DCM Shriram Ltd Management Discussions.

Performance Review

In line with our strategic direction, we increased our scale in Chlor-Alkali by adding 332 TPD capacity taking the total capacity to 1843 TPD, Distillery capacity was enhanced by 200 KLD with total capacity at 350 KLD and PVC capacity was increased by 40 TPD to 220 TPD, the increased capacities have stabilized. On cost optimization front, the new66 MW captive power plant was commissioned at Kota complex to replace the existing old 50 MW plants, this will help in reducing costs and improving reliability of operations. Increase in Distillery capacity has further added to integration of Sugar operations. Company will continue to progress in this direction.

We have also rationalized some of our businesses during the year by exiting some under-performing areas and strengthening others. In Shriram Farm solutions, we have exited from trading of Bulk fertilizer and are strengthening the Value Added agri-inputs business. In Bioseed we have exited Indonesia and Vietnam operations and are focusing on strengthening India and Philippines operations. In Fenesta, we have added System Aluminum windows to our portfolio.

During the year,overall operating performance of the Company was stable, with businesses like Sugar, Sriram Farm solutions, Fenesta and Cement registering growth led by better product prices andvolumes. Chlor-Alkali business witnessed a sharp decline in product prices as domestic caustic prices aligned with the international prices. The imports which were restricted last year due to requirements of quality approvals by Indian authorities, grew substantially at a time when domestic capacity was also increasing.

Our balance sheet and liquidity position arecomfortable which enables us to look at further growth initiatives as well as manage business uncertainties.

+ Total Revenue from operations stood at Rs. 7767crore vs Rs. 7771 crore last year.

Sugar Business revenue was up by 7% to Rs. 2522 crorecontributed by higher realisations in Sugar andadditions to the distillery capacity during the year.

Agri Input businesses - Shriram Farm Solution: Turnover of Value-added inputs vertical up by 16% YoY, led by improved focus post rationalization of bulk fertilizer business. Fertiliser and Bioseed had marginally lower revenues. Overall Agri inputs business revenueswere down2% at Rs. 2194crores.

Chemicals business revenue were lower by 10% to Rs 1725 crore. This was driven by lower realizations, a correction from abnormally high prices last year. Volumes improved due to increased capacities in comparison to last year, this helped to mitigate the downward impact of realizations on revenue.

Fenesta Business revenue was up by 7% to Rs. 419 crore with higher volumes

+ Profit before depreciation, interest and tax (PBDIT)

declinedby~11% to Rs. 1294.9 crore vs Rs. 1456.3 crore last year:

Chemicals Business PBDIT stood at Rs.633crores, adecrease of~35% from last year, on account of lower realizations partly offset by higher volumes due to increased capacity. Margins lower due to substantially lower realizations

Sugar Business PBDIT stood at Rs.454 crore, an increase of ~14% from last year, the improvement was led by improved realisations of Sugar and Higher volumes of Ethanol. Reduction in power tariff, partially offset the gains

Fertiliser business earnings improved to Rs. 91 crore vs Rs. 28 crore last year. This was primarily due to one-time impact of reversal of provision for doubtful claims relating to previous years consequent to removal of ambiguities in the Modified NPS III, amounting to Rs 38 crores related to FY 19.

• Earnings improved for Shriram Farm Solutions, Bioseed as well as Cement businesses

• Overall PBDIT margins declined to ~16.7% from ~18.7% last year

+ Finance Costs - Finance costs during FY 20 increased by 38% to Rs. 164crore.

+ PAT decreased to Rs. 717 crore, down 21% from Rs 906 crore in FY 19. 1 EPS for the year at Rs. 46.0 down from Rs. 57.1 in FY 19.

+ Net Debt as on March 31, 2020 stood at Rs. 1623 crore vis-a-vis Rs. 1265 crore as on March 31,2019. Net Debt to equity stood at 0.40x as on March 31,2020 vs 0.35x as on March 31,2019.

+ Projects Completed in FY 20 at an investment of ~ Rs. 707 crore-

• Sugar - Setting up of distillery with capacity 200 KLD at Ajbapur at an investment of Rs.292 Crores.

• Chloro-Vinyl -

• Chemicals - Capacity Expansion of Caustic Soda Plant by 332 TPD at an investment of Rs.145 Crores at Bharuch

• Plastics - PVC Expansion at Kota by 40 TPD at investment of Rs.30 Crores.

• Power - Replacement of 50 MW Coal based Power generation at Kota by 66 MW Power Plant at an investment of Rs.240 Crore.

