TO THE MEMBERS
Your Directors present their 74th Annual Report and Audited Accounts for the FinancialYear ended 31st March, 2013 -
1. Financial Results
| ||31-322013 ||31-3-2012 |
| ||(Rs. in lacs) ||(Rs. in lacs) |
|Gross Sales ||143730.66 ||128064.48 |
|Gross Profit ||21331.90 ||9663.18 |
|Less : Provisions || || |
|Depreciation ||5290.88 ||5097.29 |
|Profit Before Tax ||16041.02 ||4565.88 |
|Tax: Current Period ||3255.00 ||900.00 |
|Previous Period ||12.67 ||- |
|MAT Credit available for set off / Utilized ||371.00 ||(900.00) |
| ||3638.67 ||- |
|Profit After ||12402.35 ||4565.88 |
|Current Tax & Tax || || |
|Adjustments || || |
|Deferred Tax ||1913.50 ||1499.00 |
|Profit after Tax ||10488.85 ||3066.88 |
|Add: Balance brought forward ||2291.81 ||2074.70 |
|Profit available for ||12780.66 ||5141.58 |
|Appropriation || || |
|Appropriations: || || |
|General Reserves ||4000.00 ||2000.00 |
|Proposed Dividend ||755.25 ||731.16 |
|Dividend ||128.39 ||118.61 |
|Distribution Tax || || |
|Balance carried forward ||7897.02 ||2291.81 |
Your Directors recommend payment of Dividend at Re.0.36 per equity share of Rs. 2 each.
The sales for the year are Rs.1437.31 crores during the year compared to Rs. 1280.64crores in the previous year, registering an increase of 12%. The Gross Profit for the year(before depreciation) is Rs. 213.31 crores against Rs. 96.63 crores in previous year. Theprofit before tax amounted to Rs.160.41 crores as against Rs. 45.66 crores in the previousyear. The profit after provision of current tax is Rs. 124.02 crores against Rs. 45.66crores, of last year and profit after deferred tax is Rs.104.89 crores against Rs.30.67crores of last year, Deferred Tax is only a provision as per accounting guidelines and notan outflow. Better realization on export of Synthetic Rutile has largely helped inincrease of profits
The Company's exports are Rs.419.50 crores as compared to Rs. 255.82 crores in theprevious year. On account of better realisation on Synthetic Rutile value of exports hasgone up.
5. Divisionwise Performance:
a) PVC Division:
The turnover of the division is Rs.486.28 crores as compared to Rs. 524.15 crores inthe previous year. The demand for PVC continues to show positive growth. The Governmenthas identified irrigation, power and infrastructure, as thrust areas and increasedactivity in these sectors are likely to boost demand of PVC Resin.
b) Caustic Soda Division: The turnover of the division is Rs. 725.34 crores ascompared to Rs. 552.30 crores in the previous year, an increase of 31%. The turnover ofthe division has gone due to better relisation.
c) Soda Ash Division:
The turnover of the division is Rs.208.12 crores as compared to Rs. 194.79 crores inthe previous year registering an increase of 7%. The increase in turnover is due to betterrealization and increase in sale of both Soda Ash and Soda bicarbonate.
6. PROJECTS UNDER IMPLEMENTATION
6.1.1 Projects Under Implementation
22.214.171.124CALCIUM CHLORIDE PLANT
The Calcium Chloride project is having technical problem. It may not be possible toproduce calcium chloride , the plant and the equipment erected for this plant will be usedin the soda ash manufacture.
6.1.2 SYNTHETIC IRON OXIDE PIGMENT AND CALCIUM CHLORIDE PROJECT :-
The work on Synthetic Iron Oxide Pigment (SIOP) project is in advanced stage ofimplementation. The company has appointed UDHE India ltd., to provide engineeringservices. The mechanical completion of the plant is expected to be completed by the thirdquarter of 2013-14. The facility once established wil l enable the company to utilise itswaste and produce a commercially viable product. This plant is expected to startcommercial production by fourth quarter of 2013-14. Calcium Chloride will be produced fromthe effluent of Synthetic Iron Oxide Pigment Plant. Both Synthetic Iron Oxide Pigment andCalcium Chloride facility have been given 100% EOU status. Besides employing DCW'sin-house developed technology, the company has made an agreement with Rockwood Italia(Group Company of Rockwood Pigments' USA) for manufacture of both yellow and red ironoxide pigment. Waste stream of Iron Oxide plant will produce Calcium Chloride and PureWater. An off take agreement has been signed with Rockwood Italia for sale of 50% IronOxide Pigment to them. Balance 50% of the product can be sold at company's option.
