DCM Shriram Ltd

The Directors have pleasure in presenting the 35th Annual Report of the Company along with the Audited Financial Statements, both standalone and consolidated, for the financial year ended 31st March 2024.

Financial Highlights

The results for the financial year ended 31st March, 2024 and 31st March, 2023 are as under:

(Rs. in Crores)

State of Company's Affairs/Performance

During the financial year 2023-24, the Company witnessed a decline in its financial performance, primarily led by drop in product prices in Chloro-Vinyl segment, this was an industry-wide global scenario. Sugar including Ethanol, Fenesta Building Systems and Shriram Farm Solutions segments have performed well along with witnessing growth. The Chlor-Vinyl segment reported a decline in earnings due to sharp reduction in product prices partially mitigated by lower input costs. Sugar and Ethanol business was stable despite few regulatory challenges. Fenesta Building Systems & Shriram Farm Solutions continued to grow with higher volumes and margins. The Company's total revenue from operations at a standalone level stood at Rs.11,171 Crores in financial year 2023-24 vs. Rs.11,812 Crores last year. Chloro-vinyl business reported a decline in revenue of about 31% driven by lower product prices and lower volumes. Sugar and Ethanol business increased by 24% due to higher volumes and higher product prices of Sugar. Fenesta business registered a growth of 18% led by volumes, Shriram Farm Solutions business registered a 15% growth and Bioseed business registered a 22% growth in revenue. Fertilizer business witnessed a decline of ~ 24% led by lower gas prices which is a pass through.

Profit before depreciation, interest and tax stood at Rs.1,055 Crores, down ~40% over last year. The same was down ~37% on a consolidated basis. The decline was mainly on account of ~82% decrease in PBDIT of Chloro Vinyl primarily due to product prices, although the costs have declined led by 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 up by 64%, Shriram Farm Solutions up by ~21% and Fenesta up by ~20%. Bioseed PBDIT improved significantly driven by higher volumes especially in India business. Fertiliser business recorded a decline of ~53% in PBDIT led by reduction in energy norms and lower gas prices. Cement businesses also registered an improvement in PBDIT. Overall PBDIT margins declined to ~10% from ~15% last year.

Net Profit on standalone basis for financial year 2023-24 was lower by 56% to Rs.426 Crores from Rs.961 Crores in financial year 2022-23. It was down by ~51% on a consolidated basis. Net Debt (consolidated) as on 31st March 2024 stood at Rs.1,434 Crores vis-?-vis Rs.681 Crores as on 31st March 2023 led by surplus funds being utilized for project capex. Net Debt to equity stood at 0.23x as on 31st March 2024 vs 0.12x as on 31st March 2023.

The Company commissioned following projects in the financial year 2023-24 at an investment of ~ Rs.182 Crores:

• 44 MW (Peak) Renewable (Solar+Wind) power via SPV route (group captive) is commissioned for meeting the power requirements at Bharuch, Gujarat Unit.

• 46,00 TPA Manufacture of Sulphate of Potash (in a 100% subsidiary) plant at Hariawan Sugar complex.

• Extrusion plant expansion at Kota and Fa?ade fabrication plant at Hyderabad w.r.t. Fenesta Business.

• Water Soluble Fertiliser and Bio products (plant nutrients) manufacturing (in a 100% subsidiary) at Kota. The following projects are under implementation:

Bharuch

• 850 TPD caustic soda plant to be commissioned by Q1 FY'25. 600 TPD Caustic soda Flaker in Q2 FY'25.

• 56,100 TPA Hydrogen Peroxide facility expected to be completed by Q1/Q2 FY'25.

• 52,000 TPA Epichlorohydrine (ECH) facility with Glycerin purification facility is expected to be completed by Q1/Q2 FY'25.

• 120 MW coal based new power plant is underway and is expected to be commissioned in June / July'24.

• Anhydrous Sodium Sulphate System (AnSS) is expected to be completed by Q2 FY'25.

Sugar

• 12 TPD Integrated Compressed Biogas Project at Ajbapur Sugar complex is expected to be completed by Q4 FY'25.

• 2,100 TCD expansion at Loni complex is expected to be completed by Q3 FY'25.

Dividend

Your Directors are pleased to recommend a Final Dividend @ 130% i.e. Rs.2.60/- per equity share of Rs.2/- each for the year ended 31st March 2024, subject to approval of the Members at the ensuing Annual General Meeting ('AGM'). During the year, the Board had also declared an Interim Dividend @ 200% i.e. Rs.4/- per equity share of Rs.2/- each in February 2024. Therefore, subject to approval of Final Dividend by the shareholders, the total dividend for financial year 2023-24 will aggregate to 330% i.e. Rs.6.60/- per equity share of Rs.2/- each. The Dividend Distribution Policy of the Company as approved by the Board is available on the Company's website at the following web link: https://www.dcmshriram.com/sites/default/files/Dividend%20Distribution %20Policy%20-%20Final%20-%20Website.pdf

Transfer to Reserves

During the financial year 2023-24, the Company transferred a total of Rs.6.13 Crores to Reserves, namely, Rs.5.97 Crores to General Reserve and Rs.0.16 Crores to Storage Fund for Molasses.

