In the year 1889, a corporate entity The Delhi Cloth & General Mills Company Limited was founded. The entity was after passage of several years named as DCM Limited. A century later in the year 1989, the conglomerate that DCM was restructured into four companies through a scheme of arrangement. DCM Shriram Industries was one of four companies, which inherited the century old legacy of DCM. DCM Shriram Industries Ltd commenced its operation from 1st April, 1990. DCM Shriram Industries Ltd is a diversified company with operations in Sugar, Ethanol, tyre cord and other tyre fibers, chemicals. Company recently entered into defence production and Drone production. The company production capacity of sugarcane crushing per day expanded from 8,000 TPD to 10,000 TPD. Capacity of Tyre cord and Industrial fibers expanded from 15,700 TPA to 16,200 TPA and capacity of Organic chemicals expanded from 13,114 TPA to 13,874 TPA.
In chemicals company deals in Chemicals used for manufacturing agrochemicals, perfumes, dyes, paints, coatings, Pharma chemicals.
Company’s customers in sugar are Lupin, royal orchid, trident, oberoi group, Pepsi, Coca Cola, HUL, CCD, Park Plaza Hotels, Mac Donalds, Lavazza.
In Defence it manufactures Armoured Vehicles and other Defence equipments.
In Tyre cords and Tyre fabrics company sells its product to almost all domestic tyre companies and its exports to some western tyre companies also. Company produces Industrial technical tyre yarn, cord and fabric/chafer for tyres. It also produces fabric used for applications like stitching cord, reinforcing materials for V-belts.
Besides this company also manufactures shipping containers.
SECTOR STUDY:
1)Sugar and Ethanol:
Total production of Sugar in India is around 34 million tonnes, surplus stock of previous year is around 8 million tonnes, domestics consumption is around 28 million tonnes plus exports are at around 8-9 million tonnes (which are less than 10 million tonnes). So total surplus sugar for next season will be around 5-6 million tonnes. So no need to worry about recent government’s export curb on sugar for more than 10 million tonnes.
Out of Total Canes dues payable of Rs 91,468 crores, about Rs 74,149 crores have already paid to sugarcane farmers. It is expected that in current sugar season cane price payment of more than Rs 1,00,000 crores will be made by sugar mills to sugarcane farmers.
Consumption volume of sugar across India from 2015 to 2021 (in million metric tons)
| Year | Consumption Volume |
| 2015 | 26.5 |
| 2016 | 26.8 |
| 2017 | 25.5 |
| 2018 | 26.5 |
| 2019 | 27.5 |
| 2020 | 27 |
| 2021 | 28 |
| 2022* | 28.6 |
Total sugar production worldwide from 2009/2010 to 2020/2021 (in million metric tons)*
| Year | Sugar Production |
| 2010 | 153.4 |
| 2011 | 162.1 |
| 2012 | 172.4 |
| 2013 | 177.85 |
| 2014 | 175.90 |
| 2015 | 178.22 |
| 2016 | 164.87 |
| 2017 | 174.03 |
| 2018 | 194.6 |
| 2019 | 179.66 |
| 2020 | 166.29 |
| 2021 | 179.86 |
| 2022* | 185.54 |
Sugar Production Worldwide in 2021, by leading country (in million metric tons)
| Country | Production |
| Brazil | 42.05 |
| India | 33.76 |
| Europe | 14.72 |
| China | 10.5 |
| United States | 8.44 |
| Thailand | 7.57 |
| Mexico | 6.18 |
| Pakistan | 6.01 |
| Russia | 5.75 |
| Australia | 4.34 |
Total sugar consumption worldwide from 2010 to 2021 (in million metric tons):
| Year | Sugar Consumption |
| 2010 | 154.1 |
| 2011 | 155.8 |
| 2012 | 159.6 |
| 2013 | 165.66 |
| 2014 | 165.66 |
| 2015 | 167.87 |
| 2016 | 169.27 |
| 2017 | 170.82 |
| 2018 | 173.27 |
| 2019 | 172.62 |
| 2020 | 170.84 |
| 2021 | 171.9 |
| 2022* | 174.41 |
India’s surplus Sugar stock has reduced from 14.5 million tonnes in 2019 to 8.5 million tonnes now. India’s surplus sugar will come down to less than 1 million tonne in next 4-5 years due to ethanol blending. Diversion of sugar for ethanol making has increased in last three years in India. Around 3,36,000 tonnes of sugar was diverted for ethanol in 2019, 9,26,000 tonnes was diverted in 2020, 22,00,0000 tonnes was diverted in 2021 and 35,00,000 tonnes was diverted in current year. Around 60 lakh tonnes of sugar is estimated to be diverted for ethanol manufacturing by 2025. Its nice to see that surplus sugar of India is reducing every year.
