contents - annual... · 2018. 6. 5. · dscl annual report ‘06-’07 1 registered office dcm...

Contents

Page 1 Corporate Information

2 Notice

5 Chairman’s and Vice Chairman’s Statement

6 Board of Directors

8 Senior Executive Team

9 Our Businesses

10 Core Values

11 Financial Highlights

12 Management Discussion and Analysis

26 Corporate Social Responsibility

27 Directors’ Report

34 Corporate Governance Report

40 Financial Statements

DSCL IFC.p65 7/19/2007, 3:28 PM2-3

DSCL ANNUAL REPORT ‘06-’07 1

Registered Office DCM Shriram Consolidated Limited

6th Floor, Kanchenjunga Building,

18, Barakhamba Road,

New Delhi – 110 001.

Tel. No. : (91) 11-23316801

Fax No. : (91) 11-23318072

E.mail : [email protected]

Bankers Punjab National Bank

State Bank of India

Bank of Baroda

Oriental Bank of Commerce

Auditors M/s. A.F. Ferguson & Co.,

New Delhi

Stock Exchanges where the Securities of the Company are Listed

National Stock Exchange of India Ltd.,Exchange Plaza, 5th Floor,Plot No. C/1, G Block, Bandra-Kurla Complex,Bandra (East), Mumbai-400 051.

Bombay Stock Exchange Ltd.,Phiroze Jeejeebhoy Towers,Dalal Street, Mumbai-400 001.

(It is confirmed that annual listing fee has been paid by the Company to the above Stock Exchanges.)

Corporate Information

Subsidiary Companies DCM Shriram Credit and Investments Limited

DSCL Energy Services Company Limited

DCM Shriram International Limited

DCM Shriram Infrastructure Limited

Anant Thermal Energy Limited

Shriram Bioseed Genetics India Limited

Shriram Bioseed (Thailand) Limited

Bioseeds Limited

Bioseed Research Vietnam

Bioseed Genetics Vietnam

Bioseed Research Philippines Inc.

Bioseed Research India Private Limited

DCM Shriram Aqua Foods Limited

DSCL-1.p65 7/27/2007, 9:03 AM1


NoticeREGISTERED OFFICE:

6th Floor, Kanchenjunga Building,

18, Barakhamba Road, New Delhi.

01

Notice is hereby given that the Eighteenth Annual General Meeting of DCM Shriram Consolidated Limited will beheld on Friday, the 24th August, 2007 at 10.00 A.M. at Air Force Auditorium, Subroto Park, New Delhi to transactthe following business:

Ordinary Business:

1. To consider and adopt the Directors’ Report, the audited Balance Sheet of the Company as at 31st March, 2007and the Profit and Loss Account for the year ended on that date.

2. To declare dividend on Equity Shares.

3. To appoint a Director in place of Shri Ajit S. Shriram who retires by rotation and being eligible offers himself forre-appointment.

4. To appoint a Director in place of Shri Pradeep Dinodia who retires by rotation and being eligible offers himselffor re-appointment.

5. To appoint a Director in place of Shri S.L. Mohan who retires by rotation and being eligible offers himself forre-appointment.

6. To appoint M/s. A.F. Ferguson & Co., Chartered Accountants, as auditors of the Company and to fix theirremuneration.

Special Business:

7. To consider and, if thought fit, to pass, with or without modification(s), the following Resolution as an OrdinaryResolution:

“Resolved that pursuant to Section 293(1)(a) and other applicable provisions, if any, of the Companies Act,1956 and subject to such consents and approvals as may be necessary, the Board of Directors of the Companyor a duly constituted Committee thereof be and is hereby authorised to mortgage and/or charge all or any of thepresent and future movable and immovable properties of the Company, situated at DSCL Sugar-Ajbapur, DistrictLakhimpur Kheri, U.P., unit of the Company, together with all buildings and structures thereon and all plants andmachineries attached to the earth both present and future and the whole of the undertaking of the Companyrelating to the said unit together with the power to take over the management of the business and concernand/or undertaking of the Company relating to the aforesaid unit in certain events of default for the purposeof securing the financial assistance from Sugar Development Fund, Ministry of Food & Civil Supply, Governmentof India for Rs.26.64 Crores together with interest, additional interest, further interest, liquidated damages,compound interest, premia on prepayment, costs, charges, expenses and all other monies payable by theCompany and that such mortgage(s)/charge(s) shall rank pari passu with similar mortgage(s) and charge(s)created/to be created by the Company to secure the financial facilities/borrowings availed or to be availed bythe Company from Financial Institution(s)/Bank(s)/Body(ies) Corporate.

Resolved further that the mortgage(s)/charge(s) created or to be created and/or all agreements/documents executedor to be executed and all acts done or to be done in terms of the above Resolution by and with the authority of theBoard of Directors or a duly constituted Committee thereof be and are hereby confirmed and ratified.

Resolved further that the Board of Directors or a duly constituted Committee thereof be and is hereby authorisedto finalise the documents to secure the facilities/borrowings as aforesaid and to do all such acts, deeds, mattersand things as may be necessary, desirable, expedient for implementing the above Resolution and to resolve anyquestion or difficulty which may arise in relation thereto, or otherwise considered by the Board of Directors ora duly constituted Committee thereof to be in the best interest of the Company.”

By Order of the Board

New Delhi (V.P. AGARWAL)29th June, 2007 Company Secretary

DSCL-1.p65 7/27/2007, 9:03 AM2


Notes:

1. The relevant Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 is annexedhereto.

2. A Member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself andthe proxy need not be a Member of the Company. A Proxy Form is sent herewith.

3. The Share Transfer Books and the Register of Members of the Company will remain closed from 10th August,2007 to 17th August, 2007 (both days inclusive).

4. Members who are holding shares in identical names in more than one folio are requested to write to M/s. MCSLtd., the Registrar and Transfer Agent (RTA), Srivenkatesh Bhavan, W-40, Okhla Industrial Area, Phase-II,New Delhi-110 020, enclosing their Share Certificate(s) to enable the Company to consolidate their holding inone folio.

5. Members are requested to notify immediately any change in their address to M/s. MCS Ltd., RTA, quoting theirfolio numbers.

6. Pursuant to Section 205A of the Companies Act, 1956, the dividends upto the financial year 1994-95 whichremained unpaid/unclaimed had been transferred to the General Revenue Account of the Central Government.The Members, who have not claimed their dividend for the said period so far may claim the amount from theRegistrar of Companies, NCT of Delhi and Haryana, 4th Floor, IFCI Tower, 61 Nehru Place, New Delhi.

Pursuant to the amended provisions of Section 205A of the Companies Act, 1956, which came into effectw.e.f. 31.10.1998, the Company is obliged to transfer any amount lying in the unpaid dividend account whichremains unpaid or unclaimed for a period of 7 years from the date of such transfer to the unpaid account to thecredit of Investor Education and Protection Fund (the Fund). The Company has already transferred the unpaiddividend for the financial year 1998-99 to the Fund.

Please note that no claim shall lie against the Company or the Fund in respect of individual amounts ofdividend, once the same is transferred to the Fund. In view of this, the Members of the Company who have notyet encashed their dividend warrant(s) for the financial year ended 31.3.2000 and thereafter may write to theCompany immediately.

7. In terms of Section 109A of the Companies Act, 1956, the Member(s) of the Company may nominate a personon whom the Shares held by him/them shall vest in the event of his/their death. Member(s) desirous of availingthis facility may submit nomination in Form 2B.

8. In terms of Notification issued by the Securities and Exchange Board of India, Equity Shares of the Companyare under compulsory demat trading by all investors w.e.f. 21st March, 2000. Members are, therefore, advisedto dematerialise their shareholding to avoid inconvenience in future.

9. Appointment/Re-appointment of Directors

At the ensuing Annual General Meeting Shri Ajit S. Shriram, Shri Pradeep Dinodia and Shri S.L. Mohan,Directors, retire by rotation and being eligible offer themselves for re-appointment. The information, as required

DSCL-1.p65 7/27/2007, 9:03 AM3


Name of the Director Shri Ajit S. Shriram Shri Pradeep Dinodia Shri S.L. Mohan

Date of Birth 03.10.1967 02.12.1953 10.02.1945

Nationality Indian Indian Indian

Date of Appointment on 02.05.2001 18.07.1994 24.10.2000

the Board of the Company

Qualification B.Com, M.B.A. B.A. (Eco. Hons.), LL.B., F.C.A. B.E. (Mech.)

Expertise in Functional Area Sugar Industry Corporate Matters, Legal, FEMA, Insurance Industry

Company Law, Accounting and

Direct Taxes

Directorships held in other - DCM Shriram Credit and Investments Ltd. - Hero Honda Motors Ltd. NIL

Indian Companies - DCM Shriram Infrastructure Ltd. - Shriram Pistons & Rings Ltd.

- DCM Shriram International Ltd. - Ultima Finvest Ltd.

- DSCL Energy Services Company Ltd. - DFM Foods Ltd.

- Hariyali Kisaan Bazaar Ltd. - Hero Corporate Service Ltd.

- Anant Thermal Energy Ltd. - Manisha Commercial Ltd.

- Sera Com Pvt. Ltd.

- Shriram Holographics Pvt. Ltd.

- Micromatic Grinding Technology Ltd.

- Rajasthan Spinning & Weaving Mills Ltd.

- Sarva Commercial Pvt. Ltd.

- Shabnam Commercial Pvt. Ltd.

- Panasonic Sales & Services India Pvt. Ltd.

- SPR International Auto Exports Ltd.

Chairman/Member of the NIL Chairman NIL

Committee(s) of the Board of - Shareholders/Investors Grievance Committee

Directors of the Company

Member

- Audit Committee

- Remuneration Committee

Chairman/Member of the Member Chairman NIL

Committee(s) of the Board of Audit Committee Audit Committee

Directors of other - DCM Shriram Credit and Investments Ltd. - DFM Foods Ltd.

Companies in which he is - Hero Honda Motors Ltd.

a Director - Hero Corporate Service Ltd.

- Panasonic Sales & Services India Pvt. Ltd.

Member

Shareholders/Investors Grievance Committee

- Hero Honda Motors Ltd.

Number of shares held in Not Applicable 29,270 NIL

the Company

EXPLANATORY STATEMENT

(Pursuant to Section 173(2) of the Companies Act, 1956)

ITEM NO. 7

The Company has availed financial assistance from Sugar Development Fund, Ministry of Food & Civil Supply, Government of

India as detailed in the Resolution. The terms and conditions for availing the said financial assistance, inter-alia, provide for

creation of security by way of mortgage/charge on immovable properties and by way of hypothecation of movable assets of the

Company situated at DSCL Sugar, Ajbapur, District Lakhimpur Kheri, U.P. in the manner desired by the lenders and agreed to by

the Company. The creation of mortgage/charge requires approval of the Members under Section 293(1)(a) of the Companies

Act, 1956.

None of the Directors is concerned or interested in the Resolution.

under the Listing Agreement, in relation to the aforesaid Directors is as under:

DSCL-1.p65 7/27/2007, 9:03 AM4


Dear Friends,

The year 2006-07 has been a year of satisfactory progress

for your company. We have completed the investment

programme for 2004-07 involving project expenditure of about

Rs. 1085 crs. in Chloro-Vinyl and Sugar businesses. All these

projects stabilised during the year and achieved the planned

operating performance. The company has taken up another

investment of Rs. 300 crs. in its Chlor-Alkali business to be

completed by Q1’2008-09. This will help in substantial

improvement in the competitive position of our Bharuch

(Gujarat) operations and provide volume growth.

From the Chairman and Vice Chairman’s desk

DSCL continues to move ahead

with further strengthening of its

competitive position and building

for sustained growth in the future

During the year, we have further accelerated the growth in

our newer businesses – Hariyali Kisaan Bazaar and Fenesta

Building Systems.

Hariyali, our rural retail offering, has added 57 new outlets

during the period to reach a total of 85 outlets as of June,

07. We are planning to expand to ~ 250 outlets by Dec, 08

covering the northern, central and southern states. The

offerings from these outlets are also being expanded

continuously to meet the farming and family needs of the

rural population.

‘Fenesta’ has now expanded its network pan-India and is

growing across all regions. We continue to expand and

strengthen our product delivery capabilities to provide superior

value to our customers. Our aim is to make ‘Fenesta’ a

synonym for UPVC Windows in the country.

Sugar and imported Bulk Fertilizer businesses recorded sharp

reversals in business conditions during the year and affected

the financial results of your company quite adversely. We

have decided to stop trading in imported bulk fertilizer for

the time being. Sugar, we believe, is fundamentally a good

business and DSCL enjoys a strong competitive position in

the same. Our company’s philosophy of having a portfolio

approach to commodity businesses will enable us to

successfully ride the cycles in individual commodities, as is

being seen in the case of sugar presently.

Strong processes and systems are an essential requirement

in a large multi-business company like ours. Based on the

inputs and advice from experts in their relevant fields, we

have taken steps to strengthen our processes in the area of

performance management and governance, risk management

and compliance and basic business and transaction

processing.

Human resources continues to be a priority area for us.

Attracting and nurturing the best human resources to meet

future challenges is receiving our fullest attention.

We believe that our basic business model is strong and will

deliver superior performance based on integration and strong

competitive position.

With best wishes,

(VIKRAM S. SHRIRAM) (AJAY S. SHRIRAM)Vice Chairman & Chairman &

Managing Director Sr. Managing Director

02

DSCL-1.p65 7/27/2007, 9:03 AM5


Board of Directors

03

Shri Ajay S. Shriram

Chairman & Senior Managing Director

Shri Vikram S. Shriram

Vice Chairman & Managing Director

Shri Rajiv Sinha

Dy. Managing Director

Shri Ajit S. Shriram

Director (Sugar)

Dr. S.S. Baijal

Shri Arun Bharat Ram

Shri Pradeep Dinodia

Shri Vimal Bhandari

Shri Sunil Kant Munjal

Shri D. Sengupta

Shri S.L. Mohan

GIC Nominee

Shri S.C. Bhargava

LIC Nominee

Company Secretary Shri V.P. Agarwal

Audit Committee Dr. S.S. Baijal

Chairman

Shri Arun Bharat Ram

Shri Pradeep Dinodia

Shri D. Sengupta

DSCL-1.p65 7/27/2007, 9:03 AM6


Brief Profile of Directors of the Company

Shri Ajay S. Shriram, Chairman & Senior Managing Director, is a Director of the Company since 24.7.1989. Hegraduated in Commerce from Sydenham College, University of Mumbai and later attended the Programme forManagement Development at the Harvard Business School, U.S.A. He is a Member of the Shareholders/InvestorsGrievance Committee of the Company.

Shri Vikram S. Shriram, Vice Chairman & Managing Director, is a Director of the Company since 22.5.1990. Hegraduated in Commerce with Honours from St. Xavier’s College, Calcutta and is a Member of the Institute ofChartered Accountants of India. He is a Member of the Shareholders/Investors Grievance Committee of the Company.

Shri Rajiv Sinha, Deputy Managing Director, joined the Company in 1972 as a Management Trainee after graduatingfrom IIT, Kanpur in Mechanical Engineering. Later, he attended the Executive Development Programme at theStanford University, U.S.A.

Shri Ajit S. Shriram, Director (Sugar), joined the Company in 1991 as an Executive after graduating in Commercefrom Osmania University, Hyderabad. Later, he obtained an M.B.A. Degree from the International Institute forManagement Development, Switzerland.

Dr. S.S. Baijal is a Non-Executive Director of the Company since 22.5.1990. He retired as the Chairman of ICICompanies in India in 1987. He holds B.Sc., M.Sc., D. Phil Degrees. He is Chairman of the Board Audit Committeeand a Member of the Shareholders/Investors Grievance Committee of the Company.

Shri Arun Bharat Ram is a Non-Executive Director of the Company since 22.5.1990. He is Chairman and ManagingDirector of SRF Ltd. He graduated in Industrial Engineering from the University of Michigan, U.S.A. He is a Memberof the Board Audit Committee of the Company.

Shri Pradeep Dinodia is a Non-Executive Director of the Company since 18.7.1994. He graduated in Economicswith Honours from St. Stephens College, Delhi University and obtained his Law Degree from the same University.He is a member of the Institute of Chartered Accountants of India. He is Chairman of the Shareholders/InvestorsGrievance Committee and a Member of the Board Audit Committee of the Company.

Shri Vimal Bhandari is a Non-Executive Director of the Company since 13.5.2003. He graduated in Commerce fromSydenham College, University of Mumbai and is a Member of the Institute of Chartered Accountants of India. Heis currently serving as Country Head – India for AEGON N.V.

Shri Sunil Kant Munjal is a Non-Executive Director of the Company since 13.5.2003. He is Managing Director ofHero Cycles Limited and Chairman and Managing Director of Hero Management Service Limited and Chairman ofHero Corporate Service Limited. He is a Commerce Graduate from Delhi University and has training in MechanicalEngineering.

Shri D. Sengupta is a Non-Executive Director of the Company since 11.8.2003. He retired as Chairman of GeneralInsurance Corporation of India in June, 2002. He is a Bachelor of Science in Physics and holds Post GraduateDiploma in Marketing from FMS, Delhi University. He is a Member of the Board Audit Committee of the Company.

Shri S.L. Mohan, a nominee of General Insurance Corporation of India, is a Non-Executive Director of the Companysince 24.10.2000. He retired as Chairman & Managing Director of Oriental Insurance Company Ltd. in February,2005. He is B.E. (Mechanical) from Punjab University, Chandigarh.

Shri S.C. Bhargava, a nominee of Life Insurance Corporation of India (LIC), is a Non-Executive Director of theCompany since 11.8.2004. He retired as Executive Director (Investment) of LIC in July, 2005. He is a CommerceGraduate from University of Mumbai and a Member of the Institute of Chartered Accountants of India.

DSCL-1.p65 7/27/2007, 9:03 AM7


The Company is organized into strategic business units managed by professional managers. The DSCL managementteam has a strong, credible image in the industry. The key members of the DSCL executive team are listed below:

Mr Ajay S ShriramChairman & Senior Managing Director

Mr Vikram S ShriramVice Chairman & Managing Director

Mr Rajiv SinhaDy. Managing Director

Mr Ajit S ShriramDirector (Sugar Business)

Mr S D OmcharyChief Executive Director (Textiles & Real Estate Development)

Mr S K AgrawalSenior Executive Director - Chemicals Business

Mr K K KaulExecutive Director & Resident Head - Kota

Mr Sunil RadhakrishnaExecutive Director- Sugar Business

Dr G C Datta RoyChief Executive - Energy Business

Mr Sovan ChakrabartyPresident & Business Head - Agri Inputs

Mr Rajesh GuptaPresident and Business Head - “Hariyali”

Mr Rajat MukerjeiSenior Vice President and SBU Head - Plastics

Mr Sandeep MathurSenior Vice President & Business Head - FenestaTM Building Systems

Mr J K JainChief Financial Officer (CFO)

Dr G MukhopadhyayVice President & Business Head - Shriram PolyTech

Mr Sushil BavejaHead-Corporate HR

Mr V P AgarwalCompany Secretary

Dr Sharad SharmaPresident - Shriram Bioseed Genetics India Ltd.

Senior Executive Team

04

DSCL-1.p65 7/27/2007, 9:03 AM8


Our Businesses

1. Chloro-Vinyl business:

• Chemicals Business: This comprises of Caustic Soda (Lye and flakes), Chlorine (Liquid and Gaseous) and

associated chemicals including hydrochloric acid, stable bleaching powder, compressed hydrogen and

sodium hypochlorite. The company has two manufacturing facilities located at Kota (Rajasthan) and Bharuch

(Gujarat) with full captive power. It is increasing the capacity of its chlor-alkali manufacturing facility at

Bharuch from 200 TPD to 360 TPD and also setting up a 48 MW coal based power plant in replacement

of the existing 24MW furnace oil based power plant to generate economical power at Bharuch.

• Plastics Business: This is highly integrated, covering manufacture of PVC resins and Calcium Carbide, PVC

Compounds and UPVC Fenesta Windows (a consumer product). The company is able to capture value at

each stage of the entire value chain.

i. PVC Resin is fully integrated with captive production of acetylene, chlorine and coal based power,

located at Kota.

ii. PVC Compounds of which DSCL is the largest manufacturer is backed by an Innovative Polymer

application development centre (iPAC) at Gurgaon, India.

iii. The Cement business, located at Kota is based on waste generated from the Calcium carbide production

process.

iv. Fenesta Building Systems manufactures UPVC windows (Un-Plasticized PVC) and door systems under

the brand “Fenesta”. It offers complete solutions right from design, fabrication to installation at the

customer’s site.

2. Agri-Business:

i. Urea: DSCL has the country’s lowest cost naphtha based urea plant with a capacity of 3.79 lakh T.P.A.,

located at its integrated manufacturing facility at Kota. DSCL is one of India’s oldest manufacturers of

Urea. The Company carried out the conversion of its plant to enable use of LNG in place of Naphtha with

the objective of further improving costs.

ii. Sugar: DSCL’s sugar business comprises of 4 facilities with a combined capacity of 33,000 tcd in Central

U.P.The expansion from 14,000 tcd to 33,000 tcd was carried out in the 2006-07 sugar season along

with expansion in co-gen power capacity from 24 MW to 70.5 MW.

iii. Hariyali Kisaan Bazaar: It is a one stop solution to the multiple needs of the rural communities (both

farming and family needs). Currently we have 70 such outlets in operation,which we plan to rapidly scale

up going forward.

iv. The Agri-Inputs business: This business provides total agri-inputs to farmer community by marketing a

range of fertilizers, micro-nutrients, hybrid seeds, pesticides etc through its existing distribution network.

In view of unfavorable government policy,the company has reduced its trading operations going forward.

v. Seeds: DSCL offers a range of hybrid seeds in the country through its 51% subsidiary Shriram Bioseed

Genetics India Ltd. The company also operates its seeds business in Vietnam, Thailand and Phillippines

also via joint venture.

3. Other Businesses:

i. Textiles: The Company has a small textile operation in the form of 8,880 spindles spining unit at Tonk in

Rajasthan, which is being increased to 12,144 spindles.

ii. Energy Services (ESCO): This business assists energy users (industrial, institutional, commercial users) in

achieving efficiency in energy usage, provides engineering at project management services for biomass/

conventional fuel based power plants.

05

DSCL-9.p65 7/27/2007, 9:03 AM9


Core values and beliefs

DSCL’s core values and beliefs are a reflection of its commitment to build a world class,

learning organisation, to excel and win in all its endeavours:

Customer Focus

• Be sensitive to the needs of the customer; develop superior customer insight

• Commitment to surpass expectations and deliver superior value

Innovation and Excellence

• Think differently and promote creativity

• Make continuous improvement a way of life; drive excellence

People Development

• Continuously improve and upgrade the skills and competencies of our people

• Support people to realise their potential

Team work

• Work closely as a cohesive, well-knit team

• Inculcate a spirit of openness and collaboration

Relationships and Human Dignity

• Value people and partnerships

• Nurture understanding, compassion, trust and respect in all relationships

Social Responsibility and Ethics

• Be a socially responsible corporate, addressing the needs of the community and environment

• Conduct business ethically

• Maintain highest standards of personal integrity

06

DSCL-9.p65 7/27/2007, 9:03 AM10


Financial Highlights

(Rs. Crores)


2000 2001 2002 2003 2004 2005 2006 2007

Gross Sales 934.6 1055.4 1180.9 1376.0 1556.6 1977.4 2535.8 2938.2

Net Sales

- Own Products 777.3 826.0 828.1 1059.7 1182.7 1404.7 1788.9 2063.3

- Traded 87.8 156.8 280.4 235.0 280.7 464.2 603.0 704.1

- Total 865.1 982.8 1108.5 1294.7 1463.4 1868.9 2391.9 2767.4

PBDIT 132.7 156.1 143.7 187.2 201.3 235.3 295.1 239.6

Interest 62.2 66.5 65.4 61.9 42.1 34.7 49.4 79.1

PBDT 70.5 89.6 78.3 125.3 159.2 200.6 245.7 160.5

Depreciation & Misc. exp. w/off 40.8 44.5 47.4 54.8 55.2 57.3 73.2 93.4

PBT 29.7 45.1 30.9 70.5 104.0 114.8 172.5 67.1

Profit after Current Tax 29.5 41.3 28.5 58.7 95.7 93.6 153.2 66.8

Profit after Deferred Tax 29.5 41.3 11.2 52.7 75.6 107.7 121.0 43.4

Cash Profit 66.3 79.8 44.8 104.6 150.9 162.8 226.6 160.2

Total Funds Employed/ Utilised 864.5 895.5 884.7 915.9 920.7 1259.2 1775.0 2288.8

Share Capital - Equity 16.7 16.7 16.7 16.7 16.7 16.7 33.3 33.3

- Preference 25.0 5.0

Net Worth 295.1 324.9 227.3 272.5 333.0 443.2 525.5 554.1

Minority Interest 10.2 12.0 14.9 17.7 17.4

Deferred Tax liability 84.6 89.5 109.5 95.4 146.7 170.1

Long term loans 410.4 419.3 401.8 403.0 344.7 504.7 740.2 789.5

Short term loans 134.0 146.2 171.0 140.8 121.5 201.1 344.9 757.7

Net Fixed Assets 565.6 594.6 592.5 652.1 652.8 870.0 1272.5 1780.8

Net Current Assets 259.6 259.7 276.1 256.9 260.1 356.2 490.9 498.9

Investments 29.6 33.3 7.1 6.4 7.7 33.0 11.7 9.1

Misc. Exp. (to the extent not written off) 9.8 9.9 9.0 0.5

Earnings per share (Rs.) * 1.6 2.3 0.7 3.2 4.4 6.3 7.1 2.6

Dividend per share (Rs.)* 0.8 0.9 0.9 0.9 1.2 1.6 0.9 0.8

– *On face value of Rs. 2 per share Post Bonus and Split of shares in 2006

– Profits for the year 2002 are before exceptional items of Rs. 29.8 crores

Ratios

2000 2001 2002 2003 2004 2005 2006 2007

Return on Net Worth 10.0 12.8 5.0 19.4 22.8 24.3 23.0 7.8

Return on Capital Employed 13.4 15.8 14.5 18.1 20.2 21.6 18.7 10.3

Operating Margin 17.1 18.9 17.4 17.7 17.0 16.8 16.5 11.6

Capital Employed turnover ratio 1.1 1.2 1.2 1.4 1.6 1.6 1.5 1.5

Interest to Net Sales % 8.0 8.1 7.9 5.8 3.6 2.5 2.8 3.8

PAT to Net Sales % 3.8 5.0 1.4 5.0 6.4 7.7 6.8 2.1

Long term Debt/PBDIT 3.1 2.7 2.8 2.2 1.7 2.1 2.5 3.3

Long term Debt/Net Worth 1.4 1.3 1.8 1.5 1.0 1.1 1.4 1.4

Total Debt/Net Worth 1.9 1.7 2.5 2.0 1.4 1.6 2.1 2.8

Total Outside Liabilities/Net Worth 2.3 2.1 3.2 2.5 2.3 2.5 3.2 4.4

Interest Cover 2.1 2.3 2.2 3.0 4.8 6.8 6.0 3.0

– Net Sales for above purposes is for own products only

– Drop in PAT & Net worth related ratios in 2002 due to deferred tax provisioning.

07

DSCL-9.p65 7/27/2007, 9:03 AM11


Management Discussion and Analysis

08

Performance Overview

The key highlights of the financial year 2006-2007 are

as follows :-

• Gross turnover of Rs.2872 Crores, an increase of

16% over last year

• Operating profits at Rs.236.2 Crores as against

Rs.283.7 Crores last year

• PAT declined from Rs.115.2 Crores to Rs.45.8

Crores

• Sugar and Imported fertilizers(Traded) facing very

adverse business conditions

• Volume growth registered in businesses of

Chemicals,Plastics,Hariyali and Fenesta

• Completion and stabilization of capacity expansions

in PVC(175 tpd to 200 tpd) and Sugar(14,000 tcd

to 33,000 tcd) along with co-gen power (24 mw

to 70.5 mw)

• Conversion of Urea plant to LNG-based feedstock,

much ahead of the stipulated government deadline

• 42 new outlets added in Hariyali Kisaan Bazaar

taking total number of outlets to 70 as on 31st

March,07

• Fenesta Building Systems order book reaches 3.12

lac windows,registering a growth of 170% over

last year

Business-wise performance review and

outlook

DSCL's business portfolio includes extensive and

growing presence across the entire Agri and Chloro-

vinyl value chain.Leveraging the strengths of diverse

yet integrated businesses enables us to overcome the

cyclical effect of individual commodity businesses, and

improves our cost structures and competitiveness.

The business portfolio of the company can be broadly

divided into two categories:

1) Chloro-Vinyl Businesses

2) Agri businesses

1) Chloro-Vinyl Businesses-The chloro vinyl businesses

comprise of the following:

• Chemicals

The chemicals business comprises of Caustic

Soda,Chlorine and value added chemicals.

• Plastics

The plastics segment endeavors to capture

value at each stage of the entire value chain. It

comprises of:

� PVC Resins includes manufacture of PVC

resins and Calcium Carbide through the

acetylene route.

� PVC Compounds which are intermediate

knowledge based products manufactured

using PVC resins as input.

� Fenesta Building Systems manufactures

UPVC based windows and doors and

provides end to end solution from profile

extrusion to window installation.

2) Agri businesses-The agri-based businesses of the

company comprise of:

• Urea

With a capacity of 3.79 lac tpa, the company

now has the ability to operate the plant on LNG

or Naphtha as feedstock

• Agri-Inputs

The business markets various products like

fertilizers, micro-nutrients, hybrid seeds, and

pesticides etc.to provide all agri-inputs of high

quality through the same channel.

• Sugar

Comprises of four sugar manufacturing facilities

in Central U.P. having a total capacity of 33,000

tcd along with co-generation of power of 70.5

mw for captive use as well as export.

• Hariyali Kisaan Bazaar

The pioneering rural retail initiative which aims

to provide a one-stop solution to all the needs

of the rural population has spread to 70 stores

across six states.

Apart from the above mentioned businesses, your

company has cement,textiles,and energy services as

other businesses.

DSCL-12.p65 7/27/2007, 9:03 AM12


Chloro- Vinyl Businesses

Chemicals

DSCL, which became the second largest chlor-alkali

producer during the year,is amongst the lowest cost

manufacturers of Chlor-alkali in India. The Company has

manufacturing facilities at Kota (Rajasthan) and Bharuch

(Gujarat). The total capacity for Chlor-alkali is 1,76,250

TPA which is being expanded to 2,27,750 TPA through

a capacity expansion plan at the Bharuch facility.

The chemicals business is energy intensive in nature

and both our plants have full access to captive

power.Both the plants are based on the cost efficient

and environment friendly membrane cell technology.

The product portfolio of chemicals business comprises

of Caustic Soda, Chlorine (more than 1/3rd of which is

used captively in production of PVC and other

chemicals) and other value added products viz.stable

bleaching powder, hydrochloric acid, compressed

hydrogen and sodium hypochlorite. Caustic Soda

produced is sold entirely in the market. After internal

consumption, the balance Chlorine produced is sold

through pipelines to dedicated customers and through

tonners in the merchant market.

The contribution of the business to total Revenue, PBIT

and Capital Employed for FY 2007 is as follows:

Particulars Amount % of Total

Rs./Crores

Sales 347.5 12.9

PBIT 117.8 64.3

Capital Employed 380.4 17.5

Industry Background

The Chlor-alkali industry is amongst the twenty largest

chemical industries globally, manufacturing Caustic

Soda and Chlorine (co-products) which serve as

intermediate products for several downstream

industries. The distinguishing feature of the industry is

its co-product nature and its inverse product price cycles

generally.

