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DCW Ltd

BSE: 500117 | NSE: DCW ISIN: INE500A01029
Market Cap: [Rs.Cr.] 405.64 Face Value: [Rs.] 2
Industry: Petrochemicals

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Director's Report

TO THE MEMBERS

Your Directors present their 76th Annual Report and Audited Accounts for the Financial Year ended 31st March, 2015

1. Financial Results

31-03-2015 31-3-2014
(Rs. in lacs) (Rs. in lacs)
Net Sales 125446.82 132555.21
Gross Profit 4723.64 10321.29
Less: Provisions
Depreciation 5200.17 5101.92
Profit Before Tax/(Loss) (476.54) 5219.37
Tax: Current Period - 1107.81
Previous Period 26.09 (86.63)
MAT Credit available for set off / Utilized 211.73 (84.59)
(237.82) 936.59
Profit/(Loss) After Current Tax & Tax Adjustments (714.36) 4282.78
Deferred Tax (122.19) 494.84
Profit after Tax/(Loss) (592.17) 3787.94
Add: Balance brought forward 8301.36 7897.02
Profit available for Appropriation 7709.19 11684.96
Appropriations:
General Reserves - 2500.00
Proposed Dividend - 755.25
Dividend Distribution Tax - 128.35
Balance carried forward 7709.18 8301.36

2. Dividend:

Due to loss incurred on the operations of the company during the year your directors have not recommended any dividend for the year on the equity shares of the Company.

3. Operations:

The sales for the year are Rs. 1254.46 crores compared to Rs.l 325.55 crores in the previous year. The profit for the year (before depreciation) was Rs.47.24 crores against a profit of Rs.l 03.21 crores in the previous year. The loss before tax amounted to Rs.4.77 crores as against profit of Rs.52.19 crores in the previous year. The loss after provision of current tax/taxes for previous years is Rs. 7.14 crores against a profit of Rs.42.83 crores of last year and loss after deferred tax was Rs. 5.92 crores against profit of Rs.37.88 crores of last year.

Majorfactors like lower realization on export of Synthetic Rutile, slump in prices of PVC in the third quarter of the year and heavy rains during third quarter of the year affecting the production of company's products at its Sahupuram unit, have resulted in loss on the operations of the Company.

4. Exports:

The Company's exports were of Rs. 158.30 crores as compared to Rs. 224.59 crores in the previous year. This fall in Export Turnover is mainly on account of lower realization on Synthetic Rutile, coupled with lower sales duringtheyear.

5. Division wise Performance:

a) PVC Division:

The turnover of the division was Rs. 596.56 crores as compared to Rs. 600.23 crores in the previous year. The demand for PVC continues to show positive growth. The Government has identified irrigation, power and infrastructure, as thrust areas and increased activity in these sectors are likely to boost demand of PVC Resin.

b) Caustic Soda Division:

The turnover of the division was Rs. 450.18 crores as compared to Rs. 5 34.14 crores in the previous year, a fall of 15.71 %. The fall in turnover of the division is mainly on account of lower realization on Synthetic Rutile. Heavy rains during third quarter of the year have also adversely affected the operations of this division at company's Sahupuram unit.

c) Soda Ash Division:

The turnover of the division was Rs.192.84 crores as compared to Rs.l 77.25 crores in the previous year, an increase of 8.8%. The increase in turnover in the division was on account of increase in realization on the products coupled with higherquantity of sale.

There are no material changes and commitments affecting the financial position of the Company which have occurred between the end ofthefinancial year 2014-15 and thedate ofthis Report.

6. Projects Implemented And Under Implementation

6.1 Projects Implemented

6.1.1. SYNTHETIC IRON OXIDE PIGMENT CUM CALCIUM CHLORIDE PROJECT AT SAHUPURAM, TAMILNADU.

The work on Synthetic Iron Oxide Pigment (SIOP) project was completed and the plant has commenced commercial production in the month of May, 2015.