Total sugar produced around the globe in 2022 season was around 185.54 million metric tonnes and total sugar consumption around the globe was estimated at 175.2 million metric tonnes. So surplus of around 10 million metric tonnes. Many countries have told to blend 20% Ethanol in petrol. Ethanol blending policy will help to reduce the surplus stocks of sugar around the globe and plus ethanol blending will help many countries to save some money on crude imports.
India’s Ethanol market demand stood at 3,250 million litres in 2021 and is forecast to reach 5,412.06 million litres by 2030, growing at a CAGR of 8.25%. India is set to overtake china to become world’s third largest ethanol market by 2026. Asia is set to overtake Europe in terms of biofuel Production by 2026. Annual global demand for biofuels is set to grow by 28% from 2021 levels by 2026 reaching 186 billion litres. Asia is seen to account for almost 30% of new biofuel production.
Consumption volume of ethanol as fuel in India from 2011 to 2021 (In Million Liters)
| Year | Consumption |
| 2011 | 356 |
| 2012 | 305 |
| 2013 | 382 |
| 2014 | 350 |
| 2015 | 685 |
| 2016 | 1,110 |
| 2017 | 675 |
| 2018 | 1,500 |
| 2019 | 1,890 |
| 2020 | 1,730 |
| 2021 | 2,700 |
India needs to increase ethanol production three times compared to current level to achieve the target of 20% ethanol blending by 2025. Ethanol production in India was around 335 crore litres in 2021. This resulted in around 9% ethanol blending in petrol. To achieve 20% ethanol blending, India will require to meet an ethanol production target of 10-11 billion litres. Of which around 7 billion litres will come from sugarcane and rest will come from corn and granes.
The global production of ethanol touched 110 billion litres. USA and Brazil contributed 92 billion litres (84% of global share) followed by Europe, China, India, Canada and Thailand. Brazil legislated that the ethanol content in gasoline sold in country should be in range of 18% to 27.5% which is currently at 27%. Concurrently, the use of 100% hydrous ethanol by flex fuel vehicles in Brazil has increased the average share of ethanol in transportation to 46%.
CURRENT FUEL ETHANOL PRICE COMPARISON WITH OTHER COUNTRIES:
| Country | Price in US$ per Litre |
| USA | 0.65 |
| Brazil | 0.63 |
| Thailand | 0.70 |
| India | 0.79 |
Quantity Supplied (Ethanol) and %Blending Trends in India:
| Year | Quantity Supply (Crore Litre) | Blending% |
| 2013-14 | 38 | 1.53 |
| 2014-15 | 67.4 | 2.33 |
| 2015-16 | 111.4 | 3.51 |
| 2016-17 | 66.5 | 2.07 |
| 2017-18 | 150.5 | 4.22 |
| 2018-19 | 177.6 | 5 |
| 2019-20 | 173 | 5 |
| 2020-21 | 332 | 8.5 |
Supply of ethanol in India has increased by 91% in 2021 from 2020.
