The Directors have pleasure in presenting the 27th Annual Report ofthe Company along with Audited Financial Statements both standalone and consolidated forthe year ended 31st March 2016.
The results for the year ended 31.3.2016 and 31.3.2015 are as under:
| || || || |
(Rs. in Crores)
|Particulars ||Standalone ||Consolidated |
| ||31.3.2016 ||31.3.2015 ||31.3.2016 ||31.3.2015 |
|Total revenue ||5787.51 ||5556.73 ||5879.78 ||5690.76 |
|Profit before depreciation finance cost and tax ||591.95 ||473.39 ||543.60 ||450.31 |
|Depreciation ||94.90 ||107.00 ||98.64 ||110.20 |
|Finance cost ||85.15 ||109.30 ||85.83 ||111.75 |
|Profit before tax ||411.90 ||257.09 ||359.13 ||228.36 |
|Provision for taxation ||61.64 ||15.16 ||61.91 ||17.56 |
|Profit after tax ||350.26 ||241.93 ||297.22 ||210.80 |
|Balance brought forward from previous year ||951.34 ||762.48 ||878.67 ||721.71 |
|A. Net profit available for appropriation ||1301.60 ||993.49 ||1175.89 ||920.82 |
|Appropriations || || || || |
|- Proposed dividends on equity shares (including Interim dividends) ||51.97 ||35.73 ||51.97 ||35.73 |
|- Corporate dividend tax ||10.59 ||6.29 ||10.59 ||6.29 |
|- Storage fund for molasses account ||0.17 ||0.13 ||0.17 ||0.13 |
|- General reserve ||- ||- ||- ||- |
|B. Total Appropriations ||62.73 ||42.15 ||62.73 ||42.15 |
|C. Balance carried forward (C = A B) ||1238.87 ||951.34 ||1113.16 ||878.67 |
State of Companys Affairs/Performance
The Company reported improved financial performance in FY 16 on account of improvementin sugar business operating environment and robust performance of the chemicalsbusiness.
The Companys total revenues stood at Rs.5880 Crores in FY 16 vs. Rs.5691 Croreslast year. FY 16 EBITDA improved significantly to Rs.544 Crores from Rs.450 Crores lastyear. Improvement in earnings during the year was primarily due to profits in sugarbusiness vs. losses last year which was a result of better recoveries cash cane subsidyfor SS 2014-15 that was received and accounted this year and lower inventory write downsvs. last year. Earnings growth in Chemicals business improved on better realizations andoverall control on inputs costs.
FenestaTM Business showed improvement in earnings as higher volumes led tothe business turning PBT positive for the year.
Performance of the Companys Agri-input businesses - Shriram Farm Solutions andBioseed was impacted by the challenging domestic Agri scenario that led to lower volumesand margins during the year. Fertilizer business earnings during the year declineddue to the tightening in energy norms under the New Urea Policy which came into effectfrom 1st June 2015. The Companys finance costs for the year stood lowerat Rs.86 Crores vs. Rs.112 Crores last year. Net Debt increased to Rs.1057 Crores vs.Rs.688 Crores last year. The increase in Net Debt was due to the ongoing expansion inChlor Alkali and Sugar businesses and higher sugar inventory and subsidy receivables. NetProfit for FY 16 was up by 41% to Rs.297 Crores from Rs.211 Crores in FY 15.
The Companys expansion projects in Chemicals and Sugar businesses are proceedingas per plan with full commissioning expected by September/October 2016. In Q1 FY 17 apart of the new additional capacity at Bharuch plant was commissioned. These expansionprojects would start contributing to the Companys growth from the second half of FY17. Sustained healthy performance by the Company led to upgrade in Q4 FY 16 in Long Termcredit ratings to [ICRA] AA- from earlier [ICRA] A+.Companys Short Term rating was affirmed at [ICRA] A1+.
Your Directors are pleased to recommend a final dividend @ 40% i.e. Re.0.80 per equityshare of Rs.2/- each for the year ended 31.3.2016. The total dividend for the financialyear 2015-16 aggregates to 160% i.e. Rs.3.20 per equity share of Rs.2/- each (includingtwo interim dividends @ 60% i.e. Rs.1.20 per equity share each paid in November 2015 andFebruary 2016 respectively).
Number of Meetings of the Board
The Board met 5 times during the financial year on 1.5.2015 2.8.2015 2.11.20152.2.2016 and 5.2.2016.
Subsidiary/Associate/Joint Venture Companies
Details of Companies which has become or ceased to be Subsidiary/Associate/JointVenture (JV) during the year are as follows:
- The Scheme of Amalgamation of Shriram Bioseeds Limited Mauritius (SBLM) intoBioseeds Limited Mauritius (BLM) was approved by the Honble Supreme Court ofMauritius vide its Order dated 25th May 2015. Consequently SBLM merged intoBLM w.e.f. 22nd April 2015.
- Hariyali Services Limited a wholly owned subsidiary of the Company has made anapplication to the Registrar of Companies NCT of Delhi and Haryana for striking off itsname which is under process.
Report on Performance and Financial Position of Subsidiaries Associate and JV Company
The details regarding the performance and financial position of CompanysSubsidiaries Associate and JV are given in Annexure - 1 of this BoardsReport.
Risk Management Framework
The Company has in place a Risk Management Framework which was approved by the Boardon 28.1.2006 and was implemented w.e.f. 2.1.2007. The said framework includes riskidentification assessment response and monitoring system for mitigation of risk.
Companys Policy on Directors Appointment and Remuneration
The criteria for Directors appointment has been set up by the NominationRemuneration and Compensation Committee which includes criteria for determiningqualifications positive attributes independence of a Director and other matters providedunder Subsection (3) of Section 178 of Companies Act 2013 ("the Act"). TheRemuneration Policy is attached as Annexure - 2 to this Boards Report.
