCHEDULE “Q” - NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2010.

1. SIGNIFICANT ACCOUNTING POLICIES :

a. Method of AccountingThe Accounts have been prepared to comply in all material aspects with applicable principles in India and the AccountingStandards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act,1956.

b. InventoriesThe Raw Materials, Stores and Spare Parts are valued at a cost, which is arrived on FIFO basis. Work in progress, SemiFinished Goods and Finished Goods are valued at cost or at the net realisable value,whichever is lower. Cost of Inventoriescomprises of all costs of purchase (other than refundable duties and taxes), costs of conversion & other costs incurred inbringing the inventories to their present condition and locations. Costs of Raw Materials, Packing Materials and Stores andSpares are determined by the average method. Cost of Work in Process and Finished Goods Inventories are determined bythe absorption costing method. Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

c. DepreciationDepreciation is provided from the date the assets have been installed and put to use on written down value method at therates and in the manner prescribed by schedule XIV of the Companies Act, 1956. Lease hold land is being amortised overthe period of lease. Depreciation on additions to assets or on sale - discardement of assets, is calculated pro-rata from themonth of such addition or upto the month of such sale/discardment, as a case may be.

d. Research and Development ExpenditureRevenue Expenditure is charged in Profit & Loss Account and Capital Expenditure is added to the cost of Fixed Assets inthe year when it is incurred.

e. Revenue Recognition/IncomeRevenue Income is recognised on accrual basis except where mentioned otherwise, in particular:i. Sales revenue is recongnised when it is earned and no significant uncertainty exists as to its realisation or collection.

Sales are net of sales return and trade discounts. Rebate, claims and discounts are accounted for as and whendetermined. Deductions made have been reduced from the Sales where found necessary. Export sales are accountedon the basis of acceptance by the customers and on the basis of export bill of lading.Export sales are accounted as per the prevailing exchange rate on the date of transaction.Revenue from services is recongnised on rendering of services.

ii. Gross Sales include excise duty collection of Rs. 10,095.74 lacs, Service Tax, Sales Tax and Freight charged in invoices.iii. The pipe coating income is recognised after inspection, approval by customers and after dispatch.iv. Interest income is taken on accrual basis. Interest Income of Rs. 477.88 Lacs netted off against interest payment

during the year. (Previous year interest income of Rs.769.75 lacs netted off against interest payment) wherever applicable.v. Dividend income on investments are accounted for when the right to receive the payment is established.vi. Expenditures are accounted for on accrual basis and provisions are made for all known liabilities.

f. Treatment of expenditure during construction period:Expenditure in the case of new units and substantial expansion of existing units during the construction period is includedin the work in progress and the same is allotted to the respective Fixed Assets on the completion of the construction.

g. Fixed Assetsi. Fixed assets are stated at cost of acquisition and installation. The cost includes freight, taxes and related incidental

expenses less Modvat Credit.ii. The company has erected factory building sheds and installed plant and machinery on lease hold land. The company

had incurred some developmental expenditure which was earlier in CWIP on factory buidling, plant and on leasehold land which increase the future benefits from the existing assets beyond its previously assessed standard ofperformance i.e. increase in capacity, modernisation & upgradation.

h. Foreign Currency Transactionsi. a. The company is exposed to Currency Fluctuations on foreign currency transactions. With a view to minimize the

volatility arising from fluctuations in the currency rates, the company follows established risk managementpolicies including the use of exchange forward contracts and other derivative instruments.

b. Foreign Currency transactions are recorded at the exchange rate prevailing on the date of such transactions.Monetary Assets and Liabilities in Foreign Currency as in the Balance Sheet. Gains and Losses arising on accountof difference in foreign exchange rates on settlement / translation of monetary assets and liablities are recognizedin the Profit and Loss Account.

c. In respect of forward contracts assigned to the foreign currency assets as at the Balance Sheet date, the proportionatepremium / discount for the period up to the date of Balance Sheet is recognized in the Profit and Loss Account.The exchange difference measured by the exchange rate between the inception of forward contract and date ofBalance Sheet is applied on foreign currency amount of the forward contract and is recognized in the Profit andLoss Account.

ii. All loans and deferred credits repayable in foreign currency and outstanding at the close of the year are expressed inIndian currency at the appropriate rate of exchange prevailing on the date of Balance Sheet.

iii. Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year,are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of Balance Sheet.Resultant gain or loss is accounted during the year.

Schedules

3 PSL-27-48.p65 9/9/2010, 11:33 AM38


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i. Employee BenefitsA. Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short termemployee benefits and they are recognized in the period in which the employee renders the related service. TheCompany recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange forservices rendered as a liability (accrued expense) after deducting any amount already paid.

B. Post-employment benefits(a) Defined contribution plans

Defined contribution plans are Provident Fund Scheme, Employee State Insurance Scheme and Governmentadministered Pension Fund Scheme for all employees and superannuation scheme for eligible employees. TheCompany’s contribution to defined contribution plans are recognised in the Profit and Loss Account in theFinancial Year to which they relate.The Company makes specified monthly contributions towards employee provident fund to the Regional ProvidentFund Authority by the Company.

b) Defined benefit plansDefined benefit gratuity planThe Company operates a defined benefit gratuity plan for employees. The Company contributes the same to LIC,towards meeting the Gratuity obligation.

C. Other Long Term Employee BenefitsEntitlements to annual leave and sick leave are recognized when they accrue to employees. Sick leave can only beavailed while annual leave can either be availed or encashed subject to a restriction on the maximum number ofaccumulation of leave. The Company determines the liability for such accumulated leaves using the Projected AccruedBenefit method with actuarial valuations being carried out at each Balance Sheet date.

For the year ended March 31, 2010, provision for Employees Benefits amounting to Rs. 63.73 Lacs towards Leave Encashmenthas been made to SBI Life Insurance Co. Ltd., Mumbai. The actual liability as per acturial valuation amounts to Rs. 95.37Lacs

Schedules

Disclosure as per Accounting Standard - 15 - (Revised 2005)(Rs. In lacs)

2009-10 2008-09i) Defined Contribution Plan -

The Company has recognised the following amounts in theProfit and Loss accounts for the yearContribution to Employee’s Provident Fund - RPFC 267.80 258.91Contribution to Employee’s Provident Fund - Trust NIL NILContribution to Pension Fund 128.88 130.02Contribution to Superannuation Fund 166.37 152.54

563.05 541.47ii) Defined Benefit Plan -

The following table set out the status of the gratuity plan as requiredunder AS 15 (Revised 2005)

(a) A reconciliation of opening and closing balances of the present valueof the defined benefit obligation (DBO)Opening DBO 1,326.63 1,089.68Current service cost 84.84 74.23Interest cost 115.36 94.76Actuarial (gain)/loss NIL NILPast Service Cost NIL NILLiabilities Extinguished on settlements NIL NILBenefits paid 22.81 25.03

Closing DBO 1,504.02 1,233.64(b) A reconciliation of the opening and closing balances of the fair value of

plan assets:Opening fair value of plan assets 963.93 766.77Expected return 89.79 74.80Actuarial gain/ (loss) NIL NILContribution by the employer 62.07 147.39Assets Distributed on Settlements NIL NILBenefits paid 22.81 25.03

Closing fair value of plan assets 1,092.98 963.93( c) A reconciliation of the present value of the defined benefit obligation

and the fair value of the plan assets to the assets recognised in thebalance sheet:Present value of the defined benefit obligation at the end of the period 1,504.02 1,233.64Fair value of the plan assets at the end of the year 1,092.98 963.93

Liability recognised in the balance sheet 411.04 269.71

3 PSL-27-48.p65 9/9/2010, 11:33 AM39


40

j Derivative InstrumentsI. The Company has entered into the following Derivative Instruments.

a. Forward Exchange contracts (being a derivative instrument), which are not intended for trading or speculativepurposes, but for hedge purposes, to establish the amount of reporting currency required or available at thesettlement date of certain payables and receivables.Forward Exchange Contracts entered into by the Company as on March 31, 2010.: N I L

b. Interest Rate Swaps to hedge against fluctuations in interest rate changes :No. of Contracts : N I LNotional Principal : N I L

c. Currency Swaps (other than forward exchange contracts stated above) to hedge against fluctuations in changes inexchange rate.

No. of Contracts : N I LNotional Principal : N I L

II. The year end Foreign Currency exposures that have not been hedged by a derivative instrument or otherwise aregiven below :

Receivables/(Payables) Receivables/(Payables)(Rs. in Lacs) In Foreign Currency (USD)

2009-10 2009-10

9825.37 U S Dollars 222.51

III. Derivative Instruments (causing an unhedged Foreign Currency exposure) N I L

k. Investmentsi. Investments are of long term nature and are stated at cost of acquisition, less any diminishing in the value other than

temporary.ii. The investments in Companies under the same management and its subsidiaries whose shares are unquoted are

valued at cost. The Management is of the opinion that there is no diminishing value on these Investments.

l. Borrowing CostInterest & other borrowing costs on specific borrowings relatable to the qualifying assets are capitalised. Other interestsand borrowing costs are charged to Revenue.

m. Cash Flow StatementThe Cash Flow statement is prepared by the indirect method set out in Accounting Standard - 3 on Cash Flow Statementand presents cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents

(d) The total expense recognised in the profit and loss account:Current service cost 84.84 74.23Interest Cost 115.36 94.76Expected return on plan assets (89.79) (74.80)Actuarial (gains)/loss NIL NILPast Service Cost NIL NILLosses/(Gains) on “Curtailments & Settlements” NIL NIL

Net Gratuity cost 110.41 94.19(e) For each major category of plan assets following is the percentage that

each major category constitutes of the fair value of the total plan assets.LIC of India 100% 100%Government of India securitiesCorporate bondsSpecial deposit schemes/others

(f) Actual return on plan assets 9.32% 9.32%(g) Following are the Principal Actuarial Assumptions used as at the balance

sheet date :

Discount rate 7.66% 7.67%Expected rates of return on any plan assets 9.32% 9.32%Average Salary escalation rate for Management 5.33% 5.33%Average Salary escalation rate for Non Management for Each YearAverage Salary escalation rate for Non Management Every Third Year

The estimates of the future salary increases considered in Actuarial valuation take account of inflation, seniority promotion and otherrelevant factors.

* Including Contribution to Recognised Provident Fund Scheme (in respect of employees of Pune and Head office, Mumbai) a defined benefitscheme in the absence of actuarial valuation for Provident Fund Liability. (Refer Note 1(i)(v) in Schedule 14)

Disclosure as per Accounting Standard - 15 - (Revised 2005) (Contd.)(Rs. In lacs)

2009-10 2008-09

Schedules

}

3 PSL-27-48.p65 9/9/2010, 11:33 AM40


41

}

Schedules

presented in the Cash Flow statement consists of cash in hand and demand deposits with banks as on the Balance Sheetdate.

n. ProvisionsA provision is recognised when there is a present obligation as a result of past event, it is probable that an outflow ofresources will be required to settle the obligations and in respect of which reliable estimate can be made. Provision is notdiscounted to its present value and is determined based on the best estimate required to settle the obligation at the yearend date. These are reviewed at each year end date and adjusted to reflect the best current estimate.

o. Segment ReportingThe Group is engaged in the business of production of steel products which in the opinion of the management is consideredthe only business segment in the context of Accounting Standard - 17 on Segmental Reporting. Also, the Group does notconsider any significant difference as regards the risks and returns of the product with reference to export and domesticsales. Therefore, Segment information as required by Accounting Standard - 17 is not applicable.

p. Related Parties and Key Management Personnel DisclosureA. Name of the Party and the relationship

i. PSL Corrosion Control Services Ltd. : 100% Subsidiary Companyii. Pipeline Systems Ltd., Mauritius : 100% Subsidiary Companyiii. PSL USA INC., Delaware, USA : 100% Subsidiary Companyiv. BHI Ltd.v. Broken Hills International Ltd.vi. Eurocoustic Products Ltd. Companies in which control exists directly / indirectlyvii. Punj International Pvt. Ltd.viii. Punj Investments Pvt. Ltd.ix. Punj Corporation Private Limitedx. PSL FZE, Sharjah. : 100% Subsidiary Company of Pipeline Systems Ltd., Mauritiusxi. PSL North America LLC. : JV Company of PSL USA INC, Delware, USA, (78% holding)

Ashok Punj : Managing DirectorM. M. Mathur : DirectorR. K. Bahri : DirectorG. S. Sauhta : DirectorD. N. Sehgal : DirectorS. P. Bhatia : DirectorC. K. Goel : DirectorG. Gehani : Director & Co. Secretary

B. Nature of Transaction

Sr. Particulars Key Subsidiary Companies in which controlNo. Personnel exists directly/indirectly

1. Purchase of Goods - - 25.882. Purchase of Capital Goods - 0.84 -3. Reimbursement of Expenses - 305.69 176.914. Lease Rental - 1.90 102.315. Remuneration 840.62 - -

q. LeaseOperating lease payments are recognized as expenditure in the Profit and Loss Account on a straightline basis, which isrepresentative of the time pattern of benefits received from the use of assets taken on lease. Lease rentals in respect ofoperating lease are recognized as income over the lease period.

r. Earning Per Share

The Company reports basic and diluted Earnings Per Share in accordance with Accounting Standard 20 on Earning PerShare. Basic Earnings per share is computed by dividing the net profit or loss for the year by the weighted average numberof equity shares outstanding during the year. Diluted Earnings Per Share is computed by dividing the net profit or loss forthe year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of alldilutive potential equity shares, except where the results are anti-dilutive.

2009-10 2008-09

Weighted average number of shares at the beginning Nos 48981744 Nos 42710911

and at the end of the year.Net Profit after tax available for Equity Shareholders (Rs.in Lacs) 8829.75 (Rs.in Lacs) 8592.93Basic Earnings per share Rs. 18.03 Rs. 20.12Diluted Earnings per share Rs. 17.82 Rs. 19.85

s. Management EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles requires estimatesand assumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent liabiltieson the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from these estimates and the differences between actual results and estimates are recognised inthe periods in which the results are known / materialize.

(Rs. in lacs)

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t. Accounting for Taxes on Income

Income Taxes are accounted for in accordance with Accounting Standard 22 on Accounting for taxes on income. Incometaxes comprise both current and deferred tax.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicabletax rates and laws. The company offsets advance payments and provisions for current tax and disclose the net amount itintends to settle and where it has a legally enforceable right to set off the recognised amount.

The tax effect of the timing differences that result between taxable income and accounting income and are capable ofreversal in one or more subsequent periods are recorded as a deferred tax assest or a deferred tax liability. Deferred taxassests and liabilities are recognized for future tax consequences attributable to timing differences.

They are measured using the substantively enacted tax rates and tax regulations.

The carrying amount of deferred tax assets at each Balance Sheet date is reduced to the extent that it is no longer reasonablycertain that sufficient future taxable income will be available against which the deferred tax assests can be realized.

Fringe Benefit Tax (FBT) payable under the provisions of section 115WC of the Income Tax Act, 1961 is in accordancewith the Guidance note on Accounting for Fringe Benefit Tax issued by the ICAI regarded as an additional Income Taxand considered in determination of the profits for the year. Tax on distributed profits payable in accordance with theprovisions of section 115O of the Income Tax Act, 1961 is in accordance with the Guidance Note on Accounting forCorporate Dividend Tax regarded as a tax on distribution of profit and is not considered in the determination of profits.

(Rs. in Lacs)

2009-10 2008-09

Deferred Tax Liabilities - Depreciation Differences 1,235.65 52.71Deferred Tax Assets - Disallowances and others 169.95 10.20Net Deferred Tax Liability / (Assets) 1,065.70 42.51

u. Sundry Debtors/Loans & Advances

Sundry Debtors, Creditors and other advances are subject to confirmation. The effect of the same, if any, which is notlikely to be material, will be adjusted at the time of confirmation. Sundry Creditors for purchases includes Rs.10199.11Lacs being buyers’ credit availed by the Company for the purchase of Raw Materials/ Capital Goods.

v. Impairment of Assets:

In the opinion of the company’s Management , there is no impairment to the assets to which Accounting Standard-28“Impairment of Assets” applied requiring any revenue recognition.

w. Contingent liabilities

Contingent liabilities as defined in Accounting Standard 29 are disclosed in the notes to accounts. Provisions are made ifit became probable that an outflow of future economic benefits will be required for an item previously dealt with as acontingent liability.

(Rs. in lacs)

2009-10 2008-09a) Counter Guarantees given by the company for Bank Guarantees 88,423.60 111,107.98

(Includes Standby Letter of Credit (SBLC) given bya Bank in India amounting to Rs. 31,200 Lacs (equivalentto USD 78 mio) as a security for Tax Exempt Variable RateDemand Revenue Bonds - Series 2000A and TaxableVariable Rate Demand Revenue Bonds - Series 2000Bissued by Mississippi Business Finance CorporationUSA on behalf of company’s wholly owned subsidiary.

b) Other Guarantees given by the Company 78,919.72 19,706.93

on behalf of Associate & Subsidiary Company

c) Letter of Credit Outstandings (Materials not received) 5,556.14 1,457.68

d) Bills Discounting 14,808.76 NIL

e) Estimated amount of contracts remaining to be executed 3,000.00 3,000.00

on capital account and not provided for (net of advances)

f) Income Tax Assessments completed upto AY 2007-08 (March 2007). Demand raised by the Department amountingto Rs.497 Lacs for AY 2007-2008 and Rs. 154 lacs for AY 2006-07 are contested before CIT (Appeals) Mumbai.

The Department raised the demand of Rs.700 Lacs for AY 2005-06 U/s 143(3) of the Act read with U/s 263 of the Act.Company has preferred an appeal before ITAT challenging the commissioner’s directive U/s 263 which is pendingbefore the ITAT Mumbai.

g) Gujarat Water Supply & Sewerage Board (GWSSB), a Government of Gujarat Undertaking and a regular customer ofthe Company has made a reference to “Gujarat Public Works Contracts Disputes Arbitration Tribunal” for settlementof some diputes, including a claim against the Company arising out of a routine contract awarded earlier to the

Schedules

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Company, the performance of which was hit by force majeure conditions. As Company has since challenged thejurisidiction of aforesaid tribunal, the matter is pending.

Hence at this stage no provision has been made in the attached accounts towards any possible liability on thisaccount.

h) The renewal of leave & licence admeasuring to 329216 Sqm (Area) of Kandla Port Trust is under progress before thecompetent authority.

x. Impact of issue of Foreign Currency Convertible Bonds (FCCB’s)

a) In September 2005 the Company had issued Zero Coupon Foreign Currency Convertible Bonds (FCCB’s) worth US$40 Miillion. As per terms of issue , these Bonds are convertible into fully -paid and pari passu ranking equity sharesof Rs.10 each at premium of Rs. 224.54 (subject to terms and conditions of the said FCCB issue) on or any day priorto 8th August 2010. The said Bonds, unless converted or redeemed earlier will be redeemed at 143.64 percent oftheir principal amount on 7th September, 2010 being the prefixed maturity date.

b) Such Bonds worth US$ 3,750,000 have already been converted into 8661511 equity Shares till date.

c) The bonds are listed on the Singapore Stock Exchange.

d) Although, the Board of Directors had accorded its in principal approval to buyback the Zero Coupon ConvertibleBonds due for redemption in September 2010, amounting to USD 2.50 Million the company did not finally pay thesebonds due to changed market conditions.

