Today's Top Gainer
Note:Top Gainer - Nifty 50 More
INDUSTRY STRUCTURE AND DEVELOPMENTS:
The Indian total Apparel market is currently estimated to grow at a promising CAGR of 9.7 percent till 2026.
The innerwear category, currently estimated at 25,034 crores, accounted for 8 percent of the total apparel market in 2016 and is one of the most rapidly growing categories , with an expected CAGR of 12 percent over next five years to reach 80,117 crores by 2026.
The mens innerwear market, which accounts for 3% of the Apparel Market, is estimated to grow at a CAGR of 8 to 9 percent. The womens innerwear segment has grown consistently and estimated accounts for 5 percent of the apparel market, is estimated to grow at a CAGR of 13 to 15 percent.
PER CAPITA SPENDS IN DIFFERENT COUNTRIES VS INDIA:
An analysis of Per Capita spends on innerwear globally shows clearly that there is a tremendous scope of growth both for Men and Women over the coming years , as shown below ;
Premco Global, which basically caters to Mens Innerwear category, has invested Rs.230.85 Lacs as CAPEX in modernizing the Indian Operations. Besides, the Company has spent a substantial amount towards reorganizing its warehousing facilities for effective storage and lower wastages. Apart from this, the Company as additionally spent Rs 104.61 Lacs in Equipments and Machineries in Vietnam, to increase its capacities in the last financial year 2017-18. The Company is optimistic for the year 2018-19 and expects to grow at 10-15 % on a Consolidated Basis.
During the Year, the Company successfully withered the transitions of GST, lowering of the duty draw back rates and complying to the new Indian Accounting Standards - IND As.
OPPORTUNITIES AND THREATS:
The Changing habits of the Indian Consumer to use the Branded Under garments, will enable the Company to the cater to premium segment and will have positive impact on realizations.
Governments policy to protect Textile Sector from cheaper imports and overall Textile policy to favor the Companys long term growth.
Opening of Indian Markets for Global Brands, will usher new opportunities to Premco Global .
Company has obtained ISO 2015 certificate, which establishes the companies Quality Policy and continual endeavor to pursue quality goals.
Depreciation in rupee and Companys hedging Policy will protect/enable the Company to post better export realizations.
Companys Exposure to Foreign Currency Risks due to overseas Operations
The open policy of the government could result in more competition and more entrants/international players.
SEGMENTWISE PERFORMANCE :
As per the Management, 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.
Overseas customers have consistently shown confidence in quality products developed by the Company. Augmentation of additional Capacities in Vietnam, has given the strength to Indian Operations to cater to larger programs from Indian Large Business Houses like Rupa, G J Hosiery, Lux Industries and Dollar Industries.
Company has successfully transitioned in GST regime and mainly absorbed GST rates (5%) and lower Duty Draw back rates in its pricing policy.
Looking ahead the Company has already forayed into new and innovative products including Dyed Tapes and Tapes made from Super Soft Yarns. Going ahead, the company expects to cater to large Orders from Global brands and customers.
INTERNAL CONTROLS & THEIR ADEQUACY :
The Company has well defined Internal Control Systems. The Company takes adequate care to review and monitor the working of Internal Control Systems. Internal Audit in the Organization is an independent appraisal activity and it also measures the efficiency, adequacy and effectiveness of other controls in the Organization.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE :
(Rs. In Lakhs)
|Revenue from operations||6195.90||6985.51||7839.44||7433.71|
|Profit before Tax||682.75||1761.52||717.81||1582.88|
|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|
|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|
|Earnings per share:|
* 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.
Standalone Results Review :
During the year under review, Companys revenue from operations stood at Rs. 6195.90 Lakhs as against Rs.6985.51 Lakhs in the previous year, The Domestic Operations showed marginal growth and the revenue from export operations were lower by 17.04% as compared to previous year.
As per the companys long term strategy , a part of the Indian exports was shifted to the new Vietnamese plant, which produced and supplied global customers locally. The Company expects this trend to be completed by 201819, whereby the company will be able to fully utilize Indian capacities and look for further growth opportunities.
The Revenue from Duty Drawback declined by Rs. 101.33 Lacs, as compared to previous year is mainly due to revision of Duty Draw Back Rates w.e.f 01.07.2017, post GST Implementation. The Company has since restructured/Revised its Pricing policy to nullify the impact for the future.
