dscl ar final

8/3/2019 Dscl Ar Final

1/53


2/53


3/53


4/53


5/53


6/53


7/53


8/53


9/53


10/53


11/53


12/53


13/53


14/53


15/53


16/53


17/53


18/53


19/53


20/53


21/53

DCM SHRIRAM

CONSOLIDATED LIMITED

35

The Directors have pleasure in presenting the17th Annual Report of the Company along with AuditedAccounts for the year ended 31st March, 2006 reportinga strong performance driven by your Companys strategyof optimizing value contribution through integration andcreating long term competitive businesses.

Financial Highlights: The working results for the yearended 31.3.2006 and 31.3.2005 are as under:

31.3.2006 31.3.2005

(Rs. in Crores) (Rs. in Crores)

Sales (Gross) 2,476.32 1,905.19

Other Income 17.35 9.31

Profit before depreciation,interest, exceptionalitems and tax 283.74 227.10

Interest 48.45 34.21

Gross Profit 235.29 192.89

Depreciation 70.19 54.36

Exceptional Items 28.59

Provision for Taxation

- Current/Deferred Tax 46.31 5.51- Fringe Benefit Tax 3.60

Profit for the year after tax 115.19 104.43

Transfer from Debenture

Redemption Reserve 3.67 2.02

Balance brought forwardfrom previous year 173.91 118.16

Net Profit available forappropriation 292.77 224.61

Appropriations

Debenture RedemptionReserve 0.56

Proposed Dividends onEquity Shares 14.94 13.31

Corporate Dividend Tax 2.09 1.83

General Reserve 50.00 35.00

Balance Carried Forward 225.74 173.91

Dividend: Your Directors are pleased to recommend totaldividend @ 45% (including the interim dividend @ 20%paid in November, 2005) on Equity Shares of Rs. 2/- eachfor the year ended 31st March, 2006.

Performance: The Company attained revenues of Rs.

2476.32 Crores against revenues of Rs. 1905.19 Croresin previous financial year - a growth of 30%. The operat-ing profit of the Company for the year was at Rs. 283.74Crores, higher by 25% as compared to operating profitof Rs. 227.10 Crores in the previous year. The Companysprofit before tax (excluding exceptional items) increasedto Rs. 165.10 Crores from Rs. 138.53 Crores, reflectinga growth of 19%.

The growth during the year was primarily driven by highervolumes in Chemicals, Plastics and Sugar businesses,better margins in Chemical business in first half of theyear and better realisations in Sugar and Cementbusinesses. The improvement in performance was despitetremendous odds faced due to higher input costs (cane,salt, furnace oil, carbon materials, etc.), sharp reductionin PVC prices (~16%), freeze on reimbursement ofconversion cost increases in the urea business, uncleargovernment policy on DAP/MOP subsidy and higherinterest costs.

The detailed performance of various businesses of theCompany for the year ended 31st March, 2006 has beenstated in the Management Discussion and Analysis Report,which appears as a separate statement in the Annual

Report.Subsidiary Companies: A statement pursuant to Section212 of the Companies Act, 1956 relating to SubsidiaryCompanies is attached to 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 Auditors Reportsthereon for the year ended 31st March, 2006 along withthe Reports of the Board of Directors of the Companyssubsidiaries have not been annexed. The Company willmake available these documents upon request by anymember of the Company interested in obtaining the same.However, pursuant to Accounting Standard AS-21 issuedby the Institute of Chartered Accountants of India,Consolidated Financial Statements presented by theCompany includes the financial information of itssubsidiaries.

Sub-Division of Equity Shares & Issue of Bonus Shares:Pursuant to the resolution passed by the shareholders byPostal Ballot, the Company had sub-divided the face valueof Equity Shares of Rs.10/- each into 5 Equity Shares ofRs. 2/- each w.e.f. 18.10.2005.

