Mallcom (India) Ltd Management Discussions.

Your Company supporting and promoting the business interests of its members and united in the goal of protecting the health and safety of people worldwide. We share a personal and professional commitment to protect the safety and health of our employees, our contractors, our customers and the people of the communities in which we operate.

The financial year 2017-18 was an eventful year with the adoption of GST. While there were some initial hiccups that were to be expected, the implementation of the GST will act as a boon in the long term for the organized manufacturing industry across the country.

The GDP growth estimate for the fiscal year 2017-18 is at a four-year low of 6.5% in the current fiscal, the lowest under the Modi-led government, mainly due to the poor performance of agriculture and manufacturing sector, as against 7.1% in the last fiscal. In the second quarter (July-September), India made a comeback at 6.3% from a three-year low 5.7% in the previous quarter. However, massive rationalisation on as many as 178 products in November led to the fall in governments revenue, which seems to be picking up in later months.

As per the International Monetary Fund (IMF) the India could grow at 7.6% in the current year 2018, as against Chinas 6.8%, making it the fastest growing country among emerging economies. Notably, the International Monetary Fund has projected a 7.8% growth rate for India in 2019.

The global Personal Protective Equipment (PPE) market is projected to witness a CAGR of 6.6% over the forecast period. The industry is likely to expand from USD 43.2 billion in 2017 to USD 67.6 billion by 2024. The growth can be primarily attributed to the augmenting workplace safety concerns for employees. This has promoted the use of protective clothing and equipment across several industrial applications. Also, significant growth in the demand for multipurpose equipment from a diverse range of industries has fuelled market growth over the years to come.

Furthermore, numerous mandatory safety regulations imposed by international organizations such as NFPA, OSHAand NIOSH is expected to positively influence the market demand.

The market for personal protection equipment in the country is currently in its nascent stage due to lack of awareness about workforce health & safety. According to recent reports of the Govt, of India the Personal Protective Equipment (PPE) market in India will grow steadily during the next four years and post a CAGR of about 14% by 2022. The Personal Protective Equipment Manufacturing industry thrives on safety regulations. Revenue growth depends on industrial production and construction activity because these downstream markets are the largest purchasers of personal protective equipment. While construction activity lagged early in the period, heavy construction activity is expected through 2018.

Personal protection equipment find applications in industries such as construction, automotive, chemical, medical, pharmaceutical, oil & gas, steel and fabrication, etc. Construction and automotive sectors are anticipated to continue their dominance in Indias personal protection equipment market over the next five years. The high cost associated with workplace hazards, coupled with the launch of industry specific personal protection equipment by the companies are contributing towards boosting PPE adoption in India.

We are extremely enthusiastic about the opportunities in 2018 and beyond. We finished 2017 in a much stronger position than we started, with our businesses delivering on our strategic priorities and generating positive momentum across the board. We are driving growth that is rooted in the fundamental business model.

Going forward, there is an increasing shift being witnessed towards the organised sector owing to brand and quality awareness. With wider choice, product innovation and warranty, being offered by organised players, customers are putting more focus on this segment."Mallcom" enjoys a privileged position because of its high quality standard confirming to ISO 9001:2008 and strict adherence to time schedule at the most competitive prices over the decades.


The financial Statements have been prepared in compliance with the requirements of the Companies Act, 2013 and Generally Accepted Accounting Policies in India.

The Company has recorded a profit aftertax of ?985.56 Lakh during the financial year ended March 31, 2018 as against Rs. 932.62 Lakh during the financial year ended 31st March, 2017. The basic & diluted earnings per share are ?15.75 for financial year 2018 as against the basic & diluted earnings per share of Rs. 14.88 for financial year 2017.


The Personal Protective Equipment Manufacturing industry thrives on safety regulations. The Occupational Safety and Health Administration (OSHA) has continued to implement an increasing number of regulations to protect workers. As a result, more workers in hazardous conditions must use personal protective equipment to prevent injury, which has and will continue to sustain demand for industry products and mitigate industry volatility. Demand from construction and industrial growth will continue to drive demand for personal protective equipment and clothing over the five years to 2023.

As usual, your Company faces normal competition in all its businesses, from Indian as well as international companies. Mallcoms globally competitive cost positions and well crafted business strategies have enabled it to retain its market positions.

Your Company strongly believes in the brand equity and its ability to provide its customers with innovative solutions.

The SWOT analysis with respect to the company and its products is discussed below:


^ Mallcom (India) Ltd. (MIL) is one of the few established manufacturer and exporter of "Personal Protective Equipments" with unique advantage of offering maximum range of products vis-a-vis its competitors from India;

^ MIL has a long track record in the Personal Protective Equipment (PPE) Category;

^ MIL has been a rapidly growing and profit making organization and a recognized Trading House, with quality standard confirming to ISO 9001: 2008 and SA 8000:2008 Certified Company;

MIL has been assigned Long Term Debt Rating of Fitch "IND BBB" with Stable Outlook & Short Term Rating of Fitch "IND A3+" for its Working Capital Bank Borrowings by the Fitch Ratings;

MIL is a debt free company (except working capital borrowings] complying with key ratios benchmarks confirming the solid financials and liquidity position of the company providing ample opportunity for the company to leverage on its fundamentals and market reputation to expand its scale of operations to meet future demands;

^ Usage of Personal Protective Equipment (PPE) being mandatory at most of the work places both in India and abroad and rising awareness for the work safety coupled with advancement of work culture/ technology will result in consistent growth in demand for companys products;

^ The Company has a first movers advantage and strong Brand value for its products range and marketing in domestic market. Mallcom India Limited now enjoys a well diversified market spreaded all over the world offering a complete range of PPE and witnessing inward demand in both local as well as for overseas market.