+ New Projects: The schedule for implementation of capacity expansion at Bharuch for Caustic Soda Plant by 700 TPD (along with 120 MW Captive Power plant and Flaker capacity expansion of 500 TPD) at an investment of Rs.1,070 crores is being realigned taking into account the impact of Covid-19

Key Financial Ratios Standalone

Ratios Mar20 Mar19 Remarks
Operating Profit Margin (%) 15.5% 17.8%
Net profit Margin (%) 9.6% 11.8%
Interest Coverage Ratio 11.0 18.4 Reduction in coverage is on account of lower earnings led by Chemicals business and higher borrowings due to capital expenditure programs of the Company
Current Ratio 1.6 1.6
Net Debt to Equity Ratio 0.4 0.4
Inventory Turnover 3.0 3.3
Debtors Turnover 7.1 7.5
Return on Net Worth (%) 19.4% 27.3% Reduction is owing to lower profits compared to last year led by Chemicals Business

Business - Wise Performance Review and Outlook Chloro - Vinyl Businesses

DCM Shrirams integrated Chloro-Vinyl business is supported by 225 MW coal based captive power facilities. This business has multiple revenue streams with Chlor-Alkali (Caustic Soda lye / flakes, Chlorine, Aluminium chloride, Hydrogen), Plastics (PVC resins and Calcium carbide). These multiple revenue streams lend stability to Chloro-Vinyl operations.

Business Performance

The Revenue, PBDIT and Capital employed for this business for FY 20 is as follows:

Particulars FY 20 ( Rs/Crores) FY 19 ( Rs/Crores)
Revenue 2278.2 2502.7
PBDIT 744.8 1067.1
Capital employed 1492.6 1301.4

+ Chloro-Vinyl segments revenue stood at Rs. 2,278 crore as compared with Rs.2,503 crore in FY 19. The decline was primarily a result of lowerChlor-alkali prices which was a correction to abnormally high prices in FY 19. Volumes were higher than the previous yearpost completion of Chlor-alkali expansion projectat Bharuch complex at the beginning of FY 20.


Chlor-Alkali (Chemicals) business produces core chemicals viz. Caustic Soda, Chlorine, Hydrogen, Hydrochloric acid, Sodium Hypochloride and Stable Bleaching Powder, which are widely used in manufacturing processes of other industries. The growth of this business is largely correlated to the GDP growth in the country. Caustic Soda and Chlorine are produced as Co-products in the ratio of 1:0.88. Caustic Soda is used in Alumina, Paper, Textiles, Detergents, Pharmaceuticals, disinfectants industries etc. and Chlorine is used in Polymers, Dyes & inks, Agrochemicals, Water treatment etc. The prices of Caustic Soda are influenced by international prices as well as domestic demand supply factors. Chlorine Prices are driven only by local demand supply factors.

The company operates manufacturing facilities at Kota (Rajasthan) and Bharuch (Gujarat). With the successful completion of its 332 TPD expansion project at Bharuch, Gujarat in 2019-20, the aggregate production capacity of the Company is presently at 1843 TPD. DCM Shriram is the second largest manufacturer in the domestic Chlor-Alkali Industry and the Bharuch facility is the largest single location Chlor-alkali manufacturing unit in India. Both the manufacturing units have access to coal based captive power.

Business Performance

The Revenue, PBDIT and Capital Employed for this business for FY 20 along with quantitative data are as follows.:

Particulars FY 20 ( Rs/Crores) FY 19 ( Rs/Crores)
Revenue 1724.8 1,914.7
PBDIT 632.9 973.3
Capital employed 1209.1 1,138.2


Year Sales (MT) Realizations (Rs./MT)
FY 20 5,25,024 27,579
FY 19 4,64,918 35,696
% Change 12.9 -22.7

The domestic market was under pressure due to supply surplus. Last year the prices were high globally as well as imports into the country were restricted due to requirement of quality approval by Indian authorities. This led to abnormally high prices in FY 19. The prices corrected in FY 20 with imports being permitted, decline in global prices and capacity expansion in domestic markets.As a result of this, revenues in FY20 declined.Volumes growthled by capacity expansion mitigated the impact with a net decline of 10% YoY in revenue. Margins were under pressure as a result of decline in prices as well as increase in energy costs at Bharuch.

Industry Overview and Outlook

The Chlor- Alkali industry in India has 35 operating units with a combined installed capacity of 4.8 million Tons per annum of Caustic Soda. The Top four players comprise about 60% of the total installed capacity. The domestic demand for Caustic Soda in 2019-20 is estimated to be about 3.9 million Tons per annum. The demand of chlorine has registered higher growth due to demand on downstream industries such as agrochemicals and dyes & pigments. The import of Caustic Soda has increased compared to the previous year due to removal of BIS restrictions. Both caustic and chlorine are considered as the building blocks of various industries and the demands of both the products are linked to the Indian GDP growth. The demand for the next year is likely to be affected in line with lower GDP estimate, However, the demand is expected to be strong in the long run.

Our Strategy

Company remains committed to capitalize on the growing demand in the sector by constantly upgrading the production capacities. The company plans to sustain and improve capacity utilizations in the coming years as the chlorine demand improves and also by adding more downstream products for chlorine utilization.

The Chlor-Alkali capacity expansion at Bharuch by 700 TPD along with 120 MW captive coal-based power plant and 500 TPD flaker plant, at an investment of 1070 crores is approved by our Board, the implementation schedule is being realigned in view of the impact of Covid -19 . The captive power generation unit of 120 MWwill not only support the expansion but will reduce the overall energy cost of the Bharuch complex. Going forward we will continue exploring the possibilities to increase the portfolio of chlorine downstream products to strengthen our capability to manage fluctuations in chlorine prices and further strengthen the business.


