dscl financial statement

8/7/2019 DSCL Financial Statement

1/96


2/96

Contents

Page 1 Corporate Information

2 Notice

6 Chairmans and Vice Chairmans Statement

8 Board of Directors

10 Senior Executive Team

11 Our Businesses

12 Core Values

13 Financial Highlights

14 Management Discussion and Analysis

23 Corporate Social Responsibility

24 Directors Report

31 Corporate Governance Report

37 Financial Statements


3/96

DSCL ANNUAL REPORT 08-09

Registered Office DCM Shriram Consolidated Limited6 th Floor, Kanchenjunga Building,18, Barakhamba Road,New Delhi 110 001.Tel. No. : (91) 11-23316801Fax No. : (91) 11-23318072E.mail : [email protected]

Bankers Punjab National BankState Bank of IndiaBank of BarodaOriental Bank of CommerceHDFC Bank Limited

Auditors M/s. Deloitte Haskins & Sells,Gurgaon (Haryana)

Co rp o rate Inf o rmati o n

Stock Exchanges where the Securities of the Company are ListedNational Stock Exchange of India Ltd.,Exchange Plaza, 5 th 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.)

Subsidiary Companies DCM Shriram Credit and Investments LimitedDCM Shriram Aqua Foods LimitedDCM Shriram International LimitedDSCL Energy Services Company LimitedDCM Shriram Infrastructure LimitedDCM Shriram Thermal Energy LimitedDCM Shriram Energy and Infrastructure LimitedDCM Shriram Hydro Energy LimitedHariyali Rural Ventures LimitedHariyali Rural FoundationHariyali India LimitedHariyali Insurance Broking LimitedShriram Bioseed (Thailand) LimitedShriram Bioseed Ventures Limited

Shriram Bioseeds LimitedZeus Investments LimitedBioseeds LimitedBioseed Vietnam LimitedBioseed Research Philippines Inc.Bioseeds Holdings PTE. LimitedShriram Bioseed Genetics India LimitedBioseed Research India Private LimitedShri Ganpati Fertilizers LimitedSBM Yarn LimitedFenesta India Limited


4/96


No ticeREGISTERED OFFICE:6th Floor, Kanchenjunga Building,18, Barakhamba Road, New Delhi.

01

Notice is hereby given that the Twentieth Annual General Meeting of DCM Shriram Consolidated Limited will beheld on Tuesday, 11 th August, 2009 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,

2009 and 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 Vimal Bhandari, who retires by rotation and being eligible offers himself

for re-appointment.4. To appoint a Director in place of Shri Sunil Kant Munjal, who retires by rotation and being eligible offers himself

for re-appointment.5. To appoint a Director in place of Shri D. Sengupta, who retires by rotation and being eligible offers himself for

re-appointment.6. To appoint M/s. Deloitte Haskins & Sells, Chartered Accountants, as Statutory Auditors of the Company and

to fix their remuneration.

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

Resolution: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 (hereinafter referred to as the Board of Directors) be and is herebyauthorised to mortgage and/or charge all or any of the present and future movable and immovable propertiesof the Company, situated at Swatantra Bharat Mills, Tonk (Rajasthan), DSCL Sugar - Hariawan, Distt. Hardoi(U.P.), DSCL Sugar - Rupapur, Distt. Hardoi (U.P.), Shriram Fertilisers & Chemicals Complex at Kota (Rajasthan)and Shriram Alkali & Chemicals, Bharuch (Gujarat), units of the Company, together with all buildings andstructures thereon and all plants and machinery attached to the earth, both present and future, and the wholeof the undertaking of the Company relating to the said units together with the power in favour of the lender(s)to take over the management of the business and concern and/or undertaking of the Company relating to theaforesaid units, mortgaged to them as per details given hereunder, in certain events of default for the purposeof securing the financial assistance from the respective lenders as mentioned below:a) On Companys property situated at Swatantra Bharat Mills, Tonk

Lender Financial AssistanceAs and by way of First Charge on the Plant, Machinery, Land and Building- Punjab National Bank Rs.13.72 crores

b) On Companys property situated at DSCL Sugar - HariawanLenderAs and by way of Exclusive Second Charge on the Movable andImmovable properties- Government of India, Ministry of Consumer Affairs, Rs. 17.42 crores

Food & Public DistributionDepartment of Food & Public Distribution

c) On Companys property situated at DSCL Sugar - RupapurLender Financial AssistanceAs and by way of Exclusive Second Charge on the Movable andImmovable properties- Government of India, Ministry of Consumer Affairs, Rs. 16.75 crores

Food & Public DistributionDepartment of Food & Public Distribution


5/96


d) On Companys property situated at Kota, RajasthanLender

As and by way of First ranking pari passu Charge on the Movable assetsand Immoveable assets excluding Current assets and Second ranking chargeon Current assets subject to first ranking security interest in favour of theWorking Capital Lenders- International Finance Corporation, D.C., Washington Rs. 124.59 crores

(Equivalent to USD 25 million)e) On Companys property situated at Bharuch, Gujarat

Lender

As and by way of First ranking pari passu Charge on the Movable assetsand Immoveable assets excluding Current assets and Second ranking chargeon Current assets subject to first ranking security interest in favour of theWorking Capital Lenders- International Finance Corporation, D.C., Washington Rs. 124.59 crores

(Equivalent to USD 25 million)together with interest, compound interest, additional interest, further interest, liquidated damages, commitmentcharges, premia on prepayment, costs, charges, expenses and all other monies including any increase/decreaseas a result of devaluation/revaluation/ fluctuation in the rates of exchange of foreign currency involved payableby the Company and that such mortgage(s)/charge(s), other than those at (b) and (c) above, shall rank pari passuwith similar mortgage(s) and charge(s) created/to be created by the Company to secure the financial facilities/borrowings availed or to be availed by the 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/Documentsexecuted or to be executed and all acts done or to be done in terms of the above Resolution by and with theauthority of the Board of Directors be and are hereby ratified and confirmed.

Resolved further that the Board of Directors be and is hereby authorised to finalise the documents to securethe facilities/borrowings as aforesaid and to do all such acts, deeds, matters and things as may be necessary,desirable, expedient for implementing the above Resolution and to resolve any question or difficulty which mayarise in relation thereto, or otherwise considered by the Board of Directors to be in the best interest of theCompany.

8. To consider and, if thought fit, to pass, with or without modification(s), the following Resolution as a SpecialResolution:Resolved that pursuant to Section 163 and other applicable provisions of the Companies Act, 1956, consentof the Company be and is hereby accorded for maintaining the statutory records viz. Register of Members &Debenture holders, Index of Members & Debenture holders, Register of Share Transfers & Debentures andcopies of the Annual Returns with M/s. MCS Limited at their new address at F-65, 1 st Floor, Okhla IndustrialArea, Phase I, New Delhi 110 020.

By Order of the Board

New Delhi (B.L. SACHDEVA30 th June, 2009 Company Secretary


6/96


Notes:

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

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 28 th Jul2009 to 4 th August, 2009 (both days inclusive).

4. Members who are holding shares in physical form in identical names in more than one folio are requested towrite to M/s. MCS Ltd., the Registrar and Share Transfer Agent (RTA), F-65, 1 st Floor, Okhla Industrial Area,Phase-I, New Delhi-110 020, enclosing their Share Certificate(s) to enable the Company to consolidate theirholding in one folio.

In terms of SEBI Circular dated 20 th May, 2009, pertaining to transfer of physical shares of the listed companies,

the transferee(s) are requested to furnish copy of their Income Tax PAN Card alongwith the Transfer Deed tothe RTA for registration of transfer of shares, irrespective of the value of the transaction.

