DSCL Janta doc 24.06.04.qxd - Morningstar

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Shri Ajay S. ShriramChairman & Senior Managing Director

Shri Vikram S. Shriram Vice-Chairman & Managing Director

Shri Rajiv SinhaDy. Managing Director

Shri Ajit S. ShriramDirector (Sugar)

Dr. S.S. Baijal

Shri Arun Bharat Ram

Shri Pradeep Dinodia

Shri Vimal Bhandari

Shri Sunil Kant Munjal

Shri D. Sengupta

Shri O.V. BundelluIDBI Nominee

Shri S.L. MohanGIC Nominee

Shri S.N. ChaturvediUTI Nominee

Company Secretary Shri V.P. Agarwal

Audit Committee Dr. S.S. BaijalChairman

Shri Arun Bharat Ram

Shri Pradeep Dinodia

Shri O.V. BundelluIDBI Nominee

Bankers Punjab National Bank

Bank of Baroda

Oriental Bank of Commerce

State Bank of India

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

Registered Office 6th Floor, Kanchenjunga Building,18, Barakhamba Road, New Delhi – 110 001.Tel. No. : (91) 11-23316801Fax No. :(91) 11-23357803Email : [email protected]

Stock Exchanges where theSecurities of the Companyare Listed

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

The Stock Exchange, MumbaiPheroze Jeejeebhoy Towers,Dalal Street, Mumbai – 400 001.

The Calcutta Stock ExchangeAssociation Ltd.,7, Lyons Range, Kolkata – 700 001.(The Company’s application for delistingof its Equity Shares is pending with theCalcutta Stock Exchange Association Ltd.)

(It is confirmed that annual listing fee has been paid bythe Company to each of the above Stock Exchanges)

Board of Directors

DSCL Janta doc 24.06.04.qxd 9/18/04 4:46 AM

Multi-business proxy© Rs. 920 crores asset Company (approximately US $ 200 million)

© A broad presence in the growing agri, plastics and chemicals businesses

© One of the lowest cost manufacturers of its products

© Reinforced by a vertical, lateral and backward linkage across its product lines

© Ventured into value-added businesses for future growth

Management© Headed by Mr Ajay Shriram and Mr Vikram Shriram

© A strong and independent Board of Directors

© Organised across Strategic Business Units - managed independently by

professionals

© Continuously enriched pool of skills and competencies

Performance © Revenue of Rs 1,410 crores, a 28 per cent growth over 2002-03

© Profit after tax of Rs 76.68 crores in 2003-04 (Rs 56.61 crores in 2002-03), a

35 per cent increase

© Merger of the sugar business into DSCL

Ethos© Excellence in financial performance

© Building a world-class organization

© Long-term relationships with all stakeholders

© Strong governance with corporate best practices

© Strong human resource practices; emphasis on Team Excellence

The essential DCM ShriramConsolidated Limited

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Products and their location of manufacture Location Products

Kota, Rajasthan (1) Fertilisers, Chlor-alkali, Stable BleachingPowder, Calcium Carbide, PVC resin, PVC compounds*, Cement and PVC Profiles.

Bharuch, Gujarat (2) Chlor-alkali

Ajbapur, Uttar Pradesh (3) Sugar

Rupapur, Uttar Pradesh (4) Sugar

Hyderabad, Andhra Pradesh (5) Hybrid seedsVietnam and Philippines (under a joint venture)

Gurgaon, Haryana (6) Innovative Polymer Application Centre*

Bhiwadi, Rajasthan (8) Fenesta Windows and Doors systems

Tonk, Rajasthan (7) Yarn

* under a 100% subsidiary

Captive power at all key location (124 MW)

Operations Per cent

Agri 65

Basic commodities 30

Value added 4

products/services

Others 1

Total 100

Business segmentrevenues - 2003-04

Business segment

revenues, 2003-04

DSCL Janta doc 24.06.04.qxd 9/18/04 4:31 AM

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DSCL is strengthening existingbusinesses while incubatingnewer and value-addedbusinesses for future growth.

From the Chairman and Vice Chairman's desk

Mr Ajay S Shriram and Mr Vikram S Shriram enunciate DSCL’s growth plan

The year 2003-04 was a satisfying one for the Company.

It was a year in which we benefited from the strategy that

your Company has been consistently practicing over the

years – ‘Strengthen our position in existing businesses while

incubating newer and value added business to provide future

growth’.

A sustained focus on cost rationalization and strengthening

competitive position, helped by a favourable price cycle in

our major businesses (plastics and chemicals), resulted in

your Company achieving an improved performance – a total

income of about Rs.1500 crs. and a profit after tax of Rs. 76

crs. (increase of 35% over the previous year).

As a continuation of this ongoing strategy, your Company is

implementing a capital expenditure programme of approxi-

mately Rs. 300 crs. over the next two years. This will:

© Provide volume growth in chemicals, PVC and cement at

a time when these businesses are going through an up-

cycle, while the increased power requirement will be

addressed by the augmentation of low cost captive power

generation capacity.

© Enhance our cost competitiveness across all businesses.

© Grow Hariyali Kisaan Bazaar, our newly

launched agri-retail initiative. The response

to its business model has been

encouraging, creating customer

excitement and a satisfactory financial

performance. In view of this, it is proposed

to increase the number of stores from 8 to

33 in two years.

© Grow Fenesta Building Systems, following

a positive response to its wimdow systems

launch in May 2003. In view of this, your

Company plans to extend it to an all India

presence.

The completion of these business-enhancing

programmes is expected to result in a

quantum jump in volumes and financial

performance.

We have all along recognized that people are

the key resources for the sucess of the

Company. We will, therefore, continue to give

highest priority to develop and strengthen the

human resources to meet future challenges.

Your Company continues to put strong

emphasis on environment, health and safety,

the results of which have received due

recognition. New initiatives are being

undertaken to further upgrade these areas.

We expect that these initiatives will provide

sustainable growth and lead to enhanced

value for all our stakeholders.

Friends, we deeply appreciate your support

and encouragement, which has contributed

to our attractive growth and hope that it will

continue to encourage our performance over

the coming years.

With best wishes,

The completion of these business-enhancingprogrammes is expected to result in a quantum

jump in volumes and financial performance.

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

Managing Director Sr. Managing Director

DSCL Janta doc 24.06.04.qxd 9/18/04 4:31 AM Page 4

visibility in the urban markets, while its ‘Shriram’ agri products

are directed towards rural community.

� Customer commitment: The Company’s commitment to

customers is reflected in its transparency, delivery and quality.

The Company’s website www.dsclpartners.com enables

transactions and customer interactions to be carried out

online.

The premium positioning of the Company’s products has

resulted in its products fetching a premium over competing

brands.

Ongoing de-risking A continuous de-risking is helping progressively insulate the

Company from diverse industry challenges. Over the years,

the Company has embarked on a number of initiatives

to do so:

� Improving cost position: The Company has continuously

focused on costs to enhance its competitive position, through

re-engineering as well as various technology and process

upgradations. This has enabled the Company to be amongst

the lowest cost producers in respective categories.

� Scaling up: The Company continues to build size at the

lowest cost to derive advantages of economies of scale and

costs. The manufacturing capacities have been aggressively

utilised to achieve the best efficiencies.

� Swing capability: Over the years, the Company has

developed a swing capability in its operations, wherein it is

able to change the product mix depending on the prevalent

market situation to derive the maximum value.

� Diversified portfolio: The Company’s product portfolio is

diversified, yet related. The diversification provides it with an

effective cushion against industry troughs, enhancing its

organisational stability.

� Fiscal conservatism: The Company’s preference for

internal accrual-driven expansion and the low cost

mobilisation of debt has strengthened its de-risking (please

read the financial section for more details).

� Controls: The Company’s control systems ensure a

proactive assessment of risks and steps to mitigate them.

These systems are periodically reviewed by external

professionals and upgraded continuously.

Human resources People represent the core of DSCL’s operations. Even as the

Company has been in business for over a century, it continues

to possess a refreshingly youthful spirit. This renewal and

rejuvenation is the result of a strong and relevant organization

structure, continuous training and development,

empowerment and working of cross-functional teams. The

benchmarking of its practices to the best standards of the day

has made it an exciting destination for achievers. Besides,

institution-building initiatives are pursued continuously across

the organisation. The Company recognises its employees as

key resource and has a long-standing and credible track

record in nurturing them.

� SBU structure: The SBU structure at DSCL, gives the

reqiured focus necessary to run the businesses and manage

performance effectively. This has led to a high level of

entrepreneurial ownership and involvement.

� Institution building: A strong culture of collaborative

working, team excellence, openness, transparency, sharing

and ethical working has been consciously developed through

an institution building exercise, including the use of cross-

functional teams and process labs.

� Progressive HR practices: The Company has always laid

an emphasis on training, including international exposure, for

continuous skill upgradation, recalibration to new

organizational and environmental needs. The Company’s

workforce can be characterized as committed and stable with

a high degree of varied skills and competencies.

� Excellent Industrial Relations: The Company has enjoyed

harmonious and constructive industrial relations track record

since inception. Its Industrial Relations policy is based on

fairness, firmness and concern for each person in the

organisation.

Information technologyIT continues to be the backbone of the organization.

The Company was amongst the first Indian companies to

implement SAP R/3 and mySAP.com in 1998 and 2002. Today,

all its processes are on SAP R/3, which allows the businesses

an effective decision-making support and adequate controls.

DSCL is a networked organization with an online connectivity

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Our strengths

Integrated and Cost CompetitiveIntegration is DSCL’s biggest value-driver.

Over the years, the Company has integrated its operations across two

levels – locational and products.

� Locational integration: DSCL’s 800 acre complex at Kota comprises

the manufacture of Fertilisers, PVC resins, Calcium Carbide, Caustic soda,

Chlorine, Hydrochloric acid, Sodium hypochlorite, Cement, PVC

compounds, PVC Profiles, Captive Power and Steam. This locational

integration enables each business to share utilities and facilities, thereby

reducing overheads and other costs.

� Product integration: Operations at DSCL are also integrated across

products. The efficient utilization of products and by-products from one

plant to other and captive power and steam have enabled DSCL to emerge

among the lowest cost manufacturers in respective categories in the

country.

This approach has resulted in a reduction in operating cost/sales ratio from

94% in 1990-91 to 83% in 2003-04.

Premium positioningBranding helps DSCL’s products beat the commodity clutter of a

competitive marketplace.

� Recall: Most of the Company’s products are marketed under the

‘Shriram’ brand and represent distinct product identities, facilitating a clear

recall. The brand represents quality and reliability.

� Distribution: The Company’s products are backed by a strong

marketing and distribution network, e.g. its agri network comprises over 500

wholesalers and 5000 retailers primarily concentrated in India’s northern

states.

� Urban-rural coverage: The Company’s brands address the urban-rural

spread. For instance, its ‘Fenesta’ Windows and Doors Systems enhance

3Operations at DSCLare highly integratedon products. Efficientutilization of productsand by-products fromone plant to other andcaptive power andsteam has enabledDSCL to be amongstthe lowest costmanufacturer inrespective categories,in the country.


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across 24 locations spread all over India and also with approximately 350

customers and vendors.

DSCL has been effectively using its IT network and facilities to its business

benefits from basic transactions to e-procurement, customer interaction, etc. The

focus is on to leverage the existing set-up more and derive even better values.

ProcessesDSCL is a process-driven organisation. Over the years it has strengthened

processes, which support the fulfillment of business objectives and goals. This

enables DSCL to handle diverse businesses with a unified focus, encourages

decentralisation and entrepreneurship, the sharing of information and best

practices while maintaining strong internal controls.

These processes extend from strategic planning to transaction processing, from

human assets to physical assets and from vendors to customers.

These processes have continuously been upgraded with inputs from the best

consultants and practitioners with a view to pro-actively respond to the emerging

requirements.

This approach prompted DSCL to go through a comprehensive Business

Process Re-engineering in early Nineties, adopt the best ERP package, upgrade

in accordance with SAP R/3 and continuously benchmark all its processes in line

with the best practices.

Environment, health and safetyEnvironment, health and safety has been a focus area at the Company. This

commitment has been recognized by way of several national awards. Over the

years, this concern has also been reflected in the following initiatives:

� Certifications: Company’s compliance has been validated by world-class

certifications - ISO 14001, OHSAS 18001 and SA 8000.

� Projects: The Company has initiated a number of water harvesting schemes

and extensive tree plantation programmes across several acres in and around its

manufacturing facilities in Kota, Bharuch, Ajbapur and Rupapur.

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Financial highlightsOverviewDSCL has achieved a strong competitiveness in all its businesses, stability in itsearning stream and a sustained growth in topline / bottomline while ensuring aprudent level of leverage. This was done in line with the following objectives:

Continuing growth in Profits and profitability

DSCL focussed on cost rationalisation, exiting unviable businesses, technologyupgradation, increasing capacities and incubating/building new businesses. Whilethe investments have been continuous, they have been within prudent limits,resulting in:

© Turnover growth of 11.9% (CAGR) over 1990-91/2003-04.

© PBDIT growth of 18.9% (CAGR) over the same period.

© Operating margin enhancement from 6.7% in 1990-91 to 16.7% in 2003-04.

Stronger financial structure

Even as the total assets of the Company increased from Rs. 97 crs. to Rs. 921 crs.during this period, the leveraging ratios improved as given below:

© Total debt to net worth reduced from 2.63 in 1990-91 to 1.44 in 2003-04.

© Total outside liabilities to net worth declined from 5.10 to 2.33, and

© Interest cover strengthened from 2.03 to 4.74.

Reduction in interest costs

While funding asset growth through prudent debt management, the Company kepta tight control on interest cost. As a result, the Company was able to:

© Finance its working capital requirements at ~25 basis points higher than MIBOR i.e. effectively at rates substantially lower than the prime lending rates of banks in India.

© Progressively replace high cost long-term debt with low cost debt to achieve an effective intrest rate of ~7.75% on 31.03.04.

OutlookDSCL expects to strengthen its financials through the following:

© Enhanced credit rating: It expects to address the higher cost of feedstock inthe Urea business and upgrade its technology in Chlor-alkali, leading to lowered business risk. This, along with a further improvement in the leverage, should lead to an enhanced credit rating in the medium term.

© Extended debt maturity: The Company expects to increase its average high cost debt tenure and enhance its liquidity.

© Reduced borrowings cost: It will continue to restructure high cost debt throughdiverse financial instruments.

DSCL’s processesenable it to handlediverse businesseswith a unified focus,encouragesdecentralisation andentrepreneurship, thesharing ofinformation and bestpractices whilemaintaining stronginternal controls.

While funding thegrowth in assetsthrough prudent levelof debts, theCompany has kept itsfocus on tight controlon interest costs.


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5-year financial summary

(Rs. Crores)

Year ended 31 March 2000 2001 2002 2003 2004

Gross sales 934.6 1055.4 1180.9 1376.0 1556.6

Net Sales

- Own Products 777.3 826.0 828.1 1059.6 1171.8

- Traded 87.8 156.8 280.4 235.0 291.6

- Total 865.1 982.8 1108.5 1294.7 1463.4

PBDIT 132.7 156.1 143.7 187.2 201.7

Interest 62.2 66.5 65.4 61.9 42.1

PBDT 70.1 89.6 78.3 125.3 159.7

Depreciation and miscellaneous expenses written off 40.8 44.5 47.4 54.8 55.7

PBT 30.2 45.1 30.9 70.5 104.0

Profit after current tax 29.9 41.3 28.5 58.7 95.7

Profit after deferred tax 29.9 41.3 11.2 52.7 75.6

Total funds employed/utilised 864.5 895.5 884.7 915.9 920.7

Share capital - equity 16.7 16.7 16.7 16.7 16.7

- preference 25.0 5.0 – – –

Net worth 295.1 324.9 227.3 272.5 333.0

Minority interest – – – 10.2 12.0

Deferred tax liability – – 84.6 89.5 109.5

Long term loans 410.4 419.3 401.8 403.0 344.7

Short term loans 134.0 146.2 171.0 140.8 121.5

Net fixed assets (incl. CWIP) 565.6 594.6 592.5 652.1 652.8

Net current assets 259.6 259.7 276.1 256.9 260.1

Investments 29.6 33.3 7.1 6.4 7.7

Miscellaneous expenditure (to the extent not written off) 9.8 9.9 9.0 0.5 –

Earnings per share (Rs.) 16.09 22.81 6.61 31.96 43.83

Dividend per share (Rs.) 4.00 4.25 4.25 4.50 6.00

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

Year ended 31 March 2000 2001 2002 2003 2004

Return on net worth 10.2 12.7 4.9 19.4 22.8

Return on capital employed 13.4 15.9 14.5 18.1 20.2

Operating margin 17.1 18.9 17.3 17.7 17.2

Capital employed turnover ratio 1.1 1.2 1.2 1.4 1.6

Interest to net sales % 7.7 7.6 7.6 5.7 3.5

PAT to net sales % 3.8 5.0 1.4 5.0 6.5

Long term debt/PBDIT 3.3 2.7 2.8 2.2 1.7

Long term debt/net worth 1.5 1.3 1.8 1.5 1.0

Total debt/net worth 1.9 1.8 2.5 2.0 1.4

Total outside liabilities/net worth 2.3 2.1 3.2 2.5 2.3

Interest cover 2.1 2.3 2.2 3.0 4.8

Net Sales for above purposes is for own products only

5-year ratios


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Over the foreseeable future, the Company expects to grow horizontally and

vertically – horizontally in its core commodity businesses and vertically in

value-added products and services. These initiatives will require investments

in the short run, funded largely through accruals, and will begin yielding higher

revenues and margins across the medium to long-term.

Over the next two years, the Company will invest Rs. 300 crs. across its various

businesses in capacity expansion, technology upgradation and growing value-

added products and services through the following initiatives:

Agri-businessThe Company expects to strengthen its competitive position in Urea and

expand Hariyali Kisaan Bazaar through proactive investments.

© Urea: DSCL intends to change its feedstock from Naphtha to LNG to

reduce costs and become more environment friendly.

© Hariyali Kisaan Bazaar: In its rural retail initiative, it plans to quadruple the

number of its Hariyali Kisaan Bazaar stores to 33, increasing its spread and

growing its volumes. It also plans to increase the offerings from each of its

stores.

Chemicals© Chlor alkali: The Company has embarked on a project to convert its

mercury cell technology at Kota to membrane cell and enhance its capacity

from 139 TPD to 200 TPD by 2006.

This will enhance energy efficiency

by 22 per cent and move to more

environment friendly technology.

PVCThe Company will expand its PVC

capacity from 115 TPD to 175 TPD

with a corresponding increase in its

carbide capacity, which will also

enhance the division’s cost

competitiveness.

CementWith an increased availability of sludge

through PVC/Carbide expansion, the

Company will increase its cement

capacity from 2.97 lac TPA to 4.0 lac

TPA, so as to drive volume cost

efficiencies.

PowerPower represents the heart of the

Company’s growth engine, especially

in view of the energy intensity of its

operations. The Company will

augment its power generation

capacity at Kota from 85 MW to 125

MW by 2006. The Company will be

able to generate power at

considerably lower cost than the

prevailing tariff of power sourced from

the state electricity grid. To secure its

raw material interests, the Company is

exploring lignite as a long-term

resource from mines in Rajasthan.

Fenesta Building SystemsThe launch of Fenesta Windows will be

extended from Northern India to

across India over the next two years, in

view of the housing construction and

infrastructure growth.

SugarSimultaneously, the Company is

evaluating options to further grow its

sugar business, a long-term growth

area.

Real EstateFollowing the Supreme Court order

directing the Company to shift its

textile operations from Delhi, the

Company has liberated 112 acres of

freehold property. This is being

developed as per the directives of the

Supreme Court through a joint venture

with an international Company, making

it one of the largest projects in the

Delhi region. DSCL will invest the

gains from this operation into its core

businesses.

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The road ahead Strategy5 The Company expects to

grow horizontally in itscore commoditybusinesses and

vertically in value-addedproducts and services.


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OverviewThe financial year 2003-04 was an excellent one for your Company. The

Company’s efforts to continuously improve the cost structures over the years

and the favourable commodity cycle helped it earn higher revenues and profits

during the year.

The strong demand growth in all the products has resulted in substantial

shrinking of the overhang of excess capacity in the country. In fact, for some

products like PVC, India turned into a net importer. Consequently, the prices of

almost all the products are on an upsurge leading to an improvement in margins

and capacity utilisations. Products like cement and sugar also recorded

improvement in prices and margins in the latter part of the year.

The up-trend in all these products is likely to last at least for a couple of years.

Your Company, therefore, has finalised a plan to increase capacities in the Chlor-

alkali, PVC, and Cement business along with adequate increase in power

generating capacity.

The Scheme of Arrangement for Merger of Ghaghara Sugar Ltd. into your

Company and de-merger of the Energy Services business into a separate

subsidiary, implemented during the current year, will facilitate the growth of the

sugar and energy services businesses and help them derive the benefits of

synergy and focus in operations.

Your Company has the following main business segments:

A Fertilisers

B Agri Merchandising

C Sugar

D Plastics

E Chemicals

F Other businesses

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Management Discussion &Analysis Report6

The Company’s effortsto continuouslyimprove the coststructures over theyears and thefavourable commoditycycle helped it earnhigher revenues andprofits during the year.

A detailed analysis of the different

businesses is provided below:

A) Fertiliser businessi) Industry structure

Urea is the pre-dominant fertiliser used

by farmers in the country with an annual

demand of approx. 19.6 million TPA and

growing historically at a CAGR of ~5

per cent. Indigenous supplies primarily

meet the total demand. One of the

oldest industries in India, the fertiliser

industry has 32 players with plants of

differing vintage and varied feedstocks

(coal, fuel oil, naphtha, gas etc.). The

industry is regulated by the central

government through a Retention Price

System and Sales allocation under

Essential Commodities Act (ECA). In

2002-03, the government announced a

long-term pricing policy for urea,

thereby removing the uncertainty, which

was prevailing over the last 5-6 years.

During the current year, the government

announced policies for :

© Conversion of feedstock to

LNG/natural gas.

© De-bottlenecking of capacities and

expansion.

© Setting up of new urea plants.

The issue of LNG/NG pricing, however,

still remains to be resolved which is

delaying the efforts towards conversion

of feedstock.

In accordance with the long-term

pricing policy, the government

implemented the first phase w.e.f. 1st

April 2003 whereby the retention price

has been fixed based on the Group

Average or Company’s Retention Price,

whichever is lower. The second phase

has been implemented w.e.f. 1st April

2004, whereby energy consumption

norms have been further tightened and

expressed in terms of energy

consumed instead of quantity of inputs.

The ECA Sales Allocation has been

reduced to 50 per cent and companies

are free to sell the balance 50 per cent

in whichever market they want within the

country.

The earlier government had indicated its

decision to privatise some of the public

sector fertiliser companies which may

trigger consolidation in the industry.

Some of the existing manufacturers are

also setting up JVs in foreign countries

for the manufacture of urea for the

Indian market.

ii) Industry outlook India is expected to keep recording

positive growth in fertiliser consumption

for years to come. Fertiliser is an

essential ingredient to build a stronger

agriculture base and maintain self-

reliance in food supplies for a growing

population – the two stated objectives

of government policy.

However, in view of uncertainties in the

government policies, this sector does

not present an attractive environment

for committing major investments.

At the same time, it is expected that an

existing cost effective fertiliser

manufacturer can continue to ensure

reasonable returns provided it takes

pro-active steps to keep reducing cost

of production and strengthening market

position through the building of long-

term and fair relationships with farmers.

iii) Business performance The fertiliser business experienced

strong demand during the year,

supported by good monsoons. The

sales quantity at 3.80 lac tonnes (last

year 3.81 lac tonnes) was the maximum

permissible under the retention price

system.


The market for fertilisers, however, will

continue to face the uncertainty caused

by government policy. Other agriculture

inputs provide an attractive opportunity.

