You would have noted from the annual report that the company has maintained an appreciable rate of growth
despite unfavourable conditions in sugar and textiles industries.
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 entrepreneurship.
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.
Costs of funds has gone up by 3 to 4% over the year.
This 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 optimally productive.
Your company turned out a higher gross profit compared with last year inspite of setbacks beyond our
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 have started export of Chemicals in a small way.
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. Along with 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 manufacturers.
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.