5. Members holding shares in physical form are requested to notify immediately any change in their address toM/s. MCS Ltd., RTA, quoting their folio 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, 4 th 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 unpaidinterim dividend for the financial year 2001-02 to the Fund. Please note that no claim shall lie against theCompany or the Fund in respect of individual amounts of dividend, once the same is transferred to the Fund.In view of this, the Members of the Company who have not yet encashed their final dividend warrant(s) for thefinancial year ended 31.3.2002 and thereafter may write to the Company 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. 21 st 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 Vimal Bhandari, Shri Sunil Kant Munjal and Shri D. Sengupta,Directors, retire by rotation and being eligible offer themselves for re-appointment. The information, as requiredunder the Listing Agreement, in relation to the aforesaid Directors is as under:


7/96


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

ITEM NO. 7

The Company has availed/proposes to avail financial assistance from Punjab National Bank, Government of India, Ministry ofConsumer Affairs, Food & Public Distribution, Department of Food & Public Distribution and International Finance Corporation,Washington D.C. 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 movableassets of the Company, as detailed in the resolution to respective lenders, situated at Swatantra Bharat Mills, Tonk (Rajasthan),DSCL Sugar, Hariawan, District Hardoi (U.P.), DSCL Sugar, Rupapur, District Hardoi (U.P.), Shriram Fertilisers & ChemicalsComplex at Kota (Rajasthan) and Shriram Alkali & Chemicals at Bharuch (Gujarat) in the manner desired by the lenders andagreed 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.ITEM NO. 8

M/s. MCS Limited, Registrar and Transfer Agent for shares, debentures, etc. of the Company (both in physical and demat form)has shifted its office from Srivenkatesh Bhavan, W-40, Okhla Industrial Area, Phase II, New Delhi 110 020 to F-65, 1stFloor, Okhla Industrial Area, Phase I, New Delhi - 110 020. The statutory records mentioned in the resolution are now beingmaintained in their new Office.

Under Section 163 of the Companies Act, 1956, approval of the Members is required to keep statutory records at a place otherthan Registered Office of the Company.

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

Name of the Director Shri Vimal Bhandari Shri Sunil Kant Munjal Shri D. Sengupta

Date of Birth 23.08.1958 14.12.1957 20.6.1942

Nationality Indian Indian Indian

Date of Appointment on the 13.5.2003 13.5.2003 11.8.2003Board of the Company

Qualification B.Com, C.A. B.Com, Training in Mechanical Engineering. Bachelor of Science in Physics, PGDM.

Expertise in Functional Area Delivering on accounting, budgeting and other Information Technology, Insurance, Customer Market Development, Risk Analysis and Transfercorporate object ives in financial serv ices . Relationship, Finance and Corporate Planning. Techniques , Managing Human Resources,

Insurance and Reinsurance Principles andPractices, Funds Management and InternationalBusiness Relations.

Directorships held in other - AEGON India Pvt. Ltd. - Hero Cycles Ltd. - Reliance General Insurance Co. Ltd.Indian Companies - Mirc Electronics Ltd. - Hero Management Service Ltd. - Duncan Industries Ltd.

- Kalpataru Power Transmission Ltd. - Hero Corporate Service Ltd.- Eveready Industries India Ltd. - Hero Motors Ltd.- AEGON Rel igare Life Insurance Co. Ltd. - Satyam Auto Components Ltd .- Religare AEGON Asset Management Co. Pvt. Ltd. - Thakurdevi Investments Pvt. Ltd.- Bayer CropScience Ltd. - Bahadur Chand Investments Pvt. Ltd.

- Easy Bill Ltd.- Hero Honda Motors Ltd.- Shivam Autotech Ltd.- Thakurdevi Hydro Pvt. Ltd.- Arrow Infrastructure Ltd.- BML Investments Pvt. Ltd.- Abhyuday Manufacturing and Automotive Ltd.- Hero Mindmine Institute Ltd.- Hero Ergo Life Insurance Co. Ltd.- Weave Engineering and Design Ltd.

Chairman/Member of the - - MemberCommittee(s) of the Board of - Audit CommitteeDirectors of the Company

Chairman/Member of the Chairman Chairman MemberCommittee(s) of the Board of Audit Committee Audit Committee Audit CommitteeDirectors of other Companies - Mirc Electronics Ltd. - Satyam Auto Components Ltd. - Reliance General Insurance Co. Ltd.in which he is a Director Member Member

Audit Committee Audit Committee- Kalpataru Power Transmission Ltd. - Easy Bill Ltd.- Bayer CropScience Ltd. - Hero Management Service Ltd.- AEGON Religare Life Insurance Co. Ltd . - Shivam Autotech Ltd .


8/96


From the Chairman and Vice Chairmans desk

02

Dear Friends,

We are pleased to report that your Company recorded improved performance even in a challenging macro-environment. Strong presence in diverse sectors agri-rural businesses and Chloro-Vinyl businesses with multiplerevenue streams and swing capabilities enabled us to optimise earnings and face the volatility much better.

Your company has continuously invested in its businesses to build a solid and secure operating base. Beingamongst the lowest cost producers and integrating into value added products have been the constant drivers ofour efforts over the last few years. These efforts have resulted in your company:-

Setting up ~ 275 MW of power generating capacity with multiple uses (including sale) which strengthens ourcompetitiveness and helps to optimize the earnings per unit of Power.

Emerging as one of the top three manufacturers of Chlor-Alkali products.

Building robust Agri-inputs portfolio of value added products based on strong research and intensive agri -extension work with farmers.

Establishing a large and integrated Sugar business in U.P.

Strengthening the new businesses i.e 'Hariyali Kisaan Bazaar', 'Fenesta Building Systems' and 'Bioseed'.These businesses exhibit strong potential for value growth:

Hariyali, with over 300 outlets in 8 states, is the largest rural network of one stop destination for all needsof the farmers and the rural households. It is aggressively enhancing its rural penetration with continuousupdation of its offerings. This would lead to high growth in revenue and margins going forward.

Expanding Agri-rural

presence,

strengthening integration

and swing capabilities in

Chloro-Vinyl to deliver

sustained growth and

superior value


9/96


(VIKRAM S. SHRIRAM) (AJAY S. SHRIRAM)Vice Chairman & Chairman &Managing Director Sr. Managing Director

Fenesta is developing as a synonym to uPVC Windows in the country, both in institutional and retailsegment. After achieving operating break-even during the year, it is poised for high growth in comingyears.

Bioseed with its strong research capabilities, has over the last decade built a prominent presence inIndia, Vietnam and Philippines, and is now adding new markets. The research base has enabled a strongproduct pipeline and has put this business on a high growth trajectory.

The Companys commitment towards investing in its people resources has been strong. The employees, as always,have demonstrated highest level of engagement in dealing with the challenges of a difficult year and have contributedimmensely towards strengthening of the Organization.

Highest standards of Corporate Governance are a strong focus in your company. We are continuously taking stepsto strengthen and update the same by adopting and institutionalizing the best practices with the help of experts.

As a responsible corporate citizen, we continue to pursue various initiatives relating to education, health,infrastructure, farm income etc, which are aimed at improving the well being of society.

We would like to take this opportunity to thank all the members of the board, the employees, vendors, suppliers,businesses associates, lenders and shareholders who have always supported our progress across varied businesses.With their cooperation, we are confident of delivering superior value to all our stakeholders.

With best wishes,


10/96


Bo ard o f Direct o rs03

Shri Ajay S. Shriram

Chairman & Senior Managing Director Shri Vikram S. ShriramVice Chairman & Managing Director

Shri Rajiv SinhaDeputy Managing Director

Shri Ajit S. ShriramDirector (Sugar)

Dr. N.J. SinghWhole Time Director (EHS)

Dr. S.S. BaijalShri Arun Bharat Ram

Shri Pradeep Dinodia

Shri Vimal Bhandari

Shri Sunil Kant Munjal

Shri D. Sengupta

Shri S.C. BhargavaLIC Nominee

Company Secretary Shri B.L. Sachdeva

Audit Committee Dr. S.S. BaijalChairman

Shri Arun Bharat RamShri Pradeep DinodiaShri D. Sengupta


11/96


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. Xaviers College, Calcutta and is a Member of The Institute ofChartered Accountants of India. He is a Member of the Shareholders/Investors Grievance Committee of theCompany.

Shri Rajiv Sinha, Deputy Managing Director, is a Director of the Company since 1.11.1998. He joined the Companyin 1972 as a Management Trainee after graduating from IIT, Kanpur in Mechanical Engineering. Later, he attendedthe Executive Development Programme at the Stanford University, U.S.A.

Shri Ajit S. Shriram, Director (Sugar), is a Director of the Company since 2.5.2001. He joined the Company in1991 as an Executive after graduating in Commerce from Osmania University, Hyderabad. Later, he obtained anM.B.A. Degree from the International Institute for Management Development, Switzerland.

