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DCM Shriram Ltd.

BSE: 523367 Sector: Others
NSE: DCMSHRIRAM ISIN Code: INE499A01024
BSE 09:07 | 18 Jul 352.70 2.45
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NSE 00:00 | 17 Jul 350.70 0
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OPEN 0.00
PREVIOUS CLOSE 350.25
VOLUME 0
52-Week high 628.05
52-Week low 0.00
P/E 8.45
Mkt Cap.(Rs cr) 5,728
Buy Price 353.05
Buy Qty 200.00
Sell Price 350.00
Sell Qty 345.00
OPEN 0.00
CLOSE 350.25
VOLUME 0
52-Week high 628.05
52-Week low 0.00
P/E 8.45
Mkt Cap.(Rs cr) 5,728
Buy Price 353.05
Buy Qty 200.00
Sell Price 350.00
Sell Qty 345.00

DCM Shriram Ltd. (DCMSHRIRAM) - Director Report

Company director report

The Directors have pleasure in presenting the 29 Annual Report of the Company alongwith Audited Financial Statements both standalone and consolidated for the year ended 31March 2018.

Financial Highlights

The results for the year ended 31.3.2018 and 31.3.2017 are as under:

(Rs. in crores)

Particulars Standalone Consolidated
31.3.2018 31.3.2017 31.3.2018 31.3.2017
Revenue from operations 6912.99 6060.94 7006.56 6117.19
Profit before finance cost depreciation tax and exceptional item 1105.53 860.09 1091.04 817.86
Profit before exceptional item and tax 885.46 676.13 867.34 632.70
Exceptional item :
Provision for impairment of investment in foreign subsidiaries (Bioseed business) - 85.12 - -
Profit before tax 885.46 591.01 867.34 632.70
Profit after tax 688.44 522.07 668.66 552.33
Share of profit/(loss) of joint venture - - 0.04 0.03
Non-controlling interest - - 0.86 (0.68)
Other comprehensive income (after tax) (0.45) (7.47) 0.24 (3.58)
Total comprehensive income (after tax) 687.99 514.60 669.80 548.10
Basic/Diluted - EPS (Rs. per equity share)
- Before exceptional item 42.39 37.06 41.22 33.97
- After exceptional item 42.39 32.14 41.22 33.97
Retained earnings - opening balance 2472.36 2070.22 2410.92 1979.03
Add/(less):
Profit for the year 688.44 522.07 669.56 551.68
Dividends (including dividend tax) paid during the year (160.30) (113.37) (160.30) (113.37)
Others (0.77) (6.56) (0.81) (6.42)
Retained earnings - closing balance 2999.73 2472.36 2919.37 2410.92

State of Company's Affairs/Performance

The Company recorded satisfactory performance for the year. Chlor-Alkali business hasbecome stronger with economies of scale and substantial improvement in power efficiencies.Sugar business is experiencing difficult price situation with prices significantly belowcost. Other businesses continue to perform reasonably.

The Company's total revenues from operations stood at Rs.7007 Crores in FY18 vs.Rs.6117 Crores last year. Revenue of chemicals business up by 57% driven by increasedvolumes due to full capacity utilization of expanded capacity at Bharuch and increase inrealizations. Revenue of Sugar business up by 24% with higher volumes aided by higher canecrush.

EBITDA for FY18 stood at Rs.1091 Crores a significant improvement from Rs.818 Croresrecorded last year. This improvement was lead by better volumes and margins in Chemicalsbusiness. Sugar business recorded low EBITDA due to write down of inventory by Rs.185Crores for FY18 (valued at net realizations) and higher cost of production.

Our Agri-input businesses of Shriram farm solutions and Bioseed recorded some revivalin FY18 aided by better monsoon and better liquidity after the effects of demonetization.Fenesta business continues to register good growth.

Overall EBIDTA margins improved to 16% from 13% last year.

Net Profit for FY18 was up by 21% to Rs.670 Crores from Rs.552 Crores in FY17.

Net Debt stood at Rs.653 Crores vs. Rs.928 Crores last year. Debt equity ratio stood at0.21x vs 0.37x last year.

The Company commissioned 150 KLD distillery at its Sugar unit located at Hariawan attotal investment of ~Rs.188 Crores. Distillery will start contributing to the earnings ofthe Company from the next year.

During the year the Company has announced new capital expenditure projects forexpansion cum modernization at an investment of ~Rs.1125 Crores in Chlor- Vinyl and Sugarbusinesses. These projects are expected to be commissioned in phases in FY 2019 and FY2020.

