1994
DCM LIMITED
CHAIRMAN'S SPEECH
Ladies & Gentlemen,
I extend to you a very warm and cordial welcome The Directors' Report and
Audited Accounts for the year ending 30th June, 1994 have been with you for
some time and with your permission I will take them as read.
THE MACRO SCENE
The underlying mood during the last year on the political front has been
one of relative stability. The ups and downs which have occurred in some of
the northern States and U.P. in particular could be regarded as part of the
normal democratic process. What is noteworthy, however, is a ray of hope
on the Jammu & Kashmir front which has for some years posed an intractable
problem.
On the economic front there is every reason to feel optimistic. Every day
one reads about major multinational companies wanting to establish their
presence in India. In terms of hard facts the foreign exchange reserves now
stand at $18 billion. equivalent to about 9 months' imports. Despite this
the exchange rate has been stable at around Rs. 31 to the Dollar, The
inflation rate is now a little over 8% as against nearly 12% at this time
last year. The GDP is expected to grow at 4.5% as compared to 3.5% last
year. The BSE Sensex is 58% higher as of September 1994 compared to the
same period last year. Industrial activity has revived and production is
8.7% higher as of May 1994 than last year. Banks and institutions have been
allowed to float the interest rate with no minimum lending rate
restrictions. Imports have been further liberalised and customs duties
reduced.
Taken together these facts point towards excellent macro economic
management on the part of the Finance Minister. It is now for industry to
respond vigorously so that we can claim our rightful place as a nation
among worldclass economic powers.
Despite what I have said so far, however, there are areas which continue to
remain a drag on the social and economic system.
First and foremost is the inadequate attention to our human capital. While
we may pride ourselves on a large pool of engineers and college graduates
it is sad that our literacy rates remain woefully poor. specially among
females. It is indeed beyond comprehension that while some States like
Kerala demonstrate litercy levels comparable with the advanced nations,
others like U.P. are worse than sub-Saharan Amican countries. Female
literacy in some States is less than 20%. This has obvious adverse
implications on population control, the values imparted to children and
eventually productivity. It is no surprise that one of the key reasons that
the Asian Tigers have pertommed far better than India is that they have
achieved near-100% literacy with predictable positive results on
productivity.
Second is the sad state of our infrastructure. The sharp rise in India's
middle class has put immense pressures on transportation, roads, education,
medical services, power generation and the environment. From the view point
of investment this field is still in a nascent stage and we have to move
exceedingly fast so that infrastructure does not become a drag on our
economic progress. The positive side is that policy makers now seem to be
aware of the need to move rapidly. Consequently the field of
infrastructure is being opened up to the private sector. Your company is
also looking at this opportunity very seriously.
COMPANY AFFAIRS
I now come to our business affairs. I am glad to report good performance of
your company for the year 1993-94. The Revenue grew by 31% to Rs. 172.73
Crores and the Net Profit was up by 90% to Rs. 19.25 Crores over the
previous year's annuallsed figures. This gives an Earnings Per Share on a
pro-rata basis of Rs. 11.75 on the enhanced Equity Capital of Rs. 17.36
Crores.
Your Company has come a long way following the Trifurcation of the
erstwhile DCM Limited. From a time when our Engineering Division was the
only operation making profits and the real estate project was a distant
dream, DCM has made rapid strides to reach a stage where we have setup a
cotton yarn facility with 33,600 spindles in Hisar, received most
permissions relating to the Bara Hindu Rao real estate project, commenced
the doubling of the foundry capacity, reorganised the Information
Technology division into profit centres and divested unviable businesses.
DCM today has interests in a wide range of activities which in no way are
limited to textiles or the association with the erstwhile Delhi Cloth
Mills. In the mind of the public, however, this association continues to
linger on. We have, therefore, decided to add a suffix under DCM which
reads 'The Delhi Commerce & Manufacturing Company'. This does not affect
the legal entity of DCM Limited, but hopefully will dissociate the linkage
with the Delhi Cloth Mills over time The new by-line . has a connotation
which can appropriately encompass the present and the future activities of
the company.
During the year 1993-94, our foundry division continued to perform well and
further consolidated its position as a premier supplier of automotive
castings. The unit was also awarded the ISO 9002 certificate.
With a shift in focus of our Information Technology Division from Hardware
to Software Exports and Systems Integration, the name of the Unit was
changed from DCM Data Products to DCM DataSystems. The operations are now
being spun off into a new 100% subsidiary company to provide the desired
thrust and operational manouevrability.
In real estate the demolition in the flatted factory and residential area
is progressing fast. The textile division operations have stabilised and
modernisation of the mill is in progress.
Today, the company has reached a stage, where after having successfully
overcome the post trifurcation crisis, it has consolidated its businesses and is now poised for rapid growth. The world renowned firm of management
consultants McKinsey & Co. was accordingly appointed, to review the
operations of the company, chart out the directions for future growth and
formulate strategies. At the same time the company's businesses were
restructured and the Organisation revamped to meet the challenges of the
Nineties.
The company proposes to leverage its core strengths in Engineering and
convert DCM into a major player in the Auto-Engineering segment. After the
break through in supplying castings to South Korean companies that I had
mentioned last time, I am happy to state that we have been short listed by
major OEMs in Europe & USA and negotiations are currently being held to
finalise orders. We plan to treble our foundry capacity and continue to
expand in the global arena. To achieve this objective we are seriously
examining the setting up of machining facilities in a step by step fashion
which will also result in considerable value addition. The Tool Room
project in collaboration with Meissner of Germany is proceeding fast and
studies are being undertaken for further investments in engineering.
DCM also sees tremendous potential in the infrastructure and construction
business and a new company DCM Estates & Infrastructure Ltd has been
formed. The company shall be venturing into trading & promotion of real
estate and development of infrastructural services.
As part of the diversification process, a Housing Finance Company has also
been set up. The objective is to become a leading housing finance company
in north India within the next five years in terms of loan disbursement.
Each of these companies and businesses will experience rapid growth in the
coming years, and this shall translate into significant gains for the
shareholders. Public issues are being planned for some of these new
companies shortly, and we propose to make a preferential offer of equity
shares to our existing shareholders so that they can participate and
benefit from their growth.
The success, of a company, eventually hinges not only on leadership but
equally on the hard work and commitment of its employees. Your company is
fortunate in having a highly motivated and committed team.
Before I close, I would like to convey my sincere thanks to all our
employees for the devoted manner in which they have worked throughout the
year; the Financial Institutions and our Bankers for their co-operation;
the Government of India and the various State Governments for their support
and encouragement; and most important of all, the understanding and
unstinting support of our shareholders.
Thank you.
Dr. VINAY BHARART- RAM
Chairman & Managing Director
Place : New Delhi
Date : 23rd November, 1994