During the year, the Company has issued and allotted8,29,51,660 fully paid up Bonus Shares of Rs.2/- each inthe ratio of 1 : 1 by capitalizing amount out of CapitalRedemption Reserve.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

10Directors Report

DSCL 35-51-FINAL.p65 7/22/2006, 3:32 AM35


22/53

DCM SHRIRAM


DCM SHRIRAM


36 37

Annexure to the Directors Report

Information as required under Section 217(1)(e) read withthe Companies (Disclosure of Particulars in the Report ofBoard of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

(a) Energy Conservation Measures Taken:

Energy conservation has been an important thrustarea of the management and is being continuouslymonitored. Important specific actions taken duringthis year are:-- Installation of an efficient and optimum size pump

in canal water pump house.- Collection and recycling of steam condensate

from steam traps & drains of 36K, 29K, 14K &4K steam headers.

- Installation of waste heat recovery boiler in thenew carbide furnace to generate steam fromfurnace exhaust gases.

- Installation of variable frequency drives on sixNo. motors of ID fans of 30 MVA furnace.

- Reduction in Nos. of Garo Compressor runningfrom 3 to 2 by replacing the Garo Compressorinternals.

- Condensate heat recovery system (Cigar) forrecovering the waste heat from the condensatewater from all the evaporator bodies and sendingthe flash vapour to the succeeding bodies.

- Minimizing the running hours of bigger DM waterpump by impeller trimming of a smaller DM waterpump.

- Stoppage of agitator for brine slurry pit.- Stoppage of additional process condensate pump

by modification in piping.- Installation of a low pressure (15 kg./cm2)

hydrogen compressor in place of running150 kg./cm2 compressor for pipeline supply to

customer.

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

- Project for changeover of Ammonia plantsfeedstock from Naphtha to R-LNG/NG is underimplementation. This is expected to marginallyimprove overall energy consumption and help inmeeting the preset energy norm.

- Change from quadruple system to quintuplesystem in sugar plant at Ajbapur.

- Installation of Bagasse Drier and SED CIGARSystem in the process in sugar plant at Rupapur.

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

reduction of energy consumption and consequentimpact on the cost of production of goods:

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

production. The summarised position of energyreduction achieved is as under:-

- Steam generation of 10 Ton/hour through wasteheat recovery boiler.

- Reduction in power consumption by 170 Kwh/Ton carbide in 30 MVA furnace.

- Saving in power consumption by approx.1.63 Kwh/year by stoppage of agitator for brineslurry pit.

(d) Total energy consumption and energy consumptionper 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 toincrease exports; development of new exportmarkets for products and services; and exportplans:

During the year, interaction was increased withpotential customers in the neighbouring countriesand several enquiries were received. The Companyhas exported FRLS, cable grade material tocustomers in Sri Lanka. Visits were made tointernational buyers in UAE and Oman. PVC orders

were received from Oman and executedsuccessfully during the year.

The Company has also received approvals fo r thePVC master batches from Europe and first shipmentwas made against first pilot order. It is expectedto receive regular orders from Europe as theCompany has entered into arrangements withagents to act as a distributor for Companys PVCproducts.

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

2005-20062004-2005

- Total foreign exchange used 565.46 332.27

- Total foreign exchange earned 0.60 0.14

Finance: Your Company continues to enjoy the highestrating of A1+ for its short term borrowings. Your Com-pany has been upgraded from LA+ rating to LAA rat-ing for its long term debt programme implying the ratedinstrument carries low risk.

Fixed Deposits: As on 31.3.2006, 197 deposits aggre-gating to Rs. 42.07 lacs were unclaimed. Since then 36

deposits amounting to Rs. 8.43 lacs have been claimed/renewed.

Auditors Report: As reported in para (xxi) of the Annex-ure to Auditors Report, an employee of the Company inconnivance with parties outside the Company disposedoff certain scrap items at a price significantly less thanthe market price. Amount estimated to be shor t realizedby the Company is approximately Rs. 35 Lacs. The Com-pany has initiated necessary legal and other actions inthe matter.

Delisting of Equity Shares of the Company: During theyear, the Equity Shares of the Company were delistedfrom The Calcutta Stock Exchange Association Limited.

Corporate Governance: A separate section on CorporateGovernance and a Certificate from the Auditors of theCompany regarding compliance of conditions of Corpo-rate Governance as stipulated under Clause 49 of theListing Agreement with the Stock Exchanges form partof the Annual Report.