Dr. N.J. Singh, Whole Time Director (EHS), is a Director of the Company since 20.11.2007. He joined theCompany in 1983 as Pollution Control Engineer. He holds M.Sc., Ph.D. Degrees and has been working as ChiefExecutive, Shriram Environment & Allied Service and General Manager (Safety and Environment) with the Companyat Kota.

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 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 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 Commercefrom Sydenham College, University of Mumbai and is a Member of The Institute of Chartered Accountants ofIndia. He is 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 of

Hero Cycles Limited and Chairman cum 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.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.


12/96


The Company is organized into strategic business units managed by professional managers. The DSCL management teamhas a strong, credible image in the industry. The key Members of the DSCL group Executive Team are listed below:

Shri Ajay S. Shriram

Chairman & Senior Managing DirectorShri Vikram S. ShriramVice Chairman & Managing DirectorShri Rajiv SinhaDeputy Managing DirectorShri Ajit S. ShriramDirector (Sugar Business)Dr. N.J. SinghWhole Time Director (EHS)Shri S.D. OmcharyChief Executive Director (Textiles & Real Estate Development)Shri S.K. Agrawal

Senior Executive Director Chemicals BusinessShri K.K. KaulExecutive Director & Resident Head - KotaShri S. RadhakrishnaExecutive Director Sugar BusinessDr. G.C. Datta RoyChief Executive - Energy BusinessShri A.K. AwasthiChief Executive Hydro PowerShri Sovan ChakrabartyPresident & Business Head - Agri InputsShri Rajesh GuptaPresident & Business Head HariyaliShri J.K. JainSenior Vice President & CFOShri Rajat MukerjeiSenior Vice President and SBU Head PlasticsShri Sandeep MathurSenior Vice President & Business Head Fenesta TM Building SystemsShri Sushil BavejaHead - Corporate HRDr. Gautam MukhopadhyaySenior Vice President & Business Head - Shriram PolyTechShri B.L. SachdevaCompany Secretary

SubsidiariesDr. Sharad SharmaPresident - Shriram Bioseed Genetics India Ltd.Dr. Paresh VermaResearch Director - Bioseed Research India Pvt. Ltd.Shri Sambit SatapathyCountry Head - Bioseed Vietnam Ltd.Shri Rajeev V. NayakGeneral Manager - Bioseed Research Philippines Inc.

Seni o r Executive Team

04


13/96


Our Bu s ine ss e s

1. Chl o ro -Vinyl bu s ine ss :

Chemicals Business: This comprises of Caustic Soda (Lye and flakes), Chlorine (Liquid and Gaseous) andassociated chemicals including Hydrochloric acid, Stable Bleaching powder, Compressed Hydrogen andSodium Hypochlorite. The Company has two manufacturing facilities located at Kota (Rajasthan) andBharuch (Gujarat) with full captive power. It has increased the capacity of its chlor-alkali manufacturingfacility at Bharuch from 200 TPD to 440 TPD and also set up a 48 MW coal based power plant togenerate 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 capturevalue 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 the Company is the largest manufacturer in the organised sector 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 underthe brand Fenesta. It offers complete solutions right from design, fabrication to installation at thecustomers site.

2. Agri-Business:

i. Urea: The Company has the dual feed naphtha/LNG based urea plant with a capacity of 3.79 lakh T.P.A.,located at its integrated manufacturing facility at Kota. It is currently operating on 100% LNG.

ii. Sugar: The Companys sugar business comprises of 4 facilities with a combined capacity of 33,000 TCD

in Central U.P. and co-gen power capacity of 94.5 MW.iii. Hariyali Kisaan Bazaar: These are Rural Business Centres which are a one stop solution to the multiple

needs of the rural communities (both business and family needs). Currently there are 301 such outlets inoperation.

iv. The Agri-Inputs business: This business provides total agri-inputs to farmer community by offering arange of fertilizers, micro-nutrients, hybrid seeds, pesticides etc. through its wide distribution network.

v. Seeds: The Company offers a range of hybrid seeds under the brand Bioseed in the country through itssubsidiary Shriram Bioseed Genetics India Ltd. The Company also operates seeds business in Vietnam,Thailand, Philippines and Indonesia.

3. Other Businesses:

i. Textiles: The Company has a small textile operation in the form of 12,856 spindles spinning unit at Tonkin Rajasthan. The expansion of capacity has resulted in enhanced production from 6 tonnes per day to 12tonnes per day.

ii. Energy Services (ESCO): This business assists energy users (industrial, institutional, commercial users) inachieving efficiency in energy usage, provides engineering and project management services for biomass/conventional fuel based power plants.

05


14/96


Co re value s and belief s

The Companys core values and beliefs are a reflection of its commitment to build a worldclass, learning organization, 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


15/96


Financial Highlight s

(Rs. Crores)

Financial Highlights

2002 2003 2004 2005 2006 2007 2008 2009

Gross Sales 1053.7 1376.0 1556.6 1977.4 2535.8 2938.2 2770.1 3681.35Net Sales

- Own Products 714.7 1057.6 1175.3 1375.7 1735.1 1945.8 2211.0 2711.3- Traded 280.4 237.0 288.2 493.2 656.8 821.5 363.0 789.5

- Total 995.1 1294.7 1463.4 1868.9 2391.9 2767.4 2573.9 3500.8

PBDIT 143.7 187.2 201.3 235.3 295.1 239.6 218.0 400.3Interest 65.4 61.9 42.1 34.7 49.4 79.1 87.6 150.4PBDT 78.3 125.3 159.2 200.6 245.7 160.5 130.4 249.9Depreciation & Misc. exp. w/off 47.4 54.8 55.2 57.3 73.2 93.4 123.7 148.7PBT 30.9 70.5 104.0 114.8 172.5 67.1 6.7 101.1Profit after Current Tax 28.5 58.7 95.7 93.6 153.2 66.8 5.8 93.1

Profit after Deferred Tax 11.2 52.7 75.6 107.7 121.0 43.4 -1.3 122.6Cash Profit 44.8 104.6 150.9 162.8 226.6 160.2 126.6 241.9

Total Funds Employed/ Utilised 884.7 915.9 920.7 1259.2 1775.0 2288.8 3104.0 3399.58

Share Capital - Equity 16.7 16.7 16.7 16.7 33.3 33.3 33.3 33.34Net Worth 227.3 272.5 333.0 443.2 525.5 554.1 1149.3 1268.53Minority Interest - 10.2 12.0 14.9 17.7 17.7 - -Deferred Tax liability 84.6 89.5 109.5 95.4 146.7 170.1 171.2 143.9Long term loans 401.8 403.0 344.7 504.7 740.2 789.5 991.0 1234.4Short term loans 171.0 140.8 121.5 201.1 344.9 757.7 792.5 752.7Net Fixed Assets 592.5 652.1 652.8 870.0 1272.5 1780.8 2056.6 2288.8Net Current Assets 276.1 256.9 260.1 356.2 490.9 498.9 1035.3 1097.3Investments 7.1 6.4 7.7 33.0 11.7 9.1 12.0 13.4

Earnings per share (Rs.)* 0.7 3.2 4.4 6.3 7.1 2.6 -0.1 7.4Dividend per share (Rs.)* 0.9 0.9 1.2 1.6 0.9 0.8 3.3 0.8

Ratios

2002 2003 2004 2005 2006 2007 2008 2009

Return on Net Worth ** 4.1 21.1 25.0 27.7 25.0 8.0 - 10.1Return on Capital Employed 14.5 18.1 20.2 21.6 18.7 10.3 4.7 9.7Operating Margin 14.4 14.5 13.8 12.6 12.3 8.7 8.5 11.4Capital Employed turnover ratio 1.1 1.4 1.6 1.5 1.5 1.4 1.1 1.0Interest to Net Sales % 6.6 4.8 2.9 1.9 2.1 2.9 3.4 4.3PAT to Net Sales % 1.1 4.1 5.2 5.8 5.1 1.6 - 3.5Long term Debt/PBDIT 2.8 2.2 1.7 2.1 2.5 3.3 4.5 3.1

Long term Debt/Net Worth 1.8 1.5 1.0 1.1 1.4 1.4 0.9 1.0Total Debt/Net Worth 2.5 2.0 1.4 1.6 2.1 2.8 1.6 1.6Total Outside Liabilities/Net Worth 3.2 2.5 2.3 2.5 3.2 4.4 2.0 2.1Interest Cover 2.2 3.0 4.8 6.8 6.0 3.0 2.5 2.7

Notes:- * 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- **Profits for the year 2008 are before exceptional items of Rs. 664.5 crores- **Return on Net Worth has been computed using average Net Worth- Drop in PAT & Net worth related ratios in 2002 due to deferred tax provisioning.

