Premco Global Ltd Management Discussions

OVERVIEW

The financial year 2023-24 was a challenging one - with most economies trying to control inflation, keep interest rates under control and stable, liquidity position in the market was tight, the Company kept its momentum by maintaining sales both in Export and Domestic Markets. Economies remained cautious due to Israel and Russian aggression on Gaza and Ukraine territories. Yarn prices showed an upward trend meaning there was a challenge to maintain preexisting selling prices.

The baseline forecast for global output growth ( by IMF ) estimated for 2024 at 3.1 and 3.2 for 2025. As per IMF ( 2024 ), Indian Economy is likely to see a growth rate of 6.9% and 6.5% for the financial year 2024 & 2025 respectively.

Real GDP growth rates (average annual % change), updated as of 13 June 2024

	20 IQ- 2019	2020	2021	2022	2023	2024	2025	2026 2030	2031 2035
United States	2.4	-2.2	5.8	1.9	2.5	2.0	1.5	17	1.6
Europe	1.7	-6.0	6.3	3.6	0.5	0.9	1.5	1.0	0.8
Euro Area	1.4	-6.1	5.9	3.4	0.6	0.8	1.3	0.8	0.6
Germany	2.0	-3.8	3.2	1.8	-0.3	0.3	1.2	1.0	0.8
France	1.4	-7.6	6.8	2.6	1.1	1.0	1.2	0.8	0.7
Italy	0.3	-9.0	8.3	4.1	1.0	0.9	1.0	0 2	-0.1
United Kingdom	2.0	-10.4	8.7	4.3	0.1	08	1.6	0 9	0.8
Japan	1.2	-4.2	2.6	1.0	18	0.5	1.3	1.0	0.8
Other Mature Economies	3.2	-1.8	5.9	3 1	15	2.1	2.4	21	1.8
All Mature Economies	2.1	-3.9	5.7	2.7	1.5	1,4	1.6	1.4	1.3
China	7.4	1.9	8.8	3 0	5.2	5.0	4.6	4 3	3.9
India	6.8	-6.1	9 5	6 6	7.8	6.9	6.5	51	4.6
Other Developing Asia	5.0	-2.8	3 4	5.9	4.0	4.5	4.9	3.6	2.8
Latin America	1.2	-7.1	7.5	3 9	2.0	1.5	27	19	1.6
BraziI	0.8	-3.6	5.1	3 1	2.9	19	27	19	1.5
Mexico	2.0	-8.5	6.3	3.7	3.2	2.1	3.1	2.0	1.5
Middle East & North Africa	3.2	-2.0	5.2	5.3	2.3	3.5	4.3	2.9	2.3
Gulf region	37	-4.0	4.2	7.0	0.5	3.1	5.0	3 1	2.5
Sub-Saharan Africa	37	-1.3	4.7	3.6	3.1	3.1	3.7	3.5	3.6
Russia, Central Asia & Southeast Europe	2.9	-1.2	7.5	0.2	4.0	3.5	2.2	2.0	1.9
Russia	1.8	-2.6	5.8	-1.1	3.5	3.1	1.4	1.4	1.6
Turkey	5.6	1.7	11.8	5.3	4 5	3.8	27	2.5	2.3
All Developing Economies	4.9	-1.7	7.4	3.9	4.6	4.4	4.4	3.6	3.3
World	3.5	-2.7	6.6	3.4	3.2	3.1	3.2	2.7	2.5

As per the National Statistical Office( year 2023 ), Ministry of Statistics and Programme Implementation

Indias Real GDP and Nominal GDP are projected to grow by 7.6 per cent (YoY) and 9.6 per cent (YoY), respectively, in 2023-24. On the demand side, private consumption has witnessed continued momentum. It is estimated to grow at 4 per cent in 2023-24 compared to 6.7 per cent in 2022-23, reflecting the rebound demand witnessed in the current year on account of the release of pent

TECHNICAL TEXTILES IN INDIA ( AS PER MINISTRY OF TEXTILE)

India is the 5th largest producer of technical textiles in the whole world with a market size of nearly $22 Bn Which is tipped to reach $300bn by the centenary anniversary of the formation of the Indian republic.

Indias trade of technical textile products has been growing Steadily and the country has a trade balance as a net exporter. Indias exports of technical textile products grew from $2.21 Bn in 2020-21 to $2.85 Bn in 2021-22, registering a growth rate of 28.4% (YoY). Exports are expected to grow to $ 6 Bn by 2026 and expected to reach $50 Bn by 2047.

up demand for contact-intensive services. Exports are projected to grow at 3.2 per cent in 2023-24 despite sustained supply chain disruptions and an uncertain geopolitical environment. The share of exports in GDP (at 2011-12 prices) remains at 21.8 per cent in 2022-23 compared to 23.1 per cent in 2021-22

INDIA APPAREL AND TEXTILE INDUSTRY OUTLOOK. ( AS PER MINISTRY OF TEXTILE)

The domestic apparel & textile industry in India contributes approx. 2.3 % to the countrys GDP, 13% to industrial production and 12% to exports. India has a 4% share of the global trade in textiles and apparel.

