Premco Global Ltd Directors Report.

[(Disclosure under Section 134(3) of The Companies Act, 2013)

{Read With Companies (Accounts) Rules, 2014}]

To the Members,

The Directors present the Annual Report of Premco Global Limited (the Company or PGL) with the Audited Financial Statements for the financial year ended 31st March 2018. The consolidated performance of the Company and its subsidiary has been referred to wherever required.

1. FINANCIAL RESULTS:

(Rs. In Lacs)
Particulars

Standalone*

Consolidated*

2017-2018 2016-2017 2017-2018 2016-2017
Revenue from operations 6195.90 6985.51 7839.44 7433.71
Other Income 371.52 348.92 297.20 316.79
Total Income 6567.42 7334.43 8136.64 7750.50
Operating expenditure 5609.82 5215.59 7044.57 5722.51
EBDIT 957.60 2118.84 1092.07 2027.99
Depreciation& Interest 274.85 357.32 374.26 445.11
Profit before Tax 682.75 1761.52 717.81 1582.88
Less: Taxes 176.93 584.44 176.93 584.44
Profit for the Period 505.82 1177.08 540.88 998.44
Other Comprehensive Income 1.64 (3.24) 1.64 (3.24)
Total Comprehensive Income for the Year 507.46 1173.84 542.52 995.20
Attributable to :
Shareholders of the Company 507.46 1173.84 528.11 1020.88
Non-controlling interests N.A. N.A. 14.41 (25.68)
Appropriations:
Dividend on Equity Shares (Excluding Tax) 99.14 99.14 99.14 99.14
Tax on Dividends 20.19 20.19 20.19 20.19
General Reserve 51.00 99.00 51.00 99.00
Earnings per share:
Basic 15.36 35.52 15.98 30.89
Diluted 15.36 35.52 15.98 30.89

* The Figures for Previous year have been re-instated/-regrouped in order to comply with Ind As as applicable from 01.04.2017 and as specified in Accounting Policies and Notes to Accounts.

2. FINANCIAL PERFORMANCE, OPERATIONS AND STATE OF THE COMPANYS AFFAIRS:

During the year under review, Companys revenue from operations stood at Rs. 6195.90 Lacs as against Rs.6985.51 Lacs in the previous year, The Company has earned a Net profit after Tax of Rs. 505.82 Lacs as compared to the Net Profit after Tax of Rs. 1177.08 Lacs during the previous accounting year.

On Consolidated basis, revenue from operations stood at Rs. 7839.44 Lacs as against Rs.7433.71 Lacs in the previous year and Net Profit after Tax stood at 540.88 Lacs as compared to the Net Profit after Tax of Rs. 998.44 Lacs during the previous accounting year

The Companys EBDIT for the year on standalone basis was at Rs 957.60 Lacs as against Rs. 2118.84 Lacs. The standalone Profit After Tax of the Company Stood at Rs 505.82 as against Rs. 1177.08 Lacs.

The Companys Consolidated EBDIT for the year stood at Rs. 1092.07 Lacs as against Rs. 2027.99 Lacs, The Consolidated Profit after Tax of the Company Stood at Rs. 540.88 Lacs as against Rs. 998.44 Lacs. The reasons as explained in previous paragraph hold good for consolidated results.

A BRIEF EXPLANATION ON PERFORMANCE:

(1) Ind AS effect:

As you know Company implemented Ind AS during the year 2017-18. The Effect of the same has been explained at Notes to Accounts at Note No. 48. The same is further explained as under;

• The Income of 2016-17 was reinstated from Rs. 985.79 Lacs to Rs. 1173.84 Lacs thereby having positive impact of Rs.188.05 Lacs

• The Reserves of 2015-16 were positively impacted by Rs. 125.39 Lacs

There for Proffit after Tax for 2017-18 stands at Rs. 819.26 Lakhs based on OLD GAAP, as against the net Profit of Rs.985.79 Lakhs in the previous financial year.

The other effect are summerised in Notes to Accounts 2017-18. The above also have impacted the current year results.

(2) GST Implementation/Drawback changes :

The Company successfully implemented the GST W.E.F 01.07.2017. Until implementation of GST, the Companys Products were exempt , post implementation of GST, these products have been classified in 5% category.

The Drawbacks were reduced substantially post implementation of GST, had temporarily affected the Margins and Exports of the Company, these have now been aligned with new pricing Policy.