The business involves manufacturing of PVC Resins and Calcium Carbide. The company is one of the oldest manufacturers of PVC Resins in the country with over five decades of experience in the business. The Plastics business is an integral part of the Chlor-Vinyl manufacturing facility at Kota with backward integration in terms of own Captive Power, Chlorine and Calcium Carbide and forward integration into Cement. The Calcium Carbide manufactured by the company is partly sold as merchant Carbide and a large part is converted to Acetylene which is used for the manufacture of PVC Resins. DCM Shriram Ltd. is the only company in the country which manufactures PVC Resin through the Calcium Carbide route as against the Ethylene route which is being followed primarily by most of the countries worldwide with exception of China. The Calcium Carbide route provides us complete integration from base raw material to finished resin in the Vinyl value chain.

PVC Resin is a widely used raw material owing to its safe, healthy, convenient and aesthetical advantage for applications in urban infrastructure, Electronic products, Consumer products, Irrigation etc. It finds use in fabrication of a wide variety of products like pipes and fittings, profiles and tubes, windows and doors, sidings, wires and cables, film and sheets, toys and other moulded products and floorings. This versatility of fabrication into wide variety of forms together with features such as durability, self-extinguishing property, resistance to most chemicals and oil, mechanical strength and ease of processing, means that PVC is a competitive and attractive option for many end uses in construction and infrastructure, agriculture, electrical products and healthcare. The fact that PVC products can last up to 100 years, can be recycled and can provide products with good quality to price ratio, greatly reduces life cycle costs of PVC.

PVC is a thermoplastic with 57% chlorine and 43% carbon, making it excellent fire-resistant material. About 73% of PVC resins are used for producing pipes & fittings for use in Agriculture & Construction in India. The other key drivers for PVC Resin is the rise in micro-irrigation and growth coming from applications other than pipes such as packaging, profiles, pharmaceuticals segments, etc. which are expected to account for a higher share of the demand for PVC Resins.

Indias per capita PVC consumption is 2.4 kg which is low compared to 12.7 kg in US & 10.3 kg in China. With steady rise in demand and promising prospects in the downstream agriculture, building & construction and infrastructure segments amid high dependence on imports, India is likely to remain at the forefront of the global PVC market.

Business Performance

The Revenue, PBDIT and Capital employed for this business for FY 20 along with the quantitative data is as follows:

Particulars FY 20 (Rs/Crores) FY 19 (Rs/Crores)
Revenue 553.4 588.0
PBDIT 111.9 93.9
Capital employed 283.5 163.2


PVC Resins


Year Sales (MT) Realizations


Sales (MT) Realizations


FY 20 56,376 72,305 23,180 54,352
FY 19 58,438 75,538 24,896 52,681
% Change -3.5 -4.3 -6.9 3.2

The revenue for the business was at Rs 553.4 crore as against Rs 588.0 crore last year. The business revenue was lower by ~ 6% y-o-y primarily due to lower PVC resin price which fell globally in FY 20 and partly due to the marginal decline in volumes also due to lockdown enforced by the government of India in response to Covid-19 pandemic in the month of March20. The Carbide prices were marginally higher in this financial year in comparison with the previous financial year.

However, PBDIT for the business increased by ~19% year-on-year led by lower input costs of power and carbon material. The cost of power declined by ~6 % primarily due to reduction in fuel rateand also commissioning the new energy efficient power plant at Kota in FY20. During this financial year, we also de-bottlenecked the PVC plant capacity by ~ 14,000 MT per annum with improved technology which should help in efficiency gains from next financial year. Our capital employed increased from Rs 163 Cr to Rs 284 Cr mainly due to Capital expenditure on commissioning of new power plant & de-bottlenecking of PVC plant.

Industry Overview & Outlook

The PVC Resin installed capacity in India currently stands at ~1.45 million metric tons per annum. As against this, the domestic demand for PVC, which typically tracks GDP! has been growing steadily at a CAGR of 6% since FY 2009-10 and has reached ~3.3 MTPA in FY 2019-20. In FY 20 the demand growth was a modest ~3% over FY 2018-19 primarily due to prolonged monsoons affecting pipe demand. The gap in demand and supply, which currently stands at ~57% of our total demand, is being met by the imports of PVC Resin.

Demandcontinues to be on track for long term positive growth with domestic consumption driven growth supported by low per capita consumption and the continued focus of the Govt. on infrastructure development - rural housing, agri-asset creation, potable water & sanitation sector, development of smart cities, rapid urbanization, etc. expected to fuel growth of the PVC industry in India over the next several years.

The Calcium Carbide demand in India is estimated at around 71 KT for FY 2019-20, a drop of ~17% from FY 2018-19. DCM Shriram currently commands ~35% market share in the country, up from 30% last year. The industry witnessed a demand drop in the wake of Magnesium based desulphurization (DS) compounds supplanting Calcium Carbide based DS compound for use in the steel industry and impact of Covid-19 on Calcium Carbide import arrivals from China. The Dissolved Acetylene (DA) gas market has remained stable.

