Premco Global Ltd Management Discussions.


The global outbreak of COVID-19 has infected nearly 20 million people as of August 2020, posing a major threat to human health. The need to slow down the spread of the virus in order to protect lives has resulted in isolation / quarantine, lockdowns and widespread closure of markets.

The health crisis is having a severe impact on economic activity through supply disruption, drop in domestic and international demand, fall in travel and tourism, and erosion of consumer and investor confidence. Several organizations have slashed their growth projections for individual countries GDP as well as for the global economy. As per IMFs World Economic Outlook, April 2020, the global economy is projected to contract sharply by (–)3 per cent during 2020, much worse than the drift during the 2008 09 financial crisis, as a result of the pandemic.

Exports and domestic consumption are both expected to be sluggish in the near term due to the impact of COVID-19. The Indian Apparel Market which is currently estimated at 3,61,160 crore (USD 54 billion) will grow at a promising CAGR of 8.1% for next ten years to reach 7,88,532 crore (USD 118 billion) by 2028.

The Indian innerwear market currently estimated to be worth 32,000 crore accounts for 9 percent of the total domestic fashion retail market and is expected to grow 89700 crores by 2028 , with an attractive CAGR OF 11% Mens wear is the single largest category in knitwear, accounting for 40 percent of the market, followed by womens wear, boys wear and girls wear with market shares of 34 percent, 18 percent and 8 percent respectively.

The market has historically been highly fragmented and unorganized. Even today it is dominated by numerous small-scale players that cater to 60-65 percent of the total demand. However, the market segment is evolving and is gradually moving towards organized retail. Indian consumer spend on innerwear products is significantly lower than other Asian peers.

The mens innerwear market, which is estimated to be worth 11000 crore in the year 2018 , is estimated to grow at a CAGR of 28% percent to reach 21800 crore by 2028.

Indian consumer spend on innerwear products is significantly lower than other Asian peers. This trend is visible across both mens and womens segments with gaps of over 90% against countries like Thailand and China. This suggests that there is significant room for growth driven by rising per capita spending on such products.

Looking ahead, we expect growth in the innerwear market to be driven by broad based consumer trends in the form of rising discretionary spend, growing number of mid-high-income house hold and rising urbanization. Innerwear has graduated from being just a functional category to a category that offers additional fashion quotient. It is shifting from a price sensitive category to a brand sensitive category. Source: CLSA Asia- Pacific Markets, Euro monitor.


For the apparel industry in general and our market in particular:

Company has a locational advantage of supplying goods to its overseas customers, as it also has a plant in VIETNAM, which is presently a large global textile Hub, and ranks amongst the most rapidly growing countries for textiles manufacturing and exporting..

Increasing fashion consciousness, higher disposal incomes and consumers becoming more aspirational, discerning and brand savvy, will help the brands for which Company has been manufacturing ELASTIC TAPES grow rapidly and indirectly will increase the demand for Companys products.

* In 2018-19, Company received SINGLE STAR EXPORT HOUSE CERTIFICATE, which will enable ourcompany to be recognized for ease of operation with tax and banking officials.


Many major international apparel brands have commenced operations in India realizing that Indian markets are likely to emerge as one of the largest markets in the world in the next few decades. Due to this we expect enhanced competition for the Companys Products.

Companys Exposure to Foreign Currency Risks due to Overseas Operations.


The Company is mainly engaged in the business of Manufacturing of Woven & Knitted Elastic Tapes and all other activities of the Company revolve around the main business, and as such, there are no separate reportable segments.


Company continues to strive for maximizing its capacity utilization in India & Vietnam by concentrating on new customers and innovating and expanding its product mix for its products.


Rs. in Lakhs



March 2020 March 2019 March 2020 March 2019
Revenue from Operations 4,970.31 5,323.39 8,029.27 7,212.41
Expenses 4861.04 4985.15 6811.61 6409.93
Profit Before Finance Cost, Depreciation & Amortization Exp. 109.27 338.24 1217.66 802.48
Finance Cost 121.29 79.62 222.78 150.17
Depreciation & Amortization Exp. 212.92 171.81 461.72 271.84
Profit /(Loss) before Exceptional Items (224.94) 86.81 533.16 380.47
Exceptional Items (22.25) (106.56) (22.25) (106.56)
Profit /(Loss) before Taxation (247.19) (19.75) 510.91 273.91
Less : Provision for current Taxation (2.67) 19.16 15.14 19.16
Deferred Taxation adjustment (71.12) (54.78) (71.12) (54.78)
Profit /(Loss) After Taxation (173.40) 15.87 566.89 309.53
Minority Interest - - 108.00 (48.82)
Other Comprehensive Income (Net of Tax) (87.56) 79.17 (87.56) 79.17
Total Comprehensive Income 260.96 95.04 371.33 339.88
Paid up Equity Share Capital 330.48 330.48 330.48 330.48
Earnings Per Share (Rs.) (7.90) 2.88 11.24 10.28


