DCW Ltd

BSE: 500117 | NSE: DCW | ISIN: INE500A01029 
Market Cap: [Rs.Cr.] 505.62 | Face Value: [Rs.] 2
Industry: Petrochemicals

Director's Report
DIRECTORS

TO THE MEMBERS

Your Directors present their 75th Annual Report and Audited Accounts for theFinancial Year ended 31st March, 2014 -

1. Financial Results

31-3-2014 31-3-2013
(Rs. in lacs) (Rs. in lacs)
Net Sales 132555.21 132779.96
Gross Profit 10321.29 21331.90
Less : Provisions
Depreciation 5101.92 5290.88
Profit Before Tax 5219.37 16041.02
Tax: Current Period 1107.81 3255.00
Previous Period (86.63) 12.67
MAT Credit available for set off / Utilized (84.59) 371.00
936.59 3638.67
Profit After Current 4282.78 12402.35
Tax & Tax Adjust- ments
Deferred Tax 494.84 1913.50
Profit after Tax 3787.94 10488.85
Add: Balance brought forward 7897.02 2291.81
Profit available for Appropriation 11684.96 12780.66
Appropriations:
General Reserves 2500.00 4000.00
Proposed Dividend 755.25 755.25
Dividend 128.35 128.39
Distribution Tax
Balance carried for- ward 8301.36 7897.02

2. Dividend:

Your Directors recommend payment of Dividend at Re.0.36 per equity share of Rs.2 each.

3. Operations:

The sales for the year are Rs.1325.55 crores compared to Rs.1327.80 crores in theprevious year. The Gross Profit for the year (before depreciation) is Rs.103.21 croresagainst Rs.213.32 crores in previous year. The profit before tax amounted to Rs.52.19crores as against Rs.160.41 crores in the previous year. The profit after provision ofcurrent tax is Rs.42.83 crores against Rs.124.02 crores, of last year and profit afterdeferred tax is Rs.37.88 crores against Rs.104.89 crores of last year, Deferred Tax isonly a provision as per accounting guidelines and not an outflow. Lower realization onexport of Synthetic Rutile has largely affected decline in profits

4. Exports:

The Company’s exports are Rs. 223.36 crores as compared to Rs. 417.61crores in theprevious year. This reduction in Export Turnover is on account of decrease in realizationon Synthetic Rutile.

5. Divisionwise Performance:

a) PVC Division:

The turnover of the division is Rs.533.04 crores as compared to Rs.431.29 crores in theprevious year,an increase in turnover by 24%. The increase in turnover is on account ofbetter realization on PVC. The demand for PVC continues to show positive growth. TheGovernment has identified irrigation, power and infrastructure, as thrust areas andincreased activity in these sectors are likely to boost demand of PVC Resin.

b) Caustic Soda Division:

The turnover of the division is Rs. 533.04 crores as compared to Rs.697.80 crores inthe previous year, a decrease of 24%. The reduction in turnover of the division is mainlyon account of decrease in realization on Synthethic Rutile.

c) Soda Ash Division:

The turnover of the division is Rs.177.66 crores as compared to Rs.183.55 crores in theprevious year. The decrease in turnover in the division is due to reduction in quantity ofthe product sold manufactured by the devision.

6. PROJECTS IMPLEMENTED AND UNDER IMPLEMENTATION

6.1 Projects Under Implementation

6.1.1. SYNTHETIC IRON OXIDE PIGMENT AND CALCIUM CHLORIDE PROJECT :-

The work on Synthetic Iron Oxide Pigment (SIOP) project is in advanced stage ofcompletion. Trial runs for Synthetic Iron Oxide Pigment have started and the plant willstabilize soon. Technical and Engineering Services for the plant has been provided by UHDEIndia Ltd. The facility will enable the company to produce a commercially viableproduct utilise its waste. Calcium Chloride and Pure Water will be recovered from theeffluent of Synthetic Iron Oxide Pigment Plant.

Both Synthetic Iron Oxide Pigment and Calcium Chloride facility have been given 100%EOU status.

Besides employing DCW’s in-house developed technology, the company has made anagreement with Rockwood Italia (Group Company of Rockwood Pigments’ USA) formanufacture of red iron oxide pigment.

An off take agreement has been signed with Rockwood Italia for purchase of 50% ironoxide pigment Balance 50% of the product can be sold at company’s option.

6.1.2. PVC Automation-Cum-Balancing Equipment Program

Under PVC Automation-Cum-Balancing Equipment program the company has commissioned VCMStripping tower and Fluidised Bed Dryer (FBD) at its PVC unit in Sahupuram, Tamilnadu.This will help the company in reducing the cost of the product and increase in PVCproduction.

6.1.3. Chlorinated 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, has been appointed to do detailed engineering for the project. The work onthis project has started and mechanical erection of the plant is estimated to be completedby fourth quarter of 2014-15.

6.1.4. Producer Gas Plant :-

The company has established Producer Gas Plantatits Sahupuram unit, in Tamilnadu, toproduce gas from coal the trail runs of the same have started.

This will help the company to replace high cost Furnace Oil, resulting in lower cost ofheating in various manufacturing units of the company at its Sahupuram works.

6.1.5. Reverse Osmosis Plant (RO) :-

To meet ever increasing water requirement of company’s Shupuram unit, inTamilnadu, and to guard against water scarcity in case of scanty rains, the company hasestablished a Reverse Osmosis (R.O), plant to recycle hard / used water back into theprocess. This project has been commissioned and will help the company meet waterrequirement of its Sahupuram unit.

6.1.6. CALCIUM CHLORIDE PLANT, DHARAGHANDRA

The Calcium Chloride project is having technical problem. It may not be possible toproduce calcium chloride in the plant and the equipments erected for this plant are beingused in the soda ash plant.

