dcw ltd. - annual report - 2004-2005

8/7/2019 DCW Ltd. - Annual Report - 2004-2005

1/44DCW Limited Annual Report 2004-2005 1

LIMITED

BOARD OF DIRECTORS

Dr. Shashi Chand JainChairman and Managing Director

Shri Sharad Kumar JainVice Chairman & Managing Director

Smt. Satyawati Jain

Shri F.H. Tapia

Dr. V.H. Joshi

Shri Yuvaraj Saheb of Dhrangadhra

Shri Sushil Kumar Jalan

Shri Nirmal Kumar R. Ruia

Shri Pramod Kumar Jain

Managing Director

Shri Bakul JainExecutive Director

BANKERSPunjab National BankState Bank of SaurashtraState Bank of India

City Union Bank Ltd.ING Vysya Bank Ltd.

Corporate Directory AUDITORSV. Sankar Aiyar & Co.,Chartered Accountants, Mumbai.

REGISTERED OFFICEDhrangadhra 363 315, Gujarat.

HEAD OFFICENirmal, 3rd Floor,Nariman Point,Mumbai 400 021.

BRANCH OFFICEIndra Palace, 1st Floor,H-Block, Connaught Circus,New Delhi 110 001.

WORKSSoda Ash Division : Dhrangadhra 363 315,

Gujarat.Caustic Soda Division : Arumuganeri P.O.,

Sahupuram 628 202,

Tamil Nadu.PVC Division : Arumuganeri P.O.,

Sahupuram 628 202,Tamil Nadu.

Salt Works : Kuda, Gujarat.Arumuganeri P.O.,Sahupuram 628 202,Tamil Nadu.

66thAnnual Report2004-2005

Note: The Balance Sheet, Profit and Loss Account and Key Financial Data are also presented in US $ onPage Numbers 13, 14 & 15 respectively.


2/442 DCW Limited Annual Report 2004-2005

LIMITED

TO THE MEMBERS

Your Directors present their 66th AnnualReport and Audited Accounts for theFinancial Year ended 31st March, 2005:

1. Financial Results:31-3-2005 31-3-2004

(Rs. in lacs) (Rs. in lacs)

Sales 76,967.20 69,136.91

Gross Profit 4,442.24 4,241.27

Add: Balance

brought forward 2,259.85 1,261.23

Total (A) 6,702.09 5,502.50Less: Provisions

Depreciation 2,074.46 2,312.48

Tax: Current170.00

160.00

Deferred 94.46 (369.18)

Total (B) 2,338.92 2,103.30

Balance (A) (B) 4,363.17 3,399.20

Appropriations:

General Reserves 1,000.00 750.00

Dividend 414.16 345.13

Dividend

Distribution Tax 54.13 44.22

Balance carriedforward 2,894.88 2,259.85

2. Dividend:Your Directors recommend paymentof Dividend at Rs. 1.20 per equityshare of Rs. 10/- each.

3. Operations:Sales during the year were Rs. 769.67crores as compared to Rs. 691.36crores recorded in the previous year,registering a growth of 11%. The

increase in sales was mainly due tohigher sales realisation. The GrossProfit for the year increased fromRs. 42.41 crores to Rs. 44.42 crores.The profit before tax amounted toRs. 23.67 crores as against Rs. 19.28crores in the previous year. Afterproviding Rs. 1.70 crores for currenttaxes and Rs. 0.95 crores towardsdeferred taxes the net profit for the yearamounted to Rs. 21.03 crores asagainst Rs. 21.38 crores.

Directors Report 4. Exports:

The Companys exports increasedto Rs. 72.14 crores as compared toRs. 35.91 crores in the previous year.This 101% increase in exports enabledthe Company to take advantage of thetarget plus scheme offered by theGovernment of India.

5. Divisionwise Performance:(a) PVC Division:

The turnover of the division wasRs. 426.27 crores as comparedto Rs. 372.90 crores, registering14% increase, mainly onaccount of better Salesrealisation. The cost of VCM inthe international market

continued to rule highthroughout the year bringing themargins under pressure.

(b) Caustic Soda Division:The turnover of the division wasRs. 217.72 crores as comparedto Rs. 195.15 crores in theprevious year, registering agrowth of 12% in the sales. Theincrease in turnover was onaccount of increased exports of ilmenite and better realisationof Caustic Soda. The production

of Caustic Soda was 61,420 MTas compared to 59,060 MT inthe previous year.

(c) Soda Ash Division:The turnover of the division was

Rs. 122.83 crores as comparedto Rs. 120.85 crores in theprevious year. The Companyproduced 83,091 MT of SodaAsh (previous year 92,475 MT),16,458 MT of Soda Bi Carb(previous year 16,469 MT) and1,950 MT of Ammonia BiCarbonate (previous year 2,226MT).

The Company also produced25,654 MT of detergentscompared to 28,362 MT in theprevious year.

6. New Projects:Seven, out of the 14 new wind millsof capacity of 11.2 MW, in the stateof Tamilnadu, have gone intoproduction and selling power toTNEB. The balance seven wind millsare expected to be commissioned inthe next couple of months.

The Company is evaluating,conversion of its Caustic Plant, from

the present Mercury Cell Technologyto Membrane Cell Technology. Variousevaluations are being carried on theviability and for the execution of theproject. This may also result inincrease in production capacity apartfrom cost savings.

The Company is also evaluating asubstantial increase in its YellowSynthetic Iron Oxide capacities fromthe present 1 MT capacity per day to20 MT per day. Increase in ilmeniteproduction capacity to 36,000 MT per

annum is under completion.In order to utilize the unfiltered wasteeffluent at the Soda Ash unit, thecompany is undertaking a project tomanufacture Calcium Chloride, EdibleSalt and regenerate Water which isexpected to be completed during theyear.

7. Fixed Deposits:The Company has not accepted anyfresh Deposits during the year.



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Deposits matured but not claimed asat the end of the financial year,amounted to Rs. 0.85 lac. None of these deposits have been claimedsince then.

8.Corporate Governance:The report on Corporate Governanceis annexed to this report.

9. Conservation of Energy, TechnologyAbsorption and Foreign ExchangeEarnings and Outgo:Information pursuant to Section 217(1) (e) of the Companies Act, 1956,read with the Companies (Disclosureof Particulars in the Report of theBoard of Directors) Rules 1988 is setout in the Annexure forming part of

this Report.10. Particulars of Employees:

Information in accordance withSection 217 (2A) of the CompaniesAct, 1956, read with the Companies(Particulars of Employees) Rules, 1975is set out in the Annexure forming partof this Report.

11. Environment and Safety Measures:The Company is committed toIndustrial Safety and Environment

Protection and these are on goingprocesses at the Companys variousplants. The Sahupuram Unit has beengranted ISO 14001 Certificate forcomplying with environmentprotection and safety.

12. Directors:The Company has repaid its dues toIndustrial Development Bank of India(IDBI) and hence IDBI has withdrawnthe nomination of Shri Prafull Ojha,as nominee from our Board with effect

from 6th July, 2004.Smt. Satyawati Jain who was aDirector of the Company resignedfrom the Board with effect from 25thOctober, 2004 due to personalreasons. Smt. Satyawati Jain wasappointed as Additional Director witheffect from 31st January, 2005.

The Company has also appointed twoAdditional Directors, Shri Sushil K.Jalan on 26th October, 2004 and

Shri Nirmal Kumar R. Ruia on 31stJanuary, 2005. The said AdditionalDirectors hold office till the date of the forthcoming Annual GeneralMeeting. The Company has receivednotices under Section 257 of the

Companies Act 1956, from themembers of their intention to proposethe candidature of the aforesaidAdditional Directors for the office of Director.

Dr. Shashi Chand Jain and Shri SharadKumar Jain, Directors, retire byrotation at the forthcoming AnnualGeneral Meeting, and being eligible,offer themselves for re-appointment.

13. Auditors and Auditors Report:

M/s. V. Sankar Aiyar & Co., CharteredAccountants Statutory Auditorsof the Company retire at theforthcoming Annual GeneralMeeting and are eligible for re-appointment. Regarding thequalification in the Auditors Report,the notes to the Accounts referred toin the Auditors Report are self-explanatory and do not call for anyfurther clarification.

14. Cost Audit:In accordance with the directionsreceived from the Department of Company Affairs, the Cost Audit of theCompanys Soda Ash and Caustic SodaDivisions were conducted for theFinancial Year 2003-2004 by CostAuditors, M/s. N. D. Birla & Companyand M/s. R. Nanabhoy & Companyrespectively. Their appointments wereapproved by the Department of Company Affairs. The Cost Audit of these Divisions is conducted everyyear and the Reports are submitted bythe Cost Auditors to the CentralGovernment.

15. Management Discussion and AnalysisReport:

OUTLOOKThe Company has diversifiedoperations with three businesssegments viz. PVC 55%, Chlor Alkali28.5%, and Soda Ash 16.5%,contributing to its performance. It isthus reasonably protected from thevagaries of business cycles of theseproducts.

PVC Division:The Company, one of the six producersof the PVC resin and despitecompetition, has maintained itsmarket share of nearly 10%. The PVCIndustry continues to grow at acompounded rate of 10%. Pipes,Cables and Films which are the majoruser segments are showing satisfactorygrowth. The new application sectorslike construction and profiles haveexcellent potential.The de-bottlenecking andreplacement of the old glass-linedreactors with modern stainless steelreactors have been successfullycompleted and will result in increasein capacity to around 90,000 MTduring current financial year.

Caustic Soda Division:The Company continues to be a majorplayer in South India with a marketshare of approximately 15%. Theworking of the division has been quitesatisfactory. Due to good demand fromAlumina industry the realisation isexpected to be higher during the year.



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The demand for Caustic Soda willincrease on account of the increasein existing demand and new AluminaCompanies coming up in Orissa. Thedemand from 2006 onwards is likelyto be about 2 Million tonnes per

annum.We have been able to establish thequality of Yellow Synthetic Iron Oxidewhich has a huge export potential.

Soda Ash Division:The Soda Ash Industry continues togrow at a compounded rate of 4% to5% p.a. and this trend is expected tocontinue. Due to good demand, therealisation of Soda Ash has gone up.This is expected to further increaseduring the current year.

Internal Control Systems:The Company has an adequateinternal control procedurecommensurate with the nature of itsbusiness and size of its operations.Internal Audit is conducted at regularintervals. Internal Audit is conductedon a regular basis by an independentfirm of Chartered Accountant.However the Board of Directors arere-examining the scope of InternalAudit looking into the size of operations of the Company.