Corporate Social Responsibility
The details about the Policy on Corporate Social Responsibility (CSR) includingprogrammes/activities undertaken on CSR Annual Report on CSR activities and thecomposition of CSR Committee are provided in a separate section which forms part of thisBoards Report.
The Company has established a Vigil Mechanism for Directors and Employees of theCompany to Report genuine concerns including unethical behavior actual or suspectedfrauds or violation of Companys code of conduct or ethics etc.
The Mechanism also provides for adequate safeguards against victimization ofDirector(s)/Employee(s) who avail of the Mechanism and also provides for direct access tothe Chairman of the Audit Committee in exceptional cases.
The Vigil Mechanism is also available on Companys website at the following weblink: (http://dcmshriram.com/sites/default/files/vigil-mechanism.pdf)
Related Party Transactions
The Company has formulated a policy on dealing with related party transactions whichis also available on Companys website at the following web link:(http://dcmshriram.com/sites/default/files/related-party-transaction-policy.pdf) Duringthe year there were no contracts or arrangements entered into with related parties asreferred to in Section 188(1) of the Act the particulars of which are required to bedisclosed in Form AOC-2.
Material Subsidiary Policy
The Company has formulated a policy for determining Material Subsidiarieswhich is also available on Companys website at the following web link:(http://dcmshriram.com/sites/default/files/material-subsidiary-policy.pdf)
Particulars of Loans Guarantees or investments
The details of Loans Guarantees and Investments covered under the provisions ofSection 186 of the Act and relevant rules thereunder are given in the notes to FinancialStatements.
1. The details relating to deposits covered under Chapter V of the Act: a) acceptedduring the year : Rs.166424033/-b) remained unclaimed as at the end of the year:Rs.1052372/-c) there has been no default in repayment of deposits or payment of interestthereon during the financial year ended on 31st March 2016.
2. There are no deposits which are in non-compliance with the requirements of ChapterV of the Act.
Details in respect of adequacy of Internal Financial Control with respect to FinancialStatements
The Company has in place adequate Internal Financial Controls with respect to financialstatements. No material weakness in the design or operation in such controls was observedduring the year.
DCM Shriram Employee Stock Purchase Scheme
The Company has an Employee Stock Purchase Scheme (DCM Shriram ESPS) duly approved byMembers vide Special Resolution passed on August 13 2013 and aligned in accordance withSEBI (Share Based Employee Benefits) Regulations 2014. DCM Shriram ESPS provides forgrants of equity shares through Trust purchased from Secondary Market to the eligibleEmployees as may be decided by the Nomination Remuneration and Compensation Committeefrom time to time. DCM Shriram ESPS is a secondary market scheme and hence no fresh issueof shares was made. There are no voting rights exercised on the shares held by the Trust.Further there are no material changes in the DCM Shriram ESPS and it is in compliancewith the applicable regulations. The details required as per SEBI (Share Based EmployeeBenefits) Regulations 2014 is available at the following web link of the Company:(http://www.dcmshriram.com/DCM-Shriram-ESPS-Report)
Directors and Key Managerial Personnel (KMP)
Shri K.K. Kaul and Shri Sharad Shrivastva Directors retire by rotation and beingeligible offer themselves for re-appointment.
Shri Sameet Gambhir was appointed as Company Secretary and KMP of the Company w.e.f.1.4.2015. The Company has received declaration from all the Independent Directors of theCompany under Section
149(7) of the Act confirming that they meet the criteria of independence as prescribedunder Section 149(6) of the Act and SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015.
The details of familiarization programme for Independent Directors are available onCompanys website at the following web link:(http://dcmshriram.com/sites/default/files/familiarisation-programme-re-independent-directors. pdf)
Manner & Criteria of formal annual evaluation of Boards performance and thatof its Committees and Individual Directors
In compliance with requirements of the Act and SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 the formal annual performance evaluation ofthe Board its Committees and Individual Directors has been conducted as under:
A. Manner of evaluation as recommended to the Board by the Nomination Remuneration andCompensation Committee ("NRCC")
1. The Chairman of the Board consulted each Director separately about the performanceof Board Committees and other Directors and sought inputs in relation to the above. TheChairman then collated all the inputs and shared the same with the Board.
2. In respect of the evaluation of Chairman of the Board the Chairman of the NRCCcollated the inputs from Directors about Chairmans performance as a Director of theBoard and/ or Chairman or the Member of the Board Committees and shared the same with theBoard.
The Board as a whole discussed the inputs on performance of Board/Committees/IndividualDirectors and performed the evaluation excluding the Director being evaluated.
B. Criteria of evaluation as approved by the NRCC
The aforesaid evaluation was conducted as per the criteria laid down by the NRCC asfollows:
|Performance of ||Evaluation Criteria |
|(i) Board as a whole ||Fulfillment of functions of the Board (for instance guiding corporate strategy risk policy business plans corporate performance monitoring Companys governance practices etc. as per the Act and SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 |
|(ii) Board Committees ||Number of Board Meetings held during the year. Fulfillment of functions of the Committee with reference to its terms of reference the Act and SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 |
|(iii) Individual Directors ||Number of Committee Meetings held during the year. Fulfillment of responsibilities as a Director as per the Act the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 and applicable Company policies and practices |
| ||In case of the concerned Director being Independent Director Executive Director Chairperson of the Board or Chairperson or Member of the Committees with reference to such status and role Board and/or Committee meetings attended General Meetings attended. |
Particulars of Employees
The details required under Section 197(12) of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respectof Employees of the Company are given in Annexure - 3 of this Boards Report.
However in terms of Section 136(1) of the Act this Report and Financial Statementsare being sent to the Members and others entitled thereto excluding the Statement ofParticulars of Employees as required under Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
The said statement is available for inspection by the Members at the Registered Officeof the Company during business hours on working days up to the date of the ensuing AnnualGeneral Meeting. If any Member is interested in obtaining a copy thereof the same is madeavailable to him on receiving a request.