The textiles and apparel industry in India is the 2nd largest employer in the country providing direct employment to 45 Mn people and 100 Mn people in allied industries.

• The Indian textile and apparel market size is estimated around $165 Bn in 2022, with domestic market constituting $125 Bn and exports contributing $40 Bn.

• The market size of the industry is projected to grow at a 10% CAGR to reach $350 Bn by 2030.

PREMCO GLOBAL LIMITED, is a member of Technical Textiles Association. Technical textiles are textile materials and products used for their technical performance and functional properties. Technical Textiles have a huge scope for growth in India and is a sunrise sector.

India accounts for 11% (USD 22 Billion) of the worlds technical textile production (USD 197 Billion). Technical textiles account for up to 13% of Indias overall textile and garment industry and adds 0.7 percent to Indias GDP. According to the Commerce Ministry of India (2024), the Technical Textile sector is expected to grow at a significant growth rate of 20% p.a. over the next five years.

STRENGTH:

The companys strengths lie in its management ability to work on innovative ideas, products and services to its customers. Its ability to meet fashion designs through its Sampling and R & D team enables the Company to meet marketing challenges and new trends. Further the Companys financial stability and its ability to cover financial and non- financial risks makes the business environment meet its commitments in even challenging economic environments.

RISK AND CONCERN (WEAKNESS):

The Company has robust risk management procedures to identify and evaluate risks on an ongoing basis. Risks are inherent to business activities, however the company recognizes these risks and formulates mitigating actions across.

• Strategic Risks, * Compliance Risks, • Operational Risks,

• Reporting obligations and * Environment, Health and Political Risks

The identified risks are integrated into the business plan with detailed action plan to mitigate the identified business risk. OPPORTUNITIES AND THREATS FOR THE COMPANY OPPORTUNITIES :

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

• Company has a geographical advantage in the supply of 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 boost sales for brands that the Company has been manufacturing ELASTIC TAPES for. Demand will increase for Companys products.

• In 2023-27, the Company has successfully renewed its SINGLE STAR EXPORT HOUSE CERTIFICATE, which will enable our company to be recognized for ease of operation with tax and banking officials.

• Setting up of new factory: As Committed, the Company has established an additional factory in Gujarat, at Umbergaon with a capital outlay of Rs. 28 crores, funded through both internal Accruals of Company and bank borrowing. The new plant will be compliant to international standards to meet export certification required by global customers. Production has started and expected to stabilise by December 2024

THREATS

Many major international textile companies have ventured into technical textile business 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.

Sustainability :

We have initiated integration of sustainability across the value chain of our business by

(i) recognizing its scope and relevance;

(ii) articulating our approach and

(iii) planning; and (iv) putting in place an execution framework SEGMENTWISE PERFORMANCE:

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 separately reportable segments.

OUTLOOK

Company continues to strive for maximizing its capacity utilization in India & Vietnam by concentrating on securing new customers globally and in India and innovating and expanding its Product Mix of its Products.

1. FINANCIAL SUMMARY HIGHLIGHTS

The Financial Performance for financial year 2023-2024 is summarized in the following table: -

Rs. in Lakhs

Particulars	Consolidated		Standalone
	March 2024	March 2023	March 2024	March 2023
Total Revenue	10,321.60	9,647.03	6,742.24	7,304.29
Expenses	8,310.83	7,946.02	5,715.81	5,867.07
Profit Before Finance Cost & Depreciation	2,010.77	1,701.01	1,026.43	1,437.22
Finance Cost	229.16	192.69	60.26	55.29
Depreciation & Amortization Exp.	515.14	546.04	246.18	267.13
Profit/(Loss) before Extraordinary Items	1,266.47	962.26	719.98	1,114.8
Extraordinary Items	(19.26)	(139.99)	(19.26)	(20.00)
Profit/(Loss) before Taxation	1,285.73	1,102.25	739.25	1,134.8
Less : Provision for current Taxation	227.94	277.81	120.25	266.00
Deferred Taxation adjustment	26.57	(18.53)	26.57	(18.53)
Short/(Excess) Income Tax Provision	7.66	(100.93)	7.66	(7.17)
Profit/(Loss) After Taxation	1,023.55	943.91	584.76	894.50
Minority Interest		0.69		-
Other Comprehensive Income (Net of Tax)	(3.95)	32.4	(3.95)	32.40
Total Comprehensive Income	1,019.61	975.62	580.81	926.91
Paid up Equity Share Capital	330.48	330.48	330.48	330.48
Earnings Per Share (Rs.)	30.97	28.54	17.69	27.07