The reports of the internal audit alongwith comments from the managementare placed for review before AuditCommittee. The Audit Committee alsoscrutinizes all the programmes and theadequacy of the internal controls.

Human Resources:The Company has been following astandard procedure for recruitment of best personnel for all the departments

and is making constant andcontinuous efforts to retain and groomthem to meet its present and futurerequirements. The current strength is2,336 employees. The Companysponsors employees for variousseminars on finance, operations,marketing and human resourcedevelopment to update their skills anddevelop close co-ordination with their

counterparts in industries. This isbasically done to enhance their skillsin order to achieve an optimum outputfrom them.

Cautionary Note:Statements in this report describing thecompanys objectives, projections,estimates, expectations andpredictions may be forward lookingstatements. Actual results could differmaterially from those expressed orimplied due to variation in prices of raw materials, cyclical demand andpricing in the Companys principalmarkets, changes in Governmentregulations, tax regimes, economicdevelopments within India and otherincidental factors.

16. Directors Responsibility Statement:In terms of Section 217 (2AA) of theCompanies Act, 1956 your Directorshave:

(a) followed in the preparation of the Annual Accounts, theapplicable accounting standards

with proper explanation relatingto material departures;

(b) selected such accountingpolicies and applied themconsistently and made

judgements and estimates thatare reasonable and prudent soas to give a true and fair view of the state of affairs of yourCompany at the end of financialyear and of the profit of yourCompany for that period;

(c) taken proper and sufficient carefor the maintenance of adequateaccounting records inaccordance with the provisionsof the Companies Act, 1956 forsafeguarding the assets of yourCompany and for preventingand detecting fraud and otherirregularities; and

(d) prepared the Annual Accountson a going concern basis.

17. Insurance:All the properties of the Company areadequately insured.

18. Industrial Relations:The relations between the employeesand the management were cordial andan atmosphere of understandingprevailed throughout the year. TheCompany has entered into a long-termwage settlement Agreement with theworkers at Sahupuram unit.

19. Acknowledgement:The Board places on record theirgrateful appreciation for the assistanceand co-operation received from theFinancial Institutions and the Banks.

On behalf of theBoard of Directors

Dr. Shashi Chand JainChairman and Managing Director

Mumbai, 28th June, 2005



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Annexure to Directors Report Report on Corporate Governance

(Pursuant to Clause 49 of the Listing Agreement)

A. MANDATORY REQUIREMENTS:

1. Companys philosophy on Code of Corporate Governance:The Company believes in the practice of good Corporate Governance. A continuous process of delegation of powers

commensurate with accountability coupled with trust, faith and transparency has been embedded in the day to dayfunctioning. The Company will endeavor to improve on these aspects on an ongoing basis.

2. Board of Directors:

Size of the BoardThe Board of Directors of the Company consists of 10 Directors .

Composition, category and their attendance at the Board meetings during the year and at the last Annual GeneralMeeting as also the number of other Directorships/Memberships of Committees are as follows :

Attendance ParticularsCategory of Name of the Director at the Other Other Other

Directorship Board Last Directorships Committee CommitteeMeetings AGM Memberships Chairmanships

Promoter/ Dr. Shashi Chand Jain 5 No 5 2 Executive Directors (Chairman &

Managing Director)

Shri Sharad Kumar Jain 4 No 2 (Vice Chairman &Managing Director)

Shri Pramod Kumar Jain 5 Yes 5 (Managing Director)

Shri Bakul Jain 4 No 9 (Executive Director)

Promoter/Non-Executive Smt. Satyawati Jain 3 No 2 Director

Non-Executive and Shri Yuvaraj Saheb of 3 No Independent Directors Dhrangadhra

Shri F. H. Tapia 4 No 1 Dr. V. H. Joshi 5 Yes

Sushil K. Jalan** 2 N.A. 10

Shri N.R. Ruia*** 1 N.A. 7

Nominee Director Shri Prafull Ojha* N.A. 2 (Nominee of IDBIas Lender)

* ceased to be a Director due to withdrawal of nomination by IDBI w.e.f. 6th July, 2004

** appointed as Additional Director w.e.f. 26th October, 2004

*** appointed as Additional Director w.e.f. 31st January, 2005

No. of Board Meetings held during the year along with the dates of the meeting :During the year five Board Meetings were held on:

27.04.2004, 21.06.2004, 29.07.2004, 26.10.2004 and 31.01.2005.

The Company placed before the Board the Annual Budget, Performance of various units and other information fromtime to time as specified in Annexure I of the Listing Agreement.



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3. Audit Committee: Terms of Reference:

The terms of reference of this Committee coverthe matters as specified for Audit Committeesunder Clause 49 of the Listing Agreement as wellas per the provisions of Section 292 A of theCompanies Act, 1956.

Composition:The Audit Committee comprises 3 Non-Executive Independent Directors. Dr. V.H. Joshiis the Chairman of this Committee. Shri YuvarajSaheb of Dhrangadhra and Shri F.H. Tapia arethe other members of the Committee.

Meetings and Attendance during the year:The Committee met 3 times during the year andthe attendance of the Members at these meetingswas as follows:

Dates of Dr. V.H. Joshi Shri F.H.Tapia Shri YuvarajMeetings Saheb of

Dhrangadhra

27.04.2004 Yes Yes No

26.10.2004 Yes Yes Yes

31.01.2005 Yes Yes Yes

4. Remuneration Committee: Terms of Reference:

The terms of reference of this Committee coverthe matters as specified for RemunerationCommittees under Clause 49 of the ListingAgreement.

Composition, Name of Members and Chairman:The Remuneration Committee comprises 3 Non-Executive Independent Directors. Shri F.H. Tapiais the Chairman of this Committee. Dr. V.H. Joshiand Shri Yuvaraj Saheb of Dhrangadhra are theother members of the Committee. Shri PrafullOjha (Nominee Director) ceased to be amember of this committee w.e.f. 06.07.2004 dueto the withdrawal of his nomination on the Boardby IDBI.

Meetings and Attendance during the year:There was only one Remuneration Committeemeeting during year held on 21st June, 2004and Shri F.H. Tapia and Dr. V.H. Joshi werepresent for the same.

Remuneration Policy:The Remuneration of Managing Directors andWhole-time Director is approved by theRemuneration Committee and thereafter by theBoard (subject to the subsequent approval bythe Shareholders at the general body meeting

and such other authorities as the case may be).The remuneration is fixed considering variousfactors such as qualification, experience,expertise, prevailing remuneration in thecorporate world, financial position of theCompany etc. The remuneration Structure

comprises Salary, Perquisites, Commission,Contribution to Provident Fund, Super-Annuation Fund and other funds in accordancewith the provisions of the Companies Act, 1956.The Non-Executive Directors do not draw anyremuneration from the Company besides thesitting fees for each meeting of the Board, Auditand Remuneration Committees attended bythem.

Details of the remuneration paid to theDirectors for the Financial year 2004-2005 isgiven below:

Directors Salary Benefits Commis- Sitting Totalsion Fees

(Rs.) (Rs.) (Rs.) (Rs.) (Rs.)Dr. ShashiChand Jain 18,00,000 7,94,899 33,36,092 59,30,991Shri SharadKumar Jain 18,00,000 7,81,920 33,36,092 59,18,012Shri PramodKumar Jain 18,00,000 7,80,720 33,36,092 59,16,812Shri Bakul Jain 18,00,000 7,89,320 33,36,092 59,25,412Smt. SatyawatiJain 10,000 10,000Shri F.H. Tapia 25,000 25,000Dr. V.H. Joshi 30,000 30,000Shri YuvarajSaheb of Dhrangadhra 17,500 17,500Shri PrafullOjha Shri Sushil K.Jalan 10,000 10,000Shri NirmalKumar R. Ruia 5,000 5,000

Sitting Fees also includes payment for BoardLevel Committee meetings.

Dr. Shashi Chand Jain, Shri Sharad Kumar Jain,Shri Pramod Kumar Jain and Shri Bakul Jain are

each entitled for commission @ 25% of thedifference between 10% of the net profits ascomputed under Section 349 of the CompaniesAct, 1956, in a financial year and the aggregateof the salary and perquisites and benefits paidto all the Managing Directors and WholetimeDirector in that year subject to the overallceilings stipulated in Sections 198 and 309 of the Companies Act, 1956.

The appointments of Managing Directors/ Executive Director are contractual and are for aperiod of 5 years.



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The appointment of the Managing Directors/ Executive Director may be terminated by eitherparty by giving a six-month notice.No severance fee is payable on termination of appointment.Non-Executive Directors are not paid/entitledfor any remuneration other than sitting fees.Presently the Company does not have anyScheme for grant of any stock option either tothe Directors or to the employees.

5. Shareholders/Investors Grievance Committee: Smt. Satyawati Jain, Non-executive Director is

the Chairperson of the Shareholders/InvestorsGrievance Committee.

Shri R. Venkataraman, Chief Financial Officer& Secretary is the Compliance Officer of theCompany.

There were 147 complaints received from theshareholders during the year, which have beenresolved.

There were no pending share transfers at theclose of the financial year ended 31.03.2005.

6. General Body Meetings:Location and time of last 3 Annual General Meetingswere:

Year Location Date Time2001-02 Dhrangadhra,

Gujarat 11.09.2002 11.00 a.m.

2002-03 Dhrangadhra,Gujarat 07.08.2003 11.00 a.m.

2003-04 Dhrangadhra,Gujarat 12.08.2004 11.00 a.m.

No Special Resolutions were required to be putthrough postal ballot in the last AGM nor are thereany matters requiring postal ballot at this Meeting.

7. Disclosures:1. During the year, there were no transactions of

material nature with the Promoters, Directorsor the management or relatives etc. that mayhave potential conflict with the interest of theCompany at large.

2. During the last three years, there were nostrictures or penalties imposed by either SEBI orthe Stock Exchanges or any other statutoryauthority for non-compliance of any matterrelated to the Capital Market.

3. DCW Code of Conduct for Prevention of InsiderTrading:In accordance with the Securities and ExchangeBoard of India (Prohibition of Insider Trading)Regulations, 1992 as amended, the Board of

Directors of the Company formulated DCWCode of Conduct for the prevention of InsiderTrading in the shares of the Company by itsDirectors and designated employees. The DCWCode, inter-alia, prohibits purchase/sale of shares of the Company by the Directors and

designated employees, while in possession of unpublished price sensitive information inrelation to the Company. A system has been putin place and Directors/Designated Employeeshave been advised to take pre-clearance beforepurchase/sale of the Companys shares.

