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DCW Ltd.

BSE: 500117 | NSE: DCW |

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Series: BE | ISIN: INE500A01029 | SECTOR: Petrochemicals

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Director’s Report

TO THE MEMBERS

The Directors present their 79th Annual Report and Audited Accounts for the Financial Year ended 31st March, 2018 -

1. Financial Results

31-03-2018 (Rs. in lacs)

31-03-2017 (Rs. in lacs)

Net Sales

121340.71

130491.45

Gross Profit

3870.76

9294.21

Less : Provisions

Depreciation

8779.94

6792.91

Profit Before Tax/(Loss)

(4909.18)

2501.30

Tax: Current Period

-

485.00

Previous Period

-

15.00

MAT Credit available for set off / Utilized

-

(475.00)

-

25.00

Profit/(Loss) After Current Tax & Tax Adjustments

(4909.18)

2476.30

Deferred Tax

(2889.02)

461.57

Profit after Tax/(Loss)

(2020.16)

2014.73

Add: Balance brought forward

15686.14

13671.41

Profit available for Appropriation

13665.98

15686.14

Appropriations:

General Reserves

-

-

Proposed Dividend

-

-

Dividend Distribution Tax

-

-

Balance carried forward

13665.98

15686.14

2. Dividend:

Due to loss during the year on the operations of the company your directors have not recommended any dividend for the year on the equity shares of the Company.

3. Operations:

The sales for the year are Rs.121340.71 lacs compared to Rs.130491.45 lacs in the previous year. The profit for the year (before depreciation) was Rs.3870.76 lacs against a profit of Rs.9294.21 lacs in the previous year. The loss before tax amounted to ‘ (4909.18) lacs as against profit of Rs.2501.30 lacs in the previous year. The loss after provision of current tax / taxes for the year is ‘ (4909.18) lacs against a profit of Rs.2476.30 lacs for previous year and loss after deferred tax was ‘ (2020.16) lacs against profit of Rs.2014.73 lacs for previous year.

4. Exports:

The Company’s exports were of Rs.15291.84 lacs as compared to Rs.16558.91 lacs in the previous year. This decrease in Export Turnover is on account of lower export sale of Synthetic Rutile.

5. Division wise Performance:

a) PVC Division:

The turnover of the division was Rs.54558.22 lacs as compared to Rs.65917.92 lacs in the previous year, a decrease of 17% the turnover of this division is lower compared to previous year, this is due to lower production during first three quarter of the years because of water scarcity being faced at company’s Shupuram Unit, in Southern Tamilnadu, which has faced draught during first three quarters of the year, this has affected the working of this division. The demand for PVC continues to show positive growth. The Government has identified irrigation, power and infrastructure, as thrust areas and increased activity in these sectors are likely to boost demand of PVC Resin.

b) Caustic Soda Division:

The turnover of the division was Rs.40904.17 lacs as compared to Rs.41807.78 lacs in the previous year, an decrease of 2% in the turnover during the year. This is due to lower production during first three quarter of the years because of water scarcity being faced at company’s Shupuram Unit, in Southern Tamilnadu, which has faced draught during first three quarters of the year, this has affected the working of this division.

c) Soda Ash Division:

The turnover of the division was Rs.20736.67 lacs as compared to Rs.19635.00 lacs, an increase of 6% during the year. The turnover of this division has been mainly due to higher production and sales during the year. The demand for the product of this segment is consistent. Also looking to the demand and supply position in coming years and no major new capacities coming up in near future the working of this division is expected to be stable.

d) Synthetic Iron Oxide Pigment:

The turnover of the division was Rs.2595.82 lacs as compared to Rs.3058.99 lacs in the previous year. The product manufactured in this division has taken quite a long time to stabilize. Also this being specialty chemical the validation process was slow and longer. The company is confident of gradually ramping up the capacity and meet product variants as required by the customers. Also as explained above company’s Sahupuram plant which is located in South Tamilnadu, which has faced severe draught during the year due to which the activities of this division had been affected.

The product of the company has been accepted both in the international as well as domestic market and company is developing wider customer base for this product in both the markets. This product is also helping the company to use waste coming out from its Synthetic Rutile (BI) plant to manufacture value added commercial product.

e) C-PVC Division:

The turnover of the division was Rs.2189.12 lacs. This being the first year of operation of this plant the product being specialty chemical, has a longer approval process. The product has been well accepted by the customers and current year the plant has started working at its capacity. Also as explained above company’s Sahupuram plant which is located in South Tamilnadu where this plant is also located has experienced water crisis situation during the first three quarters of the year.

5.1 There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year 2017-18 and the date of this Report.

7. Directors & Key Managerial Personnel

A. Retirement by rotation

In accordance with the provisions of Section 152(6) Mr. Bakul Jain (DIN No.00380256) retires by rotation at the ensuing Annual General Meeting of the Company and being eligible, offer himself for re-appointment. The Board recommends his re-appointment

B. Independent Directors

Shri Sodhsal Singh Dev of Dhrangadhra (Din N. 00682550) expired on 17th September, 2017. Shri D. Ganapathy (Din No. 02707898) resigned from the Board by his letter dated 04/05/2018 due to ill health and personal commitments. The Board has put on record the valuable contributions made by the aforesaid Directors during their tenure.