Schedules

2. LICENCED AND INSTALLED CAPACITY

Sr. NAME UNIT LICENCED & INSTALLED

No. 2009-10 2008-09

1. Spiral Arc Welded Pipes Mt. 1,400,000 1,100,000 2. Coating On Steel Pipes Mtrs. NA NA 3. Anode Mt. 1,500 1,500 4. Wire Mesh Sqm. 720,000 720,000 5. Outer Wrap Sqm. 2,500,000 2,500,000 6. Rebar Coating NA NA

4. SALES TURNOVER & COATING JOBS (Rs. in lacs)

Sr. 2009-10 2008-09 No. NAME Unit Quantity Value Quantity Value

1. HSAW Pipes M.T 322,454.194 181,657.44 477,086.419 288,891.09 2. Coating on Steel Pipes / — - 87,397.16 - 44,592.73

Jobs Rebar Coating — - 2,390.68 - 2,370.80Project Equipment Divn (Daman) — - 1,360.03 - 11,367.04

3. Anodes Kgs. 296,861.470 552.41 101,742.020 227.43 4. Induction Bending — - 1,744.13 - 806.86 5. Wire Mesh Kgs. - Captive Consumption - Captive Consumption

6. Outer Wrap Sqm. 49,562.500 Captive Consumption - Captive Consumption

7. Others — 1,050.21 - 539.77

Total 276,152.06 348,795.72

3. PRODUCTION, OPENING AND CLOSING STOCK

Sr. PRODUCTION OPENING STOCK CLOSING STOCK

No. Quantity Quantity Quantity Quantity Quantity QuantityNAME UNIT 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09

1. HSAW Pipes Mt. 334,998.108 468,812.210 15,477.318 23,751.527 28,021.232 15,477.318

2. Coating on Steel Pipes/Jobs Mtrs. Turnkey Jobs Turnkey Jobs Turnkey Jobs

3. Anodes Kgs. 314,269.730 101,574.420 NIL 167.600 17,408.260 NIL

4. Wire Mesh Kgs. NIL NIL 74.550 74.550 74.550 74.550

5. Outer Wrap Sqm. 47,351.250 NIL 2,723.250 2,723.250 512.000 2,723.250

3 PSL-27-48.p65 9/9/2010, 11:33 AM43


44

[Rs. in lacs]

2009-10 2008-096. VALUE OF IMPORTS (CIF)

Raw Materials 9,377.17 217,885.86Stores 1,959.37 712.61

7. EXPENDITURE IN FOREIGN CURRENCYTravelling Expenses 176.41 130.42Agency Commission & Others 9.96 94.78

8. EARNING IN FOREIGN CURRENCYPipe Sales & Pipe Coating Receipts (FOB) 14,326.63 7,151.72

9. VALUE OF CONSUMPTION OF RAW MATERIALSImported 67,575.91 176,586.18Indigenous 139,008.54 103,191.84

10. VALUE OF CONSUMPTION OF STORESImported 972.29 947.95Indigenous 3,233.56 5,476.29

11. DIRECTORS’ REMUNERATIONSalary, Allowances & Perquisites 737.65 610.61Contribution to P.F and Other Funds 102.97 86.24

12. AUDITORS’ REMUNERATIONFor Statutory Audit 13.00 13.00For Tax Audit 2.00 2.00For Tax Matters 0.75 0.75For Other Services 1.50 1.50For Out of Pocket Expenses 0.75 0.75

13. Loans & Advances Includes Amount Receivable from Companies under Same Management Rs. 605.25 Lacs (PreviousYear Rs. 492.03 Lacs).

5. RAW MATERIAL CONSUMPTION (Rs. in lacs)

2009-10 2008-09

NAME Unit Quantity Value Quantity Value

1 H. R. Coil Mt. 328,348.33 149,023.12 537,872.31 248,536.652 Flux Mt. 1,192.04 808.07 2,127.13 1,092.603 Filler Wire Mt. 1,106.89 899.36 1,827.59 1,585.514 Epoxy Powder Mt. 1,158.78 2,148.56 1,127.48 2,085.715 Adhesive Mt. 788.11 1,237.94 650.44 963.366 Polyethylene Mt. 12,679.20 9,553.72 11,735.81 8,896.477 Inner Wrap Sqm. 1,032,377.62 96.51 1,015,184.43 84.888 Outer Wrap Sqm. 551,194.46 201.08 568,693.77 182.699 Coal Tar Enamel Mt. 4,348.61 1,047.53 4,783.23 809.7110 Polyethylene Tape Sqm. 323,570.70 375.73 2,720,297.80 3,327.1511 Wiremesh Sqm. 401,899.13 315.97 510,463.10 359.6212 Cement Mt. 12,194.65 434.07 8,024.22 305.6113 Sand Mt. 18,753.65 47.94 15,048.96 42.4214 Iron Ore Mt. 26,654.64 684.17 25,819.13 388.7415 Aluminium Kgs. 312,684.00 323.76 53,718.00 58.5516 Zinc Kgs. 21,969.29 24.50 2,936.16 3.1817 Coating Materials and others 39,362.43 11,055.17

TOTAL 206,584.45 279,778.03

18 Stores & Consumables 4,205.85 6,424.24

210,790.30 286,202.27

Schedules

3 PSL-27-48.p65 9/9/2010, 11:33 AM44


45





Schedules

14. The Company is in the process of identifying the suppliers who are Small Scale Industries & Undertakings. The amountdue to them has not been quantified during the year.

15. In the opinion of the Board, the Current Assets are approximately of the value, if realised, in the ordinary course of thebusiness. The provision for Depreciation and for all known liabilities are adequate and not in excess of the amountreasonably considered necessary. All the income accrued has been accounted for in the books.

16. Schedules A to Q forming an integral part of the Balance Sheet and Profit and Loss Account are duly authenticated.

17. The previous year figures have been regrouped/rearranged wherever necessary to conform the current year classification.

3 PSL-27-48.p65 9/9/2010, 11:33 AM45


46

CASH FLOW STATEMENT FOR THE PERIOD ENDED ON 31ST MARCH 2010(PURSUANT TO THE LISTING AGREEMENT WITH STOCK EXCHANGES)

[Rs. in lacs]

Particulars 2009-10 2008-09

A) CASH FLOW FROM OPERATING ACTIVITIESNet Profit Before Tax & Extra-ordinary Items 11729.74 12672.93ADJUSTED FORAdd : Depreciation 6634.81 5706.64Interest (Net) 10420.83 10071.93Preliminary Expenses Written off Nil NilTechnical Knowhow Written off Nil NilLess: Bad Debts Provision Nil NilLess: Profit on Sale of Fixed Assets (0.38) 2.45Add : Loss on Investments Nil NilLess: Dividend Income Nil Nil

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 28785.76 28449.05Changes InTrade Receivables 1857.40 (18531.70)Inventories 59483.54 (97539.70)Trade Payables (171250.38) 168684.13Loans and Advances (10246.74) (34760.38)

Cash Generated from Operations [A] (91370.42) 46301.42

Tax Paid/Payable/Advance Tax (3707.47) (3918.63)Technical Know How FeesNet Cash from Operating Activities (95077.89) 42382.79

B) CASH FLOW FROM INVESTING ACTIVITIESSale of Fixed Assets 6.67 3.65Profit on Sale of Assets (0.38) 2.45Interest Received 477.88 769.75Dividend Received Nil NilSale/ (Purchase) of Investments (8.90) (1768.67)Purchase of Fixed Assets (41129.23) (28307.46)Net Cash Used In Investing Activities [B] (40653.96) (29300.28)

C) CASH FLOW FROM FINANCING ACTIVITIESProceeds from Issue of SharesIncluding Share Premium 14931.86 0.68Interest Paid (10898.71) (10841.68)Loans Received / Repayments (Net) 131601.72 1245.55Dividend Paid (1245.52) (2489.75)Net Cash Used in Financing Activities [C] 134389.35 (12085.20)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENT [A+B+C] (1342.50) 997.29

Cash and Cash Equivalent - Opening [A] 12061.86 11064.57Cash and Cash Equivalent - Closing [B] 10719.36 12061.86

[B-A] (1342.50) 997.29

Auditors’ Certificate

We have verified the above Cash Flow Statement of PSL Limited derived from the Audited Financial Statements for the yearended March 31, 2010 and found the same is drawn in accordance therewith and also with the requirements of clause 32 ofthe Listing Agreements with Stock Exchange.

for Suresh C. Mathur & Co.Chartered Accountants

Sd/-Place: Mumbai Suresh C. MathurDate : 29th May, 2010 Partner

M. No. 1276

Cash Flow Statement


(SURESH C. MATHUR) M. VENKATESH K. RAMANATHAN ALOK PUNJ ASHOK PUNJ

Partner Sr. Vice President Chief Finance Officer G.S. SAUHTA M.M. MATHUR

M.No. 1276 (International Finance) D.N. SEHGAL R.K. BAHRI

S.P. BHATIA C.K. GOEL

Place: Mumbai G. GEHANI (Director & Company Secretary)Date: 29th May, 2010 Directors

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47

Part IV of Schedule VI of Companies Act, 1956 (As amended)Balance Sheet Abstract and Company’s General Business Profile

1. REGISTRATION DETAILS :

Registration No. State Code

Balance Sheet Date

2. CAPITAL RAISED DURING THE PERIOD (Rupees in lacs)

Public issue Rights Issue

Bonus issue Private Placement

3. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Rupees in lacs)

Total Liabilities Total Assets

Sources of Funds :

Paid-up Capital Reserves & Surplus

Secured Loans Unsecured Loans

Application of Funds :

Net Fixed Assets Investments

Net Current Assets Misc. Expenditure

Accumulated Losses

4. PERFORMANCE OF COMPANY (Rupees in lacs)

Turnover Total Expenditure

Profit Before Tax Profit After Tax

Earning per Share Dividend Rate(in Rupees)

5. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANY(as per Monetary terms)

ProductNIC Code No. Description :

NIC Code No ProductDescription :

NIC Code No. ProductDescription :

0 0 2 3 9 5 5 6

OTHER TUBES, PIPES AND HOLLOWPROFILES IN SPIRAL OR STRAIGHT WELDEDSEAM OF DIA 300 MM & ABOVE AND MADEOUT OF IRON STEEL OF ALL TYPE

EXTERNAL AND INTERNAL COATING OFLINE PIPES

ANTI-CORROSION COATINGS OFRE-ENFORCED REBARS

# 25% paid in May 2010 and 15% is subject to Shareholders’ Approval

3 1 - 0 3 - 1 0

N I L N I L

N I L 1 0 7 5 . 0 0

2 7 9 7 4 7 . 5 7 2 7 9 7 4 7 . 5 7

5 3 3 3 . 2 0 7 8 5 0 9 . 3 7

1 0 2 9 2 7 . 4 4 1 9 4 3 5 . 8 2

1 5 7 3 8 4 . 3 1 N I L

N I L

1 8 8 7 1 0 . 8 0 6 1 2 8 . 5 0

2 8 1 0 6 5 . 5 1 2 6 9 3 3 5 . 7 6

1 1 7 2 9 . 7 5 8 8 2 9 . 7 5

1 8 . 0 3 4 0 % #

3 3 1 9

3 4 5 0

3 4 5 0

Balance Sheet Abstract

3 PSL-27-48.p65 9/9/2010, 11:33 AM47


48

Statement of Subsidiary Companies





1 Name of the Subsidiary(s) M/s. PSL Corrosion M/s. Pipeline M/s. PSL USA INC **Control Services Limited. Systems Limited*

2 Financial Year of the Subsidiary Company(s) 31st March, 2010 31st March, 2010 31st March, 2010ended on

3 Financial Year of PSL Ltd. - being the Holding 31st March, 2010 31st March, 2010 31st March, 2010Company ended on

4 Shares of the Subsidiary Company held by theCompany on 31st March, 2010

a) Number 1400020 26475242 20003083b) Face Value Rs.10 per share USD 1/- per share USD 1/- per sharec) Extent of share holding in the Subsidiary

Company (as on 31.03.10) 100% 100% 100%

5. Profits/(Losses) of the Subsidiary Company forits Financial year so far as it concerns theMembers of PSL Ltd. which have not beendealt with in the accounts of PSL Limited

a) For the Financial Year of theSubsidiary Company Rs. 1031.89 Lacs Rs. 1027.68 Lacs Rs. 1376.32 Lacsended on 31st March, 2010(12 months)

b) For the previous Financial Year of theSubsidiary Company(s) (12 months) Rs. 614.27 Lacs Rs. 199.00 Lacs (Rs. 78.18 Lacs)

6. The net aggregate amount of the Profits/(Losses)of the Subsidiary Company, so far as the profitsare dealt in the accounts of PSL Ltd.

a) For the Financial Year endedon 31st March, 2010 of NIL NIL NIL

the Subsidiary Companyb) For the previous Financial Year of the

Subsidiary Company since it became NIL NIL NIL

the Holding Company’s Subsidiary

Note(s) :(I) The amount lent by PSL Corrosion Control Services Ltd to PSL Limited as on 31st March 2010 was Rs. NIL.(II) The amount lent by Pipeline Systems Ltd to PSL Limited as on 31st March 2010 was Rs. NIL.(iii) The amount lent by PSL USA INC to PSL Limited as on 31st March 2010 was Rs. NIL.

* Accounts are consolidated with its subsidiary company namely PSL FZE.** Accounts are consolidated with its subsidiary company namely PSL North America LLC.

PSL LIMITEDSTATEMENT UNDER SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO

PSL CORROSION CONTROL SERVICES LIMITED, PIPELINE SYSTEMS LIMITED & PSL USA, INCAS ON 31st MARCH, 2010





3 PSL-27-48.p65 9/9/2010, 11:33 AM48

Auditors’ ReportConsolidated Balance Sheet

Consolidated Profit & Loss AccountConsolidated Schedules

Consolidated Cash Flow Statement

CONSOLIDATED

STATEMENTS

4 PSL Consolidated-49-70.p65 9/9/2010, 11:33 AM49


50



51

Consolidated Auditors’ Report

To,

The Members of PSL Limited

We have audited the attached Consolidated Balance Sheet

of PSL Limited (the company) and its subsidiaries as at

31st March, 2010 and the Consolidated Profit and Loss

Account for the year then ended annexed thereto and the

Consolidated Cash Flow Statement for the year ended on

that date. These financial statements are the responsibility

of the company's management. Our responsibility is to

express an opinion on these financial statements based on

our audit.

We conducted our audit in accordance with generally

accepted auditing standards in India. These standards require

that we plan and perform the audit to obtain reasonable

assurance whether the financial statements are prepared, in

all material respects, in accordance with an identified

financial reporting framework and are free of material

misstatements. An audit includes, examining on a test basis,

evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the

accounting principles used and significant estimates made

by management, as well as evaluating the overall financial

statements. We believe that our audit provides a reasonable

basis for our opinion.

We did not audit the financial statements of PSL FZE (step

down subsidiary of PSL Limited), PSL USA Inc., (100%

subsidiary of PSL Limited) and PSL North America LLC, (78%

JV Company of PSL USA INC) . These financial statements

and other financial information have been audited by other

auditors whose reports have been furnished to us, and our

opinion is based solely on the report of other auditors.

We report that the consolidated financial statements have

been prepared by the Company in accordance with the

requirements of Accounting Standard (AS) 21 on

Consolidated Financial Statements, issued by the Institute

of Chartered Accountants of India and on the basis of the

separate audited financial statements of the Company and

its subsidiary included in the Consolidated Financial

Statements.

On the basis of the information and explanations given to

us and on the consideration of the separate audit reports on

subsidiary, we are of the opinion that the said consolidated

financial statements give a true and fair view in conformity

with the accounting principles generally accepted in India:

a) In the case of the Consolidated Balance Sheet of the

Consolidated state of affairs of the Company and its

subsidiary as at 31st March, 2010;

b) In the case of the consolidated Profit and Loss

Account, of the consolidated results of operations

of the Company and its subsidiary for the year then

ended; and

c) In the case of the consolidated cash flow statement,

of the consolidated cash flows of the company and

its subsidiary for the year then ended.

For Suresh C. Mathur & CompanyChartered Accountants


Sd/-SURESH C. MATHUR

Place : Mumbai PartnerDate : 29th May, 2010 Membership No.: 1276

4 PSL Consolidated-49-70.p65 9/9/2010, 5:36 PM51


52

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2010[Rs. in lacs]

Schedule As at As atMarch 31, 2010 March 31, 2009

SOURCE OF FUNDS

SHARE HOLDERS’ FUNDSA) Share Capital A 5,333.20 4,258.19B) Reserves & Surplus B 86,726.03 92,059.23 64,795.17 69,053.36

LOAN FUNDSA) Secured Loans C 245,211.19 112,956.08B) Unsecured Loans D 6,128.50 251,339.69 1,273.75 114,229.83Minority Interest 2,155.20 2,730.48

Deferred Taxtation Liability (340.64) (1,468.98)

TOTAL 345,213.48 184,544.69


FIXED ASSETS EA) Gross Block (At cost) 179,327.61 127,202.10B) Less: Depreciation 42,925.33 34,776.05C) Net Block 136,402.28 92,426.05D) Add: Capital Work in Progress 23,710.83 160,113.11 37,307.07 129,733.12

INVESTMENTS F 450.08 426.18

CURRENT ASSETS, LOANSAND ADVANCESA) Inventories G 172,614.22 348,002.59B) Sundry Debtors H 51,520.31 54,298.74C) Cash and Bank Balances I 28,051.88 21,326.20D) Loans and Advances J 65,211.95 55,385.12

317,398.36 479,012.64LESS : CURRENT LIABILITIES& PROVISIONSA) Current Liabilities K 126,361.34 417,810.01B) Provisions L 6,386.73 6,817.25

132,748.07 424,627.25



TOTAL 345,213.48 184,544.69

NOTES TO ACCOUNTS Q

Consolidated Balance Sheet






Place: Mumbai G. GEHANI (Director & Company Secretary)




53

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010[Rs. in lacs]

Schedule For the Year Ended For the Year EndedMarch 31, 2010 March 31, 2009

INCOME M 399,353.96 364,891.40

399,353.96 364,891.40EXPENDITURERaw Materials and Stores N 315,012.01 257,247.03Excise Duties and Taxes 17,213.73 32,942.53Manufacturing & Process Expenses(includes freight) 14,470.75 24,811.82Employees Remuneration & Benefits O 7,259.34 7,062.31Other Expenses P 9,889.18 11,822.70Interest on Term Loans & Overdrafts 11,692.76 10,274.93Depreciation 8,160.57 383,698.34 6,876.70 351,038.02

PROFIT BEFORE TAXATION 15,655.62 13,853.38Less: Provision for Taxation

Current Tax 2,366.82 4,396.73Fringe Benefit Tax NIL 91.00Deferred Tax 1,023.18 3,390.00 (118.73) 4,369.00

PROFIT AFTER TAXATION 12,265.62 9,484.38Less:

Transfer to General Reserve 986.16 1,000.00Interim Dividend NIL 1,063.51Proposed Dividend 2,131.62 1,064.55Tax on Proposed Dividend 354.04 180.97Tax on Interim Dividend NIL 180.74Prior Year Expenses (Income Tax) 289.24 3,761.06 (161.73) 3,328.04

BALANCE CARRIED OVER TO BALANCE SHEET 8,504.56 6,156.34

EARNINGS PER SHARE (BASIC) Rs. 25.04 22.21

(Face Value Rs.10/- each)

EARNINGS PER SHARE (DILUTED) Rs. 24.75 21.91

NOTES TO ACCOUNTS Q

Consolidated Profit and Loss Account










54

CONSOLIDATED SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2010

[Rs. in lacs]


SCHEDULE “A” – SHARE CAPITAL

Authorised :10,00,00,000 EQUITY SHARES OF RS. 10 EACH 10,000.00 10,000.00

A. Issued & Subscribed :-5,34,60,911 EQUITY SHARES OF RS. 10/- EACH(PREVIOUS YEAR 4,27,10,911) 5,346.09 4,271.09(Of the above shares 10,750,000 fully paid-up and pari passuranking equity shares of Rs. 10/- each were allotted consequentupon Qualified Institutional Placement)

B. PAID UP CAPITAL5,34,60,911 EQUITY SHARES OF RS. 10/- EACH(PREVIOUS YEAR 4,27,10,911) 5,346.09 4,271.09(Of the above shares 10,750,000 fully paid-up and pari passuranking equity shares of Rs. 10/- each were allotted consequentupon Qualified Institutional Placement)

Less: Allotment Money in Arrears pertaining tothe Shares Allotted prior to Merger (Directors-Nil) 12.89 12.90

5,333.20 4,258.19

SCHEDULE “B” – RESERVES AND SURPLUS

A. General ReserveAs per Last Balance Sheet 5,687.86 4,700.15Less : Investment in Subsidiary Company 12.29 12.29Add: Transfer from Profit & Loss Account 986.16 6,661.73 1,000.00 5,687.86

B. Security PremiumAs per Last Balance Sheet 29,092.11 29,092.11Add: Additions during the year 13,856.75 NILLess: Provision for Redemption Premium Nil NILAdd: Redemption Premium Added Back Nil NIL

42,948.86 29,092.11Less: Allotment Money in Arrears 95.83 42,853.03 95.93 28,996.18(Directors Nil)Foreign Exchange Difference on consolidation 2,315.66 3,728.52

C. Investment Allowance Utilised ReserveAs Per Last Balance Sheet 139.64 139.64

D. Profit and Loss AccountAs per last Balance Sheet 26,242.97 20,086.63Add: Transfer during the year 8,513.00 34,755.97 6,156.34 26,242.97

86,726.03 64,795.17

Schedules



55


[Rs. in lacs]



A. Term Loan from Financial Institutions, Banksand Non Banking Financial Institutions 41,105.47 10,353.64[Secured against first charge on some of theimmovable & moveable assets of the Company]

B. Working Capital Term Loan from Scheduled Banks 22,570.00 NIL[Secured against first charge on pari passu basis onsome of the immovable & moveable assets ofthe Company]

C. From Scheduled Banks 147,101.64 63,077.88[Secured against hypothecation of Current Assetsand second charge on the assets as per [A&B] above]

D. From Scheduled Banks 22.26 46.33[Motor Vehicle Loans]

E. Interest Free Sales Tax Deferred Scheme ofGovt. of Tamil Nadu NIL 36.94[Secured against second charge on specificAssets of the company ]

F. Tax Exempt Variable Rate Demand Revenue[Bonds 2007A issued by MississipiBusiness Corp. USA] 30,695.20 34,646.00

G. Taxable Variable Rate Demand RevenueBonds 2007A issued by MississipiBusiness Corp. USA 3,716.62 4,795.29(Both secured by an SBLC issued by a Bank) 34,411.82 39,441.29