Shri R. Venkataraman, Chief Financial Officer& Secretary has been appointed as theCompliance Officer for monitoring adherenceto the Regulations for the preservation of pricesensitive information, pre-clearance of tradesand implementation of the Code of Conduct forthe prevention of Insider Trading.

8. Means of Communication: The Quarterly results are published in Financial

Express in all editions in India including theGujarati edition published from Ahmedabad.These are not sent individually to theshareholders.

The above results are also displayed on theCompanys web-site viz. www.dcwltd.com

There were no presentations made to theinstitutional investors or to the analysts.

The Management Discussion and Analysis reportappears in para 15 of the Directors Report.

9. General Shareholders information:ANNUAL GENERAL MEETING: Day & Date : Thursday, 25th August, 2005 Time : 11.00 a.m. Venue at the Registered Office

(at Guest House No. 2) ,Dhrangadhra,Gujarat - 363 315

Financial calendar: April 2005 March 2006:First Quarter resultsending 30th June 2005 : last week of July, 2005Second Quarter resultsending 30th September

2005 : last week of October,2005Third Quarter resultsending 31st December2005 : last week of January,

2006Last Quarter resultsending 31st March2006 : last week of April, 2006Date of Book closure : Thursday, 18th August,

2005 to Thursday 25thAugust, 2005(both days inclusive).



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Listing on Stock Exchanges:

The Companys shares are listed with the followingStock Exchanges:

The Mumbai Stock Phiroze Jeejeebhoy Towers,Exchange (BSE) Dalal Street, Mumbai 400 023

National Stock Exchange Plaza Bldg.,Exchange of 5th floor, Plot No. C-1,India Limited G Block, Bandra-Kurla(NSE) Complex, Near Wockhardt,

Mumbai 400 051

Annual Listing fees as prescribed has been paid tothe above Stock Exchanges for the year 2005-2006.GDRs of the Company are listed with the LuxembourgStock Exchange

Stock Code : 117 (BSE), DCW (NSE)Demat ISIN Nos. : INE 500A01011 (Fully Paid)

9500 A01019 (Partly Paid)

Share Transfers and : Bigshare Services Pvt. Ltd.,Other Communica- (Unit DCW Ltd.,)tions may be E/2, Ansa Industrial Estate,Addressed to Sakivihar Road, Saki Naka,

Andheri (East),Mumbai 400 072.email: [email protected]

Investors complaints : Chief Financial Officer &may be SecretaryAddressed to DCW Limited

Nirmal, 3rd floor,Nariman Point,Mumbai 400 021

Market price data :High/Low During each month in last Financial year:

Month/YearNSE BSE

High Low High Low(Rs.) (Rs.) (Rs.) (Rs.)

April 2004 27.75 22.40 27.95 22.40

May 2004 26.00 18.05 25.75 18.50

June 2004 22.00 18.10 21.50 17.60

July 2004 26.80 18.65 26.90 19.00

August 2004 25.50 20.75 25.50 21.00

September 2004 29.00 23.85 28.80 23.95

October 2004 32.30 26.25 32.40 26.10

November 2004 41.50 31.45 41.35 31.45

December 2004 53.20 36.00 53.25 35.50

January 2005 47.90 36.10 47.90 37.50

February 2005 44.60 38.10 44.65 38.05

March 2005 44.00 30.10 43.45 33.70

Stock Performance (Indexed):The performance of the Companys shares relative toBSE Sensex is given in the chart below:

Registrar and Share Transfer Agents :The Company has appointed Bigshare ServicesPvt. Ltd., E/2, Ansa Industrial Estate, Sakivihar Road,Saki Naka, Andheri (East), Mumbai 400 072 asRegistrars and Share Transfer Agents of the Company.

The Companys shares are traded in the StockExchanges compulsorily under demat mode. All theapplications received for transfer of physical sharesare approved by the Share Transfer Committee, whichnormally meets twice in a month depending on thevolume of transfers. Share transfers are registered andreturned normally within 20 days from the date of lodgement, if documents are complete in all respects.

Distribution of shareholding as on 31.03.2005:

No. of Shares SHAREHOLDERS SHAREHOLDINGheld Nos. % Nos. %

Upto 250 3,280 12.73 31,763 0.09

251 - 500 3,751 14.56 1,64,465 0.48501 - 1000 5,737 22.27 5,17,747 1.50

1001 - 2000 4,518 17.54 7,62,031 2.20

2001 - 3000 1,884 7.31 5,02,441 1.463001 - 4000 1,062 4.13 3,89,347 1.134001 - 5000 1,699 6.60 8,31,521 2.415001 - 10000 2,063 8.02 16,65,886 4.83

10001& above 1,762 6.84 2,96,48,133 85.90TOTAL 25,756 100.00 3,45,13,334 100.00

Shareholding Pattern as on 31.03.2005:

Percent-Shareholder No. of age of

Shares CapitalForeign Investors:

Non-resident individuals/OCBs 2285843 6.62FIIS 1354520 3.92Non-Domestic Company 1184 0.01Shares Underlying GDRs 1070000 3.10

Total Foreign Holding 4711547 13.65



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To The Members of DCW LIMITED

We have examined compliance of conditions of CorporateGovernance by DCW Ltd. for the year ended 31st March, 2005,as stipulated in Clause 49 of the Listing Agreement of the saidCompany, with the Stock Exchanges.

The compliance of conditions of corporate governance is theresponsibility of the management. Our examination was limitedto a review of the procedures and implementation thereof,adopted by the Company for ensuring the compliance with theconditions of the Corporate Governance. It is neither an auditnor an expression of opinion on the financial statements of theCompany.

In our opinion and to the best of our information and accordingto the explanations given to us, except that during the period6th July, 2004 to 26th October, 2004 the number of independentdirectors on the Board of Directors was less than the requirednumber as prescribed in clause 49(1)(A) of the Listing Agreement,which we are informed was due to the withdrawal by IDBI of its Nominee Director, we certify that the said Company has

Auditors Certificate on Clause 49 Compliance complied with the conditions of Corporate Governance asstipulated in the above mentioned Listing Agreement.

As required by the Guidance Note on Certification of CorporateGovernance issued by the Institute of Chartered Accountants of India, we state that the registrars of the Company have certifiedthat as on 31st March, 2005 there were no investor grievancesremaining unattended pending for a period exceeding onemonth.We further state that such compliance is neither an assuranceas to the future viability of the Company nor the efficiency oreffectiveness with which the management has conducted theaffairs of the Company.

For V. Sankar Aiyar & Co.,Chartered Accountants

S. VenkatramanPartner

Place : MumbaiDate : June 28, 2005

Percent-Shareholder No. of age of

Shares Capital

Indian InstitutionsLife Insurance Corpn. of India 1673283 4.85

Unit Trust of India 3350 0.01Banks 18966 0.05Mutual Funds 6241 0.02Others 498956 1.44

Total Indian Institutions Holding 2200796 6.37

Indian Bodies CorporateDomestic Companies 2630355 7.63Other Non-nationalised Banks 578 0.01

Total Indian Bodies Corporate Holding 2630933 7.64

Directors & Relatives 5768864 16.71

Companies Associated with Directors 8769776 25.41Other Indian Investors 10431418 30.22

GRAND TOTAL 34513334 100

Dematerialisation of shares:31542577 Equity shares held by 13678 Shareholderscomprising 91.39% of the paid up Share Capital havebeen dematerialised as on 31st March, 2005.

Outstanding GDRs/ADRs/Warrants/convertibleinstruments etc.:Outstanding GDRs as on 31st March, 2004 represent1070000 shares (3.10%). There are no furtheroutstanding instruments, which are convertible intoequity in the future.

Plant Location:Given in the 1st page of this Annual Report.

Address for correspondence:DCW Limited, Nirmal, 3rd floor, Nariman Point,Mumbai 400 021.

B. NON-MANDATORY REQUIREMENTS:

1. Chairman of the Board:The Company has an Executive Chairman and hencethe requirement pertaining to reimbursement of expenses to a Non-Executive Chairman does not arise.

2. Remuneration Committee:Please refer Item No. 4 under the heading MandatoryRequirements.

3. Shareholders Rights:As the Companys Quarterly results are published inEnglish Newspaper having circulation all over Indiaand in a Gujarati Newspaper circulated in Gujarat,the same are not sent to each household of shareholders.

4. Postal Ballot:The provisions relating to Postal Ballot will becomplied with in respect of matters where applicable.



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STATEMENT CONTAINING PARTICULARS PURSUANT TO THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPOOF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS REPORT.

A. CONSERVATION OF ENERGY :1. Installation of Supermizers

Supermizers, the Electronic devise to reduce energy consumption in three phase induction motors, are being usedcontinuously in all plants to save energy and so far 236 Supermizers have been installed resulting in saving of 43 lacs unitsduring the year.

2. Other energy saving measures are being used such as installation of Asian e+ Tubelights with longer life and high lumins.Each tube consumes 28 watts as compared to conventional tubelights that consume 53 watts. The Company has startedconversion programme in a phased manner to replace inefficient tubelights and also inefficient mercury and sodium vaporlamps were replaced by highly efficient metal haldies lamps and so far 3175 nos. of lights have been installed resulting inan annual energy savings of about 6.5 lacs units.

3. The existing 3 MVA transformer was replaced by low loss 2 MVA transformer resulting in an annual energy savings of about6.5 lacs units.

4. Eight nos. of Cooling Towers without fan and gear box which save energy and also reduce maintenance cost have beeninstalled and annual energy saving to the tune of 11 lacs units is achieved.

5. In CPP, the alternator hot air was diverted outside the building through ducts, resulting in drop in the energy room temperatureand subsequent power savings to the tune of Rs. 30 lacs.

6. In-house Cost Improvement Programmes are conducted periodically where mostly energy saving proposals are given by allthe Departments for implementation. During the year under report 5 programmes have been conducted and about80 suggestions have been implemented resulting in annual saving of about Rs. 110 lacs.