FINANCIAL PERFORMANCE, OPERATIONS AND STATE OF THE COMPANYS AFFAIRS CONSOLIDATED ANALYSIS

During the year under review, on consolidated basis, the total Revenue stood at Rs. 10,321.60 Lakhs as compared to Rs. 9,647.03 Lakhs in the previous year. Revenue from operations stood at Rs. 9,788.18 Lakhs as against Rs. 9,334.15 Lakhs in the previous year. Other Income stood at Rs. 533.42 Lakhs as compared to Rs. 312.87 Lakhs in previous year.

Net Profit after Tax stood at Rs. 1023.55 Lakhs as compared to the Net Profit after Tax of Rs. 943.91 Lakhs during the previous accounting year

STANDALONE ANALYSIS

During the year under review, the total revenue stood at Rs. 6,742.23 Lakhs as against Rs. 7,304.30 Lakhs in the previous year. Companys revenue from operations stood at Rs. 6,363.02 Lakhs as against Rs. 7,085.97 Lakhs in the previous year. Other Income stood at Rs. 379.21 Lakhs as compared to Rs. 218.32 Lakhs in previous year. The Company earned Net Profit after Tax of Rs. 584.76 Lakhs as compared to Net Profit after Tax of Rs. 894.51 Lakhs during the previous accounting year.

FINANCIAL VISION AND OUTLOOK:

The Company Targets to maximize, its capacity utilization in India & Vietnam, by entering new markets like Europe and Bangladesh and introducing new products

Key financial measures (Standalone)

Particulars	2023-24	2022-23
Financial Stability Ratios :
Total Debt/Equity (x)	0.05	0.11
Current Ratio (x)	4.90	2.78
Quick Ratio (x)	2.28	1.48
Interest cover (x)	2.28	22.31
Performance Ratios :
Return on Assets (%)	6.62	10.25
ROCE (%)	9.47	13.83
Asset Turnover (%)	72.51	78.33
Working Capital/Sales (x)	0.43	0.33
Return on Equity (%)	7.75	12.38
Profitability Ratios :
EBITDA (%)	16.35	21.18
PBT (%)	11.53	16.63

Key financial measures (Consolidated)

Particulars	2023-24		2022-23
Financial Stability Ratios :
Total Debt/Equity (x)	0.06		0.11
Current Ratio (x)	6.90		4.56
Quick Ratio (x)	4.68		2.92
Interest cover (x)	6.59		6.94
Performance Ratios :
Return on Assets (%)	7.88		7.53
ROCE (%)	12.82		10.89
Asset Turnover (%)	75.62		72.01
Working Capital/Sales (x)	0.66		0.60
Return on Equity (%)	9.24		9.18
Profitability Ratios :
EBITDA (%)	20.69		20.19
PBT (%)	13.08		12.27
PAT (%)	10.42		10.45
Efficiency Ratios :
Receivables in days	25		41
Inventory in days	211		190
Payables in days	40		30
Working capital cycle in days	563		496
Growth Ratios (Y-o-Y) :
Net revenue growth (%)	6.99		-26.87
Net sales growth (%)	5.18		-27.50
EBITDA growth (%)	7.45		-37.77
PBT growth (%)	11.78		-51.42
PAT growth (%)	4.51		-41.50
Particulars		2023-24		2022-23
PAT (%)		9.13		13.08
Efficiency Ratios :
Receivables in days		44		53
Inventory in days		143		103
Payables in days		42		37
Working capital cycle in days		350		267
Growth Ratios (Y-o-Y) :
Net revenue growth (%)		-7.69		-18.14
Net sales growth (%)		-10.09		-18.28
EBITDA growth (%)		-30.66		-7.88
PBT growth (%)		-37.70		-12.95
PAT growth (%)		-37.34		-2.27

MATERIAL DEVELOPMENT IN HUMAN RESOURCES (INCLUDING NO OF PERSONNEL EMPLOYED)

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 2024, Premco Global limited Employs 500 strong work force in Indian Operations and more than 200 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, as well as young professionals, who bring fresh energy into our organization.

GROUP INSURANCE:

Company continues with its commitment towards providing group insurance to ensure that employees get a safety cover and also ensure that all the plants comply with government norms to ensure adequate safety measures. Company Employees aged 60 plus have also been offered protection up to 3,00,000 rupees for any disease. This cover is optional at the request of Employee.