DCW Ltd. - Annual Report - 2005-2006

8/7/2019 DCW Ltd. - Annual Report - 2005-2006

1/48DCW Limited Annual Report 2005-2006 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 Yuvraj Saheb of Dhrangadhra

Shri Sushil Kumar Jalan

Shri Nirmal Kumar R. Ruia

Shri Pramod Kumar Jain

Managing Director

Shri Bakul JainExecutive Director

BANKERS

Punjab National Bank

State Bank of Saurashtra

State Bank of India

City Union Bank Ltd.

ING Vysya Bank Ltd.

Corporate Directory

AUDITORS

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

REGISTERED OFFICE

Dhrangadhra 363 315, Gujarat.

HEAD OFFICE

Nirmal, 3rd Floor,Nariman Point,Mumbai 400 021.

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

WORKS

Soda 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.

67thAnnual Report2005-2006

Note: The Balance Sheet, Profit and Loss Account and Key Financial Data are also presented in US $ onPage Numbers 15, 16 & 17 respectively.


2/482 DCW Limited Annual Report 2005-2006

LIMITED

TO THE MEMBERS

Your Directors present their 67th Annual

Report and Audited Accounts for the

Financial Year ended 31st March, 2006:

1. Financial Results:31-3-2006 31-3-2005

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

Sales 70,358.82 73,590.72

Gross Profit 5,535.05 4,442.26

Less:Provisions

Depreciation 2,305.56 2,074.46

Profit Before Tax 3,229.49 2,367.80

Tax: Current 277.49 170.00

Fringe

Benefit Tax 40.00

MAT Credit

Available for

set off (272.35)

Tax adjustments

of Previous Year (130.00)

(84.86) 170.00

Profit After

Current Tax &

Tax Adjustments 3,314.35 2,197.80

Deferred Tax 587.43 94.46

Profit after Tax 2,726.92 2,103.33

Add: Balance

brought forward 2,894.90 2,259.87

Profit Available

for Appropriation 5,621.82 4,363.20

Appropriations:

General Reserves 2,000.00 1,000.00

Dividend 517.63 414.16

Dividend

Distribution Tax 76.43 54.01

Balance carried

forward 3,027.76 2,894.91

2. Dividend:

Your Directors recommend payment of

Dividend (15%) at Rs. 0.30 per equity

share of Rs. 2/- each.

3. Operations:

Sales during the year were Rs. 703.59

crores as compared to Rs. 735.91

crores recorded in the previous year.

The decrease in sales was mainly on

Directors Report

account of lower sales realization of

PVC. The Gross Profit for the year

increased from Rs. 44.42 crores to

Rs. 55.35 crores. The profit before tax

amounted to Rs. 32.29 crores as

against Rs. 23.68 crores in the

previous year. After providing Rs. 2.77crores for current taxes, Rs. 0.40 crores

towards Fringe benefit tax and taking

credit for MAT of Rs. 2.72 crores and

previous year tax adjustments of

Rs. 1.30 crores profit before deferred

tax is Rs. 33.14 crores against previous

years Rs. 21.98 crores. The profit after

provision for deferred tax is Rs. 27.27

crores against pervious years Rs. 21.03

crores. Deferred Tax is only a

provision as per guidelines and is not

an outflow.

4. Exports:

The Companys exports are Rs. 67.36

crores as compared to Rs. 72.14 crores

in the previous year, due to marginal

reduction in BI Exports.

5. Divisionwise Performance:

(a) PVC Division:

The turnover of the division was

Rs. 350.83 crores as compared to

Rs. 426.28 crores, registering a

fall of 18% due to lower

realization and lower sales of

PVC. Margins on PVC were under

pressure due to cheap import on

account of reduction in import

duty and reduction in duty

differential between raw material

and finished good. However allmajor users are recording good

demand and PVC industry

continues to show positive

growth. The Government has

identified irrigation, power and

infrastructure as thrust areas and

increased activity in these sectors

are likely to boost demand of PVC

Resin. However, on account of

reduction in duty arbitrage

between finished products and

raw material will continue to have

an impact on the profitability ofthis unit.

(b) Caustic Soda Division:



Rs. 186.86 crores in the previous

year, registering a growth of 9%

in the sales. The increase in

turnover was on account of better

realization on Caustic soda and

Chlorine. However, the profit was

lower on account of increase in

cost of captive power due to steepincrease in oil prices. The

production of Caustic Soda was

60100 MT as compared to 61420

MT in the previous year.

(c) Soda Ash Division:



Rs. 116.91 crores in the previous

year registering a growth of 24%.

This increase in turnover is due

to growth in sales and better

realization on Soda Ash. Thecompany produced 87340 MT of

Soda Ash (previous year 83091

MT), 18810 MT of Soda Bi Carb

(previous year 16458 MT) and

2721 MT of Ammonia Bi

Carbonate (previous year 1950

MT).

The Company also produced

31815 MT of washing powder

compared to 25654 MT in the

previous year.



LIMITED

6. Projects Implemented and UnderImplementation

(a) Wind Mill Project

During the year company has

completed the implementation of

its Windmill project of 11.2 MW

capacity in the State of

Tamilnadu, comprising of 14

windmills. The company is taking

necessary steps to get Carbon

Credit for this project.

(b) Calcium Chloride Project

Company is in process of

implementing project for

manufacture of Calcium Chloride

out of the waste liquor. This

project is also for pollution

abatement. Calcium Chloride is

used mainly in Drilling of Oil

Wells, De-icing and in exterior

paints and has a good demand in

domestic as well as in

international markets.

7. New Projects:

(a) Conversion of Mercury Cells toMembrane Cells at Caustic SodaUnit

The Company proposes to convert

Mercury Cells to Membrane Cells

at its Caustic Soda Unit inSahupuram. The Company has

awarded the contract to UHDE

INDIA LIMITED, for supply of

membrane cells. On completion

of the project, production

capacity of the Caustic Soda will

increase from present 175 TPD to

283 TPD. This will also result in

substantial savings in power. The

project is estimated to be

completed within 24 months.

(b) Iron Oxide Pigment PlantTo generate a commercially

viable product out of waste liquor

generated out of its Beneficiated

Ilmenite Plant at Caustic Soda

Unit in Sahupuram and as

pollution abatement measure, the

Company set up in 1995 an Iron

Oxide Pigment Pilot Plant of 450

TPA. The in-house R&D

Department of the Company

improved the quality of the

product to international standards

and the product has been well

accepted. The Company now

proposes to set up a commercial

scale project of 70 - 120 TPD

capacity. This project may be

implemented by way of a jointventure with an international

company of repute. After

implementation of the project,

there will be zero pollution. This

project is estimated to be

completed within a period of 18

to 22 months. With an estimated

capital expenditure of Rs. 125

crores.

(c) Increase of Capacity ofBeneficiated Ilmenite Plant

Chlorine generated whilemanufacturing Caustic Soda is

used for the manufacture of

Trichloroethylene and

Beneficiated Ilmenite. Presently

Company manufactures 30,000

TPA of Beneficiated Ilmenite is

totally exported and commands

good demand in the international

market. The Company proposes

to increase the capacity of this

plant to 42,000 TPA in the first

phase. The capacity addition in

the Beneficiated Ilmenite Plant

will consume the additional

chlorine generated on account of

increase in caustic soda capacity.

The project is estimated to becompleted within a period of 24

months.

(d) Thermal Power Plant atSahupuram

Caustic Soda is a power intensive

product and the cost of power

constitutes about 65% - 70% of

the total cost. The present Captive

Power Plant set up in the year

1995 96 comprises 6 x 6 MW

DG Sets. Due to steep increase in

the oil prices, the cost ofgenerating power and steam has

gone up. On account of

expansion programme of various

plants at Sahupuram, the

requirement of power is estimated

to go up from 30 MW to 44 MW

and that of steam from 19 TPH to

85 TPH. The Company, therefore,

proposes to set up a Thermal Co-

generation plant for generating 44

MW of power and 85 TPH steam.

On setting up this co-generation

plant, the cost of generation ofpower and steam will come down

substantially there by improving

the profitability of the company.

The project will be implemented

in 18 22 months. It will be done

by well known firm in the field

M/s. Thermax Ltd., on turnkey

basis.

(e) Doubling of Soda Ash Capacity

The demand of Soda Ash is going

up by 5% - 7% per annum.

Presently the Companys Soda AshUnit at Dhrangadhra in Gujarat

manufactures 300 tons per day of

Soda Ash. The Company proposes

to increase the capacity of its Soda

Ash Plant to 650 tons per day. The

increase in capacity will give

benefit of economy of scale and

improve efficiencies. M/s. Akzo

Noble of Netherland,

international leader in Soda Ash

technology will provide



LIMITED

technological support for

doubling the capacity. This

project is expected to be

completed within 24-30 months.

