DCM Shriram Ltd Management Discussions.

Performance Review

During the year the Company witnessed growth in financial as well as operating performance. Chlor – Alkali business has become stronger with economies of scale and substantial improvement in power efficiencies. Sugar business is experiencing difficult price situation with prices significantly below cost. Other businesses continue to perform reasonably. The Company commissioned 150 KLD distillery at Sugar Hariawan Unit at an investment of ~ Rs. 188 crore. Distillery will start contributing to the earnings of the Company from the next year. Our cash generation and Balance sheet are comfortable which enables us to look at further growth initiatives.

Total Revenue from operations stood at Rs. 7007 crore vs Rs. 6117 crore last year.

Chemicals business revenue grew by 57% to Rs 1584 crore driven by higher volumes with full capacity utilization from expansion at Bharuch plant, in the last fiscal & higher realisations.

Sugar Business revenue was up by 24% to Rs 1988 crore with higher volumes

Fenesta Business revenue was up by 20% to Rs.341 crore with higher volumes

Agri Input businesses revenues were down 2% at Rs. 2183 crore led by lower volumes of Bulk Fertilisers, a part of planned directive.

Profit before depreciation, interest and tax improved to Rs. 1091 crore up 33%, driven by

Chemicals Business PBDIT stood at Rs.784 crore, an increase of Rs. 455 crore over last year, led by higher volumes with full capacity utilization from expansion at Bharuch plant & higher realisations. Rising cost of captive power due to higher coal prices restricted the improvements.

Sugar Business PBDIT stood at Rs.126 crore, down by 63% over last year due to lower realisation of Sugar and Molasses. The decline is attributed to glut in sugar market led by more than anticipated production in Maharashtra in sugar season 2017-18.The Company took inventory write down of Rs.185 crore as selling prices are substantially below costs.

Fertiliser and Fenesta businesses also contributed to improvement in earnings.

Overall PBDIT margins improved to ~16% from ~13%last year. l Finance Costs – Finance costs during FY 18 increased by 16% to Rs. 83 crore.

PAT increased to Rs 670 crore, up 21% from Rs 552 crore in FY 17. l EPS for the year at Rs 41.2 up from Rs 34.0 in FY 17. l Net Debt as on March 31, 2018 stood at Rs. 653 crore vis--vis Rs. 928 crore as on March 31, 2017. Net Debt to equity stood at 0.22x as on March 31, 2018 vs 0.37x as on March 31, 2017.

The Board of directors have recommended a total dividend of 410% for FY 18 as compared to 290% in previous year.

Project Completed in FY 18 at an investment of ~ Rs. 188 crore -l Sugar – 150 KLD distillery at Hariawan Unit

. New Projects – The following projects currently underway, progressing as per schedule

Sugar – Expansion of Crushing and Co-gen Power in Hariawan Unit by 5000 TCD , 30 MW respectively at an investment of ~ Rs.303 crore

Chlor-Alkali – l Kota - Capacity Expansion of Caustic Soda Plant by 168 TPD at total investment of Rs.132 crore

Bharuch –l Capacity Expansion of Caustic Soda Plant by 332 TPD at an investment of Rs.177 crore

Commissioning of 60 TPD Aluminium Chloride Plant at an investment of Rs.43 crore

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

Power – Replace 50 MW Coal based Power Plant at Kota by 66 MW Power Plant at an investment of Rs. 240 crore

Business – Wise Performance Review and


Chloro – Vinyl Businesses

DCM Shrirams Chloro-Vinyl business is highly integrated supported by 209 MW coal based power facilities. This business has multiple revenue streams with Chlor-Alkali (Caustic Soda and Chlorine), 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 18 is as follows:

Particulars FY 18 ( Rs/Crores) FY 17 ( Rs/Crores)
Revenue 2154.9 1,584.2
PBDIT 887.7 448.1
Capital employed 1058.8 1,047.7

Chloro-Vinyl segments revenue stood at Rs. 2,155 crore as compared with Rs.1,584 crore in FY 17. The improvement was a result of higher Chlor –alkali volumes post completion of expansion project, in the last fiscal & higher realisations. Plastics business also had higher volumes.