07


16/96


Management Discussion and Analysis

08

Performance ReviewThe Company reported satisfactory growth in achallenging macro operating scenario. All businesses

reported healthy operational performance driven byimplementation of expansion plans and swingcapabilities to maximize earnings. The key highlightsof the FY2009 are as follows:

Net Revenues at Rs. 3439 Crore registered agrowth of 36% over last year:

1. Growth was driven by Agri Businesses whichinclude Agri Inputs, Fertiliser and Sugar. Thesebusinesses achieved 37% increase in revenues.

2. The Chloro Vinyl Business which includes Chlor-Alkali (Chemicals), PVC resins and Power,

registered 21% increase in turnover driven byexpanded Chlor-Alkali facilites.

3. Hariyali Kisaan Bazaar, part of our Rural valuechain, grew volumes at existing as well as newoutlets. The number of outlets reached 301across 8 states.

PBIT was up by 153% at Rs. 223 crore comparedto Rs. 88 crore last year. The segmentwise PBITperformance was as under:

Particulars FY 2009 FY 2008Rs. Crore %of Total Rs. Crore % of Total

Agri Businesses

Urea 25.8 7.2 19.7 9.9Agri inputs 23.1 6.4 7.3 3.7

Sugar 87.9 24.4 (5.0) (2.5)

Sub total 136.7 38.0 22.0 11.1

Chloro-Vinyl 197.5 54.9 149.0 75.0Cement 25.5 7.1 27.6 13.9Total 359.7 100.0 198.6 100.0

Hariyali Kisaan Bazaar (64.6) (29.6)

Other Businesses (3.5) (17.5)Unallocated Expenditure (68.8) (63.6)

Grand Total 222.8 87.9

1. Agri Businesses witnessed a turnaround with

a 522% increase in PBIT at Rs. 137 Crore.Sugar and Agri Inputs business provided themajor thrust.

2. In Chloro-Vinyl business PBIT was up 33% atRs. 198 Crore, due to higher volumes in Chlor-Alkali (part of this segment) consequent to thecapacity expansion to 765 TPD and completionof 48 MW Coal based captive power plant andthe swing capability to sell more power whendownstream products primarily PVC resins (partof this segment) witnessed stress.

3. The Hariyali Kisaan Bazaar witnessed higherlosses, consequent to accelerated pace ofexpansion, which was as per plan.

4. Fenesta Building Systems achieved operatingbreakeven during the year.

PAT for the year stood at Rs. 101.79 Crore ascompared to a loss of Rs. 3.03 Crore (withoutexceptional items) in the corresponding period lastyear. PAT also takes into account Deferred Taxcredits relating to previous periods.

Business-wise performance reviewand outlook

Business Mix


17/96


Business Performance

Year Sales (MT) Realizations(Rs./MT)

FY2009 1,80,547 22,124FY2008 1,66,249 18,276

% Change 8.6% 21.1%

The Chemical business of the Company reported ahealthy performance due to stable market conditionsand completion of expansion at Bharuch Chemicalscomplex. The expansion led to growth in volumes andthe 48 MW Coal based captive power plant has broughtin cost efficiencies. As regards other input costs, theprice of salt has stabilized at higher level which is anarea of concern.

Industry Overview and Outlook

The Chlor-Alkali industry in India has about 35 operatingunits with a combined installed capacity of 2.9 milliontonnes of Caustic Soda. The top three players compriseabout 1/3 rd of the total installed capacity. The domesticdemand for Caustic Soda and Chlorine is about 2.3million tonnes and 1.90 million tonnes respectively.The demand for Caustic soda is growing at ~ 4% p.a.and that of Chlorine at ~2% p.a.

During the year international ECU prices touched ahigh of over $ 650/Tonne, as were all the commodityprices. Post October 2008, there was a moderation inglobal demand with prices ranging between $ 250-300/tonne. However domestically the demand hasnot seen a noticeable reduction. The prices which sawa decline in 3 rd quarter of FY 09 bounced back in quarterending March 09. Further with the economy lookingup again, the GDP growth will drive the growth of thisIndustry

Our Strategy

With the project completion at Bharuch, the Companyhas now achieved cost competitiveness and enhancedscale of operations, the full year benefits will accruein the next year. The Company is making efforts tomarket higher quantity of by-products and also workingon enhancing the Flakes capacity, which is expectedto deliver better realizations. The Company is alsoexploring strategic sourcing of key raw materials likesalt, barium carbonate and coal with an objective ofsecuring supply as well as to reduce costs.

The Company will continue to maximize returns per

Chloro Vinyl BusinessesDSCLs Chloro-Vinyl business is highly integrated,supported by 143 MW coal based power facilities (part

of 275 MW power capacity in the Company). Thisbusiness has multiple revenue streams, the major beingChlor-Alkali (Caustic Soda and Chlorine), PVC resins,Calcium carbide and Power. These revenue streamsensure maximization of earnings per unit of powerproduced and lend stability to Chloro-Vinyl operations.

The contribution of this business to total Revenue,PBIT and its share of Capital Employed for FY 2009 isas follows:

Particulars FY 2009 FY 2008Rs. Crore Rs. Crore

Sales 840.7 694

PBIT 197.5 149

Capital Employed 813 780.4

Chlor Alkali

Chlor-Alkali has Caustic Soda and Chlorine as the twoCo-products. These are basic industrial chemicals, usedprimarily by Aluminum, Paper and Soap Industry. The

growth of this industry has a direct correlation to theGDP growth in the economy.

The Companys Chlor-Alkali manufacturing facilitiesat Kota (Rajasthan) and Bharuch (Gujarat) add up to atotal capacity of 765 TPD; thereby placing it amongtop three players in the domestic Chlor-Alkali industry.

During the year the capacity expansion at Bharuch wascompleted thereby adding 240 TPD, along with settingup of 48 MW Coal Based captive power plant.


18/96


unit of Power both from Kota and Bharuch and willfurther strengthen the swing capability.

PVC Resins

The PVC Resins business is an integral part of theChloro-Vinyl business, with complete backwardintegration in terms of Power, Chlorine and CalciumCarbide and has developed forward value chains whichincludes PVC Compounding, Cement and FenestaBuilding Systems. These multiple products at bothends, provide the ability for product swings to maximizethe returns.

DSCL has an annual capacity of 70,000 TPA of PVCResin at its Kota Manufacturing Complex, 112,000TPA of Calcium Carbide of which, approx. 80% is used

to produce Acetylene for production of PVC resins,balance ~ 22,000 MT is marketed is sold as packedCarbide.

The Company manufactures PVC Resin throughCarbide/Acetylene route as against Ethylene routewhich is being followed by most of the companiesmanufacturing PVC worldwide except China. This routeenables superior product that is preferred by qualityconscious customers. The integrated nature of thisoperation results in low the cost of production, andalso provides a hedge against volatility in crude prices.


PVC Resins Calcium Carbide

Year Sales (MT) Realizations Sales Realizations(Rs./MT (MT) (Rs./MT)

FY2009 35810 51993 21600 35703FY2008 57125 46712 16824 26815% Change (37.3)% 11.3% 28.4% 33.1%

The PVC Resin witnessed stress in the second half ofthe year, in terms of high input cost and lowrealizations. The Carbide business however held to thehigh realizations. The Company consciously took thedecision to reduce the production of PVC resins and

sell more of Power and Carbide, thereby utilizing itsswing capabilities to the optimum.


The Total installed capacity of the domestic PVCindustry is about 1.1 million tonne. There are fiveplayers in the industry and the largest accounts of2/3 rd of the total capacity.

The current demand in the country is ~1.4 milliontonne out of which 74% of demand is met by the

domestic Resin suppliers and balance is being imported.PVC Resin is used for a wide range of applications likemanufacturing of pipes & fittings, films & sheets, wires

& cables, windows & door profiles, medical tubing &pouches, and footwear etc. The growth of this businessfollows the GDP growth and especially that ofInfrastructure sector.