8. Capex for New Projects:

The capex of the above projects will

be approx. Rs. 700 crores, which will

be met by borrowings from banks,

FCCB issue and from internal accruals.

The profitability and turnover of the

company will be greatly strengthened

and improved.

9. Fixed Deposits:

The Company has not accepted any

fresh Deposits during the year.

Deposits matured but not claimed as

at the end of the financial year,amounted to Rs. 0.39 lacs. None of

these deposits have been claimed

since then.

10. Corporate Governance:

The report on Corporate Governance

is annexed to this report.

11. 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 (Disclosure

of Particulars in the Report of the

Board of Directors) Rules 1988 is set

out in the Annexure forming part of

this Report.

12. Particulars of Employees:

Information in accordance with

Section 217 (2A) of the Companies

Act, 1956, read with the Companies

(Particulars of Employees) Rules, 1975

is set out in the Annexure forming partof this Report.

13. Environment and Safety Measures:

The Company is committed to

Industrial Safety and Environment

Protection and these are on going

processes at the Companys various

plants. The Sahupuram Unit has been

granted ISO 14001 Certificate for

complying with environment

protection and safety.

14. Directors:

Shri F.H. Tapia, Shri Yuvraj Saheb of

Dhrangadhra and Shri Bakul Jain,

Directors, retire by rotation at the

forthcoming Annual General Meeting,

and being eligible, offer themselves for

reappointment.

15. Auditors and Auditors Report:

M/s V. Sankar Aiyar & Co., Chartered

Accountants - Statutory Auditors of the

Company retire at the forthcoming

Annual General Meeting and are

eligible for reappointment. Regarding

the qualification in the Auditors

Report, the notes to the Accounts

referred to in the Auditors Report are

self-explanatory and do not call forany further clarification.

16. Cost Audit:

In accordance with the directions

received from the Department of

Company Affairs, the Cost Audit of the

Companys Soda Ash and Caustic Soda

Divisions were conducted for the

Financial Year 2004-2005 by Cost

Auditors, M/s. N.D. Birla & Company

and M/s. R. Nanabhoy & Company

respectively. Their appointments were

approved by the Department of

Company Affairs. The Cost Audit of

these Divisions is conducted every

year and the Reports are submitted by

the Cost Auditors to the CentralGovernment.

17. Management Discussion and AnalysisReport

Outlook:

The Company has a diversified

operation with four business segments

viz. PVC, Chlor Alkali, Beneficated

Ilminite and Soda Ash. It is thus

reasonably protected from the vagaries

of business cycles of these products.

PVC Division:

The Company, one of the six producers

of the PVC resin and despite

competition, has maintained its

market share of nearly 10%. With

expected introduction of Value Added

Tax (VAT) in Tamilnadu and

Pondicherry, the Companys

competitiveness and profitability is

likely to improve.

Caustic Soda Division:

The company continues to be a majorplayer in the South India with a market

share of approximately 15%. The

demand for caustic soda is expected

to grow at a steady rate of 4% to 5%

due to healthy growth in demand from

the end-user industries, specially

aluminium.

The proposed conversion of Mercury

Cell to Membrane Cell will result in

capacity addition and power saving,

improving the bottomline.

The capacity addition in BeneficiatedIlmenite Plant will increase exports

and profitable utilization of chlorine.

Captive Thermal Power plant will

substantially reduce the power and

steam cost.

Soda Ash Division:

The Soda Ash Industry continues to

grow at a compounded rate of 5 % to

7% p.a. and this trend is expected to

continue due to strong demand from



LIMITED

end-user industries. Domestic prices

of soda ash move in line with

international prices due to the threat

from imports. The decreasing trend of

import duties in India is a cause of

concern as decline in landed costs will

exert pressure on domestic prices. Theproposed doubling capacity of the

plant will result in economy of scale

and reduction in the cost of

production.

Internal Control Systems:

The Company has an adequate

internal control procedure

commensurate with the nature of its

business and size of its operations.

Internal Audit is conducted at regular

intervals. Internal Audit is conducted

on a regular basis by an independentfirm of Chartered Accountant.

The reports of the internal audit along

with comments from the management

are placed for review before audit

committee. The Audit Committee also

scrutinizes all the programmes and the

adequacy of the internal controls.

Human Resources:

The Company has been following a

standard procedure for recruitment of

best personnel for all the departments

and is making constant andcontinuous efforts to retain and groom

them to meet its present and future

requirements. The current strength is

2525 employees. The Company

sponsors employees for various

seminars on finance, operations,

marketing and human resource

development to update their skills and

develop close co-ordination with their

counterparts in industries. This is

basically done to enhance their skills

in order to achieve an optimum output

from them.

Cautionary Note:Statement in this report describing the

companys objectives, projections,

estimates, expectations and

predictions may be forward looking

statements. Actual results could differ

materially from those expressed or

implied due to variation in prices of

raw materials, cyclical demand and

pricing in the Companys principal

markets, changes in Government

regulations, tax regimes, economic

developments within India and other

incidental factors.

18. Directors Responsibility Statement

In terms of Section 217 (2AA) of the

Companies Act, 1956 your Directors

have:

(a) Followed in the preparation of the

Annual Accounts, the applicable

accounting standards with proper

explanation relating to material

departures;

(b) selected such accounting policiesand applied them consistently and

made judgements and estimates

that are reasonable and prudent

so as to give a true and fair view

of the state of affairs of your

Company at the end of financial

year and of the profit of your

Company for that period;

(c) taken proper and sufficient care

for the maintenance of adequate

accounting records in accordance

with the provisions of the

Companies Act, 1956, for

safeguarding the assets of your

Company and for preventing anddetecting fraud and other

irregularities; and

(d) Prepared the Annual Accounts on

a going concern basis.

19. Insurance:

All the properties of the Company are

adequately insured.

20. Industrial Relations:

The relations between the employeesand the management were cordial and

an atmosphere of understanding

prevailed throughout the year.

21. Acknowledgement:

The Board places on record their

grateful appreciation for the assistance

and co-operation received from the

Financial Institutions and the Banks.

On behalf of the

Board of Directors

Dr. Shashi Chand JainChairman and Managing

Director

Mumbai, 23rd May, 2006



LIMITED

Annexure to Directors ReportReport 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 Board:

The 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 ParticularsOther CommitteeCategory of Name of the Director at the Other

Directorship Board Last Directorships Memberships ChairmanshipsMeetings AGM

Promoter/ Dr. Shashi Chand Jain 6 No 4 2 Executive Directors (Chairman &

Managing Director)

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

Shri Pramod Kumar Jain 6 Yes 2 (Managing Director)

Shri Bakul Jain 6 No 1 (Executive Director)

Promoter/Non-Executive Smt. Satyawati Jain 4 No Director

Non-Executive and Shri Yuvraj Saheb of 4 No Independent Directors Dhrangadhra

Shri F.H. Tapia 5 No

Dr. V.H. Joshi 6 Yes

Shri Sushil K. Jalan 2 No 6

Shri N.R. Ruia 4 No 2

No. of Board Meetings held during the year along with the dates of the meeting:

During the year five Board Meetings were held on:

21.04.2005, 28.06.2005, 27.07.2005, 25.10.2005, 25.01.2006 and 27.03.2006

The Company placed before the Board the Annual Budget, Performance of various units and other information from

time to time as specified in Annexure IA of the Listing Agreement.



LIMITED

3. Audit Committee:

Terms of Reference:

The terms of reference of this Committee cover

the matters as specified for Audit Committees

under Clause 49 of the Listing Agreement as

well as per the provisions of Section 292 A of

the Companies Act, 1956.

Composition, name of members andChairperson:

The Audit Committee comprises 3 Non-

Executive Independent Directors. Dr. V.H.

Joshi is the Chairman of this Committee.

Shri Yuvraj Saheb of Dhrangadhra and

Shri F.H. Tapia are the other members of the

Committee.

Meetings and Attendance during the year:

The Committee met 4 times during the yearand the attendance of the Members at these

meetings was as follows:

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

Dhrangadhra

28.06.2005 Yes Yes No

27.07.2005 Yes Yes Yes



4. Remuneration Committee:

Terms of Reference:

The terms of reference of this Committee cover

the matters as specified for Remuneration

Committees under Clause 49 of the Listing

Agreement.

Composition, Name of Members andChairperson:

The Remuneration Committee comprises 3

Non-Executive Independent Directors.