Administered Price of Ethanol by Source:
| Raw Material | Ethanol Price (Rs per Litre) |
| B-heavy | 57.61 |
| c-heavy molasses | 45.69 |
| Sugar/Sugar Syrup | 62.65 |
| Damaged food grains/maze | 51.55 |
| Surplus rice | 56.87 |
DEMAND PROJECTION OF FUEL ETHANOL IN INDIA:
The projected requirement of ethanol based on petrol (gasoline) consumption and estimated average ethanol blending targets for the period 2020-21 to 2025-26 are calculated below:
| Year | Projected Petrol Sale (Cr Litre) | Ehanol Blending (%) | Requirement of Ethanol in Petrol (Cr Litre) |
| 2019-20 | 3413 | 5 | 173 |
| 2020-21 | 3908 | 8.5 | 332 |
| 2021-22 | 4374 | 10 | 437 |
| 2022-23 | 4515 | 12 | 542 |
| 2023-24 | 4656 | 15 | 698 |
| 2024-25 | 4939 | 20 | 988 |
| 2025-26 | 5080 | 20 | 1016 |
Ethanol production from sugar and maze/grains for 20% blending by 2025-26 (In Cr Litre):
| Raw Material | Fuel Ethanol | Other Uses | Total |
| Sugar Sector | 550 | 134 | 684 |
| Grain/Maze | 466 | 200 | 666 |
| Total Supply | 1016 | 334 | 1350 |
Ethanol Capacity augmentation (20% blending by 2025-26)
| Particulars | Molasses based | Grain based | Total |
| Existing ethanol/alcohol capacity | 426 (231 distilleries) | 258 (113 distilleries) | 684 |
| Capacity addition from sanctioned projects | 93 | 0 | 93 |
| New capacity to be added | 241 | 482 | 723 |
| Total Capacity required by Nov 2026 to reach 1350 Cr litres supply | 760 | 740 | 1500 |
The ethanol storage capacity (crore litres) as per the current tankage and additional tankage planned by OMCs:
| Companies | Current tankage | Work in progress of new tankage | Total Capacity |
| IOC | 6.5 | 12.5 | 18.6 |
| BPC | 4.5 | 7.4 | 11.9 |
| HPC | 6.8 | 6.94 | 13.74 |
| Total | 17.80 | 26.84 | 44.64 |
OMC’s are installing ethanol storage tanks from current capacity of 17 crore litres to 44 crore litres by 2025. With current capacity, about 430 crore litres of ethanol can be handled annually considering 15 days of coverage period. Similarly, with total tank capacity of 44 crore litres by 2025, about 1060 litres of ethanol can be handled annually considering 15 days of coverage period.
To achieve target of 20% ethanol blending India will need an investment of Rs 41,000 crore to set up distilleries.
GOVERNMENT POLICIES SUPPORTING SUGAR AND ETHANOL SECTOR:
1)Bringing flex fuel vehicles in six months.
2) National biofuel policy: to achieve 20% ethanol blending by 2025 under make in India Program.
2) TYRE CORD, TYRE YARN AND TYRE FABRIC MARKET:
Global tyre cord and tyre fabrics market size was valued at $4.5 billion in 2018 and is estimated to over over 6.1% CAGR to reach $7.2 billion by 2026. And is expected to reach $9.4 billion by 2032.
Tyre cords are class of fabrics that are produced using superior quality yarns. These cords provide excellent properties such as abrasion, resistance, controlled deformation, high tensile strength hence are used in tyre industry. Based on automotive industry, the tyre cord and tyre fabrics market is categorized into heavy commercial vehicles, light commercial vehicles, passenger car, off road vehicles and two vehicles.
Radial tyres reduces the fuel consumption by 40%. Tyre manufacturing association says over 85% of passenger vehicle and over 35% of commercial vehicles uses radial tyres. Radial tyres cannot be made without tyre cords or tyre yarn. Growing need for reduction in fuel consumption mainly in commercial vehicles will increase the overall demand of tyre cord and tyre fabric demand because in commercial vehicles only 35% of the owners use radial tyres. This figure will increase upto 85-90% in coming years.
Indian tyre market reached a volume of 182 million units in 2021 and is expected to reach 221.8 million units by 2027. India’s two wheeler tyre market was at around $2.11 billion in 2021 and is expected to reach $3.94 billion by 2027 growing at a CAGR of 10.53%. India is fourth largest tyre market in the world after China, Europe and U.S.