Caustic Soda finds its application across a wide range

of industries like aluminium, paper, dyestuffs, soaps

and detergents, textiles, pharmaceuticals, etc. while

Chlorine is increasingly being sought in industries like

PVC, organic chemicals, inorganic chemicals,

pesticides, water treatment, etc.

Global Scenario

The global Chlor-alkali industry has been growing at a

steady pace both for Caustic Soda and Chlorine

respectively. The demand for chlorine, which is the

growth driver for the Chlor-alkali industry globally, is

being driven by healthy growth in the PVC industry

while rapid pace of growth in alumina industry is

accounting for a major portion of the increase in demand

for Caustic Soda.

The ECU prices which had witnessed a correction last

year, continued the softening trend during 06-

07.However, the prices seem to have stabilized at lower

levels now. Going forward, stable demand growth is

expected to keep the realizations healthy in the medium

term.

Domestic Scenario

The Indian chlor-alkali industry has a combined installed

capacity of 2.51 million tonne.The industry has about

35 operating manufacturers and top three

manufacturers constitute about 31% of the total

installed capacity.The industry differs in terms of

vintage, technology and levels of forward and backward

linkages.

The total demand for caustic soda and chlorine in the

country is approximately 2.07 million tonne and 1.73

million tonne respectively, growing in line with the GDP

growth rate.The demand is met primarily through

domestic production with limited quantity of

imports.Meanwhile,the customs duty for imports has

been reduced further to 7.5% in the current budget.

The industry has been witnessing healthy demand

growth of 6-7% p.a. and capacity utilization of over

80% since 2004.The domestic ECU prices which had

begun correcting after reaching a peak in Q1'06

continued to soften during 06-07, mirroring

international price trend. Further, capacity additions to

the tune of approx. 2 lac tonne (~10%) in the current

year by domestic players exerted pressure on

realizations.Going forward, strong domestic GDP

growth is expected to generate heathy demand and

drive the growth of the industry.

DSCL-12.p65 7/27/2007, 9:03 AM13


Product Volume (MT) Realization (Rs. / MT)*

FY2007 171,160 18,621

FY2006 147,880 20,529

% Shift 15.74% (9.29) %

*Average for Kota and Bharuch facilities

The chemicals business reported stable revenue growth

and earnings performance for the year under review

During the year, this division recorded a revenue growth

of 7% due to volume growth of ~16%. However,the

realizations were lower by ~9%.The expanded

capacities at Kota became fully operational,enabling

the Company report higher volumes during the year.

The operating margin witnessed pressure primarily due

to correction in ECU realizations.Also, the Bharuch

facility witnessed cost pressures on account of increase

in furnace oil prices (input for captive power at Bharuch)

which dented profitability during the year.

Our Strategy

It is our constant endeavor to improve cost

competitiveness and scale. Towards this, the Company

is implementing a capacity expansion of 51,500 TPA

at its Bharuch plant which will take the total capacity

to 2,27,750 TPA. Further, we are also setting up a 48

MW coal-based power plant to cater to the energy

needs of the present as well as enhanced capacity.

The cost-efficient thermal power plant will ease the

Business Performance cost pressures that the Bharuch facility had been

witnessing on account of high furnace oil prices.The

expansion is expected to be completed in Q1 of FY'09.

Strategic sourcing of key raw materials like salt and

barium carbonate will reduce our costs further.

Plastics

The plastics business constitutes the second leg of

our chloro-vinyl businesses.The business has a high

degree of integration which captures the entire value

chain starting from PVC resins( a commodity product)

to PVC compounds(an intermediate knowledge based

product) and finally to,Fenesta Building Systems (a

UPVC based high end consumer product).

PVC Resin and Calcium Carbide

DSCL has its PVC manufacturing facility located at its

integrated complex at Kota.The Company completed

expansion of its facility in H1'07 taking its total capacity

to 70,000 TPA.

The process is based on the carbide/acetylene route

with captive production of entire acetylene and chlorine

requirements. This process gives the Company Calcium

Carbide as an intermediate saleable product which gives

us unique product mix swing capabilities and ensures

that our cost structure is not exposed to the volatility

of the petro-chem cycle. The plant has full access to

the captive thermal power plant at Kota to meet its

energy requirements.

The company possesses technology and capability to

produce multiple grades of PVC resin including

specialized grades for special industrial applications.


and Capital Employed for FY 2007 stands as follows:

Particulars Amount % to TotalRs./Crores

Sales 337.7 12.5

PBIT 63.9 34.9


Industry Background

PVC (Poly-vinyl chloride) is the third largest polymer

globally and finds its application across a range of

industries. It is used as an input in the production of

pipes & fittings, films & sheets, wires & cables,

DSCL-12.p65 7/27/2007, 9:03 AM14


footwear and is also increasingly being sought for

advanced applications in sectors like healthcare, food

packaging, automotive etc.

The global PVC industry differs primarily on the basis

of feedstock and process. Majority of the global

capacity is based on ethylene (a crude oil by-product),

while the rest,primarily is based on the carbide/

acetylene route with different degree of forward and

backward linkages.

Global Scenario

The global PVC industry is expected to grow @ 3.6%

CAGR for the next five years (Source:Global PVC

Conference).In terms of regional dynamics,Asia is

expected to account for a major share of the increase

in demand.

PVC prices after touching a peak in Oct,04 had

witnessed a volatile trend last year which continued

through 06-07.However,prices on an average were

better than 2005-06.Going forward, the prices of PVC

is expected to remain reasonably stable on the back

of healthy demand growth.

Domestic Scenario

The Indian PVC industry has a total installed capacity

of 1.07 Million tonne.The industry structure is

consolidated with a few large players dominating the

market.All the industry players manufacture PVC based

on ethylene route except DSCL which is based on the

carbide/acetylene route.

PVC resin being one of the basic polymers, finds wide

application in pipes and fittings (used for irrigation

and construction), cables and profiles. PVC usage in

other areas i.e. automobiles, medical, and packaging

is also on the rise. Newer sectors constituting its

application in aesthetic products like door and window

profiles are gaining momentum.

India has been registering modest average growth in

PVC resin demand of around 7% in the past.Continuing

the momentum from last year, the demand growth in

2006-07 is expected to be over 10%.The country has

a current demand of 1.3 million tonnes; about 77%

of which is met by the domestic resin manufacturers

(1.05 million tonnes), rest being imports. The trade of

PVC and its intermediates is freely permissible as of

now. The import duty on PVC resin is only 5%.

On the price front, domestic prices which mirror the

international price movements, witnessed a volatile

year.The realizations for the industry were better as

compared to last year despite appreciation of the rupee.

The industry expects about 8-10 % growth in demand

in the next fiscal with medium term outlook remaining

firm, which is expected to drive stable margins going

forward.

Business Performance

Product PVC Sales PVC XWR Carbide Sales Carbide XWR

(MT) realisation (MT) realization

(Rs. / MT) (Rs. / MT)

FY2007 64,680 42,940 19,769 23,454

FY2006 47,478 40,290 14,843 23,966

% Shift 36.23% 6.58% 33.19% (2.14)%

The PVC resin and Carbide business of the company

reported strong performance during the year:

• Revenues grew by 43 %

• PBIT grew by 86 %

During the year, this division recorded a volume growth

of 36% for PVC resin and 33%for Calcium carbide,

consequent to the expansion of PVC resins and calcium

carbide capacity.The operating profits too witnessed

robust growth due to volume growth as well as uptrend

in PVC realizations.

Our Strategy

We plan to continue to grow and drive efficiencies based

on the carbide/acetylene route. We plan to launch

DSCL-12.p65 7/27/2007, 9:03 AM15


specialty polymers for specific applications customized

to the needs of customers which will replace imports

and drive new usage of PVC in the country. Strategic

sourcing of key raw materials will help in containing

costs.

PVC Compounds

DSCL is one of the largest organized player for PVC

compounds and has its manufacturing facility based

at Kota. The compounding facility sources its PVC

requirement from the PVC resin plant. The Company

at present has a compounding facility of 23,400 MT.

DSCL has also set up Innovative Polymer Application

Center (i-PAC) to undertake research and development

activities in various application areas and develop new

and innovative high end value added products.

Our strength in this business is our deep resident

technical and market related knowledge and strong

research and development capabilities.

Industry Background

PVC compounds are intermediate knowledge-based

products which are made by compounding of PVC

resins. These compounds find their application across

various industries like wires & cables, automotive,

footwear, medical, food packaging, etc.

The domestic industry is largely unorganized and

consists largely of smaller players who undertake self

compounding of resins (as part of backward integration)

for use in various applications. DSCL, which is the

largest organised player, does compounding purely for

mercantile purpose.

The industry is expected to continue to register strong

growth going forward. Almost all the user segments

of PVC compounds are witnessing robust growth rates

which will lead to a positive outlook going forward.


DSCL maintained its dominant position in the Indian

PVC compound market despite competition from small

and unorganized businesses.Maintaining the continuous

growth momentum of last year, the business once again

surpassed industry growth at 35%. The overall national

PVC industry growth was about 10%.

Such growth had been driven by focussed attention

on development of new applications and cost effective

formulation technology. The share of higher value added

products and segments in overall sales also increased

as compared to last year. The exports business which

had a small beginning last year registered encouraging

growth in the current year. All round improvement in

product quality and inventory position further enhanced

the business health during the year.

Our Strategy

We are continuously looking at expanding high value

added products in our product portfolio along with

introduction of new applications.In order to provide the

customer good quality products, we are constantly

updating our technology in this business.

Fenesta Building Systems

The UPVC window and door systems, which were

pioneered by DSCL under the brand name 'Fenesta'

constitutes the extended part of our PVC value-chain.

The business derives its synergies through backward

integration with the resins business. This business

continues to witness a strong product acceptance

across all markets and towards this we are expanding

our capacities and geographical presence rapidly.The

Fenesta product has a very attractive design and

insulation attributes that make it a strong business

proposition as the concept gains greater acceptability.

The extrusion facility located at the Company's

integrated complex at Kota is a state of the art facility

using imported machinery and equipments that match

global standards. The profiles made at the extrusion

facility find their way to the fabrication shops located

in different parts of the country.Currently, the Company

has five fabrication facilities located at Bhiwadi (near

Delhi), Mumbai, Bangalore, Hyderabad, and Chennai.

Besides these locations, the Company has marketing

network in Cochin, Coimbatore, Pune and Chandigarh.

With our strive to provide customized solutions,we have

launched a separate product for the Mumbai market

which suits its specific weather requirements.

As a result of our continued efforts towards brand-

building, the 'Fenesta' brand has become almost

synonymous with the UPVC concept and enjoys high

brand recall and equity. The end-to-end delivery model

has ensured consistent high quality product and service,

DSCL-12.p65 7/27/2007, 9:03 AM16


making 'Fenesta' the preferred choice of architects and

builders.

The segment is also witnessing entry of global as well

as domestic players and we feel that this will facilitate

the growth of the industry, as it will bring in global

practices and help in increasing the penetration of the

product to the benefit of all. At the same time, we

believe that our first-mover advantage, technological

edge, contemporary design, superior delivery model,

synergy from integration and customer care services

will help us to sustain our competitive edge and grow

at a fast pace going forward.

Industry Background

The un-plasticized PVC (UPVC) Windows and Doors,

is a nascent concept in India in comparison to the

Western world, which is now a mature market.In

China,it is a very fast growing market consuming about

1.4 million tonnes of PVC for this application compared

to only a couple of '000 tonnes in India.The product

has also made significant inroads in other parts of the

world and there is a gradual increase in demand due to

its superior features in comparison to other available

alternatives like wood, alumunium, etc. The inherent

advantages include superior sound and thermal

insulation, ability to withstand extreme weather

conditions, low maintenance, long life and above all,

environment friendliness.

Domestic Scenario

The UPVC concept,is finding increasing acceptability

and has moved from infancy to growth stage. However,

the growth dynamics differ in terms of regions with

the South, especially Bangalore emerging as the leader,

both in terms of acceptability and penetration while

other regions continue to grow fast.

Further, the fact that the country is witnessing a real-

estate boom acts as a catalyst to the future of the

industry. The real-estate sector is expected to grow

swiftly with rising disposable incomes fuelling both

residential and commercial space demand.The entry

of large foreign players will lead to globalization of

construction practices in India.These trends bode well

for the future growth of high quality UPVC window

and door systems.


The business reported an impressive growth during the

current year, with the order book reaching 3.12 lac

windows (approximate value Rs.165 crores) as against

1.16 lakh windows in 2005-06.The order book is

expected to exhibit exponential growth in the future.

The turnover, which is based on order execution is also

growing at a fast pace.

Taking into account the satisfactory business

performance, robust order book and increasing pace

of execution, this business expects to operationally

breakeven in the coming year and thereafter reap

healthy returns in future.

Our Strategy

Our strategy for this business is to nurture the 'Fenesta'

brand to maintain its leadership status in the UPVC

windows and doors segment along with offering new

and innovative products to the customer. We continue

to expand our extrusion as well as fabrication capacities

to support the increase in demand being witnessed by

us. We further plan to increase awareness and

penetration in existing markets for 'Fenesta' products.

We plan to build Pan-India presence by establishing

presence in tier-2 and tier-3 cities along with exploring

international markets witnessing high real estate

growth.We also plan to spread awareness for UPVC to

penetrate in the retail segment (individual housing) more

effectively.

Power

Power constitutes the backbone of a majority of the

Company's businesses. Due to our cost effective and

DSCL-12.p65 7/27/2007, 9:03 AM17


uninterrupted sources of power, our businesses are able

to maintain their cost-competitiveness in a tough

operating environment. The Company's integrated

complex at Kota has a total installed capacity of 125

MW. The entire power capacity is coal based and caters

fully to the need of different facilities.

The Chlor-alkali facility at Bharuch has an installed

capacity of 24 MW which is based on furnace oil. The

Bharuch facility had been witnessing cost pressures

on account of rising furnace oil prices. As a result, the

Company is setting up a 48 MW coal-based power

plant at Bharuch to generate economical power which

will take care of both the present as well as the

enhanced Chlor-alkali capacity.

With the expansion of the sugar business to 33,000

TCD, the bagasse based co-generation capacity has

gone up to 70.5 MW as against 24 MW last year with

exportable capacity at 27.5 MW.Going forward,the

Company plans to increase its co-generation capacity

to 82.5 MW out of which it proposes to export 36

MW to the grid The environment friendly co-gen facility

is also eligible for carbon-credits, which will bring an

additional revenue stream for the Company.

Agri-Businesses

Urea

DSCL is amongst the oldest manufacturers of urea in

the country, with its plant located at its integrated

manufacturing complex at Kota. The plant is permitted

to sell upto 3.79 lac tonnes per annum as per

government stipulation.The Company is the lowest cost

producer of urea in the pre-92 naphtha based group

and markets this product under the 'Shriram Urea'

brand. 'Shriram Urea' is a trusted name and enjoys

high brand equity amongst the farmers. The Company

has built up an extensive distribution network over the

entire northern and central India.

The Company undertook its scheduled maintenance

shutdown in the current year.However,the duration was

longer this year to enable conversion to LNG (liquefied

natural gas) as a feedstock, with the objective of further

improving costs and efficiencies.The facility can now

accept dual feedstock of naphtha and gas in any

proportion. The necessary infrastructure for

transporting gas from the source to the plant is being

put in place. Meanwhile, the Company is negotiating

gas supplies through spot or long-term supply

agreements with major suppliers and should be able to

secure LNG supplies in the forthcoming year.



Particulars Amount % to TotalRs./Crores

Sales 647.7 24

PBIT 11.5 6.3


Industry Background

Fertilizers are synthetic chemicals which are supplied

to the soil to fulfill its deficiency in terms of various

nutritional requirements. The application of fertilizers

in the right proportion and quantity helps improve the

productivity of the soil. Amongst the three basic

nutrients i.e. Nitrogen, Phosphorous and Potassium,

Urea helps to fulfill the nitrogen requirements of the

soil and is amongst the most widely used fertilizers

globally.

Domestic Scenario

Urea is the most widely consumed fertilizer in the

country accounting for about 60% of the total

consumption. The high nitrogenous content as well as

low farm gate price (which is fixed by the government)

makes it more attractive for the farmer vis-á-vis other

fertilizers.

The domestic urea industry has an installed capacity

of 20.5 million tonnes, with top six players accounting

for 65% of the total production. Public sector

undertakings and co-operatives comprise majority of

the installed capacity in the country. The industry differs

in terms of feedstock, with majority capacity based

on natural gas, followed by naphtha and others. Being

the cheapest feedstock, focus is shifting towards

natural gas based facilities.

The urea cosumption has witnessed a healthy growth

rate of approx. 4.5% CAGR in the last five years.The

country has a current demand of about 25 million

tonnes, about 80% of which is met by the domestic

manufacturers (20.03 million tonnes), rest being

DSCL-12.p65 7/27/2007, 9:03 AM18


imports.The share of imports in domestic consumption

has been constantly rising on the back of stagnant

domestic capacity and rising demand.

Going forward,the sector outlook looks positive in terms

of demand-supply fundamentals. Indian fertilizer

consumption in terms of global standards remains at

abysmally low levels both in terms of per capita

consumption as well as optimum nutrient mix, with

bias towards Urea due to its low farm gate price. Hence

in order to feed the ever growing population, a second

green revolution is imperative which will envisage a

quantum increase in fertilizer consumption (as increased

productivity is the only solution with declining cultivable

land) which in turn promises a good future for the

industry.

Government Policy

The Urea industry is amongst the most regulated

industries in India. Urea is covered under the Essential

Commodities Act, 1955 and the Government imposes

strict regulations with regard to the selling price,

movement and distribution of urea, cost components,

energy efficiencies and type of feedstock, which has

proved to be an impediment in the growth of the

industry.

With the objective of streamlining retention pricing

system and reducing the subsidy burden of the

government, a three stage policy was envisaged in

2002, which saw tightening of the energy norms, and

fixation of all other cost components. However, the

industry continued to suffer highly on account of

delayed subsidy payments and uncompensated cost

escalations due to rising input costs. This remains a

persistent problem and no solution is in sight. The effect

of delayed subsidy payments has significantly impacted

the financials of this sector.

The much awaited NPS-III, (New Pricing Scheme), has

been made applicable from 1st October 2006

onwards.The main focus of the policy is to encourage

conversion into gas-based units, which would help

increase competitiveness and at the same time, reduce

Government subsidy burden.The policy seeks to carry

on the six group classification of urea manufacturing

units with updation of all costs upto 31st March,2003.It

also seeks to incentivise additional urea production and

encourage setting up of joint venture projects abroad

where gas is readily available at reasonable prices.


Higher revenues for the year were the result of higher

realizations reflective of higher input costs induced by

a rise in naphtha prices. The profitability, however,

witnessed a decline mainly on account of

uncompensated cost escalations and lower volumes.

Lower volumes were on account of lower production

due to a planned 45 days shutdown of the plant for

LNG conversion and normal overhauling undertaken

once in every two years. The business performance

was also adversely affected by the delay in subsidy

payments, leading to higher working capital costs.

Our Strategy

DSCL plans to secure long-term and reliable LNG

supplies along with continuous improvement of

operational efficiencies to reduce costs further. We also

strive to continue to maintain 'Shriram Urea' as a name

of quality and trust amongst the farming community.

Agri-inputs

The transformation of the Urea marketing organization

into an Agri Inputs Marketing organization began in

Product Volume (MT) Realization (Rs. / MT)

FY2007 363,268 17,830

FY2006 378,837 15,809

% Shift (4.10)% 12.78%

DSCL-12.p65 7/27/2007, 9:03 AM19


full earnest when new products, DAP,MOP,Hybrid seeds

& Pesticides were added to the product portfolio. This

enabled us to have a larger market presence,better brand

penetration and leverage our trade relationships.Our

portfolio was rapidly expanded to include new and value

added products like Speciality Fertilizers, Micro

Nutrients, etc. and offer a total basket to the farmers

from the house of Shriram.

Apart from marketing various agri-products, we also

offer agri-services through Shriram Krishi Vikas Kendras

(SKVK’s). This pioneering concept was evolved by the

Company in order to educate the farmer community

about the best agro-practices, thereby helping them to

increase crop productivity and disposable income. The

programme has been continuously evolving in

partnership with rural communities and is expanding

its footprint across the north and central India.

Domestic Scenario

In India, 70% population is dependent on agriculture

as it is the backbone of the Indian economy. The

demand for fertilisers is driven by a number of factors,

mainly the food production in the country. Raising food

grain production has become imperative in view of the

growing population. According to the XI Five Year Plan,

the population in the country is expected to be around

1.19 billion, which would necessitate food grain

production of almost 337.3 million tonnes (this includes

only food grains like rice, wheat, coarse cereals and

pulses).Food grain production is largely dependent on

the net sown area (physical land under cultivation),

level of irrigation, the extent of multiple cropping, usage

of high yield seeds and fertiliser consumption (it is

also indirectly related to natural factors such as weather

conditions, monsoons, etc.). Going ahead, the higher

food grain requirement would largely depend on higher

yield per hectare since the incremental growth in land

under cultivation would only be marginal. One of the

primary methods of increasing the yield per hectare is

through use of various agri-inputs like fertilizers, HYV

seeds, micro-nutrients, etc.

Hence, a second green revolution is the need of the

hour and demand for all agriculture inputs is expected

to witness a strong growth in the coming years.


The revenues for this division grew by ~16% to touch

Rs. 714 crores as against Rs.618 crore last year.

Meanwhile, the value-added products like pesticides,

seeds, micro nutrients, etc. grew by 7% in the same

period. The topline growth was primarily on account

of volume growth owing to good demand witnessed

during the year.

However, the business witnessed significant margin

pressures on account of uncompensated cost increases

and delay in release of subsidy payments. The arbitrary

changes made by the Government in calculation of

base price considered for subsidy calculation, rise in

freight costs which have not been compensated,

adverse forex fluctuations and inadvertent delay in

subsidy leading to higher working capital requirements,

have all badly impacted the profitability of the business.

Our Strategy

We have rationalized our product portfolio which

involves reduced imports of bulk fertilizers and focus

on value-added products. In order to increase our market

share we plan to increase penetration and reach,

improve sourcing and operational efficiency.

Sugar

DSCL, which entered the sugar business in 1997-98,

has been continuously expanding capacity to emerge

as a major player in the sugar industry. During the

current year, the Company undertook a capacity

expansion which involved increasing capacity at one

of its existing units, Ajbapur (from 7,500 TCD to 10,500

TCD) and setting up two green field units at Hariawan

and Loni (8,000 TCD each). The Company's Rupapur

facility has capacity of 6,500 TCD. With this, the total

capacity has increased to 33,000 TCD.

Along with increase in crushing capacity, the company

also increased its power co-generation facility from 24

MW to 70.5 MW this year with exportable capacity at

27.5 MW. Going forward,it plans to increase its co-

generation capacity to 82.5 MW out of which it

proposes to export 36 MW to the grid.The Company

has entered into PPA's (power purchase agreements)

with the U.P. state electricity board for export of power.

DSCL-12.p65 7/27/2007, 9:03 AM20


Particulars Amount Rs./crore % of Total

Sales 348.8 12.9

PBIT 3.8 2.1


(Figures in Qtls)

Ajbapur Rupapur Hariawan Loni

Sugar Season 2007 2006 2007 2006 2007 2007

Season (no. of days) 175 163 170 149 131 137

Cane Crushed 15083900 10303115 9368700 7772300 6110497 6453400

Recovery rate 10.36% 10.32% 9.53% 9.23% 10.45% 10.01%

Sugar Produced 1547850 1061200 886980 712930 638755 642235

Financial Year

Cane Crushed 13114296 10481224 8223989 7772300 5605950 4967400

Sugar Produced 1359650 1081590 783100 712930 573920 477650

Sugar sold 893720 1166967 793760 778117 52542 32370

growing at a fast pace driven by state commitments

worldwide to shift to cleaner fuels.The continued

diversion of cane for ethanol is a long-term positive

for the industry going ahead.

Domestic Scenario

India is the world's largest consumer and second largest

producer of sugar. The sugar industry is amongst the

largest agro processing industry in India with an annual

turnover of approx. Rs.300 billion. Sugar is a controlled

commodity in India under the Essential Commodities

Act, 1955. The Government of India regulates and

controls the rates of sugar cane supplied to the mills

by farmers. It declares the SMP (Statutory Minimum

Price) on a year to year basis which is used by the

State Government as a benchmark rate to fix SAP (State

Administered Price).

The Government enforces a dual pricing policy for the

sugar industry. Presently 10% of the production is sold

at fixed prices to the Government which is used for

PDS (public distribution system). It also controls supply

of sugar in the open market through monthly sugar

release notification based on the market conditions and

thereby, influencing open market prices to a large extent.

The domestic sugar prices had been on an upswing for

the last three years on the back of rising international

prices and two consecutive years of production deficits

domestically, which had forced India to import over 2

million tonne of raw sugar to meet the domestic

demand. Although the production recovered in 2005-

06 sugar year, the carry-overs continued to be at low

levels thereby keeping sugar prices buoyant.

The buoyancy in sugar prices and incentives announced

by state government of U.P,which is a major sugar

producing state, led to large scale capacity expansions

in the state in 06-07 sugar season.Also,other major

producing states like Maharashtra, Tamil

Nadu,Karnataka etc. yielded a record cane crop due to

an increase in acreage as well as favorable weather

conditions.As a result, the sugar production in the

country in 2006-07 is expected to be over 27 million

tonne, against a consumption demand of approximately

20 million tonne resulting in a high carry-over for the

year. The prospect of surplus production in the country

has led to a weakening in the sugar prices as compared

All the four units of the company had access to

adequate availability of cane. All our plants have modern

technologies resulting in enhanced operating

efficiencies.

The key operating parameters for the current season

are as follows:



Global Scenario

The global sugar market had been witnessing an

uptrend for the last three years driven by the ethanol

demand as well as production deficit in 2004-05.The

higher remunerative prices has lead to an increased

cane production in almost all the major producing

countries in the world in the current year. As a result,

the global market is expected to witness surplus sugar

production this year which is expected to touch 166

million tonne with consumption at 155 million

tonne,resulting in higher carry-overs.On account of the

same, the prices have witnessed a significant correction

from the highs reached in the early part of the year.

However, the long-term outlook for the global industry

remains positive on account of following:

i. The sugar consumption has been growing at a

steady pace of around 2% for the last five years

and is expected to register stable demand growth

going forward.

ii. The ethanol capacities as well as consumption, is

DSCL-12.p65 7/27/2007, 9:03 AM21


to the highs in the early part of the year. The delay in

lifting of the export ban by the government contributed

further to the declining prices.

However, inspite of a weak current scenario, the long-

term growth story of sugar remains positive on account

of the following factors:

i. The sugar consumption has grown at a healthy

3.8% CAGR growth for the past ten years. Going

forward, positive growth will be driven by rising

population as well as growth in per-capita

consumption levels on account of rising disposable

income.

ii. The global factors like diversion of cane for ethanol

in Brazil and reduction in EU exports is likely to

spur the export demand for Indian sugar.

iii. Co-generation of power based on bagasse will bring

significant revenues for sugar companies. Besides

revenue from the sale of power, carbon credits will

also bring in an additional revenue stream for the

sugar companies.

iv. The Indian Government is pushing for the blending

of ethanol in petrol both to reduce dependence on

foreign oil and to create a cleaner alternative. The

Government mandated 5% ethanol blending this

year and plans to increase it to 10% going forward.

Even at current blending of 5%, the ethanol demand

is expected to grow @ 7% CAGR for the next five

years which will keep the demand for molasses

firm. The blending programme will open up a

significant source of revenue for the sugar

companies.

v. India on account of its cane production as well as

distillery capacity also has a great potential to export

ethanol especially to East Asian countries.


The sugar business registered lower revenues and

profits in the year due to lower sales quantity

consequent to lower carried over stocks and dip in

realizations.The operating margins were under

pressure,particularly,on account of increase in cane cost

and significant fall in sugar prices towards the later

part of the year leading to writedown of inventory to

bring it at par with the expected net realizable

value.Higher depreciation charges on account of

capacity expansion carried out in the current year also

impacted earnings at PBIT level.

Our Strategy

We plan to develop sugar as an integrated business to

ride the commodity cycle in a better way. Towards this,

our strategy is to:

• Explore the feasibility of setting up a distillery

• Increase co-gen and export power capacity

In this business we want to achieve economies of scale

and work closely with the farmer to help him increase

crop productivity which will improve his well-being and

ensure sustained cane supplies for our mills.

Hariyali Kisaan Bazaar

Hariyali Kisaan Bazaar leverages the company's

knowledge base that it has developed in the agri-chain

over the last 40 years. It is a unique rural retailing

concept based on building trusted farmer relationships

to create a rural hub that makes agri and consumer

products and services available to the farmers in a fair,

transparent and convenient format. Our outlets carry

Product Sales (MT) Realization (Rs. / MT)

FY2007 1,77,239 16,897

FY2006 1,94,509 16,976

% Shift (8.80)% -

DSCL-12.p65 7/27/2007, 9:03 AM22


out last mile delivery of the latest know how/research

in the agri space and assist farmers to apply the same

in the field. We are the first company to implement

such an initiative and have received encouraging

response at all our outlets. We believe that the Hariyali

Kisaan Bazaars have the potential to become a growth

engine for our company in the coming years

and therefore, we are planning to grow this business

at a rapid pace in terms of geographical spread and

offerings.

We now have over 70 outlets spread across states of

U.P., Punjab,Haryana,Rajasthan, Uttaranchal, and M.P.

The Company is planning to expand to Western and

Southern India in the coming year.

Hariyali Kisaan Bazaar, which had begun its journey as

a one-stop shop for the needs of the farmer, has now

expanded its offerings to fulfill the needs of his family

and aims to provide the rural community the same

quality, convenience and pleasure of shopping as

enjoyed by their urban counterparts.Apart from agri-

inputs, the product offerings now include FMCG, fuel,

consumer durables,apparels and insurance.We have

formed alliances with major product and service

providers to offer farmers greater options and hence,

greater flexibility.We have also scaled up our output

procurement from farmers to cover approx. 10000 acres

of farming area.

The business has received positive response from the

rural community and the 'Hariyali' Brand name has

already started symbolizing trust, reliability and respect

for the rural consumers.Agri services provided by the

outlets are creating tremendous opportunities for

increasing rural incomes.

The importance of supply-chain management in a retail

business can hardly be over-emphasized. With regard

to the same, the Company is planning to undertake

some new initiatives, with the objective of streamlining

and improving its logistics management.

Hariyali Kisaan Bazaar which has several firsts to its

name got another recognition in the form of "ACE-

Best Customer Award" for the successful

implementation of SAP IS retail package. The business

now runs completely on the advanced SAP platform,

thereby ensuring robust IT system and processes.

Our Strategy

We intend to rapidly scale up this business. Towards

this, we want to expand our existing operations in North

India and create "customer base" & "brand equity" in

new regions. As regards to our existing offerings, we

plan to refine them along with exploring new offering

areas. In this business, we are continuously improving

supply-chain and operating efficiencies.

Other Businesses

Cement

DSCL's cement facility epitomizes the philosophy of

converting "Waste to Wealth" wherein sludge, a waste

generated from the calcium carbide plant during the

generation of acetylene is used to produce premium

quality cement at its integrated manufacturing complex

at Kota. The high concentration of lime in sludge allows

the Company to use low-grade limestone which

otherwise cannot be used for the production of cement.

The capacity of the plant which began its operations

in 1987, based on wet-process technology from

Lafarge, stands at 4,00,000 TPA.The plant produces

different grades of cement of superior quality and

features which commands a premium in the market.

We market the cement under the 'Shriram' brand which

has created strong brand equity for itself.