Selling prices of Chlor-Alkali were higher on account of firm Caustic Soda Lye Prices with international prices. PVC prices continued to remain firm.

Input costs of Power and carbon material have risen, impacting the margins. Operating efficiencies have improved especially power consumption in Bharuch , post completion of expansion and modernization.


Chlor-Alkali (Chemicals) business produces core chemicals viz. Caustic Soda, Chlorine, Hydrogen, Hydrochloric acid and Stable Bleaching Powder, which are widely used in manufacturing processes of other industries. The growth of this business is highly correlated to the growth of GDP 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 industries etc. and Chlorine is used in Polymers, Dyes & inks, Agro-chemicals, 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 expansion project at Bharuch in 2016-17, the aggregate production capacity of the Company is presently at 1343 TPD. Caustic Soda flaking capacity presently is 350 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 100% captive power, based on coal.

Business Performance

The Revenue, PBDIT and Capital Employed for this business for FY 18 along with quantitative data are as follows:

Particulars FY 18 ( Rs/Crores) FY 17 ( Rs/Crores)
Revenue 1584.3 1,011.5
PBDIT 783.7 328.3
Capital employed 922.5 898.3


Year Sales (MT) Realizations (Rs./MT)
FY 17 4,26,518 31,885
FY 16 3,31,360 23,882
%Change 28.7 33.8

Company was able to utilise the entire chlorine output from Bharuch plant, leading to near 100% capacity utilisation. Further, operations at both Kota and Bharuch facilities continued to run optimally leading to higher production along with improving cost efficiencies. Chlor Alkali revenue increased by 57%YoY in FY 18, mainly on account of higher volume from our Bharuch unit post completion of capacity expansion project in October 2016 and higher realisations. Energy costs are on an increasing trend. However power efficiency at Bharuch unit has improved significantly post expansion and up-gradation of the existing facilities.

Industry Overview and Outlook

The Chlor-Alkali industry in India has 35 operating units with a combined installed capacity of 3.66 million Tons per annum of Caustic Soda. The Top three players comprise about 50% of the total installed capacity. The domestic demand for Caustic Soda and Chlorine in 2017-18 is estimated to be about 3.6 million Tons per annum and 2.9 million Tons per annum respectively. The imports of Caustic Soda remained same as earlier year. The demand of both the products are linked to the Indian GDP growth because these products are considered as the building blocks of various other industries. As GDP is poised for a higher growth, the demand of these products is also expected to increase.

Our Strategy

Company remains committed to capitalize on the growing demand in the sector by constant upgrading of production capacities. Post expansion in October 2016, capacity utilization at Bharuch was about 90% in 2017-18 and company plans to increase it further in 2018-19 as chlorine market improves. Further Chlor-Alkali capacity expansion at Bharuch by 332 TPD with an investment of Rs 177 crore. is expected to be commissioned in Q1, 2020. Capacity expansion at our Kota unit at an investment of Rs. 98 crore is progressing as per plan and is expected to be completed in Q3, 2019. In addition, further capacity expansion at Kota with an investment of Rs 34 crore. will be commissioned by Q3, 2020. In addition, the company will also be commissioning a 60 TPD Aluminium Chloride plant in Q3, 2019 at Bharuch with an investment of about Rs 43 crore, and will continue exploring 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 integration in terms of own Captive Power, Chlorine and Calcium Carbide. The Calcium Carbide manufactured by the company is partly sold as merchant Carbide and 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 by most of the countries worldwide except in China. The 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 is a thermoplastic with 57% chlorine and 43% carbon, making it excellent fire-resistant material. Almost 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 ~11.8 kg in US & over 10 kg in China. With steady rise in demand and promising prospects in the downstream agriculture & construction sectors and 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 18 along with the quantitative data is as follows:

Particulars FY 18 ( Rs/Crores) FY 17 ( Rs/Crores)
Revenue 570.7 572.7
PBDIT 104.0 119.8
Capital employed 136.3 149.4


PVC Resins Carbide
Year Sales (MT) Realizations Sales (MT) Realizations
(Rs./MT) (Rs./MT)
FY 18 61,868 70,932 23,867 44,063
FY 17 55,892 71,151 23,591 43,336
% Change 10.7 (0.3) 1.2 1.7

The revenue for the business was at Rs 571 crore as against Rs 573 crore last year. The business revenue was driven by higher sales volume of PVC resins in this financial year.

However, PBDIT for the business was lower by 13% year-on-year at Rs 104 crore mainly due to ban of Petroleum Coke by Ministry of Environment & Climate Change (MoEF&CC) in line with Supreme Court direction. They issued a circular banning use of Petroleum Coke in industries located in NCR states. The banning of Pet Coke, which was a key raw material in the production of Calcium Carbide made us to use more expensive and not so suitable raw materials which resulted in lesser production and reliability.

Financial year 2017-18 witnessed a significant jump in crude oil prices which led to increase in energy prices such as Coal, etc. Also, the Chinese environmental policy came into full effect in the winter months (From Nov17 to Mar18) which forced either capacity cuts or reduced operating rates in coal mining and other carbon consuming / emitting industries which pushed the price of coal, coke, graphite and other chemicals higher.

Industry Overview & Outlook

PVC Resin industry is important for the national economy with PVC being and rightly called as the infrastructure polymer. Despite of strong economic growth, India still has a long way to go to realize its infrastructural needs - nearly USD 650 billion will be required for urban infrastructure in the next twenty years. Also, the construction sector contributes to ~10% of the GDP. This is going to be growth multiplier for PVC and hence for PVC end-products that are used in these sectors. The PVC Resin installed capacity in India currently stands at ~1.4 million metric tons per annum. As against this, the domestic demand has been growing steadily & has reached ~3.02 MTPA in FY18 and is further projected to grow 8-10% in FY19. The gap in demand and supply, which currently stands at ~54% of our total demand, is being met by the import of PVC Resin. The continued focus of the Govt. on building infrastructure – development of smart cities, rural housing and Agri-asset creation,rapid urbanization and other initiatives like investments in rural sanitation is expected to fuel growth of the PVC industry in India over the next several years.

The Calcium Carbide demand in India is around 88000 MT in FY 18, a drop of 5% from FY 17. We are currently having 27% market share in the country, up from 25% last year. The industry witnessed a demand drop as Magnesium based desulphurization (DS) compounds are supplanting Calcium Carbide DS compound in the steel industry. Also, Dissolved Acetylene (DA) gas market is witnessing a slight decline due to emergence of alternatives.

The push in costs side is expected to continue in FY 19 as there is positive economic outlook in almost all developed countries for the first time in last decade. This, coupled with increasing energy demand in developing countries would push the global energy prices higher. Also, Chinese environmental restriction is expected to continue in FY 19 which will alter demand – supply of key raw materials and chemicals, thereby putting pressure on our cost side.

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 and implementing cost reduction initiatives to support the business profitability.


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 (8,000 TCD) and Loni (8,000 TCD) with a total crushing capacity of 33,000 TCD. These four units have a total power cogeneration capacity of 111 MW of which 62 MW of power can be exported. These four units are also supported by 150 KLD Distillery at Hariawan Unit.