Shri F.H. Tapia is the Chairman of this

Committee. Dr. V.H. Joshi and Shri Yuvraj

Saheb of Dhrangadhra are the other membersof the Committee.

Attendance during the year:

There were two Remuneration Committee

meetings during year held on 27th July, 2005

and 27th March, 2006. All members attended

the meeting of 27th July, 2005 and Shri F.H.

Tapia and Dr. V.H. Joshi were present at the

meeting of 27th March, 2006.

Remuneration Policy:

The Remuneration of Managing Directors and

Whole-time Director is approved by the

Remuneration Committee and thereafter by

the Board (subject to the subsequent approval by

the Shareholders at the general body meeting and

such other authorities as the case may be). The

remuneration is fixed considering various factors

such as qualification, experience, expertise,

prevailing remuneration in the corporate world,

financial position of the Company etc. The

remuneration Structure comprises Salary,

Perquisites, Commission, Contribution to

Provident Fund, Super-Annuation Fund and other

funds in accordance with the provisions of

the Companies Act, 1956. The Non-Executive

Directors do not draw any remuneration from the

Company besides the sitting fees for each

meeting of the Board, Audit and Remuneration

Committees attended by them.

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

Directors Salary Perquisites Contribution to Commission Sitting Fees TotalProvidend Fund

& Other Fund(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

Dr. Shashi Chand Jain 24,00,000 3,27,960 6,48,000 17,11,500 50,87,460

Shri Sharad Kumar Jain 24,00,000 *23,40,948 6,48,000 17,11,500 71,00,448Shri Pramod Kumar Jain 24,00,000 3,55,084 6,48,000 17,11,500 51,14,584

Shri Bakul Jain 24,00,000 3,27,262 6,48,000 17,11,500 50,86,762

Smt. Satyawati Jain 20,000 20,000

Shri F.H. Tapia 37,500 37,500

Dr. V.H. Joshi 42,500 42,500

Shri Yuvraj Saheb of Dhrangadhra 30,000 30,000

Shri Sushil K. Jalan 15,000 15,000

Shri Nirmal Kumar Ruia 20,000 20,000

* Includes Rs. 20,27,988/- paid/reimbursed as medical expenses. This expense by way of enhancement of remuneration was approved by Ministry ofCompany Affairs, Government of India vide their letter No. l2/96/2005-CL VII dated 6.10.2005 and has been also approved by Shareholders at theirmeeting held on 4.5.2006.



LIMITED

Sitting Fee also includes payment for Board

level 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 the

difference between 10% of the net profits as

computed under Section 349 of the CompaniesAct, 1956, in a financial year and the aggregate

of the salary and perquisites and benefits paid

to all the Managing Directors and Whole-time

Directors in that year subject to the overall

ceilings stipulated in Sections 198 and 309 of


The appointments of Managing Directors/

Executive Director are contractual and are for a

period of 5 years.

The appointment of the Managing Directors/

Executive Director may be terminated by either

party by giving a six-month notice.

No severance fee is payable on termination of

appointment.

Non-Executive Directors are not paid/entitled

for any remuneration other than sitting fees.

Presently the Company does not have any

Scheme for grant of any stock option either to

the Directors or to the employees.

5. Shareholders/Investors Grievance Committee:

Smt. Satyawati Jain, Non-executive Director

is the Chairperson of the Shareholders/Investors

Grievance Committee.

Ms. Kumkum Shah, Asst. Company Secretary is theCompliance Officer of the Company.

There were 96 complaints received from the

shareholders during the year.

All the Complaints were resolved satisfactorily.

There were no pending complaints as on

31.03.2006

6. General Body Meetings:

(i) Location and time of last 3 Annual General

Meetings held:

Year Location Date Time No. of Special

ResolutionsPassed

2002-03 Dhrangadhra,

Gujarat 07.08.2003 11.00 a.m.


Gujarat 12.08.2004 11.00 a.m. 6


Gujarat 25.08.2005 11.00 a.m. 1

(ii) No Special Resolution has been passed last

year through postal ballot.

(iii) No Special Resolution is proposed to be

conducted through postal ballot.

7. Disclosures:

1. During the year, there were no transactions of

material nature with the Promoters, Directors

or the management or relatives etc. that may

have potential conflict with the interest of the

Company at large.

2. During the last three years, there were no

strictures or penalties imposed by either SEBI or

the Stock Exchanges or any other statutory

authority for non-compliance of any matter

related to the Capital Market.

3. DCW Code of Conduct:

The Board has laid down a Code of Conduct for

all Board Members and Senior Management of

the Company. The Code of Conduct is posted

on the website of the Company.

In accordance with the Securities and

Exchange Board of India (Prohibition of InsiderTrading) Regulations, 1992 as amended, the

Board of Directors of the Company formulated

DCW Code of Conduct for the prevention of

Insider Trading in the shares of the Company by

its Directors and designated employees. The

DCW Code, inter-alia, prohibits purchase/

sale of shares of the Company by the Directors

and designated employees, while in possession

of unpublished price sensitive information in

relation to the Company. A system has been

put in place and Directors/Designated

Employees have been advised to take pre-

clearance before purchase/sale of theCompanys shares.

Whistle Blower mechanism is in existence and

no personnel has been denied access to the

Audit Committee.

4. Compliance with Mandatory Requirements:

The Company has complied with the

mandatory requirements of the Code of

Corporate Governance as stipulated under

Clause 49 of the Listing Agreement with the

Stock Exchanges.

Compliance with Non-MandatoryRequirements:

(1) The Board:

The Company has an Executive

Chairman and hence the 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 Mandatory Requirements.



LIMITED

(3) Shareholders Rights:

As the Companys Quarterly results are

published in English Newspapers having

circulation all over India and in a

Gujarati Newspaper circulated in

Gujarat, the same are not sent to each

household of shareholders.

(4) Audit qualification:

The Company move towards a regime of

unqualified financial statements.

(5) Training of Board Members:

The Board of Directors consists of

professionals with expertise in their

respective fields and industry. They

endeavour to keep themselves updated

with changes in economy and

legislation.

(6) Mechanism for evaluating Non-Executive Board Members:

The performance evaluation of Non-

Executive Directors is done by the Board

of Directors, excluding the Director

being evaluated.

(7) Whistle Blower Policy:

The Company has in existence a system

for the employees to report to the

Management about unethical behaviour,

actual or suspected fraud or violation of

the Companys Code of Conduct.

DECLARATION OF COMPLIANCE WITH THECODE OF CONDUCT/ETHICS:

All the Directors and Senior Management

personnel have affirmed compliance with the

Code of Conduct/Ethics as approved and

adopted by the Board of Directors.

8. Means of Communication:

The Quarterly results are published inFinancial Express in all editions in Indiaincluding the Gujarati edition published fromAhmedabad. These are not sent individually tothe shareholders.

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.

9. General Shareholders information:

ANNUAL GENERAL MEETING:

Day & Date : Thursday, 6th July, 2006

Time : 10.00 a.m.

Venue at the Registered Office(at Guest House No. 2) ,Dhrangadhra,Gujarat - 363 315

Financial calendar: April 2006 March 2007:

First Quarter resultsending 30th June 2006 : last week of July, 2006

Second Quarter resultsending 30th September last week of October,

2006 : 2006

Third Quarter resultsending 31st December last week of January,2006 : 2007

Last Quarter resultsending 31st March last week of April,2007 : 2007

Date of Book closure : 27th June, 2006to 6th July, 2006(both days inclusive).

Dividend Payment Date : 10th July, 2006

Listing on Stock Exchanges:

The Companys shares are listed with the following

Stock 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 to

the above Stock Exchanges for the year 2006-2007.

GDRs of the Company are listed with the

Luxembourg Stock Exchange.

Stock Code : 117 (BSE), DCW (NSE)

Demat ISIN Nos. : INE 500A01011

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 : Asst. Company Secretarymay be DCW LimitedAddressed to Nirmal, 3rd floor,

Nariman Point,

Mumbai 400 021



LIMITED

Market price data:

High/Low During each month in last Financial year :

Month/Year

NSE BSE

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

April, 2005 42.00 36.30 42.25 37.35

May, 2005 44.80 36.20 44.80 36.15

June, 2005 48.20 40.05 47.90 40.00

July, 2005 45.30 39.15 45.25 39.10

August, 2005 51.25 39.80 50.95 39.70

September, 2005 66.40 9.30# 66.35 9.30#

October, 2005 11.00 7.70 11.00 7.63

November, 2005 9.50 7.95 9.29 7.94

December, 2005 9.60 7.55 9.50 7.61

January, 2006 11.00 8.80 11.09 8.75

February, 2006 9.50 8.10 9.50 8.06

March, 2006 11.80 7.15 11.90 7.72

Stock Performance (Indexed):

The performance of the Companys shares relative

to BSE Sensex is given in the chart below:

# Subsequent to sub-division of each equity share of Rs. 10/-into five equity shares of Rs. 2/- each on 28.9.2005.

Registrar and Share Transfer Agents:

The Company has appointed Bigshare Services Pvt.