Performance and Outlook

The production of cement during the current year stood

at 3.69 lac tonne.The business reported strong

DSCL-12.p65 7/27/2007, 9:03 AM23


performance during the year primarily on account of

higher realizations on the back of firm demand-supply

outlook.

The cement industry has been witnessing an uptrend

with a robust demand growth of over 10% driven by

housing and infrastructure growth. The growth in

demand is expected to continue to be healthy going

forward if the current GDP growth pace is maintained.

Although we are a small player, the buoyancy in prices

due to favorable demand-supply outlook is expected

to drive our earnings going forward and we expect our

cement business to make a significant contribution to

profitability.

Our Strategy

Our strategy in this business is to continuously adopt

cost reduction methods, improve operating efficiencies

and maintain 'Shriram'brand as a mark of premium

quality.

Textiles

The Company has a textile spinning unit at Tonk in

Rajasthan.During the year, the Company is

implementing the following initiatives:

a) Enhancing the spindleage from 8,880 spindles to

12,144 spindles

b) Production increase from 6 to 12 tonnes per day

c) Count pattern from 14 average counts to 18 average

counts

The unit now has access to cheaper source of power

wheeled from Kota which has helped reduce power

costs. Going forward,the company will continue its drive

towards cost rationalization and improving efficiencies.

IT initiatives

Information technology plays a crucial role of enabling

business processes, in turn providing the Company with

the necessary agility and responsive ability to meet

customer demands and bring efficiency in operations.

The Company primarily operates on a SAP platform

with key components that encompass Enterprise

Resource Planning, Data Warehousing, Customer

Relationship Management solutions and Enterprise

Portal.

In the year gone by, the Company has successfully

completed the SAP-based, IT enablement of its new

sugar units at Hariawan and Loni, including the

establishment of the requisite communication and IT

infrastructure.The design and deployment of IT

infrastructure at Loni and Hariawan is aimed at building

a reliable, scalable, secured and converged infrastructure

for all applications including SAP, cane management

system, email, video conferencing etc.With six more

zonal offices adding into the DSCL Sugar network, it

is one of the largest interconnected network in sugar

industry. At Shriram Bioseed Genetics, the Company

has chosen to employ Microsoft's Navision ERP

package to e-enable business processes.

We are trying to connect all our godowns and depots

to have online connectivity so that real time transactions

can take place.With the objective of enhancing

productivity amongst employees, the Company is also

establishing an employee portal through Enterprise

portal system of SAP.

During the course of the year, the company conducted

a BPR (business process re-engineering) study on Order

to Cash cycle through the engagement of a consultant

of international repute, and its recommendations are

being implemented.

The size and complexity of the information technology

platform the Company operates, makes it imperative

to employ a well-considered and comprehensive

information security system. Accordingly, DSCL has

charted an information security policy which is

implemented across DSCL in a phased manner.

Human Resources and Industrial Relations

The company has over the year sustained its programs

and policies towards the development of its people

resources and maintaining a harmonious and cordial

relationship with the employees. The year has been a

challenging one given the opportunities for

professionals outside and also within to meet the

demands of growth across various businesses. The

Organisation has addressed the challenge successfully.

Human Resources Growth and Engagement

During the year the demand for people has been

extremely high, particularly in the newer businesses,

to meet the rapid growth requirements.. The company

DSCL-12.p65 7/27/2007, 9:03 AM24


has not only successfully met the needs of recruitment

but also invested in their upgradation of skills and

competencies so as to enable higher performance and

contribution towards the achievement of the business

goals and objectives. Alongside, the company has also

managed to retain its pool of talent and critical resources

and engage them towards addressing the needs of

business growth. The company has always been

sensitive towards measuring the employee needs and

aspirations and engaging and aligning them with the

needs of the organisation. As part of the engagement

process, the company participated in the Great Place

to Work study and also the Hewitt Best Employers study

which not only provided useful insights and

perspectives but also helped in bringing employees

closer to the organisation. It has also provided the

Company with an opportunity to benchmark with the

best of industry practices and standards and strengthen

the HR systems and processes within the organisation.

Training and Development

The overall training and development process in the

Organisation has continued with complete commitment

and zeal and a variety of programs have been organized

within and outside towards upgrading the technical,

functional and behavioural capabilities of the

employees. The programs have been organized across

various businesses and units, addressing the needs of

the employees at all levels of the organisation. All this

has helped to keep abreast with the rapid changes and

developments happening in the environment and also

been a source of motivation and bonding amongst

employees.

Industrial Relations

The Company has, as always, maintained an excellent

track record of healthy and cordial employee relations

across the Organisation. The overall level of involvement

and contribution of employees has continued to be at

its highest level. The levels of output and productivity

have also improved considerably adding to the overall

efficiency of the Organisation. The pride and

engagement dimensions have been at a very good level

and there have been positive initiatives to improve the

overall functioning and standards of performance.

Internal Control systems and adequacy

The company employs robust control procedures and

systems across organization to handle effectively the

requirements of its multiple businesses spread across

multiple locations. The implementation of SAP R/3

throughout the organization ensures a proper system

of checks and controls.

The internal control system is further augmented

through periodic reviews by reputed and independent

internal audit firms.The internal audit observations and

implementation of its recommendations are reviewed

by audit committee and top management regularly.

The company has also developed and documented

necessary risk and control matrices for all its significant

operations through the engagement of a professional

firm of international repute, which will strengthen its

internal controls further.

Conclusion

For the year under review, the company registered 16%

growth in revenues spurred by volume growth on

account of capacity expansions undertaken in the past

three years. All the capacity expansions are operating

successfully and achieving desired parameters,

providing cushion against the tough operating

environment witnessed in sugar and imported fertilizers

trading businesses. From a longer term perspective we

continue to remain positive on all our businesses, and

we plan to continue to progress on integration model

to ride cyclical nature of commodity businesses in a

better way. Our value added businesses of Hariyali

Kisaan Bazaar and Fenesta Building Systems also grew

at an accelerated pace, justifying their potential of

growth drivers in the future.

We believe that our inherent strengths of integration,and

operational competitiveness,and growth potential of

our new businesses will help us to deliver healthy

returns,going forward.

DSCL-12.p65 7/27/2007, 9:03 AM25


Your company believes that long term sustainable future

lies in being a socially responsible corporate citizen.

Therefore,corporate social responsibility constitutes a core

value of the company and forms an integral part of our

corporate plans. This has translated into a number of

initiatives and meaningful contribution towards the welfare

of society.

Education- To encourage meritorious and needy students

in the fields of engineering, medicine, agriculture and

management, the company has instituted scholarships

at various educational institutions in the states of its

operations and facilities including Rajasthan, Gujarat, U.P.

and Delhi.

With the objective of protecting the future of girl child,

DSCL runs a ‘Primary Education Programme’ for the girl

child, which provides support on books, school bags and

uniforms.

In its endeavor to provide high quality education, DSCL

Sugar, in association with Ryan International, is setting

up a school at Shahjahanpur. It is also setting up a primary

school in village Akbarpur, District Hardoi (U.P.). The

primary education programme, in association with Vinoba

Seva Ashram, continues to run successfully and has

benefitted over 800 children from the targeted villages in

the past three years.

Mid-day Meal Scheme for Children in Schools- DSCL has

extended financial assistance to the tune of INR 10.0

million, in addition to technical support for development

and construction of infra-structure, towards

implementation of a mid-day meal scheme for school

children and underprivileged in district Jhalawar,

Rajasthan. Initially 35,000 children will be benefitted and

going forward about 50,000 children in a radial distance

of about 40 km will be benefitted. A similar project is

under implementation in district Kota.

Health Care- The company recognises the importance of

health of fellow human beings to long term sustainability

of any human enterprise. The company has set up a rural

health clinic in Ajbapur (U.P.), which provides free health

advisory, specialized family planning and vaccination

services. DSCL Sugar runs a programme titled ‘Khushali

Pariyojana’, in association with Vinoba Seva Ashram,

which aims to provide health advisory services to pregnant

women, ensure vaccination for children, motivate families

to enroll children for structured education and to motivate

school dropouts to re-join structured education.

DSCL has embarked upon an ambitious drive to create

awareness among the members of society about AIDS.

The company has organised over 60 programmes on HIV/

Corporate Social Responsibility

AIDS awareness in the recent past. It also has an active

programme in place to build awareness on HIV/AIDS for

employees, truckers and local community.

Agriculture Extension Activities- DSCL Sugar has

developed a yield enhancement technique “Shriram Ganna

Utpadan Technique” (SGUT), and is implementing a cane

development programme in its command area with the

objective of enhancing yield and income per hectare from

sugarcane cultivation, to the benefit of the farmers.

DSCL’s Shriram Krishi Vikas Kendras (SKVK’s) continue

to support the farmers in their work and life through

adoption of over 500 villages.The SKVK’s provide help

in meeting educational, hygiene and sanitation needs for

the community as well as healthcare support for animal

husbandry.

Social Upliftment-’Swabhiman Pariyojana’

This programme, which was initiated this year by DSCL

Sugar, in association with Gram Swaraj Mission (Distt.

Kheri, U.P.), envisages setting up of Women’s self help

groups in ten adopted villages and provide them training

in various income generating activities. The initial response

to the programme has been very encouraging.

Infrastructure Development- The company continues to

support infrastructure creation and development around

its operating facilities. DSCL Sugar has adopted villages

around its mills where it has undertaken widening and

re-soling of connecting roads, ensured proper drainage

system, provision of hygienic and clean drinking water

by repairing the existing hand pumps and development

of the Panchayat bhawan area.

The rain water harvesting systems created by the

company at Kota and Bharuch, which includes 4,70,000

cubic meter rainwater collection and recharge/reuse

infrastructure,continues to run successfully and benefit

people in nearby localities.

Sports and Cultural Activities- In order to promote budding

sports talent, DSCL sponsors several schools in various

inter-school sports tournaments. A state level volleyball

tournament is being organized for the last three years in

District Hardoi (U.P.) by DSCL Sugar.

The prestigious DSCL Open National Tennis Championship

continues to run successfully and nurture the best tennis

talent in the country for international tennis arena.

In addition, DSCL has many initiatives in the area of

Corporate Citizenship at local, regional and national level

through its network and knowledge bank, and a

committed work force at all levels of the organization.

09

DSCL-12.p65 7/27/2007, 9:03 AM26


The Directors have pleasure in presenting the18th Annual Report of the Company along with AuditedAccounts for the year ended 31st March, 2007.


The working results for the year ended 31.3.2007 and31.3.2006 are as under:

Particulars 31.3.2007 31.3.2006(Rs. in Crores) (Rs. in Crores)

Sales (Gross) 2,872.16 2,476.32

Other Income 33.71 17.35

Profit before depreciation,interest and tax 236.21 283.74

Interest 77.34 48.45

Gross Profit 158.87 235.29

Depreciation 90.26 70.19

Provision for Taxation

- Current/Deferred Tax 20.55 46.31

- Fringe Benefit Tax 2.25 3.60

Profit for the year after tax 45.81 115.19

Transfer from DebentureRedemption Reserve 5.16 3.67

Balance brought forwardfrom previous year 225.74 173.91

Net Profit available forappropriation 276.71 292.77

Appropriations

- Proposed Dividends onEquity Shares 13.28 14.94

- Corporate Dividend Tax 2.06 2.09

- General Reserve 10.00 50.00

- Balance Carried Forward 251.37 225.74

Dividend

Your Directors are pleased to recommend dividend@ 40% (including the interim dividend @ 20% paidin November, 2006) on Equity Shares of Rs.2/- eachfor the year ended 31st March, 2007.

Performance

The Company achieved revenues of Rs.2872.16 Croresas compared to Rs.2476.32 Crores in previous financialyear, thereby attaining a growth of 16%. The operatingprofits for the current financial year stood at Rs.236.21Crores as against Rs.283.74 Crores last year.

The revenue growth during the year was driven byhigher volumes in Plastics, Chemicals, traded productsand new businesses and better price realisations inPVC resins and Cement businesses. The Sugar business

Directors’ Report

witnessed operating pressures on account of sharp dropin realisations as well as increase in cane cost. Theuncompensated cost increases, irrational pricing policyand delay in subsidy by the Government with regard toimported fertilisers also impacted margins. Other factorsthat affected the profitability include lower volumes inUrea business consequent to LNG-conversionshutdown, lower ECU realisations in Chemicalsbusiness, higher prices of certain raw materials (furnaceoil, carbon materials etc.) and higher interest costs.

The detailed performance of various businesses of theCompany for the year ended 31st March, 2007 hasbeen stated in the Management Discussion andAnalysis Report, which appears as a separate statementin the Annual Report.

Subsidiary Companies

During the year, Anant Thermal Energy Limited becamea subsidiary of DCM Shriram Credit and InvestmentsLimited, which is a wholly owned subsidiary of yourCompany and Shriram Bioseed (Thailand) Limited hasbecome a subsidiary of Shriram Bioseed Genetics (India)Limited, another subsidiary of your Company.

A statement pursuant to Section 212 of the CompaniesAct, 1956 relating to subsidiary companies is attachedto the accounts.

In terms of approval granted by the Central Governmentunder Section 212(8) of the Companies Act, 1956,the Audited Statements of Accounts and the Auditors’Reports thereon for the year ended 31st March, 2007along with the Reports of the Board of Directors of theCompany’s subsidiaries have not been annexed. TheCompany will make available these documents uponrequest by any member of the Company interested inobtaining the same. However, as directed by the CentralGovernment, the financial data of the subsidiaries havebeen furnished under ‘subsidiary companies particulars’forming part of the Annual Report. Further, pursuantto Accounting Standard AS-21 issued by the Instituteof Chartered Accountants of India, ConsolidatedFinancial Statements presented by the Company in thisAnnual Report includes the financial information of itssubsidiaries.

Finance

The credit rating for long term debt programme of theCompany has been revised from ‘LAA’ to ‘LA’ whichindicates adequate credit quality and the rating for shortterm borrowings has been revised from ‘A1+’ to ‘A1’which indicates highest credit quality rating for shortterm debt instruments.

10

.....................................................................................................................................................................................................

.....................................................................................................................................................................................................

.....................................................................................................................................................................................................

.....................................................................................................................................................................................................

.....................................................................................................................................................................................................

.....................................................................................................................................................................................................

...............................................................................................................................................................................................

.....................................................................................................................................................................................................

....................................................................................................................................................................................................

.....................................................................................................................................................................................................

....................................................................................................................................................................................................

.....................................................................................................................................................................................................

.....................................................................................................................................................................................................

......................................................................................................................................................................................................

DSCL-27.p65 7/27/2007, 9:03 AM27


Fixed Deposits

As on 31st March, 2007, 211 deposits aggregating toRs. 59.52 lacs were unclaimed. Since then 90 depositsamounting to Rs. 26.57 lacs have been claimed/renewed.

Auditors’ Report

As reported in para (xvii) of the Annexure to Auditors’Report, the Company has used funds raised on shortterm basis for long term investment. As on 31st March,2007, the Company has invested short term loansamounting to Rs.212.71 Crores for financing the fixedassets. The observations of the Auditors are self-explanatory. The Company has taken corrective actionin the matter.

Corporate Governance

A separate section on Corporate Governance and aCertificate from the Auditors of the Company regardingcompliance of conditions of Corporate Governance asstipulated under Clause 49 of the Listing Agreement(s)with the Stock Exchange(s) form part of the AnnualReport.

Directors

Shri Ajit S. Shriram, Shri Pradeep Dinodia and ShriS.L. Mohan, Directors, retire by rotation and are eligiblefor re-appointment.

Auditors

M/s. A.F. Ferguson & Co., Chartered Accountants, retireat the conclusion of the forthcoming Annual GeneralMeeting and are eligible for re-appointment.

Personnel

In terms of the provisions of Section 217(2A) of theCompanies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975, the name andother particulars of the employees are required to beset out in the Annexure to the Directors’ Report.However, as per the provisions of Section 219(1)(b)(iv)of the Act, the report and accounts are being sent toall the Members and the Trustee(s) for the holders ofthe debentures of the Company, excluding the aforesaidparticulars. The complete Annual Report including thisstatement shall be made available for inspection byany Member and/or any Trustee during working hoursfor a period of 21 days before the date of the AnnualGeneral Meeting. Any Member and/or the Trusteeinterested in obtaining a copy of the said statementmay write to the Company Secretary at the RegisteredOffice of the Company.

Directors’ Responsibility Statement

It is hereby affirmed that

1. in preparation of annual accounts, all applicableaccounting standards have been followed,

2. the accounting policies of the Company have beenconsistently followed. Wherever circumstancesdemanded, estimates have been made that arereasonable and prudent so as to give a true and fairview of the state of affairs of the Company at theend of the financial year and of the profit or loss ofthe Company for that period,

3. proper and sufficient care has been taken formaintenance of accounting records in accordancewith the provisions of the Companies Act, 1956 forsafeguarding assets of the Company and properinternal controls are in place for preventing anddetecting frauds and other irregularities, and

4. annual accounts have been prepared on a goingconcern basis.

Conservation of Energy, Technology Absorption and

Foreign Exchange Earnings/Outgo

The information required under Section 217(1)(e) ofthe Companies Act, 1956 read with the Companies(Disclosure of Particulars in the Report of the Board ofDirectors) Rules, 1988 with respect to these mattersis appended hereto and forms part of this report.

Industrial Relations

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

Acknowledgements

The Directors wish to thank customers, the Governmentauthorities, financial institutions, bankers, otherbusiness associates and shareholders for thecooperation and encouragement extended to theCompany. The Directors also place on record their deepappreciation for the contribution made by theemployees at all levels.

On behalf of the Board

New Delhi (AJAY S. SHRIRAM)29th June, 2007 Chairman & Sr. Managing Director

DSCL-27.p65 7/27/2007, 9:03 AM28


Annexure to the Directors’ Report

Information as required under Section 217(1)(e) read with the

Companies (Disclosure of Particulars in the Report of Board of

Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

(a)Energy Conservation Measures Taken:

Energy conservation has been an important thrust area

of the management and is being continuously monitored.

Important specific actions taken during this year are:-

- Feedstock conversion from naphtha to natural gas in

fertilizer plant thereby making the plant capable to use

gas or naphtha or a mixture thereof.

- Modification in coal handling system in power plant

enabling to feed the entire coal by the reclamation

system and reduce the running hours of the dosing

equipment.

- Installation of new drip cooler in 10 MW turbine in power

plant to utilize the low grade heat of the gland steam.

- Modification in water circuit of economizer coil of the

Waste Heat Recovery Boiler in carbide plant to improve

water flow. In addition a new high pressure air

compressor has been installed to effectively clean Waste

Heat Recovery Boiler tubes.

- Cooling water flow control and monitoring in relation

to the cooling requirement in chemicals plant.

- 27 Nos. of inefficient cell units have been replaced with

latest design NCH type of cell units in chemical plant.

- Installation of an online meter for hydrogen generation

& consumption in flaking plant.

- Modification of inter compartment seal of the grate

cooler in cement plant.

- Replacement of one electrolyser with latest NC

technology for membrane cell for caustic production.

- Installing high capacity hydrogen compressor in caustic

soda plant thereby reducing the specific power

consumption.

- Change of quadruple system to quintuple system at

Ajbapur Sugar Plant.

(b)Additional investments and proposals being implemented

for reduction in consumption of energy:

- Procurement of superior quality low ash carbon material

for furnace operation is being explored overseas to

reduce power consumption in carbide production.

- Retrofitting of grate cooler plates with IKN design is

being explored for better heat recuperation from hot

clinker coming from the kiln to reduce energy

consumption and lower maintenance cost.

- Single stage crushing of limestone in place of 3 stage

crushing is being planned which is expected to lower

consumption of grinding power.

(c) Impact of the measures at (a) & (b) above for reduction

of energy consumption and consequent impact on the

cost of production of goods:

The above mentioned energy consumption measures

which have already been undertaken and the measures

under implementation will yield savings in energy

consumption compared to the past years and will continue

to reduce the cost of production. The summarized position

of energy reduction achieved is as under:

- Feedstock conversion from naphtha to natural gas in

fertilizer plant is expected to help in achieving the energy

consumption norms set for the unit under the fertiliser

pricing policy.

- Modification of coal handling system has resulted in

saving of 1300 litres of diesel per month.

- Modification in water circuit of economizer coil of the

Waste Heat Recovery Boiler and installation of high

pressure air compressor has helped to increase 14 Kg.

steam generation by 1 MT/hr.

- Monitoring in relation to the cooling requirement and

replacement of inefficient cell units has resulted in

savings of 2 lac kwh and 4 lac kwh units of power

respectively .

- Installation of an online meter for hydrogen generation

& consumption in flaking plant has resulted in optimizing

and hence reduction in furnace oil consumption from

12 ltr./MT to 3 ltr./MT.

- Modification of inter compartment seal of the grate

cooler has resulted in savings of coal at the rate of

94.6 Kgs./hr.

(d)Total energy consumption and energy consumption per

unit of production:

Form A is annexed.

B. TECHNOLOGY ABSORPTION

(e)Efforts made in technology absorption:

Form B is annexed.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(f) Activities relating to exports; initiatives taken to increase

exports; development of new export markets for products

and services; and export plans:

The Company had got success in Master Batch segment

of PVC Compounds in the export markets and during the

year the Company has got approval from two reputed

international customers in the wire and cable segments

for FRLS product.

The Company has successfully exported FRLS

Compounds to Thailand and Srilanka. In the current year,

the Company has been working on potentional markets

in the Eastern Europe, Russia directly and through channel

partners. The Company is also exploring the possibility

of tie ups with established PVC Compounders with a

view to establish business synergies.

(g)Total foreign exchange used and earned:

Rs./Crores

2006-07 2005-06

- Total foreign exchange used 419.46 565.46

- Total foreign exchange earned 3.04 0.60

DSCL-27.p65 7/27/2007, 9:03 AM29


.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

FORM A

(See Rule 2)

Form for disclosure of particulars with respect to conservation of energy

This Year Previous Year

2006–07 2005–06

A. POWER AND FUEL CONSUMPTION

1. Electricity

(a) Purchased

– Kwh (in lacs) 590.6 772.7

– Total Cost (Rs./lacs) 2616.2 3405.4

– Rate (Rs./Kwh) 4.4 4.4

(b) Own Generation

(i) Through Diesel Generator

– Kwh (in lacs) 1895.4 1872.7

– Kwh generated per ltr. of Diesel/Furnance Oil 5.1 4.4

– Kwh generated per ‘000 SCM of Natural Gas 47.0 -

– Cost (Rs./Kwh) 4.0 4.0

(ii) Through Steam Turbine Generator

– Kwh (in lacs) 10343.4 8357.7

– Kwh generated per Kg. of Coal 1.2 1.2

– Cost (Rs./Kwh) 2.2 2.2

(iii)Through Steam Turbine Generator (Bagasse)

– Kwh (in lacs) 1449.8 736.9

– Units generated per M.T. of Bagasse 189.5 223.3

– Bagasse consumed (in M.T./lacs) 7.6 3.3

2. Coal

Quantity (M.T.) 962548.0 826317.0

Total Cost (Rs./lacs) 21439.0 17721.0

Average Rate (M.T.) 2227.00 2145.0

3. Furnace Oil

Quantity (M.T.) 39507.3 45277.8

Total Cost (Rs./lacs) 6666.0 6715.0

Average Cost (M.T.) 16872.8 14830.7

4. Natural Gas

Quantity (SCM) 8688214.0 -

Total Cost (Rs./lacs) 888.0 -

Average Cost (SCM) 10.2 -

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

DSCL-27.p65 7/27/2007, 9:03 AM30


.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................


2006–07 2005–06

B. CONSUMPTION PER UNIT OF PRODUCTION

1. Electricity

– Urea (Kwh/M.T.) 133.0 158.5

– PVC Resin (Kwh/M.T.) - 3.1

– C. Soda, SFC, Kota (Kwh/M.T.) 34.2 132.3

– C. Soda, SAC, Bharuch (Kwh/M.T.) – Internal Generation 2659.0 2601.0

– Liquid Chlorine (Kwh/M.T.) 103.0 105.0

– HCL (Kwh/M.T.) 2.0 3.0

– Textiles – Yarn (Kwh/Kg.) 2.3 2.2

– Sugar – Ajbapur (Kwh) 340.0 331.0

– Sugar – Rupapur (Kwh) 256.6 281.6

– Sugar – Loni (Kwh) 374.5 -

– Sugar – Hariawan (Kwh) 327.1 -

– PVC Compounds (Kwh/Ton) 224.0 213.5

2. Coal

– Urea (M.T./M.T.) 0.6 0.6

– PVC Resin (M.T./M.T.) 4.8 5.0

– Carbide Packed (T/Ton) 3.0 3.2

– C. Soda (M.T./M.T.) 2.3 2.2

– Cement (M.T./M.T.) 0.3 0.2

– SBP (M.T./M.T.) 0.2 0.2

3. Furnace Oil

– Urea (Kg./Ton) 5.9 7.2

– C. Soda, SFC, Kota (Kg./Ton) 0.3 2.5

– C. Soda, SAC, Bharuch (Kg./Ton) 559.0 627.0

– Cement (Kg./Ton) 0.1 0.1

4. Others

– Steam – Caustic Soda (M.T./M.T.) – SAC, Bharuch 1.3 1.3

– Bagasse (M.T.) – Ajbapur 1.5 2.4

– Bagasse (M.T.) – Rupapur 2.0 2.2

– Bagasse (M.T.) – Loni 1.2 -

– Bagasse (M.T.) – Hariawan 1.0 -

Notes:

1. Different sources of energy are inter changeable.

2. Wherever required, figures relating to previous year have been re-arranged.

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

DSCL-27.p65 7/27/2007, 9:03 AM31


FORM B

(See Rule 2)

Form for disclosure of particulars with respect to technology absorption

Research and Development (R & D)

1. Specific areas in which R & D carried out by the

Company

- Trial of fuel additives has been conducted to reducethe unburnt carbon and for furnace cleaning in PFboilers in power plant. A long term trial is plannedto establish it further from which significant savingsare expected.

- Extensive developmental work was done to semiclose 30 MVA Furnace by installing motorizedmovable gates to make it operational.

- Higher capacity acetylene generator for low sizecarbide has been designed in house resulting inlower energy consumption.

- To improve sludge concentration, various types offlocculants were tried in the laboratory and suitableflocculants were identified. Sludge filtration studiesusing vacuum filters and centrifuge were carriedout to determine the suitable equipment for sludgefiltration.

- Specialty PVC resin and compounds using ultralow K-50 and high K value resin evaluated forquality & performance advantages with range ofnew functional additives.

- Development of compounds with specialty PVCresin based on imports and production at Kota resinplant for applications like flexible hoses, pipes,blood bag, injection molded electrical enclosures,injection molded medical components, rigid masterbatches etc.

- Flexible low compression dynamic gasketcompound developed for window/automotiveprofiles and seals for rubber replacement.

- PVC alloys, blends & composites developed forflexible applications.

- Seed Pan Technique for reduction in masecuite insugar plant.

- Installation of A Pan Turn around automationSystem in sugar plant.

2. Benefits derived as a result of the above R & D

- Motorized gates in carbide plant have resulted ingeneration of 7500 MT per annum additional steamfrom waste heat of 30 MVA Furnace.

- New market segment growth with exportopportunity.

- High performance applications with PVC resinbased compounds by replacement of otherpolymers with cost advantage.

- PVC rigid injection molding compounds which canbe processed on all types of injection moldingmachines.

- Improvement in lusture of sugar crystal anddeduction in steam consumption.

- TAS system will reduce the boiling time, consistentbrix during the pan boiling, increase the purity dropfrom A Massecuite to nutsch molasses and reducesteam consumption.

3. Future plan of action

- Development of simulation model for entireammonia plant to enable evaluation of energyconservation schemes and to further optimize plantperformance.

- Trial firing of biomass/wood in AFBC boilers.- Trial of fuel additives in AFBC boilers to reduce the

unburnt carbon.- Commercialize specialty K value based applications

with faster reach to customer & market by settingpilot facility near Gurgaon for manufacturing small lots.

- Strategy to protect & retain the developed market& technology with patents.

- Installation of equipment for manufacturing of low& high K value PVC resin & compounds.

- Zero entrainment at pans & evaporators.- Pneumatic conveying of dust.- Water management to have zero discharge.- Melting of sulphur by heat generated by

combustion of sulphur.- Induction of baggasse dries to reduce the fuel

consumption in boilers.

4. Expenditure on R & D

Rs./Lacs

2006-07 2005-06

a) Capital 20.00 3.16

b) Revenue 182.58 201.50

c) Total 202.58 204.66

d) Total R & D expenditureas percentage oftotal turnover 0.07 0.08

Technology absorption, adaptation and innovation

1. Efforts, in brief, made towards technology absorption,

adaptation and innovation

- The technology of operation of Waste HeatRecovery Boiler is unique in itself and is first timein the country in a calcium carbide plant. Theinnovative design has also been customized tosuit our application.

- The technology of lime briquetting of waste limefines into useful briquettes has been successfullyadopted.

- Using nano-additives for the development ofheavy metal free PVC compounds meeting ELV(End-of-life Vehicles) regulations for automobileswith superior aesthetics.

DSCL-27.p65 7/27/2007, 9:03 AM32


- Installation of cigar (condensate flash vaporrecovery).

- Installation of DC heaters for molassesconditioning in sugar plants.

- Induction of continuous pan boiling on B-side andC-side.

- No use of water in AH, BH & CL molassesconditioners and conditioning of molasses by 4th

body evaporator (IPRO).

2. Benefits derived as a result of the above efforts, e.g.product improvement, cost reduction, productdevelopment, import substitution, etc.

Various measures described above have resulted insaving of power and steam. The benefits have alsobeen in respect of better quality of product and

improved customer service. More importantly, thesehave resulted in- Generation of more quantity of steam from Waste

Heat Recovery Boiler.- Conversion of lime briquettes from waste lime

fines for use in Furnaces.- Achievement of quality as per international norms

for exports requirements & in-house capability toanalyze resin.

- ~25% improvement in burst strength/mechanicalproperties in PVC compounds based on high Kvalue resin.

- Reduction in boiling time & consistent brix duringthe pan boiling.

3. Details of imported technology (imported during the last 5 years reckoned from the beginning of the financial year) is

furnished as under:

I. Cement Plant

a) Technology Imported To modify the klin internals to enhance the clinker production.

b) Year of Import 2004-05

c) Has the technology been fully absorbed? Yes

d) If not fully absorbed, reasons therefor and N.A.future plans of action

II.Chemical Plant

a) Technology Imported – Purchase of bipolar membrane electrolyzer from Asahi KaseiChemical Corporation based on their proprietory ion exchangemembrane technology developed for use in manufacture of Chlor-Alkali Products.

– Design & Drawings package to convert existing Mercury CellBased Caustic Soda Plant to membrance Cell Plant of 200 TPDcapacity.




III. Sugar Plant - Rupapur

a) Technology Imported Bagasse drier




IV. PVC Plant

a) Technology Imported Purchase of polymer based on suspension technology from

Chisso Japan of 100 M3 capacity.




......................................................................................................................................................................................................................................................................................................................................................................................

......................................................................................................................................................................................................................................................................................................................................................................................

......................................................................................................................................................................................................................................................................................................................................................................................

......................................................................................................................................................................................................................................................................................................................................................................................

......................................................................................................................................................................................................................................................................................................................................................................................

......................................................................................................................................................................................................................................................................................................................................................................................

......................................................................................................................................................................................................................................................................................................................................................................................

......................................................................................................................................................................................................................................................................................................................................................................................

......................................................................................................................................................................................................................................................................................................................................................................................

......................................................................................................................................................................................................................................................................................................................................................................................

......................................................................................................................................................................................................................................................................................................................................................................................

......................................................................................................................................................................................................................................................................................................................................................................................