However, a long-term outlook and the

building of strong farmer relationships

will be the key drivers of success in this

business.

iii) Business performance

The turnover of this business grew by 24

per cent (from Rs.235.03 crs. to

Rs.291.62 crs.) during the year. It also

recorded positive margins primarily due

to a healthy growth in the non-fertiliser

agri-business (seeds - 19 per cent,

pesticides - 31 per cent) and gains due

to rupee appreciation. It also provided

low cost working capital funds, thus

contributing to the reduction in overall

interest costs of the Company.

The product basket was further

enhanced with the addition of

micronutrients and soluble fertilisers.

The single super phosphate business

grew from 50,940 tonnes to 1,18,736

tonnes, by tying up of reliable supply

sources.

The DAP and MOP business continues

to suffer due to uncertain government

policy which is a major hindrance in

realising the full potential of these

products.

iv) Business strategy

The turnover of SSP and non-fertiliser

agri-inputs (seeds, pesticides,

micronutrients etc.) has gone up in the

last few years. These products have

been the major focus areas in this

business. These are higher margin

products and, therefore, the Company

wants to grow their volumes

aggressively.

C) Sugar business

i) Industry structure

India is the largest consumer of sugar inthe world. The present demand is about18.5 million tonnes and growing at ahistorical CAGR of 4 per cent perannum. With improvement in thestandard of living and the rapidevolution of the food processingindustry in India, sugar demand isbound to accelerate.

India is also the second largestproducer of sugar in the world. Thereare over 450 sugar factories of varyingcapacities and vintage. The ownershippattern is also quite varied: publicsector, cooperative sector and privatesector companies co-exist in thisindustry. Similarly, there is a tremendousdiversity in sizes. Large corporategroups with over 20,000 TCD capacitiesrub shoulders with small standalone

mills of less than 2,000 TCD capacities.Geographically, sugar is produced inalmost all the major Indian statesthough Maharashtra and U.P. contributeover 50 per cent to the country’sproduction. Tamil Nadu, Karnataka,Punjab and Andhra Pradesh are theother major sugar producing States.

Imports and exports are not verysignificant in India, except in the yearsof major deficit and surpluses. Theseoccur as a part of the sugar cyclecaused by cane arrears/climatic factorsi.e. Bumper crop > fall in sugar prices> inability of the mills to pay cane pricesto farmers > shortfall in sugarcaneproduction as farmers divert land toother crops.

Sugar is one of the largest agro-processing industries in India. Thefortunes of millions of farmers ride onthis industry. Moreover, sugar prices aresensitive from the common man’s pointof view. The sector, therefore, is highlyregulated, both by the central and stategovernments. It is the governmentwhich allots the area for cane plantationto mills, stipulates the cane prices anddecides how much sugar the mill cansell in the free market in a month.Besides, 10 per cent of sugar producedby a mill has to be sold at a fixed priceto the government’s public distributionsystem as a levy obligation.

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The production at 3.64 lac tonnes (last

year 3.93 lac tonnes) was lower due to

carried-over stock since last year’s

production was higher than the

maximum permissible sales.

The lower production, a shutdown of the

power plant for about two months due

to technical failure, and accounting of

higher fertiliser subsidy arrears in last

year’s results led to a lower profit of the

business compared to last year.

The government implemented the first

phase of the long-term fertiliser policy

w.e.f. 1st April 2003 and the second

phase w.e.f. 1st April 2004.

The second phase of the policy, which

further reduces energy consumption

norms will cause a further squeeze in

margins in the coming year in spite of

your Company being the lowest cost

producer in its group. The management

is taking steps to reduce the impact as

much as possible. The Company has

taken up a scheme for conversion of its

urea plant, from naphtha to dual feed

(i.e. gas or naphtha).

The Company continued its efforts to

strengthen its relationship with farmers

and dealers through various initiatives,

including further growth in agri-

extension activities through Shriram

Krishi Vikas Kendras, kisan melas,

dealer promotion schemes etc. All these

have helped in maintaining the premium

brand positioning in the marketplace.


During the last 35 years, the fertiliser

business of the Company has built

strong competitive advantages through

a premium positioning of Shriram brand

urea in north and central India (the

agricultural heart of the country) and a

4.2 lac MTPA naphtha-based plant

which is the lowest-cost urea producer

in its group (pre-1992 naphtha-based

plants).

These advantages enabled the

business to generate reasonable

returns despite pressures and

unfavourable developments. On the

marketing side, the Company intends to

further strengthen its relationships with

farmers and trade patrons. Your

Company continues to follow a cautious

approach towards committing major

investments in this sector.

B) Agri Merchandisingbusiness


With over two-thirds of the Indian

population engaged in agriculture,

coupled with the need to meet the

requirements of a large and growing

Indian population, the market for all

agriculture inputs -- fertilisers, seeds,

pesticides etc. – looks highly promising.

It will be characterised by an increasing

demand for valuable and better quality

agriculture inputs.

There are companies that started

business with one agriculture input and

over a period of time started offering the

complete basket through the same

channel. One of the major drivers of this

trend has been the leveraging of the

brand and distribution strength while

growing the overall volumes, which then

reinforces the brand and distribution

network - forming a virtuous cycle.

The other category of players has stuck

to its chosen field and provides only one

or two of the Agri inputs.

The central and state governments play

an important role for some of the inputs,

primarily fertilisers (DAP, MOP, SSP) and

their policies have an impact on the

business.

ii) Industry outlook

The demand for all agriculture inputs is

expected to keep growing at a healthy

rate carving an attractive profile for the

Indian market. Indian farmers have

shown great adaptability and

willingness to experiment with inputs to

increase agriculture productivity and

profitability.

18


2120

Both the sugar factories had short 2003-04 sugar seasons due to low availabilityof cane. The cane crush was thussignificantly lower than the normallyachievable levels. The recovery wasalso adversely affected due to excessrainfall and waterlogging in the caneareas.

The Company has intensified its canedevelopment efforts to reduce theimpact of these adverse developmentsin the next season (2004-05).

The year started with very

unremunerative sugar prices due to

surplus production and large carry over

stock. The drop in sugar production has

seen improvement in sugar prices in the

second half of the year. The prices of

by-products, i.e. molasses and

bagasse also moved up. This upward

movement in prices enabled the sugar

business of your Company to record a

segment revenue of Rs.197 crs. and

EBIT margin of Rs.20.20 crs.

The project for addition of powergenerating capacity and setting up oftransmission lines for the supply ofpower from Ajbapur factory to the powergrid is progressing and the Companyexpects to be in a position to supplypower in the 2004-05 sugar season.


Your Company has identified sugar asone of its growth areas and is aiming toemerge as one of the most efficient and

profitable sugar manufacturers in thecountry. Working closely with farmers toimprove cane production and canequality, and efficient factory operationsare key areas of focus for the Company.On the anvil is modular expansion ofsugar capacity in both the factories, inaccordance with the anticipated caneavailability. The Company is alsoaugmenting power generation capacityin order to supply power to the grid. Itwill explore the prospect ofalcohol/ethanol generation in duecourse.

D) Plastics business


The present demand of PVC resin is 9

lac MT which is expected to grow at a

rate of about 8 per cent per annum. PVC

is widely used in the country in various

applications such as pipes, cables,

footwear etc. There are however

significant application areas emerging,

such as automobiles, construction,

medical supplies and food packaging,

to name a few. The acceptance of PVC,

new uses and a stronger GDP growth

can further push the PVC demand

growth rate in the country.

There are five PVC manufacturers in the

country out of which Reliance and IPCL

account for 70 per cent of the total

capacity. The total production of PVC in

the country is about 8.8 lac tonnes and

the net imports are about 0.6 lac tonne

per year. Various manufacturers in the

country have announced plans to add

about four lac tonnes capacity during

2004-08. It is expected that even after

this capacity enhancement, India will

continue to be a net importer of PVC. All

the manufacturers, except your

Company, manufacture PVC through

the ethylene/EDC/VCM route. Your

Company on the other hand

manufactures PVC through the carbide

and acetylene route, a process widely

followed in China. This process

produces carbide as an intermediate

saleable product and creates immense

opportunity for the Company to simply

change the product mix between

Carbide and PVC based on prevalent

market situation to maximise value.

The landed cost of PVC imports is a

major determinant of India’s domestic

prices. Currently, PVC is subject to a

customs duty of 20 per cent, which is

expected to decline in the coming year.


PVC is experiencing buoyancy since

2003, led by a strong growth in demand

in China and other Asian countries. This

has resulted in an almost 50 per cent

increase in global prices of PVC during

the period.

It is expected that the buoyancy in the

PVC market will continue for the next

The recent order of the Hon’bleSupreme Court on cane prices hasprovided a new dimension to thealready difficult situation for the industry.We hope that both the state and centralgovernments will take a rational view inthe matter and initiate steps that help inbuilding a healthy and viable sugarindustry.

Over the last three to four years, surplusproduction and large inventory carry-over have been impacting the industry.The problem was further compoundedby the government’s increase ofsugarcane prices. It found favour withfarmers but disregarded the sugar mills’ability to afford such costs leading tohigh cane arrears. This, along withunfavourable climatic factors in some ofthe sugar cane producing States, hasled to a sharp drop in sugar productionin the sugar season of 2003-04. It isestimated that sugar production in thisseason will be about 15.5 million tonnescompared to over 20 million tonnes in

the last season. The sugar industry,incentivised by the government,exported over two million tonnes ofsugar in the last year. This has resultedin an increase in prices. In spite ofproduction declining sharply in a largenumber of mills, it is expected that theprofitability of sugar mills shouldimprove in the next couple of years.

Over the recent past, sugar mills havealso taken steps to become integratedplayers - producing power andalcohol/ethanol from by-products likebagasse and molasses, respectively.This would strengthen their operationsand improve sustainability over thelong-term.

ii) Industry outlookThe sugar season 2003-04 should endwith a reduction in carry over stock withthe industry, to bring it back to the levelsmaintained historically. It is expectedthat the country will continue to have ashortfall in sugar production vis-à-vis

demand for F.Y. 2004-05. This shouldresult in reasonable prices for sugar andthus reasonable returns to sugar mills,provided of course that the governmentfollows a rational policy on cane pricing.Thereafter, with the continuing increasein sugar demand in the country, aproduction excess is unlikely.

The process of evolving from a puresugar producer to an integrated sugarmill is likely to continue and strengthen.

iii) Business performance In accordance with the Scheme ofArrangement explained above, theoperations of the sugar business ofGhaghara Sugar Ltd. (GSL), a whollyowned subsidiary, have beentransferred to your Company w.e.f. 1stApril 2003.

The sugar season of 2003-04 (Octoberto September) is the first full season foryour Company though it also had part-operations in the previous season (Aprilto June 2003).

The performance of the sugar business during the year was satisfactory. The key operating data of both the factories is as follows:

Season 2003-04 Ajbapur RupapurStart of crushing 11.11.03 18.11.03Closure of crushing 03.04.04 04.04.04Cane crushed (Qtls.) 80,12,545.1 48,02,440.0Recovery 10.14% 9.54%Sugar produced (Qtls.) 8,16,345 4,60,100

Financial Year 2003-04Cane crushed (Lac / Qtls.) 116.79 69.02Sugar produced (Qtls.) 11,79,226 6,59,210Sugar sold (Qtls.) 11,94,186 3,22,111


2322


Domestic chlor-alkali industry has been

experiencing surplus capacity for the

last five to six years. With the growth in

domestic demand, the surplus capacity

has gradually been absorbed. The

industry has reached a capacity

utilisation of about 80 per cent in F.Y.

2004. It is, therefore, expected that the

industry will have a more favourable

demand-supply balance in the coming

years, even after accounting for the new

capacity addition by some large

manufacturers and conversion of

mercury plants to membrane

technology.

The domestic prices of chlor-alkali

products have seen an upward trend

since the last two years based on better

demand-supply balance and upward

movement in chlorine prices

internationally. The buoyancy in

international prices is expected to

continue in the coming years led by

chlorine prices. Caustic Soda prices on

the other hand may remain soft.

The domestic prices may face some

downward pressure due to a reduction

in import tariff and hardening of the

rupee. The costs are also likely to see

upward movement primarily due to an

increase in energy prices like coal and

furnace oil, salt prices and other costs

elements.


The chemicals business recorded 12

per cent growth in segment revenue

(from Rs.196.33 crs. to Rs. 220.06 crs.)

during the year, with production

volumes going up by 4.1 per cent (from

1,06,927 tonnes to 1,11,353 tonnes). In

spite of sharp volatility in caustic soda

prices, the average ECU prices for the

year were higher by about 8 per cent

resulting in a 41.7 per cent growth in

profit from this segment.

During the last year, furnace oil prices

were volatile due to an increase in the

prices of crude oil, leading to a higher

operation cost. Despite the reduction of

peak duty by 20 per cent, no cut has

been made in the duty on furnace oil

which continues at 20 per cent. This

adversely affects the margins in one of

our plants where power is based on

furnace oil.

The Hydrogen sales volume and price

declined due to increased competition.

The softening in prices has been seen

on account of several manufacturers

setting up compression capacity,

without any significant increase in

demand.

Our market share of stable bleaching

powder increased further in the year,

with sales going up from 7,248 tonnes

to 7,508 tonnes.

The Company closed the operations of

its poly aluminium chloride business

and has sold the entire plant during the

year.


Your Company is one of the lowest cost

and most efficient chlor-alkali

manufacturers in the country. It is also

the fourth largest in this industry. The

Company has been taking continuous

steps to improve its cost structures

through expansion and reduction in all

cost elements including energy. In line

with this, your Company is proactively

taking steps to implement a project to

convert its Chlor-Alkali Plant at Kota

from Mercury Cell to the latest

Membrane Cell based technology.

Simultaneously, the capacity of the plant

is being expanded from 139 TPD to 200

TPD. This project, expected to be ready

by the second quarter of 2005, would

further enhance the cost

competitiveness of this plant and

improve the profitability of chemical

operations.

F) Other businesses

Other businesses comprising some of

the older business i.e. cement and

textiles, and newer initiatives like Hariyali

Kisaan Bazaar and Fenesta building

systems have been discussed in this

segment.

couple of years, driven by the strong

demand and lack of new capacity

additions.

The Indian market has also seen strong

demand growth resulting in making

India a net importer of PVC. The prices

have also gone up in line with the

international trend in spite of

appreciation of the rupee and reduction

in customs duties. This trend is likely to

continue as India expects stronger PVC

demand growth in the coming years.


The buoyancy in the international and

domestic PVC market resulted in the

average prices for the year being higher

compared to last year, despite the

strengthening of the Rupee and a

reduction in customs duty.

The business experienced some cost-

push pressures particularly on charcoal

and coke but could still record a growth

in profit to Rs.47.22 crs. (last year

Rs.45.59 crs.), primarily due to a higher

sales quantity (35,554 tonnes vis-à-vis

34,616 tonnes last year) and higher

product prices. The sale of calcium

carbide during the year was 12,974

tonnes (last year 15,747 tonnes). The

prices were higher by ~7 per cent over

the last year.


Your Company has built a strong and

enviable position in the PVC business

over the last 40 years. Based on its

business position and future outlook ,

your Company is proposing to grow in

this business in a cost efficient manner.

Accordingly, the Company has taken up

for implementation a scheme to expand

the production capacity of PVC resin at

Kota from 115 TPD to 175 TPD along

with the proportionate increase in

carbide capacity. This is expected to be

operational in the third quarter of 2005.

E) Chemicals businessgroup


The chlor-alkali industry is a worldwide

commodity industry encompassing

products such as caustic soda (lye and

flakes/prills/solid), Chlorine,

Hydrochloric Acid and Hydrogen.

Caustic Soda, one of the main

products, is used in several large

industries like Paper, Aluminium,

Dyestuffs, Soaps and Detergents,

Textiles, Pharmaceuticals, DM Water

Plants etc. Chlorine, the other product is

increasingly used in industries like PVC,

Organic Chemicals, Pesticides, Water

Treatment etc.

The present demand of caustic soda

and chlorine in the country is about 18

lac tonnes and 16 lac tonnes

respectively. Historically, it has grown in

line with the GDP growth rate. The

industry is widely held with over 40

manufacturers. There is no single

dominant manufacturer. There are sharp

differences amongst the manufacturers

in terms of technology, vintage and

backward and forward integration.

Power forms almost two-thirds of the

direct cost of production. Thus, cost

and efficiencies of power is one of the

major differentiators across the industry.

About 35-40 per cent of the capacity in

the country is based on purchased

power and thus less competitive than

others.

Caustic soda is an internationally traded

product, both in liquid and flakes/prill

form. Chlorine on the other hand is not

traded directly, though there is large

international trade in chlorine based

products. The international prices of

caustic soda as well as the major

chlorine carriers are highly volatile. India

does import and export small volume of

caustic soda. In recent years, there has

been import substitution of caustic soda

and this trend is expected to continue.

Chlorine-based products like EDC are

also imported in large quantities in to

the country. Here too, in the last one or

two years, there has been import

substitution leading to domestic

sourcing of chlorine for EDC. However,

the trend is still to stabilise.


2524

implementing a scheme to increase the

power generating capacity at Kota by

40 MW to meet the anticipated captive

requirements consequent to increase in

chlor-alkali and PVC capacities and 7.5

MW at the sugar factories to supply

power to the grid.

IT initiativeYour Company and its subsidiaries

continue to use and benefit extensively

from the SAP package, including

Enterprise Resource Planning, Data

Warehousing and Customer

Relationship Management solutions.

During the year, your Company has

completed the IT-enablement of the

Fenesta Building Systems business by

establishing the required

communication and IT infrastructure at

the manufacturing and marketing

locations and rolling out SAP at these

locations. In Shriram Bioseed Genetics

India Ltd. (a subsidiary), e-enablement

of business processes is underway

through the implementation of Navision

ERP solution from Microsoft. An

elaborate and secure IT infrastructure

has also been created which shall help

in transacting and communicating

across all international locations.

Plans are underway to create an IT

infrastructure in Rupapur sugar factory

and the Hariyali Kisaan Bazaar.

With the objective of leveraging IT for

business benefit, your Company had

initiated the customer relationship

initiative of moving IT beyond the

organisation’s boundaries. More

customers have been added to our

customer website

www.dsclpartners.com. Your Company

has also undertaken the employee-

related initiative of

www.dsclemployeenet.com that is

helping enhance the productivity of its

sales staff.

Efforts at environmentalprotectionThe Company continues to accord a

very high priority to environmental

protection as part of its social

responsibilities and is committed to

substantially improving the environment

in and around its manufacturing units.

During the year, the water harvesting

scheme at SAC, Bharuch was operated

fully and substantial savings achieved.

Both the Kota and Bharuch units have

continued efforts in water conservation

and effluent reduction and achieved

further savings during the year.

Both chlor-alkali units have received

OHSAS 18000 certification.

As a further step towards environment

improvement, the Company has taken

up the project of converting the Kota

chlor-alkali unit from mercury

technology to membrane technology.

Internal control systemsand adequacyThe Company has adequate internal

control systems and procedures

commensurate with its size and nature

of business. The systems are designed

to ensure that all assets are

safeguarded and protected against

unauthorised use or loss and the

transactions are authorised, recorded

and reported correctly.

The use of SAP provides a high degree

of system-based checks and controls

and has helped in enhancing the

effectiveness and efficiency of the

Company’s internal control systems.

The internal control systems span the

entire gamut of operations of the

Company spanning all locations,

businesses and functions. During the

Hariyali Kisaan Bazaar

The Company had embarked on a

pioneering venture for the setting up of

a chain of rural retail stores in the last

financial year. A total of 8 stores have

been set up on a pilot basis in different

formats. As reported last year, the

response of farmers to this concept has

been encouraging.

Based on the feedback from customers,

additional categories in selected areas

are being planned to increase the

basket of offerings to rural customers. A

petrol/diesel pump has been added at

one of the locations, on a pilot basis, to

understand the economics and

synergise with the core proposition of

agri inputs. Pilots have also been run on

the output side, in the form of contract

farming, to provide higher value

addition to target customers and

improve the business model.

The learnings from the business are

being continuously assimilated and the

venture is being scaled up to the next

level. It is now proposed to set up an

additional 25 stores in the next 2 years.

Fenesta building systems

As reported last year, your Company

has been implementing a new project to

launch Fenesta Windows and Door

Systems in the country. The Company

had entered into a technology and

marketing collaboration agreement with

M/s. HW Plastics, UK for this purpose.

The Company launched Fenesta

Windows System in May 2003. The

Company has set up a fabrication shop

in Bhiwadi and is setting up more

fabrication shops at Mumbai and

Bangalore. It is also setting up a profile

extrusion plant at Kota. The logistics

and installation capabilities are also

being developed simultaneously.

The response to the Fenesta Windows

System has been highly encouraging

and the Company is taking steps to

rapidly grow this business.

Cement business

The production of cement during the

year was marginally higher at 2,95,101

tonnes against 2,94,317 tonnes in the

previous year. The prices picked up in

the last quarter of the year, enabled the

average realisation for the year to be

about 6.7 per cent higher than last

year.

The Company achieved a substantial

reduction in production costs and

rationalised distribution costs during the

year. Consequently, the business could

achieve substantial improvement in

margins.

Textiles

The operations of Swatantra Bharat

Mills, Tonk are constrained by outdated

technology and small capacity. The

Company has taken various steps to

reduce costs, improve efficiency and

change product mix, which has resulted

in better performance during the year.

DCM Silk Mills did not have any

manufacturing activities or business

operations last year.

Captive powerThe Company possesses captive power

facilities at all its manufacturing

locations to meet near total power

requirements. The total power

generating capacity is 124 MW -

including 85 MW coal-based at Kota, 24

MW furnace oil-based at Bharuch and

15 MW bagasse-based at the sugar

factories.

Captive power provides key competitive

strength to the Company in all its

businesses and thus continues to be a

main focus area. We are now


2726

year, the Company has further strengthened the

internal audit and risk management organisation

to give further impetus to the internal control

function.

The internal control systems are supplemented

by periodic reviews by external professional

firms. Audit findings and recommendations are

reviewed by the top management and the audit

committee of the Board.

Human resources / IndustrialrelationsThe Company has continued with its focus on

HR initiatives and strengthening of the HR

processes and systems during the year.

Training and development There has been a focused and structured effort

aimed at creating an all-round culture of learning

and development within the Company, which

would foster a continuous upgradation of skills

and competencies of employees. A variety of

training programmes have been conducted all

through the year. Along with the customised

training and development modules that address

individual and organisational needs, there have

been sessions on sharing of best practices and

learning from industry leaders to obtain an

update on the latest trends and thought

processes. It has also promoted professional

development and overall networking of

employees.

HR processes and systems The HR processes and systems encompassing

recruitment, performance management, training

and development, compensation management,

employee involvement and others have been

continuously strengthened and upgraded. The

Company has been able to derive considerable

benefit from the implementation of the SAP HR

module.

Organisation development has been pursued in

a very focused manner in the various

businesses and functions to deal with change

management and strengthen the renewal

processes of the Company. Attempts have been

made to institutionalise the improvements

coming out of the various organisational

development initiatives.

Industrial relationsThe organisation has had very harmonious and

cordial employee relations through the year.

DSCL is actively monitoring and managing the use of scarce natural resources,

helping it protect the environment.

DSCL’s environmental objectives

© To proactively comply and excel in all applicable environmental legislations and

regulations with due consideration to national and international protocols and

business charters relevant to our operations.

© To conserve all resources especially water, oil and energy to ensure a long-term

sustainability of the enviroment and minimise enviromental footprint of our

operations.

© To strengthen pollution prevention in all our activities and operations.

© To handle and dispose all inevitable wastes in an environmentally sound and

innovative manner.

© To enhance employee participation in environment protection.

© To keep its facilities and surroundings clean and green.

© To support and co-operate with regulatory agencies in national programmes.

© To consciously enhance the quality of life in surrounding habitats.

Environment management achievements

© A progressive decline in the consumption of energy, raw material and water.

© A lower discharge of effluents.

© Responsible ecological balance.

© A rigorous documentation and implementation discipline leading to world-class

certifications.

© The award of several national recognitions.

Energy conservation

Energy optimisation and conservation represent a critical business process in the

7A responsible corporate citizen

DSCL is aiming toensure long-termsustainability of theenvironment andminimise theenvironmental footprint of operations.