Our Strategy

The company is focused on maximizing product volumes given the higher net pay back per unit of power from the sale of PVC resin and Calcium Carbide, implementing cost reduction initiatives and continuously evaluating new models that enhance process efficiency and support the business profitability. During FY 2019-20, The Company completed the De-bottlenecking of the PVC plant which would augment our PVC resins capacity by ~ 14,000 MT per annum with an investment of ~ Rs. 30 Crs. This will help improve cost efficiencies.


DCM Shriram is a major player in the domestic sugar industry based out of the State of Uttar Pradesh. The company operates four sugar units located in central U.P at Ajbapur (10,500 TCD), Rupapur (6,500 TCD), Hariawan (13,000 TCD) and Loni (8,000 TCD) with a total crushing capacity of 38,000 TCD. These four units have a total power cogeneration capacity of 141 MW of which 84 MW of power can be exported. Hariawan crushing facilities are partially supported by a refinery of 700 TPD. These four units are also supported by two distilleries at Ajbapur (200 KLD) and Hariawan (150 KLD).

Business Performance

The Revenue, PBDIT and Capital Employed for this business for FY 20 along with the quantitative data are as follows:

Particulars FY 20 (Rs/Crores) FY 19 (Rs/Crores)
Revenue 2,521.6 2,353.0
PBDIT 454.4 398.8
Capital employed 2,704.6 2,039.0


Product Year Sales (Lac Units) Realizations


Sugar (Domestic) FY 20 50.9 3,293
(In Quintals) FY 19 55.4 3,036
% Shift -8.1 8.4
Alcohol FY 20 596.7 46.5
(in litres) FY 19 483.9 38.5
% Shift 23.3 21.0

Operating Parameters:

Particulars Unit of


FY 20 FY 19
Financial Year
Cane Crushed Lac Quintals 603.0 604.0
Recovery Rate* % 11.2 11.8
Sugar Produced Lac Quintals 67.6 71.3

* Due to B-heavy operations at some units

• Top line growth is attributed to higher volumes of ethanol and better realisations in domestic sugar. Also last year export subsidy was linked to sugarcane crush as against sugar sales this year and therefore was adjusted with cost of production instead of in revenue.

• PBDIT increase is largely attributed to better margin in sugar due to improved realization & lower cost of production as a result of better recoveries in 2018-19 & 2019-20 sugar seasons. This gain was to some extent reduced by approximately Re 2 per unit reduction in power tariffs on old PPAs by UPPCL having an impact of approximately Rs 50 crore in FY 2020.

• Crush volumes have been largely in line with the last year operations mainly on account of higher volumes in FY 2019 due to extended operations of SS 2017-18 till June 2018 which were compensated by higher volumes due to expansion at Hariawan in FY 2020.

• Sugar recoveries have been largely in line with last year; however some sugar was diverted for producing B Heavy ethanol through B Heavy molasses at some units and therefore resulted in lower recoveries in FY 2020.

Industry Overview and Outlook

India is presently thelargest producer and consumer of sugar in the world. In domestic context, sugar is the second largest Agro based industry supporting over 50 million farmers along with indirect employment to rural population. It is estimated that about 7.5% of the rural population in India is involved with the sugar industry.

Indian Sugar Industry is highly fragmented with private sector, Government undertakings, Co-operatives, and unorganized players. Unorganized players are mainly involved in production of Gur and Khandsari, the less refined form of sugar. The crushing period varies from region to region beginning in October/ November and goes on till April/ May in all states except in southern states like Tamil Nadu, Andhra Pradesh where it continues till July/ August.

Sugar industry both globally & domestically have been passing through turbulence over the past few years. This has been a result of 3 consecutive surplus years of sugar production in spite of Brazil diverting only 37% of sugarcane for sugar production in the last 2 years. This situation of surplus sugar is expected to continue for the upcoming year as well on account of the ongoing pandemic Covid 19 and the slowdown in global economies leading to a fall in crude prices.This will impact the sugar industry in two ways; firstly Brazil is expected to divert higher percentage of sugarcane for sugar production and thereby increasing the overall sugar availability; and secondly pandemic Covid 19 is likely to impact global consumption by almost 5% in the ongoing sugar season. Currently international prices have already corrected to 10.8 c/lb for raws from 15.0 c/lb levels attained in February 2020. Whites continue to trade at 360 $/t levels.

Government of India having been cognizant of the surplus situation has been proactively pushing for sugar exports&ethanol production from B Heavy molasses from last 2 years. Both these measures have kept a check on Indian sugar stock balances which are expected around 12.2mmt as against 14.0mmt last year. As per latest estimates by sugar association and industry there are indications of production of ~26.5mmt and consumption of 23.5mmt in 2019-20. Exports are likely to be in the range of 4.5 mmt.


OMCs issued a total requirement of 5.11 bl in 2019-20 against which allocation of 1.85 bl has been done. This year in view of the prevailing pandemic we expect blending will be below 5% in 2019-20. Ethanol prices were slightly increased for this year.

Product 2019-20 2018-19
1 Final Molasses 43.75 43.46
2 B Heavy 54.27 52.43
3 Cane Juice 59.48 59.13

Our Strategy

Sugar business has been working for the last couple of years on building a fully integrated sugar complex having a capability of capturing full downstream value for all its four sugar factories. Now our key focus areas are.

