Pearl Global Industries Ltd Directors Report.

To the Members,

Your Directors are pleased to present the 27th Annual Report and Audited Financial Statements for the financial year ended 31st March 2016, together with the Auditors’ Report thereon.

WORKING RESULTS OF THE COMPANY (STANDALONE)

(Rs. in Crore)
Particulars 2015-16 2014-15
Income from operations 768.18 623.99
Other Income 32.68 27.82
Profit before Tax 18.72 15.17
Provision for Tax 5.41 4.95
Profit After Tax 13.31 10.22
Transfer to General Reserves - -

WORKING RESULTS OF THE COMPANY (CONSOLIDATED)

(Rs. in Crore)
Particulars 2015-16 2014-15
Income from operations 1,393.41 1,023.74
Other Income 25.18 24.05
Profit before Tax 47.26 34.21
Provision for Tax 10.73 9.90
Profit After Tax 36.53 24.31
Minorities Share in (Profit)/Loss 0.13 0.75
Profit for the year 36.66 25.06

STATE OF THE AFFAIRS OF THE COMPANY

During the year, your Company’s consolidated income from operations was Rs. 1,393.41 Crore as against Rs. 1,023.74 Crore in the previous year and Net Profit increased by 46.29% to Rs. 36.66 Crore as against Net Profit Rs. 25.06 Crore in the previous year.

The income from operations for the year under review for the Company on Standalone basis was Rs. 768.18 Crore as compared to Rs. 623.99 Crore in the previous year and Net Profit increased by 30.23% to Rs. 13.31 Crore as compared to Net Profit Rs. 10.22 in the previous year.

Your Company has adopted market strategy based on the changing dynamics of growth in the world economy as it is necessary to ensure sustained growth of exports. We must establish new beachheads and strengthen our presence in newly opened up markets. The company has leveraged its experience and expertise in cost competitiveness in channelizing the business through its manufacturing or outsourcing activities based on buyers requirements.

Our main market in the USA looks relative healthy with both employment and consumption on a steady rise. We expect our business into USA to grow consistently over near term. Simultaneously, we expect to continue our steady penetration into other markets, allowing us to use our capacity in lean seasons and so gradually improve our ROIs. We also intend to strengthen our existing association with various apparels brands by becoming a larger, more service oriented vendor-partner to them.

We are geographically well positioned to produce from the most cost effective supply bases in Asia, keeping us highly competitive and relevant to our customers. We expect to maintain and step up our Profitability from superior value added products and meticulous management of our costs and processes.

DIVIDEND

Your Directors have declared an interim dividend Rs. 2.50/- per Equity Share of Rs. 10/- each for the financial year 2015-16, amounting Rs. 541.60 Lacs (exclusive of dividend distribution tax). The above interim dividend have been paid to those members, whose name appears in the register of members and beneficial owners, as per details received from NSDL and CDSL as on record date 21st March, 2016. The payment of interim dividend has completed on 31st March, 2016.

The Board of Directors also recommend a final dividend Rs.0.50 per equity share for the year 2015-16 amounting to Rs.1,08,31,968.50 (exclusive of tax on dividend).The final dividend payout is subject to approval of the members at the ensuing Annual General Meeting.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of your Company, Mrs. Shefali Seth and Mr. Vinod Vaish, Directors, would retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The Board of Directors have re-appointed Mr. Pulkit Seth as Managing Director of the Company for a further period of three years, with effect from 1st June, 2016 to 31st May, 2019. The Resolution for his re-appointment is proposed in the Notice calling the 27th Annual General Meeting.

The Board of Directors have re-appointed Mr. Vinod Vaish, as Whole-Time Director of the Company for a further period of two years, with effect from 19th October, 2016 to 18th October, 2018. The Resolution for his re-appointment is proposed in the Notice calling the 27th Annual General Meeting.

The Board of Directors of your Company met five times on May 22, 2015, August 11, 2015, November 09, 2015, February 12, 2016 and March 11, 2016 during the financial year 2015-16.

DIRECTORS’ IDENTIFICATION NUMBER (DIN)

The following are the Directors Identification Number (DIN) of your Directors:

Mr. Deepak Seth - 00003021 Mr. Chittranjan Dua - 00036080
Mr. Pulkit Seth - 00003044 Mr. Samar Ballav Mohapatra - 00327410
Mrs.Shefali Seth - 01388430 Mr. Rajendra Kumar Aneja - 00731956
Mr. Anil Nayar - 01390190 Mr. Vinod Vaish - 01945795

The Company has received necessary declaration from each independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence as laid down in Section 149(6) of the Companies Act, 2013.

The Company has Nomination and Remuneration Committee as required under Sub-Section (1) of Section 178 of the Companies Act, 2013 Comprising three non-executive Independent Directors, Mr. S.B. Mohapatra, Chairman, Mr. Rajendra Kumar Aneja and Mr. Anil Nayar, Members of the Committee. The Company has also formulated a Policy for performance evaluation of Board, Committees, Independent Directors and other individual Directors which included criteria for performance evaluation of the non-executive directors and executive directors.

The Nomination and Remuneration Policy of the Company is annexed herewith as ANNEXURE-I with this report.

BOARD EVALUATION

The Board of Directors has carried out an annual evaluation of its own performance, committees and individual Directors pursuant to the provisions of the Companies Act, 2013 and Rules made there under.

The performance of the Board was evaluated by the Board After seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc.