DSCL-27.p65 7/27/2007, 9:03 AM33


(A) Company’s Philosophy

The Company’s philosophy on CorporateGovernance is focused upon a rich legacy of fair,ethical and transparent governance practices. TheCompany is conscious of its responsibility as a goodcorporate citizen and is committed to high standardof Corporate Governance practices. This is reflectedin the well balanced and independent structure ofthe Company’s eminent and well represented Boardof Directors. The Company is in full compliancewith the requirements under Clause 49 of theListing Agreement with the Stock Exchanges.

(B) Board of Directors

As at 31.3.2007, the Board of Directors comprisesof an Executive Chairman, three ExecutiveDirectors and eight Non-Executive Directors.

During the year, five Board Meetings were heldon 25.4.2006, 25.7.2006, 25.10.2006,22.1.2007 and 26.3.2007.

The composition of Board of Directors and theirattendance at Board Meetings during the year2006-07 and at the last Annual General Meetingheld on 25.7.2006 and also number of otherDirectorship and Committee Membership/Chairmanship as on 31.3.2007 are as follows:

Corporate Governance Report 2006-07

The ratio between Executive and Non-ExecutiveDirectors and Non-Independent and IndependentDirectors is 4:8.

Code of Conduct for Board Members & Senior

Management Team:

In compliance to the provisions of Clause 49 of theListing Agreement, the Board has laid down a Codeof Conduct for all Board Members and SeniorManagement Team. A copy of the said Code ofConduct is available on the website of the Company(www.dscl.com).

All Board Members and Senior Management Teamhave affirmed compliance of Code of Conduct ason 31st March, 2007 and a declaration to that effectsigned by Chairman & Senior Managing Director isattached and forms part of this report.

(C) Board Audit Committee

(i) Terms of reference:

The role and terms of reference of Board AuditCommittee covers areas mentioned underClause 49 of the Listing Agreement and Section292A of the Companies Act, 1956, besides

Name of Director Category of No. of Board Attended No. of other No. of Committee

Directorship meetings last AGM Directorship # Membership # #

attended Member Chairman

Shri Ajay S. Shriram ED 5 Yes 9 2 1

Shri Vikram S. Shriram ED 5 Yes 8 4 2

Shri Rajiv Sinha ED 5 Yes 4 2 -

Shri Ajit S. Shriram ED 5 Yes 6 1 -

Dr. S.S. Baijal I-NED 4 Yes 5 5 3

Shri Arun Bharat Ram I-NED 1 No 9 4 1

Shri Pradeep Dinodia I-NED 5 Yes 8 6 4

Shri Vimal Bhandari I-NED 2 Yes 4 2 1

Shri Sunil Kant Munjal I-NED 3 Yes 9 4 1

Shri D. Sengupta I-NED 5 Yes 4 2 -

Shri S.L. Mohan (GIC Nominee) I-NED 5 Yes - - -

Shri S.C.Bhargava (LIC Nominee) I-NED 5 Yes 13 3 1

# Excluding Private Limited Companies, Foreign Companies and Companies registered under Section 25 of the Companies Act, 1956.

# # Includes only Audit Committee and Shareholders/Investors Grievance Committee.

ED - Executive Director I-NED - Independent-Non-Executive Director

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

11

DSCL-27.p65 7/27/2007, 9:03 AM34


other terms as may be referred to by the Boardof Directors.

(ii) Composition:

The Board Audit Committee was formed in1990. As at 31.3.2007, the Committeecomprises of four Independent-Non-ExecutiveDirectors. The Committee met six times duringthe year and attendance of the Members at themeetings was as follows:

Name of Member Status No. of

meetings

attended

Dr. S.S. Baijal Chairman 5

Shri Arun Bharat Ram Member 2

Shri Pradeep Dinodia Member 5

Shri D. Sengupta Member 6

(D) Committee for Determining Remuneration Payableto Managing/Whole Time Directors


Subject to the provisions of the Companies Act,1956 and the notifications, if any, issued bythe Government thereunder to determine theremuneration, including commission, payableto Managing/Whole time Directors.

(ii) Composition:

The Committee comprises of three Independent-Non-Executive Directors. The Committee mettwice during the year and the attendance of

the Members at the meetings was as follows:

Name of Member Status No. ofmeetingsattended

Dr. S.S. Baijal Chairman 2

Shri Pradeep Dinodia Member 2

Shri D. Sengupta Member 2

(iii) Remuneration Policy:

The policy, inter alia, provides for the following:

a) Executive Directors:

- Salary and commission not to exceedlimits prescribed under the CompaniesAct, 1956.

- Revision from time to time dependingupon performance of the Company,individual Director’s performance andprevailing Industry norms.

- No sitting fees.

b) Non-Executive Directors:

- Eligible for commission.

- Sitting fees and commission not toexceed limits prescribed under theCompanies Act, 1956.

- The remuneration payable to Non-Executive Directors is decided by theBoard of Directors.

........................................................................................................................................................................................

........................................................................................................................................................................................

........................................................................................................................................................................................

.........................................................................................................................................................................................

.........................................................................................................................................................................................

I. Provision for incremental gratuity and earnedleave for the current year has not beenconsidered, since the provision is based onactuarial basis for the Company as a whole.

II. Notice period for termination of appointment

of Managing/Whole-time Directors is sixcalendar months, on either side.

III. In the event of termination of appointmentof Managing/Whole-time Directors,compensation will be in accordance with

(iv) Details of remuneration for the year 2006–07:

(a) Executive Directors:

(Amount/Rs. Lacs)

Executive Directors Salary P.F. Superannuation Perquisites Commission Total

Shri Ajay S. Shriram* 51.60 6.19 7.74 42.40 59.00 166.93

Shri Vikram S. Shriram* 48.00 5.76 7.20 17.63 56.00 134.59

Shri Rajiv Sinha* 36.00 4.32 5.40 19.68 43.00 108.40

Shri Ajit S. Shriram** 33.60 4.03 5.04 21.58 37.00 101.25

* Re-appointed w.e.f. 1.11.2003 for a period of 5 years. ** Re-appointed w.e.f. 2.5.2006 for a period of 5 years.

.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

DSCL-27.p65 7/27/2007, 9:03 AM35


the provisions of the Companies Act, 1956or any statutory amendment orre-enactment thereof.

IV. The Company has not offered any stockoption to its Executive Directors.

(b) Non-Executive Directors:

During the financial year, there was no pecuniaryrelationship or transaction between theCompany and any of its Non-Executive Directors.

The criteria for making payments to Non-Executive Directors is as under:

A. Sitting fee:@ Rs.10,000/- per Board meeting and@ Rs.5,000/- per Board Committee meetingattended by them.

B. Commission:

i) A sum of Rs.1.60 lacs each to all Non-Executive Directors as on 31.3.2007,

ii) A sum of Rs.24,500/- per meeting fornumber of Board and Board Committeemeetings attended by them during thefinancial year, and

iii) A sum of Rs.2.25 lacs to the Chairmanof Board Audit Committee.

The details of remuneration paid during the yearby way of sitting fee and commission forattending meetings of Board/Committees thereofalong with number of shares held by Non-Executive Directors as on 31.3.2007 in theCompany are as under:

Name of the Director Amount/Rs. Lacs No. of

Sitting Com- Total Shares

Fee mission held

Dr. S.S. Baijal 1.60 10.71 12.31 50,000

Shri Arun Bharat Ram 0.20 2.34 2.54 -

Shri Pradeep Dinodia 1.30 6.75 8.05 29,270

Shri Vimal Bhandari 0.20 2.09 2.29 2,000

Shri Sunil Kant Munjal 0.30 2.34 2.64 -

Shri D. Sengupta 1.65 8.46 10.11 8,000

Shri S.L. Mohan

(GIC Nominee) 0.50 2.83 3.33 -

Shri S.C.Bhargava

(LIC Nominee) 0.50 2.83 3.33 -

(E) Shareholders/Investors Grievance Committee


a) to scrutinise and approve registration oftransfer of shares/debentures/warrantsissued/to be issued by the Company,

b) to exercise all powers conferred on the Boardof Directors under Article 43 of the Articlesof Association,

c) to decide all questions and matters that mayarise in regard to transmission of shares/debentures/warrants issued/to be issued bythe Company,

d) to approve and issue duplicate shares/debentures/warrants certificates in lieu ofthose reported lost,

e) to refer to the Board any proposal of refusalof registration of transfer of shares/debentures/warrants for their consideration,

f) to look into shareholders and investorscomplaints like transfer of shares, non-receipt of annual reports, non-receipt ofdeclared dividends, etc., and

g) to delegate all or any of its powers toOfficers/Authorised Signatories of theCompany.

(ii) Composition:

The Committee comprises of two Independent-Non-Executive Directors and two ExecutiveDirectors.

The Company Secretary being ComplianceOfficer has been delegated the power to approveshare transfer/transmission etc. subject to a limitof 2500 shares of Rs.2/- each per transfer deedat a time. The delegated authority has beenregularly addressing the share transferformalities.

During the year, the Committee met ten timesand the attendance of the Members was asfollows:

Name Status No. of meetings

attended

Shri Pradeep Dinodia Chairman 9

Dr. S.S. Baijal Member 7

Shri Ajay S. Shriram Member 9

Shri Vikram S. Shriram Member 9

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

DSCL-27.p65 7/27/2007, 9:03 AM36


During the year, 326 complaints were receivedfrom the shareholders and all of them wereresolved to the full satisfaction of theshareholders. No investor complaint waspending as on 31.3.2007.

(F) General Body Meetings

The last three Annual General Meetings were heldas under:

Financial Date Time Location

Year

2005-06 25.07.2006 10.00 A.M. Air Force

Auditorium,

Subroto Park,

New Delhi

2004-05 02.08.2005 10.00 A.M. Air Force

Auditorium,

Subroto Park,

New Delhi

2003-04 10.08.2004 10.00 A.M. Air Force

Auditorium,

Subroto Park,

New Delhi

The details of Special Resolutions passed inprevious 3 Annual General Meetings are as under :

AGM 2006

- Approval for re-appointment of Shri AjitS. Shriram as Director (Sugar) for a period offive years w.e.f. 2.5.2006.

- Approval for appointment of Shri AdityaA. Shriram as a Manager to hold and continueto hold an office or place of profit in theCompany.

AGM 2005

- Approval under Section 309 of the CompaniesAct,1956 for payment of sum not exceeding1% per annum of net profits to Non-ExecutiveDirectors for a period of five years commencingfrom 1st April, 2005.

AGM 2004

- Approval under Section 163 of the CompaniesAct, 1956 for maintenance of certain Statutoryrecords of the Company with M/s. MCS Limited,Registrar and Transfer Agent at SrivenkateshBhavan, W-40, Okhla Industrial Area, Phase–II,New Delhi – 110 020.

Postal Ballot

During the year, no Special Resolution has beenpassed by Postal Ballot.

(G) Disclosures

(i) There were no transactions of material naturewith related parties during the year that hadpotential conflict with the interest of theCompany at large.

(ii) There were no instances of non-compliance bythe Company, penalties and strictures imposedon the Company by the Stock Exchanges orSEBI or any other statutory authority on anymatter related to the capital markets during thelast three years.

(iii) The Company is complying with all mandatoryrequirements of Clause 49 of the ListingAgreement. Non-mandatory requirementsrelating to Remuneration Committee have beenadopted by the Company.

(H) Means of Communication

The Company interacts with its shareholdersthrough multiple forms of corporate and financialcommunications such as annual reports, resultannouncement and media releases. Quarterly resultsare usually published in English daily newspapers,viz., Economic Times, Business Line and one Hindidaily newspaper, viz. Navbharat Times. Theseresults are also made available on the website ofthe Company www.dscl.com and also posted atSEBI’s website www.sebiedifar.nic.in. TheCompany’s website also displays official newsreleases. The Company has interacted with analystsand investors during the year under review throughone on one meeting.

(I) General Shareholders Information

(i) Next Annual General Meeting is proposed tobe held on 24th August, 2007 at Air ForceAuditorium, Subroto Park, New Delhi.

(ii) Financial Year: April to March.

(iii) Date of book closure: 10th August, 2007 to17th August, 2007 (both days inclusive)

(iv) Dividend payment date: Dividend, if any,declared in the next Annual General Meeting,will be paid within 30 days of the date ofdeclaration to those shareholders whose namesappear on the Register of Members on the dateof book closure.

(v) Listing on Stock Exchanges and Stock Codes:

Equity Shares are listed on National StockExchange of India Ltd. (Stock CodeNSE:DCMSRMCONS) and Bombay StockExchange Ltd. (Stock Code BSE:523367).

.......................................................................................................................................................................................

.......................................................................................................................................................................................

DSCL-27.p65 7/27/2007, 9:03 AM37


Under the depository system, the ISIN allottedto the Company’s Equity Shares of face valueof Rs.2/- each is INE499A01024.

(vi) Equity Share Price data for the year 2006-07:

Equity Share Price on NSE and NIFTY Index

Month Share Price on NSE NIFTY Index

High Low High Low

2006

April 119.50 88.00 3598.95 3290.35

May 146.00 95.35 3774.15 2896.40

June 99.05 72.05 3134.15 2595.65

July 98.90 75.30 3208.85 2878.25

August 97.00 78.10 3452.30 3113.60

September 100.80 80.85 3603.70 3328.45

October 107.00 85.60 3782.85 3508.65

November 113.50 90.55 3976.80 3737.00

December 122.40 93.70 4046.85 3657.65

2007

January 127.30 93.70 4167.15 3833.60

February 111.70 82.10 4245.30 3674.85

March 98.00 78.00 3901.75 3554.50

(vii) Registrar and Share Transfer Agent: M/s. MCSLimited have been acting as the Registrar andShare Transfer Agent for shares anddebentures of the Company-both in physicaland electronic mode.

(viii) Share Transfer System: The Company’sshares are traded in the Stock Exchangescompulsorily in demat mode. Physical shareswhich are lodged with the Company fortransfer are processed and returned to theshareholders within a period of 30 days.

(ix) Distribution of Shareholding as on 31.03.07:

Shareholders

No. of Shares Number % to total no.

of Shareholders

Upto - 500 47083 86.49

501 - 1000 3531 6.49

1001 - 2000 1820 3.34

2001 - 3000 638 1.17

3001 - 4000 339 0.62

4001 - 5000 241 0.44

5001 - 10000 371 0.68

10001 and above 415 0.77

TOTAL 54438 100

(x) Categories of Shareholders as on 31.03.07:

No of fully %

Category paid up share-

shares held holding

Promoters, Relatives

and Associates 90508120 54.55

Financial Institutions/Banks 19766808 11.92

Foreign Institutional Investors/

Overseas Corporate Bodies/

Non-Resident Indians 22171764 13.36

Mutual Funds 2535215 1.53

Bodies Corporate 7990566 4.82

General Public 22930847 13.82

TOTAL 165903320 100

(xi) Dematerialisation of Equity Shares and liquidity:

As on 31.03.2007, of the total eligible EquityShares, 86.17% were in dematerialised formand the balance 13.83% shares in physicalform.

The Company has not issued any GDRs/ADRs/warrants or any convertible instruments, whichare pending for conversion.

(xii) Plant Locations:

The Company’s plants are located at Kota,Bharuch, Ajbapur, Rupapur, Hariawan, Loni,Tonk and Bhiwadi.

The Company has its fabrication units forFenesta operations at Bhiwadi, Kota, Mumbai,Bangalore, Hyderabad and Chennai.

(xiii) Address for Correspondence:

The Company’s Registered Office is situatedat 6th Floor, Kanchenjunga Building, 18,Barakhamba Road, New Delhi-110 001.

Correspondence by the shareholders anddebentureholders should be addressed to:

MCS LimitedSrivenkatesh Bhavan,W-40, Okhla Industrial Area, Phase–II,New Delhi – 110 020Tel Nos. 011-41406149, 41406151-52Fax No. 011-41709881E-mail : [email protected]

Exclusive E-mail for Investor [email protected]

Shareholders holding shares in electronic modeshould address all their correspondence to theirrespective Depository Participants.

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

......................................................................................................................................................................................

......................................................................................................................................................................................

......................................................................................................................................................................................

......................................................................................................................................................................................

......................................................................................................................................................................................

......................................................................................................................................................................................

......................................................................................................................................................................................

......................................................................................................................................................................................

........................................................................................................................................................................................

........................................................................................................................................................................................

........................................................................................................................................................................................

........................................................................................................................................................................................

........................................................................................................................................................................................

........................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

.......................................................................................................................................................................................

DSCL-27.p65 7/27/2007, 9:03 AM38


To the Members of DCM Shriram Consolidated Limited

We have examined the compliance of conditions of Corporate Governance by DCM Shriram Consolidated Limitedfor the year ended March 31, 2007, as stipulated in clause 49 of the Listing Agreement(s) of the said Companywith the stock exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examinationwas limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of theconditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statementsof the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that theCompany has complied with the conditions of Corporate Governance as stipulated in the above mentioned ListingAgreement(s).

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiencyor effectiveness with which the management has conducted the affairs of the Company.

For A.F. FERGUSON & CO.Chartered Accountants

J.M.SETHPlace : New Delhi PartnerDate : 29th June, 2007 Membership No.17055

Auditors’ Certificate on the Compliance of conditions of Corporate Governance under Clause 49

of the Listing Agreement

I, Ajay S. Shriram, Chairman & Senior Managing Director of DCM Shriram Consolidated Limited hereby declare thatall Board Members and Senior Management Team have affirmed compliance of the Code of Conduct for the yearended March 31, 2007.

Place : New Delhi (AJAY S. SHRIRAM)Date : 29th June, 2007 Chairman & Sr. Managing Director

Declaration regarding Compliance of Code of Conduct

DSCL-27.p65 7/27/2007, 9:03 AM39


Auditors’ Report

1. We have audited the attached balance sheet of DCMShriram Consolidated Limited as at March 31, 2007,the profit and loss account and also the cash flowstatement of the Company for the year ended onthat date annexed thereto. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express anopinion on these financial statements based on ouraudit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Thosestandards require that we plan and perform the auditto obtain reasonable assurance about whether thefinancial statements are free of materialmisstatements. An audit includes examining, on atest basis, evidence supporting the amounts anddisclosures in the financial statements. An auditalso includes assessing the accounting principlesused and significant estimates made bymanagement, as well as evaluating the overallfinancial statement presentation. We believe thatour audit provides a reasonable basis for ouropinion.

3. As required by the Companies (Auditor’s Report)Order, 2003 issued by the Central Government ofIndia in terms of section 227(4A) of the CompaniesAct, 1956, we enclose in the annexure a statementon the matters specified in paragraphs 4 and 5 ofthe said Order.

4. Further to our comments in the annexure referredto in paragraph 3 above, we report that :

a) we have obtained all the information andexplanations, which to the best of ourknowledge and belief were necessary for thepurposes of our audit;

b) in our opinion, proper books of account asrequired by law have been kept by the Companyso far as appears from our examination of thosebooks;

c) the balance sheet, profit and loss account andcash flow statement dealt with by this reportare in agreement with the books of account;

12

d) in our opinion, the balance sheet, profit andloss account and cash flow statement dealt withby this report comply with the accountingstandards referred to in sub-section (3C) ofsection 211 of the Companies Act, 1956;

e) on the basis of written representations receivedfrom the directors as on March 31,2007 andtaken on record by the Board of Directors, wereport that none of the directors is disqualifiedas on March 31, 2007 from being appointed asa director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956;

f) in our opinion and to the best of our informationand according to the explanations given to us,the accounts give the information required bythe Companies Act, 1956, in the manner sorequired and give a true and fair view inconformity with the accounting principlesgenerally accepted in India:

i) in the case of the balance sheet, of the stateof affairs of the Company as at March 31,2007;

ii) in the case of the profit and loss account,of the profit of the Company for the yearended on that date; and

iii) in the case of the cash flow statement, ofthe cash flows for the year ended on thatdate.

For A. F. FERGUSON & CO.Chartered Accountants

J.M. SETHPartner

New Delhi Membership No.: 17055June 29, 2007

To the Members of DCM Shriram Consolidated Limited

DSCL-27.p65 7/27/2007, 9:03 AM40


Auditors’ Report (Continued)

ANNEXURE

Annexure referred to in paragraph 3 of Auditors’ Reportto the Members of DCM Shriram Consolidated Limitedon the accounts for the year ended March 31, 2007.(i) (a) The Company is maintaining proper records

showing full particulars including quantitativedetails and situation of fixed assets.

(b) The management has carried out a physicalverification of most of its fixed assets duringthe year. In our opinion, the frequency ofverification is reasonable having regard to thesize of the Company and the nature of itsfixed assets. The discrepancies noticed onsuch verification were not material and havebeen properly dealt with in the books ofaccount.

(c) In our opinion and according to theinformation and explanations given to us, asubstantial part of fixed assets has not beendisposed off by the Company during the year.

(ii) (a) During the year, the inventories have beenphysically verified by the management exceptfor inventory lying with third parties whereconfirmations have been received in most ofthe cases. In our opinion, the frequency ofverification is reasonable.

(b) In our opinion and according to theinformation and explanations given to us, theprocedures of physical verification of stocksfollowed by the management are reasonableand adequate in relation to the size of theCompany and the nature of its business.

(c) On the basis of our examination of the recordsof inventories, we are of the opinion that,the Company is maintaining proper recordsof inventories. The discrepancies noticed onphysical verification of inventories ascompared to book records were not materialand have been properly dealt with in thebooks of account.

(iii) (a) According to the information andexplanations given to us, the Company has,during the year, not granted any loan, securedor unsecured to companies, firms and otherparties covered in the register maintainedunder Section 301 of the Companies Act,1956, other than unsecured loansaggregating Rs. 63.46 crores granted to threecompanies covered in the register maintainedunder Section 301 of the Companies Act,

1956. The maximum amount due during theyear was Rs. 40.63 crores and the year endbalance of loans granted was Rs. 16.64crores.

(b) In our opinion and according to theinformation and explanations given to us, therate of interest and other terms andconditions of the loans granted by theCompany, as referred to in paragraph 4(iii)(a)of the Companies (Auditor’s Report) Order,2003 (hereinafter referred to as the Order)above, are, prima-facie, not prejudicial to theinterest of the Company.

(c) According to the information andexplanations given to us, the parties, to whomthe loans have been granted by the Company,as referred to in paragraph 4(iii)(a) above, havebeen regular in repayment of principal amountas stipulated and have been regular inpayment of interest.

(d) According to the information andexplanations given to us, there are no overdueamounts in respect of the loans granted asreferred to in paragraph 4(iii)(a) above andinterest thereon.

(e) According to the information andexplanations given to us, the unsecured loantaken by the Company from companies, firmsor other parties covered in the registermaintained under section 301 of theCompanies Act, 1956, is by way of fixeddeposit of Rs 0.08 crore (maximum amountoutstanding during the year Rs 0.08 crore)from a director, which is outstanding as atthe year end.

(f) In our opinion, the rate of interest and otherterms and conditions of unsecured loan takenby the Company are not, prima facie,prejudicial to the interest of the Company.

(g) In our opinion, the Company is regular inpayment of the principal amount and theinterest thereon.

(iv) In our opinion and according to the informationand explanations given to us, there are adequateinternal control system commensurate with thesize of the Company and the nature of its businesswith regard to the purchase of inventories andfixed assets and with regard to sale of goods andthere are no sale of services. Further, on the basisof our examination and according to the

DSCL-27.p65 7/27/2007, 9:03 AM41


information and explanations given to us, we haveneither come across nor have been informed ofany instance of major weaknesses in the aforesaidinternal control system.

(v) According to the information and explanationsgiven to us, during the year, there were notransactions that were required to be entered inthe register maintained in pursuance of section301 of the Companies Act, 1956 ( “The Act”).For this purpose the Company has taken the viewthat the transactions which are subjected to theprovisions of section 299(6) of the Act are notrequired to be entered in this register. In any case,notwithstanding the view of section 299(6) ofthe Act taken by the Company, in respect of certaintransactions, exceeding the value of Rs. 5 lacs inrespect of any party during the year have beenmade at prices which are reasonable having regardto prevailing market prices at the relevant time.

(vi) In our opinion and according to the informationand explanations given to us, the Company hascomplied with the provisions of section 58A,section 58AA or any other relevant provisions ofthe Companies Act, 1956 and the Companies(Acceptance of Deposits) Rules, 1975, with regardto the deposits accepted from the public. As perinformation and explanations given to us, no orderunder the aforesaid sections has been passed bythe Company Law Board or National Company LawTribunal or Reserve Bank of India or any Court orany other Tribunal on the Company.

(vii) In our opinion, the Company has an internal auditsystem commensurate with the size and natureof its business.

(viii) We have broadly reviewed the books of accountmaintained by the Company in respect of productswhere, pursuant to the Rules made by the CentralGovernment, the maintenance of cost records hasbeen prescribed under section 209(1) (d) of theCompanies Act, 1956 and are of the opinion that,prima facie, the prescribed accounts and recordshave been made and maintained. We have not,however, made a detailed examination of therecords with a view to determining whether theyare accurate or complete.

(ix) (a) According to the information andexplanations given to us and the records ofthe Company examined by us, the Companyhas generally been regular in depositingundisputed statutory dues including providentfund, investor education protection fund,employees’ state insurance, income-tax, salestax, wealth tax, service tax, customs duty,excise duty, cess and other material statutorydues applicable to it. We are informed thatthere are no undisputed statutory dues as atthe year end outstanding for a period of morethan six months from the date they becamepayable.

(b) According to the information andexplanations given to us and the records ofthe Company examined by us, there are nodisputed dues of wealth tax, customs duty,service tax and cess matters.According to the information andexplanations given to us and the records ofthe Company examined by us, the details ofdisputed dues not paid of excise duty, salestax and income-tax dues are as follows:

Nature of the Nature of Forum where Amount* Amount paid Period to which the

statute the dues pending (Rs.Crores) under protest amount relates

(Rs. Crores)

Central Excise Law Excise duty Appellate authority up 2.16 – 1995-96, 2001-02,

to Commissioners’ level 2003-04, 2005-06, 2006-07

Central Excise and 0.11 0.06 1997-98

Service Tax Appellate Tribunal

Sales Tax Laws Sales tax Appellate authority up 2.73 0.86 1983-84, 1984-85,

to Commissioners’ level 1991-92, 1994-95,

1995-96 to 2000-01

Sales Tax Tribunal 1.52 - 1978-79, 1979-80, 1986-87

1990-91, 1991-92, 1992-93,

1995-96

Income Tax Act, 1961 Income tax Commissioner (Appeal) 27.60 27.60 2002-03, 2003-04

* amount as per demand orders including interest and penalty wherever quantified in the Order


DSCL-27.p65 7/27/2007, 9:03 AM42


The following matters, which have beenexcluded from the table above, have beendecided in favour of the Company but the

department has preferred appeals at higherlevels. The details are given below:

(x) The Company does not have accumulated lossesat the end of the financial year March 31, 2007.Further, the Company has not incurred any cashlosses during the financial year ended March 31,2007 and in the immediately preceding financialyear ended March 31, 2006.

(xi) According to the records of the Companyexamined by us and the information andexplanations given to us, the Company, duringthe year, has not defaulted in repayment of duesto financial institutions, banks or debentureholders.

(xii) As the Company has not granted any loans andadvances on the basis of security by way ofpledge of shares, debentures and other securities,paragraph 4 (xii) of the Order is not applicable.

(xiii) The provisions of any special statute as specifiedunder paragraph 4 (xiii) of the Order are notapplicable to the Company.

(xiv) As the Company is not dealing or trading inshares, securities, debentures and otherinvestments, paragraph 4 (xiv) of the Order isnot applicable.

(xv) As the Company has not given any guaranteesduring the year for loans taken by others frombanks or financial institutions, paragraph 4(xv)of the Order is not applicable.

(xvi) In our opinion and according to the informationand explanations given to us, the term loans takenduring the year have been applied for the purposefor which they were obtained.

Nature of the statute Nature of the dues Forum where pending Amount (Rs. Crores) Period to which the amount relates

Income Tax Act, 1961 Income Tax High Court 9.85 1996-97, 1997-98, 1998-99

(xvii) According to the information and explanations

given to us and on an overall examination of the

balance sheet of the Company, we report that

the Company has used funds raised on short-

term basis for long-term investment. As on March

31, 2007, the Company has invested short term

loans amounting to Rs. 212.71 crores for

financing the fixed assets.

(xviii) As the Company has not made any preferentialallotment of shares during the year, paragraph 4(xviii) of the Order is not applicable.

(xix) According to information and explanations givento us, no security has been created for debenturesissued during the year since they are unsecured.

(xx) Since the Company has not raised any moneyby way of public issue during the year, paragraph4 (xx) of the Order is not applicable.

(xxi) Based upon the audit procedures performed andinformation and explanations given by themanagement, we report that no fraud on or bythe Company has been noticed or reported duringthe course of our audit for the year ended March31, 2007.