The domestic PVC demand has been growing at aCAGR of approx. 6-7% over the past few years. InFinancial Year 2009 the demand growth was buoyantin first half of the year, however stagnated in secondhalf. To add to this, the global demand plummetedleading to crash in international prices of PVC resins.The prices fell from a high ~ $1200/tonne to ~$ 550/tonne as a result of which the domestic prices also

witnessed a sharp decline. The international as wellas domestic prices are now recovering on the back ofsigns of revival of economic growth globally.

Our Strategy

Going forward, the Company will continue to explorepossibilities of adding to the existing swing capabilitiesin this business.

Power

Power being one of the key inputs, is one of the mostcritical business activity of the Company. The Companycurrently has a total installed capacity of 275 MW atvarious locations, of which 181 MW is Coal basedand 94.5 MW is Bagasse based. Of this 51.5 MWbagasse based power is dedicated to supply to powerdistribution companies. The balance 223.5 MW hasmultiple uses and revenue streams. The Company builtswing capabilities to use power for various revenuestreams so as to maximize the earnings per unit ofpower. It keeps strengthening these swing capabilitiesfurther to enhance profitability.

Going forward, the Company will work towardssecuring the supply of Coal on Long term basis at

economical costs.Agri BusinessesUrea

DSCL Fertilizer Plant has an approved capacity of3,79,000 TPA of Urea at its integrated manufacturingcomplex at Kota, Rajasthan. The Company is the lowestcost producer of Urea in the Pre -92 naphtha basedgroup and markets its product under the Shriram Ureabrand. The Shriram brand under which the Company


19/96


markets all its fertilizers, commands respect andinvokes affinity within the farming community.

In 2006-07, the plant was modified to be capable of

having Natural Gas / LNG as its feedstock besidesNaphtha. However, availability of Natural Gas / LNGin FY2009 was restricted. The Company has nowentered into a Long Term Gas Supply agreement toprocure Natural Gas from KG Basin, meeting its fullrequirement. Moving to Urea production based onNatural Gas will benefit the Company in terms of loweroutstanding subsidies and higher energy efficiencies.


The contribution of the businesses to total Revenue,PBIT and Capital Employed for FY2009 stands as

follows:


India is the second largest producer and consumer ofUrea in the world. Urea is the most widely used fertilizer

in India and constitutes to about 72% of entire fertilizerconsumption. High Nitrogenous content as well as lowfarm gate price (which is fixed by the government)makes it an attractive nutrient for the farmers vis--vis other nutrients. The fertilizer industry continues tosuffer highly on account of delayed subsidy paymentsand uncompensated cost escalations due to rising inputcosts. The problem has further aggravated lon accountof issuance of fertilizer bonds by the Ministry of Financein lieu of subsidy payments to the Fertilizer Companies.The bonds trade at a discount to face value resultingin losses.

Our Strategy

Company intends to work towards improving theenergy efficiencies in the manufacturing process. Theavailability of Natural Gas will add to its efforts. Furtherthe Company will also like to evaluate the benefit ofNew fertilizer policy under which additional benefitsaccrue if the production is more than the approvedcapacity, as it did in current year as well.

Sugar

DSCL with a Capacity of 33,000 TCD is one of themajor player in the UP Sugar Industry. The Companyhas four sugar units located across Central U.P. atAjbapur (10,500 TCD), Rupapur (6,500 TCD),Hariawan (8,000 TCD) and Loni (8,000 TCD). Thefour units have a total sugar co-generation powerfacility of 94.5 MW out of which 51.5 MW is dedicatedto sale to power distribution companies.

The key operating parameters for the year are asfollows:


Sales 797.5 704.8

PBIT 25.8 19.7

Capital Employed 203.8 206.2

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

FY2009 3,94,513 20,216

FY2008 3,78,913 18,642

% Shift 4.1% 8.4 %

The business witnessed marginal increase in revenuesand profitability in FY2009 on account of highervolumes and realizations. The Company producedadditional urea over reassessed capacity, in line withthe government policy under NPS III. As per the policyprovisions, manufacturers are permitted to retain 35%of net gain over Import Parity Price (IPP Actual variablecost).

(Figures in lac quintal

Ajbapur Rupapur Hariawan Loni Total

Sugar Season 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008

Season (days) 91 1 23 71 1 06 75 105 78 108

Cane Crushed 66.3 111.8 32.3 58.9 31.9 61.7 38.7 66.7 169.3 299.2

Recovery Rate 8.88 10.56 8 .24 9 .53 9 .12 10.28 8 .86 10.07 8 .80 10.19

(%)

Sugar Produced 5.9 1 1.8 2.6 5.6 2.9 6.3 3.4 6.7 1 4.9 30.5

Financial Year

Cane crushed 66.3 137.2 32.3 70.7 31.9 66.7 38.7 81.6 169.3 356.3

Sugar Produced 6.0 1 4.5 2.6 6.8 2.9 6.9 3.4 8.4 1 4.9 36.7

Sugar Sold 12.0 1 2.8 5.4 5.1 6.1 5.5 7.1 5.6 30.6 29.0


20/96



The improved performance was largely due to firmingup of prices during the year as the company sold its

low cost inventory of Sugar season 2007-08. For thesugar season 2008-09, the Company crushed ~169lakh quintals (~299 lakh quintals in SS 2008) of caneproducing 14.9 lakh quintals (36.7 lakh quintals ofsugar in SS 2008) of sugar with an average recoveryof 8.80% (10.19% in SS 2008).The lack of Sugarcaneavailability and lower yield as well as recovery due toclimatic conditions led to lower crushing and henceproduction at a higher price.

The Company had accounted for cane purchases forsugar year 2007-08 at Rs. 110 per quintal, the rate atwhich it has made payment to the cane growers asper the interim order of the Honble Supreme Court,against the price of Rs. 125 per quintal fixed by theUttar Pradesh State Government. Necessaryadjustments will be made in accordance with the ordersof the Honble court in the matter.

The contribution of the business to total Revenue, PBITand Capital Employed for the FY2009 stands asfollows:

steady pace of 2% and is expected to be around 165.8million tonnes for 2008-2009 as against 162.2 milliontonnes for 2007-2008. Thus on a global basis there

has been a deficit of around 8.3 million tonnes betweenproduction and consumption in 2008-2009 causing apositive impact on world sugar prices.

India is a dominant player in the global sugar industry.It is the second largest producer (after Brazil) and thelargest consumer of sugar in the world. The availabilityof sugarcane is seasonal in nature which causescyclicality in sugar production. The cane crushingseason in India begins in October and goes on till April-May except in South India where it extends up to July-August.

All India production decreased from 26.3 million tonnesin the sugar season 2007-2008, to around 14.6 milliontonnes in the previous sugar season. This decrease inproduction can be attributed to adverse climaticconditions and remunerative prices of alternate cropslike wheat and paddy. The demand for Sugar in Indiais about 23 million tones.

The U. P. Government has declared the SAP for thegeneral variety of cane for the sugar season 2008-2009 at Rs.140 per quintal as against the SMP of Rs.81.18 fixed by the Central Government.

Our Strategy

In order to partially mitigate the impact of cyclicalityassociated with the Sugar business, the Company hasinvested in Sugar Co-generation facilities at Hariawanand Loni unit by increasing its capacity to 94.5 MWand power export capacity to 51.5 MW to ensurecontinuous flow of revenues that can be optimized byselling power to the grid.

The season 2008-2009 saw a drop in recovery. Inorder to improve the recovery rates the Company hasinitiated projects for development of good quality, highyielding sugarcane.

Agri InputsThe Agri-Inputs Business provides a wide rage of farminputs to the farmer including Fertilizers, Seeds andPesticides. The Shriram brand of Agri-Inputs is knownfor its quality and enjoys a very high brand value inthe market. The product range has been continuouslyexpanded to better serve the requirements of themarket. These products are backed up by an extensiveservices network that helps in transferring the latesttechnology and improving the farming practices.


Sales 611.8 474.3

PBIT 87.9 (5)

Capital Employed 1207 1254


The world sugar production is estimated at 157.5million tonnes as against the last years production of168.6 million tonnes. The fall in production can beattributed to lower production in India and EU.

The world sugar consumption has grown at a fairly


21/96


As part of its drive to help the farmer increase cropproductivity and standard of living, the Company alsopioneered an Agri-education program in the name of

Shriram Krishi Vikas Kendra (SKVK). The programenvisages to educate the farmer community about thebest practices in Agriculture.