The performance of the committees was evaluated by the Board After seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as the contribution of the individual Director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of independent Directors, performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of Executive Directors and Non-Executive Directors. The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its committees and individual Directors was also discussed.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal control system commensurate with the size, scale and complexity of operations. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

AUDIT COMMITTEE

The Audit Committee comprises two Independent Directors, namely Mr. Anil Nayar, Chairman, Mr. S.B. Mohapatra, Member and one executive Director, Mr. Vinod Vaish, as Member of the Committee. All the recommendations made by the Audit Committee were accepted by the Board.

VIGIL MECHANISM

The Company has set up a Vigil Mechanism, which also incorporates a whistle blower policy in terms of Listing Agreement/Regulations made by the SEBI. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone no. or a letter through to the Vigilance Officer or to the Chairman of the Audit Committee. The policy on vigil mechanism and whistle blower policy may be accessed on the Company’s website at the link: http:// pearlglobal.com/investors/policy

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility Committee of the Company has formulated a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board.

The CSR Policy may be accessed on the Company’s website at http://pearlglobal.com/investors/policy

Your Company has identified an area of education for underprivileged children for engagement under CSR activities. The Company had earmarked Rs. 15.00 Lakh for spending on the area of education for the financial year 2014-15, which was fully utilised. The Company has earmarked Rs. 24.76 Lakh for spending on the area of education in the financial year 2015-16 and would be utilised in due course, on need base.

The Annual Report on CSR activities is annexed herewith as ANNEXURE-II.

SUBSIDIARY COMPANIES

During the year under review, no Company have become or ceased to be Company’s subsidiaries, joint ventures or associates Companies.

The subsidiaries assist our Company in providing one shop stop to our preferred long term vendors, thereby having an edge over competitors. Their contribution to the Company’s performance is as evident from the consolidated results of the Company.

Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of the subsidiary companies is attached to the Financial Statements in Form AOC-1. The Company will make available the said financial statements and related detailed information of the subsidiary companies upon the request by any member of the Company.

These financial statements will also be kept open for inspection by any member at the Registered Office of the Company. The financial statements of the Company, consolidated financial statements along with the relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.

The Policy of determining material subsidiaries as approved may be accessed on the Company’s website at http:// pearlglobal.com/investors/policy

AUDITORS

In terms of Section 139 of the Companies Act, 2013, M/s S. R. Dinodia & Co. LLP, Chartered Accountants, (Regn. No. 001478N/N500005), New Delhi, were appointed by the Members in its 25th Annual General Meeting held on 26th September, 2014 as Statutory Auditors of the Company for a period of three years. A Resolution for ratification of their appointment as Statutory Auditors is proposed in the Notice calling the 27th Annual General Meeting.

SECRETARIAL AUDITOR

The Board has appointed Mr. Deepak Somaiya, Practising Company Secretary, proprietor of M/s. Deepak Somaiya & Co., to conduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report for the financial year 2015-16 is annexed herewith as ANNEXURE-III. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

INTERNAL AUDITOR

The Board has appointed M/s. Narula & Gupta, Chartered Accountants, New Delhi (FRN 013532N), as Internal Auditor for the financial year 2015-16.

EXTRACTS OF ANNUAL RETURN

Extract of Annual Return of the Company is annexed herewith as ANNEXURE-IV to this Report.

RELATED PARTY TRANSACTIONS

Particulars of Contracts or Arrangements with Related Parties referred to in Section 188(1) of the Companies Act, 2013 in Form AOC-2 is annexed as ANNEXURE-V.

A disclosure on related party, as required under Regulation 34(3) read with Schedule V of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 is annexed as ANNEXURE-VI.

PARTICULARS OF LOANS, GUARANTEES AND LISTING INVESTMENTS

Particulars of Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 is annexed as ANNEXURE-VII.

FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits from Public or Shareholders during the year, nor has any unclaimed or unpaid deposits at the end of the financial year.

RISK MANAGEMENT

The Company has implemented procedures and policies in place for risk management including identifying risk which may threaten the existence/operations of the Company.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 (5) of the Companies Act, 2013, with respect to Directors Responsibility Statement, your Directors state that:

a) in the preparation of the annual accounts for the financial year ended 31st March 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures. There are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 31st March, 2016 and of the Profit and loss of the Company for that period;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a ‘going concern’ basis;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

The shares of your Company are listed at BSE Limited and National Stock Exchange of India Limited, Mumbai. The listing fees to the Stock Exchanges for the year 2015-16 have been paid.

REGISTRAR AND SHARE TRANSFER AGENT

Link Intime India Pvt. Ltd is Company’s Registrars and Share Transfer Agent (RTA) as common agency both for physical and demat shares, as required under Securities Contract (Regulation) Act, 1956. The detail of RTA forms part of the Corporate Governance Report.

CORPORATE GOVERNANCE

Report on Corporate Governance along with the certificate of the Auditors, confirming compliance of conditions of Corporate Governance as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of the Annual report.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed review of operations, performance and future outlook of the Company is given separately under the head "Management Discussion and Analysis".

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The details as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is annexed as ANNEXURE-VIII to this report.

Particulars of employees as required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is annexed as ANNEXURE-IX to this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 134(3)(m) is annexed as ANNEXURE-X to this report.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

REPORT ON SEXUAL HARASSMENT-INTERNAL COMPLAINTS COMMITTEE

Pursuant to the provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received during the financial year 2015-16.

ACKNOWLEDGEMENT

The Directors of your Company are thankful to Bankers, Business Associates, Customers, Members, Government Bodies & Regulators for the continuous support received from them and place on record their appreciation for the sincere services rendered by the employees at all level.

For and on behalf of the Board
for PEARL GLOBAL INDUSTRIES LIMITED
(VINOD VAISH) (PULKIT SETH)
Whole-Time Director Managing Director
DIN 01945795 DIN 00003044
Place: Gurgaon
Date: August 12, 2016