Precision Electronics Ltd Directors Report.


The Members of Precision Electronics Ltd.,

Your Directors have pleasure in presenting the 39th Annual Report on the business and operations of the Company along with the Audited Statements of Accounts for the Financial Year ended March 31, 2018.


Your Companys performance during the year as compared with that during the previous year is summarized below:

(FY 2017-18) (FY 2016-17)
Revenue* 355.4 271.3
Profit before Depreciation, Interest, & Tax 2.2 27.5
Depreciation 9.3 10.7
Finance Cost 14.8 11.6
Net profit before Tax (21.9) 5.2
Provision for Tax (6.7) 6.4
Net profit after tax (15.2) (1.2)

*Revenue is net of Excise duty, VAT, Sales tax & Service Tax.


As the Company did not earn any profit during the financial year 2017-18, the Board does not recommend payment of any dividend for the financial year under review.


The Board does not recommend to transfer any amount to the general reserve.


Overall revenue of the Company for the year ended March 31, 2018 was recorded at about Rs.355.4 million which is 31 % more as compared to previous financial year (2016-17) revenue of Rs.271.3 million. However, the Company has incurred a loss of Rs.21.9 million as against a profit of Rs.5.2 million in the previous year (2016-17). Despite the revenues being more than last year, the Company incurred losses primarily due to the increase in indirect expenses and cost escalation in infra projects.

There is no change in the nature of business of the Company which is segmented in two business divisions; Electronics & Telecommunication and Infra services.

2.1 Electronics & Telecommunication Division

Telecom division revenue during the year ended March 31, 2018 is Rs.175.6 million as against Rs.176.4 million in the previous year (2016-17). Manufacturing plants are located at Noida UP (in the NCR region) and Roorkee (Uttarakhand)

2.2 Infrastructure Division

Infrastructure division revenue during the year ended March 31, 2018 is Rs.178.9 million as against Rs.91.7 million in the previous year (2016-17). The division undertakes turnkey assignments of civil, electrical and networking works and turnkey installation and commissioning of radars, sensors, data links and the command and control room at defence establishments.

No material changes and commitments have occurred after the close of the financial year till the date of this report, which affect the financial position of the Company, except that the Companys land located at Noida and Roorkee which was mortgaged with Punjab National Bank, Noida branch is now mortgaged with South Indian Bank, Noida branch.



Draft Defence Production Policy (2018) unveiled by the Ministry of Defence (MoD) is representative of Government of Indias Make in India push. Its vision is to put India "among the top five countries of the World in aerospace and defence industries." The key objectives of the policy include development of a strong indigenous defence industry leading to higher self-reliance. The Government is keen to develop this sector by making more space for FDI and through Government reforms. The company will continue to leverage its presence, expertise and partnerships with global majors to increase its revenues in the sector.

The market outlook and companys opportunities in sectors other than defence are as follows:

i. Telecom: The CAGR in this sector is recorded at 5.2% between 2014-17 and with the renewed policy initiative of the Government to promote and provide preferential market access to "Indigenous Design Developed and Manufactured" products, the sector is poised for a higher growth in the coming years. Governments plan to provide telecom/data connectivity at the Gram Panchayat Level provides unique opportunity to the company. The company is developing products that are required for "Digital India" and USOF programs.

ii. Smart City: The smart cities market in India is expected to grow at a CAGR of 18.5% from 2017-2023. India is one of the fastest and largest growing markets for smart cities due to the initiatives and the use of technology. The Tier 2 metro cities will have the highest growth rate due to the declaration of government initiatives and private investments. Moreover, the Government of India has already planned and mentioned the first 20 smart cities with 80 more in subsequent phases. Your Company is developing core technologies such as smart poles and power supplies for use in Smart Cities.

iii. Healthcare: With the launch of "Modi Health Insurance Scheme 2018" by the Government, the market for healthcare industry is set to expand many folds. Your Company is a part of the strategic supply chain of GE Healthcare and has been recognised with a "Quality Award" for supply of power distribution unit for their Super Value CT scan machine. We are continuously developing products that will expand our product offering in this segment.

iv. Oil & Gas: India is net exporter of petro-products. Its gas production is expected to touch 90 BCM in 2040 from 35 BCM in 2013 with ONGC dominating exploration and production with 70% market share. PEL is actively engaged with ONGC in the exploration sector in which ONGC has 90%+ market share. This provides your company with good opportunities to further expand its business in the sector.