Raw materials required to produce tyres:
| Raw Materials | Percentage |
| Natural Rubber | 47 |
| Carbon Black | 24 |
| Tyre Cord Fabric | 11 |
| Styrene Butadiene Rubber | 5 |
| Poly Butadiene Rubber | 5 |
| Chemicals | 5 |
| Others | 3 |
Indian tyre industry contributes 5% of total Indian GDP. Tyre cord and tyre fabric contributes around 11% in raw materials required for tyre manufacturing. The segmentation of tyres can be divided in two ways:
| Year | Replacement | OEM + Export |
| 2012 | 62% | 38% |
| 2020 | 70% | 30% |
Tyre consumption segment wise :
| Vehicle | Global | India |
| Truck & Bus | 28% | 55% |
| Passenger Vehicles | 58% | 22% |
| 2/3 wheeler | 14% | 13% |
| Off high tyres & others | 7% | 10% |
Shift towards Radialization:
In India, only passenger cars have high radicalization of tyres.
Radialisation by vehicle types in India is as follows:
| Vehicles | Radial Tyres (%) |
| Truck & Buses | 36 |
| Light Commercial Vehicles | 40 |
| Passenger cars | 98 |
In India trucks and buses contribute around 55% of total tyre consumption, but only 36% of trucks and buses and 40% of light commercial vehicles use radial tyres. This clearly shows India has low penetration of radial tyres for buses, trucks and LCV. To improve quality life of tyres and to increase fuel efficiency trucks, buses and LCV owners will switch to radial tyres. And radial tyres cannot be made without tyre cord or tyre fabric. This shows demand of tyre cords or tyre fabric will increase in India in coming years.
Market size of Tyre Industries in India (Figures in billion Rupees):
| Year | Market size |
| 2015 | 595 |
| 2026 | 2074 |
Global Tyre Investments (Figures in %):
| Countries | Percentage |
| China | 18 |
| Thailand | 8 |
| India | 6 |
| Vietnam | 5 |
| Indonesia | 2 |
| Rest Of Asia | 6 |
| North America | 27 |
| Europe | 17 |
| Africa/Middle East | 9 |
| South America | 1 |
The global demand for tyres almost attained 3,378.96 million units and it is expected to reach 4,111.02 million units in 2025.
The tyre companies are planning to increase the capex by around Rs 5,000 crores from Rs 3,700 crores in last two years. This is one more positive sign for Tyre cord and tyre fabric market.
Tyre sector is directly related to automobile sector so it is necessary to study automobile sector also.
India’s $222 billion automobile sector is expected to reach $300 billion by 2026. India’s vehicle penetration is expected to reach 72 vehicles per 1,000 people by 2025. This shows India’s vehicle penetration is low as compared to other countries. But this vehicle penetration will not remain low throughout the life. The figure of vehicle penetration will increase as per capita income will go on increasing.
Global Automotive Demand Forecast (Figures in Million units):
| Country | 2021 | 2022 | 2023 | 2024 |
| U.S | 15.08 | 16 | 17.70 | 17.60 |
| Canada | 1.64 | 1.68 | 1.84 | 1.86 |
| Mexico | 1.01 | 1.09 | 1.21 | 1.27 |
| Europe | 13.76 | 13.08 | 13.98 | 14.11 |
| Japan | 4.45 | 4.62 | 4.99 | 4.92 |
| North Korea | 1.71 | 1.70 | 1.70 | 1.70 |
| Australia | 1.01 | 1.09 | 1.14 | 1.15 |
| Brazil | 1.98 | 2.01 | 2.19 | 2.30 |
| Russia | 1.67 | 0.50 | 0.53 | 0.55 |
| India | 3.55 | 4.31 | 4.75 | 5.24 |
| China | 26.27 | 26.88 | 26.55 | 27.36 |
| Thailand | 0.77 | 0.91 | 0.99 | 1.04 |
| Indonesia | 0.89 | 1.02 | 1.12 | 1.19 |
| Malaysia | 0.51 | 0.59 | 0.60 | 0.61 |
| Argentina | 0.36 | 0.41 | 0.44 | 0.46 |
| South Africa | 0.46 | 0.51 | 0.53 | 0.55 |
| Turkey | 0.74 | 0.76 | 0.80 | 0.82 |
India’s Automobile demand is going to increase from 3.55 million units in 2021 to 5.24 million units in 2024. This will increase the tyre demand and increase in tyre demand will increase the demand of tyre cords and tyre fabrics.