Business Performance

The Revenue, PBDIT and Capital Employed for this business for FY 18 along with the quantitative data is as follows:

Particulars FY 18( Rs/Crores) FY 17( Rs/Crores)
Revenue 1,988.0 1,601.0
PBDIT 126.0 342.2
Capital employed 1,289.6 1,018.4


Year Sales (Lac Quintals) Realizations (Rs./Qtl)
FY 18 48.48 3,566
FY 17 36.60 3,527
%Change 32.4 1.1

Operating Parameters

Particulars Unit of Measurement FY 18 FY 17
Financial Year
Cane Crushed Lac Quintals 488.5 372.4
Recovery Rate % 11.08 11.89
Sugar Produced Lac Quintals 54.02 40.54

Cane crush has been higher on account of increase in cane area and higher sugarcane yield in the region.

Sugar recovery was in line with last year in spite of early start of crushing which have relatively lower recoveries. This is largely attributable to improved varietal balance in our region.

Revenues at Rs. 1988 crore were up by 24.2 % on account of higher volumes during the year.

PBDIT stood at Rs. 126 crore vs. 342 crore in FY 17. This decline is attributed to glut in the sugar market led by more than anticipated production in Maharashtra in sugar season 2017-18. Sugar prices started dropping from Rs. 3800/qtl in October 2017 to as low as Rs. 2800/qtl in March 2018. Accordingly sugar stocks as on March 31, 2018 had to be marked to market and booked a loss of Rs 141 crore. Further the Government of India came up with Minimum indicative export quota (MIEQ) scheme in March 2018 wherein we are obligated to export 3.48 lac qtl sugar on which we anticipate a loss of Rs 44 crore.

We commissioned our distillery in January 2018 and operations have largely stabilized. We have also got allocations from OMCs for supply of Ethanol which is likely to commence from April 2018. Till then we will continue to produce and store the product in our tanks.

Industry Overview and Outlook

The Indian Sugar Industry is the second largest producer after Brazil and the largest 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. There is a glut in global sugar market in 2017-18 and this scenario is expected to continue in the coming year as well. In Thailand, sugarcane crop will still remain a remunerative crop for farmers in spite of ending of the production subsidies. EU will also participate in international trade. However with crude prices heading north one can expect more Brazils cane diversion for ethanol production. Prices in international market has steadily declined by almost 25% with whites falling from 370 to 270 $/t and raws from 17 to 13 c/lb levels in a year. Brazilian currency REAL has been range bound between 3.10 to 3.30.

Indian markets remained isolated from international markets with trade restrictions and therefore witnesses stable domestic prices for 1st half of the year. However, the sugar prices headed south on the onset of sugar season 2017-18 due to unexpected production in Maharashtra. Sugar prices dropped from 3800 rs/qtl in October 2017 to as low as 2800 rs/qtl in March 2018. This situation was further aggravated by alcohol & paper producers resorting to arm twisting by-product prices in Uttar Pradesh taking cognizance of bumper production and limited storage capacities with sugar mills.India is expecting sugar production of 30 mn tonne in 2017-18 as against consumption estimates of 25 mn tonne. This situation is a cause of concern and still continues to persist in spite of Governments resorting to restriction on sales quantities in February & March 2018, reduction of export duty on sugar to NIL and announcing a minimum indicative export quota (MIEQ). The State and the Central government are cognizant to the situation and we are hopeful of timely intervention and rational policies which are in the long term interest of the Industry and the farmers. In 2017-18, Uttar Pradesh continued to witness unprecedented sugar productivity, with some mills expected to register recoveries above 12% along with better than expected yields. This is mainly attributed to regaining of varietal balance in Uttar Pradesh lost earlier in 2008-09 and partly to the favourable agro climatic conditions. Higher yields of early variety sugarcane Co0238 and therefore better crop economics as against competitive crops are indicating an unprecedented increase in cane area in upcoming season.

Ethanol: India recommends 10% blending (against mandated 5%) and accordingly OMCs issued a total requirement of 3.2 bl in 2017-18. Supply of 1.6 bl has already been finalized and one can easily expect a blending above 5% this year. This response has been an outcome of Governments decision to increase ex-mill prices of ethanol to 40.85 rs/ltr w.e.f. Dec 1, 2017 and a sudden fall in molasses prices in North.