2928

8Community development

face of DSCL’s energy-

intensive Kota operations.

The formation of cross-

functional teams represents

the Company’s principal

initiative in rationalised

energy consumption. Over

the years, this teamworking

has translated into ongoing

energy audits, technology

upgradation, increased

equipment availability and a

proactive strong preventive

maintenance. These have

resulted in the following:

© Reduction in fuel, coal and

furnace oil consumption.

© Reduction in power

consumption.

© Reduction in feedstock

(naphtha) consumption is

being considered.

Water conservation

Water conservation also

continues to be a focus area

at DSCL through an ongoing

monitor of its consumption

and harvesting. The results of

this have been:

© Aggressive waste-water

re-use and recycling.

© Substantial decline in

water consumption.

© Substantial decline in

effluent generation.

Water harvesting

DSCL’s man-made reservoir

at Kota accommodates 4.5

lac cubic metres of water,

adequate to provide for 21

days of production. In

Bharuch, located in water-

starved Gujarat, the

Company’s sound water

collection and harvesting

system holds 20,000 cubic

metres that is effectively

deployed at its caustic soda

plant.

Ecological balance

Approximately 10 hectares

out of the 46.73 hectares at

the Company’s Bharuch

plant have been reserved for

green belt eco-development.

Over 75,000 tree saplings

have been planted in this

factory, covering 33 per cent

of its green belt. Tree survival

rate touched 95 per cent -

215,000 – in arid Kota. Some

100,000 trees have been

planted across the Ajbapur

and Rupapur sugar factories.

Certifications

DSCL’s Kota plant

represents best-in-line

environment practices,

reflected in world-class

certifications: ISO 14001 by

KPMG in 2001 and the

OHSAS (Occupational Safety

and Health Standards)

18001. The Company’s

Bharuch plant has also

received the OHSAS and SA

8000 certifications.

Commitment

Right from inception, DSCL has been aware of its commitment beyond factory

gates and office portals – to society at large. This responsibility recognises the

importance of the health and happiness of fellow human beings in the long-term

sustainability of its enterprise.

As a result, social responsibility is an integral part of DSCL’s corporate philosophy.

It has translated into a mosaic of meaningful contributions to society across long-

term developmental issues like health care, family planning, education, cultural

heritage and sport.

Agriculture extension activities

Shriram Krishi Vikas Kendras (SKVKs) impart scientific knowledge to farmers across

subjects like crop cycles and harvesting, helping them achieve richer harvests and

profitable returns. SKVKs have also been active in addressing the needs of the local

populace through the adoption of villages and krishi centres.

Water to the people

DSCL has periodically responded to water needs during periods of drought in and

around its factories through the digging of bore wells, the installation of submersible

pumps and the construction of water storage tanks, etc around Kota. For instance,

around Kota bore wells and overhead tank systems were provided in a dozen

villages; in Ajbapur and Rupapur, the Company helped finance more than 650 wells.

The Company also facilitated water supply to drought-hit villages of the Mandsana

region during the sweltering summer.

Infrastructure

The most effective means of development are those that involve partnerships

between the donor and the recipient. DSCL has partnered with the local community

DSCL recognises theimportance of thehealth and happinessof fellow humanbeings in the long-term sustainability ofany human enterprise.


31

Directors’ Report

The Directors have pleasure in presenting the 15thAnnual Report of the Company along with AuditedAccounts for the year ended 31st March, 2004.

Scheme of Arrangement

The Company implemented a Scheme of Arrangementapproved by the Hon’ble High Court of Delhi under Sections391-394 of the Companies Act, 1956 for demerger of itsEnergy Services (ESCO) business to its subsidiary DSCLEnergy Services Company Limited and for merger of itssubsidiary Ghaghara Sugar Ltd. into the Company w.e.f. 1stApril, 2003. This scheme has been given full effect in theAnnual Report and Financial Statements for the year ending31st March, 2004 and thus the data for previous year is notcomparable.

The Scheme of Arrangement will further improve the businesssynergies and focus and will strengthen the financials of theCompany.

Financial Highlights

The working results for the year ended 31.3.2004 and31.3.2003 are as under:

31.3.2004 31.3.2003 (Rs. in Crores) (Rs. in Crores)

Sales (Gross) 1,475.62 1,150.14Other Income 20.83 17.93Profit before depreciation, misc. expenditure written off, interest and tax 195.09 169.23Interest 41.39 48.99Gross Profit 153.70 120.24Depreciation & misc. expenditure written off 50.72 45.03Provision for current tax 7.92 11.85Provision for deferred tax 18.38 6.75Profit for the year after tax 76.68 56.61

31.3.2004 31.3.2003 (Rs. in Crores) (Rs. in Crores)

Transfer from Debenture Redemption Reserve 10.82 8.65Balance brought forward from previous year 77.56 47.88Net Profit available for appropriation 165.06 113.14

Appropriations– Debenture Redemption

Reserve 0.56 2.40– Proposed Dividends on

Equity Shares 10.05 7.54– Tax on Dividends 1.29 0.64– General Reserve 35.00 25.00– Balance Carried Forward 118.16 77.56

Dividend

Your Company has paid an interim dividend @ 20% on1,73,70,332 Equity Shares of Rs.10/- each for the year ended31st March, 2004.

Your Directors are pleased to recommend total dividend @ 60% (including the interim dividend paid earlier) on1,73,70,332 Equity Shares of Rs.10/- each for the year ended31st March, 2004.

Performance

The Company’s sales grew by over 28% from Rs.1150.14Crores in the previous year to Rs.1475.62 Crores during thecurrent year. The operating profit of the Company for the yearincreased to Rs 195.09 Crores from Rs.169.23 Crores lastyear, reflecting an increase of over 15%. The Company’s profit

30

to build vast stretches of roads

benefiting the entire region in and

around its cane-growing areas.

Education

For the well being of the community

around its manufacturing locations,

DSCL continues to support education

activities by running various schemes at

primary and professional levels with a

special focus on protecting the future of

the girl child. It has instituted

scholarships in various educational

institutions to encourage meritorious

students achieve the best in the fields of

engineering, medicine, agriculture and

management.

The Company invested in Sanskar

Pariyojana around its sugar operations

in UP. This integrated education

programme, conducted in collaboration

with the Vinobha Bhave Trust inculcated

Shiksha (education), Swasth (health),

Safaai (cleanliness) and Swabhimaan

(self reliance) in individuals. It deputed

trainers and officers across 10 villages

covering a population in excess of

10,000.

In Kota, DSCL instituted scholarship

programmes that encourage students

to pursue advance academic studies.

The infrastructure of a number of

schools in the plants’ vicinities were

strengthened through the introduction

of basic facilities, including safe

drinking water. The Company built a

school at Nimoda Mines for students up

to class 10.

In Bharuch, it funded a degree college

and instituted a scholarship programme

that extends to several villages around

its facility. In another scheme, to provide

financial security and protect the future

of young individuals, meritorious

students were awarded ‘fixed deposits’

every year that can be encashed after

he/she turns 18 or on the students’

marriage/higher education.

DSCL responded to earthquake-torn

Kutch region of Gujarat and re-built a

school in the location.

Sport

DSCL launched the DSCL Open

National Tennis Championship to

motivate sportspersons and help India

carve a niche in the international tennis

arena. In appreciation of the Company’s

ability to organise a tournament of such

a stature, the game was awarded the

National status in 1996. Since then, the

DSCL Open National Tennis

Championship has emerged as one of

lndia’s most prestigious tournaments,

playing host to thousands of players

annually. The prize money, the largest in

its category for a national tournament,

comprehensively covers the men’s,

ladies, boys and girls (under 18,16 and

14 respectively) categories.

Health

DSCL helped equip the Maharao Bhim

Singh Hospital at Kota with a state-of-

the-art intensive care unit called ‘The

Shriram ICU’ and private wards called

‘The Shriram Wards’. The Company

encourages and promotes family

planning as a national imperative,

running incentive schemes in the

villages surrounding its facilities. It also

provided medical assistance –

consulting, medicines and camps – to

select villages in eastern Uttar Pradesh

and conducted medical camps in

villages around Kota.


32

Companies Act, 1956 form part of thisreport. However, as per the provisions ofSection 219(1)(b)(iv) of the Act, the reportand accounts are being sent to all theMembers and the Trustee(s) for theholders of the debentures of theCompany, excluding the statementcontaining the particulars to be providedunder Section 217(2A) of the Act. Thisstatement shall be made available forinspection by any Member and/or anyTrustee(s) during working hours for aperiod of 21 days before the date of theAnnual General Meeting. Any Memberand/or the Trustee(s) interested inobtaining a copy of the said statementmay write to the Company Secretary atthe Registered Office of the Company andthe same will be sent by post.

Directors' Responsibility Statement

It is hereby affirmed that

1. in preparation of annual accounts, allapplicable accounting standards havebeen followed.

2. the accounting policies of theCompany have been consistentlyfollowed. Wherever circumstancesdemanded, estimates have beenmade that are reasonable andprudent so as to give a true and fairview of the state of affairs of theCompany at the end of the financialyear and of the profit or loss of theCompany for that period.

3. proper and sufficient care has beentaken for maintenance of accountingrecords in respect of assets of theCompany and proper internal controlsare in place for preventing anyirregularities or detection of frauds,and

4. annual accounts have been preparedon a going concern basis.

Conservation of Energy, TechnologyAbsorption and Foreign ExchangeEarnings/Outgo

The information required under Section217(1)(e) of the Companies Act, 1956read with the Companies (Disclosure ofParticulars in the Report of the Board ofDirectors) Rules, 1988 with respect tothese matters is appended hereto andforms part of this report.

Industrial Relations

The Company continued to maintainharmonious and cordial relations with itsworkers in all its Divisions, which enabledit to achieve this performance level on allfronts.

Acknowledgements

The Directors wish to thank customers,the Government authorities, financialinstitutions, bankers, other businessassociates and shareholders for thecooperation and encouragementextended to the Company. The Directorsalso place on record their deepappreciation for the contribution made bythe employees at all levels.

On behalf of the Board

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

New Delhi30th June, 2004

before tax for the year at Rs.102.98 Crores has grown by over36% as against Rs. 75.21 Crores achieved last year.

Improved performance was witnessed in Plastics andChemicals business segments, however the performance ofthe Fertilisers business was adversely affected due tobreakdown of one of the power plants of the Company duringthe last quarter of the year.

The performance of various businesses of the Company forthe year ended 31st March, 2004 has been stated in theManagement Discussion and Analysis Report, which appearsas a separate statement in the Annual Report.

Subsidiary Companies

During the year, DCM Shriram Infrastructure Ltd. became asubsidiary of your Company’s subsidiary – DCM ShriramCredit and Investments Ltd.

A statement pursuant to Section 212 of the Companies Act,1956 relating to subsidiary companies is attached to theaccounts.

In terms of approval granted by the Central Government underSection 212(8) of the Companies Act, 1956, the AuditedStatements of accounts and the Auditors’ Reports thereon forthe year ended 31st March, 2004 along with the Reports of theBoard of Directors of the Company’s Subsidiaries have notbeen annexed. The Company will make available thesedocuments upon request by any member of the Companyinterested in obtaining the same. However, pursuant toAccounting Standard AS-21 issued by the Institute ofChartered Accountants of India, Consolidated FinancialStatements presented by the Company includes the financialinformation of its subsidiaries.

Finance

During the year, the Company redeemed

– 3rd and final instalment of 13% Non-convertible Debentures(NCDs) of Rs.100/- each issued in 1994 aggregating toRs.13.47 crores, and

– 2nd instalment of 13% Non-convertible Debentures (NCDs)of Rs.100/- each issued in 1996 aggregating to Rs.2.02 crores.

During the year, the Company has prepaid 16,00,000 11%NCDs issued in 2000 aggregating to Rs.16 crores.

To leverage upon the prevailing low rates of interest and bringdown the overall cost of debt, your Company restructured/prepaid high cost loans during the year.

Your Company continues to enjoy the highest rating of A1+ forits short term borrowings.

Fixed Deposits

As on 31.3.2004, 212 deposits aggregating to Rs. 39.86 lacswere unclaimed. Since then 54 deposits amounting toRs.13.14 lacs have been claimed/renewed.

Delisting of Equity Shares of the Company at DSE andCSE

Presently, the Equity Shares of the Company are listed atMumbai, Kolkata and National Stock Exchanges. During theyear, the Company applied for delisting from the StockExchanges at Delhi and Kolkata. While, approval in this regardhas already been obtained from Delhi Stock Exchange, thesame is awaited from Calcutta Stock Exchange.

Auditors' Observations

The observations of Auditors as referred to in the Auditors'Report are suitably explained in Notes to the Accounts.

Corporate Governance

A separate section on Corporate Governance and a Certificatefrom the Auditors of the Company regarding compliance ofconditions of Corporate Governance as stipulated underClause 49 of the Listing Agreement with the Stock Exchanges,form part of the Annual Report.

Directors

Shri Pradeep Dinodia, Shri Ajit S. Shriram and Shri S.L. Mohanretire by rotation and are eligible for re-appointment.

Auditors

M/s. A.F. Ferguson & Co., Chartered Accountants, retire at theconclusion of the forthcoming Annual General Meeting andare eligible for re-appointment.

Personnel

The particulars of employees as per Section 217(2A) of the

33


34

(b) Additional investments andproposals being implemented forreduction in consumption of energy:

- Installation of heat exchanger in35MW power plant to utilise the heatenergy of LP heater drip condenserand gland steam condenser.

- Installation of thermo-compressor toutilise the heat energy of gland leakoff steam.

- Close circuiting of tertiary crusherand seal modification in Kiln circuit incement plant.

- Plans are on anvil to improve energyconservation in sugar mills.

(c) Impact of the measures at (a) & (b)above for reduction of energyconsumption and consequentimpact on the cost of production ofgoods:

The above mentioned energyconsumption measures which havealready been undertaken and themeasures under implementation willyield savings in energy consumptioncompared to the past years and willcontinue to reduce the cost ofproduction. The summarised positionof energy reduction achieved is asunder:-

- Installation of barometric condenserin 30 MW power plant has resulted inmarginal saving of 3rd Extractionsteam.

- The formulation and use ofoptimised carbon material blendsand replacement of old motors withenergy efficient motors has resultedin power saving.

- Reduction in cell power, uniform loaddistribution and replacement oflights & motors has resulted insaving of power.

- Reduction in specific powerconsumption to the extent of 4 Kwh/Tof cement.

- Steam consumption has reducedfrom 50.78% cane to 50.71% cane atthe stipulated crushing rate andsaving of steam is by 1% on cane.

(d) Total energy consumption andenergy consumption per unit ofproduction: Form A is annexed.

B. TECHNOLOGY ABSORPTION

(e) Efforts made in technologyabsorption: Form B is annexed.

C. FOREIGN EXCHANGE EARNINGSAND OUTGO

(f) Activities relating to exports;initiatives taken to increase exports;development of new export marketsfor products and services; andexport plans:

There was no export of Company'sown products during the year, asdomestic realisation was better thanexport realisation.

(g) Total foreign exchange used andearned

Rs./Crores2003-04 2002-03

- Total foreign exchange used 75.66 157.21

- Total foreign exchange earned 0.01 0.15

A. CONSERVATION OF ENERGY

(a) Energy conservation measurestaken:

Energy conservation has been animportant thrust area of themanagement and is beingcontinuously monitored. Importantspecific actions taken during this yearare:

- Installation of more efficientconditioned water pump to savepower consumed in CirculationCooling Water System of urea plant.

- Replacement of existing glandpacking of two cooling waterpumps with mechanical seal toreduce power losses.

- Installation of in-house designedbarometric condenser in 30MWturbine to utilise the heat energy oflow-pressure steam.

- Installation of the state of art DCSsystem in 35MW, which hasadvance control strategies forcontrolling the boiler parameters toobtain the consistency, ease ofoperation and to increase thesystem reliability.

- Partial replacement of low CVconventional coal with High CV petcoke.

- Replacement of old 125W HPMVlight fittings with high efficiency 70Wmetal Halide light fittings.

- Close circuiting of cement millseparating cement mill product intocoarse and fine particles andregrinding of coarse particles of aseparator in the mill again.

- Installation of variable frequencydrive in five anolyte circulationpumps.

- Installation of variable frequencydrive in purified brine pumps inchemical plant and PCC & Rakeelevator in sugar mills.

- Modification in passes of Juiceheaters to reduce steamconsumption.

- Automation of Milling ControlSystem, Bagasse CombustionControl System and SteamPressure Control System.

- Automation in continuous pan formolasses, water and steam feedsystem.

Annexure to the Directors’ Report

Information as required under Section 217(1)(e)read with the Companies (Disclosure of Particularsin the Report of Board of Directors) Rules, 1988.

35


3736

FORM A(See Rule 2)

Form for disclosure of particulars with respect to conservation of energy

This Year Previous Year2003 – 2004 2002 – 2003

B. CONSUMPTION PER UNIT OF PRODUCTION

1. Electricity

Urea (Kwh/MT) 174.6 105.3

PVC Resin (Kwh/MT) 0.0 4.8

Carbide Packed (Kwh/Ton) 0.0 7.3

C. Soda, SAC, Bharuch (Kwh/MT)

Internal Generation 2664.0 2692.0

Liquid Chlorine (Kwh/MT) 99.0 96.0

HCL (Kwh/MT) 3.0 4.0

Textiles – Yarn (Kwh/Kg.) 2.5 2.7

Sugar – Ajbapur (Kwh) 335.3 –

Sugar – Rupapur (Kwh) 324.1 –

2. Coal

Urea (MT/MT) 0.6 0.6PVC Resin (MT/MT) 4.4 4.6Carbide packed (T/Ton) 2.8 2.9C. Soda (MT/MT) 2.4 2.5Cement (MT/MT) 0.2 0.3SBP (MT/MT) 0.1 0.2

3. Furnace OilUrea (Kg./Ton) 7.3 6.8C. Soda, SFC, Kota (Kg./Ton) 10.1 21.8C. Soda SAC, Bharuch (Kg./Ton) 637.0 707.0Cement (Kg./Ton) 0.1 0.1

4. Others

Steam - Caustic Soda (MT/MT) – SAC Bharuch 1.3 1.3Bagasse (M.T.) – Ajbapur 2.5 0.0Bagasse (M.T.) – Rupapur 2.6 0.0

Notes :1. Different sources of energy are inter changeable.2. Wherever required, figures relating to previous year have been re-arranged.3. Figures of furnace oil for previous year were in ltrs.4. Figures of the current year are not comparable with those of previous year due to merger of Ghaghara Sugar Ltd. into the

Company – w.e.f. 1.4.2003.

FORM A(See Rule 2)

Form for disclosure of particulars with respect to conservation of energy

This Year Previous Year2003 – 2004 2002 – 2003

A. POWER AND FUEL CONSUMPTION

1. Electricity

(a) Purchased

Kwh (in lacs) 673.6 447.4Total Cost (Rs./lacs) 2828.9 1988.7Rate (Rs./Kwh) 4.2 4.4

(b) Own Generation

(i) Through Diesel GeneratorKwh (in lacs) 1904.8 1823.7Kwh generated per ltr. of Diesel/ Furnace Oil 4.4 4.0Cost (Rs./Kwh) 2.9 3.3

(ii) Through Steam Turbine Generator

Kwh (in lacs) 6453.2 6839.3Kwh generated per Kg of Coal 1.3 1.3Cost (Rs./Kwh) 1.9 1.9

(iii) Through Steam Turbine Generator (Bagasse)

Kwh (in lacs) 609.0 –Units generated per MT of bagasse 233.1 –Bagasse consumed (in MT/lacs) 2.61 –

2. Coal

Quantity (MT) 586891.0 623115.0Total Cost (Rs./lacs) 11184.3 11805.5Average rate (MT) 1905.7 1894.6

3. Furnace Oil

–– Quantity (M.T.) 46381.6 49257.0–– Total Cost (Rs./lacs) 4900.9 4925.2–– Average Cost (M.T.) 10566.5 9998.9

4. Others

L.D.O / H.S.D.Quantity (K. Ltrs.) 8.1 3.5Total Cost (Rs./lacs) 1.3 0.6Average Rate (Rs./K.Ltr.) 15615.4 15714.3


4746

(x) The Company does not have accumulated losses at theend of the financial year March 31, 2004. Further, theCompany has not incurred any cash losses during thefinancial year ended March 31, 2004 and in thepreceding financial year ended March 31, 2003.

(xi) According to the records of the Company examined byus and the information and explanations given to us, theCompany during the year has not defaulted in repaymentof dues to financial institutions, banks or debentureholders.

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

(xiii) The provisions of any special statute as specified underparagraph 4 (xiii) of the Order are not applicable to theCompany.

(xiv) As the Company is not dealing or trading in shares,securities, debentures and other investments, paragraph4 (xiv) of the Order is not applicable.

(xv) In our opinion and according to the information andexplanations given to us, the terms and conditions onwhich the Company has given guarantees during theyear for loans taken by others from banks or financialinstitutions are prima-facie not prejudicial to the interestof the Company.

(xvi) In our opinion and according to the information andexplanations given to us, the term loans taken during the

year have been applied for the purpose for which theywere obtained.

(xvii) According to the information and explanations given tous and on an overall examination of the balance sheet ofthe Company, we report that short term funds have notbeen used to finance long term investments and viceversa.

(xviii) As the Company has not made any preferential allotmentof shares during the year, paragraph 4 (xviii) of the Orderis not applicable.

(xix) During the year, since the Company has not issued anydebentures, paragraph 4 (xix) of the Order is notapplicable.

(xx) During the year, since the Company has not raised anymoney by way of public issue, paragraph 4 (xx) of theOrder is not applicable.

(xxi) Based upon the audit procedures performed andinformation and explanations given by the management,we report that no fraud on or by the Company has beennoticed or reported during the course of our audit for theyear ended March 31, 2004.

For A. F. FERGUSON & CO.Chartered Accountants

J. M. SETHNew Delhi PartnerMay 18, 2004 (Membership number: 17055)

(b) According to the information and explanations given to us and the records of the Company examined by us, there areno disputed dues of income-tax, wealth tax, custom duty and cess matters. The details of disputed sales-tax and excise dutydues are as follows:

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

Central Excise Law Excise duty Commissioner (Appeals) 15.69 1997-98

Sales Tax Laws Sales tax Additional Commissioner (Appeals) 244.53 1978-79, 1979-80, 1981-82 to 1984-85, 1986-87, 1988-89, 1991-92, 1992-93, 1994-95 and 1995-96

Annexure referred to in paragraph 3 of Auditors’ Report to theMembers of DCM Shriram Consolidated Limited on theaccounts for the year ended March 31, 2004.

(i) (a) The Company is maintaining proper records showingfull particulars including quantitative details and situationof fixed assets.

(b) The management has carried out a physicalverification of most of its fixed assets during the year. Inour opinion, the frequency of verification is reasonablehaving regard to the size of the Company and the natureof its fixed assets. The discrepancies noticed on suchverification were not material and have been properlydealt with in the books of account.

(c) In our opinion and according to the information andexplanations given to us, a substantial part of fixedassets has not been disposed off by the Company duringthe year.

(ii) (a) During the year, the inventories have been physicallyverified by the management except for inventory lyingwith third parties which have been confirmed by theparties. In our opinion, the frequency of verification isreasonable.

(b) In our opinion and according to the information andexplanations given to us, the procedures of physicalverification of stocks followed by the management arereasonable and adequate in relation to the size of theCompany and the nature of its business.

(c) On the basis of our examination of the record ofinventories, we are of the opinion that, the Company ismaintaining proper records of inventories. Thediscrepancies noticed on physical verification ofinventories as compared to book records were notmaterial and have been properly dealt with in the booksof account.

(iii) According to the information and explanations given tous, the Company has neither granted nor taken anyloans, secured or unsecured to/from companies, firms orother parties covered in the register maintained undersection 301 of the Companies Act, 1956. Accordingly,paragraphs 4 (iii)(b), (c) and (d) of the Order are notapplicable.