245,211.19 112,956.08

SCHEDULE “D” – UNSECURED LOANS

Foreign Currency Convertible Bonds(Redeemable in 2010) (Unsecured) 1,128.50 1,273.75

From Scheduled Banks 5,000.00 6,128.50 NIL 1,273.75

6,128.50 1,273.75

Schedules



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7.8

21

,40

0.6

67

41

.45

14

6.3

61

0.7

78

77

.04

52

3.6

25

73

.00

CO

MM

ERC

IAL

VEH

ICLE

S1

05

.10

NIL

NIL

10

5.1

01

02

.25

0.8

5N

IL1

03

.10

2.0

02

.85

CY

CLE

S0

.23

0.0

6N

IL0

.29

0.1

90

.01

NIL

0.2

00

.09

0.0

4

EAR

TH

MO

VIN

G E

QU

IPM

ENTS

3,8

52

.30

22

.05

NIL

3,8

74

.35

2,7

84

.74

32

1.1

6N

IL3

,10

5.9

07

68

.45

1,0

67

.57

SHED

CO

NST

RU

CTIO

N1,7

22.1

15

88

.49

NIL

2,3

10

.60

60

4.0

21

29

.83

NIL

73

3.8

51

,57

6.7

51

,11

8.0

9

T O

T A

L1

27

,20

2.0

95

2,1

44

.68

19

.16

17

9,3

27

.61

34

,77

6.0

58

,16

0.5

711

.29

42

,92

5.3

31

36

,40

2.2

89

2,4

26

.04

Schedules



57


[Rs. in lacs]


SCHEDULE “F” – INVESTMENTS

UNQUOTED [FULLY PAID UP] AT COST

(I) LONG TERM INVESTMENTS :COMPANY UNDER SAME MANAGEMENTa) 14,70,000 Equity Shares of Rs. 10/- each

of BHI LTD. (Previous year 1470000 Shares) 147.00 147.00b) 1,50,000 Equity Shares of Rs.10/- each of

Punj International Pvt. Ltd. 15.00 15.00(Previous year 1,50,000 Equity Shares)

c) 7,500 Equity Shares of Rs. 10/- each ofBroken Hills International Ltd. 0.75 0.75(Previous year 7,500 equity shares)

d) 2,000 Equity Shares of Rs. 100/- each ofPunj Investments Pvt Ltd. 2.00 2.00(Previous year 2,000 equity shares)

e) 8,60,000 Equity Shares of EurocousticProducts Ltd. of Rs. 10/- each(Previous Year 8,60,000 Equity Shares) 86.00 86.00

f) 1,00,000 Equity Shares of Savvy ConsultantsPvt. Ltd. of Rs. 10/- each 10.00 10.00(Previous Year 1,00,000 Equity Shares)

g) 92,000 Equity Shares of Punj CorporationPvt. Ltd. of Rs. 10/- each (Previous Year NIL) 9.20 269.95 NIL 260.75

(II) OTHERSa) 3 National Savings Certificates of

Rs. 10,000/- Each. NIL 0.30b) 128 Shares @ Rs. 100/- in The Gandhidham

Mercentile Co-Op Bank Ltd. 0.13 0.13c) SBI Capital Protection Oriented Fund

(Mutual Fund) 175.00 175.00d) AXIS Equity Fund (Mutual Fund) 15.00 190.13 NIL 175.43

460.08 436.18Less: Provision for diminution invalue of Investments [Savvy Consultants Pvt. Ltd.] 10.00 10.00

450.08 426.18

SCHEDULE “G” – INVENTORIES

(Certified by the Management)

Raw Materials, Consumables, Semi-finishedgoods, Work in progress 157,691.14 332,766.53

Finished Goods 14,923.08 15,236.06

172,614.22 348,002.59

Schedules



58


[Rs. in lacs]


SCHEDULE “H” – SUNDRY DEBTORS

(Unsecured but Considered Good)A. Debts outstanding for a period

of Less Than Six Months 45,360.18 47,483.99

B. Debts outstanding for a period ofMore Than Six Months 6,160.13 51,520.31 6,814.75 54,298.74

51,520.31 54,298.74

SCHEDULE “I” – CASH AND BANK BALANCES

A. Cash in Hand 56.00 130.34B. Funds in transit NIL 11.80C. In Current Account with Scheduled Banks 16,755.13 9,876.84D. In Deposit Account with Scheduled Banks 11,240.75 11,307.21

(Includes Rs. 5,739.01 Lacs Under Lien tothe Bank for facilities availed)(Previous year Rs. 6,711.81 Lacs under lien) 28,051.88 21,326.20

SCHEDULE “J” – LOANS AND ADVANCES

(Unsecured, but considered good)A. Security Deposit 37,263.04 43,373.22

(Includes Central Excise, Service Tax,VAT deposit of Rs. 33,927.95 Lacs)(Previous year Rs. 40,320.23 Lacs)

B. Advance recoverable in cash orin kind or for the value 25,470.84 9,832.42

C. Advance Payment against taxes 2,478.06 2,179.47

65,211.95 55,385.12

SCHEDULE “K” – CURRENT LIABILITIES

A. Sundry Creditors for Purchases 59,619.25 236,685.08B. Other Current Liabilities 62,703.38 169,606.05C. Mobilization Advance 4,038.70 11,518.87

126,361.34 417,810.01

SCHEDULE “L” – PROVISIONS

Provision for Taxation - Current Tax 3,118.82 4,789.48Provision for redemption of FCCB 782.25 782.25Proposed Dividend 2,131.62 1,064.55Tax on Proposed Dividend 354.04 180.97

6,386.73 6,817.25

Schedules



59

CONSOLIDATED SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDEDON MARCH 31, 2010

[Rs. in lacs]

For the year Ended For the year EndedMarch 31, 2010 March 31, 2009

SCHEDULE “M” – INCOME

Sales & Pipe Coating Receipts 394,105.35 355,992.64Other Income 5,248.61 399,353.96 8,898.76 364,891.40

399,353.96 364,891.40

SCHEDULE “N” – RAW MATERIALS AND STORES

A. Raw Materials ConsumedOpening Stock of Raw Materials 98,349.37 20,715.21Add : Purchases of Raw Materials 259,235.32 362,995.00

357,584.69 383,710.21

Less: Closing Stock of Raw Materials 58,142.87 299,441.82 98,349.37 285,360.84

B. Consumption of storesOpening stock of stores 5,563.46 4,352.65

Add: Purchase of stores 32,633.75 8,528.1038,197.21 12,880.75

Less: Closing Stock of stores 21,890.40 5,563.4616,306.81 7,317.29

C. Change in Finished Goods & WIP (736.62) (35,431.10)

315,012.01 257,247.03

SCHEDULE “O” – EMPLOYEES’ REMUNERATION & BENEFITS

Salaries,Wages & Bonus 5,939.10 5,314.58Staff Welfare 676.58 916.68Contribution to Provident and other Funds 643.66 831.05

7,259.34 7,062.31

SCHEDULE “P” – OTHER EXPENSES

Conveyance 71.42 66.17Travelling Expenses 583.97 542.86Postage, Telegram and Telephones 131.13 145.02Printing and Stationery 123.59 144.59Rent, Rates & Taxes 838.78 663.30Electricity Charges 59.06 74.59Professional Charges 262.55 828.51Repair and Maintenance (Plant ) 93.92 122.77Repair and Maintenance (Building) 61.77 61.24Repair and Maintenance (Others) 321.42 391.99Insurance 239.80 280.06Auditors’ Remnuneration 21.46 19.35Vehicle Expenses 213.18 212.50General Expenses 1,515.01 2,291.24Agency Commission 375.55 199.78Prepayment, Syndication, Processing fees to Bank 1,613.15 685.13Franchise & Other Charges 25.88 NILBank Charges 3,337.54 4,513.75

9,889.18 11,242.87

Schedules



60

SCHEDULE “Q” - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNT FOR THE YEAR ENDED31ST MARCH,2010

1. SIGNIFICANT ACCOUNTING POLICIES :

a. Method of Accounting

The accounts have been prepared to comply in all material aspects with applicable principles in India and the AccountingStandards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

b. Principles of Consolidation

The consolidated financial statements have been prepared on the following basis :

i. The consolidated financial statements have been prepared in accordance with the accounting standards 21 (AS-21) -“Consolidated Finanacial Statements”, Accounting Standard 23 (AS-23) - “Accounting for investments in Associates inConsolidated Financial Statements” issued by the Institute of Chartered Accountants of India.

ii. In the case of foreign subsidiaries, being non-integral foreign operations, revenue items are consolidated at the average rateprevailing during the year. All Assets and Liabilities are converted at rates prevailing at the end of the year. Any exchangedifference arising on consolidation is recongnized in the exchange fluctuation reserves and in case of loss the same ischarged to Profit and Loss Account.

iii. All subsidiaries of the Company are subsidiaries since inception of their business activities. Hence, there is no capitalreserve or goodwill arising on consolidation.

iv. For the purpose of Consolidation, Accounting policies of the holding company have been adopted for all the entries.

v. The financial statements of PSL Limited (The Company) and its Subsidiaries namely PSL Corrosion Control Services Limited,Pipe Line Systems Limited, Mauritius and PSL USA INC., have combined on a line by line basis by adopting together thebook values of like items of assets, liabilities, income and expenses after fully eliminating intra group balances and intragroup transactions resulting in unrealized profits or losses.

vi. The financial statements of the subsidiaries used in the consolidation are drawn upto the same reporting date as that of theparent company i.e year ended 31st March 2010

vii. The subsidiary companies (which along with PSL Limited, the parent, constitute the group) considered in the preparationof these consolidated financial statement are:

S. Name Country of % voting power held No. incorporation as at 31st March 2010

i. PSL Corrosion Control Services Limited INDIA 100

ii. Pipeline Systems Ltd. MAURITIUS 100

iii. PSL USA INC USA 100

iv. PSL FZE SHARJAH 100% (Subsidiary of

Pipeline Systems Ltd.)

v. PSL North America LLC USA 78% Holding by PSL USA INC

On November 1, 2007, PSL -North America, LLC entered into a loan agreement with MBFC. The loan agreement providesthat MBFC shall issue Tax Exempt Variable Rate Demand Revenue Bonds, Series 2007A and Taxable Variable Rate demandRevenue Bonds, Series 2007B and loan the proceeds thereof to the Company for use in acquiring, constructing, installingand equipping a pipe manufacturing facility and other related activities. The amount of loan payments to be made by theCompany to MBFC pursuant to the loan agreement shall be sufficient to pay the principal and interest on the bonds, as andwhen the bond and interest payments are due and payable. In addition, the Company is responsible for all costs andexpenses related to the issuance of the bonds and the fees and charges of the trustee (Hancock Bank) and the remarketingagent (Merchant Capital).

As security for the MBFC loan agreement, the Company obtained an irrevocable transferable direct pay letter of credit,which expires on November 1, 2010, for up to $ 78,747,945 from JP Morgan Chase Bank, N.A. in favor of the trustee. Inaccordance with the reimbursement agreement with JP Morgan Chase Bank N.A. - PSL -North America, LLC is required topay a non-refundable fee in arrears on the gross available amount beginning on December 31, 2007 and continuing on thelast day of each March, June, September and December thereafter to the termination date at a rate of 1% per annum. Forthe year ending March 31, 2008 this amounted to $ 131,247 paid to JP Morgan Chase Bank, N.A. In addition, interest onthe unpaid principal amount of each advance will accrue at a rate per annum equal to the prime rate (normally JP MorganChase Bank, N.A.’s prime commercial rate for US dollar loans or equivalent) plus 1%.

Schedules



61

In addition, on October 22, 2007, the State Bank of India issued an irrevocable standby letter of credit, which expires onNovember 17, 2010 for upto $ 78,000,000 in favour of the JP Morgan Chase Bank, N.A. This standby letter of credit wasissued based on the financial condition of the Company’s parent, PSL Limited.

Investment in Associates

The Group Associates are

Name Country of Incorporation % of ownership interestas at 31st March, 2010

Eurocoustic Products Ltd. INDIA 48.09

Broken Hills International Ltd. INDIA 22.79

BHI Limited INDIA 49.66

Punj International Pvt. Ltd. INDIA 37.06

Punj Investments Pvt. Ltd. INDIA 14.78

Punj Corporation Pvt. Ltd. INDIA 48.42

These associates have not been considered for consolidation being not material to the Group.

c. Inventories

The raw materials, stores and spare parts are valued at cost , which is arrived on FIFO basis. Work in progress, semi finishedgoods and finished goods are valued at cost or at the net realisable value,whichever is lower. Cost of inventories comprises ofall costs of purchase (other than refundable duties and taxes), costs of conversion and other costs incurred in bringing theinventories to their present condition and location. Costs of raw materials, packing materials and stores and spares are determinedby the average method. Cost of work in process and finished goods inventories are determined by the absorption costingmethod. Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

d. Depreciation

Depreciation is provided from the date the assets have been installed and put to use on written down value method at the ratesand in the manner prescribed by schedule XIV to the Companies Act, 1956 except in PSL USA INC., where depreciation isprovided using the Straight Line Method over the estimated useful lives of the various assets. Lease hold land is being amortisedover the period of lease. Depreciation on additions to assets or on sale discardement of assets, is calculated pro-rata from themonth of such addition or upto the month of such sale/discardment, as a case may be.

e. Research and Development Expenditure

Revenue Expenditure is charged to Profit & Loss Account and Capital Expenditure is added to the cost of Fixed Assets in the yearwhen it is incurred.

f. Revenue Recognition / Income

Revenue Income is recognised on accrual basis except where mentioned otherwise, in particular:

I. Sales revenue is recongnised when it is earned and no significant uncertainty exists as to its realisation or collection.

Sales are net of sales return and trade discounts. Rebate, claims and discounts are accounted for as and when determined.

Deductions made have been reduced from the Sales where found necessary.

Export sales are accounted on the basis of acceptance by the customers and on the basis of export bill of lading.

Export sales is accounted as per the prevailing exchange rate on the date of transaction.

Revenue from services is recognised on rendering of services.

ii. Gross Sales include excise duty collection of Rs. 10095.74 lacs, sales tax and freight charged in invoices.

iii. The pipe coating income is recognised after inspection, approval by customers and after dispatch.

iv. Interest income is taken on accrual basis. Interest Income of Rs. 477.88 lacs netted off against interest payment during theyear. (Previous year interest income of Rs. 769.75 lacs netted off against interest payment ) wherever applicable.

v. Dividend income on investments are accounted for when the right to receive the payment is established.

vi. Expenditures are accounted for on accrual basis and provisions are made for all known liabilities.

g. Treatment of expenditure during construction period

Expenditure in the case of new units and substaintial expansion of existing units during the construction period is included inthe work in progress and the same is allotted to the respective Fixed Assets on the completion of the construction.

Schedules



62

h. Fixed Assets

I. Fixed assets are stated at cost of acquisition and installation. The cost includes freight, taxes and related incidental expensesless Modvat Credit.

ii. The company has erected factory building sheds and installed plant and machinery on lease hold land.

The company had incurred some developmental expenditure which was earlier in CWIP on factory building, plant and onlease hold land which increaes the future benefits from the existing assets beyond its previously assessed standard ofperformance i.e. increase in capacity and modernisation and upgradation.

i. Foreign Currency Transactions

i. a. The company is exposed to currency fluctuations on foreign currency transactions. With a view to minimize thevolatility arising from fluctuations in the currency rates, the company follows established risk management policiesincluding the use of exchange forward contracts and other derivative instruments.

b. Foreign currency transactions are recorded at the exchange rate prevaliling on the date of such transactions. Monetaryassets and liabilities in foreign currency as at the Balance Sheet. Gains and losses arising on account of difference inforeign exchange rates on settlement / translation of monetary assets and liablities are recognized in the Profit and LossAccount.

c. In respect of forward contracts assigned to the foreign currency assets as at the Balance Sheet date, the proportionatepremium / discount for the period up to the date of Balance Sheet is recognized in the Profit and Loss Account. Theexchange difference measured by the change rate between the inception of forward contract and date of BalanceSheet is applied on foreign currency amount of the forward contract and is recognized in the Profit and Loss Account.

ii. All loans and deferred credits repayable in foreign currency and outstanding at the close of the year are expressed in Indiancurrency at the appropriate rate of exchange prevailing on the date of Balance Sheet.

iii. Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year, areconverted in Indian Currency at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gainor loss is accounted during the year.

j. Derivative Instruments

I. The company has entered into the following derivative instruments.

a. Forward Exchange contracts (being a derivative instrument), which are not intended for trading or speculative purposes,but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date ofcertain payables and receivables.

Forward Exchange Contracts entered into by the Company as on March 31, 2010: N I L

b. Interest Rate Swaps to hedge against fluctuations in interest rate changes :

No of Contracts : N I LNotional Principal : N I L

c. Currency Swaps (other than forward exchange contracts stated above) to hedge against fluctuations in changes inexchange rate.

No of Contracts : N I LNotional Principal : N I L

II. The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are givenbelow :

Receivables / (Payables) Receivables / (Payables)Rupees (in Lacs) In Foreign Currency (US Dollars)

9825.37 222.51

III. Derivative Instruments (causing an unhedged foreign currency exposure) N I L

k. Investments

I. Investments are of long term nature and are stated at cost of acquisition, less any diminishing in the value other thantemporary.

ii. The investments in companies under the same management whose shares are unquoted are valued at cost. The Managementis of the opinion that there is no diminishing value on these Investments.

l. Borrowing Cost

Interest & other borrowing costs on specific borrowings relatable to the qualifying assets are capitalised. Other interests andborrowing costs are charged to Revenue.

Schedules



63

m. Cash Flow Statement

The Cash Flow statement is prepared by the indirect method set out in Accounting Standard - 3 on Cash Flow Statement andpresents cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented inthe cash flow statement consists of cash in hand and demand deposits with banks as on the Balance Sheet date.

n. Provisions

A provision is recognised when there is a present obligation as a result of past event, it is probable that an outflow of resourceswill be required to settle the obligations and in respect of which reliable estimate can be made. Provision is not discounted toits present value and is determined based on the best estimate required to settle the obligation at the year end date. These arereviewed at each year end date and adjusted to reflect the best current estimate.

o. Employee Benefits

A. Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short termemployee benefits and they are recognized in the period in which the employee renders the related service. TheCompany recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange forservices rendered as a liability (accrued expense) after deducting any amount already paid.

B. Post-employment benefits:

(a) Defined contribution plans

Defined contribution plans are Provident Fund Scheme, Employee State Insurance Scheme and Governmentadministered Pension Fund Scheme for all employees and superannuation scheme for eligible employees. TheCompany’s contribution to defined contribution plans are recognised in the Profit and Loss Account in theFinancial Year to which they relate.

The Company makes specified monthly contributions towards employee provident fund to the Regional ProvidentFund Authority by the Company.

b) Defined benefit plans:

Defined benefit gratuity planThe Company operates a defined benefit gratuity plan for employees. The Company contributes the same to LIC,towards meeting the Gratuity obligation.

C. Other Long Term Employee BenefitsEntitlements to annual leave and sick leave are recognized when they accrue to employees. Sick leave can only beavailed while annual leave can either be availed or encashed subject to a restriction on the maximum number ofaccumulation of leave. The Company determines the liability for such accumulated leaves using the Projected AccruedBenefit method with actuarial valuations being carried out at each Balance Sheet date.

For the year ended March 31, 2010, provision for Employees Benefits amounting to Rs. 63.73 Lacs towards Leave Encashmenthas been made to SBI Life Insurance Co. Ltd., Mumbai. The actual liability as per acturial valuation amounts to Rs. 95.37Lacs.

Disclosure as per Accounting Standard - 15 - (Revised 2005)(Rs. In lacs)

2009-10 2008-09i) Defined Contribution Plan -

The Company has recognised the following amounts in theProfit and Loss accounts for the yearContribution to Employee’s Provident Fund - RPFC 267.80 258.91Contribution to Employee’s Provident Fund - Trust NIL NILContribution to Pension Fund 128.88 130.02Contribution to Superannuation Fund 166.37 152.54

563.05 541.47ii) Defined Benefit Plan -

The following table set out the status of the gratuity plan as requiredunder AS 15 (Revised 2005)

(a) A reconciliation of opening and closing balances of the present valueof the defined benefit obligation (DBO)Opening DBO 1,326.63 1,089.68Current service cost 84.84 74.23Interest cost 115.36 94.76Actuarial (gain)/loss NIL NILPast Service Cost NIL NILLiabilities Extinguished on settlements NIL NILBenefits paid 22.81 25.03

Closing DBO 1,504.02 1,233.64

Schedules



64

p. Segment Reporting

The Gross income and profit from other segments are below the norms prescribed in AS-17 separate disclosure have not beenmade.