Our Strategy

The business has been looking for growth opportunities to tap full potential of its catchment area and downstream products. To achieve this objective we commissioned 150 KLD distillery at Hariawan complex and has taken up an expansion of sugar crushing facilities at Hariawan by 5000 TCD with 30 MW cogeneration. The business will continue to identify more such opportunities and also continues its focus on improving productivity and quality of sugarcane benefitting both farmers in terms of higher yields and mills in terms of better recoveries and downstream value adds. This measure is being supported by dedicated cane development efforts focused at empowering and equipping our farmers with latest technologies and improved agronomy practices.

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 Fertilisers, Micro-Nutrients etc and Bulk Fertilisers 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 17 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 FY18 are as follows

Particulars FY 18 ( Rs/Crores) FY 17 ( Rs/Crores)
Revenue 888.1 1,015.7
PBDIT 52.1 29.0
Capital employed 272.6 399.0

Revenues in FY 18 stood at Rs. 888 crore, down from Rs. 1,016 crore last year. This was mainly on account of low Volumes in Bulk Vertical. Revenue of the Value Added inputs vertical was in line with the last year.

PBDIT for FY 18 was up to Rs. 52 crore from Rs. 29 crore , primarily due to better margins in the Value Added business & discontinuation of DAP/MOP activities which had caused losses in FY 17.

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 focussed 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.

We believe, that these steps will enable the business to achieve healthy growth in the medium term especially in the Value Added inputs segment.


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 international markets of Philippines, Indonesia and Vietnam we deal primarily in corn and are developing 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 8-10% 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 FY18 are

as follows:

Particulars FY 18 ( Rs/Crores) FY 17 ( Rs/Crores)
Revenue 493.0 469.8
PBDIT 25.3 19.9
Capital employed 389.0 359.2

Bioseed Revenues in FY 18 stood at Rs 493 crore vs. Rs 470 crore last year. The Indian operations witnessed stable revenue to Rs. 404 crore from Rs. 408 crore last year with higher sales volumes of Cotton and Field Crops but lower realisations . The year witnessed increase in sowing of cotton seed in India that helped in better off take of our hybrid cotton seeds. In International operations, revenue went up to Rs. 89 crore from Rs. 62 crore in the previous year. The volumes in Vietnam and Indonesia have improved , however Vietnam remained stable.

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.

International operations are going through tough times over last couple of years. We now expect that normal monsoons and new products introduced in the market last year should drive growth in the International operations.


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 FY18

along with the quantitative data is as follows:

Particulars FY 18 ( Rs/Crores) FY 17 ( Rs/Crores)
Revenue 802.1 746.8
PBDIT 87.9 64.5
Capital employed 453.5 394.4


Year Sales (MT) Realizations (Rs./MT)
FY 18 4,04,548 19,657
FY 17 3,94,307 18,221
%Change 2.6 7.9

The Urea production during the year 2017-18 was 4,09,671 MT which has been the highest ever production achieved so far. Business earning increased vis-a-vis last year mainly on account of freight arrears received for previous periods.

Industry Overview and Outlook

India is the second largest producer and consumer of Urea in the world. Urea is most preferred fertiliser and constitutes about 81% of entire N fertiliser 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 2017-18, urea imports were 59.8 Lac MT against 54.8 Lacs during 2016-17.

Our Strategy

The Company has been making continuous efforts towards improvement in energy consumption, maximising urea production as well as control on fixed expenses. A lowest ever annual average energy consumption of 7.048 MKCal/MT Urea has been achieved during 2017-18.

Other Businesses

Fenesta Building Systems

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

Business Performance

During the year, despite adverse macro environment, the business witnessed substantial improvement in performance and improved on its profitability at the PBT level. The revenue stood at Rs. 341 crore in FY18 vs. Rs.284 crore last year. Overall Sales Volumes have grown by 32% YoY during the year. Sales volumes in FY 18 in Retail and Projects segment grew by 15% and 56%, respectively, over last year.