Shri Pradip Madhavji (Din No.00272161) have been appointed as an Additional Director w.e.f 13/11/2017 and he is also an Independent Director. Shri Kirshnamoorthy Krishnan (Din No. 008129657) has been appointed as an Additional Director w.e.f 22/05/2018 and he is also an Independent Director.

The above Additional Directors hold office till the conclusion of the forthcoming Annual General Meeting and the Company has received notices from members of their intentions to propose Shri Pradip Madhavji and Shri Krishnamoorthy Krishnan as Independent Directors for a period of 5(five) years.

The Independent Directors have submitted the declaration of Independence, as required pursuant to Section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in sub-section (6) and there has been no change in the circumstances which may affect their status as independent directors during the year.

C. Performance Evaluation -

In compliance with the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Performance evaluation of the Board was carried out during the year under review and a structured questionnaire was prepared covering various aspects of the Board’s functioning such as participation, adequate preparation, contribution to strategy and other areas, quality of decision making, high quality of debate with robust and probing discussions etc. The Nomination and Remuneration Committee evaluated the performance of the Directors. Independent Directors at a separate meeting held by them have evaluated the performance of the non-Independent Directors and also evaluated the performance of the chairman taking into consideration the views of Managing Directors. The Board of Directors have also evaluated the performance of its Committees and each of the Independent Directors.

Mr P.K. Jain, Chairman & Managing Director, Mr Bakul Jain, Mr Mudit Jain, Mr Vivek Jain, Managing Directors and Mr Vimal Jain, Chief Financial Officer and Ms. Jigna Karnick, Company Secretory are Key Managerial Personnel under Section 203 of the Companies Act, 2013.

8. Particulars of employees

8.1 The information required under Section 197 of the Companies Act, 2013 and Rule 5 (2) of Companies Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report as Annexure ‘A’.

8.2 Information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are given below:

a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year*

Managing Directors

Ratio to median remuneration

Shri P.K. Jain

4.03

Shri Bakul Jain

4.03

Shri Mudit Jain

4.03

Shri Vivek Jain

4.03

* Managing Directors, to strengthen the finances of the Company, as a gesture of goodwill, waived their salary for the period 1/6/2017 to 31/3/2018. Therefore the remuneration paid to them for the months of April and May, 2017 have been considered for the ratio mentioned above.

* Non Executive and Independent Directors have not been included as they were not paid any commission and the sitting fees paid to them have not been considered as remuneration.

b. The percentage increase in remuneration of each director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial Year.

There was no increase in the Remuneration of Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary in the Financial Year.

c. The percentage increase in the median remuneration of employees in the financial year : 40.90%

d. The number of permanent employees on the rolls of Company : 1790

e. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average increase in remuneration is 40.90% for employees other than Managerial Personnel and there was no increase in the Managerial remuneration.

f. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirm that the remuneration is as per the remuneration policy of the Company.

7. Statutory Auditors

M/s. Chhajed & Doshi, Chartered Accountants (Firm Registration No. 101794W) have been appointed by the shareholders in their Annual General Meeting held on 28/09/2017 as the statutory auditors of the company for a period of 5(five) years i.e. to hold till the conclusion of the 83rd Annual General Meeting.

8. Cost Auditor And Cost Audit Report

Pursuant to Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Amendment Rules 2014 the Board of Directors on the recommendation of the Audit Committee appointed M/s. N.D. Birla & Co., Ahmadabad and M/s. R. Nanabhoy & Co., Mumbai for conducting cost audit of the company’s Soda Ash and Caustic Soda divisions respectively for the financial year 2017-18. They have conducted Cost Audit for the financial year 2017-18 of the respective divisions and will be filing Cost Audit Report with the Central Govt. The remuneration payable to Cost Auditors is required to be determined by the Shareholders at the Annual General Meeting. They have also been appointed to do the cost audit of the said respective divisions for the year 2018-19:

9. Secretarial Auditor and Secretarial Audit Report.

M/s. S. K. Jain & Co., (Proprietor Dr. S. K. Jain) Practicing Company Secretary was appointed to conduct Secretarial Audit of the Company for financial year 2017-18 as required under section 204 of the Companies Act, 2013 and the rules thereunder. The Secretarial Audit report for financial year 2017-18 forms part of the annual report as “Annexure B” to the Boards Report. The said report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

10. Conservation of Energy, Technology and Foreign Exchange.

Information on conservation of energy, technology absorption, foreign exchange earnings and out go, required to be given pursuant to provision of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 is annexed here to marked “Annexure C” and forms part of this report.

11. Public Deposits

The Company has not accepted renewed any amount falling within the purview of provisions of Section 73 of the Companies Act. 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Act is not applicable.