Composition of Audit Committee
As on the date of this report the Audit Committee comprised of 4Independent-Non-Executive Directors viz. Dr. S.S. Baijal as Chairman and Shri ArunBharat Ram Shri Pradeep Dinodia and Shri D. Sengupta as Members.
Extract of Annual Return
The Extract of Annual Return of the Company as on 31.3.2016 in Form MGT-9 is attachedas Annexure - 4 to this Boards Report.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo are given in Annexure - 5 of this Boards Report.
Secretarial Audit Report
The Board appointed M/s. Sanjay Grover & Associates Company Secretaries toconduct the Secretarial Audit for the financial year 2015-16. The Secretarial Audit Reportfor the financial year ended 31st March 2016 is attached as Annexure - 6to this Boards Report. The Secretarial Audit Report does not contain anyqualification or reservation or adverse remark or disclaimer.
Unclaimed Shares Suspense Account
In terms of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015the Company reports the following details in respect of equity shares lying in thesuspense account which were issued in physical form:
|Balance as on 1.4.2015 ||No. of Members who approached the Company for transfer of shares and shares transferred from Suspense Account during the year ||Balance as on 31.3.2016 |
|No. of holders ||No. of shares ||No. of holders ||No. of shares ||No. of holders ||No. of shares |
|4542 ||670790 ||17 ||3410 ||4525 ||667380 |
The voting rights on the shares in the suspense account as on 31st March2016 will remain frozen unless the rightful owners of such shares claim the shares.
The Company is committed to adhere to best corporate governance practices. The separatesections on Management Discussion and Analysis Corporate Governance and a Certificatefrom the Auditors of the Company regarding compliance of conditions of CorporateGovernance as stipulated under SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 forms part of the Annual Report.
M/s. Deloitte Haskins and Sells Chartered Accountants shall retire at the forthcomingAnnual General Meeting and are eligible for re-appointment.
The Company appointed M/s. Bahadur Murao & Co. Cost Accountants New Delhi as CostAuditors for the financial year 2016-17 to audit the cost accounting records of itsproducts namely Fertilisers Chemicals Cement PVC UPVC Articles and of Power Plants(if applicable) at SFC Kota and SAC Jhagadia.
The Company also appointed M/s. J.P. Sarda & Associates Cost Accountants Kota asCost Auditors for the financial year 2016-17 to Audit its cost accounting records of itsDSCL Sugar units including Power selling plants.
Shifting of Registered Office of the Company
The Registered office of the Company has been shifted to 1st FloorKanchenjunga Building 18 Barakhamba Road New Delhi 110001 from 5thFloor Kanchenjunga Building 18 Barakhamba Road New Delhi 110001 w.e.f.2.2.2016.
Directors Responsibility Statement
Your Directors state that: a) in preparation of annual accounts for the year ended 31stMarch 2016 the applicable accounting standards have been followed and there are nomaterial departures; b) they have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at 31stMarch 2016 and of the profit of the Company for that period; c) they have taken properand sufficient care for the maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities; d) they have prepared the annual accounts ona going concern basis; e) they have laid down internal financial controls as followed bythe Company and that such internal financial controls are adequate and are operatingeffectively; and f) they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
The Company continued to maintain harmonious and cordial relations with its workers inall its Divisions which enabled it to achieve this performance level on all fronts.
The Directors wish to thank Customers the Government Authorities FinancialInstitutions Bankers Other Business Associates and Members for the co-operation andencouragement extended to the Company. The Directors also place on record their deepappreciation for the contribution made by the employees at all levels.
| ||On behalf of the Board |
|New Delhi ||AJAY S. SHRIRAM |
|10 May 2016 ||Chairman & Sr. Managing Director |
| ||DIN : 00027137 |
Annexure - 1 Performance and financial position of Companys SubsidiariesAssociate and Joint Venture
AOC - 1 - Part "A" : Subsidiaries
| || || || || || || || || || || || || || || || || || || |
|Name of the subsidiary ||DCM Shriram Credit and Investments Ltd. ||DCM Shriram Foundation ||Hariyali Rural Ventures Ltd. ||Shriram Bioseed Ventures Ltd. ||Bioseed India Ltd. ||DCM Shriram Infrastructure Ltd. ||DCM Shriram Aqua Foods Ltd. ||Fenesta India Ltd. ||Shri Ganpati Fertilizers Ltd. ||Shridhar Shriram Foundation ||PT Shriram Seed Indonesia ||Shriram Bioseed (Thailand) Ltd. ||Bioseed Research USA INC. ||Bioseeds Holdings Pte. Ltd. ||Bioseed Research Philippines INC ||Bioseed Vietnam Ltd. ||Bioseeds Ltd. || |
PT Shriram Genetics Indonesia
|Reporting period for the subsidiary concerned if different from the holding Companys reporting period ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A |
|Reporting currency and ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||N.A ||USD ||USD ||USD ||USD ||USD ||USD ||USD ||USD ||N.A |