This years standalone performance has been impacted mainly due to global PANDEMIC.

During the year under review, Companys revenue from operations stood at Rs. 4970.31 Lacs as against Rs. 5323.39 Lacs in the previous year, The Company has earned a Net Loss after Tax of Rs.173.40 Lacs as compared to the Net Profit after Tax of Rs15.87 Lacs during the previous accounting year. The Companys EBDIT for the year on standalone basis was at Rs 109.27 Lacs as against Rs. 338.24 Lacs. The standalone Profit /(Loss) after Tax of the Company Stood at Rs (173.40) as against Rs 15.87 Lacs.

Extraordinary item includes expenditure of Rs. 22.25 Lakhs booked towards reversal of GST credit on inventory held 01.08.2018. for in-advert credit.

Domestic sales were Higher by 2.57 % as compared to previous year. This would have been even better had it not been for the Global Pandemic / Lock down that started March 23, 2020 impacted sales.

The Companys exports were lower by 12.25% on account of the Global Pandemic and because most of the Large export Orders were executed from the Vietnam Factory.

The RM Cost as a percentage of sales was higher by 2.31% due to passing on the higher benefits to customers to increase the competitive edge in Domestic Market.

The Company has incurred expenses (other than RM Cost) of Rs. 2656.87 Lacs in current year as compared to previous year of Rs. 2496.59 Lacs.

Also, Employee cost increased by Rs 113.66 Lacs as compared to previous year, which was on account of new recruitment in the Marketing division, which would strongly focus on new Markets, and buiding business with big brands Internationally and in India.

The finance cost increased by of Rs. 41.67 Lacs due to cancellation of forward contracts as PGVL repaid its entire Foreign Currency Loans. The Early remittances of funds by PGVL, also enable Company to earn additional amount from investments, (in the form of Interest from Fix Deposits) negating the interest/ forward contract cancellation impact.

The Companys manufacturing expenses were lower by Rs. 201.60 Lacs due to Cost Controls and also partly due to low production volume as compared to previous year.


During the year under review, On Consolidated basis, revenue from operations stood at Rs. 8,029.27 Lacs as against Rs. 7,212.41 Lacs in the previous year and Net Profit after Tax stood at 566.89 Lacs as compared to the Net Profit after Tax of Rs. 309.53 Lacs during the previous accounting year.

The Companys Consolidated EBDIT for the year stood at Rs. 1217.66 Lacs as against Rs. 802.48 Lacs, The Consolidated Profit after Tax of the Company Stood at Rs. 566.89 Lacs as against Rs. 309.53 Lacs.

On the Consolidated basis, Companys other operating revenue was lower by 18.53 % (Rs. 13.29 Lacs) due to supply of goods by PGVL directly to customers. This was offset by savings done in working capital costs. Other income was increased by 94.93 % (i.e.Rs. 193.38 Lacs) as compared to previous year.

The Company exports (PGL + Vietnam) grew by 21.75% i.e. (Rs. 863.96 Lacs). The Companys endeavor is to further increase the same in current financial year.

Companys Gross Margins (Sales minus RM Cost on products improved from 46.12% to 47.52% thereby net saving of Rs. 237.39 Lacs.

The Company has incurred expenses (Other than RM Cost) of Rs. 3,897.39 Lacs in current year as compared to previous year of Rs. 3632.59 Lacs. There is a slight increase in expenses of Rs. 264.80 Lacs on account of; increase in Salaries cost by 6.47% due to increase in Production capacity, and Increase in other cost, as the electricity and diesel consumed in line with excess production.