The Company has earned a Net profit after Tax of Rs. 505.82Lakhsas compared to the Net Profit after Tax of Rs. 1173.84 Lakhs during the previous accounting year. The Ind As impact as shown below mainly explains the reason for decline in Profits. As per Ind As income recognition Principles, the Companys Net Income of Rs 313.44 Lakhs was recognised in the earlier Period i.e. 2016-17 and 2017-18. This also has been explained in Notes to Accounts. A further decline in profits were due to lower exports due to strategic change in Companys policy to supply the goods locally in Vietnam. This being temporary in nature, it will have a positive effect in the long term. In fact Company has already recouped most of the lost ground in the beginning of financial year 2018-19.
The Companys other Income during 2017-18 stood at Rs 371.52 Lacs as compared to previous year Rs. 348.92 Lacs, the difference being mainly on account of Interest Income from its subsidiary, to whom the company had provided short term loans for catering to its Working Capital needs.
The Companys EBDIT for the year on standalone basis was at Rs 957.60 Lakhs as against Rs. 2118.84 Lakhs during the previous year. The standalone Profit After Tax of the Company stood at Rs 505.82 as against Rs1177.08Lakhs during the previous year. The Companys Total Comprehensive Income stood at Rs 507.46 as against Rs1177.08 Lakhs during the previous year.
A BRIEF EXPLANATION ON PERFORMACE:
(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 Profits After Tax of 2016-17 was reinstated from Rs 985.79 Lacs to 1173.84 Lacs thereby having positive impact of Rs188.05 Lacs
The Reserves of 2015-16 were positively impacted by Rs. 125.39 Lacs
Therefore Profit After Tax for the 2017-18 stands at Rs. 819.26 Lacs based on OLD GAAP, as against the Net Profit of Rs 985.79 Lacs in the previous financial year.
The Other effects are summarized in Notes to Accounts 2017-18. The above also had the impacted the current years results.
Consolidated Results Review :
On Consolidated basis, revenue from operations stood at Rs. 7839.44Lakhsas against Rs.7433.71 Lakhs in the previous year. The Company posted a positive turnover on a consolidated basis due better results from its overseas operations.
The Vietnamese operations have stabilized fully and product is being supplied to Global customers as per specifications.
The company recouped the deficit shown in standalone operations and also posted a marginal increase in turnover as comparative to previous year.
The Companys Consolidated EBDIT for the year stood at Rs.1092.07 Lakhs as against Rs. 2027.99 Lakhs,
The Net Profit after Tax stood at 540.88 Lakhs as compared to the Net Profit after Tax of Rs. 998.44 Lakhs during the previous accounting year. The Companys Consolidated Total Comprehensive Income stood at Rs 542.52 Lacs as against Rs 995.20 Lakhs.
The Companys Subsidiary viz PREMCO GLOBAL VIETNAM COMPANY LIMITED, has for the first time , reported financial breakeven and profits for the quarter ended 31.03.2018 and has since been giving consistent results.
The Companys strategy to go for subsidiary in Vietnam, has started yielding results, and will reflect in improved performance of ensuing quarters.
The Management re-iterates its faith in expansion of capacities in Vietnam and expects a growth rate of 10% to 15% in the Current Financial Year on a consolidated basis though increase in turnover, improved penetration in domestic market and strong inroads on export front along with appropriate restructuring of products and procedures.
The reasons as explained in previous paragraph hold good for consolidated results.
A BRIEF EXPLANATION ON PERFORMANCE:
(2) 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 Profits After Tax of 2016-17 was reinstated from Rs 832.84 Lacs to 1020.89 Lacs thereby having positive impact of Rs188.05 Lacs
The Reserves of 2015-16 were positively impacted by Rs. 125.39 Lacs
Therefore Profit After Tax for the 2017-18 stands at Rs. 1146.38 Lacs based on OLD GAAP, as against the Net Profit of Rs 832.83 Lacs in the previous financial year.
The Other effects are summarized in Notes to Accounts 201718. The above also had the impacted the current years results.
MATERIAL DEVELOPMENT IN HUMAN RESOURCES (INCLUDING NO OF PERSONNEL EMPLOYED):
The Company believes that Human Resource 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 employee potential and provides them with growth opportunities and takes suitable measures for employees welfare.
As on 31st March 2018, Premco Global ltd Employs 500 strong workforce in Indian Operations and more than 200 workers in Vietnam.
The company has taken various technical upgradation and training Programmes to upgrade the communication, safety and technical skills of their employees. The Company conducts on the Job Training also gives rewards for improvement in Delivery, quality of Products and automation within the plants.