Ltd., E/2, Ansa Industrial Estate, Sakivihar Road, SakiNaka, Andheri (East), Mumbai 400 072 as Registrars

and Share Transfer Agents of the Company.

The Companys shares are traded in the Stock

Exchanges compulsorily under demat mode. All the

applications received for transfer of physical shares

are approved by the Share Transfer Committee,

which normally meets twice in a month depending

on the volume of transfers. Share transfers are

registered and returned normally within 20 days

from the date of lodgement, if documents are

complete in all respects.

Distribution of shareholding as on 31.03.2006:

No. of Shares SHAREHOLDERS SHAREHOLDING

held Nos. % Nos. %

1 - 500 16,407 51.48 46,06,797 2.67

501 - 1000 6,113 19.18 53,10,105 3.08

100 - 2000 3,613 11.33 56,58,378 3.28

2001 - 3000 2,069 6.49 53,13,440 3.08

3001 - 4000 701 2.20 25,26,106 1.46

4001 - 5000 1,043 3.27 50,45,782 2.92

5001 - 10000 970 3.04 74,91,688 4.34

10001& above 959 3.01 13,65,92,294 79.17

Total 31,875 100.00 17,25,44,590 100.00

Shareholding Pattern as on 31.03.2006:

Category No. of Percent-Shares age of

held Share-holding

A. PROMOTERS HOLDINGS

1. PROMOTERS

Companies Associated with

Directors 50,870,463 29.48

Foreign Promoters

2. Directors and Relatives 22,930,496 13.29

Sub-total 73,800,959 42.77

B. NON PROMOTERS HOLDING

3. Institutional Investors

a. Mutual Funds and UTI 38,955 0.02

b. Banks, Financial Institution,

Insurance Companies (Central/

State Govt. Institutions/

Non Govt. Institutions 10,768,260 6.24

c. Foreign Institutional

Investors (FIIs) 4,322,600 2.51

Sub-total 15,129,815 8.77

4. OTHERS

a. Private Corporate Bodies 9,276,054 5.38

b. Indian Public 57,758,675 33.47

c. NRIs / OCBs 11,509,863 6.67

d. Any other

Foreign Banks 44,725 0.03

GDRs 3,498,750 2.03

Shares in transit 1,525,741 0.88

Sub Total 83,613,816 48.46

Grand Total 172,544,590 100.00



LIMITED

The Board Of Directors

DCW LIMITED

I have reviewed the records concerning the Companys

compliance of conditions of Corporate Governance as

stipulated in Clause 49 of the Listing Agreement entered into,

by the Company, with the Stock Exchanges of India, for the

financial year ended 31st March, 2006.

The compliance of conditions of Corporate Governance is the

responsibility of the management. My examination was limited

to procedures and implementation thereof, adopted by the

Company for ensuring the compliance of the conditions of the

Corporate Governance. It is neither an audit nor an expression

of opinion on the financial statements of the Company.

I have conducted my review on the basis of the relevant

records and documents maintained by the Company and

furnished to me for the review, and the information and

explanations given to me by the Company.

Based on such a review, in my opinion, the Company has

complied with the conditions of Corporate Governance, asstipulated in Clause 49 of the said Listing Agreements.

I further state that, such compliance is neither an assurance as

to the future viability of the Company, nor as to the efficiency

or effectiveness with which the management has conducted

the affairs of the Company.

Sridhar NarayananPlace: Mumbai Company Secretary

Date: 23rd May, 2006 C.P. No. 2423

Certificate on Clause 49 Compliance

Dematerialisation of shares: 16,01,08,805 Equity sharesheld by 22,251 Shareholders comprising 92.79% of the

paid up Share Capital have been dematerialised as on

31st March, 2006.

Outstanding GDRs/ADRs/Warrants/convertibleinstruments etc.:

Outstanding GDRs as on 31st March, 2006 represent

34,98,750 shares (2.02%). There are no further

outstanding instruments, which are convertible into

equity 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



LIMITED

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

A. CONSERVATION OF ENERGY :

1. Supermizers, the electronic device to reduce energy consumption in three phase induction motors, are being usedcontinuously in all plants to save energy. So far, 236 supermizers have been installed resulting in saving of 43 lacs unit

during the year.

2. Asia E+ tube lights are energy efficient with longer life and high lumens. Each tube consumes 28 watts, compared toconventional tube lights which consumes 53 watts. DCW continues the conversion programme in phase manner to replaceinefficient tube lights. Also, inefficient mercury and sodium vapor-lamps were replaced by highly efficient metal halidelamps. Annual energy saving to a tune of 6.4 lacs units is achieved.

3. Energy audit on all the motors of capacity 30 KW and above was carried out and energy conservation to a tune of 45,000units have been achieved by installation of energy efficient motors.

4. For effective utilization of hydrogen available from caustic soda plant, dual burner was installed in calciner in Ilmeniteplant at cost of Rs. 25 Lacs.

5. So far, 9 nos. of cooling towers have been installed and annual energy savings to a tune of 12 lacs units is achieved.

6. In-house cost improvements are conducted periodically where mostly energy saving proposals are given by all departmentsfor implementation. During the year under report, 3 programmes were conducted and 49 suggestions resulting in annual

savings to the tune of Rs. 60 Lacs have been implemented.

B. TECHNOLOGY ABSORPTION :

Research and Development:

1.1 BENEFICIATED ILMENITE AREA:

1.1.1. Process optimization to reduce cycle time and acid consumption in BI process.

High pressure leaching implemented in all digesters resulting in reduction on acid consumption and cycle time byabout 30%. To further reduce acid consumption and subsequently the effluent, possibility of preheating of acidbeing explored.

1.1.2 Capacity enhancement of Ore Purification Plant

The capacity of ore purification plant was increased by adding High Tension Plate Separators. This will cater to theneeds of BI production and also for reprocessing of rejects.

1.2 IRON OXIDE AREA

1.2.1. Trials with ammonia in place of caustic lye

Plant scale trails were carried out using air / oxygen for seed and crystal reaction. Also trials with ammonia (in placeof caustic lye) carried out, to develop new process for making yellow iron oxide. The modified process will yieldtwo products viz. Yellow Iron Oxide and Calcium Chloride while ammonia will be recovered and recycled.

1.2.2. Trials in test unit for selection of equipment for commercial scale plant

Filtration and drying trails with prototype equipments carried out to decide requirements for commercial scaleplant.

1.3. CAUSTIC SODA AREA

1.3.1. Modernisation of cells in phased manner continued. During the year under report, 10 cells have been completed.

1.3.2. New chilling system for hydrogen was installed with an investment of Rs. 12 Lacs to improve hydrogen efficiency,

1.4. PVC

1.4.1. By in-house re engineering effort, reduction of Inputs (VCM, steam, power etc) for making PVC resin was achievedand annual savings to a tune of Rs. 75 Lacs achieved.

1.4.2. The capacity of Fluid Bed Dryer was increased from its design capacity of 120 TPD to 200 TPD by in-housemodification and debottlenecking.

1.5 CPP

1.5.1. The electrical heaters were partially replaced by steam heaters, resulting in annual savings of 2.6 lacs units.

1.5.2. In place of RO water, Water softener plant was installed for cooling towers. Annual savings of Rs. 33 Lacs achieved.

1.5.3. To improve engine performance, marine type filters were replaced by oil bath type.

Annexure to theDirectors Report



LIMITED

2. EXPENDITURE ON RESEARCH & DEVELOPMENT:

(i) Capital Rs. 80.84 lacs(ii) Recurring Rs. 6.67 lacs

Rs. 87.51 lacs

(iii) Total Research & Development Expenditure as a percentage of total turnover (Net of Excise) : 0.14 percentage.

Technology Absorption, Adaptation and Innovation :

Continuos efforts are made towards technology absorption, adaptation and innovation. The emphasis is on improving thequality of the finished product 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 Consumption

Caustic Soda Unit PVC Unit Soda Ash Unit

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

2005-2006 2004-2005 2005-2006 2004-2005 2005-2006 2004-2005

1. ELECTRICITY

(a) PurchasedUnit (Lakh Kwh) 0.19 3.03 2.79 21.90 44.84Total Amount(Rs. In Lakhs) 14.23 21.46 20.31 112.22 231.25Rate/Unit (Rs.) *73.71 7.09 7.29 5.12 5.16

(b) Own Generation(i) Through Diesel

GeneratorUnit (Lakh Kwh) 2,034.23 2,078.02 185.34 180.25 Unit/ltr ofLSHS/Diesel Oil 4.43 4.39 4.43 4.39 Cost/Unit (Rs.) 3.86 3.14 3.89 3.14

(ii) Through SteamTurbine GeneratorUnit (Lakh Kwh) 258.57 238.41Unit/ltr of Fuel Oil/GasCost/Unit (Rs.)