Also, Employee cost increased by Rs 102.41 Lacs as compared to previous year, which was on account of new recruitment in the Marketing division, which would strongly focus on new Markets, and building business with big brands Internationally and in India. Also, Vietnam Plant was run at Higher Capacity as compared to previous year resulting in Higher Employee cost incurred at Vietnam.

There has been increase in finance cost of Rs. 72.60 Lacs due to Higher Discounting costs and Forward contracts cancellations as the PGVL paid back entire Foreign Currency Loans and became debt free as on 31.03.2020. Further there was a rise in Depreciation by Rs. 189.88 Lacs during the financial year. This was mainly on account of change in Method of Lease Accounting as necessitated by INDIAN GAPs, as a mandatory requirement.


The Company targets to maximize, its capacity utilisation in India & Vietnam for the financial year 2020-21 by entering new markets like Europe and Bangladesh and introducing new Products.

Key financial measures (Standalone)

2019-20 2018-19
Financial Stability Ratios :
Total Debt/Equity (x) 0.04: 1 0.05 :1
Current Ratio (x) 17.68 12.24
Quick Ratio (x) 2.09 6.67
Interest cover (x) (2.04) 2.14
Performance Ratios :
Return on Assets (%) -3.33 1.23
RoCE (%) -4.08 1.41
Asset Turnover (%) 57.88 65.11
Working Capital/Sales (x) 0.60 0.84
Return on Equity (%) -4.08 1.41
Profitability Ratios :
EBITDA (%) -0.75 6.80
PBT (%) -8.11 1.81
PAT (%) -5.74 1.89
Efficiency Ratios :
Receivables in days 65 87
Inventory in days 144 127
Payables in days 55 38
Working capital cycle in days 391 558

The Key financials parameters for current period 2019-20 has been impacted due to COVID 19 PANDEMIC / LOCK DOWN. That has impacted its Domestic and International Business.

Key financial measures (Consolidated)

2019-20 2018-19
Financial Stability Ratios :
Total Debt/Equity (x) 0.12 1 0.05 :1
Current Ratio (x) 3.21 6.94
Quick Ratio (x) 1.63 1.59
Interest cover (x) 2.75 3.56
Performance Ratios :
Return on Assets (%) 3.73 4.19
RoCE (%) 4.97 4.86
Asset Turnover (%) 76.71 86.31
Working Capital/Sales (x) 0.46 0.62
Return on Equity (%) 4.97 4.86
Profitability Ratios :
EBITDA (%) 14.07 11.51
PBT (%) 5.10 5.49
PAT (%) 4.87 4.85
Efficiency Ratios :
Receivables in days 33 92
Inventory in days 216 253
Payables in days 43 38
Working capital cycle in days 359 498
Growth Ratios (Y-o-Y) :
Net revenue growth (%) 11.33 -11.36
Net sales growth (%) 9.18% -8.99
EBITDA growth (%) 33.16 -26.31
PBT growth (%) 1.31 -46.61
PAT growth (%) 9.25 -35.64

The Key financial parameters for Companys Global operation (INDIA + VIETNAM) are a better reflection of Companys performance for the year 2019-20, The Consolidated Financials for the financial year 2019-20 also have been impacted due to PANDEMIC / LOCK DOWN both in India and Vietnam.


The Company believes that Human Resources is one of the most vital resources and a key pillar in providing the Organization a competitive edge in a current business environment.

The Work Environment is very challenging and performance oriented. The Company recognizes employees potential and provides them with growth opportunities and takes suitable measures for employees welfare.

As on 31st March 2020, Premco Global limited Employs 500 strong work force in Indian Operations and more than 300 Managers , Workers and staff in Vietnam.

Performance Management for Staff Members :

The Company has designed and implemented a Performance Management System (PMS) that allows individual Goal/KRA (Key Result Area) setting. This enables a two-way discussion between a Staff Member and his/her Reporting Manager (Coach) which ensures that the organizations objectives are percolated down to teams and individuals.

Talent Acquisition:

The Company continues to strengthen both leadership and managerial team. Taking into consideration the increasing scale of operation, we have inducted senior leaders and executives who bring rich experience from world-class organizations around the world, as well as youngsters, who bring fresh energy into our organization.


Company has covered its all employees for group insurance to ensure that all the employees get safety and also ensured that all the plants comply with government norms to ensure social distancing and safety measures.

Company has also invested into PPE to ensure fumigation and other sanitization facilities within the Offices which work under COVID 19 scenarios.