B. TECHNOLOGY ABSORPTION :Research and Development:1.1 BENEFICIATED ILMENITE AREA:

1.1.1 High Pressure leaching to reduce cycle time and acid consumption in BI process.As reported last year, experimental trial runs have proved successful resulting in reduction in acid consumption andcycle time by about 25%. By this modified process, apart from higher productivity in digesters, fair amount of effluent reduction will also be achieved. Suitable hardware for the modified leaching process were installed for6 digesters as first phase during 2003-04. For remaining digesters, installation of necessary materials was completedby October 2004.

1.1.2 BI fines recovery systemA system consisting of lamella clarifier, tanks with agitators, floculant dosing arrangement etc. was designed andinstalled to completely recover BI fines from leach liquor resulting in the capacity of existing filter presses beingdoubled.

1.2 Iron Oxide area1.2.1 Use of carbide drums for iron reaction

Carbide drums were used due to which procurement of scrap is totally avoided and there is substantial reduction inthe cost of production of iron oxide.

1.2.2 Use of oxygen in place of air for crystal reactionLab scale and plant scale experiment were conducted and encouraging results were obtained. Oxygen was used inplace of air for crystal reaction resulting in the reaction time reducing to nearly half which in turn reduces therequirement of reactors when the plant is expanded.

1.3 Caustic Soda Area1.3.1 Modernisation of cells in phased manner continued. During the year under report, 9 Cells have been completed.1.3.2 Demercurisation plant was designed and installed to reduce the mercury content in caustic lye and hydrogen. The

CPCB norms are maintained with the commissioning of the demercurisation plant.

1.4 PVC1.4.1 To increase PVC production capacity to 90,000 TPA, 4 Nos. SS reactors (3 Nos. towards replacement of existing glass

lined reactors and 1 No. additional) were ordered. 3 Nos. were erected and commissioned during November 2004.The 4th reactor was commissioned in May 2005.

1.4.2 As reported last year, use of indigenous catalyst in place of imported catalyst is continued. There is a substantialreduction in cost of additive chemicals.

1.4.3 In-house re-engineering efforts, reduction of inputs (VCM, power etc.) for manufacturing PVC was achieved andannual savings to the tune of Rs. 40 lacs achieved.

Annexure to the Directors Report



LIMITED

1.5 Captive Power Plant1.5.1 The economizers were upgraded by increasing heating surface resulting in additional steam production of 30 MT per

day and annual savings of Rs. 70 lacs1.5.2 PLC system was installed to improve condition monitoring and to avoid major breakdowns.

2. EXPENDITURE ON RESEARCH & DEVELOPMENT:

(i) Capital Rs. 150.60 lacs(ii) Recurring Rs. 7.18 lacs

Rs. 157.78 lacs

(iii) Total Research & Development Expenditure as a percentage of total turnover (Net of Excise) : 0.23 percent.

Technology Absorption, Adaptation and Innovation :Continuos efforts are made towards technology absorption, adaptation and innovation. The emphasis is on improving thequality of the finished products and reducing energy consumption.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO :Particulars regarding foreign exchange earnings and outgo appear in Schedule 6 forming part of the Profit and Loss Account.REQUISITE DATA IN RESPECT OF ENERGY CONSUMPTION

(A) Power and Fuel ConsumptionCaustic Soda Unit PVC Unit Soda Ash Unit

Particulars Current Previous Current Previous Current PreviousYear Year Year Year Year Year

2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004

1. ELECTRICITY

(a) PurchasedUnit (Lakh Kwh) 0.19 8.28 2.79 2.93 44.84 44.19Total Amount 14.23 62.28 20.31 24.64 231.25 225.70(Rs. In Lakhs)Rate/Unit (Rs.) *73.71 7.52 7.29 8.41 5.16 5.11

(b) Own Generation(i) Through

DieselGeneratorUnit (LakhKwh) 2078.02 2008.47 180.25 192.18 Unit/ltr of 4.39 4.31 4.39 4.31 LSHS/DieselOilCost/Unit (Rs.) 3.14 3.17 3.14 3.17

(ii) Through SteamTurbine GeneratorUnit (Lakh Kwh) 238.41 250.05Unit/ltr of Fuel Oil/GasCost/Unit (Rs.)

2. FURNACE OIL/LSHS/ LSFO/ADDTITIVEQuantity (Kl) 51417.31 51102.69 3335.55 2571.11 Total Amount 5387.25 5251.12 349.86 263.76 (Rs. in Lakhs)Average Rate (Rs.) 10189.80 10177.09 10488.75 10258.68

3 . OTHERS(i) Hydrogen

Quantity (MT) 450.514 382.734 Total Amount 130.89 111.20 (Rs. in lakhs)Rate/Unit (Rs.) 29053.70 29053.70

*Inclusive of Fixed Minimum demand charges per KVA to be paid irrespective of drawal of Power.



LIMITED

Annexure to the Directors Report Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies

(Particulars of Employees) Rules, 1975 and forming part of the Directors Report

Sr. Name Designation/ Remune- Qualification Experience Date of Age Last employment held.No. Nature of Duties ration commence- Name of the Company,

ment of DesignationEmployment and Period of Service

(Rupees) (Years) (Years)

Employed for whole of the year1 Dr. Shashi Chand Jain Chairman & 5,930,991 Ph.D (Economics) 49 01.04.1969 72 Sahu Brothers (Saurashtra)

Managing Director Pvt. Ltd.Director - 11 years

2 Shri Sharad Kumar Jain Vice Chairman & 5,918,012 B.A. (Hons.) Economics 47 01.04.1969 70 Sahu Brothers (Saurashtra)Managing Director Pvt. Ltd.

Director - 11 years3 Shri Pramod Kumar Jain Managing Director 5,916,812 B.A. (Hon.) Economics 46 01.04.1969 67 Sahu Brothers (Saurashtra)

Pvt. Ltd.4 Shri Bakul Jain Executive Director 5,925,412 B.Com., MBA 21 01.09.1984 50

Employed for part of the year

1 Shri C. V. Subramanian Chief Financial 1,649,260 B.Com., ACA, 20 21.10.2002 48 Sr. General Manager Officer Grad CWA Finance & Taxation

Sterlite Opticals Ltd.

2 Shri S. Viswanathan Steno Secretary 490,085 S.S.L.C 34 20.01.1968 58 3 Shri A. S. Jhala Sr. Dy. General 437,236 B.Sc. 36 18.03.1968 60 Manager (Process)

4 Shri P. Arumairaj Dy. General 213,946 M.Sc., PGDPM & IR 11 16.11.1992 44 Manager (Salt)

5 Shri C. Sankaranarayanan J O (Time Office) 264,800 PUC 34 20.11.1969 58 6 Shri G. Srinivasan Vice President 225,840 ACA 30 08.05.1998 51 Al-Khaleej Ceramics, Dubai

(Works) - 1 yr. 6 mths.

Notes :1. The gross remuneration shown above (subject to tax) comprise salary, perquisites, Companys contribution to Provident Fund , Superannuation

Fund and Gratuity Fund.In case of Managing Directors & Executive Director, the Remuneration also includes Commission.

2. The nature of employment of the Managing Directors & the Executive Director is contractual.3. Dr. Shashi Chand Jain, Shri Sharad Kumar Jain and Shri Pramod Kumar Jain - Managing Directors and Shri Bakul Jain - Executive Director, are

related to Smt. Satyawati Jain - Director of the Company.

Caustic Soda Unit PVC Unit Soda Ash Unit

Particulars Current Previous Current Previous Current PreviousYear Year Year Year Year Year

2004-2005 2003-2004 2004-2005 2003-2004 2004-2005 2003-2004

(ii) Lignite

Quantity (MT) 108558 111460Total Amount 1377.84 1216.07(Rs. in Lakhs)Rate/Unit (Rs.) 1269.00 1091.00

(iii) HSDQuantity (MT) 19.09 21.03 8.16 1.70 Total Amount 12.10 12.10 5.17 0.98 (Rs. in lakhs)Rate/Unit (Rs.) 63397.40 57571.79 63397.40 57571.79

(B) Consumption per unitof Production

Electricity (Kwh) 3005 3020 233.00 239.00 240.00 229.00Fuel Oil (MT) 0.083 0.081 0.083 0.032 Hydrogen (Kgs.) 21.90 20.05

LSHS (MT) Lignite (MT) 0.923 0.898 HSD (Litre) 0.0001 0.0001



LIMITED

AS AT 31ST MARCH, 2005

As at As at31/03/2005 31/03/2004

US $ in Millions* US $ in Millions#SOURCES OF FUNDS

Shareholders Funds :Capital 7.89 7.92Reserves and Surplus 42.44 39.00

Loan Funds :Secured Loans 16.37 9.88Unsecured Loans 0.02 0.38

Deferred Tax Liability:Deferred Tax Liability 12.93 12.77Deferred Tax Asset 1.55 1.55

11.38 11.22

TOTAL 78.10 68.40

APPLICATION OF FUNDSFixed Assets :Gross Block 119.32 115.58Less : Depreciation 61.42 57.35

57.90 58.23Capital Work-in-progress 8.10 2.87

66.00 61.10

Investments 0.19 0.09Current Assets, Loans and Advances :

Inventories 18.25 22.15Sundry Debtors 11.24 9.40Cash and Bank Balances 0.84 0.70

Loans and Advances 11.35 3.9041.68 36.15

Less: Current Liabilities and ProvisionsLiabilities 28.02 27.46Provisions 1.75 1.48

29.77 28.94

Net Current Assets 11.91 7.21

TOTAL 78.10 68.40

* One US $ = Rs. 43.75# One US $ = Rs. 43.56

Balance Sheet



LIMITED

FOR THE YEAR ENDED 31ST MARCH, 2005

For the year ended For the year ended31/03/2005 31/03/2004

US $ in Millions* US $ in Millions#INCOME

Sales (including Excise Duty) 175.93 158.72Less: Excise Duty 21.61 19.65

154.32 139.07

Other Income 2.12 1.10

156.44 140.17

EXPENDITURE

Manufacturing and Other Expenses 146.11 129.73

Interest & Finance Charges 0.16 0.71146.27 130.44

Profit before Depreciation 10.17 9.73Depreciation 4.74 5.31

Profit Before Tax 5.43 4.42

Provision for Tax

Current Tax 0.39 0.37Deferred Tax 0.22 0.85

Profit After Tax 4.82 4.90Add : Surplus brought forward from last year 5.17 2.90

9.99 7.80

APPROPRIATION

Transfer to General Reserve 2.29 1.72Proposed Dividend on Equity Shares 0.95 0.79Provision for Dividend Distribution Tax 0.12 0.10