|Exchange rate as on the last date of the relevant || || || || || || || || || || ||Rs.66.26/ USD ||Rs.66.26/ USD ||Rs.66.26/ USD ||Rs.66.26/ USD ||Rs.66.26/ USD ||Rs.66.26/ USD ||Rs.66.26/ USD ||Rs.66.26/ USD || |
|Financial year in the case of foreign subsidiaries || || || || || || || || || || || || || || || || || || || |
|Share capital ||6.00 ||0.01 ||1.0 ||4.05 ||0.05 ||0.45 ||8.35 ||0.05 ||2.15 ||0.05 ||35.45 ||29.62 ||0.0017 ||47.31 ||7.70 ||7.93 ||15.26 ||1.99 ||0.50 |
|Reserves & surplus ||-6.34 ||-0.01 ||0.66 ||19.77 ||-0.04 ||-1.15 ||-5.19 ||0.14 ||-27.80 ||-0.012 ||-15.28 ||-29.25 ||0.10 ||-4.24 ||-40.39 ||-33.52 ||106.11 ||-4.95 ||-0.50 |
|Total assets ||5.16 ||0.02 ||16.77 ||150.10 ||0.01 ||30.89 ||3.16 ||14.49 ||9.49 ||0.04 ||27.81 ||1.51 ||0.11 ||163.92 ||42.06 ||59.09 ||215.71 ||7.45 ||- |
|Total Liabilities ||5.50 ||0.02 ||15.11 ||126.28 ||0.003 ||31.59 ||0.004 ||14.30 ||35.14 ||0.001 ||7.64 ||1.14 ||0.01 ||120.85 ||74.75 ||84.68 ||94.34 ||10.41 ||- |
|Investments ||1.82 ||- ||- ||54.64 ||- ||- ||- ||- ||- ||- ||- ||- ||- ||77.49 ||- ||- ||11.89 ||- ||- |
|Turnover ||0.54 ||0.01 ||0.07 ||9.86 ||- ||- ||0.14 ||49.76 ||25.99 ||- ||5.15 ||0.96 ||- ||6.17 ||22.25 ||23.10 ||8.8 ||10.64 ||- |
|Profit before taxation ||-2.86 ||0.0036 ||0.01 ||0.17 ||-0.005 ||-0.11 ||0.07 ||0.04 ||-3.26 ||-0.002 ||-5.23 ||-2.15 ||-0.01 ||-2.28 ||-23.80 ||-13.53 ||0.42 ||-0.56 ||- |
|Provision for taxation ||- ||- ||0.08 ||0.05 ||- ||- ||0.06 ||0.01 ||- ||- ||0.03 ||- ||- ||0 ||-0.17 ||- ||0.06 ||0.01 ||- |
|Profit after taxation ||-2.86 ||0.0036 ||-0.07 ||0.12 ||-0.005 ||-0.11 ||0.01 ||0.03 ||-3.26 ||-0.002 ||-5.26 ||-2.15 ||-0.01 ||-2.28 ||-23.63 ||-13.53 ||0.36 ||-0.55 ||- |
|Proposed Dividend ||- ||- ||- ||- ||- ||- ||- ||- ||- ||- ||- ||- ||- ||- ||- ||- ||- ||- ||- |
|% of shareholding ||100% ||100% ||100% ||100% ||100% ||100% ||100% ||100% ||81.41% ||100% ||95% ||99.99% ||100% ||100% ||100% ||100% ||100% ||49% ||100% |
1. In case of foreign subsidiaries the assets and liabilities have been translatedinto Indian Rupees at the closing exchange rate at the year end whereas statement ofprofit and loss numbers have been translated into Indian Rupees at average exchange ratefor the year.
2. Names of subsidiaries which are yet to commence operations: Nil
3. Names of subsidiaries which have been struck off/liquidated during the year: ShriramBioseed Ltd. Mauritius.
* An application with the Registrar of Companies NCT of Delhi and Haryana has beenfiled for striking off its name which is under process.
AOC -1 - Part "B": Associate and Joint Venture
Statement pursuant to Section 129(3) of the Companies Act 2013 related to AssociateCompany and Joint Venture :
|Name of Joint Venture Company ||Shriram Axiall Pvt. Ltd. |
|Latest audited Balance Sheet date ||31.3.2016 |
|No. of Shares of Joint Ventures held by the Company at the year end ||1732500 |
|Amount of Investment in Joint Venture ||Rs.3.42 Crores |
|Extent of Holding % ||50% |
|Description of how there is significant influence ||Joint Venture having 50% control of the total paid-up share capital of the Company |
|Reasons why the Joint Venture is not consolidated ||N.A. |
|Networth attributable to Shareholding as per latest audited Balance Sheet ||Rs.20.04 Crores |
|Profit/(Loss) for the year || |
|i. Considered in Consolidation ||Rs.0.64 Crore |
|ii. Not Considered in Consolidation ||Nil |
1. Names of associate or Joint Venture which are yet to commence operations : Nil
2. Names of associate or Joint Venture which have been liquidated or sold during theyear : Nil
|Sameet Gambhir ||J.K. Jain ||S.S. Baijal ||Ajay S. Shriram |
|Company Secretary ||Chief Financial Officer ||Director ||Chairman & Sr. Managing Director |
| || ||DIN : 00027961 ||DIN : 00027137 |
Annexure - 2
This Policy is in compliance with Section 178 of the Companies Act 2013 read alongwith the applicable rules thereto and Regulation 19 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 [SEBI Listing Regulations]. On therecommendation of Nomination Remuneration and Compensation Committee this policy hasbeen approved by the Board of Directors.
The Policy relates to designing the remuneration for the Directors Key ManagerialPersonnel (KMPs) Senior Management Personnel (SMPs) and other employees of the Company.
a) "Board":-Board means Board of Directors of the Company.
b) "Director":-Directors means Directors of the Company.
c) "Committee":-Committee means Nomination Remuneration andCompensation Committee of the Company as constituted or reconstituted by the Board fromtime to time.
d) "Company":- Company means DCM Shriram Limited.
e) "Independent Director":- As provided under SEBI Listing Regulationsand/or under the Companies Act 2013 and relevant rules thereto.
f) "Key Managerial Personnel":- Key Managerial Personnel (KMP)means-(i) the Chairman and Senior Managing Director; (ii) the Company Secretary; (iii) theChief Financial Officer; and (iv) such other officer as may be prescribed under theapplicable statutory provisions/ regulations and approved by Board from time to time.
g) "Senior Management Personnel":- shall mean the personnel of theCompany who are members of its Core Management team excluding the Board of Directorscomprising all members of management that are one level below the Executive Directorsincluding the functional heads.