(iv) In our opinion and according to the information andexplanations given to us, there are adequate internal

control procedures commensurate with the size of theCompany and the nature of its business with regard to thepurchase of inventories and fixed assets and with regardto sale of goods. Further, on the basis of our examinationand according to the information and explanations givento us, we have neither come across nor have beeninformed of any instance of major weaknesses in theaforesaid internal control procedures.

(v) According to the information and explanations given to us,during the year, there were no transactions that need to beentered into the Register maintained under section 301 ofthe Companies Act, 1956. Accordingly, paragraph (v) (a)and (b) of the Order are not applicable.

(vi) In our opinion and according to the information andexplanations given to us, the Company has compliedwith the provisions of section 58A and section 58AA ofthe Companies Act, 1956 and the Companies(Acceptance of Deposits) Rules, 1975, with regard to thedeposits accepted from the public. As per informationand explanations given to us, no order under theaforesaid sections has been passed by the CompanyLaw Board on the Company.

(vii) In our opinion, the Company has an internal audit systemcommensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of accountmaintained by the Company in respect of productswhere, pursuant to the Rules made by the CentralGovernment, the maintenance of cost records has beenprescribed under section 209(1) (d) of the CompaniesAct, 1956 and are of the opinion that, prima facie, theprescribed accounts and records have been made andmaintained. We have not, however, made a detailedexamination of the records with a view to determiningwhether they are accurate or complete.

(ix) (a) According to the information and explanations givento us and the records of the Company examined by us,the Company has been regular in depositing undisputedstatutory dues including provident fund, investoreducation protection fund, employees’ state insurance,income-tax, sales tax, wealth tax, customs duty, exciseduty, cess and other material statutory dues applicable toit. We are informed that there are no undisputed statutorydues as at the year end outstanding for a period of morethan six months from the date they become payable.

AnnexureAuditors’ Report (Continued) Auditors’ Report (Continued)


5150

Schedules to the Accounts DCM SHRIRAMCONSOLIDATED LIMITED Schedules to the Accounts (Continued)

DCM SHRIRAMCONSOLIDATED LIMITED

As at As atMarch 31, 2004 March 31, 2003

Rs. Crores Rs. Crores

Authorised4,00,00,000 (2002-2003 - 4,00,00,000) Equity shares of Rs.10 each 40.00 40.0065,00,000 (2002-2003 - 65,00,000) Cumulativeredeemable preference shares of Rs.100 each 65.00 65.00

105.00 105.00Issued and subscribed1,73,70,332 (2002-2003 - 1,73,70,332) Equity shares of Rs.10 each, fully called-up 17.37 17.37

Less: Calls unpaid 0.62 0.62 16.75 16.75 16.75 16.75

NOTES :1. Of the issued, subscribed and paid-up capital, 57,55,076 Equity shares of Rs. 10 each represent the equity shares issued on

October 9, 1990 to the members of undivided DCM Limited in the ratio of one share for every four shares held by the membersin undivided DCM Limited, in terms of the Scheme of Arrangement effective from April 1, 1990, without payment being receivedin cash.

2. 6,00,000 Zero interest secured fully convertible debentures convertible into two equity shares of Rs.10 each fully paid-up and10,00,000 13% secured non-convertible debentures with detachable warrants (Series II) are reserved for allotment to thesubscribers of 20,00,000 fully/partly paid-up equity shares allotted pursuant to the exercise of the option by the holders ofwarrants (Series III) in terms of Letter of Offer dated August 12, 1994, upon the partly paid-up shares becoming fully paid-up.Each detachable warrant (Series II) entitles the holder to apply for one equity share of Rs.10 each at a premium of Rs. 80between 24 and 60 months from the date of allotment as may be decided by the Board of Directors or Committee thereof.

1. SHARE CAPITAL

As at Additions Deductions As atMarch 31, 2003 March 31, 2004

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

Revaluation reserve 1.08 – – 1.08Debenture redemption reserve 27.22 0.56 # 10.82 * 16.96Capital redemption reserve 25.00 – – 25.00Share premium account 88.75 – 9.71 ## 79.04General reserve 78.32 35.00 – 113.32Profit and loss account 77.56 40.60 – 118.16

297.93 76.16 20.53 353.56

* Transfer to profit and loss account on redemption# Transfer from profit and loss account## Adjustment pursuant to scheme of arrangement referred to in note 6 in schedule 14

2. RESERVES AND SURPLUS


Rs. Crores Rs. CroresSecuredDebentures 33.02 64.69Loans from banks on cash credit account 40.90 45.91Other loans 274.52 231.98

348.44 342.58UnsecuredDeposits

Fixed 13.92 14.55Others 22.54 19.71Interest accrued and due on deposits 0.16 0.10

Short term loans and advancesBanks* 40.16 30.00Others 33.00 –

Finance lease liability** 0.40 0.55110.18 64.91458.62 407.49

* Includes Rs. Nil (2002-2003 - Rs. Nil) pertaining to commercial papers. Maximum outstanding during the year Rs. 55.00 crores (2002-2003 - Rs. 55.00 crores)

** Represents present value of minimum lease payments. Also refer note 15 in schedule 14.

3. LOAN FUNDS

SECURED1. Debentures:

i) Debentures detailed below are secured by English first mortgage on the Company's property at Taluka Kalol, DistrictGandhinagar, Gujarat and first equitable mortgage/charge on immovable/movable properties, both present and future, ofthe Company's undertakings at Kota, Rajasthan, subject to certain prior charges created in favour of lenders for theirfinancial assistance and charges created/to be created in favour of the Company's bankers on stocks, stores and bookdebts for securing borrowings for working capital, and shall rank pari-passu in all respects with the security created or tobe created in terms of the stipulations of the respective Trust Deeds :

a) 20,00,000 (2002-2003 – 20,00,000) 11% Secured redeemable non-convertible debentures of Rs.100 each redeemablein three equal annual instalments commencing in case of 15,00,000 debentures from November 1, 2005 and in case of5,00,000 debentures from November 1, 2006.

b) Nil (2002-2003 – 16,00,000) 11% Secured redeemable non-convertible debentures of Rs.100 each. These debentureshave been prepaid during the year.

ii) Debentures detailed below are secured by English second mortgage on the Company's property at Taluka Kalol, DistrictGandhinagar, Gujarat and second equitable mortgage/charge on immovable/movable properties, both present and future,of the Company's undertakings at Kota, Rajasthan, (save and except stocks, stores and book debts) subject to andsubservient to the securities already created /to be created as first charge for any existing/future borrowings of the Companyand shall rank pari-passu with any other second charge that may be required to be created to secure any existing/futureborrowings.

a) Nil (2002-2003 – 40,82,315) 13% Secured redeemable non-convertible debentures of Rs. 100 each. The third and finalinstalment has been paid during the year (Rs. Nil due within a year, 2002-2003 – Rs. 13.47 crores).

b) Nil (2002-2003 – 50,000) 13% Secured redeemable non-convertible debentures of Rs. 100 each. The third and finalinstalment has been paid during the year (Rs. Nil due within a year, 2002-2003 – Rs. 0.17 crores).

c) 6,13,618 (2002-2003 – 6,13,618) 13% Secured redeemable non-convertible debentures of Rs. 100 each redeemable inthree equal annual instalments commencing from March 26, 2003. The second instalment has been paid during the year.(Rs.2.02 crores due within a year, 2002-2003 – Rs.2.02 crores).

iii) 11,00,000 (2002-2003 – 11,00,000) 11% Secured redeemable non-convertible debentures of Rs. 100 each redeemable in


5352

Schedules to the Accounts (Continued)DCM SHRIRAM

CONSOLIDATED LIMITED Schedules to the Accounts (Continued)DCM SHRIRAM

CONSOLIDATED LIMITED

three equal annual instalments commencing in case of 7,00,000 debentures from November 1, 2005 and in case of4,00,000 debentures from November 1, 2006. These debentures are secured by English first mortgage on the Company’sproperty at Taluka Kalol, District Gandhinagar, Gujarat and first equitable mortgage/charge on immovable/movableproperties both present and future, of the Company's undertaking at District Bharuch, Gujarat (save and except book debts)subject to certain prior charges created in favour of lenders for their financial assistance and charges created/to be createdin favour of the Company's bankers on stocks, stores and book debts for securing borrowings for working capital and shallrank pari-passu with existing charges created/to be created in favour of other first chargeholders.

2. Banks :

i) Loans from banks on cash credit account of Rs. 34.29 crores (2002-2003 Rs. 45.91 crores) are secured by hypothecationof stocks/stores and book debts of the Company's undertakings at Kota, Rajasthan and at District Bharuch, Gujarat. Theseloans are further secured/to be secured by a third charge by way of mortgage/hypothecation of all the immovable/movableproperties of the Company's undertakings at Kota, Rajasthan.

ii) Loans from banks on cash credit account of Rs. 6.02 crores (2002-2003 Rs. Nil) are secured by hypothecation ofstocks/stores and book debts of the Company's Ajbapur Sugar Complex, Uttarpradesh. These loans are further secured/tobe secured by a third charge by way of mortgage/hypothecation of all the immovable/movable properties of the Company'sAjbapur Sugar Complex, Uttarpradesh.

iii) Loans from banks on cash credit account of Rs. 0.59 crore (2002-2003 – Rs. Nil) are secured by hypothecation ofstocks/stores and book debts of the Company's Rupapur Sugar Complex, Uttarpradesh. These loans are further secured/tobe secured by a second charge by way of mortgage/hypothecation of all the immovable/movable properties of theCompany's Rupapur Sugar Complex, Uttarpradesh.

3. Other loans :

i) Rupee term loan of Rs. 96.06 crores (2002-2003 - Rs. 110.52 crores) and foreign currency loan of Rs.19.04 crores (2002-2003 - Rs. 10.80 crores) from banks/ financial institutions are secured by joint pari-passu first mortgage/charge and a rupeeterm loan of Rs. 20.00 crores (2002-2003 - Rs. Nil) from a bank is secured by way of second mortgage/charge, created /to be created on all immovable and movable assets, both present and future, pertaining to the Company's undertakings atDistrict Bharuch, Gujarat, (save and except book debts), subject to prior charges created / to be created in favour of theCompany's bankers on the stocks of raw materials, semi-finished and finished goods and consumable stores for workingcapital borrowings. (Rs.20.90 crores due within a year; 2002-2003 - Rs.14.48 crores)

ii) Rupee term loan of Rs. 54.32 crores (2002-2003 - Rs. 91.05 crores) from financial institutions/bank and foreign currency loanof Rs.45.42 crores (2002-2003 – Rs.19.61 crores) are secured by way of first mortgage/charge, created / to be created,ranking pari-passu on all immovable and movable assets, both present and future, (save and except book debts) of theCompany's undertakings at Kota, Rajasthan, subject to charges created or to be created in favour of the Company'sbankers on the stocks of raw materials, semi-finished and finished goods and consumable stores for working capitalborrowings (Rs.18.96 crores due within a year; 2002-03 - Rs.16.99 crores).

iii) Foreign currency loan of Rs. 1.10 crores (2002-03 Rs. Nil) from a bank is secured by way of first mortgage / charge, rankingpari-passu on all immovable and movable assets, both present and future (excluding existing power plant and book debts)pertaining to the Company’s Ajbapur Sugar Complex, Uttarpradesh, subject to charges created / to be created in favour ofthe Company’s bankers on the stocks of raw material, semi finished goods, finished goods and consumable stores forsecuring working capital borrowings of Ajbapur sugar complex (Rs. 1.10 crores due within a year, 2002-03 Rs. Nil).

(iv)Rupee term loan of Rs. 9.87 crores (2002-03 Rs. Nil) from a bank is secured by way of first mortgage / charge, ranking pari-passu, on all immovable / movable assets, both present and future (excluding existing power plants and book debts),pertaining to the Company’s Ajbapur Sugar Complex and Rupapur Sugar Complex, Uttarpradesh, subject to chargescreated / to be created in favour of Company’s bankers on the stocks of raw material, semi finished goods, finished goodsand consumable stores for securing working capital borrowings of Ajbapur Sugar Complex and Rupapur Sugar Complex(Rs. 0.50 crore due within a year )

(v) Rupee term loan of Rs. 19.00 crores (2002-03 Rs. Nil) from GE Capital Services India is secured by way of first exclusivemortgage / charge, created / to be created on existing power plants at Ajbapur Sugar Complex and Rupapur SugarComplex of the Company. (Rs. 4.00 crores due within a year)

(vi)Rupee term loan of Rs. 9.71 crores (2002-03 Rs. Nil) from Sugar Development Fund is secured by way of secondmortgage / charge, both present and future on all immovable / movable assets, created in favour of Central Government(Rs. Nil due within a year)

3. LOAN FUNDS (Continued)


Rs. Crores Rs. CroresDeferred tax liabilitiesDepreciation 120.13 101.79Compensation payable to employees 5.11 5.09Others 3.67 2.89

128.91 109.77Deferred tax assetsProvision for gratuity and leave encashment 9.15 6.87Provision for doubtful debts and advances 2.48 2.07Unabsorbed capital loss 2.87 2.90Others 3.53 1.35

18.03 13.19Deferred tax liabilities (net) 110.88 96.58

4. DEFERRED TAX LIABILITIES AND ASSETS

Long TermTrade Investments

Unquoted7,22,735 (2002-2003 - 7,22,735) Equity shares of Rs.10 eachfully paid-up (2002-03 - partly paid up Rs. 4 per share) of BharuchEco Aqua Infrastructure Limited 0.72 0.29

6. INVESTMENTS

GROSS BLOCK DEPRECIATION NET BLOCK

Description As at Transferred Additions Deductions Transferred As at Up to Transferred For Deductions Transferred Up to As at As atMarch 31, in on on hive off March 31, March 31, in on the year on hive off March 31, March 31, March 31,

2003 Merger ## of Energy 2004 2003 Merger ## of Energy 2004 2004 2003Services Services

Business ### Business ###

Owned assetsLand 23.54 4.79 3.97 – – 32.30* – – – – – – 32.30 23.54Buildings 42.63 28.87 4.03 0.86 – 74.67** 6.63 1.77 1.85 0.09# – 10.16 64.51 36.00Plant and machinery 584.26 123.95 14.22*** 9.74 0.24 712.45 217.73 21.63 45.31 4.67 0.07 279.93 432.52 366.53Furniture and fittings 13.67 1.65 2.12 0.64 0.28 16.52 8.69 0.64 1.60 0.45 0.11 10.37 6.15 4.98Vehicles 5.07 0.53 3.96 0.53 0.18 8.85 1.74 0.06 1.42 0.34 0.06 2.82 6.03 3.33Assets taken on finance lease #Vehicles 0.76 – – 0.03 – 0.73 0.30 – 0.10 0.03 – 0.37 0.36 0.46This year 669.93 159.79 28.30 11.80 0.70 845.52 235.09 24.10 50.28 5.58 0.24 303.65 541.87Previous year 633.65 – 38.47 2.19 – 669.93 200.07 – 36.29 1.27 – 235.09 434.84Capital work in progress (includingcapital advances) 70.86 35.00

612.73 469.84

* Includes Rs.12.04 crores (2002-2003 - Rs.10.00 crores) pertaining to lands situated at Jhagadia and Rupapur pending registration in favour of the Company.** Includes Rs.1.15 crores (2002-2003 - Rs.1.15 crores) pertaining to a flat situated at Mumbai, pending registration in favour of the Company.*** Includes Rs. 0.25 crore (2002-2003 - Rs.2.44 crores) on account of foreign exchange fluctuation.# Refer note 15 (a) and (b) in schedule 14.## Transferred in on merger under 'Gross Block' and 'Depreciation' represents the gross block and accumulated depreciation of fixed assets of erstwhile Ghaghara Sugar Limited.(Refer note 6 in schedule 14).### Transferred on hive off of Energy Services Business under 'Gross Block' and 'Depreciation' represents the gross block and accumulated depreciation of fixed assets of the Energy Services Business,

transferred to DSCL Energy Services Company Limited (Refer note 6 in schedule 14).

5. FIXED ASSETS




5554




Other InvestmentsGovernment SecuritiesUnquotedNational savings certificates [# 2002-2003 - Rs. 0.26 lac] 0.01 #Investment in Shares, Units, etc.Quoted26,500 (2002-2003 - 26,500) Equity shares of Rs.10 each fullypaid-up of The ICICI Bank Ltd. 0.12 0.12

3,16,510 (2002-2003 - 3,16,510) Units of Rs.10 each fully paid-up of KotakMahindra Mutual Fund (K Bond-wholesale Plan) allotted by way of bonus units 0.33 0.33

Nil (2002-2003 - 8,30,150) Units of Rs.10 each fully paid-up of Unit Trust of India* – 0.83

83,115 (2002-03 - Nil) 6.75% Bonds of Rs. 100 each fully paid up of 0.83 –Unit Trust of India*

2,34,917 (2002-2003 - 2,34,917) Equity shares of Rs.10 each fully paid-up of SRF Polymer Limited – –

Investment in SubsidiariesUnquoted60,01,208 (2002-2003 - 60,01,208) Equity shares of Rs.10 each fully paid-up ofDCM Shriram Credit and Investments Limited 0.22 0.22

83,51,196 (2002-2003 - 83,51,196) Equity shares of Rs.10 each fully paid-up ofDCM Shriram Aqua Foods Limited 4.22 4.22

Nil (2002-2003 - 2,85,83,333) Equity shares of Rs.10 each fully paid-up of Ghaghara Sugar Limited** – 70.53

87,50,007 (2002-2003 - 45,50,007) Equity shares of Rs.10 each fully paid-up ofShriram PolyTech Limited. 42,00,000 Equity shares alloted during the year. 43.57 22.57

29,19,058 (2002-2003 - 29,19,058) Equity shares of Rs.10 each fully paid-up ofShriram Bioseed Genetics India Limited 8.78 8.78

11,74,551 (2002-2003 - 11,74,551) Equity shares of US $ 1 each fully paid-up ofBioseeds Limited 14.41 14.41

CurrentNon-trade, Unquoted

2,019 (2002-2003 - Nil) units of Rs. 1000 each fully paid-up of Franklin Templeton Mutual Fund, purchased during the year. 0.30 –(Repurchase price - Rs. 0.30 crore)

5,70,538 (2002-2003 - Nil) units of Rs. 10 each fully paid-up of Standard Chartered Mutual Fund, purchased during the year. 0.60 –(Repurchase price - Rs. 0.60 crore)

Total 74.11 122.30Aggregate book value - Quoted 1.28 1.28

- Unquoted 72.83 121.02Aggregate market value - Quoted 2.80 1.91

* 83,115 6.75% Bonds of Rs. 100 fully paid-up of Unit Trust of India allotted in lieu of 8,30,150 units of Rs. 10 each of Unit Trust of India

** Refer note 6 of Schedule 14



6. INVESTMENTS (Continued)

Current AssetsInventories

Stores and spares* 35.02 25.87Stock-in-trade**

Raw materials 18.15 13.82Process stocks 3.77 1.52Finished goods 148.53 27.25

205.47 68.46Sundry debtors

Debts over six monthsSecured - considered good 0.05 0.06Unsecured - considered good 17.21 16.80

- considered doubtful 6.60 5.46Other debts

Secured - considered good 1.41 0.66Unsecured - considered good 163.84 107.01

189.11 129.99Less: Provision for doubtful debts 6.60 5.46

Bills discounted *** – 0.16182.51 124.37

Cash and bank balancesCash on hand 0.23 0.23Cheques in hand 26.97 2.06With scheduled banks on

Current account 13.89 5.32Deposit account**** 1.04 0.46

42.13 8.07

7. CURRENT ASSETS, LOANS AND ADVANCES



Loans and AdvancesUnsecured and considered good unless otherwise stated(refer note 12 in schedule 14)

Advances recoverable in cash or in kind or for value to be received Considered good 73.58 87.66Considered doubtful 0.30 0.30

Less: Provision for doubtful advances 0.30 0.3073.58 87.66

Deposits 8.51 8.12With customs, excise and port trust authorities 5.67 3.14Tax payments (net of provision for current tax) 2.65 8.76Interest accrued on investments and deposits 0.16 0.15

90.57 107.83520.68 308.73

* Stores and spares are valued at cost or under.** Stock-in-trade is valued at cost or net realisable value, whichever is lower.*** Relates to other debts - unsecured - considered good.**** Includes Rs. 0.42 crore (2002-2003 - Rs.0.42 crore) provided as margin for bank guarantees and letters of credit.


5756




Current LiabilitiesSundry creditors #

Total outstanding dues of small scale industrial undertakings* 0.70 0.34Total outstanding dues of creditors other than small scale industrial undertakings 227.43 51.03

Ex-gratia payable under voluntary retirement schemes** 2.31 2.58Interest accrued but not due on loans 4.18 2.93

234.62 56.88ProvisionsGratuity 20.68 16.62Leave encashment 4.85 2.95Proposed dividends 6.70 5.03Corporate dividend tax 0.86 0.64

33.09 25.24267.71 82.12

# Sundry creditors do not include any amounts outstanding as on March 31, 2004 which are required to be credited toInvestor Education and Protection Fund.

* Refer note 11 in schedule 14** Rs. 0.28 crore (2002-2003 - Rs.0.28 crore) due within a year.

8. CURRENT LIABILITIES AND PROVISIONS





1) Voluntary retirement scheme – 0.66Less : Written-off – 0.66

– –2) Catalysts – 4.72

Less : Written-off – 4.72– –

3) Expenditure incurred in connectionwith prepayment/resetting of long term loans – 3.36Less : Written-off – 3.36

– –4) Preliminary expenses 0.06 –

Less : Written-off 0.06 –– –

5) Cane development expenses 0.23 –Less : Written-off 0.23 –

– –6) Interest benefit on deferred sales tax liability 0.15 –

Less : Written-off 0.15 –– –– –

9. MISCELLANEOUS EXPENDITURE(to the extent not written-off or ajusted)

Income from Services 0.03 2.71

Other incomeDividend income (gross) from:

- non trade, long term investment* – 0.18- non trade, current investment** 0.69 0.49

Profit on sale of - non trade, long term investments – 0.47- non trade, current investments 0.04 0.22

Interest income# 2.40 7.87Rent 0.02 0.02Liabilities/provisions no longer required written back 1.02 0.87Exchange fluctuation 11.74 0.95Miscellaneous 4.89 4.15

20.83 17.93

* Income-tax deducted at source Rs. Nil (2002-2003 - Rs. 0.02 crore)** Income-tax deducted at source Rs. Nil (2002-2003 - Rs. 0.05 crore)# Income-tax deducted at source Rs. 0.25 crore (2002-2003 Rs.1.48 crore)

10. INCOME FROM SERVICES AND OTHER INCOME

Year ended Year endedMarch 31, 2004 March 31, 2003


Raw materials consumed 491.01 317.97Stores, spares and components 61.38 48.05Power, fuel, etc. 192.34 190.09Repairs

Buildings 3.08 2.54Plant and machinery 19.93 14.35

Salaries, wages, bonus, gratuity, commission, etc. 75.91 62.36Provident and other funds 7.54 6.55Welfare 4.51 3.67Rent 4.11 4.77Insurance 4.48 3.98Donation 0.24 0.30Rates and taxes 0.76 0.37Auditors' remuneration

Audit fee 0.30 0.22Tax audit 0.03 0.02Provident fund trust audit (# Rs. 0.20 lac) – #Other services 0.23 0.10Out-of-pocket expenses 0.02 0.02

Directors' fees 0.06 0.04Bad debts and advances written-off 0.55 0.20

11. MANUFACTURING AND OTHER EXPENSES




5958




Provision for doubtful debts and advances 1.29 0.16Research and development expenses 0.04 0.02Freight and transport 46.99 41.05Commission to selling agents 1.08 0.30Brokerage, discounts (other than trade discounts), etc. 1.57 3.23Selling expenses 13.97 9.01Loss on sale/write off of fixed assets 0.28 0.13Increase/(decrease) in excise duty on finished goods 9.72 0.02Miscellaneous expenses 37.00 30.13

978.42 739.65- Increase/+ Decrease in stocks of finished goods and process stocksClosing stocks 152.30 28.77Less : Stock transferred from Ghaghara Sugar Limitedpursuant to Scheme of Arrangement 82.74 –(Refer note 6 in Schedule 14)

69.56 28.77Less : Opening stocks 28.77 9.42

-40.79 -19.35937.63 720.30

11. MANUFACTURING AND OTHER EXPENSES (Continued)



Interest on debentures and other fixed loans 38.03 43.64Interest - others 3.36 5.35

41.39 48.99

12. INTEREST



Depreciation 50.28 36.29Miscellaneous expenditure written-off 0.44 8.74

50.72 45.03

13. DEPRECIATION/MISCELLANEOUS EXPENDITURE WRITTEN-OFF



1. Significant accounting policies

(i) Accounting conventionThe financial statements are prepared under the historical cost convention as modified to include the revaluation of landof one of the units of the Company. These statements have been prepared in accordance with applicable mandatoryAccounting Standards and relevant presentational requirements of the Companies Act, 1956.