J.M. SETHNew Delhi PartnerJune 29, 2007 Membership No.: 17055


DSCL-27.p65 7/27/2007, 9:03 AM43


DCM SHRIRAM

CONSOLIDATED LIMITEDBalance Sheet as at March 31, 2007

Schedule As at As atMarch 31, 2007 March 31, 2006

Rs. Crores Rs. Crores

Sources of Funds

Shareholders’ funds

Share capital 1 33.34 33.34Reserves and surplus 2 518.49 488.02

551.83 521.36Loan Funds 3

Secured 978.38 743.61Unsecured 542.16 323.28

1520.54 1066.89Deferred tax liabilities (net) 4 170.55 147.00

Total funds employed 2242.92 1735.25

Application of Funds

Fixed assets 5Gross block 2145.61 1421.23Less: Depreciation 498.74 416.34

Net block 1646.87 1004.89Capital work-in-progress 101.62 237.48

1748.49 1242.37Investments 6 33.99 34.49

Current assets, loans and advances 7Inventories 558.13 440.58Sundry debtors 502.20 416.97Cash and bank balances 52.91 32.59Loans and advances 220.78 140.13

1334.02 1030.27Less: Current liabilities and provisions 8

Current liabilities 812.17 513.35Provisions 61.41 58.53

873.58 571.88Net current assets 460.44 458.39

Total funds utilised 2242.92 1735.25

Notes to the accounts 12

Per our report attachedFor A.F. FERGUSON & CO. VIKRAM S. SHRIRAM AJAY S. SHRIRAMChartered Accountants Vice Chairman & Managing Director Chairman & Sr. Managing Director

J.M. SETH V.P. AGARWAL RAJIV SINHA AJIT S. SHRIRAMPartner Company Secretary Dy. Managing Director ARUN BHARAT RAMMembership No.:17055 PRADEEP DINODIA

SUNIL KANT MUNJALD. SENGUPTAS.L. MOHAN

New Delhi S.C. BHARGAVAJune 29, 2007 Directors

DSCL-44.p65 7/27/2007, 9:03 AM44


DCM SHRIRAM

CONSOLIDATED LIMITED

Schedule Year ended Year endedMarch 31, 2007 March 31, 2006


Income

Sale of products (Gross) 2872.16 2476.32

Less: Excise duty 170.70 143.75

Sale of products (Net) 2701.46 2332.57

Other income 9 33.71 17.35

2735.17 2349.92

Expenditure

Manufacturing and other expenses 10 1837.34 1339.97

Purchases for resale 661.62 726.21

Profit for the year before depreciation, interest and tax 236.21 283.74

Interest - on debentures and other fixed loan 60.92 39.49

- others 16.42 8.96

Profit for the year before depreciation and tax 158.87 235.29


Profit for the year before tax 68.61 165.10

Provision for taxation - current/deferred tax 11 20.55 46.31

- fringe benefit tax 2.25 3.60

Profit after tax 45.81 115.19

Transfer from debenture redemption reserve 5.16 3.67

Balance brought forward from the previous year 225.74 173.91

Profit available for appropriation 276.71 292.77

Appropriations

Proposed dividends

Equity shares

- Interim 6.64 6.64

- Final 6.64 8.30

Corporate dividend tax 2.06 2.09

General reserve 10.00 50.00

Balance carried to balance sheet 251.37 225.74

Earnings per share - basic/diluted (Rs.) 2.76 6.94

(Refer note 5 in Schedule 12)

Notes to the accounts 12

Profit and Loss Account for the year ended March 31, 2007

Per our report attached to the balance sheetFor A.F. FERGUSON & CO. VIKRAM S. SHRIRAM AJAY S. SHRIRAMChartered Accountants Vice Chairman & Managing Director Chairman & Sr. Managing Director




DSCL-44.p65 7/27/2007, 9:03 AM45


DCM SHRIRAM


Year ended Year endedMarch 31, 2007 March 31, 2006

Rs. Crores Rs. Crores Rs. Crores Rs. Crores

A. Cash flow from operating activities

Net profit before tax 68.61 165.10

Adjustments for :


Provision for contingencies - 0.13

(Profit)/Loss on sale of fixed assets (8.21) (4.36)

Lease rentals expense - 0.11

Profit on sale of non-trade current investments - (0.08)

Profit on sale of non-trade long term investments (3.06) (1.42)

Finance charges 1.46 2.48

Interest expense 77.34 48.45

Less: interest and dividend income (5.95) 71.39 (3.81) 44.64

Operating profit before working capital changes 220.45 276.79

Adjustments for :

Trade and other receivables(net) (135.67) (155.23)

Inventories (117.55) (136.58)

Trade and other payables 278.04 180.75

Cash generated from operations 245.27 165.73

Income taxes (paid) / refund (net) (23.95) (20.78)

Net cash from operating activities 221.32 144.95

B. Cash flow from investing activities

Purchase of fixed assets (579.39) (486.20)

Sale of fixed assets 14.49 14.56

Purchase of trade long term Investments - (3.57)

Purchase of non-trade current investments (2007.02) (1422.01)

Sale of non-trade current investments 2007.02 1447.09

Sale of non-trade long term investments 3.06 1.87

Sale of trade long term investments 0.50 -

Advances to subsidiary companies received/(Paid) (5.29) 1.05

Interest received 4.13 1.81

Dividend received 1.60 2.01

Net cash used in investing activities (560.90) (443.39)

C. Cash flow from financing activities

Proceeds from borrowings 3958.77 2947.12

Repayment of borrowings (3691.16) (2613.96)

Finance charges (1.46) (2.48)

Changes in working capital borrowings 186.07 39.61

Repayment of finance lease liabilities (0.03) (0.31)

Dividends paid (14.94) (15.76)

Corporate dividend tax paid (2.09) (2.21)

Interest paid (75.26) (46.44)

Net cash from financing activities 359.90 305.57

Net increase in cash and cash equivalents 20.32 7.13

Cash and cash equivalents as at opening

Cash and cheques in hand and balance with banks 32.16 25.03

Cash and cash equivalents as at closing

Cash and cheques in hand and balance with banks 52.48 32.16

Cash Flow Statement for the year ended March 31, 2007

Per our report attached to the balance sheetFor A.F. FERGUSON & CO. VIKRAM S. SHRIRAM AJAY S. SHRIRAMChartered Accountants Vice Chairman & Managing Director Chairman & Sr. Managing Director




DSCL-44.p65 7/27/2007, 9:03 AM46


DCM SHRIRAM


1. SHARE CAPITAL

As at As atMarch 31, 2007 March 31, 2006


Authorised

24,99,50,000 (2005-2006 - 24,99,50,000) Equity shares 49.99 49.99

of Rs. 2 each

65,01,000 (2005-2006 - 65,01,000) Cumulativeredeemable preference shares of Rs. 100 each 65.01 65.01

115.00 115.00

Issued

16,98,03,320 (2005-2006 - 16,98,03,320) Equity sharesof Rs. 2 each 33.96 33.96

Subscribed and paid up

16,59,03,320 (2005-2006 - 16,59,03,320) Equity sharesof Rs. 2 each fully called-up 33.18 33.18

Add: Forfeited shares - Amount originally paid-up 0.16 33.34 0.16 33.34

33.34 33.34

NOTES:

Of the issued, subscribed and paid-up capital,

- 2,87,75,380 equity shares of Rs. 2 each represent the equity shares issued on October 9, 1990 to themembers of undivided DCM Limited in the ratio of one share for every four shares held by the members inundivided DCM Limited, in terms of the Scheme of Arrangement effective from April 1, 1990, without pay-ment being received in cash.

- 8,29,51,660 equity shares of Rs. 2 each fully paid up were allotted and issued as bonus shares by capitalisationof Capital Redemption Reserve.

2. RESERVES AND SURPLUS

As at As at

March 31, 2006 Additions Deductions March 31, 2007

Rs. Crores Rs. Crores Rs. Crores Rs. Crores

Capital redemption reserve 8.41 - - 8.41

Share premium account 62.76 - - 62.76

Debenture redemption reserve 11.83 - 5.16 # 6.67

General reserve 179.28 10.00 - 189.28

Profit and loss account 225.74 25.63 - 251.37

488.02 35.63 5.16 518.49

# Transfer to profit and loss account on redemption.

Schedules to the Accounts

DSCL-44.p65 7/27/2007, 9:03 AM47


DCM SHRIRAM


3. LOAN FUNDS



Secured

Debentures 13.33 23.67Loans from banks

On cash credit account 226.97 40.90Others 554.94 485.47

Other loans 183.14 193.57

978.38 743.61

Unsecured

DepositsFixed 8.54 11.29Others 28.94 25.77

Interest accrued and due on deposits 0.09 0.09Short term loans and advances

Banks 454.59 177.60Others 50.00 108.50

Finance lease liability* - 0.03

542.16 323.28

1520.54 1066.89

* Represents present value of minimum lease payments. Also refer note 11 in Schedule 12.

Secured

1. Debentures:

i) Debentures detailed below are secured by English first mortgage on the Company’s property at Taluka Kalol, District

Gandhinagar, Gujarat and first equitable mortgage/ charge on immovable/ movable properties, both present and future,

of the Company’s undertakings at Kota, Rajasthan, subject to charges created/ to be created in favour of the Compa-

ny’s bankers on stocks, stores and book debts for securing borrowings for working capital, and shall rank pari-passu

in all respects with the security created or to be created in terms of the stipulations of the respective Trust Deeds :

a) 15,00,000 (2005-2006 – 15,00,000) 8.5% Secured redeemable non-convertible debentures of Rs.100 each

redeemable in three equal annual instalments commencing from November 1, 2005. The second instalment has

been paid during the year (Rs. 5.00 crores due within a year, 2005-2006 – Rs.5.00 crores).

b) 5,00,000 (2005-2006 – 5,00,000) 8.5% Secured redeemable non-convertible debentures of Rs.100 each, re-

deemable in three equal annual instalments commencing from November 1, 2006. The first instalment has been

paid during the year (Rs.1.67 crores due within one year, 2005-2006- Rs.1.67 crores)

ii) Debentures detailed below are secured by English first mortgage on the Company’s property at Taluka Kalol, District

Gandhinagar, Gujarat and first equitable mortgage/ charge on immovable/ movable properties both present and future,

of the Company’s undertaking at District Bharuch, Gujarat (save and except book debts) subject to charges created/

to be created in favour of the Company’s bankers on stocks, stores and book debts for securing borrowings for

working capital and shall rank pari-passu with existing charges created/ to be created in favour of other first chargeholders:

a) 6,00,000 (2005-2006 – 6,00,000) 8.5% Secured redeemable non-convertible debentures of Rs.100 each re-

deemable in three equal annual instalments commencing from November 1, 2005. The second instalment has

been paid during the year (Rs.2.00 crores due within a year, 2005-2006 – Rs.2.00 crores).

b) 1,00,000 (2005-2006 – 1,00,000) 11% Secured redeemable non-convertible debentures of Rs.100 each, re-

deemable in three equal annual instalments commencing from November 1, 2005. The second instalment has

been paid during the year (Rs.0.33 crore due within a year, 2005-2006 – Rs.0.33 crore).

c) 4,00,000 (2005-2006 – 4,00,000) 8.5% Secured redeemable non-convertible debentures of Rs.100 each, re-

deemable in three equal annual instalments commencing from November 1, 2006. The first instalment has been

paid during the year (Rs.1.33 crores due within one year, 2005-2006 – Rs.1.33 crores).

Schedules to the Accounts (Continued)

DSCL-44.p65 7/27/2007, 9:03 AM48


DCM SHRIRAM


2. Short term working capital borrowings from Banks:

i) Loans from banks on cash credit account of Rs. 226.97 crores (2005-2006 – Rs. 40.90 crores) are secured by first

charge by way of hypothecation of stocks/stores and book debts of the Company as per terms and conditions of

respective Banks. These loans are further secured/to be secured by a third charge by way of mortgage/hypothecation

of all the immovable/movable properties (other than current assets) of the Company’s undertakings at Kota in Rajasthan

and Ajbapur in Uttar Pradesh and second charge by way of mortgage/hypothecation of all the immovable/movable

properties (other than current assets) of the Company’s undertakings at Rupapur in Uttar Pradesh.

3. Other loans:

i) Term loans of Rs.27.33 crores (2005-2006 – Rs.49.34 crores) from banks and term loans of Rs.12.00 crores (2005-

2006 – Rs.12.00 crores) from others are secured by pari passu first mortgage/ charge, created on immovable and

movable assets, both present and future, (save and except book debts), subject to prior charges created/to be created

in favour of the Company’s bankers on the stocks of raw materials, semi-finished and finished goods and consumable

stores for working capital borrowings and a term loan of Rs.20.00 crores (2005-2006 – Rs. 20.00 crores) from a bank

is secured by way of second mortgage/ charge, created/to be created on immovable and movable fixed assets, both

present and future, pertaining to the Company’s undertakings at District Bharuch, Gujarat, (Rs.14.69 crores due

within a year; 2005-2006 – Rs.19.97 crores).

ii) Term loans of Rs.146.43 crores (2005-2006 – Rs.128.48 crores) from banks and term loans of Rs.18.00 crores

(2005-2006 – Rs.27.00 crores) from others are secured by way of first mortgage/charge, created ranking pari-passu

on immovable and movable assets, both present and future, (save and except book debts), term loan of Rs.130.47

crores (2005-2006 – Rs.133.86 crores) from others are secured by way of first mortgage/charge, created ranking

pari-passu on immovable and movable assets, both present and future, subject to charges created or to be created in

favour of the Company’s bankers on the stocks of raw materials, semi-finished and finished goods and consumable

stores for working capital borrowings, and term loans of Rs.50.00 crores (2005-2006 – Rs. 50.00 crores) from banks

are secured by way of second mortgage/ charge, created/to be created on immovable and movable fixed assets, both

present and future of the Company’s undertakings at Kota, Rajasthan (Rs.20.87 crores due within a year; 2005-2006

– Rs.18.67 crores).

iii) Term loan of Rs.5.33 crores (2005-2006 – Rs. 7.33 crores) from a bank is secured by way of first mortgage/charge,

ranking pari passu, on immovable/movable assets, both present and future, pertaining to the Company’s Ajbapur

Sugar Complex and Rupapur Sugar Complex, Uttar Pradesh, subject to charges created/to be created in favour of

Company’s bankers on the stocks of raw materials, semi finished goods, finished goods and consumable stores for

securing working capital borrowings (Rs. 2.00 crores due within a year, 2005-2006 – Rs. 2.00 crores).

iv) Term loan of Rs.118.07 crores (2005-2006 – Rs.84.71 crores) from banks are secured by way of first mortgage/

charge, ranking pari passu, on immovable/movable assets, both present and future and term loan of Rs.15.67 crores

(2005-2006 – Rs.9.71 crores) from others is secured by way of a exclusive second charge on immovable/movable

assets (save and except book debts) subject to charges created/to be created in favour of the Company’s bankers on

the stocks of raw materials, semi finished goods, finished goods and consumable stores for securing working capital

borrowings both present and future, pertaining to the Company’s Ajbapur Sugar Complex, Uttar Pradesh (Rs.8.33

crores due within a year, 2005-2006 – Rs. Nil).

v) Term loan of Rs.7.00 crores (2005-2006 – Rs.11.00 crores) from others is secured by way of subservient mortgage/

charge, created/ to be created on 9 MW power plant at Ajbapur Sugar Complex and 6MW power plant at Rupapur

Sugar Complex of the Company. (Rs.4.00 crores due within a year, 2005-2006 – Rs. 4.00 crores).

vi) Term loan of Rs.86.98 crores (2005-2006 – Rs.89.24 crores) from a bank is secured by way of first mortgage/charge

created/ to be created on immovable/movable assets, both present and future, subject to charges created/to be

created in favour of Company’s bankers on the stocks of raw materials, semi finished goods, finished goods and

consumable stores for securing working capital borrowings, pertaining to the Company’s Loni Sugar Complex, Uttar

Pradesh. (Rs.Nil due within a year, 2005-2006 – Rs. Nil).

vii) Term loan of Rs.68.07 crores (2005-2006 – Rs.22.71 crores) from a bank is secured by way of first mortgage/charge

created/ to be created on immovable/movable assets, both present and future, subject to charges created/to be

created in favour of Company’s bankers on the stocks of raw materials, semi finished goods, finished goods and

consumable stores for securing working capital borrowings, pertaining to the Company’s Hariawan Sugar Complex,

Uttar Pradesh. (Rs. Nil due within a year, 2005-2006 – Rs. Nil).

viii) Term loan of Rs.32.73 crores (2005-2006 – Rs.33.66 crores) from a bank is secured by way of first mortgage/charge

created/ to be created on immovable/movable fixed assets, both present and future pertaining to the Company’s

Rupapur Sugar Complex, Uttar Pradesh. (Rs.Nil due within a year, 2005-2006 – Rs. Nil).


DSCL-44.p65 7/27/2007, 9:03 AM49


DCM SHRIRAM


5. FIXED ASSETS

GROSS BLOCK DEPRECIATION NET BLOCK

Description As at As at Up to For Up to As at As at

March 31, Additions Deductions March 31, March 31, the year Deductions March 31, March 31, March 31,

2006 2007 2006 2007 2007 2006

Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores

Owned assets

Land 47.55 30.97 3.95 74.57 * - - - - 74.57 47.55

Buildings 114.40 111.78 0.05 226.13 ** 15.16 3.70 0.01 18.85 207.28 99.24

Plant and machinery 1186.90 577.86 7.39 1757.37 $ 369.88 76.73 6.29 440.32$ 1317.05 817.02

Furniture and fittings 22.24 11.74 1.06 32.92 13.56 3.73 0.67 16.62 16.30 8.68

Vehicles 16.97 5.18 1.57 20.58 6.70 3.26 0.86 9.10 11.48 10.27

Intangibles

Technical Know- how 22.82 0.93 - 23.75 7.74 2.34 - 10.08 13.67 15.08

Brand 8.22 - - 8.22 2.37 0.69 - 3.06 5.16 5.85

Software 1.43 0.64 - 2.07 0.42 0.29 - 0.71 1.36 1.01

Assets taken on finance lease

Vehicles 0.70 - 0.70 - $$ 0.51 0.10 0.61 - - 0.19

This year 1421.23 739.10*** 14.72 2145.61 416.34 90.84 # 8.44 498.74 1646.87

Previous year 1040.71 397.45 16.93 1421.23 352.77 70.31 6.74 416.34 1004.89

Capital work in progress 101.62 237.48

(including capital advances)

1748.49 1242.37

* - Includes Rs. 2.15 crores (2005-2006 - Rs. 2.15 crores) being value of land jointly held and possessed in equal proportion with M/s Irama Estates Pvt. Limited,

Kolkata, pursuant to the Agreement between the parties.

- Includes Rs. 2.19 crores (2005-2006 -Rs. Nil) pertaining to land situated at Hardoi and Hyderabad pending registration in favour of the Company

** Includes Rs.Nil (2005-2006 - Rs.1.15 crores) pertaining to a flat situated at Mumbai, pending registration in favour of the Company.

*** Includes addition of Rs. 11.00 crores (2005-2006 - Rs. 2.48 crores) on account of foreign exchange fluctuation.

$ Includes Rs. 0.23 crore (2005-2006 Rs. 0.79 crore) in respect of certain plant and machinery retired from active use and held for disposal.

$$ Refer note 11 in schedule 12

# Includes Rs. 0.58 crore (2005-2006 - Rs. 0.12 Crore) included in additions to fixed assets, in respect of sugar projects.

4. DEFERRED TAX LIABILITIES AND ASSETS



Deferred tax liabilities

Depreciation 186.22 155.54Compensation payable to employees 4.84 4.79Others 6.47 5.68

197.53 166.01

Deferred tax assets

Provision for gratuity and leave encashment 14.09 12.45Provision for doubtful debts and advances 2.83 2.21Others 10.06 4.35

26.98 19.01

Deferred tax liabilities (net) 170.55 147.00


DSCL-44.p65 7/27/2007, 9:03 AM50


DCM SHRIRAM


6. INVESTMENTS



Long Term

(valued at cost unless there is permanent fall in value thereof)

Trade Investments

Unquoted

7,95,009 (2005-2006 - 7,95,009) Equity shares of Rs.10 eachfully paid up of Bharuch Eco Aqua Infrastructure Limited. 0.79 0.79

30,00,000 (2005-2006 - 35,00,000) Equity shares of Rs. 10 eachfully paid up of Forum I Aviation Limited. 5,00,000 shares 3.00 3.50sold during the year.

Non-trade Investments

Government securities

Unquoted

National savings certificates 0.01 0.01

Investment in Shares, Units, etc.

Quoted

83,115 (2005-2006 - 83,115 ) 6.75% Bonds of Rs.100 each fullypaid-up of Unit Trust of India. 0.83 0.83

Nil (2005-2006 - 2,34,917) Equity shares of Rs.10 eachfully paid-up of SRF Polymer Limited. 2,34,917 shares sold - -during the year.

Investment in Subsidiaries

Unquoted

60,01,208 (2005-2006 - 60,01,208) Equity shares of Rs.10each fully paid-up of DCM Shriram Credit and InvestmentsLimited. 0.22 0.22

83,51,196 (2005-2006 - 83,51,196)Equity shares of Rs.10each fully paid-up of DCM Shriram Aqua Foods Limited. 4.22 4.22

29,19,058 (2005-2006 - 29,19,058) Equity shares of Rs.10each fully paid-up of Shriram Bioseed Genetics India Limited. 8.78 8.78

17,33,200 (2005-2006 - 17,33,200) Equity shares of Rs. 10 eachfully paid-up of DSCL Energy Services Company Limited. 1.73 1.73

11,74,551 (2005-2006 - 11,74,551) Equity shares of US $ 1 eachfully paid-up of Bioseeds Limited. 14.41 14.41

33.99 34.49

Aggregate book value - Quoted 0.83 0.83

- Unquoted 33.16 33.66

Aggregate market value- Quoted 0.83 5.85


DSCL-44.p65 7/27/2007, 9:03 AM51


DCM SHRIRAM

CONSOLIDATED LIMITEDSchedules to the Accounts (Continued)

7. CURRENT ASSETS, LOANS AND ADVANCES



Current Assets

Inventories

Stores and spares* 67.07 57.92Stock-in-trade**

Raw materials 47.91 31.81Process stocks 14.68 8.61Finished goods 428.47 342.24

558.13 440.58

Sundry debtors

Debts over six monthsSecured - considered good 0.01 0.02Unsecured - considered good 124.49 50.65

- considered doubtful 7.99 6.21Other debts

Secured - considered good 1.01 1.14Unsecured - considered good 376.69 365.16

510.19 423.18Less: Provision for doubtful debts 7.99 6.21

502.20 416.97

Cash and bank balances

Cash on hand 3.10 0.90Cheques in hand 3.56 3.34With scheduled banks on

Current account 45.62 27.68Deposit account# 0.63 0.67

52.91 32.59

Loans and Advances

Unsecured and considered good unless otherwise stated $Advances recoverable in cash or in kind or for value to be received

Considered good 107.04 88.98Considered doubtful 0.38 0.38

Less: Provision for doubtful advances 0.38 0.38

107.04 88.98Deposits 18.78 11.96Balances with customs, excise etc. 61.01 30.16Tax payments (net of provision for current tax and FBT) 21.82 7.39MAT credit entitlement 11.76 1.49Interest accrued on investments and deposits 0.37 0.15

220.78 140.13

1334.02 1030.27

* Stores and spares are valued at cost or under.

**Stock-in-trade is valued at cost or net realisable value, whichever is lower.

# Includes Rs. 0.43 crore (2005-2006 - Rs. 0.43 crore) provided as margin for bank guarantees and letters of credit.

$ Refer note 7 of Schedule 12.

DSCL-44.p65 7/27/2007, 9:03 AM52


DCM SHRIRAM


8. CURRENT LIABILITIES AND PROVISIONS



Current Liabilities

Sundry creditors#

Total outstanding dues of small scaleindustrial undertakings* 0.47 1.04

Total outstanding dues of creditors otherthan small scale industrial undertakings 800.50 502.96

Ex-gratia payable under voluntary retirement schemes** 1.58 1.81

Interest accrued but not due on loans 9.62 7.54

812.17 513.35

Provisions

Gratuity 31.43 28.87

Leave encashment 10.12 8.11

Provision for contingencies 12.09 12.09

Proposed dividend 6.64 8.30

Corporate dividend tax 1.13 1.16

61.41 58.53

873.58 571.88

# Sundry creditors do not include any amounts outstanding as on March 31, 2007 which are required to be credited to Investor Education

and Protection Fund.

* Refer note 6 in Schedule 12.

** Rs. 0.19 crore (2005-2006 - Rs. 0.23 crore) due within a year.

9. OTHER INCOME

Year ended Year endedMarch 31, 2007 March 31, 2006


Dividend income (gross) from:- non-trade, long term investments - 0.01- non-trade, current investments 1.60 2.00Profit on sale of non-trade long term investments 3.06 1.42Profit on sale of non-trade current investments - 0.08Profit on sale of fixed assets 8.21 4.36Interest income # 4.35 1.80Rent 1.27 0.03Liabilities/provisions no longer required written back 3.00 0.51Miscellaneous 12.22 7.14

33.71 17.35

# Income-tax deducted at source Rs. 0.47 crore (2005-2006 - Rs. 0.28 crore).

DSCL-44.p65 7/27/2007, 9:03 AM53


DCM SHRIRAM


10. MANUFACTURING AND OTHER EXPENSES

Year ended Year ended

March 31, 2007 March 31, 2006


Raw materials consumed 1046.71 770.72

Stores, spares and components 130.21 98.23

Power, fuel, etc. 320.05 289.40

Repairs

Buildings 4.14 3.07

Plant and machinery 24.08 19.65

Salaries, wages, bonus, gratuity, commission, etc. 127.18 104.16

Provident and other funds 12.87 10.83

Welfare 8.06 6.57

Rent 5.98 5.04

Insurance 6.79 5.61

Donation 1.09 0.41

Rates and taxes 1.62 1.23

Auditors’ remuneration

Audit fee 0.45 0.35

Tax audit 0.06 0.04

Other services 0.43 0.35

Out-of-pocket expenses 0.02 0.02

Directors’ fees 0.06 0.07

Bad debts and advances written-off 0.05 0.15

Provision for doubtful debts and advances 1.88 0.41

Freight and transport 74.34 75.62

Commission to selling agents 0.87 0.67

Brokerage, discounts (other than trade discounts), etc. 2.80 1.11

Selling expenses 23.20 18.20

Exchange fluctuation 8.62 9.90

Increase/(decrease) in excise duty on finished goods 11.44 (2.19)

Provision for contingencies - 0.13

Miscellaneous expenses 67.57 53.06

1880.57 1472.81

Less: Cost of own manufactured goods capitalised (5.76) (2.30)

1874.81 1470.51

(Increase)/decrease in stocks of finished goods and process stocks

Closing stock 443.15 350.85

Less: Stock produced during trial run 54.83 —

Adjusted Closing Stock 388.32 350.85

Less: Opening stock 350.85 220.31

(37.47) (130.54)

1837.34 1339.97

11. CURRENT/DEFERRED TAX


March 31, 2007 March 31, 2006


Current tax 7.27 14.55

Less : MAT credit entitlement (10.27) * (1.49)

Add : Current tax of earlier years — (3.00) 1.45 14.51

Deferred tax 23.55 * 31.80

20.55 46.31

* Refer note 19 in Schedule 12

DSCL-44.p65 7/27/2007, 9:03 AM54


DCM SHRIRAM


12. NOTES TO THE ACCOUNTS

1. Significant accounting policies

(i) Accounting convention

The financial statements are prepared under the historical cost convention as modified to include therevaluation of land of one of the units of the Company. These statements have been prepared in accordancewith applicable mandatory Accounting Standards and relevant presentational requirements of theCompanies Act, 1956.

(ii) Fixed assets and depreciation

a. Owned assets

Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition or construction isinclusive of freight, duties, taxes and incidental expenses and interest on loans attributable to theacquisition of assets up to the date of commissioning of assets. Capital subsidy received againstspecific assets is reduced from the value of relevant fixed assets.

The Company is following the straight line method of depreciation in respect of buildings, plant andmachinery and written down value method in respect of other assets.

Depreciation is provided at the rates as specified in schedule XIV to the Companies Act, 1956,except in the case of following assets where depreciation is provided at rates indicated against eachasset:

Depreciation Rate

- catalyst tubes 12.50%- cell units 10.00%- certain other plant and machinery items 16.67%- office and other equipments 25.00%

Depreciation is calculated on a pro-rata basis from the date of additions, except in the case of assetscosting upto Rs.5000 each, where each such asset is fully depreciated in the year of purchase.

Depreciation (amortisation) on intangibles is provided on straight line method as follows:

- Technical know-how is amortised over its estimated economic useful life of 10 years.

- Brand is amortised over a period of 10 years.

On assets sold, discarded, etc. during the year, depreciation is provided upto the date of sale/ discard.

b. Assets taken on finance lease

Fixed assets taken on finance lease on or after April 1, 2001 are stated at the lower of the fair valueof the lease assets or the present value of the minimum lease payments at the inception of the lease.

(iii) Foreign currency transactions and derivatives

Transactions in foreign currency are recorded on initial recognition at the exchange rate prevailing at thetime of transaction.

Monetary items (i.e. receivables, payables, loans etc.) denominated in foreign currency are reportedusing the closing exchange rate on each balance sheet date.

The exchange differences arising on the settlement of monetary items or on reporting these items atrates different from rates at which these were initially recorded/reported in previous financial statementsare recognized as income/expense in the period in which they arise except where the foreign currencyliabilities have been incurred in connection with fixed assets acquired up to March 31,2004 and subsequentthereto in case of fixed assets acquired from a country outside India, where the exchange differencesare adjusted in the carrying amount of concerned fixed assets.

In case of forward exchange contracts, the premium or discount arising at the inception of such contracts,is amortised as income or expense over the life of the contract, further exchange difference on such

DSCL-44.p65 7/27/2007, 9:03 AM55


DCM SHRIRAM


contracts i.e. difference between the exchange rate at the reporting/settlement date and the exchangerate on the date of inception of contract/the last reporting date, is recognized as income/ expense forthe period except where the foreign currency liabilities have been incurred in connection with fixedassets acquired up to March 31,2004 and subsequent thereto in case of fixed assets acquired from acountry outside India, where the exchange differences are adjusted in the carrying amount of concernedfixed assets.

In respect of derivative contracts, gain/losses are recognised on actual settlement of respective contracts.

(iv) Inventories

Stores and spares are valued at cost or under. Stock-in-trade is valued at cost or net realisable value,whichever is lower. The bases of determining cost (which also includes taxes and duties wherever applicable)for different categories of inventory are as follows:-Stores, spares and raw materials - Weighted average rateStock-in-trade

Process stocks and finished goods - Direct cost plus appropriate share of overheads after giving creditfor other income and excluding certain expenses like ex-gratiaand gratuity.

By-products - At estimated realisable value

(v) Revenue recognition

a) Revenue in respect of sale of products is recognised at the point of despatch to customer.

b) Under the retention pricing scheme, the Government of India reimburses to the fertiliser industry, thedifference between the retention price based on the cost of production and selling price (as realisedfrom the farmers) as fixed by the Government from time to time, in the form of subsidy. The effect ofvariation in input costs/expenses on retention price yet to be notified is accounted for by the Companyas income for the year based on its assessment of ultimate collection with reasonable degree of certaintyat the time of accrual.

c) The Company accrues concession/subsidy on traded Phosphatic and Potassic fertilisers pendingnotification by Government of India, based on its assessment of ultimate collection thereof with reasonabledegree of certainty.

(vi) Investments

Long term investments are stated at cost unless there is a permanent fall in value thereof. Currentinvestments are stated at cost or net realisable value whichever is less.

(vii) Retirement and other benefits

The Company has the following retirement schemes:- Superannuation fund for officers.- Provident fund for all employees.

The contributions to the above funds are charged to revenue each year.Provisions for gratuity and leave encashment determined on an actuarial basis at the end of theyear are charged to revenue every year.

(viii) Research and development

The revenue expenditure on research and development is charged as an expense in the year in which itis incurred. Capital expenditure is included in fixed assets.

(ix) Income-tax

The income-tax liability is provided in accordance with the provisions of the Income-tax Act, 1961.Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being thedifference between taxable income and accounting income that originate in one period and are capableof reversal in one or more subsequent periods.

DSCL-44.p65 7/27/2007, 9:03 AM56


DCM SHRIRAM


This Year Previous Year(Rs. Crores) (Rs. Crores)

2. (i) Contingent liabilities not provided for:

Claims* (excluding claims by employees where amount notascertainable) not acknowledged as debts:

Sales tax matters 1.40 13.30Excise matters 2.27 2.40Additional premium on land 8.11 8.11Others 7.55 6.61

Total 19.33 30.42

* all the above matters are subject to legal proceedings in the ordinary course of business. In the opinion ofmanagement the legal proceedings, when ultimately concluded, will not have a material effect on resultsof operations or financial position of the Company.

(ii) Capital commitments (net of advances) 73.99 224.81

(iii) Guarantees given to financial institutions,banks and other parties in respect of loansavailed by subsidiaries and other parties:Amount guaranteed 1.85 1.85Amount of loans outstanding 0.48 0.46

3. In accordance with past practice, the Company has taken revenue credits aggregating Rs. 109.80 crores (2005-2006 - Rs. 47.58 crores) for urea subsidy claims, which are pending notification/ final acceptance by ‘FertiliserIndustry Coordination Committee’ (FICC), Government of India, in pursuance of the Retention Price Schemeadministered for nitrogenous fertilisers. Similarly, revenue credits aggregating Rs. Nil (2005-2006 - Rs. 28.62crores ) for subsidy claims relating to Di-Ammonium Phosphate and Muriate of Potash have been taken whichare pending notification of final rates of concession/subsidy by the Government of India, Ministry of Chemicalsand Fertilisers. Necessary adjustment to revenue credits so accrued will be made on issuance of notification byFICC/Government of India, Ministry of Chemicals and Fertilisers or final settlement thereof.

4. Segment reporting

A. Business segments:

Based on the guiding principles given in Accounting Standard AS-17 “Segment Reporting” issued by theInstitute of Chartered Accountants of India, the Company’s business segments include: Fertilisers(manufacturing of urea), Plastics (manufacturing of poly-vinyl chloride and carbide), Chemicals (manufacturingof chlor alkali products), Traded Products (trading of di-ammonium phosphate, muriate of potash, superphosphate, other fertilisers, seeds, pesticides and plaster of paris), Sugar (manufacturing of sugar products),Cement (manufacturing of cement), Others (textiles, agri retail business, compounds and UPVC windowsystems).

