Premco Global Ltd Management Discussions.

REPORT Overview

At the start of 2022, the world was ushered into troubled waters yet again - this time, with a serious geopolitical crisis at hand as Russia decided to wage a war against Ukraine. This meant that financial bodies revisited estimates and governments across the global were staring at lowered projections.

Overview of the World Economic Outlook Projections (%) :

Projections
2021 2022 2023
World Output 6.1 3.6 3.6
Advanced Economies 5.2 3.8 2.4
Emerging Market and Developing Economies 6.8 3.8 4.4
Emerging and Developing Asia 7.3 5.4 5.6
China 8.1 4.4 5.1
India 8.9 8.2 6.9

 

Source: World Economic Outlook, IMF INDIAN TEXTILE INDUSTRY

The Indian domestic textile and apparel market was estimated at US$ 99 bn in 2021-22 and has seen a 30% recovery since 2020-21. The market is expected to grow at 10% CAGR from 2019-20 to reach US$ 190 bn by 2025-26.

The Union Budget 2022-23 presented various incentives to help the textile sector cover losses incurred during the pandemic and grow as a global player Indias textiles industry contributed 7% to the industry output (by value) . The Indian textiles and apparel industry contributed 2.3% to the GDP, 12% to export earnings and employs more than 21% of total employment.

Indias textiles industry has around 4.5 crore employed workers including 35.22 lakh handloom workers across the country. Exports of textiles (RMG of all textiles, cotton yarns/fabs/made- ups/handloom products, man-made yarns/fabs/made-ups, handicrafts excluding handmade carpets, carpets and jute mfg. including floor coverings) stood at US$ 29.8 billion between April-December 2021.

The Indian textiles market is expected to be worth more than US$ 209 billion by 2029.

TECHNICAL TEXTILES IN INDIA

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

India is the 6th largest producer of Technical Textiles with 7% Global Share.

India accounts for 7.6% (USD 19 Billion) of the worlds technical textile production (USD 250 Billion) Technical textile makes around 13% of Indias overall textile and garment industry and adds 0.7 percent to Indias GDP. According to commerce ministry of India, the Technical Textile sector is expected to grow at a significant growth rate of 20% p.a. over the next five years.

OPPORTUNITIES AND THREATS FOR THE COMPANY OPPORTUNITIES:

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 will increase the demand for Companys products.

• In 2018-19, Company received 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: Based on current growth trends and market opportunities, the Board of Directors at its meeting held on 21st May 2022 granted approval for setting up New Factory at Gujarat for Capacity expansion with a capital outlay of Rs.18 crores to be funded through internal Accruals of Company and bank borrowings.

THREATS

Many major international apparel brands and textile companies 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.

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 separate reportable segments.

OUTLOOK

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.

1. FINANCIAL SUMMARY HIGHLIGHTS

The Financial Performance for financial year 2021-2022 is summarized in the following table: -

Rs. in Lakhs

Particulars Standalone Consolidated
March 2022 March 2021 March 2022 March 2021
Total Revenue 8,922.66 6,496.97 13,190.86 10,269.05
Expenses 7,327.73 5,596.33 10,197.13 7,728.19
Profit Before Finance Cost, Depreciation & 1,594.93 900.64 2,993.73 2,540.86
Finance Cost 76.98 80.85 196.14 166.54
Depreciation & Amortization Exp. 198.62 204.05 473.60 457.70
Profit/(Loss) before Extraordinary Items 1,319.33 615.74 2,323.99 1,916.62
Extraordinary Items (17.32) 134.94 (17.32) 134.94
Profit/(Loss) before Taxation 1,336.65 480.80 2,341.31 1,781.68
Less : Provision for current Taxation 306.00 79.53 406.85 167.52
Deferred Taxation adjustment 76.40 44.69 76.39 44.69
Short/(Excess) Income Tax Provision 18.26 (2.88) 82.21 (2.88)
Profit/(Loss) After Taxation 935.99 359.46 1,775.86 1,572.35
Minority Interest - - 120.51 181.54
Other Comprehensive Income (Net of Tax) 12.50 (0.52) 12.49 (0.52)
Total Comprehensive Income 948.49 358.94 1667.84 1,571.83
Paid up Equity Share Capital 330.48 330.48 330.48 330.48
Earnings Per Share (Rs.) 28.32 10.88 50.09 42.08

