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DCM Shriram Ltd

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BSE Code : 523367 | NSE Symbol : DCMSHRIRAM | ISIN : INE499A01024 | Industry : Diversified |


Chairman's Speech

The Indian economy ended the financial year 2023-24 with GDP growth surpassing market expectations, despite strong external headwinds. Early indications suggest a continuation of the economic momentum during the first quarter of FY25. Some of the high frequency indicators of growth such as GST collections, toll receipts on highways, sale of vehicles, electricity consumption, passenger traffic both rail and air, value of digital transactions, corroborate to the growing strength of the economy. The country was able to generate and distribute adequate power on account of increased industrial activity and higher temperatures, with peak loads exceeding 250 GW, which is a new record. Industrial activity is gaining momentum as can be seen from the improving industrial capacity utilization and volume indicators like the Index of Industrial Production. Concurrently, fixed investment is gathering pace with Government's focus on capital spending and the resultant ripple effect on private investment. Bank and Corporate Balance Sheets reflect a healthy financial stability along with significantly improved performance by the Public Sector Units. The forward-looking surveys of the Reserve Bank also indicate improving consumer confidence and industrial outlook.

Retail inflation at 4.8 per cent in April 2024 was the lowest in the past 11 months. The positive outlook of a normal monsoon season is reassuring, particularly in light of last year's deficit and the low water levels in various reservoirs of across the country. This should help in keeping inflation under check. On the external front, despite global challenges, India's foreign exchange reserves are comfortable, and the Indian rupee has been stable vis-?-vis the US dollar. Exports, particularly on account of growth in service exports has ensured stability for the country's balance of payments. Thus, the major pillars of India's macro-economic strength are positive and should help navigate unforeseen difficulties. However unrelenting geopolitical tensions and volatility in global commodity prices, especially of petroleum products, and the risk of commodity dumping, present some of the uncertainties that the economy may encounter. During the financial year 2023-24, the Company's total revenue from operations (net of excise duty) was Rs 10922 Crores vs. Rs. 11547 Crores last year. This was essentially on account of lower product prices and lower volumes of the Chloro-Vinyl business. Sugar and Ethanol business revenue increased by 24%, both on account of volumes and unit product prices. Fenesta Building Systems registered a growth of 18% led by volumes, Shriram Farm Solutions business achieved a 15% growth and Bioseed business revenue grew by 14%. Fertilizer business revenues declined by 24% on account of lower gas prices which is a pass through.

Profit before depreciation, interest and tax was Rs.1089 Crores, down 37% over last year. The decline was on account of 82% lower PBDIT of Chloro-Vinyl, primarily due to global reduction in commodity prices. Although costs have declined, including energy costs, but it was not commensurate with decline in product prices, leading to pressure on margins. Other three major businesses recorded an increase in PBDIT driven by higher volumes, improved product prices and better margins. Sugar and Ethanol PBDIT was up by 64%, Shriram Farm Solutions up by 21% and Fenesta Building Systems up by 20%. Bioseed PBDIT improved significantly driven by higher volumes specially for India business. Fertiliser business recorded a decline of 53% in PBDIT led by reduction in energy norms and lower gas prices. Cement business also registered an improvement in PBDIT. Overall PBDIT margins declined to 10% from 15% last year.

Net Profit for financial year 2023-24 was Rs. 447 Crores, lower by 51% from Rs.911 Crores in the previous year. Net Debt as on 31st March 2024 increased to Rs.1,434 Crores vis-?-vis Rs.681 Crores as on 31st March 2023, as surplus funds were utilized for expansion projects.

During the year 2023-24, some of the significant projects commissioned were, a 44 MW (peak) renewable power facility at our Chemicals Complex in Bharuch and a 4600 TPA manufacturing facility of Sulphate of Potash plant at Hariawan Sugar complex. Fenesta expanded its uPVC extrusion plant at Kota. Under the Fenesta brand, the business entered a new product line of Facades, for which a fabrication plant was established in Hyderabad. Farm Solution Business started commercial production of specialty crop nutrition products and biologicals from its own manufacturing facility at Kota The current year 2024-25 will see major capacity expansion as well as new product additions at Bharuch Chemical complex. This includes a 850 TPD caustic soda plant, 600 TPD Caustic soda Flaker facility, 56100 TPA Hydrogen Peroxide facility and a 52,000 TPA Epichlorohydrine (ECH) plant supported by 120 MW captive power plant. In the Sugar business a 12 TPD Integrated Compressed Biogas Project at Ajbapur complex is expected to be completed by Q4 FY'25 and a 2100 TCD crushing capacity expansion at Loni complex will be commissioned by Q3 FY'25.

During the year the company continued to work towards integrating environmental, social and governance (ESG) principles into all our operations across the value chain. A policy on Biodiversity was adopted to reiterate our commitment towards preventing loss of natural habitat. The Company participated in the Dow Jones Sustainability Index (DJSI), and was ranked amongst the top 8% most sustainable companies out of 527+ global chemical companies. As part of a long-term mitigation plan, initiatives are being taken to reduce the withdrawal of groundwater and increasing ground-water recharge. As a result, the company's water harvesting and conservation measures resulted in making DCM Shriram a 12 times water positive company. During the year the Company has tied up sustainability linked loans amounting to Rs. 300 Crs, demonstrating our commitment towards the environment.

DCM Shriram Foundation the company's philanthropic arm is committed to playing a larger role in bringing a tangible difference in the lives of the communities around our manufacturing locations through holistic development. We continue our focus on healthcare, education, livelihood, sanitation and environment. By addressing multiple needs, the impact is visible with long term benefits. The Foundation also aims to play a catalytic role in creating a more enabling ecosystem for enhancing sustainable use of water in agriculture in India, in close partnership with other stakeholders. Towards this end we launched the DCM Shriram AgWater Challenge with our partner The Nudge /Prize with the primary goal to foster innovation in the agriculture-water space. The AgWater Challenge seeks to inspire AgTech entrepreneurs and social impact innovators to develop scalable solutions within India's agricultural water ecosystem. We have also partnered with Sattva Knowledge Institute for a report on "Transforming Crop Cultivation by Advancing Water Efficiency in Agriculture”. Our employees are our biggest strength and we recognise their commitment towards the growth of the company. They are encouraged to innovate and constantly learn, in order to keep abreast with global best practices. The wide range of exposure covers Information technology to process engineering and from business strategies to human productivity. Employees across functions and levels get an opportunity to attend training programmes at leading management institutes such as IIMs and Wharton Business School. One such initiative for our senior team is the Advanced Leadership Development Program in collaboration with Indian School of Business (ISB) and the National University of Singapore (NUS).

We would like to take this opportunity to thank all our stakeholders members of the board, business associates, employees, suppliers, government authorities, lenders and shareholders who have contributed to the growth of our company. With their cooperation, we are confident of maintaining the growth momentum in the coming years.

7th June 2024

With best wishes,