Opportunities, Threats, Risk & Concerns


Sizable business opportunities exist in all the sectors wherein your company has a market presence. Government is proactively promoting and supporting the indigenous industry with focus on the MSME sector and its policies and procedures are geared to create a robust hi-tech industry in India. Further, with all the legal issues that the Company was embroiled in for the last six years been settled; the management is now free to direct its energies and experience towards growth of the company.

Threats, Risk & Concerns

Policy implementation by the Government has always been a major concern for the industry. This has been and continues to remain a major threat and risk as significant portion of the Companys revenues is from Government and or its Undertakings. The business model is tender-oriented, takes a long time to fructification and "L-1 takes all". Further, as we are in Technology intensive sector, funds are required to keep pace with the technology developments and to retain highly trained manpower. Availability of liquidity for a unit like ours is a challenge.


The Company has a well-balanced product portfolio of in-house designed and engineered products that are qualified by both defence and the civil sector customers. In the Electronics & Telecommunication Division, key PEL products include:

I. Wire-line

a. Digital multiplexer with capabilities to provide turnkey voice and data communications for last mile network

b. Line modems (G.SHDSL)

c. Protocol and Media Converters

II. Wireless

a. Unlicensed band (5.8GHz) IP radio: PEL is proposing this radio in several tenders of Telecom customers and hopes to achieve success.

b. High Capacity Radio Relay Systems: PEL is offering its in-house designed and engineered sub-systems against this requirement of Indian Army.

III. Power Systems

a. Power Supplies for Industrial applications

b. Power Distribution Systems for Healthcare

IV. Data Logger for Indian Railways

V. Telescopic Masts: PEL designed and manufactured electromechanical and pneumatic masts are the preferred choice of the customers in both the defence as well as civil segments.

In the Services segment, PELs revenue bucket include:

a. EPC contracts: PEL has undertaken Civil, Electrical and Networking responsibilities as a subcontractor to Large Prime Contractors for major MoD programs.

b. Hi-Tech Installation & Commissioning: PEL teams are stationed at several naval shipyards across the country to provide technical assistance to the customer on behalf of the designer CDoT to ensure trouble free commissioning of the core ATM based network switch and network termination units on all the new build ships of the Indian Navy.

c. Maintenance Repair and Overhaul (MRO) Services: PEL has undertaken contracts for Israeli majors to support UAV (Unmanned Aerial Vehicle) ground equipment at military bases across India. Further PEL has supported the maintenance of Integrated Electronic Warfare systems and Precision Guided Munitions supplied by Israeli companies to the Indian Forces.


Your company has a bullish outlook as Governments policy to support and promote MSME sector and indigenous development has started to be implemented on ground. Its market access and human resources are capable to take full advantage of these policy initiatives. Further, with legal issues being settled, the Management is now free to devote its full energy towards advancement of business. Due to temporary business fluctuation and market uncertainties the Company has incurred losses and therefore the Company proposes to monetize its underutilized assets at Noida and Roorkee to generate funds. This would add to the product offerings to its customers. Programs wherein PEL has significant stake and were put on hold by the customer are moving forward and expected to generate additional revenues for the company in the current FY 2018-19.


The Company has in place adequate internal financial controls with reference to financial statements. During the year no reportable material weakness in the system was observed. The Company has adopted IND-AS for the financial year 2017-18.


The total number of employees of the Company as on 31st March 2018 stood at 177.

Your Company believes that employees are the most valuable assets of an organization and the optimum utilization of the skill, knowledge and attitude they possess are instrumental to the growth of the organization. Your Company has lived and encouraged meritocracy, entrepreneurship, teamwork and performance driven culture. The focus has been on creating reserves through cross functional and interdisciplinary exposure at all levels to ensure redundancy and robustness in the organization.


The Company in order to enhance its fund limits has now empanelled South Indian Bank, Noida branch with increased financing facilities (fund based and non-fund based).


Pursuant to Section 134(5) of the Companies Act, 2013 with respect to Directors Responsibility Statement, it is hereby confirmed:

a) that in the preparation of the accounts for the Financial Year ended 31" March, 2018, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

b) that 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 and of the Profit and Loss of the Company for the year under review;

c) that 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) that 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) that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


In compliance with the requirements of Regulation 34(3) read with schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate report on Corporate Governance along with the certificate from M/s Munish K Sharma & Associates, Company Secretaries on its compliance forms a part the Annual Report.


The company is not covered for Corporate Social Responsibility, pursuant to the provision of Section 135 of the Companies Act, 2013 ("the Act") read with the Companies (Corporate Social Responsibility Policy) Rules, 2014.