The contribution of the business to total Revenue, PBITand Capital Employed for the FY2009 stands asfollows:

The increasing yield can be achieved only throughimproved and informed use of various Agri-Inputs likefertilizers, hybrid seeds, micro-nutrients, pesticides etc.

The demand for Agri inputs is therefore expected toregister robust growth in medium term and the privatesector which facilitate delivery of the inputs and know-how to farmers will play an increasingly significantrole.

Our Strategy

The steps taken in the last 2 years in terms ofreorganization of the Agri Input portfolio enabled theCompany report significantly better earnings from thisbusiness, while also limiting the level of working capitalrequired to run this operation. The Company willcontinue to add latest generation products to itsportfolio and strengthen its capabilities to deliver thesame to farmers in more effective manner.

Bioseed

The Bioseed business of the Company housed in 100%subsidiaries, is a key element of Agri portfolio. Thebusiness includes strong research capabilities,production, processing and marketing. It hasestablished significant presence in India, Vietnam andPhilippines. It is also developing market in Thailand,Indonesia and China. In terms of crops, its offeringsinclude Corn, Cotton, Paddy, Millet and VegetableSeeds. Over last decade, it has made significantinvestment in research which has enabled it to developa strong product pipeline. The products launched inlast two years have gained good farmers acceptanceby delivering superior performance over competingproducts. The business is poised for high level of growthin turnover and profits over the next couple of years.

Hariyali Kisaan BazaarThis business with its unique operating model hasevolved as a Rural Business Centre, symbolizing trust,reliability and respect among the rural community. Thebusiness portfolio of Hariyali consists of Retail, Financialservices and Agri businesses like commodity trading,Warehousing, seed production, milk collection andcattlefeed etc. Hariyali Kisaan Bazaar targets to providea complete solution to the farmer in terms of Input aswell as Output.

The industry structure in all the rural areas is highlyfragmented with very little presence of organized andlarge players. The performance of the Agri sector in


Sales 428.5 158.5

PBIT 23.1 7.3

Capital Employed 68.7 59

DSCLs endeavor to adapt & excel in the dynamicenvironment and strategy to focus on value addedproducts is paying off. After turning around thebusiness in FY2008, DSCL continued its efforts inaggressively growing it further. Revenue and PBITincreased from Rs. 158.5 Crore and Rs. 7.3 Crore inFY2008 to Rs. 428.5 Crore Rs. 23.1 Crore in FY 2009,respectively.

Overview and Outlook

In view of the limited land available for cultivation, thehigher food requirement can only be met by a rapidimprovement in the farm productivity. While someinitiatives like the National Food Security Mission areaimed at addressing the productivity challenge, thePrivate Sector will also have to play a pro-active roleand participate fully in this mission to achieve sometangible gains.


22/96


the last year has been fairly robust driven by higherMSPs and improved productivity levels. This hasprovided an opportunity to further grow and strengthen

the position of Hariyali Kisaan Bazaar in the market.The contribution of the business to total Revenue, PBITand Capital Employed for the FY2009 stands asfollows:


Sales 419.1 222.1

PBIT (64.6) (29.6)

Capital Employed 436.9 280.5

The Company has achieved the targeted Critical massof 301 outlets as on 31st March 09 with presence inthe States of Uttar Pradesh, Haryana, Punjab,Rajasthan, Uttaranchal, Madhya Pradesh, AndhraPradesh and Maharashtra. During the year Companyregistered ~90% increase in revenues, the losses inthe Business also moved up as was anticipated basedon the pace of expansion.

The key concern inherent in the retail business is toensure steady throughput of products so that the riskswith respect to inventory management, productobsolescence and price volatility can be effectivelymanaged. Adequate management attention and focus

is being provided in this area to ensure that these risksare managed properly. The Commercial processes andinternal control systems are also being continuouslyreviewed and strengthened to keep pace with theincreased scale and spread of the operations.

The Company has already invested in a strong ITplatform to manage the transactions and provide timelyinformation. The IT infrastructure has been furtherreinforced with the installation of SAP-MAP, which isan advanced software used for merchandiseassortment and planning.

Our Strategy

The focus going forward would be to scale up salevolumes of all retail categories form each outlets, toroll out Financial services, warehousing, output sideactivities (including Milk collection, Commodity trading,Variety seeds etc.) to as many outlets as possible, toimprove margins, to develop strategic alliances withkey Vendors and to attract larger footfall at the outletsthrough various customer loyalty and brandenhancement programs.

Other BusinessesFenesta Building SystemsThe UPVC window and door systems, pioneered byDSCL under the brand name Fenesta constitute theforward value chain of the PVC business. Fenesta hasbeen able to establish the acceptability of its productline in the market and is regarded as a leader pan India.The product has features such as sound resistance,thermal resistance, high durability and is low onmaintenance.

The Company provides end to end solution from design,extrusion, to fabrication and finally installation. Theextrusion facility located at the Companys integratedcomplex at Kota is a state of the art facility usingimported machinery and equipments that match globalstandards. The Company currently has five fabricationfacilities located at Bhiwadi (near Delhi), Mumbai,Bangalore, Hyderabad, and Chennai. Besides theselocations, the Company has full-fledged marketingoffices in 12 cities and operates through 73 dealernetwork in 23 cities.

During the year the business was impacted by theslow down in the Real Estate Sector. However withthe focus on the retail sector, the Company hasmanaged to achieve operating breakeven in financialyear 2008-09.

The order book outstanding as on March 31, 2009 is122,491 windows and the orders executed during theyear were 140,625 windows.

Our Strategy

The effects of the downturn in the Real Estate markethave affected all sub-sectors that are dependent onthe reality industry. Therefore, the Company hasextended its focus on the retail segment where thecontribution is higher and the growth prospects aremore optimistic. The Company is emphasizing onexpansion of dealer network in local & upcountry

markets. Greater focus is also being given tocommercial segments like hotels, service apartments,schools and factories. In view of the low cost housinggaining momentum, the Company is developing newproducts to cater this market segment.

The Industry is witnessing entry of global as well asdomestic players. The Company believes that this willfacilitate the future growth of the industry as it willbring in global practices and help in increasingpenetration of the product that will benefit all market


23/96


players. At the same time, DSCLs first-moveradvantage, technological edge, product range suitabilityto Indian conditions, contemporary design, superior

delivery model, synergy from integration and customercare services will help the Company sustain itscompetitive edge and grow at a fast pace goingforward.

Cement

DSCLs cement plant is an excellent example of wastemanagement. The plant is based on waste CalciumHydroxide sludge produced during Acetylenegeneration at its integrated manufacturing plant atKota. The current capacity of plant is 4,00,000 TPA.It produces high quality, premium grade of both,ordinary portland and blended cements. The cementis characterized by light colour i.e. high degree ofwhiteness, superior strength and setting properties.As a result, the Shriram cement commands a strongbrand equity and premium in the market.


The Indian cement industry, with a total capacity ofapprox. 208 MMT tonnes, is the second largestproducer of the cement in the world after China.Demand growth in FY2009 has been ~8% over theprevious year and is likely to decline to 6-7% in FY2010due to slow down in the Real Estate sector. Despite

the slow down, the prices have not seen any majordecline. With the revival of economy and more so ofinfrastructure sector the demand is expected to remainrobust.


The contribution of the business to total Revenue, PBITand Capital Employed for FY2009 stands as follows:


Sales 128.2 119.5

PBIT 25.5 27.6Capital Employed 21.7 25.8

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

FY2009 3,80,284 2,616

FY2008 3,68,473 2,589

% Shift 3.2% 1 %

The business reported stable performance during theyear in a tough operating environment. The revenueswere higher primarily on account of higher realizations

on the back of firm demand-supply outlook, whileincrease in prices of key inputs like coal, limestoneetc. affected the operating margins.

PVC Compounds

DSCL is the largest manufacturers of PVC Compoundsin the organized sectors, with a total capacity of 29,700TPA. The position was further consolidated throughcapacity expansion by 6300 TPA, with commissioningof a new state of the art compounding line at its Kotafacility. The focus on new products and applicationsdevelopment has further been intensified at DSCLsinnovative Polymer Application Center (i-PAC) to bringin innovative and high end value added products.