Dividend

Your Directors are pleased to recommend a final dividend @ 40% i.e. Re.0.80/- perequity share of Rs.2/- each for the year ended 31.3.2018 which if declared by theMembers the total dividend for the financial year 2017-18 will aggregate to 410% i.e.Rs.8.20/- per equity share of Rs.2/- each (including two interim dividends aggregating @370% i.e. Rs.7.40 per equity share).

Further as per the requirement of Regulation 43A of SEBI (Listing Obligation andDisclosure Requirement) Regulations 2015 Dividend Distribution Policy of the Company isattached as Annexure-1.

Number of Meetings of the Board

The Board met 5 times during the financial year on 1.5.2017 1.8.2017 7.11.201720.1.2018 & 23.2.2018.

Report on Performance and Financial Position of Subsidiaries

Associate and JV Company

The details regarding the performance and financial position of Company's SubsidiariesAssociate and JV are given in Annexure-2 of this Board's Report.

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.

Company's Policy on Directors' Appointment and Remuneration

The criteria for Directors' appointment has been set up by the Nomination Remunerationand Compensation Committee which includes criteria for determining qualificationspositive attributes independence of a Director and other matters provided underSub-section (3) of Section 178 of Companies Act 2013 (the Act). The Remuneration Policyis attached as Annexure-3 to this Board's 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 thisBoard's Report.

Business Responsibility Report

In compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 Business Responsibility Report (BRR) forms part of this Annual Report. The reportinter-alia describes the initiatives taken by the Company from environmental social andgovernance perspective.

Vigil Mechanism

The Company has established a Vigil Mechanism/Whistle Blower Policy as per therequirement of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 and the Companies Act 2013 which is also available on Company's website at thefollowing web link:

(http://dcmshriram.com/sites/default/files/vigil-mechanism.pdf)

Related Party Transactions

During the year there has been no materially significant related party transactionbetween the Company and its related parties which requires disclosure in Form AOC-2.

The Company has formulated a Policy on dealing with Related Party transactions whichis also available on Company's website at the following weblink:(https://www.dcmshriram.com/sites/default/files/Related%20Party%20Trnsaction%20%20-%20Final%20%28BM-12.11.2014%29.pdf)

Material Subsidiary Policy

The Company has formulated a Policy for determining 'Material' Subsidiaries which isalso available on Company's website at the following weblink:(https://www.dcmshriram.com/sites/default/files/MATERIAL%20SUBSIDIARY%20POLICY%20-%20FINAL.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.

Fixed Deposits

1. The details relating to deposits covered under Chapter V of the Act:

a) accepted including renewals during the year : Rs.65350000/-

b) remained unclaimed as at the end of the year : Rs.154398/-

c) there has been no default in repayment of deposits or payment of interest thereonduring the financial year ended on 31 March 2018.

2. There are no deposits which are in non-compliance with the requirements of ChapterV of the Act.

3. Section 124 and other applicable provisions of the Companies Act 2013 read withInvestor Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 (the Rules) as amended from time to time mandates that the matured depositsincluding interest that has remained unpaid/unclaimed for a period of seven years betransferred to the Investor Education and Protection

Fund (the Fund) established by the Central Government. According to the said Rulesduring the year matured deposits including interest of Rs.61565/- has been transferred tothe Investor Education and Protection Fund (IEPF).

Details in respect of adequacy of Internal Financial Control with

respect to Financial Statements

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 theCompany:(https://www.dcmshriram.com/sites/default/files/ESPS%20Disclosure%20-%202017-18.pdf)

Directors and Key Managerial Personnel (KMP)

Mr. K.K. Kaul and Mr. Sharad Shrivastva Directors retire by rotation and beingeligible offer themselves for re-appointment.

Re-appointment of Mr. Ajay S. Shriram Chairman & Senior Managing Director and Mr.Vikram S. Shriram Vice Chairman & Managing Director are being sought in the ensuingAnnual General Meeting (AGM) of the Company for a period of five years w.e.f. 1.11.2018.The requisite details of the re-appointment are mentioned in the said AGM Notice.

During the year Mr. K.K. Sharma was appointed as Additional Director by the Board. Hewas also appointed as Whole Time Director (EHS) w.e.f. 20.11.2017 subject to theapproval of the Members which is being sought in the ensuing AGM.

Dr. N.J. Singh ceased to be Director of the Company w.e.f. 19.11.2017.

The Company has received declaration from all the Independent Directors of the Companyunder Section 149(7) of the Act confirming that they meet the criteria of independence asprescribed under Section 149(6) of the Act and SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015.