Status of borrowings by way of issuance of debt securities

The Company was identified as a Large Corporate, pursuant to the erstwhile criteria prescribed by SEBI, as on 31st March 2021, 31st March 2022 and 31st March 2023. Pursuant to the same, the Company was required to raise 25% of its incremental borrowings by way of issuance of debt securities till the financial year 2023-24. However, the Company did not raise the required amount, as the Company borrows funds after exploring various products/options in the market and decides based on most optimal cost of funds.

Number of Meetings of the Board

The Board met 5 times during the financial year 2023-24 i.e. on 2nd May 2023, 24th July 2023, 30th October 2023, 31st January 2024 and 27th February 2024.

Report on Performance and Financial Position of Subsidiaries, Associates and JV Company

The details regarding the performance and financial position of Company's Subsidiaries, Associates, etc. are appearing in Form AOC-1 given at Annexure-1 of this Board's Report.

Key updates on subsidiaries / associates of the Company

During the year under review, ReNew Green (GJ Nine) Private Limited has become Associate of the Company, as the Company has invested in its equity shares representing 31.20% of its paid-up share capital. The contribution of subsidiaries and associates to the overall performance of the Company is outlined in Note No. 57 of the Consolidated Financial Statements.

Risk Management Framework

The Company has in place an effective Risk Management Framework. The Company has also formulated a Risk Management Policy and further updated the Risk Management Framework during the financial year 2023-24 to align the same with the amendments in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "SEBI Listing Regulations 2015") on Risk Management and also to make it more contemporary and suitable to the requirements of changing business scenarios. These were approved by the Board on 31st January 2024. The said framework includes identification, assessment, response and monitoring system for mitigation of various risks.

Company's Policy on Directors' Appointment and Remuneration

The criteria for Directors' appointment have been set up by the Nomination, Remuneration and Compensation Committee (NRCC), which, inter-alia, includes criteria for determining qualifications, positive attributes, independence of a Director, basis/criteria of remuneration to Directors/KMPs and other matters provided under Section 178 of the Companies Act, 2013 ('the Act') and the SEBI Listing Regulations 2015. The Company has a Remuneration Policy in place which deals in the remuneration of the Directors, Key Managerial Personnel (KMPs), Senior Management Personnel (SMPs) and other employees of the Company. The said remuneration policy is available on the Company's website at the following web link: http://www.dcmshriram.com/sites/default/files/Remuneration%20Policy_0.pdf

Corporate Social Responsibility (CSR)

The details of the programs/activities undertaken as CSR along with Annual Report on CSR activities and the composition of CSR Committee are provided in a separate section, which forms part of this Board's Report. The Company has a policy on CSR which includes the guidelines on the major areas in which the Company engages itself with the CSR activities/projects and the manner of implementation and monitoring the activities/projects. The composition of the CSR committee, CSR Policy, details of activities/projects approved by the Board and details of impact assessment, are also available on the Company's website at the following web link: https://www.dcmshriram.com/social-responsibility

Vigil Mechanism/Whistle Blower Policy

The Company has in place a Vigil Mechanism/Whistle Blower Policy which is available on the Company's website at the following web link: https://www.dcmshriram.com/sites/default/files/Vigil%20Mechanism%20 Policy.pdf

Internal Complaints Committee on POSH

The Company has complied with the provisions relating to constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH"). During the financial year 2023-24, 1 case was reported on sexual harassment which stands resolved at the end of the financial year. The Company has a zero tolerance stand on sexual harassment, and is committed to raise awareness and ensure compliance on this subject.

Cost Records

The Company is required to maintain Cost Records as directed by the Central Government pursuant to Section 148(1) of the Act and accordingly such accounts and records are prepared and maintained by the Company.

Related Party Transactions

During the financial year 2023-24, there has been no materially significant Related Party Transaction between the Company and/or its related parties which requires disclosure in Form AOC-2.

The Company has formulated a Policy on dealing with Related Party transactions, which is available on the Company's website at the following web link: https://www.dcmshriram.com/sites/default/files/RPT%20Policy.pdf

Material Subsidiary Policy

The Company has formulated a Policy for determining Material Subsidiaries, which is available on the Company's website at the following web link. As on 31st March 2024, basis the above policy, there was no "Material Subsidiary" of the Company. https://www.dcmshriram.com/sites/default/files/MATERIAL%20SUBSIDIA RY%20POLICY%20-%20FINAL.pdf

Particulars of Loans, Guarantees or Investments

The details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act and relevant rules thereunder are given in the Notes to the Financial Statements.