2. Coal (specify quality andwhere used) Total cost Average rate

3. FURNACE OIL/LSHS/LSFO/ADDTITIVEQuantity (Kl) 50,074.03 51,417.31 4,072.07 3,335.55 Total Amount 8,007.41 5,387.25 588.04 349.86 (Rs. in Lakhs)Average Rate (Rs.) 13,911.73 10,189.80 14,440.89 10,488.75

4. OTHERS

(i) HydrogenQuantity (MT) 194.840 450.514

Total Amount 72.075 130.89 (Rs. in lakhs)Rate/Unit (Rs.) 36,991.683 29,053.48

(ii) LigniteQuantity (MT) 114095 108558Total Amount 1602.97 1377.84(Rs. in Lakhs)Rate/Unit (Rs.) 1405 1269

(iii) HSDQuantity (MT) 21.98 19.09 4.51 8.36 Total Amount 7.78 12.10 1.59 5.17 (Rs. in lakhs)Rate/Unit (Rs.) 35386.75 63,397.40 35,386.75 63,397.40

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



LIMITED

Annexure to the Directors ReportInformation 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 & 5,087,460 Ph.D (Economics) 50 01.04.1969 73 Sahu Brothers (Saurashtra)

Managing Director Pvt. Ltd.Director - 11 years

2 Shri Sharad Kumar Jain Vice Chairman & 7,100,448 B.A. (Hons.) Economics 48 01.04.1969 71 Sahu Brothers (Saurashtra)Managing Director Pvt. Ltd.

Director - 11 years3 Shri Pramod Kumar Jain Managing Director 5,114,584 B.A. (Hon.) Economics 47 01.04.1969 68 Sahu Brothers (Saurashtra)

Pvt. Ltd.4 Shri Bakul Jain Executive Director 5,086,762 B.Com., MBA 22 01.09.1984 51

Employed for part of the year

1 Shri G. Raman Executive 1,861,622 S.S.L.C. 51 01.04.1954 77 Dalmia Cement & PaperVice President Marketing Co. Ltd.(Foreign Trade)

2 Shri B. M. Mulla General Manager 998,229 M.A. 31 10.11.1975 61 (Public Relation)

3 Shri Murugan S. Sr. Engineer 215,534 B.E. (Electrical) 12 20.01.1993 39 Southern Railway, Trichy(Electrical)

4 Shri A. Leo Joseph Sr. Engineer 420,794 B.Sc. 35 02.05.1970 58 (Quality Control Lab.)

5 Shri S. Selvaraj Sr. Officer (Stores) 352,440 B.Sc. 35 07.11.1970 58

Notes :

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

2005-2006 2004-2005 2005-2006 2004-2005 2005-2006 2004-2005

(B) Consumption per unitof Production

Electricity (Kwh) 3002 3005 226 233.00 243.00 240.00Fuel Oil (MT) 0.20 0.083 0.052 0.083 Hydrogen (Kgs.) 9.73 21.90 LSHS (MT) Lignite (MT) 0.908 0.898 HSD (Litre) 0.0001 0.0001



LIMITED

AS AT 31ST MARCH, 2006

As at As at31/03/2006 31/03/2005

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

Shareholders Funds :

Capital 7.73 7.89Reserves and Surplus 46.25 42.44

Loan Funds :

Secured Loans 29.12 16.37Unsecured Loans 0.01 0.02

Deferred Tax Liability:

Deferred Tax Liability 14.06 12.93Deferred Tax Asset (1.58) (1.55)

12.48 11.38

TOTAL 95.59 78.10

APPLICATION OF FUNDSFixed Assets :

Gross Block 134.39 119.32Less : Depreciation 63.89 61.42

70.50 57.90Capital Work-in-progress 6.95 8.10

77.45 66.00

Investments 2.49 0.19Current Assets, Loans and Advances :

Inventories 27.07 18.25Sundry Debtors 11.42 11.24Cash and Bank Balances 0.83 0.84

Loans and Advances 12.50 11.3551.82 41.68

Less: Current Liabilities and Provisions

Liabilities 33.51 28.02Provisions 2.66 1.75

36.17 29.77

Net Current Assets 15.65 11.91

TOTAL 95.59 78.10

* One US $ = Rs. 44.63# One US $ = Rs. 43.75

Balance Sheet



LIMITED

FOR THE YEAR ENDED 31ST MARCH, 2006

For the year ended For the year ended31/03/2006 31/03/2005

US $ in Millions* US $ in Millions#INCOME

Sales (including Excise Duty) 157.65 168.21

Less: Excise Duty 21.49 21.61

136.16 146.60

Other Income 5.36 2.12

141.52 148.72

EXPENDITURE

Manufacturing and Other Expenses 128.33 138.39

Interest & Finance Charges 0.79 0.16129.12 138.55

Profit before Depreciation 12.40 10.17

Depreciation 5.17 4.74

Profit Before Tax 7.24 5.43

Provision for Tax

Current Tax 0.62 0.39

Fringe Benefit Tax 0.09

MAT Credit available for set off (0.61)

Tax Adjustment of Previous Year (0.29)

Profit after Current Tax & Tax Adjustments 7.43 5.04

Deferred Tax 1.32 0.22

Profit After Deferred Tax 6.11 4.82

Add : Surplus brought forward from last year 6.49 5.17

12.60 9.99

APPROPRIATION

Transfer to General Reserve 4.48 2.29

Proposed Dividend on Equity Shares 1.16 0.95Tax on Dividend 0.17 0.12

Profit Carried Forward 6.79 6.63

* One US $ = Rs. 44.63

# One US $ = Rs. 43.75

Profit and Loss Account



LIMITED

2005-2006 2004-2005Rs. in US $ in Rs. in US $ in

Millions Millions* Millions Millions#

Gross Sales 7,035.88 157.65 7,359.07 168.21

Fixed Assets Gross Block 5,997.85 134.39 5,220.05 119.32

Net Block 3,456.58 77.45 2,887.26 65.99

Export Earnings 673.62 15.09 721.41 16.49

Earnings Before Depreciation and Interest 588.59 13.19 451.42 10.32

Interest 35.08 0.79 7.19 0.16

Earnings Before Depreciation 553.51 12.40 444.23 10.15

Depreciation 230.56 5.17 207.45 4.74

Earnings Before Tax 322.95 7.24 236.78 5.41

Taxation

Current 27.75 0.62 17.00 0.39

Fringe Benefit Tax 4.00 0.09

MAT Credit available for set off (27.24) (0.61)

Tax adjustment of previous year (13.00) (0.29)

Deferred Tax 58.74 1.32 9.45 0.22

Earnings After Tax 272.70 6.11 210.33 4.81

No. of shares of Rs. 2/- each

(Million Nos.) @ 172.54 172.54 172.54 172.54

Earnings per Share 1.58 0.04 1.22 0.03

Net Worth (Excl. Revaluation Reserve) 2,277.16 51.02 2,063.84 47.17

Book value per share 13.20 0.30 11.96 0.27

Gross profit to sales (%) 7.87 7.87 6.04 6.04(Earnings Before Depreciation)

Interest coverage Ratio 16.78 16.78 62.78 62.78

Debt/Equity 0.64:1 0.64:1 0.33:1 0.33:1

Current Assets/Current Liabilities 1.43 1.43 1.40 1.40

@ Each Equity Share of Rs. 10 has been sub-divided into five Equity Shares of Rs. 2 each, hence all related references for the previous

periods have been restated for the sake of comparability.

* 1 US $ = Rs. 44.63

# 1 US $ = Rs. 43.75

Key Financial Data



LIMITED

AUDITORS REPORT TO THE

SHAREHOLDERS OF DCW LIMITED

1. We have audited the attached

Balance Sheet of DCW Limited as at

31st March, 2006 and also the Profit

and Loss Account and Cash Flow

Statement of the Company for the

year ended on that date, annexed

thereto. These financial statements

are the responsibility of the

Companys Management. Our

responsibility is to express an opinion

on these financial statements based

on our audit.