Unless the context otherwise requires words and expressions used in this policy andnot defined herein but defined in the Companies Act 2013 as may be amended from time totime shall have the meaning respectively assigned to them therein.
4. KEY PRINCIPLES
The following principles guide the design of remuneration under this Policy:
(i) Attract retain and motivate the right talent including the Directors andEmployees as required to meet the goals of the Company. (ii) Remuneration to theDirectors KMPs and SMPs is aligned with the short term and long term goals andperformance of the Company. (iii) Promote the culture of meritocracy performance andaccountability. Give appropriate weightage to individual business and overallCompanys performance.
(iv) Reflect market trends and practices competitive positions to attract the requiredtalent.
5. REMUNERATION PAID TO EXECUTIVE DIRECTORS/MANAGING DIRECTORS
(i) The Remuneration to Executive Directors will be approved by the Board of Directorsbased on the recommendations of the Committee subject to the approval of shareholders andsuch other authorities as may be applicable. The concerned Executive Director will notparticipate in such discussions of the Board/ Committee.
(ii) The compliance of the relevant provisions of the Companies Act 2013 and SEBIListing Regulations regarding the limits of remuneration will be ensured.
(iii) The remuneration will include the following components : (iv) a) BasicSalary
- Provides for a fixed per month base level remuneration to reflect the scale anddynamics of business to be competitive in the external market.
- Will be subject to an annual increase as per the recommendations of the Committee andthe approval of the Board of Directors.
- Executive Directors will be allowed remuneration by way of commission in addition tothe Basic Salary Perquisites and any other Allowances benefits and amenities.
- The total amount of remuneration along with Commission paid to all ExecutiveDirectors shall not exceed the limits laid down in Sections 197 and 198 of the CompaniesAct 2013.
- The amount of commission shall be paid subject to recommendation of the committee andapproval of the Board of Directors.
c) Perquisites and Allowances
Perquisites and Allowances commensurate to the position of Executive Directors.
d) Contribution to Provident Superannuation fund and Gratuity payments
e) Minimum Remuneration
In the event of absence or inadequacy of profits in any financial year theremuneration approved by the shareholders excluding commission is paid to ExecutiveDirectors as a minimum remuneration subject to necessary approvals if any.
6. REMUNERATION PAID TO NON-EXECUTIVE AND INDEPENDENT DIRECTORS
The Non-Executive and Independent Directors would be paid remuneration by way ofsitting fees for attending meetings of Board or Committee thereof and profit relatedcommissions as approved by Board and Shareholders.The amount of such fees and commissionsshall be subject to ceiling/limits as provided under the Companies Act 2013 and Rulesmade thereunder or any other enactment for the time being in force.
7. KMPS/SENIOR MANAGEMENT PERSONNEL/ OTHER OFFICERS & STAFF
The Remuneration to be paid to KMPs/Senior Management Personnel/other officers &staff is based on the grade role and position in the Company the experiencequalification skills and competencies of the related personnel/employees the markettrends practices and benchmarks. The positioning strategy is to see that the compensationprovides adequate opportunity to attract the required talent and retain the same to beable to meet the requirements of the job and business.
The remuneration is subject to review on the basis of individual and businessperformance. The performance of employees is reviewed based on competency assessment andkey results delivered along with using a forced distribution method/ bell curve. Theperformance assessment more specifically is used as an input to determine merit/ specialincrements performance bonus rewards incentives (short term and long term) and otherrecognitions/promotions. The remuneration includes salary allowances perquisitesawards loans/advances as per Companys scheme retirement benefits benefits underwelfare schemes subsidies etc.
The objective is to ensure that the compensation engage the employees to give theirbest performance.
8. WORKMEN COMPENSATION
Workmen are paid wages in accordance to the settlement with the recognized union of theworkers as per best industry practice as applicable. Where there is no union workmenwages are as per the best industry practice and applicable law. All our remunerationcomponents will be in accordance with applicable statutory compliances. The remunerationincludes salary allowances perquisites awards loans/advances as per Companysscheme retirement benefits benefits under welfare schemes subsidies etc.
9. DIRECTORS AND OFFICERS INSURANCE
Where any insurance is taken by the Company on behalf of its Directors KMPs/SeniorManagement Personnel etc. for indemnifying them against any liability the premium paid onsuch insurance shall not be treated as part of the remuneration payable to any suchpersonnel.
Notwithstanding the above the applicable provisions and amendments if any under theCompanies Act 2013 and/or SEBI Listing Regulations in respect of this policy and relatedmatters shall be implemented by the Company. The Committee may recommend amendments tothis Policy from time to time as it deems appropriate.
The Policy shall be disclosed as required under the Companies Act 2013 and SEBIListing Regulations and in the Annual Report as prescribed.
Information as per Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.
(i) The percentage increase in remuneration of each Director and ratio of theremuneration of each Director to the median remuneration of the employees of the Companyfor the financial year 2015-16:
|S. No. ||Name of Director and Designation ||% increase in remuneration ||Ratio of remuneration of each Director to median remuneration of employees |
|1 ||Shri Ajay S. Shriram Chairman & Sr. Managing Director CEO & KMP ||34.70 ||136:1 |
|2 ||Shri Vikram S. Shriram Vice Chairman & Managing Director ||35.68 ||133:1 |
|3 ||Shri Ajit S. Shriram Joint Managing Director ||41.03 ||112:1 |
|4 ||Shri K.K. Kaul Whole Time Director ||12.58 ||47:1 |
|5 ||Dr. N.J. Singh Whole Time Director (EHS) ||16.42 ||19:1 |
|6 ||Dr. S.S. Baijal Non-Executive Independent Director ||8.77 ||12:1 |
|7 ||Shri Arun Bharat Ram Non-Executive Independent Director ||58.00 ||5:1 |
|8 ||Shri Pradeep Dinodia Non-Executive Independent Director ||9.52 ||9:1 |
|9 ||Shri Vimal Bhandari Non-Executive Independent Director ||56.21 ||4:1 |
|10 ||Shri Sunil Kant Munjal Non-Executive Independent Director ||34.21 ||4:1 |
|11 ||Shri D. Sengupta Non-Executive Independent Director ||14.69 ||8:1 |
|12 ||Mrs. Ramini Nirula Non-Executive Independent Director (appointed w.e.f. 3.2.2015) ||123.08 ||4:1 |
|13 ||Shri Sharad Shrivastva Nominee Director (LIC) ||1.44 ||3:1 |
The key parameters for variable component of remuneration availed by the Directorsincludes the performance of the Company and Directors and remuneration received by theother directors in comparable industry.