Profit Carried Forward 6.63 5.19

* One US $ = Rs. 43.75# One US $ = Rs. 43.56

Profit and Loss Account



LIMITED

2004-2005 2003-2004Rs. in US $ in Rs. in US $ in

Millions Millions* Millions Millions #

Gross Sales 7,696.72 175.93 6,913.69 158.72

Fixed Assets Gross Block 5,220.05 119.32 5,034.55 115.58

Net Block 2,887.26 65.99 2,661.44 61.10

Export Earnings 721.41 16.49 359.12 8.24

Earnings Before Depreciation and Interest 451.42 10.32 455.01 10.45

Interest 7.19 0.16 30.89 0.71

Earnings Before Depreciation 444.23 10.15 424.12 9.74

Depreciation 207.45 4.74 231.25 5.31

Earnings Before Tax 236.78 5.41 192.87 4.43

Taxation

Current 17.00 0.39 16.00 0.37

Deferred 9.45 0.22 (36.92) (0.85)

Earnings After Tax 210.33 4.81 213.79 4.91

No. of shares of Rs. 10/- each (Million Nos.) 34.51 34.51 34.51 34.51

Earnings per Share 6.09 0.14 6.20 0.14

Net Worth (Excl. Revaluation Reserve) 2,063.84 47.17 1,899.22 43.62

Book value per share 59.80 1.37 55.05 1.26

Gross profit to sales (%) 5.77 5.77 6.13 6.13(Earnings Before Depreciation)

Interest coverage Ratio 62.78 62.78 14.73 14.73

Debt/Equity 1:2.94 1:2.94 1:4.25 1:4.25

Current Assets/Current Liabilities 1:40 1:40 1.25 1.25

* 1 US $ = Rs. 43.75

# 1 US $ = Rs. 43.56

Key Financial Data



LIMITED

AUDITORS REPORT TO THESHAREHOLDERS OF DCW LIMITED

1. We have audited the attachedBalance Sheet of DCW Limited as at31st March, 2005 and also the Profitand Loss Account and Cash FlowStatement of the Company for theyear ended on that date, annexedthereto. These financial statementsare the responsibility of theCompanys Management. Ourresponsibility is to express an opinionon these financial statements basedon our Audit.

2. We conducted our audit inaccordance with auditing standardsgenerally accepted in India. Those

Standards require that we plan andperform the audit to obtainreasonable assurance about whetherthe financial statements are free of material misstatement. An auditincludes examining, on a test basis,evidence supporting the amountsand disclosures in the financialstatements. An audit also includesassessing the accounting principlesused and significant estimates madeby management, as well as evaluatingthe overall financial statement

presentation. We believe that ouraudit provides a reasonable basis forour opinion.

3. As required by the Companies(Auditors Report) Order, 2003 andread together with the Companies(Auditors Report) Amendment Order,2004 (hereinafter referred to as theOrder) issued by the CentralGovernment of India in terms of

sub-section (4A) of Section 227 of theCompanies Act, 1956, we enclose inthe Annexure a statement on thematters specified in paragraphs 4 and5 of the said Order.

4. Further to our comments in theAnnexure referred to in paragraph 3above, we report that:

(i) We have obtained all theinformation and explanationswhich to the best of ourknowledge and belief, werenecessary for the purpose of ouraudit;

(ii) In our opinion, proper booksof account as required by law,have been kept by the Companyso far as appears from ourexamination of those books;

(iii) The Companys Balance Sheet,Profit and Loss Account andCash Flow Statement dealtwith by this Report are inagreement with the books of account;

(iv) In our opinion, the BalanceSheet, Profit and Loss Account

and Cash Flow Statement dealtwith by this report comply withthe Accounting Standardsreferred to in sub-section (3C)of Section 211 of the CompaniesAct, 1956, to the extentapplicable;

(v) On the basis of writtenrepresentations received fromthe Directors and taken on

Auditors Report record by the Board of Directors,we report that none of theDirectors are disqualified as on31st March 2005 from beingappointed as a Director in termsof clause (g) of sub-section (1)

of Section 274 of the CompaniesAct, 1956;

(vi) In our opinion and to the bestof our information andaccording to the explanationsgiven to us, the said accountssubject to Note No. B-17 of Schedule N to the Accounts,which has the effect of not disclosing the respective liabilities/assets indicated therein and showing the total

assets and liabilities lesser to the extent of Rs. 4217.63 lacs, andread with the SignificantAccounting Policies and othernotes thereon, give theinformation required by theCompanies Act, 1956 in themanner so required and give atrue and fair view in conformitywith the accounting principlesgenerally accepted in India:

(a) In the case of the BalanceSheet, of the state of affairs

of the Company as at 31stMarch, 2005,

(b) In the case of the Profit andLoss Account, of the profitfor the year ended on thatdate, and

(c) In the case of the CashFlow Statement of the cashflows for the year ended onthat date.

For V. Sankar Aiyar & Co.,Chartered Accountants.

S. VenkatramanPlace : Mumbai Partner Dated : June 28, 2005 Membership No. 34319



LIMITED

ANNEXURE REFERRED TO INPARAGRAPH 3 OF AUDITORS REPORTTO THE SHAREHOLDERS OF DCWLIMITED ON THE ACCOUNTS FORTHE YEAR ENDED 31ST MARCH, 2005.

i. (a) The Company has maintainedproper records, except inrespect of Pantape Division,showing particulars includingquantitative details andsituation of fixed assets.

(b) We are informed that thefixed assets, except in respect

of Pantape Division, havebeen physically verified bythe Management with the

assistance of external agenciesduring the year. In our opinionthe frequency of verificationis reasonable. As per theinformation given to us by themanagement, no materialdiscrepancies as compared tobook records were noticed inrespect of fixed assets verifiedduring the year.

(c) Since there is no disposal of asubstantial part of fixed assets

during the year, the preparationof financial statements on agoing concern basis is notaffected on this account.

i i. (a) The inventories of finishedgoods (except goods lying withconsignees and in transit),stores, spare parts and rawmaterials have been physicallyverified by the managementwith the help of externalagencies. In our opinion, the

frequency of physicalverification is reasonable.

(b) In our opinion, the proceduresof physical verification of inventories (except finishedgoods lying with consigneesand in transit) followed by themanagement are reasonableand adequate in relation to thesize of the company and thenature of its business.

(c) In our opinion, the company ismaintaining proper records of inventories and no materialdiscrepancies were noticedon physical verification ascompared to the record of

inventories.

iii. Based on the audit proceduresapplied by us and according to theinformation and explanations givento us, the company has not grantedor taken any loans, secured orunsecured, to/from companies, firmsor other parties listed in the registermaintained under Section 301 of theCompanies Act, 1956.

iv. In our opinion and according to theinformation and explanations givento us, having regard to theexplanation that for purchase of certain raw materials, stores, andcomponents, alternative sources of supply are limited with reference toquality, delivery schedules, creditperiod and some of the itemspurchased are of special nature, andhence comparable alternativequotations are not available forthese, there are adequate internalcontrol procedures commensuratewith the size of the Company andthe nature of its business for thepurchase of inventories and fixedassets and for the sale of goods andservices. During the course of ouraudit, we have not observed anycontinuing failure to correct majorweaknesses in the internal controlsystem.

v. (a) Based on the audit proceduresapplied by us, to the best of ourknowledge and belief andaccording to the informationand explanations given to us,particulars of contracts orarrangements referred to inSection 301 of the CompaniesAct, 1956, have been enteredin the register required tobe maintained under thatSection.

(b) Sub clause (b) of sub-para (v)of para 4 of the Order is not

applicable as there are no suchtransactions exceeding thevalue of Rupees Five Lacs inrespect of any party in thefinancial year.

vi. In our opinion and according to theinformation and explanations givento us, the company has compliedwith the provisions of the Sections58A, 58AA and other relevantprovisions of the Companies Act,1956 and the rules framedthereunder, with regard to depositsaccepted from the public.

We are informed by theManagement that no order has beenpassed by the Company Law Board

or National Company Law Tribunalor Reserve Bank of India or any Courtor any other Tribunal under Sections58A and 58AA of the CompaniesAct, 1956.

vii. The Company has, in general, aninternal audit system commensuratewith the nature of the Companysbusiness. However, the scope of internal audit needs to be enlargedkeeping in mind the size of theCompanys business.

viii . We have broadly reviewed the booksof account maintained by thecompany pursuant to the rules madeby the Central Government for themaintenance of cost records underSection 209(1)(d) of the CompaniesAct, 1956 and are of the opinionthat, prima facie, the prescribedaccounts and records have beenmade and maintained. We have not,however, made a detailedexamination of these records with aview to determine whether they areaccurate or complete.

ix. (a) According to the records of thecompany, undisputed statutorydues including provident fund,investor education andprotection fund, employeesstate insurance, income tax,sales tax, wealth tax, servicetax, custom duty, excise duty,cess and other materialstatutory dues that are required



LIMITED

to be deposited regularly withauthorities, have generallybeen regularly deposited withthe appropriate authorities.According to the informationand explanations given to us,

no undisputed amounts inrespect of the aforesaidstatutory dues were in arrears,as at 31st March, 2005, for aperiod of more than six monthsfrom the date they becamepayable.

(b) According to the informationand explanations given to usand the records of thecompany, the dues of sales tax/ income tax/customs duty/

wealth tax/service tax/exciseduty/cess, which have not beendeposited on account of anydispute are as follows:-

Name of the Statute/ Period Forum where Dispute is pendingNature of Dues

Supreme High Appellate Appellate State GrandCourt Court Tribunal* Authority** Govern- Total

ment

Customs Act, 1962 (Customs Duty 1998 to 2005 31.26 ***111.72 142.98Including Penalty & Interest,wherever applicable)

Central Excise Act, 1944 (Excise Duty 1977 to 2005 346.96 6.83 353.79Including Penalty & Interest,wherever applicable)

Finance Act, 1994 (Chapter V) July/August Service Tax 1999 0.82 0.82

Sales Tax Legislations 1982-1999 2.57 542.60 40.29 585.46(Sales Tax, including Penalty& Interest, wherever applicable)

Local cess, Local cess surcharge 1989-1993 12.69 12.69(Land Revenue IncludingPenalty & Interest,wherever applicable)

Grand Total 33.83 1002.10 47.12 12.69 1095.74

*Appellate Tribunal includes STAT, CESTAT and ITAT

**Appellate Authority includes Commissioner Appeals, Assistant Commissioner Appeals, Deputy Commissioner Appeals, Joint Commissioner Appeals and Deputy Commissioner Commercial Taxes Appeals.