Industry Overview

PVC Compounds are intermediate products used bydifferent industry segments like wire & cables,automotive, food and medical, footwear, and now byuser of engineering plastics for selected nicheapplications demanding specific performances. Thisindustry is largely unorganized and comprises a numberof small players. DSCL is the largest organized playerand produces PVC Compounds for merchant sale.

With general slow down of economy, most PVCCompounds users are facing difficulty in maintaininggrowth momentum. The compounding industry isexpected to face some temporary slowdown in demandand achieving growth in these segments may takesometime. We expect the industry to regress tonormalcy as the economy starts recovering.


Market dominance of DSCL, even in face of generaleconomic slowdown and competition from small andunorganized players in compounding business, hasbeen maintained. Business registered a growth of about

18%, which is more than double of the PVC industrygrowth during the year.

Companys focus on new products & applicationsdevelopment, formulation cost & procurement costreduction, better quality & higher productivity, growthof customer and supplier base etc. has paid richdividends. The Company has also engaged intechnology development work with potential of creationof intellectual properties. Share of higher value added


24/96


products in overall sales was maintained and isexpected to grow in future with commercialization ofspecialty Resin based compounds.

Our StrategyDevelopment work on specialty PVC Resin basedcompounds has progressed satisfactorily. Approvalprocess from OEMs and their vendors in a few targetapplications is in advanced stage. These products andapplications potentially open up new opportunities toenhance share of higher value added products in theproduct basket. The Company expects reasonable saleand application growth in the near term.

TextilesDSCL has a spinning unit at Tonk in Rajasthan with an

increased capacity of 14,544 spindles. The Companyhas implemented an expansion cum modernizationproject, the total capacity has increased from 6 tonnesto 12.4 tonnes per day and move to finer counts. Theproject was completed in December 2008.

Going forward, the Company will continue its drivetowards cost rationalization and improving efficiencies.

Human Resources and IndustrialRelationsThe Company has, as always, maintained its focus on

development of its human resources and maintainingharmonious industrial and employee relations acrossthe organization, as part of its people philosophy andcommitment towards upholding of its core value andbelief. Our Company has always believed that peopleare fundamental to the growth. The company continuesto work towards the over arching objective of becomingan employer of choice where people are respected,cared and developed at a personal and professionallevel.

Human Resources Growth and Optimisation

The human resources in various businesses of theorganization have been fairly steady and growngradually wherever there has been the need forexpansion and growth. The focus during the year has

been more towards building efficiency and improvingthe productivity standards through various processimprovements and quality initiatives.

Employee Engagement and Initiatives

The Organisation has during the year worked towardsstrengthening employee engagement and building astrong connect through various initiatives andprocesses across various units and businesses. Duringthe year, the various HR processes and systems havebeen further strengthened through strategic initiativesin the area(s) of Talent and Leadership Development,Capability Building, Performance Management,Employer Branding and others using Cross functionalteams.

Training & DevelopmentThe Organisation, as in the past, has been workingrelentlessly towards building skills and competenciesof people in the technical, functional and behaviouraldomains, as a part of the process of creating a cultureof learning and development. It is being done througha structured and systematic intervention built aroundtraining & development, multi-skilling, job rotations,mentoring, tutoring, and other action learning projects.It is all aimed at building a world class Organisation,with practices which are not only best in the industrybut serve as a benchmark for everyone.

Industrial / Employee RelationsThe Organisation continues to keep a track record ofharmonious and cordial relations with employees acrossall levels and across all units and businesses. Therelationships continue to be characterised by completeopenness, transparency, trust and faith. This has allbeen possible through easy accessibility, regularcommunication and an authentic and caring relationshipwith all employees.

On an overall basis, the Organisation continues toprovide its employees with an enabling environmentand ethos where everyone can give their best andengage with the Organisation with complete sincerityand commitment.


25/96


Social welfare and community development lies at theheart of DSCLs corporate culture. Education, Health,Rural upliftment and concern for Environment comprise

the focus of our CSR strategy. Close and continuousinteraction with the people and communities in andaround the operating locations has been the key focuswhile striving to bring around qualitative changes andsupporting to increase economic productivity.

Education

The Company provides opportunities to studentsthrough various scholarship programs to enable thempursue academic studies. The company also providesfinancial assistance to schools around its manufacturingfacilities in Rajasthan, Gujarat and U P.

In order to improve the quality of education, theCompany runs Ryan International School incollaboration with St. Xaviers Education Trust nearits Ajbapur (UP) Sugar unit. Near its Hariawan (UP)Sugar unit also the Company has set up a primarySchool. The primary education program SanskarPariyojna, in association with Vinoba Seva Ashram,near Ajbapur Sugar unit, is aimed to provide primaryeducation in the targeted 10 villages and to createvoluntary social structures.

Mid-day Meal Scheme for Children in Schools

The Company has partnered with the Government ofRajasthan to support the state governments Mid DayMeal Scheme for school children in and aroundJhalawar and Kota Districts of Rajasthan. The Jhalawarand Kota kitchen was entirely funded by DSCL andhas benefited more than 23,000 children daily across400 schools. This also provides employmentopportunity to local women folk in the central kitchenand others in the distribution network.

Health Care

DSCL has been instrumental in creating awarenessamong the members of society against HIV/AIDS. Wehave been regularly organizing AIDS/HIV awarenessprograms aimed at the employees, contract labours,cane growers, truck drivers and residents of the nearbyvillages. HIV-AIDS program are reviewed by agencieslike IFC, UNDP, TERI, CII, World Bank and RACO.

With a focus to serve the society, the Company hasdonated and maintains Mobile Healthcare unit with

Corporate Social Responsibility

assistance of Helpage India, maintains an ICU andprivate wards at a hospital, has set up a Polyclinic, aRural Health Clinic and organizes Blood donation

Camps, Health checkup/awareness camps. It alsoprovides incentive schemes for family planningprograms.

DSCLs sugar divisions runs a programme titlesKhushali Pariyojana in association with Vinoba SevaAshram which aims to provide health advisory servicesto women, ensure vaccination, offer hygiene directives,conduct health awareness programs.

Agriculture Extension Activities

DSCLs Shriram Krishi Vikas Kendras (SKVKs) is along term integrated rural development program whichis aimed to support the farmers in their work and lifethrough adoption of over 650 villages. SKVKscurrently 108 in nos. provide help in terms of farmingtechnology, post harvest management, soil and watertesting. These Kendras organize farmer trainingprograms. Their activities are extended to meeteducation, hygiene, sanitation needs for thecommunity as well.

Social Upliftment and Rural Development

DSCLs Sugar division, in association with Gram Swaraj

Mission is running Swabhiman Pariyojana. It has set upWomens self help groups in 10 adopted villages andpromote their adoption of income generation activities.It aims to provide training in various incomes generatingactivities and facilitating creation of structures formarketing and distribution of these products.

The company has adopted villages close to its Sugarmanufacturing facilities, to develop their infrastructuresuch as widening and re-soiling of Roads, properdrainage system, clean drinking water, maintaininghygienic sanitary conditions and development ofPanchayat Bhawan area.

Sports and Cultural Activities

DSCL has been organizing prestigious DSCL OpenNational Tennis Championship on annual basis, tonurture the young tennis talents. It also organises aState level Volleyball Tournament in Hardoi District, inassociation with the U.P. State Volley ball Federation.The Company continues to support sports within itscomplex as well as in the Schools in its vicinity.

09


26/96


The Directors have pleasure in presenting the 20th AnnualReport of the Company along with Audited Accounts forthe year ended 31st March, 2009.