(ii) Comparison of remuneration of Key Managerial Personnel and average remuneration ofemployees against the performance of the Company increase in median remueration ofemployees and average percentile increase in remuneration of managerial personnel &employees other than managerial personnel.
|S. No. ||Particulars ||Financial Year 2015-16 (Rs. in Lacs) ||Financial Year 2014-15 (Rs. in Lacs) ||% increase/ decrease |
|1 ||Remuneration of Key Managerial Personnel |
| ||Shri Ajay S. Shriram (Chairman & Sr. Managing Director & KMP) ||510.78 ||379.20 ||34.70 |
| ||Shri. J. K. Jain (Chief Financial Officer & KMP) ||139.67 ||119.24 ||17.13 |
| ||Shri Sameet Gambhir (Company Secretary & KMP) ||63.40 ||-- ||N.A. |
| ||Total ||713.85 ||498.44 ||43.22 |
|2 ||Average remuneration of employees ||6.91 ||6.45 ||7.13 |
|3 ||Profit before tax ||41190.00 ||25709.00 ||60.22 |
|4 ||Median remuneration of employees ||376575.00 ||356589.00 ||5.60 |
|Average percentile increase made in the salaries of employees other than managerial personnel: 6.19% |
|Percentile increase in managerial remuneration: 27.79% |
a) Increase in Managerial Remuneration was recommended by Nomination Remuneration andCompensation Committee and approved by Board of Directors keeping in view of theperformance of the Company and Managerial Personnel and the remuneration received by ChiefExecutives in comparable bodies corporate. b) The ratio of the remuneration of the highestpaid Director to that of the employees who are not Directors but receive remuneration inexcess of the highest paid Director during the year: None
(iii) Variation in Market Capitalization Price Earning Ratio and number of permanentemployees.
|S. No. ||Particulars ||As on 31st March2016 ||As on 31st March 2015 ||% increase/ decrease |
|1 ||Market Capitalization (Rs. in Crores) ||2257.58 ||1744.35 ||29.42 |
|2 ||Price Earning Ratio ||6.44 ||7.21 ||-- |
|3 ||No. of permanent employees ||4603 ||4572 ||0.68 |
(iv) Percentage increase over decrease in the market quotations of the shares ofthe Company in comparison to the rate at which the Company came out with the last publicoffer: The Company has not made any public offer.
(v) Affirmation : It is hereby affirmed that the remuneration paid is as perthe Remuneration Policy of the Company.
Annexure - 5
Particulars of Conservation of Energy Technology Absorption Foreign Exchange Earningsand Outgo as required under the Companies (Accounts) Rules 2014. A) Conservation ofenergy (i) the steps taken and/or impact on conservation of energy; SFC Complex Kota Fertilizer
Revamping of Benefield system in
Ammonia Plant in December 2015 resulting into energy savings of 5616.6 MTOE/per year.
Modification in flue gas duct of combustion Air Preheater resulting into energy savingsof 189.8 MTOE/per year.
Improvement in process of water circulation pump in Ammonia Plant resulting into energysavings of 645.2 MTOE/per year.
Installation of Back pressure turbine to generate power utilizing energy lost inreducing steam pressure resulting in annualized saving of 94.2 MTOE/per year.
Installation of Additional Evaporator Coil
Bank in 30MVA Waste Heat Recovery Boiler. This has lead to energy recovery of approx.504 MTOE/per year due to additional steam generation.
Online fly ash sampler with reflectance meter installed in 40 MW to take immediatecorrective action to control un-burnt carbon in fly ash. Reduction in un-burnt carbonachieved by 0.6% resulting in an energy saving of 554.4 MTOE/per year.
Installation of new efficient instrument air compressor replacing the old inefficientcompressors resulting in energy saving of 141.9 MTOE/per year.
Replacement of old Auto Recirculation
Valve (ARC) of boiler no.1 of 40 MW with new one to prevent feed water passingresulting in energy saving of 88.2 MTOE/ per year.
Better control on operating parameters has lead to reduction in thermal energyconsumption by 567.0 MTOE/per year.
Lower power consumption by optimization of operating parameters has lead to reducingenergy consumption by 233.6 MTOE/per year.
Cell Power optimization in Electrolyser # D and E by the following schemes:-
Install New Zero gap type cell units (150 #) in Electrolyser # E along with newMembranes.
Install existing NCH type cell unit of Electrolyser # E (150 #) in Electrolyser
# D after their conversion to zero gap.
Reduce the operating CD of Electrolyser # E from 6.0 to 5.6 and increase the CD onElectrolyser # D from 4.7 to 5.0. for better power optimization.
The above measures will lead to energy saving of 2135.6 MTOE/per year.
SAC-Bharuch Chemical Plants
Conversion of Electrolyzer F into energy efficient Zero gap Electrolyzer.
Reduction in pressure drop by modifying FD fan discharge duct.
Reduced energy consumption by stopping operation of P975 (pump used for empty outequalization tank # 1&2) by providing direct drain line to non silica pit by gravity.