(3) Other Impacts :

The Company reported a rise in consolidated Revenue of Rs. 7839.44 Lacs as against Rs.7433.71 Lacs. The 4th quarter ending 2017-18 fiscal year resulted in a growth in top line performance, with several factors contributing to decrease in bottom line as compared to previous year. On a current note, a dramatic shift from lackluster to robust product demand has been noted and is expected to be recognized going forward. The Management is hopeful of substantially improved capacity utilization during ensuing financial year.

Your Directors are happy to announce that, the Companys Subsidiary viz. PREMCO GLOBAL VIETNAM COMPANY LIMITED, has first time reported profits for the quarter ended 31.03.2018 and financial breakeven for full year and since have been giving consistent results.

The Companys strategy to go for subsidiary in Vietnam, has been paying a rich Dividends, and will reflect in the results in ensuing quarters.

The Management re-iterates its faith in Expansion of Capacities and expects a growth rate of 18% to 20% in Current Financial Year on a consolidated basis through increase in turnover, improved penetration in domestic market and strong inroads on export front along with appropriate restructuring of products and procedures.

3. CHANGE IN THE NATURE OF BUSINESS, IF ANY:

The Company is engaged in the business of manufacturing Woven& Knitted Elastic Tapes. There was no change in nature of business activity during the year.

4. SUBSIDIARY COMPANY

The Companys investment in Equity in its subsidiary stand at Rs. 563.53 Lacs as equity in foreign subsidiary namely Premco Global Vietnam Company Limited. The company holds 85% as a percentage of total equity and the balance is held by Mr. Sushil Rajwani who is a joint investor in the company.

The Company has also lent to the tune of Rs.1,170.80 Lacs as on 31.03.2018, in the form of short term lending to its Subsidiary company to enable to meet its Working Capital Requirements. The Company Charges the interest on the above outstanding amount at Market rate and the same is added to standalone results. The Company has also issued the SBLC favoring overseas Banker viz. Standard Chartered bank on behalf its subsidiary amounting to USD 300000 as on 31.03.2018.

Pursuant to provision of section 129(3) of the Act, a statement containing salient features of the financial statements of the Companys subsidiaries in Form AOC-1 is attached to the financial statements as Annexure 1. Further, pursuant to the provisions of sec 136 of the Act, the financial statements of the company, consolidated financial statements and separate audited accounts in respect of subsidiaries are available on website of the Company.

5. DIVIDEND:

Based on the Companys performance, the Directors have recommended a Final Dividend of Rs.3.00 per share for the financial year 2017-2018 on fully paid shares of 10/- each. (Previous year Rs.3.00/- per share). The proposal is subject to the approval of shareholders at the ensuing Annual General meeting (AGM) to be held on 25th September, 2018. The final dividend on equity shares, if approved by the members would involve a cash outflow of Rs. 119.33Lacs including Dividend Tax resulting in a payout of 12.10% of the unconsolidated profits of the company.

6. RESERVES:

The Company proposes to transfer Rs. 51.00 Lacs to the general reserve out of the amount available for appropriation.

7. LOANS, GUARANTEE & INVESTMENTS:

Details of Loans, Guarantee and Investment covered under the provision of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

8. MATERIAL CHANGES AND COMMITMENTS:

Your Directors further states that there are no material changes have taken place affecting the financial position of the Company from the date of closure of financial year till the signing of Accounts.

9. DEPOSITS:

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of Balance sheet.

10. AUDITORS:

Based on the recommendation of Audit Committee, appointment of M/s. Sanjay Raja Jain& Co., Chartered Accountants, (Firm Regn. No. 120132W) as statutory auditors of the company for the financial year 2018-19 is subject to ratification at the ensuing general meeting.

11. AUDITORS REPORT AND SECRETARIAL AUDIT:

M/s. Sanjay Dholakia & Associates, Practicing Company Secretaries, have been retained to conduct Secretarial Audit for the financial year 2018-2019, as required under Section 204 of the Companies Act, 2013 and the rules framed thereunder.

The Auditors report and Secretarial auditors report does not contain any qualifications, reservations or adverse remarks. Report of Secretarial Auditor is given as Annexure 6 which forms part of this Report.