At present global automobile market is down just because of semiconductor shortage. Semiconductor shortage will not remain down throughout the life. It is just the matter of time around 6 months to 1 year. After that shortage of semiconductor will began to ease. Once the shortage of semiconductor began to ease sale of automobiles will start increasing and once the sale of automobile increases it will increase the sales of tyres. Increase in sales of tyres will increase the sales of tyre cords and tyre fabrics.
India becomes fourth largest tyre market in world, beats Germany.
Commercial Vehicles Retail Sales Growth:
| Company | April 2022 | April 2021 | Growth (%) |
| Tata Motors | 33,581 | 21,816 | 53.93 |
| Mahindra & Mahindra | 16,857 | 9,783 | 72.31 |
| Ashok Leyland | 12,284 | 8,193 | 49.93 |
| VECV | 5,446 | 3,411 | 59.66 |
| Maruti Suzuki | 3,487 | 2,447 | 42.50 |
| Daimler | 1,577 | 1,248 | 23.36 |
| Force Motors | 838 | 539 | 55.47 |
| SML Isuzu | 808 | 494 | 63.56 |
| Others | 3,520 | 3,584 | -1.79 |
Commercial vehicles sales increased by 52.18%. This shows demand of commercial vehicles are increasing and it will cross the pre-pandemic levels soon.
GOVERNMENT POLICIES SUPPORTING TYRE SECTOR:
In move to boost domestic companies, the government of India introduced a ban on import of tyres. The restriction was laid upon the import of tyres for cars, buses, trucks and motorcycles. Both normal tyres and radial tyred were banned from import.
3) CHEMICAL SECTOR:
Indian Chemical sector was at $178 billion in 2020 and is expected to reach $304 billion by 2026 growing at a CAGR of 9.3% with global companies seeking de-risk their supply chains which are dependent on China, the chemical sector in India has the opportunity for a significant growth. An investment of Rs 8 lakh crore will be required in Indian chemical sector by 2025. This shows Indian chemical sector has huge potential to grow.
Market Size of Indian Chemical Sector (Figures in US$ billion):
| Year | Market Size |
| FY19 | 178 |
| FY20 | 194.6 |
| FY21 | 212.8 |
| FY22 | 232.6 |
| FY23 | 254.3 |
| FY24 | 278.1 |
| FY25 | 304 |
Global chemical market is expected to grow from $3340.32 billion in 2020 to $4304.71 billion in 2025.
DCM SHRIRAM INDUSTRIES produces chemical used for manufacturing Pharmaceuticals, agrochemicals, paints, dyes, coatings and perfumes.
a)Indian Pharmaceuticals market will grow to $130 billion by 2030 from $42 billion in 2021.
b) Indian paints and coating sector will grow at a CAGR of 9-10% by 2026. By 2025 the construction industry in India may emerge as the third largest on global levels. So more paints will be required.
c) The Agrochemical market in India is expected to grow at 8% CAGR reaching $4 billion by 2025.
d) The Indian Perfume market is valued at just 500 million as compared with $24 billion global perfume industry. This shows India’s perfume industry is highly undervalued.
All this shows DCM Shriram Industry has good opportunity to increase its chemical business operations.
China +1 Strategy:
Apart from rising labour cost, stricter implementation of pollution control measures and withdrawal of subsidies have eroded China’s cost advantage. Relocation of toxic manufacturing plants to dedicated industrial parks, along with higher operational and capital costs have hit the operations of Chinese chemical companies, resulting in large supply chain disruption in the Industry. This has led to global chemical companies seeking to diversify procurement away from China.
Apart from reducing export incentives, the Chinese government’s introduction of a green tax based on the quantity of solid waste produced in the manufacturing process, will significantly reduce the profitability of Chinese manufacturers and will discourage the new entrants. India is emerging as a structural beneficiary of the China +1 diversification model. Beyond the labour cost advantages, a large pool of technical qualified manpower, strict adherence to global manufacturing standards and strong protection of IP rights have led to rapid scaling up of the chemical Industry in India.