Directors: During the year, Shri O.V. Bundellu, Nomineeof IDBI, ceased to be a Director of the Company. TheDirectors place on record their sincere appreciation ofthe contribution made by Shri O.V. Bundellu, during histenure as a Director of the Company.

Shri Vimal Bhandari, Shri Sunil Kant Munjal andShri D. Sengupta retire by rotation and are eligible for re-appointment.

Auditors: M/s. A.F. Ferguson & Co., Chartered Accoun-tants, retire at the conclusion of the forthcoming AnnualGeneral Meeting and are eligible for re-appointment.

Personnel

The particulars of employees as per Section 217(2A) ofthe Companies Act, 1956 form part of this report.However, as per the provisions of Section 219(1)(b)(iv)of the Act, the report and accounts are being sent to allthe Members and the Trustee(s) for the holders of thedebentures of the Company, excluding the statementcontaining the particulars to be provided under Section217(2A) of the Act. This statement shall be made availablefor inspection by any Member and/or any Trustee(s) duringworking hours for a period of 21 days before the date ofthe Annual General Meeting. Any Member and/or the

Trustee(s) interested in obtaining a copy of the saidstatement may write to the Company Secretary at theRegistered Office of the Company and the same will besent by post.

Directors Responsibility Statement: It is hereby affirmedthat

1. in preparation of annual accounts, all applicable

accounting standards have been followed.2. the accounting policies of the Company have been

consistently 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 proper internalcontrols are in place for preventing and detecting fraudsand other irregularities.

4. annual accounts have been prepared on a going concernbasis.

Conservation of Energy, Technology Absorption and For-eign Exchange Earnings/Outgo: The information requiredunder Section 217(1)(e) of the Companies Act, 1956 readwith the Companies (Disclosure of Particulars in the Re-port of the Board of Directors) Rules, 1988 with respectto these matters is appended hereto and forms part ofthis report.

Industrial Relations: The Company continued to maintainharmonious and cordial relations with its workers in all itsDivisions, which enabled it to achieve this performancelevel on all fronts.

Acknowledgements: The Directors wish to thank custom-ers, the Government authorities, financial institutions,bankers, other business associates and shareholders forthe cooperation and encouragement extended to the Com-pany. The Directors also place on record their deep ap-preciation for the contribution made by the employees atall levels.

On behalf of the Board

New Delhi (AJAY S. SHRIRAM)25th April, 2006 Chairman & Sr. Managing Director

SCL 35-51-FINAL.p65 7/22/2006, 3:33 AM36-37


23/53

DCM SHRIRAM


DCM SHRIRAM


38 39

This Year Previous Year

2005 2006 2004 2005

B. CONSUMPTION PER UNIT OF PRODUCTION

1. Electricity

Urea (Kwh/M.T.) 158.5 188.8 PVC Resin (Kwh/M.T.) 3.1 47.4

C. Soda, SFC, Kota (Kwh/M.T.) 132.3 11.6

C. Soda, SAC, Bharuch (Kwh/M.T.) Internal Generation 2601.0 2672.0

Liquid Chlorine (Kwh/M.T.) 105.0 102.0

HCL (Kwh/M.T.) 3.0 3.0

Textiles Yarn (Kwh/Kg.) 2.2 2.2

Sugar Ajbapur (Kwh) 331.0 352.3

Sugar Rupapur (Kwh) 281.6 306.4

PVC Compounds (Kwh/Ton) 213.5 220.2

2. Coal

Urea (M.T./M.T.) 0.6 0.6

PVC Resin (M.T./M.T.) 5.0 4.5

Carbide Packed (T/Ton) 3.2 2.9

C. Soda (M.T./M.T.) 2.2 2.4

Cement (M.T./M.T.) 0.2 0.3

SBP (M.T./M.T.) 0.2 0.1

3. Furnace Oil

Urea (Kg./Ton) 7.2 6.5

C. Soda, SFC, Kota (Kg./Ton) 2.5 12.4

C. Soda, SAC, Bharuch (Kg./Ton) 627.0 640.0

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 2.4 2.4

Bagasse (M.T.) Rupapur 2.2 2.4

Notes :