The details of familiarization programme for Independent Directors are available onCompany's website at the following web link:

(https://www.dcmshriram.com/sites/default/files/Details%20of%20Familiarization%20Programme%20for%20Independent%20Directors%202017-18.pdf)

Manner & Criteria of formal annual evaluation of Board's performance and that ofits 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 and Vice Chairman of the Board theChairman of NRCC collated the inputs from Directors about their performance asChairman/Vice Chairman and Director of the Board and/or the member of the Board Committeesand shared the same with the Board.

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 Structure of Board including Composition/Diversity/ Process of appointment/qualifications/experience etc; Fulfillment of functions of the Board (for instance guiding corporate strategy risk policy business plans corporate performance monitoring Company's governance practices etc. as per the Act and Listing Regulations).
Meetings of Board (Number/Manner of Board meetings held during the year including quality/ quantity/timing of circulation of agenda for Board Meetings approval process/recording of minutes and timely dissemination of information to Board. Professional Development and Training of Board of Directors as required.
(II) Board Committees Composition of Committee Fulfillment of functions of the Committee with reference to its terms of reference the Act and the Listing Regulations. Number of Committee meetings held during the year.
(III) Individual Directors Fulfillment of responsibilities as a director as per the Act the Listing Regulations 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; and 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-4 of this Board's Report.

However in terms of Section 136(1) of the Act the Report and Accounts are being sentto the Members and others entitled thereto excluding the Statement of Particulars ofEmployees as required under Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended. The said statement is available forinspection by the Members at the Registered Office of the Company during business hours onworking days up to the date of the ensuing Annual General Meeting.

Composition of Board Audit Committee

As on the date of this report the Board Audit Committee comprises of 4 Non-ExecutiveIndependent Directors viz. Mr. Pradeep Dinodia as Chairman and Ms. Ramni Nirula Mr.Sunil Kant Munjal & Mr. Pravesh Sharma as Members.

Extract of Annual Return

The Extract of Annual Return of the Company as on 31.3.2018 in Form MGT-9 is attachedas Annexure-5 to this Board's 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-6 of this Board's Report.

Secretarial Audit Report

The Board appointed M/s. Sanjay Grover & Associates Company Secretaries toconduct the Secretarial Audit for the financial year 2017-18.

The Secretarial Audit Report for the financial year ended 31 March 2018 is attached asAnnexure-7 to this Board's Report. The Secretarial Audit Report does not containany qualification or reservation or adverse remark or disclaimer.

Secretarial Standard

The Company is in Compliance with the Secretarial Standards issued by the Institute ofCompany Secretaries of India (ICSI) on Meetings of the Board of Directors (SS-1) andGeneral Meetings (SS-2).

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 theunclaimed shares suspense account.

Balance as on 1.4.2017 No. of Members who approached the Company for transfer of shares and shares transferred from Suspense Account during the year

Balance as on 31.3.2018

No. of holders No. of shares No. of No. of holders shares No. of holders No. of shares
4515 664970 18 16650 4497 648320

The voting rights on the shares in the suspense account as on 31 March 2018 willremain frozen unless the rightful owners of such shares claim the shares.

Corporate Governance

The Company is committed to adhere to best corporate governance practices. The separatesections on Management Discussion and

Analysis Corporate Governance and a Certificate from the Auditors of the Companyregarding compliance of conditions of Corporate Governance as stipulated under SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 forms part of theAnnual Report.

Statutory Auditors

Pursuant to Section 139 of the Companies Act 2013 (the Act) appointment of theStatutory Auditors M/s. Price Waterhouse Chartered Accountants LLP (FRNNo.012754N/N500016) was made by the Members in their Annual General Meeting (AGM) held on1.8.2017 for a period of five years i.e. from the conclusion of 28 AGM till the conclusionof 33 AGM.

The Report given by the Auditors on the financial statements of the Company is part ofthe Annual Report. There has been no qualification reservation adverse remark ordisclaimer given by the Auditors in their Report.

Directors' Responsibility Statement

Your Directors state that:

a) in preparation of annual accounts for the year ended 31 March 2018 the applicableaccounting standards have been followed and there are no material departures;

b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at 31 March 2018 and of the profit of theCompany for that period;

c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls as followed by the Company and thatsuch internal financial controls are adequate and are operating effectively; and

f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

Industrial Relations

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.

Acknowledgements

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
24.4. 2018 Chairman & Senior Managing Director
DIN: 00027137