(ii) Fixed assets and depreciation

a. Owned assetsFixed assets (other than land at one of the units of the Company which has been revalued and stated at the revaluedfigure) are stated at cost less accumulated depreciation. Cost of acquisition or construction is inclusive of freight,duties, taxes and incidental expenses and interest on loans attributable to the acquisition of assets up to the date ofcommissioning of assets. Capital subsidy received against specific assets is reduced from the value of relevant fixedassets.

The Company is following the straight line method of depreciation in respect of buildings, plant and machinery, andwritten down value method in respect of other assets.

Depreciation is provided at the rates as specified in schedule XIV to the Companies Act, 1956, except in the case of:

Depreciation Rate

- catalyst tubes 12.50%

- cell units 10.00%

- certain other plant and machinery items 16.67%

- office and other equipments 25.00%.

Depreciation is calculated on a pro-rata basis from the date of additions, except in the case of assets costing uptoRs.5000 each, where each such asset is fully depreciated in the year of purchase.

On assets sold, discarded, etc. during the year, depreciation is provided upto the date of sale/discard.

b. Assets taken on finance leaseFixed assets taken on finance lease on or after April 1, 2001 are stated at the lower of the fair value of the lease assetsor the present value of the minimum lease payments at the inception of the lease.

In respect of fixed assets taken on finance lease, when there is reasonable certainty that the Company will obtainownership by the end of the lease term, depreciation is provided in accordance with the policy followed by theCompany for owned assets.

(iii) Foreign currency transactionsTransactions in foreign currency are recorded at the exchange rate prevailing at the time of transaction. In the case ofliabilities incurred for the acquisition of fixed assets, the loss or gain on conversion (at the rate prevailing at the year endor at the forward rate where forward cover has been taken) is included in the carrying amount of the related fixed asset.Current assets and liabilities (other than those relating to fixed assets) are restated at the rate prevailing at the year endor at the forward rate, where forward cover has been taken and the difference between the year end rate and the exchangerate at the date of the transaction is recognised as income or expense in the profit and loss account.

In respect of transactions, covered by forward cover contracts, the difference between the contract rate and the rate ondate of transaction is recognised as income or expense in the profit and loss account over the life of the contract.

(iv)InventoriesStores and spares are valued at cost or under. Stock-in-trade is valued at cost or net realisable value, whichever is lower.The bases of determining cost for different categories of inventory are as follows:-

Stores, spares andraw materials – Weighted average rate.

Process stocks and – Direct cost plus appropriate share of overheads after giving credit for other income andfinished goods excluding certain expenses like ex-gratia and gratuity.

By-products – At estimated realisable value

(v) Customs dutyCustoms duty payable on finished goods, raw materials, stores, spares and components is accounted for on theclearance of goods from custom warehouses.

14. NOTES TO THE ACCOUNTS


6160




(vi) Revenue recognitiona. Revenue in respect of sale of products is recognised at the point of despatch to customer.

b. Under the retention pricing scheme, the Government of India reimburses to the fertiliser industry, the difference betweenthe retention price based on the cost of production and selling price (as realised from the farmers) as fixed by theGovernment from time to time, in the form of subsidy. In the case of increase in input costs/expenses/capital relatedcosts, etc. for which retention price is yet to be notified, the Company, based on its assessment of ultimate collectionwith reasonable degree of certainty at the time of accrual, takes credit for the same as income for the year.

(vii) InvestmentsLong term investments are stated at cost unless there is a permanent fall in value thereof. Current investments are statedat cost or net realisable value whichever is less.

(viii) Retirement and other benefitsThe Company has the following retirement schemes :

- Superannuation fund for officers

- Provident fund for all employees

The contributions to the above funds are charged to revenue each year.

Provision for gratuity and leave encashment determined on an actuarial basis at the end of the year are charged torevenue every year.

(ix) Research and developmentThe revenue expenditure on research and development is charged as an expense in the year in which it is incurred. Capitalexpenditure is included in fixed assets.

(x) Income-taxThe Income-tax liability is provided in accordance with the provisions of the Income-tax Act, 1961.

Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference betweentaxable income and accounting income that originate in one period and are capable of reversal in one or more subsequentperiods.

This Year Previous Year(Rs. Crores) (Rs. Crores)

2. (i) Contingent liabilities not provided for:Claims (excluding claims by employees where amount not ascertainable) not acknowledged as debts 15.28 7.63Bills/cheques discounted 1.35 1.20In respect of partly paid equity shares – 0.43

(ii) Capital commitments (net of advances) 40.18 9.87

(iii) Guarantees given to financial institutions, banks and other parties in respectof loans availed by subsidiaries and other parties:Amount guaranteed 18.10 82.23Amount of loans outstanding 7.90 80.18

14. NOTES TO THE ACCOUNTS (Continued)

3. In accordance with past practice, the Company has taken revenue credits aggregating Rs. 10.60 crores (2002-2003 - Rs. 6.75crores) for claims, which are pending notification/final acceptance by ‘Fertiliser Industry Coordination Committee’ (FICC),Government of India, in pursuance of the Retention Price Scheme administered for nitrogenous fertilisers. Necessaryadjustment to revenue credits so accrued will be made on issuance of notification by FICC or final settlement thereof.

4. Pursuant to the Scheme of Arrangement as approved by the High Court of Delhi by its order dated April 16, 1990 undersections 391/394 of the Companies Act, 1956, the assets and liabilities of certain units of undivided DCM Limited weretransferred to the Company with effect from April 1, 1990, being the effective date.

In terms of the Scheme of Arrangement there are various issues relating to income-tax, sales tax, etc. arising/arisen out of thereconstruction arrangement which will be settled and accounted for as and when the liabilities/benefits are finally determined.The effect of these is not ascertainable at this stage.

14 NOTES TO THE ACCOUNTS (Continued)

5. Land at Najafgarh Road, New Delhi, is jointly held and possessed in equal proportion with M/s. Irama Estates Limited,Calcutta, pursuant to the Agreement between the parties.

6. Pursuant to the Scheme of Arrangement (Scheme) under section 391 to section 394 of the Companies Act, 1956, approvedby the Hon’ble High Court of Delhi vide its order dated May 5, 2004, which became effective on May 14, 2004 on filing of thecertified copy of the Orders of the High Court in the office of the Registrar of Companies, w.e.f April 1, 2003, the AppointedDate of the Scheme :

a. (i) the Energy Services(ESCO) business of the Company has been transferred to and vested in DSCL Energy ServicesCompany Limited(DSCL Energy), as a going concern on slump sale basis. DSCL Energy, in terms of the Scheme, hasto discharge the liability by issuing 17,33,200 equity shares of Rs. 10/- each at par aggregating to Rs. 1.73 crores.

(ii) As a result of the above, the following net assets of the ESCO business have been transferred to DSCL Energy

Rs. Crores

Assets

Fixed assets 0.46Sundry debtors 1.27Cash and bank balances 0.02Loans and advances 0.11

Total 1.86Liabilities

Current liabilities and provisions 0.13

Total 1.73

In terms of the Scheme, all gains and losses, if any, relating to this business, arising subsequent to the appointed datebut pertaining to the period prior thereto would have to be borne by the Company.

b. (i) the entire business of Ghaghara Sugar Limited(GSL), a wholly owned subsidiary of the Company, engaged in themanufacturing of sugar has been transferred to the Company.

(ii) the amalgamation has been accounted for under the ‘pooling of interests’ method, being an amalgamation in thenature of merger, as prescribed by the Accounting Standard-14, Accounting for amalgamations, issued by the Instituteof Chartered Accountants of India. Accordingly, the following assets and liabilities of erstwhile GSL have been takenover at their book values as at April 1, 2003 :

Rs. Crores

AssetsFixed assets 138.00Investments 0.01Inventories 85.54Sundry debtors 3.20Cash and bank balances 3.70Loans and advances 2.07Miscellaneous expenditure (to the extent not written off) 0.44Deferred tax assets 4.08

Total 237.04Liabilities

Current liabilities and provisions 28.84Loans 147.38Total 176.22Net Assets 60.82

In terms of the Scheme, the accumulated losses of GSL aggregating Rs. 9.43 crores as at April 1, 2003 together withthe excess of book value of equity investments held in GSL over the aggregate of GSL’s share capital and sharepremium account amounting to Rs. 0.28 crore as at April 1, 2003 has been adjusted from "Share premium account"in schedule 2.


6362




7. Advances recoverable in cash or in kind or for value to be received in schedule 6 include Inter-corporate deposits aggregatingRs.0.50 crore (2002-2003 - Rs. 1.50 crores).

8. Segment reportingA. Business segments :

Based on the guiding principles given in Accounting Standard AS-17 "Segment Reporting" issued by the Institute ofChartered Accountants of India, the Company’s business segments include: Fertilisers (manufacturing of urea), Plastic(manufacturing of polyvinyl chloride, carbide and compounds), Chemicals (manufacturing of chlor alkali products), TradedProducts (trading of DAP, MOP, SPHS, other fertilisers, seeds, pesticides), Sugar (manufacturing of sugar products),Others (textiles, agri retail business and manufacturing of cement).

B. Geographical segments :Since the Company’s activities/operations are primarily within the country and considering the nature of products/servicesit deals in, the risks and returns are same and as such there is only one geographical segment.

C. Segment accounting policies :In addition to the significant accounting policies applicable to the business segments as set out in note 1 of schedule 14"Notes to the Accounts", the accounting policies in relation to segment accounting are as under: a) Segment revenue and expenses :

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segmentrevenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities :Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors,inventories and fixed assets, net of allowances and provisions which are reported as direct offsets in the balancesheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.Segment assets and liabilities do not include deferred income taxes. While most of the assets/liabilities can be directlyattributed to individual segment, the carrying amount of certain assets/liabilities pertaining to two or more segmentsare allocated to the segments on a reasonable basis.

c) Inter segment sales :Inter segment sales between operating segments are accounted for at market price. These transactions are eliminatedin consolidation.


D. Information about business segmentsFertiliser Plastics Chemicals Traded Products Sugar Others Elimination Total

Particulars This Previous This Previous This Previous This Previous This Previous This Previous This Previous This PreviousYear Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year

1. RevenueExternal sales 445.50 437.45 206.48 202.20 220.06 196.33 291.62 235.04 217.73 – 94.23 79.12 1475.62 1150.14Income from services 0.03 0.31 2.40 0.03 2.71Inter segment sales 0.95 0.28 16.69 17.18 1.01 0.12 0.31 – 0.01 -18.97 -17.58Total revenue 446.45 437.73 206.48 202.20 236.78 213.82 292.63 235.16 218.04 – 94.24 81.52 -18.97 -17.58 1475.65 1152.85

2. ResultsSegment results 39.49 56.92 47.22 45.59 60.38 42.60 0.31 -1.25 20.07 – -2.46 -4.30 165.01 139.56Unallocated expenses(net of income) 20.64 15.36Operating profit 39.49 56.92 47.22 45.59 60.38 42.60 0.31 -1.25 20.07 – -2.46 -4.30 144.37 124.20Interest expense 41.39 48.99Income taxes

- Current 7.92 11.85- Deferred 18.38 6.75

Net profit 76.68 56.613. Other Information

A. AssetsSegment assets 215.46 188.38 86.12 80.77 254.08 274.47 76.56 50.49 309.83 – 128.25 92.10 1070.30 686.21Unallocated assets 137.22 214.66

Total assets 215.46 188.38 86.12 80.77 254.08 274.47 76.56 50.49 309.83 – 128.25 92.10 1207.52 900.87B. Liabilities

Segment liabilities 44.91 22.18 9.91 10.10 12.43 11.48 119.14 11.96 43.97 – 17.29 9.73 247.65 65.45Share capital and reserves 370.31 314.68Secured and unsecured loans 458.62 407.49Unallocated liabilities 130.94 113.25

Total liabilities 44.91 22.18 9.91 10.10 12.43 11.48 119.14 11.96 43.97 – 17.29 9.73 1207.52 900.87C. Others

Capital expenditure 5.04 6.33 2.14 7.97 4.93 6.62 0.11 0.02 15.98 – 29.68 7.71Depreciation 10.96 9.03 5.16 4.81 21.56 18.33 0.03 0.01 7.89 – 3.74 3.45Non cash expenses other than depreciation 0.01 4.86 0.55 0.15 2.49 3.05 0.05 0.16 0.44 – 0.21 0.17

Rs. Crores

This Year Previous YearRs. Crores Rs. Crores

Profit after taxation as per profit and loss account 76.68 56.61Less : Preference dividend and dividend tax there on – –Profit attributable to equity shareholders 76.68 56.61Weighted average number of equity shares outstanding 16746332 16746332Basic and diluted earnings per share in rupees (face value – Rs.10 per share) 45.79 33.81


9. Earnings per share

10. During the year, the Company on a review of the estimated useful life of certain assets and on the basis of past experience,revised the rates of depreciation in respect of plant and machinery from rates as per Schedule XIV of the Companies Act,1956 to rates based on their estimated useful life or rates as per Schedule XIV, whichever is higher. Consequently, thedepreciation charge for the year is higher by Rs. 3.94 crores and the profit after tax for the year is lower by Rs. 2.53 crores.

11. Sundry creditors include Rs. 0.70 crore (2002-2003 - Rs. 0.34 crore) due to suppliers covered under the "Interest on DelayedPayment to Small Scale and Ancillary Industrial Undertakings Act, 1993", to the extent such parties have been identified fromthe available information. The Company has not received any claim for interest from any supplier under the said Act.

The names of Small Scale Industrial Undertakings to whom the Company owes amounts outstanding for more than 30 daysas at March 31, 2004 are M/s. L.S.Chemical & Pharmaceuticals, M/s. Gohil Dychem Corporation, M/s. J. M. Machinery, JyotiDivya Fabrication Pvt. Ltd, CA Polytech Pvt. Ltd, Kay Kay Industries, Kwality Engineering Works, Rachitech Engg. Pvt. Ltd,Sadhna Founday & Engg. Co, Sintech Precision Products Ltd., Three Star Engg. Works, Waltech India.

12. Loans and advances include following amounts due from subsidiaries:

Amount outstanding Maximum amount outstandingas at year end during the year

Name of the party This year Previous year This year Previous year


1. Ghaghara Sugar Limited# – 20.10 – 86.452. Shriram PolyTech Limited 14.53 32.48 35.27 43.343. DCM Shriram Credit & Investments Limited 15.79 6.55 16.31 14.584. Shriram Bioseed Genetics India Limited 0.09 3.45 3.78 14.865. DCM Shriram Aqua Foods Limited – – 0.07 –6. DSCL Energy Services Company Limited 2.21* – 2.21* –

Total 32.62 62.58

* Includes consideration of Rs. 1.73 crores recoverable in the form of equity shares referred to in note 6.

13. Amount of borrowing costs capitalised to fixed assets during the year Rs. Nil (2002-2003 - Rs. 0.84 crore).

14. Related party disclosures under Accounting Standard 18 :

A. Name of related party and nature of related party relationship

Subsidiaries : Shriram PolyTech Limited, Ghaghara Sugar Limited#, DCM Shriram Credit and Investments Limited, DCMShriram Aqua Foods Limited, DSCL Energy Services Company Limited, DCM Shriram International Limited, DCM ShriramInfrastructure Limited, Bioseed Research, Philippines, Inc., Bioseed Research Vietnam, Bioseed Genetics, Vietnam,Bioseed Research India Private Limited, Bioseeds Limited and Shriram Bioseed Genetics India Limited.

Key Managerial Persons, their relatives and HUFs : Mr. Ajay S.Shriram, Mr. Vikram S.Shriram, Mr. Rajiv Sinha, Mr. AjitS.Shriram, Mrs. Divya Sinha (relative of Mr. Rajiv Sinha), M/s. Ajay S.Shriram (HUF), M/s. Vikram S.Shriram (HUF).

# subsidiary in previous year


6564





Subsidiaries

Type of Transaction This Year Previous Year

Sale of finished and other goods 25.99 22.73Interest recovered 1.07 7.00Expenses recovered 1.80 1.28Purchases of finished goods 9.61 9.79Interest paid on leased assets 0.09 0.13Expenses paid 1.06 0.84Lease rental paid 0.84 1.38Advance lease rentals 0.09 0.20Fixed assets purchased 0.17 2.09Conversion of loans and advances into equity 21.00 12.50Conversion of debentures into shares – 10.00Investment in shares – 52.21Loans and advances (net) 9.21 (10.77)Guarantees given during the year 2.00 49.62Advances taken – 0.06Balance outstanding as at the year endLoans and advances 32.62 62.58Debtors 4.93 4.88Liability for leased assets 0.40 0.56Advances taken – 0.06Guarantees given 12.00 82.23Loan outstanding in respect of guarantees given 7.89 80.18

Rs. Crores

B Transactions with related parties referred to in 14(A)

i) Transactions with subsidiaries

15. a. Assets taken on finance lease before April 1, 2001 by the Company includes motor vehicles and office equipments at anaggregate cost of Rs. 2.29 crores (2002-2003 - Rs. 3.13 crores) with future obligations by way of lease rentals amountingto Rs 0.89 crore (2002-2003 - Rs. 1.75 crores).

b. Disclosure in respect of assets taken on lease on or after April 1, 2001 under Accounting Standard AS-19 "LeaseAccounting".

(i) General description of the finance lease :

The Company has entered into finance lease arrangement for vehicles. Some of the significant terms and conditionsof such leases are as under:

- renewal for a further period on such terms and conditions as may be mutually agreed upon between lessor and theCompany.

- assets to be purchased by the Company or the nominee appointed by the Company at the end of the lease term.

Key Managerial Persons,their relatives and H.U.F.’s

Type of Transaction This Year Previous Year

Hire of premises - rent paid 0.39 0.37- security deposits given 0.25 –

Balance outstanding as at the year end- Loans and advances (# Rs. 0.06 lac) – #- Security deposits for premises hired 4.87 4.62

Note: Details of remuneration to whole time directors are given in note 16 below.

Rs. Croresii) Transactions with key managerial persons, their relatives and H.U.F.'s

(ii) Reconciliation between the total of minimum lease payments at the balance sheet date and their present value :

Not later than Later than one year Total one year but not later

than five years

This year Previous year This year Previous year This year Previous year

Total of minimum lease payments at the balance sheet date 0.48 0.72 0.22 0.24 0.26 0.48

Less : Future finance charges 0.08 0.17 0.06 0.10 0.02 0.07

Present value of minimum lease payments at the balance sheet date 0.40 0.55 0.16 0.14 0.24 0.41


16. Managerial remuneration

Managerial remuneration of Rs. 4.09 crores (2002-2003 – Rs. 3.43 crores) includes commission payable to managingdirectors Rs. 1.87 crores (2002-2003 – Rs. 1.58 crores) and non-working directors Rs. 0.30 crore (2002-2003 – Rs. 0.22crore).

Provision for incremental gratuity liability and leave encashment for the current year in respect of directors has not beenconsidered above, since the provision is based on an actuarial basis for the Company as a whole.

Computation of net profit in accordance with section 198 of the Companies Act, 1956 and commission payable to directors.

This Year Previous Year

Profit for the year before tax, per profit and loss account 102.98 75.21

Add : Managerial remuneration including commission 4.09 3.43

Directors’ sitting fees 0.06 0.04

107.13 78.68

Less : Profit on sale of – non trade – long term – investment (net) – 0.47

Profit on sale of – non trade – current – investment (net) 0.04 0.22

Net profit in accordance with section 198 of the Companies Act, 1956 107.09 77.99

Maximum remuneration to managing directors @ 10% of the net profit 10.71 7.80

Restricted to 3.79 3.21

Maximum remuneration @ 1% of net profit to non-working directors 1.07 0.78

Restricted to 0.30 0.22

17. Current investment purchased and sold during the year :The details of current investments purchased and sold during the year are as follows

Rs. Crores

Rs. Crores

Face Purchased Units* Sold UnitsS. No. Mutual Fund Units value Nos. Amount Nos.

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

1 ILFS Liquid Account- Dividend Plan (Institutional) 10.00 1.27 12.72 1.27

2 ILFS Liquid Account - Growth Plan 10.00 0.04 0.50 0.04

3 ILFS Liquid Account - Dividend Plan 10.00 4.13 41.30 4.13

4 Kotak Liquid Institutional Plan 10.00 1.23 15.01 1.23


6766





Face Purchased Units* Sold UnitsS. No. Mutual Fund Units value Nos. Amount Nos.

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

5 RLF - Treasury Plan - Institutional Option - Daily 10.00 0.66 10.01 0.66Dividend Option

6 Principal Cash Management fund - Liquid option- 10.00 3.79 37.93 3.79Institutional plan -dividend reinvestment daily

7 Principal Cash Management fund - Liquid option- 10.00 0.50 5.00 0.50Dividend investment -daily

8 Principal Cash Management fund - Liquid option- 10.00 0.49 5.00 0.49Institutional Plan - Growth Plan

9 Birla Cash Plus - Institutional Plan - Dividend 10.00 2.44 26.29 2.44Reinvestment Plan

10 DSP Merrill Lynch Liquidity Fund - Daily Dividend Option 10.00 1.44 14.42 1.4411 Prudential ICICI Institutional Liquid Plan - Daily Dividend 10.00 4.57 54.15 4.57

Option12 Prudential ICICI Liquid Plan - Daily Dividend Plan 10.00 0.52 6.20 0.5213 JM Short Term Fund - Institutional Plan - Growth 10.00 0.34 3.50 0.3414 Sundaram Money Fund - Dividend Reinvestment Daily 10.00 0.20 2.00 0.2015 JM Short Term Fund- Institutional Plan - Dividend 10.00 0.38 3.80 0.3816 JM High Liquidity Fund- Daily Dividend Plan 10.00 1.15 12.00 1.1517 Tata Liquidity Fund - High Investment - Daily Dividend 10.00 2.70 30.04 2.7018 Deutsche Insta Cash Plus Fund-Daily Dividend Plan 10.00 0.73 7.53 0.7319 Grindlays Cash Fund - Daily Dividend 10.00 1.70 18.01 1.7020 JM High Liqudity fund - Institutional Plan - Daily Dividend 10.00 5.97 59.67 5.9721 Tempelton India Treasury Management Account- Daily 1500.00 0.03 51.06 0.03

Dividend Reinvestment22 Can Liquid Fund -Dividend Reinvestment 10.00 1.00 10.01 1.0023 Magnum Insta Cash Fund 10.00 1.52 16.03 1.5224 Magnum Institutional Income Fund 10.00 0.51 5.11 0.5125 Grindlays cash Fund -Daily Dividend 10.00 6.47 68.51 6.4726 HSBC Cash Fund -dividend 10.00 0.20 2.00 0.2027 HSBC -Cash Fund Institutional - Daily Dividend 10.00 0.96 10.01 0.9628 HDFC-Cash Management Fund-Savings Plan - Daily - 10.00 1.41 15.02 1.41

Dividend Reinvestment29 HDFC-Cash Management Fund-Savings Plan - Daily - 10.00 5.00 53.22 5.00

Dividend Reinvestment30 Kotak Liquid Institutional Plan - Daily Dividend 10.00 0.35 3.50 0.3531 HDFC Liquid fund - Premium plan -Dividend reinvestment 10.00 0.50 6.00 0.5032 Deutsche Insta Cash plus Fund- Daily Dividend Plan 10.00 0.65 6.73 0.6533 UTI Liquid Cash Plan Regular -Daily Income Option 10.00 0.50 5.01 0.5034 Tempelton Floating rate Income fund - Short Term Plan 10.00 0.30 3.01 0.30

Total : 620.302002-03 190.72

* Includes dividend units

Current Investment purchased and sold during the year (Continued)


18. The current year figures include figures of Ghaghara Sugar Limited and excludes figures of Energy Services business (refernote 6) for the period from April 1, 2003 to March 31, 2004. The corresponding figures of the previous year are therefore notdirectly comparable with those of the current year.