Fixed Deposits

1. The details relating to deposits for the financial year 2023-24, covered under Chapter V of the Act are as under:

a) Accepted including renewals during the year: Rs.24,08,74,399

b) Remained unpaid/ unclaimed as at the end of the year: Nil

c) There has been no default in repayment of deposits or payment of interest thereon during the financial year 2023-24.

2. All the deposits are in the compliance with the requirements of Chapter V of the Act.

Internal Financial Controls with respect to Financial Statements

The Company has in place adequate Internal Financial Controls with respect to financial statements. No material weakness in the design or operation of such controls was observed during the financial year 2023-24.

DCM Shriram Employee Stock Purchase Scheme

The Company has an Employee Stock Purchase Scheme ("DCM Shriram ESPS") duly approved by Members, which has been aligned with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. DCM Shriram ESPS is a secondary market scheme and provides for grants of equity shares through Trust, purchased from secondary market, to the eligible employees, as may be decided by the Nomination, Remuneration and Compensation Committee, from time to time. The shareholders, vide Special Resolution passed on 4th June 2023 through postal ballot, have approved further acquisition of equity shares from the secondary market, upto 2% of the paid-up equity share capital, for the purpose of the scheme. There are no voting rights exercised on the shares held by the Trust. The details required as per the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 are available on the Company's website at the following web link: https://www.dcmshriram.com/DCM-Shriram-ESPS-Report

Directors and Key Managerial Personnel (KMP)

During the year, Mr. Ajay S. Shriram was re-appointed as Chairman & Senior Managing Director, and Mr. Vikram S. Shriram was re-appointed as Vice Chairman & Managing Director, for a period of 5 years w.e.f. 1st November 2023, which has been approved by the shareholders.

Mr. Aditya A. Shriram was appointed as a Director on the Board, liable to retire by rotation, and also as the Deputy Managing Director of the Company, for a period of 5 years w.e.f. 2nd July 2023, which has been approved by the shareholders. Mr. Ajit S. Shriram and Mr. Aditya A. Shriram, Directors liable to retire by rotation, retire at the ensuing AGM, and being eligible, offer themselves for re-appointment.

During the year under review, Mr. K.K. Kaul ceased to be a Whole-time Director and as Director, due to completion of his tenure on 1st July 2023.

Based on change of nomination received from Life Insurance Corporation of India (LIC), Ms. Sarita Garg, Nominee Director of LIC upto 31st October 2023, ceased office from the said date. In her place, Mr. Rabinarayan Mishra was appointed as the Nominee Director of LIC on the Board w.e.f. 1st November 2023, liable to retire by rotation, which has been approved by the shareholders.

The 2nd term of Independent Directors, namely, Mr. Pradeep Dinodia, Mr. Sunil Kant Munjal and Mr. Vimal Bhandari, will be ending at the ensuing AGM. The Board places on record deep appreciation for their valuable advice and exceptional guidance. Based on the recommendation of Nomination, Remuneration & Compensation Committee (NRCC), the Board has recommended the appointment of Mr. Pranam Wahi, Ms. Seema Bahuguna, Dr. Simrit Kaur and Mr. Vipin Sondhi as Independent Directors of the Company, for a period of 5 years from the conclusion of the ensuing 35th AGM i.e., 16th July 2024, for approval of the Shareholders at the ensuing AGM. Based on recommendation of NRCC, the Board has recommended the appointment of Mr. Pradeep Dinodia as Non-Executive Non-Independent Director of the Company, liable to retire by rotation, effective from the conclusion of the ensuing 35th AGM of the Company, for approval of the Shareholders at the ensuing AGM.

The said persons are eligible for appointment/re-appointment in the respective capacity and the Company has received their consent(s) and requisite disclosure(s), etc. All the details required to be disclosed in connection with the appointment/re-appointment of Directors as above, are appearing in the Notice of AGM.

The Company has received declaration from all the existing and proposed Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149 of the Act and Regulation 16 of SEBI Listing Regulations 2015. In the opinion of the Board, the said Directors possess the integrity, expertise and experience including proficiency required for their appointment as Independent Director in the Company.

Mr. Sameet Gambhir, Company Secretary & Compliance Officer, has resigned from the Company to pursue some other opportunities. His resignation has been accepted in the Board Meeting held on 6th May 2024 and will be effective from a mutually agreed date. The Board has appointed Ms. Swati Patil Lahiri, General Manager (Corporate Laws), as the Acting Company Secretary & Compliance Officer effective from the cessation of office of Mr. Sameet Gambhir.