*** Appeal being filed.

(Rs. in lacs)

x. The company does not have anyaccumulated losses at the end of thefinancial year. The company has notincurred any cash losses during thefinancial year covered by our auditand the immediately preceding

financial year.xi. On the basis of verification of

records and according to theinformation and explanations givento us, the Company has not defaultedin repayment of dues to FinancialInstitutions/Banks or Debentureholders.

xii. The Company has not grantedany loans and advances on the basisof security by way of pledge of shares, debentures and othersecurities.

xiii. The Company is not a chit fund or anidhi or a mutual benefit society.

Therefore the provisions of sub para(xiii) of para 4 of the Order are notapplicable to the Company.

xiv. In respect of shares, securities andother investments dealt in or tradedby the Company, proper recordshave been maintained of thetransactions and contracts andtimely entries have been madetherein. All the investments are heldby the Company in its own nameexcept to the extent of the exemptiongranted under Section 49 of theCompanies Act, 1956.

xv. According to the information andexplanations given to us, the

Company has not given anyguarantee for any loans taken byothers from any bank or financialinstitution.


19/44



LIMITED

AS AT 31ST MARCH, 2005Schedule As at As at

31/03/2005 31/03/2004Rs. in lacs Rs. in lacs

SOURCES OF FUNDSShareholders Funds :

Capital A 3,450.93 3,450.76Reserves and Surplus B 18,567.96 16,987.25Loan Funds :

Secured Loans C 7,163.52 4,303.76Unsecured Loans D 6.94 166.73

Deferred tax liability :(Refer Note B5 of ScheduleN)

Deferred tax liability 5,658.48 5,563.83Less : Deferred tax asset (677.81) (677.62)

4,980.67 4,886.2112,151.13 9,356.70

TOTAL 34,170.02 29,794.71

APPLICATION OF FUNDSFixed Assets :

Gross Block E 52,200.45 50,345.52Less : Depreciation 26,872.09 24,979.53

25,328.36 25,365.99Capital Work-in-progress 3,544.25 1,248.38

28,872.61 26,614.37Investments F 85.01 39.41Current Assets, Loans and Advances

Inventories G 7,985.57 9,647.30Sundry Debtors H 4,919.30 4,095.74Cash and Bank Balances I 366.38 303.55Loans and Advances J 4,964.16 1,521.18

18,235.41 15,567.77Less : Current Liabilities and Provisions

Liabilities K 12,257.42 11,781.90Provisions L 765.59 644.94

13,023.01 12,426.84Net Current Assets 5,212.40 3,140.93Contingent Liabilities not provided for MSignificant Accounting Policies and NNotes forming part of Balance Sheet and Profit and Loss Account

TOTAL 34,170.02 29,794.71

Balance Sheet

R. VenkataramanChief Financial Officer &Secretary

For and on behalf of the Board

Dr. Shashi Chand JainChairman & Managing Director Sharad Kumar JainVice Chairman & Managing Director Pramod Kumar JainManaging Director Bakul JainExecutive Director

As per our Report attached

For V. Sankar Aiyar & Co.Chartered Accountants


Place : MumbaiDate : 28th June, 2005

Satyawati Jain

F. H. Tapia

Dr. V. H. Joshi

Yuvraj Saheb of DhrangadhraDirectors


21/44



LIMITED

2004-05 2003-04Rs in lacs Rs in lacs

A. Cash flow from Operating Activities

Net profit before tax and extraordinary items 2,367.80 1,928.79Adjustments for:Non-cash items 32.04 15.12Depreciation 2,074.46 2,312.48Interest ( net ) 71.91 308.90Dividend income (39.45) 2,138.96 (31.47) 2,605.03

Operating profit before working capital changes 4,506.76 4,533.82

Adjustments for:Trade and other receivables (4,266.54) (843.97)Inventories 1,661.71 (1,841.95)Current liabilities and provisions 229.82 2,018.68

Sub-Total (2,375.01) (667.24)

Cash generation from operations 2,131.75 3,866.58Interest paid (313.22) (326.51)Direct taxes paid 129.64 (321.91)

Cash flow before Extraordinary items 1,948.17 3,218.16Extraordinary items Net Cash flow from Operating Activities 1,948.17 3,218.16

B. Cash flow from Investing ActivitiesPurchase of Fixed Assets (4,276.50) (2,826.89)Sale of Fixed Assets 60.12 63.33Purchase/Sales of Investments (23.44) 38.12Dividend Income 39.45 31.47Net cash used in investing Activities (4,200.37) (2,693.97)

C. Cash from Financing ActivitiesProceeds from issue of share capital 0.17 0.05Repayment of loans (186.24) (1,335.52)Repayment of Other Borrowings (331.19) 32.64Proceeds from Long Term Borrowings 3,221.64 791.54Dividend paid (345.13) (345.13)Tax on dividend (44.22) (44.22)

Net cash used in Financing Activities 2,315.03 (900.64)Net increase in Cash and Cash equivalents 62.83 (376.45)Cash & Cash Equivalents as at 1st April 2004 303.55 680.00Cash & Cash Equivalents as at 31st March 2005 366.38 303.55

62.83 (376.45)

CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2005

R. VenkataramanChief Financial Officer &Secretary

For and on behalf of the Board

Dr. Shashi Chand JainChairman & Managing Director Sharad Kumar JainVice Chairman & Managing Director Pramod Kumar JainManaging Director Bakul JainExecutive Director

As per our Report attached

For V. Sankar Aiyar & Co.Chartered Accountants


Place : MumbaiDate : 28th June, 2005

Satyawati Jain

F. H. Tapia

Dr. V. H. Joshi

Yuvraj Saheb of DhrangadhraDirectors


23/44



LIMITED

FORMING PART OF THE BALANCE SHEET

As at As at31/03/2005 31/03/2004

Rs. in lacs Rs. in lacsSCHEDULE B

RESERVES AND SURPLUS

CAPITAL RESERVEAs per last balance sheet 355.61 355.61

CAPITAL REDEMPTION RESERVEAs per last balance sheet 5.30 5.30

SHARE PREMIUMAs per last balance sheet 7,079.70 7,079.70

DEBENTURE REDEMPTION RESERVEAs per last balance sheet 30.00 860.00Less : Transferred to General Reserve 30.00 830.00

30.00

REVALUATION RESERVEAs per last balance sheet 1,438.95 1,573.63Less : Transferred to Profit and Loss Account 58.57 134.68

1,380.38 1,438.95

GENERAL RESERVEAs per last balance sheet 5,766.80 4,232.81Add : Transfer from P&L account 1,000.00 750.00Less : Amortisation of Intangible Assets 46.02Add : Transfer from Debenture Redemption Reserve 30.00 830.00Add : Forfeiture of Debentures 4.24

6,801.04 5,766.79

CONTRIBUTION FOR CAPITAL EXPENDITUREAs per last balance sheet 51.05 51.05

PROFIT AND LOSS ACCOUNT 2,894.88 2,259.85

TOTAL 18,567.96 16,987.25

Schedules



LIMITEDSchedules

FORMING PART OF THE BALANCE SHEETAs at As at


SCHEDULE C

SECURED LOANSDebentures

Principal Amounts 26.45Add:- Forfeiture of Debentures 4.24

30.69Banks

Term loans 3,113.50 68.95Working Capital Loans 335.32 666.51

Other LoansFinancial Institutions 3,714.29 3,532.59Term Loans from NBFC 0.41 5.02

TOTAL 7,163.52 4,303.76Notes :1. Debentures

Series Redemption Details14% At par in 12 quarterly instalments commencing from August, 2001 to May, 2004.

2. Loans Secured byDebentures Legal mortgage creating charge on all immovable and movable properties of the Company situated in the State of

Gujarat and Tamil Nadu, both present and future, ranking subsequent, subservient and sub-ordinate to all priormortgages/charges created/to be created in future in favour of Public Financial Institutions.

Banks Working Capital facilities are secured by a first charge by way of hypothecation and/or pledge of current assets,namely, stocks of materials, semi-finished and finished goods, consumable stores and spares including machineryspares not capitalised, bills receivable and book debts and further secured by a second charge by way of hypothecationover all the movable plant and machinery and by way of mortgage by deposit of title deeds over the immovableproperties, both present and future, such mortgage to rank second to the mortgages created in favour of FinancialInstitutions/Debentures Trustees.Term Loans from Banks are secured by a pari-passu first charge by way of hypothecation of movable properties of theCompany.

Other loans The Long Term Working Capital Loan from a Financial Institution is secured by creation of first pari passu chargeon all the movable fixed assets, both present and future by way of hypothecation and further secured on first pari-passu charge by mortgage on all the immovable properties situated in the states of Tamilnadu and Gujarat.Equipments Finance Loan from a Financial Institution is secured by creation of first pari-passu charge on all themovable fixed assets, both present and future by way of hypothecation.

As at As at31/03/2005 31/03/2004

Rs. in lacs Rs. in lacsSCHEDULE DUNSECURED LOANSOTHERS

Deferred Sales Tax Credit 6.94 166.73

TOTAL 6.94 166.73

Due within one year Rs. 1.30 lacs (Previous Year Rs. 163.44 lacs)



LIMITED

Schedules


SCHEDULE E

FIXED ASSETS

Rs. in lacs

GROSS BLOCK

DEPRECIATION

NET BLOCK

Description of

At cost or

Additions

Sales and

At Cost or

Depreciation

Depreciation

As at

As at

Assets

Revalued

and other

other

Revalued

for the

as at

31-03-2005

31-03-2004

Book Value

Transfers

Deduc-

Book Value

Year

31-03-2005

as at

tions

as at

01-04-2004

31-03-2005

Land

407.77

9.37

417.14

417.14

407.77

Buildings

7,927.57

34.81

0.12

7,962.25

177.18

3,633.02

4,329.23

4,471.61

Plant and Machinery

40,610.44

1,973.86

242.14

42,342.16

1,832.51

22,340.47

20,001.69

19,880.15

Furniture, Fittings

733.47

35.40

14.87

753.99

51.01

573.53

180.46

267.54

Railway Sidings

0.59

0.59

0.59

Vehicles

665.69

156.86

98.24

724.32

57.00

324.48

399.84

338.93

Total

50,345.53

2,210.30

355.39

52,200.45

2,117.70

26,872.09

25,328.36

25,366.01

Previous Year

49,365.02

1,853.91

873.39

50,345.53

2,250.09

24,979.53

25,366.01

26,021.65

Notes:

1.See Note B-2 of Schedule N.