4) DEFENCE SECTOR:
Defence Production In India (Figures in US$ Billion):
| Year | Production |
| 2019 | 11 |
| 2025 | 25 |
India’s defence and aerospace manufacturing is worth Rs 85,000 crore with private investment of Rs 18,000 crore. Government aims to increase investment to Rs 1 lakh crore in 2022 and Rs 5 lakh crore by 2035. Government has order defence equipment of worth 58,000 crore to Indian companies. Government is trying to increase this figure to Rs 4.5 lakh crore by 2027-2029. Defence ministry has set a target of 70% self-reliance in weaponry by 2027, creating huge prospects for defence industry players. Armed forces spent 64% of FY22 funds on defence equipments made in India.
Defence Production in India by Sector (%):
| Sector | Percentage |
| DPSUs+OFB | 67 |
| Other PSUs and JVs | 8 |
| Private companies | 25 |
GOVERNMENT POLICIES SUPPORTING DEFENCE SECTOR:
Make in India: Indian government has introduce three bills which specifies the defence items which are banned from imports. The three list contributes around 60-70% of total defence equipments which are banned from imports. Government wants to boost Indian defence manufacturing to cut huge costs on defence imports.
In 2019 DCM Shriram Industries has obtained license from government to manufacture defence equipments.
5) DRONES:
Global drone market is at $25.47 billion dominated by U.S, Israel and China. India accounts for only 4% share of global drone market. Global drone market is expected to grow from $25.47 billion in 2021 to $501.4 billion by 2028 growing at a CAGR of 57.5%. Drone sector will be the fastest growing sector around the globe. Indian drone market is expected to reach around $40.7 billion by 2027.
Drone Usage By Industry Sector (Figures in %):
| Sector | Usage |
| Defence | 35.5 |
| Mining Industry | 3.40 |
| Telecommunication | 5 |
| Insurance | 5.30 |
| Media | 6.90 |
| Safety | 8.20 |
| Transportation | 10.20 |
| Agriculture | 25.50 |
Uses of Drones:
a)Agriculture: The world’s population will reach a massive 9.7 billion by 2050, causing agriculture consumption to rise 69%. Popular application of drones in agriculture include crop and livestock monitoring, irrigation management, and fertilization. Drone can spray fertilizer 40 to 60 times faster than doing it manually.
b) Mining and Construction: Many countries had made law to supervise construction and mining sites for safety of workers. So many construction companies supervise their sites regularly. Manually supervision on sites takes place around 6-7 hours a day but with drone technology it can be done within just 15 minutes.
c) Drones in Insurance: whenever natural calamity or accident takes place people claim insurance. Physically inspection of site after natural calamity takes around 6-7 days since the place gets disconnected from modes of transportation. But drones and easily go to the place and can click the pictures of the affected place within just 1-2 hours. So drone can help to settle the insurance claim fast.
d) Drones in E-commerce: E-commerce market in India is going to touch around $110 billion by 2025. In Today’s E-commerce industry good service is main point to attract customers. Good in E-commerce means fast delivery. The company which delivers the good fastest will get more orders from customers. For delivering goods faster drones are perfect example. With drone technology product deliveries can happen less than 30 minutes in urban areas. With multiple warehouses in metros, E-commerce companies can cover every inch of the city and can offer 30 minutes deliveries for most of its products. This would be specially helpful during festive seasons and big sale days.
e) Drones in Medical: utilization of drones to bring quality healthcare to Indian in the remotest areas seems to be realty now. Redcliffe labs has come up with its first commercial drone flight in India’s healthcare sector for blood sample collections. The company has recently opened its commercial drone corridor between Uttarkashi and Dehradun. Uttarkashi to Dehradun by road is around 144 kms, 6-8 hrs by road and 12 hrs during landslide. But using drone technology this distance was covered in 88 minutes. Faster the transportation of blood samples faster will be the report of diagnostics. This can help to save life of people living in remote areas.