B. Geographical segments:

Since the Company’s activities/ operations are primarily within the country and considering the nature ofproducts/ services it deals in, the risks and returns are same and as such there is only one geographicalsegment.

C. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note 1above, the accounting policies in relation to segment accounting are as under:

DSCL-44.p65 7/27/2007, 9:03 AM57


DCM SHRIRAM


a) Segment revenue and expenses:

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All othersegment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operatingcash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported asdirect offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principallyof creditors and accrued liabilities. Segment assets and liabilities do not include deferred income taxes.While most of the assets/ liabilities can be directly attributed to individual segment, the carrying amountof certain assets/ liabilities pertaining to two or more segments are allocated to the segments on areasonable basis.

c) Inter segment sales:

Inter segment sales between operating segments are accounted for at market price. These transactionsare eliminated in consolidation.

D. Information about business segments:Rs. Crores

PARTICULARS Fertiliser Plastics Chemicals Traded Products Sugar Cement Others Elimination Total

This Previous This Previous This Previous This Previous This Previous This Previous This Previous This Previous This Previous

Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year

1. REVENUE

External sales 647.32 600.44 349.91 246.49 395.38 360.24 713.27 617.68 373.29 388.13 121.05 101.86 271.94 161.48 2872.16 2476.32

Inter segment sales 0.38 0.10 36.52 24.85 12.98 19.32 0.62 0.41 0.22 1.85 0.53 (52.76) (45.02)

Total revenue 647.70 600.54 386.43 271.34 408.36 379.56 713.89 617.68 373.70 388.35 121.05 101.86 273.79 162.01 (52.76) (45.02) 2872.16 2476.32

2. RESULTS

Segment results 11.46 21.27 63.89 34.38 117.84 128.87 (16.88) (0.01) 3.76 72.34 27.75 11.43 (24.68) (22.55) 183.14 245.73

Unallocated expenses (net of income) 37.19 32.18

Operating profit 11.46 21.27 63.89 34.38 117.84 128.87 (16.88) (0.01) 3.76 72.34 27.75 11.43 (24.68) (22.55) 145.95 213.55


Income taxes - Current /deferred tax 20.55 46.31

- Fringe benefit tax 2.25 3.60

Net profit 45.81 115.19

3. OTHER INFORMATION

A. ASSETS

Segment assets 454.24 283.13 293.63 301.00 397.63 378.70 193.21 338.87 1262.36 643.07 34.80 38.60 362.79 239.38 2998.66 2222.75

Unallocated assets 117.84 84.38

Total assets 454.24 283.13 293.63 301.00 397.63 378.70 193.21 338.87 1262.36 643.07 34.80 38.60 362.79 239.38 3116.50 2307.13

B. LIABILITIES

Segment liabilities 116.63 45.95 28.20 25.09 17.28 26.50 378.17 317.74 247.09 76.18 8.39 7.60 25.63 22.03 821.39 521.09

Share capital and reserves 551.83 521.36

Secured and unsecured loans 1520.54 1066.89

Unallocated liabilities 222.74 197.79

Total liabilities 116.63 45.95 28.20 25.09 17.28 26.50 378.17 317.74 247.09 76.18 8.39 7.60 25.63 22.03 3116.50 2307.13

C. OTHERS

Capital expenditure 55.15 14.56 12.26 123.38 48.64 61.06 0.12 0.10 391.90 243.23 4.10 5.53 86.30 31.94

Depreciation 11.38 10.10 16.49 10.98 28.24 25.57 0.05 0.04 20.04 11.35 2.79 2.72 9.60 8.08

Non cash expenses other than - - 0.07 - 1.00 0.88 0.22 0.40 - - - 0.06 0.64 0.02

depreciation

DSCL-44.p65 7/27/2007, 9:03 AM58


DCM SHRIRAM


(Rs. in crores)

Particulars This Year Previous Year



Power, fuel, etc. 3.95 1.57

Repairs:


Salaries,wages, bonus,gratuity,commission,etc. 8.69 2.35


Welfare 0.71 0.19

Rent 0.06 0.07

Insurance 0.33 1.22




Increase/(decrease) in excise duty on finished goods 3.57 -


Interest 12.83 5.83


103.88 26.77

Less:

Other income 0.26 0.10

Inventory produced during trial run

- Process stock 3.37 -

- Finished goods 51.46 -

48.79 26.67

Add: Brought forward from the previous year 54.11 42.58

Less: Capitalised during the year 58.29 15.14

Transferred to Capital work-in-progress 44.61 54.11

5. Earnings per share:

This year Previous year

Profit after tax as per profit and loss account (Rs. Crores) 45.81 115.19

Weighted average number of equity shares outstanding 16,59,03,320 16,59,03,320

Basic and diluted earning per share in rupees (face value - Rs. 2 per share) 2.76 6.94

6. a) Sundry creditors include Rs. 0.47 crore (2005-2006 - Rs. 1.04 crores) due to suppliers covered under the “Interest on

Delayed Payment to Small Scale and Ancillary Industrial Undertakings Act, 1993”, to the extent such parties have been

identified from the available information. The Company has not received any claim for interest from any supplier under

the said Act.

The names of Small Scale Industrial Undertakings to whom the Company owes amounts outstanding for more than 30

days as at March 31, 2007 are Scientech C.O.I, Allied Enterprises (India), Prabhakar Engineers Pvt Ltd, Sidharth and

Gautam Engineers, Finex Sieves Pvt Ltd, Devi Hitech Engineers Pvt Ltd, Rajasthan Industrial and Chemicals, Hosch

Equipment (India) Pvt Ltd, Industrial Services, Vizag Filters (P) Ltd, Guru Nanak Engineering Works, Chempro Chemicals

(P) Ltd, Kamal Trading Co, Arcoy Industries.

b) Based on the information available with the Company, the balance due to Micro, Small and Medium Enterprise as

defined under the “The Micro, Small and Medium Enterprises Development Act, 2006” is Rs. 0.22 crore. Further no

interest during the year has been paid or is payable under the terms of the “The Micro, Small and Medium Enterprises

Development Act, 2006”.

7. Loans and advances include following amounts due from subsidiaries:

Amount outstanding Maximum amount

as at year end outstanding during

the year

Name of the party This year Previous year This year Previous year

(Rs. Crores) (Rs. Crores) (Rs. Crores) (Rs. Crores)

1. DCM Shriram Credit & Investments Limited 16.01 11.01 39.50 33.51

2. Shriram Bioseed Genetics India Limited 4.10 0.24 10.15 5.77

3. DCM Shriram Aqua Foods Limited 0.08 0.06 0.08 0.06

4. DSCL Energy Services Company Limited 0.55 0.28 1.05 0.59

Total 20.74 11.59

8. Amount of borrowing costs capitalised to fixed assets during the year Rs. 13.97 crores (2005-2006 - Rs. 11.91 crores).

9. Details of Pre-operative expenses pending allocation included under Capital work in progress in Schedule 5 is as under:

DSCL-44.p65 7/27/2007, 9:03 AM59


DCM SHRIRAM


10.Related party disclosures under Accounting Standard AS-18 “Related Party Disclosures” issued by the Instituteof Chartered Accountants of India:

A. Name of related party and nature of related party relationship

Subsidiaries: DCM Shriram Credit and Investments Limited, DCM Shriram Aqua Foods Limited, DSCL EnergyServices Company Limited, DCM Shriram International Limited, DCM Shriram Infrastructure Limited, BioseedResearch Philippines, Inc., Bioseed Research Vietnam, Bioseed Genetics Vietnam, Bioseed Research IndiaPrivate Limited, Bioseeds Limited, Shriram Bioseed Genetics India Limited, Shriram Bioseed (Thailand) Limitedand Anant Thermal Energy Limited.

Key Managerial Persons, their relatives and HUFs: Mr. Ajay S. Shriram, Mr. Vikram S. Shriram, Mr. RajivSinha, Mr. Ajit S. Shriram, Mr. Aditya A. Shriram (relative of Mr. Ajay S. Shriram), Mrs. Divya Sinha (relativeof Mr. Rajiv Sinha), M/s. Ajay S. Shriram (HUF), M/s. Vikram S. Shriram (HUF).

B. Transactions with related parties referred to in note 10 A above.Rs. Crores

DCM Shriram Credit DSCL Energy Shriram Bioseed DCM Shriram Key managerial Total

& Investment Ltd. Services Co. Ltd. Genetics India Ltd. Aqua Foods Ltd. personnel and

their relatives

TYPE OF TRANSACTIONS This year Previous year This year Previous year This year Previous year This year Previous year This year Previous year This year Previous year

Interest recovered 1.55 1.04 0.03 1.58 1.04

Expenses recovered 1.93 1.76 1.27 1.84 3.20 3.60

Purchases of finished goods 10.13 14.67 10.13 14.67

Interest paid on leased assets ($ Rs. 2,585) # 0.02 ## $ 0.02

Rent paid 1.08 0.55 1.08 0.55

Remuneration paid (* Rs. 40,000) 0.05 * 0.05 *

Security deposits given 2.77 2.77

Security deposits received back 0.07 0.07

Lease rental paid 0.13 0.13

Loans and advances (net) 3.76 (1.69) 0.24 (0.09) 0.02 0.02 4.02 (1.76)

Consultancy Paid 0.37 0.16 0.37 0.16

Expenses paid 0.04 0.03 0.07

Assets sold 0.01 0.01

Assets purchased 0.04 0.04

Balance outstanding as at the year end

Security deposits/indemnity 7.84 5.14 7.84 5.14

Fixed deposits 0.07 0.07 0.07 0.07

Loans and advances 16.01 11.01 0.55 0.28 4.10 0.24 0.08 0.06 20.74 11.59

Liability for leased assets 0.03 0.03

Lease rent paid in advance 0.02 0.02

# Rs.1,680

## Rs.905

Note: Details of remuneration to whole time directors are given in note 12 below.

DSCL-44.p65 7/27/2007, 9:03 AM60


DCM SHRIRAM


12.Managerial remuneration

Managerial remuneration of Rs. 5.49 crores (2005-2006 – Rs. 5.81 crores) includes commission payable tomanaging directors Rs.1.95 crores (2005-2006 – Rs. 2.59 crores) and non-working directors Rs. 0.38 crore(2005-2006 – Rs. 0.43 crore).

Provision for incremental gratuity liability and leave encashment for the current year in respect of directors hasnot been considered above, since the provision is based on an actuarial basis for the Company as a whole.

Computation of net profit in accordance with section 198 of the Companies Act, 1956 and commissionpayable to directors.

11. Disclosure in respect of assets taken on lease on or after April 1, 2001 under Accounting Standard AS-19“Leases” issued by the Institute of Chartered Accountants of India.(i) General description of the finance lease:

The Company has entered into finance lease arrangement for vehicles. Some of the significant terms andconditions of such leases are as under:- renewal for a further period on such terms and conditions as may be mutually agreed upon between

lessor and the Company.- assets to be purchased by the Company or the nominee appointed by the Company at the end of the

lease term(ii) Reconciliation between the total of minimum lease payments at the balance sheet date and their present

value:(Rs. Crores)

Not later than Later than oneTotal one year year but not later

than five years

This year Previous year This year Previous year This year Previous year

Total of minimum lease payments - 0.03 - 0.03 - -at the balance sheet date

Less: Future finance charges - * - * - -(* Rs. 1,680)

Present value of minimum lease - 0.03 - 0.03 - -payments at the balance sheet date

This year Previous year(Rs. Crores) (Rs. Crores)

Profit for the year before tax, per profit and loss account 68.61 165.10Add: Managerial remuneration including commission 5.49 5.81Directors’ sitting fees 0.06 0.07

74.16 170.98

Less: (i)Profit on sale of non – trade current investments - 0.08(ii) Profit on sale of non – trade long term investments 3.06 1.42(iii)Profit on sale of land 8.18 0.13

Net profit in accordance with section 198 of the Companies Act, 1956 62.92 169.35

Maximum remuneration to managing directors @ 10% of the net profit 6.29 16.94Restricted to 5.11 5.38Maximum remuneration @ 1% of net profit to non-working directors 0.63 1.69

Restricted to 0.38 0.43


DSCL-44.p65 7/27/2007, 9:03 AM61


DCM SHRIRAM


13.Current Investment (Mutual fund units) purchased and sold during the year:The details of current investments purchased and sold during the year are as follows:

S. Name of the Fund Face value Purchased Units* Sold units*No. Nos. Amount Nos.

(Rs.) Crores Rs. Crores Crores

1 Prudential ICICI Institutional Liquid Plan - Super Institutional Daily Dividend 10 40.16 401.61 40.162 Reliance Liquidity Fund - Daily Dividend Reinvestment Option 10 19.04 190.50 19.043 Birla Sun Life Cash Manager - IP - Daily Dividend - Reinvestment 10 3.24 32.42 3.244 Birla Cash Plus -Installment - Daily Dividend - Reinvestment 10 0.39 4.25 0.395 Birla Cash Plus -Installment Premium - Daily Dividend - Reinvestment 10 6.76 67.77 6.766 DWS Insta Cash Plus Fund - Institutional Plan -Daily Dividend Option 10 9.44 94.58 9.447 DWS Insta Cash Plus Fund - Daily Dividend Option 10 4.19 42.07 4.198 DSP Merrill Lynch Liquidity Fund - Institutional - Daily Dividend 1000 0.03 30.80 0.039 G74 GSSIF - ST - Plan C - Fortnightly Dividend 10 1.00 10.02 1.0010 Kotak Liquid Institutional Premium - Daily Dividend 10 5.38 65.76 5.3811 Kotak Liquid (Institutional) - Weekly Dividend 10 0.15 1.50 0.1512 Magnum Institutional Income - Savings - Dividend 10 4.17 41.80 4.1713 Sundaram BNP Paribas Money Fund Super Institutional Daily Dividend Reinvestment 10 2.16 21.77 2.1614 Templeton India Treasury Management Account Super Institutional Plan 1000 0.06 57.75 0.06

- Daily dividend Reinvestment15 JM High Liquidity Fund - Premium Plan - Daily Dividend 10 3.60 35.99 3.6016 JM High Liquidity Fund - Super Institutional Plan - Daily Dividend 10 2.00 20.03 2.0017 JM High Liquidity Fund - Institutional Plan - Daily Dividend 10 4.60 46.04 4.6018 ING Vysya Liquid Fund Super Institutional - Daily Dividend Option 10 15.48 154.86 15.4819 HDFC Cash Management Fund - Savings Plan - Daily Dividend Reinvestment 10 7.65 81.41 7.6520 HDFC Liquid Fund - Dividend - Daily Reinvestment 10 6.99 79.03 6.9921 Principal Cash Management Fund -Liquid Option - Instent Premium Plan 10 13.92 143.26 13.92

- Dividend Reinvestment - Daily22 LIC MF Liquid Fund- Dividend Plan 10 27.20 298.62 19.3423 HSBC Cash Fund - Institutional Plus - Daily Dividend 10 2.05 20.52 2.0524 UTI Liquid Plan - Institutional -Daily Income Option Reinvestment 1000 0.06 64.66 0.06

Total 2,007.02

* include dividend units

14.There are no disputed dues of wealth tax, customs duty and cess matters. The details of disputed Excise duty,Sales-tax and Income- tax dues as on March 31, 2007 are as follows:

Nature of the statute Nature of Forum where Amount* Amount paid Period to which thethe dues pending (Rs. Crores) under protest amount relates

Central Excise Law Excise duty Appellate authority up 2.16 - 1995-96, 2001-02, 2003-04,to Commissioners’ level 2005-06, 2006-07.

Central Excise and 0.11 0.06 1997-98Service TaxAppellate Tribunal

Sales Tax Laws Sales tax Appellate authority up 2.73 0.86 1983-84,1984-85,to commissioners’ level 1991-92,1994-95,1995-96

to 2000-01

Sales Tax Tribunal 1.52 - 1978-79,1979-80,1986-87,1990-91,1991-92,1992-93,1995-96

Income Tax Act, 1961 Income tax Commissioner (Appeal) 27.60 27.60 2002-03, 2003-04

*amount as per demand orders including interest and penalty wherever quantified in the Order.

The following matters, which have been excluded from the table above, have been decided in favour of theCompany but the department has preferred appeals at higher levels. The details are given below :

Nature of the Nature of Forum where Amount Period to which the

statute the dues pending Rs. Crores amount relates

Income Tax Act, 1961 Income tax High Court 9.85 1996-97,1997-98, 1998-99

DSCL-44.p65 7/27/2007, 9:03 AM62


DCM SHRIRAM


15. Provision for contingencies aggregating to Rs. 12.09 crores (2005-2006 - Rs. 12.09 crores) in Schedule 8represents the maximum possible exposure on ultimate settlement of issues relating to reconstructionarrangement of the companies.

16. Research and development expenses included under relevant heads in the profit and loss account Rs. 1.83crores (2005-2006 - Rs. 2.02 crores).

17. Category wise quantitative data about Derivative Instruments:

Nature of Number of deals Purpose Amount in foreign Amout in Rs. Crores

Derivative currency (in Crores)

This Previous This Previous This Previous This Previous

Year Year Year Year Year Year Year Year

US Dollar Interest 4 3 Hedging Hedging USD 2.30 USD 2.10 100.03 93.40

rate swap

JPY Interest rate 2 - Hedging - JPY 114.33 - 42.07 -

swap

Overnight Index 3 2 Hedging Hedging - - 75.00 45.00

swap

Currency swap 1 1 Conversion of Indian Rupee Conversion of USD 0.57 USD 0.56 25.00 25.00

into USD Indian Rupee

into USD

Principal swap 1 - Conversion of Indian Rupee - USD 0.50 - 21.75 -

denominated Principal

into USD

Principal swap 1 - Conversion of Indian Rupee - CHF 0.70 - 25.00 -

denominated Principal into CHF

Coupon swap 3 - Conversion of Indian Rupee - USD 0.41 - 17.74 -

denominated coupons into

USD coupons

Options 1 1 Hedging Hedging USD 0.50 USD 2.00 21.75 89.24

Foreign Currency exposures that are not hedged by derivative instruments or otherwise are as follows:

Particulars This year Previous Year

Amount in foreign Amount in Amount in foreign Amount in

currency (in Crores) Rs. Crores currency (in Crores) Rs. Crores

Loans USD 2.22 96.70 USD 1.50 66.93

- - JPY 243.61 92.18

Current liabilities USD 1.12 49.00 USD 0.11 4.78

EURO 0.00035 0.02 EURO 0.01 0.27

JPY 1.13 0.42 GBP 0.01 0.95

Current Assets USD 0.0120 0.53 - -

EURO 0.00032 0.02 - -

18. ‘Excise duty’ on sales has been deducted from gross sales on the face of profit and loss account. ‘Increase/(decrease) in excise duty on finished goods’ has been shown under the head ‘Manufacturing and other expenses’in schedule 10.

19. MAT Credit entitlement and deferred tax charge for the year includes Rs. 3.00 crores relating to earlier year,however, there is no impact on profit for the year due to the same.

20. Previous year’s figures have been recast, wherever necessary.

21. Schedules 1 to 12 and the statement of additional information form an integral part of the financial statements.

DSCL-44.p65 7/27/2007, 9:03 AM63


DCM SHRIRAM


Statement of Additional Information

1. Particulars of capacity and production

Capacity Production

Description Unit Licensed* Installed Unit

2006-07 2005-06 2006-07 2005-06 2006-07 2005-06

Ammonia M.T. per year 198000 198000 M.T. - -

Urea M.T. per year 330000 330000 M.T. 361156 381300

Calcium carbide M.T. per year 112000 112000 M.T. 19452** 15160**

PVC resins M.T. per year 70000 61250 M.T. 64758 47481

Caustic soda M.T. per year 176250 176250 M.T. 172754 149344

Chlorine M.T. per year 116750 116750 M.T. 102610 92448

Hydrochloric acid(100%) M.T. per year 73250 73250 M.T. 50326 38670

Compressed Hydrogen M.T. per year 1565 1565 M.T. 752 508

Stable Bleaching Powder M.T. per year 13200 9900 M.T. 8921 8506

Cement M.T. per year 400000 400000 M.T. 369250 393627

Yarn Spindles Nos. 8440 8880 M.T. 1707 1994

Sugar M.T. per day*** 33000 14000 M.T. 291229$ 179452

UPVC Windows Nos. per year 183000 90000 Nos. 98238 42357

PVC Compounds M.T. per year 23400 23400 M.T. 15153 11254

*Delicensed/Not applicable

** Production of Marketable Calcium carbide only

*** Crushing of sugarcane

$ Excludes 30653 M.T. production of sugar, being trial-run production

2. Particulars of stocks and sales

Stocks

Description Unit Opening Closing Sales

2006-07 2005-06 2006-07 2005-06 2006-07 2005-06

Urea M.T. 2310 10 63 2310 363268 378837

Rs. Crores 3.56 0.01 0.10 3.56 647.32 600.44

PVC resins M.T. - - 76 - 56013 41901

Rs. Crores - - 0.31 - 287.00 198.78

Caustic soda M.T. 533 413 854 533 171160 147880

Rs. Crores 0.72 0.55 1.10 0.72 329.90 272.61

Chlorine M.T. 117 146 333 117 98270 88523

Rs. Crores 0.05 0.07 0.03 0.05 40.39 68.67

Hydrochloric acid(100%) M.T. 72 25 114 72 10107 4599

Rs. Crores 0.04 0.01 0.04 0.04 3.33 2.38

Sodium Hypochloride(10%) M.T. 49 93 34 49 7654 8247

* Rs. Crores - 0.01 - - 1.83 2.11

Compressed Hydrogen M.T. - - - - 752 508

Rs. Crores - - - - 10.34 4.53

Stable Bleaching Powder M.T. 35 8 26 35 8867 8479

Rs. Crores 0.02 0.01 0.02 0.02 9.07 9.17

Marketable Calcium carbide M.T. 317 - - 317 19769 14843

Rs. Crores 0.77 - - 0.77 54.46 41.70

D.A.P. M.T. 2451 - 3621 2451 229398 172781

Rs. Crores 2.90 - 3.13 2.90 339.79 252.38

M.O.P. M.T. 116888 14527 2049 116888 219059 217573

Rs. Crores 126.96 13.94 1.44 126.96 243.61 237.90

Super Phosphate M.T. 6860 44 3957 6860 175922 148326

Rs. Crores 2.14 0.01 1.53 2.14 50.07 44.28

Zinc Sulphate M.T. 273 85 507 273 4616 4735

Rs. Crores 0.49 0.13 1.02 0.49 10.57 8.76

Traded Urea M.T. 1402 - 6995 1402 34015 16100

Rs. Crores 0.68 - 3.38 0.68 16.77 8.01

P.O.P M.T. 92 20 24 92 14175 14650

* Rs. Crores 0.01 - - 0.01 5.27 4.57

DSCL-44.p65 7/27/2007, 9:03 AM64


DCM SHRIRAM


2. Particulars of stocks and sales (Continued)

Cement M.T. 3448 3988 3238 3448 343552 383855

Rs. Crores 0.61 0.70 0.78 0.61 121.01 101.76

Yarn M.T. 34 65 55 34 1686 2021

Rs. Crores 0.25 0.45 0.41 0.25 13.76 15.58

Sugar M.T. 111764 126820 253766 111764 177239 194509

Rs. Crores 166.78 166.28 358.35 166.78 308.85 346.51

Molasses M.T. 44630 39473 86720 44629.97 127953 100882

Rs. Crores 13.01 17.97 17.51 13.01 44.60 31.85

UPVC Windows Nos. 410 1787 11524 410 86180 41933

Rs. Crores 0.70 0.46 3.92 0.70 45.29 22.69

PVC Compounds M.T. 369 412 339 369 15175 11280

Rs. Crores 2.37 2.79 2.11 2.37 97.01 69.12

Other sales/stocks

and adjustments Rs. Crores 20.18 8.94 33.29 20.18 191.92 132.52

Total Rs. Crores 342.24 212.33 428.47 342.24 2872.16 2476.32

* Amount in Rs. Lacs for above products.

Sodium Hypochloride (10%) Rs. Lacs 0.17 0.68 0.42 0.17

P.O.P. Rs. Lacs 1.17 0.21 0.38 1.17

Stocks

Description Unit Opening Closing Sales

2006-07 2005-06 2006-07 2005-06 2006-07 2005-06

3A. Particulars of raw materials consumed

2006-07 2005-06

Description Quantity Value Quantity Value

M.T. Rs. Crores M.T. Rs. Crores

Naphtha 160491* 460.85* 167312 407.78

Lime and lime stone 132471 28.61 121017 16.64

Hard coke/SLV/Pearl/Nut coke/Met coke/Pet coke 38137 29.79 29539 19.95

Charcoal 58682 46.19 42469 30.01

Salt 284479 24.71 240536 17.54

Electrode paste 1845 4.08 1379 2.25

Hydrated Lime 6458 1.76 6116 1.60

Gypsum 21637 2.18 25579 1.90

Lime stone 358564 8.74 358685 7.60

Kapas, cotton, synthetic yarn etc. 1970 8.72 2320 9.75

Sugarcane 2866004** 384.76** 1825230 228.09

PVC Resin 195 0.60 272 1.19

Plasticizers 3403 21.01 2828 14.65

Other miscellaneous raw materials 24.71 11.77

Total 1046.71 770.72

* Excludes 566 M.T. naphtha of Rs. 1.80 crores consumed during trial-run production

** Excludes 354590 M.T. sugarcane of Rs. 49.00 crores consumed during trial-run production

DSCL-44.p65 7/27/2007, 9:03 AM65


DCM SHRIRAM


3B. Particulars of goods purchased for resale

2006-07 2005-06

Description Quantity Value Quantity Value

M.T. Rs. Crores M.T. Rs. Crores

D.A.P. 230571 325.39 174476 231.48

M.O.P. 104239 107.29 319888 321.62

Zinc Sulphate 4871 10.51 4890 8.40

Super Phosphate 173019 45.09 154938 42.49

Traded Urea 39608 19.16 16958 8.13

P.O.P. 14162 2.21 14726 1.74

Traded Sugar 1300 2.66 - -

Others 149.31 112.35

Total 661.62 726.21

4. Other Additional Information

Description 2006-07 2005-06

Rs. Crores Rs. Crore

(a) Value of imports on CIF basis

Raw materials 24.04 3.74

Components and spare parts 13.15 8.05

Capital goods 57.04 35.52

(b) Expenditure in foreign currency on cash basis

Travelling 1.56 0.98

Technical know how 0.42 0.36

Interest 10.51 3.68

Consultation fees 0.74 0.62

Others 2.19 0.64

(c) Earnings in foreign exchange on cash basis

Direct export of goods on FOB basis/

as per contracts where FOB value not

readily ascertainable 2.96 0.61

2006-07 2005-06

Rs. Crores % Rs. Crores %

(d) Value of imported/indigenous

raw materials,spare parts,

components and stores consumed

(i) Raw materials

Imported 14.97 1.43 3.77 0.49

Indigenous 1031.74 98.57 766.95 99.51

1046.71 100.00 770.72 100.00

(ii) Spare parts,components and stores

Imported 22.37 17.18 8.00 8.14

Indigenous 107.84 82.82 90.23 91.86

130.21 100.00 98.23 100.00


DSCL-44.p65 7/27/2007, 9:03 AM66


DCM SHRIRAM


NOTES :

1. The Licences acquired from undivided DCM Limited, pursuant to the Scheme of Arrangement, are pendingendorsement in the name of the Company.

2. Installed capacity is as certified by officials of the Company and relied upon by the auditors, being a technicalmatter.

3. The figures of production, sales, opening /closing stock of caustic soda consist of liquid and flakes, both.4. The figures of production, sales, opening /closing stock of chlorine consist of liquid chlorine and chlorine gas,

both.5. The sales quantities are net of samples/shortages.6. Where one class of goods is used in the manufacture of another, consumption of materials has been arrived

at after deducting internal transfers.7. Production details in respect of a class of goods captively consumed have not been indicated.8. Interest paid/payable to financial institutions/ banks in India on foreign currency loans is not included under

item 4(b) above, as such payments have been/will be made in Indian Rupees to the financial institutions.

Signatures to Schedules 1 to 12 and Statement of Additional information.

VIKRAM S. SHRIRAM AJAY S. SHRIRAMVice Chairman & Managing Director Chairman & Sr. Managing Director

V.P. AGARWAL RAJIV SINHA AJIT S. SHRIRAMCompany Secretary Dy. Managing Director ARUN BHARAT RAM

PRADEEP DINODIASUNIL KANT MUNJALD. SENGUPTAS.L. MOHAN



DSCL-44.p65 7/27/2007, 9:03 AM67


DCM SHRIRAM

CONSOLIDATED LIMITEDBalance Sheet Abstract and Company’s General Business Profile

I. Registration Details

Registration No. State Code

Balance Sheet date

II. Capital raised during the year (Amount in Rs. Thousands)

Public Issue Rights Issue

Bonus Issue Private Placement

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

Sources of Funds

Paid-up Capital Reserves and Surplus

Secured Loans Unsecured Loans

Deferred Tax Liabilities (net)

Application of Funds

Net Fixed Assets Investments

Net Current Assets Misc. Expenditure

Accumulated Losses

IV. Performance of Company (Amount in Rs. Thousands)

Turnover Total Expenditure

Profit/Loss Before Tax Profit/Loss After Tax

(Please tick Appropriate box + for Profit, - for Loss)

Earning Per Share in Rs. Dividend rate %

V. Generic Names of Three Principle Products/Services of Company (as per monetary terms)

Item Code No. (ITC Code)

Product Description


Product Description


Product Description





- 3 4 9 2 3 5 5

- N I L - - N I L -

- N I L - - N I L -

2 2 4 2 9 2 4 9 2 2 4 2 9 2 4 9

3 3 3 3 6 7 5 1 8 4 9 3 8

9 7 8 3 8 0 2 5 4 2 1 6 3 5

1 7 0 5 5 0 7

1 7 4 8 4 9 2 9 3 3 9 8 7 1

4 6 0 4 4 4 9 - N I L -

- N I L -

2 7 3 5 1 6 7 0 2 6 6 6 5 6 0 1

6 8 6 0 6 9 4 5 8 0 6 9

2 . 7 6

3 1 0 2 1 0 . 0 0

U R E A

2 8 1 5 1 2 . 0 0

C A U S T I C S O D A

3 9 0 4 1 0 . 0 0

P O L Y V I N Y L C H L O R I D E

3 1 - 0 3 - 0 7

4 0

+ - + -

+ +

DSCL-44.p65 7/27/2007, 9:03 AM68


DCM SHRIRAM

CONSOLIDATED LIMITEDSection 212

Statement Pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies

1 2 3 4 5

1. Name of the Subsidiary

2. Financial year of the Subsidiary

3. Holding Company’s interest as on

31.3.2007

DSCL Energy Services Company

Limited

31st March, 2007

Holder(s) of 17,33,200 Equity

Shares of Rs.10/- each in its name

and Holding of 48,993 Equity

Shares of Rs.10/- each by DCM

Shriram Credit and Investments

Ltd., another subsidiary of

Company out of total issued and

subscribed Equity Share Capital of

17,82,200 shares.

DCM Shriram International

Limited

31st March, 2007

Holder(s) of 50,007 Equity

Shares of Rs.10/- each out

of total issued and

subscribed Equity Share

Capital of 50,007 shares by

DCM Shriram Credit and

Investments Ltd., another

subsidiary of the Company.

DCM Shriram Infrastructure

Limited

31st March, 2007


Shares of Rs.10/- each out of

total issued and subscribed

Equity Share Capital of

50,007 shares by DCM

Shriram Credit and

Investments Ltd., another


Anant Thermal Energy

Limited

31st March, 2007

Holder(s) of 49,993

Equity Shares of Rs.10/-

each out of total issued

and subscribed Equity

Share Capital of 50,000

shares by DCM Shriram

Credit and Investments

Ltd., another subsidiary

of the Company.