There were no contracts or arrangement with related parties referred to in Section 188 (1) of the Companies 2013 during the financial year. However, Form AOC-2 is attached herewith as Annexure I to show the continued related party transactions from previous years, as Mr. Nikhil Kanodia who served the Company as Chief Technical Officer and President of the Company has been appointed as the Whole Time Director cum President of the Company w.e.f. 11.08.2017.


Your Company has formulated a Risk Assessment and Management plan which includes procedures to assess and curtail risk. A "Risk Management Committee" has been constituted which has been entrusted with the responsibility to assist the Board in mitigating the risk faced by the Company in the ordinary course of business. The Risk Management committee comprises of Mr Nikhil Kanodia, Mr Sanjay Chandra, Mr Deepak Jagga, Mr Jagjit Singh Chopra and Ms Puneet Arora. The factors that affect the Companys profitability and operations are regularly monitored and offers/proposals submitted by the Company to its customers are modified accordingly. In the opinion of the Board there is no risk which may threaten the existence of the Company.


The Board is well balanced with professionals, legal experts and persons with business background who are connected with the industry and have the requisite expertise and experience to guide the Company In accordance to Section 203 of the Companies Act 2013, Key Managerial Personnel appointed by the Company are: Mr. Ashok Kumar Kanodia (Managing Director), Mr Jagjit Singh Chopra (Chief Financial Officer) and Ms Veenita Puri (Company Secretary and Compliance Officer). Mr. Nikhil Kanodia, has been appointed as the Whole Time Director cum President of the Company for a period of 5 years w.e.f 11.08.2017, by passing ordinary resolution in the AGM held on 25.09.2017. Lt. Gen. (Dr.) Rajesh Pant (Retd.), Chairman of the Company was reappointed as the Chairman cum Independent Director of the Company for a period of five years w.e.f 25.09.2017. Mr. Anant Kanoi, has resigned as an Independent Director of the Company w.e.f. 26.10.2017. Mr. Neeraj Bajaj, Chartered Accountant by profession has been appointed as an independent additional director of the Company w.e.f 29.12.2017, to hold the office upto the date of ensuing AGM of the Company. Mr. Hardeep Singh Banga has been appointed as a Non-Executive Additional Director of the Company in the Board meeting held on 11.08.2018, upto the date of ensuing AGM of the Company.

Resolution proposing the appointment of Mr. Neeraj Bajaj as a Non-Executive Independent Director for a period of 5 years and appointment of Mr. Hardeep Singh Banga as Non Executive Director, liable to retire by rotation, forms part of the notice convening the 39th Annual General Meeting. Pursuant to the provisions of Section 149 of the Companies Act, 2013 Non-Executive Independent Directors are not liable to retire by rotation. As per the disclosure received from the Directors, none of the Directors are disqualified from being appointed as Directors as specified in Section 164(2) of the Companies Act, 2013.

Mr. Deepto Roy, Non-Executive Director, retires by rotation and being eligible, offers himself for reappointment. The Board recommends his re-appointment at the ensuing Annual General Meeting of the Company.


The Independent Directors have submitted their disclosures to the Board confirming that they continue to fulfill all the requirements to qualify for their appointment as Independent Director under the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. No independent director is due for re-appointment during the year. However, Resolution proposing the appointment of Mr. Neeraj Bajaj as a Non-Executive Independent Director for a period of 5 years shall be taken up in the ensuing AGM.


The Board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors which include criteria for performance evaluation of the Non-Executive Directors and Executive Directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities & Exchange Board of India (SEBI) under SEBI (LODR) Regulations, 2015. The Company has devised an evaluation matrix for the performance evaluation and an external consultant "M/s Munish K Sharma & Associates" was engaged to collate and evaluate the results.

A meeting of Independent Director was held on July 14, 2018 without the attendance of other directors (NonIndependent) to review the performance of Non-Independent Directors, the Board as a Whole and the Chairman of the Company and to assess the flow of information between Company Management and the Board.


The requisite details as required by Section 134(3)(e) is disclosed under the Corporate Governance Report.


At the Annual General Meeting held on September 25, 2017 M/s Nemani Garg Agarwal, & Co. , Chartered Accountants, bearing (F.R.N. 010192N) were appointed as statutory auditors of the Company to hold office till the conclusion of the 43rd Annual General Meeting.

The notes on financial statements referred to in the Auditors report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation or adverse remark.


The Board has appointed M/s Munish K Sharma & Associates, Company Secretaries to conduct Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018 is annexed herewith marked as Annexure II to this Report.