1. Different sources of energy are inter changeable.

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

FORM A

(See Rule 2)

Form for disclosure of particulars with respect to conservation of energy

This Year Previous Year

2005 2006 2004 2005

A. POWER AND FUEL CONSUMPTION

1. Electricity

(a) Purchased

Kwh (in lacs) 772.7 785.7

Total Cost (Rs./lacs) 3405.4 3309.0

Rate (Rs./Kwh) 4.4 4.2

(b) Own Generation

(i) Through Diesel Generator

Kwh (in lacs) 1872.7 1944.8

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

Cost (Rs./Kwh) 4.0 3.0

(ii) Through Steam Turbine Generator

Kwh (in lacs) 8357.7 6615.1

Kwh generated per Kg. of Coal 1.2 1.2

Cost (Rs./Kwh) 2.2 2.3

(iii)Through Steam Turbine Generator (Bagasse)

Kwh (in lacs) 736.9 507.5

Units generated per M.T. of Bagasse 223.3 223.6

Bagasse consumed (in M.T./lacs) 3.3 2.3

2. CoalQuantity (M.T.) 826317.0 627281.0


Average Rate (M.T.) 2145.0 2271.0

3. Furnace Oil

Quantity (M.T.) 45277.8 47022.6


Average Cost (M.T.) 14830.7 10835.2

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DSCL 35-51-FINAL.p65 7/22/2006, 3:33 AM38-39


24/53

DCM SHRIRAM


DCM SHRIRAM


40 41

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 i nternals to enhance the clinker p roducti on.

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 Kasei

Chemical Corporation based on their proprietory ion exchange

membrane technology developed for use in manufacture of

Chlor-Alkali Products.

Design & Drawings package to convert existing Mercury Cell

Based Caustic Soda Plant to membrance Cell Plant of 200

TPD capacity.





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





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

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

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

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

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

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

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

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

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

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

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

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

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

Pilot Granulator has been installed and various

grades of NPK blended mixtures have been

produced.

A new innovative overhead gantry type reclaimer

has been designed and installed for coal handling.

The newly installed 30 MVA carbide furnace

incorporating heat recovery from waste heat

recovery boiler (WHB) was completely

conceptualized and designed in house.

Flexible low compression static & dynamic gasket

compound.

Installation of 4 New Card and Speed Frame to

improve quality of yarn.

Adoption of IPRO recommendations on various

steam saving schemes.

Catcher in molasses conditioner vacuum line.

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

Recovery of heat from waste flue gases of

30 MVA furnace by making it semi closed and

thus generating approx. 10 M.T. steam/hour free

of cost.

Loss of sugar in condenser water reduced.

Collection of sugar dust improved resulting in

better flow of sugar.

Reduction in steam consumption by 8% on cane.3. Future plan of action

Application areas for high-flow PVC/PVC Blends

in injection molded products.

High abrasion resistant, high strength, anti-skid,

matt finish flooring.

The Company plans to develop UPVC range of

products suitable for high rises and changing

construction practice in India.

4. Expenditure on R & D

Rs./Lacs

2005-2006 2004-2005

a) Capital 3.16 8.76

b) Revenue 201.50 102.56

c) Total 204.66 111.32

d) Total R & D expenditure

as percentage of

total turnover 0.08 0.06

Technology absorption, adaptation and innovation

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

adaptation and innovation

Installation of fly ash handling and storage system

and double wave type liners in raw mill to reduce

power consumption.

Commissioning of new energy efficient Chisso

technology based Polymer & Dryer.

Cost reduction innovation project for large volume

cable compounds.

Introduction of lower migration DINCH system as

a plasticizer reduces the risk of chronic toxicity

of DEHP, that is a suspected carcinogen and toxin

to the kidneys, liver & lungs.

Improvement in syrup clarification system and use

of Modular Pan for exhaustion.

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

development, import substitution, etc.

Various measures described above have resulted in

saving of power and steam. The benefits have also

been in respect of better quality of product and

improved customer service. More importantly, these

have resulted in

Increased production of PPC cement with

increased utilization of fly ash.

