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DCM Shriram Ltd.


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Series: EQ | ISIN: INE499A01024 | SECTOR: Diversified

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

Board’s Report

The Directors have pleasure in presenting the 29 Annual Re port of the Company along with Audited Financial Statements, both standalone and consolidated, for the year ended 31“ March, 2018.

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

(Rs. in crores)

Particulars Standalone






Revenue from operations





Prom before finance cost, depreciation, tax and exceptional item





Profit before exceptional





Exceptional item :

Provision for impairment of

(Bioseed business)


Profit before tax





Profit after tax





Share of profit/(loss) of joint venture Non-controlling interest Other comprehensive income (after tax)









Total comprehensive income (after tax)





Basic/Diluted - EPS (Rs. per

equity share)

- Before exceptional item

- After exceptional item









Retained earnings -


Profit for the year

Dividends (including dividend tax) Others

















Retained earnings -





State of Company''s Affairs/Performance

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

The Company’s total revenues from operations stood at Rs.7,007 Crores in FY18 vs. Rs.6,117 C rores last year. Revenue of chemicals business up by 57% driven by increased volumes due to full capacity utilization of expanded capacity at Bharuch and increase in realizations. Revenue of Sugar business up by 24% with higher volumes aided by higher cane crush.

EBITDA for FY18 stood at Rs.1,091 C rores, a significant improvement from Rs.818 C rores recorded last year. This improvement was lead by better volumes and margins in Chemicals business. Sugar business recorded low EBITDA d ue to write down of inventory by Rs.185 C rores for FY18 (valued at net realizations) and higher cost of production.

Our Agri-input businesses of Shriram farm solutions and Bioseed recorded some revival in 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 C rores from Rs.552 Crores in FY17.

Net Debt stood at Rs.653 Crores vs. Rs.928 C rores last year. Debt equity ratio stood at 0.21x vs 0.37x last year.

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

During the year the Company has announced new capital expenditure projects for expansion cum modernization at an investment of ~Rs.1125 Crores in Chlor- Vinyl and Sugar businesses. These projects are expected to be commissioned in phases in FY 2019 and FY 2020.


Your Di rectors are pleased to recommend a final dividend @ 40% i.e. Re.0.80/- per equity share of Rs.2/- each for the year ended 31.3.2018, which if declared by the Members, 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 and Disclosure Requirement) Regulations, 2015, Dividend Distribution Poli cy of the Company is attached 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, 7.11.2017, 20.1.2018 & 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 Subsidiaries, Associate 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 Board on 28.1.2006 and was implemented w.e.f. 2.1.2007. T he said framework includes risk identification, 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, Remuneration and Compensation Committee, which includes criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Sub-section (3) of Section 178 of Companies Act, 2013 (the Act). The Remuneration Policy is attached as Annexure-3 to this Board s Report.

Corporate Social Responsibility

The details about the Policy on Corporate Social Responsibility (CSR) including programmes/activities undertaken on CSR, Annual Report on

CSR activities and the composition of CSR Committee are provided in a separate section, which forms part of this Board''s Report.

Business Responsibility Report

In compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Business Responsibility Report (BRR) forms part of this Annual R eport. The report, inter-alia, describes the initiatives taken by the Company from environmental, social and governance perspective.

Vigil Mechanism

The Company has established a Vigil Mechanism/W histle Blower Policy as per the requirement of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the Companies Act, 2013 which is also available on Company''s website at the following web link:

(http: // /d efault/files/vigil-mechanism.pdf)

Related Party Transactions

During the year, there has been no materially significant related party transaction between 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, which is also available on Company''s website at the following web link: ss/default/file s/Rela te d %20Pa rty%20Tr nsaction%20%20-%20Final%20%28BM-12.11.2014%29.pdf)

Material Subsidiary Policy

The Company has formulated a Policy for determining Material Subsidiaries, which is also available on Company''s website at the following web link:

( /default/files/MATERIAL%20SUBSIDI


Particulars of Loans, Guarantees or Investments

The details of Loans, Guarantees and Investments covered under the provisions of Section 186 o f the Act and relevant rules there under are given in the notes to Financial Statements.

Fixed Deposits

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

a) accepted including renewals during the year : Rs.6,53,50,000/-

b) remained unclaimed as at the end of the year : Rs.1,54,398/-

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

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

3. Section 124 and other applicable provisions of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the Rules) as

amended from time to time, mandates that the matured deposits including interest that has remained unpaid/unclaimed for a period of seven years be transferred to the Investor Education and Protection

Fund (the Fund), established by the Central Government. According to the said Rules, during the year matured deposits including interest of Rs.61,565/- has been transferred to the 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 financial statements. No material weakness in the design or operation in such controls was observed during the year.