The Board of Directors has pursuant to Section 138 of the Companies Act, 2013 and on recommendation of the Audit Committee has appointed M/s Rajendra K. Goel & Co., Chartered Accountants, as the Internal Auditors of the Company for the financial year 2017-18.


A vigil mechanism of the Company which also includes a Whistle Blower Policy pursuant to Section 177(9) & 10 of Companies Act, 2013, has been established and can be accessed on the Company website AUDIT COMMITTEE

The Audit Committee comprises of following three Independent Directors and one Non Executive Director and during the Financial Year 2017-18 five meeting(s) of the committee were convened, the attendance record of members of the committee are as follows:

Name of Directors Category Status

Meeting Attended

1. Mr. Sharvan Kumar Kataria NEID Chairman 5
2. Mr. Neeraj Bajaj* NEID Member -
3. Mr. Suresh Vyas NEID Member 4
4. Mr. Deepto Roy NED Member 1
5. Mr. Anant Kanoi** NEID Member 3

*Mr. Neeraj Bajaj has been appointed as the member of the Audit Committee in the Board meeting held on 12.02.2018.

** Mr. Anant Kanoi, resigned w.e.f. 26.10.2017.

The recommendations, if any made to the Board by the Audit Committee during the year under review were accepted.


The Nomination and Remuneration Committee consists of following members and during the Financial Year 201718 one meeting of the committee was convened the attendance record of members of the committee are as follows:

Name of Directors Category Status

Meeting Attended

1. Mr. Anant Kanoi* NEID Chairman 1
2. Mr. Suresh Vyas** NEID Chairman 1
3. Mr. Neeraj Bajaj*** NEID Member -
3. Mr. Sharvan Kumar Kataria NEID Member 1
4. Mr. Deepto Roy NED Member -

The * Mr. Anant Kanoi, resigned w.e.f. 26.10.2017.

**Mr. Suresh Vyas was appointed as the Chairman of the Committee w.e.f. 04.12.2017.

***Mr. Neeraj Bajaj has been appointed as the member of the Committee in the Board meeting held on 12.02.2018.

The recommendations, if any made to the Board by the Nomination and Remuneration Committee during the year under review were accepted.

Your Board has approved policy on the terms and conditions of appointment of independent directors which is available on Companys website "".


The Board of Directors met six times on 29.05.2017, 11.08.2017, 12.09.2017, 04.12.2017, 12.12.2017 and 12.02.2018 during the financial year 2017-18. For further details, please refer report on Corporate Governance of this Annual Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS.

There was no transaction of the nature covered under Section 186 of the Companies Act, 2013.


As required pursuant to section 134 of the Companies Act, 2013, Annual Return in MGT 7 shall be available at the Companys website at


The information relating to conservation of energy, as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, as required to be disclosed under the Act, is provided in Annexure III to this Report.


The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure IV to this Report.

The Company does not have any employees employed throughout the financial year and in receipt of remuneration of Rs. 1.02 crore, or employed for part of the year and in receipt of Rs. 8.50 Lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The list of top ten employees of the Company in terms of their remuneration is as follows:

Mr. Ajay Goel (56), General Manager, 17.12.2005, 23,10,000/- B.E (E & C) (28), Punjab Wireless system Ltd., Mr. Amit

Mittal (48), Deputy General Manager, 14.02.2006, 15,44,786/-, B.E (E & C) (24), Punjab Wireless system Ltd., Mr. Ashok Kumar Kanodia (67), Managing Director, 01.05.1979, 22.3% equity shares, 23,24,664/-, B.E. Electrical (39). Mr. Bhaskar Biswas (56), Deputy General Manager, 28.07.2011, 18,18,960/-, B.E (E & C) (27), Indian Air Force. Mr. Deepak Jagga (46), Vice President, 01.04.2002, 23,91,749/-, B.E (Electronics) (28), Mr. Jagjit Singh Chopra (49), Chief Financial Officer, 25.04.2014, 18,00,000/-, Chartered Accountant (20), Blessings Advertising Pvt. Ltd., Mr. Nikhil Kanodia (41), President & Chief Technical Officer, 29.10.2002, 0.59% equity shares, 36,50,668/-, M.S. Electrical & Computer Engineering (20), Fujitsu Network Communications, Son of Mr. Ashok K Kanodia, Managing Director, Mr. Sandeep Chawla (49), Deputy General Manager, 20.04.2009, 24,42,000/-, B.E (E & C) (24), Wipro Technology, Mr. Sanjay Chandra (56), Senior Vice President, 10.06.2009, 33,88,004/-, M.Sc (Electronics) (31), Indian Army, Mr. Vinay Kumar (47), General Manager, 24.01.2011, 20,99,989/-, B. Tech (Civil) (22), Raus Infra Limited.