Cost reduction in FRLS PVC Compound.

Improvement in syrup quality resulting in

improvement in sugar colour.

Better exhaustion of molasses.

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

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

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

SCL 35-51-FINAL.p65 7/22/2006, 3:33 AM40-41


25/53

(C) Board Audit Committee

(i) Terms of reference:

The role and terms of reference of Board AuditCommittee covers areas mentioned under Clause

49 of the Listing Agreement and Section 292Aof the Companies Act, 1956, besides othe r termsas may be referred to by the Board of Directors.

(ii) Composition:The Board Audit Committee was formed in 1990.As at 31.3.2006, the Committee comprises of four

Independent-Non-Executive Directors. TheCommittee met five times during the year andattendance of the Members at the meetings was

as follows:

Name of Member Status No. of

meetings

attended

Dr. S.S. Baijal Chairman 4

Shri Arun Bharat Ram Member 3

Shri Pradeep Dinodia Member 4

Shri D. Sengupta* Member -

Shri O.V. Bundellu

(IDBI Nominee)** Member 1

* Appointed w.e.f. 28.1.2006

** Ceased w.e.f. 19.5.2005

(D) Committee for Determining Remuneration Payable toManaging/Whole Time Directors


Subject to the provisions of the Companies Act,1956 and the notifications, if any, issued by theGovernment thereunder to determine the

remuneration, including commission, payable to

Managing/Whole-time Directors.

(ii) Composition:

The Committee comprises of three Independent-

Non-Executive Directors. The Committee met onetime during the year and the attendance of the

Members at the meeting was as follows:

Name of Member Status No. of

meetingattended

Dr. S.S. Baijal Chairman 1

Shri Pradeep Dinodia Member 1

Shri D. Sengupta Member 1

(iii) Remuneration Policy:

The policy, inter alia, provides for the following:

a) Executive Directors:

Salary and commission not to exceed limitsprescribed under the Companies Act,1956.

Revision from time to time depending uponperformance of the Company, individualDirectors performance and prevailing

Industry norms.

No sitting fees.

b) Non-Executive Directors:

Eligible for commission.

Sitting fees and commission not to exceed

limits prescribed under the Companies Act,1956.

The remuneration payable to Non-Executive

Directors is decided by the Board of

Directors.

(iv) Details of remuneration for the year 20052006:

(a) Executive Directors:

(Amount/Rs. Lacs)

Executive Directors Salary P.F. Superannuation Perquisites Commission Total

Shri Ajay S. Shriram* 45.60 5.47 6.84 40.24 85.00 183.15

Shri Vikram S. Shriram* 42.00 5.04 6.30 18.39 80.00 151.73

Shri Rajiv Sinha* 31.20 3.74 4.68 19.13 48.00 106.75

Shri Ajit S. Shriram** 28.80 3.46 4.32 13.38 46.00 95.96

* Re-appointed w.e.f. 1.11.2003 for a period of 5 years. ** Appointed w.e.f. 2.5.2001 for a period of 5 years.

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

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

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

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

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

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

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

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

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

(B) Board of Directors

As at 31.3.2006, the Board of Directors comprises

of an Executive Chairman, three Executive Directors

and eight Non-Executive Directors.

During the year, six Board Meetings were held on

10.5.2005, 14.6.2005, 26.7.2005, 17.8.2005,

27.10.2005 and 28.1.2006.

The composition of Board of Directors and their

attendance at Board Meetings during the year 2005-

06 and at the last Annual General Meeting held on

2.8.2005 as also number of other Directorships and

Committee Membership/Chairmanship as on

31.3.2006 are as follows:

The ratio between Executive and Non-Executive

Directors and Non-Independent and Independent

Directors is 4:8.

M/s. S.R. Dinodia & Co., Chartered Accountants have

been rendering consultancy services to the Company

from time to time, in which Shri Pradeep Dinodia, a

Non-Executive Director of the Company, is interested

as a Partner. During the year, the Company paid Rs.

1.89 lacs as professional fee to M/s. S.R. Dinodia &

Co.

