DIRECTORS' REPORT Your directors have pleasure in presenting this 125th Annual Report together with the Audited Financial Statements of your Company for the year ended March 31, 2015. ECONOMIC SCENARIO The global economic environment in recent years has been challenging which coupled with slowing growth in some of the leading global economies has impacted currencies all over the world. However, despite unpredictable headwinds, the global economic recovery seems to be gaining momentum. Specifically, the recovery in the United States was stronger than expected, which provided momentum for the global economic recovery. After a tepid start by India's economy in FY 2014-15, there was a shift to positive sentiments led by commitments from the newly elected Government at the Centre. FY 2014-15 was indeed a year of transformation and optimism for the Indian economy. The new government has ushered in an era of hope and development, and a vision to create a robust economy for India. An initiative that has particularly galvanized the entire country is 'Make in India' led byour Hon'ble Prime Minister. This campaign is designed to transform India into a global manufacturing hub. India's economy is in the midst of recovery with lower fiscal and current account deficit and structural reforms to boost investments. The Indian economy is expected to grow @ 7.5% in 2015-16 (as per the World Bank) and is expected to reach around 8% by 2017. While the various steps are being taken to de-clog the growth, it is expected that the government's reform agenda will spur economic growth and increase business sentiment this fiscal year. TRANSFER TO RESERVES Your Company proposes to transfer Rs. 0.50 crore to the General Reserve out of the amount available for appropriation. After the said transfer, an amount of Rs. 151.56 crores is proposed to be retained in the Profit and Loss account. DIVIDEND During the financial year ended March 31, 2015, your Company has declared an interim dividend of Rs. 1.50 (Rupee one and fifty paisa only) per equity share of Rs. 10 each, out of accumulated profits of past years, in the month of November 2014 and the same was paid in the month of December 2014. In addition, your directors recommend a final dividend of Rs. 1.50 (Rupee one and fifty paisa only) per equity share of Rs. 10 each for the financial year 2014-15. If approved, the total dividend (interim and final dividend) for the financial year 2014-15 will be Rs. 3.00 (Rupees three only) per equity share aggregating to Rs. 626.57 lacs (including Corporate Dividend Tax). OPERATIONS OVERVIEW Textile Division The Textile Division of the Company is located at Hisar in Haryana with a capacity of114096 Spindles. During the year under review, the production ofyarnincreasedby32% (approx.) to25271 MTfrom 19095 MT lastyear mainly due to the successful execution of expansion project through an addition of 39168 spindles at Hisar entailing capital cost of about Rs. 105 Crores. Lower global demand especially from China, higher depreciation cost due to expansion and increase in power cost during the year resulted in lower Profit before Tax (PBT) of Rs. 3.97 Crores as against Rs. 45.25 Crores in the previous year. IT Division The IT Division of the Company is an established service provider for IT Infrastructure Services and Analytics operating through various offices located in India and USA. During the year under review, the sales and other income of the Division increased to Rs. 75.54 Crores from Rs. 64.79 Crores in the last year. The Division earned Profit before Tax (PBT) of Rs. 6.44 Crores compared to Rs. 4.39 Crores in the previous year. The increase in volumes both in India & overseas business, better margins on exports and favorable exchange rates, contributed to the improved overall performance of the Division. In addition, efforts were made to broaden the customer base and build capabilities in newer technology areas. Exports of Infrastructure services showed good growth during the year. Investments have been made in building sales bandwidth and acquiring tools for further expanding the export services business. This should help to provide the desired impetus to the business in future. MATERIAL CHANGES AND COMMITMENTS There was no change in the nature of the business of the Company. There were no material changes and commitments affecting the financial position of the Company occurring between March 31, 2015 and the date of this Report. SCHEME OF AMALGAMATION OF DCM ENGINEERING LIMITED INTO AND WITH DCM LIMITED During the year under review, the Board of Directors of your Company on December 8, 2014 approved the merger of DCM Engineering Limited ('Subsidiary Company') into and with your Company under a Scheme of Amalgamation (i.e. 'Scheme') under Sections 391 to 394 and other applicable provisions of the Companies Act, 1956. The Scheme envisages that upon it becoming effective and with effect from the appointed date i.e. April 1, 2014, all assets and liabilities and the entire business of DCM Engineering Ltd. shall be transferred to and vested in the Company as a going concern. The Scheme is subject to and would become effective on receipt of all regulatory/statutory approvals. The said Scheme has been pending approvals from the concerned regulatory/statutory authorities as at March 31, 2015. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES The Company has six (6) subsidiaries and one (1) associate company within the meaning of Section 2(87) and 2(6) of the Companies Act, 2013 ("Act") respectively, as on March 31, 2015. There has been no material change in the nature of the business of the subsidiaries and associate companies. During the year under review, no company has become or ceased to be Company's subsidiaries, joint ventures or associate companies. Pursuant to provisions of Section 129(3) and other applicable provisions of the Act read with Rules made thereunder, a statement containing salient features of the financial statements, performance and financial position of each ofthe subsidiaries, associates and joint venture companies in Form AOC-1 is enclosed as Annexure - A to the standalone financial statements of the Company and hence not repeated here for the sake of brevity. Pursuant to the provisions of Section 136 of the Act, the financial statements, consolidated financial statements of the Company along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company. CONSOLIDATED ACCOUNTS The Consolidated Financial Statements of the Company are prepared in accordance with provisions of the Companies Act, 2013 and relevant Accounting Standards issued by the Institute of Chartered Accountants of India and form part of this Annual Report. DIRECTORS Dr. Surendra Nath Pandey, director of the Company passed away on December 23, 2014. He was 84 years old. He was Chairman of the Board of Directors of the Company from December 20, 2005 to December 19, 2011. Your Board placed on record its deep condolences on his sad demise. Prof. Joginder Singh Sodhi has resigned from directorship of the Company with effect from February 13, 2015. Your Board placed on record its appreciation for the contributions made by Prof. Joginder Singh Sodhi during his tenure as director of the Company. Mr. Arun Kumar Vedhera was appointed as an Additional Director with effect from June 20, 2015 and holds office upto date of forthcoming Annual General Meeting of the Company. The Company has received a notice under Section 160 of the Companies Act, 2013 along with the requisite deposit from a member proposing the appointment ofMr. Arun Kumar Vedhera as a Director of the Company, liable to retire by rotation. Accordingly, a resolution is included in the Notice of the forthcoming 125th Annual General Meeting of the Company for seeking approval of members for his appointment as a Director of the Company, liable to retire by rotation. Mr. Jitendra Tuli retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment as a director of the Company. Accordingly, a resolution is included in the Notice of forthcoming 125th Annual General Meeting of the Company for seeking approval of members for his appointment as a Director of the Company. The Board of Directors of the Company in their meeting held on November 14, 2014 had appointed Mr. Jitendra Tuli as Chairman and Managing Director of the Company for a period of one year i.e. with effect from December 20, 2014 to December 19, 2015. Accordingly, a resolution is included in the Notice of the forthcoming 125th Annual General Meeting of the Company for seeking approval of members for his appointment as Managing Director of the Company. The members of the Company at 124th Annual General Meeting of the Company held on August 04, 2014 had appointed Mr. Bipin Maira, Mr. Ravi Vira Gupta, Prof. Sudhir Kumar Jain & Dr. Meenakshi Nayar, existing directors as Independent Directors of the Company to hold office for a term upto five consecutive years commencing from August 4, 2014. The aforesaid Independent Directors have submitted their Declaration of Independence, as required pursuant to Section 149(7) of the Companies Act, 2013 stating that they continue to meet the criteria of Independence as provided in Section 149(6) of the Companies Act, 2013. DIRECTORS' RESPONSIBILITY STATEMENT As required by Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, your directors state that: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had 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 at the end of the financial year and of the profit and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; (e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. KEY MANAGERIAL PERSONNEL The following persons are Whole-Time Key Managerial Personnel ('KMP') of the Company in terms of provisions of Section 203 of the Companies Act, 2013: a. Mr. Jitendra Tuli - Chairman and Managing Director b. Dr. Vinay Bharat Ram - Chief Executive Officer c. Mr. Sumant Bharat Ram - Chief Operating & Finance Officer d. Mr. Hemant Bharat Ram - President (Textiles) e. Mr. Rakesh Kumar Goel - CEO, Textile Division f. Mr. Varun Sarin - Chief of Operations & Finance, IT Division g. Mr. Mukesh Sharma — Company Secretary* h. Mr. Yadvinder Goyal — Company Secretary** *Ceased to be Company Secretary w.e.f. November 14, 2014. **Appointed as Company Secretary w.e.f. November 15, 2014. NUMBER OF BOARD MEETINGS Six meetings of the Board of Directors of your Company were held during the year under review. EVALUATION OF BOARD PERFORMANCE Pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49"), the Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors. The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the diversity of the Board, effectiveness of the board processes, information and functioning etc. The performances of the committees were evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees and effectiveness of the committee meetings etc. The performance of the individual directors was reviewed on the basis of the criteria such as contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc. The performances of non-independent directors, Board as a whole and of the Chairman were evaluated in a separate meeting of Independent Directors after taking into account the views of executive directors and non-executive directors. INTERNAL FINANCIAL CONTROL The Company