DCM Shriram Credit and

Investments Limited

31st March, 2007





60,01,208 shares.

4. Net aggregate amount of the Subsidiary’s profits/(losses) so far as they concern members of Holding Company and not dealt with in the Holding Company’s accounts:

i) For Subsidiary’s financial year (Rs.0.033 crore) Rs.0.1665 crore (Rs.0.0008 crore) (Rs.0.0024 crore) (Rs.0.056 crore)

ended 31st March, 2007

ii) For Subsidiary’s previous financial (Rs.3.503 crores) Rs.0.1141 crores (Rs.0.0209 crore) (Rs.0.0025 crore) -

years since it became Subsidiary.

5. Net aggregate amount of the Subsidiary’s profits/(losses) so far as they concern members of Holding Company and dealt with in the Holding Company’s accounts:

i) For Subsidiary’s financial year Nil Nil Nil Nil Nil

ended 31st March, 2007.

ii) For Subsidiary’s previous financial Nil Nil Nil Nil Nil


6 7 8 9

Shriram Bioseed Genetics India

Limited

31st March, 2007





57,23,657 shares.




31.3.2007

Bioseeds Limited

31st March, 2007

Holder(s) of 11,74,551

Ordinary Shares of USD 1

each out of total issued

Ordinary Share Capital of

23,03,041 shares.

Bioseed Research Vietnam

31st March, 2007

Holder(s) of 91,29,620

thousand VND stock out of

91,29,620 thousand VND stock

by Bioseeds Ltd., another


Shriram Bioseed (Thailand) Limited

31st March, 2007

Holder(s) of 39,993 shares of 100 Thai

Baht each out of total issued and

subscribed Equity Share Capital of 40,000

shares by Shriram Bioseed Genetics India

Ltd, another subsidiary of the Company.




31.3.2007

Bioseed Genetics Vietnam

31st March, 2007

Holder(s) of 39,95,460 thousand

VND stock out of 39,95,460

thousand VND stock by Bioseeds

Ltd., another subsidiary of the

Company.

Bioseed Research Philippines Inc.

31st March, 2007

Holder(s) of 3,58,523 Shares of

PHP 100 each out of total Share

Capital of 3,58,523 Shares of PHP

100 each by Bioseeds Ltd., another



i) For Subsidiary’s financial year (Rs. 0.585 crore) (Rs. 0.385 crore) Rs. 0.464 crore Rs. 1.17 crores


ii) For Subsidiary’s previous financial Rs. 1.639 crores - (Rs. 0.03 crore) Rs. 3.54 crores



i) For Subsidiary’s financial year Nil Nil Nil Nil


ii) For Subsidiary’s previous financial Nil Nil Nil Nil


10 11 12 13

DCM Shriram Aqua Foods Limited

31st March, 2007


Shares of Rs.10/- each out of total

issued and subscribed Equity Share

Capital of 83,51,207 shares.

Bioseed Research India Pvt. Ltd.

31st March, 2007




Equity Share Capital of 37,424

shares by Bioseeds Ltd., another



i) For Subsidiary’s financial year Rs.0.668 crore Rs.0.33 crore (Rs.1.07 crores) (Rs.0.04 crore)


ii) For Subsidiary’s previous financial Rs.3.35 crores Rs.0.58 crore Rs. 0.38 crore (Rs. 4.77 crores)



i) For Subsidiary’s financial year Nil Nil Nil Nil


ii) For Subsidiary’s previous financial Nil Nil Nil Nil






DSCL-44.p65 7/27/2007, 9:03 AM69


DCM SHRIRAM


Particulars regarding subsidiary companies persuant to letter no. 47/16/2007-CL-III dated January 31, 2007 from Ministry of Company Affairs.

Year Ended March 31, 2007

Rs. Crores

Name of the Subsidiary Company Capital Reserves Total Total Turnover Profit Provision Profit Proposed

Assets Liabilities Before for After Dividend

Taxation Taxation Taxation

DCM Shriram Credit and Investments Limited 6.00 0.71 22.73 22.73 1.89 0.33 0.36 (0.03) -

DSCL Energy Services Company Limited 1.78 0.28 2.61 2.61 5.13 0.45 0.28 0.17 -

DCM Shriram International Limited 0.05 - 0.05 0.05 - - - - -

DCM Shriram Infrastructure Limited 0.05 - 0.29 0.29 - - - - -

Anant Thermal Energy Limited 0.05 - 0.06 0.06 - (0.06) - (0.06) -

Shriram Bioseed Genetics India Limited 5.72 6.68 35.85 35.85 54.72 (1.43) (0.28) (1.15) -

Shriram Bioseed (Thailand) Limited 0.49 - 0.24 0.24 - 0.76 - 0.76 -

Bioseed Limited 11.21 - 10.22 10.22 0.97 0.93 0.02 0.91 -

Bioseed Reserch Vietnam 3.27 5.44 9.07 9.07 3.30 2.55 0.26 2.29 -

Bioseed Genetics Vietnam 1.79 7.46 23.77 23.77 19.37 1.38 0.07 1.31 -

Bioseed Research Philippines, Inc. 5.16 - 8.06 8.06 12.34 0.83 0.18 0.65 -

Bioseed Research India Private Limited 0.37 - 0.37 0.37 5.09 (2.03) 0.06 (2.09) -

DCM Shriram Aqua Foods Limited 8.35 - 8.43 8.43 - (0.04) - (0.04) -

Details of Investments (other than in subsidiaries) are as follows:

DCM Shriram Credit and Investments Limited Rs. Crores

12,380 6.75% Bonds of Unit Trust of India of Rs. 100/- each fully paid-up 0.11

763.959 US-2002 of Unit Trust of India of Rs. 10/- each fully paid up (# Rs. 5,000) #

National Saving Certificate (## Rs.9,000 ) ##

5,400 Master Gains 92 of Unit Trust of India of Rs. 10/- each fully paid up (### Rs. 47,000) ###

1,50,000 equity shares of IFCI Limited of Rs. 10/- each fully paid up 0.06

2,500 equity shares of APW President System Ltd. of Rs. 10/- each fully paid up 0.01

34,150 equity shares of National Thermal Power Corporation Ltd. of Rs. 10/- each fully paid up 0.21

3,430 equity shares of Punjab National Bank of Rs. 10/- each fully paid up 0.13

49,950 equity shares of Pacific Land Development Pvt. Ltd. of Rs. 10/- each fully paid up 0.05

250 units of Infinity Venture India Fund of Rs. 12,945/- each fully paid up 0.20

3,00,000 equity shares of E Commodities Ltd. of Rs. 10/- each fully paid up 0.30

2,00,000 equity shares of Ellenbarie Commercial Ltd. of Rs. 10/- each fully paid up 1.50

40,000 equity shares of BMD Estates Pvt. Ltd. of Rs. 10/- each fully paid up —

37,870 equity shares of Yes Bank Ltd. of Rs. 10 each fully paid up 0.17

6,934 equity shares of IL & FS Investment Ltd of Rs. 10 each fully paid up 0.09

66,037 equity shares of Bank of Baroda of Rs 10 each fully paid up 1.52

45,128 equity shares of Gujarat State Petronet Ltd of Rs. 10 each fully paid up 0.12

100 12% redeemable cumulative preference shares of DSCL Energy Services Company Ltd. of Rs. 100 each fully paid up (* Rs. 10,000)*

48,993 equity shares of DSCL Energy Services Company Ltd. of Rs. 10 each fully paid up 0.05

Other Subsidiaries Nil

The Company will make available the annual accounts and related detailed information of the subsidiary companies upon request to the

shareholders of the holding and the subsidiary companies. These shall also be kept for inspection at the head office of the Company and the

subsidiary companies.

Subsidiary Companies’ Particulars

DSCL-44.p65 7/27/2007, 9:03 AM70


DCM SHRIRAM

CONSOLIDATED LIMITEDConsolidated Financial Statements

Auditors’ Report

Report of the Auditors to the Board of Directors of DCM Shriram Consolidated Limited on the ConsolidatedFinancial Statements of DCM Shriram Consolidated Limited and its Subsidiaries.

We have examined the attached consolidated balancesheet of DCM Shriram Consolidated Limited and itssubsidiaries, as at March 31, 2007, the consolidatedprofit and loss account and also the cash flowstatement for the year ended on that date annexedthereto. These financial statements are theresponsibility of the management of DCM ShriramConsolidated Limited. Our responsibility is to expressan opinion on these financial statements based on ouraudit.

1. We conducted our audit in accordance withgenerally accepted auditing standards in India.These standards require that we plan and performthe audit to obtain reasonable assurance whetherthe financial statements are prepared, in all materialrespects, in accordance with an identified financialreporting framework and are free of materialmisstatements. An audit includes, examining on atest basis, evidence supporting the amounts anddisclosures in the financial statements. An auditalso includes assessing the accounting principlesused and significant estimates made bymanagement, as well as evaluating the overallfinancial statements. We believe that our auditprovides a reasonable basis for our opinion.

2. We did not audit the financial statements ofsubsidiaries viz., DCM Shriram Credit andInvestments Limited, Anant Thermal EnergyLimited, DCM Shriram International Limited, DCMShriram Infrastructure Limited, DSCL EnergyServices Company Limited, DCM Shriram AquaFoods Limited, Shriram Bioseed Genetics IndiaLimited, Shriram Bioseed (Thailand) Limited,Bioseeds Limited, Bioseed Research Vietnam,Bioseed Genetics Vietnam, Bioseed ResearchPhillipines, Inc., and Bioseed Research India PrivateLimited whose financial statements reflect totalassets of Rs. 131.39 crores as at March 31, 2007and total revenues of Rs. 96.82 crores for the yearended on that date (these figures include intra groupbalances and intra group transactions eliminatedon consolidation).These financial statements havebeen audited by other auditors whose reports have

been furnished to us, and our opinion, insofar as itrelates to the amounts included in respect of thesubsidiaries, is based solely on the report of theother auditors.

3. We report that the consolidated financial statementshave been prepared by the Company in accordancewith the requirements of Accounting Standard 21,Consolidated Financial Statements, issued by theInstitute of Chartered Accountants of India and onthe basis of the separate audited financialstatements of DCM Shriram Consolidated Limitedand its subsidiaries included in the consolidatedfinancial statements.

4. In our opinion and on the basis of the informationand explanations given to us and on theconsideration of the separate audit reports onindividual audited financial statements of DCMShriram Consolidated Limited and its subsidiaries,we are of the opinion that:

(a) the consolidated balance sheet gives a true andfair view of the consolidated state of affairs ofDCM Shriram Consolidated Limited and itssubsidiaries as at March 31, 2007;

(b) the consolidated profit and loss account givesa true and fair view of the consolidated resultsof operations of DCM Shriram ConsolidatedLimited and its subsidiaries for the year endedon that date; and

(c) the consolidated cash flow statement gives atrue and fair view of the cash flows of DCMShriram Consolidated Limited and its

subsidiaries for the year ended on that date.


J.M. SETHPartner

New Delhi Membership No.: 17055June 29, 2007

DSCL-71.p65 7/27/2007, 9:03 AM71


DCM SHRIRAM

CONSOLIDATED LIMITEDConsolidated Balance Sheet

of DCM Shriram Consolidated Limited and its Subsidiary Companies as at March 31, 2007

As at As atSchedule March 31, 2007 March 31, 2006

Rs. Crores Rs. CroresSources of FundsShareholders’ fundsShare capital 1 33.34 33.34Reserves and surplus 2 520.71 492.19

554.05 525.53Minority Interest 17.42 17.73Loan funds 3Secured 1001.83 756.54Unsecured 545.38 328.53

1547.21 1085.07Deferred tax liabilities (net) 4 170.12 146.68

Total funds employed 2288.80 1775.01

Application of FundsFixed assets 5Gross block 2187.16 1458.43Less : Depreciation 514.68 429.62

Net block 1672.48 1028.81Capital work in progress 108.33 243.64

1780.81 1272.45Investments 6 9.11 11.67Current assets, loans and advances 7Inventories 584.75 463.29Sundry debtors 538.85 443.02Cash and bank balances 62.50 37.89Loans and advances 215.08 141.08

1401.18 1085.28Less: Current liabilities and provisions 8Current liabilities 836.10 531.21Provisions 66.20 63.18

902.30 594.39Net current assets 498.88 490.89

Total funds utilised 2288.80 1775.01

Notes to the consolidated accounts 13

Per our report attached

For A.F. FERGUSON & CO. VIKRAM S. SHRIRAM AJAY S. SHRIRAM

Chartered Accountants Vice Chairman & Managing Director Chairman & Sr. Managing Director

J.M. SETH V.P. AGARWAL RAJIV SINHA AJIT S. SHRIRAM

Partner Company Secretary Dy. Managing Director ARUN BHARAT RAM

Membership No.:17055 PRADEEP DINODIA

SUNIL KANT MUNJAL

D. SENGUPTA

S.L. MOHAN

New Delhi S.C. BHARGAVA

June 29, 2007 Directors

DSCL-71.p65 7/27/2007, 9:03 AM72


DCM SHRIRAM


Year ended Year endedSchedule March 31, 2007 March 31, 2006


IncomeSale of products (Gross) 2938.23 2535.82Less : Excise duty 170.86 143.92

Sale of products (Net) 2767.37 2391.90Income from services and other income 9 39.00 24.28

2806.37 2416.18ExpenditureManufacturing and other expenses 10 1915.08 1409.00Purchases for resale 651.69 712.07Profit for the year before depreciation, interest and tax 239.60 295.11Interest - On debentures and other fixed loan 60.92 39.49

- Others 18.17 9.89

Profit for the year before depreciation and tax 160.51 245.73Depreciation 11 93.38 73.21

Profit for the year before tax 67.13 172.52Provision for taxation - Current tax/Deferred Tax 12 21.16 47.44


Profit after tax before minority interest 43.40 121.00Minority Interest 0.31 (2.85)

Net Profit for the year 43.71 118.15Transfer from debenture redemption reserve 5.16 3.67Balance brought forward from the previous year 204.75 150.23

Profit available for appropriation 253.62 272.05

AppropriationsProposed dividendsEquity shares

- Interim 6.64 6.64- Final 6.64 8.30

Corporate dividend tax 2.06 2.09Statutory reserve - 0.27General reserve 10.00 50.00

Balance carried to consolidated balance sheet 228.28 204.75

Earnings per share - basic/diluted (Rs.) 2.63 7.12(Refer note 8 in schedule 13)Notes to the consolidated accounts 13

Per our report attached to the consolidated balance sheet






SUNIL KANT MUNJAL

D. SENGUPTA

S.L. MOHAN



Consolidated Profit and Loss Account

of DCM Shriram Consolidated Limited and its Subsidiary Companies for the year ended March 31, 2007

DSCL-71.p65 7/27/2007, 9:03 AM73


DCM SHRIRAM


Year ended Year ended March 31, 2007 March 31, 2006

Rs. Crores Rs. CroresA. Cash flow from operating activities

Net profit before tax 67.13 172.52Adjustments for :Depreciation 93.38 73.21Provision for contingency - 0.13Permanent dimunition in value of Investment - 0.75(Profit)/Loss on sale of fixed assets (8.21) (4.07)Profit on sale of non-trade current investments (0.31) (0.78)Profit on sale of non-trade long term investments (3.25) (3.20)Exchange differences on conversion 1.03 (0.07)Finance charges paid 1.46 2.48Interest expense 79.09 49.38Less: interest and dividend income (5.80) (3.59)

Operating profit before working capital changes 224.52 286.76Adjustments for :Trade and other receivables(net) (157.96) (162.37)Inventories (121.66) (140.28)Trade and other payables 294.23 180.06

Cash generated from operations 239.13 164.17Income taxes paid (net) (25.14) (21.92)

Net cash from operating activities 213.99 142.25B. Cash flow from investing activities

Purchase of fixed assets (585.07) (489.21)Sale of fixed assets 14.58 14.60Purchase of non-trade current investments (2,007.02) (1422.01)Purchase of long term trade investments - (3.57)Purchase of non-trade long term investments (15.33) (4.89)Sale of non-trade current investments 2,007.02 1,447.09Sale of trade long term Investment 0.50 -Sale of non-trade long term investments 20.96 7.95Refund of security deposit from investment company 0.02 0.02Interest received 2.84 1.04Dividend received 2.13 2.03

Net cash used in investing activities (559.37) (446.95)

C. Cash flow from financing activities

Proceeds from borrowings 3,971.34 2,953.96Repayment of borrowings (3,695.16) (2,613.96)Inter Corporate Deposits received back 5.58 15.05Inter Corporate Deposits given (6.80) (18.58)Finance charges paid (1.46) (2.48)Changes in working capital borrowings 186.07 39.61Dividends paid (14.94) (15.76)Corporate dividend tax paid (2.09) (2.21)Interest received 0.58 0.20Interest paid (77.25) (47.49)

Net cash from financing activities 365.87 308.34Net increase/(decrease) in cash and cash equivalents 20.49 3.64Cash and cash equivalents as at opening

Cash and cheques in hand and balances with banks 34.53 30.89Cash and cash equivalents as at closing

Cash and cheques in hand and balances with banks 55.02 34.53

Per our report attached to the consolidated balance sheet






SUNIL KANT MUNJAL

D. SENGUPTA

S.L. MOHAN



Consolidated Cash Flow Statement

of DCM Shriram Consolidated Limited and its Subsidiary Companies for the year ended March 31, 2007

DSCL-71.p65 7/27/2007, 9:03 AM74


DCM SHRIRAM

CONSOLIDATED LIMITEDConsolidated Financial Statements

1. SHARE CAPITAL



Authorised24,99,50,000 (2005-2006 - 24,99,50,000) Equity shares 49.99 49.99of Rs. 2 each65,01,000 (2005-2006 - 65,01,000) Cumulativeredeemable preference shares of Rs.100 each 65.01 65.01

115.00 115.00Issued16,98,03,320 (2005-2006 - 16,98,03,320) Equity sharesof Rs.2 each 33.96 33.96Subscribed and paid up16,59,03,320 (2005-2006 - 16,59,03,320) Equity sharesof Rs.2 each, fully called-up 33.18 33.18Add: Forfeited shares - Amount originally paid up 0.16 33.34 0.16 33.34

33.34 33.34

NOTES:

Of the issued, subscribed and paid-up capital,

- 2,87,75,380 equity shares of Rs. 2 each represent the equity shares issued on October 9, 1990 to the members of undivided DCM Limited in the ratio

of one share for every four shares held by the members in undivided DCM Limited, in terms of the Scheme of Arrangement effective from April 1, 1990,

without payment being received in cash.

- 8,29,51,660 equity shares of Rs. 2 each fully paid up were allotted and issued as bonus shares by capitalisation of Capital Redumtion Reserve.

2. RESERVES AND SURPLUS

As at As at

March 31, 2006 Additions Deductions March 31, 2007Rs. Crores Rs. Crores Rs. Crores Rs. Crores

Revaluation reserve 0.35 - 0.01 0.34Debenture redemption reserve 11.84 - 5.16 # 6.68Share premium account 65.07 - - 65.07Capital redemption reserve 8.41 - - 8.41Capital Reserve 22.61 - - 22.61General reserve 179.28 10.00 - 189.28Statutory reserve * 0.71 - - 0.71Foreign currency translation reserve (0.83) 0.16 - (0.67)Profit and loss account 204.75 23.53 - 228.28

492.19 33.69 5.17 520.71

# Transfer to profit and loss account on redemption* As per The Reserve Bank of India (Amendment) Act 1997

3. LOAN FUNDS



SecuredDebentures 13.33 23.67Loans from banks

On Cash Credit account 250.42 53.83Others 554.94 485.47

Other loans 183.14 193.57

1,001.83 756.54UnsecuredDeposits

Fixed 8.54 11.29Others 28.94 25.77Interest accrued and due on deposits 0.09 0.09

Short term loans and advancesBanks 454.59 181.60Others 52.71 109.46

Finance Lease Liability* 0.51 0.32

545.38 328.53 1,547.21 1,085.07

* Represents present value of minimum lease payments. Also refer note 7 in schedule 13.

DSCL-71.p65 7/27/2007, 9:03 AM75


DCM SHRIRAM


Secured

1. Debentures - Company:

i) Debentures detailed below are secured by English first mortgage on the Company’s property at Taluka Kalol, District Gandhinagar,Gujarat and first equitable mortgage/ charge on immovable/ movable properties, both present and future, of the Company’s undertakingsat Kota, Rajasthan, subject to charges created/ to be created in favour of the Company’s bankers on stocks, stores and book debtsfor securing borrowings for working capital, and shall rank pari-passu in all respects with the security created or to be created interms of the stipulations of the respective Trust Deeds :

a) 15,00,000 (2005-2006 - 15,00,000) 8.5% Secured redeemable non-convertible debentures of Rs.100 each redeemable inthree equal annual instalments commencing from November 1, 2005. The second installment has been paid during the year (Rs.5.00 crores due within a year, 2005-2006 – Rs.5.00 crores).

b) 5,00,000 (2005-2006 – 5,00,000) 8.5% Secured redeemable non-convertible debentures of Rs.100 each, redeemable in threeequal annual instalments commencing from November 1, 2006. The first instalment has been paid during the year (Rs.1.67crores due within one year, 2005-2006 – Rs.1.67 crores).

ii) Debentures detailed below are secured by English first mortgage on the Company’s property at Taluka Kalol, District Gandhinagar,Gujarat and first equitable mortgage/ charge on immovable/ movable properties both present and future, of the Company’s undertakingat District Bharuch, Gujarat (save and except book debts) subject to charges created/ to be created in favour of the Company’sbankers on stocks, stores and book debts for securing borrowings for working capital and shall rank pari-passu with existing chargescreated/ to be created in favour of other first chargeholders:

a) 6,00,000 (2005-2006 – 6,00,000) 8.5% Secured redeemable non-convertible debentures of Rs.100 each redeemable in threeequal annual instalments commencing from November 1, 2005. The second instalment has been paid during the year (Rs.2.00crores due within a year, 2005-2006 – Rs.2.00 crores).

b) 1,00,000 (2005-2006 – 1,00,000) 11% Secured redeemable non-convertible debentures of Rs.100 each, redeemable in threeequal annual instalments commencing from November 1, 2005. The second installment has been paid during the year (Rs.0.33crore due within a year, 2005-2006 – Rs.0.33 crore).

c) 4,00,000 (2005-2006 – 4,00,000) 8.5% Secured redeemable non-convertible debentures of Rs.100 each, redeemable in threeequal annual instalments commencing from November 1, 2006. The first instalment has been paid during the year (Rs.1.33crores due within one year, 2005-2006 – Rs.1.33 crores).

2. Short term working capital borrowings from Banks:

i) Company

Loans from banks on cash credit account of Rs.226.97 crores (2005-2006 – Rs.40.90 crores) are secured by first charge by wayof hypothecation of stocks/stores and book debts of the Company as per terms and conditions of respective Banks. These loans arefurther secured/to be secured by a third charge by way of mortgage/hypothecation of all the immovable/movable properties (otherthan current assets) of the Company’s undertakings at Kota in Rajasthan and Ajbapur in Uttar Pradesh and second charge by wayof mortgage/hypothecation of all the immovable/movable properties (other than current assets) of the Company’s undertakings atRupapur in Uttar Pradesh.

ii) Shriram Bioseed Genetics India Limited (SBGI), a subsidiary

Short term loans and advances from banks of SBGI of Rs. 23.45 crores (2005-2006 – Rs. 12.93 crores) are secured by hypothecationof stocks and other receivables and book debts both present and future and mortgage and charge in favour of banks of allimmovable properties both present and future including movable machinery, machinery spares, tools and accessories both presentand future.

3. Loans from Banks and Others : Company

i) Term loans of Rs.27.33 crores (2005-2006 Rs.49.34 crores) from banks and term loans of Rs.12.00 crores (2005-2006 – Rs.12.00crores) from others are secured by pari-passu first mortgage/ charge, created on all immovable and movable assets, both presentand future, (save and except book debts), subject to prior charges created/to be created in favour of the Company’s bankers on thestocks of raw materials, semi-finished and finished goods and consumable stores for working capital borrowings and a term loan ofRs.20.00 crores (2005-2006 – Rs. 20.00 crores) from a bank is secured by way of second mortgage/ charge, created/to be createdon all immovable and movable fixed assets, both present and future, pertaining to the Company’s undertakings at District Bharuch,Gujarat, (Rs.14.69 crores due within a year, 2005-2006 – Rs.19.97 crores).

ii) Term loans of Rs.146.43 crores (2005-2006 – Rs.128.48 crores) from banks and term loans of Rs.18.00 crores (2005-2006 -Rs.27.00 crores) from others are secured by way of first mortgage/charge, created ranking pari-passu on all immovable andmovable assets, both present and future, (save and except book debts), term loan of Rs.130.47 crores (2005-2006 - Rs.133.86crores) from others are secured by way of first mortgage/charge, created ranking pari-passu on all immovable and movable assets,both present and future, subject to charges created or to be created in favour of the Company’s bankers on the stocks of rawmaterials, semi-finished and finished goods and consumable stores for working capital borrowings, and term loans of Rs.50.00crores (2005-2006 – Rs.50.00 crores) from banks are secured by way of second mortgage/ charge, created/to be created on allimmovable and movable fixed assets, both present and future of the Company’s undertakings at Kota, Rajasthan (Rs.20.87 croresdue within a year, 2005-2006 – Rs.18.67 crores).

iii) Term loan of Rs.5.33 crores (2005-2006 – Rs.7.33 crores) from a bank is secured by way of first mortgage/charge, ranking pari-passu, on all immovable/movable assets, both present and future, pertaining to the Company’s Ajbapur Sugar complex and RupapurSugar Complex, Uttar Pradesh, subject to charges created/to be created in favour of Company’s bankers on the stocks of rawmaterials, semi-finished goods, finished goods and consumable stores for securing working capital borrowings (Rs.2.00 crores duewithin a year, 2005-2006 – Rs.2.00 crores).

iv) Term loan of Rs.118.07 crores (2005-2006 – Rs.84.71 crores) from banks are secured by way of first mortgage/charge, rankingpari- passu, on all immovable/movable assets, both present and future and term loan of Rs.15.67 crores (2005-2006 – Rs.9.71crores) from others is secured by way of an exclusive second charge on all immovable/movable assets (save and except book debts)subject to charges created/to be created in favour of the Company’s bankers on the stocks of raw materials, semi-finished goods,finished goods and consumable stores for securing working capital borrowings both present and future, pertaining to the Company’sAjbapur Sugar Complex, Uttar Pradesh (Rs.8.33 crores due within a year, 2005-2006 – Rs.Nil).

Consolidated Financial Statements (Continued)

3. LOAN FUNDS (Continued)

DSCL-71.p65 7/27/2007, 9:03 AM76


DCM SHRIRAM


v) Term loan of Rs.7.00 crores (2005-2006 – Rs.11.00 crores) from others is secured by way of subservient mortgage/ charge,created/ to be created on 9 MW power plants at Ajbapur Sugar Complex and 6MW power plant at Rupapur Sugar Complex of theCompany. (Rs.4.00 crores due within a year, 2005-2006 – Rs.4.00 crores)

vi) Term loan of Rs.86.98 crores (2005-2006 – Rs.89.24 crores) from a bank is secured by way of first mortgage/charge created/ tobe created on all immovable/movable assets, both present and future, subject to charges created/to be created in favour ofCompany’s bankers on the stocks of raw materials, semi finished goods, finished goods and consumable stores for securingworking capital borrowings, pertaining to the Company’s Loni Sugar Complex, Uttar Pradesh. (Rs.Nil due within a year, 2005-2006– Rs.Nil)

vii) Term loan of Rs.68.07 crores (2005-2006 – Rs.22.71 crores) from a bank is secured by way of first mortgage/charge created/ tobe created on all immovable/movable assets, both present and future, subject to charges created/to be created in favour ofCompany’s bankers on the stocks of raw materials, semi finished goods, finished goods and consumable stores for securingworking capital borrowings, pertaining to the Company’s Hariawan Sugar Complex, Uttar Pradesh. (Rs.Nil due within a year,2005-2006 – Rs.Nil)

viii) Term loan of Rs.32.73 crores (2005-2006 – Rs.33.66 crores) from a bank is secured by way of first mortgage/charge created/ tobe created on all immovable/movable fixed assets, both present and future pertaining to the Company’s Rupapur Sugar Complex,Uttar Pradesh. (Rs.Nil due within a year, 2005-2006 – Rs.Nil)


3. LOAN FUNDS (Continued)

4. DEFERRED TAX LIABILITIES AND ASSETS



Deferred tax liabilitiesDepreciation 186.31 155.79Compensation payable to employees 4.84 4.79Others 6.47 5.68

197.62 166.26

Deferred tax assetsProvision for gratuity and leave encashment 14.21 12.54Provision for doubtful debts and advances 2.83 2.29Unabsorbed business loss 0.26 0.27Others 10.20 4.48

27.50 19.58Deferred tax liabilities (net) 170.12 146.68

5. FIXED ASSETS

GROSS BLOCK DEPRECIATION NET BLOCK

Description As at Additions Deductions As at Up to For Deductions/ Up to As at As at

March 31, March 31, March 31, the year Adjustment March 31, March 31, March 31,

2006 2007 2006 2007 2007 2006

Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores

Tangibles

Land 49.07 32.49 3.95 77.61 * - - - - 77.61 49.07

Buildings 117.75 112.20 0.06 229.89 ** 15.80 3.84 0.01 19.63 210.26 101.95

Plant and machinery 1,197.01 579.51*** 7.39 1,769.13 $ 372.80 77.44 6.34 443.90 $ 1,325.23 824.21

Furniture and fittings 23.44 11.87 1.06 34.25 14.38 3.83 0.67 17.54 16.71 9.06

Vehicles 19.08 5.95 1.98 23.05 7.95 3.48 1.19 10.24 12.81 11.13

Intangibles

Goodwill 18.14 - 0.19 17.95 7.45 1.82 0.11 9.16 8.79 10.69

Technical Know How 22.82 0.93 - 23.75 7.74 2.34 - 10.08 13.67 15.08

Brand 8.22 - - 8.22 2.37 0.69 - 3.06 5.16 5.85

Software 1.76 0.82 - 2.58 0.46 0.33 - 0.79 1.79 1.30

Assets on lease

Vehicles 1.14 0.32 0.73 0.73 $$ 0.67 0.22 0.61 0.28 0.45 0.47

This year 1,458.43 744.09 *** 15.36 2,187.16 429.62 93.99 # 8.93 514.68 1,672.48

Previous year 1,075.56 401.45 18.58 1,458.43 364.14 73.36 7.88 429.62 1,028.81

Capital work in progress 108.33 243.64

(including capital advances)

1,780.81 1,272.45

*- Includes Rs. 2.15 crores (2005-2006 - Rs. 2.15 crores) being value of land jointly held and possessed in equal proportion with M/s Irama Estates Pvt. Limited, Kolkata,pursuant to the Agreement between the parties.

- Includes Rs. 2.19 crores (2005-2006 - Rs. Nil) pertaining to land situated at Hardoi and Hyderabad pending registration in favour of the Company- Land amounting to Rs. 0.12 crore (2005-2006 -Rs. Nil) is yet to be mutated in the name of Bioseed Reserch India Private Limited.** Includes Rs.Nil (2005-2006 - Rs.1.15 crores) pertaining to a flat situated at Mumbai, pending registration in favour of the Company.*** Includes addition of Rs.11.00 crores (2005-2006 - Rs.2.48 crores) on account of foreign exchange fluctuation.$ Includes Rs. 0.23 crore (2005-2006 Rs. 0.79 crore) in respect of certain plant and machinery retired from active use and held for disposal.$$ Refer note 7 in schedule 13.# Includes Rs. 0.58 crore (2005-2006 - Rs. 0.12 crore) included in additions to fixed assets, in respect of Sugar Projects.