As required by the Listing Regulations, the auditors certificate on corporate governance is annexed at Page no. 15. The auditors certificate for fiscal 2018 does not contain any qualification, reservation or adverse remark.

12. BOARD MEETINGS:

During the year under review, the Company has conducted 5 Board Meetings on 09th May 2017, 07th September 2017, 18th September 2017, 12th December 2017 & 14th February 2018. The Intervening gap between the Board Meetings was within the period prescribed under Companies Act, 2013 and SEBI.

13. DIRECTORS RESPONSIBILITY STATEMENT:

The financial statements are prepared in accordance with Indian Accounting Standards ( Ind AS) under the historical cost convention on accrual basis except for certain financial instruments, which are measured at fair values, the provisions of the Act 9 to the extent notified) and guidelines issued by SEBI. The Ind AS are prescribed under Section 133 of the companies Act, 2013 (‘the Act), read with Rule 3 of the Companies 9Indian Accounting Standards) Rules 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016. Effective April 01, 2017, the Company has adopted all the Ind AS standards and the adoption has been carried out in accordance with applicable transition guidance. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

Pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

(i) I n the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation and there are no material departures;

(ii) They 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 of the company for that period;

(iii) They 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;

(iv) They have prepared the annual accounts on a going concern basis;

(v) They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the framework of Internal Financial controls and compliance systems established and maintained by the company, work performed by the internal, statutory and secretarial auditors and external consultants including audit of internal financial controls over financial reporting by statutory auditors, and the reviews performed by management and the relevant board committees, including the Audit committee, the board is of the opinion that companys internal financial controls were adequate and effective during the FY 2017-18.

14. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

A) Changes in Directors and Key Managerial Personnel

Ms. Sonia A. Harjani, (DIN 01220774), Director of the Company, who is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, seek reappointment pursuant to Section 152 of the Companies Act, 2013 read with the applicable rules thereto, including any statutory modification(s) or reenactment thereof for the time being in force.

B) Declaration by Independent Director

The Company has received necessary declarations from each independent director under section 149(7) of the Companies Act, 2013 that they meet the criteria of Independence laid down in section 149(6) of the Companies Act, 2013 and there has been no change in the circumstances which may affect their status as Independent Director during the year. During the year Non-executive Directors had no pecuniary relationship or transaction with Company, other than sitting fees for the purpose of attending the meetings of the company.

C) Key Managerial Persons

Pursuant to Provisions of section 203 of the Act, the Key Managerial Personnel of the Company are Mr. Ashok B. Harjani, Managing Director, Mrs. Nisha P. Harjani, Chief Financial Officer and Director, Ms. Pooja Shekhawat, Company Secretary& Compliance Officer.

15. BOARD EVALUATION

The Board of Directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015.

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 process, 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 criteria such as composition of committees, effectiveness of committee meeting etc.

The board and the nomination and remuneration committee reviewed the performance of the individual directors on the basis of criteria such as contribution of the individual director of the board and committee meetings like preparedness on the issue to be discussed, meaningful and constructive contribution and inputs in meetings etc. In addition the chairman was 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 chairman was evaluated, taking into account the views of the executive directors and non-executive directors, The Board has carried out an annual performance evaluation of its own performance, of individual Directors as well as the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholders Relationship Committees. The Board approved the evaluation results as collated by the Nomination and Remuneration Committee.

16. RISK MANAGEMENT POLICY:

There is an adequate risk management infrastructure in place capable of identifying, evaluating and addressing the risk organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational etc. The Company manages monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its objectives.

The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms the part of this report.

17. RELATED PARTY TRANSACTIONS:

None of the transaction with related parties falls under the scope of section 188(1) of the Act. Information on transaction with related parties pursuant to section 134(3) (h) of the Act read with rule 8(2) of the Companies Account rules, 2014 are given in ANNEXURE 2 in Form AOC-2 and the same forms part of this report.

18. EXTRACT OF ANNUAL RETURN:

As provided under Section 92 of the Companies Act, 2013, the extract of Annual Return in Form No. MGT -9 is given in ANNEXURE 3 which forms the part of Board report.

19. AUDIT COMMITTEE:

The Audit Committee comprises of 2 Non Executive Directors and 2 Executive Directors namely Mr. Devendra K. Shah (Chairman) and Mr. Rajesh M. Mahtani and Mr. Lokesh P. Harjani and Ms. Nisha P. Harjani Executive Director as other member. Other details are included in Corporate Governance Report which is the part of this report.