The Group does not consider any significant difference as regards the risks and returns of the product with reference to exportand domestic sales. Therefore, Segment information as required by Accounting Standard - 17 is not applicable.

q. Lease

Operating lease payments are recognized as expenditure in the Profit and Loss Account on a straightline basis, which isrepresentative of the time pattern of benefits received from the use of assets taken on lease. Lease rentals in respect of operatinglease are recognized as income over the lease period.

Schedules

(b) A reconciliation of the opening and closing balances of the fair value ofplan assets:Opening fair value of plan assets 963.93 766.77Expected return 89.79 74.80Actuarial gain/ (loss) NIL NILContribution by the employer 62.07 147.39Assets Distributed on Settlements NIL NILBenefits paid 22.81 25.03

Closing fair value of plan assets 1,092.98 963.93

( c) A reconciliation of the present value of the defined benefit obligationand the fair value of the plan assets to the assets recognised in thebalance sheet:Present value of the defined benefit obligation at the end of the period 1,504.02 1,233.64Fair value of the plan assets at the end of the year 1,092.98 963.93

Liability recognised in the balance sheet 411.04 269.71

(d) The total expense recognised in the profit and loss account:Current service cost 84.84 74.23Interest Cost 115.36 94.76Expected return on plan assets (89.79) (74.80)Actuarial (gains)/loss NIL NILPast Service Cost NIL NILLosses/(Gains) on “Curtailments & Settlements” NIL NIL

Net Gratuity cost 110.41 94.19

(e) For each major category of plan assets following is the percentage thateach major category constitutes of the fair value of the total plan assets.LIC of India 100% 100%Government of India securitiesCorporate bondsSpecial deposit schemes/others

(f) Actual return on plan assets 9.32% 9.32%

(g) Following are the Principal Actuarial Assumptions used as at the BalanceSheet date :

Discount rate 7.66% 7.67%Expected rates of return on any plan assets 9.32% 9.32%Average Salary escalation rate for Management 5.33% 5.33%Average Salary escalation rate for Non Management for Each YearAverage Salary escalation rate for Non Management Every Third Year

The estimates of the future salary increases considered in Actuarial valuation take account of inflation, seniority promotion and otherrelevant factors.

* Including Contribution to Recognised Provident Fund Scheme (in respect of employees of Pune and Head office, Mumbai) a definedbenefit scheme in the absence of actuarial valuation for Provident Fund Liability. (Refer Note 1(i)(v) in Schedule 14)

Disclosure as per Accounting Standard - 15 - (Revised 2005) (Contd.)(Rs. In lacs)

2009-10 2008-09

}



65

r. Related Party and Key Management Personnel Disclosure

A. Name of the Party and the relationship

i. PSL Corrosion Control Services Ltd. 100% Subsidiary Company

ii. Pipeline Systems Ltd., Mauritus 100% Subsidiary Company

iii. PSL USA INC., Delaware, USA 100% Subsidiary Company

iv. PSL FZE 100% (Subsidiary of Pipeline Systems Ltd.)

v. PSL North America LLC 78% (Held by PSL USA INC)

vi. BHI Ltd.

vii. Broken Hills International Ltd.

viii. Eurocoustic Products Ltd. Companies in which control exists directly / indirectly

ix. Punj International Pvt. Ltd.

x. Punj Investments Pvt. Ltd.

xi. Punj Corporation Private Limited

Ashok Punj Managing Director

M. M. Mathur Director

R. K. Bahri Director

G. S. Sauhta Director

D. N. Sehgal Director

S. P. Bhatia Director

C. K. Goel Director

G. Gehani Director & Co. Secretary

B. Nature of Transaction (Rs. in lacs)

Sr. Particulars Key Subsidiary Companies in which controlNo. Personnel exists directly/indirectly

1. Purchase of Goods - - 25.882. Purchase of Capital Goods - 0.84 -3. Reimbursement of Expenses - 305.69 176.914. Lease Rental - 1.90 102.315. Remuneration 840.62 - -

s. Earning Per Share

The Company reports basic and diluted Earnings Per Share in accordance with Accounting Standard 20 on Earning Per Share.Basic Earnings per share is computed by dividng the net profit or loss for the year by the weighted average number of equityshares outstanding during the year. Diluted Earnings Per Share is computed by dividing the net profit or loss for the year by theweighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equityshares, except where the results are anti-dilutive.


Weighted average number of shares at the beginning 48,981,744 42,710,911

and at the end of the year.Net Profit after tax available for Equity Share holders (Rs. in Lacs) 12,265.63 9,484.38Basic Earnings per share 25.04 22.21Diluted Earnings per share 24.75 21.91

t. Management Estimates

The preparation of financial statements is in conformity with generally accepted accounting principles required estimates andassumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent liabilties on thedate of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual resultscould differ from these estimates and the differences between actual results and estimates are recognised in the periods inwhich the results are known / materialize.

u. Accounting for Taxes on Income

Income Taxes are accounted for in accordance with Accounting Standard 22 on Accounting for taxes on income. Income taxescomprise both current and deferred tax.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable taxrates and laws. The company offsets advance payments and provisions for current tax and disclose the net amount it intends tosettle and where it has a legally enforceable right to set off the recognised amount.

Schedules

}



66

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversalin one or more subsequent periods are recorded as a deferred tax assets or a deferred tax liability. Deferred tax assets andliabilities are recognized for future tax consequences attributable to timing differences.

They are measured using the substantively enacted tax rates and tax regulations.

The carrying amount of deferred tax assets at each Balance Sheet date is reduced to the extent that it is no longer reasonablycertain that sufficient future taxable income will be available against which the deferred tax assets can be realized.

Fringe Benefit Tax (FBT) payable under the provisions of section 115WC of the Income Tax Act, 1961 is in accordance with theGuidance note on Accounting for Fringe Benefit Tax issued by the ICAI regarded as an additional Income Tax and consideredin determination of the profits for the year. Tax on distributed profits payable in accordance with the provisions of section 115O of the Income Tax Act, 1961 is in accordance with the Guidance Note on Accounting for Corporate Dividend Tax regardedas a tax on distribution of profit and is not considered in the determination of profits

(Rs. in Lacs)


Deferred Tax Liabilities - Depreciation Differences 1,235.65 52.71

Deferred Tax Assets - Disallowances and others 1,576.29 1,521.69

Net Deferred Tax Liability / (Assets) (340.64) (1,468.38)

v. Sundry Debtors/Loans & Advances

Sundry Debtors, Creditors and other advances are subject to confirmation. The effect of the same, if any, which is not likely tobe material, will be adjusted at the time of confirmation.

w. Impairment of Assets

In the opinion the the company’s Management , there is no impairment to the assets to which Accounting Standard 28 —“Impairment of Assets” applied requiring any revenue recognition.

x. Contingent liabilities

Contingent liabilities as defined in Accounting Standard 29 are disclosed in the notes to accounts. Provisions are made if itbecame probable that an outflow of future economic benefits will be required for an item previously dealt with it as a contingentliability.

2009-10 2008-09

a) Counter Guarantees given by the Company for Rs. 88,423.60 Lacs Rs. 111,107.98 Lacsbank guarantees

(Includes Standby Letter of Credit (SBLC) given by a bank inIndia amounting to Rs. 31,200 Lacs (equivalent to USD 78million) as a security for Tax Exempt Variable Rate DemandRevenue Bonds - Series 2000A and Taxable Variable RateDemand Revenue Bonds - Series 2000B issued by MississippiBusiness Finance Corporation USA on behalf of company’swholly owned subsidiary).

b) Other guarantees given by the Company Rs. 97,811.02 Lacs Rs. 19,706.93 Lacs(On behalf of Associate & Subsidiary Company)

c) Letter of Credit outstandings (material not received) Rs. 5,556.14 Lacs Rs. 1,457.68

d) Bills Discounting Rs. 14,808.76 Lacs Rs. Nil

e) Estimated amount of contracts remaining to beexecuted on capital account and not provided for(net of advances) Rs. 3,000 Lacs Rs. 3,000 Lacs

f) Income Tax Assessments Completed Upto Assesment Year 2007-08 (March 2007). Demand raised by the Departmentamounting to Rs.497 Lacs for Assesment Year 2007-2008 and Rs. 154 lacs for Assesment Year 2006-07 are contestedbefore CIT (Appeals) Mumbai. The Department raised the demand of Rs.700 Lacs for Assesment Year 2005-06 section143(3) of the Act read with Section 263 of the Act. Company has preferred an appeal before ITAT challenging thecommissioner directive u/s 263 which is pending before the ITAT Mumbai.

Schedules



67

2. LICENCED AND INSTALLED CAPACITY

Sr. Name UNITS 2009-10 2008-09No.

1. Spiral Arc Welded Pipes Mt. 1,775,000 1,475,0002. Coating on Steel Pipes Mtrs. N.A. N.A.3. Anode Mt. 1,500 1,5004. Wire Mesh Sqm. 720,000 720,0005. Outer Wrap Sqm. 2,500,000 2,500,0006. Rebar Coating — N.A. N.A.

(includes 300,000 MTPA at PSL North

America LLC installed during the year)

3. PRODUCTION, OPENING AND CLOSING STOCK

Sr. PRODUCTION OPENING STOCK CLOSING STOCK

No. Quantity Quantity Quantity Quantity Quantity QuantityName Unit 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09

1. HSAW Pipes Mt. 472,036.128 474,848.759 19,971.828 23,751.527 52,868.782 15,477.318

2. Coating on Steel Pipes/Jobs Mtrs. Turnkey Jobs Turnkey Jobs Turnkey Jobs

3. Anodes Kgs. 314,269,730 101,574.420 NIL 167.600 17,408.260 NIL

4. Wire Mesh Kgs. NIL NIL 74.550 74.550 74.550 74.550

5. Outer Wrap Sqm. 47,351.250 NIL 2,723.250 2,723.250 512.000 2,723.250

4. SALES TURNOVER & COATING JOBS (Rs. in lacs)

Sr. Name 2009-10 2008-09

No. Unit Quantity Value Quantity Value

1. HSAW Pipes M.T 442,452.174 290,088.01 478,628.460 289,914.30

2. Coating on Steel Pipes / — — 92,253.31 — 46,920.07

Jobs Rebar Coating — — 7,057.25 — 6,200.72

Project Equipment Divn (Daman) — — 1,360.03 — 11,367.04

3. Anodes Kgs. 296,861.470 552.41 101,742.020 227.43

4. Induction Bending — — 1,744.13 — 806.86

5. Wire Mesh Kgs. — Captive Consumption — Captive Consumption

6. Outer Wrap SQM 49,562.500 Captive Consumption — Captive Consumption

7. Others — 1,050.21 — 556.22

394,105.35 355,992.64

Schedules

g) Gujarat Water Supply & Sewerage Board (GWSSB), a Government of Gujarat Undertaking and a regular customer of thecompany has made a reference to “Gujarat Public Works Contracts Disputes Arbitration Tribunal” for settlement of somedisputes, including a claim against the Company arising out of a routine contract awarded earlier to the Company, theperformance of which was hit by force majeure conditions. As company has since challenged the jurisidiction of aforesaidtribunal, the matter is pending. Hence, at this stage no provision has been made in the attached accounts towards anypossible liability on this account.

h) The renewal of leave & licence admeasuring to 329216 Sqm (Area) of Kandla Port Trust is under progress before thecompetent authority.

y. Impact of Issue of Foreign Currency Convertible Bonds(FCCB’s)

a) In September 2005 the Company had issued Zero Coupon foreign Currency Convertible Bonds (FCCB’S) worth US $40Miillion. As per terms of issue , these Bonds are convertible into fully -paid and pari passu ranking equity shares of Rs.10each at premium of Rs. 224.54 (subject to terms and conditions of the said FCCB issue) on or any day prior to 8th August2010. The said Bonds, unless converted or redeemed earlier will be redeemed at 143.64 percent of their principal amounton 7th September, 2010 being the prefixed maturity date.

b) Such Bonds worth US$ 3,750,000 have already been converted into 8661511 equity Shares till date.

c) The bonds are listed on the Singapore Stock Exchange.

d) Although, the Board of Directors had accorded its in principal approval to buyback the Zero Coupon Convertible Bondsdue for redemption in September 2010, amounting to USD 2.50 Million the company did not finally pay these bonds dueto changed market conditions.



68

[Rs. in lacs]

2009-10 2008-096. VALUE OF IMPORTS (CIF)

Raw Materials 9,377.17 217,885.86Stores 1,959.37 712.61

7. EXPENDITURE IN FOREIGN CURRENCYTravelling Expenses 176.41 130.42Agency Commission & Others 843.26 94.78

8. EARNING IN FOREIGN CURRENCYPipe Sales & Pipe Coating Receipts (FOB) 14,326.63 7,151.72

9. VALUE OF CONSUMPTION OF RAW MATERIALSImported 160,153.92 176,586.18Indigenous 139,287.89 108,774.66

10. VALUE OF CONSUMPTION OF STORESImported 12,843.57 947.95Indigenous 3,463.24 6,369.34

11. DIRECTORS’ REMUNERATIONSalary, Allowances & Perquisites 737.65 606.77Contribution to P.F and other Funds 102.97 86.24

12. AUDITORS’ REMUNERATIONFor Statutory Audit 16.11 14.00For Tax Audit 2.35 2.35For Tax Matters 0.75 0.75For Other Services 1.50 1.50For Out of Pocket Expenses 0.75 0.75

13. Loans & Advances includes amount receivable from Companies under Same Management Rs. Nil (previous yearRs. Nil lacs)

5. RAW MATERIAL CONSUMPTION (Rs. in lacs)

Sr. 2009-10 2008-09No. Name Unit Quantity Value Quantity Value

1. H. R. Coil Mt. 477,502 217,873.02 544,100 252,102.522. Flux Mt. 2,148 1,400.17 2,146 1,104.843. Filler Wire Mt. 1,593 1,239.97 1,847 1,602.064. Epoxy Powder Mt. 447,591 4,169.29 1,158 2,185.345. Adhesive Mt. 795 1,252.58 673 1,013.056. Polyethylene Mt. 12,753 9,607.64 12,004 9,133.487. Inner Wrap Sqm. 1,032,378 96.51 1,015,184 84.888. Outer Wrap Sqm. 551,194 201.08 568,694 182.699. Coal Tar Enamel Mt. 4,349 1,047.53 4,783 809.7110. Polyethylene Tape Sqm. 323,571 375.73 2,720,298 3,327.1511. Wiremesh Sqm. 408,369 324.01 617,863 458.8212. Cement Mt. 12,459 441.90 10,096 438.6313. Sand Mt. 18,754 47.94 15,049 42.4214. Iron Ore Mt. 27,659 720.29 34,104 866.7815. Aluminium Kgs. 312,684 323.76 53,718 58.5516. Zinc Kgs. 21,969 24.50 2,936 3.1817. Coating Materials and others 60,295.90 11,946.73

T O T A L : 299,441.82 T O T A L : 285,360.8418. Stores & Consumables 16,306.80 7,317.29

315,748.62 292,678.13

Schedules



69








Schedules

14. The Company is in the process of identifying the suppliers who are Small Scale Industries & Undertaking. The amountdue to them has not been quantified during the year.

15. In the opinion of the Board, the Current Assets are approximately of the value, if realised, in the ordinary course of thebusiness. The Provision for Depreciation and for all known liabilities are adequate and not in excess of the amountreasonably considered necessary. All the income accrued has been accounted for in the books.

16. Schedules A to Q forming an integral part of the Balance Sheet and Profit and Loss Account are duly authenticated.

17. The previous year figures have been regrouped/rearranged wherever necessary to conform the current year classification.



70

CASH FLOW STATEMENT FOR CONSOLIDATED ACCOUNTS OF PSL LIMITEDFOR THE YEAR ENDED ON 31ST MARCH 2010

(PURSUANT TO THE LISTING AGREEMENT WITH STOCK EXCHANGES)(Rs. In lacs)


A) CASH FLOW FROM OPERATING ACTIVITIESNet Profit Before Tax & Extra-ordinary Items 15655.63 13853.38ADJUSTED FORAdd : Depreciation 8160.57 6876.70Interest (Net) 11214.88 10274.93Preliminary Expenses Written off Nil NilTechnical Knowhow Written off Nil NilLess: Bad Debts Provision Nil NilLess: Profit on Sale of Fixed Assets (0.38) 2.45Add : Loss on Investments Nil NilOperating Profit Before Working Capital Changes 35031.46 31002.56CHANGES INTrade Receivables 2778.43 (19702.11)Inventories 175388.37 (273638.71)Trade Payables (291448.67) 341338.02Loans And Advances (9528.24) (31698.70)Cash Generated From Operations [A] (87778.65) 47301.06Tax Paid/Payable/Advance Tax (4520.15) (3903.17)Technical Know How Fees NIL NILNet Cash From Operating Activities (92298.80) 43397.89

B) CASH FLOW FROM INVESTING ACTIVITIESSale of Fixed Assets 7.87 3.65Profit on Sale of Assets (0.38) 2.45Interest Received 477.88 769.75Sale/ (Purchase) of Investments (23.90) NilPurchase of Fixed Assets (38548.43) (73129.27)Net Cash Used In Investing Activities [B] (38086.96) (72353.42)

C) CASH FLOW FROM FINANCING ACTIVITIESProceeds From Issue of SharesIncluding Share Premium 12,939.86 0.68Interest Paid (11692.76) (11044.68)Loans Received / Repayments (Net) 137109.86 23764.84Dividend Paid (1245.52) (2489.75)Net Cash Used In Financing Activities [C] 137111.44 10231.09

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENT [A+B+C] 6725.68 (18724.46)

Cash And Cash Equivalent - Opening [A] 21326.20 40050.64Cash And Cash Equivalent - Closing [B] 28051.88 21326.20

[B-A] 6725.68 (18724.44)

Auditors’ CertificateWe have verified the above Cash Flow Statement of PSL Limited (Consolidated) derived from the Audited Financial Statements for the yearended March 31, 2010 and found the same is drawn in accordance therewith and also with the requirements of clause 32 of the ListingAgreements with Stock Exchange.

for Suresh C. Mathur & Co.Chartered Accountants

Sd/-Place : Mumbai Suresh C. MathurDate : 29th May, 2010 Partner

M.No. 1276








Consolidated Cash Flow Statement


PSL Corrosion Control Services Limited’sDirectors’ ReportAuditors’ Report

Balance SheetProfit & Loss Account

SchedulesBalance Sheet Abstract

STATEMENTS

OF

SUBSIDIARY

COMPANIES

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73

ToThe Members,PSL CORROSION CONTROL SERVICES LIMITED(A Wholly Owned Subsidiary of PSL Limited)

Your Directors have pleasure in presenting this AnnualReport together with Audited Accounts of your Companyfor the Financial Year ended on 31st March, 2010.

FINANCIAL HIGHLIGHTS

The working results for the year ended 31st March, 2010 areas under:-

(Rs. In Lacs)

PARTICULARS 2009-10 2008-09

Income 4867.62 4044.25Gross Profit before Depreciation 1623.04 960.33and InterestLess: Interest NIL NILProfit before Depreciation 1623.04 960.33Less: Depreciation 101.15 57.06Profit before provision for Taxation 1521.89 903.27Less: Taxation Provision

- Current Tax (Income Tax) 490.00 278.00- Deferred Tax NIL NIL- Current Tax (FBT) NIL 11.00

Net Profit 1031.89 614.27Appropriation AccountLess: Transfer to General Reserve 103.19 62.00Less: Interim Dividend NIL NILLess: Tax on Interim Dividend NIL NILLess: Income Tax Paid 2.31 27.88Add: Deferred Tax Assets/(Liabilities) 6.53 (2.10)Balance Carried over to Balance Sheet 932.92 522.29

FINANCIAL REVIEW

Due to continued recessionary trends in the market, for mostcompanies growth seemed illusionary and money a scarceresource. However even in such adverse industrial climate,your company stood its ground to ensure that it makes suchvital investments which would enable your company toovercome the lows of a recessionary year, and build a stableplatform for the future. To go further the company madesizeable investments in its Chennai and VishakapatnamPlants.

Inspite of the tight market conditions, the company was ableto post exceptionally good results, thereby scaling newheight-of recording a Profit before tax of Rs. 1521.89 Lacs,which is an increase of 68% over our previous year'sperformance. The "Total Income" of the Company for theyear under review increased from Rs. 4044.25 Lacs toRs. 4867.62 Lacs in the current year, registering a growth of20%.

OPERATIONAL ACHIEVEMENT

The continued good condition of the pipeline network isextremely important for good most process industries, suchas oil and gas refineries, fertilizers, chemicals etc., as mostof the petroleum refineries are located near seashores. Such

pipelines laid for transportation of the petroleum and otherproducts are exposed to aggressive corrosive environment(eg high chloride content in the air). To overcome theproblems of corrosion and worst after effects thereof, it isnecessary to provide effective and protective anti corrosioncoating on the pipeline. As corrosion of pipes has becomea serious concern in India, your company's business isgradually growing. To meet the new challenges yourcompany has installed a second plant at Chennai, thusincreasing its annual production from 12000 MT to 25000MT.

