DCM SHRIRAM INDUSTRIES LIMITED
Abstracts from Chairman Dr. Bansi Dhar's speech at annual general meeting
on 29th August 1995.
You would have noted from the annual report that the company has maintained
an appreciable rate of growth despite unfavourable conditions in sugar and
The directors have proposed an equity dividend of 30% on the increased
share capital. This will absorb Rs. 2.76 crore against Rs. 1.80 crore in
the previous year.
The economic situation in the country reflects the gains of liberalization
as much as it presages the effects of the run-up to the national elections.
The GDP growth rate, agricultural production, foodgrains stocks, industrial
production, exports, and foreign exchange reserves, have all followed an
upward trend. Revenue collection has been buoyant, bearing out the sound
state of health of the economy, as well as merits of unshackling of private
These are gratifying indicators. But there is also a grey lining on the
otherwise silvery sky.
Finance is the fuel of the economic engine. And that is at present the
area of extreme concern for Indian industry. The capital market is
sluggish, depressing capitalisation of the secondary market and thwarting
primary issues. Banks and financial institutions have constraint of funds
to meet industry's requirements. Cost of funds has gone up by 3 to 4% over
The rate of inflation has been falling in the current year. But the
movement is inconsistent and the fall is in face of an unabated fiscal
deficit and accelerated borrowings by Government. It is therefore in fact
largely a measure of a significant application of public funds to
governmental expenditure and subsidies, away from the productive sectors.
Price movement within the composite basket has been erratic. Cotton prices
went up abnormally last year. They continue to reflect, compared with
prices an year ago, an escalation far above rate of inflation or the
international trend; so do a basic food item like pulses and certain other
agricultural produce. The apparent stalling of price rise does not, on this
account, bear favourably either on the producer's budget or the average
consumer's wallet. Nor does it help make many of our products competitive
in the world market.
The root cause of these negative signals is non-economic. It is important
that the imperatives of socio-economic development are secured by national
consensus so that economic reforms programs stay on course, power
generation and other infrastructural projects do not suffer, investment- indigenous and external-continues to get a boost, and public spending is
Your company turned out a higher gross profit compared with last year
inspite of setbacks beyond our control.
Operations of our sugar factory saw an improvement over the preceding year.
However, profitability took a beating because of higher cane prices, lower
realization, and lower releases of sugar by Government. This also resulted
in high stocks of sugar and consequential higher interest cost.
Distillery operations continued to be affected adversely by differing
policies of Central and State Governments on decontrol of molasses, as also
by high taxation by U.P. Govt. on movement of alcohol outside the State. I
hope sustainable decisions will be taken on these issues soon.
With commissioning of three new Penicillin- G plants in the country, our
Chemicals business is picking up. We lave started export of Chemicals in a
Performance of Rayons Division improved significantly during the year.
The division's consistent export effort has been recognised by awards of
outstanding export performance and excellence by Government of India's
Export Promotion Council as well as the Rajasthan Government.
Shriram Rayons has acquired the prestigious ISO 9002 certification for its
quality systems. It has distinguished itself further by bringing home the
National Safety Award for the 13th year running.
The division's diversification projects made steady headway.
A Nylon Dipping Plant has been commissioned. This has added a new product
to our range of activities, which has been well-received in the market.
A pilot plant for making Viscose Filament Yarn has been set up, based on
in-house R&D effort. It's products have been appreciated in the market.
Operations of the Textile Division bore the effect of steep rise in cotton
prices which could not be fully recovered in prices of products.
Modernisation of Hindon River Mills progressed satisfactorily. Necessary
steps are being taken for product development to make more profitable
utilisation of the new equipment.
The unit has also received ISO 9002 certification for its quality systems.
A spinning mill consisting of 22166 spindles was imported from Italy and
set up as a separate unit under the name of DCM Clusone Spinning Mills.
It's installation and commissioning was accomplished in a record time of 8
months. This will be a valuable asset for our textiles activity.
Exports continued to be a thrust area of your company and rose to Rs. 47
crore from Rs. 39 crore in the previous year. Alongwith export of the
Company's products, Merchant Export activities were commenced during the year. We have also taken up representation in India of some foreign
You had earlier approved of setting up of an overseas company. I am glad to
report that a wholly-owned subsidiary, christened as DCM Shriram
International B.V. has been incorporated with headquarters at Amsterdam,
Holland. This is an extension of your company's role in international
trade. The subsidiary will commence operations this year and will become
the nucleus for the company's global trading activity.
Daurala Organics Ltd. made steady progress, attaining a market share of 50%
for its main product D(-)Alpha Phenyl Glycine Chloride Hydrochloride.
DCM Shriram Leasing & Finance Ltd recorded satisfactory progress and has
been able to raise its rate of dividend to 12.5% on an enlarged equity
base, from 5% last year. this will be free of income tax.
The company has obtained, from SEBI, a Merchant Banking License, Grade I.
In the depressed primary and secondary securities markets at present we
have been cautious about underwriting and investment proposals.
Indital Tintoria Ltd. could not operate satisfactorily due to unfavourable
governmental policy changes affecting this company's yarn exports. Steps
are being taken to overcome the constraints.
DCM Hyundai Ltd, the Marine Freight Containers company with South Korean
collaboration, has gone into commercial production and has established its
quality credentials with international buyers. A container made by it was
recently exhibited at the HYUNDAI stall in an international fair at
Atlanta, USA. This greenfield project has been commissioned in a record
time of twelve months.
Apart from adding long-term value to the stake of the members, our attempt
is to provide them service of a high quality. Holders of odd lots of shares
had been finding it difficult to dispose of their shares at fair market
prices. An arrangement has therefore been made for consolidation or, at
their option, disposal, of such holdings without any loss to them.
Shareholders have been informed individually of the procedure so that they
can take advantage of this measure to improve their liquidity. The response
has been excellent.
Dr. Bansi Dhar
Place : New Delhi
Date : 29th August, 1995.