Our Strategy

In Retail, 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. Also, various initiatives are being taken to enhance the overall customer experience from enquiry stage to Final Handover.

In Projects our focus is on establishing relationship with key accounts (Builders, Commercial, Industrial, Educational Institutions, Hospitality and Healthcare) and continue to achieve profitable growth.

In order to cater to increased volumes, various actions have been initiated to improve the production capacities and capability building across the organisation.


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. 184 crore vs. Rs 211 crore last year. This decrease of 13% was on account of lower sales of traded cement. While the efficiencies have improved the increase in input costs of coal, limestone and power are putting pressure on costs.

Our strategy

The business is focused on further improving its efficiencies and optimizing its cost structure along product mix for generating higher returns.

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 2-3 years.

PVC Compounds – under Joint Venture

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

The market of PVC compounds which is around 0.7 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.

Major share of the volume approximately 70% continues to be small scale and MSME suppliers, however recently some investments were made by Mexichem for compounding a variety of polymers including PVC at their Goa plant.

The business is jointly working with the JV partner (Axiall LLC/ Westlake) through its R& D facility known as iPAC (Innovative Plastic Application Center) to bring into India technologies and applications which can provide its customers.

An opportunity to work with new age PVC compounds which can even replace engineering Polymers in some selected case. This would provide our customers to replace some of the polymers which are imported today and provide them with higher flexibility beside cost competitiveness. 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 Strategy platform for growth of the Joint venture is the transfer of technology from Axiall LLC, USA to India and focus on adding new engineered Vinyl applications in India. 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 accounted at Rs. 142 crore. During the year the Companys export revenue was Rs. 2.7 crore (previous year Rs. 6.2 crore). The Company plans to expand its reach through exports to the regions of GCC, SAARC and African countries. The Company is exploring new avenues of market segments which would be mainly Engineered Vinyl Products.

Opportunities, Threats, Risks and Mitigants

The Company being a conglomerate is exposed to various opportunities and risks.


The company has presence in three different verticals

1. Chloro Vinyl (Basic industrial chemicals/polymers) where Opportunity/growth is linked with overall GDP growth / manufacturing growth. Besides growth in existing business, it offers opportunities for forward integration particularly in chemicals business.

2. Agri-Inputs

The Agri-inputs business of Bioseed and Shriram Farm solution will have opportunities over medium to long term with rising demand for food in the country along with need for higher productivity and resistance to climate, disease and pests. Approval to GM technology in India for crops such as corn, vegetables as and when it happens, will foster growth of hybrid seeds.

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

3. Sugar–forward integration

The companys Fenesta Building Systems business provides 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 credit track record provides ability to continuously invest in growth.

Risk, threats and mitigants:

Businesses such as Sugar, Fertiliser and some parts of Bioseed business 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.

iii. 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 External 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 is also implementing GRC (Access Control and Process Control), which will 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, alongwith 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. 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. Adoption of the latest IT technology of SAP S4 Hana across the various business processes has been an area of focus to drive significant improvements, process enhancements and raise the overall standard of performance and optimization. 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 have been programs and appreciation sessions to facilitate an effective adoption of the contemporary modules flowing out of S4 Hana IT technology across all the business processes. 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

One of the most significant interventions, alongwith pursing the on-going ones, has been the progress in adoption of the various Success Factor modules of SAP encompassing Recruitment & Onboarding, Goal and Performance Management, Learning Management System, E-Setu / JAM, CDP, Succession Planning. It is seen as a strategic initiative impacting the day to day experience of the employees, 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. The caring orientation alongwith the various welfare measures have ensured that the family spirit and belongingness is well sustained. The unique initiatives undertaken from time to time, alongwith 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.