6.1 .4PVC Automation-Cum-Balancing Equipment Program
The company's PVC Automation-Cum-Balancing Equipment program is under progress, whichwill increase PVC capacity from existing 90000 TPA to 140000 TPA. The expansion isexpected to be completed by Third Quarter of 2013-14.
7. Corporate Governance
The report on Corporate Governance is annexed to this report.
8. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings andOutgo:
Information pursuant to Section 217 (1) (e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of the Board of Directors) Rules 1988is set out in the Annexure forming part of this Report.
9. Particulars of Employees:
I nformation in accordance with Section 217 (2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975, is set out in the Annexure formingpart of this Report.
10. Environment and Safety Measures
The Company is committed to Industrial Safety and Environment Protection and these areon going processes at the Company's various plants. The Sahupuram Unit has been grantedISO 14001 Certificate for complying with environment protection and safety.
Shri. P. K. Jain, Shri. S. K. Jalan and Shri R. V. Ruia, Directors, retire by rotationat the forthcoming Annual General Meeting, and being eligible, offer themselves forreappointment. Smt. Vandana Jain, Executive Director of the Company, has resigned from theBoard with effect from 6th August, 2012. Dr. V. H. Joshi, Director of theCompany, has resigned from the Board with effect from 16th October, 2012. Smt.Vandana Jain has been with the Company since 2006 and Dr. V. H. Joshi has been with theCompany since 1990. The Board has put on record its appreciation for the valuable servicerendered by them during their tenure. Mr. Mudit Jain has been appointed as an AdditionalDirector and also as Whole Time Director designated as 'Executive Director' with effectfrom 6th August, 2012. Smt. Sujata Ranganekar and Shri. D.Ganapathy, wereappointed as Additional Directors with effect from 31st October, 2012 and 7thNovember, 2012 respectively and will hold office upto the date of forth coming AGM. Thecompany has received notices from members signifying their intention to propose theirappointment as Directors.
Resolutions have been incorporated in the N otice convening the forthcoming Annualgeneral Meeting for the appointment of Smt. Sujata Rangnekar and Shri D. Ganapathy.
12. Auditors and Auditors' Report: M/s V. Sankar Aiyar & Co., CharteredAccountants - Statutory Auditors of the Company retire at the forthcoming Annual GeneralMeeting and are eligible for reappointment.
13. Cost Audit:
In accordance with the directions received from the Department of Company Affairs, thecompany has appointed M/s. N. D. Birla & Company, Ahmedabad and M/s. R. Nanabhoy &Company, Mumbai for conducting the Cost Audit of the Company's Soda Ash and Caustic SodaDivisions respectively for the financial year 2011-12. Their appointments were approved bythe Ministry of Corporate Affairs. They have conducted the cost audit for the financialyear 2011-12 of respective divisions.
The due date for filing of consolidated cost audit report was 28th February,2013 and the same has been filed on 14th June, 2013. The Company has reappointed M/s. N.D. Birla & Company, Ahmedabad and M/s. R. Nanabhoy & Company, Mumbai forconducting the cost audit of the Company's Soda Ash and Caustic Soda Divisionsrespectively for the financial year 2012 - 2013. Their appointments were approved by theMinistry of Corporate Affairs. They have conducted the cost audit for the financial year2012 - 2013 of respective divisions and would file the cost audit reports with the CentralGovernment before the due date. The due date for filing of cost audit report is 27thSeptember, 2013.
14. ISSUE OF CONVERTIBLE WARRANTS TO PROMOTER GROUP ON PREFERENTIAL BASIS: Pursuantto the approval granted by the shareholders of the Company at their Annual General Meetingheld on November 24, 2011 , th e Company had allot ted on January 9, 2 012, 1,36,36,363convertible warrants on preferential basis to Promoter Group; each warrant convertibleinto one Equity Share of Rs. 2 each, at a premium of Rs. 9 per share, in one or moretranches, within a period of 18 months from the date of allotment of warrants. Out ofthese warrants 69,45,455 warrants were converted into Equity shares on January 31, 2012.39,23,393 warrants were converted into Equity Shares on 23rd April, 2012. 12,36,363warrants were converted into Equity Shares on 22nd October, 2012 and 15,31,152 warrantswere converted into Equity Shares on 24th December, 2012. None of the warrants are nowpending for conversion into Equity Shares.