2.Buildings include Rs. 701.06 lacs being cost of ownership flats and office accommodation in Co-operative Societies and a Limited Company against which the

Company holds shares of the face value of Rs. 1.24 lacs in Co-operative Societies and the Limited Company and shares of the face value of Rs. 0.54 lacs in the

Limited Company is yet to be transferred in favour of the Company.

3.Land includes the leasehold land valued at Rs. 70.99 lacs.

4.Assignment deeds in respect of 9.13 acres of Land at Caustic Soda Division, transferred by the Central Government to the State Government, are yet to be

executed by the State Government in favour of the Company.

5.Land, Building and Plant and Machinery located at Sahupuram Works (other than PVC Division) were revalued on 31.03.1993.

6.The Company exercised the option to purchase 793.39 acres of land leased by the State Government at Sahupuram Works. Assignment deeds in respect of the

said land are yet to be executed by the State Government in favour of the Company.

7.Fixed Assets includes assets taken over from erstwhile Pantape Magnetics Limited at revalued figure as per independent valuers report.



LIMITEDSchedules


SCHEDULE F As at 31/03/2005 As at 31/03/2004

Face No. of Amount Face No. of AmountValue per Shares/ Rs. in Value per Shares/ Rs. in

INVESTMENTS (At Cost) Share/ Bonds lacs Share/ Bonds lacsBond Rs. Unit/

Bond Rs.

I. Long TermIn Govt. & Trust Securities (Unquoted)7 Years National Savings Certificates 1000 10 0.10 1000 10 0.10In Other Companies Non-Trade (Unquoted)The Dhrangadhra Peoples Co-op. Bank Ltd. 25 10 *250 25 10 *250In Govt. & Trust Securites (Quoted)Unit Trust of India - 6.75% Tax Free Bonds 100 19,358 19.36 100 19,358 19.36

In Other Companies Non-Trade (Quoted)Fully Paid Equity Shares

Global Trust Bank Ltd. 10 19,000 1.90 10 19,000 1.90LIC Housing Finance Ltd. 10 17,400 10.44 10 17,400 10.44

12.34 12.34

Less: Dimunition of value in shares of Global Trust Bank 19,000 1.90

10.44 12.34

II. Current InvestmentUCO Bank 10 900 0.11Indraprastha Gas Ltd. 10 2,900 1.39Power Trading Corporation of India Ltd. 10 38,200 6.11Tata Consultancy Services Ltd. 1 3 0.03 Punjab National Bank Ltd. 10 14,123 55.08

55.11 7.61

TOTAL 85.01 39.41

* Figures Denote Amount in Rupees.


Aggregate Value of long term quoted investments 31.70 31.70Aggregate Value of current quoted investments 55.11 7.61

TOTAL 86.81 39.31Aggregate Value of unquoted investments 0.10 0.10Market Value of quoted investments 116.98 45.52

Investments purchased and redeemed/sold during the yearParticulars Face value No. of Units/SharesI. Mutual Funds Units :

PRINCIPAL Mutual Fund - Liquid Institutional Plan 10.00 166,347,075.100SBI Mutual Fund - Magnum Insta Cash Fund 10.00 46,210,127.344Prudential ICICI Mutual Fund - Institutional Liquid Plan 10.00 24,863,721.231Franklin Templeton Mutual Fund - Liquid Fund 10.00 47,950.919Tata Mutual Fund - Liquid Fund SHIP Daily Dividend 10.00 27,726,473.750HSBC Mutual Fund - Cash Fund - Institutional 10.00 8,407,825.491Birla Sun Life Mutual Fund - Institutional - Daily Dividend 10.00 4,657,760.000

II. Shares :NDTV Ltd. 10.00 5,800ONGC Ltd. 10.00 4,173Tata Consultancy Limited 1.00 2,300



LIMITED Schedules


As at As at31/03/2005 31/03/2004

Rs. in lacs Rs. in lacsSCHEDULE GINVENTORIES(As Certified by the Management)(Refer Note A-6 of Schedule N)Stores, Spare Parts, Fuel 1,732.85 2,212.85Packing Materials (at or below cost) 3.26 12.53Mercury on hand & in process 201.59 195.80STOCK-IN-TRADERaw materials on hand & in transit 3,150.35 3,257.00Finished Goods 2,788.55 3,820.08Stock in process 56.77 103.98Packing Drums & Scrap 24.25 10.55Coke dust, Gypsum 14.55 21.08Stock of Traded Goods 5.34 5.37Shares (Refer Statement below) 8.06 8.06

TOTAL 7,985.57 9,647.30

Investment in shares (Stock-in-trade)As at 31/03/2005 As at 31/03/2004

Face No. of Amount No. of AmountValue per Shares Rs. in Shares Rs. in

Particulars Share Rs. lacs lacs

QuotedReliance Industries Ltd. 10 553 0.42 553 0.42Grasim Industries Ltd. 10 700 2.01 700 2.01Ranbaxy Laboratories Ltd. 10 2,713 5.60 2,713 5.60IPCL 10 43 0.03 43 0.03

TOTAL 8.06 8.06

As at As at31/03/2005 31/03/2004

Rs. in lacs Rs. in lacs

SCHEDULE HSundry Debtors (Unsecured unless otherwise stated)(a) Over 6 months

Considered good (Secured) 30.00 30.00Considered good 127.22 115.65Considered doubtful 290.39 290.40

(b) Other Debts (considered good) 4,762.08 3,950.09

5,209.69 4,386.14Less : Provision for doubtful debts 290.39 290.40

TOTAL 4,919.30 4,095.74



LIMITEDSchedules


As at As at31/03/2005 31/03/2004


SCHEDULE ICASH AND BANK BALANCES1. Cash on hand 8.90 5.542. Cheques, Stamps, Hundi papers on hand 0.05 0.043. Balance with Scheduled Banks

a. in Current Account 310.52 295.84b. in Fixed Deposits (Pledged with Bank as Margin Money) 46.04 1.26

4. Post Office Savings Deposit (Pass Book pledged withCentral Excise Department) 0.02 0.02

5. Balance with Dhrangadhra Peoples Co-op. Bank Ltd. (Maximum amountoutstanding Rs. 0.85 lacs) 0.85 0.85

TOTAL 366.38 303.55

SCHEDULE J

LOANS AND ADVANCES (UNSECURED, CONSIDERED GOOD)Advances recoverable in cash or kind or for value to be received 2,692.06 866.02Inter Corporate Deposits Considered Good 1,400.00

Staff loans 49.73 41.73Electricity and other Deposits 132.03 82.75Balance with Customs, Central Excise etc. 656.20 480.94Claims against Insurance, Railways, Custom etc. 34.14 49.74

TOTAL 4,964.16 1,521.18

SCHEDULE K

LIABILITIESAcceptances against Letters of Credit 8,968.75 7,833.90* Sundry Creditors (Includes liabilities for capital items) 1,234.07 1,348.14Advances from Customers and Consignees 972.12 1,505.70Trade and Other Deposits 352.29 355.81Unclaimed Debentures Monies # 39.76 55.98Unclaimed Dividend # 7.99 7.56

Unclaimed Public Deposit Monies # 0.93 1.06Other Liabilities 485.31 788.22Interest accrued but not due on Loans 75.00 63.37Advance tax & tax deducted at source (Net of Provision for tax of Rs. 1,323.00 lacs) (Previous Year Rs. 1,153.00 lacs) 121.20 (177.84)

TOTAL 12,257.42 11,781.90

* Includes outstanding dues of small scale industrial undertakings of Rs. 18.43 lacs (Previous year Rs. 17.48 lacs).

# These figures do not include any amounts, due and outstanding,to be credited to Investor Education and Protection Fund.



LIMITED Schedules


As at As at31/03/2005 31/03/2004


SCHEDULE L

PROVISIONSProposed Dividend 414.16 345.13Tax on Dividend 54.13 44.22Leave Encashment 297.30 255.59

TOTAL 765.59 644.94

SCHEDULE M

A. Contingent liabilities not provided for :1. Disputed Sales Tax Demands 657.34 172.03

2. Disputed Service Tax Demands 0.823. Disputed Entry Tax Demands 592.64 592.644. Disputed Excise Demands 359.14 60.965. Disputed Customs Demands 142.98 38.266. Disputed Income Tax Demands 200.177. Companys contribution to ESI not made pursuant to petitions for

exemption pending before High Court 79.08 79.088. Lease Rent, Local Cess, Interest on Lime Stone, Surcharge, Stamp

Duty, Octroi, Water & Electricity Charges/Tax 1,145.01 714.489. Disputed Industrial relations matters 219.43 106.33

B. Claims not acknowledged as debts : 14.58 15.67



LIMITEDSchedules

FORMING PART OF THE BALANCE SHEETSCHEDULE - N

SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2005.

A. SIGNIFICANT ACCOUNTING POLICIES

1. SYSTEM OF ACCOUNTING

A. The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis.

B. Financial statements are prepared on historical cost basis and as a going concern, adjusted for revaluation/dimunitionin value of certain fixed assets.

2. USE OF ESTIMATES

The preparation of financial statements requires management to make certain estimates and assumptions that affect theamounts reported in the financial statements and notes thereto. Differences between actual results and estimates arerecognized in the period in which they materialize.

3. FIXED ASSETS AND DEPRECIATION

(A) Fixed Assets

Fixed Assets are stated at their original cost net of Cenvat Credit where applicable (including expenses related toacquisition and installation) except certain Fixed Assets which are adjusted for revaluation.

(B) Depreciation and Amortisation

Depreciation is charged in the Accounts on straight line method as under:(a) On assets revalued at Sahupuram Unit on 31-3-93 @ 3% on the revalued cost based on revision in useful life

estimated by the valuer (Refer Note B2).(b) On fixed assets added pursuant to the amalgamation of Pantape Magnetics Limited with the Company, at rates

specified in Schedule XIV to the Companies Act, 1956 on the revalued cost.(c) On balance fixed assets of the Company at rates specified in Schedule XIV to the Companies Act, 1956 on the

original cost.(d) On fixed assets added/disposed off during the year, on pro-rata basis with reference to the month of addition/

disposal.(e) On Technical Know-how fees at 33.33%

4. EXPENDITURE DURING CONSTRUCTION AND ON NEW PROJECTS

In the case of new projects and in the case of modernisation/expansion of existing units, interest on borrowings for thesame and all pre-operative expenditure, incurred during implementation upto the date of installation are included underCapital Work in Progress and capitalised by adding pro-rata to the cost of the assets.