20. NOMINATION AND REMUNERATION COMMITTEE:

The details pertaining to the composition of Nomination & Remuneration Committee are include din Corporate Governance Report which is the part of this report.

21. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

The brief outline of Corporate Social Responsibility policy and financial data pertaining to companys CSR policy and disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in ANNEXURE 4 of this report. For other details please refer Corporate Governance Report which forms part of this report.

22. SIGNIFICANT AND MATERIAL ORDERS:

There are no Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future.

23. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

As per the requirements of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company has in place a Policy on Prevention, Prohibition & Redressal of Sexual Harassment of Women at Workplace and has a robust mechanism to redress the complaints reported there under. An Internal Committee has been constituted, which comprises of internal members who have experience in the subject field.

Pursuant to the provisions of Section 22 of the Sexual Harassment of Women at Workplace (Prevention,

Prohibition and Redressal) Act, 2013, the complaints received there under and the details relating thereto are as follows:

a) Number of complaints received in the year : NIL

b) Number of complaints disposed of during the year : NIL

c) Number of cases pending more than ninety days : NIL

d) Number of workshops or awareness programme against sexual harassment carried out : Your Company on a regular basis sensitizes its employees on prevention of sexual harassment through various workshops, awareness programme.

e) Nature of action taken by the employer or district officer: NIL

24. INTERNAL FINANCIAL CONTROLS:

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were found.

25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ETC. & FOREIGN EXCHANGE EARNINGS AND OUTGOINGS:-

The information as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 with respect to conservation of energy, technology absorption and foreign exchange earnings is given below:

A. Conservation of energy:

(i) The steps taken or impact on conservation of energy

The Company has replaced the 36w/40w tube lights with 16w LED tube lights which consumes 50% less energy.

(ii) The steps taken by the company for utilising alternate sources of energy

The Companys present outlay does not recommend for alternate source of energy. The Company intends to replacing high capacity motors in covering dept. with energy efficient new motors which should give a huge saving.

(iii) The capital investment on energy conservation equipments

As explained in point No.(ii) above the Company do not propose any major capital investment on energy conservation equipments because the existing arrangement are sufficient to cater the company need and are cost effective.

B. Technology absorption:

(i) The efforts made towards technology absorption.

The Company has replaced some of the machines with high speed/upgraded version. The Company is also working on its super soft yarn technology which will help the Company to improve the quality of products.

(ii) The benefits derived like product improvement, cost reduction, product development or import substitution

The improved efficiency in production has resulted in substantial cost reduction due to lower wastages. The Company is endeavor to deliver best quality products at a lower cost.

(iii) The details of technology imported

Last year, the company had imported higher hook J/Q machines to weave wider J/Q designs. The Company is also foraying into printing and other value added products.

C. Foreign exchange earnings and Outgo:

The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgoes during the year are:

(Rs. In Lacs)
PARTICULARS 2017-18 2016-2017
Foreign Exchange Earning 3068.55 3698.77
Foreign Exchange Outgo - -
-Raw Materials & Spares 22.26 181.43
-Capital Goods 16.38 124.88
-Travelling 62.57 69.56
-Expenses for Export 22.65 56.11
-Insurance Charges 0.96 2.08

26. MANAGERIAL REMUNERATION:

A) Details of the ratio of the remuneration of each director to the median employees remuneration and other details as required pursuant to Rule5(1)of the Companies(Appointment and Remuneration of Managerial Personnel)Rules, 2014

Name of the Director Designation Ratio of remuneration to median remuneration to all employees
Ashok B. Harjani Chairman & Managing Director 27.71
Lokesh P. Harjani Executive Director 13.73
Nisha P. Harjani CFO &Director 12.48
Sonia A. Harjani Director 1.06

B) The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary

Particulars % increase in remuneration
Ashok B. Harjani, Managing Director -
Lokesh P. Harjani, Executive Director -
Nisha P. Harjani, CFO& Director -
Sonia A. Harjani, Director -
Devendra Kumar Jain, CEO-Project -
Shantanu Dey, CEO -
Pooja Shekhawat, Company Secretary -

-Independent Directors are given only sitting fees which is same as last year.