DSCL-71.p65 7/27/2007, 9:03 AM77


DCM SHRIRAM

CONSOLIDATED LIMITEDConsolidated Financial Statements (Continued)

6. INVESTMENTS

As at As at March 31, 2007 March 31, 2006


Long Term

(valued at cost unless there is permanent fall in value thereof)

Trade Investments

Unquoted

7,95,009 (2005-2006 - 7,95,009) Equity shares of Rs. 10 each

fully paid up of Bharuch Eco Aqua Infrastructure Limited. 0.79 0.79

30,00,000 (2005-2006 - 35,00,000) Equity Shares of Rs. 10 each

shares of Forum I Aviation Limited. 5,00,000 equity

shares sold during the year. 3.00 3.50

Quoted

763.959 (2005-2006 - 763.959) US-2002 of Unit Trust of India of

Rs. 10 each fully paid up (# Rs. 0.05 lac) # #

Non-Trade Investments

Government Securities

Unquoted

National savings certificates * 0.01 0.01

Investment in Shares, Units, etc.

Quoted

95,495 (2005-2006 - 95,495 ) 6.75 % Bonds of Rs.100 each

fully paid-up of Unit Trust of India 0.95 0.95

1,50,000 (2005-2006 - 2,00,000) Equity shares of IFCI Limited of

Rs.10 each fully paid up. 50,000 Equity shares sold during the year. 0.06 0.08

5,400 (2005-2006 - 5,400) Master Gains 92 of Unit Trust of

India of Rs. 10 each fully paid up (@ Rs. 0.47 lac) @ @

2,500 (2005-2006 - 2,500) Equity shares of APW President

System Limited of Rs.10 each fully paid up 0.01 0.01

66,037 (2005-2006 - 1,44,037 ) Equity shares of Bank of Baroda of

Rs. 10 each fully paid up. 78,000 Equity shares sold during the year. 1.52 3.31

45,128 (2005-2006 - 45,128) equity shares of Gujarat State Petronet

Limited of Rs. 10 each fully paid up 0.12 0.12

34,150 (2005-2006 - 34,150) equity shares of National Thermal

Power Corporation Limited of Rs.10 each fully paid up 0.21 0.21

DSCL-71.p65 7/27/2007, 9:03 AM78


DCM SHRIRAM


3,430 (2005-2006 - 9,430) Equity shares of Punjab National Bank

of Rs.10 each fully paid up. 6,000 shares sold during the year. 0.13 0.37

Nil (2005-2006 - 2,34,917) Equity shares of Rs. 10 each fully

paid-up of SRF Polymer Limited. 2,34,917 shares sold during the year. - -

37,870 (2005-2006 - 40,870) Equity shares of Yes Bank Ltd of

Rs 10 each fully paid up. 3,000 shares sold during the year. 0.17 0.18

6,934 (2005-2006 - 6,934) Equity share of IL & FS Investments

Limited of Rs. 10 each fully paid up. 0.09 0.09

Unquoted

49,950( 2005-2006 - 49,950) Equity shares of Pacific Land

Development Private Limited of Rs.10 each fully paid up. 0.05 0.05

250 (2005-2006 - 250) units of Infinity Venture India Fund of 0.20 0.20

Rs. 12,945 each, fully paid up.

3,00,000 ( 2005-2006 - 3,00,000) Equity shares of E Commodities 0.30 0.30

Limited of Rs.10 each fully paid up.

2,00,000 (2005-2006 - 2,00,000) Equity shares of Ellenbarie 1.50 1.50

Commercial Limited of Rs.10 each fully paid up.

40,000 (2005-2006 - 40,000) Equity shares of BMD Estate Private

Limited of Rs.10 each fully paid up. 0.75 0.75

Less : Permanent diminution in value 0.75 - 0.75 -

TOTAL 9.11 11.67

Aggregate book value - Quoted 3.26 5.32

- Unquoted 5.85 6.35

Aggregate market value - Quoted 4.27 11.21

* Lodged with Sales Tax authorities Rs. 9,000 (2005-2006 - Rs. 9,000)

6. INVESTMENTS (Continued)

As at As at March 31, 2007 March 31, 2006



DSCL-71.p65 7/27/2007, 9:03 AM79


DCM SHRIRAM


7. CURRENT ASSETS, LOANS AND ADVANCESAs at As at

March 31, 2007 March 31, 2006Rs. Crores Rs. Crores

Current AssetsInventories

Stores and spares * 69.98 60.10Stock-in-trade **

Raw materials 48.01 31.92Process stocks 18.78 12.59Finished goods 447.97 358.67Securities 0.01 0.01

584.75 463.29Sundry debtors

Debts over six monthsSecured - considered good 0.01 0.02Unsecured - considered good 134.85 59.77

- considered doubtful 8.99 7.55Other debts

Secured - considered good 1.01 1.14Unsecured - considered good 402.98 382.09

547.84 450.57

Less : Provision for doubtful debts 8.99 7.55538.85 443.02

Cash and bank balancesCash on hand 3.21 0.96Cheques in hand 3.81 4.10With scheduled banks on

Current account 47.80 29.23Deposit account # 7.68 $ 3.60

62.50 37.89

Loans and AdvancesAdvances recoverable in cash or inkind or for value to be received

Unsecured - considered good 96.58 85.51- considered doubtful 0.56 0.56

Less: Provision for doubtful advances 0.56 0.56

96.58 85.51

Deposits 21.34 14.36With customs, excise and port trust authorities 61.01 30.15Tax payments (net of provision for current tax and FBT) 23.89 9.28MAT Credit entitlement 11.89 1.62Interest accrued on investments and deposits 0.37 0.16

215.08 141.08

1401.18 1085.28

* Stores and spares are valued at cost or under.

** Stock-in-trade is valued at cost or net realisable value, whichever is lower.# Includes Rs. 0.43 crore (2005-2006 - Rs. 0.43 crore) provided as margin for bank guarantees and letter

of credit.$ - Includes Rs. 0.10 lac (2005-2006 - Rs. 0.10 lac) lodged with sales tax authority.

- Rs. 0.04 crore (2005-2006 - 0.02 crore) pledged as security against bank guarantee.


DSCL-71.p65 7/27/2007, 9:03 AM80


DCM SHRIRAM


8. CURRENT LIABILITIES AND PROVISIONSAs at As at


Current LiabilitiesSundry creditors#

Total outstanding dues of small scale industrial undertakings 0.47 1.04Total outstanding dues of creditors other than small scaleindustrial undertakings 824.43 520.82Ex-gratia payable under voluntary retirement schemes** 1.58 1.81Interest accrued but not due on loans 9.62 7.54

836.10 531.21ProvisionsGratuity 31.62 29.02Leave encashment 10.72 8.61Proposed dividend 6.64 8.30Corporate dividend tax 1.13 1.16Contingencies 16.09 16.09

66.20 63.18

902.30 594.39

# Sundry creditors do not include any amounts outstanding as on March 31, 2007 which are required to becredited to Investor Education and Protection Fund.

** Rs. 0.19 crore (2005-2006 - Rs.0.23 crore) due within a year.


9. INCOME FROM SERVICES AND OTHER INCOME

Year ended Year ended March 31, 2007 March 31, 2006


Income from services* 4.43 4.48Other IncomeDividend income (gross) from:

- non-trade, long term investments 0.10 0.03- non-trade, current investments 2.03 2.00

Profit on sale of:- non-trade, long term investments 3.25 3.20- non-trade, current investments 0.31 0.78

Profit on sale of fixed assets 8.21 4.07Interest income** 3.67 1.58Rent 1.27 0.03Liabilities/provisions no longer required written back 3.04 0.51Miscellaneous 12.69 7.60

39.00 24.28

* Income-tax deducted at source Rs. 0.17 crore (2005-2006 Rs. 0.14 crore)** Income-tax deducted at source Rs. 0.64 crore (2005-2006 Rs. 0.36 crore)

DSCL-71.p65 7/27/2007, 9:03 AM81


DCM SHRIRAM


10. MANUFACTURING AND OTHER EXPENSESYear ended Year ended

March 31, 2007 March 31, 2006


Raw materials consumed 1,075.99 795.80Stores, spares and components 135.48 105.51Power, fuel, etc. 320.79 290.06Repairs

Buildings 4.19 3.57Plant and machinery 24.71 19.82

Salaries, wages, bonus, gratuity, commission, etc. 139.27 114.01Provident and other funds 13.76 11.54Welfare 8.96 7.21Rent 8.17 6.75Insurance 6.99 5.79Donation 1.09 0.41Rates and taxes 2.00 1.54Auditors’ remuneration

Audit fee 0.58 0.45Tax audit 0.08 0.05Other services 0.44 0.37Out-of-pocket expenses 0.02 0.02

Directors’ fees 0.06 0.07Permanent dimunition in value of investment - 0.75Bad debts and advances written-off 0.47 0.22Provision for doubtful debts and advances 1.92 0.84Freight and transport 78.19 78.61Commission to selling agents 0.87 0.67Brokerage, discounts (other than trade discounts), etc. 11.19 9.26Selling expenses 25.84 20.77Exchange fluctuation 9.11 9.39Increase/(decrease) in excise duty of finished goods 11.44 (2.19)Provision for contingencies - 0.13Miscellaneous expenses 79.89 64.89

1,961.50 1,546.31Less: Cost of own manufactured goods capitalised (5.76) (2.30)

1,955.74 1,544.01(Increase)/ Decrease in stock of finished goods and process stockClosing stock 466.76 371.27Less: Stock produced during the trial run 54.83 -Adjusted Closing stock 411.93 371.27Less : Opening stock 371.27 236.26

(40.66) (135.01)

1,915.08 1,409.00


11. DEPRECIATION




Less: Transfer from revaluation reserve 0.03 0.03

93.38 73.21

12. CURRENT/DEFERRED TAX



Current tax 7.98 15.38

Less : MAT credit entitlement (10.27) * (1.62)

Add : Current tax of earlier years - (2.29) 1.45 15.21

Deferred tax 23.45 * 32.23

21.16 47.44

* Refer note 16 of Schedule 13

DSCL-71.p65 7/27/2007, 9:03 AM82


DCM SHRIRAM


13. NOTES TO THE CONSOLIDATED ACCOUNTS

1. Statement of accounting policies

(i) Basis of accounting

The consolidated financial statements are prepared under the historical cost convention as modified to include the revaluationof land of one of the units of the Company. These statements have been prepared in accordance with Accounting Standard 21– “Consolidated Financial Statements”.

(ii) Principles of consolidation

a) The consolidated financial statements relate to DCM Shriram Consolidated Limited (the Company) and its subsidiarycompanies. The consolidated financial statements have been prepared on the following basis:

- the financial statements of the Company and its subsidiary companies have been combined on a line-by-line basis byadding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses.

- the consolidated financial statements have been prepared using uniform accounting policies for like transactions andother events in similar circumstances and are presented in the same manner as the Company’s separate financialstatements.

- the excess of cost to the Company of its investment in a subsidiary company over the Company’s portion of theequity of the subsidiary at the date on which investment in subsidiary is made is recognised in the financial statementsas goodwill, which is amortised over a period of ten years.

b) The companies considered in the consolidated financial statements are:

Name of the Company Country of % voting % votingincorporation power held as at power held as at

March 31, 2007 March 31, 2006

Subsidiary companiesDCM Shriram Credit and Investments Limited (DSCIL) India 100 100DSCL Energy Services Company Limited (DESL) India 99.99 99.99DCM Shriram International Limited (DSIL)(100% subsidiary company of DSCIL) India 100 100DCM Shriram Infrastructure Limited(DCMSIL) (99.99 % subsidiary of DSCIL) India 99.99 99.99Anant Thermal Energy Limited(ATEL)#(99.99 % subsidiary of DSCIL) India 99.99 -DCM Shriram Aqua Foods Limited (DSAFL) India 99.99 99.99Bioseeds Limited (BL) Mauritius 51 51Bioseed Genetics Vietnam (BGV)(100% subsidiary company of BL) Vietnam 51 51Bioseed Research Vietnam (BRV)(100% subsidiary company of BL) Vietnam 51 51Bioseed Research Philippines, Inc. (BRP)(100% subsidiary company of BL) Philippines 51 51Bioseed Research India Private Limited (BRI)(100% subsidiary company of BL) India 51 51Shriram Bioseed Genetics India Limited (SBGI) India 51 51Shriram Bioseed (Thailand) Limited (SBTL)#(99.99% subsidiary company of SBGI) Thailand 50.99 -

# subsidiary from current year.

c) These Consolidated Financial Statements are based, in so far as they relate to amounts included in respect of subsidiarieson the audited financial statements prepared for consolidation by the concerned subsidiaries in accordance with therequirements of AS –21 “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India.

(iii) Fixed assets and depreciation

a) Owned assets

Fixed assets (assets acquired in Shriram Bioseed Genetics India Limited which have been revalued and are stated at revaluedfigure) are stated at cost less accumulated depreciation. Cost of acquisition or construction is inclusive of freight, duties,taxes and incidental expenses and interest on loans attributable to the acquisition of assets up to the date of commissioningof assets. Capital subsidy received against specific asset is reduced from the value of relevant fixed asset.

The Company is following the straight-line method of depreciation in respect of buildings, plant and machinery and writtendown value method in respect of other assets.Depreciation is provided at the rates as specified in schedule XIV to the Companies Act, 1956, except in the case of:

Depreciation Rate

- catalyst tubes 12.50%- cell units 10.00%- certain other plant and machinery items 16.67%- office and other equipments 25.00%

Depreciation is calculated on a pro-rata basis from the date of additions, except in the case of assets costing uptoRs. 5,000 each, where each such asset is fully depreciated in the year of purchase.


DSCL-83.p65 7/27/2007, 9:03 AM83


DCM SHRIRAM


Depreciation (amortisation) on intangibles is provided on straight line method as follows:- Technical know-how is amortised over its estimated economic useful life of 10 years- Brand is amortised over a period of 10 years.On assets sold, discarded, etc. during the year, depreciation is provided upto the date of sale/discard.

b) Assets taken on finance leaseFixed assets taken on finance lease on or after April 1, 2001 are stated at the lower of the fair value of the lease assets or thepresent value of the minimum lease payments at the inception of the lease.In respect of fixed assets taken on finance lease, when there is reasonable certainty that the Company will obtain ownership bythe end of the lease term, depreciation is provided in accordance with the policy followed by the Company for owned assets.

(iv) Foreign currency transactions and derivatives

a) Transactions in foreign currency are recorded on initial recognition at the exchange rate prevailing at the time of transaction.

Monetary items (i.e. receivables, payables, loans etc.) denominated in foreign currency are reported using the closing exchangerate on each balance sheet date.

The exchange differences arising on the settlement of monetary items or on reporting these items at rates different from ratesat which these were initially recorded/reported in previous financial statements are recognized as income/expense in the periodin which they arise except where the foreign currency liabilities have been incurred in connection with fixed assets acquired upto March 31, 2004 and subsequent thereto in case of fixed assets acquired from a country outside India, where the exchangedifferences are adjusted in the carrying amount of concerned fixed assets.

In case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised asincome or expense over the life of the contract. Further exchange difference on such contracts i.e. difference between theexchange rate at the reporting / settlement date and the exchange rate on the date of inception of contract/the last reportingdate, is recognized as income/ expense for the period except where the foreign currency liabilities have been incurred inconnection with fixed assets acquired up to March 31, 2004 and subsequent thereto in case of fixed assets acquired from acountry outside India, where the exchange differences are adjusted in the carrying amount of concerned fixed assets.

In respect of derivative contracts, gain/losses are recognised on actual settlement of respective contracts.

b) In case of foreign subsidiaries, the assets and liabilities have been translated into Indian Rupees at the closing exchange rate atthe year end whereas revenues and expenses reflected in the profit and loss account have been translated into Indian Rupeesat monthly average exchange rate for the reporting period. The resultant translation exchange differences are accumulated in“Foreign currency translation reserve” to be recognised as income or expense in the period in which net investment in concernedforeign subsidiary is disposed off.

(v) Inventories

Stores and spares are valued at cost or under. Stock-in-trade is valued at cost or net realisable value, whichever is lower. The basisof determining cost (which also includes taxes and duties wherever applicable) for different categories of inventory are as follows: -

Stores, spares and raw materials - Weighted average rate.Stock-in-trade

Process stocks and finished goods - Direct cost plus appropriate share of overheads after giving creditfor other income and excluding certain expenses like ex-gratia andgratuity.

By-products - At estimated realisable valueSecurities are valued at cost or market/realisable value, whichever is lower.

(vi) Revenue recognition

a) Revenue in respect of sale of products is recognised at the point of despatch to customer.b) Under the retention pricing scheme, the Government of India reimburses to the fertiliser industry, the difference between the

retention price based on the cost of production and selling price (as realised from the farmers) as fixed by the Government fromtime to time, in the form of subsidy. The effect of variation in input costs/expenses on retention price yet to be notified isaccounted for by the Company as income for the year based on its assessment of ultimate collection with reasonable degreeof certainty at the time of accrual.

c) The Company accrues concession/subsidy on traded Phosphatic and Potassic fertilisers pending notification by Government ofIndia, based on its assessment of ultimate collection thereof with reasonable degree of certainity.

d) Revenue in respect of income from services is recognized on proportionate completion method.

(vii) Investments

Long term investments are stated at cost unless there is a permanent fall in value thereof. Current investments are stated at cost ornet realisable value, whichever is less.

(viii) Retirement and other benefits

The Company has the following retirement schemes:- Superannuation fund for officers.- Provident fund for all employees.The contributions to the above funds are charged to revenue each year.Provisions for gratuity and leave encashment determined on an actuarial basis at the end of the year are charged to revenue everyyear.

(ix) Research and development

The revenue expenditure on research and development is charged as an expense in the year in which it is incurred. Capital expenditureis included in fixed assets.

(x) Agricultural cost

Agricultural costs of Shriram Bioseed Genetics India Limited are accounted for as per the on going contracts.


13. NOTES TO THE CONSOLIDATED ACCOUNTS (Continued)

DSCL-83.p65 7/27/2007, 9:03 AM84


DCM SHRIRAM


(xi) Income-tax

The Income-tax liability is provided in accordance with the provisions of the Income-tax Act, 1961.Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxableincome and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

This Year Previous Year(Rs. Crores) (Rs. Crores)

2. (i) Contingent liabilities not provided for:Claims* (excluding claims by employees where amountnot ascertainable) not acknowledged as debts:Sales tax matters 1.40 13.30Excise Matters 2.27 2.40Additional Premium on Land 8.11 8.11Others 8.24 8.22

Total 20.02 32.03

* all the above matters are subject to legal proceedings in the ordinary courseof business. The legal proceedings, when ultimately concluded will not, in theopinion of management, have a material effect on results of operations orfinancial position of the Company.

(ii) Capital commitments (net of advances) 75.69 224.81(iii) Guarantees given to financial institutions, banks and other parties in

respect of loans availed by subsidiaries and other parties: 1.85 1.85Amount guaranteed 0.48 0.46

3. In accordance with past practice, the Company has taken revenue credits aggregating Rs. 109.80 crores (2005-2006 - Rs. 47.58crores) for urea subsidy claims, which are pending notification/ final acceptance by ‘Fertiliser Industry Coordination Committee’(FICC), Government of India, in pursuance of the Retention Price Scheme administered for nitrogenous fertilisers. Similarly, revenuecredits aggregating Rs. Nil (2005-2006 - Rs. 28.62 crores) for subsidy claims relating to Di-Ammonium Phosphate and Muriate ofPotash have been taken which are pending notification of final rates of concession/subsidy by the Government of India, Ministry ofChemicals and Fertilizers. Necessary adjustment to revenue credits so accrued will be made on issuance of notification by FICC/Government of India, Ministry of Chemicals and Fertilizers or final settlement thereof.

4. The Hon’ble Supreme Court vide its Order dated December 11, 1996 directed that the Aqua projects shall be allowed to be developedafter the projects are granted approval by an ‘Authority’ to be constituted by the Central Government, which is still pending. DCMShriram Aqua Foods Limited (DSAFL) is monitoring the developments in this regard and will take appropriate actions in due course.

However, DSAFL, in the year 2001-2002, based on a valuation of its assets carried out by an independent valuer had out of abundantcaution made a provision for contingencies of Rs. 4.00 crores towards the possible diminution in the value of its assets.

5. Sundry debtors of Shriram Bioseed Genetics India Limited (SBGI) include Rs. 1.16 crores (Previous Year - Rs. 1.16 crores) in respectof a debtor against whom legal action for recovery has been initiated. In the opinion of the management of SBGI, this outstanding isconsidered fully recoverable and therefore, has not been provided for.

6. Segment reporting

A. Business segments :

Based on the guiding principles given in Accounting Standard AS-17 “Segment Reporting” issued by the Institute of CharteredAccountants of India, the Company’s business segments include: Fertilisers (manufacturing of urea), Plastics (manufacturing ofpolyvinyl chloride and carbide), Chemicals (manufacturing of chlor alkali products), Traded Products (trading of di-ammoniumphosphate, muriate of potash, super phosphate, other fertilisers, seeds, pesticides and plaster of paris),Cement (manufacturing ofcement), Sugar (manufacturing of sugar products), Others (energy services, textiles, agri retail business, manufacturing of compoundsand UPVC window systems).

B. Geographical segments:

Since the Company’s activities/operations are primarily within the country and considering the nature of products/services itdeals in, the risks and returns are same and as such there is only one geographical segment.

C. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accountingpolicies in relation to segment accounting are as under:

a) Segment revenue and expenses:

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue andexpenses are directly attributable to the segments.

b) Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventoriesand fixed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet. Segmentliabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets andliabilities do not include deferred income taxes. While most of the assets/liabilities can be directly attributed to individualsegments, the carrying amounts of certain assets/liabilities pertaining to two or more segments are allocated to the segmentson a reasonable basis.

c) Inter segment sales:

Inter segment sales between operating segments are accounted for at market price. These transactions are eliminated inconsolidation.



DSCL-83.p65 7/27/2007, 9:03 AM85


DCM SHRIRAM


D. Information about business segmentsRs. Crores

PARTICULARS Fertiliser Plastics Chemicals Traded Products Sugar Cement Others Elimination Total

This Previous This Previous This Previous This Previous This Previous This Previous This Previous This Previous This Previous

Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year

1. REVENUE

External sales 647.32 600.44 349.91 246.49 395.38 360.24 703.45 603.01 373.29 388.13 121.05 101.86 347.83 235.65 2938.23 2535.82

Income from services 4.43 4.42 4.43 4.42

Inter segment sales 0.38 0.10 36.52 24.85 12.98 19.32 0.62 0.41 0.22 11.31 9.70 (62.22) (54.19)

Total revenue 647.70 600.54 386.43 271.34 408.36 379.56 704.07 603.01 373.70 388.35 121.05 101.86 363.57 249.77 (62.22) (54.19) 2942.66 2540.24

2. RESULTS

Segment results 11.46 21.27 63.89 34.38 117.84 128.87 (16.88) (0.01) 3.76 72.34 27.75 11.43 (21.52) (11.84) 186.30 256.44

Unallocated expenses

(net of income) (40.08) (34.54)

Operating profit 11.46 21.27 63.89 34.38 117.84 128.87 (16.88) (0.01) 3.76 72.34 27.75 11.43 (21.52) (11.84) 146.22 221.90


Income taxes

- Current /deferred tax 21.16 47.44


Net profit 43.40 121.00

3. OTHER INFORMATION

A. ASSETS

Segment assets 454.24 283.13 293.63 301.00 397.63 378.70 188.77 338.54 1262.36 643.07 34.80 38.60 481.70 294.73 3113.13 2277.77

Unallocated assets 77.97 91.63

Total assets 454.24 283.13 293.63 301.00 397.63 378.70 188.77 338.54 1262.36 643.07 34.80 38.60 481.70 294.73 3191.10 2369.40

B. LIABILITIES

Segment liabilities 116.63 45.95 28.20 25.09 17.28 26.50 378.17 317.50 247.09 76.18 8.39 7.60 54.34 44.80 850.10 543.62

Share capital and reserves 554.05 525.53

Secured and unsecured loans 1547.21 1085.07

Unallocated liabilities 239.74 215.18

Total liabilities 116.63 45.95 28.20 25.09 17.28 26.50 378.17 317.50 247.09 76.18 8.39 7.60 54.34 44.80 3191.10 2369.40

C. OTHERS

Capital expenditure 55.15 14.56 12.26 123.38 48.64 61.06 0.12 0.10 391.90 243.23 4.13 5.53 90.31 32.82

Depreciation 11.38 10.10 16.49 10.98 28.24 25.57 0.05 0.04 19.28 11.35 2.79 2.72 11.64 10.04

Non cash expenses

other than depreciation 0.07 1.00 0.80 0.22 0.39 0.06 1.11 1.24

7. Disclosure in respect of assets taken on lease on or after April 1, 2001 under Accounting Standard AS-19 “Leases”.

(i) General description of the finance lease:

Bioseed Research Philippines, Inc. has entered into finance lease arrangement for vehicles and office equipment. Some of the

significant terms and conditions of such leases are as under:

- renewal for a further period on such terms and conditions as may be mutually agreed upon between lessor and the

Company.

- assets to be purchased by the Company or the nominee appointed by the Company at the end of the lease term.

(ii) Reconciliation between the total of minimum lease payments at the balance sheet date and their present value:

Total Not later than Later than one year

one year but not later than five years

This Previous This Previous This Previous

year year year year year year

Total of minimum lease payments

at the balance sheet date 0.63 0.37 0.21 0.11 0.42 0.26

Less: Future finance charges 0.12 0.05 0.04 0.02 0.08 0.03

Present value of minimum lease

payments at the balance sheet date 0.51 0.32 0.17 0.09 0.34 0.23



Rs. Crores

DSCL-83.p65 7/27/2007, 9:03 AM86


DCM SHRIRAM

CONSOLIDATED LIMITEDConsolidated Financial Statements (Continued)


8. Earnings per share



Profit after tax as per consolidated profit and loss account 43.71 118.15

Basic/Weighted average number of equity shares outstanding 16,59,03,320 16,59,03,320

Basic and diluted earnings per share in rupees (face value – Rs.2 per share) 2.63 7.12

9. Related party disclosures under Accounting Standard -18

A. Name of related party and nature of related party relationship

Key Managerial Persons, their relatives and HUFs : Mr. Ajay S.Shriram, Mr. Vikram S.Shriram, Mr. Rajiv Sinha, Mr. Ajit S.Shriram,

Mr. Aditya A. Shriram (relative of Mr. Ajay S. Shriram), Mrs. Divya Sinha (relative of Mr. Rajiv Sinha), M/s. Ajay S.Shriram (HUF),

M/s. Vikram S.Shriram (HUF).

B. Transactions with Key Managerial Persons, their relatives and HUF’s.

Key Managerial Personnel,

their relatives and HUFs



Hire of premises - rent paid 1.08 0.55

Security deposit given 2.77 -

Security deposit received back 0.07 -

Managerial remuneration including commission 5.11 5.38

Remuneration paid (* Rs. 40,000) 0.05 *

Balance outstanding as at the year end

- Security deposits for premises hired 7.84 5.14

- Fixed deposits 0.07 0.07

10. Amount of borrowing costs capitalised to fixed assets during the year Rs. 13.97 crores (2005-2006 - Rs. 11.91 crores)

11. Details of Pre-operative expenses pending allocation included under Capital work-in-progress in Schedule 5 is as under :

(Rs. in crores)

Particulars This Year Previous Year



Power, fuel, etc. 3.95 1.57

Repairs:


Salaries,wages, bonus,gratuity,commission,etc. 8.69 2.35


Welfare 0.71 0.19

Rent 0.06 0.07

Insurance 0.33 1.22




Increase/(decrease) in excise duty on finished goods 3.57 -


Interest 12.83 5.83


103.88 26.77

Less:

Other income 0.26 0.10

Inventory produced during trial run

- Process stock 3.37 -

- Finished goods 51.46 -

48.79 26.67

Add: Brought forward from the previous year 54.11 42.58

Less: Capitalised during the year 58.29 15.14

Transferred to Capital work-in-progress 44.61 54.11

DSCL-83.p65 7/27/2007, 9:03 AM87


DCM SHRIRAM


12. Provision for contingencies aggregating to Rs. 12.09 crores (2005-2006 - Rs. 12.09 crores) in Schedule 8 represents the maximum

possible exposure on ultimate settlement of issues relating to reconstruction arrangement of the companies.

13. Category wise quantitative data about Derivative Instruments:

Nature of Derivative Number of deals Purpose Amount in foreign Amount in Rs. Crores

currency (in Crores)

This Previous This Previous This Previous This Previous

Year Year Year Year Year Year Year Year

US Dollar Interest rate swap 4 3 Hedging Hedging USD 2.30 USD 2.10 100.03 93.40

JPY Interest rate swap 2 Hedging JPY 114.33 42.07

Overnight Index swap 3 2 Hedging Hedging - - 75.00 45.00

Currency swap 1 1 Conversion of Conversion of USD 0.57 USD 0.56 25.00 25.00

Indian Rupee Indian Rupee

into USD in to USD

Principal swap 1 Conversion of USD 0.50 21.75

Indian Rupee

denominated

Principal into

USD

Principal swap 1 Conversion of CHF 0.70 25.00

Indian Rupee

denominated

Principal into

CHF

Coupon swap 3 Conversion of USD 0.41 17.74

Indian Rupee

denominated

coupons into

USD coupons

Options 1 1 Hedging Hedging USD 0.50 USD 2.00 21.75 89.24

Foreign Currency exposures that are not hedged by derivative instruments or otherwise is as follows:

Particulars As at March 31, 2007 As at March 31, 2006

Amount in foreign Amount in Rs. Crores Amount in foreign Amount in Rs. Crores

currency (in Crores) currency (in Crores)

Loans USD 2.22 96.70 USD 1.50 66.93

- - JPY 243.61 92.18

Liabilities USD 1.12 49.00 USD 0.11 4.78

EURO 0.00035 0.02 EURO 0.01 0.27

JPY 1.13 0.42 GBP 0.01 0.95

Current Assets USD 0.0120 0.53 - -

EURO 0.00032 0.02 - -

14. In view of the financial statements of companies, which became subsidiaries during the year, being incorporated in these consolidated

financial statements, net fixed assets are higher by Rs. 0.20 crore, current assets and loans and advances are higher by Rs. 0.06

crore, current liabilities are higher by Rs. 0.01 crore, loan funds are higher by Rs. 0.52 crore and profit after tax is lower by Rs. 0.81

crore.

15. ‘Excise duty’ on sales has been deducted from gross sales on the face of profit and loss account. ‘Increase/ (decrease) in excise duty

on finished goods’ has been shown under the head ‘Manufacturing and other expenses’ in schedule 10.

16. MAT Credit entitlement and deferred tax charge for the year includes Rs. 3.00 crores relating to earlier year, however, there is no

impact on profit for the year due to the same.

17. Previous year’s figures have been recast, wherever necessary.

18. Schedules 1 to 13 form an integral part of the financial statements.



DSCL-83.p65 7/27/2007, 9:03 AM88

Contents

Page 1 Corporate Information

2 Notice

5 Chairman’s and Vice Chairman’s Statement

6 Board of Directors

8 Senior Executive Team

9 Our Businesses

10 Core Values

11 Financial Highlights

12 Management Discussion and Analysis

26 Corporate Social Responsibility

27 Directors’ Report

34 Corporate Governance Report

40 Financial Statements

DSCL IFC.p65 7/19/2007, 3:28 PM2-3

contents - annual... · 2018. 6. 5. · dscl annual report ‘06-’07 1 registered office dcm...

Documents