1. Focus on improving productivity and quality of sugarcane through dedicated cane development efforts, thereby benefitting both farmers in terms of higher yields and mills in terms of better recoveries & volumes.

2. Focus on sweating existing assets and drive operational efficiencies across all business lines.

3. Further evaluate options of value addition through forward integration including bottling of Potable Alcohol.

Shriram Farm Solutions

The business strives to provide complete solutions to the farmer ranging from products to agronomy. The product portfolio includes Value added inputs such as Seeds (GM, Hybrid and OP), Crop Care Chemicals (Insecticide, Fungicide and Herbicide), Soluble Fertilizers, Micro-Nutrients etc and Bulk Fertilizers like SSP & NPK. The business is supported by a strong extension program called the SKVP (Shriram Krishi Vikas Program). This program, apart from being an Agronomy services platform providing latest technology and practices to the farmers and the Channel, also focuses on meeting its social responsibilities. The company lays strong emphasis on strengthening its customer interface which will help in capturing the evolving trends in Agriculture and leverage technology to enhance performance of the Business, the Channel and the Farmer. The business is supported by a strong distribution network spread across 15 states, reaching out to ~ 1.0 million farmers and ~ 35,000 retailers. The Company sells these Agri-Inputs under brand Shriram which is known for quality and has a strong brand image within the farming community.

Business Performance

The Revenue, PBDIT and Capital employed for this business for FY20 are as follows:

Particulars FY 20 ( Rs/Crores) FY 19 ( Rs/Crores)
Revenue 762.0 716.6
PBDIT 68.5 41.1
Capital employed 121.2 206.1

• Revenues in FY 20 stood at Rs. 762 crore, up from Rs. 717 crore last year. This was mainly on account Revenue of the Value Added inputs vertical which was higher by 16%. Bulk volumes declined by 38% as part of the rationalisation plan.

• PBDIT for FY 20 was higher at Rs. 69 crore from Rs.41 crore, primarily due to Value Added business reported better volumes and margins.

Industry Overview and Outlook

Over the medium term, the Agri-inputs sector in India is poised to witness strong growth given the macro factors such as population growth , rising per capita income that are leading to rapid rise in growing demand for food.

Our Strategy

Company is focused on driving growth in the "Value Added" business through differentiated new technology products. To achieve this, company plans to strengthen its Research & Development, create partnerships with leading global players and enhance its market reach. The product pipeline is strong. We believe, that these steps will enable the business to achieve healthy growth in the medium term especially in the Value Added inputs segment.

To enhance the focus on Value added vertical, rationalise the bulk fertiliser vertical. As part of that strategy, the subsidiary of the Company, Shri Ganpati Fertilisers Ltd., manufacturing SSP fertiliser has been sold on 19th May 20


Bioseed is a Research oriented organization and believes in serving the farmers by providing high quality hybrid seeds with desired traits. It is a business with end to end integration which involves research, production, processing and marketing.

The key crops that we deal in India comprises of Bt cotton, Corn, Paddy, Vegetables among others. In Philippines we deal primarily in corn and are growing the market for paddy. Our distribution network is wide spread across regions and continues to grow as we increase our volumes.

We have our research stations in all major agro-climatic regions, to cater to farmers in the respective regions. We spend about 10-12% of our revenue on research activities. This has led to a healthy product pipeline. The product development is not only focused on providing high yielding hybrids, but also meeting other challenges, such as pest resistance, disease tolerance, salinity and drought tolerance. The Company has got into various research alliances to further strengthen its capabilities.

Business performance

The Revenue, PBDIT and Capital employed for this business for FY20 are as follows:

Particulars FY 20 (Rs/Crores) FY 19 (Rs/Crores)
Revenue 415.9 472.3
PBDIT 17.0 7.7
Capital employed 425.4 433.0

Indian operations witnessed a decline in revenue to Rs. 328 Crores from Rs. 390 Crores last year, a result of lower cotton seed sales. While international operations revenue increased to Rs. 88 Crores from Rs 82 Crores last year. The Phillipines operations have continued to show consistent improvement, where revenue in FY20 increased to Rs 74 crores from Rs 60 crores in FY19. The operations in Indonesia and Vietnam have been divested as unfavourable market conditions are expected to continue for foreseeable future.

Our Strategy

Research and development are the foundation of this business and we continue to strengthen it, to ensure medium to long term sustainable growth in the business. These efforts have enabled us to develop a robust pipeline of products, which meet the evolving needs of the farming community such as tolerance to climate variations, disease and pests. The company is continuously taking all necessary steps to strengthen conventional breeding as well as biotechnology related initiatives. The Company has an applied biotechnology research program which is focused on supporting breeding programs through the use of latest molecular and bio-informatics tools, as well as on developing GM and Non GM traits to meet various farming challenges.

The business is strengthening its product portfolio and intensifying marketing efforts to create a demand pull for its products. The trade channel is also being enhanced.