The details of familiarization programme for Independent Directors are available on the Company's website at the following web link: https://www.dcmshriram.com/independent-directors

Manner & Criteria of formal annual evaluation of Board's performance and that of its Committees and Individual Directors

In compliance with requirements of the Act and the SEBI Listing Regulations 2015, the formal annual performance evaluation of the Board, its Committees and Individual Directors has been conducted as under:

A. Manner of evaluation as recommended to the Board by the Nomination, Remuneration and Compensation Committee ("NRCC")

1. The Chairman of the Board consulted each Director separately about the performance of Board, Committees and other Directors and sought inputs in relation to the above. The Chairman then collated all the inputs and shared the same with the Board.

2. In respect of the evaluation of Chairman of the Board, the Chairman of NRCC collated the inputs from Directors about his performance as a Director and as Chairman of the Board/Company and as Chairman/Member of the Board Committees and shared the same with the Board.

The Board as a whole discussed the inputs on performance of Board/Committees/Individual Directors and performed the evaluation.

B. Criteria of evaluation as approved by the NRCC

The aforesaid evaluation was conducted as per the criteria laid down by the NRCC as follows :

Particulars of Employees and Managerial Remuneration

The details required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of Directors, KMPs and other employees of the Company, are given in Annexure-2 of this Board's Report. However, in terms of Section 136(1) of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the Statement of Particulars of Employees as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended. The said statement is available for inspection by the Members at the Registered Office of the Company during business hours on working days up to the date of the ensuing Annual General Meeting.

Composition of Audit Committee

As on the date of this report, the Audit Committee comprises of 4 Non-Executive Independent Directors, viz., Mr. Pradeep Dinodia as Chairman Ms. Ramni Nirula, Mr. Sunil Kant Munjal and Mr. Pravesh Sharma as Members.

Composition of other Committees

Details regarding composition of other Committees of the Board are mentioned in the Corporate Governance Report forming part of this Annual Report.

Annual Return

In terms of Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is available on the Company's website at the following web link: https://www.dcmshriram.com/annual_reports

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure-3 of this Board's Report.

Secretarial Audit Report

The Board had appointed M/s RMG & Associates, Company Secretaries, New Delhi (Firm Registration no. P2001DE016100) as Secretarial Auditors of the Company for the financial year 2023-24. The Secretarial Audit Report for the financial year 2023-24 received from the Secretarial Auditors, is attached as Annexure-4 to this Board's Report. The Secretarial Audit Report does not contain any qualification or reservation or adverse remark or disclaimer.

Secretarial Standards

The Company is in compliance with the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).

Management Discussion and Analysis

A separate section on Management Discussion and Analysis on the operations of the Company forms part of this Annual Report.

Business Responsibility and Sustainability Report

A separate section on Business Responsibility and Sustainability Report prepared pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations 2015 forms part of this Annual Report.

Corporate Governance

The Company is committed to adhere to the best Corporate Governance practices. A separate section on Corporate Governance, along with a certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under the SEBI Listing Regulations 2015, forms part of this Annual Report.

Statutory Auditors

Pursuant to Section 139 of the Act, M/s Deloitte Haskins & Sells, Delhi, a firm of Chartered Accountants (FRN No.015125N) were appointed as Statutory Auditors of the Company by the Members in its 33rd Annual General Meeting (AGM) held on 19th July 2022 for a period of five years i.e. from the conclusion of 33rd AGM till the conclusion of 38th AGM.

The Reports given by the Statutory Auditors on the financial statements (Standalone and Consolidated) of the Company for the financial year 2023-24 are forming part of this Annual Report. The said Reports are unmodified and there are no qualifications, reservation, adverse remark or disclaimer.

Directors' Responsibility Statement

Your Directors state that:

a) In preparation of annual accounts for the year ended 31st March 2024, the applicable accounting standards have been followed and there are no material departures;

b) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2024 and of the profit of the Company for that period;

c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) They have prepared the annual accounts on a going concern basis;

e) They have laid down internal financial controls as followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Significant and material orders

There are no significant and material orders passed by any regulators or courts or tribunals impacting the going concern status and the Company's operations in future.

Industrial Relations

The Company continued to maintain harmonious and cordial relations with its workmen in all its divisions, which enabled it to achieve this performance level on all fronts.

Other Disclosures

(i) No material change or commitment has occurred after close of the financial year 2023-24 till the date of this Report, which affects the financial position of the Company.

(ii) There are no proceedings initiated / pending against the Company under the Insolvency and Bankruptcy Code, 2016 which impact the business of the Company.

(iii) There were no instances of one time settlement which require valuation from Banks or Financial institutions.

(iv) There were no instances of any fraud reported by the Auditors under Section 143(12) of the Act.

Acknowledgements

The Directors wish to thank all Customers, Suppliers, the Government Authorities, Financial Institutions, Bankers, Other Business Associates, Stakeholders and Members for the co-operation and encouragement extended to the Company. The Directors also place on record their deep appreciation for the contribution made by the employees at all levels.