Apart from Chennai plant, Vizag and Daman plants werealso upgraded by increasing their annual productioncapacities to 12000 MT and 54000 MT respectively.

ON GOING PROJECTS

The spurt in power plants in India in the recent past hasacted as a welcome catalyst in directly boasting the businessof your company. The ongoing assignments include thefollowing:-

� Maharashtra State Electricity, Project in Maharashtra,� Ultra Mega Power Project in Morbi,� Thermal Power Station project in Tamil Nadu and� Andhra Pradesh Power Development Corporation

project in AP.

Your Company has executed more than 100 assignments,during the year under review, including the followingimportant assignments :-

(a) Road Over Bridges project at Jogeshwari and Goregaonin Mumbai,

(b) Rail Over Bridge project at Khanda Colony, NaviMumbai,

(c) Anarmahal Flyover project at Amarmahal Junction,

(d) ONGC's, Petro Addition Ltd project and

(e) Tunnel project at Maroshi in Mumbai.

Your Company's thrust in railways continues, through theyear under review, which includes various assignmentsexecuted by your company for Central Railways, WesternRailways, Southern Railways, Mumbai Rail VikasCorporation etc.

DIVIDEND AND RESERVE

Keeping in view the implementation of ongoing expansionplans and possibilities of some investments in future plansof similar nature, your Board has decided to plough backprofits and refrain from recommending any dividend for theyear under review.

The Board has recommended an appropriation ofRs. 103.19 Lacs to the general reserve account which is66% higher than last year. After such appropriation anamount of Rs. 932.91 Lacs has been retained in the Profitand Loss Account.

Directors’ Report

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74

DIRECTORATE

In compliance of Section 256 of the Companies Act, 1956and the Articles of Association of the Company, Shri AshokPunj, Director, retires by rotation at ensuing Annual GeneralMeeting but being eligible has offered himself for re-appointment.

CONTINUATION OF "WHOLLY OWNED SUBSIDIARY"STATUS OF COMPANY

During the year under review there has been no change inthe capital structure of the Company since its entire capitalcontinued to be held by "PSL Limited" due to which theCompany's status of "Wholly Owned Subsidiary Company"of PSL Limited continued during the year under review.

AUDITORS

M/s Suresh C. Mathur & Company, Chartered Accountants,Auditors of the Company, retire at the ensuing AnnualGeneral Meeting and being eligible, offer themselves forre-appointment.

AUDITORS' REPORT

The notes to the accounts referred to in Auditors' Report areself explanatory and therefore do not call for any furthercomments.

CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION, FOREIGN EXCHANGE EARNINGS ANDOUTGO

Particulars in respect of conservation of energy, technologyabsorption and foreign exchange earnings and outgo asrequired under Section 217 (1)(e) of the Companies Act,1956, read with the Company's (Disclosure of Particularsin the Report of Board of Directors) Rules, 1988 is annexedhereto and form a part of this report.

PARTICLUARS OF EMPLOYEES

The company had no such employees whose particularsare required to be mentioned pursuant to the provision ofSection 217 (2A) of the Companies Act, 1956 read withCompanies (Particulars of Employees) Rules, 1975.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) for the CompaniesAct, 1956 the Directors hereby confirm that:-

• In the preparation of Annual Accounts for the year underreview, the applicable accounting standards have beenfollowed.

• The applicable accounting policies are appliedconsistently to give a true and fair view of the state ofaffairs of the Company at the end of Financial Year underreview and Profit & Loss Account of the period underreport.

• The Directors have taken proper and sufficient care formaintenance of adequate records for safeguarding theassets of the Company and for preventing and detectingfraud and other irregularities.

• The Annual Accounts for the period under review havebeen prepared on a going concern basis.

ACKNOWLEDGEMENT

The Company has been able to operate efficiently becauseof the culture of professionalism, creativity and integrityprevailing at all operational levels of the company. Efficientutilization of the Company's resources directly resulted intoa sustainable and profitable growth. The Directors wish tohereby place on record their deep appreciation for theefficient and loyal services rendered by each and everyemployee in making the above possible.

Your Directors look forward to the future with confidence.

For and on behalf of the Board of Directors ofPSL Corrosion Control Services Limited

sd/- sd/- sd/-G.S. Sauhta R.K. Bahri Ashok Punj

(Director) (Director) (Director)

Place : MumbaiDate : 30th July, 2010

Directors’ Report

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75

ANNEXURE TO THE DIRECTORS’ REPORT

Information pursuant to the Companies ( Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.

I. CONSERVATION OF ENERGY 2009-10 2008-09

A. POWER AND FUEL CONSUMPTION1. Electricity

a) PurchasedUnits (M.KWH) 6719.583 5386.758Total Amount (Rs. Lacs) 252.63 184.15Average Rate/Unit (Rs./KWH) 3.76 3.42

b) Own GenerationThrough Diesel GeneratorUnits (M. KWH) 430.444 257.919Units per litre of Diesel Oil (KWH) 2.52 3.49Average Cost/Unit (Rs./ KWH) 13.71 10.54

B. TECHNOLOGY ABSORPTIONSCompany’s search for new technology for its processes so as to minimize its input costs is still continuing.

II. FOREIGN EXCHANGE EARNINGS AND OUTGO

(Rs. In lacs)

Earnings NIL NILOutgo 833.31 627.84

For and on behalf of the Board of the Directors ofPSL Corrosion Control Services Limited

sd/- sd/- sd/-Place : Mumbai G.S. Sauhta R.K. Bahri Ashok Punj

Date : 30th July, 2010 (Director) (Director) (Director)

Directors’ Report

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Auditors’ Report

To,

The Members of PSL Corrosion Control Services Limited

1. We have audited the attached Balance Sheet of PSLCorrosion Control Services Limited as at March 31, 2010and also the Profit and Loss account for the year endedon that date annexed thereto. These financial statementsare the responsibility of the company's management.Our responsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. These standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material mis-statement. An auditincludes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements.An audit also includes assessing the accountingprinciples used and significant estimates made bymanagement, as well as evaluating the overall financialstatement presentation. We believe that our auditprovides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order,2003 issued by the Central Government of India in termsof sub-section (4A) of Section 227 of the CompaniesAct, 1956, we enclose in the Annexure a statement onthe matters specified in paragraphs 4 & 5 of the saidOrder.

4. Further to our comments in the annexure referred toabove, we report that:

i. We have obtained all the information andexplanations, which to the best of our knowledgeand belief were necessary for the purposes of ouraudit.

ii. In our opinion, proper books of account as requiredby law have been kept by the Company so far asappears from our examination of those books.

iii. The Balance Sheet, Profit and Loss Account dealtwith by this report are in agreement with the booksof account.

iv. In our opinion, the Balance Sheet and Profit andLoss account dealt with by this report comply withthe accounting standards referred to in sub-section(3C) of section 211 of the Companies Act, 1956.

v. On the basis of the written representations receivedfrom the Directors, as on March 31, 2010 and takenon record by the Board of Directors, we report thatnone of the Directors is disqualified as on March31, 2010 from being appointed as a Director interms of clause (g) of sub-section (1) of section 274of the Companies Act, 1956.

vi. In our opinion and to the best of our informationand according to the explanations given to us, thesaid accounts give the information required by the

Companies Act, 1956, in the manner so requiredand give a true and fair view in conformity withthe accounting principles generally accepted inIndia;

(a) In the case of the Balance Sheet, of the state ofaffairs of the company as at March 31, 2010;

(b) In the case of the Profit and Loss account, ofthe profit for the year ended on that date.



Sd/-Suresh C. Mathur

Place : Mumbai PartnerDate : 29th May, 2010 Membership No: 1276

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR

REPORT OF EVEN DATE

1. The Company has maintained proper records showingfull particulars, including quantitative details andsituation of fixed assets. In accordance with the phasedprogramme for verification of fixed assets, certain itemsof fixed assets were physically verified by themanagement during the year and no materialdiscrepancies were noticed on such verification. Therewas no disposal of fixed assets during the year.

2. The inventory of the Company has been physicallyverified by the management during the year. In ouropinion, the frequency of verification is reasonable. Inour opinion and according to the information andexplanations given to us, the procedures of physicalverification of inventory followed by the managementwere found reasonable and adequate in relation to thesize of the Company and the nature of its business. Onthe basis of our examination of records of inventory, inour opinion, the Company has maintained properrecords of inventory and the discrepancies noticed onphysical verification between the physical stocks andthe book records were not material in relation to theoperations of the Company.

3. According to information and explanation given to us,the company has availed interest free advance ofRs. 605.25 lacs from the Holding Company which isrepayable on demand.

4. In our opinion and according to the information andexplanations given to us, there are adequate internalcontrol procedures commensurate with the size of theCompany and the nature of its business for the purchaseof Inventory, Fixed Assets and for the sale of goods.Further, on the basis of our examination and accordingto the information and explanations given to us, wehave neither come across nor have we been informedof any instance of major weaknesses in the aforesaidinternal control procedures.

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77

Auditors’ Report

5. In our opinion and according to the information andexplanations given to us, the transactions made inpursuance of contracts of arrangements entered in theregister maintained under Section 301 of the CompaniesAct, 1956 and exceeding the value of rupees five lakhsin respect of any party during the year have been madeat prices which are reasonable having regard toprevailing market prices at the relevant time.

6. The Company has not accepted any deposits from thepublic.

7. In our opinion, the Company has an internal auditsystem, commensurate with the size of the Companyand the nature of its business.

8. The Central Government has not prescribedmaintenance of cost records u/s 209(1)(d) of theCompanies Act 1956 for the products of this Company.

9. According to the records of the Company, the Companyis regular in depositing undisputed statutory duesincluding with-holding of taxes, Provident Fund,Employees State Insurance, Income Tax, Sales Tax,Wealth Tax, Custom Duty, Excise Duty, Service Tax,Cess and other statutory dues applicable to it with theappropriate authorities. According to the informationand explanations given to us, no undisputed amountspayable in respect of Income Tax, Fringe Benefit Tax,Wealth Tax, Sales Tax, Customs Duty, Service Tax, ExciseDuty and Cess were outstanding, at the year end for aperiod of more than six months from the date theybecame payable.

As on March 31, 2010 according to the records of theCompany the following are the particulars of disputeddues on account of Excise duty , Customs, Income Tax,Service Tax and Sales Tax that have not been deposited.

Sr. Nature of Amount Period to Forum whereNo. dues under which the the dispute

dispute amount is pending(Rs. In Lacs) relates

1 Service Tax 105 2005-2006 High Court, Mumbai

2 -- do -- 9 2009 Addl.Commissioner,

C.Ex. Customs, Excise

Commissioner, Daman

10. The Company has no accumulated losses at the end ofthe financial year and it has not incurred any cash lossesin the current and immediately preceding financial year.

11. Based on our audit procedures and on the informationand explanations given by the management, we areof the opinion that the Company has not defaulted inrepayment of dues to a financial institution or banks.The company does not have any outstandingdebenture.

12. According to the information and explanations givento us and based on the documents and records producedto us, the Company has not granted loans or advanceson the basis of security by way of pledge of shares,debentures and other securities.

13. In our opinion, the Company is not a chit fund or anidhi/mutual benefit fund/society. Therefore, theprovisions of clause 4(xiii) of the Companies (Auditor'sReport) Order, 2003 are not applicable to the Company.

14. In our opinion, the Company is not dealing in or tradingin shares, securities, debentures and other investments.Accordingly, the provisions of clause 4(xiv) of theCompanies (Auditor's Report) Order, 2003 are notapplicable to the Company.

15. In our opinion and according to the information andexplanation given to us, the Company has not givenany guarantees for loan taken by others from a bank orfinancial institution.

16. Based on information and explanations given to us bythe management, the Company has not taken any termloan.

17. According to the information and explanations givento us and on an overall examination of the BalanceSheet of the Company, we report that no funds raisedon short-term basis have been used for long-terminvestment and no long-term funds have been used tofinance short-term assets (excludes Long Term workingcapital).

18. The Company has not made any preferential allotmentof shares to parties and companies covered in theRegister maintained under Section 301 of theCompanies Act, 1956 during the year.

19. The Company has not raised any moneys by way ofissue of debentures.

20. The Company has not raised any money during theyear by way of public issue.

21. Based upon the audit procedures performed for thepurpose of reporting the true and fair view of thefinancial statements and as per the information andexplanations given by the management, we report thatno fraud on or by the Company has been noticed orreported during the course of our audit.



Sd/-

Suresh C. Mathur

Place : Mumbai PartnerDate : 29th May, 2010 Membership No: 1276

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78

BALANCE SHEET AS AT MARCH 31, 2010[Rs. in lacs]

Schedules As at As atMarch 31, 2010 March 31, 2009

SOURCE OF FUNDS

SHAREHOLDERS’ FUNDS

A) Share Capital A 140.00 140.00

B) General Reserve B 3,455.83 3,595.83 2,419.73 2,559.73

C) Secured Loans C NIL NIL

D) Deferred Taxation Liability NIL NIL

3,595.83 2,559.73


FIXED ASSETS D

A) Gross Block (At Cost) 1,111.30 1,058.89

B) Less : Depreciation 579.46 478.82

531.84 580.07

C) Add: Capital Work in Progress NIL 531.84 NIL 580.07

INVESTMENTS E 116.29 101.29

DEFERRED TAX ASSETS 9.95 3.43

CURRENT ASSETS, LOANS & ADVANCES

A) Inventories F 308.81 201.11

B) Sundry Debtors G 392.40 448.61

C) Cash and Bank Balance H 2,990.49 1,748.17

D) Loans and Advances I 1,413.44 1,015.72

5,105.14 3,413.60

LESS: CURRENT LIABILITIES AND PROVISIONS

A) Current Liabilities J 967.90 829.18

B) Provisions K 1,199.48 709.48

2,167.38 1,538.66


MISCELLANEOUS EXPENDITURE L NIL NIL

(To the extent not written off)

3,595.83 2,559.73

NOTES TO ACCOUNTS O

Balance Sheet

As per our report attached FOR AND ON BEHALF OF BOARD OF DIRECTORS

For Suresh C. Mathur & Co.Chartered Accountants

ASHOK PUNJ(SURESH C. MATHUR) R.K. BAHRIPartner ARCHANA MAINI G.S. SAUHTAM.No. 1276 Company Secretary (Directors)


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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010[Rs. in lacs]

Schedules For the Year Ended For the Year Ended March 31, 2010 March 31, 2009

INCOME M 4,867.62 4,044.25

EXPENDITURE

Manufacturing, Administrative and

Other Expenses N 3,244.58 3,083.92

Interest on Loans NIL 3,244.58 NIL 3,083.92

PROFIT BEFORE DEPRECIATION 1,623.04 960.33

Depreciation 101.15 57.06

PROFIT BEFORE TAXATION 1,521.89 903.27

Less :Provision for TaxationCurrent Tax (Income Tax) 490.00 278.00Current Tax (FBT) NIL 490.00 11.00 289.00

PROFIT AFTER TAXATION 1,031.89 614.27

Less : Transfer to General Reserve 103.19 62.00Less : Interim Dividend NIL NILLess : Tax on Interim Dividend NIL NILLess : Income Tax Paid F.Y. 2002-2003 NIL 27.88Less : Income Tax Paid F.Y. 2006-2007 2.31 NILLess : Deferred Tax Liability NIL 2.10Add: Deferred Tax Assets 6.53 NIL

BALANCE CARRIED OVER TO BALANCE SHEET 932.91 522.29

NOTES TO ACCOUNTS O

Profit and Loss Account





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SCHEDULE ‘A’ – SHARE CAPITAL

Authorised25,00,000 Equity Shares of Rs. 10/- each 250.00 250.00

Issued, Subscribed & Paid up Capital14,00,020 Equity Shares of Rs. 10/- each 140.00 140.00(PSL Limited - Parent Company)

140.00 140.00

SCHEDULE ‘B’ – RESERVES AND SURPLUS

General ReserveAs per Last Balance Sheet 887.90 825.90Add : Transfer from Profit & Loss Account 103.19 991.09 62.00 887.90

Profit & Loss AccountAs per Last Balance Sheet 1,531.83 1,009.54Add : Transfer from Profit & Loss Account 932.91 2,464.74 522.29 1,531.83

3,455.83 2,419.73

SCHEDULE ‘C’ – SECURED LOANSNIL NIL

NIL NIL

SCHEDULE ‘D’ – FIXED ASSETS[Rs. in lacs]

PARTICULARS GROSS BLOCK DEPRECIATION NET BLOCK

As At Additions Deductions As at Upto For the Deductions during Upto As at As at01.04.09 during the period during the period 31.03.10 01.04.09 period the period 31.03.10 31.03.10 31.03.09

Plant & Machinery 536.26 13.80 1.34 548.72 238.12 42.37 0.52 279.97 268.75 298.14

Furniture & Fixtures 179.25 NIL NIL 179.25 60.53 21.49 NIL 82.02 97.22 118.71

Computer 14.71 1.05 NIL 15.76 12.46 1.08 NIL 13.54 2.23 2.25

Electrical Installation 14.63 NIL NIL 14.63 6.70 1.10 NIL 7.80 6.82 7.93

Residental Building/Erection 2.54 NIL NIL 2.54 0.99 0.08 NIL 1.07 1.47 1.54

Factory Shed /Building 140.25 NIL NIL 140.25 69.92 7.03 NIL 76.96 63.29 70.33

Office Equipments 2.03 0.17 NIL 2.20 1.05 0.15 NIL 1.20 1.00 0.98

Motor Car 138.04 38.26 NIL 176.30 73.29 25.70 NIL 98.99 77.31 64.75

Lab Equipments 31.19 0.46 NIL 31.65 15.75 2.16 NIL 17.91 13.74 15.44

Total 1,058.89 53.75 1.34 1,111.30 478.82 101.15 0.52 579.46 531.84 580.07

Total Previous Year 772.87 286.02 NIL 1,058.89 421.77 57.06 NIL 478.82 580.07 351.11

Schedules

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SCHEDULE ‘E’ – INVESTMENTS (LONG TERM INVESTMENTS)

TRADEA. (AT COST UNQUOTED)

BHI Limited140,000 Equity Shares of Rs.10/- each 14.00 14.00

B. (AT COST QUOTED)21,50,000 Equity Shares of PSL Ltd. 12.29 12.29(Remainder of 45,50,000 Equity Shares of PSL Ltd. whichwere received in Lieu of 2,60,000 Equity Share of Rs. 10/-each of PSL International Ltd. (M.V. @ Rs.137.25 per share)

C. MUTUAL FUNDSBI Capital Protection Oriented Fund 25.00 25.00SBI Infrastructure Fund 50.00 50.00AXIS Equity Fund 15.00 NIL

116.29 101.29

SCHEDULE ‘F’ – INVENTORIES (AT COST)

(Valued at Cost or Market Price Whichever is lower)

Raw Materials 132.82 79.35Consumables 140.11 104.77Finished Goods 35.88 16.99

308.81 201.10

SCHEDULE ‘G’ – SUNDRY DEBTORS


Debts Outstanding for a PeriodLess than Six Months 327.76 391.99More than Six Months 64.65 392.40 56.62 448.61

392.40 448.61

SCHEDULE ‘H’ – CASH AND BANK BALANCES

Cash in Hand 0.90 10.82Scheduled Banks with Current Account 920.17 524.52In Deposit Account with Scheduled Banks 2,069.42 1,212.83

2,990.49 1,748.17

Schedules

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SCHEDULE ‘I’ – LOANS AND ADVANCES


Security Deposit 86.39 78.45

Advances Recoverable in Cash or in Kind orfor Value to be Received . 138.11 162.87Tax Deducted at Source 1163.13 662.09Advance Paid to Supplier 25.81 112.30

1,413.44 1,015.71

SCHEDULE ‘J’ – CURRENT LIABILITIES

Sundry Creditors (For Goods) 192.54 177.04Advance from Parties/Clients 100.93 86.17Others 674.43 565.97

967.90 829.18

SCHEDULE ‘K’ – PROVISIONS

Provision for Taxation 1,199.48 709.48Proposed Dividend 0.00 0.00Tax on Proposed Dividend 0.00 0.00

1,199.48 709.48

SCHEDULE ‘L’ – MISCELLANEOUS EXPENDITURE

Pre-operative Expenses NIL 0.22

Less : Written off during The Period NIL NIL 0.22 NIL

NIL NIL

Schedules

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SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH 31, 2010

[Rs. in lacs]For the Year Ended For the Year Ended

March 31, 2010 March 31, 2009 SCHEDULE ‘M’ – INCOME

a) Sales /Job Receipt (Including Service Tax) 4,666.57 3,829.92b) Other Income 201.05 214.33

4,867.62 4,044.25

SCHEDULE ‘N’ – MANUFACTURING, ADMINISTRATIVE AND OTHER EXPENSES

RAW MATERIALS CONSUMEDOpening Stock 79.35 17.00Add: Purchases 909.78 702.17Less: Closing Stock 132.82 856.30 79.35 639.82

CONSUMABLES CONSUMEDOpening Stock 104.77 53.92Add: Purchases 569.85 780.89Less: Closing Stock 140.11 534.51 104.77 730.04

EMPLOYEE’S EMOLUMENTS AND BENEFITSSalaries and Allowances 355.38 319.08Staff Welfare 4.83 360.21 3.91 322.99

OTHER EXPENSESAdvertisement Expenses 9.42 1.58Electricity Charges 1.28 1.58Transportation Charges of Bars 366.67 268.03Octroi Charges 134.16 260.42Lease Rent 1.49 2.58Postage, Telegram & Telephone exp. 8.47 6.90Power & Fuel 252.63 184.15Sales Promotions 105.23 108.38Rent, Rates & Taxes 1.32 1.56Repairs & Maintenance - Building 20.56 0.96Repairs & Maintenance - Others 1.70 0.68Repairs & Maintenance - Plant & M/C 18.96 3.38Motor Vehicle Expenses 30.88 17.04Travelling Expenses 41.81 51.29Conveyance Expenses 5.88 4.30Printing & Stationery Expenses 17.09 19.32Bar Straightening Charges 0.98 0.72Insurance Charges 4.48 4.06Audit Fees 1.35 1.35Bank Charges 10.51 3.32Service Tax on Coating & Edu. Cess 377.33 324.16Miscellaneous Expenses 100.24 1,512.45 131.14 1,396.90

VARIATION IN STOCKS OF FINISHED GOODS

Closing Stock (Increase in Stock) (18.89) (5.83)

3,244.58 3,083.92

Schedules

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SCHEDULE ‘O’ – NOTES FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED 31ST MARCH, 2010.