f) Measuring land: The drone technology in the SVAMITVA scheme launched by the government of India, within less than a year has helped about half a million village residence to get their property cards by mapping out the abadi areas.
h) Drones in Defence: Drones can create supply chain that get to the troops without delay. When war zones and stations are hard to reach, drones come into play and take out conventional logistical method. Drones can carry arms and ammunition at war site in less time as compared to physically transporting arms and ammunition. Some borders are not reachable due to high altitude and rough weather. At such borders drones are used to protect the borders. Drones can be used for strikes and combat. Indian army is also using drones to supply booster doses of covid-19 vaccines to the troops in snowbound areas of Jammu and Kashmir.
Drone market is not just a sector but it can be a whole ecosystem.
India is going to need 1 lakh drone pilots. Government of India wants drones to be as common as mobile phones. India has potential to become global drone hub.
In 2019 DCM Shriram Industries obtain license from government to produce drones in India. Company recently has acquired 30% stake in Turkish drone company called Zyrone Dynamic. Recently management of DCM Shriram Industries said that company is focusing on developing and manufacturing versatile drones that will not just target defence sector but almost all sectors. Company will manufacture drones completely in India. Company has research and development facility in Delhi. Company said it will not take time to scale up its manufacturing capability of drones once it gets the orders. Currently drone product is at testing stage. Company said in next few weeks they will be sending their drones for proper qualitative trials.
GOVERNMENT POLICIES SUPPORTING DRONE SECTOR:
1)Drone Shakti: Government plans to implement use of drones in almost all sector.
2)Reduction in license fees irrespective of drone size.
3) No pilot license required for non-commercial micro drones and nano drones.
4) Relaxation on various approvals and certificates pertaining to conformance, manufacturing, airworthiness, maintenance, import clearance, acceptance of existing drones, operator permit, authorization of R&D organization and student remote pilot license.
5) Abolition of approvals such as unique authorization number and unique prototype identification number.
6) Type certificate and unique identification number required only for drones operating in India, but exemption granted for drones that are imported or manufactured only for export purposes.
7) Drone corridors to be developed for cargo deliveries.
8) Revoked flight permission requirements up to 400 ft in green zones and up to 200 ft in the area ranging 8-12 kms from the airport perimeter. Green zones refer to airspace up to vertical distance of 400 ft.
9) Digital sky platform will be launched as a single-window online system to ease business operations and streamline process. An interactive airspace map will be launched on platform, showing red, green and yellow zones specifying the operations of drones.
10) Easy process of transfer and deregistration of drones.
11) Maximum penalty for violations has been reduced to Rs 1 lakh.
12 PLI Scheme: The central government notified PLI scheme for drones and drone components. Under this scheme, a total incentive of Rs 120 crore is spread over the three financial years which is nearly doubled the combination turnover of all domestic drone manufacturing companies in FY2020-21.
6) SHIPPING CONTAINER:
Indian container market size was estimated at $9.5 billion in 2020 and is expected to reach $10.3 billion by 2028.
DCM Shriram Industries also produces shipping containers.
Company is increasing its tyre cord or tyre fabric production capacity and it is also increasing its ethanol production by setting up new distillery.
Financials (Figures in Rs Crore wherever applicable):
| 2018 | 2019 | 2020 | 2021 | 2022 | |
| Net sales | 1,704 | 1,689 | 1,794 | 1,943 | 2,123 |
| EBITDA | 81.41 | 96.19 | 117.66 | 123.31 | 109.91 |
| Net Profit | 57 | 74 | 95 | 66 | 65 |
| Debt To Equity | 0.91 | 0.87 | 0.95 | 0.67 | 0.82 |
| ROE | 13.52 | 15.02 | 17.13 | 10.49 | 9.85 |
Market Cap of DCM Shriram Industries is around Rs 615 crore and its annual sales is Rs 2,123 crore. Company’s sales is 3.5 times more than its market cap. Coompany’s PE is around 9.32 and its EPS is around 7.61.
The above report of DCM SHRIRAM INDUSTRIES was made on 20th June 20, 2022 at CMP of Rs 70.90