Besides employing DCW's in-house technology in the manufacture of Yellow Iron Oxide Pigments, the technology provided by Rockwood Italia (Group Company of Rockwood Pigments' USA) has been used for manufacture of Red Iron Oxide Pigments.

6.1.2. Producer Gas Plant

The company has set-up Producer Gas Plant at its Sahupuram unit to produce gas from coal. This will help the company to replace high cost Furnace Oil, resulting in lower cost of heating in various manufacturing units of the company at its Sahupuram works.

6.1.3. Reverse Osmosis Plant (RO):-

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

6.2. Projects Under Implementation

6.2.1 Chlorinated Poly Vinyl Chloride (C-PVC) Project.

The Company has signed Technology License agreement with Arkema of France for putting up 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 on this project has started and the project is expected to go on stream in 2015-16 .

6.2.2 Calcium Chloride plant at Dhrangadhra

The Calcium Chloride project is being modified to produce edible salt.

7. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

7.1 PVC Division:

The Company, one of the country's five producers of PVC resin, has maintained its market share of nearly 7%. Anti-dumping duty imposed on PVC resin imports from China, USA, Mexico, European Union, Indonesia will protect the domestic industry against dumping of PVC resin from these countries. Automation being implemented in this unit will help the Company in reducing cost and increasing production of this division.

7.2 Caustic Soda Division:

The Company continues to be a major player in South India with a market share of approximately 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 of HCL & Chlorine which helps to maintain Caustic Production atfull level.

7.3 Soda Ash Division:

The Soda Ash Industry continues to grow at a compounded rate of 4% - 5% per annum and this trend is expected to continue. Antidumping duty imposed on import of Soda Ash from countries of 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.

8 OUTLOOK:

The Company has diversified operations with three business segments viz. PVC, Chloro Alkali and Soda Ash. It is thus reasonably protected from the vagaries of individual business cycles of these products. By the commencement of commercial production at company's new Synthetic Iron Oxide Pigment plant, company is entering into specialty chemical segment and this will give more stability to the bottom line of the company.

9. Cautionary Note:

Statement in this report describing the company's objectives, projections, estimates, expectation and prediction may be "forward looking statements". Actual results could differ materially from those expressed or implied due to variations in prices of raw materials and realization of finished goods, changes in government regulation, tax regimes, economic developments and other incidental factors

10. Directors & Key Managerial Personnel

A. Reti rement by rotation

In accordance with the provisions of Section 152 (6) Mr. Mud it Jain (DIN No.00647298) retires by rotation at the ensuing Annual General Meeting of the Company and being eligible, offer himself for re-appointment. The Board recommends his re-appointment

B. Appointment of Independent Directors

With coming into force of the Companies Act, 2013 all the existing Independent Directors viz., Shri Sodhsal Singh Dev of Dhrangadhra (DIN No.00682550), Smt. Sujata Rangenekar (DIN No.06425371), Shri D. Ganapathy (DIN No.02707898) and Shri Salil Kapoor (DIN No.02256540) were appointed as Independent Directors by the members of the Company at the Annual General Meeting held on 13th August, 2014 under Section 149 and other applicable provisions of the Companies Act, 2013 fora term of 5 consecutive years upto the conclusion of the 80th Annual General Meeting in the calendar year 2019.

The Independent Directors have submitted the declaration of Independence, as required pursuant to section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in subsection (6) and there has been no change in the circumstances which may affect their status as independent director during the year.

C) Performance Evaluation

In compliance with the Companies Act, 2013 and clause 49 of the Listing Agreement, the Performance evaluation of the Board was carried out during the year under review and a structured questionnaire was prepared covering various aspects of the Board's functioning such as participation, adequate preparation, contribution to strategy and other areas, quality of decision making, high quality of debate with robust and probing discussions etc. The Nomination and Remuneration Committee evaluated the performance of the Directors. Independent Directors at a separate meeting held by them have evaluated the performance of the non-independent Directors and the Board as a whole and also evaluated the performance of the chairman taking into consideration the views of Managing Directors. The performance evalution of the Independant Diectors was carried out by the entire Board excludingthe Director being evaluated.