FINANCIAL PERFORMANCE, OPERATIONS AND STATE OF THE COMPANYS AFFAIRS</p>

STANDALONE ANALYSIS

During the year under review, the total revenue stood at Rs. 8,922.66 Lacs as against Rs. 6,496.97 Lacs in the previous year. Companys revenue from operations stood at Rs. 8,640.22 Lacs as against Rs. 6,201.59 Lacs in the previous year. Other Income stood at Rs. 282.44 Lacs as compared to Rs. 295.38 Lacs in previous year. The Company incurred Net Profit after Tax of Rs. 935.99 Lacs as compared to Net Profit after Tax of Rs. 359.46 Lacs during the previous accounting year.

CONSOLIDATED ANALYSIS

During the year under review, on consolidated basis, the total Revenue stood at Rs. 13,190.86 Lacs as compared to Rs. 10,269.05 Lacs in the previous year. Revenue from operations stood at Rs. 12,822.69 Lacs as against Rs.9,954.46 Lacs in the previous year. Other Income stood at Rs. 368.17 Lacs as compared to Rs. 314.59 Lacs in previous year. Net Profit after Tax stood at Rs. 1,775.86 Lacs as compared to the Net Profit after Tax of Rs. 1,572.35 Lacs during the previous accounting year.

FINANCIAL VISION AND OUTLOOK:

The Company Targets to Maximize, its capacity utilisation in India & Vietnam by entering new markets like Europe and Bangladesh and introducing new Products.

Key financial measures (Standalone)

Particulars 2021-22 2020-21
Financial Stability Ratios :
Total Debt/Equity (x) 0.05 0.10
Current Ratio (x) 3.67 2.95
Quick Ratio (x) 2.22 1.56
Interest cover (x) 0.05 0.14
Performance Ratios :
Return on Assets (%) 0.11 0.04
RoCE (%) 0.19 0.07
Asset Turnover (%) 1.02 0.75
Working Capital/Sales (x) 0.36 0.42
Return on Equity (%) 0.14 0.06
Profitability Ratios :
EBITDA (%) 18.85 12.34
PBT (%) 15.66 7.75
PAT (%) 10.98 5.79
Efficiency Ratios :
Receivables in days 64 76
Inventory in days 88 147
Payables in days 41 48
Working capital cycle in days 253 295
Growth Ratios (Y-o-Y) :
Net revenue growth (%) 37.34 30.72
Net sales growth (%) 38.40 36.91
EBITDA growth (%) 112.94 2330.78
PBT growth (%) 181.90 294.51
PAT growth (%) 164.24 237.55
Financial Stability Ratios :
Total Debt/Equity (x) 0.09 0.16
Current Ratio (x) 5.27 3.85
Quick Ratio (x) 3.49 2.27
Interest cover (x) 0.08 0.09
Performance Ratios :
Return on Assets (%) 0.13 0.12
RoCE (%) 0.23 0.20
Asset Turnover (%) 1.03 0.87
Working Capital/Sales (x) 0.48 0.48
Return on Equity (%) 0.18 0.18
Profitability Ratios:
EBITDA (%) 23.61 24.16
PBT (%) 18.39 17.89
PAT (%) 13.01 13.97
Efficiency Ratios:
Receivables in days 43 56
Inventory in days 129 187
Payables in days 32 37
Working capital cycle in days 360 389
Growth Ratios (Y-o-Y) :
Net revenue growth (%) 28.45 27.90
Net sales growth (%) 28.17 30.61
EBITDA growth (%) 25.88 123.93
PBT growth (%) 32.40 357.12
PAT growth (%) 19.96 274.41

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 2022, 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 around the world, as well as youngsters, who bring fresh energy into our organization.

GROUP INSURANCE (COVID 19) :

Company Continues to cover its all employees for group insurance to ensure that all the employees get a safety cover and also ensures 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.

For Employees in the Age Group of plus 60, the Company has offered them full Protection upto 3 Lacs for any disease by covering them in a separate Mediclaim Group Insurance Policy.

WORK FROM HOME FACILITY :

During the part of the year Company Company offered its employees work from Home facility to ensure that Companys IT integrated Solutions are used to fullest Extent , enable Company to meet the statutory requirements as well Tax Compliances in addition to Employee Working Facility.