Please note that none of the above employee is employed on contractual basis.


The Company has not invited or accepted any deposits during the year under review or in the past and hence no amount of principal or interest was outstanding as of the Balance Sheet date.


Mr. Ashok Kumar Kanodia and Mr. Pradeep Kumar Kanodia, promoter brothers of the Company, had mutually arrived at Memorandum of Oral Family Settlement ("MOFS") which was duly consented by the Honble Delhi High Court vide its order dated 22.03.2018 bearing Co. Appl. 3937/ 2018 in CS (COMM) 104/ 2016. Thereafter, the application was made to NCLT for withdrawal of the Petition bearing no. CP No. 162/ND/2013 and NCLT vide its order dated 06.04.2018 disposed off the matter which was filed with the Honble Delhi High Court and the Court vide its order dated 09.04.2018 in the Co.A.(SB) 7/ 2015 and Co.A (SB) 18/ 2016 disposed off the petition(s). All pending applications/suits stand disposed of and all interim orders stand vacated. Thereafter, Mr. Pradeep Kumar Kanodia and his associates (members of the promoter group) transferred 35,04,382 equity shares to Mr Nikhil Kanodia son of Mr Ashok Kumar Kanodia, Managing Director and a member of the promoter group, aggregating to 25.30% of the paid up share capital of the Company on 26.04.2018. The said transfer is inter se transfer of shares among promoters of the Company under Regulation 10(1)(a)(ii) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 2011. The shares held by Mr. Pradeep Kumar Kanodia and his associate as on date is nil and pursuant to the provisions of the MOFS, Mr. Pradeep Kumar Kanodia and his associates do not have any right/ claim/ interest in control, ownership, and management of the Company of any nature whatsoever.

Since, the settlement is completed; no contingent liability under this head exists for the Company.


The company has constituted Internal Complain Committee for reporting of cases, if any, related to sexual harassment. Committee meetings are held at regular intervals and employees are sensitized on the issue on regular interval. No case was reported and/or filed during the year under the aforesaid Act.


The Shares of the Company are listed with The Bombay Stock Exchange Limited, Pheroze Jeejeebhoy Towers, Dalal Street, Mumbai. (Scrip Code: 517258). It is confirmed that the Company has paid Annual Listing Fee for the financial year 2018-19 to BSE.


The Safety & Health of employees and external stakeholders are embedded in the core organizational values of the Company. This aims to ensure safety of public, employees, plant & equipment, ensure compliance with all statutory rules and regulations, imparting training to its employees, carrying out safety audits of its facilities, and promoting eco - friendly activities.

The Company continues to maintain excellent track record on safety. The site had no accidents during the year 2017-18. PEL also has a Workman Safety Committee under section 41G of Factories Act 1948.This Committee meets at regular intervals to take measures for workers protection in order to make PEL a safe place to work.


Certain Statements made in Management Discussion & Analysis Report relating to the Company objectives, projections, outlook, expectations, estimates etc. may constitute forward looking statements within the meaning of applicable laws & regulations. Actual results may differ from such expectations, projections etc. whether express or implied.


As per the explanations given by the Auditors in their report no material fraud on or by the Company or any fraud in the Company by its officers or employees has been noticed or reported during the year.


No Company has become or ceased to be subsidiary/joint venture/associate company of the Company during the year under review. Hence, Form AOC 1 containing salient features of the subsidiary/joint venture/associate company is not required.


The paid up share capital of the Company is Rs. 13,84,87,620/- (Rupees Thirteen Crore Eighty Four Lakhs Eighty Seven Thousand Six Hundred and Twenty Only) comprising of 1,38,48,512 fully paid up equity shares of Rs. 10/- each amounting to Rs. 13,84,85,120/- and Rs. 2500/- on account of forfeited shares. The Company has neither made any issue/allotment nor made any buy back of securities during the Financial Year 2017-18.


The Company has duly complied with the provisions of applicable secretarial standards as issued by Institute of Company Secretaries of India.


Your Directors express their deep appreciation and gratitude for the valuable support received from Punjab National Bank, Noida Branch, South Indian Bank, Noida branch, its Customers, Business Associates, Government Departments and Shareholders and look forward to similar support and co-operation in future. Your directors appreciate the sincere efforts put in by the employees at all levels.

Place: Noida Ashok Kumar Kanodia Nikhil Kanodia
Date: 11.08.2018 Managing Director Whole Time Director cum