Installation of LED tube lights in different location in Power plant coal pit &salt pit.
The above measures lead to reduction in cost of production by Rs.235 per MT thereby asaving of Rs.369 lacs per annum.
Sugar Plants U.P.
Modification/Improvements in Low
Temperature Evaporation Module with redesigned automation to sustain the steam savingdone.
With the help of power manager individual equipment power consumption was assured andelectrical capacities redesigned to save electrical energy.
The above measures lead to steam saving and reduction in Electrical Power Consumption.
(ii) the steps taken by the Company for utilising alternate sources of energy; SFCComplex - Kota
Optimal utilization of hydrogen (which was earlier being dissipated) in caustic sodaflaker plant as fuel substituting furnace oil.
Used Bio-mass to substitute steam coal partially in power plant.
Utilization of Hydrogen in boiler as fuel in place of coal.
(iii) the capital investment on energy conservation equipments;
Major investments on energy conservation equipment are as under:
| ||(Rs.Crores) |
|Particulars ||Investment |
|Fertilisers SFC Kota || |
|CO2 removal system of Ammonia plant ||11.00 |
|Modification in flue gas duct ||0.36 |
|PVC SFC Kota || |
|Installation of Back pressure turbine ||0.90 |
|Carbide SFC Kota || |
|Additional Evaporator Coil Bank in ||0.78 |
|30MVA Waste Heat Recovery Boiler || |
|Power SFC Kota || |
|New compressor along with its ||0.22 |
|installation || |
|Chemicals SFC Kota || |
|Cell power optimization in electrolyser ||12.75 |
|# D and E || |
|Chemicals SAC Bharuch || |
|Installation of Air Preheater for waste ||1.44 |
|heat recovery form flue gas || |
B) Technology Absorption
(i) the efforts made towards technology absorption; SFC Complex Kota Fertilizer
Adoption of Benfield Lo-heat process technology:
In Ammonia plant of the Companys
Fertilizer Unit gaseous mixture containing mainly Hydrogen Nitrogen and CarbonDioxide is produced. Carbon Dioxide is separated from this gaseous mixture in packed bedcolumn using substantial amount of heat and then sent to Urea plant for furtherprocessing.
In order to reduce the heat consumption Benfield Lo-heat process technology has beenadopted wherein the waste heat is recovered from the system and reused for Carbon Dioxideseparation. The technology has been provided by M/s. UOP LLC USA who own this technology.Also new proprietary activator ACT-1 supplied by UOP has also been used for reduction inenergy consumption.
Absorption of Zero Gap technology:
For improving the energy efficiency the zero gap technology was absorbed by providingthe fine Nickel mesh and Ni Mattress on the existing cathode. The existing cathodes wereused as current collector. The fine mesh and mattress has reduced the gap between anodeand cathode by ~ 4 MM. Thus by reducing the gap cell power got reduced.
Installation of New Modified Circular Conveyor Assembly imported from China:
Raw Material charging in 30MVA furnace is done through Circular conveyor and feeds rawmaterial through 10 Nos. charging chute pipes at different locations. Due to increasedusage small size HSPC in 30 MVA furnace and due to varying and uneven gap betweenconveying table and various diverter plates in Circular conveyor distribution of carbonmaterials is non-homogeneous resulted in disturbed furnace operation and affecting qualityof the carbide badly. Successful commissioning of new upgraded design of Complete CircularConveyor Assembly imported from DHHI China in February 2016. It is estimated to result inadditional production of 3 Ton/ Day Carbide (Approx. 1000 T/year) from financial year2016-17 due to stable furnace operations.
(ii) the benefits derived like product improvement cost reduction productdevelopment or import substitution; SFC Complex - Kota Fertiliser
Adoption of UOPs Lo-heat Benfield technology along with their proprietaryactivator ACT-1 has led to reduction in energy consumption by 5616.6 MTOE/ year thusleading to reduction in energy cost of production.
The absorption of zero gap technology has lead to reduction in energy consumption by2135.6 MTOE/year.
It is estimated to result in additional contribution of Rs.90 lacs/year due toadditional production along with improvement in gas yield of carbide.
(iii) in case of imported technology (imported during the last three yearsreckoned from the beginning of the financial year); SFC Complex - Kota Fertiliser
|a) Technology Imported ||Benfield Lo-heat Process |
|b) Year of import ||2015-16 |
|c) Whether technology has been fully absorbed ||Yes |
|d) If technology not fully absorbed reason for same & future plan of action ||N.A |
|Carbide || |
|a) Technology Imported ||New Circular Conveyor Assembly Imported from M/s. DHHI China 2015 |
|b) Year of import || |
|c) Whether technology has been fully absorbed ||Yes (under observation) |
|d) If technology not fully absorbed reason for same & future plan of action ||N.A |
|Chemicals || |
|a) Technology Imported ||Installation of new zero gap cells in Electrolyser # E Installation of NCH type cell in Electrolyser # D after their zero gap conversion |
|b) Year of import ||2015-16 |
|c) Whether technology has been fully absorbed ||Yes |
|d) If technology not fully absorbed reason for same & future plan of action ||N.A |
|Chemical (SAC Bharuch) || |
|a) Technology Imported ||Components Spare parts Capital Goods and Technical Consultancy. 2015-16 2014-15 & 2013-14 |
|c) Whether technology has been fully absorbed ||Yes |
|d) If technology not fully absorbed reason for same & future plan of action ||N.A |
(iv) the expenditure incurred on Research and Development :
|Capital ||Rs.2.17 Crores |
|Revenue ||Rs.39.03 Crores |
C) Foreign Exchange Earnings and Outgo Total foreign exchange used and earned:
| ||(Rs./Crores) |
| ||2015-16 |
|- Total foreign exchange used ||888.31 |
|- Total foreign exchange earned ||7.74 |
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED 31st MARCH 2016
[Pursuant to section 204(1) of the Companies Act 2013 and Rule No. 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]
DCM Shriram Limited
(CIN: L74899DL1989PLC034923) 1st Floor Kanchenjunga Building 18Barakhamba Road New Delhi - 110001
We have conducted the Secretarial Audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by DCM Shriram Limited(hereinafter called the Company). Secretarial Audit was conducted in a manner thatprovided us a reasonable basis for evaluating the corporate conducts/statutory compliancesand expressing our opinion thereon.