19. The details of disputed sales-tax and excise duty dues as on March 31, 2004 are as follows -

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

Central Excise Law Excise duty Commissioner (Appeals) 15.69 1997-1998

Sales Tax Laws Sales tax Additional Commissioner 244.53 1978-79, 1979-80, 1981-82 to 1984-85, (Appeals) 1986-87, 1988-89, 1991-92, 1992-93,

1994-95 and 1995-96)

20. Previous year’s figures have been recast, wherever necessary.

21. Schedules 1 to 14 and the statement of additional information form an integral part of the financial statements.

Statement of Additional Information1. Particulars of capacity and production

Capacity

Description Unit Licensed Installed Unit Production

2003-04 2002-03 2003-04 2002-03 2003-04 2002-03

Ammonia M.T. per year 200000* 200000* 198000 198000 M.T. – –Urea M.T. per year 330000* 330000* 330000 330000 M.T. 363948 393750Calcium carbide M.T. per year 56100* 56100* 56100 56100 M.T. 12974** 15539**PVC resins M.T. per year 26400* 26400* 33000 33000 M.T. 35494 34600Caustic soda M.T. per year 102050* 102050* 102050 102050 M.T. 111353 106927Chlorine M.T. per year 63420* 63420* 63750 63750 M.T. 66066 61581Hydrochloric acid(100%) M.T. per year 36000* 36000* 36000 36000 M.T. 30609 31189Compressed Hydrogen M.T. per year 620* 620* 620 620 M.T. 291 479Stable Bleaching Powder M.T. per year 9900* 9900* 9900 9900 M.T. 7485 7312Poly Aluminium Chloride M.T. per year 39000* 39000* 39000 39000 M.T. 11353 10966Cement M.T. per year 200000* 200000* 200000 200000 M.T. 295101 294317Yarn Spindles Nos. 45384* 45384* 8880 8880 M.T. 1607 1408Cloth Looms Nos. 1102* 1102* – – M.T. – –Sugar M.T. per day*** 9500* – 9500 – M.T. 183844 –

* Delicensed** Production of Marketable Calcium carbide only***Crushing of sugarcane

2. Particulars of stocks and sales

Stocks

Description Unit Opening Closing Sales

2003-04 2002-03 2003-04 2002-03 2003-04 2002-03

Urea M.T. 16047 3152 28 16047 379791 380706Rs. Crores 17.66 2.41 0.02 17.66 445.46 437.28

PVC resins/compounds M.T. 66 82 – 66 35554 34616Rs. Crores 0.20 0.25 – 0.20 169.84 161.38

Caustic soda M.T. 404 1400 913 404 109565 106868Rs. Crores 0.38 1.37 0.95 0.38 150.38 112.98

Chlorine M.T. 426 24 352 426 62648 57796Rs. Crores 0.38 0.01 0.22 0.38 49.75 59.90


6968





2. Particulars of stocks and sales (continued)

Stocks

Description Unit Opening Closing Sales

2003-04 2002-03 2003-04 2002-03 2003-04 2002-03

Hydrochloric acid(100%) M.T. 120 91 71 120 4949 5545Rs. Crores 0.08 0.04 0.04 0.08 3.05 5.72

Sodium Hypochlorite(10%) M.T. 20 59 23 20 7257 7562* Rs. Crores .... .... .... .... 1.23 1.27

Compressed Hydrogen M.T. – – – – 291 479Rs. Crores – – – – 2.48 4.36

Stable Bleaching Powder M.T. 65 – 16 65 7508 7248Rs. Crores 0.04 – 0.01 0.04 7.63 7.45

Poly Aluminium Chloride M.T. 190 105 – 190 11543 10822Rs. Crores 0.08 0.03 – 0.08 5.42 4.62

Marketable Calcium carbide M.T. – – – – 12974 15539Rs. Crores – – – – 35.72 40.08

D.A.P. M.T. 197 – 47 197 113722 83448Rs. Crores 0.19 – 0.04 0.19 126.01 86.80

M.O.P. M.T. 988 443 23222 988 120591 131659Rs. Crores 0.71 0.28 15.10 0.71 83.10 95.39

Super Phosphate M.T. 39 3 2224 39 118736 50940* Rs. Crores 0.01 .... 0.61 0.01 29.41 11.93

Seeds M.T. 72 255 101 72 5353 3965Rs. Crores 1.04 1.50 0.94 1.04 14.50 12.18

Pesticides Litres 230215 70020 243236 230215 4254113 2644402Rs. Crores 4.97 0.98 2.71 4.97 33.11 25.19

Zinc Sulphate M.T. 25 – 20 25 2513 1173Rs. Crores 0.03 – 0.03 0.03 3.29 1.73

Traded Urea M.T. 1 1 – 1 – – * Rs. Crores .... .... – .... – –

M.K.P M.T. – – 48 – 46 –Rs. Crores – – 0.14 – 0.38 –

Cement M.T. 5364 3141 7615 5364 292706 291987Rs. Crores 0.66 0.38 1.16 0.66 69.87 66.10

Yarn M.T. 57 60 40 57 1625 1411Rs. Crores 0.47 0.47 0.40 0.47 15.84 11.26

Sugar M.T. – – 99810 – 151630 – Rs. Crores – – 117.93 – 198.90 –

Molasses M.T. – – 29430 – 96788 –

Rs. Crores – – 5.89 – 11.75 –

Other sales/stocks and adjustments * Rs. Crores 0.35 .... 2.34 0.35 18.50 4.52

Total 27.25 7.72 148.53 27.25 1475.62 1150.14

* Amount in Rs. Lacs for above products

Sodium Hypochlorite(10%) Rs. Lacs 0.01 0.32 0.21 0.01

Super Phosphate Rs. Lacs 0.84 0.06 60.75 0.84

Traded Urea Rs. Lacs 0.03 0.03 – 0.03

Others Rs. Lacs 35.02 0.41 234.22 35.02


3A.Particulars of raw materials consumed2003-04 2002-03

Description Quantity Value Quantity ValueM.T. Rs. Crores M.T. Rs. Crores

Naphtha 158045 239.87 172606 253.95 Lime and lime stone 145215 6.64 146817 6.31 Hard coke/SLV/Pearl/Nut coke/Met coke/Pet coke 35523 17.94 37810 16.81 Charcoal 27316 16.30 23771 13.36 Salt 179077 9.56 171282 8.82 Electrode paste 1096 1.53 1168 1.69 Hydrated Lime 5492 1.28 5418 1.27 Aluminium Hyderate 2016 1.97 2259 2.17 Gypsum 16012 0.86 15146 0.69 Lime Stone 271940 4.34 296493 4.90 Kapas, cotton, synthetic yarn etc. 1881 10.20 1639 6.83 Sugarcane 1858189 179.54 – –Other miscellaneous raw materials 0.98 1.17Total 491.01 317.97

4. Other Additional InformationDescription 2003-04 2002-03

Rs. Crores Rs. Crores(a) Value of imports on CIF basis

Components and spare parts 8.25 5.31 Capital goods 6.61 2.25

(b) Expenditure in foreign currency on cash basisTravelling 1.45 0.64 Consultation fees 1.77 0.34 Others 0.83 0.19

(c) Earnings in foreign exchange on cash basis Direct export of goods on FOB basis/as per contracts where FOB value not readily ascertainable – –Income from services – 0.07 Commission 0.01 0.08

2003-04 2002-03Rs. Crores % Rs. Crores %

(d) Value of imported/indigenous raw materials,spare parts,components and stores consumed(i) Raw materials

Indigenous 491.01 100.00 317.97 100.00(ii) Spare parts,components and stores

Imported 5.36 8.73 5.74 11.96 Indigenous 56.02 91.27 42.31 88.04

61.38 100.00 48.05 100.00

3B.Particulars of goods purchased for resale

2003-04 2002-03Description Unit Quantity Value Quantity Value

Rs. Crores Rs. CroresSeeds M.T. 5537 12.94 3791 10.41Pesticides Litres 4271546 26.80 2806450 26.54D.A.P. M.T. 113897 115.64 83700 77.00M.O.P. M.T. 142996 85.84 132283 81.58Zinc Sulphate M.T. 2510 2.93 1197 1.59Super Phosphate M.T. 120922 26.75 50977 10.80P.O.P. M.T. 7201 0.65 5063 0.41Traded Carbide M.T. – – 208 0.54M.K.P. M.T. 94 0.32 – –Others M.T. 7.44 1.86 Total 279.31 210.73


7372

Balance Sheet Abstract & Company General Business Profile DCM SHRIRAMCONSOLIDATED LIMITED Section 212 DCM SHRIRAM


Public Issue

– 3 4 9 2 3

- N I L -

Right Issue

- N I L -Bonus Issue

- N I L -

Private Placement

- N I L -

3 1 0 3

Registration No. State Code

Balance Sheet Date

I. Registration Details

II. Capital Raised during the year (Amount in Rs. Thousand)

Turnover

1 4 1 2 0 3 4 0

Total Expenditure

1 3 0 9 0 5 2 4

Earning Per Share in Rs.“(Please tick Appropriate box + for Profit, – for Loss)”

Item Code No. (ITC Code)

4 5 . 7 9

3 1 0 2 1 0 . 0 0

Product Description U R E A

Item Code No. (ITC Code) 3 9 0 4 1 0 . 0 0

Product Description P O L Y V I N Y L C H L O R I D E

Item Code No. (ITC Code) 2 8 1 5 1 2 . 0 0

Product Description C A U S T I C S O D A

Dividend rate %6 0

+ – Profit/Loss Before Tax

+ 1 0 2 9 8 1 6

+ – Profit/Loss After Tax

+ 7 6 6 8 1 6

IV. Performance of Company (Amount in Rs. Thousand)

V. Generic Names of Three Principle Products/Services of Company (as per monetary terms)

Total Liabilities

9 3 9 8 1 4 3

Total Assets

9 3 9 8 1 4 3

Paid-up CapitalSource of Funds

1 6 7 4 6 3

Reserves and Surplus

3 5 3 5 6 4 3

Secured Loans

3 4 8 4 4 4 6

Deferred Tax Liabilities (net)

1 1 0 8 7 7 6

Unsecured Loans

1 1 0 1 8 1 5

Net Fixed AssetsApplication of Funds

6 1 2 7 3 3 1

Investments

7 4 1 1 4 8Net Current Assets

2 5 2 9 6 6 4Accumulated Losses

- N I L -

Miscellaneous Expenditure

- N I L -

III. Position of Mobilization and Deployment of Funds (Amount in Rs. Thousand)

0 4

5 5

VIKRAM S. SHRIRAM AJAY S. SHRIRAMV. P. AGARWAL Vice Chairman & Chairman &Company Secretary Managing Director Sr. Managing Director

RAJIV SINHA AJIT S. SHRIRAMDy. Managing Director S. S. BAIJAL

PRADEEP DINODIASUNIL KANT MUNJAL

New Delhi S. N. CHATURVEDIMay 18, 2004 Directors

Statement Pursuant to Section 212 of The Companies Act, 1956 Relating to Subsidiary Companies1 2 3 4 5 6

1. Name of the DCM Shriram Credit DCM Shriram DCM Shriram Shriram DSCL Energy Shriram Bioseed Subsidiary and Investments Aqua Foods International

PolyTechServices Company Genetics India

Limited Limited LimitedLimited

Limited Limited

2. Financial year of the Subsidiary 31st March, 2004 31st March, 2004 31st March, 2004 31st March, 2004 31st March, 2004 31st March, 2004

3. Holding Company's interest as on 31.3.2004

4. Net aggregate amount of the Subsidiary's profits/(losses) so far as they concern members of Holding Company and not dealt with in the Holding Company's accounts:

i) For Subsidiary's financial year ended 31st March, 2004 (Rs.0.009 crore) (Rs.0.11 crore) Rs.0.0004 crore (Rs.4.39 crores) (Rs.0.0947 crore) Rs.0.63 crore

ii) For Subsidiary's previousfinancial years since it became Subsidiary (Rs.5.48 crores) (Rs.4.58 crores) (Rs.0.021 crore) (Rs.5.84 crores) (Rs.0.0002 crore) (Rs.0.10 crore)

5. Net aggregate amount of the Subsidiary's profits/(losses) so far as they concern members of Holding Company and dealt with in the Holding accounts:

i) For Subsidiary's financial year ended 31st March, 2004 Nil Nil Nil Nil Nil Nil

ii) For Subsidiary's previous financial years since it became Subsidiary. Nil Nil Nil Nil Nil Nil

Holder(s) of60,01,208 EquityShares of Rs.10/-each out of totalissued andsubscribed EquityShare Capital of60,01,208 shares.


Holding of 50,007Equity Shares ofRs.10/- each outof total issuedand subscribedEquity ShareCapital of 50,007shares by DCMShriram Creditand InvestmentsLtd., anothersubsidiary ofCompany.


Holder(s) of48,993 EquityShares of Rs.10/-each out of totalissued andsubscribed EquityShare Capital of49,000 shares byDCM ShriramCredit andInvestments Ltd.,anothersubsidiary ofCompany.


1. Name of the DCM Shriram Bioseeds Bioseed Bioseed Bioseed Bioseed Research Subsidiary Infrastructure

Limited Genetics Research ResearchIndia Private

LimitedVietnam Vietnam Philippines

Limited

2. Financial year of the Subsidiary 31st March, 2004 31st March, 2004 31st March, 2004 31st March, 2004 31st March, 2004 31st March, 2004

3. Holding Company's interest as on 31.3.2004

i) For Subsidiary's financial year ended 31st March, 2004 (Rs.0.0004 crore) Rs.0.02 crore Rs.0.74 crore Rs.0.97 crore Rs.0.09 crore Rs.0.32 crore

ii) For Subsidiary's previous financial years since it became Subsidiary Nil (Rs.0.02 crore) Rs.0.31 crore Rs.0.15 crore Rs.0.05 crore (Rs.0.36 crore)

i) For Subsidiary's financial year ended 31st March, 2004 Nil Nil Nil Nil Nil Nil

ii) For Subsidiary's previous financial years since it became Subsidiary Nil Nil Nil Nil Nil Nil

Holder(s) of50,000 EquityShares of Rs.10/-each out of totalissued andsubscribed EquityShare Capital of50,007 shares byDCM ShriramCredit andInvestments Ltd.,another subsidiaryCompany.

Holder(s) of11,74,551Ordinary Sharesof USD 1 eachout of total issuedOrdinary ShareCapital of23,03,041Shares.

Holder(s) of39,95,460thousand VNDstock out of39,95,460thousand VNDstock byBioseeds Ltd.,anothersubsidiary ofCompany.

Holder(s) of91,29,620thousand VNDstock out of91,29,620thousand VNDstock byBioseeds Ltd.,anothersubsidiary ofCompany.

Holder(s) of3,58,523 Sharesof PHP 100 eachout of total ShareCapital of3,58,523 Sharesof PHP 100 eachby Bioseeds Ltd.,anothersubsidiary ofCompany.

Holder(s) of37,424 EquityShares of Rs.10/-each out of totalissued andsubscribed EquityShare Capital of37,424 shares byBioseeds Ltd.,anothersubsidiary ofCompany.

Company's

4. Net aggregate amount of the Subsidiary's profits/(losses) so far as they concern members of Holding Company and not dealt with in the Holding Company's

5. Net aggregate amount of the Subsidiary's profits/(losses) so far as they concern members of Holding Company and dealt with in the Holding accounts:Company's

VIKRAM S. SHRIRAM AJAY S. SHRIRAMV. P. AGARWAL Vice Chairman & Chairman &Company Secretary Managing Director Sr. Managing Director

RAJIV SINHA AJIT S. SHRIRAMDy. Managing Director S. S. BAIJAL

PRADEEP DINODIASUNIL KANT MUNJAL

New Delhi S. N. CHATURVEDIMay 18, 2004 Directors

7 8 9 10 11 12

accounts:


7776

Consolidated Financial Statement DCM SHRIRAMCONSOLIDATED LIMITED

DCM SHRIRAMCONSOLIDATED LIMITED

We have examined the attached consolidated balance sheetof DCM Shriram Consolidated Limited and its subsidiaries, asat March 31, 2004 and also the consolidated profit and lossaccount and the cash flow statement for the year ended onthat date annexed thereto. These financial statements are theresponsibility of the management of DCM ShriramConsolidated Limited. Our responsibility is to express anopinion on these financial statements based on our audit.

1. We conducted our audit in accordance with generallyaccepted auditing standards in India. These standardsrequire that we plan and perform the audit to obtainreasonable assurance whether the financial statements areprepared, in all material respects, in accordance with anidentified financial reporting framework and are free ofmaterial misstatements. An audit includes, examining on atest basis, evidence supporting the amounts anddisclosures in the financial statements. An audit alsoincludes assessing the accounting principles used andsignificant estimates made by management, as well asevaluating the overall financial statements. We believe thatour audit provides a reasonable basis for our opinion.

2. We did not audit the financial statements of subsidiariesviz., DCM Shriram Credit and Investments Limited, DCMShriram Aqua Foods Limited, Shriram Polytech Limited,DSCL Energy Services Company Limited, DCM ShriramInternational Limited, DCM Shriram Infrastructure Limited,Bioseed Research, Phillipines, Inc., Bioseed ResearchVietnam, Bioseed Genetics, Vietnam, Bioseed ResearchIndia Private Limited, Bioseeds Limited and ShriramBioseed Genetics India Limited whose financial statementsreflect total assets of Rs. 139.47 crores as at March 31,2004 and total revenues of Rs. 132.57 crores for the yearended on that date (these figures include intragroupbalances and intragroup transactions eliminated onconsolidation).These financial statements have beenaudited by other auditors whose reports have beenfurnished to us, and our opinion, insofar as it relates to theamounts included in respect of the subsidiaries, is basedsolely on the report of the other auditors.

3. We report that the consolidated financial statements havebeen prepared by the Company in accordance with the

requirements of Accounting Standard 21, ConsolidatedFinancial Statements, issued by the Institute of CharteredAccountants of India and on the basis of the separateaudited financial statements of DCM Shriram ConsolidatedLimited and its subsidiaries included in the consolidatedfinancial statements.

4. Various matters arising/arisen out of the reconstructionarrangement of undivided DCM Limited effective April 1,1990 will be settled and accounted for as and when theliabilities/benefits are finally determined as stated innote 4. The effect on these accounts has not beendetermined by the Company;

Subject to the foregoing in our opinion and on the basis ofthe information and explanations given to us and on theconsideration of the separate audit reports on individualaudited financial statements of DCM Shriram ConsolidatedLimited and its subsidiaries, we are of the opinion that:

(a) the consolidated balance sheet gives a true and fairview of the consolidated state of affairs of DCM ShriramConsolidated Limited and its subsidiaries as at March 31,2004;

(b) the consolidated profit and loss account gives a trueand fair view of the consolidated results of operations ofDCM Shriram Consolidated Limited and its subsidiaries forthe year ended on that date; and

(c) the consolidated cash flow statement gives a true andfair view of the cash flows of DCM Shriram ConsolidatedLimited and its subsidiaries for the year ended on that date.

For A. F. FERGUSON & CO.Chartered Accountants

J. M. SETHPartner(Membership number: 17055)

New DelhiMay 18, 2004

Report of the Auditors to the Board of Directors of DCM Shriram Consolidated Limited on the ConsolidatedFinancial Statements of DCM Shriram Consolidated Limited and its Subsidiaries

Subsidiary Companies’ Particulars

Pursuant to letter no. 47/119/2004-CL-III dated June 29, 2004 from Ministry of Company Affairs. Year Ended March 31, 2004 Rs. Crores

Name of the Subsidiary Capital Reserves Total Total Turnover Profit Provision Profit Proposed Company Assets Liabilities Before for After Dividend

Taxation Taxation TaxationShriram Polytech Limited 8.75 34.80 52.11 52.11 49.98 (3.50) 0.90 (4.39) - DCM Shriram Credit and Investment Limited 6.00 0.32 22.14 22.14 1.24 0.03 0.04 (0.01) - DSCL Energy Services Company Limited 0.05 - 2.26 2.26 2.09 (0.15) 0.05 (0.09) - DCM Shriram International Limited 0.05 - 0.05 0.05 - - - - - DCM Shriram Infrastructure Limited 0.05 - 0.05 0.05 - - - - - Shriram Bioseed Genetics India Limited 5.72 6.76 22.20 22.20 47.23 2.20 0.96 1.24 -

Bioseed Limited 11.21 - 10.14 10.14 0.09 0.03 - 0.03 -

Bioseed Research Vietnam 3.27 0.12 3.32 3.32 2.62 1.99 - 1.99 - Bioseed Genetics Vietnam 1.79 1.90 9.23 9.23 14.19 1.56 0.05 1.51 - Bioseed Research Philippines, Inc. 5.16 - 4.02 4.02 4.92 0.28 0.10 0.18 - Bioseed Rearch India Private Limited 0.37 0.01 0.38 0.38 3.74 0.72 0.08 0.64 - DCM Shriram Aqua Foods Limited 8.35 - 8.35 8.35 - (0.11) - (0.11) -

Details of Investments (other than in subsidiaries) are as follows -

DCM Shriram Credit and Investment Limited Rs. Crores2,380 6.75% Bonds of Unit Trust of India of Rs. 100/- each fully paid-up 0.11763.959 US-2002 of Unit Trust of India of Rs.10/- each fully paid-up(# Rs. 5,000) #National Saving Certificates (## Rs. 9,000) ##5,400 Master Gains 92 of Unit Trust of India of Rs. 10/- each fully paid up 0.015,00,000 equity shares of IFCI Ltd. of Rs.10/- each fully paid up 0.202,500 equity shares of APW President System Ltd. of Rs.10/- each fully paid up 0.0150,000 equity shares of Feedback Ventures Pvt. Ltd. of Rs.10/- each fully paid up 0.0549,950 equity shares of Pacific Land Development Pvt. Ltd. of Rs.10/- each fully paid up 0.055,00,000 units of Alliance New Millennium Fund of Rs.10/- each fully paid up 0.22250 units of Infinity Venture India Fund of Rs.100000/-each, Rs.65,000/- each paid up 1.633,00,000 equity shares of E Commodities Ltd. of Rs.10/- each fully paid up 0.302,00,000 equity shares of Ellenbarie Commercial Ltd. of Rs.10/- each fully paid-up 1.5040,000 equity shares of BMD Estates P.Ltd. ofRs.10/- each fully paid up 0.75

Other subsidiaries NILThe Company will make available the annual accounts and related detailed information of the subsidiary companies uponrequest to the shareholders of the holding and the subsidiary companies. These shall also be kept for inspection at thehead office of the Company and the subsidiary companies.