5. INVESTMENTS

The Companys investments comprise long term and current investments. Long Term investments are stated at cost lesspermanent dimunition, if any, in value. Current investments are stated at lower of cost or market value.

6. INVENTORIES

Inventories are valued at lower of cost and net realisable value except stores, spares, mercury on hand and stock in processwhich are valued at cost, packing materials which are valued at or below cost and scrap which is valued at net realisablevalue. Cost is computed on weighted average basis and includes cost of conversion and other costs incurred in bringing theinventories to their present location and condition.

7. ACCOUNTING FOR CENVAT AND SERVICE TAX CREDITS

Cenvat credit available on Raw Materials, Fuel and Packing materials, stores, spares and Capital goods and Service taxcredit on services availed are accounted for by reducing purchase cost of the related material or the expenses respectively.



LIMITED Schedules


8. FOREIGN CURRENCY TRANSACTIONS

(a) Transactions in Foreign Currency are recorded at the exchange rates prevailing on the date of Transactions. Exchangedifferences arising on settlement, other than those pertaining to fixed assets, are recognised as income or expense inthe Profit and Loss account.

(b) Foreign Currency loans availed for acquisition of fixed assets are translated at the exchange rates prevailing at theyear end. The exchange difference is adjusted to the cost of Fixed Assets acquired through these loans.

(c) Foreign currency Current Assets/Liabilities covered by forward contracts are translated at forward cover rates at theclose of the year. The resultant gain or loss on translation difference is recognised in the Profit and Loss Account.

(d) Premium/discounts on forward exchange contracts are amortised over the life of the contract and recognised in theProfit and Loss account.

9. RESEARCH & DEVELOPMENT EXPENDITURE

Revenue Expenditure on Research & Development is charged against the Profit of the year in which it is incurred. Capitalexpenditure on Research & Development is shown as an addition to fixed assets.

10. BORROWING COSTSBorrowing costs attributable to acquisition, construction or production of a qualifying asset are capitalized as part of thecost of that asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Allother borrowing costs are recognized as an expense in the period in which they are incurred.

11. RETIREMENT BENEFITS

(a) Contributions to Provident and Superannuation Funds are made to recognised funds and are charged to Profit & LossAccount.

(b) The Company has created an Employees Group Gratuity Fund which has taken a Group Gratuity Assurance Schemewith the Life Insurance Corporation of India. Premium charged by the Life Insurance Corporation of India, based onactuarial valuation is debited to the Profit and Loss account.

(c) Liabilities towards Leave Encashment Benefit is provided for based on actuarial valuation done at the year end.

(d) Contribution to Employee Pension Scheme 1995 are accounted on accrual basis with corresponding remittance madeto Government Provident Fund authority.

12. CONTINGENT LIABILITIES

Show Cause Notices are not considered as Contingent Liabilities unless converted into demands.

13. TAXES ON INCOME

Income tax expenses comprises current tax and deferred tax charge or credit. Deferred tax assets/liabilities are measuredby applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date. Deferred taxasset arising on account of unabsorbed depreciation under tax laws is recognised only to the extent there is virtual certaintyof its realisation supported by convincing evidence. Deferred tax assets on account of other timing differences are recognisedonly to the extent there is reasonable certainty of its realisation. At each Balance Sheet date, the carrying amount of Deferred tax asset is reviewed based on developments to reassess realisation.

B. NOTES ON ACCOUNTS

1. Estimated amount of Contracts remaining to be executed on Capital Account and not provided for is Rs. 4,676.51 lacs(Previous year Rs. 1561.99 lacs).

2. The depreciation charge on the assets revalued on 31-3-1993 is more by Rs. 43.24 lacs (previous year Rs. 52.77 lacs) thanthe depreciation charge thereon under section 205(2)(b) of the Companies Act, 1956 and the same is met by drawing fromRevaluation Reserve. The uplift on revalued assets discarded amounting to Rs. 15.33 lacs (previous year Rs. 81.91 lacs) hasalso been met by drawing from Revaluation Reserve.

3 Consignment sales and expenses are incorporated on the basis of sale notes when received from consignees.

4. Confirmation of balances from some of the Debtors and Creditors, have not been received.



LIMITED

FORMING PART OF THE BALANCE SHEET5. The break up of Deferred Tax Assets/Liabilities are as under: (Rs. in lacs)

Nature of timing difference Deferred Tax Debit/(Credit) Deferred Tax Liability/ Liability/(Assets) for the year (Assets) as at

as at 1st April, 2004 31st March, 2005

(a) DEFERRED TAX LIABILITIESDepreciation 5,563.83 94.65 5,658.48SUB TOTAL 5,563.83 94.65 5,658.48

(b) DEFERRED TAX ASSETSProvision for dimunition in value of Business Centre Immovable Property 448.50 8.91 457.41Provision for dimunition invalue of Investments 0 0.70 0.70Provision for Doubtful debts 10.98 0.22 11.20Expenses allowed on payment basis 211.89 (9.85) 202.03Long-term capital loss to be set-off 6.25 0.23 6.47SUB-TOTAL 677.62 0.19 677.81

4,886.21 94.46 4,980.67

6. RELATED PARTY INFORMATION

(i) RELATIONSHIPS:(a) WHERE CONTROL EXISTS

Double Dot Finance Ltd.Crescent Finstock Ltd.Sahu Brothers (Saurashtra) Pvt. Ltd.Dhrangadhra Trading Company Pvt. Ltd.Kishco Cutlery Pvt. Ltd.Kalpataru Botanical Garden Pvt. Ltd.Crescent Holdings Pvt. Ltd.

(b) KEY MANAGEMENT PERSONNEL

Dr. S. C. Jain Chairman & Managing DirectorShri S. K. Jain Vice Chairman & Managing DirectorShri P. K. Jain Managing DirectorShri Bakul Jain Executive DirectorShri Vivek Jain Sr. PresidentShri Mudit Jain PresidentShri Ashish Jain President

Smt. Paulomi Jain Vice President

NOTE: Related party relationships on the basis of the requirements of Accounting Standard (AS) - 18 disclosedabove is as identified by the Company and relied upon by the auditors.

(ii) DISCLOSURE OF TRANSACTIONS BETWEEN THE GROUP AND RELATED PARTIES AND THE STATUS OFOUTSTANDING BALANCES AS ON 31ST MARCH, 2005 (Rs. in lacs)

Particulars Enterprises where Key Managementcontrol exists personnel

Commission paid 5.06

Remuneration paid 270.02

Purchases 1.10

Balances as on 31st March, 2005 (3.61)

Schedules



LIMITED

7. SEGMENT INFORMATION FOR THE YEAR 2004-05 (Rs. In lacs)

Caustic PVC Soda Ash Others Total

SEGMENT REVENUE

External Revenue 17,935.19 36,842.52 9,892.73 390.25 65,060.6915,314.56 32,282.96 9,788.17 370.47 57,756.16Inter Segment Revenue

Total Revenue 17,935.19 36,842.52 9,892.73 390.25 65,060.6915,314.56 32,282.96 9,788.17 370.47 57,756.16

RESULTSEGMENT RESULT 1,531.68 251.13 452.10 204.78 2,439.69

(383.09) 1,854.85 529.41 236.54 2,237.71Add: Unallocated Corporate Income (Net of Expenses) Less:

Finance Charges 71.91308.90Current Tax 170.00

160.00

Deffered Tax 94.46(369.18)

NET PROFIT 2,103.322,137.99

OTHER INFORMATIONSegment Assets 20,699.45 9,775.83 11,484.58 3,459.77 45,419.62

21,313.61 8,312.01 10,001.74 2,411.77 42,039.14

Add: Unallocated Corporate Assets 1,773.42 360.29

Total 21,757.14 9,775.83 11,484.58 2,402.08 47,193.0421,313.61 8,312.01 10,001.74 2,411.77 42,399.43

Segment Liabilities 1,207.13 10,699.45 742.99 380.38 13,029.951,198.14 9,892.47 887.71 257.37 12,235.69

Add: Unallocated Corporate Liabilities 12,144.18 9,725.70

Total 1,207.13 10,699.45 742.99 380.38 25,174.131,198.14 9,892.47 887.71 257.37 21,961.39

Capital expenditure including Capital 1,216.41 1,466.07 1,823.66 4,506.13Work in Progress 890.12 305.79 1,785.32 2,981.23

Depreciation 1,213.21 189.36 580.00 91.89 2,074.461,407.07 195.84 628.14 81.43 2,312.48

8. Encroachers have occupied some portions of the land belonging to the Company at Sahupuram. Efforts are being made toevict them.

9. Sales Tax Assessments of Dhrangadhra Unit are pending from 1994-95 to 1997-98 and 2002-03 to 2004-05 (except for1998-99 and 2001-02 which have been completed) and Central Sales Tax Assessments of Sahupuram Unit are pendingfrom 1998-99 Sales tax assessments under Tamil Nadu General Sales Tax Act, are pending since 1999-2000.

10. The amount of exchange difference in respect of forward contracts to be recognised in the Profit and Loss Account in thesubsequent accounting year is Rs. 7.95 Lacs (Previous year Rs. 9.50 Lacs).

Schedules




LIMITEDSchedules


11. In respect of Plant & Machinery, equipment and other items taken on lease, the future obligations towards lease rentalsunder the lease agreements as on 31st March, 2005 amount to Rs. 217.13 lacs (previous year Rs. 197.50 lacs).

12. In the matter of customs duty on imported calciner, CEGAT vide its order, dt. 8th December, 2000 has held that the

calciner imported would be entitled to exemption under Notification No. 59/87 and has also reduced the fine leviedfor alleged import of the calciner without licence to Rs. 5 lacs. The Company has consequentially applied for refundof Rs. 41.48 lacs to the Customs authorities who have denied the claim on account of unjust enrichment. The Companyfiled a Civil application before the Honable Gujarat High Court. The case is pending for hearing.

13. The Companys pending application to the Government of Tamilnadu for renewal of the lease of 3185 acres an

dcw ltd. - annual report - 2004-2005

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