We report that-a) Maintenance of secretarial record is the responsibility of themanagement of the Company. Our responsibility is to express an opinion on thesesecretarial records based on our audit. b) We have followed the audit practices andprocesses as were appropriate to obtain reasonable assurance about the correctness of thecontents of the secretarial records. The verification was done on test basis to ensurethat correct facts are reflected in secretarial records. We believe that the processes andpractices we followed provide a reasonable basis for our opinion. c) We have not verifiedthe correctness and appropriateness of the financial statements of the Company. d)Wherever required we have obtained the Managementrepresentationaboutthecompliances oflaws rules and regulations and happening of events etc. e) The compliance of theprovisions of the Corporate and other applicable laws rules regulation standards is theresponsibility of the management. Our examination was limited to the verification ofprocedures on test basis. f) The Secretarial Audit report is neither an assurance as tothe future viability of the company nor of the efficacy or effectiveness with which themanagement has conducted the affairs of the Company.
Based on our verification of the Companys books papers minutes books forms andreturns filed and other records maintained by the Company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of Secretarial Audit we hereby report that in our opinion the company hasduring the audit period covering the financial year ended on 31st March 2016("Audit Period") complied with the statutory provisions listed hereunder andalso that the Company has proper Board processes and compliance mechanism in place to theextent in the manner and subject to the reporting made hereinafter: We have examined thebooks papers minute books forms and returns filed and other records maintained by theCompany for the financial year ended on 31st March 2016 according to theprovisions of:
(i) The Companies Act 2013 (the Act) and the rules made thereunder/Companies Act 1956(wherever applicable);
(ii) The Securities Contracts (Regulation) Act 1956 (SCRA) and the rulesmade thereunder;
(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (SEBI Act):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015/the Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 1992;
(c) *The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;
(d) The Securities and Exchange Board of India (Share based Employee Benefits)Regulations 2014;
(e) *The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008;
(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993;
(g) *The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009;
(h) *The Securities and Exchange Board of India (Buyback of Securities) Regulations1998; and
(i) The Securities and Exchange Board of India (Listing obligations and Disclosuresrequirements) Regulations 2015 applicable w.e.f. December 1 2015.
* No event took place under these regulations during the Audit period.
We have also examined compliance with the applicable clauses of the following-(i)Secretarial Standard on Meetings of the Board of Directors and Secretarial Standard onGeneral Meetings issued by the Institute of Company Secretaries of India applicable w.e.f.July 1 2015.
(ii) Listing Agreements (applicable upto November 30 2015) entered into by the Companywith BSE Limited and the National Stock Exchange of India Limited.
During the Audit period the Company has complied with the provisions of the ActRules Regulations and Guidelines to the extent applicable as mentioned above.
(vi) The business portfolio of the Company comprises primarily of the following-
Urea & SSP fertilizers Sugar Farm inputs marketing such as DAP Crop careChemicals Hybrid Seeds.
Caustic Soda Chlorine Calcium Carbide PVC resins PVC Compounds Power and Cement.It has a value added business Fenesta Building Systems.
The Company has manufacturing facilities of Fertiliser Chloro Vinyl & Cement inKota (Rajasthan). The Company operates coal-based captive power facilities - in Kotarated at 133 MW and 55 MW in Bharuch (Gujarat). The Urea plant in Kota has a Productioncapacity of 379500 TPA & Chlor- Alkali capacity of 780 TPD in both Kota &Bharuch. Further Sugar factories are located in Ajbapur Rupapur Hariawan and Loni inUttar Pradesh with a combined installed capacity of 33000 TCD (tonnes crushed daily).The Hybrid seed operations- Bioseed started in Hyderabad (India) and now havea global footprint with presence in Vietnam Philippines and Indonesia. Fenesta windowsfabrication units are located in Bhiwadi Hyderabad and Chennai. Following are some of thelaws specifically applicable to the company:-
Food Safety and Standards Act 2006;
Essential Commodities Act 1955;
Narcotics Drugs and Psychotropic Substance Act 1985;
Legal Metrology Act 2009;
The Fertilizer Control Order 1985;
The U.P. Sugarcane (Purchase Tax) Act 1961;
The Sugar (Packing & Marketing) Act 1970. We have checked thecompliance management system of the Company to obtain reasonable assurance about theadequacy of systems in place to ensure compliance of specifically applicable laws and thisverification was done on test basis. We believe that the Audit evidence which we haveobtained is sufficient and appropriate to provide a basis for our audit opinion. In ouropinion and to the best of our information and according to explanations given to us webelieve that the compliance management system of the Company is adequate to ensurecompliance of laws specifically applicable to the Company.
We further report that the Board of Directors of the Company is duly constitutedwith proper balance of Executive Directors Non-Executive Directors and IndependentDirectors.The changes in the composition of the Board of Directors that took place duringthe period under review were carried out in compliance with the provisions of the Act.
Adequate notice were given to all directors to schedule the Board Meetings Agenda anddetailed notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting for meaningful participation at the meeting.
Board decisions are carried out with unanimous consent and therefore no dissentingviews were required to be captured and recorded as part of the minutes.
We further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.
| ||For Sanjay Grover & Associates |
| ||Company Secretaries |
|Firm Registration No. P2001DE052900 ||Sanjay Grover |
|May 10 2016 ||Managing Partner |
|New Delhi ||C P No.: 3850 |