Code of Conduct for Board Members & Senior

Management Team:

In compliance to the provisions of Clause 49 of the

Listing Agreement, the Board has laid down a Codeof Conduct for all Board Members and Senior

Management Team w.e.f. 1st January, 2006. A copyof the said Code of Conduct is available on the websiteof the Company (www.dscl.com).

All Board Members and Senior Management Teamhave affirmed compliance of Code of Conduct as on31st March, 2006 and a declaration to that effect

signed by Chairman & Senior Managing Director is

attached and forms part of this report.

Name of Director Category of No. of Board Attended No. of other No. of CommitteeDirectorship meetings last AGM Directorships # Memberships # #

attended Member Chairman

Shri Ajay S. Shriram ED 6 Yes 8 2 1

Shri Vikram S. Shriram ED 6 Yes 7 4 2

Shri Rajiv Sinha ED 6 Yes 3 2 -

Shri Ajit S. Shriram ED 6 Yes 5 1 -

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

Shri Arun Bharat Ram I-NED 5 No 10 4 1

Shri Pradeep Dinodia I-NED 6 Yes 8 7 4

Shri Vimal Bhandari I-NED 5 No 4 2 1

Shri Sunil Kant Munjal I-NED 3 Yes 9 2 1

Shri D. Sengupta I-NED 4 Yes 3 2 -

Shri S.L. Mohan (GIC Nominee) I-NED 5 No - - -

Shri S.C. Bhargava (LIC Nominee) I-NED 4 No 10 1 -

Shri O.V. Bundellu (IDBI Nominee)* I-NED 1 - - - -

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

## Includes only Audit Committee and Shareholders Grievance Committee.ED Executive Director * Ceased w.e.f. 19.5.2005

I-NED Independent-Non-Executive Director

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

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

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

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

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

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

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

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

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

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

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

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

I. Provision for incremental gratuity and earned

leave for the current year has not been

considered, since the provision is based on

actuarial basis for the Company as a whole.

II. Notice period for termination of appointment

of Managing/Whole-time Directors is six

calendar months, on either side.

III. In the event of termination of appointment of

Managing / Whole-time Directors,

11Corporate Governance Report 2005-06

(A) Companys Philosophy

The Companys philosophy on Corporate Governance

is focused upon a rich legacy of fair, ethical and

transparent governance practices. The Company is

conscious of its responsibility as a good corporate

citizen and is committed to high standard of Corporate

Governance practices. This is reflected in the well

balanced and independent structure of the Companyseminent and well represented Board of Directors. The

Company is in full compliance with the requirements

under Clause 49 of the Listing Agreement with the

Stock Exchanges.

DCM SHRIRAM


DCM SHRIRAM


42 43

DSCL 35-51-FINAL.p65 7/22/2006, 3:34 AM42-43


26/53

DCM SHRIRAM


DCM SHRIRAM


44 45

(F) General Body Meetings

The last three Annual General Meetings were held asunder:

F inancial Year Date Time Locat ion

2004-2005 02.08.2005 10.00 A.M.Air Force

Auditorium,

Subroto Park,

New Delhi

2003-2004 10.08.2004 10.00 A.M.Air Force

Auditorium,

Subroto Park,

New Delhi

2002-2003 11.08.2003 10.00 A.M.Air Force

Auditorium,

Subroto Park,

New Delhi

The details of Special Resolutions passed in previous3 Annual General Meetings are as under :

AGM 2005

Approval under Section 309 of the CompaniesAct,1956 for payment of sum not exceeding 1%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.

AGM 2003

Approval under Section 163 of the CompaniesAct,1956 for maintenance of certainStatutory records of the Company withM/s. MCS Limited, Registrar and TransferAgent at Srivenkatesh Bhavan, 212-A,Shahpurjat, New Delhi110 049.

Approval for re-appointment of Shri Ajay S.Shriram as Chairman & Sr. Managing Directorfor a period of five years w.e.f. 1.11.2003.

Approval for re-appointment of Shri Vikram S.Shriram as Vice Chairman & Managing Directorfor a period of five years w.e.f. 1.11.2003.