has in place an established internal control system to ensure proper recording of financial &operational information, compliance of various internal controls and other regulatory/statutory compliances. All Internal Audit findings and control systems are periodically reviewed by the Audit Committee of the Board of Directors, which provides strategic guidance on Internal Controls. STATUTORY AUDITORS The term of office of M/s A.F. Ferguson & Co., Chartered Accountants, as Statutory Auditors of the Company will expire with the conclusion of forthcoming Annual General Meeting of the Company. As on commencement of the Companies Act, 2013, M/s A.F. Ferguson & Co., Chartered Accountants, have completed more than 10 years as Statutory Auditors of the Company. A resolution proposing appointment of M/s BSR & Co. LLP, Chartered Accountants, the Statutory Auditors of the Company in place of M/s A.F. Ferguson & Co., Chartered Accountants pursuant to Section 139 of the Companies Act, 2013, forms part of the Notice of the forthcoming 125th Annual General Meeting of the Company. The Board place on record its appreciation for the services rendered by M/s A.F. Ferguson & Co., Chartered Accountants, as the Statutory Auditors of the Company. DIRECTORS' VIEW ON AUDITORS' OBSERVATIONS Management response to the observations of the auditors even though explained wherever necessary through appropriate notes to the Accounts is reproduced hereunder in compliance with the relevant legal provisions. Refer 'Basis for Qualified Opinion' in Auditors' Report on Consolidated Financial Statements Purearth Infrastructure Limited, a joint venture company, has received advances Rs. 3,431.98 lacs (Group's share in advances of joint venture are Rs. 563.35 lacs) for certain bookings of units in its Plaza 4 of Central Square Project (referred as 'said Project'). The said advances have been shown as 'Advances from customers' under 'Other Current Liabilities'. The management of the joint venture company is yet to draw up construction plans for said Project. Further, the revenue including price escalations and other recoveries in terms of the Scheme of Restructuring and understanding arrived with the booking holders of the said Project cannot be determined at this stage. Thus, the management of Joint Venture could not be able to estimate the likely losses for such bookings under the 'Plaza 4 of Central Square Project' and hence have not been provided in the financial Statement of the joint venture company. (Refer note 40 to the consolidated financial statements annexed.) DEBT REPAYMENT The Company has complied with its debt repayment obligation under the Scheme of Restructuring and Arrangement (SORA) approved by the Hon'ble Delhi High Court vide its order dated October 29, 2003 under sections 391 — 394 of the Companies Act, 1956 and subsequent modification thereto vide Hon'ble Delhi High Court order dated April 28, 2011. Where such amount has not been claimed by the creditors, the same has been deposited in separate designated Bank Account(s) in scheduled bank(s). In case an invested amount remains unclaimed and un-encashed for a period of seven years from the date it becomes due for payment, the same has been / will be transferred to the Investor Education and Protection Fund established by the Central Govt. (the relevant details of the same are uploaded on the Company's website www.dcm.in) The investors, whose investment has remained unclaimed /un-encashed and in respect of whom a period of seven years has not lapsed from the due date as per SORA, are required to lodge their claim with the Company by surrender of Debenture Certificates/Letter of Allotment/un-encashed payment warrants at the registered office of the Company. FIXED DEPOSITS No disclosure or reporting is required in respect of deposits covered under Chapter V of the Companies Act, 2013, as there were no transactions in respect of the same during the year under review. However in respect of deposits accepted by the Company under the Companies Act, 1956, the Company has paid the fixed deposit holders in all claimed cases in terms of the provisions of SORA. The amount of unclaimed / legal cases has been deposited in a separate bank account to earmark the funds for the payment of these unclaimed / legal cases. In case a deposit remained unclaimed and un-encashed for a period of seven years from the date it became due for payment, the same has been/will be transferred to the Investor Education and Protection Fund established by the Central Govt. RISK MANAGEMENT There is a continuous process of identifying / managing risks through a Risk Management Process. The measures used in managing the risks are also reviewed. The risks identified by the Company broadly fall in the category of operational risk, regulatory risk, financial & accounting risk & foreign currency related risks. The risk management process consists of risk identification, risk assessment, risk monitoring & risk mitigation. During the year, measures were taken for minimization of risks and the Board was informed from time to time. In the opinion of the Board, none of the said risks which have been identified may threaten the existence of the Company. AUDIT COMMITTEE The Audit Committee of the Company consists of Mr. Bipin Maira, Chairman, Mr. Ravi Vira Gupta, Mr. Jitendra Tuli and Prof. Sudhir Kumar Jain. The Board of Directors of your Company has revised its terms of reference to make it in line with the requirements of Section 177 of the Companies Act, 2013 and clause 49 of the listing agreement. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Board of Directors of your Company has constituted a CSR Committee comprising of Mr. Ravi Vira Gupta, Chairman, Prof. Joginder Singh Sodhi and Dr. Meenakshi Nayar, as members of the committee. Pursuant to resignation of Prof. Joginder Singh Sodhi from directorship of the Company, the Board of Directors of your Company in their meeting held on February 14, 2015 has reconstituted the CSRCommittee with Mr. Ravi Vira Gupta, Chairman, Mr. Bipin Maira and Dr. Meenakshi Nayar, as members of the Committee. This Committee is responsible for formulating and monitoring the CSR Policy of the Company. The Company's CSR Policy is available on the Company's website www.dcm.in. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) ofthe Companies Act, 2013 read with Rule 8(3) ofthe Companies (Accounts) Rules, 2014 is enclosed as Annexure — I, and forms part of this Report. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is enclosed as Annexure II and forms part of this report. A statement showing details pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure - IIA and forms part of this Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS U/S 186 Particulars of investment made and loans given are provided in the standalone financial statements. (Please refer to Note Nos. 13 & 14 of the standalone financial statements). The Company, in its capacity as title holder of land at Bara Hindu Rao / Kishanganj, Delhi, in respect of which the development rights were vested with joint venture company in terms of SORA, has mortgaged the said land for loans availed by joint venture company in connection with development of real estate project on the said land. The outstanding amount of loans, on which mortgage was created, as on 31.03.2015 was Rs. 95 crores (previous year Rs. 80.75 crores) CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on arm's length basis. During the year, the Company has not entered into any contracts / arrangements / transactions with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. The prescribed Form AOC-2 is enclosed as Annexure - III, and forms part of this Report. Your directors draw attention of members to Note 41 to the standalone financial statements which sets out related party disclosures. EXTRACT OF ANNUAL RETURN The details forming part of Extract of Annual Return in prescribed form MGT-9 is enclosed as Annexure- IV and forms part of this Report. COST AUDIT Pursuant to Section 148 of the Companies Act, 2013 and rules made thereunder, the Board of Directors have appointed M/s K C Kohli & Co., Cost Accountants, as the Cost Auditors to conduct the audit of the cost accounting records of the 'cotton textile' manufactured by the Company for the Financial Year 2015-16 at a remuneration of Rs. 50,000/- (Rupees fifty thousand only) plus Service tax and out of pocket expenses, if any. In terms of said Section 148 and rules made there under, remuneration of Cost Auditors is to be ratified by members of the Company. Accordingly, a resolution is included in the Notice of forthcoming Annual General Meeting for ratification of their remuneration by members of the Company. SECRETARIAL AUDIT The Board has appointed M/s Pragnya Pradhan & Associates, Company Secretaries, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year 2014-15 is enclosed herewith as Annexure - V and forms part of this Report. The Secretarial Audit Report does not contain any qualifications, reservation or adverse remark. CORPORATE GOVERNANCE As per Clause 49 of the listing agreements entered into with the stock exchanges, Corporate Governance Report along with Auditors' certificate thereon and Management Discussion and Analysis Report are enclosed, and form part of this report. DISCLOSURE REQUIREMENTS 1. Details of the familiarization programme of the independent directors are available on the website of the Company at weblink: <http://www.dcm.in/>pdf/Familirisation-program-for%20independe-t%20directors.pdf. 2. Policy for determining material subsidiaries of the Company is available on the website of the Company at weblink: <http://www.dcm.in/pdf/>Material-subsidiary-policy.pdf 3. Policy on materiality of related party transactions and dealing with related party transactions is available on the website of the Company at weblink: <http://www.dcm.in/pdf/Policy-on-related-party-transactions.pdf> 4. The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees including directors of the Company to report genuine concerns, which is avaliable on Company's website www.dcm.in. <http://www.dcm.in> The provisions of this policy are in line with the provisions ofSection 177(9) ofthe Companies Act, 2013 and the revised Clause 49 of the Listing Agreements with stock exchanges. 5. The Company's Remuneration Policy is enclosed as Annexure - VI and forms part of this Report. 6. Annual Report on CSR Activities is enclosed as Annexure - VII and forms part of this report. 7. There were no significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. 8. During the year under review, there were no cases reported under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ACKNOWLEDGEMENT The Directors wish to acknowledge and thank the Central and State Governments and all regulatory bodies for their continued support and guidance. The Directors thank the shareholders, customers, business associates, Financial Institutions and Banks for the faith reposed in the Company and its management. The Directors place on record their deep appreciation of the dedication and commitment of your Company's employees at all levels and look forward to their continued support in the future as well. For and on behalf of the Board Sd/- Jitendra Tuli Chairman and Managing Director Place: New Delhi Date : June 20, 2015 |