1 SIGNIFICANT ACCOUNTING POLICIES :

A. METHOD OF ACCOUNTING

The accounts have been prepared to comply in all material aspects with applicable principles in Indiaand the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevantprovisions of the Companies Act, 1956.

B. INVENTORIESRaw Materials, Stores & Spare Parts are valued at cost, which is arrived on FIFO Basis. Finished Goodsare valued at cost plus proportionate overhead or net realizable value whichever is lower.

C. DEPRECIATION

Depreciation is provided from the date the assets have been installed and put to use on written downvalue method at the rates and in the manner prescribed by Schedule XIV to the Companies Act, 1956.

D.RESEARCH AND DEVELOPMENT EXPENDITURE

Revenue Expenditure is charged to Profit & Loss Account and Capital Expenditure is added to the cost ofFixed Assets in the year when it is incurred.

E. REVENUE RECOGNITION / INCOME

i. Revenue Income is recognised on accrual basis except where mentioned otherwise, in particular.ii. Sales Income is recognised on despatch of goods.iii. Sales and freight charged in invoices, rebates, discounts, claims etc., are excluded therefrom. Rebates,

claims and discounts are accounted for as and when determined.iv. Dividend income on investments are accounted for when the right to receive the payment is established.v. Expenditures are accounted for on accrual basis and provisions are made for all known liabilities.

DETAILS OF MISCELLANEOUS EXPENSES FORMING PART OF SCHEDULE ‘N’[Rs. in lacs]

For the Year Ended For the Year EndedMarch 31, 2010 March 31, 2009

Member & Subscription Fees 0.31 2.26General Expenses 34.81 33.46Laboratory Expenses 2.43 2.00News Paper, Books & Periodicals 0.39 0.32Commission to Contractors 2.09 1.25Consultancy Charges 39.57 67.06Painting Charges of Bars at Site 1.21 0.31Short Recoveries & Discount 0.79 5.53Office Expenses 0.36 0.89Other Allowance 10.46 9.35Service Tax on Goods Trpt 6.66 5.45Guest House Exp. 0.41 0.23Seminar/Sponsership Exp 0.14 0.75Legal Expenses 0.14 0.19Unloading/Loading Exp. 0.46 0.44Pre-operative Exp. Written Off - 0.22Professional Tax 0.03 0.03Job Expenses (HLL Mumbai) - 1.40

100.24 131.14

Schedules

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85

F. FIXED ASSETS

Fixed Assets are stated at cost of acquisition and installation. The Cost includes Freight, Duties, Taxes andrelated incidental expenses.

G.FOREIGN CURRENCY TRANSACTIONS

The payment & receipt incurred in foreign currency during the period are accounted at the rates prevailingon the date of transactions.

H. DERIVATIVE INSTRUMENTS

The Company has not entered into any derivatives instruments.

I. INVESTMENTS

Investments are of long term nature and are stated at cost of acquisition, less any diminution in the valueother than temporary. The investments in the Companies under the same management whose shares areunquoted are valued at cost.

J. EMPLOYEE’S BENEFIT AS-15

1. The parent Company has covered the Employee’s of PSL Corrosion Control Services Limited under theLIC Group Gratuity & Super Annuation Scheme. The Leave encashment plan is covered under theState Bank of India Life Scheme. The Provident Fund, Pension Fund is deposited with the ProvidentFund Authorities through the parent Company. Contribution to above said defined contribution schemesare all charged to the Profit & Loss Account.

2. The actuarial valuation details are given in the notes of accounts of the parent Company.

K. BORROWING COST

Interest & other borrowing costs are charged to Revenue.

L. PROVISIONS

A provision is recognized when there is a present obligation as a result of past event, it is probable that anoutflow of resources will be required to settle the obligations and in respect of which reliable estimatecan be made. Provision is not discounted to its present value and is determined based on the best estimaterequired to settle the obligation at the year end date. These are reviewed at each year end date andadjusted to reflect the best current estimate.

M.SEGMENT REPORTING

As revenue from Sales, Internal Transfer, Profits, Assets from other segments are below the norms prescribedin AS-17, separate disclosures have not been made. Since the Company does not have any businessoutside India there are no reportable geographical segments.

N.RELATED PARTY AND KEY MANAGEMENT PERSONAL DISCLOSURE

A. Name of the Party and the Relationship

i. PSL Limited 100% Holding Company

ii. Eurocoustic Products Ltd. Companies in which control

iii. BHI Limited exists directly / indirectly

B. Nature of Transaction (Amount in Rs.)

Sr. Particulars Holding Co. Companies in which control

No. exists directly / indirectly

1. Dividend Nil NIL

2. Purchase of Capital Goods Nil Nil

3. Reimbursement of Expenses 31,599,433 29,186,860

4. Lease Rent 148,800 NIL

O. LEASES

Operating lease payments are recognized as expenditure in the Profit & Loss Account.

Schedules

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86

P. EARNING PER SHARE 2009-10 2008-09

No of shares beginning and at the end of the year 1,400,020 1,400,020

Net Profits after tax available for Equity Shareholders (Rs. in Lacs) 1031.89 614.27

Earning Per Share Rs. 73.71 Rs. 43.88

Q.MANAGEMENT ESTIMATES

The Financial Statements are prepared in conformity with generally accepted accounting principles andapplicable accounting standards, which may require management to make estimates and assumptions.These may affect the reported amount of Assets and Liabilities and disclosures of Contingent Liabilities onthe date of the financial statements and the reported amount of revenues and expenses during the reporting

periods, actual reports later could differ from these estimates.

2009-10 2008-09

(Rs. in lacs) (Rs. in lacs)

R. ACCOUNTING FOR TAX ON INCOME

Deferred Tax Liabilities - Depreciation Differences NIL 2.10

Deferred Tax Assets - Depreciation Differences 9.95 5.53

Net Deferred Tax Liability / (Assets) (9.95) (3.43)

S. SUNDRY DEBTORS/LOANS & ADVANCES

Sundry Debtors, Creditors and other advances are subject to confirmation. The effect to the same, if any,which are not likely to be material, will be adjusted at the time of confirmation.

T. IMPAIRMENT OF ASSETS

In the opinion of the Company’s Management, there is no impairment to the assets to which Accounting

Standard 28 “Impairment of Assets” applied requiring any revenue recognition.

U.CONTINGENT LIABILITIES

Contingent liabilities are disclosed in the Accounts by way of notes giving the nature and quantum of

such liabilities.

2009-10 2008-09


V. GUARANTEES

Guarantee given by the Bank 10.00 15.00

2 EARNING IN FOREIGN CURRENCY NIL NIL

3 EXPENDITURE IN FOREIGN CURRENCY

a) Raw Materials (F.O.R.) 517.21 346.11

b) Spare Parts/Consumable 316.09 281.73

c) Travelling Expenses Nil Nil

4 VALUE OF CONSUMPTION OF RAW MATERIAL

Imported 576.95 357.85

Indigenous 279.35 281.97

VALUE OF CONSUMPTION OF CONSUMABLE

Imported 304.82 260.28

Indigenous 229.68 469.75

1390.81 1369.86

Schedules

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87

5 AUDITOR'S REMUNERATION

a) Audit Fees 0.86 0.86

b) Other Capacity 0.49 0.49

6 Loans & Advances includes Amount Receivable from Companies under Same Management Rs. 68.50Lacs.

7 The Company is in process of identifying the suppliers who are small scale industries & undertakings.The amount due to them has not been bifurcated during the year.

8 In the opinion of the Board the Current Assets are approximately of the value, if realised, in the ordinarycourse of the business. The provision for depreciation and for all known liabilities are adequate and notin excess of the amount reasonably considered necessary. All the income accrued has been accountedfor in the books.

9 Schedule to A to O form an integral part of the Balance Sheet and Profit and Loss Account which areduly authenticated.

10 The previous year figures have been regrouped / rearranged wherever necessary to conform with thecurrent period classification.





Schedules

2009-10 2008-09


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Part IV of Schedule VI of Companies Act, 1956 (As amended)Balance Sheet Abstract and Company’s General Business Profile

1. REGISTRATION DETAILS

Registration No. State Code

Balance Sheet Date

2. CAPITAL RAISED DURING THE PERIOD (Rupees in lacs)

Public issue Rights Issue

Bonus issue Private Placement

3. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Rupees in lacs)

Total Liabilities Total Assets

Sources of Funds :

Paid-up Capital Reserves & Surplus

Secured Loans Unsecured Loans

Application of Funds :

Net Fixed Assets Investments

Net Current Assets Misc. Expenditure

Accumulated Losses

4. PERFORMANCE OF COMPANY (Rupees in lacs)

Turnover Total Expenditure

Profit Before Tax Profit After Tax

Earning per Share Dividend Rate(in Rupees) (in Rupees)

5. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANY(as per Monetary terms)

Product ANTI CORROSIVE TREATMENT OFNIC Code No. Description : REBARS

NIC Code No. ProductDescription :

0 0 4 6 6 6 5 6

3 1 - 0 3 - 1 0

N I L N I L

N I L N I L

3 5 9 5 . 8 3 3 5 9 5 . 8 3

1 4 0 . 0 0 3 4 5 5 . 8 3

1 1 6 . 2 9

2 9 3 7 . 7 5 N I L

N I L

4 8 6 7 . 6 2 3 2 4 4 . 5 8

1 5 2 1 . 8 9 1 0 3 1 . 8 9

7 3 . 7 1 0 . 0 0

N I L N I L

5 3 1 . 8 4

BIO DIESEL

3 4 5 0

3 0 0 9

Balance Sheet Abstract

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Pipeline Systems Limited’sAuditors’ Report

Consolidated Accounts

PSL USA INC’sIndependent Auditors’ Report

Consolidated Accounts

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ToThe Members of Pipeline Systems Limited

1. We have audited the attached Consolidated Balance

Sheet of PIPELINE SYSTEMS LTD. and it’s subsidiary

namely PSL FZE as at 31st March, 2010, and the

Consolidated Profit and Loss Account for the year then

ended, both annexed thereto. These financial statements

are the responsibility of the Company’s management

and have been prepared by the management on the basis

of separate financial statements and other financial

information regarding components. Our responsibility

is to express an opinion on these financial statements

based on our audit.

2. We conducted our audit in accordance with generally

accepted auditing standards in India. These Standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial

statements are free of material misstatements. An audit

includes, examining on a test basis, evidence supporting

the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting

principles used and significant estimates made by

management as well as evaluating the overall financial

statements presentation. We believe that our audit

provides a reasonable basis for our opinion.

3. We did not audit the financial statements of the

subsidiary of PIPELINE SYSTEMS LTD, Mauritius called

PSL FZE, Sharjah. This financial statements and other

financial information have been audited by other

auditors whose report/returns have been furnished to

us, and our opinion in so far as it relates to the amounts

included in respect of this subsidiary is based solely on

the report of the other auditors.

4. On the basis of the information and explanation given

to us and on the consideration of the separate audit report

on individual financial statements and on the other

financial information of the components of PSL FZE, we

are of the opinion that the attached financial statements

give a true and fair view in conformity with the

accounting principles generally accepted in India;

a) In the case of the Consolidated Balance Sheet, of

the consolidated statement of affairs of PIPELINE

SYSTEMS LTD and its subsidiaries as at 31st March

2010; and

b) In the case of Consolidated Profit and Loss Account,

of the consolidated results of operations of PIPELINE

SYSTEMS LTD. and its subsidiaries for the year then

ended.

For Suresh C. Mathur & Co.



Sd/-

SURESH C. MATHUR

Place: Mumbai Partner

Date : 27th May, 2010 Membership No.1276

Auditors’ Report

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CONSOLIDATED BALANCE SHEET OF PIPELINE SYSTEMS LTD. AS AT 31 MARCH, 2010

(Amount in USD)

For the year ended For the year ended

Schedule March 31, 2010 March 31, 2009

SOURCES OF FUNDS

SHARE HOLDERS FUNDS

A) Share Capital A 26,475,242 24,460,815

B) Reserve & Surplus B 2,700,256 433,135

LOAN FUNDS

Secured Loans C 43,850,000 17,162,625

73,025,498 42,056,575

APPLICATION OF FUNDS :

Fixed Assets D 32,271,526 19,222,391

Less : Depreciation 4,994,368 2,696,088

27,277,159 16,526,303

Add: Capital Work-in-Progress 880,033 28,157,191 4,064,975 20,591,278

CURRENT ASSETS, LOANS & ADVANCES

A) Inventory E 11,945,217 32,746,244

B) Sundry Debtors F 1,335,799 2,988,709

C) Cash & Bank Balances G 7,909,731 5,958,937

D) Loans and Advances H 29,311,233 3,058,230

50,501,981 44,752,120

LESS : CURRENT LIABILITIES & PROVISIONS I 5,633,674 23,286,823

NET CURRENT ASSETS 44,868,307 21,465,297


73,025,498 42,056,575


(SURESH C. MATHUR) KESHAV PUNJ RAGHAV PUNJ ASHOK PUNJPartner Director Director DirectorM. No. 1276



NOTES TO ACCOUNTS N

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CONSOLIDATED PROFIT & LOSS ACCOUNT OF PIPELINE SYSTEMS LTD.FOR THE YEAR ENDED 31ST MARCH, 2010

(Amount in USD)

For the year ended For the year ended

Schedule March 31, 2010 March 31, 2009

INCOME : J 33,798,203 8,418,083

EXPENDITURE :

Raw Materials & Stores K 26,189,913 3,112,819

Manufacturing & Process Expenses 59,175 305,976

Employees’ Remuneration & Benefits L 535,594 837,738

Other Expenses M 1,824,464 1,188,080

Interest on loan 614,119 397,841

Depreciation 2,298,280 31,521,544 2,185,167 8,027,621

Profit transferred to Balance Sheet 2,276,659 390,462

NOTES TO ACCOUNTS N




Consolidated Profit & Loss Account

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SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2010

(Amount in USD)For the year ended For the year ended

March 31, 2010 March 31,2009 SCHEDULE “A” – SHARE CAPITAL

Share Capital 26,475,242 24,460,815

26,475,242 24,460,815

SCHEDULE “B” – RESERVES & SURPLUS

As per Last Balance Sheet 422,701 32,239Profit During the Year 2,276,659 390,462

2,699,361 422,701Add/ (Less) : Foreign Exchange Fluctuation 895 10,434

2,700,256 433,135


From Banks 12,100,000 17,162,625(Secured against Hypothecation of current assetsand second charge on the assets )

Term Loan(Secured against SBLC issued by ICICI Bank-Baharain) 31,750,000 NIL

43,850,000 17,162,625

SCHEDULE “D” – FIXED ASSETS

GROSS BLOCK Depreciation Net Block

PARTICULARS As at Additions As at Upto For the Upto As on As at1-Apr-09 During 31-Mar-10 1-Apr-09 Period 31-Mar-10 31-Mar-10 31-Mar-09

the Year

Furniture & Fixtures 17,386 2,083 19,469 1,868 2,809 4,676 14,792 15,518Office Equipment 33,072 1,007 34,079 2,183 4,297 6,480 27,599 30,889Plant & Machinery 15,332,856 12,549,251 27,882,107 2,243,869 1,820,678 4,064,547 23,817,559 13,088,987Computers 18,512 NIL 18,512 2,624 6,355 8,979 9,533 15,888Motor Cars 60,514 NIL 60,514 18,484 10,882 29,365 31,149 42,030Earthmoving Equipments 572,672 NIL 572,672 52,056 156,185 208,241 364,431 520,616Shed Constructions 3,069,433 321,519 3,390,953 374,134 269,530 643,664 2,747,289 2,695,299Office Building 14,114 175,276 189,389 870 662 1,533 187,857 13,243Vehicles 103,833 NIL 103,833 NIL 26,882 26,882 76,951 103,833

TOTAL 19,222,391 13,049,136 32,271,526 2,696,088 2,298,280 4,994,368 27,277,159 16,526,303

PREVIOUS YEAR FIGURES (15,531,060) (3,691,331) (19,222,394) (510,921) (2,185,167) (2,696,088) (16,526,303) (15,020,139)

(in USD)

Schedules

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SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2010(Amount in USD)

For the year ended For the year endedMarch 31, 2010 March 31,2009

SCHEDULE “E” – INVENTORY

Raw Material, Consumables, Semi finished goods 10,000,593 25,838,223Work In progress 499,610 7,956Finished goods 1,445,014 6,900,065

11,945,217 32,746,244

SCHEDULE “F” – SUNDRY DEBTORS

Sundry Debtors 1,335,799 2,988,709

1,335,799 2,988,709

SCHEDULE “G” – CASH & BANK BALANCES

Cash in Hand 3,880 6,412

Bank Balances 7,905,851 5,952,525

7,909,731 5,958,937

SCHEDULE “H” – LOANS & ADVANCES

Loans & Advances 29,187,201 2,945,602

Staff Advance 25,104 16,007

Deposits 98,928 96,621

29,311,233 3,058,230

SCHEDULE “I” – CURRENT LIABILITIES

Sundry Creditors 729,785 2,809,942

Mobilisation Advance 4,881,355 18,807,776

Other Liabilities 22,533 1,669,104

5,633,674 23,286,822

Schedules

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For the year ended For the year endedMarch 31, 2010 March 31,2009

SCHEDULE “J” – INCOME

Sales & Pipe Coating Receipts 33,530,934 6,608,762Other Income 267,269 1,809,322

33,798,203 8,418,083

SCHEDULE “K” – RAW MATERIAL AND STORES

A. Raw Material ConsumedOpening Stock 25,409,973 81,509Add : Purchases during the year 4,903,130 35,027,989Less : Closing Stock 9,534,445 25,409,973Consumption during the year 20,778,658 9,699,526

B. Consumption of StoresConsumables & StoresOpening Stock 428,250 26,385Add : Purchases during the year 485,756 723,181Less : Closing Stock 466,149 428,250Consumption during the year 447,857 21,226,515 321,315 10,020,840

C. Change in Finished Goods and WIP 4,963,397 (6,908,021)

26,189,913 3,112,819

SCHEDULE “L” – EMPLOYEES’ REMUNERATION & BENEFITS

Salaries and Wages 401,776 565,066Staff Welfare 133,818 272,672

535,594 837,738

SCHEDULE “M” – OTHER EXPENSES

Auditors Remuneration 4,685 750Bank Charges 186,603 237,570Commission 753,679 206,224Conveyance Expenses 453 3,218Postage, Telegram and Telephone 1,358 867General Expenses 170,923 157,225Insurance Expenses 31,636 82,945Licence - Registration fees 176 9,491Motor Vehicle Expesnes 14,969 30,244Printing & Stationary Expenses 6,954 16,336Professional charges 23,951 6,784Rent, Rates and Taxes 499,461 257,658Repairs and Maintenance 31,687 29,246Telephone/Internet Expenses 22,558 14,530Travelling Expenses 75,370 134,992

1,824,464 1,188,080

SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010

(Amount in USD)

Schedules

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97

SCHEDULE “N “ - NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS OF PIPELINE SYSTEMS LTDFOR THE YEAR ENDED ON MARCH 31, 2010

1 SIGNIFICANT ACCOUNTING POLICIES

a. Method Of AccountingThe company maintain their accounting records on double entry system.

b. InventoriesThe Raw Materials, Stores and Spare Parts are valued at cost,which is arrived on FIFO basis.Cost of inventoriescomprises of all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to theirpresent condition and location. Cost of Raw Materials, Stores and Spares are determined by the average method.

c. DepreciationDepreciation is provided from the date the assets have been installed and put to use on written down value method.Depreciation on additions to assets is calculated pro rata from the month of such addition.

d. Lease hold landLand is procured on lease basis from Hamriyah Free Trade Zone Authority and lease rentals are accounted as per theterms and conditions under lease agreement.

e. Revenue Recognition/IncomeRevenue Income is recognised on accrual basis except where mentioned otherwise, in particulari) Sales revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection.