7. Corporate Governance

The report on Corporate Governance is annexed to this report.

8. Conservation of Energy, Technology Absorption and Foreign Exchange Earningsand Outgo:

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:

Information 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 beengranted ISO 14001 Certificate for complying with environment protection and safety.

11.Directors:

Shri. Bakul Jain, Director, retire by rotation at the forthcoming Annual GeneralMeeting, and being eligible, offer himselves for reappointment.

Shir. Vivek Jain was appointed as an Additional Director and will hold office upto thedate of forth coming Annual General Meeting. The company has received notice from Directorsignifying his intention to propose his appointment as Director retiring by rotation.

Shri. Salil Kapoor was appointed as an Additional Director and will hold office uptothe date of forth coming Annual General Meeting The Company has recveived notice from amember signifying his intension to proposr Shri. Salil kapoor as an Independent Directorof period of five consecutive years. Resolutions have been incorporated in the notice ofthe forth comming Annual General Meeting for appointment of Shri. Vivek Jain as a Directorretiring by rotation and Shri. Salil Kapoor, as an Independent Director for a period of 5consecutive years

In terms of Section 149 of the Companies Act, 2013, the present Directors Shri. SodshalSingh Dev of Dhrangadhra, Ms.Sujata Rangenekar and Shir. D.Ganapathy are proposed to beappointed as Independent Directors for a Consequetive period of 5 years at the forthcomingAnnual General Meeting and resolutions for the said purpose are incorporated in the noticeof the said Annual General Meeting.

During the year Dr.S.C.Jain, Managing Director since 44 years and also the Chairman ofthe Board since 30 years, has resigned as Managing Director and Director on 28th February,2014. During his long tenure he made immense contributions for the growth of the Companyand spearheaded many projects which are today the backbone of the Company.

The Board places on record its appreciation for the outstanding contributionsmade by him over several decades and unanimously appointed him as Chairman Emeritusof the Company and also a permanent invitee for all Board Meetings. AlsoShri.Berjis Desai, Shri. F.H.Tapia, Shri.S.K.Jalan and Shri. R.V.Ruia, have resigned fromthe Board during the year. The Board places on record its appreciation for thevaluable services rendered by them during their tenure.

12.Auditors and Auditors’ Report:

M/s V. Sankar Aiyar & Co., Chartered Accountants - Statutory Auditors of theCompany retire at the forthcoming Annual General Meeting and are eligible forreappointment.

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 CausticSoda Divisions respectively for the financial year 2012-13. Their appointments wereapproved by the Ministry of Corporate Affairs. They have conducted the cost audit for thefinancial year 2012-13 of respective divisions and have filed the cost audit report withthe central government.

14. 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.

PVC Division:

The Company, one of the country’s five producers of PVC resin, has maintained itsmarket share of nearly 7%. Proposed implementation of Anti-dumping duty on PVC resinimports from China, USA, Mexico, European Union, Indonesia will protect the domesticindustry against dumping of PVC resin from these countries. Also automation programme inthis unit will help the company in reducing cost and increasing production on thisdivision.

Caustic Soda Division:

The Company continues to be a major player in South India with a market share ofapproximately 20%. The demand for caustic soda is expected to grow at a steady rate,specially with increased demand from alumina manufacturers. The company has captive use ofHCL & Chlorine which helps to maintain Caustic Production at full level.

Soda Ash Division:

The Soda Ash Industry continues to grow at a compounded rate of 4% - 5% per annum andthis trend is expected to continue. Antidumping duty imposed on import of Soda Ash fromcountries like Iran, Pakistan, China, Ukraine, Kenya, European Union and the US by Govt.,of India, will protect the industry against dumping of Soda Ash from these countries.

15. 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 withcomments from the management are placed for review before audit committee.

16. Human Resources:

The Company has been following procedure for recruitment of best personnel for all thedepartments and is making continuous efforts to retain and groom them to meet its presentand future requirements. The Company sponsors employees for various seminars on finance,operations, marketing and human resource development to update their skills and developclose coordination with their counterparts in industries. This is basically done toenhance their skills in order to achieve an optimum output from them.

17. Cautionary Note:

Statement in this report describing the company’s objectives, projections,estimates, expectations and predictions may be "forward looking statements".Actual results could differ materially from those expressed or implied due to variation inprices of raw materials, demand and realization of finished goods, changes in Governmentregulations, tax regimes, economic developments and other incidental factors.

18. DIRECTORS’ RESPONSIBILITY STATEMENT

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 explanation 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 recordsin accordance with the provisions of the Companies Act, 1956, for safeguarding the assetsof your Company and for preventing and detecting fraud and other irregularities and

d) Prepared the Annual Accounts on a going concern basis.

19. Insurance

All the properties of the Company are adequately insured.

20. Industrial Relations:

The relations between the employees and the management were cordial and an atmosphereof understanding prevailed throughout the year.

21. Acknowledgement:

The Board 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

Pramod Kumar Jain

Chairman and Managing Director

Mumbai, 19th May’2014

   
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Key Information

Key Executives:

Shashi Chand Jain , Chairman Emeritus

Sodhsal Singh Dev , Director

Pramod Kumar Jain , Chairman & Managing Director

Bakul Jain , Managing Director


Company Head Office / Quarters:

No 2 Guest House,
,
Dhrangadhra,
Gujarat-363315
Phone : Gujarat-91-2754-5719967-76 / Gujarat-
Fax : Gujarat-91-2754-5755731 / Gujarat-
E-mail :
Web : http://www.dcwltd.com

Registrars:

Bigshare Services Pvt Ltd
E-2/3 Ansa Indl Est,Saki Vihar Road,Sakinaka Andheri(E),Mumbai - 400072

 
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