2. We conducted our audit in

accordance with auditing standards

generally accepted in India. Those

Standards require that we plan and

perform the audit to obtainreasonable assurance about whether

the financial statements are free of

material misstatement. An audit

includes examining, on a test basis,

evidence supporting the amounts and

disclosures in the financial

statements. An audit also includes

assessing the accounting principles

used and significant estimates made

by management, as well as evaluating

the overall financial statement

presentation. We believe that our

audit provides a reasonable basis forour opinion.

3. As required by the Companies

(Auditors Report) Order, 2003 and

read together with the Companies

(Auditors Report) Amendment Order,

2004 (hereinafter referred to as the

Order) issued by the Central

Government of India in terms of

Auditors Report

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

S. VenkatramanPlace : Mumbai Partner

Dated : 23rd May, 2006 Membership No. 34319

sub-section (4A) of Section 227 of the

Companies Act, 1956, we enclose in

the Annexure a statement on the

matters specified in paragraphs 4 and

5 of the said Order.

4. Further to our comments in the

Annexure referred to in paragraph 3

above, we report that:

(i) We have obtained all the

information and explanations,

which to the best of our

knowledge and belief, were

necessary for the purposes of our

audit;

(ii) In our opinion, proper books of

account as required by law,

have been kept by the Company

so far as appears from ourexamination of those books;

(iii) The Companys Balance Sheet,

Profit and Loss Account and

Cash Flow Statement dealt with

by this Report are in agreement

with the books of account;

(iv) In our opinion, the Balance

Sheet, Profit and Loss Account

and Cash Flow Statement dealt

with by this report comply with

the Accounting Standards

referred to in sub-section (3C)of Section 211 of the Companies

Act, 1956, to the extent

applicable;

(v) On the basis of written

representations received from

the Directors as on 31st March,

2006, taken on record by the

Board of Directors, we report

that none of the Directors is

disqualified as on 31st March

2006 from being appointed as

a Director in terms of clause (g)

of sub-section (1) of Section 274

of the Companies Act, 1956;

(vi) In our opinion and to the best

of our information and

according to the explanations

given to us, the said accounts

subject 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 total liabilities lesser

to the extent of Rs. 501.16 lacs,

and read with the SignificantAccounting Policies and other

notes thereon, give the

information required by the

Companies Act, 1956 in the

manner so required and give a

true and fair view in conformity

with the accounting principles

generally accepted in India:

(a) In the case of the Balance

Sheet, of the state of affairs

of the Company as at

31st March, 2006,

(b) In the case of the Profit and

Loss Account, of the profit

for the year ended on that

date, and

(c) In the case of the Cash

Flow Statement of the cash

flows for the year ended on

that date.



LIMITED

ANNEXURE REFERRED TO IN

PARAGRAPH 3 OF AUDITORS REPORT

TO THE SHAREHOLDERS OF DCW

LIMITED ON THE ACCOUNTS FOR THE

YEAR ENDED 31ST MARCH 2006.

i. (a) The Company hasmaintained proper records,

except in respect of Pantape

Division, showing particulars

including quantitative details

and situation of fixed assets.

(b) We are informed that the

fixed assets, except in respect

of Pantape Division, have

been physically verified by

the Management with the

assistance of external

agencies during the year. Inour opinion the frequency of

verification is reasonable. As

per the information given to

us by the management, no

material discrepancies as

compared to book records

were noticed in respect of

fixed assets verified during

the year.

(c) Since there is no disposal of a

substantial part of fixed assets

during the year, thepreparation of financial

statements on a going

concern basis is not affected

on this account.

ii. (a) The inventories of finished

goods (except goods lying

with consignees and in

transit), stores, spare parts

and raw materials have been

physically verified by the

management with the help of

external agencies. In our

opinion, the frequency ofphysical verification is

reasonable.

(b) In our opinion, the

procedures of physical

verification of inventories

(except finished goods lying

with consignees and in

transit) followed by the

management are reasonable

and adequate in relation to

the size of the Company and

the nature of its business.

(c) In our opinion, the Company

is maintaining proper records

of inventories and no

material discrepancies were

noticed on physicalverification as compared to

the record of inventories.

iii. Based on the audit procedures

applied by us and according to the

information and explanations

given to us, the Company has not

granted or taken any loans,

secured or unsecured, to/from

companies, firms or other parties

listed in the register maintained

under Section 301 of the

Companies Act, 1956.

iv. In our opinion and according to

the information and explanations

given to us, having regard to the

explanation that for purchase of

certain raw materials, stores, and

components, alternative sources of

supply are limited with reference

to quality, delivery schedules,

credit period and some of the items

purchased are of special nature,

and hence comparable alternative

quotations are not available forthese, there are adequate internal

control procedures commensurate

with the size of the Company and

the nature of its business for the

purchase of inventories and fixed

assets and for the sale of goods and

services. During the course of our

audit, we have not observed any

continuing failure to correct major

weaknesses in the internal control

system.

v. (a) Based on the audit pro-

cedures applied by us, to thebest of our knowledge and

belief and according to the


given to us, particulars of

contracts or arrangements

referred to in Section 301 of

the Companies Act, 1956,

have been entered in the

register required to be

maintained under that

Section.

(b) Sub-clause (b) of sub-para (v)

of para 4 of the Order is not

applicable as there are no

such transactions exceeding

the value of Rupees Five Lacs

in respect of any party in the

financial year.vi. In our opinion and according to

the information and explanations

given to us, the Company has

complied with the provisions of

the Sections 58A, 58AA and other

relevant provisions of the

Companies Act, 1956 and the rules

framed thereunder, with regard to

deposits accepted from the public.

We are informed by the

Management that no order has

been passed by the Company Law

Board or National Company Law

Tribunal or Reserve Bank of India

or any Court or any other Tribunal

under Sections 58A and 58AA of


vii. The Company has, in general, an

internal audit system com-

mensurate with the size and nature

of the Companys business.

viii. We have broadly reviewed the

books of account maintained by

the Company pursuant to the rules

made by the Central Governmentfor the maintenance of cost

records under Section 209(1)(d) of

the Companies Act, 1956 and are

of the opinion that, prima facie,

the prescribed accounts and

records have been made and

maintained. We have not,

however, made a detailed

examination of these records with

a view to determine whether they

are accurate or complete.

ix. (a) According to the records of

the Company, undisputedstatutory dues including

provident fund, investor

education and protection

fund, employees state

insurance, income tax, sales

tax, wealth tax, service

tax, custom duty, excise

duty, cess and other material

statutory dues that are

required to be deposited

regularly with authorities,



LIMITED

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 31.26

Including Penalty & Interest,

wherever applicable)

Central Excise Act, 1944 (Excise Duty 1977 to 2005 2.98 280.34 5.80 289.12

Including Penalty & Interest,


Sales Tax Legislations 1982 to 2000 2.57 414.59 178.94 596.10

(Sales Tax, including Penalty

& Interest, wherever applicable)

Local cess, Local cess surcharge 1989 to 2006 57.82 12.69 70.51

(Land Revenue Including

Penalty and Interest,


Grand Total 94.63 694.93 184.74 12.69 986.99

* 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.

(Rs. in lacs)

have generally been regularly

deposited with the

appropriate authorities.

According to the information

and explanations given to us,

no undisputed amounts in

respect of the aforesaidstatutory dues were in

arrears, as at 31st March,

2006, for a period of more

than six months from the date

they became payable.

(b) According to the information

and explanations given to us

and the records of the

Company, the dues of sales

tax/income tax/customs duty/

wealth tax/service tax/ excise

duty/cess, which have not

been deposited on account of

any dispute are as follows:

x. The Company does not have any

accumulated losses at the end of

the financial year. The Company

has not incurred any cash losses

during the financial year covered

by our audit and the immediately

preceding financial year.

xi. On the basis of verification of

records and according to the


given to us, the Company has not

defaulted in repayment of dues to

Financial Institutions/Banks or

Debenture holders.

xii. The Company has not granted any

loans and advances on the basis of

security by way of pledge of

shares, debentures and other

securities.

xiii. The Company is not a chit fund or

a nidhi or a mutual benefit society.

Therefore the provisions of sub-

para (xiii) of para 4 of the Order are

not applicable to the Company.

xiv. In respect of shares, securities

and other investments dealt

in or traded by the Company,proper records have been

maintained of the transactions and

contracts and timely entries have

been made therein. All the

investments are held by the

Company in its own name except

to the extent of the exemption

granted under section 49 of the

Companies Act, 1956.

xv. According to the information and

explanations given to us, the

Company has not given any

guarantee for any loans taken by

others from any bank or financial

institution.