15. MANAGEMENT DISCUSSION AND ANALYSIS REPORT OUTLOOK :
The Company has diversified operations with three business segments viz. PVC, ChloroAlkali and Soda Ash. It is thus reasonably protected from the vagaries of individualbusiness cycles of these products.
The Company, one of the country's five producers of PVC resin, has maintained itsmarket share of nearly 7%. On 10th May'13, the government has increased import duty on PVCfrom 5% to 7.5%.
This will reduce competition from imported PVC.
Caustic Soda Division:
The Company continues to be a major player in South India with a market share ofapproximately 15%. The demand for caustic soda is expected to grow at a steady rate,specially with increased demand from alumina manufacturers. Use of HCL & Chlorine tomaintain Caustic Production at full level is in place.
Soda Ash Division: The Soda Ash Industry continues to grow at a compounded rate of4% - 5% per annum and this trend is expected to continue. Imposition of Antidumping dutyon import of Soda Ash from countries like Iran, Pakistan, China, Ukraine, Kenya, EuropeanUnion and the US by Govt., of India, will protect the industry against dumping of Soda Ashfrom these countries.
16 PROPOSED PROJECT
16.1Chlorinated Poly Vinyl Chloride (C-PVC)
The Company has signed Technology License agreement with Arkema of France for puttingup Chlorinated Poly Vinyl Chloride (C-PVC) Plant at its Sahupuram Facility, in Tamilnadu.The UHDE India ltd., will do detailed engineering for the project. This project isestimated to take 12-15 months for implementation.
16.2 Producer Gas Plant :-
The Producer Gas Plant to produce gas from coal is expected to be operational byJune'2013. This will replace high cost Furnace Oil resulting in lower cost of heating invarious units of the company.
17. Internal Control Systems:
The Company has an adequate internal control procedure commensurate with the nature ofits business and size of its operations. Internal Audit is conducted on a regular basis bya reputed firm of Chartered Accountants.
The reports of the internal audit along with comments from the management are placedfor review before audit committee, to consider its adequacy.
18. Human Resources:
The Company has been following a standard procedure for recruitment of best personnelfor all the departments and is making continuous efforts to retain and groom them to meetits present and future requirements. The current strength is 2174 employees. The Companysponsors employees for various seminars on finance, operations, marketing and humanresource development to update their skills and develop close coordination with theircounterparts in industries. This is basically done to enhance their skills in order toachieve an optimum output from them.
19. Cautionary Note:
Statement in this report describing the company's objectives, projections, estimates,expectations and predictions may be "forward looking statements". Actual resultscould differ materially from those expressed or implied due to variation in prices of rawmaterials, demand and realization of finished goods, changes in Government regulations,tax regimes, economic developments and other incidental factors.
20. DIRECTORS' RESPONSIBILITY
In terms of Section 217 (2AA) of the Companies Act, 1956, your Directors have:
(a) Followed in the preparation of the Annual Accounts, the applicable accountingstandards with proper expl anation relating to material departures;
(b) Selected such accounting policies and applied them consistently and made judgementsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of your Company at the end of financial year and of the profit of yourCompany for that period;
c) Taken proper and sufficient care for the maintenance of adequate accounting recordsi n a c c o r d a n c e wi th th e provisions of the Companies Act, 1956, for safeguardingthe assets of your Company and for preventing and detecting fraud and other irregularitiesand
d) Prep ared th e An n u al Accounts on a going concern basis.
21 . Insurance
All the properties of the Company are adequately insured.
22. Industrial Relations:
Th e rel ati ons between the employees and the management were cordial and anatmosphere of understanding prevail ed throughout the year.
Th e B oard places on record their grateful appreciation for the assistance andco-operation received from the Financial Institutions and the Banks.
On behalf of the Board of Directors
Dr. Shashi Chand Jain
Chairman and Managing Director
Mumbai, 14th May, 2013.