Fertilizer (Urea)

The companys Urea plant located at its integrated manufacturing complex at Kota, Rajasthan, is one of the oldest plants in the country with a reassessed capacity of 3,79,500 TPA of Urea. The company markets its products under the "Shriram Urea" brand. "Shriram Urea" a trusted name and enjoys high brand equity amongst the farmers. The Company has an extensive distribution network over the entire Northern and Central India.

Business Performance

The Revenue, PBDIT and Capital employed for this business for FY20 along with the quantitative data is as follows:

Industry Overview and Outlook

Particulars FY 20 (Rs/Crores) FY 19 (Rs/Crores)
Revenue 1016.6 1041.0
PBDIT 91.5 28.0
Capital employed 768.2 605.8


Year Sales (MT) Realizations (Rs./MT)
FY 20 3,80,392 24,968
FY 19 3,94,755 24,782
%Change -3.6 0.8

India is the second largest producer and consumer of Urea in the world. Urea is most preferred fertilizer and constitutes about 81% of entire N fertilizer consumption in the country. Low farm gate price (fixed by government) and high nitrogen content has made it a preferred choice of the farmers. The gap between demand and supply of Urea has been meeting through imports. During 2019-20, urea imports were 90.8 Lac MT (till Feb.20) against 74.5 Lacs during 2018-19.

Our Strategy

The Company has been making continuous efforts towards improvement in energy consumption, maximising urea production as well as control on fixed expenses.

Other Businesses Fenesta Building Systems

Fenesta is Indias largest and most preferred UPVC windows and doors brand. Fenesta provides complete solution in terms of design, manufacture, fabrication, installation and service of precision-engineered, made to-order UPVC window and door systems. The company operates in two segments, i.e Retail and Projects (Institutional).

Business Performance

During the year, despite adverse macro environment, the business witnessed improvement in operating performance and also improved its profitability at the PBT level.The revenue stood at Rs. 419 crore in FY20 vs. Rs.390 crore last year. Overall Sales Volumes (in quantity) have grown by ~10% YoY during the year.

Fenesta also successfully introduced System Aluminium Windows in current year

Our Strategy

Our Strategic focus area is to provide Exceptional Customer Experience and Offer Comprehensive Product portfolio resulting in Enhanced Sales Volumes.

Fenesta will have continued focus on Geographical Expansion and Channel Expansion. We are targeting to Improve Channel Productivity and Sales Effectiveness, which is expected to result in better conversion rates and increase in overall sales.

In Projects, Fenesta will continue to focus on improving its execution capabilities. We will also be focusing on establishing relationships with key accounts (Builders, Commercial, Industrial, Educational Institutions, Hospitality and Healthcare) and continue to achieve profitable growth.


The company operates a Cement plant with a capacity of 400,000 TPA located at its integrated manufacturing facility at Kota. Calcium hydroxide sludge is generated in the process of manufacturing PVC resins through calcium carbide route, which is then converted to cement in an environmentally friendly manner using wet process.

The Company produces high quality, premium grade Pozzolana Portland Cement and Ordinary Portland Cement. The Cement is characterized by light colour, superior strength and early setting properties. These characteristics have made "Shriram Cement" to be considered as a premium brand especially in markets like Delhi/NCR and Rajasthan.

Business Performance

Revenue of the cement business stood at Rs. 170 crore vs. Rs 159 crore last year. This increase of ~7% was mainly on account of higher sale price. The fuel cost was also lower as compared to last year. However, the lime stone price increased due to increase in freight rate and higher consumption of high grade lime stone.

Our strategy

The business is focused on further improving its efficiencies and optimizing its cost structure along product mix for generating higher returns. Launching of premium brand cement "Shriram Gold" is planned. Trials have already been conducted.

Trials are also being conducted to increase usage of Calcium Hydroxide sludge .Besides usage of stored sludge, installation of Hydro cyclone has been planned for increasing the sludge consumption.Also, the plant is working on usage of alternate fuels in Cement Kiln.

Hariyali Kisaan Bazaar

The Company has limited its operations in this business to fuel retailing at the existing outlets. The Retail operations were rationalised in 2013. The company plans to close this activity and is expected to take another 2 years.

PVC Compounds - under Joint Venture

The business in a 50:50 Joint Venture in a Company called Shriram Axiall Private Limited with Axiall LLC USA (a Westlake Company). It is one of the largest commercial PVC Compounder in India.

The market of PVC compounds which is around 0.58 Mn MT is split equally between self and merchant compounding. In terms of the total market split wire and cable business constitutes around 75% of the total market size by volumes with Medical and Automotive constituting around 7% each of the total merchant compounding market.

The manufacturing facility is equipped with modern compounding technologies and stare of the art testing equipments in order to provide a vast range of high quality PVC Compounds to customers in different industries.The Joint Venture is working on expanding its product basket with introduction of new compounds and also evaluating addition of product lines at an appropriate time.

Business Performance

The Companys total revenues during the year were at Rs. 160.5 crore vs Rs. 166.9 last year. The PBDIT stood at Rs. 9.5 crore vs Rs. 7.6 crore last year. The Company is exploring new avenues of market segments which would be mainly engineered Vinyl Products.