Auditors’ Report


7978

Consolidated Balance Sheetof DCM Shriram Consolidated Limited and its Subsidiary Companies as at March 31, 2004 of DCM Shriram Consolidated Limited and its Subsidiary Companies for the year ended March 31, 2004

DCM SHRIRAMCONSOLIDATED LIMITED Consolidated Profit and Loss Account DCM SHRIRAM


As at As atSchedule March 31, 2004 March 31, 2003

Rs. Crores Rs. CroresSources of FundsShareholders' funds

Share capital 1 16.75 16.75Reserves and surplus 2 316.27 255.73

333.02 272.48Minority Interest 11.96 10.22Loan funds 3

Secured 355.15 467.49Unsecured 111.02 76.27

466.17 543.76Deferred tax liabilities (net) 4 109.50 89.46 Total funds employed 920.65 915.92Application of FundsFixed assets 5

Gross block 894.38 879.55Less : Depreciation 318.58 270.91

Net block 575.80 608.64Capital work in progress 77.04 43.48

652.84 652.12Investments 6 7.74 6.41Current assets, loans and advances 7

Inventories 228.43 176.05Sundry debtors 206.08 143.17Cash and bank balances 48.76 14.38Loans and advances 71.04 55.27

554.31 388.87Less: Current liabilities and provisions 8

Current liabilities 256.14 101.23Provisions 38.10 30.71

294.24 131.94Net current assets 260.07 256.93Miscellaneous expenditure (to the extent not written-off or adjusted) 9 – 0.46 Total funds utilised 920.65 915.92

Notes to the consolidated accounts 14

Year ended Year endedSchedule March 31, 2004 March 31, 2003


IncomeSale of products (Gross) 1556.62 1376.01Less : excise duty 93.22 81.36Sale of products (Net) 1463.40 1294.65Income from services and other income 10 23.10 17.58

1486.50 1312.23ExpenditureManufacturing and other expenses 11 1015.06 923.61Purchases for resale 269.70 201.42Profit for the year before depreciation, miscellaneous expenditure written off, interest and tax 201.74 187.20Interest 12 42.05 61.91Profit for the year before depreciation,miscellaneous expenditure written off and tax 159.69 125.29Depreciation and miscellaneous expenditure written off 13 55.66 54.81Profit for the year before tax 104.03 70.48Provision for current tax 8.35 11.74Provision for deferred tax 20.04 6.03 Profit after tax before minority interest 75.64 52.71Minority Interest (2.24) 0.81Net Profit for the year 73.40 53.52Transfer from debenture redemption reserve 10.82 8.65 Balance brought forward from the previous year 32.45 6.45 Share of brought forward balance in profit and loss accountof a subsidiary as on March 31, 2002 – (0.41)Loss transferred to share premium account 9.43 –Profit available for appropriation 126.10 68.21AppropriationsProposed dividends

Equity shares- Interim 3.35 2.51 - Final 6.70 5.03

Corporate dividend tax 1.29 0.64 Debenture redemption reserve 0.56 2.40 Statutory reserve – 0.18 General reserve 35.00 25.00 Balance carried to consolidated balance sheet 79.20 32.45Earnings per share - basic/diluted (Rs.) 43.83 31.96(Refer note 13 in schedule 14)Notes to the consolidated accounts 14

Per our report attachedFor A.F. FERGUSON & CO.Chartered Accountants VIKRAM S. SHRIRAM AJAY S. SHRIRAM

V. P. AGARWAL Vice Chairman & Chairman &J. M. SETH Company Secretary Managing Director Sr. Managing DirectorPartnerMembership No.:17055 RAJIV SINHA AJIT S. SHRIRAM

Dy. Managing Director S. S. BAIJALPRADEEP DINODIA

SUNIL KANT MUNJALNew Delhi S. N. CHATURVEDIMay 18, 2004 Directors

Per our report attached to the consolidated balance sheetFor A.F. FERGUSON & CO.Chartered Accountants VIKRAM S. SHRIRAM AJAY S. SHRIRAM





8180

Consolidated Financial Statements DCM SHRIRAMCONSOLIDATED LIMITED



Authorised4,00,00,000 (2002-2003 - 4,00,00,000) Equity shares 40.00 40.00 of Rs.10 each 65,00,000 (2002-2003 - 65,00,000) Cumulativeredeemable preference shares of Rs.100 each 65.00 65.00

105.00 105.00Issued and subscribed1,73,70,332 (2002-2003 - 1,73,70,332) Equity shares of Rs.10 each, fully called-up 17.37 17.37

Less: Calls unpaid 0.62 0.62 16.75 16.75 16.75 16.75

Notes :1. Of the issued, subscribed and paid-up capital, 57,55,076 Equity shares of Rs. 10 each represent the equity shares issued

on October 9, 1990 to the members of undivided DCM Limited in the ratio of one share for every four shares held by themembers in undivided DCM Limited, in terms of the Scheme of Arrangement effective from April 1, 1990, without paymentbeing received in cash.

2. 6,00,000 Zero interest secured fully convertible debentures convertible into two equity shares of Rs.10 each fully paid-up and10,00,000 13% secured non-convertible debentures with detachable warrants (Series II) are reserved for allotment to thesubscribers of 20,00,000 fully/partly paid-up equity shares allotted pursuant to the exercise of the option by the holders ofwarrants (Series III) in terms of Letter of Offer dated August 12, 1994, upon the partly paid-up shares becoming fully paid-up.Each detachable warrant (Series II) entitles the holder to apply for one equity share of Rs.10 each at a premium of Rs. 80between 24 and 60 months from the date of allotment as may be decided by the Board of Directors or Committee thereof.

1. SHARE CAPITAL

As at Additions Deductions As atMarch 31, 2003 March 31, 2004


Revaluation reserve 1.48 – 0.03 1.45Debenture redemption reserve 27.23 0.56 ** 10.82 * 16.97Share premium account 91.06 – 9.71 # 81.35Capital redemption reserve 25.00 – – 25.00Capital reserve 0.03 – – 0.03General reserve 78.32 35.00 – 113.32Statutory reserve ## 0.31 – – 0.31Foreign currency translation reserve (0.15) (1.21) – (1.36)Profit and loss account 32.45 46.75 – 79.20

255.73 81.10 20.56 316.27* Transfer to profit and loss account on redemption** Transfer from profit and loss account# Adjustment pursuant to scheme of arrangement referred to in note 6 in schedule 14## As per The Reserve Bank of India (Amendment) Act 1997

2. RESERVES AND SURPLUS

Consolidated Financial Statements (Continued)DCM SHRIRAM



Rs. Crores Rs. CroresSecuredDebentures 33.02 64.69 Loans from banks on cash credit account 47.61 98.88 Other loans 274.52 303.92

355.15 467.49 UnsecuredDeposits

Fixed 13.92 14.55 Others 22.93 19.71 Interest accrued and due on deposits 0.16 0.10

Short term loans and advancesBanks* 40.64 30.00 Others 33.22 11.91

Finance Lease Liability** 0.15 –111.02 76.27 466.17 543.76

* Includes Rs. Nil (2002-2003 - Rs. Nil) pertaining to commercial papers. Maximum outstanding during the year Rs.55.00crores (2002-2003 - Rs.55.00 crores)

** Represents present value of minimum lease payments. Also refer note 12 in schedule 14

3. LOAN FUNDS

Secured1. Debentures – Company:

i) Debentures detailed below are secured by English first mortgage on the Company's property at Taluka Kalol, DistrictGandhinagar, Gujarat and first equitable mortgage/charge on immovable/movable properties, both present and future, ofthe Company's undertakings at Kota, Rajasthan, subject to certain prior charges created in favour of lenders for theirfinancial assistance and charges created/to be created in favour of the Company's bankers on stocks, stores and bookdebts for securing borrowings for working capital, and shall rank pari-passu in all respects with the security created or tobe created in terms of the stipulations of the respective Trust Deeds :

a) 20,00,000 (2002-2003 – 20,00,000) 11% Secured redeemable non-convertible debentures of Rs.100 each redeemablein three equal annual instalments commencing in case of 15,00,000 debentures from November 1, 2005 and in case of5,00,000 debentures from November 1, 2006.

b) Nil (2002-2003 – 16,00,000) 11% Secured redeemable non-convertible debentures of Rs.100 each. These debentureshave been prepaid during the year.

ii) Debentures detailed below are secured by English second mortgage on the Company's property at Taluka Kalol, DistrictGandhinagar, Gujarat and second equitable mortgage/charge on immovable/movable properties, both present and future,of the Company’s undertakings at Kota, Rajasthan, (save and except stocks, stores and book debts) subject to andsubservient to the securities already created /to be created as first charge for any existing/future borrowings of the Companyand shall rank pari-passu with any other second charge that may be required to be created to secure any existing/futureborrowings.

a) Nil (2002-2003 – 40,82,315) 13% Secured redeemable non-convertible debentures of Rs. 100 each. The third and finalinstalment has been paid during the year (Rs. Nil due within a year, 2002-2003 – Rs. 13.47 crores).

b) Nil (2002-2003 – 50,000) 13% Secured redeemable non-convertible debentures of Rs. 100 each redeemable in threeequal annual instalments commencing from May 11, 2001. The third and final instalment has been paid during the year(Rs. Nil due within a year, 2002-2003 – Rs. 0.17 crores).

c) 6,13,618 (2002-2003 – 6,13,618) 13% Secured redeemable non-convertible debentures of Rs. 100 each redeemable inthree equal annual instalments commencing from March 26, 2003. The second instalment has been paid during the year.(Rs.2.02 crores due within a year, 2002-2003 – Rs.2.02 crores).

iii) 11,00,000 (2002-2003 – 11,00,000) 11% Secured redeemable non-convertible debentures of Rs. 100 each redeemable inthree equal annual instalments commencing in case of 7,00,000 debentures from November 1, 2005 and in case of4,00,000 debentures from November 1, 2006. These debentures are secured by English first mortgage on the Company’s


8382



3 LOAN FUNDS (Continued)

property at Taluka Kalol, District Gandhinagar, Gujarat and first equitable mortgage/charge on immovable/movableproperties both present and future, of the Company's undertaking at District Bharuch, Gujarat (save and except book debts)subject to certain prior charges created in favour of lenders for their financial assistance and charges created/to be createdin favour of the Company's bankers on stocks, stores and book debts for securing borrowings for working capital and shallrank pari-passu with existing charges created/to be created in favour of other first chargeholders.

2. Banks :i) Company

Loans from banks on cash credit account of Rs. 34.29 crores (2002-2003 Rs. 45.91 crores) are secured by hypothecationof stocks/stores and book debts of the Company's undertakings at Kota, Rajasthan and at District Bharuch, Gujrat. Theseloans are further secured/to be secured by a third charge by way of mortgage/hypothecation of all the immovable/movableproperties of the Company's undertakings at Kota, Rajasthan.

Loans from banks on cash credit account of Rs. 6.02 crores (2002-2003 Rs. Nil) are secured by hypothecation ofstocks/stores and book debts of the Company's Ajbapur Sugar Complex, Uttarpradesh. These loans are further secured/tobe secured by a third charge by way of mortgage/hypothecation of all the immovable/movable properties of the Company'sAjbapur Sugar Complex, Uttarpradesh.

Loans from banks on cash credit account of Rs. 0.59 crore (2002-2003 Rs. Nil) are secured by hypothecation ofstocks/stores and book debts of the Company's Rupapur Sugar Complex, Uttarpradesh. These loans are further secured/tobe secured by a second charge by way of mortgage/hypothecation of all the immovable/movable properties of theCompany's Rupapur Sugar Complex, Uttarpradesh.

ii) Shriram Bioseeds Genetics India Limited (SBGI), a subsidiaryShort term loans and advances from banks of SBGI Rs. 6.72 crore (2002-2003 RS. 7.94 crore) are secured by hypothecationof stocks and other receivables and book debts both present and future and mortgage and charge in favour of banks of allimmovable properties both present and future including movable machinery, machinery spares, tools and accessories bothpresent and future. Also secured by a corporate guarantee of the holding company.

3. Other loans : - Companyi) Rupee term loan of Rs. 96.06 crores (2002-2003 - Rs. 110.52 crores) and foreign currency loan of Rs.19.04 crores (2002-

2003 - Rs. 10.80 crores) from banks/ financial institutions are secured by joint pari-passu first mortgage/charge and a rupeeterm loan of Rs. 20.00 crores (2002-2003 - Rs. Nil) from a bank is secured by way of second mortgage/charge, created /to be created on all immovable and movable assets, both present and future, pertaining to the Company's undertakings atDistrict Bharuch, Gujarat, (save and except book debts), subject to prior charges created / to be created in favour of theCompany's bankers on the stocks of raw materials, semi-finished and finished goods and consumable stores for workingcapital borrowings. (Rs.20.90 crores due within a year; 2002-2003 - Rs.14.48 crores)

ii) Rupee term loan of Rs. 54.32 crores (2002-2003 - Rs. 91.05 crores) from financial institutions/bank and foreign currencyloan of Rs.45.42 crores (2002-2003 – Rs.19.61 crores) are secured by way of first mortgage/charge, created / to be created,ranking pari-passu on all immovable and movable assets, both present and future, (save and except book debts) of theCompany's undertakings at Kota, Rajasthan, subject to charges created or to be created in favour of the Company’sbankers on the stocks of raw materials, semi-finished and finished goods and consumable stores for working capitalborrowings (Rs.18.96 crores due within a year; 2002-03 - Rs.16.99 crores).

iii) Foreign currency loan of Rs. 1.10 crores (2002-03 Rs. Nil) from a bank is secured by way of first mortgage / charge, rankingpari-passu on all immovable and movable assets, both present and future (excluding existing power plant and book debts)pertaining to the Company’s Ajbapur Sugar Complex, Uttarpradesh, subject to charges created / to be created in favour ofthe Company’s bankers on the stocks of raw material, semi finished goods, finished goods and consumable stores forsecuring working capital borrowings of Ajbapur sugar complex (Rs. 1.10 crores due within a year, 2002-03 Rs. Nil).

(iv) Rupee term loan of Rs. 9.87 crores (2002-03 Rs. Nil) from a bank is secured by way of first mortgage / charge, ranking pari-passu, on all immovable / movable assets, both present and future (excluding existing power plants and book debts),pertaining to the Company’s Ajbapur Sugar complex and Rupapur Sugar Complex, Uttarpradesh, subject to chargescreated / to be created in favour of Company’s bankers on the stocks of raw material, semi finished goods, finished goodsand consumable stores for securing working capital borrowings of Ajbapur Sugar Complex and Rupapur Sugar Complex(Rs. 0.50 crore due within a year)

(v) Rupee term loan of Rs. 19.00 crores (2002-03 Rs. Nil) from GE Capital Services India is secured by way of first exclusivemortgage / charge, created / to be created on existing power plants at Ajbapur Sugar Complex and Rupapur SugarComplex of the Company. (Rs. 4.00 crores due within a year)

(vi) Rupee Term Loan of Rs. 9.71 crores (2002-03 Rs. Nil) from Sugar Development Fund is secured by way of second mortgage/ charge, both present and future on all immovable / movable assets, created in favour of Central Government (Rs. Nil duewithin a year)





Deferred tax liabilitiesDepreciation 120.60 124.07 Compensation payable to employees 5.11 5.09 Others 3.67 2.89

129.38 132.05Deferred tax assetsProvision for gratuity and leave encashment 9.20 7.04 Provision for doubtful debts and advances 2.48 2.07 Unabsorbed depreciation / business loss 1.70 27.91 Unabsorbed capital loss 2.87 2.90 Others 3.63 2.67

19.88 42.59 Deferred tax liabilities (net) 109.50 89.46

4. DEFERRED TAX LIABILITIES AND ASSETS

Long TermTrade Investments

Unquoted7,22,735 (2002-2003 - 7,22,735) Equity shares of Rs. 10 each fully paid up 0.72 0.29(2002-03 - partly paid up Rs. 4 per share) of Bharuch Eco Aqua Infrastructure Limited Quoted 763.959 (2002-2003 - 763.959) US-2002 of Unit Trust of India of Rs. 10 each fully paid up (# Rs. 0.05 lacs) # #

6. INVESTMENTS

GROSS BLOCK DEPRECIATION NET BLOCK

Description As at Additions Deductions As at Up to For Deductions Up to As at As atMarch 31, March 31, March 31, the year March 31, March 31, March 31,

2003 2004 2003 2004 2004 2003Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores

TangiblesLand 29.65 4.16 – 33.81 * – – – – 33.81 29.65Buildings 74.39 4.41 0.89 77.91 ** 8.82 1.96 0.11 10.67 67.24 65.57Plant and machinery 726.95 17.17 *** 10.12 734.00 245.90 46.80 4.85 287.85 446.15 481.05Furniture and fittings 15.34 2.34 0.72 16.96 9.50 1.81 0.50 10.81 6.15 5.84 Vehicles 11.15 4.10 1.68 13.57 4.02 2.72 1.29 5.45 8.12 7.13 IntangiblesGoodwill 22.07 – 4.11 17.96 2.67 1.92 0.81 3.78 14.18 19.40Assets on leaseVehicles – 0.17 – 0.17 – 0.02 – 0.02 0.15 –This year 879.55 32.35 17.52 894.38 # 270.91 55.23 7.56 318.58 ## 575.80 Previous year 766.13 118.35 ### 4.93 879.55 223.60 50.05 @ 2.74 270.91 608.64 Capital work in progress 77.04 43.48 (including capital advances)

652.84 652.12

* Includes Rs. 12.04 crores ( 2002-2003 - Rs. 10.23 crores) pertaining to lands situated at Jhagadia and Rupapur pending registration in favour of Company ** Includes Rs. 1.15 crores ( 2002-2003 - Rs. 1.15 crores) pertaining to a flat situated at Mumbai, pending registration in favour of Company *** Includes Rs. 0.25 crore ( 2002-2003 - Rs. 2.33 crores) on account of foreign exchange fluctuation # Includes Rs. 2.17 crores ( 2002-2003 - Rs. 0.43 crore) on account of foreign currency translation ## Includes Rs. 0.72 crore ( 2002-2003 - Rs. 0.14 crore) on account of foreign currency translation ### Includes Rs. 18.55 crores on account of additions of subsdiaries acquired @ Includes Rs. 4.16 crores on account of additions of subsdiaries acquired.

5. FIXED ASSETS




8584



6. INVESTMENTS (Continued)

Other InvestmentsGovernment SecuritiesUnquotedNational savings certificates** 0.01 0.01 Investment in Shares, Units, etc.Quoted26,500 (2002-03 - 26,500 ) Equity shares of Rs.10 each fully paid-up of The ICICI Bank Limited 0.12 0.123,16,510 (2002-2003 - 3,16,510) Units of Rs. 10 each fully paid up of Kotak Mahindra Mutual Fund ( K Bond - wholesale plan ) 0.33 0.33 Nil (2002-2003 - 9,57,604.505 ) Units of Rs.10 each fully paid-up of Unit Trust of India* – 0.9595495 (2002-2003 - NIL ) 6.75 % Bonds of Rs.100 each fully paid-up ofUnit Trust of India* 0.95 –2,34,917 (2002-2003 - 2,34,917) Equity shares of Rs.10 each fully paid-up ofSRF Polymers Limited – –5,00,000 (2002-2003 - 5,00,000 ) Equity shares of IFCI Limited of Rs.10 each fully paid up 0.20 0.20 5,400 (2002-2003 - 5,400) Master Gains 92 of Unit Trust of India of Rs. 10each fully paid up (@ Rs. 0.47 lacs) @ @Unquoted2,500 (2002-2003 - 2,500) Equity shares of APW President System Limited of Rs.10 each fully paid up 0.01 0.01 50,000 ( 2002-2003 -50,000) Equity shares of Feedback Ventures Private Limited of Rs.10 each fully paid up 0.05 0.05 49,950( 2002-2003-49,950) Equity shares of Pacific Land DevelopmentPrivate Limited of Rs.10 each fully paid up 0.05 0.05 5,00,000( 2002-2003 - 5,00,000) Units of Alliance Millenium Fund ofRs.10 each fully paid up 0.22 0.22 250( 2002-2003 - 250) Units of Infinity Venture India Fund of Rs.100000/- each, Rs.65,000/- each paid up 1.63 1.633,00,000 ( 2002-2003 - 300000) Equity shares of E Commodities Limited of Rs.10 each fully paid up 0.30 0.30 2,00,000 (2002-2003 - 2,00,000) Equity shares of Ellenbarie Commercial Limited of Rs.10 each fully paid up 1.50 1.5040,000 (2002-2003 - 40,000) Equity shares of BMD Estate Private Limited of Rs.10 each fully paid up 0.75 0.75

Current InvestmentsNon-trade, Unquoted

2019 (2002-2003 - Nil ) Units of Rs. 1000 each fully paid up of Franklin TempletonMutual Fund, purchased during the year (Repurchase price - Rs. 0.30 crore) 0.30 – 570538 (2002-2003 - Nil ) Units of Rs. 10 each fully paid up of Standard Chartered Mutual Fund, purchased during the year (Repurchase price - Rs. 0.60 crore) 0.60 – Total: 7.74 6.41

Aggregate book value - Quoted 1.60 1.60 - Unquoted 6.14 4.81

Aggregate market value - Quoted 3.42 2.17

* 95495 6.75% Bonds of Rs. 100 fully paid of Unit Trust of India allotted in lieu of 957604.505 units of Rs. 10 each of UnitTrust of India

** Lodged with Sales Tax authorities Rs. 9,000 (2002-2003 - Rs. 9,000)





Current AssetsInventories

Stores and spares* 37.63 30.27Stock-in-trade**

Raw materials 18.43 14.72Process stocks 5.40 4.98Finished goods 166.96 126.07Securities # 0.01 0.01

228.43 176.05Sundry debtors

Debts over six monthsSecured - considered good 0.65 0.07Unsecured - considered good 23.34 10.98

- considered doubtful 7.94 5.58Other debts


214.02 148.93Less: Provision for doubtful debts 7.94 5.58

Bills discounted *** – 0.18206.08 143.17

Cash and bank balancesCash on hand 0.35 3.32Cheques in hand 28.87 –With scheduled banks on

Current account 16.38 9.96Deposit account**** 3.16 1.10

48.76 14.38

7. CURRENT ASSETS, LOANS AND ADVANCESAs at As at

March 31, 2004 March 31, 2003Rs. Crores Rs. Crores

Loans and AdvancesAdvances recoverable in cash or in kind or for value to be received


- considered doubtful 0.48 0.31Less: Provision for doubtful advances 0.48 0.31

50.28 33.01Deposits 10.19 9.70With customs, excise and port trust authorities 5.77 3.48Tax payments (net of provision for current tax) 4.57 8.77Interest accrued on investments and deposits 0.23 0.31

71.04 55.27554.31 388.87

* Stores and spares are valued at cost or under.** Stock-in-trade (other than securities) is valued at cost or net realisable value, whichever is lower.# Securities are valued at cost or market/realisable value, whichever is lower.*** Relates to other debts - unsecured - considered good.**** Includes Rs. 0.63 crore (2002-2003 - Rs.0.42 crore) provided as margin for bank guarantees and letters of credit.


8786



Current LiabilitiesSundry creditors #

Total outstanding dues of small scale industrial undertakings 0.73 0.83Total outstanding dues of creditors other than small scale industrial undertakings 248.92 93.25

Ex-gratia payable under voluntary retirement schemes** 2.31 2.58Interest accrued but not due on loans 4.18 4.57

256.14 101.23ProvisionsGratuity 21.38 17.65Leave encashment 5.16 3.39Proposed dividends 6.70 5.03Corporate dividend tax 0.86 0.64Contingencies 4.00 4.00

38.10 30.71294.24 131.94

# Sundry creditors do not include any amounts outstanding as on March 31, 2004 which are required to be credited toInvestor Education and Protection Fund.