Mr P.K. Jain, Chairman & Managing Director, Mr Bakul Jain, Mr Mudit Jain, Mr Vivek Jain, Managing Directors and Mr Vimal Jain, Chief Financial Officer and Ms. Jigna Karnick, Company Secretory are Key Managerial Personnel under Section 203 of the Companies Act, 2013. Ms Chital Shah, Company Secretary has resigned w.e.f. 15th April, 2014 and Ms. Jigna Karnick has been appointed as Company Secretary with effect from the said date.

11. Particulars of employees

11.1 The information required under Section 197 of the Companies Act, 2013 and Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report as Annexure 'A'.

11.2 The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

a. The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year;

Managing Directors Ratio to median remuneration
Shri P.K. Jain 36:1
Shri Bakul Jain 36:1
Shri Mudit Jain 36:1
Shri Vivek Jain 36:1

For this purpose, sitting fees paid to the Directors have not been considered as remuneration

b. The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the Financial Year.

Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary % increase in remuneration in the financial Year
Shri P.K. Jain - Chairman & Managing Director 7.17
Shri Bakul Jain - Managing Director 7.17
Shri Mudit Jain - Managing Director 7.15
Shri Vivek Jain - Managing Director 113.76*
Shri Vimal Jain - Chief Financial Officer 12.51
Ms. Jigna Karnick - Company Secretary Appointed on 15/4/2014.

* during the financial year 2013-14 Mr Vivek Jain was Sr. President of the Company for 11 months and has been appointed as Managing Director effective from 1/3/2014. As Mr. Vivek Jain is paid remuneration as Managing Director, there was substantial increase in his remuneration as compared to the remuneration paid to him as Sr. President of the Company during the year 2013-14.

c. The percentage increase in the median remuneration of employees in thefinancial year: 7%

d. The number of permanent employees on the rolls of the Company: 1839

e. The explanation on the relationship between average increase in remuneration and Company performance:

There is no direct relationship between average increase in remuneration of employees and Company performance.

f. Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company:

Aggregate remuneration of key managerial personnel (KMP) (Rs. in lakhs) 534.56
Revenue (Rs. in lakhs) 125081.36
Remuneration of KMPs (as % of revenue) 0.43
Profit before Tax (PBT) (Rs. in lakhs) (-) 476.53
Remuneration of KMP (as % of PBT) -

g. Variations in the market capitalization of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year:

Particulars March 31, 2015 March 31, 2014 % Change
Market Capitalisation (Rs.in crores) 358.67 248.60 44%
Price Earnings Ratio - 6.55 -

h. Percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer

Market price as on 31st March, 2015 Rs. 16.80
Price at which the Rights Issue was made in 1988 Rs. 25.00
% increase of Market price over the priceat which the above Rights issue was made. 1008%*

* Adjustments made for (i) Bonus shares issued @1:1 ini 988 & (ii) Bonus shares issued @ 3:5 ini 991 & (iii) sub-division of shares from Rs. 10 to Rs. 2 in the year 2000.

I. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average increase in remuneration is 7% for employees other than Managerial Personnel and the increase in the Managerial remuneration was also to the same extent except of Mr. Vivek Jain, Managing Director. Mr. Vivek Jain was appointed as Managing Director with effect from 1/3/2014 prior to which he was Sr. President of the Company. As Mr. Vivek Jain is paid remuneration as Managing Director, there was substantial increase in his remuneration compared to the remuneration paid to him as Sr. President of the Company during the year 2013-14.

j.Comparison of each remuneration of the key managerial personnel against the performance of the Company:

Name Designation Remuneration (Rs. in lakhs) % of increase in Remuneration PAT (Rs. in lakhs) % increase in PAT
Mr. P.K. Jain Chairman & Managing Director 133.63 7.17 (592.17) -
Mr. Bakul Jain Managing Director 133.63 7.17 (592.17) -
Mr. Mudit Jain Managing Director 133.63 7.15 (592.17) -
Mr. Vivek Jain Managing Director 133.63 113.78* (592.17) -
Mr. Vimal Jain Chief Financial Officer 51.05 12.51 (592.17) -
Ms. Jigna Karnick Company Secretary 9.74 Appointed on 15/4/2014. (592.17)

k. The key parameters for any variable component of remuneration availed by the Directors:

Each of the Managing Director are entitled for commission @ 25% of the difference between 10% of the net profits as computed under Section 198 of the Companies Act, 2013, in a financial year and the aggregate of the salary and perquisites and benefits paid to all the Managing Directors in that year subject to the overall ceilings stipulated in Sections 197 of the Companies Act, 2013.

Each of the Non Executive Directors are entitled for commission aggregating not more than 1% of the net profits of the Company in a financial year subject to a maximum of Rs.3,00,000/- per Director as approved by the members of the Company at the Extra-Ordinary General Meeting held on December 19, 2013 besides the sitting fees for meetings of the Board and its committees attended by them.

l. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year.:

There are no employees of the Company who receive remuneration in excess of the highest paid Director of the Company.

m. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirm that remuneration is as per the remuneration policy of the Company.

12. Statutory Auditors

M/s. V. Sankar Aiyar & Co., Chartered Accountants, Statutory Auditors of the Company will hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment as per Section 139 of the Companies Act, 2013.

M/s. V. Sankar Aiyar & Co. have expressed their willingness to get re-appointed as the Statutory Auditors of the company and has furnished a certificate of their eligibility and consent under Section 141 of the Companies Act, 2013 and the Rules framed there under. In terms of the Listing Agreement, the Auditors have confirmed vide their letterdated 22nd January, 2015, thatthey hold a valid certificate issued by the Peer Review Board ofthe ICAI.

The members are requested to appoint M/s. V. Sankar Aiyar & Co., Chartered Accountants as Auditors from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting in 2016 on the terms and conditions as will be stated in the notice convening the forthcoming Annual General Meeting.

The Aud itors' Report to the Shareholders for the year under review does not contain any qual ification.

The Report given by the Statutory Auditors for the financial Statements for the year ended 31st March, 2015 read with explanatory notes thereon do not cal I for any explanation or comments from the Board under Section 134(3) ofthe Companies Act, 2013.

13. Cost Auditor And Cost Audit Report

Pursuant to Section 148 of the Companies Act, 2013 the Board of Directors on the recommendation of the Audit Committee appointed M/s. N.D. Birla & Co., Ahmadabad and M/s. R. Nanabhoy & Co., Mumbai for conducting cost audit of the company's Soda Ash and Caustic Soda divisions respectively for the financial year 2013-14. Their appointments were approved by Ministry of Corporate Affairs. They have conducted Cost Audit for the financial year 2013-14 of the respective divisions and have filed cost audit report with the Central Goverment. They have also been appointed to do the cost audit of the said respective divisions for the year 2015-16

14. Secretarial Auditor and Secretarial Audit Report.

M/s. S. K.Jain & Co., (Proprietor Dr. S. K. Jain) Practicing Company Secretary was appointed to conduct Secretarial Audit of the Company for financial year 2014-15 as required under section 204 of the Companies Act, 2013 and the Rules thereunder. The Secretarial Audit report for financial year 2014-15 forms part of the annual report as "Annexure B" to the Boards Report. The said report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134 (3) of the Companies Act, 2013.

15. Conservation of Energy, Technology and Foreign Exchange.

Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, required to be given pursuant to provision of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 is annexed here to and marked as "Annexure C" and forms part of this report.