Sales are net of sales return and trade discounts.Rebate, claims and discounts are accounted for as and whendetermined.Deductions made have been reduced from the sales where found necessary. Revenue from servicesis recognised on rendering of services.

ii) Gross Sales include freight charged in invoicesiii) Expenditure are accounted for on accrual basis and provisions are made for all known liabilities.

f. Treatment of expenditure during construction periodExpenditure in the case of new units and substantial expansion of existing units during the construction period isincluded in work in progress and the same is allocated to the respective Fixed Assets on the completion of theconstruction.

g. Fixed Assetsi) Fixed assets are stated at Cost of acquisition and installation.The cost includes freight and related incidental

expensesii) The company has erected factory building sheds and installed plant and machinery on lease hold land

h. Foreign Currency Transactionsi) The payment and receipts in foreign currency during the period are accounted at the rates prevailing on the date

of transactions.ii) All loans in Foreign Currency and outstanding at the close of year are expressed in AED at the appropriate rate

of exchange prevailing on the date of Balance sheet.

i. Sundry Debtors / Loans and AdvancesThese have been stated after making adequate provision for doubtful debts/ advances

j. Contingent LiabilitiesContingent Liabilities are disclosed in the notes to accounts Provisions are made if it became probable that anoutflow of future benefits will be required for an item previously dealt with it as a contingent liability.

2009-10 2008-09Bank Guarantees give by the banks USD 41850472 USD 40867452

2 LICENCED AND INSTALLED CAPACITY

UNIT LICENCED AND INSTALLED2009-10 2008-09

Spiral Arc Welded Pipes MT 75000 75000Coating on Steel Pipes Mtrs NOT APPLICABLE

3 PRODUCTION, OPENING AND CLOSING STOCK

PRODUCTION OPENING STOCK CLOSING STOCKNAME UNIT Quantity Quantity Quantity Quantity Quantity Quantity

2009-10 2008-09 2009-10 2008-09 2009-10 2008-09

1 HSAW Pipes MT 21500.016 6036.549 4494.51 - 1157.55 4494.512 Coating on Steel Pipes/Jobs Mtrs Turnkey Jobs Turnkey Jobs Turnkey Jobs

Schedules

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98

4 SALES TURNOVER & COATING JOBS

2009-10 2008-09Unit Quantity Value in USD Quantity Value in USD

1 HSAW Pipes M.T. 24836.976 31637086 1542.041 20082592 Coating on Steel Pipes 1893848 45678933 Others NIL 32610

TOTAL 33530934 6608762

5 RAW MATERIAL CONSUMPTION

2009-10 2008-09Unit Quantity Value in USD Quantity Value in USD

1 H.R. Coil M.T. 22,073.30 20,209,315 6,227.60 6,996,4132 Flux M.T. 114.55 44,792 18.60 24,0193 Filler wire M.T. 89.44 42,180 19.68 32,4824 Polypropylene M.T. 12.83 26,727 11.50 22,4065 PE Powder M.T. 0.25 499 8.00 31,1216 Coal tar M.T. NIL NIL 1.00 3737 Synthetic Primer LTR NIL NIL 20.00 578 Base Copon Hycote LTR 154,080.00 33,889 27,360.00 329,0849 Activator Copon LTR 38,520.00 7,794 6,840.00 81,12110 Copon Thinner LTR 12,400.00 26,714 12,200.00 29,17711 Cement M.T. 264.35 17,351 2,071.73 261,08312 Wiremesh SQM 6,469.38 17,818 107,400.09 194,69513 Ironore M.T. 1,004.00 80,010 8,284.50 938,26014 Epoxy Powder M.T. 6.14 34,526 22.34 164,41115 Polyethylene M.T. 74.15 119,449 268.18 465,18417 Adhesive M.T. 7.28 32,442 22.65 97,53618 Inter Zone 954 Black 5,940.00 54,806 NIL NIL19 International Thinner 360.00 932 NIL NIL20 Others NIL 29,414 NIL 32,102

TOTAL 20,778,658 9,699,52521 Stores & Consumables 447,857 321,315

21,226,515 10,020,840

6 FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value :Financial assets of the establishment include cash and bank balance, trade and other receivables and financial liabilitiesinclude trade other payables and loans from related party.The management believes that the fair values of the financial assets and liabilities are not significantly different from theircarrying amounts at balance sheet date.Exchange rate risks :There are no significant exchange rate risks as substantially all financial assets and financial liabilities are denominatedin Arab Emirate Dirham or Dollars to which the Dirham is pegged.

7 The previous year figures have been regrouped / rearranged wherever necessary to conform with the current yearclassification

8 The rate of Coversion 1 USD = 3.685 AED




Schedules

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99

Independent Auditors’ Report

Board of DirectorsPSL USA, INC. and Subsidiary

We have audited the accompanying consolidated Balance Sheet of PSL USA, Inc. and Subsidiary as of March31, 2010, and the related consolidated statements of operation, stockholder's equity, and Cash flows for theyear then ended. These consolidated financial statements are the responsibility of the Company's management.Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Wedid not audit the financial statements of PSL North America, LLC, a wholly owned subsidiary, which statementsreflect total assets of $ 252,145,726 as of March 31,2010 and total revenues of $217,495,206 for the year thenended. These statements were audited by other auditors whose report has been furnished to us, and our opinion,insofar as it relates to the amounts included for PSL North America,LLC is based solely on the report of the otherauditors.

We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the consolidated financial statements are free of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. Anaudit also includes assessing the accounting principles used and significant estimates made by management aswell as evaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.

In our opinion, based on our audit and the report of the other auditors, the consolidated financial statementsreferred to above present fairly, in all material respects, the financial position of PSL USA, Inc. and subsidiary asof March 31,2010 and the results of its operations and cash flows for the year then ended in conformity withaccounting principles generally accepted in the United States of America.

Our audit was made for the purpose of forming an opinion on the consolidated financial statements taken as awhole. The supplementary consolidating schedule of operating expenses, is presented for purposes of additionalanalysis and is not a required part of the basic consolidated financial statements. Such information has beensubjected to the auditing procedures applied in the audit of the basic consolidated financial statements. In ouropinion, which insofar as it relates to PSL North America, LLC, is based on the report of other auditors, suchinformation is fairly stated in all material respects in relation to the consolidated financial statements taken as awhole.

As per our report attachedFor AVL, Certified Public Account

Sd/-(ALEXANDER, VAN LOON, SLOAN, LEVENS & FAVRE, PLLC)Certified Public AccountantsGulfport, MississippiDated : 25 May, 2010

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100


CONSOLIDATED BALANCE SHEET OF PSL USA INC. AS AT MARCH 31, 2010

(Amt. in USD)

As at March31st, 2010

ASSETSCURRENT ASSETS

Cash and cash equivalents 17,974,956Accounts receivable, net 4,947,318Inventories 119,925,549Prepaid steel coil 1,072,500Deferred tax assets, current 1,544,959Other current assets 490,364

Total current Assets 145,955,646PROPERTY, PLANT, AND EQUIVALENT, NET 97,349,724OTHER ASSETSRestricted Cash 5,887,679Debt issuance costs, net of accumulated amortization 4,877,916Deferred tax assets, non-current 649,170Other assets 3,083Total other Assets 11,417,848

TOTAL ASSETS 254,723,218

LIABILITIES AND STOCKHOLDER’S EQUITY

CURRENT LIABILITIESAccounts and contracts payable 4,892,201Accrued payroll liabilities 930,606Accrued expenses 455,538Income Tax payable 39,372Deferred Revenue 99,382,213Refundable advances 14,241,777Revolving Line of Credit payable 20,000,000Capitalized leases payable 52,594Bonds payable 1,599,547Due to parent (PSL Limited) 4,464,577

Total current Liabilities 146,058,425

LONG-TERM LIABILITIES

Capitalized leases payable - net of current maturities 6,556Bonds payable - net of current maturities 76,233,530Note payable 5,076,923

Total Long-term liabilities 81,317,009

Total liabilities 227,375,434

STOCKHOLDER’S EQUITY

Common stock: $ 1 par, 50,000,000 shares authorized.20,003,083 issued and outstanding 20,003,083Retained earning 1,880,186Non-controlling interest in consolidated subsidiary’s members’ equity 5,464,515

Total stockholder’s equity 27,347,784TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY 254,723,218

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

As per our report attached FOR AND ON BEHALF OF THE BOARD OF DIRECTORSFor AVL, Certified Public Accountants

(Alexander, Van Loon, Sloan, Levens & Favre, PLLC) RAGHAV PUNJ ALOK PUNJ ASHOK PUNJDirector Director Director

Place: Gulfort MississippiDate: 25th May, 2010



101

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY FOR THE YEAR ENDED MARCH 31,2010

(Amt. in USD)

Common Stock Total#of Shares Amount Retained Non-controlling Stockholder’s

Earnings Interest Equity

BALANCE AT APRIL 1, 2009 20,003,083 20,003,083 (258,286) 5,359,136 25,103,933

Reclassification 584,654 (584,654)

BALANCE AT APRIL 1, 2009, as restated 20,003,083 20,003,083 326,368 4,774,482 25,103,933

Net income 1,553,818 690,033 2,243,851

BALANCE AT MARCH 31, 2010 20,003,083 20,003,083 1,880,186 5,464,515 27,347,784

CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31,2010

(Amt. in USD)

For the year endedMarch 31, 2010

SALES 217,436,545

COST OF SALES 208,209,712

GROSS PROFIT 9,226,833

OPERATING EXPENSES 3,790,299

INCOME FROM OPERATIONS 5,436,534

OTHER INCOME (EXPENSES)Other Income 29,829Interest Income 28,833Bank Charges (1,272,441)Interest Expense (1,173,786)Total other Income (Expenses) (2,387,565)

NET INCOME BEFORE INCOME TAX PROVISION 3,048,969

Provision for Income TaxesCurrent Income Taxes (39,372)Deferred Income Taxes Expense (See Note 10) (765,746)

Total Provision for Income Taxes (805,118)

NET INCOME 2,243,851

Less: Net Income Attributed to non-controlling interest (690,033)

NET INCOME ATTRIBUTABLE TO PSL USA, INC. 1,553,818

Consolidated Statements of Operations







102

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2010

(Amt. in USD)

CASH FLOWS FROM OPERATING ACTIVITIESNet Income 2,243,851

Adjustments to reconcile Net Income to net cash provided by operating activitiesDepreciation and Amortization 7,140,789Changes in Operating Assets and LiabilitiesAccounts Receivable (4,942,714)Inventories 146,638,414Prepaid Steel Coil 45,097,816Deferred Tax Assets 765,746Other Current Assets (156,087)Accounts Payable 276,050Accounts Payable- Affiliate 1,786,494Income Tax Payable 39,372Accrued Expenses 100,840Accrued Payroll Liabilities 460,745Deferred Revenue (209,551,968)Refundable Advances 14,241,777

Net Cash Provided by Operating Activities 4,141,125

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of Property, Plant and Equipment (5,112,107)

Net cash used in investing activities (5,112,107)

CASH FLOWS FROM FINANCING ACTIVITIES

Bond Issuance / Financing Costs (800,000)Proceeds from Line of Credit 17,500,000Repayments on Bonds Payable (590,000)Repayments on Capital Leases (69,665)

Net cash provided by Financing Activities 16,040,335

Net Increase in cash and cash equivalents 15,069,353

Cash and cash equivalents, beginning of year 8,793,282

Cash and cash equivalents, end of year 23,862,635

CLASSIFIED ON THE BALANCE SHEET AS FOLLOWS:Cash and cash equivalents-current assets 17,974,956Restricted cash-other assets 5,887,679

Total Cash and Cash Equivalents 23,862,635

Supplemental disclosure of Cash Flow informationCash paid for interest 1,181,249




Consolidated Statement of Cash Flows


For the year endedMarch 31, 2010



103

benefiting more than one period, which are expensed inthe period to which they relate.

Restricted Assets

Assets are reported as restricted when limitations on theiruse change the nature or normal understanding of theavailability of the asset. Such constraints are either externallyor internally imposed by creditors and/or management.

Financial Instruments and Credit Risk

Financial instruments consist of cash, receivables, payablesand debt. The carrying amount of cash, receivables andpayables approximates fair value because of their short-termnature. The carrying amount of debt approximates fair valueas substantially all debt bears interest at variable rates. TheCompany maintains its cash with major U.S. and foreignbanks and the amounts from time to time exceed the insuredlimit. The term of these deposits are on demand to minimizerisk. The Company has not incurred losses related to thesedeposits,

Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost anddepreciated using the straight-line method for financialreporting over the estimated useful lives of the various assets,as follows:

Useful Lives in Years

Automobiles 5Buildings 50Furniture and fixtures 5Machinery and equipment 10Maintenance and repairs are charged to expense as incurred,renewals and betterments are capitalized. Upon retirementor disposal of assets, the cost and related accumulateddepreciation are removed from the accounts and the gainor loss, if any, is included in the results of operations.

Construction in Progress

During 2010, the Company was involved in completing theconstruction of a pipe coating mill and has incurred costsrelated to the construction and financing of such facility. Itis the Company's policy to capitalize all direct costs and aproportionate allocation of indirect overhead costsassociated with the construction in progress. Interest costsrelated to borrowing for construction in progress arecapitalized from the date of the borrowing until the assetsare ready for their intended use. Insurance costs that aredirectly related to the building and equipment includebuilder's risk insurance and cargo insurance, both of whichhave been capitalized as part of construction in progress inthe current year. Direct labor costs have been capitalizedas part of construction in progress for those employees andoutside laborers working solely on the construction of thefacility.

Impairment of Long-Lived Assets

The Company reviewed long-lived tangible and intangibleassets for impairment when events indicate that the carryingvalue may not be recoverable. The Company evaluates the

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIESOrganization

PSL USA, Inc. was incorporated in December 2006 in theState of Delaware, USA as a wholly owned subsidiary ofPSL Limited. PSL - North America, LLC (78% owned byPSL USA, Inc.) was formed in the State of Delaware andregistered to conduct business in Mississippi. PSL USA,Inc. and its subsidiary, PSL - North America, LLC (collectivelyreferred to as "the Company"), are engaged in themanufacturing of steel pipes, used for underground naturalgas lines, as well as providing anti-corrosive coatings onsteel pipes. During the year, PSL - North America, LLCcontinued construction of its plant facility in HancockCounty, Mississippi, in the Port Bienville Industrial Park.

Principles of Consolidation

The accompanying consolidated financial statementsinclude the accounts of PSL USA, Inc. and its subsidiary,PSL - North America, LLC. All material inter-companytransactions and balances have been eliminated inconsolidation.

Use of Estimates

The preparation of consolidated financial statements inconformity with accounting principles generally acceptedin the United States of America requires management tomake estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the consolidated financialstatements and the reported amounts of revenues andexpenses during the reporting period. Accordingly, actualresults could differ from these estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Companyconsiders cash in operating bank accounts, cash in hand,and short-term investments with an original maturity of threemonths or less when purchased to be cash and cashequivalents.

Accounts Receivable

The Company reports trade receivables at net realizablevalue. Management determines the allowance for doubtfulaccounts based on historical losses and current economicconditions. On a continuing basis, management analyzesdelinquent receivables and, once these receivables aredetermined to be uncollectible, they are written off througha charge against an existing allowance account or againstearnings. The Company had no allowance for doubtfulaccounts as of March 31, 2010.

Inventories

Inventories are stated at the lower of cost (specificidentification method) or market. Cost includes material andapplied labor and overhead.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets representinsurance premiums and advances on steel coil purchases

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS AT MARCH 31, 2010

Notes



104


Stockholder's Equity

On November 6, 2009, the number of authorized shares ofcommon stock was increased from 25,000,000 to50,000,000 shares

NOTE 2 - INVENTORIES

Inventories at March 31, 2010 consist of the following:

(in USD)

Raw materials 68,093,810Work in process 47,474,472Supplies inventory 4,357,267

Total 119,925,549

NOTE 3 - PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment at March 31, 2010 issummarized as follows:

(in USD)

Building 45,817,795Machinery and equipment 55,530,510Automobiles 145,156Furniture and fixtures 44,415Construction in Progress 2,949,546

Total Property, Plant, and Equipment 104,487,422Less: Accumulated Depreciation (7,137,698)

Net property, plant, and equipment 97,349,724

NOTE 4 - RESTRICTED CASH

At March 31, 2010 restricted cash amounts were includedin other assets and are summarized as follows:

(in USD)

Cash restricted by bonds requirements 747,945Collateral related to letter of creditissued to customer 5,000,000Collateral related to risk managementarrangements 139,734

Total 5,887,679

NOTE 5 - DEBT ISSUANCE COSTS

Debt issuance costs incurred in obtaining financing andamortized over the original life of the debt are summarizedas of March 31, 2010 as follows:

(in USD)

Debt issuance costs 5,974,177Less:amortization (1,096,261)

Debt issuance costs, net of amortization 4,877,916

NOTE 6 - DEFERRED REVENUE

Deferred revenue represents funds received from theCompany's sole customer in advance for purchases of rawmaterials and billings for completion of production phasesfor work in process.

carrying values of all long-lived assets, including property,plant, and equipment, whenever events or changes incircumstances indicate that the carrying amount of an assetmay not be recoverable. A long-lived asset is consideredimpaired when future discounted cash flows are less thancarrying value. In that event, a loss is calculated based onthe amount the carrying value exceeds the fair value of suchasset. Management believes that long-lived assets in theaccompanying balance sheet are appropriately valued.

Compensated Absences

Full-time employees receive paid time off based upon jobclassification, length of service, and other factors. Paid timeoff includes vacation, sick, and personal time and vests withthe employee. Employees are able to carryover 160 hoursof vacation time and 48 hours of sick time at year end andany hours over the maximum are paid out to the employee.Therefore, compensated absences earned but unpaidapproximates $290,000 and has been accrued at year endand included in accrued payroll liabilities on the balancesheet.

Revenue Recognition

The Company recognizes revenue upon delivery of thefinished goods to a customer.

Income Taxes

In accordance with U.S. generally accepted accountingprinciples, the Company accounts for income taxes usingan asset and liability approach to financial accounting andreporting for income taxes. Deferred income tax assets andliabilities are computed annually for differences betweenthe financial statement and tax bases of assets and liabilitiesthat will result in taxable or deductible amounts in the futurebased on enacted tax laws and rates applicable to the periodsin which the differences are expected to affect taxableincome. Income Tax expense (benefit) is the tax payable orrefundable for the period plus or minus the change duringthe period in deferred tax assets and liabilities.

A valuation allowance is required when it is more likelythan not that some portion of the deferred tax assets will notbe realized. Realization is dependent on generatingsufficient future taxable income. Although realization isnot assured, management believes it is more likely than notthat the deferred tax assets will be fully realized. Accordingly,no valuation allowance has been provided.

Effective January 1, 2009 the Company adopted andimplemented ASC 740 as it relates to uncertainties in incometaxes. ASC 740 clarifies the accounting for uncertainty inincome taxes recognized in financial statements and requiresthe impact of tax position to be recognized in the financialstatements if that position is more likely than not of beingsustained upon examination by the taxing authority. Thetax years from 2006 to 2008 are open for examination byInternal Revenue Service. The adoption of ASC 740 did nothave a material effect on the Company's financial positionor results of operations.

Notes



105

NOTE 7 - LINE OF CREDIT

Revolving Line of Credit Payable

The Company maintains an available revolving credit notewith HSBC Bank USA, National Association (HSBC) for$30,000,000, expiring March 13, 2010. Pursuant to theagreement, there will be a sub limit for the issuance of lettersof credit not to exceed $15,000,000 and the furtherunderstanding that HSBC will not advance any funds ormake any other extensions of credit to the Company inexcess of $15,000,000 without the prior written consent ofJPMorgan Chase Bank, N.A. and without sufficient additionalcollateral as determined by HSBC. During September 2009,the sublimit was increased to $ 30,000,000.

The outstanding principal balance of the Line bears interestat a rate per annum for the interest periods which theCompany selects equal to a variable rate that equals theprime rate (normally HSBC's prime commercial rate for U.S.Dollar loans or equivalent) or 1.5% above the LIBOR rate(normally HSBC's rate per annum at which deposits in U.S.Dollars for an applicable period are offered to HSBC by firstclass banks in the London Interbank Market) for interestperiods of thirty, sixty, and ninety days, but not longer thanthe remainder of the term of the note.

As security for the Line, the Company obtained anirrevocable standby letter of credit issued by ICICI BankLimited, New York Branch "ICICI" in the amount of$15,000,000, expiring March 13, 2010. During September2009, the irrevocable standby letter of credit was increasedto $ 20,000,000.