** Rs. 0.28 crore (2002-2003 - Rs.0.28 crore) due within a year.

8. CURRENT LIABILITIES AND PROVISIONSAs at As at

March 31, 2004 March 31, 2003Rs. Crores Rs. Crores



1) Voluntary retirement scheme – 0.66Less : Written-off – 0.66

– –2) Catalysts – 4.72

Less : Written-off – 4.72– –

3) Expenditure incurred in connectionwith prepayment/resetting of long term loans – 3.36Less : Written-off – 3.36

– –4) Preliminary expenses 0.07 0.09

Less : Written-off 0.07 0.02– 0.07

5) Cane development expenses 0.24 0.43Less : Written-off 0.24 0.19

– 0.246) Interest benefit on deferred sales tax liability 0.15 0.15

Less : Written-off 0.15 –– 0.15– 0.46

9. MISCELLANEOUS EXPENDITURE(to the extent not written-off or ajusted)



Income from Services 2.12 2.76

Other incomeDividend income (gross) from:

- non trade, long term investment*( # Rs 0.20 lacs) # 0.21- non trade, current investment** 0.69 0.49Profit on sale of -non trade, long term investments 0.01 1.25-non trade, current investments 0.04 0.22Economic benefit from Kitply Industries Ltd. – 4.11Interest income## 1.55 1.96Rent 0.04 0.08Liabilities/provisions no longer required written back 1.17 0.55Exchange fluctuation 11.64 0.95Miscellaneous 5.84 5.00

23.10 17.58

* Income-tax deducted at source Rs. Nil (2002-2003 - Rs. 0.02 crore)** Income-tax deducted at source Rs. Nil (2002-2003 - Rs. 0.05 crore)## Income-tax deducted at source Rs. 0.32 crore (2002-2003 Rs.1.64 crores)

10. INCOME FROM SERVICES AND OTHER INCOME



Raw materials consumed 519.60 420.37 Stores, spares and components 71.72 63.85 Power, fuel, etc. 193.77 191.97 Repairs

Buildings 3.21 2.68 Plant and machinery 20.49 16.09

Salaries, wages, bonus, gratuity, commission, etc. 85.32 71.60 Provident and other funds 8.31 7.35 Welfare 5.00 4.70 Rent 4.68 4.37 Insurance 4.70 4.52 Donation 0.26 0.30 Rates and taxes 1.28 0.64 Auditors' remuneration *

Audit fee 0.42 0.27 Tax audit 0.04 0.03 Provident fund trust audit (# Rs. 0.20 lac) – # Other services 0.24 0.10 Out-of-pocket expenses 0.02 0.02

Directors' fees 0.06 0.04 Bad debts and advances written-off 0.98 0.25

11. MANUFACTURING AND OTHER EXPENSES




8988



Provision for doubtful debts and advances 2.53 0.29 Research and development expenses 0.04 0.89 Freight and transport 50.00 43.26 Commission to selling agents 1.08 0.84 Brokerage, discounts (other than trade discounts), etc. 10.07 7.41 Selling expenses 16.04 10.37 Exchange fluctuation – 0.07 Goodwill write off 1.81 –Loss on sale/write off of fixed assets 0.28 0.10 Increase/(decrease) in excise duty of finished goods 9.68 3.44 Miscellaneous expenses 44.74 40.41

1,056.37 896.23 - Increase/+ Decrease in stocks of finished goods and process stocksClosing stocks 172.37 131.06 Less : Opening stocks 131.06 136.20 Add: Stocks of Subsidiaries on acquisition thereof – 19.03 Add: Stocks transferred from Rupapur Sugar Complex – 3.21

(41.31) 27.38 1,015.06 923.61

* Includes remuneration of auditors of the Company and its subsidiaries

11. MANUFACTURING AND OTHER EXPENSES (Continued)



Interest on debentures and other fixed loans 38.12 52.29Interest - others 3.93 9.62

42.05 61.91

12. INTEREST



Depreciation 55.23 45.89Less: Transfer from revaluation reserve 0.03 0.03

55.20 45.86Miscellaneous expenditure written-off 0.46 8.95

55.66 54.81

13. DEPRECIATION/MISCELLANEOUS EXPENDITURE WRITTEN-OFF





1. Statement of accounting policies

(i) Basis of accountingThe consolidated financial statements are prepared under the historical cost convention as modified to include therevaluation of land of one of the units of the Company. These statements have been prepared in accordance withAccounting Standard 21 – "Consolidated Financial Statements".

(ii) Principles of consolidationa. The consolidated financial statements relate to DCM Shriram Consolidated Limited (‘the Company’) and its subsidiary

companies. The consolidated financial statements have been prepared on the following basis:

- the financial statements of the Company and its subsidiary companies have been combined on a line-by-line basisby adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminatingintra-group balances and intra-group transactions resulting in unrealised profits or losses.

- the consolidated financial statements have been prepared using uniform accounting policies for like transactionsand other events in similar circumstances and are presented in the same manner as the Company’s separatefinancial statements.

- the excess of cost to the Company of its investment in a subsidiary company over the Company’s portion of theequity of the subsidiary at the date on which investment in subsidiary is made is recognised in the financialstatements as goodwill, which is amortised over a period of ten years.

b) The companies considered in the consolidated financial statements are:

Country of % voting power % voting powerName of the Company incorporation held as at held as at

March 31, 2004 March 31, 2003

Subsidiary companiesDCM Shriram Credit And Investments Limited (DSCIL) India 100 100

DSCL Energy Services Company Limited (DESL) (99.99% subsidiary company of DSCIL) India 99.99 99.99

DCM Shriram International Limited (DSIL)(100% subsidiary company of DSCIL) India 100 100

DCM Shriram Infrastructures Limited (DCMSIL)(100 % subsidiary of DSCIL), subsidiary from current year India 100 –

DCM Shriram Aqua Foods Limited (DSAFL) India 99.99 99.99

Shriram PolyTech Limited (SPL) India 100 100

Bioseeds Limited (BL) Mauritius 51 51

Bioseed Genetics Vietnam (BGV) (100% subsidiary company of BL) Vietnam 51 51

Bioseed Research Vietnam (BRV) (100% subsidiary company of BL) Vietnam 51 51

Bioseed Research Philippines Inc (BRP) (100% subsidiary company of BL) Philippines 51 51

Bioseed Research India Private Limited (BRI) (99.99% subsidiary company of BL) India 50.99 50.99

Shriram Bioseed Genetics India Limited (SBGI) India 51 51

Ghaghara Sugar Limited (GSL)(Subsidiary upto previous year, but its entire business taken over during the year, refer note 6) India – 100

c) These Consolidated Financial Statements are based, in so far as they relate to amounts included in respect ofsubsidiaries on the audited financial statements prepared for consolidation in accordance with the requirements ofAccounting Standard 21 by the concerned subsidiaries.

14. NOTES TO THE CONSOLIDATED ACCOUNTS


9190



(iii) Fixed assets and depreciationa) Owned assets

Fixed assets (other than land at one of the units of the Company and assets acquired in Shriram Bioseed GeneticsIndia Limited which have been revalued and are stated at the revalued figure) are stated at cost less accumulateddepreciation. Cost of acquisition or construction is inclusive of freight, duties, taxes and incidental expenses andinterest on loans attributable to the acquisition of assets up to the date of commissioning of assets. Capital subsidyreceived against specific asset is reduced from the value of relevant fixed asset.

The Company is following the straight line method of depreciation in respect of buildings, plant and machinery andwritten down value method in respect of other assets.

Depreciation is provided at the rates as specified in schedule XIV to the Companies Act, 1956, except in the case of:

Depreciation Rate

- catalyst tubes 12.50%

- cell units 10.00%

- certain other plant and machinery items 16.67%

- office and other equipments 25.00%

Depreciation is calculated on a pro-rata basis from the date of additions, except in the case of assets costing uptoRs.5000 each, where each such asset is fully depreciated in the year of purchase.

On assets sold, discarded, etc. during the year, depreciation is provided upto the date of sale/discard.

b. Assets taken on finance leaseFixed assets taken on finance lease on or after April 1, 2001 are stated at the lower of the fair value of the lease assetsor the present value of the minimum lease payments at the inception of the lease.

In respect of fixed assets taken on finance lease, when there is reasonable certainty that the Company will obtainownership by the end of the lease term, depreciation is provided in accordance with the policy followed by theCompany for owned assets.

(iv) Foreign currency transactions(a) Transactions in foreign currency are recorded at the exchange rate prevailing at the time of transaction. In the case of

liabilities incurred for the acquisition of fixed assets, the loss or gain on conversion (at the rate prevailing at the yearend or at the forward rate where forward cover has been taken) is included in the carrying amount of the related fixedasset. Current assets and liabilities (other than those relating to fixed assets) are restated at the rate prevailing at theyear end or at the forward rate, where forward cover has been taken and the difference between the year end rate andthe exchange rate at the date of the transaction is recognised as income or expense in the profit and loss account.

In respect of transactions, covered by forward cover contracts, the difference between the contract rate and the rate ondate of transaction is recognised as income or expense in the profit and loss account over the life of the contract.

(b) In case of foreign subsidiaries, the assets and liabilities have been translated into Indian Rupees at the closingexchange rate at the year end whereas revenues and expenses reflected in the profit and loss account have beentranslated into Indian Rupees at monthly average exchange rate for the reporting period. The resultant translationexchange differences are accumulated in "Foreign currency translation reserve" to be recognised as income orexpense in the period in which net investment in concerned foreign subsidiary is disposed off.

(v) InventoriesStores and spares are valued at cost or under. Stock-in-trade (other than securities) is valued at cost or net realisablevalue, whichever is lower. The bases of determining cost for different categories of inventory are as follows:

Stores, spares and raw materials – Weighted average rate.

Process stocks and Finished goods – Direct cost plus appropriate share of overheads after giving credit for otherincome and excluding certain expenses like ex-gratia and gratuity.

By Products – At estimated realisable value.

Securities are valued at cost or market/realisable value, whichever is lower.

14 NOTES TO THE CONSOLIDATED ACCOUNTS (Continued)




(vi) Customs dutyCustoms duty payable on finished goods, raw materials, stores, spares and components is accounted for on theclearance of goods from custom warehouses.

(vii) Revenue recognitiona) Revenue in respect of sale of products is recognised at the point of despatch to customer.

b) Under the retention pricing scheme, the Government of India reimburses to the fertiliser industry, the difference betweenthe retention price based on the cost of production and selling price (as realised from the farmers) as fixed by theGovernment from time to time, in the form of subsidy. In the case of increase in input costs/expenses/capital relatedcosts, etc. for which retention price is yet to be notified, the Company, based on its assessment of ultimate collectionwith reasonable degree of certainty at the time of accrual, takes credit for the same as income for the year.

(viii) InvestmentsLong term investments are stated at cost unless there is a permanent fall in value thereof. Current investments are statedat cost or net realisable value, whichever is less.

(ix) Retirement and other benefitsThe Company has the following retirement schemes.

- Superannuation fund for officers

- Provident fund for all employees.

The contributions to the above funds are charged to revenue each year.

Provision for gratuity and leave encashment determined on an actuarial basis at the end of the year are charged torevenue every year.

(x) Research and developmentThe revenue expenditure on research and development is charged as an expense in the year in which it is incurred.Capital expenditure is included in fixed assets.

(xi) Agricultural costAgricultural costs of Shriram Bioseed Genetics India Limited are accounted for as per the on going contracts.

(xii) Income-taxThe Income-tax liability is provided in accordance with the provisions of the Income-tax Act, 1961.

Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference betweentaxable income and accounting income that originate in one period and are capable of reversal in one or more subsequentperiods.

3. In accordance with past practice, the Company has taken revenue credits aggregating Rs. 10.60 crores (2002-2003 - Rs. 6.75crores) for claims, which are pending notification/final acceptance by ‘Fertiliser Industry Coordination Committee’ (FICC),Government of India, in pursuance of the Retention Price Scheme administered for nitrogenous fertilisers. Necessaryadjustment to revenue credits so accrued will be made on issuance of notification by FICC or final settlement thereof.

This Year Previous Year(Rs. Crores) (Rs. Crores)

2 (i) Contingent liabilities not provided for: Claims (excluding claims by employees where amount not ascertainable) not acknowledged as debts 15.70 8.28Bills/cheques discounted 1.35 1.20In respect of partly paid equity shares/units 0.88 1.31In respect of income-tax matters 4.51 0.97

(ii) Capital commitments (net of advances) 41.27 10.92

(iii) Guarantees given to banks and other parties in respect of loans availed by others:Amount guaranteed 6.60 –Amount of loans outstanding 0.01 –


9392



4. Pursuant to the Scheme of Arrangement as approved by the High Court of Delhi by its order dated April 16, 1990 undersections 391/394 of the Companies Act, 1956, the assets and liabilities of certain units of undivided DCM Limited weretransferred to the Company with effect from April 1, 1990, being the effective date.

In terms of the Scheme of Arrangement there are various issues relating to income-tax, sales tax, etc. arising/arisen out of thereconstruction arrangement which will be settled and accounted for as and when the liabilities/benefits are finally determined.The effect of these is not ascertainable at this stage.

5. Land at Najafgarh Road, New Delhi, is jointly held and possessed in equal proportion by the Company with M/s. Irama EstatesLimited, Calcutta, pursuant to the Agreement between the parties.

6. Pursuant to the Scheme of Arrangement (Scheme) under section 391 to section 394 of the Companies Act, 1956, approvedby the Hon’ble High Court of Delhi vide its order dated May 5, 2004, which became effective on May 14, 2004 on filing of thecertified copy of the Orders of the High Court in the office of the Registrar of Companies, w.e.f April 1, 2003, the AppointedDate of the Scheme:

a) the Energy Services (ESCO) business of the Company has been transferred to and vested in DSCL Energy ServicesCompany Limited (DSCL Energy), a subsidiary ,as a going concern on slump sale basis. DSCL Energy, in terms of theScheme, has to discharge the liability by issuing 17,33,200 equity shares of Rs. 10/- each at par aggregating to Rs. 1.73crores. In terms of the Scheme, all gains and losses, if any, relating to this business, arising subsequent to the appointeddate but pertaining to the period prior thereto would have to be borne by the Company.

b) the entire business of Ghaghara Sugar Limited (GSL), a wholly owned subsidiary of the Company, engaged in themanufacturing of sugar has been transferred to the Company. In terms of the Scheme, the accumulated losses of GSLaggregating Rs. 9.43 crores as at April 1, 2003 together with the excess of book value of equity investments held in GSLover the aggregate of GSL’s share capital and share premium account amounting to Rs. 0.28 crore as at April 1, 2003 hasbeen adjusted from "Share premium account" in schedule-2.

7. Advances recoverable in cash or in kind or for value to be received in schedule 6 include Inter-corporate deposits aggregatingRs.0.50 crore (2002-2003 - Rs. 1.50 crores)

8. During the year, the Company on a review of the estimated useful life of certain assets and on the basis of past experience,revised the rates of depreciation in respect of plant and machinery from rates as per Schedule XIV of the Companies Act,1956 to rates based on their estimated useful life or rates as per Schedule XIV, whichever is higher. Consequently, thedepreciation charge for the year is higher by Rs. 3.94 crores and the profit after tax for the year is lower by Rs. 2.53 crores.

9. The Hon’ble Supreme Court vide its Order dated December 11, 1996 directed that the Aqua projects shall be allowed to bedeveloped after the projects are granted approval by an ‘Authority’ to be constituted by the Central Government, which is stillpending. DCM Shriram Aqua Foods Limited is monitoring the developments in this regard and will take appropriate actionsin due course.

10. Sundry debtors of Shriram Bioseed Genetics India Limited (SBGI) includes Rs. 1.16 crores in respect of a debtor againstwhom legal action for recovery has been initiated. In the opinion of the management of SBGI, this outstanding is consideredfully recoverable and therefore, has not been provided for.

11. Segment reporting

A. Business segments :Based on the guiding principles given in Accounting Standard AS-17 "Segment Reporting" issued by the Institute ofChartered Accountants of India, the Company’s and its subsidiaries business segments include: Fertilisers (manufacturingof urea), Plastic (manufacturing of polyvinyl chloride, carbide and compounds), Chemicals (manufacturing of chlor alkaliproducts), Traded Products (trading of DAP, MOP, other fertilisers, pesticides), Sugar (manufacturing of sugar), Others(energy services, textiles, agri retail business, seeds and manufacturing of cement).

B. Geographical segments:Since the Company’s activities/operations are primarily within the country and considering the nature of products/servicesit deals in, the risks and returns are same and as such there is only one geographical segment.




C. Segment accounting policies:In addition to the significant accounting policies applicable to the business segments as set out in note 1 of schedule 14"Notes to the Consolidated Accounts", the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenueand expenses are directly attributable to the segments.

b) Segment assets and liabilities:Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors,inventories and fixed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet.Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segmentassets and liabilities do not include deferred income taxes. While most of the assets/liabilities can be directly attributedto individual segments, the carrying amount of certain assets/liabilities pertaining to two or more segments are allocatedto the segments on a reasonable basis.

c) Inter segment sales:Inter segment sales between operating segments are accounted for at market price. These transactions are eliminatedin consolidation.

12 Disclosure in respect of assets taken on lease on or after April 1, 2001 under Accounting Standard AS-19 "Lease Accounting".

(i) General description of the finance lease:Bioseed Research Philippines Inc has entered into finance lease arrangement for vehicles. Some of the significant termsand conditions of such leases are as under:- renewal for a further period on such terms and conditions as may be mutually agreed upon between lessor and the

Company.- assets to be purchased by the Company or the nominee appointed by the Company at the end of the lease term.

d) Information about business segmentsFertiliser Plastics Chemicals Traded Products Sugar Others Elimination Total

Particulars This Previous This Previous This Previous This Previous This Previous This Previous This Previous This PreviousYear Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year

1. RevenueExternal sales 445.50 437.45 238.32 229.14 220.06 195.92 280.73 235.04 217.73 168.66 154.28 109.80 1556.62 1376.01 Income from services 0.03 0.31 2.09 2.45 2.12 2.76 Inter segment sales 0.95 0.28 16.69 17.59 1.01 0.12 0.31 0.48 0.01 11.16 (18.97) (29.63)Total revenue 446.45 437.73 238.32 229.14 236.78 213.82 281.74 235.16 218.04 169.14 156.38 123.41 (18.97) (29.63) 1558.74 1378.77

2. ResultsSegment results 39.49 56.92 46.93 45.74 60.38 42.60 (0.18) (1.25) 20.07 14.94 4.07 (3.52) 170.76 155.43 Unallocated expenses (net of income) (24.68) (23.04)Operating profit 39.49 56.92 46.93 45.74 60.38 42.60 (0.18) (1.25) 20.07 14.94 4.07 (3.52) 146.08 132.39Interest expense 42.05 61.91 Income taxes - Current 8.35 11.74

- Deferred 20.04 6.03 Net profit 75.64 52.71

3. Other InformationA.Assets

Segment assets 215.46 188.38 113.00 105.27 254.08 274.45 71.07 47.04 309.83 232.94 218.06 147.76 1181.50 995.84 Unallocated assets 33.39 52.02 Total assets 215.46 188.38 113.00 105.27 254.08 274.45 71.07 47.04 309.83 232.94 218.06 147.76 1214.89 1047.86

B.LiabilitiesSegment liabilities 44.91 22.18 12.71 13.22 12.43 11.48 116.08 11.96 43.97 28.81 44.52 27.68 274.62 115.33 Share capital and reserves 333.02 272.48 Secured and unsecured loans 466.17 543.76 Unallocated liabilities 141.08 116.29 Total liabilities 44.91 22.18 12.71 13.22 12.43 11.48 116.08 11.96 43.97 28.81 44.52 27.68 1214.89 1047.86

C.OthersCapital expenditure 5.04 6.33 4.89 9.43 4.93 6.62 0.11 0.02 15.98 46.99 31.02 27.70 Depreciation 10.96 9.03 5.64 5.82 21.56 18.33 0.03 0.01 7.89 5.53 6.35 5.07 Non cash expenses other than depreciation 0.01 4.86 1.13 0.27 2.49 3.05 0.05 0.16 0.44 0.21 1.30 0.25

Rs. Crores



9594



(ii) Reconciliation between the total of minimum lease payments at the balance sheet date and their present value :

Not later than Later than one year but Total one year not later than five years

This year Previous year This year Previous year This year Previous year

Total of minimum lease payments at the balance sheet date 0.18 – 0.04 – 0.14 –

Less: Future finance charges 0.03 – 0.01 – 0.02 –

Present value of minimum lease payments at the balance sheet date 0.15 – 0.03 – 0.12 –

13. Earning per share

This Year Previous Year

Profit after taxation as per consolidated profit and loss account 73.40 53.52

Basic/Weighted average number of equity shares outstanding 16746332 16746332

Basic and diluted earnings per share in rupees (face value – Rs.10 per share) 43.83 31.96

Rs. Crores

Rs. Crores

14. Net Deferred tax asset of Rs.0.90 crore in Shriram Polytech Limited relating to unabsorbed depreciation and lossesrecognised in the earlier years has been charged to the Profit and Loss Account during the year in view of it not being virtuallycertain at this point of time that sufficient future taxable income will be available against which such deferred tax asset can berealised.

15. Related party disclosures under Accounting Standard 18A. Name of related party and nature of related party relationship

Key Managerial Persons, their relatives and HUFs : Mr. Ajay S.Shriram, Mr. Vikram S.Shriram, Mr. Rajiv Sinha, Mr. AjitS.Shriram, Mrs. Divya Sinha (relative of Mr. Rajiv Sinha), M/s. Ajay S.Shriram (HUF), M/s. Vikram S.Shriram (HUF)

16. Amount of borrowing costs capitalised to fixed assets during the year Rs. Nil (2002-2003 Rs. 0.84 crore).

17. Previous year’s figures have been recast, wherever necessary.

18. Schedules 1 to 14 form an integral part of the financial statements.

Key Managerial Personnel,their relatives and H.U.F.’sThis Year Previous Year

Hire of premises - rent paid 0.39 0.37Security deposit given 0.25 -Managerial remuneration including commission 4.09 3.43Balance outstanding as at the year end- Loans and advances (# 0.06 lacs) – #- Security deposits for premises hired 4.93 4.62

Rs. CroresB. Transactions with Key Managerial Persons, their relatives and HUF's


Consolidated Cash Flow Statement DCM SHRIRAMCONSOLIDATED LIMITED

of DCM Shriram Consolidated Limited and its Subsidiary Companies for the year ended March 31, 2004



A. Cash flow from operating activitiesNet profit before tax 104.03 70.48 Adjustments for :Depreciation and miscellaneous expenditure written off 55.66 54.81 Loss on sale/write off of fixed assets 0.28 0.10Goodwill write off 1.81 – Profit on sale of non trade current investments (0.04) (0.22)Profit on sale of non trade long term investments (0.01) (1.25)Unrealised exchange differences (0.21) (0.02)Upfront fee paid 3.83 3.44 Interest expense 42.05 61.91 Less: interest and dividend income (2.24) (2.66)Operating profit before working capital changes 205.16 186.59 Adjustments for :Trade and other receivables(net) (87.73) 40.49 Inventories (52.59) 22.25 Trade and other payables 163.72 (31.23)Cash generated from operations 228.56 218.10 Income taxes paid (net) (2.32) (18.35)Net cash from operating activities 226.24 199.75

B. Cash flow from investing activitiesPurchase of fixed assets (61.58) (77.36)Sale of fixed assets 6.17 1.60 Miscellaneous expenditure – (0.40)Inter Corporate Deposits received back 1.00 4.74 Acquisition of Subsidiaries – (13.29)Purchase of non trade current investments (622.40) (190.72)Purchase of non trade long term investments – (2.58)Sale of non trade current investments 621.15 192.85 Sale of non trade long term investments – 1.87 Advance given for purchase of Shares (2.43) 1.72 Interest received 1.41 2.12 Dividend received 0.69 0.70 Net cash used in investing activities (55.99) (78.75)

C. Cash flow from financing activitiesIssue of share capital – 1.78 Proceeds from borrowings 475.35 457.57 Repayment of borrowings (504.14) (477.95)Inter Corporate Deposits received back 0.10 – Inter Corporate Deposits given (3.00) – Repayment of finance lease liabilities (0.04) – Upfront fee paid (3.83) (3.44)Changes in working capital borrowings (49.56) (32.12)Dividends paid (9.17) (7.04)Corporate dividend tax paid (1.07) –Interest paid (42.57) (62.66)Net cash used in financing activities (137.93) (123.86)Net increase/(decrease) in cash and cash equivalents 32.32 (2.86)Cash and cash equivalents as at opening Cash and cheques in hand and balances with banks 13.28 16.14 Cash and cash equivalents as at closing Cash and cheques in hand and balances with banks 45.60 13.28

Note: Previous year's figures have been recast, wherever necessaryPer our report attached to the consolidated balance sheetFor A.F. FERGUSON & CO.Chartered Accountants VIKRAM S. SHRIRAM AJAY S. SHRIRAM





96

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leadership is doing the right things.

– Peter F. Drucker


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