16. Share Capital

During the year your company has allotted 37,03,704 equity shares of Rs.2 each at a premium of Rs.25 per share on 12/9/2014 to promoters group on preferential basis. Consequently the equity share capital has increased from Rs.41,95,81,906/- divided into 20,97,90,953 equity shares of Rs.2 each to Rs.42,69,89,314/- divided into 21,34,94,657 equity shares of Rs. 2 each.

17. Extract of the Annual Return

Pursuant to the provisions of Section 134 (3) (a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended 31 st March 2015 made under the provisions of Section 92 (3) of the Act in Form MGT-9 is annexed herewith as "Annexure D".

18. Public Deposits

The Company has not accepted renewed any amount falling within the purview of provisions of Section 73 of the Companies Act. 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Act is not applicable.

19. Internal Control Systems and their adequacy

The Company has adequate internal control procedure commensurate with the nature of its business and size of its operations. Internal Audit is conducted on a regular basis by a reputed firm of Chartered Accountants.

The reports of the internal audit along with comments from the management are placed for review before audit committee.

20. Committees of the Board.

The Board has constituted the following mandatory committees viz., Audit Committee, Stakeholders Relationship Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Risk Management Committee and Internal Compliance Committee. The terms of reference of these committees are as required under the provisions of the respective Acts/Listing Agreement with Stock Exchanges/ as determined by the Board. Meeting of each of these committees are convened by the respective Chairman of the Committees and minutes of the meetings of these committees are placed at the Board Meetings. The details of these committees are stated in this Report/ Annexures to this Report.

20.1 Corporate Social Responsibility (CSR)

Pursuant to Section 135 of the Companies Act, 2013 and the relevant Rules, the Board has constituted the Corporate Social Responsibility (CSR) Committee under the Chairmanship of the Board Chairman, Mr. P.K. Jain. The other members of the Committee are Mr. Bakul Jain, Managing Director and Mr. Sodhsal Singh Dev of Dhrangadhra, Independent Director. A detailed CSR Policy has also been framed which is placed on the company's website. Other details for the CSR activities as required under Section 135 of the Companies Act, 2013 are given in the CSR Report at "Annexure E".

20.2 Internal Compliance Committee.

In terms of the provisions of the Sexual Harassment of Women at Work place (Prevention, Prohibition and Redressal) Act, 2013., the Company has formed Internal Compliance Committees at its Head Office at Mumbai, and its Works at Sahupuram, Tamilnadu and Dhrangadhra, Gujarat. The Board also has approved a policy for prevention of Sexual Harassment at Work place. There were no Complaints filed till date under the said policy.

20.3 Risk Management Committee

As required under Clause 49 of the Listing Agreement, the Board of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Risk Management Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

20.4 Audit Committee.

The Board has well-qualified Audit Committee comprising only. Independent Directors. They possess sound knowledge on Accounts, Audit, Finance, Taxation, Internal Controls etc. The details of the Composition of the Audit Committee are given in the Corporate Governance Report.

The Company Secretary of the Company acts as Secretary of the Committee.

During the year, there are no instances where the Board had not accepted the recommendation of Audit Committee.

20.5 Nomination & Remuneration Committee & Policy

The Company has duly constituted Nomination & Remuneration Committee to align with the requirements prescribed under the provisions of the Companies Act, 2013 and the revised Clause 49 of the Listing Agreement.

The details of the Composition of the Nomination & Remuneration Committee are given in the Corporate Governance Report.

The Board has framed a policy for selection and appointment of Directors, Senior Management and their Remuneration. The policy provides for determining qualification, positive attributes, and independence of a Director.

21. Details in respect of adequacy of internal financial controls with reference to the financial statements.

A strong internal control culture is pervasive in the company. The Company has implemented a robust and comprehensive internal control system for all the major processes to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources. The internal audit department continuously monitors efficiency of internal controls with objective of providing to the audit committ

Futures & Options Quote
Future Data Not present
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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