On March 13,2010, the Line was renewed for $ 30,000,000under the same terms and conditions but sublimited to$ 20,000,000 pending additional sales, at which time thesublimit will be removed. The Line expires March 13, 2011.As of March 31, 2010, the Company had an outstandingbalance on the Line of $ 20,000,000.

The Company's debt agreement with HSBC containsrestrictions and covenants. Under these restrictions, theCompany must not acquire any new debt and must not makeany distributions to the members without the prior writtenconsent of HSBC. In addition, the Company must maintaincertain levels of net worth. At March 31, 2010, managementis not aware of any violations of these covenants.

NOTE 8 - LONG-TERM DEBT

Bonds Payable

During 2007, the Company entered into a loan agreementwith Mississippi Bank Finance Corporation (MBFC). Theloan agreement provides that MBFC shall issue Tax ExemptVariable Rate Demand Revenue Bonds, Series 2007A, inthe amount of $68,000,000, and Taxable Variable RateDemand Revenue Bonds, Series 2007B, in the amount of$10,000,000, and loan the proceeds thereof to the Companyfor use in acquiring, constructing, installing, and equippinga pipe manufacturing facility and other related activities.The amount of loan payments to be made by the Companyto MBFC pursuant to the loan agreement shall be sufficient


to pay the principal and interest on the bonds, as and whenthe bond and interest payments are due and payable.

In addition, the Company is responsible for all costs andexpenses related to the issuance of the bonds and the feesand charges of the trustee (Hancock Bank) and theremarketing agent (Merchant Capital).

As security for the MBFC loan agreement, the Companyobtained an irrevocable transferable direct pay letter ofcredit, expiring on November 1, 2010, for up to $78,747,945from JP Morgan in favor of the trustee. In accordance withthe reimbursement agreement with JP Morgan, the Companyis required to pay a non-refundable fee in arrears on thegross available amount beginning on December 31, 2007,and continuing on the last day of each March, June,September and December and thereafter to the terminationdate at a rate of 1% per annum. In addition, interest on theunpaid principal amount of each advance will accrue at arate per annum equal to the prime rate (normally JP Morgan'sprime commercial rate for U.S. Dollar loans or equivalent)plus 1% (4.25% at March 31, 2010).

In addition, during 2007, the State Bank of India issued anirrevocable standby letter of credit, which expires onNovember 17, 2010, for up to $78,000,000 in favor of theJP Morgan Chase Bank, N.A. This standby letter of creditwas issued based on the financial condition of PSL USA,Inc.'s parent, PSL Limited.

The Company's loan agreement with MBFC shall remain infull force and effect until November 1, 2032, or until suchlater time as all of the bonds and the fees and expenses ofMBFC and Hancock Bank and all amounts payable toJP Morgan Chase Bank, N.A. under the reimbursementagreement are paid and obligations fulfilled.

The Company loan agreement with MBFC containsrestrictions and covenants. Under these restrictions, theCompany must obtain the consent of JP Morgan to paydistributions to members or borrow from others. In addition,the Company must maintain certain levels of net worth.Commencing with the calendar quarter ending September30, 2009, and continuing as long as the obligations remainoutstanding, the Company shall not permit the ratio ofearnings before interest, taxes, and depreciation (EDITDA)for any calendar quarter to the sum of (a) scheduled andvoluntary principal payments (b) interest expense (c)scheduled capital lease payments, and (d) distributions andpayments on inter company debt, for such calendar quarterperiod to be less than 1.00 to 1.00. As of March 31,2010,management is not aware of any violations of thesecovenants.

As of March 31, 2010, all bonds proceeds have been usedto fund property, plant, and equipment and provide theCompany with working capital.

Bonds payable consist of the following at March 31, 2010:

Mississippi Business Finance Corporation(MBFC) Tax Exempt Variable Rate DemandRevenue Bonds, Series 2007A; Originated

Notes



106


November 1, 2007 in the amount of $68,000,000; Interest rate Determined weeklyby Merchant Capital; Secured by all loanPayments received by MBFC and a letter ofcredit issued by JP Morgan Chase bank, N.A.with a supporting letter of credit from StateBank of India; Interest only payments duemonthly through April,2018 with principalpayments in the amount of $ 2,266,667 duesemi-annually beginning May 1,2018;Matures in November 2032. $ 68,000,000Mississippi Business Finance Corporation(MBFC) TaxableVariable Rate Demand Revenue Bonds, Series2007B; Originated November 1, 2007 in theamount of $ 10,000,000, Interest ratedetermined weekly by Merchant Capital,Secured by all loan payments received byMBFC and a letter of credit issued by JPMorgan Chase bank, N.A. with a supportingletter of credit from State Bank of India,Interest only payments due monthly throughOctober 1, 2009 with principal payments inthe amount of $ 588,235 due Semi-annuallybeginning November 1,2009, Matures inNovember 2017. $ 9,410,000

Total bonds payable $ 77,410,000

Less : current maturities (1,176,470)

Bonds payable, net of current maturities $ 76,233,530

The principal maturities of long-term bonds payable as ofMarch 31, 2010 are as follows:

(in USD)

Year Ending Tax Exempt TaxableMarch 31, Bond Bond Total

2011 - 1,176,470 1,176,4702012 - 1,176,470 1,176,4702013 - 1,176,470 1,176,4702014 - 1,176,470 1,176,4702015 - 1,176,470 1,176,470Thereafter 68,000,000 3,527,650 71,527,650

Total 68,000,000 9,410,000 77,410,000

Note PayableDuring 2009, the Company entered into a note payablewith Export-Import Bank of India (EXIM Bank) for$5,500,000, for the purpose of financing the import ofmachinery, equipment, machinery spares and tools fromIndia to the United States. The note is secured by promissorynotes issued by the Company covering each amount equalto the value of the shipment of goods financed, trust receiptsrelating to each shipment of goods financed, corporateguarantee of PSL Limited, India, and the non-disposal ofPSL USA, Inc.'s share in the equity capital of the Company.

Note payable consists of the following at, March 31, 2010:

Note Payable - Exim Bank, OriginatedFebruary 25, 2009 in the amount of$5,500,000, Interest at 8.25% per annum,Secured by promissory notes to be issued by

the Company covering each advance equalto the value of shipments and trust receiptsrelating to each shipment of goods financed,Interest only payments due quarterly throughMarch 2011 of $ 113,438, thereafter,quarterly payments of $ 423,077, includingprincipal and interest, Matures inMarch 2014. $ 5,500,000Less current maturities (423,077)Bonds payable, net of current maturities $ 5,076,923

The principal maturities of the note payable as of March31, 2010 are as follows:

(in USD)

Year EndingMarch 31, Amount

2011 423,0772012 1,692,3082013 1,692,3082014 1,692,307

Total 5,500,000

The Company's debt agreement with EXIM Bank containsrestrictions and covenants. Under these restrictions, theCompany must use the funds solely to purchase goods fromIndia. Management is not aware of any violations of thecovenants.

Capitalized Leases Payable

Capitalized leases payable consists of the following at March31, 2010:

Capitalized lease payable, Originated August2007 in the amount of $7,215, Interest at12% per annum, Secured by one copier,Monthly Payments of $157, Matures in July2012. $ 3,828

Capitalized lease payable, Originated March,2009 in the amount of $6,864, Interest at10% per annum, Secured by one copier,Monthly Payments of $140, Matures inFebruary 2014. 5,422

Capitalized lease payable; Originated August,2008 in the amount of $157,500; Interest at8% per annum; Secured by an industrial lifttruck; Monthly payments of $6,700 with afinal payment of $49,900 at the end of thelease; Matured in February 2010. 49,900

Total capital lease payable $ 59,150

Less : current maturities (52,594)

Bonds payable, net of current maturities $ 6,556

The following is an analysis of the leased assets included inproperty, plant, and equipment:

Equipment under capital lease $ 171,579Less : Accumulated depreciation (55,216)

Net book value $ 116,363

Notes



107


The future minimum lease obligation as of March 31, 2010are as follows:


2011 $ 52,5942012 3,0092013 2,0642014 1,483

Total payments $ 59,150

NOTE 9 - BANK CHARGES

Bank charges consists of non-refundable recurring feesassociated with the letters of credit required as security forthe MBFC bonds payable, and other outstanding debt andfor fees associated with the letter of credit issued by theCompany on behalf of the Company's sole customer. Forthe year ended March 31, 2010, bank charges were$ 1,272,441.

NOTE 10 - INCOME TAXES

The Company has no current federal income tax expensefor 2010 due to available net operating loss carryforwardsand $ 39,372 state income tax payable at March 31,2010.

Deferred Income Taxes

Deferred income taxes are calculated on the temporarydifferences between the financial reporting and the incometax bases of inventory, property, plant, and equipment, aswell as certain intangibles (i.e., start-up and organizationalcosts), along with the carryforward offset of unused taxcredits and net operating losses.

The components of the deferred tax asset are as follows atMarch 31, 2010:

(in USD)

Federal State Total

Deferred tax assetStart-up and organizational costs 662,237 97,388 759,625Inventories 995,488 146,395 1,141,883Compensation expenses 68,726 10,107 78,833Section 267 limitation 17,238 2,535 19,773Tax credit carryforward 304469 1877509 2181978Net Operating loss carry forward 2,779,701 - 2,779,701

4,827,859 2,133,934 6,961,793Deferred tax liabilityProperty,Plant, and equipment 4,683,447 84,217 4,767,664

4,683,447 84,217 4,767,664

Net Deferred tax assets 144,412 2,049,717 2,194,129

The net deferred tax asset is reported on the balance sheet as follows:

Deferred tax assets,current $ 1,544,959Deferred tax asset, non-current 649,170

Total $ 2,194,129

Management has evaluated the expected realization of thedeferred tax asset and consider it realizable in subsequentyears based on projected taxable income. In future yearsthe deferred tax asset will be revaluated and could result inthe recognition of a valuation allowance that would havethe effect of increasing the tax provision. The valuation willbe predicted on the Company's future operation results.

As required by generally accepted accounting principles inthe United States of America, Deferred income tax expensein the amount of $ 765,746 has been recorded on theconsolidated statement of operations and represents the netdifference between the changes in the current year of thedeferred tax assets and liabilities as explained above. Thedeferred income tax expenses represents the estimated futurefederal and state income tax payments on income earnedas of March 31,2010 that will not be due to the Federal andState jurisdiction until future years. The deferred incometax expense is recorded to allow for a complete matchingof all costs associated with the current year's revenue. Thepayment of deferred income tax will not be due until theactual income is required to be reported on the Company'sincome tax returns in future years.

At March 31, 2010, the Company has available for Federalincome tax purposes an unused net operating loss carryforward in the amount of $ 8,175,590 that will expire asfollows:

March 31, Amount

2029 $ 427,3022030 7,748,288

Total $ 8,175,590

In addition, the Company has Federal tax creditcarryforwards in the amount of $ 304,469 that will expireas follows:

March 31, Amount

2029 $ 144,7302030 159,739

Total $ 304,469

The Company also has State tax credit carryforwards in theamount of $ 1,877,509 that expire as follows:

March 31, Amount

2011 $ 390,9292012 967,8162013 518,764

Total $ 1,877,509

NotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotesNotes



108

The reconciliation for financial statement reporting andincome tax reporting is summarized as follows:

(in USD)

Federal State

Income for financial statement reportingbefore income tax provision 3,048,969 3,048,969Permanent Differences NIL NILNon-Controlling interest in net loss (690,033) (690,033)Provision for state income tax (39,372) NILNon-deductible expenses 22,831 22,831

Total permanent differences (706,574) (667,202)

Temporary differencesInventory adjustments 812,746 3,049,270Tax credit deduction NIL 122,816Depreciation and amortization (11,156,263) (1,308,775)Compensation adjustments 202,134 202,134IRC Section 267 limitation 50,700 50,700

Total Temporary differences (10,090,683) 2,116,145

Net operating income (loss) forincome tax purposes (7,748,288) 4,497,912

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Covenants to JP Morgan

As part of the agreement entered into for bonds payable, asdiscussed in Note 8, the Company must maintain, at alltimes, a minimum net worth of not less than 75% of theCompany's actual net worth as of the preceding fiscal yearend, which net worth shall be adjusted annually upon receiptof the audited consolidated financial statements in anamount equal to 40% of the Company's annual positive netincome from the preceding fiscal year. The Company is incompliance as of March 31, 2010.

In addition, the bond agreement restricts the Company fromdeclaring or paying any distributions on any membershipinterest (exclusive of distributions to its members in amountsequal to the taxes attributable to the Company's net profits)and from directly or indirectly purchasing, redeeming, orotherwise acquiring or retiring any of its members' capitalinterest or making any other distributions in respect of themembers' capital interest without JP Morgan's prior writtenconsent.

Covenants to HSBC Line of Credit

As part of the agreement entered into for the Linc, asdiscussed in Note 7, the Company must maintain, at theend of each quarter, beginning with the fiscal year endedMarch 31, 2009, a minimum net worth of not less than zeroU.S. dollars of the Company's actual net worth as of thepreceding fiscal year end. The Company is in complianceas of March 31, 2010.

In addition, the note agreement restricts the Company, frommaking any distribution to any members or managers incash or in property or redeem, purchase or otherwiseacquire, directly or indirectly, any interest, provided, so longas the Company is not in default, hereunder, distributionsto the members of the Company in such amounts as arenecessary to pay the tax liability of such members due as aresult of such members' interest in the Company.

Covenants to EXIM Bank Note

As part of the agreement entered into for the note payable,as discussed in Note 8, the Company must only utilize theproceeds of the note payable for the financing of purchasesof goods from India. The Company is in compliance as ofMarch 31, 2010.

Lease Commitments

The Company has entered into various non-cancellable leaseagreements as follows:

Plant Facility Land Lease

During 2007, the Company entered into a lease agreementwith Hancock County Port and Harbor Commission for thesite within the Port Bienville Industrial Park, upon whichthe Company is constructing its pipe manufacturing facility,for a period of thirty-three years at a cost of $1 per year.

The lease payments are identified in the agreement as$687,000 per year, abated to $1 per year during any year inwhich the Company maintains the minimum levels ofemployment set forth in the agreed-upon EmploymentCommitment, as defined in the Project Agreement by andamong the Company and the State of Mississippi, HancockCounty, Hancock County Port and Harbor Commission, andcertain authorities of or within the State of Mississippi datedas of April 25, 2007. As stated in the Project Agreement,the Company is not required to meet those employmentrequirements and submit the employment reports until oneyear after the Ramp Up Period has ended. The Ramp-UpPeriod is defined in the Project Agreement as three full yearsbeginning with the first full month beginning after the facilityis placed in service (Ramp Up Period commenced February1, 2009). The Company, is therefore, not required to meetthe minimum levels of employment and submit the annualreports until February 1, 2012. During 2010, the Companywas still within the Ramp Up Period and therefore, had metthe lease requirements and recorded $1 which is includedin operating expenses in the accompanying statement ofoperations.

Office Building Lease

During May 2008, the Company entered into a leaseagreement for an office space in Houston, Texas. The leaseterm covers a five year period and commenced on August15, 2008 with escalating payments over the term of the lease.Lease expense for the year ended March 31, 2010 wasapproximately $44,000 and is included in operatingexpenses in the accompanying statement of operations.

The estimated future minimum lease payments for the officebuilding lease as of March 31, 2010 are as follows:


2011 $ 43,0732012 43,9962013 45,5352014 15,384

Total $ 147,988


NotesNotes



109

NOTE 12 - CONCENTRATIONS

Subsidiary

PSL USA,Inc. and Subsidiary's revenues are obtained fromits sole subsidiary, PSL North America, LLC. The solesubsidiary has one contract with single customer that isscheduled to end in June,2010. See the following majorcustomer note for further details.

Major Customer

For the year ended March 31, 2010, the Company had asales contract with one customer which accounted for 100%of revenue and accounts receivable. The sales contract withthis customer will result in approximately $350 million inrevenue over the term of the contract, scheduled to endJune, 2010.

As of March 31,2010, the company has not secured newcustomers or contracts beyond the current contract due toend June,2010. The ability of the Company to secure futurecustomers or contracts will be critical to the Companymaintaining certain debt covenants. The absence of a newcontract in the near term may require additional fundingfrom the members and waivers from the lenders for certaindebts covenants.

NOTE 13 - RELATED PARTY TRANSACTIONS

Purchase of equipment

PSL Limited (Parent)

The Company incurred costs related to commitments forplant equipment for its pipe manufacturing facility andsubsequent letters of intent to purchase electrical equipmentfrom parent company PSL Limited. The amount owed toPSL Limited at March 31, 2010 is $ 4,435,339 and isrecorded in due to parent. Management considers the costsincurred to be representative of fair value and consummatedin terms equivalent to those that prevail in an arm's lengthtransaction.

Advances

Due to Parent (PSL Limited)

The Company received advances from its parent, PSLLimited, during the year. The total of the advances from theparent total $29,238 and are recorded as due to parent.These advances are without specified terms or conditionsfor repayment. During the year ended March 31, 2010, nointerest was paid nor accrued by the Company on suchadvances.

NOTE 14 - SUBSEQUENT EVENT

Management has evaluated subsequent events through May25, 2010, which is the date that the financial statementswere available to be issued, and has determined that thefollowing subsequent events should be disclosed:

On April 28, 2010, the Company increased its letter of creditissued by ICICI Bank Limited, New York Branch to$40,000,000.

SUPPLIMENTARY INFORMATION

(in USD)

PSL PSL-NorthOPERATING EXPENSES USA, Inc. America, LLC Eliminations Total

Depreciation and amortization - 857,706 - 857,706Dues and subscriptions - 45,409 - 45,409Entertainment, meals, and travels - 353,362 - 353,362Franchise and other taxes 63,258 - - 63,258Insurance - 55,008 - 55,008Office supplies and expenses - 133,022 - 133,022Payroll taxes - 103,882 - 103,882Professional fees 24,164 206,106 - 230,270Recruitment expense - 2,040 - 2,040Rent expense - 147,767 - 147,767Salaries and benefits - 1,709,091 - 1,709,091Taxes and licenses - 29,908 - 29,908Utilities - 59,576 - 59,576

Total operating expenses 87,422 3,702,877 - 3,790,299


Notes


NOTES


PSL LimitedRegd. Office: Kachigam, Daman, Union Territory of Daman & Diu - 396 210

Attendance Slip

Regd. Folio No./Client ID :

Name & Address :of First/Sole Shareholder

No. of Shares held :

I hereby record my presence at the 22nd Annual General Meeting of the Company on Thursday, 30th day of

September, 2010 at 9.30 a.m. at Cidade De Daman at Devka Beach, Nani Daman - 396210, in Union Territory

of Daman & Diu.

Signature of Member/Proxy

Note: Member/Proxy wish to attend the meeting must bring this Attendance Slip and handover the slip atthe entrance of the meeting duly signed.

Please tear here

PSL LimitedRegd. Office: Kachigam, Daman, Union Territory of Daman & Diu - 396 210

Proxy Form

Regd. Folio No./Client ID :

No. of Shares held :

I/We _________________________________________________________________________________

of _________________________________ in the district of ____________________________being a

Member/ Members of the above named Company, hereby appoint ________________________________

of ________________________________ in the district of _______________________________

____________________________________ or failing him ______________________________ of

____________________________________ in the district of ____________________________ as my/our

Proxy to attend and vote for me/us and/or on my/our behalf at the 22nd Annual General Meeting of the Company

to be held on Thursday, the 30th day of September, 2010 at 9.30 a.m. and at any adjournment thereof.

Signed this _____________ day of _________________ 2010

Note: a) Proxy need not be a member.b) The Proxy form duly signed by the Member(s) should reach the Company’s Registered Office at

Kachigam, Daman, Union Territory of Daman & Diu - 396 210, atleast forty eight hours before thetime fixed for the meeting.

c) This form should be signed across the revenue stamp and the said signature must tally with thespecimen signature registered with the company failing which this instrument shall be treated as“invalid”.

AffixRe 1/-

RevenueStamp

�

8 Proxy.p65 9/9/2010, 11:42 AM111

8 Proxy.p65 9/9/2010, 11:42 AM112

Jaipur

PSL’s Network

USA

UAE

Mauritius

Delhi

VarsanaNani Chirai

GandhidhamMahudi

Daman

Mumbai

Vizag

Kakinada

Maduranthakam

ChennaiOffice

Other Plant

Pipe Mill & Coating Plant

Overseas

In India

PSL Limited Corporate Office : PSL Towers,

615, Makwana Road, Marol, Andheri (E), Mumbai - 400 059www.psllimited.com

A Panoramic image of State of the Art Pipe Manufacturing Plant Complex at Varsana/Nanichirai

PSL Limited Corporate Office : PSL Towers,

615, Makwana Road, Marol, Andheri (E), Mumbai - 400 059www.psllimited.com D

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manufacture of hi-strength pioneers€¦ · automatic ultrasonic testing machine. through this...

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