Covid-19 Impact on our Businesses

The outbreak of Coronavirus (COVID-19) pandemic globally and in India is causing significant disruption and slowdown of economic activity. To control the pandemic in India, the Government of India and States announced nationwide lockdown effective 24th March20. As a result of this most of our operations were suspended except for Sugar and Bioseed businesses that continued operations, being essential commodities. Chlor-Alkali, Shriram Farm Solutions and Fertiliser Business restarted operations in early April 20 whereas other businesses restarted by midMay 20, in line with government regulations.

During this period the operating and financial performance of the Company was subdued led by lower volumes and softness in product prices of some of the businesses. However, the operating cashflows have continued to be comfortable.

The businesses of Sugar, Bioseed, Fertiliser and Shriram Farm Solutions (SFS) are now operating at normal levels. Other businesses are operating at reasonable levels. The demand in these businesses is improving in line with market demand, that will help to improve capacity utilisation.

The Company has diversified and integrated businesses that continuously strive for cost optimisation, these features are helping us manage our operating and financial performance better in such difficult times. Our Agri related businesses like Sugar, Fertiliser, Shriram Farm Solutions and Bioseed are relatively less impacted, being essential commodities, than the Businesses such as Chloro-Vinyl, Fenesta, Cement, this will further mitigate the impact of Covid-19 on the Company

Company is continuously taking steps to mitigate the impact of Covid-19 on the business.

• On Social front - we are distribution of Sodium Hypochlorite a disinfectant from our Chemical plants and alcohol based Sanitizers from our Sugar plant, distributing masks and gloves and spreading awareness across locations among communities, Enabling work from home to the maximum extent possible, SOPs have been put in place at all the work places for maximum precautions and preventive steps, including canteens.

• On Business front - the Company is taking steps to maximise revenues across businesses based on market demand. It is actively engaging with its customers to assess demand and credit risks; new geographies are also being explored. With respect to supply chain, in the initial period of lockdown there were minor issues, which are now resolved.The businesses are proactively working on vendor de-risking to ensure sustainable supplies. On cost front the Company is in the process of further improving its cost competitiveness to ensure reasonable margins. On liquidity front the cash is being conserved by optimising working capital and rationalising capital expenditure. There are adequate resources to meet future financial and statutory commitments. The company intends to utilise the learnings during this period, on a sustained basis.

Opportunities, Threats, Risks and Mitigants

The Company being a conglomerate has a default business hedge however individual businesses are exposed to various opportunities and risks.


• Agri-Inputs

• The Agri-inputs business of Bioseed and Shriram Farm solution will have opportunities over medium to long term in the form of rising demand for quality seeds and other farm inputs with desired traits. Demand is going up for food in the country leading to a need for higher productivity and resistance to climate, disease and pests for crops.Approval to GM technology in India for crops such as corn, vegetables as and when it happens, will further foster growth of hybrid seeds.

• Presence of companys seed business in overseas markets of Philippines provides opportunity to the business to grow along with the growth in Agri sector in these countries

• Sugar business segment of the company provides multiple opportunities for forward integration into Distillery and related products like Potable Alcohol that helps optimise the business performance.

• Chloro-Alkali businessis seeing opportunities in capacity expansion to meet the medium-term demand estimates as well as in downstream products that will help Chlorine evacuation and add value to the business.

• The companys Fenesta Building Systems business provides it opportunities in existing windows business through product innovation as well as in related building products.

• Strong brand in all businesses, which enjoy high level of Trust and Credibility with customers including farmers.

• Comfortable financials with healthy cash flows and good project implementation track record provides ability to continuously invest in growth.

Risk, threats and mitigants:

• Businesses such as Sugar, Fertiliser and parts of Bioseed business segments are exposed to risk of regulatory intervention. Exposure to these businesses is kept at reasonable level. Further, we alongside with other industry participants and associates work with regulatory agencies on continuous basis to ensure a policy framework which benefits farmers (key stakeholder in all these businesses), consumers and industry.

• Substantial delay in payment of fertiliser subsidy bills by the Government increases the borrowings and hence the interest costs. The Company manages its working capital and tries to keep overall debt at low levels to enable handling such risks

• Businesses like Chloro-vinyl are energy intensive. Rising energy costs as a result of rising international and domestic coal prices, freight, duties and levies, is increasing the cost of production. We continuously work and invest in improving our technology, efficiencies, fuel mix and sourcing, to ensure that overall cost of production is competitive.

• Chemicals, Plastics, Cement and Sugar are commodity products, hence their prices are led by global commodity prices along with domestic demand and supply position. The Company focuses on being amongst the lowest cost producers in these businesses.

• Compliance - Increasing regulatory enactments has brought in the need for additional compliances. With various statutes and regulations, non-compliance may not only lead to monetary penalties but also have an impact on the reputation of the organisation and the goodwill it enjoys. The risk is mitigated through regular monitoring and review of changes in the regulatory framework to ensure compliance with all the applicable statutes and regulations.