Approval for re-appointment of Shri Rajiv Sinhaas Dy. Managing Director for a period of five yearsw.e.f. 1.11.2003.

Approval for delisting of Equity Shares of theCompany from the Delhi Stock ExchangeAssociation Limited and The Calcutta StockExchange Association Limited.

Postal Ballot

During the year, the Special Resolution containedin the Postal Ballot Notice dated 17th August, 2005,was passed by the shareholders of the Companythrough Postal Ballot.Shri T.V. Narayanaswamy, Practicing CompanySecretary was appointed as Scrutinizer to conductthe Postal Ballot process. Details of the votingpattern were as under:

Description No. of valid Votes Cast

of Resolution Postal Ballot For Against

Forms

received

Sub-Division of

Equity Shares 4308 10859871 3688

Accordingly the said Resolution was approved bythe shareholders with requisite and overwhelmingmajority.

(G) Disclosures

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

(ii) There were no instances of non-compliance bythe Company, penalties and strictures imposedon the Company by the Stock Exchanges or SEBIor any other statutory authority on any matterrelated to the capital markets during the last threeyears.

(iii) The Company is complying with all mandatoryrequirements of Clause 49 of the ListingAgreement. Non-mandatory requirements relatingto Remuneration Committee have been adopted

by the Company.

(H) Means of Communication

The Company interacts with its shareholders throughmultiple forms of corporate and financialcommunications such as annual reports, resultannouncement and media releases. Quarterlyresults are usually published in English dailynewspapers, viz., Economic Times, Business Standard,Business Line and one Hindi daily newspaper, viz.Navbharat Times. These results are also madeavailable on the website of the Companywww.dscl.com and also posted at SEBIs websitewww. sebiedifar.nic.in. The Companys website alsodisplays official news releases. The Company hasinteracted with analysts and investors during the yearunder review through one on one meeting and theanalyst meet held in Mumbai .

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

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

compensation will be in accordance with theprovisions of the Companies Act, 1956 or anystatutory amendment orre-enactment thereof.

IV. The Company has not offered any stock optionto its Executive Directors.

(b) Non-Executive Directors:During the financial year, there was no pecuniaryrelationship or transaction between the Companyand any of its Non-Executive Directors.

The criteria for making payments to Non-ExecutiveDirectors 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. 1.75 lacs each to all Non-

Executive Directors as on 31.3.2006,ii) A sum of Rs. 27,500/- per meeting for

number of Board and Board Committeemeetings attended by them during thefinancial year, and

iii) A sum of Rs. 2.5 lacs to the Chairman ofBoard Audit Committee.

The details of remuneration paid during the yearby way of sitting fee and commission for attendingmeetings of Board/Committees thereof along withnumber of shares held by Non-Executive Directorsas on 31.3.2006 in the Company are as under :

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

Sitting Com- Total Shares

Fee mission held

Dr. S.S. Baijal 1. 85 1 3. 0514. 9050 ,0 00

Shri Arun Bharat Ram 0. 65 3 .95 4 .60

Shr i Pradeep Dinodia 1 .30 7.25 8.5523,270

Shr i Vimal Bhandar i 0 .50 3 .13 3 .63 2 ,000

Shr i Suni l Kan t Munj al 0 .30 2 .58 2 .88

Shri D. Sengupta 1.00 6.15 7.15

Shri S.L. Mohan

(GIC Nominee) 0.50 3.13 3.63

Shri S.C. Bhargava

(LIC Nominee) 0.40 2.85 3.25

Shri O.V. Bundellu

(IDBI Nominee)* 0.15 0.55 0.70

* Ceased w.e.f. 19.5.2005

(E) Shareholders/Investors Grievance Committee


a) to scrutinise and approve registration oftransfer of shares/debentures/warrants issued/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-receiptof annual reports, non-receipt of declareddividends, etc., and

g) to delegate all or any of its powers to Officers/Authorised Signatories of the Company.

(ii) Composition:

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

Shri V.P. Agarwal, Company Secretary, is theCompliance Officer. He has been delegated thepower to approve share transfer/transmission etc.subject to a l imit of 2500 shares ofRs. 2/- each per transfer deed at a time. The

delegated authority has been regularly addressingthe share transfer formalities.