LIMITED

xvi. In our opinion, the term loans

taken during the year have, prima

facie, been applied for the purpose

for which they were raised.

xvii. According to the information andexplanations given to us, based on

an overall examination of the

balance sheet of the Company,

related information made

available to us and as represented

to us by the Management, funds

raised on short-term basis have,

prima facie, not been used during

the year for long-term investment.

xviii. The Company has not made any

preferential allotment of shares

during the year to parties and

companies covered in the registermaintained under section 301 of


xix. The Company has not issued any

debentures during the year and

therefore the question of creating

security or charge in respect

thereof does not arise.

xx. The Company has not made any

public issue of any securities

during the year and therefore the

question of disclosing the end-use

of money raised by any publicissue does not arise.

xxi. We are informed that during the

year, no instances of material fraud

on or by the Company have been

noted or reported by the

management.

For V. Sankar Aiyar & Co.,

Chartered Accountants.

S. VenkatramanPlace : Mumbai Partner

Dated : 23rd May, 2006 Membership No. 34319



LIMITED

AS AT 31ST MARCH, 2006

Schedule As at As at31/03/2006 31/03/2005

Rs. in lacs Rs. in lacsSOURCES OF FUNDS

Shareholders Funds :

Capital A 3,450.89 3,450.93Reserves and Surplus B 20,642.56 18,567.99

Loan Funds :Secured Loans C 12,994.14 7,163.52Unsecured Loans D 6.15 6.94

Deferred tax liability :(Refer Note B5 of ScheduleN)

Deferred tax liability 6,274.69 5,658.48Less : Deferred tax asset (706.59) (677.81)

5,568.10 4,980.67

18,568.39 12,151.13

TOTAL 42,661.84 34,170.05

APPLICATION OF FUNDS

Fixed Assets :Gross Block E 59,978.52 52,200.45Less : Depreciation 28,512.44 26,872.09

31,466.08 25,328.36Capital Work-in-progress 3,099.68 3,544.26

34,565.76 28,872.62

Investments F 1,109.95 85.01Current Assets, Loans and Advances

Inventories G 12,083.48 7,985.59Sundry Debtors H 5,096.31 4,919.30Cash and Bank Balances I 369.31 366.38Loans and Advances J 5,580.55 4,964.16

23,129.65 18,235.43

Less : Current Liabilities and ProvisionsLiabilities K 14,956.61 12,136.22Provisions L 1,186.91 886.79

16,143.52 13,023.01

Net Current Assets 6,986.13 5,212.42Contingent Liabilities not provided for M

Significant Accounting Policies and NNotes forming part ofBalance Sheet and Profit and Loss Account

TOTAL 42,661.84 34,170.05

Balance Sheet

Kumkum ShahAsstt. Company Secretary

For and on behalf of the Board

Dr. Shashi Chand JainChairman & Managing Director

Bakul JainExecutive Director

T. M. BhandariSr. Vice President (Finance)

As per our Report attached

For V. Sankar Aiyar & Co.Chartered Accountants

S. VenkatramanPartner

Place : MumbaiDate : 23rd May, 2006

Smt. Satyawati Jain

Dr. V. H. Joshi

Yuvraj Saheb of Dhrangadhra

Sushil Kumar JalanDirectors



LIMITED

FOR THE YEAR ENDED 31ST MARCH, 2006

Schedule For the year ended For the year ended31/03/2006 31/03/2005

Rs. in lacs Rs. in lacsINCOME

Sales 170,358.82

73,590.72

Less: Excise Duty (9,591.46) (9,455.38)

Net Sales 60,767.36 64,135.34Other Income 2 2,391.34 925.36

63,158.70 65,060.70

EXPENDITURE

Manufacturing and Other Expenses 3 57,272.81 60,546.54Interest & Finance Charges (Net) 4 350.84 71.91

57,623.65 60,618.45Depreciation 5 2,305.56 2,074.46

59,929.21 62,692.91

Profit before tax 3,229.49 2,367.79Current Tax 277.49 170.00Fringe Benefit Tax 40.00 MAT Credit Available for set off (272.35) Tax Adjustment of Previous Year (130.00)

Profit after Current Tax & Tax Adjustments 3,314.35 2,197.79Deferred Tax (Refer Note B-5 of Schedule N) 587.43 94.46

Profit after Deferred Tax 2,726.92 2,103.33Add : Surplus brought forward from last year 2,894.90 2,259.87

Available for appropriation 5,621.82 4,363.20

APPROPRIATION

Transfer to General Reserve 2,000.00 1,000.00Proposed Dividend on Equity Shares 517.63 414.16Tax on Dividend 76.43 54.13

2,594.06 1,468.29

Profit Carried Forward 3,027.76 2,894.91

Notes to Profit & Loss Account 6

Weighted average number of Equity Shares

outstanding during the year * 17,25,44,590 17,25,66,670

Basic and diluted earning per share Rs. 1.58 Rs. 1.22

*(Each Equity Share of Rs. 10 has been sub-divided into five Equity Shares of Rs. 2 each, hence all related references for the previous

periods have been restated for the sake of comparability).

Profit and Loss Account










Smt. Satyawati Jain

Dr. V. H. Joshi





LIMITED

2005-06 2004-05Rs in lacs Rs in lacs

A. Cash flow from Operating Activities

Net profit before tax and extraordinary items 3,229.49 2,367.80

Adjustments for:Non-cash items (1,018.83) 32.04Depreciation 2,305.56 2,074.46Interest (net) 350.84 71.91Dividend income (61.07) 1,576.50 (39.45) 2,138.96

Operating profit before working capital changes 4,805.99 4,506.76

Adjustments for:Trade and other receivables (521.05) (4,266.54)Inventories (4,097.89) 1,661.71Current liabilities and provisions 3,059.34 (1,559.60) 229.82 (2,375.01)

Cash generation from operations 3,246.39 2,131.75

Direct taxes paid (229.34) 129.64

Cash flow before Extraordinary items 3,017.05 2,261.39Extraordinary items

Net Cash flow from Operating Activities 3,017.05 2,261.39

B. Cash flow from Investing Activities

Purchase of Fixed Assets (8,594.93) (4,276.50)Sale of Fixed Assets 1,806.94 60.12Purchase/Sales of Investments (1,008.12) (23.44)Dividend Income 61.07 39.45Interest Income 355.65 257.59

Net cash used in investing Activities (7,379.39) (3,942.78)

C. Cash from Financing ActivitiesProceeds from issue of share capital (0.04) 0.17Repayment of loans (1,390.38) (186.24)Repayment of Other Borrowings (137.81) (331.19)Proceeds from Long Term Borrowings 7,358.02 3,221.64Interest paid (996.65) (570.81)Dividend paid (409.91) (345.13)Tax on dividend (57.96) (44.22)

Net cash used in Financing Activities 4,365.27 1,744.22

Net increase in Cash and Cash equivalents 2.93 62.83Cash & Cash Equivalents as at 1st April 2005 366.38 303.55Cash & Cash Equivalents as at 31st March 2006 369.31 366.38

2.93 62.83

CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2006










Smt. Satyawati Jain

Dr. V. H. Joshi





LIMITED

FORMING PART OF THE BALANCE SHEET

As at As at31/03/2006 31/03/2005

Rs. in lacs Rs. in lacsSCHEDULE A

SHARE CAPITAL

Authorised Capital

17,50,00,000 Equity Shares of Rs. 2/- each

(Previous Year 3,50,00,000 Equity Shares @ Rs. 10 each) 3,500.00 3,500.00

TOTAL 3,500.00 3,500.00

ISSUED, SUBSCRIBED AND PAID-UP CAPITAL

17,25,44,590 Equity Shares of Rs. 2/- each

(Previous Year 3,45,13,334 Shares @ Rs. 10 each) 3,450.89 3,451.33Less : Calls in Arrears 0.40

TOTAL 3,450.89 3,450.93

Notes

Of the Equity Shares

(1) The following Shares were allotted as fully paid-up without payment being received in cash:

(a) 5,25,000 (P.Y. 1,05,000 shares of Rs. 10 each) Shares to Vendors.

(b) 4,550 (P.Y. 910 shares of Rs. 10 each) Shares to Equity Shareholders of the erstwhile, PRC Limited, pursuant to the

amalgamation with the Company.

(2) 3,74,50,985 (P.Y. 74,90,197 shares of Rs. 10 each) Shares were allotted as fully paid-up Bonus Shares by Capitalisation of

Capital Redemption Reserve, Share Premium Account and General Reserve.

(3) 2,66,66,550 (P.Y. 53,33,310 shares of Rs. 10 each) Shares were issued and allotted consequent to conversion of Part A of the

26,66,655 Partly Convertible Debentures allotted in April 1992.

(4) 4,61,25,000 (P.Y. 92,25,000 shares of Rs. 10 each) Shares were issued in 1994-95 against which Global Depository Receipts

were issued by the Depository viz. Citibank, U.S.A.