^ Strategies like product innovations or modifications require investments. These strategies entail higher costs and higher risks.

^ The nature of business the company is in has been traditionally a low margin business with possibility of moderate scale of operations and lower cash accruals.

^ The weak operating profitability margins are sensitive to incentives provided to the Sector by Government of India and its agencies;

^ High working capital intensity of the business adversely effecting the liquidity position and profitability of the company;

Risks and Concerns

The Companys results are affected by competitive conditions and customer preferences.

High manpower costs, stringent labour laws and shortage of skilled workers are the major risk concern.

^ The operations are subject to risk arising from fluctuations in exchange rates with reference to currencies in which the company transacts.

Internal Control Systems and Adequacy

In order to ensure orderly and efficient conduct of business, the Company management has put in place necessary internal control systems commensurate with its size and nature of business. The internal control systems provide for well documented policies/guidelines and authorization and approval procedures. Company through its own Internal Audit Department carries out periodical Audits at all locations and functions. Some of the salient features of the Internal Control systems in vogue are:

(i) A robust ERP system connecting all plants, sales offices and Head Office to enable seamless data inflow. This is constantly reviewed from Internal Control stand point.

(ii) Preparation of annual budget for operations and services and monitoring the same against the actual at periodic intervals.

(iii) All assets are properly recorded and system put in place to safeguard against any losses or unauthorized use or disposal.

(iv) Periodic physical verification of fixed assets and all Inventories.

(v) Observations arising out of the Internal Audit are periodically reviewed at the Audit Committee meeting and follow up action taken.

(vi) Periodic Presentations made to the Audit Committee on various operations and financial risks faced by the Company and action proposed to mitigate such risks

Human Resources/ Industrial Relations

Your Company considers its brands and its people strength as its major assets. Mallcom HR structure has been designed to support the business in achieving sustainable growth and also groom the employees talents considering the future requirements. Mallcom has a formulated uniform HR Policies for all employees/ workers to define the HR functions and to make Mallcom such a place or institution where the people working has defined role and responsibilities with a sense of belongingness amongst them.

Further it has created platforms for recognizing and motivating employees for the good work they do in the organization.

The Company has established listening and feedback systems from employees through usage of 360 degree feedback for leadership team. Such feedbacks help the company to have a collaborative, open and transparent culture. During the year under review, the company has focused on motivation and health training programs.

We maintained cordial and harmonious Industrial relations in all our manufacturing units. Several HR and industrial relations initiatives implemented by the Company have significantly helped in improving the work culture, enhancing productivity and enriching the quality of life of the workforce.

For and on behalf of the Board

Ajay Kumar Mall

Managing Director & CEO


Date: 30th May, 2018

Place: Kolkata


Highlights of Financial Performance :

(Rs. in Lakhs)




2017-18 2016-17 2017-18 2016-17
Net Sales/ Income from Operations 24,560.00 25,848.80 24,523.78 25,618.30
Other Income from Operations 350.00 262.16 352.74 293.19
Total Income from Operations (1+2) 24,910.99 26,110.96 24,876.52 25,911.49
Total Expenditure 23,414.50 24,705.74 23,522.38 24,395.18
Operating Profit 2,337.47 2,171.43 2,314.84 2,394.98
Operating Margin 9.52% 8.40% 9.44% 9.35%
Depreciation 427.91 436.04 537.71 529.65
Provision for Tax 513.99 476.94 509.60 525.16
Profit/Loss after Tax 985.56 932.62 844.54 1,007.50

Cash flow analysis:

(Rs. in Lakhs)




2017-18 2016-17 2017-18 2016-17
Sources of cash
Cash flow from Operations 2,188.76 2,031.81 2,162.44 2,246.93
Non-Operating Cash flows 52.40 90.94 54.16 93.02
Increase/ (Decrease) in Cash & Cash Equivalent (51.95) (18.99) (30.91) (11.33)
Total 2,189.21 2,103.76 2,185.69 2,328.62
Use of Cash
Net Capital Expenditure 469.66 413.10 511.32 495.54
Financial Expenses 331.27 282.09 339.26 295.86
Dividend (Including Dividend Tax) 150.21 150.21 150.21 150.21
Direct Taxes Paid 463.40 582.17 469.45 598.32
Increase/ (Decrease) in Non-Current Investments (633.40) 639.77 (615.11) 639.73
Repayment of borrowings 40.52 469.11 194.90 1263.62
Net Change in Working Capital 1367.55 (432.69) 1135.66 (1114.66)
Total 2,189.22 2,103.76 2,185.69 2,328.62


Statements in the Management Discussion and Analysis describing the Companys objectives, expectations or forecast may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include global and domestic supply and demand conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.


Annual Declaration by the Chief Executive Officer (CEO) pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Schedule V to the said Regulations :-


The Members Mallcom (India) Limited

As the Chief Executive Officer (CEO) of Mallcom (India) Limited and as required under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Schedule V of the said Regulations, I hereby declare that all the Board Members and Senior Management Personnel of the Company have affirmed compliance with the Companys Code of Conduct for the financial year ended March 31, 2018.

For and on behalf of the Board
Ajay Kumar Mall
Date: 30th May, 2018 Managing Director & CEO
Place: Kolkata (DIN:00470184)