During the year, the Committee met ten times andthe attendance of the Members was as follows:

Name Status No. of meetings

attended

Shri Pradeep Dinodia Chai rman 8

Dr. S.S. Baijal Member 8

Shri Ajay S. Shriram Member 8

Shri Vikram S. Shriram M em be r 8

During the year, 355 complaints were receivedfrom the shareholders and all of them wereresolved to the full satisfaction of the shareholders.No investor complaint was pending as on31.3.2006.

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

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

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

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

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

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

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

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

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

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

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

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

DSCL 35-51-FINAL.p65 7/22/2006, 3:34 AM44-45


27/53

DCM SHRIRAM


DCM SHRIRAM


46 47

(vii) Registrar and Share Transfer Agent: M/s. MCSLimited have been acting as the Registrar andShare Transfer Agent for shares and debenturesof the Company - both in physical and electronicmode.

(viii) Share Transfer System:The Companys sharesare traded in the Stock Exchanges compulsorily

in demat mode. Physical shares which are lodgedwith the Company for transfer are processedand returned to the shareholders within a periodof 30 days.

(ix) Distribution of Shareholding as on 31.03.2006:

No. of Shares Shareholders

Number % to total no.

of Shareholders

UPTO - 500 46572 86.60

501 - 1000 3477 6.47

1001 - 2000 1764 3.28

2001 - 3000 640 1.19

3001 - 4000 324 0.60

4001 - 5000 229 0.43

5001 - 10000 391 0.73

10001 AND ABOVE 379 0.70

TOTAL 53776 100.00

(x) Categories of Shareholders as on 31.03.2006:

Category No of fully %

paid up share-

shares held holding

Promoters, Relatives

and Associates 9,05,08,120 54.55

Financial Institutions/Banks 2,10,01,301 12.66

Foreign Institutional

Investors/Overseas

Corporate Bodies/

Non-Resident Indians 2,11,79,534 12.77

Mutual Funds 57,98,641 3.50

Bodies Corporate 45,66,223 2.75

General Publ ic 2,28,49,501 13.77

T OT AL 1 6, 59 ,0 3, 32 0 1 00 .0 0

(xi) Dematerialisation of Equity Shares and Liquidity:

As on 31.03.2006, of the total eligible EquityShares, 87.44% were in dematerialised form andthe balance 12.56% shares in physical form.

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

(xii) Plant Locations:

The Companys plants are located at Kota,Bharuch, Ajbapur, Rupapur, Tonk and Bhiwadi.

(xiii) Address for Correspondence:The Companys Registered Office is situated at6 th Floor, Kanchenjunga Building, 18,Barakhamba Road, New Delhi-110 001.

Correspondence by the shareholders and

(I) General Shareholders Information

(i) Next Annual General Meeting is proposed to beheld on 25th July, 2006 at Air Force Auditorium,Subroto Park, New Delhi.

(ii) Financial Year :April to March

(iii) Date of book closure: 7th July, 2006 to14th July, 2006 (both days inclusive)

(iv) Dividend payment date: Dividend, ifany, declared in the next Annual GeneralMeeting, will be paid within 30 days of the dateof declaration to those shareholders whosenames appear on the Register of Members onthe date of 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).

Under the depository system, the ISIN allottedto the Companys Equity Shares of face value ofRs.2/- each is INE499A01024.

(vi) Equity Share Price data for the year 2005-2006:

Equity Share Price on NSE and NIFTY Index

Month Share Price on NSE NIFTY Index

High Low High Low

2005

A pr il 488 .00 458 .00 2084. 90 1896. 30

M ay 564 .00 468 .50 2099. 35 1898. 15

June 560 .00 506 .00 2226. 15 2061. 35

Jul y 762 .10 525 .00 2332. 55 2171. 25

Augus t 934.90 720.00 2426.65 2294.25

September 972.85 820.00 2633.90 2382.90October * 2669.20 2307.45

Before

Sub-division 1068.20 910.00

After

Sub-di

dscl ar final

Documents