C) Percentage increase in the median remuneration of employees in financial year 4%

D) The number of permanent employees as on 31st March, 2018 was 182.

E) Explanation on relationship between average increase in remuneration and Company performance:

The increase in remuneration is in line with market trends and also with Companys Performance

F) Comparison of remuneration of key managerial personnel against performance of the company

(Rs. In Lacs)
Aggregate Remuneration of Key Managerial Personnel (KMP) 200.80
Revenue 6195.90
Remuneration of KMPs ( as % of revenue) 3.20 %
Profit Before Tax 682.75
Remuneration of KMP( as % of PBT) 28.97 %

G) Variation in Market Capitalisation of the CompanyPrice Earnings ratio of current financial year and previous financial year:

(Rs. In Lacs)
Particulars March 31,2018 March 31,2017 % change
Market Capitalization 689.25 15659.79 (-) 95.60 %
Price Earnings Ratio 20.89 15.89 (-) 31.47%

H) Company has not made any public offer in the recent previous and accordingly the comparison of public offer price and current market price would not be relevant.

I) Average percentile increase already made in the salaries of employees other than the managerial personnel in last financial year and its comparison with the percentile increase in managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial

It can be seen that increase in managerial remuneration is quite minimal as compared to last year, whereas the employees remuneration has been increased as per market trends. There have been no exceptional circumstances for increase in managerial remuneration.

J) Comparison of each remuneration of the key managerial personnel against the performance of the Company:

(Rs. In Lacs)
Ashok B. Harjani Managing Director Lokesh P. Harjani Executive Director Nisha P. Harjani Chief Financial officer Shantanu Dey Chief Executive Officer Devendra kumar Jain Chief Executive Officer-Project Harshakaur Hotsinghani Company Secretary (upto dec17) Pooja Shekhawat Company Secretary (from feb18)
Remuneration in FY 18 69.60 54.39 31.00 37.08 2.27 2.95 0.56
Revenue 6195.90
Remuneration as % of revenue 1.12 0.88 0.50 0.60 0.04 0.05 0.01
Profit Before Tax (PBT) 682.75
Remuneration as % of PBT 10.19 7.97 4.54 5.43 0.33 0.43 0.08

K) The Key parameters for any variable component of remuneration availed by the directors

The key parameters for the variable component of remuneration availed by the Directors are considered by the Board of Directors based on the recommendations of the Nomination and Remuneration Committee.

L) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive in excess of the highest paid director during the year: None

M) Affirmation that the remuneration is as per the remuneration policy of the Company

The Company affirms remuneration is as per the remuneration policy of the Company.

N) No employees remuneration throughout the year 20172018 exceeded remuneration aggregating Rs. 60Lacs or more per annum.

O) No employees remuneration for the year 2017-2018 exceeded the remuneration of any Directors.

P) No employee employed for a part of the year is in receipt of remuneration aggregating Rs. 5 Lacs or more per month.

Q) No employees remuneration was in excess of the remuneration drawn by the managing director or wholetime director or manager and does not holds by himself or along with his spouse and dependent children, any equity shares more than 2% of the of the company.

27. DETAILS OF SUBSIDIARY/JOINT VENTURES/ ASSOCIATE COMPANIES:

The Company does not have Joint Ventures/Associate Companies. The Company has incorporated foreign subsidiary in Vietnam viz. Premco Global Vietnam Company Limited in which it holds 85%.

28. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES:

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Regulation, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Chairman of the Audit Committee.

29. CORPORATE GOVERNANCE:

The Company is adhering to good corporate governance practices in every sphere of its operations. The Company has taken adequate steps to comply with the applicable provisions of Corporate Governance as stipulated in Chapter IV Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015entered into with the Stock Exchanges. A separate report on Corporate Governance forms part of this Report along with the Certificate from the Practicing Company Secretary confirming compliance with the conditions of Corporate Governance.

30. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

I n terms of the provisions of Regulation 34 of the Listing regulations, the Managements discussion and analysis is set out in this Annual Report as Annexure 3.

31. ACKNOWLEDGEMENT:

Your Directors wish to place on record their appreciation for the co-operation extended by all the employees, Bankers, Financial Institutions, various State and Central Government authorities and stakeholders.

For Premco Global Limited

Ashok B. Harjani

Chairman & Managing Director

DIN-00725890

Place: Mumbai

Date: 29th May 2018.