(5) 2,80,94,525 (P.Y. 56,18,905 shares of Rs. 10 each) Shares were issued and allotted pursuant to Rights issue made during

2000-01.

(6) During the year 22,080 equity shares of Rs. 2 each (4,416 shares of Rs. 10 each) were forfeited on account of calls in arrears.

Schedules



LIMITED


As at As at31/03/2006 31/03/2005

Rs. in lacs Rs. in lacsSCHEDULE B

RESERVES AND SURPLUS

CAPITAL RESERVE

As per last balance sheet 355.83 355.61

CAPITAL REDEMPTION RESERVE


SHARE PREMIUM

As per last balance sheet 7,079.70 7,079.70

REVALUATION RESERVE


Less : Transferred to Profit and Loss Account 58.50 58.57

1,321.88 1,380.38

GENERAL RESERVE


Add : Transfer from P&L account 2,000.00 1,000.00

Add : Transfer from Debenture Redemption Reserve 30.00

Add : Forfeiture of Debentures 4.24

8,801.04 6,801.04

CONTRIBUTION FOR CAPITAL EXPENDITURE


PROFIT AND LOSS ACCOUNT 3,027.76 2,894.91

TOTAL 20,642.56 18,567.99

Schedules



LIMITEDSchedules


As at As at31/03/2006 31/03/2005

Rs. in lacs Rs. in lacsSCHEDULE C

SECURED LOANS

Banks

Term loans 7,688.24 3,113.50

Working Capital Loans 198.76 335.32

Other Loans

Financial Institutions 2,857.14 3,714.29

Term Loans from NBFC 2,250.00 0.41

TOTAL 12,994.14 7,163.52

Notes :

Loans Secured by

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 of 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 assets 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 firstpari- passu charge by mortgage on all the immovable properties situated in the states of Tamilnadu and Gujarat.

Equipments Finance Loan from a Financial Institution and term loan from NBFC are secured by creation of firstpari-passu charge on all the movable fixed assets, both present and future by way of hypothecation.

As at As at

31/03/2006 31/03/2005Rs. in lacs Rs. in lacs

SCHEDULE D

UNSECURED LOANS

OTHERS

Deferred Sales Tax Credit 6.15 6.94

TOTAL 6.15 6.94

Due within one year Rs. 0.61 lacs (Previous Year Rs. 1.30 lacs)


28/48



LIMITEDSchedules


SCHEDULE F As at 31/03/2006 As at 31/03/2005

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 lacs

Bond Rs. Unit/Bond Rs.

I. Long Term :

In Govt. & Trust Securities (Unquoted)7 Years National Savings Certificates 1000 10 0.10 1000 10 0.10

In Other Companies Non-Trade (Unquoted)The Dhrangadhra Peoples Co-op. Bank Ltd. 25 10 *250 25 10 *250

In Govt. & Trust Securities (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 1.90

LIC Housing Finance Ltd. 10 17,400 10.44 10 17,400 10.44

12.34 12.34

Less: Diminution of value in shares ofGlobal Trust Bank 19,000 1.90 19,000 1.90

10.44 10.44

II. Current Investment :

Fully paid Equity Shares

Tata Consultancy Services Ltd. 1 3 0.03 1 3 0.03

Punjab National Bank Ltd. 10 14,123 55.08

0.03 55.11

Mutual Funds

Principal Mutual Fund Liquid CashManagement Fund 10 9,999,400.775 1,000.01

Tata Mutual Fund Liquid Fund SHIPDaily Dividend 1,000 7,179.095 80.01

1,080.02

TOTAL 1,109.95 85.01

* Figures Denote Amount in Rupees.

31/03/2006 31/03/2005Rs. in lacs Rs. in lacs

Aggregate Value of long term quoted investments 32.99 31.70

Aggregate Value of current quoted investments 0.06 55.11

TOTAL 33.05 86.81

Aggregate Value of unquoted investments 0.10 0.10

Market Value of quoted investments 52.75 116.98



LIMITED Schedules


Face value No. of Units/Shares

SCHEDULE F (Contd.)

Investments Purchased and Redeemed/Sold during the year:I. Mutual Funds Units :

SBI Mutual Fund - Magnum Institutional Income Fund 10.00 216,904,068.240

Prudential ICICI Mutual Fund - Super Institutional Liquid Plan 10.00 41,209,930.150

Principal Mutual Fund - Liquid Cash Management Fund 10.00 205,243,979.220

ING Vsya Mutual Fund - Liquid Fund Institutional 10.00 15,415,686.310

HSBC Mutual Fund - Cash Fund - Institutional 10.00 6,851,633.420

Tata Mutual Fund - Liquid Fund SHIP Daily Dividend 1,000.00 411,856.610

II. Shares :

Yes Bank 10.00 10,302

Punjab National Bank 10.00 14,123

Infrastructure Development Finance Corporation 10.00 26,003

As at As at31/03/2006 31/03/2005

Rs. in lacs Rs. in lacsSCHEDULE G

INVENTORIES

(As Certified by the Management)

(Refer Note A-6 of Schedule N)

Stores, Spare Parts, Fuel 2,760.54 1,726.04

Packing Materials (at or below cost) 18.81 10.08

Mercury on hand & in process 210.85 201.60

STOCK-IN-TRADE

Raw materials on hand & in transit 3,239.82 3,150.35

Finished Goods 5,661.41 2,788.55

Stock in process 100.15 56.77

Packing Drums & Scrap 31.22 24.25

Coke dust, Gypsum 52.43 14.55

Stock of Traded Goods 5.34

Shares (Refer Statement below) 8.25 8.06

TOTAL 12,083.48 7,985.59



LIMITEDSchedules


Investment in shares (Stock-in-trade)As at 31/03/2006 As at 31/03/2005

Face No. of Amount No. of Amount

Value per Shares Rs. in Shares Rs. inParticulars Share Rs. lacs lacs

Quoted

Reliance Industries Ltd. 10 553 0.42 553 0.42

Reliance Capital Venture Ltd. 10 553

Reliance Communication Venture Ltd. 5 553

Reliance Energy Venture Ltd. 10 553

Reliance Natural Resources Ltd. 5 553

Grasim Industries Ltd. 10 700 2.01 700 2.01

Ranbaxy Laboratories Ltd. 5 5,426 5.60 2,713 5.60

Reliance Industrial Infrastructure Ltd. 10 1,900 0.19

IPCL 10 43 0.03 43 0.03

TOTAL 8.25 8.06

As at As at31/03/2006 31/03/2005

Rs. in lacs Rs. in lacsSCHEDULE H

Sundry Debtors (Unsecured unless otherwise stated)

(a) Over 6 months

Considered good (Secured) 30.00 30.00

Considered good 99.64 127.22

Considered doubtful 276.47 290.39

(b) Other Debts (considered good) 4,966.67 4,762.08

5,372.78 5,209.69

Less : Provision for doubtful debts 276.47 290.39

TOTAL 5,096.31 4,919.30


32/48



LIMITEDSchedules


As at As at31/03/2006 31/03/2005

Rs. in lacs Rs. in lacs

SCHEDULE L

PROVISIONS

Proposed Dividend 517.63 414.16

Tax on Dividend 72.60 54.13

Provision for Tax (net off Advance Tax and Tax Deducted at Source) 58.35 121.20

Provision for fringe benefit tax 21.00

Provision for Retirement & Other Emp. Benefits 517.33 297.30

TOTAL 1,186.91 886.79

SCHEDULE M

A. Contingent liabilities not provided for :1. Disputed Sales Tax Demands 615.75 657.28

2. Disputed Entry Tax Demands 592.64 592.64

3. Disputed Excise Demands 291.91 359.14

4. Disputed Customs Demands 58.14 142.98

5. Disputed Income Tax Demands(TDS Appeal pending before ITAT, Demand adjusted against refunddue to the company) 0.12

6. Companys contribution to ESI not made pursuant to petitions forexemption pending before High Court 79.08 79.08

7. Lease Rent, Local Cess, Land Revenue, SurchargeOctroi & Water and Electricity Charges 1,396.10 1,145.01

8. Disputed Industrial relations matters 285.98 219.43

B. Claims not acknowledged as debts : 18.13 14.58



LIMITED Schedules


SCHEDULE - N

SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31ST MARCH, 2006.

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/dimunition

in value of certain fixed assets.

2. USE OF ESTIMATES

The preparation of financial statements requires management to make certain estimates and assumptions that affect the

amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are

recognized 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 to

acquisition 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 Com

Documents

DCW Ltd. - Annual Report - 2005-2006