12. Committees of the Board.

The Board has constituted the following mandatory committees viz., Audit Committee, Stakeholders Relationship Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Risk Management Committee and Internal Compliance Committee. The terms of reference of these committees are as required under the provisions of the respective Acts /SEBI (Listing obligations and Disclosure Requirements) 2015 and as determined by the Board. Meeting of each of these committees are convened by the respective Chairman of the Committees and minutes of the meetings of these committees are placed at the Board Meetings. The details of these committees are stated in this Report / Annexures to this Report.

13.1 Corporate Social Responsibility (CSR) Committee

Pursuant to Section 135 of the Companies Act, 2013 and the relevant rules, the Board has constituted the Corporate Social Responsibility (CSR) Committee under the Chairmanship of Shri P. K. Jain, Chairman of the Board . The other members of the Committee are Shri Krishnamoorthy Krishnan, an Independent Director and Mr. Bakul Jain, Managing Director. A detailed CSR Policy has also been framed which is placed on the company’s website. Other details for the CSR activities as required under Section 135 of the Companies Act 2013 are given in the CSR Report at “Annexure D”.

13.2 Internal Compliance Committee.

In terms of the provisions of the Sexual Harassment of Women at Work place (Prevention, Prohibition and Redressal) Act, 2013., the Company has formed Internal Compliance Committees at its Head Office at Mumbai, and its Works at Sahupuram, Tamilnadu and Dhrangadhra, Gujarat. The Board also has approved a policy for prevention of Sexual Harassment at Work place. There were no Complaints filed till date under the said policy.

13.3 Audit Committee.

Audit Committee comprises 3 Independent Directors and Ms. Sujata Rangnekar is the Chairperson of the Committee and other members of the Committee are Shri Pradip Madhavji and Shri Krishnamoorthy Krishnan and they possess sound knowledge on accounts, audit, finance, taxation, Internal Control etc. The details of the composition of the Audit Committee are given in the Corporate Governance Report .

The Company Secretary of the Company acts as Secretary of the Committee.

During the year there are no instances where the Board had not accepted the recommendation of Audit Committee.

13.4 Nomination & Remuneration Committee & Policy

The Company has duly constituted Nomination & Remuneration Committee to align with the requirements prescribed under the provisions of the Companies Act, 2013 and SEBI (Listing obligations and Disclosure Requirements) Regulation 2015.

The details of the Composition of the Nomination & Remuneration Committee are given in the Corporate Governance Report.

The Board has framed a policy for selection and appointment of Directors, Senior Management and their Remuneration. The policy provides for determining qualification, positive attributes, and independence of a Director.

14. Extract of the Annual Return

Pursuant to the provisions of Section 134 (3) (a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended 31st March 2018 made under the provisions of Section 92 (3) of the Act in Form MGT-9 is annexed herewith as Annexure “E”.

15. Details in respect of adequacy of internal financial controls with reference to the financial statements.

A strong internal control culture is pervasive in the company. The Company has implemented a robust and comprehensive internal control system for all the major processes to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources. The internal audit department continuously monitors efficiency of internal controls with objective of providing to the audit committee and the board of directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organizations risk management, controls and governance processes.

Your Company operates in SAP, ERP environment and has its accounting records stored in an electronic form and backed up periodically. The ERP system is configured to ensure that all transactions are integrated seamlessly with the underlying books of account. Your Company has automated processes to ensure accurate and timely updation of various master data in the underlying ERP system.

16. Related Party Transactions:

All the related party transactions are entered on arms length basis and are in compliance with the applicable provisions of the Act and the SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015. All related party transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of all related party transactions is presented before the audit committee on a quarterly basis specifying the nature value and terms and conditions of the transactions.

The Related Party Transactions Policy as approved by the Board is uploaded at the Company’s website.

The details of transaction with Related Party are provided in the accompanying financial statements.

Shri Ashish Jain, Sr. President, Shri Saatvik Jain, Smt. Paulomi Jain and Smt. Malti Bhindi, Presidents who are related to Managing Directors of the Company and hence related parties under Section 2(76)(i) of the Companies Act, 2013 are being re-appointed for a further period of 5 years from the expiry of their present tenure and resolutions for their re-appointment will be included in the notice convening the forth coming Annual General Meeting. They were earlier appointed in the above positions by the shareholders at their 75th Annual General Meeting held on August 13, 2014 and has been discharging their duties since then. Considering the contributions made by them during their present tenure, it is in the interest of the Company that they be re-appointed in the said positions and therefore the Board has recommended their re-appointment.

17. Particulars of loans, guarantees and investments.

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

18. Corporate Governance Report

The report on Corporate Governance is annexed to this report as Annexure “F”.

19. Directors’ Responsibility Statement

In terms of section 134 (3) (c ) of the Companies Act, 2013, your Directors have:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had 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 at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

20. Significant/Material Orders passed by the Regulators

There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.

21. Insurance

All the properties of the Company are adequately insured.

22. Industrial Relations:

The relations between the employees and the management were cordial and an atmosphere of understanding prevailed throughout the year.

23. Acknowledgements

The Board places on record their grateful appreciation for the assistance and co-operation received from the Financial Institutions and the Banks.

For and on behalf of the Board of Directors

P.K. Jain

Chairman & Managing Director

Place: Mumbai

Date: 29th May, 2018

Director’s Report