DCM Shriram Industries

1.  Research and development expenses amounting to Rs. 45.77 lacs
 (2007-2008 - Rs. 40.96 lacs) have been charged to the respective
 revenue accounts. Capital expenditure relating to research and
 development amounting to Rs. Nil (2007-08 - Rs. 1.59 lacs) has been
 included in fixed assets.
 
 2.  The Company has identified parties covered under The Micro, Small
 and Medium Enterprise Development Act, 2006 (MSMED Act, 2006) on the
 basis of confirmation received.
 
 Based upon the information available with the Company, the balance due
 to the Micro and Small Enterprises as defined under the MSMED Act, 2006
 is nil. Further no interest during the year has been paid or payable
 under the terms of the MSMED Act, 2006.
 
 3.  Segment reporting
 
 A.  Business segments
 
 Based on the guiding principles given in Accounting Standard (AS) 17
 Segment Reporting as notified under the Companies (Accounting
 Standards) Rules, 2006, the Companys business segments are Sugar
 (comprising sugar, power and molasses based alcohols), Industrial
 Fibres and related products (comprising rayon, synthetic yarn, cord,
 fabric etc.) and Chemicals (comprising Organics & fine Chemicals).
 
 B.  Geographical segments
 
 The Companys geographical segments are Domestic and Overseas, by
 location of customers.
 
 C.  Segment accounting policies
 
 In addition to the significant accounting policies applicable to the
 segments as set out in note 1 of schedule 13 Notes to the Accounts,
 the accounting policies in relation to segment accounting are as under
 :-
 
 i) Segment assets and liabilities
 
 Segment assets include all operating assets used by a segment and
 consist principally of operating cash, debtors, inventories and fixed
 assets, net of allowances and provisions which are reported as direct
 offsets in the balance sheet. Segment liabilities include all operating
 liabilities and consist principally of creditors and accrued
 liabilities. Segment assets and liabilities do not include investments,
 share capital, reserves and surplus, loan funds, income tax - current
 and deferred and certain other assets and liabilities not allocable to
 the segments on a reasonable basis. While most of the
 assets/liabilities can be directly attributed to individual segments,
 the carrying amount of certain assets/liabilities to two or more
 segments are allocated to the segments on a reasonable basis.
 
 ii) Segment revenue and expenses
 
 Joint revenue and expenses of segments are allocated amongst them on a
 reasonable basis. All other segment revenue and expenses are directly
 attributable to the segment.
 
 iii) Unallocated expenses
 
 Unallocated expenses represent general administrative expenses,
 head-office expenses and other expenses that arise at the Company level
 and relate to the Company as a whole. As such, these expenses have not
 been considered in arriving at the segment results.
 
 iv) Inter segment sales
 
 Inter segment sales between operating segments are accounted for at
 market price. These transactions are eliminated in consolidation.
 
 4. Related party disclosures under Accounting Standard (AS)18
 
 A.  Names of related party and nature of related party relationship
 Subsidiary : Daurala Foods & Beverages Pvt. Ltd. (DFBPL)
 
 Associates : DCM Hyundai Ltd. (DHL), Versa Trading Ltd. (VTL) (Formerly
 DCM Shriram Leasing & Finance Ltd.) - upto September 21, 2007.
 
 Key management personnel: Mr. Tilak Dhar, Mr. Alok B. Shriram, Mr. D.C.
 Mittal, Mr. Madhav B. Shriram and Mr. G. Kumar.
 
 Relatives/HUF of key management personnel: Mrs. Karuna Shriram, Mrs.
 Kiran Mittal, Mrs. Manju Kumar, Mr. Akshay Dhar and M/s. Bansi Dhar &
 Sons - HUF (BDS).
 
 Others (Enterprise over which key management personnel or their
 relatives are able to exercise significant influence): Hindustan Vacuum
 Glass Pvt. Ltd. (HVGPL) and Dr. Bansi Dhar Memorial Society (DBDMS).
 
 B.  Transactions with related parties referred to in 10 (A) i)
 Transactions with subsidiary and associates
 
 B.  Operating Lease
 
 i) The Company generally enters into cancel/able operating leases for
 office premises and residences of its employees, normally renewable on
 expiry.
 
 ii) Lease rent charged to the profit and loss account relating to
 operating leases entered or renewed after April 1, 2001 is Rs. 447.63
 lacs (2007-2008 - Rs. 318.95 lacs).
 
 5. In the previous year the Company had issued 7,00,000 Warrants to
 the specified entities of promoters / promoter group / persons acting
 in concert with them on preferential basis. Each Warrant carried
 entitlement to subscribe to 3 equity shares of Rs 10 each at a premium
 of Rs. 80 per share. 11,55,000 fully paid equity shares were allotted
 during the year 2007-08 and the remaining 9,45,000 fully paid equity
 shares were allotted on 1.4.2008. A petition filed by a shareholder
 before the Honble Company Law Board under Section 397 / 398 of the
 Companies Act, challenging the preferential issue, is pending.  The
 same shareholder also filed a Civil Suit challenging some of the items
 in the Agenda for the Annual General Meeting (AGM) held on 25.9.2008
 before the Honble Delhi High Court, which is also pending. As per the
 interim order of the Court, the AGM was held as scheduled and all items
 were passed with the requisite majority.
 
 6.  The Company has accounted for cane purchases for crushing season
 2007-08 at a price of Rs. 110 per qtl in terms of the interim Order
 passed by the Honble Allahabad High Court. Subsequently the Honble
 High Court passed final Order directing sugar mills to pay State
 Advised Price at Rs. 125 per qtl. Appeal against the Order of the
 Honble High Court has been filed with the Honble Supreme Court which
 has directed to pay Rs. 110 per qtl as interim arrangement. Necessary
 adjustments,if any, will be made in accordance with the final Order of
 the Honble Supreme Court.
 
 7.  Employee benefits
 
 a) Defined contribution plans
 
 The Company charged Rs. 364.65 lacs (previous year Rs. 359.35 lacs) for
 provident fund contribution and Rs. 137.91 lacs (previous year Rs.
 129.93 lacs) for superannuation contribution to the profit and loss
 account. The contributions towards these schemes by the Company are at
 rates specified in the rules of the schemes. In case of Provident Fund
 administered through a trust, shortfall if any, shall be made good by
 the Company.
 
 b) Defined benefit plans
 
 i) Liability for gratuity, Privilege leaves and Medical leaves is
 determined on actuarial basis. Gratuity liability is provided to the
 extent not covered by the funds available in the gratuity fund.
 
 ii) Gratuity Scheme provides for a lump sum payment to vested employees
 at retirement, death while in employment or on termination of
 employment. Vesting occurs upon completion of five years of service,
 except death while in employment.
 
 8.  Previous year figures have been regrouped / recast, wherever
 necessary.
 
 9.  Schedules 1 to 11 and the statement of additional information form
 an integral part of the balance sheet and profit and loss account.