Financial HighlightsThe working results for the year ended 31.3.2009 and31.3.2008 are as under:

Particulars 31.3.2009 31.3.2008(Rs. in crores) (Rs. in crores)

Sales (Gross) Own Products 2731.82 2300.95 Trading 839.52 384.64Total Sales (Gross) 3571.34 2685.59Other Income 48.43 34.79Profit before depreciation,interest, tax and exceptional item 369.23 209.99Depreciation 146.41 122.13

Interest 146.80 84.73Profit before tax and exceptional item 76.02 3.13Exceptional item - 779.64Profit before tax 76.02 782.77Provision for Taxation (25.77) 111.78Profit after tax 101.79 670.99Net Profit (before exceptional item) 101.79 (3.03)Transfer from DebentureRedemption Reserve 1.50 5.17Balance brought forward fromprevious year 461.53 251.37Net Profit available for appropriation 564.82 927.53Appropriations- Proposed Dividends on Equity Shares 13.27 56.41- Corporate Dividend Tax 2.26 9.59- General Reserve 50.00 400.00- Balance Carried Forward 499.29 461.53

DividendYour Directors are pleased to recommend dividend @Rs. 0.80 per Equity Share of Rs.2/- each for the yearended 31st March, 2009.PerformanceDuring the year, the Company reported satisfactoryearnings growth in a macro environment that has been achallenging one. The Company registered net revenuesof Rs. 3439.21 crores, an increase of 36% over previous

financial year. Net profit for the year stood at Rs. 101.79crores compared to a loss of Rs. 3.03 crores last year.Agri Business comprising Fertiliser, Agri Inputs and Sugar,contributing to about 53% of the total turnover, witnessed37% increase in revenues at Rs. 1,838 crores. PBIT forthis business was up 522% at Rs. 137 crores.Chloro-Vinyl business comprising Chlor-Alkali, PVC resinand Power, contributing about 24% of the total turnover,witnessed 21% increase in turnover at Rs. 841 crores.PBIT for this business was up about 33% at Rs. 198crores. The swing capability to sell power from these

Direct o rs Rep o rt

operations has helped in optimising the earnings per unitof power and given stability to these operations.Hariyali Kisaan Bazaar added 141 outlets during the yeartaking the number of outlets to 301. The performance isas per plan. Fenesta Building Systems achieved operatingbreakeven during the year.Earnings performance was significantly better driven bya stronger operating performance across all businesses.The post tax profits were substantially better postincreased depreciation and finance charges. Depreciationand finance costs were higher as new projects went onstream and firm interest rates. Deferred tax adjustmentsrelating to earlier periods also contributed to betterearnings performance.The Company completed all its Capex programs duringthe year with the completion of expansion of Chemicalscapacity to 765 TPD and commissioning of 48 MW Coalbased power plant at Bharuch. The Sugar Co-genexpansion to 94.5 MW was also completed during theyear.Bioseed business which operates through a 100%subsidiary, witnessed impressive growth in revenues atRs. 157 crores and PBIT at Rs. 30 crores during the year.The detailed performance of various businesses of theCompany for the year ended 31st March, 2009 has beenstated in the Management Discussion and Analysis Report,which appears as a separate statement in the AnnualReport.Subsidiary CompaniesDuring the period under review, DCM Shriram HydroEnergy Limited, SBM Yarn Limited, Fenesta India Limited,

Hariyali Insurance Broking Limited and Bioseeds HoldingsPTE. Limited, Singapore became subsidiaries of yourCompany.During the period under review, Affee Investments Corp.,British Virgin Islands and Bioseed Genetics InternationalInc., Panama were liquidated.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, theAudited Statements of Accounts and the AuditorsReports thereon for the year ended 31st March, 2009along with the Reports of the Board of Directors of theCompanys 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 particularsforming part of the Annual Report. Further, pursuant toAccounting Standard AS-21 issued by The Institute ofChartered Accountants of India, Consolidated FinancialStatements presented by the Company in this AnnualReport includes the financial information of its subsidiaries.

10

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


27/96


Fixed DepositsAs on 31st March, 2009, 136 deposits aggregating toRs. 52.36 lacs were unclaimed. Since then, 51 depositsamounting to Rs.29.27 lacs have been claimed/renewed.Corporate GovernanceA 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.DirectorsShri Vimal Bhandari, Shri Sunil Kant Munjal and Shri D.Sengupta, Directors, retire by rotation and are eligible forre-appointment.Auditors

M/s. Deloitte Haskins and Sells, Chartered Accountants,retire at the forthcoming Annual General Meeting andare eligible for re-appointment.PersonnelIn 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 be setout 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 to all the Membersexcluding the aforesaid particulars. The complete AnnualReport including this statement shall be made availablefor inspection by any Member during working hours for aperiod of 21 days before the date of the Annual GeneralMeeting. Any Member interested in obtaining a copy ofthe said statement may write to the Company Secretaryat the Registered Office of the Company.Directors Responsibility StatementIt is hereby affirmed that1. in preparation of annual accounts, all applicable

accounting 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 the endof the financial year and of the profit or loss of theCompany for that period,

3. proper and sufficient care has been taken formaintenance of accounting records in accordance withthe 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 andForeign Exchange Earnings/Outgo

The information required under Section 217(1)(e) of theCompanies Act, 1956 read with the Companies(Disclosure of Particulars in the Report of the Board ofDirectors) Rules, 1988 with respect to these matters isappended hereto and forms part of this report.Industrial RelationsThe Company continued to maintain harmonious andcordial relations with its workers in all its Divisions, whichenabled it to achieve this performance level on all fronts.AcknowledgementsThe Directors wish to thank customers, the Governmentauthorities, financial institutions, bankers, other businessassociates and shareholders for the cooperation and

encouragement extended to the Company. The Directorsalso place on record their deep appreciation for thecontribution made by the employees at all levels.

On behalf of the Board

New Delhi (AJAY S. SHRIRAM)30 th June, 2009 Chairman & Sr. Managing Director


28/96


Annexure to the Directors Report

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

with the Companies (Disclosure of Particulars in theReport of Board of Directors) Rules, 1988.

A.CONSERVATION OF ENERGY

(a) Energy Conservation Measures Taken:

Energy conservation has been an importantthrust area of the management and is beingcontinuously monitored. Important specificactions taken during this year are:-- Periodical energy audits, pressure drop

reduction measures and optimization ofoperating parameters have been done in the

Ammonia Plant.- At DM plant, optimum capacity pumps have

been installed to supply DM Water andProcess water to Fertiliser Plant.

- Flash steam generated from HCL Stripperused in 1st distillation tower reboiler.

- New system devised for timely recovery ofbroken and spilled carbide.

- Installation of low capacity Anolyte BlowDown Pump in Chlor Alkali Plant.

- Trimming of 30% HCL Pump Impeller dia tooptimise flow and head in Chlor Alkali Plant.

- Installation of overhead storage tank.

(b)Additional investments and proposals beingimplemented for reduction in consumption ofenergy:

An extensive trial of fuel additive has been carriedout in Boiler No. 2 of 35 MW Power Plant andBoiler of 40 MW to reduce the unburnt carbon.Based on the results, use of coal additive hasbeen planned in the year 2009-10 in all theboilers with an improvement of boiler efficiencyby approximately 1%.

(c) Impact of the measures at (a) & (b) above forreduction of energy consumption andconsequent impact on the cost of production ofgoods:

The above mentioned energy consumptionmeasures which have already been undertakenand the measures under implementation will yieldsavings in energy consumption compared to thepast years and will continue to reduce the cost

of production. The summarized position ofenergy reduction achieved is as under :- Saving of 0.059 M.K.Cal/MT of Urea

- Saving of 3.8 Lacs Kwh/Annum due toinstallation of new optimum capacity pumpin DM Plant in Power Plant.

- Reduction in power consumption by about44 Kw/hr in Power Plant.

- Reduction in steam requirement by 300 Kg/Hr in PVC Plant at Kota.

- Saving in steam consumption by about 200Tons/Month from the use of flash steam.

- Saving of around 7 kwh/MT of Carbide inelectrical energy on account of timelyrecovery of Carbide.

- Saving of 83 Th.Kwh/Annum power inCaustic Soda plant.

- Reduction in the running hours of HCL dozingpump resulting in power saving of 23 ThKwh/Annum in Chlor Alkali Plant at Kota.

- Saving in Power of 45 ThKwh/Annum in ChlorAlkali Plant at Kota.

- Saving in Power of 15 ThKwh/Annum in ChlorAlkali Plant at Kota.

(d)Total energy consumption and energyconsumption per unit of production:

Form A is annexed.

B. TECHNOLOGY ABSORPTION

(a) Efforts made in technology absorption:Form B is annexed.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Activities relating to exports; initiatives takento increase exports; development of new exportmarkets for products and services; and exportplans:

There was no export of Companys own productsduring the year, as domestic realisation wasbetter than export realisation.

(b) Total foreign exchange used and earned:Rs./Crores

2008-09 2007-08

- Total foreign exchange used 206.94 129.35- Total foreign exchange earned 2.27 0.0


29/96


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

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

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

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

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