Internal Control Systems and their Adequacy

Our business is run on SAP S4 Hana ERP which provides complete integration of all transactions including financial transactions and statements. The key business processes and policies are documented. Risk Control Matrix (RCM) has been prepared for all the key processes and business transactions. Process adherence and compliance effectiveness of control matrix is tested at three levels i.e. by the Business Accounts Team, Corporate Internal Audit Team and then the Co-sourced Internal Auditor. The statutory auditors also carry out their audit on processes and internal controls on financial reporting. The internal audit for all processes is carried out regularly as per the plan approved by the audit committee. The audit observations are discussed and monitored by Corporate Office as well as the Audit Committee regularly. The company has already implemented GRC (Access Control module) for access management and further also implemented GRC (Process Control module) which will facilitate continuous monitoring of controls and further enhance the effectiveness of the internal control systems.

Human Resources and Industrial/Employee Relations

The Organisation has continued through the entire year its focus on building a great work culture, healthy relationships, enhancing capabilities to drive performance and leading initiatives to make a difference, along with creating a culture of vibrancy and high employee engagement. Developing people has been a key agenda for the Organisation like every year because of its ability to drive business performance and outcomes. Also, some new focus areas like holistic Employee Wellbeing and Leveraging HR Technology has been at the core of the people agenda last year, with multiple high impact initiatives around physical, emotional and financial wellbeing of employees and proactive identification of areas for automation, in order to improve HR deliverables and help strengthen the strategic role of HR.

The commitment of the Organisation towards People is strongly enshrined in the core values and beliefs of the Organisation and the related programs, policies and practices that have got institutionalized over the years.

Productivity and Optimisation

There has been an ongoing focus on driving productivity and optimization of resources on a sustained basis in the Organisation across all the businesses and units. There have been awareness programs and initiatives in all the businesses around building efficiencies in the entire work spectrum, raising standards of performance, improving quality of products and services and reducing costs. This is seen a key contributor to building competitiveness at the market place.

There is an increased focus on improving the engagement score and strengthening the managerial effectiveness across the different businesses in the organization. Focus on talent acquisition, strengthening the selection/onboarding process continues to be the cornerstone for improved employee engagement. Learning processes have been continuously redefined and consists of a blended approach of online/classroom training for greater effectiveness. There have been various CFTs, action learning projects, ideation initiatives and suggestion schemes to engage with the larger workforce to seek their inputs and involvement to reduce costs, improve productivity and profitability in line with the industry standards and benchmarks.

Capability Building

Building capability of employees has always been a significant driver of enhancing business performance on a sustained basis in the Organisation. Like every year, the company has continued to invest in imparting new skills, competencies and knowledge of its employees across all the levels in the various businesses. Employees have continued to go through structured training and development programs, attend some of the best in class programs, conferences and seminars. There have been focused efforts on overall upgradation of unique capabilities relevant to the businesses through structured and systematic learning programs, on the job training, job rotations, multiskilling, projects and assignments. All Competencies across the entire spectrum - technical, functional and behavioural - have been focused as part of the development programs. There has been an increased focus on defining and enabling the cultural shift required to better meet customer expectations and ensuring that all processes align with the shift alongwith a focus to internalize the new values coined by the company over the course of last year.

A conscious effort is being made to enable a performance culture and empower employees. Talent and leadership development has continued for the high potential employees of the Organisation based on the developmental needs of the individuals and Organisation. Mentoring and coaching programs have continued along with rotations of employees into new and different roles to give them a developmental exposure and learning for better career.

HR Initiatives and Interventions

Some of the most significant interventions, along with pursing the ongoing ones, have been around holistic employee wellbeing and enhancing employee experience through integrated technology platforms. There has been a lot of focus on ensuring the quality of key processes impacting day to day experience of employees, encompassing Recruitment & On boarding, Goal and Performance Management, Learning Management System, CDP Succession Planning and Continuous Performance Management. These are seen as strategic initiatives, enhancing the effectiveness of HR processes & systems and creating a win-win situation for all the stake holders. The focus on leveraging the other initiatives like Talent & Leadership Development to build a talent pipeline for the future, Succession Planning for key leadership positions and Balanced Scorecard for a sharper focus on outcomes and deliverables has also been significant. The Organisation has also successfully outsourced its payroll processing and travel management in partnership with some of the best external agencies and firms. There has also been extensive work around following-up on the findings of the Engagement Study and implementing the action plan emerging out of the same to impact the various engagement drivers.

Employee / Industrial Relations

The focus on building cordial and harmonious relationship with employees of the Company has continued on a sustained basis. An environment of mutual trust, understanding and faith has been nurtured in line with the progressive philosophy of the Organisation to work in a collaborative way and build togetherness to achieve the larger goals of building a great institution and business Organisation. The core value of respect and dignity has been well institutionalized in the organization ensuring fairness, transparency and engagement. With every passing year, the organization has increased its focus on Employee health safety, responsible care, process safety and a cleaner and safer work environment.

The unique initiatives undertaken from time to time, along with an authentic people philosophy of the Company, has ensured that the workplace provided to the employees is engaging, positive and enabling. All this has led to the building of a facilitating ecosystem and ethos in the Company. It has ensured that employees give their best and align themselves fully to the business and organizational goals of the Company so as to create a bright future for every stakeholder.