DCM Shriram Employee Stock Purchase Scheme

The Company has an Employee Stock Purchase Scheme (DCM Shriram ESPS) d uly approved by Members, vide Special Resolution passed on August 13, 2013 and aligned in accordance with SEBI (Share Based Employee Benefits) Regulations, 2014. DCM Shriram ESPS provides for grants of equity shares through Tru st, purchased from secondary market, to the eligible Employees as may be decided by the Nomination, Remuneration and Compensation Committee from time to time. DCM Shriram ESPS is a secondary market scheme and hence no fresh issue of shares was made. There are no voting rights exercised on the shares held by the Trust. F urther, there are no material changes in the DCM Shriram ESPS and it is in compliance with the applicable regulations. The details required as per SEBI (Share Based Employee Benefits ) Regulations, 2014 is available at the following web link of the Company:



Directors and Key Managerial Personnel (KMP)

Mr. K.K. Kaul and Mr. Sharad Shrivastva, Directors retire by rotation, and being eligible, 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 ensuing Annual 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 N otice.

During the year, Mr. K.K. Sharma was appointed as Additional Director by the Board. He was also appointed as Whole Time Direc :tor (EHS), w.e.f. 20.11.2017, s ubject to the approval 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 Company under Section 149(7) o f the Act, co nfirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

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

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Manner & Criteria of formal annual evaluation of Board''s performance and that of its Committees and Individual Directors

In compliance with requirements of the Act and SEBI (Listing Obligations & Disclosu re Requi re ments) Regulations, 2015, the formal annual performance evaluation of the Board, its Committees and Individual Directors has been conducted as under:

A. Manner of evaluation as recommended to the Board by the

Nomination, Remuneration and Compensation Committee


1. The Chairman of the Board consulted each Director separately about the performance of Board, Committees and other Directors and sought inputs in relation to the above. The Chairman 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, the Chairman of NRCC collated the inputs from Directors about their performance as Chairman /Vice Chairman and Director of the Board and/or the member of the Board Committees and shared the same with the Board.

The Board as a whole discussed the inputs on performance of Board/Committees/Individual Directors 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 as follows:

(I) Board as a whole

* Structure of Board including Composition/Diversity/

• Fulfillment of functions of the Board (for instance guiding corporate strategy, risk policy, business plans, corporate performance, m onitoring 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 qu a lity/

quantity/timing of circulation of agenda for Board Meetings, approval process/recording of minutes and

• Professional Development and Training of Board of Directors as required.

(II) Board Committees

* Composition of Committee

* Fulfillment of functions of the Committee with

* 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

• In case of the concerned director being Independent

Director, Executive Director, Chairperson of the Board or Chairperson or member of the Committees, with

• Board and/or Committee meetings attended; and

• General meetings attended.

Particulars of Employees

The details required under Section 197(12) of the Act re ad with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial

Personnel) Rules, 2014, in respect of 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 sent to the Members and others entitled thereto, excluding the Statement of Particulars of Employees as required under Rule 5(2) o f the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended. The said statement is available for inspection by the Members at the Registered Office of the Company during business hours on working 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-Executive Independent D irectors, 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 attached as 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, foreign exchange 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, to conduct the Secretarial Audit for the financial year 2017-18. The Secretarial Audit Rep ort for the financial year ended 31“ March, 2018 is attached as Annexure-7 to this Board s Report. The Secretarial Audit Report does not contain any qualification or reservation or adverse remark or disclaimer.

Secretarial Standard

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

Unclaimed Shares Suspense Account

In terms of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 , the Company reports the following details in respect of equity shares lying in the unclaimed shares suspense account.

Balance as on


No. of Members the Company for

Suspense Account


Balance as on


No. of

No. of

No. of

No. of

No. of

No. of













The voting rights on the shares in the suspense account as on 31“ March, 2018 will remai n frozen unless the rightful owners of such shares claim the

Corporate Governance

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

Analysis, Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under SEBI (Li sting Obligations & Disclosure Requirements) Regulations, 2015 , forms part of the Annual Report.

Statutory Auditors

Pursuant to Section 139 of the Companies Act, 2013 (the Act), appointment of the Statutory Auditors M/s. Price Waterhouse Chartered

Accountants LLP (FRN No.012754N/N500016) was made by the Members in their Annual General Meeting (AGM) held on 1.8.2017 for a period of five years i.e. from the conclus ion of 28- AGM till the consuls ion of 33” AGM.

The Report given by the Auditors on the financial statements of the Company is part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer 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 applicable accounting standards have been followed and there are no material departures;

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

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets 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 that such internal financial controls are adequate and are operating effectively; and

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

Industrial Relations

The Company continued to maintain harmonious and cordial relations with its workers in all its Divisions, which enabled it to achieve this performance level on all fronts.


The Directors wish to thank Customers, the Government Authorities, Financial Institutions, Bankers, Other Business Associates and Members for the co-operation and encouragement extended to the Company. The Directors also place on record their deep appreciation for the contribution made by the employees at all levels.

On behalf of the Board


24.4. 2018 Chairman & Senior Managing Director


Director’s Report